Posted on: 04 May 2011 by Ross McSweeny
SkyWest, Inc., has reported its financial results for the first quarter of 2011 (1Q11) including a net loss of $11.1 million.
The 1Q11 net loss is well down on the $15.0 million of net income achieved in the same period last year. The company’s operating revenues in 1Q11 were $866.0 million, compared to $632.2 million in 1Q10.
With SkyWest’s acquisition of ExpressJet Holdings in November last year, SkyWest’s consolidated operations and financial results for subsequent periods reflect the addition of 244 regional jet aircraft operated by ExpressJet Airlines.
SkyWest reports that the net loss was incurred due to several primary factors, including a significant loss of block hour production due to weather-related cancellations that resulted in lost revenue, additional crew costs incurred for training and additional expenses related to both the number of airframe heavy inspections and higher than anticipated amounts for these inspections.
SkyWest’s operating revenues increased $233.7 million, or 37.0%, during 1Q11, compared with that in 1Q10. The increase in operating revenues was primarily due to the addition of ExpressJet’s operations which generated approximately $211.0 million in additional revenue. SkyWest Airlines and Atlantic Southeast Airlines’ block hours increased 4.1% compared to 1Q10, which generated approximately $8.6 million in additional revenue.
SkyWest Airlines’ pro-rate revenue increased approximately $10.0 million as a result of a 9.2% increase in the average passenger fare and a 6.9% increase in embarked passengers compared with 1Q10. SkyWest also experienced a $4.1 million increase in ground handling and other revenues for 1Q11, principally due to the ExpressJet acquisition.
In spite of these increases in operating revenues, the severe winter weather storms in January and February resulted in 13,500 fewer block hours than expected that resulted in lost revenue of approximately $9.7 million. In addition, from September 2010, ASA was required to reduce its Delta Connection Agreement contract rates, which negatively impacted revenues by approximately $7.2 million (pre-tax) for 1Q11.
At 31 March 2011, SkyWest had approximately $706.9 million in cash and marketable securities, compared with approximately $804.9 million as of 31 December 2010. The reduction in cash and marketable securities during 1Q11 was primarily related to increases in its prepaid aircraft lease amounts and changes in its other working capital accounts of approximately $53.0 million. SkyWest also paid $13.2 million in deposits on its new aircraft order and $19.6 million in authorised share repurchases.