Minnesota based low-cost airline carrier Sun Country Airlines recently sold its shares in an IPO at the New York Stock Exchange.

The company sold shares worth $218.2 million for about $24 per share. Sun Country claims to have sold 9.1 million shares on the opening day, which were priced at $21-$23 per share before the offering. The lead book-running managers on the deal were Barclays, Morgan Stanley and Deutsche Bank. Following clearance from the SEC, the company began trading on the Nasdaq Global Select Market under the ticker SNCY. Sun Country’s current valuation makes it the most valuable airline IPO in the U.S since Virgin America, which debuted in 2014.

The company saw a positive investor response throughout the day, taking the price as high as $36.38 by close on Wednesday. This translates to a price hike of more than 51%. Summing up its impressive run on Wall Street, Sun Country CEO Jude Bricker said:

‘For the first time since the Covid crisis came we’ve been able to get sales back to what they were at pre-Covid levels, so we’re feeling really good about a recovery.’

About Sun Country Airlines

Sun Country Airlines was founded in semi-urban Minnesota in 1982 by Jim Olsen and a small group of pilots and flight attendants. The company currently operates low cost passenger planes, charter planes and cargo planes. The airline specialises in ferrying Midwesterners to vacation destinations such as Florida, as well as those in Latin America and the Caribbean.

Sun Country’s business model has fared well during COVID in comparison to other major American corporate services airlines. The company generated a net revenue of $401.5 million last year, reporting $3.9 million in losses. Despite its performance being severely impacted by COVID, Sun Country recently signed an agreement with Amazon to fly their cargo on narrow-body Boeing 737 planes.

Seemingly motivated by Sun Country’s announcement, its competitor in the low cost segment, Frontier Group Holdings Inc. recently disclosed its plans for a 2021 IPO. The company previously cancelled its plans of launching an IPO in July 2020 because of the losses it faced during the pandemic. According to its filings, Frontiers revenue figures went from a net income of $251 million in 2019 to $225 million in losses in 2020. Sun Country has done comparatively well owing to its cargo wing.

Analysis of the industry

Travel and tourism has been one of the worst affected sectors in 2020. With stringent lockdown restrictions placed in multiple countries around the world, tourism companies have had to face massive losses owing to the little to no business during the year. Companies like Sun Country were able to control their losses because of their cargo and other essential services, but even these services were heavily impacted by the pandemic.

The recovery of the sector in 2021 will be entirely based on the efficient distribution of vaccines around the world and whether national governments choose to allow travel services to return to normal capacity by the end of this year. In major markets like the U.S and the U.K, the governments have already announced stimulus plans to help the tourism industry back to its feet. Its complete recovery by the end of 2021 however, still seems highly improbable.