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SkyWest announces a first quarter 2018 profit, ExpressJet to retire the CRJ900s with Delta

Delta Connection-ExpressJet Airlines Bombardier CRJ900 (CL-600-2D24) N307PQ (msn 15307) ATL (Jay Selman). Image: 403371.

SkyWest, Inc. issued this statement:

First Quarter Highlights:

  • Net income of $54 million, or $1.03 per diluted share, up 56% from $35 millionor $0.65 per diluted share in Q1 2017
  • Pre-tax income of $67 million, up 28% from $52 million in Q1 2017
  • Revenue of $783 million, up 5% from $747 million in Q1 2017 on improving fleet mix

SkyWest, Inc.  reported financial and operating results for Q1 2018, including net income of $54 million, or $1.03 per diluted share, compared to net income of $35 million, or $0.65 per diluted share for Q1 2017.

The improvement in Q1 2018 pre-tax income from Q1 2017 was primarily due to SkyWest’s ongoing fleet transition. Since Q1 2017 19 new E175 aircraft have been added and 46 CRJ and ERJ 50-seat aircraft and 25 CRJ700/CRJ900 aircraft have been removed.

Commenting on the results, Chip Childs, Chief Executive Officer and President of SkyWest, said “Demand for our product remains strong, and I’m proud of our professionals who continue to provide best-in-class operations to our customers.  Our financial results reflect continued solid operating performance combined with the ongoing improvements in our fleet mix.  We remain disciplined in our approach to risk and flying commitments and focused on executing a strategy to improve our overall model.”

Q1 2018 Financial Highlights
Revenue was $783 million in Q1 2018, up from $747 million in Q1 2017. The increase in revenue included the net impact of adding new E175 aircraft and improvement in the economics of SkyWest’s fleet mix since Q1 2017, partially offset by the removal of unprofitable or less profitable aircraft over the same period.

Operating expenses were $695 million in Q1 2018, up from $671 million in Q1 2017.  The increase in operating expenses included additional labor, engine maintenance and fuel costs.

The effective tax rate for Q1 2018 was 19% compared to 34% in Q1 2017.  The lower tax rate in Q1 2018 was primarily due to the reduced federal rate under the new tax law enacted in Q4 2017 and additional discrete tax benefits from stock compensation in Q1 2018.

Q1 2018 Operational Update
SkyWest Airlines, Inc. took delivery of five new E175/E175 SC aircraft during Q1 2018.  The following summarizes the anticipated delivery dates for seven E175 aircraft to be placed under contract with Alaska Airlines (three E175 aircraft previously scheduled for delivery in Q4 2018 have been deferred until 2021 at Alaska’s request) and 27 E175 SC aircraft to be placed under contract with Delta Air Lines in 2018:

Scheduled E175/E175 SC

Aircraft Deliveries

In-service
Mar 31, 2018

Q2 2018

Q3 2018

Q4 2018

In-Service

end of 2018

Total E175/E175 SCs:

112

16

13

5

146

ExpressJet Airlines, Inc. continued the previously-announced 2018 wind down of its flying agreement with Delta during the quarter. At the end of Q1 2018, ExpressJet had six CRJ900s and 31 CRJ700s remaining in service under the Delta agreement.  ExpressJet anticipates returning seven leased aircraft to Delta in Q2 2018 (six CRJ900s and one CRJ700).

ExpressJet continues to engage in discussions around the CRJ700s scheduled to come out of service with Delta later this year and remains pleased with the level of demand for the CRJ700 product.

Operating Performance:

Flight completion rates at SkyWest Airlines and ExpressJet for Q1 2018 and Q1 2017 are summarized as follows:

SkyWest Airlines

ExpressJet

Q1 2018

Q1 2017

Q1 2018

Q1 2017

Adjusted Completion *

99.8%

99.9%

99.9%

99.6%

Raw Completion

97.8%

97.4%

96.1%

96.9%

* Adjusted Completion excludes weather cancellations. Raw Completion includes weather cancellations.

Q1 2018 Capital and Liquidity
SkyWest had $646 million in cash and marketable securities at March 31, 2018, down $39 million from December 31, 2017. During the first quarter of 2018, SkyWest:

  • Used $18 million toward the purchase of five E175 aircraft
  • Used $20 million for an early lease buyout on nine aircraft
  • Used $30 million for other capital investments, including spare engines and aircraft parts
  • Used $10 million to repurchase stock under its $100 million share repurchase program, of which $70 million remains authorized

Total debt for the quarter was $2.8 billion, up $89 million from December 31, 2017, including debt issued for acquired aircraft, partially offset by scheduled principal payments.

Copyright Photo: The last Bombardier CRJ900 will be taken out of the Delta contract in the second quarter of 2018. The remaining CRJ700s will be retired with Delta by the end of the year. Delta Connection-ExpressJet Airlines Bombardier CRJ900 (CL-600-2D24) N307PQ (msn 15307) ATL (Jay Selman). Image: 403371.

Delta-ExpressJet aircraft slide show:

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ExpressJet expands its relationship with United and American, drops Delta

Delta Connection-ExpressJet Airlines Bombardier CRJ900 (CL-600-2D24) N307PQ (msn 15307) ATL (Jay Selman). Image: 403371.

ExpressJet Airlines, a wholly-owned subsidiary of SkyWest, Inc. has announced the initiation of a clearly defined long-term strategy:

  •  Long-term agreement secured with United Airlines. As part of this plan, ExpressJet has secured a new, five-year extension of its United Airlines ERJ 145 contract, effective January 1, 2018 through Dec. 31, 2022. The new agreement enhances ExpressJet’s United partnership and provides long-term stability to its model. It also provides ExpressJet pilots with continued access to United’s Career Pathway Program. Financial terms of the agreement were not disclosed.
  •  Early termination of Delta CPA. Additionally, ExpressJet and Delta Air Lines mutually agreed to initiate the wind-down of its remaining dual-class flying agreement under the Delta Connection brand, allowing ExpressJet opportunities to place aircraft with other partners. The agreement, which includes 28 CRJ900s and 33 CRJ700s, was previously scheduled to expire beginning in 2019. The aircraft financed by Delta, including all CRJ900s, will be returned to Delta beginning in fourth quarter 2017; ExpressJet expects to transition other aircraft previously operated under its Delta agreement to other major partners throughout 2018.
  •  Agreement with American for eight additional CRJ700s. As part of this realignment, ExpressJet has secured an agreement with American Airlines to transition eight additional CRJ700s to its American Eagle operation. That transition is expected to take place during second quarter 2018.

Copyright Photo: Delta Connection-ExpressJet Airlines Bombardier CRJ900 (CL-600-2D24) N307PQ (msn 15307) ATL (Jay Selman). Image: 403371.