SNCY - Earnings call transcript Q3 2024 | Sun Country Airlines Holdings, Inc.

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Operator

Welcome to the Sun Country Airlines Third Quarter 2024 Earnings Call. My name is Daniel, and I will be your operator for today's call. [Operator Instructions] Please be advised that today's conference is being recorded. I will now turn the call over to Chris Allen, Director of Investor Relations. Mr. Allen, you may begin.

Christopher Allen

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

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

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

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

Jude Bricker

Thanks, morning, Halloween. Chris. everyone. Good Happy

industry advantages, is shocks. flexible flows. Selling added the profits now been have cost slowing in ever airline a of to are diversified our All our deliver in expand produce network be industry will loss-making We us airlines and earnings airlines flexibility capacity and reached positive has the be rate cash of Clearly, industry By capacity has most the the our Our due and exogenous revenues June fixed revenue peak expect while, around industry year. was and capacity trends unit for growth capacity have other of January, selling network, capacity we'll yields, unit both year-on-year into a focused of are Flown to XX%. trends leisure which flat and we will continues The growth future our in and low at to be TRASM unit all now and schedule throughout allows since. all be structural across Sun believe schedules, down combination capacity. Due able revenue predictability industry reliably able cargo network. demand peaked quarter cargo removed. profitability growth to our Many domestic months. charter bullish unique on charter industry-leading and model healthy cycles. Domestic almost trends of rate our much both X%, been year-on-year fourth across businesses, But on lag, unit we that we predictable in the to rationalization scheduled to fluctuations yields are I deliver across the on respond industry. calls model margins, business the remain service to into Country next positive of year-on-year but scheduled Translating to revenues and contractual. will flat. Based industry.

the forward, is inflationary unit pressures We fuel have post-COVID mostly and and increases expecting modest only passed cost going ex-fuel are down.

we'll we in bullish shown believe well. remain our I As based inputs, guide, margin a likely into as show expansion. current And XQ on XXXX

supporting by common our a aircraft topic for Another availability draw our XQ aircraft XXXX and our through balance fleet OEM or has either program. Further, carriers. with with challenges growth Again, in deliveries, been common airline to all as business, with costs and XXXX caused AOGs sheet cargo distinction are calls other borrowing out on OEMs. and redelivered the committed they are operation are They currently are until on leased a our topic.

able we requirements. flow CapEx our and to are self-fund continue free everyone, to Just produce modest to remind cash

even such, continue As decline our grow. to levels we debt as

controllable completion cap and improvements have since disruption. and focused with August As only we XX.X% delivery. on past team -- But will IT season summer discussed these a very and we operational primarily off past factor. in positive be this the X, we was hurricanes trends, as management October challenging to service This ride achieved operationally major a the

incredible We I'll Dave. have turn I'm navigates team over it it. With of be to challenges, that, these that to an proud part and

David Davis

report was pleased consecutive produce the Thanks, year. charter business Cargo the this segment of that of capacity-driven growth, industry. quarter QX among offset solid to margins in we've business our Both Jude. and has Sun experienced profitability, ninth the our highest our in We're partially the service Country continue pricing line pressure and has to which year-to-date, scheduled

with X.X% continues 'XX. expected scheduled environment XX% more with pricing slow a the than into Sun to be of As Country stronger our versus industry as further capacity ASM has this planning scheduled higher QX fell matched service X% QX QX to ASM rationalize, year-over-year. in to slightly year-over-year growth capacity to and service We're seeing market QX in growth demand in rapidly second growth than we're quarter.

turn me now specifics of the QX. to Let

First revenue and to capacity.

declined quarter Third The our quarter impacted with an industry for quarter Scheduled shrinking by $XXX.X service which million, the was rapidly revenue CrowdStrike Passenger in September Revenue which third growing includes scheduled and service the roughly the XX.X% TRASM. scheduled X.X%, charter service scheduled 'XX. segment, was driven revenue was July with total flat our capacity by businesses, year-over-year. fell quarter service XX%. versus in XX% decline but by X% and proceeded year, our as outage Florida. We hurricanes overcapacity, reduced prior

had the which grew revenue current flat million, charter expected QX a fare length new TRASM, $XX quarters takes third with that impact levels. We mix hours high for low-single quarterly demand, of Sun booking unit which in better expected a X.X% revenue is last received from improvement renegotiated Over have 'XX we fully be long-term to a is flown reimbursement customers. fuel our revenue block of total QX unit rate charter generally revenue increases was agreements. during recently resulted scheduled of customer Country, business, of reduced result charter X% came partially from TRASM our confident growth increase levels, under allocation flying a hour. our this and service be 'XX to QX revenue weakness. and capacity Driving X% digits. Charter versus quarter to lower quarter by the higher up per done scheduled includes in the a year Charter couple changes block prices of XX% flying. cost offsetting on been service in charter contractual to and the from our and the not matches was capacity QX significantly would our feel improvement for Given fuel realize Charter it window,

which Southeast. Cargo rate $XX.X check This in For our resulting QX changes by came hour of high. annual cargo our the Cargo million, escalations. in quarterly decrease revenue rate agreement extended as a the implicit portion hours also all-time in block well of XX.X% and the an segment, was a in grew Amazon despite driven X.X% by cancellations growth in heavy block hurricane-driven revenue to aircraft from per flight up impact as XX%, was

the expect aircraft to X flying year. In throughout anticipated versus the Cargo inflect included additional QX improved an reporting continue We that in sharply to upward margins cargo on see year. our XX-Q, freighter last XXXX table take in we segment significantly as you'll

reminder, will the receive revised includes in Amazon and until corporate filings the of second XXXX. segment a we to quarterly half aircraft will additional in our reporting contract not continue be As as full allocated effect rates escalate overhead. The

costs. to now Turning

expenses slowing as XXXX, Ground handler volume, driven adjusted adjusted repeat third well-disciplined and onetime was QX remain grew during quarter CASM X.X%. didn't handling XX.X% This increased flying while by versus CASM growth credits by QX of increase the to costs incurred which largely more continue declined outsourced quarter. higher CASM year-over-year, our We X.X% year. the driven in ground 'XX, this

minimize to costs rents, fees airports increase landing we due the on roll-off rent increases. to rate to Regarding pressure in continue quarter. using contributed and airport relief payments to a that fees been and the see during This landing of COVID-era airport expense XX.X% have

scheduled business put slowing some is likely QX, growth on in into move to CASM. pressure to service we our As the adjusted continue

Regarding total at third the quarter our balance was million. our sheet, end the of liquidity $XXX

Year-to-date, At do XXXX total any million XX, liquidity million. spent $XX.X $XX point, $XXX at expect this we full to anticipate approximately not until CapEx October capacity. to of stood be aircraft we million. we approximately begin at and looking incremental CapEx, year XXXX on As purchase we've

generate to cash We free and low. flow remains our continue strong leverage

to X.Xx. ratio with expect We EBITDA to of adjusted debt the year a finish net

Let me turn now to guidance.

quarter to our be X% of $X.XX cost operating X% $XXX margin anticipating and X%. fuel to million fourth achieve for us block between $XXX total and We're be hour between to revenue gallon growth expect per on an and million X%. We to

business and I maximize is volatility. With questions. for to we'll it between Our resiliency, built continue allocate segments earnings to profitability for will up open minimize capacity that, and

Operator

Duane Pfennigwerth from comes ISI. Evercore with question first Our Instructions] [Operator

Duane Pfennigwerth

on the business still have -- do XXXX? with just respect run you're of that the existing growth cargo Cargo, rate incremental And on improvements Or doing, is aircraft you that hit any on some to business you have you're update doing? building? book that of on So full existing aircraft of timing the in

David Davis

Yes.

agreement is are in included answer number. of changes rate implicit our all not the new So are the that in that

So in, this late eighth deliver. be a track late by would portion then first looking sort for of year one one. early more new year, really of the them but be third, new and which there for aircraft the aircraft occurred increases We're to first, next quarter the on the for as X quarter still cargo will fourth coming early be second

fully and all in summer a be the year it's the the the XXXX. of 'XX, -- months And of year, during place. changes end should So should the rate rapid of operating be by ramp next aircraft

Duane Pfennigwerth

Okay. industry there? from excited new seasonal any very away from And any you're seasonal adjustments of clear. flying in are you particularly Minneapolis, markets capacity that in That's that scheduled your Great. thinking Any the kind the in you're on service just seeing markets new then Minneapolis? different And away those about? do approach

Jude Bricker

be non-Minneapolis service we're at the of likely that inductions 'XX scheduled a 'XX because of Duane, capacity primarily, going Dave to Country, about. was summer talking versus issue. -- capacity Sun And cargo summer shrinking is capacity Non-Minneapolis

be for around will hours the block total year XX%. So somewhere up

controlled sustainable the So sort of but growing pace, hiring different. mix and we're be at a will but still

consider summer flat. I year. for under so be next for non-Minneapolis wouldn't small our next new of So markets some summer pressure, flying any expect mostly year, it will

of We predominantly, in had non-Minneapolis some of markets. the have out Minneapolis of a a summer we substantial lot launches -- 'XX market

And will those need cargo some to also of in support -- the to growth. be need will suspended order to be

Operator

Shanker question Stanley. Morgan next from comes our Ravi with And

Unknown Analyst

] Catherine Ravi. [ is This for on

those on are was that to to if to on a Just Oman your or going those continue leased. quick to planning be add the update I if fleet. lease on question you're aircraft curious the you've

David Davis

Yes.

with So here's where we that. stand

which be go of Remember, aircraft, we next of then adding our them of year. Sun them and redeliver end them of sort here fleet. have definitely service and year into Country will We next year, X place at were scheduled all this to in the to one by --

extend leases, going that given we're to are I think other OEM they no happen, to exception what's and delays to of these want impacting airlines, that. some

So they have to to them. extend leases the that we want

So portion I it's that works redelivered, which growth XXXX say have likely before given a would we cargo into us of those very are next well for the out least extend at year. we they aircraft

Unknown Analyst

And year. Got next then quick it. opportunity RASM was follow-up. the be just I curious might a what

this been all industry market, you of was impacting think I given has about Country. Just capacity how curious out coming Sun the that

Jude Bricker

April. so loaded we schedules, no volume past summer Catherine, meaningful there's just of bookings

my mentioned As first in quarter earlier, I year-on-year. We're remain positive bookings comments seeing strong. trends the

things other so positive, to their only look extent beyond April. that's but our what schedules, in really that data have we the loaded airlines own at have to And through bookings in look

Operator

question Oglenski comes from next with Brandon our And Barclays.

Brandon Oglenski

hour your declines block scheduled should still next So service year? flying capacity Is be still in or we bogey? that double-digit the thinking

David Davis

Yes.

service me on that. still to we think We're that going brief year but -- finalizing say, shrink we next update to the XX%-ish. 'XX I the let were business give need plan, thought order scheduled let's of, originally So on our a so

I had number. year thought, type think next thought. mid-single now, service the our initially little given like finalizing we think Again, than in the availability passenger pilots, our business better able fly is right situation we're to that bit side shrink but probably I with than more scheduled a we be we'll on digits more

Jude Bricker

Yes.

see down can schedules and look you'll digits. year-on-year year-on-year, at compare high-single loaded June July You and and

clarity little of input there. bit the captain to fleet, of upgrades. we go is shrink a only not [indiscernible] from on cargo related will We're there's It As higher. delivery going more get the timing an an to unknown

becomes to segment clear. capacity continue as -- mix staffing we'll more pilot become scheduled and So the add as we becomes clear service

Brandon Oglenski

likely in months Jude. for that, a comment it to to realized was And pricing? start higher guess is there fares guess. few takes profile, that inventory appreciate there year or fares, or booking your the holding reductions next down higher I I in up anything a about you're I given way capacity be capacity changing Is showing you're

David Davis

No.

Brandon, the passengers just the given I more to around leisure think passenger we leisure earlier, and sort that of particularly have. tendency mix book that comment, was really

seeing on in point as because think a upward flown more -- on revenue the But they're So nice a but and a into in positive bit advance was, a only leisure for so sort fare mentioned, won't booked we're that trends, I when little passengers. Jude buy basis. of advance people inflection year-over-year maybe quarter or flow

Operator

question from next comes Linenberg Our DB. Michael with

Shannon Doherty

Shannon This on maybe for other drove Doherty revenue With is Mike. XX% that year-over-year, a you. for up Dave, couple large what increase?

David Davis

driver biggest where our P&L. that's from mean the of that leased I -- aircraft our is the revenue hits

on item shown. that lease, the where have it's we aircraft get line the out So that's we for, revenue

Shannon Doherty

limited cash free knowing due to buying be Okay. flow share Got about some cap And extent that stock and and think for just some your market uses, buybacks liquidity? your deploying trading how may do it. to current from shareholders your other you balancing

David Davis

Yes.

of share So we while. buyback program for had a sort a a going

Our I would of months. for that going amortizing stock. looks trade-off of free this debt in foresee we profile relatively rapidly. a into in getting will and rapidly move cash mode float. is say really us us couple continue buyback our always We're out the I flow into are for next limited But 'XX, difficulty and and future. don't now, share revisit -- the of good. the cash sort we we'll right as have building People this. There's very to

But it of shares, this investment we exacerbates a at back our think are shares that. kind good buy really we price. As

year revisit that. into So next, as this move going early later we we're to

Jude Bricker

seasonality balances. thing our end on Just one of the of quarter cash the balances. the trough is The third cash in annual

look balance the sheet you Q, when So just in on the mind. that at keep

Operator

with question from Tom Fitzgerald next TD comes Our Cowen.

Thomas Fitzgerald

over leaving. the of so? X last you or with JetBlue to health especially X-day back on in yields trended like the the going window, touch X carriers rolling or Minneapolis Could Just booking like how have weeks

Jude Bricker

I mean they're up. Sure.

we for So same fares that's calendar the in just X-day leisure significant And every this versus forward we point I last the up -- also, where shift look that want really ours as carriers mean happened out I powerful. month trailing to are year period have year any is volumes. selling like

of could the winter a late for, combined Easter it's a best it's Christmas and Thanksgiving also So late season. setup midweek that we and the our travel Year's, New hope sort with extends

winter Thanksgiving there's Easter. Christmas. late and a this a really cycle That's a then short because we So period period between And relatively weak year. booking have a of long

So those positive there's other this of thickest trends. biggest, markets for really bookings some seeing we're But helping we're -- kind each those markets, all like things. seeing our on in of winter, that's background generally,

So affected Florida hurricane that's Fort Minneapolis, Meyers. December L.A., West challenges. Vegas, bookings really Orlando, in been by haven't Cancun, the

the but the So November, time impact, that by schedule be will we see starts. over an to December appears

look bookings good. So really

Thomas Fitzgerald

you on and block the get you follow-up, are there kind half, first comportment 'XX Amazon the into the be planes helpful. of the That's board, a super half? about thinking you how Any just cargo as And have seasonality would just -- of really then full helpful. of once hours color second Amazon

Jude Bricker

If check you the one time. quarter-to-quarter, main it revenue volume, look through cargo at at go profile are the aircraft is varies. what sort of just going like honestly, any The check of business, variance

us expect throughout quite for flying in little that periods, advantage that great flat a has Prime harder business A year, during the bit much. not and the but Amazon we So that continue. it's to

the that to and business, very it's as So in. a all aircraft are we continue stable great, expect

Operator

with next question from [Operator Scott our Instructions] Wolfe. Group comes And

Scott Group

follow revenue hour. on to per block up the I cargo want

I'm just like more to this over similar we it's just year-over-year. year, up there's back got? XX% what sort next about X% coming. where is know magnitude think able understand to if trying quarter, other increases half it last per is your increases revenue new -- don't I what we in of Which X these tell of the I figure you I'll ultimately Should sounds by as representative And mind to more trying out, X And rate the Amazon? see I'm block go. So with in

David Davis

Yes. Yes.

at quarter-over-quarter. of escalators quarter-over-quarter you precise, mentioned XX% one representative more too So the got rate is without that number then the in I new the being has element the and is say would annual number of year-over-year that contractual rates. other

-- saw -- will everything here. We have in in. coming X fully don't roughly of in you end by X, mentioned. I roughly totality going I'm to should detail increases 'XX, more the not of next contractual increase which everything number rates year, end we between of to vary the 'XX, sorry, be get But into the be equivalent the

Jude Bricker

to a want also a up a fixed component and just hour has bring departure structure the component. then component I rate block and

on the utilization, looking heavy per impact some rate you're subject financials. that block hour has schedules, check So to mostly in the at

So little there's other things. associated a also there's not only rate noise bit with changes, of

Scott Group

makes Yes, sense.

You a flat to that leisure inflection -- feel QX, we into tend the early translate to people in is is see big early. has positive QX enough comment able in positive -- on fare RASM booking like we positive, which there Do in is fares not book the be your quarter? been QX? RASM and may RASM are booked made does where it Or you should

Jude Bricker

my Yes, ago. months we're going point the inflection was a not to only but to guide XQ, happened few that

months, at October, until we were December a a selling months So up few versus ago. year fare negative flown November, into last

we bullish the TRASM we'll look, the out these schedule a time will positive of It to But and booking Now total in it's the trends, become. we more while have longer for take the positive. catch further up.

Scott Group

think there's next mix a growth. next about Makes to obviously year? CASM mid-single-digit changes lot good What's schedule year, down, just cargo of Okay. lastly, sense. a way then And

David Davis

Yes.

coming not here up would CASM but going still of business. let's that's looking subject as together. passenger business plan. I in passenger change call we're next drives is cargo business our mid-single-digit what is plan just CASM, say sort up to is we because the obviously, to it, So is and the down, year the be CASM, numbers, at finalize the

Operator

this I'm now back showing for Jude no further Bricker it I time. to closing turn questions remarks. like to would at

Jude Bricker

morning to excited everybody. thanks day, quite great a hope has I interest. XX and booking seeing update on really Have weekend. look in trends, talked everybody lot guys, forward We're Hey, for we've about which great another a about this what we're days. your giving you a

Operator

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

now You may disconnect.

Sun Country Airlines (SNCY) 31 Oct 242024 Q3 Earnings call transcript