SkyWest, Inc. Announces Third Quarter 2022 Profit

Rhea-AI Summary

SkyWest reported strong financial results for Q3 2022, with a net income of $48 million or $0.96 per diluted share, an increase from $10 million or $0.19 per diluted share in Q3 2021. Revenue rose 6% to $789 million, driven by the addition of E175 aircraft. Operating expenses increased 2% to $714 million, mainly due to higher salaries. As of September 30, 2022, the company maintained $1.0 billion in cash, while total debt was $3.4 billion. Fleet expansion is on track with future deliveries planned for E175 aircraft by 2025.

Positive

• Net income increased to $48 million from $10 million year-over-year.
• Revenue rose 6% to $789 million, attributed to a larger E175 fleet.
• Cash and marketable securities increased to $1.0 billion.

Negative

• Operating expenses increased by 2% due to higher salaries.
• Total debt rose to $3.4 billion, reflecting financing for new aircraft.

Third Quarter 2022 Highlights

• Pre-tax income of $57 million, net income of $48 million and $0.96 per diluted share
• Took delivery of two E175 aircraft for American Airlines and seven E175 aircraft for Delta Air Lines under previously announced agreements
• SkyWest’s E175 fleet generated over 50% of SkyWest’s block hour production during the quarter as the Company continues to execute on its fleet strategy

ST. GEORGE, Utah--(BUSINESS WIRE)-- SkyWest, Inc. (NASDAQ: SKYW) (“SkyWest”) today reported financial and operating results for Q3 2022, including net income of $48 million, or $0.96 per diluted share, compared to net income of $10 million, or $0.19 per diluted share, for Q3 2021 and adjusted net income of $74 million¹, or $1.45 per diluted share, for Q3 2021.

Commenting on the results, Chip Childs, Chief Executive Officer of SkyWest, said, “We continue to experience strong demand for our product and our operational performance through the busy summer season was strong with 99.9% adjusted completion this quarter. We were pleased to have finalized new salary scales for our pilots during the quarter and continue efforts to stabilize our crew imbalance. I want to thank our people for their dedicated, world-class efforts.”

Financial Results

Revenue was $789 million in Q3 2022, up $44 million or 6%, from $745 million in Q3 2021. This quarter’s year-over-year increase in revenue under SkyWest’s flying contracts came from adding 33 E175 aircraft to its operations since Q3 2021 and eliminating the COVID-19 partner revenue concessions from Q3 last year.

_______________________

¹ See Financial Results and Reconciliation of non-GAAP financial measures sections of this release for more information.

Operating expenses were $714 million in Q3 2022, up 2% from $698 million in Q3 2021. The increase in operating expenses was primarily due to an increase in salaries, wages, and benefits, offset by a decrease in maintenance costs for Q3 2022, compared to Q3 2021.

Capital and Liquidity

SkyWest had $1.0 billion in cash and marketable securities at September 30, 2022, up from $975 million at June 30, 2022, and $860 million at December 31, 2021.

Total debt at September 30, 2022 was $3.4 billion, up from $3.3 billion at June 30, 2022, reflecting the financing of nine new E175 aircraft delivered in Q3 2022. Capital expenditures during Q3 2022 were $224 million for the purchase of these nine E175s and other fixed assets.

Status Update on Previously Announced Agreements

SkyWest is coordinating with its major airline partners to optimize the timing of upcoming fleet deliveries under previously announced agreements. SkyWest expects to finance the future E175 deliveries discussed below through debt. The anticipated future delivery dates summarized below are based on currently available information and are subject to change.

Flying contract with American for 20 E175 aircraft

• Two aircraft were delivered in Q3 2022, completing the 20 E175 aircraft deliveries under this contract.

Flying contract with Delta for 16 E175 aircraft

• Seven aircraft were delivered in Q3 2022.
• Four aircraft deliveries are anticipated in Q4 2022.
• Three aircraft are anticipated to be delivered in 2023 and 2024.
• Two aircraft were delivered prior to Q3 2022.

Flying contract with Alaska for 11 E175 aircraft

• One aircraft is expected to be delivered in 2025, which will complete the 11 E175 aircraft deliveries under this contract.

Combined, SkyWest anticipates placing 47 E175 aircraft into service under these three previously announced agreements by late 2025. As of September 30, 2022, 39 aircraft were delivered and eight aircraft have deliveries scheduled through 2025. By the end of 2025, SkyWest is scheduled to operate a total of 240 E175 aircraft.

Reconciliation of non-GAAP Financial Measures

SkyWest has included in the schedules attached to this release a reconciliation of certain non-GAAP information to the most directly comparable GAAP information. The non-GAAP information presented in this release should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP. The non-GAAP information may also be inconsistent with the manner in which similar measures are derived or used by other companies. Management uses such non-GAAP information for financial and operational decision-making purposes and as a means to evaluate period-over-period comparisons and in forecasting SkyWest’s business going forward. Management believes that the presentation of such non-GAAP information, when considered in conjunction with the most directly comparable GAAP information, provides additional useful comparative information for investors in their assessment of the underlying performance of SkyWest’s business without regard to these items. SkyWest has provided reconciling information in the attached schedules.

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 500 aircraft connecting passengers to over 230 destinations throughout North America. SkyWest Airlines operates through partnerships with United Airlines, Delta Air Lines, American Airlines and Alaska Airlines carrying more than 36 million passengers in 2021.

SkyWest will host its conference call to discuss its third quarter 2022 results today, October 27, 2022, at 2:30 p.m. Mountain Time. The conference call number is 1-888-330-2446 for domestic callers, and 1-240-789-2732 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/880585407.This press release and additional information regarding SkyWest, including access information for the digital rebroadcast of the third quarter 2022 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 impact of the COVID-19 pandemic on SkyWest’s business, financial condition and results of operations, the scheduled aircraft deliveries for SkyWest in upcoming periods, including the return to pre-COVID production levels and the execution of SkyWest’s fleet transition strategy and expected timing thereof, expected production levels in future periods and associated staffing challenges, 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, uncertainties regarding the impact of the funding received under the U.S. Treasury Department’s payroll support programs on SkyWest’s business and operations, the continued uncertainty of the duration, scope and impact of COVID-19, a further spread or worsening of COVID-19, and other potential future outbreaks of infectious diseases or other health concerns, the consequences of the COVID-19 pandemic 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 and related staffing challenges, 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, inflationary pressures, 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; uncertainty regarding ongoing hostility between Russia and the Ukraine 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; 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 and labor shortages; 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. Additionally, the risks, uncertainties and other factors set forth above or otherwise referred to in the reports that the Company files with the Securities and Exchange Commission may be further amplified by the global impact of the COVID-19 pandemic.

SkyWest, Inc. and Subsidiaries Condensed Consolidated Statements of Income (Dollars and Shares in Thousands, Except per Share Amounts) (Unaudited)
		Three months ended						Nine months ended
		September 30,						September 30,
		2022			2021			2022			2021
OPERATING REVENUES:
Flying agreements		$	763,514		$	719,084		$	2,245,351		$	1,863,242
Lease, airport services and other			25,929			25,699			78,329			73,086
Total operating revenues			789,443			744,783			2,323,680			1,936,328
OPERATING EXPENSES:
Salaries, wages and benefits			307,727			265,603			896,347			718,868
Aircraft maintenance, materials and repairs			183,182			209,795			506,478			604,501
Depreciation and amortization			97,433			109,597			297,427			329,089
Aircraft fuel			28,179			32,561			85,089			77,622
Airport-related expenses			17,501			25,992			54,196			72,478
Aircraft rentals			16,089			16,098			48,109			47,311
Special items - impairment charges			—			84,592			—			84,592
Payroll support grant			—			(115,352)			—			(422,669)
Other operating expenses			63,756			68,847			219,808			181,621
Total operating expenses			713,867			697,733			2,107,454			1,693,413
OPERATING INCOME			75,576			47,050			216,226			242,915
OTHER INCOME (EXPENSE):
Interest income			6,348			238			9,332			732
Interest expense			(33,283)			(28,980)			(92,308)			(94,274)
Other income (expense), net			8,112			(4,098)			21,011			(3,802)
Total other expense, net			(18,823)			(32,840)			(61,965)			(97,344)
INCOME BEFORE INCOME TAXES			56,753			14,210			154,261			145,571
PROVISION FOR INCOME TAXES			8,381			4,526			34,204			37,993
NET INCOME		$	48,372		$	9,684		$	120,057		$	107,578
BASIC EARNINGS PER SHARE		$	0.96		$	0.19		$	2.38		$	2.14
DILUTED EARNINGS PER SHARE		$	0.96		$	0.19		$	2.37		$	2.12
Weighted average common shares:
Basic			50,593			50,380			50,531			50,337
Diluted			50,636			50,725			50,636			50,726

SkyWest, Inc. and Subsidiaries Summary of Consolidated Balance Sheets (Dollars in Thousands) (Unaudited)
	September 30,			December 31,
	2022			2021
Cash and marketable securities	$	1,004,197		$	860,410
Other current assets		257,992			208,183
Total current assets		1,262,189			1,068,593
Property and equipment, net		5,591,542			5,373,635
Deposits on aircraft		47,229			124,964
Other long-term assets		553,244			558,755
Total assets	$	7,454,204		$	7,125,947
Current portion, long-term debt	$	429,425		$	391,798
Other current liabilities		730,470			802,823
Total current liabilities		1,159,895			1,194,621
Long-term debt, net of current maturities		2,982,034			2,717,420
Other long-term liabilities		916,327			946,392
Stockholders' equity		2,395,948			2,267,514
Total liabilities and stockholders' equity	$	7,454,204		$	7,125,947

SkyWest, Inc. and Subsidiaries Additional Operational Information (unaudited)
SkyWest’s fleet in scheduled service or under contract by aircraft type:
		September 30, 2022		December 31, 2021		September 30, 2021
E175 aircraft		232		211		199
CRJ900 aircraft		44		44		40
CRJ700 aircraft		114		114		106
CRJ200 aircraft		140		140		141
Total aircraft in service or under contract		530		509		486

As of September 30, 2022, SkyWest leased 35 CRJ700s and five CRJ900s to third parties (these aircraft are excluded from the table above). The E175 aircraft counts are based on delivery date.

Selected operational data:
		For the three months ended September 30,									For the nine months ended September 30,
Block hours by aircraft type:		2022			2021			% Change			2022			2021			% Change
E175s		169,679			169,143			0.3	%		481,080			446,867			7.7	%
CRJ900s		25,134			34,031			(26.1)	%		78,468			87,750			(10.6)	%
CRJ700s		62,540			78,788			(20.6)	%		202,538			215,263			(5.9)	%
CRJ200s		66,389			88,500			(25.0)	%		207,402			220,809			(6.1)	%
Total block hours		323,742			370,462			(12.6)	%		969,488			970,689			(0.1)	%
Departures		194,683			210,251			(7.4)	%		570,572			550,643			3.6	%
Passengers carried		10,715,415			10,862,343			(1.4)	%		30,627,250			25,872,805			18.4	%
Adjusted flight completion		99.9	%		99.8	%		0.1	pts		99.6	%		99.9	%		(0.3)	pts
Raw flight completion		99.1	%		98.8	%		0.3	pts		98.2	%		98.6	%		(0.4)	pts
Passenger load factor		84.6	%		79.1	%		5.5	pts		82.9	%		72.0	%		10.9	pts
Average trip length		488			537			(9.0)	%		498			536			(7.1)	%

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

Reconciliation to Adjusted Net Income and Diluted Earnings per Share (Dollars in Thousands, Except per Diluted Share Amounts) (Unaudited)
		For the three months ended September 30, 2021
		Pretax income			Income tax benefit (expense)			Net income			Net income per diluted share
GAAP Income		$	14,210		$	(4,526)		$	9,684		$	0.19
Q3 2021 Adjustments (1)			84,592			(20,683)			63,909
Non-GAAP Adjusted Income		$	98,802		$	(25,209)		$	73,593		$	1.45

		For the nine months ended September 30, 2021
		Pretax income			Income tax benefit (expense)			Net income			Net income per diluted share
GAAP Income		$	145,571		$	(37,993)		$	107,578		$	2.12
2021 Adjustments (1)			84,592			(20,683)			63,909
Non-GAAP Adjusted Income		$	230,163		$	(58,676)		$	171,487		$	3.38

(1)

Adjusts for a non-cash impairment charge on SkyWest Airlines operated CRJ900 aircraft.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221027006073/en/

Investor Relations

435.634.3200

Investor.relations@skywest.com



Corporate Communications

435.634.3553

corporate.communications@skywest.com

Source: SkyWest, Inc.

FAQ

What were SkyWest's financial results for Q3 2022?

SkyWest reported a net income of $48 million and revenue of $789 million in Q3 2022.

How much did SkyWest's net income increase compared to Q3 2021?

Net income increased from $10 million in Q3 2021 to $48 million in Q3 2022.

What is the total debt of SkyWest as of September 30, 2022?

SkyWest's total debt was $3.4 billion as of September 30, 2022.

How many E175 aircraft did SkyWest deliver in Q3 2022?

SkyWest delivered two E175 aircraft to American Airlines and seven to Delta Air Lines in Q3 2022.

What are the future plans for SkyWest's E175 fleet?

SkyWest anticipates placing a total of 240 E175 aircraft into service by the end of 2025.