Details From the Delta Airlines Sale of Mesaba to Pinnacle Airlines

Some of the details about the sale of Mesaba to Pinnacle have come to my attention via communications sent from Pinnacle. This is long but very interesting. Here are the highlights:


Pinnacle

Why did Delta sell Mesaba?

Delta has long believed that it was not necessary to own their
Regional Airline partners. Consistent with this philosophy, Delta determined
that it was appropriate to have its regional fleet in the hands of one of its
existing Regional partners, so it invited Pinnacle to begin discussions about
acquiring Mesaba.

What is the long-term
strategy?

The emphasis will be on expanding Pinnacle’s existing fleets
of CRJ-900s and Q400s. For the time being, Pinnacle Airlines
Corp. will continue to operate three separate fleets.

Pinnacle Airlines (jets), Colgan Air (turboprops) and Mesaba
Airlines (jets/turboprops).

Over the next two years,Pinnacle will be reorganizing around two operating airlines
and two certificates.

The intent would be to combine the regional jets under
Pinnacle Airlines and the turboprops under Mesaba Airlines. The Colgan name would be
phased out over time.

They are proposing to keep the Mesaba certificate primarily
because the infrastructure to support a large number of aircraft is
already in place there.

What about the furloughed pilots at Mesaba?

Pinnacle will immediately begin discussions with ALPA to
find a temporary solution that would allow furloughed Mesaba pilots to move to Colgan
or Pinnacle. Pinnacle will be hiring this month for an August class and Colgan is
hiring now for the Q400 deliveries that begin this August.

Will the Pilot Groups be integrated into one Seniority list?

Seniority integration may occur if it is required by Federal
law, a collective bargaining agreement or by mutual agreement. ALPA already has seniority integration policies in place.

A provision that would require seniority integration of
Colgan, Pinnacle and a subsequently acquired airline was tentatively agreed upon as
part of the failed tentative agreement at Pinnacle. That agreement remains
tentative and will not become effective until a new agreement with ALPA is reached.

Where will Mesaba locate its Crew Bases?

Mesaba will continue to base its crews in Memphis,
Minneapolis and Detroit.

What about the Flow
Through Agreement between Mesaba and Delta?

Mesaba’s contract with Delta stipulated that the Flow
Through Agreement is terminated now that Delta has sold Mesaba. It also requires that the
parties will meet prior to any termination for the purpose of discussing whether
continuation or modification would be appropriate. With that in mind, the parties have agreed to honor flow for an interim period while the parties discuss the possible continuation of flow through.

Finally, here is an excerpt from a letter from Pinnacle’s CEO:

Our collective goals are part of what makes us similar. As you might know, we have
an overriding commitment to Safety. We want to be recognized as a place where
people matter and we will work hard to make sure that we keep you informed
through internal communications channels – not the rumor mill. As we move
through the integration process, we will provide multiple channels for you to
direct questions.

This really is a great opportunity for all of us. We have further solidified
our future with Delta, having reached a new, 12-year commercial agreement with
Delta for CRJ-900 service. The existing agreement for CRJ-200 service continues
through 2017, and we have a new, two-year agreement that covers Mesaba’s Saabs.
This, combined with our partnerships with Continental, United and US Airways,
and the flying we do with our Q400s and Saabs, creates a strong foundation for
future growth and job security.

Now, let me tell you a little bit about our combined organization. For the
immediate future, we will continue to operate three separate fleets – jets at
Pinnacle Airlines, turboprops at Colgan Air, and both jets and turboprops at
Mesaba Airlines. For now, it remains business as usual for our People in all
parts of our organization, and our primary focus remains on Safety and running
a great airline. Job responsibilities, policies and procedures, and wages and
benefits are unaffected at this time.

Mesaba will remain headquartered in Eagan, Minn., and will continue to be led
by John Spanjers, Bill Donohue and the rest of the management team. John and I
have known each other for a long time and although we’ve been competitors,
we’ve always had a tremendous mutual respect.

Altogether, we now have about 7,700 People. Our combined fleet consists of 202
regional jets and 80 turboprops – 57 CRJ-900s, 145 CRJ-200s, 14 Q400s and 66
Saabs. As we grow, our emphasis will be on expanding our existing fleets of
CRJ-900s and Q400s, the most cost-effective and fuel-efficient aircraft types
in the regional industry. The contracts for nearly 500 50-seat jets operated by
our competitors will expire between 2011 and the end of 2015. We will be uniquely
well-positioned to win new flying with all of our partners.

No matter how many or what kind of aircraft we operate, this is fundamentally a
People business that requires tremendous teamwork. So, more than ever, People
matter. We have to get this right; and we are deeply committed to open
communication and seamless integration of our organizations and cultures. There
are many complex issues to be addressed and it will not be quick or easy. We
will rely heavily on transition teams from each airline, with representatives
from each discipline, to chart our approach going forward.