First Quarter 2023 Summary
- Q1 2023 pre-tax loss of $26 million, net loss of $22 million,
or $0.45 loss per share
- Deferred recognizing $63 million of revenue related to cash
payments received during Q1 2023 under SkyWest’s flying
contracts
- Repurchased 5.1 million shares of common stock for $100 million
during Q1 2023
- Acquired 24 CRJ700s and eight CRJ200s under an early lease
buyout for $125 million
- Secured an amendment with one of SkyWest’s major airline
partners during the quarter to provide increased contractual rates
in consideration of SkyWest’s current pilot pay scales; all four
SkyWest partners are now committed to helping offset higher crew
costs
SkyWest, Inc. (NASDAQ: SKYW) (“SkyWest”) today reported
financial and operating results for Q1 2023, including net loss of
$22 million, or $0.45 loss per share, compared to net income of $18
million, or $0.35 earnings per diluted share, for Q1 2022.
Commenting on the results, Chip Childs, Chief Executive Officer
of SkyWest, said, “We are making solid headway in our production
and performance objectives. We continue to experience exceptionally
high demand for our products and appreciate the ongoing engagement
from each of our partners. I also want to thank our people for
their great work in delivering both an outstanding product and
exceptional reliability through the challenging first quarter.”
During Q1 2023, SkyWest repurchased 5.1 million shares of common
stock for $100 million, which represented 10% of SkyWest’s
outstanding shares as of December 31, 2022. The shares were
repurchased under SkyWest’s previously announced share repurchase
program.
Additionally during Q1 2023, SkyWest acquired 24 CRJ700 aircraft
and eight CRJ200 aircraft under an early lease buyout for $125
million. Pursuant to this transaction, SkyWest avoids making future
lease and lease return cash payments of approximately $90 million,
and SkyWest now owns these aircraft and engines.
Financial Results
Revenue was $692 million in Q1 2023, down $43 million, or 6%,
from $735 million in Q1 2022. SkyWest deferred recognizing $63
million of revenue during Q1 2023 compared to recognizing
previously deferred revenue of $11 million during Q1 2022. The
increase in deferred revenue during Q1 2023 was driven by the terms
relating to fixed monthly cash payments under SkyWest’s previously
announced amended flying contracts. See the “Other Supplemental
Cash Flow Information” section of this release for more
information. The reduction in revenue attributed to deferred
revenue was partially offset by production-driven rate increases
under SkyWest’s flying contracts in Q1 2023 compared to Q1
2022.
Operating expenses were $697 million in Q1 2023, up $14 million,
or 2%, from $683 million in Q1 2022, driven by increases in
employee compensation, including higher pilot pay scales, partially
offset by decreases in other operating costs as a result of lower
Q1 2023 production compared to Q1 2022.
Capital and Liquidity
SkyWest had $936 million in cash and marketable securities at
March 31, 2023, compared to $1.0 billion at December 31, 2022.
Total debt at March 31, 2023 was $3.3 billion, down from $3.4
billion at December 31, 2022. Capital expenditures during Q1 2023
were $103 million, including $86 million capitalized for the 32 CRJ
aircraft acquired under the early lease buyout and other fixed
assets.
Status Update on Previously Announced Agreements
SkyWest anticipates adding two E175 aircraft in Q4 2023 and one
E175 aircraft in 2024 under a flying contract with Delta Air Lines.
SkyWest also anticipates adding one E175 aircraft in 2025 under a
flying contract with Alaska Airlines. Timing of future deliveries
is subject to change.
By the end of 2025, SkyWest is scheduled to operate a total of
240 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
230 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 first
quarter 2023 results today, April 27, 2023, at 2:30 p.m. Mountain
Time. The conference call number is 1-888-330-2446 for domestic
callers, and 1-240-789-2732 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/888777210. This press release and
additional information regarding SkyWest, including access
information for the digital rebroadcast of the first 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,
the impact of 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 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 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 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; 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; 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 (Loss)
(Dollars and Shares in Thousands,
Except per Share Amounts)
(Unaudited)
Three months ended
March 31,
2023
2022
OPERATING REVENUES:
Flying agreements
$
663,838
$
708,063
Lease, airport services and other
27,993
27,089
Total operating revenues
691,831
735,152
OPERATING EXPENSES:
Salaries, wages and benefits
335,201
300,058
Aircraft maintenance, materials and
repairs
142,226
148,413
Depreciation and amortization
94,149
102,745
Aircraft fuel
20,964
25,090
Aircraft rentals
19,528
15,996
Airport-related expenses
18,295
19,205
Other operating expenses
66,172
71,597
Total operating expenses
696,535
683,104
OPERATING INCOME (LOSS)
(4,704
)
52,048
OTHER INCOME (EXPENSE):
Interest income
10,033
425
Interest expense
(33,620
)
(28,592
)
Other income, net
2,174
880
Total other expense, net
(21,413
)
(27,287
)
INCOME (LOSS) BEFORE INCOME TAXES
(26,117
)
24,761
PROVISION (BENEFIT) FOR INCOME TAXES
(4,046
)
7,027
NET INCOME (LOSS)
$
(22,071
)
$
17,734
BASIC EARNINGS (LOSS) PER SHARE
$
(0.45
)
$
0.35
DILUTED EARNINGS (LOSS) PER SHARE
$
(0.45
)
$
0.35
Weighted average common shares:
Basic
49,391
50,480
Diluted
49,391
50,708
SkyWest, Inc. and
Subsidiaries
Summary of Consolidated
Balance Sheets
(Dollars in Thousands)
(Unaudited)
March 31,
December 31,
2023
2022
Cash and marketable securities
$
935,859
$
1,047,215
Other current assets
316,109
324,066
Total current assets
1,251,968
1,371,281
Property and equipment, net
5,537,527
5,524,549
Deposits on aircraft
23,931
23,931
Other long-term assets
420,335
494,792
Total assets
$
7,233,761
$
7,414,553
Current portion, long-term debt
$
443,328
$
438,502
Other current liabilities
708,774
734,041
Total current liabilities
1,152,102
1,172,543
Long-term debt, net of current
maturities
2,855,524
2,941,772
Other long-term liabilities
994,077
952,607
Stockholders' equity
2,232,058
2,347,631
Total liabilities and stockholders'
equity
$
7,233,761
$
7,414,553
SkyWest, Inc. and
Subsidiaries
Additional Operational
Information (unaudited)
SkyWest’s fleet in scheduled service or
under contract by aircraft type:
March 31, 2023
December 31, 2022
March 31, 2022
E175 aircraft
236
236
215
CRJ900 aircraft
36
41
44
CRJ700 aircraft
103
104
114
CRJ200 aircraft
116
136
140
Total aircraft in service or under
contract
491
517
513
As of March 31, 2023, SkyWest leased 35 CRJ700s and five CRJ900s
to third parties and had three CRJ200s that are ready for service
under SkyWest Charter operations (these aircraft are excluded from
the table above).
Selected operational data:
For the three months ended
March 31,
Block hours by aircraft type:
2023
2022
% Change
E175s
160,751
146,177
10.0
%
CRJ900s
20,713
25,855
(19.9
)
%
CRJ700s
52,028
67,878
(23.4
)
%
CRJ200s
42,749
71,083
(39.9
)
%
Total block hours
276,241
310,993
(11.2
)
%
Departures
160,623
176,211
(8.8
)
%
Passengers carried
8,575,870
8,787,367
(2.4
)
%
Adjusted flight completion
99.9
%
98.9
%
1.0
pts
Raw flight completion
97.5
%
96.2
%
1.3
pts
Passenger load factor
80.2
%
77.6
%
2.6
pts
Average trip length
472
515
(8.3
)
%
Adjusted flight completion percent excludes weather
cancellations. Raw flight completion includes weather
cancellations.
Supplemental Cash Flow Information
The Company receives certain fixed monthly cash payments under
its capacity purchase agreements (“CPAs”) that are attributed to
the Company’s overhead costs and certain fixed monthly cash
payments associated with the Company’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 the
Company’s consolidated balance sheet. Recent amendments to certain
CPAs 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 March 31, 2023 and 2022 (dollars in thousands,
unaudited).
Three months ended
March 31,
2023
2022
Revenue recognized in excess of (less
than) fixed cash payments received
$
(63,195
)
$
11,137
As of March 31, 2023
As of March 31, 2022
Cumulative revenue recognized less than
fixed cash payments received
$
(188,008
)
$
(84,354
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230427005722/en/
Investor Relations 435.634.3200
Investor.relations@skywest.com
Corporate Communications 435.634.3553
corporate.communications@skywest.com
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