Skywest, Inc. · NASDAQ:SKYW
Skywest — Investor Presentation (September 2016)
20 slides from Skywest's investor presentation, Sep 7, 2016
Slide 1: Forward Looking Statements
Forward Looking Statements In addition to historical information, this presentation 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," "lik
Slide 2: SkyWest Incorporated: SkyWest Airlines, SkyWest Leasing, ExpressJet
SKYWEST INCORPORATED SkyWest LEASING YEXPRESSJET 3
Slide 3: Executing on our Fleet Transition
Executing on our Fleet Transition Generating value during our fleet transition: 1. 2. 3. 4. 5. Adding aircraft to new, profitable contracts Removing older 50-seat aircraft from our fleet Improving economics in existing contracts when available Delivering strong operating performance Managing our fl
Slide 4: Improvement in Flying Contracts and Fleet Mix
Improvement in Flying Contracts and Fleet Mix June 2015 June 2016 46% 25% Aircraft in service: 676 Aircraft in service: 655 Operating Fleet as of June 30, 2015: 676 Legend: Removed ERJ145s (UA/AA) (26) Each colored box represents one aircraft Each white box represents one removed aircraft New E175 a
Slide 5: Fleet Changes Since June 30, 2015
Fleet Changes Since June 30, 2015 CRJ700s/900s 203 - (3) 200 Up 6% CRJ200s 234 - (10) 224 Down 8% Also transitioned 11 CRJ700s and 10 CRJ200s between partners/flying agreements. Demand from our partners continues to point in the direction of this trend continuing or accelerating. 6 “Single-class
Slide 6: Scheduled E-175 Deliveries
Scheduled E-175 Deliveries Alaska 9 4 2 5 20 48 Ongoing fleet transition, including placement of E-175 aircraft, partially offset by a reduction in 50-seat aircraft. • 7 Delta-58619 56111918104 United4729765
Slide 7: SkyWest Flying Contract Risk Model
SkyWest Flying Contract Risk Model Risks No Passenger fare volatility Seat inventory Fuel costs Network strategy Majority of fleet financing risk covered by contracts with major partners Yes Labor costs and shortages Aircraft maintenance Operating performance Competition Financing tail risk (on less
Slide 8: SkyWest Flying Contract Risk Model
SkyWe SKYWEST + Passenger fare volatility + Labor costs and shortages + Seat inventory * Aircraft maintenance * Fuel costs * Operating performance + Network strategy * Competition * Majority of fleet financing risk covered + Financing tail risk (on less than by contracts with major partners half of
Slide 9: Profitability from Fleet Transition and Operational Improvements
Profitability from Fleet Transition and Operational Improvements Revenue $ 801.3 $ 788.4 $ 1,563.4 $ 1,548.8 Pre-tax margins 8.3% 6.7% 7.1% 4.4% Q2 2016 results reflect progress in fleet economics and operating performance – – Economic benefit from adding 18 E175 aircraft and removing 39 unprofitab
Slide 10: Q2-16 Improvement from Q2-15
Q2-16 Improvement from Q2-15 $80 $70 $60 $50 $40 $66 $30 $20 $10 $- Operating Expense Variances $0 Revenue Variances $13 $13 11 $3 $41 $(30) $53 $11 $(12)$12 $(10) $(5) $(7) $10 $66 Q2-15 Actual Removal of Additional Dual CRJ200 Flying Pass Pass Early Lease Other Aircraft Higher Labor Lower Airc
Slide 11: A New Trajectory
A New Trajectory $66 Operating Margin % $53 $60 60 15.0% $45 10.5% $41 10.0% $34 9.9% 8.9% 8.1% 7.9% $16 7.1% 5.0% 6.2% 0.0% 14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 $0.14 EPS* $1.98 EPS* $1.29 YTD EPS * Adjusted for special items, see Reconciliation of Non GAAP Financial Me
Slide 12: Balance Sheet Highlights
Balance Sheet Highlights Cash, marketable securities, restricted cash $ 513 Current assets 1,028 Total assets $ 4,997 Current ratio: 1.4 Other current liabilities 464 Debt Mix: Equity Mix: 56% 44% Long-term debt 1,763 Shareholders’ equity 1,577 Total liabilities and shareholders’ equity $ 4,997 13
Slide 13: 2016 / 2017 Execution Strategy
2016 / 2017 Execution Strategy • • • • • • Place 48 additional E175 aircraft into service by end of 2017 Continue to improve our fleet mix based on evolving partner demand Deliver outstanding operational performance Enhance pilot recruiting and retention efforts Manage our fleet risk for changing ma
Slide 14: 2016 / 2017 Execution Strategy
2016 / 2017 Execution Strategy mi Place 48 additional E175 aircraft into service by end of 2017 Continue to improve our fleet mix based on evolving partner demand Deliver outstanding operational performance Enhance pilot recruiting and retention efforts Manage our fleet risk for changing market dema
Slide 15: SkyWest, Inc. Operating Fleet June 30, 2016
SkyWest, Inc. Operating Fleet June 30, 2016 SkyWest Airlines United – contract flying 59 - 47 106 55 - 55 161 Delta – contract flying 23 36 - 59 49 - 49 108 American – contract flying 7 - - 7 13 - 13 20 Alaska – contract flying 9 - 9 18 - 169 - - - 169 18 359 98 36 56 190 ExpressJet Unit
Slide 16: SkyWest, Inc. Route Map
Map SkyWest operated 1.2 million flights and carried 56 million passengers in 2015 AsotJuly31,2016 SKvWEsT SkyWest, Inc. Route
Slide 17: The People of SkyWest, Inc.
The People of SkyWest, Inc. SkyWest employees deliver a culture of quality, reliability and efficiency Nearly 20,000 dedicated aviation professionals throughout the US Our People Nearly 20,000 Pilots Flight Attendants Maintenance Customer Service Ops Support & Other Dispatch 7,100 4,900 3,300 2,400
Slide 18: Partnership Models: Fixed-fee flying contracts
Partnership Models Fixed-fee flying contracts: • • • • • Revenue at fixed rates, primarily based on completed flights Partner directly reimburses us for certain costs such as fuel Primary “at-risk” costs are labor, aircraft maintenance and overhead Most agreements include operating performance bon
Slide 19: Partnership Models: Pro-rate agreements
Partnership Models Pro-rate agreements: • • • SkyWest receives a pro-rated portion of connecting passenger fares We receive 100% of the passenger fares on local routes (non-connecting passengers) We are responsible for all operating costs associated with pro-rate flights, including fuel costs Sk
Slide 20: Reconciliation of Non-GAAP Financial Measures
conciliation of Non-GAAP Financial Measures SkYWEST Year ended December 31, 2015 Net Income Per Pre-tax Income Income Tax Net Income Diluted Share GAAP income $ 194,322 $ (76,505) $ 117817 $ 2.27 Adjusted for: Q4 2015 Adjustments (1) (24,731) 9,517 (15,214) (0.29) Non-GAAP income $ 169,591 $ (66,988