Changelog

2026-02-23 — Initial publication. Reflects FY2024 record revenue ($1.08B) and 10 consecutive profitable quarters.

Introduction

Sun Country Airlines (NASDAQ: SNCY) has emerged as one of the most operationally and financially consistent carriers in the U.S. aviation industry, achieving full-year 2024 revenue of $1.08 billion—the highest in company history—and posting its 10th consecutive profitable quarter. Unlike many of its peers, Sun Country has eschewed pure-play low-cost positioning in favor of a hybrid business model combining scheduled service, charter operations, and cargo capacity (including dedicated Amazon cargo service).

Owned by Apollo Global Management, Sun Country operates from a Minneapolis-St. Paul hub and is strategically positioned as a regional carrier with national reach through its diversified revenue streams. This profile examines Sun Country's unique hybrid model, financial performance, and the opportunities and risks in combining scheduled and charter operations.

Financial Overview: Consistent Profitability and Record Revenue

Sun Country Airlines reported full-year 2024 total operating revenue of $1.08 billion, representing the highest annual revenue in the company's history. The airline achieved FY2024 GAAP diluted earnings per share of $0.96 and adjusted diluted EPS of $1.05, demonstrating consistent bottom-line profitability.

Operating Income and Margins: The company reported a strong operating income margin of 9.9% on a GAAP basis, with adjusted operating income margin of 10.4%. These margins place Sun Country among the more profitable carriers in North America, significantly ahead of many ULCCs and competitive with selective legacy carrier metrics.

Quarterly Performance Progression: Sun Country's quarterly results in 2024 demonstrate consistent execution:

• Q1 2024: Revenue of $311 million (highest Q1 on record), with GAAP diluted EPS of $0.64 and operating income of $55 million
• Q2 2024: Revenue of $254 million
• Q3 2024: Revenue of $249 million
• Q4 2024: Revenue of $260.4 million, with income before income tax of $16.9 million and net income of $13.4 million

The seasonality evident in Q1 strength (peak leisure travel and winter-escape demand) and Q2-Q3 moderation (summer is counter-seasonally weak for Minnesota-based leisure carrier) reflects the company's leisure-focused positioning, with incremental revenue from charter and cargo smoothing seasonal troughs.

Profitability Consistency: Sun Country has achieved 10 consecutive profitable quarters, a remarkable accomplishment in an industry where even profitable carriers face quarterly variance due to demand seasonality and cost volatility. This consistency reflects the diversification of the hybrid model—when scheduled demand softens, charter and cargo revenue provide offsetting contribution.

Revenue Structure: Scheduled, Charter, and Cargo Diversification

Sun Country's revenue model is fundamentally differentiated from pure-play ULCCs through its combination of three distinct business streams:

1. Scheduled Service Revenue (~65-70% of total revenue): Sun Country operates scheduled service on leisure routes from Minneapolis-St. Paul to leisure destinations (Las Vegas, Florida, Caribbean, Mexico, California). The airline competes directly with other leisure carriers and legacy carrier low-cost offerings. Scheduled service pricing is competitive but benefits from Minneapolis geographic advantage and brand loyalty.

2. Charter Operations Revenue (~15-20% of total revenue): Sun Country operates a dedicated charter business, providing aircraft and crew services to tour operators, corporate clients, and the U.S. military. Charter operations offer higher yields than scheduled service and provide flexibility in capacity deployment—charter aircraft can be repositioned to high-demand markets or removed from service during soft-demand periods.

3. Cargo Revenue (~10-15% of total revenue): Sun Country operates cargo services, including scheduled cargo flights and belly cargo on passenger flights. The airline has a long-standing relationship with Amazon, including dedicated cargo operations. Cargo revenue is volatile but highly profitable, with pandemic-era demand peaks demonstrating the upside potential.

Revenue Diversification Benefits: The combination of scheduled, charter, and cargo revenue provides several advantages:

• Demand Hedging: When leisure travel softens, charter and cargo can offset scheduled service revenue decline
• Capacity Utilization Flexibility: Aircraft can be deployed to highest-yield use case (scheduled, charter, or cargo) based on real-time demand
• Margin Diversification: Different revenue streams have different margin profiles and growth trajectories
• Customer Diversification: Reduces dependence on leisure travel demand to a single segment

Cost Structure and Unit Economics

Sun Country's cost structure reflects the company's hybrid operations and Minneapolis-St. Paul base of operations:

Labor Costs: Sun Country employs approximately 2,500-3,000 employees across pilots, flight attendants, ground operations, and corporate functions. Labor productivity is high relative to legacy carriers, with crew scheduling optimized for high utilization. Pilot and flight attendant labor costs are competitive with regional carriers but lower than legacy mainline costs.

Aircraft Lease and Operating Costs: Sun Country operates a fleet of approximately 50 aircraft, consisting entirely of Boeing 737 aircraft (737-700, 737-800, 737-9 MAX variants). Fleet homogeneity (single aircraft type) provides maintenance advantages and reduces crew training complexity. Aircraft are operated under a combination of owned and leased structures, with lease agreements structured to provide operational flexibility.

Fuel Costs: Fuel costs at $2.40-2.50 per gallon in 2024 represent the largest operating expense category after labor. The 737 is fuel-efficient relative to legacy wide-body aircraft but less efficient than newer narrow-bodies like the A320neo. However, the modern 737-9 MAX entering the fleet offers improved fuel efficiency.

Minneapolis Hub Costs: Minneapolis-St. Paul International Airport (MSP) is a relatively low-cost hub environment compared to legacy carrier fortress hubs. Landing fees, facility rents, and ground handling costs are moderate, providing cost advantage relative to operations from major legacy hubs.

Charter and Cargo Margin Characteristics: Charter operations carry higher yields and margins than scheduled service, as charter customers are less price-sensitive and willing to pay premium rates for dedicated capacity. Cargo operations in 2024 carried healthy margins despite competitive pressure from DHL, FedEx, and UPS cargo operations.

Balance Sheet and Liquidity

Sun Country's balance sheet reflects disciplined financial management and consistent profitability:

Liquidity Position: The company maintains solid liquidity to fund operations and capital requirements. Cash generation from consistent profitability provides flexibility for debt service and investment in growth opportunities.

Debt Structure: Sun Country carries moderate leverage, with debt primarily comprised of aircraft financing and term loans. Leverage is manageable relative to EBITDA and consistent with investment-grade consideration for mid-cap carriers.

Credit Profile: Rating agencies have assigned investment-grade or high-yield credit ratings to Sun Country, reflecting consistent profitability and manageable leverage. The company's consistent cash flow generation and 10-quarter profitability streak support a stable or improving credit trajectory.

Fleet and Operations: Boeing 737 Homogeneity

Sun Country operates a fleet of approximately 50 Boeing 737 aircraft, consisting of a mix of 737-700, 737-800, and 737-9 MAX variants. This single-aircraft-type fleet provides significant operational and maintenance advantages:

Fleet Composition: The 737 series is one of the world's most produced commercial aircraft, with massive supply of spare parts, maintenance expertise, and pilot/crew training infrastructure. This contrasts with aircraft types like the Airbus A220 or Bombardier CRJ, which have smaller installed bases and more specialized support requirements.

737-9 MAX Transition: Sun Country is introducing Boeing 737-9 MAX aircraft, which offer 5-10% fuel efficiency improvements and extended range relative to 737-800 aircraft. The 737-9 MAX is longer than the 737-800, allowing higher capacity (up to 210 seats in high-density configuration) while maintaining the same crew requirements and operating costs.

Fleet Flexibility: The modular nature of the 737 allows Sun Country to configure aircraft for different missions: high-density leisure scheduling, cargo-only configurations (removing passenger seats), and charter comfort (premium seating). This flexibility is valuable in the hybrid business model.

Utilization: Fleet utilization is high (9+ flight hours per day), consistent with regional carrier standards and optimizing fixed costs across more flight hours and revenue.

Apollo Global Management Ownership and Strategic Direction

Sun Country is owned by Apollo Global Management, a diversified asset manager with significant investment in airline and transportation assets. Apollo's ownership model is financial rather than operational, meaning Apollo does not provide direct management of airline operations but rather maintains a board presence and financial oversight.

Apollo's strategy for Sun Country appears to be growth through margin expansion and capital-efficient deployment. The company is targeted for potential public exit (IPO or sale to a larger carrier or investment firm), making operational and financial improvement a priority for valuation enhancement.

Apollo's ownership has enabled Sun Country to access capital for aircraft investments (737-9 MAX acquisition), maintain dividend capacity for investors, and pursue growth opportunities in charter and cargo that a smaller independent carrier might not undertake.

Competitive Positioning: Hybrid Model as Differentiation

Sun Country's hybrid model positions it distinctly within the competitive landscape:

Versus Pure-Play ULCCs (Frontier, Allegiant, Spirit): Sun Country's charter and cargo operations provide revenue diversification that pure-play leisure carriers lack. When leisure demand softens, Sun Country can shift capacity to charter or cargo, maintaining profitability. Pure-play ULCCs must reduce capacity (driving costs up per available unit) or accept lower profitability during soft leisure demand periods.

Versus Regional Carriers (SkyWest, Republic, Envoy): Sun Country differentiates from regional carriers through its scheduled service to leisure destinations and profitable cargo operations. Regional carriers are constrained by capacity purchase agreements with major airlines and have limited independence in network strategy. Sun Country's independent network allows higher margins and better capital allocation.

Versus Legacy Carriers: Sun Country's low-cost positioning allows undercutting legacy carriers on leisure routes while maintaining profitability through ancillary revenue and charter/cargo diversification. Legacy carriers cannot cost-effectively replicate Sun Country's model due to higher labor costs and overhead structure.

Outlook: Growth Strategy and Capital Deployment

Sun Country's outlook is constructive based on several factors:

Continued Fleet Growth and Modernization: Deployment of 737-9 MAX aircraft will improve fuel efficiency and expand capacity, supporting revenue growth and margin expansion. The company is likely to continue aircraft additions in the 2025-2027 timeframe, adding 5-10 aircraft annually.

Charter Revenue Growth: As leisure travel demand normalizes and corporate travel recovers post-pandemic, charter demand is expected to remain strong. Sun Country is well-positioned to capture incremental charter opportunities, particularly in the sports/entertainment and corporate segments.

Cargo Revenue Upside: Amazon cargo operations provide a stable, high-margin revenue base. Potential expansion of Amazon cargo capacity or entry into new cargo markets (UPS, DHL drop-shipping) could accelerate cargo revenue growth.

Scheduled Service Optimization: Sun Country may expand leisure routes in underserved markets or double-capacity on high-yield routes, driving revenue growth while managing capacity discipline to support margin preservation.

Potential Strategic Transactions: Apollo's ownership model suggests openness to strategic options, including sale of Sun Country to a larger carrier (acquisition by Frontier, JetBlue post-restructuring, or a legacy carrier seeking ULCC differentiation) or IPO to unlock value for Apollo investors.

Risk Factors and Challenges

Leisure Demand Cyclicality: Economic downturns reduce discretionary leisure travel, compressing yields and load factors on scheduled service.

Fuel Price Volatility: A return to $3.00+ per gallon would meaningfully compress margins on low-yield leisure routes.

Charter Market Sensitivity: Corporate travel and sports/entertainment charter demand are cyclical and could decline during economic softness.

Cargo Market Volatility: Amazon cargo volumes could decline if Amazon shifts to alternative logistics partners or reduces outsourced cargo capacity. Air cargo pricing is volatile and subject to global trade and logistics trends.

Competition on Leisure Routes: Frontier, Allegiant, and legacy carriers' low-cost offerings create pricing pressure on Sun Country's scheduled leisure service, potentially compressing margins.

Conclusion

Sun Country Airlines represents a successful execution of the hybrid airline model, combining scheduled leisure service, charter operations, and cargo revenue to achieve sustained profitability and consistent cash generation. The company's 10 consecutive profitable quarters and record 2024 revenue demonstrate the model's effectiveness. Owned by Apollo Global Management, Sun Country is positioned for continued growth through fleet modernization, charter market expansion, and potential strategic alternatives including IPO or acquisition. The hybrid model's diversification provides significant resilience compared to pure-play carriers and positions Sun Country as an attractive investment or acquisition target.

Related Articles

Spirit Airlines Financial Profile | Frontier Airlines Financial Profile | Allegiant Travel Financial Profile | Regional Airlines Overview