With all the gloom and doom surrounding the aviation and state of airlines, one company seems to be a beacon of hope: SkyWest (SKYW) . The United States-based regional airline, operating on behalf of four U.S. mainline carriers, managed to post a net profit in Q1 2020 and even increase its revenues compared to the same period last year.
SkyWest (SKYW) ended the quarter with a net income of $30 million, with the carrier’s revenues reaching $730 million, compared to last year’s result of $88 million and $724 million, respectively. The jump in profit and revenues is the result of adding an additional 16 Embraer E175 jets, which were only partially offset by the breakout of COVID-19 and the resulting travel restrictions and free-falling demand.
Despite the unusual achievement, SkyWest (SKYW) still had to navigate rough waters through the quarter. The airline carried 8.8 million passengers, 7.8% fewer than compared to the corresponding period. In addition, the load factor onboard SkyWest’s (SKYW) aircraft dropped to 67.5%, compared to 78.6% in Q1 2019.
Furthermore, the airline was forced to look at its deliveries schedule and flying contracts with American Airlines (A1G) (AAL) (AA), Delta Air Lines and United Airlines. American Airlines (A1G) (AAL) and SkyWest (SKYW) are currently in negotiations to defer the delivery of 20 new Embraer E175 jets, in addition to the fact that nine out of 70 Bombardier CRJ700s are parked and the regional airline is working with AA to determine when the grounded jets would return to service.
While SkyWest (SKYW) anticipates the delivery of six new E175s to operate for Delta, it also expects the contract to fly 55 CRJ200s (which is set to expire in increments through 2020) will not be extended. The company will return 19 of the CRJ200s to Delta, with the remaining 36 regional jets being parked “on an individual basis.”
The airline owns 36 Bombardier aircraft operated under Delta Connection and has no further financial obligations related to the jets.
SkyWest (SKYW) anticipates little change in its relationship with United. Four used E175s were already delivered to the regional airline and a further 21 deliveries are anticipated throughout the year.