SkyWest reports fleet transitions, contract updates designed to reduce risk

SkyWest, Inc. (NASDAQ: SKYW) has reported additional fleet transitions and contract updates designed to reduce SkyWest´s long-term fleet risk and enhance its ability to respond to changing partner needs, the company said.

SkyWest expects its ExpressJet operation to transition to flying primarily dual-class aircraft in its CRJ operation by removing its CRJ200 aircraft from service over the next year. The removal of the CRJ200 aircraft reduces ExpressJet´s future required investment in its 50-seat fleet and is expected to improve the airline´s operating efficiency by eliminating an aircraft type from its platform.

The carrier said ExpressJet and American Airlines have agreed to place 12 dual-class CRJ700s into service under a multi-year term. These CRJ700s had been scheduled to be removed from service under a previously disclosed early lease return arrangement.

SkyWest and Bombardier entered into a termination agreement covering Bombardier´s residual value guarantee (RVG) agreements on 76 CRJ200 aircraft owned by SkyWest Airlines and ExpressJet. Bombardier agreed to pay SkyWest USD90 million by January 2017 along with certain other consideration in exchange for the release.

The company said it anticipates it will record a non-cash impairment charge in Q4 2016 estimated to be in the range of USD440 million to USD490 million (pre-tax) on its CRJ200 aircraft and other 50-seat aircraft assets, net of the USD90 million in cash proceeds from the Bombardier termination agreement.

SkyWest, Inc. is the holding company for two scheduled passenger airline operations and an aircraft leasing company. SkyWest´s airline companies provide commercial air service in cities throughout North America with more than 3,100 daily flights carrying nearly 57 million passengers annually.