Market Overview

SkyWest Will Be Impacted By American's Decision To Cut Ties With ExpressJet

SkyWest Will Be Impacted By American's Decision To Cut Ties With ExpressJet

American Airlines Group Inc (NASDAQ: AAL) intends to cut its business with SkyWest, Inc. (NASDAQ: SKYW) subsidiary ExpressJet, according to a Friday Bloomberg report.

The news catalyzed a 5-percent selloff in SkyWest’s stock.

Operating as American Eagle, ExpressJet has been flying an unknown number of Bombardier CRJ700s for American primarily from a Dallas hub. Last year, it had secured an agreement to add eight more aircraft to the American Eagle fleet in the second quarter of 2018.

American did not report a reason for the change in contract.

How Badly It Hurts

SkyWest does not release revenue by airline, but in the first quarter of 2018, ExpressJet completed 107,423 of the firm’s total 436,367 logged flight hours. Assuming steady rates across subsidiaries, ExpressJet would have then contributed about $192.8 million of SkyWest’s total $783 million.

In 2017, ExpressJet accounted for 15.5 million of SkyWest’s 51.4 million total passengers, as well as 637 of an average 2,813 daily departures.

A Diluted Effect

Notably, ExpressJet operates far fewer routes for American than it does for partners Delta Air Lines, Inc. (NYSE: DAL) and United Continental Holdings Inc (NYSE: UAL).

This January, United extended its contract five years, but Delta began prematurely winding down a regional contract last year, according to a 2017 press release.

Related Links:

'Our Economic Outlook For The Year Is Strong,' Delta CEO Says After Q1 Print

Southwest Airlines Is 'Oversold,' Buckingham Says In Upgrade

Photo by Alan Wilson via Wikimedia. 

Posted-In: airlinesNews Contracts Travel General Best of Benzinga


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