10-Q 1 sncy-20240331.htm 10-Q sncy-20240331
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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 March 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, Minnesota
55450
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (651) 681-3900
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareSNCY
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated Filer
Accelerated Filer
Non-accelerated Filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
Number of shares outstanding by each class of common stock, as of March 31, 2024:
Common Stock, $0.01 par value – 52,611,323 shares outstanding


Sun Country Airlines Holdings, Inc.
Form 10-Q
Table of Contents
Page
-2-

PART I. Financial Information
ITEM 1. FINANCIAL STATEMENTS
SUN COUNTRY AIRLINES HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share and share amounts)
March 31, 2024December 31, 2023
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents$28,427 $46,279 
Restricted Cash11,173 17,401 
Investments132,779 141,127 
  Accounts Receivable, net of an allowance for credit losses of $39 and $17, respectively
37,525 38,166 
Short-term Lessor Maintenance Deposits1,816 1,046 
  Inventory, net of a reserve for obsolescence of $753 and $977, respectively
8,583 7,793 
Prepaid Expenses12,604 15,823 
Other Current Assets2,062 3,716 
 Total Current Assets234,969 271,351 
Property & Equipment, net:
Aircraft and Flight Equipment703,222 685,559 
Aircraft and Flight Equipment Held for Operating Lease154,399 154,185 
Ground Equipment and Leasehold Improvements 44,379 39,847 
Computer Hardware and Software19,430 17,875 
Finance Lease Assets344,500 304,384 
Rotable Parts24,987 19,848 
Total Property & Equipment1,290,917 1,221,698 
Accumulated Depreciation & Amortization(272,590)(252,717)
Total Property & Equipment, net1,018,327 968,981 
Other Assets:
Goodwill222,223 222,223 
Other Intangible Assets, net of accumulated amortization of $25,622 and $24,190, respectively
82,119 83,551 
Operating Lease Right-of-use Assets14,252 14,917 
Aircraft Deposits9,564 9,564 
Long-term Lessor Maintenance Deposits48,181 44,675 
Other Assets9,444 8,365 
Total Other Assets385,783 383,295 
Total Assets$1,639,079 $1,623,627 
See accompanying Notes to Condensed Consolidated Financial Statements
-3-

SUN COUNTRY AIRLINES HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share and share amounts)
March 31, 2024December 31, 2023
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable$59,929 $59,011 
Accrued Salaries, Wages, and Benefits31,787 33,305 
Accrued Transportation Taxes16,459 18,097 
Air Traffic Liabilities119,938 157,996 
Finance Lease Obligations45,083 44,756 
Loyalty Program Liabilities9,404 9,898 
Operating Lease Obligations2,233 2,219 
Current Maturities of Long-term Debt, net74,398 74,177 
Income Tax Receivable Agreement Liability10,611 3,250 
Other Current Liabilities13,725 15,873 
Total Current Liabilities383,567 418,582 
Long-term Liabilities:
Finance Lease Obligations268,687 232,546 
Loyalty Program Liabilities3,664 3,839 
Operating Lease Obligations15,904 16,611 
Long-term Debt, net313,733 327,468 
Deferred Tax Liability18,080 9,148 
Income Tax Receivable Agreement Liability87,083 97,794 
Other Long-term Liabilities7,355 3,236 
Total Long-term Liabilities714,506 690,642 
Total Liabilities1,098,073 1,109,224 
Commitments and Contingencies (see Note 10)
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
590 589 
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
(105,937)(94,341)
Additional Paid-In Capital517,012 513,988 
Retained Earnings 129,542 94,229 
Accumulated Other Comprehensive Loss(201)(62)
Total Stockholders' Equity541,006 514,403 
Total Liabilities and Stockholders' Equity$1,639,079 $1,623,627 
See accompanying Notes to Condensed Consolidated Financial Statements
-4-

SUN COUNTRY AIRLINES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share and share amounts)
(Unaudited)
Three Months Ended March 31,
20242023
Operating Revenues:
Passenger$274,664 $267,269 
Cargo23,948 23,361 
Other12,871 3,485 
Total Operating Revenues311,483 294,115 
Operating Expenses:
Aircraft Fuel70,304 72,290 
Salaries, Wages, and Benefits82,238 75,430 
Aircraft Rent 1,480 
Maintenance16,817 13,039 
Sales and Marketing10,679 9,929 
Depreciation and Amortization23,809 19,460 
Ground Handling9,154 9,170 
Landing Fees and Airport Rent14,729 10,945 
Other Operating, net28,577 26,589 
Total Operating Expenses256,307 238,332 
  Operating Income55,176 55,783 
Non-operating Income (Expense):
Interest Income2,448 2,741 
Interest Expense(11,112)(8,630)
Other, net46 (212)
Total Non-operating Expense, net(8,618)(6,101)
  Income Before Income Tax46,558 49,682 
  Income Tax Expense11,245 11,354 
  Net Income$35,313 $38,328 
Net Income per share to common stockholders:
Basic$0.67 $0.68 
Diluted$0.64 $0.64 
Shares used for computation:
Basic53,034,538 56,630,656 
Diluted55,397,685 59,535,045 
See accompanying Notes to Condensed Consolidated Financial Statements
-5-

SUN COUNTRY AIRLINES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)

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
-6-

SUN COUNTRY AIRLINES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Dollars in thousands, except share amounts)
(Unaudited)

Three Months Ended March 31, 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 1 — — 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 Stock Treasury 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 2 — — 554 — — 556 
Net Stock Settlement of Stock-Based Awards— — — 406 (8)— — — (8)
Net Income— — — — — — 38,328 — 38,328 
Common Stock Repurchases— — — 1,230,932 (22,549)7,501 — — (15,048)
Amazon 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
-7-

SUN COUNTRY AIRLINES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended March 31,
20242023
Net Income$35,313 $38,328 
Adjustments to reconcile Net Income to Cash from Operating Activities:
Depreciation and Amortization23,809 19,460 
Deferred Income Taxes8,974 10,450 
Other, net2,883 4,643 
Changes in Operating Assets and Liabilities:  
Accounts Receivable4,147 (468)
Inventory(1,319)(305)
Prepaid Expenses3,218 (198)
Lessor Maintenance Deposits(4,276)(2,858)
Aircraft Deposits (187)
Other Assets1,093 581 
Accounts Payable2,455 (288)
Accrued Transportation Taxes(1,638)(2,264)
Air Traffic Liabilities(38,058)(16,382)
Loyalty Program Liabilities(669)(1,638)
Operating Lease Obligations(455)(1,434)
Other Liabilities(4,756)421 
Net Cash Provided by Operating Activities30,721 47,861 
Cash Flows from Investing Activities:  
Purchases of Property & Equipment(29,698)(104,978)
Purchases of Investments(31,200)(24,228)
Proceeds from the Maturities of Investments39,500 32,840 
Other, net1,091 1,129 
Net Cash Used in Investing Activities(20,307)(95,237)
Cash Flows from Financing Activities:  
Common Stock Repurchases(11,493)(14,812)
Proceeds from Borrowings 71,280 
Repayment of Finance Lease Obligations(5,847)(4,277)
Repayment of Borrowings(13,830)(10,122)
Other, net(3,324)(3,258)
Net Cash Provided by (Used in) Financing Activities(34,494)38,811 
Net Decrease in Cash, Cash Equivalents and Restricted Cash(24,080)(8,565)
Cash, Cash Equivalents and Restricted Cash--Beginning of the Period63,680 102,928 
Cash, Cash Equivalents and Restricted Cash--End of the Period$39,600 $94,363 
Non-cash transactions:
Aircraft Acquired under Finance Lease$40,116 $ 
The following provides a reconciliation of Cash, Cash Equivalents and Restricted Cash to the amounts reported on the Condensed Consolidated Balance Sheets:
March 31, 2024March 31, 2023
Cash and Cash Equivalents$28,427 $71,587 
Restricted Cash11,173 22,776 
Total Cash, Cash Equivalents and Restricted Cash$39,600 $94,363 

See accompanying Notes to Condensed Consolidated Financial Statements
-8-

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, 2023 as filed with the SEC ("2023 10-K"). Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the unaudited Condensed Consolidated Financial Statements for the interim periods presented. The Company reclassified certain prior period amounts to conform to the current period presentation. All material intercompany balances and transactions have been eliminated in consolidation.
The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Due to impacts from seasonal variations in the demand for air travel, the volatility of aircraft fuel prices, the impact of macroeconomic conditions, and other factors, operating results for the three months ended March 31, 2024 are not necessarily indicative of operating results for other interim periods or for the full year ending December 31, 2024.
2.    REVENUE
Sun Country is a certificated air carrier generating Operating Revenues from Scheduled Service, Charter, Ancillary, Cargo and Other revenue. Scheduled Service revenue mainly consists of base fares. Charter 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, other fees and on-board sales. Cargo consists of revenue earned from flying cargo aircraft for Amazon.com Services, Inc. (together with its affiliates, “Amazon”) under the Air Transportation Services Agreement (the “ATSA”). Other revenue consists primarily of revenue from services in connection with Sun Country Vacations products and rental revenue related to certain transactions where the Company acts as a lessor. The Company recognized $9,275 of rental revenue during the three months ended March 31, 2024. The rental revenue was not material to the Company's results of operations for the three months ended March 31, 2023.
-9-

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 March 31,
20242023
Scheduled Service$141,194 $152,657 
Charter 47,312 46,187 
Ancillary86,158 68,425 
   Passenger274,664 267,269 
Cargo23,948 23,361 
Other12,871 3,485 
Total Operating Revenues$311,483 $294,115 
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 March 31,
20242023
Domestic$290,214 $273,423 
Latin America21,269 20,255 
Other 437 
Total Operating Revenues$311,483 $294,115 
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 have not yet been provided (reported as Air Traffic Liabilities on the Condensed Consolidated Balance Sheets), 2) outstanding loyalty points that may be redeemed for future travel and other non-air travel awards (reported as Loyalty Program Liabilities on the Condensed Consolidated Balance Sheets) and, 3) the Amazon Deferred Up-front Payment received (reported within Other Current Liabilities and Other Long-term Liabilities on the Condensed Consolidated Balance Sheets).
-10-

SUN COUNTRY AIRLINES HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share and share amounts)
(Unaudited)
Contract Assets and Liabilities are as follows:
March 31, 2024December 31, 2023
Contract Assets
Costs to fulfill contract with Amazon$1,279 $1,493 
Total Contract Assets$1,279 $1,493 
Contract Liabilities
Air Traffic Liabilities$119,938 $157,996 
Loyalty Program Liabilities13,068 13,737 
Amazon Deferred Up-front Payment1,955 2,225 
Total Contract Liabilities$134,961 $173,958 
The balance in the Air Traffic Liabilities fluctuates with seasonal travel patterns. Most tickets can be purchased no more than twelve months in advance, therefore any revenue associated with tickets sold for future travel will be recognized within that timeframe. For the three months ended March 31, 2024, $128,502 of revenue was recognized in Passenger revenue that was included in the Air Traffic Liabilities as of December 31, 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:
20242023
Balance – January 1$13,737 $15,437 
Loyalty Points Earned2,430 2,294 
Loyalty Points Redeemed (1)
(3,099)(3,932)
Balance – March 31
$13,068 $13,799 
______________________
(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.
-11-

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 sets forth the computation of basic and diluted earnings per share:
Three Months Ended March 31,
20242023
Numerator:
  Net Income$35,313 $38,328 
Denominator:
  Weighted Average Common Shares Outstanding - Basic53,034,538 56,630,656 
  Dilutive effect of Stock Options, RSUs and Warrants (1)
2,363,147 2,904,389 
  Weighted Average Common Shares Outstanding - Diluted55,397,685 59,535,045 
Basic earnings per share$0.67 $0.68 
Diluted earnings per share$0.64 $0.64 
______________________
(1)
There were 2,778,194 and 3,117,544 performance-based stock options outstanding at March 31, 2024 and 2023, respectively. As of March 31, 2024 and 2023, 100% and 43% of the performance-based stock options had vested, respectively. As of March 31, 2023, 64% of the performance-based stock options were expected to vest.

The Company has excluded 4,230,975 of stock options, RSUs and warrants that would have had an anti-dilutive effect on its diluted earnings per share calculation for the three months ended March 31, 2024. The Company's anti-dilutive shares for the three months ended March 31, 2023 were not material to the Condensed Consolidated Financial Statements.
-12-

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 March 31, 2024, Sun Country's fleet consisted of 63 Boeing 737-NG aircraft, comprised of 58 Boeing 737-800s and five Boeing 737-900ERs.
The following tables summarize the Company’s aircraft fleet activity for the three months ended March 31, 2024 and 2023, respectively:
December 31, 2023
AdditionsReclassificationsRemovals
March 31, 2024
Passenger:
Owned291   

30
Finance leases131   14
Sun Country Airlines’ Fleet422   44
Cargo:
Aircraft Operated for Amazon12    12
Other:
Owned Aircraft Held for Operating Lease5    5
Subleased Aircraft (1)
1 1   2
Total Aircraft 603   63
December 31, 2022AdditionsReclassificationsRemovalsMarch 31, 2023
Passenger:
Owned29    29 
Finance leases11    11 
Operating leases2    2 
Sun Country Airlines’ Fleet42    42 
Cargo:
Aircraft Operated for Amazon12    12 
Other:
Owned Aircraft Held for Operating Lease 3   3 
Total Aircraft 54 3   57 
(1)
The head lease associated with these subleases are classified as finance leases.
During the three months ended March 31, 2024, the Company acquired one incremental aircraft and took control of two aircraft through finance lease arrangements, one of which was subsequently subleased to an unaffiliated airline through the fourth quarter of 2024. Upon expiry of the sublease, the aircraft will be redelivered to the Company and is expected to be inducted into the Company's passenger fleet. Of the 35 Owned aircraft and Owned Aircraft Held for Operating Lease as of March 31, 2024, 31 aircraft were financed and four aircraft were unencumbered. Subsequent to March 31, 2024, the Company purchased one aircraft previously classified as a finance lease, which is now unencumbered.
-13-

SUN COUNTRY AIRLINES HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share and share amounts)
(Unaudited)
During the three months ended March 31, 2023, the Company acquired three 737-900ERs that are currently on lease to an unaffiliated airline ("Owned Aircraft Held for Operating Lease"). The Owned Aircraft Held for Operating Lease are financed through a term loan arrangement. See Note 6 within Part II, Item 8 in our 2023 10-K for more information on this transaction.
Depreciation, amortization, and rent expense on aircraft are as follows:
Three Months Ended March 31,
Aircraft StatusExpense Type20242023
OwnedDepreciation$14,340 $11,872 
Finance LeasedAmortization5,730 4,683 
Operating Leased
Aircraft Rent (1)
 1,480 
$20,070 $18,035 
(1)
Aircraft Rent expense includes credits for the amortization of over-market liabilities established at the Acquisition Date.
5.    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 Credit Agreement includes financial covenants that require a minimum trailing 12-month EBITDAR of $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 March 31, 2024.
Due to previous transactions which utilized the DDTL and the subsequent repayment, no amounts under the DDTL were available to the Company as of March 31, 2024. As of March 31, 2024, the Company had $24,393 of financing available through the Revolving Credit Facility, as $607 had been pledged to support letters of credit.
Long-term Debt
Term Loan Credit Facility
During the three months ended 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 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 Owned Aircraft Held for Operating Lease, as well as the related 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 and a Loan-to-Value ("LTV") ratio calculation is completed at the end of the lease term. The interest rate in effect as of March 31, 2024 was 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%. If at any point within 12 months of the end of the lease term for each respective aircraft the Company deems it
-14-

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 will be applied towards any prepayment obligation. No amounts related to an estimated principal prepayment have been reclassified from Long-term Debt, net to Current Maturities of Long-term Debt, net on the 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 Class A and Class B certificates (the "2022-1 EETC") in an aggregate face amount of $188,277 for the purpose of financing or refinancing 13 aircraft. The Company is required to make bi-annual principal and interest payments each March and September, through March 2031. These notes bear interest at an annual rate between 4.84% and 5.75%. The weighted average interest rate was 5.05% as of 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 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 4.30% as of 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 
-15-

SUN COUNTRY AIRLINES HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share and share amounts)
(Unaudited)
The fair value of Debt was $368,207 as of March 31, 2024 and $383,061 as of December 31, 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.
6. INVESTMENTS
A summary of debt securities by major security type:
March 31, 2024
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available-for-Sale Securities: (1)
Corporate Debt Securities$62,525 $3 $(146)$62,382 
U.S. Government Agency Securities64,165  (119)64,046 
Total $126,690 $3 $(265)$126,428 
December 31, 2023
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available-for-Sale Securities: (1)
Municipal Debt Securities$6,981 $ $(5)$6,976 
Corporate Debt Securities59,222 76 (50)59,248 
U.S. Government Agency Securities68,118 23 (125)68,016 
Total $134,321 $99 $(180)$134,240 
(1)
The Company also holds Certificates of Deposit that are included in Investments on the Condensed Consolidated Balance Sheets totaling $6,351 and $6,887 as of March 31, 2024 and December 31, 2023, respectively.
As of March 31, 2024, 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. The Company believes that any unrealized losses are recoverable prior to the investment's conversion to cash.
7.    FAIR VALUE MEASUREMENTS
The following table summarizes the assets measured at fair value on a recurring basis:
March 31, 2024
Level 1Level 2Level 3Total
Cash & Cash Equivalents$28,427 $ $ $28,427 
Available-for-Sale Securities:
Corporate Debt Securities 62,382  62,382 
U.S. Government Agency Securities 64,046  64,046 
Total Available-for-Sale Securities 126,428  126,428 
Total Assets Measured at Fair Value on a Recurring Basis$28,427 $126,428 $ $154,855 
-16-

SUN COUNTRY AIRLINES HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share and share amounts)
(Unaudited)

December 31, 2023
Level 1Level 2Level 3Total
Cash & Cash Equivalents$46,279 $ $ $46,279 
Available-for-Sale Securities:
Municipal Debt Securities 6,976  6,976 
Corporate Debt Securities 59,248  59,248 
U.S. Government Agency Securities 68,016  68,016 
Total Available-for-Sale Securities 134,240  134,240 
Total Assets Measured at Fair Value on a Recurring Basis$46,279 $134,240 $ $180,519 
8.    INCOME TAXES

The Company's effective tax rate for the three months ended March 31, 2024 and 2023 was 24.2% and 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 rate was primarily due to a decrease in the impact of stock option exercises over the comparative periods.
Tax Receivable Agreement
The total Tax Receivable Agreement ("TRA") balance as of March 31, 2024 and December 31, 2023 was $97,694 and $101,044, of which $10,611 and $3,250 was current, respectively. The TRA liability is an estimate and actual amounts payable under the TRA could differ from this estimate. During the three months ended March 31, 2024 and 2023, the Company made payments of $3,350 and $2,425, respectively, to the pre-IPO stockholders (the “TRA holders”), which includes certain members of the Company's management and certain members of the Company's Board of Directors. The payment is included within Financing Activities on the Condensed Consolidated Statements of Cash Flows. Payments will be made in future periods as attributes that existed at the time of the IPO (the “Pre-IPO Tax Attributes”) are utilized.
9.    STOCKHOLDERS' EQUITY
Equity Transactions
Common Stock Repurchases
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 repurchased 750,000 shares of its Common Stock at a total cost of $14,812, or an average price of $19.75 per share. The repurchases were part of a secondary public offering of the Company's shares by the Apollo Stockholder. The settlement of a $25,000 Accelerated Share Repurchase Program occurred during January 2023, upon which the Company received an additional 480,932 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)
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 three months ended March 31, 2024 and 2023, 189,652 warrants vested, respectively. As of March 31, 2024 and 2023, the cumulative vested warrants held by Amazon were 3,413,745 and 2,591,920, respectively. The exercise period of these warrants is through the eighth anniversary of the issue date.
Stock Compensation
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 5), payments under the TRA (see Note 8), and probable future purchases of aircraft.
The Company is subject to an audit by the Internal Revenue Service (“IRS”) related to the collection of federal excise taxes on optional passenger seat selection charges covering the period of October 1, 2021 through June 30, 2023. During 2024, the Company received an assessment of approximately $2,700 from the IRS related to the results of the audit. The Company believes a loss in this matter is not probable and 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.
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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)
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 May 7, 2024, the date that the Condensed Consolidated Financial Statements were available to be issued.
Subsequent to March 31, 2024, the Company purchased one aircraft previously classified as a finance lease, which is now unencumbered.
For more information on the subsequent events, see Note 4 of the Notes to the 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 three months ended March 31, 2024 and 2023. Also discussed is our financial position as of March 31, 2024 and December 31, 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 2023 10-K. This discussion contains forward-looking statements that involve risk, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions and forecasts. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors, including those set forth under the section of this report titled, “Risk Factors” and elsewhere in this report. You should carefully read the “Risk Factors” included in our 2023 10-K to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.
Business Overview
Sun Country is a new breed of hybrid low-cost air carrier that dynamically deploys shared resources across our synergistic Scheduled Service, Charter, and Cargo businesses. By doing so, we believe we are able to generate high growth, high margins and strong cash flows with greater resilience than other passenger airlines. Based in Minnesota, we focus on serving leisure and visiting friends and relatives ("VFR") passengers, Charter customers and providing crew, maintenance and insurance (“CMI”) service to Amazon, with flights throughout the U.S. and to destinations in Canada, Mexico, Central America and the Caribbean. We share resources, such as flight crews, across our Scheduled Service, Charter and Cargo business lines with the objective of generating high returns and margins and mitigating the seasonality of our route network. We optimize capacity using an agile peak demand scheduling strategy which aims to shift flying to markets during periods of peak demand and away from markets during periods of low demand. We believe this flexible business model provides greater resiliency to economic and industry downturns than a traditional scheduled service carrier. This strategy has been implemented and executed by an experienced management team with deep knowledge of the industry.
Our Scheduled Service 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”) while maintaining lower Adjusted Cost per Available Seat Mile (“CASM”) than Low Cost Carriers (“LCCs”), resulting in best-in-class unit profitability. Our business includes many cost characteristics of ULCCs, such as an unbundled product (which means we offer a base fare and allow customers to purchase ancillary 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 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 soft drinks and juices, complimentary in-flight entertainment, and in-seat power, none of which are offered by other ULCCs.
Our Charter business, which is one of the largest narrow body Charter operations in the United States, is synergistic with our other businesses and provides both inherent diversification and downside protection. Our
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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)
Charter business has several favorable characteristics, including: large repeat customers, more stable demand than Scheduled Service flying, and the ability to pass through certain costs, including fuel. Our diverse Charter customer base includes casino operators, the DoD, and collegiate and professional sports teams. Our Charter business includes ad hoc, repeat, short-term and long-term service contracts with pass through fuel arrangements and annual rate escalations. Most of our business is non-cyclical because the DoD and sports teams continue to fly during normal economic downturns and our casino contracts are long-term in nature.
On December 13, 2019, we signed the ATSA with Amazon to provide air cargo services. Flying under the ATSA began in May 2020 and we are currently flying 12 Boeing 737-800 cargo aircraft for Amazon. Our CMI service is asset-light from a Sun Country perspective as Amazon supplies the aircraft and covers many of the operating expenses, including fuel, and provides all cargo loading and unloading services. We are responsible for flying the aircraft under our air carrier certificate, crew, aircraft line maintenance and insurance, all of which allow us to leverage our existing operational expertise from our passenger businesses. Our cargo business also enables us to leverage certain assets, capabilities, and fixed costs to enhance profitability and promote growth across our Company.
Operations in Review
We believe a key component of our success is establishing Sun Country as a high growth, low-cost carrier in the United States by attracting customers with low fares and garnering repeat business by delivering a high-quality passenger experience, offering state-of-the-art interiors, complimentary streaming of in-flight entertainment to passenger devices, seat reclining and seat-back power in all of our aircraft.
Fuel price volatility due to market conditions and geopolitical events, and the impact of macroeconomic conditions, continue to impact the Company, as well as the industry. Our diversified business model, which includes a focus on leisure and VFR passengers, Charter and Cargo service, is unique in the airline sector and mitigates the impact of economic and industry downturns on our business when compared with other large U.S. passenger airlines. This strategy has allowed us to offset a majority of additional costs associated with fuel price volatility and 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 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 2023 10-K.
Components of Operations
For a more detailed discussion on the nature of transactions included in the separate line items of our Condensed Consolidated Statement of Operations, see “Management’s Discussion and Analysis of Operations” in Part II, Item 7 in our 2023 10-K.
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SUN COUNTRY AIRLINES HOLDINGS, INC
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Operating Statistics
Three Months Ended March 31, 2024 (1)
Three Months Ended March 31, 2023 (1)
Scheduled
Service
CharterCargoTotalScheduled
Service
CharterCargoTotal
Departures (2)
7,1692,292 2,961 12,539 6,1772,369 3,027 11,672 
Block hours (2)
25,4964,900 7,688 38,437 21,9415,054 7,776 35,083 
Aircraft miles (2)
10,176,8351,696,121 2,856,662 14,840,468 8,740,4731,725,753 2,840,370 13,401,208 
Available seat miles (ASMs) (thousands) (2)
1,892,891299,058 2,211,886 1,625,728301,913 1,945,001 
Total revenue per ASM (TRASM) (cents) (3)
12.2015.82 12.58 13.8115.30 13.92 
Average passenger aircraft during the period (4)
   42.0   41.3 
Passenger aircraft at end of period (4)
   44   42 
Cargo aircraft at end of period   12   12 
Leased Aircraft (5)
Average daily aircraft utilization (hours) (4)
   8.0   7.3 
Average stage length (miles)  1,255   1,225 
Revenue passengers carried (6)
1,157,511   998,238  
Revenue passenger miles (RPMs) (thousands) (6)
1,654,851   1,432,131  
Load factor (6)
87.4 %   88.1 %  
Average base fare per passenger (6)
$121.98   $152.93  
Ancillary revenue per passenger (6)
$74.43   $68.55  
Total fare per passenger (6)
$196.41$221.48
Charter revenue per block hour (6)
$9,655    $9,139  
Fuel gallons consumed (thousands) (2)
20,0503,434 23,676 17,3833,526 21,073 
Fuel cost per gallon, excluding indirect fuel credits   $3.01   $3.45 
Employees at end of period   2,865   2,634 
Cost per available seat mile (CASM) (cents) (7)
  11.59  12.25 
Adjusted CASM (cents) (8)
  7.09  7.10 
______________________
(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 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 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 revenue is driven by flight statistics.
(7)CASM is a key airline cost metric. CASM is defined as operating expenses divided by total available seat miles.
(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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SUN COUNTRY AIRLINES HOLDINGS, INC
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Results of Operations
For the Three Months Ended March 31, 2024 and 2023

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 %
Passenger 274,664 267,269 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 Income 55,176 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 $17,368, or 6%, to $311,483 for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The revenue increase was driven by an increase in rental revenue included within Other revenue, as well as an 11% increase in Passenger segment departures, partially offset by an 11% decrease in Total Fare per passenger.
Passenger. Passenger revenue increased $7,395, or 3%, to $274,664 for the three months ended March 31, 2024 as compared to 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)
The table below presents select operating data for lines of revenue within Passenger, expressed as quarter-over-quarter changes:
Three Months Ended March 31,Change%
Change
20242023
Scheduled Service and Ancillary Statistics:
Departures7,169 6,177 992 16 %
Block Hours25,496 21,941 3,555 16 %
Passengers1,157,511 998,238 159,273 16 %
Average base fare per passenger$121.98 $152.93 $(30.95)(20)%
Ancillary revenue per passenger$74.43 $68.55 $5.88 %
Total Fare per passenger$196.41 $221.48 $(25.07)(11)%
RPMs (thousands)1,654,851 1,432,131 222,720 16 %
ASMs (thousands)1,892,891 1,625,728 267,163 16 %
TRASM (cents)12.20 13.81 (1.61)(12)%
Passenger load factor87.4 %88.1 %(0.7)ptsN/A
Charter Statistics:
Departures2,292 2,369 (77)(3)%
Block hours4,900 5,054 (154)(3)%
Charter 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 increased capacity due to a 10% increase in average daily aircraft utilization. As a result, Scheduled Service departures and ASMs both increased by 16%. This increase in capacity drove the 16% increase in passengers, which offset the quarter-over-quarter decreases in both Total Fare per passenger and TRASM. The 16% increase in Schedule Service passengers during the period also resulted in greater sales of ancillary products. Ancillary revenue was further benefited by per unit growth.
Passenger revenue was further supported by the $1,125, or 2%, increase in Charter revenue during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The Company was able to reduce the number of ferry flights by leveraging scheduled service opportunities, which drove the 3% decrease in Charter block hours and departures. This resulted in a 6% increase in Charter revenue per block hour.
Cargo. Revenue from Cargo services increased $587, or 3%, to $23,948 for the three months ended March 31, 2024, as compared to the three months ended 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 2% and 1% quarter-over-quarter decrease in departures and block hours, respectively.
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)
Operating Expenses
Aircraft Fuel. We believe Aircraft Fuel expense, excluding indirect fuel credits, is the best measure of the effect of fuel prices on our business as it consists solely of direct fuel expenses that are related to our operations and is consistent with how management analyzes our operating performance. This measure is defined as GAAP Aircraft Fuel expense, excluding indirect fuel credits that are recognized within Aircraft Fuel expense, but are not directly related to our Fuel Cost per Gallon.
The primary components of Aircraft Fuel expense are shown in the following table:

Three Months Ended March 31,Change%
Change
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 3% quarter-over-quarter primarily due to a 13% decrease in the average fuel cost per gallon, partially offset by a 12% increase in consumption.
Salaries, Wages, and Benefits. Salaries, Wages, and Benefits expense increased $6,808, or 9%, to $82,238 for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The quarter-over-quarter increase in Salaries, Wages, and Benefits was impacted by a 9% increase in employee headcount, an increase in block hours as a result of operational growth, and contractual rate increases for our pilots.
Aircraft Rent. Aircraft Rent expense decreased $1,480, or 100%, to $0 for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. Aircraft Rent expense decreased due to the composition of our aircraft fleet shifting from aircraft under operating leases to owned aircraft or finance leases.
Maintenance. Maintenance expense increased $3,778, or 29%, to $16,817 for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The quarter-over-quarter increase in Maintenance expense was primarily driven by an increase in routine, time-based heavy maintenance and landing gear events, as well as the increase in the size of our fleet and operations.