Sun Country Airlines is reducing its employee base at its Twin Cities headquarters as federal aid for the airlines is in limbo and bookings remain far below sustainable levels due to the ongoing coronavirus crisis.
Chief Executive Jude Bricker told employees Thursday the workforce is being reduced by 112 positions, or about 7%, most of which will be lost through attrition or not hiring for open vacancies.
Thursday’s cuts directly impact 18 existing corporate employees, nine of whom will be offered other positions within the company. None of the lost jobs are front line workers, such as pilots, flight attendants and ground crew workers.
“This is an e-mail I hoped never to send,” Bricker told employees in a companywide memo. “We’ve all worked together to put Sun Country in the best possible position for the future, and because of your diligent stewardship of the company, we’ve made every effort to make as few reductions as possible. … However, that doesn’t change at all how difficult these decisions have been to make or the difficulties our colleagues will face as they transition out of the company.”
The news comes as the airline industry reaches a crucial inflection point with an airline aid package being debated in Washington, D.C.
Few industries have been more devastated by the coronavirus pandemic than tourism and air travel. Congress recognized this in April when it passed the CARES Act giving special provisions to the aviation industry, including a Payroll Support Program. At the time, there was hope the effects of the pandemic would be short-lived and six months of support would help airlines keep Americans employed until the worst was past.
But the novel coronavirus continues to course through the United States with back-to-back flare-ups in different parts of the nation.
Sun Country’s cuts are despite a second quarter performance, which, Bricker said, “was better than all other carriers, and despite receiving $60 million in grants under the CARES Act.”
Sun Country, based at Minneapolis-St. Paul International Airport, has avoided the depth of pain experienced by many of the nation’s largest carriers, but it is not immune to the challenges.
The airline’s bookings began to rebound slightly in June but flattened out in July as new hot spots emerged around the United States and the pandemic’s stubborn persistence became clear.
“Bookings … have continued to be less than we need to sustain our business in the longer term,” Bricker said. “This action comes only after we have examined and implemented every other possible cost-savings measure along with drastic capacity reductions to stabilize the company financially.”
Sun Country’s revenue is down more than 50% year over year. Similarly, bookings remain about half of what they were a year ago.
An extension of the airlines’ payroll support was proposed as a part of a second coronavirus economic relief package, but negotiations screeched to a halt earlier this week on remarks made by President Donald Trump.
The president said Tuesday he was abandoning talks with House Democrats on COVID-19 economic relief until after the Nov. 3 election. He has since backpedaled, saying he’s open to smaller, targeted relief, including assistance for the airlines.
Sun Country’s leadership praised the entire workforce for their role in shoring up the company’s balance sheet over the past seven months, including voluntary furloughs or working reduced hours. Bricker doesn’t expect further staffing reductions, but acknowledged the industry continues to face considerable uncertainty.
“I’m genuinely sorry that despite all of our collective best efforts, we have reached this point. It’s more important than ever that we pull together and support one another,” Bricker said.
Airlines are currently operating “in idle,” said Bob Mann, an industry analyst and former airline executive, which cannot last much longer. Airline executives are having to make hard choices about where to make cuts, and how much. The airlines that cut too many workers or too much capacity will have a longer reboot once demand returns.
“If you shut it down too far, you won’t be able to spool it up quickly and you’ll lose to others — likely to the low-cost operators that have a simpler fleet and don’t have huge overheads,” Mann said.
Sun Country’s advantage is that it is small and therefore more nimble — a proven advantage during this crisis.
“Our hope is that with continued financial discipline, we will be in the best position to capture a rebound in demand, particularly for winter and spring break travel,” Bricker said. “The coming months will give us a much clearer picture about what demand looks like going forward.”