Sun Country Airlines Holdings, Inc. [NASDAQ: SNCY] reported its financial results for the third quarter ended September 30, 2023, and shared notable highlights.
Overall, the results indicate that Sun Country Airlines has been able to maintain its revenue growth, with a focus on expanding its routes and improving financial performance.
Strong Q3 Results
Sun Country Airlines experienced a strong third quarter, marked by a diversified business model that delivered robust results.
The company reported GAAP operating income of $19 million, an operating margin of 7.6%, and adjusted operating margin of 8.1% for the quarter. Total revenue increased by 12.3% compared to the same quarter in 2022.
“Sun Country’s diversified business model continued to deliver strong results in the third quarter, as evidenced by our strong GAAP operating results and our third consecutive quarter of year over year improvement in adjusted operating margin, adjusted pre-tax margin and adjusted earnings per share,” said Jude Bricker, Chief Executive Officer of Sun Country.
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Revenue & Earnings
Revenue Growth: The company’s total revenue for the quarter reached $249 million, showing a 12.3% increase from the third quarter of 2022.
Earnings per Share: Sun Country reported GAAP diluted earnings per share (EPS) of $0.13 and adjusted diluted EPS of $0.14 in the third quarter. This represents a year-over-year improvement.
Year-Over-Year Revenue Growth: Sun Country Airlines experienced year-over-year revenue growth for the fourth consecutive quarter across its scheduled service, charter, and cargo businesses.
Capacity Growth: The company’s system block hours flown in the third quarter of 2023 grew by 14.4% year-over-year. Cargo block hours saw a 6.3% increase due to Amazon flying constraints in the previous year.
Scheduled service block hours and charter block hours increased by 17.6% and 14.1%, respectively, on a 14.1% increase in average passenger aircraft.
Repurchasing of Shares: The board of directors authorized an additional $25 million for the repurchase of Sun Country shares, bringing the total repurchase authorization to $25 million.
Sun Country had already repurchased $80 million worth of shares since November 2022.
Scheduling & Operations
As of September 30 2023, the Company had 42 aircraft in its passenger service fleet, operated 12 freighter aircraft in its cargo operation, and had five aircraft held for operating lease.
Extension of Flight Schedule: Sun Country announced the extension of its flight schedule through September 10, 2024.
This extension includes eight new domestic seasonal nonstop routes from Minneapolis and new flying routes to Montreal and Toronto, Canada (pending final approval from Canadian airports).
Charter Services: The company mentioned that charter block hours under long-term contracts comprised 82.2% of the total charter flying performed in the third quarter of 2023.
Sun Country plans to pursue more ad-hoc charter flying as it continues to normalize its aircraft utilization.
Revenue Details: In the third quarter of 2023, the company reported that scheduled service TRASM declined only 5.0%, while scheduled service ASMs grew by 15.1%.
The total fare per scheduled passenger was $153, which was 8.7% lower than the same quarter in 2022, but ancillary revenue per passenger continued to grow at a rate of 16.9%.
Cargo Revenue: The company’s cargo revenue in the third quarter of 2023 was $26 million, representing a 10.0% increase compared to the third quarter of 2022.
This growth was driven by a 6.3% increase in block hours and an annual rate escalation that took effect in mid-December 2022.
Summary
Overall, these results and developments indicate the airline’s strong performance and growth in various segments of its business during the third quarter of 2023.
The carrier benefitted from a diversified business model, and turned in a sound quarterly performance accordingly.
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