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 $816.8 million; its shares were traded at around $14.69 with a P/E ratio of 10.2 and P/S ratio of 0.2. The dividend yield of Skywest Inc. stocks is 1%. 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 $637.7 million for the three months ended September 30, 2009, a 31.7% decrease, compared to revenues of $934.1 million for the three months ended September 30, 2008. We had net income of $28.6 million, or $0.50 per diluted share, for the three months ended September 30, 2009, a 9.2% increase in net income, compared to $26.2 million of net income, or $0.45 per diluted share, for the three months ended September 30, 2008.
On June 10, 2009, SkyWest Airlines reached a mutual understanding with Midwest to terminate the service SkyWest Airlines currently provides under the Midwest Services Agreement. As a result, SkyWest Airlines agreed to remove its remaining 12 CRJ200s from Midwest service based on the following schedule: one aircraft was removed in each of June 2009 and July 2009, three aircraft were removed in October 2009, two aircraft are scheduled to be removed in November 2009, two aircraft are scheduled to be removed in December 2009 and the last three aircraft are scheduled to be removed in January 2010. Additionally, SkyWest Airlines agreed to cancel an unsecured note from Midwest in the amount of approximately $9.3 million in exchange for a $4.0 million payment from Midwest that is guaranteed by Republic Airways Holdings, Inc. The unsecured note related to certain deferred payments Midwest owed SkyWest Airlines from services provided under the Midwest Services Agreement. Because of the unique modified payment terms associated with the termination of the Midwest Service Agreement, we have not recognized revenue associated with the deferred amount. The deferred amount is scheduled to be paid to SkyWest Airlines at the rate of $400,000 per aircraft as each applicable aircraft is removed from service starting with the aircraft that were removed in October 2009. Midwest has agreed to continue to pay existing rates and charges to SkyWest Airlines as agreed to under the Midwest Services Agreement, as previously amended, until the Midwest Express aircraft are removed from service.
Also on October 16, 2009, SkyWest Airlines extended to United a secured term loan in the amount of $80 million. The term loan bears interest at a rate of 11%, with a ten-year amortization period. The loan is secured by certain ground equipment and airport slot rights held by United. SkyWest Airlines also agreed to defer certain amounts otherwise payable to SkyWest Airlines under the existing United Express Agreement. The maximum deferral amount is $49 million and any amounts deferred accrue a deferral fee of 8%, payable weekly. Uniteds right to defer such payments is scheduled to terminate in ten years.
Passenger revenues. Passenger revenues decreased $296.2 million, or 32.0%, during the three months ended September 30, 2009, compared to the three months ended September 30, 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 $301.6 million or 85.4%, during the three months ended September 30, 2009, compared to the three months ended September 30, 2008. Our passenger revenues, excluding fuel and engine overhaul reimbursements from major partners, increased $5.0 million, or 0.9%, during the three months ended September 30, 2009, compared to the three months ended September 30, 2008. The increase in passenger revenues, excluding fuel and engine overhaul reimbursements, was less than the corresponding percentage increase in ASMs, primarily due to two factors. First, Delta transitioned 23 stations from SkyWest Airlines and ASA to other ground handlers during the second quarter of 2009 which decreased our passenger revenues. Second, operating efficiencies obtained by adding incremental aircraft under our contract flying arrangements, were factored into our contractual rates and our passenger revenues, which resulted in a reduction to our revenue per ASM..
Fuel. Fuel costs decreased $301.9 million, or 83.0%, during the three months ended September 30, 2009, compared to the three months ended September 30, 2008. The average cost of fuel decreased to $2.23 per gallon during the three months ended September 30, 2009 from $3.92 per gallon during the three months ended September 30, 2008. In addition to the decrease in the average cost per gallon of fuel, during the three months ended September 30, 2009 United purchased fuel directly from a fuel vendor for our United Express aircraft under contract operated out of Chicago, San Francisco, Los Angeles and Denver; Midwest purchased all of the fuel for our Midwest aircraft directly from Midwests fuel vendors and Delta purchased the majority of the fuel for our Delta aircraft under contract directly from its fuel vendors. These modifications reduced our total fuel costs, as well as our passenger revenues for the three months ended September 30, 2009. During the three months ended September 30, 2008, we purchased the fuel for all of our Delta Connection flights. The following table summarizes the gallons of fuel we purchased directly, and the percentage change in fuel price per gallon on our fuel expense, for the periods indicated:
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