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SkyWest Inc. Reports Operating Results (10-Q)

November 05, 2010 | About:
10qk

10qk

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SkyWest Inc. (SKYW) filed Quarterly Report for the period ended 2010-09-30.

Skywest Inc. has a market cap of $858.7 million; its shares were traded at around $15.67 with a P/E ratio of 10.6 and P/S ratio of 0.3. The dividend yield of Skywest Inc. stocks is 1.1%. Skywest Inc. had an annual average earning growth of 30.9% over the past 10 years. GuruFocus rated Skywest Inc. the business predictability rank of 2.5-star.SKYW is in the portfolios of Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

We had revenues of $686.9 million for the three months ended September 30, 2010, a 7.7% increase, compared to revenues of $637.7 million for the three months ended September 30, 2009. We had net income of $25.5 million, or $0.45 per diluted share, for the three months ended September 30, 2010, a decrease of 10.8%, compared to $28.6 million of net income, or $0.50 per diluted share, for the three months ended September 30, 2009.

On August 3, 2010, we entered into the Merger Agreement with ExpressJet and Express Merger Co., a wholly-owned subsidiary of Atlantic Southeast. The Merger Agreement provides for the merger of Express Merger Co. and ExpressJet, with ExpressJet becoming a wholly-owned subsidiary of Atlantic Southeast (the Merger). If the Merger is completed as contemplated by the Merger Agreement, the ExpressJet stockholders will receive $6.75 in cash for each outstanding share of ExpressJet common stock, and the net acquisition price for all of the issued and outstanding shares of ExpressJet common stock (after giving effect to shares of ExpressJet common stock presently owned by Atlantic Southeast) would be approximately $133 million. In connection with the proposed transaction, we have negotiated the terms of an amended capacity purchase agreement between ExpressJet and Continental Airlines, Inc., which we anticipate will become effective if the Merger is completed. Completion of the Merger is subject to approval by ExpressJets stockholders, regulatory approvals and other customary closing conditions, and is currently expected to occur during the fourth quarter of 2010.

On October 16, 2009, SkyWest Airlines extended to United a secured term loan in the amount of $80 million. The term loan bore interest at a rate of 11%, with a ten-year amortization period. The loan was secured by certain ground equipment and airport slot rights held by United. On August 11, 2010, United repaid the $80 million term loan.

Passenger revenues. Passenger revenues increased $47.0 million, or 7.5%, during the three months ended September 30, 2010, compared to the three months ended September 30, 2009. The increase in passenger revenues was due to an increase in fuel reimbursements from our major partners. The fuel reimbursement from our major partners increased $14.6 million or 28.2%, during the three months ended September 30, 2010, compared to the three months ended September 30, 2009. Our passenger revenues, excluding fuel and engine overhaul reimbursements from major partners, increased $36.6 million, or 6.7%, during the three months ended September 30, 2010, compared to the three months ended September 30, 2009. The increase in passenger revenues, excluding fuel and engine overhaul reimbursements, was generally consistent with the increase in ASMs. The increase in ASMs was primarily due to SkyWest Airlines acceptance of 18 new CRJ 700s since April 1, 2009 and its incremental placement of those aircraft into service over that period.

Fuel. Fuel costs increased $25.4 million, or 41.1%, during the three months ended September 30, 2010, compared to the three months ended September 30, 2009. The average cost per gallon of fuel increased to $2.55 per gallon during the three months ended September 30, 2010, from $2.23 per gallon during the three months ended September 30, 2009. Commencing on June 1, 2009, Delta purchased the majority of the fuel for our Delta Connection aircraft. United also purchased fuel directly from a fuel vendor for our United Express aircraft under contract flying operated out of Chicago, San Francisco, Los Angeles and Denver. The following table summarizes the gallons of fuel we purchased directly, and the change in fuel price per gallon on our fuel expense, for the periods indicated:

Read the The complete Report

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