SkyWest, Inc. Announces Third Quarter 2020 Profit
SkyWest reported its Q3 2020 results, showing a net income of $34 million or $0.66 per diluted share, down from $91 million or $1.79 per diluted share in Q3 2019. Revenue dropped to $457 million from $760 million due to COVID-19 impacts. Notably, SkyWest secured a $725 million loan facility and announced new agreements for 20 used CRJ700s with American Airlines. Operating expenses fell to $383 million, aided by $190 million in CARES Act payroll support. Cash and marketable securities rose to $822 million, while total debt increased to $3.1 billion.
- Secured an agreement for 20 used CRJ700s under a contract with American Airlines.
- Increased loan facility under the CARES Act to $725 million.
- Cash and marketable securities up to $822 million.
- Operating expenses reduced to $383 million due to fewer flights.
- Net income down 63% year-over-year from $91 million in Q3 2019 to $34 million.
- Revenue declined 40% from $760 million in Q3 2019 to $457 million.
- Total block hours decreased by 41% compared to the previous year.
ST. GEORGE, Utah, Oct. 29, 2020 /PRNewswire/ --
Third Quarter Highlights and New Deals Announced Today
- Pre-tax income of
$46 million , net income of$34 million , or$0.66 per diluted share - Increased SkyWest's secured loan facility under the CARES Act to
$725 million - Secured an agreement to place 20 used CRJ700s under a flying contract with American
- Secured agreements to acquire and lease 21 used CRJ700 aircraft to a regional airline
SkyWest, Inc. (NASDAQ: SKYW) ("SkyWest") today reported financial and operating results for Q3 2020, including net income of
Commenting on the results, Chip Childs, Chief Executive Officer of SkyWest, said, "Over the past several months, we have worked with our partners and our people to respond quickly and aggressively to the worst crisis our industry has experienced. The SkyWest team continues to demonstrate exceptional dedication and flexibility, and I want to thank them for their hard work and focus through this challenge. We are committed and remain laser-focused on ensuring we are positioned for the long-term, maintaining strong liquidity, and delivering on our partners' objectives in the recovery."
Financial Results
Revenue was
SkyWest deferred recognizing revenue on
Operating expenses were
New Deals Announced Today
SkyWest secured an agreement to place 20 used CRJ700s under a multi-year flying contract with American Airlines ("American"). SkyWest anticipates using its own aircraft not currently under contract with a partner to fulfill this agreement. The aircraft are expected to be placed into service ratably throughout 2021. Following the placement of these 20 aircraft, combined with anticipated placement of four CRJ700s in Q4 2020 and five CRJ700s in 2021 under a previously announced deal, SkyWest is scheduled to have a total of 90 CRJ700s under contract with American by the end of 2021.
SkyWest also secured agreements to acquire 21 used CRJ700s in a 50-seat configuration and lease the aircraft under a multi-year term to another regional airline operating for United Airlines. The aircraft purchases and leases are expected to be completed in Q4 2020.
Status Update on Previously Announced Deals
SkyWest is coordinating with its major airline partners to optimize the timing of upcoming fleet deliveries under previously announced deals in response to COVID-19 schedule reductions. The anticipated future delivery dates summarized below are based on currently available information and are subject to change.
Flying contract with Delta Air Lines ("Delta")
- Four new E175 aircraft to be financed and operated by SkyWest are scheduled for delivery in Q4 2020. Normal cash down payments are already covered by deposits paid last year.
- One new CRJ900 aircraft to be financed by Delta and operated by SkyWest is scheduled for delivery in 2021.
Flying contract with American for E175 aircraft
Twenty new E175 aircraft to be financed and operated by SkyWest:
- Five aircraft deliveries are anticipated in Q4 2021 and 15 deliveries in 2022
- SkyWest anticipates financing the aircraft through debt
Flying contract with Delta for CRJ200 aircraft
As previously announced, SkyWest's capacity purchase agreement with Delta for CRJ200 aircraft is scheduled to expire in 2020. SkyWest owns the remaining 17 CRJ200 aircraft under contract with Delta as of September 30, 2020. SkyWest has no outstanding financing obligations on these 17 CRJ200 aircraft and anticipates these aircraft will be fully depreciated upon removal from the Delta contract.
Capital and Liquidity
SkyWest had
During Q3 2020, as previously announced, SkyWest and SkyWest Airlines entered into a
During Q3 2020, SkyWest received
As of September 30, 2020, SkyWest had 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 over 400 aircraft connecting passengers to over 250 destinations throughout North America. SkyWest Airlines operates through partnerships with United Airlines, Delta Air Lines, American Airlines and Alaska Airlines carrying more than 43 million passengers in 2019.
SkyWest will host its conference call to discuss third quarter 2020 results today, October 29, 2020, 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/1088/37992. This press release and additional information regarding SkyWest, including access information for the digital rebroadcast of the third quarter 2020 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 expected terms, timing and benefits of the CARES Act funding, the impact of the COVID-19 outbreak on SkyWest's business, financial condition and results of operations, the scheduled aircraft deliveries for SkyWest Airlines in upcoming years, and related removal from service and/or placement into service of certain aircraft, SkyWest's coordination with major airline partners to optimize the delivery of aircraft under previously announced deals, 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 for any reason. 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, uncertainties regarding the impact of the CARES Act funding on SkyWest's business and operations, the consequences of the COVID-19 outbreak to economic conditions, the travel industry 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, 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 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 existing global COVID-19 pandemic and the outbreak of any other disease or similar public health threat that affects travel demand or travel behavior; 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 the duration and impact of the COVID-19 pandemic, and related decreases in customer demand and spending; the financial stability of SkyWest's major partners and any potential impact of their financial condition on the operations of SkyWest; fluctuations in flight schedules, which are determined by the major 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; 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; 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 (Dollars and Shares in Thousands, Except per Share Amounts) (Unaudited) | |||||||||
Three Months Ended September 30 |
Nine Months Ended September 30 | ||||||||
2020 | 2019 | 2020 | 2019 | ||||||
OPERATING REVENUES | |||||||||
Flying agreements | $ 445,048 | $ 738,838 | $ 1,490,912 | $ 2,164,173 | |||||
Lease, airport services and other | 12,445 | 21,457 | 46,557 | 64,199 | |||||
Total operating revenues | 457,493 | 760,295 | 1,537,469 | 2,228,372 | |||||
OPERATING EXPENSES | |||||||||
Salaries, wages and benefits | 194,516 | 251,414 | 613,895 | 752,768 | |||||
Aircraft maintenance, materials and repairs | 150,148 | 133,521 | 431,654 | 376,572 | |||||
Depreciation and amortization | 121,467 | 92,795 | 364,813 | 272,929 | |||||
Airport-related expenses | 18,003 | 27,808 | 70,192 | 89,237 | |||||
Aircraft rentals | 15,785 | 17,676 | 49,537 | 55,840 | |||||
Aircraft fuel | 13,641 | 31,063 | 45,875 | 87,570 | |||||
CARES Act payroll support grant | (190,200) | - | (342,138) | - | |||||
Special items | - | - | - | 21,869 | |||||
Other operating expenses | 59,580 | 59,577 | 167,170 | 184,634 | |||||
Total operating expenses | 382,940 | 613,854 | 1,400,998 | 1,841,419 | |||||
OPERATING INCOME | 74,553 | 146,441 | 136,471 | 386,953 | |||||
OTHER INCOME (EXPENSE) | |||||||||
Interest income | 1,403 | 3,542 | 5,652 | 11,081 | |||||
Interest expense | (30,150) | (31,606) | (91,280) | (96,884) | |||||
Other income, net | 405 | 361 | 1,205 | 47,367 | |||||
Total other income (expense), net | (28,342) | (27,703) | (84,423) | (38,436) | |||||
INCOME BEFORE INCOME TAXES | 46,211 | 118,738 | 52,048 | 348,517 | |||||
PROVISION FOR INCOME TAXES | 12,549 | 27,399 | 14,113 | 80,945 | |||||
NET INCOME | $ 33,662 | $ 91,339 | $ 37,935 | $ 267,572 | |||||
BASIC EARNINGS PER SHARE | $ 0.67 | $ 1.80 | $ 0.76 | $ 5.24 | |||||
DILUTED EARNINGS PER SHARE | $ 0.66 | $ 1.79 | $ 0.75 | $ 5.19 | |||||
Weighted average common shares | |||||||||
Basic | 50,181 | 50,746 | 50,199 | 51,111 | |||||
Diluted | 50,622 | 51,129 | 50,445 | 51,568 | |||||
SkyWest, Inc. and Subsidiaries Summary of Consolidated Balance Sheets (Dollars in Thousands) (Unaudited) | |||
September 30, 2020 | December 31, 2019 | ||
Cash and marketable securities | $ 822,021 | $ 520,172 | |
Other current assets | 155,257 | 240,174 | |
Total current assets | 977,278 | 760,346 | |
| 5,167,483 | 5,345,823 | |
Deposit on aircraft | 40,263 | 48,858 | |
Other long-term assets | 573,570 | 502,102 | |
Total assets | $ 6,758,594 | $ 6,657,129 | |
Current portion, long-term debt | $ 360,288 | $ 364,126 | |
Other current liabilities | 499,616 | 560,550 | |
Total current liabilities | 859,904 | 924,676 | |
Long-term debt, net of current maturities | 2,707,769 | 2,628,989 | |
Other long-term liabilities | 1,005,821 | 928,450 | |
Stockholders' equity | 2,185,100 | 2,175,014 | |
Total liabilities and stockholders' equity | $ 6,758,594 | $ 6,657,129 |
SkyWest, Inc. and Subsidiaries Additional Operational Information (unaudited) | |||||||||||||||
SkyWest's fleet in scheduled service by aircraft type: | |||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||
E175 aircraft | 189 | 189 | 151 | ||||||||||||
CRJ900 aircraft | 39 | 43 | 43 | ||||||||||||
CRJ700 aircraft | 86 | 86 | 99 | ||||||||||||
CRJ200 aircraft | 134 | 153 | 190 | ||||||||||||
Total aircraft | 448 | 471 | 483 | ||||||||||||
As of September 30, 2020, SkyWest leased four CRJ200s, 13 CRJ700s and five CRJ900s to third parties |
Selected operational data: | |||||||
Three months ended September 30, |
Nine months ended September 30, | ||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||
Block hours by aircraft type: | |||||||
E175s | 117,342 | 135,780 | (13.6)% | 311,476 | 395,776 | (21.3)% | |
CRJ900s | 12,861 | 31,595 | (59.3)% | 45,214 | 93,988 | (51.9)% | |
CRJ700s | 45,807 | 75,612 | (39.4)% | 144,547 | 224,448 | (35.6)% | |
CRJ200 | 46,551 | 132,946 | (65.0)% | 204,573 | 381,892 | (46.4)% | |
Total block hours | 222,561 | 375,933 | (40.8)% | 705,810 | 1,096,104 | (35.6)% | |
Departures | 137,493 | 219,272 | (37.3)% | 427,531 | 627,799 | (31.9)% | |
Adjusted flight completion | 0.0 pts | 0.0 pts | |||||
Raw flight completion | 0.8 pts | (0.5) pts | |||||
Passengers carried | 4,916,403 | 11,568,831 | (57.5)% | 15,583,236 | 32,566,966 | (52.2)% | |
Passenger load factor | (29.8) pts | (25.6) pts | |||||
Average trip length | 503 | 501 | 495 | 501 | (1.2)% | ||
Adjusted flight completion percent excludes weather cancellations. Raw flight completion includes weather cancellations. |
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SOURCE SkyWest, Inc.
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