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Company Profile of SkyWest Airlines
Company Profile of SkyWest Airlines - May 13th, 2011
SkyWest Airlines, Inc. is a North American regional airline headquartered in St. George, Utah, flying to 159 cities in 40 U.S. states, 6 Canadian Provinces, and 1 city in Mexico. The airline serves as a feeder airline, operating under contract with various major carriers. It flies as SkyWest Airlines in a partnership with AirTran Airways, United Express on behalf of United Airlines and as Delta Connection on behalf of Delta Air Lines.
SkyWest Airlines is one of two airlines owned by SkyWest, Inc. (the other being Atlantic Southeast Airlines). Combined the two airlines make up the tenth-largest airline in terms of number of planes, operating 440 regional aircraft.
As of 2010, SkyWest employs over 11,000 people throughout North America. The airline operates 1,750 departures a day, with 1,197 operating as United Express, 522 operating Delta Connection and 31 as AirTran Airways. In total, SkyWest carried 24.3 million passengers in 2010.
SkyWest, Inc. is the holding company for three related companies. First is SkyWest Airlines, which after its 1998 expansion became the nation's fifth largest regional airline, with scheduled flights for passengers and freight to 12 western states and Canada. It serves both business travelers who use SkyWest as a commuter airline and tourists vacationing at ski resorts or California's beaches. SkyWest Airlines' close ties to both Delta and Continental airlines have been a key to its success. Second, Scenic Airlines offers air tours, general aviation, and scheduled flights to the Grand Canyon and other areas of Arizona, Utah, and Nevada. Third, National Parks Transportation maintains a fleet of Avis rental cars to assist sightseers and others who have flown to selected locations.
SkyWest, Inc. (SkyWest), incorporated in 1972, through its wholly owned subsidiaries, SkyWest Airlines, Inc. (SkyWest Airlines) and Atlantic Southeast Airlines, Inc. (ASA), offers scheduled passenger service with approximately 2,300 daily departures to 217 destinations in the United States, Canada, Mexico and the Caribbean. Its flights are operated as Delta Connection, United Express or AirTran under code-share arrangements with Delta, United or AirTran, respectively, with presence in Delta and United's key domestic hubs and focus cities. SkyWest Airlines and ASA provides regional flying to its partners under long-term, fixed-fee, code-share agreements. In November 2010, the Company acquired ExpressJet Holdings, Inc., the parent company of ExpressJet Airlines, Inc.
SkyWest Airlines and ASA provide low-cost regional airline service. As of December, 31, 2009, the Company’s consolidated fleet consisted of a total of 449 aircraft, of which 258 were assigned with Delta, 186 were assigned with United, three were assigned to Midwest, and two were assigned to AirTran. The Company operates one type of regional jet aircraft in three different configurations, the 50-seat Bombardier Aerospace (Bombardier) CRJ200 Regional Jet (the CRJ200), the 70-seat Bombardier CRJ700 Regional Jet (the CRJ700) and the 70-90-seat Bombardier CRJ900 Regional Jet (the CRJ900), and one type of turboprop aircraft, the 30-seat Embraer Brasilia EMB-120 turboprop (the Brasilia turboprop).
As of December 31, 2009, SkyWest Airlines scheduled daily flights as a United Express carrier, which included 250 flights to or from Chicago O'Hare International Airport, 320 flights to or from Denver International Airport, 210 flights to or from Los Angeles International Airport, 238 flights to or from San Francisco International Airport and 42 flights to or from other outlying airports. As of December 31, 2009, SkyWest Airlines scheduled 20 daily flights as a Midwest Connect carrier to or from Milwaukee International Airport. As of December 31, 2009, SkyWest Airlines and ASA scheduled 10 daily flights as an AirTran carrier to or from Milwaukee International Airport.
SkyWest Airlines provides regional jet and turboprop service in the midwestern and western United States. SkyWest Airlines offered approximately 1,500 daily scheduled departures as of December 31, 2009, of which approximately 1,060 were United Express flights, 410 were Delta Connection flights, 20 were Midwest Connect flights and 10 were AirTran coded flights. SkyWest Airlines' operations are conducted from hubs located in Chicago (O'Hare), Denver, Los Angeles, Milwaukee, San Francisco and Salt Lake City. SkyWest Airlines' fleet as of December 31, 2009, consisted of 21 CRJ900s, all of which were flown for Delta, 79 CRJ700s, of which 66 were flown for United and 13 for Delta; 138 CRJ200s, of which 81 were flown for United, 52 were flown for Delta, three were flown for Midwest and two were flown for AirTran, and 51 Brasilia turboprops, of which 39 were flown for United and 12 were flown for Delta.
On June 10, 2009, SkyWest Airlines and Midwest reached a mutual understanding to terminate the service SkyWest Airlines provided under the Airline Services Agreement. As a result, SkyWest Airlines removed its remaining 12 CRJ200 regional jet aircraft out of Midwest service in stages through January 2010. On November 4, 2009, SkyWest Airlines entered into an agreement with AirTran. Under the terms of the agreement, SkyWest Airlines has agreed to operate five CRJ200s for AirTran under a pro-rate arrangement. SkyWest Airlines commenced AirTran service with two aircraft in December 2009, and added three additional aircraft in January and February of 2010.
ASA provides regional jet service in the United States primarily from hubs located in Atlanta and Cincinnati. ASA offered more than 780 daily scheduled departures as of December 31, 2009, all of which were Delta Connection flights. ASA's fleet as of December 31, 2009, consisted of 10 CRJ900s, 38 CRJ700s, and 112 CRJ200s. On February 11, 2010, ASA began operating as a United Express carrier, pursuant to an agreement with United Air Lines, Inc. (United), to operate 14 CRJ200 aircraft as a United Express carrier.
The Company competes with Air Wisconsin Airlines Corporation, American Airlines, Inc. (American Eagle Airlines, Inc. subsidiary), Delta Air Lines (Comair, Inc., Compass Airlines and Mesaba Airlines subsidiaries), ExpressJet Holdings, Inc., Alaska Air Group, Inc. (Horizon Air Industries, Inc. subsidiary), Mesa Air Group, Inc., Pinnacle Airlines Corp., Republic Airways Holdings Inc. and Trans State Airlines, Inc.
SkyWest founder Ralph Atkin retired in 1991 as board chairman and CEO; Jerry Atkin replaced his uncle in those positions. In 1992 the firm broke ground for a new corporate office in St. George. The $3.6 million facility on a 15-acre site provided offices for more than 250 employees.
Some stock analysts in 1993 encouraged investors to consider the rising stocks of regional airlines, such as SkyWest, since the major airlines were losing a lot of money. Since 1990 the airline industry had lost nearly $10 billion, so investors naturally were skeptical. Yet most regionals remained profitable. And SkyWest's nonunion work force helped it keep down labor costs.
In June 1993 SkyWest's subsidiary Aviation Services West, Inc. acquired the flight tour operations of Scenic Airlines, Inc., a company formed in 1967 to provide tours to the Grand Canyon from Las Vegas and other sites. Following the acquisition, Aviation Services West changed its name to Scenic Airlines, Inc.
In 1994 SkyWest replaced Delta after the major airline canceled its jet flights from Salt Lake City to five low-volume cities: Casper, Wyoming; Butte, Montana; Burbank, California; and Rapid City and Sioux Falls, South Dakota. To service those routes, SkyWest ordered ten Canadair Regional Jets (CRJs) from Bombardier, Inc. These jets cost far more to purchase ($17 million each) and operate than the earlier Brasilias. CRJ advantages included greater range, up to about 1,200 miles. Powered by two General Electric turbofan engines, the CRJs cruised at about 540 miles per hour (Mach 0.8). This increased speed allowed SkyWest to offer additional flights in some markets. The CRJs featured seats for 50 passengers and the ability to fly up to 41,000 feet, above most turbulent weather.
SkyWest leaders struggled with the transition to jets. President Jerry Atkin in the September 1994 Business & Commercial Aviation admitted, "It is a good thing I did not know how big a task it was." And Ron Reber, senior vice-president of marketing and sales, said, "I did not think the [regional airline] industry would ever accommodate a ... 50-passenger jet." Reber changed his mind, especially after SkyWest worked through the protests of city leaders in Butte, Montana. For years Butte had enjoyed Western and then Delta flights. Montana's congressional delegation even visited Delta's Atlanta headquarters to request continued flights, but in the end the city rejoiced at the nonstop and more frequent flights provided by SkyWest.
SkyWest pilots faced challenges from the new cockpits in the Canadair jets. None had any experience with the more sophisticated video screens in the CRJ's glass cockpit, which provided an overwhelming amount of information. After new training manuals were written, the pilots spent hours on flight-training devices and simulators to make the transition.
In October 1995 Skywest and Continental Airlines signed a marketing and code-sharing agreement whereby SkyWest became a Continental Connection in markets operating in and out of Los Angeles. Only about three percent of SkyWest passengers connected with Continental flights in 1996, however, far less than the approximately 48 percent interline passengers who connected with Delta flights the same year.
In 1996 the firm flew more than 2.5 million passengers and bought its sixtieth plane as it continued to expand in the western United States. The fleet then consisted of 50 Brasilias and ten Canadair Regional Jets. That same year it retired its last Metroliner, the company's mainstay for many years.
SkyWest announced a marketing agreement with United Airlines effective October 1, 1997, in which SkyWest began operating as United Express. This code-sharing agreement, which replaced WestAir, gave SkyWest more connecting opportunities at the Los Angeles International Airport, where United was the largest major carrier. At the same time SkyWest reaffirmed its Delta Connection contract for flights between Los Angeles and Salt Lake City.
In 1997 SkyWest celebrated its 25th anniversary. As of October 1, 1997, it operated 585 daily departures to 45 cities in 12 western states and Canada. Its longest and only international flight was between Salt Lake City and Vancouver, Canada, using the Canadair Regional Jets.
SkyWest and United on January 19, 1998 signed an agreement that SkyWest would begin operating as the United Express carrier at United's San Francisco hub on June 1, 1998. At that time it began offering some 90 departures daily to 12 California communities. In 1998 SkyWest expanded its United Express flights to include shuttles between outlying communities and the airports in Portland and Seattle. Thus in 1998 SkyWest operated as a connecting carrier to three major airlines: Delta, United, and Continental. Company executives planned to add 30 more Embraer Brasilias by October 1, 1998 to handle its new West Coast lines. These purchases would use some of the $40 million raised in a secondary stock offering completed February 12, 1998.
The firm's financial performance for fiscal year 1998, ending on March 31, showed that its annual revenues increased to $297.1 million from $278.1 for fiscal year 1997. SkyWest's fiscal year 1997 net income was $10.1 million or 50 cents per share. In fiscal year 1998 those figures more than doubled, with net income rising to $21.4 million or $1.06 per share. Not bad for a company that its owners once wanted to give away!
Principal Subsidiaries: SkyWest Airlines, Inc.; National Parks Transportation Co.; Scenic Airlines, Inc.
Market Cap (Mil.): $829.78
Shares Outstanding (Mil.): 52.89
Annual Dividend: 0.16
Yield (%): 1.02
SKYW.O Industry Sector
P/E (TTM): 12.66 19.62 18.80
EPS (TTM): -21.36 -- --
ROI: 1.81 2.40 4.19
ROE: 5.09 7.36 7.33
Incorporated: 1972 as Inter American Aviation, Inc.
Sales: $297.1 million (1998)
Stock Exchanges: NASDAQ
Ticker Symbol: SKYW
SICs: 4512 Air Transportation-Scheduled; 6719 Holding Companies, Not Elsewhere Classified
Name Age Since Current Position
Jerry Atkin 62 1991 Chairman of the Board, President, Chief Executive Officer
Bradford Rich 49 Chief Financial Officer, Executive Vice President
Russell Childs 43 2007 President and Chief Operating Officer of SkyWest Airlines
Bradford Holt 51 2007 President and Chief Operating Officer of Atlantic Southeast
Steven Udvar-Hazy 65 Lead Director
J. Ralph Atkin 67 1991 Director
Ian Cumming 70 1986 Director
Henry Eyring 47 2006 Director
Robert Sarver 49 2000 Director
Margaret Billson 49 2006 Director
James Welch 56 2007 Director
Michael Young 61 2009 Director
444 South River Road
St. George, Utah 84790
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