topend3
24th Jun 2004, 07:43
Skywest not to blame: investors
SEAN SMITH
Major shareholders yesterday defended Skywest in the wake of Monday's shock profit downgrade which has forced the postponement of its long-awaited float.
The investors admitted that they were "less than thrilled" with the profit plunge, but have refused to sheet home blame for the savage downgrade to management and argued it should not overshadow Skywest's financial turnaround.
"This is not a company that is standing on the edge of a precipice looking down into a deep dark hole," said Clive Hartz, one of Skywest's biggest shareholders with 8 per cent.
Mr Hartz, who is also a Skywest director, said the downgrade was clearly "very disappointing" but he insisted that the company "had now been structured with good sound fundamentals".
"In a trading sense, we had a substantial loss last year and it has turned around. We can't get away from the fact that this company is profitable," he said.
Skywest's downgrade has slashed its forecast 2003-04 profit to $700,000 from the $2.4 million flagged a year ago. The board said it had no inkling of the downgrade until May's financial figures were finalised on Thursday.
Skywest has blamed various factors for the earnings slide, including higher fuel costs and a recent payout to former chief executive Bill Meeke.
But his successor, Scott Henderson, also took some of the blame, admitting that he erred in his forecasts related to Skywest's new jet services in WA's North-West.
Nonetheless, another major shareholder, who declined to be named, said that Mr Henderson had "done a pretty good job" in the chief executive's role. "There's always hiccups in growth," he said.
The downgrade forced the company and its lead brokers, Patersons Securities and ABN AMRO Morgans, to delay its float just days out from a roadshow aimed at promoting the company to potential investors.
Both brokers declined to comment yesterday but it is believed the offer, which will seek less than $10 million, will be sidelined for at least several weeks while float valuations for the company are reviewed and Skywest takes a closer look at the circumstances behind the downgrade.
However, insiders close to the proposed listing are adamant that the process has not been derailed. "Like anyone that comes out with a downgrade from left field, you're a bit shocked, but you recover from that and find a way forward," one said.
The downgrade has provided ammunition for Skywest's Singaporean bidder, CaptiveVision Capital, which is seeking to buy the outstand ing 80.4 per cent of the company.
CVC will confront the board when it seeks to dump Skywest chairman Pat Ryan at what could be a fiery shareholders meeting requisitioned for Monday at the Hyatt Regency.
Mr Hartz and other directors have thrown their support behind Mr Ryan. "I don't think people realise the extent of the functions Pat performs in his role as chairman," Mr Hartz said. "The demands on his time are that of a quasi executive."
SEAN SMITH
Major shareholders yesterday defended Skywest in the wake of Monday's shock profit downgrade which has forced the postponement of its long-awaited float.
The investors admitted that they were "less than thrilled" with the profit plunge, but have refused to sheet home blame for the savage downgrade to management and argued it should not overshadow Skywest's financial turnaround.
"This is not a company that is standing on the edge of a precipice looking down into a deep dark hole," said Clive Hartz, one of Skywest's biggest shareholders with 8 per cent.
Mr Hartz, who is also a Skywest director, said the downgrade was clearly "very disappointing" but he insisted that the company "had now been structured with good sound fundamentals".
"In a trading sense, we had a substantial loss last year and it has turned around. We can't get away from the fact that this company is profitable," he said.
Skywest's downgrade has slashed its forecast 2003-04 profit to $700,000 from the $2.4 million flagged a year ago. The board said it had no inkling of the downgrade until May's financial figures were finalised on Thursday.
Skywest has blamed various factors for the earnings slide, including higher fuel costs and a recent payout to former chief executive Bill Meeke.
But his successor, Scott Henderson, also took some of the blame, admitting that he erred in his forecasts related to Skywest's new jet services in WA's North-West.
Nonetheless, another major shareholder, who declined to be named, said that Mr Henderson had "done a pretty good job" in the chief executive's role. "There's always hiccups in growth," he said.
The downgrade forced the company and its lead brokers, Patersons Securities and ABN AMRO Morgans, to delay its float just days out from a roadshow aimed at promoting the company to potential investors.
Both brokers declined to comment yesterday but it is believed the offer, which will seek less than $10 million, will be sidelined for at least several weeks while float valuations for the company are reviewed and Skywest takes a closer look at the circumstances behind the downgrade.
However, insiders close to the proposed listing are adamant that the process has not been derailed. "Like anyone that comes out with a downgrade from left field, you're a bit shocked, but you recover from that and find a way forward," one said.
The downgrade has provided ammunition for Skywest's Singaporean bidder, CaptiveVision Capital, which is seeking to buy the outstand ing 80.4 per cent of the company.
CVC will confront the board when it seeks to dump Skywest chairman Pat Ryan at what could be a fiery shareholders meeting requisitioned for Monday at the Hyatt Regency.
Mr Hartz and other directors have thrown their support behind Mr Ryan. "I don't think people realise the extent of the functions Pat performs in his role as chairman," Mr Hartz said. "The demands on his time are that of a quasi executive."