SkyWest Inc. (NASDAQ:SKYW) Q3 2017 Earnings Conference Call Transcript

Oct 25, 2017 • 04:30 pm ET

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SkyWest Inc. (NASDAQ:SKYW) Q3 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon, everyone, and welcome to the SkyWest's Third Quarter Earnings Conference Call. All participants will be in a listen-only mode.

(Operator Instructions) Please also note, today's event is being recorded.

At this time, I'd like to turn the conference call over to Mr. Rob Simmons, CFO. Sir, please go ahead.

Executive
Rob Simmons

Thanks, everyone, for joining us on the call today. As the operator indicated, this is Rob Simmons, SkyWest's CFO. On the call with me today are Chip Childs, President and CEO; Wade Steel, Chief Commercial Officer; and Eric Woodward, CAO. We'd like to excuse Mike Thompson, SkyWest Airlines' COO; and Terry Vais, ExpressJet Airlines' COO, as they are out working with their respective operations. I'd like to start today by asking Eric to read the Safe Harbor, then, I will turn the time over to Chip for some comments. Following Chip, I will take us through the financial results, then, Wade will discuss the fleet and related flying arrangements. Following Wade, we will have the customary Q&A session with our sell-side analysts. Eric?

Executive
Eric Woodward

(Forward-Looking Cautionary Statements)

Chip?

Executive
Chip Childs

Thank you, Rob and Eric. During the third quarter, we continued our progress on our overall business and fleet plans as the press release and our results demonstrate. Third quarter total production is generally high, and this quarter's was no different. Additionally, our teams navigated two major hurricanes extremely well. And I want to thank our more than 17,000 people for their great work. Not only did they step up to help each other as their own communities were affected, but both SkyWest and ExpressJet executed recovery operations to ensure our passengers were well taken care of as soon as airport operation resumed after each storm. We have truly exceptional people at both our airlines.

During the third quarter, we operated more than 281,000 flights with strong operating reliability. SkyWest Airlines and ExpressJet continued solid reliability with each delivering 99.9% adjusted completion for the quarter. Both airlines are performing well and have been top performers in United's portfolio for almost three years now. Again, our teams managed through this very challenging hurricane season extremely well, and I want to thank them again for their ongoing commitment to quality. The hurricanes had about a $0.05 impact on our results this quarter.

During the third quarter, ExpressJet announced a realignment of its strategy, including a new long-term agreement with United and an agreement with Delta to wind down dual-class CRJ flying by the end of next year. Additionally, they announced the transition of eight CRJ700s to their American Eagle operation. The execution of this new strategy began during the third quarter, as we continue making meaningful progress in our efforts to solidify ExpressJet's foundation and return that entity to profitability. We expect these transitions to be complete by the end of 2018.

Also, during the quarter, we announced flying agreements for 30 E175-SC aircraft with Delta Air Lines and 15 E175 aircraft with Alaska Airlines. Delivery of those 45 aircraft has already begun, and we