ST. GEORGE, Utah, Dec. 13, 2016 /PRNewswire/ -- SkyWest, Inc.
(NASDAQ: SKYW) ("SkyWest") announced today additional fleet
transitions and contract updates designed to reduce SkyWest's
long-term fleet risk and enhance its ability to respond to changing
partner needs. Specifically, SkyWest's ExpressJet operation
expects to transition to flying primarily dual-class aircraft in
its CRJ operation by removing its CRJ200 aircraft from service over
the next year.
The removal of the CRJ200 aircraft reduces ExpressJet's future
required investment in its 50-seat fleet and is expected to improve
the airline's operating efficiency by eliminating an aircraft type
from its platform. SkyWest also announced today that
ExpressJet and American Airlines have agreed to place 12 dual-class
CRJ700s into service under a multi-year term. These CRJ700s
had been scheduled to be removed from service under a
previously-disclosed early lease return arrangement.
Additionally, SkyWest and Bombardier entered into a termination
agreement covering Bombardier's residual value guarantee ("RVG")
agreements on 76 CRJ200 aircraft owned by SkyWest Airlines and
ExpressJet. Bombardier agreed to pay SkyWest $90 million by January
2017 along with certain other consideration in exchange for
the release. Both the required sale of each aircraft and the cost
to SkyWest of returning the aircraft to mid-time condition were
points of risk and uncertainty for SkyWest that this termination
agreement eliminates.
As a result of the expectation to remove ExpressJet CRJ200s from
service and the Bombardier RVG termination agreement, SkyWest is
evaluating its total 50-seat CRJ200 fleet and related long-lived
assets for impairment in Q4 2016. SkyWest currently
anticipates it will record a non-cash impairment charge in Q4 2016
estimated to be in the range of $440 million
to $490 million (pre-tax) on its CRJ200 aircraft and other
50-seat aircraft assets, net of the $90
million in cash proceeds from the Bombardier termination
agreement.
"Streamlining our fleet and taking early settlement of
Bombardier's RVG obligations reduce both our overall risk profile
and the future investment that would have been required in the
CRJ200 fleet," said Chip Childs,
President and CEO of SkyWest, Inc. "These moves strategically
position us to continue to deploy our capital against our best
investment opportunities and are expected to help improve future
liquidity and fleet flexibility."
About SkyWest
SkyWest, Inc. is the holding company for two scheduled passenger
airline operations and an aircraft leasing company. SkyWest's
airline companies provide commercial air service in cities
throughout North America with more
than 3,100 daily flights carrying nearly 57 million passengers
annually. SkyWest Airlines operates through partnerships with
United Airlines, Delta Air Lines, American Airlines and Alaska
Airlines. ExpressJet Airlines operates through partnerships with
United Airlines, Delta Air Lines and American Airlines. Based in
St. George, Utah, SkyWest
continues to set the standard for excellence across the regional
industry with unmatched value for customers, shareholders and its
more than 19,000 employees.
Forward Looking-Statements
In addition to historical information, this release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as
"forecasts", "expects," "intends," "believes," "anticipates,"
"estimates", "should," "likely" and similar expressions identify
forward-looking statements. Such statements include, but are
not limited to, statements about the timing and receipt of payments
and other consideration under the Bombardier RVG termination
agreement; the strategic benefit of such arrangement, including any
reduction in future maintenance costs and improvement in operating
efficiencies, profitability, liquidity and fleet flexibility; the
timing and amount of any impairment charge; SkyWest's future
financial and operating results, plans, objectives, expectations,
estimates, intentions and outlook, and other statements that are
not historical facts. All forward-looking statements included
in this release are made as of the date hereof and are based on
information available to SkyWest as of such date. SkyWest
assumes no obligation to update any forward-looking
statement. Readers should note that many factors could affect
the future operating and financial results of SkyWest, SkyWest
Airlines or ExpressJet, and could cause actual results to vary
materially from those expressed in forward-looking statements set
forth in this release. These factors include, but are not
limited to, the prospects of entering into agreements with existing
or other carriers to fly new aircraft, ongoing negotiations between
SkyWest, SkyWest Airlines and ExpressJet and their major partners
regarding their contractual obligations, uncertainties regarding
operation of new aircraft, the ability to attract and retain
qualified pilots, the impact of regulatory issues such as pilot
rest rules and qualification requirements, and the ability to
obtain aircraft financing.
Actual operational and financial results of SkyWest, SkyWest
Airlines and ExpressJet will likely also vary, and may vary
materially, from those anticipated, estimated, projected or
expected for a number of other reasons, including, in addition to
those identified above: the challenges and costs of integrating
operations and realizing anticipated synergies and other benefits
from the acquisition of ExpressJet; the challenges of competing
successfully in a highly competitive and rapidly changing industry;
developments associated with fluctuations in the economy and the
demand for air travel; the financial stability of SkyWest's major
partners and any potential impact of their financial condition on
the operations of SkyWest, SkyWest Airlines, or ExpressJet;
fluctuations in flight schedules, which are determined by the major
partners for whom SkyWest's operating airlines conduct flight
operations; variations in market and economic conditions;
significant aircraft lease and debt commitments; realization of
manufacturer residual value guarantees on applicable SkyWest
aircraft; residual aircraft values and related impairment charges;
labor relations and costs; the impact of global instability;
rapidly fluctuating fuel costs, and potential fuel shortages; the
impact of weather-related or other natural disasters on air travel
and airline costs; aircraft deliveries; the ability to attract and
retain qualified pilots and other unanticipated factors. Risk
factors, cautionary statements and other conditions which could
cause SkyWest's actual results to differ materially from
management's current expectations are contained in SkyWest's
filings with the Securities and Exchange Commission, including its
most recent Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q.
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SOURCE SkyWest, Inc.