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Sun Country Airlines Holdings, Inc. (SNCY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record fourth-quarter revenue of $260.4M and GAAP diluted EPS of $0.24, with adjusted diluted EPS of $0.27; operating income margin was 10.0% and adjusted operating margin 10.6% .
  • Results exceeded prior Q4 guidance: revenue beat the $250–$260M range and operating margin topped the 7–9% guide; management cited improving passenger unit revenue and strong cost control .
  • Cargo was a key contributor: Q4 cargo revenue reached $28.6M (+13.1% YoY) amid Amazon rate escalations; management expects eight additional Amazon freighters in 2025 to double cargo revenue by next year’s summer run-rate .
  • Q1 2025 guidance implies continued strength: total revenue $330–$340M, operating margin 17–21%, and block hours up 7–9%—supported by balanced capacity and strong bookings in leisure trunk routes .
  • Catalyst watch: visibility on Amazon ramp, capacity rationalization in scheduled service, and Q1 margin guide support near-term estimate revisions and sentiment; ongoing labor agreements and balance sheet improvements (net debt/Adj. EBITDA ≈ 2x) underpin medium-term stability .

What Went Well and What Went Wrong

What Went Well

  • Record Q4 revenue and adjusted operating margin; “our fourth quarter results exceeded our initial expectations” and topped revenue and margin guidance set at the beginning of the quarter .
  • Cargo momentum: Q4 cargo revenue hit $28.6M (+13.1% YoY) with ~16% cargo revenue per block hour uplift; Amazon contract escalations and eight new freighters in 2025 expected to sharply increase cargo flying .
  • Demand and pricing improvement: December scheduled service TRASM increased over 5% YoY, with average total fare per passenger up 2.2%; management noted trunk leisure routes (Phoenix, Vegas, Fort Myers, Orlando, Cancun) are “really good” .

What Went Wrong

  • Unit revenue and load factor softness: Q4 scheduled service TRASM declined 1.0% YoY; load factor fell 3.1pp to 81.6% amid capacity shifts and a softer Caribbean mix .
  • Cost pressures: adjusted CASM rose 7.6% YoY in Q4; maintenance costs up 14.5% and landing fees/airport rent up 18.4% due to the expiration of COVID assistance .
  • Caribbean pockets softer and February intra-quarter demand lighter; management expects scheduled service ASMs to decline 3–5% across Q2–Q4 2025 to accommodate cargo growth—pressuring adjusted CASM mid- to high-single digits for 2025 .

Financial Results

Consolidated Performance (Quarterly progression)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$254.4 $249.5 $260.4
GAAP Diluted EPS ($)$0.03 $0.04 $0.24
Adjusted Diluted EPS ($)$0.06 $0.06 $0.27
Operating Income Margin (%)4.9% 5.0% 10.0%
Adjusted Operating Income Margin (%)5.5% 5.6% 10.6%
Net Income ($USD Millions)$1.8 $2.3 $13.4

Year-over-Year Comparison (Q4)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$245.5 $260.4
GAAP Diluted EPS ($)$0.10 $0.24
Adjusted Diluted EPS ($)$0.12 $0.27
Operating Income Margin (%)7.0% 10.0%
Adjusted Operating Income Margin (%)7.4% 10.6%
Net Income ($USD Millions)$5.6 $13.4

Segment/Revenue Mix (Q4)

Segment ($USD Thousands)Q4 2023Q4 2024YoY Change
Scheduled Service$93,254 $96,077 +3.0%
Charter$46,879 $47,955 +2.3%
Ancillary$70,500 $71,232 +1.0%
Passenger Total$210,633 $215,264 +2.2%
Cargo$25,297 $28,615 +13.1%
Other$9,613 $16,527 +71.9%
Total Operating Revenue$245,543 $260,406 +6.1%

KPIs and Unit Economics (Q4)

KPIQ4 2023Q4 2024
Scheduled Service TRASM (¢)10.73 10.62
Load Factor (%)84.7% 81.6%
Average Base Fare/Passenger ($)$89.06 $91.81
Ancillary per Passenger ($)$67.33 $68.07
Total Fare per Passenger ($)$156.39 $159.88
Total TRASM (¢)11.25 11.14
CASM (¢)12.03 11.94
Adjusted CASM (¢)7.28 7.83
Scheduled Service ASMs (000s)1,554,043 1,608,432
Departures (Total System)12,745 13,130

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / ActualChange
Total Revenue ($M)Q4 2024$250–$260 $260.4 Beat top end
Operating Income Margin (%)Q4 20247%–9% 10.0% Beat top end
Effective Tax Rate (%)Q4 202423% 23% (actual tax rate applied) In line
Total Revenue ($M)Q1 2025N/A (new)$330–$340 Introduced
Economic Fuel Cost ($/gal)Q1 2025N/A (new)$2.76 Introduced
Operating Income Margin (%)Q1 2025N/A (new)17%–21% Introduced
Effective Tax Rate (%)Q1 2025N/A (new)23% Introduced
Total System Block Hours (000s)Q1 2025N/A (new)41–42 (+7%–9% YoY) Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Capacity & Unit RevenueOvercapacity pressured TRASM; scheduled ASMs +18.2% in Q2; adjusted CASM down (4.9%) Capacity rationalization; December TRASM +~5%; Q1 scheduled service unit revenue roughly flat YoY with ~7% ASM growth Improving pricing while moderating ASMs
Cargo & AmazonAmazon agreement revised in June with rate escalations; cargo revenue +1.7% YoY in Q2 Q4 cargo revenue +13.1% YoY; 8 new freighters in 2025, fleet to 20; cargo block hours to inflect sharply Material ramp and rate uplifts through 2025
Charter DynamicsProgram charter ~80%+; ad hoc charter grew; Q3 charter revenue +7% YoY Q4 charter revenue +2.3% YoY despite lower fuel reimbursement; ad hoc up 27%; per block hour up ~4.6% ex-fuel reconciliation Stable to growing; ad hoc opportunity leveraged
Network StrategyQ2–Q3 trimmed scheduled capacity; holding capacity further out to reduce pricing variability Summer cuts in lower-yield markets; focus on trunk leisure routes; capacity drawdown Q3’25 ~10% Rationalizing to enhance yields
Labor & CostsCost control: GAAP opex grew less than block hours; mobile app launched Agreements in principle with flight attendants and dispatchers; maintenance +14.5%; landing fees +18.4%; 2025 adjusted CASM mid- to high-single-digit increase Labor stability improving; some non-fuel cost inflation
Balance Sheet & LeverageLiquidity $153M; net debt $552M (Q2) Liquidity $205.6M (12/31/24); net debt $438.2M; net debt/Adj. EBITDA ≈ 2x Strengthening liquidity and leverage

Management Commentary

  • “Our fourth quarter results exceeded our initial expectations, and we achieved a higher total revenue and operating margin than we guided to at the beginning of the quarter.” — Dave Davis, CFO .
  • “By summer, we will have all 8 [Amazon] aircraft growing the cargo fleet to 20. I expect cargo revenue will roughly double by this time next year.” — Jude Bricker, CEO .
  • “In scheduled service… capacity rationalization starting to inflect unit revenues to the positive… December we saw scheduled service TRASM increase almost 5%, which is where January is.” — Jude Bricker, CEO .
  • “Our business is built for resiliency and we’ll continue to allocate capacity between segments to maximize profitability and minimize earnings volatility.” — Dave Davis, CFO .

Q&A Highlights

  • Demand mix: Europe strength indirectly helps domestic leisure; trunk leisure routes strong; Caribbean somewhat softer vs prior year but still profitable after capacity additions .
  • Margin and CASM trajectory: Q1’25 margins expected at least as strong YoY; adjusted CASM to rise mid- to high-single digits in 2025 as scheduled ASMs decline to accommodate cargo ramp .
  • Amazon cadence and economics: First aircraft in service by late March; all eight by end of August; fixed per-aircraft rate plus block-hour rate; load factors do not affect margin .
  • Network prioritization: Summer schedule cut in lower-yield/defensive markets to lift fares; Q3’25 scheduled capacity down ~10%, rebounding in Q4 .
  • Capital allocation: 2025 CapEx $70–$80M (spare engines focus); buyback under consideration dependent on cash flow; leverage improving .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable at the time of retrieval due to daily request limits. As a result, comparison vs consensus for Q4 2024 revenue and EPS could not be provided; however, actuals exceeded company guidance ranges on both revenue and operating margin . Values that would normally be retrieved from S&P Global are unavailable at this time.

Key Takeaways for Investors

  • Near-term: Strong Q1 2025 guide (revenue $330–$340M; OI margin 17–21%) plus December/January TRASM strength should support positive sentiment and potential estimate revisions once consensus is available .
  • Cargo ramp: Amazon fleet expansion to 20 aircraft by late summer 2025 and rate escalations materially diversify revenue and stabilize earnings through contractual flying .
  • Capacity discipline: Targeted scheduled service reductions in lower-yield markets and focus on trunk leisure routes aim to lift fares and margins through summer 2025 .
  • Cost watch: Adjusted CASM increased 7.6% YoY in Q4 and is guided to rise mid- to high-single digits in 2025 as passenger ASMs decline; monitor maintenance, landing fees, and labor costs .
  • Balance sheet: Liquidity improved to $205.6M; net debt down to $438.2M; net debt/Adj. EBITDA ~2x—providing optionality for opportunistic buybacks if cash flow tracks guidance .
  • Labor stability: Agreements in principle with flight attendants and dispatchers reduce operational risk heading into the ramp year .
  • Execution risks: Timing of Amazon aircraft inductions and integration could create short-term utilization noise; Caribbean softness and seasonal demand shifts warrant monitoring .