ST. GEORGE, Utah, April 27, 2017 /PRNewswire/ — SkyWest, Inc. (NASDAQ: SKYW) (“SkyWest”) today reported financial and operating results for the first quarter of 2017, including net income of $35 million, or $0.65 per diluted share, compared to net income of $27 million, or $0.52 per diluted share for Q1 2016. The improvement in pre-tax income over Q1 2016 was primarily due to SkyWest’s continued fleet transition, including the addition of 45 new E175s, and the removal of 45 ERJ145s and 16 CRJ200s since Q1 2016. Additionally, since Q1 2016 SkyWest has transitioned 38 CRJ700s it previously operated under agreements with other major airline partners to American Airlines, Inc. (“American”) under a multi-year agreement, further reducing fleet risk.

Commenting on the results, Chip Childs, SkyWest, Inc. Chief Executive Officer said, “Despite the weather challenges we faced at the beginning of the quarter, our dedicated teams worked hard to minimize passenger disruption. The solid operating performance, combined with continued execution on our fleet transition, delivered a stronger than expected March which is reflected in our improved profitability this quarter. Our first quarter results reflect the outstanding work our professionals do each day to provide an excellent product to our customers.”

Q1 2017 Financial Highlights

Revenue was $765 million in Q1 2017, up from $762 million in Q1 2016. The increase in revenue included the net impact of adding 45 new E175 aircraft since Q1 2016 (of which seven were delivered in Q1 2017), partially offset by the removal of unprofitable or less profitable aircraft over the same period, including 45 ERJ145s, 16 CRJ200s and eight CRJ700s.

Operating expenses were $689 million in Q1 2017, down from $700 million in Q1 2016. The decrease was primarily due to lower direct operating costs from 24 fewer aircraft in service and a 7% reduction in block hour production, partially offset by higher fuel costs and crew training costs associated with the new E175 aircraft deliveries.

Net income for Q1 2017 included a $3 million income tax benefit related to accounting rule changes around equity compensation adopted January 1, 2017, resulting in an effective tax rate of 34% for the quarter. SkyWest expects an effective tax rate of approximately 38-39% for each of the next three quarters, and an effective tax rate for the 2017 year of approximately 37-38%. Diluted shares used in SkyWest’s earnings per share calculation also increased by approximately 350,000 shares related to the same accounting rule changes.

Q1 2017 Operational Update

As of March 31, 2017, SkyWest Airlines and ExpressJet Airlines, Inc. (“ExpressJet”) had a total of 38 CRJ700s under a multi-year contract with American. Between SkyWest Airlines and ExpressJet, a total of 49 CRJ700s are expected to be in service with American by the end of Q3 2017. The 49 CRJ700s scheduled for service with American were previously operated by SkyWest Airlines and ExpressJet with other major airline partners.

50-seat Aircraft (CRJ200s and ERJ145/135s):

As of March 31, 2017, SkyWest had 208 CRJ200s and 137 ERJ145/135s in scheduled service. SkyWest anticipates it will reduce its CRJ200s by approximately 30 aircraft and its ERJ145/135s by approximately 37 aircraft by the end of 2017. As previously announced, ExpressJet anticipates it will transition to flying primarily dual-class aircraft in its CRJ operation by removing its CRJ200 aircraft from service by the end of 2017.

Q1 2017 Capital and Liquidity

SkyWest had $586 million in cash and marketable securities at March 31, 2017, up $21 million from December 31, 2016 and up $144 million from March 31, 2016. During the first quarter, SkyWest used $17 million in cash and $11 million in previously paid deposits toward the purchase of seven E175 aircraft. SkyWest also repurchased $10 million of SkyWest common stock under its $100 million share repurchase program.

SkyWest issued $158 million in long-term debt during Q1 2017 to finance seven E175s delivered during the quarter. Total debt increased by $69 million during the first quarter from the new E175 aircraft acquired, net of scheduled principal payments.

In Q1 2017, excluding aircraft purchased, SkyWest used $26 million for other capital investments, including spare engines and aircraft parts.