SOMETHING FISHY GOING ON . . . .


Today's Headline:

ST. GEORGE, Utah, March 8 /PRNewswire-FirstCall/ -- SkyWest, Inc. (NASDAQ: SKYW) today announced that it has been authorized by its Board of Directors to repurchase up to 5 million shares of SkyWest, Inc. outstanding common stock. The Company is authorized to repurchase in the open market or in privately negotiated transactions as deemed appropriate by management. Depending on market conditions and other factors, these purchases may be commenced or suspended from time to time without prior notice

Headline less than a year ago:

SkyWest's secondary offering of common stock, completed April 17, 2006, wherein SkyWest issued 4,000,000 shares of common stock, which increased the fully-diluted weighted average shares by 6.6%


Seems to me with all their Management Changes lately that they are looking to acquire somebody (Midwest). I would assume the stock buy back is going to be used for a CASH / STOCK deal to counter AirTran. Only makes sense.

 

that is interesting...

 

They could need or want cash for hundreds of reasons or they could simply feel that the stock is too diluted. Unless you have some other reason to believe they are in the market to start competing against the people who sign they paychecks this theory seems pretty farfetched.

 

The problem with your theory is stock buy backs consume cash. This is a way to increase (in theory) the price per share (earnings per share goes up = increased price) for the remaining shares when the buy back is completed. Unfortunately buy backs rarely return increases in stock value that equal the money invested to buy the stock. What I see is a management that has giving up on a move and is now reducing the amount of cash on hand since it is no longer needed. Too bad they don't use it to take better care of their employees.

 

In the absence of other info, this stock purchase cannot be interpreted as much of anything.

 

You are correct!!!

 

Maybe they just want their earnings to look better to shareholders. That's been a pretty common play lately. If they buy back shares, the float is smaller. If earnings stay the same, the EPS atually ends up looking better, due to fewer shares outstanding.

Lies, Lies and statistics....

 

Oh. not so interesting...

 

I don't think that SKW is going to make a play for Midwest but if they did, the market that they would gain doesn't compete with UAL or DAL. Buying Midwest would, in no way, be a breach of their codeshare contracts. Neither DAL nor UAL compete on Midwest routes. Now, buying AirTran would be a breach of our DAL contract seeing that both at ATL based.

I've said many times that I think SKW purchasing Midwest is a great move in the direction that JA wants to go, but I think the time isn't right. JA has made it know that he wants to stand alone, but it will be a slow process to insuring steady growth without sacrificing the company current contracts.

Don't bite the hand that feeds you until it slaps you in the face.

If I had to guess who JA might make a move on, I would say MAG. They have the lowest labor cost, some of the highest Mgmnt cost and he can get them for dirt cheap. It wouldn't take much to convince their BOD or creditors to approve a SKW takeover. With the purchase JA can overhaul the Mgmnt pay to equal that of SKW and giving their labor groups a new TA comparable to SKW will insure the improvement of their employee moral and turnover issues. This will also be good for the industry because SKW holds strong to their hiring mins, so you will probably see the MPD Programs disappear. Also it would be an in with US Airways and I'm certain that Doug Parker would much rather deal with JA than JO.

Just out of curiosity, what do you MAG guys & gals think of this?

Just my 2 cents. Take it for what it's worth and nothing more.

 

Mesa? im going to have to seriously disagree on this one. The ASA thing is a perfect example. JA acquired them and based on what ASA pilots say, neither management or morale has improved there. Yes they make tons of money, but the answer to making a comany better is not having skywest buy it. just because you slap a skywest inc. label on it doesnt mean its going to magically become awesome.