[Q2 2024 Executive Summary](index=1&type=section&id=Executive%20Summary) SkyWest, Inc. reported strong financial and operational performance in Q2 2024, with significant increases in net income, revenue, and block hour production [Financial Highlights](index=1&type=section&id=Financial%20Highlights) SkyWest, Inc. reported a significant increase in net income and revenue for Q2 2024 compared to Q2 2023, driven by improved operational performance and block hour production Q2 2024 Financial Performance vs. Q2 2023 | Metric | Q2 2024 ($ millions) | Q2 2023 ($ millions) | Change (%) | | :----------------- | :------------------- | :------------------- | :--------- | | Pre-tax Income | $102 | N/A | N/A | | Net Income | $76 | $15 | 406.7% | | Diluted EPS | $1.82 | $0.35 | 420.0% | | Revenue | $867 | $726 | 19% | [Operational Highlights](index=1&type=section&id=Operational%20Highlights) Operational improvements in Q2 2024 included a notable increase in block hour production and the delivery of new E175 aircraft, reflecting progress in captain availability - Block hour production increased **12% in Q2 2024** compared to Q2 2023, indicating improved captain availability[1](index=1&type=chunk)[21](index=21&type=chunk) - SkyWest took delivery of **eight E175 partner-financed aircraft** under an agreement with United Airlines[1](index=1&type=chunk) [Financial Review](index=1&type=section&id=Financial%20Review) The financial review details SkyWest's income statement, revenue, expenses, and capital position, highlighting significant growth in net income and operating revenues [Condensed Consolidated Statements of Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) The condensed consolidated statements of income (loss) show a substantial increase in net income for both the three and six months ended June 30, 2024, compared to the prior year periods, driven by higher operating revenues Condensed Consolidated Statements of Income (Loss) | Metric | Three Months Ended June 30, 2024 ($ thousands) | Three Months Ended June 30, 2023 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Total Operating Revenues | $867,118 | $725,643 | $1,670,732 | $1,417,474 | | Total Operating Expenses | $747,478 | $693,783 | $1,451,586 | $1,390,318 | | Operating Income | $119,640 | $31,860 | $219,146 | $27,156 | | Income (Loss) Before Income Taxes | $102,166 | $17,637 | $182,341 | $(8,480) | | Net Income (Loss) | $75,578 | $15,419 | $135,876 | $(6,652) | | Basic Earnings (Loss) Per Share | $1.88 | $0.35 | $3.38 | $(0.14) | | Diluted Earnings (Loss) Per Share | $1.82 | $0.35 | $3.28 | $(0.14) | [Operating Revenues](index=1&type=section&id=Operating%20Revenues) Total operating revenues increased by 19% in Q2 2024, primarily driven by flying agreements and the recognition of previously deferred revenue Operating Revenues (Q2 2024 vs. Q2 2023) | Revenue Type | Q2 2024 ($ thousands) | Q2 2023 ($ thousands) | Change ($ thousands) | Change (%) | | :------------------------ | :-------------------- | :-------------------- | :------------------- | :--------- | | Flying agreements | 838,170 | 700,394 | 137,776 | 19.7% | | Lease, airport services & other | 28,948 | 25,249 | 3,699 | 14.6% | | **Total Operating Revenues** | **867,118** | **725,643** | **141,475** | **19.5%** | - SkyWest recognized **$6 million of previously deferred revenue** in Q2 2024, contrasting with deferring $60 million in Q2 2023, with cumulative deferred revenue at **$361 million** as of June 30, 2024[11](index=11&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Operating expenses increased by 8% in Q2 2024, primarily due to the 12% increase in block hour production year-over-year, with salaries, wages, and benefits being the largest component Operating Expenses (Q2 2024 vs. Q2 2023) | Expense Category | Q2 2024 ($ thousands) | Q2 2023 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Salaries, wages and benefits | 355,005 | 322,441 | 32,564 | 10.1% | | Aircraft maintenance, materials and repairs | 183,267 | 162,491 | 20,776 | 12.8% | | Depreciation and amortization | 96,814 | 97,169 | (355) | (0.4%) | | Aircraft fuel | 21,328 | 18,279 | 3,049 | 16.7% | | Airport-related expenses | 17,535 | 16,955 | 580 | 3.4% | | Aircraft rentals | 1,310 | 2,428 | (1,118) | (46.0%) | | Other operating expenses | 72,219 | 74,020 | (1,801) | (2.4%) | | **Total Operating Expenses** | **747,478** | **693,783** | **53,695** | **7.7%** | - The **8% increase in operating expenses** was primarily driven by a **12% increase in block hour production** year-over-year[5](index=5&type=chunk) [Capital and Liquidity](index=2&type=section&id=Capital%20and%20Liquidity) SkyWest maintained a strong liquidity position with stable cash and marketable securities, while reducing total debt. The company also continued its share repurchase program [Summary of Consolidated Balance Sheets](index=5&type=section&id=Summary%20of%20Consolidated%20Balance%20Sheets) The balance sheet shows a slight decrease in total assets and a reduction in total debt from December 31, 2023, to June 30, 2024, while stockholders' equity increased Summary of Consolidated Balance Sheets (Dollars in Thousands) | Metric | June 30, 2024 ($ thousands) | December 31, 2023 ($ thousands) | | :------------------------------------ | :-------------------------- | :------------------------------ | | Cash and marketable securities | $834,269 | $835,223 | | Total current assets | $1,115,156 | $1,131,896 | | Property and equipment, net | $5,357,468 | $5,405,685 | | Total assets | $6,962,439 | $7,026,293 | | Current portion, long-term debt | $497,744 | $443,869 | | Total current liabilities | $1,323,928 | $1,254,292 | | Long-term debt, net of current maturities | $2,284,375 | $2,562,183 | | Total liabilities and stockholders' equity | $6,962,439 | $7,026,293 | | Stockholders' equity | $2,231,180 | $2,113,502 | [Debt and Cash Position](index=2&type=section&id=Debt%20and%20Cash%20Position) SkyWest's total debt decreased by $200 million, while cash and marketable securities remained stable at approximately $834 million Debt and Cash Position | Metric | June 30, 2024 ($ billions) | December 31, 2023 ($ billions) | | :-------------------------- | :------------------------- | :----------------------------- | | Total Debt | $2.8 | $3.0 | | Cash and marketable securities | $834 million | $835 million | [Share Repurchase Program](index=2&type=section&id=Share%20Repurchase%20Program) SkyWest repurchased 177,000 shares of common stock for $13.3 million during Q2 2024, with $69 million remaining under the current authorization - SkyWest repurchased **177,000 shares of common stock** for **$13.3 million** in Q2 2024, at an average price of **$75.23 per share**[24](index=24&type=chunk) - As of June 30, 2024, **$69 million remained available** under the current share repurchase program[24](index=24&type=chunk) [Operational Review](index=1&type=section&id=Operational%20Review) The operational review details SkyWest's commercial agreements, fleet composition, and key performance metrics, highlighting fleet deliveries and increased block hours [Commercial Agreements and Fleet Deliveries](index=1&type=section&id=Commercial%20Agreements%20and%20Fleet%20Deliveries) SkyWest is actively managing its fleet deliveries, particularly E175 aircraft, under existing agreements with major airline partners, with significant deliveries scheduled through 2026 - SkyWest took delivery of **eight E175 partner-financed aircraft** in Q2 2024 as part of a United Airlines agreement[1](index=1&type=chunk) Anticipated E175 Aircraft Deliveries | Partner | Q1 & Q2 2024 | Q3 & Q4 2024 | 2025 | 2026 | Total | | :---------------- | :----------- | :----------- | :--- | :--- | :---- | | Delta Air Lines | — | 1 | — | — | 1 | | United Airlines (1) | 11 | 13 | 7 | 8 | 39 | | Alaska Airlines | — | — | 1 | — | 1 | | **Total** | **11** | **14** | **8** | **8** | **41** | - By the end of 2026, SkyWest is scheduled to operate a total of **278 E175 aircraft**[25](index=25&type=chunk) [Fleet Composition](index=2&type=section&id=Fleet%20Composition) SkyWest's fleet in service or under contract primarily consists of E175, CRJ900, CRJ700, and CRJ200 aircraft, with a total of 475 aircraft as of June 30, 2024, showing a slight decrease from previous periods Aircraft in Service or Under Contract by Type | Aircraft Type | June 30, 2024 | December 31, 2023 | June 30, 2023 | | :------------ | :------------ | :---------------- | :------------ | | E175 aircraft | 248 | 237 | 235 | | CRJ900 aircraft | 41 | 41 | 41 | | CRJ700 aircraft | 99 | 118 | 110 | | CRJ200 aircraft | 87 | 89 | 106 | | **Total** | **475** | **485** | **492** | - As of June 30, 2024, SkyWest leased **35 CRJ700s and five CRJ900s to third parties** and had **16 CRJ200s ready for service** under SkyWest Charter (SWC) operations, which are excluded from the main fleet count[34](index=34&type=chunk) [Key Operational Metrics](index=1&type=section&id=Key%20Operational%20Metrics) SkyWest demonstrated strong operational performance in Q2 2024, with increases in block hours, departures, and passengers carried, alongside high flight completion rates Selected Operational Data (Q2 2024 vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change (%) | | :------------------------- | :----------- | :----------- | :--------- | | Total block hours | 317,462 | 282,617 | 12.3% | | Departures | 189,325 | 173,837 | 8.9% | | Passengers carried | 10,691,017 | 9,887,779 | 8.1% | | Adjusted flight completion | 99.9% | 99.9% | — pts | | Raw flight completion | 99.0% | 98.9% | 0.1 pts | | Passenger load factor | 84.4% | 85.5% | (1.1) pts | | Average trip length | 460 | 451 | 2.0% | - Adjusted flight completion percent excludes weather cancellations, while raw flight completion includes them[20](index=20&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) This section provides an overview of SkyWest's corporate structure, operational scope, and details regarding its Q2 2024 earnings conference call [About SkyWest](index=2&type=section&id=About%20SkyWest) SkyWest, Inc. is a holding company for SkyWest Airlines, SkyWest Charter, and SkyWest Leasing, operating a fleet of approximately 500 aircraft and partnering with major airlines across North America - SkyWest, Inc. is the holding company for SkyWest Airlines, SkyWest Charter ("SWC"), and SkyWest Leasing[26](index=26&type=chunk) - SkyWest Airlines operates a fleet of approximately **500 aircraft**, connecting passengers to over **240 destinations** throughout North America[26](index=26&type=chunk) - SkyWest Airlines operates through partnerships with United Airlines, Delta Air Lines, American Airlines, and Alaska Airlines, carrying over **38 million passengers in 2023**[26](index=26&type=chunk) [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) SkyWest hosted a conference call on July 25, 2024, to discuss its Q2 2024 results, with details provided for both domestic and international callers, as well as a live webcast - SkyWest hosted its Q2 2024 results conference call on **July 25, 2024, at 2:30 p.m. Mountain Time**[14](index=14&type=chunk) - Domestic callers could dial **1-888-330-2455**, and international callers **1-240-789-2717**; a live webcast was also available at https://events.q4inc.com/attendee/662090633[14](index=14&type=chunk)[28](index=28&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section outlines the standard disclaimer regarding forward-looking statements, emphasizing potential risks and the company's policy on updates [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section contains a standard disclaimer regarding forward-looking statements, highlighting that actual results may differ materially due to various risks and uncertainties, and the company assumes no obligation to update these statements - The release contains forward-looking statements identified by words such as "forecasts," "expects," "intends," "believes," "anticipates," "estimates," "should," "likely" and similar expressions[29](index=29&type=chunk) - Readers are cautioned that many factors could affect future operating and financial results, causing actual results to vary materially from those expressed in forward-looking statements[29](index=29&type=chunk) - SkyWest assumes no obligation to update any forward-looking statements unless required by law, and directs readers to its SEC filings for a comprehensive list of risk factors[29](index=29&type=chunk)

The Zacks Consensus Estimate for the to-be-reported quarter's earnings and revenues is pegged at $1.73 per share and $814.40 million, respectively. SKYW has an awe-inspiring earnings surprise history, as reflected in the chart below. Earnings Whispers for Q2 SKYW has an Earnings ESP of +0.96% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here. We expect revenues from flying agreements (which account for the bulk of the top line) to have been impressive in the to-be-repor ...

Company Performance - SkyWest's shares increased by 3.39% over the last month, underperforming the Transportation sector's gain of 4.01% and outperforming the S&P 500's gain of 2.14% [1] - SkyWest is currently traded at a Forward P/E ratio of 12.33, indicating a premium compared to its industry's Forward P/E of 9.25 [5] - The company is scheduled to release its earnings on July 25, 2024, with a forecasted EPS of $1.73, reflecting a 394.29% increase from the same quarter last year [6] Earnings Estimates - The Zacks Consensus Estimates project earnings of $6.83 per share and revenue of $3.36 billion for the full year, showing changes of +787.01% and +14.58% respectively from the previous year [4] - The Zacks Consensus Estimate for revenue is projecting net sales of $814.4 million, up 12.23% from the year-ago period [6] - The Zacks Rank system indicates that SkyWest currently holds a Zacks Rank of 2 (Buy) [7] Industry Context - The Transportation - Airline industry ranks in the bottom 40% of all industries, with a current Zacks Industry Rank of 153 out of over 250 industries [11] - The Zacks Industry Rank shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [3]

The airline industry is a crowded place. Finding winners in this space is easier said than done. Southwest Airlines (LUV) has been one of my favorites in this space for many years, but unfortunately, my investment in LUV has not gone according to plans, so far. While analyzing the prospects for the airline sector, I recently came across SkyWest, Inc. (NASDAQ:SKYW), a regional airline operator that draws little attention from both investors and consumers. SKYW stock, up more than 108% in the past 12 months, ...

The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate. As such, the Zacks rating upgrade for SkyWest is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price. The change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to ...

Core Insights - The airline industry is experiencing a significant rebound in air travel demand, particularly in leisure travel, which is positively impacting stock performance [11] - The International Air Transport Association (IATA) has revised its global profitability forecast for the airline industry, increasing it to $30.5 billion for the current year, up from $25.7 billion [12] Company-Specific Insights - United Airlines (UAL) has seen a 0.2% upward revision in the Zacks Consensus Estimate for 2024 earnings over the past 60 days, with a 0.4% upward revision for 2025 earnings [1] - Alaska Air (ALK) has experienced a 2% upward revision in the Zacks Consensus Estimate for 2024 earnings and a 5.1% upward revision for 2025 earnings over the same period [4] - SkyWest (SKYW) has a Zacks Rank 2 (Buy) and has seen a 6.9% improvement in the 2024 earnings estimate over the past 90 days, with an expected earnings growth rate of more than 100% for 2024 [7][10] Market Trends - Passenger traffic is expected to remain high throughout the year, with U.S. airlines anticipated to carry 271 million passengers from June 1 to August 31, 2024 [8] - The airline industry is expected to perform strongly in the latter half of 2024, driven by high passenger volumes and favorable earnings estimate revisions [9][11]

Finding the right transportation stocks to buy is more crucial than ever in today's interconnected global economy. That's because reliable transportation systems form the backbone of trade and mobility, making them indispensable to making money. However, despite its pertinence, the transportation space is up against multiple headwinds weighing down industry valuations. Some of these include production delays and labor shortages, making investors skeptical of the industry's prospects. Despite challenges, the ...

Company Performance - For the annual period, the Zacks Consensus Estimates anticipate earnings of $6.83 per share and a revenue of $3.36 billion, signifying shifts of +787.01% and +14.58%, respectively, from the last year [1] - SkyWest is expected to report an EPS of $1.73, marking a 394.29% rise compared to the same quarter of the previous year, with a projected revenue of $814.4 million, reflecting a 12.23% rise from the equivalent quarter last year [8] Stock Performance - Shares of SkyWest witnessed a gain of 11.25% over the previous month, outperforming the Transportation sector, which experienced a loss of 1.91%, and the S&P 500's gain of 3.38% [2] - SkyWest closed at $81.85 in the latest trading session, marking a +1.54% move from the prior day, outpacing the S&P 500's 0.09% gain on the day [7] Analyst Estimates and Rankings - Recent modifications to analyst estimates for SkyWest indicate positive sentiment, with the Zacks Consensus EPS estimate moving 0.24% higher over the last 30 days, currently carrying a Zacks Rank of 2 (Buy) [3][4] - The Zacks Rank system has an impressive track record, with 1 stocks generating an average annual return of +25% since 1988 [4] Industry Overview - The Transportation - Airline industry is part of the Transportation sector, holding a Zacks Industry Rank of 81, placing it in the top 33% of all 250+ industries [5] - SkyWest is currently traded at a Forward P/E ratio of 11.81, indicating a premium relative to the industry's average Forward P/E of 8.97 [10]

Over the past month, shares of this regional airline have returned +11.3%, compared to the Zacks S&P 500 composite's +3.4% change. During this period, the Zacks Transportation - Airline industry, which SkyWest falls in, has lost 4.8%. The key question now is: What could be the stock's future direction? Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present val ...

Core Insights - The article emphasizes the importance of value investing as a successful strategy across various market conditions, focusing on identifying undervalued companies through fundamental analysis [2][9] Company Analysis: SkyWest (SKYW) - SkyWest (SKYW) holds a Zacks Rank of 1 (Strong Buy) and a Value grade of A, with a current P/E ratio of 10.77, significantly lower than the industry average of 15.84 [4] - The P/B ratio for SKYW is 1.48, which is favorable compared to the industry average of 3.45, indicating solid valuation metrics [5] - SKYW's P/CF ratio stands at 6.59, which is attractive relative to the industry's average of 10.34, suggesting the stock may be undervalued based on cash flow [6] Company Analysis: Controladora Vuela Compania de Aviacion, B. de C.V. (VLRS) - Controladora Vuela Compania de Aviacion, B. de C.V. (VLRS) also has a Zacks Rank of 1 (Strong Buy) and a Value grade of A, with a Forward P/E ratio of 8.50, well below the industry average [7] - VLRS's P/B ratio is 2.67, which is lower than the industry average of 3.45, indicating a potentially attractive valuation [8] - The article notes that VLRS's PEG ratio is -2.17, contrasting sharply with the industry average of 0.73, further suggesting undervaluation [7][8] Conclusion - Both SkyWest and Controladora Vuela Compania de Aviacion, B. de C.V. are highlighted as strong value stocks, with metrics indicating they are likely undervalued at present, supported by their strong earnings outlook [9]