Sun Country watches demand for Florida travel after Q3 profit decline

Sun Country Airlines late Tuesday said its latest quarterly profit fell after fuel costs nearly doubled, and executives said Hurricane Ian-related damage may subdue demand for Florida travel this winter.

"We expect the region to fully recover and we'll be there along the way," said Jude Bricker, chief executive of the Minneapolis-based carrier.

In the third quarter, Sun Country announced service will start in February to Destin-Fort Walton Beach and Melbourne, its 11th and 12th nonstops in Florida from MSP.

The carrier also announced the expansion of service to Orlando from Eau Claire, Green Bay, and Madison, Wis., beginning in April 2023.

In the third quarter, Sun Country faced higher fuel prices and staffing-driven constraints on capacity. Hurricane Ian, which made landfall on Sept. 28 near Fort Myers, reduced total revenue by an estimated $1 million.

After a summer in which airlines were bedeviled by flight cancellations, Bricker noted that Sun Country hasn't had any in 96 days.

For the quarter ending Sept. 30, Sun Country's adjusted net income declined 45% to $7.4 million, or 12 cents a share. That compares to $13.5 million, or 22 cents a share, a year earlier.

Revenue was $222 million, which was 28% higher than a year earlier. But operating costs rose 35%, with fuel up 77%.

Meanwhile, the carrier is still training pilots to meet growth plans. The company hired 91 pilots in 2022, a 20% increase.

Sun Country's board authorized management to repurchase up to $50 million worth of the company's shares. The company's intent in the near term is to enter into a $25 million accelerated share repurchase agreement with its brokering bank to allow the rapid retirement of acquired shares.

Sun Country stock was about $16.37 in after-hours trading after closing at $16.28. The company's stock has ranged from $13.25 to $33.31 over a year.