FORMER United Airlines executive Scott Henderson will celebrate 11 months in the job as Skywest chief executive next week with what he terms a “pleasant surprise”, as the business posts its annual figures.
And while he wouldn’t divulge the figures, Mr Henderson said the airline was in a substantially better position than had been forecast.
Adding to the new air of confidence is the recent success of the company’s capital raising venture, which secured $4.2 million. The capital raising involved the issue of 17.8 million convertible notes at 15 cents, each carrying one free attaching option, exercisable at 20 cents before February 2006.
In a vote of investor confidence in the regional airline, the prospectus was oversubscribed and attracted several investment funds.
Brushing off talk of floating the company in the near future, Mr Henderson said three or four months of solid trading was required before the company would consider listing.
He said the success of the capital-raising venture, coupled with the airline’s strengthening performance, meant that Skywest no longer needed the revenue that floating the company would yield.
“The next phase is looking at an application for further funding, consolidation and growth of the company,” Mr Henderson said.
Mr Henderson’s tough adherence to his restructure program, which has slashed the company’s employee cost ratio from 28.9 per cent to 23 per cent and carved millions off service contracts, lower than expected fuel costs and strong performance of the foreign exchange has driven up profit levels.
He tipped a bright future, with the Broome link raising the airline’s operations to a new level.
There also are plans to acquire a second Fokker-100 jet, which would enable Skywest to run daily flight to the popular resort town next year.
New destinations currently under consideration include Karratha, Kununurra and Darwin.
The future growth of the resource sector is also being looked upon by Skywest as a vehicle to raft up its charter services arm, with a former Skippers general manager coming on board the management team to build up this portfolio.
The airline is also working closely with the Perth Convention and Exhibition Centre to establish business tourism capabilities, taking advantage of the pre and post-touring opportunities of convention delegates.
“These things can be enormous economic drivers for the State – these are not low fare paying passengers,” Mr Henderson said.
He said Skywest’s current standard of safety compliance would be a key competitive advantage when the Civic Aviation Safety Regulations were standardised across the industry. When the same policy was introduced in Canada, 15 per cent of airlines went out of business, according to Mr Henderson.
“It will be a significant competitive advantage for us because Skywest already has met the same level of scrutiny that Qantas does.”
Mr Henderson said he expected the Australian aviation industry to mirror the North American aviation industry, where the biggest growth was being experienced by the regional end.
“Australia is no different and we want to lead that growth at the regional end,” he told WA Business News.
While consolidation of the Australian aviation industry is expected, Mr Henderson said that after 40 years of operation in this State the Skywest brand had an enormous amount of brand equity.
“We are aiming to be the leading regional airline in Australia,” he said.
