More new DL175’s.. some old 900’s go away
Fourth Quarter Highlights:
- Net income of $67 million, or $1.28 per diluted share
- Pre-tax income of $91 million, up from $68 million in Q4 2017
- Secured new flying contract for nine E175 aircraft with Delta Air Lines ("Delta")
January 2019 Updates:
- Completed previously announced sale of ExpressJet to ManaAir, LLC
- Reached an agreement with a lessor on an early leveraged lease buyout on 52 CRJ aircraft
- Secured multi-year flying contract extension on 32 CRJ aircraft and 19 E175 aircraft with Delta
New flying agreement
SkyWest announced today it has secured a new flying contract with Delta to acquire nine new E175s and operate the aircraft for a nine-year term. SkyWest is scheduled to take delivery of five new E175 aircraft during the first half of 2019 and four new E175 aircraft in 2020. SkyWest anticipates removing nine used CRJ900 aircraft from its Delta contract as these nine E175 aircraft are placed into service. Following the removal of service with Delta, SkyWest anticipates returning four CRJ900s to the lessor, and SkyWest has an agreement to lease five CRJ900s to a third party under a six-year term.
Flying contract extension
SkyWest also announced today that it has agreed to a multi-year extension with Delta on 15 CRJ900 aircraft, 14 CRJ200 aircraft and three CRJ700 aircraft. These 32 aircraft had various contract maturities previously scheduled in 2019 and 2020. The economics associated with these extensions became effective January 1, 2019. Additionally, Delta extended the term on the first 19 E175s under contract with SkyWest from nine years to eleven years.
Deliveries under previously announced agreements
SkyWest took delivery of eight new E175 aircraft during Q4 2018 under a previously announced agreement with Delta. SkyWest also anticipates taking delivery of three new E175 aircraft in 2021 under a previously announced agreement with Alaska Airlines.
SkyWest took delivery of four CRJ900s during Q4 2018, for a total of five CRJ900s during 2018, under a previously announced agreement with Delta for 20 new CRJ900s. Delta will finance the 20 CRJ900 aircraft and SkyWest will operate these aircraft for a nine-year term. SkyWest anticipates taking delivery of the remaining 15 CRJ900s under this agreement between Q1 2019 and mid-2020. SkyWest expects to individually remove 20 CRJ700s from contracts with Delta as each of these new 20 CRJ900s are placed into service. As previously announced, SkyWest has an agreement with American Airlines to place 20 CRJ700s into service by early 2019.
January 2019 Updates
In January 2019, SkyWest completed the previously announced sale of ExpressJet to ManaAir, LLC. The transaction was completed in two parts, through an asset sale and stock sale, for a total of $76 million. As part of the transaction, SkyWest retained ownership of 30 CRJ700 aircraft that were previously operated by ExpressJet. The majority of these 30 CRJ700 aircraft are currently being utilized under existing SkyWest agreements. SkyWest has also agreed to lease 16 CRJ200s to ExpressJet for up to five years.
Also, in January 2019, SkyWest reached an agreement with a lessor on an early leveraged lease buyout on 16 CRJ700s and 36 CRJ200s. SkyWest estimates it will use $110 million in cash during Q1 2019 to acquire these aircraft. SkyWest anticipates that owning these aircraft will provide additional fleet flexibility, reduce tail risk and avoid future lease return costs along with being immediately accretive to earnings.