SkyWest, Inc. Announces Third Quarter 2012 Results

              SkyWest, Inc. Announces Third Quarter 2012 Results

PR Newswire

ST. GEORGE, Utah, Nov. 7, 2012

ST. GEORGE, Utah, Nov. 7, 2012 /PRNewswire/ --SkyWest, Inc. ("SkyWest")
(NASDAQ: SKYW) today reported net income of $20.9 million, or $0.40 per
diluted share, for the quarter ended September 30, 2012, compared to $0.1
million of net income, or slightly more than $0.00 per diluted share, for the
same period last year.

Under certain of SkyWest's flying contracts, fuel purchased for SkyWest
flights has been directly reimbursed by SkyWest's major partners and, for
financial reporting purposes, was included in operating revenues. Recently,
SkyWest's major partners have increased the amount of fuel they purchase
directly for SkyWest's flights which has resulted in a significant decrease in
the amount of fuel reimbursement SkyWest records as revenue. SkyWest
anticipates this trend will continue and that early in 2013 the majority of
fuel purchases will be made directly by SkyWest's major partners. At that
time, fuel reimbursements paid by SkyWest's major partners will no longer be
reflected in SkyWest's financial statements. Due to the decreased fuel
reimbursements paid by SkyWest's major partners, SkyWest experienced a
reduction of $88.0 million in reported operating revenues and operating
expenses related to fuel purchases under its contract flying, for the quarter
ended September 30, 2012, compared to the quarter ended September 30, 2011.
Operating revenues totaled $865.3 million for the quarter ended September 30,
2012, compared to $955.4 million for the same period last year.

Quarter Summary

SkyWest's operating and financial results for the quarter ended September 30,
2012 reflected a significant improvement compared to the same period of 2011.
After excluding fuel and certain engine overhaul expenses, of approximately
$94.0 million, that are directly reimbursed from SkyWest's major partners,
SkyWest generated increased operating revenues resulting from increased block
hour production and incentive payments under its contracts with major partners
primarily as a result of improved on-time and completion factor performance.
SkyWest's improved results also reflected the implementation of cost reduction
programs during 2011 from which SkyWest achieved reduced flight crew and
maintenance costs, as well as other benefits for the quarter ended September
30, 2012. This is the third consecutive quarter in which SkyWest has reduced
flight crew and maintenance costs under its cost reduction programs. As a
result of SkyWest's improvements as described above, SkyWest's pre-tax income
for the quarter ended September 30, 2012 increased $35.0 million over the
quarter ended September 30, 2011. SkyWest reported pre-tax income of $32.9
million for the quarter ended September 30, 2012, compared to a pre-tax loss
of $(2.1) million for the comparable quarter of 2011. Following are the
primary items that affected SkyWest's financial results for the third quarter
of 2012, compared to the third quarter of 2011:

  oRecorded approximately $6.2 million in additional revenues related to
    increased block hour production and improved metrics for on-time
    performance and higher completion factors
  oReduced United Express CRJ200 engine overhaul costs by approximately $15.1
    million due to timing of engine overhauls 
  oReduced airframe maintenance and other maintenance costs by approximately
    $4.9 million
  oReduced crew and crew-related training costs by approximately $3.0 million

Commenting on the results, Jerry C. Atkin, SkyWest's Chairman and CEO, said
"We are very pleased with our cost reduction efforts. Those efforts are
resulting in lower flight crew and maintenance costs, quarter over quarter,
and are contributing to improved profitability." He continued, "We are also
pleased that, while reducing our cost structure, we continue to improve the
quality of our operations with improved performance metrics for on-time,
completion factor and customer service."

3rd Quarter 2012 Compared to 2nd Quarter 2012

SkyWest's implementation of its plan to return to profitability also resulted
in improved financial results for the quarter ended September 30, 2012,
compared to the quarter ended June 30, 2012. During the third quarter of
2012, SkyWest generated increased operating revenues (after excluding fuel
reimbursements and certain engine overhaul expenses that are directly
reimbursed by SkyWest's major partners) and reduced its operating costs, while
producing more block hours than the second quarter of 2012. During the third
quarter of 2012, SkyWest also continued to make progress on its cost reduction
plan by reducing crew-related costs and maintenance expenses from the first
and second quarters of 2012, while taking into account the increased block
hour production it generated during the third quarter of 2012. Following are
highlights resulting from SkyWest's implementation of its plan to return to
profitability, comparing the third quarter of 2012 to the second quarter of
2012:

  oTotal passenger revenues increased $10.7 million (after excluding direct
    reimbursements of fuel and engine overhaul expenses) to $761.9 million
    compared to $751.2 million
  oTotal operating expenses and interest increased only $2.7 million (after
    excluding direct reimbursements of fuel and engine overhaul expenses) to
    $743.0 million compared to $740.3 million
  oPre-tax income improved $4.3 million to $32.9 million, compared to $28.6
    million
  oNet income improved $4.0 million to $20.9 million, compared to $16.9
    million
  oBlock hours increased to 596,901, compared to 574,884

Financial and Operating Results

SkyWest's total operating revenues decreased $90.2 million, or 9.4%, during
the quarter ended September 30, 2012, over the same period in 2011, primarily
due to the reduction fuel reimbursed from SkyWest's major partners as
previously explained above. Total block hours for the quarter ended September
30, 2012 were 596,901, compared to 585,146 for the same period last year.

Total airline expenses (consisting of total operating and interest expenses)
decreased $118.9 million, or 12.5%, during the quarter ended September 30,
2012, compared to the same period in 2011. However, after excluding
pass-through costs for fuel and certain engine overhaul expenses that are
directly reimbursed by SkyWest's major partners, total airline expenses
decreased $24.9 million or 3.2%. The decrease was primarily the result of
SkyWest's implementation of planned cost reduction efforts, which resulted in
reduced crew-related and non-pass through maintenance costs of approximately
$7.9 million. For the quarter ended September 30, 2012, compared to the third
quarter of 2011, SkyWest also experienced a reduction in United Express CRJ200
engine overhaul costs of approximately $15.1 million.

Under United Express agreements for SkyWest Airlines and ExpressJet Airlines,
SkyWest recognizes revenue at a fixed hourly rate for mature engine
maintenance on regional jet engines and SkyWest recognizes engine maintenance
expense on its CRJ200 regional jet engines on an as-incurred basis as
maintenance expense. During the quarter ended September 30, 2012, CRJ200
engine expense under these agreements decreased $15.1 million to $13.1 million
compared to $28.2 million for the quarter ended September 30, 2011, as a
result of decreased engine overhaul expense due to the timing of scheduled
engine maintenance events. SkyWest was reimbursed approximately $10.4 million
and $9.6 million for engine overhaul expense, under its United Express
agreements, in each of the periods ended September 30, 2012 and 2011,
respectively. 

Liquidity

At September 30, 2012, SkyWest had $739.1 million in cash and marketable
securities, compared to $646.5 million as of December 31, 2011. The increase
in cash and marketable securities of $92.6 million was primarily the result of
increased profitability and a reduction in working capital amounts for the
nine-month period ended September 30, 2012. SkyWest's long-term debt was
$1.53 billion as of September 30, 2012, compared to $1.61 billion as of
December 31, 2011. The decrease in long-term debt was due primarily to
SkyWest's payment of normal recurring debt obligations. SkyWest has
significant long-term lease obligations that are recorded as operating leases
and are not reflected as liabilities on SkyWest's consolidated balance
sheets. At a 5.2% discount rate, the present value of these lease obligations
was approximately $1.8 billion as of September 30, 2012.

Other Items

SkyWest has also recently achieved the following milestones:

  oAnnounced the award of 34 additional dual-class aircraft and removal of 66
    CRJ200 aircraft with Delta Airlines, Inc. ("Delta")
  oAnnounced an agreement with American Airlines to operate 23 aircraft as
    American Connection
  oAnnounced the execution of a Memorandum of Understanding with Mitsubishi
    Aircraft Corporation covering the purchase of 100 Mitsubishi regional jet
    aircraft
  oIncreased its total fleet to 739 aircraft as of September 30, 2012,
    compared to 727 aircraft as of September 30, 2011

About SkyWest

SkyWest is the holding company for two scheduled passenger airline operations
and an aircraft leasing company and is headquartered in St. George, Utah.
SkyWest's scheduled passenger airline operations consist of SkyWest Airlines
also based in St. George, Utah and ExpressJet Airlines based in Atlanta,
Georgia. SkyWest Airlines operates as United Express and Delta Connection
carriers under contractual agreements with United Airlines, Inc. ("United")
and Delta. SkyWest Airlines also operates as US Airways Express under a
contractual agreement with US Airways, Inc., and operates flights for Alaska
Airlines under a contractual agreement. ExpressJet Airlines operates as
United Express and Delta Connection carriers under contractual agreements with
United and Delta. System-wide, SkyWest serves markets in the United States,
Canada, Mexico and the Caribbean with approximately 4,000 daily departures and
a fleet of approximately 739 regional aircraft. This press release and
additional information regarding SkyWest can be accessed at www.skywest.com

FORWARD-LOOKING STATEMENTS

In addition to historical information, this release contains forward-looking
statements. SkyWest may, from time to time, make written or oral
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
"forecasts", "expects," "intends," "believes," "anticipates," "should,"
"likely" and similar expressions identify forward-looking statements. All
forward-looking statements included in this 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.
Readers should note that many factors could affect the future operating and
financial results of SkyWest, SkyWest Airlines or ExpressJet Airlines, and
could cause actual results to vary materially from those expressed in
forward-looking statements set forth in this release. These factors include,
but are not limited to, the ability of ExpressJet Airlines to realize
potential synergies and other anticipated financial impacts of the
consolidation of its operations, the possibility that future financial and
operating results of ExpressJet Airlines may not meet SkyWest's forecasts and
the timing of ongoing consolidation of the operations of ExpressJet Airlines,
if achieved.

Actual operational and financial results of SkyWest, SkyWest Airlines and
ExpressJet Airlines will also vary, and may vary materially, from those
anticipated, estimated, projected or expected for a number of other reasons,
including, in addition to those identified above: the challenges of competing
successfully in a highly competitive and rapidly changing industry;
developments associated with fluctuations in the economy and the demand for
air travel; ongoing negotiations between SkyWest, SkyWest Airlines and
ExpressJet Airlines and their major partners regarding their contractual
obligations; the financial stability of those major partners and any potential
impact of their financial condition on the operations of SkyWest, SkyWest
Airlines, or ExpressJet Airlines; the resolution of current litigation with a
major airline partner of SkyWest Airlines and ExpressJet Airlines;
fluctuations in flight schedules, which are determined by the major partners
for whom SkyWest's operating airlines conduct flight operations; variations in
market and economic conditions; labor relationships; the impact of global
instability; rapidly fluctuating fuel costs; the degree and nature of
competition; potential fuel shortages; the impact of weather-related or other
natural disasters on air travel and airline costs; aircraft deliveries; and
other unanticipated factors. Risk factors, cautionary statements and other
conditions which could cause SkyWest's actual results to differ from
management's current expectations are contained in SkyWest's filings with the
Securities and Exchange Commission; including the section of SkyWest's Annual
Report on Form 10-K for the year ended December 31, 2011, entitled "Risk
Factors."





SKYWEST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

(Unaudited)


                                                                
                                                                                   Nine Months Ended
                                                                Three Months       September 30,
                                                                Ended
                                                                September 30,
                                                                2012     2011      2012       2011
OPERATING REVENUES:
 Passenger                                                 $      $         $          $
                                                                848,578  936,363  2,671,568 2,700,529
 Ground handling and other                                 16,681   19,062    52,079     54,544
 Total operating revenues                              865,259  955,425   2,723,647  2,755,073
OPERATING EXPENSES:
 Salaries, wages and benefits                              297,106  288,401   878,596    864,675
 Aircraft maintenance, materials and                       163,825  189,762   510,610    529,335
repairs
                                                                                           
 Aircraft fuel                                             71,477   160,252   372,471    448,401
 Aircraft rentals                                          82,592   86,510    251,438    261,004
 Depreciation and amortization                             62,703   63,393    191,200    190,283
 Station rentals and landing fees                          45,336   45,902    133,523    130,850
 Ground handling services                                  28,414   30,326    93,344     100,054
 Restructuring and integration related costs           -        2,207     -          4,602
 Other                                                     58,832   61,845    170,228    179,777
 Total operating expenses                              810,285  928,598   2,601,410  2,708,981
OPERATING INCOME                                                54,974   26,827    122,237    46,092


OTHER INCOME (EXPENSE):
 Interest income                                           2,053    2,215     6,049      6,295
 Interest expense                                          (19,474) (20,086)  (58,641)   (60,358)
 Adjustment to purchase accounting gain                    -        (5,711)   -          (5,711)
 Other, net                                                (4,638)  (5,351)   (9,305)    (8,715)
 Total other (expense), net                                (22,059) (28,933)  (61,897)   (68,489)
INCOME (LOSS) BEFORE INCOME TAXES                               32,915   (2,106)   60,340     (22,397)
PROVISION (BENEFIT) FOR INCOME TAXES                            11,982   (2,222)   23,129     (13,028)
NET INCOME (LOSS)                                               20,933   $      $        $  
                                                                         116      37,211     (9,369)
BASIC INCOME (LOSS) PER SHARE                                   $     $      $      $    
                                                                 0.41   0.00      0.73       (0.18)
DILUTED INCOME (LOSS) PER SHARE                                 $     $      $      $    
                                                                 0.40   0.00      0.72       (0.18)
Weighted average common shares:
 Basic                                                     51,241   51,570    51,022     52,704
 Diluted                                                   52,153   52,315    51,608     52,704



Unaudited Operating Highlights
Operating   Three Months Ended               Nine Months Ended
Highlights
              September 30,                    September 30,
                                      %                             
                2012       2011       Change   2012       2011
                                                                     % Change
Passengers      15,687,908 15,003,068 4.6%     44,068,191 42,051,420 4.8%
carried
Revenue
passenger miles 7,968,623  7,885,058  1.1%     22,597,109 21,879,876 3.3%
(000)
Available seat  9,695,079  9,683,859  0.1%     28,042,968 27,640,777 1.5%
miles (000)
Passenger load  82.2%      81.4%            80.6%      79.2%      
factor                                0.80pts                        1.40pts
Passenger                                                          
breakeven load  78.8%      80.8%      -2.00pts 78.7%      79.6%      -0.90pts
factor
Yield per       $       $                $      $   
revenue         0.106     0.119      -10.9%   0.118      0.123      -4.1%
passenger mile
Revenue per     $       $                $      $   
available seat  0.089     0.099      -10.1%   0.097      0.100      -3.0%
mile
Cost per        $       $                $      $   
available seat  0.086     0.098      -12.2%   0.095      0.100      -5.0%
mile
Fuel cost per   $       $                $      $   
available seat  0.007     0.017      -58.8%   0.013      0.016      -18.8%
mile
Average
passenger trip  508        526        -3.4%    513        520        -1.3%
length
Block hours     596,901    585,146    2.0%     1,728,206  1,699,472  1.7%
Departures      378,013    363,841    3.9%     1,079,886  1,051,096  2.7%



SOURCE SkyWest, Inc.

Website: http://www.skywest.com
Contact: Michael J. Kraupp, Chief Financial Officer and Treasurer, Telephone:
+1-435-634-3212, or Fax: +1-435-634-3205
 
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