Fourth Quarter and Annual 2023
Summary
- Q4 2023 pre-tax income of $24 million, net income of $18
million, or $0.42 per diluted share
- Full year 2023 pre-tax income of $40 million, net income of $34
million, or $0.77 per diluted share
- SkyWest had 300 days of 100% controllable completion in
2023
SkyWest, Inc. (NASDAQ: SKYW) (“SkyWest”) today reported
financial and operating results for Q4 2023, including net income
of $18 million, or $0.42 per diluted share, compared to net loss of
$47 million, or $0.93 loss per share, for Q4 2022. SkyWest also
reported net income of $34 million, or $0.77 per diluted share, for
the 2023 year, compared to net income of $73 million, or $1.44 per
diluted share, for the 2022 year.
Commenting on the results, Chip Childs, Chief Executive Officer
of SkyWest, said, “Our teams continued to generate an exceptional
product this quarter. Together, the SkyWest team achieved a record
300 days of 100% controllable completion in 2023. With improved
pilot attrition and ongoing strong demand for our product, we are
well set up for success in 2024 and beyond. I want to thank our
amazing team for their integrity, dedication and teamwork in
delivering the best product in the regional industry.”
Under its previously announced share repurchase program
authorized by the SkyWest Board of Directors in May 2023, SkyWest
repurchased 1.0 million shares of common stock for $45 million
during Q4 2023. For the year ended December 31, 2023, SkyWest
repurchased 10.6 million shares of common stock for $289 million,
which represented 21% of SkyWest’s outstanding shares as of
December 31, 2022. As of December 31, 2023, SkyWest had $91 million
of remaining availability under its current share repurchase
program.
Financial Results
Revenue was $752 million in Q4 2023, up $71 million, or 10%,
from $681 million in Q4 2022, primarily due to flying contract rate
increases combined with 2% higher production in Q4 2023, compared
to Q4 2022. Additionally, SkyWest had $63 million of deferred
revenue during Q4 2023 under its flying contracts, compared to $70
million of deferred revenue during Q4 2022. See the “Supplemental
Cash Flow Information” section of this release for more
information.
Operating expenses were $724 million in Q4 2023, up $8 million,
or 1%, from $716 million in Q4 2022, driven by increases in
employee compensation, including higher labor pay scales, and
increased maintenance costs, partially offset by lower aircraft
rent expense from the early lease buyouts on aircraft in Q1 2023.
Additionally, for comparability purposes, Q4 2022 operating
expenses included a $36 million non-cash impairment on aircraft
held for sale.
Capital and Liquidity
SkyWest had $835 million in cash and marketable securities at
December 31, 2023, up from $820 million at September 30, 2023 and
down from $1.0 billion at December 31, 2022.
Total debt at December 31, 2023 was $3.0 billion, down from $3.1
billion at September 30, 2023 and $3.4 billion at December 31,
2022. Capital expenditures during Q4 2023 were $86 million for the
purchase of two E175 aircraft and other fixed assets.
Commercial Agreements
SkyWest is coordinating with its major airline partners to
optimize the timing of upcoming announced fleet deliveries. The
anticipated E175 future delivery dates summarized below are based
on currently available information and are subject to change.
2024
2025
2026
Total
Delta Air Lines
1
ꟷ
ꟷ
1
United Airlines
4
7
8
19
Alaska Airlines
ꟷ
1
ꟷ
1
Total
5
8
8
21
By the end of 2026, SkyWest is scheduled to operate a total of
258 E175 aircraft.
SkyWest also announced today that it has acquired a 25%
ownership stake in Contour Airlines, a Part 135 carrier. The
Contour arrangement also includes an asset provisioning agreement
under which SkyWest will provide CRJ airframes, engines and rotable
parts to Contour.
About SkyWest
SkyWest, Inc. is the holding company for SkyWest Airlines and
SkyWest Leasing, an aircraft leasing company. SkyWest Airlines has
a fleet of approximately 500 aircraft connecting passengers to over
240 destinations throughout North America. SkyWest Airlines
operates through partnerships with United Airlines, Delta Air
Lines, American Airlines, and Alaska Airlines carrying more than 38
million passengers in 2023.
SkyWest will host its conference call to discuss its fourth
quarter 2023 results today, February 1, 2024, at 2:30 p.m. Mountain
Time. The conference call number is 1-888-330-2455 for domestic
callers, and 1-240-789-2717 for international callers. Please call
up to ten minutes in advance to ensure you are connected prior to
the start of the call. The conference call will also be available
live on the Internet at
https://events.q4inc.com/attendee/811189566. This press release and
additional information regarding SkyWest, including access
information for the digital rebroadcast of the fourth quarter 2023
results call, participation at investor conferences and investor
presentations can be accessed at inc.skywest.com.
Forward Looking-Statements
In addition to historical information, this release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as
“forecasts,” "expects," "intends," "believes," "anticipates,"
“estimates,” "should," "likely" and similar expressions identify
forward-looking statements. Such statements include, but are not
limited to, statements about the continued demand for our product,
the effect of economic conditions on SkyWest’s business, financial
condition and results of operations, the scheduled aircraft
deliveries for SkyWest in upcoming periods and the related
execution of SkyWest’s fleet transition strategy and expected
timing thereof, expected production levels in future periods and
associated staffing challenges, pilot attrition trends, SkyWest’s
coordination with major airline partners to optimize the delivery
of aircraft under previously announced agreements, the expected
terms, timing and benefits related to SkyWest’s leasing and joint
venture transactions, SkyWest’s provisioning of assets to Contour
Airlines, as well as SkyWest’s future financial and operating
results, plans, objectives, expectations, estimates, intentions and
outlook, and other statements that are not historical facts. All
forward-looking statements included in this release are made as of
the date hereof and are based on information available to SkyWest
as of such date. SkyWest assumes no obligation to update any
forward-looking statements unless required by law. Readers should
note that many factors could affect the future operating and
financial results of SkyWest and could cause actual results to vary
materially from those expressed in forward-looking statements set
forth in this release. These factors include, but are not limited
to: the challenges of competing successfully in a highly
competitive and rapidly changing industry; developments associated
with fluctuations in the economy and the demand for air travel,
including related to inflationary pressures, and related decreases
in customer demand and spending; uncertainty regarding continued
recovery from the COVID-19 pandemic and other potential future
outbreaks of infectious diseases or other health concerns, and the
consequences of such outbreaks to the travel industry, including
travel demand and travel behavior, and our major partners in
general and the financial condition and operating results of
SkyWest in particular; the prospects of entering into agreements
with existing or other carriers to fly new aircraft; ongoing
negotiations between SkyWest and its major partners regarding their
contractual obligations; uncertainties regarding operation of new
aircraft; the ability to attract and retain qualified pilots,
including captains, and related staffing challenges; the impact of
regulatory issues such as pilot rest rules and qualification
requirements; the ability to obtain aircraft financing; the
financial stability of SkyWest’s major airline partners and any
potential impact of their financial condition on the operations of
SkyWest; fluctuations in flight schedules, which are determined by
the major airline partners for whom SkyWest conducts flight
operations; variations in market and economic conditions;
significant aircraft lease and debt commitments; estimated useful
life of long-lived assets, residual aircraft values and related
impairment charges; labor relations and costs and labor shortages;
the impact of global instability; rapidly fluctuating fuel costs
and potential fuel shortages; the impact of weather-related,
natural disasters and other air safety incidents on air travel and
airline costs; aircraft deliveries; uncertainty regarding ongoing
hostility between Russia and the Ukraine, as well as Israel and
Hamas, and the related impacts on macroeconomic conditions and on
the international operations of any of our major airline partners
as a result of such conflict; and other unanticipated factors. Risk
factors, cautionary statements and other conditions which could
cause SkyWest’s actual results to differ materially from
management’s current expectations are contained in SkyWest’s
filings with the Securities and Exchange Commission, including its
most recent Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K.
SkyWest, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Income (Loss)
(Dollars and Shares in Thousands,
Except per Share Amounts)
(Unaudited)
Three months ended
Year ended
December 31,
December 31,
2023
2022
2023
2022
OPERATING REVENUES:
Flying agreements
$
728,267
$
654,486
$
2,834,397
$
2,899,837
Lease, airport services and other
23,520
26,759
101,035
105,088
Total operating revenues
751,787
681,245
2,935,432
3,004,925
OPERATING EXPENSES:
Salaries, wages and benefits
331,956
315,204
1,322,615
1,211,551
Aircraft maintenance, materials and
repairs
190,271
137,679
673,453
644,157
Depreciation and amortization
95,237
97,125
383,115
394,552
Aircraft fuel
23,340
23,367
85,913
108,456
Airport-related expenses
18,992
17,353
72,640
71,549
Aircraft rentals
1,452
27,244
25,507
75,353
Other operating expenses
62,917
98,337
268,120
318,145
Total operating expenses
724,165
716,309
2,831,363
2,823,763
OPERATING INCOME (LOSS)
27,622
(35,064
)
104,069
181,162
OTHER INCOME (EXPENSE):
Interest income
12,167
8,273
43,928
17,605
Interest expense
(31,049
)
(34,775
)
(130,930
)
(127,083
)
Other income (loss), net
15,698
(112
)
23,242
20,899
Total other expense, net
(3,184
)
(26,614
)
(63,760
)
(88,579
)
INCOME (LOSS) BEFORE INCOME TAXES
24,438
(61,678
)
40,309
92,583
PROVISION (BENEFIT) FOR INCOME TAXES
6,922
(14,574
)
5,967
19,630
NET INCOME (LOSS)
$
17,516
$
(47,104
)
$
34,342
$
72,953
BASIC EARNINGS (LOSS) PER SHARE
$
0.43
$
(0.93
)
$
0.78
$
1.44
DILUTED EARNINGS (LOSS) PER SHARE
$
0.42
$
(0.93
)
$
0.77
$
1.44
Weighted average common shares:
Basic
40,706
50,598
43,940
50,548
Diluted
41,776
50,598
44,599
50,644
SkyWest, Inc. and
Subsidiaries
Summary of Consolidated
Balance Sheets
(Dollars in Thousands)
(Unaudited)
December 31,
December 31,
2023
2022
Cash and marketable securities
$
835,223
$
1,047,215
Other current assets
296,673
324,066
Total current assets
1,131,896
1,371,281
Property and equipment, net
5,405,685
5,524,549
Deposits on aircraft
77,282
23,931
Other long-term assets
411,430
494,792
Total assets
$
7,026,293
$
7,414,553
Current portion, long-term debt
$
443,869
$
438,502
Other current liabilities
810,423
734,041
Total current liabilities
1,254,292
1,172,543
Long-term debt, net of current
maturities
2,562,183
2,941,772
Other long-term liabilities
1,096,316
952,607
Stockholders' equity
2,113,502
2,347,631
Total liabilities and stockholders'
equity
$
7,026,293
$
7,414,553
SkyWest, Inc. and
Subsidiaries
Additional Operational
Information (unaudited)
SkyWest’s fleet in scheduled service or
under contract by aircraft type:
December 31, 2023
September 30, 2023
December 31, 2022
E175 aircraft
237
235
236
CRJ900 aircraft
41
37
41
CRJ700 aircraft
118
117
104
CRJ200 aircraft
89
104
136
Total aircraft in service or under
contract
485
493
517
As of December 31, 2023, SkyWest leased 35 CRJ700s and five
CRJ900s to third parties and had 16 CRJ200s that are ready for
service under SkyWest Charter (“SWC”) operations (these aircraft
are excluded from the table above).
Selected operational data:
For the three months ended
December 31,
For the year ended December
31,
Block hours by aircraft type:
2023
2022
% Change
2023
2022
% Change
E175s
177,104
153,959
15.0
%
677,886
635,039
6.7
%
CRJ900s
17,198
23,194
(25.8
)%
76,588
101,662
(24.7
)%
CRJ700s
59,820
58,498
2.3
%
218,059
261,036
(16.5
)%
CRJ200s
36,632
49,253
(25.6
)%
167,911
256,655
(34.6
)%
Total block hours
290,754
284,904
2.1
%
1,140,443
1,254,392
(9.1
)%
Departures
177,433
168,816
5.1
%
691,962
739,388
(6.4
)%
Passengers carried
9,925,655
9,437,439
5.2
%
38,597,309
40,064,689
(3.7
)%
Adjusted flight completion
99.9
%
99.9
%
—
pts
99.9
%
99.7
%
0.2
pts
Raw flight completion
99.5
%
98.3
%
1.2
pts
98.8
%
98.2
%
0.6
pts
Passenger load factor
83.4
%
84.6
%
(1.2
)pts
83.6
%
83.4
%
0.2
pts
Average trip length
445
479
(7.0
)%
453
493
(8.1
)%
Adjusted flight completion percent excludes weather
cancellations. Raw flight completion includes weather
cancellations.
Supplemental Cash Flow Information
SkyWest receives certain fixed monthly cash payments under its
capacity purchase agreements (“CPAs”) that are attributed to
SkyWest’s overhead costs and certain fixed monthly cash payments
associated with SkyWest’s aircraft ownership costs. Fixed payments
allocated to the non-lease portion are recognized as revenue on a
completed block hour basis over the applicable contract term. Fixed
payments allocated to the lease portion are accounted for as lease
revenue under the CPAs and are recognized on a straight-line basis
over the applicable contract term. Fixed monthly cash payments
received in excess of revenue recognized during the reporting
period are recorded as deferred revenue and revenue recognized in
excess of fixed monthly cash payments during the reporting period
are recorded as unbilled revenue on SkyWest’s consolidated balance
sheet. Amendments to certain CPAs executed since September 30, 2022
modified the fixed rate structure and resulted in higher deferred
revenue amounts in 2023 compared to 2022. The following
supplemental cash flow schedule summarizes the total revenue
recognized in excess of (or less than) the fixed monthly cash
received during the indicated reporting periods and the cumulative
difference as of December 31, 2023 and December 31, 2022 (dollars
in thousands, unaudited).
Three months ended
Year ended
December 31,
December 31,
2023
2022
2023
2022
Revenue recognized in excess of (less
than) fixed cash payments received
$
(62,604
)
$
(69,521
)
$
(242,463
)
$
(29,322
)
As of December 31,
2023
As of December 31,
2022
Cumulative revenue recognized less than
fixed cash payments received
$
(367,276
)
$
(124,813
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240201042560/en/
Investor Relations 435.634.3200
Investor.relations@skywest.com
Corporate Communications 435.634.3553
corporate.communications@skywest.com
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