Dahlman Rose Gives Color On Skywest Following Disappointing Earnings

SkyWest Inc.

reported a 1Q11 loss that was mostly in line with an April 1 pre-announcement. There should be some improvement as the year moves forward, but Dahlman Rose believes the shares are relatively unattractive until there is marked improvement in the results. Dahlman Rose is estimating 2011 EPS of $1.09. Its preliminary EPS estimate for 2012 is $1.30. The company supports its stock with a share repurchase program. During 1Q11 they repurchased 1.2 million shares for $19.6 million. SkyWest has 17 CRJ-700s scheduled to be delivered in 2011. Of those, four came into the fleet in 1Q11. The remaining aircraft will support the company's 2011 planned growth. SkyWest ended the March quarter with $706.9 million of cash on the balance sheet, down by $98 million from the $804.9 million at year-end 2010. Though the reduction in cash may seem worrisome, further inspection provides an explanation. During the quarter SkyWest prepaid $53 million in rents, repurchased 1.2 million shares at a cost of $19.6 million and made aircraft deposits of $13.2 million. The company uses its balance sheet to finance its growth and to return capital to shareholders through its share repurchase program. Dahlman Rose has a Hold rating on SKYW SKYW closed Wednesday at $16.55