Pinnacle Airlines Corp. Announces Second Quarter 2010 Earnings


SOURCE: Pinnacle Airlines

Company Reports Consolidated Earnings per Share of $0.32

MEMPHIS, TN–(Marketwire – August 3, 2010) – Pinnacle Airlines Corp. (NASDAQ: PNCL) (the
“Company”) today reported second quarter 2010 net income of $5.9 million
and fully diluted earnings per share (“EPS”) of $0.32, as compared to net
income and EPS for the second quarter of 2009 of $7.3 million and $0.40,
respectively, excluding prior year special items. The Company reported
consolidated operating income of $19.8 million in the second quarter of
2010, a decrease of $3.9 million from the second quarter of 2009, excluding
prior year special items. Among other items, the second quarter of 2010
was negatively affected by higher aviation insurance premiums that were the
subject of a previously reported dispute with Delta and were not reimbursed
totaling $1.7 million ($1.0 million net of related income taxes). The
Company has resolved this dispute with Delta and does not expect to incur
any additional future un-reimbursed aviation insurance premiums under its
Delta Connection agreements. Second quarter 2010 pre-tax income was also
reduced by a $1.5 million ($1.0 million net of related income taxes)
adjustment to the fair value of interest rate options that the Company
purchased to hedge interest rates in connection with the Company’s Q400
growth program.

“On behalf of the People of Pinnacle Airlines Corp., I’m pleased to report
another quarter of profitability,” said Philip Trenary, the Company’s
President and Chief Executive Officer. “While we are disappointed that
income declined slightly from a year ago, we are confident that the steps
we are taking now will lead to increased profitability in the future. I am
very proud of the job our People perform for our Customers and
Shareholders, and I want to thank each and every one of them for their hard
work.”

For the six months ended June 30, 2010, the Company reported net income of
$7.6 million and EPS of $0.41.

Recent Significant Events

– The Company acquired Mesaba Aviation, Inc. from Delta Air Lines on July
1, 2010. Mesaba operates a fleet of 60 Canadair regional jet aircraft and
32 Saab 340B+ turbo-prop aircraft. With this acquisition, the Company’s
consolidated fleet has grown from 190 regional aircraft to 282. This
acquisition will significantly increase the Company’s revenue and operating
income, and is expected to result in an increase in net income in the
second half of 2010.

– The Company also resolved several commercial issues with Delta Air Lines,
including a dispute over the reimbursement of aviation insurance premiums,
and an issue related to a rate reset under the Company’s CRJ-200 operating
agreement with Delta that was to have taken place in 2006.

– In late July, the Company took delivery of the first of 15 additional
Q400 regional aircraft to be placed in service under the Company’s
operating agreement with Continental. The Company expects to take delivery
of seven additional Q400 aircraft in 2010, and seven Q400 aircraft in the
first half of 2011.

“I want to welcome the People of Mesaba Airlines to the Pinnacle family,”
said Phil Trenary. “Mesaba Airlines has a long history and culture of
safe, highly reliable operations. With the expansion of our regional jet
fleet through the acquisition of Mesaba, and the growth of our Q400 fleet,
we are laying the foundation for consistent, stable earnings growth in the
future.”

Second Quarter 2010 Financial and Operating Results

During the second quarter of 2010, Pinnacle Airlines, Inc. (“Pinnacle”),
the Company’s regional jet operating subsidiary, completed 108,371 block
hours and 70,483 departures, increases of 2% and 2%, respectively, over the
same period in 2009. Pinnacle’s average utilization of its operating fleet
increased by 1%. Colgan Air, Inc. (“Colgan”), the Company’s regional
turboprop operating subsidiary, completed 32,795 block hours and 26,783
departures during the second quarter, decreases of 4% and 3%, respectively,
over the same period in 2009. Colgan operated four fewer Saab 340 aircraft
within its pro-rate network during the majority of the second quarter.
Three of these aircraft were rescheduled back into service during June
2010.

The Company recorded consolidated operating revenue during the second
quarter of 2010 of $218.7 million, an increase of $7.5 million, or 4%, over
the same period in 2009. Annual rate increases from the Company’s
partners, as well as higher reimbursable costs, contributed to the net
increase in consolidated operating revenue.

Pinnacle reported second quarter 2010 operating income and an operating
margin of $16.8 million and 10.5%, a decrease of $0.2 million and 0.5
points, respectively, from the second quarter of 2009. Operating income
decreased slightly due primarily to the $1.7 million of insurance costs
that were not reimbursed by Delta. The un-reimbursed insurance costs were
offset by higher revenue from an annual increase in rates under Pinnacle’s
operating agreements, and by slightly improved aircraft utilization.
During the first quarter of 2010, Pinnacle recorded an estimate of
operating performance penalties under its CRJ-200 agreement with Delta for
the first six months of 2010. Pinnacle’s operating performance improved
during the second quarter of 2010, resulting in a $0.5 million reduction of
the estimate for operating performance penalties under the CRJ-200
agreement.

Colgan reported operating income and an operating margin of $3.0 million
and 5.1%, a decrease of $2.2 million and 4.0 points, respectively, from the
second quarter of 2009 (excluding special charges). Fuel costs associated
with Colgan’s pro-rate operations increased by $1.5 million year-over year.
Fuel cost per gallon during the first quarter 2010 was $2.66, up 40% from
$1.90 per gallon during the same period in 2009. In addition, Colgan
experienced an increase in salaries, wages and benefits of $1.2 million
from lower productivity, higher health care and other benefits costs, and
crew training costs for the additional Q400 aircraft to be delivered this
year. These cost increases were partially offset by $1.2 million of
additional revenue, from both a small increase under Colgan’s operating
agreement with Continental Airlines, and a 10% increase in
revenue-per-available-seat-mile in Colgan’s pro-rate markets.

Net nonoperating expense of $10.0 million for the three months ended June
30, 2010 decreased by approximately $2.5 million as compared to the same
period in 2009. The decrease was primarily caused by reduced net interest
expense from the net repayment of approximately $230 million of the
Company’s debt obligations since July 1, 2009. The decrease in net
interest expense was partially offset by a change in the fair value of
interest rate options that are a part of the Company’s hedging program.
The Company is not applying hedge accounting to these interest rate
options, and is instead recording adjustments in their fair value each
period through the expiration of each option. The options will expire as
the Company’s 15 additional Q400 aircraft are delivered in the second half
of 2010 and first half of 2011.

Cash and Cash Equivalents

The Company ended the quarter with $79.0 million in unrestricted cash and
cash equivalents. The Company generated $3.9 million in cash from
operating activities during the second quarter of 2010. Cash flow from
operating activities was reduced by the prepayment of approximately $10.0
million of aircraft lease payments on June 30. In addition, the Company
paid $2.0 million to purchase interest rate and fuel options during the
second quarter of 2010.

Net cash used in investing activities for the three months ended June 30,
2010 was $5.2 million, primarily for pre-delivery payments for future Q400
aircraft deliveries and other routine capital expenditures. Net cash used
in financing activities for the three months ended June 30, 2010 totaled
$11.8 million, primarily for scheduled principal payments on long-term debt
obligations.

About Pinnacle Airlines Corp.

Pinnacle Airlines Corp. (NASDAQ: PNCL), an airline holding company, is the
parent company of Pinnacle Airlines, Inc.; Colgan Air, Inc.; and Mesaba
Aviation, Inc. Pinnacle Airlines, Inc. operates a fleet of 142 regional
jets as Delta Connection in the United States, Canada, the Bahamas, Mexico,
U.S. Virgin Islands, and Turks and Caicos Islands. Colgan Air, Inc.
operates a fleet of 48 regional turboprops as Continental Connection,
United Express and US Airways Express in the eastern United States and
Canada, Texas and Louisiana. Mesaba Aviation, Inc. operates a fleet of 60
regional jets and 32 jet-prop aircraft as Delta Connection in the United
States and Canada. The corporate headquarters is located in Memphis, Tenn.
Airport hub operations are located in Atlanta, Boston, Detroit, Newark,
Washington Dulles, Houston, Memphis, Minneapolis and Salt Lake City. For
further information about the Company, please refer to the Company’s Form
10-Q for the quarter ended June 30, 2010, which will soon be filed with the
SEC.

Non-GAAP Disclosures

This release and certain tables accompanying this release include certain
financial information not prepared in accordance with generally accepted
accounting principles (“GAAP”), including Colgan’s operating income,
Colgan’s operating margin, the Company’s operating income, operating
margin, nonoperating expense, pre-tax income, net income and diluted EPS
for the three and six months ended June 30, 2009, excluding special charges
related to the excess of property insurance proceeds over cost basis of
aircraft, ineffective portion of cash flow hedge, reversal of income tax
reserves and related accrued interest, net investment loss, and the gain on
debt extinguishment. The Company believes that this information is useful
to investors as it indicates more clearly the Company’s comparative
year-to-year results. None of this information should be considered a
substitute for any measures prepared in accordance with GAAP. The Company
has included its reconciliations of these non-GAAP financial measures to
the most comparable GAAP financial measures in the accompanying schedules.

Forward-Looking Statements

This press release contains various forward-looking statements that are
based on management’s beliefs, as well as assumptions made by and
information currently available to management. Although the Company
believes that the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such expectations will prove
to have been correct. Such statements are subject to certain risks,
uncertainties and assumptions, including those set forth in our filings
with the Securities and Exchange Commission, which are available to
investors at our website or online from the Commission. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove erroneous, actual results may vary materially from
results that were anticipated or projected. The Company does not intend to
update these forward-looking statements before its next required filing
with the Securities and Exchange Commission.


                      Pinnacle Airlines Corp.
       Condensed Consolidated Statements of Income (Unaudited)
                (in thousands, except per share data)

                                                       Three Months Ended
                                                            June 30,
                                                      --------------------
                                                        2010       2009
                                                      ---------  ---------

Operating revenues
  Regional airline services                           $ 214,844  $ 209,212
  Other                                                   3,876      2,051
                                                      ---------  ---------
Total operating revenues                                218,720    211,263

Operating expenses
  Salaries, wages and benefits                           57,750     55,757
  Aircraft rentals                                       30,004     30,094
  Ground handling services                               22,921     22,196
  Aircraft maintenance, materials and repairs            27,044     26,333
  Other rentals and landing fees                         17,411     17,925
  Aircraft fuel                                           6,727      5,254
  Commissions and passenger related expense               5,194      5,227
  Depreciation and amortization                           8,793      8,782
  Other                                                  23,107     17,512
                                                      ---------  ---------
Total operating expenses                                198,951    189,080
                                                      ---------  ---------

Operating income                                         19,769     22,183

Operating income as a percentage of operating
 revenues                                                   9.0%      10.5%

Nonoperating (expense) income
  Interest expense, net                                  (8,810)   (12,171)
  Miscellaneous expense, net                             (1,231)      (346)
                                                      ---------  ---------
Total nonoperating expense                              (10,041)   (12,517)
                                                      ---------  ---------
Income before income taxes                                9,728      9,666
Income tax expense                                       (3,841)    (3,673)
                                                      ---------  ---------
Net income                                            $   5,887  $   5,993
                                                      =========  =========

Basic and diluted earnings per share                  $    0.32  $    0.33
                                                      =========  =========

Shares used in computing basic earnings per share        18,137     17,970
                                                      =========  =========
Shares used in computing diluted earnings per share      18,449     17,979
                                                      =========  =========




                      Pinnacle Airlines Corp.
        Condensed Consolidated Statements of Income (Unaudited)
                (in thousands, except per share data)

                                                        Six Months Ended
                                                            June 30,
                                                      --------------------
                                                        2010       2009
                                                      ---------  ---------

Operating revenues
  Regional airline services                           $ 420,333  $ 415,136
  Other                                                   6,467      3,949
                                                      ---------  ---------
Total operating revenues                                426,800    419,085

Operating expenses
  Salaries, wages and benefits                          115,178    112,597
  Aircraft rentals                                       60,055     60,586
  Ground handling services                               47,763     48,658
  Aircraft maintenance, materials and repairs            53,616     51,469
  Other rentals and landing fees                         33,323     36,328
  Aircraft fuel                                          12,420      9,771
  Commissions and passenger related expense               9,624     10,054
  Depreciation and amortization                          17,634     17,363
  Other                                                  44,722     33,141
                                                      ---------  ---------
Total operating expenses                                394,335    379,967
                                                      ---------  ---------

Operating income                                         32,465     39,118

Operating income as a percentage of operating
 revenues                                                   7.6%       9.3%

Nonoperating (expense) income
  Interest expense, net                                 (18,601)   (21,058)
  Miscellaneous (expense) income, net                    (1,279)        55
                                                      ---------  ---------
Total nonoperating expense                              (19,880)   (21,003)
                                                      ---------  ---------
Income before income taxes                               12,585     18,115
Income tax (expense) benefit                             (5,006)     6,721
                                                      ---------  ---------
Net income                                            $   7,579  $  24,836
                                                      =========  =========

Basic earnings per share                              $    0.42  $    1.38
                                                      =========  =========
Diluted earnings per share                            $    0.41  $    1.38
                                                      =========  =========

Shares used in computing basic earnings per share        18,112     17,968
                                                      =========  =========
Shares used in computing diluted earnings per share      18,454     17,974
                                                      =========  =========




                      Pinnacle Airlines Corp.
                Condensed Consolidated Balance Sheets
                  (in thousands, except share data)

                                                  June 30,    December 31,
                                                    2010          2009
                                                ------------  ------------
Assets                                          (Unaudited)
Current assets
  Cash and cash equivalents                     $     79,010  $     91,574
  Restricted cash                                      3,115         3,115
  Receivables, net                                    34,779        34,518
  Spare parts and supplies, net                       20,848        19,472
  Prepaid expenses and other assets                   16,022         3,508
  Assets held for sale                                     -         1,255
  Deferred income taxes, net of allowance             10,111        10,406
  Income taxes receivable                              1,886        40,803
                                                ------------  ------------
    Total current assets                             165,771       204,651
Property and equipment
  Flight equipment                                   756,917       755,236
  Aircraft pre-delivery payments                      37,848        12,049
  Other property and equipment                        49,970        48,710
  Less accumulated depreciation                     (103,838)      (86,501)
                                                ------------  ------------
    Net property and equipment                       740,897       729,494

Investments                                            2,587         2,723
Debt issuance costs, net                               4,214         3,561
Goodwill                                              18,422        18,422
Intangible assets, net                                11,590        12,586
Other assets, primarily insurance receivables        320,221       317,659
                                                ------------  ------------
Total assets                                    $  1,263,702  $  1,289,096
                                                ============  ============

Liabilities and stockholders' equity
Current liabilities
  Current maturities of long-term debt          $     36,607  $     36,085
  Senior convertible notes                                 -        30,596
  Pre-delivery payment facility                       27,393         2,027
  Accounts payable                                    26,896        23,982
  Deferred revenue                                    24,363        24,363
  Accrued expenses and other current liabilities      61,022        60,610
                                                ------------  ------------
    Total current liabilities                        176,281       177,663
Noncurrent pre-delivery payment facility                   -         4,910
Long-term debt, less current maturities              500,771       519,234
Deferred revenue, net of current portion             166,273       177,711
Deferred income taxes                                 17,782        13,532
Other liabilities                                    290,479       293,809

Commitments and contingencies

Stockholders' equity
  Common stock, $0.01 par value; 40,000,000
   shares authorized; 23,065,179 and 22,786,743
   shares issued, respectively                           231           228
  Treasury stock, at cost, 4,493,327 and
   4,450,092 shares, respectively                    (68,479)      (68,152)
  Additional paid-in capital                         123,185       121,513
  Accumulated other comprehensive loss               (13,479)      (14,431)
  Retained earnings                                   70,658        63,079
                                                ------------  ------------
Total stockholders' equity                           112,116       102,237
                                                ------------  ------------
Total liabilities and stockholders' equity      $  1,263,702  $  1,289,096
                                                ============  ============



                      Pinnacle Airlines Corp.
       Condensed Consolidated Statements of Cash Flows (Unaudited)
                          (in thousands)

                                                         Six Months Ended
                                                             June 30,
                                                        ------------------
                                                          2010      2009
                                                        --------  --------

Cash provided by operating activities                   $ 44,819  $ 62,752
Cash (used in) provided by investing activities           (6,727)    3,728
Cash used in financing activities                        (50,656)  (41,740)
                                                        --------  --------
Net (decrease) increase in cash and cash equivalents     (12,564)   24,740
Cash and cash equivalents at beginning of period          91,574    69,469
                                                        --------  --------
Cash and cash equivalents at end of period              $ 79,010  $ 94,209
                                                        ========  ========



                      Pinnacle Airlines Corp.
            Pinnacle Operating Statistics (Unaudited)

              Three Months Ended June 30,     Six Months Ended June 30,
            -----------------------------   -----------------------------
              2010       2009      Change     2010       2009      Change
            ---------  ---------  -------   ---------  ---------  -------

Other Data:
Revenue
 passengers
 (in
 thousands)     2,721      2,778       (2)%     5,176      5,163        0%
Revenue
 passenger
 miles
 ("RPMs")
 (in
 thousands) 1,169,388  1,211,030       (3)% 2,229,741  2,301,384       (3)%
Available
 seat miles
 ("ASMs")
 (in
 thousands) 1,545,867  1,548,790       (0)% 3,006,041  3,129,301       (4)%
Passenger
 load
 factor          75.6%      78.2%  (2.6) pts.    74.2%      73.5%  0.7 pts.
Operating
 revenue
 per ASM
 (in cents)     10.41       9.98        4%      10.63       9.90        7%
Operating
 cost per
 ASM
 (in cents)      9.32       8.88        5%       9.58       8.92        7%
Operating
 revenue
 per block
 hour       $   1,484  $   1,452        2%  $   1,499  $   1,437        4%
Operating
 cost per
 block hour $   1,329  $   1,292        3%  $   1,351  $   1,294        4%
Block hours   108,371    106,475        2%    213,138    215,715       (1)%
Departures     70,483     68,826        2%    137,058    135,456        1%
Average
 daily
 utilization
 (block
 hours)          8.39       8.29        1%       8.29       8.38       (1)%
Average
 stage length
 (miles)          420        427       (2)%       420        439       (4)%

Number of
 operating
 aircraft
 (end of
 period)
   CRJ-200        126        124        2%
   CRJ-900         16         16        0%
Employees
 (end of
 period)        3,694      4,060       (9)%




                      Pinnacle Airlines Corp.
             Colgan Operating Statistics (Unaudited)


                        Three Months Ended
                            June 30,            Six Months Ended June 30,
                    ------------------------    -------------------------
                      2010     2009   Change     2010     2009    Change
                    -------  -------  ------    -------  -------  -------
Pro-rate
 Agreements:
Revenue passengers
 (in thousands)         301      305      (1)%      532      553       (4)%
RPMs (in thousands)  51,554   53,010      (3)%   90,904   95,614       (5)%
ASMs (in thousands) 104,764  114,768      (9)%  199,515  225,791      (12)%
Passenger load
 factor                49.2%    46.2%  3.0 pts.    45.6%    42.3%  3.3 pts.
Passenger yield (in
 cents)               75.59    73.02       4%     78.23    76.03        3%
Operating revenue
 per ASM (in cents)   37.20    33.73      10%     35.64    32.20       11%
Operating revenue
 per block hour     $ 1,857  $ 1,720       8%   $ 1,766  $ 1,627        9%
Block hours          20,986   22,507      (7)%   40,269   44,683      (10)%
Departures           18,844   20,018      (6)%   35,905   39,638       (9)%
Fuel consumption
 (in thousands of
 gallons)             2,530    2,772      (9)%    4,901    5,404       (9)%
Average price per
 gallon             $  2.66  $  1.90      40%   $  2.53  $  1.81       40%
Average fare        $   129  $   127       2%   $   134  $   131        2%

                        Three Months Ended
                            June 30,            Six Months Ended June 30,
                    ------------------------    -------------------------
                      2010     2009   Change     2010     2009    Change
                    -------  -------  ------    -------  -------  -------
Capacity Purchase
 Agreements:
Revenue passengers
 (in thousands)         410      405       1%       734      734        0%
RPMs (in thousands) 124,271  113,096      10%   218,521  202,801        8%
ASMs (in thousands) 173,319  157,299      10%   319,228  306,763        4%
Passenger load
 factor                71.7%    71.9%  (0.2) pts.  68.5%    66.1%  2.4 pts.
Operating revenue
 per ASM (in cents)   10.83    11.41       (5)%   11.29    11.85       (5)%
Operating revenue
 per block hour     $ 1,590  $ 1,531       4%   $ 1,604  $ 1,550        3%
Block hours          11,809   11,726       1%    22,477   23,461       (4)%
Departures            7,939    7,666       4%    14,966   15,134       (1)%

                        Three Months Ended
                            June 30,            Six Months Ended June 30,
                    ------------------------    -------------------------
                      2010     2009   Change     2010     2009    Change
                    -------  -------  ------    -------  -------  -------
Total Colgan:
Block hours          32,795   34,233      (4)%   62,746   68,144       (8)%
Departures           26,783   27,684      (3)%   50,871   54,772       (7)%
ASMs (in thousands) 278,083  272,067       2%   518,743  532,554       (3)%
Total operating
 cost per ASM (in
 cents)               19.75    18.94       4%     20.50    18.95        8%
Total operating
 cost per block
 hour               $ 1,674  $ 1,505      11%   $ 1,695  $ 1,481       14%

Average daily
 utilization (block
 hours)                7.59     7.84      (3)%     7.24     7.72       (6)%
Average stage
 length (miles)         229      221       4%       226      219       (3)%
Number of operating
 aircraft (end of
 period)
   Saab 340              34(1)    34       0%
   Q400                   14      14       0%
Employees              1,408   1,334       6%

(1) Four of the Saab 340 aircraft operating as US Airways Express were
    temporarily removed from scheduled service during the three months
    ended March 31, 2010.  Three of these aircraft were rescheduled into
    service during June 2010.


                        Pinnacle Airlines Corp.
           Reconciliation of Non-GAAP Disclosures (Unaudited)
                 (in thousands, except per share data)

                                         Three Months Ended June 30,
                                    ------------------------------------
                                                              % Increase
                                        2010         2009     (Decrease)
                                    -----------  -----------  ----------
Colgan operating (loss) income:
Colgan operating (loss) income  in
 accordance with GAAP               $     2,955  $     5,188         (43)%
Add: Aircraft retirement charges              -        1,533         N/A
                                    -----------  -----------  ----------
Colgan non-GAAP operating (loss)
 income                             $     2,955  $     6,721         (56)%
                                    ===========  ===========  ==========

Colgan operating margin:
Colgan operating margin in
 accordance with GAAP                       5.1%         9.1% (4.0) pts.
Add: Aircraft retirement charges              -          2.7%        N/A
                                    -----------  -----------  ----------
Colgan non-GAAP operating margin            5.1%        11.8% (6.7) pts.
                                    ===========  ===========  ==========

Consolidated operating income:
Operating income in accordance with
 GAAP                               $    19,769  $    22,183         (11)%
Add: Aircraft retirement charges              -        1,533         N/A
                                    -----------  -----------  ----------
Non-GAAP operating income           $    19,769  $    23,716         (17)%
                                    ===========  ===========  ==========

Consolidated operating margin
Operating margin in accordance with
 GAAP                                       9.0%        10.5% (1.5) pts.
Add: Aircraft retirement charges              -          0.7%        N/A
                                    -----------  -----------  ----------
Non-GAAP operating margin                   9.0%        11.2% (2.2) pts.
                                    ===========  ===========  ==========

Consolidated nonoperating expense:
Nonoperating expense in accordance
 with GAAP                          $   (10,041) $   (12,517)        (20)%
Add:  Ineffective portion of
 interest rate hedge                          -            -         N/A
Deduct:  Reversal of interest on
 income tax reserves                          -            -         N/A
Deduct:  Gain on repurchase of
 senior convertible notes                     -            -         N/A
                                    -----------  -----------  ----------
Non-GAAP nonoperating expense       $   (10,041) $   (12,517)        (20)%
                                    ===========  ===========  ==========

Consolidated income before income
 taxes:
Income before income taxes in
 accordance with GAAP               $     9,728  $     9,666           1%
Add:  Aircraft retirement charges             -        1,533         N/A
Add:  Net investment loss                     -          334         N/A
                                    -----------  -----------  ----------
Non-GAAP income before income taxes $     9,728  $    11,533         (16)%
                                    ===========  ===========  ==========

Net income:
Net income in accordance with GAAP  $     5,887  $     5,993          (2)%
Add:  Aircraft retirement charges             -          943         N/A
Add:  Net investment loss                     -          320         N/A
                                    -----------  -----------  ----------
Non-GAAP net income                 $     5,887  $     7,256         (19)%
                                    ===========  ===========  ==========

Diluted EPS:
Diluted EPS in accordance with GAAP $      0.32  $      0.33          (3)%
Add:  Aircraft retirement charges             -         0.05         N/A
Add:  Net investment loss                     -         0.02         N/A
                                    -----------  -----------  ----------
Non-GAAP diluted earnings per share $      0.32  $      0.40         (20)%
                                    ===========  ===========  ==========




                      Pinnacle Airlines Corp.
          Reconciliation of Non-GAAP Disclosures (Unaudited)
               (in thousands, except per share data)

                                          Six Months Ended June 30,
                                    ------------------------------------
                                                              % Increase
                                        2010         2009     (Decrease)
                                    -----------  ----------   ----------
Colgan operating (loss) income:
Colgan operating (loss) income  in
 accordance with GAAP               $       988  $    8,222          (88)%
Add: Aircraft retirement charges              -       1,980          N/A
Deduct: Excess of property
 insurance proceeds over cost basis
 of aircraft                                  -        (835)         N/A
                                    -----------  ----------   ----------
Colgan non-GAAP operating (loss)
 income                             $       988  $    9,367          (89)%
                                    ===========  ==========   ==========

Colgan operating margin:
Colgan operating margin in
 accordance with GAAP                       0.9%        7.5%  (6.6) pts.
Add: Aircraft retirement charges              -         0.5%         N/A
Deduct: Excess of property
 insurance proceeds over cost basis
 of aircraft                                  -       (0.2)%         N/A
                                    -----------  ----------   ----------
Colgan non-GAAP operating margin            0.9%        7.8%  (6.9) pts.
                                    ===========  ==========   ==========

Consolidated operating income:
Operating income in accordance with
 GAAP                               $    32,465  $   39,118          (17)%
Add: Aircraft retirement charges              -       1,980          N/A
Deduct: Excess of property
 insurance proceeds over cost basis
 of aircraft                                  -        (835)         N/A
                                    -----------  ----------   ----------
Non-GAAP operating income           $    32,465  $   40,263          (19)%
                                    ===========  ==========   ==========

Consolidated operating margin
Operating margin in accordance with
 GAAP                                       7.6%        9.3%  (1.7) pts.
Add: Aircraft retirement charges              -         0.5%         N/A
Deduct: Excess of property
 insurance proceeds over cost basis
 of aircraft                                  -        (0.2)%        N/A
                                    -----------  ----------   ----------
Non-GAAP operating margin                   7.6%        9.6%  (2.0) pts.
                                    ===========  ==========   ==========

Consolidated nonoperating expense:
Nonoperating expense in accordance
 with GAAP                          $   (19,880) $  (21,003)          (5)%
Add:  Ineffective portion of
 interest rate hedge                          -       1,424          N/A
Add:  Net investment loss                     -         289          N/A
Deduct:  Reversal of interest on
 income tax reserves                          -      (2,926)         N/A
Deduct:  Gain on repurchase of
 senior convertible notes                     -      (1,857)         N/A
                                    -----------  ----------   ----------
Non-GAAP nonoperating expense       $   (19,880) $  (24,073)         (17)%
                                    ===========  ==========   ==========

Consolidated income before income
 taxes:
Income before income taxes in
 accordance with GAAP               $    12,585  $   18,115          (31)%
Add: Aircraft retirement charges                      1,980          N/A
Deduct: Excess of property
 insurance proceeds over cost basis
 of aircraft                                  -        (835)         N/A
Add:  Net investment loss                               289          N/A
Add:  Ineffective portion of
 interest rate hedge                          -       1,424          N/A
Deduct:  Reversal of interest on
 income tax reserves                          -      (2,926)         N/A
Deduct:  Gain on repurchase of
 senior convertible notes                     -      (1,857)         N/A
                                    -----------  ----------   ----------
Non-GAAP income before income taxes $    12,585  $   16,190          (22)%
                                    ===========  ==========   ==========

Net income:
Net income in accordance with GAAP  $     7,579  $   24,836          (69)%
Add: Aircraft retirement charges,
 net of tax                                           1,218          N/A
Deduct: Excess of property
 insurance proceeds over cost basis
 of aircraft, net of tax                      -        (514)         N/A
Add:  Net investment loss, net of
 tax                                          -         277          N/A
Add:  Ineffective portion of
 interest rate hedge, net of tax              -         876          N/A
Deduct:  Reversal of interest on
 income tax reserves, net of tax              -      (1,842)         N/A
Deduct:  Gain on repurchase of
 senior convertible notes, net of
 tax                                          -      (1,118)         N/A
Deduct:  IRS settlement                             (13,552)         N/A
                                    -----------  ----------   ----------
Non-GAAP net income                 $     7,579  $   10,181          (26)%
                                    ===========  ==========   ==========

Diluted EPS:
Diluted EPS in accordance with GAAP $      0.41  $     1.38          (70)%
Add: Aircraft retirement charges,
 net of tax                                   -        0.07          N/A
Deduct: Excess of property
 insurance proceeds over cost basis
 of aircraft, net of tax                      -       (0.03)         N/A
Add:  Net investment loss, net of
 tax                                          -        0.02          N/A
Add:  Ineffective portion of
 interest rate hedge, net of tax              -        0.05          N/A
Deduct:  Reversal of interest on
 income tax reserves, net of tax              -       (0.10)         N/A
Deduct:  Gain on repurchase of
 senior convertible notes, net of
 tax                                          -       (0.06)         N/A
Deduct:  IRS settlement                       -       (0.75)         N/A
                                    -----------  ----------   ----------
Non-GAAP diluted earnings per share $      0.41  $     0.58          (29)%
                                    ===========  ==========   ==========




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