Sun Country Airlines Reports Second Quarter 2021 Results
Sun Country Airlines (SNCY) reported a strong Q2 2021 with net income of $51.8 million and operating income of $49 million. Total operating revenue rose to $149.2 million, a 321% increase year-over-year. The company also achieved adjusted operating income of $11.5 million despite the impact of the CARES Act grant. Passenger revenue benefitted from increased fares and ancillary sales, while the load factor reached 77%, the highest since Q4 2019. The company aims for continued growth with expanded routes and increased aircraft deliveries.
- Net income of $51.8 million reflects strong recovery.
- Total operating revenue surged to $149.2 million, a 321% increase year-over-year.
- Adjusted operating income improved to $11.5 million, the second consecutive quarter of positive adjusted operating income.
- Passenger load factor reached 77%, the highest since Q4 2019.
- Expansion of route network with 20 new nonstop routes, the largest in company history.
- Scheduled revenue per scheduled ASM (PRASM) declined 16% compared to Q2 2019.
- Total revenue still 12% below Q2 2019 levels, indicating slow recovery.
Q2 2021 GAAP EPS of
Q2 2021 Adjusted EPS of
MINNEAPOLIS, July 28, 2021 (GLOBE NEWSWIRE) -- Sun Country Airlines Holdings, Inc. (“Sun Country Airlines”, “Sun Country”, the “Company”) (NASDAQ: SNCY) today reported financial results for its second quarter ended June 30, 2021.
“We had a very strong second quarter driven by revenue outperformance in our scheduled passenger service business amid strong continued recovery in leisure travel demand,” said Jude Bricker, Chief Executive Officer of Sun Country. “Passenger revenue growth was driven by higher fares, strong ancillary sales and continued recovery in capacity. When combined with our resilient Cargo business and steadily improving charter operation, we generated a second quarter profit after removing the benefit of the CARES Act grants, further demonstrating the strength of our unique, variable capacity business model.”
Overview of Second Quarter
| Three Months Ended June 30, | |||||||
| (unaudited) (in millions, except share amounts) | 2021 | 2020 | % Change | ||||
| Total operating revenue | $ | 149.2 | $ | 35.4 | 321 | ||
| Operating income (loss) | 49.2 | (2.2 | ) | NM | |||
| Income (loss) before income tax | 61.2 | (7.9 | ) | NM | |||
| Net income (loss) | 51.8 | (6.0 | ) | NM | |||
| Diluted earnings (loss) per share | $ | 0.83 | $ | (0.13 | ) | NM | |
“NM” stands for not meaningful
| Three Months Ended June 30, | |||||||
| (unaudited) (in millions, except share amounts) | 2021 | 2020 | % Change | ||||
| Adjusted operating income (loss) (1) | $ | 11.5 | $ | (30.8 | ) | NM | |
| Adjusted income (loss) before income tax (1) | 5.4 | (36.2 | ) | NM | |||
| Adjusted net income (loss) (1) | 4.5 | (27.8 | ) | NM | |||
| Adjusted diluted earnings (loss) per share (1) | $ | 0.07 | $ | (0.59 | ) | NM | |
| Six Months Ended June 30, | |||||||
| (unaudited) (in millions, except share amounts) | 2021 | 2020 | % Change | ||||
| Total operating revenue | $ | 276.8 | $ | 215.7 | 28 | ||
| Operating income | 74.2 | 13.0 | 471 | ||||
| Income before income tax | 79.0 | 1.8 | NM | ||||
| Net income | 64.2 | 1.2 | NM | ||||
| Diluted earnings per share | $ | 1.12 | $ | 0.02 | NM | ||
| Six Months Ended June 30, | |||||||
| (unaudited) (in millions, except share amounts) | 2021 | 2020 | % Change | ||||
| Adjusted operating income (loss) (1) | $ | 12.7 | $ | (15.2 | ) | NM | |
| Adjusted income (loss) before income tax (1) | 0.7 | (26.0 | ) | NM | |||
| Adjusted net loss (1) | (0.4 | ) | (20.2 | ) | NM | ||
| Adjusted diluted earnings (loss) per share (1) | $ | (0.01 | ) | $ | (0.42 | ) | NM |
For the quarter ended June 30, 2021, Sun Country reported net income of
“This will be the second consecutive quarter in which we have produced positive adjusted operating income and the third consecutive quarter in which we had adjusted EBITDAR margins of greater than
Second Quarter 2021 Highlights
- Taken delivery of two additional aircraft
- Announced continued expansion of the Company’s route network including service to eleven new airports: Milwaukee Mitchell International Airport (MKE), Palm Beach International (PBI), Owen Roberts International Airport in Grand Cayman (GCM), Providenciales International Airport in Turks and Caicos (PLS), St. Pete-Clearwater International Airport (PIE), Punta Gorda Airport (PGD), Asheville Regional Airport (AVL), Phoenix-Mesa Gateway Airport (AZA), Duluth International Airport (DLH), Green Bay Austin Straubel International Airport (GRB) and Rochester International Airport (RST)
- Announced 20 new nonstop routes, our largest in company history, the majority will begin flying in the second half of 2021
- Welcomed Tom Kennedy to the Board of Directors and as Chairman of the Audit Committee
- Received
$39.4 million grant from the CARES Act Payroll Support Program during the second quarter
Capacity
On a total available seat mile (“ASM”) basis, the Company saw total ASMs grow
Revenue
For the second quarter of 2021, the Company reported total revenue of
Charter service revenue is primarily generated through service provided to collegiate and professional sports teams, the U.S. Department of Defense, casinos and other customers. In the second quarter of 2021, the Company’s charter service revenue was
Cargo revenue consists of revenue earned from flying cargo aircraft under the Air Transportation Services Agreement (“ATSA”) with Amazon. In the second quarter of 2021, cargo revenue was
Cost
For the second quarter of 2021, total GAAP operating expenses decreased
The Company continues to focus on reducing its unit operating costs including reducing aircraft ownership expenses, ground handling, and distribution expenses. Adjusted CASM is a non-GAAP measure derived from CASM by excluding fuel costs, Special Items described above, non-cash management stock compensation expenses, costs allocated to its cargo operations (starting in 2020 when the Company launched cargo operations), certain commissions and other costs of selling its vacations product from this measure. In the second quarter of 2021, Adjusted CASM was 6.35(2) cents.
Balance Sheet and Liquidity
The Company reduced its net debt(3) for the second consecutive quarter from
Fleet
The Company currently operates 34 aircraft in passenger service, an increase of three since March 31, having taken deliveries of two aircraft during the second quarter and one additional in July. It also operates 12 freighter aircraft in its cargo operation. The Company is actively pursuing used aircraft transactions and expects to have at least 36 passenger aircraft in our fleet by the end of the year.
Guidance for Third Quarter 2021
| Q3 2021 | H/(L) vs Q3 2019 | |
| Total revenue - millions | ( | |
| Fuel cost per gallon – excluding derivatives | ||
| Operating income margin - percentage | (1)pp to +3pp | |
| Effective tax rate | ||
| Total system ASMs - millions | 1,500 to 1,560 | ( |
Conference Call & Webcast Details
Sun Country Airlines will host a conference call to discuss its second quarter 2021 results at 8:30 a.m. Eastern Time on Thursday, July 29, 2021. A live broadcast of the conference call will be available via the investor relations section of Sun Country Airlines’ website at https://ir.suncountry.com/news-events/events-and-presentations. The online replay will be available on the same website approximately one hour after the call. The conference call can also be listened to live by dialing 1 (833) 458-0947 (U.S. toll free) or 1 (914) 987-7750 (U.S. toll).
About Sun Country Airlines
Sun Country Airlines is a new breed of hybrid low-cost air carrier that dynamically deploys shared resources across our synergistic scheduled service, charter and cargo businesses. Based in Minnesota, we focus on serving leisure and visiting friends and relatives ("VFR") passengers and charter customers and providing cargo CMI services, with flights throughout the United States and to destinations in Mexico, Central America and the Caribbean.
End Notes
1 – See additional details in the tables below in the section titled “Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted EBITDAR and Adjusted EBITDAR Margin”
2 – See additional details in table below titled “Reconciliation of Adjusted CASM to CASM”
3 – Net debt = current portion of long-term debt + long-term debt + finance lease obligations + operating lease obligations – cash and equivalents
Contacts
Investor Relations
Chris Allen
651-681-4810
IR@suncountry.com
Media
Jessica Wheeler
651-900-8400
mediarelations@suncountry.com
Forward Looking Statements
This report contains forward-looking statements, which involve risks and uncertainties. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management, and expected market growth are forward-looking statements. The forward-looking statements are relating to:
• our strategy, outlook and growth prospects;
• our operational and financial targets and dividend policy;
• general economic trends and trends in the industry and markets; and
• the competitive environment in which we operate.
These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.
These forward-looking statements reflect our views with respect to future events as of the date of this report and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this report and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this report. We anticipate that subsequent events and developments will cause our views to change. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect. Our forward-looking statements do not reflect the potential impact of any future acquisitions, merger, dispositions, joint ventures, or investments we may undertake. We qualify all of our forward-looking statements by these cautionary statements. Additional information concerning certain factors is contained in the Company’s Securities and Exchange Commission filings, including but not limited to the Company’s Prospectus included in its registration statement on Form S-1, Quarterly Report on Form 10-Q, and Current Reports on Form 8-K.
Non-GAAP Financial Measures
We sometimes use information that is derived from the consolidated financial statements, but that is not presented in accordance with GAAP. We believe these non-GAAP measures provide a meaningful comparison of our results to others in the airline industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP. Further, our non-GAAP information may be different from the non-GAAP information provided by other companies. We believe certain charges included in our operating expenses on a GAAP basis make it difficult to compare our current period results to prior periods as well as future periods and guidance. The tables below show a reconciliation of non-GAAP financial measures used in this document to the most directly comparable GAAP financial measures.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
| Three Months Ended June 30, | ||||||||||||
| 2021 | 2020 | % Change | ||||||||||
| Operating Revenues: | ||||||||||||
| Scheduled Service | $ | 67,073 | $ | 17,882 | 275.1 | |||||||
| Charter Service | 28,898 | 8,491 | 240.3 | |||||||||
| Ancillary | 29,159 | 4,968 | 486.9 | |||||||||
| Passenger | 125,130 | 31,341 | 299.3 | |||||||||
| Cargo | 22,098 | 3,219 | 586.5 | |||||||||
| Other | 1,961 | 816 | 140.3 | |||||||||
| Total Operating Revenue | 149,189 | 35,376 | 321.7 | |||||||||
| Operating Expenses: | ||||||||||||
| Aircraft Fuel | 29,709 | 677 | NM | |||||||||
| Salaries, Wages, and Benefits | 42,316 | 32,484 | 30.3 | |||||||||
| Aircraft Rent | 3,815 | 5,934 | (35.7 | ) | ||||||||
| Maintenance | 11,300 | 2,426 | 365.8 | |||||||||
| Sales and Marketing | 5,822 | 1,630 | 257.2 | |||||||||
| Depreciation and Amortization | 13,460 | 12,175 | 10.6 | |||||||||
| Ground Handling | 6,551 | 1,614 | 305.9 | |||||||||
| Landing Fees and Airport Rent | 8,752 | 2,667 | 228.2 | |||||||||
| Special Items, net | (38,520 | ) | (31,481 | ) | 22.4 | |||||||
| Other Operating, net | 16,746 | 9,484 | 76.6 | |||||||||
| Total Operating Expenses | 99,951 | 37,610 | 165.8 | |||||||||
| Operating Income (Loss) | 49,238 | (2,234 | ) | NM | ||||||||
| Non-operating Income/(Expense): | ||||||||||||
| Interest Income | 9 | 63 | (85.7 | ) | ||||||||
| Interest Expense | (6,080 | ) | (5,442 | ) | 11.7 | |||||||
| Other, net | 18,054 | (325 | ) | NM | ||||||||
| Total Non-operating Income (Expense), net | 11,983 | (5,704 | ) | NM | ||||||||
| Income (Loss) before Income Tax | 61,221 | (7,938 | ) | NM | ||||||||
| Income Tax Expense (Benefit) | 9,468 | (1,898 | ) | NM | ||||||||
| Net Income (Loss) | $ | 51,753 | $ | (6,040 | ) | NM | ||||||
| Net Income (Loss) per share to common stockholders: | ||||||||||||
| Basic | $ | 0.91 | $ | (0.13 | ) | NM | ||||||
| Diluted | $ | 0.83 | $ | (0.13 | ) | NM | ||||||
| Shares used for computation: | ||||||||||||
| Basic | 57,156,159 | 46,805,950 | 22.1 | |||||||||
| Diluted | 61,982,441 | 46,805,950 | 32.4 | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
| Six Months Ended June 30, | ||||||||||||
| 2021 | 2020 | % Change | ||||||||||
| Operating Revenues: | ||||||||||||
| Scheduled Service | $ | 121,693 | $ | 132,110 | (7.9 | ) | ||||||
| Charter Service | 54,703 | 37,718 | 45.0 | |||||||||
| Ancillary | 52,929 | 39,999 | 32.3 | |||||||||
| Passenger | 229,325 | 209,827 | 9.3 | |||||||||
| Cargo | 43,684 | 3,219 | NM | |||||||||
| Other | 3,793 | 2,660 | 42.6 | |||||||||
| Total Operating Revenue | 276,802 | 215,706 | 28.3 | |||||||||
| Operating Expenses: | ||||||||||||
| Aircraft Fuel | 53,984 | 56,238 | (4.0 | ) | ||||||||
| Salaries, Wages, and Benefits | 86,392 | 70,575 | 22.4 | |||||||||
| Aircraft Rent | 9,414 | 16,966 | (44.5 | ) | ||||||||
| Maintenance | 20,510 | 8,904 | 130.3 | |||||||||
| Sales and Marketing | 10,932 | 10,202 | 7.2 | |||||||||
| Depreciation and Amortization | 26,075 | 22,702 | 14.9 | |||||||||
| Ground Handling | 11,781 | 10,906 | 8.0 | |||||||||
| Landing Fees and Airport Rent | 17,537 | 13,781 | 27.3 | |||||||||
| Special Items, net | (65,392 | ) | (31,481 | ) | 107.7 | |||||||
| Other Operating, net | 31,397 | 23,917 | 31.3 | |||||||||
| Total Operating Expenses | 202,630 | 202,710 | 0.0 | |||||||||
| Operating Income | 74,172 | 12,996 | 470.7 | |||||||||
| Non-operating Income/(Expense): | ||||||||||||
| Interest Income | 24 | 314 | (92.4 | ) | ||||||||
| Interest Expense | (13,201 | ) | (11,058 | ) | 19.4 | |||||||
| Other, net | 18,049 | (494 | ) | NM | ||||||||
| Total Non-operating Income (Expense), net | 4,872 | (11,238 | ) | (143.4 | ) | |||||||
| Income before Income Tax | 79,044 | 1,758 | NM | |||||||||
| Income Tax Expense | 14,875 | 547 | NM | |||||||||
| Net Income | $ | 64,169 | $ | 1,211 | NM | |||||||
| Net Income per share to common stockholders: | ||||||||||||
| Basic | $ | 1.21 | $ | 0.03 | NM | |||||||
| Diluted | $ | 1.12 | $ | 0.02 | NM | |||||||
| Shares used for computation: | ||||||||||||
| Basic | 52,850,041 | 46,805,950 | 12.9 | |||||||||
| Diluted | 57,403,593 | 48,243,146 | 19.6 | |||||||||
Key Operating Statistics
The following table presents key operating statistics and metrics for the three months ended June 30, 2021.
| Three Months Ended June 30, | |||||||||
| 2021 | 2020 | % Change | |||||||
| Scheduled service statistics: | |||||||||
| Revenue passenger miles (RPMs) – thousands | 919,034 | 153,098 | 500.3 | ||||||
| Available seat miles (ASMs) – thousands | 1,198,768 | 318,049 | 276.9 | ||||||
| Load factor | 76.7 | % | 48.1 | % | 28.6 pts | ||||
| Revenue passengers carried | 700,019 | 121,922 | 474.2 | ||||||
| Departures | 4,921 | 1,376 | 257.6 | ||||||
| Block hours | 15,900 | 4,177 | 280.7 | ||||||
| Passenger revenue per ASM (PRASM) - cents | 5.60 | 5.62 | (0.4 | ) | |||||
| Average base fare per passenger | $ | 95.81 | $ | 146.66 | (34.7 | ) | |||
| Ancillary revenue per passenger | $ | 41.66 | $ | 40.74 | 2.3 | ||||
| Fuel gallons - thousands | 12,267 | 3,028 | 305.1 | ||||||
| Charter statistics: | |||||||||
| Departures | 1,727 | 520 | 232.1 | ||||||
| Block hours | 3,656 | 1,321 | 176.8 | ||||||
| Available seats miles (ASMs) - thousands | 237,723 | 97,827 | 143.0 | ||||||
| Fuel gallons - thousands | 2,622 | 946 | 177.2 | ||||||
| Cargo statistics: | |||||||||
| Departures | 2,752 | 413 | 566.3 | ||||||
| Block hours | 8,198 | 1,076 | 661.9 | ||||||
| Total system statistics: | |||||||||
| Average passenger aircraft | 31 | 31 | - | ||||||
| Passenger aircraft – end of period | 33 | 31 | 6.5 | ||||||
| Cargo aircraft – end of period | 12 | 7 | 71.4 | ||||||
| Available seat miles (ASMs) – thousands | 1,442,744 | 417,538 | 245.5 | ||||||
| Departures | 9,445 | 2,324 | 306.4 | ||||||
| Block hours | 27,874 | 6,604 | 322.1 | ||||||
| Daily utilization – hours | 7.0 | 2.0 | 250.0 | ||||||
| Average stage length – miles | 1,179 | 1,180 | (0.1 | ) | |||||
| Total revenue per ASM (TRASM) - cents | 8.81 | 7.70 | 14.4 | ||||||
| Cost per ASM (CASM) - cents | 6.93 | 9.01 | (23.1 | ) | |||||
| Adjusted CASM - cents | 6.35 | 14.57 | (56.4 | ) | |||||
| Fuel gallons - thousands | 14,955 | 3,991 | 274.7 | ||||||
| Fuel cost per gallon, excluding derivatives | $ | 2.07 | $ | 1.17 | 76.9 | ||||
| Employees at end of period | 1,815 | 1,660 | 9.3 | ||||||
The following table presents key operating statistics and metrics for the six months ended June 30, 2021.
| Six Months Ended June 30, | |||||||||
| 2021 | 2020 | % Change | |||||||
| Scheduled service statistics: | |||||||||
| Revenue passenger miles (RPMs) – thousands | 1,694,033 | 1,303,004 | 30.0 | ||||||
| Available seat miles (ASMs) – thousands | 2,356,780 | 1,826,245 | 29.1 | ||||||
| Load factor | 71.9 | % | 71.3 | % | 0.6 pts | ||||
| Revenue passengers carried | 1,253,051 | 935,860 | 33.9 | ||||||
| Departures | 9,244 | 7,182 | 28.7 | ||||||
| Block hours | 31,107 | 24,419 | 27.4 | ||||||
| Passenger revenue per ASM (PRASM) - cents | 5.16 | 7.23 | (28.6 | ) | |||||
| Average base fare per passenger | $ | 97.12 | $ | 141.16 | (31.2 | ) | |||
| Ancillary revenue per passenger | $ | 42.24 | $ | 42.74 | (1.2 | ) | |||
| Fuel gallons - thousands | 23,824 | 18,779 | 26.9 | ||||||
| Charter statistics: | |||||||||
| Departures | 3,238 | 2,156 | 50.2 | ||||||
| Block hours | 6,987 | 4,933 | 41.6 | ||||||
| Available seats miles (ASMs) - thousands | 449,444 | 334,690 | 34.3 | ||||||
| Fuel gallons - thousands | 4,979 | 3,646 | 36.6 | ||||||
| Cargo statistics: | |||||||||
| Departures | 5,317 | 413 | NM | ||||||
| Block hours | 16,440 | 1,076 | NM | ||||||
| Total system statistics: | |||||||||
| Average passenger aircraft | 31.0 | 31.5 | (1.6 | ) | |||||
| Passenger aircraft – end of period | 33 | 31 | 6.5 | ||||||
| Cargo aircraft – end of period | 12 | 7 | 71.4 | ||||||
| Available seat miles (ASMs) – thousands | 2,819,540 | 2,174,605 | 29.7 | ||||||
| Departures | 17,897 | 9,847 | 81.8 | ||||||
| Block hours | 54,806 | 30,691 | 78.6 | ||||||
| Daily utilization – hours | 6.8 | 5.2 | 30.8 | ||||||
| Average stage length – miles | 1,225 | 1,254 | (2.3 | ) | |||||
| Total revenue per ASM (TRASM) - cents | 8.27 | 9.77 | (15.4 | ) | |||||
| Cost per ASM (CASM) - cents | 7.19 | 9.32 | (22.9 | ) | |||||
| Adjusted CASM - cents | 6.25 | 7.81 | (20.0 | ) | |||||
| Fuel gallons - thousands | 28,948 | 22,562 | 28.3 | ||||||
| Fuel cost per gallon, excluding derivatives | $ | 1.99 | $ | 1.71 | 16.4 | ||||
| Employees at end of period | 1,815 | 1,660 | 9.3 | ||||||
SUMMARY BALANCE SHEET
(Dollars in millions)
(Unaudited – amounts may not recalculate due to rounding)
| 6/30/2021 | 12/31/2020 | % Change | ||||||
| Cash and cash equivalents | $ | 310.7 | $ | 62.0 | 401.1 | |||
| Other current assets | 60.5 | 64.7 | (6.5 | ) | ||||
| Total current assets | 371.2 | 126.7 | 193.0 | |||||
| Total property & equipment, net | 500.0 | 414.5 | 20.6 | |||||
| Other | 438.8 | 512.0 | (14.3 | ) | ||||
| Total assets | 1,310.0 | 1,053.2 | 24.4 | |||||
| Air traffic liabilities | 113.8 | 101.1 | 12.6 | |||||
| Current finance lease obligations | 9.6 | 11.5 | (16.5 | ) | ||||
| Current operating lease obligations | 18.2 | 34.5 | (47.2 | ) | ||||
| Current maturities of long-term debt | 19.8 | 26.1 | (24.1 | ) | ||||
| Other current liabilities | 89.4 | 80.5 | 10.9 | |||||
| Total current liabilities | 250.8 | 253.7 | (1.1 | ) | ||||
| Finance lease obligations | 135.1 | 95.7 | 41.2 | |||||
| Operating lease obligations | 68.4 | 112.7 | (39.3 | ) | ||||
| Long-term debt | 267.7 | 256.3 | 4.4 | |||||
| Income tax receivable agreement | 96.5 | 0 | NM | |||||
| Other | 27.2 | 51.0 | (46.6 | ) | ||||
| Total liabilities | 845.7 | 769.4 | 9.9 | |||||
| Total stockholders equity | $ | 464.3 | $ | 283.8 | 63.6 | |||
SUMMARY CASH FLOW
(Dollars in millions)
(Unaudited - amounts may not recalculate due to rounding)
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | % Change | ||||||
| Net cash provided by (Used in) operating activities | $ | 89.8 | $ | (12.9 | ) | NM | ||
| Purchases of property & equipment | (66.7 | ) | (93.7 | ) | (28.8 | ) | ||
| Other | (0.5 | ) | 0.1 | (600 | ) | |||
| Net cash used in investing activities | (67.2 | ) | (93.6 | ) | (28.2 | ) | ||
| Cash received from stock offering | 235.9 | 0.0 | NM | |||||
| Proceeds from borrowing | 80.5 | 220.3 | (63.5 | ) | ||||
| Repayment of finance lease obligations | (7.9 | ) | (86.0 | ) | (90.8 | ) | ||
| Repayment of borrowings | (74.7 | ) | (54.9 | ) | 36.1 | |||
| Other | (11.3 | ) | (2.7 | ) | 318.5 | |||
| Net cash provided by financing activities | 222.5 | 76.7 | 190.1 | |||||
| Change in cash | 245.1 | (29.8 | ) | NM | ||||
| Cash and equivalents and restricted cash – beginning of the period | 70.4 | 64.5 | 9.1 | |||||
| Cash and equivalents and restricted cash – end of the period | $ | 315.5 | $ | 34.7 | 809.2 | |||
Calculation of Special Items
Dollars in millions – Unaudited - amounts may not recalculate due to rounding
The following tables lists the items that are included as Special Items, net.
| Three Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| CARES Act grant recognition (1) | $ | (39.4 | ) | $ | (31.5 | ) |
| CARES Act employee retention credit (2) | (0.4 | ) | - | |||
| Aircraft purchase impacts (3) | 1.3 | - | ||||
| Total special items, net | $ | (38.5 | ) | $ | (31.5 | ) |
(1) In the quarter ended March 31, 2021, the Treasury awarded the Company a grant of
(2) Relates to a credit recognized under the CARES Act Employee Retention credit which is a refundable tax credit against certain employee taxes
(3) One aircraft was purchased in April 2021 that was previously under an operating lease. Aircraft lease buy-out expense represents the net costs incurred to terminate the lease on that aircraft. This includes the associated lease termination costs, write-off of previously capitalized maintenance deposits, and the write-off of over-market liabilities
| Six Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| CARES Act grant recognition (1) | $ | (71.6 | ) | $ | (31.5 | ) |
| CARES Act employee retention credit (2) | (0.8 | ) | - | |||
| Aircraft purchase impacts (3) | 7.0 | - | ||||
| Total special items, net | $ | (65.4 | ) | $ | (31.5 | ) |
(1) In the quarter ended March 31, 2021, the Treasury awarded the Company a grant of
(2) Relates to a credit recognized under the CARES Act Employee Retention credit which is a refundable tax credit against certain employee taxes
(3) Five aircraft were purchased in March 2021 that were previously under operating leases. One additional aircraft was purchased in April 2021 that was previously under an operating lease. Aircraft lease buy-out expense represents the net costs incurred to terminate the leases on those six aircraft. This includes the associated lease termination costs, write-off of previously capitalized maintenance deposits, and the write-off of over-market liabilities
Summary Income Statement
The following tables present revenue line items, expense line items and select operating statistics to provide a better comparison for 2021 results.
(Dollars in millions, except for operating statistics)
(Unaudited - amounts may not recalculate due to rounding)
| 2020 | |||||||||||
| 3 Mos Ended Mar 31 | 3 Mos Ended Jun 30 | 3 Mos Ended Sep 30 | 3 Mos Ended Dec 31 | ||||||||
| Operating Revenues: | |||||||||||
| Scheduled Service | $ | 114.2 | $ | 17.9 | $ | 27.0 | $ | 34.0 | |||
| Charter Service | 29.2 | 8.5 | 23.3 | 37.1 | |||||||
| Ancillary | 35.0 | 5.0 | 12.3 | 15.8 | |||||||
| Cargo | - | 3.2 | 14.2 | 19.3 | |||||||
| Other | 1.8 | 0.8 | 1.2 | 1.6 | |||||||
| Total Operating Revenue | 180.3 | 35.4 | 78.0 | 107.8 | |||||||
| Operating Expenses: | |||||||||||
| Aircraft Fuel | 55.6 | 0.7 | 13.1 | 14.0 | |||||||
| Salaries, Wages, and Benefits | 38.1 | 32.5 | 36.3 | 34.7 | |||||||
| Aircraft Rent | 11.0 | 5.9 | 6.4 | 7.6 | |||||||
| Maintenance | 6.5 | 2.4 | 6.3 | 12.2 | |||||||
| Sales and Marketing | 8.6 | 1.6 | 2.9 | 3.4 | |||||||
| Depreciation and Amortization | 10.5 | 12.2 | 12.9 | 12.5 | |||||||
| Ground Handling | 9.3 | 1.6 | 4.9 | 4.8 | |||||||
| Landing Fees and Airport Rent | 11.1 | 2.7 | 8.6 | 8.9 | |||||||
| Special Items, net | - | (31.5 | ) | (32.9 | ) | (0.2 | ) | ||||
| Other Operating, net | 14.4 | 9.5 | 10.4 | 14.3 | |||||||
| Total Operating Expenses | 165.1 | 37.6 | 69.2 | 112.2 | |||||||
| Operating Income (Loss) | $ | 15.2 | $ | (2.2 | ) | $ | 8.8 | $ | (4.4 | ) | |
| Operating Statistics: | |||||||||||
| Scheduled ASMs (millions) | 1,508.2 | 318.0 | 763.4 | 876.6 | |||||||
| Total ASMs (millions) | 1,757.1 | 417.5 | 974.6 | 1,162.0 | |||||||
| Charter Block hours | 3,612 | 1,321 | 2,920 | 4,259 | |||||||
| Cargo Block hours | - | 1,076 | 5,168 | 7,604 | |||||||
(Dollars in millions, except for operating statistics)
(Unaudited - amounts may not recalculate due to rounding)
| 2019 | |||||||||
| 3 Mos Ended Mar 31 | 3 Mos Ended Jun 30 | 3 Mos Ended Sep 30 | 3 Mos Ended Dec 31 | ||||||
| Operating Revenues: | |||||||||
| Scheduled Service | $ | 124,1 | $ | 95.4 | $ | 93.0 | $ | 83.6 | |
| Charter Service | 38.2 | 41.7 | 45.9 | 48.8 | |||||
| Ancillary | 29.4 | 29.2 | 30.5 | 29.0 | |||||
| Cargo | - | - | - | - | |||||
| Other | 5.0 | 3.1 | 2.1 | 2.4 | |||||
| Total Operating Revenue | 196.7 | 169.4 | 171.5 | 163.9 | |||||
| Operating Expenses: | |||||||||
| Aircraft Fuel | 36.6 | 43.5 | 47.3 | 38.3 | |||||
| Salaries, Wages, and Benefits | 34.8 | 36.3 | 34.6 | 35.1 | |||||
| Aircraft Rent | 14.6 | 12.4 | 10.9 | 11.9 | |||||
| Maintenance | 9.5 | 6.1 | 9.4 | 10.3 | |||||
| Sales and Marketing | 10.6 | 9.0 | 7.8 | 8.0 | |||||
| Depreciation and Amortization | 7.5 | 8.5 | 9.4 | 9.5 | |||||
| Ground Handling | 10.1 | 10.0 | 10.9 | 10.7 | |||||
| Landing Fees and Airport Rent | 11.1 | 10.5 | 12.2 | 10.7 | |||||
| Special Items, net | (1.0 | ) | 7.4 | 0.0 | 0.7 | ||||
| Other Operating, net | 16.3 | 16.2 | 18.6 | 17.1 | |||||
| Total Operating Expenses | 150.2 | 159.8 | 161.0 | 152.3 | |||||
| Operating Income | $ | 46.5 | $ | 9.5 | $ | 10.5 | $ | 11.6 | |
| Operating Statistics: | |||||||||
| Scheduled ASMs (millions) | 1,532.6 | 1,429.4 | 1,486.2 | 1,299.1 | |||||
| Total ASMs (millions) | 1,813.5 | 1,744.3 | 1,851.8 | 1,654.9 | |||||
| Charter Block hours | 4,441 | 4,820 | 5,300 | 5,292 | |||||
| Cargo Block hours | - | - | - | - | |||||
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted EBITDAR and Adjusted EBITDAR Margin
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, and Adjusted Net Income are non-GAAP measures included as supplemental disclosure because we believe they are useful indicators of our operating performance. Derivations of operating income and net income are well recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in our industry. Adjusted EBITDAR and Adjusted EBITDAR Margin is a non-GAAP measure included as supplemental disclosure because we believe it is a valuation measure commonly used by investors, securities analysts and other interested parties in the industry to compare airline companies and derive valuation estimates without consideration of airline capital structure or aircraft ownership methodology. We believe that while items excluded from Adjusted EBITDAR and Adjusted EBITDAR Margin may be recurring in nature and should not be disregarded in evaluation of our earnings performance, Adjusted EBITDAR and Adjusted EBITDAR Margin is useful because its calculation isolates the effects of financing in general, the accounting effects of capital spending and acquisitions (primarily aircraft, which may be acquired directly, directly subject to acquisition debt, by finance lease or by operating lease, each of which is presented differently for accounting purposes), and income taxes, which may vary significantly between periods and for different companies for reasons unrelated to overall operating performance. Adjusted EBITDAR and Adjusted EBITDAR Margin should not be viewed as a measure of overall performance or considered in isolation or as an alternative to net income because it excludes aircraft rent, which is a normal, recurring cash operating expense that is necessary to operate our business. We have historically incurred substantial rent expense due to our legacy fleet of operating leased aircraft, which are currently being transitioned to owned and finance leased aircraft.
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted EBITDAR and Adjusted EBITDAR Margin have limitations as analytical tools. Some of the limitations applicable to these measures include: Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted EBITDAR and Adjusted EBITDAR Margin do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; Adjusted EBITDAR and Adjusted EBITDAR Margin does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; Adjusted EBITDAR and Adjusted EBITDAR Margin does not reflect changes in, or cash requirements for, our working capital needs; they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDAR and Adjusted EBITDAR Margin does not reflect any cash requirements for such replacements; and other companies in our industry may calculate Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted EBITDAR and Adjusted EBITDAR Margin differently than we do, limiting each measure’s usefulness as a comparative measure. Because of these limitations, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted EBITDAR and Adjusted EBITDAR Margin should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.
As derivations of Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted EBITDAR and Adjusted EBITDAR Margin are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result, derivations of net income, including Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted EBITDAR and Adjusted EBITDAR Margin, as presented may not be directly comparable to similarly titled measures presented by other companies. For the foregoing reasons, each of Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted EBITDAR and Adjusted EBITDAR Margin has significant limitations which affect its use as an indicator of our profitability and valuation. Accordingly, you are cautioned not to place undue reliance on this information.
Reconciliation of Adjusted Operating Income to GAAP Operating Income
Dollars in millions – Unaudited - amounts may not recalculate due to rounding
The following table presents the reconciliation of adjusted operating income to GAAP operating income.
| Three Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| Operating revenue | $ | 149.2 | $ | 35.4 | ||
| Operating income (loss) | 49.2 | (2.2 | ) | |||
| Special items, net (1) | (38.5 | ) | (31.5 | ) | ||
| Stock compensation expense | 0.7 | 0.4 | ||||
| Tax receivable agreement expense (2) | 0.1 | - | ||||
| Voluntary leave expense (3) | - | 2.5 | ||||
| Adjusted operating income (loss) | $ | 11.5 | $ | (30.8 | ) | |
| Operating income (loss) margin | 33.0 | % | (6.3 | %) | ||
| Adjusted operating income (loss) margin | 7.7 | % | (87.0 | %) | ||
(1) See special items table above for more details
(2) This represents the one-time costs to establish the Tax Receivable Agreement with our pre-IPO stockholders
(3) This represents expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of Special Items, net
Reconciliation of Adjusted Operating Income to GAAP Operating Income
Dollars in millions – Unaudited - amounts may not recalculate due to rounding
The following table presents the reconciliation of adjusted operating income to GAAP operating income.
| Six Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| Operating revenue | $ | 276.8 | $ | 215.7 | ||
| Operating income | 74.2 | 13.0 | ||||
| Special items, net (1) | (65.4 | ) | (31.5 | ) | ||
| Stock compensation expense | 3.6 | 0.8 | ||||
| Tax receivable agreement expense (2) | 0.3 | - | ||||
| Voluntary leave expense (3) | - | 2.5 | ||||
| Adjusted operating income (loss) | $ | 12.7 | $ | (15.2 | ) | |
| Operating income (loss) margin | 26.8 | % | 6.0 | % | ||
| Adjusted operating income (loss) margin | 4.6 | % | (7.0 | %) | ||
(1) See special items table above for more details
(2) This represents the one-time costs to establish the Tax Receivable Agreement with our pre-IPO stockholders
(3) This represents expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of Special Items, net
Reconciliation of Adjusted Income Before Income Tax to GAAP Income Before Income tax
Dollars in millions – Unaudited - amounts may not recalculate due to rounding
The following table presents the reconciliation of adjusted income before income tax to GAAP income before income tax.
| Three Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| Net Income (loss) | $ | 51.8 | $ | (6.0 | ) | |
| Add: Provision for income tax expense | 9.5 | (1.9 | ) | |||
| Income (loss) before income tax, as reported | 61.2 | (7.9 | ) | |||
| Pre-tax margin | 41.0 | % | (22.4 | %) | ||
| Special items, net (1) | (38.5 | ) | (31.5 | ) | ||
| Stock compensation expense | 0.7 | 0.4 | ||||
| Loss on asset transactions, net | - | 0.3 | ||||
| Tax receivable agreement expense (2) | 0.1 | - | ||||
| Tax receivable agreement adjustment (3) | (18.7 | ) | - | |||
| Voluntary leave expense (4) | - | 2.5 | ||||
| Secondary offering related expense | 0.6 | - | ||||
| Adjusted income (loss) before income tax | $ | 5.4 | $ | (36.2 | ) | |
| Adjusted Pre-tax margin | 3.6 | % | (102.3 | %) | ||
(1) See special items table above for more details
(2) This represents the one-time costs to establish the Tax Receivable Agreement (“TRA”) with our pre-IPO stockholders
(3) This represents the adjustment to the TRA for the period, which is recorded in Non-operating (Income) / Expense
(4) This represents expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of Special Items, net
Reconciliation of Adjusted Income Before Income Tax to GAAP Income Before Income tax
Dollars in millions – Unaudited - amounts may not recalculate due to rounding
The following table presents the reconciliation of adjusted income before income tax to GAAP income before income tax.
| Six Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| Net Income | $ | 64.2 | $ | 1.2 | ||
| Add: Provision for income tax expense | 14.9 | 0.5 | ||||
| Income before income tax, as reported | 79.0 | 1.8 | ||||
| Pre-tax margin | 28.5 | % | 0.8 | % | ||
| Special items, net (1) | (65.4 | ) | (31.5 | ) | ||
| Stock compensation expense | 3.6 | 0.8 | ||||
| Loss on asset transactions, net | - | 0.4 | ||||
| Early pay-off of US Treasury loan | 0.8 | - | ||||
| Tax receivable agreement expense (2) | 0.3 | - | ||||
| Tax receivable agreement adjustment (3) | (18.7 | ) | - | |||
| Loss on refinancing credit facility | 0.4 | - | ||||
| Voluntary leave expense (4) | - | 2.5 | ||||
| Secondary offering related expense | 0.6 | - | ||||
| Adjusted income (loss) before income tax | $ | 0.7 | $ | (26.0 | ) | |
| Adjusted Pre-tax margin | 0.3 | % | (12.1 | %) | ||
(1) See special items table above for more details
(2) This represents the one-time costs to establish the Tax Receivable Agreement (“TRA”) with our pre-IPO stockholders
(3) This represents the adjustment to the TRA for the period, which is recorded in Non-operating (Income) / Expense
(4) This represents expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of Special Items, net
Reconciliation of Adjusted Net Income and Adjusted Earnings per Share to GAAP Net Income
Dollars and shares in millions, except for per share – Unaudited - amounts may not recalculate due to rounding
The following table presents the reconciliation of adjusted net income and adjusted earnings per share to GAAP net income.
| Three Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| Net income (loss) | $ | 51.8 | $ | (6.0 | ) | |
| Net income (loss) per share – diluted | $ | 0.83 | $ | (0.13 | ) | |
| Special items, net (1) | (38.5 | ) | (31.5 | ) | ||
| Stock compensation expense | 0.7 | 0.4 | ||||
| Loss on asset transactions, net | - | 0.3 | ||||
| Tax receivable agreement expense (2) | 0.1 | - | ||||
| Tax receivable agreement adjustment (3) | (18.7 | ) | - | |||
| Voluntary leave expense (4) | - | 2.5 | ||||
| Secondary offering costs | 0.6 | - | ||||
| Income tax effect of adjusting items, net (5) | 8.5 | 6.5 | ||||
| Adjusted net income (loss) | $ | 4.5 | $ | (27.8 | ) | |
| Diluted share count | 62.0 | 46.8 | ||||
| Adjusted net income (loss) per share - diluted | $ | 0.07 | $ | (0.59 | ) | |
(1) See special items table above for more details
(2) This represents the one-time costs to establish the Tax Receivable Agreement (“TRA”) with our pre-IPO stockholders
(3) This represents the adjustment to the TRA for the period, which is recorded in Non-operating (Income) / Expense
(4) This represents expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of Special Items, net
(5) The tax effect of adjusting items, net is calculated at the Company’s statutory rate for the applicable period
Reconciliation of Adjusted Net Income and Adjusted Earnings per Share to GAAP Net Income
Dollars and shares in millions, except for per share – Unaudited - amounts may not recalculate due to rounding
The following table presents the reconciliation of adjusted net income and adjusted earnings per share to GAAP net income.
| Six Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| Net income | $ | 64.2 | $ | 1.2 | ||
| Net income per share – diluted | $ | 1.12 | $ | 0.02 | ||
| Special items, net (1) | (65.4 | ) | (31.5 | ) | ||
| Stock compensation expense | 3.6 | 0.8 | ||||
| Loss on asset transactions, net | - | 0.4 | ||||
| Early pay-off of US Treasury loan | 0.8 | - | ||||
| Tax receivable agreement expense (2) | 0.3 | - | ||||
| Tax receivable agreement adjustment (3) | (18.7 | ) | - | |||
| Loss on refinancing credit facility | 0.4 | - | ||||
| Voluntary leave expense (4) | - | 2.5 | ||||
| Secondary offering costs | 0.6 | - | ||||
| Income tax effect of adjusting items, net (5) | 13.7 | 6.4 | ||||
| Adjusted net (loss) | $ | (0.4 | ) | $ | (20.2 | ) |
| Diluted share count | 57.4 | 48.2 | ||||
| Adjusted net income (loss) per share - diluted | $ | (0.01 | ) | $ | (0.42 | ) |
(1) See special items table above for more details
(2) This represents the one-time costs to establish the Tax Receivable Agreement (“TRA”) with our pre-IPO stockholders
(3) This represents the adjustment to the TRA for the period, which is recorded in Non-operating (Income) / Expense
(4) This represents expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of Special Items, net
(5) The tax effect of adjusting items, net is calculated at the Company’s statutory rate for the applicable period
Reconciliation of Adjusted EBITDAR to GAAP Net Income
Dollars in millions – Unaudited - amounts may not recalculate due to rounding
The following tables present the reconciliation of Net Income (Loss) to Adjusted EBITDAR for the periods presented below.
| Three Months Ended June 30, | Three Months Ended December 31 | |||||||||
| 2021 | 2020 | 2020 | ||||||||
| Net income (loss) | $ | 51.8 | $ | (6.0 | ) | $ | (8.0 | ) | ||
| Special items, net (1) | (38.5 | ) | (31.5 | ) | (0.2 | ) | ||||
| Loss on asset transactions, net | - | 0.3 | - | |||||||
| Interest expense | 6.1 | 5.4 | 5.9 | |||||||
| Stock compensation expense | 0.7 | 0.4 | 0.8 | |||||||
| Tax receivable agreement expense (2) | 0.1 | - | - | |||||||
| Tax receivable agreement adjustment (3) | (18.7 | ) | - | - | ||||||
| Interest income | - | (0.1 | ) | - | ||||||
| Voluntary leave expense (4) | - | 2.5 | 0.4 | |||||||
| Secondary offering costs | 0.6 | - | - | |||||||
| Provision for income taxes | 9.5 | (1.9 | ) | (2.2 | ) | |||||
| Depreciation and amortization | 13.5 | 12.2 | 12.5 | |||||||
| Aircraft rent | 3.8 | 5.9 | 7.6 | |||||||
| Adjusted EBITDAR | $ | 28.8 | $ | (12.7 | ) | $ | 16.7 | |||
| Adjusted EBITDAR margin | 19.3 | % | (35.9 | %) | 15.5 | % | ||||
(1) See special items table above for more details
(2) This represents the one-time costs to establish the Tax Receivable Agreement (“TRA”) with our pre-IPO stockholders
(3) This represents the adjustment to the TRA for the period, which is recorded in Non-operating (Income) / Expense
(4) This represents expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of Special Items, net
Reconciliation of Adjusted EBITDAR to GAAP Net Income
Dollars in millions – Unaudited - amounts may not recalculate due to rounding
The following tables present the reconciliation of Net Income to Adjusted EBITDAR for the periods presented below.
| Six Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| Net income | $ | 64.2 | $ | 1.2 | ||
| Special items, net (1) | (65.4 | ) | (31.5 | ) | ||
| Loss on asset transactions, net | - | 0.4 | ||||
| Interest expense | 13.2 | 11.1 | ||||
| Stock compensation expense | 3.6 | 0.8 | ||||
| Tax receivable agreement expense (2) | 0.3 | - | ||||
| Tax receivable agreement adjustment (3) | (18.7 | ) | - | |||
| Interest income | - | (0.3 | ) | |||
| Voluntary leave expense (4) | - | 2.5 | ||||
| Secondary offering costs | 0.6 | - | ||||
| Provision for income taxes | 14.9 | 0.5 | ||||
| Depreciation and amortization | 26.1 | 22.7 | ||||
| Aircraft rent | 9.4 | 17.0 | ||||
| Adjusted EBITDAR | $ | 48.2 | $ | 24.4 | ||
| Adjusted EBITDAR margin | 17.4 | % | 11.3 | % | ||
(1) See special items table above for more details
(2) This represents the one-time costs to establish the Tax Receivable Agreement (“TRA”) with our pre-IPO stockholders
(3) This represents the adjustment to the TRA for the period, which is recorded in Non-operating (Income) / Expense
(4) This represents expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of Special Items, net
Adjusted CASM is a non-GAAP measure derived from CASM by excluding fuel costs, costs related to our cargo operations (starting in 2020 when we launched our cargo operations), certain commissions and other costs of selling our vacations product from this measure as these costs are unrelated to our airline operations and improve comparability to our peers. Adjusted CASM is an important measure used by management and by our board of directors in assessing quarterly and annual cost performance. Adjusted CASM is also a measure commonly used by industry analysts and we believe it is an important metric by which they compare our airline to others in the industry, although other airlines may exclude certain other costs in their calculation of Adjusted CASM. The measure is also the subject of frequent questions from investors. Adjusted CASM excludes fuel costs. By excluding volatile fuel expenses that are outside of our control from our unit metrics, we believe that we have better visibility into the results of operations and our non-fuel cost initiatives. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can lead to a significant improvement in operating results. In addition, we believe that all domestic carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management and investors to understand the impact and trends in company-specific cost drivers, such as labor rates, aircraft costs and maintenance costs, and productivity, which are more controllable by management. Adjusted CASM also excludes special items and other adjustments, as defined in the relevant reporting period, that are not representative of the ongoing costs necessary to our airline operations and may improve comparability between periods. We also exclude stock compensation expense when computing Adjusted CASM. The Company’s compensation strategy includes the use of stock-based compensation to attract and retain employees and executives and is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period. As derivations of Adjusted CASM are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result, derivations of Adjusted CASM as presented may not be directly comparable to similarly titled measures presented by other companies. Adjusted CASM should not be considered in isolation or as a replacement for CASM. For the foregoing reasons, Adjusted CASM has significant limitations which affect its use as an indicator of our profitability. Accordingly, you are cautioned not to place undue reliance on this information.
Reconciliation of Adjusted CASM to CASM
amounts may not recalculate due to rounding
The following table presents the reconciliation of CASM to Adjusted CASM.
| Three Months Ended June 30, | ||||||||||
| 2021 | 2020 | |||||||||
| Operating Expenses - mm | Per ASM (cents) | Operating Expenses - mm | Per ASM (cents) | |||||||
| CASM | $ | 100.0 | 6.93 | $ | 37.6 | 9.01 | ||||
| Less: | ||||||||||
| Aircraft fuel | 29.7 | 2.06 | 0.7 | 0.17 | ||||||
| Stock compensation expense | 0.7 | 0.05 | 0.4 | 0.09 | ||||||
| Special items,net (1) | (38.5 | ) | (2.67 | ) | (31.5 | ) | (7.54 | ) | ||
| Tax receivable agreement expense(2) | 0.1 | 0.0 | - | - | ||||||
| Voluntary leave expense (3) | - | - | 2.5 | 0.61 | ||||||
| Cargo expenses, not already adjusted above | 16.2 | 1.12 | 4.5 | 1.08 | ||||||
| Sun Country Vacations | 0.2 | 0.01 | 0.1 | 0.03 | ||||||
| Adjusted CASM | $ | 91.6 | 6.35 | $ | 60.8 | 14.57 | ||||
| Available seat miles (ASMs) - mm | 1,442.7 | 417.5 | ||||||||
(1) See special items table above for more details
(2) This represents the one-time costs to establish the Tax Receivable Agreement with our pre-IPO stockholders
(3) This represents expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of Special Items, net
Reconciliation of Adjusted CASM to CASM
amounts may not recalculate due to rounding
The following table presents the reconciliation of CASM to Adjusted CASM.
| Six Months Ended June 30, | ||||||||||
| 2021 | 2020 | |||||||||
| Operating Expenses - mm | Per ASM (cents) | Operating Expenses - mm | Per ASM (cents) | |||||||
| CASM | $ | 202.6 | 7.19 | $ | 202.7 | 9.32 | ||||
| Less: | ||||||||||
| Aircraft fuel | 54.0 | 1.91 | 56.2 | 2.59 | ||||||
| Stock compensation expense | 3.6 | 0.13 | 0.8 | 0.03 | ||||||
| Special items,net (1) | (65.4 | ) | (2.32 | ) | (31.5 | ) | (1.45 | ) | ||
| Tax receivable agreement expense(2) | 0.3 | 0.01 | - | - | ||||||
| Voluntary leave expense (3) | - | - | 2.5 | 0.12 | ||||||
| Cargo expenses, not already adjusted above | 33.4 | 1.18 | 4.5 | 0.21 | ||||||
| Sun Country Vacations | 0.4 | 0.01 | 0.3 | 0.02 | ||||||
| Adjusted CASM | $ | 176.3 | 6.25 | $ | 169.8 | 7.81 | ||||
| Available seat miles (ASMs) - mm | 2,819.5 | 2,174.6 | ||||||||
(1) See special items table above for more details
(2) This represents the one-time costs to establish the Tax Receivable Agreement with our pre-IPO stockholders
(3) This represents expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of Special Items, net
FAQ
What were Sun Country Airlines' Q2 2021 earnings?
How much revenue did Sun Country Airlines generate in Q2 2021?
What is the passenger load factor for Sun Country Airlines in Q2 2021?
How does Sun Country Airlines' Q2 2021 performance compare to Q2 2020?
What are the expected revenue figures for Sun Country Airlines in Q3 2021?
