Sun Country Airlines has turned a first-quarter profit. With passenger revenues down, the key to Sun Country’s success has come from its diversified business model. Touching scheduled passenger service, charters, and a cargo deal with Amazon, the airline is looking forward to a very successful summer with three strong revenue streams.
Sun Country Airlines turns a first-quarter profit
Ultra-low-cost carrier (ULCC) Sun Country Airlines has reported a net income of $12.4 million for the first quarter of 2021. Total operating revenue was $127.6 million.
Passenger scheduled service fares brought the airline $54.6 million, while ancillary fees raked in another $23.8 million. As a ULCC, Sun Country brings passengers in with its low fares with few frills and offers its passengers chances to purchase add-ons.
Sun Country’s diversified strategy has helped
Sun Country has three solid revenue streams. First, there are scheduled passenger services, which make up the bulk of the airline’s revenue. In the scheduled passenger world, Sun Country’s first-quarter capacity was down 23% to align with passenger demand. Load factor for the business was 67% in the quarter.
The second major revenue stream for Sun Country is the charter business. Primary clients for Sun Country include sports teams, the US Department of Defense, casinos, and other customers. Charter service revenue was down 12% for the quarter due to declines in casino charters even with the return of March Madness flying for basketball. Charters help the airline touch over 300 airports in a year.
The last, and one of the most stable streams of revenue, was the cargo business. Sun Country has an agreement with Amazon. Flying cargo jets for Amazon only started in May 2020, but revenue from this stream was $21.6 million – a sizable chunk.
2021 is looking like a good year for Sun Country
Sun Country has provided some guidance for the second quarter. It expects its total system capacity to be down around 17-20%, with revenue down 20-24%. The second quarter will see a host of new passenger flights launching.
However, the summer is going to be a good one. After seeing demand improve from mid-February, CEO Jude Bricker stated the following about 2021:
“As of today, our summer schedule is sold to a higher load factor as compared to the same time in 2019. Our charter business is recovering quickly, and we are flying a full twelve aircraft schedule in our cargo business.”
Sun Country has come a long way over the last few years. After lagging behind its competitors, the airline brought on Mr. Bricker, who came to Sun Country from Allegiant. Mr. Bricker helped push the airline on its transition to an ultra-low-cost carrier.
Arguably, one of the best decisions Sun Country made was entering the cargo business. This helped the airline through the pandemic. Sun Country flies 12 Boeing 737-800 freighter aircraft for Amazon. This business is far more stable than passenger flying.
Sun Country is now back on an expansion track. It has agreements in place to take three more planes this year. In the coming months, the airline wants to take more planes and put up a fight. While the airline has a bias towards older, mid-life aircraft, it has not ruled out the potential for a major fleet shakeup.
Are you surprised by Sun Country’s first-quarter results? Let us know in the comments!