ST. GEORGE, Utah, Feb. 4, 2021 /PRNewswire/ --
Fourth Quarter and Annual Results
- Q4 2020 pre-tax loss of $59
million, net loss of $46
million, or $0.93 loss per
share
- Full year 2020 pre-tax loss of $7
million, net loss of $9
million, or $0.17 loss per
share
- Full year 2020 revenue of $2.1
billion, down 28% from 2019 due to COVID-19
- As previously announced:
-
- Acquired 21 used CRJ700 aircraft and placed the aircraft under
lease with a United Express operator during Q4
- Took delivery of four new E175 aircraft during Q4 under a
flying contract with Delta Air Lines
SkyWest, Inc. (NASDAQ: SKYW) ("SkyWest") today reported
financial and operating results for Q4 2020, including a net loss
of $46 million, or $0.93 loss per share, compared to net income of
$73 million, or $1.43 per diluted share, for Q4 2019. SkyWest
also reported a net loss of $9
million, or $0.17 loss per
share, for the 2020 year, compared to net income of $340 million, or $6.62 per diluted share, for the 2019 year. The
primary factor in SkyWest's lower results in 2020 compared to 2019
was reduced flight schedules and lower demand resulting from the
COVID-19 pandemic.
Commenting on the results, Chip
Childs, Chief Executive Officer of SkyWest, said, "The past
year has challenged our industry, our business, and our people
beyond what anyone could have anticipated, and we responded quickly
and aggressively to protect our people, our partners, and our
business. I'm incredibly proud of the SkyWest team's great work and
the flexibility they continue to demonstrate. We believe we're in a
strong position to play a key role in the industry's recovery and
we remain committed to positioning SkyWest for future success."
Financial Results
Revenue was $590 million in Q4 2020,
down from $744 million in Q4 2019, or
21%, due to the COVID-19 pandemic that caused a significant
reduction in the number of scheduled flights SkyWest operated under
its flying agreements compared to the same period last year.
Sequentially, revenue in Q4 2020 was up from $457 million Q3 2020, or 29%, due to improvements
in demand for our scheduled flights. Total block hours in Q4 2020
were down 27% from Q4 2019 and up 20% from Q3 2020.
SkyWest deferred recognizing revenue on $12 million of fixed monthly payments received
during Q4 2020, down from $30 million
and $69 million that was deferred in
Q3 2020 and Q2 2020, respectively. SkyWest will recognize the
deferred revenue from the fixed monthly payments on a per completed
flight basis over the remaining contract term.
Operating expenses were $617
million in Q4 2020, relatively flat from $618 million in Q4 2019. The reduction in direct
operating costs associated with fewer flights operated compared to
the same period last year was offset by an increase in maintenance
expense on our CRJ200 and CRJ700 fleets and depreciation expense on
our CRJ200 fleet. Operating expenses in Q4 2020 were up from
$383 million in Q3 2020. The Q3 2020
operating expenses reflected a reduction of $190 million in connection with the Coronavirus
Aid, Relief, and Economic Security Act (the "CARES Act") payroll
support grant received by SkyWest compared to $3 million in Q4 2020.
Capital and Liquidity
SkyWest had $826 million in cash and marketable securities at
December 31, 2020, up from
$822 million at September 30, 2020 and $520 million at December
31, 2019.
SkyWest has $665 million available
under its $725 million, five-year
secured loan facility with the U.S. Treasury Department
("Treasury") under the CARES Act. SkyWest has until May 28, 2021 to borrow additional amounts under
the facility.
SkyWest has a $75 million line of
credit facility with approximately $35
million of letters of credit issued under the facility and
$40 million available under the line
at December 31, 2020.
As previously announced, SkyWest entered into a payroll support
program extension agreement with Treasury in January 2021 to receive a total of approximately
$233 million under the Consolidated
Appropriations Act of 2021. SkyWest received half of the
$233 million in January 2021 and expects to receive the second
half in February 2021. In
consideration for the funding, approximately $40 million will be in the form of a ten-year,
low interest unsecured term loan, and SkyWest will issue to
Treasury warrants to purchase approximately 98,815 shares of
SkyWest common stock at a strike price of $40.41.
During 2020, SkyWest received $450
million under the payroll support program with Treasury
under the CARES Act. In consideration for the funding, $105 million was in the form of a ten-year, low
interest unsecured term loan. SkyWest recognized the $345 million in grant proceeds as a reduction to
expense during the 2020 year, of which $3
million was recognized in Q4 2020.
Total debt at December 31, 2020
was $3.2 billion, up from
$3.1 billion at September 30, 2020 and $3.0 billion at December
31, 2019. Capital expenditures during Q4 2020 included
$230 million for the purchase of four
new E175 aircraft and 22 used CRJ700 aircraft and $28 million for other maintenance assets. SkyWest
issued $205 million in debt to
acquire the E175 and CRJ700 aircraft in Q4 2020.
Status Update on Previously Announced Deals
SkyWest is coordinating with its major airline partners to optimize
the timing of upcoming fleet deliveries under previously announced
deals in response to COVID-19 schedule reductions. The anticipated
future delivery dates summarized below are based on currently
available information and are subject to change.
Flying contract with Delta Air Lines ("Delta")
- Four new E175 aircraft financed by SkyWest were delivered in Q4
2020
- One new CRJ900 aircraft to be financed by Delta and operated by
SkyWest is scheduled for delivery in 2021
Flying contract with American Airlines ("American") for 20 E175
aircraft
- 18 aircraft deliveries are anticipated in the second half of
2021 and two deliveries are expected in 2022. The aircraft are
scheduled to be placed into service in 2022.
- SkyWest anticipates financing the aircraft through debt
Flying contract with American for CRJ700 aircraft
- SkyWest has 65 CRJ700 aircraft in service with American as of
December 31, 2020
- SkyWest anticipates placing 25 additional CRJ700 aircraft into
service with American ratably throughout 2021
- SkyWest anticipates using its own aircraft not currently under
contract with a partner to fulfill this agreement
Flying contract with Delta for CRJ200 aircraft
SkyWest's capacity purchase agreement with Delta for CRJ200
aircraft expired at the end of 2020 and was not extended. SkyWest
has no outstanding financing obligations on the CRJ200 aircraft
removed from the Delta contract and these aircraft are fully
depreciated. SkyWest's prorate flying arrangement for CRJ200
aircraft with Delta did not terminate as of December 31, 2020.
About SkyWest
SkyWest, Inc. is the holding company for SkyWest Airlines and
SkyWest Leasing, an aircraft leasing company. SkyWest Airlines has
a fleet of over 400 aircraft connecting passengers to over 250
destinations throughout North
America. SkyWest Airlines operates through partnerships with
United Airlines, Delta Air Lines, American Airlines and Alaska
Airlines carrying more than 21 million passengers in 2020 and 43
million passengers in 2019.
SkyWest will host its conference call to discuss its fourth
quarter 2020 results today, February 4,
2021, 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/1088/39619. This press
release and additional information regarding SkyWest, including
access information for the digital rebroadcast of the fourth
quarter 2020 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 expected terms, timing and
benefits of the Consolidated Appropriations Act of 2021 funding,
the ability to draw down loan amounts under its facility pursuant
to the CARES Act and its line of credit, the impact of the COVID-19
outbreak on SkyWest's business, financial condition and results of
operations, the scheduled aircraft deliveries for SkyWest Airlines
in upcoming years, and related removal from service and/or
placement into service of certain aircraft, SkyWest's coordination
with major airline partners to optimize the delivery of aircraft
under previously announced deals, 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, uncertainties regarding the impact of the Consolidated
Appropriations Act of 2021 funding and CARES Act funding and loans
on SkyWest's business and operations, the uncertainty of the
duration, scope and impact of COVID-19, a further spread or
worsening of COVID-19, the consequences of the COVID-19 outbreak to
economic conditions, 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, 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 existing
global COVID-19 pandemic and the outbreak of any other disease or
similar public health threat that affects travel demand or travel
behavior; 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 the duration and impact of the COVID-19
pandemic, 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; 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; 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. Additionally, the risks,
uncertainties and other factors set forth above or otherwise
referred to in the reports that the Company files with the
Securities and Exchange Commission may be further amplified by the
global impact of the COVID-19 pandemic.
SkyWest, Inc. and
Subsidiaries
|
Condensed
Consolidated Statements of Income
|
(Dollars and Shares
in Thousands, Except per Share Amounts)
|
(Unaudited)
|
|
|
Three Months
Ended
December
31,
|
|
Twelve Months
Ended
December
31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
|
Flying
agreements
|
$
569,889
|
|
$
725,092
|
|
$
2,060,801
|
|
$
2,889,265
|
|
Lease, airport
services and other
|
19,748
|
|
18,499
|
|
66,305
|
|
82,698
|
|
Total
operating revenues
|
589,637
|
|
743,591
|
|
2,127,106
|
|
2,971,963
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Salaries,
wages and benefits
|
212,214
|
|
248,978
|
|
826,109
|
|
1,001,746
|
|
Aircraft
maintenance, materials and
repairs
|
187,335
|
|
137,741
|
|
618,989
|
|
514,313
|
|
Depreciation
and amortization
|
110,146
|
|
95,168
|
|
474,959
|
|
368,098
|
|
Airport-related expenses
|
23,694
|
|
29,600
|
|
93,886
|
|
118,837
|
|
Aircraft
rentals
|
15,779
|
|
16,158
|
|
65,316
|
|
71,998
|
|
Aircraft
fuel
|
15,864
|
|
31,546
|
|
61,739
|
|
119,115
|
|
CARES Act
payroll support grant
|
(3,353)
|
|
-
|
|
(345,491)
|
|
-
|
|
Special
items
|
-
|
|
-
|
|
-
|
|
21,869
|
|
Other
operating expenses
|
55,627
|
|
59,095
|
|
222,797
|
|
243,729
|
|
Total
operating expenses
|
617,306
|
|
618,286
|
|
2,018,304
|
|
2,459,705
|
|
OPERATING INCOME
(LOSS)
|
(27,669)
|
|
125,305
|
|
108,802
|
|
512,258
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
Interest
income
|
227
|
|
3,051
|
|
5,879
|
|
14,131
|
|
Interest
expense
|
(31,893)
|
|
(30,871)
|
|
(123,173)
|
|
(127,755)
|
|
Other income
(expense), net
|
(40)
|
|
304
|
|
1,165
|
|
47,671
|
|
Total other
income (expense), net
|
(31,706)
|
|
(27,516)
|
|
(116,129)
|
|
(65,953)
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE
INCOME TAXES
|
(59,375)
|
|
97,789
|
|
(7,327)
|
|
446,305
|
|
PROVISION (BENEFIT)
FOR INCOME TAXES
|
(12,925)
|
|
25,262
|
|
1,188
|
|
106,206
|
|
NET INCOME
(LOSS)
|
$
(46,450)
|
|
$
72,527
|
|
$
(8,515)
|
|
$
340,099
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS (LOSS)
PER SHARE
|
$
(0.93)
|
|
$
1.44
|
|
$
(0.17)
|
|
$
6.68
|
|
DILUTED EARNINGS
(LOSS) PER SHARE
|
$
(0.93)
|
|
$
1.43
|
|
$
(0.17)
|
|
$
6.62
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares
|
|
|
|
|
|
|
|
|
Basic
|
50,181
|
|
50,395
|
|
50,195
|
|
50,932
|
|
Diluted
|
50,181
|
|
50,796
|
|
50,195
|
|
51,375
|
|
SkyWest, Inc. and
Subsidiaries
|
Summary of
Consolidated Balance Sheets
|
(Dollars in
Thousands)
|
(Unaudited)
|
|
|
December
31,
2020
|
|
December
31,
2019
|
Cash and marketable
securities
|
$
825,908
|
|
$
520,172
|
Other current
assets
|
156,894
|
|
240,174
|
Total current
assets
|
982,802
|
|
760,346
|
Property and equipment, net
|
5,330,423
|
|
5,345,823
|
Deposit on
aircraft
|
31,625
|
|
48,858
|
Other long-term
assets
|
542,772
|
|
502,102
|
Total
assets
|
$
6,887,622
|
|
$
6,657,129
|
|
|
|
|
Current portion,
long-term debt
|
$
402,158
|
|
$
364,126
|
Other current
liabilities
|
539,564
|
|
560,550
|
Total current
liabilities
|
941,722
|
|
924,676
|
|
|
|
|
Long-term debt, net
of current maturities
|
2,801,538
|
|
2,628,989
|
Other long-term
liabilities
|
1,004,817
|
|
928,450
|
Stockholders'
equity
|
2,139,545
|
|
2,175,014
|
Total liabilities and
stockholders' equity
|
$
6,887,622
|
|
$
6,657,129
|
SkyWest, Inc. and
Subsidiaries
|
Additional
Operational Information (unaudited)
|
|
SkyWest's fleet in
scheduled service by aircraft type:
|
|
|
December 31,
2020
|
September 30,
2020
|
December 31,
2019
|
E175
aircraft
|
193
|
189
|
156
|
CRJ900
aircraft
|
39
|
39
|
43
|
CRJ700
aircraft
|
90
|
86
|
94
|
CRJ200
aircraft
|
130
|
134
|
190
|
Total aircraft in
service
|
452
|
448
|
483
|
|
As of December 31,
2020, SkyWest leased two CRJ200s, 34 CRJ700s and five CRJ900s to
third parties (these aircraft are excluded from the table
above).
|
Selected
operational data:
|
|
|
Three months ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2020
|
2019
|
Change
|
|
2020
|
2019
|
Change
|
Block hours by
aircraft type:
|
|
|
|
|
|
|
|
E175s
|
124,081
|
133,232
|
(6.9)%
|
|
435,557
|
529,008
|
(17.7)%
|
CRJ900s
|
21,426
|
30,872
|
(30.6)%
|
|
66,640
|
124,860
|
(46.6)%
|
CRJ700s
|
56,313
|
74,151
|
(24.1)%
|
|
200,860
|
298,599
|
(32.7)%
|
CRJ200
|
65,708
|
130,046
|
(49.5)%
|
|
270,281
|
511,938
|
(47.2)%
|
Total block
hours
|
267,528
|
368,301
|
(27.4)%
|
|
973,338
|
1,464,405
|
(33.5)%
|
|
|
|
|
|
|
|
|
Departures
|
157,726
|
214,299
|
(26.4)%
|
|
585,257
|
842,098
|
(30.5)%
|
Adjusted flight
completion
|
99.9%
|
99.9%
|
NC
|
|
99.9%
|
99.9%
|
NC
|
Raw flight
completion
|
99.3%
|
98.4%
|
0.9 pts
|
|
97.8%
|
97.9%
|
(0.1) pts
|
Passengers
carried
|
5,672,695
|
11,093,800
|
(48.9)%
|
|
21,255,931
|
43,660,766
|
(51.3)%
|
Passenger load
factor
|
55.5%
|
82.2%
|
(26.7) pts
|
|
56.4%
|
82.3%
|
(25.9) pts
|
Average trip
length
|
515
|
496
|
3.9%
|
|
500
|
500
|
NC
|
|
Adjusted flight
completion percent excludes weather cancellations. Raw flight
completion includes weather cancellations.
|
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SOURCE SkyWest, Inc.