Sun Country Airlines Holdings, Inc.

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. 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. 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'm 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'd like to remind everyone that during this call, the company may make certain statements that constitute forelooking statements. Our remarks today may include forward-looking statements which are based upon management's current beliefs, expectations, assumptions, and subjects 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 on our most recent SEC filing. We assume no obligation to update any forward-looking statement. You can find our third quarter, 2024 Earnings Press Release and Investor Relations portion of our website at ir.suncaddy.com. With that said, I'd like to turn it over to you.

Thanks, Chris. Good morning, everyone. Happy Halloween. Our diversified business model is unique in the airline industry. Due to the predictability of our charter and cargo businesses, we are able to deliver the most flexible scheduled service capacity in the industry. The combination of our schedule flexibility and low fixed cost model allows 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 industry-leading profitability throughout all cycles. Domestic industry capacity growth peaked in June at almost 7%, and the growth rate has been slowing ever since. But across our network, industry capacity reached a peak growth rate of 12%. By January, domestic industry capacity will be flat year on year and will be down across our network. Many airlines' earnings calls have focused on a rationalization of capacity. Clearly, much of the capacity that other airlines added across our network was loss-making and has been removed. All the while, Sun Country continues to expand and produce profits and healthy cash flows. Selling unit revenues are now positive year-on-year for all future selling months. Flown unit revenues will lag, but we now expect fourth quarter TRASM year-on-year to be around flat, based on industry schedules that remain bullish on unit revenue trends into next year. Translating scheduled unit revenue trends into margins, we have positive trends in charter yields and cargo yields, both of which are contractual. We have mostly passed the post-COVID inflationary pressures and are expecting only modest ex-fuel unit cost increases going forward, and fuel is down. As shown in our 4Q guide, we believe we'll likely show a margin expansion, and based on current inputs, I remain bullish into 2025 as well. Another common topic on Airline 3Q calls has been challenges with aircraft availability and OEM deliveries and AOGs caused by OEMs. Again, to draw distinction with our business, all the aircraft supporting our fleet growth for 2025 and 2026 are currently in operation with other carriers. They are either on our balance sheet as leased out until they are re-delivered or committed through our cargo program. Further, borrowing costs are a common topic. Just to remind everyone, we continue to produce free cash flow and are able to self-fund our modest CapEx requirements. As such, our debt levels continue to decline even as we grow. As we ride these positive trends, this management team will primarily be focused on operational improvements and service delivery. This past summer was very challenging operationally, as we discussed in the past, and only to cap the season off with hurricanes and a major IT disruption. But since August 1st, we have achieved a 99.5 controllable completion factor. We have an incredible team that navigates these challenges, and I'm proud to be part of it. With that, I'll turn it over to Dave.