Category Archives: ExpressJet Airlines

SkyWest reports a second quarter net profit of $31.5 million

SkyWest, Inc. (SkyWest Airlines and ExpressJet Airlines) (St. George, Utah) reported its financial and operating results for the quarter ended on June 30, 2015:

SkyWest generated $31.5 million of net income for Q2 2015, or $0.61 per diluted share. This represents an improvement of $46.2 million from Q2 2014, which had a net loss of $(14.7) million, or $(0.29) per diluted share. Operating income for Q2 2015 was $70 million, which represents SkyWest’s best quarterly operating income since 2008.

SkyWest reported $41 million of net income for the first half of 2015, or $0.79 per diluted share, a $79 million improvement compared to the first half of 2014 which had a net loss of $(38) million, or $(0.73) per diluted share.

Q2 2015 Financial Highlights

Pre-tax income increased $58 million in Q2 2015 from Q2 2014, primarily due to improved operating performance, additional flying contracts with improved profitability and a reduction in the number of aircraft operating under unprofitable flying contracts.
SkyWest generated $135 million in EBITDA in Q2 2015, compared to $77 million in Q2 2014. For the first half of 2015 EBITDA was $234 million, compared to $112 million for the first half of 2014.
Revenue included improvements of $32 million from the additional E175 operations, improved contract rates from renewals of SkyWest’s existing flying contracts and improved contract performance incentives compared to Q2 2014. Revenue also improved from Q2 2014 by $11 million from higher flight completion rates. These improvements provided a significant offset to the revenue decrease from a reduced fleet size and less scheduled production for a net decrease in revenue of $28 million year over year.
Operating expenses were down by $85 million compared to Q2 2014, primarily driven by operating efficiencies from improved completion rates, a net decrease in production, maintenance cost initiatives and a reduction in fuel costs.

Q2 2015 Operational Update

Excluding weather cancellations, the adjusted flight completion rate for ExpressJet Airlines, Inc. (“ExpressJet”) improved to 99.8% in Q2 2015 from 99.0% in Q2 2014. The adjusted flight completion rate for SkyWest Airlines, Inc. (“SkyWest Airlines”) also improved to 99.2% in Q2 2015 from 99.0% in Q2 2014.
Including weather cancellations, ExpressJet’s raw flight completion rate was 97.5% in Q2 2015 compared to 95.3% in Q2 2014. SkyWest Airlines’ raw flight completion rate improved to 98.4% in Q2 2015 compared to 97.4% in Q2 2014.
Total aircraft in service went to 676 at June 30, 2015, from 693 at March 31, 2015, summarized as follows:

1. Added six new E175 aircraft with United Air Lines, Inc. (“United”)

2. Added three new E175 aircraft with Alaska Air Group (“Alaska Airlines”)

3. Added ten used ERJ 145 aircraft with American Airlines, Inc. (“American”)

4. Removed 24 ERJ 145/ERJ 135 aircraft from service

5. Removed twelve EMB-120 turboprop aircraft from service

Under its fleet transition, SkyWest generated approximately 24,000 additional block hours with its dual class aircraft (CRJ700s/900s and E175s) compared to Q2 2014. SkyWest also had a reduction of approximately 72,000 block hours with its 50-seat and smaller sized aircraft (CRJ200s, ERJ145s/135s and EMB120s) compared to Q2 2014. The total aircraft in service decreased to 676 at June 30, 2015 from 752 at June 30, 2014.
Under an agreement announced in Q2 2015, SkyWest Airlines will place 8 additional E175 aircraft into service with Alaska Airlines, for a total of 15 E175s with Alaska Airlines. SkyWest Airlines is scheduled to take delivery of the remaining twelve new E175 aircraft for Alaska Airlines between Q4 2015 and Q4 2016.
Under a previously announced agreement, SkyWest Airlines is scheduled to take delivery of five new E175 aircraft for United during Q3 2015.
Commenting on the results, Chip Childs, SkyWest, Inc. President, said,

“Our second quarter results reflect meaningful progress in our action plans to secure profitable flying contracts, remove unprofitable aircraft and provide solid operating performance. These actions are the primary drivers for the strong earnings momentum we are generating. We remain committed to disciplined deployment of capital and resources as we continue the process of optimizing our fleet size and mix.”

Q2 2015 Capital and Liquidity Update

SkyWest had $505 million in cash and marketable securities at June 30, 2015, an increase of $24 million from March 2015. SkyWest made capital investments of $40 million during the quarter to acquire nine E175 aircraft including spare parts and engines.
SkyWest repurchased 1.25 million shares of its common stock for $18.7 million in cash during Q2 2015

The company issued $229 million in new long term debt to finance spare engines and the nine new E175s delivered during the quarter.
SkyWest anticipates using approximately $30 million in cash as investments in E175 aircraft scheduled for delivery in Q3 and Q4 of 2015.

SkyWest’s two airline companies provide commercial air service in cities across the United States, Canada, Mexico and the Caribbean with more than 3,500 scheduled daily flights. SkyWest Airlines operates through partnerships with United, Delta, US Airways, American and Alaska Airlines. ExpressJet operates through partnerships with United, Delta and American.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. SkyWest is rapidly reducing the amount of 50-seat regional jets as the report states above. Its largest Bombardier CRJ200 customer is United Airlines but that too will continue to be reduced. Bombardier CRJ200 (CL-600-2B19) N956SW (msn 7871) in United Express colors departs from Los Angeles International Airport.

United Express-SkyWest aircraft slide show:

SkyWest Route Map: (click on the map for the full size view):

ExpressJet Route Map (click on the map for the full size view):

SkyWest reports first quarter net income of $9.6 million, downsizes the fleet by 24 aircraft

SkyWest, Inc. (SkyWest Airlines and ExpressJet Airlines) (St. George, Utah) reported net income of $9.6 million, reversing a previous net off of $22.9 million in the same quarter a year ago.

The company removed 15 Embraer EMB-120 Brasilias from service along with 29 50-seat aircraft previously operated for United Express. The represents a net reduction in the combined fleet of 24 aircraft. SkyWest will further reduced the fleet by another 60 aircraft by the end of this year. The company is eliminating unprofitable aircraft and contract routes.

Here is the full financial report:

SkyWest, Inc. reported financial and operating results for the quarter ended March 31, 2015.

SkyWest generated $9.6 million of net income, or $0.18 per diluted share, for Q1 2015. This represents an after-tax improvement of $32.5 million from Q1 2014, which had a net loss of $(22.9) million, or $(0.44) per diluted share.

Q1 2015 Financial Highlights

 Pre-tax income increased $59 million from Q1 2014 primarily due to improved operating performance, additional flying contracts and improved recovery from weather disruptions.
 SkyWest generated $100 million in EBITDA in Q1 2015, compared to $35 million in Q1 2014.
 Revenue included improvements of $21 million from higher flight completion rates and $33 million from the additional E175 operations, improved contract rates from renewals and extensions and improved contract performance incentives. These improvements provided a significant offset to the anticipated revenue decrease from a reduced fleet size and production.
 Operating expenses were down by $74 million compared to Q1 2014, primarily driven by improved operating efficiencies and a net decrease in production.

Q1 2015 Operational Update

 ExpressJet’s adjusted completion rate significantly improved to 99.6% in Q1 2015 from 98.0% in Q1 2014. SkyWest Airlines adjusted completion rate also improved to 99.3% in Q1 2015 from 99.0% in Q1 2014.
 ExpressJet reduced its number of total cancelled flights, including weather cancellations, to 7,300 flights, or 4.5% of scheduled flights, in Q1 2015, from approximately 20,400, or 10.6% of scheduled flights, in Q1 2014. Additionally, SkyWest Airlines reduced its number of total cancelled flights, including weather cancellations, to 3,500 flights, or 2.3% of scheduled flights, in Q1 2015, from 6,400 flights, or 4.1% of scheduled flights, in Q1 2014.

April 30, 2015

 SkyWest was named one of “America’s Best Employers 2015” by Forbes ®. SkyWest is the only regional airline company included on the 2015 list.
 The reduction in ExpressJet’s ERJ145 operations was the primary driver in SkyWest’s 6.4% reduction in departures and a 5.5% reduction in block hours compared to Q1 2014.
 Total aircraft in service went to 693 at March 31, 2015 from 717 December 31, 2014, summarized as follows:

o Added nine new E175 aircraft with United

o Added five used 50-seat aircraft with Delta and six used 50-seat aircraft with American

o Removed 15 EMB120 aircraft from service

o Removed 29 50-seat aircraft from service previously operated with United

 Under a previously announced agreement with Alaska Airlines, SkyWest Airlines is scheduled to take delivery of seven new E175 aircraft between Q2 2015 and the Q1 2016.

Commenting on the results, Chip Childs, SkyWest, Inc. President said, “Our first quarter results reflect strong progress on our long-term objectives to improve operating performance and reduce the number of aircraft operating in unprofitable flying contracts. During the quarter we continued execution of our fleet transition plan and we expect this transition to continue through 2016. First quarter’s positive results demonstrate solid execution of these long-term strategic objectives to improve profitability.”

Q1 2015 Capital and liquidity update

 SkyWest had $480 million in cash and marketable securities at March 31, 2015. Cash and marketable securities decreased $79 million during Q1 2015, primarily due to $46 million in scheduled semi-annual aircraft lease pre-payments and SkyWest’s investment of $36 million to acquire E175 aircraft and $10 million to acquire E175 spare parts and engines.
 Long-term debt increased $164 million from December 31, 2014 to March 31, 2015. The increase was primarily due to the issuance of $203 million of long-term debt for nine E175 aircraft delivered during Q1 2015, partially offset by principal payments made on total outstanding debt.

Copyright Photo: Mark Durbin/AirlinersGallery.com. SkyWest removed 15 Embraer EMB-120ER Brasilias from service during the quarter. Embaer EMB-120ER Brasilia N560SW (msn 120334) prepares to taxi from the gate at San Francisco International Airport (SFO).

SkyWest Airlines aircraft slide show (in-house liveries):

United Airlines reports record first quarter net income of $508 million, announces its fleet plans including 10 Boeing 777-300 ERs

United Airlines (UAL) (United Continental Holdings, Inc.) (Chicago) today reported first-quarter 2015 net income of $582 million, or $1.52 per diluted share, excluding $74 million of special items. Including special items, UAL reported first-quarter net income of $508 million, or $1.32 per diluted share. These results are a record first-quarter profit for the company.

UAL earned a 17.1 percent return on invested capital for the 12 months ended March 31, 2015.
UAL’s consolidated passenger revenue per available seat mile (PRASM) increased 0.4 percent for first-quarter 2015 compared to first-quarter 2014.

First-quarter 2015 consolidated unit costs (CASM), excluding special charges, third-party business expenses, fuel and profit sharing, decreased 1.5 percent year-over-year on a consolidated capacity increase of 0.1 percent. First-quarter 2015 CASM, including those items, decreased 13.1 percent year-over-year.

In the quarter, UAL returned approximately $200 million to shareholders as part of its previously announced $1 billion share buyback program.

In the quarter, UAL prepaid approximately $120 million of debt and announced its intention, in the second quarter, to prepay $601 million of its 6 percent notes due 2026 and 2028.

“This quarter we reported a profit of nearly $600 million, excluding special items, a $1 billion improvement compared to the first quarter of 2014, and I’d like to thank the United team for all their great work,” said Jeff Smisek, UAL’s chairman, president and chief executive officer. “We continued to improve our operational reliability and deliver products that enhance our customers’ experience, including new aircraft, improved food, new inflight entertainment options and modern facilities. We are making significant progress on our long-term plan to reduce costs, improve our margins and grow our earnings, and expect our second quarter pre-tax margin to be between 12 and 14 percent, excluding special items.”

First-Quarter Revenue and Capacity

For the first quarter of 2015, total revenue was $8.6 billion, a decrease of 1.0 percent year-over-year. First-quarter consolidated passenger revenue increased 0.5 percent to $7.4 billion, compared to the same period in 2014. Ancillary revenue per passenger in the first quarter increased 8.6 percent year-over-year to more than $23 per passenger. First-quarter cargo revenue grew 15.8 percent year-over-year to $242 million. Other revenue in the first quarter decreased 14.2 percent year-over-year, mostly due to the reduction in sales of fuel to a third party. The corresponding expense decline from this reduction appears in third-party business expense.

Consolidated revenue passenger miles increased 0.1 percent and consolidated available seat miles increased 0.1 percent year-over-year for the first quarter, resulting in a first-quarter consolidated load factor of 81.1 percent.

First-quarter 2015 consolidated PRASM increased 0.4 percent and consolidated yield increased 0.4 percent compared to the first quarter of 2014.

“This quarter our PRASM performance reflected good progress on our revenue initiatives,” said Jim Compton, UAL’s vice chairman and chief revenue officer. “We will continue to match capacity with demand while making the appropriate network, fleet and product decisions to enhance revenue and margin performance, while improving our customers’ experience.”

First-Quarter Costs

First-quarter consolidated CASM, excluding special charges, third-party business expense, fuel and profit sharing, decreased 1.5 percent compared to the first quarter of 2014. The improved cost performance was driven by the better-than-expected performance from the company’s Project Quality efficiency program and strong U.S. dollar. First-quarter consolidated CASM including those items decreased 13.1 percent.

First-quarter total operating expenses, excluding special charges, decreased $1.19 billion, or 13.2 percent, year-over-year. Including special charges, total operating expenses decreased $1.18 billion, or 13.0 percent, in the first quarter versus the same period in 2014.

First-Quarter Liquidity and Cash Flow

In the first quarter, UAL generated over $1 billion in free cash flow, and ended the quarter with $7.0 billion in unrestricted liquidity, including $1.35 billion of undrawn commitments under its revolving credit facility. During the first quarter, the company had gross capital expenditures of $794 million, excluding fully reimbursable projects. The company contributed approximately $180 million to its pension plans and made debt and capital lease principal payments of $320 million in the first quarter, including approximately $120 million of prepayments. UAL also announced its intention to prepay the remaining $303 million of 6 percent notes due 2026 on April 1, 2015 and to prepay $298 million of 6 percent notes due 2028 on May 1, 2015.

As part of UAL’s $1 billion share buyback program, the company spent approximately $200 million in share repurchases in the first quarter. Through the first quarter, UAL has returned a total of approximately $520 million to shareholders under the program.

For the 12 months ended March 31, 2015, the company’s return on invested capital was 17.1 percent.

For more information on UAL’s second-quarter 2015 guidance, please visit ir.united.com for the company’s investor update.

Fleet Updates

Today, UAL announced refinements to its fleet plan, which will allow the company to achieve longer-term network needs without increasing its outlook for capacity or gross capital expenditures over the next several years. These adjustments will accelerate the company’s network initiatives as it transitions flying into the mainline operation from the regional operation, increases average gauge and reduces reliance on 50-seat aircraft. As part of this effort, the company will:

Complete the removal of more than 130 50-seat aircraft from its schedule by the end of 2015. UAL will remove additional 50-seat aircraft in 2016 and beyond as aircraft come off lease.

Above Copyright Photo: Brian McDonough/AirlinersGallery.com. United is removing rapidly its smaller regional jets. Operated by ExpressJet Airlines, Embraer ERJ 145XR (EMB-145XR) N12166 (msn 145831) approaches the runway at Baltimore/Washington (BWI).

Exchange 10 787 orders with Boeing for 10 777-300 ERs for delivery beginning in 2016. The new 777-300 ER aircraft will provide attractive upgauge and range opportunities to the company at competitive economics.

Extend the life of 11 additional 767-300 ER aircraft. The company now plans to extend the life of all 21 767-300 ER through investments in winglets, reliability improvements and interior modifications, which will improve financial performance and make the aircraft more customer pleasing.

Above Copyright Photo: SPA/AirlinersGallery.com. United has made the decision to extend the operating life of all 21 Boeing 767-300 ER aircraft. United is also inserting some international Boeing 777-200 and 757-200 aircraft back into the domestic market.

Reconfigure and transition 10 777-200 aircraft currently used in international markets into the domestic network, and position a number of its trans-Atlantic 757-200 fleet into the domestic and Latin markets, with the extension of the 767-300 ER aircraft.

Acquire additional used narrowbody aircraft. The company is in final negotiations regarding the lease of 10 to 20 used narrowbody aircraft for delivery over the next few years. In addition, the company plans to continue to seek other opportunities to acquire used aircraft to meet its needs as market conditions allow.

These changes will not impact the company’s current 2015 capacity guidance, and are consistent with the company’s focus on capacity discipline, and will not alter the company’s current gross annual capital expenditure guidance of $2.7 billion to $2.9 billion over the next three to four years.

“These changes are part of our strategy to improve operational reliability, grow capacity with demand, and enable us to achieve our long-term goal to improve margins and return on invested capital,” said John Rainey, UAL’s executive vice president and chief financial officer. “Customers tell us they prefer larger aircraft, and these fleet modifications will provide more opportunity for our customers to travel on the type of aircraft they prefer.”

Top Copyright Photo: SPA/AirlinersGallery.com. United will exchange 10 Boeing 787 orders with Boeing for 10 777-300 ERs for delivery beginning in 2016. According to the carrier, “the new 777-300 ER aircraft will provide attractive upgauge and range opportunities to the company at competitive economics.” Boeing 787-8 Dreamliner N26910 (msn 34826) climbs away from London (Heathrow).

United Airlines aircraft slide show (current livery only):

SkyWest reports a net loss of $27.9 million in the 4Q, a net loss of $24.2 million for 2014

SkyWest, Inc. (SkyWest Airlines and ExpressJet Airlines) (St. George, Utah) today reported financial and operating results for the quarter ended December 31, 2014.

Highlights are as follows:

Excluding special items, SkyWest’s pre-tax income was $33.5 million for the December 2014 quarter, an increase of $18.4 million over the December 2013 quarter. SkyWest’s net loss, including special items, was $(27.9) million, or $(0.54) per diluted share, for the December 2014 quarter, compared to net income of $8.6 million, or $0.17 per diluted share, for the December 2013 quarter.

The December 2014 quarter includes special item expenses of $70.0 million pre-tax ($43.6 million after-tax) due to the accelerated retirement of SkyWest’s EMB-120 turboprop aircraft and a code-share agreement modification that shortened the contract term for ExpressJet’s operation of the ERJ 145 aircraft type.

SkyWest’s pre-tax income for the December 2014 quarter, excluding special items, increased 122% from the December 2013 quarter, despite a 6.6% reduction in departures and a 4.4% reduction in completed block hours, from the December 2013 quarter. Excluding the special items, the increase in pre-tax income from the December 2013 quarter was primarily due to higher unit revenue from new and renewed flying arrangements at improved rates as described in more detail below.

For the 2014 year, SkyWest’s pre-tax income, excluding special items, was $58.4 million, compared to $98.5 million for the 2013 year. SkyWest’s net loss, including special items, was $(24.2) million, or $(0.47) per diluted share, for the 2014 year, compared to net income of $59.0 million, or $1.12 per diluted share, for the 2013 year.

Significant operational and commercial items related to the December 2014 quarter include:

SkyWest Airlines took delivery of six E175 aircraft during the quarter under its flying contract with United, which resulted in a total of 20 E175 deliveries for calendar 2014.

SkyWest is scheduled to take delivery of the remaining 20 E175s under its United agreement during the first three quarters of 2015.

SkyWest Airlines reached an agreement with Alaska to operate seven new E175 aircraft with deliveries scheduled between the third quarter of 2015 and the first quarter of 2016.

SkyWest Airlines reached an agreement with Delta to operate 12 additional used CRJ200 aircraft that SkyWest Airlines intends to lease from Delta. The aircraft deliveries started in December 2014 and are scheduled to continue through the second quarter of 2015.

SkyWest Airlines started the removal of 43 EMB-120 turboprop aircraft from service and is expected to be an all-jet operator by the conclusion of the second quarter of 2015. As of December 31, 2014, SkyWest owned 18 EMB-120s and leased 25 EMB-120s.

For the second consecutive quarter, ExpressJet’s operational reliability improved year-over-year to a 99.6% adjusted completion rate for the December 2014 quarter compared to 99.1% for the December 2013 quarter.

ExpressJet reached an agreement with American to operate 15 used ERJ 145 aircraft that ExpressJet intends to lease from American. The American ERJ 145 operation is scheduled to begin during the first quarter of 2015.

Commenting on the results, Jerry C. Atkin, SkyWest’s Chairman and CEO said, “SkyWest made significant progress in executing our long-term strategy in the fourth quarter, including reducing the total number of unprofitable aircraft and flying over time. We expect these changes to continue through 2017, as we continue to work with our major airline partners to meet their needs with larger RJ opportunities during that same period. We expect that reducing our total fleet count while improving the overall fleet composition will put us on a path of continued financial and operational improvement.”

Copyright Photo: Tony Storck/AirlinersGallery.com. ExpressJet removed 10 ERJ 145s from its United flying contract during the fourth quarter of 2014 and is returning the aircraft to United. ExpressJet removed a total of 26 ERJ 145s from its United flying contract during the 2014 year. Additionally, 59 ERJ 145s and nine ERJ 135s are scheduled to be removed from service during 2015 and to be returned to United. As of December 31, 2014, ExpressJet had 216 ERJ 145s and nine ERJ 135s operating under the United ERJ contract. ExpressJet Airlines’ Embraer ERJ 145LR (EMB-145LR) N14959 (msn 145091) arrives at Baltimore/Washington.

United Express-ExpressJet Airlines aircraft slide show:

United to end Houston (Bush) – Dallas (Love) service

United Airlines (Chicago) is ending Houston (Bush Intercontinental) – Dallas (Love Field) United Express service on March 16. Currently ExpressJet Airlines operates seven daily flights on the route per Airline Route.

Previously Southwest Airlines had announced it was sub-leasing two gates from United Airlines at Love Field. Southwest will now operate from 18 gates at DAL and will start new flights to nine cities in April.

Copyright Photo: Brian McDonough/AirlinersGallery.com. ExpressJet Airlines Embraer ERJ 145XR (EMB-145XR) N17169 (msn 145844) arrives at Dulles International Airport near Washington.

United Express-ExpressJet aircraft slide show:

http://airlinersgallery.smugmug.com/Airlines-UnitedStates-3/Airlines-United-States3-QZ/United-Express-ExpressJet

SkyWest Airlines to remove all remaining Embraer EMB-120 Brasilias from service

SkyWest, Inc. (SkyWest Airlines and ExpressJet Airlines) (St. George, Utah) has announced fleet transitions and contract updates designed to improve SkyWest’s overall efficiency and long-term profitability.

Specifically, SkyWest announced that SkyWest Airlines, Inc., its wholly-owned subsidiary, intends to transition to an all-jet fleet by removing all remaining 30-seat Embraer EMB-120 Brasilia turboprop aircraft from service by summer 2015. The EMB-120 fleet retirement comes, in part, in response to increased costs and additional challenges associated with new FAR117 flight and duty rules, implemented in January 2014.

Separately, SkyWest announced that ExpressJet Airlines, Inc., its wholly-owned subsidiary, has executed an agreement with United Airlines, Inc. to reduce the term of the existing 50-seat ERJ 145 contract between ExpressJet and United from November 2020 to December 2017, subject to certain extension rights by United. ExpressJet Airlines anticipates the reduction in the ERJ 145 operations will improve its overall operational reliability and financial results.

As a result of the decision to remove the EMB-120 aircraft from service by June 2015 and as a result of the reduced term to operate the ERJ 145 aircraft, SkyWest, Inc. anticipates recording pre-tax special charges (primarily non-cash) ranging from $55-70 million in the fourth quarter of 2014.

It is unclear how the grounding and retirement of the Brasilia fleet will affect air service to remote communities.

Top Copyright Photo: Michael B. Ing/AirlinersGallery.com. SkyWest Airlines mainly operates its Brasilias under the United Express brand however 13 EMB-120s wear the SkyWest house livery (below). Embraer EMB-120ER brasilia N294SW (msn 120321) arrives in Los Angeles.

United Express-SkyWest Airlines aircraft slide show:

SkyWest Airlines aircraft slide show:

Bottom Copyright Photo: Michael B. Ing/AirlinersGallery.com. Embraer EMB-120ER Brasilia N217SW (msn 120286) arrives in Las Vegas.

SkyWest reports a third quarter net profit of $41.3 million

SkyWest, Inc. (SkyWest Airlines and ExpressJet Airlines) (St. George, Utah) today reported financial and operating results for the third quarter ended September 30, 2014. Highlights are as follows:

SkyWest’s net income was $41.3 million (inclusive of $15.3 million after-tax related to TRIP gain from below), or $0.79 per diluted share, for the quarter ended September 30, 2014. This compares to net income of $26.4 million, or $0.50 per diluted share, for the same period last year.

Significant financial items related to the third quarter included:

Operating income, which excludes TRIP gain, increased $2.9 million from the same period last year, despite the negative financial impact of FAR117 flight and duty rules implemented January 2014

The completion of the Trip Linhas Aereas S.A. stock sale resulted in a pre-tax gain of $24.9 million and interest income of $2.1 million

Operating revenues, after excluding a reduction in direct contract reimbursement for pass-through cost expenses, increased 1.9% compared to the prior period, despite a 6.0% reduction in departures and 3.8% reduction in block hours from the prior period

Significant operational and commercial items include:

16 ERJ145s were removed from contract during the third quarter of 2014. SkyWest anticipates 18 ERJ145s will be removed during the fourth quarter of 2014, and 23 ERJ145s and 9 ERJ135s will be removed during the first half of 2015.

As of September 30, 2014, SkyWest had 14 E175 jet aircraft in the United Airlines contract and took delivery of one additional E175 in October 2014. SkyWest expects delivery of six additional E175 aircraft by December 31, 2014 and the remaining 19 additional aircraft by August 2015.

ExpressJet appointed Alexandria Marren as its COO effective October 1, 2014

Operational reliability at ExpressJet improved to 99.4% adjusted completion for the September 30, 2014 quarter from 99.0% from the same period last year

SkyWest invested approximately $35.7 million for E175 specific spare parts, engines and tooling as of September 30, 2014. SkyWest also invested $56.0 million into E175 ownership equity as of September 30, 2014.

Commenting on the results, Jerry C. Atkin, SkyWest’s Chairman and CEO said, “The increase in operating income from last year is positive news when factoring the significant cost impact of FAR117 we’ve experienced in 2014 and the reduction in departures and block hours since last year.” He continued, “As we pursue opportunities to remove our older 50-seat aircraft from service and add new larger dual-class aircraft, we are optimistic that our operational reliability and financial results will continue to improve. We remain committed to our major partners and our process to improve both financial and operating performance.”

Financial Performance

Total operating revenues, excluding the significant direct contract reimburses for fuel, landing fees, station rents, and engine maintenance, increased by $12.7 million during the quarter ended September 30, 2014 from the same period last year. The improvement was primarily due to certain contract renewals and modifications, operating additional E175 aircraft, and increased government subsidies for operating certain routes.

Flight crew costs and related crew hotels expenses associated with FAR117 and training costs for the introduction of the new E175 aircraft, that resulted in an increase of $13.8 million in operating costs compared to the quarter ended September 30, 2013.

Direct maintenance expense, excluding engine maintenance expense, decreased $12.2 million during the quarter ended September 30, 2014 compared to the same period last year due to a reduction in scheduled events and removal of older aircraft after June 30, 2013. Certain other operating expenses, primarily related to the E175 aircraft and pro-rate operations, increased during the three months ended September 30, 2014 compared to the same period last year.

Liquidity

At September 30, 2014, SkyWest had $555.7 million in cash and marketable securities, compared to $467.0 million as of June 30, 2014 and $670.1 million as of December 31, 2013. Cash and marketable securities decreased $114.4 million from December 31, 2013 to September 30, 2014, primarily due to SkyWest’s investment of approximately $91.7 million in E175 assets and E175 equity investment in the debt financing and timing of semi-annual aircraft lease payments resulting in an increase of prepaid aircraft rents of $20.3 million. The cash and marketable securities balance increased from June 30, 2014 primarily due to pre-tax income generated during the quarter.

Long-term debt increased $130.8 million from December 31, 2013 to September 30, 2014. During this period, $323.7 million of long-term debt was used for the 14 E175 aircraft delivered in 2014, offset by principal payments made on outstanding debt.

Copyright Photo: Mark Durbin/AirlinersGallery.com. As the Embraer ERJ 135 and ERJ 145 fleet shrinks at ExpressJet, SkyWest Airlines had 14 Embraer ERJ 175 jet aircraft in the United Airlines contract at the end of September and took delivery of one additional ERJ 175 this month. SkyWest expects delivery of six additional E175 aircraft by December 31, 2014 and the remaining 19 additional aircraft by August 2015. Embarrass ERJ 170-200LR (ERJ 175) N118SY (msn 17000420) taxies at the San Francisco hub.

United Express-SkyWest Aircraft Slide Show:

United Airlines to drop the Washington Dulles-New York JFK route

United Airlines (Chicago) will drop the Washington (Dulles)-New York (JFK) route on October 26. ExpressJet Airlines (Atlanta) currently operates the United Express route with CRJ200s per Airline Route.

Copyright Photo: Brian McDonough/AirlinersGallery.com. ExpressJet Airlines’ Bombardier CRJ200 (CL-600-2B19) N877AS (msn 7579) arrives at the Washington Dulles hub.

United Airlines (current):

United Express-ExpressJet:

United to drop the Chicago O’Hare-Topeka route on September 3

United Airlines (Chicago) is ending United Express service from Topeka, Kansas to the Chicago (O’Hare) hub on September 3 according to Airline Route.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Embraer ERJ 145XR (EMB-145XR) N18101 (msn 145590) arrives at the Chicago O’Hare hub.

United Airlines (current):

United Express/ExpressJet:

United Express service is coming to Atlantic City, New Jersey

United Airlines (Chicago) today announced the airline will inaugurate service at Atlantic City International Airport, offering customers daily nonstop flights to United’s hubs at Chicago O’Hare International Airport and Houston’s George Bush Intercontinental Airport beginning on April 1, 2014..

From Chicago, United’s flight to Atlantic City will depart at 8:10 a.m. (0810) daily, arriving at 11:17 a.m. (1117). The return flight will depart Atlantic City at 11:52 a.m. (1152) and arrive in Chicago at 1:10 p.m. (1310).

From Houston, United’s flight to Atlantic City will depart at 7 p.m. (1900) daily, arriving at 11:20 p.m. (2320). The return flight will depart Atlantic City at 6 a.m. (0600) and arrive in Houston at 8:49 a.m. (0849).

United Express carrier ExpressJet Airlines (Atlanta) will operate the Atlantic City flights with 50-seat Embraer ERJ 145 aircraft.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. ExpressJet Airlines’ Embraer ERJ 145XR (EMB-145XR) N12136 (msn 145719) arrives at the Chicago O’Hare hub.

United Airlines: