Sign in

You're signed outSign in or to get full access.

SC

Sun Country Airlines Holdings, Inc. (SNCY)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered record revenue of $326.6M, GAAP diluted EPS of $0.66 and adjusted diluted EPS of $0.72, with GAAP operating margin of 17.2% and adjusted operating margin of 18.3% .
  • Versus estimates: adjusted EPS modestly beat (consensus ~$0.697 vs actual $0.72*) while revenue was in line-to-slightly below (consensus ~$327.5M vs actual $326.6M*). Strength in charter (+15.6% YoY) and cargo (+17.6% YoY) offset weaker scheduled service TRASM (-4.7% YoY) .
  • Q2 2025 guidance implies a sequential step-down: revenue $250–$260M, operating margin 4–7%, fuel $2.44/gal, total block hours 36–37k, reflecting planned scheduled service pullback to staff and induct 5 additional cargo aircraft (20 cargo aircraft by Q3) .
  • Board approved a $25M share repurchase authorization; liquidity stood at $227.1M and revolver increased to $75M, adding flexibility for opportunistic capital allocation .
  • Management reiterated cargo ramp as a 2025–2026 earnings stabilizer (fixed-fee economics) and flagged improving close-in fares in April as a summer tailwind, framing catalysts around cargo doubling by September and tactical buybacks .

Note: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Record quarter: “quarterly records for revenue and earnings,” with adjusted operating margin of 18.3% (higher YoY), validating the diversified model (scheduled, charter, cargo) .
  • Cargo and charter outperformed: cargo revenue +17.6% YoY on -1.1% block hours; charter revenue +15.6% YoY, with ad hoc charter +55% YoY now ~34% of charter revenue, demonstrating mix and flexibility .
  • Near-term demand indicators: management highlighted “close-in fares accelerated into April,” supportive for summer peak; Minneapolis network/gates enable peak scheduling density .

What Went Wrong

  • Scheduled service unit revenue: TRASM fell 4.7% YoY; load factor declined 3.9ppt, as off-peak February demand underperformed while ASMs rose 6.7% .
  • Cost inflation in non-fuel lines: salaries +12.9% (pilot headcount +8% and wage step-up), ground handling +24.6%, landing fees +14.3%, maintenance +12.2%, pressuring adjusted CASM (+3.5% YoY) .
  • Q2 guide softness: operating margin 4–7% on lower scheduled ASMs; management also flagged temporary unit cost pressures from lower passenger utilization during cargo induction buffers .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Operating Revenue ($USD Millions)$249.5 $260.4 $326.6
GAAP Diluted EPS ($)$0.04 $0.24 $0.66
Adjusted Diluted EPS ($)$0.06 $0.27 $0.72
GAAP Operating Margin (%)5.0% 10.0% 17.2%
Adjusted Operating Margin (%)5.6% 10.6% 18.3%

Segment revenue breakdown:

Segment Revenue ($USD Millions)Q3 2024Q4 2024Q1 2025
Scheduled Service$83.8 $96.1 $143.5
Charter$50.8 $48.0 $54.7
Ancillary$73.2 $71.2 $87.7
Cargo$29.2 $28.6 $28.2
Other$12.5 $16.5 $12.6
Total Operating Revenue$249.5 $260.4 $326.6

Key KPIs:

KPIQ3 2024Q4 2024Q1 2025
Scheduled Service TRASM (¢)10.42 10.62 11.63
Total TRASM (¢)11.15 11.14 12.23
Load Factor (%)84.2% 81.6% 83.5%
ASMs (thousands)1,884,889 1,963,254 2,370,755
Departures (total)13,730 13,130 12,964
Block Hours (total)36,191 36,610 40,681
CASM (¢)12.58 11.94 11.41
Adjusted CASM (¢)8.04 7.83 7.34
Fuel Cost per Gallon ($)2.69 2.47 2.66

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)Q2 2025N/A$250–$260 New
Operating Income Margin (%)Q2 2025N/A4%–7% New
Economic Fuel Cost ($/gal)Q2 2025N/A$2.44 New
Effective Tax Rate (%)Q2 2025N/A23% New
Total System Block Hours (000s)Q2 2025N/A36–37 New
Scheduled Service ASMsFY 2025N/ADecline 3%–5% New
Adjusted CASMFY 2025N/AIncrease mid- to high-single digits New
CapEx ($M)FY 2025N/A$70–$80 New
Share Repurchase AuthorizationOngoingPrior $10M completed in Q1 (secondary offering participation) New $25M authorization Raised flexibility
Q1 2025 Guide (context)Q1 2025Revenue $330–$340; Op margin 17–21% Actual Revenue $326.6; Op margin 17.2% Slightly below revenue guide; margin within lower end

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Cargo economics and rampQ3: Cargo rev/block hr +16% YoY; plan first new aircraft late Mar/early Apr 2025 . Q4: Rapid cargo growth expected in 2025 .3 of 8 additional aircraft inducted; 20 cargo aircraft by end of summer; revenue per block hour +~20% YoY; cargo revenue to roughly double by September .Positive acceleration
Scheduled service capacity/ASMsQ3: Right-sized capacity; Q4 ASMs +~3% YoY . Q4: Q1 2025 scheduled ASMs +~7% YoY .Q2 scheduled ASMs to decline ~7%; full-year scheduled ASMs down 3–5% to support cargo ramp .Near-term reduction
Unit revenue/close-in faresQ3: Overcapacity pressured unit revenue; fares improving late Q3 . Q4: TRASM improvement into December .Close-in fares accelerated in April; expect ~3% TRASM improvement in Q2 despite ASM cut .Improving indicators
Cost pressures (labor, ground)Q3: Ground handling +23.3%; landing fees +14.5% . Q4: Adjusted CASM +7.6% YoY on lower ASMs .Salaries +12.9%; ground handling +24.6%; landing fees +14.3%; adjusted CASM +3.5% YoY .Persistent, moderated
Credit card/co-brandNot highlighted in Q3/Q4 press.Synchrony Bank selected; improved revenue share; P&L impact starting 2026 .Strategic positive
Regional demand trendsQ3: Hurricanes impacted cargo; domestic overcapacity . Q4: improving demand trends .Midwest and Minneapolis-origin markets strong; California a bit weaker; O’Hare backdrop rationalizing; added gates in MSP .Mixed, Midwest strong
Balance sheet/liquidityQ3 liquidity $165M . Q4 liquidity $205.6M .Liquidity $227.1M; revolver upsized to $75M .Strengthening

Management Commentary

  • “Our diversified business model is unique... we will be able to reliably deliver industry-leading profitability throughout all cycles… we’re reporting quarterly records for revenue and earnings.” — CEO Jude Bricker .
  • “Q1 cargo revenue per block hour growing by about 20%… cargo revenue should be roughly double by September… 2/3 of our flights will be under committed contracts, both charter and cargo.” — CEO Jude Bricker .
  • “Diluted adjusted EPS for the quarter was $0.72… scheduled service TRASM declined 4.7%… charter revenue grew 15.6%… cargo revenue grew 17.6%.” — CFO Bill Trousdale .
  • “Close-in fares accelerated into April… positive indicator for the summer… we’re guiding conservatively.” — CEO Jude Bricker .
  • “We entered into a 4-year $75M revolving credit facility… do not anticipate a need to purchase incremental aircraft until 2027 capacity.” — CFO Bill Trousdale .

Q&A Highlights

  • Cargo ramp and economics: Fixed-fee structure (margin in fixed component; variable covers costs) means lower utilization can drive higher margins; eight additional freighters with induction buffers may temporarily pressure unit costs .
  • Demand trends and pricing: February off-peak weakness impacted loads; April close-in fares accelerated; summer bookings for Minneapolis big city markets strong; expect TRASM improvement in Q2 .
  • Balance sheet flexibility: Revolver upsized to $75M to reflect larger scale; capital priorities include opportunistic aircraft, buybacks ($25M authorization), and potential M&A .
  • Credit card co-brand: Synchrony agreement to improve revenue share and add tech; transition creates near-term headwinds; meaningful P&L impact from 2026 .
  • Operational enhancements: Additional gates in MSP (peak up to 10) enable higher-density peak scheduling and better economics; pilot shortage alleviated; focus on upgrades and base planning .

Estimates Context

  • Q1 2025: Adjusted EPS beat (consensus ~$0.697 vs actual $0.72); revenue roughly in line/slightly below (consensus ~$327.5M vs actual $326.6M)*.
  • Q4 2024: EPS beat ($0.205 vs $0.27); revenue beat ($258.0M vs $260.4M)*.
  • Q3 2024: EPS in line/beat ($0.06 vs $0.064); revenue slight miss ($250.3M vs $249.5M)*.
  • With Q2 2025 guidance softer on margin (4–7%) and lower scheduled ASMs, near-term revenue/earnings estimates may drift lower, while back-half margin expansion possibility (as cargo completes ramp and passenger utilization normalizes) could support FY margin estimate stability/upside .

Estimates table:

MetricQ3 2024Q4 2024Q1 2025
Primary EPS Consensus Mean ($)0.060.2050.697
Actual EPS ($)0.0640.270.72
Revenue Consensus Mean ($M)250.3258.0327.5
Actual Revenue ($M)249.5260.4326.6
# EPS Estimates688
# Revenue Estimates466

Note: Values retrieved from S&P Global.

Key Takeaways for Investors

  • Diversified model is delivering: record Q1 revenue and margins with charter/cargo offsetting scheduled softness; adjusted operating margin rose to 18.3% .
  • Near-term guide is conservative: Q2 margin (4–7%) and lower scheduled ASMs reflect cargo staffing/induction priorities; expect demand indicators (close-in fares) to aid summer .
  • Cargo ramp is the core 2025–2026 catalyst: 20 aircraft by end of summer; revenue per block hour +~20% YoY; management targets cargo revenue doubling by September .
  • Cost vigilance required: non-fuel inflation (labor, ground handling, landing fees) persists; adjusted CASM +3.5% YoY in Q1 even as fuel prices eased .
  • Capital allocation flexibility: $227.1M liquidity, $75M revolver, and $25M buyback authorization provide levers to support equity value and opportunistic moves .
  • Back-half margin setup: management sees a path to margin expansion in H2 as passenger utilization normalizes post cargo induction .
  • Watch estimate revisions: Q2 softness likely drives near-term cuts; cargo mix and summer close-in pricing could stabilize or lift back-half EPS expectations* .

Additional Q1 2025 Press Releases and Context

  • Synchrony Bank credit card issuer agreement announced; launch later this year .
  • Flight attendant (Teamsters) contract ratified; TWU dispatcher agreement ratified Feb 13 .
  • Board approved $25M share repurchase authorization and completed $10M repurchase during Apollo’s secondary offering exit .
  • Liquidity improved to $227.1M; net debt $446.7M .
  • Q4 2024 context: Q1 2025 guide at the time was revenue $330–$340M and margin 17–21%, highlighting seasonal strength and pre-ramp timing .

Note: Values retrieved from S&P Global.