##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2007
 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number 001-31898
 PINNACLE AIRLINES CORP.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    03-0376558(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)1689 Nonconnah Blvd, Suite 111Memphis, Tennessee
    
    38132(Address of principal executive offices)
    
    (Zip Code)
 901-348-4100
 (Registrants telephone number, including area code)
  þ o
  o þ o
  o þ




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##### 



Table of Contents
 PART I. Financial Information
    
    
    1Item 1.Financial Statements
    
    
    1Condensed Consolidated Statements of Income (Unaudited)
    
    
    1Condensed Consolidated Balance Sheets (Unaudited)
    
    
    3Condensed Consolidated Statements of Cash Flows (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
    
    
    25Item 3. Quantitative and Qualitative Disclosure about Market Risk
    
    
    39Item 4. Controls and Procedures
    
    
    40PART II. Other Information
    
    
    41Item 1. Legal Proceedings
    
    
    41Item 1A. Risk Factors
    
    
    41Item 2. unregistered sales of equity and Use of Proceeds
    
    
    41Item 3. Defaults Upon Senior Securities
    
    
    41Item 4. Submission of Matters to a Vote of Security Holders
    
    
    41Item 5. Other Information
    
    
    42Item 6. Exhibits
    
    
    42Section 302 Certification for CEOSection 302 Certification for CFOSection 906 Certification for CEO & CFO




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 
 Pinnacle Airlines Corp.
Condensed Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)
 Three Months Ended June 30,2007
    
    
    2006Operating revenuesRegional airline services
    
    $
    194,756
    
    
    $
    202,811Other
    
    
    6,238
    
    
    
    1,703Total operating revenues
    
    
    200,994
    
    
    
    204,514Operating expensesSalaries, wages and benefits
    
    
    50,261
    
    
    
    35,593Aircraft maintenance, materials and repairs
    
    
    22,775
    
    
    
    7,996Aircraft rentals
    
    
    35,229
    
    
    
    66,031Aircraft fuel
    
    
    9,646
    
    
    
    27,211Other rentals and landing fees
    
    
    15,138
    
    
    
    11,223Ground handling services
    
    
    24,294
    
    
    
    21,765Commissions and passenger related expense
    
    
    6,320
    
    
    
    913Depreciation and amortization
    
    
    2,318
    
    
    
    967Other
    
    
    19,787
    
    
    
    11,972Provision for increases in losses associated with
bankruptcy filings of Northwest and Mesaba
    
    
    404
    
    
    
    1,348Total operating expenses
    
    
    186,172
    
    
    
    185,019Operating income
    
    
    14,822
    
    
    
    19,495Operating income as a percentage of operating revenues
    
    
    7.4
    %
    
    
    9.5
    %Nonoperating income (expense)Interest income
    
    
    2,882
    
    
    
    645Interest expense
    
    
    (2,907
    )
    
    
    (1,452
    )Loss on sale of unsecured claim
    
    
    (4,144
    )
    
    
    Miscellaneous income, net
    
    
    318
    
    
    
    23Total nonoperating expense
    
    
    (3,851
    )
    
    
    (784
    )Income before income taxes
    
    
    10,971
    
    
    
    18,711Income tax expense
    
    
    3,309
    
    
    
    6,820Net income
    
    $
    7,662
    
    
    $
    11,891Basic earnings per share
    
    $
    0.35
    
    
    $
    0.54Diluted earnings per share
    
    $
    0.32
    
    
    $
    0.54Shares used in computing basic earnings per share
    
    
    21,752
    
    
    
    21,945Shares used in computing diluted earnings per share
    
    
    24,240
    
    
    
    21,984
  1




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##### Table of Contents



Pinnacle Airlines Corp.
Condensed Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)
 Six Months Ended June 30,2007
    
    
    2006Operating revenuesRegional airline services
    
    $
    369,255
    
    
    $
    407,816Other
    
    
    11,289
    
    
    
    3,787Total operating revenues
    
    
    380,544
    
    
    
    411,603Operating expensesSalaries, wages and benefits
    
    
    97,562
    
    
    
    70,020Aircraft maintenance, materials and repairs
    
    
    40,323
    
    
    
    18,258Aircraft rentals
    
    
    68,948
    
    
    
    132,062Aircraft fuel
    
    
    16,083
    
    
    
    53,912Other rentals and landing fees
    
    
    29,052
    
    
    
    22,474Ground handling services
    
    
    48,716
    
    
    
    44,124Commissions and passenger related expense
    
    
    10,815
    
    
    
    1,768Depreciation and amortization
    
    
    4,372
    
    
    
    1,929Other
    
    
    38,074
    
    
    
    24,667Provision for (decreases) increases in losses associated with
bankruptcy filings of Northwest and Mesaba
    
    
    (1,048
    )
    
    
    1,365Total operating expenses
    
    
    352,897
    
    
    
    370,579Operating income
    
    
    27,647
    
    
    
    41,024Operating income as a percentage of operating revenues
    
    
    7.3
    %
    
    
    10.0
    %Nonoperating income (expense)Interest income
    
    
    5,947
    
    
    
    1,149Interest expense
    
    
    (4,981
    )
    
    
    (2,952
    )Loss on sale of unsecured claim
    
    
    (4,144
    )
    
    
    Miscellaneous income, net
    
    
    336
    
    
    
    51Total nonoperating expense
    
    
    (2,842
    )
    
    
    (1,752
    )Income before income taxes
    
    
    24,805
    
    
    
    39,272Income tax expense
    
    
    7,778
    
    
    
    14,085Net income
    
    $
    17,027
    
    
    $
    25,187Basic earnings per share
    
    $
    0.78
    
    
    $
    1.15Diluted earnings per share
    
    $
    0.70
    
    
    $
    1.15Shares used in computing basic earnings per share
    
    
    21,869
    
    
    
    21,945Shares used in computing diluted earnings per share
    
    
    24,489
    
    
    
    21,979
  2




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##### Table of Contents



Pinnacle Airlines Corp.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
 June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    34,457
    
    
    $
    705Short-term investments
    
    
    208,775
    
    
    
    72,700Receivables
    
    
    56,654
    
    
    
    100,925Spare parts and supplies, net
    
    
    15,033
    
    
    
    8,061Prepaid expenses and other assets
    
    
    19,671
    
    
    
    15,003Deferred income taxes
    
    
    11,088
    
    
    
    Total current assets
    
    
    345,678
    
    
    
    197,394Property and equipmentFlight equipment
    
    
    86,586
    
    
    
    38,436Other property and equipment
    
    
    35,399
    
    
    
    24,470121,985
    
    
    
    62,906Less accumulated depreciation
    
    
    (23,929
    )
    
    
    (21,921
    )Net property and equipment
    
    
    98,056
    
    
    
    40,985Deferred income taxes
    
    
    73,574
    
    
    
    Other assets, primarily aircraft deposits
    
    
    89,016
    
    
    
    31,240Goodwill, net
    
    
    27,890
    
    
    
    18,422Intangible assets, net
    
    
    17,950
    
    
    
    13,232Total assets
    
    $
    652,164
    
    
    $
    301,273
  3




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##### Table of Contents



Pinnacle Airlines Corp.
 Condensed Consolidated Balance Sheets
 (in thousands, except share data)
 June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)Liabilities and stockholders equityCurrent liabilitiesCurrent maturities of debt and capital leases
    
    $
    14,428
    
    
    $
    Bank line of credit
    
    
    8,375
    
    
    
    Accounts payable
    
    
    28,991
    
    
    
    18,201Accrued expenses
    
    
    64,239
    
    
    
    26,190Income taxes payable
    
    
    42,592
    
    
    
    16,658Deferred income taxes
    
    
    
    
    
    
    6,815Deferred revenue
    
    
    23,199
    
    
    
    Senior convertible notes
    
    
    121,000
    
    
    
    121,000Other current liabilities
    
    
    20,820
    
    
    
    5,980Total current liabilities
    
    
    323,644
    
    
    
    194,844Long-term debt, net of current maturities
    
    
    12,067
    
    
    
    Capital leases, net of current maturities
    
    
    4,223
    
    
    
    Deferred income taxes
    
    
    
    
    
    
    7,112Deferred revenue, net of current portion
    
    
    220,394
    
    
    
    Other liabilities
    
    
    1,757
    
    
    
    2,296Commitments and contingenciesStockholders equityPreferred stock, par value $0.01 per share; 1,000,000 shares authorized,
no shares issued
    
    
    
    
    
    
    Series A preferred stock, stated value $100 per share; one share
authorized and issued
    
    
    
    
    
    
    Series common stock, par value $0.01 per share; 5,000,000 shares
authorized; no shares issued
    
    
    
    
    
    
    Common stock, $0.01 par value; 40,000,000 shares authorized; 22,370,056
and
22,080,585 shares issued
    
    
    224
    
    
    
    221Treasury stock, at cost, 1,483,900 shares
    
    
    (27,222
    )
    
    
    Additional paid-in capital
    
    
    89,903
    
    
    
    86,152Retained earnings
    
    
    27,174
    
    
    
    10,648Total stockholders equity
    
    
    90,079
    
    
    
    97,021Total liabilities and stockholders equity
    
    $
    652,164
    
    
    $
    301,273
  4




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##### Table of Contents



Pinnacle Airlines Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 Six Months Ended June 30,2007
    
    
    2006Operating activitiesNet income
    
    $
    17,027
    
    
    $
    25,187Adjustments to reconcile net income to cash provided by
operating activities:Provision for (decreases) increases in losses associated
with bankruptcy
filings of Northwest and Mesaba
    
    
    (1,048
    )
    
    
    1,365Loss on sale of unsecured claim
    
    
    4,144
    
    
    
    Depreciation and amortization
    
    
    5,632
    
    
    
    1,929Deferred income tax benefit
    
    
    (98,589
    )
    
    
    (325
    )Recognition of deferred revenue
    
    
    (10,794
    )
    
    
    Excess tax benefits on the exercise of stock options
    
    
    (626
    )
    
    
    Other
    
    
    582
    
    
    
    3,196Changes in operating assets and liabilities:Receivables
    
    
    53,443
    
    
    
    479Increase in deferred revenue, primarily from assignment of
Northwest claim
    
    
    269,170
    
    
    
    Spare parts and supplies
    
    
    (497
    )
    
    
    (675
    )Prepaid expenses and other assets
    
    
    (3,325
    )
    
    
    (5,726
    )Accounts payable and accrued expenses
    
    
    23,335
    
    
    
    1,625Income taxes payable
    
    
    26,559
    
    
    
    (3,525
    )Other liabilities
    
    
    (4,103
    )
    
    
    (2,429
    )Cash provided by operating activities
    
    
    280,910
    
    
    
    21,101Investing activitiesPurchases of property and equipment
    
    
    (8,223
    )
    
    
    (1,588
    )Proceeds from sale of property and equipment
    
    
    610
    
    
    
    Aircraft pre-delivery payments
    
    
    (57,628
    )
    
    
    Acquisition of Colgan Air, Inc., net of cash acquired
    
    
    (8,366
    )
    
    
    Purchases of short-term investments
    
    
    (675,755
    )
    
    
    (394,200
    )Proceeds from sales of short-term investments
    
    
    539,680
    
    
    
    392,910Cash used in investing activities
    
    
    (209,682
    )
    
    
    (2,878
    )Financing activitiesPayments on capital leases
    
    
    (440
    )
    
    
    Payments on debt
    
    
    (12,842
    )
    
    
    Payment on line of credit
    
    
    
    
    
    
    (17,000
    )Treasury shares repurchased
    
    
    (27,222
    )
    
    
    Proceeds from exercise of stock options
    
    
    2,402
    
    
    
    Excess tax benefits from exercise of stock options
    
    
    626
    
    
    
    Cash used in financing activities
    
    
    (37,476
    )
    
    
    (17,000
    )Net increase in cash and cash equivalents
    
    
    33,752
    
    
    
    1,223Cash and cash equivalents at beginning of period
    
    
    705
    
    
    
    31,567Cash and cash equivalents at end of period
    
    $
    34,457
    
    
    $
    32,790
  5




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 1. Description of Business and Basis of Presentation
     Standard SeatingAircraft Type
    
    Number of Aircraft
    
    ConfigurationCRJ-200
    
    
    139
    
    
    
    50Total Pinnacle aircraft
    
    
    139Saab 340
    
    
    42
    
    
    
    34Beech 1900D
    
    
    10
    
    
    
    19Total Colgan aircraft
    
    
    52Total aircraft
    
    
    191
    6




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 1. Description of Business and Basis of Presentation (continued)
  Accounting Policies
  Revenue Recognition
   2. Acquisition of Colgan Air, Inc.
     7




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 2. Acquisition of Colgan Air, Inc. (continued)
 Purchase PriceAllocationCurrent assets
    
    $
    18,547Property and equipment
    
    
    50,299Other assets
    
    
    2,326Intangibles
    
    
    5,550Goodwill
    
    
    9,468Total assets acquired
    
    
    86,190Less: Accounts payable
    
    
    (13,177
    )Accrued expenses
    
    
    (12,684
    )Bank line of credit
    
    
    (8,375
    )Long-term debt and capital leases
    
    
    (30,460
    )Other liabilities
    
    
    (10
    )Purchase price, including $1,484 of transaction costs
    
    
    21,484Less: Note payable issued
    
    
    (10,000
    )Less: Cash acquired
    
    
    (1,088
    )Cash paid for acquisition
    
    $
    10,396
   Accumulated
    
    
    
    
    
    
    
    
    
    
    Estimated AnnualAmortization At
    
    
    Weighted Average
    
    
    Amortization
    
    
    AmortizationGross Carrying
    
    
    June 30,
    
    
    Amortization Period
    
    
    Expense Through
    
    
    Expense for 2007Amount
    
    
    2007
    
    
    (in years)
    
    
    June 30, 2007
    
    
    Through 2011Code-share and EAS
agreements
    
    $
    3,900
    
    
    $
    162
    
    
    
    10
    
    
    $
    162
    
    
    $
    390Airport landing slots
    
    
    1,650
    
    
    
    69
    
    
    
    10
    
    
    
    69
    
    
    
    165Goodwill
    
    
    9,468
    
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    
    Total
    
    $
    15,018
    
    
    $
    231
    
    
    
    
    
    
    $
    231
    
    
    $
    555
  8




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 2. Acquisition of Colgan Air, Inc. (continued)
   Three Months Ended
    
    Six Months EndedJune 30, 2006
    
    June 30, 2006Operating revenues
    
    $
    254,952
    
    
    $
    504,585Operating income
    
    
    22,603
    
    
    
    42,239Net income
    
    
    13,870
    
    
    
    24,820Basic and diluted earnings per share
    
    $
    0.63
    
    
    $
    1.13
 3. Code-Share Agreements with Partners
  Percentage ofRegional AirlineCode-Share Partner
    
    Services RevenueNorthwest Airlines
    
    
    78
    %US Airways
    
    
    12
    %Continental Airlines
    
    
    6
    %United Airlines
    
    
    4
    %Delta Air Lines
    
    
    Total
    
    
    100
    %
 Northwest Airlines
   9




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 3. Code-Share Agreements with Partners (continued)
  Reimbursement payments
  Payments based on pre-set rates
 Margin payments
   10




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 3. Code-Share Agreements with Partners (continued)
  US Airways
   Continental Airlines
   11




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 3. Code-Share Agreements with Partners (continued)
   United Airlines
  Delta Air Lines
   Other
   12




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 4. Northwest Bankruptcy Filing
      13




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 5. Mesaba Bankruptcy Filing
        14




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 5. Mesaba Bankruptcy Filing (continued)
   6. Related Party Transactions
 Northwest
   Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006Revenue:Regional airline services revenue
    
    $
    146,662
    
    
    $
    202,811
    
    
    $
    287,756
    
    
    $
    407,816Other revenue
    
    
    1,815
    
    
    
    1,150
    
    
    
    3,685
    
    
    
    2,490Expenses:Aircraft fuel
    
    
    
    
    
    
    27,111
    
    
    
    
    
    
    
    53,650Aircraft rentals
    
    
    36,623
    
    
    
    66,031
    
    
    
    64,191
    
    
    
    132,062Other rentals and landing fees
    
    
    2,813
    
    
    
    2,813
    
    
    
    5,626
    
    
    
    5,626Ground handling services
    
    
    14,821
    
    
    
    15,925
    
    
    
    29,277
    
    
    
    31,669Commissions and passenger related
expenses
    
    
    71
    
    
    
    112
    
    
    
    114
    
    
    
    190Other
    
    
    349
    
    
    
    571
    
    
    
    716
    
    
    
    982Provision for losses associated with
bankruptcy filings of
Northwest
and Mesaba
    
    
    
    
    
    
    14
    
    
    
    33
    
    
    
    (1,552
    )
   15




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 6. Related Party Transactions (continued)
   Other
    7. Debt
  Short-term notes payable
    
    $
    7,628Line of credit
    
    
    8,375Senior convertible notes
    
    
    121,000Total short-term debt
    
    $
    137,003Long-term notes payable:Secured
    
    $
    16,252Unsecured
    
    
    1,527Total long-term debt
    
    
    17,779Less current maturities
    
    
    (5,712
    )Long-term debt, net of current maturities
    
    $
    12,067
 Notes Payable
  16




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 7. Debt (continued)
  Line of Credit
  Senior Convertible Notes
   Proposed Accounting Standard.
 8. Leases
 Capital Leases
  17




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 8. Leases (continued )
  CapitalLeasesRemainder of 2007
    
    $
    7662008
    
    
    1,5102009
    
    
    1,3052010
    
    
    1,3092011
    
    
    776Thereafter
    
    
    877Total future rental payments
    
    
    6,543Amount representing interest
    
    
    (1,232
    )Present value of future lease payment
    
    
    5,311Less: current maturities
    
    
    (1,088
    )Capital leases, net of current maturities
    
    $
    4,223
 Operating Leases
     Operating LeasesAircraft
    
    
    Non-aircraft
    
    
    TotalRemainder of 2007
    
    $
    97,890
    
    
    $
    9,926
    
    
    $
    107,8162008
    
    
    120,038
    
    
    
    17,155
    
    
    
    137,1932009
    
    
    115,293
    
    
    
    16,503
    
    
    
    131,7962010
    
    
    113,323
    
    
    
    16,162
    
    
    
    129,4852011
    
    
    113,088
    
    
    
    15,850
    
    
    
    128,938Thereafter
    
    
    678,528
    
    
    
    34,765
    
    
    
    713,293Total future rental payments
    
    $
    1,238,160
    
    
    $
    110,361
    
    
    $
    1,348,521
 18




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 9. Earnings Per Share
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    7,662
    
    
    $
    11,891
    
    
    $
    17,027
    
    
    $
    25,187Basic earnings per share
    
    $
    0.35
    
    
    $
    0.54
    
    
    $
    0.78
    
    
    $
    1.15Diluted earnings per share
    
    $
    0.32
    
    
    $
    0.54
    
    
    $
    0.70
    
    
    $
    1.15Share computation:Weighted average number of shares outstanding for basic EPS (1)
    
    
    21,752
    
    
    
    21,945
    
    
    
    21,869
    
    
    
    21,945Senior convertible notes (2)
    
    
    2,334
    
    
    
    
    
    
    
    2,368
    
    
    
    Share-based compensation
    
    
    154
    
    
    
    39
    
    
    
    252
    
    
    
    34Weighted average number of shares outstanding for diluted EPS (3)
    
    
    24,240
    
    
    
    21,984
    
    
    
    24,489
    
    
    
    21,979
 
 (1)
    
    On May 14, 2007, the board of directors of the Company authorized a share repurchase
program, whereby the Company may repurchase up to an aggregate of $30,000 of its outstanding
shares. During the three months ended June 30, 2007, the Company repurchased 1,484 shares of
its own common stock, of which the weighted average number of shares repurchased during the
current period are excluded from basic EPS. The Company accounted for the repurchase of this
treasury stock using the cost method.(2)
    
    Dilution is calculated as follows: Three Months Ended
    
    Six Months EndedJune 30, 2007
    
    June 30, 2007Increase in fully
    
    $
    121,000    $121,000
    
    
    $
    121,000    $121,000diluted share count=
    
    $
    13.22(a)      $17.444(b)
    
    
    $
    13.22(a)      $17.832(c)
 
 (a)$13.22 = Conversion price of the Notes(b)$17.744 = Average stock price for the three months ended June 30, 2007(c)$17.832 = Average stock price for the six months ended June 30, 2007(3)
    
    Options to purchase 203 and 935, respectively, shares of common stock were excluded from the
diluted EPS calculation at June 30, 2007 and 2006, because their effect would be
anti-dilutive. 19




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 10. Share-Based Compensation
     Stock OptionsWeighted Average
    
    
    
    
    
    Weighted Average
    
    Aggregate IntrinsicShares
    
    Exercise Price
    
    Fair Value
    
    Remaining Life
    
    ValueOutstanding at January 1, 2007
    
    
    934
    
    
    $
    11.57
    
    
    $
    6,530Granted
    
    
    203
    
    
    $
    16.76
    
    
    $
    1,740Exercised
    
    
    (213
    )
    
    $
    11.45
    
    
    $
    1,473Forfeited
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2007
    
    
    924
    
    
    $
    12.74
    
    
    $
    6,797
    
    
    7.6 years
    
    $
    5,559Options exercisable at June
30, 2007
    
    
    527
    
    
    $
    13.50
    
    
    $
    4,500
    
    
    6.5 years
    
    $
    2,764
  Restricted StockFairShares
    
    ValueOutstanding at January 1, 2007
    
    
    135
    
    
    $
    875Granted
    
    
    76
    
    
    $
    1,279Vested
    
    
    (45
    )
    
    $
    292Forfeited
    
    
    
    
    
    
    Outstanding at June 30, 2007
    
    
    166
    
    
    $
    1,695
 20




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 11. Income Taxes
  Three Months Ended June 30,2007
    
    
    2006$
    
    
    %
    
    
    $
    
    
    %Income tax expense at statutory rate
    
    $
    3,840
    
    
    
    35.0
    %
    
    $
    6,549
    
    
    
    35.0
    %State income taxes, net of federal taxes
    
    
    134
    
    
    
    1.2
    %
    
    
    436
    
    
    
    2.3
    %Tax-exempt income
    
    
    (931
    )
    
    
    (8.5
    )%
    
    
    (194
    )
    
    
    (1.0
    )%Valuation allowance
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    Other
    
    
    266
    
    
    
    2.5
    %
    
    
    36
    
    
    
    0.2
    %Income tax expense
    
    $
    3,309
    
    
    
    30.2
    %
    
    $
    6,820
    
    
    
    36.5
    %
 Six Months Ended June 30,2007
    
    
    2006$
    
    
    %
    
    
    $
    
    
    %Income tax expense at statutory rate
    
    $
    8,682
    
    
    
    35.0
    %
    
    $
    13,745
    
    
    
    35.0
    %State income taxes, net of federal taxes
    
    
    348
    
    
    
    1.4
    %
    
    
    800
    
    
    
    2.0
    %Tax-exempt income
    
    
    (1,760
    )
    
    
    (7.0
    )%
    
    
    (344
    )
    
    
    (0.9
    )%Valuation allowance
    
    
    
    
    
    
    
    
    
    
    (201
    )
    
    
    (0.5
    )%Other
    
    
    508
    
    
    
    2.0
    %
    
    
    85
    
    
    
    0.2
    %Income tax expense
    
    $
    7,778
    
    
    
    31.4
    %
    
    $
    14,085
    
    
    
    35.8
    %
  Accounting for
Uncertainty in Income Taxes
   21




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 11. Income Taxes (continued)
  12. Short-Term Investments
 Accounting for Certain Investments in Debt and Equity Securities
   13. Commitments and Contingencies
 Employees
 Number ofEmployees
    
    
    
    ContractRepresented by
    
    
    
    AmendableEmployee Group
    
    Union
    
    Representing Union
    
    DatePilots
    
    
    1,131
    
    
    Air Line Pilots Association
    
    April 30, 2005Flight Attendants
    
    
    641
    
    
    United Steel Workers of America
    
    February 1, 2011Ground Operations
    
    
    1,410
    
    
    United Steel Workers of America
    
    March 19, 2010Flight Dispatchers
    
    
    38
    
    
    Transport Workers Union of
America
    
    Initial contract
currently being
negotiated
 22




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 13. Commitments and Contingencies (continued)
    Purchase Commitments.
 FirmNoncancelable
    
    Firm Cancelable
    
    Options
    
    TotalQ4002007
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    22008
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    132009
    
    
    
    
    
    
    8
    
    
    
    8
    
    
    
    162010
    
    
    
    
    
    
    2
    
    
    
    12
    
    
    
    14Total Q400
    
    
    15
    
    
    
    10
    
    
    
    20
    
    
    
    45CRJ-9002007
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    22008
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    132009
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Total CRJ-900
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Total
    
    
    31
    
    
    
    10
    
    
    
    20
    
    
    
    61
  Guarantees and Indemnifications.
 23




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##### Table of Contents



Pinnacle Airlines Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(all amounts in thousands, except per share data)
 13. Commitments and Contingencies (continued)
     Other Contingencies.
 24




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
 General
  www.pncl.com
 Overview
  Share Repurchase Program
  Sale of our Final $42.5 Million Stipulated Unsecured Claim against Northwest Airlines
  Second Quarter Operations
  Outlook
  25




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
          26




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
   Results of Operations
 Three Months Ended June 30,2007
    
    
    2006Pinnacle Airlines,
    
    
    
    
    
    
    Pinnacle Corp.
    
    
    Pinnacle Corp.Inc./Corp.
    
    
    Colgan Air, Inc.
    
    
    Consolidated
    
    
    Consolidated(in thousands)Operating revenuesRegional airline services
    
    $
    146,662
    
    
    $
    48,094
    
    
    $
    194,756
    
    
    $
    202,811Other
    
    
    2,457
    
    
    
    3,781
    
    
    
    6,238
    
    
    
    1,703Total operating revenues
    
    
    149,119
    
    
    
    51,875
    
    
    
    200,994
    
    
    
    204,514Operating expensesSalaries, wages and benefits
    
    
    38,357
    
    
    
    11,904
    
    
    
    50,261
    
    
    
    35,593Aircraft maintenance,
materials and repairs
    
    
    12,804
    
    
    
    9,971
    
    
    
    22,775
    
    
    
    7,996Aircraft rentals
    
    
    32,925
    
    
    
    2,304
    
    
    
    35,229
    
    
    
    66,031Aircraft fuel
    
    
    135
    
    
    
    9,511
    
    
    
    9,646
    
    
    
    27,211Other rentals and landing fees
    
    
    12,446
    
    
    
    2,692
    
    
    
    15,138
    
    
    
    11,223Ground handling services
    
    
    21,188
    
    
    
    3,106
    
    
    
    24,294
    
    
    
    21,765Commissions and passenger
related expense
    
    
    940
    
    
    
    5,380
    
    
    
    6,320
    
    
    
    913Depreciation and amortization
    
    
    1,115
    
    
    
    1,203
    
    
    
    2,318
    
    
    
    967Other
    
    
    15,235
    
    
    
    4,552
    
    
    
    19,787
    
    
    
    11,972Provision for increases in
losses associated with
bankruptcy filings of
Northwest and Mesaba
    
    
    404
    
    
    
    
    
    
    
    404
    
    
    
    1,348Total operating expenses
    
    
    135,549
    
    
    
    50,623
    
    
    
    186,172
    
    
    
    185,019Operating income
    
    $
    13,570
    
    
    $
    1,252
    
    
    $
    14,822
    
    
    $
    19,495
 27




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
 Six Months Ended June 30,2007
    
    
    2006Pinnacle Airlines,
    
    
    
    
    
    
    Pinnacle Corp.
    
    
    Pinnacle Corp.Inc./Corp.
    
    
    Colgan Air, Inc.
    
    
    Consolidated
    
    
    Consolidated(in thousands)Operating revenuesRegional airline services
    
    $
    287,757
    
    
    $
    81,498
    
    
    $
    369,255
    
    
    $
    407,816Other
    
    
    5,016
    
    
    
    6,273
    
    
    
    11,289
    
    
    
    3,787Total operating revenues
    
    
    292,773
    
    
    
    87,771
    
    
    
    380,544
    
    
    
    411,603Operating expensesSalaries, wages and benefits
    
    
    77,134
    
    
    
    20,428
    
    
    
    97,562
    
    
    
    70,020Aircraft maintenance,
materials and repairs
    
    
    23,824
    
    
    
    16,499
    
    
    
    40,323
    
    
    
    18,258Aircraft rentals
    
    
    64,778
    
    
    
    4,170
    
    
    
    68,948
    
    
    
    132,062Aircraft fuel
    
    
    150
    
    
    
    15,933
    
    
    
    16,083
    
    
    
    53,912Other rentals and landing fees
    
    
    24,424
    
    
    
    4,628
    
    
    
    29,052
    
    
    
    22,474Ground handling services
    
    
    42,888
    
    
    
    5,828
    
    
    
    48,716
    
    
    
    44,124Commissions and passenger
related expense
    
    
    1,841
    
    
    
    8,974
    
    
    
    10,815
    
    
    
    1,768Depreciation and amortization
    
    
    2,196
    
    
    
    2,176
    
    
    
    4,372
    
    
    
    1,929Other
    
    
    30,101
    
    
    
    7,973
    
    
    
    38,074
    
    
    
    24,667Provision for (decreases)
increases in losses
associated with bankruptcy
filings of Northwest and
Mesaba
    
    
    (1,048
    )
    
    
    
    
    
    
    (1,048
    )
    
    
    1,365Total operating expenses
    
    
    266,288
    
    
    
    86,609
    
    
    
    352,897
    
    
    
    370,579Operating income
    
    $
    26,485
    
    
    $
    1,162
    
    
    $
    27,647
    
    
    $
    41,024
  Comparison of Three Months Ended June 30, 2007 to Three Months Ended June 30, 2006
 Revenues
 Three Months Ended June 30,2007
    
    
    2006
    
    
    $ Variance
    
    
    % Variance(in thousands)Operating revenuesRegional airline services
    
    $
    194,756
    
    
    $
    202,811
    
    
    $
    (8,055
    )
    
    
    (4
    )%Other
    
    
    6,238
    
    
    
    1,703
    
    
    
    4,535
    
    
    
    266
    %Total operating revenues
    
    $
    200,994
    
    
    $
    204,514
    
    
    $
    (3,520
    )
    
    
    (2
    )%
 Regional Airline Services
  28




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
  Other Revenue
  Operating Expenses
 Three Months Ended June 30,2007
    
    
    2006
    
    
    $ Variance
    
    
    % Variance(in thousands)Operating expenses:Salaries, wages and benefits
    
    $
    50,261
    
    
    $
    35,593
    
    
    $
    14,668
    
    
    
    41
    %Aircraft maintenance,
materials and repairs
    
    
    22,775
    
    
    
    7,996
    
    
    
    14,779
    
    
    
    185
    %Aircraft rentals
    
    
    35,229
    
    
    
    66,031
    
    
    
    (30,802
    )
    
    
    (47
    )%Aircraft fuel
    
    
    9,646
    
    
    
    27,211
    
    
    
    (17,565
    )
    
    
    (65
    )%Other rentals and landing fees
    
    
    15,138
    
    
    
    11,223
    
    
    
    3,915
    
    
    
    35
    %Ground handling services
    
    
    24,294
    
    
    
    21,765
    
    
    
    2,529
    
    
    
    12
    %Commissions and passenger
related expense
    
    
    6,320
    
    
    
    913
    
    
    
    5,407
    
    
    
    592
    %Depreciation and amortization
    
    
    2,318
    
    
    
    967
    
    
    
    1,351
    
    
    
    140
    %Other
    
    
    19,787
    
    
    
    11,972
    
    
    
    7,815
    
    
    
    65
    %Provision for increases in
losses associated with
bankruptcy filings of
Northwest and Mesaba
    
    
    404
    
    
    
    1,348
    
    
    
    (944
    )
    
    
    (70
    )%Total operating expenses
    
    $
    186,172
    
    
    $
    185,019
    
    
    $
    1,153
    
    
    
    1
    %
   29




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
         Nonoperating Expense
  30




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
 Income Tax Expense
  Comparison of Six Months Ended June 30, 2007 to Six Months Ended June 30, 2006
 Revenues
 Six Months Ended June 30,2007
    
    
    2006
    
    
    $ Variance
    
    
    % Variance(in thousands)Operating revenuesRegional airline services
    
    $
    369,255
    
    
    $
    407,816
    
    
    $
    (38,561
    )
    
    
    (10
    )%Other
    
    
    11,289
    
    
    
    3,787
    
    
    
    7,502
    
    
    
    198
    %Total operating revenues
    
    $
    380,544
    
    
    $
    411,603
    
    
    $
    (31,059
    )
    
    
    (8
    )%
 Regional Airline Services
  Other Revenue
  31




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
 Operating Expenses
 Six Months Ended June 30,2007
    
    
    2006
    
    
    $ Variance
    
    
    % Variance(in thousands)Operating expenses:Salaries, wages and benefits
    
    $
    97,562
    
    
    $
    70,020
    
    
    $
    27,542
    
    
    
    39
    %Aircraft maintenance,
materials and repairs
    
    
    40,323
    
    
    
    18,258
    
    
    
    22,065
    
    
    
    121
    %Aircraft rentals
    
    
    68,948
    
    
    
    132,062
    
    
    
    (63,114
    )
    
    
    (48
    )%Aircraft fuel
    
    
    16,083
    
    
    
    53,912
    
    
    
    (37,829
    )
    
    
    (70
    )%Other rentals and landing fees
    
    
    29,052
    
    
    
    22,474
    
    
    
    6,578
    
    
    
    29
    %Ground handling services
    
    
    48,716
    
    
    
    44,124
    
    
    
    4,592
    
    
    
    10
    %Commissions and passenger
related expense
    
    
    10,815
    
    
    
    1,768
    
    
    
    9,047
    
    
    
    512
    %Depreciation and amortization
    
    
    4,372
    
    
    
    1,929
    
    
    
    2,443
    
    
    
    127
    %Other
    
    
    38,074
    
    
    
    24,667
    
    
    
    13,407
    
    
    
    54
    %Provision for (decreases)
increases in losses
associated with bankruptcy
filings of Northwest and
Mesaba
    
    
    (1,048
    )
    
    
    1,365
    
    
    
    (2,413
    )
    
    
    (177
    )%Total operating expenses
    
    $
    352,897
    
    
    $
    370,579
    
    
    $
    (17,682
    )
    
    
    (5
    )%
      32




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
      Nonoperating Expense
  Income Tax Expense
  33




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
 Certain Statistical Information
  TurbopropCRJ
    
    Three MonthsThree Months Ended June 30,
    
    Ended June 30,2007
    
    2006
    
    Change
    
    2007 (3)Other Data:Revenue passengers (in thousands)
    
    
    2,643
    
    
    
    2,340
    
    
    
    13
    %
    
    
    415Revenue passenger miles (in thousands) (1)
    
    
    1,233,335
    
    
    
    1,111,012
    
    
    
    11
    %
    
    
    77,135Available seat miles (in thousands)
    
    
    1,532,510
    
    
    
    1,371,539
    
    
    
    12
    %
    
    
    160,698Passenger load factor (2)
    
    
    80.5
    %
    
    
    81.0
    %
    
    
    (0.5
    ) pts
    
    
    48.0
    %Operating revenue per available seat mile (in
cents)
    
    
    9.73
    
    
    
    14.91
    
    
    
    (35
    )%
    
    
    32.28Operating cost per available seat mile (in cents)
    
    
    8.84
    
    
    
    13.49
    
    
    
    (34
    )%
    
    
    31.50Operating revenue per block hour
    
    $
    1,358
    
    
    $
    1,977
    
    
    
    (31
    )%
    
    $
    1,683Operating cost per block hour
    
    $
    1,234
    
    
    $
    1,788
    
    
    
    (31
    )%
    
    $
    1,643Block hours
    
    
    109,810
    
    
    
    103,471
    
    
    
    6
    %
    
    
    30,820Cycles
    
    
    67,265
    
    
    
    63,053
    
    
    
    7
    %
    
    
    29,043Average daily utilization (block hours)
    
    
    8.68
    
    
    
    9.17
    
    
    
    (5
    )%
    
    
    6.50Average stage length (miles)
    
    
    461
    
    
    
    467
    
    
    
    (1
    )%
    
    
    185Number of operating aircraft (end of period)
    
    
    139
    
    
    
    124
    
    
    
    12
    %
    
    
    52
 
 (1)
    
    Revenue passenger miles represents the number of miles flown by revenue passengers.(2)
    
    Passenger load factor equals revenue passenger miles divided by available seat miles.(3)
    
    The Company purchased Colgan on January 18, 2007, as discussed in Note 2 to our condensed consolidated
financial statements. We did not operate turboprops during 2006. TurbopropCRJ
    
    Six Months EndedSix Months Ended June 30,
    
    June 30,2007
    
    2006
    
    Change
    
    2007 (3)Other Data:Revenue passengers (in thousands)
    
    
    4,841
    
    
    
    4,355
    
    
    
    11
    %
    
    
    687Revenue passenger miles (in thousands) (1)
    
    
    2,240,500
    
    
    
    2,082,817
    
    
    
    8
    %
    
    
    127,571Available seat miles (in thousands)
    
    
    2,965,558
    
    
    
    2,713,207
    
    
    
    9
    %
    
    
    278,876Passenger load factor (2)
    
    
    75.6
    %
    
    
    76.8
    %
    
    
    (1.2
    ) pts
    
    
    45.7
    %Operating revenue per available seat mile (in
cents)
    
    
    9.87
    
    
    
    15.17
    
    
    
    (35
    )%
    
    
    31.47Operating cost per available seat mile (in cents)
    
    
    8.98
    
    
    
    13.66
    
    
    
    (34
    )%
    
    
    31.06Operating revenue per block hour
    
    $
    1,350
    
    
    $
    1,997
    
    
    
    (32
    )%
    
    $
    1,570Operating cost per block hour
    
    $
    1,228
    
    
    $
    1,798
    
    
    
    (32
    )%
    
    $
    1,549Block hours
    
    
    216,823
    
    
    
    206,068
    
    
    
    5
    %
    
    
    55,910Cycles
    
    
    131,228
    
    
    
    124,318
    
    
    
    6
    %
    
    
    49,933Average daily utilization (block hours)
    
    
    8.81
    
    
    
    9.18
    
    
    
    (4
    )%
    
    
    6.65Average stage length (miles)
    
    
    459
    
    
    
    470
    
    
    
    (2
    )%
    
    
    184Number of operating aircraft (end of period)
    
    
    139
    
    
    
    124
    
    
    
    12
    %
    
    
    52
 
 (1)
    
    Revenue passenger miles represents the number of miles flown by revenue passengers.(2)
    
    Passenger load factor equals revenue passenger miles divided by available seat miles.(3)
    
    The Company purchased Colgan on January 18, 2007, as discussed in Note 2 to our condensed consolidated
financial statements. The six months ended for turboprops implies the period from the date of purchase of
Colgan through June 30, 2007. We did not operate turboprops during 2006.  34




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
 Liquidity and Capital Resources
 th
  Contractual obligations
 Payments Due by Period2007(1)
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    TotalContractual
obligations:Debt (2)
    
    $
    129,695
    
    
    $
    8,765
    
    
    $
    7,611
    
    
    $
    4,963
    
    
    $
    3,812
    
    
    $
    37,821
    
    
    $
    192,667Interest
payments on debt (3)
    
    
    3,058
    
    
    
    5,731
    
    
    
    5,184
    
    
    
    4,600
    
    
    
    4,247
    
    
    
    53,191
    
    
    
    76,011Aircraft
purchase commitments
    
    
    97,139
    
    
    
    492,637
    
    
    
    22,037
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    611,813Bank line of credit
    
    
    
    
    
    
    8,375
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,375Capital leases
    
    
    766
    
    
    
    1,510
    
    
    
    1,305
    
    
    
    1,309
    
    
    
    776
    
    
    
    877
    
    
    
    6,543Operating leases
    
    
    107,816
    
    
    
    137,193
    
    
    
    131,796
    
    
    
    129,485
    
    
    
    128,938
    
    
    
    713,293
    
    
    
    1,348,521Purchase obligations
(4)
    
    
    6,897
    
    
    
    20,939
    
    
    
    675
    
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    28,645Total
contractual
cash obligations
    
    $
    345,371
    
    
    $
    675,150
    
    
    $
    168,608
    
    
    $
    140,491
    
    
    $
    137,773
    
    
    $
    805,182
    
    
    $
    2,272,575
 
 (1)
    
    Contractual obligations for the remainder of 2007.(2)
    
    Amount for 2007 includes the par amount of the Notes, which are convertible into a
combination of cash and common stock. Amounts for 2007 and 2008 include $5.0 million and $2.5
million, respectively, for short-term notes payable for the purchase of Colgan (see Note 2 and
Note 7 to our condensed consolidated financial statements for further discussion).(3)
    
    While the entire principal balance of the Notes is shown as a debt obligation for 2007, we
are assuming that the Notes will not be converted and that the related annual interest
payments of $3.9 million will continue to be made through 2025.(4)
    
    Amounts represent $6.4 million for the purchase of the aircraft hangars (see Note 2 to our
condensed consolidated financial statements for further discussion) in 2007, purchase of
Series A Preferred Share of $20.0 million (see Note 4 to our condensed consolidated financial
statements for further discussion) for 2008, and noncancelable commitments to purchase goods
and services, including certain aircraft parts and information technology software and
equipment.  35




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Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
        36




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Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
    Operating activities.
  Investing activities
   Financing activities
  Deferred tax asset.
 37




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Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
 Forward Looking Statements
  38




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Item 3. Quantitative and Qualitative Disclosure about Market Risk
  Commodity Price Risk
  Interest Rate Risk
 Aircraft financing.
  Investment income.
  Senior convertible notes.
 39




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##### Table of Contents



Item 4. Controls and Procedures
   40




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##### Table of Contents



Part II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Maximum NumberTotal Number of
    
    (or ApproximateShares Purchased as
    
    Dollar Value) thatPart of Publicly
    
    May Yet Be PurchasedTotal Number of
    
    Average Price Paid
    
    Announced Plans or
    
    Under the Plans orPeriod
    
    Shares Purchased
    
    per Share (a)
    
    Programs (b)
    
    Programs (b)April 1, 2007  April 30,
2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    May 1, 2007  May 31, 2007
    
    
    435,300
    
    
    
    17.55
    
    
    
    435,300
    
    
    
    22,349,341June 1, 2007  June 30, 2007
    
    
    1,048,600
    
    
    
    18.63
    
    
    
    1,048,600
    
    
    
    2,777,745Total
    
    
    1,483,900
    
    
    $
    18.32
    
    
    
    1,483,900
    
    
    $
    2,777,745
 
 a
    
    Average price paid per share excludes commissions.b
    
    On May 14, 2007, the Board of Directors authorized a share repurchase program, whereby the Company may
repurchase up to an aggregate of $30 million of its outstanding shares. The Company purchased over 1.6
million of its outstanding shares through July 3, 2007, at which time the allocated funds had been completely
spent. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   41




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##### Table of Contents



Item 5. Other Information
  
 Item 6. Exhibits
  ExhibitNumber
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation of the registrant (Incorporated by
reference to the Companys Registration Statement Form S-1 (Registration No. 333-83359), as
amended (the S-1) initially filed on February 25, 2002)3.1.1
    
    Second Amended and Restated Certificate of Incorporation of the registrant (Incorporated by
reference to the S-1)3.2
    
    Certificate of Designations for Series A preferred stock of the registrant (Incorporated by
reference to the S-1)3.3
    
    Bylaws of the registrant (Incorporated by reference to the S-1)3.3.1
    
    Amended and Restated Bylaws, dated January 14, 2003, of the registrant (Incorporated by
reference to the S-1)4.1
    
    Specimen Stock Certificate (Incorporated by reference to the S-1)4.2
    
    Rights Agreement between the registrant and EquiServe Trust Company, N.A., as Rights Agent
(Incorporated by reference to the S-1)4.3
    
    Indenture, 3.25% Senior Convertible Notes due 2025, dated as of February 8, 2005, by and
between Pinnacle Airlines Corp. and Deutsche Bank Trust Company (Incorporated by reference to
Exhibits 99.2 and 99.3 to the Registrants Current Report on Form 8-K filed on February 8,
2005)4.4
    
    Registration Rights Agreement made pursuant to the Purchase Agreement dated February 3,
2005, dated as of February 8, 2005, by and among Pinnacle Airlines Corp., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Raymond James & Associates, Inc. (Incorporated by
reference to Exhibits 99.2 and 99.3 to the Registrants Current Report on Form 8-K filed on
February 8, 2005)10.1
    
    Loan Agreement dated as of June 16, 2005 between Pinnacle Airlines, Inc. and First Tennessee
Bank National Association (Incorporated by reference to the Registrants Current Report on
Form 8-K filed on June 23, 2005)10.2
    
    Sublease Agreement between Pinnacle Airlines, Inc. and Northwest Airlines, Inc.
(Incorporated by reference to the S-1)10.2.1
    
    First Amendment to Sublease Agreement between Pinnacle Airlines, Inc. and Northwest
Airlines, Inc. (Incorporated by reference to the S-1)10.2#
    
    Guaranty Agreement between Pinnacle Airlines, Inc. and First Tennessee Bank National
Association (Incorporated by reference to the Registrants Current Report on Form 8-K filed
on June 23, 2005)10.3
    
    Engine Lease Agreement between Pinnacle Airlines, Inc. and Northwest Airlines, Inc.
(Incorporated by reference to the S-1)10.3.1
    
    First Amendment to Engine Lease Agreement between Pinnacle Airlines, Inc. and Northwest
Airlines, Inc. (Incorporated by reference to the S-1)10.3#
    
    Revolving Credit Note dated as of June 16, 2005 between Pinnacle Airlines, Inc. and First
Tennessee Bank National Association (Incorporated by reference to the Registrants Current
Report on Form 8-K filed on June 23, 2005)10.4#
    
    Security Agreement dated as of June 16, 2005 between Pinnacle Airlines, Inc. and First
Tennessee Bank National Association (Incorporated by reference to the Registrants Current
Report on Form 8-K filed on June 23, 2005)10.5#
    
    Negative Pledge Agreement dated as of June 16, 2005 between Pinnacle Airlines, Inc. and
First Tennessee Bank National Association (Incorporated by reference to the Registrants
Current Report on Form 8-K filed on June 23, 2005)
 42




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##### Table of Contents



ExhibitNumber
    
    Description10.6#
    
    Negative Pledge Agreement dated as of June 16, 2005 between Pinnacle Airlines Corp. and
First Tennessee Bank National Association (Incorporated by reference to the Registrants
Current Report on Form 8-K filed on June 23, 2005)10.8
    
    Pinnacle Airlines Corp. 2003 Stock Incentive Plan (Incorporated by reference to the S-1)10.9
    
    Non-Qualified Stock Option Agreement for options granted under the Pinnacle Airlines Corp.
2003 Stock Incentive Plan (Incorporated by reference to the S-1)10.10
    
    Pinnacle Airlines, Inc. Annual Management Bonus Plan (Incorporated by reference to the S-1)10.11
    
    Amended and Restated Sublease Agreement dated as of January 14, 2003 between Pinnacle
Airlines, Inc. and Northwest Airlines, Inc. (SBN Facilities) (Incorporated by reference to
the S-1)10.12
    
    Sublease Agreement dated as of August 1, 2002 between Pinnacle Airlines, Inc. and Northwest
Airlines, Inc. (TYS Facilities) (Incorporated by reference to the S-1)10.13
    
    Amended and Restated Facilities Use Agreement between Pinnacle Airlines, Inc. and Northwest
Airlines, Inc. (DTW Facilities) (Incorporated by reference to the S-1)10.14
    
    Amended and Restated Facilities Use Agreement between Pinnacle Airlines, Inc. and Northwest
Airlines, Inc. (MEM Facilities) (Incorporated by reference to the S-1)10.15
    
    Amended and Restated Facilities Use Agreement between Pinnacle Airlines, Inc. and Northwest
Airlines, Inc. (MSP Facilities) (Incorporated by reference to the S-1)10.16
    
    Intentionally omitted10.17
    
    Intentionally omitted10.18
    
    Lease Guaranty issued by the registrant to Northwest Airlines, Inc. (Incorporated by
reference to the S-1)10.19
    
    Sublease Guaranty issued by the registrant to Northwest Airlines, Inc. (Incorporated by
reference to the S-1)10.20
    
    Airline Services Agreement dated as of March 1, 2002 among the registrant, Pinnacle
Airlines, Inc. and Northwest Airlines, Inc. (Incorporated by reference to the S-1)10.21
    
    Airline Services Agreement dated as of January 14, 2003 among the registrant, Pinnacle
Airlines, Inc. and Northwest Airlines, Inc. (Incorporated by reference to the S-1)10.21.1
    
    Amendment No. 1 dated as of September 11, 2003 to the Airline Services Agreement dated as
of January 14, 2003 among the registrant, Pinnacle Airlines, Inc. and Northwest Airlines,
Inc. (Incorporated by reference to the S-1)10.21.2
    
    Amendment No. 2 dated as of November 26, 2003 to the Airline Services Agreement dated as
of January 14, 2003 among the registrant, Pinnacle Airlines, Inc. and Northwest Airlines,
Inc. (Incorporated by reference to the S-1)10.22
    
    Amended and Restated Ground Handling Agreement between Pinnacle Airlines, Inc. and
Northwest Airlines, Inc. (Incorporated by reference to the S-1)10.23
    
    Amended and Restated Information Technology Services Agreement between Pinnacle Airlines,
Inc. and Northwest Airlines, Inc. (Incorporated by reference to the S-1)10.24
    
    Amended and Restated Family Assistance Services Agreement between Pinnacle Airlines, Inc.
and Northwest Airlines, Inc. (Incorporated by reference to the S-1)10.25
    
    Amended and Restated Manufacturer Benefits Agreement between Pinnacle Airlines, Inc. and
Northwest Airlines, Inc. (Incorporated by reference to the S-1)10.26
    
    Form of Amended and Restated Preferential Hiring Agreement between Pinnacle Airlines, Inc.
and Northwest Airlines, Inc. (Incorporated by reference to the S-1)10.27
    
    Purchase Agreement, Senior Convertible Notes due 2025, dated as of February 3, 2005, by and
among, Pinnacle Airlines Corp., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Raymond James & Associates, Inc. (Incorporated by reference to the Registrants Current
Report on Form 8-K filed on February 8, 2005)10.28
    
    Amended and Restated Management Compensation Agreement between Pinnacle Airlines, Inc. and
Philip H. Trenary (Incorporated by reference to the Registrants Current Report on Form 8-K
filed on August 12, 2005)
 43




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##### Table of Contents



ExhibitNumber
    
    Description10.29
    
    Amended and Restated Management Compensation Agreement between Pinnacle Airlines, Inc. and
Peter D. Hunt (Incorporated by reference to the Registrants Current Report on Form 8-K filed
on August 12, 2005)10.30
    
    Amended and Restated Management Compensation Agreement between Pinnacle Airlines, Inc. and
Douglas W. Shockey (Incorporated by reference to the Registrants Current Report on Form 8-K
filed on August 12, 2005)10.31
    
    Form of Indemnity Agreement between Pinnacle Airlines Corp. and its directors and officers
(Incorporated by reference to the Registrants Current Report on Form 8-K filed on January
26, 2006)10.32
    
    Assignment of Claim Agreement between Pinnacle Airlines, Inc. and Goldman Sachs Credit
Partners, L.P., dated as of October 5, 2006.10.40
    
    Assumption and Claim Resolution Agreement between Pinnacle Airlines Corp. and Northwest
Airlines, Inc., dated as of December 20, 2006 (Incorporated by reference to the Registrants
Current Report on Form 8-K filed on January 3, 2007)10.41
    
    Amended and Restated Airline Services Agreement by and among Pinnacle Airlines, Inc.,
Pinnacle Airlines Corp. and Northwest Airlines, Inc., dated December 15, 2006, effective as
of January 1, 200710.50
    
    Stock Purchase Agreement, dated as of January 18, 2007, by and among Colgan Air, Inc. and
Pinnacle Airlines Corp. (Incorporated by reference to the Registrants Current Report on
Form 8-K filed on January 24, 2007)10.60**
    
    Capacity Purchase Agreement between
Continental Airlines, Inc., Pinnacle Airlines Corp. and Colgan Air,
Inc., dated as of February 2, 200710.61**
    
    Purchase Agreement between
Bombardier Inc. and Pinnacle Airlines Corp., relating to the purchase
of twenty-five (25) Bombardier Q400 series aircraft, dated as of
February 17, 200710.65**
    
    Delta Connection Agreement among
Delta Air Lines, Inc., Pinnacle Airlines Corp. and Pinnacle Airlines,
Inc., dated as of April 27, 200710.66**
    
    Assignment and Assumption Agreement
by and among Delta Air Lines, Inc., Pinnacle Airlines, Inc., Pinnacle
Airlines Corp., and Bombardier Inc., dated as of April 26, 200710.67**
    
    Purchase Agreement between
Bombardier Inc. and Pinnacle Airlines, Inc., relating to the purchase
of sixteen (16) Bombardier CRJ-900 series aircraft, dated as of April
26, 200710.99.1#
    
    Promissory Note issued by Pinnacle Airlines, Inc. to Northwest Airlines, Inc.
(Incorporated by reference to the S-1)10.99.2#
    
    Guarantee of Promissory Note issued by registrant to Northwest Airlines, Inc.
(Incorporated by reference to the S-1)10.99.3#
    
    Revolving Credit Facility dated as of January 14, 2003 between Pinnacle Airlines, Inc.
and Northwest Airlines, Inc. (Incorporated by reference to the S-1)10.99.4#
    
    First Amendment dated as of February 5, 2003 to Revolving Credit Facility dated as of
January 14, 2003 between Pinnacle Airlines, Inc. and Northwest Airlines, Inc. (Incorporated
by reference to the S-1)10.99.5#
    
    Second Amendment dated as of November 28, 2003 to Revolving Credit Facility dated as of
January 14, 2003 between Pinnacle Airlines, Inc. and Northwest Airlines, Inc. (Incorporated
by reference to the S-1)10.99.6#
    
    Third Amendment dated as of December 13, 2004 to Revolving Credit Facility dated as of
January 14, 2003 between Pinnacle Airlines, Inc. and Northwest Airlines, Inc. (Incorporated
by reference to the Registrants Current Report on Form 8-K filed on February 8, 2005)10.99.7#
    
    Fourth Amendment dated as of February 8, 2005 to Revolving Credit Facility dated as of
January 14, 2003 between Pinnacle Airlines, Inc. and Northwest Airlines, Inc. (Incorporated
by reference to the Registrants Current Report on Form 8-K filed on February 8, 2005)10.99.8#
    
    Guaranty dated as of January 14, 2003 issued by registrant to Northwest Airlines, Inc.
(Incorporated by reference to the S-1)21.1
    
    List of Subsidiaries (Incorporated by reference to the S-1)23.1
    
    Consent of Independent Registered Public Accounting Firm31.1*
    
    Certification of Chief Executive Officer31.2*
    
    Certification of Chief Financial Officer32*
    
    Certifications of CEO and CFO
 
 *
    
    Filed herewith**
    
    To be filed by amendment
    
    Management contract or compensatory plan or arrangement#
    
    Cancelled agreement referenced in this Form 10-Q 44




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##### Table of Contents



SIGNATURES
  By:
    /s/ Philip H. TrenaryPhilip H. TrenaryDate: August 7, 2007
    
    President and Chief Executive OfficerBy:
    /s/ Peter D. HuntPeter D. HuntDate: August 7, 2007
    
    Vice President and Chief Financial Officer 45