Sun Country Airlines Holdings, Inc.

Welcome to the Sun Country Airlines third quarter 2021 earnings call. My name is Amitris, and I will be your operator for today's call. At this time, my participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I will now turn the call over to Chris Allen, Director of Investor Relations. Mr. Allen, you may begin.

Thank you. I'm joined today by Jude Bricker, our Chief Executive Officer, Dave Davis, President and Chief Financial Officer, and a talented group of others to help answer questions. Before we begin, I would like to remind everyone that during this call, a company may make certain statements that constitute forward-looking statements. Our remarks today may include forward-looking statements which are based upon management's current beliefs, expectations, and assumptions, and subjects to risk and uncertainties. Actual results may differ materially. We encourage you to review the risk factors and cautionary statements outlined in our earnings release and our most SEC filings. We assume no obligation to update any forward-looking statement. You can find our third quarter earnings press release on the Investor Relations portion of our website at ir.suncountry.com. With that said, I would like to turn the call over now to Jude.

Thanks, Chris. Good morning, everyone. To review... Our multi-segment business model is unique in the airline industry. Due to the predictability of our charter and cargo businesses, we're able to deliver the most flexible scheduled service capacity in the industry. The combination of our scheduled flexibility and low fixed cost model allow us to respond to both predictable leisure demand fluctuations and exogenous industry shocks. We believe due to our structural advantages, we'll be able to reliably deliver the industry's best profitability throughout all cycles. Traditionally, the third quarter is a relatively weak quarter for us. However, I'm happy to report industry-leading EBITDA and operating margins of 21.3% and 13.2% respectively. While the Delta variant negatively impact our scheduled service revenue, our cargo and charter segments outperform to the upside. In addition, our variable capacity model helped to minimize our exposure to the demand weakness in late August, early September, as we flew 41% of the quarter the quarter's scheduled service departures in July and just 22 in September. This focus on flying more during peak demand helped to produce a 4% TRASM increase versus the third quarter 2019. In fact, TRASM improved in every month within the quarter in spite of the Delta variant. We attribute this trend to careful allocation of our capacity and continued improving performance of our ancillary product. Fourth quarter bookings are trending positively as well. Similar to the third quarter, we've loaded a schedule focused primarily on peak periods. For example, currently in the fourth quarter, 85% of our ASMs are on peak days, up from 80% in the fourth quarter of 2019. I want to address two common themes across our industry. First, operation performance. It seems operations are straining everywhere across the economy as we recover from the COVID crisis. So I'm especially proud of our team's performance. We have maintained a scheduled controllable completion factor of 99.9% throughout the quarter and in the trailing 12 months. Further, our trailing 12-month on-time performance is above 84%, with a mishandled bag rate of less than 2 per 1,000. This is while growing system block hours 15% versus the third quarter of 2019, and we've added our fleet substantially, increasing it by about 50% since COVID began. In light of our growth rates, our operation performance is particularly impressive. Second, cost pressures. While we're certainly not immune to labor costs inflation, we still expect our fourth quarter 21 ex-fuel unit costs to be roughly in line with the 2019 comp. This is in spite of significantly lower utilization. As we bring back utilization on our passenger fleet to 2019 levels and work through some of our legacy contracts, we'll be able to continue our ex-fuel chasm trend heading to below $0.06. Finally, I want to give a few thoughts on our charter business. I haven't devoted much commentary to this segment in the past. Our charter business is extremely valuable because it has passed through economics. It is counter-seasonal to our leisure demand. It's a space where we have significant advantages, and mainly we can be more responsive than any other carriers. For example, all in the third quarter, we participated in the Afghan evacuation while also delivering our VIP product on our Kona shuttle, and we flew our usual seasonal NCAA football schedule facilitated by positioning aircraft throughout the country on sketch service. In short, we're better charters than anybody. Recently, we announced a new five-year agreement to support Major League Soccer and their charter need. Generally, we're now seeing charter volumes back to 2019 levels. As we continue to find new charter opportunities, I'm confident that our charter segment will continue to grow proportional to our SCED business. With that, I'll turn it over to Dave.