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What changed in Sun Country Airlines Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sun Country Airlines Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+446 added−607 removedSource: 10-K (2025-02-12) vs 10-K (2024-02-14)

Top changes in Sun Country Airlines Holdings, Inc.'s 2024 10-K

446 paragraphs added · 607 removed · 370 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

78 edited+18 added−14 removed73 unchanged
Biggest changeOur Cargo business also enables us to leverage certain assets, capabilities and fixed costs to enhance profitability and promote growth across our Company. For example, we believe that by deploying pilots across each of our business lines, we increase the efficiency of our operations.
Biggest changeWe are currently flying 12 Boeing 737-800 cargo aircraft for Amazon. All aircraft in our Cargo service are subleased directly from Amazon, serve destinations in Amazon's network and are operated pursuant to the A&R ATSA. Our Cargo business also enables us to leverage certain assets, capabilities and fixed costs to enhance profitability and promote growth across our Company.
Heavy maintenance consists of engine, auxiliary power units, landing gear, and airframe overhauls, which some are quite extensive and can take several months to complete. We maintain an inventory of spare engines to provide for continued operations during engine maintenance events.
Heavy maintenance consists of engine, auxiliary power units, landing gear, and airframe overhauls, some of which are quite extensive and can take several months to complete. We maintain an inventory of spare engines to provide for continued operations during engine maintenance events.
Our international flights to Mexico are governed by a liberalized bilateral air transport agreement, which the DOT has determined has all of the attributes of an “open skies” agreement.
Our international flights to Mexico are governed by a liberalized bilateral air transport agreement, which the DOT has determined has all the attributes of an “open skies” agreement.
In addition, as described above, we will not directly control our CORSIA compliance costs because our compliance obligations through 2032 are based on the growth in emissions of the global aviation sector and begin to incorporate a factor for individual airline operator emissions growth starting in 2033.
In addition, as described above, we will not directly control our CORSIA compliance costs because our compliance obligations through 2032 are based on the growth in emissions of the global aviation sector and will begin to incorporate a factor for individual airline operator emissions growth starting in 2033.
These restrictions can include limiting nighttime operations, directing specific aircraft operational procedures during take-off and initial climb and limiting the overall number of flights at an airport. While we have had sufficient scheduling flexibility to accommodate local noise restrictions in the past, our operations could be adversely impacted if ICAO or locally imposed regulations become more restrictive or widespread.
These restrictions can include limiting nighttime operations, directing specific aircraft operational procedures during take-off and initial climb and limiting the overall number of flights at an airport. While we have had sufficient scheduling flexibility to accommodate local noise restrictions in the past, our operations could be adversely impacted if the ICAO or locally imposed regulations become more restrictive or widespread.
These jet fuel reduction initiatives include: • Efficient seating - we optimize the number of seats on our plane, making each flight as fuel efficient as possible. • Focus on demand - we understand our customers travel needs and patterns.
These jet fuel reduction initiatives include the following: • Efficient seating - we optimize the number of seats on our plane, making each flight as fuel efficient as possible. • Focus on demand - we understand our customers travel needs and patterns.
Points expire 36 months after the date they were earned, except those points held by Sun Country co-branded cardholders do not expire so long as the holder maintains the card as active.
Points expire 36 months after the date they were earned, except those points held by Sun Country co-branded credit cardholders do not expire so long as the holder maintains the card as active.
In charter arrangements where we are the principal, the reimbursed fuel costs are recognized as revenue and the fuel costs are recognized with Aircraft Fuel Expense on the Statement of Operations. These amounts are reflected in the measure above.
In Charter arrangements where we are the principal, the reimbursed fuel costs are recognized as revenue and the fuel costs are recognized in Aircraft Fuel Expense on the Statement of Operations. These amounts are reflected in the measure above.
Our marketing tools are our proprietary email distribution list consisting of over two million email addresses, our Sun Country Rewards program, as well as advertisements online, on television, radio, digital billboards and other channels. Our objective is to use our low prices, quality customer service, and differentiated in-flight product to stimulate demand and drive customer loyalty.
Our marketing tools are our proprietary email distribution list consisting of approximately two million email addresses, our Sun Country Rewards program, as well as advertisements online, on television, radio, digital billboards and other channels. Our objective is to use our low prices, quality customer service, and differentiated in-flight product to stimulate demand and drive customer loyalty.
Points earned are treated like currency and can be applied towards the purchase price of all or a portion of our air travel tickets. This makes our program more valuable to leisure customers who travel less frequently and would have difficultly accumulating enough points to get discounted travel on other airlines.
Points earned are treated like currency and can be applied towards the purchase price of all or a portion of our air travel tickets and ancillary products. This makes our program more valuable to leisure customers who travel less frequently and would have difficultly accumulating enough points to get discounted travel on other airlines.
In general, our charter operations and the ATSA have pass-through provisions for fuel costs. Under our charter agreements, we are either responsible for arranging for fuel on behalf of the customer (agent), or we are directly responsible for providing fuel (principal). The fuel costs under both charter arrangements are reimbursed by the customer.
In general, our Charter operations and the A&R ATSA have pass-through provisions for fuel costs. Under our Charter agreements, we are either responsible for arranging for fuel on behalf of the customer (agent), or we are directly responsible for providing fuel (principal). The fuel costs under both Charter arrangements are reimbursed by the customer.
ITEM 1. BUSINESS Overview Sun Country Airlines 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 are able to generate high growth, high margins and strong cash flows with greater resilience than other passenger airlines.
ITEM 1. BUSINESS Overview Sun Country Airlines 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 generate high growth, high margins and strong cash flows with greater resilience than other passenger airlines.
Our key competitors on domestic routes include Alaska Airlines, Allegiant Travel Company, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines. Our Charter business competitors include charter-only operators Swift/iAero Airways, as well as other scheduled passenger carriers who also operate charter flying, such as Delta Air Lines.
Our key competitors on domestic routes include Alaska Airlines, Allegiant Travel Company, American Airlines, Delta Air Lines, Frontier Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines. Our Charter business competitors include charter-only operators, as well as other scheduled passenger carriers who also operate charter flying, such as Delta Air Lines.
The Sun Country Airlines co-branded credit card is the primary vehicle for our customers to earn points and our loyalty program is geared specifically towards supporting adoption and continued use of the credit card. Sun Country Rewards offers award travel on every flight without blackout dates.
The Sun Country Airlines co-branded credit card is the primary vehicle for our customers to earn points and our loyalty program is geared specifically 14 Table of Content towards supporting adoption and continued use of the credit card. Sun Country Rewards offers award travel on every flight without blackout dates.
We maintain Sun Country technicians in Minneapolis, with limited line maintenance capabilities in Gulfport, Mississippi, Dallas-Fort Worth/Alliance Fort Worth, Texas, Lakeland Linder Airport, Florida, and Laughlin/Bullhead International Airport, Arizona. All other line maintenance is provided by third-party maintenance contractors as needed.
We maintain Sun Country technicians in Minneapolis, with limited line maintenance capabilities in Gulfport, Mississippi, Dallas-Fort Worth/Alliance Fort Worth, Texas, Lakeland Linder Airport, Florida, Laughlin/Bullhead International Airport, Arizona, Fort Meyers, Florida and Reno, Nevada. All other line maintenance is provided by third-party maintenance contractors, as needed.
For a discussion of the procedures we instituted to ensure compliance with these foreign ownership rules, please see “Risk Factors - Risks Related to Ownership 19 Table of Contents of Our Common Stock - Our certificate of incorporation and bylaws include provisions limiting ownership and voting by non-U.S. citizens .” Government Regulation Aviation Regulation The airline industry is heavily regulated, especially by the federal government.
For a discussion of the procedures we instituted to ensure compliance with these foreign ownership rules, please see “Risk Factors - Risks Related to Ownership of Our Common Stock - Our certificate of incorporation and bylaws include provisions limiting ownership and voting by non-U.S. citizens .” 18 Table of Content Government Regulation Aviation Regulation The airline industry is heavily regulated, especially by the federal government.
Seasonal Demand Dictates Monthly Scheduled Service Schedule Day-of-Week Capacity Determined by Scheduled Service Demand Patterns (1) Monthly Seats as a % of March 2023 Seats (% of Peak Day ASMs) (TRASM in cents) (1) Based on fiscal year 2023 data Our Scheduled Service 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), and point-to-point service.
Seasonal Demand Dictates Monthly Scheduled Service Schedule Day-of-Week Capacity Determined by Scheduled Service Demand Patterns (1) Monthly Seats as a % of March 2024 Seats (% of Peak Day ASMs) (TRASM in cents) (1) Based on fiscal year 2024 data 10 Table of Content Our Scheduled Service business includes many cost characteristics of ULCCs, such as an unbundled product (which means we offer a low base fare and allow customers to purchase ancillary products and services for an additional fee), and point-to-point service.
The principal competitive factors in the airline industry are ticket prices, flight schedules, aircraft type, passenger amenities, customer service, reputation and loyalty programs. We have different competitive sets in our Scheduled Service business, Charter business and Cargo business. Our competitors and potential competitors in the Scheduled Service business include both legacy network airlines and low-cost airlines.
The principal competitive factors in the airline industry are ticket prices, flight schedules, passenger amenities, customer service, reputation and loyalty programs. We have different competitive sets in our Scheduled Service and Charter lines of business, and our Cargo business. Our competitors and potential competitors in the Scheduled Service business include both legacy network airlines and low-cost airlines.
This allows for the most profitable use of the aircraft, either Scheduled Service or Charter, to be selected at any point in time. Our Charter business has several favorable characteristics, including large repeat customers, and the ability to pass through certain costs, including fuel.
This allows for the most profitable use of the aircraft to be selected at any point in time. Our Charter business has several favorable characteristics, including large repeat customers, and the ability to pass through certain costs, including fuel.
Under the RLA, the collective bargaining agreements generally do not expire, but instead become amendable as of a stated date. If either party wishes to modify the terms of any such agreement, they must notify the other party in the manner agreed to by the parties.
Under the RLA, the CBA's generally do not expire, but instead become amendable as of a stated date. If either party wishes to modify the terms of any such agreement, they must notify the other party in the manner agreed to by the parties.
AMFA organized our technicians in 2022 and negotiations for an initial collective bargaining agreement with our technicians and related craft employees began in October of 2022 and negotiations are ongoing with the assistance of a federal mediator appointed by the NMB. IBT organized our below-the-wing employees in 2023 and negotiations began in March of 2023 and are ongoing.
AMFA organized our technicians in 2022 and negotiations for an initial CBA with our technicians and related craft employees began in October of 2022 and negotiations are ongoing with the assistance of a federal mediator appointed by the NMB. IBT organized our below-the-wing employees in 2023 and negotiations began in March of 2023 and are ongoing.
Our collective bargaining agreement with our pilots is amendable on December 21, 2025. Our collective bargaining agreement with our flight attendants became amendable on December 31, 2019. We entered into negotiations in November 2019. Negotiations were paused by mutual consent in March 2020 due to the COVID-19 pandemic.
Our CBA with our pilots is amendable on December 21, 2025. Our CBA with our flight attendants became amendable on December 31, 2019. We entered into negotiations in November 2019. Negotiations were paused by mutual consent in March 2020 due to the COVID-19 pandemic.
Materials filed with the SEC are available at www.sec.gov. 22 Table of Contents The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report.
Materials filed with the SEC are available at www.sec.gov. The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report. 21 Table of Content
See also “Risk Factors - Risks Related to Our Industry - The airline industry is exceedingly competitive, and we compete against new entrants, LCCs, ULCCs, legacy network airlines and cargo carriers; if we are not able to compete successfully in our markets, our business will be materially adversely affected.” Seasonality The airline industry has significant seasonal fluctuation in demand.
See also “Risk Factors - Risks Related to Our Industry - The airline industry is exceedingly competitive, and we compete against new entrants, LCCs, ULCCs, legacy network airlines and cargo carriers, as well as air travel substitutes; if we are not able to compete successfully in our markets, our business will be materially adversely affected.” Seasonality The airline industry has significant seasonal fluctuation in leisure demand.
Human Capital As of December 31, 2023, we had 2,783 employees. FAA regulations require pilots to have commercial licenses with specific ratings for the aircraft to be flown and to be medically certified as physically fit to fly. FAA and medical certifications are subject to periodic renewal requirements including recurrent training and recent flying experience.
Human Capital As of December 31, 2024, we had 3,141 employees. FAA regulations require pilots to have commercial licenses with specific ratings for the aircraft to be flown and to be medically certified as physically fit to fly. FAA and medical certifications are subject to periodic renewal requirements including recurrent training and recent flying experience.
As of December 31, 2023, we have access to eight of the 14 gates in Terminal 2. We have been based in the Minneapolis-St. Paul area since our founding over 40 years ago, where our brand is well-known and well-respected.
As of December 31, 2024, we have access to eight of the 14 gates in Terminal 2 and use of additional gates as needed. We have been based in the Minneapolis-St. Paul area since our founding over 40 years ago, where our brand is well-known and well-respected.
Our flexible business model provides greater resiliency to economic and industry downturns than a traditional Scheduled Service carrier. Our flying continued to be more seasonal in 2023, as only 2% of our total Scheduled Service routes were daily, year-round routes to three locations.
Our flexible business model provides greater resiliency to economic and industry downturns than a traditional Scheduled Service carrier. Our flying continued to be seasonal in 2024, as only 3% of our total Scheduled Service routes were daily, year-round routes to three locations.
We restarted negotiations with our flight attendants in October of 2021 and in July of 2023, we and IBT jointly requested the appointment of a mediator through the NMB. The NMB has appointed a mediator, and the parties began mediated negotiations in December of 2023 and are ongoing.
We restarted negotiations with our flight attendants in October of 2021 and in July of 2023, we and IBT jointly requested the appointment of a mediator through the NMB. The parties began NMB mediated negotiations in December of 2023.
The costs of complying with our future obligations under CORSIA are uncertain because there is significant uncertainty with respect to the future supply and price of carbon offset credits and lower-carbon aircraft fuels. As of December 31, 2023, we have not been required to purchase any carbon offset credits or lower-carbon aircraft fuels for the CORSIA pilot phase (2021-2023).
The costs of complying with our future obligations under CORSIA are uncertain because there is significant uncertainty with respect to the future supply and price of carbon offset credits and lower-carbon aircraft fuels. We were not required to purchase any carbon offset credits or lower-carbon aircraft fuels for the CORSIA pilot phase (2021-2023).
Our fleet is reliable, and we have demonstrated the ability to maintain our high completion factor during harsh weather conditions. For 10 Table of Contents more information on our operational performance and comparisons to our competitors, see "Operational Performance" included within Part I, Item 1, "Business". As of December 31, 2023, our fleet consisted of 60 Boeing 737-NG aircraft.
Our fleet is reliable, and we have demonstrated the ability to maintain our high completion factor during harsh weather conditions. For 9 Table of Content more information on our operational performance and comparisons to our competitors, see "Operational Performance" included within Part I, Item 1, "Business". As of December 31, 2024, our fleet consisted of 63 Boeing 737-NG aircraft.
This includes 42 aircraft in the passenger fleet, 12 cargo operated aircraft through the ATSA with Amazon, and six aircraft that are currently on lease to unaffiliated airlines. Our fleet is managed through our two reportable segments: Passenger, which is comprised of Scheduled Service and Charter, and Cargo. Our Unique Business Model Scheduled Service.
This includes 45 aircraft in the passenger fleet, 12 cargo operated aircraft through the A&R ATSA with Amazon, and six aircraft that are currently on lease to unaffiliated airlines. Our fleet is managed through our two reportable segments: Passenger, which is comprised of Scheduled Service and Charter, and Cargo.
Our historical fuel consumption and costs were as follows: Year Ended December 31, 2023 2022 Fuel Gallons Consumed (in thousands) 79,574 71,690 Fuel cost per gallon, excluding indirect fuel credits $ 3.11 $ 3.75 Gallons consumed includes Scheduled Service and Charter operations where we are responsible for fuel and are later reimbursed by the customer, but does not include Cargo.
Our historical fuel consumption and costs were as follows: Year Ended December 31, 2024 2023 Fuel Gallons Consumed (in thousands) 86,185 79,574 Fuel cost per gallon, excluding indirect fuel credits $ 2.77 $ 3.11 Gallons consumed includes Scheduled Service and some Charter operations where we are responsible for fuel and are later reimbursed by the customer, but does not include Cargo.
We are the largest low-cost airline operating at MSP, which is our largest base, and the second largest airline at MSP after Delta Air Lines. We have been focused on developing our network at MSP and have grown our non-stop destinations from MSP by over 70% since 2019. Our MSP network served approximately 89 markets in 2023.
We are the largest low-cost airline operating at MSP, which is our largest base, and the second largest airline at MSP after Delta Air Lines. We have been focused on developing our network at MSP. Since 2019, we have doubled our non-stop destinations from MSP. Our MSP network served approximately 104 markets in 2024.
We offer vacation products to promote “one stop shopping.” Our Other Revenue also includes revenue from our co-branded credit card and rental revenue related to certain relationships where the Company acts as an aircraft lessor. 2023 Scheduled Service Route Map Scheduled Service Route Network .
We offer vacation products to promote “one stop shopping.” Our Other Revenue also includes revenue from our co-branded credit card and rental revenue related to certain transactions where the Company serves as a lessor. 2024 Scheduled Service Route Map Scheduled Service Route Network .
Our product includes non-stop flights to popular destinations, generous legroom, complimentary beverages, in-flight entertainment, and in-seat power. For the years ended December 31, 2023 and 2022, we flew 4.1 million and 3.6 million Scheduled Service passengers, respectively. For the years ended December 31, 2023 and 2022, our total fare was approximately $176.30 and $175.29, respectively.
Our product includes non-stop flights to popular destinations, generous legroom, complimentary beverages, in-flight entertainment, and in-seat power. For the years ended December 31, 2024 and 2023, we flew 4.5 million and 4.1 million Scheduled Service passengers, respectively. For the years ended December 31, 2024 and 2023, our average total fare per passenger was approximately $159.93 and $176.30, respectively.
For example, when our scheduled flying demand is lower during the fall and early December, our Cargo service remains consistent and grows until Christmas. 14 Table of Contents Traditionally, our business is geared towards north to south travel from MSP and the upper Midwest in the winter months, our strongest travel season.
For example, when our scheduled flying demand is lower during the fall and early December, we fly Charter contracts such as our contracts for collegiate sports. Our Cargo service remains consistent and grows until Christmas. Traditionally, our business is geared towards north to south travel from MSP and the upper Midwest in the winter months, our strongest travel season.
On January 11, 2021, the EPA issued a proposed rule regulating GHG emissions from aircraft that largely conforms to the March 2017 ICAO standards. Like the ICAO standards, the final EPA standards would not apply retroactively to engines on in-service aircraft.
On January 11, 2021, the EPA issued a proposed rule regulating GHG emissions from aircraft that largely conforms to the March 2017 ICAO standards. Like the ICAO standards, the final EPA standards would not apply retroactively to engines on in-service aircraft. These final standards have been challenged by several states and environmental groups.
Our air carrier operating certificate, labor agreements and operating capabilities allow us to fly to numerous destinations, which we believe is a benefit to our Charter Service. Our Charter business includes ad hoc, repeat, short-term and long-term service contracts with pass-through fuel arrangements and annual rate escalations.
Our air carrier operating certificate, labor agreements and operating capabilities allow us to fly to numerous destinations, permitting us to enter into a variety of Charter contracts. Our Charter business includes ad hoc, short-term and long-term service contracts with pass-through fuel arrangements and annual rate escalations.
Congress and the President have the authority to prevent “self-help” by enacting legislation that, among other things, imposes a settlement on the parties. Safety and Security Sun Country Airlines’ number one priority is the safety and security of our employees and customers.
Congress and the President have the authority to prevent a strike and “self-help” by enacting legislation that, among other things, imposes a settlement on the parties. Safety and Security Sun Country Airlines prioritizes the safety and security of its employees and customers.
CORSIA is being implemented in phases, with information sharing that began in 2019 and a pilot phase that began in 2021, to be followed by a first phase of the program beginning in 2024 and a second phase beginning in 2027.
CORSIA will increase operating costs for us and other U.S. airlines that operate internationally. CORSIA is being implemented in phases, with information sharing that began in 2019 and a pilot phase that began in 2021, to be followed by a first phase of the program beginning in 2024 and a second phase beginning in 2027.
Our diverse Charter customer base includes, but is not limited to casino operators, the DoD, and collegiate and professional sports teams. In October 2021, we signed a five-year agreement to provide Charter Service to all MLS teams. MLS features 29 clubs throughout the United States and Canada, in addition to future expansion teams.
Our diverse Charter customer base includes, but is not limited to the DoD, collegiate and professional sports teams and casinos. In October 2021, we signed a five-year agreement to provide Charter service to all MLS teams. MLS will feature 30 clubs throughout the United States and Canada during the 2025 season, and may have future expansion teams in later seasons.
There may be future rulemaking that may result in stricter GHG emissions standards than those contained in the proposed rule. In addition, in October 2016, ICAO adopted the CORSIA, which is a global, market-based emissions offset program designed to encourage carbon-neutral growth beyond 2020. CORSIA will increase operating costs for us and other U.S. airlines that operate internationally.
There may be future rulemaking that may result in stricter GHG emissions standards than those contained in the proposed rule. 20 Table of Content In addition, in October 2016, ICAO adopted the CORSIA, which is a global, market-based emissions offset program designed to encourage carbon-neutral growth beyond 2020.
As of December 31, 2023, approximately 65% of our employees were represented by labor unions under collective-bargaining agreements as set forth in the table below.
As of December 31, 2024, approximately 60% of our employees were represented by labor unions as set forth in the table below.
Performing effective line maintenance is critical in maintaining a reliable operation and represents the majority of and most extensive maintenance we perform. Line maintenance consists of routine daily and weekly scheduled maintenance checks and unplanned maintenance on our aircraft.
Line maintenance work is handled by our employees and maintenance contractors and consists of work performed between flights or overnight. Performing effective line maintenance is critical in maintaining reliable operations and represents the majority of and most extensive maintenance we perform. Line maintenance consists of routine daily and weekly scheduled maintenance checks and unplanned maintenance on our aircraft.
To the extent we can optimize flight crew on cargo aircraft with overlapping Scheduled or Charter Service, we attempt to capture those synergies as well, though they are not core to that line of 13 Table of Contents business.
For example, we believe that by deploying pilots across each of our business lines, we increase the efficiency of our operations. To the extent we can optimize flight crew on cargo aircraft with overlapping Scheduled Service or Charter flights, we attempt to capture those synergies as well, though they are not core to that line of business.
For the years ended December 31, 2023 and 2022, our average ancillary revenue per passenger was approximately $66.69 and $53.49, respectively. We also earn revenue from our SCV products, including commissions from the sale of third-party hotel rooms and rental cars. Our SCV products facilitate booking a flight and land package at a discounted price for our customers.
We also earn revenue from our SCV products, including commissions from the sale of third-party hotel rooms and rental cars. Our SCV products facilitate booking a flight and land package at a discounted price for our customers.
The following charts demonstrate that our Scheduled Service schedule is highly variable by day of the week and time of year.
The following charts demonstrate the variability in our Scheduled Service flying by day of the week and time of year.
Consumer Protection Regulation The DOT also has jurisdiction over certain economic issues affecting air transportation and consumer protection matters, including unfair or deceptive practices and unfair methods of competition, lengthy tarmac delays, airline advertising, denied boarding compensation, ticket refunds, baggage liability, contracts of carriage, customer service commitments, consumer notices and disclosures, customer complaints and transportation of passengers with disabilities.
There is no assurance, however, that we will be able to do so in the future because, among other reasons, such allocations are subject to changes in governmental policies. 19 Table of Content Consumer Protection Regulation The DOT also has jurisdiction over certain economic issues affecting air transportation and consumer protection matters, including unfair or deceptive practices and unfair methods of competition, lengthy tarmac delays, airline advertising, denied boarding compensation, ticket refunds, baggage liability, contracts of carriage, customer service commitments, consumer notices and disclosures, customer complaints and transportation of passengers with disabilities.
(# of Departures) March 2023 Orlando, Florida 44% Cancun, Mexico Fort Meyers, Florida Phoenix, Arizona of Departures Las Vegas, Nevada July 2023 Los Angeles, California 30% San Francisco, California Seattle, Washington Las Vegas, Nevada of Departures Anchorage, Alaska Charter .
MSP Departures Top 5 Destinations from MSP in.... (# of Departures) March 2024 Orlando, Florida 42% Cancun, Mexico Fort Meyers, Florida Phoenix, Arizona of Departures Tampa, Florida July 2024 Los Angeles, California 25% San Francisco, California Seattle, Washington Las Vegas, Nevada of Departures Orlando, Florida Charter .
We conserve fuel by limiting ferry flights and flying when and where demand exists. • On-the-ground tactics - our commitment to fuel efficiency includes tactical on-ground procedures, such as only using one engine to taxi around the airport, which allows us to reduce fuel consumption.
We conserve fuel by limiting ferry flights and flying only when and where demand exists. • On-the-ground tactics - our commitment to fuel efficiency includes tactical on-ground procedures, such as only using one engine to taxi around the airport and utilizing super tugs to position aircraft, which allows us to reduce fuel consumption. 15 Table of Content Technical Operations: Maintenance, Repairs and Overhaul We have an FAA mandated and approved maintenance program, which is administered by an experienced group of Technical Operations leaders.
Our ability to maintain low unit costs at low utilization provides us with a competitive advantage to execute our agile peak demand network planning structure. Our peak demand strategy allows us to move into new markets quickly during periods when demand is maximized and there is less competitive pricing pressure.
Our peak demand strategy allows us to move into new markets quickly during periods when demand is maximized and there is less competitive pricing pressure.
Distribution We sell our Scheduled Service flights through direct and indirect distribution channels with the goal of selling in the most efficient way across our customer base.
Distribution We sell our Scheduled Service flights through direct and indirect distribution channels with the goal of selling in the most efficient way across our customer base. Our direct distribution channels include our website, mobile app and call center, and indirect distribution channels include third parties, such as travel agents and OTAs (e.g., Priceline and Expedia).
However, like the Charter and Scheduled Service business, aircraft and crew utilization can be optimized by filling in Cargo service in periods when Scheduled Service and Charter flying is less profitable. Our CMI service is asset-light, as Amazon supplies the aircraft and covers many of the operating expenses, including fuel, and provides all cargo loading and unloading services.
Our CMI service is asset-light, as Amazon supplies the aircraft and covers many of the operating expenses, including fuel, and provides all cargo loading and unloading services.
Marketing We are focused on direct-to-consumer marketing targeted at our core leisure and VFR travelers who pay for their own travel costs. Our marketing message is designed to convey our affordable and convenient flight options to leisure destinations. We often include our low base fares in marketing materials in order to stimulate demand.
Our marketing message is designed to convey our affordable and convenient flight options to leisure destinations. We often include our low base fares in marketing materials to stimulate demand.
Rewards are not available to Charter or Cargo customers. 15 Table of Contents Operational Performance We are committed to delivering excellent operational performance, even in extreme weather conditions, which we believe supports our “peak demand,” leisure-focused business model and will strengthen customer loyalty and attract new customers.
Operational Performance We are committed to delivering excellent operational performance, even in extreme weather conditions, which we believe supports our “peak demand,” leisure-focused business model and will strengthen customer loyalty and attract new customers. This focus also strengthens our relationship with our cargo customer, Amazon, who has incentives and disincentives for performance in the A&R ATSA.
As part of the ongoing assessment of market opportunities, we continue to identify future growth opportunities, primarily from Midwest locations to warm weather leisure destinations and large markets with fragmented and seasonal demand peaks. 12 Table of Contents MSP Departures Top 5 Destinations from MSP in....
Non-MSP service is an increasingly significant portion of our business, comprising 14% of all the markets served in 2024. 11 Table of Content As part of the ongoing assessment of market opportunities, we continue to identify future growth opportunities, primarily to warm weather leisure destinations and large markets with fragmented and seasonal demand peaks.
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 Scheduled Service and Charter businesses. The ATSA has generated consistent cash flows, including during the COVID-19 induced downturn, and provides for annual rate escalations.
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 Scheduled Service and Charter lines of business. Competition The airline industry is highly competitive.
Sources of our ancillary revenue include air travel-related services such as baggage fees, seat selection and upgrade fees, priority check-in and boarding fees, other fees and on-board sales.
Sources of our ancillary revenue include air travel-related services such as baggage fees, seat selection and upgrade fees, priority check-in and boarding fees, other fees and on-board sales. Part of our strategy is to reduce base fares to stimulate demand while increasing ancillary revenue per passenger, which we believe offers passengers more choice and generates more ancillary revenue.
The outcome of the legal challenge and whether there will be any development of new aircraft GHG emissions standards cannot be predicted at this 21 Table of Contents time. On November 23, 2022, the EPA published the final rule for particulate matter emission standards and test procedures for civil aircraft engines, which took effect on January 1, 2023.
On November 23, 2022, the EPA published the final rule for particulate matter emission standards and test procedures for civil aircraft engines, which took effect on January 1, 2023.
Sales through direct channels for the years ended December 31, 2023 and 2022 were 78% and 73%, respectively. Indirect distribution channels remain important outlets to sell our flights. Our movement in and out of markets where we may not have an established brand presence, is facilitated by the availability of our inventory through GDS companies (e.g., Amadeus, Sabre and Travelport).
Our movement in and out of markets where we may not have an established brand presence, is facilitated by the availability of our inventory through GDS companies (e.g., Amadeus, Sabre and Travelport). We also generate sales through OTAs, which also broadens our ability to sell in highly seasonal markets.
Many of our pilots and other team members are armed forces veterans and we are proud to fly the DoD. We also support the development of a more diverse “workforce of tomorrow” by investing in initiatives like STARBASE STEM and Girls in Aviation, which both serve to educate and create a pipeline for historically disadvantaged students.
We also support the development of a “workforce of tomorrow” by investing in initiatives like STARBASE STEM and Girls in Aviation, which both serve to educate and create a pipeline for historically disadvantaged students. Insurance We maintain insurance policies that are of types customary in the airline industry and as required by the DOT, lessors and other financing parties.
This focus also strengthens our relationship with our cargo customer, Amazon, who has incentives and disincentives for performance in the ATSA. Our operational performance is enabled by our capable and dedicated workforce in maintenance, ground, flight crew and system operations, as well as our highly capable fleet of 737-NG aircraft, which are equipped to operate in adverse weather conditions.
Our operational performance is enabled by our capable and dedicated workforce in maintenance, ground, flight crew and system operations, as well as our highly capable fleet of Boeing 737-NG aircraft, which are equipped to operate in adverse weather conditions. Our primary operational metric is completion factor because most of our markets are operated less than daily.
In addition, they provide more opportunities to sell ancillary products and services, such as baggage fees, seat selection and upgrade fees, priority check-in and boarding fees, and other fees. With our Navitaire -based reservation system and enhanced website, we have experienced a significant increase in the proportion of our bookings that are sold through direct channels.
Our direct distribution channels are our lowest cost methods of distributing our product. In addition, they provide more opportunities to sell ancillary products and services, such as baggage fees, seat selection and upgrade fees, priority check-in and boarding fees, and other fees.
We also believe the association of our brand with a high level of operational performance differentiates us from our competitors and enables us to generate greater customer loyalty. The majority of our competitors maintain higher utilization to keep their unit costs low, which makes it difficult for them to serve markets on a highly seasonal or day-of-week basis.
The majority of our competitors maintain higher utilization to keep their unit costs low, which makes it difficult for them to serve markets on a highly seasonal or day-of-week basis. Our ability to maintain low unit costs at low utilization provides us with a competitive advantage to execute our agile peak demand network planning structure.
Our dispatchers ratified a new collective bargaining agreement in December 2019, which is amendable on November 30, 2024. 17 Table of Contents As of December 31, 2023, the status of the collective-bargaining agreements for our employees was as follows: Employee Group Number of Employees Representative Status of Agreement/Amendable Date Pilots 616 ALPA Amendable in December 2025 Flight Attendants 675 IBT Currently amendable (commenced as of December 2019) Dispatchers 33 TWU Amendable in November 2024 Technicians and related craft employees 206 AMFA Contract in negotiations Below the Wing Fleet Service Employees 273 IBT Contract in negotiations The RLA governs our relations with labor organizations.
The parties reached a tentative agreement in January 2025 and the ratification vote is expected to occur in the first quarter of 2025. 16 Table of Content As of December 31, 2024, the status of the CBAs for our employees was as follows: Employee Group Number of Employees Representative Status of Agreement/Amendable Date Pilots 662 ALPA Amendable in December 2025 Flight Attendants 756 IBT Currently amendable (commenced as of December 2019) (1) Dispatchers 34 TWU Currently amendable (commenced as of November 2024) (2) Technicians and related craft employees 197 AMFA Contract in negotiations Below the Wing Fleet Service Employees 237 IBT Contract in negotiations (1) In February 2025, we reached a tentative agreement with our flight attendants.
Additionally, Sun Country is proud to help transport military veterans to Washington, D.C. aboard Honor Flights to share in a day of honor at our nation’s memorials. These trips are an important way to commemorate the courage and dedication of our nation’s veterans and provide them a day filled with reflection, support, and thanks.
Sun Country is a proud partner of the DoD, and we take pride in providing Charter service for our nation’s military domestically and abroad. Additionally, Sun Country is proud to help transport military veterans to Washington, D.C. aboard Honor Flights to share in a day of honor at our nation’s memorials.
While our passenger business will remain highly seasonal, our Cargo operations will have the effect of mitigating seasonal troughs.
We grow 13 Table of Content and obtain new opportunities for our Charter service when Scheduled Service demand is reduced. While our passenger business will remain highly seasonal, our Cargo operations will have the effect of mitigating seasonal troughs.
Aircraft Fuel Aircraft fuel is one of our largest individual expenses, representing approximately 27% and 32% of our total operating costs for the years ended December 31, 2023 and 2022, respectively. The price and availability of jet fuel are volatile due to global economic and geopolitical factors as well as domestic and local supply factors.
The price and availability of jet fuel are volatile due to global economic and geopolitical factors as well as domestic and local supply factors.
These final standards have been challenged by several states and environmental groups, and the Biden Administration has issued an executive order requiring review of these final standards. On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions standards but would seek more ambitious new aircraft GHG emission standards within the ICAO process.
On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions standards but would seek more ambitious new aircraft GHG emission standards within the ICAO process. The outcome of the legal challenge and whether there will be any development of new aircraft GHG emissions standards cannot be predicted at this time.
Our primary operational metric is completion factor because most of our markets are operated less than daily. Our Scheduled Service completion factor, including the adverse impact of weather, was 99.0% and 98.8% for the years ended December 31, 2023 and 2022, respectively.
Our Scheduled Service completion factor, including the adverse impact of weather, was 98.7% and 99.0% for the years ended December 31, 2024 and 2023, respectively. Aircraft Fuel Aircraft fuel is one of our largest individual expenses, representing approximately 24% and 27% of our total operating costs for the years ended December 31, 2024 and 2023, respectively.
We sell our Charter Services through an internal, dedicated sales team that is focused on long-term relationships with key customers, brokers, organizations, and college and professional sports teams. While our CMI service is presently dedicated to Amazon and governed by the ATSA, we may expand our Cargo business by marketing to new potential customers.
Sales through these relatively higher cost indirect channels for both years ended December 31, 2024 and 2023 were 22%. We sell our Charter services through an internal, dedicated sales team that is focused on long-term relationships with key customers, brokers, organizations, and college and professional sports teams.
Information gathered from our safety programs is used to create awareness for leadership in order to actively monitor the health of our SMS and SeMS. Sun Country Airlines continuously strives to promote a culture of safety and security in line with the highest possible industry standards.
The information from these safety programs is used to inform management, ensuring the ongoing health and effectiveness of our SMS. Sun Country Airlines is dedicated to fostering a culture of safety and security that meets the highest industry standards.
Each December, our “Flight to the North Pole” helps bring holiday cheer to Wish Kids by “flying” them to the home of Santa Claus. We also sponsor the Hennepin Theatre Trust Spotlight Education program.
In 2024, we continued our commitment to donate travel to Make-A-Wish Minnesota by signing a new three-year agreement that automatically renews at the end of the agreement. Each December, our “Flight to the North Pole” helps bring holiday cheer to Wish Kids by “flying” them to the home of Santa Claus.
Most of these contracts are non-cyclical because the DoD and sports teams still fly during normal economic downturns, and our casino contracts are long-term in nature. We also operate regularly scheduled VIP Charter Services to certain specified locations with continuous service and an aircraft outfitted with an all first-class configuration.
We also operate regularly scheduled VIP Charter services to certain specified locations with continuous service and an aircraft outfitted with an all first-class configuration. For the years ended December 31, 2024 and 2023, Charter block hours under long-term contracts comprised 74% and 80% of total Charter flying, respectively. Cargo .
Our expectation is to operate at the highest level of safety compliance and our actions are guided by our procedures and policies without exception. Training employees to proper standards and providing them with the tools and equipment required to perform their jobs in a safe and efficient manner is essential to our operation.
We are committed to maintaining the highest level of safety compliance, with all operations guided by procedures and policies. Ensuring that employees are trained to the proper standards and equipped with the necessary tools and resources to perform their roles safely and efficiently is essential to our operations.
Part of our strategy is to reduce base fares to stimulate demand while increasing ancillary revenue 11 Table of Contents per passenger, which we believe offers passengers more choice and generates more ancillary revenue. Our on-board sales are also designed to enhance the customer experience, including local passenger favorite brands of beer, wine and spirits.
Our on-board sales are also designed to enhance the customer experience, including local passenger favorite brands of beer, wine and spirits. For the years ended December 31, 2024 and 2023, our average ancillary revenue per passenger was approximately $68.68 and $66.69, respectively.
Technical Operations: Maintenance, Repairs and Overhaul We have an FAA mandated and approved maintenance program, which is administered by an experienced group of Technical Operations leaders. All of our technicians are two-licensed Airframe and Powerplant and undergo extensive initial and recurrent training. Aircraft maintenance and repair consists of routine and non-routine maintenance.
All our technicians are licensed for both Airframe and Powerplant and undergo extensive initial and recurrent training. Aircraft maintenance and repair consists of routine and non-routine maintenance. Work performed is divided into three general categories: line maintenance, heavy maintenance, and component maintenance.
We seek employee feedback by conducting annual safety culture surveys. This feedback helps identify areas of improvement and is used to develop and implement corrective action plans.
We gather employee feedback through annual safety culture surveys to identify improvement areas, which are used to develop corrective action plans. We also engage in industry best practices by participating in safety-sharing programs with other airlines and using the FAA’s Aviation Safety Information Analysis and Sharing System to exchange critical safety data.
Removed
Since the start of 2023, we have launched 23 new markets. Non-MSP service is an increasingly significant portion of our business, comprising 28% of all the markets served in 2023.
Added
The 12 cargo aircraft are subleased directly from Amazon and we operate them pursuant to the A&R ATSA. The six aircraft that are currently on lease to unaffiliated airlines are expected to be inducted into our passenger fleet upon lease expiry. As of December 31, 2024, the leases expire at various dates through the fourth quarter of 2025.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf Delta experiences a significant business challenge, disruption or failure due to issues such as financial difficulties or bankruptcy, regulatory or quality compliance issues, or other financial, legal, regulatory or reputational issues, ceases to produce our aircraft parts, is unable to effectively deliver our aircraft parts on timelines and at the prices we have negotiated, or terminates the contract, we would incur substantial transition costs and we would lose the cost benefits from our current arrangement with Delta, which would have a material adverse effect on our business, results of operations and financial condition. 44 Table of Contents Reduction in demand for air transportation, or governmental reduction or limitation of operating capacity, in the domestic United States, Canada, Mexico or Caribbean markets, or a reduction in demand for our Charter or Cargo operations, could harm our business, results of operations and financial condition.
Biggest changeReduction in demand for air transportation, or governmental reduction or limitation of operating capacity, in the domestic United States, Canada, Mexico or Caribbean markets, or a reduction in demand for our Charter or Cargo operations, could harm our business, results of operations and financial condition.
Changes to law, regulations or government policy that could have a material impact on us in the future include, but are not limited to, infrastructure renewal programs; changes to operating and maintenance requirements; foreign and domestic changes in customs, immigration and security policy and requirements that impede travel into or out of the United States; modifications to international trade policy, including withdrawing from trade agreements and imposing tariffs; changes to consumer protection laws; changes to public health policy; changes to financial legislation, including the partial or full repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or Dodd-Frank Act; public company reporting requirements; environmental regulation, including new environmental, social and governance disclosures required by the SEC; and antitrust enforcement.
Changes to law, regulations or government policy that could have a material impact on us in the future include, but are not limited to, infrastructure renewal programs; changes to operating and maintenance requirements; foreign and domestic changes in customs, immigration and security policy and requirements that impede travel into or out of the United States; modifications to international trade policy, including withdrawing from trade agreements and imposing tariffs; changes to consumer protection laws; changes to public health policy; changes to financial legislation, including the partial or full repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; public company reporting requirements; environmental regulation, including new environmental, social and governance disclosures required by the SEC; and antitrust enforcement.
We rely on third-party distribution channels, including those provided by or through GDS, conventional travel agents and OTAs, to distribute a significant portion of our airline tickets, and we expect in the future to rely on these channels to also collect a portion of our ancillary revenues.
We also rely on third-party distribution channels, including those provided by or through GDS, conventional travel agents and OTAs, to distribute a significant portion of our airline tickets, and we expect in the future to rely on these channels to also collect a portion of our ancillary revenues.
A cybersecurity incident could also impact our brand, harm our reputation and adversely impact our relationship with our customers, employees and stockholders. Our Cargo business is concentrated with Amazon, and any decrease in volumes or increase in costs, or a termination of the ATSA , could have a material adverse effect on our business, operations, financial condition and brand.
A cybersecurity incident could also impact our brand, harm our reputation and adversely impact our relationship with our customers, employees and stockholders. Our Cargo business is concentrated with Amazon, and any decrease in volumes or increase in costs, or a termination of the A&R ATSA , could have a material adverse effect on our business, operations, financial condition and brand.
The ATSA also contains monthly incentive payments for reaching specific on-time arrival performance thresholds and there are monetary penalties for on-time arrival performance below certain thresholds. As a result, our operating revenues may vary from period-to-period depending on the achievement of monthly incentives or the imposition of penalties.
The A&R ATSA also contains monthly incentive payments for reaching specific on-time arrival performance thresholds and there are monetary penalties for on-time arrival performance below certain thresholds. As a result, our operating revenues may vary from period-to-period depending on the achievement of monthly incentives or the imposition of penalties.
In addition, a reduction in demand from our Charter customers, including as a result of decreased DoD troop movements or fewer sports events and related travel, or from Amazon under the ATSA could have a material and adverse effect on our business, results of operations and financial condition.
In addition, a reduction in demand from our Charter customers, including as a result of decreased DoD troop movements or fewer sports events and related travel, or from Amazon under the A&R ATSA could have a material and adverse effect on our business, results of operations and financial condition.
However, in the past, we have experienced customer complaints related to, among other things, product and pricing changes related to our business strategy and customer service. In particular, we have generally experienced a higher volume of complaints when we implemented changes to our unbundling policies, such as charging for seats and baggage.
In the past, we have experienced customer complaints related to, among other things, product and pricing changes related to our business strategy and customer service. In particular, we have generally experienced a higher volume of complaints when we implemented changes to our unbundling policies, such as charging for seats and baggage.
Existing export restrictions impact where we can place and deliver our aircraft. New export restrictions, including those implemented quickly or as a result of geopolitical events, may impact where we can place and deliver our aircraft or the ability of our lessees to operate our aircraft in certain jurisdictions, which may negatively impact our earnings and cash flows.
New export restrictions, including those implemented quickly or as a result of geopolitical events, may impact where we can place and deliver our aircraft or the ability of our lessees to operate our aircraft in certain jurisdictions, which may negatively impact our earnings and cash flows.
Our results of operations may be affected by actions taken by governmental or other agencies or authorities having jurisdiction over our operations at these airports, including, but not limited to: • increases in airport rates and charges; • limitations on take-off and landing slots, airport gate capacity or other use of airport facilities; • termination of our airport use agreements, some of which can be terminated by airport authorities with little notice to us; • increases in airport capacity that could facilitate increased competition; • international travel regulations such as customs and immigration; • increases in taxes; • changes in law, regulations and government policies that affect the services that can be offered by airlines, in general, and in particular markets and at particular airports; • restrictions on competitive practices; • changes in law or ordinances that increase minimum wages beyond regional norms; • the adoption of statutes or regulations that impact or impose additional customer service standards and requirements, including operating and security standards and requirements; and 41 Table of Contents • the adoption of more restrictive locally imposed noise regulations or curfews.
Our results of operations may be affected by actions taken by governmental or other agencies or authorities having jurisdiction over our operations at these airports, including, but not limited to: • increases in airport rates and charges; • limitations on take-off and landing slots, airport gate capacity or other use of airport facilities; • termination of our airport use agreements, some of which can be terminated by airport authorities with little notice to us; • increases in airport capacity that could facilitate increased competition; • international travel regulations such as customs and immigration; • increases in taxes; • changes in law, regulations and government policies that affect the services that can be offered by airlines, in general, and in particular markets and at particular airports; • restrictions on competitive practices; • changes in law or ordinances that increase minimum wages beyond regional norms; • the adoption of statutes or regulations that impact or impose additional customer service standards and requirements, including operating and security standards and requirements; and • the adoption of more restrictive locally imposed noise regulations or curfews.
Security concerns resulting in enhanced passenger screening, increased regulation governing carry-on baggage and cargo and other similar restrictions on passenger travel and cargo may further increase passenger inconvenience and reduce the demand for air travel or increase costs associated with providing Cargo service.
Security concerns resulting in enhanced passenger screening, increased regulation governing carry-on baggage and cargo and other similar restrictions on passenger travel and cargo may further increase customer inconvenience and reduce the demand for air travel or increase costs associated with providing Cargo service.
We participate with other airlines in fuel consortia and fuel committees at our airports where economically beneficial, which agreements generally include cost-sharing provisions and environmental indemnities that are generally joint and several among the participating airlines.
We also participate with other airlines in fuel consortia and fuel committees at our airports where economically beneficial, which agreements generally include cost-sharing provisions and environmental indemnities that are generally joint and several among the participating airlines.
Amazon may also terminate the ATSA for convenience, subject to certain notice requirements and payment of a termination fee. The ATSA is also subject to two, two-year extension options, which Amazon may choose not to exercise.
Amazon may also terminate the A&R ATSA for convenience, subject to certain notice requirements and payment of a termination fee. The A&R ATSA is also subject to two, two-year extension options, which Amazon may choose not to exercise.
The Credit Agreement contains, and any future indebtedness of ours could contain covenants that impose significant operating and financial restrictions on us, such as restrictions on our and our subsidiaries’ ability to, among other things: • incur additional debt, guarantee indebtedness, or issue certain preferred equity interests; • pay dividends on or make distributions in respect of, or repurchase or redeem, our capital stock, or make other restricted payments; • prepay, redeem, or repurchase certain debt; • make loans or certain investments; • sell certain assets; • create liens on certain assets; • consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets; 51 Table of Contents • enter into certain transactions with our affiliates; • alter the businesses we conduct; • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • designate our subsidiaries as unrestricted subsidiaries.
The Credit Agreement contains, and any future indebtedness of ours could contain covenants that impose significant operating and financial restrictions on us, such as restrictions on our and our subsidiaries’ ability to, among other things: • incur additional debt, guarantee indebtedness, or issue certain preferred equity interests; • pay dividends on or make distributions in respect of, or repurchase or redeem, our capital stock, or make other restricted payments; • prepay, redeem, or repurchase certain debt; • make loans or certain investments; • sell certain assets; • create liens on certain assets; • consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets; • enter into certain transactions with our affiliates; • alter the businesses we conduct; • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • designate our subsidiaries as unrestricted subsidiaries.
In addition, vesting can occur immediately in certain circumstances, including upon a change of control (as defined in the 2019 Warrant) or certain transfers of 30% or more of the voting power in the Company to a new person or group, other than any equity offering by the Company or the Apollo Stockholder pursuant to an effective registration statement so long as no person or group, within the meaning of the Exchange Act, acquires more than 50% of the voting power of the Company in such offering).
In addition, vesting can occur immediately in certain circumstances, including upon a change of control (as defined in the 2019 Warrant) or certain transfers of 30% or more of the voting power in the Company to a new person or group, other than any equity offering by the Company pursuant to an effective registration statement so long as no person or group, within the meaning of the Exchange Act, acquires more than 50% of the voting power of the Company in such offering).
In addition, any accident involving the Boeing 737-NG or an aircraft similar to the Boeing 737-NG that we operate could result in the curtailment of such aircraft by aviation regulators, manufacturers and other airlines and could create a negative public perception about the safety of our aircraft, any of which could have a material adverse effect on our business, results of operations and financial condition.
In addition, any accident involving the Boeing 737-NG or an aircraft similar to the Boeing 737-NG that we operate, or essential parts of our aircraft, could result in the curtailment of such aircraft or parts by aviation regulators, manufacturers and other airlines and could create a negative public perception about the safety of our aircraft, any of which could have a material adverse effect on our business, results of operations and financial condition.
The restrictions imposed by federal law and DOT policy require that we be owned and controlled by U.S. citizens, that no more than 25% of our voting stock be owned or controlled, directly or indirectly, by persons or entities who are not U.S. citizens, as defined in 49 U.S.C. § 40102(a)(15), that no more than 49% of 52 Table of Contents our stock be owned or controlled, directly or indirectly, by persons or entities who are not U.S. citizens and are from countries that have entered into “open skies” air transport agreements with the United States, that our president and at least two-thirds of the members of our Board of Directors and other managing officers be U.S. citizens and that we be under the actual control of U.S. citizens.
The restrictions imposed by federal law and DOT policy require that we be owned and controlled by U.S. citizens, that no more than 25% of our voting stock be owned or controlled, directly or indirectly, by persons or entities who are not U.S. citizens, as defined in 49 U.S.C. § 40102(a)(15), that no more than 49% of our stock be owned or controlled, directly or indirectly, by persons or entities who are not U.S. citizens and are from countries that have entered into “open skies” air transport agreements with the United States, that our president and at least two-thirds of the members of our Board of Directors and other managing officers be U.S. citizens and that we be under the actual control of U.S. citizens.
The outcome of our collective bargaining negotiations cannot presently be determined and the terms and conditions of our future collective bargaining agreements may be affected by the results of collective bargaining negotiations at other airlines that may have a greater ability, due to larger scale, greater efficiency or other factors, to bear higher costs than we can.
The outcome of our collective bargaining negotiations cannot presently be determined and the terms and conditions of our future CBAs may be affected by the results of collective bargaining negotiations at other airlines that may have a greater ability, due to larger scale, greater efficiency or other factors, to bear higher costs than we can.
If actual costs are higher than projected or aircraft reliability is less than expected, or aircraft become damaged and are out of revenue service for repair, the profitability of the ATSA and future operating results may be negatively impacted. We rely on flight crews that are unionized.
If actual costs are higher than projected or aircraft reliability is less than expected, or aircraft become damaged and are out of revenue service for repair, the profitability of the A&R ATSA and future operating results may be negatively impacted. We rely on flight crews that are unionized.
The security of the systems and network where we and our third-party providers store this data is a critical element of our business, and these systems and our network may be vulnerable to theft, loss, damage and interruption from a number of potential sources and events, including computer viruses, hackers, enemy state actors, denial-of-service attacks, employee theft or misuse, natural or man-made disasters, telecommunications failures, power loss and other disruptive sources and events.
The security of the systems and network where we and our third-party providers store this data is a critical element of our business, and these systems and our network may be 30 Table of Content vulnerable to theft, loss, damage and interruption from a number of potential sources and events, including computer viruses, hackers, enemy state actors, denial-of-service attacks, employee theft or misuse, natural or man-made disasters, telecommunications failures, power loss and other disruptive sources and events.
As of December 31, 2023, we were not subject to any credit card holdbacks under our credit card processing agreements, although if we fail to meet certain liquidity and other financial covenants, our credit card processors have the right to hold back credit card remittances to cover our obligations to them.
As of December 31, 2024, we were not subject to any credit card holdbacks under our credit card processing agreements, although if we fail to meet certain liquidity and other financial covenants, our credit card processors have the right to hold back credit card remittances to cover our obligations to them.
Some of our target growth markets include countries with less developed economies, legal systems, financial markets and business and political environments that are vulnerable to economic and political disruptions, such as significant fluctuations in gross domestic product, interest and currency exchange rates, civil disturbances, government instability, nationalization and expropriation of private assets, trafficking and the imposition of taxes or other charges by governments, as well as health and safety concerns.
Some of our target growth markets include countries with less developed economies, legal systems, financial markets and business and political environments that are vulnerable to economic and political disruptions, such as significant fluctuations in gross domestic product, interest and currency exchange rates, civil disturbances, government instability, nationalization and expropriation of private assets, trafficking and the imposition of charges by governments, as well as health and safety concerns.
In addition, the profitability of the ATSA is dependent on our ability to manage and accurately predict costs. Our projections of operating costs, crew productivity and maintenance expenses contain key assumptions, including flight hours, aircraft reliability, crewmember productivity, compensation and benefits and maintenance costs.
In addition, the profitability of the A&R ATSA is dependent on our ability to manage and accurately predict costs. Our projections of operating costs, crew productivity and maintenance expenses contain key assumptions, including flight hours, aircraft reliability, crewmember productivity, compensation and benefits and maintenance costs.
A decision by the FAA to ground, or require time-consuming inspections of or maintenance on, our aircraft, for any reason, could negatively affect our business, results of operations and financial condition. Federal law requires that air carriers operating Scheduled Service be continuously “fit, willing and able” to provide the services for which they are licensed.
A decision 28 Table of Content by the FAA to ground, or require time-consuming inspections of or maintenance on, our aircraft, for any reason, could negatively affect our business, results of operations and financial condition. Federal law requires that air carriers operating Scheduled Service be continuously “fit, willing and able” to provide the services for which they are licensed.
In general, our Charter and Cargo operations have pass-through provisions for fuel costs, and as such we do not hedge our fuel requirements for that portion of our business. As of December 31, 2023, we had no outstanding fuel derivative contracts.
In general, our Charter and Cargo operations have pass-through provisions for fuel costs, and as such we do not hedge our fuel requirements for that portion of our business. As of December 31, 2024, we had no outstanding fuel derivative contracts.
High fuel prices or increases in fuel costs (or in the price of crude oil) could have a material 23 Table of Contents adverse effect on our business, results of operations and financial condition, including as a result of legacy network airlines and LCCs adapting more rapidly or effectively to higher fuel prices through new-technology aircraft that is more fuel efficient than our aircraft.
High fuel prices or increases in fuel costs (or in the price of crude oil) could have a material adverse effect on our business, results of operations and financial condition, including as a result of legacy network airlines and LCCs adapting more rapidly or effectively to higher fuel prices through new-technology aircraft that is more fuel efficient than our aircraft.
Our inability to meet our obligations as they become due would have a material adverse effect on our business, results of operations and financial condition. 42 Table of Contents Our liquidity would be adversely impacted, potentially materially, in the event one or more of our credit card processors were to impose holdback restrictions for payments due to us from credit card transactions.
Our inability to meet our obligations as they become due would have a material adverse effect on our business, results of operations and financial condition. Our liquidity would be adversely impacted, potentially materially, in the event one or more of our credit card processors were to impose holdback restrictions for payments due to us from credit card transactions.
Performance under the ATSA is subject to a number of challenges and uncertainties, such as: unforeseen maintenance and other costs; our ability to hire pilots, crew and other personnel necessary to support our CMI 35 Table of Contents services, which can be impacted by industry-wide staffing shortages; interruptions in the operations under the ATSA as a result of unexpected or unforeseen events, whether as a result of factors within the Company’s control or outside of the Company’s control; and the level of operations and results of operations, including margins, under the ATSA being less than the Company’s current expectations and projections.
Performance under the A&R ATSA is subject to a number of challenges and uncertainties, such as: unforeseen maintenance and other costs; our ability to hire pilots, crew and other personnel necessary to support our CMI services, which can be impacted by industry-wide staffing shortages; interruptions in the operations under the A&R ATSA as a result of unexpected or unforeseen events, whether as a result of factors within the Company’s control or outside of the Company’s control; and the level of operations and results of operations, including margins, under the A&R ATSA being less than the Company’s current expectations and projections.
This process continues until either the parties have reached agreement on a new collective bargaining agreement, or the parties have been released to “self-help” by the NMB. In most circumstances, the RLA prohibits strikes; however, after release by the NMB, carriers and unions are free to engage in self-help measures such as lockouts and strikes.
This process continues until either the parties have reached agreement on a new CBA, or the parties have been released to “self-help” by the NMB. In most circumstances, the RLA prohibits strikes; however, after release by the NMB, carriers and unions are free to engage in self-help measures such as lockouts and strikes.
If it is determined that the amount registered in the foreign stock record exceeds the foreign ownership restrictions imposed by federal law, shares will be removed from the foreign stock record, resulting in the loss of voting rights, in reverse chronological order based on the date of registration therein, until the number of shares registered therein does not exceed the foreign ownership restrictions imposed by federal law.
If it is determined that the amount registered in the foreign stock record exceeds the foreign ownership restrictions imposed by federal law, shares will be removed from the foreign stock record, resulting in 44 Table of Content the loss of voting rights, in reverse chronological order based on the date of registration therein, until the number of shares registered therein does not exceed the foreign ownership restrictions imposed by federal law.
For the year ended December 31, 2023, Cargo revenue under the ATSA represented 10% of our total operating revenues and our Cargo revenue consisted entirely of air cargo transportation services provided to Amazon under the ATSA. The ATSA does not require a minimum amount of flying and Amazon is permitted to decrease flying volume at any time.
For the year ended December 31, 2024, Cargo revenue under the A&R ATSA represented 10% of our total operating revenues and our Cargo revenue consisted entirely of air cargo transportation services provided to Amazon under the A&R ATSA. The A&R ATSA does not require a minimum amount of flying and Amazon is permitted to decrease flying volume at any time.
Under the RLA, collective bargaining agreements generally contain “amendable dates” rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the National Mediation Board, or the NMB.
Under the RLA, CBAs generally contain “amendable dates” rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the National Mediation Board, or the NMB.
While we may change this policy at some point in the future, we cannot assure you that we will make such a change. We are required to pay our pre-IPO stockholders for certain tax benefits, and the amounts of such payments could be material.
While we may change this policy at some point in the future, we cannot assure you that we will make such a change. 45 Table of Content We are required to pay our pre-IPO stockholders for certain tax benefits, and the amounts of such payments could be material.
If we fail to maintain the strength of our company culture, our competitive ability and our business, results of operations and financial condition could be harmed. Our inability to expand or operate reliably or efficiently out of airports where we operate could have a material adverse effect on our business, results of operations and financial condition and brand.
If we fail to maintain the strength of our company culture, our competitive ability and our business, results of operations and financial condition could be harmed. 37 Table of Content Our inability to expand or operate reliably or efficiently out of airports where we operate could have a material adverse effect on our business, results of operations and financial condition and brand.
Further, any changes in tax laws in any of the jurisdictions that subject us to income or other taxes, such as increases in tax rates or limitations on our ability to deduct certain expenses from taxable income, such as depreciation expense and interest expense, could materially affect our tax obligations and effective tax rate. 50 Table of Contents ESG matters may impose additional costs and expose us to new risks.
Further, any changes in tax laws in any of the jurisdictions that subject us to income or other taxes, such as increases in tax rates or limitations on our ability to deduct certain expenses from taxable income, such as depreciation expense and interest expense, could materially affect our tax obligations and effective tax rate. 42 Table of Content ESG matters may impose additional costs and expose us to new risks.
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Operating Expenses—Maintenance.” 43 Table of Contents We have a significant amount of aircraft and other fixed obligations that could impair our liquidity and thereby harm our business, results of operations and financial condition. The airline business is capital intensive.
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Operating Expenses—Maintenance.” We have a significant amount of aircraft and other fixed obligations that could impair our liquidity and thereby harm our business, results of operations and financial condition. The airline business is capital intensive.
The DOT periodically audits airlines to determine whether such airlines have 28 Table of Contents violated any of the DOT rules. If the DOT determines that we are not, or have not been, in compliance with these rules or if we are unable to remain compliant, the DOT may subject us to fines or other enforcement action.
The DOT periodically audits airlines to determine whether such airlines have violated any of the DOT rules. If the DOT determines that we are not, or have not been, in compliance with these rules or if we are unable to remain compliant, the DOT may subject us to fines or other enforcement action.
In the event that one or more of our primary technology or systems 38 Table of Contents vendors fails to perform and a replacement system is not available or if we fail to implement a replacement system in a timely and efficient manner, our business could be materially adversely affected.
In the event that one or more of our primary technology or systems vendors fails to perform and a replacement system is not available or if we fail to implement a replacement system in a timely and efficient manner, our business could be materially adversely affected.
Under certain laws current and former owners or operators of facilities, as well as generators of waste materials disposed of at such facilities, can be subject to liability for investigation and remediation costs at facilities that have been identified as requiring response actions.
Under certain laws current and former owners or 27 Table of Content operators of facilities, as well as generators of waste materials disposed of at such facilities, can be subject to liability for investigation and remediation costs at facilities that have been identified as requiring response actions.
The failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of a substantial amount of our indebtedness. Risks Related to Ownership of Our Common Stock Our stock price may fluctuate significantly.
The failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of a substantial amount of our indebtedness. 43 Table of Content Risks Related to Ownership of Our Common Stock Our stock price may fluctuate significantly.
Our Cargo business would decline if Amazon’s use of our Cargo services decreases for any reason, including due to general economic conditions or preferences of Amazon and its customers, which a decline would materially adversely affect our business, results of operations, and prospects.
Our Cargo business would decline if Amazon’s use of our 31 Table of Content Cargo services decreases for any reason, including due to general economic conditions or preferences of Amazon and its customers, which a decline would materially adversely affect our business, results of operations, and prospects.
Moreover, U.S. federal government shutdowns may cause delays and cancellations or 26 Table of Contents reductions in discretionary travel due to longer security lines, including as a result of furloughed government employees or reductions in staffing levels, including air traffic controllers.
Moreover, U.S. federal government shutdowns may cause delays and cancellations or reductions in discretionary travel due to longer security lines, including as a result of furloughed government employees or reductions in staffing levels, including air traffic controllers.
The industry is experiencing a higher than normal number of pilot retirements, increased competition in pilot hiring, more stringent duty time regulations, increased flight hour requirements for commercial airline pilots, reductions in the number of military pilots entering the commercial workforce, increased training requirements and other factors that have led to a shortage of pilots, which could materially adversely affect our business.
The industry is experiencing increased competition in pilot hiring, more stringent duty time regulations, increased flight hour requirements for commercial airline pilots, reductions in the number of military pilots entering the commercial workforce, increased training requirements and other factors that have led to a shortage of pilots, which could materially adversely affect our business.
Any such changes could make it more difficult and/or more expensive for us to obtain new aircraft or engines and parts to maintain existing aircraft or engines or make it less profitable or prevent us from flying to or from some of the destinations we currently serve.
Any such changes could make it more difficult and/or more expensive for us to obtain new aircraft or engines and 29 Table of Content parts to maintain existing aircraft or engines or make it less profitable or prevent us from flying to or from some of the destinations we currently serve.
If Amazon exercises its right to acquire shares of our common stock 53 Table of Contents pursuant to the 2019 Warrants, this will dilute the ownership interests of our then-existing stockholders and could adversely affect the market price of our common stock.
If Amazon exercises its right to acquire shares of our common stock pursuant to the 2019 Warrants, this will dilute the ownership interests of our then-existing stockholders and could adversely affect the market price of our common stock.
We aim to optimize our daily aircraft utilization rate by tailoring service to customer demand patterns, which are seasonal and vary by day of the week. Our average daily aircraft utilization was 6.9 hours and 7.2 hours for the years ended December 31, 2023 and 2022, respectively.
We aim to optimize our daily aircraft utilization rate by tailoring service to customer demand patterns, which are seasonal and vary by day of the week. Our average daily aircraft utilization was 7.3 hours and 6.9 hours for the years ended December 31, 2024 and 2023, respectively.
Further, implementation of the Next Generation Air Transportation System, or NextGen, by the FAA would result in changes to aircraft routings and flight paths that could lead to increased noise complaints and lawsuits, resulting in increased costs. NextGen is a multi-year modernization project with a target of having all major components in place by 2025.
Further, implementation of the Next Generation Air Transportation System, or NextGen, by the FAA would result in changes to aircraft routings and flight paths that could lead to increased noise complaints and lawsuits, resulting in increased costs. NextGen is a multi-year modernization project which had an initial target of having all major components in place by 2025.
Any such action or other labor dispute with unionized employees could disrupt our operations, reduce our profitability or interfere with the ability of our management to focus on executing our business strategies.
Any such action or other 36 Table of Content labor dispute with unionized employees could disrupt our operations, reduce our profitability or interfere with the ability of our management to focus on executing our business strategies.
Additionally, we frequently use all freighters in support of our Cargo business. In the event we experience a series of aircraft out of service, we would experience a decline in revenue and potentially 40 Table of Contents customer satisfaction.
Additionally, we frequently use all freighters in support of our Cargo business. In the event we experience a series of aircraft out of service, we would experience a decline in revenue and potentially customer satisfaction.
The warrants granted to Amazon in 2019 increase the number of diluted shares reported, which has an effect on our diluted earnings per share to the extent the warrants actually vest. The warrants have an exercise price of approximately $15.17 per share, approximately 34% of which had vested as of December 31, 2023.
The warrants granted to Amazon in 2019 increase the number of diluted shares reported, which has an effect on our diluted earnings per share to the extent the warrants actually vest. The warrants have an exercise price of approximately $15.17 per share, approximately 43% of which had vested as of December 31, 2024.
In the future, there may be additional consolidation in our industry. Business combinations could significantly alter industry conditions and competition within the airline industry and could permit our competitors to reduce their fares.
There has been significant consolidation within the airline industry and there may be additional consolidation in our industry in the future. Business combinations could significantly alter industry conditions and competition within the airline industry and could permit our competitors to reduce their fares.
In addition, certain of our existing stockholders, including the Apollo Stockholder and Amazon, have certain rights to require us to register the sale of common stock held by them including in connection with underwritten offerings.
In addition, certain of our existing stockholders, including Amazon, have certain rights to require us to register the sale of common stock held by them including in connection with underwritten offerings.
Past terrorist attacks or attempted attacks, particularly those involving airlines, heightened security and military action in response thereto, and war have caused substantial revenue losses and increased security costs, and such event, even if not directly involving an airline, could have a material adverse effect on our business, results of operations and financial condition.
Terrorist attacks (including attempted attacks) particularly those involving airlines, heightened security and military action in response thereto, and war could cause substantial revenue losses and increased security costs, and such event, even if not directly involving an airline, could have a material adverse effect on our business, results of operations and financial condition.
The airline industry is exceedingly competitive, and we compete against new entrants, LCCs, ULCCs, legacy network airlines and cargo carriers; if we are not able to compete successfully in our markets, our business will be materially adversely affected. We face significant competition with respect to routes, fares and services.
The airline industry is exceedingly competitive, and we compete against new entrants, LCCs, ULCCs, legacy network airlines and cargo carriers, as well as air travel substitutes; if we are not able to compete successfully in our markets, our business will be materially adversely affected. We face significant competition with respect to routes, fares and services.
If collective bargaining agreements increase our costs and we cannot recover such increases, our operating results would be negatively impacted. It may be necessary for us to terminate certain customer contracts or curtail planned growth.
If CBAs increase our costs and we cannot recover such increases, our operating results would be negatively impacted. It may be necessary for us to terminate certain customer contracts or curtail planned growth.
In addition, if we are unable to reach agreement with any of our unionized work groups in current or future negotiations regarding the terms of their collective bargaining agreements, we may be subject to work interruptions, stoppages or shortages.
In addition, if we are unable to reach agreement with any of our unionized work groups in current or future negotiations regarding the terms of their CBAs, we may be subject to work interruptions, stoppages or shortages.
These and other restrictions and regulations, as well as general concerns about traveling during a public health threat, could have a material adverse impact on our business, operating results, financial condition and liquidity.
These and other restrictions and regulations, as well as general concerns about 25 Table of Content traveling during a public health threat, could have a material adverse impact on our business, operating results, financial condition and liquidity.
Restrictions on or increased taxes applicable to charges for ancillary products and services paid by airline passengers and burdensome consumer protection regulations or laws could harm our business, results of operations and financial condition. For the years ended December 31, 2023 and 2022 we generated ancillary revenues of $276,133 and $192,506, respectively.
Restrictions on or increased taxes applicable to charges for ancillary products and services paid by airline passengers and burdensome consumer protection regulations or laws could harm our business, results of operations and financial condition. For the years ended December 31, 2024 and 2023 we generated ancillary revenues of $307,909 and $276,133, respectively.
The future performance of the Company may differ significantly from the anticipated performance of the Company. We may become involved in litigation that may materially adversely affect us.
The future performance of the Company may differ significantly from the anticipated performance of the Company. 40 Table of Content We may become involved in litigation that may materially adversely affect us.
Over the past several years, the price of aircraft fuel has fluctuated substantially and prices continue to be highly volatile.
Over the past several years, the price of aircraft fuel has 22 Table of Content fluctuated substantially and prices continue to be highly volatile.
The cost of aircraft fuel is highly volatile and is one of our largest individual operating expenses, accounting for approximately 27% and 32% of our operating expenses for the years ended December 31, 2023 and 2022, respectively.
The cost of aircraft fuel is highly volatile and is one of our largest individual operating expenses, accounting for approximately 24% and 27% of our operating expenses for the years ended December 31, 2024 and 2023, respectively.
The amount of our aircraft-related fixed obligations could have a material adverse effect on our business, results of operations and financial condition and could: • require a substantial portion of cash flows be used for aircraft leases and maintenance deposit payments and interest expense, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; • limit our ability to obtain additional financing to support our expansion plans and for working capital and other purposes on acceptable terms or at all; • make it more difficult for us to pay our other obligations as they become due during adverse general economic and market industry conditions because any related decrease in revenues could cause us to not have sufficient cash flows from operations to make our scheduled payments; • reduce our flexibility in planning for, or reacting to, changes in our business and the airline industry and, consequently, place us at a competitive disadvantage to our competitors with lower fixed payment obligations; and • cause us to lose access to one or more aircraft and forfeit our maintenance and other deposits if we are unable to make our required aircraft lease rental payments and our lessors exercise their remedies under the lease agreement, including cross-default provisions in certain of our leases.
The amount of our aircraft-related fixed obligations could have a material adverse effect on our business, results of operations and financial condition and could: • require a substantial portion of cash flows be used for aircraft leases and maintenance deposit payments and interest expense, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; • limit our ability to obtain additional financing to support our expansion plans and for working capital and other purposes on acceptable terms or at all; • make it more difficult for us to pay our other obligations as they become due during adverse general economic and market industry conditions because any related decrease in revenues could cause us to not have sufficient cash flows from operations to make our scheduled payments; • reduce our flexibility in planning for, or reacting to, changes in our business and the airline industry and, consequently, place us at a competitive disadvantage to our competitors with lower fixed payment obligations; and • cause us to lose access to one or more aircraft and forfeit our maintenance and other deposits if we are unable to make our required aircraft lease rental payments and our lessors exercise their remedies under the lease agreement, including cross-default provisions in certain of our leases. 39 Table of Content Our ability to obtain financing or access capital markets may be limited and there can be no assurance that we will be able to obtain sufficient funds to enable us to repay or refinance our debt obligations on commercially reasonable terms, or at all.
Assuming no material changes in the relevant tax law, and that we and our subsidiaries earn sufficient income to realize the full tax benefits subject to the income tax receivable agreement, we expect that future payments under the income tax receivable agreement will aggregate to be approximately $101,044 as of December 31, 2023.
Assuming no material changes in the relevant tax law, and that we and our subsidiaries earn sufficient income to realize the full tax benefits subject to the income tax receivable agreement, we expect that future payments under the income tax receivable agreement will aggregate to be approximately $97,694 as of December 31, 2024.
A competitor adopting an LCC or ULCC strategy may have greater financial resources and access to lower cost sources of capital than we do, which could enable them to operate their business with a lower cost structure or lower marginal revenues without substantial adverse effects than we can.
Our low-cost structure is one of our primary competitive advantages. A competitor adopting an LCC or ULCC strategy may have greater financial resources and access to lower cost sources of capital than we do, which could enable them to operate their business with a lower cost structure or lower marginal revenues without substantial adverse effects than we can.
In particular, passengers can use social media to portray interactions with Sun Country, without context, in a manner that can be quickly and broadly disseminated. To the extent that we are unable to respond timely and appropriately to negative publicity, our reputation and brand can be harmed.
Negative publicity, whether or not justified, can spread rapidly through social media. In particular, passengers can use social media to portray interactions with Sun Country, without context, in a manner that can be quickly and broadly disseminated. To the extent that we are unable to respond timely and appropriately to negative publicity, our reputation and brand can be harmed.
Our business would also be negatively impacted by any circumstances causing a reduction in demand for air transportation in the Minneapolis area, such as adverse changes in local economic conditions, local regulations and/or mandates, health concerns, adverse weather conditions, negative public perception of Minneapolis, riots, social unrest, terrorist attacks or significant price or tax increases linked to increases in airport access costs and fees imposed on passengers. 36 Table of Contents We currently operate out of Terminal 2 at MSP.
Our business would also be negatively impacted by any circumstances causing a reduction in demand for air transportation in the Minneapolis area, such as adverse changes in local economic conditions, local regulations and/or mandates, health concerns, adverse weather conditions, negative public perception of Minneapolis, riots, social unrest, terrorist attacks or significant price or tax increases linked to increases in airport access costs and fees imposed on passengers.
In addition to direct costs, such regulation may have a greater effect on the airline industry through increases in fuel costs that could result from fuel suppliers passing on increased costs that they incur under such a system. We face competition from air travel substitutes.
In addition to direct costs, such regulation may have a greater effect on the airline industry through increases in fuel costs that could result from fuel suppliers passing on increased costs that they incur under such a system.
If Delta Air Lines or another legacy network airline were to successfully develop low-cost or low-fare products or if we were to experience increased competition from LCCs or ULCCs in the Minneapolis market, our business, results of operations and prospects could be materially adversely affected.
If we were to experience increased competition from LCCs or ULCCs, or increased competition on low-fare products from Delta airlines or another legacy network airline in the Minneapolis market, our business, results of operations and prospects could be materially adversely affected.
Inflation generally results in increased costs of goods and services, including those we use in our operations, which would increase our expenses. In addition, our customers could also be affected by inflation, which could have a negative impact on demand for air travel.
Inflation can adversely affect us by resulting in increased costs of goods and services, including those we use in our operations, which would increase our expenses. In addition, our customers could also be affected by inflation, which could have a negative impact on demand for air travel.
These service agreements are generally subject to termination after notice by the third-party providers. In addition, we could experience a significant business disruption if we were to change vendors or if an existing provider ceased to be able to serve us.
These service agreements are generally subject to termination after notice by the third-party providers. In addition, we could experience a significant business disruption if we were to change vendors or if an existing provider ceased to be able to serve us. We expect to be dependent on such third-party arrangements for the foreseeable future.
A portion of the 2019 Warrants will vest incrementally based on aggregate global payments by Amazon to the Company or its affiliates pursuant to the ATSA.
A portion of the 2019 Warrants will vest incrementally based on aggregate global payments by Amazon to the Company or its affiliates pursuant under both the original and A&R ATSA.
For example, approximately 92% of 2023 Scheduled Service capacity, as measured by ASMs, had MSP as either their origin or destination.
For example, approximately 94% of 2024 Scheduled Service capacity, as measured by ASMs, had MSP as either their origin or destination.
If our competitors increase overall industry capacity, or capacity dedicated to a particular domestic or foreign region, market or route that we serve, it could have a material adverse impact on our business.
Airlines increase or decrease capacity in markets based on perceived profitability. If our competitors increase overall industry capacity, or capacity dedicated to a particular domestic or foreign region, market or route that we serve, it could have a material adverse impact on our business.
As of December 31, 2023, our 42 passenger aircraft fleet consisted of 13 aircraft financed under finance leases and 29 aircraft financed under secured debt arrangements or owned outright. As of December 31, 2023, we had six aircraft that are currently on lease to unaffiliated airlines.
As of December 31, 2024, our 45 passenger aircraft fleet consisted of 11 aircraft financed under finance leases and 34 aircraft financed under secured debt arrangements or owned outright. As of December 31, 2024, we had six aircraft that are currently on lease to unaffiliated airlines.
We rely on third-party service providers and other commercial partners to perform functions integral to our operations. We have entered into agreements with third-party providers to furnish certain facilities and services required for our operations, including ground handling, catering, passenger handling, engineering, maintenance, refueling, reservations and airport facilities as well as administrative and support services.
We have entered into agreements with third-party providers to furnish certain facilities and services required for our operations, including ground handling, catering, passenger handling, engineering, maintenance, refueling, reservations and airport facilities as well as administrative and support services.
Pursuant to these registration rights, we filed a "shelf" registration statement, under which the Apollo Stockholder and Amazon could offer and sell, from time-to-time, up to an aggregate of 34,352,603 shares of our common stock, including 9,482,606 shares of our common stock issuable upon exercise of outstanding warrants.
Pursuant to these registration rights, we filed a "shelf" registration statement, under which Amazon could offer and sell, from time-to-time, up to 9,482,606 shares of our common stock issuable upon exercise of outstanding warrants.
If our credit card processors were to impose holdback restrictions on us, the negative impact on our liquidity could be significant which could have a material adverse effect on our business, results of operations and financial condition. Our ability to obtain financing or access capital markets may be limited.
If our credit card processors were to impose holdback restrictions on us, the negative impact on our liquidity could be significant which, could have a material adverse effect on our business, results of operations and financial condition.
Airlines are often affected by factors beyond their control, including: air traffic congestion at airports; air traffic control inefficiencies; air traffic control staffing; government shutdowns or mandates; FAA grounding of aircraft; major construction or improvements at airports; adverse weather conditions, such as hurricanes or blizzards; increased security measures; new travel-related taxes; or the outbreak of disease, any of which could have a material adverse effect on our business, results of operations and financial condition.
Airlines are often affected by factors beyond their control, including: air traffic congestion at airports; air traffic control inefficiencies; air traffic control staffing; air traffic incidents; government shutdowns or mandates; FAA grounding of aircraft; major construction or improvements at airports; adverse weather conditions, such as hurricanes or blizzards; threatened or actual terrorist attacks, war or other security concerns; or the outbreak or rapid spread of disease, any of which could have a material adverse effect on our business, results of operations and financial condition.
To the extent our volume of flying for Amazon decreases or costs associated with our Cargo business increase, or if the ATSA is terminated for any reason, our business, results of operations and financial condition could be materially and adversely affected.
To the extent our volume of flying for Amazon decreases or costs associated with our Cargo business increase, or if the A&R ATSA is terminated for any reason, our business, results of operations and financial condition could be materially and adversely affected. Our business is significantly tied to and consolidated in our main hub in Minneapolis-St.
Our maintenance costs will fluctuate over time; additionally we will periodically incur substantial maintenance costs due to the maintenance schedules of our aircraft fleet and obligations to the lessors, and we could incur significant maintenance expenses outside of such maintenance schedules in the future. We have substantial maintenance expense obligations, including with respect to our aircraft leases.
Our maintenance costs will fluctuate over time; additionally we will periodically incur substantial maintenance costs due to the maintenance schedules of our aircraft fleet and obligations to the lessors, and we could incur significant maintenance expenses outside of such maintenance schedules in the 38 Table of Content future.
The COVID-19 pandemic adversely 33 Table of Contents affected our growth plans and business strategy.
The COVID-19 pandemic adversely affected our growth plans and business strategy.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+1 added−0 removed17 unchanged
Biggest changeCybersecurity risk is a focus of our control environment and included within our entity-level controls, process level controls, and general information technology controls. We regularly review and update our procedures, processes and technologies to prevent and protect against unauthorized access to, and to ensure the confidentiality, integrity, and availability of, our networks and systems.
Biggest changeWe regularly review and update our procedures, processes and technologies to prevent and protect against unauthorized access to, and to ensure the confidentiality, integrity, and availability of, our networks and systems.
Activities include mandatory online training for all employees, technical security controls, enhanced data protection, the maintenance of backup and protective systems, policy review and implementation, the evaluation and retention of cybersecurity insurance, periodic assessments of third-party service providers to assess cyber preparedness of key vendors, and running simulated cybersecurity drills, including vulnerability scanning, penetration testing and disaster recovery 56 Table of Contents exercises, throughout the organization.
Activities include mandatory online training for all employees, technical security controls, enhanced data protection, the maintenance of backup and protective systems, policy review and implementation, the evaluation and retention of cybersecurity insurance, periodic assessments of third-party service providers to assess cyber preparedness of key vendors, and running simulated cybersecurity drills, including vulnerability scanning, penetration testing and disaster recovery exercises, throughout the organization.
The Company’s CIO and CISO are responsible for managing these risks. These individuals have extensive experience in technology and information security within the airline industry. The CIO and CISO are responsible for assessing the Company’s cybersecurity risks and, in conjunction with Legal where appropriate, establishing and maintaining a cybersecurity program to manage such risks.
The Company’s CIO and CISO are responsible for 47 Table of Content managing these risks. These individuals have extensive experience in technology and information security within the airline industry. The CIO and CISO are responsible for assessing the Company’s cybersecurity risks and, in conjunction with Legal where appropriate, establishing and maintaining a cybersecurity program to manage such risks.
The costs and operational consequences of defending against, preparing for, responding to and remediating an incident may be substantial. Further, we could be exposed to litigation, regulatory enforcement or other legal action as a result of an incident, carrying the potential for damages, fees, fines, sanctions or other penalties, as well as injunctive relief requiring costly compliance measures.
Further, we 46 Table of Content could be exposed to litigation, regulatory enforcement or other legal action as a result of an incident, carrying the potential for damages, fees, fines, sanctions or other penalties, as well as injunctive relief requiring costly compliance measures.
Added
The costs and operational consequences of defending against, preparing for, responding to and remediating an incident may be substantial.

Item 2. Properties

Properties — owned and leased real estate

13 edited+6 added−4 removed3 unchanged
Biggest changeWe may expand our freighter fleet in order to serve additional cargo customers or provide additional service to Amazon. Facilities In most of the airports we serve, we do not directly lease facilities, but rather operate under flexible common use agreements. This facilitates our strategy of entering and exiting markets to service periods of peak demand.
Biggest changeAs such, no right-of-use asset and 48 Table of Content lease liability is recognized in these financial statements for the Amazon arrangement. This conclusion is unchanged from the original ATSA. Facilities In most of the airports we serve, we do not directly lease facilities, but rather operate under flexible common use agreements.
We do not have an aircraft order book because we only purchase mid-life aircraft. As a result, unlike many other airlines, we are not locked into large future capital expenditures. Rather, we opportunistically take advantage of aircraft prices with purchases at the time of our choosing. As of December 31, 2023, we operated 42 aircraft in our passenger fleet.
We do not have an aircraft order book because we only purchase mid-life aircraft. As a result, unlike many other airlines, we are not locked into large future capital expenditures. Rather, we opportunistically take advantage of aircraft prices with purchases at the time of our choosing. As of December 31, 2024, we operated 45 aircraft in our passenger fleet.
Our leases also include two hangars: • 108,000 square foot maintenance hangar, which includes office space and is where we provide certain maintenance on our aircraft; and 58 Table of Contents • 90,000 square foot office and hangar facility which has been converted into our corporate headquarters.
Our leases also include two hangars: • 108,000 square foot maintenance hangar, which includes office space and is where we provide certain maintenance on our aircraft; and • 90,000 square foot office and hangar facility which has been converted into our corporate headquarters.
As of December 31, 2023, Sun Country's fleet consisted of 60 Boeing 737-NG aircraft, comprised of 55 Boeing 737-800s and five Boeing 737-900ERs. This includes 42 aircraft in the passenger fleet, 12 cargo operated aircraft through the ATSA with Amazon, and six aircraft that are currently on lease to 57 Table of Contents unaffiliated airlines.
As of December 31, 2024, Sun Country's fleet consisted of 63 Boeing 737-NG aircraft, comprised of 58 Boeing 737-800s and five Boeing 737-900ERs. This includes 45 aircraft in the passenger fleet, 12 cargo operated aircraft through the A&R ATSA with Amazon, and six aircraft that are currently on lease to unaffiliated airlines.
Of these passenger aircraft, 13 were financed under finance leases, 26 of the owned aircraft were financed and three aircraft were unencumbered. The average age of the passenger aircraft in our fleet was approximately 15 years as of December 31, 2023.
Of these passenger aircraft, 11 were financed under finance leases, 27 of the owned aircraft were financed and seven aircraft were unencumbered. The average age of the passenger aircraft in our fleet was approximately 16 years as of December 31, 2024.
We also have entered into use agreements at many of the airports we serve that provide for the non-exclusive use of runways, taxiways and other facilities. Landing fees under these agreements are based on the number of landings and weight of the aircraft.
For any leased space we are typically responsible for maintenance, insurance and other facility-related expenses and services under these agreements. We also have entered into use agreements at many of the airports we serve that provide for the non-exclusive use of runways, taxiways and other facilities.
We also operate 12 aircraft dedicated to our Cargo business. These freighters had an average age of 21 years as of December 31, 2023. This fleet of freighters is subleased directly from Amazon and we operate them pursuant to the ATSA.
These freighters had an average age of 22 years as of December 31, 2024. All freighters are subleased directly from Amazon and we operate them pursuant to the A&R ATSA.
Gate space and ticket counter space is used and billed on a per operation (each arrival and departure) basis until an annual operating cap is met.
All other leases for our terminal passenger service facilities, which include operational support space and baggage service offices, are leased on a month-to-month basis. Gate space and ticket counter space is used and billed on a per operation (each arrival and departure) basis until an annual operating cap is met.
Our terminal passenger service facilities, which include ticket counters, gate space, operational support space and baggage service offices, generally have month-to-month terms or are used on a per use basis. For any leased space we are typically responsible for maintenance, insurance and other facility-related expenses and services under these agreements.
This facilitates our strategy of entering and exiting markets to service periods of peak demand. Our terminal passenger service facilities, which include ticket counters, gate space, operational support space and baggage service offices, generally have month-to-month terms or are used on a per use basis.
We primarily operate out of eight of the 14 gates at Terminal 2 at MSP, which we have access to on an "Enhanced Priority" basis through 2028, with common use access to the remaining gates. All other leases for our terminal passenger service facilities, which include operational support space and baggage service offices, are leased on a month-to-month basis.
Landing fees under these agreements are based on the number of landings and weight of the aircraft. We primarily operate out of eight of the 14 gates at Terminal 2 at MSP, which we have access to on an "Enhanced Priority" basis through 2028, with common use access to the remaining gates.
The Company is entitled to fixed payments over the remaining lease term for each aircraft, which expire at various dates between the fourth quarter of 2024 and the fourth quarter of 2025. On each lease expiry date, the Owned Aircraft Held for Operating Lease will be redelivered to Sun Country and are expected to be inducted into the Company’s fleet.
The Company is entitled to fixed payments over the remaining lease term for each aircraft, which expire at various dates through the fourth quarter of 2025.
The aircraft will be delivered to Sun Country on the sublease expiry date and the aircraft will continue to be leased by the Company. The aircraft is expected to be inducted into the Company's fleet upon redelivery. The age of the subleased aircraft was approximately 11 years as of December 31, 2023.
On each lease expiry date, the Owned Aircraft Held for Operating Lease will be redelivered to Sun Country and are expected to be inducted into the Company’s fleet. The average age of the Owned Aircraft Held for Operating lease in our fleet was approximately 10 years as of December 31, 2024.
Based upon review of the ATSA, the sublease arrangement does not qualify as a lease under ASC 842, Leases , because we do not control the use of the aircraft. As such, no right-of-use asset and lease liability is recognized in our financial statements for the Amazon arrangement.
All eight additional aircraft are expected to be operational by the end of the third quarter of 2025. Based upon review of the A&R ATSA, the sublease arrangement does not qualify as a lease under ASC 842, Leases , because the Company does not control the use of the aircraft.
Removed
During the year ended December 31, 2023, the Company acquired five 737-900ERs that are currently on lease to an unaffiliated airline. The Company obtained outright ownership of the Owned Aircraft Held for Operating Lease upon purchase and assumed the position of lessor until the end of the lease terms.
Added
The Company also has six aircraft that are currently on lease to unaffiliated airlines, which is comprised of four Owned Aircraft Held for Operating Lease and two subleased aircraft. The Company owns five Boeing 737-900ERs, four of which are currently on lease. The fifth aircraft is currently being inducted into the Company's passenger fleet.
Removed
The average age of the Owned Aircraft Held for Operating lease in our fleet was approximately 9 years as of December 31, 2023. As of December 31, 2023, the Company had a commitment to purchase an aircraft with an expected delivery in the first quarter of 2024.
Added
In January 2025, amendments were executed to extend the lease expiry terms for three of the four remaining Owned Aircraft Held for Operating Lease, which now expire over various dates through the fourth quarter of 2026.
Removed
The purchase agreement calls for a base price of $27,500 that is subject to adjustment based on the aircraft's maintenance condition on the date of delivery. The Company had a commitment to lease three aircraft with deliveries spanning the fourth quarter of 2023 and the first quarter of 2024.
Added
The Company has subleased two Boeing 737-800 aircraft, which will be delivered to Sun Country on the sublease expiry date. The subleases are classified as operating leases and do not relieve the Company of its primary lease obligations with the lessor. The Company operates the subleased aircraft under finance leases and will continue to be leased upon redelivery.
Removed
The leases have annual lease payments of approximately $2,000 for six years. As of December 31, 2023, the Company had taken control of one of the three aircraft, which was subsequently subleased. The sublease expires in the fourth quarter of 2024.
Added
The Company is entitled to fixed payments over the remaining lease terms, with additional variable lease payments based on aircraft utilization. During the year ended December 31, 2024, amendments were executed to extend the lease expiry terms for both subleased aircraft through November 2025.
Added
Upon expiry of these subleases, both aircraft will be redelivered to the Company and are expected to be inducted into the Company's passenger fleet. The average age of the two subleased aircraft was approximately 11 years as of December 31, 2024. We currently operate 12 aircraft dedicated to our Cargo business.
Added
In June 2024, the Company entered into the A&R ATSA with Amazon that will increase the number of Boeing 737-800 cargo aircraft that Sun Country operates on behalf of Amazon from 12 to 20. The first additional aircraft was received in January 2025 and is expected to begin service in the first quarter of 2025.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−4 removed3 unchanged
Biggest changeTotal Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Approximate Dollar Value ($ in thousands) of Shares that May Yet be Purchased Under Plan October 1-31, 2023 — $ — — $ — November 1-30, 2023 (1) 446,948 13.97 446,948 18,757 December 1-31, 2023 459,486 15.84 459,486 11,478 Total 906,434 $ 14.92 906,434 $ 11,478 _________________________________ (1) On November 6, 2023, the Company's Board of Directors authorized an additional $25,000 to the Company's existing stock repurchase program. 60 Table of Contents Stock Performance Graph The following graph compares the cumulative total return from March 17, 2021 through December 31, 2023 on our common stock with the cumulative total return on the NASDAQ Composite Index and the NYSE ARCA Airline Index.
Biggest changeAs part of this transaction, the Company repurchased 630,914 shares of its Common Stock, for a total cost of $10,000, or an average price of $15.85 per share. 50 Table of Content Stock Performance Graph The following graph compares the cumulative total return from March 17, 2021 through December 31, 2024 on our common stock with the cumulative total return on the NASDAQ Composite Index and the NYSE ARCA Airline Index.
The graph assumes that the value of the investment on our common stock and each of the Indexes was $100 on March 17, 2021, and further assumes that all dividends are reinvested. 3/17/2021 12/31/2021 12/31/2022 12/31/2023 SNCY $ 100.00 $ 74.90 $ 43.60 $ 43.24 NYSE Arca Airline Index 100.00 71.28 46.12 59.15 NASDAQ Composite Index 100.00 115.67 77.39 110.99 The stock performance depicted in the graph above represents historical performance and is not to be relied upon as indicative of future performance.
The graph assumes that the value of the investment on our common stock and each of the Indexes was $100 on March 17, 2021, and further assumes that all dividends are reinvested. 3/17/2021 12/31/2021 12/31/2022 12/31/2023 12/31/2024 SNCY $ 100.00 $ 74.90 $ 43.60 $ 43.24 $ 40.08 NYSE Arca Airline Index 100.00 71.28 46.12 59.15 58.56 NASDAQ Composite Index 100.00 115.67 77.39 110.99 142.78 The stock performance depicted in the graph above represents historical performance and is not to be relied upon as indicative of future performance.
We are unable to estimate the total number of stockholders represented by the holders. For this reason, the actual number of stockholders is greater than this number of record holders.
We are unable to estimate the total 49 Table of Content number of stockholders represented by the holders. For this reason, the actual number of stockholders is greater than this number of record holders.
For more information on the 59 Table of Contents Company's compensation plans, see Note 10 to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements" of this Annual Report.
For more information on the Company's compensation plans, see Note 9 to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements" of this Annual Report.
As of December 31, 2023, there were 53,291,001 shares of common stock outstanding and held of reco rd by approximately 3 stockholders and no shares of preferred stock were outstanding. The number of record holders of our common stock does not include DTC participants or beneficial owners holding shares through nominee names.
As of December 31, 2024, there were 53,157,964 shares of common stock outstanding and held of reco rd by approximately three stockholders and no shares of preferred stock were outstanding. The number of record holders of our common stock does not include DTC participants or beneficial owners holding shares through nominee names.
Securities Authorized for Issuance under Equity Compensation Plans The Company has 3,600,000 shares authorized under the Sun Country Airlines Holdings, Inc. 2021 Omnibus Incentive Plan, of which 2,881,120 remains available as of December 31, 2023.
Securities Authorized for Issuance under Equity Compensation Plans The Company has 3,600,000 shares authorized under the Sun Country Airlines Holdings, Inc. 2021 Omnibus Incentive Plan, of which 2,241,578 remain available as of December 31, 2024.
Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Sun Country Airlines Holdings, Inc. 2021 Omnibus Incentive Plan 68,540 $ 33.03 2,881,120 Sun Country Airlines 2018 Equity Incentive Plan 3,992,712 $ 6.11 — Total 4,061,252 $ 6.56 2,881,120 Purchases of Equity Security by the Issuer and Affiliated Purchasers On October 31, 2022, the Company’s Board of Directors authorized a $50,000 stock repurchase program of its Common Stock.
Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Sun Country Airlines Holdings, Inc. 2021 Omnibus Incentive Plan 68,540 $ 33.03 2,241,578 Sun Country Airlines 2018 Equity Incentive Plan 3,501,179 $ 5.94 — Total 3,569,719 $ 6.46 2,241,578 Purchases of Equity Security by the Issuer and Affiliated Purchasers The Company may purchase shares of its Common Stock on a discretionary basis from time-to-time through open market repurchases, privately negotiated transactions, accelerated share repurchase, or other means, including through Rule 10b5-1 trading plans.
Any repurchases made under this program will be funded from the Company’s existing cash flows, or future cash flows.
Any repurchases made under this program will be funded from the Company’s existing cash flows, or future cash flows. The Company did not repurchase any shares of its Common Stock during the three months ended December 31, 2024.
Removed
As a holding company, our ability to pay dividends also depends on our receipt of cash dividends from our operating subsidiaries. Our ability to pay dividends is restricted as a result of the Credit Agreement and may be restricted under future indebtedness that we or our subsidiaries may incur.
Added
As of December 31, 2024, the Company did not have any remaining amount of Board authorization to repurchase shares of its Common Stock. Subsequent to December 31, 2024, the Company received authorization from its Board of Directors to repurchase up to $10,000 of its Common Stock in connection with a secondary public offering by the SCA Horus Stockholder.
Removed
For more information on the Company's Credit Agreement, see Note 8 to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements" of this Annual Report.
Removed
On August 1, 2023 and November 6, 2023, the Company's Board of Directors authorized the addition of $30,000 and $25,000, respectively to the Company's existing stock repurchase program.
Removed
The Company may purchase shares of its Common Stock on a discretionary basis from time-to-time through open market repurchases, privately negotiated transactions, accelerated share repurchase, or other means, including through Rule 10b5-1 trading plans. The stock repurchase program has no expiration date and may be modified, suspended, or terminated at any time.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

100 edited+29 added−61 removed46 unchanged
Biggest changeLiquidity and Financial Condition Indicators The table below presents the major indicators of financial condition and liquidity: December 31, 2023 2022 Cash and Cash Equivalents $ 46,279 $ 92,086 Available-for-Sale Securities 134,240 172,635 Amount Available Under Revolving Credit Facility 24,650 24,650 Total Liquidity $ 205,169 $ 289,371 December 31, 2023 2022 Total Debt, net $ 401,645 $ 352,235 Finance Lease Obligations 277,302 251,296 Operating Lease Obligations 18,830 26,132 Total Debt and Lease Obligations 697,777 629,663 Stockholders' Equity 514,403 492,712 Total Invested Capital $ 1,212,180 $ 1,122,375 Debt-to-Capital 0.58 0.56 76 Table of Contents Sources and Uses of Liquidity Year Ended December 31, $ Change % Change 2023 2022 Total Operating Activities $ 174,120 $ 127,440 $ 46,680 37 % Investing Activities: Purchases of Property & Equipment (218,160) (187,922) (30,238) 16 % Proceeds from the Sale of Property & Equipment 4,953 2,451 2,502 102 % Proceeds from Insurance Settlements — 8,865 (8,865) NM Purchases of Investments (95,535) (178,960) 83,425 (47) % Proceeds from the Sale of Investments 291 1,236 (945) (76) % Proceeds from the Maturities of Investments 137,220 5,000 132,220 NM Total Investing Activities (171,231) (349,330) 178,099 (51) % Financing Activities: Proceeds from Stock Option and Warrant Exercises, net 2,652 1,934 718 37 % Common Stock Repurchases (68,585) (25,054) (43,531) 174 % Proceeds from Borrowings 119,200 188,277 (69,077) (37) % Repayment of Finance Lease Obligations (21,883) (42,062) 20,179 (48) % Repayment of Borrowings (69,276) (113,492) 44,216 (39) % Payment of Tax Receivable Agreement Liability (2,425) — (2,425) NM Debt Issuance Costs (1,820) (2,570) 750 (29) % Total Financing Activities (42,137) 7,033 (49,170) NM Net Decrease in Cash $ (39,248) $ (214,857) $ 175,609 (82) % _________________________ _ “ Cash” consists of Cash, Cash Equivalents and Restricted Cash “NM” stands for not meaningful Operating Cash Flow Activities Operating activities in the years ended December 31, 2023 and 2022 provided $174,120 and $127,440 of cash, respectively.
Biggest changeFor more information on the TRA liability, see Note 13 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. 64 Table of Content Liquidity and Financial Condition Indicators The table below presents the major indicators of financial condition and liquidity: December 31, 2024 2023 Cash and Cash Equivalents $ 83,219 $ 46,279 Available-for-Sale Securities 97,636 134,240 Amount Available Under Revolving Credit Facility 24,743 24,650 Total Liquidity $ 205,598 $ 205,169 December 31, 2024 2023 Total Debt, net $ 327,122 $ 401,645 Finance Lease Obligations 271,262 277,302 Operating Lease Obligations 20,650 18,830 Total Debt, net and Lease Obligations 619,034 697,777 Stockholders' Equity 570,373 514,403 Total Invested Capital $ 1,189,407 $ 1,212,180 Debt-to-Capital 0.52 0.58 Sources and Uses of Liquidity Year Ended December 31, % Change 2024 2023 Total Operating Activities $ 164,862 $ 174,120 (5) % Investing Activities: Purchases of Property & Equipment (47,332) (218,160) (78) % Proceeds from the Sale of Property & Equipment 17,166 4,953 247 % Purchases of Investments (92,404) (95,535) (3) % Proceeds from the Maturities of Investments 130,125 137,220 (5) % Other, net 842 291 189 % Total Investing Activities 8,397 (171,231) 105 % Financing Activities: Common Stock Repurchases (12,134) (68,585) (82) % Proceeds from Borrowings 70,000 119,200 (41) % Repayment of Finance Lease Obligations (45,942) (21,883) 110 % Repayment of Borrowings (145,518) (69,276) 110 % Other, net (2,874) (1,593) 80 % Total Financing Activities (136,468) (42,137) 224 % Net Increase (Decrease) in Cash $ 36,791 $ (39,248) 194 % _________________________ _ “ Cash” consists of Cash, Cash Equivalents and Restricted Cash “NM” stands for not meaningful 65 Table of Content Operating Cash Flow Activities Operating activities in the years ended December 31, 2024 and 2023 provided $164,862 and $174,120 of cash, respectively.
(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 Service and Cargo amounts.
(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 Consolidated Statements of Operations. (4) Scheduled Service and Charter Service utilize the same fleet of aircraft. Aircraft counts and utilization metrics are shown on a system basis only.
(3) Scheduled Service TRASM includes Schedule Service revenue, Ancillary revenue, and ASM generating revenue classified within Other Revenue on the 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. (6) Passenger-related statistics and metrics are shown only for Scheduled Service. Charter Service 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.
(5) Includes both the Company's Owned Aircraft Held for Operating Lease as well as subleased aircraft. (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.
We have identified the following critical accounting policies: – Revenue Recognition – Asset Impairment Analysis Revenue Recognition Scheduled Service, Charter Service, and most Ancillary revenues are recognized when the passenger flight occurs. Revenues exclude amounts collected on behalf of other parties, including transportation taxes.
We have identified the following critical accounting policies: – Revenue Recognition – Asset Impairment Analysis Revenue Recognition Scheduled Service, Charter, and most Ancillary revenues are recognized when the passenger flight occurs. Revenues exclude amounts collected on behalf of other parties, including transportation taxes.
The Company’s assets include aircraft and associated engines, operating and finance lease assets, the Company’s customer relationship and over-market finite-lived intangible assets, and other long-lived assets. The Company reviews the current economic and operating environment to determine whether events or circumstances indicate that these assets (or asset groups) may be impaired.
The Company’s long-lived assets include aircraft and associated engines, operating and finance lease assets, the Company’s customer relationship and over-market finite-lived Other Intangible Assets, and other long-lived assets. The Company reviews the current economic and operating environment to determine whether events or circumstances indicate that these assets (or asset groups) may be impaired.
Aircraft rent expense also includes supplemental rent, which consists of maintenance reserves paid to aircraft lessors in advance of the performance of significant maintenance activities that are not probable of being reimbursed to us by the lessor during the lease term, as well as lease return costs, which consist of all costs that would be incurred at the return of the aircraft, including costs incurred to return the airframe and engines to the condition required by the lease.
Aircraft rent expense also includes supplemental rent, which consists of maintenance reserves paid to aircraft lessors in advance of the performance of significant maintenance activities that are not probable of being reimbursed to us by the lessor during the lease term, as well as lease return costs, which consist of probable costs that would be incurred at the return of the aircraft, including costs incurred to return the airframe and engines to the condition required by the lease.
For further detail of our long-term debt and the timing of expected future payments, see Note 8 to the Consolidated Financial Statements included in Part II, Item 8, included in this Annual Report. Interest coupon payments on the Company's EETC financings are paid semi-annually. The Term Loan is repaid monthly. • Aircraft Leases and Maintenance Reserves.
For further detail of our long-term debt and the timing of expected future payments, see Note 7 to the Consolidated Financial Statements included in Part II, Item 8, included in this Annual Report. Interest coupon payments on the Company's EETC financings are paid semi-annually. The Term Loan is repaid monthly. • Aircraft Leases and Maintenance Reserves.
To determine whether impairment exists, the Company groups its assets based on the lowest level of identifiable cash flows. The Company operates a fleet comprised exclusively of one type of aircraft, the Boeing 737-NG. Therefore, the Company's largest asset group is its fleet of 737-NG aircraft, associated engines, as well as related finite-lived intangible assets.
To determine whether impairment exists, the Company groups its assets based on the lowest level of identifiable cash flows. The Company operates a fleet comprised exclusively of one type of aircraft, the Boeing 737-NG. Therefore, the Company's largest asset group is its fleet of Boeing 737-NG aircraft, associated engines, as well as related finite-lived Other Intangible Assets.
Depreciation and Amortization . Depreciation and amortization expense includes depreciation of fixed assets we own, amortization of leasehold improvements, amortization of finance leased assets, as well as the amortization of certain finite-lived intangible assets. It also includes the depreciation of significant maintenance expenses deferred under the built-in overhaul method for owned and certain finance leased aircraft. Ground Handling.
Depreciation and amortization expense includes depreciation of fixed assets we own, amortization of leasehold improvements, amortization of finance leased assets, as well as the amortization of certain finite-lived other intangible assets. It also includes the depreciation of significant maintenance expenses deferred under the built-in overhaul method for owned and certain finance leased aircraft. Ground Handling.
The payment obligations under the equipment notes are those of Sun Country. We use these certificates to finance or refinance aircraft purchases. The obligations are listed in Note 8 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Fuel Consortia .
The payment obligations under the equipment notes are those of Sun Country. We use these certificates to finance or refinance aircraft purchases. The obligations are listed in Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Fuel Consortia .
For more information on our finance leases, as well as the timing of expected future lease payments, see Note 9 to the Consolidated Financial Statements included in Part II, Item 8, included in this Annual Report. • TRA Liability.
For more information on our finance leases, as well as the timing of expected future lease payments, see Note 8 to the Consolidated Financial Statements included in Part II, Item 8, included in this Annual Report. • TRA Liability.
Unless expressly stated otherwise, for discussion and analysis of fiscal year 2021 items and fiscal year 2022 compared to fiscal year 2021, please refer to Item 7 of Part II, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K, for the fiscal year ended December 31, 2022, which was filed with the SEC and is incorporated herein by reference.
Unless expressly stated otherwise, for discussion and analysis of fiscal year 2022 items and fiscal year 2023 compared to fiscal year 2022, please refer to Item 7 of Part II, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K, for the fiscal year ended December 31, 2023, which was filed with the SEC and is incorporated herein by reference.
Adjusted CASM is a non-GAAP measure derived from CASM by excluding fuel costs, costs related to our Cargo operations, depreciation and amortization recognized on certain assets that generate lease income, stock-based compensation, certain commissions and other costs of selling our vacation products from this measure as these costs are unrelated to our airline operations and improve comparability to our peers.
Adjusted CASM is a metric that uses a non-GAAP measure derived from CASM by excluding fuel costs, costs related to our Cargo operations, depreciation and amortization recognized on certain assets that generate lease income, stock-based compensation, certain commissions and other costs of selling our vacation products from this measure as these costs are unrelated to our airline operations and improve comparability to our peers.
ITEM 7: 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. The following discussion and analysis presents factors that had a material effect on our results of operations during the years ended December 31, 2023 and 2022.
ITEM 7: 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. The following discussion and analysis presents factors that had a material effect on our results of operations during the years ended December 31, 2024 and 2023.
Sales and Marketing . Sales and marketing expense includes credit card processing fees, travel agent commissions and related GDS fees, advertising, sponsorship and distribution costs, such as the costs of our call centers, and costs associated with our loyalty program. It excludes related salary and wages of personnel, which are included in salaries, wages, and benefits expense.
Sales and marketing expense includes credit card processing fees, travel agent commissions and related GDS fees, advertising, sponsorship and distribution costs, such as the costs of our call centers, and costs associated with our loyalty program. It excludes related salary and wages of personnel, which are included in salaries, wages, and benefits expense. Depreciation and Amortization .
We initially defer Scheduled Service ticket sales as an air traffic liability and recognizes revenue when the passenger flight occurs. Unused non-refundable tickets expire at the date of scheduled travel and are recorded as revenue unless the customer notifies the Company in advance of such date that the customer will not travel.
We initially defer Scheduled Service ticket sales as an air traffic liability and recognize revenue when the passenger flight occurs. Unused non-refundable tickets expire at the date of scheduled travel and are recorded as revenue unless the customer notifies the Company in advance of such date that the customer will not travel.
However, we cannot 74 Table of Contents predict what the effect on our business and financial position might be from a change in the competitive environment in which we operate or from events beyond our control, such as volatile fuel prices, economic conditions, pandemics, weather-related disruptions, the impact of airline bankruptcies, restructurings or consolidations, U.S. military actions, geopolitical factors, regulations, or acts of terrorism.
However, we cannot predict what the effect on our business and financial position might be from a change in the competitive environment in which we operate or from events beyond our control, such as volatile fuel prices, economic conditions, pandemics, weather-related disruptions, the impact of airline bankruptcies, restructurings or consolidations, U.S. military actions, geopolitical factors, regulations, or acts of terrorism.
For additional information on the status of our union contracts, as well as our contractual obligations and commitments, refer to Note 2 and Note 17 to the Consolidated Financial Statements included in Part II, Item 8, included in this Annual Report.
For additional information on the status of our union contracts, as well as our contractual obligations and commitments, refer to Note 2 and Note 15 to the Consolidated Financial Statements included in Part II, Item 8, included in this Annual Report.
We believe our estimates and assumptions are reasonable; however, actual results could differ from those estimates. Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report. Some of those significant accounting policies require us to make difficult, 79 Table of Contents subjective, or complex judgments, or estimates.
We believe our estimates and assumptions are reasonable; however, actual results could differ from those estimates. Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report. Some of those significant accounting policies require us to make difficult, subjective, or complex judgments, or estimates.
Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any period. As derivations of Adjusted CASM are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner.
Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any period. 62 Table of Content As derivations of Adjusted CASM are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner.
Our compensation strategy includes the use of stock-based compensation to 73 Table of Contents attract and retain employees and executives and is principally aimed at aligning their interests with those of our stockholders and long-term employee retention, rather than to motivate or reward operational performance for any period.
Our compensation strategy includes the use of stock-based compensation to attract and retain employees and executives and is principally aimed at aligning their interests with those of our stockholders and long-term employee retention, rather than to motivate or reward operational performance for any period.
For more information on the TRA liability to be paid to the TRA holders, see Note 14 to the Consolidated Financial Statements included in Part II, Item 8, included in this Annual Report.
For more information on the TRA liability to be paid to the TRA holders, see Note 13 to the Consolidated Financial Statements included in Part II, Item 8, included in this Annual Report.
The estimated breakage rate is primarily based on historical experience of travel credit activity and other factors that may not be indicative of future trends, such as the COVID-19 pandemic, program changes or modifications that could affect the ultimate usage patterns of tickets and travel credits.
The estimated breakage rate is primarily based on historical experience of travel credit activity and other factors that may not be indicative of future trends, such as program changes or modifications that could affect the ultimate usage patterns of tickets and travel credits.
Other revenue consists primarily of revenue from services in connection with our SCV products, including organizing ground services, such as hotel, car and transfers, as well as the rental revenue related to certain transactions where we act as an aircraft lessor.
Other revenue consists primarily of revenue from services in connection with our SCV products, including organizing ground services, such as hotel, car and transfers, as well as the rental revenue related to certain transactions where we act as a lessor.
In addition, we had restricted cash of $17,401 as of December 31, 2023, which generally consists of cash received as prepayment for chartered flights that is maintained in separate escrow accounts in accordance with DOT regulations requiring that Charter revenue receipts received prior to the date of transportation are maintained in a separate third-party escrow account.
In addition, we had restricted cash of $17,252 as of December 31, 2024, which generally consists of cash received as prepayment for chartered flights that is maintained in separate escrow accounts in accordance with DOT regulations requiring that Charter revenue receipts received prior to the date of transportation are maintained in a separate third-party escrow account.
This section should be read in conjunction with our Consolidated Financial Statements and related 61 Table of Contents notes appearing elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions and forecasts.
This section should be read in conjunction with our Consolidated Financial Statements and related 51 Table of Content notes appearing elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions and forecasts.
The Company continuously monitors its breakage rate assumptions and may adjust its estimated breakage rate in the future. Changes in the Company’s estimated breakage rate impact revenue recognition prospectively. For the year ended December 31, 2023, a 10% change in the Company’s estimated travel credit breakage rate would have resulted in a change to Passenger Revenue of approximately $827.
The Company continuously monitors its breakage rate assumptions and may adjust its estimated breakage rate in the future. Changes in the Company’s estimated breakage rate impact revenue recognition prospectively. For the year ended December 31, 2024, a 10% change in the Company’s estimated travel credit breakage rate would have resulted in a change to Passenger Revenue of approximately $770.
Fuel cost per gallon decreased by 17% year-over-year due to the impact of global geopolitical events on the price of fuel during the year ended December 31, 2022. Fuel consumption has increased by 11% year-over-year, as a result of the increase in fleet size and total operations.
Fuel cost per gallon decreased by 11% year-over-year due to the impact of global geopolitical events on the price of fuel during the year ended December 31, 2023. Fuel consumption has increased by 8% year-over-year, as a result of the increase in fleet size and total operations.
There are no critical accounting estimates associated with Charter or Cargo revenue recognition that would materially impact the amount of revenue recognized in any specific period. 80 Table of Contents Asset Impairment Analysis The Company’s long-lived assets, such as Property & Equipment and finite-lived Intangible Assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable.
There are no critical accounting estimates associated with Charter or Cargo revenue recognition that would materially impact the amount of revenue recognized in any specific period. 68 Table of Content Asset Impairment Analysis The Company’s long-lived assets, such as Property & Equipment and Other Intangible Assets with Finite-Lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable.
Aircraft Fuel expense represented approximately 27% and 32% of our total operating expense for the years ended December 31, 2023 and 2022, respectively. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations.
Aircraft Fuel expense represented approximately 24% and 27% of our total operating expense for the years ended December 31, 2024 and 2023, respectively. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations.
Ground handling includes ground services at airports, including baggage handling, ticket counter and other ground services. Landing Fees and Airport Rent. Landing fees and airport rent includes aircraft landing fees and charges for the use of airport facilities. Other Operating.
Ground handling includes ground services at airports, including baggage handling, ticket counter and other ground services. Landing Fees and Airport Rent. Landing fees and airport rent includes aircraft landing fees and charges for the use of airport facilities. 53 Table of Content Other Operating.
During the years ended December 31, 2023 and 2022, Net Income was $72,181 and $17,676, respectively. For more information on the components of Net Income for the years ended December 31, 2023 and 2022, refer to the Consolidated Results of Operations discussion above. Our operating cash flow is primarily impacted by the following factors: Seasonality of Advance Ticket Sales.
During the years ended December 31, 2024 and 2023, Net Income was $52,903 and $72,181, respectively. For more information on the components of Net Income for the years ended December 31, 2024 and 2023, refer to the Consolidated Results of Operations discussion above. Our operating cash flow is primarily impacted by the following factors: Seasonality of Advance Ticket Sales.
Accordingly, readers are cautioned not to place undue reliance on this information . 71 Table of Contents The following table presents the reconciliation of Operating Income to Adjusted Operating Income, and Adjusted Operating Income Margin for the periods presented below.
Accordingly, readers are cautioned not to place undue reliance on this information . 60 Table of Content The following table presents the reconciliation of Operating Income to Adjusted Operating Income, and Adjusted Operating Income Margin for the periods presented below.
As of December 31, 2023 and 2022, the Company’s air traffic liability included $6,048 and $10,192, respectively, related to travel credits for future travel. The Company records an estimate for travel credits that will expire unused, otherwise known as breakage, in Passenger Revenue upon issuance of the travel credit.
As of December 31, 2024 and 2023, the Company’s air traffic liability included $5,822 and $6,048, respectively, related to travel credits for future travel. The Company records an estimate for travel credits that will expire unused, otherwise known as breakage, in Passenger Revenue upon issuance of the travel credit.
Also discussed is our financial position as of December 31, 2023 and 2022.
Also discussed is our financial position as of December 31, 2024 and 2023.
Our management team retains broad discretion to allocate liquidity. We believe that our unrestricted cash and cash equivalents, short-term investments, and availability under our Revolving Credit Facility, combined with expected future cash flows from operations, will be sufficient to fund our operations and meet our debt payment obligations for at least the next twelve months.
We believe that our unrestricted cash and cash equivalents, short-term investments, and availability under our Revolving Credit Facility, combined with expected future cash flows from operations, will be sufficient to fund our operations and meet our debt payment obligations for at least the next twelve months.
For more information on the payment of the TRA, see Note 14 of the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. 78 Table of Contents Off Balance Sheet Arrangements Indemnities .
For more information on the payment of the TRA, see Note 13 of the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Off Balance Sheet Arrangements Indemnities .
During the years ended December 31, 2023 and 2022, the Company recorded $10,240 and $12,560, respectively, of estimated travel credit breakage. A portion of travel credits will expire unused, at which time any remaining revenue is recognized.
During the years ended December 31, 2024 and 2023, the Company recorded $8,455 and $10,240, respectively, of estimated travel credit breakage. A portion of travel credits will expire unused, at which time any remaining revenue is recognized.
Aircraft – As of December 31, 2023, we had a fleet of 60 Boeing 737-NG aircraft. This includes 42 aircraft in the passenger fleet and 12 cargo operated aircraft through the ATSA and six aircraft that are currently on lease to unaffiliated airlines.
Aircraft – As of December 31, 2024, we had a fleet of 63 Boeing 737-NG aircraft. This includes 45 aircraft in the passenger fleet and 12 cargo operated aircraft through the A&R ATSA and six aircraft that are currently on lease to unaffiliated airlines.
Primarily all of the Company’s long-lived assets are owned by, or associated with, the Passenger operating segment. The Company has not recorded an impairment on its long-lived assets for any of the periods presented in these Consolidated Financial Statements, nor did it identify any triggering events during the year ended December 31, 2023 and 2022.
All of the Company’s long-lived assets are owned by, or associated with, the Passenger operating segment. The Company has not recorded an impairment on its long-lived assets, nor did it identify any triggering events, for any of the periods presented in these Consolidated Financial Statements.
For more information on the TRA liability, see Note 14 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
For more information on the Company's stock repurchases, see Note 14 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Other.
During the year ended December 31, 2023, we entered into a series of transactions where we act as an aircraft lessor. As of December 31, 2023, we leased or subleased six aircraft. Depreciation and Amortization expense on these aircraft materially began during the three months ended June 30, 2023.
The Company has entered into certain transactions where it serves as a lessor. As of December 31, 2024, we leased or subleased six aircraft. Depreciation and Amortization expense on these aircraft materially began during the three months ended June 30, 2023.
The increase was primarily driven by the 15% increase in Passenger segment departures, due to our expanding operations, as well as rate increases due to inflationary and market pressures. Landing Fees and Airport Rent .
The year-over-year increase was primarily the result of an 8% increase in Passenger segment departures, due to our expanding operations, as well as rate increases due to market pressures. Landing Fees and Airport Rent .
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. 62 Table of Contents Pilot training throughput issues, fuel price volatility due to market conditions and geopolitical events, and the impact of macroeconomic conditions, including inflationary pressures, continue to impact the Company, as well as the industry.
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.
For more information on the purchase of five Owned Aircraft Held for Operating Lease, see Note 6 of the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
For more information on the components of our lease income, see Note 8 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Operating Expenses Aircraft Fuel .
This allows us to produce higher unit revenue with a competitive low-cost structure, in line with other ULCCs resulting in best-in-class unit profitability, while also providing greater resiliency to economic or industry downturns. This strategy has been implemented and executed by an experienced management team with deep knowledge of the industry.
This allows us to produce higher unit revenue with a competitive low-cost structure, in line with other ULCCs resulting in best-in-class unit profitability, while also providing greater resiliency to economic or industry downturns.
It also excludes maintenance expenses, which are deferred based on the built-in overhaul method for owned and finance leased aircraft, which is subsequently amortized as a component of depreciation and amortization expense.
It excludes direct labor costs related to our own mechanics, which are included in salaries, wages, and benefits expense. It also excludes maintenance expenses, which are deferred based on the built-in overhaul method for owned and certain finance leased aircraft, which is subsequently amortized as a component of depreciation and amortization expense. Sales and Marketing .
Further, our diversified business model, which includes a focus on leisure and VFR passengers, Charter and e-commerce related 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 these additional costs.
Our diversified business model, which includes a focus on leisure and VFR passengers, Charter and Cargo service, is unique in the airline sector and helps mitigate the impact of economic and industry downturns on our business when compared with other large U.S. passenger airlines.
Year Ended December 31, 2023 2022 Adjusted Operating Income Margin reconciliation: Operating Revenue $ 1,049,620 $ 894,444 Operating Income 127,500 55,708 Stock Compensation Expense 9,274 2,774 Adjusted Operating Income $ 136,774 $ 58,482 Operating Income Margin 12.1 % 6.2 % Adjusted Operating Income Margin 13.0 % 6.5 % The following table presents the reconciliation of Net Income to Adjusted Net Income for the periods presented below.
Year Ended December 31, 2024 2023 Adjusted Operating Income Margin Reconciliation: Operating Revenue $ 1,075,739 $ 1,049,620 Operating Income 105,986 127,500 Stock Compensation Expense 6,020 9,274 Adjusted Operating Income $ 112,006 $ 136,774 Operating Income Margin 9.9 % 12.1 % Adjusted Operating Income Margin 10.4 % 13.0 % The following table presents the reconciliation of Net Income to Adjusted Net Income for the periods presented below.
We do not maintain an aircraft order book; instead, we enter into aircraft transactions on an opportunistic basis based on market conditions, our prevailing level of liquidity and capital market availability. As a result, we are not locked into large future capital expenditures. We have historically acquired aircraft through operating leases, finance leases, and debt.
Our single largest capital expenditure requirement relates to the acquisition of aircraft. We 63 Table of Content do not maintain an aircraft order book; instead, we enter into aircraft transactions on an opportunistic basis based on market conditions, our prevailing level of liquidity and capital market availability. As a result, we are not locked into large future capital expenditures.
For the years ended December 31, 2023 and 2022, there were an average of 33 and 25 owned aircraft and 12 and 11 aircraft under finance leases, respectively. 68 Table of Contents Ground Handling . Ground handling expense increased $3,690, or 11%, to $37,506 for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
For the years ended December 31, 2024 and 2023, there were an average of 36 and 33 owned aircraft and 15 and 12 aircraft under finance leases, respectively. Ground Handling . Ground handling expense increased $4,612, or 12%, to $42,118 for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
The TRA adjustment is not tax deductible and therefore not included in this adjustment. 72 Table of Contents The following table presents the reconciliation of Net Income to Adjusted EBITDA for the periods presented below.
(b) The tax effect of adjusting items, net is calculated at the Company’s statutory rate for the applicable period. The TRA adjustment is not tax deductible and therefore not included in this adjustment. 61 Table of Content The following table presents the reconciliation of Net Income to Adjusted EBITDA for the periods presented below.
For more information on our credit facilities or debt, see Note 8 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. TRA Liability - In connection with the Company’s IPO, we entered into a TRA with pre-IPO stockholders (the “TRA holders”).
For more information on our credit facilities or debt, see Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
The increase was primarily due to the impact of a change in the composition of our aircraft fleet that resulted in an increased number of owned aircraft and aircraft under finance leases (the expense is recorded as Depreciation and Amortization and Interest Expense).
Depreciation and amortization expense increased $6,838, or 8%, to $94,989 for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase was primarily due to the impact of a change in the composition of our aircraft fleet that resulted in an increased number of owned aircraft and aircraft under finance leases.
Deferred taxes are recorded based on differences between the financial statement basis and tax basis of assets and liabilities and available tax loss and credit carryforwards. 64 Table of Contents Operating Statistics Key Operating Statistics and Metrics Year Ended December 31, 2023 (1) Year Ended December 31, 2022 (1) Scheduled Service Charter Cargo Total Scheduled Service Charter Cargo Total Departures (2) 26,144 10,387 13,009 50,040 23,166 8,616 11,619 43,686 Block hours (2) 82,618 21,154 34,592 139,841 76,081 17,788 32,691 127,361 Aircraft miles (2) 32,494,683 7,331,362 13,145,001 53,450,328 30,413,446 6,295,154 12,502,451 49,438,373 ASMs (thousands) (2) 6,044,011 1,286,175 7,416,189 5,637,233 1,093,530 6,771,340 TRASM (cents) (3) 12.27 14.78 12.56 11.40 14.78 11.87 Average passenger aircraft during the period (4) 41.8 35.9 Passenger aircraft at end of period (4) 42 42 Leased aircraft (5) 6 — Cargo aircraft at end of period 12 12 Average daily aircraft utilization (hours) (4) 6.9 7.2 Average stage length (miles) 1,090 1,155 Revenue passengers carried (6) 4,140,663 3,598,584 Revenue passenger miles (RPMs) (thousands) (6) 5,217,852 4,706,996 Load factor (6) 86.3% 83.5% Average base fare per passenger (6) $ 109.61 $ 121.80 Ancillary revenue per passenger (6) $ 66.69 $ 53.49 Total fare per passenger (6) $ 176.30 $ 175.29 Charter revenue per block hour (6) $ 8,988 $ 9,086 Fuel gallons consumed (thousands) (2) 64,450 14,299 79,574 59,222 12,055 71,690 Fuel cost per gallon, excluding indirect fuel credits $ 3.11 $ 3.75 Employees at end of period 2,783 2,510 CASM (cents) (7) 12.43 12.39 Adjusted CASM (cents) (8) 7.49 7.04 __________________________ (1) Certain operating statistics and metrics are not presented as they are not calculable or are not utilized by management.
Deferred taxes are recorded based on differences between the financial statement basis and tax basis of assets and liabilities and available tax loss and credit carryforwards. 54 Table of Content Operating Statistics Key Operating Statistics and Metrics Year Ended December 31, 2024 (1) Year Ended December 31, 2023 (1) Scheduled Service Charter Cargo Total Scheduled Service Charter Cargo Total Departures (2) 29,039 10,359 13,094 53,009 26,144 10,387 13,009 50,040 Block hours (2) 92,391 20,775 33,744 148,518 82,618 21,154 34,592 139,841 Aircraft miles (2) 36,060,794 7,191,928 12,770,713 56,538,114 32,494,683 7,331,362 13,145,001 53,450,328 ASMs (thousands) (2) 6,707,308 1,270,455 8,071,949 6,044,011 1,286,175 7,416,189 TRASM (cents) (3) 10.87 15.51 11.47 12.27 14.78 12.56 Average passenger aircraft during the period (4) 43.0 41.8 Passenger aircraft at end of period (4) 45 42 Leased aircraft (5) 6 6 Cargo aircraft at end of period 12 12 Average daily aircraft utilization (hours) (4) 7.3 6.9 Average stage length (miles) 1,098 1,090 Revenue passengers carried (6) 4,483,515 4,140,663 Revenue passenger miles (RPMs) (thousands) (6) 5,648,351 5,217,852 Load factor (6) 84.2% 86.3% Average base fare per passenger (6) $ 91.25 $ 109.61 Ancillary revenue per passenger (6) $ 68.68 $ 66.69 Total fare per passenger (6) $ 159.93 $ 176.30 Charter revenue per block hour (6) $ 9,485 $ 8,988 Fuel gallons consumed (thousands) (2) 71,631 13,666 86,185 64,450 14,299 79,574 Fuel cost per gallon, excluding indirect fuel credits $ 2.77 $ 3.11 Employees at end of period 3,141 2,783 CASM (cents) (7) 12.01 12.43 Adjusted CASM (cents) (8) 7.59 7.49 __________________________ (1) Certain operating statistics and metrics are not presented as they are not calculable or are not utilized by management.
Salaries, Wages, and Benefits . Salaries, wages, and benefits expense increased $49,785, or 20%, to $295,640 for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Salaries, Wages, and Benefits . Salaries, wages, and benefits expense increased $31,135, or 11%, to $326,775 for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Our capital expenditures during the year ended December 31, 2023 primarily included the purchase of five Owned Aircraft Held for Operating Lease and one incremental aircraft for our passenger fleet. Our capital expenditures during the year ended December 31, 2022 primarily included the purchase of five incremental aircraft, two aircraft off operating leases, five spare engines, and a flight simulator.
Our capital expenditures during the year ended December 31, 2024 included the acquisition of one aircraft and other items not individually material. Our capital expenditures during the year ended December 31, 2023 primarily included the purchase of five Owned Aircraft Held for Operating Lease and one incremental aircraft for our passenger fleet. Investments.
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.
Our business model is flexible, which gives us the ability to adjust our services in response to market conditions and is intended to produce the highest possible returns for Sun Country.
As of December 31, 2023, we had $45,721 of total Lessor Maintenance Deposits. As of December 31, 2023, all maintenance deposits are estimated to be recoverable either through reimbursable maintenance events or through application towards the purchase of the aircraft. Investments - We invest cash and cash equivalents in highly liquid securities with strong credit ratings.
As of December 31, 2024, we had $54,145 in total Lessor Maintenance Deposits. As of December 31, 2024, all maintenance deposits are estimated to be recoverable either through reimbursable maintenance events or through application towards the purchase of the aircraft.
The restrictions are released once the charter transportation is provided. Our primary uses of liquidity are for operating expenses, capital expenditures, lease rentals and maintenance reserve deposits, debt repayments, working capital requirements, and other general corporate purposes. Our single largest capital expenditure requirement relates to the acquisition of aircraft.
The restrictions are released once the charter transportation is provided. Our primary uses of liquidity are for operating expenses, capital expenditures, lease rentals and maintenance reserve deposits, purchase options on finance leases we are reasonably certain to exercise, debt repayments, working capital requirements, TRA payments to the pre-IPO stockholders (the “TRA holders”), and other general corporate purposes.
For more information on the TRA Liability and secondary offerings, see Note 14 and Note 15 to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements" of this Annual Report. Income Tax Expense.
For more information on our fleet and related lease payments, see Note 5 and Note 8 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
For the years ended December 31, 2023 and 2022, there were an average of 12 and 11 finance leases, respectively. Common Stock Repurchases. During the year ended December 31, 2023, we repurchased 4,213,975 shares of our Common Stock at a total cost of $68,585, or an average price of $16.28 per share.
For the years ended December 31, 2024 and 2023, there were an average of 15 and 12 finance leases, respectively. Common Stock Repurchases. During the year ended December 31, 2024, the Company completed open market repurchases for 755,284 shares of its Common Stock at a total cost of $11,493, or an average price of $15.22 per share.
For more information on the changes in the components of Operating Income for the Passenger segment, refer to the Results of Operations discussion above . Cargo. Cargo had an operating loss of $5,372 for the year ended December 31, 2023, as compared to a loss of $139 for the year ended December 31, 2022, which is a decrease of $5,233.
For more information on the changes in the components of Operating Income for the Passenger segment, refer to the Results of Operations discussion above . Cargo. Cargo Operating Income increased by $6,565 to $1,193 for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
As of December 31, 2023, we had $24,650 of the $25,000 Revolving Credit Facility available due to $350 being pledged to support a letter of credit, and no balance drawn.
Credit Facilities - We use our Credit Facilities to provide liquidity support for general corporate purposes and to finance the acquisition of aircraft. As of December 31, 2024, we had $24,743 of the $25,000 Revolving Credit Facility available due to $257 being pledged to support a letter of credit, and no balance drawn.
For more information on our business and strategic advantages, see the "Business" section within Part I, Item 1 of this Annual Report. Operating Revenues Scheduled Service . Scheduled Service revenue mainly consists of base fares and expired passenger travel credits. Charter Service .
Additionally, our Charter and Cargo businesses have the ability to pass on certain costs to customers. For more information on our business and strategic advantages, see the "Business" section within Part I, Item 1 of this Annual Report. Operating Revenues Scheduled Service .
Charter service revenue consists of revenue earned from our Charter business, primarily generated through our service to the DoD, collegiate and professional sports teams, and casinos. Ancillary . Ancillary revenue consists primarily of revenue generated from air travel-related services, such as baggage fees, seat selection and upgrade fees, priority check-in and boarding fees, other fees and on-board sales. Cargo .
Ancillary revenue consists primarily of revenue generated from air travel-related services, such as baggage fees, seat selection and upgrade fees, priority check-in and boarding fees, other fees and on-board sales. Cargo . Cargo revenue consists of air cargo transportation services under the A&R ATSA with Amazon, primarily related to e-commerce delivery services. Other .
Non-GAAP Financial Measures We sometimes use information that is derived from the Consolidated Financial Statements, but that is not presented in accordance with GAAP. We believe these non-GAAP measures provide a meaningful comparison of our results to others in the airline industry and our prior year results.
We believe these non-GAAP measures provide a meaningful comparison of our results to others in the airline industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP.
The year-over-year increase was partially offset by a $1,557 loss on extinguishment of debt incurred during the year ended December 31, 2022 related to the repayment of the DDTL. For more information on the Company's Debt, see Note 8 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Other, net .
For more information on the Company's Debt, see Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Other, net . Other, net changed by $942 to a net benefit of $55 for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Our primary sources of liquidity as of December 31, 2023 included our existing cash and cash equivalents of $46,279 and short-term investments of $141,127, our expected cash generated from operations, and the $24,650 of available funds from the Revolving Credit Facility.
Our primary sources of liquidity as of December 31, 2024 included our existing cash and cash equivalents of $83,219 and short-term investments of $104,053, our expected cash generated from operations, and the $24,743 of available funds from the Revolving Credit Facility. We invest cash and cash equivalents in highly liquid securities with strong credit ratings.
Our ability to successfully execute our business strategy is largely dependent on the continued availability of capital with attractive terms and maintaining sufficient liquidity. We have historically funded our operations and capital expenditures primarily through cash from operations, proceeds from stockholders’ capital contributions, the issuance of promissory notes, and debt financing.
We have historically funded our operations and capital expenditures primarily through cash from operations, proceeds from stockholders’ capital contributions, the issuance of promissory notes, and debt financing.
Investments. During the year ended December 31, 2023, our net investment activity resulted in cash inflows of $41,976 primarily due to maturing debt securities exceeding purchases of investments. These maturing cash inflows were used to fund the purchase of aircraft during the year ended December 31, 2023.
During the years ended December 31, 2024 and 2023, our net investment activity in debt securities resulted in cash inflows of $37,721 and $41,685, respectively, due to maturities of debt securities exceeding purchases of investments.
As of December 31, 2023, we held $134,240 of debt securities, all of which are classified as current assets because of their highly liquid nature and availability to be converted into cash to fund current operations.
We classify our investments as current assets because of their highly liquid nature and availability to be converted into cash to fund current operations.
We believe certain charges included in our operating expenses on a GAAP basis make it difficult to compare our current period results to prior periods as well as future periods and guidance. The tables below show a reconciliation of non-GAAP financial measures used in this Annual Report to the most directly comparable GAAP financial measures.
Further, our non-GAAP information may be different from the non-GAAP information provided by other companies. We believe certain charges included in our operating expenses on a GAAP basis make it difficult to compare our current period results to prior periods as well as future periods and guidance.
The primary components of Aircraft Fuel expense are shown in the following table: Year Ended December 31, Change % Change 2023 2022 Total Aircraft Fuel Expense $ 246,669 $ 268,363 $ (21,694) (8) % Indirect Fuel Credits 976 739 237 32 % Aircraft Fuel Expense, Excluding Indirect Fuel Credits $ 247,645 $ 269,102 $ (21,457) (8) % Fuel Gallons Consumed (thousands) 79,574 71,690 7,884 11 % Fuel Cost per Gallon, Excluding Indirect Fuel Credits $ 3.11 $ 3.75 $ (0.64) (17) % Aircraft Fuel expense decreased by 8% year-over-year, primarily due to a 17% decrease in the average fuel cost per gallon, slightly offset by an 11% increase in consumption as a result of the increased operations.
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. 57 Table of Content The primary components of Aircraft Fuel expense are shown in the following table: Year Ended December 31, % Change 2024 2023 Total Aircraft Fuel Expense $ 237,160 $ 246,669 (4) % Indirect Fuel Credits 1,461 976 50 % Aircraft Fuel Expense, Excluding Indirect Fuel Credits $ 238,621 $ 247,645 (4) % Fuel Gallons Consumed (thousands) 86,185 79,574 8 % Fuel Cost per Gallon, Excluding Indirect Fuel Credits $ 2.77 $ 3.11 (11) % Aircraft Fuel expense decreased by 4% year-over-year, primarily due to a 11% decrease in the average fuel cost per gallon, partially offset by an 8% increase in consumption as a result of increased operations.
The year-over-year increase in Salaries, Wages, and Benefits was due to an 11% increase in employee headcount, increased per unit costs for pilots and flight crews to support the increase in operations, and an acceleration of stock-based compensation expense recognized during the current year for our time-based and performance-based stock options.
The year-over-year increase in Salaries, Wages, and Benefits was due to a 13% increase in employee headcount to support the increase in total system block hours as a result of operational growth, and contractual rate increases for our pilots; partially offset by an acceleration of stock-based compensation expense recognized during the prior year for the vesting of our time-based and performance-based stock options.
During the year ended December 31, 2023, we 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 to be repaid monthly through March 2030.
During the year ended December 31, 2023, we 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. For additional information regarding these financing arrangements, see Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Critical Accounting Policies and Estimates 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.
Except as described herein, there have been no material changes in our contractual obligations and commitments other than in the ordinary course of business since our fiscal year ended December 31, 2024. 67 Table of Content Critical Accounting Policies and Estimates 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.
(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. 65 Table of Contents Results of Operations For the Years Ended December 31, 2023 and 2022 Year Ended December 31, $ Change % Change 2023 2022 Operating Revenues: Scheduled Service $ 453,862 $ 438,308 $ 15,554 4 % Charter 190,128 161,619 28,509 18 % Ancillary 276,133 192,506 83,627 43 % Passenger 920,123 792,433 127,690 16 % Cargo 99,735 90,350 9,385 10 % Other 29,762 11,661 18,101 155 % Total Operating Revenues 1,049,620 894,444 155,176 17 % Operating Expenses: Aircraft Fuel 246,669 268,363 (21,694) (8) % Salaries, Wages, and Benefits 295,640 245,855 49,785 20 % Aircraft Rent 2,281 8,768 (6,487) (74) % Maintenance 60,588 46,604 13,984 30 % Sales and Marketing 34,105 31,053 3,052 10 % Depreciation and Amortization 88,151 67,641 20,510 30 % Ground Handling 37,506 33,816 3,690 11 % Landing Fees and Airport Rent 49,615 45,658 3,957 9 % Other Operating, net 107,565 90,978 16,587 18 % Total Operating Expenses 922,120 838,736 83,384 10 % Operating Income 127,500 55,708 71,792 129 % Non-operating Income (Expense), net: Interest Income 10,180 4,527 5,653 125 % Interest Expense (42,634) (31,018) (11,616) 37 % Other, net (887) (5,235) 4,348 (83) % Total Non-operating Income (Expense), net (33,341) (31,726) (1,615) 5 % Income before Income Tax 94,159 23,982 70,177 293 % Income Tax Expense 21,978 6,306 15,672 249 % Net Income $ 72,181 $ 17,676 $ 54,505 308 % Total Operating Revenues increased $155,176, or 17%, to $1,049,620 for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
(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. 55 Table of Content Results of Operations For the Years Ended December 31, 2024 and 2023 Year Ended December 31, % Change 2024 2023 Operating Revenues: Scheduled Service $ 409,133 $ 453,862 (10) % Charter 197,045 190,128 4 % Ancillary 307,909 276,133 12 % Passenger 914,087 920,123 (1) % Cargo 107,174 99,735 7 % Other 54,478 29,762 83 % Total Operating Revenues 1,075,739 1,049,620 2 % Operating Expenses: Aircraft Fuel 237,160 246,669 (4) % Salaries, Wages, and Benefits 326,775 295,640 11 % Aircraft Rent — 2,281 (100) % Maintenance 68,770 60,588 14 % Sales and Marketing 34,935 34,105 2 % Depreciation and Amortization 94,989 88,151 8 % Ground Handling 42,118 37,506 12 % Landing Fees and Airport Rent 59,549 49,615 20 % Other Operating, net 105,457 107,565 (2) % Total Operating Expenses 969,753 922,120 5 % Operating Income 105,986 127,500 (17) % Non-operating Income (Expense), net: Interest Income 7,833 10,180 (23) % Interest Expense (44,300) (42,634) 4 % Other, net 55 (887) 106 % Total Non-operating Expense, net (36,412) (33,341) 9 % Income before Income Tax 69,574 94,159 (26) % Income Tax Expense 16,671 21,978 (24) % Net Income $ 52,903 $ 72,181 (27) % Total Operating Revenues increased $26,119, or 2%, to $1,075,739 for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The table below presents select operating data for lines of revenue within Passenger: Year Ended December 31, Change % Change 2023 2022 Scheduled Service and Ancillary Statistics: Departures 26,144 23,166 2,978 13 % Block Hours 82,618 76,081 6,537 9 % Passengers 4,140,663 3,598,584 542,079 15 % Average base fare per passenger $ 109.61 $ 121.80 $ (12.19) (10) % Ancillary revenue per passenger $ 66.69 $ 53.49 $ 13.20 25 % Total Fare per passenger $ 176.30 $ 175.29 $ 1.01 1 % RPMs (thousands) 5,217,852 4,706,996 510,856 11 % ASMs (thousands) 6,044,011 5,637,233 406,778 7 % TRASM (cents) 12.27 11.40 0.87 8 % Passenger load factor 86.3 % 83.5 % 2.8 pts N/A Charter Statistics: Departures 10,387 8,616 1,771 21 % Block hours 21,154 17,788 3,366 19 % Charter revenue per block hour $ 8,988 $ 9,086 (98) (1) % The year-over-year increase in Scheduled Service operating revenue was primarily the result of an increase in demand year-over-year.
The table below presents select operating data for lines of revenue within Passenger: Year Ended December 31, % Change 2024 2023 Scheduled Service and Ancillary Statistics: Departures 29,039 26,144 11 % Block Hours 92,391 82,618 12 % Passengers 4,483,515 4,140,663 8 % Average base fare per passenger $ 91.25 $ 109.61 (17) % Ancillary revenue per passenger $ 68.68 $ 66.69 3 % Total Fare per passenger $ 159.93 $ 176.30 (9) % RPMs (thousands) 5,648,351 5,217,852 8 % ASMs (thousands) 6,707,308 6,044,011 11 % TRASM (cents) 10.87 12.27 (11) % Passenger load factor 84.2 % 86.3 % (2) % Charter Statistics: Departures 10,359 10,387 — % Block hours 20,775 21,154 (2) % Charter revenue per block hour $ 9,485 $ 8,988 6 % The year-over-year decreases in both total fare per passenger and TRASM were impacted by increased capacity across the industry.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+2 added−0 removed3 unchanged
Biggest changeAs of December 31, 2023, the Company had $24,650 of financing available through the Revolving Credit Facility, as $350 had been pledged to support a letter of credit. As of December 31, 2023, no amounts on the Revolving Credit Facility had been drawn. Our short-term investment securities are primarily comprised of fixed-rate debt investments.
Biggest changeAs of December 31, 2024, no amounts on the Revolving Credit Facility had been drawn. Our short-term investment securities are primarily comprised of fixed-rate debt investments. An increase in market interest rates decreases the market value of fixed-rate investments. Conversely, a decrease in market interest rates increases the market value.
Aircraft Fuel expense does not include amounts where we are considered the customer's agent for procuring fuel. We had no fuel option and swap contracts in place to hedge the economic risk associated with volatile fuel prices as of December 31, 2023.
Aircraft Fuel expense does not include amounts where we are considered the customer's agent for procuring fuel. We had no fuel option and swap contracts in place to hedge the economic risk associated with volatile fuel prices as of December 31, 2024.
Unexpected pricing changes of aircraft fuel could have a material adverse effect on our business, results of operations and financial condition. For example, based on our forecasted Aircraft Fuel expense for the first quarter of 2024, we estimate that a one cent per gallon increase in the average aircraft fuel price would increase Aircraft Fuel expense by approximately $233.
Unexpected pricing changes of aircraft fuel could have a material adverse effect on our business, results of operations and financial condition. For example, based on our forecasted Aircraft Fuel expense for the first quarter of 2025, we estimate that a one cent per gallon increase in the average aircraft fuel price would increase Aircraft Fuel expense by approximately $250.
Given these factors and that a significant portion of our portfolio is held in cash and cash equivalents, we do not anticipate fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position. 82 Table of Contents
Given these factors and that a significant portion of our portfolio is held in cash and cash equivalents, we do not anticipate fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position. 70 Table of Content
A change in market interest rates would impact interest expense under the $119,200 term loan credit facility used to finance the Owned Aircraft Held for Operating Lease. A 100 basis point increase in interest rates on the term loan would result in a corresponding increase in interest expense of approximately $1,084 annually.
A change in market interest rates would impact interest expense under the term loan credit facility used to finance the Owned Aircraft Held for Operating Lease.
An increase in market interest rates decreases the market value of fixed-rate investments. Conversely, a decrease in market interest rates increases the market value. The fair market value of our short-term investments with exposure to interest rate risk was $134,240 as of December 31, 2023. The Company limits its investments to investment grade quality securities.
The fair market value of our short-term investments with exposure to interest rate risk was $97,636 as of December 31, 2024. The Company limits its investments to investment grade quality securities.
As of the date of this filing, the 81 Table of Contents entire term loan credit facility has been drawn. The Company also maintains a $25,000 Revolving Credit Facility with a variable interest rate that is impacted by market conditions.
The Company also maintains a $25,000 Revolving Credit Facility with a variable interest rate that is impacted by market conditions. As of December 31, 2024, the Company had $24,743 of financing available through the Revolving Credit Facility, as $257 had been pledged to support a letter of credit.
Added
In December 2024, the Company reissued Class C trust certificates from the 2019-1 EETC, which had previously been repaid, in an aggregate face amount of $60,000 and concurrently applied the 69 Table of Content proceeds to repay a portion of the term loan credit facility.
Added
This significantly reduced the Company's exposure to market risk associated with changes in interest rates related to our variable-rate debt. A 100 basis point increase in interest rates on the term loan would result in a corresponding increase in interest expense of approximately $331 annually.

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