Revenue of $311 million, highest first quarter on record(1)GAAP diluted EPS of $0.64 and operating income of $55 millionAdj. diluted EPS(2) of $0.66 and adjusted operating income(2) of $57 million, MINNEAPOLIS, May 07, 2024 (GLOBE NEWSWIRE) -- Sun Country Airlines Holdings, Inc. ("Sun Country Airlines," "Sun Country," the "Company") (NASDAQ:SNCY) today reported financial results for its first quarter ended March 31, 2024. "Sun Country's diversified business model produced another strong first quarter with margins that we expect to finish at the top of the industry," said Jude Bricker, Chief Executive Officer of Sun Country. "Total revenue was up 5.9% versus the first quarter of 2023, reaching a record quarterly high of $311 million(1) while costs remained in check. We continue to grow in all areas of our business, with total block hours growing by nearly 10% and scheduled passenger service ASMs growing by over 16%. Total passenger revenue per ASM (TRASM) declined by 9.6%, driven by both our growth as well as significant capacity additions by other airlines in some of our markets. Our strong results would not have been possible without our dedicated employees who delivered the number one completion factor in the industry during the quarter." Overview of First Quarter   Three Months Ended March 31,   (unaudited) (in millions, except per share amounts)   2024   2023 % Change Total Operating Revenue $ 311.5 $ 294.1 5.9   Operating Income   55.2   55.8 (1.1 ) Income Before Income Tax   46.6   49.7 (6.3 ) Net Income   35.3   38.3 (7.9 ) Diluted earnings per share $ 0.64 $ 0.64 —     Three Months Ended March 31,   (unaudited) (in millions, except per share amounts)   2024   2023 % Change Adjusted Operating Income (2) $ 56.7 $ 58.5 (3.0 ) Adjusted Income Before Income Tax (2)   48.1   52.5 (8.5 ) Adjusted Net Income (2)   36.5   40.4 (9.8 ) Adjusted diluted earnings per share (2) $ 0.66 $ 0.68 (2.9 ) For the quarter ended March 31, 2024, Sun Country reported net income of $35 million and income before income tax of $47 million, on $311 million of revenue. Adjusted income before income tax(2) for the quarter was $48 million. GAAP operating income during the quarter was $55 million, while adjusted operating income(2) was $57 million, operating margin was 17.7% and adjusted operating margin(2) was 18.2%.   "We had another good first quarter which is historically our strongest," said Dave Davis, President and Chief Financial Officer.   "Our performance was particularly strong in two areas.   First, our growth was not constrained by staffing issues, leading to a nearly 10% improvement in aircraft utilization.   Second, we continued to demonstrate strong cost control with a year over year decline in adjusted CASM(3), continuing a trend started in the fourth quarter of last year.   This improvement came despite a planned investment in increased maintenance expenses.   Our balance sheet remains healthy.   During the quarter, we repurchased $11.5 million worth of SNCY shares through our existing share repurchase program.   First quarter capex was $29.7 million and we have acquired all of the aircraft we need to support our expected growth through at least 2025." Notable Highlights Extended the selling schedule through December 2024. The company will operate 122 routes serving 108 airports. The company acquired three aircraft in the first quarter of this year. One aircraft was purchased for cash and another was taken on finance lease. These aircraft are expected to enter revenue service in the second quarter. The third aircraft was purchased early in the quarter and is the seventh aircraft that is on lease to another airline. The company repurchased 755,000 shares at an average price of $15.22 during the first quarter. Capacity System block hours flown during the first quarter of 2024 grew by 9.6% year-over-year due to a 16.2% increase in scheduled service block hours. Both cargo block hours and charter block hours declined in the first quarter by 1.1% and 3.0% respectively year-over-year. Cargo block hours were influenced by scheduled maintenance in the quarter while charter block hours were optimized to minimize non-productive ferry flights. Charter block hours under long-term contracts comprised 75% of the total charter flying performed in the first quarter of 2024. As the Company continues to normalize its aircraft utilization, it is pursuing more ad-hoc charter flying. Revenue For the first quarter of 2024, the Company reported total revenue of $311 million, which was 5.9% more than the first quarter of 2023. The Company's scheduled service TRASM(4) of 12.20 cents in the first quarter of 2024 decreased 11.7% year-over-year, while scheduled service ASMs increased 16.4%. The first quarter 2024 total fare per scheduled passenger of $196 was lower than first quarter 2023 by 11.3% as scheduled service revenue passengers grew 16.0%. In the first quarter of 2024, the Company's charter service revenue was $47 million, an increase of 2.4% year-over-year. On a rate basis, first quarter 2024 charter revenue per block hour was 5.6% higher than the rate in the first quarter of 2023. This rate increase includes the impact of lower fuel prices which reduced the fuel reimbursement amount that we received from our charter customers by 20% year-over-year. In the first quarter of 2024, cargo revenue was $24 million, a 2.5% increase versus the first quarter of 2023. The variance was primarily driven by the annual rate escalation which went into effect in mid-December 2023. Cost For the first quarter of 2024, total GAAP operating expenses increased 7.5% year-over-year, primarily due to a 29.0% increase in maintenance expense from aircraft heavy maintenance and a 34.6% in landing fees and airport rent as the COVID assistance used by airports to keep rates lower expired. Fuel expense decreased by 2.7% compared to first quarter 2023. This combination drove first quarter CASM to decline 5.4% and adjusted CASM(3) to decrease 0.1% versus last year. Balance Sheet and Liquidity Total liquidity(5) was $179 million on March 31, 2024, while the Company's net debt(6) was $565 million. (in millions - amounts may not recalculate due to rounding) March 31, 2024   December 31, 2023   (Unaudited)     Cash and Cash Equivalents $ 28.4   $ 46.3 Available-for-Sale Securities   126.4     134.2 Amount Available Under Revolving Credit Facility   24.4     24.7 Total Liquidity $ 179.2   $ 205.2         (in millions - amounts may not recalculate due to rounding) March 31, 2024   December 31, 2023   (Unaudited)     Total Debt, net $ 388.1   $ 401.6 Finance Lease Obligations   313.8     277.3 Operating Lease Obligations   18.1     18.8 Total Debt, net, and Lease Obligations   720.0     697.7 Cash and Cash Equivalents   28.4     46.3 Available-for-Sale Securities   126.4     134.2 Net Debt $ 565.2   $ 517.2 Fleet As of March 31, 2024, the Company had 44 aircraft in its passenger service fleet, operated 12 freighter aircraft in its cargo operation and had seven aircraft that are currently on lease to unaffiliated airlines. Guidance for Second Quarter 2024   Q2 2024 H/(L) vs Q2 2023 Total revenue - millions $255 to $265 (2%) to 1% Economic fuel cost per gallon $2.93 8% Operating income margin - percentage 4% to 7% (11pp) to (8pp) Effective tax rate 23%   Total system block hours - thousands 37 to 38 8% to 11% Conference Call & Webcast Details Sun Country Airlines will host a conference call to discuss its first quarter 2024 results at 8:30 a.m. Eastern Time on Tuesday, May 7, 2024. A live broadcast of the conference call will be available via the investor relations section of Sun Country Airlines' website at https://ir.suncountry.com/news-events/events-and-presentations. The online replay will be available on the same website approximately one hour after the call. About Sun Country Airlines Sun Country Airlines is a new breed of hybrid low-cost air carrier that dynamically deploys shared resources across our synergistic scheduled service, charter and cargo businesses. Based in Minnesota, we focus on serving leisure and visiting friends and relatives ("VFR") passengers and charter customers and providing cargo services, with flights throughout the United States and to destinations in Mexico, Central America, Canada, and the Caribbean. End Notes 1 - Records begin in January 2017 2 - See additional details, including reconciliations to the most comparable GAAP measures, in the section titled "Non-GAAP financial measures" 3 - Adjusted CASM is a non-GAAP measure derived from CASM by excluding fuel costs, non-cash management stock compensation expense, costs arising from its cargo operations, depreciation and amortization recognized on certain assets that generate lease income, certain commissions, and other costs of selling its vacations product from this measure. See table titled "Reconciliation of CASM to Adjusted CASM" 4 - Scheduled Service TRASM includes Schedule Service revenue, Ancillary revenue, and ASM generating revenue classified within Other Revenue on the Consolidated Statement of Operations / Scheduled Service ASMs. Other Revenue includes rental revenue of approximately $9.3 million associated with certain assets that generate lease income in the three months ended March 31, 2024, which is not included. Lease income was immaterial for the three months ended March 31, 2023. 5 - Total liquidity = cash and cash equivalents + available-for-sale securities + amount available under revolver 6 - Net debt = current portion of long-term debt + long-term debt + finance lease obligations + operating lease obligations – cash and cash equivalents - available-for-sale securities Forward Looking Statements This press release contains forward-looking statements, which involve risks and uncertainties. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "plan," "possible," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this press release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management, and expected market growth are forward-looking statements. The forward-looking statements are relating to: • our strategy, outlook and growth prospects; • our operational and financial targets and dividend policy; • general economic trends and trends in the industry and markets; • potential repurchases of our common stock; and • the competitive environment in which we operate. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These forward-looking statements reflect our views with respect to future events as of the date of this press release and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this press release and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this press release. We anticipate that subsequent events and developments will cause our views to change. You should read this press release completely and with the understanding that our actual future results may be materially different from what we expect. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may undertake. We qualify all of our forward-looking statements by these cautionary statements. Additional information concerning certain factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Non-GAAP Financial Measures We sometimes use information that is derived from the Condensed Consolidated Financial Statements, but that is not presented in accordance with GAAP. We believe these non-GAAP measures provide a meaningful comparison of our results to others in the airline industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP. Further, our non-GAAP information may be different from the non-GAAP information provided by other companies. We believe certain charges included in our operating expenses on a GAAP basis make it difficult to compare our current period results to prior periods as well as future periods and guidance. The tables below show a reconciliation of non-GAAP financial measures used in this document to the most directly comparable GAAP financial measures. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per share amounts) (Unaudited)   Three Months Ended March 31,         2024       2023     % Change Operating Revenues:           Scheduled Service $ 141,194     $ 152,657     (7.5 ) Charter Service   47,312       46,187     2.4   Ancillary   86,158       68,425     25.9   Passenger   274,664       267,269     2.8   Cargo   23,948       23,361     2.5   Other   12,871       3,485     269.3   Total Operating Revenue   311,483       294,115     5.9               Operating Expenses:           Aircraft Fuel   70,304       72,290     (2.7 ) Salaries, Wages, and Benefits   82,238       75,430     9.0   Aircraft Rent   —       1,480     (100.0 ) Maintenance   16,817       13,039     29.0   Sales and Marketing   10,679       9,929     7.6   Depreciation and Amortization   23,809       19,460     22.3   Ground Handling   9,154       9,170     (0.2 ) Landing Fees and Airport Rent   14,729       10,945     34.6   Other Operating, net   28,577       26,589     7.5   Total Operating Expenses   256,307       238,332     7.5   Operating Income   55,176       55,783     (1.1 )             Non-operating Income (Expense):           Interest Income