Welcome to the Sun Country Airlines business and second quarter update. My name is Josh, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I will now turn the call over to Chris Allen, Director of Investor Relations. Mr. Allen, you may begin. Thank you. I'm joined today by Jude Bricker, our Chief Executive Officer, Dave Davis, President and Chief Financial Officer, and a group of others to help answer questions. Before we begin, I'd like to remind everyone that during this call, the company may make certain statements that constitute forward-looking statements. Our remarks today may include forward-looking statements, which are based upon management's current beliefs, expectations, and assumptions and are subject to risks and uncertainties. Actual results may differ materially. We encourage you to review the risk factors and cautionary statements outlined in our SEC filings. We assume no obligation to update any forward-looking statements. You can find our press release and the accompanying presentation on the investor relations portion of our website at ir.suncountry.com. With that said, I'd like to now turn the call over to Dave. Thank you, Chris. Good afternoon, everyone. Thanks for joining us on the call. Our intent today is to update our investors and analysts on our revised Amazon agreement, provide a very high-level look at our growth plans over the next couple of years, and update our outlook for Q2. First of all, we're very excited to announce that we've entered into an amended Air Transport Services Agreement with Amazon. Per this agreement, we will grow our cargo fleet by an expected 8 additional aircraft and extend the term of the agreement to 2030, with additional extensions possible through 2037. Amazon has been a great partner of ours since 2019, and we look forward to continuing this relationship well into the future. This expanded agreement reflects Sun Country's unique business model and importantly, our diversified revenue streams, and we expect our growth in 2025 to be focused on our cargo segment. On Thursday morning, we 8-K'd a short presentation to accompany this call, which is also available on our IR site, as Chris mentioned. Let me just briefly walk through the slides, then I'll open the call for a few questions that Jude or I or others can, can field. First of all, starting on page three of the presentation, this is a look at the major terms of the agreement. We think this agreement provides some key benefits for, for Sun Country. First of all, as I mentioned, we're expecting to take eight incremental aircraft, and we're expecting to take those aircraft in 2025, with deliveries to us, or in-service dates, let's say, starting at the end of the first quarter and extending through the third quarter of 2025. When you add the 12 aircraft we now have, this brings our total freighter fleet to 20 aircraft, which we hope to be at by the end of 2025. Also, as I mentioned, we extended the term of the agreement, so the base agreement is extended through 2030, and then there's a couple of extension options in there that can take the agreement all the way out to 2037. I think really importantly is with this new agreement, we sort of achieved balanced economics here, and here's what I mean by that. So we expect on a steady-state basis, once fully ramped towards the, like I said, third, fourth quarter of 2025, that the contribution margin of the Amazon flying will be basically on par with the contribution margin of our passenger flying on a historical basis. So by that, we mean basically our 2023 passenger margins, the contribution of that business, we expect to be similar to our Amazon business going forward. So this is indifferent between Amazon and the passenger business to decide which segment we grow in, and we've achieved these improved economics. And then really importantly, you know, as we look forward here from our CapEx perspective, as with the 12 aircraft we have, there's no CapEx required to grow this fleet, because the aircraft are controlled by Amazon, and we operate them for Amazon. Turning to page four. So where are we going to grow over the next couple of years? This is what our preliminary numbers look like. So in 2025, we expect all of the growth resources that we have to be dedicated to the Amazon business. So we expect, depending on exactly when the aircraft show up, we expect, you know, let's say, 60%-65% growth rate in our cargo business next year, and then 13%-15% in 2026, really due to just the annualization of the 2025 growth. What this is going to necessitate is a reduction in the size of our scheduled service segment in 2025, which we estimate to be between 10% and 12%. Then we'll begin growing that business again in 2026, which, you know, very preliminarily at this point, we expect to grow by 6%-8% in 2026. Now, a lot of that reduction in 2025 flying will come in off-peak periods and be our most marginal flying. So we're expecting significant unit revenue improvements in 2025 for our passenger business.... We sort of think that's really important at this point. If you look at this graph that we have on the bottom of the page, what we did here is just plot ASM growth between 2023 and—between 2019 and 2023, and then our TRASM growth over that period as well for all these carriers. You know, as you would expect, sort of the slower, more methodically growing carriers have produced outsized TRASM growth, and that's especially the case for Sun Country. So, you know, we expect to get back to this measured growth over the long term in our passenger business after some pretty rapid growth in 2025. As I mentioned, lower right-hand side, we're expecting significant TRASM improvement next year, and, you know, there's been a lot of growth this year and a lot of capacity added to the domestic market. Finally, on page five, Q2 results. This is what we're expecting at this point. So our previous guidance was revenue of $255 million-$265 million. We're tightening that up a bit towards the bottom end of the range here, $255 million-$257 million for the quarter. Fuel's coming in a bit favorable. We're expecting operating margin to be between 4% and 5% for the second quarter, and then our tax rate and the size of the airline is expected to be about the same as it was when we gave the original guidance. I think also importantly to note is we're expecting, and we continue to expect, favorable year-over-year CASM for the third straight quarter. So in the fourth quarter, the first quarter, and now the second quarter, we're expecting our Adjusted CASM ex to be favorable on a year-over-year basis. That's the slides. Again, we just wanted to update folks on this new agreement and what our longer term is looking like, and happy to take a few questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions. Our first question comes from Duane Pfennigwerth with Evercore ISI. You may proceed. Hey, thanks. Congrats on this expansion. Can you talk about if there are any startup costs? You know, if there is such a thing, like, the network for cargo, how will your cargo network line up with your existing passenger network? Any need for, like, new potential bases? Yeah. So I think we expect some startup CapEx, but we expect it to be pretty minimal. Like, for the total aircraft, think sort of low-digit millions from a CapEx perspective, so it's very small. You know, we don't have final schedules yet. We'll see where they want us to fly the aircraft. We're hoping that maybe it produces even sort of more efficient schedules since we have a greater mass of aircraft. From a basing perspective, again, I think, you know, we'll sort of make some decisions on that as we get more clarity on the schedule, which we just don't have yet. Okay, great. And then, I'm sure some clients have already backed into this, from the slides you gave, but can you give us a sense for, you know, overall kind of system block hour growth expectations, in 2025 and 2026? And maybe for those same years, how we think about the mix of earnings from cargo, specifically, what percentage of your EBIT, for example, would that represent? Yeah. So first of all, from a growth perspective, I think it's our objective to sort of continue to grow the airline on a high single-digit, low double-digit a year block hour number. That total growth may be a little bit slower than that in 2025, you know, maybe mid- to high single digits from a block hour perspective, with all of that and more dedicated to the cargo business. Then after that, as we get back into sort of 2026, it's probably that high single, low double-digit block hour growth for the fleet. You know, we're not going to get into a ton of the financials yet, but you know, as I mentioned, we wouldn't be taking on sort of this additional flying if it wasn't as profitable as our historic passenger business, our scheduled service business in particular. So you could probably do some rough math around that. It's a little bit premature for us to get into the details on the call, but, you know, we're expecting significantly improved contribution from the cargo business going forward. Okay, thanks very much. Thank you. Our next question comes from Ravi Shanker with Morgan Stanley. You may proceed. Thanks to all, for everyone. Dave, I think this happened a little bit quicker than we were expecting, just given the original contract timeline. So can you just unpack a little bit of, you know, how, how long has this negotiation taken? And how did it come about? And was it a, a function of some recent changes that Amazon was seeing in some of their other contracts, or has this discussion been going, going on for some time? Yeah, I mean, I would say the discussion as to the ultimate fleet size has been going on for an extended period of time. You know, as to Amazon's exact motives as to, you know, why there's a certain number of aircraft or certain providers, it's a little bit unclear. But specific negotiations around this particular expansion, I would say, have probably been underway for probably six months, maybe a little more than that, with more intensity in the last two to three months. You know, it's our belief that, you know, Amazon is focused on, on reliable service above all else to, to serve their customers. So, we think we've demonstrated that, over the years, and, you know, we've been rewarded with these additional aircraft. We believe because of it, they're, you know, our most important relationship at the company, and we wanna continue to provide that level of service as we go forward, and we're just gratified that we have these additional eight aircraft to fly. Understood. Just to follow up on that point, are you locked in on the fleet size, or is there opportunity to expand beyond 20 during the life of this contract if Amazon decides to get deeper into narrowbody? There's no lock on the fleet size. You know, I think we've talked before that Amazon operates 20 narrow bodies in the U.S., at this point, so we expect to be operating all of those. If they grow the fleet in the future, we would definitely hope to be, you know, considered for further expansion. I think that's a function of our performance, which we intend to continue to perform on. But there's no, you know, hard cap or anything like that. Understood. Thanks, Dave. Thank you. Our next question comes from Helane Becker with TD Cowen. You may proceed. Thanks very much, operator. Hi, team. I'm assuming this is gonna be operated the same way as the existing is, with no additional pilots required or anything like that, you know, just integrated into the existing business? Yeah, I mean, it'll be integrated into the existing business just exactly the way it is now. I mean, we, we won't have a, a segregated, you know, Amazon pilot corps or anything like that. The strength of the model is diversification and cross-utilization. So, you know, we expect to fully, to fully, you know, continue to be doing that into the future. You know, we'll need more pilots just because we're growing. So whatever growth resources we have as we move into 25, they're gonna be dedicated to the cargo business. And then, you know, we'll get back to scheduled service growth after that. But, you know, we'll need more pilots because the airline's bigger. Okay. That's very helpful. Thanks, Dave. And then my other question is, I don't know if you can answer this right now, but it's on the warrants. I, I didn't see anything in the document yesterday that talked about warrants changing. So can you maybe walk us through the value of the agreement, and... Or, or did you issue more warrants, and I just missed it in my, in my reading? Yeah, you didn't miss anything, Helane. We didn't issue any more warrants as part of, as part of the agreement. Okay, so then the value of the warrants just are the same as they were before, as if this change didn't occur. Is that how we should think about it? So this is the way that at a very high level, the warrant agreement works. So we granted Amazon a certain number of warrants in 2019 when we signed the original deal, and that's accessible. You can get that number. Right. Those warrants vest based on the amount of revenue that we get from Amazon. So it's fair to say that the vesting of those warrants will go faster because we're getting more revenue, but the number of absolute warrants issued is unchanged. That's how I would say it. Now, they vest fairly slowly. They'll continue to vest fairly slowly, but at a bit more rapid rate than they have been. Okay. That's hugely helpful. Thanks, Dave. Thank you. Our next question comes from Michael Linenberg with Deutsche Bank. You may proceed. Hi there, this is Shannon on for Mike. Thanks for taking my question. Two separate ones. On the revenue guidance down, I know it's very slight this quarter, you know, for the second quarter, but is there anything that we should read into, you know, regarding demand on that, or is it mostly just from an overly competitive landscape? Yeah, I think some of the fare pressure that we saw and talked about on our first quarter call essentially continues. I mean, there's been a fair amount of capacity added, some of it by us. You know, there's been fare pressure. I think it's a function of both capacity and, you know, just the sense of maybe just a general slowdown, a slight weakness in demand, you know, for sort of our consumer. Planes are full, fares are down a bit, so, you know, thus the sort of lower end of the range. And I would hope- Shannon, I'd add that the capacity, the capacity backdrop as you go through the rest of the year looks improved. So we're kind of at max capacity year-on-year growth into the second quarter at 10%, overlapped on our network, and then that improves into the back of the year, dropping into low single digits. Thanks, Jude. And for my second question, on future use of free cash flow generation, and I know that this Amazon contract is definitely going to boost that, are you planning for a new share purchase program or, you know, accelerate debt pay down? I know that your balance sheet is in great shape, but anything on uses of cash here would be helpful. ... Yeah, so as we've mentioned, our, you know, our CapEx burden is a lot less in 2024 than it was in 2023, and we expect it to continue low into 2025 and 2026. We bought back probably 10%-13% of our float in the last year and a half or so. We sort of exhausted the last of the authorized buyback in March. I think as we sort of look at the back half of the year, look at the revenue backdrop, yeah, the revenue backdrop, we'll make some more decisions on that. But it's fair to say that, you know, with our surplus cash, it's either going to be more share buybacks or maybe some debt paid down, but we haven't sort of firmed up on that yet. Thank you. Thank you. Our next question comes from Scott Group with Wolfe Research. You may proceed. Hey, thanks, guys. So I just want to follow up on the comments around contribution margins getting in line with passenger. I'm guessing some of this is, you know, apples and oranges, but in the 8-K, right, you talked about in 2023, passenger operating margins were 14% and cargo was -5%. Is that sort of directionally, when you talk about contribution margins, is that directionally the way to think about it, that there's like a 20-point improvement in cargo margin to go from, you know, in line with passenger? It's not quite that linear, but I think if you do sort of, off the top of my head, if you do kind of that rough math, you're going to get pretty close to what we would expect the steady state improvement to be in the bottom line, let's say by 2026. The issue and why it doesn't maybe not show up that way in the financials is, you know, we allocate overhead. Some of that overhead is allocated based on the number of aircraft. Some of it is based on block hours, so it may not sort of appear exactly that way, let's say, once we get into 2026. But the overall magnitude of the, let's say, the contribution to the overall airline from the math you're roughly doing in your head, it's probably not that far off. And so when you think about the net of, right, a lot more cargo next year, less passenger, right? RASM accretion from less off peak, right? Is the net of it, in your mind, better margin in 2025 than 2024? Our preliminary looks are substantially better margins in 2025 than 2024. Yeah. Okay. Helpful. And then, any way to just put some directional color on that, you know, RASM accretion comment, on the passenger side? You know, we say in the presentation here, and part of this is... Let's say it, let me say it this way. Let's say all else being equal, because clearly a lot of what's happening in the revenue environment is not directly Sun Country related, and it's just the backdrop. But if we're looking at a total reduction in block hours on the order of, you know, 10%-12%, it probably translates into RASM improvement on the order of, let's say, high single digits, you know, let's say eight-10, kind of a number. And again, this is- That's a big- ... X, X, the outside environment, just, you know, we'll pull out a lot of unfavorable capacity or a lot of unfavorable flying. Okay. Hey, Scott, it's Jude. I just want to make the point, 2025 will be special because the airplanes for cargo start to show up in the second quarter. So our first quarter will be benefiting from growth. You know, we're going to grow 10% of our block hours. Those block hours will be allocated in the scheduled service in the first quarter, and then our scheduled service will be reduced in the second and fourth quarters. So we have the seasonality benefit of the cargo growth in 2025, in addition to what Dave's talking about. Your point is, your Q1, that's always your seasonally best, doesn't see any of the reduction in passenger, Yeah, precisely. Passenger- So season- -block hours. Seasonal mix for scheduled service in 2025 will be better than it is in 2024. Yep. Okay. And then just last one, if I can, just near term, you know, just given the Q2, how should we think about just the normal seasonal Q2 to Q3? If you have any initial thoughts there. Normal seasonally between the two quarters, to go back and look historically, probably not that much different. You know, September is the worst month for the company, so maybe a touch worse, would be sort of seasonal two to three. Helpful. Thank you, guys. Thanks. Thank you. And as a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. One moment for questions. Our next question comes from Christopher Stathoulopoulos with Susquehanna Financial Group. You may proceed. Good morning. So two questions. Just, if you could, remind us with the CMI leases, whether they're utilization minimums, and then also the visibility into flight schedules for Amazon. So is it where you get schedules week of, month of? Just how much visibility do you have into what a typical month or quarter, flying and, you know, utilization might look like? Thank you. Yeah, let me take the first part on the CMI leases, and then Greg can talk about the second part. So there's no utilization minimums, but the contracts, the contract is structured in such a way that there's both a per aircraft and a block hour component to how we get paid. So functionally, there's sort of a minimum because there's simply a per block hour number in the, I mean, sort of a per aircraft number, which kind of serves as the floor. So Greg, on the schedule front? Yeah, on the schedule front, Chris, this is Greg Mays. We get those schedules much in advance. We actually have the opportunity to work with Amazon to make them more efficient. So I think we're probably talking four months out as we're working through schedules, so we get a lot of advance notice on those. We'd probably expect the first schedule with the new aircraft in it sometime in the fourth quarter. Okay, so next time this year, then, you would have at least an early read, by, call it August, you know, that timeframe for what peak might look like, peak season? You mean—you're talking about for, like, when we get our first look at the new Amazon schedules? Right. So for instance, if we're fast forward, you know, next, next August at this time, July, you would have at least a kind of a preliminary flight schedule for Amazon with what fourth quarter peak flying or fourth quarter utilization might look like. Yeah. So, think of, you know, like, 3 to 4, like, 4 months before the quarter starts. Okay, great. Thank you. Thank you. I would now like to turn the call back over to Dave Davis for any closing remarks. Thanks, everyone. As I said at the top of the call, this is an exciting time for us. A lot of good things happening at the airline, and we appreciate everyone joining, and we'll talk to you again after our second quarter earnings announcement. Thanks. Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.