SkyWest paints optimistic picture for regionals

10nCLR

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http://www.centreforaviation.com/ne...paints-optimistic-picture-for-regionals/page1

SkyWest paints optimistic picture for regionals

5th February, 2010

Not only is there plenty of opportunity for regionals, said SkyWest CFO Brad Rich, but there are still opportunities for 50-seat lift; a good thing considering the high concentration of those aircraft in its 451-aircraft fleet. But the company is also looking at larger aircraft including Bombardier’s C-Series. “We are actively involved in analyzing different aircraft types and how we could use them,” he told analysts at the Raymond James Growth Airline conference this week in New York.
Raymond James Analyst, Duane Pfenningworth, who declared himself a long-term fan of the company, indicated as pilots work to gain back everything they have lost with new contracts now being negotiated throughout the industry, legacies could gain the ability to have regionals operate 90- to 100-seat equipment.
Rich agreed that scope should be increased. “We’ve done a better job of controlling costs than the legacies have,” he said. “So economically it makes more sense. In fact, I know there is sensitivity relative to pilots that feel strongly about more flying going to regionals but regional economics say very clearly that should be done.”
A week out from announcing its 4Q2009 and year-end financial results, Rich referenced statistics for the first three quarter of 2009 in saying he believes SkyWest Inc has the strongest balance sheet in the industry. “Our net cash flow is better than any carrier in the country,” he stated.
Company fiscal performance provides opportunities

“In spite of difficulties and challenges of the past year, we are very optimistic and enthusiastic about the opportunities for regional carriers whether it is due to distress in our peer group or the needs of the major carriers,” he said. “We are continually working on how we can combine our strengths – our people, our balance sheet, our cash and liquidity, and our long-term contracts to create opportunities for us.
“We have the best credit in the regional airline industry which gives us advantages,” he continued. “We have good credibility as not only an operator, but as a good, disciplined company. The strength of our credit rating brings us economic advantages. Not only do we have access to capital but we have access to capital at very competitive prices. That gives us a competitive advantage on aircraft ownership costs and that has allowed us to win so many competitive bids.”
In addition to the carrier’s financial position giving the company advantages and opportunities, Rich also pointed its product quality as accomplishing the same thing.
More synergies expected between SkyWest and ASA

However, he added there was more opportunity to create ongoing efficiencies between SkyWest Airlines and Atlantic Southeast Airlines, saying the company has made mistakes since its 2005 acquisition of ASA. “There are still opportunities for integration benefits that will give us more optimal efficiencies than we have today,” he concluded.
A major goal is adding codesharing partners, he continued, noting that both ASA and SkyWest added new partners, with AirTran at Milwaukee and ASA with United, as part of a financing deal SkyWest did with United.
Taking a page from Republic Airways Holdings, which became a bank for Midwest and Frontier airlines, as well as US Airways, SkyWest did an USD80 million deal with United, taking advantage of United’s need for liquidity in order to wrest more business from the legacy partner. The 11% interest loan is secured by ground equipment and slot rights at Chicago. From that, the company reduced most of the “tail-risk” it had on 45 of its most exposed aircraft, which Rich described as a mismatch between the financial obligations on aircraft and the contracts under which they would operate for a partner.
“We obtained extensions in excess of 10 years,” he explained. “That is equivalent to 4,800 aircraft months of extensions, which we feel is a very material deal. We understand that we aren’t a bank and we wouldn’t have done it if it were a stand-alone deal. But we needed to lower our tail risk and United needed liquidity. In addition, we were able to expand the United Express operation to ASA with 14 additional aircraft so now it has a second codesharing relationship which will start this month. That is a significant development for ASA".
ASA will connect flights over Chicago and Washington Dulles, where ASA is planning to open a new maintenance and crew base that will ultimately grow to 120 crew members.
The 14 aircraft included in the five-year deal had been cut from its Delta Connection operations, along with six others as part of Delta’s move into larger jets. Atlanta-based ASA is currently working on destinations for the remaining six and President Brad Holt told the Atlanta Journal Constitution that included in his discussions with various airlines was a proposal to provide technical expertise Mekong Air in Viet Nam.
For ASA the United deal not only diversifies the ASA client portfolio – finally – it provides an opportunity to improve its performance now solely reliant on the weather vagaries of Atlanta. This, coupled with the major airline bias toward cancelling or delaying regional flights first, has often put it near the bottom of the DOT performance list.
AirTran deal holds little risk

Similarly, Rich discussed the AirTran deal over Milwaukee in which SkyWest is flying five CRJ-200s in a pro-rate agreement. He sought to assuage worries about the volatility of pro-rate contracts, especially with 50-seat lift. “It is a unique opportunity,” he said. “But the most important thing is it is being done with aircraft that do not have long-term obligations. This is a very short-term opportunity and if it doesn’t work we have no long-term obligation with the fleet so it can be discontinued very quickly.”
He noted the debate about whether SkyWest Inc should continue its stock repurchase programs but explained each repurchase is analyzed against the other opportunities for that money and only done when the repurchase would give it the best return on investment.
Having built itself through the acquisition of several companies, Rich said the company continues to look for additional acquisition opportunities. In addition, while it has been very conservative in getting into international joint ventures, it is pleased with the progress of its deal with Trip in Brazil, he said, adding it is performing “exactly the way we thought it would if not slightly better.”

A little side note-Brazil's economy is growing, # of middle class increased and flying more, TRIP Linhas Aereas plans to invest $198 million during 2010 in acquiring eight new aircraft and expanding operations, options for ten more, plus purchase rights for another 15, also TAM and TRIP Linhas Aereas just expanded their codeshare agreement. Jose Mario Caprioli-President, is a younger S. American version of Jerry. Go figure.
 

WayBack

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I wish other airline management would pay attention to what SkyWest is doing, because them and Southwest now how to run a real airline.
When you run an airline the right way, there is no need for a worthless national union, say ALPA, example.
 

wms

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A good comparison would be the old ASA and the new ASA. A little change in corporate culture does wonders for the success of an airline.

The legacies could learn a thing or two.
 

Jetjockey

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I wish other airline management would pay attention to what SkyWest is doing, because them and Southwest now how to run a real airline.
When you run an airline the right way, there is no need for a worthless national union, say ALPA, example.


Sure, who needs a union when things are running good? What happens if/when management changes, or they decide to force feed the group a big shiat sandwich? A union is like insurance, kind of necessary, and your glad you have it when things go wrong.

I guess this is why young people think they don't need health insurance......................" I never get sick..............."

To your health.
 

TurboAWD

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why?
Rich agreed that scope should be increased. “We’ve done a better job of controlling costs than the legacies have,” he said. “So economically it makes more sense. In fact, I know there is sensitivity relative to pilots that feel strongly about more flying going to regionals but regional economics say very clearly that should be done.”

:puke:
 

ex j-41

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What are you saying??? My $1400 to Alpa last year was a waste?
 

BHopper88

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As much as I dont like what Skywest has done with our health care, and other internal issues, I have to give them a lot of credit for running a great company financially. Especially in this climate, they have produced profits and give dividends to investors. They are VERY SMART with their money and what they invest in and to their investors it does show. As for morale, it seems low with all the issues that need to be resolved and yet its a huge fight to change certain issues or even get mgmt to discuss them.
 

WayBack

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Sure, who needs a union when things are running good? What happens if/when management changes, or they decide to force feed the group a big shiat sandwich? A union is like insurance, kind of necessary, and your glad you have it when things go wrong.

I guess this is why young people think they don't need health insurance......................" I never get sick..............."

To your health.

Why would there be a shift of management when things are running well?
I see your point about ALPA being like insurance, and I agree. They are like "The General" insurance agency. Really cheap, doesn't cover as much as they claim, and when you need them the most...you can't get a hold of them. But hey, they have a really catching theme song, a cute little cartoon figure as a mascot and all the bright colors attract the kids.

I can see Prater as ALPA's mascot. Speaking of Prater, the only thing ALPA insures is Praters and Worthless's retirement fund. How do you justify paying them for the sloppy "work" they do.

On a side note, for as much Prater is making, he should call Jenny Craig, buy a tread mill and get a friggin haircut.....with a mustache trim.
 

homerjdispatch

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a lot
Rich sounds like the Iraqi Information Minister
Bagdad Bob!!!

bagdad_bob_large-773082.gif
 

CX880

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Skywest knows they are f"ed with those 378 50 seaters. Their strategy of bribing mainline airlines by buying up flying and working under a loss may be beneficial to them in the long run. One thing's for sure they could proabaly fly with heavy losses for 20 years without going bankrupt. All the years of non union bottom feeding has done them good in the bank.
 

Rez O. Lewshun

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Regardless, no corporation is going to make a negative press statement.... nor are they expected.... what is interesting is the SkyWest employees pacifying their false conscious with this corporate practice....

Guys... it is what companies do.... it doesn't mean anything to you personally.
 

CopilotDoug

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Done!
Looks like the Skywest pilot group IS the change they want to see in the industry. And it's paying off handsomely for them. Good job guys.
 

Erlanger

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Skywest knows they are f"ed with those 378 50 seaters. Their strategy of bribing mainline airlines by buying up flying and working under a loss may be beneficial to them in the long run. One thing's for sure they could proabaly fly with heavy losses for 20 years without going bankrupt. All the years of non union bottom feeding has done them good in the bank.

You really are ignorant.
 

WayBack

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Regardless, no corporation is going to make a negative press statement.... nor are they expected.... what is interesting is the SkyWest employees pacifying their false conscious with this corporate practice....

Guys... it is what companies do.... it doesn't mean anything to you personally.

You're incredibly smart, Rez. Scary smart! I don't think anyone on this forum would have picked that up if you hadn't pointed it out for us, Thanks again! Beer is on me next time! This is typical of any American business/Coorperation, especially one union who does it all the time. Do I need to name that Union?? Oh wait, they're an Association now.
 

JoeMerchant

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Regardless, no corporation is going to make a negative press statement.... nor are they expected.... what is interesting is the SkyWest employees pacifying their false conscious with this corporate practice....

Guys... it is what companies do.... it doesn't mean anything to you personally.

Poor old Rez can't stand the Skywest success story...It really gets to him...Sad to see him so bitter about a successful company that treats it's employees well and still succeeds....

The ASA ALPA pilots like to hear these things from Skywest management...makes us smile too....Go Skywest...Don't worry about poor Rez....:laugh:
 

JoeMerchant

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You're incredibly smart, Rez. Scary smart! I don't think anyone on this forum would have picked that up if you hadn't pointed it out for us, Thanks again! Beer is on me next time! This is typical of any American business/Coorperation, especially one union who does it all the time. Do I need to name that Union?? Oh wait, they're an Association now.

You're right...BOTH ALPA and Skywest management put out press releases that paint a rosy picture...The difference is that they usually come true for Skywest.....ALPA not so much....:laugh:
 

WayBack

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You're right...BOTH ALPA and Skywest management put out press releases that paint a rosy picture...The difference is that they usually come true for Skywest.....ALPA not so much....:laugh:

My favorite Rah Rah, Shish Boom Bah cheer from ALPA, has to be Prater's "We're taking it Back!" speech. The mouth breathers who watched in awe, as their Leader spoke to them, experienced goose bumps, followed by tears rolling down their cheeks and even a warm sensation in their trousers. The really believed that everything was going to turn around for the better.
It was that same week, Prater rallied the Spirit pilots, but completely ignored the Comair pilots we're getting hosed with more concessions.

Does anyone have a list of what Prater has Taken Back so far? Other than amending the way he is compensated, taking it the average of the Top 3....because this allows him to make more money.
 

yellowfever

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Poor old Rez can't stand the Skywest success story...It really gets to him...Sad to see him so bitter about a successful company that treats it's employees well and still succeeds....

The ASA ALPA pilots like to hear these things from Skywest management...makes us smile too....Go Skywest...Don't worry about poor Rez....:laugh:


I'm pretty sure skywest doesn't treat all its employees well:

http://employmentlawgroupblog.com/wp-content/douglas-v-skywest-airlines.pdf

and how much are those guys making in the right seat (how many years will they be there)?
 

WayBack

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I'm pretty sure skywest doesn't treat all its employees well:

http://employmentlawgroupblog.com/wp-content/douglas-v-skywest-airlines.pdf

and how much are those guys making in the right seat (how many years will they be there)?

The FO's make the same as ASA and more than other CRJ pilots. Except for SkyWest pilots get to keep 2% of their paycheck.

As far as upgrade, you're right, the guys at SkyWest are hosed. They're going to be FO's forever. Unlike the FO's who are at ASA, Comair and PSA...those guys are so lucky, they're upgrading FO's like it's going out of style.
Are you pick'in up what I'm layin down?
 
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