SKYW
$56.76
Skywest
$.82
1.47%
Earnings Details
2nd Quarter June 2019
Wednesday, July 31, 2019 4:01:00 PM
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Summary

Skywest Beats

Skywest (SKYW) reported 2nd Quarter June 2019 earnings of $1.71 per share on revenue of $744.4 million. The consensus earnings estimate was $1.60 per share on revenue of $733.0 million. The Earnings Whisper number was $1.66 per share. Revenue fell 7.6% compared to the same quarter a year ago.

SkyWest Inc, through its subsidiaries offers scheduled passenger service to destinations in the United States, Canada, Mexico and the Caribbean.

Results
Reported Earnings
$1.71
Earnings Whisper
$1.66
Consensus Estimate
$1.60
Reported Revenue
$744.4 Mil
Revenue Estimate
$733.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

SkyWest, Inc. Announces Second Quarter 2019 Profit

ST. GEORGE, Utah, July 31, 2019 /PRNewswire/ --  

Second Quarter Highlights:

  • Net income of $88 million, or $1.71 per diluted share, up from $76 million, or $1.43 per diluted share in Q2 2018
  • Pre-tax income of $115 million, up from $98 million in Q2 2018
  • Placing ten used CRJ700s into a flying contract with American Airlines beginning early 2020

SkyWest, Inc. (NASDAQ: SKYW) ("SkyWest") today reported financial and operating results for Q2 2019, including net income of $88 million, or $1.71 per diluted share, compared to net income of $76 million, or $1.43 per diluted share, for Q2 2018. Pre-tax income in Q2 2019 was $115 million, a 17% increase from Q2 2018 primarily due to SkyWest's ongoing fleet transition. SkyWest has added 25 new E175 aircraft and 11 new CRJ900 aircraft since Q2 2018 and has reduced aircraft ownership costs through early lease buyouts on 52 aircraft executed in early 2019.

Commenting on the results, Chip Childs, Chief Executive Officer and President of SkyWest, said, "This quarter we were pleased to demonstrate our ability to deploy capital and unlock growth opportunities within our partners' existing scope constraints. I want to thank our outstanding SkyWest professionals for the service they provide to our customers."

Financial Highlights
Revenue was $744 million in Q2 2019, down from $806 million in Q2 2018 due to the sale of ExpressJet Airlines ("ExpressJet") in January 2019. Excluding ExpressJet revenue in Q2 2018, Q2 2019 revenue increased $82 million, primarily from adding 36 new aircraft since Q2 2018.

Operating expenses were $600 million in Q2 2019, down from $679 million in Q2 2018 also due to the sale of ExpressJet. Excluding ExpressJet operating expenses in Q2 2018, Q2 2019 operating expenses increased $70 million, primarily from growth in operations as a result of additional aircraft placed into service since Q2 2018 and from higher labor costs.

Operational Update
Flying contract updates
SkyWest announced an agreement with American Airlines ("American") to place ten used CRJ700s under a multi-year contract beginning early 2020. SkyWest anticipates acquiring seven CRJ700 aircraft from a third party and internally sourcing three CRJ700 aircraft through upcoming scheduled contract expirations.

Delivery update on new aircraft for Delta
E175 aircraft to be financed by SkyWest and operated by SkyWest:

  • Four aircraft delivered in Q2 2019
  • Four aircraft scheduled for delivery in mid-2020

SkyWest expects to remove four CRJ900 aircraft under its Delta agreement in 2020 and to return those aircraft to the lessor. SkyWest has previously removed five CRJ900s from service under its agreement with Delta and is leasing these five aircraft to a third party under a six-year term.

CRJ900 aircraft to be financed by Delta and operated by SkyWest for Delta:

  • Three aircraft delivered in Q2 2019
  • One aircraft scheduled for delivery in Q3 2019
  • Eight aircraft scheduled for delivery in 2020

SkyWest expects to remove a used CRJ700 from its contract with Delta as each of these CRJ900 financed by Delta is placed into service. As previously announced, SkyWest anticipates transitioning the CRJ700s removed under this arrangement with Delta to an agreement with American.

Lease agreement with a third party for 29 CRJ700 aircraft
SkyWest placed one of 29 CRJ700 aircraft under a previously announced lease agreement to a third party for a ten-year term during Q2 2019. SkyWest anticipates the remaining aircraft will be placed under lease in increments through mid-2020.

Capital and Liquidity

SkyWest had $550 million in cash and marketable securities at June 30, 2019, up from $544 million at March 31, 2019. During the second quarter of 2019, SkyWest:

  • Used $35 million to repurchase stock under SkyWest's $250 million share repurchase program
  • Used $14 million toward the purchase of four E175 aircraft (total capital expenditure of $88 million on the acquired aircraft including debt issued)
  • Used $23 million for other capital investments, primarily related to spare engines, aircraft parts and maintenance assets, net of proceeds from sale of fixed assets

Total debt at June 30, 2019 and March 31, 2019 was $3.1 billion. Q2 2019 ending debt balance included debt issued for four E175 aircraft acquired during the quarter, offset by principal payments.

About SkyWest

SkyWest, Inc. is the holding company for SkyWest Airlines and SkyWest Leasing, an aircraft leasing company. SkyWest Airlines has a fleet of nearly 500 aircraft connecting millions of passengers each month to over 250 destinations and provides commercial air service in cities throughout North America with nearly 2,500 daily flights. SkyWest Airlines operates through partnerships with United Airlines, Delta Air Lines, American Airlines and Alaska Airlines to carry more than 38 million passengers annually. Based in St. George, Utah, SkyWest continues to set the standard for excellence across the regional industry with exceptional value for customers, shareholders and its more than 13,000 employees.

SkyWest will host its conference call to discuss second quarter 2019 results today, July 31, 2019, 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/1088/30921. This press release and additional information regarding SkyWest, including access information for the digital rebroadcast of the second quarter 2019 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 the continued demand for our product, the potential benefits resulting from the sale of ExpressJet, including reduced risk, increased flexibility, efficiency and improved positioning for market opportunities, the scheduled aircraft deliveries for SkyWest Airlines in upcoming years and the related removal from service and/or placement into service of certain aircraft, 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 for any reason. 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, 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 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; 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; 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,


2019


2018


2019


2018

OPERATING REVENUES








 Flying agreements

$   725,335


$   793,637


$   1,425,336


$   1,561,602

 Airport customer service and other

19,048


11,878


42,741


27,313

  Total operating revenues

744,383


805,515


1,468,077


1,588,915









OPERATING EXPENSES








 Salaries, wages and benefits

243,766


293,677


501,354


600,396

 Aircraft maintenance, materials and repairs    

124,789


139,774


243,051


281,380

 Depreciation and amortization

90,148


82,714


180,134


160,298

 Airport-related expenses

30,782


25,890


61,429


55,197

 Aircraft fuel

30,851


30,011


56,507


56,950

 Aircraft rentals

18,006


37,508


38,164


82,188

 Special items

-


-


21,869


-

 Other operating expenses

61,948


69,263


125,057


137,653

  Total operating expenses

600,290


678,837


1,227,565


1,374,062

OPERATING INCOME

144,093


126,678


240,512


214,853

OTHER INCOME (EXPENSE)








 Interest income

3,731


1,705


7,538


3,409

 Interest expense

(32,770)


(28,811)


(65,278)


(55,045)

 Other income (expense), net

281


(1,245)


47,006


2,313

 Total other income (expense), net

(28,758)


(28,351)


(10,734)


(49,323)









INCOME BEFORE INCOME TAXES

115,335


98,327


229,778


165,530

PROVISION FOR INCOME TAXES

27,283


22,468


53,545


35,310

NET INCOME

$   88,052


$   75,859


$   176,233


$   130,220









BASIC EARNINGS PER SHARE

$    1.72


$    1.46


$    3.44


$    2.51

DILUTED EARNINGS PER SHARE

$    1.71


$    1.43


$    3.40


$    2.46









Weighted average common shares








 Basic

51,145


52,046


51,293


51,983

 Diluted

51,477


52,913


51,787


52,973

 

SkyWest, Inc. and Subsidiaries

Summary of Consolidated Balance Sheets

(Dollars in Thousands)

(Unaudited)



June 30,

2019


December 31,

2018

Cash and marketable securities

$    549,561


$    689,329

Other current assets

230,370


331,465

Total current assets

779,931


1,020,794

Property and equipment, net

5,240,140


4,963,732

Deposit on aircraft

50,906


42,012

Other long-term assets

509,042


286,674

Total assets

$   6,580,019


$  6,313,212





Current portion, long-term debt

$    345,253


$    350,206

Other current liabilities

582,075


574,620

Total current liabilities

927,328


924,826





Long-term debt, net of current maturities

2,719,041


2,809,768

Other long-term liabilities

881,405


614,337

Stockholders' equity

2,052,245


1,964,281

Total liabilities and stockholders' equity

$   6,580,019


$   6,313,212

 

Unaudited Operating Highlights – SkyWest Airlines



Three Months Ended

June 30,


Six Months Ended

June 30,


2019

2018

 Change


2019

2018

 Change

Block hours

370,782

344,284

7.7%


720,171

673,228

7.0%

Departures

215,052

199,587

7.7%


408,527

385,065

6.1%









Adjusted flight completion

99.9%

99.9%

0.0 pts


99.9%

99.9%

0.0 pts

Raw flight completion

98.3%

98.9%

(0.6) pts


97.4%

98.3%

(0.9) pts









Passengers carried

11,383,187

10,257,532

11.0%


20,998,133

19,317,005

8.7%

Passenger load factor

83.9%

82.7%

1.2 pts


81.4%

80.8%

0.6 pts









Average passenger trip length

496

488

1.6%


501

490

2.2%

On January 22, 2019, SkyWest completed the sale of ExpressJet to a third party. The unaudited operating highlights above include SkyWest Airlines only and exclude ExpressJet in both periods for comparability purposes.

Adjusted flight completion percent excludes weather cancellations. Raw flight completion includes weather cancellations.

SkyWest, Inc. and Subsidiaries
Additional Operational Information (unaudited)

SkyWest's total fleet in service increased by six aircraft during Q2 2019, as follows:






Aircraft in scheduled service at March 31, 2019:



476


Additions:





New E175 aircraft:

4




New CRJ900 aircraft:

3




Total new aircraft added:



7







Used aircraft transitioned back into service, net



3







Removals:





CRJ900 aircraft:



(4)





Aircraft in scheduled service at June 30, 2019:



482


SkyWest's total fleet in service decreased by 101 aircraft over the last 12 months, as follows:






Aircraft in scheduled service at June 30, 2018:



583


Additions:





New E175 aircraft:

25




New CRJ900 aircraft:

11




Total new aircraft added:



36







Used aircraft transitioned back into service, net



6







SkyWest Airlines removals:





CRJ900 aircraft:



(5)


ExpressJet removals:





ERJ145 aircraft:

(100)




CRJ700 aircraft:

(38)







(138)


Aircraft in scheduled service at June 30, 2019:



482


 

SkyWest, Inc. and Subsidiaries

Additional Operational Information (continued and unaudited)


Completed Block Hours by Aircraft Type



Three months ended June 30,


Six months ended June 30,

SkyWest Airlines:

2019


2018


Variance %


2019


2018


Variance %

E175s

133,247


109,383


21.8%


259,996


208,975


24.4%

CRJ900s

31,428


28,414


10.6%


62,393


56,410


10.6%

CRJ700s

77,068


66,719


15.5%


148,836


133,066


11.9%

CRJ200s

129,039


139,768


(7.7)%


248,946


274,777


(9.4)%

Total Block Hours

370,782


344,284


7.7%


720,171


673,228


7.0%

 

Aircraft in Scheduled Service and Block Hour Production Forecast for 2019



As of

12/31/2018


As of

3/31/2019


As of

6/30/2019


As of

9/30/2019


As of

12/31/2019



SkyWest Airlines aircraft (1):

(Actual)


(Actual)


(Actual)


(Estimate)


(Estimate)



E175s

146


147


151


151


151



CRJ900s

41


43


42


43


43



CRJ700s

99


99


99


98


98



CRJ200s

184


187


190


190


191



Total SkyWest Airlines

470


476


482


482


483
















As of

12/31/2018











ExpressJet aircraft (1):

(Actual)











ERJ145s

100











CRJ200s

16











CRJ700s

10











Total ExpressJet

126












Q4 2018


Q1 2019


Q2 2019


Q3 2019


Q4 2019


Total 2019

SkyWest Airlines (2):

(Actual)


(Actual)


(Actual)


(Estimate)


(Estimate)


(Estimate)

Block Hours

351,928


349,389


370,782


375,000


369,000


1,464,000



(1)

The aircraft count in the table above excludes aircraft removed from SkyWest's scheduled service. Actual fleet counts may vary from the forecast due to timing of aircraft removed from service, timing of aircraft placed into service when transitioning between flying contracts, and timing of new aircraft deliveries. 




As of June 30, 2019, SkyWest leased four CRJ200s, one CRJ700 and five CRJ900s to third parties (these aircraft are excluded from the table above).



(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. Actual block hours presented for Q4 2018 and Q1 2019 in the table above exclude block hours operated by ExpressJet prior to the sale of ExpressJet on January 22, 2019. ExpressJet generated approximately 17,000 block hours in the month of January 2019 through the date of sale. ExpressJet also generated 81,500 block hours in Q4 2018.

 

SkyWest, Inc. Logo

 

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SOURCE SkyWest, Inc.