Sun Country Airlines posted a $10.7 million profit in the third quarter of 2022 despite higher operating costs and ongoing struggles to hire enough flight crews.
The Minneapolis, Minnesota-based airline brought in an operating revenue of $221.7 million, a 28% increase compared with $173.7 million in the three months ending 30 September last year.
“Demand continues to be robust,” Jude Bricker, Sun Country’s chief executive, said during the airline’s third-quarter earnings call on 1 November. “There’s no sign of a slowdown in the leisure space.”
However, like many of its industry peers, the ultra-low cost carrier has been hobbled by a lack of qualified and current pilots – captains, specifically.
“Last quarter, we were constrained primarily by first officers,” Bricker says. “This quarter, captain availability has become the restraining input.”
Sun Country has hired 91 pilots in 2022 and has made “significant progress in expanding our pilot training pipeline”, Bricker says.
Operating expenses were 35% higher year-on-year, the company says. The cost of jet fuel was 75% higher than in the third quarter 2021, as the airline paid an average of $3.93 per gallon.
Additionally, the airline experienced an increase in non-fuel costs “largely driven by the fact that our aircraft utilisation remains lower than target and the impact of our new pilot agreement, which we signed at the end of last year”, Bricker says.
Sun Country’s scheduled service revenue rose just over 27% to $102 million from $80.2 million last year, and its charter service produced revenue of $42.9 million, a year-on-year increase of 27%.
Revenue from flying freight for Amazon, on the other hand, was $23.7 million – 3% lower than during the third quarter of 2021. The lower cargo revenue is explained by a one-time payment made by Amazon in the third quarter of last year, Bricker says.
Whether reduced flights to southwest Florida due to Hurricane Ian will affect Sun Country’s performance this winter remains unclear. Flights to Fort Myers are an integral part of Sun Country’s network through March, but the airline has cut flights through the end of the year and is monitoring bookings for the first quarter.
“We estimate that Hurricane Ian drove about $1 million in lost revenue during the third quarter,” Bricker says.
On 30 September, Sun Country held $285.2 million in unrestricted cash, cash equivalents, securities and credit, down from $334.3 million on the same date in 2021. The all-Boeing 737 airline had 42 aircraft operating in its passenger fleet and 12 freighters for Amazon.
For the fourth quarter, the company says it is targetting $220 to $230 million in revenue and it expects to fly 9-12% more block hours than in the same quarter of 2021.
