Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 28, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
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 | |
Trading Symbol | SKYW | |
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 | |
Entity Common Stock, Shares Outstanding | 42,062,796 | |
Entity Central Index Key | 0000793733 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 114,433 | $ 102,984 |
Marketable securities | 747,916 | 944,231 |
Receivables, net | 104,706 | 100,523 |
Inventories, net | 123,572 | 123,209 |
Other current assets | 92,506 | 100,334 |
Total current assets | 1,183,133 | 1,371,281 |
PROPERTY AND EQUIPMENT: | ||
Aircraft and rotable spares | 8,233,312 | 8,143,614 |
Deposits on aircraft | 23,931 | 23,931 |
Buildings and ground equipment | 273,425 | 265,019 |
Total property and equipment, gross | 8,530,668 | 8,432,564 |
Less-accumulated depreciation and amortization | (3,039,525) | (2,884,084) |
Total property and equipment, net | 5,491,143 | 5,548,480 |
OTHER ASSETS: | ||
Operating lease right-of-use assets | 92,803 | 151,928 |
Long-term receivables and other assets | 348,695 | 342,864 |
Total other assets | 441,498 | 494,792 |
Total assets | 7,115,774 | 7,414,553 |
CURRENT LIABILITIES: | ||
Current maturities of long-term debt | 442,155 | 438,502 |
Accounts payable | 457,310 | 422,001 |
Accrued salaries, wages and benefits | 189,265 | 186,285 |
Current maturities of operating lease liabilities | 18,715 | 71,726 |
Taxes other than income taxes | 22,631 | 20,480 |
Other current liabilities | 35,918 | 33,549 |
Total current liabilities | 1,165,994 | 1,172,543 |
LONG-TERM DEBT, net of current maturities | 2,743,804 | 2,941,772 |
DEFERRED INCOME TAXES PAYABLE | 682,694 | 687,060 |
NONCURRENT OPERATING LEASE LIABILITIES | 73,894 | 88,622 |
OTHER LONG-TERM LIABILITIES | 292,149 | 176,925 |
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; 82,800,633 and 82,592,830 shares issued as of June 30, 2023, and December 31, 2022, respectively | 744,276 | 734,426 |
Retained earnings | 2,230,217 | 2,236,869 |
Treasury stock, at cost, 40,427,758 and 31,994,416 shares as of June 30, 2023, and December 31, 2022, respectively | (816,446) | (619,862) |
Accumulated other comprehensive loss | (808) | (3,802) |
Total stockholders' equity | 2,157,239 | 2,347,631 |
Total liabilities and stockholders' equity | $ 7,115,774 | $ 7,414,553 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
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 | 82,800,633 | 82,592,830 |
Treasury stock, at cost, shares | 40,427,758 | 31,994,416 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
OPERATING REVENUES: | ||||
Total operating revenues | $ 725,643 | $ 799,085 | $ 1,417,474 | $ 1,534,237 |
OPERATING EXPENSES: | ||||
Salaries, wages and benefits | 322,441 | 288,562 | 657,642 | 588,620 |
Aircraft maintenance, materials and repairs | 162,491 | 174,883 | 304,717 | 323,296 |
Depreciation and amortization | 97,169 | 97,249 | 191,318 | 199,994 |
Aircraft fuel | 18,279 | 31,820 | 39,243 | 56,910 |
Airport-related expenses | 16,955 | 17,490 | 35,250 | 36,695 |
Aircraft rentals | 2,428 | 16,024 | 21,956 | 32,020 |
Other operating expenses | 74,020 | 84,455 | 140,192 | 156,052 |
Total operating expenses | 693,783 | 710,483 | 1,390,318 | 1,393,587 |
OPERATING INCOME | 31,860 | 88,602 | 27,156 | 140,650 |
OTHER INCOME (EXPENSE): | ||||
Interest income | 10,494 | 2,559 | 20,527 | 2,984 |
Interest expense | (33,718) | (30,433) | (67,338) | (59,025) |
Other income, net | 9,001 | 12,019 | 11,175 | 12,899 |
Total other expense, net | (14,223) | (15,855) | (35,636) | (43,142) |
INCOME (LOSS) BEFORE INCOME TAXES | 17,637 | 72,747 | (8,480) | 97,508 |
PROVISION (BENEFIT) FOR INCOME TAXES | 2,218 | 18,796 | (1,828) | 25,823 |
NET INCOME (LOSS) | $ 15,419 | $ 53,951 | $ (6,652) | $ 71,685 |
BASIC EARNINGS (LOSS) PER SHARE (in dollars per share) | $ 0.35 | $ 1.07 | $ (0.14) | $ 1.42 |
DILUTED EARNINGS (LOSS) PER SHARE (in dollars per share) | $ 0.35 | $ 1.07 | $ (0.14) | $ 1.42 |
Weighted average common shares: | ||||
Basic (in shares) | 43,837 | 50,522 | 46,614 | 50,501 |
Diluted (in shares) | 44,219 | 50,566 | 46,614 | 50,637 |
COMPREHENSIVE INCOME (LOSS): | ||||
Net income (loss) | $ 15,419 | $ 53,951 | $ (6,652) | $ 71,685 |
Net unrealized appreciation (depreciation) on marketable securities, net of taxes | 1,514 | (1,945) | 2,994 | (1,945) |
TOTAL COMPREHENSIVE INCOME (LOSS) | 16,933 | 52,006 | (3,658) | 69,740 |
Flying agreements | ||||
OPERATING REVENUES: | ||||
Total operating revenues | 700,394 | 773,774 | 1,364,232 | 1,481,837 |
Lease, airport services and other | ||||
OPERATING REVENUES: | ||||
Total operating revenues | $ 25,249 | $ 25,311 | $ 53,242 | $ 52,400 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2021 | $ 722,310 | $ 2,163,916 | $ (618,712) | $ 2,267,514 | |
Balance (in shares) at Dec. 31, 2021 | 82,336 | (31,956) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 17,734 | 17,734 | |||
Exercise of common stock options and vested employee stock awards | $ 27 | 27 | |||
Exercise of common stock options and vested employee stock awards (in shares) | 139 | ||||
Employee income tax paid on vested equity awards | $ (1,123) | (1,123) | |||
Employee income tax paid on vested equity awards (in shares) | (37) | ||||
Sale of common stock under employee stock purchase plan | $ 1,487 | 1,487 | |||
Sale of common stock under employee stock purchase plan (in shares) | 40 | ||||
Stock based compensation expense | $ 4,076 | 4,076 | |||
Balance at Mar. 31, 2022 | $ 727,900 | 2,181,650 | $ (619,835) | 2,289,715 | |
Balance (in shares) at Mar. 31, 2022 | 82,515 | (31,993) | |||
Balance at Dec. 31, 2021 | $ 722,310 | 2,163,916 | $ (618,712) | 2,267,514 | |
Balance (in shares) at Dec. 31, 2021 | 82,336 | (31,956) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 71,685 | ||||
Net unrealized appreciation (depreciation) on marketable securities, net of tax | (1,945) | ||||
Balance at Jun. 30, 2022 | $ 731,210 | 2,235,601 | $ (619,835) | $ (1,945) | 2,345,031 |
Balance (in shares) at Jun. 30, 2022 | 82,515 | (31,993) | |||
Balance at Mar. 31, 2022 | $ 727,900 | 2,181,650 | $ (619,835) | 2,289,715 | |
Balance (in shares) at Mar. 31, 2022 | 82,515 | (31,993) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 53,951 | 53,951 | |||
Stock based compensation expense | $ 3,310 | 3,310 | |||
Net unrealized appreciation (depreciation) on marketable securities, net of tax | (1,945) | (1,945) | |||
Balance at Jun. 30, 2022 | $ 731,210 | 2,235,601 | $ (619,835) | (1,945) | 2,345,031 |
Balance (in shares) at Jun. 30, 2022 | 82,515 | (31,993) | |||
Balance at Dec. 31, 2022 | $ 734,426 | 2,236,869 | $ (619,862) | (3,802) | 2,347,631 |
Balance (in shares) at Dec. 31, 2022 | 82,593 | (31,994) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | (22,071) | (22,071) | |||
Exercise of common stock options and vested employee stock awards | $ 57 | 57 | |||
Exercise of common stock options and vested employee stock awards (in shares) | 130 | ||||
Employee income tax paid on vested equity awards | $ (585) | (585) | |||
Employee income tax paid on vested equity awards (in shares) | (32) | ||||
Sale of common stock under employee stock purchase plan | $ 1,218 | 1,218 | |||
Sale of common stock under employee stock purchase plan (in shares) | 78 | ||||
Stock based compensation expense | $ 4,329 | 4,329 | |||
Treasury stock purchases | $ (100,001) | (100,001) | |||
Treasury stock purchases (in shares) | (5,067) | ||||
Net unrealized appreciation (depreciation) on marketable securities, net of tax | 1,480 | 1,480 | |||
Balance at Mar. 31, 2023 | $ 740,030 | 2,214,798 | $ (720,448) | (2,322) | 2,232,058 |
Balance (in shares) at Mar. 31, 2023 | 82,801 | (37,093) | |||
Balance at Dec. 31, 2022 | $ 734,426 | 2,236,869 | $ (619,862) | (3,802) | 2,347,631 |
Balance (in shares) at Dec. 31, 2022 | 82,593 | (31,994) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | (6,652) | ||||
Net unrealized appreciation (depreciation) on marketable securities, net of tax | 2,994 | ||||
Balance at Jun. 30, 2023 | $ 744,276 | 2,230,217 | $ (816,446) | (808) | 2,157,239 |
Balance (in shares) at Jun. 30, 2023 | 82,801 | (40,428) | |||
Balance at Mar. 31, 2023 | $ 740,030 | 2,214,798 | $ (720,448) | (2,322) | 2,232,058 |
Balance (in shares) at Mar. 31, 2023 | 82,801 | (37,093) | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 15,419 | 15,419 | |||
Stock based compensation expense | $ 4,246 | 4,246 | |||
Treasury stock purchases | $ (95,998) | (95,998) | |||
Treasury stock purchases (in shares) | (3,335) | ||||
Net unrealized appreciation (depreciation) on marketable securities, net of tax | 1,514 | 1,514 | |||
Balance at Jun. 30, 2023 | $ 744,276 | $ 2,230,217 | $ (816,446) | $ (808) | $ 2,157,239 |
Balance (in shares) at Jun. 30, 2023 | 82,801 | (40,428) |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY | |||
Net unrealized appreciation on marketable securities, tax | $ 488 | $ 476 | $ 628 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
NET CASH PROVIDED BY OPERATING ACTIVITIES | $ 333,023 | $ 215,279 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of marketable securities | (533,465) | (1,254,213) |
Sales of marketable securities | 732,774 | 975,649 |
Acquisition of property and equipment: | ||
Aircraft and rotable spare parts | (122,529) | (301,004) |
Buildings and ground equipment | (11,338) | (9,525) |
Proceeds from the sale of property and equipment | 3,815 | 6,275 |
Deposits on aircraft | (37,100) | |
Aircraft deposits applied towards acquired aircraft | 70,501 | |
Decrease (increase) in other assets | 734 | (7,172) |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 69,991 | (556,589) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of long-term debt | 25,000 | 376,753 |
Principal payments on long-term debt | (221,148) | (196,961) |
Payment of debt issuance cost | (108) | (1,223) |
Net proceeds from issuance of common stock | 1,275 | 1,514 |
Employee income tax paid on vested equity awards | (585) | (1,123) |
Purchase of treasury stock | (195,999) | |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (391,565) | 178,960 |
Increase (decrease) in cash and cash equivalents | 11,449 | (162,350) |
Cash and cash equivalents at beginning of period | 102,984 | 258,421 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 114,433 | 96,071 |
Non-cash investing and financing activities: | ||
Acquisition of property and equipment | 73 | 18,234 |
Derecognition of right of use assets | (35,062) | |
Derecognition of operating lease liabilities | 35,062 | |
Cash paid during the period for: | ||
Interest, net of capitalized amounts | 66,131 | 60,197 |
Income taxes | $ 2,902 | $ 217 |
Condensed Consolidated Financia
Condensed Consolidated Financial Statements | 6 Months Ended |
Jun. 30, 2023 | |
Condensed Consolidated Financial Statements | |
Condensed Consolidated Financial Statements | ( 1) Condensed Consolidated Financial Statements Basis of Presentation The condensed consolidated financial statements of SkyWest, Inc. (“SkyWest” or the “Company”), its operating subsidiary SkyWest Airlines, Inc. (“SkyWest Airlines”), its leasing subsidiary SkyWest Leasing, Inc. (“SkyWest Leasing”) and its charter service subsidiary SkyWest Charter, LLC (“SWC”) included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company formed SWC in 2022, with the intent to offer on-demand charter service and public charter service to underserved communities in the United States. 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, 2022. Due in part to the uncertain rate of recovery from workforce shortages, in addition to other factors, the results of operations for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. 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 could differ materially from those estimates and assumptions. |
Flying Agreements Revenue and L
Flying Agreements Revenue and Lease, Airport Services and Other Revenues | 6 Months Ended |
Jun. 30, 2023 | |
Flying Agreements Revenue and Lease, Airport Services and Other Revenues | |
Flying Agreements Revenue and Lease, Airport Services and Other Revenues | (2) Flying Agreements Revenue and Lease, Airport Services and Other Revenues The Company recognizes revenue under its flying agreements and airport services and other service agreements when the service is provided under the applicable agreement. The Company recognizes revenue under its lease agreements ratably over the applicable lease term. Under the Company’s fixed-fee arrangements (referred to as “capacity purchase” agreements) with United Airlines, Inc. (“United”), Delta Air Lines, Inc. (“Delta”), 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, measured in completed block hours, 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 both the six months ended June 30, 2023 and 2022, capacity purchase agreements represented approximately 88.3% of the Company’s flying agreements revenue. Under the Company’s prorate arrangements (also referred to as “prorate” or “revenue-sharing” agreements), 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 determines 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. Certain routes under the Company’s prorate arrangements are subsidized by the U.S. Department of Transportation under the Essential Air Service (“EAS”) program, a program created to ensure small communities in the United States maintain a minimum level of scheduled air service. The EAS contracts are generally two years in duration and the Company recognizes EAS revenue on a per-completed-flight basis pursuant to the terms of each contract. For both the six months ended June 30, 2023 and 2022, prorate flying agreements represented approximately 11.7% of the Company’s flying agreements revenue. The following table represents the Company’s flying agreements revenue by type for the three and six months ended June 30, 2023 and 2022 (in thousands): For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 Capacity purchase agreements flight operations revenue (non-lease component) $ 499,142 $ 549,539 $ 968,058 $ 1,054,347 Capacity purchase agreements fixed aircraft lease revenue 74,042 129,502 148,522 253,587 Capacity purchase agreements variable aircraft lease revenue 44,984 — 88,089 — Prorate agreements revenue 82,226 94,733 159,563 173,903 Flying agreements revenue $ 700,394 $ 773,774 $ 1,364,232 $ 1,481,837 The Company allocates the total consideration received under its capacity purchase agreements between lease and non-lease components based on stand-alone selling prices. 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 accounted for 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 (loss). During the three months ended December 31, 2022, the Company amended certain of its capacity purchase agreements resulting in a portion of the Company’s aircraft lease revenue becoming variable beginning in the fourth quarter of 2022. Additionally, as a result of these capacity purchase agreement amendments executed in 2022, during the six months ended June 30, 2023, the Company deferred recognizing lease revenue on $40.0 million of the allocated fixed monthly lease payments received during the six months ended June 30, 2023, under the straight-line method. The Company has not separately stated aircraft rental income and aircraft rental expense in the consolidated statement of comprehensive income (loss) because the use of the aircraft is not a separate activity of the total service provided under the capacity purchase agreements. A portion of the Company’s compensation under its capacity purchase agreements relates to operating the aircraft, identified as the non-lease component of the capacity purchase agreement. The Company recognizes revenue attributed to the non-lease component received as fixed-fees for each departure, flight hour or block hour on an as-completed basis for each reporting period. The Company recognizes revenue attributed to the non-lease component received as fixed monthly payments per aircraft proportionate to the number of block hours completed during each reporting period, relative to the estimated number of block hours the Company anticipates completing over the remaining contract term. The Company’s total deferred revenue balance as of June 30, 2023 was $262.1 million, including $7.3 million in other current liabilities and $254.8 million in other long-term liabilities. The Company’s unbilled revenue balance was $13.9 million as of June 30, 2023, including $7.2 million in other current assets and $6.7 million in other long-term assets. The Company’s deferred revenue balance was $144.7 million as of December 31, 2022, including $5.2 million in other current liabilities and $139.5 million in other long-term liabilities. The Company’s unbilled revenue balance was $19.9 million as of December 31, 2022, including $9.9 million in other current assets and $10.0 million in other long-term assets. 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. As of June 30, 2023, the Company had 492 aircraft in scheduled service or under contract pursuant to code-share agreements. The following table summarizes the significant provisions of each code-share agreement the Company has with each major airline partner through SkyWest Airlines: United Express Agreements Agreement Aircraft type Number of Aircraft Term / Termination Dates United Express Agreements (capacity purchase agreement) • E175 • CRJ 700 • CRJ 200 90 19 70 • Individual aircraft have scheduled removal dates from 2024 to 2029 United Express Prorate Agreement (prorate agreement) • CRJ 200 19* • Terminable with 120-days’ Total under United Express Agreements 198 Delta Connection Agreements Agreement Aircraft type Number of Aircraft Term / Termination Dates Delta Connection Agreement (capacity purchase agreement) • E175 • CRJ 900 • CRJ 700 83 35 5 • Individual aircraft have scheduled removal dates from 2023 to 2033 Delta Connection Prorate Agreement (prorate agreement) • CRJ 900 • CRJ 700 • CRJ 200 6* 1* 17* • 30-days’ Total under Delta Connection Agreements 147 American Capacity Purchase Agreement Agreement Aircraft type Number of Aircraft Term / Termination Dates American Agreement (capacity purchase agreement) • E175 • CRJ 700 20 85 • Individual aircraft have scheduled removal dates from 2024 to 2032 Total under American Agreement 105 Alaska Capacity Purchase Agreement Agreement Aircraft type Number of Aircraft Term / Termination Dates Alaska Agreement (capacity purchase agreement) • E175 42 • Individual aircraft have scheduled removal dates from 2030 to 2034 * The Company’s prorate agreements are based on specific routes, not a specific aircraft count. The number of aircraft listed above for each prorate agreement approximates the number of aircraft the Company uses to serve the prorate routes. In addition to the contractual arrangements described above, as of June 30, 2023, SkyWest Airlines has a capacity purchase agreement with Delta to place a total of three additional E175 regional jet aircraft (“E175”) from Embraer, S.A. (“Embraer”) into service, with delivery dates currently s cheduled in 2023 and 2024. SkyWest Airlines also has a capacity purchase agreement with Alaska to place one additional E175 aircraft into service with a delivery date currently scheduled for 2025. Final delivery and in-service dates for aircraft to be placed under contract may be adjusted based on various factors. When an aircraft is scheduled to be removed from a capacity purchase arrangement, 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 agreement, leasing the aircraft to a third party or disassembling aircraft components such as the engines and parts to be used as spare inventory or to lease the engines to a third party. Lease, airport services and other revenues primarily consist of revenue generated from aircraft and spare engines leased to third parties and airport customer services, such as gate and ramp agent services at applicable airports where the Company has agreements with third parties. The following table represents the Company’s lease, airport services and other revenues for the three and six months ended June 30, 2023 and 2022 (in thousands): For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 Operating lease revenue $ 16,791 $ 16,450 $ 33,351 $ 33,005 Airport customer service and other revenue 8,458 8,861 19,891 19,395 Lease, airport services and other $ 25,249 $ 25,311 $ 53,242 $ 52,400 The following table summarizes future minimum rental income under operating leases primarily related to leased aircraft and engines that had remaining non-cancelable lease terms as of June 30, 2023 (in thousands): July 2023 through December 2023 $ 22,880 2024 45,553 2025 40,583 2026 35,017 2027 34,995 Thereafter 86,297 Total future minimum rental income under operating leases $ 265,325 Of the Company’s $5.5 billion of net property and equipment as of June 30, 2023, $211.8 million of regional jet aircraft and spare engines were leased to third parties under operating leases. The Company’s mitigation strategy for the residual asset risks of these assets includes 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 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 Company’s operating revenues could be impacted by several factors, including changes to the Company’s code-share agreements with its major airline partners, changes in flight schedules, 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. 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. Allowance for credit losses The Company monitors publicly available credit ratings for entities for which the Company has a significant receivable balance. As of June 30, 2023, the Company had gross receivables of $123.1 million in current assets and gross receivables of $201.7 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 notes receivable. During the six months ended June 30, 2023, the Company wrote-off a $3.6 million receivable that was fully reserved as of December 31, 2022. There were no other significant changes in the outstanding accounts receivable, notes receivable or credit ratings of the entities. The following table summarizes the changes in allowance for credit losses: Allowance for Credit Losses Balance at December 31, 2022 $ 37,385 Adjustments to credit loss reserves 2,086 Write-offs charged against allowance (3,570) Balance at June 30, 2023 $ 35,901 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | (3) Stock-Based Compensation During the six months ended June 30, 2023, the Company granted 125,780 restricted stock units and 391,810 performance shares to certain employees of the Company under the SkyWest, Inc. 2019 Long-Term Incentive Plan. Both the restricted stock units and performance shares have a three-year vesting per share The Company accounts for forfeitures of restricted stock units and performance shares when forfeitures occur. The estimated fair value of the restricted stock units and performance shares is amortized over the applicable vesting periods. Stock-based compensation expense for the performance shares is based on the Company’s anticipated outcome of achieving the performance metrics. During the six months ended June 30, 2023 and 2022, the Company recorded pre-tax stock-based compensation expense of $8.6 million and $7.4 million, respectively. |
Stock Repurchase
Stock Repurchase | 6 Months Ended |
Jun. 30, 2023 | |
Stock Repurchase | |
Stock Repurchase | ( 4) Stock Repurchase The Company’s Board of Directors has adopted stock repurchase programs in both February 2019 and May 2023, which authorize the Company to repurchase shares of the Company’s common stock in the public market or in private transactions, from time to time, at prevailing prices. The Company’s February 2019 stock repurchase During the six months ended June 30, 2023, the Company repurchased 8.4 million shares of common stock for $194.1 million at a weighted average price per share of $23.10. The Company also recorded $1.9 million of excise tax related to the stock repurchases as Treasury Stock in the Company’s Stockholders Equity for the six months ended June 30, 2023. The Company did not have any stock repurchases during the six months ended June 30, 2022. |
Net Income (Loss) Per Common Sh
Net Income (Loss) Per Common Share | 6 Months Ended |
Jun. 30, 2023 | |
Net Income (Loss) Per Common Share | |
Net Income (Loss) Per Common Share | (5) Net Income (Loss) Per Common Share Basic net income (loss) per common share (“Basic EPS”) excludes dilution and is computed by dividing net income (loss) 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 (loss) per common share. Securities that could potentially dilute Basic EPS in the future, and which were excluded from the calculation of Diluted EPS because inclusion of such share would be anti-dilutive, are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 PSP1 and Treasury Loan Warrants (1) — 582 582 291 PSP2 Warrants (2) 125 125 125 125 PSP3 Warrants (3) 78 78 78 78 Employee Stock Awards — 65 676 32 Total antidilutive securities 203 850 1,461 526 (1) Pursuant to the payroll support program established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (“PSP1”) and Loan and Guarantee Agreement with the U.S. Department of the Treasury (“U.S. Treasury”), SkyWest issued to U.S. Treasury warrants to purchase shares of SkyWest common stock for an exercise price of $28.38 per share. (2) Pursuant to the payroll support program established under the Consolidated Appropriations Act, 2021 (“PSP2”), SkyWest issued to U.S. Treasury warrants to purchase shares of SkyWest common stock for an exercise price of $40.41 per share. (3) Pursuant to the payroll support program established under the American Rescue Plan Act of 2021 (“PSP3”), SkyWest issued to U.S. Treasury warrants to purchase shares of SkyWest common stock for an exercise price of $57.47 per share. Additionally, during the six months ended June 30, 2023 and 2022, 538,000 and 350,000 performance shares (at target performance) were excluded from the computation of Diluted EPS because the Company had not achieved the minimum target thresholds for the three and six months ended June 30, 2023 and 2022, respectively. The calculation of the weighted average number of shares of common stock outstanding for Basic EPS and Diluted EPS are as follows for the periods indicated (in thousands, except per share data): Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Numerator: Net income (loss) $ 15,419 $ 53,951 $ (6,652) $ 71,685 Denominator: Basic earnings per share weighted average shares 43,837 50,522 46,614 50,501 Dilutive effect of employee stock awards and warrants 382 44 — 136 Diluted earnings per share weighted average shares 44,219 50,566 46,614 50,637 Basic earnings (loss) per share $ 0.35 $ 1.07 $ (0.14) $ 1.42 Diluted earnings (loss) per share $ 0.35 $ 1.07 $ (0.14) $ 1.42 |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting | |
Segment Reporting | (6) Segment Reporting The Company’s two reporting segments consist of the operations of (1) SkyWest Airlines and SWC (collectively, “SkyWest Airlines and SWC”) and (2) SkyWest Leasing activities. 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 and SWC segment includes revenue earned under the applicable capacity purchase agreements attributed to operating such aircraft and the respective operating costs and revenue and operating expenses attributed to charter flight services. 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 and other activities. 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. Additionally, aircraft removed from SkyWest Airlines’ operations and held for sale are included in the SkyWest Leasing segment. The following represents the Company’s segment data for the three-month periods ended June 30, 2023 and 2022 (in thousands): Three months ended June 30, 2023 SkyWest Airlines SkyWest and SWC Leasing Consolidated Operating revenues (1) $ 586,476 $ 139,167 $ 725,643 Operating expense 624,490 69,293 693,783 Depreciation and amortization expense 37,966 59,203 97,169 Interest expense 4,695 29,023 33,718 Segment profit (loss) (2) (42,709) 40,851 (1,858) Total assets (as of June 30, 2023) 2,570,050 4,545,724 7,115,774 Capital expenditures (including non-cash) 25,609 410 26,019 Three months ended June 30, 2022 SkyWest Airlines SkyWest and SWC Leasing Consolidated Operating revenues (1) $ 664,203 $ 134,882 $ 799,085 Operating expense 636,245 74,238 710,483 Depreciation and amortization expense 44,982 52,267 97,249 Interest expense 2,650 27,783 30,433 Segment profit (2) 25,308 32,861 58,169 Total assets (as of June 30, 2022) 3,011,236 4,325,411 7,336,647 Capital expenditures (including non-cash) 20,010 181,168 201,178 (1) Prorate revenue and airport customer service revenue are primarily reflected in the SkyWest Airlines and SWC segment. (2) Segment profit (loss) is equal to operating income less interest expense. The following represents the Company’s segment data for the six-month periods ended June 30, 2023 and 2022 (in thousands): Six months ended June 30, 2023 SkyWest Airlines SkyWest and SWC Leasing Consolidated Operating revenues (1) $ 1,154,649 $ 262,825 $ 1,417,474 Operating expense 1,257,882 132,436 1,390,318 Depreciation and amortization expense 76,224 115,094 191,318 Interest expense 8,757 58,581 67,338 Segment profit (loss) (2) (111,990) 71,808 (40,182) Total assets (as of June 30, 2023) 2,570,050 4,545,724 7,115,774 Capital expenditures (including non-cash) 46,720 87,220 133,940 Six months ended June 30, 2022 SkyWest Airlines SkyWest and SWC Leasing Consolidated Operating revenues (1) $ 1,267,252 $ 266,985 $ 1,534,237 Operating expense 1,257,273 136,314 1,393,587 Depreciation and amortization expense 92,676 107,318 199,994 Interest expense 4,439 54,586 59,025 Segment profit (2) 5,540 76,085 81,625 Total assets (as of June 30, 2022) 3,011,236 4,325,411 7,336,647 Capital expenditures (including non-cash) 52,706 276,057 328,763 (1) Prorate revenue and airport customer service revenue are primarily reflected in the SkyWest Airlines and SWC segment. (2) Segment profit (loss) is equal to operating income less interest expense. |
Leases, Commitments, Guarantees
Leases, Commitments, Guarantees and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Leases, Commitments, Guarantees and Contingencies | |
Leases, Commitments, Guarantees and Contingencies | (7) Leases, Commitments, Guarantees and Contingencies 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 lease payments based on information available at lease commencement. Aircraft During the six months ended June 30, 2023, the Company acquired 32 CRJ aircraft under an early lease buyout arrangement with the lessor for $125.5 million. As of June 30, 2023, excluding aircraft financed by the Company’s major airline partners that the Company operates for them under contract, the Company leased 11 aircraft under long-term lease agreements with remaining terms ranging from one year to seven years. 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 33 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 June 30, 2023, the Company’s right-of-use assets were $92.8 million, the Company’s current maturities of operating lease liabilities were $18.7 million, and the Company’s noncurrent lease liabilities were $73.9 million. During the six months ended June 30, 2023, the Company paid $17.9 million under operating leases reflected as a reduction from operating cash flows. The table below presents lease related terms and discount rates as of June 30, 2023: Weighted-average remaining lease term for operating leases 9.7 years Weighted-average discount rate for operating leases 6.1% The Company’s lease costs for the three and six months ended June 30, 2023 and 2022 included the following components (in thousands): For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 Operating lease cost $ 7,857 $ 21,822 $ 32,805 $ 43,663 Variable and short-term lease cost 534 805 1,337 1,822 Sublease income (1,351) (1,845) (2,701) (3,648) Total lease cost $ 7,040 $ 20,782 $ 31,441 $ 41,837 As of June 30, 2023, 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 may be renewed or replaced by other leases, or the property may be purchased rather than leased. The following table summarizes future minimum rental payments required under operating leases that had initial or remaining non-cancelable lease terms as of June 30, 2023 (in thousands): July 2023 through December 2023 $ 9,846 2024 22,266 2025 17,188 2026 13,509 2027 12,316 Thereafter 54,344 Total future minimum operating lease payments $ 129,469 As of June 30, 2023, the Company had a firm purchase commitment for four E175 aircraft from Embraer with anticipated delivery dates through 2025. The following table summarizes the Company’s commitments and obligations as noted for each of the next five years and thereafter (in thousands): Total Jul - Dec 2023 2024 2025 2026 2027 Thereafter Operating lease payments for aircraft and facility obligations $ 129,469 $ 9,846 $ 22,266 $ 17,188 $ 13,509 $ 12,316 $ 54,344 Firm aircraft and spare engine commitments 127,337 72,670 26,896 27,771 — — — Interest commitments (1) 515,372 64,590 115,322 95,225 75,663 54,039 110,533 Principal maturities on long-term debt 3,212,622 223,985 444,898 529,506 507,629 461,083 1,045,521 Total commitments and obligations $ 3,984,800 $ 371,091 $ 609,382 $ 669,690 $ 596,801 $ 527,438 $ 1,210,398 (1) At June 30, 2023, the Company’s long-term debt had fixed interest rates. Guarantees In 2022, the Company agreed to guarantee $19.8 million of debt for a 14 CFR Part 135 air carrier. The debt is secured by the Part 135 air carrier’s aircraft and engines and has a five-year term. The purpose of the arrangement is to increase the potential number of commercial pilots in the Company’s hiring pipeline. In exchange for providing the guarantee, the Company received 6.5% of the guaranteed amount as consideration, payable in common stock of the Part 135 air carrier, which will be recorded in “Other income, net” on the Company’s consolidated statements of comprehensive income over the term of the guarantee. The Company also recorded the estimated credit loss associated with the guarantee in “Other long-term liabilities” on the Company’s consolidated balance sheet based on publicly available historical default rates issued by a third party for companies with similar credit ratings, factoring the collateral and guarantee term. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | (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 June 30, 2023, and December 31, 2022, the Company held certain assets that are required to be measured at fair value on a recurring basis. The Company’s assets measured at fair value on a recurring basis are summarized below (in thousands): Fair Value Measurements as of June 30, 2023 Total Level 1 Level 2 Level 3 Marketable Securities Bonds and bond funds $ 525,707 $ — $ 525,707 $ — Commercial paper 222,209 — 222,209 — $ 747,916 $ — $ 747,916 $ — Investments in Other Companies 29,251 10,480 — 18,771 Cash and Cash Equivalents 114,433 114,433 — — Total Assets Measured at Fair Value $ 891,600 $ 124,913 $ 747,916 $ 18,771 Fair Value Measurements as of December 31, 2022 Total Level 1 Level 2 Level 3 Marketable Securities Bonds and bond funds $ 624,254 $ — $ 624,254 $ — Commercial paper 319,977 — 319,977 — $ 944,231 $ — $ 944,231 $ — Investments in Other Companies 21,380 7,200 — 14,180 Cash and Cash Equivalents 102,984 102,984 — — Total Assets Measured at Fair Value $ 1,068,595 $ 110,184 $ 944,231 $ 14,180 The Company’s “marketable securities” classified as Level 2 securities primarily utilize broker quotes in a non-active market for valuation of these securities. See Note 10 “Investments in Other Companies” regarding the Company’s investment in other companies, for the six months ended June 30, 2023. The Company did not make any significant transfers of securities between Level 1, Level 2 and Level 3 during the six months ended June 30, 2023. 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 June 30, 2023, and December 31, 2022, the Company classified $747.9 million and $944.2 million of marketable securities, respectively, as short-term because it had the intent to maintain a liquid portfolio and the ability to redeem the securities within one year. As of June 30, 2023, and December 31, 2022, the cost of the Company’s marketable securities was $749.0 million and $949.3 million, respectively. As of June 30, 2023, the Company had $56.7 million in held-for-sale assets included in “Other current assets” on the Company’s consolidated balance sheet related to 14 CRJ700 aircraft. The fair values were based upon observable and unobservable inputs, including a third-party valuation, market trends and conditions of the airframes and engines, considered Level 3 within the fair value hierarchy. The assumptions used to determine the fair value of the assets held for sale are subject to inherent uncertainty and could produce a wide range of outcomes, which the Company will continue to monitor in future periods as new information becomes available. The Company did not record a gain or loss associated with its assets held for sale during the six months ended June 30, 2023. |
Long-term Debt
Long-term Debt | 6 Months Ended |
Jun. 30, 2023 | |
Long-term Debt | |
Long-term Debt | (9) Long-term Debt Long-term debt consisted of the following as of June 30, 2023, and December 31, 2022 (in thousands): June 30, 2023 December 31, 2022 Current portion of long-term debt $ 445,946 $ 442,360 Current portion of unamortized debt issue cost, net (3,791) (3,858) Current portion of long-term debt, net of debt issue costs $ 442,155 $ 438,502 Long-term debt, net of current maturities $ 2,766,676 $ 2,966,951 Long-term portion of unamortized debt issue cost, net (22,872) (25,179) Long-term debt, net of current maturities and debt issue costs $ 2,743,804 $ 2,941,772 Total long-term debt (including current portion) $ 3,212,622 $ 3,409,311 Total unamortized debt issue cost, net (26,663) (29,037) Total long-term debt, net of debt issue costs $ 3,185,959 $ 3,380,274 As of June 30, 2023, the Company had $3.2 billion of total long-term debt, which consisted of $3.0 billion of debt used to finance aircraft and spare engines and $200.6 million of unsecured debt payable to U.S. Treasury. The average effective interest rate on the Company’s debt was approximately 4.1% at June 30, 2023. During six months ended June 30, 2023, the Company executed a promissory note for $25.0 million. The promissory note has an eight term, is due in monthly installments, has a fixed annual interest rate of 5.6% and is secured by spare engines. As of June 30, 2023 and December 31, 2022, the Company had $59.6 million and $59.2 million, respectively, in letters of credit and surety bonds outstanding with various banks and surety institutions. As of June 30, 2023, SkyWest Airlines had a $100.0 million line of credit. The line of credit includes minimum liquidity and profitability covenants and is secured by certain assets. As of June 30, 2023, SkyWest Airlines had no amounts outstanding under the facility. However, at June 30, 2023, SkyWest Airlines had $29.9 million in letters of credit issued under the facility, which reduced the amount available under the facility to $70.1 million. The line of credit expires March 25, 2025 and has a variable interest rate of plus the one month SOFR rate. The Company’s debt agreements are not traded on an active market and are recorded at carrying value on the Company’s consolidated balance sheet. The fair value of the Company’s long-term debt is estimated based on current rates offered to the Company for similar debt. Debt is primarily classified as Level 2 within the fair value hierarchy. The carrying value and fair value of the Company’s long-term debt as of June 30, 2023 and December 31, 2022, were as follows (in thousands): June 30, 2023 December 31, 2022 Carrying value $ 3,212,622 $ 3,409,311 Fair value $ 3,103,757 $ 3,264,704 |
Investments in Other Companies
Investments in Other Companies | 6 Months Ended |
Jun. 30, 2023 | |
Investments in Other Companies | |
Investments in Other Companies | ( 10) Investments in Other Companies Equity Method Investment During 2019, the Company created a joint venture with Regional One, Inc. and, as of June 30, 2023, has invested a total of $26.6 million for an ownership interest in Aero Engines, LLC. (“Aero Engines”). The primary purpose of Aero Engines is to lease engines to third parties. 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. Aero Engines had no debt outstanding as of June 30, 2023. As of June 30, 2023, the Company’s investment balance in Aero Engines was $24.9 million and has been recorded in “Other Assets” on the Company’s consolidated balance sheet. The Company’s portion of loss generated by Aero Engines for the six months ended June 30, 2023, was $0.1 million, which is recorded in “Other income, net” on the Company’s consolidated statements of comprehensive income. Fair Value Method Investments In 2021, the Company entered into a strategic partnership with Eve UAM, LLC (“Eve UAM”), to develop a network of deployment for Eve UAM’s electric vertical takeoff and landing (eVTOL) aircraft. In 2022, the Company acquired 1,000,000 shares of common stock of Eve Holding, Inc. (“Eve”) and a warrant giving the Company the right to acquire 1,500,000 shares of common stock of Eve at an exercise price of $0.01 per share. The Company also received a put option from an Eve shareholder for the 1,000,000 shares of common stock of Eve payable in aircraft parts credits. The intent of the put option is to reduce the Company’s investment risk in Eve. The warrant expires in May 2032, and the put option expires in December 2031. The Company acquired the shares of common stock, warrant and put option (collectively the “Eve Investments”) for $10.0 million. The Company evaluated the Eve Investments under Accounting Standard Codification (“ASC”) Topic 321, “Investments – Equity Securities” and ASC Topic 815, “Derivatives and Hedging,” and recorded the Eve Investments based on their pro rata share of the consideration paid using the fair value of the Eve Investments on the acquisition date, with subsequent changes in the fair value reported in earnings. Company used the Black Scholes Option Pricing Model to determine the estimated fair market value of the warrant and put option, including an expected volatility of 50% , which is a derived from historical volatility of comparable companies. The table below shows the reconciliation of the Level 3 warrant and put option Eve Investments (in thousands): Level 3 Investments: Balance at December 31, 2022 $ 14,180 Purchases — Unrealized gains 4,591 Balance at June 30, 2023 $ 18,771 The Company recognized unrealized gains of $7.9 million in “Other income, net” on the Company’s consolidated statements of comprehensive income for the six months ended June 30, 2023, related to the Eve Investments. As of June 30, 2023, the fair value of the Eve Investments was $29.3 million and was recorded in “Other Assets” on the Company’s consolidated balance sheet. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Taxes | |
Income Taxes | (11) Income Taxes The Company’s effective tax rate for the six months ended June 30, 2023 was 21.6%. The Company’s effective tax rate for the six months ended June 30, 2023 varied from the federal statutory rate of 21.0% primarily due to the impact of non-deductible expenses and a discrete tax expense on employee equity transactions that occurred during the six months ended June 30, 2023, partially offset by the provision for state income taxes. The Company’s effective tax rate for the six months ended June 30, 2022 was 26.5%. The Company’s effective tax rate for the six months ended June 30, 2022 varied from the federal statutory rate of 21.0% primarily due to the provision for state income taxes, the impact of non-deductible expenses and a discrete tax expense on employee equity transactions that occurred during the six months ended June 30, 2022. |
Legal Matters
Legal Matters | 6 Months Ended |
Jun. 30, 2023 | |
Legal Matters | |
Legal Matters | (12) Legal Matters The Company is subject to certain legal actions which it considers routine to its business activities. As of June 30, 2023, 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. |
Condensed Consolidated Financ_2
Condensed Consolidated Financial Statements (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Condensed Consolidated Financial Statements | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements of SkyWest, Inc. (“SkyWest” or the “Company”), its operating subsidiary SkyWest Airlines, Inc. (“SkyWest Airlines”), its leasing subsidiary SkyWest Leasing, Inc. (“SkyWest Leasing”) and its charter service subsidiary SkyWest Charter, LLC (“SWC”) included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company formed SWC in 2022, with the intent to offer on-demand charter service and public charter service to underserved communities in the United States. 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, 2022. Due in part to the uncertain rate of recovery from workforce shortages, in addition to other factors, the results of operations for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. 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 could differ materially from those estimates and assumptions. |
Flying Agreements Revenue and_2
Flying Agreements Revenue and Lease, Airport Services and Other Revenues (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Agreements with other airlines | |
Schedule of revenue by type | The following table represents the Company’s flying agreements revenue by type for the three and six months ended June 30, 2023 and 2022 (in thousands): For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 Capacity purchase agreements flight operations revenue (non-lease component) $ 499,142 $ 549,539 $ 968,058 $ 1,054,347 Capacity purchase agreements fixed aircraft lease revenue 74,042 129,502 148,522 253,587 Capacity purchase agreements variable aircraft lease revenue 44,984 — 88,089 — Prorate agreements revenue 82,226 94,733 159,563 173,903 Flying agreements revenue $ 700,394 $ 773,774 $ 1,364,232 $ 1,481,837 |
Schedule of aircraft and agreements with major airline partners | United Express Agreements Agreement Aircraft type Number of Aircraft Term / Termination Dates United Express Agreements (capacity purchase agreement) • E175 • CRJ 700 • CRJ 200 90 19 70 • Individual aircraft have scheduled removal dates from 2024 to 2029 United Express Prorate Agreement (prorate agreement) • CRJ 200 19* • Terminable with 120-days’ Total under United Express Agreements 198 Delta Connection Agreements Agreement Aircraft type Number of Aircraft Term / Termination Dates Delta Connection Agreement (capacity purchase agreement) • E175 • CRJ 900 • CRJ 700 83 35 5 • Individual aircraft have scheduled removal dates from 2023 to 2033 Delta Connection Prorate Agreement (prorate agreement) • CRJ 900 • CRJ 700 • CRJ 200 6* 1* 17* • 30-days’ Total under Delta Connection Agreements 147 American Capacity Purchase Agreement Agreement Aircraft type Number of Aircraft Term / Termination Dates American Agreement (capacity purchase agreement) • E175 • CRJ 700 20 85 • Individual aircraft have scheduled removal dates from 2024 to 2032 Total under American Agreement 105 Alaska Capacity Purchase Agreement Agreement Aircraft type Number of Aircraft Term / Termination Dates Alaska Agreement (capacity purchase agreement) • E175 42 • Individual aircraft have scheduled removal dates from 2030 to 2034 |
Schedule of future minimum rental payments for operating leases | July 2023 through December 2023 $ 9,846 2024 22,266 2025 17,188 2026 13,509 2027 12,316 Thereafter 54,344 Total future minimum operating lease payments $ 129,469 |
Schedule of allowance for credit losses | The following table summarizes the changes in allowance for credit losses: Allowance for Credit Losses Balance at December 31, 2022 $ 37,385 Adjustments to credit loss reserves 2,086 Write-offs charged against allowance (3,570) Balance at June 30, 2023 $ 35,901 |
Airport customer service and other | |
Agreements with other airlines | |
Schedule of revenue by type | For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 Operating lease revenue $ 16,791 $ 16,450 $ 33,351 $ 33,005 Airport customer service and other revenue 8,458 8,861 19,891 19,395 Lease, airport services and other $ 25,249 $ 25,311 $ 53,242 $ 52,400 |
Aircraft | |
Agreements with other airlines | |
Schedule of future minimum rental payments for operating leases | For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 Operating lease revenue $ 16,791 $ 16,450 $ 33,351 $ 33,005 Airport customer service and other revenue 8,458 8,861 19,891 19,395 Lease, airport services and other $ 25,249 $ 25,311 $ 53,242 $ 52,400 |
Net Income (Loss) Per Common _2
Net Income (Loss) Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Net Income (Loss) Per Common Share | |
Schedule of antidilutive securities excluded from calculation of diluted EPS | The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income (loss) per common share. Securities that could potentially dilute Basic EPS in the future, and which were excluded from the calculation of Diluted EPS because inclusion of such share would be anti-dilutive, are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 PSP1 and Treasury Loan Warrants (1) — 582 582 291 PSP2 Warrants (2) 125 125 125 125 PSP3 Warrants (3) 78 78 78 78 Employee Stock Awards — 65 676 32 Total antidilutive securities 203 850 1,461 526 (1) Pursuant to the payroll support program established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (“PSP1”) and Loan and Guarantee Agreement with the U.S. Department of the Treasury (“U.S. Treasury”), SkyWest issued to U.S. Treasury warrants to purchase shares of SkyWest common stock for an exercise price of $28.38 per share. (2) Pursuant to the payroll support program established under the Consolidated Appropriations Act, 2021 (“PSP2”), SkyWest issued to U.S. Treasury warrants to purchase shares of SkyWest common stock for an exercise price of $40.41 per share. (3) Pursuant to the payroll support program established under the American Rescue Plan Act of 2021 (“PSP3”), SkyWest issued to U.S. Treasury warrants to purchase shares of SkyWest common stock for an exercise price of $57.47 per share. |
Schedule of Basic EPS and Diluted EPS | The calculation of the weighted average number of shares of common stock outstanding for Basic EPS and Diluted EPS are as follows for the periods indicated (in thousands, except per share data): Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Numerator: Net income (loss) $ 15,419 $ 53,951 $ (6,652) $ 71,685 Denominator: Basic earnings per share weighted average shares 43,837 50,522 46,614 50,501 Dilutive effect of employee stock awards and warrants 382 44 — 136 Diluted earnings per share weighted average shares 44,219 50,566 46,614 50,637 Basic earnings (loss) per share $ 0.35 $ 1.07 $ (0.14) $ 1.42 Diluted earnings (loss) per share $ 0.35 $ 1.07 $ (0.14) $ 1.42 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting | |
Schedule of Company's segment data | The following represents the Company’s segment data for the three-month periods ended June 30, 2023 and 2022 (in thousands): Three months ended June 30, 2023 SkyWest Airlines SkyWest and SWC Leasing Consolidated Operating revenues (1) $ 586,476 $ 139,167 $ 725,643 Operating expense 624,490 69,293 693,783 Depreciation and amortization expense 37,966 59,203 97,169 Interest expense 4,695 29,023 33,718 Segment profit (loss) (2) (42,709) 40,851 (1,858) Total assets (as of June 30, 2023) 2,570,050 4,545,724 7,115,774 Capital expenditures (including non-cash) 25,609 410 26,019 Three months ended June 30, 2022 SkyWest Airlines SkyWest and SWC Leasing Consolidated Operating revenues (1) $ 664,203 $ 134,882 $ 799,085 Operating expense 636,245 74,238 710,483 Depreciation and amortization expense 44,982 52,267 97,249 Interest expense 2,650 27,783 30,433 Segment profit (2) 25,308 32,861 58,169 Total assets (as of June 30, 2022) 3,011,236 4,325,411 7,336,647 Capital expenditures (including non-cash) 20,010 181,168 201,178 (1) Prorate revenue and airport customer service revenue are primarily reflected in the SkyWest Airlines and SWC segment. (2) Segment profit (loss) is equal to operating income less interest expense. The following represents the Company’s segment data for the six-month periods ended June 30, 2023 and 2022 (in thousands): Six months ended June 30, 2023 SkyWest Airlines SkyWest and SWC Leasing Consolidated Operating revenues (1) $ 1,154,649 $ 262,825 $ 1,417,474 Operating expense 1,257,882 132,436 1,390,318 Depreciation and amortization expense 76,224 115,094 191,318 Interest expense 8,757 58,581 67,338 Segment profit (loss) (2) (111,990) 71,808 (40,182) Total assets (as of June 30, 2023) 2,570,050 4,545,724 7,115,774 Capital expenditures (including non-cash) 46,720 87,220 133,940 Six months ended June 30, 2022 SkyWest Airlines SkyWest and SWC Leasing Consolidated Operating revenues (1) $ 1,267,252 $ 266,985 $ 1,534,237 Operating expense 1,257,273 136,314 1,393,587 Depreciation and amortization expense 92,676 107,318 199,994 Interest expense 4,439 54,586 59,025 Segment profit (2) 5,540 76,085 81,625 Total assets (as of June 30, 2022) 3,011,236 4,325,411 7,336,647 Capital expenditures (including non-cash) 52,706 276,057 328,763 (1) Prorate revenue and airport customer service revenue are primarily reflected in the SkyWest Airlines and SWC segment. (2) Segment profit (loss) is equal to operating income less interest expense. |
Leases, Commitments, Guarante_2
Leases, Commitments, Guarantees and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases, Commitments, Guarantees and Contingencies | |
Summary of related terms and discount rates | Weighted-average remaining lease term for operating leases 9.7 years Weighted-average discount rate for operating leases 6.1% |
Summary of lease costs | For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 Operating lease cost $ 7,857 $ 21,822 $ 32,805 $ 43,663 Variable and short-term lease cost 534 805 1,337 1,822 Sublease income (1,351) (1,845) (2,701) (3,648) Total lease cost $ 7,040 $ 20,782 $ 31,441 $ 41,837 |
Schedule of future minimum rental payments for operating leases | July 2023 through December 2023 $ 9,846 2024 22,266 2025 17,188 2026 13,509 2027 12,316 Thereafter 54,344 Total future minimum operating lease payments $ 129,469 |
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 Jul - Dec 2023 2024 2025 2026 2027 Thereafter Operating lease payments for aircraft and facility obligations $ 129,469 $ 9,846 $ 22,266 $ 17,188 $ 13,509 $ 12,316 $ 54,344 Firm aircraft and spare engine commitments 127,337 72,670 26,896 27,771 — — — Interest commitments (1) 515,372 64,590 115,322 95,225 75,663 54,039 110,533 Principal maturities on long-term debt 3,212,622 223,985 444,898 529,506 507,629 461,083 1,045,521 Total commitments and obligations $ 3,984,800 $ 371,091 $ 609,382 $ 669,690 $ 596,801 $ 527,438 $ 1,210,398 (1) At June 30, 2023, the Company’s long-term debt had fixed interest rates. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Measurements | |
Schedule of assets measured at fair value on a recurring basis | The Company’s assets measured at fair value on a recurring basis are summarized below (in thousands): Fair Value Measurements as of June 30, 2023 Total Level 1 Level 2 Level 3 Marketable Securities Bonds and bond funds $ 525,707 $ — $ 525,707 $ — Commercial paper 222,209 — 222,209 — $ 747,916 $ — $ 747,916 $ — Investments in Other Companies 29,251 10,480 — 18,771 Cash and Cash Equivalents 114,433 114,433 — — Total Assets Measured at Fair Value $ 891,600 $ 124,913 $ 747,916 $ 18,771 Fair Value Measurements as of December 31, 2022 Total Level 1 Level 2 Level 3 Marketable Securities Bonds and bond funds $ 624,254 $ — $ 624,254 $ — Commercial paper 319,977 — 319,977 — $ 944,231 $ — $ 944,231 $ — Investments in Other Companies 21,380 7,200 — 14,180 Cash and Cash Equivalents 102,984 102,984 — — Total Assets Measured at Fair Value $ 1,068,595 $ 110,184 $ 944,231 $ 14,180 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Long-term Debt | |
Schedule of long-term debt | Long-term debt consisted of the following as of June 30, 2023, and December 31, 2022 (in thousands): June 30, 2023 December 31, 2022 Current portion of long-term debt $ 445,946 $ 442,360 Current portion of unamortized debt issue cost, net (3,791) (3,858) Current portion of long-term debt, net of debt issue costs $ 442,155 $ 438,502 Long-term debt, net of current maturities $ 2,766,676 $ 2,966,951 Long-term portion of unamortized debt issue cost, net (22,872) (25,179) Long-term debt, net of current maturities and debt issue costs $ 2,743,804 $ 2,941,772 Total long-term debt (including current portion) $ 3,212,622 $ 3,409,311 Total unamortized debt issue cost, net (26,663) (29,037) Total long-term debt, net of debt issue costs $ 3,185,959 $ 3,380,274 |
Carrying value and fair value of long-term debt | The carrying value and fair value of the Company’s long-term debt as of June 30, 2023 and December 31, 2022, were as follows (in thousands): June 30, 2023 December 31, 2022 Carrying value $ 3,212,622 $ 3,409,311 Fair value $ 3,103,757 $ 3,264,704 |
Investments in Other Companies
Investments in Other Companies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Investments in Other Companies | |
Schedule of reconciliation of Level 3 investments | The table below shows the reconciliation of the Level 3 warrant and put option Eve Investments (in thousands): Level 3 Investments: Balance at December 31, 2022 $ 14,180 Purchases — Unrealized gains 4,591 Balance at June 30, 2023 $ 18,771 |
Flying Agreements Revenue and_3
Flying Agreements Revenue and Lease, Airport Services and Other Revenues (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) aircraft | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Agreements with other airlines | |||||
Percentage of ASMs flown under fixed-fee arrangements | 88.30% | 88.30% | |||
Percentage of ASMs flown under pro-rate arrangements | 11.70% | 11.70% | |||
Rental income under operating leases | |||||
Operating lease revenue | $ 16,791 | $ 16,450 | $ 33,351 | $ 33,005 | |
Total operating revenues | 725,643 | 799,085 | 1,417,474 | 1,534,237 | |
Future minimum rental income | |||||
July 2023 through December 2023 | 22,880 | 22,880 | |||
2024 | 45,553 | 45,553 | |||
2025 | 40,583 | 40,583 | |||
2026 | 35,017 | 35,017 | |||
2027 | 34,995 | 34,995 | |||
Thereafter | 86,297 | 86,297 | |||
Total future minimum rental income under operating leases | 265,325 | 265,325 | |||
Deferred revenue recognized | 77,400 | 17,600 | |||
Unbilled revenue recognized | 6,000 | 9,300 | |||
Deferred revenue | 262,100 | 262,100 | $ 144,700 | ||
Deferred revenue in other current liabilities | 7,300 | 7,300 | 5,200 | ||
Deferred revenue in other long-term liabilities | 254,800 | 254,800 | 139,500 | ||
Unbilled revenue | 13,900 | 13,900 | 19,900 | ||
Property and equipment and related assets | 5,491,143 | 5,491,143 | 5,548,480 | ||
Gross receivables current | 123,100 | 123,100 | |||
Gross receivables Non-current | 201,700 | 201,700 | |||
Balance | 37,385 | ||||
Adjustments to credit loss reserves | 2,086 | ||||
Write-offs charged against allowance | (3,570) | ||||
Balance | 35,901 | 35,901 | |||
Other Current Assets | |||||
Future minimum rental income | |||||
Unbilled revenue | 7,200 | 7,200 | 9,900 | ||
Other Noncurrent Assets | |||||
Future minimum rental income | |||||
Unbilled revenue | 6,700 | 6,700 | $ 10,000 | ||
Other Noncurrent Liabilities | |||||
Future minimum rental income | |||||
Deferred lease revenue | 40,000 | $ 40,000 | |||
Aircraft in schedule service or under contract | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 492 | ||||
United | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 198 | ||||
United | United Express Prorate Agreement | |||||
Future minimum rental income | |||||
Agreement term | 120 days | ||||
Delta | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 147 | ||||
Delta | Delta Connection Prorate Agreement | |||||
Future minimum rental income | |||||
Agreement term | 30 days | ||||
American | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 105 | ||||
Jet aircraft and spare engines leased to third parties | |||||
Future minimum rental income | |||||
Property and equipment and related assets | 211,800 | $ 211,800 | |||
CRJ 200 | United | United Express Agreements | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 70 | ||||
CRJ 200 | United | United Express Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 19 | ||||
CRJ 200 | Delta | Delta Connection Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 17 | ||||
CRJ 700 | United | United Express Agreements | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 19 | ||||
CRJ 700 | Delta | Delta Connection Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 1 | ||||
CRJ 700 | Delta | Delta Connection Agreements | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 5 | ||||
CRJ 700 | American | American Capacity Purchase Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 85 | ||||
CRJ 900 | Delta | Delta Connection Prorate Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 6 | ||||
CRJ 900 | Delta | Delta Connection Agreements | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 35 | ||||
E175 | |||||
Future minimum rental income | |||||
Number of aircraft under purchase agreement | aircraft | 4 | ||||
E175 | Sky West Airlines Inc. | Alaska Capacity Purchase Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 42 | ||||
E175 | United | United Express Agreements | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 90 | ||||
E175 | Delta | |||||
Future minimum rental income | |||||
Number of aircraft under purchase agreement | aircraft | 3 | ||||
E175 | Delta | Delta Connection Agreements | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 83 | ||||
E175 | American | American Capacity Purchase Agreement | |||||
Future minimum rental income | |||||
Number of aircraft | aircraft | 20 | ||||
E175 | Alaska | |||||
Future minimum rental income | |||||
Number of aircraft under purchase agreement | aircraft | 1 | ||||
Flying agreements | |||||
Rental income under operating leases | |||||
Total operating revenues | 700,394 | 773,774 | $ 1,364,232 | 1,481,837 | |
Flight operations revenue | |||||
Rental income under operating leases | |||||
Total operating revenues | 499,142 | 549,539 | 968,058 | 1,054,347 | |
Capacity purchase agreements fixed aircraft lease revenue | |||||
Rental income under operating leases | |||||
Total operating revenues | 74,042 | 129,502 | 148,522 | 253,587 | |
Capacity purchase agreements variable aircraft lease revenue | |||||
Rental income under operating leases | |||||
Total operating revenues | 44,984 | 88,089 | |||
Prorate agreements revenue | |||||
Rental income under operating leases | |||||
Total operating revenues | 82,226 | 94,733 | 159,563 | 173,903 | |
Airport customer service and other revenue | |||||
Rental income under operating leases | |||||
Total operating revenues | 8,458 | 8,861 | 19,891 | 19,395 | |
Lease, airport services and other. | |||||
Rental income under operating leases | |||||
Total operating revenues | $ 25,249 | $ 25,311 | $ 53,242 | $ 52,400 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) $ / shares in Units, $ in Millions | 6 Months Ended | |
Jun. 30, 2023 USD ($) item $ / shares shares | Jun. 30, 2022 USD ($) | |
Share-Based Compensation | ||
Upon vesting, each restricted stock unit and performance share replaced with common stock | 1 | |
Stock based compensation expense | $ | $ 8.6 | $ 7.4 |
Restricted Stock Units (RSUs) | ||
Share-Based Compensation | ||
Granted (in dollars per share) | $ / shares | $ 18.65 | |
Restricted Stock Units (RSUs) | Long Term Incentive Plan 2019 | ||
Share-Based Compensation | ||
Granted (in shares) | 125,780 | |
Vesting period | 3 years | |
Performance Share Units (PSUs) | ||
Share-Based Compensation | ||
Granted (in dollars per share) | $ / shares | $ 18.65 | |
Performance Share Units (PSUs) | Long Term Incentive Plan 2019 | ||
Share-Based Compensation | ||
Granted (in shares) | 391,810 | |
Vesting period | 3 years | |
Number of performance period | item | 3 | |
Performance period | 1 year | |
Performance Share Units (PSUs) | Minimum | Long Term Incentive Plan 2019 | ||
Share-Based Compensation | ||
Award percentage | 0% | |
Performance Share Units (PSUs) | Maximum | Long Term Incentive Plan 2019 | ||
Share-Based Compensation | ||
Award percentage | 250% | |
Director | ||
Share-Based Compensation | ||
Granted (in shares) | 37,534 | |
Granted (in dollars per share) | $ / shares | $ 18.65 |
Stock Repurchase (Details)
Stock Repurchase (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | May 31, 2023 | |
Stock Repurchase | ||
Common stock authorized for repurchase, maximum | $ 250 | $ 250 |
Common stock remaining number of shares authorized to repurchase | 185.9 | |
Stock repurchased (shares) | 8.4 | |
Stock repurchased during period (value) | $ 194.1 | |
Weighted average price per share of common stock (in dollars per share) | $ 23.10 | |
Excise tax related to the stock repurchases as treasury stock | $ 1.9 |
Net Income (Loss) Per Common _3
Net Income (Loss) Per Common Share - Antidilutive securities (Details) - $ / shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Net Income Per Common Share | ||||
Total antidilutive securities (in shares) | 203 | 850 | 1,461 | 526 |
Warrants PSP1 | ||||
Net Income Per Common Share | ||||
Warrants exercise price (in dollars per share) | $ 28.38 | $ 28.38 | ||
Warrants PSP2 | ||||
Net Income Per Common Share | ||||
Warrants exercise price (in dollars per share) | 40.41 | 40.41 | ||
Warrants PSP3 | ||||
Net Income Per Common Share | ||||
Warrants exercise price (in dollars per share) | $ 57.47 | $ 57.47 | ||
Warrants PSP1 | ||||
Net Income Per Common Share | ||||
Total antidilutive securities (in shares) | 582 | 582 | 291 | |
Warrants PSP2 | ||||
Net Income Per Common Share | ||||
Total antidilutive securities (in shares) | 125 | 125 | 125 | 125 |
Warrants PSP3 | ||||
Net Income Per Common Share | ||||
Total antidilutive securities (in shares) | 78 | 78 | 78 | 78 |
Employee Stock Awards | ||||
Net Income Per Common Share | ||||
Total antidilutive securities (in shares) | 65 | 676 | 32 |
Net Income (Loss) Per Common _4
Net Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Number of outstanding units not included in computation of Diluted EPS (in shares) | 203,000 | 850,000 | 1,461,000 | 526,000 | ||
Numerator: | ||||||
Net income (loss) | $ 15,419 | $ (22,071) | $ 53,951 | $ 17,734 | $ (6,652) | $ 71,685 |
Denominator: | ||||||
Basic earnings per share weighted average shares | 43,837,000 | 50,522,000 | 46,614,000 | 50,501,000 | ||
Dilutive effect of employee stock awards and warrants | 382,000 | 44,000 | 136,000 | |||
Diluted earnings per share weighted average shares | 44,219,000 | 50,566,000 | 46,614,000 | 50,637,000 | ||
Basic earnings (loss) per share (in dollars per share) | $ 0.35 | $ 1.07 | $ (0.14) | $ 1.42 | ||
Diluted earnings (loss) per share (in dollars per share) | $ 0.35 | $ 1.07 | $ (0.14) | $ 1.42 | ||
Performance Share Units (PSUs) | ||||||
Number of outstanding units not included in computation of Diluted EPS (in shares) | 538,000 | 350,000 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) segment | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Segment Reporting | |||||
Number of reporting segments | segment | 2 | ||||
Operating revenues | $ 725,643 | $ 799,085 | $ 1,417,474 | $ 1,534,237 | |
Operating expense | 693,783 | 710,483 | 1,390,318 | 1,393,587 | |
Depreciation and amortization expense | 97,169 | 97,249 | 191,318 | 199,994 | |
Interest expense | 33,718 | 30,433 | 67,338 | 59,025 | |
Segment profit (loss) | (1,858) | 58,169 | (40,182) | 81,625 | |
Total assets | 7,115,774 | 7,336,647 | 7,115,774 | 7,336,647 | $ 7,414,553 |
Capital expenditures (including non-cash) | 26,019 | 201,178 | 133,940 | 328,763 | |
SkyWest Airlines and Charter | |||||
Segment Reporting | |||||
Operating revenues | 586,476 | 664,203 | 1,154,649 | 1,267,252 | |
Operating expense | 624,490 | 636,245 | 1,257,882 | 1,257,273 | |
Depreciation and amortization expense | 37,966 | 44,982 | 76,224 | 92,676 | |
Interest expense | 4,695 | 2,650 | 8,757 | 4,439 | |
Segment profit (loss) | (42,709) | 25,308 | (111,990) | 5,540 | |
Total assets | 2,570,050 | 3,011,236 | 2,570,050 | 3,011,236 | |
Capital expenditures (including non-cash) | 25,609 | 20,010 | 46,720 | 52,706 | |
SkyWest Leasing | |||||
Segment Reporting | |||||
Operating revenues | 139,167 | 134,882 | 262,825 | 266,985 | |
Operating expense | 69,293 | 74,238 | 132,436 | 136,314 | |
Depreciation and amortization expense | 59,203 | 52,267 | 115,094 | 107,318 | |
Interest expense | 29,023 | 27,783 | 58,581 | 54,586 | |
Segment profit (loss) | 40,851 | 32,861 | 71,808 | 76,085 | |
Total assets | 4,545,724 | 4,325,411 | 4,545,724 | 4,325,411 | |
Capital expenditures (including non-cash) | $ 410 | $ 181,168 | $ 87,220 | $ 276,057 |
Leases, Commitments, Guarante_3
Leases, Commitments, Guarantees and Contingencies (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) aircraft | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Lessee, Lease, Description [Line Items] | |||||
Operating lease right-of-use assets | $ 92,803 | $ 92,803 | $ 151,928 | ||
Current maturities of lease liabilities | 18,715 | 18,715 | 71,726 | ||
Noncurrent operating leases | $ 73,894 | 73,894 | $ 88,622 | ||
Operating leases | $ 17,900 | ||||
Weighted-average remaining lease term for operating leases | 9 years 8 months 12 days | 9 years 8 months 12 days | |||
Weighted-average discount rate for operating leases | 6.10% | 6.10% | |||
Lease costs | |||||
Operating lease cost | $ 7,857 | $ 21,822 | $ 32,805 | $ 43,663 | |
Variable and short-term lease cost | 534 | 805 | 1,337 | 1,822 | |
Sublease income | (1,351) | (1,845) | (2,701) | (3,648) | |
Total lease cost | 7,040 | $ 20,782 | $ 31,441 | $ 41,837 | |
CRJ Aircraft | |||||
Lessee, Lease, Description [Line Items] | |||||
Number of aircraft acquired | aircraft | 32 | ||||
Lease liability payable due | $ 125,500 | $ 125,500 | |||
Aircraft | |||||
Lessee, Lease, Description [Line Items] | |||||
Number of aircraft acquired | aircraft | 11 | ||||
Aircraft | Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease term | 1 year | 1 year | |||
Aircraft | Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease term | 7 years | 7 years | |||
Airport Facilities | Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease term | 1 month | 1 month | |||
Airport Facilities | Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease term | 33 years | 33 years |
Leases, Commitments, Guarante_4
Leases, Commitments, Guarantees and Contingencies - Operating Leases (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) aircraft | |
Future minimum rental payments required under operating leases | |
July 2023 through December 2023 | $ 9,846 |
2024 | 22,266 |
2025 | 17,188 |
2026 | 13,509 |
2027 | 12,316 |
Thereafter | 54,344 |
Total future minimum operating lease payments | $ 129,469 |
E175 | |
Future minimum rental payments required under operating leases | |
Number of aircraft under purchase agreement | aircraft | 4 |
Leases, Commitments, Guarante_5
Leases, Commitments, Guarantees and Contingencies - Commitments and Obligations (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Operating lease payments for aircraft and facility obligations | ||
Jul - Dec 2023 | $ 9,846 | |
2024 | 22,266 | |
2025 | 17,188 | |
2026 | 13,509 | |
2027 | 12,316 | |
Thereafter | 54,344 | |
Total future minimum operating lease payments | 129,469 | |
Firm aircraft and spare engine commitments | ||
Jul - Dec 2023 | 72,670 | |
2024 | 26,896 | |
2025 | 27,771 | |
Total | 127,337 | |
Interest commitments | ||
Jul - Dec 2023 | 64,590 | |
2024 | 115,322 | |
2025 | 95,225 | |
2026 | 75,663 | |
2027 | 54,039 | |
Thereafter | 110,533 | |
Total | 515,372 | |
Principal maturities on long-term debt | ||
Jul - Dec 2023 | 223,985 | |
2024 | 444,898 | |
2025 | 529,506 | |
2026 | 507,629 | |
2027 | 461,083 | |
Thereafter | 1,045,521 | |
Total | 3,212,622 | $ 3,409,311 |
Total commitments and obligations | ||
Jul - Dec 2023 | 371,091 | |
2024 | 609,382 | |
2025 | 669,690 | |
2026 | 596,801 | |
2027 | 527,438 | |
Thereafter | 1,210,398 | |
Total | $ 3,984,800 |
Leases, Commitments, Guarante_6
Leases, Commitments, Guarantees and Contingencies - Guarantees (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Other income, net | |
Leases, Commitments, Guarantees and Contingencies | |
Guaranteed amount received as consideration, percentage | 6.50% |
Debt | Aircraft and engines | |
Leases, Commitments, Guarantees and Contingencies | |
Guaranteed amount | $ 19.8 |
Term of guarantee obligations | 5 years |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 USD ($) aircraft | Dec. 31, 2022 USD ($) | |
Fair Value Measurements | ||
Marketable Securities | $ 747,916 | $ 944,231 |
Maximum period for redemption | 1 year | 1 year |
Marketable securities at cost | $ 749,000 | $ 949,300 |
Held for sale | CRJ 700 | ||
Fair Value Measurements | ||
Number of aircraft held-for-sale | aircraft | 14 | |
Assets held for sale | $ 56,700 | |
Recurring | Estimate of Fair Value Measurement | ||
Fair Value Measurements | ||
Marketable Securities | 747,916 | 944,231 |
Investments in Other Companies | 29,251 | 21,380 |
Cash and Cash Equivalents | 114,433 | 102,984 |
Total Assets Measured at Fair Value | 891,600 | 1,068,595 |
Recurring | Estimate of Fair Value Measurement | Bonds and bond funds | ||
Fair Value Measurements | ||
Marketable Securities | 525,707 | 624,254 |
Recurring | Estimate of Fair Value Measurement | Commercial Paper | ||
Fair Value Measurements | ||
Marketable Securities | 222,209 | 319,977 |
Recurring | Level 1 | ||
Fair Value Measurements | ||
Investments in Other Companies | 10,480 | 7,200 |
Cash and Cash Equivalents | 114,433 | 102,984 |
Total Assets Measured at Fair Value | 124,913 | 110,184 |
Recurring | Level 2 | ||
Fair Value Measurements | ||
Marketable Securities | 747,916 | 944,231 |
Total Assets Measured at Fair Value | 747,916 | 944,231 |
Recurring | Level 2 | Bonds and bond funds | ||
Fair Value Measurements | ||
Marketable Securities | 525,707 | 624,254 |
Recurring | Level 2 | Commercial Paper | ||
Fair Value Measurements | ||
Marketable Securities | 222,209 | 319,977 |
Recurring | Level 3 | ||
Fair Value Measurements | ||
Investments in Other Companies | 18,771 | 14,180 |
Total Assets Measured at Fair Value | $ 18,771 | $ 14,180 |
Long-term Debt (Details)
Long-term Debt (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Current portion of long-term debt | $ 445,946 | $ 442,360 |
Current portion of unamortized debt issue cost, net | (3,791) | (3,858) |
Current portion of long-term debt, net of debt issue costs | 442,155 | 438,502 |
Long-term debt, net of current maturities | 2,766,676 | 2,966,951 |
Long-term portion of unamortized debt issue cost, net | (22,872) | (25,179) |
Long-term debt, net of current maturities and debt issue costs | 2,743,804 | 2,941,772 |
Total long-term debt (including current portion) | 3,212,622 | 3,409,311 |
Total unamortized debt issue cost, net | (26,663) | (29,037) |
Total long-term debt, net of debt issue costs | $ 3,185,959 | 3,380,274 |
Effective interest rate (as a percent) | 4.10% | |
Letters of credit and surety bonds | ||
Debt Instrument [Line Items] | ||
Letters of credit and surety bonds outstanding with various banks and surety institutions | $ 59,600 | $ 59,200 |
Letters of credit | ||
Debt Instrument [Line Items] | ||
Amount outstanding | 29,900 | |
Current borrowing capacity | $ 70,100 | |
Basis spread on variable rate | 3.50% | |
Promissory note | ||
Debt Instrument [Line Items] | ||
Debt instrument, term | 8 years | |
Interest rate (as a percent) | 5.60% | |
Principal amount | $ 25,000 | |
Unsecured debt payable to U.S. Treasury | ||
Debt Instrument [Line Items] | ||
Total long-term debt, net of debt issue costs | 200,600 | |
Line of credit | ||
Debt Instrument [Line Items] | ||
Amount outstanding | 0 | |
Maximum borrowing capacity | 100,000 | |
Primarily related to acquisition of aircraft and certain spare engines | ||
Debt Instrument [Line Items] | ||
Total long-term debt (including current portion) | 3,200,000 | |
Total long-term debt, net of debt issue costs | $ 3,000,000 |
Long-term Debt - Carrying Value
Long-term Debt - Carrying Value and Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Carrying value | $ 3,185,959 | $ 3,380,274 |
Recurring | Level 2 | ||
Debt Instrument [Line Items] | ||
Carrying value | 3,212,622 | 3,409,311 |
Fair value | $ 3,103,757 | $ 3,264,704 |
Investments in Other Companie_2
Investments in Other Companies (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | |
Long-term debt | $ 3,185,959 | $ 3,380,274 |
Aero Engines, LLC. ("Aero Engines") | ||
Payments to acquire interest in joint venture | 26,600 | |
Long-term debt | 0 | |
Investment balance in other companies | 24,900 | |
Aero Engines, LLC. ("Aero Engines") | Other Nonoperating Income. | ||
Company's portion of loss generated by other companies | 100 | |
Eve Holdings, Inc. ("Eve") | ||
Warrants to purchase shares | shares | 1,500,000 | |
Warrants exercise price (in dollars per share) | $ / shares | $ 0.01 | |
Initial investment | $ 10,000 | |
Eve Holdings, Inc. ("Eve") | Level 3 | ||
Beginning balance | 14,180 | |
Unrealized gains | 4,591 | |
Ending balance | 18,771 | $ 14,180 |
Eve Holdings, Inc. ("Eve") | Level 3 | Black Scholes Option Pricing Model | Volatility | ||
Measurement input | 0.50 | |
Eve Holdings, Inc. ("Eve") | Put option | ||
Shares obtained | shares | 1,000,000 | |
Eve Holdings, Inc. ("Eve") | Other Assets | ||
Investment balance in other companies | 29,300 | |
Eve Holdings, Inc. ("Eve") | Other Nonoperating Income. | ||
Company's portion of loss generated by other companies | $ 7,900 | |
Eve Holdings, Inc. ("Eve") | Class A common stock | ||
Number of shares acquired | shares | 1,000,000 |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Taxes | ||
Effective tax rate (as a percent) | 21.60% | 26.50% |
Statutory Federal income tax rate (as a percent) | 21% | 21% |