SkyWest Inc. (NASDAQ:SKYW) Q1 2019 Earnings Conference Call - Final Transcript

Apr 26, 2018 • 04:30 pm ET

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SkyWest Inc. (NASDAQ:SKYW) Q1 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Rob Simmons

in Q1, we would update last quarter's comments by adding another $0.25 to that number. Wade?

Executive
Wade Steel

Thank you, Rob. I'll first review our fleet changes during Q1 and then discuss our current fleet expectations for the rest of 2018. From year-end 2017 to March 31, 2018, we successfully moved from 595 total aircraft to 580 total aircraft in our fleet. Specifically, we added five new E175 to our fleet during the quarter.

As of the end of Q1, we had 65 E175s under contract with United, 25 with Alaska and 23 with Delta, bringing our total E175 fleet to 112. We anticipate taking delivery of 16 E175s during Q2, 13 during Q3 and 5 during Q4. At Alaska's request, we have agreed to defer three E175s previously scheduled for delivery during the fourth quarter of 2018 until 2021.

As we discussed last quarter, ExpressJet have extended its United ERJ145 contract for five years effective January 1, 2018. The new agreement enhances ExpressJet-United's partnership, significantly reduces contract risk and provides long-term stability to its model. As of March 31, 2018, we had 100 ERJ145s under contract with United. As part of our agreement to wind down ExpressJets dual-class Delta connection flying, 22 CRJ900 has been returned to Delta as of the first quarter. We anticipate returning to remaining six CRJ900 by the end of the second quarter.

We also began removing ExpressJet remaining 33 CRJ700 from Delta service during the quarter. The three Delta owned CRJ700s have been returned to Delta. We own the remaining 30 CRJ700s, eight of which we expect to redeploy under our American contract. Our Q4 forecast assumes these 22 aircraft will not be renewed. However, conversations regarding placement of the remaining 22 SkyWest owned CRJ700s are positive and we remain confident that they will be placed prior to their expiration at the end of 2018.

On the SkyWest airline side, we also have several CRJ200 contracts expiring during 2018. Our partners demand for 50-seat flying remains strong, we are working with each of them to meet their 50-seat needs. During the quarter, we added eight CRJ200s to the United contract. Our fleet strategy continues producing tangible results to our model and overall profitability. As we've discussed, we expect fleet transition to continue throughout 2018 as we place new aircraft into service and continue to deliver on our commercial agreements.

Okay. Operator, we're now ready for Q&A.