Pinnacle files for bankruptcy protection Pinnacle Airlines Corp, a US regional carrier which flies short haul routes for United Airlines, Delta Air Lines and US Airways, filed for bankruptcy protection on Sunday, blaming a mix of higher costs and problems integrating acquisitions. The company said it would use the Chapter 11 process to restructure its contracts with Delta and other customers, exit unprofitable business, cut its labour costs and refocus its fleet around more fuel efficient aircraft. IN Airlines "Quite simply, our current business model is not sustainable," Sean Menke, chief executive of Pinnacle, said in a statement, pointing to the company's fragile balance sheet, rising operating costs and repeated delays in integrating recent acquisitions. In 2007 and 2010 Pinnacle purchased two rivals, Colgan Air and Mesaba Aviation, as part of a broader wave of consolidation within the US regional airline industry, designed to respond to high oil prices and lower fees for service. But those moves have added integration expenses to Pinnacle's costs, contributing to a run of losses at the airline. The company has more than 7,500 employees and operates more than 1,540 daily flights to 188 cities. After experiencing rapid growth in the past decade as mainline carriers chose to outsource their flying to third parties with lower costs, in recent years the US regional airline industry has come under increasing pressure. Typically regional airlines provide short haul capacity for larger carriers under long term contracts that reimburse them for variable costs such as fuel. But increasingly companies such as Delta and United have attempted to shift more financial risks to their suppliers. Regional airlines have been forced to bid ever-lower rates and accept increasingly unfavorable contract terms to win the business of major carriers. These sacrifices have drained regional carriers," John Spanjers, chief operating officer of Pinnacle, said in a court filing. In 2011 capacity flown by regional carriers declined for only the second time since the 1970s and US regional airlines lost about $0.5bn according to US regulators. Two of the biggest regionals, Pinnacle and American Eagle, a unit of AMR Corp, are now in bankruptcy protection. "The majors need the feed the regionals provide," Helane Becker, with Dahlman Rose, wrote in a note to clients, "but the revenue reimbursement rates are currently below the regional airlines" cost of providing the service." In court documents Pinnacle said that it had assets of about $1.5bn and debts of about $1.4bn. Creditors include customers, a handful of airports and suppliers aircraft parts and maintenance services. Mr Menke said that the company had secured $74.3m of financing from Delta to help it restructure. About $44.3m of the funds will be used to repay an outstanding note held by Delta while the rest will support its operations. "Our objective is to emerge from this process as a stronger, more focused company, with a revised business model, a substantially improved cost structure and operating agreements that will position us for profitable growth in the future," he said.