Good afternoon, everyone and welcome to the SkyWest Third Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Rob Simmons, Chief Financial Officer. Sir, please go ahead.

Thanks everyone for joining us on the call today. As the operator indicated, this is Rob Simmons, SkyWest’s Chief Financial Officer. On the call with me today are Chip Childs, President and Chief Executive Officer; Wade Steel, Chief Commercial Officer and Eric Woodward, Chief Accounting Officer. We would like to excuse Mike Thompson, SkyWest Airlines Chief Operating Officer; and Terry Vais, ExpressJet Airlines Chief Operating Officer as they're out working with their respective operations. I'd like to start today by asking Eric to read the Safe Harbor, then I will turn the time over to Chip for some comments. Following Chip, I will take us through the financial results. Then Wade will discuss the fleet and related flying arrangements. Following Wade, we will have the customary Q&A session with our sell side analysts. Eric?

Today’s discussion contains forward-looking statements that represent our current beliefs, expectations and assumptions regarding future events and are subject to risks and uncertainties. We assume no obligation to update any forward-looking statements. Actual results will likely vary and may vary materially from those anticipated, estimated or projected for a number of reasons. Some of the factors that may cause such differences are included in our 2016 Form 10-K and other reports and filings with the Securities and Exchange Commission. Chip?

Thank you, Rob and Eric. During the third quarter, we continued our progress on our overall business and fleet plan as the press release and our results demonstrate. Third quarter total production is generally high and this quarter is no different. Additionally, our teams navigated two major hurricane extremely well and I want to thank our more than 17,000 people for their great work. Not only did they step up to help each other as their own communities were affected, but both SkyWest and ExpressJet executed recovery operations to ensure our passengers were well taken care of as soon as airport operating resumed after each storm. We have truly exceptional people at both our airlines. During the third quarter, we operated more than 281,000 flights with strong operating reliability. SkyWest Airlines and ExpressJet continued solid reliability with each delivering 99.9% adjusted completion for the quarter, both airlines performing well and have been top performers in United's portfolio for almost three years now. Again, our team [demand] is very challenging hurricane season extremely well and I want to thank them again for their ongoing commitment to quality. The hurricanes had about a $0.05 impact on our results this quarter. During the third quarter, ExpressJet announced a realignment of its strategy including a new long-term agreement with United and an agreement with Delta to wind down dual class CRJ flying by the end of next year. Additionally, they announced the transition of 8 CRJ700s to their American Eagle operation. The execution of this new strategy began during the third quarter as we continue making meaningful progress in our efforts to solidify ExpressJet's foundation and return that entity to profitability. We expect these transitions to be complete by the end of 2018. Also during the quarter, we announced flying agreements for 30 E175C…

Today we've reported net income of $64 million or $1.01 per share for the third quarter of 2017 up from net income of $41 million or $0.79 from Q3 2016. Our pretax income increased 30% year-over-year to $87 million. As a reminder, last year's GAAP got numbers included $9 million or $0.11 of early restructuring expense. Revenue was $832 million in Q3 of 2017 up $32 million from Q3 2016. This increase in revenue included the net impact of adding 37 new E175 aircrafts since Q3 2016, partially offset by the removal of 75 unprofitable or less profitable aircraft over the same period, including 50 ERJ145s, 22 CRJ200s and three CRJ700/900 Class aircrafts. We expect to put three more E175s into service during Q4 of 2017 to bring our total fleet of E175s to 107 by year end. Wade will provide some more color on the fleet in a minute. The provision rate for the quarter was 38%. Our future provision rate may vary based on the timing and amount of stock option exercises, restricted share vesting, stock price performance and other factors. Generally, we anticipate a future effective tax rate between 38%, 39% in Q4 and between 37% and 38% for all of 2018. Our total fuel cost per gallon averaged a $1.99 during the third quarter, up from $1.75 per gallon in Q3 2016. The increased fuel cost per gallon cost us $3 million or a $0.04 reduction in EPS from a year ago under our pro rate business model. You can see in our release that the expense line item for aircraft maintenance is up about $5 million year-over-year. This increase largely relates to a higher percentage of our engines now being covered by long-term powered by the hour maintenance agreements including the 37 new E175s in…

Thanks Rob. In the third quarter, we continued to execute on our fleet strategy, removing aircraft from unprofitable agreements, transitioning our fleet to larger, new aircraft and redeploying aircraft with extended flying terms to mitigate financing risks. During the quarter, we entered into an aircraft purchase agreement and capacity purchase agreements to acquire and operate 45 new Embraer E175. Of those 30 are E175SC aircraft to fly under an agreement with Delta in a 70-seat configuration. These SC aircraft have an E175 airframe and can be retrofitted to 76 seats in the future. 15 of the 45 aircraft are E175 that will fly under an agreement with Alaska in a 76-seat configuration similar to our other aircraft in service with Alaska. The expected delivery dates of the 45 E175 aircraft run from September 2017 through the end of 2018, bringing our total E175 to 149 at that time. During the third quarter, we took delivery of one E175 for Alaska bringing our total E175 fleet to 104. Also during the third quarter, as Chip mentioned, ExpressJet announced a new long-term agreement with United for its ERJ145s effective January 1, 2018. The new agreement enhances ExpressJet United partnership provides long-term stability to its model and significantly reduces contract risk. We anticipate operating approximately 100 aircrafts under this agreement. Additionally, earlier this summer, ExpressJet announced a mutual agreement with Delta to initiated the wind down of its remaining dual class flying, including 28 CRJ900s, 33 CRJ700 previously scheduled to expire in 2019. The 28 CRJ900s owned by Delta will be returned to Delta. Four CRJ900s were returned to Delta earlier this month. We anticipate a total of 12 CRJ900s will be returned by year end with the remaining being returned to Delta next year. ExpressJet owns 30 CRJ700s currently operating for Delta…

So, thanks for your interest in SkyWest as we continue our evolution and progress. We'll now take time to do Q&A. Jamie?

Ladies and gentlemen, at this time we'll begin the question-and-answer session. [Operator instructions] Our first question today comes from Savi Syth from Raymond James. Please go ahead with your question.

Hey. Good afternoon, guys.

Hey Savi.

Can you talk a little bit about, I know year is going to be heavy on the transition and I am guessing there is going to be a lot of pilot training related to some of the aircraft that you're getting and the aircraft that you're getting out? Could you talk a little bit about what that might look like either from a magnitude standpoint or a timing standpoint?

Yeah Savi, again I think that you're right that 2018 as Chip said in his script, is going to be a year with a lot of fleet movement. So, lot of training and lot of new deliveries coming online, but 2018 should set us up beautifully for 2019. So again, I think that 2018 despite that noise should still be a reasonably nice year for us, but again as we've said, 2018 is really the final year of the fleet transition setting us up for 2019.

Got it. And if I may follow-up on the CRJ700s that need to be placed or returned, could you talk a little about just so we understand kind of the worst-case scenario the risk around if those aren’t placed like how along you have left on those and just how we can think about kind of the risk around the placement.

Yeah Savi, this is Wade. So, as I said in my prepared remarks, we have already placed eight of those 30 with American. The other 22 CRJ700s that we have, those are all financed, they're all owned aircraft. They do have a little bit of debt on them, but we're very comfortable with the asset value of the aircraft compared to the debt. So, we're not nervous about the financial exposure on those aircraft.

Okay. Very helpful. And if I may squeeze one more in here. Just as you think about you are now transitioning a little bit into growth and just any updated thoughts on pilot sourcing? It seems like maybe you're starting to see some supply come in maybe from other areas into commercial flying, but just any latest thoughts on what you're seeing on the pilot side both internal trends and I believe higher?

Yes Savi. This is Chip. Yeah this is a topic that we spent a lot of time and energy on. I can certainly as we said in other quarters, the key strategy for us is to manage our fleet from a flexible nature to where we can deploy our fleet and meet our commitments with our partners because I think at the end of the day, that's our number one responsibility what we're committing to with our customers. From our perspective, our staffing today remains very good. With the fleet transitions that you brought up on the ExpressJet side, obviously there's some transitions that a fair amount of aircraft that are going to be coming out, but as we develop that model for long-term sustainability and profitability, we're certainly going to need to energizer our efforts a bit there, but we are very well staffed there and are recruiting processes that SkyWest are extremely strong as well. So we're in a very good position at a global level? Are we seeing anything different from a supply side, I don't know that our outlook is technically that different than what we've had in the past. We're still very conscious of the very organic nature of how pilots are developed and we won't get into the details, but we certainly are involved in a lot of efforts to making sure that we have pilots coming for years to come. So, at a high level, Savi, I wouldn't say that our perspective has changed significantly as of late, but we're certainly doing what we've done the past several years to manage our fleets and are recruiting efforts and being very, very astute in what we're committing to here.

Helpful. Thank you very much.

Our next question comes from Michael Linenberg from Deutsche Bank. Please go ahead with your question?

Good afternoon. This is actually Katie O'Brien. Let's see, the first one I had was how would you categorized the market for RFPs post your recent growth announcements? Do you think there is more to do out there or do you think after we get these deliveries by end 2018, that's really the end of the growth cycle for you guys? Then of a second one on that is, do you think the potential increase liability of the C-Series program could mean more small market flying to meet that level?

Okay. Katie, thanks for calling in. Let me start with the first one with RFPs. I think it's an interesting world in the regional world these days. We've had a lot of growth in fleet transitions and we haven't really been involved in many RFPs. A lot of it's been with a very strategic sit-down about the future conversation with all of our partners. We've really embraced that process because I think RFPs are great. When they come out, we're going to respond to them, but a lot of what we've done within our business model is really spent a lot of time with our customers in understanding their needs and having the fleet flexibility to respond to things. Because in our dynamic world, not only do you have to respond to things in the long term, but you'll also have to help out in the short term as well and that's where some of the things that we're really good at doing. From that perspective, we certainly have a full '18 as we've announced the last quarter. We do anticipate some additional RFP activity probably leading into some portions of 2019, but then I would also reiterate, we're still even through we're coming on the talent of this re-fleeting exercise that we've done over the past couple of years, we do still see a lot of opportunity within our existing fleet without even adding aircraft that we need to respond to the right opportunities with. So, we're overall extremely optimistic and Cathie I am sorry, the second portion of your question was?

Oh yes sure. Now with the recent announcement of Airbus investing in the C-Series program, potentially making it a more viable aircraft program, do you think you could see more small-market find to meet that level over the coming year, obviously this is a longer-term question?

Yeah, I think from a market development, I don't doubt that there's probably some opportunities for an aircraft like the C-Series to be integrated into smaller communities as population changes and that type of stuff happens, but I think that also translates into our existing fleet opportunities as well. I think mathematically, you'll see that from an operating cost with how we're financing aircraft and how we're operating aircraft today, that I think that there will be an equal opportunity with smaller aircraft with our dual class fleet as well as even 50 seaters. We've said for a long time that we're still fans of 50-seat aircraft and there is the unique niche in how we can continue to provide excellent service to existing and potentially new communities with 50 seaters and given the dynamics of scope and everything like that I think that we're still very comfortable and confident in the size of the fleet and the aircraft that we fly today.

Okay. Understood. If I can squeeze one more in, now that you've secured this growth we've been talking about, which is very exciting what do you think that means in terms of looking -- returning cash to shareholders via share purchases or dividends? I know you're committed to completing your current program, but maybe programs beyond that?

Yeah Katie, this is Rob. So, I think that what you'll see is that we'll continue to keep a strong balance sheet. First and foremost, we always want to have the liquidity and the balance sheet available for growth opportunities that come our way like these 45 airplanes whatever there is in the future. We want to make sure that we're ready from a balance sheet standpoint, but we're also -- we're in a place where if those investment opportunities don't come or if they slow, we're going to be in a position to generate significant cash flow in the future and we'll look for shareholder-friendly ways to invest that. Whether it's investing in new growth airplanes, potentially repaying debt, repurchasing stock or some combination of all the above, we feel like we've got the balance sheet and the liquidity to be able to manage whatever opportunities come our way.

Okay. Great. Thanks. And then if I can ask one more quick one, usually you guys give some sort of EPS guidance, any comments on that for the fourth quarter?

No, so we don't usually give any specific EPS guidance. The only thing that we've said and we said this last quarter is that with respect to 2018, don't expect EPS to have a four in front of it. But 2018 is set up the last year of our fleet transition setting us up for what should be a nice 2019.

Okay. Great. Thank you so much for all the time.

Thanks Katie.

[Operator instructions] Our next question comes from Helane Becker from Cowen. Please go ahead with your question.

Hey guys. This is actually Conor.

Hey Conor.

Just to piggyback on Savi's earlier question on the CRJ, can you -- is there any potential for any short-term contracts. I would imagine that given this year that Horizon for Alaska that there might be some potential for maybe the CRJ's to pick up some slack there, can you just maybe address that a little bit.

Conor, this is Chip. I think from our perspective we do always like to have a component of CRJs available for spares, fee checks, potential short-term flying, certainly as if the ball right now, there's a little bit of an opportunity where we're flexing up with Alaska as we have some pilots and as we have a small component of aircraft in the fall. But you're right, a lot of that is temporary and a lot of it is based on some flexibility that we have beyond our commitment. So, from our perspective, like I said in some earlier comments, we do try to do what we can do to have a flexible fleet to respond at certain things within our partners all of our partners and it's a good strategy for us and is helping out a lot bit right now.

Okay. Great. And then on the E175 that's configured specifically for Delta the smaller one, since that announcement, has there been any other carriers that have been interested in potentially seeing the aircraft configure that way or is it just specific really to Delta at this point?

No, this is Wade, Conor. That's a great question. Obviously, Delta saw very unique opportunity to take advantage of the new E175SC configuration. We have discussions with other partners related to that. We're still working with the partners on potentially what that may look like.

Okay. And then just one last one. You gave the $0.05 headwind from the storms in the quarter. Can you just talk, is it possible do you guys have an estimate in terms of the revenue impact? I just want to make sure that we're looking about the business little bit correctly going forward because I imagine it would be one time in nature, so. Thank you.

Yeah. Nothing on the revenue side. Just we estimate about $0.05 of EPS impact from the storms.

Okay. Thank you.

And ladies and gentlemen, at this time, I am showing no further questions. I would like to turn the conference call back over to Chip Childs for any closing remarks.

Thank you, Jamie. Again, we appreciate your interest in SkyWest. As we said in our call, we're going to continue to be focused and evolve the businesses as we've outlined and look forward to giving you update for the year in late January. Thank you.

Ladies and gentlemen, that does conclude today's conference call. Thank you for attending today's presentation. You may now disconnect your lines.