SkyWest Q1 Profit Drops, But Stock Up

(RTTNews) - SkyWest Inc. (SKYW) reported that its first-quarter net income dropped to $29.99 million or $0.59 per share, from $88.18 million, or $1.69 per share last year, due to lower demand in March 2020 resulting from the COVID-19 outbreak.

SKYW closed Thursday regular trading at $24.07, up $0.06 or 0.25 percent. In the after-hours, the stock further gained $2.43 or 10.10 percent.

Adjusted net income for the prior year was $69 million, or $1.33 per share, excluding the gain on the sale of ExpressJet and other special items.

Revenue was $730 million up from $724 million last year, primarily from the impact of adding 16 E175 aircraft since the first-quarter of 2019, partially offset by reduced passenger demand resulting from the COVID-19 pandemic in March 2020.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.91 per share and revenues of $715.61 million for the quarter. Analysts' estimates typically exclude special items.

SkyWest anticipates removing three CRJ700 aircraft and four CRJ900 aircraft from its flying agreement with Delta by the end of third-quarter 2020.

SkyWest has a flying contract with American to operate a total of 70 CRJ700 aircraft, of which 61 aircraft are currently operating under contract. SkyWest is working with American to determine the in-service dates for the remaining nine aircraft.

SkyWest expects to receive approximately $438 million as payroll support under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), of which approximately $337 million will be a direct grant and about $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 $219 million of the $438 million in April 2020. In consideration for the funding, SkyWest will issue to the U.S. Treasury Department warrants to purchase an aggregate of 357,317 shares of SkyWest common stock. The warrants carry an exercise price of $28.38 per share.