Pinnacle’s HQ Move Means New MN Jobs, No Impact on Flyers

Pinnacle Airlines, a regional carrier for Delta Air Lines, is moving to Minnesota and has been offered a $550,000 loan from the state, which will be forgiven if the company brings at least 200 jobs to the Twin Cities.

Pinnacle Airlines Corporation is relocating its headquarters to Minnesota, a move that is expected to bring hundreds of jobs to the state, but one that is unlikely to have any impact on those flying in and out of the Twin Cities.

Pinnacle is a regional carrier for Delta Air Lines, and it operates flights under the Delta Connection banner. The company currently employs about 1,100 in Minnesota, including pilots, flight attendants, and aircraft maintenance workers, according to Pinnacle spokesman Joe Williams.

Pinnacle acquired Eagan-based Delta subsidiary Mesaba Airlines for $62 million in 2010 but subsequently shuttered Mesaba’s Minnesota headquarters—a move that was expected to result in the loss of roughly 200 jobs. Then last year, Pinnacle Airlines filed for Chapter 11 bankruptcy protection.

Local officials, including representatives from the Metropolitan Airports Commission, have since encouraged Pinnacle to relocate its headquarters to the Twin Cities from Memphis, Tennessee, where the company currently employs 500 at its corporate office.

It is yet to be determined how many of Pinnacle’s Memphis employees will migrate to Minnesota, Williams said. But the company has been granted a $550,000 loan from the Minnesota Department of Employment and Economic Development (DEED), which will be forgiven if Pinnacle Airlines transfers at least 200 jobs to Minnesota (or hires as many) within two years, according to DEED spokesman Blake Chaffee.

There’s also potential that DEED will award a grant through its Job Skills Partnership program, which funds job training; that option will be “assessed as we continue down the road,” Chaffee said.

Pinnacle said that it has “tentative plans” to transfer its headquarters to Minnesota by May; its corporate operations will be housed within space at the Minneapolis-St. Paul International Airport (MSP) that is currently leased by Delta.

Pinnacle has a total of 5,100 employees, and it operates 191 regional jets on 1,000 daily flights to more than 100 cities in the United States and Canada. It operates about 80 daily flights from MSP, according to a Star Tribune report.

Delta spokeswoman Kristin Baur told Twin Cities Business by e-mail that the company does not expect Pinnacle’s relocation process to result in any changes to flight schedules or to have any other impact on Delta customers.

And according to one analyst, Pinnacle’s move is unlikely to have a material impact on the local airline market. As the company attempts to emerge from bankruptcy, it’s “unlikely to increase competition in the [Twin Cities] market, but it just better suits Delta’s needs long-term,” Fred Lowrance, a senior research analyst at Nashville-based Avondale Partners who closely follows the airline industry, told Twin Cities Business.

Pinnacle President and CEO John Spanjers, meanwhile, said in a statement that the move to Minnesota is “a significant milestone in our restructuring and represents substantial progress that we expect will allow us to continue down a path toward successfully emerging from bankruptcy.”

Pinnacle’s move represents a homecoming for Spanjers, who led Mesaba Airlines before it was acquired by Pinnacle.

“We had the responsibility to explore every aspect of our business to find opportunities to reduce costs, including evaluating our property leases, to find the most economical options for Pinnacle,” Spanjers said in a statement. “Our analysis covered everything from the available labor pool and operational alignment to economic incentives. Both Memphis and the State of Minnesota presented very strong cases. In the end, it was an economic decision.”

DEED Commissioner Katie Clark Sieben said in a statement that the state agency, Governor Mark Dayton, Delta, and the Metropolitan Airports Commission have “worked diligently with Pinnacle Airlines over the past year, and we look forward to continuing our support as they move their headquarters to Minnesota.”

According to Chaffee, representatives from local economic development organization Greater MSP accompanied DEED officials to Memphis when attempting to lure Pinnacle to the Twin Cities. Greater MSP was also involved in helping coordinate discussions between the Metropolitan Airports Commission, DEED, and Pinnacle, Chaffee added.

Pinnacle’s move means that Minnesota will once again be home to the headquarters of two airlines. It was previously home to Northwest Airlines, which was acquired by Atlanta-based Delta in 2008, and remains the home state of Mendota Heights-based Sun Country Airlines.

The last major change at MSP was the debut of Florida-based Spirit Airlines, a discount airline that began serving the Twin Cities last year.