Sun Country Airlines Holdings Inc (SNCY) 2024 Q2 法說會逐字稿

Welcome to the Sun Country Airlines Second Quarter 2024 Earnings Call. My name is Crystal, and I will be your operator for today's call. (Operator Instructions) As a reminder, this call will be 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 年第二季財報電話會議。我叫克里斯托，我將擔任今天電話的接線生。（操作員說明）謹此提醒，本次通話將會被錄音。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. 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 our risk factors and cautionary statements outlined in our earnings release and our most recent SEC filings.

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。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發布和最新的 SEC 文件中概述的風險因素和警告聲明。

We assume no obligation to update any forward-looking statements. You can find our second quarter 2024 earnings press release on the Investor Relations website at ir.suncountry.com. With that said, I would now like to turn the call over to Jude.

我們不承擔更新任何前瞻性陳述的義務。您可以在投資者關係網站 ir.suncountry.com 上找到我們的 2024 年第二季財報新聞稿。話雖如此，我現在想把電話轉給裘德。

Thanks, 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 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.

謝謝，克里斯。大家早安。我們的多元化業務模式在航空業中是獨一無二的。由於我們的包機和貨運業務的可預測性，我們能夠提供業內最靈活的定期服務能力。我們的計劃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。

We believe due to our structural advantages, we'll be able to reliably deliver industry-leading profitability throughout all cycles. I want to start by acknowledging our employees that have worked so hard through this challenging summer. In both June and July, we've grown scheduled service departures in excess of 15% year-on-year. While facing some extended aircraft out of service events and an IT outage, the temporarily disable the key operational system.

我們相信，由於我們的結構優勢，我們將能夠在所有周期中可靠地提供領先業界的獲利能力。首先，我要向在這個充滿挑戰的夏天辛勤工作的員工表示感謝。6 月和 7 月，我們的定期航班出發量年增超過 15%。在面臨一些長時間的飛機停飛事件和 IT 中斷時，關鍵作業系統會暫時癱瘓。

Our employees like usual, delivered for our customers and I'm personally grateful. There's been a lot of discussion about overcapacity in our industry. For us, in our key market of Minneapolis, the domestic seat growth rate peaked in July and subsides through the rest of the year and into the next spring. As such, we expect lessening fare pressure as we move through the year.

我們的員工像往常一樣，為我們的客戶提供服務，我個人對此表示感謝。關於我們產業產能過剩的討論很多。對我們來說，在我們的關鍵市場明尼阿波利斯，國內座位成長率在 7 月達到頂峰，並在今年剩餘時間和明年春季逐漸放緩。因此，我們預計今年票價壓力將會減輕。

It's encouraging to see the industry move aggressively to rightsize schedules. Our reaction to changes in market environment will always be to adjust capacity. Our July Minneapolis seats were up 29% year-on-year. By September, our seats will be down 9% year-on-year. July scheduled service volume will be 2.25x larger than September.

看到該行業積極調整時間表是令人鼓舞的。我們對市場環境變化的反應永遠是調整產能。我們 7 月明尼阿波利斯的席位年增 29%。到9月份，我們的席位將比去年同期減少9%。7 月的預定服務量將是 9 月的 2.25 倍。

September always being the most challenging month for leisure demand. As already announced, we will move capacity aggressively into our other segments, Charter and Cargo. We still expect a strong winter season for leisure and are planning mid-single-digit capacity growth for our peak upcoming winter. I want to point out that June and July continued to be strong demand months for our scheduled service product.

九月始終是休閒需求最具挑戰性的月份。正如已經宣布的那樣，我們將積極將運力轉移到其他領域，即包機和貨運。我們仍然預計冬季休閒季節將會強勁，並計劃在即將到來的冬季高峰期實現中個位數的運力增長。我想指出的是，六月和七月仍然是我們定期服務產品需求強勁的月份。

We had sold loads in excess of 85% during both months with unit revenues up nearly 20% versus pre-COVID comps, even considering our growth. Our ability to manage of the capacity while maintaining our unit cost advantage, mostly explains the outperformance of our scheduled business as compared to other domestic leisure carriers. In Cargo, we have contractual growth along with rate improvements through the end of 2025. For charter, while volumes were generally flat, we've been able to manage to higher margins as we adjust our pre-COVID long-term contracts to the new cost environment.

即使考慮到我們的成長，這兩個月我們的銷售量也超過了 85%，單位收入比新冠疫情前的同期成長了近 20%。我們在保持單位成本優勢的同時管理運力的能力，在很大程度上解釋了我們的定期業務與其他國內休閒航空公司相比表現優異的原因。在 Cargo 方面，到 2025 年底，我們的合約將會成長，費率也會提高。對於包機而言，雖然銷量總體持平，但隨著我們根據新的成本環境調整疫情前的長期合同，我們已經能夠實現更高的利潤。

As mentioned before, we have fleet expansion plans to 71 aircraft from our current in-service fleet of 56. All this growth will come from our leased out fleet, seven aircraft; and from committed Cargo deliveries, eight aircraft. In both cases, this growth won't require additional CapEx. So we expect to continue to deliver high free cash flow yields in the near midterm. And with that, I'll turn it over to Dave.

如前所述，我們計劃將機隊規模從目前的 56 架飛機增加到 71 架。所有這些成長都將來自我們租賃的機隊，包括七架飛機；以及承諾的貨運交付，八架飛機。在這兩種情況下，這種成長都不需要額外的資本支出。因此，我們預計在近期中期將繼續提供高自由現金流收益率。有了這個，我會把它交給戴夫。

Thanks, Jude. We're pleased to report that Q2 was our eighth consecutive quarter of profitability and that through the first half of 2024, Sun Country was the most profitable airline in the US. This is despite the fact that unlike for most other carriers, Q2 is a seasonally slower quarter for Sun Country. The domestic revenue environment continues to be impacted by overcapacity and the resulting impact on fares as a domestic-focused LCC is the hardest. Our resilient business model has allowed us to remain profitable because of the diversity of our revenue streams.

謝謝，裘德。我們很高興地報告，第二季度是我們連續第八個季度實現盈利，並且到 2024 年上半年，Sun Country 都是美國盈利能力最強的航空公司。儘管與大多數其他業者不同，Sun Country 第二季度是季節性放緩的季度。國內收入環境持續受到產能過剩的影響，而對於專注於國內的廉價航空公司來說，由此對票價的影響最為嚴重。由於收入來源的多樣性，我們富有彈性的業務模式使我們能夠保持獲利。

As we move through the third quarter, we are slowing scheduled capacity growth. While our model allows us to make tactical capacity allocation decisions quickly, large moves require several quarters to execute. As we mentioned during our announcement of our revised agreement with Amazon, Sun Country's Cargo segment will become a larger portion of our business starting in mid-2025. By 2026, we expect revenue from our Cargo segment to be almost 20% of our total revenue versus approximately 10% in 2024. The expansion of our Cargo segment comes with almost no required CapEx and drives improved profitability and greater free cash flow.

隨著第三季的到來，我們正在放緩預定的產能成長。雖然我們的模型使我們能夠快速做出戰術容量分配決策，但大型變動需要幾個季度才能執行。正如我們在宣布與亞馬遜修訂協議時所提到的，從 2025 年中期開始，Sun Country 的貨運業務將成為我們業務的更大一部分。到 2026 年，我們預計貨運部門的收入將占我們總收入的近 20%，而 2024 年這一比例約為 10%。我們貨運部門的擴張幾乎不需要資本支出，並提高了獲利能力和更大的自由現金流。

This is the essence of the Sun Country business model. Let me now turn to the specifics of the second quarter. First, to revenue and capacity. In the second quarter, total revenue declined 2.6% versus the second quarter of 2023 to $254.4 million. For our Passenger segment, which includes our scheduled service and Charter businesses, total revenue fell 5% year-over-year.

這就是太陽國商業模式的精髓。現在讓我談談第二季的具體情況。首先，收入和產能。第二季總營收較 2023 年第二季下降 2.6%，至 2.544 億美元。對於我們的客運業務，包括定期服務和包機業務，總收入較去年同期下降 5%。

Scheduled service revenue declined 7.2%, driven by a 21.3% decline in scheduled service TRASM on an 18.2% increase in ASMs. Clearly, we flew more during off-peak periods than the demand environment could support. In addition, we were impacted by late June operational challenges in MSP that reduced Passenger revenue by between $1 million and $1.5 million. In response to the soft demand environment, we're curtailing our growth in the third quarter and expect scheduled service ASMs to be up 7% to 8% year-over-year versus a roughly 15% we were originally planning.

定期服務收入下降 7.2%，原因是定期服務 TRASM 下降 21.3%，而 ASM 成長 18.2%。顯然，我們在非尖峰時段的飛行次數超出了需求環境所能支持的範圍。此外，我們也受到 6 月底 MSP 營運挑戰的影響，乘客收入減少了 100 萬至 150 萬美元。為了應對疲軟的需求環境，我們正在限制第三季的成長，並預計定期服務 ASM 年成長 7% 至 8%，而我們最初計劃的成長約為 15%。

We expect year-over-year growth to fall further in Q4. The pull down comes mainly from reducing off-peak flying. Scheduled service ASMs for our full network will still grow in July by about 16% year-over-year. But by September, they will shrink by 11%. Average total fare per passenger fell by 20.1% during the quarter.

我們預計第四季同比增速將進一步下降。下降主要來自非高峰航班的減少。7 月份，我們整個網路的定期服務 ASM 仍將年增約 16%。但到 9 月份，它們將萎縮 11%。本季每位乘客的平均總票價下降了 20.1%。

While total fare has declined versus last year, the second quarter was the first since COVID that we flew more ASMs in the second quarter of 2019. And Q2 '24 scheduled service TRASM was 12.3% higher than Q2 of '19. Charter revenue in the second quarter grew 2.8% to $51 million, which was a new quarterly high. This result was even more impressive as second quarter charter block hours declined 10.2% year-over-year due to scheduling improvements, which reduced the number of ferry flights we operated.

雖然總票價較去年有所下降，但自新冠疫情爆發以來，我們在 2019 年第二季度首次實現了更多 ASM 飛行。24 年第二季定期航班 TRASM 比 19 年第二季高出 12.3%。第二季包機營收成長2.8%，達5,100萬美元，創季度新高。這一結果更加令人印象深刻，因為由於調度改進，我們營運的渡輪航班數量減少，第二季包機班次較去年同期下降了 10.2%。

Ad hoc charter revenue grew significantly versus last year and was 23% of the total Charter revenue versus 13% in the second quarter of last year. For our Cargo segment, revenue grew by 1.7% to $25.4 million and a 2.4% decrease in block hours. Cargo block hours are influenced by scheduled heavy maintenance events, which drive moderate changes in aircraft availability. We expect year-over-year cargo block hours to grow in both the third and fourth quarter of this year and then to inflect sharply upward in 2025 as we take on an expected eight additional freighter aircraft throughout the year.

臨時包機營收較去年大幅成長，佔包機總營收的 23%，去年第二季為 13%。對於我們的貨運部門，收入成長了 1.7%，達到 2,540 萬美元，而班次減少了 2.4%。貨運封鎖時間受到預定的重型維修事件的影響，這會導致飛機可用性發生適度變化。我們預計今年第三季和第四季的貨運班次將年增，然後在 2025 年大幅上升，因為我們預計全年將增加 8 架貨機。

June was the first month that a portion of the revised Amazon contract rates went into effect. The full impact of the new rates will not be in effect until the second half of 2025. Turning now to costs, second quarter total operating expenses increased 7.3% on an 8.9% increase in total block hours. CASM declined by 5.1% versus the second quarter of 2023 while adjusted CASM declined 4.9%, marking our third consecutive quarter of year-over-year declines.

6 月是部分修訂後的亞馬遜合約費率生效的第一個月。新費率的全面影響要到 2025 年下半年才會生效。現在談到成本，第二季總營運費用增加了 7.3%，而總運行時間增加了 8.9%。CASM 與 2023 年第二季相比下降了 5.1%，調整後的 CASM 下降了 4.9%，這標誌著我們連續第三個季度同比下降。

As our pilot availability issues have eased, we've been able to grow flying through higher aircraft utilization, which was 7.5 hours per day in the second quarter, up 11.9% versus the second quarter of last year. Our declining CASM came despite increases in both brown handling costs and higher airport fees. Ground handling expenses grew by 16.6% year-over-year, driven by a 20% increase in scheduled service departures while the roll-off of COVID relief payments that airports had been using to minimize rate increases contributed to a 14.9% increase in landing fees and airport rent expenses. As we move into Q3, the slowing growth in our scheduled service business is likely to result in an increase in adjusted CASM.

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，第二季為每天 7.5 小時，比去年第二季度增加了 11.9%。儘管棕色處理成本和機場費用增加，但我們的 CASM 仍在下降。地面服務費用年增 16.6%，原因是定期航班起飛次數增加了 20%，而機場一直用於盡量減少費率上漲的新冠疫情救濟金的滾存導致著陸費增加了 14.9%以及機場租金費用。隨著進入第三季度，我們的定期服務業務成長放緩可能會導致調整後的 CASM 增加。

Regarding our balance sheet, our total liquidity at the end of the second quarter was $153 million. Year-to-date, we spent $38.2 million on CapEx. At this point, we do not need to purchase any incremental aircraft until we begin looking for 2027 capacity. We continue to generate strong free cash flow and we still anticipate full year 2024 CapEx to be well below $100 million.

關於我們的資產負債表，第二季末我們的總流動資金為 1.53 億美元。今年迄今，我們在資本支出上花了 3820 萬美元。目前，我們不需要購買任何增量飛機，直到我們開始尋找 2027 年的產能。我們繼續產生強勁的自由現金流，並且仍然預計 2024 年全年資本支出將遠低於 1 億美元。

Our leverage remains low with our net debt to adjusted EBITDA ratio at the end of the second quarter at 2.6 times. Finally, the effective income tax rate increased substantially during the three months ended June 30, 2024, as compared with prior year due to some additional tax expense related to stock compensation. Turning to our guidance, third quarter total revenue to be between $245 million and $255 million on block hour growth of 5% to 8%. We're anticipating our cost per gallon for fuel to be $2.82 and for us to achieve an operating margin between 3% and 5%.

我們的槓桿率仍然很低，第二季末淨負債與調整後 EBITDA 的比率為 2.6 倍。最後，由於與股票補償相關的一些額外稅收費用，截至 2024 年 6 月 30 日的三個月內，實際所得稅率與前一年相比大幅上升。根據我們的指引，第三季總營收將在 2.45 億美元至 2.55 億美元之間，區塊小時成長率為 5% 至 8%。我們預計每加侖燃料的成本為 2.82 美元，營業利潤率將在 3% 到 5% 之間。

Our business is built for resiliency and will continue to allocate capacity between segments to maximize profitability and minimize earnings volatility. With that, I'll open it up for questions.

我們的業務是為了保持彈性而建立的，並將繼續在各個部門之間分配產能，以最大限度地提高盈利能力並最大限度地減少收益波動。有了這個，我將打開它來提問。

(Operator Instructions) Ravi Shanker, Morgan Stanley.

（操作員指令）Ravi Shanker，摩根士丹利。

So big capacity cuts in the back half that is good to see from an overall industry perspective. But given your unique model and the ability to move around resources, is there anything you guys can do to reallocate those resources to kind of offset the impact on CASM.

下半年產能大幅削減，從整個產業的角度來看是件好事。但考慮到你們獨特的模型和移動資源的能力，你們可以做些什麼來重新分配這些資源，以抵消對 CASM 的影響。

Probably in the second half of the year. To some extent, the answer to that is yes, but probably not fully. We've been consistently coming in favorable to our cost projections the company has done a great job on that front. Just given the sort of pull down that we've done fairly recently, we'll be able to offset some of the CASM impact but probably not all of it and we'll be looking for reallocation opportunities, particularly in the charter market as sort of much as we can here on relatively short notice.

大概是下半年吧。在某種程度上，答案是肯定的，但可能不完全。我們一直對我們的成本預測表示滿意，該公司在這方面做得很好。考慮到我們最近所做的那種下拉，我們將能夠抵消 CASM 的一些影響，但可能不是全部，我們將尋找重新分配的機會，特別是在包機市場等方面我們在相對較短的時間內就可以做到這一點。

I'd also add that our charter operations drive higher unit costs than do our scheduled service capacity. So it won't be apples-for-apples as we exchange into charter from scheduled service. And finally, really unit costs inflect when we start operating below minimum guarantees for our crews and we won't hit that level anyway. So we'll still be in an efficient bandwidth.

我還想補充一點，我們的包機業務比我們的預定服務能力帶來更高的單位成本。因此，當我們從定期航班換成包機時，這不會是蘋果對蘋果的情況。最後，當我們開始以低於員工最低保證的水平運作時，單位成本確實會發生變化，而且無論如何我們都不會達到這個水平。所以我們仍然處於有效的頻寬中。

Understood. That's really helpful. And maybe as a follow-up, kind of how would you characterize the competitive environment in Minneapolis, going to meet in our reports that and our delta may be looking to ramp up there. So has anything changed there?

明白了。這真的很有幫助。也許作為後續行動，你會如何描述明尼阿波利斯的競爭環境，在我們的報告中會遇到，我們的三角洲可能會尋求那裡的發展。那麼那裡有什麼變化嗎？

Well, mostly I mean, I'm getting the information from selling schedules, which are out through March of next year. And we see July as being the peak growth rate across our network for all OAs and an improving condition all the way through the end of the year and into next spring.

嗯，主要是我的意思是，我從銷售時間表中獲取信息，該時間表將持續到明年三月。我們認為 7 月是我們所有 OA 網路中成長率的峰值，並且從今年年底到明年春季，情況一直在改善。

Duane Pfennigwerth, Evercore ISI.

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

Can you remind us how much liquidity you want to keep on the balance sheet? Is there any desire to build up dry powder ahead of the cargo ramp next year? And just given the free cash flow you expect to generate, how are you thinking about capacity for buybacks for the rest of this year?

您能提醒我們您希望在資產負債表上保留多少流動性嗎？是否有意願在明年貨運坡道之前累積乾粉？考慮到您預期產生的自由現金流，您如何考慮今年剩餘時間的回購能力？

Yes. So we're sort of at liquidity trough for the year at sort of this time, and we'll start building liquidity as we begin selling sort of our winter schedule, peak liquidity sort of towards the end of the year. The thing about the liquidity of this business is we think we can operate this at probably relatively lower levels of liquidity than other airlines because a big chunk of our revenue stream is very predictable between our Cargo and Charter businesses. I hesitate to throw out an exact minimum liquidity number, but it's well below where we're at today. There's really not that much of a need to build liquidity as we head into the cargo ramp because there's really no CapEx required or very, very little CapEx required.

是的。因此，我們在今年的這個時候處於流動性低谷，當我們開始銷售冬季計劃時，我們將開始建立流動性，在年底時達到流動性高峰。關於這項業務的流動性，我們認為我們可以以比其他航空公司相對較低的流動性水平來運營這項業務，因為我們的貨運和包機業務的收入流的很大一部分是非常可預測的。我猶豫是否要給出一個確切的最低流動性數字，但它遠低於我們今天的水平。當我們進入貨運坡道時，實際上沒有那麼多需要建立流動性，因為實際上不需要資本支出，或者需要的資本支出非常非常少。

It will be continuing the stream of pilot hiring that we're doing and then a reallocation of some resource from our scheduled service into the Cargo business, so there's not really any kind of a significant liquidity need there. That will be a liquidity positive event for us because of the improved profitability of the new cargo flying. To your second question, we've done well over $100 million in share buybacks and we'll sort of continue to look at our free cash flow profile. We're paying back a lot of debt and our debt balances are coming down pretty quickly, so this is something that's always on our plate and we'll probably revisit and take another look at as we move through this year and early into next.

它將繼續我們正在進行的飛行員招募流程，然後將一些資源從我們的定期服務重新分配到貨運業務，因此實際上並不存在任何重大的流動性需求。由於新貨運航班的盈利能力有所提高，這對我們來說將是一個流動性積極事件。對於你的第二個問題，我們已經完成了超過 1 億美元的股票回購，我們將繼續關注我們的自由現金流狀況。我們正在償還大量債務，而且我們的債務餘額正在迅速下降，因此這是我們一直面臨的問題，在今年和明年年初的過程中，我們可能會重新審視並重新審視。

Just one more thing on that, Duane. I mean, typically, airlines require a lot of working capital to transition new fleets because of crew training and things like that. I just want to remind everybody that our pilots do all the flying that we do across all 3 segments from a single base. So there's really no incremental operating costs associated with the transition either.

還有一件事，杜安。我的意思是，通常情況下，由於機組人員培訓等原因，航空公司需要大量營運資金來過渡新機隊。我只是想提醒大家，我們的飛行員在一個基地完成所有 3 個航段的所有飛行。因此，實際上也沒有與過渡相關的增量營運成本。

Yes, that's very clear. Good reminders. And just to follow up on Charter. How do you view the opportunity set now? And maybe just operationally, what is the lead time you need to kind of tilt harder into that segment versus maybe scheduled service. Is that are you looking one to two quarters out? Or can you react to opportunities closer in?

是的，這很清楚。很好的提醒。只是為了跟進憲章。您如何看待現在的機會？也許只是在操作上，與可能的預定服務相比，您需要更加努力地投入到該細分市場的交貨時間是多少。您正在尋找一到兩個季度的機會嗎？或者你能對臨近的機會做出反應嗎？

Duane, why don't I start and then I'll turn it over to Grant. So the Charter comes in kind of two flavors. One is contracted charter flying, which is under long-term agreements. It's about seven aircraft worth of flying that we do that's related to that.

杜安，我為什麼不開始，然後把它交給格蘭特。因此，《憲章》有兩種風格。一種是根據長期協議簽訂的包機飛行合約。我們飛行的飛機大約有七架，與此相關。

And essentially, it's us being an airline for someone else. And it's the same aircraft that our passenger scheduled service fleet operates, so it's interchangeable, but it's very dependable volumes and profitability. And then there's a big section of charters that's ad hoc, which is booked relatively close in high-margin flying and mostly a way for us to allocate surplus capacity into profitable flying. And that's the domestic military market that we participate in, a significant amount of sports charters that we do for predominantly NCAA sports and major league soccer.

從本質上講，我們是為別人服務的航空公司。它與我們的客運定期服務機隊運營的飛機相同，因此可以互換，但其數量和盈利能力非常可靠。還有很大一部分包機是臨時的，在高利潤飛行中預訂得相對接近，這主要是我們將剩餘運力分配到有利可圖的飛行中的一種方式。這就是我們參與的國內軍事市場，我們主要為 NCAA 體育賽事和美國職業足球大聯盟提供大量體育賽事包機。

So those are a little bit harder to predict because it's close in but we're pretty bullish on it going into this fall as we've continued to expand that market. Grant, do you have a color on that?

因此，這些預測有點難，因為它已經很接近了，但隨著我們繼續擴大該市場，我們非常看好今年秋天的情況。格蘭特，你有顏色嗎？

Yes. The only thing I would add would be, even in the second quarter, when we really were bias towards scheduled service growth using up what we thought were pretty much all of our crew resources, we still were able to pivot pretty significantly, as Jude mentioned, to those military trips in those closed in ad hoc trips. And as we look towards the back half of the year, we're going to be very aggressive. We don't have to wait those requests are coming to us, and the team is very poised to go out and where there's an opportunity, where we can do it profitably. We're going to do it and we have such a good reputation in the market will place that people come to us pretty quickly when we have that capacity. And when things do get tight, we sort of take that capacity off so we can turn it on very, very quickly, which we're doing right now.

是的。我唯一要補充的是，即使在第二季度，當我們確實偏向於預定的服務增長，耗盡了我們認為幾乎所有的機組人員資源時，我們仍然能夠相當大地進行調整，正如裘德提到的那樣，那些臨時旅行中的軍事旅行。展望今年下半年，我們將非常積極。我們不必等待這些請求來到我們這裡，團隊已經做好了走出去的準備，哪裡有機會，哪裡我們就可以獲利。我們將會這樣做，並且我們在市場上擁有良好的聲譽，當我們有這種能力時，人們很快就會來找我們。當事情確實變得緊張時，我們會取消該容量，以便我們可以非常非常快地打開它，就像我們現在正在做的那樣。

Scott Group, Wolfe.

斯科特集團，沃爾夫。

What the capacity you're talking about, are you in the camp of a September RASM inflection? And then is there in your mind, is there a risk like this is just like a head fake a September is off-peak and that capacity starts to reaccelerate in Q4?

你所說的能力是什麼？然後，您是否會想到，是否存在這樣的風險，就像 9 月處於非高峰期並且運力在第四季度開始重新加速一樣？

No, I think we're seeing a structural change in the growth rate. I think we saw a reallocation of capacity into the domestic leisure market in '22 and then capacity chase that demand into big market connectivity, transatlantic, the Midwest was kind of late to get those capacity growth reallocations from the post-COVID environment, and we saw growth rates peak in July. And everybody is selling out through April now. So I feel fairly confident that our peak winter schedule will show the kind of profitability that we're all expecting as we move into this winter.

不，我認為我們正在看到成長率的結構性變化。我認為我們在 22 年看到了容量重新分配到國內休閒市場，然後容量將需求追逐到大市場連接、跨大西洋、中西部，從後疫情環境中獲得這些容量增長重新分配有點晚了，我們7月份成長率達到頂峰。現在到四月時每個人都賣完了。因此，我相當有信心，我們的冬季高峰計劃將顯示出我們在進入今年冬季時所期望的盈利能力。

So no, I don't think that's the case. September for us --.

所以不，我認為情況並非如此。九月對我們來說--.

The September piece?

九月的作品？

It's always. Yes, September price is always challenging. So when we cut down capacity, obviously, we're able to identify the flights down to the very flight level that aren't going to make a positive contribution and cut those out. So we're expecting a pretty good September, all things equal because we've had the time to prepare under the current environment, which is substantially different than when we planned the year out.

總是如此。是的，九月的價格總是充滿挑戰。因此，當我們削減運力時，顯然，我們能夠識別出那些不會做出積極貢獻的航班，並將其削減。因此，在所有條件相同的情況下，我們預計 9 月會非常好，因為我們有時間在當前環境下做好準備，這與我們計劃今年的情況有很大不同。

Can you just remind us the timing of the aircraft ramp with Amazon? And then you had a comment that we're seeing a partial impact of the higher rates in June, but we don't see the full impact until the second half of next year. Can you just talk about that?

您能提醒我們一下亞馬遜飛機停機坪的時間嗎？然後您評論說，我們看到了 6 月利率上升的部分影響，但要到明年下半年才能看到全部影響。能簡單談談嗎？

Yes. So I can't go into the details on how the rates come in. But basically, we got a partial increase in rate when we signed the deal. So really, that didn't have any impact on our numbers until June. So the effect of the second quarter of the new Amazon rates is very, very small.

是的。所以我無法詳細說明費率是如何產生的。但基本上，當我們簽署協議時，我們的利率得到了部分提高。事實上，直到六月，這才對我們的數字產生任何影響。因此，亞馬遜第二季新費率的影響非常非常小。

But there's this piece that came in when we signed the deal and then additional increases as the aircraft come in. And the aircraft right now, we expect to start arriving in March of 2025. And then to come in relatively quickly so that by the third quarter, they're kind of all on board here. Now things can move left to right a little bit, but that's the instruction we've been given and sort of the path that we're on.

但是當我們簽署協議時，這一部分就出現了，然後隨著飛機的到來而額外增加。目前，我們預計飛機將於 2025 年 3 月開始抵達。然後相對較快地進入，以便到第三季度，他們就都在這裡了。現在事情可以從左向右移動一點，但這就是我們得到的指示，也是我們所走的道路。

And so we still get like this, I guess, for lack of a better word, like 2 bites of the apple next year where we get the Q1 benefit of schedule and then we get the Cargo ramp in the rest of the year?

所以我們仍然會這樣，我想，因為缺乏更好的詞，就像明年咬兩口蘋果，我們獲得第一季度的時間表效益，然後我們在今年剩餘的時間裡獲得貨運量？

Yes. Yes, that's exactly right. Look, we're really bullish on next year and part of the reason is what you just said. So we're going to be able to continue allocating all of our resources to scheduled service as much as necessary to schedule service in Q1, which obviously is the biggest quarter for us by far and then transition very smoothly as things slow down for us into the Cargo business more. So it kind of works out really well.

是的。是的，完全正確。聽著，我們非常看好明年，部分原因就是你剛才所說的。因此，我們將能夠繼續將所有資源分配給預定服務，以安排第一季的服務，這顯然是我們迄今為止最大的季度，然後隨著我們的情況放緩，過渡非常順利貨運業務更多。所以效果非常好。

Michael Linenberg, Deutsche Bank.

麥可‧林伯格，德意志銀行。

When I look at your schedule for the winter, you talked about 55 or more than 55 cities that you're going to serve nonstop for Minneapolis. When I think about what you're going to serve and maybe what you were serving a year ago, it does seem like there are some markets that you have pulled out of. Curious what is the common denominator in some of those markets? Was it just they didn't ramp up well, they didn't accompany maybe some of the charter flying that you did, maybe that was sort of part of the package or it's just the competitive response. Anything we can take away from that?

當我查看你們冬季的航班安排時，你們提到你們將在 55 個或超過 55 個城市提供直達明尼阿波利斯的航班。當我想到你將要提供什麼服務，也許你一年前正在提供什麼服務時，你似乎確實已經退出了一些市場。好奇其中一些市場的共同點是什麼？是不是他們沒有很好地成長，他們沒有陪伴你做的一些包機飛行，也許這是套餐的一部分，或者只是競爭的反應。我們可以從中得到什麼嗎？

Well, first, there are seasonal markets to happen across our network that are going to be repetitive every year and nearly every market works from Minneapolis in June and July, I mean we need more capacity in winter and nearly everything works. I think everything works in that period of time as well, but they're very different networks summer to winter. I think the thing to watch is as we go into summer '25, some of our markets will need to be suspended through summer '25 and not come back into the network until future years and that's because of reallocation into cargo but our winter network will be intact, yes.

嗯，首先，我們的網絡中會出現季節性市場，這些市場每年都會重複，幾乎每個市場都在六月和七月從明尼阿波利斯開始運作，我的意思是我們在冬季需要更多的容量，而且幾乎一切都正常。我認為在那段時間一切都正常，但夏季和冬季的網路非常不同。我認為值得關注的是，當我們進入 25 年夏季時，我們的一些市場將需要在 25 年夏季暫停，並且直到未來幾年才能恢復網絡，這是因為重新分配到貨運，但我們的冬季網絡將完好無損，是的。

Okay. That's helpful. And then just secondly, as you ramp and bring on the additional airplanes and you talked about sort of reallocating resources, where we are on pilots and staffing first officers versus captains, should we see any sort of teething issues as we ramp up into 2025 with the additional airplanes coming on for cargo, et cetera?

好的。這很有幫助。其次，當你增加飛機並增加飛機時，你談到了重新分配資源，我們在飛行員和大副與機長方面的人員配置，當我們進入 2025 年時，我們是否應該看到任何初期問題額外的飛機來運送貨物等等？

Yes, this is Greg Mays. I think with regard to pilots, we've been able to allocate resources and will not be constrained by pilots or staffing really generally. So as we look out into 2025, we don't see any change to that. We see overall industry hiring is way down. So things look good for us. We still would love to have more captives upgrade. But at this point in time, that's not constraining our growth. We feel really, as Dave said, bullish about 2025.

是的，我是格雷格·梅斯。我認為關於飛行員，我們已經能夠分配資源，並且通常不會受到飛行員或人員配置的限制。因此，當我們展望 2025 年時，我們認為這一點不會發生任何變化。我們看到整個行業的招聘人數大幅下降。所以事情看起來對我們很好。我們仍然希望有更多的俘虜升級。但目前，這並沒有限制我們的成長。正如戴夫所說，我們確實對 2025 年感到樂觀。

(Operator Instructions) Tom Fitzgerald, TD Cowen.

（操作員說明）Tom Fitzgerald，TD Cowen。

Can we just go back to capital allocation again? And just given everything with where the business is going and how cheap the stock is right now, why not issue debt instead of paying down debt and use of proceeds to buy back your stock?

我們可以再次回到資本配置嗎？考慮到業務的發展方向以及目前股票的價格有多便宜，為什麼不發行債務而不是償還債務並使用收益回購股票？

Look, we've sort of considered all different avenues here. Debt isn't sort of cheap as it could be at this point? We are kind of looking at everything. We're sort of making capital allocation decisions here, not just for the next 3 to 6 months. But for the long term, we want to continue to operate with a conservative balance sheet and sort of loading up with more debt right now to buy back stock is probably not something that we're going to do in the short term.

看，我們在這裡考慮了所有不同的途徑。目前債務並不便宜？我們正在關註一切。我們在這裡做出資本配置決策，而不僅僅是未來 3 到 6 個月的決策。但從長遠來看，我們希望繼續以保守的資產負債表運營，並且現在增加債務來回購股票可能不是我們短期內會做的事情。

Okay. Fair enough. That's helpful. And then just like longer term, once you kind on get on past 2026, just how are you thinking about the network and whether you need another focus city beyond Minneapolis?

好的。很公平。這很有幫助。然後就像更長期的那樣，一旦你即將過去 2026 年，你如何看待網路以及你是否需要明尼阿波利斯以外的另一個焦點城市？

Tom, there's not a lot of growth opportunities outside of Minneapolis other than the stuff that we already have in the schedule like Texas origination down the Mexican Caribbean markets in the summertime. In the past, we've had a lot of success expanding our Midwest footprint into origination markets around Minneapolis. We also had a nice business in 2019 flying Hawaii. Hawaii is not a great place to be right now.

湯姆，除了我們已經在日程表中的東西之外，明尼阿波利斯之外沒有太多的成長機會，例如夏季從德克薩斯州出發進入墨西哥加勒比市場。過去，我們在將中西部足跡擴展到明尼阿波利斯週邊的原產地市場方面取得了巨大的成功。我們在 2019 年飛往夏威夷的航班也取得了不錯的成績。夏威夷現在不是一個好地方。

So with the yield environment, there's nothing that's obvious and urgent for us to move into. And so I think what we're quite frankly, what we're going to be waiting on is some of our competitors to go through some challenging times and free up some opportunity for us. And that's why we want to think about having some powder on the balance sheet and just being able to be dynamic to be able to reallocate capacity when it presents itself, which I think is going to be an opportunity that's difficult to predict as we sit here today. The best thing for us in the near term as we talked about Cargo and Charter opportunities.

因此，在收益率環境下，我們沒有什麼明顯且迫切的需要進入的地方。因此，我認為坦白說，我們將等待我們的一些競爭對手度過一些充滿挑戰的時期，並為我們釋放一些機會。這就是為什麼我們要考慮在資產負債表上添加一些粉末，並且能夠動態地在產能出現時重新分配產能，我認為這將是一個很難預測的機會，因為我們坐在今天。當我們談論貨運和包機機會時，這對我們來說是近期最好的事情。

Yes. This is Dave. I just completely agree with what you just said. '25 for us is a year of integrating these new cargo aircraft taking advantage of the economics of that new deal. And then we'll look at the landscape in '26. There's growth opportunities -- there could be growth opportunities here, growth opportunities elsewhere, but see what the landscape looks like in '26 and beyond. And I think given the state of some others, we expect it to be a different landscape than it looks like at this particular minute.

是的。這是戴夫。我完全同意你剛才所說的。對我們來說，25 年是利用新協議的經濟效益整合這些新貨機的一年。然後我們將看看 26 年的情況。這裡有成長機會——這裡可能有成長機會，其他地方也可能有成長機會，但看看 26 年及以後的情況會是什麼樣子。我認為考慮到其他一些人的狀況，我們預計情況會與此刻不同。

Does that conclude your questions, Mr. FitzGerald?

菲茨傑拉德先生，您的問題就這樣結束了嗎？

Yes.

是的。

Scott Group, Wolfe.

斯科特集團，沃爾夫。

I just want to make sure we're thinking about full year '25, right, just with the moving pieces. Can you just remind us how to think about how much scheduled ASMs are going to be down? And then what you think a full year sort of block hours for cargo?

我只是想確保我們正在考慮 25 年全年的情況，對吧，只是考慮一些移動的部分。您能否提醒我們如何考慮有多少預定的 ASM 會停機？那麼您認為全年的貨運封鎖時間是多少？

Yes. So let me sort of just describe it this way. So basically, we're going to be taking these Cargo aircraft in and that is going to have sort of the first call on the resources that we have here, particularly on the pilot front. Then as we have remaining resources available, we'll allocate that between scheduled service and charter depending on where the opportunity is. So part of this depends on exactly where we sit from a pilot availability standpoint, frankly, going into '25.

是的。讓我這樣描述一下。所以基本上，我們將接收這些貨機，這將是對我們在這裡擁有的資源的第一次調用，特別是在飛行員方面。然後，由於我們有剩餘的可用資源，我們將根據機會在定期服務和包機之間分配資源。因此，坦白說，這部分取決於我們從飛行員可用性的角度來看，進入 25 年。

Our current outlook is likely to be down high single, low double digits on a block hour basis or sorry, on an ASM basis for scheduled service. But that could move left to right, depending on exactly where we sit from a pilot perspective. I think we had the block hour growth for cargo next year. Give me one second here. Yes, I don't have the '25 number right in front.

我們目前的前景可能會在每小時的基礎上下降高個位數，低兩位數，或者抱歉，在定期服務的 ASM 基礎上。但這可能會從左到右移動，這取決於我們從飛行員的角度來看的位置。我認為明年我們的貨運量將大幅成長。請給我一秒鐘。是的，我前面沒有 '25 號碼。

We can follow up with you on that, but it will obviously be significant since we're bringing in 8 new aircraft. But the size of our scheduled service and charter business is going to be driven by resource availability, particularly pilots.

我們可以跟進此事，但這顯然意義重大，因為我們將引進 8 架新飛機。但我們的定期服務和包機業務的規模將由資源可用性（尤其是飛行員）所驅動。

And any thoughts on what that mix shift should mean from a just total cost or unit cost perspective?

從總成本或單位成本的角度來看，這種混合轉變意味著什麼，有什麼想法嗎？

Probably a little premature to sort of talk about that as to what's going to happen with CASM next year precisely. The Cargo business is going to consume some of our resources here, so there's going to be some additional allocation of overhead and other things to the Cargo business. So that mix just isn't sort of straightened out quite yet. Sorry, just quickly. Yes, I think as we sit right now, we're expecting the Cargo segment to be up, let's say, 60% to 63% in block hours in 2025 over 2024.

現在談論 CASM 明年的具體情況可能還為時過早。貨運業務將消耗我們的一些資源，因此將為貨運業務分配一些額外的管理費用和其他費用。所以這種混合還沒有完全理順。抱歉，請快點。是的，我認為，就我們目前而言，我們預計 2025 年貨運業務的班次將比 2024 年增長 60% 至 63%。

Ultimately, so it doesn't sound like anything from what you guys laid out for us in June when you first made this announcement, it doesn't sound like anything is really changing.

歸根結底，這聽起來與你們在 6 月首次宣布這一消息時為我們制定的計劃沒有任何區別，聽起來沒有任何事情真正改變。

Nothing is really changing significantly. I'll tell you, the only trend that we're seeing a little bit is maybe a little bit of improved pilot availability, which would say maybe we could be a little bit bigger next year from a scheduled service perspective. On the call, I said down 10% to 12%, in the scheduled service segment. Our latest numbers have us more like high single digits. So that's the number that's kind of moving left and right now, but the cargo delivery schedule of the aircraft I talked about on the last call is still relevant.

沒有什麼真正發生重大變化。我告訴你，我們看到的唯一趨勢可能是飛行員可用性有所改善，這意味著從定期服務的角度來看，明年我們的規模可能會更大一些。在電話中，我表示定期航班服務價格下降 10% 至 12%。我們的最新數據更像是高個位數。所以這個數字現在左右移動，但我在上次通話中談到的飛機的貨物交付時間表仍然相關。

Importantly, you called out the seasonality of the growth is really beneficial for us. So the first quarter will be intact and we'll see at least mid-single-digit growth January, February and March. And then as we move into the year and start taking cargo airplanes, that's where we'll see a drop down of our business.

重要的是，您指出成長的季節性對我們確實有利。因此，第一季將完好無損，我們將在 1 月、2 月和 3 月看到至少中等個位數的成長。然後，當我們進入新的一年並開始乘坐貨機時，我們的業務就會下降。

Okay. Appreciate it.

好的。欣賞它。

Michael Linenberg, Deutsche Bank.

麥可‧林伯格，德意志銀行。

Just a quick as we think about composition of revenue, do we get to like 35% or 40% of your revenue is Cargo and/or Charter for next year? Or am I just too high? Just trying to get your sense.

快速考慮收入的組成，我們是否會認為明年的收入中有 35% 或 40% 是貨運和/或包機？還是我太高了？只是想了解你的感覺。

No. I think that number is probably not unrealistic for '26 but that sort of 35-plus number in '25 is not going to be that high.

不。我認為這個數字對 26 年來說可能並非不切實際，但 25 年 35 以上的數字不會那麼高。

I want to point out, block hours, we might get something like that towards the end of next year and going into the subsequent year. But the density of revenue is a lot higher in charter and scheduled service because of fuel pass-through and some other costs too. So the revenue per block hour is a lot lower in cargo, just because of the way the accounting is treated for fuel expenses that we don't pay and things like that.

我想指出的是，在封鎖時間裡，我們可能會在明年年底和下一年得到類似的東西。但由於燃油轉嫁和其他一些成本，包機和定期服務的收入密度要高得多。因此，貨運方面每個區塊小時的收入要低得多，這只是因為我們不支付的燃料費用以及類似費用的會計處理方式。

Yes. I'm just thinking about how that's going to impact your costs and also your fuel bill and some big chunk of your business, it is going to be this pass-through. Okay. No, that's helpful.

是的。我只是在考慮這將如何影響您的成本、燃料費用以及您的大部分業務，這將是這種轉嫁。好的。不，這很有幫助。

Thanks, Mike.

謝謝，麥克。

And I am showing no further questions in our phone lines. I'd now like to turn the conference back over to Jude Bricker for any closing remarks.

我在電話線路中沒有再提出任何問題。現在我想將會議轉回給裘德·布里克（Jude Bricker）發表閉幕詞。

Thanks for your interest, guys. Three big points: capacity growth has peaked, and we feel that it's going to be a constructive fare environment moving through the end of the year. Our black hour growth will continue, but we're going to shift into Cargo predominantly. And we're really bullish on our free cash flow production as we have already acquired the growth for the next several years.

謝謝你們的興趣，夥伴們。三大要點：運力成長已見頂，我們認為年底將形成一個建設性的票價環境。我們的黑色時段增長將繼續，但我們將主要轉向貨運。我們非常看好我們的自由現金流量生產，因為我們已經實現了未來幾年的成長。

And lastly, I'll end to just being so proud to be part of this team that executed so well through such a challenging period. This IT interruption, the whole industry had to deal with was severe for our frontline employees, and they executed beautifully and I'm just so proud of them. Thanks, and we'll talk to you guys next quarter. Appreciate your interest.

最後，我非常自豪能夠成為這個在如此充滿挑戰的時期表現出色的團隊的一員。整個產業必須應對的 IT 中斷對我們的第一線員工來說非常嚴重，他們執行得非常出色，我為他們感到驕傲。謝謝，我們將在下個季度與你們交談。感謝您的興趣。

Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.

謝謝。今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。祝大家有美好的一天。