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 ~~March 31,~~June 30, 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 ☐	Accelerated 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 ~~March 31,~~June 30, 2023:

Common Stock, $0.01 par value – ~~56,241,005~~56,012,229 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			6
Condensed Consolidated Statements of Comprehensive Income (Loss)				Condensed Consolidated Statements of Comprehensive Income (Loss)		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	Basis of Presentation	9	1	Basis of Presentation	9
2	2	Coronavirus Aid, Relief, and Economic Security Act	9	2	Revenue	9
3	3	Revenue	9	3	Earnings per Share	12
4	4	Earnings per Share	12	4	Aircraft	13
5	5	Aircraft	12	5	Asset Acquisitions	14
6	6	Asset Acquisitions	14	6	Debt	15
7	7	Debt	15	7	Stock-Based Compensation	17
8	8	Investments	18	8	Investments	18
9	9	Fair Value Measurements	18	9	Fair Value Measurements	18
10	10	Income Taxes	19	10	Income Taxes	19
11	11	Stockholders' Equity	19	11	Stockholders' Equity	19
12	12	Commitments and Contingencies	20	12	Commitments and Contingencies	20
13	13	Operating Segments	21	13	Operating Segments	21
14	14	Subsequent Events	21	14	Subsequent Events	22

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		22	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		39	Item 3. Quantitative and Qualitative Disclosures About Market Risk		47
Item 4. Controls and Procedures	Item 4. Controls and Procedures		39	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		41	Item 1. Legal Proceedings		50
Item 1A. Risk Factors	Item 1A. Risk Factors		41	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		48	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		52
Item 3. Defaults Upon Senior Securities	Item 3. Defaults Upon Senior Securities		48	Item 3. Defaults Upon Senior Securities		52
Item 4. Mine Safety Disclosures	Item 4. Mine Safety Disclosures		48	Item 4. Mine Safety Disclosures		53
Item 5. Other Information	Item 5. Other Information		48	Item 5. Other Information		53
Item 6. Exhibits	Item 6. Exhibits		49	Item 6. Exhibits		54

Signatures	Signatures		50	Signatures		55

-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)


		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS

Current Assets:	Current Assets:					Current Assets:
Cash and Cash Equivalents	Cash and Cash Equivalents	$	71,587	$	92,086	Cash and Cash Equivalents	$	86,930	$	92,086
Restricted Cash	Restricted Cash	22,776		10,842		Restricted Cash	7,281		10,842
Investments	Investments	171,638		178,936		Investments	158,177		178,936
Accounts Receivable, net of an allowance for credit losses of $245 and $231, respectively		35,464		35,124
Accounts Receivable, net of an allowance for credit losses of $241 and $231, respectively						Accounts Receivable, net of an allowance for credit losses of $241 and $231, respectively	26,937		35,124
Short-term Lessor Maintenance Deposits	Short-term Lessor Maintenance Deposits	1,279		1,241		Short-term Lessor Maintenance Deposits	999		1,241
Inventory, net of a reserve for obsolescence of $1,183 and $1,107, respectively		6,805		7,659
Inventory, net of a reserve for obsolescence of $1,190 and $1,107, respectively						Inventory, net of a reserve for obsolescence of $1,190 and $1,107, respectively	7,365		7,659
Prepaid Expenses	Prepaid Expenses	11,621		11,423		Prepaid Expenses	12,209		11,423
Other Current Assets	Other Current Assets	4,823		8,179		Other Current Assets	2,365		8,179
Total Current Assets	Total Current Assets	325,993		345,490		Total Current Assets	302,263		345,490

Property & Equipment, net:	Property & Equipment, net:					Property & Equipment, net:
Aircraft and Flight Equipment	Aircraft and Flight Equipment	643,924		636,584		Aircraft and Flight Equipment	664,757		636,584
Aircraft and Flight Equipment Held for Operating Lease	Aircraft and Flight Equipment Held for Operating Lease	92,627		—		Aircraft and Flight Equipment Held for Operating Lease	154,161		—
Ground Equipment and Leasehold Improvements	Ground Equipment and Leasehold Improvements	37,664		35,948		Ground Equipment and Leasehold Improvements	38,690		35,948
Computer Hardware and Software	Computer Hardware and Software	9,327		10,831		Computer Hardware and Software	10,388		10,831
Finance Lease Assets	Finance Lease Assets	261,991		261,991		Finance Lease Assets	276,086		261,991
Rotable Parts	Rotable Parts	13,318		17,059		Rotable Parts	15,206		17,059
Total Property & Equipment	Total Property & Equipment	1,058,851		962,413		Total Property & Equipment	1,159,288		962,413
Accumulated Depreciation & Amortization	Accumulated Depreciation & Amortization	(190,580)		(176,746)		Accumulated Depreciation & Amortization	(211,227)		(176,746)
Total Property & Equipment, net	Total Property & Equipment, net	868,271		785,667		Total Property & Equipment, net	948,061		785,667

Other Assets:	Other Assets:					Other Assets:
Goodwill	Goodwill	222,223		222,223		Goodwill	222,223		222,223
Other Intangible Assets, net of accumulated amortization of $19,890 and $18,890, respectively		86,109		85,110
Other Intangible Assets, net of accumulated amortization of $21,325 and $18,890, respectively						Other Intangible Assets, net of accumulated amortization of $21,325 and $18,890, respectively	86,416		85,110
Operating Lease Right-of-use Assets	Operating Lease Right-of-use Assets	21,929		22,182		Operating Lease Right-of-use Assets	18,715		22,182
Aircraft Deposits	Aircraft Deposits	9,374		9,134		Aircraft Deposits	9,614		9,134
Long-term Lessor Maintenance Deposits	Long-term Lessor Maintenance Deposits	35,253		32,433		Long-term Lessor Maintenance Deposits	38,310		32,433
Deferred Tax Asset	Deferred Tax Asset	2,389		12,956		Deferred Tax Asset	—		12,956
Other Assets	Other Assets	10,185		9,217		Other Assets	9,021		9,217
Total Other Assets	Total Other Assets	387,462		393,255		Total Other Assets	384,299		393,255
Total Assets	Total Assets	$	1,581,726	$	1,524,412	Total Assets	$	1,634,623	$	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)


		March 31, 2023		December 31, 2022			June 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	$	58,455	$	62,370	Accounts Payable	$	56,143	$	62,370
Accrued Salaries, Wages, and Benefits	Accrued Salaries, Wages, and Benefits	28,523		26,521		Accrued Salaries, Wages, and Benefits	30,095		26,521
Accrued Transportation Taxes	Accrued Transportation Taxes	15,403		17,666		Accrued Transportation Taxes	15,488		17,666
Air Traffic Liabilities	Air Traffic Liabilities	141,613		157,995		Air Traffic Liabilities	130,264		157,995
Finance Lease Obligations	Finance Lease Obligations	18,506		17,990		Finance Lease Obligations	33,641		17,990
Loyalty Program Liabilities	Loyalty Program Liabilities	9,664		13,963		Loyalty Program Liabilities	8,962		13,963
Operating Lease Obligations	Operating Lease Obligations	6,578		6,296		Operating Lease Obligations	4,485		6,296
Current Maturities of Long-term Debt, net	Current Maturities of Long-term Debt, net	66,194		57,548		Current Maturities of Long-term Debt, net	83,204		57,548
Income Tax Receivable Agreement Liability	Income Tax Receivable Agreement Liability	8,165		2,260		Income Tax Receivable Agreement Liability	8,000		2,260
Other Current Liabilities	Other Current Liabilities	13,267		14,519		Other Current Liabilities	12,973		14,519
Total Current Liabilities	Total Current Liabilities	366,368		377,128		Total Current Liabilities	383,255		377,128

Long-term Liabilities:	Long-term Liabilities:					Long-term Liabilities:
Finance Lease Obligations	Finance Lease Obligations	228,513		233,306		Finance Lease Obligations	223,647		233,306
Loyalty Program Liabilities	Loyalty Program Liabilities	4,135		1,474		Loyalty Program Liabilities	4,694		1,474
Operating Lease Obligations	Operating Lease Obligations	19,521		19,836		Operating Lease Obligations	18,264		19,836
Long-term Debt, net	Long-term Debt, net	346,065		294,687		Long-term Debt, net	365,211		294,687
Deferred Tax Liability						Deferred Tax Liability	3,356		—
Income Tax Receivable Agreement Liability	Income Tax Receivable Agreement Liability	92,855		101,540		Income Tax Receivable Agreement Liability	93,020		101,540
Other Long-term Liabilities	Other Long-term Liabilities	3,262		3,729		Other Long-term Liabilities	2,411		3,729
Total Long-term Liabilities	Total Long-term Liabilities	694,351		654,572		Total Long-term Liabilities	710,603		654,572
Total Liabilities	Total Liabilities	1,060,719		1,031,700		Total Liabilities	1,093,858		1,031,700

Commitments and Contingencies (see Note 12)	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, 58,364,752 and 58,217,647 issued and 56,241,005 and 57,325,238 outstanding at March 31, 2023 and December 31, 2022, respectively		584		582
Preferred stock, with $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2023 and December 31, 2022		—		—
Treasury stock, at cost, 2,123,747 and 892,409 shares held at March 31, 2023 and December 31, 2022, respectively		(40,162)		(17,605)
Common stock, with $0.01 par value, 995,000,000 shares authorized, 58,552,727 and 58,217,647 issued and 56,012,229 and 57,325,238 outstanding at June 30, 2023 and December 31, 2022, respectively						Common stock, with $0.01 par value, 995,000,000 shares authorized, 58,552,727 and 58,217,647 issued and 56,012,229 and 57,325,238 outstanding at June 30, 2023 and December 31, 2022, respectively	586		582
Preferred stock, with $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at June 30, 2023 and December 31, 2022						Preferred stock, with $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at June 30, 2023 and December 31, 2022	—		—
Treasury stock, at cost, 2,540,498 and 892,409 shares held at June 30, 2023 and December 31, 2022, respectively						Treasury stock, at cost, 2,540,498 and 892,409 shares held at June 30, 2023 and December 31, 2022, respectively	(47,673)		(17,605)
Additional Paid-In Capital	Additional Paid-In Capital	500,627		488,494		Additional Paid-In Capital	507,522		488,494
Retained Earnings	Retained Earnings	60,376		22,048		Retained Earnings	80,994		22,048
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss	(418)		(807)		Accumulated Other Comprehensive Loss	(664)		(807)
Total Stockholders' Equity	Total Stockholders' Equity	521,007		492,712		Total Stockholders' Equity	540,765		492,712
Total Liabilities and Stockholders' Equity	Total Liabilities and Stockholders' Equity	$	1,581,726	$	1,524,412	Total Liabilities and Stockholders' Equity	$	1,634,623	$	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 March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022			2023		2022		2023		2022
Operating Revenues:	Operating Revenues:					Operating Revenues:
Passenger	Passenger	$	267,269	$	202,033	Passenger	$	227,866	$	195,362	$	495,135	$	397,394
Cargo	Cargo	23,361		21,053		Cargo	25,017		21,190		48,378		42,243
Other	Other	3,485		3,439		Other	8,203		2,515		11,688		5,954
Total Operating Revenues	Total Operating Revenues	294,115		226,525		Total Operating Revenues	261,086		219,067		555,201		445,591

Operating Expenses:	Operating Expenses:					Operating Expenses:
Aircraft Fuel	Aircraft Fuel	72,290		64,544		Aircraft Fuel	52,360		76,947		124,650		141,492
Salaries, Wages, and Benefits	Salaries, Wages, and Benefits	75,430		59,617		Salaries, Wages, and Benefits	75,919		60,298		151,349		119,915
Aircraft Rent	Aircraft Rent	1,480		3,186		Aircraft Rent	779		2,211		2,259		5,397
Maintenance	Maintenance	13,039		11,995		Maintenance	15,942		12,782		28,981		24,777
Sales and Marketing	Sales and Marketing	9,929		8,628		Sales and Marketing	8,507		7,881		18,436		16,509
Depreciation and Amortization	Depreciation and Amortization	19,460		15,328		Depreciation and Amortization	22,355		16,854		41,815		32,182
Ground Handling	Ground Handling	11,038		7,958		Ground Handling	11,311		8,212		22,349		16,170
Landing Fees and Airport Rent	Landing Fees and Airport Rent	12,051		10,286		Landing Fees and Airport Rent	12,962		9,496		25,013		19,782
Other Operating, net	Other Operating, net	23,615		23,150		Other Operating, net	25,364		21,017		48,979		44,166
Total Operating Expenses	Total Operating Expenses	238,332		204,692		Total Operating Expenses	225,499		215,698		463,831		420,390
Operating Income	Operating Income	55,783		21,833		Operating Income	35,587		3,369		91,370		25,201

Non-operating Income (Expense):	Non-operating Income (Expense):					Non-operating Income (Expense):
Interest Income	Interest Income	2,741		24		Interest Income	2,545		532		5,286		556
Interest Expense	Interest Expense	(8,630)		(8,562)		Interest Expense	(11,239)		(7,042)		(19,869)		(15,604)
Other, net	Other, net	(212)		(6,876)		Other, net	(143)		(1,702)		(355)		(8,577)
Total Non-operating Expense, net	Total Non-operating Expense, net	(6,101)		(15,414)		Total Non-operating Expense, net	(8,837)		(8,212)		(14,938)		(23,625)

Income Before Income Tax		49,682		6,419
Income Tax Expense		11,354		2,782
Net Income		$	38,328	$	3,637
Income (Loss) Before Income Tax						Income (Loss) Before Income Tax	26,750		(4,843)		76,432		1,576
Income Tax Expense (Benefit)						Income Tax Expense (Benefit)	6,132		(921)		17,486		1,861
Net Income (Loss)						Net Income (Loss)	$	20,618	$	(3,922)	$	58,946	$	(285)

Net Income per share to common stockholders:
Net Income (Loss) per share to common stockholders:						Net Income (Loss) per share to common stockholders:
Basic	Basic	$	0.68	$	0.06	Basic	$	0.37	$	(0.07)	$	1.05	$	0.00
Diluted	Diluted	$	0.64	$	0.06	Diluted	$	0.35	$	(0.07)	$	0.99	$	0.00
Shares used for computation:	Shares used for computation:					Shares used for computation:
Basic	Basic	56,630,656		57,907,655		Basic	56,084,759		58,060,716		56,364,170		57,984,608
Diluted	Diluted	59,535,045		61,731,942		Diluted	59,712,048		58,060,716		59,630,008		57,984,608

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 (LOSS)

(Dollars in thousands)

(Unaudited)

Three Months Ended March 31,
2023 2022
Net Income $ 38,328 $ 3,637
Other Comprehensive Income:
Net unrealized gains on Available-for-Sale securities, net of deferred tax expense of $116 and $—, respectively 389 —
Other Comprehensive Income 389 —
Comprehensive Income $ 38,717 $ 3,637


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net Income (Loss)	$	20,618	$	(3,922)	$	58,946	$	(285)

Other Comprehensive Income (Loss):
Net unrealized gains (losses) on Available-for-Sale securities, net of deferred tax expense (benefit) of $(73), $(66), $43 and $(66), respectively	(246)		(220)		143		(220)
Other Comprehensive Income (Loss)	(246)		(220)		143		(220)
Comprehensive Income (Loss)	$	20,372	$	(4,142)	$	59,089	$	(505)

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, except share amounts)

(Unaudited)


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


		Three Months Ended March 31, 2022																		Six Months Ended June 30, 2022
		Warrants		Common Stock						Additional Paid-in Capital		Retained Earnings				Total				Warrants				Common Stock						Treasury Stock						Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive (Loss)				Total
			Shares		Amount										Shares						Amount					Shares			Amount
December 31, 2021	December 31, 2021		1,643,660		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 Issued for Stock-Based Awards	Stock Issued for Stock-Based Awards	—		91,868		1				522		—				523			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	189,652		—		—				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	1,833,312		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 Share-Based Awards																			Stock Issued for Share-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 Loss																			Net Loss	—				—			—			—			—			—				(3,922)				—				(3,922)
Amazon Warrants																			Amazon Warrants	189,652				—			—			—			—			1,400				—				—				1,400
Stock-based Compensation																			Stock-based Compensation	—				—			—			—			—			575				—				—				575
Other Comprehensive Loss																			Other Comprehensive Loss	—				—			—			—			—			—				—				(220)				(220)
June 30, 2022																			June 30, 2022	2,022,964				58,145,724			$	581		1,823			$	(52)		$	491,492			$	4,087			$	(220)			$	495,888

See accompanying Notes to Condensed Consolidated Financial Statements

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SUN COUNTRY AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


		Three Months Ended March 31,						Six Months Ended June 30,
		2023		2022				2023		2022
Net Income		$	38,328	$	3,637
Adjustments to reconcile Net Income to Cash from Operating Activities:
Net Income (Loss)							Net Income (Loss)	$	58,946	$	(285)
Adjustments to reconcile Net Income (Loss) to Cash from Operating Activities:							Adjustments to reconcile Net Income (Loss) to Cash from Operating Activities:
Depreciation and Amortization	Depreciation and Amortization	19,460		15,328			Depreciation and Amortization	41,815		32,182
Deferred Income Taxes	Deferred Income Taxes	10,450		2,782			Deferred Income Taxes	16,269		1,861
Other, net	Other, net	4,643		13,013			Other, net	11,677		18,356
Changes in Operating Assets and Liabilities:	Changes in Operating Assets and Liabilities:						Changes in Operating Assets and Liabilities:
Accounts Receivable	Accounts Receivable	(468)		(1,577)			Accounts Receivable	9,199		(8,023)
Inventory	Inventory	(305)		(346)			Inventory	(1,012)		(1,184)
Prepaid Expenses	Prepaid Expenses	(198)		(1,655)			Prepaid Expenses	(780)		(7,733)
Lessor Maintenance Deposits	Lessor Maintenance Deposits	(2,858)		(3,919)			Lessor Maintenance Deposits	(5,635)		(7,356)
Aircraft Deposits	Aircraft Deposits	(187)		(1,044)			Aircraft Deposits	(427)		(1,720)
Other Assets	Other Assets	581		(6,262)			Other Assets	1,269		18
Accounts Payable	Accounts Payable	(288)		9,500			Accounts Payable	(2,744)		15,692
Accrued Transportation Taxes	Accrued Transportation Taxes	(2,264)		1,362			Accrued Transportation Taxes	(2,178)		1,813
Air Traffic Liabilities	Air Traffic Liabilities	(16,382)		(7,616)			Air Traffic Liabilities	(27,731)		5,396
Loyalty Program Liabilities	Loyalty Program Liabilities	(1,638)		(2,344)			Loyalty Program Liabilities	(1,781)		(3,113)
Operating Lease Obligations	Operating Lease Obligations	(1,434)		(3,240)			Operating Lease Obligations	(2,999)		(5,698)
Other Liabilities	Other Liabilities	421		594			Other Liabilities	1,805		(3,146)
Net Cash Provided by Operating Activities	Net Cash Provided by Operating Activities	47,861		18,213			Net Cash Provided by Operating Activities	95,693		37,060
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:						Cash Flows from Investing Activities:
Purchases of Property & Equipment	Purchases of Property & Equipment	(104,978)		(49,683)			Purchases of Property & Equipment	(192,352)		(137,647)
Purchases of Investments	Purchases of Investments	(24,228)		(3)			Purchases of Investments	(49,437)		(71,629)
Proceeds from the Maturities of Investments	Proceeds from the Maturities of Investments	32,840		—			Proceeds from the Maturities of Investments	71,795		—
Other, net	Other, net	1,129		58			Other, net	1,953		10,315
Net Cash Used in Investing Activities	Net Cash Used in Investing Activities	(95,237)		(49,628)			Net Cash Used in Investing Activities	(168,041)		(198,961)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:						Cash Flows from Financing Activities:
Common Stock Repurchases	Common Stock Repurchases	(14,812)		—			Common Stock Repurchases	(22,249)		—
Proceeds from Borrowings	Proceeds from Borrowings	71,280		77,986			Proceeds from Borrowings	119,200		172,507
Repayment of Finance Lease Obligations	Repayment of Finance Lease Obligations	(4,277)		(4,466)			Repayment of Finance Lease Obligations	(8,671)		(24,293)
Repayment of Borrowings	Repayment of Borrowings	(10,122)		(77,947)			Repayment of Borrowings	(21,808)		(86,046)
Other, net	Other, net	(3,258)		(1,456)			Other, net	(2,841)		(1,062)
Net Cash Provided by (Used in) Financing Activities		38,811		(5,883)
Net Cash Provided by Financing Activities							Net Cash Provided by Financing Activities	63,631		61,106

Net Decrease in Cash, Cash Equivalents and Restricted Cash	Net Decrease in Cash, Cash Equivalents and Restricted Cash	(8,565)		(37,298)			Net Decrease in Cash, Cash Equivalents and Restricted Cash	(8,717)		(100,795)

Cash, Cash Equivalents and Restricted Cash--Beginning of the Period	Cash, Cash Equivalents and Restricted Cash--Beginning of the Period	102,928		317,785			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	$	94,363	$	280,487		Cash, Cash Equivalents and Restricted Cash--End of the Period	$	94,211	$	216,990

Non-cash transactions:	Non-cash transactions:						Non-cash transactions:
Aircraft and Flight Equipment Acquired through Finance Leases	Aircraft and Flight Equipment Acquired through Finance Leases	$	—	$	19,928		Aircraft and Flight Equipment Acquired through Finance Leases	$	—	$	19,928
Changes to Finance Lease Assets due to Operating and Finance Lease Modifications		$	—	$	46,311
Changes to Finance Lease Assets due to Lease Modifications							Changes to Finance Lease Assets due to Lease Modifications	$	14,095	$	46,311
Aircraft Acquired From Exercise of Finance Lease Purchase Option, net of Accumulated Depreciation							Aircraft Acquired From Exercise of Finance Lease Purchase Option, net of Accumulated Depreciation	$	—	$	19,083

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:					The following provides a reconciliation of Cash, Cash Equivalents and Restricted Cash to the amounts reported on the Condensed Consolidated Balance Sheets:
		March 31, 2023		March 31, 2022				June 30, 2023		June 30, 2022
Cash and Cash Equivalents	Cash and Cash Equivalents	$	71,587	$	272,402		Cash and Cash Equivalents	$	86,930	$	212,858
Restricted Cash	Restricted Cash	22,776		8,085			Restricted Cash	7,281		4,132
Total Cash, Cash Equivalents and Restricted Cash	Total Cash, Cash Equivalents and Restricted Cash	$	94,363	$	280,487		Total Cash, Cash Equivalents and Restricted Cash	$	94,211	$	216,990

See accompanying Notes to Condensed Consolidated Financial Statements

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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)

1. 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.

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. 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 Condensed Consolidated Financial Statements of Sun Country Airlines Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements contained in the 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. 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.

The Company completed its public float calculation for SEC reporting purposes as of June 30, 2023, as required. The Company will be a large accelerated filer as of December 31, 2023.

Due to impacts from 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 ~~three~~six months ended ~~March 31,~~June 30, 2023 are not necessarily indicative of operating results for future quarters or for the year ending December 31, 2023.

2. ~~CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY ACT~~

During the twelve months ended June 30, 2022, the compensation payable to an executive officer temporarily exceeded the restrictions on the payment of certain executive compensation under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). Once the issue was identified, the executive officer voluntarily rescinded the unvested portion of the equity grant that caused the executive’s compensation to exceed the 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 March 31, 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.

3. REVENUE

Sun Country is a certificated air carrier generating Operating Revenues from Scheduled service, Charter service, Ancillary, Cargo and Other revenue. Scheduled 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 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 Air Transportation Services Agreement (the “ATSA”). Other revenue consists primarily of revenue from services in connection with Sun Country Vacations products and rental revenue related to certain transactions where the Company acts as a lessor.

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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)

revenue consists primarily of revenue from services in connection with Sun Country Vacations products and revenue related to certain transactions where the Company acts as a lessor. The amounts included in Other revenue are not material to the Company's results at the individual or aggregate level.

The significant categories comprising Operating Revenues are as follows:


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022			2023		2022		2023		2022
Scheduled Service	Scheduled Service	$	152,657	$	124,068	Scheduled Service	$	111,467	$	108,412	$	264,124	$	232,479
Charter Service	Charter Service	46,187		32,879		Charter Service	49,626		42,749		95,813		75,628
Ancillary	Ancillary	68,425		45,086		Ancillary	66,773		44,201		135,198		89,287
Passenger	Passenger	267,269		202,033		Passenger	227,866		195,362		495,135		397,394
Cargo	Cargo	23,361		21,053		Cargo	25,017		21,190		48,378		42,243
Other	Other	3,485		3,439		Other	8,203		2,515		11,688		5,954
Total Operating Revenues	Total Operating Revenues	$	294,115	$	226,525	Total Operating Revenues	$	261,086	$	219,067	$	555,201	$	445,591

The Company attributes and measures its Operating Revenues by geographic region as defined by the 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 March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022			2023		2022		2023		2022
Domestic	Domestic	$	273,423	$	208,591	Domestic	$	251,582	$	211,012	$	526,071	$	419,851
Latin America	Latin America	20,255		17,869		Latin America	9,451		8,014		28,555		25,634
Other	Other	437		65		Other	53		41		575		106
Total Operating Revenues	Total Operating Revenues	$	294,115	$	226,525	Total Operating Revenues	$	261,086	$	219,067	$	555,201	$	445,591

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.

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).

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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)

Contract Assets and Liabilities are as follows:


		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
Contract Assets	Contract Assets					Contract Assets
Costs to fulfill contract with Amazon	Costs to fulfill contract with Amazon	$	2,026	$	2,195	Costs to fulfill contract with Amazon	$	1,855	$	2,195
Total Contract Assets	Total Contract Assets	$	2,026	$	2,195	Total Contract Assets	$	1,855	$	2,195

Contract Liabilities	Contract Liabilities					Contract Liabilities
Air Traffic Liabilities	Air Traffic Liabilities	$	141,613	$	157,995	Air Traffic Liabilities	$	130,264	$	157,995
Loyalty Program Liabilities	Loyalty Program Liabilities	13,799		15,437		Loyalty Program Liabilities	13,656		15,437
Amazon Deferred Up-front Payment	Amazon Deferred Up-front Payment	3,019		3,271		Amazon Deferred Up-front Payment	2,764		3,271
Total Contract Liabilities	Total Contract Liabilities	$	158,431	$	176,703	Total Contract Liabilities	$	146,684	$	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 ~~three~~six months ended ~~March 31,~~June 30, 2023, ~~$123,574~~$146,904 of revenue was recognized in Passenger revenue that was included in the Air Traffic Liabilities as of December 31, 2022.

Loyalty Program

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 estimated loyalty points that will expire unused, or 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 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:


		2023		2022			2023		2022
Balance – January 1	Balance – January 1	$	15,437	$	19,718	Balance – January 1	$	15,437	$	19,718
Loyalty Points Earned	Loyalty Points Earned	2,294		1,819		Loyalty Points Earned	4,262		3,471
Loyalty Points Redeemed (1)	Loyalty Points Redeemed (1)	(3,932)		(4,163)		Loyalty Points Redeemed (1)	(6,043)		(6,585)
Balance – March 31		$	13,799	$	17,374
Balance – June 30						Balance – June 30	$	13,656	$	16,604

______________________


(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.

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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)

4.3. EARNINGS PER SHARE

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


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022			2023		2022		2023		2022
Numerator:	Numerator:					Numerator:
Net Income		$	38,328	$	3,637
Net Income (Loss)						Net Income (Loss)	$	20,618	$	(3,922)	$	58,946	$	(285)

Denominator:	Denominator:					Denominator:
Weighted Average Common Shares Outstanding - Basic	Weighted Average Common Shares Outstanding - Basic	56,630,656		57,907,655		Weighted Average Common Shares Outstanding - Basic	56,084,759		58,060,716		56,364,170		57,984,608
Dilutive effect of Stock Options, RSUs and Warrants (1)	Dilutive effect of Stock Options, RSUs and Warrants (1)	2,904,389		3,824,287		Dilutive effect of Stock Options, RSUs and Warrants (1)	3,627,289		—		3,265,838		—
Weighted Average Common Shares Outstanding - Diluted	Weighted Average Common Shares Outstanding - Diluted	59,535,045		61,731,942		Weighted Average Common Shares Outstanding - Diluted	59,712,048		58,060,716		59,630,008		57,984,608

Basic earnings per share	Basic earnings per share	$	0.68	$	0.06	Basic earnings per share	$	0.37	$	(0.07)	$	1.05	$	0.00
Diluted earnings per share	Diluted earnings per share	$	0.64	$	0.06	Diluted earnings per share	$	0.35	$	(0.07)	$	0.99	$	0.00

______________________


(1)			There were ~~3,117,544~~3,051,025 and ~~3,550,810~~3,372,527 performance-based stock options outstanding at ~~March 31,~~June 30, 2023 and 2022, respectively. As of ~~March 31,~~June 30, 2023, ~~and 2022, the Company expected approximately 64% and 75% of these options to vest, respectively. As of March 31, 2023, 43%~~100% of the ~~eligible outstanding~~ performance-based stock options have vested. ~~These amounts are included in~~As of June 30, 2022, 74% of the ~~measure above~~performance-based stock options were expected to ~~the extent they are dilutive.~~vest.

Due to the Net Loss there were 3,529,406 and 3,676,847 stock options, restricted stock units, and vested warrants for the three and six months ended June 30, 2022, respectively, that were not included in the computation of diluted earnings per share due to their anti-dilutive effect. The Company's anti-dilutive shares for all other periods presented were not material to the Condensed Consolidated Financial Statements.

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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)

5.4. AIRCRAFT

As of ~~March 31,~~June 30, 2023, Sun Country's fleet consisted of 5760 Boeing 737-NG aircraft, comprised of 5354 Boeing 737-800s, ~~three~~five Boeing 737-900ERs and one Boeing 737-700.

The following tables summarize the Company’s aircraft fleet activity for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively:


		December 31, 2022	Additions	Reclassifications	Removals	March 31, 2023		December 31, 2022	Additions	Reclassifications	Removals	June 30, 2023
Passenger:	Passenger:						Passenger:
Owned	Owned	29	—	—	—	29	Owned	29	1	—	—	30
Finance leases(1)	Finance leases(1)	11	—	—	—	11	Finance leases(1)	11	—	1	—	12
Operating leases	Operating leases	2	—	—	—	2	Operating leases	2	—	(1)	—	1
Sun Country Airlines’ Fleet	Sun Country Airlines’ Fleet	42	—	—	—	42	Sun Country Airlines’ Fleet	42	1	—	—	43
Cargo:	Cargo:						Cargo:
Aircraft Operated for Amazon	Aircraft Operated for Amazon	12	—	—	—	12	Aircraft Operated for Amazon	12	—	—	—	12
Other owned:
Other Owned:							Other Owned:
Aircraft Held for Operating Lease	Aircraft Held for Operating Lease	—	3	—	—	3	Aircraft Held for Operating Lease	—	5	—	—	5
Total Aircraft	Total Aircraft	54	3	—	—	57	Total Aircraft	54	6	—	—	60

		December 31, 2021	Additions	Reclassifications	Removals	March 31, 2022		December 31, 2021	Additions	Reclassifications	Removals	June 30, 2022
Passenger:	Passenger:						Passenger:
Owned	Owned	21	1	—	—	22	Owned	21	5	1	(1)	26
Finance leases(2)	Finance leases(2)	9	1	2	—	12	Finance leases(2)	9	1	1	—	11
Operating leases	Operating leases	6	—	(2)	—	4	Operating leases	6	—	(2)	—	4
Sun Country Airlines’ Fleet	Sun Country Airlines’ Fleet	36	2	—	—	38	Sun Country Airlines’ Fleet	36	6	—	(1)	41
Cargo:	Cargo:						Cargo:
Aircraft Operated for Amazon	Aircraft Operated for Amazon	12	—	—	—	12	Aircraft Operated for Amazon	12	—	—	—	12
Total Aircraft	Total Aircraft	48	2	—	—	50	Total Aircraft	48	6	—	(1)	53


(1)			One aircraft operating lease was reclassified into a finance lease, as further described below.
(2)			Two aircraft operating leases were reclassified into finance leases and a separate aircraft finance lease purchase option was exercised, resulting in a net change of one finance lease reclassification.

During the ~~three~~six months ended ~~March 31,~~June 30, 2023, the Company ~~entered into an agreement to acquire~~acquired five 737-900ERs that are currently on lease to an unaffiliated airline ("Aircraft Held for Operating Lease"). As of March 31, 2023, three of the Aircraft Held for Operating Lease had been acquired. Subsequent to March 31, 2023, the transaction was completed resulting in the acquisition of the two remaining Aircraft Held for Operating Lease. The five Aircraft Held for Operating Lease were financed through a term loan arrangement. See Note 65 of these Condensed Consolidated Financial Statements for more information on this transaction. ~~As of March 31,~~Additionally, during the six months ended June 30, 2023, ~~29 of~~ the ~~owned~~Company acquired an incremental aircraft and ~~Aircraft Held for Operating Lease were financed and three aircraft were unencumbered.~~

~~During the three months ended March 31, 2022, the Company~~ executed a lease ~~amendments~~amendment to purchase ~~two~~one aircraft at the end of ~~the~~its lease ~~term, which~~term. An additional aircraft purchase amendment was executed subsequent to June 30, 2023. The lease amendments modified the ~~lease~~ classification of these leases from operating leases to finance leases and have expiration dates in fiscal year 2024. Of the 35 Owned aircraft

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

and Aircraft Held for Operating Lease as of June 30, 2023, 31 were financed and four aircraft were unencumbered.

During the six months ended June 30, 2022, the Company executed lease amendments to purchase two aircraft at the end of the lease term, which modified the lease classification from operating leases to finance leases with expiration dates in fiscal year ~~2026. The~~2026 and retired one aircraft. Further, the Company ~~also acquired two incremental 737-800~~purchased an aircraft ~~one~~previously classified as a finance lease using proceeds of ~~which was financed using proceeds~~the from the issuance of Class A and Class B pass-through trust certificates (the "2022-1 EETC"). The Company also acquired six incremental 737-800 aircraft, five of which were financed using proceeds from the 2022-1 EETC and another through a finance lease arrangement that is set to expire in fiscal year 2030.

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


			Three Months Ended March 31,						Three Months Ended June 30,				Six Months Ended June 30,
Aircraft Status	Aircraft Status	Expense Type	2023		2022		Aircraft Status	Expense Type	2023		2022		2023		2022
Owned	Owned	Depreciation	$	11,872	$	8,673	Owned	Depreciation	$	14,443	$	10,175	$	26,315	$	18,848
Finance Leased	Finance Leased	Amortization	4,683		4,069		Finance Leased	Amortization	4,875		4,044		9,558		8,113
Operating Leased	Operating Leased	Aircraft Rent (1)	1,480		3,186		Operating Leased	Aircraft Rent (1)	779		2,211		2,259		5,397
			$	18,035	$	15,928			$	20,097	$	16,430	$	38,132	$	32,358


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

6.5. ASSET ACQUISITIONS

During the ~~three~~six months ended ~~March 31, 2023, the Company entered into an agreement to acquire five Aircraft Held for Operating Lease for approximately $158,000. On March 29,~~June 30, 2023, the Company acquired ~~three of the~~five Aircraft Held for Operating Lease. The table below reflects the cumulative balances ~~recognized upon acquisition~~ of the ~~three~~five aircraft ~~on March 29, 2023:~~as of the acquisition dates:

Asset

Balance Sheet Classification

Aircraft Held for Operating Lease

Aircraft and Flight Equipment Held for Operating Lease

~~67,959~~114,628

Maintenance Rights Asset

Aircraft and Flight Equipment Held for Operating Lease

~~24,668~~39,533

Over-Market Asset

Other Intangible Assets, net

~~2,004~~3,741

Total

~~94,631~~157,902

The purchase price was assigned to the assets based upon their relative fair values as of the acquisition date. The Company estimated the fair value of the Aircraft Held for Operating Lease principally based on market appraisals. The appraisals were based on an analysis of the economic conditions impacting both the 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 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 agreements.

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.

On April 4, 2023, the Company completed the transaction resulting in the acquisition of the two additional Aircraft Held for Operating Lease for the remaining consideration of approximately $63,000. The acquisition cost of the aircraft will be allocated between Aircraft Held for Operating Lease, Maintenance Rights, and Over-Market Assets on a relative fair value basis.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

As of March 31, 2023, the Company's restricted cash balance also included $13,103 that was deposited in relation to the purchase of the two remaining Aircraft Held for Operating Lease. Upon acquisition, the deposited amounts were remitted to the seller.

The purchase of the Aircraft Held for Operating Lease was financed ~~primarily~~ using the proceeds from a term loan credit facility with a face amount of $119,200 and the Company's cash. As of March 31, 2023, $71,280 of the term loan credit facility was outstanding with respect to three Aircraft Held for Operating Lease acquired during the three months ended March 31, 2023. The remaining $47,920 of financing available under the term loan credit facility was drawn on April 4, 2023 related to the purchase of the two remaining Aircraft Held for Operating Lease. For more information on the term loan credit facility, see Note 76 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, 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 isare 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 $5,871 of rental revenue ~~was not material to~~during the ~~Company's results of operations for the three~~six months ended ~~March 31,~~June 30, 2023.

Maintenance Rights Asset

Upon purchase of the Aircraft Held for Operating Lease, the Company recognized a Maintenance Rights Asset which represents the Company’s contractual right to receive the aircraft in a specified maintenance condition at the end of the lease. The acquired leases contain an end of lease compensation clause whereby the lessee is required to remit a cash payment ~~as a means~~ 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 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 lessor (unfavorable to the lessee), as compared with market terms of similar leases. The asset will be amortized over the remaining lease terms for the respective ~~aircrafts,~~aircraft, which ~~ranges~~range from ~~approximately 1.7-2.7 years.~~1.4-2.4 years as of June 30, 2023. The amortization will be recognized as a contra-revenue, offsetting the rental revenue associated with the 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. 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

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

During 2021, the Company drew $80,500 on the DDTL to purchase six aircraft, which were previously under operating leases. During 2022, the Company repaid the outstanding balance of the DDTL in full using proceeds 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 ~~March 31,~~June 30, 2023. The Company recorded a $1,557 loss on extinguishment of debt ~~during the three months ended March 31,~~in 2022 in connection with the repayment of the DDTL, which represents the write-off of the unamortized deferred financing costs. As of ~~March 31,~~June 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.

Long-term Debt

Term Loan Credit Facility

During the ~~three~~six months ended ~~March 31,~~June 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 over 7 years. 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 ~~three~~six months ended March 31, 2023, the Company received gross proceeds of $71,280 with respect to three of the Aircraft Held for Operating Lease. An incremental $47,920 of gross proceeds were received subsequent to March 31, 2023 upon the completion of the transaction resulting in the acquisition of two additional Aircraft Held for Operating Lease. During the three months ended March 31,June 30, 2023, the Company recorded ~~$1,388~~$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 ~~at the end of the lease term~~ and a Loan-to-Value ("LTV") ratio calculation is ~~completed.~~completed at the end of the lease term. The interest rate in effect as of ~~March 31,~~June 30, 2023 on the term loan was ~~8.6%~~8.9%. 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%. Amounts received under the end of lease maintenance compensation clause may be applied towards the LTV payment.

Pass-Through Trust Certificates

InDuring 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 5.06% as of June 30, 2023.

In December 2019, the Company arranged for the issuance of Class A, Class B and Class C 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.

The Company is required to make bi-annual principal and interest payments each June and December, through December 2027. These notes bear interest at an annual rate between 4.13% and 6.95%. The weighted average interest rate was 4.69% as of June 30, 2023.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

Long-term Debt includes the following:


		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
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 March 31, 2023.		$	176,697	$	176,697
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 March 31, 2023.		168,897		179,019
Term Loan Credit Facility (see terms and conditions on pg 16)		71,280		—
2019-1 EETC (see terms and conditions above)						2019-1 EETC (see terms and conditions above)	$	168,598	$	176,697
2022-1 EETC (see terms and conditions above)						2022-1 EETC (see terms and conditions above)	168,897		179,019
Term Loan Credit Facility (see terms and conditions above)						Term Loan Credit Facility (see terms and conditions above)	115,614		—
Total Debt	Total Debt	416,874		355,716		Total Debt	453,109		355,716
Less: Unamortized debt issuance costs	Less: Unamortized debt issuance costs	(4,615)		(3,481)		Less: Unamortized debt issuance costs	(4,694)		(3,481)
Less: Current Maturities of Long-term Debt	Less: Current Maturities of Long-term Debt	(66,194)		(57,548)		Less: Current Maturities of Long-term Debt	(83,204)		(57,548)
Total Long-term Debt, net	Total Long-term Debt, net	$	346,065	$	294,687	Total Long-term Debt, net	$	365,211	$	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 2023	Remainder of 2023	$	55,025	$	(982)	$	54,043	Remainder of 2023	$	47,567	$	(680)	$	46,887
2024	2024	69,623		(1,097)		68,526		2024	75,617		(1,168)		74,449
2025	2025	74,216		(872)		73,344		2025	80,009		(944)		79,065
2026	2026	55,142		(637)		54,505		2026	61,072		(705)		60,367
2027	2027	58,280		(468)		57,812		2027	65,097		(530)		64,567
Thereafter	Thereafter	104,588		(559)		104,029		Thereafter	123,747		(667)		123,080
Total as of March 31, 2023		$	416,874	$	(4,615)	$	412,259
Total as of June 30, 2023								Total as of June 30, 2023	$	453,109	$	(4,694)	$	448,415

The fair value of Debt was ~~$390,948~~$425,031 as of ~~March 31,~~June 30, 2023 and $324,059 as of December 31, 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 $4,415 and $575, during the three months ended June 30, 2023 and June 30, 2022, respectively; and $7,093 and $1,495 during the six months ended June 30, 2023 and June 30, 2022, respectively. During the three months ended June 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 three months ended June 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 June 30, 2023, there was $8,661 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 2.3 years.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

8. INVESTMENTS

A summary of debt securities by major security type:


		March 31, 2023									June 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: (1)	Available-for-Sale Securities: (1)									Available-for-Sale Securities: (1)
Municipal Debt Securities	Municipal Debt Securities	$	27,601	$	5	$	(132)	$	27,474	Municipal Debt Securities	$	18,694	$	—	$	(118)	$	18,576
Corporate Debt Securities	Corporate Debt Securities	89,045		—		(386)		88,659		Corporate Debt Securities	64,329		—		(256)		64,073
U.S. Government Agency Securities	U.S. Government Agency Securities	49,174		69		(99)		49,144		U.S. Government Agency Securities	69,299		—		(487)		68,812
Total	Total	$	165,820	$	74	$	(617)	$	165,277	Total	$	152,322	$	—	$	(861)	$	151,461


	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)			The Company also holds Certificates of Deposit that are included in Investments on the Condensed Consolidated Balance Sheets totaling ~~$6,361~~$6,716 and $6,301 as of ~~March 31,~~June 30, 2023 and December 31, 2022, respectively.

As of ~~March 31,~~June 30, 2023, substantially all 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 ~~March 31,~~June 30, 2023, the Company believes that any unrealized losses are recoverable prior to the investment's conversion to cash. Therefore, the Company believes these losses to be temporary and no impairments have been recognized.

9. FAIR VALUE MEASUREMENTS

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


		March 31, 2023									June 30, 2023
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Cash & Cash Equivalents	Cash & Cash Equivalents	$	71,587	$	—	$	—	$	71,587	Cash & Cash Equivalents	$	86,930	$	—	$	—	$	86,930
Available-for-Sale Securities:	Available-for-Sale Securities:									Available-for-Sale Securities:
Municipal Debt Securities	Municipal Debt Securities	—		27,474		—		27,474		Municipal Debt Securities	—		18,576		—		18,576
Corporate Debt Securities	Corporate Debt Securities	—		88,659		—		88,659		Corporate Debt Securities	—		64,073		—		64,073
U.S. Government Agency Securities	U.S. Government Agency Securities	—		49,144		—		49,144		U.S. Government Agency Securities	—		68,812		—		68,812
Total Available-for-Sale Securities	Total Available-for-Sale Securities	—		165,277		—		165,277		Total Available-for-Sale Securities	—		151,461		—		151,461
Total Assets Measured at Fair Value on a Recurring Basis	Total Assets Measured at Fair Value on a Recurring Basis	$	71,587	$	165,277	$	—	$	236,864	Total Assets Measured at Fair Value on a Recurring Basis	$	86,930	$	151,461	$	—	$	238,391

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)


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

10. INCOME TAXES

The Company's effective tax rate for both the three and six months ended ~~March 31,~~June 30, 2023 was 22.9%. The effective tax rate for the three and six months ended June 30, 2022 was ~~22.9%~~19.0% and ~~43.3%~~118.1%, respectively. The effective tax rate represents a blend of federal and state taxes and includes the impact of certain nondeductible or nontaxable items. The ~~20.4% decrease in the~~ effective tax ~~rate was~~rates for the three and six months ended June 30, 2022 were primarily ~~due to~~impacted by the ~~$6,800~~$1,700 and $8,500 non-deductible ~~adjustment~~adjustments to increase the tax receivable liability related to the Tax Receivable Agreement (the "Tax Receivable Agreement" or "TRA") ~~in the prior period, partially offset by stock compensation benefits.~~, respectively.

Tax Receivable Agreement

The TRA balance as of ~~March 31,~~June 30, 2023 and December 31, 2022 was $101,020 and $103,800, respectively. The TRA liability is an estimate and actual amounts payable under the Tax Receivable Agreement could differ from this estimate. During the ~~three~~six months ended ~~March 31,~~June 30, 2023, the Company recorded an immaterial adjustment to the estimated TRA liability. During the ~~three~~six months ended ~~March 31,~~June 30, 2022, the Company recorded an $8,500 adjustment to increase the estimated TRA ~~liability of $6,800.~~liability. During the ~~three~~six months ended ~~March 31,~~June 30, 2023, the Company made a payment of $2,425 to the pre-IPO stockholders (the “TRA holders”), which includes certain members of the Company's management and certain members of 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 future periods as 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. ~~(“Apollo”~~("the Apollo Stockholder"). The underwriters were given an option to purchase an additional 787,500 shares of Common Stock. In connection with the offering, the underwriters agreed to sell to the Company, and the Company agreed to purchase from the underwriters, an aggregate of 750,000 shares of Common Stock at a price of $19.75 per share, the same price at which the underwriters purchased the Common Stock from the selling stockholder, for a total of $14,812. The ~~Company incurred offering expenses of $528 in connection to this offering and did not receive any of the proceeds.~~

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

Company incurred offering expenses of $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. During the fourth quarter of 2022, the 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 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.

~~The~~During the six months ended June 30, 2023, the Company ~~also~~ repurchased ~~$14,812~~1,166,751 shares of its Common Stock asat a total cost of $22,249, or an average price of $19.07 per share. The repurchase was part of a secondary public offering of the ~~secondary offering~~Company's shares by the ~~selling stockholder. See above for more details.~~Apollo Stockholder, as well as open market purchases completed in the second quarter.

As of ~~March 31,~~June 30, 2023, the Company had ~~$10,188~~$2,759 of Board authorization remaining to repurchase additional shares of its Common Stock. Subsequent to June 30, 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 to $32,759. 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 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 ~~three~~six months ended ~~March 31,~~June 30, 2023 and ~~March 31,~~June 30, 2022, ~~189,652~~442,521 and 379,304 warrants vested, ~~in each respective period.~~respectively. As of ~~March 31,~~June 30, 2023 and ~~March 31,~~June 30, 2022, the cumulative vested warrants held by Amazon were ~~2,591,920~~2,844,789 and ~~1,833,312,~~2,022,964, respectively. The exercise period of these warrants is through the eighth anniversary of the issue date.

12. 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 10), and probable future purchases of aircraft.

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 during 2022. The contingency has been finalized and the impact of the retirement was not material to the Company's Condensed Consolidated Results of Operations.

As of ~~March 31,~~June 30, 2023, the Company had a commitment to lease three aircraft with deliveries spanning the fourth quarter of 2023 and the first quarter of 2024. The leases will each have annual lease payments of approximately $2,000 for six years.

AsDuring the twelve months ended June 30, 2022, the compensation payable to an executive officer temporarily exceeded the restrictions on the payment of ~~March 31, 2023,~~certain executive compensation under the ~~Company had a commitment~~Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). Once the issue was identified, the executive officer voluntarily rescinded the unvested portion of the equity grant that caused the executive’s compensation to ~~purchase an incremental aircraft for approximately $24,500.~~exceed the 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 ~~is expected~~did not accrue any amounts related to ~~take delivery~~this matter as of June 30, 2023. To the ~~aircraft~~extent we are deemed to have failed to remain in full

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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)

compliance with the ~~second quarter of 2023.~~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.

13. OPERATING SEGMENTS

The following tables present financial information for the Company’s two operating segments: Passenger and Cargo.


	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
	Passenger		Cargo		Consolidated		Passenger		Cargo		Consolidated
Operating Revenues	$	236,069	$	25,017	$	261,086	$	197,877	$	21,190	$	219,067
Non-Fuel Operating Expenses	146,207		26,932		173,139		117,297		21,454		138,751
Aircraft Fuel	52,347		13		52,360		76,947		—		76,947
Total Operating Expenses	198,554		26,945		225,499		194,244		21,454		215,698
Operating Income (Loss)	$	37,515	$	(1,928)	35,587		$	3,633	$	(264)	3,369
Interest Income					2,545						532
Interest Expense					(11,239)						(7,042)
Other, net					(143)						(1,702)
Income (Loss) Before Income Tax					$	26,750					$	(4,843)


	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
	Passenger		Cargo		Consolidated		Passenger		Cargo		Consolidated
Operating Revenues	$	506,823	$	48,378	$	555,201	$	403,348	$	42,243	$	445,591
Non-Fuel Operating Expenses	286,843		52,338		339,181		238,105		40,793		278,898
Aircraft Fuel	124,613		37		124,650		141,492		—		141,492
Total Operating Expenses	411,456		52,375		463,831		379,597		40,793		420,390
Operating Income (Loss)	$	95,367	$	(3,997)	91,370		$	23,751	$	1,450	25,201
Interest Income					5,286						556
Interest Expense					(19,869)						(15,604)
Other, net					(355)						(8,577)
Income Before Income Tax					$	76,432					$	1,576

~~-20-~~

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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)

~~13. OPERATING SEGMENTS~~

~~The following tables present financial information for the Company’s two operating segments: Passenger and Cargo.~~

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022
Passenger Cargo Consolidated Passenger Cargo Consolidated
Operating Revenues $ 270,754 $ 23,361 $ 294,115 $ 205,472 $ 21,053 $ 226,525
Non-Fuel Operating Expenses 140,637 25,405 166,042 120,810 19,338 140,148
Aircraft Fuel 72,266 24 72,290 64,544 — 64,544
Total Operating Expenses 212,903 25,429 238,332 185,354 19,338 204,692
Operating Income (Loss) $ 57,851 $ (2,068) 55,783 $ 20,118 $ 1,715 21,833
Interest Income 2,741 24
Interest Expense (8,630) (8,562)
Other, net (212) (6,876)
Income Before Income Tax $ 49,682 $ 6,419

14. SUBSEQUENT EVENTS

The Company evaluated subsequent events for the period from the Balance Sheet date through ~~April 28,~~August 4, 2023, the date that the Condensed Consolidated Financial Statements were available to be issued.

~~During~~The Company executed a purchase amendment for an aircraft lease subsequent to June 30, 2023. The purchase amendment added a purchase obligation for the ~~three months ended March 31,~~aircraft at the end of the lease term, which modified the classification of this lease from an operating lease to a finance lease. The amended aircraft lease has an expiration date in fiscal year 2024.

Subsequent to June 30, 2023, the ~~Company entered into an agreement~~Company's Board of Directors authorized the addition of $30,000 to ~~acquire five Aircraft Held for Operating Lease. On April 4, 2023,~~ the ~~Company completed~~Company's existing stock repurchase program, which increased the ~~transaction resulting in the acquisition~~total amount of ~~two Aircraft Held for Operating Lease for total consideration of approximately $63,000. The purchase price was primarily financed with the~~authorization remaining ~~$47,920 available under the term loan credit facility and $13,103~~to repurchase shares of the ~~Company’s restricted cash that was previously deposited.~~

~~For more information on the subsequent events, see~~ ~~Note 5~~, No ~~te 6~~,Company's Common Stock to $32,759. The stock repurchase program has no expiration date and ~~Note 7~~ ~~of the Notes to the Condensed Consolidated Financial Statements included elsewhere in this report.~~may be modified, suspended, or terminated at any time.

* * * * * *

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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.

Forward-Looking Statements

The following discussion and analysis presents factors that had a material effect on our results of operations during the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022. Also discussed is our financial position as of ~~March 31,~~June 30, 2023 and December 31, 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 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 in our 2022 10-K 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. Based in Minnesota, we focus on serving leisure and visiting friends and relatives ("VFR") passengers and charter customers and providing crew, maintenance and insurance (“CMI”) services, with flights throughout the United States and to destinations in Canada, Mexico, Central America and the Caribbean. 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 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", 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", which include Southwest Airlines and JetBlue Airways), resulting in best-in-class unit profitability. Our business includes many cost characteristics of ULCCs, 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. For example, our product includes more average legroom than ULCCs, complimentary beverages, complimentary in-flight entertainment, and in-seat power, none of which are offered by ULCCs.

~~-22-~~

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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, 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. Flying 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 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~~complementary streaming of in-flight entertainment to passenger devices, seat reclining and seat-back power in all of our aircraft.

Pilot training throughput issues ~~fuel price increases due to geopolitical events,~~ and the impact of macroeconomic conditions, including inflationary pressures, continue to impact the Company, as well as the industry. Airline travel demand has remained strong which has offset the additional costs associated with pilot training throughput issues ~~fuel price increases,~~ and other inflationary pressures. 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.

The Company experienced challenging winter weather at our main hub, the Minneapolis – St. Paul International Airport ("MSP") during the first quarter of 2023. A substantial portion of our business is focused on serving markets originating or ending in MSP during this seasonal peak period. Minneapolis-St. Paul had one of the top snowfalls on record this year, which drove a number of operational challenges and resulted in additional costs for the Company. Two major storms shut down MSP airport during the first quarter of 2023, which is rare. The resulting cancellations from these closures negatively impacted results in the quarter.

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 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 2022 10-K.

~~-23-~~-24-

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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 March 31, 2023 (1)								Three Months Ended March 31, 2022 (1)									Three Months Ended June 30, 2023 (1)								Three Months Ended June 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)	6,177			2,369		3,027	11,672		6,227			1,620		2,574	10,487		Departures (2)	6,401			2,759		3,184	12,495		5,674			2,235		2,693	10,687
Block hours (2)	Block hours (2)	21,941			5,054		7,776	35,083		22,433			3,804		7,390	33,805		Block hours (2)	19,561			5,666		8,570	34,230		18,205			4,573		7,762	30,755
Aircraft miles (2)	Aircraft miles (2)	8,740,473			1,725,753		2,840,370	13,401,208		9,100,714			1,379,448		2,809,782	13,334,873		Aircraft miles (2)	7,622,465			1,955,117		3,292,789	13,015,134		7,233,722			1,621,748		3,000,546	11,914,350
Available seat miles (ASMs) (thousands) (2)	Available seat miles (ASMs) (thousands) (2)	1,625,728			301,913			1,945,001		1,684,532			235,705			1,928,149		Available seat miles (ASMs) (thousands) (2)	1,417,778			337,319			1,780,340		1,343,116			278,804			1,632,501
Total revenue per ASM (TRASM) (cents)(3)	Total revenue per ASM (TRASM) (cents)(3)	13.81			15.30			13.92		10.25			13.95			10.66		Total revenue per ASM (TRASM) (cents)(3)	12.74			14.71			12.93		11.55			15.33			12.12
Average passenger aircraft during the period ~~(3)~~(4)	Average passenger aircraft during the period ~~(3)~~(4)							41.3								34.1		Average passenger aircraft during the period ~~(3)~~(4)							42.0								34.5
Passenger aircraft at end of period ~~(3)~~(4)	Passenger aircraft at end of period ~~(3)~~(4)							42								38		Passenger aircraft at end of period ~~(3)~~(4)							43								41
Cargo aircraft at end of period	Cargo aircraft at end of period							12								12		Cargo aircraft at end of period							12								12
Aircraft Held for Operating Lease	Aircraft Held for Operating Lease							3								—		Aircraft Held for Operating Lease							5								—
Average daily aircraft utilization (hours) ~~(3)~~(4)	Average daily aircraft utilization (hours) ~~(3)~~(4)							7.3								8.6		Average daily aircraft utilization (hours) ~~(3)~~(4)							6.7								7.4
Average stage length (miles)	Average stage length (miles)							1,225								1,336		Average stage length (miles)							1,046								1,120
Revenue passengers carried ~~(4)~~(5)	Revenue passengers carried ~~(4)~~(5)	998,238								922,652								Revenue passengers carried ~~(4)~~(5)	1,005,126								884,088
Revenue passenger miles (RPMs) (thousands) ~~(4)~~(5)	Revenue passenger miles (RPMs) (thousands) ~~(4)~~(5)	1,432,131								1,338,459								Revenue passenger miles (RPMs) (thousands) ~~(4)~~(5)	1,216,261								1,126,030
Load factor ~~(4)~~(5)	Load factor ~~(4)~~(5)	88.1		%						79.5		%						Load factor ~~(4)~~(5)	85.8		%						83.8		%
Average base fare per passenger ~~(4)~~(5)	Average base fare per passenger ~~(4)~~(5)	$	152.93							$	134.47							Average base fare per passenger ~~(4)~~(5)	$	110.90							$	122.63
Ancillary revenue per passenger ~~(4)~~(5)	Ancillary revenue per passenger ~~(4)~~(5)	$	68.55							$	48.87							Ancillary revenue per passenger ~~(4)~~(5)	$	66.43							$	50.00
Charter revenue per block hour (4)					$	9,139							$	8,643
Total fare per passenger (5)																		Total fare per passenger (5)	$	177.33							$	172.63
Charter revenue per block hour (5)																		Charter revenue per block hour (5)				$	8,758							$	9,349
Fuel gallons consumed (thousands) (2)	Fuel gallons consumed (thousands) (2)	17,383			3,526			21,073		17,401			2,758			20,245		Fuel gallons consumed (thousands) (2)	15,128			4,023			19,399		14,187			3,271			17,568
Fuel cost per gallon, excluding indirect fuel credits	Fuel cost per gallon, excluding indirect fuel credits							$	3.45							$	3.20	Fuel cost per gallon, excluding indirect fuel credits							$	2.71							$	4.39
Employees at end of period	Employees at end of period							2,634								2,316		Employees at end of period							2,749								2,282
Cost per available seat mile (CASM) (cents) (5)								12.25								10.62
Adjusted CASM (cents) (6)								7.10								6.21
Cost per available seat mile (CASM) (cents) (6)																		Cost per available seat mile (CASM) (cents) (6)							12.67								13.21
Adjusted CASM (cents) (7)																		Adjusted CASM (cents) (7)							7.88								7.14

______________________

(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, and certain other costs that are unrelated to our airline operations.

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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


	Six Months Ended June 30, 2023(1)								Six Months Ended June 30, 2022 (1)
	Scheduled Service			Charter		Cargo	Total		Scheduled Service			Charter		Cargo	Total
Departures (2)	12,578			5,128		6,211	24,167		11,901			3,855		5,267	21,174
Block hours (2)	41,503			10,720		16,346	69,313		40,638			8,377		15,152	64,560
Aircraft miles (2)	16,362,938			3,680,870		6,133,159	26,416,342		16,334,436			3,001,196		5,810,328	25,249,223
Available seat miles (ASMs) (thousands) (2)	3,043,506			639,231			3,725,341		3,027,648			514,509			3,560,651
Total revenue per ASM (TRASM) (cents) (3)	13.31			14.99			13.45		10.82			14.70			11.33
Average passenger aircraft during the period (4)							41.7								34.3
Passenger aircraft at end of period (4)							43								41
Cargo aircraft at end of period							12								12
Aircraft Held for Operating Lease							5								—
Average daily aircraft utilization (hours) (4)							7.0								8.0
Average stage length (miles)							1,132								1,227
Revenue passengers carried (5)	2,003,364								1,806,740
Revenue passenger miles (RPMs) (thousands) (5)	2,648,392								2,464,490
Load factor (5)	87.0		%						81.4		%
Average base fare per passenger (5)	$	131.84							$	128.67
Ancillary revenue per passenger (5)	$	67.49							$	49.42
Total fare per passenger (5)	$	199.33							$	178.09
Charter revenue per block hour (5)				$	8,938							$	9,028
Fuel gallons consumed (thousands) (2)	32,511			7,550			40,472		31,587			6,029			37,813
Fuel cost per gallon, excluding indirect fuel credits							$	3.10							$	3.76
Employees at end of period							2,749								2,282
Cost per available seat mile (CASM) (cents) (6)							12.45								11.81
Adjusted CASM (cents) (7)							7.47								6.64

______________________

(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 utilize the same fleet of aircraft. Aircraft counts and utilization metrics are shown on a system basis only.

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

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

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

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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 Three Months Ended ~~March 31,~~June 30, 2023 and 2022


		Three Months Ended March 31,				$ Change			% Change			Three Months Ended June 30,					$ Change		% Change
		2023		2022				2023					2022
Operating Revenues:	Operating Revenues:													Operating Revenues:
Scheduled Service	Scheduled Service	$	152,657	$	124,068	$	28,589		23	%	Scheduled Service	$	111,467		$	108,412	$	3,055	3	%
Charter Service	Charter Service	46,187		32,879		13,308			40	%	Charter Service	49,626			42,749		6,877		16	%
Ancillary	Ancillary	68,425		45,086		23,339			52	%	Ancillary	66,773			44,201		22,572		51	%
Passenger	Passenger	267,269		202,033		65,236			32	%	Passenger	227,866			195,362		32,504		17	%
Cargo	Cargo	23,361		21,053		2,308			11	%	Cargo	25,017			21,190		3,827		18	%
Other	Other	3,485		3,439		46			1	%	Other	8,203			2,515		5,688		226	%
Total Operating Revenues	Total Operating Revenues	294,115		226,525		67,590			30	%	Total Operating Revenues	261,086			219,067		42,019		19	%

Operating Expenses:	Operating Expenses:										Operating Expenses:
Aircraft Fuel	Aircraft Fuel	72,290		64,544		7,746			12	%	Aircraft Fuel	52,360			76,947		(24,587)		(32)	%
Salaries, Wages, and Benefits	Salaries, Wages, and Benefits	75,430		59,617		15,813			27	%	Salaries, Wages, and Benefits	75,919			60,298		15,621		26	%
Aircraft Rent	Aircraft Rent	1,480		3,186		(1,706)			(54)	%	Aircraft Rent	779			2,211		(1,432)		(65)	%
Maintenance	Maintenance	13,039		11,995		1,044			9	%	Maintenance	15,942			12,782		3,160		25	%
Sales and Marketing	Sales and Marketing	9,929		8,628		1,301			15	%	Sales and Marketing	8,507			7,881		626		8	%
Depreciation and Amortization	Depreciation and Amortization	19,460		15,328		4,132			27	%	Depreciation and Amortization	22,355			16,854		5,501		33	%
Ground Handling	Ground Handling	11,038		7,958		3,080			39	%	Ground Handling	11,311			8,212		3,099		38	%
Landing Fees and Airport Rent	Landing Fees and Airport Rent	12,051		10,286		1,765			17	%	Landing Fees and Airport Rent	12,962			9,496		3,466		36	%
Other Operating, net	Other Operating, net	23,615		23,150		465			2	%	Other Operating, net	25,364			21,017		4,347		21	%
Total Operating Expenses	Total Operating Expenses	238,332		204,692		33,640			16	%	Total Operating Expenses	225,499			215,698		9,801		5	%
Operating Income	Operating Income	55,783		21,833		33,950			155	%	Operating Income	35,587			3,369		32,218		956	%

Non-operating Income (Expense):	Non-operating Income (Expense):										Non-operating Income (Expense):
Interest Income	Interest Income	2,741		24		2,717			NM		Interest Income	2,545			532		2,013		378	%
Interest Expense	Interest Expense	(8,630)		(8,562)		(68)			1	%	Interest Expense	(11,239)			(7,042)		(4,197)		60	%
Other, net	Other, net	(212)		(6,876)		6,664			(97)	%	Other, net	(143)			(1,702)		1,559		(92)	%
Total Non-operating Expense, net	Total Non-operating Expense, net	(6,101)		(15,414)		9,313			(60)	%	Total Non-operating Expense, net	(8,837)			(8,212)		(625)		8	%

Income Before Income Tax		49,682		6,419		43,263			674	%
Income Tax Expense		11,354		2,782		8,572			308	%
Net Income		$	38,328	$	3,637	$	34,691		954	%
Income (Loss) Before Income Tax											Income (Loss) Before Income Tax	26,750			(4,843)		31,593		NM
Income Tax Expense (Benefit)											Income Tax Expense (Benefit)	6,132			(921)		7,053		NM
Net Income (Loss)											Net Income (Loss)	$	20,618		$	(3,922)	$	24,540	NM


"NM" stands for not meaningful

Total Operating Revenues increased ~~$67,590,~~$42,019, or ~~30%~~19%, to ~~$294,115~~$261,086 for the three months ended ~~March 31,~~June 30, 2023 ~~from $226,525 for~~as compared to the three months ended ~~March 31,~~June 30, 2022. The revenue increase was largely driven by ana 22% increase in average passenger aircraft in the period and demand for our passenger service offerings during the ~~first~~second quarter of 2023 as compared to the ~~first~~second quarter of 2022. The increase in demand resulted in an increase to average total fare per passenger of $4.70, or 3%, to $177.33 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, as well as a 2.0 percentage point increase in

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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)

~~increase in demand resulted in an increase to average total fare per~~ passenger ~~of $38.14, or 21%~~load factor over the same period. Passenger segment departures and block hours increased by 16% and 11%, ~~to $221.48 for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.~~respectively.

Scheduled Service. Scheduled service revenue increased ~~by $28,589,~~$3,055, or ~~23%~~3%, to ~~$152,657~~$111,467 for the three months ended ~~March 31,~~June 30, 2023 ~~from $124,068 for~~as compared to the three months ended ~~March 31,~~June 30, 2022. The table below presents select operating data for scheduled service, expressed as ~~year-over-year~~quarter-over-quarter changes:


		Three Months Ended March 31,						Change					% Change			Three Months Ended June 30,									Change				% Change
		2023			2022							2023					2022
Departures	Departures	6,177			6,227						(50)					(1)		%	Departures	6,401				5,674				727			13	%
Passengers	Passengers	998,238			922,652			75,586					8	%	Passengers	1,005,126					884,088				121,038				14	%
Average base fare per passenger	Average base fare per passenger	$	152.93		$	134.47		$	18.46				14	%	Average base fare per passenger	$	110.90				$	122.63			$	(11.73)			(10)	%
RPMs (thousands)	RPMs (thousands)	1,432,131			1,338,459			93,672					7	%	RPMs (thousands)	1,216,261					1,126,030				90,231				8	%
ASMs (thousands)	ASMs (thousands)	1,625,728			1,684,532			(58,804)					(3)	%	ASMs (thousands)	1,417,778					1,343,116				74,662				6	%
TRASM (cents)	TRASM (cents)	13.81			10.25			3.56					35	%	TRASM (cents)	12.74					11.55				1.19				10	%
Passenger load factor	Passenger load factor	88.1		%	79.5		%	8.6		pts			N/A		Passenger load factor	85.8		%			83.8		%		2.0		pts		N/A

The ~~year-over-year~~quarter-over-quarter increases in certain ~~scheduled service~~Scheduled Service operating data were primarily the result of an increase in demand and capacity in the ~~first~~second quarter of 2023 relative to the same period in 2022. The ~~year-over-year~~quarter-over-quarter increase in demand is demonstrated by a 14% increase in ~~the average base fare per passenger, 8.6~~passengers and a 2.0 percentage ~~points~~point increase in passenger load ~~factor, and a 8%~~factor. The increase in ~~passengers,~~demand supported the 13% and 6% increase in departures and ASMs, respectively, as ~~year-over-year ASMs decreased by 3%.~~a result of the 22% quarter-over-quarter increase in the average passenger aircraft for the period. The ~~year-over-year~~quarter-over-quarter Scheduled Service revenue increase ~~is slightly~~was offset by the introduction of ana new Ancillary product during the second quarter of 2022, which reclassified approximately ~~$17,224~~$21,374 of revenue from Scheduled Service to Ancillary during the three months ended ~~March 31, 2023.~~June 30, 2023, as compared to $5,552 during the three months ended June 30, 2022.

Charter Service. Charter ~~service~~Service revenue increased ~~$13,308,~~$6,877, or ~~40%~~16%, to ~~$46,187~~$49,626 for the three months ended ~~March 31,~~June 30, 2023, ~~from $32,879 for~~as compared to the three months ended ~~March 31,~~June 30, 2022. ~~Charter revenue per block hour was $9,139 for the three months ended March 31, 2023, as compared to $8,643 for the three months ended March 31, 2022, for an increase of 6%.~~ The increase in Charter service revenue was driven by a ~~46%~~24% and ~~33%~~23% increase in Charter ~~departures and~~Service block hours and departures, respectively, ~~primarily~~as a result of increased activity with long-term charter customers. These increases were slightly offset by a 6% decrease quarter-over-quarter in Charter revenue per block hour as lower fuel prices impacted revenue due to ~~new charter agreements.~~the nature of the contractual fuel pass-through.

Ancillary. Ancillary revenue increased ~~by $23,339,~~$22,572, or ~~52%~~51%, to ~~$68,425~~$66,773 for the three months ended ~~March 31,~~June 30, 2023, ~~from $45,086 for~~as compared to the three months ended ~~March 31,~~June 30, 2022. Ancillary revenue was ~~$68.55~~$66.43 per passenger in the three months ended ~~March 31,~~June 30, 2023, up ~~$19.68,~~$16.43 or ~~40%~~33%, from the three months ended ~~March 31,~~June 30, 2022. Ancillary revenue benefited from the introduction of ana new Ancillary product during the second quarter of 2022, which reclassified approximately ~~$17,224~~$21,374 of revenue from Scheduled Service to Ancillary during the three months ended ~~March 31, 2023.~~June 30, 2023, as compared to $5,552 during the three months ended June 30, 2022. The increase in ~~scheduled~~Scheduled Service passengers ~~and passenger load factor of 8% and 8.6 percentage points, respectively,~~ during the period resulted in ~~greater~~a higher volume of sales offor 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.

Cargo. Revenue from ~~cargo~~Cargo services increased ~~by $2,308,~~$3,827, or ~~11%~~18%, to ~~$23,361~~$25,017 for the three months ended ~~March 31,~~June 30, 2023, ~~from $21,053 for~~as compared to the three months ended ~~March 31,~~June 30, 2022. The increase was primarily driven by a 18% and 5%10% quarter-over-quarter increase in departures and block hours, respectively. Revenue during the three ~~months ended March 31, 2023 also benefited from the annual rate escalation included in the ATSA, which went into effect on December 13, 2022.~~

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

(Dollars in thousands, except per share amounts)

(Unaudited)

months ended June 30, 2023 also benefited from the annual rate escalation included in the ATSA, which went into effect on December 13, 2022.

Other. Other revenue ~~was $3,485~~increased $5,688, or 226%, to $8,203 for the three months ended ~~March 31,~~June 30, 2023, as compared to ~~$3,439 for~~ the three months ended ~~March 31,~~June 30, 2022. Other revenue ~~will benefit in future periods~~benefited from the $5,871 of rental revenue associated with the five Aircraft Held for Operating Lease acquired ~~in March and April~~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:


		Three Months Ended March 31,				Change					% Change			Three Months Ended June 30,								Change			% Change
		2023		2022						2023					2022
Total Aircraft Fuel Expense	Total Aircraft Fuel Expense	$	72,290	$	64,544			$	7,746					12		%	Total Aircraft Fuel Expense	$	52,360		$	76,947		$	(24,587)		(32)	%
Indirect Fuel Credits	Indirect Fuel Credits	440		318		122					38	%	Indirect Fuel Credits	212					208			4			2	%
Aircraft Fuel Expense, Excluding Indirect Fuel Credits	Aircraft Fuel Expense, Excluding Indirect Fuel Credits	$	72,730	$	64,862	$	7,868				12	%	Aircraft Fuel Expense, Excluding Indirect Fuel Credits	$	52,572				$	77,155		$	(24,583)		(32)	%
Fuel Gallons Consumed (thousands)	Fuel Gallons Consumed (thousands)	21,073		20,245		828					4	%	Fuel Gallons Consumed (thousands)	19,399					17,568			1,831			10	%
Fuel Cost per Gallon, Excluding Indirect Fuel Credits	Fuel Cost per Gallon, Excluding Indirect Fuel Credits	$	3.45	$	3.20	$	0.25				8	%	Fuel Cost per Gallon, Excluding Indirect Fuel Credits	$	2.71				$	4.39		$	(1.68)		(38)	%

Aircraft Fuel expense ~~increased by 12% year-over-year~~decreased 32% quarter-over-quarter primarily due to a ~~8% increase~~38% decrease in the average fuel cost per gallon, partially offset by and a 4%10% increase in consumption. The price of fuel ~~continues to be~~during the three months ended June 30, 2022 was significantly impacted by global geopolitical events.

Salaries, Wages, and Benefits. Salaries, Wages, and Benefits expense increased ~~$15,813,~~$15,621, or ~~27%~~26%, to ~~$75,430~~$75,919 for the three months ended ~~March 31,~~June 30, 2023, as compared to ~~$59,617 for~~ the three months ended ~~March 31,~~June 30, 2022. The quarter-over-quarter increase in Salaries, Wages, and Benefits was ~~primarily due to~~impacted by an increase in employee headcount, ~~as well as~~an acceleration of stock-based compensation expense recognized during the three months ended June 30, 2023 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. ~~The employee headcount as~~For more information on the acceleration of ~~March 31, 2023 was 2,634, as compared to 2,316 as~~stock-based compensation for our time-based and performance-based stock options, see Note 7 of ~~March 31, 2022, for an increase~~the Condensed Consolidated Financial Statements included in Part I, Item I of ~~318, or 14%.~~this report.

Aircraft Rent. Aircraft Rent expense decreased ~~$1,706,~~$1,432, or ~~54%~~65%, to ~~$1,480~~$779 for the three months ended ~~March 31,~~June 30, 2023, as compared to ~~$3,186 for~~ the three months ended ~~March 31,~~June 30, 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). As of ~~March 31,~~June 30, 2023 and 2022, ~~there were two~~we operated one and four aircraft under operating leases, ~~respectively~~.respectively.

Maintenance. Maintenance expense increased ~~$1,044,~~$3,160, or 9%25%, to ~~$13,039~~$15,942 for the three months ended ~~March 31,~~June 30, 2023, as compared to ~~$11,995 for~~ the three months ended ~~March 31,~~June 30, 2022. The increase in ~~maintenance~~Maintenance expense was primarily driven by the year-over-year increase in the size of our fleet, as well as increased total system departures and block hours. These amounts were partially offset by fewer landing gear events and heavy maintenance checks.

~~Sales and Marketing. Sales and Marketing expense increased $1,301, or 15%, to $9,929 for the three months ended March 31, 2023, as compared to $8,628 for the three months ended March 31, 2022. The year-over-year~~

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(Dollars in thousands, except per share amounts)

(Unaudited)

primarily driven by higher line maintenance costs due to the quarter-over-quarter increase in the size of our fleet and operations, as well as the timing of heavy maintenance events and unscheduled repairs.

Sales and Marketing. Sales and Marketing expense increased $626, or 8%, to $8,507 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022. The change quarter-over-quarter was driven by an increase of approximately ~~$1,500 increase~~$1,000 in credit card processing ~~partially offset by~~and other travel agent fees, as a ~~decrease~~result of the 14% increase in ~~global distribution system expenses due to a new direct distribution method that has shifted the mix of direct and indirect sales.~~passengers.

Depreciation and Amortization. Depreciation and Amortization expense increased ~~$4,132,~~$5,501, or ~~27%~~33%, to ~~$19,460~~$22,355 for the three months ended ~~March 31,~~June 30, 2023, as compared to ~~$15,328 for~~ the three months ended ~~March 31,~~June 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 ~~March 31,~~June 30, 2023 and 2022, there were 4347 and 3437 aircraft that were owned or under finance leases, respectively.

Ground Handling. Ground Handling expense increased ~~$3,080,~~$3,099, or ~~39%~~38%, to ~~$11,038~~$11,311 for the three months ended ~~March 31,~~June 30, 2023, as compared to ~~$7,958 for~~ the three months ended ~~March 31,~~June 30, 2022. The increase was primarily driven by the ~~46%~~16% increase in ~~Charter~~Passenger segment departures as a result of our expanding operations, as well as rate increases due to inflationary and market pressures.

Landing Fees and Airport Rent. Landing Fees and Airport Rent increased ~~$1,765,~~$3,466, or ~~17%~~36%, to ~~$12,051~~$12,962 for the three months ended ~~March 31,~~June 30, 2023, as compared to ~~$10,286 for~~ the three months ended ~~March 31,~~June 30, 2022. The increase was primarily driven by the ~~46%~~16% increase in ~~Charter~~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 ~~$465,~~$4,347, or 2%21%, to ~~$23,615~~$25,364 for the three months ended ~~March 31,~~June 30, 2023, as compared to ~~$23,150 for~~ the three months ended ~~March 31,~~June 30, 2022, ~~mainly~~primarily due to ~~increased departures within Charter, which resulted~~increases in ~~higher crew travel~~ costs associated with our operational growth and ~~catering expenses,~~related inflationary pressures, as well as an increase in ~~other operational overhead costs. These increases were partially offset by an increase in Charter recovery costs as a result of the 46% increase in departures.~~third-party vendor spend.

Non-operating Income (Expense)

Interest Income. Interest income ~~was $2,741~~increased $2,013, or 378%, to $2,545 for the three months ended ~~March 31,~~June 30, 2023, as compared to the three months ended June 30, 2022. The increase was primarily due to the change in our investment strategy, which led to the purchase of debt securities ~~during~~in May 2022, as well as an increases in the ~~second quarter~~number of ~~2022. Interest income for the three months ended March 31, 2022 was nominal.~~investments held and interest rates.

Interest Expense. Interest expense increased ~~$68,~~$4,197, or 1%60%, to ~~$8,630~~$11,239 for the three months ended ~~March 31,~~June 30, 2023, as compared to ~~$8,562 for~~ the three months ended ~~March 31,~~June 30, 2022. The ~~increase~~change was primarily due to a ~~larger mix of~~24% increase in owned aircraft that were financed or refinanced with ~~the proceeds from new~~ debt partially offset by a $1,557 loss on extinguishment of debt in the three months ended March 31, 2022 related to the repayment of the DDTL. Interest expense will be impacted in future periods from the additional debt incurred to complete the acquisition of five Aircraft Held for Operating Lease in March and April of 2023.proceeds. For more information on the Company's Debt, see Note 76 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Other, net. Other, net ~~was~~decreased $1,559, or 92% to a net expense of ~~$212~~$143 for the three months ended ~~March 31,~~June 30, 2023, as compared to ~~a net expense of $6,876 for~~ the three months ended ~~March 31, 2022, a decrease of $6,664, or 97%.~~June 30, 2022. The decrease was primarily due to the ~~$6,800~~$1,700 adjustment to increase the estimated TRA liability in the prior ~~year, partially offset by offering expenses of $528 in connection to the Company's secondary offering during the three months ended March 31, 2023.~~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 ~~March 31,~~June 30, 2023 was 22.9% compared to ~~43.3%~~19.0% for the three months ended ~~March 31,~~June 30, 2022. The ~~decrease~~increase in the effective tax rate was primarily due to the ~~$6,800~~$1,700 non-deductible adjustment of the TRA liability in 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 March 31, 2023 and 2022~~

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022
Passenger Cargo Total Passenger Cargo Total
Operating Revenues $ 270,754 $ 23,361 $ 294,115 $ 205,472 $ 21,053 $ 226,525
Operating Expenses:
Aircraft Fuel 72,266 24 72,290 64,544 — 64,544
Salaries, Wages, and Benefits 58,808 16,622 75,430 47,531 12,086 59,617
Aircraft Rent 1,480 — 1,480 3,186 — 3,186
Maintenance 9,482 3,557 13,039 9,103 2,892 11,995
Sales and Marketing 9,929 — 9,929 8,628 — 8,628
Depreciation and Amortization 19,430 30 19,460 15,302 26 15,328
Ground Handling 11,038 — 11,038 7,954 4 7,958
Landing Fees and Airport Rent 11,950 101 12,051 10,171 115 10,286
Other Operating, net 18,520 5,095 23,615 18,935 4,215 23,150
Total Operating Expenses 212,903 25,429 238,332 185,354 19,338 204,692
Operating Income (Loss) $ 57,851 $ (2,068) $ 55,783 $ 20,118 $ 1,715 $ 21,833
Operating Margin % 21.4 % (8.9) % 19.0 % 9.8 % 8.1 % 9.6 %

~~Passenger.~~ Passenger Operating Income increased by $37,733 to $57,851 for the three months ended March 31, 2023 from $20,118 for the three months ended March 31, 2022. The Operating Margin Percentage for the three months ended March 31, 2023 increased by 11.6 percentage points, as compared to the three months ended March 31, 2022. The increase in Passenger Operating Income and Operating Margin was primarily driven by an increase in demand for passenger service during the first quarter of 2023, as compared to the first quarter of 2022, resulting in higher per unit revenues for both scheduled service and charter. These revenue increases more than offset increases in expenses. 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 $2,068 for the three months ended March 31, 2023, as compared to Operating Income of $1,715 for the three months ended March 31, 2022, a decrease of $3,783. Operating Margin Percentage for the three months ended March 31, 2023 decreased by 17.0 percentage points, as compared to the three months ended March 31, 2022. The decrease was primarily driven by a year-over-year increase in Salaries, Wages, and Benefits due to an increase in head count, as well as per unit costs for pilots

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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 Six Months Ended June 30, 2023 and 2022


	Six Months Ended June 30,				$ Change		% Change
	2023		2022
Operating Revenues:
Scheduled Service	$	264,124	$	232,479	$	31,645	14	%
Charter Service	95,813		75,628		20,185		27	%
Ancillary	135,198		89,287		45,911		51	%
Passenger	495,135		397,394		97,741		25	%
Cargo	48,378		42,243		6,135		15	%
Other	11,688		5,954		5,734		96	%
Total Operating Revenues	555,201		445,591		109,610		25	%

Operating Expenses:
Aircraft Fuel	124,650		141,492		(16,842)		(12)	%
Salaries, Wages, and Benefits	151,349		119,915		31,434		26	%
Aircraft Rent	2,259		5,397		(3,138)		(58)	%
Maintenance	28,981		24,777		4,204		17	%
Sales and Marketing	18,436		16,509		1,927		12	%
Depreciation and Amortization	41,815		32,182		9,633		30	%
Ground Handling	22,349		16,170		6,179		38	%
Landing Fees and Airport Rent	25,013		19,782		5,231		26	%
Other Operating, net	48,979		44,166		4,813		11	%
Total Operating Expenses	463,831		420,390		43,441		10	%
Operating Income	91,370		25,201		66,169		263	%

Non-operating Income (Expense):
Interest Income	5,286		556		4,730		851	%
Interest Expense	(19,869)		(15,604)		(4,265)		27	%
Other, net	(355)		(8,577)		8,222		(96)	%
Total Non-operating Expense, net	(14,938)		(23,625)		8,687		(37)	%

Income Before Income Tax	76,432		1,576		74,856		NM
Income Tax Expense	17,486		1,861		15,625		840	%
Net Income (Loss)	$	58,946	$	(285)	$	59,231	NM


"NM" stands for not meaningful

Total Operating Revenues increased $109,610, or 25%, to $555,201 for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. The revenue increase was largely driven by an increase in demand for our passenger service offerings during the first half of 2023 as compared to the first half of 2022. The increase in demand resulted in an increase to average total fare per passenger of $21.24, or 12%, to $199.33 for the six months ended June 30, 2023 as compared to 2022, as well as a 5.6 percentage point increase in passenger load factor over the same period.

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

(Dollars in thousands, except per share amounts)

(Unaudited)

Scheduled Service. Scheduled Service revenue increased $31,645, or 14%, to $264,124 for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. The table below presents select operating data for Scheduled Service, expressed as year-over-year changes:


	Six Months Ended June 30,						Change			% Change
	2023			2022
Departures	12,578			11,901			677			6	%
Passengers	2,003,364			1,806,740			196,624			11	%
Average base fare per passenger	$	131.84		$	128.67		$	3.17		2	%
RPMs (thousands)	2,648,392			2,464,490			183,902			7	%
ASMs (thousands)	3,043,506			3,027,648			15,858			1	%
TRASM (cents)	13.31			10.82			2.49			23	%
Passenger load factor	87.0		%	81.4		%	5.6		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 an 11% increase in passengers, a 5.6 percentage point increase in passenger load factor, and a 2% increase in the average base fare per passenger. 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 $38,598 of revenue from Scheduled Service to Ancillary during the six months ended June 30, 2023, as compared to $5,552 during the six months ended June 30, 2022.

Charter Service. Charter service revenue increased $20,185, or 27%, to $95,813 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The increase in Charter Service revenue was driven by a 33% and 28%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 $45,911, or 51%, to $135,198 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. Ancillary revenue was $67.49 per passenger in the six months ended June 30, 2023, up $18.07 or 37%, from the six months ended June 30, 2022. Ancillary revenue benefited from the introduction of a new Ancillary product during the second quarter of 2022, which reclassified approximately $38,598 of revenue from Scheduled Service to Ancillary during the six months ended June 30, 2023, as compared to $5,552 during the six months ended June 30, 2022. The 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.

Cargo. Revenue from Cargo services increased $6,135, or 15%, to $48,378 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The increase was primarily driven by an 18% and 8% increase in Cargo departures and block hours, respectively. Revenue during the six months ended June 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 $5,734, or 96%, to $11,688 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. Other revenue in the current year benefited from $5,871 of rental revenue associated with the five Aircraft Held for Operating Lease acquired during the first half of 2023.

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

(Dollars in thousands, except per share amounts)

(Unaudited)

Operating Expenses

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


	Six Months Ended June 30,				Change		% Change
	2023		2022
Total Aircraft Fuel Expense	$	124,650	$	141,492	$	(16,842)	(12)	%
Indirect Fuel Credits	651		526		125		24	%
Aircraft Fuel Expense, Excluding Indirect Fuel Credits	$	125,301	$	142,018	$	(16,717)	(12)	%
Fuel Gallons Consumed (thousands)	40,472		37,813		2,659		7	%
Fuel Cost per Gallon, Excluding Indirect Fuel Credits	$	3.10	$	3.76	$	(0.66)	(18)	%

Aircraft Fuel expense decreased by 12% year-over-year primarily due to a 18% decrease in the average fuel cost per gallon, slightly offset by a 7% increase in consumption. The price of fuel during the six months ended June 30, 2022 was significantly impacted by global geopolitical events.

Salaries, Wages, and Benefits. Salaries, Wages, and Benefits expense increased $31,434, or 26%, to $151,349 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The year-over-year increase in Salaries, Wages, and Benefits was impacted by an increase in employee headcount, an acceleration of stock-based compensation expense recognized during the six months ended June 30, 2023 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 $3,138, or 58%, to $2,259 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. Aircraft Rent expense decreased primarily due to the composition of our aircraft fleet continuing to shift 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). As of June 30, 2023 and 2022, we operated one and four aircraft under operating leases, respectively.

Maintenance. Maintenance expense increased $4,204, or 17%, to $28,981 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The increase in Maintenance expense was primarily driven by higher line maintenance costs due to the year-over-year increase in the size of our fleet and operations, as well as an increase in unscheduled repair events.

Sales and Marketing. Sales and Marketing expense increased $1,927, or 12%, to $18,436 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The year-over-year increase was driven by an approximately $2,900 increase in credit card processing and other travel agent fees, as a result of

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(Dollars in thousands, except per share amounts)

(Unaudited)

the 11% increase in 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.

Depreciation and Amortization. Depreciation and Amortization expense increased $9,633, or 30%, to $41,815 for the six months ended June 30, 2023, as compared to the six months ended June 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 June 30, 2023 and 2022, there were 47 and 37 aircraft that were owned or under finance leases, respectively.

Ground Handling. Ground Handling expense increased $6,179, or 38%, to $22,349 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The increase was primarily driven by the 12% increase in Passenger segment departures as a result of our expanding operations, as well as rate increases due to inflationary and market pressures.

Landing Fees and Airport Rent. Landing Fees and Airport Rent increased $5,231, or 26%, to $25,013 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The increase was primarily driven by the 12% 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 $4,813, or 11%, to $48,979 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, primarily due to increases in costs associated with our operational growth and related inflationary pressures, as well as an increase in third-party vendor spend. These increases were partially offset by an increase in Charter Service recovery costs as a result of an increase in certain Charter Service departures.

Non-operating Income (Expense)

Interest Income. Interest income was $5,286 for the six months ended June 30, 2023 primarily due to the change in our investment strategy, which led to the purchase of debt securities in May 2022.

Interest Expense. Interest expense increased $4,265, or 27%, to $19,869 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The change was primarily due to a 24% increase in owned aircraft that were financed or refinanced with debt proceeds, partially offset by a $1,557 loss on extinguishment of debt incurred during the six months ended June 30, 2022 related to the repayment of the DDTL. For more information on the Company's Debt, see Note 6 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Other, net. Other, net decreased $8,222, or 96% to a net expense of $355 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The decrease was primarily due to the $8,500 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 six months ended June 30, 2023 was 22.9% compared to 118.1% for the six months ended June 30, 2022. The decrease in the effective tax rate was primarily due to the $8,500 non-deductible adjustment of the TRA liability in 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.

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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 June 30, 2023 and 2022


	Three Months Ended June 30, 2023									Three Months Ended June 30, 2022
	Passenger			Cargo			Total			Passenger			Cargo			Total
Operating Revenues	$	236,069		$	25,017		$	261,086		$	197,877		$	21,190		$	219,067

Operating Expenses:
Aircraft Fuel	52,347			13			52,360			76,947			—			76,947
Salaries, Wages, and Benefits	57,745			18,174			75,919			46,854			13,444			60,298
Aircraft Rent	779			—			779			2,211			—			2,211
Maintenance	12,179			3,763			15,942			9,273			3,509			12,782
Sales and Marketing	8,507			—			8,507			7,881			—			7,881
Depreciation and Amortization	22,341			14			22,355			16,828			26			16,854
Ground Handling	11,311			—			11,311			8,208			4			8,212
Landing Fees and Airport Rent	12,861			101			12,962			9,393			103			9,496
Other Operating, net	20,484			4,880			25,364			16,649			4,368			21,017
Total Operating Expenses	198,554			26,945			225,499			194,244			21,454			215,698
Operating Income (Loss)	$	37,515		$	(1,928)		$	35,587		$	3,633		$	(264)		$	3,369

Operating Margin %	15.9		%	(7.7)		%	13.6		%	1.8		%	(1.2)		%	1.5		%

Passenger. Passenger Operating Income increased $33,882 to $37,515 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022. The Operating Margin Percentage for the three months ended June 30, 2023 increased 14.1 percentage points, as compared to the three months ended June 30, 2022. The increases in Passenger Operating Income and Operating Margin were driven by an increase in the average passenger aircraft in the period and demand for passenger service during the second quarter of 2023, as compared to the same period of 2022. This resulted in a significant increase in departures and passengers 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 June 30, 2023 also benefited from a 32% quarter-over-quarter decrease in Aircraft Fuel expense due to a 38% decrease in the average fuel cost per gallon, partially offset by and a 10% increase in consumption. The price of fuel during the three months ended June 30, 2022 was significantly impacted by 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 Operating Loss increased by $1,664, to $1,928 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022. Operating Margin Percentage for the three months ended June 30, 2023 decreased 6.5 percentage points, as compared to the three months ended June 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 for pilots to support operations. For more information on the components of Operating Income for the Cargo segment, refer to the Results of Operations discussion ~~above, where we describe~~above.

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(Dollars in thousands, except per share amounts)

(Unaudited)

Segments

For the ~~cargo~~Six Months Ended June 30, 2023 and 2022


	Six Months Ended June 30, 2023									Six Months Ended June 30, 2022
	Passenger			Cargo			Total			Passenger			Cargo			Total
Operating Revenues	$	506,823		$	48,378		$	555,201		$	403,348		$	42,243		$	445,591

Operating Expenses:
Aircraft Fuel	124,613			37			124,650			141,492			—			141,492
Salaries, Wages, and Benefits	116,553			34,796			151,349			94,385			25,530			119,915
Aircraft Rent	2,259			—			2,259			5,397			—			5,397
Maintenance	21,660			7,321			28,981			18,375			6,402			24,777
Sales and Marketing	18,436			—			18,436			16,509			—			16,509
Depreciation and Amortization	41,771			44			41,815			32,130			52			32,182
Ground Handling	22,349			—			22,349			16,162			8			16,170
Landing Fees and Airport Rent	24,811			202			25,013			19,563			219			19,782
Other Operating, net	39,004			9,975			48,979			35,584			8,582			44,166
Total Operating Expenses	411,456			52,375			463,831			379,597			40,793			420,390
Operating Income (Loss)	$	95,367		$	(3,997)		$	91,370		$	23,751		$	1,450		$	25,201

Operating Margin %	18.8		%	(8.3)		%	16.5		%	5.9		%	3.4		%	5.7		%

Passenger. Passenger Operating Income increased $71,616 to $95,367 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. Passenger Operating Margin Percentage for the six months ended June 30, 2023 increased 12.9 percentage points, as compared to the six months ended June 30, 2022. The increase in Passenger Operating Income and Operating Margin was driven by an increase in demand for passenger service during the first half of 2023, as compared to the first half of 2022. Passenger Operating Income and Operating Margin for the six months ended June 30, 2023 also benefited from a 12% year-over-year decrease in Aircraft Fuel expense due to an 18% decrease in the average fuel cost per gallon, slightly offset by a 7% increase in consumption. The price of fuel during the six months ended June 30, 2022 was significantly impacted by 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 $3,997 for the six months ended June 30, 2023, as compared to Operating Income of $1,450 for the six months ended June 30, 2022, a decrease of $5,447. Operating Margin Percentage for the six months ended June 30, 2023 decreased 11.7 percentage points, as compared to the six months ended June 30, 2022. The decrease was primarily driven by a year-over-year increase in Salaries, Wages, and Benefits due to an increase in employee head count, an increase in per unit costs for pilots to support operations, and increased other operating expenses ~~embedded within each financial statement line item.~~as a result of an increase in departures. For more information on the components of Operating Income for the Cargo segment, refer to the Results of Operations discussion above.

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(Dollars in thousands, except per share amounts)

(Unaudited)

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 to the most directly comparable GAAP financial measures.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income (Loss) and Adjusted EBITDA

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income (Loss), 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 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.

The measures described above have limitations as analytical tools. Some of the limitations applicable to these measures include: 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 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.

For the foregoing reasons, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income (Loss) 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.

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(Dollars in thousands, except per share amounts)

(Unaudited)

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 March 31,							Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022				2023			2022			2023			2022
Adjusted Operating Income Margin Reconciliation:	Adjusted Operating Income Margin Reconciliation:							Adjusted Operating Income Margin Reconciliation:
Operating Revenue	Operating Revenue	$	294,115		$	226,525		Operating Revenue	$	261,086		$	219,067		$	555,201		$	445,591
Operating Income	Operating Income	55,783			21,833			Operating Income	35,587			3,369			91,370			25,201

Stock Compensation Expense	Stock Compensation Expense	2,678			920			Stock Compensation Expense	4,415			575			7,093			1,495
Adjusted Operating Income	Adjusted Operating Income	$	58,461		$	22,753		Adjusted Operating Income	$	40,002		$	3,944		$	98,463		$	26,696

Operating Income Margin	Operating Income Margin	19.0		%	9.6		%	Operating Income Margin	13.6		%	1.5		%	16.5		%	5.7		%
Adjusted Operating Income Margin	Adjusted Operating Income Margin	19.9		%	10.0		%	Adjusted Operating Income Margin	15.3		%	1.8		%	17.7		%	6.0		%

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


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022			2023		2022		2023		2022
Adjusted Net Income Reconciliation:
Net Income		$	38,328	$	3,637
Adjusted Net Income (Loss) Reconciliation:						Adjusted Net Income (Loss) Reconciliation:
Net Income (Loss)						Net Income (Loss)	$	20,618	$	(3,922)	$	58,946	$	(285)

Stock Compensation Expense	Stock Compensation Expense	2,678		920		Stock Compensation Expense	4,415		575		7,093		1,495
Gain on Asset Transactions, net (a)	Gain on Asset Transactions, net (a)	—		(2)		Gain on Asset Transactions, net (a)	—		(77)		—		(79)
Loss on refinancing credit facility	Loss on refinancing credit facility	—		1,557		Loss on refinancing credit facility	—		—		—		1,557
Secondary offering costs	Secondary offering costs	528		—		Secondary offering costs	112		—		640		—
TRA adjustment (b)	TRA adjustment (b)	(357)		6,800		TRA adjustment (b)	—		1,700		(357)		8,500
Income tax effect of adjusting items, net (c)	Income tax effect of adjusting items, net (c)	(737)		(568)		Income tax effect of adjusting items, net (c)	(1,041)		(114)		(1,779)		(684)
Adjusted Net Income		$	40,440	$	12,344
Adjusted Net Income (Loss)						Adjusted Net Income (Loss)	$	24,104	$	(1,838)	$	64,543	$	10,504

_________________________


(a)			Due to changes in the Company’s operations, ~~Management~~management determined that, beginning in the fourth quarter of 2022, certain asset transactions will no longer be included as adjustments to Adjusted Net Income because these transactions are part of our recurring operations. This change was made prospectively beginning in the fourth quarter of 2022, and no prior period amounts have been adjusted.
(b)			This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense).
(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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(Dollars in thousands, except per share amounts)

(Unaudited)

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


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022			2023		2022		2023		2022
Adjusted EBITDA Reconciliation:	Adjusted EBITDA Reconciliation:					Adjusted EBITDA Reconciliation:
Net Income		$	38,328	$	3,637
Net Income (Loss)						Net Income (Loss)	$	20,618	$	(3,922)	$	58,946	$	(285)
Stock Compensation Expense	Stock Compensation Expense	2,678		920		Stock Compensation Expense	4,415		575		7,093		1,495
Gain on Asset Transactions, net (a)	Gain on Asset Transactions, net (a)	—		(2)		Gain on Asset Transactions, net (a)	—		(77)		—		(79)
Secondary offering costs	Secondary offering costs	528		—		Secondary offering costs	112		—		640		—
TRA adjustment (b)	TRA adjustment (b)	(357)		6,800		TRA adjustment (b)	—		1,700		(357)		8,500
Interest Income	Interest Income	(2,741)		(24)		Interest Income	(2,545)		(532)		(5,286)		(556)
Interest Expense	Interest Expense	8,630		8,562		Interest Expense	11,239		7,042		19,869		15,604
Provision for Income Taxes	Provision for Income Taxes	11,354		2,782		Provision for Income Taxes	6,132		(921)		17,486		1,861
Depreciation and Amortization	Depreciation and Amortization	19,460		15,328		Depreciation and Amortization	22,355		16,854		41,815		32,182
Adjusted EBITDA	Adjusted EBITDA	$	77,880	$	38,003	Adjusted EBITDA	$	62,326	$	20,719	$	140,206	$	58,722

_________________________


(a)			Due to changes in the Company’s operations, ~~Management~~management determined that, beginning in the fourth quarter of 2022, certain asset transactions will no longer be included as adjustments to Adjusted Net Income because these transactions are part of our recurring operations. This change was made prospectively beginning in the fourth quarter of 2022, and no prior period amounts have been adjusted.
(b)			This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense).

CASM and Adjusted 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. ~~Adjusted CASM further excludes special items and other adjustments, as defined in the relevant reporting period, that are not~~The five Aircraft Held for Operating Lease

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(Dollars in thousands, except per share amounts)

(Unaudited)

were acquired during the six months ended June 30, 2023. Depreciation expense on these aircraft materially began during the 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 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.

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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 March 31,							Three Months Ended June 30,
		2023			2022				2023			2022
		Operating Expenses		Per ASM (in cents)	Operating Expenses		Per ASM (in cents)		Operating Expenses		Per ASM (in cents)	Operating Expenses		Per ASM (in cents)
CASM	CASM	$	238,332	12.25	$	204,692	10.62	CASM	$	225,499	12.67	$	215,698	13.21
Less:	Less:							Less:
Aircraft Fuel	Aircraft Fuel	72,290		3.72	64,544		3.35	Aircraft Fuel	52,360		2.94	76,947		4.71
Stock Compensation Expense	Stock Compensation Expense	2,678		0.13	920		0.05	Stock Compensation Expense	4,415		0.25	575		0.04
Cargo expenses, not already adjusted above	Cargo expenses, not already adjusted above	24,812		1.28	19,112		0.99	Cargo expenses, not already adjusted above	25,966		1.46	21,326		1.31
Sun Country Vacations	Sun Country Vacations	436		0.02	402		0.02	Sun Country Vacations	266		0.01	215		0.01
Aircraft and Flight Equipment Held for Operating Lease, Depreciation Expense								Aircraft and Flight Equipment Held for Operating Lease, Depreciation Expense	2,273		0.13	—		—
Adjusted CASM	Adjusted CASM	$	138,116	7.10	$	119,714	6.21	Adjusted CASM	$	140,219	7.88	$	116,635	7.14

ASM (thousands)	ASM (thousands)	1,945,001			1,928,149			ASM (thousands)	1,780,340			1,632,501


	Six Months Ended June 30,
	2023			2022
	Operating Expenses		Per ASM (in cents)	Operating Expenses		Per ASM (in cents)
CASM	$	463,831	12.45	$	420,390	11.81
Less:
Aircraft Fuel	124,650		3.35	141,492		3.97
Stock Compensation Expense	7,093		0.19	1,495		0.04
Cargo expenses, not already adjusted above	50,778		1.36	40,438		1.14
Sun Country Vacations	702		0.02	617		0.02
Aircraft and Flight Equipment Held for Operating Lease, Depreciation Expense	2,273		0.06	—		—
Adjusted CASM	$	278,335	7.47	$	236,348	6.64

ASM (thousands)	3,725,341			3,560,651

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.

Our primary sources of liquidity as of ~~March 31,~~June 30, 2023 included our existing cash and cash equivalents of ~~$71,587~~$86,930 and short-term investments of ~~$171,638,~~$158,177, our expected cash generated from operations, and the $24,650 of available funds from the Revolving Credit Facility. In addition, we had restricted cash of ~~$22,776~~$7,281 as of ~~March 31,~~June 30, 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. As of March 31, 2023, the Company's restricted cash balance also included $13,103 that was deposited in relation to the purchase of the two remaining Aircraft Held for Operating Lease. Upon acquisition, the deposited amounts were remitted to the seller.

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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)

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.

Aircraft – As of ~~March 31,~~June 30, 2023, our fleet consisted of 5760 Boeing 737-NG aircraft. This includes 4243 aircraft in the passenger fleet, 12 cargo operated aircraft through the ATSA, and ~~three Aircraft Held for Operating Lease.~~

~~During the three months ended March 31, 2023, the Company entered into an agreement to acquire~~ five Aircraft Held for Operating Lease. ~~On March 29,~~During the six months ended June 30, 2023, the Company acquired ~~three~~five of the Aircraft Held for Operating Lease for total consideration of approximately ~~$95,000. On April~~$158,000.

For more information on our fleet and probable future purchases of aircraft, see Note 4 ~~2023, the Company completed the transaction resulting in the acquisition~~ and Note 12 of the ~~two additional Aircraft Held for Operating Lease for total consideration~~Condensed Consolidated Financial Statements included in Part I, Item I of ~~approximately $63,000. Upon~~this report. For more information on the purchase ~~the Company obtained outright ownership~~of five of the Aircraft Held for Operating Lease, and assumed the position of lessor until the end of the lease terms. On each lease expiry date, the Aircraft Held for Operating Lease will be redelivered to Sun Country and is expected to be inducted into the Company’s fleet.

We may finance additional aircraft through debt financing or finance leases based on market conditions, our prevailing level of liquidity and capital market availability. We may also enter into new operating leases on an opportunistic basis. For more information on our fleet, 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 ~~March 31,~~June 30, 2023, we had ~~$36,532~~$39,309 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 ~~March 31,~~June 30, 2023, the Company held ~~$165,277~~$151,461 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.

~~The Company~~We also ~~holds $6,361~~hold $6,716 of Certificates of Deposit that are included in Investments on the Condensed Consolidated Balance Sheets as of ~~March 31, 2023.~~

~~CARES Act~~ -~~During the twelve months ended~~ June 30, 2022, the compensation payable to an executive officer temporarily exceeded the restrictions on the payment of certain executive compensation under the CARES Act. Once the issue was identified, the executive officer voluntarily rescinded the unvested portion of the equity grant that caused the executive’s compensation to exceed the CARES Act limit. At no point did the executive's cash

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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 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 March 31,~~ 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.

Credit Facilities - ~~The Company uses its~~We use our Credit Facilities to provide liquidity support for general corporate purposes and to finance the acquisition of aircraft.

As of ~~March 31,~~June 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

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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)

a minimum liquidity of $30,000 at the close of any business day. The Company was in compliance with these covenants as of ~~March 31,~~June 30, 2023.

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 issued the 2022-1 EETC for the purpose of financing or refinancing 13 aircraft.

During the ~~three~~six months ended ~~March 31,~~June 30, 2023, ~~the Company~~we 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 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 three months ended March 31, 2023, the Company received gross proceeds of $71,280 with respect to three of the Aircraft Held for Operating Lease. An incremental $47,920 of gross proceeds were received subsequent to March 31, 2023 upon the completion of the transaction resulting in the acquisition of two additional Aircraft Held for Operating Lease.

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 LTV ratio calculation is completed at the end of the lease ~~term and a LTV ratio calculation is completed.~~term. The interest rate in effect as of ~~March 31,~~June 30, 2023 on the term loan was ~~8.6%~~8.9%. 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%. Amounts received under the end of lease maintenance compensation clause may be applied towards the LTV payment.

For more information on our credit facilities or debt, see Note 76 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

TRA Liability - During the ~~three~~six months ended ~~March 31,~~June 30, 2023, ~~the Company~~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 TRA liability, see Note 10 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

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


	June 30, 2023		December 31, 2022
Cash and Cash Equivalents	$	86,930	$	92,086
Available-for-Sale Securities	151,461		172,635
Amount Available Under Revolving Credit Facility	24,650		24,650
Total Liquidity	$	263,041	$	289,371

	June 30, 2023		December 31, 2022
Total Debt, net	$	448,415	$	352,235
Finance Lease Obligations	257,288		251,296
Operating Lease Obligations	22,749		26,132
Total Debt, net, and Lease Obligations	728,452		629,663
Stockholders' Equity	540,765		492,712
Total Invested Capital	$	1,269,217	$	1,122,375

Debt-to-Capital	0.57		0.56

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

March 31, 2023 December 31, 2022
Cash and Cash Equivalents $ 71,587 $ 92,086
Available-for-Sale Securities 165,277 172,635
Amount Available Under Revolving Credit Facility 24,650 24,650
Total Liquidity $ 261,514 $ 289,371
March 31, 2023 December 31, 2022
Total Debt, net $ 412,259 $ 352,235
Finance Lease Obligations 247,019 251,296
Operating Lease Obligations 26,099 26,132
Total Debt, net, and Lease Obligations 685,377 629,663
Stockholders' Equity 521,007 492,712
Total Invested Capital $ 1,206,384 $ 1,122,375
Debt-to-Capital 0.57 0.56

Sources and Uses of Liquidity


		Three Months Ended March 31,				$		%			Six Months Ended June 30,				$		%
		2023		2022		Change		Change			2023		2022		Change		Change
Total Operating Activities	Total Operating Activities	$	47,861	$	18,213	$	29,648	163	%	Total Operating Activities	$	95,693	$	37,060	$	58,633	158	%

Investing Activities:	Investing Activities:									Investing Activities:
Purchases of Property & Equipment	Purchases of Property & Equipment	(104,978)		(49,683)		(55,295)		111	%	Purchases of Property & Equipment	(192,352)		(137,647)		(54,705)		40	%
Purchases of Investments	Purchases of Investments	(24,228)		(3)		(24,225)		NM		Purchases of Investments	(49,437)		(71,629)		22,192		(31)	%
Proceeds from the Maturities of Investments	Proceeds from the Maturities of Investments	32,840		—		32,840		NM		Proceeds from the Maturities of Investments	71,795		—		71,795		NM
Other, net	Other, net	1,129		58		1,071		NM		Other, net	1,953		10,315		(8,362)		(81)	%
Total Investing Activities	Total Investing Activities	(95,237)		(49,628)		(45,609)		92	%	Total Investing Activities	(168,041)		(198,961)		30,920		(16)	%

Financing Activities:	Financing Activities:									Financing Activities:
Common Stock Repurchases	Common Stock Repurchases	(14,812)		—		(14,812)		NM		Common Stock Repurchases	(22,249)		—		(22,249)		NM
Proceeds from Borrowings	Proceeds from Borrowings	71,280		77,986		(6,706)		(9)	%	Proceeds from Borrowings	119,200		172,507		(53,307)		(31)	%
Repayment of Finance Lease Obligations	Repayment of Finance Lease Obligations	(4,277)		(4,466)		189		(4)	%	Repayment of Finance Lease Obligations	(8,671)		(24,293)		15,622		(64)	%
Repayment of Borrowings	Repayment of Borrowings	(10,122)		(77,947)		67,825		(87)	%	Repayment of Borrowings	(21,808)		(86,046)		64,238		(75)	%
Other, net	Other, net	(3,258)		(1,456)		(1,802)		124	%	Other, net	(2,841)		(1,062)		(1,779)		168	%
Total Financing Activities	Total Financing Activities	38,811		(5,883)		44,694		(760)	%	Total Financing Activities	63,631		61,106		2,525		4	%

Net Decrease in Cash	Net Decrease in Cash	$	(8,565)	$	(37,298)	$	28,733	(77)	%	Net Decrease in Cash	$	(8,717)	$	(100,795)	$	92,078	(91)	%

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

"NM" stands for not meaningful

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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 Cash Flow Activities

Operating activities in the ~~three~~six months ended ~~March 31,~~June 30, 2023 provided ~~$47,861,~~$95,693, as compared to ~~providing $18,213~~$37,060 during the ~~three~~six months ended ~~March 31,~~June 30, 2022. During the ~~three~~six months ended ~~March 31,~~June 30, 2023, ~~and 2022,~~ our Net Income was ~~$38,328 and $3,637, respectively.~~$58,946, as compared to a Net Loss of $285 during the six months ended June 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 ~~three~~six months ended ~~March 31,~~June 30, 2023, ~~$123,574~~$146,904 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 increased year-over-year by ~~28%~~5% to ~~$141,613~~$130,264 as of ~~March 31,~~June 30, 2023. This is due to increased demand for passenger services, which has also resulted in higher per unit revenues.

Aircraft Fuel. Aircraft Fuel expense represented approximately ~~30%~~27% and ~~32%~~34% of our total operating expense for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. Fuel cost per gallon decreased by 18% year-over-year due to the impact of global geopolitical events on the price of fuel during the six 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)

June 30, 2022. Fuel consumption increased by 4%7% during the ~~three~~six months ended ~~March 31,~~June 30, 2023, compared to the prior year. Additionally, the cost per gallon increased by 8% year-over-year due to current market conditions, which continue to be impacted by global geopolitical events. We expect jet fuel prices to remain volatile throughout 2023.

Investing Cash Flow Activities

Capital Expenditures. Our capital expenditures were ~~$104,978~~$192,352 and ~~$49,683~~$137,647 for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively. Our capital expenditures during the ~~three~~six months ended ~~March 31,~~June 30, 2023 primarily included the purchase of ~~three~~five Aircraft Held for Operating Lease and one ~~spare engine.~~incremental aircraft for our passenger fleet. Our capital expenditures during the ~~three~~six months ended ~~March 31,~~June 30, 2022 primarily included the purchase of ~~one~~five incremental aircraft, the purchase of ~~three~~four spare engines, the first installment payment to purchase a flight simulator, and other miscellaneous projects.

Investments. During ~~three~~the six months ended ~~March 31,~~June 30, 2023, the Company's net investment activity resulted in cash inflows of ~~$8,612.~~$22,358 due to maturing securities exceeding purchases of investments. This was the result of a change in our investment strategy during the second quarter of 2022, which led to the purchase of ~~debt securities. Proceeds from maturing securities exceeded purchases~~$71,629 of investments during the ~~three~~six months ended ~~March 31, 2023.~~June 30, 2022.

Financing Cash Flow Activities

Debt. During the ~~three~~six months ended ~~March 31,~~June 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 Company received gross proceeds of $71,280 with respect to three of the Aircraft Held for Operating Lease during the three months ended March 31, 2023.~~ 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.

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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)~~

Finance Leases. Our repayments of finance lease obligations were $8,671 and $24,293 for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2022, the Company purchased one aircraft previously classified as a finance lease using proceeds from the 2022-1 EETC. The ~~year-over-year decrease was impacted by~~resulting cash outflows are recorded as payments for finance lease obligations. There were no similar transactions during the ~~change in the composition of our fleet that resulted in a decrease in the number of aircraft operated under finance leases.~~six months ended June 30, 2023. As of ~~March 31,~~June 30, 2023 and 2022, there were 1112 and 1211 finance leases, respectively.

Common Stock Repurchases. During the ~~three~~six months ended ~~March 31,~~June 30, 2023, the Company repurchased ~~750,000~~1,166,751 shares of its Common Stock at a total cost of ~~$14,812,~~$22,249, or ~~$19.75~~$19.07 per share. The ~~repurchase was~~repurchases were part of a secondary public offering of the Company's shares by ~~an affiliate of certain investment funds managed by affiliates of Apollo.~~the Apollo Stockholder, as well as open market purchases completed in the second quarter. For more information on the stock repurchase program and this purchase, see Note 11 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Other. During the ~~three~~six months ended ~~March 31,~~June 30, 2023, the Company made a payment of $2,425 to the TRA holders.

Off Balance Sheet Arrangements

For a detailed discussion on the nature of the Company's Off Balance Sheet Arrangements, see “Management’s Discussion and Analysis of Operations” in Part II, Item 7 in our 2022 10-K. There have been no material changes to the Company's Off Balance Sheet Arrangements as compared to the 2022 10-K.

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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)

Commitments and Contractual Obligations

See~~Note 6~~ ~~and~~ Note 12 to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for more information regarding commitments and contractual obligations.

Recently Adopted Accounting Pronouncements

During the ~~three~~six months ended ~~March 31,~~June 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 to our critical accounting policies and estimates as compared to the 2022 10-K.

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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 ~~March 31,~~June 30, 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 ~~second~~third quarter of 2023, we estimate that a one cent per gallon increase in the average aircraft fuel price would increase aircraft fuel expense by approximately ~~$193~~$196 excluding reimbursed fuel from cargo 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 $119,200 term loan credit facility used to finance the Aircraft Held for Operating Lease. A 100 basis point increase in interest rates on the term loan would result in a corresponding increase in interest expense of approximately $1,192 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 ~~March 31,~~June 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 ~~March 31,~~June 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 ~~$165,277~~$151,461 as of ~~March 31,~~June 30, 2023. These investments are highly liquid and are available to be quickly converted into known amounts of cash to fund current operations. 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.

~~Our~~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, 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 ~~March 31,~~June 30, 2023.

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Based on the evaluation of our disclosure controls and procedures as of ~~March 31,~~June 30, 2023, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of ~~March 31,~~June 30, 2023, due to the material ~~weakness~~weaknesses in internal control over financial reporting 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 Annual Report on Form 10-K as of 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 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 June 30, 2023.

Remediation Plan

Management 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;

•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;~~transactions including updating the lease accounting checklist;

•Engaging 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 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.~~

~~We have made significant progress in accordance with our remediation plan since the filing of our Annual Report on Form 10-K for the year ended December 31, 2022 as follows:~~

•~~Continued to engage third-party specialists to review Managements conclusions on the accounting for non-routine transactions occurring in the first quarter of 2023; and~~transactions;

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

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

We have made significant progress in accordance with our remediation plan related to the material weakness in controls over the accounting for complex, non-routine transactions since the filing of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 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 second quarter of 2023; and

•Continued to enhance 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.

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.

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

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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.

Despite the existence of ~~this~~these material ~~weakness,~~weaknesses, our management believes that the Condensed Consolidated Financial Statements included in this Quarterly Report present fairly, ~~present,~~ in all material respects, ~~our~~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 ~~March 31,~~June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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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 2022 10-K and in ourQuarterly Report on Form 10-Q for the period ended March 31, 2023 ("March 31, 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 2022 10-K, March 31, 2023 10-Q, and the risk 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 Our Industry

We are subject to extensive regulation by the FAA, the DOT, the TSA, CBP and other U.S. and foreign governmental agencies, compliance with which could cause us to incur increased costs and adversely affect our business, results of operations and financial condition.

Airlines are subject to extensive regulatory and legal compliance requirements, both domestically and internationally, that impose significant costs. In the last several years, Congress has passed laws and the FAA, DOT and TSA have issued regulations, orders, rulings and guidance relating to consumer protections and to the operation, safety, and security of airlines that have required significant expenditures. We expect to continue to incur expenses in connection with complying with such laws and government regulations, orders, rulings and guidance. Additional laws, regulations, taxes and increased airport rates and charges have been proposed from time-to-time that could significantly increase the cost of airline operations or reduce the demand for air travel. For example, the DOT has broad authority over airlines and their consumer and competitive practices, and has used this authority to issue numerous regulations and pursue enforcement actions, including rules and fines relating to the handling of lengthy tarmac delays, consumer notice requirements, consumer complaints, price and airline advertising, distribution, oversales and involuntary denied boarding process and compensation, ticket refunds, liability for loss, delay or damage to baggage, customer service commitments, contracts of carriage and the transportation of passengers with disabilities.

For example, the DOT or FAA has pending proposed rulemakings and/or published final rules regarding: the accessibility features of lavatories and onboard wheelchair requirements on certain single-aisle aircraft with an FAA certificated maximum capacity of 125 seats or more, training flight attendants to proficiency on an annual basis to provide assistance in transporting qualified individuals with disabilities to and from the lavatory from the aircraft seat, and providing certain information on request to qualified individuals with a disability or persons inquiring on their behalf, on the carrier’s website, and in printed or electronic form on the aircraft concerning the accessibility of aircraft lavatories; traveling by air with service animals; defining unfair or deceptive practices; clarifying that the maximum amount of denied boarding compensation that a carrier may provide to a passenger denied boarding involuntarily is not limited, prohibiting airlines from involuntarily denying boarding to a passenger after the passenger’s boarding pass has been collected or scanned and the passenger has boarded (subject to safety and security exceptions), raising the liability limits for denied boarding compensation, and raising the liability limit for mishandled baggage in domestic air transportation; enhancing the transparency of airline ancillary service fees; airline ticket refunds and consumer protections; requiring that certain airplanes used to conduct domestic, flag, or supplemental passenger-carrying operations have installed a physical secondary barrier that protects the flightdeck from unauthorized intrusion when the flightdeck door is opened; and flight attendant duty period limitations and rest requirements. In addition, Congress is currently considering FAA Reauthorization legislation which may result in additional rules, regulations, and obligations. Failure to

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remain in full compliance with these and other applicable rules and regulations may subject us to fines or other enforcement action or adversely affect our business, results of operations and financial condition.

Risks Related to Our Business

Major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions, could adversely affect our business, financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. OnFor example, on March 10, 2023, the California Department of Financial Protection and Innovation closed Silicon Valley Bank (“SVB”) and appointed Federal Deposit Insurance Corporation (the “FDIC”) receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. Since that time, there have been reports of instability at other U.S. banks. Although the Federal Reserve Board, the Department of the Treasury and the FDIC have taken steps to ensure that depositors at SVB ~~received~~and Signature Bank can access toall of their funds, ~~uncertainty~~including funds held in uninsured deposit accounts, and ~~liquidity concerns in the broader financial services industry remain. Inflation and rapid increases in interest rates~~ have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. The U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a programtaken additional steps to provide upliquidity to $25 billion of loans to financial institutions secured by such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments. However, widespread demands for customer withdrawals or other ~~needs of financial institutions for immediate liquidity may exceed the capacity of such program. There~~banks, there is no guarantee that, ~~the U.S. Department~~

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~~of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future~~ in the event of the closure of other banks or financial institutions in the future, depositors would be able to access uninsured funds or that they would be able to do so in a timely fashion ~~or at all.~~and uncertainty and liquidity concerns in the broader financial services industry remain. The ultimate outcome of these events, and whether further regulatory actions will be taken, cannot be predicted.

We would face certain risks in the event of a sustained deterioration of financial market liquidity, as well as in the event of sustained deterioration in the liquidity, or failure, of our clearing, cash management and custodial financial institutions. In particular, in the event of a major bank or credit card failure, we could be unable to process credit card transactions. In such a case, or if financial liquidity deteriorates for other reasons, our ability to operate our business and our financial condition and results of operations could be significantly harmed.

~~Lessee defaults could materially adversely affect our business, financial condition and results~~Risks Related to Ownership of ~~operations.~~Our Common Stock

~~Investors should expect some lessees to experience payment difficulties, particularly~~As disclosed, we have identified material weaknesses in ~~difficult economic or operating environments. As a result of their~~our internal control over financial ~~condition and lack of liquidity, lessees may be significantly in arrears in their rental or maintenance payments.~~The airline industry is cyclical, economically sensitive and highly competitive, and our lessees are affected by several factors over which we and they have limited control, including: air passenger demand; changes in fuel costs, interest rates, foreign currency, inflation, labor difficulties, including pilot shortages, wage negotiations or other labor actions; increases in other operating costs, such as increased insurance costs, general economic conditions and governmental regulation and associated fees affecting the air transportation business. In recent years, the airline industry has been substantially impacted by the COVID-19 pandemic. In addition, geopolitical events such as changes in national policy or the imposition of sanctions, including new sanctions, trade barriers or tariffs, as well as events leading to political or economic instability such as war, prolonged armed conflict and acts of terrorism; epidemics, pandemics and natural disasters; availability of financing, including availability of governmental support; and airline financial health may also have an impact. Finally, our lessees may also be affected by aircraft accidents, in particular a loss if the aircraft is damaged or destroyed by an event specifically excluded from insurance policies such as dirty bombs, biohazardous materials and electromagnetic pulsing. These factors could cause our lessees to incur higher costs and to generate lower revenues which could adversely affect their ability to make lease payments or perform their maintenance obligations under the leases. In addition, lease default levels will likely increase over time if economic conditions deteriorate.

We may not correctly assess the credit risk of a lessee or that risk could change over time. We may not be able to charge risk-adjusted lease rates, and lessees may not be able to continue to perform their financial and other obligations under our leases in the future.

Many airlines received lease deferrals or other accommodations during the COVID-19 pandemic and we may agree to deferrals, restructurings and terminations in the ordinary course of our business with lessees in the future. If a lessee delays, reduces, or fails to make lease payments when duereporting and, if we are unable to ~~agree on a lease payment deferral or lease restructuring and we elect to terminate the lease,~~remediate each material weakness, we may not ~~receive all~~be able to accurately or ~~any payments still outstanding. While deferrals generally shift~~timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the ~~timing~~value of ~~payments to a later period, restructurings and terminations generally permanently reduce lease revenue, and the associated reduction in lease revenue could negatively affect~~ our ~~business.~~common stock.

~~In the event~~As disclosed in Part I, Item 4, “Controls and Procedures,” we have identified material weaknesses 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 ~~lessee defaults under~~material misstatement of a ~~lease, any security deposit paid~~company’s annual or ~~letter of credit provided by the lessee may~~interim financial statements will not be prevented or detected on a timely basis. Each control deficiency described below creates a reasonable possibility that a material misstatement to the annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Accordingly, management has concluded that each of these control deficiencies constituted a material weakness as of June 30, 2023. The previously disclosed material weakness relates to management's controls over the accounting for complex, non-routine transactions that 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 ~~cover~~ the ~~lessee’s outstanding or unpaid lease obligations~~purchase of aircraft subject to an existing operating lease. The additional material weakness identified in the quarter ended June 30, 2023, relates to an ineffective risk assessment and ~~required maintenance~~lack of effective controls over the procurement process activities outsourced to a third-party service organization, including the information technology general controls (“ITGCs” over the automation of processing of vendor invoices (i.e., scanning, routing, approving, and ~~transition expenses.~~preparing the recording of invoices) and hosting of related information.

~~Significant costs resulting from lease defaults~~Failure to have effective internal control over financial reporting and disclosure controls and procedures could ~~have~~impair our ability to produce accurate financial statements on a ~~material adverse effect on our business.~~

~~Although we have the right to repossess the aircraft~~timely basis and ~~to exercise other remedies upon a lessee default, repossession of an aircraft would likely~~could lead to ~~significant costs for us. Those costs include legal and other expenses~~a restatement of ~~court or other governmental proceedings, particularly if the lessee is contesting the proceedings, and costs to obtain possession and/or deregistration~~our financial statements. If, as a result of the ~~aircraft~~ineffectiveness of our internal control over financial reporting and ~~flight~~disclosure controls and ~~export permissions. Delays resulting from these proceedings would increase the period~~procedures, we cannot provide reliable financial statements, our business decision processes may be adversely affected, our business and results of ~~time during which the aircraft is not generating revenue. We may incur maintenance, refurbishment or repair costs that a defaulting lessee has failed to incur or pay~~operations could be harmed, and ~~that are necessary to put the aircraft in suitable condition for re-lease, sale, or induction into the~~investors

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~~Company’s fleet. We may also incur storage costs associated with aircraft that we repossess and are unable to sell, induct into~~could lose confidence in our ~~fleet, or place immediately with another lessee. We may be required to pay off liens, claims, taxes and other governmental charges to obtain clear possession,including,~~reported financial information. In addition, in some ~~cases, liens that the lessee might have incurred~~circumstances, failure to maintain effective internal control over financial reporting could result in ~~connection with the operation of its other aircraft. We could also incur other costs in connection with the physical possession of the aircraft.~~investigations or sanctions by regulatory authorities.

WeOur management has implemented a remediation plan to address each material weakness, as described in Part I, Item 4. Such remediation measures may ~~suffer other adverse consequences due~~require additional time and resources and there is no assurance that these initiatives will ultimately have the intended effects. As management continues to ~~a lessee default~~evaluate and ~~the repossession of the aircraft. Our rights upon a lessee default vary significantly depending upon the jurisdiction and~~work to improve our internal control over financial reporting, management may ~~include the need~~determine that additional measures to ~~obtain a court order for repossession of the aircraft and/~~address control deficiencies or consents for deregistration or re-export of the aircraft. When a defaulting lessee is in bankruptcy, protective administration, insolvency or similar proceedings, additional limitations may apply. Certain jurisdictions give rightsmodifications to the ~~trustee in bankruptcy~~remediation plan are necessary. Therefore, we cannot assure you when the Company will remediate such weaknesses, nor can we be certain that additional actions will not be required or ~~a similar officer to assume or reject the lease or to assign it to a third party, or entitle the lessee or another third party to retain possession~~what costs of ~~the aircraft without paying lease rentals or without performing all of the obligations under the lease. There~~any such additional actions may be. In addition, there can be no assurance that ~~jurisdictions~~such remediation efforts will be successful, that ~~have adopted~~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 ~~Cape Town Convention, which provides for uniformity and certainty for repossession~~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 ~~aircraft,~~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 ~~enforce it as written. Our efforts~~be able to ~~repossess our aircraft could be further complicated for lessees~~attest that such internal controls are ~~owned in whole or in part by, or~~effective when they are subsidized by, government-related entities. Accordingly, we may be delayed in, or prevented from, enforcing our rights under a lease and in re-leasing, inducting into our fleet, or selling the affected aircraft.required to do so.

If we ~~repossess an aircraft,~~fail to remediate each material weakness and maintain effective internal control over financial reporting or disclosure controls and procedures, we may not be able to ~~export~~rely on the integrity of our financial results, which could result in inaccurate or ~~deregister and profitably redeploy~~late reporting of our financial results, as well as delays or the ~~aircraft in a timely manner~~inability to meet our reporting obligations or at all. Before an aviation authority will register an aircraft that has previously been registered in another country, it must receive confirmation that the aircraft has been deregistered by that country’s aviation authority. In order to ~~deregister an aircraft, the lessee must~~ comply with ~~applicable laws and regulations, and the relevant governmental authority must enforce these laws~~SEC rules and regulations. For instance, where a lessee or other operator flies only domestic routes in the jurisdiction in which the aircraft is registered, repossession may be more difficult, especially if the jurisdiction permits the lessee or the other operator to resist deregistration. We may also incur significant costs in retrieving or recreating aircraft records required for registrationAny of the aircraft, and in obtaining a certificate of airworthiness for an aircraft. Upon a lessee default, we may incur significant costs in connection with repossessing our aircraft and we may be delayed in repossessing our aircraft or may be unable to obtain possession of our aircraft, whichthese could ~~have a materially adverse impact on our future revenue and cash flows.~~

~~Lessee defaults and reorganizations, bankruptcies or similar proceedings may~~ result in ~~lost revenue~~delisting actions by the Nasdaq Stock Market, investigation and ~~additional costs.~~

From time to time, an airline may seek reorganization or protection from creditors under its local laws or may go into liquidation. Lessees may default on their lease obligations or file for bankruptcy or otherwise seek protection from creditors (collectively referred to as “bankruptcy”). Based on historical rates of airline defaultssanctions by regulatory authorities, stockholder investigations and ~~bankruptcies, it’s possible that we will experience lessee defaults~~lawsuits, and ~~bankruptcies.~~

If a lessee defaults on its lease or files for bankruptcy, the lessee may not make lease payments or may return aircraft to us before the lease expires. If a lessee files for bankruptcy with the intent of reorganizing its business, we may agree to adjust our lease terms, including reducing lease payments by a significant amount. Certain jurisdictions give rights to the trustee in a bankruptcy to assume or reject the lease or to assign it to a third party, or entitle the lessee or another third party to retain possession of the aircraft without paying lease rentals or performing all or some of the obligations under the relevant lease. If one or more airline bankruptcies result in a larger number of aircraft being available for purchase or lease over a short period of time, aircraft values and aircraft lease rates may be depressed, and additional grounded aircraft and lower market values could adversely affect our ~~ability to sell our aircraft or lease or remarket our aircraft at favorable rates or at all.~~

As a result of the time and process involved with lessee reorganizations, bankruptcies or similar proceedings as described above, which can vary by airline and jurisdiction among other factors, we may experience lost revenue and additional costs.

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~~If our lessees encounter financial difficulties and we decide to restructure our leases with those lessees, this could result in less favorable leases and in significant reductions in our cash flow.~~

If a lessee is late in making payments or fails to make payments in full, we may elect to or be required to restructure the lease. Restructuring may involve anything from a simple rescheduling of payments to the termination of a lease without receiving all the past due amounts. If requests for payment restructuring or rescheduling are granted, reduced or deferred rental payments may be payable over all or some part of the remaining term of the lease,business and the ~~terms~~trading price of our common stock. The potential consequences of any revised payment schedules may be unfavorable or such payments may not be made. We may be unable to agree upon acceptable terms for any requested restructurings and as a result may be forced to exercise our remedies under those leases and we may be unable to repossess our aircraft on a timely basis.

~~The terms and conditions of payment restructurings or reschedulings may adversely affect our cash flows.~~

Our lessees may fail to adequately insure our aircraft or fulfill their indemnity obligations, or we may not be able to adequately insure our aircraft, which may result in increased costs and liabilities.

~~When an aircraft is on lease, we do not directly control its operation. Nevertheless, because we hold title to the aircraft, we~~material weakness could be sued or held strictly liable for losses resulting from the operation of such aircraft, or may be held liable for losses on other legal theories or claims may be made against us as the owner of an aircraft requiring us to expend resources in our defense. As a result, we separately purchase contingent liability insurance and contingent hull insurance on all aircraft in our owned fleet. While we believe our insurance is adequate both as to coverages and amounts based on industry standards in the current market, we cannot assure you that we are adequately insured against all risks and in all territories in which our aircraft operate. For example, following the Russia-Ukraine conflict, Russia, Ukraine and Belarus are now generally excluded from coverage in our contingent liability, contingent hull and contingent hull war insurance consistent with insurance market terms available at the time these policies were last renewed.

We also separately require our lessees to obtain specified levels of insurance customary in the aviation industry and indemnify us for, and insure against, liabilities arising out of the lessee’s use and operation of the aircraft. Lessees are also required to maintain all risks hull insurance, all risks property insurance, and war risks hull insurance on the aircraft at agreed upon levels. Lessees may fail to maintain adequate insurance coverage during a lease term, which, although in contravention of the lease terms, could necessitate our taking some corrective action such as terminating the lease or securing insurance for the aircraft. Moreover, even if our lessees retain specified levels of insurance, and indemnify us for, and insure against, liabilities arising out of their use and operation of the aircraft, we cannot assure you that we will not have any liability.

In addition, there are certain risks or liabilities that we or our lessees may face, for which insurers may be unwilling to provide coverage for, or the cost to obtain such coverage may be prohibitively expensive. For example, following the terrorist attacks of September 11, 2001, aviation insurers significantly reduced the amount of insurance coverage available for claims resulting from acts of terrorism, war, dirty bombs, biohazardous materials, electromagnetic pulsing or similar events, and increased the premiums for such third-party war risk and terrorism liability insurance and coverage in general. Similarly, following the Russia-Ukraine conflict, aviation insurers have, in some cases, reduced the scope of insurance coverage provided by policies and increased insurance premiums. Accordingly, our or our lessees’ insurance coverage could be insufficient to cover all claims that could be asserted against us arising from the operation of our aircraft. Inadequate insurance coverage or default by lessees in fulfilling their indemnification or insurance obligations will reduce the proceeds that would be received by us if we are sued and are required to make payments to claimants. Moreover, our lessees’ insurance coverage is dependent on the financial condition of insurance companies, which might not be able to pay claims.

Our or our lessees’ failure to adequately insure our aircraft, or our lessees’ failure to fulfill their indemnity obligations to us, could reduce insurance proceeds otherwise payable to us in certain cases, and may result in increased costs and liabilities for our business.

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~~A lessee’s failure to obtain required licenses, consents and approvals could negatively affect our ability to remarket, sell, or induct such aircraft into our fleet.~~

Airlines are subject to extensive regulation in the jurisdictions in which they are registered and operate. As a result, we expect some of our leases will require licenses, consents or approvals, including consents from governmental or regulatory authorities for certain payments under our leases and for the import, export or deregistration of aircraft. Subsequent changes in applicable law or administrative practice may require additional licenses and consents or result in revocation of prior licenses and consents.

Furthermore, consents needed in connection with our repossession or sale of an aircraft may be withheld. Any of these events could negatively affect our ability to remarket, sell, or induct such aircraft into our fleet.

Events outside of our control, including the threat or realization of epidemic diseases such as the COVID-19 pandemic, natural disasters, terrorist attacks, war or armed hostilities between countries or non-state actors, may adversely affect the financial condition of our lessees and of the aviation industry more broadly, and may ultimately impact our business.

Air travel has historically been disrupted, sometimes severely, by the occurrence of unexpected events outside of our and our lessees’ control. The COVID-19 pandemic has recently impacted air travel and our results of operations. We may still experience other impacts from COVID-19 or another disease, such as weaker demand for used aircraft, lessee defaults, bankruptcies or reorganizations, delays in delivery of aircraft, and increased costs of borrowing. We cannot currently reasonably estimate the extent to which these events will impact our business, results of operations and financial condition.

In addition to the recent COVID-19 pandemic, passenger demand for air travel has also been negatively impacted in the past by other epidemic diseases, such as severe acute respiratory syndrome, bird flu, swine flu, the Zika virus, and Ebola. Future epidemic diseases and other diseases, or the fear of such events, could provoke responses that negatively affect passenger air travel. Air travel has also been disrupted in the past by terrorist attacks, war or armed hostilities between countries or non-state actors, including the fear of such events, and the occurrence of natural disasters and other natural phenomena, such as extreme weather conditions, floods, earthquakes, and volcanic eruptions, which may become more frequent or severe as a result of climate change.

The occurrence of any such event, or multiple such events, could cause our lessees to experience decreased passenger demand, to incur higher costs and to generate lower revenues, which could adversely affect their ability to make lease payments to us, fulfill their maintenance obligations, or to obtain the types and amounts of insurance we require. This, in turn, could lead to lease restructurings and repossessions, impair our ability to remarket or otherwise dispose of aircraft on favorable terms or at all, or reduce the proceeds we receive for our aircraft in a disposition which may ultimately impact our business.

~~Export restrictions and tariffs may impact where we can place and deliver our aircraft and negatively impact our earnings and cash flows.~~

Existing export restrictions impact where we can place and deliver our aircraft. New export restrictions, including those implemented quickly or as a result of geopolitical events, may impact where we can place and deliver our aircraft or the ability of our lessees to operate our aircraft in certain jurisdictions, which may negatively impact our earnings and cash flows. For example, in early 2022, in connection with the ongoing conflict between Russia and Ukraine, the United States, European Union, United Kingdom and others imposed economic sanctions and export controls against certain industry sectors and parties in Russia. These sanctions include closures of airspace for aircraft operated by Russian airlines, bans on the leasing or sale of aircraft to Russian controlled entities, bans on the export and re-export of aircraft and aircraft components to Russian controlled entities or for use in Russia, and corresponding prohibitions on providing technical assistance, brokering services, insurance and reinsurance, as well as financing or financial assistance.

Tariffs can also impact our ability to place and deliver aircraft. Our leases are primarily structured as triple net leases, whereby the lessee is responsible for all operating costs. As a result, increased tariffs will result in a higher cost for imported aircraft that our lessees may not be willing to assume and which could adversely impact

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~~demand for aircraft, creating an oversupply of aircraft and potentially placing downward pressure on lease rates and aircraft market values.~~

For example, in October 2019, the Office of the U.S. Trade Representative announced a 10% tariff on new aircraft imported from Europe, including Airbus aircraft. In March 2020, the tariffs on aircraft were raised to 15%. In November 2020, the E.U. announced a 15% tariff on new aircraft imported into the E.U. from the U.S., including Boeing aircraft. In June 2021, the U.S. and the E.U. agreed to temporarily suspend all retaliatory tariffs related to new aircraft imports for five years.

We cannot predict what further actions may ultimately be taken with respect to export controls, tariffs or trade relations between the U.S. and other countries. Accordingly, it is difficult to predict exactly how, and to what extent, such actions may impact our business, or the business of our lessees or aircraft manufacturers. Any unfavorable government policies on international trade, such as export controls, capital controls or tariffs, may affect the demand for aircraft, increase the cost of aircraft components, delay production, or impact the competitive position of certain aircraft manufacturers. In turn, this may impact where we can place and deliver our aircraft, which may negatively impact our earnings and cash flows.

~~Changes in fuel costs could negatively affect our lessees, and by extension, the demand for our aircraft, which may negatively impact our earnings and cash flows.~~

Historically, fuel prices have fluctuated widely depending primarily on international market conditions, geopolitical and environmental events, and currency exchange rates. The cost of fuel represents a major expense that is not within the control of airlines, and significant increases in fuel costs or hedges that inaccurately assess the direction of fuel costs can adversely affect our and other airlines’ operating results. Due to the competitive nature of the aviation industry, operators may be unable to pass on increases in fuel prices to their customers by increasing fares in a manner that fully offsets increased fuel costs. In addition, operators may not be able to manage this risk by appropriately hedging their exposure to fuel price fluctuations. Airlines that do hedge their fuel costs can also be adversely affected by swift movements in fuel prices if such airlines are required as a result to post cash collateral under hedge agreements. Therefore, if fuel prices materially increase or show significant volatility, our lessees are likely to incur higher costs or generate lower revenues, which may affect their ability to meet their obligations to us. A sustained period of lower fuel costs may also adversely affect regional economies that depend on oil revenue, including those in which certain of our lessees operate. Should changes in fuel costs negatively affect our lessees or demand for our aircraft, our earnings and cash flows may be negatively impacted.

The appreciation of the U.S. dollar could negatively impact our lessees’ ability to honor the terms of their leases, which are denominated in U.S. dollars, and may result in lost revenues and reduced net income.

Lessees are exposed to currency risk due to the fact that they earn revenues in their local currencies while a significant portion of their liabilities and expenses are denominated in U.S. dollars, including their lease payments to us, as well as fuel, debt service, and other expenses. The ability of our lessees to make lease payments to us in U.S. dollars may be adversely impacted in the event of an appreciating U.S. dollar. This is particularly true for non-U.S. airlines whose operations are primarily domestic. Shifts in foreign exchange rates can be significant, are difficult to predict, and can occur quickly as evidenced by the significant appreciation of the U.S. dollar in 2022. Should our lessees be unable to honor the terms of their leases due to the appreciation of the U.S. dollar, we may experience lost revenues and reduced net income.

~~Income and other taxes could negatively affect our business and operating results due to our multi-jurisdictional operations.~~

We operate in multiple jurisdictions and may become subject to a wide range of income and other taxes. If we are unable to execute our business in jurisdictions with favorable tax treatment, our operations may be subject to significant income and other taxes. Moreover, as our aircraft are operated by our lessees in multiple jurisdictions, we may have nexus or taxable presence as a result of our aircraft landings in various jurisdictions. Such landings may result in us being subject to various taxes in such jurisdictions. Further, any changes in tax laws in any of the jurisdictions that subject us to income or other taxes, such as increases in tax rates or

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~~limitations on our ability to deduct certain expenses from taxable income, such as depreciation expense and interest expense, could materially affect our tax obligations and effective tax rate.~~

~~Environmental, social and governance (“ESG”) matters may impose additional costs and expose us to new risks.~~

Public ESG and sustainability reporting is becoming more broadly expected by investors, shareholders, regulatory agencies and other third parties. Certain organizations that provide corporate governance and other corporate risk information to investors have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or “sustainability” metrics. Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a reputational or other factor in making an investment decision. In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve ESG disclosure or performance and may also make voting decisions, or take other actions, to hold these companies and their boards of directors accountable. We may also face reputational damage in the event our corporate responsibility initiatives or objectives do not meet the standards set by our investors, shareholders, lawmakers, listing exchanges or other constituencies, or if we are unable to achieve an acceptable ESG or sustainability rating from third party rating services.

~~Risks and requirements related to transacting business in foreign countries may result in increased liabilities, including penalties and fines as well as reputational harm.~~

Our international business exposes us to trade and economic sanctions and other restrictions imposed by the United States or other governments or organizations. The U.S. Departments of Justice, Commerce, State and Treasury, and other foreign authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the Foreign Corrupt Practices Act (“FCPA”) and other federal statutes and regulations, including the International Traffic in Arms Regulations and those established by the Office of Foreign Assets Control (“OFAC”), and similar or more restrictive foreign laws, rules and regulations, which may also apply to us. Under these laws and regulations, the government may require export licenses, or impose restrictions that would require modifications to business practices, including cessation of business activities in sanctioned countries or with sanctioned persons or entities, and modifications to compliance programs, which may increase compliance costs. Failure to implement changes may subject us to fines, penalties and other sanctions.

We have in place Company policies related to FCPA, OFAC, export controls and similar laws and regulations, but we cannot assure you that our employees, consultants, sales agents, or associates will not engage in unlawful conduct for which we may be held responsible or that our business partners will not engage in conduct that could affect their ability to perform their contractual obligations and result in our being held liable for such conduct. Violation of laws or regulations may result in increased liabilities including penalties and fines as well as reputational harm.

The Company’s business has been, and in the future may again be, materially and adversely impacted by extreme weather events. An inability to quickly and effectively restore operations following adverse weather or a localized disaster or disturbance in a key geography has adversely and materially impacted, and in the future could again adversely and materially impact, the Company’s business, results of operations, and financial condition.

Depending on location, the Company’s assets, including aircraft on lease, and route network are or could be exposed to ongoing risks arising from a variety of adverse weather conditions or localized natural or manmade disasters such as earthquakes, volcanoes, wildfires, hurricanes, tropical storms, tornadoes, floods, sea-level rise, severe winter weather, sustained or extreme cold or heat, drought, or other disturbances, actual or threatened. Extreme weather conditions, including increases in the frequency, severity, or duration of severe weather events (whether or not caused by anthropogenic climate change), can disrupt air travel from time to time, ground planes, damage equipment and increase maintenance costs, cause delays and cancellations or other network disruptions, require implementation of weight limitations due to increased temperatures, increase turbulence-related injuries, cause increases in fuel consumption to avoid such weather, disrupt the Company’s

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supply chains (including fuel, parts, and service provider disruptions), and otherwise adversely affect the Company’s assets, operations, and infrastructure. These events can decrease revenue, increase costs, and adversely impact the Company’s financial condition. Prolonged interruptions or disruptions at airports can and do also adversely impact the Company’s business and results of operations. The Company also may incur significant costs to reestablish or relocate affected business functions, aircraft, and employees. Moreover, any resulting economic dislocations could adversely affect demand for the Company’s services, resulting in anmaterial adverse effect on our business, results of operations and financial condition.

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

The following table summarizes the Company's repurchases of Common Stock for the quarter ended ~~March 31,~~June 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 ~~and~~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 $50,000 stock 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
January 1-31, 2023 480,932 $ — (1) 480,932 $ 25,000
February 1-28, 2023 750,406 19.75 750,000 10,188
March 1-31, 2023 — — — —
Total 1,231,338 $ — 1,230,932 $ 10,188


	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 (1)
April 1-30, 2023	—	$	—	—	$	—
May 1-31, 2023	374,103	17.77		374,103	3,538
June 1-30, 2023	42,648	18.27		42,648	2,759
Total	416,751	$	17.82	416,751	$	2,759

~~_________________________~~__________________________


(1)Subsequent to June 30, 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 to $32,759.			During the fourth quarter of 2022, the 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 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.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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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 June 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

Eric Levenhagen, Senior Vice President and Chief Human Resources Officer

Adoption

May 3, 2023

April 30, 2024

(119,037)

Gregory Mays, Executive Vice President and Chief Operating Officer

Termination

May 3, 2023

December 29, 2023

(262,559)

Gregory Mays, Executive Vice President and Chief Operating Officer

Adoption

May 5, 2023

December 29, 2023

(200,000)

Erin Rose Neale, General Counsel and Senior Vice President

Termination

June 2, 2023

April 1, 2024

(23,436)

Erin Rose Neale, General Counsel and Senior Vice President

Adoption

June 5, 2023

April 5, 2024

(10,184)

Grant Whitney, Senior Vice President and Chief Revenue Officer

Adoption

May 5, 2023

April 2, 2024

(142,463)

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ITEM 6. EXHIBITS

(a)Exhibits


10.1*10.1			Employment ~~Letter,~~Agreement, dated as of ~~July 5, 2022,~~April 11, 2023, by and between Jude Bricker and Sun Country, Inc. (incorporated by reference to Exhibit 10.1 to Sun Country Airlines Holdings, Inc.'s Current Report on Form 8-K filed with the Securities and ~~Rose Neale~~Exchange Commission on May 12, 2023)

10.2*10.2			~~Term Loan Facility~~Employment Agreement, dated as of ~~March 21,~~April 11, 2023, by and ~~among~~between David Davis and Sun Country, Inc. (incorporated by reference to Exhibit 10.2 to Sun Country Airlines Holdings, Inc.~~, Sun Country, Inc. (D/B/A Sun Country Airlines),~~'s Current Report on Form 8-K filed with the ~~lenders party thereto~~Securities and ~~UMB Bank, National Association, as facility agent, security trustee and account bank~~Exchange Commission on May 12, 2023)

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 ~~March 31,~~June 30, 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 ~~March 31,~~June 30, 2023

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 ~~March 31,~~June 30, 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

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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)

~~April 28,~~August 4, 2023

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