Third Quarter 2023 Summary
- Q3 2023 pre-tax income of $24 million, net income of $23
million, or $0.55 per diluted share
- Secured an agreement with United Airlines to place 19 new E175
aircraft under contract, with deliveries scheduled from late 2024
through 2026
- Repurchased 1.2 million shares of common stock for $50 million
during Q3 2023 at an average price of $42 per share
SkyWest, Inc. (NASDAQ: SKYW) (“SkyWest”) today reported
financial and operating results for Q3 2023, including net income
of $23 million, or $0.55 per diluted share, compared to net income
of $48 million, or $0.96 earnings per diluted share, for Q3
2022.
Commenting on the results, Chip Childs, Chief Executive Officer
of SkyWest, said, “Our teams continue to deliver an exceptional
product and operating performance. We are pleased with the
improving trajectory of our business, strong demand for our
product, and steady progress toward stabilization of our pilot
hiring and retention. I want to thank our amazing team for
delivering outstanding operations in the third quarter.”
Under its previously announced share repurchase program
authorized by the SkyWest Board of Directors in May 2023, SkyWest
repurchased 1.2 million shares of common stock for $50 million
during Q3 2023. For the nine months ended September 30, 2023,
SkyWest repurchased 9.6 million shares of common stock for $244
million, which represented 19% of SkyWest’s outstanding shares as
of December 31, 2022. As of September 30, 2023, SkyWest had $136
million of remaining availability under its current share
repurchase program.
Financial Results
Revenue was $766 million in Q3 2023, down $23 million, or 3%,
from $789 million in Q3 2022. SkyWest deferred recognizing $57
million of revenue during Q3 2023 compared to recognizing
previously deferred revenue of $13 million during Q3 2022. The
amount of revenue deferred during Q3 2023 was driven by modified
terms relating to fixed monthly cash payments under SkyWest’s
previously announced amended flying contracts. See the
“Supplemental Cash Flow Information” section of this release for
more information. Production-driven rate increases under SkyWest’s
amended flying contracts since Q3 2022 partially offset the impact
of deferred revenue year-over-year.
Operating expenses were $717 million in Q3 2023, up $3 million
from $714 million in Q3 2022, driven by increases in employee
compensation, including higher pilot pay scales. Higher labor costs
were partially offset by lower aircraft rent expense due to the
early lease buyouts on 35 CRJ aircraft for the nine months ended
September 30, 2023 and lower operating costs associated with a 10%
reduction in Q3 2023 block hour production compared to Q3 2022.
Capital and Liquidity
SkyWest had $820 million in cash and marketable securities at
September 30, 2023, down from $862 million at June 30, 2023 and
$1.0 billion at December 31, 2022.
Total debt at September 30, 2023 was $3.1 billion, down from
$3.2 billion at June 30, 2023 and $3.4 billion at December 31,
2022. Capital expenditures during Q3 2023 were $32 million,
including $15 million capitalized for three CRJ aircraft acquired
under an early lease buyout and purchases of other fixed assets.
Additionally, SkyWest paid $36 million in aircraft deposits related
to its order for 19 new E175 aircraft during Q3 2023.
Status Update on Previously Announced Agreements
SkyWest announced today it has secured a new flying agreement
with United Airlines for SkyWest to acquire and place 19 new E175s
under contract. SkyWest is coordinating with its major airline
partners to optimize the timing of upcoming fleet deliveries under
this and previously announced agreements. The anticipated E175
future delivery dates summarized below are based on currently
available information and are subject to change.
Q4 2023
2024
2025
2026
Total
Delta Air Lines
2
1
ꟷ
ꟷ
3
United Airlines
ꟷ
4
7
8
19
Alaska Airlines
ꟷ
ꟷ
1
ꟷ
1
Total
2
5
8
8
23
By the end of 2026, SkyWest is scheduled to operate a total of
258 E175 aircraft.
About SkyWest
SkyWest, Inc. is the holding company for SkyWest Airlines and
SkyWest Leasing, an aircraft leasing company. SkyWest Airlines has
a fleet of approximately 500 aircraft connecting passengers to over
240 destinations throughout North America. SkyWest Airlines
operates through partnerships with United Airlines, Delta Air
Lines, American Airlines, and Alaska Airlines carrying more than 40
million passengers in 2022.
SkyWest will host its conference call to discuss its third
quarter 2023 results today, October 26, 2023, at 2:30 p.m. Mountain
Time. The conference call number is 1-888-330-2455 for domestic
callers, and 1-240-789-2717 for 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://events.q4inc.com/attendee/707520484. This press release and
additional information regarding SkyWest, including access
information for the digital rebroadcast of the third quarter 2023
results call, participation at investor conferences and investor
presentations 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 the continued demand for our product,
recovery from the COVID-19 pandemic, economic conditions and the
captain shortage on SkyWest’s business, financial condition and
results of operations, the scheduled aircraft deliveries for
SkyWest in upcoming periods and the related execution of SkyWest’s
fleet transition strategy and expected timing thereof, expected
production levels in future periods and associated staffing
challenges, pilot attrition trends, SkyWest’s coordination with
major airline partners to optimize the delivery of aircraft under
previously announced agreements, the expected terms, timing and
benefits related to SkyWest’s leasing and joint venture
transactions, as well as 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 statements unless required by law. Readers should
note that many factors could affect the future operating and
financial results of SkyWest 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, uncertainty regarding recovery from the COVID-19 pandemic and
other potential future outbreaks of infectious diseases or other
health concerns, and the consequences of such outbreaks to the
travel industry and our major partners in general and the financial
condition and operating results of SkyWest in particular, the
prospects of entering into agreements with existing or other
carriers to fly new aircraft, ongoing negotiations between SkyWest
and its major partners regarding their contractual obligations,
uncertainties regarding operation of new aircraft, the ability to
attract and retain qualified pilots, including captains, and
related staffing challenges, 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 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 of
competing successfully in a highly competitive and rapidly changing
industry; developments associated with fluctuations in the economy
and the demand for air travel, including related to recovery from
the COVID-19 pandemic, inflationary pressures, and related
decreases in customer demand and spending; the financial stability
of SkyWest’s major partners and any potential impact of their
financial condition on the operations of SkyWest; fluctuations in
flight schedules, which are determined by the major partners for
whom SkyWest conducts flight operations; variations in market and
economic conditions; significant aircraft lease and debt
commitments; estimated useful life of long-lived assets, residual
aircraft values and related impairment charges; labor relations and
costs and labor shortages; 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; uncertainty regarding
ongoing hostility between Russia and the Ukraine, as well as the
Israeli-Palestinian military conflict, and the related impacts on
macroeconomic conditions and on the international operations of any
of our major airline partners as a result of such conflict;
recovery from the global COVID-19 pandemic and the outbreak of any
other disease or similar public health threat that affects travel
demand or travel behavior; 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, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K.
SkyWest, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Income
(Dollars and Shares in Thousands,
Except per Share Amounts)
(Unaudited)
Three months ended
Nine months ended
September 30,
September 30,
2023
2022
2023
2022
OPERATING REVENUES:
Flying agreements
$
741,898
$
763,514
$
2,106,130
$
2,245,351
Lease, airport services and other
24,273
25,929
77,515
78,329
Total operating revenues
766,171
789,443
2,183,645
2,323,680
OPERATING EXPENSES:
Salaries, wages and benefits
333,017
307,727
990,659
896,347
Aircraft maintenance, materials and
repairs
178,465
183,182
483,182
506,478
Depreciation and amortization
96,560
97,433
287,878
297,427
Aircraft fuel
23,330
28,179
62,573
85,089
Airport-related expenses
18,398
17,501
53,648
54,196
Aircraft rentals
2,099
16,089
24,055
48,109
Other operating expenses
65,011
63,756
205,203
219,808
Total operating expenses
716,880
713,867
2,107,198
2,107,454
OPERATING INCOME
49,291
75,576
76,447
216,226
OTHER INCOME (EXPENSE):
Interest income
11,234
6,348
31,761
9,332
Interest expense
(32,543
)
(33,283
)
(99,881
)
(92,308
)
Other income (loss), net
(3,631
)
8,112
7,544
21,011
Total other expense, net
(24,940
)
(18,823
)
(60,576
)
(61,965
)
INCOME BEFORE INCOME TAXES
24,351
56,753
15,871
154,261
PROVISION (BENEFIT) FOR INCOME TAXES
873
8,381
(955
)
34,204
NET INCOME
$
23,478
$
48,372
$
16,826
$
120,057
BASIC EARNINGS PER SHARE
$
0.56
$
0.96
$
0.37
$
2.38
DILUTED EARNINGS PER SHARE
$
0.55
$
0.96
$
0.37
$
2.37
Weighted average common shares:
Basic
41,826
50,593
45,018
50,531
Diluted
42,580
50,636
45,540
50,636
SkyWest, Inc. and
Subsidiaries
Summary of Consolidated
Balance Sheets
(Dollars in Thousands)
(Unaudited)
September 30,
December 31,
2023
2022
Cash and marketable securities
$
819,501
$
1,047,215
Other current assets
342,495
324,066
Total current assets
1,161,996
1,371,281
Property and equipment, net
5,418,966
5,524,549
Deposits on aircraft
79,459
23,931
Other long-term assets
398,697
494,792
Total assets
$
7,059,118
$
7,414,553
Current portion, long-term debt
$
443,186
$
438,502
Other current liabilities
762,484
734,041
Total current liabilities
1,205,670
1,172,543
Long-term debt, net of current
maturities
2,633,707
2,941,772
Other long-term liabilities
1,083,043
952,607
Stockholders' equity
2,136,698
2,347,631
Total liabilities and stockholders'
equity
$
7,059,118
$
7,414,553
SkyWest, Inc. and
Subsidiaries
Additional Operational
Information (unaudited)
SkyWest’s fleet in scheduled service or
under contract by aircraft type:
September 30, 2023
December 31, 2022
September 30, 2022
E175 aircraft
235
236
232
CRJ900 aircraft
37
41
44
CRJ700 aircraft
117
104
114
CRJ200 aircraft
104
136
140
Total aircraft in service or under
contract
493
517
530
As of September 30, 2023, SkyWest leased 35 CRJ700s and five
CRJ900s to third parties and had 13 CRJ200s that are ready for
service under SkyWest Charter (“SWC”) operations (these aircraft
are excluded from the table above).
Selected operational data:
For the three months
ended
September 30,
For the nine months
ended
September 30,
Block hours by aircraft type:
2023
2022
% Change
2023
2022
% Change
E175s
171,615
169,679
1.1
%
500,782
481,080
4.1
%
CRJ900s
18,979
25,134
(24.5
)%
59,390
78,468
(24.3
)%
CRJ700s
56,117
62,540
(10.3
)%
158,239
202,538
(21.9
)%
CRJ200s
44,119
66,389
(33.5
)%
131,278
207,402
(36.7
)%
Total block hours
290,830
323,742
(10.2
)%
849,689
969,488
(12.4
)%
Departures
180,069
194,683
(7.5
)%
514,529
570,572
(9.8
)%
Passengers carried
10,208,005
10,715,415
(4.7
)%
28,671,654
30,627,250
(6.4
)%
Adjusted flight completion
99.9
%
99.9
%
—
pts
99.9
%
99.6
%
0.3
pts
Raw flight completion
99.1
%
99.1
%
—
pts
98.5
%
98.2
%
0.3
pts
Passenger load factor
85.1
%
84.6
%
0.5
pts
83.7
%
82.9
%
0.8
pts
Average trip length
446
488
(8.6
)%
456
498
(8.4
)%
Adjusted flight completion percent excludes weather
cancellations. Raw flight completion includes weather
cancellations.
Supplemental Cash Flow Information
SkyWest receives certain fixed monthly cash payments under its
capacity purchase agreements (“CPAs”) that are attributed to
SkyWest’s overhead costs and certain fixed monthly cash payments
associated with SkyWest’s aircraft ownership costs. Fixed payments
allocated to the non-lease portion are recognized as revenue on a
completed block hour basis over the applicable contract term. Fixed
payments allocated to the lease portion are accounted for as lease
revenue under the CPAs and are recognized on a straight-line basis
over the applicable contract term. Fixed monthly cash payments
received in excess of revenue recognized during the reporting
period are recorded as deferred revenue and revenue recognized in
excess of fixed monthly cash payments during the reporting period
are recorded as unbilled revenue on SkyWest’s consolidated balance
sheet. Amendments to certain CPAs executed since September 30, 2022
modified the fixed rate structure and resulted in higher deferred
revenue amounts in 2023 compared to 2022. The following
supplemental cash flow schedule summarizes the total revenue
recognized in excess of (or less than) the fixed monthly cash
received during the indicated reporting periods and the cumulative
difference as of September 30, 2023 and December 31, 2022 (dollars
in thousands, unaudited).
Three months ended
Nine months ended
September 30,
September 30,
2023
2022
2023
2022
Revenue recognized in excess of (less
than) fixed cash payments received
$
(56,461
)
$
13,320
$
(179,859
)
$
40,200
As of September 30,
2023
As of December 31,
2022
Cumulative revenue recognized less than
fixed cash payments received
$
(304,672
)
$
(124,813
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026530068/en/
Investor Relations 435.634.3200
Investor.relations@skywest.com
Corporate Communications 435.634.3553
corporate.communications@skywest.com
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