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SkyWest, Inc. Announces First Quarter 2016 Profit

Commenting on the results, Chip Childs, SkyWest, Inc. Chief Executive Officer, said "The quarter's strong results reflect the value SkyWest has been able to generate for our partners through solid, reliable operating performance. The demand for our service and aircraft is strong and we remain focused on continuing to drive incremental improvement in fleet economics to create long-term value for our stakeholders. The quarter's performance is a huge credit to our 20,000 professionals who deliver a quality product to our passengers and major airline partners."

Q1 2016 Financial Highlights
Revenue was $762 million in Q1 2016, up $2 million from Q1 2015. The increase in revenue included the net impact of 29 aircraft added to profitable flying agreements and the removal of 66 aircraft from unprofitable or less-profitable flying agreements since Q1 2015. Q1 2016 revenue also reflected rate increases under certain existing SkyWest flying contracts, additional flying under pro-rate arrangements, and higher contract performance incentives earned compared to Q1 2015.

Operating expenses were $700 million in Q1 2016, down by $26 million from Q1 2015. This improvement primarily related to lower direct operating costs from fewer aircraft in service, a reduction in fuel costs, maintenance cost savings initiatives, partially offset by additional crew training costs in anticipation of scheduled Embraer E175 aircraft ("E175") deliveries.

Q1 2016 Operational Update
Flight completion rates at SkyWest Airlines, Inc. ("SkyWest Airlines") and ExpressJet Airlines, Inc. ("ExpressJet") for Q1 2016 and Q1 2015 are summarized as follows:

SkyWest's total aircraft in service decreased by four aircraft during the first quarter of 2016 as follows:

Aircraft available for scheduled service at December 31, 2015:


660

Additions:



New E175 aircraft with Alaska Airlines, Inc. ("Alaska"):

2


New E175 aircraft with United Airlines, Inc. ("United"):

1


Total Additions:


3

Removals:

ERJ145 aircraft from United:

(5)


CRJ200 aircraft from Delta Air Lines ("Delta"):

(1)


CRJ700 aircraft from Delta:

(1)


Total Removals:


(7)

Aircraft available for scheduled service at March 31, 2016:


656

SkyWest's total aircraft in service decreased by 37 aircraft from March 31, 2015 to March 31, 2016 as follows:

Aircraft available for scheduled service at March 31, 2015:


693

Additions:



New E175 aircraft with United:

12


New E175 aircraft with Alaska:

7


Used E145 aircraft with American Airlines, Inc. ("American"):

10


Total Additions:


29

Removals:

ERJ145 aircraft from United service:

(43)


CRJ200 aircraft from service with multiple partners:

(10)


CRJ700 aircraft from Delta service:

(1)


EMB120 aircraft from service with multiple partners:

(12)


Total Removals:


(66)

Aircraft available for scheduled service at March 31, 2016:


656

Under its fleet transition plan, SkyWest generated approximately 24,000 additional block hours, or a 14% increase, with its dual-class aircraft (E175s and CRJ700s/900s) during Q1 2016, compared to Q1 2015. SkyWest had a reduction of approximately 54,000 block hours, or a 16% decrease, with its 50-seat and smaller aircraft (ERJ145s/135s, CRJ200s and EMB120s) during Q1 2016, compared to Q1 2015.

The following table outlines SkyWest's anticipated delivery schedule for new E175 aircraft through June 2017:


E175 Aircraft Scheduled Deliveries



Total in-service

March 31, 2016

Q2 2016

2H 2016

1H 2017

Total anticipated

in-service

June 30, 2017

United

41

6

7

11

65

Alaska

7

2

6

5

20

Delta

-

-

13

6

19

Total E175s:

48

8

26

22

104

SkyWest reached an agreement with Alaska to take delivery of five additional E175 aircraft in 2017, resulting in a total of 20 E175 aircraft expected to be in service with Alaska by the second half of 2017.

Q1 2016 Capital and Liquidity Update
SkyWest had $442 million in cash and marketable securities at March 31, 2016, a decrease of $56 million from...


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