Sun Country Airlines Holdings, Inc. ((SNCY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Sun Country Airlines Holdings, Inc. recently held its earnings call, revealing a generally positive sentiment with notable growth in the cargo and charter segments. The company continues to maintain profitability and operational reliability, despite facing challenges in its scheduled service segment and increased operating costs, particularly in maintenance and labor.
Cargo Revenue Growth
Sun Country Airlines reported a significant increase in cargo revenue, with a 60% year-on-year growth for September. The airline expects this growth to surpass 75% by December, marking a successful completion of its cargo expansion as all 20 cargo aircraft are now operational.
Record Charter Production
The airline achieved an all-time high in charter production, with a 15.6% revenue growth and an 11.1% increase in charter block hours compared to the previous year. This highlights the strength of Sun Country’s charter services.
Strong Load Factor and Fare Increases
Sun Country experienced a rise in total fares and load factors, with August fares increasing by 2.6% and load factors by 2.7 percentage points to 87%. September continued this trend with a 4.5% increase in fares and a 3.2 percentage point rise in load factor to 83%.
13 Consecutive Profitable Quarters
The airline reported its 13th consecutive profitable quarter, showcasing its resilience and adaptability in navigating the challenging aviation market.
Safe and Reliable Operations
Sun Country maintained a high standard of operational reliability, achieving a controllable completion factor of 99.3%, underscoring its commitment to safe and reliable service.
Scheduled Service Decline
The airline’s scheduled service available seat miles (ASMs) declined by 10.2% in Q3 due to resource allocation towards the cargo segment. A further decline of 8% to 9% is expected in Q4 2025.
Increased Operating Expenses
Total operating expenses grew by 3.6% in Q3, with cost per available seat mile (CASM) up 10.3% compared to the same period in 2024, driven by a 10.2% drop in scheduled service ASMs.
Higher Maintenance and Labor Costs
The airline faced higher maintenance and labor costs, with maintenance expenses increasing by 13.5% due to unplanned events and salaries rising by 15%, influenced by a 10.6% increase in employees and contractual rate increases.
Forward-Looking Guidance
Sun Country Airlines provided a robust financial outlook during the earnings call. The company reported a GAAP EPS of $0.03 and an adjusted EPS of $0.07 for the third quarter. Total revenue increased by 2.4% to $255.5 million, supported by a 3.8% rise in total block hours. The airline anticipates further growth in TRASM and aims to achieve a $300 million run rate EBITDA by mid-2027. For Q4, Sun Country guides for total revenue between $270 million and $280 million, with an 8% to 11% increase in block hours and an operating margin of 5% to 8%. Despite cost pressures, the airline plans to expand its passenger fleet to 50 aircraft by mid-2027.
In summary, Sun Country Airlines Holdings, Inc. demonstrated strong growth in its cargo and charter segments while maintaining profitability and operational reliability. Despite challenges in the scheduled service segment and rising operating costs, the airline’s forward-looking guidance suggests continued growth and expansion in the coming years.