Sun Country Airlines Holdings, Inc.

Welcome to the Sun Country Airlines third quarter 2022 earnings call. My name is Liz, and I will 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 during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. 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.

Thank you. I am joined today by Jude Bricker, our 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 forelooking statements. Our remarks today may include forelooking statements which are based upon management's current beliefs, expectations, and assumptions, and are subject 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 on our most recent SEC filings. We assume no obligation to update any forward-looking statements. 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 now like to turn the call over to Jude.

Thanks, Chris. Good afternoon, everybody. We have much to be excited about in our three key results. I'm particularly pleased though with our performance operationally. Since July 1st we've run a 99.8% controllable completion factor with 83% A14. Today it's been 96 days since we had a cancellation. This with block hour growth of over 15% versus the same quarter in 2019. Operation results like these are a team effort and I'm really proud of what our folks were able to deliver after coming through a tough Since the demand environment's rapid recovery began earlier this year, our focus at Sun Country has been to staff for growth to restore passenger fleet utilization to pre-pandemic levels. We continue to find sufficient new hires to meet our goals. However, particularly in the case of pilots, we continue to work through training overhang. Last quarter, we were constrained primarily by first officers. This quarter, captain availability has become the constraining input. As our rapid hiring works through our training program, we expect fleet utilization to continue to improve into the beginning of 2023. Increased utilization is very valuable in this demand environment. Our scheduled service TRASM in 3Q improved versus 2019 by over 46%. Our TRASM improvement exceeds that of the industry as a whole due to our sculpted scheduling and the strength of Sun Country's brand in our local market. Based on our sales for travel into 2023, In industry schedules, we anticipate yield strength to continue for the foreseeable future. In scheduled service, we're seeing strength across all our markets, leisure, VFR, international and domestic, peak and off-peak. Our charter business continues to show yield improvements as well. Due to the lower cost of incremental capacity ads and the strong yield environment, we expect margins to widen into next year. The west coast of Florida is an important destination for us, particularly in the winter travel seasons. Our thoughts go out to the people of that region as they work to recover from the tragedy of Ian. For some country, anticipating the demand recovery to that region is challenging. Typically, Fort Myers in particular is an increasingly larger part of our network through our March peak. We've made cuts through the end of the year and continue to monitor bookings through the first quarter. Our customers will travel. However, we have less certainty about historically reliable demand. We've launched two new markets into Florida and we'll redeploy capacity to other sunny destinations. However, the uncertainty is why we have a wider guide than usual for the fourth quarter. We expect the region to fully recover and we'll be there along the way. One benefit of our model that's good to highlight in a rising rate environment is our flexible fleet strategy. We buy used aircraft in the spot market, so prices will adjust to finance costs global weakness, and a strong dollar. And the timing of our deliveries will be in response to our staffing levels. Based on our current fleet commitments, we expect the fleet to grow to 54 aircraft while also reducing net interest expense in 23 over 22. To summarize, we're not limited by opportunities, capital, nor aircraft, and I'm pleased with the progress we're making on staffing. 4Q and 2023 are setting up very well for us. And with that, I'll turn it over to Dave.