Sun ntry Airlines (US:SNCY)2023-02-03 18:11Financial Data and Key Metrics Changes - The total operating revenue for Q4 2022 was $227.2 million, a 31.6% increase compared to the same quarter last year [114] - Full year revenue for 2022 reached $894.4 million, marking a 44% increase over 2021 and setting a record for the company [115] - Adjusted pretax income for Q4 2022 was $10.3 million, a 39% improvement over Q4 2021, despite a nearly 44% increase in fuel prices [86] Business Line Data and Key Metrics Changes - Scheduled service TRASM grew 27% year-over-year, with a 14% increase in scheduled service ASMs [87] - Charter revenue increased by 11% in Q4, driven by strong growth in long-term contracts and improvements in ad hoc business [88] - Ad hoc charter revenue for the full year remained about 60% below its peak in 2019, but growth is expected as pilot resources are added [89] Market Data and Key Metrics Changes - The recovery in international demand is a significant factor for Q1 2023, with strong demand observed across Caribbean, Mexican, and Central American markets [20] - Approximately 80% of planned Q1 passenger revenue was already booked, indicating strong demand trends [91] Company Strategy and Development Direction - The company plans to focus on long-term contracted charter revenue and expects significant growth in this area in 2023 [84] - The strategy includes postponing the restart of Hawaiian operations until 2024 to concentrate on building the MSP operation [83] - The company aims to maintain a balance of approximately 25% of block hours allocated to fixed fee contracts to optimize operations [147] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit growth rates by June 2023, aligning growth with peak opportunities [21] - The company anticipates a deceleration in unit cost increases as it grows into its expanded fleet throughout 2023 [90] - Management remains optimistic about the overall demand environment and believes the fundamentals of the diversified business model are strong [92] Other Important Information - The company finished 2022 with $289.4 million in total liquidity, including $264.7 million in unrestricted cash [76] - The expected operating margin for 2023 is between 15% and 20%, assuming a fuel price of $3.58 per gallon [77] - The company completed a $25 million share buyback program in January 2023, repurchasing approximately 1.4 million shares [118] Q&A Session Summary Question: Can you provide more detail on the booking curve and future expectations? - Management indicated that bookings for April are strong, with dramatic year-over-year revenue improvements expected [8] Question: What is the pilot availability situation and expected growth? - Management noted improvements in pilot training and recruitment, expecting block hour growth of around 10% for the year [9] Question: How does the company view its capital expenditures for 2023? - The company plans to add one or two aircraft in 2023, with a significant decrease in CapEx compared to previous years [12] Question: What are the expectations for operating margins in 2023? - Management expressed confidence in returning to historical margin levels, with a focus on achieving double-digit operating margins [36] Question: How does the company plan to manage pilot costs relative to competitors? - Management highlighted that their pilot contract includes rate escalators, which should help manage costs effectively [52]