EX-99.1 2 a16-17930_1ex99d1.htm EX-99.1

Exhibit 99.1

PARTNER OF CHOICE EMPLOYER OF CHOICE INVESTMENT OF CHOICE Investor Update September 2016 1

Forward Looking Statements In addition to historical information, this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “forecasts”, "expects," "intends," "believes," "anticipates," “estimates”, "should," "likely" and similar expressions identify forward-looking statements. Such statements include, but are not limited to, statements about SkyWest’s future financial and operating results, plans, objectives, expectations, estimates and intentions, and other statements that are not historical facts. All forward-looking statements included in this presentation are made as of the date hereof and are based on information available to SkyWest as of such date. SkyWest assumes no obligation to update any forward-looking statement. Readers should note that many factors could affect the future operating and financial results of SkyWest, SkyWest Airlines or ExpressJet, and could cause actual results to vary materially from those expressed in forward-looking statements set forth in this presentation. These factors include, but are not limited to, the prospects of entering into agreements with existing or other carriers to fly new aircraft, ongoing negotiations between SkyWest, SkyWest Airlines and ExpressJet and their major partners regarding their contractual obligations, uncertainties regarding operation of new aircraft, the ability to attract and retain qualified pilots, the impact of regulatory issues such as pilot rest rules and qualification requirements, and the ability to obtain aircraft financing. Actual operational and financial results of SkyWest, SkyWest Airlines and ExpressJet will likely also vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of other reasons, including, in addition to those identified above: the operational and financial challenges and impact of market demand shifting from 50-seat single-class aircraft to dual-class aircraft;; the challenges of competing successfully in a highly competitive and rapidly changing industry;; developments associated with fluctuations in the economy and the demand for air travel;; the financial stability of SkyWest’s major partners and any potential impact of their financial condition on the operations of SkyWest, SkyWest Airlines, or ExpressJet;; fluctuations in flight schedules, which are determined by the major partners for whom SkyWest’s operating airlines conduct flight operations;; variations in market and economic conditions;; significant aircraft lease and debt commitments;; realization of manufacturer residual value guarantees on applicable SkyWest aircraft;; market changes in residual values for aircraft and related assets;; labor relations and costs;; the impact of global instability;; rapidly fluctuating fuel costs, and potential fuel shortages;; the impact of weather-related or other natural disasters on air travel and airline costs;; interruption of information technology systems, including systems provided by our major partners and vendors;; aircraft deliveries;; the ability to attract and retain qualified pilots and other unanticipated factors. Risk factors, cautionary statements and other conditions which could cause SkyWest’s actual results to differ materially from management’s current expectations are contained in SkyWest’s filings with the Securities and Exchange Commission, including the section of SkyWest’s Annual Report on Form 10-K for the year ended December 31, 2015, entitled “Risk Factors.” 2

SKYWEST INCORPORATED SkyWest LEASING YEXPRESSJET 3

Executing on our Fleet Transition Generating value during our fleet transition: 1. 2. 3. 4. 5. Adding aircraft to new, profitable contracts Removing older 50-seat aircraft from our fleet Improving economics in existing contracts when available Delivering strong operating performance Managing our fleet risk for changing market demands 4

Improvement in Flying Contracts and Fleet Mix June 2015 June 2016 46% 25% Aircraft in service: 676 Aircraft in service: 655 Operating Fleet as of June 30, 2015: 676 Legend: Removed ERJ145s (UA/AA) (26) Each colored box represents one aircraft Each white box represents one removed aircraft New E175 aircraft Significant annualized earnings Removed CRJ700s (DL) (3) Significant annualized losses 5 Also transitioned 11 CRJ700s and 10 CRJ200s between partners Operating Fleet as of June 30, 2016:655 Removed CRJ200s (multiple)(10) Added E175s (UA/AS)18

Fleet Changes Since June 30, 2015 CRJ700s/900s 203 - (3) 200 Up 6% CRJ200s 234 - (10) 224 Down 8% Also transitioned 11 CRJ700s and 10 CRJ200s between partners/flying agreements. Demand from our partners continues to point in the direction of this trend continuing or accelerating. 6 “Single-class aircraft”435-(36)399 l Operating Fleet67618(39)655 ERJ145s/135s201-(26)175 “Dual-class aircraft”24118(3)256 E175s3818-56

Scheduled E-175 Deliveries Alaska 9 4 2 5 20 48 Ongoing fleet transition, including placement of E-175 aircraft, partially offset by a reduction in 50-seat aircraft. • 7 Delta-58619 56111918104 United4729765

SkyWest Flying Contract Risk Model Risks No Passenger fare volatility Seat inventory Fuel costs Network strategy Majority of fleet financing risk covered by contracts with major partners Yes Labor costs and shortages Aircraft maintenance Operating performance Competition Financing tail risk (on less than half of fleet) Residual values on owned aircraft and related assets • • • • • • • • • • • Business model generated net income in 24 of 26 years 8

Financial Data 9

Profitability from Fleet Transition and Operational Improvements Revenue $ 801.3 $ 788.4 $ 1,563.4 $ 1,548.8 Pre-tax margins 8.3% 6.7% 7.1% 4.4% Q2 2016 results reflect progress in fleet economics and operating performance – – Economic benefit from adding 18 E175 aircraft and removing 39 unprofitable / less profitable aircraft 99.9% weather adjusted flight completion rate achieved at SkyWest and ExpressJet • Solid operating performance generated additional revenue and improved operating efficiencies Opportunities to improve fleet mix not fully played out yet – – – 48 additional E175s scheduled from July 2016 through the end of 2017 Scheduled contract expirations with 50-seat aircraft in 2016 and 2017 We expect earnings growth for the second half of 2016 to be in the low double-digit range when compared to the second half of 2015, excluding unusual items Potential additional noise likely in execution of fleet optimization going forward in the form of non-cash or cash charges on our leased and owned fleet and related assets 10 – Pre-tax income$66.3$52.5$110.8$68.8 Improved Results Year-Over-Year (in millions)

Q2-16 Improvement from Q2-15 $80 $70 $60 $50 $40 $66 $30 $20 $10 $- Operating Expense Variances $0 Revenue Variances $13 $13 11 $3 $41 $(30) $53 $11 $(12)$12 $(10) $(5) $(7) $10 $66 Q2-15 Actual Removal of Additional Dual CRJ200 Flying Pass Pass Early Lease Other Aircraft Higher Labor Lower Aircraft Q2-16 Actual (pre-tax)E145 AircraftClass AircraftRevenue Agreement Through T hrough T e r m ination on Lease Return CostsMX Costs(pre-tax) ImprovementsResolutionCostsCosts3 CRJ700'sCosts

A New Trajectory $66 Operating Margin % $53 $60 60 15.0% $45 10.5% $41 10.0% $34 9.9% 8.9% 8.1% 7.9% $16 7.1% 5.0% 6.2% 0.0% 14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 $0.14 EPS* $1.98 EPS* $1.29 YTD EPS * Adjusted for special items, see Reconciliation of Non GAAP Financial Measures 12 Operating Margin* % Pre-Tax Income* ($ in millions) Pre-tax Income 50 40 30 20 10 0 -3.6% -$43 Q1- $43 2.2%4.5% -$2

Balance Sheet Highlights Cash, marketable securities, restricted cash $ 513 Current assets 1,028 Total assets $ 4,997 Current ratio: 1.4 Other current liabilities 464 Debt Mix: Equity Mix: 56% 44% Long-term debt 1,763 Shareholders’ equity 1,577 Total liabilities and shareholders’ equity $ 4,997 13 Other long-term liabilities916 Current liabilities741 Current portion of debt$277 Aircraft, PP&E and other3,969 Other current assets515

2016 / 2017 Execution Strategy • • • • • • Place 48 additional E175 aircraft into service by end of 2017 Continue to improve our fleet mix based on evolving partner demand Deliver outstanding operational performance Enhance pilot recruiting and retention efforts Manage our fleet risk for changing market demands Deploy cash towards accretive opportunities 14

Additional Information 15

SkyWest, Inc. Operating Fleet June 30, 2016 SkyWest Airlines United – contract flying 59 - 47 106 55 - 55 161 Delta – contract flying 23 36 - 59 49 - 49 108 American – contract flying 7 - - 7 13 - 13 20 Alaska – contract flying 9 - 9 18 - 169 - - - 169 18 359 98 36 56 190 ExpressJet United – contract flying - - - - - 161 161 161 Delta – contract flying 38 28 - 66 41 - 41 107 American – contract flying - - - - 11 14 25 25 38 28 - 66 55 175 230 296 16 655 224175399 Combined1366456256 3 3-3 American – pro-rate flying---- Total CRJ200ERJ135/145Total CRJ700CRJ900E175Total 5 5-5 American – pro-rate flying---- 21 21-21 Delta – pro-rate flying---- 26 26-26 United – pro-rate flying---- Combined Total 50 Seat Jets CRJ200ERJ135/145Total 66+ Seat Dual Class Jets CRJ700CRJ900E175Total

Map SkyWest operated 1.2 million flights and carried 56 million passengers in 2015 AsotJuly31,2016 SKvWEsT SkyWest, Inc. Route

The People of SkyWest, Inc. SkyWest employees deliver a culture of quality, reliability and efficiency Nearly 20,000 dedicated aviation professionals throughout the US Our People Nearly 20,000 Pilots Flight Attendants Maintenance Customer Service Ops Support & Other Dispatch 7,100 4,900 3,300 2,400 1,500 200 18

Partnership Models Fixed-fee flying contracts: • • • • • Revenue at fixed rates, primarily based on completed flights Partner directly reimburses us for certain costs such as fuel Primary “at-risk” costs are labor, aircraft maintenance and overhead Most agreements include operating performance bonuses/penalties Fixed rates are typically set for the full contract term at inception Ø Advantages of fixed-fee flying contracts: – – – – Significant airline operating costs, such as fuel and aircraft ownership, are essentially mitigated Contract length typically provides for long-term infrastructure planning Major partner has lead/risk on passenger fare management;; allows us to focus on a strong operation Provides value to major partners by providing critical feed into their hubs Ø Disadvantages of fixed-fee flying contracts: – – – – “At-risk” operating costs may exceed fixed rates over contract term Operating requirements may vary over time without concurrent rate adjustments Partner may change schedules and utilization seasonally, resulting in inefficient periods Potential aircraft financing exposure if financing terms extend beyond contract terms 19

Partnership Models Pro-rate agreements: • • • SkyWest receives a pro-rated portion of connecting passenger fares We receive 100% of the passenger fares on local routes (non-connecting passengers) We are responsible for all operating costs associated with pro-rate flights, including fuel costs SkyWest by Model (Aircraft Count) Ø Advantages of pro-rate agreements: – – – Increased control over scheduling Control over pricing of local routes Independent negotiation of government subsidies Contract 92% Ø Disadvantages of pro-rate agreements: – – – Number of preferable routes limited Subject to passenger fare volatility Increased risk for fuel cost Pro-Rate 8% 20

Reconciliation of Non-GAAP Financial Measures Diluted Share GAAP income $ 194,322 $ (76,505) $ 117,817 $ 2.27 (24,731) 9,517 (15,214) (0.29) Q4 2015 Adjustments (1) Non-GAAP income $ 169,591 $ (66,988) $ 102,603 $ 1.98 Diluted Share GAAP income (loss) $ (16,343) $ (7,811) $ (24,154) $ (0.47) Total Adjustments Non-GAAP income 49,855 33,512 (18,945) (26,756) 30,910 6,756 0.61 0.14 $ $ $ $ (1) Adjusts for a gain from early debt payoff of approximately $32.6 million, partially offset by a resolution of contract matter with a major partner of approximately $7.9 million. Adjusts for the gain from the sale of our equity investment in TRIP Linhas Aereas. Adjusts for costs resulting from the removal of a specific aircraft from our operations. (2) (3) Although SkyWest’s financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), SkyWest management believes that certain non-GAAP financial measures may provide investors with useful information regarding the underlying business trends and performance of SkyWest’s ongoing operations and may be useful for period-over- period comparisons of such operations. The table above reconciles income before income taxes, excluding special items, to GAAP financial statements for the periods indicated (dollars in millions). Readers should consider this non-GAAP measure in addition to, not a substitute for, financial reporting measures prepared in accordance with GAAP. This non-GAAP financial measure excludes 21 some, but not all, items that may affect SkyWest’s net income. Additionally, this calculation may not be comparable with similarly titled measures of other companies. Adjusted for: Gain on Sale of Equity Investment (2)(24,922)9,470(15,452) Special items for fleet reduction (3)74,777(28,415)46,362 Pre-tax IncomeIncome Tax Net IncomeNet Income Per Adjusted for: Pre-tax IncomeIncome Tax Net IncomeNet Income Per