MEMPHIS, TN (abc24.com) - It looks like thousands of workers at Memphis-based Pinnacle Airlines will start the New Year uncertain about the future of the company.
Pinnacle is trying to reduce its operating costs without declaring bankruptcy, caught in the squeeze between the high cost of fuel and deep cuts by Delta that have reduced Pinnacle's flights out of Memphis and other airports.
Pinnacle employees 1,500 people in Memphis and almost 8,000 around the country. It flies regional jets on shorter haul flights to smaller markets with fewer passengers, which is exactly the kind of routes Delta is cutting.
Just before Christmas, Pinnacle announced the layoff of 150 ground crew members at Memphis International. The company has hired outside consultants and lawyers to try to negotiate new less expensive deals with its workers and creditors.
Ray Neidl, a respected Wall Street airline analyst, doubts Pinnacle can avoid bankruptcy.
"It's a very difficult task to do, getting all the different parties to come in and make major sacrifices," he said. "As the big carriers pare down the marginal hubs like Memphis that means there's going to be less business for many of the regional carriers. So, even if they have a good plan for restructuring, the long term viability of many companies in the regional section is a question mark, in my opinion."
There's also worry in downtown Memphis, where Pinnacle moved its headquarters last year to a newly renovated office tower.
The City of Memphis put together millions of dollars of incentives, including a 15 year property tax freeze on Pinnacle's new headquarters at One Commerce Square. It's home now to 650 employees working downtown and thousands more who visit from around the country every year for ongoing training with the airline.
But, Paul Morris, President of the Downtown Memphis Commission, said the city's investment in One Commerce Square was about more than Pinnacle Airlines.
Morris told abc24.com, "What we bargained for was a revamped Class A office building, which is what we've got, which has not only attracted Pinnacle Airlines, but has attracted many other tenants to the downtown core."
If Pinnacle does end up in bankruptcy it would likely be Chapter 11 reorganization, meaning the airline would keep flying and the employees would keep working for now. But, what the airline might look like coming out of bankruptcy is the big unknown.