Sun Country Airlines, Minnesota’s “hometown airline” since Delta Air Lines bought Northwest Airlines a decade ago, contracted a bit in 2016.
Sun Country competes in a U.S. industry dominated by the Goliath likes of Delta, United and American. Overall, the industry posted its third consecutive year of growing revenue and increased profits.
But Sun Country’s posted operating income of $16 million was down 41 percent from 2015, and operating revenue declined 1.35 percent to $511 million, according to a government filing covering fiscal 2016.
Sun Country is privately held by the Davis family, which acquired it out of bankruptcy from the estate of Tom Petters, who is serving 50 years for a Ponzi scheme conviction. However, the airline must make periodic financial disclosures to the U.S. Department of Transportation.
Sun Country carried 1.8 million passengers in the 12-month period ended in January, down 2.5 percent from the year-ago period, ranking it 26th among 89 U.S. passenger carriers, from Delta to the veritable regional puddle-jumpers.
Sun Country originated nearly 900,000 passengers from Minneapolis-St. Paul International Airport, its biggest hub and where it holds an estimated 5.4 percent market share.
The carrier got more productive; revenue per seat-mile rose 6.75 percent in fiscal 2016. However, profits narrowed even at a time of lower fuel costs. That may partly result from increased pay to pilots and flight attendants through contracts concluded since 2015.
Like most passenger carriers, Sun Country is a promotional company that trots out the brass for announcements about new on-board sandwiches, naming aircraft after Minnesota lakes and warm-weather destinations.
The company did not respond to e-mail requests for comment last week about its performance or go-forward strategy.
Marty Davis, the company chairman, named Zarir Erani as the carrier’s CEO in 2015, the third boss since the Davis family bought the company for $34 million in 2011. Erani was chief information officer of Hallmark Business Connections — as in cards, not air carriers — and was praised for his strong organizational skills.
Erani, who seems to keep a low profile, succeeded CEO John Fredericksen, who was hired on an interim basis in 2013 after serving as general counsel of Sun Country.
Fredericksen was elevated by Davis after the surprise departure of five-year CEO Stan Gadek.
Gadek was an airline industry veteran who was popular with the workforce. He took over as CEO in 2008, hired by Petters, just as Sun Country was about to spin out of control amid the Petters investigation and the airline-busting Great Recession.
Gadek negotiated concessions with employees who saved the carrier. He paid them back out of increased revenue later.
Gadek and Davis apparently didn’t get along for the couple of years that Gadek remained after the Davis family bought Sun Country. They expressed differences over strategy and other issues when Gadek left in 2013.
“The idea of wanting more control over an acquisition is a good reason to part ways,” Alfred Marcus, a University of Minnesota business professor, said at the time.
Davis, 52, hails from the St. Peter farm family that became a success in the milk and cheese industry after World War II. He led the family’s acquisition of a once-bankrupt technology firm about 20 years ago that they turned into Cambria, the popular quartz counter-top company.