Another Airline Files for Bankruptcy

Add Pinnacle to the lengthening list of carriers that have filed for bankruptcy. The Memphis-based regional airline filed for Chapter 11 on April 1.

Similar to American’s filing for Chapter 11 last year, this will be a big deal for employees, stockholders, and creditors, but probably not for travelers. Pinnacle and its subsidiary Colgan will keep flying and honoring reservations and tickets during the bankruptcy process.

Pinnacle was already in the process of restructuring its deal with Delta and winding down its operations for United and US Airways. Primarily because 50-passenger regional jets like the ones run by Pinnacle have become too expensive to operate, those major carriers have decided to re-contract some of their supporting commuter arrangements.

As those deals change, some communities will see reductions in service frequency and a small number will lose service entirely. Advance schedules will reflect these adjustments: A few travelers with future tickets may face schedule changes (with optional refunds), but no travelers will lose money. Pinnacle expects to keep flying as Delta Connection and will try to forge agreements with other major lines.

Meanwhile, we probably haven’t seen the last domestic airline bankruptcy. High fuel costs are changing airline economics in fundamental ways, and further failures are likely. These same factors are also causing similar problems in Europe and Asia, too. We’ll keep you informed of any major developments.

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