Sun Country Airlines, battered by oil prices exceeding $100 a barrel, has decided to sublease two of its airplanes instead of flying them on unprofitable U.S. routes.
Stan Gadek, Sun Country's new CEO, said Tuesday that "we are trying to trim capacity and recast the company to be successful in the current environment."
During the spring and summer, Sun Country will operate seven Boeing 737s and sublease two others to Amsterdam-based Transavia. That decision led Sun Country to issue May 1 to Oct. 31 layoff notices to 45 of its 156 pilots.
In the winter season, Sun Country used five Transavia airplanes to boost its fleet to 14 to meet high flying demand. Normally, Sun Country turns a profit in the first three months. But Gadek said that in 2008's first quarter "we lost money -- without question."
In 2007, Sun Country lost $34 million on total revenue of $234 million.
Gadek, a veteran executive who came to Sun Country from the much larger AirTran Airways, said he intends to return Sun Country to profitability by focusing on leisure markets and serving the needs of tour operators.
Sun Country's 2008 budget was created on the assumption of oil costing $85 to $90 a barrel. Now, Gadek said, he is taking a number of steps to help Sun Country survive the brutal fuel price environment.
Those steps include halting growth plans and reducing flights to some markets. For example, Sun Country will cut service to Washington, D.C., from twice-daily flights to a single flight. In addition, it has backed away from plans to add a second flight to San Diego.
"Clearly the world has changed with high fuel prices," Gadek said.
Buddy Scroggins, chairman of the Sun Country pilots union, said that the pilots' contract provides for summer layoffs. While the pilot layoffs are involuntary, Gadek said some flight attendants have taken voluntary leaves. Depending on the month, 65 to 98 flight attendants will be on leave.
Liz Fedor • 612-673-7709