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SkyWest Inc. Message Board

  • dabmu dabmu Aug 15, 2002 2:33 AM Flag

    UAL Exposure Facts - Minimal

    Let's look at the real numbers. First, only 1/3 of SKYW's business is UAL-driven, according to the latest 10-Q:

    "As of June 30, 2002, approximately 68% of SkyWest�s capacity was under the Delta code and 32% was under the United code. "

    Now, total accounts receivable are $35 million compared to $350 million in cash and short-term investments. If 1/3 of the A/R is UAL, it is less than $12 million, or less than 4% of total cash and investments.

    In the worst case, UAL would continue to operate and pay its suppliers at least part of what is owed. Also, future SKYW flights would probably be on a cash and carry basis authorized by a bankruptcy court.

    So what is the danger? SKYW may have to write off a few million in receivables compared to the $90 million in profits they expect to make this year.

    Those are the facts.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Its called a code share. Don't you read the news?

    • "No one else has the capacity to provide the feed to UAL.


      Its called USAirways"

      Ha Ha Ha Ha HA

      thats the funniest thing Ive heard in a long time. USAirways mechanics wont accept concessions. There is no way UAL could pay U enough to fly the routes. Fat chance of that ever happening.

    • The real fear and risk of a UAL Chapter 11 is that it allows UAL to cancel all "executory contracts" including SKYW's 10 year agreement with UAL. There is no risk of losing UAL as a customer or of losing flights. The only threat is a permanent reduction in SKYW's margins and contact rates. That would hurt.

    • In the upcoming year, SkyWest will receive 25 CRJ's for operation under UA code. In the same time period, they will receive 10 CRJ's to operate under the DL code. Clearly, SkyWest is increasing its exposure to UAL which could be dangerous if UAL goes into BK.

      Maybe SKYW could shift some of those UAL bound RJ's over to DL if UAL is no longer able to keep up. DL has said that it is still unhappy with the performance of SLC and wants to improve it either by adding new markets (RJ growth) and/or replacing unprofitable mainline routes with RJ's (more growth). Although, there can't be that many more mainline routes to downgrade that are within the reach of the RJ.

      • 1 Reply to uconnflyer
      • Market seems to assume UAL will cease operations, and all the UAL passengers will be denied to SKYW feeder lines. Why?

        Most airlines in BK continue to operate - and if UAL isn't there, the passengers won't cancel trips, they just book another airline.

        If their trips require feeder service, SKYW can be there to meet it.

        This freaked out bear market shoots stocks first and asks questions later. The SKYW story looks very solid to me, no matter what happens to UAL.

        Remember, SKYW was the airline with the smarts to maintain an affordable cost structure while the biggies overbuilt.

        I am holding my SKYW investment past this storm in a teacup.

 
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