Sign in
SI

SKYWEST INC (SKYW)·Q2 2025 Earnings Summary

Executive Summary

  • SkyWest delivered a strong Q2 2025 with revenue of $1.035B and diluted EPS of $2.91, materially above consensus; operating margin expanded to ~16.4% on higher block hours and fleet utilization .
  • Results beat Street estimates: EPS $2.91 vs $2.395*, Revenue $1.035B vs $0.979B*, EBITDA $260M vs $239M*; management also flagged ~$0.20 EPS from discrete non-operating gains .
  • Guidance color improved: 2025 block hours growth raised to ~14% (from 12–13%); 2025 GAAP EPS “around $10” (prior low-to-mid $9); 2025 capex raised to $575–$625M .
  • Strategic catalysts: order for 60 E175s (plus rights on 50), new Delta contract (16 E175s), and $250M increase to share repurchase authorization; tariff uncertainty may delay Embraer deliveries into Q4 2025/early 2026 .

What Went Well and What Went Wrong

What Went Well

  • Block hours +19% YoY and +7% QoQ; revenue +19% YoY to $1.035B; operating expenses rose slower (+16%), expanding operating leverage .
  • Strategic fleet actions: agreement to purchase and operate 16 E175s for Delta; firm positions for 44 additional E175s through 2032 and purchase rights on 50 more; management emphasized “demand for our product remains solid” .
  • Strong capital deployment: buybacks of 195K shares in Q2 ($17.3M); BoD raised repurchase authorization by $250M in May; total debt down to $2.5B and cash of $727M at quarter end .

“Demand for our product remains solid. We believe we are well-positioned to deploy our capital for long-term growth and fleet opportunities…” — Chip Childs, CEO .

What Went Wrong

  • Tariff uncertainty on Brazil could push late-2025 E175 deliveries into early 2026; management stated “we are not willing to pay a 50% tariff on new aircraft deliveries,” paid ~10% only on certain components so far .
  • Ongoing third-party MRO labor/parts challenges, especially on CRJ airframes, sustaining elevated maintenance expense at Q2 levels as aircraft re-enter service .
  • Load factor down 160 bps YoY (82.8% vs 84.4%) despite demand strength; average trip length -2% YoY, reflecting mix/frequency dynamics .

Financial Results

P&L vs prior year and prior quarter

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$867.1 $948.5 $1,035.2
Operating Income ($USD Millions)$119.6 $139.4 $170.1
Net Income ($USD Millions)$75.6 $100.6 $120.3
Diluted EPS ($)$1.82 $2.42 $2.91
Operating Margin (%)13.8% 14.7% 16.4%
Net Income Margin (%)8.7% 10.6% 11.6%

Note: CFO referenced ~$1.0B revenue in remarks (rounded); press release/8‑K shows $1,035.2M .

Segment revenue breakdown

Segment ($USD Millions)Q2 2024Q1 2025Q2 2025
Contract (CPA) Revenue$731 $785 $842
Pro‑rate & Charter$107 $131 $145
Leasing & Other$29 $32 $47
Total$867 $948 $1,035

KPIs

KPIQ2 2024Q2 2025
Total Block Hours317,462 376,269
Departures189,325 222,874
Passengers10,691,017 12,092,758
Adjusted Flight Completion (%)99.9% 99.9%
Raw Flight Completion (%)99.0% 99.1%
Passenger Load Factor (%)84.4% 82.8%
Average Trip Length (miles)460 451

Supplemental cash flow: Revenue recognized in excess of fixed cash received was $22.98M in Q2 2025 vs $5.55M in Q2 2024; cumulative deferred revenue decreased to $286.5M at 6/30/25 (from $322.4M at 12/31/24) .

Results vs S&P Global Consensus

MetricConsensusActual
Revenue ($USD Millions)$979.4*$1,035.2
EBITDA ($USD Millions)$239.1*$260.3
Primary EPS ($)$2.395*$2.91
# of EPS Estimates4*—
# of Revenue Estimates5*—

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Block Hours Growth YoYFY 2025+12–13% ~+14% Raised
GAAP EPSFY 2025Low-to-mid $9 incl. Q1 discrete tax benefit Around $10 if execution successful Raised
CapexFY 2025$575–$600M $575–$625M Raised upper bound
Effective Tax RateFY 2025 (remaining)~26% ~26–27% Slightly widened
Maintenance ExpenseFY 2025Slightly >$200M/quarter Continue at Q2 levels adjusted for production Maintained
Deferred Revenue RecognitionFY 2025 (per quarter)~$10–$20M ~$10–$20M Maintained
E175 Deliveries (2025)2025Majority in 2H Majority in Q4 or slip to early 2026; tariff-driven uncertainty Pushed out
Q3 Block Hours vs Q2Q3 2025—~+2% New color
Debt RepaymentFY 2025>$400M ~$490M Raised
Share Repurchase AuthorizationOpen-ended$250M (May’23) with ~$34M remaining 3/31/25 +$250M increase (May 6, 2025) to ~$272M remaining Increased
Fleet Orders2027–203216 E175s by 2026 60 firm E175 (incl. 16 for Delta in 2027–28) + 44 firm positions 2028–2032; 50 purchase rights Expanded

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Current Period (Q2 2025)Trend
Tariffs/MacroDelivery delays likely; strong summer schedules despite domestic softening 10% tariff paid on components; potential 50% Brazil tariff unacceptable; deliveries could defer to 2026 Risk heightened; mitigation via deferrals
Supply chain/MROPersistent MRO labor/parts constraints; maintenance >$200M/quarter CRJ airframe parts/labor issues continue; part-out 24 of 30 CRJ900 airframes to derisk Still challenged; proactive mitigation
Fleet flexibilityCRJ550 expansion with United; dual-class CRJ reactivations Redeploy CRJs; 25 dual-class CRJs to reactivate; flexibility to delay 175s and fly CRJ longer Reinforced flexibility
Pro‑rate/small communitiesDemand very strong; more seasonality returning Demand “stronger than ever”; working with many communities; seasonality acknowledged Strong demand sustained
Capital allocationFree cash flow, deleveraging, opportunistic buybacks ~$200M FCF 1H25; ~$490M 2025 debt repayment; buybacks + authorization increase Optionality improved
SkyWest Charter (Part 380)Tentative DOT approval; seasonal aircraft shifts Optimism about final approval; timeline affected by admin change Incremental progress

Management Commentary

  • “We believe we are well-positioned to deploy our capital for long-term growth and fleet opportunities… optimizing our fleet to meet the demand for regional flying.” — Chip Childs, CEO .
  • “We now anticipate our 2025 block hours to be up approximately 14%… We now expect our 2025 GAAP EPS could be in the $10 per share area if we are successful…” — Rob Simmons, CFO .
  • “If the 50% tariff with Brazil is implemented, we plan on working… to delay the delivery until the tariff situation is resolved.” — Wade Steel, CCO .
  • “Our EPS for the quarter included approximately $0.20 from discrete non operating gains… mark-to-market on equity investments and sale of fixed assets.” — Rob Simmons, CFO .
  • “Demand is not our problem… it’s as strong as we’ve ever seen it.” — Chip Childs, CEO .

Q&A Highlights

  • CRJ200 flexibility: priority to fly under current contracts, pro‑rate with partners, leasing to third parties, and parts/engines consumption; ~50 aircraft parked offer optionality .
  • MRO constraints: purchasing 30 used CRJ900 airframes (operate 6, part-out 24) to mitigate airframe parts/labor shortages; engine position stable due to continued events during COVID .
  • Tariff mechanics: 10% tariff applied only to certain components; 50% country tariff would be unacceptable; close alignment with partners and Embraer to manage timing .
  • 2026 growth: no formal guidance; growth opportunities intact via CRJ reactivations and partner demand; more color expected next quarter .
  • Capital allocation: robust optionality to invest in fleet, delever, and buy back stock; strong liquidity supports multi-path deployment .

Estimates Context

  • Q2 2025 delivered a broad beat: EPS $2.91 vs $2.395*, Revenue $1.035B vs $0.979B*, EBITDA $260M vs $239M*; estimate counts: EPS (4*), Revenue (5*) .
  • With block hour guidance raised and tariff-related delivery timing possibly pushing some capex into 2026, Street models likely need higher 2025 EPS/EBITDA and modestly revised quarterly cadence to reflect deferred revenue recognition ($10–$20M per quarter) and seasonality .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Operational momentum continues: double-digit YoY growth in block hours and revenue, with expanding margins driven by utilization and mix; EPS beat underpinned by operating leverage and ~$0.20 discrete gains .
  • 2025 outlook strengthened: higher block hour growth (~14%) and “around $10” GAAP EPS indicate continued upside if execution holds; maintenance spend to remain elevated but manageable .
  • Tariff uncertainty is the principal near-term risk to delivery timing; SkyWest’s extensive fleet flexibility (CRJ redeployment) and partner alignment reduce earnings risk from potential deferrals .
  • Capital deployment optionality is robust: increased buyback authorization, deleveraging trajectory (~$490M debt repayment in 2025), and sizeable E175 order book support multi-year shareholder returns .
  • Pro‑rate and small community demand remains strong, reinforcing medium-term growth paths via CRJ550 expansion and underserved market restoration; expect seasonality to reassert in 2H .
  • Modeling notes: include deferred revenue recognition ($10–$20M per quarter), normalized tax rate ~26–27%, maintenance at Q2 run-rate adjusted for production, and Q3 block hours ~+2% QoQ .
  • Strategic narrative is favorable: largest global E175 operator positioning, diversified revenue streams (CPA, pro‑rate, leasing), and strong partner relationships form a durable thesis amid macro volatility .