Sun Country Airlines is an ultra-low-cost carrier (ULCC) that primarily operates flights geared toward the Midwest-originating traveler. Based at Minneapolis/St. Paul International Airport (MSP), the airline goes head-to-head with Delta Air Lines, but it faces relatively little competition from other ULCCs. Speaking on the airline’s fourth-quarter earnings call, executives were upbeat about the airline’s growth prospects, even as two airlines have formed plans to create the country’s largest ULCC.
Sun Country optimistic despite recent moves
On Monday, Spirit Airlines and Frontier Airlines announced plans to merge. While there are plenty of unknowns around the merger, Sun Country’s executives were asked about their thoughts on what it would mean for the airline. CEO Jude Bricker stated the following:
“We don’t have a lot of overlap with either of those carriers. They’ve both been out there trying to find things that the other doesn’t do for multiple years as they’ve both been growing so rapidly, and Minnesota hasn “t been very successful for them. I don’t think that changes with them as a single company.”
Looking at data from Cirium, Sun Country offers 260 departures per week out of Minneapolis this March, with a maximum of 45 departures per day. Spirit Airlines has up to eight departures per day, with 51 over the week, while Frontier has up to four per day, with 22 over the week. Combined, Spirit and Frontier will have over 13,000 seats per week, compared to Sun Country’s nearly 48,000.Neither Spirit nor Frontier has announced major growth out of Minneapolis. The two have focused their attention on other markets, and it remains to be seen what growth the airlines will bring to Minneapolis. Certainly, there should be some growth, but how far behind they will be behind the dominant Delta and growing Sun Country remains to be seen.
Sun Country’s growth is still on track
Sun Country Airlines reported a $77.5 million profit for the full year of 2021, which also marked a year of growth for the airline. Passenger operations (including charter services) brought in over $523 million in revenue, but cargo was also significant, with over $90 million in revenue coming off the airline’s agreement with Amazon.
One of the best tailwinds for the airline is its agreement with pilots. The new four-year contract became effective in January 2022 and allowed the airline to significantly bring its pilot pay rates up, which will be a boon to the company as it seeks to grow its staff of pilots. It is also a contract that allows the airline to implement a better bidding system for pilots. Altogether, the airline is bullish on the benefits its contract with pilots will provide.
Sun Country continues to expand its Boeing 737-800 fleet. Photo: Sun Country
In January of 2022, the airline entered into letters of intent (LOI) to acquire five Boeing 737-800 aircraft in 2022. This is on top of the two acquired in 2021, which are scheduled to arrive in 2022. In total, the airline expects to add eight more Boeing 737s, of which seven are firm. mr. Bricker indicated on the call that Sun Country was still seeing some good pricing and availability in the used market for 737s.
In the first quarter of 2022, Sun Country expects to fly 5 to 10% more capacity, as measured in available seat miles (ASMs), compared to the first quarter of 2019. This is not surprising, given the airline’s recent growth in 2021 and 2022 growth.
In essence, recent moves in the marketplace have left Sun Country undeterred. It is still looking to cater to the Minnesota customer and believes its position is strong enough to sustain any moves its competitors may make. Sun Country has spent the last few years working on building up its relationship with Minnesota-originating travelers, and it will continue to grow.
As an all-economy ultra-low-cost carrier, Sun Country has a lot of flexibility with its model when it comes to pricing and making leisure routes work. Photo: Sun Country
Sun Country showed that it is willing to also look outside of just Minneapolis when it comes to growth. The airline recently inaugurated operations out of Rochester International Airport (RST) in Minnesota, rounding out its recent additions that have included cities like Duluth (DLH) in Minnesota and Milwaukee (MKE) in Wisconsin.
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