Will Sun Country Find a Merger Partner?

CEO Jude Bricker was cagey on the subject last week, but he had interesting things to say about competitive dynamics and other stuff.

Dear readers,

I’ve known Jude Bricker longer than just about any other U.S. airline executive, because years ago, I covered Allegiant Air for Aviation Week. While he often tells me (and probably you) that he’s very happy where he is — first running Allegiant’s operations, and now Sun Country’s CEO since 2017 — I have always sensed he had bigger ambitions than running small ULCCs with limited name recognition.

Now, with the U.S. low-cost segment in need of consolidation, I wonder if Bricker will finally get this chance to create and run a larger company that (unlike Sun Country) competes in more than just one major market, and flies more than 60 airplanes.

But if that’s his goal, Bricker is being careful with his words. The typically outspoken CEO spoke last week at the Bank of America Industrials, Transportation and Airlines Key Leaders Conference, and while he was adamant that the industry has too many discount airlines, he said he may not participate in consolidation because Sun Country might be too tiny to matter.

“Is Sun Country interested?” he said on May 13. “Absolutely. I think the industry uniformly benefits from consolidation because it rationalizes capacity. But we're small, we're independent, we're weird. So we're not a natural fit. There's no puzzle piece that goes naturally anywhere. And so I don't spend a lot of time worrying about it.”

Maybe he doesn’t worry about it, but I do suspect Bricker thinks about openings for Sun Country more than he let on in his comments. He knows that smaller competitors (with stronger balance sheets and more adept CEOs) often acquire weakened competitors. And it seems reasonable that Bricker could find a big-moneyed entity to back him, such as Apollo Group. Apollo’s team retained Bricker as Sun Country’s CEO in 2017 after the firm bought the airline, and Bricker made Apollo a lot of money on its investment. The arrangement apparently went well enough that Bricker now serves on the board of SAS, a more recent Apollo investment.

During the conference, Bricker talked about the state of the ULCC market, suggesting many airlines could be in play for consolidation. He name-checked Spirit, Frontier, and JetBlue, telling investors that all three have not had positive operating cash flow since the pandemic, and mentioned three additional airlines that haven’t had that much success. “Allegiant is working on trying to kind of go back into being an airline and [to get] down into their core business,” he said. “There's two start-ups in the space that haven't made money yet. And so it's irrational. It's unsustainable. Airline equity has gotten to be really, really expensive.”

Bricker also criticized Spirit, accusing the airline of carrying on like nothing happened after its pre-packaged bankruptcy. Eventually, I suspect Spirit may fail without a better model, but for now it looks to me like a zombie airline that only serves to weaken industry pricing.

"I'm kind of disappointed with the Spirit bankruptcy and what it produced," Bricker said. "I think seats need to come out of the market or costs need to come down for low-cost carriers. And we're going to be ready to take advantage of any opportunities that are out there. But I'm not running around placing bids on anybody."

Because M&A is so important to the industry’s future health, those were probably the most newsworthy comments from Bricker’s discussion last week. Yet he made several other comments that were perhaps less newsworthy but still very interesting. That’s typical of Bricker’s style — by airline CEO standards, he doesn’t have much of a filter.

For example, he posited that Ozempic might change demand for airlines, declared the onset of Trump’s tariffs to be bad for business, elaborated about what constitutes a “bad market” for Sun Country, and talked about the one airplane in Sun Country’s fleet that he considers to be a mini-private jet for people who can’t quite afford a Gulfstream. Plus, Bricker shared details about how much it costs to add new seats, WiFi and inflight entertainment to an airplane.

First, to the ramifications from Liberation Day…