Bank of America has published a report on SkyWest SKYW noting higher costs for the passenger airline.
In the report, Bank of America commented that, "Demand for 50-seat regional jets is contracting and rate pressures are slowly pushing down margins, yet underlying cost pressures (health care, other) are also rising. Major partner schedule changes raised transition expenses in 2Q and we believe rising pilot turnover is also pressuring crew costs. SkyWest expects to achieve a single operating certificate in 4Q11, so merger savings will primarily benefit 2012 results, not 2011. Mgmt singled out as one-time several of these items in 1Q, but the impact is lasting longer than previously expected, which makes differentiating between recurring and non-recurring items difficult." Bank of America also noted the pressures of rising fuel costs on SkyWest."
Bank of America rated SkyWest an Underperform with a price objective of $10.00. SkyWest closed Friday at $14.72.
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