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Despite a significant increase in air travel demand, SkyWest (NASDAQ: SKYW) shares are still trading at a 25% discount to pre-Covid levels. Passenger numbers at TSA checkpoints are nearly 20% lower than in 2019, indicating that the travel and tourism industry is still recovering. Despite a 30% drop in revenues, the company achieved positive operating cash last year, thanks largely to the US government’s payroll assistance program. Trefis believes SkyWest stock has a lot of room to expand given the recovering travel demand. We compare SkyWest’s stock performance during this crisis to that of the previous recession in 2008. Timeline of the 2020 Coronavirus Epidemic So far, it’s been:
Coronavirus cases are first reported in China on 12/12/2019.
The World Health Organization (WHO) announces a global health emergency on January 1, 2020.
2/19/2020: The S&P 500 reaches a new high thanks to signs of effective control in China and expectations of monetary easing by major central banks.
3/23/2020: The S&P 500 index falls 34% from its peak on February 19, as Covid-19 instances spread outside of China. It doesn’t help that oil prices plummeted in mid-March as a result of a Saudi-led price war.
From 3/24/2020: The S&P 500 rebounds 94 percent from its March 23 lows, as the Fed’s multibillion-dollar stimulus plan calms near-term survival fears and injects cash into the system.

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Here’s how SKYW and the broader market fared during the financial crisis of 2007/2008.
Timeline of the 2007-2008 Financial Crisis
ADDITIONAL INFORMATION FOR YOU
1/10/2007: The S&P 500 index reaches an approximate pre-crisis high.
9/1/2008 – 10/1/2008: Market downturn accelerates in response to Lehman Brothers’ bankruptcy filing (9/15/08).
3/1/2009: The S&P 500 index appears to have reached a bottom.
1/1/2010: Initial return to pre-accelerated drop levels (about 9/1/2008).

Performance of SkyWest vs. S&P 500 During the financial crisis of 2007-2008,
The stock of SKYW fell from over $25 in October 2007 (pre-crisis high) to around $10 in March 2009. (as the markets bottomed out). However, following the 2008 financial crisis, the stock soared to around $17 in early 2010, up 65 percent between March 2009 and January 2010. In instance, the S&P 500 Index first plunged 51% after the recession, before recovering 48% by January 2010.
In recent years, SkyWest’s fundamentals appear to have remained stable.
SkyWest’s income fell 5% from $3.2 billion in 2017 to $3 billion in 2019, despite capacity and ticket prices remaining relatively unchanged. Due to rising gasoline and administrative costs, net margins also declined by two percentage points. As a result, the EPS fell 20% from $8.28 in 2017 to $6.68 in 2019. Revenues plummeted by 26 percent year over year in Q1 2021, as block hours fell by the same amount and the load factor dropped by ten percentage points.
CONCLUSION
The stages of the Covid-19 problem are as follows:
Early to mid-March 2020: Fears of a rapid spread of the coronavirus outbreak become reality, with the number of patients increasing globally.
From late March 2020 onwards, social distancing measures and lockdowns will be implemented.
April 2020: The Federal Reserve’s stimulus reduces near-term survival anxiety.
May-June 2020: Demand recovers, with lockdowns gradually lifted – little panic, but a continuous increase in the number of cases.
Since late 2020: Market mood has been buoyed by continuous improvement in demand and progress with vaccine development.

Given the company’s good operating cash flow during the epidemic and improving travel demand, we believe SkyWest stock has space to rise further.
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