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 ~~June 30, 2023~~March 31, 2024


☐			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 ~~June 30, 2023:~~March 31, 2024:

Common Stock, $0.01 par value – ~~56,012,229~~52,611,323 shares outstanding

Table of Contents

Sun Country Airlines Holdings, Inc.

Form 10-Q

Table of Contents


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

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

1

1

1	1	Basis of Presentation		9	Basis of Presentation		9
2	2	Revenue		9	2	Revenue		9
3	3	Earnings per Share		12	3	Earnings per Share		12
4	4	Aircraft		13	4	Aircraft		13
5	5	Asset Acquisitions		14	5	Debt		14
6	6	Debt		15	6	Investments		16
7	7	Stock-Based Compensation		17	7	Fair Value Measurements		16
8	8	Investments		18	8	Income Taxes		17
9	9	Fair Value Measurements		18	9	Stockholders' Equity		17
10	10	Income Taxes		19	10	Commitments and Contingencies		18
11	11	Stockholders' Equity		19	11	Operating Segments		19
12	12	Commitments and Contingencies		20	12	Subsequent Events		19
13		Operating Segments		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
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			23	20
Item 3. Quantitative and Qualitative Disclosures About Market Risk	Item 3. Quantitative and Qualitative Disclosures About Market Risk			47	Item 3. Quantitative and Qualitative Disclosures About Market Risk			37
Item 4. Controls and Procedures	Item 4. Controls and Procedures			47	Item 4. Controls and Procedures			37

Part II. Other Information	Part II. Other Information
Part II. Other Information
Part II. Other Information
Item 1. Legal Proceedings
Item 1. Legal Proceedings
Item 1. Legal Proceedings	Item 1. Legal Proceedings			50	38
Item 1A. Risk Factors	Item 1A. Risk Factors			50	Item 1A. Risk Factors			38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			52	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			38
Item 3. Defaults Upon Senior Securities	Item 3. Defaults Upon Senior Securities			52	Item 3. Defaults Upon Senior Securities			38
Item 4. Mine Safety Disclosures	Item 4. Mine Safety Disclosures			53	Item 4. Mine Safety Disclosures			38
Item 5. Other Information	Item 5. Other Information			53	Item 5. Other Information			39
Item 6. Exhibits	Item 6. Exhibits			54	Item 6. Exhibits			40

Signatures	Signatures			55
Signatures
Signatures								41

-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)


		June 30, 2023		December 31, 2022
		(Unaudited)
	March 31, 2024					March 31, 2024	December 31, 2023
	(Unaudited)
ASSETS
ASSETS
ASSETS	ASSETS

Current Assets:	Current Assets:

Current Assets:

Current Assets:
Cash and Cash Equivalents
Cash and Cash Equivalents
Cash and Cash Equivalents	Cash and Cash Equivalents	$	86,930	$	92,086
Restricted Cash	Restricted Cash	7,281		10,842
Investments	Investments	158,177		178,936
Accounts Receivable, net of an allowance for credit losses of $241 and $231, respectively		26,937		35,124
Accounts Receivable, net of an allowance for credit losses of $39 and $17, respectively
Short-term Lessor Maintenance Deposits	Short-term Lessor Maintenance Deposits	999		1,241
Inventory, net of a reserve for obsolescence of $1,190 and $1,107, respectively		7,365		7,659
Inventory, net of a reserve for obsolescence of $753 and $977, respectively
Prepaid Expenses	Prepaid Expenses	12,209		11,423
Other Current Assets	Other Current Assets	2,365		8,179
Total Current Assets	Total Current Assets	302,263		345,490

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

Other Assets:	Other Assets:
Other Assets:
Other Assets:
Goodwill	Goodwill	222,223		222,223
Other Intangible Assets, net of accumulated amortization of $21,325 and $18,890, respectively		86,416		85,110
Goodwill
Goodwill
Other Intangible Assets, net of accumulated amortization of $25,622 and $24,190, respectively
Operating Lease Right-of-use Assets	Operating Lease Right-of-use Assets	18,715		22,182
Aircraft Deposits	Aircraft Deposits	9,614		9,134
Long-term Lessor Maintenance Deposits	Long-term Lessor Maintenance Deposits	38,310		32,433
Deferred Tax Asset		—		12,956
Other Assets	Other Assets	9,021		9,217
Total Other Assets	Total Other Assets	384,299		393,255
Total Assets	Total Assets	$	1,634,623	$	1,524,412

See accompanying Notes to Condensed Consolidated Financial Statements

-3-

Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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


		June 30, 2023		December 31, 2022
		(Unaudited)
	March 31, 2024					March 31, 2024	December 31, 2023
	(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:	Current Liabilities:

Current Liabilities:

Current Liabilities:
Accounts Payable
Accounts Payable
Accounts Payable	Accounts Payable	$	56,143	$	62,370
Accrued Salaries, Wages, and Benefits	Accrued Salaries, Wages, and Benefits	30,095		26,521
Accrued Transportation Taxes	Accrued Transportation Taxes	15,488		17,666
Air Traffic Liabilities	Air Traffic Liabilities	130,264		157,995
Finance Lease Obligations	Finance Lease Obligations	33,641		17,990
Loyalty Program Liabilities	Loyalty Program Liabilities	8,962		13,963
Operating Lease Obligations	Operating Lease Obligations	4,485		6,296
Current Maturities of Long-term Debt, net	Current Maturities of Long-term Debt, net	83,204		57,548
Income Tax Receivable Agreement Liability	Income Tax Receivable Agreement Liability	8,000		2,260
Other Current Liabilities	Other Current Liabilities	12,973		14,519
Total Current Liabilities	Total Current Liabilities	383,255		377,128

Long-term Liabilities:	Long-term Liabilities:
Long-term Liabilities:
Long-term Liabilities:
Finance Lease Obligations
Finance Lease Obligations
Finance Lease Obligations	Finance Lease Obligations	223,647		233,306
Loyalty Program Liabilities	Loyalty Program Liabilities	4,694		1,474
Operating Lease Obligations	Operating Lease Obligations	18,264		19,836
Long-term Debt, net	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	93,020		101,540
Other Long-term Liabilities	Other Long-term Liabilities	2,411		3,729
Total Long-term Liabilities	Total Long-term Liabilities	710,603		654,572
Total Liabilities	Total Liabilities	1,093,858		1,031,700

Commitments and Contingencies (see Note 12)
Commitments and Contingencies (see Note 10)
Commitments and Contingencies (see Note 10)
Commitments and Contingencies (see Note 10)

Stockholders' Equity:	Stockholders' Equity:
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		—		—
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)
Stockholders' Equity:
Stockholders' Equity:
Common stock, with $0.01 par value, 995,000,000 shares authorized, 58,954,329 and 58,878,723 issued and 52,611,323 and 53,291,001 outstanding at March 31, 2024 and December 31, 2023, respectively
Common stock, with $0.01 par value, 995,000,000 shares authorized, 58,954,329 and 58,878,723 issued and 52,611,323 and 53,291,001 outstanding at March 31, 2024 and December 31, 2023, respectively
Common stock, with $0.01 par value, 995,000,000 shares authorized, 58,954,329 and 58,878,723 issued and 52,611,323 and 53,291,001 outstanding at March 31, 2024 and December 31, 2023, respectively
Preferred stock, with $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
Treasury stock, at cost, 6,343,006 and 5,587,722 shares held at March 31, 2024 and December 31, 2023, respectively
Additional Paid-In Capital	Additional Paid-In Capital	507,522		488,494
Retained Earnings	Retained Earnings	80,994		22,048
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss	(664)		(807)
Total Stockholders' Equity	Total Stockholders' Equity	540,765		492,712
Total Liabilities and Stockholders' Equity	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 June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
	Three Months Ended March 31,										Three Months Ended March 31,
	2024									2024		2023
Operating Revenues:	Operating Revenues:
Passenger
Passenger
Passenger	Passenger	$	227,866	$	195,362	$	495,135	$	397,394
Cargo	Cargo	25,017		21,190		48,378		42,243
Other	Other	8,203		2,515		11,688		5,954
Total Operating Revenues	Total Operating Revenues	261,086		219,067		555,201		445,591

Operating Expenses:	Operating Expenses:
Operating Expenses:
Operating Expenses:
Aircraft Fuel
Aircraft Fuel
Aircraft Fuel	Aircraft Fuel	52,360		76,947		124,650		141,492
Salaries, Wages, and Benefits	Salaries, Wages, and Benefits	75,919		60,298		151,349		119,915
Aircraft Rent	Aircraft Rent	779		2,211		2,259		5,397
Maintenance	Maintenance	15,942		12,782		28,981		24,777
Sales and Marketing	Sales and Marketing	8,507		7,881		18,436		16,509
Depreciation and Amortization	Depreciation and Amortization	22,355		16,854		41,815		32,182
Ground Handling	Ground Handling	11,311		8,212		22,349		16,170
Landing Fees and Airport Rent	Landing Fees and Airport Rent	12,962		9,496		25,013		19,782
Other Operating, net	Other Operating, net	25,364		21,017		48,979		44,166
Total Operating Expenses	Total Operating Expenses	225,499		215,698		463,831		420,390
Operating Income	Operating Income	35,587		3,369		91,370		25,201

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

Income (Loss) Before Income Tax		26,750		(4,843)		76,432		1,576
Income Tax Expense (Benefit)		6,132		(921)		17,486		1,861
Net Income (Loss)		$	20,618	$	(3,922)	$	58,946	$	(285)
Income Before Income Tax
Income Before Income Tax
Income Before Income Tax
Income Tax Expense
Net Income

Net Income (Loss) per share to common stockholders:
Net Income per share to common stockholders:
Net Income per share to common stockholders:
Net Income per share to common stockholders:
Basic
Basic
Basic	Basic	$	0.37	$	(0.07)	$	1.05	$	0.00
Diluted	Diluted	$	0.35	$	(0.07)	$	0.99	$	0.00
Shares used for computation:	Shares used for computation:
Basic	Basic	56,084,759		58,060,716		56,364,170		57,984,608
Basic
Basic
Diluted	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 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)


	Three Months Ended March 31,
	2024		2023
Net Income	$	35,313	$	38,328

Other Comprehensive (Loss) Income:
Net unrealized (losses) gains on Available-for-Sale securities, net of deferred tax (benefit) expense of $(42) and $116, respectively	(139)		389
Other Comprehensive (Loss) Income	(139)		389
Comprehensive Income	$	35,174	$	38,717

See accompanying Notes to Condensed Consolidated Financial Statements

-6-

Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in thousands, except share amounts)

(Unaudited)

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

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


	Three Months Ended March 31, 2024
	Warrants	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total
		Shares	Amount		Shares	Amount
December 31, 2023	3,224,093	58,878,723	$	589	5,587,722	$	(94,341)	$	513,988	$	94,229	$	(62)	$	514,403
Stock Issued for Stock-Based Awards	—	75,606	1		—	—		110		—		—		111
Net Income	—	—	—		—	—		—		35,313		—		35,313
Common Stock Repurchases	—	—	—		755,284	(11,596)		—		—		—		(11,596)
Amazon Warrants	189,652	—	—		—	—		1,400		—		—		1,400
Stock-based Compensation	—	—	—		—	—		1,514		—		—		1,514
Other Comprehensive Income	—	—	—		—	—		—		—		(139)		(139)
March 31, 2024	3,413,745	58,954,329	$	590	6,343,006	$	(105,937)	$	517,012	$	129,542	$	(201)	$	541,006


	Three Months Ended March 31, 2023
	Warrants	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total
		Shares	Amount		Shares	Amount
December 31, 2022	2,402,268	58,217,647	$	582	892,409	$	(17,605)	$	488,494	$	22,048	$	(807)	$	492,712
Stock Issued for Stock-Based Awards	—	147,105	2		—	—		554		—		—		556
Net Stock Settlement of Stock-Based Awards	—	—	—		406	(8)		—		—		—		(8)
Net Income	—	—	—		—	—		—		38,328		—		38,328
Common Stock Repurchases	—	—	—		1,230,932	(22,549)		7,501		—		—		(15,048)
Amazon Warrants	189,652	—	—		—	—		1,400		—		—		1,400
Stock-based Compensation	—	—	—		—	—		2,678		—		—		2,678
Other Comprehensive Income	—	—	—		—	—		—		—		389		389
March 31, 2023	2,591,920	58,364,752	$	584	2,123,747	$	(40,162)	$	500,627	$	60,376	$	(418)	$	521,007

See accompanying Notes to Condensed Consolidated Financial Statements

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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

Six Months Ended June 30,

2023

2022

Net Income (Loss)

58,946

(285)

Adjustments to reconcile Net Income (Loss) to Cash from Operating Activities:

Three Months Ended March 31,

2024

Net Income

Adjustments to reconcile Net Income to Cash from Operating Activities:

Depreciation and Amortization

41,815

32,182

Deferred Income Taxes

16,269

1,861

Deferred Income Taxes

Other, net

11,677

18,356

Changes in Operating Assets and Liabilities:

Accounts Receivable

9,199

(8,023)

Inventory

(1,012)

(1,184)

Inventory

Prepaid Expenses

(780)

(7,733)

Lessor Maintenance Deposits

(5,635)

(7,356)

Lessor Maintenance Deposits

Aircraft Deposits

(427)

(1,720)

Other Assets

1,269

Other Assets

Accounts Payable

(2,744)

15,692

Accrued Transportation Taxes

(2,178)

1,813

Accrued Transportation Taxes

Air Traffic Liabilities

(27,731)

5,396

Loyalty Program Liabilities

(1,781)

(3,113)

Loyalty Program Liabilities

Operating Lease Obligations

(2,999)

(5,698)

Other Liabilities

1,805

(3,146)

Other Liabilities

Net Cash Provided by Operating Activities

95,693

37,060

Cash Flows from Investing Activities:

Purchases of Property & Equipment

(192,352)

(137,647)

Purchases of Investments

(49,437)

(71,629)

Purchases of Investments

Proceeds from the Maturities of Investments

71,795

—

Other, net

1,953

10,315

Other, net

Net Cash Used in Investing Activities

(168,041)

(198,961)

Cash Flows from Financing Activities:

Common Stock Repurchases

(22,249)

—

Proceeds from Borrowings

119,200

172,507

Proceeds from Borrowings

Repayment of Finance Lease Obligations

(8,671)

(24,293)

Repayment of Borrowings

(21,808)

(86,046)

Repayment of Borrowings

Other, net

(2,841)

(1,062)

Net Cash Provided by Financing Activities

63,631

61,106

Other, net

Net Cash Provided by (Used in) Financing Activities

Net Decrease in Cash, Cash Equivalents and Restricted Cash

(8,717)

(100,795)

Cash, Cash Equivalents and Restricted Cash--Beginning of the Period

102,928

317,785

Cash, Cash Equivalents and Restricted Cash--Beginning of the Period

Cash, Cash Equivalents and Restricted Cash--End of the Period

94,211

216,990

Non-cash transactions:

Aircraft and Flight Equipment Acquired through Finance Leases

—

19,928

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

—

19,083

Non-cash transactions:

Aircraft Acquired under Finance Lease

The following provides a reconciliation of Cash, Cash Equivalents and Restricted Cash to the amounts reported on the Condensed Consolidated Balance Sheets:

June 30, 2023

June 30, 2022

The following provides a reconciliation of Cash, Cash Equivalents and Restricted Cash to the amounts reported on the Condensed Consolidated Balance Sheets:

March 31, 2024

Cash and Cash Equivalents

86,930

212,858

Restricted Cash

7,281

4,132

Restricted Cash

Total Cash, Cash Equivalents and Restricted Cash

94,211

216,990

Total Cash, Cash Equivalents and Restricted Cash

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~~2023 as filed with the SEC ("~~2022~~2023 10-K"). Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the unaudited Condensed Consolidated Financial Statements for the interim periods presented. The Company reclassified certain prior period amounts to conform to the current period presentation. All material intercompany balances and transactions have been eliminated in consolidation.

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

~~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 ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 are not necessarily indicative of operating results for ~~future quarters~~other interim periods or for the full year ending December 31, ~~2023.~~2024.

2. REVENUE

Sun Country is a certificated air carrier generating Operating Revenues from Scheduled ~~service,~~Service, Charter, ~~service,~~ Ancillary, Cargo and Other revenue. Scheduled ~~service~~Service revenue mainly consists of base fares. Charter ~~service~~ revenue is primarily generated through service provided to the U.S. Department of Defense ("DoD"), 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~~other fees and on-board sales. Cargo consists of revenue earned from flying cargo aircraft for Amazon.com Services, Inc. (together with its affiliates, “Amazon”) under the 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. The Company recognized $9,275 of rental revenue during the three months ended March 31, 2024. The rental revenue was not material to the Company's results of operations for the three months ended March 31, 2023.

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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)

The significant categories comprising Operating Revenues are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
	Three Months Ended March 31,										Three Months Ended March 31,
	2024									2024		2023
Scheduled Service	Scheduled Service	$	111,467	$	108,412	$	264,124	$	232,479
Charter Service		49,626		42,749		95,813		75,628
Charter
Ancillary	Ancillary	66,773		44,201		135,198		89,287
Passenger	Passenger	227,866		195,362		495,135		397,394
Cargo	Cargo	25,017		21,190		48,378		42,243
Other	Other	8,203		2,515		11,688		5,954
Total Operating Revenues	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 United States 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 June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
	Three Months Ended March 31,										Three Months Ended March 31,
	2024									2024		2023
Domestic	Domestic	$	251,582	$	211,012	$	526,071	$	419,851
Latin America	Latin America	9,451		8,014		28,555		25,634
Other	Other	53		41		575		106
Total Operating Revenues	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 contract liabilities are comprised of: 1) ticket sales for transportation that ~~has~~have 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:


		June 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Contract Assets	Contract Assets
Costs to fulfill contract with Amazon
Costs to fulfill contract with Amazon
Costs to fulfill contract with Amazon	Costs to fulfill contract with Amazon	$	1,855	$	2,195
Total Contract Assets	Total Contract Assets	$	1,855	$	2,195

Contract Liabilities	Contract Liabilities
Contract Liabilities
Contract Liabilities
Air Traffic Liabilities
Air Traffic Liabilities
Air Traffic Liabilities	Air Traffic Liabilities	$	130,264	$	157,995
Loyalty Program Liabilities	Loyalty Program Liabilities	13,656		15,437
Amazon Deferred Up-front Payment	Amazon Deferred Up-front Payment	2,764		3,271
Total Contract Liabilities	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 ~~six~~three months ended ~~June 30, 2023, $146,904~~March 31, 2024, $128,502 of revenue was recognized in Passenger revenue that was included in the Air Traffic Liabilities as of December 31, ~~2022.~~2023.

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
	2024					2024	2023
Balance – January 1	Balance – January 1	$	15,437	$	19,718
Loyalty Points Earned	Loyalty Points Earned	4,262		3,471
Loyalty Points Redeemed (1)	Loyalty Points Redeemed (1)	(6,043)		(6,585)
Balance – June 30		$	13,656	$	16,604
Balance – March 31

______________________


(1)			Loyalty points are combined in one homogenous pool, 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)

3. EARNINGS PER SHARE

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


		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
	Three Months Ended March 31,										Three Months Ended March 31,
	2024									2024		2023
Numerator:	Numerator:
Net Income (Loss)		$	20,618	$	(3,922)	$	58,946	$	(285)
Net Income
Net Income
Net Income

Denominator:	Denominator:
Denominator:
Denominator:
Weighted Average Common Shares Outstanding - Basic
Weighted Average Common Shares Outstanding - Basic
Weighted Average Common Shares Outstanding - Basic	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)	3,627,289		��		3,265,838		—
Weighted Average Common Shares Outstanding - Diluted	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	$	0.37	$	(0.07)	$	1.05	$	0.00
Basic earnings per share
Basic earnings per share
Diluted earnings per share	Diluted earnings per share	$	0.35	$	(0.07)	$	0.99	$	0.00

______________________


(1)			There were ~~3,051,025~~2,778,194 and ~~3,372,527~~3,117,544 performance-based stock options outstanding at ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. As of ~~June 30,~~March 31, 2024 and 2023, 100% and 43% of the performance-based stock options ~~have vested.~~had vested, respectively. As of ~~June 30, 2022, 74%~~March 31, 2023, 64% of the performance-based stock options were expected to vest.

~~Due to the Net Loss there were 3,529,406 and 3,676,847~~The Company has excluded 4,230,975 of stock options, ~~restricted stock units,~~RSUs and ~~vested~~ warrants ~~for the three and six months ended June 30, 2022, respectively,~~ that ~~were not included in the computation of~~would have had an anti-dilutive effect on its diluted earnings per share ~~due to their anti-dilutive effect.~~calculation for the three months ended March 31, 2024. The Company's anti-dilutive shares for ~~all other periods presented~~the three months ended March 31, 2023 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)

4. AIRCRAFT

As of ~~June 30, 2023,~~March 31, 2024, Sun Country's fleet consisted of 6063 Boeing 737-NG aircraft, comprised of 5458 Boeing 737-800s and five Boeing ~~737-900ERs and one Boeing 737-700.~~737-900ERs.

The following tables summarize the Company’s aircraft fleet activity for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively:


		December 31, 2022	Additions	Reclassifications	Removals	June 30, 2023
	December 31, 2023								December 31, 2023		Additions		Reclassifications		Removals			March 31, 2024
Passenger:	Passenger:
Owned	Owned	29	1	—	—	30
Finance leases (1)		11	—	1	—	12
Owned
Owned								29		1		—		—		30
Finance leases							Finance leases	13		1		—		—			14
Sun Country Airlines’ Fleet							Sun Country Airlines’ Fleet	42		2		—		—			44
Cargo:
Aircraft Operated for Amazon
Aircraft Operated for Amazon
Aircraft Operated for Amazon								12		—		—		—			12
Other:
Owned Aircraft Held for Operating Lease
Owned Aircraft Held for Operating Lease
Owned Aircraft Held for Operating Lease								5		—		—		—			5
Subleased Aircraft (1)							Subleased Aircraft (1)	1		1		—		—			2
Total Aircraft							Total Aircraft	60		3		—		—			63

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

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


(1)			~~One aircraft operating~~The head lease ~~was reclassified into a~~associated with these subleases are classified as 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.leases.

During the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, the Company acquired ~~five 737-900ERs that are currently on~~one incremental aircraft and took control of two aircraft through finance lease arrangements, one of which was subsequently subleased to an unaffiliated airline ~~("Aircraft Held for Operating Lease"). The five~~through the fourth quarter of 2024. Upon expiry of the sublease, the aircraft will be redelivered to the Company and is expected to be inducted into the Company's passenger fleet. Of the 35 Owned aircraft and Owned Aircraft Held for Operating Lease as of March 31, 2024, 31 aircraft were financed ~~through a term loan arrangement. See~~ ~~Note 5~~ ~~of these Condensed Consolidated Financial Statements for more information on this transaction. Additionally, during the six months ended June 30, 2023,~~and four aircraft were unencumbered. Subsequent to March 31, 2024, the Company ~~acquired an incremental aircraft and executed a lease amendment to purchase~~purchased one aircraft ~~at the end of its~~previously classified as a finance lease, term. An additional aircraft purchase amendment was executed subsequent to June 30, 2023. The lease amendments modified the classification of these leases from operating leases to finance leases and have expiration dates in fiscal year 2024. Of the 35 Owned aircraftwhich is now unencumbered.

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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)

~~and~~During the three months ended March 31, 2023, the Company acquired three 737-900ERs that are currently on lease to an unaffiliated airline ("Owned Aircraft Held for Operating Lease"). The Owned Aircraft Held for Operating Lease ~~as of June 30, 2023, 31 were~~are 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 and retired one aircraft. Further, the Company purchased an aircraft previously classified as a finance lease using proceeds of 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~~term loan arrangement. See Note 6 within Part II, Item 8 in ~~fiscal year 2030.~~our 2023 10-K for more information on this transaction.

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


				Three Months Ended June 30,				Six Months Ended June 30,
			Three Months Ended March 31,													Three Months Ended March 31,
Aircraft Status	Aircraft Status	Expense Type		2023		2022		2023		2022		Aircraft Status	Expense Type	2024	2023
Owned	Owned	Depreciation		$	14,443	$	10,175	$	26,315	$	18,848
Finance Leased	Finance Leased	Amortization		4,875		4,044		9,558		8,113
Operating Leased	Operating Leased	Aircraft Rent (1)		779		2,211		2,259		5,397
				$	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.

5. ~~ASSET ACQUISITIONS~~

During the six months ended June 30, 2023, the Company acquired five Aircraft Held for Operating Lease. The table below reflects the cumulative balances of the five aircraft as of the acquisition dates:

~~Asset~~

~~Balance Sheet Classification~~

~~Aircraft Held for Operating Lease~~

~~Aircraft and Flight Equipment Held for Operating Lease~~

~~114,628~~

~~Maintenance Rights Asset~~

~~Aircraft and Flight Equipment Held for Operating Lease~~

~~39,533~~

~~Over-Market Asset~~

~~Other Intangible Assets, net~~

~~3,741~~

~~Total~~

~~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.

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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)~~

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

~~Aircraft Held for Operating Lease~~

The Company obtained outright ownership of the Aircraft Held for Operating Lease upon purchase and assumed the position of lessor until the end of the lease terms. The Company is entitled to fixed payments over the remaining lease term for each aircraft, which expire at various dates between the fourth quarter of 2024 and the fourth quarter of 2025. On each lease expiry date, the Aircraft Held for Operating Lease will be redelivered to Sun Country and are expected to be inducted into the Company’s fleet. The rental revenue associated with the Aircraft Held for Operating Lease is recognized as it is earned and is included in Other revenue. The Company has recognized $5,871 of rental revenue during the six months ended 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 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 aircraft, which range from 1.4-2.4 years as of June 30, 2023. The amortization will be recognized as contra-revenue, offsetting the rental revenue associated with the Aircraft Held for Operating Lease included in Other revenue.

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 “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)~~$87,700 and minimum liquidity, as defined within the Credit Agreement, of $30,000 at the close of any business day. The Company was in compliance with these covenants as of ~~June 30, 2023.~~March 31, 2024.

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~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

~~During 2021, the Company drew $80,500 on~~Due to previous transactions which utilized the DDTL ~~to purchase six aircraft, which were previously under operating leases. During 2022,~~and 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,~~subsequent repayment, no amounts under the DDTL were available to the Company as of June 30, 2023. The Company recorded a $1,557 loss on extinguishment of debt in 2022 in connection with the repayment of the DDTL, which represents the write-off of the unamortized deferred financing costs.March 31, 2024. As of ~~June 30, 2023,~~March 31, 2024, the Company had ~~$24,650~~$24,393 of financing available through the Revolving Credit Facility, as ~~$350~~$607 had been pledged to support ~~a letter~~letters of credit.

Long-term Debt

Term Loan Credit Facility

During the ~~six~~three months ended ~~June 30,~~March 31, 2023, the Company executed a term loan credit facility with a face amount of $119,200 for the purpose of financing the five Owned Aircraft Held for Operating Lease. The loan is ~~to be~~ repaid monthly ~~over 7 years.~~through March 2030. During the lease term, payments collected from the lessee ~~will be~~are applied directly to the repayment of principal and interest on the term loan credit facility. The Owned Aircraft Held for Operating Lease, as well as the related lease payments received from the lessee, are pledged as collateral. ~~During the six months ended June 30, 2023, the Company recorded $1,820 in debt issuance costs associated with the term loan credit facility.~~

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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)

probable that a principal prepayment will be required in order to reduce the LTV ratio to 75%, and such amount can be reasonably estimated, the estimated principal prepayment amount will be reclassified from Long-term Debt, net to Current Maturities of Long-term Debt, net on the Company's Condensed Consolidated Balance Sheets. In the event a principal prepayment is required, amounts received under the end of lease maintenance compensation clause ~~may~~will be applied towards any prepayment obligation. No amounts related to an estimated principal prepayment have been reclassified from Long-term Debt, net to Current Maturities of Long-term Debt, net on the ~~LTV payment.~~Company's Condensed Consolidated Balance Sheets as of March 31, 2024.

Pass-Through Trust Certificates

During March 2022, the Company arranged for the issuance of ~~the 2022-1 EETC~~Class A and Class B certificates (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%~~5.05% as of ~~June 30, 2023.~~March 31, 2024.

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%~~4.30% as of ~~June 30, 2023.~~March 31, 2024.

Long-term Debt includes the following:


	March 31, 2024		December 31, 2023
2019-1 EETC (see terms and conditions above)	$	138,423	$	138,423
2022-1 EETC (see terms and conditions above)	148,653		158,775
Term Loan Credit Facility (see terms and conditions above)	104,733		108,442
Total Debt	391,809		405,640
Less: Unamortized debt issuance costs	(3,678)		(3,995)
Less: Current Maturities of Long-term Debt, net	(74,398)		(74,177)
Total Long-term Debt, net	$	313,733	$	327,468

Future maturities of the outstanding Debt are as follows:


	Debt Principal Payments		Amortization of Debt Issuance Costs		Net Debt
Remainder of 2024	$	61,559	$	(871)	$	60,688
2025	80,005		(956)		79,049
2026	61,150		(709)		60,441
2027	65,175		(525)		64,650
2028	36,362		(337)		36,025
Thereafter	87,558		(280)		87,278
Total as of March 31, 2024	$	391,809	$	(3,678)	$	388,131

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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)

~~Long-term Debt includes the following:~~

June 30, 2023 December 31, 2022
2019-1 EETC (see terms and conditions above) $ 168,598 $ 176,697
2022-1 EETC (see terms and conditions above) 168,897 179,019
Term Loan Credit Facility (see terms and conditions above) 115,614 —
Total Debt 453,109 355,716
Less: Unamortized debt issuance costs (4,694) (3,481)
Less: Current Maturities of Long-term Debt (83,204) (57,548)
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
Remainder of 2023 $ 47,567 $ (680) $ 46,887
2024 75,617 (1,168) 74,449
2025 80,009 (944) 79,065
2026 61,072 (705) 60,367
2027 65,097 (530) 64,567
Thereafter 123,747 (667) 123,080
Total as of June 30, 2023 $ 453,109 $ (4,694) $ 448,415

The fair value of Debt was ~~$425,031~~$368,207 as of ~~June 30, 2023~~March 31, 2024 and ~~$324,059~~$383,061 as of December 31, ~~2022.~~2023. 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.

~~-17-~~

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~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

8.6. INVESTMENTS

A summary of debt securities by major security type:


		June 30, 2023
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	March 31, 2024											March 31, 2024
	Amortized Cost									Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
Available-for-Sale Securities: (1)	Available-for-Sale Securities: (1)
Municipal Debt Securities		$	18,694	$	—	$	(118)	$	18,576
Corporate Debt Securities
Corporate Debt Securities
Corporate Debt Securities	Corporate Debt Securities	64,329		—		(256)		64,073
U.S. Government Agency Securities	U.S. Government Agency Securities	69,299		—		(487)		68,812
Total	Total	$	152,322	$	—	$	(861)	$	151,461


		December 31, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	December 31, 2023											December 31, 2023
	Amortized Cost									Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
Available-for-Sale Securities: (1)	Available-for-Sale Securities: (1)
Municipal Debt Securities
Municipal Debt Securities
Municipal Debt Securities	Municipal Debt Securities	$	47,897	$	16	$	(258)	$	47,655
Corporate Debt Securities	Corporate Debt Securities	93,460		1		(683)		92,778
U.S. Government Agency Securities	U.S. Government Agency Securities	32,326		2		(126)		32,202
Total	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 ~~$6,716~~$6,351 and ~~$6,301~~$6,887 as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

As of ~~June 30, 2023, substantially all of~~March 31, 2024, the ~~Company's investments 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 June 30, 2023, the~~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.~~

9.7. FAIR VALUE MEASUREMENTS

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


		June 30, 2023
		Level 1		Level 2		Level 3		Total
	March 31, 2024											March 31, 2024
	Level 1									Level 1	Level 2	Level 3	Total
Cash & Cash Equivalents	Cash & Cash Equivalents	$	86,930	$	—	$	—	$	86,930
Available-for-Sale Securities:	Available-for-Sale Securities:
Municipal Debt Securities		—		18,576		—		18,576
Corporate Debt Securities
Corporate Debt Securities
Corporate Debt Securities	Corporate Debt Securities	—		64,073		—		64,073
U.S. Government Agency Securities	U.S. Government Agency Securities	—		68,812		—		68,812
Total Available-for-Sale Securities	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	$	86,930	$	151,461	$	—	$	238,391

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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)


		December 31, 2022
		Level 1		Level 2		Level 3		Total
	December 31, 2023											December 31, 2023
	Level 1									Level 1	Level 2	Level 3	Total
Cash & Cash Equivalents	Cash & Cash Equivalents	$	73,727	$	18,359	$	—	$	92,086
Available-for-Sale Securities:	Available-for-Sale Securities:
Municipal Debt Securities
Municipal Debt Securities
Municipal Debt Securities	Municipal Debt Securities	—		47,655		—		47,655
Corporate Debt Securities	Corporate Debt Securities	—		92,778		—		92,778
U.S. Government Agency Securities	U.S. Government Agency Securities	—		32,202		—		32,202
Total Available-for-Sale Securities	Total Available-for-Sale Securities	—		172,635		—		172,635
Total Assets Measured at Fair Value on a Recurring Basis	Total Assets Measured at Fair Value on a Recurring Basis	$	73,727	$	190,994	$	—	$	264,721

~~10.~~8. INCOME TAXES

The Company's effective tax rate for ~~both~~ the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023 was ~~22.9%. The effective tax rate for the three~~24.2% and ~~six months ended June 30, 2022 was 19.0% and 118.1%~~22.9%, respectively. The effective tax rate represents a blend of federal and state taxes and includes the impact of certain nondeductible or nontaxable items. The quarter-over-quarter increase in the effective tax ~~rates for~~rate was primarily due to a decrease in the ~~three and six months ended June 30, 2022 were primarily impacted by~~impact of stock option exercises over the ~~$1,700 and $8,500 non-deductible adjustments to increase the tax receivable liability related to the Tax Receivable Agreement (the "Tax Receivable Agreement" or "TRA"), respectively.~~comparative periods.

Tax Receivable Agreement

The ~~TRA~~total Tax Receivable Agreement ("TRA") balance as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 was ~~$101,020~~$97,694 and ~~$103,800,~~$101,044, of which $10,611 and $3,250 was current, respectively. The TRA liability is an estimate and actual amounts payable under the ~~Tax Receivable Agreement~~TRA could differ from this estimate. During the ~~six~~three months ended June 30, 2023, the Company recorded an immaterial adjustment to the estimated TRA liability. During the six months ended June 30, 2022, the Company recorded an $8,500 adjustment to increase the estimated TRA liability. During the six months ended June 30,March 31, 2024 and 2023, the Company made ~~a payment~~payments of $3,350 and $2,425, respectively, 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.~~9. STOCKHOLDERS' EQUITY

Equity Transactions

~~Secondary Offerings~~Common Stock Repurchases

~~On February 15,~~The Company maintains a stock repurchase program, which has no expiration date and may be modified, suspended, or terminated by the Company's Board of Directors at any time. As of March 31, 2024, the Company did not have any remaining amount of Board authorization to repurchase shares of its Common Stock.

During the three months ended March 31, 2024, the Company repurchased 755,284 shares of its Common Stock at a total cost of $11,493, or an average price of $15.22 per share. The repurchases were part of open market purchases. During the three months ended March 31, 2023, the Company ~~announced the commencement~~repurchased 750,000 shares of its Common Stock at a total cost of $14,812, or an average price of $19.75 per share. The repurchases were part of a secondary public offering of ~~5,250,000~~the Company's shares ~~of its Common Stock~~ by ~~an affiliate of certain investment funds managed by affiliates of Apollo Global Management, Inc. ("~~the Apollo ~~Stockholder").~~Stockholder. The ~~underwriters were given an option to purchase~~settlement of a $25,000 Accelerated Share Repurchase Program occurred during January 2023, upon which the Company received 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. The480,932 shares.

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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)

~~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.

During the six months ended June 30, 2023, the Company repurchased 1,166,751 shares of its Common Stock at 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 Company's shares by the Apollo Stockholder, as well as open market purchases completed in the second quarter.

As of June 30, 2023, the Company had $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 both the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and June 30, 2022, 442,521 and 379,304~~189,652 warrants vested, respectively. As of ~~June 30,~~March 31, 2024 and 2023, ~~and June 30, 2022,~~ the cumulative vested warrants held by Amazon were ~~2,844,789~~3,413,745 and ~~2,022,964,~~2,591,920, respectively. The exercise period of these warrants is through the eighth anniversary of the issue date.

Stock Compensation

~~12.~~During the first quarter of 2024, the Company issued performance-based restricted stock units (“PRSUs”) to certain employees. The PRSUs are long-term incentive opportunities that represent the right to receive shares of the Company’s Common Stock based on the achievement of certain performance conditions over a three-year period. Potential payouts range from 50%-150% of a target level. The maximum number of shares that may be issued on the PRSU vesting date is 259,095. The Company recognizes PRSU stock compensation expense to the extent it is probable the performance condition(s) will be satisfied.

10. COMMITMENTS AND CONTINGENCIES

The Company has contractual obligations and commitments primarily with regard to lease arrangements, repayment of debt (see Note 65), payments under the TRA (see Note 108), and probable future purchases of aircraft.

~~As of June 30, 2023, the~~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.

~~During the twelve months ended June 30, 2022, the compensation payable~~is subject to an ~~executive officer temporarily exceeded~~audit by the ~~restrictions on the payment of certain executive compensation under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"~~Internal Revenue Service (“IRS”). 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~~the collection of federal excise taxes on optional passenger seat selection charges covering the period of October 1, 2021 through June 30, 2023. ToDuring 2024, the ~~extent we are deemed~~Company received an assessment of approximately $2,700 from the IRS related to ~~have failed to remain~~the results of the audit. The Company believes a loss in ~~full~~

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~~SUN COUNTRY AIRLINES HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share~~this matter is not probable and ~~share amounts)~~

~~(Unaudited)~~

~~compliance with the CARES Act and the applicable rules and regulations thereunder, we may become subject to fines or other enforcement actions.~~has not recognized a loss contingency.

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

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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)

~~14.~~11. OPERATING SEGMENTS

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


	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
	Passenger		Cargo		Consolidated		Passenger		Cargo		Consolidated
Operating Revenues	$	287,535	$	23,948	$	311,483	$	270,754	$	23,361	$	294,115
Non-Fuel Operating Expenses	160,700		25,303		186,003		140,637		25,405		166,042
Aircraft Fuel	70,304		—		70,304		72,266		24		72,290
Total Operating Expenses	231,004		25,303		256,307		212,903		25,429		238,332
Operating Income (Loss)	$	56,531	$	(1,355)	55,176		$	57,851	$	(2,068)	55,783
Interest Income					2,448						2,741
Interest Expense					(11,112)						(8,630)
Other, net					46						(212)
Income Before Income Tax					$	46,558					$	49,682

12. SUBSEQUENT EVENTS

The Company evaluated subsequent events for the period from the Balance Sheet date through ~~August 4, 2023,~~May 7, 2024, the date that the Condensed Consolidated Financial Statements were available to be issued.

~~The~~Subsequent to March 31, 2024, the Company ~~executed~~purchased one aircraft previously classified as a ~~purchase amendment for an aircraft~~finance lease, which is now unencumbered.

For more information on the subsequent ~~to June 30, 2023. The purchase amendment added a purchase obligation for the aircraft at the end~~events, see Note 4 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's Board of Directors authorized the addition of $30,000~~Notes 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.

~~* * * * * *~~Condensed Consolidated Financial Statements included elsewhere in this report.

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SUN COUNTRY AIRLINES HOLDINGS, INC

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

(Dollars in thousands, except per share amounts)

(Unaudited)

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 ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 and ~~2022.~~2023. Also discussed is our financial position as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. 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~~2023 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~~2023 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,~~Scheduled Service, Charter, and ~~cargo~~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~~Charter customers and providing crew, maintenance and insurance (“CMI”) ~~services,~~service to Amazon, with flights throughout the ~~United States~~U.S. and to destinations in Canada, Mexico, Central America and the Caribbean. We share resources, such as flight crews, across our ~~scheduled service, charter~~Scheduled Service, Charter and ~~cargo~~Cargo business lines with the objective of generating ~~higher~~high 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~~using an agile peak demand scheduling strategy which aims to shift 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.~~demand. We believe ~~our~~this flexible business model ~~generates higher returns and margins while also providing~~provides greater resiliency to economic and industry downturns than a traditional scheduled service carrier. This strategy has been implemented and executed by an experienced management team with deep knowledge of the industry.

Our ~~scheduled service~~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)~~(“ULCCs”) while maintaining lower Adjusted Cost per Available Seat Mile (“CASM”) than Low Cost Carriers ~~("LCCs", which include Southwest Airlines and JetBlue Airways)~~(“LCCs”), 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,~~soft drinks and juices, complimentary in-flight entertainment, and in-seat power, none of which are offered by other ULCCs.

Our ~~charter~~Charter business, which is one of the largest narrow body ~~charter~~Charter operations in the United States, is ~~a key component of~~synergistic with our ~~strategy because it~~other businesses and provides both inherent diversification and downside ~~protection, and~~protection. Our

~~-23-~~-20-

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

(Dollars in thousands, except per share amounts)

(Unaudited)

~~because it is synergistic with our other businesses. Our charter~~Charter business has several favorable characteristics, including: large repeat customers, more stable demand than ~~scheduled service~~Scheduled Service flying, and the ability to pass through certain costs, including fuel. Our diverse ~~charter~~Charter customer base includes casino operators, the ~~U.S. Department of Defense,~~DoD, and collegiate and professional sports teams. Our ~~charter~~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~~DoD 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, ~~complementary~~complimentary 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 volatility due to market conditions and geopolitical events, and the impact of macroeconomic conditions, ~~including inflationary pressures,~~ continue to impact the Company, as well as the industry. ~~Airline travel demand~~Our diversified business model, which includes a focus on leisure and VFR passengers, Charter and Cargo service, is unique in the airline sector and mitigates the impact of economic and industry downturns on our business when compared with other large U.S. passenger airlines. This strategy has ~~remained strong which has~~allowed us to offset ~~the~~a majority of additional costs associated with ~~pilot training throughput issues~~fuel price volatility and ~~other inflationary pressures.~~the impact of macroeconomic conditions. Additionally, our Charter and Cargo businesses have the ability to pass on certain costs, including fuel. Our flexible business model gives us the ability to adjust our services in response to ~~these~~ market conditions, which is targeted at producing the highest possible returns for Sun Country.

For more information on our business and strategic advantages, see the "Business" and “Management’s Discussion and Analysis of Operations” sections within Part I, Item 1 and Part II, Item 7, respectively, in our ~~2022~~2023 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~~2023 10-K.

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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 Statistics


		Three Months Ended June 30, 2023 (1)								Three Months Ended June 30, 2022 (1)
		Scheduled Service			Charter		Cargo	Total		Scheduled Service			Charter		Cargo	Total
	Three Months Ended March 31, 2024 (1)																									Three Months Ended March 31, 2024 (1)							Three Months Ended March 31, 2023 (1)
	Scheduled Service																					Scheduled Service			Charter	Cargo			Total	Scheduled Service			Charter	Cargo	Total
Departures (2)	Departures (2)	6,401			2,759		3,184	12,495		5,674			2,235		2,693	10,687
Block hours (2)	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)	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)	1,417,778			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)	12.74			14.71			12.93		11.55			15.33			12.12
Average passenger aircraft during the period (4)	Average passenger aircraft during the period (4)							42.0								34.5
Passenger aircraft at end of period (4)	Passenger aircraft at end of period (4)							43								41
Cargo aircraft at end of period	Cargo aircraft at end of period							12								12
Aircraft Held for Operating Lease								5								—
Leased Aircraft (5)
Average daily aircraft utilization (hours) (4)	Average daily aircraft utilization (hours) (4)							6.7								7.4
Average stage length (miles)	Average stage length (miles)							1,046								1,120
Revenue passengers carried (5)		1,005,126								884,088
Revenue passenger miles (RPMs) (thousands) (5)		1,216,261								1,126,030
Load factor (5)		85.8		%						83.8		%
Average base fare per passenger (5)		$	110.90							$	122.63
Ancillary revenue per passenger (5)		$	66.43							$	50.00
Total fare per passenger (5)		$	177.33							$	172.63
Charter revenue per block hour (5)					$	8,758							$	9,349
Revenue passengers carried (6)																		Revenue passengers carried (6)	1,157,511								998,238
Revenue passenger miles (RPMs) (thousands) (6)																		Revenue passenger miles (RPMs) (thousands) (6)	1,654,851								1,432,131
Load factor (6)																		Load factor (6)	87.4		%						88.1		%
Average base fare per passenger (6)																		Average base fare per passenger (6)	$	121.98							$	152.93
Ancillary revenue per passenger (6)																		Ancillary revenue per passenger (6)	$	74.43							$	68.55
Total fare per passenger (6)
Charter revenue per block hour (6)
Charter revenue per block hour (6)
Charter revenue per block hour (6)																							$	9,655							$	9,139
Fuel gallons consumed (thousands) (2)	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							$	2.71							$	4.39
Employees at end of period	Employees at end of period							2,749								2,282
Cost per available seat mile (CASM) (cents) (6)								12.67								13.21
Adjusted CASM (cents) (7)								7.88								7.14
Cost per available seat mile (CASM) (cents) (7)
Adjusted CASM (cents) (8)

______________________

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

(5)Includes both the Company's Owned Aircraft Held for Operating Lease as well as subleased aircraft. These aircraft are leased to unaffiliated third parties.

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

~~(6)~~(7)CASM is a key airline cost metric. CASM is defined as operating expenses divided by total available seat miles.

~~(7)~~(8)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.

~~-25-~~

~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

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

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

~~(Unaudited)~~

~~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.~~

~~(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 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.~~

~~-26-~~-22-

Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

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

(Dollars in thousands, except per share amounts)

(Unaudited)

Results of Operations

For the Three Months Ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~

Three Months Ended June 30, $
Change %
Change
2023 2022
Operating Revenues:
Scheduled Service $ 111,467 $ 108,412 $ 3,055 3 %
Charter Service 49,626 42,749 6,877 16 %
Ancillary 66,773 44,201 22,572 51 %
Passenger 227,866 195,362 32,504 17 %
Cargo 25,017 21,190 3,827 18 %
Other 8,203 2,515 5,688 226 %
Total Operating Revenues 261,086 219,067 42,019 19 %
Operating Expenses:
Aircraft Fuel 52,360 76,947 (24,587) (32) %
Salaries, Wages, and Benefits 75,919 60,298 15,621 26 %
Aircraft Rent 779 2,211 (1,432) (65) %
Maintenance 15,942 12,782 3,160 25 %
Sales and Marketing 8,507 7,881 626 8 %
Depreciation and Amortization 22,355 16,854 5,501 33 %
Ground Handling 11,311 8,212 3,099 38 %
Landing Fees and Airport Rent 12,962 9,496 3,466 36 %
Other Operating, net 25,364 21,017 4,347 21 %
Total Operating Expenses 225,499 215,698 9,801 5 %
Operating Income 35,587 3,369 32,218 956 %
Non-operating Income (Expense):
Interest Income 2,545 532 2,013 378 %
Interest Expense (11,239) (7,042) (4,197) 60 %
Other, net (143) (1,702) 1,559 (92) %
Total Non-operating Expense, net (8,837) (8,212) (625) 8 %
Income (Loss) Before Income Tax 26,750 (4,843) 31,593 NM
Income Tax Expense (Benefit) 6,132 (921) 7,053 NM
Net Income (Loss) $ 20,618 $ (3,922) $ 24,540 NM


~~"NM" stands for not meaningful~~


	Three Months Ended March 31,				$ Change		% Change
	2024		2023
Operating Revenues:
Scheduled Service	$	141,194	$	152,657	$	(11,463)	(8)	%
Charter	47,312		46,187		1,125		2	%
Ancillary	86,158		68,425		17,733		26	%
Passenger	274,664		267,269		7,395		3	%
Cargo	23,948		23,361		587		3	%
Other	12,871		3,485		9,386		269	%
Total Operating Revenues	311,483		294,115		17,368		6	%

Operating Expenses:
Aircraft Fuel	70,304		72,290		(1,986)		(3)	%
Salaries, Wages, and Benefits	82,238		75,430		6,808		9	%
Aircraft Rent	—		1,480		(1,480)		(100)	%
Maintenance	16,817		13,039		3,778		29	%
Sales and Marketing	10,679		9,929		750		8	%
Depreciation and Amortization	23,809		19,460		4,349		22	%
Ground Handling	9,154		9,170		(16)		—	%
Landing Fees and Airport Rent	14,729		10,945		3,784		35	%
Other Operating, net	28,577		26,589		1,988		7	%
Total Operating Expenses	256,307		238,332		17,975		8	%
Operating Income	55,176		55,783		(607)		(1)	%

Non-operating Income (Expense):
Interest Income	2,448		2,741		(293)		(11)	%
Interest Expense	(11,112)		(8,630)		(2,482)		29	%
Other, net	46		(212)		258		(122)	%
Total Non-operating Expense, net	(8,618)		(6,101)		(2,517)		41	%

Income Before Income Tax	46,558		49,682		(3,124)		(6)	%
Income Tax Expense	11,245		11,354		(109)		(1)	%
Net Income	$	35,313	$	38,328	$	(3,015)	(8)	%

Total Operating Revenues increased ~~$42,019,~~$17,368, or ~~19%~~6%, to ~~$261,086~~$311,483 for the three months ended ~~June 30, 2023~~March 31, 2024 as compared to the three months ended ~~June 30, 2022.~~March 31, 2023. The revenue increase was ~~largely~~ driven by ~~a 22%~~an increase in ~~average passenger aircraft in the period and demand for our passenger service offerings during the second quarter of 2023~~rental revenue included within Other revenue, as ~~compared to the second quarter of 2022. The~~well as an 11% increase in ~~demand resulted~~Passenger segment departures, partially offset by an 11% decrease in ~~an increase to average total fare~~Total Fare per ~~passenger of $4.70,~~passenger.

Passenger. Passenger revenue increased $7,395, or 3%, to ~~$177.33~~$274,664 for the three months ended ~~June 30, 2023,~~March 31, 2024 as compared to the three months ended ~~June 30, 2022, as well as a 2.0 percentage point increase in~~March 31, 2023.

~~-27-~~-23-

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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)

~~passenger load factor over the same period. Passenger segment departures and block hours increased by 16% and 11%, respectively.~~

~~Scheduled Service~~. ~~Scheduled service revenue increased $3,055, or 3%, to $111,467 for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.~~ The table below presents select operating data for ~~scheduled service,~~lines of revenue within Passenger, expressed as quarter-over-quarter changes:


		Three Months Ended June 30,						Change				% Change
		2023			2022
			Three Months Ended March 31,																										Three Months Ended March 31,											Change			% Change
			2024
Scheduled Service and Ancillary Statistics:
Scheduled Service and Ancillary Statistics:
Scheduled Service and Ancillary Statistics:
Departures	Departures	6,401			5,674						727			13	%
		Departures
		Departures															7,169						6,177							992							16	%
	Block Hours																	Block Hours			25,496						21,941							3,555							16	%
Passengers	Passengers	1,005,126			884,088			121,038				14	%			Passengers		1,157,511				998,238			998,238				159,273				159,273			16					16	%
Average base fare per passenger	Average base fare per passenger	$	110.90		$	122.63		$	(11.73)			(10)	%			Average base fare per passenger		$	121.98			$		$	152.93			$			$	(30.95)			(20)				(20)		%
	Ancillary revenue per passenger																	Ancillary revenue per passenger			$	74.43					$	68.55						$	5.88						9	%
	Total Fare per passenger																	Total Fare per passenger			$	196.41					$	221.48						$	(25.07)						(11)	%
RPMs (thousands)	RPMs (thousands)	1,216,261			1,126,030			90,231				8	%			RPMs (thousands)		1,654,851				1,432,131			1,432,131				222,720				222,720			16					16	%
ASMs (thousands)	ASMs (thousands)	1,417,778			1,343,116			74,662				6	%			ASMs (thousands)		1,892,891				1,625,728			1,625,728				267,163				267,163			16					16	%
TRASM (cents)	TRASM (cents)	12.74			11.55			1.19				10	%			TRASM (cents)		12.20				13.81			13.81				(1.61)				(1.61)			(12)					(12)	%
Passenger load factor	Passenger load factor	85.8		%	83.8		%	2.0		pts		N/A				Passenger load factor		87.4		%				88.1		%					(0.7)		pts					N/A

Charter Statistics:
Charter Statistics:
Charter Statistics:
		Departures
		Departures
		Departures															2,292						2,369							(77)							(3)	%
	Block hours																	Block hours			4,900						5,054							(154)							(3)	%
	Charter revenue per block hour																	Charter revenue per block hour			$	9,655					$	9,139						516							6	%

The quarter-over-quarter increases in certain Scheduled Service operating data were primarily the result of anincreased capacity due to a 10% increase in ~~demand~~average daily aircraft utilization. As a result, Scheduled Service departures and ~~capacity in the second quarter of 2023 relative to the same period in 2022. The quarter-over-quarter~~ASMs both increased by 16%. This increase in ~~demand is demonstrated by a 14%~~capacity drove the 16% increase in passengers, which offset the quarter-over-quarter decreases in both Total Fare per passenger and ~~a 2.0 percentage point~~TRASM. The 16% increase in ~~passenger load factor. The~~Schedule Service passengers during the period also resulted in greater sales of ancillary products. Ancillary revenue was further benefited by per unit growth.

Passenger revenue was further supported by the $1,125, or 2%, increase in demand supported the 13% and 6% increase in departures and ASMs, respectively, as a result of the 22% quarter-over-quarter increase in the average passenger aircraft for the period. The quarter-over-quarter Scheduled ServiceCharter revenue ~~increase was offset by the introduction of a new Ancillary product during the second quarter of 2022, which reclassified approximately $21,374 of revenue from Scheduled Service to Ancillary~~ during the three months ended ~~June 30, 2023, as compared to $5,552 during the three months ended June 30, 2022.~~

~~Charter Service.~~ ~~Charter Service revenue increased $6,877, or 16%, to $49,626 for the three months ended June 30, 2023,~~March 31, 2024, as compared to the three months ended ~~June 30, 2022.~~March 31, 2023. The ~~increase~~Company was able to reduce the number of ferry flights by leveraging scheduled service opportunities, which drove the 3% decrease in Charter ~~service revenue was driven by a 24% and 23% increase in Charter Service~~ block hours and ~~departures, respectively, as a result of increased activity with long-term charter customers. These increases were slightly offset by~~departures. This resulted in a 6% ~~decrease quarter-over-quarter~~increase in Charter revenue per block ~~hour as lower fuel prices impacted revenue due to the nature of the contractual fuel pass-through.~~

~~Ancillary~~. Ancillary revenue increased $22,572, or 51%, to $66,773 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022. Ancillary revenue was $66.43 per passenger in the three months ended June 30, 2023, up $16.43 or 33%, from the three 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 $21,374 of revenue from Scheduled Service to Ancillary during the three months ended June 30, 2023, as compared to $5,552 during the three months ended June 30, 2022. The increase in Scheduled Service passengers during the period resulted in a higher volume of sales for air travel-related services, such as baggage fees, seat selection and upgrade fees, priority check-in and boarding fees, itinerary service fees, other fees and on-board sales. The increase in revenue was further supported by rate increases for our Ancillary products.hour.

Cargo. Revenue from Cargo services increased ~~$3,827,~~$587, or ~~18%~~3%, to ~~$25,017~~$23,948 for the three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the three months ended ~~June 30, 2022.~~March 31, 2023. The increase was primarily driven by the annual rate escalation included in the ATSA, which went into effect on December 13, 2023. This increase was offset by a ~~18%~~2% and ~~10%~~1% quarter-over-quarter ~~increase~~decrease in departures and block hours, respectively. ~~Revenue~~

Other. Other revenue increased $9,386, or 269%, to $12,871 for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. Other revenue benefited from the $9,275 of rental revenue associated with the seven leased aircraft during the three months ended March 31, 2024, as compared to an immaterial amount in the three months ended March 31, 2023.

~~-28-~~-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)

~~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 $5,688, or 226%, to $8,203 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022. Other revenue benefited from the $5,871 of rental revenue associated with the five Aircraft Held for Operating Lease acquired during the first half of 2023.

~~Operating Expenses~~

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

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

Three Months Ended June 30, Change %
Change
2023 2022
Total Aircraft Fuel Expense $ 52,360 $ 76,947 $ (24,587) (32) %
Indirect Fuel Credits 212 208 4 2 %
Aircraft Fuel Expense, Excluding Indirect Fuel Credits $ 52,572 $ 77,155 $ (24,583) (32) %
Fuel Gallons Consumed (thousands) 19,399 17,568 1,831 10 %
Fuel Cost per Gallon, Excluding Indirect Fuel Credits $ 2.71 $ 4.39 $ (1.68) (38) %

Aircraft Fuel expense decreased 32% quarter-over-quarter primarily 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.

~~Salaries~~, ~~Wages, and Benefits~~. Salaries, Wages, and Benefits expense increased $15,621, or 26%, to $75,919 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022. The quarter-over-quarter increase in Salaries, Wages, and Benefits was impacted by an increase in employee headcount, 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. 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 $1,432, or 65%, to $779 for the three months ended June 30, 2023, as compared to the three months ended 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 June 30, 2023 and 2022, we operated one and four aircraft under operating leases, respectively.

~~Maintenance. Maintenance expense increased $3,160, or 25%, to $15,942 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022. The increase in Maintenance expense was~~

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~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

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

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

~~(Unaudited)~~

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 $1,000 in credit card processing and other travel agent fees, as a result of the 14% increase in passengers.

~~Depreciation and Amortization~~. Depreciation and Amortization expense increased $5,501, or 33%, to $22,355 for the three months ended June 30, 2023, as compared to the three 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 $3,099, or 38%, to $11,311 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022. The increase was primarily driven by the 16% 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 $3,466, or 36%, to $12,962 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022. The increase was primarily driven by the 16% 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 $4,347, or 21%, to $25,364 for the three months ended June 30, 2023, as compared to the three 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.

~~Non-operating Income (Expense)~~

~~Interest Income~~. Interest income increased $2,013, or 378%, to $2,545 for the three months ended 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 in May 2022, as well as an increases in the number of investments held and interest rates.

~~Interest Expense~~. Interest expense increased $4,197, or 60%, to $11,239 for the three months ended June 30, 2023, as compared to the three 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. 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 $1,559, or 92% to a net expense of $143 for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022. The decrease was primarily due to the $1,700 adjustment to increase the estimated TRA liability in the prior year.

~~Income Tax.~~ The Company's effective tax rate for the three months ended June 30, 2023 was 22.9% compared to 19.0% for the three months ended June 30, 2022. The increase in the effective tax rate was primarily due to the $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.~~

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~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

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

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

~~(Unaudited)~~

~~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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~~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)~~

~~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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~~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 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:

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) %


	Three Months Ended March 31,				Change		% Change
	2024		2023
Total Aircraft Fuel Expense	$	70,304	$	72,290	$	(1,986)	(3)	%
Indirect Fuel Credits	954		440		514		117	%
Aircraft Fuel Expense, Excluding Indirect Fuel Credits	$	71,258	$	72,730	$	(1,472)	(2)	%
Fuel Gallons Consumed (thousands)	23,676		21,073		2,603		12	%
Fuel Cost per Gallon, Excluding Indirect Fuel Credits	$	3.01	$	3.45	$	(0.44)	(13)	%

Aircraft Fuel expense decreased ~~by 12% year-over-year~~3% quarter-over-quarter primarily due to a ~~18%~~13% decrease in the average fuel cost per gallon, ~~slightly~~partially offset by a 7%12% 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,~~$6,808, or ~~26%~~9%, to ~~$151,349~~$82,238 for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023. The ~~year-over-year~~quarter-over-quarter increase in Salaries, Wages, and Benefits was impacted by ana 9% increase in employee headcount, an ~~acceleration~~increase in block hours as a result of ~~stock-based compensation expense recognized during the six months ended June 30, 2023~~operational growth, and contractual rate increases 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.~~pilots.

Aircraft Rent. Aircraft Rent expense decreased ~~$3,138,~~$1,480, or ~~58%~~100%, to ~~$2,259~~$0 for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023. Aircraft Rent expense decreased ~~primarily~~ due to the composition of our aircraft fleet ~~continuing to shift~~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 June 30, 2023 and 2022, we operated one and four aircraft under operating leases, respectively.~~leases.

Maintenance. Maintenance expense increased ~~$4,204,~~$3,778, or ~~17%~~29%, to ~~$28,981~~$16,817 for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023. The quarter-over-quarter increase in Maintenance expense was primarily driven by ~~higher line~~an increase in routine, time-based heavy maintenance ~~costs due to~~and landing gear events, as well as the ~~year-over-year~~ increase in the size of our fleet and ~~operations, as well as an increase in unscheduled repair events.~~operations.

Sales and Marketing. Sales and Marketing expense increased ~~$1,927,~~$750, or ~~12%~~8%, to ~~$18,436~~$10,679 for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023. The ~~year-over-year increase~~change quarter-over-quarter was primarily driven by an ~~approximately $2,900~~increase in advertising costs and an increase in credit card processing fees due to quarter-over-quarter passenger growth.

Depreciation and ~~other travel agent fees,~~Amortization. Depreciation and Amortization expense increased $4,349, or 22%, to $23,809 for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase was due to the impact of a ~~result~~change in the composition of our aircraft fleet that resulted in an increased number of owned aircraft and aircraft under finance leases. As of March 31, 2024 and 2023, there were 51 and 43 aircraft that were owned or under finance leases, respectively.

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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 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%,~~decreased $16, to ~~$22,349~~$9,154, for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the ~~six~~three months ended ~~June 30, 2022. The increase was primarily driven~~March 31, 2023. Ground Handing expenses during the three months ended March 31, 2023 were significantly impacted by the ~~12%~~challenging winter weather conditions at our main hub, the Minneapolis – St. Paul International Airport. This quarter-over-quarter benefit was offset by an 11% 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,~~$3,784, or ~~26%~~35%, to ~~$25,013~~$14,729 for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023. The increase was ~~primarily driven~~a result of the exhaustion of the remaining Coronavirus Aid, Relief, and Economic Security Act funding, which increased rates. The increase was also impacted by market pressures and the ~~12%~~11% increase in Passenger segment departures as a result of our expanding ~~operations, as well as rate increases due to inflationary and market pressures.~~operations.

Other Operating, net. Other operating, net increased ~~$4,813,~~$1,988, or ~~11%~~7%, to ~~$48,979~~$28,577 for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, 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.growth.

Non-operating Income (Expense)

Interest Income. Interest income ~~was $5,286~~decreased $293, or 11%, to $2,448 for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024, as compared to the three months ended March 31, 2023. The decrease was primarily due to the ~~change~~decrease in ~~our~~the Company's investment ~~strategy, which led to the purchase of debt securities in May 2022.~~balance quarter-over-quarter.

Interest Expense. Interest expense increased ~~$4,265,~~$2,482, or ~~27%~~29%, to ~~$19,869~~$11,112 for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023. The ~~change~~increase was ~~primarily~~ due to ~~a 24%~~the change in our aircraft fleet that resulted in an increase inof aircraft under finance leases and 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.~~proceeds. For more information on the Company's Debt, see Note 65 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Other, net. Other, net ~~decreased $8,222,~~changed by $258, or ~~96%~~122% to a net benefit of $46 for the three months ended March 31, 2024, as compared to a net expense of ~~$355~~$212 for the ~~six~~three 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 ofMarch 31, 2023.

Income Tax. The Company's effective tax rate for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 was ~~22.9%~~24.2% compared to ~~118.1%~~22.9% for the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023. The ~~decrease~~increase in the effective tax rate was primarily due to ~~the $8,500 non-deductible adjustment of the TRA liability~~a decrease in the ~~prior period, partially offset by~~impact of stock ~~compensation benefits. For more information on~~option exercises over the ~~TRA liability, see~~ comparative periods.

~~Note 10~~ ~~of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.~~

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SUN COUNTRY AIRLINES HOLDINGS, INC

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

(Dollars in thousands, except per share amounts)

(Unaudited)

Segments

For the Three Months Ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~


		Three Months Ended June 30, 2023									Three Months Ended June 30, 2022
		Passenger			Cargo			Total			Passenger			Cargo			Total
	Three Months Ended March 31, 2024																															Three Months Ended March 31, 2024															Three Months Ended March 31, 2023
	Passenger																							Passenger					Cargo							Total						Passenger						Cargo						Total
Operating Revenues	Operating Revenues	$	236,069		$	25,017		$	261,086		$	197,877		$	21,190		$	219,067		Operating Revenues	$	287,535				$	23,948						$	311,483					$	270,754					$	23,361					$	294,115

Operating Expenses:	Operating Expenses:
Operating Expenses:
Operating Expenses:
Aircraft Fuel
Aircraft Fuel
Aircraft Fuel	Aircraft Fuel	52,347			13			52,360			76,947			—			76,947			70,304					—						70,304							72,266						24						72,290
Salaries, Wages, and Benefits	Salaries, Wages, and Benefits	57,745			18,174			75,919			46,854			13,444			60,298			Salaries, Wages, and Benefits	65,588					16,650							82,238						58,808						16,622						75,430
Aircraft Rent	Aircraft Rent	779			—			779			2,211			—			2,211			Aircraft Rent	—									—							1,480						—						1,480
Maintenance	Maintenance	12,179			3,763			15,942			9,273			3,509			12,782			Maintenance	13,404					3,413							16,817						9,482						3,557						13,039
Sales and Marketing	Sales and Marketing	8,507			—			8,507			7,881			—			7,881			Sales and Marketing	10,679					—							10,679						9,929						—						9,929
Depreciation and Amortization	Depreciation and Amortization	22,341			14			22,355			16,828			26			16,854			Depreciation and Amortization	23,804					5							23,809						19,430						30						19,460
Ground Handling	Ground Handling	11,311			—			11,311			8,208			4			8,212			Ground Handling	9,145					9							9,154						9,170						—						9,170
Landing Fees and Airport Rent	Landing Fees and Airport Rent	12,861			101			12,962			9,393			103			9,496			Landing Fees and Airport Rent	14,576					153							14,729						10,844						101						10,945
Other Operating, net	Other Operating, net	20,484			4,880			25,364			16,649			4,368			21,017			Other Operating, net	23,504					5,073							28,577						21,494						5,095						26,589
Total Operating Expenses	Total Operating Expenses	198,554			26,945			225,499			194,244			21,454			215,698			Total Operating Expenses	231,004					25,303							256,307						212,903						25,429						238,332
Operating Income (Loss)	Operating Income (Loss)	$	37,515		$	(1,928)		$	35,587		$	3,633		$	(264)		$	3,369		Operating Income (Loss)	$	56,531				$	(1,355)						$	55,176					$	57,851					$	(2,068)					$	55,783

Operating Margin %	Operating Margin %	15.9		%	(7.7)		%	13.6		%	1.8		%	(1.2)		%	1.5		%
Operating Margin %
Operating Margin %																					19.7		%			(5.7)		%					17.7		%				21.4		%				(8.9)		%				19.0		%

Passenger. Passenger Operating Income ~~increased $33,882~~decreased $1,320 to ~~$37,515~~$56,531 for the three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the three months ended ~~June 30, 2022.~~March 31, 2023. The Operating Margin Percentage for the three months ended ~~June 30, 2023 increased 14.1~~March 31, 2024 decreased by 1.7 percentage points, as compared to the three months ended ~~June 30, 2022.~~March 31, 2023. The ~~increases~~quarter-over-quarter decrease in Passenger Operating Income and Operating Margin ~~were driven by~~Percentage was due to increased expenses associated with our operational growth, contractual rate increases for our pilots, an increase in ~~the average passenger aircraft in the period~~heavy maintenance and ~~demand~~landing gear events, and rate increases for ~~passenger service during the second quarter of 2023, as compared~~Landing Fees and Airport Rent. These impacts were partially offset by a quarter-over-quarter revenue growth due to ~~the same period of 2022. This resulted in a significant~~an 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.passengers. 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~~decreased by ~~$1,664,~~$713, to ~~$1,928~~$1,355, for the three months ended ~~June 30, 2023,~~March 31, 2024, as compared to the three months ended ~~June 30, 2022.~~March 31, 2023. Operating Margin Percentage for the three months ended ~~June 30, 2023 decreased 6.5~~March 31, 2024 improved by 3.2 percentage points, as compared to the three months ended ~~June 30, 2022.~~March 31, 2023. The ~~decrease was primarily~~changes in both Operating Loss and Operating Margin Percentage were driven by ascheduling efficiency improvements between our segments, which offset the contractual rate increases for our pilots and resulted in materially consistent quarter-over-quarter ~~increase~~Operating Expenses. The changes in ~~Salaries, Wages,~~Operating Loss and ~~Benefits due to an increase~~Operating Margin Percentage were further benefited by the annual rate escalation included in ~~employee head count, as well as per unit costs for pilots to support operations.~~the ATSA. For more information on the components of Operating Income for the Cargo segment, refer to the Results of Operations discussion above.

~~-35-~~

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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)~~

~~Segments~~

~~For the 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 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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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)

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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Table of Contents

SUN COUNTRY AIRLINES HOLDINGS, INC

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

(Dollars in thousands, except per share amounts)

(Unaudited)

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


		Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
	Three Months Ended March 31,																							Three Months Ended March 31,
	2024																		2024						2023
Adjusted Operating Income Margin Reconciliation:	Adjusted Operating Income Margin Reconciliation:
Operating Revenue
Operating Revenue
Operating Revenue	Operating Revenue	$	261,086		$	219,067		$	555,201		$	445,591		$	311,483					$	294,115
Operating Income	Operating Income	35,587			3,369			91,370			25,201			Operating Income		55,176						55,783

Stock Compensation Expense	Stock Compensation Expense	4,415			575			7,093			1,495
Stock Compensation Expense
Stock Compensation Expense																1,514						2,678
Adjusted Operating Income	Adjusted Operating Income	$	40,002		$	3,944		$	98,463		$	26,696		Adjusted Operating Income		$	56,690					$	58,461

Operating Income Margin	Operating Income Margin	13.6		%	1.5		%	16.5		%	5.7		%
Operating Income Margin
Operating Income Margin																17.7		%				19.0		%
Adjusted Operating Income Margin	Adjusted Operating Income Margin	15.3		%	1.8		%	17.7		%	6.0		%	Adjusted Operating Income Margin		18.2		%				19.9		%

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

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Adjusted Net Income (Loss) Reconciliation:
Net Income (Loss) $ 20,618 $ (3,922) $ 58,946 $ (285)
Stock Compensation Expense 4,415 575 7,093 1,495
Gain on Asset Transactions, net (a)
— (77) — (79)
Loss on refinancing credit facility — — — 1,557
Secondary offering costs 112 — 640 —
TRA adjustment (b)
— 1,700 (357) 8,500
Income tax effect of adjusting items, net (c)
(1,041) (114) (1,779) (684)
Adjusted Net Income (Loss) $ 24,104 $ (1,838) $ 64,543 $ 10,504


	Three Months Ended March 31,
	2024		2023
Adjusted Net Income Reconciliation:
Net Income	$	35,313	$	38,328

Stock Compensation Expense	1,514		2,678
Secondary offering costs	—		528
TRA adjustment (1)	—		(357)
Income tax effect of adjusting items, net (2)	(348)		(737)
Adjusted Net Income	$	36,479	$	40,440

_________________________


~~(a)~~			Due to changes in the Company’s operations, management determined that, beginning in the fourth quarter of 2022, certain asset transactions will no longer be included as adjustments 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)~~(1)			This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense).
~~(c)~~(2)			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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SUN COUNTRY AIRLINES HOLDINGS, INC

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

(Dollars in thousands, except per share amounts)

(Unaudited)

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


		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
	Three Months Ended March 31,										Three Months Ended March 31,
	2024									2024		2023
Adjusted EBITDA Reconciliation:	Adjusted EBITDA Reconciliation:
Net Income (Loss)		$	20,618	$	(3,922)	$	58,946	$	(285)
Net Income
Net Income
Net Income
Stock Compensation Expense	Stock Compensation Expense	4,415		575		7,093		1,495
Gain on Asset Transactions, net (a)		—		(77)		—		(79)
Secondary offering costs	Secondary offering costs	112		—		640		—
TRA adjustment (b)		—		1,700		(357)		8,500
TRA adjustment (1)
Interest Income	Interest Income	(2,545)		(532)		(5,286)		(556)
Interest Expense	Interest Expense	11,239		7,042		19,869		15,604
Provision for Income Taxes	Provision for Income Taxes	6,132		(921)		17,486		1,861
Depreciation and Amortization	Depreciation and Amortization	22,355		16,854		41,815		32,182
Adjusted EBITDA	Adjusted EBITDA	$	62,326	$	20,719	$	140,206	$	58,722

_________________________


~~(a)~~			Due to changes in the Company’s operations, management determined that, beginning in the fourth quarter of 2022, certain asset transactions will no longer be included as adjustments 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)~~(1)			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 and amortization recognized on ~~our aircraft and flight equipment held for operating~~certain assets that generate lease income, 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~~Cargo operations, as well as depreciation and ~~depreciation~~amortization recognized on ~~our aircraft and flight equipment held for operating~~certain assets that generate lease income as these operations do not create ASMs. The ~~cargo~~Cargo expenses in the reconciliation below are different from the total operating expenses for our Cargo segment in the “Segment Information” table presented above, due to several items that are included in the Cargo segment, but have been captured in other line items used in the Adjusted CASM calculation. ~~The five Aircraft Held for Operating Lease~~We have entered into a series of transactions where we act as an aircraft lessor. As of March 31, 2024, we leased or subleased seven aircraft. Depreciation and Amortization 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

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SUN COUNTRY AIRLINES HOLDINGS, INC

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

(Dollars in thousands, except per share amounts)

(Unaudited)

were acquired during the 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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~~Table of Contents~~

~~SUN COUNTRY AIRLINES HOLDINGS, INC~~

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

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

~~(Unaudited)~~

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


		Three Months Ended June 30,
		2023			2022
		Operating Expenses		Per ASM (in cents)	Operating Expenses		Per ASM (in cents)
	Three Months Ended March 31,										Three Months Ended March 31,
	2024								2024			2023
	Operating Expenses							Operating Expenses		Per ASM (in cents)	Operating Expenses		Per ASM (in cents)
CASM	CASM	$	225,499	12.67	$	215,698	13.21
Less:	Less:
Aircraft Fuel
Aircraft Fuel
Aircraft Fuel	Aircraft Fuel	52,360		2.94	76,947		4.71
Stock Compensation Expense	Stock Compensation Expense	4,415		0.25	575		0.04
Cargo expenses, not already adjusted above	Cargo expenses, not already adjusted above	25,966		1.46	21,326		1.31
Sun Country Vacations	Sun Country Vacations	266		0.01	215		0.01
Aircraft and Flight Equipment Held for Operating Lease, Depreciation Expense		2,273		0.13	—		—
Leased Aircraft, Depreciation and Amortization Expense (1)
Adjusted CASM	Adjusted CASM	$	140,219	7.88	$	116,635	7.14

ASM (thousands)	ASM (thousands)	1,780,340			1,632,501
ASM (thousands)
ASM (thousands)

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
_________________________


(1)			Includes both the Company's Owned Aircraft Held for Operating Lease as well as subleased aircraft. These aircraft are leased to unaffiliated third parties.

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 ~~June 30, 2023~~March 31, 2024 included our existing cash and cash equivalents of ~~$86,930~~$28,427 and short-term investments of ~~$158,177,~~$132,779, our expected cash generated from operations, and the ~~$24,650~~$24,393 of available funds from the Revolving Credit Facility. In addition, we had restricted cash of ~~$7,281~~$11,173 as of ~~June 30, 2023,~~March 31, 2024, 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~~

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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)

receipts received prior to the date of transportation are maintained in a separate third-party escrow account. The restrictions are released once the charter transportation is provided.

Our primary uses of liquidity are for operating expenses, capital expenditures, lease rentals and maintenance reserve deposits, debt repayments, working capital requirements, and other general corporate purposes. Our single largest capital expenditure requirement relates to the acquisition of aircraft. We do not maintain an aircraft 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 ~~June 30, 2023,~~March 31, 2024, our fleet consisted of 6063 Boeing 737-NG aircraft. This includes 4344 aircraft in the passenger fleet, 12 cargo operated aircraft through the ATSA, and ~~five Aircraft Held for Operating Lease. During the six months ended June 30, 2023,~~seven aircraft currently on lease to unaffiliated airlines.

Subsequent to March 31, 2024, the Company ~~acquired five of the Aircraft Held for Operating Lease for total consideration of approximately $158,000.~~purchased one aircraft previously classified as a finance lease, which is now unencumbered.

For more information on our fleet, ~~and probable future purchases of aircraft,~~ see Note 4 ~~and~~ ~~Note 12~~ ~~of the Condensed Consolidated Financial Statements included in Part I, Item I of this report. For more information on the purchase of five of the Aircraft Held for Operating Lease, see~~ ~~Note 5~~ of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Maintenance Deposits - In addition to funding the acquisition of aircraft, we are required by certain of our aircraft lessors to fund reserves in cash in advance for scheduled maintenance to act as collateral for the benefit of lessors. Qualifying payments that are expected to be recovered from lessors are recorded as Lessor Maintenance Deposits on our Condensed Consolidated Balance Sheets. As of ~~June 30, 2023,~~March 31, 2024, we had ~~$39,309~~$49,997 of total Lessor Maintenance Deposits.

Investments - We invest our cash and cash equivalents in highly liquid securities with strong credit ratings. As of ~~June 30, 2023,~~March 31, 2024, the Company held ~~$151,461~~$126,428 of debt securities, all of which are classified as current assets because of their highly liquid nature and availability to be converted into cash to fund current operations. Given the significant portion of our portfolio held in cash and cash equivalents and the high credit quality of our debt security investments, we do not anticipate fluctuations in the aggregate fair value of our investments to have a material impact on our liquidity or capital position.

We also hold ~~$6,716~~$6,351 of Certificates of Deposit that are included in Investments on the Condensed Consolidated Balance Sheets as of ~~June 30, 2023.~~March 31, 2024.

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

As of ~~June 30, 2023,~~March 31, 2024, the Company had ~~$24,650~~$24,393 of the $25,000 Revolving Credit Facility available due to ~~$350~~$607 being pledged to support ~~a letter~~letters of credit, and no balance drawn. The Credit Agreement includes financial covenants that require a minimum trailing 12-month EBITDAR ~~($87,700~~of $87,700 and minimum liquidity, as ~~of March 31, 2022 and beyond) and~~defined

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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~~within the Credit Agreement, of $30,000 at the close of any business day. The Company was in compliance with these covenants as of ~~June 30, 2023.~~March 31, 2024.

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 ~~six~~three months ended ~~June 30,~~March 31, 2023, we executed a term loan credit facility with a face amount of $119,200 for the purpose of financing the five Owned Aircraft Held for Operating Lease. The ~~loan is to be repaid monthly over 7 years. During the~~ lease term ~~payments collected from~~for each aircraft expire at various dates between the ~~lessee will be applied directly to~~fourth quarter of 2024 and the ~~repayment~~fourth quarter of ~~principal and interest on the term loan credit facility. The Aircraft Held for Operating Lease, as well as the related~~2025. On each lease ~~payments received from the lessee, are pledged as collateral.~~

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 andexpiry date, a LTV ratio calculation is ~~completed at the end of the lease term. The interest rate in effect as of June 30, 2023 on the term loan was 8.9%.~~completed. To the extent that the LTV ratio exceeds 75% at the end of the lease term, a principal prepayment will be required in order to reduce the ratio to 75%. ~~Amounts~~If at any point within 12 months of the end of the lease term for each respective aircraft the Company deems it probable that a principal prepayment will be required in order to reduce the LTV ratio to 75%, and such amount can be reasonably estimated, the estimated principal prepayment amount will be reclassified from Long-term Debt, net to Current Maturities of Long-term Debt, net on the Company's Condensed Consolidated Balance Sheets. In the event a principal prepayment is required, amounts received under the end of lease maintenance compensation clause ~~may~~will be applied towards any prepayment obligation. No amounts related to an estimated principal prepayment have been reclassified from Long-term Debt, net to Current Maturities of Long-term Debt, net on the ~~LTV payment.~~Company's Condensed Consolidated Balance Sheets as of March 31, 2024.

For more information on our credit facilities or debt, see Note 65 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

TRA Liability - During the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, we made a payment of $3,350 and $2,425 to the TRA ~~holders.~~holders, respectively. Payments will be made in future periods as Pre-IPO Tax Attributes are utilized. For more information on the TRA liability, see Note 108 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Liquidity and Financial Condition Indicators

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


		June 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024		December 31, 2023
Cash and Cash Equivalents	Cash and Cash Equivalents	$	86,930	$	92,086
Available-for-Sale Securities	Available-for-Sale Securities	151,461		172,635
Amount Available Under Revolving Credit Facility	Amount Available Under Revolving Credit Facility	24,650		24,650
Total Liquidity	Total Liquidity	$	263,041	$	289,371

		June 30, 2023		December 31, 2022
		March 31, 2024
		March 31, 2024
		March 31, 2024					December 31, 2023
Total Debt, net	Total Debt, net	$	448,415	$	352,235
Finance Lease Obligations	Finance Lease Obligations	257,288		251,296
Operating Lease Obligations	Operating Lease Obligations	22,749		26,132
Total Debt, net, and Lease Obligations	Total Debt, net, and Lease Obligations	728,452		629,663
Stockholders' Equity	Stockholders' Equity	540,765		492,712
Total Invested Capital	Total Invested Capital	$	1,269,217	$	1,122,375

Debt-to-Capital	Debt-to-Capital	0.57		0.56
Debt-to-Capital
Debt-to-Capital

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SUN COUNTRY AIRLINES HOLDINGS, INC

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

(Dollars in thousands, except per share amounts)

(Unaudited)

Sources and Uses of Liquidity


		Six Months Ended June 30,				$		%
		2023		2022		Change		Change
	Three Months Ended March 31,																		Three Months Ended March 31,									$					%
	2024														2024							2023								Change
Total Operating Activities	Total Operating Activities	$	95,693	$	37,060	$	58,633	158	%	Total Operating Activities	$	30,721		$			$	47,861			$		$	(17,140)		(36)			(36)		%

Investing Activities:	Investing Activities:
Investing Activities:
Investing Activities:
Purchases of Property & Equipment
Purchases of Property & Equipment
Purchases of Property & Equipment	Purchases of Property & Equipment	(192,352)		(137,647)		(54,705)		40	%	(29,698)			(104,978)			(104,978)				75,280			75,280			(72)			(72)		%
Purchases of Investments	Purchases of Investments	(49,437)		(71,629)		22,192		(31)	%	Purchases of Investments	(31,200)			(24,228)				(24,228)				(6,972)			(6,972)		29				29	%
Proceeds from the Maturities of Investments	Proceeds from the Maturities of Investments	71,795		—		71,795		NM		Proceeds from the Maturities of Investments	39,500			32,840				32,840				6,660			6,660		20				20	%
Other, net	Other, net	1,953		10,315		(8,362)		(81)	%	Other, net	1,091			1,129				1,129				(38)			(38)		(3)				(3)	%
Total Investing Activities	Total Investing Activities	(168,041)		(198,961)		30,920		(16)	%	Total Investing Activities	(20,307)			(95,237)				(95,237)				74,930			74,930		(79)				(79)	%

Financing Activities:	Financing Activities:
Financing Activities:
Financing Activities:
Common Stock Repurchases
Common Stock Repurchases
Common Stock Repurchases	Common Stock Repurchases	(22,249)		—		(22,249)		NM		(11,493)			(14,812)			(14,812)				3,319			3,319			(22)			(22)		%
Proceeds from Borrowings	Proceeds from Borrowings	119,200		172,507		(53,307)		(31)	%	Proceeds from Borrowings	—			71,280				71,280				(71,280)			(71,280)		(100)				(100)	%
Repayment of Finance Lease Obligations	Repayment of Finance Lease Obligations	(8,671)		(24,293)		15,622		(64)	%	Repayment of Finance Lease Obligations	(5,847)			(4,277)				(4,277)				(1,570)			(1,570)		37				37	%
Repayment of Borrowings	Repayment of Borrowings	(21,808)		(86,046)		64,238		(75)	%	Repayment of Borrowings	(13,830)			(10,122)				(10,122)				(3,708)			(3,708)		37				37	%
Other, net	Other, net	(2,841)		(1,062)		(1,779)		168	%	Other, net	(3,324)			(3,258)				(3,258)				(66)			(66)		2				2	%
Total Financing Activities	Total Financing Activities	63,631		61,106		2,525		4	%	Total Financing Activities	(34,494)			38,811				38,811				(73,305)			(73,305)		(189)				(189)	%

Net Decrease in Cash	Net Decrease in Cash	$	(8,717)	$	(100,795)	$	92,078	(91)	%	Net Decrease in Cash	$	(24,080)		$			$	(8,565)			$		$	(15,515)		181			181		%

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

~~"NM" stands for not meaningful~~

Operating Cash Flow Activities

Operating activities in the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 provided ~~$95,693,~~$30,721, as compared to ~~$37,060~~$47,861 during the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023. During the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, our Net Income was ~~$58,946,~~$35,313, as compared to ~~a Net Loss of $285~~$38,328 during the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023.

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 ~~six~~three months ended ~~June 30, 2023, $146,904~~March 31, 2024, $128,502 of revenue recognized in Passenger revenue was included in the ~~$157,995~~$157,996 of Air Traffic Liabilities as of December 31, ~~2022. The balance of Air Traffic Liabilities increased year-over-year by 5% to $130,264 as of 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 27% and ~~34%~~30% of our total operating expense for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 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~~13% quarter-over-quarter. Fuel consumption increased by 12% during the three months ended March 31, 2024, compared to the prior year as a result of the increase in fleet size and total operations. We expect volatility in Aircraft Fuel prices per gallon throughout 2024 due to ~~the impact of~~market conditions and global geopolitical ~~events on the price of fuel during the six months ended~~events.

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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 7% during the six months ended June 30, 2023, compared to the prior year.~~

Investing Cash Flow Activities

Capital Expenditures. Our capital expenditures were ~~$192,352~~$29,698 and ~~$137,647~~$104,978 for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. Our capital expenditures during the ~~six~~three months ended ~~June 30,~~March 31, 2024 included the acquisition of an aircraft and other items not individually material. Our capital expenditures during the three months ended March 31, 2023, primarily included the purchase of ~~five~~three Owned Aircraft Held for Operating Lease and one ~~incremental aircraft for our passenger fleet. Our capital expenditures during the six months ended June 30, 2022 primarily included the purchase of five incremental aircraft, the purchase of four~~ spare ~~engines, the first installment payment to purchase a flight simulator, and other miscellaneous projects.~~engine.

Investments. ~~During the six months ended June 30, 2023, the~~The Company's net investment activity resulted in cash inflows of ~~$22,358~~$8,300 and $8,612 during the three months ended March 31, 2024 and 2023, respectively, due to maturing debt 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 $71,629 of investments during the six months ended June 30, 2022.~~

Financing Cash Flow Activities

Debt. During the ~~six~~three months ended ~~June 30,~~March 31, 2023, the Company executed a term loan credit facility with a face amount of $119,200 for the purpose of financing the five Owned Aircraft Held for Operating Lease. InThe Company received gross proceeds of $71,280 with respect to three of the Aircraft Held for Operating Lease during the three months ended March ~~2022,~~31, 2023. The term loan credit facility is repaid monthly through March 2030. During the lease term, payments collected from the lessee are applied directly to the repayment of principal and interest on the term loan credit facility.

The Company ~~arranged for the issuance of~~is required to make bi-annual principal and interest payments on the 2022-1 EETC ~~in an aggregate face amount of $188,277 for~~each March and September, through March 2031. The Company is required to make bi-annual principal and interest payments on 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.~~2019-1 EETC each June and December, through December 2027.

Finance Leases. Our repayments of finance lease obligations were ~~$8,671~~$5,847 and ~~$24,293~~$4,277 for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, respectively. As of March 31, 2024 and ~~2022, respectively. During the six months ended June 30, 2022,~~2023, the Company purchased one aircraft previously classified as a finance lease using proceeds from the 2022-1 EETC. The resulting cash outflows are recorded as payments for finance lease obligations. There were no similar transactions during the six months ended June 30, 2023. As of June 30, 2023 and 2022, there were 12had 16 and 11 aircraft finance leases, respectively.

Common Stock Repurchases. During the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, the Company repurchased ~~1,166,751~~755,284 shares of its Common Stock at a total cost of ~~$22,249,~~$11,493, or ~~$19.07~~$15.22 per share. ~~The repurchases were part~~During the three months ended March 31, 2023, the Company repurchased 750,000 shares of its Common Stock at a ~~secondary public offering~~total cost of ~~the Company's shares by the Apollo Stockholder, as well as open market purchases completed in the second quarter.~~$14,812, or $19.75 per share. For more information on the stock repurchase program and this purchase, see Note 119 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

Other. During the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, the Company made ~~a payment~~payments of $3,350 and $2,425 to the TRA ~~holders.~~holders, respectively. For more information on the payment of the TRA, see Note 8 of the Condensed Consolidated Financial Statements included in Part I, Item I of this report.

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~~2023 10-K. There have been no material changes to the Company's Off Balance Sheet Arrangements as compared to the ~~2022~~2023 10-K.

Commitments and Contractual Obligations

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

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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 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 ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, 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~~2023 10-K.

There have been no material changes to our critical accounting policies and estimates as compared to the ~~2022~~2023 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. ToFor example, based on our forecasted Aircraft Fuel expense for the second quarter of 2024, we estimate that a one cent per gallon increase in the average aircraft fuel price would increase Aircraft Fuel expense by approximately $216. Aircraft Fuel expense does not include amounts where we are considered the customer's agent for procuring fuel. We had no fuel option and swap contracts in place 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~~as 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 June 30, 2023. We do not hold or issue option or swap contracts for trading purposes.March 31, 2024. 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 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 $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 Owned Aircraft Held for Operating Lease. A 100 basis point increase in interest rates on the March 31, 2024 balance of the term loan would result in a corresponding increase in interest expense of approximately ~~$1,192~~$1,047 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 ~~June 30, 2023,~~March 31, 2024, the Company had ~~$24,650~~$24,393 of financing available through the Revolving Credit Facility, as ~~$350~~$607 had been pledged to support ~~a letter~~letters of credit. As of ~~June 30, 2023,~~March 31, 2024, 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 ~~$151,461~~$126,428 as of ~~June 30, 2023. These investments are highly liquid and are available to be quickly converted into known amounts of cash to fund current operations.~~March 31, 2024. 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 represent controls and 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, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

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 ~~June 30, 2023.~~March 31, 2024.

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Based on the evaluation of our disclosure controls and procedures as of ~~June 30, 2023,~~March 31, 2024, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were ~~not~~ effective as of ~~June 30, 2023, due to the material weaknesses in internal control over financial reporting described below.~~

~~Material 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~~March 31, 2022 that management identified a material weakness in the Company's internal control over financial reporting. Specifically, 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.

During the quarter ended June 30, 2023, management identified an additional material weakness in the Company’s internal control 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, each of these control deficiencies create 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 control deficiency constituted a material 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:

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

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

2024.

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

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

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

We have made significant progress in accordance with our remediation plan 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 operating effectiveness of the new or enhanced controls implemented as a result of the corrective actions. We believe that our remediation plans will be sufficient to remediate the identified material weaknesses and strengthen our internal control over financial reporting. However, as we continue to evaluate and improve our internal control over financial reporting, management may determine that additional measures to address the identified control deficiencies or modifications to the remediation plans are necessary. Therefore, we cannot assure you when the Company will remediate the material 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 these material weaknesses, our management believes that the Condensed Consolidated Financial Statements included in this Quarterly Report present fairly, in all material respects, the Company's financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Changes in Internal Control Over Financial Reporting

~~Other than the changes made as part of the remediation plans described above, there has~~There have been no ~~change~~changes 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 ~~June 30, 2023~~March 31, 2024 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~~2023 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~~2023 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. For 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 and Signature Bank can access all of their funds, including funds held in uninsured deposit accounts, and have taken additional steps to provide liquidity to other banks, there is no guarantee that, 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 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.

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

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

As disclosed in Part I, Item 4, “Controls and Procedures,” we have 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 material misstatement of a company’s annual or 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 the 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 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 preparing the recording of invoices) and hosting of related information.

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

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could lose confidence in our reported financial information. In addition, in some circumstances, failure to maintain effective internal control over financial reporting could result in investigations or sanctions by regulatory authorities.

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

If we fail to remediate each material weakness and maintain effective internal control over financial reporting or disclosure controls and procedures, we may not be able to rely on the integrity of our financial results, which could result in inaccurate or late reporting of our financial results, as well as delays or the inability to meet our reporting obligations or to comply with SEC rules and regulations. Any of these could result in delisting actions by the Nasdaq Stock Market, investigation and sanctions by regulatory authorities, stockholder investigations and lawsuits, and could adversely affect our business and the trading price of our common stock. The potential consequences of any material weakness could have a material adverse effect 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 ~~June 30, 2023.~~March 31, 2024. 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. Incremental costs associated with trade execution for the Common Stock repurchases are outside of the scope of the Board’s authorization. For the avoidance of doubt, such costs are permissible as administrative execution expenses. The shares of Common Stock withheld to satisfy tax withholding obligations are considered to be "issuer purchases" of shares that are required to be disclosed pursuant to this Item, but are not considered to be part of the Company's ~~$50,000~~ stock repurchase program. For more information on the Company's stock repurchase program, see Note 119 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 (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.


	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Approximate Dollar Value ($ in thousands) of Shares that May Yet be Purchased Under Plan (2)
January 1-31, 2024	—	$	—	—	$	11,478
February 1-29, 2024	580,000	15.20		580,000	2,659
March 1-31, 2024	175,284	15.17		175,284	—
Total	755,284	$	15.20	755,284	$	—

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

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ITEM 5. OTHER INFORMATION

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,~~March 31, 2024, 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~~February 2, 2024

~~December 29, 2023~~March 31, 2025

~~(200,000)~~(268,000)

~~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~~Termination

~~May 5, 2023~~March 4, 2024

April 2, 2024

(142,463)

Grant Whitney, Senior Vice President and Chief Revenue Officer

Adoption

March 4, 2024

July 7, 2025

(226,288)

~~-53-~~-39-

Table of Contents

ITEM 6. EXHIBITS

(a)Exhibits


~~10.1~~10.1*			~~Employment~~Form of Performance-Based Restricted Stock Unit Award Agreement ~~dated as of April 11, 2023, by and between Jude Bricker and Sun Country, Inc. (incorporated by reference to Exhibit 10.1 to~~under the Sun Country Airlines Holdings, Inc.~~'s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2023)~~ 2021 Omnibus Incentive Plan

~~10.2~~			Employment Agreement, dated as of April 11, 2023, by and between David Davis and Sun Country, Inc. (incorporated by reference to Exhibit 10.2 to Sun Country Airlines Holdings, Inc.'s Current Report on Form 8-K filed with the Securities and 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 ~~June 30, 2023~~March 31, 2024

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 ~~June 30, 2023~~March 31, 2024

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 ~~June 30, 2023~~March 31, 2024

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

~~-54-~~-40-

Table of Contents

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)

~~August 4, 2023~~May 7, 2024

~~-55-~~-41-


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


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


	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