Category Archives: SkyWest Airlines

United and SkyWest to drop Tallahassee, Florida

United Airlines’ partner SkyWest Airlines operating as a United Express carrier will discontinue service to various markets, including Tallahassee, after October 1, 2021.

SkyWest adds 16 new E175s for the Delta contract, will replace 16 CRJ900s

SkyWest, Inc. today announced an agreement with Delta Air Lines to purchase and operate 16 new E175 aircraft under a multi-year capacity purchase agreement.

These aircraft are scheduled to be placed into service beginning in the first half of 2022, and will be placed into service ratably through year-end 2022.

The aircraft will be purchased by SkyWest from Embraer and delivered new from the factory.

SkyWest continues to be the largest owner/operator of the Embraer E175 aircraft in the world.

SkyWest expects the 16 new E175 aircraft will replace 16 SkyWest-owned or financed CRJ900s currently under its Delta contract, with expirations ranging from the second half of 2022 to early 2023. SkyWest is evaluating the impact of the anticipated displacement of the CRJ900s, including a potential non-cash impairment charge

United to pull out of Paine Field on October 5

Delivered on November 8, 2019

United Airlines has announced it will suspend the Denver – Everett (Paine Field) route on October 5. This was the only United Express route operated to PAE. It previously operated a route from PAE to the San Francisco hub.

PAE United Express flights are operated for United Airlines by SkyWest Airlines.

Alaska Airlines continues to operate out of Paine Field.

Top Copyright Photo: United Express-SkyWest Airlines Embraer ERJ 170-200LL (ERJ 175) N620UX (msn 17000824) PAE (Nick Dean). Image: 953003.

United Express-SkyWest aircraft slide show:

SkyWest Airlines orders eight new E175 aircraft for operation with Alaska Airlines

Embraer has agreed to the sale of eight new E175 jets to SkyWest, Inc. for operation with Alaska Airlines, adding to the 32 SkyWest E175 jets SkyWest already flies for Alaska. The E175 aircraft will fly exclusively with Alaska Airlines under a Capacity Purchase Agreement (CPA).

Alaska Airlines, a new member of the oneworld Alliance, currently has 62 Embraer E175 jets in their fleet, operated by Horizon Air and SkyWest Airlines. The 76-seat aircraft will be delivered in Alaska’s livery and three-class configuration, starting in 2022.

SkyWest manages to turn a profit in the first quarter

American Eagle Airlines (2nd)-SkyWest Airlines Bombardier CRJ700 (CL-600-2C10) N703SK (msn 10139) LAX (Michael B. Ing). Image: 937551.

SkyWest has issued this financial statement for the first quarter 2021:

First Quarter 2021 Highlights

  • Pre-tax income of $50 million, net income of $36 million, or $0.71 per diluted share
  • Placed nine used CRJ700 aircraft into service under a previously announced agreement with American Airlines; took delivery of one new CRJ900 aircraft under a previously announced agreement with Delta Air Lines
  • Named to Forbes America’s Best Employers 2021 List; also named a Best Place to Work in 2021, a Glassdoor Employees’ Choice Award

SkyWest, Inc. has reported financial and operating results for Q1 2021, including net income of $36 million, or $0.71 per diluted share, compared to net income of $30 million, or $0.59 per diluted share, for Q1 2020. Pre-tax income for Q1 2021 included $193 million in payroll support program grants received from U.S. Treasury Department (“U.S. Treasury”) reflected as a reduction to operating expenses.

Commenting on the results, Chip Childs, Chief Executive Officer of SkyWest, said, “We continued to see improvement in the demand for our product during the first quarter. Our strategy of investing in our fleet and delivering flexible solutions with solid operating performance to our customers continues to position SkyWest well for long-term success. I want to thank the SkyWest team for their commitment to excellence through these dynamic and challenging circumstances.”

Financial Results

Revenue was $535 million in Q1 2021, down from $730 million in Q1 2020, or 27%, due to a significant reduction in the number of flights SkyWest was scheduled to operate under its flying agreements compared to the same period last year because of the COVID-19 pandemic. SkyWest’s Q1 2021 completed departures and block hours were down 26% and 23%, respectively, from Q1 2020.

SkyWest deferred recognizing revenue on $21 million of fixed monthly payments received during Q1 2021. SkyWest will recognize the deferred revenue from the fixed monthly payments on a per-completed, block hour basis over the remaining contract term.

Operating expenses were $454 million in Q1 2021, down from $664 million in Q1 2020, or 32%. The reduction was due to $193 million in payroll support program grants received from U.S. Treasury under a payroll support program extension agreement (“PSP2”) reflected in the Q1 2021 results. Operating expenses were also down due to fewer flights operated in Q1 2021 compared to the same period last year, partially offset by an increase in maintenance expense on SkyWest’s CRJ700 fleet.

Capital and Liquidity

SkyWest had $836 million in cash and marketable securities at March 31, 2021, up from $826 million at December 31, 2020.

SkyWest has $665 million of available borrowings under its $725 million, five-year secured loan facility with U.S. Treasury under the CARES Act. SkyWest has until May 28, 2021 to borrow additional amounts under the facility and is evaluating its future utilization of the facility.

SkyWest has a $75 million line of credit facility with approximately $34 million of letters of credit issued under the facility and $41 million available under the line at March 31, 2021.

As previously announced, SkyWest entered into PSP2 with U.S. Treasury in January 2021 and received total proceeds of $233 million during Q1. In consideration for the funding, approximately $40 million was in the form of a ten-year, low interest unsecured term loan and SkyWest issued to U.S. Treasury warrants to purchase 98,815 shares of SkyWest common stock at a strike price of $40.41. In April 2021, SkyWest received additional proceeds of approximately $35 million under PSP2. In consideration of the additional funding, approximately $10.5 million was in the form of a ten-year, low interest unsecured term loan and SkyWest issued to U.S. Treasury warrants to purchase an additional 25,958 shares of SkyWest common stock at a strike price of $40.41.

Total debt at March 31, 2021 was $3.1 billion, down from $3.2 billion at December 31, 2021. Capital expenditures during Q1 2021 were $56 million for the purchase of four used CRJ700 aircraft, spare engines and other fixed assets.

As previously announced, SkyWest entered into a payroll support program 3 agreement (“PSP3”) with U.S. Treasury in April 2021 to receive total proceeds of approximately $250 million under the American Rescue Plan Act of 2021. SkyWest received half of the $250 million in April 2021 and expects to receive the remainder during the second quarter of 2021. In consideration for the funding, approximately $45 million will be in the form of a ten-year, low interest unsecured term loan, and SkyWest will issue to U.S. Treasury warrants to purchase approximately 78,317 shares of SkyWest common stock at a strike price of $57.47.

Status Update on Previously Announced Agreements

SkyWest is coordinating with its major airline partners to optimize the timing of upcoming fleet deliveries under previously announced agreements in response to COVID-19 schedule reductions. The anticipated future delivery dates summarized below are based on currently available information and are subject to change.

Flying contract with Delta Air Lines (“Delta”)

  • One new CRJ900, financed by Delta and operated by SkyWest was delivered in Q1 2021,

Flying contract with American Airlines (“American”) for 20 E175 aircraft

  • 18 aircraft deliveries are anticipated in the second half of 2021 and two deliveries are expected in 2022. The aircraft are scheduled to be placed into service in 2022.
  • SkyWest anticipates financing the aircraft through debt,

Flying contract with American for CRJ700 aircraft

  • SkyWest placed nine used CRJ700s in service during Q1 2021.
  • SkyWest anticipates placing an additional 16 used CRJ700s into service over the remainder of 2021.
  • SkyWest expects to have 90 CRJ700s under agreement with American by the end of 2021.

Top Copyright Photo: American Eagle Airlines (2nd)-SkyWest Airlines Bombardier CRJ700 (CL-600-2C10) N703SK (msn 10139) LAX (Michael B. Ing). Image: 937551.

American Eagle-SkyWest aircraft slide show:

American Eagle Route Map:

SkyWest, Inc. announces fourth quarter and annual 2020 results

SkyWest Inc. issued this financial statement:

Fourth Quarter and Annual Results

  • Q4 2020 pre-tax loss of $59 million, net loss of $46 million, or $0.93 loss per share
  • Full year 2020 pre-tax loss of $7 million, net loss of $9 million, or $0.17 loss per share
  • Full year 2020 revenue of $2.1 billion, down 28% from 2019 due to COVID-19
  • As previously announced:

SkyWest, Inc. reported financial and operating results for Q4 2020, including a net loss of $46 million, or $0.93 loss per share, compared to net income of $73 million, or $1.43 per diluted share, for Q4 2019. SkyWest also reported a net loss of $9 million, or $0.17 loss per share, for the 2020 year, compared to net income of $340 million, or $6.62 per diluted share, for the 2019 year. The primary factor in SkyWest’s lower results in 2020 compared to 2019 was reduced flight schedules and lower demand resulting from the COVID-19 pandemic.

Commenting on the results, Chip Childs, Chief Executive Officer of SkyWest, said, “The past year has challenged our industry, our business, and our people beyond what anyone could have anticipated, and we responded quickly and aggressively to protect our people, our partners, and our business. I’m incredibly proud of the SkyWest team’s great work and the flexibility they continue to demonstrate. We believe we’re in a strong position to play a key role in the industry’s recovery and we remain committed to positioning SkyWest for future success.”

Financial Results Revenue was $590 million in Q4 2020, down from $744 million in Q4 2019, or 21%, due to the COVID-19 pandemic that caused a significant reduction in the number of scheduled flights SkyWest operated under its flying agreements compared to the same period last year. Sequentially, revenue in Q4 2020 was up from $457 million Q3 2020, or 29%, due to improvements in demand for our scheduled flights. Total block hours in Q4 2020 were down 27% from Q4 2019 and up 20% from Q3 2020.

 

Capital and Liquidity SkyWest had $826 million in cash and marketable securities at December 31, 2020, up from $822 million at September 30, 2020 and $520 million at December 31, 2019.

SkyWest has $665 million available under its $725 million, five-year secured loan facility with the U.S. Treasury Department (“Treasury”) under the CARES Act. SkyWest has until May 28, 2021 to borrow additional amounts under the facility.

SkyWest has a $75 million line of credit facility with approximately $35 million of letters of credit issued under the facility and $40 million available under the line at December 31, 2020.

As previously announced, SkyWest entered into a payroll support program extension agreement with Treasury in January 2021 to receive a total of approximately $233 million under the Consolidated Appropriations Act of 2021. SkyWest received half of the $233 million in January 2021 and expects to receive the second half in February 2021. In consideration for the funding, approximately $40 million will be in the form of a ten-year, low interest unsecured term loan, and SkyWest will issue to Treasury warrants to purchase approximately 98,815 shares of SkyWest common stock at a strike price of $40.41.

During 2020, SkyWest received $450 million under the payroll support program with Treasury under the CARES Act. In consideration for the funding, $105 million was in the form of a ten-year, low interest unsecured term loan. SkyWest recognized the $345 million in grant proceeds as a reduction to expense during the 2020 year, of which $3 million was recognized in Q4 2020.

Total debt at December 31, 2020 was $3.2 billion, up from $3.1 billion at September 30, 2020 and $3.0 billion at December 31, 2019. Capital expenditures during Q4 2020 included $230 million for the purchase of four new E175 aircraft and 22 used CRJ700 aircraft and $28 million for other maintenance assets. SkyWest issued $205 million in debt to acquire the E175 and CRJ700 aircraft in Q4 2020.

Status Update on Previously Announced Deals SkyWest is coordinating with its major airline partners to optimize the timing of upcoming fleet deliveries under previously announced deals in response to COVID-19 schedule reductions. The anticipated future delivery dates summarized below are based on currently available information and are subject to change.

Flying contract with Delta Air Lines (“Delta”)

  • Four new E175 aircraft financed by SkyWest were delivered in Q4 2020
  • One new CRJ900 aircraft to be financed by Delta and operated by SkyWest is scheduled for delivery in 2021

Flying contract with American Airlines (“American”) for 20 E175 aircraft

  • 18 aircraft deliveries are anticipated in the second half of 2021 and two deliveries are expected in 2022. The aircraft are scheduled to be placed into service in 2022.
  • SkyWest anticipates financing the aircraft through debt

Flying contract with American for CRJ700 aircraft

  • SkyWest has 65 CRJ700 aircraft in service with American as of December 31, 2020
  • SkyWest anticipates placing 25 additional CRJ700 aircraft into service with American ratably throughout 2021
  • SkyWest anticipates using its own aircraft not currently under contract with a partner to fulfill this agreement

Flying contract with Delta for CRJ200 aircraft SkyWest’s capacity purchase agreement with Delta for CRJ200 aircraft expired at the end of 2020 and was not extended. SkyWest has no outstanding financing obligations on the CRJ200 aircraft removed from the Delta contract and these aircraft are fully depreciated. SkyWest’s prorate flying arrangement for CRJ200 aircraft with Delta did not terminate as of December 31, 2020.

Route Map:

SkyWest to receive $233 million through a Payroll Support Program extension under 2021 Appropriations Act

SkyWest, Inc. has announced that its wholly-owned subsidiary SkyWest Airlines has entered into a Payroll Support Program Extension Agreement with the U.S. Treasury Department to receive a total of approximately $233 million under the Consolidated Appropriations Act of 2021. SkyWest received half of the $233 million today and expects to receive the second half in February 2021. In consideration for the funding, approximately $40 million will be in the form of a ten-year, low interest unsecured term loan, and SkyWest will issue to the U.S. Treasury Department warrants to purchase approximately 98,815 shares of SkyWest common stock at a strike price of $40.41.

The funds received under this Payroll Support Program will be used to pay for the wages, salaries and benefits of thousands of SkyWest Airlines employees. This Program includes certain restrictions similar to the original Payroll Support Program, including limitations on involuntary terminations and furloughs through March 31, 2021, restrictions on the payment of dividends and the repurchase of shares through March 31, 2022, the recall of involuntarily terminated or furloughed employees after Sept. 30 with pay from Dec. 1, 2020 to March 31, 2021, and certain limitations on executive compensation through October 1, 2022.

Additionally, SkyWest also announced that SkyWest Airlines has entered into an amendment to its Loan and Guaranty Agreement with the U.S. Treasury Department extending the deadline pursuant to which SkyWest Airlines may borrow under the $725 million facility from March 26, 2021 to May 28, 2021. The other terms of the Loan and Guaranty Agreement were not amended and remain in effect.

SkyWest makes a profit in the third quarter, will fly 20 more CRJ700s and 20 E175s for American

SkyWest, Inc. has reported its financial and operating results for Q3 2020, including net income of $34 million, or $0.66 per diluted share, compared to net income of $91 million, or $1.79 per diluted share, for Q3 2019. The primary factor in SkyWest’s lower results in Q3 2020 compared to Q3 2019 was reduced flight schedules and lower demand resulting from the COVID-19 pandemic.

Commenting on the results, Chip Childs, Chief Executive Officer of SkyWest, said, “Over the past several months, we have worked with our partners and our people to respond quickly and aggressively to the worst crisis our industry has experienced. The SkyWest team continues to demonstrate exceptional dedication and flexibility, and I want to thank them for their hard work and focus through this challenge. We are committed and remain laser-focused on ensuring we are positioned for the long-term, maintaining strong liquidity, and delivering on our partners’ objectives in the recovery.”

Financial Results
Revenue was $457 million in Q3 2020, down from $760 million in Q3 2019, due to the COVID-19 pandemic that caused a significant reduction in the number of scheduled flights SkyWest operated under its flying contracts compared to the same period last year. Total block hours in Q3 2020 were down 41% from Q3 2019.

SkyWest deferred recognizing revenue on $30 million of fixed monthly payments received during Q3 2020, down from $69 million of revenue that was deferred in Q2 2020. SkyWest will recognize the deferred revenue based on completed flights over the remaining contract term.

Operating expenses were $383 million in Q3 2020, down from $614 million in Q3 2019 due to fewer flights operated compared to the same period last year, with $190 millionin CARES Act payroll support (described under “Capital and Liquidity” below) recognized as an offset to salaries and wages expense in Q3 2020. SkyWest anticipates recognizing the remaining $3 million in payroll support grants in Q4 2020.

New Deals
SkyWest secured an agreement to place 20 used CRJ700s under a multi-year flying contract with American Airlines. SkyWest anticipates using its own aircraft not currently under contract with a partner to fulfill this agreement. The aircraft are expected to be placed into service ratably throughout 2021. Following the placement of these 20 aircraft, combined with anticipated placement of four CRJ700s in Q4 2020 and five CRJ700s in 2021 under a previously announced deal, SkyWest is scheduled to have a total of 90 CRJ700s under contract with American by the end of 2021. 

SkyWest also secured agreements to acquire 21 used CRJ700s in a 50-seat configuration and lease the aircraft under a multi-year term to another regional airline operating for United Airlines. The aircraft purchases and leases are expected to be completed in Q4 2020.

Status Update on Previously Announced Deals
SkyWest is coordinating with its major airline partners to optimize the timing of upcoming fleet deliveries under previously announced deals in response to COVID-19 schedule reductions. The anticipated future delivery dates summarized below are based on currently available information and are subject to change.

Flying contract with Delta Air Lines (“Delta”)

  • Four new E175 aircraft to be financed and operated by SkyWest are scheduled for delivery in Q4 2020. Normal cash down payments are already covered by deposits paid last year.
  • One new CRJ900 aircraft to be financed by Delta and operated by SkyWest is scheduled for delivery in 2021.

Flying contract with American for E175 aircraft
Twenty new E175 aircraft to be financed and operated by SkyWest:

  • Five aircraft deliveries are anticipated in Q4 2021 and 15 deliveries in 2022
  • SkyWest anticipates financing the aircraft through debt

Flying contract with Delta for CRJ200 aircraft
As previously announced, SkyWest’s capacity purchase agreement with Delta for CRJ200 aircraft is scheduled to expire in 2020. SkyWest owns the remaining 17 CRJ200 aircraft under contract with Delta as of September 30, 2020. SkyWest has no outstanding financing obligations on these 17 CRJ200 aircraft and anticipates these aircraft will be fully depreciated upon removal from the Delta contract.

Capital and Liquidity
SkyWest had $822 million in cash and marketable securities at September 30, 2020, up from $762 million at June 30, 2020. Total debt at September 30, 2020 was $3.1 billion, up from $3.0 billion at June 30, 2020. Capital expenditures during Q3 2020 was $10 million for a spare engine and other maintenance assets.

During Q3 2020, as previously announced, SkyWest and SkyWest Airlines entered into a $573 million, five-year secured loan facility with the U.S. Treasury Department (“Treasury”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). SkyWest Airlines borrowed the minimum required $60 million under the facility at closing. In October, SkyWest increased its loan capacity under this facility to $725 million. SkyWest Airlines has until March 2021 to borrow additional amounts under the facility. SkyWest issued warrants to purchase 211,416 shares of common stock to Treasury in conjunction with the initial $60 million draw.

During Q3 2020, SkyWest received $144 million in payroll support funding, including $101 million in grants and $43 million in unsecured debt, under the previously announced Payroll Support Program Agreement (“PSP Agreement”) with Treasury. In aggregate, SkyWest received $450 million under the PSP Agreement in 2020, including $345 million in direct grants and $105 million in unsecured debt. SkyWest recognized $152 million and $190 million in payroll grant expense reductions in Q2 2020 and Q3 2020, respectively, and anticipates recognizing the remaining $3 millionin Q4 2020.

As of September 30, 2020, SkyWest had a $75 million line of credit facility. SkyWest had approximately $35 million of letters of credit issued under the facility and $40 million available under the line at quarter-end.

American Eagle-SkyWest aircraft photo gallery:

SkyWest to receive $438 million through Payroll Support Program under CARES Act

SkyWest, Inc. has announced that its wholly-owned subsidiary SkyWest Airlines has entered into a Payroll Support Program Agreement with the U.S. Treasury Department to receive a total of approximately $438 million under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Of the $438 million, approximately $337 million will be a direct grant and approximately $101 million will be in the form of a ten-year, low interest unsecured term loan.

SkyWest has elected to receive the funds in four disbursements. In consideration for the funding, SkyWest will issue to the U.S. Treasury Department warrants to purchase approximately 357,000 shares of SkyWest common stock.

The funds received under the Payroll Support Program will be used to pay for the wages, salaries and benefits of thousands of SkyWest Airlines employees. The Payroll Support Program includes certain restrictions, including limitations on involuntary terminations and furloughs through September 30, 2020, requirements to maintain certain levels of scheduled service, restrictions on the payment of dividends and the repurchase of shares through September 30, 2021, and certain limitations on executive compensation.

“We appreciate Congress and the Administration for quickly passing legislation to help support our people,” said SkyWest Chief Executive Officer Chip Childs. “These funds will cover important payroll expenses as we work together with our people to provide critical air service during this difficult time, and prepare for when demand returns.”

Route Map:

SkyWest Airlines aircraft photo gallery:

SkyWest announces new flying agreement for 25 E175s with United Airlines

SkyWest, Inc. today announced an agreement with United Airlines to operate 25 Embraer E175 aircraft under a multi-year contract. These aircraft are scheduled to be placed into service ratably over a 12-month period beginning in the second quarter of 2020 through the first quarter of 2021. The aircraft are financed by United and are to be sourced from another United Express operator.

Commenting on the agreement, Chip Childs, Chief Executive Officer and President of SkyWest, said, “As their initial E175 launch partner, we are excited to become United’s largest E175 operator and the largest operator of the E175 aircraft in the United States. We are pleased to continue strengthening our United partnership through this new agreement.”

Route Map (United):

United Express-SkyWest Airlines aircraft photo gallery: