Sun Country Airlines (SNCY -11.04%), a hybrid airline combining scheduled flights, charter services, and dedicated cargo operations, announced its second quarter 2025 financial results on July 31, 2025. The airline posted record GAAP revenue of $263.6 million and adjusted earnings per share of $0.14, both exceeding Wall Street expectations, with non-GAAP EPS of $0.14 (versus estimate of $0.11) and GAAP revenue of $263.6 million (versus estimate of $255.98 million). Analysts had projected GAAP revenue of $256.0 million and adjusted EPS (non-GAAP) of $0.14. Earnings per share (non-GAAP) topped forecasts by 26.8%, and revenue (GAAP) outpaced estimates by 3.0%. The quarter was marked by robust growth in cargo operations, continued profitability, but also Rising costs, particularly in the scheduled flight segment as the company shifts more capacity to cargo, were observed. Management described the results as marking the twelfth consecutive profitable quarter, but signaled a period of elevated operating costs during its ongoing strategic pivot.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.14 | $0.11 | $0.06 | 133.3% |
| Revenue (GAAP) | $263.6 million | N/A | $254.4 million | 3.6% |
| Operating Income | $16.3 million | $12.4 million | 31.5% | |
| Operating Margin | 6.2% | 4.9% | 1.3 pp | |
| Net Income | $6.6 million | $1.8 million | 266.7% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About the Business and Strategic Priorities
Sun Country Airlines operates a unique hybrid business model. Its operation blends scheduled passenger flights, charter services, and a growing cargo segment, primarily flying for Amazon under a contract arrangement. This setup gives the airline flexibility to shift resources among business lines as market conditions change and helps mitigate the typical seasonality seen in the airline industry.
The company’s recent focus has been on expanding its cargo operations and leveraging its relationship with Amazon, while implementing a "peak demand" scheduling strategy for its passenger business. Key factors for its success include optimizing fleet use, balancing capacity, and maintaining a dominant position within its home base at the Minneapolis-St. Paul (MSP) airport. Profitability in each line of business and efficient cost control remain core goals.
Quarterly Results: Highlights and Critical Developments
Sun Country Airlines reached its highest-ever second-quarter GAAP revenue of $263.6 million, coming in 3.6% above the prior-year period. Adjusted earnings per share more than doubled compared to last year. This financial strength reflected increased cargo contributions and higher overall margins, even as the company managed lower passenger capacity in scheduled flying.
The cargo segment saw the most significant gains. Revenue surged 36.8% as additional aircraft came online to support Amazon's shipping needs. By the end of the quarter, 15 cargo aircraft were in service, rising to 17 as of the earnings release, and management expects to operate all 20 committed cargo planes by the end of the third quarter. Cargo accounted for approximately 13.2% of total revenue, with gains driven by new Amazon contract rates and increased cargo flight hours. Despite some delivery timing delays, overall cargo performance offset softness elsewhere.
Charter block hours increased by 7.9%, although the revenue boost was partly dampened by lower fuel reimbursements linked to falling fuel prices. Sun Country continued to use surplus passenger aircraft and available crew to take advantage of ad hoc charter opportunities, a strategy seen as making the business more efficient while supporting cargo ramp-up.
Scheduled passenger service revenue was $88.1 million (GAAP), holding flat compared to the prior year, but there was a notable reduction in capacity. The company cut available seat miles by 6.2% to allow for more cargo flying, which led to 9% fewer scheduled passengers and a 1.3 percentage point decline in load factor. Nevertheless, total fare per passenger rose by 6.5%. Management emphasized that its scheduling strategy—targeting high-demand periods and routes—helped sustain pricing power and produce a 3.7% increase in scheduled service total revenue per available seat mile (TRASM).
Unit costs (CASM) increased materially. Adjusted cost per available seat mile (CASM) rose 11.3% as fixed costs were absorbed across fewer scheduled flights and the company faced higher labor, airport, and maintenance expenses. Management said these cost pressures are expected to remain for the next several quarters until scheduled service growth resumes, which is anticipated in the second half of 2026. Salaries and wages rose 12.9%, linked to new labor contracts and pilot pay increases. Landing fees and airport rent increased 9.1%, and Maintenance costs (GAAP) were up 5.3% year over year.
The overall GAAP operating expense increase of only 2.2% demonstrated some cost control. The company continues to maintain healthy liquidity, reporting $37.0 million in cash and equivalents as of June 30, 2025, with Net debt was $431 million as of June 30, 2025. Year to date through Q1 2025, Sun Country repurchased $10 million of its own shares
Product-wise, Sun Country operates a fleet of Boeing 737 Next Generation aircraft, including both passenger and cargo models. The company expanded its gate access at Minneapolis-St. Paul airport by two gates, further strengthening its home market dominance. There were no major new passenger product introductions, although ongoing investments in customer service continued.
The Amazon cargo partnership continued to be a key strategic relationship, driven by higher rates under the renewed contract and the induction of more Amazon-provided freighter aircraft. The asset-light structure of this arrangement, in which Sun Country provides crews, maintenance, and insurance, helps generate stable revenue for the airline.
SNCY does not currently pay a dividend.
Looking Ahead: Guidance and Investment Watchpoints
For the third quarter, Sun Country provided guidance for GAAP revenue in the range of $250 million to $260 million, implying growth of 0% to 4% compared to the prior year. The company expects system-wide block hours to increase by 5% to 8%, but anticipated operating income margin is forecast at 3% to 6%. This outlook reflects management’s cautious stance around persisting cost pressures as more aircraft are transitioned to cargo service. Fuel costs per gallon are expected to fall to $2.61
Leadership signaled that scheduled passenger service capacity, as measured by available seat miles, will continue to decline by about 10% as cargo growth peaks. Management expects the benefits of this cargo expansion to show most clearly by September 2025, with cargo revenue on track to roughly double year over year by September 2025. Regular growth in scheduled service should resume in late 2026, which is anticipated to help normalize costs. Investors will likely be watching for execution of the full Amazon fleet ramp-up, cost management progress, and preparations for a return to growth in the passenger business.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
