Pinnacle Air's Business Model One of the Safest in the Industry

| About: Pinnacle Airlines (PNCLQ)
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Small Cap Watch List member Pinnacle Airlines (PNCL) announced the following in an 8k filing:

Bombardier Aerospace announced today that Pinnacle Airlines Corp. of Memphis, Tenn. has signed a contract to acquire 15 Bombardier Q400 74-seat turboprop airliners. The transaction also includes conditional orders for another 10 Q400 aircraft and options on an additional 20. The value of the 15 firm ordered aircraft, based on the list price of the Q400 aircraft, is approximately $381 million US. The value could rise to $1.2 billion US if all conditional orders and options are exercised.

Pinnacle typically operates under a fairly safe business model under which it leases most of its capacity to major carriers for whom it provides regional connections. Still, there are some residual risks and capacity additions always bring further risk of excess supply.

But though risks remain, the business model is one of the safest in the airline industry.

PNCL 1-yr chart:

PNCL 1-yr chart