Sun Country Airlines (SNCY) Investor Update summary

Amazon Agreement Expansion and Cargo Growth

• Amended agreement with Amazon adds 8 B737-800 freighters, increasing the total cargo fleet to 20 by end of 2025 and extends the contract through 2030, with options to 2037.

• All 2025 growth resources will be dedicated to the Amazon cargo business, with expected cargo segment growth of 60%-65% in 2025 and 13%-15% in 2026.

• Amazon provides all aircraft, eliminating capital expenditure for Sun Country, and no major new bases are planned.

• No additional warrants were issued in the new agreement; existing warrants will vest faster due to increased Amazon revenue.

• Cargo operations offer less seasonality and reduce earnings volatility, with no cap on future fleet size if Amazon expands its narrowbody fleet.

Passenger Segment and Financial Outlook

• Scheduled service segment will shrink by 10%-12% in 2025, with growth resuming in 2026 at 6%-8%.

• Reduction in off-peak flying is expected to drive significant unit revenue (RASM/TRASM) improvements for the passenger business in 2025.

• Contribution margin from Amazon flying is expected to match historical passenger margins by late 2025.

• Preliminary outlook suggests substantially better margins in 2025 versus 2024, with high single-digit RASM improvement expected from reduced block hours.

• Q2 revenue guidance narrowed to $255M-$257M, with operating margin expected at 4%-5% and favorable year-over-year CASM for the third consecutive quarter.

Capital Allocation and Operational Details

• CapEx burden remains low through 2025-2026, with surplus cash likely allocated to share buybacks or debt reduction.

• No utilization minimums in CMI leases; payment structure includes per-aircraft and block hour components, providing a functional floor.

• Schedules for Amazon flying are received about four months in advance, allowing for operational planning and efficiency.

• Growth will require more pilots, but integration will leverage cross-utilization within the existing workforce.

• Seasonal mix in 2025 will benefit from cargo aircraft deliveries starting in Q2, with Q1 scheduled service remaining strong.