Sun Country Airlines Holdings, Inc. · NASDAQ:SNCY
Sun Country Airlines — Investor Presentation (May 2023)
25 slides from Sun Country Airlines's investor presentation, May 2023
Slide 1: Sun Country Airlines
Sun Country Airlines May 2023
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by the Company for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise or representation by the presenter or the Company or any director, employee, ag
Slide 3: Business Overview
Business Overview
Slide 4: Unique, Diversified Business Model
Unique, Diversified Business Model Sun Country Business Line Synergies 1 Passenger Leisure 2 Charter (~72% of Revenue(1)) (~18% of Revenue(1)) • Unique low cost airline with focus on leisure travel • A leader in U.S. narrowbody charter • Flexible capacity model focused on peak demand • Contracted re
Slide 5: Flexible Scheduled Service Route Network
Flexible Scheduled Service Route Network ~91% of our markets are seasonal which reflects demand trends of our customer 5
Slide 6: Business Model Has Facilitated Rapid Growth…
Business Model Has Facilitated Rapid Growth… Significant Growth Since 2017… …Exceeding Pre-Pandemic Levels (Revenue, $mm) (Revenue, $mm) $1,071 $962 $894 $701 $559 2017 LTM Q1 2023 2019 2022 Consensus 2023 Our financial performance has demonstrated growth and resilience inherent in our business mode
Slide 7: …And Outperformance in COVID and Through the Recovery
…And Outperformance in COVID and Through the Recovery 2020 Adj. EBIT Margin 2021 Adj. EBIT Margin 2022 Adj. EBIT Margin 8% (10%) (33%) 7% 5% (9%) (57%) (10%) (58%) 3% 1% (13%) SNCY ULCCs Big Four Mid Sized SNCY ULCCs Mid Sized Big Four SNCY Big Four Mid Sized ULCCs Carriers Carriers Carriers SNCY UL
Slide 8: Outperformance Continues in Q1 2023
Outperformance Continues in Q1 2023 Q1 2023 Adj. EBIT Margin 20% 15% 5% 4% (0%) (3%) (5%) (5%) (6%) (7%) (21%) Seasonal business model – Q1 is historically the strongest Source: Public filing. 8
Slide 9: We Offer A High-Quality Product
We Offer A High-Quality Product Weighted Average Seat In-Flight In-Seat Free Seat Pitch Recline Entertainment Power Beverage 31” 32” 30” 30” 28” 9
Slide 10: Agile Passenger Capacity Built to Capture Highest Unit Revenues
Agile Passenger Capacity Built to Capture Highest Unit Revenues Seasonal Demand Dictates Day-of-Week Capacity Determined Results in Higher Unit Revenue Monthly Schedule by Demand Patterns(1) Versus High Utilization Peers (% of Peak Day ASMs) (TRASM) (¢) Monthly Seats as % of March 2023 2022 TRASM 11
Slide 11: Experts in Executing a Seasonal Network
Experts in Executing a Seasonal Network Departures by Month at Three of Our Largest Cities MSP Departures DFW Departures (# of Departures) (# of Departures) Strong North / South demand in Winter, Strong summer demand 1,250 East / West in Summer 250 to Mexico / Caribbean 1,000 200 750 150 500 100 250
Slide 12: Sun Country Has Been Growing its Share at MSP
Sun Country Has Been Growing its Share at MSP Cumulative Change in MSP Point-of-Origin Passenger Share Since 2018(1)(2) 9% Current Share 7% 6% 6% 6% 18% 3% 3% 2% 2% 62% 0% 0% (1%) (2%) (3%) -5% (6%) (7%) (9%) 20% (9%) (12%) 2018 2019 2020 2021 2022 SNCY DAL Others MSP share growth has been achieved
Slide 13: Ancillary Revenue Growth Potential
Ancillary Revenue Growth Potential Ancillary Revenue per Passenger Growth Range(1)(2) Initiative Areas $2 to $5 per Pax • Enhanced Merchandising – of Ancillary improved offer and product Upside $58.75 presentation on suncountry.com, including bundled ancillary $53.49 products • New Products – introd
Slide 14: Differentiated, Leading Charter Business
Differentiated, Leading Charter Business NCAA and professional sports, Casino, VIP, US military, among other customers Overview % Charter Flying Under Long Term Contracts • Contract based business provides recurring 76% revenues 47% • Integrated scheduling capability drives efficiencies • Growth opp
Slide 15: Growing Business Under Charter Contracts
Growing Business Under Charter Contracts Recent New Customers Details • 5-year agreement to provide charter service to all Major League Soccer teams - Agreement began at the beginning of 2022 • 5-year agreement to provide charter service for Caesars Entertainment guests - Agreement began in March 20
Slide 16: Unique, Asset-Light Cargo Business
Unique, Asset-Light Cargo Business Overview Key Highlights • 12 Boeing 737-800 freighter aircraft operated on behalf of Third largest narrowbody cargo operator in the U.S(1) Amazon High margin and cash flow with stable revenue and pass- • Amazon supplies the aircraft, pays for many flight expens
Slide 17: Ratified Pilot Contract Unlocks Growth
Ratified Pilot Contract Unlocks Growth New 4-year pilot agreement ratified December 2021 Pilot Contract Still Minimizing Attrition – Improving Training to Fund Growth Pilot Attrition % Pilot Production Pilot Headcount # of pilots graduating 7.5% 83 591 571 4.2% 62 456 3.2% Q4 2021 Q4 2022 Q1 2023 Ja
Slide 18: Balance Sheet Positions Sun Country for Growth
Balance Sheet Positions Sun Country for Growth • $262m of liquidity at year end of Q1 23 provides ample capital to support growth • Manageable CAPEX requirements given mid-life passenger fleet; cargo segment asset-lite • No non-aircraft debt • Reduced debt levels during COVID • Returned $40m to shar
Slide 19: Acquisition of 737-900ERs
Acquisition of 5 737-900ERs • Acquiring 5 737-900ERs currently on lease to Oman Air • Expect to receive in 2023 ~ $3m(1) in operating income per quarter starting Q2 2023. Steps up to a higher amount in 2024 • First lease expires Q4 2024, remainder through 2025 • Expect to begin to bring these aircra
Slide 20: Responsible Fleet Growth
Responsible Fleet Growth Total Aircraft in Service Strategy in Place to Support Fleet Growth (# of aircraft) • Focus on ownership of Boeing 737 NGs 75 – 80(1) with low capital commitments • The 737-800 is the LCC stalwart for 54 airlines such as Southwest and Ryanair 48 12 43 12 • Sun Country mainta
Slide 21: Differentiated and Unique Aviation Company
Differentiated and Unique Aviation Company Differentiated Highly Balance Synergistic Sheet Businesses Resiliency Superior Unit Through Profitability the Cycle High Growth Contracted High Margin Recurring Strong Cash Flow Revenue Streams Sun Country was built to generate best in class performance in
Slide 22: Appendix
Appendix
Slide 23: Description of Special Items
Description of Special Items Special items, net – in millions USD FY 2019 FY 2020 FY 2021 FY 2022 CARES Act grant recognition - ($62.3) ($71.6) - CARES Act employee retention credit - (2.3) (0.8) - Contractual obligations for retired technology 1 7.6 - - - Sale of airport slot rights 2 (1.2) - - - O
Slide 24: Adjusted Operating Income
Adjusted Operating Income Adjusted operating income – in millions USD FY 2020 FY 2021 FY 2022 Q1 2023 Operating revenue $401.5 $623.0 $894.4 $294.1 Operating income 17.4 111.9 55.7 55.8 Special items, net (64.6) (72.4) - Stock compensation expense 2.1 5.6 2.8 2.7 Other adjustments 1 4.9 3.0 - Taxabl
Slide 25: Adjusted EBITDA
Adjusted EBITDA Adjusted EBITDA Reconciliation – in millions USD FY 2019 FY 2022 Net income (loss) $46.1 $17.7 Provision for income taxes 14.1 6.3 Interest expense 17.2 31.0 Interest income (0.9) (4.5) Special items, net 7.1 - Tax receivable agreement adjustment 1 - 5.0 Stock compensation expense 1.
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