SkyWest reports a rare first quarter loss

United Express-SkyWest Airlines Bombardier CRJ200 (CL-600-2B19) N917SW (msn 7641) SFO (Mark Durbin), originally uploaded by Airliners Gallery.

SkyWest, Inc. (St. George) today (May 4) reported operating revenues of $866.0 million for the quarter ended March 31, 2011, compared to $632.2 million for the same period last year.

SkyWest also reported a net loss of $(11.1) million, or $(0.21) per diluted share, for the quarter ended March 31, 2011, compared to $15.0 million of net income, or $0.26 per diluted share, for the same period last year.

On November 12, 2010, SkyWest completed the acquisition of ExpressJet Holdings, Inc. (Houston) for a total cash purchase price of $136.5 million, which includes the value of the shares previously owned by Atlantic Southeast Airlines, Inc. (Atlanta), SkyWest’s wholly owned subsidiary. As a result of the acquisition, ExpressJet became a wholly-owned subsidiary of Atlantic Southeast and SkyWest’s consolidated operations and financial results for periods subsequent to the acquisition reflect the addition of 244 regional jet aircraft operated by ExpressJet Airlines, Inc. (Houston) the primary operating entity of ExpressJet.

SkyWest incurred the net loss principally as the result of several primary factors, including a significant loss of block hour production due to weather-related cancellations that resulted in lost revenue, additional crew costs incurred for training and additional expenses related to both the number of airframe heavy inspections and higher than anticipated amounts for these inspections.

Additionally, under United Express agreements for SkyWest Airlines and Atlantic Southeast, 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, 2011, CRJ200 engine expense under these agreements decreased $0.7 million to $14.6 million compared to $15.3 million for the quarter ended March 31, 2010, as a result of decreased engine overhaul expense principally due to the timing of scheduled engine maintenance events. Additionally, SkyWest was reimbursed approximately $7.0 million under its United Express agreements in each of the periods presented. The average number of scheduled engine maintenance events will likely continue each quarter of 2011 and into the middle of 2012.

At March 31, 2011, SkyWest’s fleet totaled 707 aircraft, consisting of 661 regional jets (241 assigned to Delta, 416 assigned to United and Continental, four assigned to AirTran Airways), and 46 EMB-120 turbo prop aircraft (36 assigned to United and 10 assigned to Delta).

SkyWest is the holding company for three scheduled passenger airline operations and an aircraft leasing company and is headquartered in St. George, Utah. SkyWest’s scheduled passenger airline operations include SkyWest Airlines also based in St. George, Utah, Atlantic Southeast based in Atlanta, Georgia and recently acquired ExpressJet Airlines based in Houston, Texas. SkyWest Airlines operates as United Express and Delta Connection carriers under contractual agreements with United and Delta. SkyWest Airlines also operates flights for AirTran under a marketing agreement. Atlantic Southeast operates as United Express and Delta Connection carriers under contractual agreements with United and Delta. ExpressJet Airlines operates as Continental Express and United Express under contractual agreements with Continental Airlines, Inc. and United and is a wholly-owned subsidiary of Atlantic Southeast. System-wide, SkyWest serves markets in the United States, Canada, Mexico and the Caribbean with approximately 3,850 daily departures and a fleet of approximately 707 regional aircraft.

United Express-SkyWest Airlines Route Map: