Sun Country Airlines will place greater focus on charter operations than scheduled service as the economic downturn continues and the Minneapolis carrier wades through Chapter 11 bankruptcy protection.
The airline intends to launch transatlantic and transpacific charter offerings as it works secure two-hour extended range twin-engine operations (ETOPS) certification from the FAA.
Sun Country president and CEO Stan Gadek tells ATI he expects to receive an initial certification in the next two to three months. After a two-hour ETOPS certification is finalized, the carrier will apply for three-hour ETOPS certification so it can pursue west coast charter flights to Hawaii, as well as aircraft, crew maintenance and insurance (ACMI) agreements.
While the carrier would consider adding transatlantic or transpacific scheduled service to its route network, its initial usage will be under ACMI agreements with airlines that lack ETOPS and or charters, especially given the competitive commercial Hawaiian market, he says.
Coming off its peak scheduled season in Mexico and the Caribbean, Sun Country is seeing softness in advanced bookings for commercial operations, the executive says.
No airline is making money from scheduled service in this weak environment, so, now is not the time to grow that business in a large way, Gadek says.
But he believes opportunities to stimulate demand still exist. "People still want to travel, you just need to find the price point," he says, pointing out that a recent Sun Country network-wide fare sale, with select seats going for $59, sold out within a weekend after the sale was announced. While passengers paid sale prices for off-peak, weekday legs of their flight, the airline benefited from those same customers paying full fare on the return leg of their trips.
But the emphasis on non-scheduled service over scheduled operations comes as the carrier posted a record first quarter profit of $8.1 million, reversing an $8.3 million loss for the period in 2008.
In addition to a record profit, Sun Country reported $9.8 million in operating income largely due to increases in ancillary revenues.
The latest financial results mark the airline's second consecutive month in the black after entering Chapter 11 in September 2008. The parent company of Sun Country's majority shareholder Petters Aviation became involved in a federal fraud investigation and the carrier failed to receive a short-term loan from Petters Aviation.
While Sun Country has not set an exit date for Chapter 11, the carrier plans to step up marketing efforts in the latter half of the year to attract long-term investors after the airline continuesto build profitability, Gadek says, adding he is not in a hurry to market the airline as Sun Country has the support of its creditors and creditors committee to continue operating with its current business plan.
Gadek reasons the more consecutive profitable quarters Sun Country posts along with generating a healthy cash flow should help Sun Country's credibility with potential investors.
Source: Air Transport Intelligence news
