Minneapolis-based Sun Country Airlines is marketing cheap golf getaway flights starting at $59 one way as executives expect consistent demand to come even as other domestic carriers signal weaker sales.
Demand is typically higher for the growing leisure carrier’s flights during winter and spring break holidays when Minnesotans look to escape the winter doldrums. The shoulder seasons of late spring and early fall — the weeks between what’s considered peak (summer) and off-peak (winter) times — tend to be down periods for Sun Country.
When Southwest Airlines reported its earnings about two weeks ago, it dialed back its growth plans to expand its flying from a year earlier to between 10% and 12% to start 2024, which is a decrease from the Dallas-based company’s initial estimate of as much as 16%. With “revenge travel” — taking a trip not possible during the pandemic — showing signs of slowing in the U.S., some domestic budget carriers are wondering how that will affect profits.
Sun Country, though, seems less concerned, potentially because it benefits from snowbirds and other leisure travelers in winter. In a call with analysts after market close Tuesday, Chief Executive Jude Bricker said the growing leisure carrier didn’t have enough available pilot captains to meet potential demand, particularly in July. The carrier is working internally to train enough pilots to the captain seat.
“The trends are moving in the right direction,” he said. “We don’t see a pilot shortage.”
For the third quarter ending Sept. 30, net income decreased nearly 30% to $7.6 million from the same period a year ago. Diluted earnings per share reflected a similar decrease to 13 cents per share vs. 18 cents from a year earlier, while revenue grew about 12% to $249 million in the third quarter.
Operating expenses grew about 11%, primarily because of a 24% increase in salaries, wages and benefits as well as a 39% increase in maintenance expenses.
The company also repurchased 2.1 million shares at an average price of $15.30 during the third quarter. The board of directors approved an additional $25 million of buyback authority.
The stock — which has fluctuated between $12.57 and $23.80 per share through the past 52 weeks — closed at $13.05 Tuesday, a small drop from a day earlier, though the earnings information came out after the market had closed.
Sun Country calls itself a new breed of hybrid low-cost air carrier, flying scheduled passenger service, charter flights and cargo routes focused on Amazon. The carrier flies throughout the United States and to destinations in Mexico, Central America, Canada and the Caribbean.
