Sun Country Airlines started to see a slight uptick in demand after hitting a low point in early April, and executives said the airline will keep middle seats empty for the foreseeable future.
“We’re starting to see a little bit of good news for bookings for summer, relative to where we were in the trough about two weeks ago,” Jude Bricker, the company’s chief executive, said in an interview this week.
Passenger demand has fallen more than 90% over the last two months, part of the broader travel downturn brought on by the coronavirus outbreak.
Sun Country has parked 22 of its 31 airplanes outside its headquarters and hangar on the west side of Minneapolis-St. Paul International Airport.
The airline last weekend received permission from the Department of Transportation to trim its operation to as little as six flights a week to survive the slump. Executives are hopeful they won’t have to trim operations that far. Sun Country is now operating around 30 flights a week and will continue to adjust its schedule based on demand.
The airline, which chiefly provides flights from Minnesota to leisure destinations and back, has a history of changing schedules seasonally — primarily heading south in the winter and east and west in the summer.
Mike Boyd, head of Boyd Group International, an airline consultancy, said Sun Country is in a stronger position than most when travel begins to recover. “As the economy comes back, it’s an airline like Sun Country that can pick and choose where they want to fly,” Boyd said.
In previous recessions and travel slumps, leisure travel tends to bounce back more quickly than business travel. But that may not be the case when people stopped flying because of fear about a disease rather than because they can’t afford a flight.
Bricker said he doesn’t think airlines will be able to attract passengers back simply by offering fare discounts, as they did in recoveries from previous downturns. “This is really about getting customers to feel safe on the airplane,” he said.
Sun Country is not currently accepting assignments for its middle seats, except for families of at least three people traveling together. Passengers flying alone or with another person won’t sit next to a stranger, Bricker said.
Bricker said it’s unclear how long Sun Country will keep middle seats unassigned. “We’re going to need to respond to what passenger expectations are, what the rest of the industry is doing and, of course, our regulators,” he said.
The airline imposed more frequent and thorough cleaning routines for planes. It’s also making temperature checks of crews and other employees and equipping them with gloves and face masks. Bricker said the airline is “working through” whether it should — and legally can — insist that passengers wear face masks.
After two years of sometimes difficult restructuring under a new owner, Sun Country was positioned for a strong year in 2020.
The airline — owned by a fund of Apollo Global Management, a New York private-equity firm — produced record profit for 12 months ended Feb. 29 and record liquidity, executives said. Plans were underway for a listing on the stock market, but that’s uncertain now, they said.
Sun Country has cut costs sharply and doesn’t have the sizable capital commitments, such as new plane orders, that other airlines face. It was granted $60 million in federal payroll assistance under the CARES Act.
“That really helps us sustain ourselves during what we hope will be a relatively short period of revenue being down as far as it is right now,” said Dave Davis, president and chief financial officer.
And Sun Country has another source of revenue about to develop: The company on Thursday will launch cargo flights for Amazon.com, an operation that will grow to 10 planes by July.
Because the planes are the same kind, Boeing 737-800s, Sun Country uses for passenger flights, the airline can rely on its existing pilot corps to fly them.
“The airline industry isn’t the place to be right now,” Bricker said. “But if you have to be, I’d rather have my hand than anybody else’s in the industry.”