SNCY - Earnings call transcript Q3 2021 | Sun Country Airlines Holdings, Inc.

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Operator

Welcome to the Sun Country Airlines Third Quarter 2021 Earnings Call. My name is Amitras, and I will be your operator for today's call. [Operator Instructions]. I will now turn the call over to Chris Allen, Director of Investor Relations. Mr. begin. may you Allen,

Chris Allen

joined Davis, Jude Officer; President of answer talented I'm Executive and our Officer; group questions. help to Dave and others today you. Bricker, by Chief a Thank Chief Financial

like would company the certain I begin, make we to everyone this may forward-looking that constitute that remind statements call, during statements. Before

you expectations, risk may may risks and to no and include today are forward-looking differ remarks any outlined earnings subject We statements, which in statements. the We to based obligation release most Actual assumptions results to upon cautionary statements Our and update forward-looking assume management's factors SEC materially. encourage current review beliefs, our uncertainties. filings. our

ir.suncountry.com. turn You now quarter the press can Relations on the to our I Jude. release earnings third would like that call With said, website over to portion find at Investor of our

Jude Bricker

our industry cost predictable leisure exogenous a weak throughout review, are profitability everyone. to of the Due the business Good model capacity we businesses, our our quarter To respond is believe Chris. Traditionally, be third industry. shocks. to and we of most the advantages, scheduled quarter in industry. predictability our both is We relatively the Thanks, allow airline due and fluctuations fixed the in industry's best will demand low us combination for to able structural to scheduled The flexible unique deliver able deliver multisegment service to reliably to cargo the and flexibility morning, model all charter us. cycles.

XX.X%, respectively. industry-leading EBITDA and I'm margins report XX.X% operating However, happy and of to

segments upside. service While our revenue, the outperformed Delta and scheduled impact charter negatively our the to variant cargo

weakness versus third departures flying demand to August, helped our July X% exposure on TRASM-ings in produce September service and helped we scheduled XX quarter of the more variable the to capacity as This in during model September. focus to the In XX% a addition, flew late just in our XXXX. quarter's early minimize demand peak

attribute to TRASM of in allocation our loaded schedule trend trending improving peak periods. quarter, our to this Fourth are third focused of the month in quarter bookings of variant. every improved continued fact, we've within as quarter Similar careful the a well. performance spite products. ancillary and In primarily We the on Delta positively capacity

For our in the example, in fourth fourth of the on days, X XX% I address industry. ASMs up XXXX. want currently, of are XX% themes quarter, across to quarter common peak from our

First, we straining operations economy It operational COVID the across crisis. are everywhere seems performance. from the as recover

especially of performance. I'm our proud So team's

a and X and than quarter bag XXXX, we've of growth with while maintained XX.X% factor the We hours XX% XX our growing on-time the per about it performance XX-month versus COVID above substantially This a rates, XX% block third performance X,XXX. controllable schedule of increasing have throughout trailing is operation quarter is added particularly In rate impressive. of by light our is months. mishandled of our since our completion fleet, in XX% system began. Further, the trailing less

cost Second, pressures.

still work trend to continue bring expect passenger heading we able spite fourth ex to be lower on significantly roughly legacy we fleet XXXX fuel of CASM and utilization with as of cost be comp. not $X.XX. utilization to While unit back our we'll our XXXX below our levels some to inflation, in we're contracts, line is our through fuel 'XX to immune the certainly This quarter cost labor ex in

much I Finally, this haven't in on our the to commentary devoted charter give business. few I past. a thoughts to segment want

our significant charter other than space more demand. namely, leisure is where carrier. responsive pass-through is valuable any It Our have a has we be we business extremely economics. because and to advantages it can It's counter-seasonal

service. our delivering we throughout the participated quarter, while aircraft schedule we also all our positioning Soccer we're back Shuttle, flew by third and seeing charters to charter our Recently, better Kona example, agreement in sched football to seasonal on their needs. short, For new League facilitated country usual the volumes on now than evacuation NCA In VIP we're XXXX charter anybody. we Generally, the Major product in a levels. support and announced X-year Afghan

As our to business. we Dave. to charter I'm will find I'll continue sched that, With continue proportional it grow opportunities, over turn our segment charter new confident that to to

David Davis

the detail update is into QX than produced more third 'XX Thanks, We acquisitions Jude. the quarter on third of since quarter fleet level of our revenue This results and I'll review an Q&A. our financial before in quarter. now third $XXX.X and higher the moving highest in provide of XXXX. million is

still million load which TRASM, service is 'XX but ASM, We're revenue quarter $X.XXXX, was up segment, QX ASMs. of are by Ancillary XXXX the 'XX. XX% For revenue revenue than was but of our or from revenue $X.XXXX, pricing. QX trailing are increase the and which higher versus we cargo sequentially, per factor scheduled Charter includes excludes the for that X% in Total in strengthening our encouraged which quarter per X% levels. is the our of seeing third service from PRASM was 'XX. in quarter. business passenger business, $XX.X $X.XXXX to charter increased 'XX below $XX.XX PRASM second only strong scheduled an at passenger, XX% stay Viewed the continues

rebounding back our Soccer. our League fully not to in growth and seeing Major still QX are 'XX flying levels, business, sports strong charter Although nicely, we for particularly revenue is

recently a to deal As X-year Jude noted, the to charter provider we be service MLS. signed the

from excess flying, from military to international 'XX. charter return. Cargo remains the $XX.X and airlines will from the second are largely there other consists block traffic quarter capacity was think in revenue hours market, charter which we subside once the track begins Our and which more increase still of recovering casino programs, and pandemic, and the quarter X% lucrative a in third business benefited million versus of

costs. operating to now Turning

were 'XX. leased depreciation than a aircraft from was quarter XX% the as to rent aircraft, quarter dividends with 'XX. discipline cost they the maintain to operating in third than lower total owned to solid expenses pay lower fleet expense of Conversion aircraft third of of and X% continue the in combination continues We

lower resulted per have of MSP improved. as and markedly salary Our quarter operations Salaries to and mainly basis, due the well of distribution growth April rents the of costs passenger our hour efforts quarter third expense the marketing XX% flying ground On flat insourcing block costs in MSP the per third in have operations the as level. reduction XX% combination versus compared handling higher however, a sales XXXX of in in 'XX and were of 'XX. period to both a same of versus to essentially 'XX was base at our in our

to our now fleet. Turning

our the XXXX. been to in and intent second incremental calls, X As of we've XX mentioned XXXX acquire passenger in XXXX, half on aircraft in least aircraft at has X to by our previous way

our With to to the remain we've need we of continue ownership that down will on acquisition in we're a end fleet number of of that discussions we'll quarter, costs. what and at since for planes, the X to XXXX. additional the to aircrafts us We able second grow our engaged average allow prices find now goal reached be confident

as has end increased flexibility resulting finance provide a we operating engines amounts and aircraft in November at $XXX for $XXX of is on only on assets QX, of the balance the the may decisions. liquidity in and lease from are so timing second $X our the including X We strong Total sheet During future, position cash end in the our purchased fund future of since debt, million a reduction financing to an of sufficient very beginning we and was the in engine, both at QX. to the our of balance million, $XXX And to X liquidity an finance liquidity quarter unencumbered the growth. year. million million

the in Finally, quarter seasonally expectations we a than Sun QX is typically our for weaker summarize earnings release. for QX. Country QX

In addition, higher than in QX. are $X.XX prices gallon in to expected QX fuel be per

quarter, $XXX I'd to gallon revenue a price that, to X.X%. of total like between of operating per questions. margins X.X% $XXX million we it million, now up and open fuel With and of the to $X.XX expect For

Operator

[Operator Instructions].

line Research. of The comes Hunter Keay from first the question with Wolfe

Noah Chase

used Chase mean of your your by capacity Keay. expansion you What you context the on plans? sensibly in actually do word that when for growth. Hunter describing It's I noticed Noah the

Jude Bricker

main quality deliver The to thing results. operational able we we're would making is sure that mean

working So we the we're have have faster than pandemic. through substantially of kind the everybody fleet airline to the of we recall, so grow COVID the kept growing. we didn't most industry had, drawdown But

through Now we're considering look is like we into most the XX% that about which the next XXXX running higher period. on then substantial, hiring But airlines depending levels, the as pandemic. year, stopped XX% we to

major all in a as We're go. right we that's ramp-up labor as and mode across full fast about can So categories, having now. we're

Operator

line the Your Catherine next from Sachs. of Goldman O'Brien question with comes

Catherine O'Brien

beat this went to airline think So know you mentioned guess release, you I to variant impact offset did the your your what U.S. the system. guys had initial across see in the were delta quarter press I that guidance you the weakness? better I mid-quarter. of Delta really given only some

David Davis

Yes.

think I -- this Dave. is

our unclear. were guidance, demand things. be I there we continued probably pretty went the into think think environment When initial a has I few to

anticipated. the little And what downs flying the costs maybe conservative bit COVID. cost our quarter We knowing doing and the due at were control and tad operating company with a to we then I expect we cargo a line. think had at ups job is from than great not a So during just in originally just to benefited keeping everybody more

the that we sort of produce I those themselves period think things margins during saw. operating to the all manifested

was continued extraordinary, sort of So tight I business. just the there don't management think anything of really

Catherine O'Brien

then Okay. the one maybe book. just And Got forward on it.

sequentially there drove your really the little in is efficiency despite driving Or going What's just CASM quarter. third the quarter timing the quarter forward? operation be fourth a being bit guidance, some of lower based from gaining that would fuel, implied inflation? ex Were down Your third ASMs events that? actually on in

Jude Bricker

I third fourth don't quarter just because it know our going is smaller. that the than be in to in the lower is we're quarter CASM

of case. any the the that a item of at seeing think wasn't actually, step-up fourth I impact In particular So I that's don't some I'm that pretty we're -- of there with is thinking in bit costly the There wasn't quarter, small. events a sort in don't onetime all. any think maintenance -- quarter necessarily just particularly the third

any is drivers So from X capacity. change mainly of really, to X just to due CASM

David Davis

roughly mainly quarter would to compared take My be a as bit. so some expect to we or little 'XX, variability comments, Yes. which were Catherine, give fourth flat. there, And there's around in

Catherine O'Brien

values aircraft sharpen improve. could aircraft secondary the a in market the for the I quick next Got I'll up probably the pencil starting the just seen guess, us last growth starting probably hearing helpful the is little model. if used would over that plans making If X maybe are heat the aircraft it that are initially I been couple first, could thing sneak to one. bit and when it. on be where you've used you years? midpoint versus and I've to of help same you're frame pre-COVID

David Davis

tallied don't we've maybe other out in to of pretty it find XXX picky. year. If year. looked so we've we're But I seen we similar so the to -- in it's at minor. in aircraft been standpoint sort we of the aircraft any told our real I X, acquire. pricing pricing. aircraft earlier we We've But up think this probably far saw We've there day. from have, what acquired to at continue you tightening plenty pretty there's

bit noticed recently, world. the and as market the they but what two haven't economics throughout big I last is the by nothing same weakness were this we The I'd a are the is the say year. little did other used other on change in So than done driven maybe airplanes acquired significant. we margins, any with very line airplanes And

America and Asia little So weak Europe Southeast bit, really North a where right we tightening saw is now now.

XX% market to lift in lot so pricing? Relative pre-pandemic, think, too the coming do capacity -- those we XX% And about from see Jude? what we Down a jurisdictions. still concerned finding of XX%, you need. not to I'm

Jude Bricker

about right. Yes.

David Davis

mostly values, equipment. part-out Yes, we're even buying newer

Operator

of Deutsche with Linenberg Your comes line the next Michael from question Bank.

Michael Linenberg

your federal personnel Look, vaccine you this a as and look? guys having mandate, where How does to on contractor with situation deal are that?

Jude Bricker

Do want one? to take that you

Gregory Mays

Yes, this is Greg.

rolled said, -- is you us. to we've as applies vaccine out. So We the something that that mandate

our up team Our technology can done to the right we're their so to pretty getting where continuing of of a upload We're we now. all people that has are with regard status. job and great encourage employees, optimistic

deadline think manage the and I December is got we've out plan. the I by entire of think industry for mandate. a to good sort is Xth trying Federal The how figure through this to of

chase their would with month The employees I operational to folks as dealing think cards. any of We're was probably we'll from haven't mandate imagine. impact wouldn't use vaccine mixed, that we'll expect reaction the but this try I the quarter. vaccination submitted some down be frustration, from that kind to compliant. you

Michael Linenberg

versus gallon, XQ towards say 'XX. in of quickly in over pass-through mentioned, going days said guess you respect or of economics charter a is maybe like and up XQ. XX% prices I you Dave the can fuel charter about you they per fourth repivot with $X.XX as Jude, Very And think good. to $X.XX were the is maybe it think XX%, did quarter With of that as capacity and sort to I it How cargo? cargo, your you peak lot, XX% was up your be capacity

really business, seems prices. So fuel the it scheduled in maybe on of like you're higher busiest focused days, the because

on thoughts that. Just

Jude Bricker

We market. very in you reallocate. it of in think can and substantial opportunities really sched move have out capacity volume service. the can about doesn't But kind hoc units We of to when of pretty ad responsive be close charter the

days planned flat. is in our least XX So Amazon at And flying sched's advance. mostly

Mike, the think the out So side of these it little I we we to And you're of I'm response what the airlines as bit headed. if think kind capacity positive fuel business really and we not dealing is a where the in seats season. demand about it, just want is tickets, have pretty segments prices. rest is same Like move the commentary, fast the as expensive price, and we're wouldn't to that for I is holiday here it's bring one of economy, or though, a that's particularly provide yield fuel like a deliver sched where structure now. costs. right sure much be even the fly want unit to can of the seeing out to aren't this other we kind a going reflation we're reallocation way of buying in lot there mean And these economics on we're cost as in with days. other to able the that and sched, recovering. of back

Michael Linenberg

seen Yes. definitely No, I've firsthand. it

one Just Amazon. quick one on the

highest quarter your seasonally than where fourth flat, fairly Is from And perspective? shipping is Amazon? I to holiday fact suspect say cargo the that I'm did third. think going your You but everybody even that just was it Is and quarter the going an though you're weaker I to thinking a from that big quarter your the is running have tight. revenue-wise be

Jude Bricker

speak volumes fourth year, we've will yes, this flown the this ever But I them. highest quarter future. For can't be our for to

Operator

[Operator Instructions].

line Barclays. the Your with next Brandon from Oglenski question comes of

Brandon Oglenski

to So better bit a Jude, due coming obviously, maybe about little quarter follow fuel. up and can down on probably the margins are we there little in comments the fourth yields? bit a Because

behavior how here the pricing on outlook? on does So margin that and change the your

Jude Bricker

Yes.

fully mean, Delta sitting of bookings we our here in XXXX which is beginning on 'XX. substantially 'XX, load Thanksgiving his the the affected we're passenger are August which producing but excess And -- comments, segment, comp as which no of late November variant have ever as Dave $XX is mean we've Easter, up had there's But winter is seen. what in is of the through kind ancillary begin factors looking mentioned from basically maturity in we now the of products, -- per now a but anyway. travel winter -- yields mean add for effects are and would got to I remnants as to recovered. at if which more to good weak where of back quite in lot right a we winter the I ability they come to season. of end the I had into capacity us we the do going were, haven't So looks season, kind from October, so

David Davis

Yes.

is Brandon. -- hey, this think Dave, I

a quarter than of perspective I things is margin about Fourth think is just third one of the the weaker the typically this from think quarter to anyway. airline. seasonality

As Jude fourth biggest The gave We fuel. remain yields points relative margin. be guidance to that -- number is the out, quarter operating for it would where strong. on we historically effect

add in typically sort that be fourth you we'd number, this big sort fuel seeing of for this of we same If to run-up to third that patterns yearly. back the quarter see company

Brandon Oglenski

flying to next And now? about what I comments the it. is could. Dave, What's more, fleet Got if right you the those you constraint about add guess guess, I Is limitations? you'd capacity? plans? be year. it it pilot fleet airport you think hit plan Because spoke to to expansion your And I you

Jude Bricker

hiring Yes, pilot constraints. it's

labor right As would uncertainty same point seeing our count with some everywhere is objective, hitting the now, just we're want across and there's the I that. of economy, in some things. make to the tight we're head but

than we forecasted, have why. we with and days, we wanted with down more the sitting hiring higher we'll And And And so charters. our XX pull the uncertainty you attrition to some charter -- what then of then case is if fly service. if if a perform way production, here to downside is lower that's sched or what upside talking we in on had deal add we're we

Brandon Oglenski

if you to have you you where where and Got one it. prepandemic? could took the relative pallets me. were you guess, for you And capacity could then up, last utilization get I system hypothetically, that needed today all

Jude Bricker

passenger X we of which of an of where a about loaded think hours per XX%. XX% rule be would good be to increase thumb have from would Well, ASMs I a aircraft, day

David Davis

Yes.

sort still, at of than bit a mean, it little demand just staffing not out, load thing and there's X issue. a sort was notice low pointed prepandemic you remain weaker levels. think remains little as that's of I factors to I

the some of So our there's environment overall just then to on you're that about. talking levels of and the relative impact the capacity constraints staffing prepandemic

Jude Bricker

great that was optimal. are I Yes, constrained that January And so capacity the there always. of every early mid-April. never real have -- to when year enough capacity. Brandon, And to that Thanksgiving where point. the we starting periods for are we It's -- didn't a we enter just But mid-February until case were and been then think we're basically demand think about the October, period calendar we

we could of XX%, And yes, so during of utilization those periods easily take XX%. time,

Operator

Your next of with Chris question comes the from Stathoulopoulos Susquehanna. line

Chris Stathoulopoulos

the military piece within and looks So business, hoc that as commercial given a Or there's charter But peak flying cargo segment? able fairly for strong well. be an mostly you Is the curious any opportunity? are what ad to do to on there season.

David Davis

ad pilot it, after the Well, we would as be define scheduled deck. hoc, would bid we

is pilots as taking we're the opportunity out or don't the that putting for to this fleet in reserve to We slack. for is pilots zero The quarter flying were in Amazon, as any because words, in have we fleet. cargo that close So allocated with other open can to about in particular who pretty volunteer. time, hard

Jude Bricker

scheduled Remember, our basically business. Chris, in we're takers cargo

operate we schedule. Amazon So

segment. by, that not driven of have someone periods is Day, pointed seasonality stuff much things the business that and as busier So that holidays, kind periods really where other allocating out us they earlier, so to than Prime of

Chris Stathoulopoulos

Okay. And a follow-up.

filling look focused a business give and network, opportunities adding the should we And out schedule? is on both? of as more So Or dots some if on color as think peers domestically. larger about at the your Or could little XXXX travel long-haul the international your we XXXX? bit into map? on Curious restarting you are

Grant Whitney

Grant. is this Chris,

what a just that we're our schedule, winter our schedule sort had it -- time. long we there of going shown out think for I we've summer we've and extended do and to was

We're full Twin network, on We're themes nonstop hitting opportunity XX our what the Minneapolis to just is been that to And over customer building we've in giving so we're destinations our really really base up with happy to of Minneapolis. doing from to fly here terms in the potential. new out broadening destinations. here Cities

that compare where XXXX go XX%. You to back were, and we to about

we advantage also to is and we that of that we're there. there's Minneapolis schedule COVID, of comes we but But come of will, take sort and opportunity context, through environment, we will the cargo and as opportunities be and have development. the in And is really feel business and Dave really like how But the charter side the and wins happy consistent. put plan, agile going nimble having really but positioned together, outside it communicate a is about see mentioned, all the we're And Jude of inputs lot can our we're these advantage So of we're as into business good it really we -- that, we up. out out and on that. there, schedule to and we're about feel take

very So the nicely. is plan for XXXX together coming

Jude Bricker

consistent network with strategy IPO. And the during as that's our communicated

Dallas. then we during with So for Twin be like Cities, everybody be carrier bring down that city own Twin market large Cities, capacity flexible to the the fares for can their leisure the paying outside to origination And peak want periods money. want in we

Operator

this questions. At Jude over no to call like Bricker. there turn now I time, are would to further the

Jude Bricker

thanks for everybody. interest, tuning day. in, a Thanks for have great and your Well,

Operator

call. for concludes today's This Thank participating. conference you

disconnect. You now may

Sun Country Airlines (SNCY) 2 Nov 212021 Q3 Earnings call transcript