Sun Country Airlines is going public, will list on Nasdaq

The owners of Sun Country Airlines on Monday filed to take the company public.

The Minnesota-based airline has been privately held for its entire 39-year history. But the prospect of a public listing has loomed since Sun Country was purchased in April 2018 by a New York investment firm, Apollo Global Management, from Minnesota businessmen Mitch and Marty Davis.

Sun Country plans to list its common stock on the Nasdaq Global Select Market under the ticker symbol "SNCY," the company said in a filing with the Securities and Exchange Commission.

The price range and number of shares offered have not yet been set. Sun Country executives were unavailable for comment.

When rumors of a potential IPO surfaced in summer 2019, Sun Country said, "There are several options that our board of directors can take for the next step in our journey as an airline."

The decision to move forward with a stock listing now is another sign that airline executives and investors believe the worst of the pandemic, which brought demand for air travel to a near-halt, is behind. With vaccinations rolling out in the U.S. and several other hard-hit countries, pent-up consumer demand for travel is expected to produce an increase in bookings and revenue.

"From the airline demand perspective, it's only up from here," said Bob Mann, an industry analyst.

Sun Country's securities filing shows its investor pitch is focusing on the promise of a travel rebound, its unique market position and improved efficiencies made through significant cost-cutting measures.

For much of its recent history, Sun Country struggled to fit within the categories of traditional airlines, sandwiched somewhere between mainline carriers like Delta Air Lines and ultra-low-cost carriers such as Spirit Airlines.

In 2017, the Davis brothers hired Jude Bricker as chief executive of Sun Country and he set a new strategy for the airline. Its passenger service transformed to more closely resemble a budget carrier experience, with no first-class seats and a la carte pricing on amenities.

Sun Country reduced unit costs by 19% from 2017 to 2019, according to the filing.

The makeover had plenty of fits and starts and was met at times with consternation by customers. It outsourced hundreds of ground jobs at Minneapolis-St. Paul International Airport to a contractor, then reversed course by firing the firm and running those operations itself again.

But Bricker and his leadership team also cultivated two other businesses: charter flights and cargo flights. They forged a major cargo contract with Amazon that provided an alternate source of revenue during the early pandemic period when passenger demand dropped off.

Charter and cargo revenue helped smooth out the airline's lopsided passenger revenue, which spikes during Minnesota's cold winters and slows in summer when customers soak up Midwest summers.

This evolution was spelled out in the IPO filing, where the company calls itself "a new breed of hybrid low-cost air carrier that dynamically deploys shared resources" across its three lines of business.

"We believe our flexible business model generates higher returns and margins while also providing greater resiliency to economic and industry downturns than a traditional scheduled service carrier," the airline said in the filing.

It reiterated previous estimates that its pretax and operating income margins were the best of any U.S. airline in the first nine months of 2020.

And Sun Country in the filing acknowledged that the pandemic impeded a payoff from its transformation. "We believe that these investments have positioned us to profitably grow our business in the long term following a rebound in the U.S. airline industry," it said.

Kristen Leigh Painter • 612-673-4767