After a challenging end to 2021, Sun Country Airlines executives said they are seeing an upswing in bookings for spring break, one of its busiest seasons.
“What we’re seeing in bookings just in the last two weeks is really, really positive,” Jude Bricker, Sun Country’s chief executive, said in a conference call with analysts Tuesday morning.
Sun Country shares rose 8% Tuesday as investors reacted to the fourth quarter results the airline announced after market close on Monday.
Those results beat expectations and Sun Country executives also forecast revenue growth of 9% to 14% over 2019 levels for the first three months of 2022. That would outpace its expected capacity growth of 5% to 10%.
Sun Country said it will add two new aircraft this quarter, building on the five it acquired in 2021 that lifted its passenger fleet size to 36.
The airline is also on a pilot hiring spree, shaped in part by a new contract with its pilots union that allows the airline to base more pilots around the country. Bricker said the airline’s pilot training program needs could triple in size this year as Sun Country grows.
Executives attributed better-than-expected revenue in the last three months of 2021 — 5% higher than in 2019 — to strong bookings in October and November, before the onset of the omicron variant of COVID-19 dampened travel.
In the last week of the year, a problem with a key computer system led Sun Country to cancel about 15% of flights on two consecutive days. That disruption produced delays for most of the week leading into New Year’s weekend. Executives said Tuesday that Sun Country paid out about $1 million to passengers in vouchers and other expenses as a result of the disruptions.
The omicron variant is now fading in the US, and Bricker said demand for air travel is again rising quickly. He said expects airline industry capacity to be constrained through spring and for air fares to be rise, as a result.
“I’m really bullish on demand in the next four to six weeks as move into our peak spring season,” Bricker said.
With 10% market share in 2021, Sun Country is the No. 2 carrier at Minneapolis-St. Paul International Airport travels behind Delta Air Lines, which has a 72% share. Sun Country rounds out its passenger service, which is oriented to leisure passengers, with cargo and charter operations that combine to provide about one-third of revenue.
Sun Country executives said they don’t see a lot of overlap from low-fare carriers Frontier and Spirit airlines, which announced Monday that they plan to merge to form the nation’s fifth-largest airline.
“I don’t think it changes the dynamic much in Minneapolis, which is quickly becoming a two airline market,” Bricker said.
Frontier and Spirit airlines accounted for about 3% of passenger revenue at MSP last year.
“They’ve both been out there trying to find things that the other doesn’t do, for multiple years as they’ve been growing so rapidly,” Bricker said. “Minnesota hasn’t been very successful for them. I don’t think that changes for them as a single company.”
Dave Davis, Sun Country’s chief financial officer, added that its executives generally “view consolidation in the industry as a good thing.”