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SKYW

SkyWest NasdaqGS:SKYW Stock Report

Last Price

US$23.70

Market Cap

US$1.2b

7D

-5.1%

1Y

-44.5%

Updated

10 Aug, 2022

Data

Company Financials +
SKYW fundamental analysis
Snowflake Score
Valuation2/6
Future Growth3/6
Past Performance2/6
Financial Health2/6
Dividends0/6

SKYW Stock Overview

SkyWest, Inc., through its subsidiaries, operates a regional airline in the United States.

SkyWest, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for SkyWest
Historical stock prices
Current Share PriceUS$23.70
52 Week HighUS$53.05
52 Week LowUS$20.06
Beta1.78
1 Month Change14.00%
3 Month Change-7.35%
1 Year Change-44.52%
3 Year Change-56.30%
5 Year Change-34.80%
Change since IPO1,968.36%

Recent News & Updates

Jul 29

SkyWest up 8% after Q2 beats consensus

Regional airline operator, SkyWest (NASDAQ:SKYW) Q2 shows revenue of $799M up 22% from last year, beats consensus by $75.76M. Flying contracts came from adding 43 aircraft to its operations since Q2 2021, with the remaining revenue increase largely due to COVID-19 revenue concessions given to our major airline partners in Q2 2021. Operating expenses were $710M, up 31%. $975M in cash and marketable securities at June 30, 2022. Total debt at June 30, 2022 was $3.3B, up from $3.2B last quarter. GAAP EPS of $1.07 beats consensus by $0.68. Commenting on the results, CEO Chip Childs said, “The quarter results reflect the continued strong demand for our product and the impact of our improved fleet mix as we continue investing in our E175 fleet. As we work through the constraints of an ongoing pilot imbalance and industry-wide staffing challenges, demand for our product remains exceptionally strong. I want to thank our people for their dedicated, world-class efforts.” YTD the stock has declined about 40%, comparing performance with the peers over the same time frame:

Jul 12
SkyWest (NASDAQ:SKYW) Has No Shortage Of Debt

SkyWest (NASDAQ:SKYW) Has No Shortage Of Debt

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously...

Jun 29

SkyWest: Captains, Not Covid-19, Is The Limiting Factor

I did have concerns demand for airline travel would remain suppressed, as COVID-19 changed from pandemic to endemic. But airline travel demand has surged despite ongoing outbreaks of new and existing strains of COVID-19. A new issue has arisen for all airlines - a shortage of Flight Captains and lengthy time periods for Flight Officers to qualify as Flight Captains. SkyWest is a virtual training ground for the Tier 1 carriers it is allied with. But demand for Captains by Tier 1 carriers is exceeding SkyWest's ability to qualify new Captains. SkyWest has many more pilots in total than pre-pandemic, and is taking an innovative approach to getting more pilots and aircraft back in the air. SkyWest Bombardier CRJ-200 airplane Phoenix airport. Investment Thesis: SkyWest Buy, Hold Or Sell? Back on August 1, 2021, with the share price at $45.57, I published the article, "SkyWest Stock: The Outlook Is Improving." Since then, the share price of SkyWest, Inc. (SKYW) has fallen by ~54.2% to $20.87, compared to a fall of 19.3% in the S&P 500 over the same period. How did I, and the many analysts estimating strong EPS growth back then, get it so wrong? Well it was not COVID, and what I summed up with in that previous article remains fairly much on the mark today: "My own view is most of the COVID-19 risk is now behind us, with international travel restrictions being lifted on November 8. But even the analysts' high EPS estimates for 2023 are still below past historical levels. I expect there will be further upgrades to analysts' EPS estimates over time. SkyWest has a sound balance sheet with manageable debt levels. Due to suspension of dividends and government support, shareholders' equity actually increased from $2,175 million at December 31, 2019 to $2,249 million at June 30, 2021, with no increase in outstanding shares. It is pleasing to see warrants issued will not lead to significant dilution, if exercised. For existing shareholders, I would say now is not a time to sell. For potential investors, I would say SkyWest could be a buy with considerable upside potential, and downside risk is definitely less than when I wrote my last article on August 1." Today, passenger demand is strong for all airlines, including Sky West. But during the pandemic, it is estimated 6,000 Flight Captains took early retirement offers or left the industry. This shortage of Captains is placing a limit for all airlines on the numbers of flights that can be conducted. SkyWest is curtailing flights, despite more than sufficient airplanes, and Flight Officers ("FO") to crew them. Addressing the shortage of Captains - It takes a minimum of 1500 flying hours for an FO to qualify as a Captain. The reduced number of flights due to the shortage of Captains also limits the available number of hours for FOs to gain Captain status. The Tier 1 carriers pay higher rates for pilots (Captains and FOs) than regional airlines like Sky West. Sky West has increased its total pool of pilots from 5,239 at Dec. 31, 2019 pre-pandemic to 5,705 at Dec. 31, 2021. A potential shortage of pilots was discussed in SkyWest's earnings call for Q3 2021, when it was stated hiring and training was outpacing attrition at SkyWest. It was not until the Q4 2021 earnings call that SkyWest first indicated an issue with Captain numbers, in particular. The issue was addressed in greater detail in the Q1 2022 earnings call. Of course, pilot attrition was anticipated and planned for in our models and strategies. However, the rapid increase in captain attrition was not... given the timing...for training and upgrade, this imbalance will likely constrain production into early 2023. This pilot imbalance is an industry-wide challenge as services in various ways and we are working together with our people to ensure that we remain in the best position to manage it aggressively. The increase from 250 hours to 1500 hours training requirement to achieve Captain status was introduced in 2013, following the 2009 crash of Colgan Air flight 3407, which crashed primarily due to pilot error. The shortage of Captains is prompting calls for a reduction in the hours requirement. The SkyWest CEO, on the Q1 2022 earnings call, does not see this changing, and instead will address the shortage of Captains by being, "...aggressive in a multitude of other areas to address this." Aggressive Approach To Getting More Pilots And Aircraft Flying - By a touch of serendipity, SkyWest revealed one way they will get more pilots and aircraft flying while I was finalizing this article. The full impact will be better understood by first reading the analysis below of the issues SkyWest currently faces. The impatient can skip to the end, where this discussion continues, but will miss some valuable detail. The impact of constrained flight hours on costs and earnings - Table 1 below includes a comparison of Q1 2022 results to Q1 2019 results (pre-pandemic). Surprisingly, despite the shortage of Captains, revenue is higher in Q1 2022 than for Q1 2019. But operating income is well down mainly due far higher Salaries etc. and Aircraft maintenance. Table 1 SEC filings To better understand what is happening with costs and revenues, I have compiled the segment analyses per Table 2 below. Table 2 SEC filings The analyses in Table 2 revealed a further surprise. SkyWest's aircraft leasing business has increased earnings compared to pre-pandemic, and is the primary reason the company has remained profitable. From the Q1 2022 earnings conference call: ...we currently have 39 CRJ700s and 900s under long-term leases with third parties. This line of business has very good cash flow and strong margin characteristics. Demand for our engine leasing business is returning, and we anticipate placing several engines under long-term leases this year. And the following Q&A on leasing: Question - But what is the potential pool of aircraft and engines, you're looking to lease over the next year or two look like? I'm just trying to think through like aircraft supply is also a bit tight right now, so there's more demand, but then you've got maybe some offset on pilot availability driving some decisions with some of the third-parties you look to do this with. So just any color here would be great. Answer - ...there's a couple of new and interesting kind of opportunities. As we've kind of started to explore different opportunities out there, a of these 135 carriers are definitely reaching out to us about our existing asset base, right? As Chip said, we have over 200 -- CRJ200s that are extremely well priced. They've been maintained by the best airline in the country for 25 years. We have the best engine agreement. And so there's been very good demand from a lot of a -- lot of small airlines associated with our CRJ platforms. And I'll tell you, the engine interest in that fleet is also extremely strong, right? They -- we have a very good engine agreement with our OEM. And a lot of these smaller airlines just don't have the size and the buying power that we have associated with that fleet. And so those are probably -- those are two very good opportunities right there for us. And then as you look at the engines that are on the 700s, the 900s, there is a very large wave of engine events coming for the industry in the next couple of years. And SkyWest has invested heavily in those engines during 2019, during 2020, during 2021, we made very large investments in those, and we are very well prepared for that. And we've had a lot of interest from other airlines in potentially helping them through their wave and their model, hopefully, that they could avoid engine events by leasing from us. And so there are some pretty good opportunities out there, both on our CRJ200 and then the engines associated with the 700 to 900. Those are a couple of quite long quotes, but that information should be of great interest to anyone considering an investment in SkyWest stock. Leasing out surplus aircraft and engines could be a profitable solution to the present under utilization discussed below. In Table 3 below I carry out further analysis, with particular emphasis on the SkyWest Airlines segment of the business. Table 3 SEC filings Comments on Airlines segment comparing Q1 2022 to Q1 2021- For the Airlines segment, revenue decreased by 1.7% but Operating Income decreased by 137%, going from $53.3 million to a $19.8 million loss. There were reduced Block hours, but this effect was largely offset by higher revenue per passenger. The decline in operating income is clearly not revenue related. It is a cost issue, and it will not be possible for Airlines segment to return to profitability unless the underlying causes are recognized and addressed.

Jun 21

SkyWest Airlines Navigates A Rough Regional Airline Environment

SkyWest Airlines beat expectations on revenues and earnings. SkyWest Airlines has a reduced schedule as the pilot shortage affects the airline's ability to execute flights. Current pilot shortage might drastically reform regional airlines.

Shareholder Returns

SKYWUS AirlinesUS Market
7D-5.1%0.6%1.2%
1Y-44.5%-26.0%-11.6%

Return vs Industry: SKYW underperformed the US Airlines industry which returned -25.1% over the past year.

Return vs Market: SKYW underperformed the US Market which returned -13.5% over the past year.

Price Volatility

Is SKYW's price volatile compared to industry and market?
SKYW volatility
SKYW Average Weekly Movement7.4%
Airlines Industry Average Movement8.1%
Market Average Movement7.9%
10% most volatile stocks in US Market17.0%
10% least volatile stocks in US Market3.2%

Stable Share Price: SKYW is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: SKYW's weekly volatility (7%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
197215,205Chip Childshttps://inc.skywest.com

SkyWest, Inc., through its subsidiaries, operates a regional airline in the United States. The company operates through two segment, SkyWest Airlines and SkyWest Leasing. It also leases regional jet aircraft and spare engines to third parties.

SkyWest, Inc. Fundamentals Summary

How do SkyWest's earnings and revenue compare to its market cap?
SKYW fundamental statistics
Market CapUS$1.20b
Earnings (TTM)US$85.70m
Revenue (TTM)US$3.06b

14.0x

P/E Ratio

0.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
SKYW income statement (TTM)
RevenueUS$3.06b
Cost of RevenueUS$2.15b
Gross ProfitUS$909.80m
Other ExpensesUS$824.10m
EarningsUS$85.70m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)1.70
Gross Margin29.77%
Net Profit Margin2.80%
Debt/Equity Ratio140.3%

How did SKYW perform over the long term?

See historical performance and comparison