Q1 2024 Sun Country Airlines Holdings Inc Earnings Call Transcript
Key Points
- Sun Country Airlines Holdings Inc reported a strong first quarter with a record revenue of $311.5 million and an adjusted operating margin of 18.2%, demonstrating the resiliency and earnings power of its diversified business model.
- The company has maintained a high completion factor of 99.7% among the 11 public mainline carriers, reflecting operational excellence and reliability in its service delivery.
- Sun Country Airlines Holdings Inc has successfully managed its costs, with year-over-year unit costs falling for the second consecutive quarter despite significant increases in maintenance and airport related expenses.
- The airline has a robust balance sheet with total liquidity at the end of Q1 standing at $179 million, and a net debt to adjusted EBITDA ratio at 2.5 times, providing financial flexibility.
- Sun Country Airlines Holdings Inc has expanded its fleet to 63 aircraft, with expectations of increased capacity and reduced capital expenditure in the coming years, supporting future growth without significant financial burden.
- The adjusted operating margin of just over 18% was at the lower end of the company's expectations for the quarter, primarily due to weaker than expected bookings in March.
- Sun Country Airlines Holdings Inc faces challenges from industry capacity growth across its largest markets, which has put pressure on yields and contributed to fare declines.
- The company experienced a significant increase in maintenance expenses, which grew by 29% year-over-year due to more frequent airframe and engine overhaul events.
- There has been a noticeable increase in rent and landing fees, which rose by 34.6% due to the rolling off of COVID relief payments, adding to the operational costs.
- The airline's revenue and capacity growth are being challenged by external factors such as the early Easter shift and increased competition, particularly in the Minneapolis market where Delta has been expanding.
Welcome to the Sun Country Airlines' first-quarter 2024 earnings call. My name is Jill, and I will be your operator for today's call. (Operator Instructions) Please be advised that today's conference is being recorded. I will now turn the call over to Chris Allen, Director of Investor Relations. Mr. Allen, you may begin.
Thank you. I'm joined today by Jude Bricker, our Chief Executive Officer; Dave Davis, President and Chief Financial Officer; and a group of others to help answer questions.
Before we begin, I'd like to remind everyone that during this call, the company may make certain statements that constitute forward-looking statements. Our remarks today may include forward-looking statements, which are based on management's current beliefs, expectations, and assumptions and are subject to risks and uncertainties. Actual results may differ materially, and we encourage you to review the risks and cautionary statements outlined in our earnings release and our most recent SEC filings.
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