Profits up by 28% at SkyWest

SkyWest, Inc. reported financial and operating results for the first quarter of 2018 this week, including net income of $54 million, or $1.03 per diluted share, compared to net income of $35 million, or $0.65 per diluted share for Q1 2017.
The improvement in Q1 2018 pre-tax income from Q1 2017 was primarily due to SkyWest's ongoing fleet transition. Since Q1 2017 19 new E175 aircraft have been added and 46 CRJ and ERJ 50-seat aircraft and 25 CRJ700/CRJ900 aircraft have been removed. 
Commenting on the results, Chip Childs, Chief Executive Officer and President of SkyWest, said "Demand for our product remains strong, and I'm proud of our professionals who continue to provide best-in-class operations to our customers.  Our financial results reflect continued solid operating performance combined with the ongoing improvements in our fleet mix.  We remain disciplined in our approach to risk and flying commitments and focused on executing a strategy to improve our overall model."   
Revenue was $783 million in Q1 2018, up from $747 million in Q1 2017. The increase in revenue included the net impact of adding new E175 aircraft and improvement in the economics of SkyWest's fleet mix since Q1 2017, partially offset by the removal of unprofitable or less profitable aircraft over the same period. 
Operating expenses were $695 million in Q1 2018, up from $671 million in Q1 2017.  The increase in operating expenses included additional labour, engine maintenance and fuel costs.
The effective tax rate for Q1 2018 was 19% compared to 34% in Q1 2017.  The lower tax rate in Q1 2018 was primarily due to the reduced federal rate under the new tax law enacted in Q4 2017 and additional discrete tax benefits from stock compensation in Q1 2018.
SkyWest Airlines, Inc. ("SkyWest Airlines") took delivery of five new E175/E175 SC aircraft during Q1 2018.  The following summarizes the anticipated delivery dates for seven E175 aircraft to be placed under contract with Alaska Airlines ("Alaska") (three E175 aircraft previously scheduled for delivery in Q4 2018 have been deferred until 2021 at Alaska's request) and 27 E175 SC aircraft to be placed under contract with Delta Air Lines ("Delta") in 2018:

ExpressJet Airlines, Inc. ("ExpressJet") continued the previously-announced 2018 wind down of its flying agreement with Delta during the quarter. At the end of Q1 2018, ExpressJet had six CRJ900s and 31 CRJ700s remaining in service under the Delta agreement.  ExpressJet anticipates returning seven leased aircraft to Delta in Q2 2018 (six CRJ900s and one CRJ700). 

ExpressJet continues to engage in discussions around the CRJ700s scheduled to come out of service with Delta later this year and remains pleased with the level of demand for the CRJ700 product. 

Operating Performance:

Flight completion rates at SkyWest Airlines and ExpressJet for Q1 2018 and Q1 2017 are summarized as follows:

		SkyWest Airlines			ExpressJet
		Q1 2018	Q1 2017		Q1 2018	Q1 2017
Adjusted Completion *		99.8%	99.9%		99.9%	99.6%
Raw Completion		97.8%	97.4%		96.1%	96.9%
* Adjusted Completion excludes weather cancellations. Raw Completion includes weather cancellations.

Q1 2018 Capital and Liquidity SkyWest had $646 million in cash and marketable securities at March 31, 2018, down $39 million from December 31, 2017. During the first quarter of 2018, SkyWest:

• Used $18 million toward the purchase of five E175 aircraft
• Used $20 million for an early lease buyout on nine aircraft
• Used $30 million for other capital investments, including spare engines and aircraft parts
• Used $10 million to repurchase stock under its $100 million share repurchase program, of which $70 million remains authorized

Total debt for the quarter was $2.8 billion, up $89 million from December 31, 2017, including debt issued for acquired aircraft, partially offset by scheduled principal payments.