Sun Country projects $300M EBITDA run rate by Q2 2027 as cargo expansion completes and scheduled service poised for growth

Earnings Call Insights: Sun Country Airlines Holdings, Inc. (SNCY) Q3 2025

MANAGEMENT VIEW

* CEO Jude Bricker highlighted the completion of the cargo fleet expansion, stating "in 2025, Sun Country is focused on cargo expansion as we execute on the planned growth of the cargo fleet to 20 aircraft. Today, all 20 aircraft are in operation." Bricker emphasized the company's "13 consecutive profitable quarters" and the ability to "deliver the most flexible scheduled service capacity in the industry." He signaled a return to scheduled service growth, noting "I expect to be able to show positive year-on-year scheduled service growth by 3Q '26."
* Bricker pointed out, "3Q TRASM was up 1.6%. However, for September, it was up over 7%. Currently, we expect 4Q TRASM to be up over 6%, with 1Q 2026 it advances even stronger." He reiterated the long-term target, stating "I continue to expect to achieve $300 million of run rate EBITDA after the second quarter of 2027, operating the fleet we currently have on our balance sheet."
* Bricker also cited record charter performance: "We had an all-time record volume while also growing revenue per block hour by 4% year-on-year."
* CFO Daniel Zubeck noted, "this quarter marked the completion of our cargo expansion with all 20 aircraft now operating under the contract for Amazon. Adding 8 additional aircraft to our fleet was truly a team effort and represents a 14% increase in our total fleet." Zubeck reported, "Our GAAP EPS for the third quarter was $0.03 and while our adjusted EPS was $0.07. GAAP pretax margin was 8%, while adjusted pretax margin was 2%, our fourth consecutive quarter of year-over-year adjusted margin expansion."
* Zubeck described the transitional period, stating "we remain in a transition period while we begin to annualize our cargo growth and then begin to grow back our passenger service business to the pre-2024 utilization and expand our passenger fleet to 50 aircraft by mid-2027."

OUTLOOK

* Management expects fourth quarter total revenue to be between $270 million and $280 million on an increase in block hours of 8% to 11%.
* Zubeck guided to "fuel cost per gallon to be $2.50" and an "operating margin of 5% to 8%."
* Scheduled service ASMs are expected to decline between 8% and 9% in Q4 2025 versus last year, but Bricker anticipates, "we'll be focused on recovering those levels in the next several quarters."
* Bricker projected, "we should hit an inflection point on unit cost... year-on-year CASM ex to hit kind of a 0, flat level in the middle of next year, late next year and improve from there."

FINANCIAL RESULTS

* Third quarter total revenue was $255.5 million, a 2.4% increase year-over-year on a 3.8% increase in total block hours.
* Revenue for the passenger segment was down 3.2% year-over-year, attributed to reduced scheduled service as focus shifted to cargo growth.
* Charter revenue grew 15.6%, and block hours for charters increased 11.1%.
* Cargo segment revenue climbed to $44 million, described as "the highest quarterly cargo revenue in our history." Cargo block hours increased 33.7% in the quarter.
* CASM rose 10.3% year-over-year, with adjusted CASM up 5.2%. Salaries increased 15% and maintenance costs rose 13.5%.
* Sun Country closed on a $108 million term loan facility, resulting in total liquidity of $298.7 million at quarter end. Net debt was $406.1 million, down from $438.2 million at the start of the year.
* Share repurchases totaled $10 million in the quarter, with $15 million remaining in the buyback authorization.

Q&A

* Brandon Oglenski, Barclays: Asked about seasonality impact with cargo expansion. Bricker responded, "I don't think there's going to be much to change the seasonality of our business. Our first quarter is always going to be massive."
* Oglenski also inquired about maintenance costs. Zubeck explained, "We've expanded fleet, and there's more maintenance required... we plan to pull [maintenance] into 2025 to stabilize the maintenance demand."
* Catherine O'Brien, Goldman Sachs: Queried about RASM trends and holiday bookings. Bricker stated, "we had over 7% TRASM improvement in scheduled service in September... Sales look really, really strong into the winter period."
* O'Brien sought clarification on unit cost trends. Zubeck detailed, "we've got $2.4 million of heavy maintenance forecasted in 2026 right now."
* Thomas Fitzgerald, TD Cowen: Asked about labor and base openings. Bricker confirmed plans to open a Cincinnati base and noted, "captain upgrades are the limiting factors as we do long-range planning into '26 and '27."
* Michael Linenberg, Deutsche Bank: Asked about competitive capacity and Spirit exit from Minneapolis. Bricker clarified, "we're not capacity constrained in Minneapolis whatsoever."
* Further Q&A covered charter business demand, growth in ad hoc charters, unit cost expectations, maintenance strategies, and capital allocation priorities.

SENTIMENT ANALYSIS

* Analysts pressed for details on cost inflation, capacity recovery, and capital deployment, maintaining a neutral to slightly positive tone, as evidenced by repeated acknowledgments of positive demand trends and questions about growth opportunities.
* Management displayed confidence, especially regarding demand and operational flexibility. Bricker stated, "I don't have any negatives... I'm not seeing any competitive movements that give me pause or any year-over-year weaknesses," and "it just looks really good."
* Compared to the previous quarter, management's tone was more upbeat about scheduled service recovery, while analysts remained focused on cost management and competitive positioning.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language shifted from cautious recovery of scheduled service to a more assertive stance on expected growth by 3Q '26.
* Both quarters highlighted the transition driven by cargo expansion, but Q3 introduced a clear inflection in scheduled service TRASM and stronger charter performance.
* Management confidence increased regarding the sustainability of demand and profitability, while analysts' questions evolved from concerns over cargo ramp delays to anticipation of margin recovery and capital allocation.
* Key metrics such as cargo revenue and charter growth accelerated compared to Q2, while maintenance and labor inflation continued as central themes.

RISKS AND CONCERNS

* Management cited ongoing cost pressures from labor contracts and airport fees, with Bricker noting "we're getting a lot of cost pressure like all airlines from airports. I don't see that abating much."
* Maintenance costs were highlighted as a risk, with planned heavy maintenance accelerated into Q4 to stabilize future requirements.
* Analysts questioned unit cost trends, capacity constraints, and potential competitive responses in key markets, but management expressed confidence in mitigation strategies and operational flexibility.

FINAL TAKEAWAY

Sun Country Airlines concluded the quarter with all 20 cargo aircraft in operation and reaffirmed its target of reaching a $300 million EBITDA run rate by the second quarter of 2027. Management emphasized the flexibility of the business model, record cargo and charter revenues, and a clear path to scheduled service growth as the company transitions through its cargo expansion phase. While cost pressures and maintenance requirements remain, the leadership team expressed confidence in both demand trends and the company's ability to allocate capital opportunistically, positioning Sun Country for continued profitability and growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/sncy/earnings/transcripts]

MORE ON SUN COUNTRY

* Sun Country Airlines Holdings, Inc. (SNCY) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4835734-sun-country-airlines-holdings-inc-sncy-q3-2025-earnings-call-transcript]
* Sun Country Airlines: Why I Am Disappointed With Management's Execution (Rating Downgrade) [https://seekingalpha.com/article/4826581-sun-country-airlines-why-disappointed-with-management-execution]
* Sun Country Airlines Holdings, Inc. (SNCY) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4807921-sun-country-airlines-holdings-inc-sncy-q2-2025-earnings-call-transcript]
* Ultra low-cost airline carriers turn defensive on United CEO comments [https://seekingalpha.com/news/4493484-ultra-low-cost-airline-carriers-turn-defensive-on-united-ceo-comments]
* Sun Country outlines $1.5B revenue and $2.50 EPS targets by Q2 2027 as cargo fleet expansion impacts near-term margins [https://seekingalpha.com/news/4476838-sun-country-outlines-1_5b-revenue-and-2_50-eps-targets-by-q2-2027-as-cargo-fleet-expansion]