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Table of Contents

As filed with the Securities and Exchange Commission on October 12, 2021

Registration No. 333-   

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Sun Country Airlines Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

4512

87-4092570

(State or other jurisdiction of
incorporation or organization)

(Primary Standard Industrial
Classification Code Number)

(I.R.S. Employer
Identification Number)

2005 Cargo Road

Minneapolis, MN 55450

(651) 681-3900

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Eric Levenhagen, Esq.

General Counsel and Secretary

2005 Cargo Road

Minneapolis, MN 55450

(651) 681-3900

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:

Brian M. Janson, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
(212) 373-3000

Michael Kaplan, Esq.
Derek Dostal, Esq.
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
(212) 450-4000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered

    

Amount to be
Registered
(1)

    

Proposed Maximum
Offering Price
Per Share
(2)

    

Proposed
Maximum
Aggregate
Offering
Price
(1)(2)

    

Amount of Registration
Fee

Common stock, par value $0.01 per share

9,200,000

$

36.19

$

332,948,000

$

30,865

(1)

Includes 1,200,000 shares of common stock that the underwriters have the option to purchase. See “Underwriting (Conflict of Interest).”

(2)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. In accordance with Rule 457(c) of the Securities Act of 1933, as amended, the price shown is the average of the high and low selling prices of the common stock on October 5, 2021, as reported by the Nasdaq Global Select Market.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Table of Contents

Subject to completion, dated October 12, 2021

PROSPECTUS

8,000,000 Shares

Graphic

Sun Country Airlines Holdings, Inc.

Common Stock

The selling stockholders identified in this prospectus are selling 8,000,000 shares of common stock of Sun Country Airlines Holdings, Inc., a Delaware corporation. In addition, the selling stockholders have granted the underwriters an option to purchase up to an additional 1,200,000 shares of common stock. We are not selling any shares of our common stock, and we will not receive any of the proceeds from the sale of shares of our common stock offered by the selling stockholders.

Our common stock is listed on the Nasdaq Global Select Market (Nasdaq) under the symbol SNCY. The last reported sale price of our common stock on October 11, 2021 was $34.24 per share.

SCA Horus Holdings, LLC (the “Apollo Stockholder”), which is an affiliate of certain investment funds managed by affiliates of Apollo Global Management, Inc., is currently our majority stockholder and is a selling stockholder in this offering. Following the completion of this offering, the Apollo Stockholder will no longer own a majority of the voting power of our outstanding common stock. As a result, we will no longer be a controlled company” under the corporate governance rules for Nasdaq-listed companies and we will be required to comply with additional corporate governance requirements of the Nasdaq rules, subject to the applicable phase-in periods. See “Risk Factors—Risks Related to this Offering and Ownership of our Common Stock, “Management—Loss of Controlled Company Status” and “Principal and Selling Stockholders.

We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 and are eligible for reduced public company reporting requirements. Please see “Prospectus Summary—Implications of Being an Emerging Growth Company.

By participating in this offering, you are representing that you are a citizen of the United States, as defined in 49 U.S.C. § 40102(a)(15). See “Description of Capital Stock—Limited Ownership and Voting by Foreign Owners.

Investing in our common stock involves risks that are described in the “Risk Factors” section beginning on page 22 of this prospectus.

    

Per Share

    

Total

Public offering price

$

$

Underwriting discounts and commissions(1)

$

$

Proceeds, before expenses, to the selling stockholders

$

$

(1)

See “Underwriting (Conflict of Interest)” for additional information regarding the underwriters’ compensation and reimbursement of expenses.

The underwriters may also exercise their option to purchase up to an additional 1,200,000 shares from the selling stockholders at the public offering price, less underwriting discounts and commissions, for 30 days after the date of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock against payment on or about           , 2021.

Joint Bookrunners

Barclays

Morgan Stanley

Co- Manager

Apollo Global Securities

Prospectus dated           , 2021

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For investors outside the United States: none of us, the selling stockholders or the underwriters have done anything that would permit this offering or possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this offering in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus and any such free writing prospectus outside of the United States.

TABLE OF CONTENTS

PROSPECTUS SUMMARY

1

RISK FACTORS

25

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

62

USE OF PROCEEDS

64

MARKET PRICE OF COMMON STOCK AND DIVIDEND POLICY

64

CAPITALIZATION

65

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

65

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

68

INDUSTRY

112

BUSINESS

116

MANAGEMENT

137

EXECUTIVE COMPENSATION

144

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

155

PRINCIPAL AND SELLING STOCKHOLDERS

161

DESCRIPTION OF CAPITAL STOCK

164

SHARES ELIGIBLE FOR FUTURE SALE

173

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

176

UNDERWRITING (CONFLICT OF INTEREST)

179

LEGAL MATTERS

186

EXPERTS

186

WHERE YOU CAN FIND MORE INFORMATION

186

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

F-1

None of us, the selling stockholders or the underwriters have authorized any other person to provide you with any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We, the selling stockholders and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may provide you. The stockholders are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. You should assume that the information appearing in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

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TRADEMARKS, TRADE NAMES, AND SERVICE MARKS

We use various trademarks, trade names and service marks in our business, including “Sun Country,” “Sun Country Airlines,” “Sun Country Connections,” “Sun Country Rewards,” “Sun Country Vacations,” “The Hometown Airline” and “UFLY,” as well as our signature “S” logo. This prospectus contains references to our trademarks, trade names and service marks. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

INDUSTRY AND MARKET DATA

We include in this prospectus statements regarding our industry, our competitors and factors that have impacted our and our customers’ industries. Such statements are statements of belief and are based on industry data and forecasts that we have obtained from industry publications and surveys, including those published by the United States Department of Transportation, as well as internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of such information. In addition, while we believe that the industry information included herein is generally reliable, such information is inherently imprecise. Certain statements regarding our competitors are based on publicly available information, including filings with the Securities and Exchange Commission and United States Department of Transportation by such competitors, published industry sources and management estimates. While we are not aware of any misstatements regarding the industry, competitor and market data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the caption “Risk Factors” in this prospectus.

BASIS OF PRESENTATION

In this prospectus, unless otherwise indicated or the context otherwise requires, references to the “Company,” the “Issuer,” “Sun Country,” “we,” “us” and “our” refer, prior to our conversion to a corporation, to SCA Acquisition Holdings, LLC and its consolidated subsidiaries and, after our conversion to a corporation, to Sun Country Airlines Holdings, Inc. and its consolidated subsidiaries. See “Prospectus Summary—The Reorganization Transactions.”

On April 11, 2018, MN Airlines, LLC (d/b/a Sun Country Airlines and now known as Sun Country, Inc.) was indirectly acquired by certain investment funds (the “Apollo Funds”) managed by affiliates of Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”). As a result of the change of control, the acquisition was accounted for as a business combination using the acquisition method of accounting, which requires, among other things, that our assets and liabilities be recognized on the consolidated balance sheet at their fair value as of the acquisition date. Accordingly, the financial information provided in this prospectus is presented as “Predecessor” or “Successor” to indicate whether they relate to the period preceding the acquisition or the period succeeding the acquisition, respectively. Due to the change in the basis of accounting resulting from the acquisition, the consolidated financial statements for the Predecessor and Successor periods, included elsewhere in this prospectus, are not necessarily comparable.

All consolidated financial statements presented in this prospectus have been prepared in U.S. dollars in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

For the years ended December 31, 2019 and 2018, we were managed as a single segment that provided scheduled service and charter air transportation to passengers. In May 2020, we began providing air cargo services under the ATSA (as defined in the “Glossary of Terms” below) and, during the fourth quarter of 2020, we determined that we have two reportable segments: passenger and cargo. As air cargo operations commenced in May 2020, the cargo segment had no comparable operations for any other prior period presented.

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GLOSSARY OF TERMS

Set forth below is a glossary of certain terms used in this prospectus:

“Adjusted CASM” means CASM excluding fuel costs, costs related to our cargo operations (starting in 2020 when we launched our cargo operations), certain commissions and other costs of selling our vacations product and excluding special items, income tax receivable expenses and other adjustments, as defined for the relevant reporting period, that are not representative of the ongoing costs necessary to our airline operations and may improve comparability between periods. We also exclude stock compensation expense when computing Adjusted CASM. Our compensation strategy includes the use of stock-based compensation to attract and retain employees and executives and is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period. When Adjusted CASM is referenced or presented for other airlines, it has been adjusted to our average stage length for the period presented.

“Aircraft miles” means miles flown by all of our aircraft, measured by summing up the miles for each completed flight segment.

“Air traffic liability” means the value of tickets sold in advance of travel.

“ALPA” means the Air Line Pilots Association, the union representing our pilots. “Amazon” means Amazon.com Services, LLC, together with its affiliates.

“Ancillary revenue” consists primarily of revenue generated from air travel-related services such as baggage fees, seat selection and upgrade fees, itinerary service fees, on-board sales and sales of trip insurance.

“Ancillary services” refers to the services that generate ancillary revenue.

“ATSA” means the Air Transportation Services Agreement, dated as of December 13, 2019, as amended as of June 30, 2020, by and between Sun Country, Inc. and Amazon.com Services, LLC (successor to Amazon.com Services, Inc.), as amended or modified from time to time.

“Available seat miles” or “ASMs” means the number of seats available for passengers multiplied by the number of miles the seats are flown.

“Average aircraft” means the average number of aircraft used in flight operations, as calculated on a daily basis.

“Average daily aircraft utilization” means block hours divided by number of days in the period divided by average aircraft.

“Average stage length” means the average number of statute miles flown per flight segment.

“Block hours” means the number of hours during which the aircraft is in revenue service, measured from the time of gate departure before take-off until the time of gate arrival at the destination.

“Cargo service” includes our CMI service operations under the ATSA.

“CASM” or “unit costs” means operating expenses divided by total ASMs. When CASM is referenced or presented for other airlines, it has been adjusted to our average stage length for the period presented.

“CBA” means a collective bargaining agreement.

“CBP” means the United States Customs and Border Protection.

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“Charter service” means flights operated for specific customers who purchase the entire flight from us and specify the origination and destination.

“Citizen of the United States” means (A) an individual who is a citizen of the United States; (B) a partnership each of whose partners is an individual who is a citizen of the United States; or (C) a corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, which is under the actual control of citizens of the United States, and in which at least 75% of the voting interest is owned and controlled by persons that are citizens of the United States.

“CMI service” means an arrangement whereby a cargo customer provides us with aircraft, pursuant to a sublease, and we provide crew, maintenance and insurance to operate such aircraft on the customer’s behalf. Amazon is currently our only CMI service customer.

“Completion factor” means the percentage of scheduled flights that are completed.

“COVID-19” means the novel coronavirus (SARS-CoV-2), which was first reported in December 2019.

“DOT” means the United States Department of Transportation.

“EPA” means the United States Environmental Protection Agency.

“FAA” means the United States Federal Aviation Administration.

“Flight cycle” means a cycle consisting of one take-off and one landing.

“Freighters” include the aircraft operated under the ATSA, which are configured entirely for cargo operations.

“GDS” means a Global Distribution System such as Amadeus, Sabre and Travelport, used by travel agencies and corporations to purchase tickets on participating airlines.

“IBT” means the International Brotherhood of Teamsters, the union representing our flight attendants.

“LCC” means low-cost carrier and includes JetBlue Airways and Southwest Airlines.

“Load factor” means the percentage of aircraft seat miles actually occupied on a flight (RPMs divided by ASMs) for scheduled service.

“Mainline U.S. passenger airlines” includes us, Alaska Airlines, Allegiant Travel Company, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines.

“NMB” means the National Mediation Board.

“OTAs” means online travel agents.

“Passengers” means the total number of passengers flown on all flight segments.

“PRASM” means scheduled service revenue divided by ASMs for scheduled service.

“Revenue passenger miles” or “RPMs” means the number of miles flown by passengers.

“RLA” means the United States Railway Labor Act.

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“Scheduled service” means transportation of passengers on flights we operate in and out of airports on a schedule of routes and flight times we provide for general sale.

“Scheduled service revenue” consists of base fares, unused and expired passenger credits and other expired travel credits for scheduled service.

“Stage-length adjustment” refers to an adjustment that can be utilized to compare CASM, PRASM and TRASM across airlines with varying stage lengths. All other things being equal, the same airline will have lower CASM, PRASM and TRASM as stage length increases since fixed and departure related costs are spread over increasingly longer average flight lengths. Therefore, as one method to facilitate comparison of these quantities across airlines (or even across the same airline for two different periods if the airline’s average stage length has changed significantly), it is common in the airline industry to settle on a common assumed stage length and then to adjust CASM, PRASM and TRASM appropriately. Stage-length adjusted comparisons are achieved by multiplying the base metric by a quotient, the numerator of which is the square root of the carrier’s stage length and the denominator of which is the square root of the common stage length. Stage-length adjustment techniques require judgment and different observers may use different techniques. For stage-length PRASM or TRASM comparisons in this prospectus, the stage length being utilized is the aircraft stage length.

“TRASM” or “unit revenue” means total revenue divided by total ASMs. Starting in 2020, we exclude cargo revenue from total revenue as the freighters we operate under the ATSA do not contribute to our ASMs. When TRASM is referenced or presented for other airlines, it has been adjusted to our average stage length for the period presented.

“TSA” means the United States Transportation Security Administration.

“TWU” means the Transport Workers Union, the union representing our dispatchers.

“ULCC” means ultra low-cost carrier and includes Allegiant Travel Company, Frontier Airlines and Spirit Airlines.

“VFR” means visiting friends and relatives.

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PROSPECTUS SUMMARY

The following summary contains selected information about us and about this offering. It does not contain all of the information that is important to you and your investment decision. Before you make an investment decision, you should review this prospectus in its entirety, including matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus. Some of the statements in the following summary constitute forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.” For definitions of certain terms used in this prospectus, see “Glossary of Terms” beginning on page iii.

Overview

Sun Country Airlines is a new breed of hybrid low-cost air carrier that dynamically deploys shared resources across our synergistic scheduled service, charter and cargo businesses. By doing so, we believe we are able to generate high growth, high margins and strong cash flows with greater resilience than other passenger airlines. We focus on serving leisure and visiting friends and relatives (“VFR”) passengers and charter customers and providing CMI service to Amazon, with flights throughout the United States and to destinations in Canada, Mexico, Central America and the Caribbean. Based in Minnesota, we operate an agile network that includes our scheduled service business and our synergistic charter and cargo businesses. We share resources, such as flight crews, across our scheduled service, charter and cargo business lines with the objective of generating higher returns and margins and mitigating the seasonality of our route network. We optimize capacity allocation by market, time of year, day of week and line of business by shifting flying to markets during periods of peak demand and away from markets during periods of low demand with far greater frequency than nearly all other large U.S. passenger airlines. We believe our flexible business model generates higher returns and margins while also providing greater resiliency to economic and industry downturns than a traditional scheduled service carrier.

Our Unique Business Model

Scheduled Service.  Our scheduled service business combines low costs with a high quality product to generate higher TRASM than ULCCs while maintaining lower Adjusted CASM than LCCs, resulting in best-in-class unit profitability. Our scheduled service business includes many cost characteristics of ultra low-cost carriers, or ULCCs (which include Allegiant Travel Company, Frontier Airlines and Spirit Airlines), such as an unbundled product (which means we offer a base fare and allow customers to purchase ancillary products and services for an additional fee), point-to-point service and a single-family fleet of Boeing 737-NG aircraft, which allow us to maintain a cost base comparable to these ULCCs. However, we offer a high quality product that we believe is superior to ULCCs and consistent with that of low-cost carriers, or LCCs (which include Southwest Airlines and JetBlue Airways). For example, our product includes more legroom than ULCCs, complimentary beverages, in-flight entertainment and in-seat power, none of which are offered by ULCCs. The combination of our agile peak demand network with our elevated consumer product allows us to generate higher TRASM than ULCCs while maintaining lower Adjusted CASM than LCCs. In addition, as a low cost, leisure focused carrier, rather than a business travel focused carrier, we believe we are one of the early beneficiaries of the industry rebound following the COVID-19 pandemic.

Charter.  Our charter business, which is one of the largest narrow body charter operations in the United States, is a key component of our strategy both because it provides inherent diversification and downside protection (it is uncorrelated to our scheduled service and cargo businesses, as evidenced by the fact that it recovered faster than our scheduled service business during the COVID-19 pandemic) as well as because it is synergistic with our other businesses (for example, we can dynamically deploy aircraft and pilots to their most profitable uses whether they be charter or scheduled service). Our charter business has several favorable characteristics, including large repeat customers, more stable demand than scheduled service flying and the ability to pass through certain costs, including fuel. Our diverse charter customer base includes casino operators, the U.S. Department of Defense, college sports teams and professional sports teams. We are the primary air carrier for the NCAA Division I National Basketball Tournament (known as “March Madness”), and we flew over 100 college sports teams during 2019. Our charter business includes ad hoc, repeat, short-term and long-term service contracts with pass through fuel arrangements and annual rate escalations. Most of our business is non-cyclical because the U.S. Department of Defense and sports teams still fly during normal

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economic downturns, and our casino contracts are long-term in nature. Our charter business has proven to be more resilient than our scheduled service business during the COVID-19 induced downturn, with charter revenue having declined less than scheduled service revenue on a percentage basis in 2020 as compared to 2019. Additionally, our charter business complements our seasonal and day-of-week focused scheduled passenger service by allowing us to optimally schedule our aircraft and crews to the most profitable flying opportunities. In general, charter available seat miles, or ASMs, are highest in fall months when scheduled service operations are less favorable. From 2017 through 2019, we grew our charter revenue by approximately 32% while providing charter services to 395 destinations in 27 countries across the world. While our charter revenues were down as a result of COVID-19, they rebounded in the second half of 2020 and into the second quarter of 2021. In the second quarter of 2021, our charter revenues were 30.7% lower when compared to the second quarter of 2019. In comparison, combined U.S. passenger airline revenues were 39.9% lower during the second quarter of 2021 when compared to the second quarter of 2019.

Cargo.  On December 13, 2019, we signed a six-year contract (with two, two-year extension options, for a total term of 10 years), which we refer to as the “ATSA,” with Amazon to provide air cargo services. Flying under the ATSA began in May 2020 and, as of the date of this prospectus, we are flying 12 Boeing 737-800 cargo aircraft for Amazon (having been awarded two additional aircraft in October and November 2020 after the initial contract for 10 aircraft). Our CMI service is asset-light from a Sun Country perspective, as Amazon supplies the aircraft and covers many of the operating expenses, including fuel, and provides all cargo loading and unloading services. We are responsible for flying the aircraft under our air carrier certificate, crew, aircraft line maintenance and insurance, all of which allow us to leverage our existing operational expertise from our scheduled service and charter businesses. The ATSA has generated consistent, positive cash flows through the COVID-19 induced downturn. The ATSA offers potential future growth opportunities by establishing a long-term partnership with Amazon. Our cargo business also enables us to leverage certain assets, capabilities and fixed costs to enhance profitability and promote growth across our company. For example, we believe that by deploying pilots across each of our business lines, we increase the efficiency of our operations.

Our Transformation

In April 2018, Sun Country Airlines was acquired by the Apollo Funds. Since the acquisition, our business has been transformed under a new management team of seasoned professionals who have a strong combination of low-cost and legacy network airline experience.

We redesigned our network to focus our flying on peak demand opportunities by concentrating scheduled service trips during the highest yielding months of the year and days of the week and allocating aircraft to our charter service when it is more profitable to do so. This effectively shifted our focus toward leisure customers.
We invested over $200 million in capital projects that included modernizing the cabin experience with new seats, in-seat power and in-flight entertainment. Our investments also facilitated a transition to owning our fleet, rather than leasing, to reduce costs. We implemented a new booking engine, Navitaire, rebranded our product along with our website and invested in improving the customer support experience. We consolidated our corporate headquarters into an on-airport hangar.
We greatly expanded our ancillary products and services, which consist of baggage fees, seat assignment fees and other fees, increasing average ancillary revenue per scheduled service passenger by 148% from 2017 to 2019.
We launched and grew our asset light cargo business and fully integrated our pilot base across our scheduled service, charter and cargo businesses.
We reduced unit costs by 19% from 2017 to 2019 with several initiatives, including: renegotiating certain key contracts and agreements; increasing the portion of bookings made directly through our website; reducing the cost of our fleet through more efficient aircraft sourcing and financing; staffing efficiencies; and other cost-saving initiatives.

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While the COVID-19 induced industry downturn impeded our growth in 2020, we believe that these investments have positioned us to profitably grow our business in the long term following a rebound in the U.S. airline industry and that our period of heavy investment in transformative capital spending is behind us for the foreseeable future.

Initial Public Offering , Private Placements and Follow-On Offering

On March 19, 2021, we completed our initial public offering (the “initial public offering”), in which we issued and sold 10,454,545 shares of our common stock at a public offering price of $24.00 per share. We received net proceeds of approximately $235.2 million from sales of shares in the initial public offering, after deducting underwriting discounts and commissions of approximately $15.7 million. We used approximately $46.2 million of the net proceeds from the initial public offering to repay all amounts outstanding under the CARES Act Loan. A portion of the proceeds was used to pay fees and expenses in connection with the initial public offering. The remaining net proceeds have been and will continue to be used for general corporate purposes, including to acquire additional aircraft.

Additionally, each of PAR Investment Partners, L.P. (“PAR Capital”) and certain funds or accounts managed by an investment adviser subsidiary of Blackrock, Inc. (such funds and accounts, the “Blackrock Entities”) purchased shares of our common stock from the Apollo Stockholder in private placements that closed on March 19, 2021 concurrently with our initial public offering. The number of shares of common stock purchased by each of PAR Capital and the Blackrock Entities from the Apollo Stockholder was based on an aggregate purchase price of $50.0 million and a price per share equal to 94% of the initial public offering price. Based on the initial public offering price of $24.00 per share of common stock, PAR Capital purchased 2,216,312 shares of common stock from the Apollo Stockholder at a price per share of $22.56 and the Blackrock Entities purchased an aggregate of 2,216,308 shares of common stock from the Apollo Stockholder at a price per share of $22.56.

On May 24, 2021, the Apollo Stockholder completed an underwritten public offering of 8,337,500 shares of common stock at a public offering price of $34.50 per share.

COVID-19 Induced Downturn

All major U.S. passenger airlines were negatively impacted by the declining demand environment resulting from the COVID-19 pandemic. We have experienced a significant decline in demand related to the COVID-19 pandemic, which has caused a material decline in our revenues and negatively impacted our financial condition and operating results during the COVID-19 pandemic, which is likely to continue for the duration of the COVID-19 pandemic, and our business operations were adjusted in response to the pandemic as described below. However, we believe that our diversified and flexible business model allowed us to mitigate the impact of COVID-19 on our business in 2020 better than any other large U.S. passenger airline (which we consider to be the largest 11 U.S. mainline passenger carriers based on 2019 ASMs) based on pre-tax and operating income margins for the year ended December 31, 2020, as calculated by us based on publicly available information for other airlines. We believe this result was due to our business model, which includes a cargo business, allowing us to shift resources to our charter and cargo businesses and away from our scheduled service business during periods of low scheduled services passenger demand, focuses on leisure point-to-point routes and provides us with flexibility in scheduling our routes. Other airlines have different business models than ours, and a comparison of pre-tax and operating income margins among airlines during normal industry conditions may have a different result.

Actions we took during 2020 to mitigate the impact of the COVID-19 induced downturn preserved more than $152.0 million in liquidity and included: capacity reductions; a company-wide hiring freeze; headcount reductions; voluntary leave programs; reduced advertising expenditures; reduced capital expenditures; and deferred vendor payments. In February 2021, we entered into a new credit agreement (the “Credit Agreement”), which provides for a $25.0 million revolving credit facility (the “Revolving Credit Facility”), which is currently undrawn, and a $90.0 million delayed draw term loan facility (the “Delayed Draw Term Loan Facility” and, together with the Revolving Credit Facility, the “Credit Facilities”) to be used to finance the acquisition of aircraft and engines. Further, we have received grants from the United States Department of the Treasury (“Treasury”) through the Payroll Support Program (the “Payroll Support Program”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and the

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American Rescue Plan Act of 2021 (“Payroll Support Program 3”), and accepted a loan from Treasury through the CARES Act Loan Program (the “CARES Act Loan”), which has now been repaid in full, without issuing any warrants, unlike nearly all other carriers with whom we compete that received government assistance. We have also maintained our pre-COVID-19 corporate credit ratings throughout the downturn. COVID-19 vaccines have become widely available in the United States with nearly 400 million doses administered and over 55% of the U.S. population fully vaccinated according to the Centers for Disease Control and Prevention (the "CDC"). As vaccines continue to become more widely distributed in 2021, we believe the airline industry will continue to rebound in the remainder of 2021 and normalize in 2022. Given our focus on low-cost domestic leisure travel, we believe we are rebounding faster than most other U.S. airlines.

Our financial and operating results and business operations for our scheduled service and charter businesses for the year ended December 31, 2020 were materially and adversely impacted as a result of the COVID-19 pandemic, which impact is likely to continue during the duration of the COVID-19 pandemic. We believe that our financial and operating results for the year ended December 31, 2019 are more useful indicators of our scheduled service and charter service operating performance during normal industry conditions. See “Risk Factors.”

Recent Developments

The following presents selected preliminary estimates of our consolidated financial and other data for the three months ended September 30, 2021 and actual unaudited financial and other data for the three months ended September 30, 2020 and 2019. Our consolidated financial statements as of, and for the three months ended, September 30, 2021 are not yet available and are subject to completion of our financial closing procedures. The following information reflects our preliminary estimates based on currently available information and is subject to change. We have provided ranges, rather than specific amounts, for the preliminary results described below primarily because we are still in the process of finalizing our financial and operating results as of, and for the three months ended, September 30, 2021 and, as a result, our final reported results may vary materially from the preliminary estimates. The preliminary financial data included in this prospectus have been prepared by, and are the responsibility of, our management. KPMG LLP has not audited, reviewed, compiled or applied agreed-upon procedures with respect to the preliminary financial data. Accordingly, KPMG LLP does not express an opinion or any other form of assurance with respect thereto.

Three Months Ended September 30,

    

2021

    

2020

    

2019

Low
(Estimated)

High
(Estimated)

Actual

 

Unaudited

(In thousands)

Consolidated Statement of Operations Data:

Revenue

$

172,000

$

175,000

$

77,973

$

171,478

Operating income

20,500

23,500

8,817

10,475

Other Operating Data:

ASMs

1,530,000

1,560,000

974,584

1,851,793

For the third quarter of 2021 we expect revenue to be between $172 million and $175 million, which would be an increase of approximately 121% to 124% as compared to the third quarter of 2020 and an increase of approximately 0% to 2% as compared to the third quarter of 2019. Passenger revenue for the third quarter of 2021 is expected to be up approximately 136% from the third quarter of 2020 due to the strength of the COVID-19 pandemic recovery compared to the prior year. Passenger revenue for the third quarter of 2021 is estimated to be 13% lower than the third quarter of 2019, due to the COVID-19 pandemic impact on passenger air traffic, which has not yet recovered to 2019 levels despite the recovery underway. Cargo revenue is expected to be up approximately 71% versus the third quarter of 2020 largely due to the fact that in the prior period we were operating fewer freighter aircraft. Our cargo fleet was not fully ramped up to the full 12 aircraft until mid-fourth quarter of 2020. We did not receive any cargo revenue in 2019, as our cargo service commenced in May 2020.

For the third quarter of 2021 we expect operating income to be between $20.5 million and $23.5 million, which would be an increase of approximately 133% to 167% as compared to the third quarter of 2020 and an increase of

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approximately 96% to 124% as compared to the third quarter of 2019. For the third quarter of 2021, operating expenses are expected to be up 119% as compared to the third quarter of 2020, driven by increased flying from the COVID-19 pandemic recovery and increased cargo fleet, higher fuel prices, and a $32.9 million credit received in the third quarter of 2020 under the CARES Act. The increase in operating expenses is expected to be offset by the increase in revenue in the third quarter of 2021. Operating expenses in the third quarter of 2021 are expected to be approximately 6% lower than the third quarter of 2019, driven by lower fuel costs from reduced passenger service flying and a shift of aircraft ownership away from leased aircraft to debt financed aircraft. This shift is reducing our aircraft rent expense, but is increasing depreciation and amortization expenses, as well as interest expense in the non-operating portion of our income statement.

For the third quarter of 2021, ASMs are expected to be between 1.53 billion and 1.56 billion, which would be an increase of approximately 57% to 60% as compared to the third quarter of 2020 and a decrease of approximately 16% to 17% as compared to the third quarter of 2019.

Our financial and operating results and business operations for our scheduled service and charter businesses for the three months ended September 30, 2020 were materially and adversely impacted as a result of the COVID-19 pandemic. We believe that our financial and operating results for the three months ended September 30, 2019 are more useful indicators of our scheduled service and charter service operating performance during normal industry conditions.

The information above should be read in conjunction with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for prior periods included elsewhere in this prospectus. Our actual results for the three months ended September 30, 2021 are not yet available, may differ materially from our preliminary estimates (including as a result of quarter-end closing and review procedures) and are not necessarily indicative of the results to be expected for the remainder of 2021 or any future period. Accordingly, you should not place undue reliance upon these preliminary estimates, which are subject to risks and uncertainties, many of which are not within our control. Please see “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for additional information regarding factors that could result in differences between the preliminary estimated ranges of certain of our financial results and other data presented above and the actual financial results and other information we will report as of and for the three months ended September 30, 2021.

During 2021, we have continued to see recovery in demand from the COVID-19 pandemic relative to demand in 2020. However, the ongoing impact of the COVID-19 pandemic on overall demand for air travel remains uncertain and cannot be predicted at this time. In addition, the impact of COVID-19 vaccine mandates and uncertainties in pilot staffing, as well as higher fuel prices, could impact our business and results of operations in the near term. See “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations --Trends and Uncertainties Affecting Our Business.

Our Competitive Strengths

We believe that the following key strengths allow us to compete successfully within the U.S. airline industry.

Diversified and Resilient Business Model. Our diversified business model, which includes significant leisure and VFR focused scheduled service, charter and e-commerce related cargo service, is unique in the airline sector and mitigates the impact of economic and industry downturns on our business when compared with other large U.S. passenger airlines. Our charter business has rebounded quicker than our scheduled service business as customers such as the U.S. Department of Defense and large university sports teams continued to fly in 2020, while our casino customers are subject to long-term contracts and began flying again in June 2020. Our cargo business exhibited steady growth in 2020 and into the first half of 2021 as flying ramped up and demand remained strong, driven by underlying secular growth in e-commerce.

Agile Peak Demand Scheduling Strategy. We flex our capacity by day of the week, month of the year and line of business to capture what we believe are the most profitable flying opportunities available from both our Minneapolis-St. Paul home market, or MSP, and our network of non-MSP markets. As a result, our route network varies widely throughout the year. For the year ended December 31, 2019, the most recent normalized full year before the COVID-19

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pandemic, we flew approximately 38% of our ASMs during our top 100 peak demand days of the year as compared to 15% of our ASMs during our bottom 100 demand days of the year. For 2019, our average fare was approximately 29% higher on our top 100 peak demand days as compared to the remaining days of the year. In 2019, only 3% of our routes were daily year-round, compared to 67% for Southwest Airlines, 42% for Spirit Airlines, 8% for Frontier Airlines and 2% for Allegiant Travel Company. Our agile peak demand strategy allows us to generate higher TRASM by focusing on days with stronger demand. Our flexible network has also benefitted us in 2020 during the COVID-19 induced industry downturn where we have been able to quickly shift capacity from low demand markets to high demand markets within the United States as COVID-19 infection rates shifted across regions of the country. We have continued to become more seasonal in 2021 with our current planned schedule service from July 2021 through April 2022 containing only 1% daily year-round routes. The following charts demonstrate that our schedule is highly variable by day of the week and month of the year.

Graphic

In addition to shifting aircraft across our network by season and day of week, we also shift aircraft between our scheduled service and charter businesses to maximize the return on our assets. We regularly schedule our fleet using what we refer to as “Power Patterns,” which involves scheduling aircraft and crew on trips that combine scheduled service and charter legs, dynamically replacing what would be lower margin scheduled service flights with charter opportunities. Our agility is supported by our variable cost structure and the cross utilization of our people and assets between our lines of business. Our synergies from cross utilization have increased since we began providing CMI services because our pilots are interchangeably deployed between scheduled service, charter and cargo flights. For example, when demand in our scheduled service business declined in 2020 as a result of the COVID-19 induced industry downturn, we allocated more pilot flying hours to our charter and cargo businesses.

Tactical Mid-Life Fleet with Flexible Operations. We maintain low aircraft ownership costs by acquiring mid-life Boeing 737-800 aircraft, which have lower acquisition costs, when compared to new Boeing 737 aircraft, that more than offsets their higher ongoing maintenance and repair costs. Lower ownership costs allow us to maintain lower unit costs at lower levels of utilization. This allows us to concentrate our flying during periods of peak demand, which generates higher TRASM and also allows us to park aircraft during periods of low demand, such as in 2020, at a lower cost than other airlines. In 2019, we flew our aircraft an average of 9.6 hours per day, which is the lowest among major U.S. airlines, other than Allegiant Travel Company, which operates a similar low utilization model but serves smaller

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markets. In addition to the benefits of lower all-in ownership costs, we do not have an aircraft order book because we only purchase mid-life aircraft. As a result, unlike many other airlines, we are not locked into large future capital expenditures at above market aircraft prices. Rather, we have the ability to opportunistically take advantage of falling aircraft prices with purchases at the time of our choosing. Our single family aircraft fleet also has operational and cost advantages, such as allowing for optimization of crew scheduling and training and lower maintenance costs. Our fleet is highly reliable, and we have a demonstrated ability to maintain our high completion factor during harsh weather conditions. For the year ended December 31, 2019, we had a completion factor of 99.8% across our system.

Superior Low-Cost Product and Brand. We have invested in numerous projects to create a well-regarded product and brand that we believe is superior to ULCCs while maintaining lower fares than LCCs and larger full service carriers. Some of the reasons that we believe we have a superior brand to ULCCs include:

Our Cabin Experience. All of our 737-800 aircraft have new state-of-the-art seats that comfortably recline and have full size tray tables. Our seats have an average pitch of approximately 31 inches, giving our customers comparable legroom to Southwest Airlines and greater legroom than all ULCCs in the United States. We also provide seat-back power, complimentary in-flight entertainment and free beverages to improve the overall flying experience for our customers. Such amenities are comparable to those offered by our LCC competitors and are not available on any ULCCs in the United States.
Our Digital Experience. We have significantly improved the buying experience for our customers. We overhauled our passenger service system in 2019 and transitioned to Navitaire, the premier passenger service system in the United States. Navitaire has decreased our overall website session length, decreased the percentage of failures to complete a transaction after accessing our website on a mobile device and increased the percentage of visits to our website that result in an airfare purchase. The transition to Navitaire has been one of the most important initiatives in improving the Sun Country customer experience, making our website booking more seamless, allowing us to create a large customer database and supporting ancillary revenue growth. Beyond Navitaire, we have improved the check-in experience for customers by providing access to web-check in across the system and access to kiosks in our main hub location of MSP. Since the Navitaire transition, 73% of our Minneapolis originating scheduled service passengers have checked in either online or at a kiosk. System wide over 67% of our scheduled service passengers have checked in electronically. These tools increase the chances that the passenger can skip the check in counter, which we believe improves our customers’ experience while also reducing costs.

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Graphic

In addition to our product, we believe that our brand is well recognized and well regarded in the markets that we serve. In the fourth quarter of 2019, management conducted a study of individuals across a variety of ages, income levels, home regions and home airports (including both MSP and non-MSP travelers), each of whom had traveled for leisure within the prior 24 months. Individuals selected for the survey included Sun Country passengers and a consumer sample provided by a third-party survey panel provider. 468 individuals responded to the study, 275 of whom had flown Sun Country Airlines. Based on the study: 79% of the 29 respondents who expressed a preference between airlines and had flown on both Sun Country Airlines and Allegiant Travel Company said they would rather fly on Sun Country Airlines; 77% of the 71 respondents who expressed a preference between airlines and had flown on both Sun Country Airlines and Frontier Airlines said they would rather fly on Sun Country Airlines; and 81% of the 77 respondents who expressed a preference between airlines and had flown on both Sun Country Airlines and Spirit Airlines said they would rather fly on Sun Country Airlines.

Competitive Low Cost Structure. Our CASM declined from 10.09 cents for the year ended December 31, 2017 to 8.82 cents for the year ended December 31, 2019. Our Adjusted CASM declined from 7.80 cents for the year ended December 31, 2017 to 6.31 cents for the year ended December 31, 2019. Our completed and ongoing cost savings efforts include conversion to a focus on owning (versus leasing) aircraft, renegotiation of our component maintenance agreement, fuel savings initiatives, catering cost reductions, renegotiation of distribution contracts, consolidation of staff at headquarters on airport property and various other initiatives. Our CASM and Adjusted CASM for the year ended December 31, 2020 of 8.91 cents and 7.57 cents and for the six months ended June 30, 2021 of 7.19 cents and 6.25 cents, respectively, were adversely impacted due to the COVID-19 pandemic. While Adjusted CASM for all U.S. airlines increased in 2020 as a result of the COVID-19 induced downturn, we believe that our business model and strategy positions us well to maintain and improve our Adjusted CASM in the future, while maintaining lower utilization rates than many other U.S. passenger airlines.

Strong Position in Our Profitable MSP Home Market. We have been based in the Minneapolis-St. Paul area since our founding over 35 years ago, where our brand is well-known and well-liked. We are the largest low-cost carrier

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operating at MSP, which is our largest base, and the second largest airline based on ASMs at MSP after Delta Air Lines, which primarily serves business and connecting traffic customers, while we primarily serve leisure customers. Excluding Delta Air Lines, we have nearly twice the capacity, as measured by ASMs, of any other competitor operating at MSP.  Spirit Airlines and Southwest Airlines scaled back from MSP during the COVID-19 induced downturn and focused on their core markets, demonstrating MSP is likely not a strategic market for either airline. However, our current seat share at MSP is still meaningfully lower than Spirit Airlines’ seat share in Detroit and Frontier Airlines’ seat share in Denver, and we believe there is significant room for us to grow in MSP through further market stimulation once the U.S. air travel market rebounds. We fly out of Terminal 2, which we believe is preferred by many flyers because of its smaller layout, shorter security wait times, close parking relative to check-in and full suite of retail shops. As of the date of this prospectus, we utilize 8 of the 14 gates in Terminal 2. As a result of our focus on flying during seasonal peak periods, our well regarded brand and product and our strong position in Minneapolis, we have historically enjoyed a TRASM premium at MSP. In 2019, the most recent normalized full year before the COVID-19 pandemic, we believe MSP was among the most profitable LCC bases in the United States and we believe we generated higher TRASM in MSP during 2019 than any ULCC in the United States in its primary base.

Seasoned Management Team. Our Chief Executive Officer, Jude Bricker, joined Sun Country Airlines in July 2017 and has over 17 years of experience in the aviation industry, including serving as the Chief Operating Officer of Allegiant Travel Company from 2016 to 2017. Our President and Chief Financial Officer, Dave Davis, joined Sun Country in April 2018 and has over 22 years of experience in the aviation industry, including previously serving as the Chief Financial Officer at Northwest Airlines and US Airways. Other members of our management team have worked at airlines such as Alaska Airlines, American Airlines, Delta Air Lines, Northwest Airlines, United Airlines and US Airways.

Our Growth Strategy

Since 2018, we have established the infrastructure to support our significant long-term profitable growth strategy that we plan to continue once the U.S. air travel market rebounds from the COVID-19 induced downturn.

Network. We launched 64 new markets from 2018 through 2019 and developed a repeatable network growth strategy. Since the start of 2021, we have announced 35 new markets. Our network strategy is expected to support passenger fleet growth to approximately 50 aircraft by the end of 2023.
Fleet. We restructured our fleet with a focus on ownership of Boeing 737-800s with no planned lease redeliveries prior to 2024, allowing us to focus on growth with low capital commitments. We believe the current dislocation in the aircraft market will enable us to access new aircraft at an attractive cost relative to our peers.
Customer. We rebranded the airline around a leisure product with a significant ancillary revenue component which we believe will allow us to stimulate demand during the rebound from COVID-19 earlier than airlines focused on business travelers.
Culture. We installed a new management team with a cost-conscious ethos, which included moving our headquarters into a hangar at MSP.
Operations. We maintained high standards of operational performance, including a 99.8% completion factor for the year ended December 31, 2019.

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We believe our initiatives have provided us with a platform to profitably grow our business. Key elements of our growth strategy include:

Leverage the Expected Rebound in Our Passenger Business. The number of domestic LCC and ULCC passenger enplanements grew at a compound annual growth rate of 7% from 2014 to 2019 due to long-term increasing demand for air travel in the United States. Following the spread of COVID-19 in the United States, passenger levels declined. We believe our scheduled service business is poised for a rapid rebound following the end of the COVID-19 pandemic. We believe we are positioned to be among the early beneficiaries of this rebound given our peak demand strategy and focus on leisure and VFR travelers, who are expected to be the first to fly at pre-COVID-19 levels. In previous economic downturns, leisure and VFR travelers have also been the first to return to flying at normalized levels.

Grow Our Cargo Business. In December 2019, we signed the ATSA with Amazon to provide air cargo transportation services flying 10 aircraft with agreed pricing. Since that time, Amazon requested, and we agreed to fly, two additional aircraft to bring the total number of aircraft we are flying for Amazon as of the date of this prospectus to 12. We believe we are well-positioned to continue growing our cargo business over time, while continuing to operate for Amazon and potentially new customers.

Expand our Peak Demand Flying in Minneapolis and Beyond. Following a rebound in U.S. air travel, we intend to continue growing our network profitably both from MSP and on new routes outside of MSP by focusing on seasonal markets and day-of-the-week flying during periods of peak demand. We expanded our network from 46 routes in 2017 to 98 as of the end of 2019, including expanding our routes that neither originate nor terminate in MSP from 5 routes in 2017 to 42 as of the end of 2019. We have identified over 250 new market opportunities as the long-term reduction in our unit costs has expanded the number of markets that we can profitably serve. We have a successful history of opening and closing stations quickly to meet seasonal demand, which we believe will benefit us in re-opening markets we closed during the COVID-19 downturn and in pursuing new market growth opportunities quickly. Our future network plans include growing our network at our hub in Minneapolis to full potential, including adding frequencies on routes we already serve and adding new routes to leverage our large, loyal customer base in the area. Our long-term strategic plans have identified growth opportunities at MSP that we believe represent approximately 40% of our scheduled service capacity growth opportunities.

We had also been rapidly growing outside of MSP prior to the COVID-19 pandemic, and we expect to do so again once the air travel market rebounds. Our customer-friendly low fares have been well received in the upper Midwest and in large, fragmented markets elsewhere that we can profitably serve on a seasonal and/or day-of-week basis. Our upper Midwest growth is focused on cold to warm weather leisure routes from markets similar to Minneapolis, such as Madison, Wisconsin. Additionally, we have added capacity on large leisure trunk routes on a seasonal basis during periods when demand is high. Examples of such routes include Los Angeles to Honolulu and Dallas to Mexican beach destinations during the summer months. Our business model is ideally suited to seasonally serve these routes, which are highly profitable in normal environments because fares are elevated during the months in which we fly them. Our long-term strategic plans have identified non-MSP growth opportunities that we believe represent approximately 60% of our scheduled service capacity growth opportunities.

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Continue to Increase Our Margins and Free Cash Flow. From December 31, 2017 through December 31, 2019, we reduced our CASM from 10.09 cents to 8.82 cents and our Adjusted CASM from 7.80 cents to 6.31 cents, a level comparable to ULCCs. When combined with our TRASM, which remains comparable to LCCs and higher than ULCCs, we generate highly competitive margins. Our period of investment in fleet renewal and transformative capital expenditures is largely behind us, and our focus, following the end of the COVID-19 pandemic, will pivot to growth. We intend to continue to improve our leading margin and free cash flow profile through a variety of initiatives and measures. Key initiatives include further conversion to an owned (versus leased) model for aircraft ownership, leveraging our fixed cost base as we continue to grow our passenger aircraft fleet to achieve economies of scale, continuous optimization of our maintenance operations and completion of other ongoing strategic initiatives. As a result, we expect improvements in profit margins and free cash flow, which we define as operating cash flow minus non-aircraft capital expenditures, following a rebound in the U.S. air travel market to support growth in the years ahead.

Our Route Network

During the twelve months ended June 30, 2021, we served 61 airports throughout the United States, Mexico, Central America and the Caribbean. In 2020 we operated 10 new routes and we have announced 35 new routes in 2021. The map below represents our current network.

Graphic

Risk Factor Summary

Participating in this offering involves substantial risk. Our ability to execute our strategy also is subject to certain risks. The risks described under the heading “Risk Factors” immediately following this summary may cause us not to realize the full benefits of our competitive strengths or may cause us to be unable to successfully execute all or part of our strategy. Some of the more significant challenges and risks we face include the following:

the COVID-19 pandemic and its effects, including variants, travel restrictions, social distancing measures and decreased demand for air travel;
we are depending upon continued uptake of the COVID-19 vaccine by the general public in order to normalize economic conditions, the airline industry and our business operations and to realize our planned financial and growth plans and business strategy;
changes in economic conditions;

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the price and availability of aircraft fuel and our ability to control other costs;
threatened or actual terrorist attacks or security concerns;
the ability to operate in an exceedingly competitive industry;
factors beyond our control, including air traffic congestion, adverse weather, federal government shutdowns, aircraft-type groundings, increased security measures or disease outbreaks;
the ability to realize the anticipated strategic and financial benefits of the ATSA with Amazon;
any restrictions on or increased taxes applicable to charges for ancillary products and services;
our concentration in the Minneapolis-St. Paul market; or
our ability to attract and retain qualified personnel, including but not limited to, pilots and technicians, at a reasonable cost or maintain our company culture.

Our Sponsor

Founded in 1990, Apollo is a leading global alternative investment manager with offices in New York, Los Angeles, San Diego, Houston, Bethesda, London, Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong, Shanghai and Tokyo, among others. Apollo had assets under management of approximately $472 billion as of June 30, 2021 in credit, private equity and real assets funds.

Upon the closing of this offering, the Apollo Stockholder will no longer own a majority of the voting power of our outstanding common stock. As a result, we will no longer be a “controlled company” within the meaning of the Nasdaq corporate governance standards and we will be required to comply with additional corporate governance requirements of the Nasdaq rules, subject to the applicable phase-in periods. For further information, see “Risk Factors—Risks Related to this Offering and Ownership of Our Common Stock” and “Management—Loss of Controlled Company Status.”

The Apollo Stockholder has the right, at any time until Apollo and its affiliates, including the Apollo Stockholder, no longer beneficially own at least 5% of the voting power of our outstanding common stock, to nominate a number of directors comprising a percentage of our board of directors in accordance with their beneficial ownership of the voting power of our outstanding common stock (rounded up to the nearest whole number). See “Management—Board Composition,” “Certain Relationships and Related Party Transactions—Stockholders Agreement” and “Description of Capital Stock—Composition of Board of Directors; Election and Removal of Directors” for more information.

Implications of Being an Emerging Growth Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012. As an “emerging growth company,” we may take advantage of specified reduced reporting and other requirements that are otherwise applicable to public companies. These provisions include, among other things:

exemption from the auditor attestation requirement in the assessment on the effectiveness of our internal control over financial reporting;
exemption from new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies;

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exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board (United States), requiring mandatory audit firm rotation or a supplement to our auditor’s report in which the auditor would be required to provide additional information about the audit and our financial statements;
an exemption from the requirement to seek non-binding advisory votes on executive compensation and golden parachute arrangements; and
reduced disclosure about executive compensation arrangements.

We may take advantage of these provisions until the end of the fiscal year ending December 31, 2026 or such earlier time that we are no longer an “emerging growth company.” We will cease to be an “emerging growth company” if we have $1.07 billion or more in total annual gross revenues during our most recently completed fiscal year, if we become a “large accelerated filer,” which requires us to have been a public company for at least 12 months at the end of our most recently completed fiscal year and have the market value of our common stock held by non-affiliates exceeding $700 million as of the last business day of the second quarter of such fiscal year, or as of any date on which we have issued more than $1.0 billion in non-convertible debt over the three-year period to such date.

We may choose to take advantage of some, but not all, of these reduced burdens. For example, we have taken advantage of the reduced reporting requirement with respect to disclosure regarding our executive compensation arrangements and expect to take advantage of the exemption from the auditor attestation requirement in the assessment on the effectiveness of our internal control over financial reporting. In addition, while we have elected to avail ourselves of the exemption to adopt new or revised accounting standards until those standards apply to private companies, we are permitted and have elected to early adopt certain new or revised accounting standards for which the respective standard allows for early adoption. See Note 2 to our audited consolidated financial statements included elsewhere in this prospectus for additional information. For as long as we take advantage of the reduced reporting obligations, the information that we provide stockholders may be different from information provided by other public companies.

The Reorganization Transactions

We were formed in December 2017 as a Delaware limited liability company under the name SCA Acquisition Holdings, LLC in connection with the acquisition by the Apollo Funds. Following the acquisition by the Apollo Funds in April 2018, one of the Apollo Funds beneficially owned 5,326,755 outstanding equity interests of SCA Acquisition Holdings, LLC, which historically were denominated as shares of common stock that we refer to as “SCA common stock,” which represented approximately 78.3% of the outstanding SCA common stock, and another Apollo Fund owned a warrant to purchase an additional 40,005,885 shares of SCA common stock at an exercise price of approximately $0.0005 per share.

Prior to our initial public offering, the Apollo Funds engaged in a series of transactions to form a new holding company, which is the Apollo Stockholder, that acquired all of the outstanding shares of SCA common stock held by one of the Apollo Funds and acquired and immediately exercised all of the warrants to purchase SCA common stock that were held by another Apollo Fund. As a result, the Apollo Stockholder owned 45,332,640 shares of SCA common stock, which represented approximately 96.9% of the outstanding SCA common stock.

On January 31, 2020, SCA Acquisition Holdings, LLC was converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Sun Country Airlines Holdings, Inc. In connection with our conversion to a corporation, all of the outstanding shares of SCA common stock were converted into shares of our common stock, the outstanding warrants held by Amazon to purchase shares of SCA common stock were converted into warrants to purchase shares of our common stock and all of the outstanding options to purchase shares of SCA common stock were converted into options to purchase shares of our common stock. As a result of the conversion, Sun Country Airlines Holdings, Inc. continued to hold all property and assets of SCA Acquisition Holdings, LLC and assumed all of the debts and obligations of SCA Acquisition Holdings, LLC, the members of the board of directors of SCA Acquisition Holdings, LLC became the members of the board of directors of Sun Country Airlines Holdings, Inc. and the officers of SCA Acquisition Holdings, LLC became the officers of Sun Country Airlines Holdings, Inc.

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Prior to our initial public offering, on March 3, 2021, we effected an approximately 18.8886 for 1 stock split of our common stock (the “Stock Split”), with exercise prices for our outstanding warrants and options appropriately adjusted.

In this prospectus, we refer to the transactions described in this section as the “Reorganization Transactions.” The Reorganization Transactions were intended to simplify our capital structure and to facilitate our initial public offering.

Corporate Information

We were organized under the laws of the State of Delaware as a limited liability company on December 8, 2017 and converted to a corporation under the laws of the state of Delaware on January 31, 2020. Our principal executive offices are located at 2005 Cargo Road, Minneapolis, MN 55450. Our telephone number is (651) 681-3900. Our website is located at https://www.suncountry.com. Our website and the information contained on, or that can be accessed through, our website will not be deemed to be incorporated by reference in, and are not considered part of, this prospectus. You should not rely on our website or any such information in making your decision whether to purchase shares of our common stock.

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The Offering

By participating in this offering, you are representing that you are a citizen of the United States, as defined in 49 U.S.C. § 40102(a)(15). See “Description of Capital Stock—Limited Ownership and Voting by Foreign Owners.”

The Company

Sun Country Airlines Holdings, Inc.

Common stock offered by us

None.

Common stock offered by the selling stockholders

8,000,000 shares (or 9,200,000 shares if the underwriters exercise their option to purchase additional shares in full as described below).

Common stock outstanding after this offering

57,551,741 (or 57,924,509 as a result of the exercise of options to facilitate sales if the underwriters exercise their option to purchase additional shares in full as described below)

Option to purchase additional shares

The selling stockholders have granted the underwriters an option to purchase up to an additional 1,200,000 shares. The underwriters may exercise this option at any time within 30 days from the date of this prospectus. See “Underwriting (Conflict of Interest).”

Use of proceeds

The selling stockholders will receive all of the proceeds from the sale of shares of our common stock in this offering. We will not receive any proceeds from the sale of shares of our common stock in this offering. The selling stockholders will bear any underwriting discounts and commissions attributable to their sale of our common stock and we will bear the remaining fees, costs and expenses of this offering, which we estimate to be approximately $0.7 million.

Loss of controlled company status

Upon completion of this offering, the Apollo Stockholder will no longer beneficially own more than 50% of the voting power of our outstanding common stock. As a result, we will no longer be a “controlled company” under the corporate governance rules for Nasdaq-listed companies and we will be required to comply with additional corporate governance requirements of the Nadsaq rules, subject to the applicable phase-in periods. See “Management—Loss of Controlled Company Status.”

Dividend policy

We have not to date paid any cash dividends on our common stock and we currently do not intend to pay cash dividends on our common stock in the foreseeable future. However, we may, in the future, decide to pay dividends on our common stock. Any declaration and payment of cash dividends in the future, if any, will be at the discretion of our board of directors and will depend upon such factors as earnings levels, cash flows, capital requirements, levels of indebtedness, restrictions imposed by applicable law, our overall financial condition, restrictions in our debt agreements, and any other factors deemed relevant by our board of directors.

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As a holding company, our ability to pay dividends also depends on our receipt of cash dividends from our operating subsidiaries. Our ability to pay dividends will therefore be restricted as a result of restrictions on their ability to pay dividends to us under the CARES Act and the Credit Agreement and may be restricted under future indebtedness that we or they may incur.

See “Market Price of Common Stock and Dividend Policy.”

Listing

Our common stock is listed on Nasdaq under the symbol “SNCY.”

Risk factors

You should read the section titled “Risk Factors” beginning on page 24 of this prospectus for a discussion of some of the risks and uncertainties you should carefully consider before deciding to invest in our common stock.

Conflict of interest

Apollo Global Securities, LLC, an affiliate of Apollo, is an underwriter in this offering and will receive a portion of the underwriting discounts and commissions in connection with this offering. Affiliates of Apollo beneficially own in excess of 10% of our issued and outstanding common stock. As a result, Apollo Global Securities, LLC is deemed to have a “conflict of interest” under FINRA Rule 5121, and this offering will be conducted in compliance with the requirements of Rule 5121. Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as the members primarily responsible for managing the public offering do not have a conflict of interest and meet the requirements of paragraph (f)(12)(E) of Rule 5121. Apollo Global Securities, LLC will not confirm sales of the securities to any account over which it exercises discretionary authority without the specific written approval of the account holder. See “Underwriting (Conflict of Interest).”

Except as otherwise indicated, all of the information in this prospectus:

is based on 57,551,741 shares of common stock outstanding as of September 30, 2021;
assumes no exercise of the underwriters’ option to purchase up to 1,200,000 additional shares of common stock from the selling stockholders;
assumes no exercise of the warrants to purchase an aggregate of 9,482,606 shares of common stock issued to Amazon in connection with the ATSA (the “2019 Warrants”), approximately 15.3% of which have vested as of September 30, 2021. As is the case for investment in our company generally, the exercise of the 2019 Warrants is limited by restrictions imposed by federal law on foreign ownership and control of U.S. airlines. See “Description of Capital Stock—Limited Ownership and Voting by Foreign Owners” and “Description of Capital Stock—Warrants”;
does not reflect 3,600,000 shares of common stock reserved for grant or issuable in respect of awards granted under under the Sun Country Airlines Holdings, Inc. 2021 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), including 7,634 shares of common stock that may be issued upon the vesting of restricted stock units (“RSUs”) outstanding as of September 30, 2021. See “Executive Compensation—Equity Compensation Plans—2021 Omnibus Incentive Plan”; and

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does not reflect 5,592,191 shares of common stock that may be issued upon the exercise of stock options outstanding as of September 30, 2021 under the SCA Acquisition Holdings, LLC Equity Incentive Plan (the “SCA Acquisition Equity Plan”).

The following table sets forth the outstanding stock options and RSUs under the Omnibus Incentive Plan and the SCA Acquisition Equity Plan as of September 30, 2021:

    

Number of  

    

Weighted-  

Options(1) or

Average Exercise

RSUs

Price Per Share

Vested stock options (time-based vesting)

1,186,421

$

5.74

Unvested stock options (time-based vesting)

778,919

$

9.23

Unvested stock options (performance-based vesting)

 

3,626,851

$

6.98

Unvested RSUs (time-based vesting)

 

7,634

 

N/A

(1)Upon a holder’s exercise of one option, we will issue to the holder one share of common stock.

Summary Consolidated Financial and Operating Information

The following tables present our summary consolidated financial and operating information for the periods indicated. We have derived our summary historical consolidated statement of operations data for the years ended December 31, 2020 and 2019 and for the periods January 1, 2018 through April 10, 2018 (Predecessor) and April 11, 2018 through December 31, 2018 (Successor). We have derived our summary historical consolidated statement of operations data for the six months ended June 30, 2021 and 2020 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. We have derived our summary historical consolidated balance sheet data as of June 30, 2021 from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus.

The significant differences in accounting for the Successor periods as compared to the Predecessor period, which were established as part of our acquisition by the Apollo Funds, are in (1) aircraft rent, due to the over-market liabilities related to unfavorable terms of our existing aircraft leases and maintenance reserve payments, which will be amortized on a straight-line basis as a reduction of aircraft rent over the remaining life of each lease, (2) maintenance expenses, due to recognizing a liability (or contra-asset) that will offset expenses for maintenance events incurred by the Successor but paid for by the Predecessor and (3) depreciation and amortization, due to the recognition of our property and equipment and other intangible assets at fair value at the time of the acquisition, which will be amortized through depreciation and amortization on a straight-line basis over their respective useful lives. Our historical results are not necessarily indicative of our results that may be expected for any future period. The following summary consolidated financial and operating information should be read in conjunction with the section titled “Management’s Discussion and

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Table of Contents

Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

Successor

Predecessor

For the period

For the six

For the six

For the year

For the year

April 11, 2018

For the period

months ended

months ended

ended

ended

through

January 1,

    

June 30,

    

June 30,

    

December 31,

    

December 31,

    

 December 31,

2018 through

    

2021

    

2020

    

2020

    

 2019

    

 2018

  

  

April 10, 2018

(in thousands, except share and per share data)

Consolidated Statement of Operations Data:

  

  

  

  

  

  

Operating Revenues:

  

  

  

  

  

  

Passenger

$

229,325

$

209,827

$

359,232

$

688,833

$

335,824

$

172,897

Cargo

43,684

3,219

36,809

Other

 

3,793

 

2,660

 

5,445

 

12,551

 

49,107

 

24,555

Total Operating Revenue

 

276,802

 

215,706

 

401,486

 

701,384

 

384,931

 

197,452

Operating Expenses:

 

  

 

  

 

  

 

  

 

  

 

  

Aircraft Fuel

$

53,984

$

56,238

$

83,392

$

165,666

$

119,553

$

45,790

Salaries, Wages, and Benefits.

 

86,392

 

70,575

 

141,641

 

140,739

 

90,263

 

36,964

Aircraft Rent(1)

 

9,414

 

16,966

 

30,989

 

49,908

 

36,831

 

28,329

Maintenance(2)

 

20,510

 

8,904

 

27,416

 

35,286

 

15,491

 

9,508

Sales and Marketing.

 

10,932

 

10,202

 

16,570

 

35,388

 

17,180

 

10,854

Depreciation and Amortization(3)

 

26,075

 

22,702

 

48,086

 

34,877

 

14,405

 

2,526

Ground Handling

 

11,781

 

10,906

 

20,596

 

41,719

 

23,828

 

8,619

Landing Fees and Airport Rent.

 

17,537

 

13,781

 

31,256

 

44,400

 

25,977

 

10,481

Special Items, net(4)

 

(65,392)

 

(31,481)

 

(64,563)

 

7,092

 

(6,706)

 

271

Other Operating, net

 

31,397

 

23,917

 

48,718

 

68,187

 

40,877

 

17,994

Total Operating Expenses

 

202,630

 

202,710

 

384,101

 

623,262

 

377,699

 

171,336

Operating Income

 

74,172

 

12,996

 

17,385

 

78,122

 

7,232

 

26,116

Non-operating Income (Expense):

 

  

 

  

 

  

 

  

 

  

 

  

Interest Income

$

24

$

314

$

377

$

937

$

258

$

96

Interest Expense

 

(13,201)

 

(11,058)

 

(22,073)

 

(17,170)

 

(6,060)

 

(339)

Other, net

 

18,049

 

(494)

 

(371)

 

(1,729)

 

(1,636)

 

37

Total Non-operating Income (Expense)

 

4,872

 

(11,238)

 

(22,067)

 

(17,962)

 

(7,438)

 

(206)

Income (Loss) before Income Tax

 

79,044

 

1,758

 

(4,682)

 

60,160

 

(206)

 

25,910

Income Tax Expense (Benefit)

 

14,875

 

547

 

(778)

 

14,088

 

161

 

Net Income (Loss)

$

64,169

$

1,211

$

(3,904)

$

46,072

$

(367)

$

25,910

Net Income (Loss) per share to common stockholders:

 

  

 

  

 

  

 

  

 

  

 

  

Basic

$

1.21

$

0.03

$

(0.08)

$

0.99

$

(0.01)

$

0.26

Diluted

$

1.12

$

0.02

$

(0.08)

$

0.96

$

(0.01)

$

0.26

Weighted average shares outstanding:

 

  

 

  

 

  

 

  

 

  

 

  

Basic

 

52,850,041

 

46,805,950

 

46,805,951

 

46,773,038

 

46,700,990

 

100,000,000

Diluted

 

57,403,593

 

48,243,146

 

46,805,951

 

47,909,413

 

46,700,990

 

100,000,000

(1)Aircraft Rent expense for the Successor periods is reduced due to amortization of a liability representing lease rates and maintenance reserves which were higher than market terms of similar leases at the time of our acquisition by the Apollo Funds. This liability was recognized at the time of the acquisition and is being amortized into earnings through a reduction of Aircraft Rent on a straight-line basis over the remaining life of each lease. See Note 2 and Note 4 to our audited consolidated financial statements included elsewhere in this prospectus for additional information.
(2)Maintenance expense for the Successor periods is reduced due to recognizing a liability (or contra-asset) to represent the Successor’s obligation to perform planned maintenance events paid for by the Predecessor on leased aircraft at the date of our acquisition by the Apollo Funds. The liability (or contra-asset) is recognized as a reduction to Maintenance expense as reimbursable maintenance events are performed and maintenance expense is incurred. See Note 2 and Note 4 to our audited consolidated financial statements included elsewhere in this prospectus for additional information.
(3)Depreciation and amortization expense increased in the Successor periods due to higher fair values for certain acquired assets and to the amortization of definite-lived intangible assets. See Note 2 to our audited consolidated financial statements included elsewhere in this prospectus for additional information.
(4)See Note 16 to our audited consolidated financial statements and Note 11 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for additional information on the components of Special items, net.

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Table of Contents

As of June 30, 

(in thousands)

    

2021

Consolidated Balance Sheet Data:

Cash and equivalents

$

310,723

Total assets

 

1,309,964

Long-term debt and finance leases, including current portion

 

432,171

Total stockholders’ equity

 

464,233

Successor

  

  

Predecessor

For the period

For the six

For the six

For the year

For the year

April 11, 2018

For the period

months ended

months ended

ended

ended

through

January 1,

June 30,

June 30,

December 31,

December 31,

December 31,

2018 through

(in thousands)

    

2021

    

2020

    

2020

    

2019

    

2018

  

  

April 10, 2018

Adjusted Net Income (Loss)(1)

$

(423)

$

(20,196)

$

(47,916)

$

53,734

$

(5,871)

$

26,181

Adjusted EBITDAR(1)

48,186

24,368

38,930

171,129

49,688

57,279

(1)Adjusted Net Income (Loss) is a non-GAAP measure included as supplemental disclosure because we believe it is a useful indicator of our operating performance. Derivations of net income are well recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in our industry. Adjusted EBITDAR is a non-GAAP measure included as supplemental disclosure because we believe it is a valuation measure commonly used by investors, securities analysts and other interested parties in the industry to compare airline companies and derive valuation estimates without consideration of airline capital structure or aircraft ownership methodology. We believe that while items excluded from Adjusted EBITDAR may be recurring in nature and should not be disregarded in evaluation of our earnings performance, Adjusted EBITDAR is useful because its calculation isolates the effects of financing in general, the accounting effects of capital spending and acquisitions (primarily aircraft, which may be acquired directly, directly subject to acquisition debt, by finance lease or by operating lease, each of which is presented differently for accounting purposes), and income taxes, which may vary significantly between periods and for different companies for reasons unrelated to overall operating performance. Adjusted EBITDAR should not be viewed as a measure of overall performance or considered in isolation or as an alternative to net income because it excludes aircraft rent, which is a normal, recurring cash operating expense that is necessary to operate our business. We have historically incurred substantial rent expense due to our legacy fleet of operating leased aircraft, which are currently being transitioned to owned and finance leased aircraft.

Adjusted Net Income (Loss) and Adjusted EBITDAR have limitations as analytical tools. Some of the limitations applicable to these measures include: Adjusted Net Income (Loss) and Adjusted EBITDAR do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; Adjusted EBITDAR does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; Adjusted EBITDAR does not reflect changes in, or cash requirements for, our working capital needs; Adjusted Net Income (Loss) and Adjusted EBITDAR do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDAR does not reflect any cash requirements for such replacements; and other companies in our industry may calculate Adjusted Net Income (Loss) and Adjusted EBITDAR differently than we do, limiting each measure’s usefulness as a comparative measure. Because of these limitations Adjusted Net Income (Loss) and Adjusted EBITDAR should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

As derivations of Adjusted Net Income (Loss) and Adjusted EBITDAR are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result, derivations of net income, including Adjusted Net Income (Loss) and Adjusted EBITDAR, as presented may not be directly comparable to similarly titled measures presented by other companies. For the foregoing reasons, each of Adjusted Net Income (Loss) and Adjusted EBITDAR has significant limitations which affect its use as an indicator of our profitability and valuation. Accordingly, you are cautioned not to place undue reliance on this information.

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Table of Contents

The following table presents the reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) for the periods presented below.

Successor

  

  

Predecessor

For the period

For the six

For the six

For the year

For the year

April 11, 2018

For the period

months ended

months ended

ended

ended

through

January 1,

June 30,

June 30,

December 31,

December 31,

December 31,

2018 through

(in thousands)

    

2021

    

2020

    

2020

    

2019

    

2018

April 10, 2018

Net income (loss).

$

64,169

$

1,211

$

(3,904)

$

46,072

$

(367)

$

25,910

Special items, net(a)

(65,392)

(31,481)

(64,563)

7,092

(6,706)

271

Stock compensation expense

3,613

757

2,110

1,888

373

Loss (gain) on asset transactions, net

381

413

745

(811)

Early repayment of CARES Act Loan

842

Secondary offering costs

640

Income tax receivable agreement expense (b)

 

315

 

 

 

 

 

Income tax receivable agreement adjustment (c)

(18,700)

Loss on refinancing credit facility

 

382

 

 

 

 

 

Other adjustments(d)

 

 

2,541

 

4,881

 

226

 

 

Income tax effect of adjusting items, net (e)

 

13,708

 

6,395

 

13,147

 

(2,289)

 

1,640

 

Adjusted Net Income (Loss).

$

(423)

$

(20,196)

$

(47,916)

$

53,734

$

(5,871)

$

26,181

(a)See Note 16 to our audited consolidated financial statements and Note 11 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for additional information on the components of Special items, net.
(b)Represents one-time costs to establish the income tax receivable agreement with our pre-IPO stockholders. See Note 10 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus.
(c)Represents the adjustment to the income tax receivable agreement for the period, which is recorded in Non-operating Income (Expense). See Note 10 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus.
(d)Other adjustments for the six months ended June 30, 2020 and year ended December 31, 2020 include expenses related to a voluntary employee leave program in response to the COVID-19 pandemic, a portion of which is offset by the CARES Act Payroll Support Program as the benefit of this program is also adjusted as a component of special items. Other adjustments for the year ended December 31, 2019 include expenses incurred in terminating work on a planned new crew base.
(e)The tax effect of adjusting items, net is calculated at the Company’s statutory rate for the applicable period.

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Table of Contents

The following table presents the reconciliation of Net Income (Loss) to Adjusted EBITDAR for the periods presented below.

Successor

  

  

Predecessor

For the period

For the six

For the six

For the year

For the year

April 11, 2018

For the period

months ended

months ended

ended

ended

through

January 1,

June 30,

June 30,

December 31,

December 31,

December 31,

2018 through

(in thousands)

    

2021

    

2020

    

2020

    

2019

    

2018

April 10, 2018

Net income (loss)

$

64,169

$

1,211

$

(3,904)

$

46,072

$

(367)

$

25,910

Special items, net(a)

(65,392)

(31,481)

(64,563)

7,092

(6,706)

271

Interest expense

13,201

11,058

22,073

17,170

6,060

339

Stock compensation expense

3,613

757

2,110

1,888

373

Loss (gain) on asset transactions, net

381

413

745

(811)

Other adjustments(b)

 

 

2,541

 

4,881

 

226

 

 

Interest income

 

(24)

 

(314)

 

(377)

 

(937)

 

(258)

 

(96)

Provision for income taxes

 

14,875

 

547

 

(778)

 

14,088

 

161

 

Depreciation and amortization

 

26,075

 

22,702

 

48,086

 

34,877

 

14,405