UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-40217

Sun Country Airlines Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware			82-4092570
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2005 Cargo Road
Minneapolis, Minnesota			55450
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (651) 681-3900

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

SNCY

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated ~~filer~~Filer ☐	Accelerated ~~filer~~Filer ☐☑	Non-accelerated Filer ☑☐
	Smaller reporting company ☐	Emerging growth company ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Number of shares outstanding by each class of common stock, as of September 30, ~~2022:~~2023:

Common Stock, $0.01 par value – ~~58,166,674~~54,133,851 shares outstanding

Table of Contents

Sun Country Airlines Holdings, Inc.

Form 10-Q

Table of Contents


			Page			Page
Part I. Financial Information	Part I. Financial Information			Part I. Financial Information
Item 1. Financial Statements	Item 1. Financial Statements			Item 1. Financial Statements
Condensed Consolidated Balance Sheets	Condensed Consolidated Balance Sheets		3	Condensed Consolidated Balance Sheets		3
Condensed Consolidated Statements of Operations	Condensed Consolidated Statements of Operations		5	Condensed Consolidated Statements of Operations		5
Condensed Consolidated Statements of Comprehensive Income	Condensed Consolidated Statements of Comprehensive Income		6	Condensed Consolidated Statements of Comprehensive Income		6
Condensed Consolidated Statements of Changes in Stockholders’ Equity	Condensed Consolidated Statements of Changes in Stockholders’ Equity		7	Condensed Consolidated Statements of Changes in Stockholders’ Equity		7
Condensed Consolidated Statements of Cash Flows	Condensed Consolidated Statements of Cash Flows		8	Condensed Consolidated Statements of Cash Flows		8

Notes to the Condensed Consolidated Financial Statements	Notes to the Condensed Consolidated Financial Statements			Notes to the Condensed Consolidated Financial Statements

1	1	Company Background	9	1	Basis of Presentation	9
2	2	Basis of Presentation	10	2	Revenue	9
3	3	Impact of the COVID-19 Pandemic	14	3	Earnings per Share	12
4	4	Revenue	15	4	Aircraft	13
5	5	Earnings per Share	17	5	Asset Acquisitions	14
6	6	Aircraft	18	6	Debt	15
7	7	Debt	20	7	Stock-Based Compensation	17
8	8	Fuel Derivatives and Risk Management	22	8	Investments	18
9	9	Investments	23	9	Fair Value Measurements	18
10	10	Fair Value Measurements	23	10	Income Taxes	19
11	11	Income Taxes	24	11	Stockholders' Equity	19
12	12	Special Items, net	25	12	Commitments and Contingencies	20
13	13	Commitments and Contingencies	25	13	Operating Segments	21
14	14	Operating Segments	26	14	Subsequent Events	22
15		Subsequent Events	26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		28	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	Item 3. Quantitative and Qualitative Disclosures About Market Risk		60	Item 3. Quantitative and Qualitative Disclosures About Market Risk		47
Item 4. Controls and Procedures	Item 4. Controls and Procedures		60	Item 4. Controls and Procedures		47

Part II. Other Information	Part II. Other Information			Part II. Other Information
Item 1. Legal Proceedings	Item 1. Legal Proceedings		62	Item 1. Legal Proceedings		50
Item 1A. Risk Factors	Item 1A. Risk Factors		62	Item 1A. Risk Factors		50
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		63	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		50
Item 3. Defaults Upon Senior Securities	Item 3. Defaults Upon Senior Securities		63	Item 3. Defaults Upon Senior Securities		51
Item 4. Mine Safety Disclosures	Item 4. Mine Safety Disclosures		63	Item 4. Mine Safety Disclosures		51
Item 5. Other Information	Item 5. Other Information		63	Item 5. Other Information		51
Item 6. Exhibits	Item 6. Exhibits		63	Item 6. Exhibits		52

Signatures	Signatures		65	Signatures		53

-2-

Table of Contents

PART I. Financial Information

ITEM 1. FINANCIAL STATEMENTS

SUN COUNTRY AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share and share amounts)


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS

Current Assets:	Current Assets:					Current Assets:
Cash and Cash Equivalents	Cash and Cash Equivalents	$	131,912	$	309,338	Cash and Cash Equivalents	$	26,967	$	92,086
Restricted Cash	Restricted Cash	14,163		8,447		Restricted Cash	10,953		10,842
Investments	Investments	135,170		6,283		Investments	153,290		178,936
Accounts Receivable, net of an allowance for credit losses of $175 and $250, respectively		31,628		30,156
Accounts Receivable, net of an allowance for credit losses of $110 and $231, respectively						Accounts Receivable, net of an allowance for credit losses of $110 and $231, respectively	42,876		35,124
Short-term Lessor Maintenance Deposits	Short-term Lessor Maintenance Deposits	1,211		5,505		Short-term Lessor Maintenance Deposits	1,191		1,241
Inventory, net of a reserve for obsolescence of $1,255 and $1,275, respectively		7,280		5,405
Inventory, net of a reserve for obsolescence of $1,076 and $1,107, respectively						Inventory, net of a reserve for obsolescence of $1,076 and $1,107, respectively	7,678		7,659
Prepaid Expenses	Prepaid Expenses	11,692		8,511		Prepaid Expenses	13,358		11,423
Other Current Assets	Other Current Assets	4,684		1,798		Other Current Assets	3,992		8,179
Total Current Assets	Total Current Assets	337,740		375,443		Total Current Assets	260,305		345,490

Property & Equipment, net:	Property & Equipment, net:					Property & Equipment, net:
Aircraft and Flight Equipment	Aircraft and Flight Equipment	628,375		447,319		Aircraft and Flight Equipment	679,145		636,584
Aircraft and Flight Equipment Held for Operating Lease						Aircraft and Flight Equipment Held for Operating Lease	154,165		—
Ground Equipment and Leasehold Improvements	Ground Equipment and Leasehold Improvements	33,809		20,876		Ground Equipment and Leasehold Improvements	39,316		35,948
Computer Hardware and Software	Computer Hardware and Software	10,402		8,785		Computer Hardware and Software	12,856		10,831
Finance Lease Assets	Finance Lease Assets	262,060		209,457		Finance Lease Assets	285,942		261,991
Rotable Parts	Rotable Parts	13,992		9,150		Rotable Parts	16,820		17,059
Total Property & Equipment	Total Property & Equipment	948,638		695,587		Total Property & Equipment	1,188,244		962,413
Accumulated Depreciation & Amortization	Accumulated Depreciation & Amortization	(159,779)		(117,069)		Accumulated Depreciation & Amortization	(231,501)		(176,746)
Total Property & Equipment, net	Total Property & Equipment, net	788,859		578,518		Total Property & Equipment, net	956,743		785,667

Other Assets:	Other Assets:					Other Assets:
Goodwill	Goodwill	222,223		222,223		Goodwill	222,223		222,223
Other Intangible Assets, net		86,110		89,110
Other Intangible Assets, net of accumulated amortization of $22,757 and $18,890, respectively						Other Intangible Assets, net of accumulated amortization of $22,757 and $18,890, respectively	84,984		85,110
Operating Lease Right-of-use Assets	Operating Lease Right-of-use Assets	23,919		61,658		Operating Lease Right-of-use Assets	15,475		22,182
Aircraft Deposits	Aircraft Deposits	9,128		10,021		Aircraft Deposits	9,589		9,134
Long-term Lessor Maintenance Deposits	Long-term Lessor Maintenance Deposits	29,714		20,346		Long-term Lessor Maintenance Deposits	41,172		32,433
Deferred Tax Asset	Deferred Tax Asset	14,734		17,608		Deferred Tax Asset	—		12,956
Other Assets	Other Assets	9,017		5,495		Other Assets	10,577		9,217
Total Other Assets	Total Other Assets	394,845		426,461		Total Other Assets	384,020		393,255
Total Assets	Total Assets	$	1,521,444	$	1,380,422	Total Assets	$	1,601,068	$	1,524,412

See accompanying Notes to Condensed Consolidated Financial Statements

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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share and share amounts)


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
		(Unaudited)					(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts Payable	Accounts Payable	$	49,969	$	39,805	Accounts Payable	$	55,680	$	62,370
Accrued Salaries, Wages, and Benefits	Accrued Salaries, Wages, and Benefits	25,900		28,527		Accrued Salaries, Wages, and Benefits	30,451		26,521
Accrued Transportation Taxes	Accrued Transportation Taxes	11,000		12,736		Accrued Transportation Taxes	12,795		17,666
Air Traffic Liabilities	Air Traffic Liabilities	132,830		118,562		Air Traffic Liabilities	130,453		157,995
Over-market Liabilities		1,535		4,309
Finance Lease Obligations	Finance Lease Obligations	17,484		11,705		Finance Lease Obligations	32,096		17,990
Loyalty Program Liabilities	Loyalty Program Liabilities	13,045		11,451		Loyalty Program Liabilities	9,415		13,963
Operating Lease Obligations	Operating Lease Obligations	6,281		17,231		Operating Lease Obligations	2,286		6,296
Current Maturities of Long-term Debt		45,535		29,412
Current Maturities of Long-term Debt, net						Current Maturities of Long-term Debt, net	83,339		57,548
Income Tax Receivable Agreement Liability	Income Tax Receivable Agreement Liability	2,260		—		Income Tax Receivable Agreement Liability	1,511		2,260
Other Current Liabilities	Other Current Liabilities	14,850		7,913		Other Current Liabilities	12,849		14,519
Total Current Liabilities	Total Current Liabilities	320,689		281,651		Total Current Liabilities	370,875		377,128

Long-term Liabilities:	Long-term Liabilities:					Long-term Liabilities:
Over-market Liabilities		1,423		10,428
Finance Lease Obligations	Finance Lease Obligations	237,644		180,450		Finance Lease Obligations	231,185		233,306
Loyalty Program Liabilities	Loyalty Program Liabilities	3,272		8,267		Loyalty Program Liabilities	4,432		1,474
Operating Lease Obligations	Operating Lease Obligations	21,508		58,810		Operating Lease Obligations	17,108		19,836
Long-term Debt		324,662		248,014
Long-term Debt, net						Long-term Debt, net	351,766		294,687
Deferred Tax Liability						Deferred Tax Liability	5,214		—
Income Tax Receivable Agreement Liability	Income Tax Receivable Agreement Liability	101,540		98,800		Income Tax Receivable Agreement Liability	99,509		101,540
Other Long-term Liabilities	Other Long-term Liabilities	2,701		3,413		Other Long-term Liabilities	1,618		3,729
Total Long-term Liabilities	Total Long-term Liabilities	692,750		608,182		Total Long-term Liabilities	710,832		654,572
Total Liabilities	Total Liabilities	1,013,439		889,833		Total Liabilities	1,081,707		1,031,700

Commitments and Contingencies (see Note 13)
Commitments and Contingencies (see Note 12)						Commitments and Contingencies (see Note 12)

Stockholders' Equity:	Stockholders' Equity:					Stockholders' Equity:
Common stock, with $0.01 par value, 995,000,000 shares authorized, 58,168,497 and 57,872,452 issued at September 30, 2022 and December 31, 2021, respectively		582		579
Preferred stock, with $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2022 and December 31, 2021		—		—
Treasury stock, at cost, 1,823 shares held at September 30, 2022 and no shares held at December 31, 2021		(52)		—
Common stock, with $0.01 par value, 995,000,000 shares authorized, 58,815,139 and 58,217,647 issued and 54,133,851 and 57,325,238 outstanding at September 30, 2023 and December 31, 2022, respectively						Common stock, with $0.01 par value, 995,000,000 shares authorized, 58,815,139 and 58,217,647 issued and 54,133,851 and 57,325,238 outstanding at September 30, 2023 and December 31, 2022, respectively	588		582
Preferred stock, with $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022						Preferred stock, with $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022	—		—
Treasury stock, at cost, 4,681,288 and 892,409 shares held at September 30, 2023 and December 31, 2022, respectively						Treasury stock, at cost, 4,681,288 and 892,409 shares held at September 30, 2023 and December 31, 2022, respectively	(80,681)		(17,605)
Additional Paid-In Capital	Additional Paid-In Capital	493,493		485,638		Additional Paid-In Capital	511,375		488,494
Retained Earnings	Retained Earnings	14,764		4,372		Retained Earnings	88,585		22,048
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss	(782)		—		Accumulated Other Comprehensive Loss	(506)		(807)
Total Stockholders' Equity	Total Stockholders' Equity	508,005		490,589		Total Stockholders' Equity	519,361		492,712
Total Liabilities and Stockholders' Equity	Total Liabilities and Stockholders' Equity	$	1,521,444	$	1,380,422	Total Liabilities and Stockholders' Equity	$	1,601,068	$	1,524,412

See accompanying Notes to Condensed Consolidated Financial Statements

-4-

Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share and share amounts)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Operating Revenues:	Operating Revenues:									Operating Revenues:
Passenger	Passenger	$	195,360	$	147,718	$	592,753	$	377,042	Passenger	$	214,355	$	195,360	$	709,490	$	592,753
Cargo	Cargo	23,687		24,400		65,930		68,084		Cargo	26,059		23,687		74,437		65,930
Other	Other	2,653		1,545		8,607		5,338		Other	8,462		2,653		20,150		8,607
Total Operating Revenue		221,700		173,663		667,290		450,464
Total Operating Revenues										Total Operating Revenues	248,876		221,700		804,077		667,290

Operating Expenses:	Operating Expenses:									Operating Expenses:
Aircraft Fuel	Aircraft Fuel	64,843		36,647		206,334		90,631		Aircraft Fuel	61,179		64,843		185,829		206,334
Salaries, Wages, and Benefits	Salaries, Wages, and Benefits	58,661		43,424		178,576		129,815		Salaries, Wages, and Benefits	72,541		58,661		223,890		178,576
Aircraft Rent	Aircraft Rent	1,949		3,925		7,347		13,339		Aircraft Rent	22		1,949		2,281		7,347
Maintenance	Maintenance	11,018		9,660		35,794		30,170		Maintenance	15,330		11,018		44,311		35,794
Sales and Marketing	Sales and Marketing	6,827		5,470		23,336		16,402		Sales and Marketing	7,569		6,827		26,005		23,336
Depreciation and Amortization	Depreciation and Amortization	17,181		14,710		49,364		41,532		Depreciation and Amortization	22,762		17,181		64,577		49,364
Ground Handling	Ground Handling	8,669		7,873		24,838		19,654		Ground Handling	9,382		8,669		28,299		24,838
Landing Fees and Airport Rent	Landing Fees and Airport Rent	12,926		12,069		32,708		29,606		Landing Fees and Airport Rent	13,958		12,926		36,847		32,708
Special Items, net		—		(65)		—		(72,419)
Other Operating, net	Other Operating, net	24,235		18,629		68,401		50,026		Other Operating, net	27,127		24,235		81,663		68,401
Total Operating Expenses	Total Operating Expenses	206,309		152,342		626,698		348,756		Total Operating Expenses	229,870		206,309		693,702		626,698
Operating Income	Operating Income	15,391		21,321		40,592		101,708		Operating Income	19,006		15,391		110,375		40,592

Non-operating Income (Expense):	Non-operating Income (Expense):									Non-operating Income (Expense):
Interest Income	Interest Income	1,610		28		2,166		52		Interest Income	2,480		1,610		7,766		2,166
Interest Expense	Interest Expense	(7,493)		(6,286)		(23,097)		(19,487)		Interest Expense	(11,403)		(7,493)		(31,272)		(23,097)
Other, net	Other, net	3,422		456		(5,156)		18,505		Other, net	(15)		3,422		(370)		(5,156)
Total Non-operating Expense, net	Total Non-operating Expense, net	(2,461)		(5,802)		(26,087)		(930)		Total Non-operating Expense, net	(8,938)		(2,461)		(23,876)		(26,087)

Income Before Income Tax	Income Before Income Tax	12,930		15,519		14,505		100,778		Income Before Income Tax	10,068		12,930		86,499		14,505
Income Tax Expense	Income Tax Expense	2,253		2,140		4,113		18,444		Income Tax Expense	2,477		2,253		19,963		4,113
Net Income	Net Income	$	10,677	$	13,379	$	10,392	$	82,334	Net Income	$	7,591	$	10,677	$	66,536	$	10,392

Net Income per share to common stockholders:	Net Income per share to common stockholders:									Net Income per share to common stockholders:
Basic	Basic	$	0.18	$	0.23	$	0.18	$	1.51	Basic	$	0.14	$	0.18	$	1.19	$	0.18
Diluted	Diluted	$	0.18	$	0.22	$	0.17	$	1.40	Diluted	$	0.13	$	0.18	$	1.12	$	0.17
Shares used for computation:	Shares used for computation:									Shares used for computation:
Basic	Basic	58,146,606		57,355,104		58,039,201		54,368,231		Basic	55,435,386		58,146,606		56,051,173		58,039,201
Diluted	Diluted	60,793,516		61,712,378		61,372,735		58,699,991		Diluted	58,595,646		60,793,516		59,281,819		61,372,735

See accompanying Notes to Condensed Consolidated Financial Statements

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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net Income $ 10,677 $ 13,379 $ 10,392 $ 82,334
Other Comprehensive Loss:
Net unrealized loss on Available-for-Sale securities, net of deferred tax benefit of $244, $—, $309 and $—, respectively (562) — (782) —
Other Comprehensive Loss (562) — (782) —
Comprehensive Income $ 10,115 $ 13,379 $ 9,610 $ 82,334


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net Income	$	7,591	$	10,677	$	66,536	$	10,392

Other Comprehensive Income (Loss):
Net unrealized gains (losses) on Available-for-Sale securities, net of deferred tax expense (benefit) of $46, $(244), $90 and $(309), respectively	158		(562)		301		(782)
Other Comprehensive Income (Loss)	158		(562)		301		(782)
Comprehensive Income	$	7,749	$	10,115	$	66,837	$	9,610

See accompanying Notes to Condensed Consolidated Financial Statements

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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in ~~thousands)~~thousands, except share amounts)

(Unaudited)


	Nine Months Ended September 30, 2023
	Warrants	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total
		Shares	Amount		Shares	Amount
December 31, 2022	2,402,268	58,217,647	$	582	892,409	$	(17,605)	$	488,494	$	22,048	$	(807)	$	492,712
Stock Issued for Stock-Based Awards	—	147,105	2		—	—		554		—		—		556
Net Stock Settlement of Stock-Based Awards	—	—	—		406	(8)		—		—		—		(8)
Common Stock Repurchases	—	—	—		1,230,932	(22,549)		7,501		—		—		(15,048)
Net Income	—	—	—		—	—		—		38,328		—		38,328
Amazon Warrants	189,652	—	—		—	—		1,400		—		—		1,400
Stock-based Compensation	—	—	—		—	—		2,678		—		—		2,678
Other Comprehensive Income	—	—	—		—	—		—		—		389		389
March 31, 2023	2,591,920	58,364,752	$	584	2,123,747	$	(40,162)	$	500,627	$	60,376	$	(418)	$	521,007
Stock Issued for Stock-Based Awards	—	187,975	2		—	—		613		—		—		615
Common Stock Repurchases	—	—	—		416,751	(7,511)		—		—		—		(7,511)
Net Income	—	—	—		—	—		—		20,618		—		20,618
Amazon Warrants	252,869	—	—		—	—		1,867		—		—		1,867
Stock-based Compensation	—	—	—		—	—		4,415		—		—		4,415
Other Comprehensive Loss	—	—	—		—	—		—		—		(246)		(246)
June 30, 2023	2,844,789	58,552,727	$	586	2,540,498	$	(47,673)	$	507,522	$	80,994	$	(664)	$	540,765
Stock Issued for Stock-Based Awards	—	262,412	2		—	—		1,414		—		—		1,416
Common Stock Repurchases	—	—	—		2,140,790	(33,008)		—		—		—		(33,008)
Net Income	—	—	—		—	—		—		7,591		—		7,591
Amazon Warrants	189,652	—	—		—	—		1,400		—		—		1,400
Stock-based Compensation	—	—	—		—	—		1,039		—		—		1,039
Other Comprehensive Income	—	—	—		—	—		—		—		158		158
September 30, 2023	3,034,441	58,815,139	$	588	4,681,288	$	(80,681)	$	511,375	$	88,585	$	(506)	$	519,361

Nine Months Ended September 30, 2021
Common Stock Loans to
Stockholders Additional
Paid-in Capital Retained
Earnings (Deficit) Total
Shares Amount
December 31, 2020 46,839,659 $ 468 $ (3,500) $ 248,525 $ 38,324 $ 283,817
Shares Surrendered by Stockholders (140,737) (1) 3,500 (3,499) — —
Initial Public Offering, net 10,454,545 105 — 224,552 — 224,657
Net Income — — — — 16,778 16,778
Income Tax Receivable Agreement — — — — (115,200) (115,200)
Amazon Warrants — — — 1,400 — 1,400
Stock-based Compensation — — — 2,870 — 2,870
March 31, 2021 57,153,467 $ 572 $ — $ 473,848 $ (60,098) $ 414,322
Initial Public Offering Expense Adjustment — — — 349 — 349
Exercise of Stock Options 5,000 — — 27 — 27
Net Income — — — — 52,177 52,177
Amazon Warrants — — — 1,400 — 1,400
Stock-based Compensation — — — 744 — 744
June 30, 2021 57,158,467 $ 572 $ — $ 476,368 $ (7,921) $ 469,019
Exercise of Stock Options 393,274 4 — 2,376 — 2,380
Net Income — — — — 13,379 13,379
Amazon Warrants — — — 1,400 — 1,400
Stock-based Compensation — — — 964 — 964
September 30, 2021 57,551,741 $ 576 $ — $ 481,108 $ 5,458 $ 487,142


		Nine Months Ended September 30, 2022																				Nine Months Ended September 30, 2022
		Common Stock			Treasury Stock			Additional Paid-in Capital				Retained Earnings		Accumulated Other Comprehensive Loss				Total				Warrants				Common Stock						Treasury Stock						Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive (Loss)				Total
		Shares	Amount		Shares	Amount											Shares						Amount					Shares			Amount
December 31, 2021	December 31, 2021	57,872,452	$	579	—	$	—			$	485,638					$	4,372			$	—			$	490,589		December 31, 2021	1,643,660			57,872,452		$	579			—			$	—			$	485,638			$	4,372			$	—	$	490,589
Stock Option Exercises		91,868	1		—	—		522				—		—				523
Stock Issued for Stock-Based Awards																					Stock Issued for Stock-Based Awards	—				91,868			1			—			—			522				—				—				523
Net Income	Net Income	—	—		—	—		—				3,637		—				3,637			Net Income	—				—			—			—			—			—				3,637				—				3,637
Amazon Warrants	Amazon Warrants	—	—		—	—		1,400				—		—				1,400			Amazon Warrants	189,652				—			—			—			—			1,400				—				—				1,400
Stock-based Compensation	Stock-based Compensation	—	—		—	—		920				—		—				920			Stock-based Compensation	—				—			—			—			—			920				—				—				920
March 31, 2022	March 31, 2022	57,964,320	$	580	—	$	—	$	488,480			$	8,009	$	—			$	497,069		March 31, 2022	1,833,312				57,964,320			$	580		—			$	—		$	488,480			$	8,009			$	—			$	497,069
Stock Issued for Stock-Based Awards	Stock Issued for Stock-Based Awards	181,404	1		—	—		1,037				—		—				1,038			Stock Issued for Stock-Based Awards	—				181,404			1			—			—			1,037				—				—				1,038
Net Stock Settlement of Stock-Based Awards	Net Stock Settlement of Stock-Based Awards	—	—		1,823	(52)		—				—		—				(52)			Net Stock Settlement of Stock-Based Awards	—				—			—			1,823			(52)			—				—				—				(52)
Net Loss	Net Loss	—	—		—	—		—				(3,922)		—				(3,922)			Net Loss	—				—			—			—			—			—				(3,922)				—				(3,922)
Amazon Warrants	Amazon Warrants	—	—		—	—		1,400				—		—				1,400			Amazon Warrants	189,652				—			—			—			—			1,400				—				—				1,400
Stock-based Compensation	Stock-based Compensation	—	—		—	—		575				—		—				575			Stock-based Compensation	—				—			—			—			—			575				—				—				575
Other Comprehensive Loss	Other Comprehensive Loss	—	—		—	—		—				—		(220)				(220)			Other Comprehensive Loss	—				—			—			—			—			—				—				(220)				(220)
June 30, 2022	June 30, 2022	58,145,724	$	581	1,823	$	(52)	$	491,492			$	4,087	$	(220)			$	495,888		June 30, 2022	2,022,964				58,145,724			$	581		1,823			$	(52)		$	491,492			$	4,087			$	(220)			$	495,888
Stock Issued for Stock-Based Awards	Stock Issued for Stock-Based Awards	22,773	1		—	—		114				—		—				115			Stock Issued for Stock-Based Awards	—				22,773			1			—			—			114				—				—				115
Net Income	Net Income	—	—		—	—		—				10,677		—				10,677			Net Income	—				—			—			—			—			—				10,677				—				10,677
Amazon Warrants	Amazon Warrants	—	—		—	—		1,400				—		—				1,400			Amazon Warrants	189,652				—			—			—			—			1,400				—				—				1,400
Stock-based Compensation	Stock-based Compensation	—	—		—	—		487				—		—				487			Stock-based Compensation	—				—			—			—			—			487				—				—				487
Other Comprehensive Loss	Other Comprehensive Loss	—	—		—	—		—				—		(562)				(562)			Other Comprehensive Loss	—				—			—			—			—			—				—				(562)				(562)
September 30, 2022	September 30, 2022	58,168,497	$	582	1,823	$	(52)	$	493,493			$	14,764	$	(782)			$	508,005		September 30, 2022	2,212,616				58,168,497			$	582		1,823			$	(52)		$	493,493			$	14,764			$	(782)			$	508,005

See accompanying Notes to Condensed Consolidated Financial Statements

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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
Net Income	Net Income	$	10,392	$	82,334	Net Income	$	66,536	$	10,392
Adjustments to reconcile Net Income to Cash from Operating Activities:	Adjustments to reconcile Net Income to Cash from Operating Activities:					Adjustments to reconcile Net Income to Cash from Operating Activities:
Depreciation and Amortization	Depreciation and Amortization	49,364		41,532		Depreciation and Amortization	64,577		49,364
Tax Receivable Agreement Adjustment		5,000		(19,800)
Operating Lease Right-of-use Assets		(199)		12,920
Non-Cash (Gain) Loss on Asset Transactions, net		(318)		2
Unrealized (Gain) on Fuel Derivatives		—		(3,527)
Amortization of Over-market Liabilities		(2,453)		(4,159)
Deferred Income Taxes	Deferred Income Taxes	3,183		18,340		Deferred Income Taxes	18,080		3,183
Amazon Warrants Vested		4,200		4,200
Stock-based Compensation Expense		1,981		4,577
Amortization of Debt Issuance Costs and Debt Securities		467		963
Loss on Extinguishment of Debt		1,557		1,224

Other, net						Other, net	14,433		10,235
Changes in Operating Assets and Liabilities:	Changes in Operating Assets and Liabilities:					Changes in Operating Assets and Liabilities:
Accounts Receivable	Accounts Receivable	(88)		34		Accounts Receivable	(7,083)		(88)
Inventory	Inventory	(1,402)		(456)		Inventory	(1,478)		(1,402)
Prepaid Expenses	Prepaid Expenses	(3,188)		(3,153)		Prepaid Expenses	(1,929)		(3,188)
Lessor Maintenance Deposits	Lessor Maintenance Deposits	(10,256)		(5,464)		Lessor Maintenance Deposits	(8,689)		(10,256)
Aircraft Deposits	Aircraft Deposits	(2,569)		1,162		Aircraft Deposits	(482)		(2,569)
Other Assets	Other Assets	(5,478)		2,297		Other Assets	70		(5,478)
Accounts Payable	Accounts Payable	8,674		2,257		Accounts Payable	(5,855)		8,674
Accrued Transportation Taxes	Accrued Transportation Taxes	(1,736)		2,999		Accrued Transportation Taxes	(4,872)		(1,736)
Air Traffic Liabilities	Air Traffic Liabilities	14,269		3,972		Air Traffic Liabilities	(27,542)		14,269
Loyalty Program Liabilities	Loyalty Program Liabilities	(3,401)		(1,759)		Loyalty Program Liabilities	(1,590)		(3,401)
Operating Lease Obligations	Operating Lease Obligations	(61)		(32,651)		Operating Lease Obligations	(3,858)		(61)
Other Liabilities	Other Liabilities	3,733		8,514		Other Liabilities	2,333		3,733
Net Cash Provided by Operating Activities	Net Cash Provided by Operating Activities	71,671		116,358		Net Cash Provided by Operating Activities	102,651		71,671

Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Purchases of Property & Equipment	Purchases of Property & Equipment	(177,658)		(118,016)		Purchases of Property & Equipment	(210,641)		(177,658)
Proceeds from the Sale of Property & Equipment		777		—
Proceeds from Insurance Settlements		8,865		—
Purchases of Investments	Purchases of Investments	(130,529)		(1,436)		Purchases of Investments	(82,574)		(130,529)
Proceeds from the Sale of Investments		935		1,062
Proceeds from the Maturities of Investments						Proceeds from the Maturities of Investments	110,850		—
Other, net						Other, net	4,087		10,577
Net Cash Used in Investing Activities	Net Cash Used in Investing Activities	(297,610)		(118,390)		Net Cash Used in Investing Activities	(178,278)		(297,610)

Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Cash Received from Stock Offering		—		235,894
Costs of Stock Offering		—		(8,706)
Proceeds from Stock Option and Warrant Exercises		1,656		2,407
Taxes Paid for Net Stock Settlement of Stock-Based Awards		(31)		—
Common Stock Repurchases						Common Stock Repurchases	(55,051)		—
Proceeds from Borrowings	Proceeds from Borrowings	188,277		80,500		Proceeds from Borrowings	119,200		188,277
Repayment of Finance Lease Obligations	Repayment of Finance Lease Obligations	(37,842)		(9,113)		Repayment of Finance Lease Obligations	(16,390)		(37,842)
Repayment of Borrowings	Repayment of Borrowings	(95,305)		(75,728)		Repayment of Borrowings	(35,475)		(95,305)
Debt Issuance Costs		(2,526)		(2,560)
Other, net						Other, net	(1,665)		(901)
Net Cash Provided by Financing Activities	Net Cash Provided by Financing Activities	54,229		222,694		Net Cash Provided by Financing Activities	10,619		54,229

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash		(171,710)		220,662
Net Decrease in Cash, Cash Equivalents and Restricted Cash						Net Decrease in Cash, Cash Equivalents and Restricted Cash	(65,008)		(171,710)

Cash, Cash Equivalents and Restricted Cash--Beginning of the Period	Cash, Cash Equivalents and Restricted Cash--Beginning of the Period	317,785		70,363		Cash, Cash Equivalents and Restricted Cash--Beginning of the Period	102,928		317,785

Cash, Cash Equivalents and Restricted Cash--End of the Period	Cash, Cash Equivalents and Restricted Cash--End of the Period	$	146,075	$	291,025	Cash, Cash Equivalents and Restricted Cash--End of the Period	$	37,920	$	146,075

Non-cash transactions:						Non-cash transactions:
Aircraft and Flight Equipment Acquired through Finance Leases						Aircraft and Flight Equipment Acquired through Finance Leases	$	—	$	40,480
Changes to Finance Lease Assets due to Lease Modifications						Changes to Finance Lease Assets due to Lease Modifications	$	26,427	$	46,311
Aircraft and Flight Equipment Acquired From Exercise of Finance Lease Purchase Option, net of Accumulated Depreciation						Aircraft and Flight Equipment Acquired From Exercise of Finance Lease Purchase Option, net of Accumulated Depreciation	$	2,386	$	28,012

The following provides a reconciliation of Cash, Cash Equivalents and Restricted Cash to the amounts reported on the Condensed Consolidated Balance Sheets:						The following provides a reconciliation of Cash, Cash Equivalents and Restricted Cash to the amounts reported on the Condensed Consolidated Balance Sheets:
							September 30, 2023		September 30, 2022
Cash and Cash Equivalents						Cash and Cash Equivalents	$	26,967	$	131,912
Restricted Cash						Restricted Cash	10,953		14,163
Total Cash, Cash Equivalents and Restricted Cash						Total Cash, Cash Equivalents and Restricted Cash	$	37,920	$	146,075

~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Dollars in thousands)~~

~~(Unaudited)~~

Nine Months Ended September 30,
2022 2021
Non-cash transactions:
Lease Deposits Applied Against the Purchase of Aircraft $ 1,085 $ 3,296
Aircraft and Flight Equipment Acquired through Finance Leases 40,480 71,856
Finance Lease Asset Modifications 46,311 —
Aircraft Acquired From Exercise of Finance Lease Purchase Option, net of Accumulated Depreciation 28,012 —
Derecognition of Operating Lease Right-of-Use Assets, net 8,674 41,135
Derecognition of Operating Lease Obligations 8,674 44,726
The following provides a reconciliation of Cash, Cash Equivalents and Restricted Cash to the amounts reported on the Condensed Consolidated Balance Sheets:
September 30, 2022 September 30, 2021
Cash and Cash Equivalents $ 131,912 $ 275,332
Restricted Cash 14,163 15,693
Total Cash, Cash Equivalents and Restricted Cash $ 146,075 $ 291,025
See accompanying Notes to Condensed Consolidated Financial Statements

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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

1. ~~COMPANY BACKGROUND~~BASIS OF PRESENTATION

Sun Country Airlines Holdings, Inc. (together with its consolidated subsidiaries, "Sun Country" or the "Company") is the parent company of Sun Country, Inc., which is a certificated air carrier providing scheduled passenger service, air cargo service, charter air transportation and related services. Services are provided to the general public, cargo customers, military branches, wholesale tour operators, schools, companies and other individual entities for air transportation to various U.S. and international destinations. Except as otherwise stated, the financial information, accounting policies, and activities of Sun Country Airlines Holdings, Inc. are referred to as those of the "Company" or "Sun Country".

~~Equity Transactions~~

On April 11, 2018 (the "Acquisition Date"), certain investment funds (the “Apollo Funds”) managed by affiliates of Apollo Global Management, Inc. (“Apollo”) acquired Sun Country, Inc. For more information on the Company’s equity transactions, see ~~Note 1~~ of Notes to the Consolidated Financial Statements included in Part II, Item 8 “Financial Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the U.S. Securities and Exchange Commission (“2021 10-K”).

~~Initial Public Offering of Common Stock~~

On March 16, 2021, the Company priced its initial public offering of 9,090,909 shares of common stock to the public at $24.00 per share. The stock began trading on the NASDAQ on March 17, 2021 under the symbol "SNCY". The underwriters had an option to purchase an additional 1,363,636 shares from the Company at the public offering price, which they exercised. In total, all 10,454,545 shares were issued on March 19, 2021 and the net proceeds to the Company were $225,329 after deducting underwriting discounts and commissions, and other offering expenses.

Concurrently with the closing of the initial public offering, SCA Horus Holdings, LLC, an affiliate of investment funds managed by affiliates of Apollo (the “Apollo Stockholder”), also completed a private placement in which the Apollo Stockholder sold 2,216,312 and 2,216,308 shares of common stock to PAR Investment Partners, L.P. and certain funds or accounts managed by an investment adviser subsidiary of Blackrock, Inc., respectively. Each of the two sales was based on an aggregate purchase price of $50,000 and a price per share equal to 94% of the initial public offering price of $24.00 per share.

~~Secondary Offerings~~

~~During May 2021 and October 2021, the Apollo Stockholder and other selling stockholders sold 7,250,000 and 8,500,000 shares of the Company's common stock at the public offering prices~~of$34.50 and $32.50, respectively. Under both transactions, the underwriters were given options to purchase additional shares of the Company's common stock at the public offering price. During the May 2021 and October 2021 offerings, the underwriters elected to purchase 1,087,500 and 435,291 of the option shares, respectively. The Company incurred offering expenses of $1,763 in conjunction with the two secondary offerings a~~nd did not receive any of the proceeds from these offerings.~~

~~For more information on the 2021 secondary offerings, see~~ ~~Note 1~~ ~~of Notes to the Consolidated Financial Statements included in Part II, Item 8 “Financial Statements” in the 2021 10-K.~~

~~-9-~~

~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~Amazon Agreement~~

On December 13, 2019, the Company signed a six-year contract (with two, two-year extension options, for a maximum term of 10 years) with Amazon.com Services, Inc. (together with its affiliates, “Amazon”) to provide cargo services under an Air Transportation Services Agreement (the “ATSA”).

In connection with the ATSA, the Company issued warrants to Amazon to purchase an aggregate of up to 9,482,606 shares of common stock at an exercise price of approximately $15.17 per share. There were 632,183 warrants that vested upon execution of the ATSA and 63,217 warrants will vest for each milestone of $8,000 in qualifying payments made by Amazon to the Company. During the nine months ended September 30, 2022 and September 30, 2021, 568,956 warrants vested in each respective period. As of September 30, 2022 and September 30, 2021, the cumulative vested warrants held by Amazon were 2,212,615 and 1,454,008, respectively. The exercise period of these warrants is through the eighth anniversary of the issue date.

~~2. BASIS OF PRESENTATION~~

The Company has prepared the unaudited Condensed Consolidated Financial Statements according to U.S. Generally Accepted Accounting Principles (“GAAP”) and has included the accounts of Sun Country Airlines Holdings, Inc. and its subsidiaries. ~~The~~Certain information and footnote disclosures normally included in the audited annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for Form 10-Q. Therefore, the accompanying ~~unaudited~~ Condensed Consolidated Financial Statements of Sun Country Airlines Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements contained in the ~~2021 10-K.~~Company's Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC ("2022 10-K"). Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the unaudited Condensed Consolidated Financial Statements for the interim periods presented. The Company reclassified certain prior period amounts to conform to the current period presentation. All material intercompany balances and transactions have been eliminated in consolidation.

The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. ~~Significant areas~~

The Company completed its public float calculation for SEC reporting purposes as of ~~judgment relate to passenger revenue recognition, maintenance under the built-in overhaul method, equity-based compensation, tax receivable agreement, lease accounting, impairment~~June 30, 2023, as required. The Company will be a large accelerated filer as of goodwill, impairment of long-lived and intangible assets, air traffic liabilities, the loyalty program, as well as the valuation of Amazon warrants. During the nine months ended September 30, 2022, there were no significant changes to the Company’s critical accounting policies.December 31, 2023.

Due to impacts from ~~the global coronavirus (“COVID-19”) pandemic,~~ seasonal variations in the demand for air travel, the volatility of aircraft fuel prices, uncertainties in pilot staffing, the impact of macroeconomic conditions including inflationary pressures, and other factors, operating results for the nine months ended September 30, ~~2022~~2023 are not necessarily indicative of operating results for future quarters or for the year ending December 31, 2022. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers, unemployment levels, corporate travel budgets, extreme or severe weather and natural disasters, disease outbreaks, fears of terrorism or war, and other factors beyond the Company's control.

~~Revision of Previously Issued Consolidated Financial Statements~~

During the second quarter of 2022, the Company identified an immaterial misstatement in its Condensed Consolidated Financial Statements for the quarter and year-to-date interim periods in the year ended December 31, 2021 (the "previously issued financial statements"). The error related to the improper

~~-10-~~

~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~application of Accounting Standards Codification (ASC) Topic 842,~~ ~~Leases~~ regarding the treatment of the incremental difference between the net purchase price of the leased aircraft and the net operating lease recorded on the balance sheet immediately prior to the transaction. This difference should have been capitalized as part of the acquisition costs incurred to purchase the aircraft off the operating lease. The Company incorrectly expensed this amount as incurred within Special Items, net on the Condensed Consolidated Statements of Operations. The error resulted in an understatement of the benefit within Special Items, net, partially offset by incremental Depreciation and Amortization Expense for the three and nine months ended September 30, 2021, and an understatement of Aircraft and Flight Equipment.

~~The Company assessed the materiality of the errors on the prior period financial statements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 99,~~ ~~Materiality, codified in ASC 250,~~ ~~Presentation of Financial Statements. Management concluded it was immaterial to the Company's previously issued annual or interim financial statements.~~

The Company has revised the previously issued financial statements as presented in these Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. In addition, the immaterial error has and will continue to be corrected in the comparative amounts presented in the Company’s subsequent quarterly and annual filings.

~~The impact of the revision on the Company's previously issued Consolidated Balance Sheets as of December 31, 2021 are as follows:~~

December 31, 2021
As Previously Issued Correction As Revised
Assets
Aircraft and Flight Equipment $ 440,356 $ 6,963 $ 447,319
Total Property & Equipment 688,624 6,963 695,587
Accumulated Depreciation & Amortization (115,013) (2,056) (117,069)
Total Property & Equipment, net 573,611 4,907 578,518
Deferred Tax Asset 18,737 (1,129) 17,608
Total Other Assets 427,590 (1,129) 426,461
Total Assets 1,376,644 3,778 1,380,422
Stockholder's Equity
Retained Earnings 594 3,778 4,372
Total Stockholders' Equity 486,811 3,778 490,589
Total Liabilities and Stockholders' Equity 1,376,644 3,778 1,380,422

~~-11-~~

~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~The impact of the revision on the Company's previously issued Condensed Consolidated Statements of Operations for the three and nine-month periods ended September 30, 2021 are as follows:~~

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
As Previously Issued Correction As Revised As Previously Issued Correction As Revised
Operating Expenses
Depreciation and Amortization $ 14,029 $ 681 $ 14,710 $ 40,103 $ 1,429 $ 41,532
Special Items, net (65) — (65) (65,456) (6,963) (72,419)
Total Operating Expenses 151,661 681 152,342 354,290 (5,534) 348,756
Operating Income 22,002 (681) 21,321 96,174 5,534 101,708
Income Before Income Tax 16,200 (681) 15,519 95,244 5,534 100,778
Income Tax Expense 2,297 (157) 2,140 17,172 1,272 18,444
Net Income 13,903 (524) 13,379 78,072 4,262 82,334
Basic Income per share $ 0.24 $ (0.01) $ 0.23 $ 1.44 $ 0.07 $ 1.51
Diluted Income per share $ 0.23 $ (0.01) $ 0.22 $ 1.33 $ 0.07 $ 1.40

~~The revision also impacted the Company's previously issued Condensed Consolidated Statements of Changes in Stockholders Equity as follows:~~

For the Three Months Ended June 30, 2021 For the Three Months Ended March 31, 2021
As Previously Issued Correction As Revised As Previously Issued Correction As Revised
Net Income $ 51,753 $ 424 $ 52,177 $ 12,416 $ 4,362 $ 16,778

As of March 31, 2022 As of September 30, 2021
As Previously Issued Correction As Revised As Previously Issued Correction As Revised
Retained Earnings $ 4,231 $ 3,778 $ 8,009 $ 1,196 $ 4,262 $ 5,458
Total Stockholders' Equity 493,291 3,778 497,069 482,880 4,262 487,142
As of June 30, 2021 As of March 31, 2021
As Previously Issued Correction As Revised As Previously Issued Correction As Revised
Retained Earnings (Deficit) $ (12,707) $ 4,786 $ (7,921) $ (64,460) $ 4,362 $ (60,098)
Total Stockholders' Equity 464,233 4,786 469,019 409,960 4,362 414,322

The Company's Condensed Consolidated Statement of Changes Stockholders' Equity as of December 31, 2021 has been corrected to reflect the changes to the impacted Stockholders' Equity accounts as described above.

~~-12-~~

~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~The impact of the revision on the Company's previously issued Condensed Consolidated Statements of Cash Flow for the nine months ended September 30, 2021 is as follows:~~

Nine Months Ended September 30, 2021
As Previously Issued Correction As Revised
Operating Activities
Net Income $ 78,072 $ 4,262 $ 82,334
Depreciation and Amortization 40,103 1,429 41,532
Non-Cash (Gain) Loss on Asset Transaction, Net (12,666) 12,668 2
Deferred Income Taxes 17,068 1,272 18,340
Operating Lease Obligations (19,983) (12,668) (32,651)
Net Cash Provided by Operating Activities 109,395 6,963 116,358
Investing Activities
Purchases of Property & Equipment (111,053) (6,963) (118,016)
Net Cash Used in Investing Activities (111,427) (6,963) (118,390)

~~The revision had no impact on the Company's Net Cash Provided by Financing Activities for the nine months ended September 30, 2021.~~

~~Investments~~

Investments consist of debt securities and Certificates of Deposit. The Certificates of Deposit are recorded at cost, plus accrued interest. These certificates serve as collateral for letters of credit required by various airports and other vendors. All of the certificates have original maturities greater than 90 days.

During the nine months ended September 30, 2022, the Company purchased debt securities with original maturities of three months or greater. The investments are classified as Current Assets on the Condensed Consolidated Balance Sheets because the securities are highly liquid and are available to be quickly converted into known amounts of cash to fund current operations. Most of the Company's Available-for-Sale securities will mature within one year. The Company limits its exposure to any one issuer or market sector, and largely limits its investments to investment grade quality securities.

The Company's investment securities are classified as Available-for-Sale and are reported at fair value on the Company's Condensed Consolidated Balance Sheets. Unrealized gains and losses on the Company's Available-for-Sale securities are excluded from net earnings and are reported as a component of Accumulated Other Comprehensive Income, net of income tax effects, within Stockholders' Equity on the Condensed Consolidated Balance Sheets until realized. Realized gains and losses are recorded using the specific identification method and reflected in Other, net within Non-operating Income (Expense) on the Company's Condensed Consolidated Statement of Operations. Premiums and discounts recorded on Available-for-Sale debt securities are accounted for in Interest Income within Non-operating Income (Expense) on the Company's Condensed Consolidated Statement of Operations.

At each reporting period, the Company assesses its Available-for-Sale investments in an unrealized loss position to determine whether an impairment exists. The Company will record an impairment if management intends to sell an impaired security, will likely be required to sell a security before recovery of the entire amortized cost, or the same level of collectible cash flows from the security is no longer expected. The

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~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~entire impairment will be included in Other, net within Non-operating Income (Expense) on the Company's Condensed Consolidated Statement of Operations.~~

~~Recently Adopted Accounting Standards~~

~~In May 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2021-04, Earnings Per Share (Topic 260),~~ Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. On January 1, 2022, the Company adopted ASU 2021-04 on a prospective basis, as required by the Standard. There was no financial statement impact upon adoption.

~~In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832),~~ ~~Disclosures by Business Entities about Government Assistance~~. The new standard requires additional disclosures regarding government grants and money contributions. The standard requires disclosures on the nature of the transactions and related accounting policies, including significant terms and conditions, as well as the amounts and specific financial statement line items affected by the transactions. The Company adopted this standard as of January 1, 2022. See ~~Note 3~~ ~~for additional information on COVID-19 related government assistance the Company has received.~~2023.

~~3. IMPACT OF THE COVID-19 PANDEMIC~~

The COVID-19 pandemic resulted in a dramatic decline in passenger demand across the U.S. airline industry. Sun Country experienced a significant decrease in demand related to the COVID-19 pandemic, which caused a material decline in 2021 revenues as compared to pre-pandemic levels, and negatively impacted the Company’s financial condition and operating results.

During the third quarter of 2022, Sun Country continued to see recovery in demand from the COVID-19 pandemic relative to demand in 2021, which may impact the comparability of results to prior periods. However, the ongoing impact of the COVID-19 pandemic on overall demand for air travel remains uncertain and cannot be predicted at this time.

~~Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)~~

During 2021 and 2020, the Company received certain funds from the CARES Act. The cash awarded to the Company through the CARES Act was accounted for as grants, debt, and tax credits based on the terms and nature of the funds awarded.

During the nine months ended September 30, 2021, the Company received and recognized as income within Special Items, net $71,587 from the U.S. Treasury under the Payroll Support Program Extension (“PSP2”) and the American Rescue Plan Act of 2021 ("PSP3"). The CARES Act provides an employee retention credit (“CARES Employee Retention Credit”), which is a refundable tax credit against certain employment taxes. During the nine months ended September 30, 2021, the Company recorded $848 related to the CARES Employee Retention Credit within Special Items, net. Under the CARES Act Loan Program, the Company received a $45,000 loan (the “CARES Act Loan”) from the U.S. Treasury, which was repaid in full on March 24, 2021 using proceeds from the IPO. For more information on funds awarded through the CARES Act, see ~~Note 3~~ ~~of Notes to the Consolidated Financial Statements included in Part II, Item 8 “Financial Statements” in the 2021 10-K.~~

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

In accordance with any grants and/or loans received under the CARES Act, the Company is required to comply with the relevant provisions of the CARES Act and the related implementing agreements which, among other things, include the following: the requirement to use the Payroll Support Program payments exclusively for the continuation of payment of crewmember and employee wages, salaries and benefits; the requirement that certain levels of commercial air service be maintained through March 1, 2022, if ordered by the Department of Transportation ("DOT"); the prohibitions on share repurchases of listed securities and the payment of common stock (or equivalent) dividends through September 30, 2022; and restrictions on the payment of certain executive compensation through April 1, 2023. As of September 30, 2022, the Company was in compliance with these provisions.

4.2. REVENUE

Sun Country is a certificated air carrier generating Operating Revenues from Scheduled ~~service,~~Service, Charter service, Ancillary, Cargo and Other revenue. Scheduled ~~service~~Service revenue mainly consists of base fares. Charter service revenue is primarily generated through service provided to the U.S. Department of Defense, collegiate and professional sports teams, and casinos. Ancillary revenues consist of revenue earned from air travel-related services, such as: baggage fees, seat selection fees, ~~passenger interface fee~~other fees and on-board sales. Cargo consists of revenue earned from flying cargo aircraft for Amazon.com Services, Inc. (together with its affiliates, “Amazon”) under the ~~ATSA.~~Air Transportation Services Agreement (the “ATSA”). Other revenue consists primarily of revenue from services in connection with Sun Country Vacations ~~products.~~products and rental revenue related to certain transactions where the Company acts as a lessor.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

The significant categories comprising Operating Revenues are as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Scheduled Service	Scheduled Service	$	102,200	$	80,212	$	334,679	$	201,905	Scheduled Service	$	96,483	$	102,200	$	360,607	$	334,679
Charter Service	Charter Service	42,899		33,809		118,526		88,511		Charter Service	47,437		42,899		143,250		118,526
Ancillary	Ancillary	50,261		33,697		139,548		86,626		Ancillary	70,435		50,261		205,633		139,548
Passenger	Passenger	195,360		147,718		592,753		377,042		Passenger	214,355		195,360		709,490		592,753
Cargo	Cargo	23,687		24,400		65,930		68,084		Cargo	26,059		23,687		74,437		65,930
Other	Other	2,653		1,545		8,607		5,338		Other	8,462		2,653		20,150		8,607
Total Operating Revenue		$	221,700	$	173,663	$	667,290	$	450,464
Total Operating Revenues										Total Operating Revenues	$	248,876	$	221,700	$	804,077	$	667,290

The Company attributes and measures its Operating ~~Revenue~~Revenues by geographic region as defined by the ~~DOT~~Department of Transportation ("DOT") for airline reporting based upon the origin of each passenger and cargo flight segment.

The Company’s operations are highly concentrated in the U.S., but include service to many international locations, primarily based on scheduled service to Latin America during the winter season and on military charter services.

Total Operating Revenues by geographic region are as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Domestic $ 214,904 $ 167,660 $ 634,963 $ 429,508
Latin America 6,756 5,447 32,182 19,870
Other 40 556 145 1,086
Total Operating Revenue $ 221,700 $ 173,663 $ 667,290 $ 450,464

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~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Domestic	$	242,504	$	214,904	$	767,509	$	634,963
Latin America	6,372		6,756		36,078		32,182
Other	—		40		490		145
Total Operating Revenues	$	248,876	$	221,700	$	804,077	$	667,290

Contract Balances

The Company’s contract assets primarily relate to costs incurred to get Amazon cargo aircraft ready for service. The balances are included in Other Current Assets and Other Assets on the Condensed Consolidated Balance Sheets. ~~These deferred up-front costs are being amortized into Maintenance Expense on a pro-rata basis over the initial six years of the ATSA.~~The amount expensed during the three and nine months ended September 30, 2022 was $151 and $469, respectively. The expense for both the three and nine months ended September 30, 2021 was $208 and $515, respectively.

The Company’s ~~significant~~ contract liabilities are comprised of: 1) ticket sales for transportation that has not yet been provided (reported as Air Traffic Liabilities on the Condensed Consolidated Balance Sheets), 2) outstanding loyalty points that may be redeemed for future travel and other non-air travel awards (reported as Loyalty Program Liabilities on the Condensed Consolidated Balance Sheets) and, 3) the Amazon Deferred Up-front Payment received (reported within Other Current Liabilities and Other Long-term Liabilities on the Condensed Consolidated Balance Sheets).

~~As part~~

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Table of ~~the ATSA executed~~Contents

SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in December 2019, Amazon paid the Company $10,300 toward start-up costs. Upon signing the ATSA, Amazon received 632,183 fully vested warrants to purchase the Company’s common stock, with a fair value of $4,667. This fair value was assigned to a portion of the $10,300 cash received from Amazonthousands, except per share and the remaining $5,633 was recorded in Other Liabilities on the Company’s Condensed Consolidated Balance Sheets. This deferred up-front payment is being amortized into revenue on a pro-rata basis over the initial six years of the ATSA. For the three and nine months ended September 30, 2022, $225 and $699 was amortized into Cargo revenue, respectively. For the three and nine months ended September 30, 2021, $310 and $779 was amortized into Cargo revenue, respectively.share amounts)

(Unaudited)

Contract Assets and Liabilities are as follows:


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Contract Assets	Contract Assets					Contract Assets
Costs to fulfill contract with Amazon	Costs to fulfill contract with Amazon	$	2,350	$	2,819	Costs to fulfill contract with Amazon	$	1,669	$	2,195
Total Contract Assets						Total Contract Assets	$	1,669	$	2,195

Contract Liabilities						Contract Liabilities
Air Traffic Liabilities	Air Traffic Liabilities	132,830		118,562		Air Traffic Liabilities	$	130,453	$	157,995
Loyalty Program Liabilities	Loyalty Program Liabilities	16,317		19,718		Loyalty Program Liabilities	13,847		15,437
Amazon Deferred Up-front Payment	Amazon Deferred Up-front Payment	3,501		4,200		Amazon Deferred Up-front Payment	2,486		3,271
Total Contract Liabilities	Total Contract Liabilities	$	152,648	$	142,480	Total Contract Liabilities	$	146,786	$	176,703

The balance in the Air Traffic Liabilities fluctuates with seasonal travel patterns. Most tickets can be purchased no more than twelve months in advance, therefore any revenue associated with tickets sold for future travel will be recognized within that timeframe. For the nine months ended September 30, ~~2022, $109,852~~2023, $152,292 of revenue was recognized in Passenger revenue that was included in the Air Traffic Liabilities as of December 31, ~~2021.~~2022.

Loyalty Program

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~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

loyalty points issued to the Company’s Visa card holders is established by deferring a portion of payments received from the Company’s co-branded agreement. The balance of the Loyalty Program Liabilities fluctuates based on seasonal patterns, which impacts the volume of loyalty points awarded through travel or issued to co-branded credit card and other partners (deferral of revenue) and loyalty points redeemed (recognition of revenue). Due to these reasons, the timing of loyalty point redemptions can vary significantly.

Changes in the Loyalty Program Liabilities are as follows:


		2022		2021			2023		2022
Balance – January 1	Balance – January 1	$	19,718	$	22,069	Balance – January 1	$	15,437	$	19,718
Loyalty Points Earned	Loyalty Points Earned	5,125		3,058		Loyalty Points Earned	6,209		5,125
Loyalty Points Redeemed (1)	Loyalty Points Redeemed (1)	(8,526)		(4,816)		Loyalty Points Redeemed (1)	(7,799)		(8,526)
Balance – September 30	Balance – September 30	$	16,317	$	20,311	Balance – September 30	$	13,847	$	16,317

______________________


(1)			Loyalty points are combined in one homogenous pool, ~~that~~which includes both air and non-air travel awards, and are not separately identifiable. As such, the revenue recognized is comprised of points that were part of the Loyalty Program Liabilities balance at the beginning of the period, as well as points that were earned during the period.

~~5. EARNINGS PER SHARE~~

~~The following table shows the computation of basic and diluted earnings per share:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Numerator:
  Net Income $ 10,677 $ 13,379 $ 10,392 $ 82,334
Denominator:
  Weighted Average Common Shares Outstanding - Basic 58,146,606 57,355,104 58,039,201 54,368,231
  Dilutive effect of Stock Options, RSUs and Warrants (1)
2,646,910 4,357,274 3,333,534 4,331,760
  Weighted Average Common Shares Outstanding - Diluted 60,793,516 61,712,378 61,372,735 58,699,991
Basic earnings per share $ 0.18 $ 0.23 $ 0.18 $ 1.51
Diluted earnings per share $ 0.18 $ 0.22 $ 0.17 $ 1.40

~~______________________~~


~~(1)~~			There were 3,221,617 and 3,626,851 performance-based stock options outstanding at September 30, 2022 and 2021, respectively. As of September 30, 2022 and 2021, the Company expected approximately 63% and 75% of these options to vest, respectively. As of September 30, 2022, 32.5% of the eligible outstanding performance-based stock options vested and were considered exercisable. These amounts are included in the measure above to the extent they are dilutive.

~~The Company's anti-dilutive shares for the periods presented were immaterial to the Condensed Consolidated Financial Statements.~~

Warrants held by Amazon are included in the calculation of dilutive weighted average shares outstanding as of the date the warrants vest. The unvested warrants held by Amazon have not been included in dilutive shares as their performance condition has not been satisfied.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

6.3. EARNINGS PER SHARE

The following table shows the computation of basic and diluted earnings per share:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net Income	$	7,591	$	10,677	$	66,536	$	10,392

Denominator:
Weighted Average Common Shares Outstanding - Basic	55,435,386		58,146,606		56,051,173		58,039,201
Dilutive effect of Stock Options, RSUs and Warrants (1)	3,160,260		2,646,910		3,230,646		3,333,534
Weighted Average Common Shares Outstanding - Diluted	58,595,646		60,793,516		59,281,819		61,372,735

Basic earnings per share	$	0.14	$	0.18	$	1.19	$	0.18
Diluted earnings per share	$	0.13	$	0.18	$	1.12	$	0.17

______________________


(1)			There were 2,810,840 and 3,221,617 performance-based stock options outstanding at September 30, 2023 and 2022, respectively. As of September 30, 2023, 100% of the performance-based stock options have vested. As of September 30, 2022, 63% of the performance-based stock options were expected to vest.

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SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

4. AIRCRAFT

As of September 30, ~~2022,~~2023, Sun ~~Country operated a~~Country's fleet consisted of 59 Boeing 737-NG aircraft, comprised of 54 Boeing ~~737-NG aircraft, consisting of 53 Boeing~~ 737-800s and ~~one~~five Boeing ~~737-700.~~737-900ERs.

The following tables summarize the Company’s aircraft fleet activity for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively:


		December 31, 2021	Additions	Reclassifications	Removals	September 30, 2022		December 31, 2022	Additions	Reclassifications	Removals	September 30, 2023
Passenger:	Passenger:						Passenger:
Owned	Owned	21	5	4	(1)	29	Owned	29	1	—	(1)	29
Finance leases (1)	Finance leases (1)	9	2	—	—	11	Finance leases (1)	11	—	2	—	13
Operating leases	Operating leases	6	—	(4)	—	2	Operating leases	2	—	(2)	—	—
Sun Country Airlines’ Fleet	Sun Country Airlines’ Fleet	36	7	—	(1)	42	Sun Country Airlines’ Fleet	42	1	—	(1)	42
Cargo:	Cargo:						Cargo:
Aircraft Operated for Amazon	Aircraft Operated for Amazon	12	—	—	—	12	Aircraft Operated for Amazon	12	—	—	—	12
Total Aircraft Operated		48	7	—	(1)	54
Other Owned:							Other Owned:
Aircraft Held for Operating Lease							Aircraft Held for Operating Lease	—	5	—	—	5
Total Aircraft							Total Aircraft	54	6	—	(1)	59

		December 31, 2020	Additions	Reclassifications	Removals	September 30, 2021		December 31, 2021	Additions	Reclassifications	Removals	September 30, 2022
Passenger:	Passenger:						Passenger:
Owned	Owned	14	1	6	—	21	Owned	21	5	4	(1)	29
Finance leases		5	3	—	—	8
Finance leases (2)							Finance leases (2)	9	2	—	—	11
Operating leases	Operating leases	12	—	(6)	—	6	Operating leases	6	—	(4)	—	2
Sun Country Airlines’ Fleet	Sun Country Airlines’ Fleet	31	4	—	—	35	Sun Country Airlines’ Fleet	36	7	—	(1)	42
Cargo:	Cargo:						Cargo:
Aircraft Operated for Amazon	Aircraft Operated for Amazon	12	—	—	—	12	Aircraft Operated for Amazon	12	—	—	—	12
Total Aircraft Operated		43	4	—	—	47
Total Aircraft							Total Aircraft	48	7	—	(1)	54


(1)			Two aircraft operating leases were reclassified into finance ~~lease~~leases, as further described below.
(2)			Two aircraft operating leases were reclassified into finance leases and two separate aircraft finance lease purchase options were exercised, resulting in a net change of zero finance lease reclassifications.

During the nine months ended September 30, ~~2022,~~2023, the Company acquired ~~seven incremental aircraft,~~ five ~~of which~~737-900ERs that are currently on lease to an unaffiliated airline ("Aircraft Held for Operating Lease"). The five Aircraft Held for Operating Lease were financed ~~using proceeds from the issuance of Class A and Class B pass-through trust certificates (the "2022-1 EETC"), and two~~ through ~~finance lease arrangements. As of September 30, 2022, 26 of the owned aircraft were financed and three aircraft were unencumbered. For more information on the Company's financing arrangements, see~~a term loan arrangement. See Note 75 of these Condensed Consolidated Financial ~~Statements.~~

~~During~~Statements for more information on this transaction. Additionally, during the nine months ended September 30, ~~2022,~~2023, the Company ~~completed transactions that adjusted the composition of its fleet. The Company~~acquired an incremental aircraft and executed two lease amendments to purchase two aircraft at the end of ~~the~~their respective lease ~~term, which~~terms. The lease amendments modified the classification of these leases from operating leases to finance leases ~~with~~and have expiration dates in fiscal year ~~2026. The Company purchased two aircraft previously classified as finance leases, using proceeds from~~2024. During the ~~2022-1 EETC. Additionally, the Company purchased two aircraft previously classified as operating leases, both of which are now unencumbered.~~three months ended September 30, 2023, management approved a

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

plan to retire an owned aircraft. Certain parts of the aircraft were maintained for future use by the Company or held for sale. The impact of the retirement and the assets held for sale were not material to the Company's Condensed Consolidated Financial Statements. Of the 34 Owned aircraft and Aircraft Held for Operating Lease as of September 30, 2023, 31 aircraft were financed and three aircraft were unencumbered.

During the nine months ended September 30, 2022, ~~an owned~~the Company executed lease amendments to purchase two aircraft ~~was retired due to~~at the ~~aircraft sustaining damage beyond economic repair. The retirement had no impact on the Company's Condensed Consolidated Results of Operations. See~~ ~~Note 13~~ ~~for more information.~~

~~Six~~end of the lease term, which modified the lease classification from operating leases to finance leases with expiration dates in fiscal year 2026 and retired one aircraft. Further, the Company purchased two aircraft previously classified as finance leases using proceeds from the issuance of Class A and Class B pass-through trust certificates (the "2022-1 EETC") and purchased ~~during the nine months ended September 30, 2021 were financed through the Delayed Draw Term Loan Facility. See~~ ~~Note 7~~ ~~for additional information. All six~~two aircraft ~~were~~ previously ~~accounted for~~classified as operating leases. The Company also acquired ~~four~~seven incremental 737-800 aircraft, ~~one~~five of which ~~was purchased,~~were financed using proceeds from the 2022-1 EETC and ~~three~~two through a finance lease ~~arrangements.~~arrangement that is set to expire in fiscal year 2030.

Depreciation, amortization, and rent expense on aircraft are as follows:


			Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended September 30,				Nine Months Ended September 30,
Aircraft Status	Aircraft Status	Expense Type	2022		2021		2022		2021		Aircraft Status	Expense Type	2023		2022		2023		2022
Owned	Owned	Depreciation	$	10,179	$	9,284	$	29,027	$	26,514	Owned	Depreciation	$	14,395	$	10,179	$	40,709	$	29,027
Finance Leased	Finance Leased	Amortization	4,419		2,977		12,533		7,846		Finance Leased	Amortization	5,183		4,419		14,741		12,533
Operating Leased	Operating Leased	Aircraft Rent (1)	1,949		3,925		7,347		13,339		Operating Leased	Aircraft Rent (1)	22		1,949		2,281		7,347
			$	16,547	$	16,186	$	48,907	$	47,699			$	19,600	$	16,547	$	57,731	$	48,907


(1)			Aircraft Rent expense includes credits for the amortization of over-market liabilities established at the Acquisition Date.

~~Depreciation expense on owned aircraft and amortization expense on finance leased aircraft are both classified in Depreciation and Amortization on the Condensed Consolidated Statements of Operations.~~

~~Aircraft Maintenance Deposits Contra-Assets~~5. ASSET ACQUISITIONS

As of the Acquisition Date, the Company established a maintenance deposit contra-asset to offset the acquired maintenance deposits assets included in Short-term Lessor Maintenance Deposits on the Condensed Consolidated Balance Sheets. The assets represent deposits remitted by the previous owners of the Company to the lessor for maintenance events. The contra-assets represent the Company’s obligation to perform planned maintenance events on leased aircraft held as of the Acquisition date. As reimbursable maintenance events are performed and Maintenance Expense is incurred, a portion of the contra-asset is recognized as a reduction to Maintenance Expense on the Condensed Consolidated Statements of Operations due to the fact that the previously acquired maintenance deposit is partially funding the maintenance event. As of September 30, 2022 and December 31, 2021, the remaining balance of the contra-asset was $13,211 and $22,348, respectively. Of the $9,137 reduction in the contra-asset duringDuring the nine months ended September 30, ~~2022, $8,362 is related~~2023, the Company acquired five Aircraft Held for Operating Lease. The table below reflects the cumulative balances of the five aircraft as of the acquisition dates:


Asset	Balance Sheet Classification
Aircraft Held for Operating Lease	Aircraft and Flight Equipment Held for Operating Lease	$	114,632
Maintenance Rights Asset	Aircraft and Flight Equipment Held for Operating Lease	39,533
Over-Market Asset	Other Intangible Assets, net	3,741
Total		$	157,906

The purchase price was assigned to the ~~purchase~~assets based upon their relative fair values as of ~~two aircraft previously under operating leases. The contra-assets reduced~~ the acquisition ~~costs incurred to purchase~~date. The Company estimated the ~~aircraft off the operating lease.~~

~~Over-market Liabilities~~

Asfair value of the Acquisition Date, the Company recognized a liability representing lease terms which are unfavorable compared with market terms of similar leases. The over-market lease liability is recorded as a contra-asset offsetting the corresponding lease asset. The remaining unamortized balance of this contra-asset as of September 30, 2022 and December 31, 2021 was $132 and $10,363, respectively and is recorded withinAircraft Held for Operating Lease ~~Right-of-Use Assets. During the first quarter of 2022, the Company executed lease amendments which modified two aircraft from operating leases to finance leases. As a result~~principally based on market appraisals. The appraisals were based on an analysis of the ~~modifications,~~economic conditions impacting both the ~~Company reclassified $9,687~~airline industry and broader economy, the current fuel price environment, aircraft order data, passenger traffic levels, and qualitative and quantitative characteristics impacting the value of the ~~over-market~~acquired aircraft.

The fair value of the Maintenance Rights Asset was determined using a discounted cash flow method based on aircraft utilization levels at the time of the acquisition and the applicable rates as specified within the lease liability from Operating Lease Right-of-Use Assets to Finance Lease Assets. The resulting reclassification reduced the go-forward Depreciation and Amortization for the related Finance Lease Assets. Additionally, $173 of theagreements.

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SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

~~reduction is related~~The fair value of the Over-Market Asset was determined using a discounted cash flow model that involves the comparison of contractual lease cash flows to the estimated at-market lease payments for an aircraft of the same type and age.

The purchase of ~~two~~the Aircraft Held for Operating Lease was financed using the proceeds from a term loan credit facility with a face amount of $119,200 and the Company's Cash and Cash Equivalents. For more information on the term loan credit facility, see Note 6 of these Condensed Consolidated Financial Statements.

Aircraft Held for Operating Lease

The Company obtained outright ownership of the Aircraft Held for Operating Lease upon purchase and assumed the position of lessor until the end of the lease terms. The Company is entitled to fixed payments over the remaining lease term for each aircraft, ~~previously under operating leases~~which expire at various dates between the fourth quarter of 2024 and the fourth quarter of 2025. On each lease expiry date, the Aircraft Held for Operating Lease will be redelivered to Sun Country and are expected to be inducted into the Company’s fleet. The rental revenue associated with the Aircraft Held for Operating Lease is recognized as it is earned and is included in Other revenue. The Company has recognized $5,870 and $11,742 of rental revenue during the three and nine months ended September 30, ~~2022. The contra-assets reduced~~2023, respectively.

Maintenance Rights Asset

Upon purchase of the ~~acquisition costs incurred~~Aircraft Held for Operating Lease, the Company recognized a Maintenance Rights Asset which represents the Company’s contractual right to ~~purchase~~receive the aircraft ~~off~~in a specified maintenance condition at the ~~operating lease.~~

Asend of the ~~Acquisition Date, Sun Country’s existing~~lease. The acquired leases ~~included payments~~contain an end of lease compensation clause whereby the lessee is required to remit a cash payment to true-up the aircraft’s maintenance condition to full-life or perform the maintenance tasks needed to physically restore the airframe and engines to such a condition. The asset represents the difference between the Aircraft Held for Operating Lease’s physical maintenance ~~reserves in addition~~condition as of the purchase date and the contractual return condition at the end of the lease term. The Maintenance Rights Asset is not depreciated over the lease term, nor will it accrete as additional life is consumed on the aircraft.

Over-Market Asset

Upon purchase of the Aircraft Held for Operating Lease, the Company recognized an intangible asset representing lease terms which are favorable to the ~~stated aircraft lease payments. For a substantial portion of these maintenance reserve payments,~~lessor (unfavorable to the ~~Company does not expect to be reimbursed by the lessor. Therefore, a liability was established representing over-market maintenance reserve lease terms~~lessee), as compared towith market terms of similar leases. The asset will be amortized over the remaining ~~balance~~lease terms for the respective aircraft, which ranges from 1.2 to 2.2 years as of ~~this liability at~~ September 30, ~~2022 and December 31, 2021 was $2,958 and $14,737, respectively. Of~~2023. The amortization will be recognized as contra-revenue, offsetting the ~~$11,779 reduction in the over-market maintenance reserve liabilities during the nine months ended September 30, 2022, $6,023 was incorporated into the Finance Lease Assets in accordance~~rental revenue associated with the terms of the executed lease amendments, as described above. Additionally, $3,303 of the reduction is related to the purchase of two aircraft previously under operating leases. The maintenance deposits were allocated to the acquisition costs incurred to purchase the aircraft off the operating lease.Aircraft Held for Operating Lease included in Other revenue.

7.6. DEBT

Credit Facilities –

On February 10, 2021, the Company executed a five-year credit agreement (the “Credit Agreement”) with a group of ~~lenders that replaced the Company’s prior $25,000 asset-based revolving credit facility.~~lenders. The Credit Agreement includes a $25,000 Revolving Credit Facility (the "Revolving Credit Facility") and a $90,000 Delayed Draw Term Loan Facility (“DDTL”), which are collectively referred to as the “Credit Facilities.” The proceeds from the Revolving Credit Facility can be used for general corporate purposes, whereas the proceeds from the DDTL were to be used solely to finance the acquisition of aircraft or engines to be registered in the United States. The Credit Agreement includes financial covenants that

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SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

require a minimum trailing 12-month EBITDAR ($87,700 as of March 31, 2022 and beyond) and minimum liquidity, as defined within the Credit Agreement, of $30,000 at the close of any business day. The Company was in compliance with these covenants as of September 30, ~~2022.~~2023.

During 2021, the Company drew $80,500 on the DDTL to purchase six aircraft, which were previously under operating leases. During ~~the first quarter of~~ 2022, the Company repaid the outstanding balance of the DDTL in full using proceeds it received from the 2022-1 EETC, which terminated the DDTL. As a result, no amounts under the DDTL were available to the Company as of September 30, ~~2022.~~2023. The Company recorded a $1,557 loss on extinguishment of debt ~~related to~~in 2022 in connection with the repayment of the DDTL, which represents the write-off of the unamortized deferred financing costs. As of September 30, ~~2022,~~2023, the Company had $24,650 of financing available through the Revolving Credit Facility, ~~remained undrawn and $24,650 was available~~as $350 had been pledged to ~~the Company.~~support a letter of credit.

Long-term Debt–

Term Loan Credit Facility

During the nine months ended September 30, 2023, the Company executed a term loan credit facility with a face amount of $119,200 for the purpose of financing the five Aircraft Held for Operating Lease. The loan is to be repaid monthly through March 2030. During the lease term, payments collected from the lessee will be applied directly to the repayment of principal and interest on the term loan credit facility. The Aircraft Held for Operating Lease, as well as the related lease payments received from the lessee, are pledged as collateral. During the nine months ended September 30, 2023, the Company recorded $1,820 in debt issuance costs associated with the term loan credit facility.

The interest rate on the term loan credit facility is determined by using a base rate, which resets monthly, plus an applicable margin, and a fixed credit spread adjustment of 0.1%. The applicable margin during the lease term is fixed at 3.75%, and is subsequently reduced to 3.25% once the aircraft have been redelivered to the Company and a Loan-to-Value ("LTV") ratio calculation is completed at the end of the lease term. The interest rate in effect as of September 30, 2023 was 9.2%. To the extent that the LTV ratio exceeds 75% at the end of the lease term, a principal prepayment will be required in order to reduce the ratio to 75%. If at any point within 12 months of the end of the lease term for each respective aircraft the Company deems it probable that a principal prepayment will be required in order to reduce the LTV ratio to 75%, and such amount can be reasonably estimated, the estimated principal prepayment amount will be reclassified from Long-term Debt, net to Current Maturities of Long-Term Debt, net on the Company's Condensed Consolidated Balance Sheets. In the event a principal prepayment is required, amounts received under the end of lease maintenance compensation clause may be applied towards the prepayment.

Pass-Through Trust Certificates

During March 2022, the Company arranged for the issuance of the 2022-1 EETC in an aggregate face amount of $188,277 for the purpose of financing or refinancing 13 aircraft. The Company is required to make bi-annual principal and interest payments each March and September, through March 2031. These notes bear interest at an annual rate between 4.84% and 5.75%. The weighted average interest rate was 5.05% as of September 30, 2023.

In December 2019, the Company arranged for the issuance of Class A, Class B and Class C ~~pass-through~~ trust certificates Series 2019-1 (the “2019-1 EETC”), in an aggregate face amount of $248,587 for the purpose of financing or refinancing 13 used aircraft, which was completed in 2020.

In March 2022, the Company arranged for the issuance of the 2022-1 EETC in an aggregate face amount of $188,277 for the purpose of financing or refinancing 13 aircraft. The Company recorded $2,526 in debt issuance costs associated with the 2022-1 EETC. Of the 13 aircraft financed by the 2022-1 EETC during the nine months ended September 30, 2022, five were existing owned aircraft previously financed by the DDTL, two of the aircraft were owned outright, four of the aircraft were acquired incrementally, and two aircraft were bought-out from an existing finance lease. The Company is required to make ~~semi-annual~~bi-annual principal and interest payments each ~~March~~June and ~~September, the first payment occurred on September 15, 2022. The 2022-1 EETC is secured by a lien on the financed or refinanced aircraft and will be cross-collateralized by the other aircraft financed~~December, through ~~the issuance. Total appraised value of the aircraft and engines financed by the 2022-1 EETC was approximately $259,688 as of the original date of the agreement.~~December 2027. These notes bear

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SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

~~During the nine months ended~~interest at an annual rate between 4.13% and 6.95%. The weighted average interest rate was 4.69% as of September 30, ~~2022, the Company capitalized $2,327 of Interest Expense related to aircraft financed with the proceeds of the 2022-1 EETC while undergoing induction.~~2023.

Long-term Debt includes the following:

September 30, 2022 December 31, 2021
Notes payable under the Company's 2019-1 EETC agreement dated December 2019, with original loan amounts of $248,587 payable in bi-annual installments, in June and December, through December 2027. These notes bear interest at an annual rate between 4.13% and 6.95% and the weighted average interest rate is 4.73% as of September 30, 2022. $ 194,884 $ 202,984
Notes payable under the Company's 2022-1 EETC agreement dated March 2022, with a face amount of $188,277 payable in bi-annual installments, in March and September, through March 2031. These notes bear interest at an annual rate between 4.84% and 5.75% and the weighted average interest rate is 5.06% as of September 30, 2022. 179,019 —
Delayed Draw Term Loan Facility — 77,481
Other Notes payable — 466
Total Debt 373,903 280,931
Less: Unamortized debt issuance costs (3,706) (3,505)
Less: Current Maturities of Long-term Debt (45,535) (29,412)
Total Long-term Debt $ 324,662 $ 248,014


	September 30, 2023		December 31, 2022
2019-1 EETC (see terms and conditions above)	$	168,598	$	176,697
2022-1 EETC (see terms and conditions above)	158,775		179,019
Term Loan Credit Facility (see terms and conditions above)	112,068		—
Total Debt	439,441		355,716
Less: Unamortized debt issuance costs	(4,336)		(3,481)
Less: Current Maturities of Long-term Debt, net	(83,339)		(57,548)
Total Long-term Debt, net	$	351,766	$	294,687

Future maturities of the outstanding Debt are as follows:


		Debt Principal Payments		Amortization of Debt Issuance Costs		Net Debt			Debt Principal Payments		Amortization of Debt Issuance Costs		Net Debt
Remainder of 2022		$	18,187	$	(264)	$	17,923
2023		58,518		(962)		57,556
Remainder of 2023								Remainder of 2023	$	33,804	$	(341)	$	33,463
2024	2024	60,157		(777)		59,380		2024	75,403		(1,188)		74,215
2025	2025	65,241		(602)		64,639		2025	80,007		(956)		79,051
2026	2026	45,668		(415)		45,253		2026	61,146		(709)		60,437
2027								2027	65,170		(525)		64,645
Thereafter	Thereafter	126,132		(686)		125,446		Thereafter	123,911		(617)		123,294
Total as of September 30, 2022		$	373,903	$	(3,706)	$	370,197
Total as of September 30, 2023								Total as of September 30, 2023	$	439,441	$	(4,336)	$	435,105

The fair value of Debt was ~~$340,067~~$408,892 as of September 30, ~~2022~~2023 and ~~$272,004~~$324,059 as of December 31, ~~2021.~~2022. The fair value of the Company’s debt was based on the discounted amount of future cash flows using the Company’s end-of-period estimated incremental borrowing rate for similar obligations. The estimates were primarily based on Level 3 inputs.

7. STOCK-BASED COMPENSATION

Stock compensation expense was $1,039 and $487, during the three months ended September 30, 2023 and September 30, 2022, respectively; and $8,132 and $1,981 during the nine months ended September 30, 2023 and September 30, 2022, respectively. During the nine months ended September 30, 2023, all conditions associated with the time-based and performance-based options granted under the SCA Acquisition Holdings, LLC Amended and Restated Equity Incentive Plan were met. As a result, 100% of the performance-based stock options and all remaining unvested time-based options vested. Therefore, during the nine months ended September 30, 2023, the Company recognized an acceleration of stock-based compensation expense for the time-based and performance-based stock options totaling $2,960.

As of September 30, 2023, there was $7,267 of total unrecognized compensation expense related to Restricted Stock Units ("RSUs"). This unrecognized compensation is expected to be fully recognized over a weighted average period of approximately 2.1 years.

~~-21-~~

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SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

8. ~~FUEL DERIVATIVES AND RISK MANAGEMENT~~

The Company’s operations are inherently dependent upon the price of aircraft fuel. To manage economic risks associated with fluctuations in aircraft fuel prices, the Company periodically enters into fuel option and swap contracts. The Company does not apply hedge accounting to its fuel derivative contracts, nor does it hold or issue them for trading purposes. As of September 30, 2022 and December 31, 2021, the Company had no outstanding fuel derivative contracts.

Fuel derivative contracts are recognized at fair value on the Condensed Consolidated Balance Sheets as Derivative Assets, if the fair value is in an asset position, or as Derivative Liabilities, if the fair value is in a liability position. Derivatives where the payment due date is greater than one year from the balance sheet date are classified as long-term. Fuel derivative gains and losses are classified in Aircraft Fuel on the Condensed Consolidated Statements of Operations.

~~Changes in Derivative Assets (Liabilities) are as follows:~~

Nine Months Ended September 30,
2022 2021
Balance - January 1 $ — $ (1,174)
Non-cash Gains — 3,527
Contract Settlements — (2,105)
Balance - September 30 $ — $ 248

~~Fuel Derivative Gains (Losses) consist of the following:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Total Fuel Derivative Gains (Losses) $ — $ (72) $ — $ 3,527

~~No cash premiums were paid in any of the periods presented above.~~

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~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

9. INVESTMENTS

A summary of debt securities by major security type:


		September 30, 2022 (1)									September 30, 2023
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-Sale Securities (2):
Available-for-Sale Securities: (1)										Available-for-Sale Securities: (1)
Municipal Debt Securities	Municipal Debt Securities	$	41,108	$	—	$	(331)	$	40,777	Municipal Debt Securities	$	17,071	$	—	$	(50)	$	17,021
Corporate Debt Securities	Corporate Debt Securities	83,547		—		(695)		82,852		Corporate Debt Securities	55,514		—		(209)		55,305
U.S. Government Agency Securities	U.S. Government Agency Securities	5,005		—		(65)		4,940		U.S. Government Agency Securities	74,591		—		(398)		74,193
Total	Total	$	129,660	$	—	$	(1,091)	$	128,569	Total	$	147,176	$	—	$	(657)	$	146,519


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-Sale Securities: (1)
Municipal Debt Securities	$	47,897	$	16	$	(258)	$	47,655
Corporate Debt Securities	93,460		1		(683)		92,778
U.S. Government Agency Securities	32,326		2		(126)		32,202
Total	$	173,683	$	19	$	(1,067)	$	172,635


(1)			~~As the Company began purchasing these investment securities during the second quarter of 2022, there is no comparable prior period information.~~
~~(2)~~			The Company also holds Certificates of Deposit that are included in Investments on the Condensed Consolidated Balance Sheets totaling ~~$6,601~~$6,771 and ~~$6,283~~$6,301 as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

As of September 30, ~~2022,~~2023, most of the Company's investments ~~that have unrealized losses~~ have been in a continuous unrealized loss position for less than 12 months. The unrealized losses were the result of increases in market interest rates and were not the result of a deterioration in the credit quality of the securities. As of September 30, ~~2022,~~2023, the Company believes that any unrealized losses are recoverable prior to the investment's conversion to cash. As of September 30, 2023, the Company had the intent and ability to hold these investments until maturity. Therefore, the Company believes these losses to be ~~temporary.~~temporary and no impairments have been recognized.

~~10.~~9. FAIR VALUE MEASUREMENTS

~~For a description of~~The following table summarizes the ~~methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see~~ ~~Note 12~~ ~~of the Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in the 2021 10-K.~~

~~Financial Instruments~~ ~~– Financial instruments including Restricted Cash, Certificates of Deposit, Accounts Receivable, Accounts Payable and all other Current Liabilities have carrying values that approximate fair value.~~

~~Cash & Cash Equivalents~~ – The carrying value of cash and cash equivalents approximates fair value. Fair values of cash equivalent instruments that do not trade on a regular basis in active markets are classified as Level 2.

~~Available-for-Sale Securities~~ - Available-for-Sale investment securities include debt securities, such as municipal, corporate, and U.S. government agency notes. All of these investments are classified as Level 2 because they do not trade in active markets on a regular basis. The Company obtains its pricing per security from a third-party, which uses quoted market prices, when available, or other observable inputs for determination of fair value.

~~Non-Financial Assets~~ ~~– Certain~~ assets ~~are measured at fair value on a nonrecurring basis. The Company’s non-financial assets, which primarily consist of Property & Equipment, Goodwill and Other Intangible Assets are not required to be~~ measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying value may not be recoverable, non-financial assets are assessed for impairment and, if applicable, written down to fair value using significant unobservable inputs, classified as Level 3.basis:


	September 30, 2023
	Level 1		Level 2		Level 3		Total
Cash & Cash Equivalents	$	26,967	$	—	$	—	$	26,967
Available-for-Sale Securities:
Municipal Debt Securities	—		17,021		—		17,021
Corporate Debt Securities	—		55,305		—		55,305
U.S. Government Agency Securities	—		74,193		—		74,193
Total Available-for-Sale Securities	—		146,519		—		146,519
Total Assets Measured at Fair Value on a Recurring Basis	$	26,967	$	146,519	$	—	$	173,486

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SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

~~Debt~~ ~~– See~~ ~~Note 7~~ ~~for more information on the Company's debt financings and related fair values.~~

~~The following table summarizes the assets measured at fair value on a recurring basis:~~

September 30, 2022
Level 1 Level 2 Level 3 Total
Cash & Cash Equivalents $ 70,925 $ 60,987 $ — $ 131,912
Available-for-Sale Securities:
Municipal Debt Securities — 40,777 — 40,777
Corporate Debt Securities — 82,852 — 82,852
U.S. Government Agency Securities — 4,940 — 4,940
Total Available-for-Sale Securities — 128,569 — 128,569
Total Assets Measured at Fair Value on a Recurring Basis $ 70,925 $ 189,556 $ — $ 260,481


		December 31, 2021									December 31, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Cash & Cash Equivalents	Cash & Cash Equivalents	$	309,338	$	—	$	—	$	309,338	Cash & Cash Equivalents	$	73,727	$	18,359	$	—	$	92,086
Available-for-Sale Securities:										Available-for-Sale Securities:
Municipal Debt Securities										Municipal Debt Securities	—		47,655		—		47,655
Corporate Debt Securities										Corporate Debt Securities	—		92,778		—		92,778
U.S. Government Agency Securities										U.S. Government Agency Securities	—		32,202		—		32,202
Total Available-for-Sale Securities										Total Available-for-Sale Securities	—		172,635		—		172,635
Total Assets Measured at Fair Value on a Recurring Basis	Total Assets Measured at Fair Value on a Recurring Basis	$	309,338	$	—	$	—	$	309,338	Total Assets Measured at Fair Value on a Recurring Basis	$	73,727	$	190,994	$	—	$	264,721

~~11.~~10. INCOME TAXES

The Company's effective tax rate for the three and nine months ended September 30, ~~2022~~2023 was ~~17.4%~~24.6% and ~~28.4%~~23.1%, respectively. The effective tax rate for the three and nine months ended September 30, ~~2021~~2022 was ~~13.8%~~17.4% and ~~18.3%~~28.4%, respectively. The effective tax rate represents a blend of federal and state taxes and includes the impact of certain nondeductible or nontaxable items. The ~~increase~~effective tax rates for the three and nine months ended September 30, 2022 ~~effective tax rate is~~were primarily ~~due to~~impacted by the ~~non-taxable adjustment~~non-deductible adjustments to the tax receivable liability related to the Tax Receivable Agreement (the "Tax Receivable Agreement" or "TRA")~~, partially offset by stock compensation benefits.~~.

Tax Receivable Agreement

~~In connection with~~The total TRA balance as of September 30, 2023 and December 31, 2022 was $101,020 and $103,800, of which $1,511 and $2,260 was current, respectively. The TRA liability is an estimate and actual amounts payable under the ~~Company’s IPO,~~TRA could differ from this estimate. During the nine months ended September 30, 2023, the Company ~~entered into~~recorded an immaterial adjustment to the estimated TRA ~~with our~~liability. During the nine months ended September 30, 2022, the Company recorded a $5,000 adjustment to increase the estimated TRA liability. During the nine months ended September 30, 2023, the Company made a payment of $2,425 to the pre-IPO stockholders (the “TRA holders”)~~. The TRA provides for the payment by the Company to the TRA holders of 85%~~, which includes certain members of the ~~amount~~Company's management and certain members of ~~cash savings, if any,~~the Company's Board of Directors. The payment is included within Financing Activities on the Condensed Consolidated Statements of Cash Flows. Payments will be made in ~~U.S. federal, state, local, and foreign income tax that the Company actually realizes (or are deemed to realize in certain circumstances)~~future periods as ~~a result of certain tax~~ attributes that existed at the time of the IPO (the “Pre-IPO Tax Attributes”) are utilized.

11. STOCKHOLDERS' EQUITY

Equity Transactions

Secondary Offerings

On February 15, 2023, the Company announced the commencement of a secondary public offering of 5,250,000 shares of its Common Stock by an affiliate of certain investment funds managed by affiliates of Apollo Global Management, Inc. ("the Apollo Stockholder"). The ~~Company will retain~~underwriters were given an option to purchase an additional 787,500 shares of Common Stock. In connection with the ~~benefit of~~offering, the ~~remaining 15% of these cash savings.~~

~~Upon the closing of the IPO in the first quarter of 2021,~~underwriters agreed to sell to the Company, recognized a non-current liability of $115,200, which represented undiscounted aggregate payments that were expected to be paid to the TRA holders under the TRA, with an offset to Stockholders’ Equity. The TRA balance as of September 30, 2022 and December 31, 2021 was $103,800 and $98,800, respectively. The TRA liability is an estimate and actual amounts payable under the Tax Receivable Agreement could differ from this estimate. During the nine months ended September 30, 2022, the Company ~~recorded~~agreed to purchase from the underwriters, an ~~adjustment to~~aggregate of 750,000 shares of Common Stock at a price of $19.75 per share, the ~~estimated TRA~~same price at which the underwriters purchased the Common Stock from the selling stockholder, for a total of $14,812. The

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SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

~~liability~~Company incurred offering expenses of ~~$5,000. Adjustments~~$640 in connection with this offering and did not receive any of the proceeds.

Common Stock Repurchases

On October 31, 2022, the Company’s Board of Directors authorized a $50,000 stock repurchase program. On August 1, 2023, the Company's Board of Directors authorized the addition of $30,000 to the ~~TRA are recorded in Other, net Non-Operating Income (Expense) on~~Company's existing stock repurchase program. The stock repurchase program has no expiration date and may be modified, suspended, or terminated at any time.

During the ~~Company’s Condensed Consolidated Statements~~fourth quarter of ~~Operations.~~

~~For more information on~~2022, the ~~TRA, see~~ ~~Note 13~~Company entered into a $25,000 Accelerated Share Repurchase Program. The Company received an initial delivery of 890,586 shares at an average price of $19.65 per share during the fourth quarter of 2022. The settlement of the ~~Notes~~program occurred during January 2023, upon which the Company received an additional 480,932 shares. In total, the Company repurchased 1,371,518 shares at an average price of $18.23 per share.

During the nine months ended September 30, 2023, the Company repurchased 3,307,541 shares of its Common Stock at an average price of $16.64 per share. The repurchases were part of a secondary public offering of the Company's shares by the Apollo Stockholder, as well as open market purchases completed in the second and third quarters.

As of September 30, 2023, the Company did not have any remaining amount of Board authorization to repurchase shares of its Common Stock. Subsequent to September 30, 2023, the Company's Board of Directors authorized the addition of $25,000 to the ~~Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in~~Company's existing stock repurchase program. The stock repurchase program has no expiration date and may be modified, suspended, or terminated at any time.

Amazon Agreement

On December 13, 2019, the ~~2021 10-K.~~Company signed a six-year contract (with two, two-year extension options, for a maximum term of 10 years) with Amazon to provide cargo services under the ATSA. In connection with the ATSA, the Company issued warrants to Amazon to purchase an aggregate of up to 9,482,606 shares of common stock at an exercise price of approximately $15.17 per share. During the nine months ended September 30, 2023 and 2022, 632,173 and 568,956 warrants vested, respectively. As of September 30, 2023 and 2022, the cumulative vested warrants held by Amazon were 3,034,441 and 2,212,616, respectively. The exercise period of these warrants is through the eighth anniversary of the issue date.

12. ~~SPECIAL ITEMS, NET~~

Special Items, net reflects expenses, or credits to expense, that are not representative of our ongoing costs for the periods presented and may vary from period to period in nature, frequency, and amount.

~~Special Items, net on the Condensed Consolidated Statements of Operations consist of the following:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
CARES Act grant recognition (see Note 3)
$ — $ — $ — $ (71,587)
CARES Act employee retention credit (See Note 3)
— (68) — (848)
Other — 3 — 16
Total Special Items, net $ — $ (65) $ — $ (72,419)

~~13.~~ COMMITMENTS AND CONTINGENCIES

The Company has contractual obligations and commitments primarily with regard to lease arrangements, repayment of debt (see Note 76), payments under the TRA (see Note 1110), and probable future purchases of aircraft.

~~During~~As of September 30, 2023, the ~~second~~Company had a commitment to lease three aircraft with deliveries spanning the fourth quarter of ~~2022,~~2023 and the first quarter of 2024. The leases will each have annual lease payments of approximately $2,000 for six years.

As of September 30, 2023, the Company had a commitment to purchase an ~~owned~~ aircraft ~~was retired due~~with an expected delivery in the fourth quarter of 2023. The purchase agreement calls for a base price of $27,500 that is subject to ~~the aircraft sustaining damage beyond economic repair. The best estimate of this event was recorded as of the second quarter and had no financial impact~~adjustment based on the Company's Condensed Consolidated Statement of Operations. The estimate will be revised when additional information becomes available or when the contingency is finalized. The Company does not believe the finalization of the contingency will have a material effectaircraft's maintenance condition on the ~~Company's Condensed Consolidated Results~~date of ~~Operations.~~delivery.

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SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

During the ~~nine~~twelve months ended ~~September~~June 30, 2022, the ~~Company executed~~compensation payable to an ~~agreement to purchase a flight simulator at a total purchase price~~executive officer temporarily exceeded the restrictions on the payment of ~~$9,745. To date, $8,781 has been remitted to~~certain executive compensation under the ~~seller. The remaining purchase price will be remitted to~~Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). Once the ~~seller upon receipt and installation~~issue was identified, the executive officer voluntarily rescinded the unvested portion of the ~~simulator. Payments for~~equity grant that caused the ~~simulator are accounted for within Property & Equipment on~~executive’s compensation to exceed the ~~Condensed Consolidated Balance Sheets~~CARES Act limit. At no point did the executive's cash compensation and equity awards that could be monetized exceed the CARES Act limit. The Company did not accrue any amounts related to this matter as of September 30, ~~2022.~~2023. To the extent we are deemed to have failed to remain in full compliance with the CARES Act and the applicable rules and regulations thereunder, we may become subject to fines or other enforcement actions.

The Company is subject to various legal proceedings in the normal course of business and expenses legal costs as incurred. Management does not believe these proceedings will have a materially adverse effect on the Company.

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~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~14.~~13. OPERATING SEGMENTS

The following tables present financial information for the Company’s two operating segments: Passenger and Cargo. ~~For more information on the Company’s segments, see~~ ~~Note 17~~ ~~of the Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in the 2021 10-K.~~

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021
Passenger Cargo Consolidated Passenger Cargo Consolidated
Operating Revenues $ 198,013 $ 23,687 $ 221,700 $ 149,263 $ 24,400 $ 173,663
Non-Fuel Operating Expenses 117,788 23,678 141,466 99,960 15,800 115,760
Aircraft Fuel 64,763 80 64,843 36,556 91 36,647
Special Items, net — — — (65) — (65)
Total Operating Expenses 182,551 23,758 206,309 136,451 15,891 152,342
Operating Income (Loss) $ 15,462 $ (71) 15,391 $ 12,812 $ 8,509 21,321
Interest Income 1,610 28
Interest Expense (7,493) (6,286)
Other, net 3,422 456
Income Before Income Tax $ 12,930 $ 15,519

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021
Passenger Cargo Consolidated Passenger Cargo Consolidated
Operating Revenues $ 601,360 $ 65,930 $ 667,290 $ 382,380 $ 68,084 $ 450,464
Non-Fuel Operating Expenses 355,894 64,470 420,364 280,272 50,272 330,544
Aircraft Fuel 206,254 80 206,334 90,468 163 90,631
Special Items, net — — — (54,018) (18,401) (72,419)
Total Operating Expenses 562,148 64,550 626,698 316,722 32,034 348,756
Operating Income $ 39,212 $ 1,380 40,592 $ 65,658 $ 36,050 101,708
Interest Income 2,166 52
Interest Expense (23,097) (19,487)
Other, net (5,156) 18,505
Income Before Income Tax $ 14,505 $ 100,778

~~15. SUBSEQUENT EVENTS~~

~~The Company evaluated subsequent events~~Operating revenues for the ~~period from the Balance Sheet date through November 2, 2022, the date that the Condensed Consolidated Financial Statements were available to be issued.~~

Passenger segment includes amounts recorded within Other revenue.


	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
	Passenger		Cargo		Consolidated		Passenger		Cargo		Consolidated
Operating Revenues	$	222,817	$	26,059	$	248,876	$	198,013	$	23,687	$	221,700
Non-Fuel Operating Expenses	142,045		26,646		168,691		117,788		23,678		141,466
Aircraft Fuel	61,157		22		61,179		64,763		80		64,843
Total Operating Expenses	203,202		26,668		229,870		182,551		23,758		206,309
Operating Income (Loss)	$	19,615	$	(609)	19,006		$	15,462	$	(71)	15,391
Interest Income					2,480						1,610
Interest Expense					(11,403)						(7,493)
Other, net					(15)						3,422
Income Before Income Tax					$	10,068					$	12,930

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SUN COUNTRY AIRLINES HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share and share amounts)

(Unaudited)

~~On October 31, 2022,~~


	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	Passenger		Cargo		Consolidated		Passenger		Cargo		Consolidated
Operating Revenues	$	729,640	$	74,437	$	804,077	$	601,360	$	65,930	$	667,290
Non-Fuel Operating Expenses	428,889		78,984		507,873		355,894		64,470		420,364
Aircraft Fuel	185,770		59		185,829		206,254		80		206,334
Total Operating Expenses	614,659		79,043		693,702		562,148		64,550		626,698
Operating Income (Loss)	$	114,981	$	(4,606)	110,375		$	39,212	$	1,380	40,592
Interest Income					7,766						2,166
Interest Expense					(31,272)						(23,097)
Other, net					(370)						(5,156)
Income Before Income Tax					$	86,499					$	14,505

14. SUBSEQUENT EVENTS

The Company evaluated subsequent events for the ~~Company’s~~period from the Balance Sheet date through November 7, 2023, the date that the Condensed Consolidated Financial Statements were available to be issued.

Subsequent to September 30, 2023, the Company's Board of Directors authorized athe addition of $25,000 to the Company's existing stock repurchase program pursuant to which the Company may purchase up to $50,000 of its Common Stock, $0.01 par value per share (“Common Stock”). The Company may purchase shares of its Common Stock on a discretionary basis from time-to-time through open market repurchases, privately negotiated transactions, accelerated share repurchase, or other means, including through Rule 10b5-1 trading plans. Whether any repurchases are made, and the timing and actual number of any shares repurchased, will be determined by management depending on a variety of factors, including stock price, trading volume, market conditions and other general business considerations.program. The stock repurchase program has no expiration date and may be modified, suspended, or terminated at any time. ~~Any repurchases made under this program will be funded from the Company’s existing cash flows, or future cash flows.~~

* * * * * *

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated, the terms “Sun Country,” “we,” “us” and “our” refer to Sun Country Airlines Holdings, Inc., and its subsidiaries.

~~Critical Accounting Policies and Estimates~~

The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. We believe our estimates and assumptions are reasonable; however, actual results could differ from those estimates.

~~Our significant accounting policies are described in~~ ~~Note 2~~ of the Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in the 2021 10-K. Some of those significant accounting policies require us to make difficult, subjective, or complex judgments, or estimates. An accounting estimate is considered to be critical if it meets both of the following criteria:

i.~~the estimate requires assumptions about matters that are highly uncertain at the time the accounting estimate is made, and~~

~~ii.~~different estimates reasonably could have been used, or changes in the estimate that are reasonably likely to occur from period to period may have a material impact on the presentation of our financial condition, changes in financial condition, or results of operations.

~~We have identified the following critical accounting policies:~~

–~~Revenue Recognition~~

–~~Loyalty Program Accounting~~

–~~Asset Impairment Analysis~~

–~~Valuation of the TRA Liability~~

~~Revenue Recognition~~

Scheduled passenger service, charter service, and most ancillary revenues are recognized when the passenger flight occurs. Revenues exclude amounts collected on behalf of other parties, including transportation taxes.

The Company initially defers ticket sales as an air traffic liability and recognizes revenue when the passenger flight occurs. Unused non-refundable tickets expire at the date of scheduled travel and are recorded as revenue unless the customer notifies the Company in advance of such date that the customer will not travel. If notification is made, a travel credit is created for the face value, including ancillary fees, less applicable change fees. Revenue for change fees is deferred and recognized when the passenger travel is provided.

Travel credits may generally be redeemed toward future travel for up to 12 months after the date of the original booking. As of September 30, 2022, the Company’s air traffic liability included $8,378 related to travel credits for future travel. The Company records an estimate for travel credits that will expire unused, otherwise known as breakage, in Passenger Revenue upon issuance of the travel credit. During the nine months ended September 30, 2022 and 2021, the Company recorded $7,837 and $9,008 of estimated travel credit breakage, respectively. A portion of travel credits will expire unused, at which time any remaining revenue is recognized.

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~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

The estimated breakage rate is primarily based on historical experience of travel credit activity and other factors that may not be indicative of future trends, such as the COVID-19 pandemic, program changes or modifications that could affect the ultimate usage patterns of tickets and travel credits. The Company continuously monitors its breakage rate assumptions and may adjust its estimated breakage rate in the future. Changes in the Company’s estimated breakage rate impact revenue recognition prospectively.

~~For the nine months ended September 30, 2022, a 10% change in the Company’s estimated travel credit breakage rate would have resulted in a change to Passenger Revenue of approximately $626.~~

~~There are no critical accounting estimates associated with Charter or Cargo revenue recognition that would materially impact the amount of revenue recognized in any specific period.~~

~~Loyalty Program Accounting~~

The Sun Country Rewards program provides loyalty awards to program members based on accumulated loyalty points. The Company records a liability for loyalty points earned by passengers under the Sun Country Rewards program using two methods: (1) a liability for points that are earned by passengers on purchases of the Company’s services is established by deferring revenue based on the redemption value, net of breakage; and (2) a liability for points attributed to loyalty points issued to the Company’s Visa card holders is established by deferring a portion of payments received from the Company’s co-branded agreement. The Company’s Sun Country Rewards program allows for the redemption of points to include payment towards air travel, land travel, taxes, and other ancillary purchases. The balance of the Loyalty Program Liabilities fluctuates based on seasonal patterns, which impacts the volume of loyalty points awarded through travel or issued to co-branded credit card and other partners (deferral of revenue) and loyalty points redeemed (recognition of revenue). The Company records an estimate for loyalty points breakage in Passenger Revenue upon issuance of the loyalty points. Loyalty points held by co-branded credit card members do not expire. All other loyalty points expire if unused after three years.

~~Points Earned Through Travel Purchases~~. Passenger sales that earn Sun Country Rewards provide customers with travel services and loyalty points, which are each considered distinct performance obligations. The Company values each performance obligation on a standalone basis. The Company determines the standalone selling price of loyalty points issued using a redemption value approach, which considers the value a passenger will receive upon redemption of the loyalty points. Consideration allocated to loyalty points is deferred, net of estimated breakage, and recognized as Passenger Revenue when both the loyalty points have been redeemed and the passenger travel occurs.

~~Points Earned through the Co-Branded Credit Card Program~~. Under the Company's co-branded credit card program, funds received for the marketing of a co-branded credit card and delivery of loyalty points are accounted for as a multiple-deliverable arrangement. The Company determined that the arrangement has two distinct performance obligations: (1) loyalty points to be awarded; and, (2) use of our brand and access to our customer lists, and certain other advertising and marketing elements (collectively, the marketing performance obligation). Funds received from the co-branded credit card program are allocated to the two performance obligations based on relative standalone selling price. The assumptions used to allocate the funds received are not considered critical to the application of the accounting model for the Company’s loyalty program. Consideration allocated to loyalty points is deferred and recognized as Passenger Revenue when both the loyalty points have been redeemed and the passenger travel occurs. Consideration allocated to the marketing performance obligation is recognized as revenue as the spend occurs and is recorded in Other Revenue.

The Company estimates breakage for loyalty points that are not likely to be redeemed. Loyalty points are combined in one homogenous pool, that includes both air and non-air travel awards, and are not separately identifiable. The estimated breakage rate is primarily based on historical experience of loyalty point redemption

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~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

activity and other factors that may not be indicative of future trends, such as the COVID-19 pandemic, program changes or modifications that could affect the ultimate usage pattern of loyalty points. The Company continuously monitors its breakage rate assumptions and may adjust its estimated breakage rate for loyalty points in the future. Changes in the Company’s estimated breakage rate assumptions impact revenue recognition prospectively.

During the nine months ended September 30, 2022, the Company recognized $1,134 of loyalty points breakage within Passenger Revenue. A 10% change in the Company’s loyalty point estimated breakage rate would have resulted in a change to Passenger Revenue of approximately $141.

~~Asset Impairment Analysis~~

The Company’s long-lived assets, such as Property & Equipment and finite-lived Intangible Assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company’s assets include aircraft and associated engines, operating and finance lease assets, the Company’s customer relationship finite-lived intangible assets, and other long-lived assets. The Company reviews the current economic and operating environment to determine whether events or circumstances indicate that these assets may be impaired. Such indicators include, but are not limited to: (1) significant, permanent decrease in the market price of the Company’s long-lived assets, (2) significant decrease in the projected cash flows generated from the use of its long-lived assets, (3) changes in the estimated useful life or productive capacity of the asset, (4) changes in the regulatory environment in which the Company operates, and (5) a decision to permanently remove flight equipment or other long-lived assets from operations. If such factors are identified and the Company determines that the carrying amount of the long-lived asset (or asset group) is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the asset (or asset group’s) carrying amount exceeds its fair value. Fair value is determined using various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

When the Company assesses its long-lived assets for impairment, it utilizes certain assumptions, including, but not limited to: (1) estimated fair value of the assets and (2) estimated future undiscounted cash flows expected to be generated by those assets. Cash flow estimates are determined based on additional assumptions, including asset utilization, average fares, projected fuel costs and other operating costs, along with the estimated service life of the asset. Certain of these assumptions are highly volatile and could change significantly from period to period due to various macroeconomic and industry-specific events.

To determine whether impairment exists, the Company groups its assets based on the lowest level of identifiable cash flows, which is its operating segments. This is due to the Company operating a Passenger Service fleet comprised exclusively of one type of aircraft, the Boeing 737-NG. None of the Company’s long-lived assets are owned by, or associated with, the Cargo operating segment.

The Company has not recorded an impairment on its long-lived assets for any of the periods presented in these Condensed Consolidated Financial Statements, nor did it identify any triggering events during the nine months ended September 30, 2022 and for the year ended December 31, 2021.

~~Valuation of the TRA Liability~~

In connection with its IPO, the Company entered into a TRA with pre-IPO stockholders (the “TRA holders”). The TRA provides for the payment by the Company to the TRA holders of 85% of the amount of cash savings, if any, in U.S. federal, state, local, and foreign income tax that the Company actually realizes (or are deemed to realize in certain circumstances) as a result of certain tax attributes that existed at the time of the IPO (the “Pre-IPO Tax Attributes”). Amounts payable under the TRA are contingent upon, among other things, (i) generation of future

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~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

taxable income over the term of the TRA, (ii) the Company’s participation in future government programs, (iii) stock option activity during periods prior to the commencement of payments under the TRA and (iv) future changes in tax laws. These factors could result in an increase or decrease in the related liability, which would be recognized in the Company’s earnings in the period of such change.

If the Company does not generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax benefits, then it would not be required to make the related TRA payments. Estimating future taxable income is inherently uncertain and requires judgment. In projecting future taxable income, the Company considers its historical results and incorporates certain assumptions, including revenue growth, operating margin, stock option exercises and tax depreciation expense. The TRA liability estimates related to the generation of future taxable income and stock option activity during the periods prior to the commencement of payments only applies through fiscal year 2022, due to the expiration of the CARES Act dividend and capital distribution restrictions in 2022.

A $10,000 change in forecasted taxable income would have resulted in a change to the TRA Liability of approximately $1,200. Stock option exercises during the nine months ended September 30, 2022 did not significantly impact the TRA liability. Adjustments to the TRA are recorded in the current period in Other, net within Non-operating Income (Expense) on the Company’s Condensed Consolidated Statements of Operations.

~~Recently Adopted Accounting Pronouncements~~

~~See~~ ~~Note 2~~ ~~to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for more information regarding recently adopted accounting pronouncements.~~

Forward-Looking Statements

The following discussion and analysis presents factors that had a material effect on our results of operations during the nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022. Also discussed is our financial position as of September 30, ~~2022~~2023 and December 31, ~~2021.~~2022. This section should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited Consolidated Financial Statements and related notes and discussion under the heading, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2021~~2022 10-K. This discussion contains forward-looking statements that involve risk, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions and forecasts. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors, including those set forth under the section of this report titled, “Risk Factors” and elsewhere in this report. You should carefully read the “Risk Factors” included herein and in our ~~2021~~2022 10-K and in our Quarterly Report on Form 10-Q for the periods ended March 31, 2023 ("March 31, 2023 10-Q") and June 30, 2023 ("June 30, 2023 10-Q") to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

Business Overview

Sun Country is a new breed of hybrid low-cost air carrier that dynamically deploys shared resources across our synergistic scheduled service, charter, and cargo businesses. By doing so, we believe we are able to generate high growth, high margins and strong cash flows with greater resilience than other passenger airlines. WeBased in Minnesota, we focus on serving leisure and visiting friends and relatives ("VFR") passengers and charter customers ~~as well as~~and providing crew, maintenance and insurance (“CMI”) services, ~~to Amazon,~~ with flights throughout the ~~United States~~U.S. and to destinations in Canada, Mexico, Central America and the Caribbean. ~~Based in Minnesota, we operate an agile network that includes our scheduled service business, our synergistic charter, and cargo businesses.~~ We share resources, such as flight crews, across our scheduled service, charter and cargo business lines with the objective of generating higher returns and margins and mitigating the seasonality of our

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~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

route network. We optimize capacity allocation by market, time of year, day of week and line of business by shifting flying to markets during periods of peak demand and away from markets during periods of low demand with far greater frequency than nearly all other large U.S. passenger airlines. We believe our flexible business model generates higher returns and margins while also providing greater resiliency to economic and industry downturns than a traditional scheduled service carrier.

Our scheduled service business combines low costs with a high-quality product to generate higher Total Revenue per Available Seat Mile (“TRASM”) than Ultra Low-Cost Carriers ~~(“ULCCs”)~~("ULCCs", which include Allegiant Travel Company, Frontier Airlines and Spirit Airlines) while maintaining lower Adjusted Cost per Available Seat Mile (“CASM”) than Low Cost Carriers ~~(“LCCs”)~~("LCCs", which include Southwest Airlines and JetBlue Airways), resulting in best-in-class unit profitability. Our business includes many cost characteristics of ULCCs, ~~(which includes Allegiant Travel Company, Frontier Airlines and Spirit Airlines),~~ such as an unbundled product (which means we offer a base fare and allow customers to purchase ~~ancillary~~Ancillary products and services for an additional fee), point-to-point service and a single-family fleet of Boeing 737-NG aircraft, which allow us to maintain a cost base comparable to these ULCCs. However, we offer a high-quality product that we believe is superior to ULCCs and consistent with that of ~~LCCs (which includes Southwest Airlines and JetBlue Airways).~~LCCs. For example, our product includes more average legroom than ULCCs, complimentary ~~beverages,~~soft drinks and juices, complimentary in-flight entertainment, and in-seat power, none of which are offered by other ULCCs.

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

Our charter business, which is one of the largest narrow body charter operations in the United States, is a key component of our strategy because it provides both inherent diversification and downside protection, and because it is synergistic with our other businesses. Our charter business has several favorable characteristics, including: large repeat customers, more stable demand than scheduled service flying, and the ability to pass through certain costs, including fuel. Our diverse charter customer base includes casino operators, the U.S. Department of Defense, ~~college,~~and collegiate and professional sports teams. Our charter business includes ad hoc, repeat, short-term and long-term service contracts with ~~pass through~~pass-through fuel arrangements and annual rate escalations. Most of our business is non-cyclical because the U.S. Department of Defense and sports teams continue to fly during normal economic downturns and our casino contracts are long-term in nature.

On December 13, 2019, we signed the ATSA with Amazon to provide air cargo services. WeFlying under the ATSA began in May 2020 and we are currently flying 12 Boeing 737-800 cargo aircraft for Amazon. Our CMI service is asset-light from a Sun Country perspective as Amazon supplies the aircraft and covers many of the operating expenses, including fuel, and provides all cargo loading and unloading services. We are responsible for flying the aircraft under our air carrier certificate, crew, aircraft line maintenance and insurance, all of which allow us to leverage our existing operational expertise from our ~~scheduled service and charter~~passenger businesses. Our cargo business also enables us to leverage certain assets, capabilities, and fixed costs to enhance profitability and promote growth across our Company.

Operations in Review

We believe a key component of our success is establishing Sun Country as a high growth, low-cost carrier in the United States by attracting customers with low fares and garnering repeat business by delivering a high-quality passenger experience, offering state-of-the-art interiors, ~~free~~complimentary streaming of in-flight entertainment to passenger devices, seat reclining and seat-back power in all of our aircraft.

The COVID-19 pandemic resulted in a dramatic decline in passenger demand across the U.S. airline industry. We experienced a significant decrease in demand related to the COVID-19 pandemic, which caused a material decline in our 2021 results as compared to pre-pandemic levels, and negatively impacted our financial condition and operating results.

During the third quarter of 2022, we have continued to see recovery in demand from the COVID-19 pandemic relative to demand in 2021, which may impact the comparability of results presented. However, the ongoing impact of the COVID-19 pandemic on overall demand for air travel remains uncertain and cannot be predicted

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~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~at this time. In addition, the impact of COVID-19 vaccine mandates, uncertainties in pilot staffing, higher aircraft~~Pilot training throughput issues, fuel ~~prices~~price volatility due to ~~global~~market conditions and geopolitical events, and the impact of macroeconomic conditions, including inflationary pressures, ~~could~~continue to impact our business and results of operations in the near term. While the COVID-19 pandemic-induced industry downturn delayed our growth in 2020 and 2021, we believe that our investments have positioned us to profitably grow our business in the long term following a rebound in the U.S. airline industry.

~~Operational challenges, driven by training throughput issues, fuel price increases and other inflationary pressures have impacted~~ the Company, as well as the industry. In the ~~near term,~~ current demand environment, the Company has been able to maintain relatively strong performance by relying on its core competency of optimizing capacity allocation by market, time of year, day of week and line of business by appropriately allocating capacity to best meet demand. Further, our diversified business model, which includes a focus on leisure and VFR passengers, charter and e-commerce related cargo service, is unique in the airline ~~travel demand will partially~~sector and mitigates the impact of economic and industry downturns on our business when compared with other large U.S. passenger airlines. This strategy has allowed the Company to offset a majority of these additional costs. Further, our Charter and Cargo businesses have the ~~additional~~ability to pass on certain costs, ~~associated with operational challenges, fuel price increases, and other inflationary pressures.~~including fuel. Our flexible business model gives us the ability to adjust our services in response to ~~these~~ market conditions, which is targeted at producing the highest possible returns for Sun Country.

For more information on our business and strategic advantages, see the "Business" and “Management’s Discussion and Analysis of Operations” sections within Part I, Item 1 and Part II, Item 7, respectively, in our ~~2021~~2022 10-K.

Components of Operations

For a more detailed discussion on the nature of transactions included in the separate line items of our Condensed Consolidated Statement of Operations, see “Management’s Discussion and Analysis of Operations” in Part II, Item 7 in our ~~2021~~2022 10-K.

~~Prior Periods' Financial Statement Revisions~~

~~As described in~~ ~~Note 2~~ to the Condensed Consolidated Financial Statements, we have revised previously issued financial statements to correct an immaterial misstatement. Accordingly, all prior period numbers included in this Management's Discussion and Analysis of Financial Condition reflect the effect of the revisions.

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

Operating Statistics


		Three Months Ended September 30, 2022 (1)								Three Months Ended September 30, 2021 (1)									Three Months Ended September 30, 2023 (1)								Three Months Ended September 30, 2022 (1)
		Scheduled Service			Charter		Cargo	Total		Scheduled Service			Charter		Cargo	Total			Scheduled Service			Charter		Cargo	Total		Scheduled Service			Charter		Cargo	Total
Departures (2)	Departures (2)	5,611			2,359		3,043	11,072		5,533			1,798		2,912	10,299		Departures (2)	6,878			2,688		3,432	13,128		5,611			2,359		3,043	11,072
Block hours (2)	Block hours (2)	16,947			4,623		8,739	30,492		17,313			3,835		8,533	29,842		Block hours (2)	19,935			5,274		9,287	34,874		16,947			4,623		8,739	30,492
Aircraft miles (2)	Aircraft miles (2)	6,777,764			1,629,061		3,399,149	11,864,450		7,046,575			1,423,300		3,376,084	11,897,035		Aircraft miles (2)	7,776,676			1,841,921		3,599,149	13,341,868		6,777,764			1,629,061		3,399,149	11,864,450
Available seat miles (ASMs) (thousands) (2)	Available seat miles (ASMs) (thousands) (2)	1,256,755			286,189			1,553,483		1,296,555			244,393			1,549,432		Available seat miles (ASMs) (thousands) (2)	1,446,462			322,722			1,791,485		1,256,755			286,189			1,553,483
Total revenue per ASM (TRASM) (cents)(3)	Total revenue per ASM (TRASM) (cents)(3)	12.34			14.99			12.75		8.90			13.83			9.63		Total revenue per ASM (TRASM) (cents)(3)	11.72			14.70			12.11		12.34			14.99			12.75
Average passenger aircraft during the period ~~(3)~~(4)	Average passenger aircraft during the period ~~(3)~~(4)							36.8								32.9		Average passenger aircraft during the period ~~(3)~~(4)							42.0								36.8
Passenger aircraft at end of period ~~(3)~~(4)	Passenger aircraft at end of period ~~(3)~~(4)							42								35		Passenger aircraft at end of period ~~(3)~~(4)							42								42
Cargo aircraft at end of period	Cargo aircraft at end of period							12								12		Cargo aircraft at end of period							12								12
Average daily aircraft utilization (hours) (3)								6.4								7.0
Aircraft Held for Operating Lease																		Aircraft Held for Operating Lease							5								—
Average daily aircraft utilization (hours) (4)																		Average daily aircraft utilization (hours) (4)							6.6								6.4
Average stage length (miles)	Average stage length (miles)							1,055								1,155		Average stage length (miles)							1,005								1,055
Revenue passengers carried (4)		908,967								785,348
Revenue passenger miles (RPMs) (thousands) (4)		1,101,011								1,011,936
Load factor (4)		87.6		%						78.0		%
Average base fare per passenger (4)		$	112.44							$	102.14
Ancillary revenue per passenger (4)		$	55.29							$	42.91
Charter revenue per block hour (4)					$	9,280							$	8,816
Revenue passengers carried (5)																		Revenue passengers carried (5)	1,090,172								908,967
Revenue passenger miles (RPMs) (thousands) (5)																		Revenue passenger miles (RPMs) (thousands) (5)	1,252,583								1,101,011
Load factor (5)																		Load factor (5)	86.6		%						87.6		%
Average base fare per passenger (5)																		Average base fare per passenger (5)	$	88.50							$	112.44
Ancillary revenue per passenger (5)																		Ancillary revenue per passenger (5)	$	64.61							$	55.29
Total fare per passenger (5)																		Total fare per passenger (5)	$	153.11							$	167.73
Charter revenue per block hour (5)																		Charter revenue per block hour (5)				$	8,994							$	9,280
Fuel gallons consumed (thousands) (2)	Fuel gallons consumed (thousands) (2)	13,352			3,056			16,509		13,475			2,760			16,321		Fuel gallons consumed (thousands) (2)	15,536			3,513			19,262		13,352			3,056			16,509
Fuel cost per gallon, excluding derivatives and other items								$	3.93							$	2.24
Fuel cost per gallon, excluding indirect fuel credits																		Fuel cost per gallon, excluding indirect fuel credits							$	3.19							$	3.93
Employees at end of period	Employees at end of period							2,354								2,014		Employees at end of period							2,692								2,354
Cost per available seat mile (CASM) (cents) (5)								13.28								9.83
Adjusted CASM (cents) (6)								7.55								6.39
Cost per available seat mile (CASM) (cents) (6)																		Cost per available seat mile (CASM) (cents) (6)							12.83								13.28
Adjusted CASM (cents) (7)																		Adjusted CASM (cents) (7)							7.75								7.55

______________________

(1)Certain operating statistics and metrics are not presented as they are not calculable or are not utilized by management.

(2)Total System operating statistics for Departures, Block hours, Aircraft miles, ASMs and Fuel gallons consumed include amounts related to flights operated for maintenance; therefore, the Total System amounts are higher than the sum of Scheduled Service, Charter Service and Cargo amounts.

(3)Scheduled Service TRASM includes Schedule Service revenue, Ancillary revenue, and ASM generating revenue classified within Other Revenue on the Condensed Consolidated Statements of Operations.

(4)Scheduled Service and Charter ~~service~~Service utilize the same fleet of aircraft. Aircraft counts and utilization metrics are shown on a system basis only.

~~(4)~~(5)Passenger-related statistics and metrics are shown only for ~~scheduled service.~~Scheduled Service. Charter ~~service~~Service revenue is driven by flight statistics.

~~(5)~~(6)CASM is a key airline cost metric. CASM is defined as operating expenses divided by total available seat miles.

~~(6)~~(7)Adjusted CASM is a non-GAAP measure derived from CASM by excluding fuel costs, costs related to our cargo operations, ~~special items,~~ and certain other costs that are unrelated to our airline operations.

~~-34-~~

-25-

Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

Nine Months Ended September 30, 2022 (1)
Nine Months Ended September 30, 2021 (1)
Scheduled
Service Charter Cargo Total Scheduled
Service Charter Cargo Total
Departures (2)
17,512 6,214 8,310 32,246 14,777 5,036 8,229 28,196
Block hours (2)
57,585 13,000 23,891 95,052 48,420 10,822 24,973 84,648
Aircraft miles (2)
23,112,200 4,630,257 9,209,477 37,113,673 19,758,087 4,005,794 9,884,576 33,780,294
Available seat miles (ASMs) (thousands) (2)
4,284,403 800,698 5,114,134 3,653,335 693,837 4,368,972
Total revenue per ASM (TRASM) (cents) 11.27 14.80 11.76 8.04 12.76 8.75
Average passenger aircraft during the period (3)
35.2 31.7
Passenger aircraft at end of period (3)
42 35
Cargo aircraft at end of period 12 12
Average daily aircraft utilization (hours) (3)
7.4 6.9
Average stage length (miles) 1,169 1,199
Revenue passengers carried (4)
2,715,707 2,038,399
Revenue passenger miles (RPMs) (thousands) (4)
3,565,501 2,705,969
Load factor (4)
83.2 % 74.1 %
Average base fare per passenger (4)
$ 123.24 $ 99.05
Ancillary revenue per passenger (4)
$ 51.39 $ 42.50
Charter revenue per block hour (4)
$ 9,118 $ 8,179
Fuel gallons consumed (thousands) (2)
44,940 9,085 54,322 37,299 7,739 45,269
Fuel cost per gallon, excluding derivatives and other items $ 3.81 $ 2.08
Employees at end of period 2,354 2,014
Cost per available seat mile (CASM) (cents) (5)
12.25 7.98
Adjusted CASM (cents) (6)
6.91 6.32
Operating Statistics

~~____________________~~


	Nine Months Ended September 30, 2023(1)								Nine Months Ended September 30, 2022 (1)
	Scheduled Service			Charter		Cargo	Total		Scheduled Service			Charter		Cargo	Total
Departures (2)	19,456			7,816		9,643	37,295		17,512			6,214		8,310	32,246
Block hours (2)	61,438			15,994		25,633	104,188		57,585			13,000		23,891	95,052
Aircraft miles (2)	24,139,614			5,522,791		9,732,308	39,758,210		23,112,200			4,630,257		9,209,477	37,113,673
Available seat miles (ASMs) (thousands) (2)	4,489,968			961,953			5,516,826		4,284,403			800,698			5,114,134
Total revenue per ASM (TRASM) (cents) (3)	12.80			14.89			13.01		11.27			14.80			11.76
Average passenger aircraft during the period (4)							41.8								35.2
Passenger aircraft at end of period (4)							42								42
Cargo aircraft at end of period							12								12
Aircraft Held for Operating Lease							5								—
Average daily aircraft utilization (hours) (4)							6.9								7.4
Average stage length (miles)							1,088								1,169
Revenue passengers carried (5)	3,093,536								2,715,707
Revenue passenger miles (RPMs) (thousands) (5)	3,900,975								3,565,501
Load factor (5)	86.9		%						83.2		%
Average base fare per passenger (5)	$	116.57							$	123.24
Ancillary revenue per passenger (5)	$	66.47							$	51.39
Total fare per passenger (5)	$	183.04							$	174.63
Charter revenue per block hour (5)				$	8,956							$	9,118
Fuel gallons consumed (thousands) (2)	48,046			11,063			59,734		44,940			9,085			54,322
Fuel cost per gallon, excluding indirect fuel credits							$	3.12							$	3.81
Employees at end of period							2,692								2,354
Cost per available seat mile (CASM) (cents) (6)							12.57								12.25
Adjusted CASM (cents) (7)							7.56								6.91

______________________

(1)Certain operating statistics and metrics are not presented as they are not calculable or are not utilized by management.

(3)Scheduled Service TRASM includes Schedule Service revenue, Ancillary revenue, and ASM generating revenue classified within Other Revenue on the Condensed Consolidated Statements of Operations.

(4)Scheduled Service and Charter ~~service~~Service utilize the same fleet of aircraft. Aircraft counts and utilization metrics are shown on a system basis only.

~~(4)~~(5)Passenger-related statistics and metrics are shown only for ~~scheduled service.~~Scheduled Service. Charter ~~service~~Service revenue is driven by flight statistics.

~~(5)~~(6)CASM is a key airline cost metric. CASM is defined as operating expenses divided by total available seat miles.

~~-35-~~-26-

Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

Results of Operations

For the Three Months Ended September 30, ~~2022~~2023 and ~~2021~~2022


		Three Months Ended September 30,				$ Change			% Change			Three Months Ended September 30,					$ Change		% Change
		2022		2021				2023					2022
Operating Revenues:	Operating Revenues:													Operating Revenues:
Scheduled Service	Scheduled Service	$	102,200	$	80,212	$	21,988		27	%	Scheduled Service	$	96,483		$	102,200	$	(5,717)	(6)	%
Charter Service	Charter Service	42,899		33,809		9,090			27	%	Charter Service	47,437			42,899		4,538		11	%
Ancillary	Ancillary	50,261		33,697		16,564			49	%	Ancillary	70,435			50,261		20,174		40	%
Passenger	Passenger	195,360		147,718		47,642			32	%	Passenger	214,355			195,360		18,995		10	%
Cargo	Cargo	23,687		24,400		(713)			(3)	%	Cargo	26,059			23,687		2,372		10	%
Other	Other	2,653		1,545		1,108			72	%	Other	8,462			2,653		5,809		219	%
Total Operating Revenues	Total Operating Revenues	221,700		173,663		48,037			28	%	Total Operating Revenues	248,876			221,700		27,176		12	%

Operating Expenses:	Operating Expenses:										Operating Expenses:
Aircraft Fuel	Aircraft Fuel	64,843		36,647		28,196			77	%	Aircraft Fuel	61,179			64,843		(3,664)		(6)	%
Salaries, Wages, and Benefits	Salaries, Wages, and Benefits	58,661		43,424		15,237			35	%	Salaries, Wages, and Benefits	72,541			58,661		13,880		24	%
Aircraft Rent	Aircraft Rent	1,949		3,925		(1,976)			(50)	%	Aircraft Rent	22			1,949		(1,927)		(99)	%
Maintenance	Maintenance	11,018		9,660		1,358			14	%	Maintenance	15,330			11,018		4,312		39	%
Sales and Marketing	Sales and Marketing	6,827		5,470		1,357			25	%	Sales and Marketing	7,569			6,827		742		11	%
Depreciation and Amortization	Depreciation and Amortization	17,181		14,710		2,471			17	%	Depreciation and Amortization	22,762			17,181		5,581		32	%
Ground Handling	Ground Handling	8,669		7,873		796			10	%	Ground Handling	9,382			8,669		713		8	%
Landing Fees and Airport Rent	Landing Fees and Airport Rent	12,926		12,069		857			7	%	Landing Fees and Airport Rent	13,958			12,926		1,032		8	%
Special Items, net		—		(65)		65			(100)	%
Other Operating, net	Other Operating, net	24,235		18,629		5,606			30	%	Other Operating, net	27,127			24,235		2,892		12	%
Total Operating Expenses	Total Operating Expenses	206,309		152,342		53,967			35	%	Total Operating Expenses	229,870			206,309		23,561		11	%
Operating Income	Operating Income	15,391		21,321		(5,930)			(28)	%	Operating Income	19,006			15,391		3,615		23	%

Non-operating Income (Expense):	Non-operating Income (Expense):										Non-operating Income (Expense):
Interest Income	Interest Income	1,610		28		1,582			NM		Interest Income	2,480			1,610		870		54	%
Interest Expense	Interest Expense	(7,493)		(6,286)		(1,207)			19	%	Interest Expense	(11,403)			(7,493)		(3,910)		52	%
Other, net	Other, net	3,422		456		2,966			NM		Other, net	(15)			3,422		(3,437)		(100)	%
Total Non-operating Expense, net	Total Non-operating Expense, net	(2,461)		(5,802)		3,341			(58)	%	Total Non-operating Expense, net	(8,938)			(2,461)		(6,477)		263	%

Income Before Income Tax	Income Before Income Tax	12,930		15,519		(2,589)			(17)	%	Income Before Income Tax	10,068			12,930		(2,862)		(22)	%
Income Tax Expense	Income Tax Expense	2,253		2,140		113			5	%	Income Tax Expense	2,477			2,253		224		10	%
Net Income	Net Income	$	10,677	$	13,379	$	(2,702)		(20)	%	Net Income	$	7,591		$	10,677	$	(3,086)	(29)	%


"NM" stands for not meaningful

Total Operating Revenues increased $27,176, or 12%, to $248,876 for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The revenue increase was largely driven by a 14% increase in average passenger aircraft, which led to a 20% increase in passenger segment departures and a 15% increase in passenger segment ASMs. The volume increases offset the decrease to average total fare per passenger of $14.62, or 9%, to $153.11 for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. Total Operating Revenues for the three months ended

~~-36-~~-27-

Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~Total~~September 30, 2023 benefited from the $5,870 of rental revenue associated with the five Aircraft Held for Operating ~~Revenues increased $48,037,~~Lease acquired during the first half of 2023.

Scheduled Service. Scheduled Service revenue decreased $5,717, or ~~28%~~6%, to ~~$221,700~~$96,483 for the three months ended September 30, ~~2022 from $173,663 for~~2023 as compared to the three months ended September 30, 2021. The increase was largely driven by an increase in demand for passenger service during 2022 as compared to 2021, which was significantly impacted by a decrease in passenger demand due to the COVID-19 pandemic.

~~Scheduled Service~~. ~~Scheduled service revenue increased by $21,988, or 27%, to $102,200 for the three months ended September 30, 2022 from $80,212 for the three months ended September 30, 2021.~~2022. The table below presents select operating data for scheduled service, expressed as quarter-over-quarter changes:


		Three Months Ended September 30,						Change					% Change			Three Months Ended September 30,									Change				% Change
		2022			2021							2023					2022
Departures	Departures	5,611			5,533						78					1		%	Departures	6,878				5,611				1,267			23	%
Passengers	Passengers	908,967			785,348			123,619					16	%	Passengers	1,090,172					908,967				181,205				20	%
Average base fare per passenger	Average base fare per passenger	$	112.44		$	102.14		$	10.30				10	%	Average base fare per passenger	$	88.50				$	112.44			$	(23.94)			(21)	%
RPMs (thousands)	RPMs (thousands)	1,101,011			1,011,936			89,075					9	%	RPMs (thousands)	1,252,583					1,101,011				151,572				14	%
ASMs (thousands)	ASMs (thousands)	1,256,755			1,296,555			(39,800)					(3)	%	ASMs (thousands)	1,446,462					1,256,755				189,707				15	%
TRASM (cents)	TRASM (cents)	12.34			8.90			3.44					39	%	TRASM (cents)	11.72					12.34				(0.62)				(5)	%
Passenger load factor	Passenger load factor	87.6		%	78.0		%	9.6		pts			N/A		Passenger load factor	86.6		%			87.6		%		(1.0)		pts		N/A

The quarter-over-quarter increases in certain ~~scheduled service~~Scheduled Service operating data were primarily the result of ~~the continued recovery in demand from the COVID-19 pandemic in the third quarter of 2022 relative to the same period in 2021. The quarter-over-quarter~~an increase in ~~demand is demonstrated~~capacity and materially consistent demand. Scheduled Service departures and ASMs increased by 23% and 15%, respectively, as a ~~39% increase in TRASM, a 10%~~result of the 14% quarter-over-quarter increase in the average ~~base fare per~~ passenger ~~and a 16%~~aircraft for the period. This increase in capacity drove the 20% increase in passengers, ~~even as~~while TRASM and load factor had decreases quarter-over-quarter. The decrease quarter-over-quarter ~~departures were materially consistent and ASMs decreased by 3%. The year-over-year revenue increase is slightly offset~~was further impacted by the ~~introduction of a new~~rate increase for an Ancillary product, which reclassified ~~approximately $11,600~~portions of revenue from Scheduled Service to ~~Ancillary.~~

~~Charter Service.~~ ~~Charter service~~Ancillary after its introduction in the second quarter of 2022. The quarter-over-quarter increase in rate for this Ancillary product decreased Scheduled Service revenue ~~increased $9,090, or 27%, to $42,899~~by $24,037 for the three months ended September 30, ~~2022, from $33,809~~2023, as compared to $11,633 during the three months ended September 30, 2022.

Charter Service. Charter Service revenue increased $4,538, or 11%, to $47,437 for the three months ended September 30, ~~2021. Charter revenue per block hour was $9,280 for~~2023, as compared to the three months ended September 30, ~~2022, as compared to $8,816 for the three months ended September 30, 2021, for an increase of 5%.~~2022. The increase in Charter service revenue was driven by ~~the~~a 14% increase in ~~rates and a 21% increase in~~both Charter Service block hours ~~due to the continued recovery from the COVID-19 pandemic~~ and ~~new~~departures as a result of increased activity with long-term charter ~~agreements that began operations during 2022. Rates in 2021 suffered from significant competitive pressure because other carriers had excess aircraft, crew, and resources to operate charter capacity.~~customers. Charter Service revenue per block hour was materially consistent quarter-over-quarter.

Ancillary. Ancillary revenue increased ~~by $16,564,~~$20,174, or ~~49%~~40%, to ~~$50,261~~$70,435 for the three months ended September 30, ~~2022, from $33,697 for~~2023, as compared to the three months ended September 30, 2021. The 16% increase in scheduled passengers during the period resulted in greater sales of air travel-related services, such as: baggage fees, seat selection and upgrade fees, and on-board sales. Ancillary revenue for the three months ended September 30, 2022 was further benefited by the introduction of a new a new ancillary product that began in the second quarter of 2022 and reclassified approximately $11,600 of revenue from Scheduled Service to Ancillary.2022. Ancillary revenue was ~~$55.29~~$64.61 per passenger in the three months ended September 30, ~~2022,~~2023, up ~~$12.38,~~$9.32 or ~~29%~~17%, ~~from~~as compared to the three months ended September 30, ~~2021. Revenue per passenger increased due to~~2022. The increase in Scheduled Service passengers during the ~~inclusion~~period resulted in a higher volume of ~~a new ancillary~~sales for air travel-related services, such as baggage fees, seat selection and upgrade fees, priority check-in and boarding fees, itinerary service fees, other fees and on-board sales. The increase in revenue was further supported by rate increases for our Ancillary products. The change quarter-over-quarter was also impacted by an increase in rate for an Ancillary product, ~~that~~which reclassified portions of revenue from Scheduled Service to Ancillary after its introduction in the ~~return~~second quarter of ~~onboard food and beverage sales, and~~2022. The increase in rate increased ~~demand.~~revenue by $24,037 for the three months ended September 30, 2023, as compared to $11,633 during the three months ended September 30, 2022.

Cargo. Revenue from ~~cargo~~Cargo services ~~decreased by $713,~~increased $2,372, or 3%10%, to ~~$23,687~~$26,059 for the three months ended September 30, ~~2022, from $24,400 for~~2023, as compared to the three months ended September 30, ~~2021.~~2022. The ~~decrease~~increase was primarily driven by a 13% and 6% quarter-over-quarter increase in departures and block hours, respectively. Revenue

~~-37-~~-28-

Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~primarily driven by an approximately $1,700 revenue benefit recognized~~during the three months ended September 30, 2023 also benefited from the annual rate escalation included in the ~~prior year, slightly offset by a 2% and 4% increase in block hours and departures, respectively.~~ATSA, which went into effect on December 13, 2022.

Other. Other revenue ~~was $2,653~~increased $5,809, or 219%, to $8,462 for the three months ended September 30, ~~2022,~~2023, as compared to ~~$1,545 for~~ the three months ended September 30, ~~2021. The increase was primarily driven by increased~~2022. Other revenue benefited from ~~Sun Country Vacations as a result~~the $5,870 of ~~higher year-over-year bookings.~~rental revenue associated with the five Aircraft Held for Operating Lease acquired during the first half of 2023.

Operating Expenses

Aircraft Fuel. We believe Aircraft Fuel expense, excluding ~~derivatives and other items,~~indirect fuel credits, is the best measure of the effect of fuel prices on our business as it consists solely of ~~items associated with~~direct fuel ~~for~~expenses that are related to our operations and is consistent with how management analyzes our operating performance. This measure is defined as GAAP Aircraft Fuel expense, excluding ~~gains related to~~indirect fuel ~~hedge derivative contracts and certain costs~~credits that are recognized within Aircraft Fuel expense, but are not directly related to our Fuel Cost per Gallon.

The primary components of Aircraft Fuel expense are shown in the following table:

Three Months Ended September 30, Change %
Change
2022 2021
Total Aircraft Fuel Expense $ 64,843 $ 36,647 $ 28,196 77 %
Exclude: Fuel Derivative Losses — (72) 72 (100) %
Other Excluded Items 71 (5) 76 NM
Aircraft Fuel Expense, Excluding Derivatives and Other Items $ 64,914 $ 36,570 $ 28,344 78 %
Fuel Gallons Consumed (thousands) 16,509 16,321 188 1 %
Fuel Cost per Gallon, Excluding Derivatives and Other Items $ 3.93 $ 2.24 $ 1.69 75 %


	Three Months Ended September 30,				Change		% Change
	2023		2022
Total Aircraft Fuel Expense	$	61,179	$	64,843	$	(3,664)	(6)	%
Indirect Fuel Credits	175		71		104		146	%
Aircraft Fuel Expense, Excluding Indirect Fuel Credits	$	61,354	$	64,914	$	(3,560)	(5)	%
Fuel Gallons Consumed (thousands)	19,262		16,509		2,753		17	%
Fuel Cost per Gallon, Excluding Indirect Fuel Credits	$	3.19	$	3.93	$	(0.74)	(19)	%


~~"NM" stands for not meaningful~~

~~The increase in~~ Aircraft Fuel expense ~~was mainly driven by the 75% year-over-year increase~~decreased 6% quarter-over-quarter primarily due to a 19% decrease in the average ~~price~~fuel cost per gallon, partially offset by a 17% increase in consumption. The price of fuel ~~due to current market conditions, further exacerbated~~during the three months ended September 30, 2022 was significantly impacted by global geopolitical events.

Salaries, Wages, and Benefits. Salaries, Wages, and Benefits expense increased ~~$15,237,~~$13,880, or ~~35%~~24%, to ~~$58,661~~$72,541 for the three months ended September 30, ~~2022,~~2023, as compared to ~~$43,424 for~~ the three months ended September 30, ~~2021.~~2022. The quarter-over-quarter increase in Salaries, Wages, and Benefits was ~~primarily driven~~impacted by ~~the new Collective Bargaining Agreement ("CBA") for our pilots, which went into effect~~a 14% increase in ~~the first quarter of 2022,~~employee headcount and increased per unit costs for pilots and ~~an increase in Passenger Service block hours. The employee headcount as of September 30, 2022 was 2,354, as compared~~flight crews to ~~2,014 as of September 30, 2021, for an increase of 340, or 17%. The increase in employee headcount was driven by increased passenger demand as we continue our recovery from~~support the ~~impacts of the COVID-19 pandemic.~~current flight schedule.

Aircraft Rent. Aircraft Rent expense decreased ~~$1,976,~~$1,927, or ~~50%~~99%, to ~~$1,949~~$22 for the three months ended September 30, ~~2022,~~2023, as compared to ~~$3,925 for~~ the three months ended September 30, ~~2021.~~2022. Aircraft Rent expense decreased primarily due to the composition of our aircraft fleet shifting from aircraft under operating leases (expense is recorded within Aircraft Rent) to owned aircraft or finance leases (expense is recorded through Depreciation and Amortization and Interest Expense). ~~Specifically,~~As of September 30, 2023 and 2022, we operated no and two aircraft under operating leases, respectively. Accordingly, Aircraft Rent expense is expected to be nominal in future periods. The acquisition of new aircraft through operating leases is at the ~~nine~~discretion of management.

Maintenance. Maintenance expense increased $4,312, or 39%, to $15,330 for the three months ended September 30, ~~2022, we executed lease amendments which modified two aircraft from operating leases~~2023, as compared to ~~finance leases~~the three months ended September 30, 2022. The increase in Maintenance expense was primarily driven by the timing of heavy maintenance events and unscheduled

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~and purchased two aircraft previously classified~~repairs, as ~~operating leases. As of September 30, 2022 and 2021, there were two and six aircraft under operating leases, respectively~~.

~~Maintenance. Maintenance materials and repair expense increased $1,358, or 14%, to $11,018 for the three months ended September 30, 2022,~~well as ~~compared to $9,660 for the three months ended September 30, 2021. The increase in~~higher maintenance ~~expense was primarily driven by increased line maintenance for the Cargo fleet, increased per unit~~ costs due to ~~incremental contract labor spend, and an~~the quarter-over-quarter increase in ~~certain aircraft acquisition expenses that are not eligible for capitalization.~~the size of our fleet and operations.

Sales and Marketing. Sales and Marketing expense increased ~~$1,357,~~$742, or ~~25%~~11%, to ~~$6,827~~$7,569 for the three months ended September 30, ~~2022,~~2023, as compared to ~~$5,470 for~~ the three months ended September 30, ~~2021.~~2022. The change quarter-over-quarter ~~increase~~ was primarily driven by a ~~$1,300~~$415 increase in credit card processing ~~and global distribution system~~ fees, ~~due to volume and rate increases.~~as a result of the 20% increase in Scheduled Service passengers.

Depreciation and Amortization. Depreciation and Amortization expense increased ~~$2,471,~~$5,581, or ~~17%~~32%, to ~~$17,181~~$22,762 for the three months ended September 30, ~~2022,~~2023, as compared to ~~$14,710 for~~ the three months ended September 30, ~~2021.~~2022. The increase was primarily due to the impact of a change in the composition of our aircraft fleet that results in an increased number of owned aircraft and aircraft under finance leases (the expense is recorded as Depreciation and Amortization and Interest Expense). As of September 30, ~~2022~~2023 and ~~2021,~~2022, there were 2947 and 2140 aircraft that were owned ~~aircraft and 11 and eight~~or under finance leases, respectively.

Ground Handling. Ground Handling expense increased ~~$796,~~$713, or ~~10%~~8%, to ~~$8,669~~$9,382 for the three months ended September 30, ~~2022,~~2023, as compared to ~~$7,873 for~~ the three months ended September 30, ~~2021.~~2022. The increase was primarily driven by the 20% increase in Passenger segment departures as a result of our expanding operations, as well as rate increases due to ~~new charter agreements that began operations during 2022.~~market pressures.

Landing Fees and Airport Rent. Landing Fees and Airport Rent increased ~~$857,~~$1,032, or 7%8%, to ~~$12,926~~$13,958 for the three months ended September 30, ~~2022,~~2023, as compared to ~~$12,069~~the three months ended September 30, 2022. The increase was primarily driven by the 20% increase in Passenger segment departures as a result of our expanding operations, as well as rate increases due to market pressures.

Other Operating, net. Other operating, net increased $2,892, or 12%, to $27,127 for the three months ended September 30, ~~2021. The increase was~~2023, as compared to the three months ended September 30, 2022, primarily due to ~~new charter agreements that began operations during 2022 and~~increases in costs associated with our operational growth, as well as an increase in ~~rates.~~third-party vendor spend.

Non-operating Income (Expense)

~~Special Items, net~~Interest Income. ~~There were no Special Items recorded~~Interest income increased $870, or 54%, to $2,480 for the three months ended September 30, ~~2022,~~2023, as compared to ~~a net benefit~~the three months ended September 30, 2022. The increase was primarily due to increases in the amount of ~~$65~~investments held and higher interest rates.

Interest Expense. Interest expense increased $3,910, or 52%, to $11,403 for the three months ended September 30, ~~2021.~~2023, as compared to the three months ended September 30, 2022. The change was primarily due to a 19% increase in owned aircraft that were financed or refinanced with debt proceeds. This includes the term loan credit facility for the purpose of financing the five Aircraft Held for Operating Lease purchased during the first half of 2023, which was financed in a higher interest rate environment. For more information on ~~Special Items,~~the Company's Debt, see Note 126 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Other, ~~Operating,~~ net. Other, ~~operating,~~ net ~~increased $5,606,~~decreased $3,437, or ~~30%,~~100% to ~~$24,235~~a net expense of $15 for the three months ended September 30, ~~2022,~~2023, as compared to ~~$18,629~~a net benefit of $3,422 for the three months ended September 30, 2021, mainly due to increased departures within the Passenger segment, which resulted in higher crew and other employee travel costs, catering expenses, and other operational overhead costs, as well as an increase in rates associated with these expenditures.

~~Non-operating Income (Expense)~~

~~Interest Income. Interest income~~2022. The decrease was ~~$1,610 for the three months ended September 30, 2022~~ primarily due to the ~~change in investment strategy which led~~$3,500 adjustment to the ~~purchase of debt securities during 2022. Interest income for~~estimated TRA liability in the ~~three months ended September 30, 2021 was nominal.~~

~~Interest Expense~~. Interest expense increased $1,207, or 19%, to $7,493 for the three months ended September 30, 2022, as compared to $6,286 for the three months ended September 30, 2021. The increase was primarily due to a larger mix of owned aircraft that were financed or refinanced with the proceeds from the 2022-1 EETC, as well as an increase in aircraft accounted for as finance leases during the three months endedprior year.

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

Income Tax. The Company's effective tax rate for the three months ended September 30, 2023 was 24.6% compared to 17.4% for the three months ended September 30, 2022. ~~These amounts were slightly~~The increase in the effective tax rate was primarily due to the $3,500 non-deductible adjustment of the TRA liability in the prior period, partially offset by ~~$1,049 of capitalized interest.~~stock compensation benefits. For more information on the ~~Company's Debt,~~TRA liability, see Note 710 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

~~Other, net. Other, net increased by $2,966 to a net benefit~~Results of ~~$3,422 for~~Operations

For the ~~three months ended~~Nine Months Ended September 30, 2023 and 2022 as compared to net benefit of $456 for the three months ended September 30, 2021. The increase was primarily due to the $3,500 adjustment to decrease the estimated TRA liability in the current quarter, as compared to the $1,100 adjustment to decrease the estimated TRA liability in the prior year. For more information on the TRA liability, see ~~Note 11~~ ~~of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.~~

~~Income Tax.~~ The Company's effective tax rate for the three months ended September 30, 2022 was 17.4% compared to 13.8% for the three months ended September 30, 2021. The increase in the effective tax rate was primarily due to the non-taxable adjustment of the TRA liability, partially offset by stock compensation benefits.


	Nine Months Ended September 30,				$ Change		% Change
	2023		2022
Operating Revenues:
Scheduled Service	$	360,607	$	334,679	$	25,928	8	%
Charter Service	143,250		118,526		24,724		21	%
Ancillary	205,633		139,548		66,085		47	%
Passenger	709,490		592,753		116,737		20	%
Cargo	74,437		65,930		8,507		13	%
Other	20,150		8,607		11,543		134	%
Total Operating Revenues	804,077		667,290		136,787		20	%

Operating Expenses:
Aircraft Fuel	185,829		206,334		(20,505)		(10)	%
Salaries, Wages, and Benefits	223,890		178,576		45,314		25	%
Aircraft Rent	2,281		7,347		(5,066)		(69)	%
Maintenance	44,311		35,794		8,517		24	%
Sales and Marketing	26,005		23,336		2,669		11	%
Depreciation and Amortization	64,577		49,364		15,213		31	%
Ground Handling	28,299		24,838		3,461		14	%
Landing Fees and Airport Rent	36,847		32,708		4,139		13	%
Other Operating, net	81,663		68,401		13,262		19	%
Total Operating Expenses	693,702		626,698		67,004		11	%
Operating Income	110,375		40,592		69,783		172	%

Non-operating Income (Expense):
Interest Income	7,766		2,166		5,600		259	%
Interest Expense	(31,272)		(23,097)		(8,175)		35	%
Other, net	(370)		(5,156)		4,786		(93)	%
Total Non-operating Expense, net	(23,876)		(26,087)		2,211		(8)	%

Income Before Income Tax	86,499		14,505		71,994		496	%
Income Tax Expense	19,963		4,113		15,850		385	%
Net Income	$	66,536	$	10,392	$	56,144	540	%


"NM" stands for not meaningful

~~-40-~~

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~Results of Operations~~

~~For the Nine Months Ended September 30, 2022 and 2021~~

Nine Months Ended September 30, $
Change %
Change
2022 2021
Operating Revenues:
Scheduled Service $ 334,679 $ 201,905 $ 132,774 66 %
Charter Service 118,526 88,511 30,015 34 %
Ancillary 139,548 86,626 52,922 61 %
Passenger 592,753 377,042 215,711 57 %
Cargo 65,930 68,084 (2,154) (3) %
Other 8,607 5,338 3,269 61 %
Total Operating Revenues 667,290 450,464 216,826 48 %
Operating Expenses:
Aircraft Fuel 206,334 90,631 115,703 128 %
Salaries, Wages, and Benefits 178,576 129,815 48,761 38 %
Aircraft Rent 7,347 13,339 (5,992) (45) %
Maintenance 35,794 30,170 5,624 19 %
Sales and Marketing 23,336 16,402 6,934 42 %
Depreciation and Amortization 49,364 41,532 7,832 19 %
Ground Handling 24,838 19,654 5,184 26 %
Landing Fees and Airport Rent 32,708 29,606 3,102 10 %
Special Items, net — (72,419) 72,419 (100) %
Other Operating, net 68,401 50,026 18,375 37 %
Total Operating Expenses 626,698 348,756 277,942 80 %
Operating Income 40,592 101,708 (61,116) (60) %
Non-operating Income (Expense):
Interest Income 2,166 52 2,114 NM
Interest Expense (23,097) (19,487) (3,610) 19 %
Other, net (5,156) 18,505 (23,661) NM
Total Non-operating Expense, net (26,087) (930) (25,157) NM
Income Before Income Tax 14,505 100,778 (86,273) (86) %
Income Tax Expense 4,113 18,444 (14,331) (78) %
Net Income $ 10,392 $ 82,334 $ (71,942) (87) %


~~"NM" stands for not meaningful~~

Total Operating Revenues increased ~~by $216,826,~~$136,787, or ~~48%~~20%, to ~~$667,290~~$804,077 for the nine months ended September 30, ~~2022 from $450,464~~2023 as compared to the nine months ended September 30, 2022. The revenue increase was largely driven by an increase in demand for our passenger service offerings during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. The increase in demand resulted in an increase to average total fare per passenger of $8.41, or 5%, to $183.04 for the nine months ended September 30, ~~2021.~~2023 as compared to 2022, as well as a 3.7 percentage point increase in Scheduled Service passenger load factor over the same period. The revenue increase was further benefited from a 19% increase in average passenger aircraft, which increased capacity.

Scheduled Service. Scheduled Service revenue increased $25,928, or 8%, to $360,607 for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The table below presents select operating data for Scheduled Service, expressed as year-over-year changes:


	Nine Months Ended September 30,						Change			% Change
	2023			2022
Departures	19,456			17,512			1,944			11	%
Passengers	3,093,536			2,715,707			377,829			14	%
Average base fare per passenger	$	116.57		$	123.24		$	(6.67)		(5)	%
RPMs (thousands)	3,900,975			3,565,501			335,474			9	%
ASMs (thousands)	4,489,968			4,284,403			205,565			5	%
TRASM (cents)	12.80			11.27			1.53			14	%
Passenger load factor	86.9		%	83.2		%	3.7		pts	N/A

The year-over-year increases in certain Scheduled Service operating data were primarily the result of an increase in demand year-over-year. The year-over-year increase in demand is demonstrated by a 14% increase in passengers, a 3.7 percentage point increase in passenger load factor, and a 14% increase in TRASM. The year-over-year Scheduled Service revenue increase is slightly offset by the introduction of a new Ancillary product during the second quarter of 2022, which reclassified approximately $62,635 of revenue from Scheduled Service to Ancillary during the nine months ended September 30, 2023, as compared to $17,184 during the nine months ended September 30, 2022. This reclassification was further impacted by an increase in rate for the Ancillary product.

Charter Service. Charter Service revenue increased $24,724, or 21%, to $143,250 for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. The increase in Charter Service revenue was ~~largely~~ driven by ana 26% and 23%increase in Charter Service departures and block hours, respectively. Charter Service revenue per block hour was materially consistent year-over-year.

Ancillary. Ancillary revenue increased $66,085, or 47%, to $205,633 for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. Ancillary revenue was $66.47 per passenger in the nine months ended September 30, 2023, up $15.08 or 29%, from the nine months ended September 30, 2022. Ancillary revenue benefited from the introduction of a new Ancillary product during the second quarter of 2022, which reclassified approximately $62,635 of revenue from Scheduled Service to Ancillary during the nine months ended September 30, 2023, as compared to $17,184 during the nine months ended September 30, 2022. The 14% increase in Scheduled Service passengers during the period resulted in greater sales of air travel-related services, such as baggage fees, seat selection and upgrade fees, priority check-in and boarding fees, itinerary service fees, other fees and on-board sales. The increase in Ancillary revenue was further supported by rate increases for our Ancillary products.

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

Cargo. Revenue from Cargo services increased $8,507, or 13%, to $74,437 for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. The increase was primarily driven by an 16% and 7% increase in ~~demand~~Cargo departures and block hours, respectively. Revenue during the nine months ended September 30, 2023 also benefited from the annual rate escalation included in the ATSA, which went into effect on December 13, 2022.

Other. Other revenue increased $11,543, or 134%, to $20,150 for ~~passenger service~~the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. Other revenue in the current year benefited from $11,742 of rental revenue associated with the five Aircraft Held for Operating Lease acquired during the first half of 2023.

Operating Expenses

Aircraft Fuel. We believe Aircraft Fuel expense, excluding indirect fuel credits, is the best measure of the effect of fuel prices on our business as it consists solely of direct fuel expenses that are related to our operations and is consistent with how management analyzes our operating performance. This measure is defined as GAAP Aircraft Fuel expense, excluding indirect fuel credits that are recognized within Aircraft Fuel expense, but are not directly related to our Fuel Cost per Gallon.

The primary components of Aircraft Fuel expense are shown in the following table:


	Nine Months Ended September 30,				Change		% Change
	2023		2022
Total Aircraft Fuel Expense	$	185,829	$	206,334	$	(20,505)	(10)	%
Indirect Fuel Credits	827		598		229		38	%
Aircraft Fuel Expense, Excluding Indirect Fuel Credits	$	186,656	$	206,932	$	(20,276)	(10)	%
Fuel Gallons Consumed (thousands)	59,734		54,322		5,412		10	%
Fuel Cost per Gallon, Excluding Indirect Fuel Credits	$	3.12	$	3.81	$	(0.69)	(18)	%

Aircraft Fuel expense decreased by 10% year-over-year primarily due to an 18% decrease in the average fuel cost per gallon, slightly offset by a 10% increase in consumption. The price of fuel during the nine months ended September 30, 2022 ~~as compared to 2021, which~~ was significantly impacted by ~~a decrease in passenger demand due to the COVID-19 pandemic.~~global geopolitical events.

~~Scheduled Service~~Salaries, Wages, and Benefits. ~~Scheduled service revenue~~Salaries, Wages, and Benefits expense increased ~~by $132,774,~~$45,314, or ~~66%~~25%, to ~~$334,679~~$223,890 for the nine months ended September 30, ~~2022 from $201,905~~2023, as compared to the nine months ended September 30, 2022. The year-over-year increase in Salaries, Wages, and Benefits was due to a 14% increase in employee headcount, an acceleration of stock-based compensation expense recognized during the current year for our time-based and performance-based stock options, and increased per unit costs for pilots and flight crews to support the current flight schedule. For more information on the acceleration of stock-based compensation for our time-based and performance-based stock options, see Note 7 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Aircraft Rent. Aircraft Rent expense decreased $5,066, or 69%, to $2,281 for the nine months ended September 30, ~~2021. The table below presents select operating data for scheduled service:~~

Nine Months Ended September 30, Change %
Change
2022 2021
Departures 17,512 14,777 2,735 19 %
Passengers 2,715,707 2,038,399 677,308 33 %
Average base fare per passenger $ 123.24 $ 99.05 $ 24.19 24 %
RPMs (thousands) 3,565,501 2,705,969 859,532 32 %
ASMs (thousands) 4,284,403 3,653,335 631,068 17 %
TRASM (cents) 11.27 8.04 3.23 40 %
Passenger load factor 83.2 % 74.1 % 9.1 pts N/A

~~The significant year-over-year increases in all scheduled service operating data was primarily the result of the continued recovery in demand from the COVID-19 pandemic in~~2023, as compared to the nine months ended September 30, 2022 relative to the same period in 2021. The year-over-year increase in demand is demonstrated by a 40% increase in TRASM, 19% increase in departures, a 33% increase in passengers, and a 24% increase in the average base fare per passenger. The year-over-year revenue increase is slightly offset by the introduction of a new Ancillary product, which reclassified approximately $17,200 of revenue from Scheduled Service to Ancillary.

~~Charter Service.~~ Charter service revenue increased $30,015, or 34%, to $118,526 for the nine months ended September 30, 2022, from $88,511 for the nine months ended September 30, 2021. Charter revenue per block hour was $9,118 for the nine months ended September 30, 2022, as compared to $8,179 for the nine months ended September 30, 2021, for an increase of 11%. The increase in Charter service revenue was driven by the increase in rates and a 20% increase in Charter block hours2022. Aircraft Rent expense decreased primarily due to the ~~continued recovery~~composition of our aircraft fleet continuing to shift from ~~the COVID-19 pandemic~~aircraft under operating leases (expense is recorded within Aircraft Rent) to owned aircraft or finance leases (expense is recorded through Depreciation and ~~new charter agreements that began operations during 2022. Rates in 2021 suffered from significant competitive pressure because other carriers had excess aircraft, crew,~~Amortization and ~~resources to operate charter capacity.~~

~~Ancillary~~Interest Expense). ~~Ancillary revenue increased by $52,922, or 61%, to $139,548 for the nine months ended~~ As of September 30, 2023 and 2022, from $86,626 for the nine months ended September 30, 2021. The 33% increase in scheduled passengers during the period resulted in greater sales of air travel-related services, such as: baggage fees, seat selection and upgrade fees, and on-board sales. Ancillary revenue for the nine months ended September 30, 2022 was further benefited by the introduction of a new a new ancillary product that began in the second quarter of 2022 and reclassified approximately $17,200 of revenue from Scheduled Service to Ancillary. Ancillary revenue was $51.39 per passenger in the nine months ended September 30, 2022, up $8.89, or 21%, from the nine months ended September 30, 2021. Revenue per passenger increased due to the inclusion of a new ancillary product that reclassified portions of revenue from Scheduled Service to Ancillary, the return of onboard food and beverage sales, and increased demand.

~~Cargo~~. Revenue from cargo services decreased by $2,154, or 3%, to $65,930 for the nine months ended September 30, 2022, from $68,084 for the nine months ended September 30, 2021. The number of departures was materially consistent year-over-year; however, block hours declined 4%. The year-over-year decrease in block hours was primarily driven by heavy maintenance events. Operational factors and an approximately $1,700 revenue benefit recognized in 2021 also contributed to the year-over-year revenue decrease.we

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

operated no and two aircraft under operating leases, respectively. Accordingly, Aircraft Rent expense is expected to be nominal in future periods. The acquisition of new aircraft through operating leases is at the discretion of management.

~~Other~~Maintenance. ~~Other revenue was $8,607~~ Maintenance expense increased $8,517, or 24%, to $44,311 for the nine months ended September 30, ~~2022,~~2023, as compared to ~~$5,338~~the nine months ended September 30, 2022. The increase in Maintenance expense was primarily driven by higher maintenance costs due to the year-over-year increase in the size of our fleet and operations, as well as an increase in heavy maintenance events and unscheduled repair events.

Sales and Marketing. Sales and Marketing expense increased $2,669, or 11%, to $26,005 for the nine months ended September 30, ~~2021.~~2023, as compared to the nine months ended September 30, 2022. The year-over-year increase was ~~primarily~~ driven by anapproximately $2,700 increase in ~~revenue from Sun Country Vacations~~credit card processing and other travel agent fees, as a result of ~~higher year-over-year~~the 14% increase in Scheduled Service passengers. These increases were partially offset by a decrease in global distribution system expenses due to a new indirect distribution method that reduced the fees paid for bookings.

~~Operating Expenses~~

~~Aircraft Fuel~~Depreciation and Amortization. ~~We believe Aircraft Fuel expense, excluding derivatives~~Depreciation and other items, is the best measure of the effect of fuel prices on our business as it consists solely of items associated with fuel for our operations and is consistent with how management analyzes our operating performance. This measure is defined as GAAP Aircraft Fuel expense, excluding gains related to fuel hedge derivative contracts and certain costs that are recognized within Aircraft Fuel expense, but are not directly related to our Fuel Cost per Gallon.

~~The primary components of Aircraft Fuel expense are shown in the following table:~~

Nine Months Ended September 30, Change %
Change
2022 2021
Total Aircraft Fuel Expense $ 206,334 $ 90,631 $ 115,703 128 %
Exclude: Fuel Derivative Gains — 3,527 (3,527) (100) %
Other Excluded Items 598 64 534 NM
Aircraft Fuel Expense, Excluding Derivatives and Other Items $ 206,932 $ 94,222 $ 112,710 120 %
Fuel Gallons Consumed (thousands) 54,322 45,269 9,053 20 %
Fuel Cost per Gallon, Excluding Derivatives and Other Items $ 3.81 $ 2.08 $ 1.73 83 %

The increase in Aircraft Fuel expense was mainly driven by the 83% increase in the average price per gallon of fuel, and a 20% increase in fuel gallons consumed resulting from a recovery in demand as demonstrated by a 19% increase in passenger service block hours.

~~Salaries~~, ~~Wages, and Benefits. Salaries, Wages, and Benefits~~Amortization expense increased ~~$48,761,~~$15,213, or ~~38%~~31%, to ~~$178,576~~$64,577 for the nine months ended September 30, ~~2022,~~2023, as compared to ~~$129,815~~the nine months ended September 30, 2022. The increase was primarily due to the impact of a change in the composition of our aircraft fleet that results in an increased number of owned aircraft and aircraft under finance leases (the expense is recorded as Depreciation and Amortization and Interest Expense). As of September 30, 2023 and 2022, there were 47 and 40 aircraft that were owned or under finance leases, respectively.

Ground Handling. Ground Handling expense increased $3,461, or 14%, to $28,299 for the nine months ended September 30, ~~2021.~~2023, as compared to the nine months ended September 30, 2022. The increase was primarily driven by the ~~new Collective Bargaining Agreement ("CBA") for our pilots, which went into effect in the first quarter of 2022, increased per unit costs, and an~~15% increase in Passenger ~~Service block hours. The employee headcount~~segment departures as a result of ~~September 30, 2022 was 2,354,~~our expanding operations, as ~~compared~~well as rate increases due to 2,014 as of September 30, 2021, for an increase of 340, or 17%. The increase in employee headcount was to support all lines of business during the ongoing recovery from the impacts of the COVID-19 pandemic.inflationary and market pressures.

~~Aircraft~~Landing Fees and Airport Rent. ~~Aircraft~~Landing Fees and Airport Rent ~~expense decreased $5,992,~~increased $4,139, or ~~45%~~13%, to ~~$7,347~~$36,847 for the nine months ended September 30, ~~2022,~~2023, as compared to ~~$13,339~~the nine months ended September 30, 2022. The increase was primarily driven by the 15% increase in Passenger segment departures as a result of our expanding operations, as well as rate increases due to inflationary and market pressures.

Other Operating, net. Other operating, net increased $13,262, or 19%, to $81,663 for the nine months ended September 30, ~~2021. Aircraft Rent expense decreased primarily due~~2023, as compared to the composition of our aircraft fleet shifting from aircraft under operating leases (expense is recorded within Aircraft Rent) to owned aircraft or finance leases (expense is recorded through Depreciation and Amortization and Interest Expense). Specifically, in the first nine months of 2022, we executed lease amendments which modified two aircraft from operating leases to finance leases and purchased two aircraft previously classified as operating leases. For the nine months ended September 30, 2022, primarily due to increased departures, which resulted in higher crew costs and ~~2021, there were an average of four and eight aircraft under operating leases, respectively~~.catering expenses.

Non-operating Income (Expense)

~~Maintenance~~Interest Income. ~~Maintenance materials and repair expense~~Interest income increased ~~$5,624,~~by $5,600, or ~~19%~~259%, to ~~$35,794~~$7,766 for the nine months ended September 30, ~~2022, as compared~~2023. The increase was primarily due to ~~$30,170~~the change in our investment strategy, which led to the purchase of debt securities in May 2022. The continued rise in interest rates also contributed to the increase over the prior year.

Interest Expense. Interest expense increased $8,175, or 35%, to $31,272 for the nine months ended September 30, ~~2021.~~2023, as compared to the nine months ended September 30, 2022. The change was primarily due to a 19% increase in ~~maintenance expense~~owned aircraft that were financed or refinanced with debt proceeds. This includes the term loan credit facility for the purpose of financing the five Aircraft Held for Operating Lease purchased during the first half of 2023, which was ~~primarily driven~~financed in a higher interest rate environment. The year-over-year increase was partially offset by ~~increased departures and block hours across~~a $1,557 loss on extinguishment of debt incurred during the nine months ended September

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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~Passenger segment, an increase in maintenance events for the Cargo fleet, and increased per unit costs due to incremental contract labor spend.~~

~~Sales and Marketing. Sales and Marketing expense increased $6,934, or 42%, to $23,336 for the nine months ended September~~ 30, 2022 as compared to $16,402 for the nine months ended September 30, 2021. Passenger revenue increased 57% between these two periods leading to a nearly $6,500 in increased credit card processing and global distribution system fees during this time period.

~~Depreciation and Amortization~~. Depreciation and Amortization expense increased $7,832, or 19%, to $49,364 for the nine months ended September 30, 2022, as compared to $41,532 for the nine months ended September 30, 2021. The increase was primarily duerelated to the impact of a change in the composition of our aircraft fleet to an increased number of owned aircraft and aircraft under finance leases (the expense is recorded as Depreciation and Amortization and Interest Expense). For the nine months ended September 30, 2022 and 2021, there was an average of 25 and 19 owned aircraft and 11 and six finance leases, respectively.

~~Ground Handling~~. Ground Handling expense increased $5,184, or 26%, to $24,838 for the nine months ended September 30, 2022, as compared to $19,654 for the nine months ended September 30, 2021. The increase was primarily driven by the 20% increase in Passenger segment departures due to the resultrepayment of the ~~continued recovery in demand from the COVID-19 pandemic and new charter agreements that began operations during 2022.~~

~~Landing Fees and Airport Rent~~. Landing Fees and Airport Rent increased $3,102, or 10%, to $32,708 for the nine months ended September 30, 2022, as compared to $29,606 for the nine months ended September 30, 2021. The increase was primarily driven by the 20% increase in Passenger segment departures due to the result of the continued recovery in demand from the COVID-19 pandemic and new charter agreements that began operations during 2022.

~~Special Items, net~~. There were no Special Items recorded during the nine months ended September 30, 2022. Special Items had a net benefit of $72,419 for the nine months ended September 30, 2021. The net benefit was primarily driven by the payroll support received under the CARES Act, of which the Cargo segment was allocated $18,401. These credits within the Cargo segment results were based on the respective segment salaries, wages, and benefits.DDTL. For more information on ~~Special Items,~~the Company's Debt, see Note 126 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Other, ~~Operating,~~ net. Other, ~~operating,~~ net ~~increased $18,375,~~decreased $4,786, or ~~37%,~~93% to ~~$68,401~~a net expense of $370 for the nine months ended September 30, ~~2022,~~2023, as compared to ~~$50,026~~the nine months ended September 30, 2022. The change over prior year was primarily due to the $5,000 adjustment to increase the estimated TRA liability incurred during the prior year, partially offset by offering expenses of $640 in connection with the secondary offering during the first quarter of 2023.

Income Tax. The Company's effective tax rate for the nine months ended September 30, ~~2021, mainly due~~2023 was 23.1% compared to ~~increased departures within the Passenger segment, which resulted in higher crew and other employee travel costs, catering expenses, and other operational overhead costs.~~

~~Non-operating Income (Expense)~~

~~Interest Income. Interest income was $2,166~~28.4% for the nine months ended September 30, ~~2022~~2022. The decrease in the effective tax rate was primarily due to the ~~change~~$5,000 non-deductible adjustment of the TRA liability in ~~investment strategy which led~~the prior period, partially offset by stock compensation benefits. For more information on the TRA liability, see Note 10 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Segments

For the Three Months Ended September 30, 2023 and 2022


	Three Months Ended September 30, 2023									Three Months Ended September 30, 2022
	Passenger			Cargo			Total			Passenger			Cargo			Total
Operating Revenues	$	222,817		$	26,059		$	248,876		$	198,013		$	23,687		$	221,700

Operating Expenses:
Aircraft Fuel	61,157			22			61,179			64,763			80			64,843
Salaries, Wages, and Benefits	54,527			18,014			72,541			44,051			14,610			58,661
Aircraft Rent	22			—			22			1,949			—			1,949
Maintenance	11,679			3,651			15,330			7,290			3,728			11,018
Sales and Marketing	7,569			—			7,569			6,827			—			6,827
Depreciation and Amortization	22,756			6			22,762			17,152			29			17,181
Ground Handling	9,382			—			9,382			8,666			3			8,669
Landing Fees and Airport Rent	13,858			100			13,958			12,823			103			12,926
Other Operating, net	22,252			4,875			27,127			19,030			5,205			24,235
Total Operating Expenses	203,202			26,668			229,870			182,551			23,758			206,309
Operating Income (Loss)	$	19,615		$	(609)		$	19,006		$	15,462		$	(71)		$	15,391

Operating Margin %	8.8		%	(2.3)		%	7.6		%	7.8		%	(0.3)		%	6.9		%

Passenger. Passenger Operating Income increased $4,153 to ~~the purchase of debt securities during 2022. Interest income~~$19,615 for the ~~nine~~three months ended September 30, ~~2021 was nominal.~~

~~Interest Expense. Interest expense increased $3,610, or 19%, to $23,097 for the nine months ended September 30, 2022,~~2023, as compared to ~~$19,487 for~~ the nine months ended September 30, 2021. The increase was primarily due to a larger mix of owned aircraft that were financed or refinanced with the proceeds from the 2022-1 EETC, as well as an increase in aircraft accounted for as finance leases during the ninethree months ended September 30, 2022. ~~These amounts~~The Operating Margin Percentage for the three months ended September 30, 2023 increased 1.0 percentage point, as compared to the three months ended September 30, 2022. The increases in Passenger Operating Income and Operating Margin were ~~slightly offset~~driven by ~~$2,327~~an increase in the average passenger aircraft in the third quarter of ~~capitalized interest. For more information~~2023, as compared to the same period of 2022, which increased capacity and ASMs. This resulted in a significant increase in departures and passengers

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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

with relatively similar quarter-over-quarter per unit revenues for both Scheduled Service and Charter Service. Passenger Operating Income and Operating Margin for the three months ended September 30, 2023 also benefited from a 6% quarter-over-quarter decrease in Aircraft Fuel expense due to a 19% decrease in the average fuel cost per gallon, partially offset by a 17% increase in consumption. The price of fuel during the three months ended September 30, 2022 was significantly impacted by global geopolitical events. For more information on the ~~Company's Debt, see~~ changes in the components of Operating Income for the Passenger segment, refer to the Results of Operations discussion above~~Note 7~~.

Cargo. ofCargo Operating Loss increased by $538, to $609 for the ~~Condensed Consolidated Financial Statements~~three months ended September 30, 2023, as compared to the three months ended September 30, 2022. Operating Margin Percentage for the three months ended September 30, 2023 decreased 2.0 percentage points, as compared to the three months ended September 30, 2022. The decrease was primarily driven by a quarter-over-quarter increase in Salaries, Wages, and Benefits due to an increase in employee head count, as well as per unit costs, to support operations. The changes in Operating Loss and Operating Margin Percentage were partially offset by the annual rate escalation included in ~~Part I, Item I~~the ATSA, which went into effect on December 13, 2022. For more information on the components of ~~this report.~~Operating Income for the Cargo segment, refer to the Results of Operations discussion above.

Segments

For the Nine Months Ended September 30, 2023 and 2022


	Nine Months Ended September 30, 2023									Nine Months Ended September 30, 2022
	Passenger			Cargo			Total			Passenger			Cargo			Total
Operating Revenues	$	729,640		$	74,437		$	804,077		$	601,360		$	65,930		$	667,290

Operating Expenses:
Aircraft Fuel	185,770			59			185,829			206,254			80			206,334
Salaries, Wages, and Benefits	171,080			52,810			223,890			138,436			40,140			178,576
Aircraft Rent	2,281			—			2,281			7,347			—			7,347
Maintenance	33,339			10,972			44,311			25,665			10,129			35,794
Sales and Marketing	26,005			—			26,005			23,336			—			23,336
Depreciation and Amortization	64,527			50			64,577			49,282			82			49,364
Ground Handling	28,299			—			28,299			24,828			10			24,838
Landing Fees and Airport Rent	36,545			302			36,847			32,386			322			32,708
Other Operating, net	66,813			14,850			81,663			54,614			13,787			68,401
Total Operating Expenses	614,659			79,043			693,702			562,148			64,550			626,698
Operating Income (Loss)	$	114,981		$	(4,606)		$	110,375		$	39,212		$	1,380		$	40,592

Operating Margin %	15.8		%	(6.2)		%	13.7		%	6.5		%	2.1		%	6.1		%

~~Other, net~~Passenger.~~. Other, net decreased $23,661~~ Passenger Operating Income increased $75,769 to ~~a net expense of $5,156~~$114,981 for the nine months ended September 30, ~~2022,~~2023, as compared to ~~net benefit $18,505~~the nine months ended September 30, 2022. Passenger Operating Margin Percentage for the nine months ended September 30, ~~2021. The decrease was primarily due to the $5,000 adjustment to increase the estimated TRA liability as of September 30, 2022,~~2023 increased 9.3 percentage points, as compared to ~~the $19,800 adjustment to decrease the estimated TRA liability as of September 30, 2021. For more information on the TRA liability, see~~ ~~Note 11~~ ~~of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.~~

~~Income Tax.~~ ~~The Company's effective tax rate for~~ the nine months ended September 30, ~~2021 was 28.4% compared to 18.3% for the nine months ended September 30, 2021.~~2022. The increase in ~~the effective tax rate was primarily due to the non-taxable adjustment of the TRA liability, partially offset by stock compensation benefits.~~

Passenger Operating Income and

~~-45-~~-36-

Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~Segments~~

~~For the Three Months Ended September 30, 2022 and 2021~~

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021
Passenger Cargo Total Passenger Cargo Total
Operating Revenues $ 198,013 $ 23,687 $ 221,700 $ 149,263 $ 24,400 $ 173,663
Operating Expenses:
Aircraft Fuel 64,763 80 64,843 36,556 91 36,647
Salaries, Wages, and Benefits 44,051 14,610 58,661 33,619 9,805 43,424
Aircraft Rent 1,949 — 1,949 3,925 — 3,925
Maintenance 7,290 3,728 11,018 7,175 2,485 9,660
Sales and Marketing 6,827 — 6,827 5,470 — 5,470
Depreciation and Amortization 17,152 29 17,181 14,684 26 14,710
Ground Handling 8,666 3 8,669 7,873 — 7,873
Landing Fees and Airport Rent 12,823 103 12,926 11,949 120 12,069
Special Items, net — — — (65) — (65)
Other Operating, net 19,030 5,205 24,235 15,265 3,364 18,629
Total Operating Expenses 182,551 23,758 206,309 136,451 15,891 152,342
Operating Income (Loss) $ 15,462 $ (71) $ 15,391 $ 12,812 $ 8,509 $ 21,321
Adjustment for Special Items, net — — — (65) — (65)
Operating Income (Loss), Excluding Special Items, net $ 15,462 $ (71) $ 15,391 $ 12,747 $ 8,509 $ 21,256
Operating Margin %, Excluding Special Items, net 8% —% 7% 9% 35% 12%

~~Passenger.~~ Passenger Operating Income increased by $2,650 to $15,462 for the three months ended September 30, 2022 from $12,812 for the three months ended September 30, 2021. The increase in Passenger Operating Income was driven by an expansion in demand for passenger service during 2022 as compared to 2021, which was significantly impacted by the COVID-19 pandemic. Operating Margin Percentage for the three months ended September 30, 2022 decreased by 1%, as compared to the three months ended September 30, 2021. The Operating Margin Percentage decrease was primarily driven by the quarter-over-quarter increase in Aircraft Fuel Expense, slightly offset by increases in revenue across all Passenger segment business lines. For

~~-46-~~

~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~more information on the changes in the components of Operating Income for the Passenger segment, refer to the Results of Operations discussion above~~.

~~Cargo.~~ Cargo Operating Income decreased by $8,580, resulting in an Operating Loss of $71 for the three months ended September 30, 2022, as compared to Operating Income of $8,509 for the three months ended September 30, 2021. Operating Margin ~~Percentage decreased by 35%, to break-even, over the same periods. The decrease~~ was ~~primarily~~ driven by a ~~quarter-over-quarter~~year-over-year increase in ~~Salaries, Wages, and Benefits driven by the new CBA~~demand for ~~our pilots that went into effect in the beginning of 2022, a quarter-over-quarter increase in Maintenance Expense for the Cargo fleet due to~~passenger service, as well as an increase in ~~maintenance events~~the average passenger aircraft which increased capacity and per unit costs, and a revenue benefit recognized in the prior period. For more information on the components of Operating Income for the Cargo segment, refer to the Results of Operations discussion above, where we describe the cargo expenses embedded within each financial statement line item.

~~-47-~~

~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~Segments~~

~~For the Nine Months Ended September 30, 2022 and 2021~~

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021
Passenger Cargo Total Passenger Cargo Total
Operating Revenues $ 601,360 $ 65,930 $ 667,290 $ 382,380 $ 68,084 $ 450,464
Operating Expenses:
Aircraft Fuel 206,254 80 206,334 90,468 163 90,631
Salaries, Wages, and Benefits 138,436 40,140 178,576 98,615 31,200 129,815
Aircraft Rent 7,347 — 7,347 13,339 — 13,339
Maintenance 25,665 10,129 35,794 22,417 7,753 30,170
Sales and Marketing 23,336 — 23,336 16,402 — 16,402
Depreciation and Amortization 49,282 82 49,364 41,453 79 41,532
Ground Handling 24,828 10 24,838 19,654 — 19,654
Landing Fees and Airport Rent 32,386 322 32,708 29,228 378 29,606
Special Items, net — — — (54,018) (18,401) (72,419)
Other Operating, net 54,614 13,787 68,401 39,164 10,862 50,026
Total Operating Expenses 562,148 64,550 626,698 316,722 32,034 348,756
Operating Income $ 39,212 $ 1,380 $ 40,592 $ 65,658 $ 36,050 $ 101,708
Adjustment for Special Items, net — — — (54,018) (18,401) (72,419)
Operating Income, Excluding Special Items, net $ 39,212 $ 1,380 $ 40,592 $ 11,640 $ 17,649 $ 29,289
Operating Margin %, Excluding Special Items, net 7% 2% 6% 3% 26% 7%

~~Passenger.~~ASMs. Passenger Operating Income ~~decreased by $26,446 to $39,212~~and Operating Margin for the nine months ended September 30, ~~2022~~2023 also benefited from ~~$65,658 for~~a 10% year-over-year decrease in Aircraft Fuel expense due to an 18% decrease in the average fuel cost per gallon, slightly offset by a 10% increase in consumption. The price of fuel during the nine months ended September 30, ~~2021. Operating Margin Percentage, Excluding Special Items, net increased~~2022 was significantly impacted by 4%, to 7%, from 3% over the same periods. The year-over-year decrease in Passenger Operating Income is primarily driven by the allocated payroll support received under the CARES Act during the first half of 2021, recognized within Special Items, net, as well as the increase in Aircraft Fuel Expense and Salaries, Wages, and Benefits. The increase in Operating Margin Percentage, Excluding Special Items, net was primarily driven by the year-over-year increases in revenue across all Passenger segment business lines, slightly offset by the increases in Aircraft Fuel Expense and Salaries,

~~-48-~~

~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~Wages, and Benefits.~~global geopolitical events. For more information on the changes in the components of Operating Income for the Passenger segment, refer to the Results of Operations discussion above.

Cargo.Cargo had an Operating Loss of $4,606 for the nine months ended September 30, 2023, as compared to Operating Income ~~decreased by $34,670 to~~of $1,380 for the nine months ended September 30, 2022, ~~as compared to $36,050~~a decrease of $5,986. Operating Margin Percentage for the nine months ended September 30, ~~2021. Operating Margin Percentage, Excluding Special Items, net~~2023 decreased ~~by 24%,~~8.3 percentage points, as compared to ~~2%, over~~ the ~~same periods.~~nine months ended September 30, 2022. The decrease ~~in Operating Income~~ was primarily driven by ~~the allocated payroll support received under the CARES Act during the first half of 2021, recognized within Special Items, net, a revenue benefit recognized in the prior period,~~ a year-over-year increase in Salaries, Wages, and Benefits ~~driven by the new CBA~~due to an increase in employee head count, an increase in per unit costs for ~~our~~ pilots ~~that went into effect in the beginning of 2022, decreased block hours~~to support operations, and departures driven by heavy maintenance events, and operational factors that reduced revenue. The year-over-year decrease in Operating Margin Percentage, Excluding Special Items, net is driven by the factors listed above, excluding the benefit recognizedincreased operating expenses as a result of an increase in departures. The decreases in Operating Loss and Operating Margin Percentage were partially offset by the ~~allocated payroll support received under~~annual rate escalation included in the ~~CARES Act during the first half of 2021.~~ATSA, which went into effect on December 13, 2022. For more information on the components of Operating Income for the Cargo segment, refer to the Results of Operations discussion ~~above, where we describe the cargo expenses embedded within each financial statement line item.~~above.

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 ~~report~~Report to the most directly comparable GAAP financial measures.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income and Adjusted EBITDA

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income, and Adjusted EBITDA are non-GAAP measures included as supplemental disclosure because we believe they are useful indicators of our operating performance. Derivations of Operating Income and ~~net income~~Net Income are well recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in our industry.

~~Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income, and Adjusted EBITDA~~The measures described above have limitations as analytical tools. Some of the limitations applicable to these measures include: ~~Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income, and Adjusted EBITDA~~they do not reflect the impact of certain cash and non-cash charges resulting from matters we consider not to be indicative of our ongoing operations; and other companies in our industry may calculate ~~Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income, and Adjusted EBITDA~~these non-GAAP measures differently than we do, limiting each measure’s usefulness as a comparative measure. Because of these limitations, the following non-GAAP measures should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP and may not be the same as or comparable to similarly titled measures presented by other companies due to the possible differences in the method of calculation and in the items being adjusted.

~~-49-~~-37-

Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

For the foregoing reasons, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income and Adjusted EBITDA have significant limitations which affect their use as indicators of our profitability. Accordingly, readers are cautioned not to place undue reliance on this information.

The following table presents the reconciliation of Operating Income to Adjusted Operating Income, and Adjusted Operating Income Margin for the periods presented below.

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Adjusted Operating Income Margin Reconciliation:
Operating Revenue $ 221,700 $ 173,663 $ 667,290 $ 450,464
Operating Income 15,391 21,321 40,592 101,708
Special Items, net (a)
— (65) — (72,419)
Stock compensation expense 487 964 1,981 4,577
TRA expenses (b)
— 25 — 340
Adjusted Operating Income $ 15,878 $ 22,245 $ 42,573 $ 34,206
Operating Income Margin 6.9 % 12.3 % 6.1 % 22.6 %
Adjusted Operating Income Margin 7.2 % 12.8 % 6.4 % 7.6 %

~~_________________________~~


~~(a)~~			~~The adjustments include Special Items, net, as presented in~~ ~~Note 12~~ ~~of the Company's Condensed Consolidated Financial Statements.~~
~~(b)~~			~~This represents the one-time costs to establish the TRA liability with our TRA holders. See~~ ~~Note 11~~ ~~of the Company’s Condensed Consolidated Financial Statements.~~


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Adjusted Operating Income Margin Reconciliation:
Operating Revenue	$	248,876		$	221,700		$	804,077		$	667,290
Operating Income	19,006			15,391			110,375			40,592

Stock Compensation Expense	1,039			487			8,132			1,981
Adjusted Operating Income	$	20,045		$	15,878		$	118,507		$	42,573

Operating Income Margin	7.6		%	6.9		%	13.7		%	6.1		%
Adjusted Operating Income Margin	8.1		%	7.2		%	14.7		%	6.4		%

~~-50-~~

~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

The following table presents the reconciliation of Net Income to Adjusted Net Income for the periods presented below.

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Adjusted Net Income Reconciliation:
Net Income $ 10,677 $ 13,379 $ 10,392 $ 82,334
Special Items, net (a)
— (65) — (72,419)
Stock Compensation Expense 487 964 1,981 4,577
(Gain) Loss on Asset Transactions, net (239) 2 (318) 2
Early pay-off of US Treasury loan — — — 842
Loss on refinancing credit facility — — 1,557 382
Secondary Offering Costs — 641 — 1,281
TRA expenses (b)
— 25 — 340
TRA adjustment (c)
(3,500) (1,100) 5,000 (19,800)
Income tax effect of adjusting items, net (d)
(57) (360) (741) 14,949
Adjusted Net Income $ 7,368 $ 13,486 $ 17,871 $ 12,488


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Adjusted Net Income Reconciliation:
Net Income	$	7,591	$	10,677	$	66,536	$	10,392

Stock Compensation Expense	1,039		487		8,132		1,981
Gain on Asset Transactions, net (a)	—		(239)		—		(318)
Loss on refinancing credit facility	—		—		—		1,557
Secondary offering costs	—		—		640		—
TRA adjustment (b)	—		(3,500)		(357)		5,000
Income tax effect of adjusting items, net (c)	(239)		(57)		(2,018)		(741)
Adjusted Net Income	$	8,391	$	7,368	$	72,933	$	17,871

_________________________


(a)			~~The~~Due to changes in the Company’s operations, management determined that, beginning in the fourth quarter of 2022, certain asset transactions will no longer be included as adjustments ~~include Special Items, net, as presented~~to Adjusted Net Income because these transactions are part of our recurring operations. This change was made prospectively beginning in ~~Note 12~~the fourth quarter of ~~the Company's Condensed Consolidated Financial Statements.~~2022, and no prior period amounts have been adjusted.
(b)			~~This represents the one-time costs to establish the TRA liability with our TRA holders. See~~ ~~Note 11~~ ~~of the Company’s Condensed Consolidated Financial Statements.~~
~~(c)~~			This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense).
~~(d)~~(c)			The tax effect of adjusting items, net is calculated at the Company's statutory rate for the applicable period. The TRA adjustment is not included within the income tax effect calculation.

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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

The following table presents the reconciliation of Net Income to Adjusted EBITDA for the periods presented below.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Adjusted EBITDA Reconciliation:	Adjusted EBITDA Reconciliation:									Adjusted EBITDA Reconciliation:
Net Income	Net Income	$	10,677	$	13,379	$	10,392	$	82,334	Net Income	$	7,591	$	10,677	$	66,536	$	10,392
Special Items, net (a)		—		(65)		—		(72,419)
Stock Compensation Expense	Stock Compensation Expense	487		964		1,981		4,577		Stock Compensation Expense	1,039		487		8,132		1,981
(Gain) Loss on Asset Transactions, net		(239)		2		(318)		2
Secondary Offering Costs		—		641		—		1,281
TRA expenses (b)		—		25		—		340
TRA adjustment (c)		(3,500)		(1,100)		5,000		(19,800)
Gain on Asset Transactions, net (a)										Gain on Asset Transactions, net (a)	—		(239)		—		(318)
Secondary offering costs										Secondary offering costs	—		—		640		—
TRA adjustment (b)										TRA adjustment (b)	—		(3,500)		(357)		5,000
Interest Income	Interest Income	(1,610)		(28)		(2,166)		(52)		Interest Income	(2,480)		(1,610)		(7,766)		(2,166)
Interest Expense	Interest Expense	7,493		6,286		23,097		19,487		Interest Expense	11,403		7,493		31,272		23,097
Provision for Income Taxes	Provision for Income Taxes	2,253		2,140		4,113		18,444		Provision for Income Taxes	2,477		2,253		19,963		4,113
Depreciation and Amortization	Depreciation and Amortization	17,181		14,710		49,364		41,532		Depreciation and Amortization	22,762		17,181		64,577		49,364
Adjusted EBITDA	Adjusted EBITDA	$	32,742	$	36,954	$	91,463	$	75,726	Adjusted EBITDA	$	42,792	$	32,742	$	182,997	$	91,463

_________________________


(a)			~~The~~Due to changes in the Company’s operations, management determined that, beginning in the fourth quarter of 2022, certain asset transactions will no longer be included as adjustments ~~include Special Items, net, as presented~~to Adjusted Net Income because these transactions are part of our recurring operations. This change was made prospectively beginning in ~~Note 12~~the fourth quarter of ~~the Company's Condensed Consolidated Financial Statements.~~2022, and no prior period amounts have been adjusted.
(b)			~~This represents the one-time costs to establish the TRA liability with our TRA holders. See~~ ~~Note 11~~ ~~of the Company’s Condensed Consolidated Financial Statements.~~
~~(c)~~			This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense).

CASM and Adjusted CASM

~~Cost per Available Seat Mile (“CASM”)~~CASM is a key airline cost metric defined as operating expenses divided by total available seat miles. Adjusted CASM is a non-GAAP measure derived from CASM by excluding fuel costs, costs related to our cargo operations, depreciation recognized on our aircraft and flight equipment held for operating lease, stock-based compensation, certain commissions and other costs of selling our vacation products from this measure as these costs are unrelated to our airline operations and improve comparability to our peers. Adjusted CASM is an important measure used by management and by our Board of Directors in assessing quarterly and annual cost performance. Adjusted CASM is commonly used by industry analysts and we believe it is an important metric by which they compare our airline to others in the industry, although other airlines may exclude certain other costs in their calculation of Adjusted CASM. The measure is also the subject of frequent questions from investors.

Adjusted CASM excludes fuel costs. By excluding volatile fuel expenses that are outside of our control from our unit metrics, we believe that we have better visibility into the results of operations and our non-fuel cost initiatives. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can lead to a significant improvement in operating results. In addition, we believe that all domestic carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management and investors to understand the impact and trends in company-specific cost drivers, such as labor rates, aircraft costs and maintenance costs, and productivity, which are more controllable by management.

We have excluded costs related to the cargo operations and depreciation recognized on our aircraft and flight equipment held for operating lease as these operations do not create ASMs. The cargo expenses in the reconciliation below are different from the total operating expenses for our Cargo segment in the “Segment Information” table presented above, due to several items that are included in the Cargo segment, but have been captured in other line items used in the Adjusted CASM calculation. The five Aircraft Held for Operating Lease

~~-52-~~-39-

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

were acquired during the ~~“Segment Information” table presented above, due to several items that are included in~~nine months ended September 30, 2023. Depreciation expense on these aircraft materially began during the ~~Cargo segment, but have been captured in other line items used in the Adjusted CASM calculation.~~three months ended June 30, 2023. Adjusted CASM further excludes special items and other adjustments, as defined in the relevant reporting period, that are not representative of the ongoing costs necessary to our airline operations and may improve comparability between periods. We also exclude stock compensation expense when computing Adjusted CASM. The Company’s compensation strategy includes the use of stock-based compensation to attract and retain employees and executives and is principally aimed at aligning their interests with those of our stockholders and long-term employee retention, rather than to motivate or reward operational performance for any period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any period.

As derivations of Adjusted CASM are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result, derivations of Adjusted CASM as presented may not be directly comparable to similarly titled measures presented by other companies. Adjusted CASM should not be considered in isolation or as a replacement for CASM. For the ~~foregoing~~aforementioned reasons, Adjusted CASM has significant limitations which affect its use as an indicator of our profitability. Accordingly, readers are cautioned not to place undue reliance on this information.

The following tables present the reconciliation of CASM to Adjusted CASM.


	Three Months Ended September 30,
	2023			2022
	Operating Expenses		Per ASM (in cents)	Operating Expenses		Per ASM (in cents)
CASM	$	229,870	12.83	$	206,309	13.28
Less:
Aircraft Fuel	61,179		3.41	64,843		4.17
Stock Compensation Expense	1,039		0.06	487		0.03
Cargo expenses, not already adjusted above	26,417		1.48	23,569		1.52
Sun Country Vacations	200		0.01	193		0.01
Aircraft and Flight Equipment Held for Operating Lease, Depreciation Expense	2,192		0.12	—		—
Adjusted CASM	$	138,843	7.75	$	117,217	7.55

ASM (thousands)	1,791,485			1,553,483

~~-53-~~

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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~The following tables present the reconciliation of CASM to Adjusted CASM.~~

Three Months Ended September 30,
2022 2021
Operating
Expenses Per ASM
(in cents) Operating
Expenses Per ASM
(in cents)
CASM $ 206,309 13.28 $ 152,342 9.83
Less:
Aircraft Fuel 64,843 4.17 36,647 2.37
Stock Compensation Expense 487 0.03 964 0.06
Special Items, net (a)
— — (65) —
TRA expense (b)
— — 25 —
Cargo expenses, not already adjusted above 23,569 1.52 15,544 1.00
Sun Country Vacations 193 0.01 176 0.01
Adjusted CASM $ 117,217 7.55 $ 99,051 6.39
ASM (thousands) 1,553,483 1,549,432

Nine Months Ended September 30,
2022 2021
Operating
Expenses Per ASM
(in cents) Operating
Expenses Per ASM
(in cents)
CASM $ 626,698 12.25 $ 348,756 7.98
Less:
Aircraft Fuel 206,334 4.03 90,631 2.07
Stock Compensation Expense 1,981 0.04 4,577 0.11
Special Items, net (a)
— — (72,419) (1.66)
TRA expense (b)
— — 340 0.01
Cargo expenses, not already adjusted above 64,007 1.25 48,923 1.12
Sun Country Vacations 810 0.02 563 0.01
Adjusted CASM $ 353,566 6.91 $ 276,141 6.32
ASM (thousands) 5,114,134 4,368,972

~~________________________~~


~~(a)~~			~~The adjustments include Special Items, net, as presented in~~ ~~Note 12~~ ~~of the Company's Condensed Consolidated Financial Statements.~~
~~(b)~~			~~This represents the one-time costs to establish the TRA liability with our TRA holders. See~~ ~~Note 11~~ ~~of the Company’s Condensed Consolidated Financial Statements.~~


	Nine Months Ended September 30,
	2023			2022
	Operating Expenses		Per ASM (in cents)	Operating Expenses		Per ASM (in cents)
CASM	$	693,702	12.57	$	626,698	12.25
Less:
Aircraft Fuel	185,829		3.37	206,334		4.03
Stock Compensation Expense	8,132		0.14	1,981		0.04
Cargo expenses, not already adjusted above	77,195		1.40	64,007		1.25
Sun Country Vacations	902		0.02	810		0.02
Aircraft and Flight Equipment Held for Operating Lease, Depreciation Expense	4,466		0.08	—		—
Adjusted CASM	$	417,178	7.56	$	353,566	6.91

ASM (thousands)	5,516,826			5,114,134

Liquidity and Capital Resources

The airline business is capital intensive. Our ability to successfully execute our business strategy is largely dependent on the continued availability of capital with attractive terms and maintaining sufficient liquidity. We have historically funded our operations and capital expenditures primarily through cash from operations, proceeds from stockholders’ capital contributions, the issuance of promissory notes, and debt financing.

~~-54-~~

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~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

Our primary sources of liquidity as of September 30, ~~2022~~2023 included our existing cash and cash equivalents of ~~$131,912~~$26,967 and short-term investments of ~~$135,170,~~$153,290, our expected cash generated from operations, and the $24,650 of available funds from the Revolving Credit ~~Facility as of September 30, 2022.~~Facility. In addition, we had restricted cash of ~~$14,163~~$10,953 as of September 30, ~~2022,~~2023, which generally consists of cash received as prepayment for chartered flights that is maintained in separate escrow accounts in accordance with DOT regulations requiring that charter revenue receipts received prior to the date of transportation are maintained in a separate third-party escrow account. The restrictions are released once the charter transportation is provided.

Our primary uses of liquidity are for operating expenses, capital expenditures, lease rentals and maintenance reserve deposits, debt repayments, working capital requirements, and other general corporate purposes. Our single largest capital expenditure requirement relates to the acquisition of aircraft. We do not maintain an aircraft ~~which~~order book; instead, we enter into aircraft transactions on an opportunistic basis based on market conditions, our prevailing level of liquidity and capital market availability. As a result, we are not locked into large future capital expenditures. We have historically acquired aircraft through operating leases, finance leases, and debt. Our management team retains broad discretion to allocate liquidity.

We believe that our unrestricted cash and cash equivalents, short-term investments, and availability under our Revolving Credit Facility, combined with expected future cash flows from operations, will be sufficient to fund our operations and meet our debt payment obligations for at least the next twelve months. However, we cannot predict what the effect on our business and financial position might be from a change in the competitive environment in which we operate or from events beyond our control, such as volatile fuel prices, economic conditions, pandemics, weather-related disruptions, the impact of airline bankruptcies, restructurings or consolidations, U.S. military actions, regulations, or acts of terrorism.

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

Aircraft – As of September 30, ~~2022, we operated a~~2023, our fleet consisted of 5459 Boeing 737-NG aircraft. This includes 42 aircraft in the passenger fleet, ~~and~~ 12 cargo operated aircraft through the ~~ATSA. We may finance additional aircraft through debt financing or finance leases based on market conditions, our prevailing level~~ATSA, and five Aircraft Held for Operating Lease. During the nine months ended September 30, 2023, the Company acquired five Aircraft Held for Operating Lease for total consideration of ~~liquidity and capital market availability. We may also enter into new operating leases on an opportunistic basis.~~ approximately $158,000.

For more information on our fleet and probable future aircraft acquisitions, see Note 64 and Note 12 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report. For more information on the purchase of five Aircraft Held for Operating Lease, see Note 5 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Maintenance Deposits - In addition to funding the acquisition of aircraft, we are required by certain of our aircraft lessors to fund reserves in cash in advance for scheduled maintenance to act as collateral for the benefit of lessors. Qualifying payments that are expected to be recovered from lessors are recorded as Lessor Maintenance Deposits on our Condensed Consolidated Balance Sheets. As of September 30, ~~2022,~~2023, we had ~~$30,925~~$42,363 of total Lessor Maintenance Deposits.

Investments - ~~The Company invests its~~We invest our cash and cash equivalents in highly liquid securities with strong credit ratings. As of September 30, ~~2022,~~2023, the Company held ~~$128,569~~$146,519 of debt securities, all of which are classified as current assets because of their highly liquid nature and availability to be converted into cash to fund current operations. Given the significant portion of our portfolio held in cash and cash equivalents and the high credit quality of our debt security investments, we do not anticipate fluctuations in the aggregate fair value of our investments to have a material impact on our liquidity or capital position.

We also hold $6,771 of Certificates of Deposit that are included in Investments on the Condensed Consolidated Balance Sheets as of September 30, 2023.

~~CARES Act~~ -Credit Facilities - We use our Credit Facilities to provide liquidity support for general corporate purposes and to finance the acquisition of aircraft.

As of September 30, 2023, the Company had $24,650 of the $25,000 Revolving Credit Facility available due to $350 being pledged to support a letter of credit, and no balance drawn. The Credit Agreement includes financial covenants that require a minimum trailing 12-month EBITDAR ($87,700 as of March 31, 2022 and beyond) and a minimum liquidity, as defined within the Credit Agreement, of $30,000 at the close of any business day. The Company was in compliance with these covenants as of September 30, 2023.

Debt - At our discretion, we obtain debt financing through the issuance of pass-through trust certificates to purchase, or refinance aircraft. For more information on our credit facilities or debt, see Note 6 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report. In December 2019, we issued the 2019-1 EETC, for the purpose of financing or refinancing 13 used aircraft. In March 2022, the Company issued the 2022-1 EETC for the purpose of financing or refinancing 13 aircraft.

During ~~2021,~~the nine months ended September 30, 2023, we ~~received grants totaling $71,587~~executed a term loan credit facility with a face amount of $119,200 for the purpose of financing the five Aircraft Held for Operating Lease. The loan is to be repaid monthly over 7 years. During the lease term, payments collected from the ~~Treasury under PSP2~~lessee will be applied directly to the repayment of principal and ~~PSP3. We also~~interest on the term loan credit facility. The Aircraft Held for Operating Lease, as well as the related lease payments received ~~a CARES Act Loan of $45,000 in October 2020, which was repaid in full on March 24, 2021 using proceeds~~ from the ~~IPO.~~lessee, are pledged as collateral.

~~In accordance with~~The interest rate on the ~~$71,587~~term loan credit facility is determined by using a base rate, which resets monthly, plus an applicable margin, and a fixed credit spread adjustment of ~~grants received under~~0.1%. The applicable margin during the ~~CARES Act, we are required~~lease term is fixed at 3.75%, and is subsequently reduced to ~~comply with~~3.25% once the ~~relevant provisions~~aircraft have been redelivered to the Company and a LTV ratio calculation is completed at the end of the ~~CARES Act and the related implementing agreements.~~lease term. The provisions related to the requirement that certain levels of commercial air service be maintained, if ordered by the DOT, and the prohibitions on share repurchases of listed securities and the payment of common stock (or equivalent) dividends, have lapsedinterest rate in effect as of ~~the date of this filing. Restrictions on the payment of certain executive~~

~~-55-~~-42-

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~compensation continue through April 1, 2023. We were in compliance with the CARES Act provisions as of~~ September 30, ~~2022.~~2023 was 9.2%. To the extent that the LTV exceeds 75% at the end of the lease term, a principal prepayment will be required in order to reduce the ratio to 75%. If at any point within 12 months of the end of the lease term for each respective aircraft the Company deems it probable that a principal prepayment will be required in order to reduce the LTV ratio to 75%, and such amount can be reasonably estimated, the estimated principal prepayment amount will be reclassified from Long-term Debt, net to Current Maturities of Long-Term Debt, net on the Company's Condensed Consolidated Balance Sheets. In the event a principal prepayment is required, amounts received under the end of lease maintenance compensation clause may be applied towards the prepayment.

TRA Liability - During the nine months ended September 30, 2023, we made a payment of $2,425 to the TRA holders. Payments will be made in future periods as Pre-IPO Tax Attributes are utilized. For more information on the ~~CARES Act provisions,~~TRA liability, see Note 310 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

~~Credit Facilities~~ ~~- The Company uses its Credit Facilities to provide liquidity support for general corporate purposes~~Liquidity and to finance the acquisition of aircraft. On February 10, 2021, we entered into a Credit Agreement which includes a $25,000 Revolving Credit Facility and a $90,000 DDTL. The proceeds from the Revolving Credit Facility can be used for general corporate purposes, whereas the proceeds from the DDTL were to be used solely to finance the acquisition of aircraft or engines to be registered in the United States. The Credit Agreement includes financial covenants that require a minimum trailing 12-month EBITDAR ($87,700 as of March 31, 2022 and beyond) and a minimum liquidity of $30,000 at the close of any business day. The Company was in compliance with this covenant as of September 30, 2022.

~~During 2021, the Company drew $80,500 on the DDTL to purchase six aircraft, which were previously under operating leases.~~The Company repaid the outstanding balance for the DDTL in full in March 2022 using proceeds it received from the 2022-1 EETC. No amounts under the DDTL are available to the Company as of September 30, 2022. As of September 30, 2022, the Company had $24,650 of the $25,000 Revolving Credit Facility available and no balance drawn.

~~Debt~~ - At our discretion, we obtain debt financing through the issuance of pass-through trust certificates to purchase, or refinance, aircraft. In December 2019, we issued the 2019-1 EETC, for the purpose of financing or refinancing 13 used aircraft.

In March 2022, the Company arranged for the issuance of the 2022-1 EETC in an aggregate face amount of $188,277 for the purpose of financing or refinancing 13 aircraft. The 2022-1 EETC is secured by a lien on the financed or refinanced aircraft and is cross collateralized by the other aircraft financed through the issuance. Total appraised value of the aircraft and engines financed by the 2022-1 EETC was approximately $259,688 as of the original date of the agreement.

~~For more information on our credit facilities or debt, see~~ ~~Note 7~~ ~~of the Condensed Consolidated~~ Financial ~~Statements included in Part I, Item I of this report.~~Condition Indicators

The table below presents the major indicators of financial condition and liquidity:


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Cash and Cash Equivalents	Cash and Cash Equivalents	$	131,912	$	309,338	Cash and Cash Equivalents	$	26,967	$	92,086
Available-for-Sale Securities	Available-for-Sale Securities	128,569		—		Available-for-Sale Securities	146,519		172,635
Amount Available Under Revolving Credit Facility	Amount Available Under Revolving Credit Facility	24,650		25,000		Amount Available Under Revolving Credit Facility	24,650		24,650
Total Liquidity	Total Liquidity	$	285,131	$	334,338	Total Liquidity	$	198,136	$	289,371

		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Total Debt		$	370,197	$	277,426
Total Debt, net						Total Debt, net	$	435,105	$	352,235
Finance Lease Obligations	Finance Lease Obligations	255,128		192,155		Finance Lease Obligations	263,281		251,296
Operating Lease Obligations	Operating Lease Obligations	27,789		76,041		Operating Lease Obligations	19,394		26,132
Total Debt and Lease Obligations		653,114		545,622
Total Debt, net, and Lease Obligations						Total Debt, net, and Lease Obligations	717,780		629,663
Stockholders' Equity	Stockholders' Equity	508,005		490,589		Stockholders' Equity	519,361		492,712
Total Invested Capital	Total Invested Capital	$	1,161,119	$	1,036,211	Total Invested Capital	$	1,237,141	$	1,122,375

Debt-to-Capital		0.56		0.53
Debt-to-Capital Ratio						Debt-to-Capital Ratio	0.58		0.56

~~-56-~~-43-

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

Sources and Uses of Liquidity

Nine Months Ended September 30,
2022 2021
Total Operating Activities $ 71,671 $ 116,358
Investing Activities:
Purchases of Property & Equipment (177,658) (118,016)
Proceeds from the Sale Property & Equipment 777 —
Proceeds from Insurance Settlements 8,865 —
Purchases of Investments (130,529) (1,436)
Proceeds from the Sale of Investments 935 1,062
Total Investing Activities (297,610) (118,390)
Financing Activities:
Cash Received from Stock Offering, net — 227,188
Proceeds from Stock Option and Warrant Exercises, net 1,625 2,407
Proceeds from Borrowings 188,277 80,500
Repayment of Finance Lease Obligations (37,842) (9,113)
Repayment of Borrowings (95,305) (75,728)
Debt Issuance Costs (2,526) (2,560)
Total Financing Activities 54,229 222,694
Net (Decrease) Increase in Cash $ (171,710) $ 220,662


	Nine Months Ended September 30,				$		%
	2023		2022		Change		Change
Total Operating Activities	$	102,651	$	71,671	$	30,980	43	%

Investing Activities:
Purchases of Property & Equipment	(210,641)		(177,658)		(32,983)		19	%
Purchases of Investments	(82,574)		(130,529)		47,955		(37)	%
Proceeds from the Maturities of Investments	110,850		—		110,850		NM
Other, net	4,087		10,577		(6,490)		(61)	%
Total Investing Activities	(178,278)		(297,610)		119,332		(40)	%

Financing Activities:
Common Stock Repurchases	(55,051)		—		(55,051)		NM
Proceeds from Borrowings	119,200		188,277		(69,077)		(37)	%
Repayment of Finance Lease Obligations	(16,390)		(37,842)		21,452		(57)	%
Repayment of Borrowings	(35,475)		(95,305)		59,830		(63)	%
Other, net	(1,665)		(901)		(764)		85	%
Total Financing Activities	10,619		54,229		(43,610)		(80)	%
Net Decrease in Cash	$	(65,008)	$	(171,710)	$	106,702	(62)	%

"Cash" consists of Cash, Cash Equivalents and Restricted Cash

"NM" stands for not meaningful

Operating Cash Flow Activities

Operating activities in the nine months ended September 30, ~~2022~~2023 provided ~~$71,671,~~$102,651, as compared to ~~providing $116,358~~$71,671 during the nine months ended September 30, ~~2021.~~2022. During the nine months ended September 30, ~~2022 and 2021,~~2023, our Net Income was ~~$10,392 and $82,334, respectively.~~$66,536, as compared to a Net Income ~~in 2021 benefited from $71,587 in grants received under~~of $10,392 during the ~~CARES Act.~~nine months ended September 30, 2022.

Our operating cash flow is primarily impacted by the following factors:

Seasonality of Advance Ticket Sales. We sell tickets for air travel in advance of the customer's travel date. When we receive a cash payment at the time of sale, we record the cash received on advance sales as deferred revenue in Air Traffic Liabilities. Air Traffic Liabilities typically increase during the fall and early winter months as advanced ticket sales grow prior to the late winter and spring peak travel season and decrease during the summer months.Most tickets can be purchased no more than twelve months in advance, therefore any revenue associated with tickets sold for future travel will be recognized within that timeframe. For the nine months ended September 30, 2023, $152,292 of revenue recognized in Passenger revenue was included in the $157,995 of Air Traffic Liabilities as of December 31, 2022. The balance of Air Traffic Liabilities as of September 30, 2023 was materially unchanged year-over-year.

Aircraft Fuel. Aircraft Fuel expense represented approximately ~~33%~~27% and ~~26%~~33% of our total operating expense for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. Fuel ~~consumption increased~~cost per gallon decreased by ~~20%~~18% year-over-year due to the impact of global geopolitical events on the price of fuel during the nine months ended September 30, ~~2022 compared to prior year, consistent with~~2022. Fuel consumption increased ~~passengers as~~by 10% during the ~~impact~~nine months ended

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

September 30, 2023, compared to the prior year as a result of the ~~pandemic subsides. Additionally, the cost~~increase in fleet size and total operations. We expect volatility in Aircraft Fuel prices per gallon ~~increased by 83% year-over-year. We expect a trend of higher year-over-year fuel costs per gallon to continue for~~throughout the remainder of ~~2022~~2023 due to ~~current~~ market conditions ~~further exacerbated by~~and global geopolitical events.

~~CARESAct.~~ ~~During~~ As capacity has grown due to the ~~nine months ended September 30, 2022~~increase in the year-over-year average passenger aircraft during the period, we ~~did not receive any funding from the CARES Act. During the nine months ended September 30, 2021, we received $71,587 in CARES Act grants and $848 in employee retention tax credits.~~ expect that fuel consumption will remain higher for full year 2023 as compared to 2022.

Investing Cash Flow Activities

Capital Expenditures. Our capital expenditures were ~~$177,658~~$210,641 and ~~$118,016~~$177,658 for the nine months ended September 30, 2023 and 2022, respectively. Our capital expenditures during the nine months ended September 30, 2023 primarily included the purchase of five Aircraft Held for Operating Lease and ~~2021, respectively.~~one incremental aircraft for our passenger fleet. Our capital expenditures during the nine months ended September 30, 2022 primarily included the purchase of five incremental aircraft, two aircraft off operating leases, five spare engines, prepayment of ~~$8,781 towards~~ a flight simulator, and other miscellaneous projects. ~~The final installment on~~

Investments. During the ~~flight simulator will be remitted~~nine months ended September 30, 2023, the Company's net investment activity resulted in cash inflows of $28,276 due to ~~the seller upon receipt and installation. The~~maturing debt securities exceeding purchases of investments. These maturing cash inflows were used to fund the purchase of aircraft ~~previously under finance leases were recorded as a non-cash investing activities. Our capital expenditures~~ during the nine months ended September 30, ~~2021 were primarily related~~2023. During the second quarter of 2022 we changed our investment strategy which led to the ~~purchases~~purchase of ~~seven aircraft, six of which were existing aircraft previously under operating leases.~~

~~Investments.~~ ~~During 2022, the Company purchased~~ $130,529 of investments. Primarily all of these purchases were debt securities, which are classified as Current Assets because of their highly liquid nature and availability to be converted into cash to fund current operations.investments during the nine months ended September 30, 2022.

Financing Cash Flow Activities

~~IPO.~~Debt ~~In March 2021, we completed our IPO. In total, 10,454,545 shares were issued and~~. During the ~~net proceeds to~~nine months ended September 30, 2023, the Company ~~were $225,329 after deducting underwriting discounts and commissions, and other offering expenses.~~executed a term loan credit facility with a face amount of $119,200 for the purpose of financing the five Aircraft Held for Operating Lease. The ~~proceeds from the IPO were immediately used~~loan is to ~~repay our $45,000 loan with the U.S. Treasury, plus interest.~~

~~Debt~~.be repaid monthly over 7 years. In March 2022, the Company arranged for the issuance of the 2022-1 EETC in an aggregate face amount of $188,277 for the purpose of financing or refinancing 13 aircraft. Five of these aircraft were owned fleet assets previously financed by the DDTL, which was repaid with the proceeds from the 2022-1 EETC.

~~For additional information regarding these financing arrangements, see~~ ~~Note 7~~ ofThe Company is required to make bi-annual principal and interest payments on the ~~Notes~~2022-1 EETC each March and September, through March 2031. The Company is required to make bi-annual principal and interest payments on the ~~Condensed Consolidated Financial Statements included in Part I, Item I of this report.~~2019-1 EETC each June and December, through December 2027.

Finance Leases. Our repayments of finance lease obligations were ~~$37,842~~$16,390 and ~~$9,113~~$37,842 for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. During the nine months ended September 30, 2022, the Company ~~exercised the purchase options on~~purchased two aircraft previously classified as a finance ~~leases~~lease using proceeds from ~~the issuance of~~ the 2022-1 EETC. The resulting cash outflows are recorded as payments for finance lease obligations. There were no similar aircraft transactions during the nine months ended September 30, ~~2021.~~2023. As of September 30, 2023 and 2022, the Company had 13 and 11 aircraft finance leases, respectively.

~~Off Balance Sheet Arrangements~~

~~Indemnities~~Common Stock Repurchases. ~~. Our aircraft, equipment and other leases and certain operating agreements typically contain provisions requiring us, as~~During the ~~lessee, to indemnify~~nine months ended September 30, 2023, the ~~other parties to those agreements, including certain~~Company repurchased 3,307,541 shares of ~~those parties’ related persons, against virtually any liabilities that might arise from the use or operation~~its Common Stock at an average price of $16.64 per share. The repurchases were part of a secondary public offering of the ~~aircraft or such other equipment. We believe that our insurance covers most~~Company's shares by the Apollo Stockholder, as well as open market purchases completed in the second and third quarters. For more information on the stock repurchase program and this purchase, see Note 11 of ~~our exposure~~the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Other. During the nine months ended September 30, 2023, the Company made a payment of $2,425 to ~~liabilities and related indemnities associated with~~ the ~~leases described above.~~TRA holders. For more information on the payment of the TRA, see Note 10 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

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SUN COUNTRY AIRLINES HOLDINGS, INC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

Off Balance Sheet Arrangements

~~Pass-Through Trusts. We have equipment notes outstanding issued under~~For a detailed discussion on the ~~2019-1 EETC and 2022-1 EETC. Generally, the structure~~nature of the ~~EETC financings consists~~Company's Off Balance Sheet Arrangements, see “Management’s Discussion and Analysis of ~~pass-through trusts created by us to issue pass-through certificates, which represent fractional undivided interests~~Operations” in the respective pass-through trusts and are not obligations of Sun Country. The proceeds of the issuance of the pass-through certificates are used to purchase equipment notes which are issued by us and secured by our aircraft. The payment obligations under the equipment notes are those of Sun Country. We use these certificates to finance or refinance aircraft purchases. The obligations are listed inPart II, ~~Note~~Item 7 ofin our 2022 10-K. There have been no material changes to the ~~Condensed Consolidated Financial Statements included in Part I, Item I of this report.~~

~~Fuel Consortia~~. We currently participate in fuel consortia at Minneapolis-Saint Paul International Airport, Las Vegas International Airport, Dallas-Fort Worth International Airport, San Diego International Airport, Los Angeles International Airport, Seattle Tacoma International Airport, Portland International Airport, Phoenix Sky Harbor International Airport, Orlando International Airport, Southwest Florida International Airport and San Francisco International Airport and we expectCompany's Off Balance Sheet Arrangements as compared to expand our participation with other airlines in fuel consortia and fuel committees at our airports where economically beneficial. These agreements generally include cost-sharing provisions and environmental indemnities that are generally joint and several among the participating airlines. Consortia that are governed by interline agreements are either, (i) not variable interest entities (“VIEs”) because they are not legal entities, or (ii) are variable interest entities, but the Company is not deemed the primary beneficiary. Therefore, these agreements are not reflected on our Condensed Consolidated Balance Sheets. There are no assets or liabilities on our Balance Sheets related to these VIEs, since our participation is limited to purchasing aircraft fuel.2022 10-K.

~~We have no other off-balance sheet arrangements.~~

Commitments and Contractual Obligations

~~We have contractual obligations comprised of aircraft leases and supplemental maintenance reserves, payments of debt, interest, other lease arrangements, and the TRA.~~

During the second quarter of 2022, an owned aircraft was retired due to the aircraft sustaining damage beyond economic repair. The best estimate of this event was recorded as of the second quarter and had no financial impact on the Company's Condensed Consolidated Statement of Operations. The estimate will be revised when additional information becomes available or when the contingency is finalized. The Company does not believe the finalization of the contingency will have a material effect on the Company's Condensed Consolidated Results of Operations.

During the nine months ended September 30, 2022, the Company executed an agreement to purchase a flight simulator at a total purchase price of $9,745. To date, $8,781 has been remitted to the seller. The remaining purchase price will be remitted to the seller upon receipt and installation of the simulator. Payments for the simulator are accounted for within Property & Equipment on the Condensed Consolidated Balance Sheets as of September 30, 2022.

~~For additional information, refer to~~See Note 1312 ~~Commitments and Contingencies~~ to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form ~~10-Q. Except as described herein,~~10-Q for more information regarding commitments and contractual obligations.

Recently Adopted Accounting Pronouncements

During the nine months ended September 30, 2023, there were no recently adopted accounting standards that had a material impact to the Company.

Critical Accounting Policies and Estimates

Our unaudited Condensed Consolidated Financial Statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of the Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. For more information on our critical accounting policies, see “Management’s Discussion and Analysis of Operations” sections within Part II, Item 7, respectively, in our 2022 10-K.

There have been no material changes into our ~~contractual obligations~~critical accounting policies and ~~commitments other than in~~estimates as compared to the ~~ordinary course of business since our fiscal year ended December 31, 2021.~~2022 10-K.

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~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to market risks in the ordinary course of our business. These risks include commodity price risk, specifically with respect to aircraft fuel, as well as interest rate risk. The adverse effects of changes in these markets could pose a potential loss as discussed below. The sensitivity analysis provided does not consider the effects that such adverse changes may have on overall economic activity, nor does it consider additional actions we may take to mitigate our exposure to such changes. Accordingly, actual results may differ from the information provided below.

Aircraft Fuel. Unexpected pricing changes of aircraft fuel could have a material adverse effect on our business, results of operations and financial condition. To hedge the economic risk associated with volatile aircraft fuel prices, we periodically enter into fuel collars, which allows us to reduce the overall cost of hedging, but may prevent us from participating in the benefit of downward price movements. In the past, we have also entered into fuel option and swap contracts. We had no hedges in place at September 30, ~~2022.~~2023. We do not hold or issue option or swap contracts for trading purposes. We currently do not expect to enter into these types of contracts prospectively, although significant changes in market conditions could affect our decisions. Based on our forecasted scheduled service and charter fuel consumption for the fourth quarter of ~~2022,~~2023, we estimate that a one cent per gallon increase in the average aircraft fuel price would increase aircraft fuel expense by approximately ~~$175~~$200 excluding reimbursed fuel from cargo ~~fuel.~~and certain charter customers.

Interest Rates. We have exposure to market risk associated with changes in interest rates related to the interest expense from our variable-rate debt and our short-term investment securities. A change in market interest rates would impact interest expense under the ~~Revolving Credit Facility, totaling $25,000 in principal capacity. During~~$119,200 term loan credit facility used to finance the first quarter, we repaid the outstanding balance of the DDTL using proceeds from the 2022-1 EETC, which terminated the DDTL. We are unable to draw any additional amounts from the DDTL and no longer face any exposure to market risk on this portion of our Credit Facilities. Assuming the Revolving Credit Facility is fully drawn, aAircraft Held for Operating Lease. A 100 basis point increase in interest rates on the September 30, 2023 balance of the term loan would result in a corresponding increase in interest expense of approximately ~~$250~~$1,121 annually. As of the date of this filing, the entire term loan credit facility had been drawn. The Company also maintains a $25,000 Revolving Credit Facility with a variable interest rate that is impacted by market conditions. As of September 30, 2023, the Company had $24,650 of financing available through the Revolving Credit Facility, as $350 had been pledged to support a letter of credit. As of September 30, 2023, no amounts on the Revolving Credit Facility had been drawn.

Our short-term investment securities are primarily comprised of fixed-rate debt investments. An increase in market interest rates decreases the market value of fixed-rate investments. Conversely, a decrease in market interest rates increases the market value. The fair market value of our short-term investments with exposure to interest rate risk was ~~$128,569~~$146,519 as of September 30, ~~2022. These investments are highly liquid and are available to be quickly converted into known amounts of cash to fund current operations.~~2023. The Company limits its investments to investment grade quality securities. Given these factors and that a significant portion of our portfolio is held in cash and cash equivalents, we do not anticipate fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures ~~are~~represent controls and ~~other~~ procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our ~~Management,~~management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

~~As required by Rules 13a-15 and 15d-15 under~~In connection with the preparation of this Form 10-Q, pursuant to Rule 13a-15(b) of the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, ~~carried out an evaluation of~~has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, ~~2022.~~ 2023.

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Based ~~upon this~~on the evaluation of our disclosure controls and procedures as of September 30, 2023, our Chief Executive Officer and Chief Financial Officer have concluded that ~~due to the existence of the material weakness in our internal control over financial reporting described below,~~ our disclosure controls and procedures ~~(as defined in Rules 13a-15(e) and~~

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~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

~~15d-15(e) under the Exchange Act)~~ were not effective as of September 30, ~~2022~~2023, due to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Management as appropriate to allow timely decisions regarding required disclosure. In light of this fact, Management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material ~~weakness~~weaknesses in ~~our~~ internal control over financial reporting the consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the periods presented, in conformity with U.S. GAAP.described below.

Material ~~Weakness~~Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

We previously disclosed in our ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K as of ~~June 30,~~December 31, 2022 that ~~Management~~management identified a material weakness in the Company's internal control over financial reporting. Specifically, ~~Management's~~ controls over the accounting for complex, non-routine transactions were not designed or implemented to operate with a sufficient level of precision. This included controls addressing the application of ASC Topic 842, Leases, to the purchase of aircraft subject to an existing operating lease.

~~This~~During the quarter ended June 30, 2023, management identified an additional material weakness in the Company’s internal control ~~deficiency~~over financial reporting. Specifically, the Company did not have an effective risk assessment process to identify and assess the risks of misstatement associated with the utilization of a third-party service organization's hosted IT solution for automating the processing of vendor invoices (i.e., scanning, routing, approving, and preparing the recording of invoices) and hosting of related information. As a result, management’s information technology general controls (“ITGCs”) over the IT application used by the service organization and process-level controls over the procurement activities carried out by the third-party service organization were not designed or implemented to operate at a sufficient level of precision. The Company also did not obtain a System and Organization Controls ("SOC") Report from the third-party that would provide evidence of design, implementation, and operating effectiveness of such controls within the service organization’s framework of internal controls.

These control deficiencies did not result in a material misstatement of the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q or our prior period consolidated annual or interim financial statements. However, ~~the~~each of these control ~~deficiency created~~deficiencies create a reasonable possibility that a material misstatement to the annual or interim consolidated financial statements ~~would~~will not ~~have been~~be prevented or detected on a timely basis. Accordingly, ~~Management~~management has concluded that ~~this~~each control deficiency constituted a material ~~weakness.~~weakness in the Company's internal control over financial reporting and our internal control over financial reporting was not effective as of September 30, 2023.

Remediation Plan

Management ~~has begun supplementing~~is continuing to supplement and enhance the Company's system of internal control over financial reporting through actions responsive to each identified material weakness. The remediation plan for the material weakness associated with accounting for complex, non-routine transactions, includes the ~~following actions:~~following:

•Hired a technical accounting specialist and manager after the material weakness occurred;

•Provided additional training on how to utilize external technical accounting research resources;

•~~Engaging~~Reviewed all existing internal accounting policies and accounting guidance memos for completeness and the appropriate accounting guidance, including those surrounding leases;

•Established a policy to provide additional guidance surrounding the use of third-party specialists;

•Enhanced the design of financial reporting controls, specifically sub-certifications and review of non-routine transactions including updating the lease accounting checklist;

•Engaged third-party specialists, as necessary, to review ~~Management’s~~management’s analysis and conclusions on the accounting for non-routine transactions involving the application of complex accounting standards; ~~and~~

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•~~Continuing~~Continued to review and make necessary changes to the ~~overall~~ design of our risk assessment and review controls over accounting for complex, non-routine transactions, including lease-related ~~transactions.~~transactions;

•Re-designed the overall design of our risk assessment process with utilization of a new third-party tool; and

•Established a policy and internal controls surrounding transactions related to a new lessor relationship.

We have made significant progress in accordance with our remediation ~~plan; however,~~plan related to the material weakness in controls over the accounting for complex, non-routine transactions since the filing of our June 30, 2023 10-Q as follows:

•Continued to engage third-party technical accounting specialists to review management's conclusions on the accounting for non-routine transactions occurring in the third quarter of 2023;

•Continued to perform management's controls surrounding the accounting for complex, non-routine transactions, including those associated with the acquisition and related financing of additional aircraft, and those involved with becoming a first-time aircraft lessor; and

•Provided "refresher" training on how to utilize external technical accounting research resources.

The remediation plan for the material weakness associated with the controls over the utilization of a third-party service organization's hosted IT solution for automating the processing of vendor invoices and hosting of related information, includes the following:

•Understand the timing and scope of the third-party service organization's attestation report to determine whether the attestation will be adequate and performed in a timely manner to cover our fiscal year;

•Where a SOC attestation is not completed, explore alternative solutions including, but not limited to, a) bringing the application on premise so the necessary IT infrastructure and related processes and controls surrounding the IT application can be entirely within the Company’s control, and b) evaluating other service providers that are able to provide a SOC attestation report; and

•Enhance the design and operation of manual internal controls within the Company, including tracking and reviewing of vendor invoices outside of the third-party service organization’s application and processes, in the event an adequate and timely SOC attestation report is not available from the third-party service organization and other viable solutions are not pursued.

We have made significant progress in accordance with our remediation plan related to the material weakness in controls over the utilization of a third-party service organization’s hosted IT solution for automating the processing of vendor invoices and hosting of related information since the filing of our June 30, 2023 10-Q as follows:

•Established and tested the IT infrastructure necessary to operate the vendor’s application on premise;

•Completed the move of the historical data and implemented internal processes and controls surrounding the IT application in order to operate it entirely within the Company’s control; and

•Continuing to enhance the risk assessment process and design of our process-level controls over procurement activities so they operate at a sufficient level of precision.

Each material weakness will not be considered remediated until a sustained period of time has passed to allow management to test the design and ~~operational~~operating effectiveness of the new or enhanced controls implemented as a result of the corrective actions. We believe that our remediation ~~plan~~plans will be sufficient to remediate the identified material ~~weakness~~weaknesses and strengthen our internal control over financial reporting. However, as we continue to evaluate and ~~work to~~ improve our internal control over financial reporting, ~~Management~~management may determine that additional measures to address the identified control deficiencies or modifications to the remediation ~~plan~~plans are necessary. Therefore, we cannot assure you when the Company will remediate the material ~~weakness~~weaknesses identified above, nor can we be certain that additional actions will not be required and what the costs of any such additional actions may be. Moreover, we cannot assure you that additional material weaknesses will not arise in the future.

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~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

Despite the existence of these material weaknesses, our management believes that the Condensed Consolidated Financial Statements included in this Quarterly Report present fairly, in all material respects, the Company's financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Changes in Internal Control Over Financial Reporting

Other than the changes made as part of the remediation ~~plan~~plans described above, there has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, ~~2022~~2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. We currently believe that the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on our financial position, liquidity or results of operations.

ITEM 1A. RISK FACTORS

We have disclosed under the heading “Risk Factors” in our ~~2021~~2022 10-K,March 31, 2023 10-Q, and June 30, 2023 10-Q, the risk factors which materially affect our business, financial condition or results of operations. Except for the updated risk factors set forth below, there have been no material changes from the risk factors previously disclosed. You should carefully consider the risk factors set forth in our ~~2021~~2022 10-K, March 31, 2023 10-Q, June 30, 2023 10-Q and the risk ~~factor~~factors presented in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Risks Related to ~~Ownership of~~ Our ~~Common Stock~~Industry

~~As previously disclosed, we have identified a material weakness in our internal control over financial reporting~~Terrorism, war, and ~~if we are unable to remediate this material weakness, we~~other events may ~~not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.~~

As disclosed in Part I, Item 4, “Controls and Procedures,” we have previously disclosed the identification of a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. The control deficiency described below created a reasonable possibility that a material misstatement to the annual or interim consolidated financial statements would not have been prevented or detected on a timely basis. Accordingly, Management has concluded that this control deficiency constituted a material weakness as of June 30, 2022. Specifically, Management's controls over the accounting for complex, non-routine transactions were not designed or implemented to operate with a sufficient level of precision. This included controls addressing the application of ASC Topic 842, ~~Leases,~~ ~~to the purchase of aircraft subject to an existing operating lease.~~

Failure to have effective internal control over financial reporting and disclosure controls and procedures could impair our ability to produce accurate financial statements on a timely basis and could lead to a restatement of our financial statements. If, as a result of the ineffectiveness of our internal control over financial reporting and disclosure controls and procedures, we cannot provide reliable financial statements, our business decision processes may be adversely affected, our business and results of operations could be harmed, and investors could lose confidence in our reported financial information. In addition, in some circumstances, failure to

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~~maintain effective internal control over financial reporting could result in investigations or sanctions by regulatory authorities.~~

As described in Part 1, Item 4, Management began supplementing the system of internal control over financial reporting to address the material weakness. Such remediation measures may require additional time and resources and there is no assurance that these initiatives will ultimately have the intended effects. As Management continues to evaluate and work to improve our internal control over financial reporting, Management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary. Therefore, we cannot assure you when the Company will remediate such weakness, nor can we be certain that additional actions will not be required and what costs of any such additional actions may be. In addition, there can be no assurance that such remediation efforts will be successful, that our internal control over financial reporting will be effective as a result of these efforts nor that additional material weaknesses will not arise in the future or that Management has identified all material weaknesses. If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. Any such future deficiencies identified may not be material weaknesses that would be required to be reported in future periods. In addition, we cannot assure you that our independent registered public accounting firm will be able to attest that such internal controls are effective when they are required to do so.

If we fail to remediate the material weakness and maintain effective internal control over financial reporting or disclosure controls and procedures, we may not be able to rely on the integrity of our financial results, which could result in inaccurate or late reporting of our financial results, as well as delays or the inability to meet our reporting obligations or to comply with SEC rules and regulations. Any of these could result in delisting actions by the Nasdaq Stock Market, investigation and sanctions by regulatory authorities, stockholder investigations and lawsuits, and could adversely affect our business and the trading price of our common stock. The potential consequences of any material weakness could have a material adverse effect onharm our business, results of operations and financial condition.

The continued threat of terrorism and heightened security and military action in response thereto, or any other current or future acts of terrorism, war (such as the Hamas-Israel and the Russia-Ukraine military conflicts), and other events (such as economic sanctions and trade restrictions, including those related to the foregoing) may cause further disruptions to the economies of the United States and other countries and create further uncertainties or could otherwise negatively impact our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~The following table summarizes the Company's repurchases of Common Stock for the quarter ended September 30, 2023. All stock repurchases during the quarter reflect shares repurchased pursuant to the Company's stock repurchase program and shares withheld from employees to satisfy the taxes due in connection with grants of stock under the Company's equity incentive plans. The shares of Common Stock withheld to satisfy tax withholding obligations are considered to be "issuer purchases" of shares that are required to be disclosed pursuant to this Item, but are not considered to be part of the Company's stock

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repurchase program. For more information on the Company's stock repurchase program, see Note 11 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.


	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Approximate Dollar Value ($ in thousands) of Shares that May Yet be Purchased Under Plan (2)
July 1-31, 2023	—	$	—	—	$	2,759
August 1-31, 2023 (1)	1,236,023	15.45		1,236,023	13,667
September 1-30, 2023	904,767	15.11		904,767	—
Total	2,140,790	$	15.30	2,140,790	$	—

__________________________

(1)On August 1, 2023, the Company's Board of Directors authorized the addition of $30,000 to the Company's existing stock repurchase program, which increased the total amount of authorization remaining to repurchase shares of the Company's Common Stock as of that date to $32,759.

(2)Subsequent to September 30, 2023, the Company's Board of Directors authorized the addition of $25,000 to the Company's existing stock repurchase program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

~~None.~~Our directors and executive officers may purchase or sell shares of our common stock in the market from time to time, including pursuant to equity trading plans adopted in accordance with Rule 10b5-1 under the Exchange Act ("Rule 10b5-1") and in compliance with guidelines specified by the Company. In accordance with Rule 10b5-1 and the Company’s insider trading policy, directors, officers and certain employees who, at such time, are not in possession of material non-public information about the Company are permitted to enter into written plans that pre-establish amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired pursuant to the Company’s equity plans ("Rule 10b5-1 Trading Plans"). Under a Rule 10b5-1 Trading Plan, a broker executes trades pursuant to parameters established by the director or executive officer when entering into the plan, without further direction from them. The following table describes contracts, instructions or written plans for the sale or purchase of our securities adopted, terminated or modified by our directors and executive officers during the three months ended September 30, 2023, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).

Name and Title

Adoption, Termination or Modification

Date of Adoption, Termination or Modification

Duration of Plan (Scheduled Expiration Date of Plan)

Number of Securities to be Purchased (Sold) under the Plan

Dave Davis, President and Chief Financial Officer

Termination

August 21, 2023

December 29, 2023

(162,422)

Dave Davis, President and Chief Financial Officer

Adoption

August 21, 2023

May 3, 2024

(350,720)

-51-

Table of Contents

ITEM 6. EXHIBITS

(a)Exhibits


10.1*#			Amendment 19 to the Inventory Support Services Agreement, dated as July 20, 2023, by and between Sun Country, Inc., dba Sun Country Airlines and Delta Air Lines, Inc .

31.1*			Certification by Sun Country's Chief Executive Officer with respect to Sun Country's Quarterly Report on Form 10-Q for the quarterly period ended September 30, ~~2022~~2023

31.2*			Certification by Sun Country’s President and Chief Financial Officer with respect to Sun Country's Quarterly Report on Form 10-Q for the quarterly period ended September 30, ~~2022~~2023

~~-63-~~

~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC~~



32*			Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by Sun Country Airlines Holdings, Inc.’s Chief Executive Officer and President and Chief Financial Officer with respect to Sun Country's Quarterly Report on Form 10-Q for the quarterly period ended September 30, ~~2022~~2023

101.INS*			Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document

101.SCH*			Inline XBRL Taxonomy Extension Schema Document

101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*			Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*			Cover Page Interactive Data Files (formatted as inline XBRL and contained in Exhibit 101)



*			Filed herewith
#			Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request.

~~-64-~~-52-

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~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			Sun Country Airlines Holdings, Inc. (Registrant)

			/s/ Dave Davis
			Dave Davis
			President and Chief Financial Officer (Principal Financial and Accounting Officer)

November ~~2, 2022~~7, 2023

~~-65-~~-53-


	Nine Months Ended September 30, 2021
	Common Stock			Loans to Stockholders		Additional Paid-in Capital		Retained Earnings (Deficit)		Total
	Shares	Amount
December 31, 2020	46,839,659	$	468	$	(3,500)	$	248,525	$	38,324	$	283,817
Shares Surrendered by Stockholders	(140,737)	(1)		3,500		(3,499)		—		—
Initial Public Offering, net	10,454,545	105		—		224,552		—		224,657
Net Income	—	—		—		—		16,778		16,778
Income Tax Receivable Agreement	—	—		—		—		(115,200)		(115,200)
Amazon Warrants	—	—		—		1,400		—		1,400
Stock-based Compensation	—	—		—		2,870		—		2,870
March 31, 2021	57,153,467	$	572	$	—	$	473,848	$	(60,098)	$	414,322
Initial Public Offering Expense Adjustment	—	—		—		349		—		349
Exercise of Stock Options	5,000	—		—		27		—		27
Net Income	—	—		—		—		52,177		52,177
Amazon Warrants	—	—		—		1,400		—		1,400
Stock-based Compensation	—	—		—		744		—		744
June 30, 2021	57,158,467	$	572	$	—	$	476,368	$	(7,921)	$	469,019
Exercise of Stock Options	393,274	4		—		2,376		—		2,380
Net Income	—	—		—		—		13,379		13,379
Amazon Warrants	—	—		—		1,400		—		1,400
Stock-based Compensation	—	—		—		964		—		964
September 30, 2021	57,551,741	$	576	$	—	$	481,108	$	5,458	$	487,142


	December 31, 2021
	As Previously Issued		Correction		As Revised
Assets
Aircraft and Flight Equipment	$	440,356	$	6,963	$	447,319
Total Property & Equipment	688,624		6,963		695,587
Accumulated Depreciation & Amortization	(115,013)		(2,056)		(117,069)
Total Property & Equipment, net	573,611		4,907		578,518
Deferred Tax Asset	18,737		(1,129)		17,608
Total Other Assets	427,590		(1,129)		426,461
Total Assets	1,376,644		3,778		1,380,422
Stockholder's Equity
Retained Earnings	594		3,778		4,372
Total Stockholders' Equity	486,811		3,778		490,589
Total Liabilities and Stockholders' Equity	1,376,644		3,778		1,380,422


	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
	As Previously Issued		Correction		As Revised		As Previously Issued		Correction		As Revised
Operating Expenses
Depreciation and Amortization	$	14,029	$	681	$	14,710	$	40,103	$	1,429	$	41,532
Special Items, net	(65)		—		(65)		(65,456)		(6,963)		(72,419)
Total Operating Expenses	151,661		681		152,342		354,290		(5,534)		348,756

Operating Income	22,002		(681)		21,321		96,174		5,534		101,708
Income Before Income Tax	16,200		(681)		15,519		95,244		5,534		100,778
Income Tax Expense	2,297		(157)		2,140		17,172		1,272		18,444
Net Income	13,903		(524)		13,379		78,072		4,262		82,334
Basic Income per share	$	0.24	$	(0.01)	$	0.23	$	1.44	$	0.07	$	1.51
Diluted Income per share	$	0.23	$	(0.01)	$	0.22	$	1.33	$	0.07	$	1.40


	For the Three Months Ended June 30, 2021						For the Three Months Ended March 31, 2021
	As Previously Issued		Correction		As Revised		As Previously Issued		Correction		As Revised
Net Income	$	51,753	$	424	$	52,177	$	12,416	$	4,362	$	16,778


	As of March 31, 2022						As of September 30, 2021
	As Previously Issued		Correction		As Revised		As Previously Issued		Correction		As Revised
Retained Earnings	$	4,231	$	3,778	$	8,009	$	1,196	$	4,262	$	5,458
Total Stockholders' Equity	493,291		3,778		497,069		482,880		4,262		487,142
	As of June 30, 2021						As of March 31, 2021
	As Previously Issued		Correction		As Revised		As Previously Issued		Correction		As Revised
Retained Earnings (Deficit)	$	(12,707)	$	4,786	$	(7,921)	$	(64,460)	$	4,362	$	(60,098)
Total Stockholders' Equity	464,233		4,786		469,019		409,960		4,362		414,322


	September 30, 2022		December 31, 2021
Notes payable under the Company's 2019-1 EETC agreement dated December 2019, with original loan amounts of $248,587 payable in bi-annual installments, in June and December, through December 2027. These notes bear interest at an annual rate between 4.13% and 6.95% and the weighted average interest rate is 4.73% as of September 30, 2022.	$	194,884	$	202,984

Notes payable under the Company's 2022-1 EETC agreement dated March 2022, with a face amount of $188,277 payable in bi-annual installments, in March and September, through March 2031. These notes bear interest at an annual rate between 4.84% and 5.75% and the weighted average interest rate is 5.06% as of September 30, 2022.	179,019		—

Delayed Draw Term Loan Facility	—		77,481

Other Notes payable	—		466

Total Debt	373,903		280,931

Less: Unamortized debt issuance costs	(3,706)		(3,505)

Less: Current Maturities of Long-term Debt	(45,535)		(29,412)
Total Long-term Debt	$	324,662	$	248,014


	Nine Months Ended September 30, 2022 (1)								Nine Months Ended September 30, 2021 (1)
	Scheduled Service			Charter		Cargo	Total		Scheduled Service			Charter		Cargo	Total
Departures (2)	17,512			6,214		8,310	32,246		14,777			5,036		8,229	28,196
Block hours (2)	57,585			13,000		23,891	95,052		48,420			10,822		24,973	84,648
Aircraft miles (2)	23,112,200			4,630,257		9,209,477	37,113,673		19,758,087			4,005,794		9,884,576	33,780,294
Available seat miles (ASMs) (thousands) (2)	4,284,403			800,698			5,114,134		3,653,335			693,837			4,368,972
Total revenue per ASM (TRASM) (cents)	11.27			14.80			11.76		8.04			12.76			8.75
Average passenger aircraft during the period (3)							35.2								31.7
Passenger aircraft at end of period (3)							42								35
Cargo aircraft at end of period							12								12
Average daily aircraft utilization (hours) (3)							7.4								6.9
Average stage length (miles)							1,169								1,199
Revenue passengers carried (4)	2,715,707								2,038,399
Revenue passenger miles (RPMs) (thousands) (4)	3,565,501								2,705,969
Load factor (4)	83.2		%						74.1		%
Average base fare per passenger (4)	$	123.24							$	99.05
Ancillary revenue per passenger (4)	$	51.39							$	42.50
Charter revenue per block hour (4)				$	9,118							$	8,179
Fuel gallons consumed (thousands) (2)	44,940			9,085			54,322		37,299			7,739			45,269
Fuel cost per gallon, excluding derivatives and other items							$	3.81							$	2.08
Employees at end of period							2,354								2,014
Cost per available seat mile (CASM) (cents) (5)							12.25								7.98
Adjusted CASM (cents) (6)							6.91								6.32