Sun ntry Airlines (SNCY) - 2025 Q2 - Quarterly Report

Part I. Financial Information Financial Statements The company's assets and liabilities decreased, while net income grew year-over-year for the six months ended June 30, 2025 Condensed Consolidated Balance Sheets Total assets decreased to $1.55 billion while stockholders' equity increased to $613.0 million by June 30, 2025 Condensed Consolidated Balance Sheets | Balance Sheet Item | June 30, 2025 (Unaudited, in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $222,293 | $266,584 | | Total Assets | $1,552,109 | $1,630,177 | | Total Current Liabilities | $354,702 | $422,290 | | Total Liabilities | $939,064 | $1,059,804 | | Total Stockholders' Equity | $613,045 | $570,373 | Condensed Consolidated Statements of Operations Operating revenues and net income grew for both the three and six-month periods ending June 30, 2025 Key Operating Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Six Months 2025 (in thousands) | Six Months 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenues | $263,621 | $254,381 | $590,270 | $565,864 | | Operating Income | $16,262 | $12,365 | $72,508 | $67,541 | | Net Income | $6,577 | $1,812 | $43,112 | $37,125 | | Diluted EPS | $0.12 | $0.03 | $0.78 | $0.67 | Condensed Consolidated Statements of Cash Flows Net cash from operations slightly decreased while cash used in financing and investing activities increased Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $36,252 | $38,872 | | Net Cash (Used in) Provided by Investing Activities | $(8,011) | $3,522 | | Net Cash Used in Financing Activities | $(75,402) | $(72,037) | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | $(47,161) | $(29,643) | Notes to the Condensed Consolidated Financial Statements Notes detail significant cargo service expansion with Amazon, fleet growth, and a new credit facility - The company expanded its cargo operations with Amazon by entering into the Amended and Restated Air Transportation Services Agreement (A&R ATSA), which will increase the number of cargo aircraft operated from 12 to 20; seven of the eight additional aircraft were received by June 30, 2025[23] Revenue by Category (Six Months Ended June 30) | Revenue Category | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Passenger | $500,556 | $491,059 | | Cargo | $62,960 | $49,395 | | Other | $26,754 | $25,410 | | Total Operating Revenues | $590,270 | $565,864 | - As of June 30, 2025, the company's fleet consisted of 69 Boeing 737-NG aircraft, an increase from 63 aircraft at the same time in 2024, primarily due to additions for cargo operations[35][37] - In March 2025, the company executed a new $75 million Revolving Credit Facility, replacing its previous $25 million facility; the company was in compliance with all financial covenants as of June 30, 2025[44] Segment Performance (Six Months Ended June 30, 2025) | Segment Performance | Passenger (in thousands) | Cargo (in thousands) | | :--- | :--- | :--- | | Operating Revenues | $527,310 | $62,960 | | Operating Income (Loss) | $68,731 | $3,777 | Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue growth was driven by expanded cargo services, offsetting higher labor costs with lower fuel expenses Results of Operations Revenue increased 4% in the first half of 2025, driven by strong cargo and charter performance - For Q2 2025, Total Operating Revenues increased 4% YoY, driven by a 37% increase in Cargo revenue from the expanded Amazon agreement; this was partially offset by a 1% decrease in Passenger revenue as capacity was shifted to support cargo growth[97][100] - Q2 2025 Aircraft Fuel expense decreased 19% YoY due to a 15% decrease in fuel cost per gallon and a 4% decrease in consumption; conversely, Salaries, Wages, and Benefits increased 13% due to a 7% increase in headcount and contractual rate increases[104][105] - For the six months ended June 30, 2025, Total Operating Revenues increased 4% YoY; the growth was primarily from a 27% increase in Cargo revenue and an 11% increase in Charter revenue[118][120][121] Segments Analysis The Cargo segment's operating income improved significantly, while the Passenger segment's income remained stable Segment Performance (Six Months Ended June 30) | Segment Performance | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Passenger Operating Income | $68,731 | $69,072 | | Passenger Operating Margin % | 13.0% | 13.4% | | Cargo Operating Income (Loss) | $3,777 | $(1,531) | | Cargo Operating Margin % | 6.0% | (3.1)% | - The Cargo segment's operating income improved by $5.3 million for the first six months of 2025 compared to 2024, driven by contractual rate increases and the addition of new aircraft under the A&R ATSA with Amazon[140] Non-GAAP Financial Measures Adjusted Net Income and Adjusted Operating Income showed year-over-year growth Adjusted Net Income Reconciliation (Six Months Ended June 30) | Reconciliation | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net Income (GAAP) | $43,112 | $37,125 | | Special Items, net | 1,848 | — | | Stock Compensation Expense | 3,254 | 3,084 | | Other Adjustments | 667 | — | | Income Tax Effect of Adjustments | (1,327) | (709) | | Adjusted Net Income (Non-GAAP) | $47,554 | $39,500 | CASM Reconciliation (Six Months Ended June 30) | CASM Reconciliation | 2025 (cents) | 2024 (cents) | | :--- | :--- | :--- | | CASM (GAAP) | 12.03 | 11.80 | | Less: Aircraft Fuel | 2.68 | 3.14 | | Less: Cargo Expenses & Other Adjustments | 1.56 | 1.38 | | Adjusted CASM (Non-GAAP) | 7.79 | 7.28 | Liquidity and Capital Resources Total liquidity remained stable at $206.6 million, sufficient to fund operations for the next 12 months Liquidity Position | Liquidity Position | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and Cash Equivalents | $36,964 | $83,219 | | Available-for-Sale Securities | $94,644 | $97,636 | | Amount Available Under Revolving Credit Facility | $75,000 | $24,743 | | Total Liquidity | $206,608 | $205,598 | - Key uses of cash in the first six months of 2025 included $21.2 million for capital expenditures, $10.0 million for common stock repurchases, and $10.5 million for a Tax Receivable Agreement payment[175][179] Quantitative and Qualitative Disclosures About Market Risk Market risks related to fuel prices and interest rates remain materially unchanged from the 2024 annual report - There have been no material changes in market risk from those disclosed in the company's 2024 10-K, with primary risks remaining aircraft fuel commodity prices and interest rates[190] Controls and Procedures Management confirmed the effectiveness of disclosure controls and procedures with no material changes to internal controls - The CEO and Interim CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[193] - No changes occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[194] Part II. Other Information Legal Proceedings Current legal proceedings are not expected to have a material adverse effect on the company's financials - The company does not expect current legal proceedings to have a material adverse effect on its financial condition or results[195] Risk Factors No material changes to risk factors have been identified since the 2024 annual report - No material changes have been identified from the risk factors disclosed in the 2024 10-K[196] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - The company reported no unregistered sales of equity securities during the period[197] Defaults Upon Senior Securities The company reported no defaults upon its senior securities - The company reported no defaults upon senior securities[198] Other Information No directors or executive officers made changes to Rule 10b5-1 trading plans during the quarter - No directors or executive officers adopted, terminated, or modified any Rule 10b5-1 trading plans during the second quarter of 2025[200] Exhibits The report includes required exhibits such as officer certifications and XBRL data files - Exhibits filed with the report include officer certifications (31.1, 31.2, 32) and Inline XBRL documents (101 series)[204]