Company To Complete Deferred Wage Repayment... Including Interest

Maybe they should call it "Lazarus" Airlines... though, admittedly, the marketing angle would likely be problematic. All-but-written off for dead less than a year ago, Sun Country Airlines announced Thursday a record first quarter net income of $8.1 million. This compares to a net loss of $8.3 million in the first quarter of 2008.

"We are pleased with the record financial performance and the success of our turnaround to date," said Stan Gadek, chairman and CEO. "“I am very proud of the hard work and determination of every person on the Sun Country team. They deserve full credit for these outstanding results and having overcome significant challenges during the past year."

First quarter operating income was $9.8 million and operating margin was 15.3%, both representing all-time records for the airline. Contributing to the operating income were significant year-over-year gains in charter and ancillary revenue as well as an 8.3% increase in passenger unit revenue to 8.31 cents per available seat mile.

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 promised those cuts would be short-lived... and that's proven to be the case.

The company also announced Thursday it will complete the repayment of employee deferred wages on April 22. This will represent the fifth and final payment and will include 3% interest on the amount of deferred wages. "We have an outstanding employee group and I am pleased to return their wages with interest which they contributed to the company," Gadek said.

During the first quarter, Sun Country’s operating unit costs declined 5.9% to 8.06 cents per available seat mile as a result of lower fuel costs and improved cost controls and efficiencies. Load factor or the percentage of filled seats increased 8.3 points from 71.5% in the first quarter 2008 to 79.8% in the first quarter 2009.

FMI: www.suncountry.com