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Sun Country Airlines Holdings, Inc. (SNCY)·Q3 2025 Earnings Summary

Executive Summary

  • Sun Country delivered its thirteenth consecutive profitable quarter: revenue $255.5M (highest third quarter on record), GAAP diluted EPS $0.03, adjusted diluted EPS $0.07; GAAP operating margin 3.9% and adjusted operating margin 4.8% .
  • Cargo expansion completed with all 20 freighters in service; cargo revenue rose to $44.0M (+50.9% YoY), and cargo/charter combined contributed 40% of total revenue, stabilizing results amid reduced scheduled service ASMs .
  • Q4 2025 guidance: revenue $270–$280M, operating margin 5–8%, fuel $2.50/gal, system block hours 39.5–40.5K; heavy maintenance costs pulled forward will burden Q4 margins, but management expects TRASM to remain strong .
  • Versus Wall Street: Q3 revenue was in line ($255.5M vs $255.8M*), and adjusted EPS beat ($0.07 vs $0.0646*); Q4 revenue consensus $274.7M* is within company guidance range (implies balanced expectations)*. Values retrieved from S&P Global.
  • Catalysts: TRASM inflection (September >7%) and Q4 outlook (>6%), cargo at full run rate by December, share repurchases ($10M completed; $15M remaining), and a new co‑brand credit card launched with Synchrony (targeting ~$20M annual program contribution at full implementation) .

What Went Well and What Went Wrong

What Went Well

  • Cargo ramp achieved: “By September, we had deployed our full fleet of 20 freighter aircraft for Amazon,” expanding total operating aircraft 14% YTD .
  • Revenue mix resilience: CFO noted “Cargo and charter combined to generate 40% of our total revenue this quarter,” limiting fuel price exposure and stabilizing revenue streams .
  • TRASM inflection: “For me, the most positive news… was the inflection in scheduled service TRASM. 3Q TRASM was up 1.6%,… September it was up over 7%,” with 4Q expected up >6% .
  • Charter strength: All‑time record volume and +4% revenue per block hour YoY, leveraging flexible capacity allocation .
  • Operational reliability: 3Q controllable completion factor of 99.3% .

What Went Wrong

  • Margin compression: GAAP operating margin fell to 3.9% (from 5.0% a year ago) amid elevated unit costs from reduced scheduled flying and maintenance events .
  • Lower scheduled production: Scheduled service ASMs down 10.2% and block hours down 10.9% as cargo ramp displaced peak period flying .
  • Cost pressures: Salaries and benefits +15.0% due to pilot growth and wage scales; maintenance +13.5% from unplanned events; adjusted CASM +5.2% YoY .
  • Transcript discrepancy: Management’s remark that “GAAP pre‑tax margin was 8%” conflicts with the 8‑K showing GAAP pre‑tax margin of 0.8% (8‑K numbers should be treated as authoritative) .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Total Operating Revenue ($M)$326.649 $263.621 $255.538
GAAP Diluted EPS ($)$0.66 $0.12 $0.03
Adjusted Diluted EPS ($)$0.72 $0.14 $0.07
Operating Income ($M)$56.246 $16.262 $9.902
Operating Margin (%)17.2% 6.2% 3.9%
Adjusted Operating Income ($M)$59.7 $17.9 $12.4
Adjusted Operating Margin (%)18.3% 6.8% 4.8%
Net Income ($M)$36.535 $6.577 $1.552
Pre‑tax Margin (%)14.7% 3.2% 0.8%
Adjusted EBITDA ($M)$84.5 $42.8 $36.3
Adjusted EBITDA Margin (%)25.9% 16.2% 14.2%
Revenue YoY Change (%)+4.9% +3.6% +2.4%

Segment Revenue Breakdown

Segment ($M)Q1 2025Q2 2025Q3 2025
Scheduled Service$143.522 $88.138 $76.746
Charter$54.692 $54.271 $58.673
Ancillary$87.674 $72.259 $65.679
Passenger (Sub‑total)$285.888 $214.668 $201.098
Cargo$28.157 $34.803 $44.023
Other$12.604 $14.150 $10.417
Total Operating Revenue$326.649 $263.621 $255.538

KPIs and Unit Economics

KPIQ1 2025Q2 2025Q3 2025
Scheduled Service TRASM (¢)11.63 10.40 10.59
Total TRASM (¢)12.23 11.26 11.54
CASM (¢)11.41 12.79 13.87
Adjusted CASM (¢)7.34 8.34 8.46
Load Factor (%)83.5% 81.8% 84.8%
Scheduled ASMs (000s)2,020,545 1,571,210 1,374,519
Total ASMs (000s)2,370,755 1,933,871 1,770,569
Total Block Hours40,681 37,086 37,554
Scheduled Block Hours27,242 21,887 19,078
Charter Block Hours5,424 5,489 5,963
Cargo Block Hours7,605 9,157 11,977
Fuel Cost per Gallon ($)$2.66 $2.43 $2.55

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)Q4 2025N/A$270–$280 N/A
Operating Income Margin (%)Q4 2025N/A5%–8% N/A
Economic Fuel Cost ($/gal)Q4 2025N/A$2.50 N/A
Effective Tax Rate (%)Q4 2025N/A23% N/A
Total System Block Hours (000s)Q4 2025N/A39.5–40.5 N/A
Total Revenue ($M)Q3 2025$250–$260 Actual $255.5 Met range
Operating Income Margin (%)Q3 20253%–6% Actual 3.9% Within
Economic Fuel Cost ($/gal)Q3 2025$2.61 Actual $2.55 Lower
Total System Block Hours (000s)Q3 202538–39 Actual 37.554 Slightly lower

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Cargo ramp & mixPlan to reach 20 aircraft; cargo revenue per block hour +~20%; cargo drove scheduled ASM reductions; 20 aircraft expected by end of Q3 All 20 freighters in service; cargo revenue $44.0M (+50.9% YoY); cargo/charter = 40% of company revenue Improving
TRASM & demandQ2 TRASM +3.5% overall; May strongest; Q3 guided TRASM +3%–6% TRASM +1.6% in Q3; September >7%; Q4 expected >6% Improving
Maintenance costs & timingNon‑routine events elevated; rate increases; heavy checks common; 2025 CapEx $70–$80M Unplanned maintenance increased costs; heavy maintenance pulled into Q4 2025 Near‑term pressure
Pilot staffing & upgradesPilot raises and staffing for cargo; upgrades a constraint; PBS and new base planned; no pilot attrition recently PBS roster executed; new Cincinnati base planned to support cargo; captain upgrades still limiting factor Structural improvement
Credit card & loyaltySynchrony co‑brand to launch in Q3; economics to benefit in 2026+ Card launched; program aims for ~$20M annual contribution at full implementation; strong early uptake Positive
Market capacity (MSP)Gate expansion supports peaks; MSP becoming two‑airline market; reduced ULCC presence Allegiant/Spirit removal noted; MSP two‑airline dynamic; strong bookings into winter Supportive pricing
Used aircraft/enginesEngines/airframes expensive; NG availability tied to MAX rates Engine maintenance value doubled vs COVID; shop visit costs ~2x; asset market tight Cost inflation persists

Management Commentary

  • CEO: “Sun Country is pleased to report our thirteenth consecutive profitable quarter with GAAP EPS of $0.03 and adjusted diluted EPS of $0.07.” He added cargo fleet was fully deployed (20 aircraft) and share repurchases of $10M were completed with $15M remaining .
  • CEO on TRASM: “3Q TRASM was up 1.6%, however, for September it was up over 7%… we expect 4Q TRASM to be up over 6%” .
  • CFO: “Cargo and charter combined to generate 40% of our total revenue this quarter…. Scheduled service ASMs were down 10.2%… unit costs are expected to remain elevated… until the Company adds back scheduled service later in 2026” .
  • CEO long‑term: “I continue to expect to achieve $300 million of run rate EBITDA after the second quarter of 2027 operating the fleet we currently have” .

Q&A Highlights

  • Seasonality with cargo: Cargo run rate planned at >5,000 block hours per month; cargo growth displaced peak scheduled flying in Q3/Q4, to be rebuilt in subsequent quarters .
  • Maintenance pull‑forward: Heavy maintenance expenses pulled into Q4 to stabilize demand; contributes to CASM ex‑fuel inflation near term .
  • Pilot base and productivity: PBS roster adopted; new Cincinnati base to support cargo operations; captain upgrades remain a constraint but improving .
  • Market structure: MSP becoming a two‑airline market with ULCC exits; West Coast broadly mixed but leisure Southern California and Palm Springs strong .
  • Used aircraft/engine costs: Engine maintenance values have “almost doubled” vs COVID; tight asset market; company favoring buybacks absent compelling aircraft deals .

Estimates Context

  • Q3 2025 vs consensus: Revenue $255.538M vs $255.756M* (in line); Adjusted diluted EPS $0.07 vs $0.0646* (beat). EBITDA consensus $36.947M* vs reported adjusted EBITDA $36.3M (definitions differ; broadly in line)*. Values retrieved from S&P Global.
  • Q4 2025: Company guides revenue $270–$280M; consensus $274.727M* sits mid‑range, implying no material gap between Street and management’s outlook*. Values retrieved from S&P Global.
  • FY 2025: Consensus EPS $1.092* and revenue $1.1209B*; given cargo at full run rate by December and ongoing TRASM strength, Street may fine‑tune Q4 assumptions for maintenance and segment mix*. Values retrieved from S&P Global.
MetricQ3 2025 ActualQ3 2025 Consensus*Q4 2025 GuidanceQ4 2025 Consensus*
Revenue ($M)$255.538 $255.756*$270–$280 $274.727*
Diluted EPS ($)$0.03 GAAP; $0.07 Adj $0.0646* (Primary EPS)N/A$0.1529*
Adjusted EBITDA ($M)$36.3 $36.947*N/A$42.935*

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near‑term margins constrained by mix and maintenance, but TRASM is inflecting and cargo is at full run rate by December, positioning for sequential improvement into 2026 .
  • Diversified revenue model (cargo/charter) mitigates volatility; cargo/charter at 40% of revenue provides stability and less fuel sensitivity .
  • Capacity add‑back in scheduled service to be targeted in peak periods (June/July/Aug/Dec/March), supporting unit revenue resilience as pilot credit hours expand .
  • Capital allocation remains shareholder‑friendly (buybacks) with limited aircraft CapEx until 2027; new $108M term loan at fixed 5.98% improves debt profile .
  • Loyalty and co‑brand card program expected to contribute meaningfully (~$20M annually at full implementation), with early adoption exceeding expectations .
  • Watch for Q4 maintenance pull‑forward impact vs guidance (5–8% margin) and continued CASM ex‑fuel pressure until scheduled service growth resumes in 2026 .
  • Discrepancy alert: Treat 8‑K margins as authoritative where transcript remarks conflict (GAAP pre‑tax margin 0.8% per 8‑K) .

Additional Notes

  • Liquidity and leverage: Total liquidity $298.7M at 9/30/25 (includes $54M available under new term loan), net debt $406.1M; total debt/lease obligations $575.8M .
  • Q4 scheduled ASMs expected down ~8–9% YoY as cargo growth annualizes .
  • Non‑GAAP adjustments in Q3 included stock comp ($1.7M), unplanned engine retirement ($0.7M), and loss on debt extinguishment ($0.4M), impacting adjusted metrics .

Citations: .

Values retrieved from S&P Global (consensus estimates marked with *).