SkyWest, Inc. Announces Fourth Quarter and Annual 2023 Profit
- Record 300 days of 100% controllable completion in 2023
- Revenue increased to $752 million in Q4 2023, up 10% from the previous year
- Operating expenses were $724 million
- Acquired a 25% ownership stake in Contour Airlines
- Net income decreased from $73 million in 2022 to $34 million in 2023
- Total debt was $3.0 billion at December 31, 2023
Insights
Examining the financial performance of SkyWest, Inc., several key metrics stand out. The company's pre-tax income of $24 million in Q4 2023 and net income of $18 million, or $0.42 per diluted share, represent a significant recovery from a net loss of $47 million in Q4 2022. This turnaround is indicative of effective cost management and potentially favorable market conditions. The full-year net income of $34 million, or $0.77 per diluted share, although lower than the previous year's $73 million, suggests resilience in the face of industry challenges. The share repurchase program, with 21% of outstanding shares bought back, is a bullish signal on management's confidence in the company's valuation, potentially leading to earnings per share accretion.
Furthermore, the increase in revenue to $752 million in Q4 2023, attributed to contract rate increases and higher production, against a modest 1% rise in operating expenses, reflects strong operational leverage. However, investors should be cognizant of the $91 million of remaining availability under the share repurchase program, which could affect future liquidity. The decrease in total debt is a positive indicator of the company's commitment to balance sheet strength. The capital expenditures for new aircraft suggest a strategic investment in fleet modernization, which may enhance competitiveness but also requires scrutiny of the associated debt levels and return on investment.
The reported 300 days of 100% controllable completion in 2023 is a remarkable operational achievement for SkyWest, reflecting superior reliability and efficiency in its service delivery. This operational excellence can lead to stronger partnerships with major airlines and higher customer satisfaction, potentially translating into more favorable contract terms in the future.
The acquisition of a 25% ownership stake in Contour Airlines aligns with strategic diversification and could open new revenue streams for SkyWest. The asset provisioning agreement to provide CRJ airframes, engines and parts to Contour represents an innovative use of existing assets to generate additional income. However, stakeholders should assess the potential risks associated with expanding into the Part 135 carrier space, which operates under different regulatory and competitive dynamics compared to SkyWest's mainline operations.
Regarding the commercial agreements with major airline partners, the optimization of fleet delivery timings and the scheduled operation of 258 E175 aircraft by the end of 2026 indicate a commitment to fleet expansion and renewal. This planned growth in capacity is a strategic move to secure future revenue growth but also necessitates careful monitoring of demand trends in the regional airline sector to avoid overcapacity.
The 10% increase in Q4 2023 revenue indicates strong demand for SkyWest's services, which is in line with broader industry trends of recovering passenger numbers post-pandemic. The company's proactive measures, such as improved pilot retention, are essential in an industry facing a pilot shortage and could provide a competitive edge. The market should also note the 2% higher production in Q4 2023, which reflects an increase in operational capacity and may signal confidence in sustained demand.
However, the deferred revenue of $63 million under flying contracts in Q4 2023, although lower than Q4 2022, requires careful analysis as it may impact future revenue recognition and cash flows. Investors should also consider the broader economic context, including fuel costs and potential shifts in consumer travel behavior, which could influence the company's performance going forward.
Fourth Quarter and Annual 2023 Summary
-
Q4 2023 pre-tax income of
$24 million $18 million $0.42 -
Full year 2023 pre-tax income of
$40 million $34 million $0.77 -
SkyWest had 300 days of
100% controllable completion in 2023
Commenting on the results, Chip Childs, Chief Executive Officer of SkyWest, said, “Our teams continued to generate an exceptional product this quarter. Together, the SkyWest team achieved a record 300 days of
Under its previously announced share repurchase program authorized by the SkyWest Board of Directors in May 2023, SkyWest repurchased 1.0 million shares of common stock for
Financial Results
Revenue was
Operating expenses were
Capital and Liquidity
SkyWest had
Total debt at December 31, 2023 was
Commercial Agreements
SkyWest is coordinating with its major airline partners to optimize the timing of upcoming announced fleet deliveries. The anticipated E175 future delivery dates summarized below are based on currently available information and are subject to change.
|
|
2024 |
|
2025 |
|
2026 |
|
Total |
Delta Air Lines |
|
1 |
|
ꟷ |
|
ꟷ |
|
1 |
United Airlines |
|
4 |
|
7 |
|
8 |
|
19 |
Alaska Airlines |
|
ꟷ |
|
1 |
|
ꟷ |
|
1 |
Total |
|
5 |
|
8 |
|
8 |
|
21 |
By the end of 2026, SkyWest is scheduled to operate a total of 258 E175 aircraft.
SkyWest also announced today that it has acquired a
About SkyWest
SkyWest, Inc. is the holding company for SkyWest Airlines and SkyWest Leasing, an aircraft leasing company. SkyWest Airlines has a fleet of approximately 500 aircraft connecting passengers to over 240 destinations throughout
SkyWest will host its conference call to discuss its fourth quarter 2023 results today, February 1, 2024, at 2:30 p.m. Mountain Time. The conference call number is 1-888-330-2455 for domestic callers, and 1-240-789-2717 for 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://events.q4inc.com/attendee/811189566. This press release and additional information regarding SkyWest, including access information for the digital rebroadcast of the fourth quarter 2023 results call, participation at investor conferences and investor presentations 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 effect of economic conditions on SkyWest’s business, financial condition and results of operations, the scheduled aircraft deliveries for SkyWest in upcoming periods and the related execution of SkyWest’s fleet transition strategy and expected timing thereof, expected production levels in future periods and associated staffing challenges, pilot attrition trends, SkyWest’s coordination with major airline partners to optimize the delivery of aircraft under previously announced agreements, the expected terms, timing and benefits related to SkyWest’s leasing and joint venture transactions, SkyWest’s provisioning of assets to Contour Airlines, 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 statements unless required by law. Readers should note that many factors could affect the future operating and financial results of SkyWest 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 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, including related to inflationary pressures, and related decreases in customer demand and spending; uncertainty regarding continued recovery from the COVID-19 pandemic and other potential future outbreaks of infectious diseases or other health concerns, and the consequences of such outbreaks to the travel industry, including travel demand and travel behavior, and our major partners in general and the financial condition and operating results of SkyWest in particular; the prospects of entering into agreements with existing or other carriers to fly new aircraft; ongoing negotiations between SkyWest and its major partners regarding their contractual obligations; uncertainties regarding operation of new aircraft; the ability to attract and retain qualified pilots, including captains, and related staffing challenges; the impact of regulatory issues such as pilot rest rules and qualification requirements; the ability to obtain aircraft financing; the financial stability of SkyWest’s major airline partners and any potential impact of their financial condition on the operations of SkyWest; fluctuations in flight schedules, which are determined by the major airline partners for whom SkyWest conducts flight operations; variations in market and economic conditions; significant aircraft lease and debt commitments; estimated useful life of long-lived assets, residual aircraft values and related impairment charges; labor relations and costs and labor shortages; the impact of global instability; rapidly fluctuating fuel costs and potential fuel shortages; the impact of weather-related, natural disasters and other air safety incidents on air travel and airline costs; aircraft deliveries; uncertainty regarding ongoing hostility between
SkyWest, Inc. and Subsidiaries |
||||||||||||||||
Condensed Consolidated Statements of Income (Loss) |
||||||||||||||||
(Dollars and Shares in Thousands, Except per Share Amounts) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended |
|
Year ended |
||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
OPERATING REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Flying agreements |
|
$ |
728,267 |
|
|
$ |
654,486 |
|
|
$ |
2,834,397 |
|
|
$ |
2,899,837 |
|
Lease, airport services and other |
|
|
23,520 |
|
|
|
26,759 |
|
|
|
101,035 |
|
|
|
105,088 |
|
Total operating revenues |
|
|
751,787 |
|
|
|
681,245 |
|
|
|
2,935,432 |
|
|
|
3,004,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries, wages and benefits |
|
|
331,956 |
|
|
|
315,204 |
|
|
|
1,322,615 |
|
|
|
1,211,551 |
|
Aircraft maintenance, materials and repairs |
|
|
190,271 |
|
|
|
137,679 |
|
|
|
673,453 |
|
|
|
644,157 |
|
Depreciation and amortization |
|
|
95,237 |
|
|
|
97,125 |
|
|
|
383,115 |
|
|
|
394,552 |
|
Aircraft fuel |
|
|
23,340 |
|
|
|
23,367 |
|
|
|
85,913 |
|
|
|
108,456 |
|
Airport-related expenses |
|
|
18,992 |
|
|
|
17,353 |
|
|
|
72,640 |
|
|
|
71,549 |
|
Aircraft rentals |
|
|
1,452 |
|
|
|
27,244 |
|
|
|
25,507 |
|
|
|
75,353 |
|
Other operating expenses |
|
|
62,917 |
|
|
|
98,337 |
|
|
|
268,120 |
|
|
|
318,145 |
|
Total operating expenses |
|
|
724,165 |
|
|
|
716,309 |
|
|
|
2,831,363 |
|
|
|
2,823,763 |
|
OPERATING INCOME (LOSS) |
|
|
27,622 |
|
|
|
(35,064 |
) |
|
|
104,069 |
|
|
|
181,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
12,167 |
|
|
|
8,273 |
|
|
|
43,928 |
|
|
|
17,605 |
|
Interest expense |
|
|
(31,049 |
) |
|
|
(34,775 |
) |
|
|
(130,930 |
) |
|
|
(127,083 |
) |
Other income (loss), net |
|
|
15,698 |
|
|
|
(112 |
) |
|
|
23,242 |
|
|
|
20,899 |
|
Total other expense, net |
|
|
(3,184 |
) |
|
|
(26,614 |
) |
|
|
(63,760 |
) |
|
|
(88,579 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
INCOME (LOSS) BEFORE INCOME TAXES |
|
|
24,438 |
|
|
|
(61,678 |
) |
|
|
40,309 |
|
|
|
92,583 |
|
PROVISION (BENEFIT) FOR INCOME TAXES |
|
|
6,922 |
|
|
|
(14,574 |
) |
|
|
5,967 |
|
|
|
19,630 |
|
NET INCOME (LOSS) |
|
$ |
17,516 |
|
|
$ |
(47,104 |
) |
|
$ |
34,342 |
|
|
$ |
72,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
BASIC EARNINGS (LOSS) PER SHARE |
|
$ |
0.43 |
|
|
$ |
(0.93 |
) |
|
$ |
0.78 |
|
|
$ |
1.44 |
|
DILUTED EARNINGS (LOSS) PER SHARE |
|
$ |
0.42 |
|
|
$ |
(0.93 |
) |
|
$ |
0.77 |
|
|
$ |
1.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
40,706 |
|
|
|
50,598 |
|
|
|
43,940 |
|
|
|
50,548 |
|
Diluted |
|
41,776 |
|
|
50,598 |
|
|
|
44,599 |
|
|
50,644 |
||||
SkyWest, Inc. and Subsidiaries |
||||||
Summary of Consolidated Balance Sheets |
||||||
(Dollars in Thousands) |
||||||
(Unaudited) |
||||||
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|||
|
2023 |
|
2022 |
|||
Cash and marketable securities |
$ |
835,223 |
|
$ |
1,047,215 |
|
Other current assets |
|
296,673 |
|
|
324,066 |
|
Total current assets |
|
1,131,896 |
|
|
1,371,281 |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
5,405,685 |
|
|
5,524,549 |
|
Deposits on aircraft |
|
77,282 |
|
|
23,931 |
|
Other long-term assets |
|
411,430 |
|
|
494,792 |
|
Total assets |
$ |
7,026,293 |
|
$ |
7,414,553 |
|
|
|
|
|
|
|
|
Current portion, long-term debt |
$ |
443,869 |
|
$ |
438,502 |
|
Other current liabilities |
|
810,423 |
|
|
734,041 |
|
Total current liabilities |
|
1,254,292 |
|
|
1,172,543 |
|
|
|
|
|
|
|
|
Long-term debt, net of current maturities |
|
2,562,183 |
|
|
2,941,772 |
|
Other long-term liabilities |
|
1,096,316 |
|
|
952,607 |
|
Stockholders' equity |
|
2,113,502 |
|
|
2,347,631 |
|
Total liabilities and stockholders' equity |
$ |
7,026,293 |
|
$ |
7,414,553 |
|
SkyWest, Inc. and Subsidiaries |
||||||
Additional Operational Information (unaudited) |
||||||
SkyWest’s fleet in scheduled service or under contract by aircraft type: |
||||||
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
E175 aircraft |
|
237 |
|
235 |
|
236 |
CRJ900 aircraft |
|
41 |
|
37 |
|
41 |
CRJ700 aircraft |
|
118 |
|
117 |
|
104 |
CRJ200 aircraft |
|
89 |
|
104 |
|
136 |
Total aircraft in service or under contract |
|
485 |
|
493 |
|
517 |
As of December 31, 2023, SkyWest leased 35 CRJ700s and five CRJ900s to third parties and had 16 CRJ200s that are ready for service under SkyWest Charter (“SWC”) operations (these aircraft are excluded from the table above).
Selected operational data: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
For the three months ended December 31, |
|
For the year ended December 31, |
||||||||||||||
Block hours by aircraft type: |
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
||||||
E175s |
|
177,104 |
|
|
153,959 |
|
|
15.0 |
% |
|
677,886 |
|
|
635,039 |
|
|
6.7 |
% |
CRJ900s |
|
17,198 |
|
|
23,194 |
|
|
(25.8 |
)% |
|
76,588 |
|
|
101,662 |
|
|
(24.7 |
)% |
CRJ700s |
|
59,820 |
|
|
58,498 |
|
|
2.3 |
% |
|
218,059 |
|
|
261,036 |
|
|
(16.5 |
)% |
CRJ200s |
|
36,632 |
|
|
49,253 |
|
|
(25.6 |
)% |
|
167,911 |
|
|
256,655 |
|
|
(34.6 |
)% |
Total block hours |
|
290,754 |
|
|
284,904 |
|
|
2.1 |
% |
|
1,140,443 |
|
|
1,254,392 |
|
|
(9.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Departures |
|
177,433 |
|
|
168,816 |
|
|
5.1 |
% |
|
691,962 |
|
|
739,388 |
|
|
(6.4 |
)% |
Passengers carried |
|
9,925,655 |
|
|
9,437,439 |
|
|
5.2 |
% |
|
38,597,309 |
|
|
40,064,689 |
|
|
(3.7 |
)% |
Adjusted flight completion |
|
99.9 |
% |
|
99.9 |
% |
|
— |
pts |
|
99.9 |
% |
|
99.7 |
% |
|
0.2 |
pts |
Raw flight completion |
|
99.5 |
% |
|
98.3 |
% |
|
1.2 |
pts |
|
98.8 |
% |
|
98.2 |
% |
|
0.6 |
pts |
Passenger load factor |
|
83.4 |
% |
|
84.6 |
% |
|
(1.2 |
)pts |
|
83.6 |
% |
|
83.4 |
% |
|
0.2 |
pts |
Average trip length |
|
445 |
|
|
479 |
|
|
(7.0 |
)% |
|
453 |
|
|
493 |
|
|
(8.1 |
)% |
Adjusted flight completion percent excludes weather cancellations. Raw flight completion includes weather cancellations.
Supplemental Cash Flow Information
SkyWest receives certain fixed monthly cash payments under its capacity purchase agreements (“CPAs”) that are attributed to SkyWest’s overhead costs and certain fixed monthly cash payments associated with SkyWest’s aircraft ownership costs. Fixed payments allocated to the non-lease portion are recognized as revenue on a completed block hour basis over the applicable contract term. Fixed payments allocated to the lease portion are accounted for as lease revenue under the CPAs and are recognized on a straight-line basis over the applicable contract term. Fixed monthly cash payments received in excess of revenue recognized during the reporting period are recorded as deferred revenue and revenue recognized in excess of fixed monthly cash payments during the reporting period are recorded as unbilled revenue on SkyWest’s consolidated balance sheet. Amendments to certain CPAs executed since September 30, 2022 modified the fixed rate structure and resulted in higher deferred revenue amounts in 2023 compared to 2022. The following supplemental cash flow schedule summarizes the total revenue recognized in excess of (or less than) the fixed monthly cash received during the indicated reporting periods and the cumulative difference as of December 31, 2023 and December 31, 2022 (dollars in thousands, unaudited).
|
|
Three months ended |
|
Year ended |
||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenue recognized in excess of (less than) fixed cash payments received |
|
$ |
(62,604 |
) |
|
$ |
(69,521 |
) |
|
$ |
(242,463 |
) |
|
$ |
(29,322 |
) |
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
|
|
As of December 31, 2023 |
|
As of December 31, 2022 |
||||
Cumulative revenue recognized less than fixed cash payments received |
|
$ |
(367,276 |
) |
|
$ |
(124,813 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240201042560/en/
Investor Relations
435.634.3200
Investor.relations@skywest.com
Corporate Communications
435.634.3553
corporate.communications@skywest.com
Source: SkyWest, Inc.
FAQ
What was SkyWest's pre-tax income for Q4 2023?
How many days of 100% controllable completion did SkyWest achieve in 2023?
What was the revenue in Q4 2023?
What was the operating expenses in Q4 2023?
What was SkyWest's total debt at December 31, 2023?
What stake did SkyWest acquire in Contour Airlines?
