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What changed in Sun Country Airlines Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Sun Country Airlines Holdings, Inc.'s 2024 and 2025 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 2025 report.

+404 added−333 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-12)

Top changes in Sun Country Airlines Holdings, Inc.'s 2025 10-K

404 paragraphs added · 333 removed · 286 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

70 edited+17 added−12 removed87 unchanged
Biggest changeThe 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.
Biggest changeOur CBA with our dispatchers will become amendable on February 28, 2030. 18 Table of Contents As of December 31, 2025, the status of the CBAs for our employees was as follows: Employee Group Number of Employees Representative Status of Agreement/Amendable Date Pilots 682 ALPA Currently amendable (commenced as of December 2025) Flight Attendants 753 IBT Amendable in February 2030 Dispatchers 36 TWU Amendable in February 2030 Technicians and related craft employees 202 AMFA Agreement in principle as of December 2025 Below the Wing Fleet Service Employees 505 IBT Amendable in November 2028 The RLA governs our relations with labor organizations.
We have operated in and out of JFK, a Level 3 airport, since April of 2023. We also currently operate in and out of the following Level 2 airports: SFO, LAX, ORD and EWR.
We have operated in and out of JFK, a Level 3 airport, since April 2023. We also currently operate in and out of the following Level 2 airports: SFO, LAX, ORD and EWR.
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.
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 and Sabre). We also generate sales through OTAs, which also broadens our ability to sell in highly seasonal markets.
Our network strategy is designed to take advantage of the seasonal nature of the leisure customer's needs by concentrating our flying in seasons when demand is strongest and flying significantly less in seasons when demand is lower. As a result, our passenger business is subject to significant seasonal fluctuations, especially our Scheduled Service.
Our network strategy is designed to take advantage of the seasonal nature of the leisure customer's needs by concentrating our flying in seasons when demand is strongest and flying significantly less in seasons when demand is lower. As a result, our passenger business is subject to significant seasonal fluctuations, especially our Scheduled Service business line.
Our Scheduled Service business combines low costs with a high-quality product to generate higher TRASM than ULCCs while maintaining lower Adjusted CASM than LCCs, resulting in best-in-class unit profitability. We offer a high-quality product that we believe is superior to ULCCs and consistent with that of LCCs.
Our Scheduled Service business combines low costs with a high-quality product which we believe can generate higher TRASM than ULCCs while maintaining lower Adjusted CASM than LCCs, resulting in best-in-class unit profitability. We offer a high-quality product that we believe is superior to ULCCs and consistent with that of LCCs.
We are a leading Charter airline for collegiate sports including the NCAA Championships, as well as individual team travel. Most of our 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 are a leading Charter airline for collegiate sports including the NCAA Championships, as well as individual team travel. Most of our contracts are non-cyclical because the DoW and sports teams still fly during normal economic downturns, and our casino contracts are long-term in nature.
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.
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 passenger service (including Scheduled Service and Charter) and cargo service segments. By doing so, we generate high growth, high margins and strong cash flows with greater resilience than other passenger airlines.
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.
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. 17 Table of Contents 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.
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 strong 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.
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.
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.
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.
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 .” 20 Table of Contents 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 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.
Seasonal Demand Dictates Monthly Scheduled Service Schedule Day-of-Week Capacity Determined by Scheduled Service Demand Patterns (1) Monthly Seats as a % of March 2025 Seats (% of Peak Day ASMs) (TRASM in cents) (1) Based on fiscal year 2025 data 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.
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.
Human Capital As of December 31, 2025, we had 3,281 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.
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 .
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, 2025 and 2024, Charter block hours under long-term contracts comprised 72% and 74% of total Charter flying, respectively. Cargo .
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.
Our diverse Charter customer base includes, but is not limited to the DoW, 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 featured 30 clubs throughout the United States and Canada during the 2025 season and may have future expansion teams in later seasons.
We regularly schedule our fleet using what we refer to as “Power Patterns”, which involves scheduling aircraft and crew on trips that combine Scheduled Service and Charter legs, dynamically replacing what would be lower margin Scheduled Service flights with Charter opportunities.
We regularly schedule our fleet using what we refer to as "Power Patterns", which involves scheduling aircraft and crew on trips that combine Scheduled Service and Charter legs, dynamically replacing what would be lower margin Scheduled Service flights with Charter opportunities.
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
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. 23 Table of Contents
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.
We grow 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 15 Table of Contents mitigating seasonal troughs.
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.
The 20 cargo aircraft are subleased directly from Amazon and we operate them pursuant to the A&R ATSA. The three 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, 2025, the leases expire at various dates through the fourth quarter of 2026.
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.
These jet fuel reduction initiatives include the following: • Efficient seating - we optimize the number of seats on our planes, making each flight as fuel efficient as possible. • Focus on demand - we understand our customers' travel needs and patterns.
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.
Sales through these relatively higher cost indirect channels for the years ended December 31, 2025 and 2024 were 20% and 22%, 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.
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.
Our fleet is reliable, and we have demonstrated the ability to maintain our high completion factor during harsh weather conditions. For 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, 2025, our fleet consisted of 70 Boeing 737-NG aircraft.
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 .
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. 12 Table of Contents 2025 Scheduled Service Route Map Scheduled Service Route Network .
With our Navitaire -based reservation system, enhanced website, and mobile app, we sell a large proportion of our bookings through direct channels. Sales through direct channels for both years ended December 31, 2024 and 2023 were 78%. Indirect distribution channels remain important outlets to sell our flights.
With our Navitaire-based reservation system, enhanced website, and mobile app, we sell a large proportion of our bookings through direct channels. Sales through direct channels for the years ended December 31, 2025 and 2024 were 80% and 78%, respectively. Indirect distribution channels remain important outlets to sell our flights.
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.
This includes 47 aircraft in the passenger fleet, 20 cargo operated aircraft through the A&R ATSA with Amazon, and three 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 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.
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, 2025 and 2024, our average ancillary revenue per passenger was approximately $70.12 and $68.68, respectively.
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.
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 Passenger service businesses. Competition The airline industry is highly competitive.
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.
Our historical fuel consumption and costs were as follows: Year Ended December 31, 2025 2024 Fuel Gallons Consumed (in thousands) 84,647 86,185 Fuel Cost Per Gallon, excluding indirect fuel credits $ 2.56 $ 2.77 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.
In addition to these network shifts, we also shift aircraft between our Scheduled Service and Charter businesses to maximize the return on our assets.
In addition to these network shifts, we also shift aircraft within our Passenger segment, the Scheduled Service and Charter businesses, to maximize return on our assets.
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.
Our Scheduled Service completion factor, including the adverse impact of weather, was 98.9% and 98.7% for the years ended December 31, 2025 and 2024, respectively. Aircraft Fuel Aircraft fuel is one of our largest individual expenses, representing approximately 21% and 24% of our total operating costs for the years ended December 31, 2025 and 2024, respectively.
However, like the Charter and Scheduled 12 Table of Content 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.
However, like the Charter and Scheduled Service business, aircraft and crew utilization can be optimized by filling in Cargo service in periods when Passenger flying is less profitable.
Sun Country invests in safety and security programs, including: • Flight Operations Quality Assurance, a program designed to collect and analyze flight operations data to identify areas for safety, efficiency, and training improvements. • Investments in advanced training devices, such as a new cabin simulator, to enhance flight attendant training. • ProSafeT, an SMS that enables anonymous safety concern reporting and supports hazard identification and mitigation efforts. 17 Table of Content • ASAP, a partnership with the FAA and labor unions to encourage the reporting of safety issues without fear of FAA enforcement.
Sun Country invests in safety and security programs, including: • Flight Operations Quality Assurance, a program designed to collect and analyze flight operations data to identify areas for safety, efficiency, and training improvements. • Investments in advanced training devices, such as a new cabin simulator, to enhance flight attendant training. • ProSafeT, an SMS that enables anonymous safety concern reporting and supports hazard identification and mitigation efforts. • ASAP, a partnership with the FAA and labor unions to encourage the reporting of safety issues without fear of FAA enforcement. 19 Table of Contents The information from these safety programs is used to inform management, ensuring the ongoing health and effectiveness of our SMS.
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 .
MSP Departures Top 5 Destinations from MSP in.... (# of Departures) March 2025 Orlando, Florida 41% Fort Meyers, Florida Cancun, Mexico Phoenix, Arizona of Departures Tampa, Florida July 2025 Los Angeles, California 26% Seattle, Washington San Francisco, California Las Vegas, Nevada of Departures Anchorage, Alaska Charter .
Our agility is supported by our variable cost structure and the cross utilization of our people and assets between our lines of business. Our synergies from cross-utilization have increased since we began providing CMI services because our pilots are interchangeably deployed between Scheduled Service, Charter and Cargo flights.
Our agility is supported by owning lower cost used aircraft, a highly variable low-cost structure, and the cross-utilization of our people and assets between our lines of business. Our synergies from cross-utilization have increased since we began providing CMI services because our pilots are interchangeably deployed between Passenger service and Cargo flights.
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 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 Passenger service flights, we attempt to capture those synergies as 14 Table of Contents well.
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.
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 Passenger service segment, comprising of Scheduled Service and Charter lines of business, and our Cargo segment.
Our strong relationship with Amazon is evidenced by the most recent A&R ATSA which will increase the number aircraft operated on behalf of Amazon from 12 to 20, making us the sole operator of Amazon 737-800 freighters in their US domestic network.
Our strong relationship with Amazon is evidenced by the most recent A&R ATSA, which increased the number of aircraft operated on behalf of Amazon from 12 to 20, making us the sole operator of Amazon 737-800 freighters in their U.S. domestic network. In early 2026, we agreed to operate two additional cargo aircraft on behalf of Amazon.
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 operate our Scheduled Service business using a flexible capacity model focused on peak demand. 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 2025, as only 4% of our total Scheduled Service routes were daily, year-round routes to four locations.
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.
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, 2025 and 2024, we flew 4.2 million and 4.5 million Scheduled Service passengers, respectively.
As a result of our focus on flying during seasonal peak periods, our well-respected brand and product, and our strong position in Minneapolis, we have historically enjoyed a TRASM premium to other leisure airlines at MSP. Our peak demand strategy focuses on profitable flying opportunities available from both our MSP home market and our network of non-MSP markets.
As a result of our focus on flying during seasonal peak periods, our well-respected brand and product, and our strong position in Minneapolis, we have historically enjoyed a TRASM premium to other leisure airlines at MSP. We also served 17 non-MSP markets in 2025.
Our principal competitive advantages include our: diversified and resilient business model, agile peak demand scheduling strategy, tactical mid-life fleet with flexible operations, superior low-cost product and brand, competitive low-cost structure, strong position in our profitable MSP home market and our seasoned management team.
This will increase the total aircraft that we operate on behalf of Amazon from 20 to 22. Our principal competitive advantages include our: diversified and resilient business model, agile peak demand scheduling strategy, tactical mid-life fleet with flexible operations, superior low-cost product and brand, competitive low-cost structure, strong position in our profitable MSP home market and our seasoned management team.
We share resources, such as flight crews, across our Scheduled Service, Charter and Cargo business lines with the objective of generating high returns and margins and mitigating the seasonality of our route network.
We share resources, such as flight crews, across our Passenger and Cargo segments with the objective of generating higher returns and margins while mitigating the seasonality of our route network.
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.
CORSIA is being implemented in phases, with information sharing that began in 2019 and a pilot phase that began in 2021, followed by a first phase of the program beginning in 2024 and a second phase to begin in 2027.
During 2024, the Company entered into the A&R ATSA with Amazon that will increase the number of Boeing 737-800 cargo aircraft that we operate on behalf of Amazon from 12 to 20 in 2025. The first additional aircraft was received in January 2025 and is expected to begin service in the first quarter of 2025.
During 2024, the Company entered into the A&R ATSA with Amazon that increased the number of Boeing 737-800 cargo aircraft that we operate on behalf of Amazon from 12 to 20, and we received and placed in-service all eight additional cargo aircraft in 2025. In early 2026, we agreed to operate two additional cargo aircraft on behalf of Amazon.
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.
Points expire 36 months after the date they were earned, except those 16 Table of Contents points held by Sun Country co-branded credit cardholders do not expire so long as the holder maintains the card as active. In March 2025, we entered into a Credit Card Program Agreement for a new co-branded credit card program.
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.
This will increase the total aircraft that we operate on behalf of Amazon from 20 to 22. 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.
The agreement includes two additional, two-year renewal terms exercisable at Amazon's option, and a subsequent three-year renewal term subject to mutual written agreement, which, if not agreed to, will trigger a final two-year wind-down term.
The agreement includes two additional, two-year renewal terms exercisable at Amazon's option, and a subsequent three-year renewal term subject to mutual written agreement, which, if not agreed to, will trigger a final two-year wind-down term. Our Cargo business also enables us to leverage certain assets, capabilities and fixed costs to enhance profitability and promote growth across our Company.
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.
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.
Airport Access In the United States, the FAA currently regulates the allocation of take-off and landing authority, slots, slot exemptions, operating authorizations or similar capacity allocation mechanisms, which limit take-offs and landings, at certain airports.
To the extent that a lessee is not in compliance, we may be required to comply with such requirements, possibly at our own expense. Airport Access In the United States, the FAA currently regulates the allocation of take-off and landing authority, slots, slot exemptions, operating authorizations or similar capacity allocation mechanisms, which limit take-offs and landings, at certain airports.
SB-261 requires covered entities to publicly disclose their climate-related financial risk and the measures adopted to reduce and adapt to those risks. The first report required by SB-261 will be due by January 1, 2026. It is not yet clear whether the Company will be considered a reporting entity or covered entity under SB-253 or SB-261, respectively.
SB-261 requires covered entities to publicly disclose their climate-related financial risk and the measures adopted to reduce and adapt to those risks. The deadline for the first report required by SB-261 was January 1, 2026, but the deadline was not enforced due to pending litigation. The deadline for the first report required by SB-253 is August 10, 2026.
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 22 Table of Contents procedures for civil aircraft engines, which took effect on January 1, 2023. There may be future rulemaking that may result in stricter GHG emissions standards than those contained in the proposed rule.
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.
As of December 31, 2025, approximately 66% of our employees were represented by labor unions as set forth in the table below. AMFA organized our technicians in 2022 and negotiations for an initial CBA with our technicians and related craft employees began in October 2022, and involved the assistance of a federal mediator through the NMB.
Our Fleet We fly a single-family fleet of mid-life Boeing 737-NG aircraft, which allows us to maintain a cost base comparable to ULCCs.
For additional information on the Merger Agreement with Allegiant, refer to the information included in Part II, Item 7 of this Annual Report. Our Fleet We fly a single-family fleet of mid-life Boeing 737-NG aircraft, which allows us to maintain a cost base comparable to ULCCs.
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. Many of our pilots and other team members are armed forces veterans and we are proud to fly the DoD. We sponsor the Hennepin Theatre Trust Spotlight Education program.
Many of our pilots and other team members are armed forces veterans and we are proud to fly the DoW. We sponsor the Hennepin Theatre Trust Spotlight Education program.
As a result, our route network varies widely throughout the year. We have a successful history of opening and closing stations to meet seasonal demand and we expect to continue to identify high demand markets where other airlines have been unable to respond to market needs during periods of seasonal demand.
We have a successful history of opening and closing stations to meet seasonal demand and we expect to continue to identify high demand markets where other airlines have been unable to respond to market needs during periods of seasonal demand. 13 Table of Contents 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.
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.
Our competitors and potential competitors in the Scheduled Service business include both legacy network airlines and low-cost airlines. 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.
All eight additional aircraft are expected to be operational by the end of the third quarter of 2025. For more information on the A&R ATSA, see the "Cargo" discussion included within Part I, Item 1, "Business". Our Unique Business Model Scheduled Service.
This will increase the total aircraft that we operate on behalf of Amazon from 20 to 22. For more information on the A&R ATSA, see the "Cargo" discussion included within Part I, Item 1, "Business". Our Unique Business Model Scheduled Service.
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.
In 2021, we made a three-year commitment to donate travel to accommodate every Wish Kid traveling anywhere that our airline flies. 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.
We 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.
We are currently flying 20 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. The A&R ATSA includes an initial six-year term, which expires in October 2030.
During 2024, the Company entered into the A&R ATSA with Amazon that will increase the number of Boeing 737-800 cargo aircraft that we operate on behalf of Amazon from 12 to 20 in 2025. The A&R ATSA includes revised economics to reflect the higher-cost environment that has ensued since the original ATSA was signed in December 2019.
During 2024, the Company entered into the A&R ATSA with Amazon that increased the number of Boeing 737-800 cargo aircraft that we operate on behalf of Amazon from 12 to 20 in 2025, and we received and placed in-service all eight additional aircraft in 2025. In early 2026, we agreed to operate two additional cargo aircraft on behalf of Amazon.
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.
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.
We are a longtime partner with Make-A-Wish Minnesota and provide flights for children with critical illnesses to help them safely travel to and from their wish destinations. In 2021, we made a three-year commitment to donate travel to accommodate every Wish Kid traveling anywhere that our airline flies.
As a fast-growing and dynamic airline, we know our success depends on collaboration with stakeholders, and we strive to engage with stakeholders in our community and more broadly. We are a longtime partner with Make-A-Wish Minnesota and provide flights for children with critical illnesses to help them safely travel to and from their wish destinations.
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.
Paul area since our founding over 40 years ago, where our brand is well-known and well-respected. 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. Our MSP network served approximately 95 markets in 2025.
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.
As of December 31, 2025, we have access to eight of the 16 gates in Terminal 2 and use of additional gates as needed. As of January 1, 2026, we have access to nine of the 16 gates in Terminal 2 and use of additional gates as needed. We have been based in the Minneapolis-St.
We provide low-fare passenger airline service primarily to leisure and VFR travelers. Our low fares are designed to stimulate demand from price-sensitive travelers seeking a superior product to ULCCs. We operate our Scheduled Service business using a flexible capacity model focused on peak demand.
For the years ended December 31, 2025 and 2024, our average total fare per passenger was approximately $166.17 and $159.93, respectively. 11 Table of Contents We provide low-fare passenger airline service primarily to leisure and VFR travelers. Our low fares are designed to stimulate demand from price-sensitive travelers seeking a superior product to ULCCs.
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.
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.
ATSG and Alaska Airlines (acquired through the Hawaiian Airlines transaction) also perform US domestic flying for Amazon utilizing widebody aircraft while Sun Country and Atlas operate narrowbody 737-800 freighters for Amazon. The performance of our Cargo line of business is strong and reliable which gives us a stable position with our customer, Amazon.
The performance of our Cargo line of business is strong and reliable, which gives us a stable position with our customer, Amazon.
Community Involvement At Sun Country, we place tremendous value in our stakeholders, such as our customers, partners, and members of our community. As a fast-growing and dynamic airline, we know our success depends on collaboration with stakeholders, and we strive to engage with stakeholders in our community and more broadly.
Sun Country Airlines is dedicated to fostering a culture of safety and security that meets the highest industry standards. Community Involvement At Sun Country, we place tremendous value in our stakeholders, such as our customers, partners, and members of our community.
The FAA requires each commercial airline to obtain and hold an FAA air carrier certificate. We currently hold an FAA air carrier certificate. Our lessees are also subject to extensive, direct regulation under the laws of the jurisdictions in which they are registered and where they operate.
Our lessees are also subject to extensive, direct regulation under the laws of the jurisdictions in which they are registered and where they operate. Such laws govern, among other things, the registration, operation, security, and maintenance of our aircraft, environmental issues and the financial oversight of their operations.
In January 2025, amendments were executed to extend the lease expiry terms for three of the six aircraft that are currently on lease to unaffiliated airlines. As of the date of this filing, the leases expire over various dates through the fourth quarter of 2026.
In February 2026, an amendment was executed to extend the lease expiry term for the one aircraft subleased to an unaffiliated airline. As of the date of this filing, the lease expires in the fourth quarter of 2026.
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We have invested in numerous projects to create a well-regarded product and brand that we believe is superior to ULCCs while maintaining lower fares than LCCs and larger full-service carriers. We believe that our cabin experience is a differentiator amongst ULCCs. All of our aircraft have new state-of-the-art seats that comfortably recline and have full size tray tables.
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Merger Agreement with Allegiant On January 11, 2026, Sun Country, entered into the Merger Agreement with Allegiant Travel Company, a Nevada corporation (“Allegiant”), under which Allegiant will acquire the Company.
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Our seats have an average pitch of approximately 31 inches, giving our customers comparable legroom to Southwest Airlines and greater legroom than all ULCCs in the United States. We also provide seat-back power, complimentary in-flight entertainment and free beverages to improve the overall flying experience for our customers.
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Pursuant to the Merger Agreement, each existing share of Sun Country Common Stock will be converted into the right to receive (i) $4.10 in cash, without interest and (ii) 0.1557 shares of Allegiant Common Stock. Capitalized terms used herein, but not otherwise defined, have the meanings set forth in the Merger Agreement.
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Since the start of 2024, we have launched 16 new markets.
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Completion of the Merger is subject to the satisfaction or waiver of certain closing conditions, including, among other things that (1) Allegiant stockholders approving the share issuance proposal and Sun Country stockholders approving the Merger Agreement proposal, (2) the waiting period applicable to the closing under the HSR Act (and any customary timing agreement with any governmental entity to toll, stay or extend such waiting period, or to delay or not to consummate the mergers) will have expired or been terminated, (3) all consents, registrations, notices, waivers, exemptions, approvals, confirmations, clearances, permits, certificates, orders and authorizations required to be obtained from, or delivered to, as applicable, the U.S.
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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.
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Federal Aviation Administration, the U.S. Department of Transportation and the U.S.
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The first additional aircraft was received in January 2025 and is expected to begin service in the first quarter of 2025. All eight additional aircraft are expected to be operational by the end of the third quarter of 2025. The A&R ATSA includes an initial six-year term, which expires in October 2030.
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Department of Homeland Security, including the TSA, in connection with the closing will have been obtained or delivered, as applicable, (4) there will be no law in effect, whether preliminary, temporary or permanent, which makes the proposed transaction illegal or prohibits or otherwise prevents the closing, (5) the registration statement to be filed by Allegiant and Sun Country with the SEC pursuant to the Merger Agreement, will have become effective in accordance with the provisions of the Securities Act of 1933, as amended, and no stop order suspending the effectiveness of the registration statement will have been issued by the SEC and remain in effect and no proceeding to that effect will have been commenced or threatened unless subsequently withdrawn; and (6) the 10 Table of Contents shares of Allegiant common stock to be issued in the Merger will have been authorized and approved for listing on Nasdaq.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, under some circumstances, including certain mergers, asset sales and other transactions constituting a “change of control” under the income tax receivable agreement or if we breach our obligations thereunder, the income tax receivable agreement will terminate and we will be required to make a payment equal to the present value of future payments under the income tax receivable agreement, which payment will be calculated based on certain assumptions, including those relating to our and our subsidiaries’ future taxable income.
Biggest changeIn addition, under some circumstances, including such as if we breach our obligations under the TRA or in the case of a merger, asset sale or other transaction constituting a “change of control” thereunder, including our currently contemplated Merger with Allegiant, the TRA will terminate and the Company must pay an amount equal to the outstanding balance of the TRA at time of closing.
The airline industry, including related vendor partners, is experiencing and may continue to experience a shortage of qualified personnel and we face added challenges with attracting and retaining qualified personnel due to the low unemployment rate in Minnesota.
The airline industry, including related vendor partners, is experiencing and may continue to experience a shortage of qualified personnel and we face added challenges with attracting and retaining qualified personnel due to the relatively low unemployment rate in Minnesota.
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.
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 31 Table of Contents new environmental, social and governance disclosures required by the SEC; and antitrust enforcement.
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.
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.
Outbreaks or rapid spreads of pandemic or contagious viral or bacterial infections, diseases or similar public health threats, such as Ebola, measles, avian flu, severe acute respiratory syndrome (SARS), COVID-19, H1N1 (swine) flu, pertussis (whooping cough) and zika virus, or their respective variants, could result in the implementation of restrictions and regulations, including travel restrictions, quarantines, limitations on aircraft capacity, supply chain disruptions, testing requirements and restrictions on our ability to access our facilities or aircraft or requirements to collect additional passenger data or our ability to maintain a suitably skilled and sized workforce.
Outbreaks or rapid spreads of pandemic or contagious viral or bacterial infections, diseases or similar public health threats, such as Ebola, measles, avian flu, severe acute respiratory syndrome (SARS), COVID-19, H1N1 (swine) flu, pertussis (whooping cough) and zika virus, or their respective variants, could result in the implementation of restrictions and regulations, including travel restrictions, quarantines, limitations on aircraft capacity, supply chain disruptions, testing requirements and restrictions on our ability to access our facilities or 27 Table of Contents aircraft or requirements to collect additional passenger data or our ability to maintain a suitably skilled and sized workforce.
For most passengers visiting friends and relatives and cost-conscious leisure travelers (our primary market), travel is a discretionary expense, and during periods of unfavorable economic conditions, travelers have often elected to replace air travel at such times with car travel or other forms of ground transportation or have opted not to travel at all.
For most passengers visiting friends and relatives and cost-conscious leisure travelers (our primary market), travel is a discretionary expense, and during periods of actual or perceived unfavorable economic conditions, travelers have often elected to replace air travel at such times with car travel or other forms of ground transportation or have opted not to travel at all.
Our ability to pay the fixed costs associated with our contractual obligations will depend on our operating performance, cash flow, availability under the Revolving Credit Facility and our ability to secure adequate future financing, which will in turn depend on, among other things, the success of our current business strategy and our future financial and operating performance, competitive conditions, fuel price volatility, any significant weakening or improving in the U.S. economy, availability and cost of financing, as well as general economic and political conditions and other factors that are, to some extent, beyond our control.
Our ability to pay the fixed costs associated with our contractual obligations will depend on our operating performance, cash flow, availability under the Revolving Credit Facility and our ability to secure adequate future financing, which will in turn depend on, among other things, the success of our current business strategy and our future financial and operating performance, 41 Table of Contents competitive conditions, fuel price volatility, any significant weakening or improving in the U.S. economy, availability and cost of financing, as well as general economic and political conditions and other factors that are, to some extent, beyond our control.
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.
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 26 Table of Contents 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.
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. In addition, the terms of any lease agreements that we enter into in the future could also require maintenance reserves in excess of our current requirements.
As of December 31, 2025, all maintenance deposits are estimated to be recoverable either through reimbursable maintenance events or through application towards the purchase of the aircraft. In addition, the terms of any lease agreements that we enter into in the future could also require maintenance reserves in excess of our current requirements.
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.
In addition, a reduction in demand from our Charter customers, including as a result of decreased DoW 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.
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.
As of December 31, 2025, 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.
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.
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.
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.
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, 2025, 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 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 24 Table of Contents 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.
The amount and timing of these so-called “return conditions” costs can prove unpredictable due to uncertainty regarding the maintenance status of each particular aircraft at the time it is to be returned and it is not unusual for disagreements to ensue between the airline and the leasing company as to the required redelivery conditions on a given aircraft or engine.
The amount and timing of these so-called “return conditions” costs can prove unpredictable due to uncertainty regarding the maintenance status of each particular aircraft at the time it is to be returned and it is not unusual for 43 Table of Contents disagreements to ensue between the airline and the leasing company as to the required redelivery conditions on a given aircraft or engine.
Like other airlines, our business is affected by factors beyond our control, including air traffic congestion at airports, air traffic control inefficiencies, air traffic incidents, major construction or improvements at airports at 24 Table of Content which we operate, increased security measures, adverse weather conditions, threatened or actual terrorist attacks, war, natural disasters and the outbreak of disease.
Like other airlines, our business is affected by factors beyond our control, including air traffic congestion at airports, air traffic control inefficiencies, air traffic incidents, major construction or improvements at airports at which we operate, increased security measures, adverse weather conditions, threatened or actual terrorist attacks, war, natural disasters and the outbreak of disease.
The Credit Agreement contains, and any future indebtedness likely will contain, restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to pay dividends and make other restricted payments. As a result, capital appreciation, if any, of our common stock may be the only source of gain for the foreseeable future.
Any future indebtedness likely will contain restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to pay dividends and make other restricted payments. As a result, capital appreciation, if any, of our common stock may be the only source of gain for the foreseeable future.
Attacks may be targeted at us, our customers (including the DoD) and our third-party service providers, including air navigation service providers, or others who have entrusted us with information, including regulators such as the DoD, FAA and DOT.
Attacks may be targeted at us, our customers (including the DoW) and our third-party service providers, including air navigation service providers, or others who have entrusted us with information, including regulators such as the DoW, FAA and DOT.
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.
The security of the systems and network where we and our third- 32 Table of Contents 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.
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.
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.
We cannot assure you that we will find profitable markets in which to operate during the off-peak season. Lower demand for air travel during the fall and other off-peak months could have a material adverse effect on our business, results of operations and financial condition.
We cannot assure you that we will find profitable markets in which to operate during the off-peak season. Lower demand 42 Table of Contents for air travel during the fall and other off-peak months could have a material adverse effect on our business, results of operations and financial condition.
As a result, we separately purchase contingent liability insurance and contingent hull insurance on all aircraft in our owned fleet. We also separately require our 41 Table of Content lessees to obtain specified levels of insurance customary in the aviation industry and indemnify us for, and insure against, liabilities arising out of the lessee’s use and operation of the aircraft.
As a result, we separately purchase contingent liability insurance and contingent hull insurance on all aircraft in our owned fleet. We also separately require our lessees to obtain specified levels of insurance customary in the aviation industry and indemnify us for, and insure against, liabilities arising out of the lessee’s use and operation of the aircraft.
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.
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.
Furthermore, our labor costs may increase in connection with our growth, especially if we needed to hire more pilots in order to grow various segments of our business, including Cargo. We may also become subject to additional CBAs in the future as non-unionized workers may unionize.
Furthermore, our labor costs may increase in connection with our growth, especially if we needed to hire more pilots in order to grow various 38 Table of Contents segments of our business, including Cargo. We may also become subject to additional CBAs in the future as non-unionized workers may unionize.
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.
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 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.
If we were to experience increased competition from LCCs or ULCCs, or increased competition on low-fare products from Delta Air Lines or another legacy network airline in the Minneapolis market, our business, results of operations and prospects could be materially adversely affected.
The pendency and resolution of any such matters or similar matters may be time-consuming and costly and could have an adverse impact on our results of operations, financial condition, business and prospects. We may also be exposed to adverse publicity in the ordinary course of business.
The pendency and resolution of any such matters or similar matters may be time-consuming and costly and could have an adverse impact on our results of operations, financial condition, business and prospects. 35 Table of Contents We may also be exposed to adverse publicity in the ordinary course of business.
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.
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.
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.
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.
We are or may be subject to new or amended laws and regulations that may have a direct effect (or indirect effect through our third-party providers, including the petroleum industry, or airport facilities at which we operate) on our operations. In addition, U.S. airport authorities are exploring ways to limit de-icing fluid discharges.
We are or may be subject to new or amended laws and regulations that may have a direct effect (or indirect effect through our third-party providers, including 29 Table of Contents the petroleum industry, or airport facilities at which we operate) on our operations. In addition, U.S. airport authorities are exploring ways to limit de-icing fluid discharges.
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.
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.
We cannot assure you that our continued use of our facilities at MSP will occur on 32 Table of Content acceptable terms with respect to operations and cost of operations, or at all, or that our ongoing use of these facilities will not include additional or increased fees.
We cannot assure you that our continued use of our facilities at MSP will occur on acceptable terms with respect to operations and cost of operations, or at all, or that our ongoing use of these facilities will not include additional or increased fees.
The following factors could affect our stock price: • our operating and financial performance and prospects; • quarterly variations in the rate of growth (if any) of our financial or operational indicators, such as earnings per share, net income, revenues, Adjusted Net Income, Adjusted EBITDA and Adjusted CASM; • the public reaction to our press releases, our other public announcements and our filings with the SEC; • strategic actions by our competitors; • changes in operating performance and the stock market valuations of other companies; • announcements related to litigation; • our failure to meet revenue or earnings estimates made by research analysts or other investors; • changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; • speculation in the press or investment community; • sales of our common stock by us or our stockholders, or the perception that such sales may occur; • changes in accounting principles, policies, guidance, interpretations, or standards; • additions or departures of key management personnel; • actions by our stockholders; • general economic and market conditions; • the rapid spread of a viral or bacterial infection, disease or similar public health threat and its effects; • domestic and international economic, legal and regulatory factors unrelated to our performance; • material weakness in our internal control over financial reporting; and • the realization of any risks described under this “Risk Factors” section, or other risks that may materialize in the future.
The following factors could affect our stock price: • our operating and financial performance and prospects; • quarterly variations in the rate of growth (if any) of our financial or operational indicators, such as earnings per share, net income, revenues, Adjusted Net Income, Adjusted EBITDA and Adjusted CASM; • the public reaction to our press releases, our other public announcements and our filings with the SEC; • strategic actions by our competitors; • changes in operating performance and the stock market valuations of other companies; • announcements related to litigation; • our failure to meet revenue or earnings estimates made by research analysts or other investors; • changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts; • speculation in the press or investment community; • sales of our common stock by us or our stockholders, or the perception that such sales may occur; • changes in accounting principles, policies, guidance, interpretations, or standards; • additions or departures of key management personnel; • actions by our stockholders; • general economic and market conditions; • the rapid spread of a viral or bacterial infection, disease or similar public health threat and its effects; • domestic and international economic, legal and regulatory factors unrelated to our performance; • material weakness in our internal control over financial reporting; and • the realization of any risks described under this “Risk Factors” section, or other risks that may materialize in the future. 46 Table of Contents The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
A failure to pay our operating lease, debt and other fixed cost obligations or a breach of our contractual obligations, including the Credit Agreement, could result in a variety of adverse consequences, including the exercise of remedies by our creditors and lessors.
A failure to pay our operating lease, debt and other fixed cost obligations or a breach of our contractual obligations, including the Revolving Credit Facility. could result in a variety of adverse consequences, including the exercise of remedies by our creditors and lessors.
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.
For the year ended December 31, 2025, Cargo revenue under the A&R ATSA represented 14% 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.
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.
Amazon may also terminate the A&R ATSA for convenience, subject to certain notice 34 Table of Contents 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.
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.
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.
Federal government shutdowns can also affect the availability of federal resources necessary to provide air traffic control and airport security and impact our ability to take delivery of aircraft and commence operations in new domestic stations. Another extended shutdown like the instance in December 2018-January 2019 may have a negative impact on our operations and financial results.
Federal government shutdowns can also affect the availability of federal resources necessary to provide air traffic control and airport security and impact our ability to take delivery of aircraft and commence operations in new domestic stations. Another extended shutdown like those in December 2018-January 2019 and October 2025-November 2025 may have a negative impact on our operations and financial results.
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.
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.
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.
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 57% of which had vested as of December 31, 2025.
If the U.S. economy continues to feel the effects of inflationary pressures, our business, results of operations and financial condition could be materially adversely affected. Our business has been, and in the future may be, materially adversely affected by the price and availability of aircraft fuel.
If inflation increases or continues, the U.S. economy may feel the effects of inflationary pressures and our business, results of operations and financial condition could be materially adversely affected. Our business has been, and in the future may be, materially adversely affected by the price and availability of aircraft fuel.
We collect the excise tax, along with certain 26 Table of Content other U.S. and foreign taxes and user fees on air transportation (such as passenger security fees), and pass along the collected amounts to the appropriate governmental agencies.
We collect the excise tax, along with certain other U.S. and foreign taxes and user fees on air transportation (such as passenger security fees), and pass along the collected amounts to the appropriate governmental agencies.
If our operating cash flows become insufficient to cover the entirety of our cash outflows, the Revolving Credit Facility may not be adequate to finance our operations.
If our operating cash flows become insufficient to cover the entirety of our cash outflows, the Revolving Credit Facility may not be adequate to 40 Table of Contents finance our operations.
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.
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.
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.
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 7.1 hours and 7.3 hours for the years ended December 31, 2025 and 2024, 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.
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, 2025 and 2024 we generated ancillary revenues of $294,904 and $307,909, respectively.
To the extent that we are unable to make payments under the income tax receivable agreement for any reason, such payments will be deferred and will accrue interest until paid, which could adversely affect our results of operations and could also affect our liquidity in periods in which such payments are made.
To the extent that we are unable to make payments under the TRA for any reason, such payments will be deferred and will accrue interest until paid, which could adversely affect our results of operations and could also affect our liquidity in periods in which such payments are made.
Our certificate of incorporation and bylaws include provisions limiting ownership and voting by non-U.S. citizens. To comply with restrictions imposed by federal law on foreign ownership and control of U.S. airlines, our certificate of incorporation and bylaws restrict ownership and control of shares of our common stock by non-U.S. citizens.
To comply with restrictions imposed by federal law on foreign ownership and control of U.S. airlines, our certificate of incorporation and bylaws restrict ownership and control of shares of our common stock by non-U.S. citizens.
In particular, we depend on the services of our senior management team, particularly Jude Bricker, our Chief Executive Officer, and Dave Davis, our President and Chief Financial Officer.
In particular, we depend on the services of our senior management team, particularly Jude Bricker, our President and Chief Executive Officer.
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.
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.
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.
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. A decline in our Cargo business would materially adversely affect our business, results of operations, and prospects.
Over the past several years, the price of aircraft fuel has 22 Table of Content fluctuated substantially and prices continue to be highly volatile.
Over the past several years, the price of aircraft fuel has 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 24% and 27% of our operating expenses for the years ended December 31, 2024 and 2023, respectively.
The cost of aircraft fuel is highly volatile and is one of our largest individual operating expenses, accounting for approximately 21% and 24% of our operating expenses for the years ended December 31, 2025 and 2024, 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. 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.
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.
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.
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 $87,169 as of December 31, 2025.
Further, we could be found in default if we do not maintain certain minimum thresholds over an extended period of time.
Further, we could be found in default of the A&R ATSA if we do not maintain certain minimum thresholds over an extended period of time.
In addition, our business is labor intensive, with labor costs representing approximately 34% and 32% of our total operating costs for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, approximately 60% of our workforce was represented by labor unions.
In addition, our business is labor intensive, with labor costs representing approximately 36% and 34% of our total operating costs for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, approximately 66% of our workforce was represented by labor unions.
For example, approximately 94% of 2024 Scheduled Service capacity, as measured by ASMs, had MSP as either their origin or destination.
For example, approximately 93% of 2025 Scheduled Service capacity, as measured by ASMs, had MSP as either their origin or destination.
Sales of significant amounts of stock in the public market upon expiration of lock-up agreements, the perception that such sales may occur, or early release of any lock-up agreements, could adversely affect prevailing market prices of our common stock or make it more difficult to sell shares of common stock at a time and price that you deem appropriate.
While the Merger Agreement limits our ability to issue new shares of common stock, sales of significant amounts of stock in the public market upon exercise of warrants, options or upon expiration of lock-up agreements, the perception that such sales may occur, or early release of any lock-up agreements, could adversely affect prevailing market prices of our common stock or make it more difficult to sell shares of common stock at a time and price that you deem appropriate.
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.
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.
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.
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.
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.
As of December 31, 2025, our 47 passenger aircraft fleet consisted of 12 aircraft financed under finance leases and 35 aircraft financed under secured debt arrangements or owned outright. As of December 31, 2025, we had three aircraft that are currently on lease to unaffiliated airlines.
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.
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.
These technologies and systems include our computerized airline reservation system provided by Navitaire , a unit of Amadeus, operational control systems, telecommunications systems, mobile phone application, airline website and maintenance systems as well as government and other third-party systems.
We are highly dependent on technology and computer systems and networks to operate our business. These technologies and systems include our computerized airline reservation system provided by Navitaire, a unit of Amadeus, operational control systems, telecommunications systems, mobile phone application, airline website and maintenance systems as well as government and other third-party systems.
Additionally, we made payments for maintenance reserves of $16,675 for 2024 and expect to make significant payments for maintenance reserves in the future.
Additionally, we made payments for maintenance reserves of $14,932 for 2025 and expect to make significant payments for maintenance reserves in the future.
Furthermore, in the event we are unable to procure aircraft at the price-point necessary to allow for lower utilization during weak demand periods, our costs will be higher and could have a material adverse effect on our business, results of operations and financial condition.
Furthermore, in the event we are unable to procure aircraft at the price-point necessary to allow for lower utilization during weak demand periods, our costs will be higher and could have a material adverse effect on our business, results of operations and financial condition. 39 Table of Contents If we are unable to attract, retain and train qualified personnel at reasonable costs or fail to maintain our company culture, our business could be harmed.
Public ESG and sustainability reporting is becoming more broadly expected by investors, shareholders, regulatory agencies and other third parties. Certain organizations that provide corporate governance and other corporate risk information to investors have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or “sustainability” metrics.
Certain organizations that provide corporate governance and other corporate risk information to investors have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or “sustainability” metrics.
We are likely to enter into similar service agreements in new markets we decide to enter, and we cannot assure you that we will be able to obtain the necessary services at acceptable rates, or that such third-party providers will be available to service us. 33 Table of Content Although we seek to monitor the performance of third parties that furnish certain facilities or provide us with our ground handling, catering, passenger handling, engineering, maintenance, refueling, reservations and airport facilities, the efficiency, timeliness and quality of contract performance by third-party providers are often beyond our control, and any failure by our third-party providers to perform up to our expectations, or sufficiently staff their operation, may have an adverse impact on our business, reputation with customers, our brand and our operations.
Although we seek to monitor the performance of third parties that furnish certain facilities or provide us with our ground handling, catering, passenger handling, engineering, maintenance, refueling, reservations and airport facilities, the efficiency, timeliness and quality of contract performance by third-party providers are often beyond our control, and any failure by our third-party providers to perform up to our expectations, or sufficiently staff their operation, may have an adverse impact on our business, reputation with customers, our brand and our operations.
Any unfavorable government policies on international trade, such as export controls, capital controls or tariffs, may affect the demand for aircraft, increase the cost of aircraft components, delay production, or impact the competitive position of certain aircraft manufacturers. In turn, this may impact where we can place and deliver our aircraft, which may negatively impact our earnings and cash flows.
Any unfavorable government policies on international trade, such as export controls, capital controls or tariffs, may affect the demand for aircraft, increase the cost of aircraft components, delay production, or impact the competitive position of certain aircraft manufacturers.
During economic downturns, including during a health crisis, our competitors may choose to take an aggressive posture toward market share growth on routes where we compete, which would flood a low demand market with additional capacity that drives down fares, which could have a material adverse effect on our business, results of operations and financial condition. 23 Table of Content Our growth and the success of our high-growth, low-cost business model could stimulate competition in our markets through our competitors’ development of their own LCC or ULCC strategies, new pricing policies designed to compete with LCCs, ULCCs or new market entrants.
During economic downturns, including during a health crisis, our competitors may choose to take an aggressive posture toward market share growth on routes where we compete, which would flood a low demand market with 25 Table of Contents additional capacity that drives down fares, which could have a material adverse effect on our business, results of operations and financial condition.
If we are unable to maintain or further differentiate our brand and product from LCCs or ULCCs, our market share could decline, which could have a material adverse effect on our business, results of operations and financial condition.
Differentiating our brand and product has required and will continue to require significant investment, and we cannot assure that the initiatives we have implemented will continue to be successful or that the initiatives we intend to implement will be successful. 37 Table of Contents If we are unable to maintain or further differentiate our brand and product from LCCs or ULCCs, our market share could decline, which could have a material adverse effect on our business, results of operations and financial condition.
We cannot forecast what additional security and safety requirements may be imposed in the future or the costs or revenue impact that would be associated with complying with such requirements. Furthermore, the DoD continues to issue new IT systems security requirements which require expenditures in order to bring our systems into compliance.
We cannot forecast what additional security and safety requirements may be imposed in the future or the costs or revenue impact that would be associated with complying with such requirements.
Substantial or sustained disruptions or system failures could cause service delays or failures and result in our customers purchasing tickets from other airlines. We cannot assure you that any of our security measures, change control procedures or disaster recovery plans that we have implemented are adequate to prevent disruptions or failures.
We cannot assure you that any of our security measures, change control procedures or disaster recovery plans that we have implemented are adequate to prevent disruptions or failures.
We compete against other U.S. airlines for pilots, mechanics and other skilled labor and certain U.S. airlines offer wage and benefit packages exceeding ours.
Our business is labor intensive. We require large numbers of pilots, flight attendants, maintenance technicians and other personnel. We compete against other U.S. airlines for pilots, mechanics and other skilled labor and certain U.S. airlines offer wage and benefit packages exceeding ours.
The airline industry is subject to extensive government fees and taxation that negatively impact our revenue and profitability. The U.S. airline industry is one of the most heavily taxed of all industries. These fees and taxes have grown significantly in the past decade for domestic flights, and various U.S. fees and taxes also are assessed on international flights.
The airline industry is subject to extensive government fees and taxation that negatively impact our revenue and profitability. The U.S. airline industry is one of the most heavily taxed of all industries.
As of December 31, 2024, we had 53,157,964 shares of common stock outstanding, warrants to purchase 9,482,606 shares of common stock, options to purchase 3,569,719 shares of common stock and 842,377 shares of common stock that may be issued upon the vesting of outstanding restricted stock units.
As of December 31, 2025, we had 53,223,302 shares of common stock outstanding, warrants to purchase 9,482,606 shares of common stock, options to purchase 2,367,380 shares of common stock and 914,052 47 Table of Contents shares of common stock that may be issued upon the vesting of outstanding restricted stock units.
As of December 31, 2024, we had future debt principal obligations of $330,122 and future finance lease obligations of $337,279. During 2025, based on our aircraft leases and debt structure as of December 31, 2024, we expect to make payments of $88,682 related to debt principal obligations and $37,897 related to finance lease obligations.
As of December 31, 2025, we had future debt principal obligations of $326,410 and future finance lease obligations of $299,382. During 2026, based on our aircraft leases and debt structure as of December 31, 2025, we expect to make payments of $69,057 related to debt principal obligations and $77,905 related to finance lease obligations.
In these situations, our obligations under the income tax receivable agreement could have a material and adverse impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales or other “change of control” transactions.
In these situations, our obligations under the income tax receivable agreement could have a material and adverse impact on our liquidity.
Negotiations for a new 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. Our fleet service employees (cargo, commissary/catering, ramp agents, and bag room agents) elected to be represented by the International Brotherhood of Teamsters on January 4, 2023.
Our below-the-wing fleet service employees (cargo, commissary/catering, ramp agents, and bag room agents) elected to be represented by the International Brotherhood of Teamsters on January 4, 2023 and negotiations for a new CBA began in March of 2023. The parties reached an agreement in August 2025, and our below-the-wing fleet service employees ratified the CBA in November 2025.
Near term supply constraints from original equipment manufacturers pressure the availability and cost of the Boeing 737-NG aircraft and CFM56 engines Sun Country operates.
Near term supply constraints from original equipment manufacturers pressure the availability and cost of the Boeing 737-NG aircraft and CFM56 engines Sun Country operates. While our fleet strategy partially mitigates these pressures, our business could be materially adversely impacted by broader industry trends.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFurther, 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.
Biggest changeThe 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.
ITEM 1C: CYBERSECURITY As a regular part of our ordinary business operations, we collect and store sensitive data, including information necessary for our operations, information from our passengers, customers (including the DoD), employees and our business partners.
ITEM 1C: CYBERSECURITY As a regular part of our ordinary business operations, we collect and store sensitive data, including information necessary for our operations, information from our passengers, customers (including the DoW), employees and our business partners.
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 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. 52 Table of Contents 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.
Due to the significant competition within the airline industry, a cybersecurity incident could also impact our brand, harm our reputation and adversely impact our relationship with our customers, employees and stockholders.
Due to the significant competition within the airline industry, a cybersecurity incident 51 Table of Contents could also impact our brand, harm our reputation and adversely impact our relationship with our customers, employees and stockholders.
Removed
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

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Biggest changeThe 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.
Biggest changeThe average age of the passenger aircraft in our fleet was approximately 17 years as of December 31, 2025. The Company also has three aircraft that are currently on lease to unaffiliated airlines, which is comprised of two Owned Aircraft Held for Operating Lease and one subleased aircraft.
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.
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, 2025, we operated 47 aircraft in our passenger fleet.
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.
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 11 years as of December 31, 2025.
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.
The Company has subleased one Boeing 737-800 aircraft, which will be delivered to Sun Country on the sublease expiry date. The sublease is classified as an operating lease and does 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.
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.
As of December 31, 2025, Sun Country's fleet consisted of 70 Boeing 737-NG aircraft, comprised of 65 Boeing 737-800s and five Boeing 737-900ERs. This includes 47 aircraft in the passenger fleet, 20 cargo operated aircraft through the A&R ATSA with Amazon, and three aircraft that are currently on lease to unaffiliated airlines.
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.
We currently operate 20 aircraft dedicated to our Cargo business. These freighters had an average age of 23 years as of December 31, 2025. All freighters are subleased directly from Amazon and we operate them pursuant to the A&R ATSA.
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 Company owns five Boeing 737-900ERs, two of which are currently on lease. 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 2026.
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.
The Company is entitled to fixed payments over the remaining lease term, with additional variable lease payments based on aircraft utilization. During the year ended December 31, 2025, an amendment was executed to extend the lease expiry term for the subleased aircraft through the second quarter of 2026.
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.
In June 2024, the Company entered into the A&R ATSA with Amazon that increased the number of Boeing 737-800 cargo aircraft that Sun Country operates on behalf of Amazon from 12 to 20. During the year ended December 31, 2025, the Company received and placed in-service all eight additional cargo aircraft under the A&R ATSA.
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.
We primarily operate out of eight of the 16 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. As of January 1, 2026, we have Enhanced Priority access to nine of the 16 gates, with common use access to the remaining gates.
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 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.
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.
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.
As 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.
This conclusion is unchanged from the original ATSA. 53 Table of Contents 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.
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.
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. As such, no right-of-use asset and lease liability is recognized in these financial statements for the Amazon arrangement.
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.
In February 2026, an additional amendment was executed to extend the sublease expiry term through the fourth quarter of 2026. Upon expiry of the sublease, the aircraft will be redelivered to the Company and is expected to be inducted into the Company's passenger fleet. The age of the one subleased aircraft was 13 years as of December 31, 2025.
Removed
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.
Added
Of these passenger aircraft, 12 were financed under finance leases. Of the 37 owned aircraft and Owned Aircraft Held for Operating Lease as of December 31, 2025, 31 aircraft were financed, five aircraft have been pledged to support the ability to efficiently utilize the Company's four-year $75,000 Revolving Credit Facility, and one aircraft was unencumbered.
Removed
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.
Added
In early 2026, the Company agreed to operate another two additional cargo aircraft, which will increase the total from 20 to 22 once the aircraft are received and placed in-service.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−1 removed3 unchanged
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.
Biggest changeUnder the Merger Agreement with Allegiant, the Company is prohibited from repurchasing any shares of its Common Stock during the period from January 11, 2026 to the time of closing of the Merger. 55 Table of Contents Stock Performance Graph The following graph compares the cumulative total return from March 17, 2021 through December 31, 2025 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 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.
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 12/31/2025 SNCY $ 100.00 $ 74.90 $ 43.60 $ 43.24 $ 40.08 $ 39.55 NYSE Arca Airline Index 100.00 71.28 46.12 59.15 58.56 61.36 NASDAQ Composite Index 100.00 115.67 77.39 110.99 142.78 171.84 The stock performance depicted in the graph above represents historical performance and is not to be relied upon as indicative of future performance.
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.
For more information on the Company's compensation plans, see Note 10 to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements" of this Annual Report.
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.
We are unable to estimate the total number of 54 Table of Contents stockholders represented by the holders. For this reason, the actual number of stockholders is greater than this number of record holders.
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.
As of December 31, 2025, there were 53,223,302 shares of common stock outstanding and held of reco rd by 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.
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.
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 1,808,707 Sun Country Airlines 2018 Equity Incentive Plan 2,298,840 $ 6.18 — Total 2,367,380 $ 6.95 1,808,707 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.
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.
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 1,808,707 remain available as of December 31, 2025.
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.
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, 2025. As of December 31, 2025, the Company had $15,000 remaining of Board authorization to repurchase shares of its Common Stock.
Removed
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.

Item 7. Management's Discussion & Analysis

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

92 edited+42 added−19 removed64 unchanged
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.
Biggest changeLiquidity and Financial Condition Indicators The table below presents the major indicators of financial condition and liquidity: December 31, 2025 2024 Cash and Cash Equivalents $ 144,684 $ 83,219 Available-for-Sale Securities 83,131 97,636 Amount Available Under Revolving Credit Facility 75,000 24,743 Total Liquidity $ 302,815 $ 205,598 December 31, 2025 2024 Total Debt, net $ 323,346 $ 327,122 Finance Lease Obligations 251,087 271,262 Operating Lease Obligations 17,393 20,650 Total Debt, net and Lease Obligations 591,826 619,034 Stockholders' Equity 625,156 570,373 Total Invested Capital $ 1,216,982 $ 1,189,407 Debt-to-Capital 0.49 0.52 Sources and Uses of Liquidity Year Ended December 31, % Change 2025 2024 Total Operating Activities $ 157,106 $ 164,862 (5) % Investing Activities: Purchases of Property & Equipment (73,128) (47,332) 55 % Proceeds from the Sale of Property & Equipment 19,250 17,166 12 % Purchases of Investments (66,553) (92,404) (28) % Proceeds from the Maturities of Investments 81,228 130,125 (38) % Other, net 198 842 (76) % Total Investing Activities (39,005) 8,397 (565) % Financing Activities: Common Stock Repurchases (20,015) (12,134) 65 % Proceeds from Borrowings 108,000 70,000 54 % Repayment of Finance Lease Obligations (20,175) (45,942) (56) % Repayment of Borrowings (111,711) (145,518) (23) % Tax Receivable Agreement Payment (10,525) (3,350) 214 % Other, net 1,895 476 298 % Total Financing Activities (52,531) (136,468) (62) % Net Increase in Cash $ 65,570 $ 36,791 78 % _________________________ _ "Cash” consists of Cash, Cash Equivalents and Restricted Cash 72 Table of Contents Operating Cash Flow Activities Operating activities in the years ended December 31, 2025 and 2024 provided $157,106 and $164,862 of cash, respectively.
As of December 31, 2024, we are not operating any aircraft under an operating lease. The acquisition of future aircraft through operating leases is at the discretion of management. Maintenance . Maintenance expense includes the cost of all parts, materials and fees for repairs performed by us and our third-party vendors to maintain our fleet.
As of December 31, 2025 and 2024, we are not operating any aircraft under an operating lease. The acquisition of future aircraft through operating leases is at the discretion of management. Maintenance . Maintenance expense includes the cost of all parts, materials and fees for repairs performed by us and our third-party vendors to maintain our fleet.
In December 2024, the Company reissued Class C trust certificates of its 2019-1 EETC, which had previously been repaid, in an aggregate face amount of $60,000 and concurrently applied all the proceeds to repay a portion of the term loan credit facility.
In December 2024, the Company reissued Class C trust certificates of its 2019-1 EETC, which had previously been repaid, in an aggregate face amount of $60,000 and concurrently applied all the proceeds to repay a portion of the 2023 Term Loan Credit Facility.
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.
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, nor did it identify any triggering events, for any of the periods presented in these Consolidated Financial Statements.
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 .
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 .
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.
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.
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.
Unless expressly stated otherwise, for discussion and analysis of fiscal year 2023 items and fiscal year 2024 compared to fiscal year 2023, 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, 2024, which was filed with the SEC and is incorporated herein by reference.
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.
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, 2025 and 2024.
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.
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 quarterly. • Aircraft Leases and Maintenance Reserves.
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.
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. 75 Table of Contents 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.
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.
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.
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 .
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. Off Balance Sheet Arrangements Indemnities .
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.
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. 59 Table of Contents Ground Handling.
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.
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.
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.
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, complimentary streaming of in-flight entertainment to passenger devices, seat reclining and seat-back power in all of our aircraft.
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.
Our single largest capital expenditure requirement relates to the acquisition of aircraft. We do not maintain an aircraft order book; instead, we enter into aircraft transactions on an opportunistic basis 70 Table of Contents 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.
These aircraft are leased to unaffiliated airlines. Liquidity and Capital Resources The airline business is capital intensive. Our ability to successfully execute our business strategy is largely dependent on the continued availability of capital with attractive terms and maintaining sufficient liquidity.
These aircraft are leased to unaffiliated third parties. Liquidity and Capital Resources The airline business is capital intensive. Our ability to successfully execute our business strategy is largely dependent on the continued availability of capital with attractive terms and maintaining sufficient liquidity.
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.
Our diversified business model, which includes a focus on leisure and VFR passengers, Charter and Cargo service, all primarily within the U.S., is unique in the airline sector and helps mitigate the impact of cyclical, economic, and industry downturns on our business when compared with other large U.S. passenger airlines.
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.
This section should be read in conjunction with our Consolidated Financial Statements and related 56 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.
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.
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, 2025, a 10% change in the Company’s estimated travel credit breakage rate would have resulted in a change to Passenger Revenue of approximately $757.
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 more information on our fleet and related lease payments, see Note 6 and Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
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.
During the years ended December 31, 2025 and 2024, Net Income was $52,809 and $52,903, respectively. For more information on the components of Net Income for the years ended December 31, 2025 and 2024, 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.
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.
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, 68 Table of Contents certain unplanned engine events, 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.
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 allows us to produce higher unit revenue with a competitive low-cost structure, in line with other ULCCs resulting in relatively high unit profitability, while also providing greater resiliency to economic or industry downturns.
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 .
For more information on the components of our lease income, see Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. 63 Table of Contents Operating Expenses Aircraft Fuel .
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.
In addition, we had restricted cash of $21,357 as of December 31, 2025, 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.
Accordingly, readers are cautioned not to place undue reliance on this information. The following tables present the reconciliation of CASM to Adjusted CASM.
Accordingly, readers are cautioned not to place undue reliance on this information. 69 Table of Contents The following tables present the reconciliation of CASM to Adjusted CASM.
Business Overview Sun Country 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 believe we are able to generate high growth, high margins and strong cash flows with greater resilience than other passenger airlines.
Business Overview Sun Country is a new breed of hybrid low-cost air carrier that dynamically deploys shared resources across our synergistic passenger service (including Scheduled Service and Charter), and cargo service segments. By doing so, we generate high growth, high margins and strong cash flows with greater resilience than other passenger airlines.
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.
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, 74 Table of Contents included in this Annual Report.
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.
During the years ended December 31, 2025 and 2024, the Company recorded $8,413 and $8,455, respectively, of estimated travel credit breakage. A portion of travel credits will expire unused, at which time any remaining revenue is recognized.
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.
As of December 31, 2025 and 2024, the Company’s air traffic liability included $4,676 and $5,822, 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, 2024 and 2023.
Also discussed is our financial position as of December 31, 2025 and 2024.
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 Company has entered into certain transactions where it serves as a lessor. As of December 31, 2025, three of our aircraft were leased or subleased. Depreciation and Amortization expense on these aircraft materially began during the three months ended June 30, 2023.
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.
As of December 31, 2025, we had $68,099 in total Lessor Maintenance Deposits. As of December 31, 2025, all maintenance deposits are estimated to be recoverable either through reimbursable maintenance events or through application towards the purchase of the aircraft.
During the years ended December 31, 2024 and 2023, we made payments of $3,350 and $2,425 to the TRA holders, respectively, which includes certain members of the Company's management and certain members of the Company's Board of Directors.
During the years ended December 31, 2025 and 2024, we made payments of $10,525 and $3,350 to the TRA holders, respectively, which includes certain members of the Company's management and certain members of the Company's Board of Directors.
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.
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.
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.
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. Special Items, net.
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.
Aircraft – As of December 31, 2025, we had a fleet of 70 Boeing 737-NG aircraft. This includes 47 aircraft in the passenger fleet and 20 cargo operated aircraft through the A&R ATSA and three aircraft that are currently on lease to unaffiliated airlines.
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.
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 $2,317 to $3,510 for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
TRA Liability - During the years ended December 31, 2024 and 2023, we made payments of $3,350 and $2,425 to the TRA holders, respectively, which includes certain members of the Company's management and certain members of the Company's Board of Directors. The total TRA liability balance as of December 31, 2024 was $97,694, of which $10,325 was current.
TRA Liability - During the years ended December 31, 2025 and 2024, we made payments of $10,525 and $3,350 to the TRA holders, respectively, which includes certain members of the Company's management and certain members of the Company's Board of Directors. The total TRA liability balance as of December 31, 2025 was $87,169, of which no amount was current.
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.
Aircraft Fuel expense represented approximately 21% and 24% of our total operating expense for the years ended December 31, 2025 and 2024, respectively. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. Fuel cost per gallon decreased by 8% year-over-year.
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 primary sources of liquidity as of December 31, 2025 included our existing cash and cash equivalents of $144,684 and short-term investments of $89,629, our expected cash generated from operations, and the $75,000 of available funds from the Revolving Credit Facility. We invest cash and cash equivalents in highly liquid securities with strong credit ratings.
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.
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 . Other, net expense increased $529 to $474 for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
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 2025 Term Loan Facility is repaid quarterly through September 2032. 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.
We share resources, such as flight crews, across our Scheduled Service, Charter and Cargo business lines with the objective of generating high returns and margins and mitigating the seasonality of our route network.
We share resources, such as flight crews, across our Passenger and Cargo segments with the objective of generating higher returns and margins while mitigating the seasonality of our route network.
Air Traffic Liabilities typically increase during the fall and early winter months as advanced ticket sales grow prior to the late winter and spring peak travel season and decrease during the summer months. Air Traffic liabilities were materially consistent year-over-year. Aircraft Fuel.
Air Traffic Liabilities typically increase during the fall and early winter months as advanced ticket sales grow prior to the late winter and spring peak travel season and decrease during the summer months. Air Traffic liabilities were $167,024 and $160,686 as of December 31, 2025 and 2024, respectively. Aircraft Fuel.
If the Company does not generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax benefits, then it would not be required to make the related TRA payments.
If the Company does not generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax benefits, then it would not be required to make the related TRA payments. In the case of a merger that constitutes a change of control, such as the Merger Agreement with Allegiant, the TRA will terminate.
For the foregoing reasons, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income and Adjusted EBITDA have significant limitations which affect their use as indicators of our profitability.
For the foregoing reasons, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Income and Adjusted EBITDA have significant limitations which affect their use as indicators of our profitability. Accordingly, readers are cautioned not to place undue reliance on this information .
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.
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. 60 Table of Contents Operating Statistics Key Operating Statistics and Metrics Year Ended December 31, 2025 (1) Year Ended December 31, 2024 (1) Scheduled Service Charter Cargo Total Scheduled Service Charter Cargo Total Departures (2) 27,037 11,069 16,709 55,357 29,039 10,359 13,094 53,009 Block hours (2) 88,417 22,970 41,896 155,313 92,391 20,775 33,744 148,518 Aircraft miles (2) 34,492,185 7,922,137 15,798,169 58,752,120 36,060,794 7,191,928 12,770,713 56,538,114 ASMs (thousands) (2) 6,416,830 1,408,600 7,923,857 6,707,308 1,270,455 8,071,949 TRASM (cents) (3) 11.09 15.96 11.82 10.87 15.51 11.47 Average passenger aircraft during the period (4) 43.9 43.0 Passenger aircraft at end of period (4) 47 45 Leased aircraft (5) 3 6 Cargo aircraft at end of period 20 12 Average daily aircraft utilization (hours) (4) 7.1 7.3 Average stage length (miles) 1,113 1,098 Revenue passengers carried (6) 4,205,847 4,483,515 Revenue passenger miles (RPMs) (thousands) (6) 5,362,531 5,648,351 Load factor (6) 83.6% 84.2% Average base fare per passenger (6) $ 96.06 $ 91.25 Ancillary revenue per passenger (6) $ 70.12 $ 68.68 Total fare per passenger (6) $ 166.17 $ 159.93 Charter revenue per block hour (6) $ 9,762 $ 9,485 Fuel gallons consumed (thousands) (2) 68,539 15,173 84,647 71,631 13,666 86,185 Fuel cost per gallon, excluding indirect fuel credits $ 2.56 $ 2.77 Employees at end of period 3,281 3,141 CASM (cents) (7) 12.95 12.01 Adjusted CASM (cents) (8) 8.17 7.59 __________________________ (1) Certain operating statistics and metrics are not presented as they are not calculable or are not utilized by management.
In June 2024, the Company entered into the A&R ATSA with Amazon that will result in an increase in the number of Boeing 737-800 cargo aircraft that we operate 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.
In June 2024, the Company entered into the A&R ATSA with Amazon that increased the number of Boeing 737-800 cargo aircraft that we operate on behalf of Amazon from 12 to 20 in 2025. During the year ended December 31, 2025 , we received and placed in-service all eight additional aircraft.
As of December 31, 2024, these funds have been largely exhausted, resulting in price increases. Certain of our operating costs have been further impacted by inflationary pressures, supply chain issues, and other macroeconomic conditions. To date, our strategy has allowed us to offset a majority of additional costs associated with the impact of macroeconomic conditions.
Certain of our operating costs have been further impacted by inflationary pressures, supply chain issues, and other macroeconomic conditions. To date, our strategy has allowed us to offset a majority of additional costs associated with the impact of macroeconomic conditions. Additionally, our Charter and Cargo businesses have the ability to pass on certain costs to customers.
The decrease was primarily due to the reduction in the Company's average investment balance year-over-year. Interest Expense . Interest expense increased $1,666, or 4%, to $44,300 for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Interest income decreased by $860, or 11%, to $6,973 for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was primarily due to the reduction in the Company's average investment balance year-over-year. Interest Expense .
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.
Our capital expenditures during the year ended December 31, 2024 included the acquisition of one aircraft and other items not individually material. Investments. During the years ended December 31, 2025 and 2024, our net investment activity in debt securities resulted in cash inflows of $14,675 and $37,721, respectively, due to maturities of debt securities exceeding purchases of investments.
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.
Salaries, Wages, and Benefits . Salaries, wages, and benefits expense increased $45,822, or 14%, to $372,597 for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
Passenger operating income decreased by $28,079 to $104,793 for the year ended December 31, 2024 as compared to the year ended December 31, 2023. Operating Margin Percentage decreased by 3.2 percentage points, to 10.8%, as compared to the year ended December 31, 2023.
Passenger operating income decreased by $7,730 to $97,063 for the year ended December 31, 2025 as compared to the year ended December 31, 2024. Operating Margin Percentage decreased by 0.8 percentage points, to 10.0%, as compared to the year ended December 31, 2024.
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 .
Charter revenue consists of revenue earned from our Charter business, primarily generated through our service to the DoW, 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 .
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.
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.
Maintenance expense increased $8,182, or 14%, to $68,770 for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The year-over-year increase in Maintenance expense was primarily driven by an increase in routine, time-based heavy maintenance and landing gear events, as well as the increase in the size of our fleet and operations.
Maintenance expense increased $11,579, or 17%, to $80,349 for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The year-over-year increase in Maintenance expense was primarily driven by growth in our fleet and operations and higher rates for service. The number of routine, time-based airframe heavy maintenance events were consistent year-over-year.
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.
The following table presents the reconciliation of Operating Income to Adjusted Operating Income, and Adjusted Operating Income Margin for the periods presented below.
(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.
(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. 61 Table of Contents Results of Operations For the Years Ended December 31, 2025 and 2024 Year Ended December 31, % Change 2025 2024 Operating Revenues: Scheduled Service $ 403,998 $ 409,133 (1) % Charter 224,227 197,045 14 % Ancillary 294,904 307,909 (4) % Passenger 923,129 914,087 1 % Cargo 155,027 107,174 45 % Other 48,613 54,478 (11) % Total Operating Revenues 1,126,769 1,075,739 5 % Operating Expenses: Aircraft Fuel 213,480 237,160 (10) % Salaries, Wages, and Benefits 372,597 326,775 14 % Maintenance 80,349 68,770 17 % Sales and Marketing 33,300 34,935 (5) % Depreciation and Amortization 98,878 94,989 4 % Ground Handling 44,701 42,118 6 % Landing Fees and Airport Rent 64,761 59,549 9 % Special Items, net 1,886 — NM Other Operating, net 116,244 105,457 10 % Total Operating Expenses 1,026,196 969,753 6 % Operating Income 100,573 105,986 (5) % Non-operating Income (Expense), net: Interest Income 6,973 7,833 (11) % Interest Expense (36,861) (44,300) (17) % Other, net (474) 55 NM Total Non-operating Expense, net (30,362) (36,412) (17) % Income before Income Tax 70,211 69,574 1 % Income Tax Expense 17,402 16,671 4 % Net Income $ 52,809 $ 52,903 — % "NM" stands for not meaningful Total Operating Revenues increased $51,030, or 5%, to $1,126,769 for the year ended December 31, 2025 as compared to the year ended December 31, 2024.
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 .
For more information on our business and strategic advantages, see the "Business" section within Part I, Item 1 of this Annual Report. 58 Table of Contents Operating Revenues Scheduled Service . Scheduled Service revenue mainly consists of base fares and expired passenger travel credits. Charter .
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.
The table below presents select operating data for lines of revenue within Passenger: Year Ended December 31, % Change 2025 2024 Scheduled Service and Ancillary Statistics: Departures 27,037 29,039 (7) % Block Hours 88,417 92,391 (4) % Passengers 4,205,847 4,483,515 (6) % Average base fare per passenger $ 96.06 $ 91.25 5 % Ancillary revenue per passenger $ 70.12 $ 68.68 2 % Total Fare per passenger $ 166.17 $ 159.93 4 % RPMs (thousands) 5,362,531 5,648,351 (5) % ASMs (thousands) 6,416,830 6,707,308 (4) % TRASM (cents) 11.09 10.87 2 % Passenger load factor 83.6 % 84.2 % (0.6) (1) Charter Statistics: Departures 11,069 10,359 7 % Block hours 22,970 20,775 11 % Charter revenue per block hour $ 9,762 $ 9,485 3 % (1) Percentage point difference Passenger revenue was impacted by reduced capacity as we focused our operations on growth in the Cargo business.
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.
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 66 Table of Contents 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.
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.
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.
The year-over-year change is a result of a difference in timing of debt security maturities and a reduction in the Company's average investment balance year-over-year and does not represent a change in investment strategy. Financing Cash Flow Activities Debt .
The year-over-year change is a result of a difference in timing of debt security maturities and a reduction in the Company's average investment balance year-over-year to support capital expenditures and other general corporate purposes. Financing Cash Flow Activities Debt . At our discretion, we obtain debt financing in order to purchase or refinance aircraft.
This was primarily the result of our engine and part sales programs, mostly offset by an increase in operations. 58 Table of Content Non-operating Income (Expense) Interest Income . Interest income decreased by $2,347, or 23%, to $7,833 for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Other Operating, net . Other operating, net expense increased $10,787, or 10%, to $116,244 for the year ended December 31, 2025, as compared to the year ended December 31, 2024. This was primarily the result of an increase in operations, partially offset by increased year-over-year activity from our aircraft parts sales programs. Non-operating Income (Expense) Interest Income .
We expect volatility in Aircraft Fuel prices per gallon to continue for the foreseeable future due to the impact of market conditions and global geopolitical events. Investing Cash Flow Activities Capital Expenditures. Our capital expenditures were $47,332 and $218,160 for the years ended December 31, 2024 and 2023, respectively.
Fuel consumption decreased by 2% year-over-year, as a result of the operational shift in capacity from Passenger to the Cargo business. We expect volatility in Aircraft Fuel prices per gallon to continue for the foreseeable future due to the impact of market conditions and global geopolitical events. Investing Cash Flow Activities Capital Expenditures.
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 primary components of Aircraft Fuel expense are shown in the following table: Year Ended December 31, % Change 2025 2024 Total Aircraft Fuel Expense $ 213,480 $ 237,160 (10) % Indirect Fuel Credits 2,863 1,461 96 % Aircraft Fuel Expense, Excluding Indirect Fuel Credits $ 216,343 $ 238,621 (9) % Fuel Gallons Consumed (thousands) 84,647 86,185 (2) % Fuel Cost per Gallon, Excluding Indirect Fuel Credits $ 2.56 $ 2.77 (8) % Aircraft Fuel expense decreased by 10% year-over-year, due to an 8% decrease in the average fuel cost per gallon and a 2% decrease in consumption.
Finance Leases . Our repayments of finance lease obligations were $45,942 and $21,883 for the years ended December 31, 2024 and 2023, respectively. During 2024, we purchased three aircraft previously classified as finance leases, which are now unencumbered. The resulting cash outflows are recorded as payments for finance lease obligations.
During 2024, the Company purchased three aircraft previously classified as a finance lease. The resulting cash outflows of $22,909 were recorded as payments for finance lease obligations. For the years ended December 31, 2025 and 2024, there were an average of 13 and 15 finance leases, respectively. 73 Table of Contents Common Stock Repurchases.
The increase in the effective tax rate was due to the impact of permanent stock compensation items. For more information on the Company's tax rate, see Note 13 to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements" of this Annual Report.
The increase was primarily driven by expenses of $481 the Company incurred in conjunction with the secondary public offering. For more information on the secondary public offering, see Note 16 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Income Tax Expense.
The increase was also impacted by rate increases due to market pressures and the 8% increase in Passenger segment departures as a result of our expanding operations. Other Operating, net . Other operating, net expense decreased $2,108, or 2%, to $105,457 for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Ground handling expense increased $2,583, or 6%, to $44,701 for the year ended December 31, 2025, as compared to the year ended December 31, 2024. This year-over-year increase was the result of rate increases due to market pressures, partially offset by a 3% decrease in Passenger segment departures, as we focused our operations on the growth in Cargo.
Operating Income and Operating Margin Percentage were 59 Table of Content further impacted by increased expenses as a result of contractual rate increases for our pilots, an increase in heavy maintenance and landing gear events, and rate increases for Landing Fees and Airport Rent; partially offset by an 11% decrease in the average fuel cost per gallon.
The year-over-year decrease in Passenger Operating Income and Operating Margin Percentage were primarily driven by contractual rate increases for our pilots, contractual pay increases as a result of new collective bargaining agreements, rate increases for Ground Handling and Landing Fees and Airport Rent, and the ratification bonus paid to eligible flight attendants during the period; partially offset by an 8% decrease in the average fuel cost per gallon.
Year Ended December 31, 2024 2023 Operating Expenses Per ASM (in cents) Operating Expenses Per ASM (in cents) CASM $ 969,753 12.01 $ 922,120 12.43 Less: Aircraft Fuel 237,160 2.94 246,669 3.33 Stock Compensation Expense 6,020 0.07 9,274 0.12 Cargo expenses, not already adjusted above 104,634 1.30 102,995 1.39 Sun Country Vacations 1,257 0.01 1,138 0.01 Leased Aircraft, Depreciation and Amortization Expense (a) 8,059 0.10 6,669 0.09 Adjusted CASM $ 612,623 7.59 $ 555,375 7.49 ASM (thousands) 8,071,949 7,416,189 __________________________ (a) Includes both the Company's Owned Aircraft Held for Operating Lease as well as subleased aircraft.
Year Ended December 31, 2025 2024 Operating Expenses Per ASM (in cents) Operating Expenses Per ASM (in cents) CASM $ 1,026,196 12.95 $ 969,753 12.01 Less: Special Items, net (1) 1,886 0.02 — — Aircraft Fuel 213,480 2.69 237,160 2.94 Stock Compensation Expense 6,305 0.08 6,020 0.07 Unplanned Engine Retirement (2) 737 0.01 — — Cargo expenses, not already adjusted above 149,468 1.89 104,634 1.30 Sun Country Vacations 1,144 0.02 1,257 0.01 Leased Aircraft, Depreciation and Amortization Expense (3) 5,694 0.07 8,059 0.10 Adjusted CASM $ 647,482 8.17 $ 612,623 7.59 ASM (thousands) 7,923,857 8,071,949 __________________________ (1) The adjustments include Special Items, net, as included in Note 15 of these Consolidated Financial Statements.
Segment Information For the Years Ended December 31, 2024 and 2023: Year Ended December 31, 2024 Year Ended December 31, 2023 Passenger Cargo Total Passenger Cargo Total Operating Revenues $ 968,565 $ 107,174 $ 1,075,739 $ 949,885 $ 99,735 $ 1,049,620 Operating Expenses: Aircraft Fuel 237,108 52 237,160 246,600 69 246,669 Salaries, Wages, and Benefits 255,887 70,888 326,775 225,744 69,896 295,640 Aircraft Rent — — — 2,281 — 2,281 Maintenance 54,619 14,151 68,770 46,211 14,377 60,588 Sales and Marketing 34,935 — 34,935 34,105 — 34,105 Depreciation and Amortization 94,971 18 94,989 88,098 53 88,151 Ground Handling 42,102 16 42,118 37,506 — 37,506 Landing Fees and Airport Rent 58,951 598 59,549 49,175 440 49,615 Other Operating, net 85,199 20,258 105,457 87,293 20,272 107,565 Total Operating Expenses 863,772 105,981 969,753 817,013 105,107 922,120 Operating Income (Loss) $ 104,793 $ 1,193 $ 105,986 $ 132,872 $ (5,372) $ 127,500 Operating Margin % 10.8 % 1.1 % 9.9 % 14.0 % (5.4) % 12.1 % Passenger.
For more information on the Company's tax rate, see Note 14 to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements" of this Annual Report. 65 Table of Contents Segment Information For the Years Ended December 31, 2025 and 2024: Year Ended December 31, 2025 Year Ended December 31, 2024 Passenger Cargo Total Passenger Cargo Total Operating Revenues $ 971,742 $ 155,027 $ 1,126,769 $ 968,565 $ 107,174 $ 1,075,739 Operating Expenses: Aircraft Fuel 213,109 371 213,480 237,108 52 237,160 Salaries, Wages, and Benefits 272,841 99,756 372,597 255,887 70,888 326,775 Maintenance 59,124 21,225 80,349 54,619 14,151 68,770 Sales and Marketing 33,300 — 33,300 34,935 — 34,935 Depreciation and Amortization 98,860 18 98,878 94,971 18 94,989 Ground Handling 44,691 10 44,701 42,102 16 42,118 Landing Fees and Airport Rent 64,029 732 64,761 58,951 598 59,549 Special Items, net 1,886 — 1,886 — — — Other Operating, net 86,839 29,405 116,244 85,199 20,258 105,457 Total Operating Expenses 874,679 151,517 1,026,196 863,772 105,981 969,753 Operating Income $ 97,063 $ 3,510 $ 100,573 $ 104,793 $ 1,193 $ 105,986 Operating Margin % 10.0 % 2.3 % 8.9 % 10.8 % 1.1 % 9.9 % Passenger.
All eight additional aircraft are expected to be operational by the end of the third quarter of 2025. In the near term, the increase in aircraft that we operate on behalf of Amazon will result in more resources being allocated to the Cargo business.
In early 2026, we agreed to operate two additional cargo aircraft on behalf of Amazon. This will increase the total aircraft that Sun Country operates on behalf of Amazon from 20 to 22. The increase in aircraft that we operate on behalf of Amazon will result in more resources being allocated to the Cargo business.
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.
Credit Facilities - We use our Credit Facilities to provide liquidity support for general corporate purposes and to finance the acquisition of aircraft. In March 2025, the Company executed a new $75,000 Revolving Credit Facility with a group of lenders. The new Revolving Credit Facility replaces the Company's previous $25,000 revolving credit facility.
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.
The year-over-year increase in Salaries, Wages, and Benefits was impacted by a 4% increase in employee headcount to support our expanding operations, contractual rate increases for our pilots, and contractual pay increases as a result of new CBAs. Maintenance .
Passenger revenue was further supported by the $6,917 increase, or 4%, to $197,045 for Charter revenue during the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase was primarily due to the 6% increase in Charter revenue per block hour.
Passenger revenue benefited from the $27,182, or 14%, increase in Charter revenue during the year ended December 31, 2025, as compared to the year ended December 31, 2024. This increase was the result of a 11% increase in block hours and a 3% increase in Charter revenue per block hour.
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.
During the year ended December 31, 2024, the Company completed open market repurchases for 755,284 shares of its Common Stock at an average price of $15.22 per share. For more information on the Company's stock repurchases, see Note 16 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. TRA Payment.
This aligns with our strategy of long-term flexibility and supports our ability to mitigate the impact of economic and industry downturns on our business. The impact of macroeconomic conditions, continue to impact the Company, as well as the industry. For example, airports were using CARES Act funding to mitigate certain price increases.
For more information, refer to the Merger Agreement with Allegiant discussion above. Macroeconomic conditions, continue to impact the Company, as well as the industry. For example, airports were using CARES Act funding to mitigate certain price increases. As of December 31, 2024, these funds have been largely exhausted, resulting in price increases.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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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.
Biggest changeThe Company maintains a $75,000 Revolving Credit Facility with a variable interest rate that is impacted by market conditions. As of December 31, 2025, no amounts on the Revolving Credit Facility had been drawn. 76 Table of Contents Our short-term investment securities are primarily comprised of fixed-rate debt investments.
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.
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, 2025.
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.
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 2026, we estimate that a one cent per gallon increase in the average aircraft fuel price would increase Aircraft Fuel expense by approximately $227.
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
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. 77 Table of Contents
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.
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 $83,131 as of December 31, 2025. The Company limits its investments to investment grade quality securities.
Removed
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.
Removed
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.
Removed
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.
Removed
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.

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