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The results announced Tuesday brought net income for the year to date through Sept. 30 to $17.6 million, or 97 cents per share, which is about 50 percent higher than 2008.
Company officials said the better performance reflected lower fuel costs and a stable flow of income from contracts with Delta, Continental and other mainline carriers.
Analysts had projected earnings of 30 cents per share. Pinnacle stock
climbed 4.5 percent, closing at $6.27 per share, on the news
The quarterly earnings figure excluded a nonrecurring gain of $4.2 million from the sale of an auction rate securities portfolio back to the issuer, Citigroup. The portfolio sale was part of a transaction that took $163 million in debt off Pinnacle's books with net cash used of $51 million.
President and CEO Phil Trenary said Pinnacle's success in cleaning up its balance sheets boded well for growth in 2010 and beyond.
"We've had a remarkable turnaround in the balance sheet," Trenary said. "We're very well positioned for the future and the growth we think it going to come, particularly with the aircraft we operate."
As competing regional carriers come to the end of long-term contracts with mainline carriers, Pinnacle will have the ability to bid on more business, said analyst Bob McAdoo of Avondale Partners LLC.
"I think they're just looking forward to those opportunities," McAdoo added.
Chief financial officer Peter Hunt said Pinnacle will be moving to resolve contract disputes with Delta, such as cost of aviation insurance for aircraft serving the Delta network.
Delta requires regional partners to obtain their own insurance, unlike the arrangement Pinnacle had with Northwest, but Delta has balked at covering the full cost, Hunt said.
Helane Becker, analyst with Jesup & Lamont Securities, thinks the contract issues inject some uncertainty into Pinnacle's future prospects.
"The biggest issue is the Delta code share where Delta has been pushing back on all cost increases," Becker said. "They are either going to have to litigate some of the thornier issues that won't be easily resolved in a negotiation or they will have to go to arbitration."
Added Hunt: "These are contractual items. The operating relationship with Delta still remains strong."
McAdoo didn't see the contract issues as a big concern.
"Delta's got little issues where there are questions of interpretation" with its various regional partners, he said.
Pinnacle Airlines Corp. is an airline holding company that operates Pinnacle Airlines Inc. and Colgan Air. It has about 4,500 employees. Pinnacle operates Delta Connection flights and Colgan flights are part of the Continental Express, United Express and U.S. Airways Express brands.
Pinnacle bought Manassas, Va.-based turbo-prop operator Colgan Air in 2007 and is consolidating the operations in Memphis.
Hunt said up to $1.5 million in relocation costs could affect fourth-quarter earnings.
-- Wayne Risher: 529-2874
Pinnacle Airlines Corp.
Total operating revenues: $217.2 million
Net income: $7.3 million
Earnings per share: 40 cents
Nonrecurring gain: $4.2 million from securities sale
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