Sun Country Airlines Holdings, has reported financial results for its second quarter ended June 30, 2024.
“Sun Country is pleased to report our eighth consecutive profitable quarter with GAAP EPS of $0.03 and adjusted EPS of $0.06(1),” said Jude Bricker, Chief Executive Officer of Sun Country. “Despite a soft domestic revenue environment and some late-June operational challenges, we delivered a GAAP operating margin of 4.9% and an adjusted operating margin of 5.5%(1). Sun County’s financial results continue to be among the industry leaders at a particularly challenging time for low-cost airlines. This is the direct result of the unique, diversified model that we have built over the last 6 years. The revised agreement with Amazon that we announced in June will further strengthen the diversification of our revenue base and should significantly add to our earnings. We want to thank our employees for their hard work and dedication during a challenging operating period.”
For the quarter ended June 30, 2024, Sun Country reported net income of approximately $2 million and income before income tax of $3 million, on $254 million of revenue. Adjusted income before income tax(1) for the quarter was approximately $5 million. GAAP operating income during the quarter was $12 million, while adjusted operating income(1) was $14 million, operating margin was 4.9% and adjusted operating margin(1) was 5.5%.
Sun Country Airlines has signed an Amended and Restated Air Transport Services Agreement with Amazon, extending the contract through 2030 with options to further extend the terms through 2037. Under the amended agreement, Sun Country will operate up to eight additional Boeing 737-800 cargo aircraft beginning in early 2025.
The amended agreement will increase Sun Country’s cargo operation from 12 to up to 20 freighters with the first additional aircraft expected to begin service in the first quarter of 2025. All eight aircraft are expected to be operational by the third quarter of 2025.
“Amazon is an extremely important customer to Sun Country and strong execution on our current cargo services positioned us well to grow our business. We look forward to continuing to provide services to Amazon into the 2030s,” said Jude Bricker, chief executive officer, Sun Country.
Sun Country Airlines is a new breed of hybrid low-cost air carrier, whose mission is to connect guests to their favorite people and places, to create lifelong memories and transformative experiences. Sun Country dynamically deploys shared resources across our synergistic scheduled service, charter, and cargo businesses. Based in Minnesota, we focus on serving leisure and visiting friends and relatives (“VFR”) passengers and charter customers and providing cargo service to Amazon, with flights throughout the United States and to destinations in Mexico, Central America, Canada, and the Caribbean.
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The U.S. budget carrier Sun Country Airlines has launched a new mobile app to enhance the travel experience for Sun Country customers. Travellers can now book travel, check-in for flights, use their mobile boarding pass, and manage their trips within the app. The app is now available in the Apple store and Google Play store.
“The new mobile app is part of a multi-year investment in enhancing our digital experience for our customers,” said Colton Snow, chief marketing officer for Sun Country. “In 2019, as part of the airline’s transformation into a low-cost carrier focused on leisure travel, Sun Country invested in a new reservation platform and mobile-friendly website that improved the customer experience in exploring destinations, booking, and managing their trips. The new app is a continuation of those tools for our customers.”
“In anticipation of a busy 2024 summer travel season, the airline is prioritizing a new digital experience and one-stop-shop travel solutions,” said Jim Stathopoulos, senior vice president and chief information officer for Sun Country. “More digital access for our customers will enhance their day of travel.”
In 2023, Sun Country also launched new self-service digital tools for customers experiencing extended delays. These automated customer emails and self-service tools make it simpler and quicker for customers to receive digital hotel and meal vouchers, refunds or choose alternate flight options.
“Our priority is to make it easier for our customers to book, re-book, or cancel and manage any changes to their flights on-the-go,” Snow added.
As for the timing of releasing an app now, Snow said, “More people book directly with us than ever before, and the website is working well for our customers. The time was right to focus on meeting our customers where they are during their day of travel, and the app is a next step to accomplish that.”
Sun Country Airlines reported financial results for its fourth quarter and full year ended December 31, 2023, earlier this month. The budget airline based in Minneapolis recorded total revenues of $245.5 million, the highest fourth quarter on record.
“We are excited that Sun Country’s uniquely diversified business model, and the efforts of our outstanding employees, produced another strong quarter, with record revenue(1), a 7.0% GAAP operating income margin and a 7.4% adjusted operating income margin(2),” said Jude Bricker, Chief Executive Officer of Sun Country. “Additionally, we continue to maintain solid cost control with fourth quarter adjusted CASM(3) falling by 2.2% versus fourth quarter 2022. Results for the full year were equally impressive. Full-year 2023 revenue exceeded $1 billion for the first time, our GAAP operating income margin was 12.1%, and our adjusted operating income margin of 13.0%(2) was our highest on record(1). GAAP net income for the year was $72.2 million and we grew total year-over-year block hours by 9.8% and total revenue by 17.3%. We believe our unique business model produces superior results across operating environments and 2023 again proved that out. We could not have achieved these record results without the hard work of our dedicated employees. We are looking forward to another successful year in 2024.”
Q4 2023 total revenue of $245.5 million, highest fourth quarter on record(1)
Q4 2023 GAAP diluted EPS of $0.10 and operating income margin of 7.0%
Q4 2023 Adjusted diluted EPS of $0.12(2) and adjusted operating income margin of 7.4%(2)
FY 2023 total revenue of $1.05 billion, highest full year on record(1)
FY 2023 GAAP diluted EPS of $1.23 and operating income margin of 12.1%
FY 2023 Adjusted diluted EPS of $1.37(2) and adjusted operating income margin of 13.0%(2), highest full year on record(1)
For the quarter ended December 31, 2023, Sun Country reported Income Before Income Tax of $7.7 million and Net Income of $5.6 million, on $245.5 million of revenue. Adjusted Income Before Income Tax for the quarter was $9.3 million(2). GAAP Operating Income during the quarter was $17.1 million, producing an Operating Income Margin of 7.0%, while Adjusted Operating Income was $18.3 million(2), resulting in an Adjusted Operating Income Margin of 7.4%(2).
“We had a very successful 2023,” said Dave Davis, President and Chief Financial Officer. “Our full year GAAP pre-tax margin was 9.0% and we produced an adjusted pre-tax margin of 9.9%(2), which we expect to be the best, or among the best in the industry. Our cost performance improved throughout the year as our fourth quarter adjusted CASM(3) of 7.3 cents was 2.2% lower than a year ago. Additionally, our 2023 GAAP diluted EPS was $1.23, our adjusted diluted EPS was $1.37(2) and we generated a record(1) 21.4% adjusted EBITDA margin(2) for the full year. These positive results allowed us to return cash to shareholders through share repurchases, which in 2023 totaled 4.2 million shares for $68.6 million. Total Capex spending in 2023 was $218.2 million, of which approximately $200 million was for additional aircraft. We expect these aircraft to provide almost all of the passenger lift we need through 2025, resulting in much lower capex levels in 2024.”
Notable Highlights
Strengthened ties with our Minnesota community by becoming the Official Airline of the University of Minnesota Gopher Athletics
Acquired one 737-800 which will remain on lease to Fly Dubai until the fourth quarter 2024. Expected to acquire another 737-800 by the end of February 2024 which will also remain on lease to Fly Dubai.
The Company repurchased 0.9 million shares at an average price of $14.93 during the fourth quarter. At the end of the year, $11.5 million remained under the current repurchase authorization.
Sun Country Airlines will launch a new nonstop service to YUL Montréal-Trudeau International Airport and Toronto Pearson International Airport (YYZ) in June of 2024 (pending final approval). Sun Country has also extended its schedule for customers to book travel through Sept. 10, 2024.
In addition to Montréal and Toronto, the schedule extension includes eight new domestic, seasonal nonstop routes from Minneapolis-St. Paul International Airport (MSP) to:
Albuquerque International Sunport (ABQ), New Mexico
Billings Logan International Airport (BIL), Montana
Boise Airport (BOI), Idaho
Dulles International Airport (IAD), Virginia/Washington, D.C.
Gerald R. Ford International Airport (GRR), Grand Rapids, Michigan
Missoula Montana Airport (MSO), Montana
Oakland International Airport (OAK), California
Syracuse Hancock International Airport (SYR), New York
Service to the new destinations will generally be twice weekly with service to Dulles four times a week. With these new destinations, Sun Country will offer nonstop service from MSP to 98 distinct markets in 2024.
“Sun Country prides itself on being the leisure airline of choice for MSP customers,” said Grant Whitney, senior vice president and chief revenue officer for Sun Country. “We have more than doubled our nonstop destinations for customers flying out of MSP in the last five years and we are thrilled to offer these unique new offerings spanning the continent from Quebec to New Mexico.”
Sun Country will also continue its seasonal service to the cities it launched in summer 2023. In addition, beginning in spring 2024, Houston flights will use William P. Hobby Airport (HOU) rather than George Bush Intercontinental/Houston Airport (IAH).
With today’s announcement, Sun Country Airlines will operate 120 routes serving 104 airports across the United States, Mexico, Central America, Canada, and the Caribbean, providing safe, reliable, hassle-free flights at affordable prices. Sun Country’s onboard experience includes state-of-the-art seating equipment, offering full-size tray tables, comfortable recline, and in-seat power in most seats. Sun Country also provides free in-flight entertainment to our guests’ devices and complimentary beverages including water, coffee, tea, juices, and soda. Additional beverage options and snacks are available for purchase, and we are proud to partner with many Minnesota and Midwest-based companies to highlight their local products on our menu.
Sun Country Airlines will launch a new nonstop service to YUL Montréal-Trudeau International Airport and Toronto Pearson International Airport (YYZ) in June of 2024 (pending final approval). Sun Country has also extended its schedule for customers to book travel through Sept. 10, 2024.
In addition to Montréal and Toronto, the schedule extension includes eight new domestic, seasonal nonstop routes from Minneapolis-St. Paul International Airport (MSP) to:
Albuquerque International Sunport (ABQ), New Mexico
Billings Logan International Airport (BIL), Montana
Boise Airport (BOI), Idaho
Dulles International Airport (IAD), Virginia/Washington, D.C.
Gerald R. Ford International Airport (GRR), Grand Rapids, Michigan
Missoula Montana Airport (MSO), Montana
Oakland International Airport (OAK), California
Syracuse Hancock International Airport (SYR), New York
Service to the new destinations will generally be twice weekly with service to Dulles four times a week. With these new destinations, Sun Country will offer nonstop service from MSP to 98 distinct markets in 2024.
“Sun Country prides itself on being the leisure airline of choice for MSP customers,” said Grant Whitney, senior vice president and chief revenue officer for Sun Country. “We have more than doubled our nonstop destinations for customers flying out of MSP in the last five years and we are thrilled to offer these unique new offerings spanning the continent from Quebec to New Mexico.”
Sun Country will also continue its seasonal service to the cities it launched in summer 2023. In addition, beginning in spring 2024, Houston flights will use William P. Hobby Airport (HOU) rather than George Bush Intercontinental/Houston Airport (IAH).
With today’s announcement, Sun Country Airlines will operate 120 routes serving 104 airports across the United States, Mexico, Central America, Canada, and the Caribbean, providing safe, reliable, hassle-free flights at affordable prices. Sun Country’s onboard experience includes state-of-the-art seating equipment, offering full-size tray tables, comfortable recline, and in-seat power in most seats. Sun Country also provides free in-flight entertainment to our guests’ devices and complimentary beverages including water, coffee, tea, juices, and soda. Additional beverage options and snacks are available for purchase, and we are proud to partner with many Minnesota and Midwest-based companies to highlight their local products on our menu.
Sun Country Airlines Holdings, a hybrid low-cost air carrier that operates scheduled, charter and cargo services and is based in Minnesota, has released details of its performance during the second quarter of the year.
Sun Country advises it had a reported net income of $21 million and income before income tax of $27 million, on $261 million of revenue. Adjusted income before income tax(2) for the quarter was $31 million. GAAP operating income during the quarter was $36 million, while adjusted operating income(2) was $40 million.
Dave Davis, President and Chief Financial Officer said: “During the quarter, revenue growth continued across our scheduled service, charter and cargo businesses, and the second quarter was our eighth consecutive quarter where year-over-year total revenue growth has exceeded total block hour growth. Scheduled service TRASM(3) increased 10.3% while scheduled service ASMs increased 5.6% versus second quarter 2022. This contributed to net income of $21 million and an adjusted EBITDA margin(2) of 23.9% for the quarter, and net income of $59 million and an adjusted EBITDA margin of 25.3% year to date. Total flown block hours during the second quarter across all business lines grew by 11.3% year over year. Adjusted CASM(4) was 10.4% higher than second quarter 2022, which reflects declining year-over-year CASM growth versus the first quarter. We expect year-over-year Adjusted CASM(4) trends to continue to improve in the quarters ahead.”
Notable Highlights
Named the Best Low-Cost Airline in North America by Skytrax at the 2023 World Airline Awards.
Added nonstop flying from Milwaukee to both Orlando and Phoenix, and increased flying between Milwaukee and Cancun over the busy winter travel period.
The Company repurchased 416,751 shares at an average price of $17.82 during the second quarter. The board of directors approved an additional $30 million of buyback authority which brings the current repurchase authorization to $32.8 million.
Capacity
System block hours flown during the second quarter of 2023 grew by 11.3% year-over-year. Cargo block hours grew in the second quarter by 10.4% year-over-year as Amazon flying was constrained last year due to scheduled maintenance events. Scheduled service block hours and charter block hours increased by 7.4% and 23.9%, respectively year-over-year on a 21.7% increase in average passenger aircraft.
Charter block hours under long-term contracts comprised 87.2% of the total charter flying performed in the second quarter of 2023. As the Company continues to normalize its aircraft utilization, it intends to pursue more ad-hoc charter flying.
Revenue
For the second quarter of 2023, the Company reported total revenue of $261 million, which was 19.2% more than the second quarter of 2022. The Company’s scheduled service TRASM(3) of 12.74 cents in the second quarter of 2023 increased 10.3% year-over-year while scheduled service ASMs also increased 5.6%. The second quarter 2023 average total fare of $177 exceeded second quarter 2022 by 2.7% and included strong average ancillary revenue per passenger of $66. In the second quarter of 2023, the Company’s charter service revenue was $50 million, an increase of 16.1% year-over-year. On a rate basis, second quarter 2023 charter revenue per block hour was 6.3% lower than the rate in the second quarter of 2022 as lower fuel prices reduced the fuel reimbursement amount that we received from our charter customers.
In the second quarter of 2023, cargo revenue was $25 million, an 18.1% increase versus the second quarter of 2022. The variance was primarily driven by a 10.4% increase in block hours and the annual rate escalation which went into effect in mid-December 2022.
Cost
For the second quarter of 2023, total GAAP operating expenses increased 4.5% year-over-year, primarily due to a 25.9% increase in salaries, wages, and benefits. This increase was driven, in part, by a $3 million one-time vesting of management stock options. Fuel expense decreased by 32.0% compared to second quarter 2022. Adjusted CASM(4) in the second quarter increased 10.4% versus the second quarter 2022 due to a decrease in daily aircraft utilization of 9.5% for the same period.
“Sun Country had an historically strong second quarter, in what is typically a seasonally weaker quarter for us,” said Jude Bricker, Chief Executive Officer of Sun Country. “Total revenue was up by 19.2% versus the second quarter 2022 and we produced a GAAP operating margin of 13.6% and an adjusted operating margin(2) of 15.3%. The revenue environment continued to be robust as total average fare increased 2.7% and load factor was up by 2 percentage points versus the second quarter of 2022. This helped to drive a GAAP diluted EPS of $0.35 and an Adjusted diluted EPS(2) of $0.40 in the second quarter. In addition to our excellent performance, our board of directors has authorized an additional $30 million for repurchases of Sun Country shares.”
In response to increased consumer demand in Wisconsin, the budget U.S. airline, Sun Country is also adding more flights and new destinations from Milwaukee Mitchell International Airport.
Nonstop flights to Cancun (CUN) will return this winter and increase during the season, culminating with daily flights by March 2024. Nonstop flights from MKE to Southwest Florida International Airport in Fort Myers, FL (RSW) will also return this winter.
Sun Country is also adding nonstop flights from MKE to Orlando International Airport (MCO) and Sky Harbor International Airport in Phoenix (PHX). In addition to Milwaukee, Sun Country also serves Eau Claire, Green Bay, and Madison.
“Mexico, Florida, and Arizona are the most popular winter destinations for Milwaukee-based travellers, and we’re pleased Sun Country is providing additional low-fare options to these family-friendly warm weather destinations,” said Brian Dranzik, MKE Airport Director. “It’s great to see that Sun Country is increasing its Cancun service to daily, which will give more travellers the opportunity to hit the beach with just one easy flight from MKE.”
The budget airline Sun Country Airlines is adding a new Caribbean destination for Minneapolis-St. Paul travellers this winter. The carrier will fly nonstop service from Minneapolis-St. Paul International Airport to Princess Juliana International Airport on the Caribbean island of St. Maarten. Flights will be offered once a week on Saturdays from 13th January through to 6th April, 2024.
“Sun Country is focused on continuing to grow our schedule offerings in MSP,” said Grant Whitney, Senior Vice President and Chief Revenue Officer at Sun Country. “With this schedule extension, we are giving customers more flights and choices in existing markets. We are also very excited to welcome St. Maarten back to the Sun Country network.”
In addition to serving over 50 nonstop destinations during the winter from MSP, Sun Country offers the most nonstop destinations from MSP to Florida, as well as the Caribbean and Mexico. Service to Florida and Sun Country’s most popular international destinations will increase beginning in December 2023.
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Sun Country Airlines is a new breed of hybrid low-cost air carrier, whose mission is to connect guests to their favourite people and places, to create lifelong memories and transformative experiences. Sun Country dynamically deploys shared resources across synergistic scheduled service, charter, and cargo businesses.
Based in Minnesota, the carrier's focus is on serving leisure and visiting friends and relatives (“VFR”) passengers and charter customers and providing cargo service to Amazon, with flights throughout the United States and to destinations in Mexico, Central America, Canada, and the Caribbean.
Revenue of $294 million, Sun Country’s highest on record
Sun Country Airlines this week reported financial results for its first quarter ended March 31, 2023.
“Sun Country’s unique, diversified business model continues to deliver strong results,” said Jude Bricker, Chief Executive Officer of Sun Country. “The revenue environment remains resilient, as we saw a 20.8% increase in total average fare and a gain of 8.6 percentage points in load factor in the first quarter versus 2022. This demand strength helped deliver a first quarter GAAP operating income margin of 19.0% and an adjusted operating income margin of 19.9%(2), easily exceeding the first quarter of last year by over 9 percentage points. We delivered these outstanding results despite a winter season at our Minneapolis-St. Paul base that was the third snowiest on record. I want to thank our dedicated team of employees for their extraordinary efforts this winter.”
For the quarter ended March 31, 2023, Sun Country reported net income of $38 million and income before income tax of $50 million, on $294 million of revenue. Adjusted income before income tax for the quarter was $53 million(2). GAAP operating income during the quarter was $56 million, while adjusted operating income was $58 million(2).
“We continue to see strength across our scheduled service, charter and cargo businesses,” said Dave Davis, President and Chief Financial Officer. “Total revenue was up nearly 30% year-over-year, with Scheduled Service TRASM(3) up 34.7% and TRASM(4), including charter revenue, up 30.6% versus the first quarter of 2022. GAAP operating income increased 155% while adjusted operating income was up 157% year-over-year, generating a GAAP operating margin of 19.0% and an adjusted operating income margin of nearly 20% in our seasonally strongest quarter. During the first quarter, our unit costs were negatively impacted by decreased aircraft utilization levels. In the second quarter, we expect total block hour growth of at least 11% versus last year, and pressure on non-fuel CASM should ease during the year. We are also excited to have acquired five 737-900ER aircraft which are currently on lease to Oman Air. We will obtain the lease revenue from Oman Air until the expiration of the leases and the aircraft are delivered to us beginning in late 2024 and continuing through 2025. The 737-900ER is a new fleet variant for Sun Country and we expect it to create new opportunities for our network.”
Sun Country Airlines will acquire five 737-900ERs that will expand its passenger fleet in late 2024 and 2025.
Under the terms of the deal, Sun Country will acquire current leases for the five aircraft which will remain on lease to Oman Air until the leases begin to expire in late 2024 and through 2025. Sun Country will take delivery of one aircraft in late 2024 and the other four throughout 2025.
Purchasing the aircraft under their existing leases is advantageous to Sun Country for several reasons:
This transaction demonstrates Sun Country’s ability to opportunistically acquire aircraft in a tight market at favorable economic terms while providing fleet growth certainty through 2025.
Acquiring five aircraft of the same variant guarantees sufficient scale to be efficient in Sun Country’s existing fleet of 737-800s.
The 737-900ER has more seat capacity than 737-800s and can fly a longer range.
Sun Country will deploy capital to acquire the aircraft today while receiving lease revenue though 2025.
Finally, used aircraft induction lead times have been challenged by supply chain constraints and engineering support. This transaction allows Sun Country to minimize the transition time of modifying the aircraft and induction into revenue service.
“The 737-900ER will be a great addition to our fleet,” said Jude Bricker, CEO of Sun Country. “Relative to our 737-800 aircraft, it will increase the number of seats without a reduction in range or take-off performance. This transaction demonstrates our ability to find creative ways to source the right aircraft in any market environment.”
The acquisition will be financed through a credit facility with MUFG Union Bank.
Q4 2022 GAAP diluted EPS of $0.12 and operating margin of 6.7%
Q4 2022 Adjusted diluted EPS of $0.13(1) and adjusted operating margin of 7.0%(1)
FY 2022 GAAP diluted EPS of $0.29 and operating margin of 6.2%
FY 2022 Adjusted diluted EPS of $0.42(1) and adjusted operating margin of 6.5%(1)
Sun Country Airlines Holdings, Inc. has reported financial results for its fourth quarter and full year ending December 31, 2022. “Thank you to the entire Sun Country team for a successful 2022,” said Jude Bricker, Chief Executive Officer of Sun Country. “Our unique and diversified business model continued to produce strong results in the face of significant industry challenges, as we grew year-over-year revenue by 43.6% to $894.4 million, a record high for Sun Country. Despite constraints on our growth, the impact of Omicron in Q1 and a 71% increase in fuel prices versus 2021, we produced a GAAP pre-tax margin of 2.7% and an adjusted pre-tax margin of 3.7% for the year while growing scheduled service block hours nearly 18%. Over the important holiday travel season, our operations team produced the industry’s highest completion factor of 99.3%. We are very optimistic about 2023, as we continue to see strong bookings, unit revenues and earnings growth heading into Q1.”
Sun Country Airlines has appointed Gail Peterson, executive vice president of Global Marketing & Communications for Ecolab Inc., to its board of directors, effective January 20, 2023.
“I am pleased to welcome Gail as our newest board member,” says David Siegel, Sun Country board chair. “She brings a wealth of experience in publicly held companies and has a proven record of success with two of Minnesota’s Fortune 500 companies. Sun Country will benefit greatly from her leadership and vision.”
Peterson brings a unique blend of strategic leadership, operational pragmatism and purpose driven marketing to companies. In her role at Ecolab, she oversees the company’s global brand, global communications, corporate marketing, and sustainability teams. Peterson previously served as vice president of marketing for Ecolab’s Global Healthcare business. Prior to joining Ecolab in 2016, Peterson spent 15 years as a marketing executive at General Mills, Inc. where she helped grow several key brands and strategic initiatives.
Sun Country Airlines has announced 15 new nonstop routes from Minneapolis-St. Paul International Airport (MSP) beginning in summer 2023. Twelve new destinations are featured as the airline continues to expand its network. Sun Country has also extended its booking schedule so customers can now book travel through Labor Day 2023.
Sun Country’s summer schedule will connect travelers to Colorado Springs’ mountains, the Jersey Shore, Kansas City barbecue, the Black Hills and Louisville’s bourbon country, among other destinations. Sun Country will also resume service from MSP to John F. Kennedy International Airport (JFK) for customers who want additional options to visit New York City, in addition to flying to Newark. Sun Country last flew to JFK in 2019.
Sun Country will add new, nonstop service from MSP to Charlotte Douglas International Airport (CLT), Wilmington International Airport in N.C. (ILM), John Glenn Columbus International Airport in Ohio (CMH), Kansas City International Airport (MCI), Richmond International Airport in Va. (RIC), Louisville International Airport (SDF), Rapid City Regional Airport (RAP), Colorado Springs Airport (COS), Atlantic City International Airport (ACY), Omaha Eppley Airfield (OMA), Detroit Metropolitan Wayne County Airport (DTW) and Cherry Capital Airport in Traverse City, Mich. (TVC).
The airline will also resume nonstop service from MSP to Milwaukee Mitchell International Airport (MKE) and St. Louis Lambert International Airport (STL). Sun Country last flew to MKE in January 2022 and to STL in October 2021.
Photo Sun Country Airlines
“We’re excited to continue our growth to top leisure destinations across the country,” says Grant Whitney, Chief Revenue Officer at Sun Country Airlines. “With these new routes, Sun Country will now fly direct from MSP to 86 unique markets across the United States, Mexico, Central America, Canada and the Caribbean. We look forward to connecting our guests to their favorite people and places to create lifelong memories and transformative experiences.”
Sun Country Airlines to offer free fresh hot Caribou Coffee Photo Sun Country
Starting this month, Sun Country Airlines will be offering passengers complimentary fresh brewed hot Caribou Coffee. Named the Official Coffee of Sun Country Airlines earlier this year, the airline has been serving the Minnesota-based coffee company's ready-to-drink Cold Brew Coffee since January.
Sun Country worked closely with Caribou to ensure high flavour quality and consistency in the onboard experience for all guests and invested more than $250,000 in equipment upgrades onboard.
“Developing a blend that satisfies the tastes of a broad group of travellers while also representing our quality promise and that performs well brewed at 30,000 feet gave us a unique opportunity to showcase the expertise of our sourcing and roasting teams,” says Brian Aliffi, Caribou Coffee’s senior manager of coffee sourcing. “This coffee is balanced and sweet with enough roasted note to combine with cream and sugar but can also easily be enjoyed on its own.”
The U.S. budget airline Sun Country is extending its selling schedule through to May 31, 2023, allowing customers to book spring travel including Memorial Day. In addition, Sun Country is launching a new service from Minneapolis-St. Paul International (MSP) to Destin-Fort Walton Beach (VPS), Florida, as well as service from Eau Claire, Green Bay and Madison, Wisconsin to Orlando (MCO), Florida.
MSP to Destin-Fort Walton Beach (VPS), Florida starts April 12, 2023
Destin-Fort Walton Beach will be Sun Country’s 11th nonstop destination in Florida from the Twin Cities. “We are excited to provide new service to northwest Florida,” said Grant Whitney, Chief Revenue Officer, Sun Country. “Sun Country offers the most nonstop Florida destinations from MSP, and we are confident that Minnesotans and Midwest vacationers will love the white sand beaches that have made the Florida Panhandle famous.”
“This partnership is so meaningful for Okaloosa County. Not only will destinations like Minneapolis/St. Paul become more accessible to residents, visitors can book spring travel now to experience our white sandy beaches and attractions throughout the County which make Destin-Fort Walton Beach, Florida a premier destination,” said Okaloosa Board of County Commissioner Chairman Mel Ponder.
Eau Claire, Green Bay and Madison to Orlando
Sun Country has also opened bookings for new non-stop service from Chippewa Valley Regional Airport (EAU) to Orlando (MCO) twice weekly on Friday and Monday starting April 21, 2023. This service is in addition to Sun Country’s nonstop service from Eau Claire to MSP which allows for connectivity across Sun Country’s system.
Also, in Wisconsin, new service will operate twice weekly on Thursdays and Sundays between Orlando and both Madison and Green Bay beginning April 20. “Customers in Wisconsin have strongly supported Sun Country’s growth and we are thrilled to add this new service to Orlando that augments existing service to Fort Myers, Las Vegas and Phoenix from both of these great markets,” Whitney added.
Based in the Twin Cities of Minneapolis and St. Paul, Sun Country Airlines operates 98 routes serving 78 airports across the United States, Mexico, Central America, Canada, and the Caribbean, providing safe, reliable, hassle-free flights at affordable prices. Sun Country offers a customer experience that includes free in-flight entertainment, complimentary non-alcoholic beverage service, a mobile-friendly website with more self-service tools, and new interiors on each aircraft.
Sun Country Airlines, the budget U.S. regional carrier has issued its financial results for its second quarter ended June 30, 2022, which show a net loss of $4 million, which is rather good considering the difficult trading conditions over the last few months.
The airline reported total revenue of $219 million, which was 29% more than the second quarter of 2019. Excluding the $21 million in cargo revenue that did not exist in 2019, revenue still exceeded second quarter of 2019 by $28.5 million.
Charter service revenue is primarily generated through services provided to collegiate and professional sports teams, the U.S. Department of Defense, casinos, and other customers. In the second quarter of 2022, the Company’s charter service revenue was $43 million, an increase of 3% versus second quarter 2019. On a rate basis, second quarter 2022 charter revenue per block hour was 8% higher than the rate in the second quarter of 2019.
Highlights for the quarter included:
Adding a third aircraft to its charter service for Caesars Entertainment in October 2022
Selected by the U.S. Department of Transportation to provide Essential Air Service (EAS) for Chippewa Valley Regional Airport (EAU) in Eau Claire, WI, beginning in December 2022
Announced new service to Grand Cayman beginning in December 2022
Airline Business awarded Sun Country with the Airline Strategy Award 2022 for Sector Leadership
“Despite the second quarter being a historically seasonally weaker quarter, scheduled service TRASM in the quarter was up 29% versus the second quarter 2019 and 13% sequentially versus first quarter 2022. We generated a positive operating profit of $3.4 million and an adjusted operating profit of $4 million despite fuel prices averaging $4.39 per gallon during the quarter,” said Jude Bricker, Chief Executive Officer of Sun Country. "During the month of June, scheduled service TRASM was 44% higher than in 2019 and we generated a GAAP operating margin of almost 8%, all while we were paying $4.47 per gallon for jet fuel. We continued to see strong leisure demand in July and expect it to stay elevated through the summer travel period. We are facing the same training challenges that have impacted the rest of the industry, resulting in less scheduled service flying than we would like to have flown and negatively impacting results We are making progress on resolving these training challenges and fundamentally view them to be temporary in nature; I am as bullish as ever on all of the critical factors that will determine Sun Country’s long-term success.”
Dave Davis, President and Chief Financial Officer. said “Demand continues to be at some of the strongest levels that we have seen. Unfortunately, despite growing second quarter block hours by 23% versus 2019, we were undersized in the quarter due to training challenges limiting our scheduled service and ad hoc charter growth. Since signing our new pilot agreement in December of last year, we have been able to attract all of the new hire pilots we need, and attrition has been greatly reduced. We are making strong progress in expanding our training pipeline to accommodate our growth and we anticipate seeing the benefits later this year. Capacity constraints have pressured our unit costs by limiting aircraft utilization. As we hire and train new staff at a record pace for Sun Country, new flying will come at high marginal profitability as the needed assets already exist.”
The first period of the year has been a good one for Sun Country Airlines Holdings, unlike many in the U.S. aviation industry it has reported a profit for Q1.
For the quarter ended March 31, 2022, Sun Country reported net income of $4 million and income before income tax of $6 million, on $227 million of revenue. Adjusted income before income tax for the quarter was $16 million(1). GAAP operating income during the quarter was $22 million, producing an operating margin of 9.6%, while adjusted operating income was $23 million(1), resulting in an adjusted operating income margin of 10.0%.
Jude Bricker, Chief Executive Officer of Sun Country said: “I am proud of all the people at Sun Country who, once again, delivered quarterly profitable growth despite the challenging macro-economic and pandemic backdrop. Very strong bookings and unit revenue trends, combined with solid cost control, drove a first-quarter net income, adjusted net income and adjusted net income per share of approximately $4 million, $12 million and $0.20 per share, respectively. These results came despite much higher-than-expected fuel prices and Omicron-driven headwinds earlier in the quarter. We anticipate passenger demand to remain strong with second-quarter scheduled service TRASM expected to increase between 25% and 34% versus the second quarter of 2019. Sun Country’s uniquely resilient model has now generated our fourth consecutive quarter of profitability and our sixth consecutive quarter of greater than 15% EBITDAR margins.”
Dave Davis, President and Chief Financial Officer, said: “We were able to produce an adjusted operating margin of 10% on $227 million in total revenue during the quarter. This revenue is a record quarterly high for Sun Country. Our results were accomplished despite paying $3.20 per gallon for jet fuel during the quarter. In March, traditionally our strongest month, we paid $3.58 per gallon while generating an operating margin well in excess of 20%. Demand in the quarter materially picked up starting in February as demonstrated by our March scheduled service TRASM increasing 4% versus the same time period in 2019 on 8% capacity growth. Our charter and cargo operations, which were 33% of our block hours in the first quarter, include pass-through fuel economics, providing a natural cost-hedge against volatile fuel prices.”
As of March 31, 2022, the Company had 38 aircraft in its passenger service fleet, an increase of two from December 31, 2021. In addition to the two aircraft that entered into service in the first quarter of 2022, Sun Country completed the purchase of four aircraft in April 2022 and is under a letter of intent for a seventh aircraft for delivery in 2022. In April, the Company completed a lease buyout and anticipates a second lease buyout to occur in the third quarter (both of which were financed by the EETC). It currently operates twelve freighter aircraft in its cargo operation.
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.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts) (Unaudited)
Three Months Ended March 31,
2022
2021
% Change
Operating Revenues:
Scheduled Service
$
124,068
$
54,620
127.1
Charter Service
32,879
25,805
27.4
Ancillary
45,086
23,770
89.7
Passenger
202,033
104,195
93.9
Cargo
21,053
21,585
(2.5
)
Other
3,439
1,831
87.8
Total Operating Revenue
226,525
127,611
77.5
Operating Expenses:
Aircraft Fuel
64,544
24,274
165.9
Salaries, Wages, and Benefits
59,617
44,075
35.3
Aircraft Rent
3,186
5,599
(43.1
)
Maintenance
11,995
9,210
30.2
Sales and Marketing
8,628
5,110
68.8
Depreciation and Amortization
15,328
12,615
21.5
Ground Handling
7,958
5,230
52.2
Landing Fees and Airport Rent
10,286
8,785
17.1
Special Items, net
-
(26,871
)
NM
Other Operating, net
23,150
14,651
58.0
Total Operating Expenses
204,692
102,678
99.4
Operating Income
21,833
24,933
(12.4
)
Non-operating Income (Expense):
Interest Income
24
15
60.0
Interest Expense
(8,562
)
(7,121
)
20.2
Other, net
(6,876
)
(5
)
NM
Total Non-operating Income (Expense), net
(15,414
)
(7,111
)
116.8
Income before Income Tax
6,419
17,822
(64.0
)
Income Tax Expense
2,782
5,406
(48.6
)
Net Income
$
3,637
$
12,416
(70.7
)
Net Income per share to common stockholders:
Basic
$
0.06
$
0.26
(76.9
)
Diluted
$
0.06
$
0.24
(75.0
)
Shares used for computation:
Basic
57,907,655
48,496,077
19.4
Diluted
61,731,942
52,508,186
17.6
“NM” stands for not meaningful
Key Operating Statistics
The following table presents key operating statistics and metrics for the three months ended March 31, 2022 and 2021.
Three Months Ended March 31,
2022
2021
% Change
Scheduled service statistics:
Revenue passenger miles (RPMs) – thousands
1,338,459
774,999
72.7
Available seat miles (ASMs) – thousands
1,684,532
1,158,012
45.5
Load factor
79.5%
66.9%
12.6pp
Revenue passengers carried
922,652
553,032
66.8
Departures
6,227
4,323
44.0
Block hours
22,433
15,207
47.5
Scheduled service TRASM(1) - cents
10.25
6.93
47.9
Average base fare per passenger
$134.47
$98.77
36.1
Ancillary revenue per passenger
$48.87
$42.98
13.7
Fuel gallons - thousands
17,401
11,557
50.6
Charter statistics:
Departures
1,620
1,511
7.2
Block hours
3,804
3,331
14.2
Available seats miles (ASMs) - thousands
235,705
211,721
11.3
Fuel gallons - thousands
2,758
2,357
17.0
Cargo statistics:
Departures
2,574
2,565
0.4
Block hours
7,390
8,242
(10.3)
Total system statistics:
Average passenger aircraft
34.1
31.0
10.0
Passenger aircraft – end of period
38
31
22.6
Cargo aircraft – end of period
12
12
-
Available seat miles (ASMs) – thousands
1,928,149
1,376,796
40.0
Departures
10,487
8,452
24.1
Block hours
33,805
26,932
25.5
Daily utilization – hours
8.6
6.7
28.6
Average stage length – miles
1,336
1,278
4.5
Total revenue per ASM (TRASM)(2) - cents
10.66
7.70
38.4
Cost per ASM (CASM) - cents
10.62
7.46
42.3
Adjusted CASM - cents
6.21
6.15
0.9
Fuel gallons - thousands
20,245
13,993
44.7
Fuel cost per gallon, excluding derivatives
$3.20
$1.91
67.9
Employees at end of period
2,316
1,768
31.0
1 – Scheduled service TRASM = scheduled service revenue + ancillary revenue + other revenue / scheduled service ASMs 2 – Total system TRASM = total revenue – cargo revenue / system ASMs
SUMMARY BALANCE SHEET (Dollars in millions) (Unaudited – amounts may not recalculate due to rounding)
3/31/2022
12/31/2021
% Change
Cash and cash equivalents
$
272.4
$
309.3
(11.9
)
Other current assets
76.8
66.1
16.2
Total current assets
349.2
375.4
(7.0
)
Total property & equipment, net
675.6
573.6
17.8
Other
394.8
427.6
(7.7
)
Total assets
1,419.6
1,376.6
3.1
Air traffic liabilities
110.9
118.6
(6.5
)
Current finance lease obligations
31.1
11.7
165.8
Current operating lease obligations
10.2
17.2
(40.7
)
Current maturities of long-term debt
34.7
29.4
18.0
Other current liabilities
114.6
104.8
9.3
Total current liabilities
301.5
281.7
7.0
Finance lease obligations
239.0
180.5
32.4
Operating lease obligations
23.9
58.8
(59.4
)
Long-term debt
242.5
248.0
(2.2
)
Income tax receivable agreement
105.6
98.8
6.9
Other
13.8
22.0
(37.3
)
Total liabilities
926.3
889.8
4.1
Total stockholders equity
$
493.3
$
486.8
1.3
SUMMARY CASH FLOW (Dollars in millions) (Unaudited - amounts may not recalculate due to rounding)
Three Months Ended March 31,
2022
2021
% Change
Net cash provided by operating activities
$
18.2
$
15.8
15.2
Purchases of property & equipment
(49.7
)
(54.4
)
(8.6
)
Other
0.1
(0.2
)
NM
Net cash used in investing activities
(49.6
)
(54.6
)
(9.2
)
Cash received from stock offering
-
235.9
NM
Proceeds from borrowing
78.0
68.0
14.7
Repayment of finance lease obligations
(4.5
)
(3.9
)
15.4
Repayment of borrowings
(77.9
)
(46.1
)
69.0
Other
(1.5
)
(9.9
)
(84.8
)
Net cash provided by financing activities
(5.9
)
244.0
NM
Change in cash
(37.3
)
205.3
NM
Cash and equivalents and restricted cash – beginning of the period
317.8
70.4
351.4
Cash and equivalents and restricted cash – end of the period
$
280.5
$
275.6
1.8
“NM” stands for not meaningful
Calculation of Special Items Dollars in millions – Unaudited - amounts may not recalculate due to rounding
The following tables lists the items that are included as Special Items, net.
Three Months Ended March 31,
2022
2021
CARES Act employee retention credit(1)
$
-
$
(32.2
)
CARES Act employee retention credit(2)
-
(0.3
)
Aircraft purchase impacts(3)
-
5.7
Total special items, net
$
-
$
(26.9
)
(1) In the quarter ended March 31, 2021, the United States Department of the Treasury awarded the Company a grant of $32.2 under the Payroll Support Program Extension (“PSP2”) under the Consolidated Appropriations Act, 2021 (2) Relates to a credit recognized under the CARES Act Employee Retention credit which is a refundable tax credit against certain employee taxes (3) Five aircraft were purchase in March 2021 that were previously under operating lease. Aircraft lease buy-out expense represents the net costs incurred to terminate the leases on those five aircraft. This includes the associated lease termination costs, write-off of previously capitalized maintenance deposits, and the write-off of over-market liabilities.
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