Sun Country Airlines at Bank of America Conference: Strategic Expansion Insights

On Tuesday, 13 May 2025, Sun Country Airlines (NASDAQ:SNCY) presented at the Bank of America Industrials, Transportation & Airlines Key Leaders Conference 2025. CEO Jude Bricker outlined the airline’s strategic direction, emphasizing its unique hybrid business model that combines scheduled passenger service with charter and cargo operations. Bricker highlighted the company’s industry-leading margins and operational flexibility, while also addressing challenges such as capacity management and pilot availability.

Key Takeaways

• Sun Country Airlines maintains strong profitability, even during challenging periods like the COVID-19 pandemic, through its diversified business model.
• The company is strategically managing capacity, focusing on growth in cargo and fixed-fee flying while optimizing scheduled services.
• Sun Country is expanding in leisure markets and exploring new opportunities in Texas, with an eye on industry trends and potential consolidation.
• CEO Jude Bricker emphasized the importance of maintaining a strong balance sheet and carefully evaluating growth opportunities.
• The company is committed to delivering value through competitive pricing, convenient routes, and reliable operations.

Financial Results

• Unit Revenue: Sun Country reported a 3% to 4% increase in unit revenues for April after cutting 5% of Available Seat Miles (ASMs). May is expected to see a 6% improvement, with Q2 guidance ahead of the 3% year-over-year improvement.
• Cargo Revenue: Cargo revenue per block hour increased by 20% year-over-year in Q1, driven by contractual rate hikes with Amazon.
• Profitability: The airline’s pretax margin in 2023 matched Delta’s, and it achieved a positive EBITDAR in 2020 despite the pandemic. The first quarter operating margin was 18.5%.

Operational Updates

• Capacity Management: Sun Country is reducing capacity slightly, focusing cuts on off-peak periods without removing any markets. Adjustments are based on performance and opportunity cost.
• Pilot Capacity: The company plans to grow pilot capacity by 10% annually, aiming to have all 70 aircraft in service by 2027, expanding the operation by 30%.
• Fleet and Cabin Updates: Current cabins, installed around 2018, are due for upgrades. Plans include new seats, in-flight entertainment, and satellite connectivity, with costs detailed per seat and for connectivity.

Future Outlook

• Growth Strategy: Sun Country targets high single-digit to low double-digit annual growth, balancing scheduled service with charter and cargo operations.
• Market Expansion: The airline is exploring counter-seasonal markets to Minneapolis and considering expansion in Dallas and other Texas areas.
• Industry Consolidation: Bricker believes consolidation would benefit the industry by rationalizing capacity. Sun Country is positioning itself for opportunities but is not actively pursuing acquisitions.

Q&A Highlights

• Cargo Growth: Growth is contractual with Amazon, with rate increases. The company is aligning cargo growth with pilot capacity by making cutbacks in other areas.
• Charter Operations: Half of the charter business is under long-term contracts, with the rest involving varying levels of commitment. Scheduling predictions optimize fleet use.
• Competition: Network carriers are better managing capacity with tools like basic economy. Sun Country differentiates itself with a hybrid model and optimized scheduling.

For a more in-depth analysis, readers are encouraged to refer to the full transcript of the conference call.

Full transcript - Bank of America Industrials, Transportation & Airlines Key Leaders Conference 2025:

Andrew, Conference Host, BofA: Good afternoon, everyone. Thanks thank you for joining us today. Our next session here at the BofA Industrials Transportation and Airlines con conference is Sun Country. Sun Country is represented here by their CEO, Jude Bricker. Jude, thank you for, thank you for joining us.

Jude Bricker, CEO, Sun Country: Think it’s Nice, Andrew. Good to be here.

Andrew, Conference Host, BofA: First time at at at this conference. It is. Yeah. So look, Sun Country is, you know, more than just a a passenger airline. You also run a much more, you know, I’ll call it, predictable kind of charter and cargo business that I know you wanna kind of get get into and talk about a little bit more because it’s one of your differentiating factors.

But, you know, they all you know, I’ll start the conversation. And if during the next thirty, thirty five minutes, if anyone has a question, just raise your hand, and I think people can get a get a mic over to you. But as you may be touching upon, you know, starting with the airline, the passenger airline side of everything first. I know you reported just a couple weeks ago. Last week, we had you know, Allegion said that things were improving, you know, a little bit of late.

I think United had some comments over the weekend as well seeing you know, saying something similar. I guess, you know, what are you seeing? Because honestly, from where I sit, the TSA throughput data is still a little soft. Our card data is a little soft. So what could you, you know, could you corroborate what they’re saying or, you know, what are you seeing in the demand environment?

Jude Bricker, CEO, Sun Country: But it’s important for some context there that we’re shrinking our scheduled service business while we grow our cargo business faster than we can add pilots. So we’re taking on a bunch of airplanes that had been operated by Atlas. Those airplanes are gonna add, you know, essentially double our cargo business by the end of the year on a year over year basis from a revenue standpoint. And it’s just more rapid growth than we can absorb. So as a result, we’re gonna cut down our sched service temporarily so we can add these cargo airplanes.

So, you know, that’s just context is because the yields that I’m seeing are partially due to the reduction in capacity that we ourselves put into our network. So in April, we cut, I don’t know, 5% of our ASMs and saw about 3% to 4% uplift in unit revenues, which is, you know, I would expect a little bit more also considering the Easter shift with the late Easter relative to last year. May a little bit better, maybe 6% unit revenue improvement. So we’re on track for some really good results. We guided about a 3% unit revenue, 2Q year on year improvement.

So we’re kinda ahead of where we had thought we would be. I think the challenge that the whole industry had is we’re kinda reporting close into this all this tariff stuff going on. And so everybody’s watching bookings. If you’re watching bookings right after Labor Day Liberation Day, you know, you saw a lot of softness. I guarantee every airline was seeing that and they were kinda like, I don’t know where we’re headed here.

So for the most part that recovered pretty quickly. As I mentioned, April and May selling pretty well. We got a lot of close in demand in the summertime, so it’s still too early to call on June and July, but it looks pretty good. I mean, our capacity backdrop, so the markets that we serve, both us and other airlines, you know, kind of flat to down. We’ve seen a lot of pullback from our core market Minneapolis other than us and Delta.

Southwest is down substantially. The ULCC Spirit and Frontier pulled back dramatically. Allegion just extended their schedule. They’re not even including Minneapolis in it. So it just looks really positive.

I think we’re gonna see, unit revenues continue to perform really well for the rest of the year. Got it.

Andrew, Conference Host, BofA: Obviously, your key source market is Minneapolis. Can you maybe talk a little bit about know, who that core customer is within within the market? And, you know, has that changed since, you know, over the few over the last few years as Sun Country has has grown as well? And how do you expect that customer to change if at all?

Jude Bricker, CEO, Sun Country: Right. So the tagline is everybody that pays with their own money should fly Sun Country. We’re gonna fly where you wanna go, when you wanna get there. And that means the network has to be dramatically different seasonally. So think about our winter customer is flying north south of the warm destinations, Minnesota, obviously cold.

And we’ve been doing it for forty years. That’s kind of the core of the Sun Country model and hasn’t changed much in a really long time. What’s changed is that the summer now is a is a really viable part of our network, but it’s to different places. Think of it mostly as big city connectivity to the twin cities. We fly a little bit of transcon connectivity over over MSP Airport.

We have a big summer origination market out of major Texas markets like Central Texas out of San Antonio. We chose over Austin, DFW, Houston. So it’s, it’s, it’s a totally different network each and every day. Our relationship with our consumer in the summertime is essentially on price. We have a lot of single use customers and they choose us based on value, but there’s just not enough seats in the marketplace over the summer season from Memorial Day to Labor Day to satiate demand.

Fares are higher. And so even though we’re discounting relative to an incumbent, we’re still viable competitor in the market. In the wintertime is different. We have pricing power, we have brand presence, we have monopoly markets. And so, you know, that’s why we do, you know, mid 18% margin in the first quarter is that we have this really stable, large source of demand in the twin cities for people going to sunny destinations, really viable business.

And then in the summertime, and when, when I got to the business, I was like, all right, we, we got a strategic weakness about how do we make the peaks bigger without, you know, getting worse than the off peak, carrying the pilots and planes, etcetera. And that’s where cargo came in. And so today think about the business as kind of loading in cargo for future sched service growth. The margers are in sched service, but we need the right balance, you know, two thirds, one third, whatever it is to kind of keep that, keep those troughs, you know, cash positive, basically. Yeah.

Andrew, Conference Host, BofA: Yeah. Profitable. Yeah. So just on your core consumer, do you think your consumer skews, you know, middle income, you know, operate, like, kind of, I don’t know, in around that hundred thousand dollar per year wage rate?

Jude Bricker, CEO, Sun Country: Or Yeah. I’d imagine we’re, like, 10% over median household, which is probably, you know, $74,000 in Minnesota. I mean, have a fairly diverse customer segment. So we serve expensive markets like Grand Cayman, Aruba, St. Thomas, St.

Martin. You know, it’s a $10.20000 family vacation to these destinations. And we also serve Myrtle Beach. Nothing against Myrtle, but it’s a certainly a Yeah.

Yeah. So I think we have kind of across the spectrum. And like I said, I wanna be known for value convenience, reliable operations. And, you know, the, the airplanes are designed and the product is designed to be a little bit better than, you know, kind of Southwest. We have really nice seating.

It’s three by three seating. So you because it’s $7.37, but we have a little bit better pitch than any ULCC. We give away non alcoholic beverages. We have free onboard entertainment. And the reason for a lot of that is that it’s a long stage length market.

We’re in the middle of the Upper Midwest. You’re gonna if you’re gonna go to the coast, it’s gonna be a three hour flight. So you you gotta have a little bit better product, and I think it resonates pretty well with the consumer.

Andrew, Conference Host, BofA: We’ve always been hearing a lot from the network carriers about, you know, the strength of premium revenues and, you know, how customers continue to want more of a decommoditized experience. I guess, do you have a good way to to frame the market in terms of the travelers that just want kind of, you know, just a very, you know, simple kind of main cabin type Yeah. Experience and kind of don’t care about the higher end. Just I know you could be a lot a lot against Delta in Minneapolis, so you might have maybe a little bit more unique view on that.

Jude Bricker, CEO, Sun Country: Well, Delta has a great product, and so I think that holds us to a higher standard. The Minnesota traveler probably has flown Delta and has a high expectation for both operation performance and product. I mean, we have 20% of our seats as premium economy seats. The price point of premium economy and basic economy have widened, but not substantially enough to justify like a cabin reconfig with more premium than has existed before COVID. So it’s been, it’s been relatively modest.

I think that a lot of what the, you know, I think there’s a, there’s like kernels of truth in everything that you’re hearing from the network carriers. There’s a demographics with the boomers traveling that are more willing to pay for premium. There’s probably a lot to do with their loyalty program and redemptions being more skewed towards premium. So I think that, you know, but but I think the future looks a lot like the past and there’s gonna be, you know, kind of a sizable demand for the basic people just wanna get their prices is is the key component of their travel decision, you know, and then, you know, we have markets where premium economy yields, you know, 50% higher. And, but for short haul flying, it’s just not that meaningful.

You know, if you’re flying from Minneapolis to Chicago, One of our shortest stages, premium economy has almost no premium. And so I think there’s a lot more color to it. We’re not adding a first class. We don’t have a business customer. A lot of first class customers don’t pay with their own money.

They’re either travel redemptions or corporate customers. And that’s just not a dynamic. We don’t really wanna be threatening to Delta for corporate contracts. Yep. So, you know, I think we’ve got the right mix.

It’s working well for us. We have the leading margins in the industry. Yeah.

Andrew, Conference Host, BofA: I don’t know. Seems pretty simple. Yeah.

Jude Bricker, CEO, Sun Country: I mean, a cabin lasts about seven years. It’s viable for us to say, okay. In 2018, we went through a big you know, we went through private equity sponsorship. We changed the airline dramatically, took out first class at that time. The cabins that we have are basically what we put in 2018.

We’re about seven years in. In the next couple of years, we’re probably gonna need to make a decision about a major change because we need to replace the seats. We might wanna replace the fleet. Certainly, IFE has made it in flight entertainment has has gone a long way. There’s a lot of buzz about Starlink, a low orbit low orbit satellite connectivity, which takes away the latency that that had existed with what was in place ten years ago.

So right now we’re kind of waiting and seeing, and I think I think we got the right product for the market today. But You certainly didn’t

Andrew, Conference Host, BofA: rush into any changes like many other airlines.

Jude Bricker, CEO, Sun Country: I don’t think we need to do anything. I mean, you know, we’re making good money. So I think if you’re, if you’re not and you’re flailing around trying to find something that works, I get it. But now we’re, we’re not in that place. Yep.

Yeah.

Andrew, Conference Host, BofA: Just curious if cabins typically last, call it seven to nine years, what does it cost to completely redo a cabin and how long

Jude Bricker, CEO, Sun Country: Depends on the cabin, of course. But if all you

Andrew, Conference Host, BofA: do wanted to freshen your

Jude Bricker, CEO, Sun Country: current cabin. So new seats, carpet, that kind of stuff would be around $600. If you’re gonna put seat back devices, that’s about a thousand a seat. So that another, you know, 202 hundred and $50,000, that’s for a pretty basic product.

Andrew, Conference Host, BofA: Okay.

Jude Bricker, CEO, Sun Country: And then in flight connectivity be another million if you’re gonna have a satellite antenna and that kind of stuff. So you could get up to 2,000,000 for a narrow body all the way down to, like, if I’m putting, you know, I don’t know, the old the ACRO seats, the Frontier Spirit, and Allegiant Fly, I can probably get it done

Andrew, Conference Host, BofA: for $400. Wow. Okay. Very interesting.

Jude Bricker, CEO, Sun Country: Yeah.

Andrew, Conference Host, BofA: So you say you’re cutting capacity. You got it sent seems like kind of low single digits. Yep. Where are you pulling? Like, what kind of flying are you pulling right now?

Jude Bricker, CEO, Sun Country: Mostly it’s off peak stuff as you’d imagine. So the, you know, consistent with what you’re hearing, Tuesdays, Wednesdays, Saturdays are a little weaker shoulder months like May coming down a little bit more than June and July. The the big thing is we don’t have any bad markets. So like you haven’t seen a lot of markets come off our our network. We we do have some

Andrew, Conference Host, BofA: How do you define a bad market?

Jude Bricker, CEO, Sun Country: Loses money. Just loses money. Got it. Okay. Well, but it that’s not fair.

I would define a bad market as a market that doesn’t perform to the opportunity. There’s something better to be doing with the the plane and pilots at that moment in time. So in a a market that in September, you know, is a little bit better than breakeven might stay in the schedule. But a market, you know, in March, you gotta be making 35% contribution a year out. And so it it is really about opportunity cost at that moment in time.

You know, surprisingly, some of the stuff that was not perhaps surprisingly, last summer, the Midwest to Minneapolis wasn’t very good. This year, it looks really good. And that’s because the OA capacity is kind of rationalized. Last summer, we had a really great summer in Texas to the Mexican Caribbean markets that looks really good this year again. California is a little weak out of out of the Midwest, and I can’t explain it based on the capacity out there, but the Northeast looks really, really good in Boston in particular.

So it’s kind of mixed and I look at the schedule as a working document. So we write it. We put a flight in the schedule. We monitor the sales on that flight like every airline, but we’re constantly forecasting the results of that flight. And if it’s becomes clear that that flight’s not gonna cover some hurdle, it’s cut.

Same thing as if a market exceeds its expectation, we can add.

Andrew, Conference Host, BofA: How long do you give that?

Jude Bricker, CEO, Sun Country: Well, there’s practical constraints related to the operation. At the beginning of every month, I bid subsequent month out to pilots. Once it’s bid out, it becomes paid. Yep. So it’s a pay guarantee.

So by the, you know Yep. Basically, by Friday, I had to have June kinda set in stone. But we we usually load a schedule three hundred and thirty days out, so there’s a lot of period where you can analyze the schedule that you’re selling and continue to optimize it.

Andrew, Conference Host, BofA: Mhmm. Yep. Look. You’re not the only one to call out pulling off peak. Right?

Jude Bricker, CEO, Sun Country: I think

Andrew, Conference Host, BofA: we’ve we’ve heard that from from everybody else. And, you know, it is something like I don’t I think I even heard pre pandemic that, like, obviously, peak’s always better than than off peak. Yeah. What needs to, like, can the industry ever solve that peak off peak problem, or is it just not realistic enough to have fleets of this size not operating seven days a week?

Jude Bricker, CEO, Sun Country: I think that that people will always wanna travel when they travel. Coming out of COVID, this was a popular input. It’s like, oh, everybody’s gonna be work from home. There’s no peaks anywhere. And instead, like the opposite has happened.

Like now vacations become more valuable. Time off becomes more valuable. Everyone went back to work. Kale went back to school. Weekends are important.

Holidays are important, etcetera. March is important for me. So it’s kind of like back to normal with regard to peak and off peak. So the demand has predictive variable nature. And so, yeah, I think it’s always gonna be the And I think the big thing now versus previous, you know, kind of if you look at margin reversion from the ULCC space, you have the maturity of all the network effects of these mergers from the net, from the big four.

So loyalty program’s a lot more valuable, you know, and then you have the costs rising from the ULCC so that they’re no longer able to stimulate in the off peak to the same degree that they did in 2019. And then I think basic economy is a pretty effective tool that the network carriers have to to put seats in the market when there’s insufficient demand and compete on price and then put those seats pull those seats out of the market when there’s surplus demand and so they can yield up. So I think the network carriers have, for the most part, been able to manage it a lot better to the detriment of of high utilization ULCCs.

Andrew, Conference Host, BofA: Got it. Last question for now on the the passenger side. I definitely have some more to come back to. But with all with capacity, you know, in mind, how do you view kind of the medium to long term growth cake or opportunity for Sun Country?

Jude Bricker, CEO, Sun Country: Well, I mean, we’re an outperformer. We had the the highest pretax margin in ’23. We’re kind of tied with Delta last year. So a company that’s outperforming and differentiated and also difficult to replicate because we have a cargo interaction with Sched service. You know, I think we can grow, you know, I don’t know, five points higher than GDP a year.

So let’s call it high single digits, low double digits kind of as long as we could continue to buy airplanes at suitable prices. So I I don’t think there’s a demand. It’s a it’s a really massive TAM because every major market has these demand variabilities on leisure. And I think if we could go in and do these major markets and operate, so we’re not competing against leisure, which is monopolist, small market origination. We’re not competing with spirit and frontier for off peak demand when there’s when there’s not any pricing power.

I I think we have a huge opportunity. I think we can continue to grow, you know, much faster than GDP. What I’d say though is we need the balance that we have. You know, we can’t let scheduled service get too out in front of our fixed fee flying, and we can’t let fixed fee flying getting too far out and head ahead of our sched service growth. The, the, the proportional, the proportionality of our segments is important to us and it needs to be, you know, kind of so fixed fee charter flying, you know, kinda contracted flying is the same to us as cargo.

And that that in its in aggregate needs to be between, you know, I don’t know, 2040% of our flying in order for us to be able to operate in the kind of peaks that we do in scheduled service. So I think that would be a potential constraint on the growth of the business. Yeah.

Andrew, Conference Host, BofA: Okay. Just gonna lead me into my next question that may be touching upon cargo and Yeah. Charter a little bit. Right? Those on your your earnings call when you reported first quarter, your cargo cargo revenue per block hour was up 20%.

Jude Bricker, CEO, Sun Country: Yeah.

Andrew, Conference Host, BofA: Can you maybe talk to, one, how you kind of schedule or how the schedule needs to change in order to accommodate cargo and the the charter business? And then maybe just talk to the strength that you’re seeing on the on the cargo side. Is that just the rate reset? Is that true demand combination of both?

Jude Bricker, CEO, Sun Country: Just Yeah. So so from a from a fit you know, looking down on the business, we’re sucking in pilots as fast as we can. And so that that’s a constraint on growth. So we’re growing our capacity, our pilot capacity 10% a year. Yep.

And I can make it faster, but that requires infrastructure investment, maybe contract changes with pilot union. So we’re in like a sustainable growth profile. And all that’s happening is we’re getting more cargo than we can grow the pilot group. So we’re subsidizing cargo growth with cutbacks in other lines of our business. And it’ll right size because we’re gonna continue to grow 10% a year.

And so 2027, we’ll have all 70 of our aircraft in service will be 30% bigger than we are today. And, you know, everything will be back to the right size. The the the unit revenue improvement in cargo is contractual. So that we signed a deal with Amazon last year that took the Atlas airplanes and brought them over to our certificate as part of that. They increased their rates with us and that’s in perpetuity.

I mean, that’s not going anywhere. It’s passed through economics. So they buy the gas, they pay for handling. They worry about the revenue that the plane generates from the consumer and they pay us a tolling arrangement. And, and I think the right way to look at our business is that arrangement along with our track charter businesses, which are long term pass through economic businesses in the same way like SkyWest.

I was gonna say, yeah, the regional. So those proceeds kinda service the fixed cost of the business and allows scheduled service to be completely responsive to predictable variations in demand. So seasonality of big peaks and stuff like that, and also disruptions like COVID. I mean, we made we had a positive EBITDAR in 2020. I just I don’t know if any any airline in the world can say that.

So And that’s when cargo was smaller. Yeah. We just, we just started cargo at the beginning of that year. You know, I think it’s, it’s a very sustainable business. You know, we’re, we’re being very careful about growth.

We gotta get the planes at the right valuation to be able to operate at low utilization. That’s a challenge in this market. So, and, and the other thing is cargo shows up, you know, you talk to Amazon about incremental growth. It’s a different conversation than incremental growth to me.

Andrew, Conference Host, BofA: For you. Yes.

Jude Bricker, CEO, Sun Country: So it comes in chunks and we’re digesting a chunk Right now.

Andrew, Conference Host, BofA: Yeah. Yeah. Got it. I guess I’m a little less familiar on with charter operations.

Jude Bricker, CEO, Sun Country: Yes.

Andrew, Conference Host, BofA: How, like, of your charter business, how much of that is kind of really under contract for foresee for the foreseeable future? Right? Like, so Yeah. Sure you fly college football teams or Yep. Or or whatnot.

You know, how far out do they book? How much visibility do you have there?

Jude Bricker, CEO, Sun Country: Yeah. So there’s kinda shades of that. So we’re in a long term contract with Major League Soccer. That’s contracted flying. We have five airplanes with casinos.

That’s contracted flying. And then we have a VIP airplane that shuttles people, rich people. It’s like the Gulf Stream minus. You’re not quite up there, but you’re you had a second home on Kona, so you’re gonna go back and forth, FBO, FBO. So we got that going.

So that’s six airplanes plus MLS. I consider that under long term contract. That’s about half of our charter business. The other half is in shades of commitment. And what I mean by is, is the government we’re in the craft program.

We fly the, the GIPMO charter happens every couple of times a week. These are flying. I wanna be clear. We’re flying troops. We’re not we’re flying servicemen.

Yeah. We’re flying servicemen back and forth. And and so, you know, that shows up pretty consistently, but a lot of the military flying is is two to three weeks out. Okay. And then you brought up college football.

We don’t have anything contracted in college football, but what happens is we we fly about 23 teams every year. So these are long term relationships that show up every year, but it’s not contracted. So it’s kind of shades of predictability. Okay. We, we, what we do in charter that I think is unique in the world maybe is that we schedule in predictions of charter volume.

So think about Vegas. Thursday inbound, great. Sunday return, great. A lot of the rest of the stuff is pretty terrible, particularly if you have to schedule a round trip. So if you had to schedule a Sunday round trip, you fly into Vegas, plane’s empty, fly out of Vegas, a little bit of hyperbole.

Plane’s full of high paying customers. Everybody wants to go home Sunday afternoon. So instead of doing that, what we do very often using Vegas as an example is schedule the airplane in on the Thursday, out on a Sunday. It’s scheduled to sit on the ground for forty two seventy two hour forty eight seventy two hours. We know later on there’s gonna be a charter opportunity on the West Coast for that airplane and crew.

But when we built the schedule three hundred days out, we don’t know what it’s gonna be. So that allows us to bid competitively in the charter space and allows us to fly strength when there’s strength and demand for scheduled service. I I think it’s pretty unique. And so when we think about Major League Soccer, the reason that I think that contract’s gonna be with us forever is that we build our whole network around Major League Soccer movements. So we’ll schedule into Kansas City, a one way flight, and that allows that airplane to be positioned for to move the Kansas city team to Salt Lake.

And then we’ll schedule back and then we’ll do, we’ll unwind it on the other way. And so we don’t have to bill them for ferry flights, is pretty unique. You’re a pure charter carrier, have to, if you’re a pure sched carrier, mostly you’re bidding out charter. Think about it as an offload of surplus capacity, but the plane’s never where you need it to be. That’s right.

So you have to charge the customer for fairing. And so I think our charter business is gonna continue to grow. It’s high margin, reliable. It’s not gonna produce the kind of growth numbers that we’re gonna see in charter and cargo this year nor in scheduled service in ’26.

Andrew, Conference Host, BofA: Got it. What do you think is the investors miss when they think about your cargo and charter business?

Jude Bricker, CEO, Sun Country: Well, I mean, I I think the number one thing is how much better we are on the scheduled service side because of cargo. So the way we think about scheduled services, let’s start with a blank slate. Nothing scheduled. Do the best thing an airplane can be done on that moment in time and keep doing things until we run out of things to do and the rest of the fleet is grounded or we run out of airplanes and the fleet’s fully allocated. That’s how we schedule the airline.

Most airlines build a schedule, optimize it for cost, crew, gates, all that stuff. It’s input. It’s very complicated. And then they replicate that three hundred sixty five days, and then they make tweaks around that for holidays or whatever. That’s mostly how airlines schedule their business.

I think that’s a dramatic departure and kind of what gives us, I think, a differentiated product is the way we think about capacity and sched service. And what to your question about what people miss about charter and cargo is that we can do that because we have things to do if we don’t have any sched service flights. It’s not is it I’m never gonna go into scheduling department and be like, hey, there’s 25 airplanes on tarmac. What are y’all doing? That never happens.

Instead, I’d be after the month closed, I’d be like, hey, that flight didn’t make its contribution, didn’t cover hurdle. Why was it in the schedule? There are only a couple responses. Number one, it was the beginning of a season. We had to fly empty one way.

Number two, it’s a new market and we’re working on improve it. Or number three, there’s some rational assumption. I thought fuel was gonna be different than what it was or whatever. Like there needs to be some justification for that to be in there. And mostly airline guys look at route prop and stuff like that on averages, and and I think that’s the wrong way to do it.

We’re very micro in how we think about it.

Andrew, Conference Host, BofA: Got it. So we got about six minutes left. There’s one or two other questions I want to get in here. And the first one is just on comments you made on your earnings call just around maybe kind of M and A across the airline sector. I said, you know, my question, I guess, one, does it make you know, how does it make sense in what form and would Sun Country be, you know, a willing participant in that?

Jude Bricker, CEO, Sun Country: So I’ll take I’ll I’ll do it in the LIFO method. Right? So, like, your your last question was, is Sun Country interested in absolutely. I think I think the industry uniformly benefits from consolidation because it rationalizes capacity. But we’re small, we’re independent, we’re weird.

So we’re not a natural fit. There’s no puzzle piece that goes naturally anywhere. And so I don’t spend a lot of time worrying about it. But my comments were basic that that there’s some unsustainable, like so Spirit and Frontier haven’t made operating cash positive operating cash flow since COVID. JetBlue is in that camp too.

You know, Allegion is is working on trying to kinda go back into being an airline and down into their core business. There’s two startups in the space that haven’t made money yet. And so like, it’s it’s irrational, you know, that, like, it’s unsustainable. Airline equity has gotten to be really, really expensive. So, yeah, I mean, I I think there needs to be some action.

I’m kinda disappointed with the spirit bankruptcy and what it produced. So, you know, I mean, I I think seats need to come out of the market or costs need to come down for for low cost carriers. And and, you know, we’re we’re gonna be ready to take advantage of any opportunities that are out there. But I’m not running around plates and bids on anybody. So I

Andrew, Conference Host, BofA: guess my my last question with a couple of minutes left is so bigger picture. Right? Clearly, a structural shift going on Yeah. Out there in the market. You talked you spoke well about the the the lower end.

Obviously, your margins are up there with the Delta’s United Uniteds of the world. So we’re seeing a a big dichotomy in the space. I guess when you think when you’re doing your strategic plan five, ten years down the road, how do you think Sun Country fits into this broader industry backdrop going forward?

Jude Bricker, CEO, Sun Country: Yeah. I mean, to me, we’re the leisure carrier that services capacity out of big markets. Right now we’re out of Minneapolis. I think in the future we wanna be, you know, we have a seasonal operation out of Dallas that’s real successful out of Central Texas, out of Milwaukee. We originate traffic out of the Upper Midwest from small origination markets like Eau Claire, Green Bay, Madison, Wisconsin.

That I think there’s a lot of opportunity, but it’s kind of a crowded space. Planes have gotten pretty expensive. Cruiser a lot more expensive than they used to be. And I think that our right thing to do is kind of get a strong balance sheet made stronger, continue to kind of absorb these opportunities in cargo so that we’re kind of spring loaded for growth when the market changes. I mean, on the positive side, like, know, load factors are pretty high.

Mhmm. There’s a lot of demand for travel. I think, you know, as a secular product, I think it’s gonna continue to do well. You know, people are gonna want experiences. We talk a lot about consumers shifting from goods to experiences and, and, you know, I don’t know, GLP one drugs making people more comfortable moving around.

I don’t know. Like, I think there’s a lot of, there’s a lot of tailwinds in demand. So, you know, I mean, I just think we need a little bit more rationalization in the, in the low cost space. Yeah.

Andrew, Conference Host, BofA: You know, you you mentioned, you know, other markets outside of Minneapolis. What’s like if you were to expand or, you know, grow more meaningfully in in another market, what would the characteristics of that market be?

Jude Bricker, CEO, Sun Country: So the very best thing would be counter seasonal to Minneapolis. I struggle to think of anything better to do as a leisure carrier than fly Minneapolis originating service from Thanksgiving to Easter. We make we we reported first quarter ’18 and a half percent operating margin that was the same as we had the year prior down from the year prior before that. So we make really good margins during that time of the season. So to me, the best opportunity is summer originating markets to leisure for leisure customers.

Yep. The price sensitive is leisure.

Andrew, Conference Host, BofA: Yep.

Jude Bricker, CEO, Sun Country: And fortunately, most of the country is that way. All of the Northeast has a a summer peak. Most of the South has a summer peak. Minneapolis is a bit of an outlier and that makes counter seasonal more easy to find. But, you know, right now, things are pretty crowded out there, so we’re not out there chasing low yield traffic.

But I I, you know, I think Dallas will continue to expand for us. I talk a lot about Texas, you know, sort of every every major market save maybe Chicago has a nice winter, but, like, Upper Midwest has the characteristics of the kind of market that we’d be successful in and will be complementary to our Minneapolis business.

Andrew, Conference Host, BofA: Great. Just a few seconds left, so maybe we’ll leave it there. Jude.

Jude Bricker, CEO, Sun Country: Thank you. Andrew, good to see you. Pleasure. Yeah. Thanks, guys.

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