Amazon CMI operator Sun Country files for IPO

Minneapolis-based Sun Country Airlines, which currently operates twelve 737-800BCFs under CMI agreements with Amazon, filed Feb. 8 with the U.S. Securities and Exchange Commission for a proposed initial public offering of common stock. [caption id="attachment_414665" align="alignright" width="550"] Sun Country operates twelve 737-800BCFs on behalf of Amazon. (Photo/Amazon)[/caption] As part of the growth strategy detailed in the proposal, the low-cost leisure carrier turned cargo CMI-operator said it intends to continue growing its cargo business, not only on behalf of Amazon but also for “potentially new customers.” However, while the airline has so far benefitted from its relatively brief operations for Amazon, the current dependence on its agreement with Amazon is also a risk factor for the carrier. The carrier’s current operations are focused on providing low-cost fares to leisure travelers and conducting CMI operations on behalf of Amazon, according to the filing. With the negative impact on passenger operations during the COVID-19 pandemic, the cargo CMI operations for Amazon have “generated consistent, positive cash flows” for Sun Country. The airline’s six-year agreement with Amazon was signed in December 2019 and includes two options for two-year extensions, for a total term of ten years. Sun Country’s filing indicates that it would consider establishing a long-term partnership beyond its current agreement with Amazon to further grow its cargo operations in the future. The filing noted that under Sun Country’s current agreement with Amazon, there is no minimum flying requirement in place. In other words, Sun Country warned that Amazon could “choose not to fly significant volumes with us.”. There are also on-time arrival and other performance metrics that Sun Country must meet in its operations for Amazon, with failure to meet those putting the airline in default. Such a default would be grounds for Amazon to terminate all or part of its current agreement with Sun Country, according to the airline. For its part, Amazon has already reassigned some of its CMI flying between the carriers it contracts with, as we previously reported . While Amazon did not comment on the reason for the reassignment, labor issues between Atlas Air and the union representing its pilots may have been a factor. Sun Country also listed the potential for union disputes, employee strikes and other labor issues among the risk factors for its ongoing successful operations. Sun Country was a surprise entrant onto the CMI freighter operation scene when it was announced in late 2019 that the low-cost carrier would become the third of Amazon’s CMI operators in the United States, after Air Transport Services Group and Atlas Air Worldwide Holdings. The carrier’s operations on behalf of Amazon began shortly after the COVID-19 pandemic began impacting airfreight capacity in the U.S. in April 2020. The number of shares to be offered and the offering price were not included in the proposal. Sun Country could not be immediately reached for comment. Cargo Facts Asia, taking place April 20-21 as a virtual experience, is the event for exploring opportunity in the Asia-Pacific region. The event continues to bring together the best, brightest, and most innovative executives in the global air cargo industry. Learn more and register at www.cargofactsasia.com .

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