‘A New Breed:’ Sun Country Looks to Go Public
Twin Cities-based low-cost carrier Sun Country Airlines on Monday submitted the paperwork to take the company public.
The airline hasn’t yet settled on the number or price of shares it plans to sell. But in a filing with the Securities and Exchange Commission, the company sounded a positive note on its business prospects over the last year. Describing itself as a “new breed of hybrid low-cost air carrier,” Sun Country said that a diverse set of revenue streams helped the company weather the Covid-19 pandemic better than other airlines. Sun Country operates standard passenger service alongside cargo flights for Amazon and charter flights.
“We believe that our diversified and flexible business model allowed us to mitigate the impact of Covid-19 on our business better than any other large U.S. passenger airline,” the company wrote in the filing.
But Sun Country wasn’t entirely spared from the worst effects of the pandemic; in October, the airline eliminated 112 jobs. Most were unfilled positions. The company also reduced flight capacity in April 2020. Sun Country’s net income did take a hit as a result of Covid, too: For the first nine months of the company’s 2020 fiscal year, the airline reported net income of $4.1 million, down substantially from $41 million over the same period in 2019. And although the company touts a diversified revenue base, passenger revenue still accounted for a majority of the company’s revenue. For the first nine months of FY2020, Sun Country reported $293 million in operating revenue; passenger revenue accounted for $272 million of that total.
To be sure, the Covid-19 pandemic has not been kind to the airline industry. Delta Airlines, the Atlanta-based carrier that handles the majority of passenger traffic at Minneapolis-St. Paul International Airport, logged a staggering $12.39 billion loss in 2020.
Sun Country, meanwhile, is still banking on a “rebound in U.S. travel.” When travel picks up, Sun Country aims to increase the number of markets it serves.
“We have identified over 250 new market opportunities as the long-term reduction in our unit costs has expanded the number of markets that we can profitably serve,” the company said. “We have a successful history of opening and closing stations quickly to meet seasonal demand, which we believe will benefit us in re-opening markets we closed during the Covid-19 downturn and in pursuing new market growth opportunities quickly.”
Sun Country is looking to grow its Minneapolis-based network “to full potential, including adding frequencies on routes we already serve,” the company said.
The company also acknowledged that Covid-19 still poses a number of concerns for the airline industry: “We are depending upon a successful Covid-19 vaccine and significant uptake by the general public in order to normalize economic conditions, the airline industry, and our business operations.”
Ever since it was acquired by New York-based Apollo Capital Management in 2017, Sun Country had been rumored to go public. CEO Jude Bricker confirmed as much in an interview with travel industry website Skift in August 2019. Though he anticipated an earlier IPO date, Bricker believed that “there’s a market for an airline that is growing,” as he told Skift.
Apollo will still retain 50 percent of its voting stock, according to the SEC filing.
The airline hopes to raise up to $100 million in the IPO, and the company plans to list on the Nasdaq Global Select Market, the filing said.