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- Net income of $40 million, or $0.77 per diluted share, for the second quarter of 2016, up from net income of $31 million, or $0.61 per diluted share, in Q2 2015
- Pre-tax income of $66 million for the second quarter of 2016, a 26% increase from Q2 2015
Operating income was $84 million for the second quarter of 2016, compared to $70 million in Q2 2015. The improvement in operating income was primarily due to new aircraft added to profitable flying contracts, strong and improved operating performance at SkyWest Airlines ("SkyWest Airlines") and ExpressJet Airlines ("ExpressJet") and continued economic benefit from the execution of SkyWest's fleet transition plan.
Commenting on the results, Chip Childs, SkyWest, Inc. Chief Executive Officer, said "The year- over-year improvement in our profitability reflects the value from our on-going fleet transition efforts coupled with continued strong operating performance. We remain focused on improving our long- term fleet economics, reducing fleet risk and delivering exceptional service to our passengers and major partners. I want to thank our 20,000 professionals for achieving an incredible 99.9% controllable completion rate during the quarter."
Q2 2016 Financial HighlightsRevenue was $801 million in Q2 2016, up $13 million from Q2 2015. The increase in revenue included the net impact of adding 18 new E175 aircraft since Q2 2015 and economic improvements in certain existing flying arrangements, partially offset by the removal of 46 CRJ200 and ERJ145 aircraft from unprofitable or less-profitable flying agreements over the same period.
Operating expenses were $717 million in Q2 2016, down by $1 million from Q2 2015. This improvement primarily related to lower direct operating costs from fewer aircraft in service and maintenance cost savings initiatives, offset by early aircraft lease termination costs associated with three CRJ700s that were removed from service and processed for storage during Q2 2016.
Q2 2016 Operational UpdateFlight completion rates at SkyWest Airlines and ExpressJet for Q2 2016 and Q2 2015 are summarized as follows:
SkyWest Airlines ExpressJet
Q2 2016 | Q2 2015 | Q2 2016 | Q2 2015 | |
Adjusted Completion * | 99.9% | 99.2% | 99.9% | 99.8% |
Raw Completion | 99.1% | 98.4% | 98.2% | 97.5% |
* Adjusted Completion excludes weather cancellations. Raw Completion includes weather cancellations.
SkyWest's total aircraft in service decreased by one aircraft during the second quarter of 2016 as follows:
Aircraft available for scheduled service at March 31, 2016: 656
Additions/Redeployed:
New E175 aircraft added with United Airlines ("United"): | 6 |
New E175 aircraft added with Alaska Airlines ("Alaska"): | 2 |
Redeployed (transitioned) CRJ700 aircraft with multiple partners: | 10 |
Total Additions/Redeployed: Removals: | 18 |
ERJ145 aircraft removed from service with United: | (5) |
ERJ145 aircraft removed from service with American Airlines | |
("American"): | (2) |
CRJ700 aircraft removed from service with United: | (9) |
CRJ700 aircraft removed from service with Delta Air Lines ("Delta"): | (3) |
Total Removals: | (19) |
Aircraft available for scheduled service at June 30, 2016: | 655 |
SkyWest's total aircraft in service decreased by 21 aircraft from June 30, 2015 to June 30, 2016 as follows:
Aircraft available for scheduled service at June 30, 2015: 676
Additions/Redeployed:
New E175 aircraft added with United: | 12 |
New E175 aircraft added with Alaska: | 6 |
Redeployed (transitioned) CRJ700 aircraft with multiple partners: | 11 |
Redeployed (transitioned) CRJ200 aircraft with multiple partners: | 10 |
Total Additions/Redeployed: Removals: | 39 |
ERJ145 aircraft removed from service with United: | (24) |
ERJ145 aircraft removed from service with American: | (2) |
CRJ200 aircraft removed from service with multiple partners: | (20) |
CRJ700 aircraft removed from service with United: | (11) |
CRJ700 aircraft removed from service with Delta: | (3) |
Total Removals: | (60) |
Aircraft available for scheduled service at June 30, 2016: | 655 |
During Q2 2016, SkyWest redeployed seven CRJ700 aircraft into service under a four-year agreement with American. SkyWest previously operated the seven CRJ700s under an agreement with another major airline partner prior to transitioning the aircraft to the American agreement. The redeployed CRJ700s with American are consistent with SkyWest's fleet transition plan to reduce its aircraft lease commitment risk on its CRJ700 aircraft and improve SkyWest's overall long-term profitability. In conjunction with the CRJ700s transitioned to American, SkyWest anticipates its American CRJ200s contracts currently scheduled to expire between Q4-2016 and Q1-2017 will not be extended.
SkyWest anticipates its CRJ200 fleet will be reduced by approximately 21 aircraft and its ERJ145 fleet will be reduced by eleven aircraft by the end of 2016 as a result of scheduled flying agreement expirations. These 21 CRJ200 aircraft are currently operating under agreements with multiple partners. The majority of the CRJ200 aircraft and ERJ145 aircraft reduction is anticipated to coincide with scheduled aircraft lease expirations. The quarterly block hour forecast for 2016 at the end of this release reflects the anticipated production impact from this scheduled reduction.
SkyWest also anticipates it will return 17 additional CRJ700s under an early lease return arrangement over the next twelve months. The early lease termination cost on these 17 aircraft is estimated to be approximately $20-27 million (pre-tax) of largely non-cash expense and will be recognized as the aircraft are removed from service and processed for storage. SkyWest estimates that Q3 and Q4 of 2016 will have approximately $10-15 million of this charge each quarter.
The following table outlines SkyWest's anticipated delivery schedule for new E175 aircraft through the end of 2017:
United | Total in-service June 30, 2016 | E175 Aircraft Scheduled Deliveries Q3 2016 Q4 2016 2017 | Total anticipated in-service by end of 2017 | ||
47 9 - | 2 4 5 | 9 2 8 | 7 5 6 | 65 20 19 | |
Alaska | |||||
Delta | |||||
Total E175s: | 56 | 11 | 19 | 18 | 104 |
SkyWest Inc. published this content on 28 July 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 28 July 2016 23:06:01 UTC.
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