Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the SkyWest Incorporated First Quarter 2023 Results Call. Today's call is being recorded. [Operator Instructions]

I would now like to turn the conference over to Rob Simmons, SkyWest's Chief Financial Officer. Please go ahead.

Robert Simmons

us call joining for everyone on today. the Thanks

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

On the Commercial Chief Executive Woodward, call President Accounting Officer; Childs, with Chief Wade me today Steel, Chief Officer. Officer; Eric are and Chip and

Eric start then Safe turn time asking will for Chip read over the I'd like to by some to to the today Harbor, I comments.

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

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

Eric Woodward

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

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

I'll And Chip. call to over the turn now,

Chip Childs

for Rob you afternoon, and Good on us everyone. Eric. call Thank you, the Thank today. joining

foundational traction during provided over the solid Our first quarter. past has the work year

pretax share reported were of loss million SkyWest loss of $XX deferred per million $XX a So reflected in $X.XX for or quarter first results the of XXXX, those revenue.

regularly As previously shared, utilization normalizes. until be revenue we we deferred forward, expect moving discussing will

and people pilot strategic including in last our investments As finalized pay with that during our through partners making talked shareholders. progress our work unmatched nearly objectives our every increased our quarter I advance value we XXXX, XXXX, significant group for pleased our and have we're provide in agreement. we're about for people, the

of quarter, with finalize new our their of environment. contracts engagement were and deep each we help confidence our our We costs. all During the efforts offset partner appreciate in partners product to the first our the new pilot to able in

provide and evolve, their with strong committed needs. our to adapt always, partners working we're solutions As to to

first repurchase quarter, outstanding, purchased $XXX including We're shareholders million focused we best value all year-to-date. creating of in million shares for to authorized million totaling X.X and share for acquired plan XX% the X.X stakeholders, the $XXX of previously the value our importance shares million or proposition During have total provide approximately under the our industry. on shares

million. This Rob work included that about to a we minute. transaction quarter's future buyouts results for also this lease flexibility XX We will captains industry-wide capital $XXX for and of in specifics the more aircraft fleet deployed partners early imbalance. our cover Wade create as through

and we headway making on prioritizing to captain hire We're pilot new we our to work classes imbalance, good upgrades, crews. as our while continue rebalance we are fill

and Additionally, has stabilization captain lower than begun of attrition was quarter. the showing for planned signs

is last outlook hours our to compared comments slightly our I XXXX a to that our restore block would result, for portion quarter. a our As with mix. fleet production previous existing becomes we rebalance ability of even accretive you remind on improved as

and couple the will full years and rebalance utilization to to cruise believe take production some continue our it our next restore over We of fleet. time of

With our spend. last accommodate the growth of existing additional CapEx future EXXXs alone, can XX large year addition without fleet

on and shore to our remain processes in continued have operational we ensuring resources, we our disciplined We up deliver commitments.

continues During to to commitment over first and our and produced reliability the our their apart. quarter, completion, adjusted operations XX.X% teams set service great

key through winter to with affecting continued weather proactively resources. these our planning we and quarter's geographies, challenges the solid Despite manage

the adapt we a and Our you teams our continue as tremendous job lead team. Thank to do industry. to

commercial successfully this made as month. flight completed its progress the We with quarter exceptional SkyWest our first entity We during first Charter well.

regulations to groups, by and numerous made well-established is requirements regulatory necessary the all what claims unfounded SkyWest some been Charter available to existing provide completed have there president. special already While interest operators has within

even in to want deliver through many XXX low some be raising SkyWest what is qualification looks rules Charter that, XXX Charter with enhancements carriers. subsidiaries its enhance Part the Part Part underserved XXX in foremost for is safety and above utilize more XXX being at service small first training, existing and Part SMS, to rest and forward will this communities. requirements in and cost advanced particularly assets always done to flight bar SkyWest the safety. and SkyWest programs carriers, dispatching, as to I the clear always, space priority critical space active

for remains our strong. products demand of each Overall, exceptionally

and executing As to we are game best the execute reliably positioned on our business long remain to on laser we for focused respond ensuring fundamentals, we opportunities.

quarter, As be better set up company. I fundamentally have we and ourselves a to last discussed different

on core the sustainable set XXXX have have that focusing up in for of and this ensure by beyond us our will we solid and future. business areas We done a growth

financial Rob the will now data. through take us

Robert Simmons

loss reported quarter we first share. pretax of million our Today, or was per million. $XX loss GAAP QX $XX $X.XX loss net

XX.X for was was tax and average million share weighted QX rate effective Our count XX.X%. our

First Leasing XXXX. from down up up X% QX up and revenue and QX revenue. up QX and X% X% breaks other X% from down revenue down in $XX and X% QX from QX X% Prorate QX QX was of Total $XXX sequentially revenue is X% XXXX. sequentially million and QX year-over-year. with XXXX. is QX down from million down from from XXXX revenue revenue X% contract

quarter obligations related the released $XX of received $XX deferred the This effect These quarter. $XX include and to QX of XXXX. deferred in during $XX million GAAP in revenue million million that of in to QX of performance million completed cash revenue results compared with $XX QX was relates deferred million this

deferred in future that QX, cumulative have periods. As of of end will $XXX of revenue be million we recognized the

revenue of $XX last and three balances beyond. revenue approximately next into expected in quarter per before indicated reverse deferred quarter, the to As begin we for million these quarters XXXX

billion me last million, $X the over quarter. with quarter down sheet. ended about of a the to balance from million move Let little cash $XXX We $XXX

fair SkyWest market, approximately outstanding shares $XXX for open acquired we the buyout aircraft and for obligations company million, the $XXX value transaction lease the us $XX acquired stock estimated of agreement CRJ of allows $XXX to bought of aircraft cash debt, lease the XX% This quarter, the an approximately in under we we repaid future shares engines. XX X.X and This in million. of million back million paying avoid million early of

lease So, $XXX avoiding instead and million. both paying engine future then aircraft in lease million the the by costs the $XXX to assets million all back value in and obligations and of tremendous $XX million, lessor, worth acquiring unlock assets and for by we retaining $XX future giving

capitalized buyout XXXX. transaction and of early $XXX fixed from lease quarter the with from the billion CapEx assets. fourth $XX Our during assets $X.X was million ended of as other QX year-end million, down We of $X.X billion, including net debt

buyout, numbers buying in than it of the million during an combined production CapEx repaying positive illustrates from operations executing constraints in with flow $XXX back the These $XXX million in tell strong lower quarter, that cash a the quarter, prior falling with This and cash important about flow early quarter. $XXX despite only $XXX benefit cash million debt, from story generated stock cash investment related free in spite higher of years. a we in reflects million last and lease labor costs

deployed collateral $X could over to liquidity well continue that unpledged of have be billion also additional needed. if for We ever

in including aircraft has service fact that over Additional fleet flexibility of obligation. our comes partner-owned XX% no financing the from

to liquidity tools sheet and value. Our strong strong to balance powerful continue shareholder be create

effect model that at commented Consistent we little million specific we giving not guidance we but quarter, "modestly color. of give expect and any From policy with me improved. in our results $XX revenue several last elements practice, our be when per let quarter in deferred roughly XXXX, are time, XXXX to of the have EPS before this a profitable" you

reflecting now XXXX captain Wade our our partners. we be XX% block XXXX all hours down reimbursements cost XX% higher from based metrics. XXXX to minute. to block Two, hour now improving improved, pilot production will have in we with has four down approximately We completed expect in expected be attrition amendments on for outlook discuss a that for which One, of

still company's had approximately X.X $XXX stock under previously million XX% able of plan shares the $XXX QX were we back during is to our Three, repurchase are authorized million for targets. buy that at million or QX activity. X/XX/XXXX outstanding year-end. as million $XX.X $XX.X Total shares outstanding unused million data of their important rebuild analysts as from an EPS down point This before this

from closed acquired P&L includes a benefit QX lease expense near noncash under million $XX avoidance of new CRJ early the $XX similar million that was four, will Note, reduce projected impact pretax the transaction there the transaction. number the quarterly mentioned quarters. previously the transaction our as not the This by XX expenses quarter. buyout of for next four And net earlier on per lease aircraft this approximately depreciation end operating quarter

down Consistent results from million expect with revenue in total we profitable quarter's per in comments, $XX deferred XXXX be roughly XXXX, remain to but the XXXX. before GAAP last quarter continue effect of to

this thereafter. expected years revenue, points of XXXX, per call expect deferred $XX In balance five GAAP will spite would and for $XX I several to in reverse revenue out. by in like We million million quarter approximately to to by continue deferred there reverse the loss XXXX driven are

of XXXX three, today more minute. place compared $XXX two, fleet over $XXX growth expect Number cash capital still be to billion Wade XXXX expected to around a near give investment, to down accommodate Number we without million be million. including XX% this incremental Number in year-over-year debt expect end XXXX. the can $X one, in to XX% the XXXX we of in at repayment CapEx future quantification will in

contract quarter reduction this years. activity to the five, nicely flow EPS four, the first for growth partner the number Number shares when set share return from outstanding in we amendments last best GAAP CapEx outlook drive year's cash XX% production repurchase and profitability. the And will could improving reduction, free stage five the in

fleet to returns. couple of industry We years to the time total cash we the position way utilization incremental pilot our that the preserve actions optionality over shareholder the for through taking to the are strong well the strong monetizing over imbalance and next prepare drive position us to believe work and demand affecting will of of our now opportunities

Wade?

Wade Steel

you, Thank Rob.

a our provide fleet and as on charter, status businesses. leasing an I'll well update as and production prorate update

our last nearing are schedule. of delivery completion discussed As strong we quarter,

last bring order. XXXX remaining on two to XXX have the anticipate EXXX quarter total one aircraft. We fourth XXXX, fleet in of This the in and our XXXX. those EXXXs will taking EXXX in We four of

increased our partners over discussed, last last quarters each As we working we've continued mainline the ratified with two to previously of agreement address pilot pay the year.

During mainline on quarter, came increasing this cost. our partners our an to agreement we rates new first for remaining with the

reimbursement. the all of appreciate in quarter We support partner cost our quarter first be continued and The reimbursements. complete full second our to will impact confidence include the this all partner our product of additional and

our review me production. Let

quarter we by first hours our of fourth block current The approximately quarter have that will hours from our increase to as quarter. the the as to anticipate approximately compared by XXXX. down compared for block we on were major Based the second first X% the quarter schedules in X% QX, partners

captain have our As in a Chip attrition. trend discussed, seen we positive

than With quarter. the improvement XXXX XX% from captain as be to an is lower will hours communicated last block anticipate which the down attrition that planned, we XXXX our compared we XX%

As additional we and to to the CRJ aircraft. block beyond, add can fleet for fleet any This and accretive without makes our XX% XX% very model. hour we number same block our ERJ is to approximately over additional more look XXXX each hours

efforts our conversations supporting with partners, are production. restore Given very our our to in they engaged

XXXX, lease fair the are worth payments most We alone we $XXX inflexible unnecessary $XXX leases under the XX some the and return costs value of We avoided QX agreements. of were over over during purchased also $XX million. of and believe CRJ million. Additionally, engines the for lease million These cash expensive we early acquired an lease and buyout. aircraft aircraft

about Let Charter. me the business. new our give of charter SkyWest update brief a status

completed the March, we all received all necessary an operate runs as During FAA the airline. from to proving and approvals

April, During revenue on-demand we operated charter flight. our first

of about We progress the are new our airline. excited very

in operational the fitness not commuter and application commuter matters. primarily still the meant the from of carrier to received have managerial financial, terms of we demonstrate is The DOT. authority However, authority

things, and is has some well of believe Among the we well-capitalized other industry. SkyWest - is the Charter best a operational entity in leaders

DOT our Once able be commuter commuter issue we the all information the SkyWest and will requested are Charter authority. with forward communities. our and application, still SkyWest they charters. for serve them small are Charter plans provided Regardless better approve have We for to the of to of status granted, operate to the on-demand with authority moving waiting commuter

strong of rest like as extremely seen business, far yields demand we As very prorate have the our and great remains the support. strong, the industry, just community

will our communities continue continue the to with service. best We the to work on way

selling some success We having excess CRJ assets. some also of our are of

$X assets XX signed sell these letters second to and sold the will we or the approximately agreements million million purchase over we We months, anticipate of of close have past during During assets. and quarters. currently transactions of intent third XX

years last for to continued continue have each several financing flexibility work we're and differentiator The committed major continuing the flexibility us our reducing creative risk spent for well enhancing we are our We with provide solutions to to and positioned. a to to be partners and products. will of our ensure demand the exceptional fleet

Robert Simmons

ready Okay. Q&A. the we're for Operator,

Operator

[Operator Deutsche Instructions] with We'll first question take Bank. from our Mike Linenberg

Mike Linenberg

everyone. afternoon, Good Hi.

of go $XX was on the authorization couple although a program, million. powder you or $XXX have million would Do another million, guess there I'm of back of Rob an $XXX to outstanding some that? repurchase Just here. time, had just share it dry the still to of know been and Board reauthorized. the the get curious I that and I you for status have

Robert Simmons

Mike. thanks Yes,

Just quarter, we approved still the to available into program. previously was clarify, had going million a first $XXX under that

quarter, million April, of month During Chip was $XX the And done. in as we the there deployed of another million first that. mentioned, $XXX

of end that about we the only have of program. under $X available as will April, So million original

Mike Linenberg

Great. of all with I clarifying of point. the the that in Are purchased think airplanes? XX for were airplanes, those those productive those to what's carriers, I just or status Then missed on Thanks second the out that SkyWest leased off just that. some lease. other service

Wade Steel

Wade. is this Mike, Hi

assets I there CRJ like said. a were thought as we $XXX yes, worth XX fleet. of there in the Airlines my They're There said SkyWest in you are, script, engines. million all So was

today the flying So fleet. those all Airlines engines clearly within SkyWest are

they of be our Some fleet and on pilot but as within the may right are right airframes the now, situation all our we're ground for captain now. the optimizing

Mike Linenberg

then anything Typically that last of Obviously, contract? quid your can last a question. deals And to of just a partners. of with done as Congratulations length some getting my Okay, always great. four it quo, deal on element these get there's done, - the your pro risk, wish economics, you relates when have have one tail of out for under relates be to Thanks were as with terms, but there number sort it anything my questions. watching they we aircraft utilize just to trade-offs you the that for partner? better to of of that any contract, that kind answering share

Wade Steel

Hi Wade. this is Mike,

that's great a So question.

finalized of So, not the last and the our like said, we With agreement. to agreements, want of not term. all these those purposely we we extend did term extend any did on we

additional Right with of under now, them primarily all they are are these agreements, that very that. are just consistent rate reimbursements

pilot reimbursement really of like was additional that nothing airplanes didn't It We done. unusual. the for any there primarily out was So there take just a nothing was costs. contract,

Mike Linenberg

Okay, great. Thanks everyone.

Operator

next We'll Cowen. our Becker Helane TD take question with from

Helane Becker

Thanks very much, time for operator. here. Hi, the team. Thanks

to be Charter, use going strictly or that your that can to hire SkyWest new of So on the you fly existing is pilots some pilots?

Chip Childs

yes, will a we for hiring completely been we with demand be completely different Chip, new is on this operation. really as different pilots airline Helane, certificate, and that good Hi, have it's

Helane Becker

what And don't Okay. or you to do SkyWest? it, want have agreement then I you the flow-through a mainline call know

Chip Childs

Charter some to other. join opportunities as SkyWest flying So to from will to I there we this To type different of those a The move things be very the they're each be candid, other. any no each between strong. different entities type is demand necessarily arise. some may flow the Airlines to say, not like There's I going of of be But from at charter is doubt may extremely think two have very SkyWest moment. from

right continue building to we're Airlines. with build charters pleased need We're we what that now individuals and types and that, with hiring teams sports on-demand do and those as to from the SkyWest separately to demand corporations continue high-wealth and fill of we'll we and very flying,

Helane Becker

Okay, that's you. Thank perfect.

Chip Childs

Thank you.

Operator

We'll from take Savi question our Syth with James. Raymond next

Unidentified Analyst

covering Matt Savi for everybody. afternoon, It's good here. Hi,

gave you you guide, hour to the quarterly the progression can me, several over block give next quarters? the like you on First, look expect - what

Wade Steel

Yes.

great. So, Mike,

Matt. So,

So sorry Yes, that. listen, about this is Wade.

going down said year and sorry, XXXX. or XXXX down QX XX%. then anticipate entire excuse was So, to to to X% so yes, and for then of X% it from we're We QX, the up being up XX% down, we QX QX, so and from me, compared

- you gave we my So And script. can publicly. we in the that's what comparing of fill what's in kind out from there there blanks

Unidentified Analyst

availability shifted Okay, correctly? think be there perfect. permanent on there and could XXX Thanks that is or XX for could then helpful? the clarifying CRJ I color any CRJ fleet that. that or related looking I at one maybe that you a pilot to reduction. XXXs about the talk And or short-term Was - reduction And a was

Wade Steel

Yes, and release. maintenance we've do prorate airplanes at has that numbers and fleet have that so just this of Those stuff and that's away are in those heavy would parked the the some point. that the some airplanes primarily expired, gone

Unidentified Analyst

Okay, Do expect XXX some get American point? you to thanks. XXX, at a to still

Wade Steel

calls agreement for our right XX. now Currently

Unidentified Analyst

Thanks for appreciate clarification. I the it.

Operator

O'Brien from We'll next take our Catherine question Goldman Sachs. with

Catherine O'Brien

Hi, the just one quick follow-up to first good question. for afternoon, Mike's time. Thanks my Maybe gentlemen. a

on the partner the So congratulations the by fourth agreeing pilot on which way. costs reimbursement to

partner your XX% costs. covered us quarter, to So increase you on got in now agreements a the that closing XXX% in to being about partners through? like XX% last believe the now, with three told on you are With other this I pass you fourth pilot

Wade Steel

are increases now Yes, vast off. majority the close pilot our we covered to of

Catherine O'Brien

That's great.

loss can quarter, XXXX you range. in Okay. was the somewhere the modestly said Last revenues. excluding $XXX you the help And the $XXX just pretax just guess out profitable deferred million had - like flush maybe us outlook. million then changes GAAP I in to

can much about us $XX the be two hours Thanks results greater and million profit down onset from block help last pilot us between the expect much. to the how you pass-through think year, so range? GAAP also We swing

Robert Simmons

in from be Look, different final of Yes, down that XX% a we are was our of completion to hour part last 'XX number that elements of to improving I originally agreement thanks outlook this. think that's that script, down. what Cathy. we outlook block talked about the quarter expected Part amendment we've there partner the into XX% got. The that of that as the play

over million very the approximately with lease about and as transaction we've P&L talked in is benefit a The cash $XX four also next from early quarters. perspective buyout contributes good the

from and a things lot have there elements of that XX evolved far lot of our pleased victory that ago, we're days we are that, declaring have improved, are this a from point. So still at of model but with

Catherine O'Brien

to or tabulate all go aggressive? pauses that's a year trying breakeven we head be here, as result the we in could this looking but at my I'm GAAP too

Robert Simmons

improvement look, to in to our I not days, granularity, of XX can going GAAP outlook. last that Well, give seen we're in own guidance material that, we've level the but say

Catherine O'Brien

get business? for Had as that there DCA the I your you move Got guess to operations decent maybe it. around the at all? like, is so And partners have York cost impacting give try. capacity is for you Thanks City on amount capacity it time. any so Do to quick a the last slot much in your just long to just one to of to one move SkyWest around? all notice, New And is waivers, and that any or

Chip Childs

corridor airplanes there And clearly up relative is don't Chip. West. Detroit has to Chicago we the operation slots, the infrastructure all still perspective, in a we're very sure right that locations what other have Yes to with we and flying that. big our they that fly still in you Cathy. impact bases that we're to a on is, do very because you work supportive even have from over enough have this strong make well mostly for our northeast Yes, Thanks to just and do their partners flying the

about us to involves a usually pretty So, sophisticated they want anytime move, it that. conversation

just impact, so an there, do flying we of a our from a of up lot look, don't lot it So so. have doesn't perspective,

Catherine O'Brien

you. Thank

Operator

to And Chip turn there time. I'd remarks. at like this call Childs are back for no closing over questions the further to

Chip Childs

for you, interest your Thank the today. call everyone Lisa, you on and thank

that I our and to moment how some we're and been we're the of has great Again, of all making our I of a pivotal right what this the went a strategic accomplish we say to for our teams here. of think long-term take We partners. decisions and sort enough - were reliability think first our care and do trying able well can't in months winter stakeholders. relative about what to the to quarter

end the today. appreciate We to quarter. you. next you and you Thank will joining, We we'll call talk

Operator

concludes you participation. your that And for Thank presentation. today's

may disconnect. now You

SkyWest (SKYW) 27 Apr 232023 Q1 Earnings call transcript