Category Archives: American Eagle-SkyWest Airlines

SkyWest, Inc. announces a first quarter 2019 profit

American Eagle Airlines (2nd)-SkyWest Airlines Bombardier CRJ700 (CL-600-2C10) N710SK (msn 10170) LAX (Michael B. Ing). Image: 946297.

SkyWest, Inc. today reported financial and operating results for Q1 2019, including net income of $88 million, or $1.69 per diluted share, compared to net income of $54 million, or $1.03 per diluted share, for Q1 2018. Adjusted net income in Q1 2019 was $69 million, up 27% from Q1 2018 primarily due to SkyWest’s ongoing fleet transition, as SkyWest has added 43 new aircraft since Q1 2018, and reduced aircraft ownership costs resulting from early lease buyouts executed in early 2019.

Commenting on the results, Chip Childs, Chief Executive Officer and President of SkyWest, said, “This quarter was significant for SkyWest as we move forward as one airline with a smaller, but more efficient footprint.  Our team performed well this quarter through a series of severe weather events.  We are encouraged with our progress and are working together with our 14,000 employees to deliver the best possible product to our partners.”

Financial Highlights
Revenue was $724 million in Q1 2019, down from $783 million in Q1 2018 due to the sale of ExpressJet Airlines (“ExpressJet”) in January 2019. Excluding ExpressJet revenue in both periods, revenue increased to $700 million in Q1 2019 from $622 million in Q1 2018 primarily from the impact of adding 35 new E175 and eight new CRJ900 aircraft since Q1 2018.

Operating expenses were $627 million in Q1 2019, down from $695 million in Q1 2018 due to the sale of ExpressJet. Excluding ExpressJet operating expenses in both periods, operating expenses increased to $599 million in Q1 2019 from $528 million in Q1 2018, primarily from the additional aircraft placed into service, higher labor costs and special item operating expenses in Q1 2019.

The adjusted results for the quarter exclude $24.7 million of pre-tax earnings comprised of the gain on the sale of ExpressJet of $46.6 million (pre-tax) and a $21.9 million (pre-tax) expense primarily due to a non-cash write-off of aircraft manufacturer part credits forfeited to settle future lease return obligations.

Operational Update
Flying contract extension
SkyWest announced today that it has agreed to a multi-year extension with American Airlines on 38 CRJ700 aircraft (top).  These aircraft previously had contract maturities scheduled to begin in late 2019.  SkyWest also expects to add two used CRJ700 aircraft to the American contract in Q2 2019 under a multi-year term.

Lease agreement with a third-party for 29 CRJ700 aircraft
SkyWest also announced today that it has agreed to lease 29 CRJ700 aircraft to a third-party for a ten-year term, subject to the finalization of their flying contract.  SkyWest anticipates the aircraft will be placed under lease in increments from mid-2019 to mid-2020.

Delivery schedule under previously announced agreements
E175 aircraft to be financed by SkyWest and operated for Delta Air Lines and Alaska Airlines:

  • Took delivery of one aircraft during Q1 2019 (Delta contract)
  • Scheduled to take delivery of four aircraft in Q2 2019 (Delta contract)
  • Scheduled to take delivery of four aircraft in mid-2020 (Delta contract)
  • Scheduled to take delivery of three aircraft in 2021 (Alaska contract)

SkyWest expects to remove a used CRJ900 aircraft from its contract with Delta as each of these ERJ175 aircraft is placed into service with Delta (total of nine CRJ900 expected removals).  As previously announced, SkyWest anticipates leasing five CRJ900s to a third party under a six-year term and returning four CRJ900s to a lessor following removal of service with Delta.

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

  • Took delivery of three aircraft during Q1 2019
  • Scheduled to take delivery of four aircraft in mid-2019
  • Scheduled to take delivery of eight aircraft 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.

Joint venture with Regional One
SkyWest entered into a joint venture with Regional One during Q1 2019.  The primary purpose of the joint venture is to lease spare engines to third parties.  SkyWest anticipates initiating transactions through the joint venture beginning in Q2 2019, including the transfer of 14 engines into the joint venture.

Previously announced transactions that closed in Q1 2019
In January 2019, SkyWest completed the previously announced sale of ExpressJet to ManaAir, LLC.  The transaction was completed in two parts, through an asset sale and stock sale, for an aggregate sales price of $77 million.  SkyWest loaned $26 million to ManaAir in conjunction with the closing.

SkyWest also completed the previously-announced early leveraged lease buyout on 16 CRJ700s and 36 CRJ200s.  SkyWest used $110 million in Q1 2019 to acquire these aircraft off lease.  SkyWest assumed no debt on these aircraft.

Capital and Liquidity
SkyWest had $544 million in cash and marketable securities at March 31, 2019, down from $689 million at December 31, 2018. During the first quarter of 2019, SkyWest:

  • Used $110 million to acquire 52 CRJ aircraft under an early lease buyout
  • Used $90 million to acquire 16 used CRJ700s previously operated and leased by a SkyWest entity. SkyWest anticipates leasing the majority of airframes and engines to third parties and using a portion of aircraft components as spare parts.
  • Received $51 million net cash from the sale of ExpressJet
  • Used $25 million to repurchase stock, of which $21 million was purchased under SkyWest’s $250 million share repurchase program approved during Q1 2019
  • Used $4 million toward the purchase of one E175 aircraft
  • Used $28 million for other capital investments, primarily related to spare engines, aircraft parts and maintenance assets

Total debt at March 31, 2019 was $3.1 billion, down from $3.2 billion as of December 31, 2018.   Q1 2019 ending debt balance included debt issued for one E175 aircraft acquired during the quarter, offset by principal payments.

Top Copyright Photo (all others by the airline): American Eagle Airlines (2nd)-SkyWest Airlines Bombardier CRJ700 (CL-600-2C10) N710SK (msn 10170) LAX (Michael B. Ing). Image: 946297.

American Eagle-SkyWest aircraft slide show:

Alaska SkyWest route map:

American Eagle route map:

Delta Connection route map:

United Express route map:

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SkyWest Airlines is launching American Eagle flights from Cheyenne to Dallas-Fort Worth in November

American Eagle Airlines (2nd)-SkyWest Airlines Bombardier CRJ200 (CL-600-2B19) N955SW (msn 7817) LAX (Michael B. Ing). Image: 930438.

SkyWest Airlines has announced it will bring American Eagle flights from Cheyenne to Dallas-Fort Worth (DFW)! The new American Eagle flights, operated by SkyWest, will take off beginning November 4, 2018.

The new route will be operated with Bombardier CRJ200s.

Top Copyright Photo (all others by SkyWest): American Eagle Airlines (2nd)-SkyWest Airlines Bombardier CRJ200 (CL-600-2B19) N955SW (msn 7817) LAX (Michael B. Ing). Image: 930438.

American Eagle-SkyWest aircraft slide show:

Route Map:

American to seasonally test the Los Angeles – Flagstaff market

American Eagle Airlines (2nd)-SkyWest Airlines Bombardier CRJ700 (CL-600-2C10) N702SK (msn 10136) LAX (Michael B. Ing). Image: 936836.

American Airlines will operate American Eagle service seasonally on Saturdays in the Los Angeles – Flagstaff, AZ market starting on May 5, 2018. The weekly service will operate until September 2018 to test the market.

Flagstaff Convention and Visitor’s Bureau issued this statement:

Flagstaff Convention and Visitor’s Bureau is pleased to announce that starting May 5, 2018, American Airlines will fly a 70-seat jet aircraft from Los Angeles International Airport (LAX) into Flagstaff every Saturday. The aircraft will include a first-class cabin, and depart LAX at 2 p.m. and arrive at FLG at 3:30 p.m. The flight to LAX will depart Flagstaff at 3:58 p.m., arriving in Los Angeles at 5:43 p.m.

Beginning June 9, 2018, American Airlines will also add a nonstop flight from Dallas-Fort Worth, Texas (DFW) to FLG every Saturday. The flight departs DFW at 11 a.m. and arrives in FLG at 11:30 a.m. The returning flight will depart Flagstaff at 12:45 p.m. and return to DFW at 5:15 p.m. Note arrival and departure times are listed in FLG and DFW local times. This aircraft will also be a 70-passenger jet with a first-class cabin.

Copyright Photo: American Eagle Airlines (2nd)-SkyWest Airlines Bombardier CRJ700 (CL-600-2C10) N702SK (msn 10136) LAX (Michael B. Ing). Image: 936836.

American to end American Eagle service to both Monterey and Santa Fe from Los Angeles

American Airlines 2013 logo

American Airlines (Dallas/Fort Worth) is planning to end American Eagle service from Los Angeles to both Monterey, California and Santa Fe, New Mexico on September 8 per Airline Route. AA is planning to end all service to both stations.

American Eagle (2013) logo

Copyright Photo below: Michael B. Ing/AirlinersGallery.com. Like others, American is also downsizing 50-seat regional jet operations. SkyWest Airlines‘ Bombardier CRJ200 (CL-600-2B19) N492SW (msn 7168) climbs away from Los Angeles International Airport.

American Airlines aircraft slide show (current livery): AG Airline Slide Show

American Eagle-SkyWest Airlines aircraft slide show: AG Airline Slide Show

American to end American Eagle Los Angeles-Santa Barbara service

American Airlines (Dallas/Fort Worth) will end American Eagle Bombardier CRJ200 service between Los Angeles and Santa Barbara on April 1 according to Airline Route.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. How much longer will AA contract for the small 50-seat CRJ200s on feeder routes? Operated by SkyWest Airlines on contract, CRJ200 (CL-600-2B19) N864AS (msn 7502) prepares to land at Los Angeles International Airport (LAX).

American Eagle-SkyWest: AG Slide Show

SkyWest, Inc. reports lower fourth quarter net profit of $8.6 million and a higher net profit of $59 million for 2013

SkyWest, Inc. (SkyWest Airlines and ExpressJet Airlines) (St. George, Utah) reported net income of $8.6 million, or $0.17 per diluted share, for the quarter ended December 31, 2013, compared to net income of  $13.9 million, or $0.27 per diluted share, for the same period last year.

SkyWest also reported net income of $59.0 million, or $1.12 per diluted share, for the twelve months ended December 31, 2013, compared to $51.2 million, or $0.99 per diluted share, for the same period last year.

Quarter Summary

For each of the quarters ended March, June and September of 2013, SkyWest reported improved financial results, on a year-over-year basis, in achieving increases in its fully-diluted earnings per share.  However, SkyWest experienced a decline in its financial results for the quarter ended December 31, 2013 compared to its financial results for the quarter ended December 31, 2012. During the quarter ended December 31, 2013, compared to the quarter ended December 31, 2012, SkyWest experienced increased crew training costs as a result of new regulations regarding pilots (FAR 117) that became effective January 4, 2014 of approximately $3.0 million pretax. SkyWest also experienced increased maintenance costs of approximately $5.0 million, pretax, due primarily to performing additional C-checks related to used aircraft that were added to SkyWest’s fleet during 2013.  Additionally during the quarter ended December 31, 2013, SkyWest incurred approximately $3.0 million, pretax, of costs associated with advanced pilot training and efforts to become certified to operate the new Embraer 175 regional jets scheduled for deliveries beginning in March 2014.

For the quarter ended December 31, 2013, SkyWest generated increased operating revenues (net of fuel, certain engine overhaul, landing fee and station pass-through revenues under SkyWest’s contracts with its major partners), of approximately $23.0 million, or 3.7%, compared to the quarter ended December 31, 2012,  primarily due to additional block hour production of 2.8%  and scheduled rate escalations. The increased operating revenues were offset by increased costs in several areas that resulted in a reduced amount of operating and pre-tax income for the quarter ended December 31, 2013 compared to the quarter ended December 31, 2012.

Following are selected statistics and information from the quarter ended December 31, 2013, compared to the quarter ended December 31, 2012:

  • Pre-tax income declined to $15.1 million, compared to $25.6 million
  • Fully-diluted EPS declined to $0.17, compared to $0.27
  • Increased block hour production 2.8% to 584,594 block hours, compared to 568,808 block hours
  • Increased operating revenues by approximately $23.0 million (net of fuel, certain engine overhaul, landing fees and station pass-through revenues) primarily related to rate escalations under SkyWest’s agreements with its major partners and increased block hour production
  • Increased total aircraft fleet to 757 aircraft as of December 31, 2013, compared to 744 aircraft as ofDecember 31, 2012

Commenting on the results, Jerry C. Atkin, SkyWest’s Chairman and CEO, said, “The decrease in our earnings in the fourth quarter is primarily due to advance preparations for the implementation of FAR 117, the new flight and duty time regulations, and aging maintenance costs on the 50-seat aircraft. We also invested in our future by beginning certification work on the Embraer 175 aircraft that are scheduled for delivery beginning in the first quarter of 2014.”

Financial and Operating Results

Operating revenues totaled $804.4 million for the quarter ended December 31, 2013, compared to $810.7 million for the same period last year or a decrease of $6.3 million.  The decrease was due primarily to the reduction of approximately $29.2 million in fuel expenses, certain engine overhaul amounts, landing fees and station costs which were directly reimbursed by SkyWest’s major partners and recorded as operating revenues.  However, this reduction was mostly offset by recording $23.0 million in additional operating revenues, primarily resulting from rate escalations under SkyWest’s agreements with its major partners and a 2.8% increase in total block hours for the quarter ended December 31, 2013, compared to the quarter ended December 31, 2012.

Total airline expenses (consisting of total operating and interest expenses) increased $4.0 million, or 0.5%, during the quarter ended December 31, 2013, compared to the same period in 2012.  However, after deducting pass-through costs for fuel, certain engine overhaul expenses landing fees and station costs from total operating cost and interest expenses, the remaining total airline expenses increased $33.4 million.  Management estimates that approximately $16.9 million of the increase was due primarily to the 2.8% increase in block hour production and approximately $16.4 million was primarily due to additional maintenance costs, cost increases resulting from new pilot regulations (FAR 117) and costs incurred from certifying a new E175 aircraft type.

Under certain of its agreements with its major partners, SkyWest recognizes revenue at fixed hourly rates for mature engine maintenance on regional jet engines and recognizes engine maintenance expense on its CRJ200 regional jet engines on an as-incurred basis as maintenance expense.  During the quarter ended December 31, 2013, CRJ200 engine expense under these agreements decreased $1.0 million to$9.6 million, compared to $10.6 million for the quarter ended December 31, 2012, primarily as a result of decreased engine overhaul expense due to the timing of scheduled engine maintenance events.  SkyWest was reimbursed approximately $12.7 million and $10.3 million for engine overhaul expense, under its agreements with its major partners, during the quarters ended December 31, 2013 and 2012, respectively.

Liquidity

At December 31, 2013, SkyWest had $670.1 million in cash and marketable securities, compared to$709.4 million as of December 31, 2012.  Cash and marketable securities decreased $39.3 million during the quarter ended December 31, 2013 compared to the balance as of December 31, 2012, due primarily to SkyWest’s payment of $40.0 million (total amount required under agreement) related to deposits on its new order for E175 regional jet aircraft.  SkyWest’s long-term debt was $1.29 billion as of December 31, 2013, compared to $1.47 billion as of December 31, 2012.  The decrease in long-term debt for the twelve-months ended December 31, 2013 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 5.8% discount rate, the present value of these lease obligations was approximately $1.5 billion as of December 31, 2013.

Business Developments

On May 21, 2013, SkyWest announced it had entered into a Capacity Purchase Agreement (CPA) with United Airlines, Inc. to operate 40 new Embraer 175 dual-class regional jet aircraft. The CPA is for 12 years and the new aircraft will be operated by SkyWest’s wholly-owned subsidiary, SkyWest Airlines, Inc. (St. George). Deliveries for these aircraft are scheduled to begin in March 2014 and continue through July 2015.

Additionally, on May 21, 2013 SkyWest announced it reached an agreement with Embraer S.A. for the purchase of 100 new E175 dual-class regional jet aircraft, 40 of which are considered firm orders and the remaining 60 aircraft remain conditional upon SkyWest entering into capacity purchase agreements with other major airlines. SkyWest intends to place the 40 new E175 aircraft into service under the terms of the United CPA discussed above.

On June 17, 2013, SkyWest and Embraer jointly announced an aircraft purchase agreement covering 100 E175-E2 dual-class regional jet aircraft and an option to purchase an additional 100 of the same aircraft.  Deliveries for these E2 aircraft are tentatively planned to start in 2020.

During 2012, SkyWest announced the award of 34 additional dual-class aircraft and the removal of 66 CRJ200 aircraft under its Delta Connection Agreements with Delta Airlines, Inc. (Atlanta).  As of May 2013, all 34 of these additional dual-class aircraft had been delivered. As of December 31, 2013 SkyWest had removed 33 (22 placed in contract with another major partner and 11 removed from SkyWest’s fleet) of the 66 CRJ200 aircraft from service and currently anticipates removing another 29 CRJ200 aircraft during 2014.  SkyWest believes the remaining four CRJ200 aircraft will be removed from its fleet in early 2015.  Additionally, 41 of the 66 CRJ200 aircraft have been financed by Delta and will be returned to Delta with no further obligation by SkyWest.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Even though SkyWest is shrinking its Bombardier CRJ200 fleet, it was fortunate to place some of the grounded CRJ200s with American Airlines as an American Eagle carrier. SkyWest’s Bombardier CRJ200 (CL-600-2B19) N864AS (msn 7502) departs the runway at Los Angeles International Airport.

American Eagle-SkyWest: AG Slide Show

American and American Eagle to add nine new destinations from Los Angeles

American Airlines (Dallas/Fort Worth) is significantly expanding service from Los Angeles International Airport (LAX) this year. In addition to American’s new service between Los Angeles and Raleigh/Durham, North Carolina, which began on April 2, American will begin serving the following new destinations this summer from LAX:

  • Eugene, Oregon, beginning June 12 (operated by SkyWest Airlines)
  • Redmond, Oregon, beginning June 12 (operated by SkyWest Airlines)
  • Pittsburgh, Pennsylvania, beginning August 27
  • Indianapolis, Indiana, beginning August 27
  • Columbus, Ohio, beginning August 27
  • Hartford/Springfield, Connecticut, beginning August 27
  • Northwest Arkansas Regional Airport in Bentonville, Ark., beginning Aug. 27 (operated by American Eagle Airlines)

In February American filed an application with the U.S. Department of Transportation for the right to fly additional United States – Brazil frequencies beginning in 2013. Pending government approval, American intends to use these frequencies to add one new daily round trip service from its Los Angeles hub to Sao Paulo on November 21, expanding the airline’s Latin American network footprint. American currently offers more than 900 weekly flights to 49 cities throughout Latin America, including Mexico, Central and South America.

With these new markets, American will serve 51 domestic and international destinations from its LAX hub. 

Further demonstrating its commitment to the Los Angeles market, American will be deploying its brand new 777-300 ER aircraft on its route between Los Angeles and London Heathrow in June. The 777-300 ER introduces new enhancements to the inflight experience, including fully lie-flat seats in First and Business Class – all with direct aisle access; a walk-up bar for premium-cabin customers that offers snacks and sweets; and a sophisticated entertainment system offering hundreds of hours of audio and video programming options at every seat throughout the aircraft. American was the first U.S. airline to order and take delivery of the state-of-the-art Boeing 777-300 ER and intends to take delivery of 20 of the aircraft over the next few years.

Copyright Photo: Brian McDonough. Boeing 737-823 WL N803NN (msn 29566) arrives at Washington (Reagan National) in the new look. Will new incoming American CEO Doug Parker allow the combined fleet to be repainted in outgoing CEO Tom Horton’s livery?

American Airlines: AG Slide Show