SkyWest Revs Up, Net Down in Q1

Although the company could not comment on its recent offer to acquire ExpressJet, SkyWest Inc Vice President and Treasurer Brad Rich did outline for analysts the philosophy in SkyWest’s acquisition strategy. “We aren’t interested in acquiring non-competitive operations and eating the costs and lowering our return on investment,” he said. “We don’t see the value in growth just to grow. What is of high value is creating a return that is appropriate to the investment. We want to gain a revenue stream when it helps us create efficiencies and leverage that to gain size that we can turn into value.”
SkyWest, Inc. reported operating revenues of $868.0 million for the quarter ended March 31, a 10.0 percent increase, compared to $789.0 million for the same period last year. SkyWest also reported net income of $29.1 million for the quarter ended March 31, 2008, a decrease of 16.2 percent, or $0.47 per diluted share compared to $34.8 million of net income or $0.53 per diluted share, for the same period last year. The significant items affecting SkyWest’s financial performance during the first quarter included the operating revenue increase resulting from increased fuel cost reimbursements by SkyWest’s major partners that are recorded as operating revenues under contract flying arrangements. Additionally, block hour production increased 4.3 percent to 353,637 hours compared to 338,992 hours for the same period last year.
SkyWest was able to reduce is cost per available seat mile (CASM) by two percent despite its lower production rate and higher maintenance costs. The CASM drop resulted from the company’s aggressive cost reduction program, said Rich. It is focusing those efforts on its pro-rate flying done by 34 of the 59 Embraer Brasilias remaining in its fleet and expects to eliminate 23 of those aircraft replacing them with CRJ 700s and 900s ordered last year for its United and Delta operations. Eighteen of the new jets are destined for its United program with four going to Delta.