MINNEAPOLIS - Sun Country Airlines (NASDAQ: SNCY) has solidified its partnership with e-commerce giant Amazon (NASDAQ:AMZN), announcing an expanded Air Transport Services (NASDAQ:ATSG) Agreement that extends their collaboration until 2030, with options to continue until 2037. This enhancement of the contract stipulates that Sun Country will add up to eight Boeing (NYSE:BA) 737-800 cargo aircraft to its operations starting in early 2025.
According to the details released Thursday, the Minneapolis-based airline is set to grow its cargo fleet from 12 to a maximum of 20 freighters. The first of these additional aircraft is scheduled to enter service in the first quarter of 2025, with the expectation that all eight will be fully operational by the third quarter of the same year.
Jude Bricker, CEO of Sun Country, expressed confidence in the extended agreement, attributing the expansion to the airline's successful execution of current cargo services. Bricker emphasized the importance of Amazon as a customer and conveyed enthusiasm for the ongoing relationship into the next decade.
Sun Country Airlines operates as a hybrid low-cost carrier, offering services to leisure and visiting friends and relatives (VFR) passengers, charter customers, and cargo transport, primarily for Amazon. The airline's network includes routes throughout the United States as well as to destinations in Mexico, Central America, Canada, and the Caribbean.
This move to enlarge the cargo operation aligns with Sun Country's strategy of leveraging shared resources across its scheduled service, charter, and cargo businesses. The airline has been recognized for its unique approach to the air travel market, aiming to create memorable and transformative experiences for its customers.
The information for this article is based on a press release statement from Sun Country Airlines.
In other recent news, Sun Country Airlines has seen several significant developments. TD Cowen recently adjusted its price target for the airline from $22.00 to $17.00, despite maintaining a Buy rating on the stock. This adjustment was made due to Sun Country's Q1 adjusted earnings per share (EPS) hitting $0.66, which was in line with TD Cowen's estimates but fell short of the broader market consensus of $0.68. The airline was able to achieve a record in revenue, but these numbers were at the lower end of their initial guidance range.
In addition, Deutsche Bank revised its stock price target for Sun Country to $18 from $20, while still endorsing the stock with a Buy rating. This was in response to Sun Country's operating margin for the March quarter, which was a robust 18.2%. However, the forecast for the June quarter suggests a significantly lower operating margin range of 4% to 7%.
Sun Country has also announced plans for strategic capacity reallocations and anticipates a significant fleet capacity increase by late 2025. These decisions come in response to fare declines and market pressures, particularly in Minneapolis.
InvestingPro Insights
Amidst the excitement of Sun Country Airlines' (NASDAQ: SNCY) expanded partnership with Amazon, investors are closely monitoring the company's financial health and stock performance. According to InvestingPro data, Sun Country boasts a market capitalization of $541.34 million and is trading at a low P/E ratio of 8.54, which further adjusts to an even more attractive 7.83 when considering earnings over the last twelve months as of Q1 2024. This suggests that the stock may be undervalued relative to near-term earnings growth, a point underscored by the company's low PEG ratio of 0.2 during the same period, indicating potential for future earnings growth relative to its share price.
While the airline's revenue has grown by 10.91% over the last twelve months as of Q1 2024, an InvestingPro Tip highlights that four analysts have revised their earnings downwards for the upcoming period, which could be a point of concern for investors looking at the company's future profitability. Additionally, the company's stock price has experienced significant volatility, with a 24.58% drop over the last three months and a 35.47% decrease over the last six months, reflecting investor sentiment and market conditions.
However, another InvestingPro Tip reveals a silver lining: analysts predict Sun Country will be profitable this year, and the company has indeed been profitable over the last twelve months. Investors interested in a deeper dive into Sun Country's financials and stock performance can find more than 10 additional InvestingPro Tips on InvestingPro. Plus, for those looking to enhance their investment strategy, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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