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Continued: Sun Country reports $1 million profit

  • Article by: LIZ FEDOR , Star Tribune
  • Last update: January 28, 2009 - 9:05 PM

Sun Country Airlines, which filed for bankruptcy in October, reported Wednesday that it produced a $1 million profit in the fourth quarter because it reaped the benefits of changing its business strategy during 2008.

The carrier's income on $49.5 million in revenue was in dramatic contrast to its performance a year earlier, when the Mendota Heights-based airline lost $18 million on revenue of $54.5 million.

Sun Country also announced Wednesday that it will begin service to Boston in May, with one daily departure Sundays through Fridays.

Sun Country faced a cash shortage late last year after businessman and Sun Country owner Tom Petters was arrested on fraud charges and was unable to provide the airline with an operating loan.

So Stan Gadek, Sun Country CEO, turned to his employees for help; they took temporary pay cuts to tide the airline over until more cash started to flow in during the carrier's heavy winter-flying period. Those employee sacrifices allowed Sun Country to keep operating, and Gadek said Wednesday that he has reimbursed employees for the cuts they took on two paychecks. They're to get the rest of their deferred pay by April.

But the turnaround in Sun Country's fourth quarter financial results is linked to many actions that were taken earlier in 2008.

"We made significant changes to our business model to include reworking our flight schedule to eliminate unprofitable routes," Gadek said.

Sun Country management reduced its winter fleet from 14 to 10 airplanes, eliminated union and nonunion jobs, cut wages by 10 to 15 percent, introduced consumer fees -- such as a fee for the first checked bag -- and solicited new charter business.

In the fourth quarter, Gadek said, Sun Country's charter revenue was $7.8 million, up from $1.3 million in the 2007 quarter.

The reduction in fuel prices also helped. Sun Country paid $2.20 a gallon for fuel in the fourth quarter, down from $2.71 a gallon a year earlier.

Gadek said that Sun Country is seeing "some softness" in bookings that reflect the current recession, but he added that the carrier is flying fuller airplanes to warm-weather destinations this year because Sun Country pared its fleet. The privately held airline expects to make money in the first quarter of this year as well as for the full year.

Liz Fedor • 612-673-7709

  • about this series

  • The Star Tribune's coverage of the federal fraud case against entrepreneur Tom Petters and the struggles of Petters-owned Sun Country Airlines.

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