I appreciate you taking the questions. OK. The cargo business, the number I gave you is plus or minus 1% or 2% on a quarterly basis. So, if it's possible, can you talk about for the growth that we see in the schedules, how much of that was sort of proactively protecting your margins? The company -- we have so our company's been around for a long time and traditionally was hiring five or so a month on a lumpy basis, and now we're growing sort of unprecedented rates. And in anyone's best guess where we're at next year. I mean, I think this is the -- this has sort of been the trend. We just came through COVID with all its ups and downs. Your line is now open. So we haven't seen a lot of it yet. Your line is now open. We expect to generate strong free cash flow for the year. Flying under our agreements with MLS and Caesars was ramping up during Q1 and will be fully operating in Q2. We did the deal. Cost basis and return based on previous market day close. It's a good question, and I'll let Grant answer, but I just want to highlight a couple of differences that we have. In other words, I think we're probably about right. Yeah. Included in this is ancillary revenue per passenger of $49, which was the highest in the history of our company. Yeah, that's the strip along with some assumption for some crack spread narrowing, to be honest with you, that's probably, I don't know, four or five days, six days old, something like that. Returns as of 07/21/2022. We encourage you to review the risk factors and cautionary statements outlined in our earnings release and our most recent SEC filings. Gotcha, Dave. Yes, the other thing -- hello, Brandon, it's Dave. MINNEAPOLIS, May 10, 2022 (GLOBE NEWSWIRE) -- Sun Country Airlines (NASDAQ: SNCY) today announced that Dave Davis, president and chief financial officer, will present at the Bank of America Transportation, Airlines and Industrials Conference on Tuesday, May 17 at 10:40 AM EST. So -- and then there's other variations of that inputs associated with the yield environment or fuel prices or anything else, competitive backdrop, aggressive or benign or whatever. And one last one for me, I think you said rates were up like 30% with the new contracts, but you had a lot of efficiency offsets that you expected with it. Thanks. Demand continues to be robust with historically strong revenue trends. I mean we need to try to continue to push peak period scheduled service, which is really strong today. Q1 adjusted operating margin was 10%, which we believe to be industry leading. So our exposure to the Northeast is very minimal, but that continues to be where most of our fuel comes from. Hello, Chris, let me make a couple of general comments, and I'll throw it over to Grant. Finally, our balance sheet remains very strong. So if you look at some of the cuts we made, that's because of fuel prices. Sun Country Airlines. Thank you, guys. Very good. It gets higher and higher as we push into the summer. We assume no obligation to update any forward-looking statement.

It's our best thing right now. This has allowed us to attract the quality and quantity of talented aviators needed to support our growth, but it also gives us more certainty in our cost as compared to having an open contract in this environment. After the speaker's presentation, there will be a question-and-answer session. So we're probably going to finish over 60. These businesses are primarily under long-term contracts with premier partners such as Major League Soccer, Caesars, and Amazon, we pass through fuel cost to the consumer. I can't think of another circumstance where we've seen kind of this variance from mid-February where we saw this inflection point and no signs of slowing down. We do it economically. So while at a system level we may be down, you can absolutely look at markets that we're really excited about, and we're making strategic bets there. Got it. We closed the quarter with $297 million in liquidity and completed a EETC aircraft financing for $188 million with an average interest rate of just over 5%. And then on the charter side, we absolutely, as Dave mentioned, we have these ad hoc customers that are relatively close in, and we can pick and choose there as well. And then we have this ad hoc segment. As we implement our new agreement, we're expanding our training capacity and plan to increase the size of our new hire classes, allowing us to grow faster in future quarters. Thanks. We expect operating margin to be in the plus 5% to 9% range for the quarter, even in spite of forecasting a fuel price of $3.50 per gallon and facing some unit cost headwinds in Q2. Also our MLS and Caesars contracts, I think Caesars didn't get really started until March. To make the world smarter, happier, and richer. Thanks for your time, everyone. Good afternoon, gentlemen. Our future capex can be adjusted for aircraft prices, interest rates, and the opportunity to deploy the asset. With that, I'll turn it over to Dave. We remain in discussion with them about growth opportunities. Remember, our charter business is composed of a fixed component, basically a component under contract, I'll call it, which we fly and we want to continue to fly and we will. Thanks, Jude. ET. But just given how tight you are with capacity right now actively deciding to be tight with capacity, should we be thinking about loads a little bit differently for the balance of this year? Yes. While it's been a long and challenging time for our industry and its employees, the last two years have shown the resiliency of Sun Country and what makes us truly unique. Here's where that's going to come through. That looks to be solved. Well, so first, I mean, keep in mind that we're still having a distribution of opportunities that include weak and strong flights. Dave Davis -- President and Chief Financial Officer. Appreciate the time. [Operator instructions] I will now turn the call over to Chris Allen, director of investor relations. All I would say is the team does a really good job of optimizing based on forecasted best margins. And the capacity backdrop in the U.S. looks really accretive. I'm curious, two, three months ago, sort of on a block hour basis, where that mix was? And then maybe just one quick last one on a related -- it's kind of going on the plan on the same string. Despite Q1 being the first full quarter of operating under our new pilot agreement, our adjusted CASM of $0.0621 was only 0.6% higher than Q1 of '19. These growth trends imply scheduled service TRASM growth of a remarkable 25% to 34% over the same period. I mean, it is a big move. There is seasonality in Minneapolis tends to go all the way through Labor Day. OK, Jude, I think you mentioned some constraints as well though, on the staffing side. And that is particularly if you think about the stack of ancillary products, bag seats, people kind of expect to have to bring a bag and therefore it's priced into the airfare, seat [Inaudible] a little less, so you don't have to buy one. We don't fly when we can't make money. We paid an average of $3.20 per gallon for fuel during the quarter, which was significantly higher than our initial Q1 plan and almost $1 per gallon higher than it was in the first quarter of '19. So we feel really good about how things are coming in for us. May 10, 2022 15:17 ET The bulk of -- obviously, the bulk of the fuel we buy is here in Minneapolis. And as we're prioritizing the use of our resources, let's say, pilots, whatever the constraining resources is at any time. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

Although we're tremendously excited about our growth prospects, we're not reliant on growth to deliver consistent profitability and cash flow. First, we're already profitable. And our pilot contract went into effect in January. I mean, it's a steady hill of average airfare sold every day. And if we looked at what's in the schedule for the third quarter, would we be taking the over on that at this point based on how strong revenue is? Those are fixed production margin businesses. You're going to pay a lot of travel because there's, not enough seats out there. Our numbers demonstrate again the benefits of Sun Country's unique and highly resilient business model.

Finally, as you all know, we ratified a contract with our pilot group in December. I know the follow-up on the Amazon cargo question from earlier. OK. And then just lastly, as we're seeing a little bit of an uptick in cases, are you seeing any changes in the demand environment as cases move a little higher? Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Adjusted pre-tax earnings for the quarter were $15.7 million, and adjusted EPS was $0.20 a share, and revenue of $226.5 million, a record for Sun Country. Maybe are you benefiting from better prices, Chicago, Mid-Con, you're not dealing with New York Harbor, that did seem to be a bit lower? I think the way we'll think about it is this way. Calculated by Time-Weighted Return since 2002. But just as we think about some of the changes to the business, I would think you would improve your run rate profitability, adding the cargo business. Mike, this is Grant. I think the input is fuel that we don't know and how that affects ex-fuel CASM is that we will cut out to flying and grow less fast if fuel doesn't mean revert. Thanks, Chris. Your line is now open. But you're saying a lot of that is just a shift from one to the other? We expect the refinancing to save us over $2 million per year in ownership costs. Thanks for taking my question. While the industry now faces a certain challenge, I want to take a few minutes to highlight some differences here at Sun Country versus the broader industry. No. Third, and importantly, the synergies between our cargo, charter, and scheduled service segments have never been more apparent as they are today. We think cracks are going to come in. And because of that peak focus, we expect to be able to deliver much stronger scheduled service unit revenue growth in 2Q versus the industry. As we enter a seasonally weaker second quarter, we're pleased with how the quarter is shaping up. So should we continue to see that -- obviously, I know it's a little lumpy quarter to quarter? The quarter was a tale of two halves. And then this last quarter, I mean, you did make a pretty meaningful shift to your scheduled capacity, and it's -- look, it's the right thing. Through this time next year, we expect to continue to deliver over 20% growth without future capex while deleveraging as our debt amortizes and producing positive cash flow adding to our already strong liquidity position. If you could give some color with respect to what the zero to 60-day booking window looks like? So our -- I would say probably our steady-state load factors is at such lower than what you would expect to see in Southwest, for example.

Is that coming through as you expected? Does this have any impact on kind of the schedule they're flying with you guys and how full the aircraft are, etc.? OK. No, that's helpful. And so optimally, we're at about 25% fixed flying 75% sched. I actually just happen to have a couple of those numbers in front of me, Duane. We're just trying to get those flights out of the sched service business. So in the second quarter, in response to the fuel environment, we've been able to focus our growth on peak periods where fares can be achieved to compensate us for our fuel costs. This article is a transcript of this conference call produced for The Motley Fool. Q1 was the third consecutive quarter where charter revenue per block hour was higher than in 2019 and flying done under longer-term contracts made up over 70% of the charter flying we did during the quarter. Duane Pfennigwerth -- Evercore ISI -- Analyst. So I get no change in the business today. Thank you. I know you said you were 66% in the March quarter, June quarter, it looks like it's going to be a little bit less than for scheduled. Your next question comes from the line of Chris Stathoulopoulos from Susquehanna. And fares up, I would say, like 50%. I mean, pulling down things like Minneapolis to Fairbanks and obviously, West Coast Hawaii, I mean, it starts getting really expensive Jude, as you said, some of these longer haul flights and given the fact that you're carrying fuel to carry the fuel to get you to that definition with these 73s? One of the things I think you may be getting at is kind of when we went into this new pricing environment after omicron kind of how quickly are we going to react to the new environment. So they're seeing this, and they're doing a really good job of making sure that we are selling fares at the highest level that the market will bear, being cognizant of other things. https://ir.suncountry.com/news-events/events-and-presentations, www.suncountryview.com/newsroom/multimedia/. You talked about $49 of ancillary revenue per passenger. Yield management of seat pricing, getting more heavily involved in third-party products, which we started doing in the rental car business. So I'm sure the 30% increase in block hours helped drive efficiencies across fixed costs. Can you talk to the new pilot contract and if that's helped you on attrition or not? That's one metric, but a more relevant metric for us is total block hours because we've got this big cargo business now that we didn't have two years, three years ago or whatever. Good morning, everyone. Hello, Ravi, it's Dave. Talk to you next quarter. Understand 1Q is a bigger quarter for you historically on scheduled service, but wonder if you could sort of give any color on the composition sequentially. The NCAA basketball, for instance, fell in the ad hoc segment. I understand pilot costs maybe took a little bit out of margins this year, but that improves going forward. Yeah, I would -- I mean our third quarter plan, we think, is appropriate at today's forward curve, which is in backwardation. Thanks for that detail. We continue to see strong application numbers from prospective new pilots, and we are filling all of our new hire classes. So that's really ramping up now, and that will be a bigger piece of our flying in the second quarter as well. We've got an active program now buying green time engines as opposed to expensive overhauls, which is another benefit of our older fleet strategy. The pandemic produced many opportunities for us to purchase growth aircraft at attractive prices. But all fair, so post-March 1, it's kind of on a year over three-year basis high, but like steady. A link to the live webcast can be found on the Sun Country investor relations website at https://ir.suncountry.com/news-events/events-and-presentations. So, the margins of that business are tighter now than they were last year and will widen as the escalation outpaces pilot rate increases and the juniorization as we hire more pilots. Cargo revenue in the quarter of $21.1 million was down slightly when compared to the first quarter of last year due to the timing of planned heavy maintenance checks. Well, thanks for your interest, everybody, and thanks for spending the time with us. Your next question comes from the line of Brandon Oglenski from Barclays. And particularly, as we continue to grow and add flying, we'll continue to spread our costs out over more block hours. But I don't see it improving from where we are today. As you said, fuel is obviously significantly higher than in 2019. The other thing I want to point out is you can look at sort of our ASM production relative to 2019.

Thanks for taking the question. The other thing is I would just echo Jude's sentiment. I guess maybe to be more explicit, if we look at 2Q schedules right now, ASMs are down about 6%. I mean I think the right way to think about our margins is when it's as good as it can get for everybody else, we'll be right there with them. Yeah, all the ULCCs have a product like that and we're doing one that's all it is. One other comment is that fares are on a heuristic algorithm. The PIF, I think, Allegiant calls it a customer convenience fee, it's a CIC, customer interface charge, at Frontier. Calendar year, OK, got it. And as we look out to maybe the third quarter, what is sort of planned and baked. Yeah. I mean you said that you didn't fly the NCAA planes this time because of availability, and that makes sense. Actual results may differ materially. Mr. Allen, you may begin. Our total average fare in Q1 of $183 was 7% higher than the comparable number in Q1 of '19. Discounted offers are only available to new members. Yeah, that's the big wildcard is how -- as we talked about before, we're very targeted in where we fly. No, we fly the same amount now as we did when we fully stood up the airplanes to 12 aircraft. A little commentary on cargo though is keep in mind, it's a long-term contract with escalation annually that's fixed. I guess just a quick one here on fuel, Dave, $3.50 per gallon. Yes. And then further out, so let's say, 60-plus days, or are you having to stimulate discount, excuse me, to stimulate demand or is marketing and whatever you normally do around with your RMS team sufficient to fill out your kind of required load factors into the second half? Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Hey, good afternoon. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript.

And we're starting to hit bottlenecks across the training production timeline to include SIMs which we have -- we went from one to two, we need to go to three, check airmen, which we're in the process of training more and getting more approval from the FA for more of those. Grant, anything to add. All right. OK. That's helpful. So the growth continues to be very robust. Your line is now open. In terms of quarterly unit revenue, scheduled service TRASM was down 1% on a 10% increase in scheduled service ASMs when compared to the first quarter of '19. [Operator instructions] Please be advised that this conference call is being recorded. So yields will go up just because more of the seats will be sold into the new environment. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. They manage these on a flight-by-flight basis, day-by-day basis. That makes sense. With that, I'll open it up to questions. One of the biggest ones is PBS. And the only thing I would add to that, Jude -- we have teams, the revenue management, the yield management team especially these are folks who know these markets really, really well. But it's really -- the team is doing a good job getting people on the airplane. And the days out of bookings are basically what they were back in the day. So that's bearing fruit. Hey, good afternoon, Jude and Dave. After nearly two years since the onset of the COVID pandemic, demand for air travel in the first quarter returned to pre-pandemic levels. And so as we -- if you would have stepped back in time, we definitely made the adjustments you made -- or you commented on from a scheduled service, which were absolutely the right ones done with this -- through a strategic framework. Got it. Because of the consistency of charter and cargo, we have the flexibility to adjust our scheduled service operations to deliver in all circumstances. And so -- but I think over time, we're going to kind of correct into that place where it's about 75-25 sched versus track and cargo, which basically operate the same -- in our business and, Grant, if you've got anything else? And we had sold in the second quarter about a third of our segments by the end of February with two-thirds yet to be priced into the new environment, and it's about 15% at the third quarter. But we do cater the schedule to fly when people want to fly. Jude pointed out sort of what we're doing on the pilot front. For example, we're typically one of the largest charter carriers for the NCAA basketball tournament, but we didn't participate this year due to capacity constraints. The nature of seasonal flying when it begins and ends is that there's a naked leg, right. I'm just wondering kind of how much flexibility you guys have in your charter contracts because I think one of the good things about this contracts that they are long-term contracts, and they're pretty sticky. We certainly have looked at really peak opportunities where we can -- we're tied on crews, and we're thinking always about how we can allocate those across the opportunity set. That stuff we pick up on a near-term basis. Invest better with The Motley Fool. It's the reverse in the third quarter, etc. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. Two, three months ago, what were you above 70 and maybe there was less for Charter and now you've been able to shift. We're hiring about 20 a month that began in the winter and continues on today. I said on the last call, we experienced high levels of attrition in like the October -- September, October timeframe of last year. I would now like to turn the conference back to Jude Bricker. And that's because the majority -- as compared to them, more of our flying happened in March when fuel is higher, which is -- that's our business plan. In the first quarter, we grew block hours by 30% versus the same quarter in 2019. Good afternoon, guys. And I guess any high-level thoughts about the balance of the year? We're very pleased with these results given high fuel prices throughout the quarter and omicron-driven demand softness prior to President's Day. And all of that is really, really strong. Sun Country Airlines I mean, I can't give you the exact numbers in the quarters ahead, but that all of those concepts are absolutely still there. Q1 was another profitable quarter at Sun Country, including our sixth consecutive quarter of greater than 15% EBITDA margins. So, week is better, but peak periods are even better and so, most of the cuts that we did are response to the high fuel prices. What's the day end?

Based in Minnesota, 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 Mexico, Central America, Canada and the Caribbean. And then while charter block hours are lower, your revenue per charter block hour is higher, so these new contracts. Stock Advisor list price is $199 per year. As we move into the year, I mean, remember, Q1 is our big quarter, particularly from a scheduled service perspective. Your line is now open. So part of it is our growth is going to be tempered by both staffing, as well as fuel costs. So its items like that. So that will be, we think, a pretty big step change in efficiency. And in all other circumstances, will lead the industry. In March, which was our heaviest flying month of the quarter, fuel costs were $3.58 per gallon, yet we still produced an operating margin of greater than 20%. So there's a spectrum of incremental value associated with the product categories. Bookings were soft in January, but since President's Day, we have seen some of the strongest demand in our history. But you guys do have the flexibility to not fly them if you didn't want to? You've had decent fares, you've had decent yields. You can find our first quarter earnings press release on the investor relations portion of our website at ir.suncountry.com. Chris Allen -- Director of Investor Relations. Yeah. And maybe in an ideal world, you'd actually have more of that out there than what's been cut versus this idea of constraint? The Motley Fool has a disclosure policy. We think, which gives us the ability on a typical seasonality that we would expect September versus March to draw down our sched service to about a third of what it is in March and September. We're rightsizing our capacity to maximize profitability in a high-fuel environment, while responding to staffing challenges. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Second, our charter and cargo segments produced strong results and predictable cash flow in all demand and fuel environments. OK. So, we are not doing any stimulation in the schedules we have out in the future. My name is Terry, and I will be your operator for today's call. So I think -- we can't give you an exact answer, but we're just always modifying the schedule based on inputs to include the yield environment and the fuel prices and trying to continually hit a hurdle rate in every given period. We expect total revenue to be up 24% to 30% versus the second quarter of 2019 and 22% to 26% higher block hours. I'm joined today by Jude Bricker, our chief executive officer; Dave Davis, president and chief financial officer; and talented group of others to help answer questions. We're working hard on reducing our maintenance costs. Third-party product sales you're going to buy anyway, those are totally accretive. I can't remember what Spirit calls it, but they all have one and it's basically just a fee that moves money from fare.

Catherine O'Brien -- Goldman Sachs -- Analyst. Making the world smarter, happier, and richer. So scheduled service block hours were 66% of our total in the first quarter.