Next hot IPO? Sun Country eyes possible opportunity
A small Minnesota airline may be about to cash in big. Sun Country Airlines is considering potentially filing an IPO (initial public offering) next year, according to an interview that the CEO of the company, Jude Bricker, gave to Skift this week.
Sun Country is owned by Apollo Global Management, a private equity firm in New York that has stakes in such brands as Caesar's Entertainment, Hostess and Chuck E. Cheese, which recently scrapped its plans to go public. As for the Sun Country IPO, Bricker said there is, in his view, “a window of opportunity” for the airline right now, going on to add: “We are small and we are different. We just want to be ready for it, if it’s open for us. If it’s not, we’ll wait.”
The last U.S. airline to go public was Nevada-based Mesa Airlines with a $116 million IPO a year ago. While the stock saw an uptick today, its share price is down more than 50% since the offering.
Under Apollo’s ownership over the last 21 months, since it bought the airline in December of 2017, Sun Country Airlines has made a variety of changes in an attempt to improve efficiency and bring down costs. The changes include everything from “moving beyond the airline’s long-time Minnesota base to start routes from other cities” such as Portland, OR and Los Angeles) to “shedding smaller and less efficient Boeing 737-700s in favor of larger Boeing 737-800s " to dropping first class in an effort to compete with other low cost carriers like Spirit Airlines and Frontier Airlines, per Skift.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| APO | APOLLO GLOBAL MANAGEMENT | 167.54 | +2.53 | +1.53% |
| MESA | MESA AIR GROUP INC. | 0.87 | +0.01 | +0.62% |
The results of these changes have seemingly paid off and noteworthy: “In the first quarter, Sun Country produced an operating margin excluding special items of 23.8 percent, highest among the 11 major U.S. airlines tracked by Jay Shabat, senior analyst at Skift Airline Weekly.”
Additionally, according to the Star Tribune: “Last year, Sun Country reported a net income of $27 million on $616 million in revenue, according to required filings by the U.S. Bureau of Transportation Statistics. That’s up from net income of $16 million on $518 million in revenue in 2016.”
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And all of the above has perhaps put Sun Country Airlines in a position to make an IPO splash.