Sun Country Airlines Holdings, Inc. Q4 FY2024 earnings call

• Addressed the tragic accident in Washington, D.C. and emphasized maintaining the highest safety standards across operations. - Highlighted the diversified business model with schedule flexibility and low fixed cost, enabling response to demand fluctuations and industry shocks. - Reached agreements in principle with flight attendants and dispatchers, expecting these to go to vote soon. - Took delivery of the first cargo aircraft from the Amazon agreement, with eight aircraft expected by summer. - Executed redelivery of the first 737 - 900, with six more aircraft to be redelivered by the end of 2026. - Scheduled service TRASM was flat year - on - year for the fourth quarter but December saw a nearly 5% increase, and capacity trends remained positive. - Completion factor and mishandled bag rate, important operational metrics for the low - frequency model, were near the best in the industry.

The Passenger segment, which includes scheduled service and charter businesses, saw fourth - quarter revenue grow 2.2% year - over - year. The average scheduled service fare rose 2.2% year - over - year to $159.88. Scheduled service TRASM improved during the quarter, with December up 5.8%. Charter revenue in the fourth quarter was $48 million, a 2.3% increase, and ad hoc charter revenue grew by 27% during the quarter. Excluding fuel reconciliation, Q4 charter revenue grew approximately 10% over the previous year, and charter revenue per block hour was up 4.6%. The Cargo segment had revenue growth of 13.1% in Q4 to $28.6 million, an all - time quarterly high, with revenue per block hour up 16%.

• Expect first - quarter total revenue to be between $330 million and $340 million with block hour growth of 7% to 9%. - Anticipate fuel cost per gallon to be $2.76 and an operating margin between 17% and 21%. - Will allocate capacity between segments to maximize profitability and minimize earnings volatility.

• Industry competition could impact market share and profitability. - Economic or market changes may affect the cargo business. - Uncertainties related to aircraft delivery schedules and utilization can pose risks to growth plans.

Q: How does the strength in Europe's first quarter impact Sun Country?

A: Jude Bricker stated that Sun Country doesn't fly to Europe, but the reallocation of capacity into the transatlantic market positively affects them, and there's no shift in demand out of their markets into the transatlantic.

Q: Can you frame the trajectory of margin and cash through the year?

A: Dave Davis mentioned first quarter is expected to be strong, seasonal pattern typical, and Amazon cargo aircraft delivery dates drive part of the year's performance.

Q: Talk about bookings patterns in the fourth quarter, especially ATL?

A: Jude Bricker said ATL has year - on - year strength, with some changes in booking like holding capacity further out leading to higher fares and slightly lower load factors.

Q: Network priorities as you get into summer months and impact on margin?

A: Jude Bricker said they'll scale back capacity in markets that were for competitive encroachment, leading to higher fares and strong revenue projections.

Q: Margin outlook, including first quarter vs fourth quarter?

A: Dave Davis said first quarter guide midpoint implies 100 basis point decline, with factors like flight attendant deals, pilot pay, and industry uplift considered.

Q: Aircraft growth and availability for later decade?

A: Dave Davis and Jude Bricker discussed redelivery of leased aircraft, utilization upside, and confidence in finding growth aircraft opportunistically.

Q: Encroachment capacity and market opportunities?

A: Jude Bricker explained their different approach to capacity planning, keeping capacity in strategically important markets and scaling back in others.

Q: Cargo business, including Amazon contract and downside risk?

A: Dave Davis said the Amazon contract has fixed and block hour rates, operating as de facto minimums, and Jude Bricker noted cargo margins are good regardless of load.

Q: Ad hoc Charter segment growth, drivers, and future cadence?

A: Dave Davis said ad hoc charter growth in fourth quarter was driven by football flying, and expects it to continue into 2025 with cargo growth not down in line with scheduled service.

Q: Amazon business economics and visibility?

A: Jude Bricker said there's a two - month approval process for schedules, fixed and variable rate structure, and they can adapt to any network based on charter DNA.

Q: Network performance in different regions?

A: Jude Bricker and Grant Whitney discussed strong demand in leisure trunk routes, some uncertainty in West Florida and Southern California, but Mexican markets doing well.