Steel Workers Union Alleges Problems With Pinnacle's DIP Financing
The United States Bankruptcy Court for the Southern District of New York has granted final approval to Pinnacle Airlines Corp. for $74.3 million in debtor-in-possession (DIP) financing. The funding is being provided by Delta Air Lines.
"We are pleased that the court has granted Pinnacle final approval for DIP financing with the support of the unsecured creditors' committee," said Sean Menke, president and CEO of Pinnacle. "Combined with cash from our ongoing operations, this funding will be available to help ensure that Pinnacle has sufficient liquidity to meet its operational and restructuring needs. This is an important step in our ongoing efforts to develop a viable business plan, while continuing to provide passengers with safe, reliable and timely service."
As previously announced, $44.3 million of the DIP financing will be used by Pinnacle to repay a secured promissory note held by Delta. The remaining $30 million will be available to fund operations during the restructuring process. Davis Polk & Wardwell LLP and Akin Gump Strauss Hauer & Feld LLP are serving as the company's legal advisors in the restructuring. Barclays Capital and Seabury Group LLC are serving as financial advisors.
But In its presentation to the court, the United Steelworkers (USW) ... one of seven members of the Pinnacle Airlines' Official Committee of Unsecured Creditors ... said that agreements between Pinnacle and Delta will pose problems in upcoming bargaining.
USW International Vice President at Large Carol Landry, who leads the union's Airline Division, stressed that the complex economic and non-economic issues that must be addressed in negotiations will require patience, good faith and commitment from top-level corporate management, Delta and other stakeholders in order to ensure that Pinnacle emerges from bankruptcy as a viable, more stable employer in the future.
Pinnacle presented the USW with a proposal on May 8 seeking changes to the labor agreement covering the company's flight attendants.
"Pinnacle has already announced hundreds of layoffs and is seeking drastic cuts to flight attendant, pilot and other employee pay, benefits and work rules," Landry said. "We will not allow any party to exploit the bankruptcy process. The USW will work aggressively to protect its members' standards of living, achieve job security and obtain opportunities to participate in the company's future success."
Landry pointed out that since Pinnacle filed its Chapter 11 bankruptcy case, USW officers, staff, financial experts and legal counsel have been actively involved in the proceedings.
As a member of the Creditors' Committee, the USW provides the committee and its members with the unique perspective of the more than 2,700 flight attendants and ground operations employees that the union represents at Pinnacle and Colgan Air.