toltommy
Posts: 2497
Joined: Tue Dec 09, 2003 9:04 am

Pinnacle Wants More Time To Discuss NW Payments

Wed Mar 08, 2006 1:12 am

Looks like NW is preparing to protect themselves if they force Pinnacle to file bankruptcy. They are asking for additional security deposits, according to an article in todays (3/7) Aviation Daily. Here are highlights from the article:

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"Pinnacle Airlines might consider taking legal action to avoid paying additional aircraft security deposits to partner Northwest Airlines if a March 15 deadline for the payment is not extended."

"Northwest sent a letter to Pinnacle in September 2005 asking for about $24 million in additional security deposits by March 6. In a previous Securities And Exchange Commission filing, Pinnacle noted that Northwest's request, "coupled with the $24.3 million already held by Northwest, would result in Northwest retaining two full months of basic rent as security for the airline's obligations under the aircraft subleases."

"Pinnacle warned in its 10-K that if the airlines fail to resolve the issue by March 15, or if Northwest fails to extend the deadline, "then we may seek legal remedies to prevent payment of these security deposits to Northwest." The airline cautioned that it was unsure whether it could successfully avoid paying the deposit payments."

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Sounds to me like Northwest is trying to avoid the losses they took when Mesaba filed CH11. Pinnacle doesn't seem sure they can avoid making the payments. As far as I know, they don't have a holding company to shield assets, like MAIR did, only putting Mesaba in CH11. Looks like the squeeze is on.