Sun Country Airlines is reducing jobs at its Twin Cities headquarters as federal aid for the airlines is in limbo and bookings remain far below sustainable levels due to the ongoing coronavirus crisis.
The airline's workforce is being reduced by 112 positions, or about 7%, Jude Bricker, the company's chief executive, told employees Thursday.
Most of the reduction was due to attrition, or not hiring for vacancies. But 18 employees were directly affected by the decision Thursday, with nine offered other positions. None were front-line workers, such as pilots, flight attendants or ground crew workers.
"This is an e-mail I hoped never to send," Bricker told employees. "We've all worked together to put Sun Country in the best possible position for the future, and because of your diligent stewardship of the company, we've made every effort to make as few reductions as possible. … However, that doesn't change at all how difficult these decisions have been to make or the difficulties our colleagues will face as they transition out of the company."
The news comes as the airline industry reaches a critical inflection point with an airline aid package being debated in Washington, D.C.
Few industries have been more devastated by the coronavirus pandemic than tourism and air travel. Congress recognized this in March when it passed the CARES Act, which included $25 billion in aid to passenger airlines in return for a promise not to cut jobs through September.
Sun Country, based at Minneapolis-St. Paul International Airport, received $60 million from that aid, which helped it achieve a small operating profit in the second quarter.
The airline's bookings began to rebound slightly in June but flattened out in July as new hot spots emerged around the United States and the pandemic's stubborn persistence became clear.
"Bookings … have continued to be less than we need to sustain our business in the longer term," Bricker said. "This action comes only after we have examined and implemented every other possible cost-savings measure along with drastic capacity reductions to stabilize the company financially."
Sun Country's revenue is down more than 50% year over year. Similarly, bookings remain about half of what they were a year ago.
An extension of the airlines' payroll support was proposed as a part of a second coronavirus economic relief package, but President Donald Trump on Tuesday halted talks with House Democrats on the broad measure. He has since backpedaled, saying he's open to smaller, targeted relief, including assistance for the airlines.
Sun Country's leadership praised the entire workforce for their role in shoring up the company's balance sheet over the past seven months, including voluntary furloughs or working reduced hours. Bricker doesn't expect further staffing reductions, but acknowledged the industry continues to face considerable uncertainty.
"I'm genuinely sorry that despite all of our collective best efforts, we have reached this point. It's more important than ever that we pull together and support one another," Bricker said.
Airlines are currently operating "in idle," said Bob Mann, an industry analyst and former airline executive, which cannot last much longer.
Airline executives are having to make hard choices about where to make cuts, and how much. The airlines that cut too many workers or too much capacity will have a longer reboot once the public starts flying again.
"If you shut it down too far, you won't be able to spool it up quickly and you'll lose to others — likely to the low-cost operators that have a simpler fleet and don't have huge overheads," Mann said.
Sun Country's advantage is that it is small and therefore more nimble — a proven advantage during this crisis.
"Our hope is that with continued financial discipline, we will be in the best position to capture a rebound in demand, particularly for winter and spring break travel," Bricker said. "The coming months will give us a much clearer picture about what demand looks like going forward."