SkyWest, Inc. (NASDAQ: SKYW) has reported first quarter net income of USD 30 million or USD 0.59 per diluted share, compared to first quarter 2019.
Adjusted net income in Q1 2019 was USD 69 million, or USD 1.33 per diluted share, excluding the gain on the sale of ExpressJet and other special items1. The primary factor in SkyWest´s lower earnings in Q1 2020 compared to Q1 2019 was decreased demand in March 2020 resulting from the COVID-19 outbreak.
Revenue was USD 730 million in Q1 2020, up from USD 724 million in Q1 2019, primarily from the impact of adding 16 E175 aircraft since Q1 2019, partially offset by reduced passenger demand resulting from the COVID-19 pandemic in March 2020.
Operating expenses were USD 664 million in Q1 2020, up from USD 627 million in Q1 2019, primarily from additional aircraft maintenance and depreciation on aircraft and spare engines in Q1 2020 compared to the same period in 2019. For comparability purposes, SkyWest´s Q1 2019 results included ExpressJet January 2019 operating expense of USD 29 million.
SkyWest had USD 578 million in cash and marketable securities at March 31, 2020, up from USD 520 million at December 31, 2019. During the first quarter of 2020, SkyWest:
-Used USD 55 million to purchase spare engines and USD 22 million for other capital investments, primarily related to used aircraft, aircraft parts and maintenance assets
-Did not finance any new aircraft in Q1 2020
-Used USD 20 million to repurchase stock during Q1 2020
SkyWest expects to receive approximately USD 438 million as payroll support under the Coronavirus Aid, Relief, and Economic Security Act, of which approximately USD 337 million will be a direct grant and approximately USD 101 million will be in the form of a ten-year, low interest unsecured loan.
SkyWest has elected to receive the funds in four monthly disbursements from April to July 2020. SkyWest received USD 219 million of the USD 438 million in April 2020. In consideration for the funding, SkyWest will issue to the US Treasury Department warrants to purchase an aggregate of 357,317 shares of SkyWest common stock. The warrants carry an exercise price of USD 28.38 per share.
SkyWest has applied for approximately USD 497 million in secured loans under the CARES Act and is evaluating its level of participation in this loan program.
Total debt at March 31, 2020 was USD 2.9 billion, down from USD 3.0 billion as of December 31, 2019. As of March 31, 2020, SkyWest had a USD 75 million line of credit facility. SkyWest had approximately USD 9 million of letters of credit issued under the facility and USD 66 million available under the line at March 31, 2020.
SkyWest, Inc. is the holding company for SkyWest Airlines and SkyWest Leasing, an aircraft leasing company. SkyWest Airlines has a fleet of nearly 500 aircraft connecting passengers to over 250 destinations throughout North America. SkyWest Airlines operates through partnerships with United Airlines, Delta Air Lines, American Airlines and Alaska Airlines carrying more than 43 million passengers in 2019.