Shares of St. George-based SkyWest Inc. plunged 13.5 percent on Wednesday after the company reported it barely managed to eke out a profit for the third quarter of its 2011 fiscal year.
The company, the parent of SkyWest Airlines and Atlantic Southeast Airlines, said its third quarter net income was a paltry $116,000, or essentially break-even-per-share. A year ago the company reported a third quarter profit of $25.5 million, or 45 cents per share.
Revenue for the third quarter that ended Sept. 30 reached $995.4 million compared with $686.9 million for the same period last year.
During the quarter SkyWest saw a reduction of approximately $41.4 million in its pretax earnings, which the St. George-based company said was due in part to $10.7 million spent for additional engine overhauls, $9.7 million in crew-related expenses because of additional staffing needs and a $7 million of pretax loss pegged to its November 2010 acquisition of ExpressJet.
ExpressJet is now operating as a subsidiary of Atlantic Southeast Airlines.
SkyWest shares closed Wednesday at $11.51, down $1.79 for the day.
In a conference call Wednesday with securities analysts and investors, SkyWest Chairman and CEO Jerry Atkin said the company is making significant progress toward improving its financial results while remaining in the strongest position in the regional airline industry.
"I realize your confidence in SkyWest here has undoubtedly been tested, as we announced the first quarter of 2011 as the first quarterly financial loss in a long time [nearly 23 years], and have missed our own plan since then by producing a break-even financial operation in the second and third quarters," he said.
SkyWest is continuing to work on merging ExpressJet with its Atlantic Southeast Airlines subsidiary, and that has resulted in some unexpected operating expenses for the parent company.
"It is our expectation to achieve an efficient and effective new combined company in ExpressJet airlines," Atkin said. "We expect it will take a year longer than we initially thought and we will spend more than we had planned to do so."
Robert McAdoo, a securities analyst who follows SkyWest for the Tennessee-based Avondale Partners, said the company is facing a difficult time but Atkin's comments indicate management recognizes the problems "are all on the same page" and are committed to dealing with them.
"They [SkyWest's management] have been open and honest in explaining what the issues are, and while their problems are unfortunate they're not life-threatening. SkyWest has plenty of cash to deal with its challenges," McAdoo said.
Atkin said SkyWest's management "expects the company's financial results for 2012 will be better than 2011 but most of that really won't occur until the second half of 2012. And we expect notable improvement in 2013 compared to 2012."
For the first nine months of 2011, SkyWest reported total operating revenue of $2.7 billion, up from $1.9 billion for the same period a year ago. The company lost $9.3 million, or 18 cents per share, for the period compared with net income of $59.1 million, or $1.06 per share, for the first nine months of 2010.
Âsteve@sltrib.com
Twitter: @OberbeckBiz
