Bluer skies ahead for Sun Country?

In the last six months, Sun Country Airlines has picked up new planes, new employees and new routes. It soon will have new owners.

In a bankruptcy filing of the estate of onetime Sun Country owner Tom Petters, trustee Doug Kelley says he "anticipates accepting a letter of intent" from outside parties to acquire the Twin Cities-based carrier.

Neither the identity of the purchaser nor a purchase price is disclosed in the document.

A sale could offer stability to the airline, its employees and passengers after a bumpy two-plus years under the auspices of the federal bankruptcy court, from which it officially emerged Feb. 23.

With the sale of Northwest Airlines to Delta Air Lines, Sun Country is the lone remaining locally owned commercial airline serving the Twin Cities.

It is uncertain when the transaction will be consummated, but it probably will be within the next month, giving the timing of Kelley's filing this week and his request to U. S. Bankruptcy Judge Gregory Kishel to keep the name of the purchasers and their offer under seal while the final deal is being negotiated. Kelley declined to comment beyond the court documents.

In the filing, Kelley said there is a "minimum price" that he will settle for but that disclosure of that price "would be detrimental" to the estate in negotiations. Last September, that company said it had a value of $20 million.

Within a week, Kelley will control about 56 percent of Sun Country, and two investment vehicles affiliated with Minneapolis-based Whitebox Advisers will own about 44 percent, which was increased from 39 percent as part of a settlement to get it on board with a sale.

A Sun Country spokeswoman said she had no knowledge of the possible deal.

The airline filed for bankruptcy protection in the fall of 2008 when the collapse of the Petters financial empire dried up Sun Country's best source for operating funds. A $5 million loan by Kelley from the Petters bankruptcy estate kept the planes flying and Sun County eventually became profitable under the guidance of CEO Stan Gadek and other cost-cutting measures, most notably cutting the pay of employees. Gadek did not return a call seeking comment.

When its reorganization plan was approved last fall, the airline announced that it would launch new routes, acquire three new planes (bringing the fleet to 12 Boeing jets) and hire about 100 employee, all of which it did.

Whoever the buyers are will be obtaining a solid airline but living in a changing low-fare environment.

"Right now they are in a better position than they've ever been," said Terry Trippler, a Minneapolis-based airline expert. "They've got some legs under their pricing power. The $98 flights are not there anymore because other carriers have cut capacity."

Still, Trippler said, Sun Country faces more competition in the low-fare marketplace as other small discount carriers combine or get gobbled up. Southwest Airlines recently acquired Air Tran, and Frontier and Midwest are now operating as one.

The Sun Country transaction would be one of the biggest in the Petters estate, giving creditors comfort that there will be something in the pool for them when the bankruptcy closes, although it is unclear when that will be.

Kelley's bankruptcy team previously sold Polaroid, another Petters company, for $85.9 million and has liquidated other personal and corporate assets owned by Petters and his associates in the $3.65 billion Ponzi scheme that sent them all to jail.

Kelley also is seeking more than $1.7 billion in clawback lawsuits against investors who may have obtained "phantom profits" in their dealings with Petters.

Petters is serving a 50-year sentence on fraud, conspiracy and money laundering convictions.

David Phelps • 612-673-7269