Sun Country Airlines Holdings, Inc.

Welcome to the Sun Country Airlines second quarter 2022 earnings call. My name is Kathy Darnell, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you'll need to press star 1-1 on your telephone. You'll then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I'll 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, Chief Executive Officer, Dave Davis, President and Chief Financial Officer, and a group of others to help answer questions. Before we begin, I would like to remind everyone that during this call, the company may make certain statements that constitute forward-looking statements. Our remarks today may include poor-looking statements which are based upon management's current beliefs, expectations, and assumptions, and are subject to risk and uncertainty. Actual results may differ materially. We encourage you to review the risk factors and cautionary statements outlined in our earnings release and our most recent SEC filings. We assume no obligation to update any poor-looking statement. You can find our second quarter earnings release, our second quarter press release on the investor relations portion of the website at ir.suncountry.com. With that said, I'd like to turn the call over to June.

Thanks, Chris. Good morning, everyone. Demand for all segments of our business remains as strong as it's ever been. Our revenue in 2Q grew over 29% versus the same quarter in 2019 on block hour growth at 23%. During the pandemic, we launched and built out our cargo business, and now and over the next several quarters, our main focus at Sun Country is to staff our airline to get back to 2019 utilization levels on our passenger fleet as quickly as possible. We want to deliver this growth while also maintaining the operational excellence and service levels that our customers expect of us. I'm especially proud that year to date Sun Country has led the industry in completion factor with 98.2% in this challenging operational environment. That performance during such rapid growth is a testament to the hard work and talents of all our team members that deliver for our customers each day. Like all airlines, we're facing the challenges of record high fuel, tight labor market, and inflationary pressures. We build a model that we believe can deliver profits in any environment. We were profitable through the pandemic, through a war, and now through record fuel. Our flexible network combined with having a large percentage of our flying committed to long-term pass-through contracts give us the ability to be successful regardless of what challenges we're facing. By design, our response to high fuel is to cut off-peak flying and concentrate our schedule on periods of the calendar when we're able to achieve acceptable returns. As fuel rose rapidly through February and into May, we aggressively cut weaker periods like midweek, May and September, and long-haul routes that are more fuel-intensive. These capacity cuts, along with all our revenue initiatives, allowed us to deliver over 29% scheduled service TRASM growth versus 2019 for 2Q. As we've had more lead time going into the third quarter, we expect our scheduled service TRASM to approach 40% improvements. And we continue to see strength across our selling schedule currently posted through April of next year. We expect not only to be profitable in all environments, but also to deliver industry-leading margins. I want to give some color as to why, for the first time in 10 quarters, that isn't the case. The capacity changes we've implemented in the second and third quarters were all cuts. However, the fair environment and our fleet size justifies significantly more flying during peak periods. We weren't able to add this flying due to crew constraints. Since ratifying our pilot agreement at the end of last year, we haven't had any issues with retention or hiring. However, we're attempting to train about four times the amount of crews versus pre-COVID levels. At the end of June, about a third of our FOs were in a training status. This resulted in a reduction for June, a peak month, of 30% in passenger fleet utilization versus 2019. With 40% of the fleet committed to contract flying, we were under-allocated to the best margin opportunities during the quarter, namely scheduled service large volume domestic markets. As hiring and retention continue to not be an issue, we expect our crew constraints to be temporary. Again, I'm so proud of all our team members here at Sun Country for going above and beyond every day. And with that, I'll turn it over to Dave.