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RUMOR MILL: Will Southwest Airlines Buy Out Sun Country?

Sun Country Boeing 737-800 (N807SY) taken at SEA.

Sun Country Boeing 737-800 (N807SY) taken at SEA.

The rumors surrounding Sun Country’s buy-out have been circulating for quite sometime. I have heard that Delta, AirTran or Southwest might be good candidates for a take over. Out of those three, Southwest seems the most likely.

I spoke with representatives from all three rumored buyers and they each had their own unique way of telling me, “no comment.” That was totally expected, since either they honestly have no interest or this is a hot topic and one of them is not ready to let the cat out of the bag. I have spent the last few days trying to get a hold of someone at Sun Country, but with no success. Either this is a topic they want to avoid or they aren’t so keen talking to bloggers.

Sun Country is based at Minneapolis-Saint Paul International Airport (MSP), which Southwest has recently started to fly into. This being a new market,  presumably Southwest would want to be able to grow rapidly. With the recent merger of Delta and Northwest (which was based at MSP), there could be Northwest loyalists who aren’t wanting to start flying Delta and looking for a new airline to LUV.

There is also fleet similarities between Sun Country and Southwest. Sun Country flies Boeing 737-700 and -800′s, while Southwest is just steps away from starting to fly the larger -800 among other versions of the 737. Southwest has been looking at flying internationally and taking over Sun Country would allow them to quickly start. Since Southwest is installing satellite based ROW 44 internet, they would have an advantage over other low cost carriers that fly internationally.

Sun Country recently came out of bankruptcy by creating a viable business plan. Although the airline publicly states they feel confident with their future, this would be a good time for another airline to take them over. Sun Country has announced they will be purchasing new aircraft, expanding routes and hiring 100 new employees. That confidence is good for Sun Country’s future and should make them a better value for possible buyers.

Southwest might also want Sun Country to make their books look better. Since Sun Country flies mostly to leisure travel  destinations from the very cold MSP, the first quarter is their best. However, the first quarter is Southwest’s weakest. Combining the two is like completing a financial puzzle.

So most things look like a great match. However, there are always two sides to a story and I spoke with Steven Frischling, who writes the blog Flying With Fish, and he sees some issue with this match up.  First, purchasing Sun Country wouldn’t  mean that Southwest would be getting their aircraft, “While many look at Sun Country’s fleet as compatible with Southwest Airlines, especially with Southwest announcing that they are exploring the 737-800, Sun Country does not own its fleet. All of its 737-700s & -800s appear to be leased.  So a purchase of Sun Country would not include aircraft,” he explained.

He also points out that one of the major reasons airlines will buy out another airline is to get slots at a particular airport. However, slots are not that difficult to get at MSP and Southwest wouldn’t need to buy an airline to increase flights. “Sometimes buying an airline for landing slots, fleet, routes or gates makes sense,” Frischling stated. “While Southwest Airlines is  changing how it does business, Sun Country offers Southwest Airlines nothing. The airline is not even a competitor.”

So, this might only be a rumor and nothing will come of it, but it is always fun to think about. The old Southwest probably wouldn’t have any interest in Sun Country, but things have been changing over at the Dallas based airline. Will the new Southwest look to take over Sun Country and expand internationally? I don’t know, but I wouldn’t be surprised if they did.

MORE OPINIONS:
* Ben Mutzabaugh with USA Today
* Terry Maxton with Airline Biz Blog
* Reuters

Image: Drewski2112

9 comments to RUMOR MILL: Will Southwest Airlines Buy Out Sun Country?

  • Since the analyst admits it’s an idea he picked out of the blue sky, it doesn’t warrant much discussion.

    The reason that the spokespeople all declined to discuss it is because of SEC rules on publicly-traded companies. The intent behind the regs is that information has to be made available to all investors equally. But it makes its own brand of strange behavior in people affected by it. Anyone who knows about a merger/acquisition involving a publicly traded company would go to jail if they disclosed it before it’s announced. They can’t deny cases of wild speculation because failure to deny it in other cases could amount to a premature disclosure, and they’d go to jail. So “no comment” is the only answer they’re going to give for that question either way.

  • MVFlyer

    I don’t think SW buying Sun Country would improve SW’s desire to fly internationally. SW claims their reservation system can’t handle international flights (yet), which is the reason they haven’t started. Otherwise, it would be easy for them to go to Canada, for example, due to Open Skies between the countries, and Mexico, which right now would be eager to get more flights with MX’s demise.

    Taking over Sun Country wouldn’t change the res system, and SW doesn’t need approvals for most of the flights they’d be interested in starting up.

  • David Z

    Just search around online: Southwest and AirTran will merge. :)

  • [...] that long ago I was questioning if Southwest was eying to buy Sun Country. Ha…I will a little off. Southwest was planning something a little bigger. Yes, the new and [...]

  • lady

    Southwest needs to talk to Alaska Airlines about merger,This would make Southwest complete,they would have the west coast,state of Alaska,Mexico,Canada,and Hawaii.This would be $$$$$$$$$$$$$$$$$ for both airlines

  • Tara Williams

    Alaska Airlines should acquire and merge with Sun Country. Same aircraft type – A perfect fit!

  • [...] am not really sure who could be a good buyer for Sun Country. I wondered if Southwest Airlines might be interested, but shortly after I hypothesized, Southwest announced their purchase of AirTran — so I was a [...]

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