Utah’s SkyWest reports improved first-quarter results
Published: May 2, 2012 07:12PM
Updated: August 28, 2012 11:32PM
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Djamila Grossman | Tribune file photo According to a SkyWest statement, the company generated positive revenue growth by flying about 16,500 additional block hours between Jan. 1 and March 31.

St. George-based SkyWest, Inc. reported a better year-over-year performance in the first quarter Wednesday, narrowing losses from $18.5 million to $1.2 million, and increasing revenue $866 million to $921.2 million.

The previous year dealt a few blows to the regional airline carrier that reported an $18 million loss in the fourth quarter of 2011 because of troubles related to merging its ExpressJet acquisition into its Atlantic Southeast Airlines subsidiary. SkyWest logged $27.3 million in red ink for 2011.

“Our leadership teams and frontline employees are working very hard at continuing our plan to return to consistent and sustained profitability,” President Bradford Rich said in a conference call with analysts.

“We are acutely aware of the challenges we’ve had, not only specifically to SkyWest and our companies but the challenges and difficulties of our industry.”

SkyWest owns 727 aircraft and employs approximately 20,000 people (including nearly 2,800 in Utah), of whom about 6,500 are pilots, SkyWest, Inc.’s Chief Financial Officer Michael Kraupp said in a interview later Wednesday. The regional airline conducts about 4,000 flights per day.

“We were in uncharted waters last year,” Kraupp said of the challenges the company faced during the integration of ExpressJet Airlines Inc., which SkyWest acquired in late 2010.

After 23 years of profitability, that acquisition signaled the need for the regional carrier to find ways to maximize efficiency.

In the first quarter of 2012, SkyWest poured $21.5 million into engine overhauls on its aging CRJ200 aircraft. Those upgrades will continue through the second quarter, Kraupp said, but will begin to fall away in the last half of 2012.

SkyWest’s foreign investments in Trip Linhas Aereas (TRIP) and Mekong Aviation Joint Stock Co. (Air Mekong) also dented the bottom line by causing a combined $4.1 million loss in the first quarter.

“We think we have a fairly strong embedded gain in the investment that is not being reflected in the financials,” Rich told analysts, adding that SkyWest can absorb a little bit of negative financial impact when the investment’s overall value is believed to be increasing.

According to a SkyWest statement, the company generated positive revenue growth by flying about 16,500 additional hours from Jan. 1 to March 31. Cost-reduction programs implemented in 2011 also contributed to the company’s improved fiscal performance.

“We are very pleased with the improvement in our financial results, quarter over quarter, as well as how we performed compared to our first quarter operating plan for 2012,” SkyWest Inc. CEO Jerry Atkin said in a statement. “We remain committed to our return-to-profitability program for 2012.”

Although the first quarter’s $1.2 million loss was “not an acceptable rate of return,” Rich said he was pleased with the company’s improvement and strategic positioning.

“When we think of strategic positioning, we think of-the strength of our balance sheet, our liquidity and our access to capital at competitive rates,” Rich said, factors he believes give SkyWest a clear edge in the regional airline space.

By the close of trading Wednesday, SkyWest shares had climbed 19 cents, to $8.96. The stock’s 52-week range is $8.52-$16.92.

Beleaguered stock gets a bump

By the close of trading Wednesday, SkyWest shares had climbed 19 cents, to $8.96. The stock’s 52-week range is $8.52-$16.92.