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SkyWest posts $11 million first-quarter loss

posted May 5, 2011, 5:45 AM by Rowan Hewitt

By Linda Blachly | May 5, 2011

SkyWest Inc., the Utah-based parent of regionals SkyWest Airlines, Atlantic Southeast Airlines and ExpressJet, reported a first-quarter net loss of $11.1 million, reversed from a $15 million profit in the year-ago period.

Executive VP and CFO Bradford Rich pointed out to reporters and analysts that the results were a little better than SkyWest's earlier guidance (ATW Daily News, April 4). He attributed the company's rare quarterly deficit to “severe winter storms in January and February” that resulted in “13,600 fewer block hours than expected and a revenue loss of approximately $9.7 million.” Rich noted this was the “first time in 91 consecutive quarters that SkyWest Inc. has reported a net loss and is not reflective of our future potential.”

SkyWest said in a statement, “Beginning in September 2010, Atlantic Southeast was required to reduce its contract rates, as contemplated by its Delta Connection agreement, which resulted in a negative impact on revenues of approximately $7.2 million pretax for the quarter ended March 31, 2011.”

First-quarter revenue increased 37% to $866 million while expenses rose 47% to $865.7 million, producing operating income of $227,000, reversed from $42.4 million operating profit in the prior-year quarter. Rich noted the increase in revenue was “primarily due to the addition of ExpressJet’s operations, which generated approximately $211 million in additional revenue.”

Owing in part to the ExpressJet acquisition, consolidated traffic jumped 48% to 6.4 billion RPMs on a 53% rise in capacity to 8.6 billion ASMs, producing a load factor of 74.9%, down 2.2 points. Yield dipped 8.4% to 13.1 cents as RASM lowered 9.8% to 10.1 cents and CASM decreased 4.6% to 10.3 cents.

Rich said the integration of Houston-based regional ExpressJet with Atlanta-based subsidiary ASA remains “on track to close at the end of 2011” (ATW Daily News, Aug. 5, 2010).

As of March 31, SkyWest Inc.’s fleet totaled 707 aircraft, comprising 661 regional jets (241 assigned to Delta, 416 to United/Continental, four to AirTran Airways), and 46 Embraer 120s (36 assigned to UA and 10 to DL).