Sun Country Airlines, which six months ago appeared to be on the verge of extinction, took another small step back Tuesday.
The carrier, which flies vacationers to warm-weather climes, said that it has repaid a crucial loan it took out in December as part of its bankruptcy proceedings.
Sun Country also said it expects to be profitable in its first quarter and for the full year in 2009 as a result of steps it began taking last year, including eliminating unprofitable routes, charging new fees to fliers and expanding its charter business. It is already looking to expand, with service to Boston to begin in May and a new route expected to be announced today.
Just months ago, the airline's very survival was at stake. In October -- days before filing for bankruptcy -- it warned of a possible shutdown in early December because of a "serious financial crisis." It told employees it would defer half their compensation until its heavier winter-flying season began.
The cash crunch came on the heels of the arrest of owner Tom Petters, who had provided the airline about $25 million in operating funds since late 2007. Sun Country CEO Stan Gadek said last October he had been counting on a $7 million loan from Petters to serve as a financial bridge until the high revenue winter travel season.
Sun Country filed for bankruptcy protection days after the arrest of Petters, who has pleaded not guilty to fraud and money laundering charges. The company slashed the pay of most of its 850 employees by as much as 50 percent.
In January, with new financing in hand, Sun Country restored employee pay. That same month, the airline reported a $1 million profit for the fourth quarter of 2008 compared to an $18.4 million loss for the same period in 2007.
The bankruptcy financing came from Elite Landings, which is also part of Petters' business empire. The loan amount has not been disclosed.
Gadek said Tuesday the loan repayment is a significant step in its Chapter 11 reorganization.
"Sun Country has become more efficient and financially stronger despite adverse circumstances," he said.
The projected profit for the first quarter would contrast with an $8.3 million loss for the same period a year earlier.
In addition to benefitting from changes in its business model, Sun Country and other airlines have been helped by lower fuel prices.
Susan Feyder • 612-673-1723
