Success in a fickle market: Utah's top 50 public companies.

• Author: Olsen, Jaclyn
• Position: Feature - Company Profile

Hop a flight to Billings. Keep warm with natural gas. Boost your small business with the Web. Improve your quality of life with healthcare technology. Utahns find themselves in the middle of an entrepreneurial world with successful public companies producing quality products all around them. And for the first time in years, things just might be looking up for those businesses in the glare of the stock market spotlight. * For local and national public companies, 2003 was a transitional year, waylaid in part by high energy prices, says Wells Fargo executive vice president and economist Kelly Matthews. "This time last year we were flirting with an ugly deflation possibility," notes Matthews. Economists found themselves glancing over their shoulders because of declining interest rates that could prove to be a mixed blessing. Yes, if you were peddling homes or automobiles those interest rates brought a smile to your face, but for other segments of the economy, the low interest rates reflected an atmosphere of caution. * But after mid-year, the stock market seemed to turn a corner of sorts. Companies nationwide started seeing improved earnings--but expected job growth didn't follow. "It was an efficiency phenomenon. Companies weren't hiring more," says Matthews, who believes the transition was successfully made, and 2004 is enjoying job growth as well as improved efficiency. But he still tempers his enthusiasm with caution. "We still have a long way to go with additional job gains," he notes and adds that the Wells Forecast showed an overall growth rate for 2003 in the 4 to 4.5 percent range, which should continue through 2004. * Four significant Utah companies, like many other Utah public businesses, continue navigating the stock market minefield, giving insight into their sagas--past, present and future.

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SKYWEST, INC.

SkyWest was born in 1972 after Utah lawyer Ralph Atkin bought Dixie Airlines and offered flights for a penny a pound, including stunt artists and parachutists. The first scheduled flight ran from St. George to Salt Lake City and cost a staggering $28; a six-seat Piper Seneca carried 256 people that year.

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By 1975 losses reached $300,000 and owners couldn't even give the company away, so they turned to reorganization and trusted Jerry Atkin to become the youngest scheduled-airline president in the country. "You do what you have to do when you're in that kind of trouble," says Atkin, who remains the company's president and CEO. "Success is born of failure. There's something about living through difficulties and coming out with the resolve that you never want to go through them again."

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These days SkyWest is fortunate to be in the right place at the right time, reaping benefits as most major airlines scale back from jumbo jets and offer more frequent flights on smaller planes. "The food chain moved down to us as the market size went down (after 9/11)," Atkin says. The company has contracted with such major airlines as United, Delta and Continental to offer more flights on smaller planes. SkyWest's average trip length is just 550 miles. The airline also benefits from a good relationship with its employees. It's one of only two non-union airlines in the United States. "We work it out together and do what needs to be done," Atkin says.

The company's contracts with the major airlines also include the price of fuel, so SkyWest doesn't have to worry about rising fuel costs on its end of things.

"We've been able to reduce costs to match the reduced ticket price," Atkin notes, "and major airlines can't seem to do that."

SkyWest recently added 42 planes to its contract with United and is planning an additional support facility in Colorado Springs, which should be running by the end of the summer.

The shift in traffic from major carriers to low-cost airlines and contract airlines is pushing SkyWest to new heights: the company announced operating revenue of $774 million in 2002 and $888 million in 2003. Those smaller 50- to 70-passenger planes are flying high and bringing in money, despite the fact that not all passengers have returned to the air since 9/11, and competition is driving down ticket prices. It also helps that "we have a reasonably open atmosphere and that management and labor are generally on the same page," concludes Atkin.

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QUESTAR CORPORATION

A happy accident hurled Questar into a new arena in the 1920s when the small company drilled for oil and found natural gas instead. "We undertook what most people thought was a great folly," says CEO Keith Rattie regarding the company's construction of a 200-mile-long natural gas pipeline despite one of the harshest winters on record. The construction was completed in August of 1929.

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The company now enjoys a $4 billion value and is traded publicly on the New York Stock Exchange under STR. The stock is at an all-time high this summer as Questar benefits from environmental concerns that propel demand for natural gas. The company lays claim to the largest natural gas deposit in the lower 48 states and distributes to 760,000 homes and businesses in Utah, Wyoming and Idaho.

The natural gas share of the energy market is growing steadily because it's one of the cleanest burning fuels, says Rattie, who also notes that Utahns enjoy one of the lowest rates in the country for natural gas. The company has three main entities, including Questar Gas, the sales and distribution arm; Questar Market Resources, which takes on exploration and production; and Questar Pipeline, which deals with bulk transportation.

The company's future looks bright, according to Rattie, as it is mining gas from the Pinedale anticline, a 40-mile-long segment of land that produces commercial amounts of natural gas. Fifteen percent of the company's net income is generated by the gas arm, 70 percent from exploration and production and 15 percent from the pipeline. Questar is using an aggressive approach to mitigating the impact on the area's environment by reducing drilling surface disturbance and limiting emissions.

"We got lucky 75 years ago and stayed in this business," notes Rattie, whose company now boasts a total of 2,200 employees, including 1,500 in Utah from Ogden to St. George. "We were in the right place at the right time. Now we're in the center of the action. The Rockies are the place to be."

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