SkyWest Reports First Quarter Net Income of $36 Million on 27 Percent Decline in Revenue to $535 M
U.S. regional carrier SkyWest has reported a first quarter net profit of $36 million or $0.71 per share on a year-over-year decline in revenue of 27 percent to $535 million. The carrier ended the quarter with $836 million in cash and marketable securities.
On Thursday (April 29, 2021), St, George, Utah-based U.S. regional carrier SkyWest, Inc. reported their first quarter 2021 financial results. The carrier reported a Q1 net profit of $36 million or $0.71 per diluted share on a year-over-year revenue decline of 27 percent to $535 million. The carrier’s first quarter pre-tax income of $50 million for the quarter included $193 million in U.S. Treasury Payroll Support Program extension (PSP2) grants, which is reflected as a reduction in operating expenses. During the quarter, SkyWest placed nine used CRJ700s into service under a previously announced agreement with American Airlines and took delivery of one new CRJ900 under an agreement with Delta Air Lines.
In Thursday’s announcement, SkyWest’s Chief Executive Officer, Chip Childs, said,
“We continued to see improvement in the demand for our product during the first quarter. Our strategy of investing in our fleet and delivering flexible solutions with solid operating performance to our customers continues to position SkyWest well for long-term success. I want to thank the SkyWest team for their commitment to excellence through these dynamic and challenging circumstances.”
The airline’s first quarter operating expenses decline 32 percent year-over year to $454 million, largely attributable to receipt of a $193 million PSP2 grant and fewer operated flights. As previously mentioned, at March 31, 2021, SkyWest had $836 million in cash and marketable securities, up from $826 million at December 31, 2021. The company also has $665 million available under a $725 million five-year secured loan facility with the U.S. Treasury, which must be drawn by May 28, 2021. Additionally, SkyWest has a $75 million line of credit facility with approximately $34 million of letters of credit issued and $41 million available.
In addition to the $193 million PSP2 grant, SkyWest borrowed $40 million from the U.S Treasury under a 10 year low-interest unsecured term loan during Q1. In consideration for the total government funding of $233 million, SkyWest issued to the U.S. Treasury warrants to purchase 98,815 shares of common stock at a strike price of $40.41. At March 31, 2021, the carrier’s total debt was $3.1 billion, down $100 million from December 31, 2021. First Quarter CAPEX totaled $56 million for the purchase of four used CRJ700s, spare engines and other fixed assets.
Under the company’s flying contract with Delta Air Lines, during Q1 the company received one new CRJ900 which was financed by Delta. The company’s contract with American Airlines will see the delivery of 20 Embraer E175s with 18 expected to be delivered in the second half of 2021, and the remaining two in 2022, which will be financed by debt. SkyWest placed nine used CRJ700s in service during Q1 and plans on placing an additional 16 of the type into service this year. At the end of 2021, the carrier expects to have 90 CRJ700s in service under their agreement with American Airlines.
St. George, Utah-based SkyWest, Inc. (NASDAQ: SKYW) is the holding company for SkyWest Airlines and SkyWest Leasing. The regional carrier usually operates up to 2,500 daily flights to more than 230 destinations throughout North America with a fleet of over 450 aircraft. Through partnerships with United Airlines, Delta Air Lines, American Airlines and Alaska Airlines, SkyWest carried over 21 million passengers in 2020, down from 43 million passengers in 2019 due to the global COVID-19 pandemic.