DELTA UPSET PINNACLE AIRLINES SHAREHOLDERS

It is about the right time to call the finale of the Pinnacle Airlines bankruptcy.

Delta Airlines, an iconic American brand, did not bother with shareholders of its subcontractor and took over a profitable and solvent company. What is interesting it took it over FREE OF CHARGE (yes, it provided financing, blah blah blah, and got hundreds for a few tens of millions).


Evidently, Delta follows a very strong set of guidelines as summarized in the Code of Ethics and Business Conduct:

Fair Dealing. Directors shall oversee fair dealing by employees, officers and directors with the Company's customers, suppliers, competitors and employees. "Fair dealing" means the avoidance of unfair advantage through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice. This Code provision will have no effect on existing legal rights and obligations of the Company and its employees, including "at will" employment arrangements.

As a shareholder, I would prefer a liquidation (without a credible attempt it was impossible to extract any shareholder value) and potentially a meaningful recovery of some shareholder money but a "greater good for society" argument in combination with questionable action of a judge (can he read the balance sheet?) and lack of shareholder coordination and financial resources to take the litigation risk negated this opportunity. What is greater good for society, though, a properly functioning and just civilization or preserved jobs in the hands of vulture iconic brands?

As written here: 

If Pinnacle were to liquidate, Delta wouldn’t have many options for regional jet service, putting the bargaining power in the regional airlines’ corner. Without Pinnacle, Delta’s options would be limited to Skywest Inc. and other smaller regional providers.

I forgot to mention the leading role of management, unwilling and incompetent to extract any value in such a strong bargaining situation for those who created them jobs. But they did really well for their new employer.

Here are the heroes: Board of Directors

Donald J. Breeding Chairman

Susan MacGregor Coughlin Director

Ian Massey Director

James E. McGehee Jr. Director

Thomas S. Schreier Director

R. Philip Shannon Director

Alfred T. Spain Director

Nicholas R. Tomassetti Director

John Spanjers Director

What are the lesson here? Anything is possible, anywhere. Even in Russia.

Debt layer of financial structure is much safer and considerably less prone for a binary outcome in similar situations.