Third Quarter Highlights:
- $1.79 earnings per diluted share, up 14% from $1.57 in Q3 2018
- Pre-tax income of $119 million, up from $110 million in Q3 2018; net income of $91 million, up from $83 million in Q3 2018
- Five new E175 aircraft scheduled for delivery in Q4 2019 under a previously announced agreement
SkyWest, Inc. (NASDAQ: SKYW) ("SkyWest") today reported financial and operating results for Q3 2019, including net income of $91 million, or $1.79 per diluted share, compared to net income of $83 million, or $1.57 per diluted share, for Q3 2018. Earnings per diluted share increased 14% in Q3 2019 from Q3 2018, primarily due to SkyWest's ongoing fleet transition. SkyWest has added 13 new E175 aircraft and 11 new CRJ900 aircraft since Q3 2018 and reduced aircraft ownership costs through early lease buyouts on 52 aircraft executed in 2019.
Commenting on the results, Chip Childs, Chief Executive Officer and President of SkyWest, said, "We were pleased to deliver another solid quarter as we continue executing our fleet strategy and remain positioned for future opportunity based on strong demand for our product. I want to thank our SkyWest professionals for their excellent work during the quarter."
Revenue was $760 million in Q3 2019, down from $829 million in Q3 2018 due to the sale of ExpressJet Airlines ("ExpressJet") in January 2019. Excluding ExpressJet revenue in Q3 2018, Q3 2019 revenue increased $71 million, primarily from adding 24 new aircraft since Q3 2018.
Operating expenses were $614 million in Q3 2019, down from $691 million in Q3 2018, also due to the sale of ExpressJet. Excluding ExpressJet operating expenses in Q3 2018, Q3 2019 operating expenses increased $62 million, primarily from growth in operations as a result of additional aircraft placed into service since Q3 2018.
Aircraft deliveries under previously announced deals for Delta
New E175 aircraft to be financed and operated by SkyWest:
- Five aircraft scheduled for delivery in Q4 2019
- Six aircraft scheduled for delivery from early to mid-2020
New CRJ900 aircraft to be financed by Delta and operated by SkyWest:
- One aircraft delivered in Q3 2019
- One aircraft scheduled for delivery in mid-2020
Used E175 aircraft financed by Delta and operated by SkyWest:
- Six aircraft scheduled for in-service dates from early to mid-2020
During Q3 2019, SkyWest acquired four CRJ900 aircraft under an early lease buyout. These four aircraft are scheduled to expire under SkyWest's flying agreement with Delta in 2020.
SkyWest also anticipates removing eight CRJ700s from its flying agreement with Delta by the end of 2020. As previously announced, SkyWest has an agreement with Delta to replace these 12 used CRJ aircraft with 12 new aircraft. Following their agreement expirations, SkyWest anticipates utilizing these 12 used aircraft in various ways: placing them with other partners, using the airframe/engines as spare parts and/or leasing the airframes/engines to third parties.
Aircraft deliveries under previously announced deals for American
SkyWest is scheduled to place ten used CRJ700 aircraft with American throughout 2020 including seven used aircraft that SkyWest anticipates acquiring from a third party and three used aircraft that SkyWest expects to source through upcoming contract expirations with another SkyWest partner.
Lease agreement with a third party for 29 CRJ700 aircraft
SkyWest has placed four of 29 CRJ700 aircraft under a previously announced lease agreement with a third party for a ten-year term as of September 30, 2019. SkyWest anticipates the remaining aircraft will be placed under lease in increments through mid-2020.
Capital and Liquidity
SkyWest had $572 million in cash and marketable securities at September 30, 2019, up from $550 million at June 30, 2019. During the third quarter of 2019, SkyWest:
- Used $25 million to repurchase stock under SkyWest's $250 million share repurchase program
- Used $30 million to acquire four CRJ900 aircraft under an early lease buyout
- Used $39 million to acquire spare engines and $33 million for other spare aircraft parts and maintenance assets
Total debt at September 30, 2019 was $3.0 billion, down from $3.1 billion as of June 30, 2019.