Sun Country Airlines Enters Into Revised Agreement with Amazon

Rhea-AI Summary

Sun Country Airlines (NASDAQ: SNCY) has signed an amended and restated Air Transport Services Agreement with Amazon, extending their partnership through 2030, with options to extend further to 2037. This revised agreement will see Sun Country operating up to eight additional Boeing 737-800 cargo aircraft beginning in early 2025. This expansion will increase the airline's cargo fleet from 12 to 20 aircraft, with all new planes expected to be operational by the third quarter of 2025. Sun Country's CEO, Jude Bricker, highlighted the importance of Amazon as a customer and expressed confidence in the continued growth of their cargo operations.

Positive

• Contract extension with Amazon through 2030 with potential extension to 2037.
• Addition of up to eight Boeing 737-800 cargo aircraft, increasing the cargo fleet to 20.
• All new aircraft expected to be operational by Q3 2025, starting service by Q1 2025.

Negative

• None.

Insights

Financial Analyst

Extending the agreement with Amazon until 2030, with the option to extend further until 2037, represents a significant long-term revenue stream for Sun Country Airlines. This contract extension not only stabilizes future cash flow but also strengthens the company's position in the cargo sector. The addition of eight Boeing 737-800 aircraft, increasing the fleet to 20, will allow Sun Country to capitalize on the growing demand for cargo services, driven by e-commerce growth.

From a financial perspective, this agreement may lead to improved economies of scale and better utilization of existing infrastructure. However, investors should also monitor potential risks related to dependency on a single major customer, as any disruptions in Amazon’s operations or strategy could impact Sun Country significantly. Additionally, the capital expenditures required for these aircraft acquisitions should be noted and their impact on the balance sheet should be closely watched.

Overall, this deal provides a more predictable revenue stream and potential for growth, but the cost and dependency factors are critical aspects to monitor for future implications.

Aviation Industry Expert

The aviation sector is increasingly tapping into cargo services as a stable revenue source, especially in light of fluctuating passenger demand. This strategic move by Sun Country to expand its cargo fleet aligns well with industry trends. The Boeing 737-800 is a versatile aircraft for short to medium-haul routes, making it a suitable choice for fulfilling Amazon's logistical needs.

For Sun Country, this could mean more efficient operations and better aircraft utilization rates. The deal signifies confidence in Sun Country’s operational capabilities and reliability, which is important in the cargo sector where timely deliveries are paramount. Furthermore, the long-term nature of the agreement provides a stable horizon for planning and investment in cargo operations.

Nevertheless, the operational challenges of rapidly scaling the cargo fleet and integrating these new aircraft into service should not be underestimated. Efficiently managing maintenance, crew training and scheduling will be vital to maximize the benefits of this expansion.

Eight additional B737-800 aircraft will bring Sun Country cargo fleet to 20 Term extended to 2030 with potential further extension to 2037

MINNEAPOLIS, June 20, 2024 (GLOBE NEWSWIRE) -- Sun Country Airlines (NASDAQ: SNCY) today signed an Amended and Restated Air Transport Services Agreement with Amazon, extending the contract through 2030 with options to further extend the terms through 2037. Under the amended agreement, Sun Country will operate up to eight additional Boeing 737-800 cargo aircraft beginning in early 2025.

The amended agreement will increase Sun Country’s cargo operation from 12 to up to 20 freighters with the first additional aircraft expected to begin service in the first quarter of 2025. All eight aircraft are expected to be operational by the third quarter of 2025.

“Amazon is an extremely important customer to Sun Country and strong execution on our current cargo services positioned us well to grow our business. We look forward to continuing to provide services to Amazon into the 2030s,” said Jude Bricker, chief executive officer, Sun Country.

About Sun Country
Sun Country Airlines is a new breed of hybrid low-cost air carrier, whose mission is to connect guests to their favorite people and places, to create lifelong memories and transformative experiences. Sun Country dynamically deploys shared resources across our synergistic scheduled service, charter, and cargo businesses. Based in Minnesota, we focus on serving leisure and visiting friends and relatives (“VFR”) passengers and charter customers and providing cargo service to Amazon, with flights throughout the United States and to destinations in Mexico, Central America, Canada, and the Caribbean.

For photos, b-roll and additional company information, visit https://www.stories.suncountry.com/multimedia.

FAQ

What recent agreement did Sun Country Airlines sign with Amazon?

Sun Country Airlines signed an amended and restated Air Transport Services Agreement with Amazon, extending their partnership through 2030 with options to extend to 2037.

How many additional aircraft will Sun Country operate under the new agreement with Amazon?

Sun Country will operate up to eight additional Boeing 737-800 cargo aircraft.

When will the new Boeing 737-800 cargo aircraft begin service for Sun Country?

The new aircraft are expected to begin service in early 2025, with all operational by the third quarter of 2025.

What is the expected size of Sun Country's cargo fleet after the expansion?

Sun Country's cargo fleet will increase from 12 to up to 20 aircraft.

Why is the new agreement with Amazon significant for Sun Country Airlines?

The agreement highlights the strong execution of cargo services by Sun Country and positions the airline well for continued business growth with a key customer.