Sun Country Airlines Q1 2025: Contradictions in Cargo Growth, Revenue, and Fleet Expansion

Cargo growth and profitability expectations, cargo revenue growth expectations, cargo fleet expansion timeline, impact of capacity reductions on profitability are the key contradictions discussed in Sun Country Airlines' latest 2025Q1 earnings call.



Record Financial Performance:
- Sun Country Airlines reported total revenue of $326.6 million, the highest in the company's history, marking a 4.9% increase from Q1 of 2024 and resulting in an operating margin of 17.2%.
- The growth was driven by strong demand in the first quarter, particularly in March, and the execution of its diverse business model.

Cargo Segment Expansion:
- The cargo segment experienced a 17.6% increase in revenue to $28.2 million, despite a 1.1% decrease in cargo block hours.
- This growth is attributed to a 18.9% increase in cargo revenue per block hour, driven by increased rates from an amended Amazon agreement and standard rate adjustments.

CASM and Cost Control:
- Adjusted CASM increased by 3.5% compared to Q1 of last year, primarily due to pilot headcount growth and operational challenges.
- The company is managing costs by reallocating pilot resources from scheduled service to cargo, with expectations for full-year CASM to increase in the mid- to high single digits.

Fare and Load Factor Dynamics:
- Scheduled service average fares grew by 1% year-over-year to $198.44, despite a 3.9 percentage point decline in load factor.
- The decline in load factor was due to scheduled service ASMs increasing by 6.7% while TRASM decreased by 4.7%, reflecting strategic scheduling decisions to manage capacity.