With his airline on the auction block, Sun Country Airlines CEO Stan Gadek said Thursday that the Minnesota-based carrier is back to profitability and is poised for growth.
New owner isn't yet on Sun Country's radar
CEO Stan Gadek said Sun Country Airlines, being shopped around by the Tom Petters trustee, is profitable and looking to grow.
Gadek also acknowledged that the airline is being courted by potential investors but said "nothing is imminent" regarding Sun Country's sale.
"Eventually we will have a change in ownership, I just can't say who it will be," Gadek said during a morning presentation hosted by the Minneapolis St. Paul Business Journal.
Gadek said the key to Sun Country's recent prosperity -- a $13 million profit in 2010, positive numbers in the first three months of 2011 -- was diversification of revenue sources to include scheduled flights, travel management services and military and collegiate sports charters.
That's good news to the Metropolitan Airports Commission, which likes to keep as much competition at Minneapolis-St. Paul International Airport, where Delta is by far the largest carrier.
"Sun Country is an important player," said Dan Boivin, commission chairman. "We like to see them healthy and growing. Along with Southwest Airlines, they compete with Delta and keep prices lower on those routes where they compete."
Gadek said that airline industry consolidation in recent years means fewer planes in the air which translates into more stable ticket revenue because carriers are not constantly dropping fares to fill up empty seats.
"Carriers have more pricing power than ever before," Gadek said.
But, he acknowledged that Sun Country, as well as the rest of commercial aviation, always faces challenges from high fuel costs to security issues to epidemics and the economy.
"It goes on and on and on," Gadek said. "It drives investors nuts."
Which might be one of the reasons Sun Country hasn't found a buyer yet.
Sun Country was once part of the business domain of convicted businessman Tom Petters, whose estate is now in bankruptcy. The trustee in that case, Doug Kelley, has been pursing potential buyers as part of the bankruptcy proceeding.
A month ago Kelley appeared to have an unnamed buyer on the hook, but then oil prices skyrocketed, the Middle East was racked with turmoil and Japan suffered the triple whammy of earthquake, tsunami and nuclear meltdown.
Apparently tire-kicking by potential new owners is ongoing.
"The combination of a loyal workforce and strong management that helped achieve profitability has made Sun Country an attractive property," Kelley said Thursday. "We have had a number of parties that have indicated an interest and negotiations are ongoing. I don't expect anything real soon, but it could happen."
Gadek said Sun Country, with 12 aircraft, picks its routes carefully and was pleasantly surprised by an experiment with a route to London that proved highly successful.
The carrier has special regulatory designation to fly over oceans with its narrow-body 737s, and the London flights last year were part of a demonstration project for the Defense Department to qualify for military charters to overseas destination.
"This is significant," Gadek said about an airline that emerged from bankruptcy in February. "We're profitable, we're out of bankruptcy and we're poised for future growth and to live up to our reputation as Minnesota's home-grown airline."
The airline recently started service out of Lansing, Mich., he said, after the number of carriers serving that market dropped from 10 to two over the past five years.
Gadek said the airline is starting a new marketing campaign called "soaring," as in, "They fly, we soar."
"The public is so jaded about service and the hassles of flying. We're trying to address that and make flying as hassle-free as possible," Gadek said. "Five years from now, this will not be a 12-plane airline."
David Phelps • 612-673-7269
The Minnetonka-based health insurer says the new contract “ensures continued, uninterrupted network access” to hospitals and clinics at the Bloomington-based health system.