Sun Country Airlines has reported net loss of $0.6 million and income before income tax of $0.2 million, on $173 million of revenue for the quarter ended December 31, 2021. Adjusted income before income tax for the quarter was $8 million. For the full year, Sun Country reported net income of $77.5 million on $623 million of revenue for the fill year 2021. Adjusted net income for the full year was $50.5 million.
“We closed out 2021 in a very strong way,” said Jude Bricker, Chief Executive Officer of Sun Country. “The fourth quarter delivered our 5th consecutive quarter of greater than 15% adjusted EBITDAR margins and a full year adjusted net profit of $20 million or $0.33 cents per share. We also ratified a new labor agreement with our pilots, offering highly competitive pay rates, benefits and work rules, allowing Sun Country to attract the pilots we need to support our future growth. Even including the new agreement, we expect our 2022 full year adjusted CASM to be lower than our adjusted CASM in 2019. The company is in a tremendous position, and we are excited to see it outperform in 2022 and beyond.”
“We are very pleased to have produced a 9% adjusted operating margin and adjusted earnings of $0.10 per diluted share in a challenging fourth quarter,” said Dave Davis, President and Chief Financial Officer of Sun Country. “Similar to other airlines, our operations were challenged by harsh weather conditions and staffing outages driven by the Omicron variant. In addition, we faced a technology issue that impacted us during the peak Christmas holiday travel period. Demand was modestly softer than expected in December, which we believe to have been due to the Omicron variant. Beginning in mid-January, we have seen a very strong rebound in bookings. Despite the challenges in the fourth quarter, we exceeded our earlier revenue and earnings expectations, and fourth quarter total revenue per available seat mile (total system TRASM), which excludes cargo revenue, exceeded fourth quarter 2019 TRASM by 3.4%.”
In January 2022, Sun Country entered into letters of intent (LOI) to add five 737-800 aircraft to the Sun Country fleet in 2022. In addition to the two aircraft that were acquired in 2021 with deliveries scheduled in 2022, seven of the eight planned adds for this year have already been identified
Fourth quarter total available seat miles (ASM) decreased versus the third quarter of 2021 by 6% as a reflection of the seasonality of leisure demand and are still 12% lower than the fourth quarter of 2019 due largely to ongoing efforts to match supply to COVID-reduced demand levels. The airline reports that charter activity continues to recover as block hours have grown sequentially for three consecutive quarters from the second to the fourth quarter of 2021. Charter block hours increased by 8%, and cargo block hours grew by 5% versus the third quarter of 2021. Cargo comparisons to the fourth quarter of 2020 are not meaningful as the first quarter of 2021 was the first time all twelve cargo aircraft were in service.
Cargo revenue consists of revenue earned from flying cargo aircraft under the Air Transportation Services Agreement (ATSA) with Amazon. In the fourth quarter of 2021, cargo revenue was $23 million, a 4% decrease versus the third quarter of 2021 due to operational issues over the holiday period. Flying under the ATSA began in May 2020.
Sun Country’s net debt at year end 2021 was $236 million, versus $475 million at the end of 2020. Total liquidity at the end of the fourth quarter was $334 million. Total liquidity increased $34 million from the end of the third quarter.
As of December 31, 2021, Sun Country operated 36 aircraft in its passenger service fleet, an increase of five from the beginning of 2021. The airline has committed to take delivery of two more aircraft in first quarter 2022 and has executed LOI’s for an additional five aircraft for delivery in 2022. The company expects to add eight or more total aircraft to its passenger fleet this year. It continues to operate 12 freighter aircraft in its cargo operation.