SkyWest, Inc. (St. George) today reported operating revenues of $921.2 million for the quarter ended March 31, 2012, compared to $866.0 million for the same period last year. SkyWest also reported a net loss of $(0.7) million, or $(0.01) per diluted share, for the quarter ended March 31, 2012, compared to $(11.1) million of net loss, or $(0.21) per diluted share, for the same period last year.
The full report:
SkyWest’s operating and financial results for the quarter ended March 31, 2012 reflected a significant improvement compared to the first quarter of 2011. Specifically, SkyWest generated positive revenue growth, period over period, primarily as a result of flying approximately 16,500 additional block hours during the first quarter of 2012. SkyWest’s improved results also reflected the implementation of cost reduction programs during 2011 from which SkyWest achieved reduced maintenance costs, as well as other benefits. SkyWest also produced better results than it had forecast for the quarter ended March 31, 2012, principally as a result of executing on its return to profitability objectives for 2012. As a consequence of SkyWest’s improved results, SkyWest’s pre-tax loss for the quarter ended March 31, 2012 was $17.3 million less than the quarter ended March 31, 2011. SkyWest reported a pre-tax loss of $1.2 million for the quarter ended March 31, 2012, compared to a pre-tax loss of $18.5 million for the first quarter of 2011. Following are the primary items that affected SkyWest’s financial results for the first quarter of 2012:
- Recorded approximately $30.1 million in additional revenues related to increased block hour production, improved utilization and ground handling contracts
- Reduction of $4.6 million in prorate flying loss
- Recorded an additional $5.7 in United CRJ200 engine overhaul costs
- Recorded an additional $3.8 million in employer benefit costs
- Recorded an additional $4.1 million of loss attributable to SkyWest’s minority investments in Trip Linhas Aereas (“TRIP”) and Mekong Aviation Joint Stock Company (“Air Mekong”)
Commenting on the results, Jerry C. Atkin, Chairman and CEO said “We are very pleased with the improvement in our financial results, quarter over quarter, as well as how we performed compared to our first quarter operating plan for 2012.” He continued, “We executed well on our action plan items and also experienced a higher completion factor of our scheduled flights and on-time arrivals due to better weather in the quarter compared to the same period last year. We remain committed to our return to profitability program for 2012.”
Financial and Operating Results
SkyWest’s total operating revenues increased $55.2 million, or 6.4%, during the quarter ended March 31, 2012, over the same period in 2011. The increase in operating revenues was the result of higher pass-through costs (primarily fuel and engine overhaul costs) under SkyWest’s agreements with its major partners and an increase in block hour production. The increase in operating revenues was offset by a planned reduction in prorate flying block hours of 13.4% resulting in reduced revenues of approximately $6.0 million. In spite of the reducing operating revenues from prorate flying, SkyWest’s revenue per available seat mile for this flying increased 14.6% from improved pricing. After excluding the increased pass-through costs of approximately $31.1 million, for fuel and engine overhauls, and the reduction in prorate flying revenue of $6.0, total operating revenues increased approximately $30.1 million due to the additional block hour production of 3.1% and improved utilization. Total block hours for the quarter ended March 31, 2012 were 556,421 compared to 539,910 for the same period last year.
Total airline expenses (consisting of total operating and interest expenses) increased $34.6 million, or 3.9%, during the quarter ended March 31, 2012, over the same period in 2011. After excluding the increase in fuel costs of $20.7 million, total operating costs and expenses increased $13.8 million or 1.8% which was less than the rate of increase in block hours of 3.1%.
Under United Express agreements for SkyWest Airlines and ExpressJet Airlines, SkyWest recognizes revenue at a fixed hourly rate for mature engine maintenance on regional jet engines and SkyWest recognizes engine maintenance expense on its CRJ200 regional jet engines on an as-incurred basis as maintenance expense. During the quarter ended March 31, 2012, CRJ200 engine expense under these agreements increased $5.7 million to $21.5 million compared to $15.8 million for the quarter ended March 31, 2011, as a result of increased engine overhaul expense due to the timing of scheduled engine maintenance events. SkyWest was reimbursed approximately $9.4 million and $8.2 million for engine overhaul expense, under its United Express agreements, in each of the periods ended March 31, 2012 and 2011, respectively.
At March 31, 2012, SkyWest had $583.3 million in cash and marketable securities, compared to $646.5 million as of December 31, 2011. The reduction in cash and marketable securities during the year ended March 31, 2012 was primarily related to increases in its prepaid aircraft lease amounts and changes in certain other working capital accounts of approximately $65.5 million offset by the issuance of $2.2 million of common stock under SkyWest’s employee stock purchase program. SkyWest’s long-term debt was $1.58 billion as of March 31, 2012, compared to $1.71 billion as of December 31, 2011. The decrease in long-term debt was due primarily to SkyWest’s payment of normal recurring debt obligations. SkyWest has significant long-term lease obligations that are recorded as operating leases and are not reflected as liabilities on SkyWest’s consolidated balance sheets. At a 5.2% discount rate, the present value of these lease obligations was approximately $1.9 billion as of March 31, 2012.
During the quarter ended March 31, 2012, SkyWest achieved the following milestones:
- Completed implementation with US Airways for 14 CRJ200 regional jets
- Completed corporate merger between ExpressJet Holdings and Atlantic Southeast effective on January 1, 2012, with the surviving entity named ExpressJet Airlines, Inc.
- Total fleet as of March 31, 2012 consisted of 727 total aircraft compared to 713 aircraft for the same period last year
SkyWest is the holding company for two scheduled passenger airline operations and an aircraft leasing company and is headquartered in St. George, Utah. SkyWest’s scheduled passenger airline operations consist of SkyWest Airlines also based in St. George, Utah and ExpressJet Airlines based in Atlanta, Georgia. SkyWest Airlines operates as United Express and Delta Connection carriers under contractual agreements with United Airlines, Inc. and Delta Air Lines, Inc. SkyWest Airlines also operates as US Airways Express under a contractual agreement with US Airways, Inc., and operates flights for Alaska Airlines under a contractual agreement. ExpressJet Airlines operates as United Express and Delta Connection carriers under contractual agreements with United and Delta. System-wide, SkyWest serves markets in the United States, Canada, Mexico and the Caribbean with approximately 3,900 daily departures and a fleet of approximately 727 regional aircraft.
Top Copyright Photo: Michael B. Ing.
SkyWest Slide Show: CLICK HERE
Delta Connection-Atlantic Southeast Slide Show: CLICK HERE
Delta Connection-ExpressJet Slide Show: CLICK HERE
Delta Connection-SkyWest Slide Show: CLICK HERE
ExpressJet Slide Show: CLICK HERE
United Express-ExpressJet Slide Show: CLICK HERE
United Express-SkyWest Slide Show: CLICK HERE
Middle Copyright Photo: Mark Durbin.
Bottom Copyright Photo: Brian McDonough.