UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 14, 2013
SKYWEST, INC.
(Exact name of registrant as specified in its charter)
Utah |
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0-14719 |
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87-0292166 |
(State or other jurisdiction of |
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(Commission |
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(I.R.S. Employer |
incorporation or organization) |
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File Number) |
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Identification No.) |
444 South River Road St. George, Utah |
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84790 |
(Address of principal executive offices) |
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(Zip Code) |
(435) 634-3000
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 14, 2013, SkyWest, Inc. (SkyWest) issued a press release announcing its financial results for the quarter ended December 31, 2012. The full text of SkyWests press release, together with related unaudited financial and operating highlights, is furnished herewith as Exhibit 99.1.
The information in this Current Report on Form 8-K (including the exhibit) is furnished pursuant to General Instruction B.2. of Form 8-K and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS
The following is filed as an exhibit to this report:
Exhibit |
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Title of Document |
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Location |
99.1 |
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Press release dated February 14, 2013 |
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Attached |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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SKYWEST, INC. | |
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Date: February 14, 2013 |
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By |
/s/ Eric J. Woodward |
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Eric J. Woodward, Chief Accounting Officer |
Exhibit 99.1
NEWS RELEASE
For Further Information Contact:
Michael J. Kraupp
Chief Financial Officer and Treasurer
Telephone: (435) 634-3212
Fax: (435) 634-3205
FOR IMMEDIATE RELEASE: February 14, 2013
SKYWEST, INC. ANNOUNCES FOURTH QUARTER 2012 RESULTS
St. George, UtahSkyWest, Inc. (SkyWest) (NASDAQ: SKYW) today reported net income of $13.9 million, or $0.27 per diluted share, for the quarter ended December 31, 2012, compared to a net loss of $(18.0) million, or $(0.35) per diluted share, for the same period last year.
Quarter Highlights
SkyWests operating and financial results for the quarter ended December 31, 2012 reflect a significant improvement compared to the same period of 2011, primarily as a result of recording additional revenues from an increase in block hour production and continuing to reduce its cost structure as part of its profit improvement plan; however, for financial reporting purposes, the increased revenues were offset by lower reimbursement payments for fuel and maintenance overhaul expenses under contracts with SkyWests major partners, resulting in a net decrease in total operating revenues. These efforts resulted in a $53.3 million improvement in pretax income and an improvement in fully diluted earnings per share of $0.62 for the quarter ended December 31, 2012, compared to the same period last year. This is the fourth quarter in a row where reported results have exceeded market estimates. Following are some selected highlights for the quarter and twelve months ended December 31, 2012 compared to the same periods last year:
(Unaudited) |
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Three Months Ended |
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Twelve Months Ended |
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Dollars in thousands, except per share |
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December 31, |
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December 31, |
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amounts |
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2012 |
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2011 |
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% Change |
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2012 |
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2011 |
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% Change |
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Total operating revenue |
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$ |
810,725 |
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$ |
899,851 |
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(9.9 |
)% |
$ |
3,534,372 |
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$ |
3,654,924 |
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(3.3 |
)% |
Total operating margin |
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5.4 |
% |
(0.6 |
)% |
6.0 |
pts |
4.7 |
% |
1.1 |
% |
3.6 |
pts | ||||
Pretax income (loss) |
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$ |
25,556 |
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$ |
(27,773 |
) |
192.0 |
% |
$ |
85,896 |
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$ |
(50,170 |
) |
271.2 |
% |
Net income (loss) |
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$ |
13,946 |
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$ |
(17,967 |
) |
177.6 |
% |
$ |
51,157 |
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$ |
(27,335 |
) |
287.1 |
% |
Fully diluted earnings per share |
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$ |
0.27 |
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$ |
(0.35 |
) |
177.1 |
% |
$ |
0.99 |
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$ |
(0.52 |
) |
290.4 |
% |
Block hours |
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568,808 |
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550,808 |
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3.3 |
% |
2,297,014 |
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2,250,280 |
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2.1 |
% |
Commenting on the results, Jerry C. Atkin, SkyWests Chairman and CEO, said We are very pleased with our operating and financial results for the quarter ended December 31, 2012. This is a solid result for a quarter that can typically be very challenging. He continued, We
continue to make positive progress in our cost reduction efforts that are resulting in improved profits, quarter over quarter.
Financial and Operating Results
Under certain of SkyWests flying contracts, fuel purchased for SkyWest flights has been directly reimbursed by SkyWests major partners and, for financial reporting purposes, was included in operating revenues. The majority of fuel is now purchased directly by SkyWests major partners and as a result, SkyWest experienced a reduction of $92.5 million in reported operating revenues and operating expenses related directly to fuel purchases by its major partners under its contract flying, for the quarter ended December 31, 2012, compared to the quarter ended December 31, 2011.
Operating revenues totaled $810.7 million for the quarter ended December 31, 2012, compared to $899.9 million for the same period last year or a decrease of $89.2 million, or 9.9%, The decrease was due primarily to the reduction of $115.8 million of fuel and certain engine overhaul amounts which are directly reimbursed by major partners and recorded as operating revenues, offset by an increase in revenues of approximately $27.5 million as a result of additional block hour production and incentive amounts for improvements in completion factors and on-time performance for its flights. Total block hours for the quarter ended December 31, 2012 were 568,808, or an increase of 3.3 percent, compared to 550,808 for the same period last year.
Total airline expenses (consisting of total operating and interest expenses) decreased $139.1 million, or 15.0%, during the quarter ended December 31, 2012, compared to the same period in 2011. However, after excluding pass-through costs for fuel and certain engine overhaul expenses that are directly reimbursed by SkyWests major partners, total airline expenses decreased $35.2 million or 4.6%. The decrease was primarily the result of 1) reduced non-pass through maintenance costs of approximately $14.7 million, 2) reduced United Express CRJ200 engine overhaul costs of approximately $8.7 million and 3) reduced customer service labor of approximately $7.9 million due to the elimination of handling of flights at certain airports.
Under United Express agreements for SkyWest Airlines, Inc. (SkyWest Airlines) and ExpressJet Airlines, Inc. (ExpressJet Airlines) SkyWest recognizes revenue at fixed hourly rates for mature engine maintenance on regional jet engines and SkyWest recognizes engine maintenance expense on its CRJ200 regional jet engines on an as-incurred basis as maintenance expense. During the quarter ended December 31, 2012, CRJ200 engine expense under these agreements decreased $8.7 million to $10.6 million compared to $19.3 million for the quarter ended December 31, 2011, as a result of decreased engine overhaul expense due to the timing of scheduled engine maintenance events. SkyWest was reimbursed approximately $10.3 million and $8.9 million for engine overhaul expense, under its United Express agreements, in each of the periods ended December 31, 2012 and 2011, respectively.
Liquidity
At December 31, 2012, SkyWest had $709.4 million in cash and marketable securities, compared to $646.5 million as of December 31, 2011. The increase in cash and marketable securities of
$62.9 million was primarily the result of increased profitability for the twelve-month period ended December 31, 2012. SkyWests long-term debt was $1.47 billion as of December 31, 2012, compared to $1.61 billion as of December 31, 2011. The decrease in long-term debt was due primarily to SkyWests payment of normal recurring debt obligations. SkyWest has significant long-term lease obligations that are recorded as operating leases and are not reflected as liabilities on SkyWests consolidated balance sheets. At a 4.7% discount rate, the present value of these lease obligations was approximately $1.8 billion as of December 31, 2012.
Recent Buiness Developments
SkyWest recently announced the award of 34 additional dual-class aircraft and the removal of 66 CRJ200 aircraft with Delta Airlines, Inc. (Delta) and has taken delivery of 20 of these dual-class aircraft by December 31, 2012. The remaining 14 aircraft have planned delivery dates between January and May 2014. SkyWest anticipates removal of the 66 CRJ200 aircraft starting in October of 2013.
SkyWest also recently announced the signing of an agreement with American Airlines, Inc. (American Airlines) to operate 23 CRJ200 regional jet aircraft as American Eagle and had integrated 12 of these aircraft into operations by December 31, 2012. The remaining 11 aircraft have been introduced into service February 14, 2013.
SkyWest recently announced the execution of an Aircraft Purchase Aagreement with Mitsubishi Aircraft Corporation covering the purchase of 100 Mitsubishi regional jet aircraft. Deliveries are currently expected to begin in 2016.
SkyWest has increased its total fleet to 744 aircraft as of December 31, 2012, compared to 732 aircraft as of December 31, 2011.
About SkyWest
SkyWest is the holding company for two scheduled passenger airline operations and an aircraft leasing company and is headquartered in St. George, Utah. SkyWests scheduled passenger airline operations consist of SkyWest Airlines also based in St. George, Utah and ExpressJet Airlines based in Atlanta, Georgia. SkyWest Airlines operates as United Express, Delta Connection and American Eagle carriers under contractual agreements with United Airlines, Inc. (United), Delta and American Airlines. SkyWest Airlines also operates as US Airways Express under a contractual agreement with US Airways, Inc., and operates flights for Alaska Airlines under a contractual agreement. ExpressJet Airlines operates as United Express and Delta Connection carriers under contractual agreements with United and Delta. System-wide, SkyWest serves markets in the United States, Canada, Mexico and the Caribbean with approximately 3,900 daily departures and a fleet of approximately 744 regional aircraft. This press release and additional information regarding SkyWest can be accessed at www.skywest.com
FORWARD-LOOKING STATEMENTS
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 SkyWests beliefs, expectations, hopes or intentions regarding future events. Words such as forecasts, 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. Readers should note that many factors could affect the future operating and financial results of SkyWest, SkyWest Airlines or ExpressJet Airlines, 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 ability of ExpressJet Airlines to realize potential synergies and other anticipated financial impacts of the consolidation of its operations, the possibility that future financial and operating results of ExpressJet Airlines may not meet SkyWests forecasts and the timing of ongoing consolidation of the operations of ExpressJet Airlines, if achieved.
Actual operational and financial results of SkyWest, SkyWest Airlines and ExpressJet Airlines will 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 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; ongoing negotiations between SkyWest, SkyWest Airlines and ExpressJet Airlines and their major partners regarding their contractual obligations; the financial stability of those major partners and any potential impact of their financial condition on the operations of SkyWest, SkyWest Airlines, or ExpressJet Airlines; the resolution of current litigation with a major airline partner of SkyWest Airlines and ExpressJet Airlines; fluctuations in flight schedules, which are determined by the major partners for whom SkyWests operating airlines conduct flight operations; variations in market and economic conditions; labor relationships; the impact of global instability; rapidly fluctuating fuel costs; the degree and nature of competition; 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 SkyWests actual results to differ from managements current expectations are contained in SkyWests filings with the Securities and Exchange Commission; including the section of SkyWests Annual Report on Form 10-K for the year ended December 31, 2012, entitled Risk Factors.
(more)
SKYWEST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars and Shares in Thousands, Except per Share Amounts)
(Unaudited)
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Three Months Ended |
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Twelve Months Ended |
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2012 |
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2011 |
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2012 |
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2011 |
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OPERATING REVENUES: |
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Passenger |
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$ |
795,978 |
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$ |
884,248 |
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$ |
3,467,546 |
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$ |
3,584,777 |
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Ground handling and other |
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14,747 |
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15,603 |
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66,826 |
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70,146 |
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Total operating revenues |
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810,725 |
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899,851 |
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3,534,372 |
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3,654,923 |
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OPERATING EXPENSES: |
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Salaries, wages and benefits |
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293,093 |
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289,568 |
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1,171,689 |
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1,155,051 |
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Aircraft maintenance, materials and repairs |
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149,259 |
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183,591 |
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659,869 |
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712,926 |
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Aircraft fuel |
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53,916 |
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144,471 |
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426,387 |
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592,871 |
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Aircraft rentals |
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82,199 |
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85,521 |
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333,637 |
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346,526 |
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Depreciation and amortization |
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60,758 |
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63,899 |
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251,958 |
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254,182 |
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Station rentals and landing fees |
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36,333 |
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43,989 |
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169,855 |
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174,838 |
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Ground handling services |
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31,805 |
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31,408 |
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125,148 |
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131,462 |
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Restructuring and integration related costs |
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1,168 |
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5,770 |
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Other |
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59,612 |
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61,223 |
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229,842 |
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240,192 |
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Total operating expenses |
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766,975 |
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904,838 |
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3,368,385 |
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3,613,818 |
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OPERATING INCOME |
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43,750 |
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(4,987 |
) |
165,987 |
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41,105 |
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OTHER INCOME (EXPENSE): |
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Interest income |
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1,878 |
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1,940 |
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7,928 |
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8,236 |
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Interest expense |
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(18,739 |
) |
(20,025 |
) |
(77,380 |
) |
(80,383 |
) | ||||
Adjustment to purchase accounting gain |
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(5,711 |
) | ||||
Other, net |
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(1,333 |
) |
(4,701 |
) |
(10,639 |
) |
(13,417 |
) | ||||
Total other (expense), net |
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(18,194 |
) |
(22,786 |
) |
(80,091 |
) |
(91,275 |
) | ||||
INCOME (LOSS) BEFORE INCOME TAXES |
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25,556 |
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(27,773 |
) |
85,896 |
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(50,170 |
) | ||||
PROVISION (BENEFIT) FOR INCOME TAXES |
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11,610 |
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(9,806 |
) |
34,739 |
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(22,835 |
) | ||||
NET INCOME (LOSS) |
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$ |
13,946 |
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$ |
(17,967 |
) |
$ |
51,157 |
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$ |
(27,335 |
) |
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BASIC INCOME (LOSS) PER SHARE |
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$ |
0.27 |
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$ |
(0.35 |
) |
$ |
1.00 |
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$ |
(0.52 |
) |
DILUTED INCOME (LOSS) PER SHARE |
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$ |
0.27 |
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$ |
(0.35 |
) |
$ |
.99 |
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$ |
(0.52 |
) |
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Weighted average common shares: |
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Basic |
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51,296 |
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50,691 |
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51,090 |
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52,201 |
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Diluted |
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52,161 |
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50,691 |
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51,746 |
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52,201 |
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Unaudited Operating Highlights
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Three Months Ended |
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Twelve Months Ended |
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Operating Highlights |
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2012 |
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2011 |
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% Change |
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2012 |
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2011 |
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% Change |
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Passengers carried |
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14,735,499 |
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13,784,851 |
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6.9 |
% |
58,803,690 |
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55,836,271 |
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5.3 |
% | ||||
Revenue passenger miles (000) |
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7,491,169 |
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7,229,163 |
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3.6 |
% |
30,088,278 |
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29,109,039 |
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3.4 |
% | ||||
Available seat miles (000) |
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9,235,586 |
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9,058,082 |
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2.0 |
% |
37,278,554 |
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36,698,859 |
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1.6 |
% | ||||
Passenger load factor |
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81.1 |
% |
79.8 |
% |
1.3 |
pts |
80.7 |
% |
79.3 |
% |
1.4 |
pts | ||||
Passenger breakeven load factor |
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78.6 |
% |
82.0 |
% |
(3.4 |
)pts |
78.7 |
% |
80.2 |
% |
(1.5 |
)pts | ||||
Yield per revenue passenger mile |
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$ |
0.106 |
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$ |
0.122 |
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(13.1 |
)% |
$ |
0.115 |
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$ |
0.123 |
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(6.5 |
)% |
Revenue per available seat mile |
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$ |
0.088 |
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$ |
0.099 |
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(11.1 |
)% |
$ |
0.095 |
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$ |
0.100 |
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(5.0 |
)% |
Cost per available seat mile |
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$ |
0.085 |
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$ |
0.102 |
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(16.7 |
)% |
$ |
0.092 |
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$ |
0.101 |
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(8.9 |
)% |
Fuel cost per available seat mile |
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$ |
0.006 |
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$ |
0.016 |
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(62.5 |
)% |
$ |
0.011 |
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$ |
0.016 |
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(31.3 |
)% |
Average passenger trip length |
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508 |
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524 |
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(3.1 |
)% |
512 |
|
521 |
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(1.7 |
)% | ||||
Block hours |
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568,808 |
|
550,808 |
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3.3 |
% |
2,297,014 |
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2,250,280 |
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2.1 |
% | ||||
Departures |
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355,626 |
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339,427 |
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4.8 |
% |
1,435,512 |
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1,390,523 |
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3.2 |
% |
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