SKYW - Earnings call transcript Q3 2017

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Operator

Good afternoon, everyone and welcome to the SkyWest Third Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Officer. Financial Chief Simmons, Rob Sir, please ahead. go

Rob Simmons

Thanks for joining us today. call the on everyone

indicated, Simmons, is Officer. the this As operator Rob SkyWest’s Financial Chief

Eric On Operating their Thompson, start Steel, today Chief me to Officer. Terry We Airlines Eric the Chief Childs, to the Accounting Officer Chief read asking respective call today I'd and excuse Operating ExpressJet like President out and Mike Woodward, turn are Chief with Executive as Harbor, Vais, Airlines Commercial working Chip Safe Chief to Chip operations. like by Wade would will comments. Officer SkyWest and Officer; then with to the they're for I some over time Officer;

Then discuss flying Chip, and related fleet Wade will Following take financial will I arrangements. the us through results. the

have will customary the Eric? with Q&A analysts. side our we Wade, Following sell session

Eric Woodward

statements to anticipated, current future and Today’s represent projected vary obligation no events discussion those forward-looking vary materially will and from for are may or likely expectations regarding uncertainties. subject and that contains of to risks reasons. statements. Actual number update and assume assumptions a results estimated forward-looking our any We beliefs,

and with included Chip? the cause reports of may Form such other the filings XX-K differences our Some and Securities that and XXXX Commission. are factors in Exchange

Chip Childs

you, and Eric. Thank Rob

the third During as our continued release press overall plan our quarter, fleet and we demonstrate. business the progress on and our results

is this Third different. quarter total quarter no production and high generally is

to our after soon airport and up taken each were Additionally, communities ExpressJet XX,XXX want passengers own for Not were people resumed both hurricane care they their only work. affected, of our to thank executed to well recovery storm. other navigated teams their two more help operating than major SkyWest step operations our ensure extremely as as I great each as and well did but

both our have people We airlines. exceptional at truly

with been performers each quarter, quarter, performing Airlines ExpressJet for completion three delivering and quality. strong with portfolio almost reliability results the third and United's continued operating thank a XX.X% than both I [demand] team more top we have hurricanes and our in the reliability. SkyWest their solid to adjusted During operated on airlines $X.XX XXX,XXX flights commitment had very extremely to well season impact them about this quarter. for Again, challenging again ongoing years The hurricane for now. want is our well

with quarter, announced strategy ExpressJet third CRJ dual including with realignment agreement class down year. wind end the its next by long-term flying During agreement a of of Delta a United and new to an the

CRJXXXs progress return and operation. to quarter the they continue our this to X that Eagle profitability. we making of to during entity of their in The began Additionally, American announced ExpressJet's solidify efforts third transition execution strategy meaningful new as the foundation

to and during in flying XXXX. began up by EXXX with transitions We and set Also movement the expect maintenance to of complete but our that of smaller recap agreements stretch strong into end total XXXX. Delta to this Alaska back will representing these be that EXXXC transformation XXX quarter, To anticipate just the the of XX we had the we aircraft XXXX and fleet XXXX up XXX a a Delivery year. be we fleet announced XX has to and continued aircraft more by busy in number aircraft that final mix end of for execution significant strategy our transition XX XXXX progress, aircraft talk wrap about in profitable footprint. fleet those The do in Wade significant to Airlines. in with fleet of of us with for be XXXX. XXXX beginning with already the year have our a EXXX is will end another minute. and expect XXX our by Airlines fleet next detail we We expect begun

Our aviation to as this next continue and we professionals do phase. so transition have throughout move fleet this to this remarkably performed

remain we focused forward, strong excellence, on Moving operational capital profitable growth and deployment.

to objective to the the thank to want we're industry's that strong for XX,XXX our Rob? product Again, professionals their exceptional to demand. work is continue for their more positioned best and our ensure see We I operations. meet demand than across our

Rob Simmons

Today $X.XX for net from million we've quarter from per million reported share $XX QX or XXXX third net XXXX. income $X.XX or of up of $XX income the of

million. Our pretax income to XX% year-over-year increased $XX

new XXXX. year's $X million of last revenue $XX increase included million QX $XXX reminder, partially $X.XX in from included XXXX, a This XXXX of expense. or GAAP was less removal impact As the ERJXXXs, or XX numbers Revenue CRJXXX/XXX the profitable by up early restructuring Class and including in XX period, the over QX XX net aircraft of got CRJXXXs adding million offset QX EXXX of aircrafts. same aircrafts XX three unprofitable since

of will was put Wade end. on We for XXX to our more minute. EXXXs expect rate fleet service QX year XX%. three of into provide in bring by more total during XXXX quarter the the color fleet to to provision a EXXXs The some

XX%, rate between and based XX% stock in XXXX. for a stock share effective QX restricted we timing performance future Generally, vesting, all XX% XX% vary the exercises, may price future on provision other anticipate and of option Our of and tax rate and factors. amount between

the ago in third fuel gallon cost or a per during million $X.XX The from XXXX. quarter, cost from a model. in QX $X.XX $X.XX our up rate pro reduction EPS total cost gallon gallon per Our year $X a under us increased per business averaged fuel

long-term fleet engines up by powered by agreements either this including of by We the a maintenance the or to The improved our aircraft costs. about higher of You engine covered predictability are year-over-year. since expense that million the future our percentage can a our agreements of at EXXXs powered line long-term to new by increase now agreement now release hour vast last the time. in believe partners. This hour maintenance relates item our year being largely our direct are maintenance significantly our see in XX engine engines $X for the is majority covered pass-through expense

three acquisition manufactured differentiation the fourth last also other sheet, our EXXXs. ended in cash of with our we spending have million toward year XXXX. debt expected during to debt the and QX as million into $X.X million We total last million critical QX million along say new to million XXXX in order no quarter capital supporting balance XXXX a billion time. $XXX issued $XXX cash of of We million in of for this at billion, SkyWest and XX, deployed $XX CapEx XX $XXX delivered new point Let continue in couple in by in Total a from toward down $XX Non-aircraft $X.X million purchase up million run EXXXs $XX range with should quarter deposits from end. quarter last with was the quarter. model. the about used funded equity things $XX $XX XXXX our September $XX per of year the of be quarter in me

debt of fully end $X.X of million only completed the raise EXXXs now principal of term billion we normal $X we are $XXX where order to the expect quarters for plans, in With we amortizing from by new end XX up XXXX, debt. payments from those in debt be but our will five be billion our approximately close new the XXXX, next over term expected by to plan to the embedded

free after cash end $XXX where slightly flow in $X debt additional expected generating we cumulatively. we plan million XXXX are rent XX next while in $XXX the to of will that We now, million flows operating of as XXXX Assuming rents amortize year from enhance in of invest of EXXXs asset and cash primarily We expense of long-term agreements. XXXX. the XXXX contribute XXXX debt will earnings. airplanes, approximately year at billion aircraft pay to growth XXXX the flat expected per 'XX, under be between of we a net this with and our ended our cash and over the years because quality flow flow our cash lease third free a several equity anticipate debt prepaid of peaking the to non-cash XXXX cash and no our will million excess over we $XXX per quarter in will in in end debt million down cash to and would new $XXX end the expect up in of or now reduction service We of

not did repurchase in program stock we QX, million During authorized $XXX our the three-year by repurchase QX. any Board under

in million remaining program expect utilize it. $XX authorization and We to this Wade? under have fully

Wade Steel

continued extended and to fleet on Thanks execute agreements, aircraft redeploying fleet terms to In removing to third with our the risks. from quarter, strategy, financing mitigate Rob. flying unprofitable larger, new aircraft we transitioning aircraft our

EXXX. an delivery an EXXX aircraft that and in the our the dates service XX acquire aircraft into operate agreements an entered XX in future. are those Of and capacity EXXXSC These XX be Delta in seats agreement new with During XX can configuration. the agreement the we EXXX under fly retrofitted purchase airframe have quarter, SC XX-seat aircraft Embraer similar bringing a to expected end the an aircraft a Alaska purchase EXXX aircraft to with XX-seat XX through to time. XX to and total XXXX, our at of The with XXX are of under EXXX XXXX from fly will September that Alaska. run configuration other agreement in of aircraft to

for model reduces approximately EXXX Also bringing long-term contract third United mentioned, agreement. under X, for During partnership total announced its Alaska The XXX. to January ExpressJet agreement new the this a effective EXXX we ERJXXXs stability with of anticipate significantly its ExpressJet new risk. our quarter, one and enhances long-term XXX provides United aircrafts during delivery We to quarter, fleet third XXXX. operating as Chip the took agreement

end to announced Delta down XXXX. ExpressJet these year. We Delta returned remaining remaining agreement and of by currently of Delta. returned XX to CRJXXXs, Four were for summer, its returned in this wind CRJXXXs XX expire with scheduled aircrafts CRJXXXs throughout earlier XX the be next class to earlier mutual by XX the this returned including be owned to Delta flying, to Delta a partners to year XX will with XXXX. with Additionally, redeploying owns operating CRJXXX previously initiated CRJXXXs other dual being month. total expects will major CRJXXXs ExpressJet a The Delta anticipate

its from quarter end XXXX, with American we CRJXXXs our accordance to eight flying the At operation American for to XX. contract As ExpressJet transition of previously XXXX. Eagle number CRJXXXs during announced, American the in their of bring plan natural second total remove to agreement to of the expiration. This has fleet XX the CRJXXXs will ExpressJet announced ExpressJet Airlines an with secured

have XX during will aircrafts quarter. September two of of remaining the that from been XX, be anticipate the XX fourth We removed As removed contract. the

XX expirations lease natural remaining majority these year, remaining We of parties. to this aircraft XX third very meet with returned and be to our ongoing the to under other major We working expanded will our under sold for Demand of expect strong seat SkyWest be needs. Delta we're while each Airlines recently seat aircrafts aircraft the lessors will XX agreement. remained our partners their

our partners flying, of execute aircraft strategy into to commercial removing larger, placing continue to on deliver continue our agreements. unprofitable new and with and aircraft risk our We minimize other redeploying to on service

Chip Childs

So, Jamie? as your now SkyWest continue we to Q&A. in do evolution thanks progress. take time our and for interest We'll

Operator

gentlemen, Syth your James. Our first today and question. from session. begin instructions] we'll the with at Ladies Savi Please ahead go comes [Operator this question-and-answer time Raymond from question

Savi Syth

Hey. guys. afternoon, Good

Chip Childs

Hey Savi.

Savi Syth

of and be little going pilot be lot a transition standpoint either bit you there to little talk like a bit heavy of from what year you getting and Could going to training that about look getting I magnitude on am is the the or some that out? to you're Can the know is you're a that standpoint? timing talk a related I about, aircraft a aircraft guessing might

Eric Woodward

Chip I that be is of said that again right think script, his fleet Savi, going a year a you're movement. with to as lot XXXX Yeah in

new So, online, and lot of beautifully should XXXX. XXXX coming training up but lot for of deliveries us set

really despite up XXXX. a the we've final us year that reasonably for the us, that year still as think of XXXX but should transition setting be again is fleet nice said, XXXX for I again, noise So

Savi Syth

the just And to on follow-up those if placed be how the aren’t we scenario placement. think or about about may kind just it. of left around we have Got little like along the that placed if how on the understand returned, those can of around and I you could the CRJXXXs risk you need a so talk kind worst-case risk

Wade Steel

is Yeah Savi, this Wade.

in said my XX of I as already with we placed remarks, prepared So, American. those have eight

them, have they're The other value we debt. debt aircraft They XX are but the owned bit asset of those on to do the of aircraft. that compared all very the we're CRJXXXs a with have, financed, little all comfortable

the financial not nervous those aircraft. we're exposure on about So,

Savi Syth

more I squeeze helpful. And in one if Okay. may Very here.

just think little any higher? internal commercial thoughts the on about I believe both in see starting updated you you're like areas come latest seeing It as you into side and now supply into to a transitioning on what and Just bit you're sourcing? any growth pilot thoughts maybe maybe other flying, are seems pilot but on just from some trends

Chip Childs

is topic committing day, we're that that's commitments this to Yes lot because us with key our can from remains number manage our and think our nature a we where Savi. customers. to for staffing the the spent partners responsibility our a the This to Chip. is Yeah end From with energy quarters, one at fleet good. flexible certainly said we today deploy on. time strategy is meet what very a can of of our in perspective, fleet I we other I and as our our our

fleet we're you long-term there but that that the going are be but the With need staffed develop coming recruiting we brought side, sustainability strong and certainly of to are going model transitions that well efforts extremely there, obviously a amount are bit SkyWest very some are out, fair our there's that that processes energizer to to ExpressJet aircraft transitions profitability, on for well. as as and a we up

know to supply the organic the we our seeing nature sure very have outlook lot a we in I still level? don't technically developed but good of years pilots coming get pilots different we we certainly involved in a conscious we're of from efforts are We're position what very details, won't to how global different in So a that for past. that into had side, and at is than very a Are we've are that of the come. anything making

I has manage as doing our to level, at in astute certainly Savi, efforts wouldn't and say here. but perspective to we're of So, that past the our being very we're done years we've high a late, what changed fleets and significantly what committing recruiting are very, several

Savi Syth

very you Thank Helpful. much.

Operator

your from Michael question? question comes next go Deutsche Linenberg Our Please from Bank. with ahead

Cathie O'Brien

Good afternoon. is Katie actually This O'Brien.

liability Let's first end really the could or cycle that's announcements? after growth do is see, the guys? the out your program Do end a potential these second level? that do of you had market to think is, for you there recent growth get small was you you to XXXX, how for of categorized think more the mean C-Series I think would flying the we Then increase one by do one there on meet more market RFPs that post deliveries of the you

Chip Childs

Katie, thanks Okay. in. calling for

with one Let me start with first the RFPs.

that dynamic When with it's of in very that flexibility haven't a in going respond of we're a really lot the lot think world, to a RFPs. days. partners. business great. I Because conversation we fleet needs need world interesting the all that we RFP a we've but of have an regional as would lot really model we're and XXXX, things. is it's our adding had lot of to respond good short re-fleeting really in about what the this to been with process only come of leading A the the I our without do with understanding have the We've in the customers through fleet have a because involved transitions that RFPs over talent lot we're but at of within aircraft having our are a From I still of on quarter. anticipate past our to think in 'XX to the term full some then you probably certainly done we out couple we've help time do to future that's we perspective, their that years, portions of these of do opportunities even right reiterate, many embraced you'll even sit-down done they additional and to out, to them, some spent the in We in as but really respond and world exercise coming into well term, see We've fleet of things doing. our not been growth strategic also with. where within the long to things respond opportunity also existing last announced still we're we've activity some

overall we're portion extremely was? question and sorry, the So, of I optimistic Cathie am your second

Cathie O'Brien

Oh yes sure.

viable think potentially coming of it find level recent announcement a investing small-market year, more over aircraft see to program, is in making the this you more could Airbus that longer-term program, Now with obviously a the question? do meet you C-Series the

Chip Childs

opportunities I to from smaller think like I existing of changes communities a I that doubt there's stuff be also fleet don't and for probably that into think aircraft translates our opportunities C-Series market happens, development, but type Yeah, that an some the well. into as as population integrated

given and think everything the and we excellent confident provide can existing still in like fleet of and XX-seat the you'll I time our for aircraft and the how fleet how with XX in of comfortable size smaller a and aircraft the that fly there dynamics see aircraft that the aircraft that with an to is communities new today, and niche operating opportunity think I with XX that aircraft how service unique potentially scope even today. to very and we that with we're continue seaters operating mathematically, we're there said an We've be equal we're long well cost class will seaters. that as financing as still dual I think fans we're of from that

Cathie O'Brien

that is which in, know I returning or about, dividends? growth means that purchases you completing you've can that? cash looking you're programs we've this shareholders talking -- Okay. via do Understood. been very your terms think current I squeeze to but one secured If exciting maybe what now beyond program, of in more share to committed

Rob Simmons

is this Katie, Rob. Yeah

a to think see what that that continue you'll keep strong I we'll So, sheet. is balance

combination come those standpoint, make a going where to the future and want liquidity flow balance for we're generate to that. ways shareholder-friendly to Whether in XX we'll be ready be We from significant way future. in repaying opportunities the available a is growth all some our manage want investment like sheet in the there in don't balance also these invest growth able to First that opportunities like for -- always and position airplanes, and opportunities way. of whatever if they whatever our a above, balance the debt, potentially come foremost, if we're sure we slow, we feel to the we're that stock to look we're airplanes have cash or place but come sheet got in it's liquidity new investing and the the repurchasing we've sheet to or

Cathie O'Brien

can usually the for one, any give some comments Okay. Great. one quick EPS quarter? that of more I guidance, sort fourth on Thanks. you then ask And if guys

Rob Simmons

setting No, to in a should to that don't so last expect this nice we don't EPS for XXXX said our what with last But fleet we EPS have usually XXXX, a it. respect thing us XXXX. of up give the four that is any is said only of up transition set The and front guidance. be year specific we've quarter

Cathie O'Brien

Okay. Great. for much the time. Thank all you so

Rob Simmons

Katie. Thanks

Operator

Helane from comes question. Becker Cowen. go with ahead question next Please from Our instructions] [Operator your

Conor Cunningham

guys. Conor. This Hey actually is

Chip Childs

Conor. Hey

Conor Cunningham

short-term this there is some slack that on you maybe imagine just any I for Horizon be for on bit. given can potential Alaska you -- potential contracts. address that to would any up there, some that might the a Savi's pick little CRJ's CRJ, there Just year question to the that maybe can piggyback earlier for

Chip Childs

this Chip. Conor, is

a to I there's component if an Alaska flying, of like right, we think as the fall. potential with is on some lot a opportunity we now, our flexing component little CRJs of of perspective we it spares, from as right that a some the our beyond checks, we have certainly fee available a pilots commitment. bit based of in have up do lot always where small we're But that a ball have is and flexibility you're aircraft for as have and temporary of short-term

out flexible comments, our and and now. partners we we can at have within perspective, fleet bit in partners strategy a all So, of for things right our earlier our respond what said to do do like certain us from do it's try a I lot some helping to good to a is

Conor Cunningham

on at other just or Delta potentially then specifically that's one, announcement, been configure have there And Delta seeing is specific that interested been carriers in point? for since that EXXX has Great. to the Okay. way the any really it configured the aircraft that smaller this

Wade Steel

very great unique take No, a Wade, this configuration. to Delta EXXXSC the opportunity is Conor. That's Obviously, question. advantage new saw of

may other partners with related with We're discussions potentially have to that. like. working on still We the look that partners what

Conor Cunningham

then And one just Okay. last one.

impact? You talk, gave the the is want $X.XX the storms the estimate the to of Thank headwind correctly imagine do so. bit forward quarter. because in time possible have it that one it nature, going you looking revenue sure in I Can be just in just you make about little business we're from you. would terms an I guys

Rob Simmons

revenue the on side. Nothing Yeah.

$X.XX Just impact the storms. of from we EPS estimate about

Conor Cunningham

you. Thank Okay.

Operator

I further time, conference this over remarks. turn call at Chip gentlemen, and like for any Childs ladies I closing questions. am the back to no showing would And to

Chip Childs

Thank you, in Jamie. we appreciate interest your SkyWest. Again,

we've and in in outlined Thank you. going the update to said and our to we're you year we late call, look be the as As giving to evolve businesses focused forward continue for January.

Operator

that presentation. and for Thank attending Ladies conference conclude does call. gentlemen, today's today's you

may your disconnect lines. now You

SkyWest (SKYW) 25 Oct 172017 Q3 Earnings call transcript