Sun Country is well positioned after successful IPO
Sun Country Airlines has paid off its government loan in full after a successful IPO. As the airline now looks to the future, the carrier has a lot to look forward to. With many growth opportunities on the horizon, the ability to acquire more aircraft, and a strong cargo arm that will help the airline weather the slack, Sun Country is in an enviable position.
Sun Country Airlines repays government loan
After a successful IPO that raised the airline more than $ 200 million, the carrier paid off its government loan. Like other airlines, the carrier took out a loan under the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The total amount collected was $ 46.3 million. This included both principal outstanding and accrued interest.
Sun Country took out the loan at a time when there was a lot of uncertainty about the future of the airline industry. While there were many small dips that seemed to indicate a recovery, a sustained recovery only appears to have materialized in the past few weeks.
What a sustained recovery means for Sun Country
Sun Country is an ultra-low-cost (ULCC) leisure-oriented transporter. The airline has recovered from the crisis and plans to expand its services this summer. Operating on a low-frequency model responding to peak leisure travel days, the airline flies to many destinations across the United States, but only a handful see scheduled passenger services year round.
ULCCs are in a better position to lead the way for recovery. The airline announced an expansion in January for the summer, which is just the start. As more passengers begin to look to book flights, the airline may tempt travelers tired by the pandemic with low fares to seasonal destinations.
Sun Country wants to grow. It has isolated many opportunities to grow from its home port in Minneapolis-St. Paul International Airport (MSP) and other destinations. There are many underserved roads across the country that Sun Country could work on.
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Diverse company helps Sun Country
Sun Country also has a trump card up its sleeve. The carrier flies Boeing 737 cargo aircraft for Amazon, shuffling packages through the company’s extensive warehouse network. This activity is much more stable than leisure-oriented passenger air travel and helps support Sun Country during off-peak times.
In addition to air freight, Sun Country is a large charter operator. The carrier even serves over 300 airports in a year, with the lion’s share of those airports being charter services. Another activity that can be lucrative for a ULCC like Sun Country is charters.
Sun Country can now turn to airplanes
An IPO brought Sun Country Airlines a financial boon. With its plans to acquire Boeing 737s at mid-life, the proceeds of the IPO, minus the loan repayment, leaves plenty of money to acquire additional planes.
Some airlines have retired older Boeing 737 planes. If Sun Country is willing to diversify its fleet, Boeing and a lessor could offer them a fantastic deal on some whitetail MAX jets. For Sun Country, however, simplicity is better, and it’s cheaper for the carrier to go with the 737-800 plane they love and know.
In essence, now that Sun Country has the cash and has paid off the government loan, he can focus on bigger goals. Expect more from this airline as summer approaches.
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