SkyWest (SKYW) Earnings Surpass Estimates In Q1, Up Y/Y

Shares of SkyWest, Inc. (NASDAQ:SKYW) have gained 4.4% since it reported better-than-expected earnings per share and revenues for the first quarter of 2018.

Markedly, this regional carrier’s first-quarter earnings per share came in at $1.03, well above the Zacks Consensus Estimate of 84 cents. Also, the bottom line expanded 58.5% on a year-over-year basis. Results were aided by higher revenues and a lower tax rate.

Quarterly revenues increased significantly year over year to $783.4 million, outpacing the Zacks Consensus Estimate of $754.5 million. The top line benefited from the company’s improved fleet mix.

In fact, SkyWest’s efforts to modernize its fleet and streamline operations are very impressive. The company aims to reduce the 50-seat jets in its fleet and add new E175 aircraft. To this end, this St. George, Utah-based carrier reported a decline in block hours (a measure of aircraft utilization) in the first quarter of 2018. For the first three months of 2018, the carrier reported a 3.6% decrease in block hours. Departures declined 6% and load factor (% of seats filled by passengers) were also down 120 basis points to 77.4%.

In a bid to modernize its fleet, the carrier has added 19 new E175 planes to its fleet and removed 71 unproductive/less-profitable aircraft from its fleet since the first quarter of 2017.

The effective tax rate in the quarter under review declined to 19% from 34% a year-ago mainly owing to the new tax law (Tax Cuts and Jobs Act). Operating expenses, however, were up 3.6% to $695 million. High labor, fuel and maintenance costs led to the uptick. Average fuel cost per gallon increased 19.4% year over year to $2.40 in the quarter.

This Zacks Rank #2 (Buy) carrier exited the quarter with cash and marketable securities of $645.53 million, down 5.8%. Expenses toward fleet modernization, buybacks and capital investment led to the downturn. Total debt increased more than 3% sequentially to $2.8 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Zacks Transportation industry are keenly awaiting first-quarter earnings reports from key players like C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) , Expeditors International of Washington, Inc. (NASDAQ:EXPD) and Copa Holdings, S.A. (NYSE:CPA) in the coming days. While C.H. Robinson Worldwide is scheduled to report on May 1, Expeditors and Copa Holdings are scheduled to do the same on May 8 and May 9, respectively.

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