Pinnacle Airlines joins Peers in Seeking Bankruptcy Protection

Pinnacle Airlines

, a Tennessee-based regional airline, filed for bankruptcy protection to reorganize the company amid declining revenue. Pinnacle uses the names Continental Express, Delta Connection and United Express for the east coast connecting flights it runs to smaller airports. The airliner plans to end its United Express services by Aug. 1 while continuing other services. The company has $1.5 billion in assets and owes $1.4 billion according to the company's Chapter 11 bankruptcy filing. “Our current business model is not sustainable, as increasing operating expenses, liquidity constraints, business integration delays and difficulties associated with combining our operations have hindered our ability to maximize our growth potential,” Sean Menke, Pinnacle president and CEO, said in a press release to investors Sunday. Menke was the head of Frontier Airlines when it filed for Chapter 11 four years ago. The company had earlier filed a notice with the U.S. Department of Transportation to end flights in certain markets of its Essential Air Service, a partnership with US Airways

, as the markets are served by Pinnacle-subsidiary Colgan Air. It has asked the DOT to accelerate the process as part of the bankruptcy filings. Pinnacle received a $74.3 million loan from Delta Air Lines

, its largest customer. $44.3 million of the loan will be used to repay a secured promissory note held by Delta. The remainder, and cash generated by operations, will give the company liquidity to operate and restructure. As part of the filing, Pinnacle will try to change agreements with Delta Air Lines and end operations with United Airlines

. The company said it will ask its pilots and other employees to help it cut costs, possibly reducing the employee count from 7,800. The potential wage cuts could create a court battle as they did with American Airlines, which filed for bankruptcy in late 2011. After difficulty negotiating a labor contract, the company sought approval in March to dismiss labor contracts, increasing pressure on union leaders to reach a consensus with management. American Airlines parent company AMR Corporation (AAMRQ.PK) was the most recent major US carrier to file for bankruptcy. Pinnacle is the third US airline to file for bankruptcy protection this year, according to trade group Airlines for America. Global Aviation Holdings, a Peachtree City, Georgia-based airline, filed for bankruptcy Feb. 6 and Rockford, Illinois-based Ryan International Airlines filed for bankruptcy a month later, March 6. More than 20 airlines in the US have filed for bankruptcy since the recession stared in 2007, prompting people to reduce discretionary spending.