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.