US low-cost carrier, Sun Country Airlines (SY, Minneapolis/St. Paul), plans to make another push for an initial public offering in 2021 if travel demand picks up, says Chief Executive Officer Jude Bricker.

Bolstered by its cargo service for minority shareholder Amazon.com, the Minnesota-based airline also plans to increase its cargo fleet in November to twelve B737-800(BCF), Bricker told Bloomberg. According to the ch-aviation fleets advanced module, Sun Country already operates a cargo fleet of eleven B737-800(BCF)s at present, including one owned aircraft and ten leased from GECAS.

This comes as the airline last week announced it was cutting 112 jobs or about 7% of its workforce as US federal aid stopped at the end of September and passenger bookings remained low due to the ongoing COVID-19 crisis. Most of the reduction was due to attrition, or not hiring for vacancies, but 18 employees were directly affected, with nine offered other positions. None were front-line workers, such as pilots, flight attendants or ground crew workers, the Star Tribune newspaper reported.

Bricker did not expect further staffing reductions but acknowledged the industry continued to face considerable uncertainty. "Our hope is that with continued financial discipline, we will be in the best position to capture a rebound in demand, particularly for winter and spring break travel. The coming months will give us a much clearer picture about what demand looks like going forward," he said.

Sun Country received USD60 million in federal aid under the CARES Act, which helped it achieve a small operating profit in 2Q2020. The airline's bookings began to rebound slightly in June, but flattened out in July, as new COVID-19 hot spots emerged around the United States. Sun Country's revenue is down more than 50% year-on-year. Similarly, bookings remain about half of what they were a year ago.

Bricker predicted Sun Country's summer business next year would be 20% smaller than in 2019. By the end of 2021, however, the carrier expected to operate at the same size as it did before the pandemic, led by a rebound in leisure markets, Bloomberg reported.

Sun Country’s core business is leisure travel to Florida, Las Vegas McCarran, the Caribbean, Mexico, and Central America. The airline’s charter work for sports teams and casinos has recovered well but has yet to regain its pre-pandemic revenues.

Bloomberg reported Bricker’s upbeat view suggested at least the potential for a revival of Sun Country’s IPO plans, despite the industry devastation caused by COVID-19. Initial plans for an IPO in April 2020 were dashed by the pandemic. Even now, “explaining an outperformance in passenger strength in the market could be difficult” without a sustained rebound across the industry, Bricker acknowledged.

Any stock offering would also be complicated by the challenge across the industry of valuing airlines amid an unprecedented collapse in commercial flying, he conceded. The airline may also face stepped-up competition from larger carriers such as United Airlines (UA, Chicago O'Hare), Alaska Airlines (AS, Seattle Tacoma Int'l), and JetBlue Airways (B6, New York JFK), which have pivoted their networks to capture more leisure traffic given the deep shortfalls in international and business travel.

Sun Country is majority-owned by Apollo Global Management, which acquired the airline in 2017 from the Davis family, which in turn had bought it out of bankruptcy in 2011. Bricker, previously of Allegiant Air (G4, Las Vegas McCarran), was appointed and began implementing a low-cost strategy by cutting expenses and adding seats to aircraft. A minority share was sold to Amazon in December 2019 with the cargo flights under Amazon Air’s brand designed to stabilise revenues during off-peak leisure seasons. Sun Country's passenger aircraft fleet of 42 aircraft includes 30 leased B737-800s and one leased B737-700.