Continuous Ignition
28th Nov 2001, 21:40
The pilots' new contract appears to give the airline some flexibility in laying off pilots by equipment type rather than just by seniority. Sun Country Seeks Saviors (http://www.pioneerplanet.com/business/biz_docs/194635.htm)
Sun Country seeks saviors
BY ERIC TORBENSON Pioneer Press
Sun Country Airlines courted financial saviors Tuesday and prepared for what could be a showdown with its pilots union after the carrier decided to ground the majority of its 17-jet fleet and cut half of its flying.
A meeting with a local group of investors that includes Hobbit Travel owner George Wozniak and is coordinated by Twin Cities financier Jack Levi went "extremely well," said Sun Country spokeswoman Tammy Lee. No deal is imminent, but the group seemed to have the money at hand to help Sun Country if it decides to invest, she said.
"Let's put it this way -- their checks would not bounce," she said. Wozniak and Levi didn't return calls Tuesday.
More meetings with potential owners or investors are scheduled for today.
Current owner Bill La Macchia Sr. has poured nearly $80 million into Sun Country since 1998, and wants to sell part or all of the cash-strapped low-fare airline. Bids start around $20 million for an equity stake in the carrier, though Sun Country wants "as much as it can get" in terms of new capital, Lee said.
The Mendota Heights-based airline plans to halt most of its flying to six cities on Friday or Saturday, opting to send 10 Boeing 727s back to leasing companies instead of continuing to fly the inefficient planes.
The cities cut include some of the most popular destinations for Twin Cities travelers, including New York City, Washington, San Francisco and Los Angeles. Sun Country will continue to fly to mostly vacation cities with seven new Boeing 737 aircraft.
The change eliminates most of the "hub" flying Sun Country does through Minneapolis-St. Paul International, flights that agents booked on short notice for clients of Yatra.com, a Twin Cities-based travel consultant that helps middle-sized business manage travel.
"We weren't aware that something like this was possible for Sun Country," said Yatra spokesman Chris Berger. "Sun Country was one of our preferred suppliers because it offered reasonable fares. It's not going to reduce our number of bookings, but at the same time it removes an option for our clients."
Others said the Sun Country news wasn't surprising considering the challenges all airlines face.
"This is an aviation recession bordering on depression that cannot be cured by cost-cutting alone," said U.S. Rep. James Oberstar, ranking Democrat on the House Transportation Committee. "We need Sun County to maintain competition."
Sun Country's pilot group continued to meet with management, said union head George Barbes Jr. "We're going to listen to what they have to offer and then discuss it internally," he said Tuesday.
The pilots' new contract appears to give the airline some flexibility in laying off pilots by equipment type rather than just by seniority.
Sun Country's 727 pilots are more senior than pilots rated to fly the far more advanced 737 planes, and by traditional pilot contracts could "bump" their less-senior counterparts out of jobs and require new training. Training one flight crew on the 737 would cost the carrier $80,000 in expense, according to Sun Country.
One Sun Country pilot who declined to be named speculated that the union would file a "massive" grievance against the carrier to keep the 727 pilots employed. Lee said the airline had presented a variety of options to its nearly 300 pilots and was working on a settlement.
While fare increases to the six cities axed by Sun Country are expected, fare increases weren't evident Tuesday. Northwest Airlines hadn't appeared to make changes in its advance purchase fares of $211 to Los Angeles and other affected markets.
"We make adjustments to our schedules based on customer demand and we will continue to do so," said spokesman Kurt Ebenhoch. Northwest has strongly denied Sun Country allegations of predatory pricing, and said Tuesday that it is still working through its 20 percent schedule reduction linked to the Sept. 11 terrorist attacks. "There are larger forces at work here," Ebenhoch said of the carrier's pricing strategy. Northwest still faces competition on more than 95 percent of its routes, he said.
Northwest recently lowered its "list" prices for airfares by 25 percent to respond to a flurry of discounting in the industry, a move designed to make its regular fares more appealing to customers. That discounting didn't have much of an effect on Northwest' matching of Sun Country's low fares.
Sun Country may approach officials at the Metropolitan Airports Commission about operating fewer gates at the new Hubert H. Humphrey terminal. Sun Country has four of the terminal's eight gates, but since its flight activity will drop to between five and eight per day in December, it won't need the space, Lee said.
Boy, I sure hope this doesn't happen... It would set a bad precedent...
:mad:
[ 28 November 2001: Message edited by: Continuous Ignition ]
Sun Country seeks saviors
BY ERIC TORBENSON Pioneer Press
Sun Country Airlines courted financial saviors Tuesday and prepared for what could be a showdown with its pilots union after the carrier decided to ground the majority of its 17-jet fleet and cut half of its flying.
A meeting with a local group of investors that includes Hobbit Travel owner George Wozniak and is coordinated by Twin Cities financier Jack Levi went "extremely well," said Sun Country spokeswoman Tammy Lee. No deal is imminent, but the group seemed to have the money at hand to help Sun Country if it decides to invest, she said.
"Let's put it this way -- their checks would not bounce," she said. Wozniak and Levi didn't return calls Tuesday.
More meetings with potential owners or investors are scheduled for today.
Current owner Bill La Macchia Sr. has poured nearly $80 million into Sun Country since 1998, and wants to sell part or all of the cash-strapped low-fare airline. Bids start around $20 million for an equity stake in the carrier, though Sun Country wants "as much as it can get" in terms of new capital, Lee said.
The Mendota Heights-based airline plans to halt most of its flying to six cities on Friday or Saturday, opting to send 10 Boeing 727s back to leasing companies instead of continuing to fly the inefficient planes.
The cities cut include some of the most popular destinations for Twin Cities travelers, including New York City, Washington, San Francisco and Los Angeles. Sun Country will continue to fly to mostly vacation cities with seven new Boeing 737 aircraft.
The change eliminates most of the "hub" flying Sun Country does through Minneapolis-St. Paul International, flights that agents booked on short notice for clients of Yatra.com, a Twin Cities-based travel consultant that helps middle-sized business manage travel.
"We weren't aware that something like this was possible for Sun Country," said Yatra spokesman Chris Berger. "Sun Country was one of our preferred suppliers because it offered reasonable fares. It's not going to reduce our number of bookings, but at the same time it removes an option for our clients."
Others said the Sun Country news wasn't surprising considering the challenges all airlines face.
"This is an aviation recession bordering on depression that cannot be cured by cost-cutting alone," said U.S. Rep. James Oberstar, ranking Democrat on the House Transportation Committee. "We need Sun County to maintain competition."
Sun Country's pilot group continued to meet with management, said union head George Barbes Jr. "We're going to listen to what they have to offer and then discuss it internally," he said Tuesday.
The pilots' new contract appears to give the airline some flexibility in laying off pilots by equipment type rather than just by seniority.
Sun Country's 727 pilots are more senior than pilots rated to fly the far more advanced 737 planes, and by traditional pilot contracts could "bump" their less-senior counterparts out of jobs and require new training. Training one flight crew on the 737 would cost the carrier $80,000 in expense, according to Sun Country.
One Sun Country pilot who declined to be named speculated that the union would file a "massive" grievance against the carrier to keep the 727 pilots employed. Lee said the airline had presented a variety of options to its nearly 300 pilots and was working on a settlement.
While fare increases to the six cities axed by Sun Country are expected, fare increases weren't evident Tuesday. Northwest Airlines hadn't appeared to make changes in its advance purchase fares of $211 to Los Angeles and other affected markets.
"We make adjustments to our schedules based on customer demand and we will continue to do so," said spokesman Kurt Ebenhoch. Northwest has strongly denied Sun Country allegations of predatory pricing, and said Tuesday that it is still working through its 20 percent schedule reduction linked to the Sept. 11 terrorist attacks. "There are larger forces at work here," Ebenhoch said of the carrier's pricing strategy. Northwest still faces competition on more than 95 percent of its routes, he said.
Northwest recently lowered its "list" prices for airfares by 25 percent to respond to a flurry of discounting in the industry, a move designed to make its regular fares more appealing to customers. That discounting didn't have much of an effect on Northwest' matching of Sun Country's low fares.
Sun Country may approach officials at the Metropolitan Airports Commission about operating fewer gates at the new Hubert H. Humphrey terminal. Sun Country has four of the terminal's eight gates, but since its flight activity will drop to between five and eight per day in December, it won't need the space, Lee said.
Boy, I sure hope this doesn't happen... It would set a bad precedent...
:mad:
[ 28 November 2001: Message edited by: Continuous Ignition ]