Petters Aviation and its subsidiaries have filed for Chapter 11 bankruptcy protection. Petters Aviation, a wholly owned unit of Thomas Petters Incorporated, owns MN Airline Holdings, the parent company of Sun Country Airlines based in St Paul, Minnesota, the United States.

Looks like Sun Country Airlines are the latest victim of the steep downturn in US economy.

Petters Aviation said Sun Country Airlines would continue to operate under its regular flight schedule.

In an interview to the media, Stan Gadek, chief executive officer of Sun Country, said: “We were forced to take this action as a result of recent events at Petters Group Worldwide. We are not in bankruptcy because of our business model being broken; we are in bankruptcy because of the recent events at Petters Group Worldwide.”

According to media reports, Sun Country Airlines, which has been fighting to survive a cash crunch, filed for the bankruptcy protection in a move that separated itself from its majority stockholder, Tom Petters, whose other businesses have been taken over by a court appointee as a part of a huge fraud case.

Tom Petters and his associates are accused of defrauding investors to the tune of over $3 billion.

Agents of the Federal Bureau of Investigation (FBI) had raided the home and headquarters of Tom Petters on September 24, 2008. Petters was jailed later.

Sun Country CEO Stan Gadek said the decision to file for bankruptcy was made because the company “did not want to be under the auspices of a court receiver.”

He added: “During Chapter 11 bankruptcy, I expect new owners to provide new capital. I want to give employees shares in the airline; they have sacrificed for a long time here, and I think it is high time they got a chance to benefit from future success.”

Stan Gadek, a former executive of Northwest Airlines and AirTran Airways, was appointed the CEO of Sun Country in March 2008. Since his taking over, Gadek has taken steps to cut costs and find sources of revenue for the company, including military charters and new fees.

A federal judge had appointed a receiver for Sun Country. However, owing to the filing of the Chapter 11 bankruptcy protection in the Bankruptcy Court in Minnesota, the United States, Sun Country will be exempt from coming under a receiver.

In the interview, Stan Gadek said that Sun Country has been “whipsawed by daily revelations and news stories” about the unfolding legal case against Tom Petters and his associates.

Petters Aviation, headquartered in the Mendota Heights, Minnesota, the United States, employs about 850 people and operates 30 flights a day.

In a statement, the company said: “In bankruptcy, the carrier plans to fly its normal schedule. It is the No. 2 carrier in the Twin Cities, where 663,000 people boarded Sun Country flights during the 12 months ending in June. The airline is gearing up for about 40 daily flights during its peak season, when many Minnesotans flee winter to hot spots in Mexico.”

The airline stressed in the statement that “when consumers charge tickets on Sun Country, credit card companies keep customer payments until after the flights are operated. So, a consumer will either fly or get a refund.”

The website flightglobal.com quoted an airline expert, based in Minneapolis, as remarking: “The Sun Country’s bankruptcy will be no different from what consumers saw when Northwest Airlines was in bankruptcy. Your tickets are still good. You can still book with confidence.”

Sun Country, founded in 1982, has been through bankruptcy earlier. The airline almost went bust in late 2001 and was forced into bankruptcy by creditors, but it managed to emerge months later with new owners.