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SkyWest (SKYW) Q2 Earnings Beat on Fleet Transition Efforts

Zacks Equity Research

SkyWest SKYW delivered better-than-expected results in the second quarter of 2019. The company’s earnings of $1.71 per share surpassed the Zacks Consensus Estimate of $1.60. Also, the bottom line improved 19.6% on a year-over-year basis. Results benefited from the company’s fleet transition initiatives. Notably, SkyWest has added 25 new E175 aircraft and 11 new CRJ900 aircraft to its fleet since the second quarter of 2018.

Quarterly revenues came in at $744.38 million, beating the Zacks Consensus Estimate of $732.97 million. However, the top line declined year over year due to the sale of ExpressJet Airlines in January 2019.

SkyWest’s efforts to modernize its fleet and streamline operations are very impressive. The company aims to reduce the 50-seat jets from its fleet and add new E175 aircraft. This St. George, UT-based carrier reported a 7.7% increase in block hours (a measure of aircraft utilization) during the quarter under review.

SkyWest, Inc. Price, Consensus and EPS Surprise


SkyWest, Inc. Price, Consensus and EPS Surprise

SkyWest, Inc. price-consensus-eps-surprise-chart | SkyWest, Inc. Quote

Operating expenses declined 11.6% to $600 million owing to the sale of ExpressJet Airlines. Expenses on salaries, wages and benefits decreased 17% to $243.77 million.

The company, carrying a Zacks Rank #2 (Buy), exited the reported quarter with cash and marketable securities of $550 million, up 1.1% sequentially. Total debt as of Jun 30, 2019 was flat sequentially at $3.1 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We are also pleased by the company’s efforts to reward shareholders. To this end, the company bought back shares worth $35 million under its $250-million buyback program.

Apart from announcing quarterly results, the company has entered into a multi-year contract (effective early 2020) with American Airlines (AAL) to place 10 used CRJ700s. SkyWest expects to acquire seven CRJ700 aircraft from a third party and internally source three of those.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting second-quarter earnings reports from key players, such as Expeditors International of Washington, Inc. EXPD, Air Lease Corporation AL and Hertz Global Holdings, Inc HTZ. While Expeditors and Hertz will report earnings numbers on Aug 6, Air Lease will release the same on Aug 8.

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