Press Release: SkyWest, Inc. Announces Fourth Quarter and Annual 2020 Results
SkyWest, Inc. Announces Fourth Quarter and Annual 2020 Results
ST. GEORGE, Utah, Feb. 4, 2021
ST. GEORGE, Utah, Feb. 4, 2021 /PRNewswire/ --
Fourth Quarter and Annual Results
SkyWest, Inc. (NASDAQ: SKYW) ("SkyWest") today reported financial and operating results for Q4 2020, including a net loss of $46 million, or $0.93 loss per share, compared to net income of $73 million, or $1.43 per diluted share, for Q4 2019. SkyWest also reported a net loss of $9 million, or $0.17 loss per share, for the 2020 year, compared to net income of $340 million, or $6.62 per diluted share, for the 2019 year. The primary factor in SkyWest's lower results in 2020 compared to 2019 was reduced flight schedules and lower demand resulting from the COVID-19 pandemic.
Commenting on the results, Chip Childs, Chief Executive Officer of SkyWest, said, "The past year has challenged our industry, our business, and our people beyond what anyone could have anticipated, and we responded quickly and aggressively to protect our people, our partners, and our business. I'm incredibly proud of the SkyWest team's great work and the flexibility they continue to demonstrate. We believe we're in a strong position to play a key role in the industry's recovery and we remain committed to positioning SkyWest for future success."
Revenue was $590 million in Q4 2020, down from $744 million in Q4 2019, or 21%, due to the COVID-19 pandemic that caused a significant reduction in the number of scheduled flights SkyWest operated under its flying agreements compared to the same period last year. Sequentially, revenue in Q4 2020 was up from $457 million Q3 2020, or 29%, due to improvements in demand for our scheduled flights. Total block hours in Q4 2020 were down 27% from Q4 2019 and up 20% from Q3 2020.
SkyWest deferred recognizing revenue on $12 million of fixed monthly payments received during Q4 2020, down from $30 million and $69 million that was deferred in Q3 2020 and Q2 2020, respectively. SkyWest will recognize the deferred revenue from the fixed monthly payments on a per completed flight basis over the remaining contract term.
Operating expenses were $617 million in Q4 2020, relatively flat from $618 million in Q4 2019. The reduction in direct operating costs associated with fewer flights operated compared to the same period last year was offset by an increase in maintenance expense on our CRJ200 and CRJ700 fleets and depreciation expense on our CRJ200 fleet. Operating expenses in Q4 2020 were up from $383 million in Q3 2020. The Q3 2020 operating expenses reflected a reduction of $190 million in connection with the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") payroll support grant received by SkyWest compared to $3 million in Q4 2020.
Capital and Liquidity
SkyWest had $826 million in cash and marketable securities at December 31, 2020, up from $822 million at September 30, 2020 and $520 million at December 31, 2019.
SkyWest has $665 million available under its $725 million, five-year secured loan facility with the U.S. Treasury Department ("Treasury") under the CARES Act. SkyWest has until May 28, 2021 to borrow additional amounts under the facility.
SkyWest has a $75 million line of credit facility with approximately $35 million of letters of credit issued under the facility and $40 million available under the line at December 31, 2020.
As previously announced, SkyWest entered into a payroll support program extension agreement with Treasury in January 2021 to receive a total of approximately $233 million under the Consolidated Appropriations Act of 2021. SkyWest received half of the $233 million in January 2021 and expects to receive the second half in February 2021. In consideration for the funding, approximately $40 million will be in the form of a ten-year, low interest unsecured term loan, and SkyWest will issue to Treasury warrants to purchase approximately 98,815 shares of SkyWest common stock at a strike price of $40.41.
During 2020, SkyWest received $450 million under the payroll support program with Treasury under the CARES Act. In consideration for the funding, $105 million was in the form of a ten-year, low interest unsecured term loan. SkyWest recognized the $345 million in grant proceeds as a reduction to expense during the 2020 year, of which $3 million was recognized in Q4 2020.
Total debt at December 31, 2020 was $3.2 billion, up from $3.1 billion at September 30, 2020 and $3.0 billion at December 31, 2019. Capital expenditures during Q4 2020 included $230 million for the purchase of four new E175 aircraft and 22 used CRJ700 aircraft and $28 million for other maintenance assets. SkyWest issued $205 million in debt to acquire the E175 and CRJ700 aircraft in Q4 2020.
Status Update on Previously Announced Deals
SkyWest is coordinating with its major airline partners to optimize the timing of upcoming fleet deliveries under previously announced deals in response to COVID-19 schedule reductions. The anticipated future delivery dates summarized below are based on currently available information and are subject to change.
Flying contract with Delta Air Lines ("Delta")
Flying contract with American Airlines ("American") for 20 E175 aircraft
Flying contract with American for CRJ700 aircraft
Flying contract with Delta for CRJ200 aircraft
SkyWest's capacity purchase agreement with Delta for CRJ200 aircraft expired at the end of 2020 and was not extended. SkyWest has no outstanding financing obligations on the CRJ200 aircraft removed from the Delta contract and these aircraft are fully depreciated. SkyWest's prorate flying arrangement for CRJ200 aircraft with Delta did not terminate as of December 31, 2020.
SkyWest, Inc. is the holding company for SkyWest Airlines and SkyWest Leasing, an aircraft leasing company. SkyWest Airlines has a fleet of over 400 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 21 million passengers in 2020 and 43 million passengers in 2019.
SkyWest will host its conference call to discuss its fourth quarter 2020 results today, February 4, 2021, at 2:30 p.m. Mountain Time. The conference call number is 1-877-418-5293 for domestic callers, 1-866-605-3852 for Canada callers and 1-412-717-9593 for other international callers. Please call up to ten minutes in advance to ensure you are connected prior to the start of the call. The conference call will also be available live on the Internet at https://www.webcaster4.com/Webcast/Page/1088/39619. This press release and additional information regarding SkyWest, including access information for the digital rebroadcast of the fourth quarter 2020 results call, participation at investor conferences and investor presentations can be accessed at inc.skywest.com.
In addition to historical information, this release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "forecasts," "expects," "intends," "believes," "anticipates," "estimates," "should," "likely" and similar expressions identify forward-looking statements. Such statements include, but are not limited to, statements about the expected terms, timing and benefits of the Consolidated Appropriations Act of 2021 funding, the ability to draw down loan amounts under its facility pursuant to the CARES Act and its line of credit, the impact of the COVID-19 outbreak on SkyWest's business, financial condition and results of operations, the scheduled aircraft deliveries for SkyWest Airlines in upcoming years, and related removal from service and/or placement into service of certain aircraft, SkyWest's coordination with major airline partners to optimize the delivery of aircraft under previously announced deals, the expected terms, timing and benefits related to SkyWest's leasing and joint venture transactions, as well as SkyWest's future financial and operating results, plans, objectives, expectations, estimates, intentions and outlook, and other statements that are not historical facts. All forward-looking statements included in this release are made as of the date hereof and are based on information available to SkyWest as of such date. SkyWest assumes no obligation to update any forward-looking statements unless required by law. Readers should note that many factors could affect the future operating and financial results of SkyWest and could cause actual results to vary materially from those expressed in forward-looking statements set forth in this release. These
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