SkyWest, Inc. Announces First Quarter 2016 Profit

ST. GEORGE, Utah, April 28, 2016 /PRNewswire/ -- SkyWest, Inc. (NASDAQ: SKYW) today reported financial and operating results for the first quarter of 2016, including net income of $27 million or $0.52 per diluted share, up from net income of $10 million or $0.18 per diluted share in Q1 2015.  Pre-tax income for the first quarter of 2016 was $45 million compared to $16 million in Q1 2015.  

Operating income was $62 million, or 8.1% in operating margin, for the first quarter of 2016, compared to $34 million, or 4.5% in operating margin, in Q1 2015.  The improvement in operating margin was primarily due to new aircraft added to profitable flying contracts, economic improvements from fleet transition and certain existing flying contracts, additional financial incentives earned through improved operating performance and a reduction in the number of aircraft operating under unprofitable or less-profitable flying contracts.

Commenting on the results, Chip Childs, SkyWest, Inc. Chief Executive Officer, said "The quarter's strong results reflect the value SkyWest has been able to generate for our partners through solid, reliable operating performance.  The demand for our service and aircraft is strong and we remain focused on continuing to drive incremental improvement in fleet economics to create long-term value for our stakeholders.  The quarter's performance is a huge credit to our 20,000 professionals who deliver a quality product to our passengers and major airline partners."

Q1 2016 Financial Highlights
Revenue was $762 million in Q1 2016, up $2 million from Q1 2015.  The increase in revenue included the net impact of 29 aircraft added to profitable flying agreements and the removal of 66 aircraft from unprofitable or less-profitable flying agreements since Q1 2015.  Q1 2016 revenue also reflected rate increases under certain existing SkyWest flying contracts, additional flying under pro-rate arrangements, and higher contract performance incentives earned compared to Q1 2015. 

Operating expenses were $700 million in Q1 2016, down by $26 million from Q1 2015. This improvement primarily related to lower direct operating costs from fewer aircraft in service, a reduction in fuel costs, maintenance cost savings initiatives, partially offset by additional crew training costs in anticipation of scheduled Embraer E175 aircraft ("E175") deliveries.

Q1 2016 Operational Update  
Flight completion rates at SkyWest Airlines, Inc. ("SkyWest Airlines") and ExpressJet Airlines, Inc. ("ExpressJet") for Q1 2016 and Q1 2015 are summarized as follows:

SkyWest's total aircraft in service decreased by four aircraft during the first quarter of 2016 as follows:

SkyWest's total aircraft in service decreased by 37 aircraft from March 31, 2015 to March 31, 2016 as follows:

Under its fleet transition plan, SkyWest generated approximately 24,000 additional block hours, or a 14% increase, with its dual-class aircraft (E175s and CRJ700s/900s) during Q1 2016, compared to Q1 2015.  SkyWest had a reduction of approximately 54,000 block hours, or a 16% decrease, with its 50-seat and smaller aircraft (ERJ145s/135s, CRJ200s and EMB120s) during Q1 2016, compared to Q1 2015.

The following table outlines SkyWest's anticipated delivery schedule for new E175 aircraft through June 2017:

SkyWest reached an agreement with Alaska to take delivery of five additional E175 aircraft in 2017, resulting in a total of 20 E175 aircraft expected to be in service with Alaska by the second half of 2017.

Q1 2016 Capital and Liquidity Update
SkyWest had $442 million in cash and marketable securities at March 31, 2016, a decrease of $56 million from December 31, 2015.  SkyWest made $35 million in scheduled semi-annual aircraft lease pre-payments during Q1 2016. SkyWest issued $68 million in new long-term debt during Q1 2016 to finance the three new E175s delivered during the quarter.  Total debt, net of principal payments, increased by $11 million during the quarter. 

In the first quarter of 2016, SkyWest made capital investments of $30 million:  $12 million in equity toward the purchase of three E175 aircraft, $5 million for a related spare engine, and $13 million in other capital expenditures. 

For the second quarter of 2016, SkyWest estimates capital investments of $50 million:  $32 million in equity toward the purchase of eight E175 aircraft, $5 million for a related spare engine, and $13 million in other capital expenditures.

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 scheduled daily flights carrying nearly 57 million passengers annually. SkyWest Airlines operates through partnerships with United Airlines, Delta Air Lines, American Airlines and Alaska Airlines. ExpressJet Airlines operates through partnerships with United Airlines, Delta Air Lines and American Airlines. 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 nearly 20,000 employees. This press release and additional information regarding SkyWest can be accessed at inc.skywest.com.

Forward Looking-Statements
In addition to historical information, this release contains forward-looking statements.  SkyWest may, from time to time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements encompass SkyWest's beliefs, expectations, hopes or intentions regarding future events.  Words such as "forecasts", "expects," "intends," "believes," "anticipates," "estimates", "should," "likely" and similar expressions identify forward-looking statements.  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 ability of ExpressJet to realize potential synergies and other anticipated financial impacts of the consolidation of its operations, the possibility that future financial and operating results of ExpressJet may not meet SkyWest's forecasts and the timing of ongoing consolidation of the operations of ExpressJet, if achieved; 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; labor relationships; the impact of global instability; rapidly fluctuating fuel costs; the degree and nature of competition; 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 from management's current expectations are contained in SkyWest's filings with the Securities and Exchange Commission; including the section of SkyWest's Annual Report on Form 10-K for the year ended December 31, 2015, entitled "Risk Factors."

SOURCE SkyWest, Inc.

Related Links

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