EX-99.1 2 a07-28850_1ex99d1.htm EX-99.1

 

EXHIBIT 99.1

 

 


NEWS RELEASE                                                                                                                                                                                                                                                                                             

For Further Information Contact:                                                                                                                                                                                                                                                                                                              

Michael J. Kraupp

Vice President Finance and Treasurer             

Telephone:  (435) 634-3212

Fax:  (435) 634-3205

 

FOR IMMEDIATE RELEASE:          November 8, 2007

 

SKYWEST ANNOUNCES THIRD QUARTER 2007 RESULTS

 

St. George, Utah—SkyWest, Inc. (NASDAQ: SKYW) today reported operating revenues of $875.6 million for the third quarter ended September 30, 2007, a 10.6% increase, compared to $791.8 million for the same period last year.  SkyWest also reported net income of $42.9 million for the quarter ended September 30, 2007, or $0.68 per diluted share, compared to $40.7 million of net income or $0.63 per diluted share for the same period last year. 

 

SkyWest also reported operating revenues of $2.52 billion for the nine months ended September 30, 2007, an 8.4% increase, compared to $2.33 billion for the same period last year.  SkyWest also reported net income of $118.3 million for the nine months ended September 30, 2007, or $1.83 per diluted share, compared to $114.6 million of net income or $1.82 per diluted share for the same period last year.

 

The primary items of significance affecting the third quarter of 2007 are outlined below:

 

Total operating revenues for the third quarter of 2007 increased primarily as a result of a 14.7% increase in available seat miles (ASMs) and by increased fuel cost reimbursements by SkyWest’s major partners that are recorded as operating revenues and operating expenses, under contract flying arrangements.  Operating revenues were also impacted by a 3.3% decrease in revenue per available seat mile

 

Total operating expenses and interest per ASM for the third quarter of 2007, excluding fuel charges of $284.1 million or $0.047 per ASM, was $0.088, which was the same as the quarter ended September 30, 2006. 

 

Total ASMs for the third quarter of 2007 increased 14.7% from the third quarter of 2006, primarily as a result of SkyWest increasing its fleet size to 437 aircraft as of September 30, 2007, from 407 as of September 30, 2006.  At September 30, 2007, SkyWest’s fleet consisted of:  365 regional jets (233 Delta, 117 United and 15 Midwest); 60 EMB-120 aircraft (48 United, and 12

 



 

Delta); and 12 ATR72 aircraft (all Delta).  During the third quarter of 2007, SkyWest generated 6.06 billion ASMs, compared to 5.28 billion ASMs during the same period of 2006. 

 

During the quarter ended September 30, 2007, SkyWest continued repurchasing outstanding shares of its common stock under a 5 million share stock buyback program previously authorized by its board of directors.  As of September 30, 2007, SkyWest had repurchased approximately 4.2 million shares under the program, at an average cost of $24.94 per share and a total cost of approximately $103.8 million.  SkyWest intends to continue to purchase common shares of its outstanding stock under the authorized stock buyback program, from time to time, as it deems appropriate.

 

On October 12, 2007, SkyWest announced plans to acquire 22 additional regional jet aircraft allowing for the retirement of 23 EMB-120 turboprop aircraft.  SkyWest intends to operate these additional aircraft under existing capacity purchase agreements for both United and Delta with 18 of the aircraft operating in United Express operations and 4 of the aircraft operating in Delta Connections operations with all of the aircraft being allocated to SkyWest Airlines, Inc.  It is currently anticipated that aircraft deliveries would begin in the fourth quarter of 2008 and continue through 2009.  Delivery dates and a manufacturer of the aircraft have not yet been determined.

 

SkyWest recorded stock based compensation expense of approximately $2.9 million ($1.8 million after tax) for the quarter ended September 30, 2007.  Future stock based compensation expense will be contingent upon the amount of future option or stock grants that are made by SkyWest’s Board of Directors.

 

At September 30, 2007 SkyWest had $728.3 million in cash and marketable securities compared to $651.9 million as of December 31, 2006.  SkyWest’s long-term debt increased to approximately $1.77 billion as of September 30, 2007, compared to $1.68 billion at December 31, 2006, consistent with SkyWest’s refinancing arrangements on aircraft and making normal recurring debt payments.  During the quarter ended September 30, 2007, SkyWest took delivery of three CRJ 200 aircraft and financed them through third-party operating leases.  SkyWest has significant long-term lease obligations that are recorded as operating leases and are not reflected as liabilities on SkyWest’s consolidated balance sheets.  At a 7.39% discount factor, the present value of these lease obligations was approximately $2.1 billion as of September 30, 2007.

 

Under SkyWest Airlines United Express agreement, specific amounts are included in the rates charged for mature maintenance on regional jet aircraft engines that SkyWest records as revenue.  However, consistent with the time and material maintenance policy, as more fully described in SkyWest’s Annual Report on Form 10-K for the year ended December 31, 2006, SkyWest records maintenance expense on its CRJ200 regional jet aircraft engines as the maintenance events occur.  As a result, during the third quarter of 2007, SkyWest collected and recorded as revenue $7.7 million (pretax) under the United Express agreement which is net of any regional jet engine maintenance overhauls.

 

SkyWest Airlines, based in St. George, Utah, and Atlantic Southeast Airlines, Inc. (“ASA”), based in Atlanta, Georgia are wholly owned subsidiaries of SkyWest.  SkyWest Airlines operates

 



 

as United Express, Delta Connection and Midwest Connect carriers under contractual agreements with United Airlines, Delta Air Lines and Midwest Airlines.  ASA operates as a Delta Connection carrier under a contractual agreement with Delta Air Lines.  System-wide, SkyWest serves a total of approximately 236 cities in the United States, Canada, Mexico and the Caribbean, with approximately 2,637 daily departures.  This press release and additional information regarding SkyWest, Inc. can be accessed at www.skywest.com.

 

In addition to historical information, this release contains forward-looking statements.  SkyWest may, from time-to-time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements encompass SkyWest's beliefs, expectations, hopes or intentions regarding future events.  Words such as “expects,” “intends,” “believes,” “anticipates,” “should,” “likely” and similar expressions identify forward-looking statements.  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 statement. Actual results will vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others: the failure to successfully operate as anticipated under the terms of the Delta Connection, United Express and Midwest Connect Agreements; the impact of negotiations with ASA’s organized labor forces and the impact of the costs of such labor forces on SkyWest’s operations and financial condition; and the challenges of competing successfully in a highly competitive and rapidly changing industry.  Other factors that may cause actual results to vary from SkyWest’s expectations include developments associated with fluctuations in the economy and the demand for air travel; ongoing negotiations between SkyWest and its major partners regarding their contractual relationships; variations in market and economic conditions; the impact of global instability, including the continued impact of the United States military presence in foreign countries, the September 11, 2001 terrorist attacks and the potential impact of future hostilities, terrorist attacks or other global events; employee relations and labor costs; ability to attract and retain qualified labor; rapidly escalating fuel costs; the degree and nature of competition; potential fuel shortages in markets where SkyWest Airlines or ASA operates; the impact of weather-related or other natural disasters on air travel and airline costs; the ability of SkyWest Airlines and ASA to expand services in new and existing markets and to maintain profit margins in the face of pricing pressures; aircraft deliveries; SkyWest’s ability to obtain financing; and other unanticipated factors.  Risk factors, cautionary statements and other conditions which could cause actual results to differ from management’s current expectations are contained in SkyWest’s filings with the Securities and Exchange Commission, including the section of SkyWest’s Annual Report on form 10-K, entitled “Risk Factors.”

 

 

(more)

 



 

SKYWEST, INC.

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,

 

 

 

2007

 

2006

 

2007

 

2006

 

Operating revenues:

 

 

 

 

 

 

 

 

 

Passenger

 

$

867,076

 

$

784,597

 

$

2,493,999

 

$

2,303,357

 

Ground handling and other

 

8,525

 

7,244

 

25,618

 

21,743

 

 

 

875,601

 

791,841

 

2,519,617

 

2,325,100

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Flying operations

 

487,551

 

447,702

 

1,368,512

 

1,288,899

 

Customer service

 

103,032

 

99,767

 

328,258

 

298,793

 

Maintenance

 

101,196

 

78,057

 

292,148

 

230,148

 

Depreciation and amortization

 

53,169

 

47,420

 

155,622

 

140,171

 

General and administrative

 

38,184

 

31,124

 

114,177

 

106,836

 

 

 

783,132

 

704,070

 

2,258,717

 

2,064,847

 

Operating income

 

92,469

 

87,771

 

260,900

 

260,253

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

8,674

 

5,378

 

23,915

 

12,512

 

Interest expense

 

(32,831

)

(28,987

)

(95,134

)

(86,049

)

Gain (loss) on sale of property and equipment

 

0

 

0

 

467

 

(1,084

)

 

 

(24,157

)

(23,609

)

(70,752

)

(74,621

)

Income before income taxes

 

68,312

 

64,162

 

190,148

 

185,632

 

Provision for income taxes

 

25,385

 

23,477

 

71,810

 

71,073

 

Net income

 

$

42,927

 

$

40,685

 

$

118,338

 

$

114,559

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.69

 

$

0.64

 

$

1.87

 

$

1.85

 

Diluted earnings per share

 

$

0.68

 

$

0.63

 

$

1.83

 

$

1.82

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

Basic

 

61,942

 

63,870

 

63,344

 

61,986

 

Diluted

 

62,888

 

64,482

 

64,657

 

62,886

 

 

 

                                                                           Unaudited Operating Highlights

                                                                                                                                              

 

 

 

Three Months Ended
September 30,

 

 

 

Nine Months Ended
September 30,

 

 

 

Operating Highlights

 

2007

 

2006

 

% Change

 

2007

 

2006

 

% Change

 

Passengers carried

 

9,137,212

 

8,171,812

 

11.8

 

25,892,757

 

23,725,518

 

9.1

 

Revenue passenger miles (000)

 

4,811,281

 

4,156,637

 

15.7

 

13,497,141

 

11,857,945

 

13.8

 

Available seat miles (000)

 

6,059,501

 

5,281,794

 

14.7

 

17,156,421

 

15,054,072

 

14.0

 

Passenger load factor

 

79.4

%

78.7

%

.7

pts 

78.7

%

78.8

%

(.1

)pts

Passenger breakeven load factor

 

74.0

%

72.9

%

1.1

pts 

73.5

%

72.9

%

.6

 pts

Yield per revenue passenger mile

 

$

0.180

 

$

0.189

 

(4.8

)

$

0.185

 

$

0.194

 

(4.6

)

Revenue per available seat mile

 

$

0.145

 

$

0.150

 

(3.3

)

$

0.147

 

$

0.154

 

(4.5

)

Cost per available seat mile

 

$

0.135

 

$

0.139

 

(2.9

)

$

0.137

 

$

0.143

 

(4.2

)

Fuel cost per available seat mile

 

$

0.047

 

$

0.051

 

(7.8

)

$

0.045

 

$

0.050

 

(10.0

)

Average passenger trip length

 

527

 

509

 

3.5

 

521

 

500

 

4.2

 

Block Hours

 

376,999

 

339,855

 

10.9

 

1,074,278

 

966,911

 

11.1

 

Departures

 

235,974

 

222,283

 

6.2

 

677,674

 

638,710

 

6.1

 

 

4