Sun Country Airlines Holdings, Inc. · NASDAQ:SNCY
Sun Country Airlines — Investor Presentation (February 2022)
27 slides from Sun Country Airlines's investor presentation, February 2022
Slide 1: Sun Country Airlines
Sun Country Airlines February 2022
Slide 2: Disclaimer
Disclaimer Confidentiality and Market Data This presentation constitutes confidential information and is provided to you on the condition that you will hold it in strict confidence and not reproduce, disclose, forward or distribute it in whole or in part without the prior written consent of the Comp
Slide 3: Business Overview
Business Overview
Slide 4: A New Breed of Hybrid LCC
A New Breed of Hybrid LCC Sun Country Overview Adjusted EBITDAR Margin (1) Rebound in performance well underway High growth low cost airline with a unique and resilient business model Serves the VFR and leisure passenger, 24.4% charter and cargo sectors 19.8% 18.4% Differentiated low fixed cos
Slide 5: Unique, Diversified Business Model
Unique, Diversified Business Model Sun Country’s symbiotic business lines share assets to maximize operating leverage Sun Country Business Line Synergies 2 1 Passenger Leisure Charter (~64% of Revenue(1)) (~20% of Revenue(1)) Unique low cost airline with focus on Leading provider of narrowbody chart
Slide 6: Agile Passenger Capacity Built to Capture Peak Demand
Agile Passenger Capacity Built to Capture Peak Demand Unlike other passenger airlines, we quickly shift our capacity to focus flying when demand is high which results in higher yields Seasonal Demand Dictates Monthly Schedule(1) Day-of-Week Capacity Determined by Demand Patterns(1) (% of Block Hours
Slide 7: Superior Passenger Product Offering
Superior Passenger Product Offering Average Revenue per Passenger(1) $155.49 $144.22 $145.10 $110.91 $108.65 Weighted Average Seat $98.14 Seat Recline Pitch: 31" In-Flight Entertainment In-Seat Power 2019 2020 2021 2020 1 - Sun Country revenue/passenger = average base fare + ancillary revenue per pa
Slide 8: Sun Country Route Network
Sun Country Route Network Current Passenger Leisure Operations ~97% of our markets are seasonal which reflects demand trends of our customer 8
Slide 9: Leading Charter Business
Leading Charter Business NCAA and professional sports, casino/VIP, US military, among other customers Overview Charter Revenue per Block Hour • High growth and high margin market leader $8,767 $8,793 in narrow body charter market $8,508 $8,101 • Only U.S. passenger airline with a meaningful charter
Slide 10: Cargo Business - Source of Significant, Stable Cash Flow
Cargo Business - Source of Significant, Stable Cash Flow • 12 Boeing 737-800 converted freighter aircraft operated on behalf of Amazon • Increased from original plan of 10 aircraft • 10 year contract, initial term six years and two additional, two-year extension options • Partnership with one of the
Slide 11: Continue to Reduce CASM Even in Lower Utilization Environment
Continue to Reduce CASM Even in Lower Utilization Environment Adjusted CASM vs Historical Utilization 9.8 9.7 9.6 During COVID 7.80 7.57 7.05 6.8 6.31 6.44 5.1 2017 2018 2019 2020 2021 Adjusted CASM - cents Total Utilization - hours Still in demand recovery phase, expect CASM to improve as we normal
Slide 12: Strongly Profitable Even at Lower Utilization
Strongly Profitable Even at Lower Utilization Adjusted Operating Margin Versus Utilization 25% 2019 20% 15% 2019 2019 Adjusted operating margin 2019 10% 2021 5% 2021 0% -5% -10% 2021 -15% 2021 -20% -25% 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 Daily utilization – hours per day Built to be different, diff
Slide 13: Decline in Fleet Costs Over Time
Decline in Fleet Costs Over Time Better fleet deals and transition from leased to owned aircraft has significantly lowered average monthly costs P&L Total Expense per AC(1) per Month Cash Payments(2) per AC(1) per Month USD in 000s USD in 000s $354 $339 $266 $295 $246 $246 $228 $194 2018 2019 2020 2
Slide 14: Resilient and Positioned for Growth
Resilient and Positioned for Growth
Slide 15: Best Performance During COVID in 2020
Best Performance During COVID in 2020 Since 2017, Sun Country has gone from the lowest EBITDAR margin airline to the best, even through one of the worst periods in aviation history in 2020 2017 Rank 2020 Adjusted EBITDAR Margin Allegiant 9.7% Alaska 4.5% Southwest (5.6%) Spirit JetBlue (18.6%) Delta
Slide 16: Financial Momentum Continuing During Recovery
Financial Momentum Continuing During Recovery 2021 Adjusted Operating Margin 8.1% 6.6% -4.6% -8.1% -9.5% -13.3% -15.1% -17.8% -18.5% -19.5% Multi-segment business strategy offsets some of leisure demand weakness Source: Company filings See appendix for reconciliation to operating margin 16
Slide 17: Crises Historically Create Opportunity for ULCC Growth
Crises Historically Create Opportunity for ULCC Growth 9/11 and 2001 Recession Great Recession ULCCs Post Crisis (Change in Domestic US ASMs between two periods) 2007 - 2012 • ULCC ASM share 5x larger in 2000 - 2005 2019 than 2000 22.7% 60.5% • Shallower decline and more rapid recovery in leisure de
Slide 18: Fleet Plan: Responsible Growth
Fleet Plan: Responsible Growth With no aircraft order book and experience purchasing mid-life aircraft, Sun Country can opportunistically acquire aircraft at best prices Aircraft in Service Strategy in Place to Support Fleet Growth (# of aircraft) 50 passenger aircraft target by YE 2023 • Restructur
Slide 19: Balance Sheet Positions Sun Country for Growth
Balance Sheet Positions Sun Country for Growth • $334m(1) in total liquidity, 54% of 2021 total revenue • De minimis non aircraft debt • Mid-life, low CAPEX passenger fleet; cargo segment asset-lite Change in Total Debt USD - mm $537 $84.8 $545 $309 ($5.0) ($71.2) $236 Total debt Change in Change in
Slide 20: In Summary…
In Summary… Resilient and Diverse Business Model Low Cost Capital Light Operations Outperformance in Difficult Environments Well Positioned for High Growth in Rebound Poised for Long-Term Growth Beyond the Rebound 20
Slide 21: Appendix
Appendix
Slide 22: Description of Special Items
Description of Special Items Special Items, Net – in millions USD FY 2018 FY 2019 FY 2020 FY 2021 CARES Act grant recognition $0.0 $0.0 ($62.3) ($71.6) CARES Act employee retention credit - - (2.3) (0.8) Contractual obligations for retired technology - 7.6 - - Sale of airport slot rights - (1.2) - -
Slide 23: Non-GAAP Reconciliation – Adj EBITDAR
Non-GAAP Reconciliation – Adj EBITDAR Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization and Aircraft Rent (“EBITDAR”) is included as a supplemental disclosure because we believe it is a useful indicator of our operating performance. Adjusted EBITDAR is a well recognized performan
Slide 24: Non-GAAP Reconciliation – Adj Operating Income
Non-GAAP Reconciliation – Adj Operating Income Adjusted Operating Income is included as a supplemental disclosure because we believe it is a useful indicator of our operating performance. Adjusted Operating Income is a well recognized performance measurement in the airline industry that is frequentl
Slide 25: Non-GAAP Reconciliation – Adj Pre-tax Income
Non-GAAP Reconciliation – Adj Pre-tax Income Adjusted Pre-tax Income is included as a supplemental disclosure because we believe it is a useful indicator of our operating performance. Adjusted Pre-tax Income is a well recognized performance measurement in the airline industry that is frequently used
Slide 26: Non-GAAP Reconciliation – Adj Net Income
Non-GAAP Reconciliation – Adj Net Income Adjusted Net Income is included as a supplemental disclosure because we believe it is a useful indicator of our operating performance. Adjusted Net Income is a well recognized performance measurement in the airline industry that is frequently used by our mana
Slide 27: Non-GAAP Reconciliation – Adj CASM
Non-GAAP Reconciliation – Adj CASM Adjusted CASM, which is a non-GAAP financial measure, is also a key airline cost metric and excludes fuel costs, costs related to our freighter operations (starting in 2020 when we launched our freighter operation), certain commissions and other costs of selling ou
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