Sept. 16: Increased charter flying gives lift to Sun Country

Sun Country Airlines lost $13.4 million in April, May and June on operating revenue of $56.6 million. But its top executive said Monday that the carrier's financial performance improved dramatically this summer, despite oil prices that climbed above $145 per barrel in July.

"I don't view the second quarter as being representative of how this company is doing today," CEO Stan Gadek said in an interview. "So far in the third quarter, we've made money, not a lot of money."

The Mendota Heights-airline has struggled to change its business model in response to high oil prices. But recent cost cuts, fare and fee increases and additional charter flying have helped Sun Country regain its financial footing, Gadek said. Yet, he added, he still expects Sun Country to ask the Metropolitan Airports Commission for assistance as the airline further adapts to high fuel costs.

The airline had a net loss of $47 million on operating revenue of $251 million in the four quarters that ended in June, according to a report released Monday by the federal Bureau of Transportation Statistics.

In early August, Sun Country executives made a presentation to a MAC committee about the level of service it offers in the Twin Cities and how its presence provides competition for the much larger Northwest Airlines.

Gadek said Monday that he's been having detailed discussions with the MAC about some form of financial aid, which he expects to request "in the near future." But Gadek didn't repeat the $50 million assistance figure that he cited in June as the magnitude of help that Sun Country might need.

MAC staff members have had several meetings with Sun Country leaders that focused on Sun Country's business challenges and the "federal restrictions on what airports can do financially for a particular airline," MAC spokesman Patrick Hogan said Monday.

"Sun Country officials have not presented a specific proposal for aid, and we have made no commitments," Hogan said. "We want to see Sun Country succeed but have not yet identified any meaningful role the MAC can play in achieving that outcome."

Since Gadek, former chief financial officer of AirTran Airways, was hired in March to lead Sun Country, he's taken several steps to boost revenue and slash operating costs.

"We are not going out of business," he said, and he's encouraged that the new revenue brought in by charter flights allowed the carrier to be profitable in July and August.

About 10 to 15 percent of Sun Country's business comes from charter flights for the military, tour operators and the vice presidential campaign of Sen. Joe Biden, D-Del. Among domestic airlines, Gadek said, Sun Country finished No. 2 in the amount of military charter flying from April through August.

He also considers it a coup that Sun Country is flying Biden and a traveling press corps to campaign events. "It raises the company's profile beyond just the immediate region here," Gadek said. "It gives us credibility."

Sun Country is operating seven Boeing 737s during September and expects to be flying at least 10 airplanes in December, when its schedule expands for winter-vacation flying.

The big jump in oil prices hurt Sun Country and other carriers this year. In July, Sun Country paid $4.17 a gallon for jet fuel, compared with $2.14 in July 2007, Gadek said. The price per gallon fell to $3.66 in August, and Sun Country will pay less this month as oil prices closed under $100 per barrel on Monday for the first time since March.

Liz Fedor • 612-673-7709