Exhibit 99.1

 

 

 

NEWS RELEASE

 

CONTACT:

Investor Relations

Corporate Communications

 

435.634.3200

435.634.3553

 

Investor.relations@skywest.com

corporate.communications@skywest.com

 

SkyWest, Inc. Announces First Quarter 2018 Profit

 

First Quarter Highlights:

·                  Net income of $54 million, or $1.03 per diluted share, up 56% from $35 million or $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

 

ST. GEORGE, UTAH, April 26, 2018 — SkyWest, Inc. (NASDAQ: SKYW) (“SkyWest”) today 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.”

 

 

1



 

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. (“SkyWest Airlines”) 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 (“Alaska”) (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 (“Delta”) 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. (“ExpressJet”) 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.

 

 

2



 

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.

 

 

3



 

About SkyWest

 

Based in St. George, Utah, SkyWest, Inc. is the holding company for two scheduled passenger airline operations and an aircraft leasing company with more than 17,000 employees. SkyWest’s airline companies provide commercial air service in cities throughout North America with nearly 3,000 daily flights carrying more than 50 million passengers annually. SkyWest Airlines operates through partnerships with United Airlines, Delta Air Lines, American Airlines and Alaska Airlines.

 

SkyWest will host its conference call to discuss first quarter 2018 results today, April 26, 2018, at 2:30 p.m. Mountain Time. The conference call number is 1-877-418-5293 for domestic callers, 1-866-605-3852 for Canada callers and 1-412-717-9593 for other international callers. Please call up to ten minutes in advance to ensure you are connected prior to the start of the call. The conference call will also be available live on the Internet at https://www.webcaster4.com/Webcast/Page/1088/25278.  This press release and additional information regarding SkyWest, including access information for the digital rebroadcast of the first quarter 2018 earnings call, participation at investor conferences, investor presentations and monthly traffic statistic releases, can be accessed at inc.skywest.com.

 

Forward Looking-Statements

 

In addition to historical information, this release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “forecasts”, “expects,” “intends,” “believes,” “anticipates,” “estimates”, “should,” “likely” and similar expressions identify forward-looking statements. Such statements include, but are not limited to, statements about the continued demand for our product, the wind-down of ExpressJet’s flying agreement with Delta, and the related removal from service and/or placement into service of certain aircraft, the scheduled aircraft deliveries for SkyWest Airlines for 2018, as well as SkyWest’s future financial and operating results, plans, objectives, expectations, estimates, intentions and outlook, and other statements that are not historical facts. All forward-looking statements included in this release are made as of the date hereof and are based on information available to SkyWest as of such date. SkyWest assumes no obligation to update any forward-looking statement. Readers should note that many factors could affect the future operating and financial results of SkyWest, SkyWest Airlines or ExpressJet, and could cause actual results to vary materially from those expressed in forward-looking statements set forth in this release. These factors include, but are not limited to, the prospects of entering into agreements with existing or other carriers to fly new aircraft, ongoing negotiations between SkyWest, SkyWest Airlines and ExpressJet and their major partners regarding their contractual obligations, uncertainties regarding operation of new aircraft, the ability to attract and retain qualified pilots, the impact of regulatory issues such as pilot rest rules and qualification requirements, and the ability to obtain aircraft financing.

 

Actual operational and financial results of SkyWest, SkyWest Airlines and ExpressJet will likely also vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of other reasons, including, in addition to those identified above: the challenges and costs of integrating operations and realizing anticipated synergies and other benefits from the acquisition of ExpressJet; the challenges of competing successfully in a highly competitive and rapidly changing industry; developments associated with fluctuations in the economy and the demand for air travel; the financial stability of SkyWest’s major partners and any potential impact of their financial condition on the operations of SkyWest, SkyWest Airlines, or ExpressJet; fluctuations in flight schedules, which are determined by the major partners for whom SkyWest’s operating airlines conduct flight operations; variations in market and economic conditions; significant aircraft lease and debt commitments; residual aircraft values and related impairment charges; labor relations and costs; the impact of global instability; rapidly fluctuating fuel costs, and potential fuel shortages; the impact of weather-related or other natural disasters on air travel and airline costs; aircraft deliveries; the ability to attract and retain qualified pilots and other unanticipated factors. Risk factors, cautionary statements and other conditions which could cause SkyWest’s actual results to differ materially from management’s current expectations are contained in SkyWest’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

 

 

4



 

SkyWest, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Dollars and Shares in Thousands, Except per Share Amounts)

(Unaudited)

 

 

 

Three Months Ended
March 31

 

 

 

2018

 

2017

 

OPERATING REVENUES

 

 

 

 

 

Flying agreements

 

$

767,964

 

$

734,529

 

Airport customer service and other

 

15,436

 

12,637

 

Total operating revenues

 

783,400

 

747,166

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

Salaries, wages and benefits

 

306,719

 

297,667

 

Aircraft maintenance, materials and repairs

 

141,606

 

132,325

 

Depreciation and amortization

 

77,585

 

70,114

 

Aircraft rentals

 

44,680

 

57,709

 

Airport-related expenses

 

29,307

 

31,948

 

Aircraft fuel

 

26,939

 

18,433

 

Other operating expenses

 

68,389

 

62,675

 

Total operating expenses

 

695,225

 

670,871

 

OPERATING INCOME

 

88,175

 

76,295

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

Interest income

 

1,705

 

660

 

Interest expense

 

(26,234

)

(24,549

)

Other income, net

 

3,558

 

 

Total other expense, net

 

(20,971

)

(23,889

)

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

67,204

 

52,406

 

PROVISION FOR INCOME TAXES

 

12,842

 

17,620

 

NET INCOME

 

$

54,362

 

$

34,786

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE

 

$

1.05

 

$

0.67

 

DILUTED EARNINGS PER SHARE

 

$

1.03

 

$

0.65

 

 

 

 

 

 

 

Weighted average common shares

 

 

 

 

 

Basic

 

51,921

 

51,820

 

Diluted

 

53,033

 

53,202

 

 

 

5



 

SkyWest, Inc. and Subsidiaries

Summary of Consolidated Balance Sheets

(Dollars in Thousands)

(Unaudited)

 

 

 

March 31,
2018

 

December 31,
2017

 

Cash and marketable securities

 

$

645,527

 

$

685,295

 

Other current assets

 

307,096

 

309,838

 

Total current assets

 

$

952,623

 

$

995,133

 

 

 

 

 

 

 

Property and equipment, net

 

4,326,204

 

4,134,003

 

Deposit on aircraft

 

49,000

 

49,000

 

Other long-term assets

 

272,360

 

296,264

 

Total assets

 

$

5,600,187

 

$

5,474,400

 

 

 

 

 

 

 

Current portion, long-term debt

 

$

335,429

 

$

309,678

 

Other current liabilities

 

502,389

 

511,147

 

Total current liabilities

 

$

837,818

 

$

820,825

 

 

 

 

 

 

 

Long-term debt, net of current maturities

 

2,440,771

 

2,377,346

 

Other long-term liabilities

 

534,461

 

521,907

 

Stockholders’ equity

 

1,787,137

 

1,754,322

 

Total liabilities and stockholders’ equity

 

$

5,600,187

 

$

5,474,400

 

 

Unaudited Operating Highlights

 

 

 

Three Months Ended
March 31,

 

 

 

2018

 

2017

 

Change

 

Block hours

 

436,367

 

452,683

 

(3.6

)%

Departures

 

248,127

 

263,862

 

(6.0

)%

 

 

 

 

 

 

 

 

Passengers carried

 

11,320,230

 

12,020,377

 

(5.8

)%

Passenger load factor

 

77.4

%

78.6

%

(1.2

) pts

 

 

 

 

 

 

 

 

Average passenger trip length

 

525

 

520

 

1.0

%

 

 

6



 

SkyWest, Inc. and Subsidiaries

Additional Operational Information (unaudited)

 

SkyWest’s total fleet in service decreased by 15 aircraft during Q1 2018, as follows:

 

Aircraft in scheduled service at December 31, 2017:

 

 

 

595

 

Additions:

 

 

 

 

 

New E175/E175 SC aircraft:

 

 

 

5

 

Removals, net:

 

 

 

 

 

CRJ900 aircraft:

 

(10

)

 

 

CRJ700 aircraft:

 

(2

)

 

 

ERJ145 aircraft

 

(12

)

 

 

Total net removals:

 

 

 

(24

)

Redeployed in-transit CRJ200 aircraft:

 

 

 

4

 

Aircraft in scheduled service at March 31, 2018:

 

 

 

580

 

 

SkyWest’s total fleet in service decreased by 52 aircraft over the last twelve months, as follows:

 

Aircraft in scheduled service at March 31, 2017:

 

 

 

632

 

Additions:

 

 

 

 

 

New E175/E175 SC aircraft:

 

 

 

19

 

Removals, net:

 

 

 

 

 

ERJ145/135 aircraft:

 

(37

)

 

 

CRJ200 aircraft:

 

(9

)

 

 

CRJ900 aircraft;

 

(22

)

 

 

CRJ700 aircraft:

 

(3

)

 

 

Total net removals:

 

 

 

(71

)

Aircraft in scheduled service at March 31, 2018:

 

 

 

580

 

 

 

7



 

SkyWest, Inc. and Subsidiaries

Additional Operational Information (continued and unaudited)

 

Completed Block Hours by Aircraft Type and by Airline

 

 

 

Three months ended March 31

 

By Aircraft Type:

 

2018

 

2017

 

Variance %

 

E175s

 

99,592

 

79,927

 

24.6

 

CRJ700/900s

 

128,815

 

136,861

 

(5.9

)

Dual-class aircraft

 

228,407

 

216,788

 

5.4

 

 

 

 

 

 

 

 

 

CRJ200s

 

135,009

 

133,275

 

1.3

 

ERJ145/135s

 

72,951

 

102,620

 

(28.9

)

50-seat aircraft

 

207,960

 

235,895

 

(11.8

)

Total Block Hours

 

436,367

 

452,683

 

(3.6

)

 

 

 

Three months ended March 31

 

By Airline:

 

2018

 

2017

 

Variance %

 

SkyWest Airlines

 

328,944

 

277,835

 

18.4

 

ExpressJet

 

107,423

 

174,848

 

(38.6

)

Total Block Hours

 

436,367

 

452,683

 

(3.6

)

 

Quarterly Fleet and Block Hour Production Forecast for 2018

 

Fleet (1):

 

As of
12/31/2017

 

As of
3/31/2018

 

As of
6/30/2018

 

As of
9/30/2018

 

As of
12/31/2018

 

 

 

 

 

 

(Actual)

 

(Actual)

 

(Estimate)

 

(Estimate)

 

(Estimate)

 

 

 

 

E175/175SCs

 

107

 

112

 

128

 

141

 

146

 

 

 

 

CRJ700/900s

 

181

 

169

 

158

 

149

 

140

 

 

 

 

CRJ200s

 

195

 

199

 

192

 

180

 

171

 

 

 

 

ERJ145s/135s

 

112

 

100

 

100

 

100

 

100

 

 

 

 

Totals

 

595

 

580

 

578

 

570

 

557

 

 

 

 

 

Production (2):

 

Q4-2017

 

Q1-2018

 

Q2-2018

 

Q3-2018

 

Q4-2018

 

 

Total 2018

 

 

 

(Actual)

 

(Actual)

 

(Estimate)

 

(Estimate)

 

(Estimate)

 

 

(Estimate)

 

Block Hours

 

450,095

 

436,367

 

439,000

 

451,000

 

434,000

 

 

1,760,000

 


(1) Fleet count excludes aircraft removed from scheduled service. Actual fleet counts may vary from the forecast due to timing of aircraft removed from service, timing of aircraft transitioned into service and timing of new aircraft deliveries.

 

(2) Actual production may vary from estimates for various reasons including, but not limited to, timing of aircraft removals and deliveries and anticipated flight completion rates. SkyWest has discontinued providing ASM forecasts, as ASMs are not a meaningful metric in SkyWest’s capacity purchase agreements.

 

 

8


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