ST. GEORGE, Utah,
Oct. 30 /PRNewswire-FirstCall/ -- SkyWest, Inc.
(Nasdaq: SKYW) today reported operating revenues of
$791.8 million for the
quarter ended
September 30, 2006, a 59.2% increase, compared to
$497.3 million
for the same period last year. SkyWest also reported net income of
$40.7 million for the quarter ended
September 30, 2006, or
$0.63 per diluted
share, compared to
$30.1 million of net income or
$0.51 per diluted share for
the same period last year.
SkyWest also reported operating revenues of $2.33 billion for the nine
months ended September 30, 2006, a 90.3% increase, compared to $1.22 billion
for the same period last year. SkyWest also reported net income of
$114.6 million for the nine months ended September 30, 2006, or $1.82 per
diluted share, compared to $73.6 million of net income or $1.26 per diluted
share for the same period last year.
The results for the quarter and the nine months ended September 30, 2006,
also include the impact of SkyWest's secondary offering of common stock,
completed April 17, 2006, wherein SkyWest issued 4,000,000 shares of common
stock, which increased the fully-diluted weighted average shares by 6.6% for
the quarter and 4.0% for the nine months ended September 30, 2006.
Additionally, these results include the effect of SkyWest's adoption of FASB
Statement No. 123(R), Share-Based Payments ("SFAS 123 (R)"), effective
January 1, 2006.
The primary items of significance affecting the third quarter of 2006 are
outlined below:
On September 7, 2005, SkyWest completed the acquisition of Atlantic
Southeast Airlines, Inc. ("ASA") from Delta Air Lines, Inc. As a result of
the acquisition, ASA became a wholly-owned subsidiary of SkyWest and SkyWest's
consolidated operations and financial results for periods subsequent to
September 7, 2005 include the financial and operating results of ASA
(including the addition of 153 aircraft operated by ASA for such periods).
Primarily due to the ASA acquisition, SkyWest experienced significant
increases in the size of its fleet, operating statistics and financial
results.
Total operating revenues for the third quarter of 2006 increased primarily
as a result of a 63.3% increase in available seat miles (ASMs). Operating
revenues were impacted by a 5.0% decrease in revenue per available seat mile
and by increased fuel cost reimbursements by SkyWest's major partners that are
recorded as operating revenues under contract flying arrangements.
Total operating expenses and interest per ASM for the third quarter of
2006, excluding fuel charges of $271.1 million or $0.051 per ASM, decreased
approximately 2.2% to $0.088 from $0.090 for the same quarter of 2005. The
decrease was primarily the result of operating a combined total of 32 larger
and newer regional jet aircraft since September 30, 2005.
Total ASMs for the third quarter of 2006 increased 63.3% from the third
quarter of 2005 primarily as a result of SkyWest increasing its fleet size to
407 aircraft as of September 30, 2006. During the quarter, SkyWest took
delivery of six CRJ900 and four CRJ200 regional jet aircraft and financed them
through interim and long-term operating leases. At September 30, 2006,
SkyWest's fleet consisted of: 333 regional jets (119 United and 214 Delta);
62 EMB-120 aircraft (48 United, and 14 Delta); and 12 ATR72 aircraft (all
Delta). During the third quarter of 2006, SkyWest generated 5.28 billion
ASMs, compared to 3.23 billion ASMs during the same period of 2005.
SkyWest's adoption of SFAS 123(R) effective January 1, 2006 resulted in
approximately $3.0 million ($2.1 million after tax) of expense for the quarter
ended September 30, 2006. SkyWest anticipates that future expenses
attributable to SkyWest's adoption of SFAS 123(R) will be contingent upon the
amount of future option or stock grants that are made by the Company.
At September 30, 2006 SkyWest had $595.0 million in cash and marketable
securities compared to $324.5 million as of December 31, 2005. SkyWest's
long-term debt increased to approximately $1.51 billion as of September 30,
2006, compared to $1.42 billion at December 31, 2005, consistent with
SkyWest's refinancing arrangements on aircraft and making normal recurring
debt payments. 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 $2.3 billion as of September 30,
2006.
Under SkyWest's 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 SkyWest's time and
material maintenance policy, as more fully described in SkyWest's Annual
Report on Form 10-K for the year ended December 31, 2005, SkyWest records
maintenance expense on its CRJ200 regional jet aircraft engines as the
maintenance events occur. As a result, during the third quarter of 2006,
SkyWest collected and recorded as revenue $7.2 million (pretax) related to
maintenance expense under its United Express agreement which is net of any
regional jet engine maintenance overhauls.
SkyWest Airlines has been ranked the number one on-time mainland carrier
by the Department of Transportation for 2003 through 2005. SkyWest Airlines
was also recently awarded the FAA's Aviation Maintenance Technician (AMT) Gold
Award for 2005. Additionally during 2005, ASA received the FAA Aviation
Maintenance Diamond Award.
SkyWest Airlines, based in St. George, Utah, and ASA, based in Atlanta,
Georgia, are wholly-owned subsidiaries of SkyWest. SkyWest Airlines operates
as United Express and Delta Connection carriers under contractual agreements
with United Airlines and Delta Air Lines. ASA operates as a Delta Connection
carrier under a contractual agreement with Delta Air Lines. System-wide,
SkyWest serves a total of approximately 229 cities in the United States,
Canada, Mexico and the Caribbean, with approximately 2,441 daily departures.
This press release and additional information regarding SkyWest 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: Delta's bankruptcy
proceedings; the failure to integrate the operations and employees of SkyWest
and ASA and achieve the anticipated synergies as a result of the acquisition;
the failure to successfully operate as anticipated under the terms of the
Delta Connection 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; the failure to accurately forecast
acquisition-related costs; 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;
employee relations and labor costs; 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."
SKYWEST, INC.
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,
2006 2005 2006 2005
Operating revenues:
Passenger $784,597 $490,191 $2,303,357 $1,203,991
Ground handling and
other 7,244 7,158 21,743 17,693
791,841 497,349 2,325,100 1,221,684
Operating expenses:
Flying operations 447,702 283,591 1,288,899 669,964
Customer service 99,767 65,626 298,793 177,387
Maintenance 78,057 41,306 230,148 107,686
Depreciation and
amortization 47,420 27,596 140,171 70,238
General and
administrative 31,124 23,236 106,836 61,371
704,070 441,355 2,064,847 1,086,646
Operating income 87,771 55,994 260,253 135,038
Other income (expense):
Interest income 5,378 3,822 12,512 10,165
Interest expense (28,987) (11,472) (86,049) (25,510)
Other 0 (585) (1,084) (585)
(23,609) (8,235) (74,621) (15,930)
Income before income
taxes 64,162 47,759 185,632 119,108
Provision for income
taxes 23,477 17,699 71,073 45,525
Net income $40,685 $30,060 $114,559 $73,583
Basic earnings per share $0.64 $0.52 $1.85 $1.27
Diluted earnings per
share $0.63 $0.51 $1.82 $1.26
Weighted average common
shares:
Basic 63,870 57,846 61,986 57,729
Diluted 64,482 59,016 62,886 58,512
Unaudited Operating Highlights
Operating Highlights Three Months Ended
September 30,
2006 2005 % Change
Passengers carried 8,171,812 5,119,212 59.6
Revenue passenger miles (000) 4,156,637 2,457,634 69.1
Available seat miles (000) 5,281,794 3,234,835 63.3
Passenger load factor 78.7% 76.0% 2.7 pts
Passenger breakeven load factor 72.9% 69.2% 3.7 pts
Yield per revenue passenger mile $0.189 $0.199 (5.0)
Revenue per available seat mile $0.150 $0.154 (2.6)
Cost per available seat mile $0.139 $0.140 (0.7)
Fuel cost per available seat mile $0.051 $0.050 2.0
Average passenger trip length 509 480 6.0
Block Hours 339,855 215,977 57.4
Departures 222,283 154,831 43.6
Operating Highlights Nine Months Ended
September 30,
2006 2005 % Change
Passengers carried 23,725,518 12,988,939 82.7
Revenue passenger miles (000) 11,857,945 6,000,078 97.6
Available seat miles (000) 15,054,072 8,001,002 88.2
Passenger load factor 78.8% 75.0% 3.8 pts
Passenger breakeven load factor 72.9% 68.3% 4.6 pts
Yield per revenue passenger mile $0.194 $0.201 (3.5)
Revenue per available seat mile $0.154 $0.153 .7
Cost per available seat mile $0.143 $0.139 2.9
Fuel cost per available seat mile $0.050 $0.043 16.3
Average passenger trip length 500 462 8.2
Block Hours 966,911 558,659 73.1
Departures 638,710 411,506 55.2
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