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Thu, Jan 29, 2009

Sun Country Posts Small Profit In Fourth Quarter

Reports Of Our Death Have Been... Well, You Know

We're not going to call the turnaround in fortunes for St. Paul, MN-based Sun Country Airlines "miraculous"... though for a company many chalked up for dead last October, news of a fourth quarter profit is nothing short of amazing.

On Wednesday, Sun Country Airlines announced net income of $955,000 for the fourth quarter of 2008. That's not a large sum by any means in the airline business... though compared with the $18.0 million loss Sun Country incurred in the fourth quarter of 2007, well...

It also represents the first profitable fourth quarter Sun Country -- a relatively small niche carrier, largely dependent on vacation and charter flights -- has had in the past five years.

"Our 2008 financial results reflect a significant improvement based upon the successful turnaround of Sun Country Airlines. This success was achieved through the hard work and dedication of our employees as well as the changes to our business model over the past several months," said Stan Gadek, Chairman and CEO of Sun Country Airlines.

As ANN reported, fortunes turned decidedly against Sun Country last year, when parent company Petters Aviation, LLC filed for Chapter 11 bankruptcy protection on October 6. The capitulation came about two weeks after the offices of Petters Group Worldwide were raided by federal agents. Company founder Tom Petters resigned as chairman of Sun Country's board of directors soon afterward, under clouds of accusation and a strong whiff of corporate malfeasance.

Despite the turmoil, Gadek asserted his airline would continue flying... though employees were asked to accept two rounds of pay cuts through the end of the year, as the decline of Petters tanked the airline's chances of securing outside loans to cover regular payroll.

At the time, Gadek also promised those cuts would be short-lived. The airline allowed certain pay concessions to lapse December 31, as planned, and employees were reimbursed for 40 percent of their early October wage sacrifices on their end of year paychecks. The airline plans to pay back the rest of the deferred wages by April -- plus three percent interest, for what amounted to a loan from the airline's workforce.

"Based on current booking and revenue trends, we expect to be profitable in first quarter and full year 2009," continued Gadek. "While we were faced with numerous challenges, including record high fuel prices, we successfully positioned the company for profitability and growth going forward. We appreciate the continued support of our Sun Country customers and look forward to providing the superior level of service that Sun Country is known for."

Despite Wednesday's good news, Sun Country still has a ways to go before it can be truly termed a success. For the year, the carrier reported a loss of $21.4 million... though, again, that compares favorably to a $35.0 million loss in 2007.

Perhaps most importantly, for the second half of 2008 -- when more than a few analysts and pundits expected the airline to fold -- Sun Country recorded net income of $412,000... compared to a net loss of $ 7.8 million in the second half of 2007.

And, perhaps, even more importantly than that, the airline accomplished those feats while apparently doing right by its workforce, a decided rarity today (just ask employees at United, American, US Airways...)

If that streak continues, Sun Country could give Southwest a run for its money on how to run a successful airline.



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