Colgan sold for $20 million

[hiss srq]

Colgan was purchased for twenty million dollars this afternoon by Pinnacle (Northwest airlink) . Quite a shocker to me. I just flew them yesterday to PVD too. Quite a low price for a company who probably owns about $80 million dollars worth of airplanes alone. They bought everything including the GSE, and the part 121. I would say that their part 121 alone would be worth that much and that would be a low estimate. My first boss in the aviation world knows the Colgan family quite well for many years.

[T-Bird76]

Wow that is interesting. Isn't Colgan privately owned? I wonder if they were in debt and had to sell.

[nwafan20]

What is Colgan?

[hiss srq]

They are a regional airline flying the BE1900 and SF340 primaraly for US Express banner but also uner the Continental Connection and United Express banner based in Manasses, Va.

[Nonstop2AUH]

Interesting, I wonder how much of their fleet is owned vs. leased. I know 1900s aren't exactly in high demand and much of the Colgan service only operates because of the EAS. Still, they have a nice little niche, I know someone who used to fly for them and have flown with them a few times myself. Wonder what Pinnacle is planning to do with it.

[cancidas]

still, $20 million is chump change when it comes to buying an operating certificate and airplanes. i could only imagine what they are worth, but what we heard may not be all of the deal.

[moose135]

Wow that is interesting. Isn't Colgan privately owned? I wonder if they were in debt and had to sell.

From the Pinnacle press release
http://www.marketwire.com/mw/release_ht ... _id=204591

Pinnacle Airlines Corp. will pay $20 million for all of the issued and outstanding capital stock of Colgan Air, with $10 million in the form of an immediate cash payment and $10 million in the form of a one-year note secured by the stock of Colgan Air. The acquisition will be completed today subject to any applicable regulatory review.
<snip>
Mike Colgan, President & CEO of Colgan Air, will remain in his current capacity as President and CEO of Colgan Air, Inc. for the immediate future. Mr. Colgan will be an instrumental liaison between Pinnacle Airlines Corp. and Colgan Air as they create a seamless transition for the current Colgan customers.

Mr. Colgan stated, "We are very proud of Colgan Air and see this as an exciting step forward. While this was not an easy decision for our family, we considered the strength of Pinnacle Airlines Corp. and its management team as an opportunity to continue the growth of the company in an ever-evolving industry. The employees of Colgan Air are more than just employees here -- they are family. Collectively, the entire Colgan Air Family, along with our customers, has made this possible. The management team of Pinnacle Airlines Corp. has been long-time friends and industry colleagues; I join them in welcoming everyone to this new and exciting venture."

I didn't see anything about Pinnacle taking on any debt as part of this deal. I don't really understand the purchase price. Also from the press release:

Colgan operates 39 Saab 340 and 11 Beech 1900 regional airliners, and has hub operations in Boston, Houston, New York, Pittsburgh and Washington, D.C. Colgan Air employs approximately 1,100 People and transported nearly 1.5 million Customers in 2006. Colgan has experienced strong revenue growth over the past years. In 2005 Colgan had revenues of approximately $137 million. Colgan projects that it will have revenues of approximately $190 million in 2006.

[hiss srq]

I think Mr. C just wanted out of it. Who knows. They are a clsoe knit bunch at that company. Its defineately not a firesale because they are doing quite well from all I have known. Even yesterday on the Saab I spoke with all three crewmembers and they did not even hint toward knowing of anything like this taking place so this must have been a shot in the dark. It reminds me of Florida Coastal Air. The guy put the airline certificate and all on ebay for a mill.

[USAF Pilot 07]

It's not a bad deal. He walks away with a nice chump of change, and keeps his position as President, which probably brings with it a nice salary...

[RDU-JFK]

How does this affect their USX operations?

[moose135]

How does this affect their USX operations?

According to a Washington Post article, the purchase includes Colgan's contracts with United, Continental, and US Airways. The Pinnacle press release stated that Pinnacle and Colgan would operate as two independent subsidiaries of Pinnacle Airlines Corp. They said that Colgan "will remain headquartered in Manassas as long as it continues to make financial sense"

[hiss srq]

Our (US) network thus so far will not be affected by this change in ownership for the forseeable future. Now when the contract ends perhaps thna maybe there might be some change in the structure of the company that would lead us to need to find someone new like perhaps Gulfstream to pick up the slack.

[Nonstop2AUH]

This might deserve its own thread but NYT today has interesting article about CEO of Mesa, which sheds alot of light on how the regional airline business works. Unlike the more corporately-managed majors, many of these smaller companies are still run very personally by the head guy, quirks and all, and Colgan as a family business was probably an extreme case of this. As Ryan says, Mr. C got a chance to cash out and still get a salary. Nice deal I wish someone would offer my family business!

[hiss srq]

I wish that about my family biz too but my dad and uncle will die before they let that business go outside of blood or they will pull it apart first lol