Sun Country Airlines Reports Record Earnings and Growth

Sun Country Airlines Holdings, Inc. ((SNCY)) has held its Q4 earnings call. Read on for the main highlights of the call.

Sun Country Airlines confidently outlines a promising trajectory, highlighting robust financial outcomes amidst certain operational challenges during their latest earnings call. The company celebrated record revenues and strategic growth in their cargo segment, alongside a diversified model that positions them well for future expansion.

Record Revenue and Profitability

Sun Country Airlines marked its tenth consecutive quarter of profitability in Q4 2024, achieving a total revenue of $260.4 million and an adjusted operating margin of 10.6%. These figures represent the highest on record for the company, underscoring its strong financial health and effective operational strategies.

Full Year Revenue Milestone

In 2024, Sun Country reached a significant milestone with its highest full-year revenue of $1.08 billion. This success was driven by strong performances, particularly in the charter and cargo segments, showcasing the company’s strategic focus on diversified revenue streams.

Cargo Segment Growth

The cargo segment demonstrated impressive growth with a 13.1% increase in revenue in Q4 2024, hitting a quarterly high of $28.6 million. This growth came despite a reduction in Cargo block hours, and the company anticipates cargo revenue to approximately double by the following year, signaling a promising future for this segment.

Strategic Fleet Expansion

Sun Country’s strategic fleet expansion is well underway, having received its first cargo aircraft through a new agreement with Amazon. The airline plans to expand its cargo fleet to 20 aircraft by summer 2025 and increase block hours by about 30% through 2027, reinforcing its strategic growth plans.

Union Agreements

The company reported progress in labor relations, reaching agreements in principle with unions representing flight attendants and dispatchers. These agreements, which are set to go to a vote soon, promise enhanced rates and work rules, reflecting Sun Country’s commitment to positive employee relations.

Scheduled Service Revenue Challenges

Despite an increase in scheduled service ASMs by 3.5%, Q4 scheduled service TRASM was down by 1%, highlighting ongoing challenges in revenue optimization. This points to areas where the company must continue refining its strategies to enhance profitability.

Caribbean Market Softness

The Caribbean market experienced some softness during the quarter, attributed mainly to a substantial increase in capacity as part of the company’s strategic growth initiatives. This reflects the complexities of balancing market expansion with demand.

Higher Pilot Costs

An increase in pilot pay in 2025 has been noted, which is expected to affect the operating margin forecast for Q1 2025. This development highlights the ongoing challenges in managing operational costs amidst rising labor expenses.

Guidance and Future Outlook

Looking ahead, Sun Country Airlines provided optimistic guidance for 2025, anticipating total revenue between $330 million and $340 million for Q1, with block hour growth projected at 7% to 9%. Despite higher pilot costs, the company expects a strong operating margin between 17% and 21%. Full-year block hours are set to increase by 9% to 10%, driven by eight additional Amazon cargo aircraft. While scheduled service ASMs are expected to decline slightly, capital expenditures will focus on spare engines, ensuring operational excellence and robust cash flow.

Sun Country Airlines’ latest earnings call paints a picture of robust financial health and strategic growth, particularly in the cargo segment. Despite certain challenges, such as higher pilot costs and Caribbean market softness, the company’s diversified model and strategic decisions position it well for future growth, with optimistic guidance for 2025 underscoring its confidence in maintaining high profitability.