SkyWest, Inc. reports 3Q13 results

SkyWest, Inc. has announced net income of $26.4 million for the quarter ended 30 September 2013 (3Q13), compared with net income of $20.9 million for the same period last year.
SkyWest also reported net income of $50.3 million for the nine months ended 30 September 2013, compared with $37.2 million for the first nine months of last year.
In 3Q13, SkyWest generated increased operating revenues (after giving effect to reduced fuel, certain engine overhaul and landing fee pass through amounts) primarily due to additional block hour production from increased aircraft utilisation, larger fleet size and rate escalations in SkyWest contracts with its major airline partners.
The company’s 3Q13 pretax income increased 34.8% to $44.4 million, compared with $32.9 million in 3Q12, while the fully-diluted EPS rose 25.0% to $0.50, compared with $0.40 for the respective periods.
Operating revenues increased by approximately $32.9 million (net of fuel, certain engine overhaul and landing fee pass through revenues), primarily related to rate escalations under SkyWest's agreements with its major partners and increased block hour production
SkyWest made cash payments of $22.9 million consisting of $11.5 million for the repurchase of 800,000 shares of treasury stock and $11.4 million for deposits on new aircraft during the quarter.
Commenting on the results, SkyWest's chairman and CEO Jerry Atkin, said, "We are pleased with the improved financial performance for the current quarter. However, in spite of current challenges we remain committed to further improvement in meeting our current and long-term operational and financial objectives."
Operating revenues totalled $850.7 million for 3Q13, compared with $865.3 million for the same period last year or a decrease of $14.6 million. The decrease was due primarily to the reduction of approximately $47.5 million in fuel, certain engine overhaul amounts and landing fees which were directly reimbursed by SkyWest's major partners and recorded as operating revenues. However, this reduction was mostly offset by recording approximately $32.9 million in additional operating revenues, primarily resulting from rate escalations under SkyWest's agreements with its major partners and a 2.8% increase in total block hours for 3Q13, compared with 3Q12.
Total airline expenses (consisting of total operating and interest expenses) decreased $18.2 million, or 2.2%, during the quarter ended September 30, 2013, compared to the same period in 2012. However, after excluding pass-through costs for fuel, certain engine overhaul expenses and landing fees, total airline expenses increased $29.3 million.
Under certain of its agreements with its major partners, SkyWest recognises revenue at fixed hourly rates for mature engine maintenance on regional jet engines and SkyWest recognises engine maintenance expense on its CRJ200 engines on an as-incurred basis as maintenance expense. During 3Q13, CRJ200 engine expense under these agreements decreased by $4.0 million to $9.1 million, compared with $13.1 million for 3Q12, primarily as a result of decreased engine overhaul expense due to the timing of scheduled engine maintenance events. SkyWest was reimbursed approximately $12.8 million and $10.4 million for engine overhaul expense, under its agreements with its major partners, during 3Q13 and 3Q12, respectively.

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