Colgan Air Sold to Memphis-Based Carrier
Friday, January 19, 2007
Colgan Air, the Manassas airline founded by Virginia state Sen. Charles J. Colgan (D-Prince William), announced yesterday its sale to a Memphis-based carrier for $20 million, becoming the latest regional carrier to be snapped up in a rapidly consolidating industry.
Pinnacle Airlines, which operates under the name Northwest Airlink, gains Colgan Air's fleet of 50 airplanes and 350 daily flights to 53 cities. The purchase includes contracts with Continental, United and US Airways that would broaden Pinnacle's domestic reach.
The two airlines will be separate subsidiaries of Pinnacle Airlines Corp., a publicly traded holding company. Colgan Air will retain its current management in Manassas.
Charles Colgan will remain chairman of the board but will have mostly a consulting role, Pinnacle said. The senator's son, Michael, will remain president, and his daughter, Mary Colgan Finnigan, will remain vice president of administration.
"Colgan has a strong reputation and long history, particularly in Virginia, and it's a testament to the family and their acumen that they were able to last this long," said Douglas Abbey, a partner in Velocity Group, an aviation consulting firm.
Pinnacle said it did not plan to lay off any of Colgan's 1,100 employees. The airline will remain headquartered in Manassas as long as it continues to make financial sense, Pinnacle said.
"We will look for cost savings and synergy. Time will only tell as we work out those synergies," said Philip Reed, a spokesman for Pinnacle.
Colgan Air operates out of hubs at Washington-Dulles International Airport and Houston. It also operates from New York's LaGuardia airport, Boston and Pittsburgh. It flies twice a day from Reagan National Airport to Charleston, W.Va.
Colgan had turned down several offers from private equity investors and other airlines. "We weren't looking to sell at all, but Pinnacle had been a long-standing colleague and it was the right fit," said Dennis Burnett, director of development for Colgan Air. "For our employees, this means bigger and better things, as it gives them more access to resources and more management team expertise."
Charles Colgan, a member of the Virginia Senate since 1976, formed Colgan Air in 1965 with 16 investors as a regional carrier out of the Manassas Regional Airport. The airline was purchased in 1986 by Presidential Airlines and collapsed with the failure of Presidential in 1991. Soon after, Colgan and his son revived Colgan Air, with one airplane.
"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," Michael Colgan said in a statement.