SKYW P224 Feb 2011 08:57
There are many benefits to Skywest shareholders, as part of the Virgin Blue arrangements. Some of these benefits include that Skywest is paid the cost of operating the planes in full, alongside its typical profit margin. . Additionally, the strategic alliance between the two parties could potentially double the size of Skywest, from the current Skywest fleet of 18 planes to the possibility of operating 36 aircraft or more. The arrangement is anticipated to commence in May 2011 with the delivery of the first of a series of aircraft.
Furthermore, Skywest may enjoy the opportunity to refresh its turboprop fleet with new aircraft which should deliver operational and maintenance cost savings to Skywest. The combined buying power of the Virgin Blue fleet with Skywest's more modest requirements provides Skywest with the opportunity to potentially acquire attractively priced new aircraft.
Reclassification and comparative figures
Certain reclassifications have been made to align the previous period's results, with the current results as follows:
- The prior period's cost of sales of SGD 82,265,148 and administrative expenses of SGD 15,497,520 have been reclassified to aircraft operating cost (excluding fuel costs) of SGD 17,904,984, fuel cost of SGD 21,486,974, aircraft lease rental and hire charges of SGD 11,703,400, employee benefits of SGD 22,276,970, sales and marketing costs of SGD 2,683,021, engineering and maintenance costs of SGD 10,437,418, depreciation and amortization of SGD 6,929,130 and other expenses of SGD 4,340,771.
- The prior period's other investments of SGD 692,723 in the statement of financial position has been reclassified from non-current assets to current assets.
Risks
Risks faced by the business remain the normal commercial risks and typical airline industry related risks. The Group appears to be facing increased competition as the overall size of the resources sector client base continues to expand. This year has demonstrated the impact of significant rapid changes in exchange rate and fuel costs. These two factors still represent a significant risk to the business. Australian domestic fuel prices, when combined with a lowering in the value of the Australian dollar, cause increased overall costs to the Airline's operations. The Group does attempt to mitigate changes in the dollar and fuel costs by way of hedging, however, rapid and massive changes can quickly impact the finances of the Group with significant consequences.
In all, the Board remains committed to deliver shareholder value while growing this business in challenging times.
Jeff Chatfield
Executive Chairman
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