What happened

Sun Country Airlines Holdings (SNCY 6.65%) had a strong fourth quarter, and investors are reacting by climbing on board. Shares of the leisure-focused airline traded up as much as 11% on Tuesday after the company reported better-than-expected financial results. As of 1:23 p.m. ET, it was up 8.03%.

So what

Sun Country is a Minnesota-based discount carrier that also has a large charter operation. The airline went public last spring and has mostly flown into headwinds in the months since, with the stock down 27% from its March 2021 opening.

An airplane flies above a row of palm trees.

Image source: Getty Images.

But if the fourth quarter is any indication, Sun Country is heading in the right direction. The airline earned $0.10 per share in the quarter on revenue of $172.6 million, beating analyst expectations for a $0.01 per share profit on sales of $167 million. Charter service -- including business with collegiate and professional sports teams, the Pentagon, and casino operations -- generated revenue of $39 million, up 15% from the third quarter.

"We are very pleased to have produced a 9% adjusted operating margin and adjusted earnings of $0.10 per diluted share in a challenging fourth quarter," the company's president and chief financial officer, Dave Davis, said in a statement. "Similar to other airlines, our operations were challenged by harsh weather conditions and staffing outages driven by the Omicron variant."

Now what

Sun Country said demand was softer than expected in December, but beginning in mid-January the company has seen "a very strong rebound in bookings." The airline last year signed new charter agreements with both Caesars Entertainment and Major League Soccer that ramp in the months to come, and it will add five new aircraft to the fleet in 2022 to support growth.

It might take some time for that growth to materialize. Indeed, Sun Country's first-quarter forecast for $215 million to $225 million of revenue was just below Wall Street's $227 million expectation. But the airline appears to be on course for sustained long-term growth, and it could discover new opportunities for expansion in the months to come as two of its discount competitors attempt to merge.

Sun Country is a niche airline, but it is carving out a profitable niche. Given time, this is an under-the-radar airline investment that could pay off for investors.