Sun Country Airlines Holdings Inc. posted a $12.4 million profit in its first-ever quarterly results, and executives said summer bookings were rising quickly for the Twin Cities-based carrier.
As of Wednesday, Sun Country's scheduled summer flights are fuller than they were at the same time two years ago though the total number of available flights is lower, the airline said as it released first-quarter results following market close. Shares rose 4.7% in after-hours trading as investors digested the news.
The airline industry endured a nearly ruinous year due to the coronavirus pandemic. But with more Americans getting vaccines, it is starting to come back, and Sun Country, a carrier that relies heavily on leisure travelers, is on pace to fly more passengers than it did in the summer before the pandemic.
"I am encouraged by the recent improvement we are seeing in forward bookings. Demand really picked up in mid-February, and that momentum continues," said Jude Bricker, Sun Country's chief executive.
Sun Country went public for the first time in its nearly 40-year history on March 17, selling 10.5 million shares to raise about $225 million. Bricker said the listing strengthened the company's balance sheet and "better positions Sun Country for long-term profitable growth."
Because the listing also led to Wednesday's results disclosure, industry onlookers, passengers or employees for the first time had full view of its financial position on a quarterly basis.
A federal CARES Act grant bolstered Sun Country in the quarter, the results showed. Without that and other one-time items, Sun Country said it would have lost about $5 million.
"In light of the COVID-19 driven reduction in demand in the first quarter, particularly early in the quarter, we are pleased with our strong results and we are highly confident that we remain on track to meet our expectations for the full year of 2021 and beyond," Dave Davis, president and chief financial officer of Sun Country, said in a statement.
The airline also reported purchasing five aircraft during the January-March period that it previously leased.
The results came a day after pilots at Sun Country told management they want to see changes in their contract, including a pay raise and retirement benefits that more closely match their peers at other carriers.
The work group, represented by the Air Line Pilots Association International (ALPA), formally notified the airline's management Tuesday that it will be seeking improvements to its collective bargaining agreement. Its existing five-year contract was signed in 2015 and became amendable last fall, but the pilots group held off on seeking contract negotiations given the pandemic-induced crisis that airlines were still weathering.
Now, Sun Country appears to have turned a corner. "The industry is turning around in quite a significant way and as it comes around we need to be looking at commensurate gains for our pilots," said Eric Meenk, vice chair of Sun Country's ALPA leadership group.
The 2015 contract was the result of a long, at times contentious negotiation. Since then, the airline has had a complete makeover of its management team following the appointment of Bricker as chief executive in 2017 and the company's change in ownership in 2018.
It's common in the airline industry for the work groups — pilots, flight attendants or ground crews — to compare their pay to their counterparts at other carriers when their contracts become amendable.
Peer airlines, including Spirit and Frontier, have granted pilots raises during the intervening years, pushing Sun Country pilots' pay to about 40% below their segment's average.
"We are the laggard in our industry in our segment. When we operated a seasonal airline, that operated on a different economy," Meenk said. "The business model has now changed."
Meenk said the pilots have a good relationship with management and expects there will be aspects of their existing work rules that the company could benefit from, specifically modernized scheduling rules for their reserves pilots. Both sides said Wednesday they don't anticipate, and hope to avoid, discussions becoming contentious — though both acknowledge the process can become drawn-out.
"We are going into this conversation with an open mind," Sun Country spokeswoman Jessica Wheeler said. "We will try to come up with an end result that's good for the pilots and that's good for the company."