SkyWest considers foreign carriers

SkyWest Inc., the largest U.S. commuter airline by market value, said Wednesday it is considering investing in foreign carriers as domestic growth slows.

Laws limiting U.S. carriers from owning no more than 49 percent of a foreign airline wouldn't deter St. George-based SkyWest, Chief Financial Officer Brad Rich told analysts on a conference call. "Our strategic approach to it would be to partner with people who are local to any area that we look at," he said.

An acquisition might help boost revenue amid cuts in U.S. operations by UAL Corp.'s United Airlines and others for which SkyWest flies passengers. Revenue in 2007 may climb 12 percent, the average of three analyst estimates compiled by Bloomberg, after three straight annual gains of more than 30 percent.

"Our growth in the U.S. is slowing down and we are taking our last firm deliveries of aircraft," Finance Vice President Michael Kraupp said in an interview. "People are naturally asking 'Where are you going to grow?"' He didn't identify any possible SkyWest targets.

SkyWest customers, including United and Delta Air Lines Inc., are shifting capacity to higher-margin international routes from domestic flying where they have to battle low-cost carriers.

Kraupp declined to comment on whether SkyWest is among four parties that have signed confidentiality agreements with Midwest Air Group Inc., a SkyWest customer, to study a possible takeover.

"We are very pleased with our relationship as a Midwest Connect carrier," he said.

Separately, SkyWest said its second-quarter profit rose 3.3 percent to $40.6 million, or 62 cents a share. The per-share earnings topped the 60-cent average of five analysts' estimates compiled by Bloomberg. Revenue rose 8.2 percent to $855.9 million.

The company recorded stock-based compensation expense of approximately $3.9 million ($2.5 million after tax) for the most recent quarter.

SkyWest has two wholly owned subsidiaries: St. George-based SkyWest Airlines and Atlanta-based ASA. Combined, they serve 242 cities in the United States, Canada, Mexico and the Caribbean with 2,739 daily flights.

SkyWest shares rose 48 cents Wednesday to close at $23.25. During the past year, the price has ranged from $21.27 to $28.60.