SkyWest, holding company for SkyWest Airlines, reported a net income of $86.87 million on $774.22 million in revenues for 2002, marking a 72 percent increase over the $50.5 million in net income for 2001 and a 28.6 percent increase over $601.87 in revenues for 2001. Operating expenses increased only 22.3 percent, going from $536.3 million in 2001 to $655.78 last year.

For the last quarter of 2002, SkyWest had a 25.7 percent increase in revenues, going from $165.47 million for fourth quarter 2001 to $207.93 million, while expenses grew only 21.9 percent, from $147.04 million to $179.24 million. Net income for the quarter was $17.79 million, a 29.2 percent increase over the $13.77 million in net income for fourth quarter of 2001.

Of the $774.22 million in total operating revenues reported for 2002, passenger traffic accounted for $769.2 million, while freight and other sources accounted for $5.02 million. Freight revenue has steadily declined over the past three years, with $5.88 million reported in 2001 and $6.838 million in 2000. However, passenger revenue has steadily climbed from $516.16 million in 2000 and $595.99 million in 2001.

SkyWest could be impacted negatively this year if United Airlines enters Chapter 7 insolvency, since half of its business is as a United Express carrier. The remainder of its business is with Delta Connection. Also, SkyWest has not yet had its fixed fee contract with United affirmed, providing uncertainty in both short and long term operations with that carrier.

However, if United does declare Chapter 7, it is believed that SkyWest and its RJ operations would be picked up by other major carriers seeking to replace United's hub operations, according to James Parker, managing director of Raymond James & Associates.

Parker said that despite the uncertainty, Raymond James is retaining its "Strong Buy" rating for SkyWest because "there is good value in its stock since it is selling near its book value of $11.12 and it has a strong cash position of $9.35 per share" as of Dec. 31. However, 12-month target price projections have been dropped from $21 to $16.