Skywest earning call notes

[Medeco]

A re-fleeting of the airline will be needed in the next couple of years

seemless intergration of the work groups has been planned for a while

Continental/United both approve of this sale, new 10yr contract with them. Reset of rates after 5yrs

targeting a 12month integration is the target after closing, recognizes this is agressive timeline. Marjority of value starts after Single operating certificate

Brad Holt Keeps the Helm

15 growth airplanes in new contract with Continental

ASA will keep XJT bases as is

Network of 696 aircraft for Skywest Inc

Rational of purchase, is for positioning in the Continental network, grow only when you turn size into value

creating a platform for industry leading things

largest customer for both manufacturers of the ERJ/RJ

elimination of public company expenses

Still keeps the best balance sheet in the industry, and shareholder value

 

[azpilot]

This is an example of where thorough and patient and looking for the right opportunity is being manifest.

Why are we pursuing Xjet:

• Quality operations and front line employees dedication not a fixer upper acquisition. High quality operation.
• Find an opportunity where we can bring the two strengths together
• Bring to the employees
• Bring Stability
• Position ExpressJet to grow
• Have cash to re-fleet this operation
• Full integration into ASA will bring expense reductions
• Want single operating certificate 12-14 months from closing
• Expect acquired operations to generate positive cash flow
• Already have a post merger integration plan - very thorough integration plan
• Continental and United have already agreed. New CPA agreement already approved by Continental
• Larger provider to Continental and United
• Full integration into ASA
• Single Operating Certificate 12 month integration
• HQ in ATL
• Keep same crew bases
• No changes at Skywest
• Continental supports this new agreement will take effect at closing 206 airplanes for 10 year term Replacement of CURRENT FLEET. Add 15 growth airplanes.
• Refleet this operation as necessary and required
• Expressjet has 244 regional jets
• Treat people with dignity and respect.
• 404 planes at ASA 696 Total with Skywest
• Good integration fit
• Largest pool of regional aircraft in the industry. Largest customer for both Bombardier and Embraer
• No stress on the Skywest balance sheet with this acquisition.

From Q&A

• Been anxious and wanted a relationship with Continental for a long time. Respect for the operation of ExpressJet.
• Negotiated a fair contract with Continental so timing was good
• 10 year term for 206 aircraft
• If United operations terminate Skywest does not lose financially
• If scope clauses allow we are positioned to grow to different fleet types

 

[BCpilot81]

I try not to sound like a drinker of the Kool- Aide, but man does it taste good. Great move, and 2 OUTSTANDING companies. I for one, am looking forward to it

 

[WAVIT Inbound]

In the Conf. call Brad Rich was asked if INC. was done acquiring for a while. He said it would be very difficult to bring on any additional flying during the integration process to ASA, so for the next 12 - 18 months. However they expect some growth both acquisition and organic on the SkyWest side.

Interesting comment indeed.

 

[Medeco]

Yes that was a good indicator, ASA is done for now, but not Skywest.

Aslo he was asked if they have an easy way out of this deal, in which he hesitated then said we have a very strong contract

 

[BCpilot81]

So I guess I am not getting that rumored DEN base. DAMN

 

[XPOO]

In the Conf. call Brad Rich was asked if INC. was done acquiring for a while. He said it would be very difficult to bring on any additional flying during the integration process to ASA, so for the next 12 - 18 months. However they expect some growth both acquisition and organic on the SkyWest side.

Interesting comment indeed.

We already know what it is, just playing the waiting game at this point.

 

[WAVIT Inbound]

We already know what it is, just playing the waiting game at this point.

Any concrete sources?

 

[Propsfullfwd]

seemless intergration of the work groups has been planned for a while

targeting a 12month integration is the target after closing, recognizes this is agressive timeline. Marjority of value starts after Single operating certificate

15 growth airplanes in new contract with Continental

ASA will keep XJT bases as is

Network of 696 aircraft for Skywest Inc

elimination of public company expenses

Are they saying all 3 into 1 or just ASA and XJT???

 

[johnpeace]

seemless intergration of the work groups has been planned for a while

targeting a 12month integration is the target after closing, recognizes this is agressive timeline. Marjority of value starts after Single operating certificate

15 growth airplanes in new contract with Continental

ASA will keep XJT bases as is

Network of 696 aircraft for Skywest Inc

elimination of public company expenses

Are they saying all 3 into 1 or just ASA and XJT???

Just ASA/XJT.

12 month integration means they don't anticipate any protracted labor negotiations.

What happens? Does the CBA contract get re-negotiated/agreed to? Does one group's existing contract get applied to the entire new group?

How do these things work?

I would expect that this new pilot group would have to elect it's own MEC and ratify it's own labor contract, right?