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Airtran: Interested In Buying Sun Country?

Tue Nov 27, 2001 11:25 am

Associated Press: Business News
Sun Country to Rid Some Flights
By KARREN MILLS (AP Business Writer)
The Associated Press

Web Posted : 11/26/2001 7:10 PM

Sun Country Airlines, while looking for an outside investor to keep operations running, is cutting its flight schedule.

The Minnesota-based airline announced Monday it will stop flying its 12 Boeing 727 airplanes and end regularly scheduled flights to California, Arizona, New York and Washington, D.C. on Friday.

The destinations being cut are San Francisco, Los Angeles, San Diego, Phoenix, New York and Washington, D.C.

For the winter, the Mendota Heights-based carrier said it will serve its strong leisure markets out of Minneapolis, using the seven new Boeing 737 airplanes recently added to its fleet.

Sun Country will continue to serve the leisure destinations of Las Vegas; Miami, Orlando and Fort Myers in Florida; Dallas and Harlingen in Texas; Milwaukee; Cancun, Cozumel, Mazatlan and Puerto Vallarta in Mexico; and Montego Bay and St. Thomas in the Caribbean.

"It is our hope that this temporary retrenchment, a return to our strongest markets with guaranteed flying, will allow the airline to become more financially viable and rebuild after we enter our strong first quarter," said David Banmiller, Sun Country president and chief executive.

The cutbacks came as Sun Country negotiated with potential buyers. Owner Bill La Macchia Sr. announced Nov. 8 _ after losing money for more than two years trying to compete with Northwest Airlines _ that the airline was for sale.

Among the potential buyers:

_An independent group or groups of buyers. George Wozniak of Hobbit Travel, a Minneapolis agency that specializes in low-fare travel, said he has put together a group of investors who were among potential buyers scheduled to meet with Sun Country officials on Tuesday.

_Frontier Airlines, which now operates nonstop flights between Minneapolis and Denver.

_Air Tran, another low-fare carrier based in Fort Lauderdale, Fla., which operates nonstop service between Minneapolis and Atlanta.

_Champion Airlines, largely owned by Carl Pohlad and Northwest Airlines, may want to acquire Sun Country to eliminate competition.

Sources close to the industry say acquisition by Southwest Airlines or Indianapolis-based ATA is unlikely.

Airline analyst Terry Trippler said a group put together by Wozniak would make sense.

"George has the outlet, he could really sell it. That would be best for the Twin Cities, best for the employees of Sun Country and best for the consumers," Trippler said.

La Macchia, who owns The Mark Travel Corp. in Milwaukee, also could return Sun Country to an all-charter operation to provide additional transportation for Mark Travel's Funjet Vacations and Trans Global Vacations subsidiaries and other tour packagers.

La Macchia has said a buyer could obtain a substantial share of Sun Country for $20 million. A controlling share or the entire carrier would cost more. Sun Country is a turnkey operation with seven new Boeing 737-800 airplanes, 12 Boeing 727-200s and a trained work force.

La Macchia bought Sun Country for a reported $41 million in April 1997 when it was an all-charter carrier.

Since he converted Sun Country into a scheduled airline in June 1999, putting it in direct competition with Northwest Airlines, La Macchia has covered at least $80 million in Sun Country costs and losses.

Anyone know more?

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RE: Airtran: Interested In Buying Sun Country?

Tue Nov 27, 2001 12:37 pm

From what I hear if someone does not come up with cash soon, days, it is over. The airline is planning to park all 12 727's and layoff out of seniority. That may not fly with the union. Anyway 7 737's is a far cry from the 22 aircraft originally planned for this winter. It is a shame but the ecomomy did this along with a poor marketing plan.

I hope they hang on.
Jean Leloup
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RE: Airtran: Interested In Buying Sun Country?

Tue Nov 27, 2001 12:42 pm

When did they get rid of their DC-10(s)? Where did those fly?
Next flight.... who knows.
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lindy field
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RE: Airtran: Interested In Buying Sun Country?

Tue Nov 27, 2001 12:46 pm

A little less color in California skies... Sigh.

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Goodbye, Sun Country!
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RE: Airtran: Interested In Buying Sun Country?

Tue Nov 27, 2001 12:51 pm

The DC10's were parked in April. They mainly flew to LAS and CUN with them with occasional military trips mixed in. The DC10's were -15's and Douglas only made 7, they had 4 of the 7. While they were nice aircraft, Very powerful, they lacked the range to do Europe from the midwest, or HNL from the midwest. You always had to fuel stop. I still can not believe how fast they have fallen in such a short time.
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RE: Airtran: Interested In Buying Sun Country?

Tue Nov 27, 2001 12:54 pm

All those 727's described seem to be parked in front of the Sun Country hangar at MSP. I've noticed at least one with an engine missing, as I'm sure they are either "pickling" them or the aircraft maintenance staff has been reduced and hours cut tremendously.

In the past, SY seemed to be at least somewhat successful as a charter operator getting people away from the Minnesota winter (which just started up again today in a really bad way). La Macchia had a grand vision of standing up against NW in the MSP market (which nobody else has really ever successfully done) and competing as a scheduled passenger carrier. He sold off the DC10's that ferried a lot of passengers to and from resort destinations in Mexico and the Carribean and decided to totally realign the company. Other smaller startups have not had success at MSP. Vanguard doesn't fly to MSP anymore, AirTran tried MSP-ORD service but that didn't last too long. People have been demanding Southwest to come to MSP for a long time, but I'm sure they know better than to attempt that or face a long, bloody fare war with NW.

Now in MSP, NW has this gigantic share of the pie. The almost socialist government in Minnesota is scared to do anything that wouldn't appease NW for fear that they might pack up their bags and move lots of jobs elsewhere, so NW gets to control something like 80% of the gates at MSP and runs some other enterprises (fuelling and other ground services).

SY was able to have some gates, but they are at the Humphrey terminal which is disconnected from the main terminal of MSP airport. NW would constantly play tremendous price wars with SY, and SY doesn't have deep enough pockets to play in that kind of game. And SY tried to compete on routes that were way out of their league, like MSP-ORD. They compete with NW (busiest route out of MSP), AA and UA for that same route, all with lots of flights and lots more clout than SY. If SY would have stuck with some routes that were not as well covered by NW out of MSP they would have had a chance, like all those flight to Mexico and the Carribean.

If someone like Wozniak can get some investors to jump in and buy SY, that would be kind of cool. Ownership would stay local, many people would get to stay employed and the people served by MSP would benefit by the added route options that SY presents to the market.

Ich haben zwei Platzspielen und ein Microphone

RE: Airtran: Interested In Buying Sun Country?

Tue Nov 27, 2001 4:19 pm

Too bad, their planes were stunning. They and ATA tried the charter to sked swtich. SY is in trouble and I doubt ATA will find much success in its formula.

Canada 3000 went that route to and got smashed.

What does this teach? STICK TO WHAT YOUR GOOD AT!
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RE: Airtran: Interested In Buying Sun Country?

Tue Nov 27, 2001 4:38 pm

I doubt if AirTran would buy Sun Country since their fleets are so different and apparently Sun Country is debt ridden. I think a good combination would be AirTran and Midwest Express though.

RE: Airtran: Interested In Buying Sun Country?

Tue Nov 27, 2001 7:05 pm

>>AirTran tried MSP-ORD service but that didn't last too long.<<

Correction: They tried MSP-MDW service, and that was started because apparently NW somehow heard about them starting up ATL-MSP and they slashed their fares. So AirTran flew MDW-MSP for almost a year, then switched to ATL-MSP. The other reason was that there were too many low-fare carriers on that route. You also had Vanguard and ATA.

RE: Airtran: Interested In Buying Sun Country?

Tue Nov 27, 2001 7:07 pm

I believe that AirTran will buy the planes, gates, and some slots from SY and that's it. That way they won't end up with more debt than they need.

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