Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 04, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 0-14719 | |
Entity Registrant Name | SKYWEST INC | |
Entity Incorporation, State or Country Code | UT | |
Entity Tax Identification Number | 87-0292166 | |
Entity Address, Address Line One | 444 South River Road | |
Entity Address, City or Town | St. George | |
Entity Address, State or Province | UT | |
Entity Address, Postal Zip Code | 84790 | |
City Area Code | 435 | |
Local Phone Number | 634-3000 | |
Title of 12(b) Security | Common Stock, No Par Value | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Trading Symbol | SKYW | |
Entity Common Stock, Shares Outstanding | 50,140,172 | |
Entity Central Index Key | 0000793733 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 289,544 | $ 87,206 |
Marketable securities | 288,351 | 432,966 |
Income tax receivable | 18,945 | 11,141 |
Receivables, net | 37,197 | 82,977 |
Inventories, net | 104,800 | 110,503 |
Other current assets | 30,131 | 35,553 |
Total current assets | 768,968 | 760,346 |
PROPERTY AND EQUIPMENT: | ||
Aircraft and rotable spares | 7,203,714 | 7,078,801 |
Deposits on aircraft | 48,858 | 48,858 |
Buildings and ground equipment | 244,751 | 265,398 |
Total property and equipment, gross | 7,497,323 | 7,393,057 |
Less-accumulated depreciation and amortization | (2,103,585) | (1,998,376) |
Total property and equipment, net | 5,393,738 | 5,394,681 |
OTHER ASSETS: | ||
Operating lease right-of-use assets | 326,698 | 336,009 |
Other assets | 172,007 | 166,093 |
Total other assets | 498,705 | 502,102 |
Total assets | 6,661,411 | 6,657,129 |
CURRENT LIABILITIES: | ||
Current maturities of long-term debt | 364,579 | 364,126 |
Accounts payable | 407,290 | 284,473 |
Accrued salaries, wages and benefits | 112,972 | 133,856 |
Current maturities of operating lease liabilities | 88,649 | 94,806 |
Taxes other than income taxes | 14,148 | 15,004 |
Other current liabilities | 32,205 | 32,411 |
Total current liabilities | 1,019,843 | 924,676 |
LONG-TERM DEBT, net of current maturities | 2,537,613 | 2,628,989 |
DEFERRED INCOME TAXES PAYABLE | 633,110 | 623,580 |
NONCURRENT OPERATING LEASE LIABILITIES | 259,039 | 259,237 |
OTHER LONG-TERM LIABILITIES | 48,368 | 45,633 |
COMMITMENTS AND CONTINGENCIES (Note 7) | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, 5,000,000 shares authorized; none issued | ||
Common stock, no par value, 120,000,000 shares authorized; 82,053,807 and 81,742,937 shares issued, respectively | 690,065 | 686,806 |
Retained earnings | 2,090,509 | 2,079,179 |
Treasury stock, at cost, 31,913,635 and 31,420,179 shares, respectively | (617,136) | (590,971) |
Total stockholders' equity | 2,163,438 | 2,175,014 |
Total liabilities and stockholders' equity | $ 6,661,411 | $ 6,657,129 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 82,053,807 | 81,742,937 |
Treasury stock, at cost, shares | 31,913,635 | 31,420,179 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
OPERATING REVENUES: | ||
Total operating revenues | $ 729,936 | $ 723,694 |
OPERATING EXPENSES: | ||
Salaries, wages and benefits | 249,160 | 257,588 |
Depreciation and amortization | 111,708 | 89,986 |
Special items | 21,869 | |
Other operating expenses | 69,422 | 63,109 |
Total operating expenses | 663,615 | 627,275 |
OPERATING INCOME | 66,321 | 96,419 |
OTHER INCOME (EXPENSE): | ||
Interest income | 2,564 | 3,807 |
Interest expense | (30,204) | (32,507) |
Other income (expense), net | 398 | 46,725 |
Total other income (expense), net | (27,242) | 18,025 |
INCOME BEFORE INCOME TAXES | 39,079 | 114,444 |
PROVISION FOR INCOME TAXES | 9,091 | 26,263 |
NET INCOME | $ 29,988 | $ 88,181 |
BASIC EARNINGS PER SHARE (in dollars per share) | $ 0.60 | $ 1.71 |
DILUTED EARNINGS PER SHARE (in dollars per share) | $ 0.59 | $ 1.69 |
Weighted average common shares: | ||
Basic (in shares) | 50,277 | 51,440 |
Diluted (in shares) | 50,559 | 52,098 |
COMPREHENSIVE INCOME: | ||
Net income | $ 29,988 | $ 88,181 |
Net unrealized appreciation on marketable securities, net of taxes | 32 | |
TOTAL COMPREHENSIVE INCOME | 29,988 | 88,213 |
Flying agreements | ||
OPERATING REVENUES: | ||
Total operating revenues | 709,494 | 700,001 |
Lease, airport services and other | ||
OPERATING REVENUES: | ||
Total operating revenues | 20,442 | 23,693 |
Airport customer service and other | ||
OPERATING REVENUES: | ||
Total operating revenues | 20,442 | 23,693 |
Aircraft maintenance, materials and repairs | ||
OPERATING EXPENSES: | ||
Total operating expenses | 160,216 | 118,262 |
Airport related expenses | ||
OPERATING EXPENSES: | ||
Total operating expenses | 30,640 | 30,647 |
Aircraft fuel | ||
OPERATING EXPENSES: | ||
Total operating expenses | 25,413 | 25,656 |
Aircraft rentals | ||
OPERATING EXPENSES: | ||
Total operating expenses | $ 17,056 | $ 20,158 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total |
Increase (Decrease) in Stockholders' Equity | |||||
Change in accounting principle and other | $ (13,141) | $ (13,141) | |||
Balance, as adjusted | $ 690,910 | 1,763,444 | $ (503,182) | $ (32) | 1,951,140 |
Balance at Dec. 31, 2018 | $ 690,910 | 1,776,585 | $ (503,182) | (32) | 1,964,281 |
Balance (in shares) at Dec. 31, 2018 | 81,239 | (29,851) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 88,181 | 88,181 | |||
Net unrealized depreciation on marketable securities, net of tax of $10 | $ 32 | 32 | |||
Exercise of common stock options and stock issued under equity award plan | $ 641 | 641 | |||
Exercise of common stock options and stock issued under equity award plan (in shares) | 521 | ||||
Sale of common stock under employee stock purchase plan | $ 1,620 | 1,620 | |||
Sale of common stock under employee stock purchase plan (in shares) | 39 | ||||
Stock-based compensation expense (forfeiture credit) associated with equity awards, net | $ (578) | (578) | |||
Treasury shares acquired from vested employee stock awards for income tax withholdings | $ (9,311) | (9,311) | |||
Treasury shares acquired from vested employee stock awards for income tax withholdings (in shares) | (173) | ||||
Treasury stock purchases | $ (25,000) | (25,000) | |||
Treasury stock purchases (in shares) | (476) | ||||
Cash dividends declared | (6,158) | (6,158) | |||
Balance at Mar. 31, 2019 | $ 692,593 | 1,845,467 | $ (537,493) | 2,000,567 | |
Balance (in shares) at Mar. 31, 2019 | 81,799 | (30,500) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Change in accounting principle and other | (11,639) | (11,639) | |||
Balance, as adjusted | $ 686,806 | 2,067,540 | $ (590,971) | 2,163,375 | |
Balance at Dec. 31, 2019 | $ 686,806 | 2,079,179 | $ (590,971) | 2,175,014 | |
Balance (in shares) at Dec. 31, 2019 | 81,743 | (31,420) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 29,988 | 29,988 | |||
Exercise of common stock options and stock issued under equity award plan | $ 38 | 38 | |||
Exercise of common stock options and stock issued under equity award plan (in shares) | 287 | ||||
Sale of common stock under employee stock purchase plan | $ 1,494 | 1,494 | |||
Sale of common stock under employee stock purchase plan (in shares) | 24 | ||||
Stock-based compensation expense (forfeiture credit) associated with equity awards, net | $ 1,727 | 1,727 | |||
Treasury shares acquired from vested employee stock awards for income tax withholdings | $ (6,165) | (6,165) | |||
Treasury shares acquired from vested employee stock awards for income tax withholdings (in shares) | (108) | ||||
Treasury stock purchases | $ (20,000) | (20,000) | |||
Treasury stock purchases (in shares) | (386) | ||||
Cash dividends declared | (7,019) | (7,019) | |||
Balance at Mar. 31, 2020 | $ 690,065 | $ 2,090,509 | $ (617,136) | $ 2,163,438 | |
Balance (in shares) at Mar. 31, 2020 | 82,054 | (31,914) |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | ||
Net unrealized depreciation on marketable securities, tax | $ 10 | |
Cash dividends declared (in dollars per share) | $ 0.14 | $ 0.12 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
NET CASH PROVIDED BY OPERATING ACTIVITIES | $ 269,483 | $ 154,914 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of marketable securities | (236,527) | (498,113) |
Sales of marketable securities | 381,142 | 605,693 |
Proceeds from the sale of aircraft, property and equipment | 1,366 | 43 |
Acquisition of property and equipment: | ||
Aircraft and rotable spare parts | (73,482) | (197,341) |
Buildings and ground equipment | (3,542) | (52,075) |
Aircraft deposits applied towards acquired aircraft | 4,660 | |
Net cash received from sale of ExpressJet subsidiary | 53,200 | |
Decrease (increase) in other assets | (13,970) | 7,028 |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 54,987 | (76,905) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of long-term debt | 19,940 | |
Principal payments on long-term debt | (89,796) | (98,204) |
Net proceeds from issuance of common stock | 1,532 | 2,261 |
Purchase of treasury and common stock and employee income tax paid on equity awards | (26,165) | (34,311) |
Increase in debt issuance and lessor initial direct costs | (1,664) | (53) |
Payment of cash dividends | (6,039) | (5,141) |
NET CASH PROVIDED USED IN FINANCING ACTIVITIES | (122,132) | (115,508) |
Increase (decrease) in cash and cash equivalents | 202,338 | (37,499) |
Cash and cash equivalents at beginning of period | 87,206 | 328,384 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 289,544 | 290,885 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Acquisition of rotable spare parts | 34,100 | |
Debt assumed on aircraft acquired under operating leases | 14,475 | |
Non-cash assets used to acquire aircraft under operating leases | 150,688 | |
Lease liability arising from the recognition of right-of-use asset | 456,472 | |
Cash paid during the period for: | ||
Interest, net of capitalized amounts | 31,413 | 34,288 |
Income taxes | $ 126 | 1,653 |
SUPPLEMENTAL DISCLOSURE OF SALE OF SUBSIDIARY: | ||
Decrease in carrying amount of assets | (101,448) | |
Decrease in carrying amount of liabilities | 68,341 | |
Cash received from buyers | 79,632 | |
Gain on sale of subsidiary | $ 46,525 |
Condensed Consolidated Financia
Condensed Consolidated Financial Statements | 3 Months Ended |
Mar. 31, 2020 | |
Condensed Consolidated Financial Statements | |
Condensed Consolidated Financial Statements | Note 1 — Condensed Consolidated Financial Statements Basis of Presentation The condensed consolidated financial statements of SkyWest, Inc. (“SkyWest” or the “Company”) and its operating subsidiary SkyWest Airlines, Inc. (“SkyWest Airlines”) and its leasing subsidiary SkyWest Leasing, Inc. (“SkyWest Leasing”) included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). On January 22, 2019, the Company completed the sale of its former wholly owned subsidiary, ExpressJet Airlines, Inc. (“ExpressJet”). The Company’s financial and operating results presented in this Report include the financial results of ExpressJet for the period of time ExpressJet was operating as a subsidiary of the Company. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the interim periods presented. All adjustments are of a normal recurring nature, unless otherwise disclosed. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Due in part to the severe impacts from the global COVID-19 (coronavirus) pandemic, in addition to other factors, the results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results will likely differ, and may differ materially, from those estimates and assumptions. Recent Accounting Pronouncements Recently Adopted Standards In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” (“Topic 326”), which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosure regarding significant estimates and judgments used in estimating credit losses. Topic 326 is effective for the Company beginning January 1, 2020. The Company adopted Topic 326 on January 1, 2020. The Company’s primary financial assets as of December 31, 2019 included trade receivables from its flying agreements, a note receivable from the sale of ExpressJet, and receivables from aircraft manufacturers and other third parties in the airline industry. The Company recorded a credit loss of |
Impact of the COVID-19 Pandemic
Impact of the COVID-19 Pandemic | 3 Months Ended |
Mar. 31, 2020 | |
Impact of the COVID-19 Pandemic | |
Impact of the COVID-19 Pandemic | Note 2 — Impact of the COVID-19 Pandemic COVID-19, which was declared a global health pandemic by the World Health Organization in March 2020, has surfaced in nearly all regions of the world and driven the implementation of significant, government-imposed measures to prevent or reduce its spread, including travel restrictions, closing of borders, “shelter in place” orders and business closures. Consequently, the Company and its major airline partners (as defined in Note 3 below), have experienced an unprecedented decline in the demand for air travel, which has materially and adversely affected the Company’s revenues, particularly under its prorate agreements (as defined in Note 3 below). The spread of the virus and the resulting global pandemic has affected the majority of the domestic and international networks of the Company’s major airline partners for whom it conducts flight operations and relies on to set its flight schedules. While the length and severity of the reduction in demand due to COVID-19 are uncertain, the Company presently expects a more significant negative impact on its results of operations in the second quarter of 2020 and for the remainder of 2020. In response to these developments, the Company has implemented measures to focus on the personal safety of its passengers and employees, while at the same time seeking to mitigate the impact on the Company’s financial position and operations. These measures include, but are not limited to, the following: Focus on the Personal Safety of Passengers and Employees. ● Working with the Company’s major airline partners to enhance its aircraft cleaning procedures. ● Working with the Company’s major airline partners to provide masks for crewmembers and ensuring that all fleet service personnel have the necessary personal protective equipment for disinfecting the aircraft. ● Providing a number of options to employees who are diagnosed with COVID-19, including pay protection and extended leave options. ● Implementing workforce social distancing and protection measures, enhanced cleaning of the Company’s facilities, including training facilities, using methods and products similar to what the Company is using on its aircraft. Capacity Reductions. Cost Reductions. ● Reducing employee-related costs including by: o Offering voluntary unpaid leave to employees. o Suspending all non-scale pay increases. o Instituting a company-wide hiring freeze. ● Delaying non-essential maintenance projects and reducing or suspending other discretionary spending. Liquidity. approximately $438.0 million in the aggregate, 50% of which was received in April 2020. See Note 15 for more information on the Payroll Support Program. The CARES Act also provides for up to |
Flying Agreements Revenue and L
Flying Agreements Revenue and Lease, Airport Services and Other Revenues | 3 Months Ended |
Mar. 31, 2020 | |
Flying Agreements Revenue and Lease, Airport Services and Other Revenues | |
Flying Agreements Revenue and Lease, Airport Services and Other Revenues | Note 3 — Flying Agreements Revenue and Lease, Airport Services and Other Revenues The Company recognizes flying agreements revenue and lease, airport services and other revenues when the service is provided under its code-share agreements. Under the Company’s fixed-fee arrangements (referred to as “capacity purchase agreements”) with Delta Air Lines, Inc. (“Delta”), United Airlines, Inc. (“United”), American Airlines, Inc. (“American”) and Alaska Airlines, Inc. (“Alaska”) (each, a “major airline partner”), the major airline partner generally pays the Company a fixed-fee for each departure, flight hour (measured from takeoff to landing, excluding taxi time) or block hour (measured from takeoff to landing, including taxi time) incurred, and an amount per aircraft in service each month with additional incentives based on flight completion and on-time performance. The major airline partner also directly pays for or reimburses the Company for certain direct expenses incurred under the capacity purchase agreement, such as fuel, airport landing fees and airport rents. Under the capacity purchase agreements, the Company’s performance obligation is met when each flight is completed and is reflected in flying agreements revenue. The transaction price for the capacity purchase agreements is determined from the fixed-fee consideration, incentive consideration and directly reimbursed expenses earned as flights are completed over the agreement term. For the three months ended March 31, 2020, capacity purchase agreements represented approximately Under the Company’s revenue-sharing arrangements (referred to as a “revenue-sharing” or “prorate” arrangement), the major airline partner and the Company negotiate a passenger fare proration formula, pursuant to which the Company receives a percentage of the ticket revenues for those passengers traveling for one portion of their trip on a Company airline and the other portion of their trip on the major airline partner. Under the Company’s prorate flying agreements, the performance obligation is met and revenue is recognized when each flight is completed based upon the portion of the prorate passenger fare the Company anticipates that it will receive for each completed flight. The transaction price for the prorate agreements is determined from the proration formula derived from each passenger ticket amount on each completed flight over the agreement term. For the three months ended March 31, 2020, prorate flying arrangements represented approximately Lease, airport services and other revenues primarily consist of revenue generated from aircraft and spare engines leased to third parties. Of the Company’s $5.4 billion of property and equipment, net as of March 31, 2020, $154.1 million of regional jet aircraft and spare engines was leased to third parties under operating leases as of March 31, 2020. The Company mitigates the residual asset risks of these assets by leasing aircraft and engine types that can be operated by the Company in the event of a default. Additionally, the operating leases typically have specified lease return condition requirements paid by the lessee to the Company and the Company typically maintains inspection rights under the leases. The following table summarizes future minimum rental income under operating leases primarily related to leased aircraft that had remaining non-cancelable lease terms as of March 31, 2020 (in thousands): April 2020 through December 2020 $ 23,484 2021 27,849 2022 27,606 2023 24,704 2024 24,396 Thereafter 87,235 $ 215,274 Additionally, lease, airport services and other revenues includes airport agent services, such as gate and ramp agent services at applicable airports where the Company provides such services. The transaction price for airport customer service agreements is determined from an agreed-upon rate by location applied to the applicable number of flights handled by the Company over the agreement term. The following represents the Company’s airport and customer service and other revenue for the three months ended March 31, 2020 and 2019 (in thousands): For the three months ended March 31, 2020 2019 Airport customer service revenue $ 9,896 $ 14,635 Operating lease revenue 10,546 9,058 Lease, airport services and other $ 20,442 $ 23,693 Other ancillary revenues commonly associated with airlines, such as baggage fee revenue, ticket change fee revenue and the marketing component of the sale of mileage credits, are retained by the Company’s major airline partners on flights that the Company operates under its code-share agreements. The following table represents the Company’s flying agreements revenue by type for the three-month periods ended March 31, 2020 and 2019 (in thousands): For the three months ended March 31, 2020 2019 Capacity purchase agreements revenue: flight operations $ 366,409 $ 386,545 Capacity purchase agreements revenue: aircraft lease revenue 242,734 207,381 Prorate agreements revenue 100,351 106,075 Flying agreements revenue $ 709,494 $ 700,001 A portion of the Company’s compensation under its capacity purchase agreements is designed to reimburse the Company for certain aircraft ownership costs. The consideration for aircraft ownership costs varies by agreement but is intended to cover either the Company’s aircraft principal and interest debt service costs, its aircraft depreciation and interest expense or its aircraft lease expense costs while the aircraft is under contract. The consideration received for the use of the aircraft under the Company’s capacity purchase agreements is reflected as lease revenue, inasmuch as the agreements identify the “right of use” of a specific type and number of aircraft over a stated period of time. The lease revenue associated with the Company’s capacity purchase agreements is accounted for as an operating lease and is reflected as flying agreements revenue on the Company’s consolidated statements of comprehensive income. The Company has not separately stated aircraft rental income and aircraft rental expense in the consolidated statement of comprehensive income since the use of the aircraft is not a separate activity of the total service provided. The Company’s capacity purchase and prorate agreements include weekly provisional cash payments from the respective major airline partner based on a projected level of flying each month. The Company and each major airline partner subsequently reconcile these payments to the actual completed flight activity on a monthly or quarterly basis. In the event a flying agreement includes a mid-term rate reset to adjust rates prospectively and the contractual rates under the Company’s flying agreements have not been finalized at quarterly or annual financial statement dates, the Company applies the variable constraint guidance under ASU No. 2014-09, “Revenue from Contracts with Customers, (Topic 606)” (“Topic 606”), where the Company records revenue to the extent it believes that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. In several of the Company’s agreements, the Company is eligible to receive incentive compensation upon the achievement of certain performance criteria. The incentives are defined in the agreements and are measured and determined on a monthly or quarterly basis. At the end of each period during the term of an agreement, the Company calculates the incentives achieved during that period and recognizes revenue attributable to that agreement accordingly, subject to the variable constraint guidance under Topic 606. The following table summarizes the significant provisions of each code-share agreement SkyWest Airlines has with each major airline partner: Delta Connection Agreements Agreement Aircraft type Number of Term / Termination Delta Connection Agreement (capacity purchase agreement) • CRJ 200 • CRJ 700 • CRJ 900 • E175 55 8 43 62 • Individual aircraft have scheduled removal dates from 2020 to 2029 Delta Connection Prorate Agreement (prorate arrangement) • CRJ 200 27 • Terminable with 30-day notice United Express Agreements Agreement Aircraft type Number of Term / Termination United Express Agreements (capacity purchase agreement) • CRJ 200 • CRJ 700 • E175 70 19 69 • Individual aircraft have scheduled removal dates from 2022 to 2029 United Express Prorate Agreement (prorate arrangement) • CRJ 200 31 • Terminable with 120-day notice American Agreements Agreement Aircraft type Number of Term / Termination American Agreement (capacity purchase agreement) • CRJ 700 61 • Individual aircraft have scheduled removal dates from 2022 to 2025 American Prorate Agreement (prorate arrangement) • CRJ 200 7 • Terminable with 120-day notice Alaska Capacity Purchase Agreement Agreement Aircraft type Number of Term / Termination Alaska Agreement (capacity purchase agreement) • E175 32 • Individual aircraft have scheduled removal dates from 2027 to 2030 In addition to the contractual arrangements described above, SkyWest Airlines has entered into capacity purchase agreements with Delta, American and United to place additional new and used Embraer E175 dual-class regional jet aircraft (“E175”) into service. The Company is coordinating with its major airline partners on the timing of upcoming fleet deliveries under previously announced deals in response to COVID-19 schedule reductions. The anticipated future delivery dates summarized below are subject to change. As of March 31, 2020, the Company was scheduled to acquire and place into service six new E175 aircraft in connection with its agreement with Delta. The delivery dates for these six new E175 aircraft are currently scheduled to be completed during 2020. Additionally, the Company is scheduled to add As of March 31, 2020, the Company was scheduled to acquire and place into service 20 new E175 aircraft in connection with its agreement with American. The delivery dates for the new E175 aircraft were originally scheduled to be completed by 2021. The Company is currently coordinating with American and the manufacturer on revised delivery dates due to COVID-19-related schedule reductions. Additionally, SkyWest Airlines has a flying contract with American to operate a total of The Company anticipates its American Prorate Agreement on seven CRJ200 aircraft will terminate in 2020 as a result of COVID-19-related passenger demand reductions. The Company may have further reductions in the number of CRJ200 aircraft operating under prorate agreements with its other major airline partners throughout 2020. During the three months ended March 31, 2020, SkyWest Airlines placed four used E175 aircraft financed by United under a capacity purchase agreement with United. As of March 31, 2020, SkyWest Airlines was scheduled to add 21 used E175 aircraft that were financed by United under the United agreement throughout 2020 and 2021. As of March 31, 2020, the Company’s capacity purchase agreement with Delta included 55 CRJ200 aircraft that are scheduled to expire in increments during the remainder of 2020 and are not expected to be extended as a result of the decreased demand caused by the COVID-19 pandemic. The Company leases 19 of the 55 aircraft from Delta and anticipates returning the leased aircraft to Delta in 2020. The Company owns the remaining 36 CRJ200 aircraft and anticipates parking the 36 CRJ200 aircraft following removal from service. The Company has no outstanding financing obligations on the 36 owned CRJ200 aircraft. The Company reduced the estimated useful lives of these 36 CRJ200 aircraft to align with each aircraft’s anticipated removal dates, which resulted in approximately $15.0 million of incremental depreciation expense during the three months ended March 31, 2020. The Company anticipates it will incur $29.1 million of additional depreciation expense from April to December 2020 resulting from the shorter estimated useful lives of the 36 owned CRJ200 aircraft. When an aircraft is scheduled to be removed from a capacity purchase agreement, the Company may, as practical under the circumstances, negotiate an extension with the respective major airline partner, negotiate the placement of the aircraft with another major airline partner, return the aircraft to the lessor if the aircraft is leased and the lease is expiring, place owned aircraft for sale, or pursue other uses for the aircraft. Other uses for the aircraft may include placing the aircraft in a prorate arrangement, leasing the aircraft to a third party, using aircraft parts and engines as spare inventory or leasing spare engines to a third party. In the event practical alternative uses for the aircraft removed from service are not available, the Company may park and store the aircraft. The Company’s operating revenues could be impacted by a number of factors, including the impact of the COVID-19 pandemic on the demand for air travel and associated reduction in flight schedules, changes to the Company’s code-share agreements with its major airline partners, contract modifications resulting from contract renegotiations, the Company’s ability to earn incentive payments contemplated under the Company’s code-share agreements and settlement of reimbursement disputes with the Company’s major airline partners. Allowance for credit losses The Company monitors publicly available credit ratings for entities for which the Company has a significant receivable balance. As of March 31, 2020, the Company had gross receivables of $42.0 million in current assets and gross receivables of $76.7 million in other long-term assets. The Company has established credit loss reserves based on publicly available historic default rates issued by a third party for companies with similar credit ratings, factoring in the term of the respective accounts receivable or note receivable. During the three months ended March 31, 2020, the credit ratings were lowered on certain entities for which the Company has outstanding accounts receivable or notes receivable, which was the primary driver for the increase in the Company’s credit loss reserve when benchmarked against historic default rates of similarly rated companies during the three months ended March 31, 2020. The following table summarizes the changes in allowance for credit losses: Allowance for Credit Losses Balance at January 1, 2020 $ 15,388 Additions to credit loss reserve 3,756 Write-offs charged against the allowance — Balance at March 31, 2020 $ 19,144 |
Share-Based Compensation and St
Share-Based Compensation and Stock Repurchases | 3 Months Ended |
Mar. 31, 2020 | |
Share-Based Compensation and Stock Repurchases | |
Share-Based Compensation and Stock Repurchases | Note 4 — Share-Based Compensation and Stock Repurchases During the three months ended March 31, 2020, the Company granted 82,505 restricted stock units and 69,132 performance shares to certain employees of the Company and its subsidiaries under the SkyWest, Inc. 2019 Long-Term Incentive Plan. Both the restricted stock units and performance shares have a per share. During the three months ended March 31, 2020, the Company did not grant any options to purchase shares of common stock. Additionally, during the three months ended March 31, 2020, the Company granted The Company accounts for forfeitures of stock options, restricted stock units and performance share grants when forfeitures occur. The estimated fair value of the stock options, restricted stock units and performance shares is amortized over the applicable vesting periods. During the three months ended March 31, 2020 and 2019, the Company recorded pre-tax share-based compensation expense of million, respectively. Additionally, the Company incurred During the three months ended March 31, 2020, the Company repurchased 385,606 shares of its common stock for $20.0 million and paid $6.2 million for the income tax obligation on vested employee equity awards and issued the net, after-tax shares to employees. During the three months ended March 31, 2019, the Company repurchased 476,277 shares of its common stock for $25.0 million and paid $9.3 million for the income tax obligation on vested employee equity awards and issued the net, after-tax shares to employees. In connection with the Company’s receipt of financial support under the Payroll Support Program, the Company agreed not to repurchase shares of or make dividend payments in respect of its common stock through September 30, 2021. |
Net Income Per Common Share
Net Income Per Common Share | 3 Months Ended |
Mar. 31, 2020 | |
Net Income Per Common Share | |
Net Income Per Common Share | Note 5 — Net Income Per Common Share Basic net income per common share (“Basic EPS”) excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income per common share. During the three months ended March 31, 2020, 219,000 performance shares (at target performance) were excluded from the computation of Diluted EPS since the Company had not achieved the minimum target thresholds as of March 31, 2020. During the three months ended March 31, 2019, 241,000 performance shares (at target performance) were excluded from the computation of Diluted EPS since the Company had not achieved the minimum target thresholds as of March 31, 2019. The calculation of the weighted average number of shares of common stock outstanding for Basic EPS and Diluted EPS for the periods indicated (in thousands, except per share data) is as follows: Three Months Ended March 31, 2020 2019 Numerator: Net Income $ 29,988 $ 88,181 Denominator: Weighted average number of common shares outstanding 50,277 51,440 Effect of outstanding share-based awards 282 658 Weighted average number of shares for diluted net income per common share 50,559 52,098 Basic earnings per share $ 0.60 $ 1.71 Diluted earnings per share $ 0.59 $ 1.69 |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting | |
Segment Reporting | Note 6 — Segment Reporting Prior to the Company’s sale of ExpressJet on January 22, 2019, the Company’s three reporting segments consisted of the operations of SkyWest Airlines, ExpressJet and SkyWest Leasing activities. The segment information presented for ExpressJet reflects the period of time prior to the sale, when ExpressJet was operating as a subsidiary of the Company. The Company’s chief operating decision maker analyzes the profitability of operating new aircraft financed through the issuance of debt, including the Company’s E175 fleet, separately from the profitability of the Company’s capital deployed for ownership and financing of such aircraft. The SkyWest Airlines segment includes revenue earned under the applicable capacity purchase agreements attributed to operating such aircraft and the respective operating costs. The SkyWest Leasing segment includes applicable revenue earned under the applicable capacity purchase agreements attributed to the ownership of new aircraft acquired through the issuance of debt and the respective depreciation and interest expense of such aircraft. The SkyWest Leasing segment also includes the activity of leasing regional jet aircraft and spare engines to third parties. The SkyWest Leasing segment’s total assets and capital expenditures include new aircraft acquired through the issuance of debt and assets leased to third parties. The following represents the Company’s segment data for the three-month periods ended March 31, 2020 and 2019 (in thousands): Three months ended March 31, 2020 SkyWest SkyWest Airlines ExpressJet Leasing Consolidated Operating revenues (1) $ 606,842 $ — $ 123,094 $ 729,936 Operating expense 594,141 — 69,474 663,615 Depreciation and amortization expense 51,775 — 59,933 111,708 Interest expense 2,541 — 27,663 30,204 Segment profit (2) 10,160 — 25,957 36,117 Total assets (as of March 31, 2020) 2,650,094 — 4,011,317 6,661,411 Capital expenditures (including non-cash) 38,879 — 72,245 111,124 Three months ended March 31, 2019 SkyWest SkyWest Airlines ExpressJet Leasing Consolidated Operating revenues (1) $ 585,768 $ 24,050 $ 113,876 $ 723,694 Operating expense 545,901 28,690 52,684 627,275 Depreciation and amortization expense 40,053 971 48,962 89,986 Special Items 18,508 3,361 — 21,869 Interest expense 3,818 — 28,689 32,507 Segment profit (loss) (2) 36,049 (4,640) 32,503 63,912 Total assets (as of March 31, 2019) 2,738,248 — 3,806,284 6,544,532 Capital expenditures (including non-cash) 68,650 — 345,929 414,579 (1) Prorate revenue and airport customer service revenue are primarily reflected in the SkyWest Airlines segment. (2) Segment profit (loss) is equal to operating income less interest expense . |
Leases, Commitments and Conting
Leases, Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Leases, Commitments and Contingencies | |
Leases, Commitments and Contingencies | Note 7 — Leases, Commitments and Contingencies Effective January 1, 2019, the Company adopted Topic 842. The Company leases property and equipment under operating leases. For leases with durations longer than 12 months, the Company recorded the related operating lease right-of-use asset and operating lease liability at the present value of lease payments over the term. The Company used its incremental borrowing rate to discount the Aircraft As of March 31, 2020, the Company had 103 aircraft under operating leases with remaining terms ranging from less than one With the adoption of Topic 842 on January 1, 2019, the Company evaluated whether leased aircraft asset groups within the Company’s fleet were impaired. Under the transition guidance for Topic 842, a company is permitted to recognize a previously unrecognized impairment related to a right-of-use asset in the period prior to the adoption date of Topic 842 if the event giving rise to the impairment occurred before the adoption date. In 2016, the Company recorded an impairment on certain of its long-lived assets, which included the Company’s CRJ200 aircraft . In 2016, the market lease rate was less than the contractual lease rate on the Company’s CRJ200 leased aircraft. The Company recorded an impairment of Airport facilities The Company has operating leases for facility space including airport terminals, office space, cargo warehouses and maintenance facilities. The Company generally leases this space from government agencies that control the use of the various airports. The remaining lease terms for facility space vary from one month to 36 years. The Company’s operating leases with lease rates that are variable based on airport operating costs, use of the facilities or other variable factors are excluded from the Company’s right-of-use assets and operating lease liabilities in accordance with accounting guidance. Leases As of March 31, 2020, the Company’s right-of-use assets were $326.7 million, the Company’s current maturities of operating lease liabilities were $88.6 million, and the Company’s noncurrent lease liabilities were $259.0 million. During the three months ended March 31, 2020, the Company paid $17.7 million in operating leases reflected as a reduction from operating cash flows. The table below presents lease related terms and discount rates as of March 31, 2020. March 31, 2020 Weighted-average remaining lease term for operating leases 6.8 years Weighted-average discount rate for operating leases 6.4% The Company’s lease costs for the three months ended March 31, 2020 and 2019 included the following components (in thousands): For the three months ended March 31, 2020 2019 Operating lease cost $ 25,018 $ 27,221 Variable and short-term lease cost 1,344 1,475 Sublease income (1,571) — Total lease cost $ 24,791 $ 28,696 As of March 31, 2020, the Company leased aircraft, airport facilities, office space, and other property and equipment under non-cancelable operating leases, which are generally on a long-term, triple-net lease basis pursuant to which the Company pays taxes, maintenance, insurance and certain other operating expenses applicable to the leased property. The Company expects that, in the normal course of business, such operating leases that expire will be renewed or replaced by other leases, or the property may be purchased rather than leased. The following table summarizes future minimum rental payments primarily related to leased aircraft required under operating leases that had initial or remaining non-cancelable lease terms as of March 31, 2020 (in thousands): April 2020 through December 2020 $ 75,137 2021 85,409 2022 75,776 2023 69,623 2024 28,320 Thereafter 100,234 $ 434,499 The Company is coordinating with its major airline partners on the timing of upcoming fleet deliveries under previously announced deals in response to COVID-19-related schedule reductions. The anticipated future delivery dates are subject to change. As of March 31, 2020, the Company had a firm purchase commitment for 26 E175 aircraft from Embraer, S.A. (“Embraer”) with original delivery dates through 2021. The Company has also agreed to purchase two used CRJ700 aircraft from a third party with anticipated delivery dates in 2020. The following table summarizes the Company’s commitments and obligations as noted for each of the next five years and thereafter (in thousands): Total Apr - Dec 2020 2021 2022 2023 2024 Thereafter Operating lease payments for aircraft and facility obligations $ 434,499 $ 75,137 $ 85,409 $ 75,776 $ 69,623 $ 28,320 $ 100,234 Firm aircraft and spare engine commitments 714,797 435,183 274,114 5,500 — — — Interest commitments (1) 543,153 88,581 104,678 90,251 73,946 59,373 126,324 Principal maturities on long-term debt 2,927,262 277,692 352,005 365,907 374,906 327,630 1,229,122 Total commitments and obligations $ 4,619,711 $ 876,593 $ 816,206 $ 537,434 $ 518,475 $ 415,323 $ 1,455,680 (1) At March 31, 2020, all of the Company’s total long-term debt had fixed interest rates . |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | Note 8 — Fair Value Measurements The Company holds certain assets that are required to be measured at fair value in accordance with GAAP. The Company determined the fair value of these assets based on the following three levels of inputs: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Some of the Company’s marketable securities primarily utilize broker quotes in a non-active market for valuation of these securities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, therefore requiring an entity to develop its own assumptions. As of March 31, 2020, and December 31, 2019, the Company held certain assets that are required to be measured at fair value on a recurring basis. Assets measured at fair value on a recurring basis are summarized below (in thousands): Fair Value Measurements as of March 31, 2020 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 289,544 $ 289,544 $ — $ — Marketable securities Bonds and bond funds $ 179,964 $ — $ 179,964 $ — Commercial paper 108,387 — 108,387 — 288,351 — 288,351 — Total assets measured at fair value $ 577,895 $ 289,544 $ 288,351 $ — Fair Value Measurements as of December 31, 2019 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 87,206 $ 87,206 $ — $ — Marketable securities Bonds and bond funds $ 267,243 $ — $ 267,243 $ — Commercial paper 165,723 — 165,723 — 432,966 — 432,966 — Total assets measured at fair value $ 520,172 $ 87,206 $ 432,966 $ — The Company’s “marketable securities” classified as Level 2 securities primarily utilize broker quotes in a non-active market for valuation of these securities. The Company did not make any significant transfers of securities between Level 1, Level 2 and Level 3 during the three months ended March 31, 2020. The Company’s policy regarding the recording of transfers between levels is to record any such transfers at the end of the reporting period. As of March 31, 2020, and December 31, 2019, the Company classified $288.4 million and $433.0 million of marketable securities, respectively, as short-term since it had the intent to maintain a liquid portfolio and the ability to redeem the securities within one year. As of March 31, 2020, and December 31, 2019, the cost of the Company’s total cash and cash equivalents and available for sale securities was The fair value of the Company’s long-term debt classified as Level 2 debt was estimated using discounted cash flow analyses, based on the Company’s current estimated incremental borrowing rates for similar types of borrowing arrangements. The fair value of the Company’s long-term debt is estimated based on current rates offered to the Company for similar debt and was estimated to be $2.96 billion as of March 31, 2020 and $2.99 billion as of December 31, 2019, as compared to the carrying amount of $2.93 billion as of March 31, 2020 and $3.02 billion as of December 31, 2019. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2020 | |
Long-Term Debt | |
Long-Term Debt | Note 9 — Long-Term Debt Long-term debt consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands): March 31, 2020 December 31, 2019 Current portion of long-term debt $ 368,558 $ 367,954 Current portion of unamortized debt issue cost, net (3,979) (3,828) Current portion of long-term debt, net of debt issue costs $ 364,579 $ 364,126 Long-term debt, net of current maturities $ 2,558,704 $ 2,649,569 Long-term portion of unamortized debt issue cost, net (21,091) (20,580) Long-term debt, net of current maturities and debt issue costs $ 2,537,613 $ 2,628,989 Total long-term debt (including current portion) $ 2,927,262 $ 3,017,523 Total unamortized debt issue cost, net (25,070) (24,408) Total long-term debt, net of debt issue costs $ 2,902,192 $ 2,993,115 During the three months ended March 31, 2020, the Company did not issue any long-term debt. As of March 31, 2020, and December 31, 2019, the Company had $61.8 million and $61.7 million, respectively, in letters of credit and surety bonds outstanding with various banks and surety institutions. |
Gain on Sale of ExpressJet
Gain on Sale of ExpressJet | 3 Months Ended |
Mar. 31, 2020 | |
Gain on Sale of ExpressJet | |
Gain on Sale of ExpressJet | Note 10 — Gain on Sale of ExpressJet On January 22, 2019, the Company completed the sale of its former wholly owned subsidiary ExpressJet. The Company recorded a gain of $46.5 million before income tax from the sale of ExpressJet. The closing of the transaction was completed in two parts, through an asset sale and stock sale, as further described below. Asset Sale On January 11, 2019, pursuant to the terms and conditions of the Asset Purchase Agreement, dated as of December 17, 2018, by and among the Company, ExpressJet and United, United acquired certain specified assets and liabilities of ExpressJet, including, among other things, aircraft engines, auxiliary power units, rotable spare parts, ground support equipment and flight training equipment for $60.8 million in cash, subject to certain purchase price adjustments (the “Asset Sale”). Certain assets and liabilities of ExpressJet were expressly excluded from the Asset Sale. Stock Sale Additionally, on January 22, 2019, pursuant to the terms and conditions of the Stock Purchase Agreement, dated as of December 17, 2018, by and among the Company and ManaAir, LLC, a company in which United owns a minority interest (the “Buyer”), the Buyer acquired all of the outstanding shares of capital stock of ExpressJet from the Company for $18.8 million in cash, subject to certain purchase price adjustments (the “Stock Sale,”). To facilitate payment of the purchase price for the Stock Sale, at the closing of the Stock Sale, the Company loaned $26 million to Kair Enterprises, Inc. (the “Borrower”), the majority owner of the Buyer. Such loan accrues interest at the rate of 6.85% per annum, matures on the last business day of the last month immediately preceding the two-year anniversary of the closing of the Stock Sale and is secured by, among other things, the Borrower’s ownership interests in the Buyer. |
Special Items
Special Items | 3 Months Ended |
Mar. 31, 2020 | |
Special Items | |
Special Items | Note 11 — Special Items During the three months ended March 31, 2019, the Company terminated an agreement with an aircraft manufacturer that obligated the Company to future aircraft lease return conditions on aircraft the Company leased. In conjunction with the terminated agreement, the aircraft manufacturer released the Company from the future aircraft lease return obligations and the Company agreed to terminate aircraft part credits previously issued by the manufacturer to the Company. As a result of the terminated agreement, the Company recorded a non-cash expense of Additionally, during the three months ended March 31, 2019, the Company incurred $3.4 million of employee severance related costs associated with the sale of ExpressJet that are also reflected in special items. The Company had no special expense items for the three months ended March 31, 2020. |
Investment in Other Companies
Investment in Other Companies | 3 Months Ended |
Mar. 31, 2020 | |
Investment in Other Companies | |
Investment in Other Companies | Note 12 — Investment in Other Companies During 2019, the Company created a joint venture with Regional One, Inc. (“Regional One”) by investing $22.3 million for a 75% ownership interest in Aero Engines, LLC. (“Aero Engines”). The primary purpose of Aero Engines is to lease engines to third parties. Aero Engines requires unanimous approval from the Company and Regional One for its engine purchases, dispositions, lease agreements with third parties and all other material transactions. The Company determined Aero Engines is a variable interest entity as the Company has a 75% ownership interest in Aero Engines and all material decisions require unanimous approval from the Company and Regional One, resulting in disproportionate ownership rights relative to voting rights. As unanimous approval is required for all Aero Engines’ material activities. Aero Engines has no primary beneficiary. The Company accounts for its investment in Aero Engines under the equity method. The Company’s exposure in its investment in Aero Engines primarily consists of the Company’s portion of income or loss from Aero Engines’ engine lease agreements with third parties and the Company’s ownership percentage in Aero Engines’ engines book value. The Company purchased |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Taxes | |
Income Taxes | Note 13 — Income Taxes The Company’s effective tax rate for the three months ended March 31, 2020 was 23.3%. The Company’s effective tax rate for the three months ended March 31, 2020 varied from the federal statutory rate of 21.0% primarily due to the provision for state income taxes and the impact of non-deductible expenses, partially offset by a $1.4 million discrete tax benefit from excess tax deductions generated from employee equity transactions that occurred during the three months ended March 31, 2020. The Company’s effective tax rate for the three months ended March 31, 2019 was 23.0%. The Company’s effective tax rate for the three months ended March 31, 2019 varied from the federal statutory rate of 21.0% primarily due to the provision for state income taxes and the impact of non-deductible expenses, partially offset by a $2.3 million discrete tax benefit from excess tax deductions generated from employee equity transactions that occurred during the three months ended March 31, 2019. |
Legal Matters
Legal Matters | 3 Months Ended |
Mar. 31, 2020 | |
Legal Matters | |
Legal Matters | Note 14 — Legal Matters The Company is subject to certain legal actions which it considers routine to its business activities. As of March 31, 2020, the Company’s management believed, after consultation with legal counsel, that the ultimate outcome of such legal matters was not likely to have a material adverse effect on the Company’s financial position, liquidity or results of operations. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events | |
Subsequent Events | Note 15 — Subsequent Events On April 23, 2020, SkyWest Airlines entered into the PSP Agreement with Treasury with respect to the Payroll Support Program under the CARES Act. The CARES Act also provides for up to $25 billion in secured loans to the airline industry, and the Company has applied for and expects to be eligible for approximately $497.0 million under the loan program and is currently evaluating its level of participation. Payroll Support Program Agreement Pursuant to the PSP Agreement, SkyWest Airlines expects to receive from Treasury approximately In connection with the receipt of financial assistance under the Payroll Support Program, SkyWest Airlines is required to comply with the relevant provisions of the CARES Act, including the requirement that the funding be used exclusively for the continuation of payment of employee wages, salaries and benefits. SkyWest Airlines and, in some cases, the Company will also be subject to certain restrictions, including, but not limited to, limitations on involuntary terminations and furloughs through September 30, 2020, requirements to maintain certain levels of scheduled service, restrictions on the payment of dividends and the repurchase of shares through September 30, 2021, and certain limitations on executive compensation. Promissory Note As partial compensation to Treasury for the provision of financial assistance under the PSP Agreement, SkyWest Airlines issued the Promissory Note to Treasury on the Closing Date. The Promissory Note provides for SkyWest Airlines’ unconditional promise to pay to Treasury the principal sum of up to approximately $101.4 million. On the Closing Date, the principal amount of the Promissory Note was approximately $35.7 million, and such principal amount will be increased by an amount equal to 30% of each additional disbursement of grants to SkyWest Airlines under the PSP Agreement on each Disbursement Date following the Closing Date. The Promissory Note will bear interest at a rate equal to 1.00% per annum until the fifth anniversary of the Closing Date, and 2.00% plus an interest rate based on the secured overnight financing rate per annum (but not less than 0.00%) thereafter until the tenth anniversary of the Closing Date (the “Maturity Date”). Accrued interest will be payable in arrears on the last business day of each of March and September of each year, beginning with September 30, 2020. The aggregate unpaid principal amount of the Promissory Note, all accrued and unpaid interest and all other amounts payable under the Promissory Note will be due and payable on the Maturity Date. SkyWest Airlines may, at any time, make voluntary prepayments of amounts due under the Promissory Note without penalty or premium. Within 30 days of a Change of Control (as defined in the Promissory Note), SkyWest Airlines is required to make mandatory prepayments of the aggregate principal amount outstanding and any accrued interest or other amounts owing under the Promissory Note at such time. The Promissory Note is SkyWest Airlines’ senior unsecured obligation, and the guarantee of the Promissory Note is the senior unsecured obligation of the Company. The Promissory Note contains certain events of default, including cross-default with respect to acceleration or failure to pay at maturity other material indebtedness of SkyWest Airlines and the Company. Subject to certain grace periods, upon the occurrence of an event of default, the outstanding obligations under the Promissory Note may, and in certain circumstances will automatically, be accelerated and become due and payable immediately. Warrant Agreement and Warrants In connection with the PSP Agreement and as partial compensation to Treasury for the provision of financial assistance under the PSP Agreement, the Company has agreed to issue warrants (each a “Warrant” and, collectively, the “Warrants”) to Treasury to purchase up to an aggregate of On the Closing Date, the Company issued a Warrant to Treasury to purchase 125,804 shares of the Company’s common stock. On each Disbursement Date, the Company will issue to Treasury an additional Warrant to purchase a number of shares of its common stock determined by the quotient of (a) the product of the amount by which the principal amount of the Promissory Note is increased on the closing date of such Warrant, multiplied by 0.1, divided by (b) the Exercise Price. The Warrants are freely transferable and do not have any voting rights. The Warrant Agreement also provides for certain registration rights. The right to purchase Warrant Shares expires on the fifth anniversary of the date of issuance of each Warrant. The Warrants will be exercisable either through net share settlement or cash, at the Company’s option. |
Condensed Consolidated Financ_2
Condensed Consolidated Financial Statements (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Condensed Consolidated Financial Statements | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements of SkyWest, Inc. (“SkyWest” or the “Company”) and its operating subsidiary SkyWest Airlines, Inc. (“SkyWest Airlines”) and its leasing subsidiary SkyWest Leasing, Inc. (“SkyWest Leasing”) included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). On January 22, 2019, the Company completed the sale of its former wholly owned subsidiary, ExpressJet Airlines, Inc. (“ExpressJet”). The Company’s financial and operating results presented in this Report include the financial results of ExpressJet for the period of time ExpressJet was operating as a subsidiary of the Company. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the interim periods presented. All adjustments are of a normal recurring nature, unless otherwise disclosed. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Due in part to the severe impacts from the global COVID-19 (coronavirus) pandemic, in addition to other factors, the results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results will likely differ, and may differ materially, from those estimates and assumptions. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Standards In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” (“Topic 326”), which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosure regarding significant estimates and judgments used in estimating credit losses. Topic 326 is effective for the Company beginning January 1, 2020. The Company adopted Topic 326 on January 1, 2020. The Company’s primary financial assets as of December 31, 2019 included trade receivables from its flying agreements, a note receivable from the sale of ExpressJet, and receivables from aircraft manufacturers and other third parties in the airline industry. The Company recorded a credit loss of |
Flying Agreements Revenue and_2
Flying Agreements Revenue and Lease, Airport Services and Other Revenues (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Agreements with other airlines | |
Schedule of future minimum rental payments for operating leases | April 2020 through December 2020 $ 75,137 2021 85,409 2022 75,776 2023 69,623 2024 28,320 Thereafter 100,234 $ 434,499 |
Schedule of revenue by type | The following table represents the Company’s flying agreements revenue by type for the three-month periods ended March 31, 2020 and 2019 (in thousands): For the three months ended March 31, 2020 2019 Capacity purchase agreements revenue: flight operations $ 366,409 $ 386,545 Capacity purchase agreements revenue: aircraft lease revenue 242,734 207,381 Prorate agreements revenue 100,351 106,075 Flying agreements revenue $ 709,494 $ 700,001 |
Schedule of details of agreements with other airlines | The following table summarizes the significant provisions of each code-share agreement SkyWest Airlines has with each major airline partner: Delta Connection Agreements Agreement Aircraft type Number of Term / Termination Delta Connection Agreement (capacity purchase agreement) • CRJ 200 • CRJ 700 • CRJ 900 • E175 55 8 43 62 • Individual aircraft have scheduled removal dates from 2020 to 2029 Delta Connection Prorate Agreement (prorate arrangement) • CRJ 200 27 • Terminable with 30-day notice United Express Agreements Agreement Aircraft type Number of Term / Termination United Express Agreements (capacity purchase agreement) • CRJ 200 • CRJ 700 • E175 70 19 69 • Individual aircraft have scheduled removal dates from 2022 to 2029 United Express Prorate Agreement (prorate arrangement) • CRJ 200 31 • Terminable with 120-day notice American Agreements Agreement Aircraft type Number of Term / Termination American Agreement (capacity purchase agreement) • CRJ 700 61 • Individual aircraft have scheduled removal dates from 2022 to 2025 American Prorate Agreement (prorate arrangement) • CRJ 200 7 • Terminable with 120-day notice Alaska Capacity Purchase Agreement Agreement Aircraft type Number of Term / Termination Alaska Agreement (capacity purchase agreement) • E175 32 • Individual aircraft have scheduled removal dates from 2027 to 2030 |
Schedule of changes in allowance for credit losses | Allowance for Credit Losses Balance at January 1, 2020 $ 15,388 Additions to credit loss reserve 3,756 Write-offs charged against the allowance — Balance at March 31, 2020 $ 19,144 |
Aircraft | |
Agreements with other airlines | |
Schedule of future minimum rental payments for operating leases | April 2020 through December 2020 $ 23,484 2021 27,849 2022 27,606 2023 24,704 2024 24,396 Thereafter 87,235 $ 215,274 |
Airport customer service and other | |
Agreements with other airlines | |
Schedule of revenue by type | For the three months ended March 31, 2020 2019 Airport customer service revenue $ 9,896 $ 14,635 Operating lease revenue 10,546 9,058 Lease, airport services and other $ 20,442 $ 23,693 |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Net Income Per Common Share | |
Schedule of net income per common share | The calculation of the weighted average number of shares of common stock outstanding for Basic EPS and Diluted EPS for the periods indicated (in thousands, except per share data) is as follows: Three Months Ended March 31, 2020 2019 Numerator: Net Income $ 29,988 $ 88,181 Denominator: Weighted average number of common shares outstanding 50,277 51,440 Effect of outstanding share-based awards 282 658 Weighted average number of shares for diluted net income per common share 50,559 52,098 Basic earnings per share $ 0.60 $ 1.71 Diluted earnings per share $ 0.59 $ 1.69 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting | |
Schedule of Company's segment data | The following represents the Company’s segment data for the three-month periods ended March 31, 2020 and 2019 (in thousands): Three months ended March 31, 2020 SkyWest SkyWest Airlines ExpressJet Leasing Consolidated Operating revenues (1) $ 606,842 $ — $ 123,094 $ 729,936 Operating expense 594,141 — 69,474 663,615 Depreciation and amortization expense 51,775 — 59,933 111,708 Interest expense 2,541 — 27,663 30,204 Segment profit (2) 10,160 — 25,957 36,117 Total assets (as of March 31, 2020) 2,650,094 — 4,011,317 6,661,411 Capital expenditures (including non-cash) 38,879 — 72,245 111,124 Three months ended March 31, 2019 SkyWest SkyWest Airlines ExpressJet Leasing Consolidated Operating revenues (1) $ 585,768 $ 24,050 $ 113,876 $ 723,694 Operating expense 545,901 28,690 52,684 627,275 Depreciation and amortization expense 40,053 971 48,962 89,986 Special Items 18,508 3,361 — 21,869 Interest expense 3,818 — 28,689 32,507 Segment profit (loss) (2) 36,049 (4,640) 32,503 63,912 Total assets (as of March 31, 2019) 2,738,248 — 3,806,284 6,544,532 Capital expenditures (including non-cash) 68,650 — 345,929 414,579 (1) Prorate revenue and airport customer service revenue are primarily reflected in the SkyWest Airlines segment. (2) Segment profit (loss) is equal to operating income less interest expense . |
Leases, Commitments and Conti_2
Leases, Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases, Commitments and Contingencies | |
Summary of related terms and discount rates | March 31, 2020 Weighted-average remaining lease term for operating leases 6.8 years Weighted-average discount rate for operating leases 6.4% |
Summary of lease costs | For the three months ended March 31, 2020 2019 Operating lease cost $ 25,018 $ 27,221 Variable and short-term lease cost 1,344 1,475 Sublease income (1,571) — Total lease cost $ 24,791 $ 28,696 |
Schedule of future minimum rental payments for operating leases | April 2020 through December 2020 $ 75,137 2021 85,409 2022 75,776 2023 69,623 2024 28,320 Thereafter 100,234 $ 434,499 |
Summary of commitments and obligations | The following table summarizes the Company’s commitments and obligations as noted for each of the next five years and thereafter (in thousands): Total Apr - Dec 2020 2021 2022 2023 2024 Thereafter Operating lease payments for aircraft and facility obligations $ 434,499 $ 75,137 $ 85,409 $ 75,776 $ 69,623 $ 28,320 $ 100,234 Firm aircraft and spare engine commitments 714,797 435,183 274,114 5,500 — — — Interest commitments (1) 543,153 88,581 104,678 90,251 73,946 59,373 126,324 Principal maturities on long-term debt 2,927,262 277,692 352,005 365,907 374,906 327,630 1,229,122 Total commitments and obligations $ 4,619,711 $ 876,593 $ 816,206 $ 537,434 $ 518,475 $ 415,323 $ 1,455,680 (1) At March 31, 2020, all of the Company’s total long-term debt had fixed interest rates . |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Schedule of assets measured at fair value on a recurring basis | Fair Value Measurements as of March 31, 2020 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 289,544 $ 289,544 $ — $ — Marketable securities Bonds and bond funds $ 179,964 $ — $ 179,964 $ — Commercial paper 108,387 — 108,387 — 288,351 — 288,351 — Total assets measured at fair value $ 577,895 $ 289,544 $ 288,351 $ — Fair Value Measurements as of December 31, 2019 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 87,206 $ 87,206 $ — $ — Marketable securities Bonds and bond funds $ 267,243 $ — $ 267,243 $ — Commercial paper 165,723 — 165,723 — 432,966 — 432,966 — Total assets measured at fair value $ 520,172 $ 87,206 $ 432,966 $ — |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Long-Term Debt | |
Schedule of long-term debt | Long-term debt consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands): March 31, 2020 December 31, 2019 Current portion of long-term debt $ 368,558 $ 367,954 Current portion of unamortized debt issue cost, net (3,979) (3,828) Current portion of long-term debt, net of debt issue costs $ 364,579 $ 364,126 Long-term debt, net of current maturities $ 2,558,704 $ 2,649,569 Long-term portion of unamortized debt issue cost, net (21,091) (20,580) Long-term debt, net of current maturities and debt issue costs $ 2,537,613 $ 2,628,989 Total long-term debt (including current portion) $ 2,927,262 $ 3,017,523 Total unamortized debt issue cost, net (25,070) (24,408) Total long-term debt, net of debt issue costs $ 2,902,192 $ 2,993,115 |
Condensed Consolidated Financ_3
Condensed Consolidated Financial Statements (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 |
Recent Accounting Pronouncements | ||
Credit loss | $ 3,756 | |
Topic 326 | ||
Recent Accounting Pronouncements | ||
Credit loss | $ 11,600 |
Impact of the COVID-19 Pandem_2
Impact of the COVID-19 Pandemic (Details) $ in Millions | Apr. 24, 2020USD ($) | Apr. 23, 2020USD ($) | Apr. 30, 2020item | Mar. 31, 2020USD ($)aircraft | Dec. 31, 2020aircraft |
Unusual Risk or Uncertainty [Line Items] | |||||
Liquid Assets | $ 644.1 | ||||
Cash and Marketable Securities | 577.9 | ||||
Line of credit facility, reduction of amount available | 66.2 | ||||
Maximum borrowing capacity | $ 75 | ||||
Forecast | |||||
Unusual Risk or Uncertainty [Line Items] | |||||
Number of daily departures | item | 2,500 | ||||
Minimum | Subsequent event | COVID-19 | |||||
Unusual Risk or Uncertainty [Line Items] | |||||
Number of daily departures | item | 800 | ||||
Maximum | Subsequent event | |||||
Unusual Risk or Uncertainty [Line Items] | |||||
CARES Act, secured loans to airline industry | $ 25,000 | ||||
Maximum | Subsequent event | COVID-19 | |||||
Unusual Risk or Uncertainty [Line Items] | |||||
Number of daily departures | item | 900 | ||||
PSP agreement | Subsequent event | |||||
Unusual Risk or Uncertainty [Line Items] | |||||
Grants receivable | $ 438 | ||||
Grants Received Percentage | 50.00% | ||||
Loan Program | Subsequent event | |||||
Unusual Risk or Uncertainty [Line Items] | |||||
Maximum borrowing capacity | $ 497 | ||||
Sky West Airlines Inc | American Prorate Agreement | |||||
Unusual Risk or Uncertainty [Line Items] | |||||
Number of aircraft | aircraft | 7 | ||||
CRJ 200 | Sky West Airlines Inc | Delta Connection Agreement | |||||
Unusual Risk or Uncertainty [Line Items] | |||||
Number of aircraft | aircraft | 55 | ||||
CRJ 200 | Sky West Airlines Inc | American Prorate Agreement | Forecast | |||||
Unusual Risk or Uncertainty [Line Items] | |||||
Number of aircraft removed from service | aircraft | 7 |
Flying Agreements Revenue and_3
Flying Agreements Revenue and Lease, Airport Services and Other Revenues - Flying Agreements (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2020USD ($)aircraft | Mar. 31, 2019USD ($) | Jun. 30, 2020USD ($)aircraft | Dec. 31, 2020USD ($)aircraft | Dec. 31, 2019USD ($) | |
Agreements with other airlines | |||||
Percentage of ASMs flown under fixed-fee arrangements | 85.90% | ||||
Percentage of ASMs flown under pro-rate arrangements | 14.10% | ||||
Revenues [Abstract] | |||||
Operating revenues | $ 729,936 | $ 723,694 | |||
Rental income under operating leases | |||||
Operating lease revenue | 10,546 | 9,058 | |||
Future minimum rental income | |||||
April 2020 through December 2020 | 23,484 | ||||
2021 | 27,849 | ||||
2022 | 27,606 | ||||
2023 | 24,704 | ||||
2024 | 24,396 | ||||
Thereafter | 87,235 | ||||
Total | 215,274 | ||||
Property and equipment and related assets | 5,393,738 | $ 5,394,681 | |||
Balance | 15,388 | $ 15,388 | $ 15,388 | ||
Additions to credit loss reserve | 3,756 | ||||
Balance | $ 19,144 | ||||
Sky West Airlines Inc | Delta Connection Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 27 | ||||
Agreement term | 30 days | ||||
Sky West Airlines Inc | United Express Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 31 | ||||
Agreement term | 120 days | ||||
Sky West Airlines Inc | American Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 7 | ||||
Agreement term | 120 days | ||||
Third Party Lease | |||||
Future minimum rental income | |||||
Property and equipment and related assets | $ 154,100 | ||||
CRJ 200 | Sky West Airlines Inc | Delta Connection Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 55 | ||||
Number of aircraft parked and stored | aircraft | 36 | ||||
Additional depreciation | $ 15,000 | ||||
Number of aircraft leased | aircraft | 19 | ||||
CRJ 200 | Sky West Airlines Inc | United Express Agreements | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 70 | ||||
CRJ 200 | Sky West Airlines Inc | Forecast | Delta Connection Agreement | |||||
Future minimum rental income | |||||
Number of aircraft parked and stored | aircraft | 36 | ||||
Additional depreciation | $ 29,100 | ||||
CRJ 700 | American Capacity Purchase Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 61 | ||||
Number of aircraft to be placed in service | aircraft | 9 | ||||
Total number of aircraft operated | aircraft | 70 | ||||
CRJ 700 | Sky West Airlines Inc | Delta Connection Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 8 | ||||
CRJ 700 | Sky West Airlines Inc | United Express Agreements | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 19 | ||||
CRJ 900 | Sky West Airlines Inc | Delta Connection Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 43 | ||||
CRJ 900 | Sky West Airlines Inc | Delta Connection Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft to be placed in service | aircraft | 1 | ||||
Agreement term | 9 years | ||||
E175 | Sky West Airlines Inc | Delta Connection Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 62 | ||||
E175 | Sky West Airlines Inc | Delta Connection Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft to be placed in service | aircraft | 6 | ||||
E175 | Sky West Airlines Inc | United Express Agreements | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 69 | ||||
E175 | Sky West Airlines Inc | American Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft to be placed in service | aircraft | 20 | ||||
E175 | Sky West Airlines Inc | Forecast | Delta Connection Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft to be placed in service | aircraft | 3 | ||||
Current assets | |||||
Future minimum rental income | |||||
Gross receivables current | $ 42,000 | ||||
Other noncurrent assets | |||||
Future minimum rental income | |||||
Gross receivables Non-current | 76,700 | ||||
Flying agreements | |||||
Revenues [Abstract] | |||||
Operating revenues | 709,494 | 700,001 | |||
Flight operations | |||||
Revenues [Abstract] | |||||
Operating revenues | 366,409 | 386,545 | |||
Aircraft lease | |||||
Revenues [Abstract] | |||||
Operating revenues | 242,734 | 207,381 | |||
Prorate agreements | |||||
Revenues [Abstract] | |||||
Operating revenues | 100,351 | 106,075 | |||
Airport customer service revenue | |||||
Revenues [Abstract] | |||||
Operating revenues | 9,896 | 14,635 | |||
Airport customer service and other | |||||
Revenues [Abstract] | |||||
Operating revenues | $ 20,442 | $ 23,693 |
Share-Based Compensation and _2
Share-Based Compensation and Stock Repurchases (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-Based Compensation | ||
Upon vesting, each restricted stock unit and performance share replaced with common stock | 1.00% | |
Stock based compensation expense | $ 1.7 | $ 3.9 |
Employee severance related costs | 7.9 | |
Forfeiture credit | $ 4.5 | |
Common stock repurchased (in shares) | 385,606 | 476,277 |
Common stock repurchased, value | $ 20 | $ 25 |
Payment of income tax obligation on employee equity awards | $ 6.2 | $ 9.3 |
Restricted stock units | ||
Share-Based Compensation | ||
Granted (in dollars per share) | $ 61.45 | |
Restricted stock units | Long Term Incentive Plan 2010 | ||
Share-Based Compensation | ||
Granted (in shares) | 82,505 | |
Vesting period | 3 years | |
Performance stock units | Long Term Incentive Plan 2010 | ||
Share-Based Compensation | ||
Granted (in shares) | 69,132 | |
Vesting period | 3 years | |
Performance stock units | Minimum | Long Term Incentive Plan 2010 | ||
Share-Based Compensation | ||
Percentage number of performance shares awarded | 0.00% | |
Performance stock units | Maximum | Long Term Incentive Plan 2010 | ||
Share-Based Compensation | ||
Percentage number of performance shares awarded | 200.00% | |
Director | ||
Share-Based Compensation | ||
Granted (in shares) | 14,643 | |
Granted (in dollars per share) | $ 61.45 |
Net Income Per Common Share (De
Net Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net Income Per Common Share | ||
Number of outstanding units not included in computation of Diluted EPS (in shares) | 219,000 | 241,000 |
Numerator: | ||
Net income | $ 29,988 | $ 88,181 |
Denominator: | ||
Weighted average number of common shares outstanding | 50,277,000 | 51,440,000 |
Effect of outstanding share-based awards | 282,000 | 658,000 |
Diluted earnings per share weighted average shares | 50,559,000 | 52,098,000 |
Basic earnings per share (in dollars per share) | $ 0.60 | $ 1.71 |
Diluted earnings per share (in dollars per share) | $ 0.59 | $ 1.69 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting | |||
Number of operating segments | segment | 3 | ||
Operating revenues | $ 729,936 | $ 723,694 | |
Operating expense | 663,615 | 627,275 | |
Depreciation and amortization expense | 111,708 | 89,986 | |
Special items | 21,869 | ||
Interest expense | 30,204 | 32,507 | |
Segment profit (loss) | 39,079 | 114,444 | |
Total assets | 6,661,411 | 6,544,532 | $ 6,657,129 |
Capital expenditures (including non-cash) | 111,124 | 414,579 | |
Segments | |||
Segment Reporting | |||
Segment profit (loss) | 36,117 | 63,912 | |
SkyWest Airlines | |||
Segment Reporting | |||
Operating revenues | 606,842 | 585,768 | |
Operating expense | 594,141 | 545,901 | |
Depreciation and amortization expense | 51,775 | 40,053 | |
Special items | 18,508 | ||
Interest expense | 2,541 | 3,818 | |
Total assets | 2,650,094 | 2,738,248 | |
Capital expenditures (including non-cash) | 38,879 | 68,650 | |
SkyWest Airlines | Segments | |||
Segment Reporting | |||
Segment profit (loss) | 10,160 | 36,049 | |
ExpressJet Airlines Inc | |||
Segment Reporting | |||
Operating revenues | 24,050 | ||
Operating expense | 28,690 | ||
Depreciation and amortization expense | 971 | ||
Special items | 3,361 | ||
ExpressJet Airlines Inc | Segments | |||
Segment Reporting | |||
Segment profit (loss) | (4,640) | ||
SkyWest Leasing | |||
Segment Reporting | |||
Operating revenues | 123,094 | 113,876 | |
Operating expense | 69,474 | 52,684 | |
Depreciation and amortization expense | 59,933 | 48,962 | |
Interest expense | 27,663 | 28,689 | |
Total assets | 4,011,317 | 3,806,284 | |
Capital expenditures (including non-cash) | 72,245 | 345,929 | |
SkyWest Leasing | Segments | |||
Segment Reporting | |||
Segment profit (loss) | $ 25,957 | $ 32,503 |
Leases, Commitments and Conti_3
Leases, Commitments and Contingencies - Leases (Details) $ in Thousands | Jan. 01, 2019USD ($) | Mar. 31, 2020USD ($)aircraft | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) |
Lessee, Lease, Description [Line Items] | ||||
Number of aircraft leased | aircraft | 103 | |||
Operating lease right-of-use assets | $ 326,698 | $ 336,009 | ||
Current maturities of lease liabilities | 88,649 | 94,806 | ||
Noncurrent operating leases | 259,039 | $ 259,237 | ||
Operating leases | $ 17,700 | |||
Weighted-average remaining lease term for operating leases | 6 years 9 months 18 days | |||
Weighted-average discount rate for operating leases | 6.40% | |||
Lease costs | ||||
Operating lease cost | $ 25,018 | $ 27,221 | ||
Variable and short-term lease cost | 1,344 | 1,475 | ||
Sublease income | (1,571) | |||
Total lease cost | $ 24,791 | $ 28,696 | ||
Aircraft | ||||
Lessee, Lease, Description [Line Items] | ||||
Impairment adjustment on retained earnings | $ 13,100 | |||
Aircraft | Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining lease term | 1 year | |||
Aircraft | Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining lease term | 10 years | |||
Airport Facilities | Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining lease term | 1 month | |||
Airport Facilities | Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining lease term | 36 years |
Leases, Commitments and Conti_4
Leases, Commitments and Contingencies - Future Minimum Rental Payment (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)aircraft | |
Future minimum rental payments required under operating leases | |
April 2020 through December 2020 | $ 75,137 |
2021 | 85,409 |
2022 | 75,776 |
2023 | 69,623 |
2024 | 28,320 |
Thereafter | 100,234 |
Total | $ 434,499 |
E175 | |
Future minimum rental payments required under operating leases | |
Number of aircraft under firm purchase commitment | aircraft | 26 |
CRJ 700 | |
Future minimum rental payments required under operating leases | |
Number of aircraft under firm purchase commitment | aircraft | 2 |
Leases, Commitments and Conti_5
Leases, Commitments and Contingencies - Commitments and Obligations (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Operating lease payments for aircraft and facility obligations | ||
Apr - Dec 2020 | $ 75,137 | |
2021 | 85,409 | |
2022 | 75,776 | |
2023 | 69,623 | |
2024 | 28,320 | |
Thereafter | 100,234 | |
Total | 434,499 | |
Firm aircraft and spare engine commitments | ||
Apr - Dec 2020 | 435,183 | |
2021 | 274,114 | |
2022 | 5,500 | |
Total | 714,797 | |
Interest commitments | ||
Apr - Dec 2020 | 88,581 | |
2021 | 104,678 | |
2022 | 90,251 | |
2023 | 73,946 | |
2024 | 59,373 | |
Thereafter | 126,324 | |
Total | 543,153 | |
Principal maturities on long-term debt | ||
Apr - Dec 2020 | 277,692 | |
2021 | 352,005 | |
2022 | 365,907 | |
2023 | 374,906 | |
2024 | 327,630 | |
Thereafter | 1,229,122 | |
Total long-term debt | 2,927,262 | $ 3,017,523 |
Total commitments and obligations | ||
Apr - Dec 2020 | 876,593 | |
2021 | 816,206 | |
2022 | 537,434 | |
2023 | 518,475 | |
2024 | 415,323 | |
Thereafter | 1,455,680 | |
Total | $ 4,619,711 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value Measurements | ||
Marketable securities | $ 288,351 | $ 432,966 |
Fair Value of Financial Instruments | ||
Carrying amount of long-term debt | 2,902,192 | 2,993,115 |
Recurring | ||
Fair Value Measurements | ||
Cost of cash and cash equivalents and available for sale securities | 577,900 | 520,200 |
Recurring | Fair value | ||
Fair Value Measurements | ||
Cash and cash equivalents | 289,544 | 87,206 |
Marketable securities | 288,351 | 432,966 |
Total assets measured at fair value | 577,895 | 520,172 |
Recurring | Fair value | Bonds and bond funds | ||
Fair Value Measurements | ||
Marketable securities | 179,964 | 267,243 |
Recurring | Fair value | Commercial paper | ||
Fair Value Measurements | ||
Marketable securities | 108,387 | 165,723 |
Recurring | Level 1 | ||
Fair Value Measurements | ||
Cash and cash equivalents | 289,544 | 87,206 |
Total assets measured at fair value | 289,544 | 87,206 |
Recurring | Level 2 | ||
Fair Value Measurements | ||
Marketable securities | 288,351 | 432,966 |
Total assets measured at fair value | 288,351 | 432,966 |
Fair Value of Financial Instruments | ||
Fair value of long-term debt | 2,960,000 | 2,990,000 |
Carrying amount of long-term debt | 2,930,000 | 3,020,000 |
Recurring | Level 2 | Bonds and bond funds | ||
Fair Value Measurements | ||
Marketable securities | 179,964 | 267,243 |
Recurring | Level 2 | Commercial paper | ||
Fair Value Measurements | ||
Marketable securities | $ 108,387 | $ 165,723 |
Long-term Debt (Details)
Long-term Debt (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)aircraft | Dec. 31, 2019USD ($) | |
Debt Instrument [Line Items] | ||
Current portion long-term debt | $ 368,558 | $ 367,954 |
Less current portion of unamortized debt issue cost, net | (3,979) | (3,828) |
Current portion of long-term debt, net of debt issue costs | 364,579 | 364,126 |
Long-term debt, net of current maturities | 2,558,704 | 2,649,569 |
Less long-term portion of unamortized debt issue cost, net | (21,091) | (20,580) |
Long-term debt, net of current maturities and debt issue costs | 2,537,613 | 2,628,989 |
Total long-term debt (including current portion) | 2,927,262 | 3,017,523 |
Total unamortized debt issue cost, net | (25,070) | (24,408) |
Total | 2,902,192 | 2,993,115 |
Debt issued | $ 0 | |
Number of aircraft leased | aircraft | 103 | |
Maximum borrowing capacity | $ 75,000 | |
Amount outstanding | 0 | |
Current borrowing capacity | 66,200 | |
Letters of credit and surety bonds | ||
Debt Instrument [Line Items] | ||
Amount outstanding | 61,800 | $ 61,700 |
Letters of credit | ||
Debt Instrument [Line Items] | ||
Amount outstanding | $ 8,800 |
Gain on Sale of ExpressJet (Det
Gain on Sale of ExpressJet (Details) - USD ($) $ in Thousands | Jan. 22, 2019 | Jan. 11, 2019 | Mar. 31, 2019 |
Gain on sale | $ 46,525 | ||
Interest rate (as a percent) | 6.85% | ||
Asset Purchase Agreement | ExpressJet | |||
Proceeds from sale of equipment | $ 60,800 | ||
Stock Purchase Agreement | ExpressJet | |||
Cash received from stock sale | $ 18,800 | ||
Amount loaned to Kair Enterprises, Inc | $ 26,000 |
Special Items (Details)
Special Items (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Special Items | ||
Agreement termination non cash expense | $ 18.5 | |
Employee severance | $ 3.4 | |
Special expense items | $ 0 |
Investment in Other Companies (
Investment in Other Companies (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($)engine | |
Number of spare engines purchased | engine | 15 | |
Long-term debt | $ 2,902,192 | $ 2,993,115 |
Aero Engines, LLC. | ||
Payments to acquire interest in joint venture | $ 22,300 | |
Investment ownership (as a percent) | 75.00% | |
Number of spare engines sold to Aero Engines | engine | 15 | |
Long-term debt | 0 | |
Investment balance in Aero Engines | 24,300 | |
Company's portion of income generated by Aero Engines | $ 400 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Effective tax rate (as a percent) | 23.30% | 23.00% |
Statutory Federal income tax rate (as a percent) | 21.00% | 21.00% |
Accounting Standards Update 2016-09 | ||
Discrete tax benefit | $ 1.4 | $ 2.3 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 24, 2020 | Apr. 23, 2020 | Jan. 22, 2019 | Mar. 31, 2020 |
Subsequent Event [Line Items] | ||||
Maximum borrowing capacity | $ 75 | |||
Promissory Note | ||||
Interest rate (as a percent) | 6.85% | |||
Subsequent event | Maximum | ||||
Subsequent Event [Line Items] | ||||
CARES Act, secured loans to airline industry | $ 25,000 | |||
PSP agreement | Subsequent event | ||||
Subsequent Event [Line Items] | ||||
Grants receivable | $ 438 | |||
Grants Received Percentage | 50.00% | |||
PSP agreement | Subsequent event | Warrant Shares | ||||
Warrants and Rights Note Disclosure [Abstract] | ||||
Warrants to purchase shares | 357,317 | |||
Warrants exercise price | $ 28.38 | |||
PSP agreement | Subsequent event | Common stock warrants | ||||
Warrants and Rights Note Disclosure [Abstract] | ||||
Warrants to purchase shares | 125,804 | |||
Quotient percentage for additional warrants to be issued | 0.1 | |||
PSP agreement | Subsequent event | Promissory note | ||||
Promissory Note | ||||
Principal amount | $ 35.7 | |||
Increase in principal amount (Percentage) | 30.00% | |||
Represents the number of days for voluntary prepayments of amounts due under the Promissory Note without penalty or premium. | 30 days | |||
PSP agreement | Subsequent event | Promissory note | Maximum | ||||
Promissory Note | ||||
Principal amount | $ 101.4 | |||
PSP agreement | Subsequent event | Direct grant | Maximum | ||||
Promissory Note | ||||
Principal amount | $ 336.6 | |||
PSP agreement | Subsequent event | Until the fifth anniversary of the Closing Date | Promissory note | ||||
Promissory Note | ||||
Interest rate (as a percent) | 1.00% | |||
PSP agreement | Subsequent event | Thereafter until the tenth anniversary of the Closing Date | Promissory note | ||||
Promissory Note | ||||
Interest rate (as a percent) | 2.00% | |||
PSP agreement | Subsequent event | Thereafter until the tenth anniversary of the Closing Date | Promissory note | Minimum | ||||
Promissory Note | ||||
Interest rate (as a percent) | 0.00% | |||
Loan Program | Subsequent event | ||||
Subsequent Event [Line Items] | ||||
Maximum borrowing capacity | $ 497 |