Sun ntry Airlines (US:SNCY)2021-05-06 19:39Financial Performance - Total operating revenues decreased by $52,719, or 29%, to $127,611 for the three months ended March 31, 2021, from $180,330 for the same period in 2020[138]. - Scheduled service revenue decreased by $59,608, or 52%, to $54,620 for the three months ended March 31, 2021, from $114,228 for the same period in 2020[139]. - Passenger revenue decreased by $74,291, or 42%, to $104,195 for the three months ended March 31, 2021, from $178,486 for the same period in 2020[138]. - Operating income increased by $9,703, or 64%, to $24,933 for the three months ended March 31, 2021, compared to $15,230 for the same period in 2020[138]. - Net income increased by $5,165, or 71%, to $12,416 for the three months ended March 31, 2021, compared to $7,251 for the same period in 2020[138]. - Total operating revenues decreased by 41% to $127,611 from $180,330 year-over-year[157]. - Operating income for the passenger segment decreased by 16% to $12,774, while cargo operating income was $12,159[158][159]. - Adjusted Operating Income Margin for Q1 2021 was 0.9%, compared to 8.7% in Q1 2020[167]. - Net Income for Q1 2021 was $12,416, up from $7,251 in Q1 2020[170]. - Adjusted Net Income (Loss) for Q1 2021 was $(4,919), compared to $7,591 in Q1 2020[170]. - Adjusted EBITDAR for Q1 2021 was $19,405, down from $37,061 in Q1 2020[175]. Revenue Sources - Scheduled service revenue includes base fares and unused passenger credits, while charter service revenue is primarily generated from contracts with the U.S. Department of Defense and sports teams[118]. - The charter business is a key component of the company's strategy, providing stable demand and diversification, with large repeat customers[112]. - Ancillary revenue, which includes fees for services like baggage and seat selection, contributes to overall revenue growth[119]. - Ancillary revenue decreased by $11,261, or 32%, to $23,770 for the three months ended March 31, 2021, from $35,031 for the same period in 2020[138]. - Charter service revenue fell by 12% to $25,805, with casino charter service revenue down 62.5% due to delayed recovery in demand[141]. - Cargo revenue was $21,585 for the three months ended March 31, 2021, with no prior year comparison available[143]. Operating Expenses - Operating expenses include significant costs for aircraft fuel, salaries, and maintenance, which can be volatile due to market conditions[122][123][125]. - Total operating expenses decreased by $62,422, or 38%, to $102,678 for the three months ended March 31, 2021, from $165,100 for the same period in 2020[138]. - Aircraft fuel costs decreased by $31,287, or 56%, to $24,274 for the three months ended March 31, 2021, from $55,561 for the same period in 2020[138]. - Salaries, wages, and benefits expense increased by 16% to $44,075, influenced by insourcing operations and increased pilot pay[146]. - Fuel expenses accounted for approximately 24% of total operating expenses in Q1 2021, down from 34% in Q1 2020, showing a significant reduction in fuel cost impact[197]. Business Strategy - Sun Country aims to establish itself as a high growth, low-cost carrier by offering low fares and a high-quality passenger experience[114]. - The company utilizes a flexible business model to optimize capacity allocation, shifting resources based on market demand[110]. - Sun Country's business model allows for higher returns and margins compared to traditional scheduled service carriers, providing greater resilience during economic downturns[111]. - The company plans to grow its passenger fleet to an estimated 50 aircraft by the end of 2023, potentially financed through debt or finance leases[191]. Financial Position - As of March 31, 2021, the company had cash and equivalents of $269,599 and short-term investments of $5,777[185]. - The company raised $224,657 from the public offering of 10,454,545 shares at $24.00 per share in March 2021[184]. - The company had a $25,000 Revolving Credit Facility with full availability as of March 31, 2021[185]. - Total debt and lease obligations decreased to $505,141 as of March 31, 2021, down from $536,832 at the end of 2020, reflecting improved financial stability[195]. - The company incurred $68,000 in new debt in Q1 2021, primarily for aircraft purchases, compared to $108,777 in Q1 2020[202]. Market Risks - The company is exposed to market risks including commodity price risk and interest rate risk[213]. - A one cent per gallon increase in average aircraft fuel price is estimated to increase annual aircraft fuel expense by $600 in 2021[214]. - A 100 basis point increase in interest rates would result in an approximate annual increase in interest expense of $1,200, assuming Credit Facilities are fully drawn[215]. - Significant changes in market conditions could affect the company's decisions regarding fuel hedging contracts[214]. - The company periodically enters into fuel collars to hedge against volatile aircraft fuel prices, which may limit benefits from downward price movements[214]. - Actual results may differ from the estimates provided due to market volatility and other factors[213].