Sun Country Airlines - Strategic Analysis and Outlook Report (2026)

Sun Country Airlines has completed a remarkable operational transformation that positions the Minneapolis-based carrier for sustained growth.

The airline closed out its thirteenth consecutive profitable quarter in Q3 2025, posting record third-quarter revenue of $255.5 million while simultaneously managing one of aviation’s most complex fleet rebalancing efforts.

What sets Sun Country apart is its differentiated hybrid model that seamlessly integrates scheduled passenger service, charter operations, and dedicated cargo flying. This approach has shielded the carrier from volatility that has hammered industry peers.

Table of Contents

• The Cargo Transformation: A Strategic Pivot

• Cincinnati Base: Geographic Expansion Beyond Minne …

• Passenger Operations: Managed Contraction with Rec …

• Charter Business: Consistent Revenue Growth

• Financial Performance and Profitability Metrics

• Network Strategy and Route Development

• Cost Management Amid Transition

• Competitive Positioning and Industry Context

• Fleet Composition and Aircraft Strategy

• Labor Relations and Workforce Development

• Technology and Customer Experience Initiatives

• Forward Guidance and Management Outlook

• My Final Thoughts

The Cargo Transformation: A Strategic Pivot

Sun Country completed its most significant operational milestone in September 2025 by deploying a full fleet of 20 Boeing 737-800 freighters for Amazon. This represents a 66.7% expansion from the 12 cargo aircraft operated at the end of Q3 2024.

The numbers tell a compelling story. Third-quarter cargo revenue reached $44 million, surging 50.9% year-over-year. Nine-month cargo revenue totaled $106.9 million, up 36.2% compared to 2024.

This wasn’t simply fleet expansion. The airline renegotiated its Amazon contract with improved rates that began taking effect in June 2024. Combined with increased utilization, the cargo segment now generates 40% of total revenue when paired with charter operations.

CFO Torque Zubeck emphasized the strategic value of this diversification: cargo and charter provide stable revenue with limited exposure to fuel price volatility, which represents a structural advantage over traditional carriers.

Cincinnati Base: Geographic Expansion Beyond Minneapolis

Sun Country announced plans to establish its first crew base outside Minneapolis at Cincinnati/Northern Kentucky International Airport (CVG), scheduled to open January 31, 2026.

CVG was strategically selected for multiple reasons. It serves as a major Amazon air hub and sorting facility. The airport ranks among the fastest-growing cargo facilities in the United States. The surrounding region demonstrates strong passenger demand that positions Sun Country for seamless scheduled service expansion.

“Growing our footprint beyond Minneapolis-St. Paul has long been a goal,” said CEO Jude Bricker. The Cincinnati base supports enhanced service efficiency across operations while creating advancement opportunities for pilots.

CVG OPERATIONAL ADVANTAGES:
- Major Amazon air hub location
- Fastest-growing U.S. cargo airports
- Strong regional passenger demand
- Shared facility infrastructure
- Geographic network diversification

Sun Country is actively recruiting pilots for the Cincinnati base. Management indicated they are evaluating additional base locations to support both Amazon cargo operations and scheduled service growth through 2026 and beyond.

Passenger Operations: Managed Contraction with Recovery Plans

The carrier temporarily reduced scheduled passenger flying to accommodate rapid cargo fleet expansion. Third-quarter scheduled service block hours declined 10.9% year-over-year, while scheduled service ASMs (available seat miles) decreased 10.2%.

However, unit economics improved substantially. Scheduled service TRASM (total revenue per available seat mile) increased 1.6% to 10.59 cents. Average base fare per passenger rose 2.1% to $76.90. Total fare per passenger climbed to $142.72, up from $141.13 in Q3 2024.

Load factor strengthened to 84.8%, a 0.6 percentage point improvement year-over-year. August saw average fares rise 5% with load factors increasing nearly three percentage points. September accelerated further, delivering nearly 8% fare growth with load factor improvements exceeding three points.

Management confirmed plans to restore passenger flying in late 2026 as cargo operations stabilize. The airline targets expanding its passenger fleet to 50 aircraft by 2027, up from 45 passenger aircraft at the end of Q3 2025.

Charter Business: Consistent Revenue Growth

The charter segment delivered $58.7 million in Q3 2025 revenue, representing 15.6% year-over-year growth that outpaced the 11.1% increase in charter block hours. This indicates improved pricing power and contract quality.

For the nine-month period, charter revenue reached $167.6 million, up 12.4% compared to 2024.

The business line benefits from the same shared resource model that drives overall efficiency. Pilots, aircraft, and support infrastructure seamlessly shift between scheduled service, charter, and cargo operations based on demand patterns and seasonal opportunities.

Financial Performance and Profitability Metrics

Sun Country achieved GAAP operating income of $9.9 million in Q3 2025 with a 3.9% operating margin. Adjusted operating income reached $12.4 million with a 4.8% adjusted margin. GAAP diluted EPS came in at $0.03, while adjusted diluted EPS reached $0.07.

Year-to-date performance through September proved stronger. Nine-month operating income totaled $82.4 million, up 3.1% year-over-year. Net income reached $44.7 million, representing 13.2% growth. Diluted EPS increased 12.5% to $0.81 on a GAAP basis and 19.2% to $0.93 on an adjusted basis.

The carrier generated $78.2 million in operating cash flow for the nine months ended September 30, 2025. Total liquidity stood at $298.7 million, providing substantial financial flexibility. Net debt decreased to $406.1 million from $438.2 million at year-end 2024.

Sun Country completed $10 million in share repurchases during Q3, with $15 million remaining under existing authorization. The company also refinanced debt, entering a $108 million Term Loan Facility at a fixed 5.98% annual rate.

Network Strategy and Route Development

Sun Country extended its booking schedule through summer 2026, offering 115 routes serving 100 airports across the United States, Mexico, Central America, Canada, and the Caribbean.

The carrier focuses on leisure and visiting friends and relatives (VFR) traffic. This market segment experiences less volatility than business travel and demonstrates stronger pricing resilience during economic uncertainty.

New routes announced for the summer 2026 schedule include Minneapolis-St. Paul to Tulsa, Oklahoma, plus a Tulsa to Cancún connection. These additions reflect Sun Country’s strategy of linking secondary markets to popular leisure destinations while leveraging its Minneapolis hub for connecting traffic.

Cost Management Amid Transition

Unit costs increased during the cargo transition period. Cost per available seat mile (CASM) rose 10.3% in Q3 2025, while adjusted CASM increased 5.2%. Management expects elevated unit costs to persist through the remainder of 2025 due to reduced scheduled service flying capacity.

Salaries, wages and benefits increased 15.0% year-over-year in Q3, driven by pilot hiring to support cargo expansion, contractual wage increases implemented at the end of 2024, and a new flight attendant contract ratified in March 2025.

Maintenance expenses climbed 13.5% due to unplanned maintenance events, including an in-flight engine shutdown in July that resulted in an engine retirement. These elevated costs are temporary. Unit cost pressure should moderate as the carrier restores passenger flying in late 2026 and spreads fixed costs across increased capacity.

Competitive Positioning and Industry Context

Sun Country’s hybrid model creates competitive moats that pure low-cost carriers lack. The cargo contract with Amazon provides revenue stability and cash flow predictability. Charter operations offer premium pricing opportunities during peak demand periods. Scheduled service generates brand awareness and customer loyalty.

Resource sharing across business lines maximizes asset utilization. A single pilot group flies passenger, charter, and cargo missions. Aircraft transition between segments based on seasonal demand patterns. Support infrastructure scales efficiently across the operation.

Analysts at TD Cowen raised Sun Country’s price target to $21 in November 2025, citing projected year-over-year margin expansion beginning in the second half of 2026. The analyst emphasized that projected profits for 2026 and 2027 exceed consensus estimates, reflecting confidence in continued growth.

Fleet Composition and Aircraft Strategy

As of September 30, 2025, Sun Country operated 70 aircraft:

• 45 passenger Boeing 737NG aircraft

• 20 cargo Boeing 737-800 freighters

• 5 aircraft on lease to other carriers

The all-Boeing 737NG fleet strategy delivers operational simplicity. Pilots type-rated on the 737 can fly both passenger and cargo variants. Maintenance infrastructure, spare parts inventory, and technical expertise concentrate on a single aircraft family. This creates cost efficiencies that competitors with mixed fleets cannot match.

The airline introduced its first Boeing 737-900ER variant to the passenger fleet in late 2024, providing 189 seats compared to 179 on the standard 737-800. The larger aircraft offers superior unit economics on high-demand routes while maintaining fleet commonality.

Labor Relations and Workforce Development

Sun Country’s workforce totaled 3,279 employees at the end of Q3 2025, up 10.6% from 2,965 a year earlier. The growth primarily reflects pilot hiring to support the cargo expansion and Cincinnati base opening.

Flight attendants ratified a new five-year collective bargaining agreement in March 2025. The contract included ratification bonuses and improved compensation that took effect during the quarter. Pilots work under a contractual wage scale that received increases at the end of 2024.

The Cincinnati base opening creates advancement opportunities for pilots seeking to progress to captain positions or relocate to the region. Management emphasized that geographic expansion supports career development while improving operational flexibility.

Technology and Customer Experience Initiatives

Sun Country launched the Sun Country Visa Signature credit card in partnership with Synchrony Bank during September 2025. The carrier simultaneously introduced Sun Country Rewards Plus Status, a new loyalty tier designed to reward highly engaged members and cardholders.

These initiatives aim to increase customer lifetime value and drive direct bookings. Credit card programs generate ancillary revenue through sign-up bonuses, interchange fees, and increased customer spending. Enhanced loyalty status creates switching costs that improve retention.

Forward Guidance and Management Outlook

For Q4 2025, Sun Country projects total revenue between $270 million and $280 million, representing 4% to 8% growth year-over-year. The company forecasts operating income margin of 5% to 8%. Total system block hours are expected to increase 8% to 11%, reaching 39,500 to 40,500 hours.

Management anticipates year-over-year margin expansion beginning in the second half of 2026 as passenger flying restoration commences. Full passenger capacity recovery should materialize in 2027 alongside continued cargo operations at the 20-aircraft level.

The carrier maintains flexibility to adjust capacity allocation between business segments based on demand conditions and economic returns. This dynamic resource deployment represents the core advantage of Sun Country’s hybrid model.

My Final Thoughts

Sun Country has executed a disciplined transformation that few carriers could replicate. Managing simultaneous cargo fleet expansion, temporary passenger capacity reduction, and sustained profitability demonstrates operational excellence and strategic foresight.

The Cincinnati base opening marks an inflection point. For the first time, Sun Country operates as a multi-base carrier with geographic diversification beyond its Minneapolis origins. This expansion creates platform value for future growth.

The hybrid model continues to prove its worth.

While competitors face margin pressure from fuel volatility and demand uncertainty, Sun Country’s diversified revenue streams provide stability. Cargo operations with Amazon generate predictable cash flow. Charter flying captures premium pricing during seasonal peaks. Scheduled service builds brand equity and customer relationships.

Near-term unit cost pressure is a transient challenge, not a structural problem. Restoring passenger capacity in 2026 will drive operating leverage and margin improvement. The carrier’s fleet commonality, shared resource model, and focus on leisure/VFR markets position it well for sustained profitability.

Risks exist. Heavy Amazon dependence creates customer concentration. Labor cost inflation may outpace revenue growth. Industry capacity additions could pressure leisure fares.

However, Sun Country’s track record of thirteen consecutive profitable quarters suggests management has built organizational capabilities to navigate turbulence effectively.

The path forward targets controlled expansion, margin recovery, and continued shareholder returns through both operational performance and capital allocation discipline.