SkyWest, Inc. Announces Fourth Quarter 2012 Results

             SkyWest, Inc. Announces Fourth Quarter 2012 Results

PR Newswire

ST. GEORGE, Utah, Feb. 14, 2013

ST. GEORGE, Utah, Feb. 14, 2013 /PRNewswire/ --SkyWest, Inc. ("SkyWest")
(NASDAQ: SKYW) today reported net income of $13.9 million, or $0.27 per
diluted share, for the quarter ended December 31, 2012, compared to a net loss
of $(18.0) million, or $(0.35) per diluted share, for the same period last
year.

Quarter Highlights

SkyWest's operating and financial results for the quarter ended December 31,
2012 reflect a significant improvement compared to the same period of 2011,
primarily as a result of recording additional revenues from an increase in
block hour production and continuing to reduce its cost structure as part of
its profit improvement plan; however, for financial reporting purposes, the
increased revenues were offset by lower reimbursement payments for fuel and
maintenance overhaul expenses under contracts with SkyWest's major partners,
resulting in a net decrease in total operating revenues. These efforts
resulted in a $53.3 million improvement in pretax income and an improvement in
fully diluted earnings per share of $0.62 for the quarter ended December 31,
2012, compared to the same period last year. This is the fourth quarter in a
row where reported results have exceeded market estimates. Following are some
selected highlights for the quarter and twelve months ended December 31, 2012
compared to the same periods last year:

(Unaudited)
                    Three Months Ended          Twelve Months Ended
Dollars in
thousands, except   December 31,                December 31,
per share amounts
                    2012      2011      %      2012       2011       % Change
                                        Change
Total operating     $        $        (9.9)%  $3,534,372 $3,654,924 (3.3)%
revenue             810,725   899,851
Total operating     5.4%      (0.6)%        4.7%       1.1%       
margin                                  6.0pts                       3.6pts
Pretax income       $       $        192.0%  $        $         271.2%
(loss)              25,556    (27,773)         85,896     (50,170)
Net income (loss)   $       $        177.6%  $        $         287.1%
                    13,946    (17,967)         51,157     (27,335)
Fully diluted       $     $      177.1%  $      $       290.4%
earnings per share  0.27      (0.35)           0.99       (0.52)
Block hours         568,808   550,808   3.3%    2,297,014  2,250,280  2.1%

Commenting on the results, Jerry C. Atkin, SkyWest's Chairman and CEO, said
"We are very pleased with our operating and financial results for the quarter
ended December 31, 2012. This is a solid result for a quarter that can
typically be very challenging." He continued, "We continue to make positive
progress in our cost reduction efforts that are resulting in improved profits,
quarter over quarter."

Financial and Operating Results

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. The majority
of fuel is now purchased directly by SkyWest's major partners and as a result,
SkyWest experienced a reduction of $92.5 million in reported operating
revenues and operating expenses related directly to fuel purchases by its
major partners under its contract flying, for the quarter ended December 31,
2012, compared to the quarter ended December 31, 2011.

Operating revenues totaled $810.7 million for the quarter ended December 31,
2012, compared to $899.9 million for the same period last year or a decrease
of $89.2 million, or 9.9%, The decrease was due primarily to the reduction of
$115.8 million of fuel and certain engine overhaul amounts which are directly
reimbursed by major partners and recorded as operating revenues, offset by an
increase in revenues of approximately $27.5 million as a result of additional
block hour production and incentive amounts for improvements in completion
factors and on-time performance for its flights. Total block hours for the
quarter ended December 31, 2012 were 568,808, or an increase of 3.3 percent,
compared to 550,808 for the same period last year. 

Total airline expenses (consisting of total operating and interest expenses)
decreased $139.1 million, or 15.0%, during the quarter ended December 31,
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 $35.2 million or 4.6%. The decrease was primarily the result of 1)
reduced non-pass through maintenance costs of approximately $14.7 million, 2)
reduced United Express CRJ200 engine overhaul costs of approximately $8.7
million and 3) reduced customer service labor of approximately $7.9 million
due to the elimination of handling of flights at certain airports.

Under United Express agreements for SkyWest Airlines, Inc. ("SkyWest
Airlines") and ExpressJet Airlines, Inc. ("ExpressJet Airlines") SkyWest
recognizes revenue at fixed hourly rates 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 December 31, 2012, CRJ200 engine expense under these
agreements decreased $8.7 million to $10.6 million compared to $19.3 million
for the quarter ended December 31, 2011, as a result of decreased engine
overhaul expense due to the timing of scheduled engine maintenance events.
SkyWest was reimbursed approximately $10.3 million and $8.9 million for engine
overhaul expense, under its United Express agreements, in each of the periods
ended December 31, 2012 and 2011, respectively. 

Liquidity

At December 31, 2012, SkyWest had $709.4 million in cash and marketable
securities, compared to $646.5 million as of December 31, 2011. The increase
in cash and marketable securities of $62.9 million was primarily the result of
increased profitability for the twelve-month period ended December 31, 2012.
SkyWest's long-term debt was $1.47 billion as of December 31, 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 4.7% discount rate, the present value of
these lease obligations was approximately $1.8 billion as of December 31,
2012.

Recent Business Developments

SkyWest recently announced the award of 34 additional dual-class aircraft and
the removal of 66 CRJ200 aircraft with Delta Airlines, Inc. ("Delta") and has
taken delivery of 20 of these dual-class aircraft by December 31, 2012. The
remaining 14 aircraft have planned delivery dates between January and May
2014. SkyWest anticipates removal of the 66 CRJ200 aircraft starting in
October of 2013.

SkyWest also recently announced the signing of an agreement with American
Airlines, Inc. ("American Airlines") to operate 23 CRJ200 regional jet
aircraft as American Eagle and had integrated 12 of these aircraft into
operations by December 31, 2012. The remaining 11 aircraft have been
introduced into service February 14, 2013.

SkyWest recently announced the execution of an Aircraft Purchase Agreement
with Mitsubishi Aircraft Corporation covering the purchase of 100 Mitsubishi
regional jet aircraft. Deliveries are currently expected to begin in 2016.

SkyWest has increased its total fleet to 744 aircraft as of December 31, 2012,
compared to 732 aircraft as of December 31, 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, Delta Connection and
American Eagle carriers under contractual agreements with United Airlines,
Inc. ("United"), Delta and American Airlines. 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 3,900 daily departures and a fleet of approximately 744 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, 2012, entitled "Risk
Factors."

SKYWEST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

(Unaudited)


                               Three Months Ended     Twelve Months Ended

                               December 31,           December 31,
                               2012      2011         2012        2011
OPERATING REVENUES:
 Passenger                $       $  884,248  $          $ 3,584,777
                               795,978               3,467,546
 Ground handling and      14,747    15,603       66,826      70,146
other
 Total operating      810,725   899,851      3,534,372   3,654,923
revenues
OPERATING EXPENSES:
 Salaries, wages and      293,093   289,568      1,171,689   1,155,051
benefits
 Aircraft maintenance,    149,259   183,591      659,869     712,926
materials and repairs
Aircraft fuel           53,916    144,471      426,387     592,871
 Aircraft rentals         82,199    85,521       333,637     346,526
 Depreciation and         60,758    63,899       251,958     254,182
amortization
 Station rentals and      36,333    43,989       169,855     174,838
landing fees
 Ground handling services 31,805    31,408       125,148     131,462
Restructuring and        -         1,168        -           5,770
integration related costs
 Other                    59,612    61,223       229,842     240,192
 Total operating      766,975   904,838      3,368,385   3,613,818
expenses
OPERATING INCOME               43,750    (4,987)      165,987     41,105
OTHER INCOME (EXPENSE):
 Interest income          1,878     1,940        7,928       8,236
 Interest expense         (18,739)  (20,025)     (77,380)    (80,383)
 Adjustment to purchase   -         -            -           (5,711)
accounting gain
 Other, net               (1,333)   (4,701)      (10,639)    (13,417)
 Total other (expense),   (18,194)  (22,786)     (80,091)    (91,275)
net
INCOME (LOSS) BEFORE INCOME    25,556    (27,773)     85,896      (50,170)
TAXES
PROVISION (BENEFIT) FOR INCOME 11,610    (9,806)      34,739      (22,835)
TAXES
NET INCOME (LOSS)              $       $ (17,967)  $        $  
                               13,946                51,157      (27,335)
BASIC INCOME (LOSS) PER SHARE  $     $          $       $    
                               0.27     (0.35)      1.00        (0.52)
DILUTED INCOME (LOSS) PER      $     $          $      $    
SHARE                          0.27     (0.35)      .99         (0.52)
Weighted average common
shares:
 Basic                    51,296    50,691       51,090      52,201
 Diluted                  52,161    50,691       51,746      52,201



Unaudited Operating Highlights


 Operating   Three Months Ended              Twelve Months Ended
Highlights
               December 31,                    December 31,
               2012       2011       % Change 2012       2011       %
                                                                     Change
Passengers     14,735,499 13,784,851 6.9%      58,803,690 55,836,271 5.3%
carried
Revenue
passenger      7,491,169  7,229,163  3.6%      30,088,278 29,109,039 3.4%
miles (000)
Available seat 9,235,586  9,058,082  2.0%      37,278,554 36,698,859 1.6%
miles (000)
Passenger load 81.1%      79.8%       1.3pts  80.7%      79.3%      
factor                                                               1.4pts
Passenger                            
breakeven load 78.6%      82.0%      (3.4)pts 78.7%      80.2%      (1.5)pts
factor
Yield per      $      $                 $      $   
revenue        0.106      0.122      (13.1)%   0.115     0.123      (6.5)%
passenger mile
Revenue per    $      $                 $      $   
available seat 0.088      0.099      (11.1)%   0.095     0.100      (5.0)%
mile
Cost per       $      $                 $      $   
available seat 0.085      0.102      (16.7)%   0.092     0.101      (8.9)%
mile
Fuel cost per  $      $                 $      $   
available seat 0.006      0.016      (62.5)%   0.011     0.016      (31.3)%
mile
Average
passenger trip 508        524        (3.1)%    512        521        (1.7)%
length
Block hours    568,808    550,808    3.3%      2,297,014  2,250,280  2.1%
Departures     355,626    339,427    4.8%      1,435,512  1,390,523  3.2%

SOURCE SkyWest, Inc.

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