SkyWest attributes $51 million 2Q net profit to fleet transition

Utah-based SkyWest Inc., parent of regional carriers SkyWest Airlines and ExpressJet Airlines, reported a $50.5 million net profit for the 2017 second quarter, up 25.4% over $40.2 million net income in 2Q 2016.

SkyWest’s second-quarter revenue increased 1.1% year-over-year (YOY) to $809.8 million while expenses fell 2% to $703.2 million, producing $106.6 million in operating profit, a 26.7% rise.

“Our [2Q] results reflect strong production, solid operating performance and ongoing fleet improvements,” SkyWest CEO Chip Childs said, attributing the net growth primarily to SkyWest’s continued fleet transition, including the net impact of the addition of 47 new Embraer E175s, partially offset by the removal of 76 “unprofitable or less profitable aircraft”, including 51 ERJ-145s, 18 Bombardier CRJ200s and seven CRJ700s, since Q2 2016.

SkyWest added five E175s into service with United Airlines and another five E175s into service with Delta Air Lines during the second quarter. An additional E175 will be delivered in the fourth quarter; the company will close out the year with a total of 104 E175s.

During the quarter, SkyWest and ExpressJet completed the transition of 49 CRJ700s from un-named “other major airline partners” to American Airlines under a multi-year contract, “further reducing fleet risk,” the company said.

SkyWest attributed its decrease in expenses to lower direct operating costs related to having 29 fewer aircraft in service, as well as a 5% reduction in block hour production. The cost cutting, however, was partially offset by higher crew training expenses associated with the new E175s.

Also during the quarter, SkyWest pilots agreed to extend their current salary contract for four years, effective July 2017 through mid-2022, and will receive additional compensation primarily in profit sharing and 401(k) matches.