Sun Country Launches IPO With Great Expectations
Ambitious ultra-low-cost carrier (ULCC), Sun Country, has announced the launching of its initial public offering (IPO). The airline…
Ambitious ultra-low-cost carrier (ULCC), Sun Country, has announced the launching of its initial public offering (IPO). The airline could earn as much as $240 million from the offering, which will go far in the carrier’s expansion plans and could end up making Sun Country another force in the US.
Sun Country IPO launches
On March 8th, Sun Country announced the official launch of its initial public offering. Traded under the symbol “SNCY” on the Nasdaq, the airline is offering 9,090,909 shares of common stock. The initial public offering price is expected to be between $21 and $23 per share.
The airline expects to grant the underwriters a 30-day option to purchase up to an additional 1,363,636 shares of common stock at the initial public offering price, less underwriting discounts and commissions.
All in all, Sun Country is currently expecting to receive gross proceeds of approximately $190.9 million to $209.1 million from the offering before deducting underwriting discounts and commissions. If underwriters do exercise their over-allotment option in full, the airline expects to get approximately $219.5 million to $240.4 million, less underwriting discounts and commissions.
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Sun Country’s IPO
Sun Country Airlines announced it was seeking an IPO to raise at least $100 million back in early February. The Minneapolis-based ULCC believes its “hybrid low-cost air carrier” model positions it to do well in the current demand market. The IPO could let the airline chart out some impressive growth.
Sun Country Airlines flies to over 300 airports in a year. Most of that is driven by its charter operations. The airline flies to a very limited number of destinations on a year-round scheduled service, with most cities getting seasonal services instead.
Recently, to diversify its business and support it during the low times, the airline started flying cargo jets on behalf of e-commerce giant Amazon. All the planes Sun Country flies, including the Amazon jets, are Boeing 737 aircraft, making the airline very efficient.
What will Sun Country do with the money?
Sun Country Airlines plans to used a portion of the net proceeds to repay the outstanding loan from the US government it took out in the early days of the crisis. Data from the US Department of the Treasury shows that the airline has a $45 million total anticipated loan amount.
After repaying that loan, the airline plans to pay fees and expenses in connection with the offering. The rest of the net proceeds would be available for general corporate purposes. That final amount could be well above $100 million if the IPO is successful and the airline gets a lot of interest from investors.
One of the key facets of Sun Country Airlines’ IPO plan was that it saw room for growth. Some of the money will certainly go to support the airline’s expansion plan.
The airline likes to take on mid-life Boeing 737-800s, which come a fair bit cheaper than older aircraft, and some mid-life jets should be available at a steal during the current crisis. The airline currently has a fleet of 43 aircraft, and it hopes to fly up to 50 aircraft by the end of 2023.
This year, the airline plans to add nine new cities to its network and launch 16 new flights. This is expected to be just the start of the airline’s growth and optimization strategy.
Are you glad to see Sun Country move forward with the launch of an IPO? Do you think the airline’s IPO will be successful? Let us know in the comments!