Sun Country Airlines Holdings Inc (SNCY) 2024 Q1 法說會逐字稿

Welcome to the Sun Country Airlines' first-quarter 2024 earnings call. My name is Jill, and I will be your operator for today's call. (Operator Instructions) 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.

歡迎參加太陽鄉村航空 2024 年第一季財報電話會議。我叫吉爾，我將擔任今天電話的接線生。（操作員指示）請注意，今天的會議正在錄製中。我現在將把電話轉給投資者關係總監克里斯艾倫。艾倫先生，您可以開始了。

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.

謝謝。今天我們的執行長 Jude Bricker 也加入了我的行列。戴夫戴維斯 (Dave Davis)，總裁兼財務長；以及其他一群人來幫忙回答問題。

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 on management's current beliefs, expectations, and assumptions and are subject to risks and uncertainties. Actual results may differ materially, and we encourage you to review the risks and cautionary statements outlined in our earnings release and our most recent SEC filings. We assume no obligation to update any forward-looking statement. You can find our first quarter 2024 earnings press release on the Investor Relations portion of the website at ir.suncountry.com. With that said, I'd like to turn it over to Jude.

在開始之前，我想提醒大家，在這次電話會議中，公司可能會做出某些構成前瞻性陳述的陳述。我們今天的言論可能包括前瞻性陳述，這些陳述基於管理層當前的信念、預期和假設，並受到風險和不確定性的影響。實際結果可能存在重大差異，我們鼓勵您查看我們的收益報告和最新的 SEC 文件中概述的風險和警告聲明。我們不承擔更新任何前瞻性聲明的義務。您可以在 ir.suncountry.com 網站的投資者關係部分找到我們的 2024 年第一季財報新聞稿。話雖如此，我想把它交給裘德。

Thank you, Chris. Good morning, everyone. Our diversified business model is unique in the airline industry due to the predictability of our charter and cargo businesses, we're able to deliver the most flexible scheduled service capacity in the industry. The combination of our schedule 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 are able to reliably deliver industry-leading profitability throughout all cycles. Operational excellence is a core tenant of our product. It's critical to our scheduled service customers and justifies our growth with our charter and cargo customers. Among the 11 public mainline carriers, Sun Country again had the best completion factor at 99.7% for 1Q. Congratulations to our employees, especially our frontlines for delivering excellence this past quarter.

謝謝你，克里斯。大家，早安。由於我們的包機和貨運業務的可預測性，我們的多元化業務模式在航空業中是獨一無二的，我們能夠提供業內最靈活的定期服務運力。我們的日程安排靈活性和低固定成本模式相結合，使我們能夠應對可預測的休閒需求波動和外生行業衝擊。我們相信，由於我們的結構優勢；我們能夠在所有周期中可靠地提供業界領先的獲利能力。卓越營運是我們產品的核心要素。這對我們的定期服務客戶至關重要，並證明我們與包機和貨運客戶的成長是合理的。在 11 家公共幹線航空公司中，Sun Country 第一季的完成率再次最高，達到 99.7%。恭喜我們的員工，特別是我們的第一線員工在上個季度取得了卓越的成就。

In the first quarter, we saw yields reset off their post pandemic highs. These fare declines were partially absorbed by our continued momentum on costs. Our CASMx declined slightly in 1Q in spite of significant increase in heavy aircraft visits. Diligent cost control, scheduled service growth, along with the effects of our buyback program, produced flat EPS for us last year. Our adjusted operating margin of just over 18% was at the lower end of our expectations coming into the quarter. This variance is mostly due to close in March bookings finishing less strong than in 2023. March is still a great month for us, we had gross margins, profit success in excess of variable costs approaching 50%. However, March bookings made through January would have indicated an even stronger month. As lows remains high, most of the variance can be attributed to industry capacity growth across our largest markets.

在第一季度，我們看到收益率重回疫情後的高點。這些票價下降部分被我們持續的成本成長動能所吸收。儘管重型飛機的訪問量大幅增加，但我們的 CASMx 在第一季略有下降。嚴格的成本控制、預定的服務成長以及我們的回購計畫的影響，去年我們的每股盈餘持平。我們調整後的營業利潤率略高於 18%，處於我們對本季預期的下限。這種差異主要是由於 3 月的預訂量不如 2023 年強勁。3月份對我們來說仍然是一個偉大的月份，我們的毛利率、利潤成功超過可變成本接近50%。然而，從 3 月到 1 月的預訂量來看，這個月的表現更為強勁。由於低點仍然很高，大部分差異可歸因於我們最大市場的行業產能成長。

Our response to changes in the fare environment or fuel price inputs, is to adjust marginal capacity so that we continue to produce positive and industry leading results. When possible, we may allocate surplus capacity into our charter and cargo segments. So looking into the rest of the year, we're currently allocating too much capacity growth in off-peak periods based on selling fares. While we're committed to May, I expect us to make some significant capacity trends in September through November. Some of that displaced capacity will provide growth opportunities in cargo and charter. Summer peak continues to sell well and should remain mostly as scheduled. Also, a quick note on the Easter shift. And early Easter reduces the peak winter season and explains about 10 percentage points in fare drop in April 2024 or about $3 million. This revenue isn't recoverable in March because it's already at peak capacity.

我們對票價環境或燃油價格輸入變化的反應是調整邊際運力，以便我們繼續產生積極且行業領先的業績。如果可能，我們可以將剩餘運力分配給我們的包機和貨運部門。因此，展望今年剩餘時間，我們目前根據銷售票價在非尖峰時段分配了過多的運力成長。雖然我們致力於 5 月，但我預計我們將在 9 月至 11 月期間做出一些重要的產能趨勢。部分被取代的運力將為貨運和包機提供成長機會。夏季高峰銷售繼續良好，應該會基本如期進行。另外，關於復活節班次的快速說明。復活節提早減少了冬季高峰期，導致 2024 年 4 月票價下降約 10 個百分點，約 300 萬美元。該收入在三月無法恢復，因為它已經達到了峰值容量。

Finally, on fleet activities. With our recent aircraft purchase, we now have a control fleet of 63 aircraft. Seven of these aircraft remain out on the operating lease, and two more are in induction process to enter service in late 2Q. Once all these aircraft are in operation by late 2025. We'll have fleet capacity to produce about 40% more block hours than we currently operate. As we already paid for that growth, we won't require any aircraft CapEx. And so expect CapEx to fall to maintenance levels, which is about $50 million to $75 million per year. And with that, I'll turn it over to Dave.

最後，關於艦隊活動。透過最近購買的飛機，我們現在擁有一支由 63 架飛機組成的控制機隊。其中七架飛機仍處於經營租賃狀態，另外兩架飛機正在入職過程中，將於第二季末投入使用。一旦所有這些飛機到 2025 年底投入運作。我們的車隊產能將比目前多生產約 40% 的區塊時間。由於我們已經為這種增長付出了代價，因此我們不需要任何飛機資本支出。因此，預計資本支出將降至維持水平，即每年約 5,000 萬至 7,500 萬美元。有了這個，我會把它交給戴夫。

Thanks, Jude. We're pleased to report strong Q1 results, including record revenue and an adjusted operating margin of 18.2%, which we expect to be at the top of the industry. Our quarterly results again demonstrate the resiliency and earnings power of our diversified business model as this is our seventh consecutive quarter of profitability.

謝謝，裘德。我們很高興地報告強勁的第一季業績，包括創紀錄的收入和 18.2% 的調整後營業利潤率，我們預計這將處於行業領先地位。我們的季度業績再次證明了我們多元化業務模式的彈性和獲利能力，因為這是我們連續第七個季度獲利。

The staffing driven constraints we've experienced for over a year now have eased and we were able to grow our scheduled service business as rapidly as we intended to. Year-over-year unit costs fell for the second consecutive quarter despite significant increases in maintenance and airport related expenses. It's important to keep in mind that our unique operating model is the opposite of the high utilization carriers. Our diversification across scheduled service, charter and cargo operations leads to resiliency through business cycles. Where we've seen large increases in OA capacity in some of our markets, which has pressured yields, there are significant opportunities for accretive growth in our charter and cargo businesses, and we'll continue to allocate capacity to the segments generating the highest returns.

我們一年多來經歷的人員配置限制現在已經緩解，我們能夠按照我們的預期快速發展我們的定期服務業務。儘管維護和機場相關費用大幅增加，但單位成本連續第二季年減。重要的是要記住，我們獨特的營運模式與高利用率航空公司相反。我們在定期服務、包機和貨運業務方面實現多元化，從而在整個業務週期中保持彈性。我們看到一些市場的 OA 運力大幅增加，這對收益率造成壓力，但我們的包機和貨運業務有巨大的成長機會，我們將繼續將運力分配給產生最高回報的細分市場。

Let me turn now to the specifics of the first quarter. First, on revenue and capacity. In the first quarter, total revenue grew 5.9% versus Q1 of last year, to $311.5 million. This is our highest quarterly total record -- revenue on record. Scheduled service revenue plus ancillary revenue grew 2.8% to $227.4 million, also the highest on record. Scheduled service TRASM decreased 11.7% to $12.2, as scheduled service ASMs grew by more than 16%. Total fare declined 11.3% to $196.41, while we maintained an 87% load factor. For the month of March, we saw our scheduled service load factor at 89%. First quarter is historically our strongest, and we expect to see a seasonally driven fall in unit revenue from Q1 to Q2, exacerbated by the Easter shift into Q1 and the nearly 20% growth in scheduled service ASMs we're expecting to see in Q2.

現在讓我談談第一季的具體情況。首先，關於收入和產能。第一季總營收較去年第一季成長 5.9%，達到 3.115 億美元。這是我們最高的季度總收入記錄。定期服務收入加上輔助收入成長了 2.8%，達到 2.274 億美元，也是有記錄以來的最高水準。定期服務 TRASM 下降 11.7%，至 12.2 美元，而定期服務 ASM 增長超過 16%。總票價下降 11.3% 至 196.41 美元，而客座率維持在 87%。3 月份，我們的預定服務負載率為 89%。第一季是我們歷史上最強勁的季度，我們預計第一季度到第二季度的單位收入將出現季節性下降，復活節進入第一季度以及我們預計第二季度定期服務ASM 增長近20% 會加劇這種情況。

Charter revenue in the first quarter grew 2.4% to $47.3 million on a block hour decline of 3%, driving charter revenue per block hour, up 5.6%. If you exclude changes in fuel reimbursement revenue from both Q1 of this year and Q1 of last year, charter revenue grew 6.5% over the period, and revenue per block-hour was up 9.8%. Ad hoc charter revenue grew 29% versus Q1 of last year, and charter flying under long-term contracts was 75% of total charter revenue versus 80% last year. First quarter cargo revenue grew 2.5% to $23.9 million on a 1.1% increase in block hours. As a reminder, our cargo rates in -- sorry, 1.1% decrease in block hours. As a reminder, our cargo rates increase annually at the end of December.

第一季包機營收成長 2.4%，達到 4,730 萬美元，但每區塊小時下降 3%，帶動每塊小時包機營收成長 5.6%。如果排除今年第一季和去年第一季燃油報銷收入的變化，包機收入在此期間增長了 6.5%，每區塊小時收入增長了 9.8%。臨時包機收入與去年第一季相比成長了 29%，長期合約下的包機飛行佔包機總收入的 75%，而去年為 80%。第一季貨運收入成長 2.5%，達到 2,390 萬美元，班輪運轉時間增加 1.1%。謹此提醒，抱歉，我們的貨運費率在封鎖時間內下降了 1.1%。請注意，我們的貨運費率每年 12 月底都會上漲。

Let me turn now to costs. Our first quarter total operating expenses increased 7.5% on a 9.6% increase in total block hours. CASM declined by 5.4% versus Q1 of '23 while adjusted CASM declined by 0.1%, marking our second consecutive quarter of year-over-year CASM declines. As our pilot availability issues have eased, we've been able to grow flying through higher aircraft utilization, which was eight hours per day in Q1, up 9.6% versus Q1 of last year. Our declining CASM came despite increases in both maintenance expenses and higher airport costs. Maintenance expenses grew by 29% year over year, driven by an increase in the number of airframe and engine overhaul events from three in Q1 of '23 to eight to this quarter, while the rolling off of COVID relief payments to airports helped to drive a 34.6% increase in rent and landing fees.

現在讓我談談成本。我們第一季的總營運費用成長了 7.5%，而總運行時間增加了 9.6%。CASM 與 23 年第一季相比下降了 5.4%，而調整後的 CASM 下降了 0.1%，這標誌著 CASM 連續第二季同比下降。隨著飛行員可用性問題的緩解，我們能夠透過提高飛機利用率來增加飛行量，第一季為每天 8 小時，比去年第一季增加了 9.6%。儘管維護費用和機場成本增加，但我們的 CASM 仍在下降。由於機身和發動機大修事件數量從 2023 年第一季的 3 起增加到本季度的 8 起，維護費用同比增長 29%，同時向機場發放的新冠疫情救濟金也推動了租金和登陸費增加34.6 %。

Now let me turn now to the balance sheet. Our total liquidity at the end of Q1 was $179 million, which incorporates $11.5 million in share repurchases that we made during the quarter and $29.7 million in CapEx spend. At this point, we do not expect to purchase any incremental aircraft until we begin looking for 2026 capacity at the very earliest. We anticipate full year 2024 CapEx to be well below $100 million. We continue to maintain a very strong balance sheet and our net debt to adjusted EBITDA ratio at the end of Q1 was 2.5 times. Since we do not have a significant debt burden, we have flexibility in how we deploy our cash.

現在讓我談談資產負債表。第一季末我們的總流動資金為 1.79 億美元，其中包括我們在本季進行的 1,150 萬美元的股票回購和 2,970 萬美元的資本支出。目前，我們預計最早不會購買任何增量飛機，除非我們最早開始尋找 2026 年的產能。我們預計 2024 年全年資本支出將遠低於 1 億美元。我們繼續保持非常強勁的資產負債表，第一季末淨負債與調整後 EBITDA 的比率為 2.5 倍。由於我們沒有重大的債務負擔，因此我們可以靈活地配置現金。

Turning now to guidance. We expect second quarter total revenue to be between $255 million and $265 million on block hour growth of 8% to 11%. We're anticipating our cost per gallon for fuel to be $2.93. And for us to achieve an operating margin between 4% and 7%. Our business is built for resiliency, and we'll continue to allocate capacity between our lines of business to maximize profitability and minimize earnings volatility. With that, we will open it up for questions.

現在轉向指導。我們預計第二季總營收將在 2.55 億美元至 2.65 億美元之間，區塊小時成長率為 8% 至 11%。我們預計每加侖燃料的成本為 2.93 美元。我們的營業利益率可以達到 4% 到 7% 之間。我們的業務是為了彈性而建立的，我們將繼續在業務線之間分配產能，以最大限度地提高盈利能力並最大限度地減少收益波動。至此，我們將開放提問。

(Operator Instructions) Ravi Shanker, Morgan Stanley.

（操作員指令）Ravi Shanker，摩根士丹利。

Thanks. Morning, everyone. Dave, can I just start with where you ended off and talk about the difference in the segment realignment or reallocation of capacity. Can you go into a little more detail on kind of what you guys are doing in terms of specific actions to absorb some of that excess capacity and some of your oversupplied markets and kind of how long that will take?

謝謝。大家早安。戴夫，我可以從您結束的地方開始，談談部門重新調整或容量重新分配方面的差異嗎？您能否更詳細地介紹一下您正在採取哪些具體行動來吸收一些過剩產能和一些供應過剩的市場，以及這需要多長時間？

Yeah. I'll let Jude speak to that mainly but let me just say it at a high level here. So I think basically our capacity is committed for Q2, and that explains part of the margin pressure that we're seeing into the second quarter. There'll be opportunities in the back half of the year to reallocate some of that capacity, particularly in off-peak times away from our scheduled service business and into our charter businesses.

是的。我將讓裘德主要談論這一點，但讓我在這裡從高層次上說一下。因此，我認為基本上我們的產能是在第二季承諾的，這解釋了我們在第二季度看到的部分利潤壓力。今年下半年將有機會重新分配部分運力，特別是在非高峰時段，從我們的定期服務業務轉移到我們的包機業務。

In the longer term to the medium term, we continue to look for opportunities to allocate the resources we have across all our segments. There's opportunities in the cargo business that present themselves, we're going to presume. We're going to allocate our pilot capacity, our training capacity, the capacity of our company between the segments based on profitability. If there's continued pressure in the scheduled service business, we're going to allocate to the other segments that we think there are opportunities in both of our other lines of business.

從長期到中期來看，我們將繼續尋找機會在所有部門之間分配我們擁有的資源。我們認為，貨運業務中存在著機會。我們將根據獲利能力在各部門之間分配我們的飛行員能力、我們的訓練能力、我們公司的能力。如果定期服務業務持續面臨壓力，我們將分配給我們認為在我們其他業務領域都有機會的其他細分市場。

Yeah, the focus is in the Labor Day through Thanksgiving period to try to pick up more charters, but it usually is that way. So incremental allocations are going to be marginal. So it's mostly going to be capacity cuts of scheduled service flights that don't make variable contribution.

是的，重點是在勞動節到感恩節期間嘗試獲得更多包機，但通常都是這樣。因此增量分配將是微乎其微的。因此，這主要是定期服務航班運力的削減，不會產生可變的貢獻。

Got it. As maybe just to follow up on that, how do we think about modeling from 2Q to 3Q kind of the relative normal seasonality, given the kind of extremely low starting point for 2Q.

知道了。也許只是為了跟進這一點，考慮到第二季的起點極低，我們如何考慮從第二季到第三季相對正常季節性的建模。

That's a fair point. I mean typically, we would see 2Q and 3Q perform equally. This 2Q has both over-capacity in April and May and an Easter shift. So our expectation is we outperform 2Q and 3Q.

這是一個公平的觀點。我的意思是，通常情況下，我們會看到第二季和第三季的表現相同。第二季既有四月和五月的產能過剩，也有復活節的轉變。因此，我們的預期是我們的表現優於第二季和第三季。

I understood. Thanks, guys.

我明白了。多謝你們。

Duane Pfennigwerth, EVERCORE ISI.

杜安‧芬尼格沃斯 (Duane Pfennigwerth)，EVERCORE ISI。

Hey, good morning. Thanks. So if we just play back your ability to kind of flex up in the peak periods, you were obviously constrained for an extended period of time. Those constraints started to ease and now you have a greater ability to kind of flex up in these peaks, which theoretically was going to be at higher incremental RASM. And so I guess, relative to your expectations going in, how has that gone? And I guess more importantly, what do you take with you going forward? So how are you thinking about flexing up in future peaks, maybe relative to how you managed peaks in the first quarter?

嗨，早安。謝謝。因此，如果我們只是回顧一下你在高峰期的表現能力，你顯然會在很長一段時間內受到限制。這些限制開始緩解，現在你有更大的能力在這些峰值中靈活起來，理論上這將是在更高增量的 RASM 下。所以我想，相對於你的期望，情況如何？我想更重要的是，你未來會做什麼？那麼，您如何考慮在未來的高峰中調整，也許相對於您在第一季管理高峰的方式？

The biggest surprise is that the scheduled service network didn't absorb the growth in the off-peak periods the way we expected it to do. Keep in mind, we designed the network based on its performance largely of the prior year on a granular level. So this slide on this day did well, let's add another. This market was cut right at the end of the peak period but was performing strongly, so maybe it can go into the off-peak period and still contribute.

最令人驚訝的是，定期服務網絡並沒有像我們預期的那樣吸收非尖峰時段的成長。請記住，我們在很大程度上是根據前一年的性能來設計網路的。所以今天這張投影片效果很好，我們再增加一張。這個市場在高峰期結束時被削減，但表現強勁，所以也許進入非高峰期仍然可以做出貢獻。

And those decisions on the margin didn't produce the results that we thought they would. So most of the difference between where we expected fares to be and where they actually turned out to be, can be explained through more seats in markets, not just from us, but from OAs. And there's a really strong correlation between the change in route, the downward pressure on fares, the change in unit revenue in a market, and its seat growth, as you would expect. And in off-peak periods when there just isn't a lot of margin to give, those markets, those flights should have been not in the schedule.

這些邊際決定並沒有產生我們認為會產生的結果。因此，我們預期票價與實際票價之間的大部分差異可以透過市場上更多的座位來解釋，不僅來自我們，還來自 OA。正如您所期望的那樣，航線變化、票價下行壓力、市場單位收入變化及其座位增長之間存在著非常強烈的相關性。在非高峰時期，沒有太多的利潤可給這些市場，這些航班不應該出現在時刻表中。

The change -- what's really interesting about this time is that the change in the selling fare environment didn't really start until mid-February. And then we're looking at 2Q and saying, okay, well, these fares are coming down, some of these flights aren't going to be positively contributing, but we should leave them in there to protect the sold seats on those flights. And further like, fare fluctuations are pretty common. This one just lasted on the way through the selling period. So I think we made the right decision in 2Q, keep these markets going and then we'll adjust to the new environment in the post summer trough.

這次的變化——真正有趣的是，銷售票價環境的變化直到二月中旬才真正開始。然後我們看看第二季度並說，好吧，好吧，這些票價正在下降，其中一些航班不會做出積極貢獻，但我們應該將它們留在那裡以保護這些航班上已售出的座位。此外，票價波動也很常見。這只是在銷售期間持續的。因此，我認為我們在第二季度做出了正確的決定，保持這些市場的發展，然後我們將適應夏季後低谷的新環境。

That's great. So basically, the learnings that you're taking here from your approach to off-peak, 2Q is not really the period to measure that change it's more kind of 3Q second half. Is that fair?

那太棒了。因此，基本上，您從非高峰期的方法中學到的知識，第二季度並不是真正衡量變化的時期，它更像是第三季下半年。這樣公平嗎？

Yeah. But Duane, keep in mind that we're always adjusting utilization based on the inputs of fare environment and fuel. So this can reverse itself as well. But the marginal capacity that comes in or out of the schedule largely resides in the off-peak periods. So think of our business is there's one awesome month, that's March. There's about six good months: February, April, June, July, December, August. And then there's a really bad month in September. And then there's kind of a couple that are meh for. And when we think about variable capacity, it's always allocating into like those shoulder months that can absorb or not based on the fuel price and fare environment.

是的。但是杜安，請記住，我們總是根據票價環境和燃料的輸入來調整使用率。所以這也可以逆轉。但進入或退出計畫的邊際容量主要集中在非尖峰時段。所以想想我們的生意，有一個很棒的月份，那就是三月。大約有六個好月份：二月、四月、六月、七月、十二月、八月。然後九月是一個非常糟糕的月份。還有一些是值得的。當我們考慮可變容量時，它總是根據燃油價格和票價環境分配到可以吸收或不吸收的肩月。

Yeah. But it is fair to say, Duane, obviously we have more of the second quarter sold than we did the third quarter or the fourth quarter. So our ability to adjust the schedule gets better the further out we go. It is somewhat limited in Q2 at this point.

是的。但可以公平地說，杜安，顯然我們第二季的銷量比第三季或第四季要多。因此，我們走得越遠，調整時間表的能力就越好。目前第二季的情況有些有限。

That's all great. And just my follow-up. Any outlook or update you can provide us, your outlook for new wins in the cargo segment? Thanks for taking the questions.

這一切都很棒。這只是我的後續行動。您可以向我們提供任何展望或更新嗎？感謝您提出問題。

Nothing to talk about right now.

現在沒什麼好談的。

Yeah, we probably don't have much to talk about at this point.

是的，我們現在可能沒有太多可談的。

Okay. Thank you.

好的。謝謝。

Helane Becker, TD Cowen

海蘭·貝克爾，TD Cowen

Thanks very much, operator. Hi, team. Thanks for the time. Just a couple of clarification points. Are you expecting maintenance costs then to continue to be at this level for the rest of the year or is this just a one-quarter event?

非常感謝，接線生。大家好。謝謝你的時間。只需澄清幾點。您是否預計今年剩餘時間維護成本將繼續保持在這個水平，或者這只是一個季度的事件？

No, the maintenance costs are going to stay a bit elevated like this through the rest of the year. I think we talked about it on the Q1 or the call we get in the end of '23, about some intentional changes to our maintenance program that we made in '24 that are going to keep costs higher. And that's going to likely persist, or it will persist based on our plan through '24.

不，今年剩下的時間裡，維護成本將繼續保持在較高水準。我想我們在第一季或我們在 23 年底接到的電話中討論過這個問題，關於我們在 24 年對維護計劃進行的一些有意的改變，這些改變將使成本保持在更高水平。這種情況可能會持續下去，或者根據我們的計劃，這種情況會持續到 24 年。

Okay. That's very helpful. Thanks, Dave. And then the other question I have is with respect to the decline in air traffic liability. And maybe you explained it through the changes in bookings, but usually it doesn't decline as much as it seems to have declined from the year end, from the fourth quarter to the first quarter. But it was down 24%. So how are you thinking about that? Or did you explain that already?

好的。這非常有幫助。謝謝，戴夫。我的另一個問題是關於空中交通責任的下降。也許你透過預訂量的變化來解釋這一點，但通常情況下，它的下降幅度並不像年底、從第四季到第一季的下降幅度那麼大。但下降了 24%。那麼你對此有何看法？或者你已經解釋過了嗎？

I don't think we explained it already, but I mean the ATL is going to drop as we go through Q1. A little bit of the decline this time, what might be the weaker fare environment in the second quarter. But there's nothing unusual in the ATL drop.

我認為我們還沒有解釋過，但我的意思是，當我們經歷第一季時，ATL 將會下降。這次略有下降，可能是第二季票價環境疲軟。但ATL下降並沒有什麼異常。

Okay. Well, that's very helpful.

好的。嗯，這很有幫助。

Yeah. Just there is a lot of seasonality in our ATL just based on the volatility of our schedule and fare environment. So going into the first quarter, we'll have the highest ATLs for the year.

是的。只是由於我們的時間表和票價環境的波動性，我們的 ATL 存在著許多季節性。因此，進入第一季度，我們將迎來全年最高的 ATL。

Right, that's what I would expect. But I wouldn't expect it to decline as much as it did from January to March. But I guess it all has to do with not having as many bookings for the second quarter, the Easter shift, and all the other things you've already explained, right? Is that how we should sort of think about it?

沒錯，這就是我所期望的。但我預計它不會像一月到三月那樣下降那麼多。但我想這一切都與第二季的預訂量減少、復活節班次以及您已經解釋過的所有其他事情有關，對吧？我們該這樣思考嗎？

Yeah. To the extent that it's a little bit unusually large, it would be the fair issues you're talking about, and Easter is a big part of it.

是的。從某種程度上來說，它有點異常大，這將是你談論的公平問題，而復活節是其中一個重要的部分。

Perfect. Okay. Thanks for your help. I appreciate it.

完美的。好的。感謝您的幫助。我很感激。

Thanks, Helane. (multiple speakers)

謝謝，海蘭。（多個發言者）

Michael Linenberg, Deutsche Bank.

麥可‧林伯格，德意志銀行。

Hey, good morning, everyone. In the release, and I think Jude, you even sort of mentioned capacity by competitors, OA capacity. Can you give us a sense of maybe what OA capacity looks in the June quarter in your markets, year over year changes made in September. Maybe how that trends? Maybe it was better in the March quarter? Any color on that would be great.

嘿，大家早安。在發布中，我認為 Jude，您甚至提到了競爭對手的能力，即 OA 能力。您能否讓我們了解一下您所在市場 6 月季度的 OA 容量以及 9 月的年比變化。也許趨勢如何？也許三月季度會更好？任何顏色都會很棒。

Domestic capacity was up 6% and overlay capacity was up about 10% in the first quarter. Those trends are basically consistent in the second quarter as well. Keep in mind, our network is dramatically different from quarter to those two quarters. But I mean, we're just seeing a lot of seats in our markets. In the back of the year, we become really concentrated between Labor Day and Thanksgiving because as we trim our markets that are seasonal, so that's where the concentration resides. So then we have a lot of capacity into major trunk routes out of Minneapolis, and that's where you see a lot of -- see pressure.

第一季國內產能成長 6%，覆蓋產能成長約 10%。這些趨勢在第二季也基本一致。請記住，我們的網路在這兩個季度之間存在顯著差異。但我的意思是，我們在市場上看到了很多席位。在今年下半年，我們在勞動節和感恩節之間變得非常集中，因為當我們調整季節性市場時，這就是集中。因此，我們有大量運力進入從明尼阿波利斯出發的主要幹線，這就是你看到很多壓力的地方。

Okay. And then just my second question is you've obviously identified the issue and you'll respond. As you mentioned in sort of the off-peak periods from September through Thanksgiving. How much of what's going on reflects some of the other churn going on in the industry? When I think about the network changes being made by many of the other carriers. And I would say it's really the smaller carriers, not the big three. I mean, they're very well established.

好的。我的第二個問題是，您顯然已經發現了問題並且您會做出回應。正如您所提到的從九月到感恩節的非高峰期。正在發生的事情有多少反映了行業中正在發生的其他一些變化？當我想到許多其他運營商正在做出的網路變革時。我想說的是，這實際上是較小的運營商，而不是三大運營商。我的意思是，他們已經非常成熟了。

The churn that we're seeing in network changes. It's quite frankly, it's nothing like I've seen before when I look at the number of additions and deletions. And so how much of this may be just more of this sort of structural change going on in the industry? Where it just may be that more difficult to respond to because of the dramatic shifts in networks that we're seeing? Just your thoughts on that, thanks.

我們在網路變化中看到的流失。坦白說，從增刪改查的數量來看，這是我以前從未見過的。那麼，其中有多少可能只是產業中正在發生的這種結構性變化呢？由於我們所看到的網路的巨大變化，哪些地方可能更難做出回應？只是您對此的想法，謝謝。

It's difficult to give a long-term read-through based on a very limited amount of input. I mean, my view would be that Spirit and Frontier are challenged more with when they fly than where they fly. The same way that we're having these off-peak weaknesses, they're experiencing the same. And so the network churn isn't addressing the issue. Our response to this is going to be looking at incremental capacity and shave it down, and it always has been.

基於非常有限的輸入量很難進行長期的通讀。我的意思是，我的觀點是，精神號和前沿號在飛行時面臨的挑戰比飛行時面臨的挑戰更大。就像我們遇到這些非高峰期的弱點一樣，他們也經歷著同樣的事情。因此，網路流失並不能解決這個問題。我們對此的反應將是專注於增量產能並削減它，而且一直如此。

And then on a competitive encroachment, most of what we're seeing is from Delta, quite frankly. And it seems like they're just kind of building out Minneapolis in the post-COVID recovery, later than they've done in some of their other hubs. And then there has been some encroachment speaking specifically of Minneapolis from Frontier. But those markets like Cleveland, are ones that they had done pre-COVID and cancelled because they didn't work. So I don't -- I think it's mainly just, our markets had really high fares through the comp period that people are scheduling into, and they attracted a bunch of seats and it'll sort of equivocate over time.

然後，坦白說，在競爭性侵占方面，我們看到的大部分內容都來自達美航空。看起來他們只是在新冠疫情後的復甦中建造明尼阿波利斯，晚於他們在其他一些中心的建設。然後，Frontier 專門針對明尼阿波利斯進行了一些侵犯。但像克里夫蘭這樣的市場，是他們在新冠疫情之前就已經做過的市場，但因為不起作用而被取消。所以我不——我認為這主要是，我們的市場在人們安排進入的補償期內票價非常高，而且他們吸引了很多座位，隨著時間的推移，它會變得模棱兩可。

Yeah, makes sense. All right, great. Thanks. Thanks for answering my questions.

是的，有道理。好吧，太好了。謝謝。謝謝回答我的問題。

Thanks, Mike.

謝謝，麥克。

Scott Group, Wolfe.

斯科特集團，沃爾夫。

Hey, thanks. Good morning. So I just want to make sure I'm understanding some of the monthly commentary. I get sort of some weaker close-in in March, April at Easter, but as you look at May and June, are things getting incrementally worse? Is it stabilizing? And any signs of things getting better? I know June seasonally is a better month, but just seasonally adjusted, do you feel like things are getting incrementally better or worse?

嘿，謝謝。早安.所以我只是想確保我理解一些每個月的評論。我在三月、四月的復活節時遇到了一些較弱的接近，但當你看看五月和六月時，情況是否變得越來越糟？穩定了嗎？有什麼跡象表明情況正在好轉嗎？我知道六月季節性是一個更好的月份，但只是季節性調整後，您覺得情況是逐漸好轉還是更糟？

Well I guess it depends Scott, on what the expectation basis is. So when we went into the quarter -- when we built the quarter last year, we're way below that. And then we had this period of resetting through late February and March for selling fares into the second quarter. And now in the last couple of weeks, they've come up slightly. So it's been an evolution. But I'd say, fares -- our selling fare expectation has bottomed and is recovering slightly. But we're talking about a recovery that is small numbers relative to where we expected to be when we built the schedule.

嗯，我想這取決於斯科特，取決於期望的基礎是什麼。因此，當我們進入這個季度時——當我們去年構建這個季度時，我們遠低於這個水平。然後我們在二月下旬和三月期間進行了重置，以銷售第二季的票價。現在在過去幾周里，它們略有上升。所以這是一個演變。但我想說的是，票價——我們的銷售票價預期已經觸底並且正在小幅回升。但我們談論的是復甦，相對於我們制定時間表時的預期而言，這個數字很小。

Okay. That's helpful. And then where do you ultimately think you're going to take capacity in the second half? And did I hear right that you think that your margins in Q3 will be higher than Q2?

好的。這很有幫助。那麼您最終認為下半年將在哪裡利用產能？我沒聽錯吧，您認為第三季的利潤率會高於第二季？

On the second part, yes, because typically second and third quarter had produced about the same margin. And in this particular second quarter will be handicapped by the Easter shift and some overcapacity in April and May.

對於第二部分，是的，因為通常第二季和第三季的利潤率大致相同。在這個特殊的第二季度，復活節的轉變以及四月和五月的一些產能過剩將阻礙其發展。

I don't -- yeah, and that first part of your question is difficult to say at this point. I mean, we have some time to make these adjustments. But post Labor Day, I would expect us to be mostly focused on scheduled service flying in markets that typically have a good third quarter. There's about a handful of those. And then scheduled service flying in support of positioning airplanes and crews for our charter business. So there's not a whole lot opportunity in September. So it's going to be pretty small.

我不——是的，你問題的第一部分目前很難說。我的意思是，我們有一些時間進行這些調整。但勞動節過後，我預計我們將主要關注第三季度通常表現良好的市場中的定期航班服務。大約有幾個這樣的。然後是定期飛行服務，以支援我們的包機業務定位飛機和機組人員。所以九月的機會不多。所以它會很小。

Yeah. So Scott, just let's say from a planning perspective, we had sort of in the scheduled service segment, year-over-year capacity growth peaking in the second quarter, tapering in the third quarter, and then tapering significantly more into the fourth quarter. So second quarter was our peak year-over-year growth. And as we pointed out here, we'll kind of revisit that, given this off-peak weakness. So it's probably going to be even more dramatic than it was in our plan.

是的。斯科特，從規劃的角度來看，我們在定期服務領域中，同比運力增長在第二季度達到頂峰，在第三季度逐漸減少，然後在第四季度大幅減少。因此，第二季是我們年成長的高峰。正如我們在這裡指出的，鑑於非高峰時段的疲軟，我們將重新審視這一點。所以這可能會比我們計劃中的更戲劇化。

Okay, great. And then just last question, I thought I heard $65 million of CapEx. Is that the rest of the year comment or is that a full year comment and then does -- is '25 a similar, it sounds like it's another very low number. I just wanted to make sure we're thinking about it right.

好的，太好了。最後一個問題，我想我聽到了 6500 萬美元的資本支出。是今年剩餘時間的評論還是全年評論，然後是“25”，類似，聽起來這是另一個非常低的數字。我只是想確保我們的想法是正確的。

That's right. Yeah, so my commentary was about a run rate basis. So we completed an aircraft purchase couple of months ago. That's the last airplane that we're committed to buy. We'll still be in the market also for engines. So I'm just trying to give a little bit of a sense of what we would expect on maintenance CapEx, $50 million to $75 million. And the lumpiness is largely going to be about opportunistic buys for engines that would replace an overhaul.

這是正確的。是的，所以我的評論是關於運行率的。因此，我們幾個月前完成了飛機採購。這是我們承諾購買的最後一架飛機。我們仍然會參與發動機市場。因此，我只是想稍微介紹一下我們對維護資本支出的預期，即 5,000 萬至 7,500 萬美元。而這種不穩定性很大程度是由於機會主義購買引擎來取代大修。

Yeah, Scott. So this year, we will be on pace to do well, sub-$100 million in CapEx. I would expect '25, barring what Jude say in here in terms of some opportunistic purchases here and there, to be less than '24. From a cash flow perspective, the calls on cash around CapEx are minimal for several years to come. (multiple speakers) --

是的，斯科特。因此，今年我們的資本支出將可望達到 1 億美元以下。我預計'25，除非裘德在這裡所說的一些機會主義購買，會少於'24。從現金流的角度來看，未來幾年對資本支出的現金需求很小。（多位發言者）——

Yeah, with growth too, which is unusual.

是的，也有成長，這是不尋常的。

Okay. Makes sense. Okay. Thank you for the time, guys. Appreciate it.

好的。說得通。好的。謝謝你們抽出時間，夥伴們。欣賞它。

Thanks, Scott. (multiple speakers)

謝謝，斯科特。（多個發言者）

(Operator Instructions) Brandon Oglenski, Barclays.

（操作員說明）Brandon Oglenski，巴克萊銀行。

Hey, gentlemen. Good morning and thanks for taking my question. Jude, I want to come back to the comment about Delta adding capacity in Minneapolis and the challenges you guys have seen in off-peak. Because I thought that was kind of a strength in your model that you guys tried to target the peak travel periods. So can you just put this thing in (technical difficulty). Can you guys go after a little bit more off-peak this summer and it just didn't play out the way you thought it. And maybe longer term, does this change your view on the opportunity set in Minneapolis in any way?

嘿，先生們。早安，感謝您提出我的問題。裘德，我想回到關於達美航空在明尼阿波利斯增加運力的評論以及你們在非高峰時段看到的挑戰。因為我認為這是你們模型的優勢，你們試圖瞄準高峰旅行時段。那你能把這個東西放進去嗎（技術難度）。你們今年夏天可以追求更多的非高峰期嗎？也許從長遠來看，這是否會改變您對明尼阿波利斯機會的看法？

Well in the first part, that's exactly what happened. So our percentage growth five months year over year in the second quarter is smallest in June. And that's just -- because when we came into the year, we're looking at the fares of the previous comp months. So April of '23, and it looked like it could support incremental growth. And we have the capacity, we have the pilots. So it's really low-cost incremental flying. And yeah, I mean, I think that the market just couldn't support that kind of growth.

在第一部分中，這正是發生的事情。因此，我們第二季五個月的年成長百分比在六月是最小的。這只是 - 因為當我們進入這一年時，我們正在查看前幾個月的票價。23 年 4 月，看起來它可以支援增量成長。我們有能力，我們有飛行員。所以這確實是低成本的增量飛行。是的，我的意思是，我認為市場無法支持這種成長。

And so the fare pressure was beyond what we expected. And that's because we were adding seats as along with side of all the OAs in Minneapolis. We're a pretty Minneapolis-centric airline in the first quarter in particular, because that's sort of the bright spot in the US network. As we move into the summer. I mean, we're not cutting in June and July, those months look really good. August is probably mostly like we planned it to be. There's no real change in the long-term opportunity in Minneapolis.

所以票價壓力超出了我們的預期。那是因為我們增加了明尼阿波利斯所有 OA 的席位。尤其是在第一季度，我們是一家以明尼阿波利斯為中心的航空公司，因為這是美國網路中的亮點。當我們進入夏天時。我的意思是，我們不會在六月和七月削減產量，那幾個月看起來非常好。八月可能基本上就像我們計劃的那樣。明尼阿波利斯的長期機會沒有真正的改變。

I think long term where I've reset it, is an aircraft utilization. In 2019, we were producing about nine block hours per aircraft per day. We kind of set out with the fleet age and our focus on reliability. We probably need to be around eight hours a day per aircraft in a steady-state environment, just based on operational restrictions. And now based on off-peak performance, I think we're probably lower than that. But these things change pretty rapidly as we've been talking about, and it could easily reverse itself.

我認為從長遠來看，我重置它的是飛機的利用率。2019 年，我們每架飛機每天生產約 9 個區塊小時。我們從機隊年齡和對可靠性的關注出發。僅根據營運限制，在穩態環境下，我們可能需要每架飛機每天工作約八小時。現在，根據非高峰期的表現，我認為我們的水平可能會低於這個水平。但正如我們一直在談論的那樣，這些事情變化得非常快，而且很容易逆轉。

So the key for us is flexibility. So it's just very important that you understand how we think about incremental capacity if you want to understand the businesses. Every airplane doing the best thing it can with that plane time at that moment and when we run out of things to do, they contribute positively. We don't fly, where we fly cargo, or we fly charter. And so we're just adjusting at the margin, and we were a little bit bigger than we needed to be into April and May.

所以對我們來說關鍵是靈活性。因此，如果您想了解業務，那麼了解我們如何看待增量產能非常重要。每架飛機都在當時的飛行時間內盡其所能，當我們沒有事情可做時，它們會做出積極的貢獻。我們不飛行，我們飛行貨運，或包機。所以我們只是在邊際上進行調整，我們的規模比四月和五月所需的規模要大一些。

Appreciate that, Jude. And Dave, I think you said in your prepared remarks, and we kind of spoke about this in the Q&A. It's about reducing volatility in earnings. I mean, we probably shouldn't confuse that with seasonality, right? But can you maybe elaborate a little bit more there?

很欣賞這一點，裘德。戴夫，我想你在準備好的演講中說過，我們在問答中談到了這一點。這是為了減少收益的波動性。我的意思是，我們可能不應該將其與季節性混淆，對吧？但您能詳細說明一下嗎？

So yeah, we shouldn't confuse it with seasonality. That's going to be a part of our business. I think there are pieces of our business without getting into a ton of detail, that are much more stable from an earnings perspective that we will continue to focus on and maybe emphasize more in future periods. That should help reduce the volatility of earnings. And by reduced the volatility -- I guess what I mean by that is somewhat less exposure to capacity adds in the scheduled service segment. So it's really focusing on some of these other segments filling in off-peak periods and focusing on other segments that are going to be more stable and provide more stability to earnings.

所以是的，我們不應該將其與季節性混淆。這將成為我們業務的一部分。我認為，我們的某些業務雖然沒有涉及太多細節，但從獲利角度來看，這些業務更加穩定，我們將繼續專注於這些業務，甚至在未來的時期可能會更強調這些業務。這應該有助於減少收益的波動性。透過減少波動性——我想我的意思是減少了定期服務領域容量增加的風險。因此，它實際上專注於填補非高峰期的其他一些細分市場，並專注於其他更穩定並為收益提供更多穩定性的細分市場。

Thank you, both.

謝謝你們倆。

Thank you. This now concludes the question-and-answer session. I would now like to turn it back to Jude Bricker for closing remarks.

謝謝。問答環節到此結束。現在我想請裘德·布里克（Jude Bricker）發表結束語。

Thanks for your time, everybody. Have a great day. And we'll talk to you in 90 days.

謝謝大家抽出時間。祝你有美好的一天。我們將在 90 天後與您聯繫。

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

感謝您參加今天的會議。這確實結束了該程式。您現在可以斷開連線。