ST. GEORGE, Utah, July 27, 2017 /PRNewswire/ -- SkyWest, Inc.
(NASDAQ: SKYW) ("SkyWest") today reported financial and operating
results for the second quarter of 2017, including net income of
$50 million, or $0.95 per diluted share, compared to net income
of $40 million, or $0.77 per diluted share for Q2 2016. The
improvement in net income over Q2 2016 was primarily due to
SkyWest's continued fleet transition, including the addition of 47
new E175s, and the removal of 51 ERJ145s and 18 CRJ200s since Q2
2016. Additionally, since Q2 2016, SkyWest transitioned 49 CRJ700s
from other major airline partners to American Airlines, Inc.
("American") under a previously announced multi-year agreement,
further reducing fleet risk.
Commenting on the results, Chip
Childs, Chief Executive Officer of SkyWest, said "Our
results reflect strong production, solid operating performance and
ongoing fleet transition improvements. We will continue our
disciplined strategy to pursue opportunities that will further
improve our business model. None of this is possible without our
outstanding professionals, and I want to thank them for the work
they do each day to provide an excellent product to our
customers."
Q2 2017 Financial Highlights
Revenue was $810 million in Q2
2017, up from $801 million in Q2
2016. The increase in revenue included the net impact of adding 47
new E175 aircraft since Q2 2016, partially offset by the removal of
76 unprofitable or less profitable aircraft over the same period,
including 51 ERJ145s, 18 CRJ200s and seven CRJ700s.
Operating expenses were $703
million in Q2 2017, down from $717
million in Q2 2016. The decrease was primarily due to lower
direct operating costs from 29 fewer aircraft in service and a 5%
reduction in block hour production, partially offset by higher crew
training costs associated with the new E175 aircraft
deliveries.
Q2 2017 Operational Update
SkyWest Airlines, Inc. ("SkyWest Airlines") took delivery of ten
E175s during Q2 2017. SkyWest Airlines anticipates adding one
additional E175 aircraft in Q4 2017, resulting in a total of 104
E175 aircraft by the end of 2017.
During Q2 2017, SkyWest Airlines and ExpressJet Airlines, Inc.
("ExpressJet") completed the previously announced transition of 49
CRJ700s to American under a multi-year contract. The 49 CRJ700s in
service with American were previously operated by SkyWest Airlines
or ExpressJet with other major airline partners.
SkyWest Airlines pilots voted in favor of a four-year extension
to their current pay agreement, with the new agreement effective
July 2017 through mid-2022. The new
agreement provides additional compensation for SkyWest Airlines
pilots, primarily in profit sharing and 401(k) match. The
financial terms of the agreement were not disclosed. SkyWest
Airlines anticipates the new agreement will allow it to continue to
provide outstanding pilot careers, meet its mainline partners'
needs and provide better visibility for long-term growth
opportunities.
Operating Performance:
Flight completion rates at SkyWest Airlines and ExpressJet for
Q2 2017 and Q2 2016 are summarized as follows:
|
|
SkyWest
Airlines
|
|
ExpressJet
|
|
|
Q2 2017
|
Q2 2016
|
|
Q2 2017
|
Q2 2016
|
Adjusted Completion
*
|
|
99.9%
|
99.9%
|
|
99.9%
|
99.9%
|
Raw
Completion
|
|
98.9%
|
99.1%
|
|
97.6%
|
98.2%
|
|
* Adjusted Completion
excludes weather cancellations. Raw Completion includes weather
cancellations.
|
Q2 2017 Capital and Liquidity
SkyWest had $635 million in cash
and marketable securities at June 30,
2017, up $70 million from
December 31, 2016 and up $48 million from March 31,
2017. During the second quarter of 2017, SkyWest used
$15 million in cash and $25 million in previously paid deposits toward
the purchase of ten E175 aircraft. SkyWest did not repurchase any
stock this quarter under its $100
million share repurchase program of which $90 million remains authorized.
SkyWest issued $227 million in
long-term debt during Q2 2017 to finance ten E175s delivered during
the quarter. Total debt increased by $145
million during the second quarter of 2017 from the new E175
aircraft acquired, net of scheduled principal payments.
In Q2 2017, excluding aircraft purchased, SkyWest used
$21 million for other capital
investments, including spare engines and aircraft parts.
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 3,000 daily flights carrying more than 50 million passengers
annually. SkyWest Airlines operates through partnerships with
United Airlines ("United"), Delta Air Lines ("Delta"), American and
Alaska Airlines ("Alaska").
ExpressJet Airlines operates through partnerships with United,
Delta and American. 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 18,000 employees.
SkyWest will host its conference call to discuss second quarter
2017 results today, July 27, 2017, at
2:30 p.m. Mountain Time. The
conference call number is 1-877-418-5293 for domestic callers,
1-866-605-3852 for Canada callers
and 1-412-717-9593 for other international callers. Please call up
to ten minutes in advance to ensure you are connected prior to the
start of the call. The conference call will also be available live
on the Internet at
https://www.webcaster4.com/Webcast/Page/1088/21885.This press
release and additional information regarding SkyWest, including
access information for the digital rebroadcast of the second
quarter 2017 earnings call, participation at investor conferences,
investor presentations and monthly traffic statistic releases, can
be accessed at inc.skywest.com.
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 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.
SkyWest, Inc. and
Subsidiaries
Condensed
Consolidated Statements of Income
(Dollars and Shares
in Thousands, Except per Share Amounts)
(Unaudited)
|
|
|
|
|
Three Months
Ended
June 30
|
|
Six Months
Ended
June 30
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
|
Passenger
|
$
791,341
|
|
$
784,813
|
|
$
1,536,752
|
|
$
1,529,203
|
|
Ground
handling and other
|
18,418
|
|
16,525
|
|
38,422
|
|
34,211
|
|
Total operating
revenues
|
809,759
|
|
801,338
|
|
1,575,174
|
|
1,563,414
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Salaries, wages and benefits
|
295,929
|
|
304,228
|
|
595,969
|
|
609,785
|
|
Aircraft
maintenance, materials and
repairs
|
152,356
|
|
142,289
|
|
284,681
|
|
281,149
|
|
Depreciation and amortization
|
71,206
|
|
69,887
|
|
141,320
|
|
137,688
|
|
Aircraft
rentals
|
55,413
|
|
72,567
|
|
113,123
|
|
139,691
|
|
Aircraft
fuel
|
37,183
|
|
32,306
|
|
71,493
|
|
57,638
|
|
Ground
handling services
|
15,902
|
|
16,743
|
|
35,436
|
|
37,727
|
|
Other
operating expenses
|
75,174
|
|
79,181
|
|
150,262
|
|
153,790
|
|
Total operating
expenses
|
703,163
|
|
717,201
|
|
1,392,284
|
|
1,417,468
|
|
OPERATING
INCOME
|
106,596
|
|
84,137
|
|
182,890
|
|
145,946
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
Interest
income
|
1,330
|
|
485
|
|
1,990
|
|
915
|
|
Interest
expense
|
(27,063)
|
|
(18,287)
|
|
(51,612)
|
|
(36,012)
|
|
Total
other expense, net
|
(25,733)
|
|
(17,802)
|
|
(49,622)
|
|
(35,097)
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
80,863
|
|
66,335
|
|
133,268
|
|
110,849
|
|
PROVISION FOR INCOME
TAXES
|
30,386
|
|
26,091
|
|
48,005
|
|
43,513
|
|
NET INCOME
|
$
50,477
|
|
$
40,244
|
|
$
85,263
|
|
$
67,336
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER
SHARE
|
$
0.98
|
|
$
0.78
|
|
$
1.65
|
|
$
1.31
|
|
DILUTED EARNINGS PER
SHARE
|
$
0.95
|
|
$
0.77
|
|
$
1.61
|
|
$
1.29
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares
|
|
|
|
|
|
|
|
|
Basic
|
51,751
|
|
51,418
|
|
51,785
|
|
51,318
|
|
Diluted
|
52,977
|
|
52,194
|
|
53,090
|
|
52,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SkyWest, Inc. and
Subsidiaries
Summary of
Consolidated Balance Sheets
(Dollars in
Thousands)
(Unaudited)
|
|
|
June
30, 2017
|
|
December
31, 2016
|
Cash, restricted
cash, and marketable securities
|
$
634,519
|
|
$
564,907
|
Other current
assets
|
312,490
|
|
352,885
|
Total current
assets
|
$
947,009
|
|
$
917,792
|
Property and equipment, net
|
4,112,541
|
|
3,782,897
|
Deposit on
aircraft
|
21,976
|
|
38,800
|
Other long term
assets
|
279,087
|
|
268,477
|
Total
assets
|
$
5,360,613
|
|
$
5,007,966
|
|
|
|
|
Current portion,
long-term debt
|
$
306,849
|
|
$
305,460
|
Other current
liabilities
|
472,241
|
|
441,805
|
Total current
liabilities
|
$
779,090
|
|
$
747,265
|
|
|
|
|
Long-term debt, net
of current maturities
|
2,452,663
|
|
2,240,051
|
Other long-term
liabilities
|
706,318
|
|
669,707
|
Stockholders'
equity
|
1,422,542
|
|
1,350,943
|
Total liabilities and
stockholders' equity
|
$
5,360,613
|
|
$
5,007,966
|
Unaudited
Operating Highlights
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30
|
|
Six Months
Ended
June 30
|
|
2017
|
2016
|
Change
|
|
2017
|
2016
|
Change
|
Block
hours
|
467,100
|
493,336
|
(5.3) %
|
|
919,783
|
980,209
|
(6.2) %
|
Departures
|
280,326
|
296,454
|
(5.4) %
|
|
544,188
|
582,929
|
(6.6) %
|
|
|
|
|
|
|
|
|
Passengers
carried
|
13,364,974
|
13,915,405
|
(4.0) %
|
|
25,385,351
|
26,583,951
|
(4.5) %
|
Passenger load
factor
|
81.8%
|
83.2%
|
(1.4)
pts
|
|
80.3%
|
81.1%
|
(0.8)
pts
|
|
|
|
|
|
|
|
|
Average passenger
trip length
|
511
|
521
|
(1.9) %
|
|
515
|
526
|
(2.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SkyWest, Inc. and
Subsidiaries
|
Additional
Operational Information (unaudited)
|
|
SkyWest's total fleet
in service decreased by six aircraft during Q2 2017, as
follows:
|
|
Aircraft in
scheduled service at March 31, 2017:
|
|
|
632
|
|
Additions:
|
|
|
|
|
New E175 aircraft
added with United:
|
5
|
|
|
|
New E175 aircraft
added with Delta:
|
5
|
|
|
|
Total
Additions:
|
|
|
10
|
|
Removals:
|
|
ERJ145 aircraft
removed from service:
|
(13)
|
|
|
|
CRJ200 aircraft
removed from service:
|
(2)
|
|
|
|
CRJ700 aircraft
removed from service:
|
(1)
|
|
|
|
Total
Removals:
|
|
|
(16)
|
|
Aircraft in
scheduled service at June 30, 2017:
|
|
|
626
|
|
|
|
|
|
|
|
SkyWest's total fleet
in service decreased by 29 aircraft over the last twelve months, as
follows:
|
|
Aircraft in
scheduled service at June 30, 2016:
|
|
|
655
|
|
Additions:
|
|
|
|
|
New E175 aircraft
added with United:
|
18
|
|
|
|
New E175 aircraft
added with Delta:
|
18
|
|
|
|
New E175 aircraft
added with Alaska:
|
11
|
|
|
|
Total
Additions:
|
|
|
47
|
|
Removals:
|
|
ERJ145 aircraft
removed from service:
|
(51)
|
|
|
|
CRJ200 aircraft
removed from service:
|
(18)
|
|
|
|
CRJ700 aircraft
removed from service:
|
(7)
|
|
|
|
Total
Removals:
|
|
|
(76)
|
|
Aircraft in
scheduled service at June 30 2017:
|
|
|
626
|
|
|
|
|
|
|
|
SkyWest, Inc. and
Subsidiaries
Additional
Operational Information (continued and unaudited)
|
|
|
|
Completed Block Hours
by Aircraft Type and by Airline
|
|
|
|
|
Three months ended
June 30
|
|
Six months ended June
30
|
|
By Aircraft
Type:
|
2017
|
|
2016
|
|
Variance
%
|
|
2017
|
|
2016
|
|
Variance
%
|
|
E175s
|
90,051
|
|
50,499
|
|
78.3
|
|
169,979
|
|
93,613
|
|
81.6
|
|
CRJ700/900s
|
145,565
|
|
160,062
|
|
(9.1)
|
|
282,426
|
|
319,368
|
|
(11.6)
|
|
Dual-class
aircraft
|
235,616
|
|
210,561
|
|
11.9
|
|
452,405
|
|
412,981
|
|
9.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRJ200s
|
137,477
|
|
160,271
|
|
(14.2)
|
|
270,751
|
|
317,029
|
|
(14.6)
|
|
ERJ145/135s
|
94,007
|
|
122,504
|
|
(23.3)
|
|
196,627
|
|
250,199
|
|
(21.4)
|
|
50-seat
aircraft
|
231,484
|
|
282,775
|
|
(18.1)
|
|
467,378
|
|
567,228
|
|
(17.6)
|
|
Total Block
Hours
|
467,100
|
|
493,336
|
|
(5.3)
|
|
919,783
|
|
980,209
|
|
(6.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30
|
|
Six months ended June
30
|
|
By
Airline:
|
2017
|
|
2016
|
|
Variance
%
|
|
2017
|
|
2016
|
|
Variance
%
|
|
SkyWest
Airlines
|
303,921
|
|
281,622
|
|
7.9
|
|
581,756
|
|
553,158
|
|
5.2
|
|
ExpressJet
|
163,179
|
|
211,714
|
|
(22.9)
|
|
338,027
|
|
427,051
|
|
(20.8)
|
|
Total Block
Hours
|
467,100
|
|
493,336
|
|
(5.3)
|
|
919,783
|
|
980,209
|
|
(6.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Fleet,
Block Hour and ASM Production Forecast for 2017
|
|
|
|
|
|
|
|
|
|
|
|
As of
12/31/2016
|
|
As of
3/31/2017
|
|
As of
6/30/2017
|
|
As of
9/30/2017
|
|
As of
12/31/2017
|
Fleet (1):
|
(Actual)
|
|
(Actual)
|
|
(Actual)
|
|
(Estimate)
|
|
(Estimate)
|
E175s
|
86
|
|
93
|
|
103
|
|
103
|
|
104
|
CRJ700/900s
|
194
|
|
194
|
|
193
|
|
195
|
|
193
|
CRJ200s
|
213
|
|
208
|
|
206
|
|
188
|
|
195
|
ERJ145s/135s
|
159
|
|
137
|
|
124
|
|
119
|
|
100
|
Totals
|
652
|
|
632
|
|
626
|
|
605
|
|
592
|
|
|
|
|
|
|
|
|
|
|
|
Q1-2017
|
|
Q2-2017
|
|
Q3-2017
|
|
Q4-2017
|
|
Total 2017
|
Production
(2):
|
(Actual)
|
|
(Actual)
|
|
(Estimate)
|
|
(Estimate)
|
|
(Estimate)
|
Block Hours
|
452,683
|
|
467,100
|
|
469,000
|
|
445,000
|
|
1,834,000
|
ASMs (in
billions)
|
8.0
|
|
8.3
|
|
8.5
|
|
8.3
|
|
33.1
|
|
|
|
|
|
|
|
|
|
|
|
(1) Fleet
count excludes aircraft removed from scheduled service. Actual
fleet counts may vary from the forecast due to timing of aircraft
removed from service, timing of aircraft transitioned into service
and timing of new aircraft deliveries.
|
|
(2) Actual
production may vary from estimates for various reasons including,
but not limited to, timing of aircraft removals and deliveries and
anticipated flight completion rates.
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SOURCE SkyWest, Inc.