Skywest warns of profit dip

Regional air carrier Skywest is anticipating full year revenue to hit $S300 million ($232 million) by the end of June, a 25 per cent increase in expected earnings, but has warned its profit could be significantly lower than last year.

Singapore and ASX-listed Skywest said revenue growth was expected to be particularly strong over the second half of the financial year, and 35 per cent up on the previous half year.

The company was previously expecting a 20 per cent increase in revenue.

But Skywest said, although providing guidance in the airline industry was difficult, it expected a net profit of around $S2 million ($1.55 million) for FY2012, after lodging a profit of $S9.8 million ($7.6 million) in FY2011.

“Current trading has been impacted by a change in the composition of the client base for charter, and most especially abnormally high aircraft cross hire costs,” Skywest said.

“Given the rapid growth of the company the current trading is as expected with the benefits of scale and growth anticipated to be enjoyed in the 2013 financial year."

Skywest said second half revenue would be written down by $S10 million due to “significant abnormal aircraft cross hire charges” for its fly-in, fly-out charter business.

Cross-hire charges totalled around $S4 million the previous financial year.

“All aircraft cross-hiring ceased on 14 June and the company does not expect future material aircraft cross-hire requirements,” the company said.

Skywest stocks on the ASX were steady at 11:40AM, WST, trading at 35 cents.