SkyWest(US:SKYW)2022-04-29 02:46Financial Data and Key Metrics Changes - The company reported a first quarter GAAP net income of $17.7 million, or $0.35 diluted earnings per share, with a pre-tax income of $24.8 million [22] - Total Q1 revenue was $735 million, down 5% sequentially from Q4 2021 but up 38% from Q1 2021 [23] - The effective tax rate for Q1 was 28% [22] Business Line Data and Key Metrics Changes - Contract revenue decreased by 2% from Q4 2021 but increased by 42% from Q1 2021 [23] - Prorate revenue was $79 million in Q1, down 28% from Q4 2021 but up 15% from Q1 2021 [23] - Leasing and other revenue increased by 7% sequentially and 16% year-over-year [23] Market Data and Key Metrics Changes - The company anticipates a reduction in 2022 production by about 5% compared to 2021, slightly better than previous estimates [18] - The second quarter is expected to perform better than the first quarter, while the second half of the year is projected to be lower due to crew imbalance [30] Company Strategy and Development Direction - The company plans to place 46 new E175s into service within the next 12 months, aiming for a total of 240 E175s by early next year [7] - A focus on maintaining a robust hiring pipeline and addressing pilot attrition through various incentives and career pathways [12][19] - The company filed a 90-day termination notice for 29 communities to manage staffing imbalances while exploring partnerships with other airlines to maintain service [15][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for regional flying, particularly as communities seek better connectivity post-pandemic [19] - The staffing imbalance and ongoing refleeting are expected to constrain production into late 2023 to early 2024 [13] - The company remains committed to investing in its fleet and addressing pilot shortages to position itself strongly for future growth [20][33] Other Important Information - The company ended Q1 with cash of $856 million, essentially flat from the previous quarter, and expects total 2022 CapEx to be approximately $800 million [26][29] - The company has over $1 billion of unpledged collateral available for additional liquidity if needed [27] Q&A Session Summary Question: Is the improved block hour outlook due to better pilot hiring and training? - The company optimized block hours based on fleet mix changes and found stabilization in some models, aiding in more accurate predictions [45] Question: How is pilot attrition trending? - Pilot attrition has remained flat since the last quarter, with expectations for a lighter summer and a potential increase in the fall [46] Question: Are there plans to invest in training capacity? - The primary issue is time for first officers to gain experience to upgrade, not a training capacity problem [51] Question: What are the implications of the pilot shortage on future production? - The company is preparing for a wide range of outcomes, with expectations to recover pilot numbers starting in late 2023 [70] Question: What opportunities exist in the leasing business? - There is strong demand for CRJ200s and engines, with interest from smaller airlines looking to lease from the company [78]