Sun Country Airlines has reported a 122.7% rise in total operating revenue to $173.7 million for the third quarter ended September 30, 2021. Operating income also rose to $22 million with net income at $13.9 million.
“We had a great third quarter,” said Jude Bricker, Chief Executive Officer of Sun Country. “We posted our highest adjusted operating margin, adjusted pre-tax margin and adjusted net income since the first quarter of 2019. As a reminder, the third quarter is historically not our strongest quarter of the year. Total quarterly revenue in Q3 2021 was higher than in Q3 2019, the first quarter this has occurred since the start of the pandemic. This and our continued focus on cost control in the quarter produced earnings of $0.23, the highest since the start of the pandemic, and our third consecutive quarter of positive adjusted operating margins.”
GAAP operating income during the quarter was $22 million, producing an operating margin of 12.7%, while adjusted operating income was $23 million, resulting in an adjusted operating income margin of 13.2%.
“We have now put together four consecutive quarters of above 15% adjusted EBITDAR margins with a 24% margin for the third quarter,” said Dave Davis, President and Chief Financial Officer of Sun Country. “We are achieving these strong financial results despite still being in the recovery phase of the pandemic. Although total available seat miles are still 16% below what they were in the third quarter 2019, our total revenue per ASM (TRASM), which excludes cargo revenue, was positive versus 2019 for each month in this quarter. In addition, both our average base fare per passenger and ancillary revenue per passenger were higher than 2019 for the third quarter.”
Sun Country also continues to nudge up capacity. Total available seat miles (ASM) increased versus the second quarter of 2021 by 7% but are still 16% lower than the third quarter of 2019 due to the “unpredictability of the demand environment”. Charter block hours also increased versus the second quarter of 2021 by 5%, with the bulk of the charter flying occurring in our ad hoc segment. Cargo block hours grew 4% versus the second quarter 2021.
Sun Country also reports scheduled revenue per scheduled ASM (PRASM) of 6.2 cents in the third quarter of 2021 increased 11% from the second quarter 2021, while scheduled ASMs grew 8% during the same period. Ancillary revenue has remained strong throughout the pandemic. Ancillary revenue per passenger of $42.91 was 33% higher than the third quarter of 2019 and grew 3% versus the second quarter of 2021.
Cargo revenue consists of revenue earned from flying cargo aircraft under the Air Transportation Services Agreement (ATSA) with Amazon. In the third quarter of 2021, cargo revenue was $24 million, a 10% increase versus the second quarter of 2021. Flying under the ATSA began in May 2020.
For the third quarter of 2021, total GAAP operating expenses decreased 6% versus the third quarter of 2019, while total block hours increased 13% versus the same period.
Sun Country’s net debt for the third quarter was $267 million. Total liquidity at the end of the third quarter was $300 million. The use of cash during the quarter was driven by the purchase of two aircraft. Total debt during the quarter increased due to the addition of an incremental aircraft using a finance lease structure.
Sun Country currently operates 35 aircraft in passenger service, an increase of two since June 30. It has acquired five aircraft this year as planned and says that it is “actively pursuing other used aircraft transactions”. It continues to operate 12 freighter aircraft in its cargo operation.
For the fourth quarter, Sun Country has provided guidance of $164-$169 million in total revenue, with an Operating income margin of between 1.5%-5.5%.