SkyWest, Inc. Announces Second Quarter 2024 Profit

Rhea-AI Summary

SkyWest Inc. (NASDAQ: SKYW) reported strong financial results for Q2 2024, with net income of $76 million, or $1.82 per diluted share, compared to $15 million in Q2 2023. Revenue increased by 19% to $867 million, driven by a 12% increase in block hour production. The company took delivery of eight E175 partner-financed aircraft under an agreement with United Airlines. SkyWest's cash position remained stable at $834 million, while total debt decreased to $2.8 billion. The company repurchased 177,000 shares for $13.3 million during Q2 2024. SkyWest is set to operate a total of 278 E175 aircraft by the end of 2026, with additional deliveries scheduled for Delta Air Lines and Alaska Airlines.

Positive

• Net income increased significantly from $15 million in Q2 2023 to $76 million in Q2 2024
• Revenue grew by 19% year-over-year to $867 million
• Block hour production increased by 12% compared to Q2 2023
• Total debt decreased from $3.0 billion to $2.8 billion
• SkyWest repurchased 177,000 shares for $13.3 million, enhancing shareholder value

Negative

• Operating expenses increased by 8% to $747 million due to higher block hour production
• Cash and marketable securities slightly decreased from $835 million to $834 million

Insights

Financial Analyst

SkyWest's Q2 2024 results demonstrate a significant improvement in financial performance compared to the same period last year. The company reported $76 million in net income, translating to $1.82 per diluted share, a substantial increase from $15 million ($0.35 per share) in Q2 2023. This 407% year-over-year growth in net income is particularly noteworthy.

Revenue increased by 19% to $867 million, driven by a 12% increase in block hour production. This growth reflects improved captain availability, a critical factor in the airline industry. The company's ability to recognize $6 million of previously deferred revenue this quarter, compared to deferring $60 million in Q2 2023, further bolstered the top line.

Operating expenses rose by 8%, which is lower than the revenue growth rate, indicating improved operational efficiency. This has resulted in an operating margin of approximately 13.8%, a significant improvement from the 4.4% in Q2 2023.

The balance sheet remains strong with $834 million in cash and marketable securities, although slightly down from year-end 2023. Total debt decreased by $200 million since December 2023, showing effective debt management. The company's share repurchase program, with $69 million remaining, demonstrates confidence in its financial position and commitment to shareholder returns.

Looking ahead, SkyWest's planned expansion of its E175 fleet to 278 aircraft by 2026 positions the company for continued growth, particularly in serving small and underserved markets. This strategy aligns well with the ongoing recovery and evolution of the regional airline sector.

Aviation Industry Expert

SkyWest's Q2 2024 performance highlights a robust recovery in the regional airline sector. The 12% increase in block hour production is a key indicator of operational efficiency and demand recovery. This growth is particularly impressive given the industry-wide challenges in pilot availability that have plagued regional carriers.

The delivery of eight E175 aircraft (out of a planned 20) to United Airlines is a significant development. The E175 is a popular choice for regional routes due to its efficiency and passenger comfort. This fleet expansion aligns with the industry trend of upgauging regional fleets to larger, more efficient aircraft.

SkyWest's strategy to organically rebuild captain availability is crucial. The pilot shortage has been a major constraint for regional airlines and SkyWest's progress in this area could provide a competitive advantage. This improvement in staffing levels opens up opportunities for growth in small and underserved markets, a traditional stronghold for regional carriers.

The planned expansion to 278 E175 aircraft by 2026 is ambitious but well-timed. As major carriers continue to focus on larger aircraft for their mainline operations, there's an increasing reliance on regional partners like SkyWest to serve smaller markets and provide feed to hubs. This fleet strategy positions SkyWest to capitalize on this trend and potentially gain market share.

However, it's important to note the potential risks. The regional airline industry is highly dependent on contracts with major carriers and any shifts in these relationships could impact SkyWest's future performance. Additionally, while pilot availability has improved, ongoing industry-wide challenges in this area could still pose risks to growth plans.

Second Quarter 2024 Summary

• Q2 2024 pre-tax income of $102 million, net income of $76 million, or $1.82 per diluted share
• SkyWest took delivery of eight of the 20 E175 partner-financed aircraft under a previously announced agreement with United Airlines
• Block hour production increased 12% in Q2 2024 compared to Q2 2023

ST. GEORGE, Utah--(BUSINESS WIRE)-- SkyWest, Inc. (NASDAQ: SKYW) (“SkyWest”) today reported financial and operating results for Q2 2024, including net income of $76 million, or $1.82 per diluted share, compared to net income of $15 million, or $0.35 per diluted share, for Q2 2023.

Commenting on the results, Chip Childs, Chief Executive Officer of SkyWest, said, “We are pleased with our continuing progress towards organically rebuilding our levels of captain availability. This opens the door to pursue and monetize the multiple pathways available to us to recapture and regrow small and underserved markets over the coming years. I want to thank our people for their solid operational execution.”

Financial Results

Revenue was $867 million in Q2 2024, up $141 million, or 19%, from $726 million in Q2 2023. SkyWest’s block hour production increased 12% in Q2 2024 compared to Q2 2023, which reflects improvements in captain availability since Q2 2023.

For purposes of revenue comparability year-over-year, SkyWest recognized $6 million of previously deferred revenue during Q2 2024 under its flying contracts, compared to deferring $60 million of revenue under its flying contracts during Q2 2023. As of June 30, 2024, SkyWest had cumulative deferred revenue of $361 million on its balance sheet.

Operating expenses were $747 million in Q2 2024, up $53 million, or 8%, from $694 million in Q2 2023. The increase in operating expenses was primarily driven by the 12% increase in block hour production year-over-year.

Capital and Liquidity

SkyWest had $834 million in cash and marketable securities at June 30, 2024, down from $835 million at December 31, 2023.

Total debt at June 30, 2024 was $2.8 billion, down from $3.0 billion at December 31, 2023. Capital expenditures during Q2 2024 were $19 million for the purchase of spare engines and other fixed assets.

Under its previously announced share repurchase program authorized by the SkyWest Board of Directors in May 2023, SkyWest repurchased 177,000 shares of common stock for $13.3 million during Q2 2024 at an average price per share of $75.23. As of June 30, 2024, SkyWest had $69 million of remaining availability under its current share repurchase program.

Commercial Agreements

SkyWest is coordinating with its major airline partners to optimize the timing of upcoming announced fleet deliveries. The table below summarizes E175 aircraft deliveries SkyWest received during the first half of 2024 and anticipated future deliveries during the periods indicated based on currently available information, which is subject to change.

	Q1 & Q2 2024		Q3 & Q4 2024		2025		2026		Total
Delta Air Lines	ꟷ		1		ꟷ		ꟷ		1
United Airlines(1)	11		13		7		8		39
Alaska Airlines	ꟷ		ꟷ		1		ꟷ		1
Total	11		14		8		8		41
(1) Includes 11 partner-financed E175s delivered in the first half of 2024 and 9 partner-financed deliveries expected in the second half of 2024.

By the end of 2026, SkyWest is scheduled to operate a total of 278 E175 aircraft.

About SkyWest

SkyWest, Inc. is the holding company for SkyWest Airlines, SkyWest Charter (“SWC”) and SkyWest Leasing, an aircraft leasing company. SkyWest Airlines has a fleet of approximately 500 aircraft connecting passengers to over 240 destinations throughout North America. SkyWest Airlines operates through partnerships with United Airlines, Delta Air Lines, American Airlines, and Alaska Airlines carrying more than 38 million passengers in 2023.

SkyWest will host its conference call to discuss its second quarter 2024 results today, July 25, 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/662090633. This press release and additional information regarding SkyWest, including access information for the digital rebroadcast of the second quarter 2024 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 and fleet size 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, 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 airline 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 airline 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 Russia and the Ukraine, as well as Israel and Hamas, and the related impacts on macroeconomic conditions and on the international operations of any of our major airline partners as a result of such conflict; 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, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

SkyWest, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Loss)
(Dollars and Shares in Thousands, Except per Share Amounts)
(Unaudited)
	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2024				2023				2024				2023
OPERATING REVENUES:
Flying agreements	$	838,170			$	700,394			$	1,616,459			$	1,364,232
Lease, airport services and other		28,948				25,249				54,273				53,242
Total operating revenues		867,118				725,643				1,670,732				1,417,474
OPERATING EXPENSES:
Salaries, wages and benefits		355,005				322,441				706,004				657,642
Aircraft maintenance, materials and repairs		183,267				162,491				328,682				304,717
Depreciation and amortization		96,814				97,169				192,684				191,318
Aircraft fuel		21,328				18,279				42,492				39,243
Airport-related expenses		17,535				16,955				38,423				35,250
Aircraft rentals		1,310				2,428				2,586				21,956
Other operating expenses		72,219				74,020				140,715				140,192
Total operating expenses		747,478				693,783				1,451,586				1,390,318
OPERATING INCOME		119,640				31,860				219,146				27,156
OTHER INCOME (EXPENSE):
Interest income		12,040				10,494				23,666				20,527
Interest expense		(28,966	)			(33,718	)			(58,795	)			(67,338	)
Other income (loss), net		(548	)			9,001				(1,676	)			11,175
Total other expense, net		(17,474	)			(14,223	)			(36,805	)			(35,636	)
INCOME (LOSS) BEFORE INCOME TAXES		102,166				17,637				182,341				(8,480	)
PROVISION (BENEFIT) FOR INCOME TAXES		26,588				2,218				46,465				(1,828	)
NET INCOME (LOSS)	$	75,578			$	15,419			$	135,876			$	(6,652	)
BASIC EARNINGS (LOSS) PER SHARE	$	1.88			$	0.35			$	3.38			$	(0.14	)
DILUTED EARNINGS (LOSS) PER SHARE	$	1.82			$	0.35			$	3.28			$	(0.14	)
Weighted average common shares:
Basic		40,179				43,837				40,239				46,614
Diluted		41,431				44,219				41,462				46,614

SkyWest, Inc. and Subsidiaries
Summary of Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
	June 30,			December 31,
	2024			2023
Cash and marketable securities	$	834,269		$	835,223
Other current assets		280,887			296,673
Total current assets		1,115,156			1,131,896
Property and equipment, net		5,357,468			5,405,685
Deposits on aircraft		77,282			77,282
Other long-term assets		412,533			411,430
Total assets	$	6,962,439		$	7,026,293
Current portion, long-term debt	$	497,744		$	443,869
Other current liabilities		826,184			810,423
Total current liabilities		1,323,928			1,254,292
Long-term debt, net of current maturities		2,284,375			2,562,183
Other long-term liabilities		1,122,956			1,096,316
Stockholders' equity		2,231,180			2,113,502
Total liabilities and stockholders' equity	$	6,962,439		$	7,026,293

SkyWest, Inc. and Subsidiaries
Additional Operational Information (unaudited)
SkyWest’s fleet in scheduled service or under contract by aircraft type:
	June 30, 2024		December 31, 2023		June 30, 2023
E175 aircraft	248		237		235
CRJ900 aircraft	41		41		41
CRJ700 aircraft	99		118		110
CRJ200 aircraft	87		89		106
Total aircraft in service or under contract	475		485		492

As of June 30, 2024, SkyWest leased 35 CRJ700s and five CRJ900s to third parties and had 16 CRJ200s that are ready for service under SWC operations (these aircraft are excluded from the table above).

Selected operational data:
	For the three months ended June 30,										For the six months ended June 30,
Block hours by aircraft type:	2024			2023			% Change				2024			2023			% Change
E175s	195,207			168,416			15.9		%		374,192			329,167			13.7		%
CRJ900s	20,823			19,698			5.7		%		38,215			40,411			(5.4	)	%
CRJ700s	58,311			50,094			16.4		%		116,596			102,122			14.2		%
CRJ200s	43,121			44,409			(2.9	)	%		78,260			87,159			(10.2	)	%
Total block hours	317,462			282,617			12.3		%		607,263			558,859			8.7		%
Departures	189,325			173,837			8.9		%		358,757			334,460			7.3		%
Passengers carried	10,691,017			9,887,779			8.1		%		19,840,470			18,463,649			7.5		%
Adjusted flight completion	99.9	%		99.9	%		—		pts		99.9	%		99.9	%		—		pts
Raw flight completion	99.0	%		98.9	%		0.1		pts		98.4	%		98.2	%		0.2		pts
Passenger load factor	84.4	%		85.5	%		(1.1	)	pts		82.7	%		83.0	%		(0.3	)	pts
Average trip length	460			451			2.0		%		461			461			—		%

Adjusted flight completion percent excludes weather cancellations. Raw flight completion includes weather cancellations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725220475/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 (SKYW) earnings per share in Q2 2024?

SkyWest (SKYW) reported earnings of $1.82 per diluted share in Q2 2024.

How many E175 aircraft did SkyWest (SKYW) receive in Q2 2024?

SkyWest (SKYW) took delivery of eight E175 partner-financed aircraft under an agreement with United Airlines in Q2 2024.

What was SkyWest's (SKYW) revenue in Q2 2024?

SkyWest (SKYW) reported revenue of $867 million in Q2 2024, a 19% increase from Q2 2023.

How many E175 aircraft is SkyWest (SKYW) scheduled to operate by the end of 2026?

SkyWest (SKYW) is scheduled to operate a total of 278 E175 aircraft by the end of 2026.