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SkyWest Inc. Reports Operating Results (10-Q)

May 07, 2009 | About:
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SkyWest Inc. (SKYW) filed Quarterly Report for the period ended 2009-03-31.

SkyWest Inc. through its wholly-owned subsidiary SkyWest Airlines Inc. operates one of the larger regional airlines in the United States. SkyWest provides passenger and air freight service and completes over 880 daily flights. Pursuant to a joint marketing and code sharing agreement with Delta Airlines Inc. SkyWest operates as a Delta Connection in certain SkyWest markets. SkyWest entered into a marketing and code sharing agreement with Continental Airlines Inc. Which allows SkyWest to operate as a Continental Connection in certain markets in and out of Los Angeles. SkyWest Inc. has a market cap of $722.7 million; its shares were traded at around $12.795 with a P/E ratio of 6.7 and P/S ratio of 0.2. The dividend yield of SkyWest Inc. stocks is 1.2%. SkyWest Inc. had an annual average earning growth of 41.2% over the past 10 years. GuruFocus rated SkyWest Inc. the business predictability rank of 4.5-star.

Highlight of Business Operations:

We had revenues of $672.6 million for the three months ended March 31, 2009, a 22.5% decrease, compared to revenues of $868.0 million for the three months ended March 31, 2008. We had net income of $9.4 million, or $0.16 per diluted share, for the three months ended March 31, 2009, a decrease in net income of 67.8%, compared to $29.1 million of net income, or $0.47 per diluted share, for the three months ended March 31, 2008.

Passenger revenues. Passenger revenues decreased $194.3 million, or 22.6%, during the three months ended March 31, 2009, compared to the three months ended March 31, 2008. The decrease in passenger revenues was primarily due to a decrease in fuel reimbursements from our major partners. The fuel reimbursement from our major partners decreased $147.0 million or 51.8%, during the three months ended March 31, 2009, compared to the three months ended March 31, 2008. Our passenger revenues, excluding fuel and engine overhaul reimbursements from major partners, decreased $47.7 million, or 8.5%, during the three months ended March 31, 2009, compared to the three months ended March 31, 2008. The decrease in passenger revenues, excluding fuel and engine overhaul reimbursements, was more than the corresponding decrease in ASMs, primarily due to two factors. First, ASA experienced an abnormally high number of flight cancellations during the three months ended March 31, 2009. ASA incurred significant weather related cancellations in its Atlanta hub during the three months ended March 31, 2009. Additionally, on March 31, 2009, as a result of an internal audit, ASA grounded 60 CRJ200 aircraft in order to perform engine safety inspections in accordance with the manufacturer’s recommendations. ASA cancelled approximately 750 flights more than normal as a result of the severe weather and the aircraft grounding during the quarter. As a result of the abnormally high number of cancellations, ASA experienced a negative impact on passenger revenues of approximately $7.6 million. Second, the percentage decrease in passenger revenues excluding fuel and engine overhaul reimbursements was more than the percentage decrease in ASMs, primarily due operating efficiencies we obtained by adding incremental aircraft under our contract flying arrangements, which are factored into our contractual rates.

Fuel. Fuel costs decreased $151.8 million, or 51.9%, during the three months ended March 31, 2009, compared to the three months ended March 31, 2008. The average cost per gallon of fuel decreased to $1.65 per gallon during the three months ended March 31, 2009 from $3.08 during the three months ended March 31, 2008. In addition to the decrease in the average cost per gallon during the three months ended March 31, 2009, United purchased fuel directly from a fuel vendor for our United Express aircraft operated out of Chicago, San Francisco, Los Angeles and Denver. Midwest also purchased all of its fuel directly from fuel vendors during the three months ended March 31, 2009, which reduced our total fuel costs and related passenger revenue. 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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