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Sun Country Airlines Holdings (NASDAQ: SNCY) outperformed expectations in the final three months of 2023, and its stock is taking flight as a result. Shares of Sun Country opened up more than 12% on Thursday and remain up 6% as of 12:30 p.m. ET.

Costs are falling on a unit basis

Sun Country operates a fleet of 54 aircraft engaged in scheduled service, charter flights, and cargo. The company has relationships with Amazon for cargo and with collegiate and pro sports teams, as well as the U.S. government, for charter, helping it to maintain one of the more diverse revenue mixes in the business.

In the fourth quarter, that mix paid off. Sun Country earned $0.12 per share, topping the $0.05 per-share estimate despite revenue that, at $245.5 million, was a little light compared to expectations.

Costs were up 7.7% year over year, including higher wages, but the airline operated more flights than a year ago and was therefore able to bring down its cost per available seat mile, a common industry metric, by about 2.2%. Charter revenue grew by 8.8% from last year, and cargo sales were up 3.6%.

"We are excited that Sun Country's uniquely diversified business model, and the efforts of our outstanding employees, produced another strong quarter," CEO Jude Bricker said in a statement. "Additionally, we continue to maintain solid cost control."

Is Sun Country stock a buy after a strong earnings report?

The airline is forecasting year-over-year revenue growth of between 5% and 9% in the current quarter, and operating income margin flat to up slightly as higher wages are at least partially offset by lower fuel costs. Salaries, wages, and benefits grew 20.2% in 2023, while maintenance expense increased 30% in part due to Sun Country's growth, so investors are likely to be satisfied with flat margins.

The issue for Sun Country, and the rest of the airline industry, is so much of what happens in 2024 is out of their control. A spike in fuel costs or a falloff in demand could eat into the best-laid plans.

It's that uncertainty that likely has Sun Country's early gains fading as the day goes on. Investors considering buying in would be getting a well-run airline, but the volatility of this business should not be underestimated.

Should you invest $1,000 in Sun Country Airlines right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Lou Whiteman has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

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