SkyWest (SKYW) 31 Oct 242024 Q3 Earnings call transcript

Hello, and welcome to the SkyWest Inc.

Third Quarter 2024 Results Call. [Operator Instructions] As a reminder, this conference is being recorded.

At this time, I would like to turn the conference over to Rob Simmons, Chief Financial Officer. ahead. go Please

joining for the today. call Thanks, us everyone, on

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

today the I'd turn to read I over to Chip asking the like by Eric harbor. safe to Then comments. start time will for some

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

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

Today's and or forward-looking as uncertainties. whether update statements otherwise. to and beliefs, discussion to that contains statement, events and represent assumptions are a current result our We risks events obligation forward-looking expectations, assume of no regarding new future any future subject information,

will from and projected results likely or estimated of materially a anticipated, vary for may those number reasons. vary Actual

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

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

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

a and quarter in Helene flying go strong operations, and to people true hearts season. lost geographically, there others by SkyWest. affected And at brought Milton to on ones truly wasn't to In a our third these The support out and who here colleagues the storms. East those people SkyWest our amazing rallied our even have while humanitarian fashion, our loved significant homes impact Coast. hurricane provide monetary Hurricanes for We and

companies This Time during delivering quarter quarter than by be XX.X% XX,XXX the year, a to named same Magazine latest Magazine as honored adjusted more of the over one best also completion. in the by was midsized flights thank choice great for focus aviation continuing to America's is our recognition SkyWest work underscored I professionals. we last to completed deliver have the our of want employer product. team for their and exceptional that product providing on more awards of than an outstanding for our customers an remaining Time series XX,XXX and

$XX diluted $X.XX per Today, reported for net third income of of SkyWest the million XXXX. quarter or share

pleased agreement under very Airlines majority being an SkyWest to reached with have CRJXXXs multiyear of existing a place United are covered to that XX at those CRJXXX agreement the We our announce from fleet. we aircraft with

through position ongoing Additionally, of the in balance. you additional by I staffing slated book improvement during the availability demand would bringing third aircraft strong regional with remind have from delivery, quarter XXXX, pleased hour Over XXXX. XX year delivery and this our fourth from overall of dual-class captain was of for quarter our we continues the to We're that XX% and us increased the market production continued block EXXX and our the XXX to us share. end also pilot for

have very We next strong of our year. hire program filled pathway August new a and through classes are

we As confident the term. we long are pilot help over will the place our measures stabilize have in restore staffing production, we

for return utilization to to to a that as small expense maintenance works and We do and as our full in last and see we XXXX a in to regional opportunities to hour the markets. this With and just below demand capacity be or up more end We in at production industry the underserved rightsize demand levels. year. the Wade we particularly this XX% by or for nationwide, will We speak aircraft with service. pre-COVID full middle that compared utilization progress, lift increase the about partner coming for by year about continued product block of anticipate expect still requested be very the increase strong minute. year near we'll significant expect

we and the focused on remain positioned staffing ensure well-positioned XXXX. our and investing are the our ongoing remainder industry. in in the several and XXXX fleet, In game of summary, people, remain well the are market partners the and last in respond of in possible our cap elements play situation continue demand, years in people optimistic long we We our best extremely about ensure fleet to spent partnerships the core our heavily to our improvements fleet Overall, to we our and and and our strong we to to demands. business,

now will the Rob us through take information. financial

million net $X.XX was GAAP income per quarter earnings third QX million. a reported income $XXX $XX pretax share. or we Today, of

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

is QX in Total up from XXXX $XXX revenue. due and from XXXX QX revenue about X% QX XXXX. was in XX% QX in in million up up XXXX. up breaks XX% down QX and XX% $XXX departures QX and sequentially from talk yields. from revenue passenger contract revenue $XXX up QX, million and X% from million, increases of revenue let's Prorate QX million up at with First, XXXX, XX% $XXX million from XXXX charter to QX and $XXX

of $XX GAAP deferring XXXX. effect and up recognition in revenue include of QX reflecting million $X recognizing QX recognizing $XX deferred of additional million revenue the results in year-over-year, was flat by sequentially the XXXX leasing $X revenue $XX and Leasing this to million million other compared of million at quarter and previously opportunities. These

cumulative the revenue in amount similar revenue QX, of quarter have of the previously will $XXX recognized deferred that recognizing million in end we of As a the fourth in We periods. deferred future third be quarter. of was anticipate that recognized

outstanding up QX per $XXX at Since repurchased share. quarter repaying over the increase in price quarter shares The and of with moderate to of company accretive the Let $XX.X price of XXXX, $XXX beginning share. actions or in of back XXX,XXX million million and million, per of ended for the cash quarter last shares $XXX included debt me during the approximately shares an $XX.XX move the of year-end. of We balance XX.X at stock of an we million at average SkyWest XX% for in $XX.XX the sheet. $XXX average have buying million slightly from million $XXX the cash

the third quarter numbers Our QX down an solid generate These including free flow billion, aircraft. $X.X million, We quarter one of the cash acquisition from operations. of of new EXXX continue billion $X with year-end story about CapEx $XX to XXXX. debt important ended tell we during as was that the positive from

we have EXXXs continue order on in future repay financing including advantage sheet powerful growth continuing strong all in repurchase while help well-grounded shareholder XXXX, of liquidity to to our tools us be XXXX, Our balance execute that over on will take tools $XXX value, opportunities, through debt and million us create allow expect to program. we the share XX to

like As we to on the remain invested we highlight capital, return focused on would following. improving our

as As compared September XXXX. million as million a to since $XX.X over XX, of beginning the the XX.X XX start of repurchasing of shares XXXX, of XXXX, we result shares outstanding million of had

of had repurchase As $XX going continuing share authorization. repurchasing forward. our anticipate be XX, September in we opportunistic shares under We million to remaining current

similar We on repayment million before XXXX XXXX $XXX are to financings. a in aircraft track new in to number over in debt our repay debt,

cash lowest point Our and their leverage over at are decade. a in debt, ratios of net

million, total of our $XXX anticipate XXXX. continue including new be to the EXXXs $XXX We X CapEx QX XXXX approximately purchase million to in will

XXXs. aircraft of with in We and $XXX the million, mostly by new acquisition, expect increase neighborhood driven XXXX engine CapEx to year-over-year be the

we're policy and me not additional Consistent at give on with XXXX. any specific time. our you this little giving XXXX But guidance and practice, EPS a let color

a approximately our up block over XX% As now from we hours ago. quarter up to Wade be of to anticipate will XX% discuss XXXX in the expectation a X% minute, XXXX, up

Our by utilization ongoing availability, XXXX production. outlook our improving modestly strong block hours is for and in demand our improved improving driven captain fleet

over be block up roughly We hours XXXX. expect XX% XXXX to

pre-COVID, XXXX outlook. to slightly be reflecting the above last $X low where GAAP and quarter's our we expect expectation EPS our We production updated the year in than for better area, were

We seasonally to below QX. be expect earnings QX

We XXXX in are front on us. EPS our be mid-$X in executing the successful if of expect to opportunities area we in the GAAP

the growth focus into and We are our including optimistic about XXXX, X going areas. possibilities following XXXX

business through of communities First, growth along today contract deployment with rate CRJXXX aircraft pro the our in announced with United. underserved XX

XX ERJ QX placing between and Second, end XXXX. of utilization CRJ the service into fleets; the EXXXs on improved and our new aircraft XXXX and third,

and that we to drive actions and strong monetize believe will be incremental in our opportunities optimize deployment invest us balance to liquidity, the opportunity of time taking to over will well We strong and the total sheet returns. demand fleet our shareholder position

Wade?

service XX includes this of We we for Thank total multiyear aircraft which the United year United during of will are to announced United, from flying Of CRJXXX XX XX be XXXX. of this total fleet end And last month. operating you, XX by by the XX CRJXXXs into a Rob. will existing of and a CRJXXXs, the aircraft the be these with anticipate fleet. end with Today, a be going announced our X will earlier the by modified new of purchased from our and and new agreement XX XXXX. XX

next to by of the We purchases year. middle expect these complete

the by XXXX. We point with CRJXXX excited now continued XXXX, United. additional July, arriving quarter transitioning are for with successfully fleet that net along I between new about we our first we partnership during CRJXXXs and want out aircraft, of first XX of to anticipate our flying represents Delta agreement this to of launched EXXXs and growth end Delta the the

approximately have XXXX. additional these are for under with that CRJXXXs, agreements each flying in prorate XX we expirations and aircraft have and place strong productively to CRJXXX we single-class CRJXXXs an our progress United, with This of aircraft and With CRJXXX agreements. contract partners is remaining the contract ideal replacement new Delta making

we earlier from contract. recall Express XX agreement EXXXs carrier under flying United You'll CRJXXXs United XX replace our for to a that announced year, another United-owned this

addition XX As and expect XX of that EXXXs These Alaska. XX SkyWest the aircraft all these and be United we transitioned this had order, are for to on X, XX to transitioned for XX in X will October currently year. new of

delivery took the quarter, X we Delta During agreement. EXXX under of third our

the XXXX total in world, XX% At in enhance the quarter, SkyWest XXXX, delivery expect to the of and X our XXXX. the with will XXX, be fleet in in our aircraft the end from as XXXX. XX% largest the of We continuing during to aircraft X Embraer fourth of dual-class share position our fleet, addition more dual-class the X EXXX large of large increased market has to operator regional

excited are about market improvement. We share our

review our Let production. me

The third on XXXX. that than will approximately fourth block the our from the we more quarter X% quarter second quarter QX, for schedules increase partners X% quarter. have hours hours major third current by up the compared anticipate to completed to we compared block of Based were our

that improve, As block our year. compared to XX% approximately continues by XXXX captain increase to our we will attrition last anticipate hours

XXXX over XXXX, block We our expect up hours levels. XX% roughly XXXX be to approaching

to the during and the approximately as still return XX to We are have single-class CRJ returned also seasonality model utilization contract prorate CRJ through expect months. to We XX be block aircraft hours dual-class CRJXXXs strong parked additional service summer either improves over and flying. could or that

quickly labor and into including CRJs experience flying service, our third-party we parts challenges. challenges continuing in returns network, As to and we MRO place are

As increase far anticipate first as of as our half maintenance of expense, second half in the to the million XXXX. XXXX we compared $XX

during We quarter as storage service a production expect continues current fleet maintenance our of and long-term out bring expense increase. the to to we aircraft $XX as million average XXXX

happen As maintenance will back would the you into before service. the goes aircraft expense expect,

engaged efforts restore production. very remain partners Our our to supporting in

little aircraft. assets. And These I CRJXXX remaining monetize. want over have our cycles X.X value monetize aircraft to and book CRJXXX own no plans to debt. approximately we our million to We also XXX very review have still

Our in with or partners prorate Airlines to contract is business. our assets fly under SkyWest at priority monetize to our these them

We aircraft service. SWC. Our XX or next at priority SkyWest operate these SWC on-demand is currently aircraft to Charter charter have

You'll asset also to will ownership recall engines includes under that Contour stake which provide in CRJ our provisioning agreement airframes minority and SkyWest an Contour.

prorate business, we great extremely the support. and strong, our remains community as demand far As have

service are We restore to our SkyWest seeing communities we opportunities CRJ several to return as production.

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

model. business, more to As our continue reintroduced see increase our will seasonality prorate we we into

remain our strong provide all good our feel continuing with major softer. QX solutions committed to for partners risk and are work enhance to QX demand of typical continued the QX and financing revenue We QX and fleet and our quarters efforts to airlines, are creative and As and with products. our flexibility reduce to ongoing each about

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

Instructions] right. [Operator All

Deutsche line comes Bank. Our first question the from from Linenberg Mike of

On the used, for an into of coming to that XXXs? adjunct incrementally airplanes going the XX CRJXXXs into airplanes carrier? inventory Or then to those that they remaining induct as United, another you're they United? from they are United? currently are And into is the you that, CRJXXXs, that United new are sort United Or XX that XX the an Express that are have grounded are converting from for going you and lift

is this Wade. Mike, Yes,

So that first been the United, of we're couple all, last on parked the in have those storage from XX of purchasing for CRJXXXs years.

So Express they United for for years. operator operating another not been have several

those be On the And transitioned of the we XX will bring United. are for currently XX, in those new XXXs, CRJXXXs. as to flying

flying are being in from those XX are are that are so the and some operating. And storage allocated and airplanes that

So we're little bringing of bit mix it's all a as of a those in. things

have you XX CRJXXXs do CRJXXXs how many the get storage, that the bring grounded? converted of So into out Wade, after you now XXXs, left

dual-class were Well, CRJ airplanes about that so in talked my grounded. script, XX we

so number shrink that by And so. XX or will approximately

to bring continue fly. more there opportunities some have and out back still we'll so to And some

is just Okay. then to Great. just guess, And clarify. I question, second my

the million a said like but think talked $XXX maintenance you It You expense. I meant $XX about you quarter, maybe increased sounded million?

Rob it's neighborhood million quarter next we what Yes, said expect $XXX it's year. about million in that to of change be no Mike, going year we here. from the will expense Yes, $XXX this last maintenance

million $XXX a about So quarter.

your based cities, Delta And in When they'll many the Okay. be of cities, pilot lost those additional could a And you there cities bring of back about how of were of last realize that you or service. I And coming SkyWest the number to see trying of I markets the where lack half Is and/or my pilots, believe with on those CRJXXXs. pilot online that those it SkyWest where the whether some cities back about from, American just And -- do how you then even withdrew XX believe availability. sense back -- cases, probably was because of XX United get codeshare cities many question. many cities? I'm XXXX? I in could of opportunity come or think they

now, Mike, right the you're to every Yes, at that's question. and markets one looking a Right we close are of those yes, great very numbers.

we're were. did our Maintenance, back overall, up. about we're in talk about in think the MRO. I maintenance from XX% we bringing I constraints where And those down

we and more. a are looking XXXX actively out bit those of take may and a it few So that but definitely even markets at little were of XXXX there all potentially

that X nailed categorize go you Yes, little is still bit that I'd it we we Chip. of entirely left this Mike, back to. can a One, kind into buckets. the cities

to still that lot we think to existing tremendous yet to of I there's pandemic amount cities to go be back new back a still we of go of lot were increase at flying most we're looking interesting us can cities that done. A cities. service we didn't that pre that well. of and those a And not to looking as is then that leave

to issue had. but getting So the to we we back it's it's to cities of a lot captain opportunities, that with left good not that try the limited

to that space we fact the COVID, of cities, new a largely cities the the that materially. you, have think I that because pretty regional on Just saw contract function the is of become overall new

today when about so at you're only And that platform it right one has think look the Is out it? to way X ago, cities. where there some are move these who looks into to really of we the versus really we years like the

it with the in pandemic, good, platform. to markets capitalize think best the have like a moved to lot the that this, of strong the throughout of to that would that position I feed deorganization but markets have bigger we we are with, our and would ability on opportunities do you you I also the smaller still nation. definitely a the of do out midsize on And yet to said, people backdrop still of

Our of comes Syth next James. question Savi Raymond from the from line

that prorate brief couple I Actually, purchase The the along of back of just the service, curious to you're was cities about questions extending kind a what capacity related two. -- kind of a of or is kind agreements? talking there. to of Mike's as kind clarification going into or of that between

weighted prorate. It's both, a toward bit heavily of but little

there of earlier on million CapEx, just thinking Is now year, next then And that CRJXXXs, why run the CapEx? conversion of sense. $XXX in is kind those? $XXX necessary? of Makes that inclusive that investment that maybe about of anything to through is think terms the that million. of we And kind investment Does I flying else of the done? Is think the there need kind to get

do will of Wade. also CapEx. is as They conversion Savi, We're those well. CapEx. through The purchasing from Yes, of this through XX those go United go

CapEx. the that would main those the through is but CapEx modification going reasons the So go are up,

sense. one. then one last if Makes And I might,

Just about be of kind captain in view that kind of where if where next updated next to flying of kind kind to of it's you levels settling or you'd and kind bring terms that are years? how could like in you the on all to of talked down. wonder the of summer I pilot side, CRJ of over you couple an you're maybe provide on investing

That's Yes. in X,XXX just probably most reconcile X,XXX of We of we've a can imbalance, question. pilots. now past. said kind At with pilots. the are good were what approaching the dire under our I we captain part

pre-pandemic think complement back be or pilots captain first to quarter, same I or pre of we'll of year the imbalance. the that end the by total we by were

we're those back So getting to numbers.

you And that the given our demand pilots say time we utilization -- the really, XXXX, relative pandemic, to the we've structure backwards COVID to good to should that by quarter and we get look has made to mid think of third that shape we've more comments at want. the lot need the by aircraft the we Wade partners getting a the I really in the I taken we be since then had. And would since what since additional time and than

out So to that I look, the of to have get of storage to we've up we demand that strong. pilots higher given perspective, don't get ever numbers and know want pilots, exactly, from we we'll type stuff when than know more of before but trying aircraft had and the is

So we we're we'll still throughout but a like XXXX. ago, better still said, updated, we where ago, and growing keep significantly months year is hiring, our were we're but X than situation

next from TD Cowen. Our comes question Tom from Fitzgerald

to to chances. about there you XX-seat great about quarter. opportunity Or pretty on another set same you good many there of there your Congrats feeling in year, how about out talked you taken? the the on would out us awarded Is to that still still had -- XXX out can aircraft and be Earlier being there? mind are updating those be

Wade. is this Tom,

RJ small Some take the for landscape, be our But and the as at allocated still RJ scope, class our demand well. appears you there's still very share scope getting of the large are have of opportunities partners. the the those look there good scope, quickly. that's airplane market to out at out up all But dual that lot to there filled in been a to opportunities that's we look opportunities and there But of there. partners strong as in advantage of small with the very

the somewhat we're have So filled they talking definitely moving in about, in but that those right been are numbers XXX direction. the

the do then dividend you maybe With is flows? in, just great how capital really of That's attract the trading at and where consider more shape all to a helpful. balance stock And sheet the is thinking Okay. allocation. about investor

point, at considering would say I It's not we here, reinstating Rob are dividend Yes. yet. the this Tom.

head year? squeeze as momentum in next Okay. after the into first in. helpful. strong update any I year we there the super more if could Is on you charter That's the front got And one

I year we're bigger season still Yes, have that. last very this from were busy operation. Charter Tom, before We're throughout winter about to the months Charter are is what optimistic than which is than year, our -- think and perspective, this for the that going very -- was the they bigger significantly bookings the significantly We're a Chip, we Chip.

as still still to to as that So incredible. optimistic well we the stuff dynamics have of continue teams strong going is the type the brings said bit, the corporate serious relative credibility seen, market and about as we about on we've call, SWC that see, authority. deserve. lot stagnating given travel a community community just sports that of we're And that be It's of we're and opportunities good quite that already that a to to small pursuing because

continues optimistic progress. very and it to SWC So about

That questions the queue. have we is that all our of in

turn it over for Chip I'll back So remarks. closing to Childs

your is Great, SkyWest. interest we've proud aviation Jeremy. We're want interest to you. we and professionals frame. company to in so Thank it represent hard sure quarter. Thank We as XX,XXX making amazing look we support forward Again, the had the the good to your -- of you everybody work through that February contribute and company thank at as for the the appreciate our they is. in And to time you. that updating year-end

conference. today's concludes day. pleasant Have That a