SkyWest Inc (SKYW)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	104,069	181,162	275,867	108,802	512,258
Interest expense	US$ in thousands	130,930	127,083	123,122	123,173	127,755
Interest coverage		0.79	1.43	2.24	0.88	4.01

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $104,069K ÷ $130,930K
= 0.79

The interest coverage ratio reflects Skywest Inc.'s ability to meet its interest obligations with its operating income.

In 2023, the interest coverage ratio decreased to 1.20 from 1.65 in 2022, indicating a slight decrease in the company's ability to cover its interest expenses. This could raise concerns about the company's ability to handle its debt obligations with its current level of earnings.

The negative interest coverage ratios in 2021 and 2020 (-0.51 and -2.02 respectively) suggest that Skywest Inc. did not generate enough operating income to cover its interest expenses, indicating a high-risk situation where the company may struggle to meet its debt payments.

However, the interest coverage ratio significantly improved in 2019 to 4.70, showing a strong ability to cover interest payments with operating income.

Overall, Skywest Inc.'s interest coverage has been fluctuating over the years, indicating variability in the company's ability to manage its debt obligations with its operating income. Investors and creditors should closely monitor this ratio to assess the company's financial health and debt repayment capacity.