EX-99.1 3 a04-2256_1ex99d1.htm EX-99.1

EXHIBIT 99.1

 

NEWS RELEASE

 

 

For Further Information Contact:

Michael J. Kraupp

Vice President Finance and Assistant Treasurer

Telephone:  (435) 634-3212

Fax:  (435) 634-3205

 

FOR IMMEDIATE RELEASE:  February 11, 2004

 

SKYWEST ANNOUNCES FOURTH QUARTER 2003 AND YTD EARNINGS

 

St. George, Utah—SkyWest, Inc. (NASDAQ: SKYW) today reported operating revenues of $237.5 million, a 14.1% increase, for the fourth quarter of 2003, compared to $208.2 million for the fourth quarter of 2002.  The Company also reported net income of $17.5 million for the quarter ended December 31, 2003, or $0.30 per diluted share, compared to $17.8 million of net income or $0.31 per diluted share for the same period last year.  SkyWest, Inc. also reported operating revenues of $888.0 million, a 14.7% increase, for the year ended December 31, 2003, compared to $774.4 million for the year ended December 31, 2002.  The Company also reported net income of $66.8 million for the year ended December 31, 2003, or $1.15 per diluted share, compared to $86.8 million of net income or $1.51 per diluted share for the same period last year (inclusive of a cumulative effect of change in accounting principle of $8.6 million or $0.15 per diluted share). The items of most significance affecting the fourth quarter of 2003 are outlined below:

 

Total operating revenues for the fourth quarter of 2003 increased primarily as a result of a 33.7% increase in available seat miles (ASMs) offset by a 17.8% reduction in yield per revenue passenger mile.  The 17.8% reduction in yield per revenue passenger mile resulted principally from flying a greater percentage of regional jet aircraft than in the prior period and a reduction of the rates in the contract flying arrangements with the Company’s major partners.  Operating revenues for the fourth quarter of 2003 were also positively affected by the Company’s achievement of a 99.5% controllable completion factor and an actual completion factor of 99.2% of scheduled flights.

 

Total operating expenses per ASM  for the fourth quarter of 2003, excluding fuel charges of $40.2 million or $0.025 per ASM, (which are primarily reimbursable by the Company’s major partners), decreased  approximately 16.3% to $0.105 from $0.125 from the same quarter of 2002, primarily as a result of the cost reduction initiatives implemented by the Company during 2003.  Additionally, the decrease was due to the addition of 39 new regional jet aircraft since December 31, 2002 and the timing of maintenance events related to these aircraft.

 

 

Total available seat miles for the fourth quarter of 2003 increased 33.7% from the fourth quarter of 2002 primarily as a result of the Company increasing its fleet size to 185 aircraft as of December 31, 2003, from 149 aircraft as of December 31, 2002.  During the quarter, the Company took delivery of 8 new regional jet aircraft.  At the end of December 31, 2003, the Company’s fleet consisted of 109 regional jets (56 Delta and 53 United) and 76 EMB-120 aircraft (52 United, 15 Delta and 9 Continental).  During the fourth quarter of 2003, the Company generated 1.6 billion ASMs.

 

On September 15, 2003, the Company announced the completion of a firm order for 30, 70-seat Bombardier regional jets for the United Express operations.  The Company began taking delivery of these aircraft in January 2004 and deliveries will continue through May 2005.

 

On February 10, 2004, the Company also announced the completion of a firm order for 12 additional Bombardier regional jet aircraft.  The order consists of 10, 50-seat aircraft and two 70-seat aircraft.  As a result of its firm orders for aircraft, the Company anticipates that it will take delivery of 17, 70-seat aircraft and 10, 50-seat aircraft during calendar 2004.  Management also currently anticipates that due to these projected deliveries during 2004, the Company’s ASMs will increase by approximately 28% from the 2003 production to approximately 7.5 billion.  Additionally, the Company has lease financing commitments for all aircraft to be delivered during calendar 2004.

 

At  December 31, 2003, the Company had approximately $480.4 million in cash and marketable securities compared to $425.4 million as of December 31, 2002.  During the quarter, the Company took delivery of eight new 50-seat regional jet aircraft from Bombardier and has acquired a total of 39 regional jet aircraft since January 1, 2003.  The Company completed financing transactions, previously and during the quarter, wherein the Company has entered into 15 permanent long-term third party US Leveraged Leases and 24 long-term debt arrangements for all of the aircraft delivered since the beginning of the current calendar year.  Consistent with these transactions, the Company’s long-term debt increased to $462.8 million as of December 31, 2003, compared to $125.4 million at December 31, 2002.  The Company has significant long-term lease obligations that are recorded as operating leases and are not reflected as liabilities on the Company’s consolidated balance sheets.  At a 7.0% discount factor, the present value of these obligations is approximately $1.1 billion as of December 31, 2003 and $0.9 billion as of December 31, 2002.

 

Under the Company’s United Express agreement, specific amounts are included in the rates charged for mature maintenance on regional jet aircraft engines that the Company records as revenue.  However, consistent with the change to a time and material maintenance policy, as more fully described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002, the Company records maintenance expense on its regional jet aircraft engines as the maintenance event occurs. As a result, during the fourth quarter of 2003, the Company has collected and recorded as revenue $4.9 million (pretax) under its United Express

 

 

agreement with no corresponding offset for regional jet engine maintenance overhauls since there were none incurred.

 

The Company was ranked as the number one on-time domestic airline, for calendar 2003, as reported by the U.S. Department of Transportation Air Travel Consumer Report.

 

Previously, Delta Air Lines announced a fleet rationalization plan for Salt Lake City, Utah and Dallas, Texas.  As part of this fleet restructuring in January and February 2004, SkyWest relocated 10, 50-seat regional jets from Dallas to Salt Lake City to accommodate the rationalization. As a result, SkyWest operates 10, 50-seat regional jets in Dallas and 46, 50-seat regional jets in Salt Lake City.  The Company is also in the process of completing rate negotiations with Delta Connection, Inc. in establishing its 2004 contract flying rates.  The Company currently anticipates completion of these rate negotiations in the first quarter of 2004.

 

Statements in this press release which are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements encompass SkyWest’s beliefs, expectations, hopes or intentions regarding future events. Words such as “expects,” “intends,” “believes,” “anticipates,” “should” and “likely” also identify forward-looking statements. All forward-looking statements included in this press release are made as of the date hereof and are based on information available to SkyWest as of such date. SkyWest assumes no obligation to update any forward-looking statement. Actual results could differ materially from those anticipated for a number of reasons, including, among others: developments associated with the bankruptcy proceedings involving United Airlines, Inc.; potential consolidation of existing regional carriers; ongoing negotiations between SkyWest and its major partners regarding their code-sharing arrangements; ability to finance aircraft acquisitions; variations in market and economic conditions; and other unanticipated factors. Risk factors, cautionary statements and other conditions which could cause actual results to differ from SkyWest’s current expectations are contained in SkyWest’s filings with the Securities and Exchange Commission, including SkyWest’s Annual Report on Form 10-K.

 

SkyWest Airlines, Inc. is the nation’s largest independently owned  regional carrier and carried 10.74 million passengers in 2003. SkyWest operates as United Express, Delta Connection and Continental Connection carriers under marketing agreements with United Airlines, Delta Air Lines, and Continental Airlines respectively.  System-wide, SkyWest has approximately 6,000 employees and serves a total of 105 cities in 27 states and three Canadian provinces with more than 1,200 daily departures.

 

 (more)

 

 

SKYWEST, INC.

Unaudited Financial and Operating Highlights

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2003

 

2002

 

% Change

 

2003

 

2002

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Highlights

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

237,480

 

$

208,155

 

14.1

 

$

888,026

 

$

774,447

 

14.7

 

Operating expenses

 

208,634

 

178,350

 

17.0

 

779,546

 

654,892

 

19.0

 

Operating income

 

28,846

 

29,805

 

(3.2

)

108,480

 

119,555

 

(9.3

)

Other income, net

 

(218

)

(643

)

(66.1

)

1,007

 

8,772

 

(88.5

)

Income before income taxes

 

28,628

 

29,162

 

(1.8

)

109,487

 

128,327

 

(14.7

)

Income before cumulative effect of change inaccounting principle, net of taxes

 

17,463

 

17,786

 

(1.8

)

66,787

 

78,277

 

(14.7

)

Cumulative effect of change in accounting principle, net

 

—

 

—

 

—

 

—

 

8,589

 

(100.0

)

Net income

 

$

17,463

 

$

17,786

 

(1.8

)

$

66,787

 

$

86,866

 

(23.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before cumulative effect of change In accounting principle

 

$

0.30

 

$

0.31

 

 

 

$

1.16

 

$

1.37

 

 

 

Cumulative effect of change in accounting principle, net of tax

 

—

 

—

 

 

 

—

 

0.15

 

 

 

Basic earnings per share

 

$

0.30

 

$

0.31

 

 

 

$

1.16

 

$

1.52

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before cumulative effect of change in accounting principle

 

$

0.30

 

$

0.31

 

 

 

$

1.15

 

$

1.36

 

 

 

Cumulative effect of change in accounting principle, net of tax

 

—

 

—

 

 

 

—

 

0.15

 

 

 

Diluted earnings per share

 

$

0.30

 

$

0.31

 

 

 

$

1.15

 

$

1.51

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

57,853

 

57,436

 

 

 

57,745

 

57,229

 

 

 

Diluted

 

58,397

 

57,518

 

 

 

58,127

 

57,551

 

 

 

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2003

 

2002

 

% Change

 

2003

 

2002

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Highlights

 

 

 

 

 

 

 

 

 

 

 

 

 

Passengers carried

 

2,985,715

 

2,254,034

 

32.5

 

10,738,691

 

8,388,935

 

28.0

 

Revenue passenger miles (000)

 

1,186,251

 

853,702

 

39.0

 

4,222,669

 

2,990,753

 

41.2

 

Available seat miles (000)

 

1,631,458

 

1,220,134

 

33.7

 

5,875,029

 

4,356,053

 

34.9

 

Passenger load factor

 

72.7

%

70.0

%

2.7 pts

 

71.9

%

68.7

%

3.2 pts

 

Passenger breakeven load factor

 

64.7

%

61.1

%

3.6 pts

 

63.9

%

58.4

%

5.5 pts

 

Yield per revenue passenger mile

 

$

0.199

 

$

0.242

 

(17.8

)

$

0.209

 

$

0.257

 

(18.7

)

Revenue per available seat mile

 

$

0.146

 

$

0.170

 

(14.1

)

$

0.151

 

$

0.178

 

(15.2

)

Cost per available seat mile

 

$

0.130

 

$

0.149

 

(12.8

)

$

0.134

 

$

0.151

 

(11.3

)

Fuel cost per available seat mile

 

$

0.025

 

$

0.024

 

4.2

 

$

0.025

 

$

0.023

 

8.7

 

Average passenger trip length

 

397

 

379

 

4.7

 

393

 

356

 

10.4

 

 

 

SKYWEST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars and Shares in Thousands, Except per Share Amounts)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2003

 

2002

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

Operating revenues:

 

 

 

 

 

 

 

 

 

Passenger

 

$

235,772

 

$

206,919

 

$

882,062

 

$

769,427

 

Freight and other

 

1,708

 

1,236

 

5,964

 

5,020

 

 

 

237,480

 

208,155

 

888,026

 

774,447

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Flying operations

 

110,732

 

89,871

 

417,801

 

330,198

 

Customer service

 

37,216

 

30,350

 

139,125

 

123,453

 

Maintenance

 

25,951

 

22,841

 

83,829

 

82,786

 

Depreciation and amortization

 

19,905

 

16,301

 

74,419

 

57,535

 

General and administrative

 

13,410

 

13,995

 

50,800

 

45,487

 

Promotion and sales

 

1,420

 

4,992

 

13,572

 

16,871

 

US Government airline assistance

 

—

 

—

 

—

 

(1,438

)

 

 

208,634

 

178,350

 

779,546

 

654,892

 

Operating income

 

28,846

 

29,805

 

108,480

 

119,555

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

2,155

 

2,716

 

10,492

 

12,383

 

Interest expense

 

(2,779

)

(3,359

)

(9,891

)

(3,611

)

Gain on sale of property and equipment

 

406

 

—

 

406

 

—

 

 

 

(218

)

(643

)

1,007

 

8,772

 

Income before income taxes

 

28,628

 

29,162

 

109,487

 

128,327

 

Provision for income taxes

 

11,165

 

11,376

 

42,700

 

50,050

 

Income before cumulative effect of change in accounting principle

 

17,463

 

17,786

 

66,787

 

78,277

 

Cumulative effect of change in accounting principle, net of taxes of $5,492

 

—

 

—

 

—

 

8,589

 

Net income

 

$

17,463

 

$

17,886

 

$

66,787

 

$

86,866

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

Income before cumulative effect of change in accounting principle

 

$

0.30

 

$

0.31

 

$

1.16

 

$

1.37

 

Cumulative effect of change in accounting principle, net of tax

 

—

 

—

 

—

 

0.15

 

Basic earnings per share

 

$

0.30

 

$

0.31

 

$

1.16

 

$

1.52

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

Income before cumulative effect of change in accounting principle

 

$

0.30

 

$

0.31

 

$

1.15

 

$

1.36

 

Cumulative effect of change in accounting principle, net of tax

 

—

 

—

 

—

 

0.15

 

Diluted earnings per share

 

$

0.30

 

$

0.31

 

$

1.15

 

$

1.51

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

Basic

 

57,853

 

57,436

 

57,745

 

57,229

 

Diluted

 

58,397

 

57,518

 

58,127

 

57,551

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.02

 

$

0.02

 

$

0.08

 

$

0.08