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    Stock Alert for Pinnacle Airlines Corp. (PNCL)

    Pinnacle Airlines Corp. (PNCL), an airline holding company with over 8,000 employees, is the parent company of Pinnacle Airlines Inc. and Colgan Air Inc. Flying as Continental Express, Delta Connection, United Express and US Airways Express, PNCL operating subsidiaries operate 199 regional jets and 69 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at nine major U.S. airports.

    Share Statistics (31-Jan-12)   FY












    Symbol PNCL Revenue, $Mn 845.51 1,020.77 20.7% 302.33 319.76 5.8%
    Current price $1.41 Gross marg. 24.4% 21.9% -10.2% 22.5% 18.5% -17.8%
    52wk Range: $0.72-$7.69 Oper. margin 6.0% 2.0%
    Avg Vol (3m): 165,513 Net margin 5.0% 1.3% -74.0% 3.1% -1.2% -138.7%
    Market Cap. 26.97M              
    Shares Outstanding 19.13M EPS, $ 2.42 1.06 -56.2% 0.51 -0.11 -121.6%

    Source:, SEC Filings.

    Investment Highlights

    Making gains for the second day in a row, Pinnacle Airlines Corp.  (PNCL) shot up 42.4% to close Tuesday’s trade at $1.41.  Over 1.70  million shares traded hands during the session, topping the 10-day average of 260.07 K.  The rally took the price to an intraday high of $1.85.

    Shares of the Memphis-based airline holding company have gained 83.6% in the last five days and 72.0% in the last month.  Year-to-date, the stock is down 80.4%.

    Investors last week welcomed the news that the company has inked an deal with Export Development Canada to defer payments owed to the credit agency, a move seen as an effort to keep off bankruptcy.

    According to a filing with the SEC, PNCL and subsidiary Colgan Air were scheduled to pay principal and interest of $16.6 million from January 14 to March 31. Under the deal, the debt would be delayed until April.

    Shares plummeted earlier in January after the Company warned of a possible Chapter 11 filing if it is unable to trim costs. “On the current path, our financial position will continue to worsen at an alarming rate; we need to act immediately,” CEO Sean Menke stated in a letter to employees. According to him, the company needs to reach cost-cutting agreements with labor, vendors and other partners.

    In other news, PNCL last month announced capacity and operational results for its subsidiaries for December of 2011, showing decreases in all measures of traffic. The Company reported total passengers of about 1.49 million for the month, compared to over 1.50 million in 2010.  Revenue Passenger Miles (RPMs) was 631.35 K, down 6.9% from 678.02 K reported in the previous year.  Load Factor was 72.5%, dropping 0.1 points from the previous year’s 72.6%.

    PNCL conducts the majority of its operations under capacity purchase agreements.  Fluctuations in total Passengers, RPMs, and Load Factor do not affect revenue earned by the Company under these types of agreements.


    Financial Summary

    PNCL recorded consolidated operating revenue of $319.8 million for the third quarter of 2011, an increase of $17.4 million, or 5.8%, over the same period in 2010. The Company attributed the increase to an increase in its Q400 operations with United and the year-over-year increase in the rates earned under its operating contracts, which were partially offset by the wind-down of its Saab operations with Delta as well as reduced regional jet flying with Delta.

    The Company reported operating income and operating margin for the quarter of $2.6 million and 1.6%, representing decreases of $12.9 million and 8.0 percentage points, respectively, from the third quarter of 2010.  Financial results were negatively impacted by an increase in pilot wage rates related to the new labor agreement with ALPA, an increase in crew related expenses resulting from scheduling changes by Delta, which resulted in the reallocation of flight crews and increases in crew staging.  Also, the Company reached a tentative settlement of a dispute with Delta related to the reimbursement of certain heavy airframe maintenance costs.

    PNCL realized a net loss of $3.5 million, or $0.19 per share, for the quarter.  Excluding special items, net loss was $1.7 million, or $0.09 per share.

    The Company reported unrestricted cash and cash equivalents of $82 million at September 30, 2011.


    Financial Strength (31-Jan-2012)




    S&P 500

    Quick Ratio (MRQ) 0.58 1.06 1.34 0.65
    Current Ratio (MRQ) 0.72 1.15 1.69 1.02
    LT Debt to Equity (MRQ) 655.60 151.69 53.25 96.17
    Total Debt to Equity (MRQ) 712.61 188.56 79.76 135.09
    Interest Coverage (TTM) 1.92 0.09 0.50 27.46

    Source:, SEC Filings.

    Technical Analysis


    PNCL is above the upper Bollinger Band, implying that it is currently extended from its recent trend. Be aware, however, that a cross outside of the Bollinger Bands can sometimes be a signal of trend strength and not, necessarily, trend reversal.

    PNCL’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Jan31-2012 symbol Share, $ $ Mn 2011 2012 2011 2012
    Southwest Airlines Co. LUV 9.38 7.44B 11.44 8.69 0.43 0.41
    SkyWest Inc. SKYW 12.80 649.24M n/a 20.00 0.18 0.17
    Republic Airways Holdings Inc. RJET 5.52 266.63M 26.29 6.99 0.09 0.10
    Alaska Air Group Inc. ALK 76.13 2.70B 8.18 7.71 0.58 0.56
    Regional Airlines Median       20.73 n/a 0.47 n/a
    Pinnacle Airlines Corp. PNCL 1.41 26.97M n/a 70.50 0.02 0.02

    Source: Thomson Financial

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