Welcome to the Sun Country Airlines third quarter 2024 earnings call. My name is Daniel, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. 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 subject to risks and uncertainties. Actual results may differ materially. We encourage you to review the risk factors and cautionary statements outlined in our earnings release and on our most recent SEC filings. We assume no obligation to update any forward-looking statement. You can find our third quarter 2024 earnings press release and investor relations portion of our website at ir.suncountry.com. With that said, I'd like to turn it over to Jude. Thanks, Chris. Good morning, everyone. Happy Halloween. Our diversified business model is unique in the airline industry. Due to the predictability of our charter and cargo businesses, we are able to deliver the most flexible scheduled service capacity in the industry. The combination of our scheduled flexibility and low fixed cost model allows us to respond to both predictable leisure demand fluctuations and exogenous industry shocks. We believe, due to our structural advantages, we'll be able to reliably deliver industry-leading profitability throughout all cycles. Domestic industry capacity growth peaked in June at almost 7%, and the growth rate has been slowing ever since. But across our network, industry capacity reached a peak growth rate of 12%. By January, domestic industry capacity will be flat year on year and will be down across our network. Many airlines' earnings calls have focused on a rationalization of capacity. Clearly, much of the capacity that other airlines added across our network was loss-making and has been removed. All the while, Sun Country continues to expand and produce profits and healthy cash flows. Selling unit revenues are now positive year on year for all future selling months. Flown unit revenues will lag, but we now expect fourth quarter RASM year on year to be around flat, based on industry schedules that remain bullish on unit revenue trends into next year. Translating scheduled unit revenue trends into margins, we have positive trends in charter yields and cargo yields, both of which are contractual. We have mostly passed the post-COVID inflationary pressures and are expecting only modest ex-fuel unit cost increases going forward, and fuel is down. As shown in our 4 Q guide, we believe we'll likely show a margin expansion, and based on current inputs, I remain bullish into 2025 as well. Another common topic on airline 3 Q calls has been challenges with aircraft availability and OEM deliveries and AOGs caused by OEMs. Again, to draw a distinction with our business, all the aircraft supporting our fleet growth for 2025 and 2026 are currently in operation with other carriers. They are either on our balance sheet as leased out until they are redelivered or committed through our cargo program. Further, borrowing costs are a common topic. Just to remind everyone, we continue to produce free cash flow and are able to self-fund our modest CapEx requirements. As such, our debt levels continue to decline even as we grow. As we ride these positive trends, this management team will primarily be focused on operational improvements and service delivery. This past summer was very challenging operationally, as we discussed in the past, and only to cap the season off with hurricanes and a major IT disruption. But since August 1st, we have achieved a 99.5% controllable completion factor. We have an incredible team that navigates these challenges, and I'm proud to be part of it. With that, I'll turn it over to Dave. Thanks, Jude. We're pleased to report that Q3 was our ninth consecutive quarter of profitability, and year to date, Sun Country has among the highest margins in the industry. Both our cargo segment and our charter line of business continue to produce solid growth, which has partially offset the capacity-driven pricing pressure we've experienced in the scheduled service business this year. As industry capacity continues to rationalize, we're seeing a stronger pricing environment in Q4 and into Q1 of 2025. Sun Country has rapidly matched our capacity with market demand as Q3 scheduled service ASM growth fell to 5.8% year-over-year versus more than 18% in the second quarter. We're planning this growth to slow further in Q4, with scheduled service ASM growth expected to be slightly higher than 3% year-over-year. Let me now turn to the specifics of Q3. First, to revenue and capacity. Third quarter total revenue was $249.5 million, which was roughly flat with the third quarter 2023. Revenue for our passenger segment, which includes our scheduled service and charter businesses, fell 3% year-over-year. Scheduled service revenue declined 5.9%, driven by an 11.1% decline in scheduled service TRASM. The quarter was impacted by industry overcapacity, the CrowdStrike outage, and hurricanes in Florida. We rapidly reduced our scheduled service capacity as the quarter proceeded, with July growing 12% versus prior year, but September shrinking by 10%. Given the length of our booking window, it generally takes a couple of quarters to fully realize the impact of capacity changes on flown fare levels. We feel confident that our current capacity allocation for Q4 and Q1 2025 matches customer demand. Q4 scheduled service TRASMs is expected to be flat with Q4 2023 levels and total TRASMs, which includes our charter business, is expected to be up versus last year by low single digits. Charter revenue in the third quarter grew 7% to $51 million, which was a new quarterly high for Sun Country, partially offsetting scheduled service weakness. Driving this result was a 1.7% increase in charter block hours and a 5% improvement in revenue per block hour. Charter unit revenue improvement resulted from recently renegotiated contractual rate increases and a better mix of flying. Charter unit revenue growth would have been significantly higher had lower fuel prices not reduced the fuel cost reimbursement we received from our charter customers. Over 80% of our charter revenue during the quarter came from flying done under long-term agreements. For our cargo segment, revenue grew by 11.9% in Q3 to $29.2 million, which was also an all-time quarterly high. This growth came despite a 3.6% decrease in cargo block hours, resulting from aircraft and heavy check and hurricane-driven flight cancellations in the Southeast. Cargo revenue per block hour was up 16%, driven by the impact of a portion of the rate changes implicit in our extended Amazon agreement, as well as annual rate escalations. We continue to expect cargo flying to inflect sharply upward in 2025 as we take on an anticipated eight additional freighter aircraft throughout the year. In the segment reporting table included in our Q3 10-Q, you'll see that cargo margins improved significantly versus last year. As a reminder, the segment reporting in our quarterly filings includes allocated corporate overhead. The revised Amazon contract rates will continue to escalate as we receive additional aircraft and will not be in full effect until the second half of 2025. Turning now to costs, we continue to remain well-disciplined as Q3 CASM declined 1.9% versus the third quarter of 2023, while adjusted CASM increased 3.7%. This adjusted CASM increase was largely driven by our slowing growth during the quarter. Ground handling expenses grew 23.3% year-over-year, driven by more flying volume, higher outsourced ground handler costs, and one-time credits incurred in Q3 2023, which didn't repeat this year. Regarding landing fees and airport rents, we continue to see pressure on costs due to the rolloff of COVID-era relief payments that airports have been using to minimize rate increases. This contributed to a 14.5% increase in landing fees and airport rent expense during the quarter. As we move into Q4, the slowing growth in our scheduled service business is likely to continue to put some pressure on adjusted CASM. Regarding our balance sheet, our total liquidity at the end of the third quarter was $165 million. As of October 30th, total liquidity stood at approximately $184 million. Year to date, we've spent $42.6 million on CapEx, and we anticipate full year 2024 CapEx to be approximately $75 million. At this point, we do not expect to purchase any incremental aircraft until we begin looking at 2027 capacity. We continue to generate strong free cash flow, and our leverage remains low. We expect to finish the year with a net debt-to-adjusted EBITDA ratio of 2.3 times. Let me turn now to guidance. We expect fourth quarter total revenue to be between $250 and $260 million on block hour growth of 2%-5%. We're anticipating our fuel cost per gallon to be $2.47 and for us to achieve an operating margin between 7% and 9%. Our business is built for resiliency, and we'll continue to allocate capacity between segments to maximize profitability and minimize earnings volatility. With that, I will open it up for questions. 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. In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Duane Pfennigwerth with Evercore ISI. Your line is open. Hey, good morning. Thanks. So on cargo, just with respect to the existing book of business that you're doing, have you hit full run rate on improvements on the existing business that you're doing, or is some of that still building? And do you have any update on the timing of incremental cargo aircraft growth aircraft in 2025? Yeah. So the answer is not all of the rate changes that are implicit in our new agreement are included in that number. So a portion of them occurred this year, but there will be two more increases next year as the new aircraft deliver. We're really still looking to be on track for sort of the new cargo aircraft coming in, which would be late first, early second quarter for the first one, and then by late third, early fourth quarter for the eighth one. So it's a rapid ramp during the summer months of 2025. And by the end of the year of next year, 2025, all the aircraft should be operating, and the rate changes should be fully in place. Okay, great. That's very clear. And then just on the seasonal flying that you do in scheduled service away from Minneapolis, any new thinking in your approach there? Any kind of new markets you're particularly excited about? And are the industry capacity adjustments that you're seeing any different in those seasonal markets away from Minneapolis? No Minneapolis capacity. Hey, Duane, no Minneapolis capacity is primarily a Sun Country summer issue. And we're going to be likely shrinking scheduled service capacity summer of 2025 versus 2024 because of the cargo inductions that Dave was talking about. So total block hours for the year will be up somewhere around 10%. So we're still hiring and growing sort of at a controlled but sustainable pace, but the mix will be different. So for summer of next year, our non-Minneapolis flying will be under some small pressures, so consider it mostly flat. I wouldn't expect any new markets for summer next year. Very clear. We had a lot of market launches in the summer of 2024 out of Minneapolis predominantly, some non-Minneapolis markets, and some of those will also need to be suspended in order to support the cargo growth. Okay, got it. Thank you. Thank you. And our next question comes from Ravi Shankar with Morgan Stanley. Your line is open. Hi, good morning. This is Katherine Ahn for Ravi. Thank you for taking my question. Just a quick question on the update on the Oman aircraft that you've leased. I was curious if those are going to continue to be on lease or if you're planning to add those to your fleet? Yeah. So here's where we stand with that. We will definitely be adding them to our fleet. Remember, we have five aircraft, which were scheduled to sort of one of them redeliver this year and go into service next year, and then all of them in place here at Sun Country by the end of next year. I think what's going to happen, given some of these OEM delays that are impacting other airlines, they want to extend leases, and we're no exception to that. So they want to extend the leases that we have to them. So I would say it's very likely that we extend at least a portion of those aircraft out into 2026 before they are redelivered, which works well for us given the cargo growth we have next year. Got it. And just a quick follow-up. I was curious what the RASM opportunity might be next year, just given all this industry capacity has been coming out of the market. I was curious how you think about that impacting Sun Country? Thanks. Hey, Katherine. We just loaded summer schedule, so there's no meaningful volume of bookings past April. As I mentioned in my comments earlier, the first quarter bookings remain strong. We're seeing positive trends year on year, and so to the extent that we have data to look at in our own bookings beyond what other airlines have loaded in their schedules, things look really positive, but that's only through April. Thank you. And our next question comes from Brandon Oglenski with Barclays. Your line is open. Hey, good morning, Jude and Dave. Thanks for taking the question. So should we still be thinking double-digit declines in your scheduled service capacity or block-hour flying next year? Is that still the bogey? Yeah. So let me give a brief update on that. We're still finalizing the 2025 plan, but I think so we originally thought that we were going to need to shrink our scheduled service business next year on the order of, let's say, 10%-ish. I think given the situation with our pilots, better availability than we thought, that shrink in our scheduled service business is probably more like mid-single digits type number. Again, we're finalizing right now, but I think we'll be able to fly a little bit more on the passenger side next year than we had initially thought. Yeah. You can look at loaded schedules and compare July year on year and June year on year, and you'll see down high single digits. As we get more clarity on the delivery timing of the cargo fleet, there's a little bit of an input that is an unknown related to captain upgrades. We're not going to shrink from there. It'll only go higher. So we'll continue to add scheduled service capacity as the segment mix becomes clear and pilot staffing becomes more clear. I appreciate that, Jude. And I guess there was a comment about your booking profile. It takes a few months for capacity reductions to start showing up in higher fares or higher realized fares, I guess. Is there anything you're changing given that capacity is likely to be down next year in the way you're holding inventory or pricing? No. I think that comment, Brandon, was really more around just sort of leisure passengers and the tendency to book earlier, particularly given the leisure passenger mix that we have. So the only point was, as I think Jude mentioned, we're seeing nice upward trends, positive inflection year-over-year on a booked fare basis, but that won't sort of flow into flown revenue for a quarter or so because people buy in advance and maybe a little bit more in advance when they're leisure passengers. Okay. Understood. Thank you, guys. Thank you. Our next question comes from Michael Lindenberg with DB. Your line is open. Hi. Yes, this is Shannon Doherty on for Mike. Thanks for taking my questions. Dave, maybe a couple for you. With other revenue up 48% year-over-year, what drove that large increase? I mean, the biggest driver of that is ours. That's where the revenue from leased aircraft hits our P&L. So the aircraft that we have out on lease, we get revenue for. That's the line item where it's shown. Okay. Got it. And how do you think about balancing deploying your free cash flow for share buybacks and other uses, just knowing that some shareholders may be limited to some extent from buying your stock due to your current market cap and trading liquidity? Yeah. So we had a sort of a share buyback program going for a while. Our free cash flow profile looks good. I would say we are very rapidly amortizing debt right now, and that will continue into the future. I don't really foresee us in a share buyback mode for the next couple of months, but as we move into 2025, our cash is building rapidly. We'll sort of revisit this. There's always this trade-off for us in relatively limited float. People have difficulty getting in and out of the stock. As we buy back shares, it kind of exacerbates that. But we think our shares are a really good investment at this price. So as we move later this year into early next, we're going to revisit that. Just one thing on cash balances. The end of the third quarter is the annual trough in the seasonality of our cash balances, so when you look at the balance sheet on the 10-Q, just keep that in mind. Helpful. Thank you. Thank you. Our next question comes from Tom Fitzgerald with TD Cowen. Your line is open. Thanks so much for the time, everyone. Just going back to the health of the booking window, especially in Minneapolis with carriers like JetBlue leaving, could you touch on how seven-day rolling yields have trended over the last six or eight weeks or so? Sure. I mean, they're up, so seven-day trailing fares versus the same period last year are up in every selling month as we look forward where we have any significant volumes. And I mean, also, I just want to point out that the calendar shift for leisure carriers like ours that's happened this year is really powerful, so it's a late Thanksgiving and a midweek Christmas and New Year's. It's sort of the best setup that we could hope for, combined also with a late Easter extends our winter travel season, so there's a really weak period between Thanksgiving and Christmas. That's a relatively short period this year, and then we have a long winter booking cycle because of a late Easter, so there's some other background that's kind of helping bookings like those things. But generally, on our biggest, thickest markets for this winter, we're all seeing in each of those markets, we're seeing really positive trends. So that's Minneapolis, Vegas, LA, Orlando, Cancun, Fort Myers. December bookings in West Florida haven't been really affected by the hurricane challenges. So November will see an impact, but that appears to be over by the time the December schedule starts. So bookings look really good. That's super helpful. Thanks so much. And then just as a follow-up, once you get into 2026 and you have the Amazon, the full complement of the Amazon planes on board, how are you thinking about the seasonality of cargo block hours, just kind of first half, second half? Any color there would be really helpful. Thanks again for the time. If you go look at sort of the revenue profile of the cargo business, it varies. The main variance quarter to quarter, honestly, is just check volume, like what aircraft are going through check at any one time. So the business has a great advantage for us in that it's quite flat throughout the year, and we expect that to continue. A little bit harder flying during Amazon Prime periods, but not that much. So it's great, very stable business, and we expect that to continue as all the aircraft are in. Thank you. As a reminder, to ask a question, please press star one one on your telephone. Again, that is star 11 to ask a question. And our next question comes from Scott Group with Wolfe. Your line is open. Hey, thanks. Good morning. I want to follow up on the cargo revenue per block hour. So I don't know if I see it's up 7% over last quarter, 16% year-over-year. Which is sort of, in your mind, is more representative of the new rate with Amazon? And I'll tell you what I'm trying to figure out. It sounds like there's two more increases coming. Should we think about these other two increases similar in magnitude as what we just got? And I'm just trying to understand ultimately by the back half next year where this revenue per block has to go. Yeah. Yeah. Yeah. So the 16% year-over-year has got in it, the annual rate escalators, and then the other number you mentioned is quarter over quarter. I would say that without being too precise, that quarter over quarter number is more representative of one element of the new contractual rates. We have two more increases coming next year, which very roughly in totality between the two should be roughly equivalent to the increase we saw in the number you mentioned. I'm not going to get into detailed contractual rates here, but by the end of 2026, everything. Sorry, end of 2025, everything will be fully in. Okay. No, that's helpful. I just want to bring up also the rate structure has a fixed component and then a departure component and a block hour component. So utilization, mostly subject to heavy check schedules, has some impact on the per block hour rate that you're looking at in the financials. So there's not only rate changes, there's also a little bit of noise associated with other things. Yep. Makes sense. You made a comment that fares booked are positive, RASMs flat in Q4, and people on leisure tend to book early. Do you feel like we should be able to, does the fare positive translate into positive RASM in Q1, which is your big quarter, or has there been enough early booking where we may not see the RASM inflection in Q1? Yeah. We're not going to guide to 1 Q, but my point was only that the inflection happened a few months ago. So we were selling into flown months, October, November, December, at a negative fare versus last year up until a few months ago. Now it's positive. It'll take a while for total TRASM to catch up. But the further out in the schedule we look, the longer time we'll have of these positive booking trends, and the more bullish we become. Okay. Makes sense. And then just lastly, there's obviously a lot of mixed changes next year, schedule down, mid-single digit cargo growing. What's a good way to think about CASM next year? Yeah, so the plan is still sort of coming together. CASM is going to be up because the passenger business is down, and the passenger business is what drives CASM, obviously, not the cargo business. I would say we're looking at numbers, let's just call it mid-single digit up next year in CASM, but that's subject to change here as we finalize our plan. Makes sense. Thank you, guys. Appreciate it. Thanks, Scott. Thank you. I'm showing no further questions at this time. Oh, now I'd like to turn it back to Jude Bricker, closing remarks. Hey, guys. Thanks for your interest. I hope everybody has a great weekend. We're really excited about what we're seeing on booking trends, which we've talked about quite a lot this morning, and look forward to giving you another update in 90 days. Have a great day, everybody. This concludes today's conference call. Thank you for participating. You may now disconnect.