SkyWest, Inc. Announces Third Quarter 2024 Profit

Rhea-AI Summary

SkyWest (NASDAQ: SKYW) reported strong Q3 2024 financial results with net income of $90 million ($2.16 per diluted share), up from $23 million in Q3 2023. Revenue increased 19% to $913 million, driven by a 15% increase in block hour production. The company announced an agreement with United Airlines for 40 CRJ550s and took delivery of nine E175 partner-financed aircraft. Operating expenses rose 9% to $781 million. SkyWest maintained strong liquidity with $836 million in cash and reduced total debt to $2.7 billion. The company continued its share repurchase program, buying back 217,000 shares for $16.3 million during Q3.

Positive

• Net income quadrupled to $90 million ($2.16/share) from $23 million YoY
• Revenue increased 19% YoY to $913 million
• Block hour production improved 15% YoY
• Secured agreement with United Airlines for 40 CRJ550s
• Total debt reduced from $3.0B to $2.7B
• Strong liquidity position with $836M in cash

Negative

• Operating expenses increased 9% YoY to $781 million

Insights

Financial Analyst

SkyWest delivered an impressive Q3 2024 performance with $90 million in net income ($2.16 per share), marking a substantial 291% increase from Q3 2023's $23 million. Revenue grew 19% to $913 million, driven by a 15% increase in block hour production. The company maintains a strong liquidity position with $836 million in cash and marketable securities.

The new agreement with United Airlines for 40 CRJ550s and the ongoing E175 fleet expansion demonstrate strategic growth. Notably, total debt decreased by $300 million since December 2023, showing improved financial health. The company's active share buyback program, having repurchased shares at an average of $74.98, reflects management's confidence in the business outlook.

Aviation Industry Analyst

The significant increase in captain availability has enabled SkyWest to capitalize on market opportunities and expand operations strategically. The mixed fleet strategy with CRJ550s and E175s positions the company well in the regional aviation market. The scheduled delivery of 41 E175 aircraft through 2026 and the addition of 40 CRJ550s will strengthen SkyWest's competitive position in serving major airline partners.

The $342 million in deferred revenue represents future earning potential as service levels normalize. The combination of fleet modernization, increased utilization and strong partnerships with major carriers creates a robust foundation for sustained growth in the regional aviation sector.

Third Quarter 2024 Summary

• Q3 2024 pre-tax income of $116 million, net income of $90 million, or $2.16 per diluted share
• SkyWest reached an agreement with United Airlines (“United”) to place 40 CRJ550s under a multi-year contract (SkyWest to acquire 11 used CRJ550s and convert 29 of its CRJ700 fleet to CRJ550s)
• SkyWest took delivery of nine E175 partner-financed aircraft under a previously announced agreement with United

 

ST. GEORGE, Utah--(BUSINESS WIRE)-- SkyWest, Inc. (NASDAQ: SKYW) (“SkyWest”) today reported financial and operating results for Q3 2024, including net income of $90 million, or $2.16 per diluted share, compared to net income of $23 million, or $0.55 per diluted share, for Q3 2023.

Commenting on the results, Chip Childs, Chief Executive Officer of SkyWest, said, “Our ability to organically grow the number of available captains for the first three quarters of 2024 has opened up incremental growth vectors for us. We are making significant progress in recapturing underserved markets, increasing fleet utilization and quickly placing new aircraft deliveries into service. I want to thank our people for their amazing work as we continue to execute on these opportunities, including the expansion of our CRJ550 and E175 fleets.”

Financial Results

Revenue was $913 million in Q3 2024, up $147 million, or 19%, from $766 million in Q3 2023. SkyWest’s block hour production increased 15% in Q3 2024 compared to Q3 2023, which reflects improvements in captain availability since Q3 2023.

For purposes of revenue comparability year-over-year, SkyWest recognized $19 million of previously deferred revenue under its flying contracts during Q3 2024, compared to deferring $57 million of revenue during Q3 2023. As of September 30, 2024, SkyWest had cumulative deferred revenue of $342 million under its flying contracts on its balance sheet.

Operating expenses were $781 million in Q3 2024, up $64 million, or 9%, from $717 million in Q3 2023, driven by an incremental increase in flight production year-over-year.

Capital and Liquidity

SkyWest had $836 million in cash and marketable securities at September 30, 2024, similar to the $835 million balance at December 31, 2023.

Total debt at September 30, 2024 was $2.7 billion, down from $3.0 billion at December 31, 2023. Capital expenditures during Q3 2024 were $97 million for the purchase of aircraft, 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 217,000 shares of common stock for $16.3 million during Q3 2024 at an average price per share of $74.98. As of September 30, 2024, SkyWest had $53 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 three quarters of 2024 and anticipated future deliveries during the periods indicated based on currently available information, which is subject to change.

		Completed YTD Q3 2024		Q4 2024		2025		2026		Total
Delta Air Lines		1		ꟷ		ꟷ		ꟷ		1
United Airlines(1)		20		4		7		8		39
Alaska Airlines		ꟷ		ꟷ		1		ꟷ		1
Total		21		4		8		8		41
(1) The 20 E175 deliveries completed year-to-date Q3 2024 were partner-financed aircraft.

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

As announced today, SkyWest reached an agreement with United to place 40 CRJ550s under a multi-year contract. Pursuant to this agreement, SkyWest will acquire 11 used CRJ550s and convert 29 of its CRJ700s to CRJ550s. The aircraft are anticipated to be placed into service between late 2024 and the end of 2026 based on currently available information, which is subject to change. One of such CRJ550 aircraft was acquired in Q3 2024.

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 third quarter 2024 results today, October 31, 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/618656128. This press release and additional information regarding SkyWest, including access information for the digital rebroadcast of the third 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 (Dollars and Shares in Thousands, Except per Share Amounts) (Unaudited)
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2024			2023			2024			2023
OPERATING REVENUES:
Flying agreements		$	883,494		$	741,898		$	2,499,953		$	2,106,130
Lease, airport services and other			29,292			24,273			83,565			77,515
Total operating revenues			912,786			766,171			2,583,518			2,183,645
OPERATING EXPENSES:
Salaries, wages and benefits			377,435			333,017			1,083,439			990,659
Aircraft maintenance, materials and repairs			181,652			178,465			510,334			483,182
Depreciation and amortization			96,662			96,560			289,346			287,878
Aircraft fuel			22,724			23,330			65,216			62,573
Airport-related expenses			22,642			18,398			61,065			53,648
Aircraft rentals			1,339			2,099			3,925			24,055
Other operating expenses			78,897			65,011			219,612			205,203
Total operating expenses			781,351			716,880			2,232,937			2,107,198
OPERATING INCOME			131,435			49,291			350,581			76,447
OTHER INCOME (EXPENSE):
Interest income			12,460			11,234			36,126			31,761
Interest expense			(27,808)			(32,543)			(86,603)			(99,881)
Other income (loss), net			109			(3,631)			(1,567)			7,544
Total other expense, net			(15,239)			(24,940)			(52,044)			(60,576)
INCOME BEFORE INCOME TAXES			116,196			24,351			298,537			15,871
PROVISION (BENEFIT) FOR INCOME TAXES			26,487			873			72,952			(955)
NET INCOME		$	89,709		$	23,478		$	225,585		$	16,826
BASIC EARNINGS PER SHARE		$	2.23		$	0.56		$	5.61		$	0.37
DILUTED EARNINGS PER SHARE		$	2.16		$	0.55		$	5.44		$	0.37
Weighted average common shares:
Basic			40,253			41,826			40,244			45,018
Diluted			41,561			42,580			41,495			45,540

SkyWest, Inc. and Subsidiaries Summary of Consolidated Balance Sheets (Dollars in Thousands) (Unaudited)
	September 30,			December 31,
	2024			2023
Cash and marketable securities	$	836,042		$	835,223
Other current assets		298,175			296,673
Total current assets		1,134,217			1,131,896
Property and equipment, net		5,345,811			5,405,685
Deposits on aircraft		71,457			77,282
Other long-term assets		405,115			411,430
Total assets	$	6,956,600		$	7,026,293
Current portion, long-term debt	$	496,789		$	443,869
Other current liabilities		817,385			810,423
Total current liabilities		1,314,174			1,254,292
Long-term debt, net of current maturities		2,196,548			2,562,183
Other long-term liabilities		1,134,381			1,096,316
Stockholders' equity		2,311,497			2,113,502
Total liabilities and stockholders' equity	$	6,956,600		$	7,026,293

SkyWest, Inc. and Subsidiaries Additional Operational Information (unaudited)
SkyWest’s fleet in scheduled service or under contract by aircraft type:
		September 30, 2024		December 31, 2023		September 30, 2023
E175 aircraft		258		237		235
CRJ900 aircraft		36		41		37
CRJ700 aircraft (1)		109		118		117
CRJ200 aircraft		81		89		104
Total aircraft in service or under contract		484		485		493
___________________________
(1) Includes CRJ550 aircraft, a 50-seat configuration of the CRJ700 aircraft.

As of September 30, 2024, SkyWest leased 35 CRJ700s and five CRJ900s to third parties and had 17 CRJ200s that are configured for service under SWC operations (these aircraft are excluded from the table above).

Selected operational data:
		For the three months ended September 30,									For the nine months ended September 30,
Block hours by aircraft type:		2024			2023			% Change			2024			2023			% Change
E175s		206,607			171,615			20.4	%		580,799			500,782			16.0	%
CRJ900s		22,957			18,979			21.0	%		61,172			59,390			3.0	%
CRJ700s		59,807			56,117			6.6	%		176,403			158,239			11.5	%
CRJ200s		45,088			44,119			2.2	%		123,348			131,278			(6.0)	%
Total block hours		334,459			290,830			15.0	%		941,722			849,689			10.8	%
Departures		201,397			180,069			11.8	%		560,154			514,529			8.9	%
Passengers carried		11,263,322			10,208,005			10.3	%		31,103,792			28,671,654			8.5	%
Adjusted flight completion		99.9	%		99.9	%		—	pts		99.9	%		99.9	%		—	pts
Raw flight completion		99.5	%		99.1	%		0.4	pts		98.8	%		98.5	%		0.3	pts
Passenger load factor		83.7	%		85.1	%		(1.4)	pts		83.0	%		83.7	%		(0.7)	pts
Average trip length		455			446			2.0	%		467			456			2.4	%
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/20241031757239/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) net income in Q3 2024?

SkyWest reported net income of $90 million, or $2.16 per diluted share, in Q3 2024.

How many CRJ550 aircraft will SkyWest (SKYW) operate under the new United Airlines agreement?

SkyWest will operate 40 CRJ550s under the new United Airlines agreement, acquiring 11 used aircraft and converting 29 of its existing CRJ700s to CRJ550s.

What was SkyWest's (SKYW) revenue growth in Q3 2024?

SkyWest's revenue grew 19% year-over-year to $913 million in Q3 2024, up from $766 million in Q3 2023.

How many shares did SkyWest (SKYW) repurchase in Q3 2024?

SkyWest repurchased 217,000 shares for $16.3 million during Q3 2024 at an average price of $74.98 per share.