Sun Country Airlines has reported record revenue for the third quarter, with the low-cost carrier delivering its 13th consecutive profitable quarter.
Total revenue came in at $256 million, an increase of 2.4% and slightly above expectations of $255 million.
Adjusted earnings per share (EPS) came in at $0.07, in line with analysts’ expectations, and net income came in at $1.6 million.
Among the airline’s highlights for the quarter, cargo revenue surged 60% to $44 million. This was driven by the completion of its cargo fleet expansion to 20 aircraft under a contract with Amazon.
The company expects cargo revenue to continue climbing into the end of 2025, with fourth-quarter cargo revenue tracking 75% higher than during the same period last year.
Sun Country’s business model combines scheduled, charter, and cargo services between the US, Mexico, Central America, and the Caribbean.
In the third quarter, cargo and charter combined accounted for 40% of total revenue – the highest contribution of the two segments since 2020.
Scheduled services also showed strong momentum throughout the quarter. Average fares rose 5% year over year in August, and load factors increased nearly three percentage points.
These trends accelerated in September, with nearly 8% fare growth and load factor improvements exceeding three points.
Looking ahead, the company said it anticipates strong revenue in the fourth quarter, within the range of $270 million to $280 million.
Jude Bricker, CEO of Sun Country, said in an investor call that sales are looking “really, really strong” going into the peak winter season.
“There’s just nothing worrisome right now, across the network,” he said. “I’m not seeing any competitive movements that give me pause or any year-over-year weaknesses.
The CEO added that Minneapolis-St Paul, Sun Country’s base, is becoming a “two-airline market” thanks to the exit of Allegiant and Spirit.
“It just looks really good,” he said. “I don’t have anything negative to speak of.”
In the third quarter, salary costs grew 15%, driven by a 10.6% increase in total employees, plus contractual increases in pilot and cabin crew salaries that were agreed in the first quarter.
Maintenance costs in the third quarter grew 13.5%, due mostly to unplanned maintenance events.
Sun Country also strengthened its balance sheet during the quarter, closing a $108 million term loan facility with a fixed rate of 5.98% per annum.
This allowed the airline to pay off a first-quarter term loan that had a “materially higher” interest rate and to refinance its five 737-900ER aircraft.
“We still have not drawn down the entire $108 million and we expect to receive the remaining $54 million by the end of 2025,” said Bricker.
“Our total liquidity of $298.7 million in the earnings release includes this amount.”
Bricker closed by saying that the airline’s “differentiated model” will continue to be a unique selling point among its key customer base in Minneapolis-St Paul.
“We’re a small airline, but relevant to the community we serve,” he said.
“If you want to go nonstop to Mexico, South Florida, Southern California, Caribbean destinations, we’re the carrier of choice here in the Twin Cities.
“It’s better to be small and relevant than big and irrelevant everywhere – and I think Spirit and Frontier are kind of playing that out.”