Sun Country Airlines Reports Record Earnings and Strategic Growth

Sun Country Airlines Holdings, Inc. ((SNCY)) has held its Q1 earnings call. Read on for the main highlights of the call.

Sun Country Airlines’ recent earnings call revealed a generally positive sentiment, marked by record-breaking revenue and earnings, alongside significant expansions in its cargo and charter segments. Despite facing challenges in scheduled service ASM and TRASM, as well as temporary cost pressures and increased operating expenses, the highlights of the call significantly outweighed the lowlights, indicating a strong overall performance.

Record-Breaking Revenue and Earnings

Sun Country Airlines reported total revenue of $326.6 million, marking the highest of any quarter on record. The company achieved an operating margin of 17.2% and an adjusted operating margin of 18.3%, with a diluted adjusted EPS of $0.72 for the quarter, underscoring its robust financial health.

Cargo Segment Expansion

The airline continues to execute its cargo expansion strategy effectively, with three of the eight additional committed aircraft inducted. Unit revenues in the cargo segment grew by about 20% compared to the previous year, and the company expects to double its cargo revenue by September 2025.

Charter Revenue Growth

Sun Country Airlines experienced a 15.6% growth in charter revenue, reaching $55 million in the first quarter. This growth was significantly driven by ad hoc charter revenue, which increased by 55% compared to the previous year.

Strong Operational Metrics

The airline achieved a controllable completion factor of 99.4% in its scheduled business and maintained over 98% on-time performance in its cargo operations. Additionally, it recorded a mishandled bag rate of just 1.3, setting a new benchmark for operational efficiency.

Airline Leader of the Year Award

Sun Country Airlines was honored with the Airline Leader of the Year award for 2025 by Air Transport World, reflecting its leadership and excellence in the aviation industry.

Scheduled Service ASM and TRASM Challenges

The company reported a 7% growth in scheduled service ASM but faced a 4.5% decline in TRASM. Looking ahead to Q2, Sun Country plans to reduce scheduled service ASMs by about 7%, with an expected TRASM improvement of around 3%.

Temporary Cost Pressures

Sun Country anticipates temporary cost pressures due to its cargo growth, which includes staffing surpluses and lower utilization of the passenger fleet. These factors are expected to impact unit costs until staffing levels align with operational needs.

Increase in Operating Expenses

Operating expenses grew by 5.5% on a 5.8% increase in block hours, with adjusted CASM rising by 3.5%. This increase was driven by higher salaries, wages, and non-routine maintenance events.

Forward-Looking Guidance

Sun Country Airlines provided forward-looking guidance that emphasizes its strategic focus on leveraging a diversified business model. The airline plans to reduce scheduled service ASMs by about 7% in Q2 2025, with an anticipated TRASM improvement of 3%. It continues to expand its cargo operations, expecting to double cargo revenue by September. The company is also focused on fleet expansion and aligning pilot staffing with growth by Q2 2026. Financially, Sun Country maintains strong liquidity and plans to reduce net debt levels significantly by 2028.

In summary, Sun Country Airlines’ earnings call highlighted a strong performance with record-breaking revenue and earnings, alongside strategic expansions in its cargo and charter segments. Despite facing some operational challenges, the airline’s forward-looking guidance reflects confidence in its ability to maintain growth and financial stability.