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SKYWEST INC (SKYW)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered strong operational and financial execution: revenue $1.05B (+15% YoY), diluted EPS $2.81, operating income $174.1M (+33% YoY) .
  • Results beat Wall Street consensus: EPS $2.81 vs $2.56*, revenue $1.05B vs $1.03B*; driven by 14.9% YoY block hour growth, higher fleet utilization, and modest deferred revenue recognition ($17M) in GAAP .
  • Guidance improved: 2025 block hours raised to ~+15% YoY and full‑year GAAP EPS now “mid‑$10” with Q4 EPS implied at ~$2.30; 2026 EPS targeted around $11, CapEx cut for 2025 to ~$550M from prior $575–$625M .
  • Strategic catalysts: multi‑year United extension for up to 40 CRJ‑200s into the 2030s; CRJ‑550 ramp and E175 delivery schedule position fleet for 2026 growth; SWC commuter authorization finalized by DOT .

Values with asterisk (*) retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • Strong demand and summer seasonality restored operating leverage; CEO: “Demand for our product is very strong… lead our segment in the industry” .
    • Contract extension with United for up to 40 CRJ‑200s into the 2030s enhances near‑term lift and monetizes CRJ flexibility .
    • Balance sheet strength: debt reduced to $2.4B (from $2.7B at 12/31/24), cash $753M, share repurchases increased QoQ to 244k shares ($26.6M) .

  • What Went Wrong

    • Embraer E175 delivery delays; majority of 2025 deliveries pushed into Q4/early 2026, adding timing uncertainty .
    • Supply chain/MRO constraints keep maintenance intensity high; 2026 maintenance expected “approximately at current rates” as more aircraft return to service .
    • Macro/regulatory overhangs: Brazil tariffs (10% currently; risk of higher levels) and Essential Air Service funding uncertainty amid government shutdown; management planning to fly but reimbursement risk exists post‑Nov 18 .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$0.913 $0.948 $1.035 $1.050
Diluted EPS ($)$2.16 $2.42 $2.91 $2.81
Operating Income ($USD Millions)$131.4 $139.4 $170.1 $174.1
Operating Margin (%)14.4% (calc) 14.7% (calc) 16.4% (calc) 16.6% (calc)
Net Income ($USD Millions)$89.7 $100.6 $120.3 $116.4
Net Income Margin (%)9.8% (calc) 10.6% (calc) 11.6% (calc) 11.1% (calc)

Actuals vs S&P Global consensus:

MetricConsensusActualBeat/Miss
EPS ($)2.56*2.81 Beat*
Revenue ($USD Billions)1.030*1.050 Beat*

Values with asterisk (*) retrieved from S&P Global.

Segment revenue breakdown and mix:

Segment ($USD Millions)Q1 2025Q2 2025Q3 2025
Contract / Flying Agreements$785 $842 $844
Pro‑rate & Charter$131 $145 $167
Leasing & Other$32 $47 $39

KPIs and Operating Metrics:

KPIQ1 2025Q2 2025Q3 2025
Total Block Hours352,155 376,269 384,247
Departures201,838 222,874 226,305
Passengers Carried10,390,364 12,092,758 12,446,270
Passenger Load Factor78.6% 82.8% 84.0%
Adjusted Flight Completion99.9% 99.9% 99.9%
Raw Flight Completion98.2% 99.1% 99.1%

Balance sheet and cash deployment highlights:

  • Cash & marketable securities: $753M (9/30/25); total debt: $2.4B; equity: $2.68B .
  • Share repurchases: 244k shares for $26.6M in Q3; $240M remaining authorization .
  • CapEx: $122M in Q3 (spares, engines, fixed assets) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Block Hours YoYFY 2025+12–13% (Q1) → +14% (Q2) ~+15% Raised
GAAP EPSFY 2025Low–mid $9 (incl. Q1 tax benefit) → ~$10 area (Q2) Mid‑$10 area Raised
EPSQ4 2025N/A~$2.30 New
EPSFY 2026N/A~$11; mid‑to‑high single‑digit EPS growth New
Effective Tax RateQ4 2025~26–27% ~26–27% Maintained
Effective Tax RateFY 2026N/A~24% New
CapExFY 2025~$575–$625M ~$550M Lowered
CapExFY 2026~$575–$625M ~$575–$625M Maintained
Maintenance ActivityFY 2025~>$200M/quarter “At Q2 levels adjusted for production” Maintained intensity
Maintenance ActivityFY 2026N/A“Approximately at current rates” New
E175 DeliveriesQ4 2025 / FY 20266 in rest of 2025, 8 in 2026 (Q2) 3 in Q4 2025; 11 in 2026 Timing revised
CRJ‑550 In‑ServiceYE 2025 / FY 202630 by YE 2025; last 20 in 2026 30 by YE 2025; last 20 in 2026 Maintained
CRJ‑200 Extension (United)2030sN/AUp to 40 extended New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q1)Current Period (Q3)Trend
Supply chain / MROParts/labor constraints; maintenance ~$200M/quarter; buying 30 CRJ‑900 airframes to part‑out 2026 maintenance “approx. at current rates” as aircraft return to service Persistent constraints but stabilizing
Brazil tariffsPaid ~10% on components (not full aircraft); would delay deliveries if 50% imposed 10% still a headwind; strategic capital deployment; industry working solutions Ongoing risk; managed
Pro‑rate demand / small communitiesVery strong; reintroduces seasonality; expanding with American About ~70% of 2019 levels; expanding with United/American; premium push (dual‑class) Improving; expanding mix
Essential Air Service (EAS)N/A in Q1; referenced small community demand Funding through Nov 18; intent to continue service; reimbursement uncertain Near‑term uncertainty
Fleet strategyCRJ‑550 ramp; E175 orders with flexibility; parts program United CRJ‑200 extension; ~300 E175 by 2028; delivery timing adjusted Flexibility reinforced
Capital allocationOpportunistic buybacks; delevering ~$400M FCF YTD; Q3 buybacks up 25% QoQ; ~$500M debt repayment in 2025 Shareholder returns + de‑risking

Management Commentary

  • “Demand for our product is very strong, and SkyWest continues to lead our segment in the industry, in service, and in the value of our diverse assets.” — CEO Chip Childs .
  • “We now expect our 2025 GAAP EPS could be in the mid‑$10 per share area for the year… implies Q4 EPS in the $2.30 area. For 2026… EPS in the area of $11.” — CFO Rob Simmons .
  • “Today, we announced an agreement with United to extend up to 40 CRJ200s into the 2030s… We expect our existing CRJ fleet to produce accretively well into the next decade.” — CCO Wade Steel .
  • “These agreements continue to deliver unparalleled fleet flexibility for the future… nearly 300 E175s by the end of 2028.” — CEO Chip Childs .

Q&A Highlights

  • EAS funding risk and commitment: Management intends to honor service commitments even amid reimbursement uncertainty post‑Nov 18, coordinating with partners and agencies .
  • CRJ‑200 strategy: 40 contract extensions with United; potential to expand pro‑rate; long‑term plan to operate ~100 CRJ‑200s into early 2030s with continued investments .
  • Pro‑rate evolution: Increasing dual‑class pro‑rate (CRJ‑900, CRJ‑550) with American and Delta to support premium service in small/medium markets .
  • Buybacks and EPS denominator: Opportunistic approach continues; Q3 buybacks up 25% QoQ .
  • Delivery/options flexibility: 74 firm E175 orders through 2032 (30 allocated; 44 unassigned) with flexibility to defer/terminate if unallocated .

Estimates Context

  • Q3 2025 vs S&P Global consensus: EPS $2.81 vs $2.56* (Beat), Revenue $1.050B vs $1.030B* (Beat). Expect estimate revisions higher on EPS and modestly higher on revenue given operational throughput and implied Q4 EPS ~$2.30 .

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Strong beat on EPS and revenue amid robust block hours and utilization; GAAP included $17M deferred revenue recognition, but underlying demand and operations were the primary drivers .
  • 2025 guidance raised (block hours +15%, EPS mid‑$10) and 2026 EPS around $11 suggests durable operating leverage despite delivery delays and macro uncertainties .
  • Fleet flexibility is a differentiator: United CRJ‑200 extension and CRJ‑550 ramp bridge E175 timing; expect seasonality but stable production through 2026 .
  • Capital deployment balanced: ~$400M FCF YTD and increased buybacks while delevering; 2025 CapEx cut to ~$550M reduces cash burn without impairing growth pathways .
  • Watch regulatory/macro: Brazil tariff trajectory and EAS funding outcomes are swing factors; management appears prepared to defer deliveries and maintain service continuity .
  • Near‑term trading: Positive catalyst path from United CRJ‑200 extension, Q4 EPS visibility (~$2.30), and potential estimate raises; risk from delivery timing and tariff headlines .
  • Medium‑term thesis: Scale, partner breadth, and fleet optionality should support EPS growth and FCF compounding as E175 fleet approaches ~300 by 2028 .