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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, 2023March 31, 2024
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-40217
SNYC 1.jpg
Sun Country Airlines Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware82-4092570
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2005 Cargo Road
Minneapolis, Minnesota55450
(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 classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareSNCYThe 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 – 56,012,22952,611,323 shares outstanding


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Sun Country Airlines Holdings, Inc.
Form 10-Q
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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, 2023December 31, 2022
(Unaudited)
March 31, 2024March 31, 2024December 31, 2023
(Unaudited)
ASSETS
ASSETS
ASSETSASSETS
Current Assets:Current Assets:
Current Assets:
Current Assets:
Cash and Cash Equivalents
Cash and Cash Equivalents
Cash and Cash EquivalentsCash and Cash Equivalents$86,930 $92,086 
Restricted CashRestricted Cash7,281 10,842 
InvestmentsInvestments158,177 178,936 
Accounts Receivable, net of an allowance for credit losses of $241 and $231, respectively26,937 35,124 
Accounts Receivable, net of an allowance for credit losses of $39 and $17, respectively
Short-term Lessor Maintenance DepositsShort-term Lessor Maintenance Deposits999 1,241 
Inventory, net of a reserve for obsolescence of $1,190 and $1,107, respectively7,365 7,659 
Inventory, net of a reserve for obsolescence of $753 and $977, respectively
Prepaid ExpensesPrepaid Expenses12,209 11,423 
Other Current AssetsOther Current Assets2,365 8,179 
Total Current Assets Total Current Assets302,263 345,490 
Property & Equipment, net:Property & Equipment, net:
Property & Equipment, net:
Property & Equipment, net:
Aircraft and Flight Equipment
Aircraft and Flight Equipment
Aircraft and Flight EquipmentAircraft and Flight Equipment664,757 636,584 
Aircraft and Flight Equipment Held for Operating LeaseAircraft and Flight Equipment Held for Operating Lease154,161 — 
Ground Equipment and Leasehold ImprovementsGround Equipment and Leasehold Improvements38,690 35,948 
Computer Hardware and SoftwareComputer Hardware and Software10,388 10,831 
Finance Lease AssetsFinance Lease Assets276,086 261,991 
Rotable PartsRotable Parts15,206 17,059 
Total Property & EquipmentTotal Property & Equipment1,159,288 962,413 
Accumulated Depreciation & AmortizationAccumulated Depreciation & Amortization(211,227)(176,746)
Total Property & Equipment, netTotal Property & Equipment, net948,061 785,667 
Other Assets:Other Assets:
Other Assets:
Other Assets:
GoodwillGoodwill222,223 222,223 
Other Intangible Assets, net of accumulated amortization of $21,325 and $18,890, respectively86,416 85,110 
Goodwill
Goodwill
Other Intangible Assets, net of accumulated amortization of $25,622 and $24,190, respectively
Operating Lease Right-of-use AssetsOperating Lease Right-of-use Assets18,715 22,182 
Aircraft DepositsAircraft Deposits9,614 9,134 
Long-term Lessor Maintenance DepositsLong-term Lessor Maintenance Deposits38,310 32,433 
Deferred Tax Asset— 12,956 
Other AssetsOther Assets9,021 9,217 
Total Other AssetsTotal Other Assets384,299 393,255 
Total AssetsTotal Assets$1,634,623 $1,524,412 
See accompanying Notes to Condensed Consolidated Financial Statements
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SUN COUNTRY AIRLINES HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share and share amounts)
June 30, 2023December 31, 2022
(Unaudited)
March 31, 2024March 31, 2024December 31, 2023
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:Current Liabilities:
Current Liabilities:
Current Liabilities:
Accounts Payable
Accounts Payable
Accounts PayableAccounts Payable$56,143 $62,370 
Accrued Salaries, Wages, and BenefitsAccrued Salaries, Wages, and Benefits30,095 26,521 
Accrued Transportation TaxesAccrued Transportation Taxes15,488 17,666 
Air Traffic LiabilitiesAir Traffic Liabilities130,264 157,995 
Finance Lease ObligationsFinance Lease Obligations33,641 17,990 
Loyalty Program LiabilitiesLoyalty Program Liabilities8,962 13,963 
Operating Lease ObligationsOperating Lease Obligations4,485 6,296 
Current Maturities of Long-term Debt, netCurrent Maturities of Long-term Debt, net83,204 57,548 
Income Tax Receivable Agreement LiabilityIncome Tax Receivable Agreement Liability8,000 2,260 
Other Current LiabilitiesOther Current Liabilities12,973 14,519 
Total Current LiabilitiesTotal Current Liabilities383,255 377,128 
Long-term Liabilities:Long-term Liabilities:
Long-term Liabilities:
Long-term Liabilities:
Finance Lease Obligations
Finance Lease Obligations
Finance Lease ObligationsFinance Lease Obligations223,647 233,306 
Loyalty Program LiabilitiesLoyalty Program Liabilities4,694 1,474 
Operating Lease ObligationsOperating Lease Obligations18,264 19,836 
Long-term Debt, netLong-term Debt, net365,211 294,687 
Deferred Tax LiabilityDeferred Tax Liability3,356 — 
Income Tax Receivable Agreement LiabilityIncome Tax Receivable Agreement Liability93,020 101,540 
Other Long-term LiabilitiesOther Long-term Liabilities2,411 3,729 
Total Long-term LiabilitiesTotal Long-term Liabilities710,603 654,572 
Total LiabilitiesTotal Liabilities1,093,858 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, respectively586 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 CapitalAdditional Paid-In Capital507,522 488,494 
Retained EarningsRetained Earnings80,994 22,048 
Accumulated Other Comprehensive LossAccumulated Other Comprehensive Loss(664)(807)
Total Stockholders' EquityTotal Stockholders' Equity540,765 492,712 
Total Liabilities and Stockholders' EquityTotal Liabilities and Stockholders' Equity$1,634,623 $1,524,412 
See accompanying Notes to Condensed Consolidated Financial Statements
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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,
2023202220232022
Three Months Ended March 31,Three Months Ended March 31,
202420242023
Operating Revenues:Operating Revenues:
Passenger
Passenger
PassengerPassenger$227,866 $195,362 $495,135 $397,394 
CargoCargo25,017 21,190 48,378 42,243 
OtherOther8,203 2,515 11,688 5,954 
Total Operating RevenuesTotal Operating Revenues261,086 219,067 555,201 445,591 
Operating Expenses:Operating Expenses:
Operating Expenses:
Operating Expenses:
Aircraft Fuel
Aircraft Fuel
Aircraft FuelAircraft Fuel52,360 76,947 124,650 141,492 
Salaries, Wages, and BenefitsSalaries, Wages, and Benefits75,919 60,298 151,349 119,915 
Aircraft RentAircraft Rent779 2,211 2,259 5,397 
MaintenanceMaintenance15,942 12,782 28,981 24,777 
Sales and MarketingSales and Marketing8,507 7,881 18,436 16,509 
Depreciation and AmortizationDepreciation and Amortization22,355 16,854 41,815 32,182 
Ground HandlingGround Handling11,311 8,212 22,349 16,170 
Landing Fees and Airport RentLanding Fees and Airport Rent12,962 9,496 25,013 19,782 
Other Operating, netOther Operating, net25,364 21,017 48,979 44,166 
Total Operating ExpensesTotal Operating Expenses225,499 215,698 463,831 420,390 
Operating Income Operating Income35,587 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 IncomeInterest Income2,545 532 5,286 556 
Interest ExpenseInterest Expense(11,239)(7,042)(19,869)(15,604)
Other, netOther, net(143)(1,702)(355)(8,577)
Total Non-operating Expense, netTotal Non-operating Expense, net(8,837)(8,212)(14,938)(23,625)
Income (Loss) Before Income Tax26,750 (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
BasicBasic$0.37 $(0.07)$1.05 $0.00 
DilutedDiluted$0.35 $(0.07)$0.99 $0.00 
Shares used for computation:Shares used for computation:
BasicBasic56,084,759 58,060,716 56,364,170 57,984,608 
Basic
Basic
DilutedDiluted59,712,048 58,060,716 59,630,008 57,984,608 
See accompanying Notes to Condensed Consolidated Financial Statements
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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,
2023202220232022
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,
20242023
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
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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
WarrantsCommon StockTreasury StockAdditional Paid-in CapitalRetained
Earnings
Accumulated Other Comprehensive (Loss) IncomeTotal
SharesAmountSharesAmount
December 31, 20222,402,268 58,217,647 $582 892,409 $(17,605)$488,494 $22,048 $(807)$492,712 
Stock Issued for Stock-Based Awards— 147,105 — — 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 Warrants189,652 — — — — 1,400 — — 1,400 
Stock-based Compensation— — — — — 2,678 — — 2,678 
Other Comprehensive Income— — — — — — — 389 389 
March 31, 20232,591,920 58,364,752 $584 2,123,747 $(40,162)$500,627 $60,376 $(418)$521,007 
Stock Issued for Share-Based Awards— 187,975 — — 613 — — 615 
Common Stock Repurchases— — — 416,751 (7,511)— — — (7,511)
Net Income— — — — — — 20,618 — 20,618 
Amazon Warrants252,869 — — — — 1,867 — — 1,867 
Stock-based Compensation— — — — — 4,415 — — 4,415 
Other Comprehensive Loss— — — — — — — (246)(246)
June 30, 20232,844,789 58,552,727 $586 2,540,498 $(47,673)$507,522 $80,994 $(664)$540,765 

Six Months Ended June 30, 2022
WarrantsCommon StockTreasury StockAdditional Paid-in CapitalRetained
Earnings
Accumulated Other Comprehensive (Loss)Total
SharesAmountSharesAmount
December 31, 20211,643,660 57,872,452 $579 — $— $485,638 $4,372 $— $490,589 
Stock Issued for Stock-Based Awards— 91,868 — — 522 — — 523 
Net Income— — — — — — 3,637 — 3,637 
Amazon Warrants189,652 — — — — 1,400 — — 1,400 
Stock-based Compensation— — — — — 920 — — 920 
March 31, 20221,833,312 57,964,320 $580 — $— $488,480 $8,009 $— $497,069 
Stock Issued for Share-Based Awards— 181,404 — — 1,037 — — 1,038 
Net Stock Settlement of Stock-Based Awards— — — 1,823 (52)— — — (52)
Net Loss— — — — — — (3,922)— (3,922)
Amazon Warrants189,652 — — — — 1,400 — — 1,400 
Stock-based Compensation— — — — — 575 — — 575 
Other Comprehensive Loss— — — — — — — (220)(220)
June 30, 20222,022,964 58,145,724 $581 1,823 $(52)$491,492 $4,087 $(220)$495,888 
Three Months Ended March 31, 2024
WarrantsCommon StockTreasury StockAdditional Paid-in CapitalRetained
Earnings
Accumulated Other Comprehensive (Loss) IncomeTotal
SharesAmountSharesAmount
December 31, 20233,224,093 58,878,723 $589 5,587,722 $(94,341)$513,988 $94,229 $(62)$514,403 
Stock Issued for Stock-Based Awards— 75,606 — — 110 — — 111 
Net Income— — — — — — 35,313 — 35,313 
Common Stock Repurchases— — — 755,284 (11,596)— — — (11,596)
Amazon Warrants189,652 — — — — 1,400 — — 1,400 
Stock-based Compensation— — — — — 1,514 — — 1,514 
Other Comprehensive Income— — — — — — — (139)(139)
March 31, 20243,413,745 58,954,329 $590 6,343,006 $(105,937)$517,012 $129,542 $(201)$541,006 

Three Months Ended March 31, 2023
WarrantsCommon StockTreasury StockAdditional Paid-in CapitalRetained
Earnings
Accumulated Other Comprehensive (Loss) IncomeTotal
SharesAmountSharesAmount
December 31, 20222,402,268 58,217,647 $582 892,409 $(17,605)$488,494 $22,048 $(807)$492,712 
Stock Issued for Stock-Based Awards— 147,105 — — 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 Warrants189,652 — — — — 1,400 — — 1,400 
Stock-based Compensation— — — — — 2,678 — — 2,678 
Other Comprehensive Income— — — — — — — 389 389 
March 31, 20232,591,920 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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SUN COUNTRY AIRLINES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six Months Ended June 30,
20232022
Net Income (Loss)$58,946 $(285)
Adjustments to reconcile Net Income (Loss) to Cash from Operating Activities:
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
2024
2024
2024
Net Income
Net Income
Net Income
Adjustments to reconcile Net Income to Cash from Operating Activities:
Adjustments to reconcile Net Income to Cash from Operating Activities:
Adjustments to reconcile Net Income to Cash from Operating Activities:
Depreciation and Amortization
Depreciation and Amortization
Depreciation and AmortizationDepreciation and Amortization41,815 32,182 
Deferred Income TaxesDeferred Income Taxes16,269 1,861 
Deferred Income Taxes
Deferred Income Taxes
Other, net
Other, net
Other, netOther, net11,677 18,356 
Changes in Operating Assets and Liabilities:Changes in Operating Assets and Liabilities:  
Changes in Operating Assets and Liabilities:
Changes in Operating Assets and Liabilities:
Accounts Receivable
Accounts Receivable
Accounts ReceivableAccounts Receivable9,199 (8,023)
InventoryInventory(1,012)(1,184)
Inventory
Inventory
Prepaid Expenses
Prepaid Expenses
Prepaid ExpensesPrepaid Expenses(780)(7,733)
Lessor Maintenance DepositsLessor Maintenance Deposits(5,635)(7,356)
Lessor Maintenance Deposits
Lessor Maintenance Deposits
Aircraft Deposits
Aircraft Deposits
Aircraft DepositsAircraft Deposits(427)(1,720)
Other AssetsOther Assets1,269 18 
Other Assets
Other Assets
Accounts Payable
Accounts Payable
Accounts PayableAccounts Payable(2,744)15,692 
Accrued Transportation TaxesAccrued Transportation Taxes(2,178)1,813 
Accrued Transportation Taxes
Accrued Transportation Taxes
Air Traffic Liabilities
Air Traffic Liabilities
Air Traffic LiabilitiesAir Traffic Liabilities(27,731)5,396 
Loyalty Program LiabilitiesLoyalty Program Liabilities(1,781)(3,113)
Loyalty Program Liabilities
Loyalty Program Liabilities
Operating Lease Obligations
Operating Lease Obligations
Operating Lease ObligationsOperating Lease Obligations(2,999)(5,698)
Other LiabilitiesOther Liabilities1,805 (3,146)
Other Liabilities
Other Liabilities
Net Cash Provided by Operating Activities
Net Cash Provided by Operating Activities
Net Cash Provided by Operating ActivitiesNet Cash Provided by Operating Activities95,693 37,060 
Cash Flows from Investing Activities:Cash Flows from Investing Activities:  
Cash Flows from Investing Activities:
Cash Flows from Investing Activities:
Purchases of Property & Equipment
Purchases of Property & Equipment
Purchases of Property & EquipmentPurchases of Property & Equipment(192,352)(137,647)
Purchases of InvestmentsPurchases of Investments(49,437)(71,629)
Purchases of Investments
Purchases of Investments
Proceeds from the Maturities of Investments
Proceeds from the Maturities of Investments
Proceeds from the Maturities of InvestmentsProceeds from the Maturities of Investments71,795 — 
Other, netOther, net1,953 10,315 
Other, net
Other, net
Net Cash Used in Investing Activities
Net Cash Used in Investing Activities
Net Cash Used in Investing ActivitiesNet Cash Used in Investing Activities(168,041)(198,961)
Cash Flows from Financing Activities:Cash Flows from Financing Activities:  
Cash Flows from Financing Activities:
Cash Flows from Financing Activities:
Common Stock Repurchases
Common Stock Repurchases
Common Stock RepurchasesCommon Stock Repurchases(22,249)— 
Proceeds from BorrowingsProceeds from Borrowings119,200 172,507 
Proceeds from Borrowings
Proceeds from Borrowings
Repayment of Finance Lease Obligations
Repayment of Finance Lease Obligations
Repayment of Finance Lease ObligationsRepayment of Finance Lease Obligations(8,671)(24,293)
Repayment of BorrowingsRepayment of Borrowings(21,808)(86,046)
Repayment of Borrowings
Repayment of Borrowings
Other, netOther, net(2,841)(1,062)
Net Cash Provided by Financing Activities63,631 61,106 
Other, net
Other, net
Net Cash Provided by (Used in) Financing Activities
Net Cash Provided by (Used in) Financing Activities
Net Cash Provided by (Used in) Financing Activities
Net Decrease in Cash, Cash Equivalents and Restricted Cash
Net Decrease in Cash, Cash Equivalents and Restricted Cash
Net Decrease in Cash, Cash Equivalents and Restricted CashNet Decrease in Cash, Cash Equivalents and Restricted Cash(8,717)(100,795)
Cash, Cash Equivalents and Restricted Cash--Beginning of the PeriodCash, Cash Equivalents and Restricted Cash--Beginning of the Period102,928 317,785 
Cash, Cash Equivalents and Restricted Cash--Beginning of the Period
Cash, Cash Equivalents and Restricted Cash--Beginning of the Period
Cash, Cash Equivalents and Restricted Cash--End of the Period
Cash, Cash Equivalents and Restricted Cash--End of the Period
Cash, Cash Equivalents and Restricted Cash--End of the PeriodCash, Cash Equivalents and Restricted Cash--End of the Period$94,211 $216,990 
Non-cash transactions:Non-cash transactions:
Aircraft and Flight Equipment Acquired through Finance Leases$— $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:
Non-cash transactions:
Aircraft Acquired under Finance Lease
Aircraft Acquired under Finance Lease
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:The following provides a reconciliation of Cash, Cash Equivalents and Restricted Cash to the amounts reported on the Condensed Consolidated Balance Sheets:
June 30, 2023June 30, 2022
The following provides a reconciliation of Cash, Cash Equivalents and Restricted Cash to the amounts reported on the Condensed Consolidated Balance Sheets:
The following provides a reconciliation of Cash, Cash Equivalents and Restricted Cash to the amounts reported on the Condensed Consolidated Balance Sheets:
March 31, 2024
March 31, 2024
March 31, 2024
Cash and Cash Equivalents
Cash and Cash Equivalents
Cash and Cash EquivalentsCash and Cash Equivalents$86,930 $212,858 
Restricted CashRestricted Cash7,281 4,132 
Restricted Cash
Restricted Cash
Total Cash, Cash Equivalents and Restricted CashTotal Cash, Cash Equivalents and Restricted Cash$94,211 $216,990 
Total Cash, Cash Equivalents and Restricted Cash
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, 20222023 as filed with the SEC ("20222023 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 sixthree months ended June 30, 2023March 31, 2024 are not necessarily indicative of operating results for future quartersother 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 serviceService 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 interfaceother 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,
2023202220232022
Three Months Ended March 31,Three Months Ended March 31,
202420242023
Scheduled ServiceScheduled Service$111,467 $108,412 $264,124 $232,479 
Charter Service49,626 42,749 95,813 75,628 
Charter
AncillaryAncillary66,773 44,201 135,198 89,287 
Passenger Passenger227,866 195,362 495,135 397,394 
CargoCargo25,017 21,190 48,378 42,243 
OtherOther8,203 2,515 11,688 5,954 
Total Operating RevenuesTotal 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,
2023202220232022
Three Months Ended March 31,Three Months Ended March 31,
202420242023
DomesticDomestic$251,582 $211,012 $526,071 $419,851 
Latin AmericaLatin America9,451 8,014 28,555 25,634 
OtherOther53 41 575 106 
Total Operating RevenuesTotal 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 hashave 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, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
Contract AssetsContract Assets
Costs to fulfill contract with Amazon
Costs to fulfill contract with Amazon
Costs to fulfill contract with AmazonCosts to fulfill contract with Amazon$1,855 $2,195 
Total Contract AssetsTotal Contract Assets$1,855 $2,195 
Contract LiabilitiesContract Liabilities
Contract Liabilities
Contract Liabilities
Air Traffic Liabilities
Air Traffic Liabilities
Air Traffic LiabilitiesAir Traffic Liabilities$130,264 $157,995 
Loyalty Program LiabilitiesLoyalty Program Liabilities13,656 15,437 
Amazon Deferred Up-front PaymentAmazon Deferred Up-front Payment2,764 3,271 
Total Contract LiabilitiesTotal 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 sixthree months ended June 30, 2023, $146,904March 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:
20232022
202420242023
Balance – January 1Balance – January 1$15,437 $19,718 
Loyalty Points EarnedLoyalty Points Earned4,262 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 showssets forth the computation of basic and diluted earnings per share:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Three Months Ended March 31,Three Months Ended March 31,
202420242023
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 - Basic56,084,759 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 - Diluted59,712,048 58,060,716 59,630,008 57,984,608 
Basic earnings per shareBasic earnings per share$0.37 $(0.07)$1.05 $0.00 
Basic earnings per share
Basic earnings per share
Diluted earnings per shareDiluted earnings per share$0.35 $(0.07)$0.99 $0.00 
______________________
(1)There were 3,051,0252,778,194 and 3,372,5273,117,544 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 3,676,847The 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 ofwould 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 presentedthe 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 sixthree months ended June 30,March 31, 2024 and 2023, and 2022, respectively:
December 31, 2022AdditionsReclassificationsRemovalsJune 30, 2023
December 31, 2023December 31, 2023AdditionsReclassificationsRemovalsMarch 31, 2024
Passenger:Passenger:
OwnedOwned29— — 

30
Finance leases (1)
11— — 12
Owned
Owned29— — 

30
Finance leasesFinance leases13— — 14
Sun Country Airlines’ FleetSun Country Airlines’ Fleet42— — 44
Cargo:
Aircraft Operated for Amazon
Aircraft Operated for Amazon
Aircraft Operated for Amazon12 — — — 12
Other:
Owned Aircraft Held for Operating Lease
Owned Aircraft Held for Operating Lease
Owned Aircraft Held for Operating Lease— — — 5
Subleased Aircraft (1)
Subleased Aircraft (1)
— — 2
Total AircraftTotal Aircraft60— — 63
December 31, 2022
December 31, 2022
December 31, 2022AdditionsReclassificationsRemovalsMarch 31, 2023
Passenger:
Owned
Owned
Owned
Finance leases
Operating leasesOperating leases— (1)— 
Sun Country Airlines’ FleetSun Country Airlines’ Fleet42— — 43
Cargo:Cargo:
Aircraft Operated for AmazonAircraft Operated for Amazon12— — — 12
Other Owned:
Aircraft Held for Operating Lease— — 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 AircraftTotal Aircraft54— — 60
December 31, 2021AdditionsReclassificationsRemovalsJune 30, 2022
Passenger:
Owned21 (1)26 
Finance leases (2)
— 11 
Operating leases— (2)— 
Sun Country Airlines’ Fleet36 — (1)41 
Cargo:
Aircraft Operated for Amazon12 — — — 12 
Total Aircraft48 — (1)53 
(1)One aircraft operatingThe head lease was reclassified into aassociated 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 sixthree months ended June 30, 2023,March 31, 2024, the Company acquired five 737-900ERs that are currently onone 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 fivethrough 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 purchasepurchased one aircraft at the end of itspreviously 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)
andDuring 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 wereare 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 expireterm 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 StatusAircraft StatusExpense Type2023202220232022Aircraft StatusExpense Type20242023
OwnedOwnedDepreciation$14,443 $10,175 $26,315 $18,848 
Finance LeasedFinance LeasedAmortization4,875 4,044 9,558 8,113 
Operating LeasedOperating 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 LeaseAircraft and Flight Equipment Held for Operating Lease$114,628 
Maintenance Rights AssetAircraft and Flight Equipment Held for Operating Lease39,533 
Over-Market AssetOther Intangible Assets, net3,741 
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 onDue 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 letterletters of credit.
Long-term Debt
Term Loan Credit Facility
During the sixthree 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 beare 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.
The interest rate on the term loan credit facility is determined by using a base rate, which resets monthly, plus an applicable margin, and a fixed credit spread adjustment of 0.1%. The applicable margin during the lease term is fixed at 3.75%, and is subsequently reduced to 3.25% once the aircraft have been redelivered to the Company and a Loan-to-Value ("LTV") ratio calculation is completed at the end of the lease term. The interest rate in effect as of June 30, 2023 on the term loanMarch 31, 2024 was 8.9%9.2%. To the extent that the LTV ratio exceeds 75% at the end of the lease term, a principal prepayment will be required in order to reduce the ratio to 75%. AmountsIf at any point within 12 months of the end of the lease term for each respective aircraft the Company deems it
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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 maywill 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 EETCClass 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, 2024December 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 Debt391,809 405,640 
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 
202580,005 (956)79,049 
202661,150 (709)60,441 
202765,175 (525)64,650 
202836,362 (337)36,025 
Thereafter87,558 (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, 2023December 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 Debt453,109 355,716 
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 
202475,617 (1,168)74,449 
202580,009 (944)79,065 
202661,072 (705)60,367 
202765,097 (530)64,567 
Thereafter123,747 (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, 2023March 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.
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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 CostGross Unrealized GainsGross Unrealized LossesFair Value
March 31, 2024March 31, 2024
Amortized CostAmortized CostGross Unrealized GainsGross Unrealized LossesFair 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 SecuritiesCorporate Debt Securities64,329 — (256)64,073 
U.S. Government Agency SecuritiesU.S. Government Agency Securities69,299 — (487)68,812 
TotalTotal$152,322 $— $(861)$151,461 
December 31, 2022
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
December 31, 2023December 31, 2023
Amortized CostAmortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available-for-Sale Securities: (1)
Available-for-Sale Securities: (1)
Municipal Debt Securities
Municipal Debt Securities
Municipal Debt SecuritiesMunicipal Debt Securities$47,897 $16 $(258)$47,655 
Corporate Debt SecuritiesCorporate Debt Securities93,460 (683)92,778 
U.S. Government Agency SecuritiesU.S. Government Agency Securities32,326 (126)32,202 
TotalTotal$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, 2023March 31, 2024 and December 31, 2022,2023, respectively.
As of June 30, 2023, substantially all ofMarch 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, theThe 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 1Level 2Level 3Total
March 31, 2024March 31, 2024
Level 1Level 1Level 2Level 3Total
Cash & Cash EquivalentsCash & 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 SecuritiesCorporate Debt Securities— 64,073 — 64,073 
U.S. Government Agency SecuritiesU.S. Government Agency Securities— 68,812 — 68,812 
Total Available-for-Sale SecuritiesTotal Available-for-Sale Securities— 151,461 — 151,461 
Total Assets Measured at Fair Value on a Recurring BasisTotal 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 1Level 2Level 3Total
December 31, 2023December 31, 2023
Level 1Level 1Level 2Level 3Total
Cash & Cash EquivalentsCash & Cash Equivalents$73,727 $18,359 $— $92,086 
Available-for-Sale Securities:Available-for-Sale Securities:
Municipal Debt Securities
Municipal Debt Securities
Municipal Debt SecuritiesMunicipal Debt Securities— 47,655 — 47,655 
Corporate Debt SecuritiesCorporate Debt Securities— 92,778 — 92,778 
U.S. Government Agency SecuritiesU.S. Government Agency Securities— 32,202 — 32,202 
Total Available-for-Sale SecuritiesTotal Available-for-Sale Securities— 172,635 — 172,635 
Total Assets Measured at Fair Value on a Recurring BasisTotal 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 three24.2% 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 forrate was primarily due to a decrease in the three and six months ended June 30, 2022 were primarily impacted byimpact 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 TRAtotal Tax Receivable Agreement ("TRA") balance as of June 30, 2023March 31, 2024 and December 31, 20222023 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 AgreementTRA could differ from this estimate. During the sixthree 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 paymentpayments 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 OfferingsCommon 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 commencementrepurchased 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 5,250,000the 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 purchasesettlement 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 sixthree months ended June 30,March 31, 2024 and 2023, and June 30, 2022, 442,521 and 379,304189,652 warrants vested, respectively. As of June 30,March 31, 2024 and 2023, and June 30, 2022, the cumulative vested warrants held by Amazon were 2,844,7893,413,745 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, theThe 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 payableis subject to an executive officer temporarily exceededaudit 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 asthe 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 deemedCompany received an assessment of approximately $2,700 from the IRS related to have failed to remainthe 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 sharethis 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, 2023Three Months Ended June 30, 2022
PassengerCargoConsolidatedPassengerCargoConsolidated
Operating Revenues$236,069 $25,017 $261,086 $197,877 $21,190 $219,067 
Non-Fuel Operating Expenses146,207 26,932 173,139 117,297 21,454 138,751 
Aircraft Fuel52,347 13 52,360 76,947 — 76,947 
Total Operating Expenses198,554 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 Income2,545 532 
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, 2023Six Months Ended June 30, 2022
PassengerCargoConsolidatedPassengerCargoConsolidated
Operating Revenues$506,823 $48,378 $555,201 $403,348 $42,243 $445,591 
Non-Fuel Operating Expenses286,843 52,338 339,181 238,105 40,793 278,898 
Aircraft Fuel124,613 37 124,650 141,492 — 141,492 
Total Operating Expenses411,456 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 Income5,286 556 
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, 2024Three Months Ended March 31, 2023
PassengerCargoConsolidatedPassengerCargoConsolidated
Operating Revenues$287,535 $23,948 $311,483 $270,754 $23,361 $294,115 
Non-Fuel Operating Expenses160,700 25,303 186,003 140,637 25,405 166,042 
Aircraft Fuel70,304 — 70,304 72,266 24 72,290 
Total Operating Expenses231,004 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 Income2,448 2,741 
Interest Expense(11,112)(8,630)
Other, net46 (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.
TheSubsequent to March 31, 2024, the Company executedpurchased one aircraft previously classified as a purchase amendment for an aircraftfinance 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 endevents, 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 $30,000Notes 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 sixthree months ended June 30, 2023March 31, 2024 and 2022.2023. Also discussed is our financial position as of June 30, 2023March 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 20222023 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 20222023 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 cargoCargo 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 charterCharter customers and providing crew, maintenance and insurance (“CMI”) services,service to Amazon, with flights throughout the United StatesU.S. and to destinations in Canada, Mexico, Central America and the Caribbean. We share resources, such as flight crews, across our scheduled service, charterScheduled Service, Charter and cargoCargo business lines with the objective of generating higherhigh 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 shiftingusing 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 ourthis flexible business model generates higher returns and margins while also providingprovides 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 serviceScheduled 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 Ancillaryancillary 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 charterCharter business, which is one of the largest narrow body charterCharter operations in the United States, is a key component ofsynergistic with our strategy because itother businesses and provides both inherent diversification and downside protection, andprotection. Our
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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 charterCharter business has several favorable characteristics, including: large repeat customers, more stable demand than scheduled serviceScheduled Service flying, and the ability to pass through certain costs, including fuel. Our diverse charterCharter customer base includes casino operators, the U.S. Department of Defense,DoD, and collegiate and professional sports teams. Our charterCharter business includes ad hoc, repeat, short-term and long-term service contracts with pass-throughpass through fuel arrangements and annual rate escalations. Most of our business is non-cyclical because the U.S. Department of DefenseDoD 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, complementarycomplimentary streaming of in-flight entertainment to passenger devices, seat reclining and seat-back power in all of our aircraft.
Pilot training throughput issuesFuel 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 demandOur 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 hasallowed us to offset thea majority of additional costs associated with pilot training throughput issuesfuel 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 20222023 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 20222023 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
CharterCargoTotalScheduled
Service
CharterCargoTotal
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
CharterCargoTotalScheduled
Service
CharterCargoTotal
Departures (2)
Departures (2)
6,4012,759 3,184 12,495 5,6742,235 2,693 10,687 
Block hours (2)
Block hours (2)
19,5615,666 8,570 34,230 18,2054,573 7,762 30,755 
Aircraft miles (2)
Aircraft miles (2)
7,622,4651,955,117 3,292,789 13,015,134 7,233,7221,621,748 3,000,546 11,914,350 
Available seat miles (ASMs) (thousands) (2)
Available seat miles (ASMs) (thousands) (2)
1,417,778337,319 1,780,340 1,343,116278,804 1,632,501 
Total revenue per ASM (TRASM) (cents) (3)
Total revenue per ASM (TRASM) (cents) (3)
12.7414.71 12.93 11.5515.33 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 periodCargo aircraft at end of period   12   12 
Aircraft Held for Operating Lease— 
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)
15,1284,023 19,399 14,1873,271 17,568 
Fuel cost per gallon, excluding indirect fuel creditsFuel cost per gallon, excluding indirect fuel credits   $2.71   $4.39 
Employees at end of periodEmployees 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.
















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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

Six Months Ended June 30, 2023(1)
Six Months Ended June 30, 2022 (1)
Scheduled
Service
CharterCargoTotalScheduled
Service
CharterCargoTotal
Departures (2)
12,5785,128 6,211 24,167 11,9013,855 5,267 21,174 
Block hours (2)
41,50310,720 16,346 69,313 40,6388,377 15,152 64,560 
Aircraft miles (2)
16,362,9383,680,870 6,133,159 26,416,342 16,334,4363,001,196 5,810,328 25,249,223 
Available seat miles (ASMs) (thousands) (2)
3,043,506639,231 3,725,341 3,027,648514,509 3,560,651 
Total revenue per ASM (TRASM) (cents) (3)
13.3114.99 13.45 10.8214.70 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— 
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)
32,5117,550 40,472 31,5876,029 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.


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

Three Months Ended June 30,$
Change
%
Change
20232022
Operating Revenues:
Scheduled Service$111,467 $108,412 $3,055 %
Charter Service49,626 42,749 6,877 16 %
Ancillary66,773 44,201 22,572 51 %
Passenger227,866 195,362 32,504 17 %
Cargo25,017 21,190 3,827 18 %
Other8,203 2,515 5,688 226 %
Total Operating Revenues261,086 219,067 42,019 19 %
Operating Expenses:
Aircraft Fuel52,360 76,947 (24,587)(32)%
Salaries, Wages, and Benefits75,919 60,298 15,621 26 %
Aircraft Rent779 2,211 (1,432)(65)%
Maintenance15,942 12,782 3,160 25 %
Sales and Marketing8,507 7,881 626 %
Depreciation and Amortization22,355 16,854 5,501 33 %
Ground Handling11,311 8,212 3,099 38 %
Landing Fees and Airport Rent12,962 9,496 3,466 36 %
Other Operating, net25,364 21,017 4,347 21 %
Total Operating Expenses225,499 215,698 9,801 %
Operating Income35,587 3,369 32,218 956 %
Non-operating Income (Expense):
Interest Income2,545 532 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)%
Income (Loss) Before Income Tax26,750 (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
20242023
Operating Revenues:
Scheduled Service$141,194 $152,657 $(11,463)(8)%
Charter47,312 46,187 1,125 %
Ancillary86,158 68,425 17,733 26 %
Passenger274,664 267,269 7,395 %
Cargo23,948 23,361 587 %
Other12,871 3,485 9,386 269 %
Total Operating Revenues311,483 294,115 17,368 %
Operating Expenses:
Aircraft Fuel70,304 72,290 (1,986)(3)%
Salaries, Wages, and Benefits82,238 75,430 6,808 %
Aircraft Rent— 1,480 (1,480)(100)%
Maintenance16,817 13,039 3,778 29 %
Sales and Marketing10,679 9,929 750 %
Depreciation and Amortization23,809 19,460 4,349 22 %
Ground Handling9,154 9,170 (16)— %
Landing Fees and Airport Rent14,729 10,945 3,784 35 %
Other Operating, net28,577 26,589 1,988 %
Total Operating Expenses256,307 238,332 17,975 %
Operating Income55,176 55,783 (607)(1)%
Non-operating Income (Expense):
Interest Income2,448 2,741 (293)(11)%
Interest Expense(11,112)(8,630)(2,482)29 %
Other, net46 (212)258 (122)%
Total Non-operating Expense, net(8,618)(6,101)(2,517)41 %
Income Before Income Tax46,558 49,682 (3,124)(6)%
Income Tax Expense11,245 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, 2023March 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 2023rental revenue included within Other revenue, as compared to the second quarter of 2022. Thewell as an 11% increase in demand resultedPassenger segment departures, partially offset by an 11% decrease in an increase to average total fareTotal 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 inMarch 31, 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)
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
20232022
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:
DeparturesDepartures6,401 5,674 727 13 %
Departures
Departures7,169 6,177 992 16 %
Block HoursBlock Hours25,496 21,941 3,555 16 %
PassengersPassengers1,005,126 884,088 121,038 14 %Passengers1,157,511 998,238 998,238 159,273 159,273 16 16 %
Average base fare per passengerAverage 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 passengerAncillary revenue per passenger$74.43 $68.55 $5.88 %
Total Fare per passengerTotal Fare per passenger$196.41 $221.48 $(25.07)(11)%
RPMs (thousands)RPMs (thousands)1,216,261 1,126,030 90,231 %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 %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 factorPassenger load factor85.8 %83.8 %2.0 ptsN/APassenger load factor87.4 %88.1 %(0.7)ptsN/A
Charter Statistics:
Charter Statistics:
Charter Statistics:
Departures
Departures
Departures2,292 2,369 (77)(3)%
Block hoursBlock hours4,900 5,054 (154)(3)%
Charter revenue per block hourCharter revenue per block hour$9,655 $9,139 516 %
The quarter-over-quarter increases in certain Scheduled Service operating data were primarily the result of anincreased capacity due to a 10% increase in demandaverage 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-quarterASMs 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 pointTRASM. The 16% increase in passenger load factor. TheSchedule 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 increaseCompany 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 bydepartures. This resulted in a 6% decrease quarter-over-quarterincrease 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 increasedecrease 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.
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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
20232022
Total Aircraft Fuel Expense$52,360 $76,947 $(24,587)(32)%
Indirect Fuel Credits212 208 %
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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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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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
20232022
Operating Revenues:
Scheduled Service$264,124 $232,479 $31,645 14 %
Charter Service95,813 75,628 20,185 27 %
Ancillary135,198 89,287 45,911 51 %
Passenger495,135 397,394 97,741 25 %
Cargo48,378 42,243 6,135 15 %
Other11,688 5,954 5,734 96 %
Total Operating Revenues555,201 445,591 109,610 25 %
Operating Expenses:
Aircraft Fuel124,650 141,492 (16,842)(12)%
Salaries, Wages, and Benefits151,349 119,915 31,434 26 %
Aircraft Rent2,259 5,397 (3,138)(58)%
Maintenance28,981 24,777 4,204 17 %
Sales and Marketing18,436 16,509 1,927 12 %
Depreciation and Amortization41,815 32,182 9,633 30 %
Ground Handling22,349 16,170 6,179 38 %
Landing Fees and Airport Rent25,013 19,782 5,231 26 %
Other Operating, net48,979 44,166 4,813 11 %
Total Operating Expenses463,831 420,390 43,441 10 %
Operating Income91,370 25,201 66,169 263 %
Non-operating Income (Expense):
Interest Income5,286 556 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 Tax76,432 1,576 74,856 NM
Income Tax Expense17,486 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
20232022
Departures12,578 11,901 677 %
Passengers2,003,364 1,806,740 196,624 11 %
Average base fare per passenger$131.84 $128.67 $3.17 %
RPMs (thousands)2,648,392 2,464,490 183,902 %
ASMs (thousands)3,043,506 3,027,648 15,858 %
TRASM (cents)13.31 10.82 2.49 23 %
Passenger load factor87.0 %81.4 %5.6 ptsN/A
The year-over-year increases in certain Scheduled Service operating data were primarily the result of an increase in demand year-over-year. The year-over-year increase in demand is demonstrated by an 11% increase in passengers, a 5.6 percentage point increase in passenger load factor, and a 2% increase in the average base fare per passenger. The year-over-year Scheduled Service revenue increase is slightly offset by the introduction of a new Ancillary product during the second quarter of 2022, which reclassified approximately $38,598 of revenue from Scheduled Service to Ancillary during the six months ended June 30, 2023, as compared to $5,552 during the six months ended June 30, 2022.
Charter Service. Charter service revenue increased $20,185, or 27%, to $95,813 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The increase in Charter Service revenue was driven by a 33% and 28%increase in Charter Service departures and block hours, respectively. Charter Service revenue per block hour was materially consistent year-over-year.
Ancillary. Ancillary revenue increased $45,911, or 51%, to $135,198 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. Ancillary revenue was $67.49 per passenger in the six months ended June 30, 2023, up $18.07 or 37%, from the six months ended June 30, 2022. Ancillary revenue benefited from the introduction of a new Ancillary product during the second quarter of 2022, which reclassified approximately $38,598 of revenue from Scheduled Service to Ancillary during the six months ended June 30, 2023, as compared to $5,552 during the six months ended June 30, 2022. The increase in Scheduled Service passengers during the period resulted in greater sales of air travel-related services, such as baggage fees, seat selection and upgrade fees, priority check-in and boarding fees, itinerary service fees, other fees and on-board sales. The increase in Ancillary revenue was further supported by rate increases for our Ancillary products.
Cargo. Revenue from Cargo services increased $6,135, or 15%, to $48,378 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. The increase was primarily driven by an 18% and 8% increase in Cargo departures and block hours, respectively. Revenue during the six months ended June 30, 2023 also benefited from the annual rate escalation included in the ATSA, which went into effect on December 13, 2022.
Other. Other revenue increased $5,734, or 96%, to $11,688 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. Other revenue in the current year benefited from $5,871 of rental revenue associated with the five Aircraft Held for Operating Lease acquired during the first half of 2023.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Operating Expenses
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
20232022
Total Aircraft Fuel Expense$124,650 $141,492 $(16,842)(12)%
Indirect Fuel Credits651 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 %
Fuel Cost per Gallon, Excluding Indirect Fuel Credits$3.10 $3.76 $(0.66)(18)%

Three Months Ended March 31,Change%
Change
20242023
Total Aircraft Fuel Expense$70,304 $72,290 $(1,986)(3)%
Indirect Fuel Credits954 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-year3% quarter-over-quarter primarily due to a 18%13% decrease in the average fuel cost per gallon, slightlypartially 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 sixthree months ended June 30, 2023,March 31, 2024, as compared to the sixthree months ended June 30, 2022.March 31, 2023. The year-over-yearquarter-over-quarter increase in Salaries, Wages, and Benefits was impacted by ana 9% increase in employee headcount, an accelerationincrease in block hours as a result of stock-based compensation expense recognized during the six months ended June 30, 2023operational 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 sixthree months ended June 30, 2023,March 31, 2024, as compared to the sixthree months ended June 30, 2022.March 31, 2023. Aircraft Rent expense decreased primarily due to the composition of our aircraft fleet continuing to shiftshifting 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 sixthree months ended June 30, 2023,March 31, 2024, as compared to the sixthree months ended June 30, 2022.March 31, 2023. The quarter-over-quarter increase in Maintenance expense was primarily driven by higher linean increase in routine, time-based heavy maintenance costs due toand 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 sixthree months ended June 30, 2023,March 31, 2024, as compared to the sixthree months ended June 30, 2022.March 31, 2023. The year-over-year increasechange quarter-over-quarter was primarily driven by an approximately $2,900increase 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 resultchange 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 sixthree months ended June 30, 2023,March 31, 2024, as compared to the sixthree months ended June 30, 2022. The increase was primarily drivenMarch 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 sixthree months ended June 30, 2023,March 31, 2024, as compared to the sixthree months ended June 30, 2022.March 31, 2023. The increase was primarily drivena 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 sixthree months ended June 30, 2023,March 31, 2024, as compared to the sixthree 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 $5,286decreased $293, or 11%, to $2,448 for the sixthree months ended June 30, 2023March 31, 2024, as compared to the three months ended March 31, 2023. The decrease was primarily due to the changedecrease in ourthe 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 sixthree months ended June 30, 2023,March 31, 2024, as compared to the sixthree months ended June 30, 2022.March 31, 2023. The changeincrease 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 sixthree 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 sixthree months ended June 30, 2023March 31, 2024 was 22.9%24.2% compared to 118.1%22.9% for the sixthree months ended June 30, 2022.March 31, 2023. The decreaseincrease in the effective tax rate was primarily due to the $8,500 non-deductible adjustment of the TRA liabilitya decrease in the prior period, partially offset byimpact of stock compensation benefits. For more information onoption 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, 2023Three Months Ended June 30, 2022
PassengerCargoTotalPassengerCargoTotal
Three Months Ended March 31, 2024Three Months Ended March 31, 2024Three Months Ended March 31, 2023
PassengerPassengerCargoTotalPassengerCargoTotal
Operating RevenuesOperating Revenues$236,069$25,017$261,086$197,877$21,190$219,067Operating 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 FuelAircraft Fuel52,3471352,36076,94776,94770,30470,30472,2662472,290
Salaries, Wages, and BenefitsSalaries, Wages, and Benefits57,74518,17475,91946,85413,44460,298Salaries, Wages, and Benefits65,58816,65082,23858,80816,62275,430
Aircraft RentAircraft Rent7797792,2112,211Aircraft Rent1,4801,480
MaintenanceMaintenance12,1793,76315,9429,2733,50912,782Maintenance13,4043,41316,8179,4823,55713,039
Sales and MarketingSales and Marketing8,5078,5077,8817,881Sales and Marketing10,67910,6799,9299,929
Depreciation and AmortizationDepreciation and Amortization22,3411422,35516,8282616,854Depreciation and Amortization23,804523,80919,4303019,460
Ground HandlingGround Handling11,31111,3118,20848,212Ground Handling9,14599,1549,1709,170
Landing Fees and Airport RentLanding Fees and Airport Rent12,86110112,9629,3931039,496Landing Fees and Airport Rent14,57615314,72910,84410110,945
Other Operating, netOther Operating, net20,4844,88025,36416,6494,36821,017Other Operating, net23,5045,07328,57721,4945,09526,589
Total Operating ExpensesTotal Operating Expenses198,55426,945225,499194,24421,454215,698Total Operating Expenses231,00425,303256,307212,90325,429238,332
Operating Income (Loss)Operating Income (Loss)$37,515$(1,928)$35,587$3,633$(264)$3,369Operating 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 $33,882decreased $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 14.1March 31, 2024 decreased by 1.7 percentage points, as compared to the three months ended June 30, 2022.March 31, 2023. The increasesquarter-over-quarter decrease in Passenger Operating Income and Operating Margin were driven byPercentage 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 periodheavy maintenance and demandlanding gear events, and rate increases for passenger service during the second quarter of 2023, as comparedLanding 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 significantan 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 increaseddecreased 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 6.5March 31, 2024 improved by 3.2 percentage points, as compared to the three months ended June 30, 2022.March 31, 2023. The decrease was primarilychanges 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 increaseOperating Expenses. The changes in Salaries, Wages,Operating Loss and Benefits due to an increaseOperating 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.
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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, 2023Six Months Ended June 30, 2022
PassengerCargoTotalPassengerCargoTotal
Operating Revenues$506,823$48,378$555,201$403,348$42,243$445,591
Operating Expenses:
Aircraft Fuel124,61337124,650141,492141,492
Salaries, Wages, and Benefits116,55334,796151,34994,38525,530119,915
Aircraft Rent2,2592,2595,3975,397
Maintenance21,6607,32128,98118,3756,40224,777
Sales and Marketing18,43618,43616,50916,509
Depreciation and Amortization41,7714441,81532,1305232,182
Ground Handling22,34922,34916,162816,170
Landing Fees and Airport Rent24,81120225,01319,56321919,782
Other Operating, net39,0049,97548,97935,5848,58244,166
Total Operating Expenses411,45652,375463,831379,59740,793420,390
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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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,
2023202220232022
Three Months Ended March 31,Three Months Ended March 31,
202420242023
Adjusted Operating Income Margin Reconciliation:Adjusted Operating Income Margin Reconciliation:
Operating Revenue
Operating Revenue
Operating RevenueOperating Revenue$261,086$219,067$555,201$445,591$311,483$294,115
Operating IncomeOperating Income35,5873,36991,37025,201Operating Income55,17655,783
Stock Compensation ExpenseStock Compensation Expense4,4155757,0931,495
Stock Compensation Expense
Stock Compensation Expense1,5142,678
Adjusted Operating IncomeAdjusted Operating Income$40,002$3,944$98,463$26,696Adjusted Operating Income$56,690$58,461
Operating Income MarginOperating Income Margin13.6 %1.5 %16.5 %5.7 %
Operating Income Margin
Operating Income Margin17.7 %19.0 %
Adjusted Operating Income MarginAdjusted Operating Income Margin15.3 %1.8 %17.7 %6.0 %Adjusted Operating Income Margin18.2 %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,
2023202220232022
Adjusted Net Income (Loss) Reconciliation:
Net Income (Loss)$20,618 $(3,922)$58,946 $(285)
Stock Compensation Expense4,415 575 7,093 1,495 
Gain on Asset Transactions, net (a)
— (77)— (79)
Loss on refinancing credit facility— — — 1,557 
Secondary offering costs112 — 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,
20242023
Adjusted Net Income Reconciliation:
Net Income$35,313 $38,328 
Stock Compensation Expense1,514 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,
2023202220232022
Three Months Ended March 31,Three Months Ended March 31,
202420242023
Adjusted EBITDA Reconciliation:Adjusted EBITDA Reconciliation:
Net Income (Loss)$20,618 $(3,922)$58,946 $(285)
Net Income
Net Income
Net Income
Stock Compensation ExpenseStock Compensation Expense4,415 575 7,093 1,495 
Gain on Asset Transactions, net (a)
— (77)— (79)
Secondary offering costsSecondary offering costs112 — 640 — 
TRA adjustment (b)
— 1,700 (357)8,500 
TRA adjustment (1)
Interest IncomeInterest Income(2,545)(532)(5,286)(556)
Interest ExpenseInterest Expense11,239 7,042 19,869 15,604 
Provision for Income TaxesProvision for Income Taxes6,132 (921)17,486 1,861 
Depreciation and AmortizationDepreciation and Amortization22,355 16,854 41,815 32,182 
Adjusted EBITDAAdjusted 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 operatingcertain 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 cargoCargo operations, as well as depreciation and depreciationamortization recognized on our aircraft and flight equipment held for operatingcertain assets that generate lease income as these operations do not create ASMs. The cargoCargo 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 LeaseWe 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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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,
20232022
Operating
Expenses
Per ASM
(in cents)
Operating
Expenses
Per ASM
(in cents)
Three Months Ended March 31,Three Months Ended March 31,
202420242023
Operating
Expenses
Operating
Expenses
Per ASM
(in cents)
Operating
Expenses
Per ASM
(in cents)
CASMCASM$225,499 12.67 $215,698 13.21 
Less:Less:
Aircraft Fuel
Aircraft Fuel
Aircraft FuelAircraft Fuel52,360 2.94 76,947 4.71 
Stock Compensation ExpenseStock Compensation Expense4,415 0.25 575 0.04 
Cargo expenses, not already adjusted aboveCargo expenses, not already adjusted above25,966 1.46 21,326 1.31 
Sun Country VacationsSun Country Vacations266 0.01 215 0.01 
Aircraft and Flight Equipment Held for Operating Lease, Depreciation Expense2,273 0.13 — — 
Leased Aircraft, Depreciation and Amortization Expense (1)
Adjusted CASMAdjusted 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,
20232022
Operating
Expenses
Per ASM
(in cents)
Operating
Expenses
Per ASM
(in cents)
CASM$463,831 12.45 $420,390 11.81 
Less:
Aircraft Fuel124,650 3.35 141,492 3.97 
Stock Compensation Expense7,093 0.19 1,495 0.04 
Cargo expenses, not already adjusted above50,778 1.36 40,438 1.14 
Sun Country Vacations702 0.02 617 0.02 
Aircraft and Flight Equipment Held for Operating Lease, Depreciation Expense2,273 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, 2023March 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 letterletters of credit, and no balance drawn. The Credit Agreement includes financial covenants that require a minimum trailing 12-month EBITDAR ($87,700of $87,700 and minimum liquidity, as of March 31, 2022 and beyond) anddefined
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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 liquiditywithin 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 sixthree 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 fromfor each aircraft expire at various dates between the lessee will be applied directly tofourth quarter of 2024 and the repaymentfourth quarter of principal and interest on the term loan credit facility. The Aircraft Held for Operating Lease, as well as the related2025. 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%. AmountsIf 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 maywill 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 sixthree 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, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
Cash and Cash EquivalentsCash and Cash Equivalents$86,930 $92,086 
Available-for-Sale SecuritiesAvailable-for-Sale Securities151,461 172,635 
Amount Available Under Revolving Credit FacilityAmount Available Under Revolving Credit Facility24,650 24,650 
Total LiquidityTotal Liquidity$263,041 $289,371 
June 30, 2023December 31, 2022
March 31, 2024
March 31, 2024
March 31, 2024December 31, 2023
Total Debt, netTotal Debt, net$448,415 $352,235 
Finance Lease ObligationsFinance Lease Obligations257,288 251,296 
Operating Lease ObligationsOperating Lease Obligations22,749 26,132 
Total Debt, net, and Lease ObligationsTotal Debt, net, and Lease Obligations728,452 629,663 
Stockholders' EquityStockholders' Equity540,765 492,712 
Total Invested CapitalTotal Invested Capital$1,269,217 $1,122,375 
Debt-to-CapitalDebt-to-Capital0.57 0.56 
Debt-to-Capital
Debt-to-Capital
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SUN COUNTRY AIRLINES HOLDINGS, INC
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Sources and Uses of Liquidity
Six Months Ended June 30,$%
20232022ChangeChange
Three Months Ended March 31,Three Months Ended March 31,$%
202420242023Change
Total Operating ActivitiesTotal 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 & EquipmentPurchases of Property & Equipment(192,352)(137,647)(54,705)40 %(29,698)(104,978)(104,978)75,280 75,280 (72)(72)%
Purchases of InvestmentsPurchases 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 InvestmentsProceeds from the Maturities of Investments71,795 — 71,795 NMProceeds from the Maturities of Investments39,500 32,840 32,840 6,660 6,660 20 20 %
Other, netOther, net1,953 10,315 (8,362)(81)%Other, net1,091 1,129 1,129 (38)(38)(3)(3)%
Total Investing ActivitiesTotal 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 RepurchasesCommon Stock Repurchases(22,249)— (22,249)NM(11,493)(14,812)(14,812)3,319 3,319 (22)(22)%
Proceeds from BorrowingsProceeds from Borrowings119,200 172,507 (53,307)(31)%Proceeds from Borrowings— 71,280 71,280 (71,280)(71,280)(100)(100)%
Repayment of Finance Lease ObligationsRepayment 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 BorrowingsRepayment 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, netOther, net(2,841)(1,062)(1,779)168 %Other, net(3,324)(3,258)(3,258)(66)(66)%
Total Financing ActivitiesTotal Financing Activities63,631 61,106 2,525 %Total Financing Activities(34,494)38,811 38,811 (73,305)(73,305)(189)(189)%
Net Decrease in CashNet 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 sixthree months ended June 30, 2023March 31, 2024 provided $95,693,$30,721, as compared to $37,060$47,861 during the sixthree months ended June 30, 2022.March 31, 2023. During the sixthree 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 sixthree 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 sixthree months ended June 30, 2023, $146,904March 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 sixthree 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-year13% 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 ofmarket conditions and global geopolitical events on the price of fuel during the six months endedevents.
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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 sixthree months ended June 30,March 31, 2024 and 2023, and 2022, respectively. Our capital expenditures during the sixthree 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 fivethree 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, theThe 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 sixthree 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 ofis required to make bi-annual principal and interest payments on the 2022-1 EETC in an aggregate face amount of $188,277 foreach 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 sixthree 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 sixthree months ended June 30, 2023,March 31, 2024, the Company repurchased 1,166,751755,284 shares of its Common Stock at a total cost of $22,249,$11,493, or $19.07$15.22 per share. The repurchases were partDuring the three months ended March 31, 2023, the Company repurchased 750,000 shares of its Common Stock at a secondary public offeringtotal 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 sixthree months ended June 30,March 31, 2024 and 2023, the Company made a paymentpayments 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 20222023 10-K. There have been no material changes to the Company's Off Balance Sheet Arrangements as compared to the 20222023 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 sixthree 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 20222023 10-K.
There have been no material changes to our critical accounting policies and estimates as compared to the 20222023 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 costas 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 letterletters 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 DecemberMarch 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 hasThere have been no changechanges 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, 2023March 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 20222023 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 20222023 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 $50,000 stock repurchase program. For more information on the Company's stock repurchase program, see Note 119 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.
Total Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans
Approximate Dollar Value ($ in thousands) of Shares that May Yet be Purchased Under Plan (1)
April 1-30, 2023— $— — $— 
May 1-31, 2023374,103 17.77 374,103 3,538 
June 1-30, 202342,648 18.27 42,648 2,759 
Total416,751 $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 $32,759.
Total Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans
Approximate Dollar Value ($ in thousands) of Shares that May Yet be Purchased Under Plan (2)
January 1-31, 2024— $— — $11,478 
February 1-29, 2024580,000 15.20 580,000 2,659 
March 1-31, 2024175,284 15.17 175,284 — 
Total755,284 $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 TitleAdoption, Termination or ModificationDate of Adoption, Termination or ModificationDuration 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
AdoptionMay 3, 2023April 30, 2024(119,037)
Gregory Mays, Executive Vice President and Chief Operating Officer
TerminationMay 3, 2023December 29, 2023(262,559)
Gregory Mays, Executive Vice President and Chief Operating Officer
AdoptionMay 5, 2023February 2, 2024December 29, 2023March 31, 2025(200,000)(268,000)
Erin Rose Neale, General Counsel and Senior Vice President
TerminationJune 2, 2023April 1, 2024(23,436)
Erin Rose Neale, General Counsel and Senior Vice President
AdoptionJune 5, 2023April 5, 2024(10,184)
Grant Whitney, Senior Vice President and Chief Revenue Officer
AdoptionTerminationMay 5, 2023March 4, 2024April 2, 2024(142,463)
Grant Whitney, Senior Vice President and Chief Revenue OfficerAdoptionMarch 4, 2024July 7, 2025(226,288)
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ITEM 6. EXHIBITS
(a)Exhibits
10.110.1*
10.2
31.1*
31.2*
32*
101.INS*Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*Cover Page Interactive Data Files (formatted as inline XBRL and contained in Exhibit 101)
*Filed herewith
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Sun Country Airlines Holdings, Inc.
(Registrant)
/s/ Dave Davis
Dave Davis
President and Chief Financial Officer
(Principal Financial and Accounting Officer)
August 4, 2023May 7, 2024
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