SkyWest, Inc. Q2 FY2025 earnings call

• SkyWest reported net income of $120 million or $2.91 per diluted share for the second quarter of 2025. The results reflect higher production and exceptionally strong demand for products. - The company was named one of America's greatest workplaces by Newsweek for the second year running. - Announced an agreement to purchase and operate 16 new E175s under a multiyear contract with Delta, with deliveries expected to begin in 2027, and secured firm delivery positions with Embraer for 44 more E175s from 2028 to 2032. - Total Q2 revenue was $1 billion, up 9% from Q1 2025 and 19% from Q2 2024. - Ended Q2 with cash of $727 million, down from previous quarters. Repaid $111 million in debt, bought back 195,000 shares of SkyWest stock for $17.3 million, and invested $169 million in CapEx. - Anticipate recognizing approximately $10 million to $20 million of previously deferred revenue per quarter over the remainder of 2025.

Total Q2 revenue was $1 billion. Contract revenue was $842 million, which is 84.2% of the total revenue, up from $785 million in Q1 2025 and $731 million in Q2 2024. Prorate and charter revenue was $145 million, accounting for 14.5% of the total revenue, up from $131 million in Q1 2025 and $107 million in Q2 2024. Leasing and other revenue was $47 million, making up 4.7% of the total revenue, up from $32 million in Q1 2025 and $29 million in Q2 2024.

• Anticipate 2025 block hours to be up approximately 14% over 2024. - Expect 2025 GAAP EPS could be in the $10 per share area if successful in executing on opportunities. - 2026 focus areas include: growth in increasing service to underserved communities driven by deployment of over 30 additional CRJ550 aircraft, improved aircraft utilization and availability on ERJ and CRJ fleets, and placing 14 new E175s into service for United and Alaska by the end of 2026 and 16 new E175s for Delta in 2027 and 2028.

• Tariffs on Brazil could impact aircraft deliveries, but not expected to change the 2025 production forecast immediately. - Challenges in the third - party MRO network including labor and parts issues. - Potential delivery delays from Embraer due to tariffs and other factors.

Q: Could you talk about your CRJ200 fleet?

A: Wade said the CRJ200 fleet has about 50 parked planes. The priority is to continue to fly them for current contracts with major partners, then fly prorate with major partners, then lease them out or use the excess parts and engines on those assets.

Q: Briefly touch on the tariff topic?

A: Chip said the 10% tariff paid so far is not on the full aircraft cost as there are many American components like engines in the 175. The company is monitoring the Section 232 investigation and the 50% country - level tariff.

Q: Touch on the recovery in the prorate and small community market?

A: Chip said demand in small and midsized communities is extremely strong. Wade added that demand is strong, communities value the service, but supply chain issues are constraining the restoration of service.

Q: If CapEx gets deferred, how is capital allocation thought about?

A: Robert said there is a lot of flexibility in capital deployment, with options to focus on the balance sheet or buy back stock. Wade added that the fleet has flexibility, allowing deferring 175s and continuing to operate CRJ700s.

Q: Early view for '26 block hour growth assuming tariff uncertainty resolved?

A: Wade said there are 25 dual - class CRJ planes being reactivated which will contribute to growth, but no specific guidance was given. Robert said more color on 2026 will be provided next quarter.

Q: Was there a gain this quarter? What assets were sold?

A: Robert said there was about $10 million or $0.20 EPS from a mark - to - market gain on equity investments and a gain on the sale of fixed assets.

Q: Capital allocation and deliveries?

A: Chip said there is optionality in dealing with tariffs, with options like deferring deliveries or using other means. Russell said demand is not the problem, but meeting demand is manageable.

Q: Why are the 25 dual - class CRJ aircraft being reactivated?

A: Wade said it is a combination of new flying arrangements signed over the last 6 months and bringing back parked planes.