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SKYWEST INC (SKYW)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered clean beats on revenue and EPS, supported by 22% YoY block-hour growth and mix from dual-class flying; diluted EPS was $2.42 vs S&P Global consensus $2.05* and revenue was $948.5M vs $946.8M*, while EBITDA also modestly topped estimates* .
  • Management nudged 2025 production and EPS outlook higher: block hours now up ~12–13% YoY (from 12%) and full-year GAAP EPS “low-to-mid $9” (was “$9” last quarter), with maintenance running a little over $200M per quarter and a 26% tax rate for the remaining three quarters .
  • Strategic momentum continued: United exercised options to expand the CRJ550 program to 50 aircraft (vs 40), with 30 in service by year-end and the remaining 20 in 2026; 16 new E175s remain slated through 2026 despite expected delivery delays shifting to 2H25 .
  • Balance sheet and cash generation remain strengths (Q1 free cash flow >$140M; Q1 debt paydown ~$114M), enabling opportunistic buybacks (141K shares) alongside ~$575–$600M FY25 CapEx to fund fleet growth and parts; narrative supports multiple catalysts (production, CRJ550/E175 deployment, SWC approval) that could drive estimate revisions and sentiment .

What Went Well and What Went Wrong

  • What Went Well

    • Solid operational execution through winter with 99.9% adjusted completion and 21.5% total block hour growth YoY; “our people completed over 30,000 more flights than the same quarter last year” (CEO) .
    • Mix/scale benefits and deferred revenue recognition aided topline; Q1 recognized ~$13M of previously deferred revenue, with $309M cumulative deferred revenue to be recognized over time (expect ~$10–$20M per quarter in 2025) .
    • Strategic wins and visibility: expanded multiyear CRJ550 commitments (United to 50; Delta transition continuing), CRJ700/900 extensions at Delta, and CRJ700s with American “through most of this decade,” reinforcing long-term contracted lift .

  • What Went Wrong

    • Maintenance/MRO remains a headwind amid labor and parts constraints; 2025 maintenance expense guided to “a little over $200M per quarter,” and spend occurs before aircraft reactivation, pressuring near-term margins .
    • Load factor dipped YoY (78.6% vs 80.8%) as capacity ramped; raw completion also remains weather-sensitive (98.2% vs 97.7% YoY), implying some operational variability with higher production .
    • Aircraft delivery timing risk: Embraer E175 deliveries weighted to 2H25 due to OEM delays, adding execution timing risk to utilization plans .

Financial Results

P&L vs Prior Quarters (actuals)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$912.8 $944.4 $948.5
Operating Income ($M)$131.4 $144.1 $139.4
Net Income ($M)$89.7 $97.4 $100.6
Diluted EPS ($)$2.16 $2.34 $2.42
EBIT Margin (%)14.4 (calc from )15.3 (calc from )14.7 (calc from )
Net Income Margin (%)9.8 (calc from )10.3 (calc from )10.6 (calc from )
EBITDA ($M)$228.1*$234.5*$228.8*
EBITDA Margin (%)25.0%*24.8%*24.1%*

Values marked with * are from S&P Global and do not have document citations. Values retrieved from S&P Global.

Actual vs S&P Global Consensus

MetricQ3 2024 ActualQ3 2024 Cons.Beat/MissQ4 2024 ActualQ4 2024 Cons.Beat/MissQ1 2025 ActualQ1 2025 Cons.Beat/Miss
Revenue ($M)912.8 896.2*+$16.6M944.4 915.6*+$28.8M948.5 946.8*+$1.6M
EPS ($)2.16 1.95*+$0.212.34 1.81*+$0.532.42 2.05*+$0.37
EBITDA ($M)228.1*224.1*+$4.0M234.5*210.5*+$24.0M228.8*228.0*+$0.8M

Values marked with * are from S&P Global and do not have document citations. Values retrieved from S&P Global.

Revenue Mix

Revenue Component ($M)Q3 2024Q4 2024Q1 2025
Contract Revenue761 786 785
Prorate & Charter123 126 131
Leasing & Other29 32 32
Total Revenue912.8 944.4 948.5

KPIs

KPIQ3 2024Q4 2024Q1 2025
Total Block Hours334,459 350,318 352,155
Departures201,397 206,588 201,838
Passengers11,263,322 11,231,510 10,390,364
Adj. Flight Completion99.9% 99.9% 99.9%
Raw Flight Completion99.5% 99.0% 98.2%
Load Factor83.7% 82.2% 78.6%

Balance Sheet & Cash

  • Cash & marketable securities: $750.9M (3/31/25) vs $801.6M (12/31/24); Total debt: $2.56B (3/31/25) vs $2.67B (12/31/24) .
  • Q1 CapEx $73M; repurchased 141K shares for $13.7M; remaining buyback authorization $34M as of 3/31/25 .
  • Q1 free cash flow >$140M; repaid ~$114M debt; 2025 CapEx planned ~$575–$600M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Block Hours GrowthFY 2025~12% YoY ~12–13% YoY Raised
GAAP EPSFY 2025“~$9 per share area” “Low-to-mid $9 per share area” (incl. Q1 discrete tax) Raised
Maintenance ExpenseFY 2025~$200M/quarter “A little over $200M/quarter” Slightly raised
DepreciationFY 2025Flat to slightly down vs 2024 Slightly down vs 2024 Maintained
Effective Tax Rate2025 (Remainder)N/A~26% for remaining 3 quarters New
Deferred Revenue RecognitionFY 2025N/A~$10–$20M per quarter subject to production New
CapExFY 2025≈$600M ~$575–$600M Narrowed
E175 Deliveries2025–20268 in 2025; 8 in 2026 8 in 2025; 8 in 2026; majority 2025 in 2H due to OEM delays Timing shifted later in 2025
CRJ550 Program (United)2025–202640 total; 30 by YE25; last 10 in 2026 50 total; 30 by YE25; last 20 in 2026 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Pilot staffingImproving captain availability; pipeline strong; approaching pre-COVID utilization by mid-2025 “Staffing has stabilized”; robust pipeline; production up 12–13% in 2025 Improving/stable
Maintenance/MROExpect 2025 ≈$200M/quarter; MRO labor/parts constraints “A little over $200M/quarter” as aircraft reactivated; MRO constraints persist Slightly higher spend; constraints persist
Prorate & small communitiesStrong demand; adding markets; seasonality returns Prorate demand “extremely strong”; capacity increases drove QoQ uptick Positive demand/expansion
Fleet (CRJ550/E175)Announced 40 CRJ550s with United; Delta CRJ550 ramp; 20 E175s through 2026 United expands CRJ550 to 50; 16 new E175s by 2026; 25 parked dual-class CRJs to return Expanded scope
Charter (SWC) / DOTPursuing commuter authority; 17–18 aircraft seasonality DOT tentative approval for Part 380 scheduled service; near-term aircraft shifted to airline for summer Regulatory milestone, operational balancing
Capital allocationOpportunistic buybacks; deleveraging; CapEx step-up >$140M FCF in Q1; $114M debt repaid; 141K shares repurchased; 2025 CapEx $575–$600M Continued balanced deployment
Macro/schedulingExpect stronger summer; potential domestic softening watch Partners may flex schedules with peak/off-peak dynamics; no “massive pivot” yet Watchful but steady

Management Commentary

  • CEO: “We expect our solid operating leverage to continue to deliver well, with increased production translating into positive returns for our stakeholders.”
  • CFO: “We now anticipate our 2025 GAAP EPS could be in the low to mid $9 per share area… We continue to expect to deliver solid operating leverage with 12% to 13% year-over-year production growth, translating into 18% to 19% increase in earnings per share in 2025.”
  • CCO: “United exercised its option to add 10 additional CRJ550s… bringing the total to 50… we expect to operate 30 by the end of this year, with the last 20 entering service during 2026.”
  • CEO on SWC: “We were pleased… to receive the DOT’s tentative approval for SkyWest Charter’s Part 380 scheduled service authorization.”

Q&A Highlights

  • Capital deployment and buybacks: Management continues to prioritize accretive growth but will repurchase shares when attractive; ~22% of shares repurchased since 2023, with Board discussing authorization each quarter .
  • CRJ200 monetization: Multi-pronged strategy across partner contracts, prorate, SWC, and asset sales/engine leasing; management sees ongoing productive use for several years .
  • Scheduling/macro: Partners could tactically deploy regional lift in softer periods; no visibility to a “massive pivot” in schedules over next six months, but historical downturns favor regional aircraft flexibility .
  • Contract structure: Despite some higher variable elements added during pilot crisis, CPAs retain strong fundamentals (minimum utilization, schedule coordination) .
  • E175 contract renewals: Early, ongoing discussions with partners; optimistic on extensions as initial-debt amortization concludes .

Estimates Context

  • Q1 2025 beats: EPS $2.42 vs $2.05*, revenue $948.5M vs $946.8M*, EBITDA $228.8M vs $228.0M*; all modest to solid beats, led by higher production and strong dual-class mix .
  • Prior quarters also beat: Q4 2024 EPS $2.34 vs $1.81*; Q3 2024 EPS $2.16 vs $1.95*; revenue exceeded in both quarters as well, supporting upward estimate momentum through the last three prints .

Values marked with * are from S&P Global and do not have document citations. Values retrieved from S&P Global.

Key Takeaways for Investors

  • The beat-and-raise cadence is intact: higher FY25 production (12–13%) and EPS “low-to-mid $9” underpin estimate revisions; watch maintenance cadence and tax normalization (26%) as offsets .
  • Network/contract momentum is a durable driver: expanded United CRJ550 (50 total) and broader CRJ700/900 placements reduce asset slack and extend visibility into 2026 .
  • Execution catalysts: 2H25 E175 deliveries, returning ~25 parked dual-class CRJs to service, and SWC’s pending final DOT approval can each lift utilization and profitability as 2025 progresses .
  • Mix tailwinds continue from dual-class flying and prorate expansion; Q1 prorate & charter grew QoQ despite seasonality, reflecting strong small-community demand .
  • Cash flow and balance sheet provide flexibility to fund growth and opportunistic buybacks alongside elevated CapEx; deleveraging continues even as fleet grows .
  • Near-term watch items: MRO throughput/parts availability, E175 delivery timing into 2H25, and any partner schedule fine-tuning if domestic demand softens; none imply a strategic pivot today .
  • Trading implication: Continued operating leverage and contract wins create a supportive setup for multiple expansion if production guidance tracks, with any SWC approval and visible E175 induction rate as incremental catalysts .

Appendix: Additional Data Points

  • Q1 Statement of Income and balance sheet excerpts provided in the 8-K Exhibit 99.1 (press release) and reconciled on the call; net income $100.6M and diluted EPS $2.42 include a $10M discrete tax benefit (~$0.24) .
  • Deferred revenue balance $309.5M at 3/31/25; management expects ~$10–$20M of recognition per quarter in 2025, subject to production .
  • Fleet count at 3/31/25: E175 262; CRJ900 35; CRJ700/550 114; CRJ200 77; total 488 in service or under contract .