Sun Country Airlines says overcapacity pressures unit revenue in second quarter

Sun Country Airlines said overcapacity in the domestic market had put pressure on its unit revenues for the second quarter of 2024. It reported a total revenue of $254 million for the period. Its revenues were down 2.6% from the same period last year. In addition, its total fare per scheduled passenger was at $142, 20.1% lower than the same financial period a year prior. ""Despite the challenging domestic revenue environment, and the fact that second quarter is a seasonally weaker quarter for Sun Country, we continued our two-year run of profitable quarters,"" said Sun Country Airlines president and chief financial officer Dave Davis. The company's charter service revenue, totalling $51 million, was up slightly over last year at 2.8%. Cargo revenue was up marginally at 1.7% versus second quarter 2023, totalling $25 million. Davis continued: ""The strength of the Sun Country model is driven by our diversified revenue streams, which other carriers cannot readily duplicate. We move capacity to the lines of business that will maximise profitability."" The company's operating income was down 65.3% to $12.4 million and reported a net income of $1.8 million, or three cents per share. Total operating expenses were $242 million. Fuel expenses was up 18.8% to $62.2 million. In the second quarter, Sun Country Airlines had entered into a revised air transport services agreement with Amazon that includes an extension of the agreement through 2030 with options to further extend through 2037. ""Our revised agreement with Amazon is a great example of the power of this diversification. As new Amazon aircraft come into service starting in late-first quarter 2025, we intend to moderately shrink our scheduled service business to accommodate the Amazon growth,"" commented Davis. ""Our intent is to begin growing the scheduled service business again in 2026."" As of June 30, 2024, its total assets were valued at $1.6bn. Total liabilities were $1.1bn, while total stockholders' equity was $546.9 million. It ended the quarter with 44 aircraft in its passenger service fleet, as well as 12 freighter aircraft and also had seven aircraft on lease to unaffiliated airlines. For the third quarter, it expects total revenues to be around $245 and $255 million, or a negative 2% to a positive 2% over the third quarter of last year. In addition, it expects economic fuel cost per gallon to be $2.82.