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Financial report summary
?Competition
Delta Air Lines • Hawaiian Airlines • Southwest Airlines • United Airlines • United Airlines • Atlas Air Worldwide • Jetblue Airways • Allegiant Travel • Spirit AirlinesRisks
- The demand for airline services is highly sensitive to changes in economic conditions, and a recession or similar or worse economic downturn in the United States would weaken demand for our services and have a material adverse effect on our business, results of operations and financial condition.
- Inflation may have an adverse impact on our business, results of operations and financial condition.
- Our business has been, and in the future may be, materially adversely affected by the price and availability of aircraft fuel. Unexpected increases in the price of aircraft fuel or a shortage or disruption in the supply of aircraft fuel could have a material adverse effect on our business, results of operations and financial condition.
- Threatened or actual terrorist attacks, war, or other security concerns involving airlines could have a material adverse effect on our business, results of operations and financial condition.
- The airline industry is exceedingly competitive, and we compete against new entrants, LCCs, ULCCs, legacy network airlines and cargo carriers; if we are not able to compete successfully in our markets, our business will be materially adversely affected.
- Airlines are often affected by factors beyond their control, including: air traffic congestion at airports; air traffic control inefficiencies; air traffic control staffing; government shutdowns or mandates; FAA grounding of aircraft; major construction or improvements at airports; adverse weather conditions, such as hurricanes or blizzards; increased security measures; new travel-related taxes; or the outbreak of disease, any of which could have a material adverse effect on our business, results of operations and financial condition.
- The industry is experiencing a higher than normal number of pilot retirements, increased competition in pilot hiring, more stringent duty time regulations, increased flight hour requirements for commercial airline pilots, reductions in the number of military pilots entering the commercial workforce, increased training requirements and other factors that have led to a shortage of pilots, which could materially adversely affect our business.
- Risks associated with our presence in international markets, including political or economic instability, and failure to adequately comply with existing and changing legal requirements, may materially adversely affect us.
- Increases in insurance costs or reductions in insurance coverage may have a material adverse effect on our business, results of operations and financial condition.
- The airline industry is heavily taxed.
- Restrictions on or increased taxes applicable to charges for ancillary products and services paid by airline passengers and burdensome consumer protection regulations or laws could harm our business, results of operations and financial condition.
- We are subject to risks associated with climate change, including increased regulation to reduce emissions of greenhouse gases.
- We face competition from air travel substitutes.
- The rapid spread of a viral or bacterial infection, disease or similar public health threat, may have an adverse impact on our business, operating results, financial condition and liquidity.
- We cannot assure you that compliance with laws, regulations, orders, rulings and guidance will not have a material adverse effect on our business, results of operations and financial condition.
- Changes in law, regulation and government policy have affected, and may in the future have a material adverse effect on our business.
- We are subject to various environmental and noise laws and regulations, which could have a material adverse effect on our business, results of operations and financial condition.
- We are subject to extensive regulation by the FAA, the DOT, the TSA, CBP and other U.S. and foreign governmental agencies, compliance with which could cause us to incur increased costs and adversely affect our business, results of operations and financial condition.
- If we fail to implement our business strategy successfully, our business will be materially adversely affected.
- Our low-cost structure is one of our primary competitive advantages, and many factors could affect our ability to control our costs.
- Our business is significantly tied to and consolidated in our main hub in Minneapolis-St. Paul, and any decrease in traffic in this hub could have a material adverse effect on our business, operations, financial condition and brand.
- Our reputation and business could be adversely affected in the event of an accident or similar public incident involving our aircraft or personnel.
- We rely on third-party service providers and other commercial partners to perform functions integral to our operations.
- We rely on third-party distribution channels to distribute a portion of our airline tickets.
- We rely heavily on technology and automated systems to operate our business, and any disruptions or failure of these technologies or systems or any failure on our part to implement any new technologies or systems could materially adversely affect our business.
- We may not be able to grow or maintain our unit revenues or maintain our ancillary revenues.
- We operate a single aircraft type.
- Increased labor costs, union disputes, employee strikes and other labor-related disruption may adversely affect our business, results of operations and financial condition.
- We rely on efficient daily aircraft utilization to address peak demand days of the week and months of the year, which makes us vulnerable to flight delays, flight cancellations or aircraft unavailability during peak demand periods.
- The cost of aircraft repairs and unexpected delays in the time required to complete aircraft maintenance could negatively affect our operating results.
- If we are unable to attract, retain and train qualified personnel at reasonable costs or fail to maintain our company culture, our business could be harmed.
- Our inability to expand or operate reliably or efficiently out of airports where we operate could have a material adverse effect on our business, results of operations and financial condition and brand.
- Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect our business and financial results.
- Our reputation and brand could be harmed if we were to experience significant publicity, including through social media.
- We are highly dependent upon our cash and investment balances, Operating Cash Flows and availability under our Revolving Credit Facility.
- Our liquidity would be adversely impacted, potentially materially, in the event one or more of our credit card processors were to impose holdback restrictions for payments due to us from credit card transactions.
- Our ability to obtain financing or access capital markets may be limited.
- Our maintenance costs will fluctuate over time; additionally we will periodically incur substantial maintenance costs due to the maintenance schedules of our aircraft fleet and obligations to the lessors, and we could incur significant maintenance expenses outside of such maintenance schedules in the future.
- We have a significant amount of aircraft and other fixed obligations that could impair our liquidity and thereby harm our business, results of operations and financial condition.
- We depend on a sole-source supplier for the majority of our aircraft parts and any supply disruption could have a material adverse effect on our business.
- Reduction in demand for air transportation, or governmental reduction or limitation of operating capacity, in the domestic United States, Canada, Mexico or Caribbean markets, or a reduction in demand for our Charter or Cargo operations, could harm our business, results of operations and financial condition.
- Our business could be materially adversely affected if we lose the services of our key personnel.
- Our quarterly results of operations fluctuate due to a number of factors, including seasonality.
- We may become involved in litigation that may materially adversely affect us.
- Lessee defaults could materially adversely affect our business, financial condition and results of operations.
- The Credit Agreement contains, and any future indebtedness of ours could contain, restrictions that limit our flexibility.
- Our stock price may fluctuate significantly.
- Our certificate of incorporation and bylaws include provisions limiting ownership and voting by non-U.S. citizens.
- The Apollo Stockholder has significant influence over us, and Apollo’s interests may conflict with our interests and the interests of other stockholders.
- We are a holding company and rely on dividends, distributions, and other payments, advances, and transfers of funds from our subsidiary to meet our obligations.
- Our future earnings and earnings per share, as reported under GAAP, could be adversely impacted by the warrants granted to Amazon. If Amazon exercises its right to acquire shares of our common stock
- pursuant to the 2019 Warrants, this will dilute the ownership interests of our then-existing stockholders and could adversely affect the market price of our common stock.
- Future sales of our common stock in the public market, or the perception in the public market that such sales may occur, could reduce our stock price.
- We do not anticipate paying dividends on our common stock in the foreseeable future.
- We are required to pay our pre-IPO stockholders for certain tax benefits, and the amounts of such payments could be material.
Management Discussion
- Unless otherwise indicated, the terms "Sun Country," "we," "us" and "our" refer to Sun Country Airlines Holdings, Inc., and its subsidiaries.
- notes appearing elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions and forecasts. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors, including those set forth under the section of this Annual Report titled “Risk Factors” “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this Annual Report. The “Risk Factors” and the “Cautionary Note Regarding Forward-Looking Statements” should be read carefully to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.
- Sun Country is a new breed of hybrid low-cost air carrier that dynamically deploys shared resources across our synergistic Scheduled Service, Charter, and Cargo businesses. By doing so, we believe we are able to generate high growth, high margins and strong cash flows with greater resilience than other passenger airlines. Based in Minnesota, we focus on serving leisure and VFR passengers, Charter customers and providing CMI service to Amazon, with flights throughout the U.S. and to destinations in Canada, Mexico, Central America and the Caribbean. We share resources, such as flight crews, across our Scheduled Service, Charter and Cargo business lines with the objective of generating high returns and margins and mitigating the seasonality of our route network. We optimize capacity using an agile peak demand scheduling strategy which aims to shift flying to markets during periods of peak demand and away from markets during periods of low demand. This allows us to produce higher unit revenue with a competitive low-cost structure, in line with other ULCCs resulting in best-in-class unit profitability, while also providing greater resiliency to economic or industry downturns. This strategy has been implemented and executed by an experienced management team with deep knowledge of the industry.