Skywest Inc

Case 6 Sky watt Inc. and the regional air duct manufacturing 1. 3 chore forge 1. mesh Carriers legacy carriers hub-and-spoke 2007 unify, Northwest, American, Continental Delta 2005 5 82 % 10 0 25. 3 2. crushed represent Carriers pitiful cost business model point-to-point sou-west tarryBlue legacy number one price Low Cost fall in parentagelines Low Cost united Ted respiratory tracts Delta Low Cost Deltas Song occupationlines 3. regional Carriers Jets legacy mesh topologywork (Hub-and-Spoke) short-haul career regional air hoses block-hour incentive regional 95 % regional regional Hub-and-Spoke legacy Regional air lanes cooperator Sky westside Inc biography Origins in the Early 1970s Sky due west confederation air hose St. George Utah 1972 J. Ralph Atkin 4 Dixies commuter train flight path Atkin Fixed Base cognitive operation (FOB) parentage Charters Air Ambula nce military service bobble 1972 Atkin SkyWest air ducts 1974 Jerry C. Atkin Ralph Atkins nephew $25,000 Oct 1975 Reorganized 3 SkyWest Expansion in the Late 1970s 1976 Hughes Air West cedar tree urban center- flavor Lake City SkyWest Navajo Chieftans 5 content set Transportation Company Avis Franchises 2 Cedar City St. George. 1977 Interline American skyways ? check in Interline SkyWest 1978 1. SkyWest Commuter airway ( Regional airway) 3 Certified Air Carrier national Government Regulations major airlines 2. Civil astronautics Board (CAB) SkyWest 3 $160,000 Page azimuth Yuma, Kingman, Prescott, Grand canyon, Tucson, Winslow Phoenix, genus Arizona, Blythe, Los Angeles, and El Centro, calcium. 3. SkyWest Fairchild Metroliner II $1. 4 ( $150,000) step-up from Deregulation, Acquisition, and Affiliations in the eighties 1978 major(ip) air ducts get unneurotic, westward American Airlines Regional Airlines SkyWest 1983 Metros 7 Navajo Chieftans 5 Cessna 207s Charters SkyWest Reagan Reagan Professional Air avocation Controllers Association 24 Sep 1981 SkyWest Arizona Metro SkyWest 1982 SkyWest 10 Republics Escort 1980s SkyWest Mail, Small Packages, and Bank Documents 10 % 1983 SkyWest 2 Regional Airlines St. George 17 6 250 customer do Aug 1984 SkyWest Las Vegas Palm Springs, atomic number 20 Confederate calcium Palm Springs solarize Aire 1968 Borrego Springs, California San Diego 90 1983 insolate Aire 330,000 1985 Sun Aire SkyWest Metros SkyWest 12 14 Sun Aire 28 Sun Aire Facilities American Airlines Los Angeles SkyWest/Sun Aire Major market SkyWest Regional Carrier 11 retention Company SkyWest, Inc. , 3 1. SkyWest Airlines Inc. SkyWest air Inc. ) 1998 Regional Airline 5 12 business concern Travelers SkyWest Commuter Airline Ski Resorts California SkyWest Airlines Delta Continental Airlines 2. scenic Airlines Air Tours, oecumenical Aviation recordd safety valves Grand Canyon Arizona, Utah, Nevada 3. National Parks Transportation franchise Avis 1985 SkyWest canon-Sharing Hesperian Airline Salt Lake 70% 1987 Delta Airlines Western Airlines SkyWest Delta Code DL SkyWest SkyWest/Sun Aire Western limited Delta Connection. Logo Code-Sharing Major Regional Airlines 1980 United Airlines Regional United Express American Airlines American double birdie Network 1980 SkyWest Brasilia EMB-120 Turboprop Regional Airlines SkyWest California 1986 Sun Aire acquisition SkyWest NASDAQ 1987 SkyWest Air Transport Worlds Commuter/Regional Airline 500 Regional Airlines 988 SkyWest $2. 3 California 28 Events in the 1990s Jun 1993 Aviation go West, Inc. Flight Tour Scenic Airlines, Inc. , Las Vegas Grand Canyon Aviation Services West Scenic Airlines, Inc. 1994 SkyWest Delta Salt Lake City 5 Casper, Wyoming Butte, Montana B urbank, California fast City and Sioux Falls, South Dakota SkyWest Canadair Regional Jets (CRJs) Bombardier, Inc. Brasilias 50 540 1,200 miles 41,000 Oct 1995 SkyWest Continental Airlines Code-Sharing SkyWest Continental Connection Los Angeles SkyWest 3% Continental Flights 1996 48% Delta 1996 SkyWest 2. 5 16 SkyWest Brasilias 50 Canadair Regional Jets 10 Metroliner 1 Oct 1997 SkyWest United Airlines United Express SkyWest Connecting Flight Los Angeles 1997 SkyWest 25 SkyWest 585 45 12 Salt Lake City Vancouver Canadair Regional Jets 19 Jan 1998 SkyWest United United Express San Francisco Hub United June 1, 1998 1998 SkyWest Connecting flight 3 Major Airlines Delta, United Continental 1 July 2002 SkyWest Tucson Arizona. 8 Dec 2002 United Airlines furnish SkyWest Chapter 11 2003 SkyWest Bombardier CRJ700 70 30 United Express 9 whitethorn 2003 SkyWest code-share Continental Airlines SkyWest regional Continental Houston, The US incision of Transportation SkyWest 2003 SkyWest dissipate SkyWest 1 5 regional carriers DOT 2004 hub Chicago, IL (ORD) Colorado Springs, CO (COS) CRJ Delta Dallas/ Fort cost Hub (DFW) SkyWest SkyWest ,000 DOT SkyWest 2004. pic2005 SkyWest, Inc. Atlantic southeastern Airlines Delta Air Lines. Chicago OHare. Sky West Inc. dowerner United Delta 2006 bequest 2 2006 SkyWest CRJ900 Dec 2006 SkyWest Inc. SkyWest midwestern United States Partner pic2007 SkyWest Airlines Midwest Connect / Delta Connection / United Express bequest 2 (Delta Connection / United Express) Outsource 20 SkyWest Inc. Denver, Chicago, Los Angeles San Francisco United transport SkyWest Inc. Outsourcing Delta SkyWest Delta Connection department of Transportation Cedar Utah 8 Jan 2008. Source yearly pass over 2007 SkyWest Inc. Skywest Inc. 2. Bridging the Region Gap from West to east SkyWest Inc. Regional Airline W estern east SkyWest Airlines ASA artner legacy Airlines safety / on time arrival / service and select / fairness and consistency / working together as a team / person-to-person and corporate integrity and maintaining profitability & businesslike Use of All Resources. SkyWest Inc. Partner legacy Airline / Developed industry-leading reputations for providing quality, low-cost regional airline service. 3. (Functional take dodge) pic Inbound Logistics Service , , , install Handling Equipment, Operations outward Logistics Marketing and Sales Distribution bequest Airline Partner output heading Service (Functional take aim strategy) ( agonistical Advantage) 3. 1 top-hole expertness pukka susceptibility SkyWest Inc. produce Design 0. 03 USD 0. 095 USD. Partner bequest Airline (routine maintenance) Human Resource 90 - hideaway Plans SkyWest Inc. Teamwork Information System Functi on Interline American Airlines Check-in Republics Escort Marketing Product (Cost per Available seat mile) Place Code Sharing Market Share Partner legacy SkyWest Inc. 2006 SkyWest Inc. 3,114 2005 1,964 ( Exhibit 6) 3. 2 lord lineament master superior SkyWest Inc. reliableness The Aviation Safety Action broadcast Program Stetson grapheme suite SkyWest Inc. SkyWest Airline Regional Airline 15 2004 2005 SkyWest 84. 5% SkyWest 1% 50% 2006 SkyWest Airlines 1. 2 % 1. 7 % Reliability SkyWest Airlines . 3 top-flight Innovation Process Innovation SkyWest Airline ASA 2 Partner Legacy Airline 3. 4 ace guest responsiveness SkyWest Airlines DOT 2 2003-2004 Functional Strategy SkyWest Inc. Superior Customer reactivity Superior Efficiency Product Design ascension 0. 103 USD 0. 095 USD. Superior Quality Customer Service 4. ( pedigree Level Strategy) (Functional Level Strategy) . What needfully leave be satisfied? SkyWest Inc. Regional Airline Legacy Airlines partnership 2. Who will be served? Connecting flight Legacy Airlines (Broad Target) 3. How will those needs be satisfied? On-time service with quality. Business Strategy SkyWest Inc. Cost leading Competitive Positioning Efficiency Quality Business Leisure (Broad Target) Legacy Airlines partner Western Eastern Customer Services) Business Strategy Functional Strategy Superior Efficiency Superior Quality Superior Customer Responsiveness 5. (Corporate Level Strategy) SkyWest Inc. 1. Concentration yield Horizontal developing ASA Partner Legacy Airline Partner Legacy Airline Partner (Contract Agreement Term) Intensive Growth Improve Competitive Position Regional Airline 2. Retrenchment Sell-out National Parks Transportation Scenic Airlines Atlantic selenium Airlines (ASA) pic (Concentration Strategies) 1. Market Penetra tion SkyWest Inc. Upgrade ( CRJ 50 ) Legacy Airline (Contract Agreement Term) Legacy Airlines 2. Market suppuration ASA ( ) Eastern Partner Legacy Airline 6. 6. 1 (Organizational Structure) SkyWest Inc. geographic Structure (Destinations) SkyWest Airline Atlantic Southeast Airline (ASA) Functional Structure decisiveness Making SkyWest Inc. Centralized ( www. SkyWest. com/about/exec. php , www. flyasa. com , www. SkyWest,Inc. htm ) 6. 2 (Organizational Culture) SkyWest Inc. Efficiency and Quality Efficiency Part Time 3 Ticket Agents / luggage Handlers SkyWest Airlines $40,000 $202,000 ASA Airlines Quality SkyWest Airline Maintenance part AMT Award 3 2004 2006 The US part of Transportation SkyWest 2003 2004 6. 3 (Organizational Leadership) Chairman, President and chief run officer Jerry Atkin accept the Airline Business cartridge holder award for Regional Airlines Leadership Efficiency and Qu ality 7. (Strategic Control) 7. 1 Efficiency SkyWest Inc. ASA Delta SkyWest Inc. SkyWest SkyWest 70 90 50 2007 SkyWest Inc. SkyWest ASA ? ASA Regional SkyWest ASA Cost per available seat pic 7. 2 Quality SkyWest Inc. The US Department of Transportation SkyWest 2003 2004 SkyWest Inc. the Department of Transportation Federal Aviation administration Stetson Quality Suite packet SkyWest Inc. ? Partner Legacy Airline 7. 3 Innovation Midwest, Bradford R. Rich , CEO treasurer SkyWest Inc. SkyWest Midwest ASA Teamwork ? 7. 4 Customer Responsiveness The US Department of Transportation SkyWest 003 2004 Legacy Airlines 8. (Strategic Evaluation) 8. 1 Established standards and targets Regional Airline Partner Legacy Airline FAA / DOT TSA Regional Airline Legacy Airline Partner Legacy Airline 8. 2 Create measuring and monitoring outline Yield/RPM, Revenue/ASM, Cost/ASM recede baggage handling rate 8. 3 Compare actual performance against the schematic targets ? 8. 4 Evaluate result and come action if necessary (Statements of Income / Balance Sheets / Air Travel Consumer Report) easuring and monitoring system 9. SkyWest Inc. (Functional Level Strategy) Superior Efficiency Superior Quality Superior Customer Responsiveness Superior Efficiency Product Design 0. 103 USD 0. 095 USD. Superior Quality (Customer Service) (Business Level Strategy) Cost Leadership Competitive Positioning Efficiency Quality Business Leisure (Broad Target) Major Airline Partner (Customer Services) Western Eastern (Corporate Level Strategy) 1. Market Penetration SkyWest Inc. ( CRJ 50 ) Legacy Airline (Contract Agreement Term) 2. Market Development ASA ( ) Eastern Partner Legacy Airline Bridging the Region Gap from West to East Regional Airline Western Eastern Operations Devel oped industry-leading reputations for providing quality, low-cost regional airline service. 10. (Effectiveness of Strategies) returnsability (ROIC) Profit Growth 5 5 5 board ancestry, ALASKA sort, EXPRESSJET, PINNACLE parentageLINES commonwealth AIRWAYS 6 002-2006 Airlines 2002 2003 2004 2005 2006 SKYWEST 86. 87 66. 79 81. 95 112. 27 145. 81 board AIR -11. 27 25. 31 26. 28 56. 87 33. 97 ALASKA AIR -118. 60 13. 50 -15. 30 -5. 90 -52. 60 EXPRESSJET 84. 28 108. 18 122. 77 97. 99 92. 7 PINNACLE AIRLINES 30. 79 35. 07 40. 73 25. 70 77. 80 REPUBLIC AIRWAYS 7. 69 36. 14 38. 85 60. 65 79. 51 substance 79. 75 284. 98 295. 28 347. 58 377. 05 (Source Annual Report year 2002-2006 ) Plot 2002-2006 pic SkyWest Inc. SkyWest Inc. 2005 SkyWest Inc. SkyWest Inc. ASA Delta 2005 ASM (Available Seat mile) SkyWest Inc. (Passenger Revenue) found Handling Service Major Airline Partner ASA 2005 SkyWes t Inc. 2002 2006 2002 2003 2004 2005 2006 operating(a) REVENUES Passenger 769,427 882,062 1,139,580 1,938,450 3,087,215 consideration handling and other 5,020 5,964 16,464 25,598 27,441 derive operating revenues 774,447 888,026 1,156,044 1,964,048 3,114,656 OPERATING EXPENSES Total operating expenses 654,892 779,546 1,011,268 1,743,640 2,775,496 post expense 3,611 9,891 18,239 53,330 118,002 2003 2004 2005 2006 OPERATING REVENUES Passenger 14. 64% 29. 19% 70. 10% 59. 26% Ground handling and other 18. 80% 176. 06% 55. 8% 7. 20% Total operating revenues 14. 67% 30. 18% 69. 89% 58. 58% OPERATING EXPENSES Total operating expenses 19. 03% 29. 73% 72. 42% 59. 18% Interest expense 173. 91% 84. 40% 192. 0% 121. 27% 2002 -2003 2004 2002 2006 Airlines 2002 2003 2004 2005 2006 SKYWEST 71. 96% -23. 11% 22. 71% 36. 99% 29. 87% MESA AIR 76. 56% 32 4. 57% 3. 86% 116. 37% -40. 27% ALASKA AIR -173. 27% 111. 38% -213. 33% 61. 44% -791. 53% EXPRESSJET 75. 31% 28. 36% 13. 49% -20. 18% -5. 4% PINNACLE AIRLINES 116. 10% 13. 91% 16. 13% -36. 90% 202. 74% REPUBLIC AIRWAYS 26. 73% 370. 00% 7. 51% 56. 12% 31. 09% Total 190. 78% 257. 33% 3. 62% 17. 71% 8. 48% Plot 2002-2006 pic SkyWest Inc. 2002-2006 2003 CRJ200s EMB120s ROIC ROIC = Net Profit (After Tax) Invested Capital ? Invested Capital = Total fairness + Total Long-term Debt ( http//finapps. forbes. com/finapps/jsp/finance/compinfo/) (Annual Report) Sky West 2001-2006 ROIC 2002 2003 2004 2005 2006 Net Profit (After Tax) 86,866 66,787 81,952 112,267 145,806 Total Asset 999,384 1,529,210 1,662,287 ,320,646 3,731,419 Total Equity 638,686 709,063 779,055 913,198 1,178,293 Long-Term Debt 125,379 462,773 463,233 1,422,758 1,675,626 Total Invested Capital 764,065 1,171,836 1,242,288 2,335,95 6 2,853,919 ROIC 11. 37% 5. 70% 6. 60% 4. 81% 5. 11% (Source Annual Report from www. SkyWest. com) ROIC SkyWest Inc. ROIC 5 MESA AIR, ALASKA AIR, EXPRESSJET, PINNACLE AIRLINES REPUBLIC AIRWAYS 6 2002 2006 ROIC Airlines 2002 2003 2004 2005 2006 SKYWEST 11. 37% 5. 70% 6. 60% 4. 81% 5. 11% MESA AIR -5. 67% 8. 14% 3. 87% 6. 99% 4. 44% ALASKA AIR -7. 84% 0. 85% -0. 92% -0. 33% -2. 74% EXPRESSJET 31. 53% 39. 46% 42. 49% 27. 21% 20. 37% PINNACLE AIRLINES 37. 52% 48. 96% 34. 67% 18. 41% 35. 68% REPUBLIC AIRWAYS - 7. 18% 3. 97% 3. 44% 3. 99% Plot pic SkyWest Inc. ROIC 2003, 2005 2006 2003 CRJ200s EMB120s 005 ASA Delta ROIC 2005 ROIC 11. (Problems) SkyWest Airline (Miss baggage handling) Atlantic Southeast Airline scrape flight (Miss baggage handling) (On-time) ASA 12. (Issues) 1. Partner Low Cost Airlines (South West Airline and Jet Blue) 2. Partner 13. (External environment Analysis) (External Strategic Factors) (Opportunity) (Threat) (Attractive or Unattractive Industry) 13. 1 General Environment pic a) Economic segment 4 US inflation rates pic Current Inflation Rate Year Jan Feb Mar Apr may Jun Jul Aug Sep Oct Nov Dec Ave 2009 NA NA NA NA NA NA NA NA NA NA NA NA NA 2008 4. 28% 4. 03% 3. 98% 3. 94% 4. 8% 5. 02% 5. 60% 5. 37% 4. 94% 3. 66% 1. 07% 0. 09% 3. 5% 2007 2. 08% 2. 42% 2. 78% 2. 57% 2. 69% 2. 69% 2. 36% 1. 7% 2. 76% 3. 54% 4. 31% 4. 08% 2. 85% 2006 3. 99% 3. 0% 3. 36% 3. 55% 4. 17% 4. 32% 4. 15% 3. 82% 2. 06% 1. 1% 1. 97% 2. 54% 3. 24% 2005 2. 97% 3. 01% 3. 15% 3. 51% 2. 0% 2. 53% 3. 17% 3. 64% 4. 69% 4. 35% 3. 46% 3. 42% 3. 9% 2004 1. 93% 1. 69% 1. 74% 2. 29% 3. 05% 3. 27% 2. 99% 2. 65% 2. 54% 3. 9% 3. 52% 3. 26% 2. 68% 2003 2. 60% 2. 98% 3. 02% 2. 2 2% 2. 6% 2. 11% 2. 11% 2. 16% 2. 32% 2. 04% 1. 77% 1. 88% 2. 7% 2002 1. 14% 1. 14% 1. 48% 1. 64% 1. 18% 1. 07% 1. 46% 1. 0% 1. 51% 2. 03% 2. 20% 2. 38% 1. 59% 2001 3. 3% 3. 53% 2. 92% 3. 27% 3. 62% 3. 25% 2. 72% 2. 72% 2. 65% 2. 13% 1. 0% 1. 55% 2. 83% 2000 2. 74% 3. 22% 3. 76% 3. 7% 3. 19% 3. 73% 3. 66% 3. 41% 3. 45% 3. 45% 3. 45% 3. 39% 3. 8% 1999 fiscal Year Domestic International Total % mixed bag 2006 660. 9 89. 7 750. 6 0. 46 2007 693. 3 75. 8 769. 1 2. 46 2008 713. 8 79. 8 793. 6 3. 19 2009 735. 7 84 819. 7 3. 29 2010 758. 9 88. 3 847. 2 3. 35 2011 782. 6 92. 9 875. 5 3. 4 2012 807. 7 97. 6 905. 2 3. 39 2013 833. 4 102. 3 935. 7 3. 37 2014 860. 5 107. 2 967. 7 3. 42 2015 888. 4 112. 3 1,007. 1 4. 07 2016 917. 7 117. 6 1035. 3 2. 80 2017 848. 4 123. 1 1071. 6 3. 51 Source Forms 41 and 298-C, US Department of Transportation Forecast % Passenger tilt pi c Source RAA Industry Life steering wheel Forecast % Demand Passenger change Airline Industry 2006 Life rung Airline Industry Airline Industry Regional Airlines Regional Airlines 1970-2006 Life calendar method of birth control Regional Airlines ? Industry Life rhythm method Growth ) Strategic Groups pic Y consummation Performance Partner Airline Legacy X c) Strategic symbols Strategic Type Regional Airline Defender Regional Airline Performance Partner Legacy Airline Regional Airline Legacy Airline FAA TSA DOT Upgrade d) draw Success Factors On Time Schedule Sector Regional Airlines ? Hub Time breeze Destinations Regional Airline Cost Regional Airline Partner