Next time you buy a ticket to fly Sun Country, try picturing Howard Stern and Martha Stewart, cheerily singing along to Sir Elton John on a magnificent Long Island estate.
Leon Black turned 60 in 2011, and celebrated the day with the opulence one might expect of an investment billionaire. Black’s wife wore a dress designed by Vera Wang—who also showed up to party, as did then-New York Mayor Michael Bloomberg.
Sir Elton was paid $1 million for the birthday gig, where guests like the CEO of Goldman Sachs munched on a buffet of snow crab and seared foie gras. Sounds expensive, but, as Stern told his radio listeners, to a man like Leon Black, “a billion dollars is like 10 dollars to us.”
Earlier this month, Forbes estimated Black, cofounder of the Apollo Global Management equity fund, to have a net worth of $6.6 billion, about $1 billion better than his 2017 position. Next year, Black should be sitting even prettier.
Since the mid-2000s, Apollo has amassed a portfolio’s worth of name brands: Harrah’s, the gambling interest behind Caesars Palace and other casinos; Jacuzzi; textbook publishers McGraw-Hill; Chuck E. Cheese’s; and the three-headed real estate leviathan of Sotheby’s, Century 21, and Coldwell Banker.
In December, Apollo took to the skies, announcing plans to acquire Sun Country Airlines for an as-yet-undisclosed amount. The deal ends the ownership run of brothers Mitch and Marty Davis, notoriously likable southern Minnesota natives who grew up on a family dairy farm. The Davises bought Sun Country in a 2011 bankruptcy auction for $34 million, then steered the airline out of a near-death-spiral triggered by the previous owner, Tom Petters, who’d tied Sun Country’s finances to his Ponzi scheme.
Sun Country was launched in 1983 by Minnesota pilots and flight attendants, who noticed unmet need for affordable flights to pleasant locales. That business model has held for decades: Last year, Sun Country’s biggest markets, behind its million-plus annual fliers from the Twin Cities, were tourist destinations: Las Vegas, Los Angeles, New York, and Orlando.
Sun Country has never tried to compete with volume flights or destinations, instead selling affordable tickets to folks who appreciate local owners and award-winning customer service. That’s why Rhonda was happy to work there. That and the flight benefits. (“Rhonda” is a pseudonym; Sun Country does not allow employees to speak openly with media.)
Rhonda enjoyed her duties as a desk agent. Almost everyone on both sides of the transaction was a Minnesotan, married to one, or just happy to be visiting.
“Our agents had the mindset we could look at the people on the other side of the desk and relate to them,” Rhonda says. “I think Sun Country was maybe unique in that way to any other airline.”
Sun Country also didn’t gouge fliers with fees, nor jam them together as if each plane were a roll of quarters. Despite this greedless streak, the airline made a little money—about $20 million profit in 2017, about $15 million the year before. That wasn’t enough, not even for the Davis brothers, who last summer installed Jude Bricker, formerly of Allegiant Airlines, as Sun Country’s CEO.
Within months, Sun Country announced plans to charge customers for carry-ons (up to $40) and checked bags ($20). Those who wished to pick their seat—previously for free—would now pay up to $35. Sun Country also pledged to install “thinner” seats. Not because it noticed customers losing weight. An additional 18 asses per plane will increase passenger loads by 11 percent. Your misery is Sun County’s profit.
All this was before Sun Country was bought by investment bankers. Expect it to get worse. Soon after the purchase announcement, Sun Country said it was laying off 350 people in Minnesota. Rhonda was among them. Not to worry, she and her co-workers were informed. They could reapply to work for Global Aviation Services, the Canadian outfit to which Sun County outsourced its desk service.
There were just a couple catches. Rhonda’s pay of $14 an hour would drop to $12.50, and her ability to hop on an open Sun Country seat would drop five levels, from “standby 1” to “standby 6,” which would rank her a lower priority than other Sun Country workers’ friends. Not even their relatives, their friends.
Rhonda doesn’t need the money. “For a lot of my younger co-workers, this is their living. It’s them I feel bad for.” She wasn’t comfortable working for these New York investment guys anyway. “I don’t know that the Sun Country that’s coming is one that I would be proud to represent,” she says.
And that’s without knowing about the owners’ budding friendship with Jared Kushner. On the last day of February, the New York Times revealed that Kushner—husband to Ivanka Trump, son-in-law and at-large advisor to Donald—had taken White House meetings with banking and investment representatives. Among them: Apollo Global Management.
Joshua Harris, who’d co-founded the company with Leon Black, “met on multiple occasions” with Kushner, ostensibly to talk about a possible job for Harris in the Trump administration. That didn’t happen. Here’s what did:
Apollo floated a $184 million loan to Kushner’s real estate company, which helped it refinance its mortgage on a Chicago skyscraper. One month later, the Securities and Exchange Commission (SEC) dropped an investigation into Apollo Global Management, quietly killing an inquiry into how it reported financial results.
Leon Black was not at those White House meetings. But he was at the U.S. Open tennis tournament in 2016, seated next to Kushner, a few months before Election Day. Maybe someday when you fly Sun Country, you’ll picture someone getting hauled in to testify in front of Congress. Or indicted.
Rhonda’s done with Sun Country, but she’s holding on to her job just long enough to get her daughter a cheap flight for spring break. Good for her. It might be the last nice thing Sun Country does for anyone around here.
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