Nvidia surged again on Tuesday, as investors buy the AI chip powerhouse based on massive growth and mounting FOMO. The strong showing helped the Nasdaq touch fresh highs to start the week since the market was closed for Memorial Day. The bulls appear to be in firm control and many anticipate that the S&P 500 and the Nasdaq will keep marching slowly higher throughout the historically low-volume summer months. The current market backdrop likely means investors want to keep buying stocks this summer. Today we ...

Check price target & stock forecast for SkyWest here>>> Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell- side) analysts often affect a stock's price, do they really matter? Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about SkyWest (SKYW) . ...

[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the first quarter of 2024 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents SkyWest, Inc.'s unaudited condensed consolidated financial statements for Q1 2024, including balance sheets, income, equity, and cash flow statements, with detailed accounting notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section provides a summary of the company's financial position, detailing assets, liabilities, and stockholders' equity as of March 31, 2024, and December 31, 2023 Balance Sheet Summary (as of March 31, 2024) | Metric | March 31, 2024 (USD thousands) | December 31, 2023 (USD thousands) | | :--- | :--- | :--- | | **Total Assets** | **$6,982,743** | **$7,026,293** | | Total Current Assets | $1,069,361 | $1,131,896 | | Total Property and Equipment, net | $5,490,819 | $5,482,967 | | **Total Liabilities** | **$4,817,840** | **$4,912,791** | | Total Current Liabilities | $1,312,296 | $1,254,292 | | Long-Term Debt, net | $2,389,227 | $2,562,183 | | **Total Stockholders' Equity** | **$2,164,903** | **$2,113,502** | - Total assets slightly decreased to **$6.98 billion** from **$7.03 billion** at year-end 2023, primarily due to a decrease in marketable securities[8](index=8&type=chunk)[11](index=11&type=chunk) - Total stockholders' equity increased to **$2.16 billion** from **$2.11 billion**, driven by net income[8](index=8&type=chunk)[11](index=11&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section outlines the company's financial performance, presenting total operating revenues, operating income, net income, and diluted EPS for Q1 2024 and Q1 2023 Q1 2024 vs. Q1 2023 Income Statement Highlights | Metric | Q1 2024 (USD thousands) | Q1 2023 (USD thousands) | Change | | :--- | :--- | :--- | :--- | | Total Operating Revenues | $803,614 | $691,831 | +16.2% | | Operating Income (Loss) | $99,506 | $(4,704) | Significant Turnaround | | Net Income (Loss) | $60,298 | $(22,071) | Significant Turnaround | | Diluted EPS | $1.45 | $(0.45) | Significant Turnaround | - The company reported a significant turnaround, with net income of **$60.3 million** in Q1 2024 compared to a net loss of **$22.1 million** in Q1 2023, driven by a **16.2%** increase in operating revenues[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities for Q1 2024 and Q1 2023, highlighting changes in liquidity Q1 2024 vs. Q1 2023 Cash Flow Summary | Cash Flow Activity | Q1 2024 (USD thousands) | Q1 2023 (USD thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $157,648 | $150,203 | | Net Cash from (used in) Investing Activities | $(554) | $3,032 | | Net Cash used in Financing Activities | $(125,392) | $(181,695) | - Cash from operations increased slightly to **$157.6 million**[17](index=17&type=chunk) - Cash used in financing activities decreased significantly, primarily due to lower treasury stock purchases (**$8.8 million** in Q1 2024 vs. **$100.0 million** in Q1 2023)[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, revenue recognition from flying agreements, segment reporting, stock-based compensation, debt structure, and future aircraft purchase commitments Flying Agreements Revenue Breakdown (Q1 2024 vs Q1 2023) | Revenue Type | Q1 2024 (USD thousands) | Q1 2023 (USD thousands) | | :--- | :--- | :--- | | Capacity purchase agreements | $677,205 | $586,496 | | Prorate agreements and SWC revenue | $101,084 | $77,337 | | **Total Flying Agreements Revenue** | **$778,289** | **$663,838** | - As of March 31, 2024, the company had **475 aircraft** in scheduled service under code-share agreements with United, Delta, American, and Alaska Airlines[32](index=32&type=chunk) - The company has firm purchase commitments for **21 E175 aircraft** with delivery dates through 2026 and agreements to place **38 additional E175 aircraft** into service with partners through 2026[38](index=38&type=chunk)[68](index=68&type=chunk) Segment Profit (Loss) Summary (Q1 2024 vs Q1 2023) | Segment | Q1 2024 Profit (USD thousands) | Q1 2023 Profit/(Loss) (USD thousands) | | :--- | :--- | :--- | | SkyWest Airlines and SWC | $1,970 | $(69,281) | | SkyWest Leasing | $67,707 | $30,957 | - During Q1 2024, the company repurchased **136,261 shares** of common stock for **$8.7 million**[52](index=52&type=chunk)[53](index=53&type=chunk) - As of March 31, 2024, **$82.2 million** remained available under the current repurchase authorization[52](index=52&type=chunk)[53](index=53&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 financial results, noting a **16.2%** operating revenue increase to **$803.6 million** and a net income turnaround to **$60.3 million**, driven by block hour growth, prorate revenue, and deferred revenue changes [Overview and Fleet](index=33&type=section&id=Overview%20and%20Fleet) This section describes the company's regional airline business model, its reliance on code-share agreements, and the current composition and future plans for its aircraft fleet - The business model is based on providing regional airline service under code-share agreements, with capacity purchase agreements representing **87.0%** of flying agreement revenue in Q1 2024[101](index=101&type=chunk)[104](index=104&type=chunk) Fleet Composition (as of March 31, 2024) | Category | E175 | CRJ900 | CRJ700 | CRJ200 | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | In scheduled service/under contract | 240 | 41 | 105 | 89 | 475 | | SWC | - | - | - | 16 | 16 | | Leased to third parties | - | 5 | 35 | - | 40 | | Other | - | 3 | 27 | 40 | 70 | | **Total Fleet** | **240** | **49** | **167** | **145** | **601** | - The company plans to add **38 E175 aircraft** with partners through 2026, aiming to improve profitability by replacing older, higher-maintenance aircraft[102](index=102&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section analyzes the key drivers of financial performance, including changes in block hours, revenue streams from capacity purchase and prorate agreements, and significant shifts in operating expenses - Total block hours increased by **4.9%** YoY to **289,801** in Q1 2024, driven by an increase in available captains[114](index=114&type=chunk)[115](index=115&type=chunk) - Capacity purchase revenue increased by **$90.7 million** (**15.5%**) due to higher block hours and the recognition of **$0.9 million** in previously deferred revenue in Q1 2024, compared to deferring **$63.2 million** in Q1 2023[109](index=109&type=chunk)[120](index=120&type=chunk) - Prorate and SWC revenue increased by **$23.7 million** (**30.7%**) due to more passengers and the start of SWC operations in May 2023[109](index=109&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - Total operating expenses increased by only **1.1%**, primarily due to higher salaries and maintenance costs, which were largely offset by a **$18.3 million** (**93.5%**) decrease in aircraft rental expense from early lease buyouts in 2023[110](index=110&type=chunk)[124](index=124&type=chunk)[129](index=129&type=chunk) [Business Segments Analysis](index=42&type=section&id=Business%20Segments%20Analysis) This section provides a detailed analysis of the financial performance of the SkyWest Airlines and SWC segment and the SkyWest Leasing segment, highlighting key drivers of their respective profits - The SkyWest Airlines and SWC segment reported a profit of **$2.0 million**, a significant turnaround from a **$69.3 million** loss in Q1 2023, driven by increased block hour production and favorable deferred revenue recognition[137](index=137&type=chunk)[138](index=138&type=chunk)[140](index=140&type=chunk) - The SkyWest Leasing segment profit increased by **118.7%** to **$67.7 million**, benefiting from additional lease revenue, lower interest expense, and favorable deferred lease revenue recognition compared to the prior year[137](index=137&type=chunk)[144](index=144&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's financial flexibility, detailing cash and marketable securities, operating cash flow, financing activities, and long-term debt structure - As of March 31, 2024, the company had **$821.2 million** in cash and marketable securities and believes its working capital is sufficient for at least the next 12 months[145](index=145&type=chunk) - Net cash from operating activities was **$157.6 million** for Q1 2024[17](index=17&type=chunk)[146](index=146&type=chunk)[150](index=150&type=chunk) - Cash used in financing activities was **$125.4 million**, which included **$8.7 million** for stock repurchases and **$111.2 million** in principal payments on long-term debt[17](index=17&type=chunk)[146](index=146&type=chunk)[150](index=150&type=chunk) - Total long-term debt was **$2.9 billion** as of March 31, 2024, with an average effective interest rate of approximately **4.1%**[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include aircraft fuel prices, interest rates, and labor/inflation, with fuel price exposure mainly on prorate and SWC operations, while fixed-rate debt mitigates interest rate risk - The company bears the economic risk of fuel price fluctuations on its prorate and SWC operations, which accounted for **13.0%** of total flying agreements revenue in Q1 2024[165](index=165&type=chunk) - A hypothetical **25%** increase in fuel price would have increased fuel expense by **$5.3 million** for the quarter[165](index=165&type=chunk) - As of March 31, 2024, all long-term debt had fixed interest rates, mitigating near-term interest rate risk on existing debt[166](index=166&type=chunk) - Labor and inflation are identified as significant risks[167](index=167&type=chunk)[168](index=168&type=chunk) - Salaries, wages, and benefits represented **49.9%** of total operating expenses in Q1 2024[167](index=167&type=chunk)[168](index=168&type=chunk) [Item 4. Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting identified during Q1 2024 - Management concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective[170](index=170&type=chunk)[171](index=171&type=chunk) - There were no changes in internal control over financial reporting during Q1 2024 that materially affected, or are reasonably likely to materially affect, internal controls[172](index=172&type=chunk) [PART II OTHER INFORMATION](index=52&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, equity sales, other disclosures, and a list of exhibits [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to routine legal actions, but management believes these are not likely to have a material adverse effect on its financial position, liquidity, or operations - As of March 31, 2024, management believes that ongoing legal matters are not likely to have a material adverse effect on the company[173](index=173&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the company's 2023 Annual Report on Form 10-K and other SEC filings for a comprehensive discussion of material risk factors affecting the business - The company directs investors to its 2023 Form 10-K for a detailed discussion of risk factors[174](index=174&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's Q1 2024 stock repurchase activity, totaling **136,261 shares** at a weighted average price of **$64.21** per share under its authorized program Q1 2024 Stock Repurchase Summary | Period | Total Shares Purchased | Average Price Paid Per Share ($) | Remaining Authorization (USD thousands) | | :--- | :--- | :--- | :--- | | Jan 2024 | 18,707 | $51.23 | $89,964 | | Feb 2024 | 18,255 | $59.79 | $88,872 | | Mar 2024 | 99,299 | $67.47 | $82,172 | | **Total Q1 2024** | **136,261** | **$64.21** | **$82,172** | - As of March 31, 2024, **$82.2 million** remained available for repurchase under the May 2023 stock purchase program authorization of **$250.0 million**[175](index=175&type=chunk) [Item 5. Other Information](index=52&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2024 - No director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2024[176](index=176&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including compensation plans and officer certifications required by the Sarbanes-Oxley Act - Exhibits filed include compensation plan documents and certifications from the Chief Executive Officer and Chief Financial Officer[177](index=177&type=chunk)

SkyWest, Inc. (NASDAQ:SKYW) Q1 2024 Results Conference Call April 25, 2024 4:30 PM ET Company Participants Rob Simmons - Chief Financial Officer Eric Woodward - Chief Accounting Officer Chip Childs - President & Chief Executive Officer Wade Steel - Chief Commercial Officer Conference Call Participants Savi Syth - Raymond James Helane Becker - TD Cowen Mike Linenberg - Deutsche Bank Duane Pfennigwerth - Evercore ISI Operator Good afternoon. My name is Brianna, and I will be your conference operator today. At ...

Exhibit 99.1 NEWS RELEASE CONTACT: Investor Relations Corporate Communications 435.634.3200 435.634.3553 Investor.relations@skywest.com corporate.communications@skywest.com SkyWest, Inc. Announces First Quarter 2024 Profit First Quarter 2024 Summary ST. GEORGE, UTAH, April 25, 2024 -- SkyWest, Inc. (NASDAQ: SKYW) ("SkyWest") today reported financial and operating results for Q1 2024, including net income of $60 million, or $1.45 per diluted share, compared to net loss of $22 million, or $0.45 loss per share ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) SkyWest, Inc. is the largest regional airline in the United States, operating scheduled passenger services for major partners under long-term, fixed-fee capacity purchase agreements, with a fleet of 603 aircraft as of December 31, 2023 [General Business and Fleet](index=6&type=section&id=Item%201.%20Business-General) SkyWest provides scheduled passenger service across the U.S., Canada, and Mexico, primarily through fixed-fee code-share agreements with four major airline partners, operating 485 aircraft in service as of year-end 2023 - Substantially all flights are operated under long-term, fixed-fee capacity purchase agreements with United, Delta, American, or Alaska, where partners pay fixed rates and cover direct operating expenses like fuel[16](index=16&type=chunk) Fleet in Service or Under Contract (as of Dec 31, 2023) | Partner | E175 | CRJ900 | CRJ700 | CRJ200 | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | United | 90 | — | 19 | 89 | 198 | | Delta | 85 | 41 | 9 | — | 135 | | American | 20 | — | 90 | — | 110 | | Alaska | 42 | — | — | — | 42 | | **Total** | **237** | **41** | **118** | **89** | **485** | Total Fleet Composition (as of Dec 31, 2023) | Category | E175 | CRJ900 | CRJ700 | CRJ200 | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Aircraft in scheduled service | 237 | 41 | 118 | 89 | 485 | | SWC | — | — | — | 16 | 16 | | Leased to third parties | — | 5 | 35 | — | 40 | | Other (spares, transitioning, etc.) | — | 3 | 14 | 45 | 62 | | **Total Fleet** | **237** | **49** | **167** | **150** | **603** | [Business Segments: SkyWest Leasing and SkyWest Charter (SWC)](index=8&type=section&id=Item%201.%20Business-Segments) SkyWest Leasing manages aircraft financing and third-party leasing, while SkyWest Charter (SWC) began revenue-generating on-demand charter services in May 2023 with 16 CRJ200 aircraft - SkyWest Leasing manages aircraft financing and leases assets to third parties. As of December 31, 2023, it leased **35 CRJ700** aircraft and **five CRJ900** aircraft to external entities[22](index=22&type=chunk)[23](index=23&type=chunk) - SkyWest Charter (SWC) is a new subsidiary that launched on-demand charter service in May 2023, operating **16 CRJ200** aircraft in a 30-seat configuration as of December 31, 2023[24](index=24&type=chunk) [Competition, Industry Conditions, and Pilot Constraints](index=8&type=section&id=Item%201.%20Business-Competition%20and%20Industry) SkyWest competes with other regional airlines, facing significant challenges from pilot attrition that has reduced flight schedules, while maintaining **$906.0 million** in total available liquidity as of December 31, 2023 - Primary competitors include Air Wisconsin, Endeavor Air, Envoy Air, PSA Airlines, Piedmont Airlines, Horizon Air, GoJet, Mesa, and Republic Airways[25](index=25&type=chunk) - High pilot attrition to major airlines has negatively impacted the company's ability to operate flight schedules, causing a year-over-year decline in flights and block hours from 2021 to 2023[30](index=30&type=chunk) Operational Performance Trend | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Departures | 691,962 | 739,388 | 749,943 | | Block hours | 1,140,443 | 1,254,392 | 1,319,628 | - As of December 31, 2023, total available liquidity was **$906.0 million**, comprising **$835.2 million** in cash, cash equivalents, and marketable securities, and **$70.8 million** available under a line of credit[32](index=32&type=chunk) [Code-Share Agreements](index=10&type=section&id=Item%201.%20Business-Code-Share%20Agreements) SkyWest's revenue is dominated by code-share agreements, with **87%** of 2023 flying revenue from capacity purchase agreements, and the company has firm commitments to add **21 new E175** aircraft across partnerships through 2026 - In 2023, approximately **87%** of flying agreements revenue came from capacity purchase agreements, with the remainder from prorate and SWC flights[39](index=39&type=chunk) Code-Share Agreement Summary (as of Dec 31, 2023) | Partner | Agreement Type | Aircraft Count | Average Remaining Term | | :--- | :--- | :--- | :--- | | United | Capacity Purchase & Prorate | 198 | 2.7 years | | Delta | Capacity Purchase & Prorate | 135 | 4.8 years | | American | Capacity Purchase | 110 | 3.1 years | | Alaska | Capacity Purchase | 42 | 7.5 years | - SkyWest has agreements to add **19 new E175s** for United (2024-2026), **one** for Delta (2024), and **one** for Alaska (2025)[49](index=49&type=chunk) [Human Capital Resources](index=17&type=section&id=Item%201.%20Business-Human%20Capital) As of December 31, 2023, SkyWest employed **13,121** people, with **89%** represented by in-house labor associations, and has implemented pay increases and pathway programs to combat high pilot turnover - As of December 31, 2023, the company employed **13,121** people, including **4,410** pilots and **4,135** flight attendants. Approximately **89%** of employees are represented by in-house labor associations[56](index=56&type=chunk) - In response to labor market pressures, the company increased pilot pay rates in September 2022 and raised starting pay for flight attendants by **35%** in 2023[58](index=58&type=chunk)[60](index=60&type=chunk) - The company runs a Pilot Pathway Program and an Aviation Maintenance Technician (AMT) Pathway Program in partnership with schools to create a direct career path for aviation professionals[65](index=65&type=chunk) - As of December 31, 2023, the workforce was approximately **44%** women and **31%** people of color[70](index=70&type=chunk) [Government Regulation and Environmental Matters](index=23&type=section&id=Item%201.%20Business-Regulation%20and%20Environment) SkyWest is subject to extensive DOT and FAA regulation, with its 2023 flights producing approximately **5.0 million metric tons of CO2e**, and is exploring future options like eVTOL aircraft - The company is subject to regulation by the DOT and FAA, covering economic aspects of air service, airworthiness, and operational certifications[74](index=74&type=chunk) - In 2023, flights operated by SkyWest produced approximately **5.0 million metric tons of CO2e**. Under capacity purchase agreements, major airline partners are responsible for fuel procurement and have significant control over variables impacting fuel consumption[77](index=77&type=chunk) - The company has a strategic partnership with Eve UAM, an Embraer company, which includes an option to purchase up to **100 eVTOL** aircraft, anticipated to be available after 2026[81](index=81&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks, including operational disruptions from pilot shortages, cybersecurity threats, reliance on key hubs, dependence on four major code-share partners, and significant long-term debt obligations [Risks That May Disrupt Operations](index=27&type=section&id=Item%201A.%20Risk%20Factors-Operations) Operational risks include difficulty retaining qualified pilots, which has already reduced flight schedules, vulnerability to economic downturns, cybersecurity incidents, and disruptions at major hub airports - Elevated pilot attrition, particularly of captains, has led to a reduction in flight schedules in 2023 compared to 2022, resulting in operating inefficiencies[90](index=90&type=chunk) - The company faces evolving cybersecurity risks from various threat actors. A 2021 incident resulted in approximately **1,700** flight cancellations and a pre-tax financial impact of about **$16 million**[97](index=97&type=chunk)[99](index=99&type=chunk)[186](index=186&type=chunk) - Operations are concentrated at major partner hubs (e.g., Chicago, Denver, Salt Lake City), making the company vulnerable to disruptions from weather, system malfunctions, or other issues at these locations[103](index=103&type=chunk) [Risks Related to Code-Share Agreements](index=33&type=section&id=Item%201A.%20Risk%20Factors-Code-Share%20Agreements) The business model is highly dependent on code-share agreements with four major airline partners, with United and Delta accounting for a significant majority of aircraft in service, and recent contract amendments have shifted compensation towards utilization-based payments - As of December 31, 2023, **333 of 485** aircraft in scheduled service were operated for United or Delta. Termination of either relationship would have a material adverse effect[114](index=114&type=chunk) - Recent amendments to capacity purchase agreements have shifted compensation to be more weighted on utilization. In 2023, recognized revenue was **$242.5 million** less than fixed monthly cash payments received, primarily due to these amendments[117](index=117&type=chunk) - The new on-demand charter subsidiary, SWC, which began operations in May 2023, presents significant risks and may divert management attention and resources from the core business[130](index=130&type=chunk) [Risks Related to Operating Costs and Personnel](index=39&type=section&id=Item%201A.%20Risk%20Factors-Costs%20and%20Personnel) Labor costs, constituting **46.7%** of 2023 operating expenses, are a significant risk, as increases may not be fully offset by rate adjustments in capacity purchase agreements, and the company bears fuel price risk for its prorate and charter operations - Salaries, wages, and benefits constituted **46.7%** of total operating costs in 2023. Increased labor costs may not be fully offset under capacity purchase agreements, potentially reducing margins[133](index=133&type=chunk) - The company bears the economic risk of fuel price fluctuations on its prorate and charter operations, which involve CRJ200, CRJ700, and CRJ900 aircraft[140](index=140&type=chunk) [Risks Related to Operating and Leasing Aircraft and Other Investments](index=43&type=section&id=Item%201A.%20Risk%20Factors-Aircraft%20and%20Investments) The company relies on two aircraft manufacturers and one engine manufacturer, holds significant long-term debt of **$3.0 billion**, and has future purchase commitments of **$610.9 million**, while strategic investments also carry substantial risks - As of December 31, 2023, the company had approximately **$3.0 billion** in long-term debt obligations[145](index=145&type=chunk) - The company has firm purchase commitments for **21 E175** aircraft and spare engines totaling **$610.9 million**[149](index=149&type=chunk) - The company has guaranteed debt for a Part 135 air carrier (**$17.6 million** outstanding) and an aviation school (**$4.8 million** outstanding) to support its pilot pipeline[143](index=143&type=chunk) - The investment in Eve Holding, Inc. had a fair value of **$15.4 million** at year-end 2023, and its value is subject to market price fluctuations[161](index=161&type=chunk) [Cybersecurity](index=53&type=section&id=Item%201C.%20Cybersecurity) SkyWest manages cybersecurity risk through a NIST-aligned program overseen by the Audit Committee, though a 2021 cyberattack caused **1,700** flight cancellations and a **$16 million** pre-tax financial impact, half of which was recovered via insurance - The company's cybersecurity risk management program is aligned with the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF)[183](index=183&type=chunk) - The Board delegates cybersecurity risk oversight to the Audit Committee, which receives quarterly reports from management[189](index=189&type=chunk)[190](index=190&type=chunk) - A 2021 cyberattack resulted in a server outage, causing **~1,700** flight cancellations and an estimated **$16 million** pre-tax negative financial impact. Approximately half of this loss was recovered via cyber insurance in 2023[186](index=186&type=chunk) [Properties](index=55&type=section&id=Item%202.%20Properties) As of December 31, 2023, SkyWest's fleet consisted of owned and leased aircraft, with an average age ranging from **5.8** to **20.9** years, and the company owns its corporate headquarters and some maintenance facilities while leasing most airport facilities Fleet Details (as of Dec 31, 2023) | Aircraft Type | Owned | Leased | Passenger Capacity | Average Age (years) | | :--- | :--- | :--- | :--- | :--- | | E175s | 207 | 30 | 70-76 | 5.8 | | CRJ900s | 17 | 24 | 70-76 | 13.0 | | CRJ700s | 116 | 2 | 65-70 | 18.3 | | CRJ200s | 89 | — | 50 | 20.9 | - The company owns its corporate headquarters in St. George, Utah, and maintenance facilities in locations like Salt Lake City, Milwaukee, and Oklahoma City. It leases most airport terminal and maintenance facilities[195](index=195&type=chunk)[196](index=196&type=chunk) [Legal Proceedings](index=57&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to routine legal actions incidental to its business activities, which management believes are not likely to have a material adverse effect on its financial position, liquidity, or results of operations as of December 31, 2023 - As of December 31, 2023, management believes that the ultimate outcome of routine legal actions is not likely to have a material adverse effect on the company's financial position, liquidity, or results of operations[197](index=197&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=57&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) SkyWest's common stock trades on the Nasdaq under SKYW, and while no dividends were declared in 2022 or 2023, the company repurchased **995,631** shares for approximately **$45.0 million** in Q4 2023, with **$90.9 million** remaining under the repurchase program - The company's common stock is traded on The Nasdaq Global Select Market under the symbol "SKYW"[200](index=200&type=chunk) - No dividends were declared in 2022 and 2023. Payment of dividends was restricted through September 30, 2022, under Payroll Support Program Agreements[201](index=201&type=chunk) Share Repurchases (Q4 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Value (in thousands) | | :--- | :--- | :--- | :--- | | Oct 2023 | 372,691 | $40.25 | $14,996 | | Nov 2023 | 332,433 | $45.12 | $15,000 | | Dec 2023 | 290,507 | $51.63 | $15,000 | | **Total Q4** | **995,631** | **$45.20** | **$44,996** | - For the full year ended December 31, 2023, the company repurchased **10.6 million** shares for **$289.1 million**. As of year-end, **$90.9 million** remained available under the May 2023 repurchase program[203](index=203&type=chunk)[169](index=169&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, SkyWest's operating revenues decreased **2.3%** to **$2.9 billion**, and net income fell to **$34.3 million**, driven by a **9.1%** reduction in block hours and **$242.5 million** in revenue deferrals from amended partner contracts, while liquidity remains strong with **$835.2 million** in cash [Overview and Financial Highlights](index=60&type=section&id=Item%207.%20MD%26A-Overview) SkyWest's 2023 financial performance was marked by a **2.3%** decrease in operating revenues to **$2.9 billion** and a drop in net income to **$34.3 million**, reflecting a **9.1%** decrease in block hours due to pilot shortages Financial Highlights (2023 vs 2022) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Operating Revenues | $2.9B | $3.0B | (2.3)% | | Net Income | $34.3M | $73.0M | (53.0)% | | Diluted EPS | $0.77 | $1.44 | (46.5)% | - The number of aircraft in scheduled service decreased by **6.2%** from 517 to 485, and block hours decreased by **9.1%** from **1.25 million** to **1.14 million**, primarily due to pilot availability constraints[217](index=217&type=chunk) - The company plans to add **one new E175** with Delta in 2024, **19 new E175s** with United from 2024-2026, and **one new E175** with Alaska in 2025[213](index=213&type=chunk) [Results of Operations (2023 vs 2022)](index=64&type=section&id=Item%207.%20MD%26A-Results%20of%20Operations) For 2023, operating revenues decreased by **$69.5 million (2.3%)** to **$2.94 billion**, primarily due to a **$97.5 million** drop in capacity purchase revenue and **$242.5 million** in revenue deferrals, leading to a net income of **$34.3 million** Operating Revenue Breakdown (in thousands) | Revenue Source | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Flying agreements | $2,834,397 | $2,899,837 | $(65,440) | (2.3)% | | Lease, airport services and other | $101,035 | $105,088 | $(4,053) | (3.9)% | | **Total operating revenues** | **$2,935,432** | **$3,004,925** | **$(69,493)** | **(2.3)%** | - In 2023, the company deferred recognizing **$164.0 million** of flight operations revenue and **$78.5 million** of aircraft lease revenue related to fixed monthly payments received under amended capacity purchase agreements[226](index=226&type=chunk)[227](index=227&type=chunk) Operating Expense Breakdown (in thousands) | Expense Category | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Salaries, wages and benefits | $1,322,615 | $1,211,551 | $111,064 | 9.2% | | Aircraft maintenance | $673,453 | $644,157 | $29,296 | 4.5% | | Aircraft rentals | $25,507 | $75,353 | $(49,846) | (66.1)% | | Other operating expenses | $268,120 | $318,145 | $(50,025) | (15.7)% | | **Total operating expenses** | **$2,831,363** | **$2,823,763** | **$7,600** | **0.3%** | - The decrease in aircraft rentals was primarily due to an early lease buyout of **35 CRJ** aircraft in Q1 2023[238](index=238&type=chunk)[239](index=239&type=chunk) [Business Segments Analysis (2023 vs 2022)](index=70&type=section&id=Item%207.%20MD%26A-Business%20Segments) In 2023, the SkyWest Airlines and SWC segment reported a loss of **$191.8 million**, while the SkyWest Leasing segment's profit grew **65.6%** to **$165.0 million**, primarily due to the non-recurrence of a large 2022 impairment charge Segment Profit (Loss) (in thousands) | Segment | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | SkyWest Airlines and SWC | $(191,825) | $(45,563) | $(146,262) | 321.0% | | SkyWest Leasing | $164,964 | $99,642 | $65,322 | 65.6% | | **Total Segment Profit (Loss)** | **$(26,861)** | **$54,079** | **$(80,940)** | **(149.7)%** | - The SkyWest Airlines and SWC segment loss widened due to deferring **$164.0 million** of flight operations revenue and a **$111.9 million** increase in salary expenses[252](index=252&type=chunk)[261](index=261&type=chunk) - The SkyWest Leasing segment profit increased primarily because a **$51.4 million** impairment charge recorded in 2022 did not repeat in 2023[257](index=257&type=chunk) [Liquidity and Capital Resources](index=74&type=section&id=Item%207.%20MD%26A-Liquidity%20and%20Capital%20Resources) As of December 31, 2023, SkyWest had **$835.2 million** in cash and marketable securities, down from **$1.0 billion** due to **$289.1 million** in share repurchases, while long-term debt decreased from **$3.4 billion** to **$3.0 billion** Liquidity and Debt Position (in billions) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash, cash equivalents & marketable securities | $0.84 | $1.0 | | Long-term debt (incl. current maturities) | $3.0 | $3.4 | Summary of Cash Flows (in millions) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $736.3 | $480.4 | | Net cash used in investing activities | $(23.2) | $(904.9) | | Net cash provided by (used in) financing activities | $(667.8) | $269.1 | - The company used **$289.1 million** to repurchase **10.6 million** shares of common stock during 2023[259](index=259&type=chunk) [Significant Commitments and Obligations](index=78&type=section&id=Item%207.%20MD%26A-Commitments%20and%20Obligations) As of December 31, 2023, SkyWest has total commitments and obligations of **$4.24 billion**, including **$3.03 billion** in long-term debt principal, **$610.9 million** in aircraft and engine purchase commitments, and **$472.0 million** in interest commitments Commitments and Obligations Summary (as of Dec 31, 2023, in thousands) | Obligation Type | Total | 2024 | 2025 | 2026 | | :--- | :--- | :--- | :--- | :--- | | Operating lease payments | $129,063 | $19,924 | $17,503 | $13,752 | | Firm aircraft & engine commitments | $610,945 | $143,810 | $230,725 | $236,410 | | Interest commitments | $471,986 | $117,976 | $97,702 | $77,951 | | Principal maturities on long-term debt | $3,030,310 | $447,534 | $532,314 | $510,625 | | **Total** | **$4,242,304** | **$729,244** | **$878,244** | **$838,738** | - The company has guaranteed **$22.4 million** in promissory notes for third parties (**$17.6 million** for a Part 135 carrier and **$4.8 million** for an aviation school) to support its pilot pipeline[278](index=278&type=chunk)[406](index=406&type=chunk)[407](index=407&type=chunk) [Critical Accounting Policies and Estimates](index=80&type=section&id=Item%207.%20MD%26A-Critical%20Accounting%20Policies) SkyWest's critical accounting policies involve significant management judgment, particularly in revenue recognition, where **$78.5 million** in lease revenue and **$151.4 million** in non-lease flight operations revenue were deferred in 2023, and in assessing long-lived assets for impairment - Revenue Recognition: A portion of fixed monthly payments from capacity purchase agreements is deferred. In 2023, the company deferred **$78.5 million** of lease revenue and **$151.4 million** of non-lease flight operations revenue[281](index=281&type=chunk)[282](index=282&type=chunk) - Long-Lived Assets: The company estimates useful lives (up to **22 years** for aircraft) and residual values (up to **20%** for aircraft) and assesses for impairment based on future cash flow projections. In 2023, a **$2.3 million** impairment loss was recorded for **14 CRJ700** aircraft held for sale[286](index=286&type=chunk)[287](index=287&type=chunk)[337](index=337&type=chunk) - Income Tax: The company makes estimates and judgments to determine tax expense, including evaluating the utilization of tax credits and deferred tax assets. The effective tax rate was **14.8%** in 2023, down from **21.2%** in 2022[289](index=289&type=chunk)[244](index=244&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=84&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks primarily from aircraft fuel prices, interest rates, and labor inflation, with fuel price risk borne by SkyWest for its prorate and SWC operations, where a hypothetical **25%** increase would have added **$21.5 million** to 2023 expenses - The company bears the economic risk of fuel price fluctuations on its prorate and SWC operations. A hypothetical **25%** increase in the price per gallon would have increased 2023 fuel expense by an estimated **$21.5 million**[292](index=292&type=chunk) - As of December 31, 2023, all of the company's long-term debt had fixed interest rates, mitigating exposure to interest rate fluctuations on existing debt[293](index=293&type=chunk) - Salaries, wages, and benefits represented **46.7%** of total operating expenses for 2023, highlighting significant exposure to labor cost inflation[295](index=295&type=chunk) [Financial Statements and Supplementary Data](index=84&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the unqualified opinion from Ernst & Young LLP on the consolidated financial statements and internal controls, presenting the core financial statements and detailed notes covering accounting policies, segment reporting, debt, and other material financial information [Report of Independent Registered Public Accounting Firm](index=85&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued an unqualified opinion on SkyWest, Inc.'s consolidated financial statements and internal controls as of December 31, 2023, identifying the valuation of fixed overhead deferred revenue as a critical audit matter due to estimation uncertainty - Ernst & Young LLP expressed an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2023[299](index=299&type=chunk)[300](index=300&type=chunk) - A critical audit matter was identified concerning the valuation of fixed overhead deferred revenue, specifically the significant estimation uncertainty related to forecasting future block hours over the contract term[303](index=303&type=chunk)[307](index=307&type=chunk) [Consolidated Balance Sheets](index=88&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2023, SkyWest reported total assets of **$7.03 billion**, a decrease from **$7.41 billion** in 2022, with total liabilities at **$4.91 billion** and total stockholders' equity at **$2.11 billion** Consolidated Balance Sheet Summary (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | **$1,131,896** | **$1,371,281** | | Total Property and Equipment, net | $5,482,967 | $5,548,480 | | **Total Assets** | **$7,026,293** | **$7,414,553** | | **Total Current Liabilities** | **$1,254,292** | **$1,172,543** | | Long-Term Debt, net | $2,562,183 | $2,941,772 | | **Total Liabilities** | **$4,912,791** | **$5,066,922** | | **Total Stockholders' Equity** | **$2,113,502** | **$2,347,631** | [Consolidated Statements of Comprehensive Income](index=90&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) For the year ended December 31, 2023, SkyWest generated total operating revenues of **$2.94 billion**, with operating income of **$104.1 million**, and net income of **$34.3 million**, or **$0.77** per diluted share Consolidated Income Statement Summary (in thousands, except per share data) | Account | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Total operating revenues | $2,935,432 | $3,004,925 | $2,713,491 | | Total operating expenses | $2,831,363 | $2,823,763 | $2,437,624 | | **Operating Income** | **$104,069** | **$181,162** | **$275,867** | | Income Before Income Taxes | $40,309 | $92,583 | $150,610 | | **Net Income** | **$34,342** | **$72,953** | **$111,910** | | **Diluted Earnings Per Share** | **$0.77** | **$1.44** | **$2.20** | [Consolidated Statements of Cash Flows](index=92&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For 2023, net cash provided by operating activities significantly increased to **$736.3 million**, while net cash used in investing activities sharply decreased to **$23.2 million**, and net cash used in financing activities reversed to **$667.8 million**, driven by stock repurchases Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $736,334 | $480,376 | | Net cash used in investing activities | $(23,228) | $(904,894) | | Net cash provided by (used in) financing activities | $(667,813) | $269,081 | | **Increase (decrease) in cash and cash equivalents** | **$45,293** | **$(155,437)** | | **Cash and cash equivalents at end of period** | **$148,277** | **$102,984** | [Notes to Consolidated Financial Statements](index=95&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial data, including revenue recognition, segment reporting, **$3.0 billion** in long-term debt, income tax reconciliation, commitments, leases, fair value measurements, and stock compensation - Note 1 details revenue recognition policies, highlighting that in 2023, the company deferred recognizing **$78.5 million** in fixed lease revenue and had a net deferral of **$138.8 million** in non-lease flight operations revenue due to contract amendments and flight activity levels[346](index=346&type=chunk)[349](index=349&type=chunk) - Note 2 provides segment data, showing the SkyWest Airlines and SWC segment had a loss of **$191.8 million** in 2023, while the SkyWest Leasing segment had a profit of **$165.0 million**[383](index=383&type=chunk) - Note 3 outlines long-term debt of **$3.03 billion** as of year-end 2023, with an average effective interest rate of **4.1%**. Maturities are scheduled through 2035[386](index=386&type=chunk)[388](index=388&type=chunk) - Note 11 details stock compensation, including the issuance of **127,348 RSUs** and **391,810 PSUs** (at target) in 2023. It also notes that no stock options were granted[431](index=431&type=chunk)[435](index=435&type=chunk)[429](index=429&type=chunk) - Note 14 discusses investments, including a **$9.9 million** investment in Contour Airlines and an investment in Eve UAM with a fair value of **$15.4 million** at year-end 2023[447](index=447&type=chunk)[454](index=454&type=chunk) [Controls and Procedures](index=136&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2023, with no material changes to internal control over financial reporting, and Ernst & Young LLP issued an unqualified opinion on the effectiveness of internal controls - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[457](index=457&type=chunk) - Management's annual report on internal control over financial reporting concluded that controls were effective as of December 31, 2023, based on the COSO framework[461](index=461&type=chunk) - The independent registered public accounting firm, Ernst & Young LLP, audited and issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2023[462](index=462&type=chunk)[465](index=465&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=139&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%20and%2014) Information required for Items 10 through 14, covering directors, executive officers, corporate governance, executive compensation, security ownership of management, related transactions, and principal accountant fees and services, is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Shareholders - Items 10, 11, 12, 13, and 14 are incorporated by reference from the registrant's definitive proxy statement for the 2024 Annual Meeting of Shareholders, to be filed within 120 days of the fiscal year-end[477](index=477&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=139&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the 10-K report, including consolidated financial statements, Schedule II—Valuation and qualifying accounts, and a detailed list of exhibits such as articles of incorporation, material contracts, and CEO/CFO certifications - The filing includes the consolidated financial statements and Schedule II—Valuation and qualifying accounts[481](index=481&type=chunk)[483](index=483&type=chunk) - A comprehensive list of exhibits is provided, including key agreements like the Delta Connection Agreement, United Express Agreement, and various aircraft purchase agreements[484](index=484&type=chunk)[486](index=486&type=chunk)

SkyWest, Inc. (NASDAQ:SKYW) Q4 2023 Results Conference Call February 1, 2024 4:30 PM ET Company Participants Rob Simmons - Chief Financial Officer Eric Woodward - Chief Accounting Officer Chip Childs - President & Chief Executive Officer Wade Steel - Chief Commercial Officer Conference Call Participants Savi Syth - Raymond James Duane Pfennigwerth - Evercore ISI Mike Linenberg - Deutsche Bank Helane Becker - TD Cowen Catherine O'Brien - Goldman Sachs Operator Hello, and thank you for standing by. My name is ...

PART I FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The financial statements for the nine months ended September 30, 2023, show a decrease in total assets to $7.06 billion and a significant drop in net income to $16.8 million from $120.1 million year-over-year [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $7.06 billion as of September 30, 2023, from $7.41 billion at year-end 2022, mainly due to a reduction in marketable securities | Balance Sheet Items | Sep 30, 2023 (in thousands USD) | Dec 31, 2022 (in thousands USD) | | :--- | :--- | :--- | | **Total Current Assets** | $1,161,996 | $1,371,281 | | **Total Property and Equipment, net** | $5,498,425 | $5,548,480 | | **Total Assets** | **$7,059,118** | **$7,414,553** | | **Total Current Liabilities** | $1,205,670 | $1,172,543 | | **Total Long-Term Liabilities** | $3,716,750 | $3,894,379 | | **Total Liabilities** | $4,922,420 | $5,066,922 | | **Total Stockholders' Equity** | $2,136,698 | $2,347,631 | | **Total Liabilities and Stockholders' Equity** | **$7,059,118** | **$7,414,553** | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) For the third quarter of 2023, net income was $23.5 million, a sharp decline from $48.4 million in Q3 2022, primarily due to a decrease in operating revenues from $2.32 billion to $2.18 billion for the nine-month period | Metric (in thousands USD, except EPS) | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $766,171 | $789,443 | $2,183,645 | $2,323,680 | | **Operating Income** | $49,291 | $75,576 | $76,447 | $216,226 | | **Net Income** | $23,478 | $48,372 | $16,826 | $120,057 | | **Diluted EPS** | $0.55 | $0.96 | $0.37 | $2.37 | [Consolidated Statements of Stockholders Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders%20Equity) Stockholders' equity decreased from $2.35 billion at the end of 2022 to $2.14 billion as of September 30, 2023, primarily driven by the repurchase of treasury stock amounting to $246.5 million - The company repurchased **9.6 million shares** of common stock for **$244.1 million** during the nine months ended September 30, 2023, significantly reducing stockholders' equity[48](index=48&type=chunk)[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash from operations increased to $511.9 million, investing activities provided $61.0 million, and financing activities used $550.6 million, mainly for stock repurchases and debt payments | Cash Flow Activity (in thousands USD) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $511,907 | $343,535 | | **Net Cash from Investing Activities** | $61,003 | $(864,569) | | **Net Cash from Financing Activities** | $(550,564) | $301,463 | | **Increase (Decrease) in Cash** | $22,346 | $(219,571) | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail key accounting policies and events, including $111.9 million in deferred revenue, $244.1 million in share repurchases, the early lease buyout of 35 CRJ aircraft, and $3.1 billion in total long-term debt - For the nine months ended September 30, 2023, capacity purchase agreements represented approximately **87.2%** of flying agreements revenue[23](index=23&type=chunk) - The company deferred recognizing revenue on **$111.9 million** of fixed monthly payments during the nine months ended September 30, 2023, due to amendments in its capacity purchase agreements[28](index=28&type=chunk) - During the nine months ended September 30, 2023, the company repurchased **9.6 million shares** of common stock for **$244.1 million**[48](index=48&type=chunk) - The company acquired **35 CRJ aircraft** under early lease buyout arrangements for **$142.4 million** during the first nine months of 2023[59](index=59&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 2.9% decrease in Q3 revenue and the significant drop in net income to reduced flight operations caused by pilot availability constraints, leading to deferred revenue and a modest increase in operating expenses [Overview](index=35&type=section&id=Overview) SkyWest operates as the largest U.S. regional airline, primarily through capacity purchase agreements, with 493 aircraft in scheduled service as of September 30, 2023, and plans to add 23 new E175 aircraft through 2026 Fleet Summary (Aircraft Count) | Fleet Summary | E175 | CRJ900 | CRJ700 | CRJ200 | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | **Aircraft in scheduled service or under contract** | 235 | 37 | 117 | 104 | **493** | | **Total Fleet** | 235 | 49 | 167 | 156 | **607** | - The company plans to add **3 new E175s** with Delta (2023-2024), **19 new E175s** with United (2024-2026), and **1 new E175** with Alaska (2025) to improve profitability[97](index=97&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) For Q3 2023, revenues fell 2.9% year-over-year to $766.2 million due to a 10.2% decrease in block hours and deferred revenue, while operating expenses rose slightly by 0.4% Q3 2023 vs Q3 2022 Operational Metrics | Q3 2023 vs Q3 2022 | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | **Total block hours** | 290,830 | 323,742 | (10.2)% | | **Departures** | 180,069 | 194,683 | (7.5)% | | **Passengers carried** | 10,208,005 | 10,715,415 | (4.7)% | Q3 Operating Expenses (in thousands USD) | Q3 Operating Expenses (in thousands) | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Salaries, wages and benefits** | $333,017 | $307,727 | $25,290 | 8.2% | | **Aircraft rentals** | $2,099 | $16,089 | $(13,990) | (87.0)% | | **Total operating expenses** | $716,880 | $713,867 | $3,013 | 0.4% | - For the nine months ended Sep 30, 2023, the company deferred recognizing **$120.6 million** of revenue related to fixed monthly payments, compared to recognizing **$40.2 million** of previously deferred revenue in the same period of 2022[132](index=132&type=chunk) [Business Segments](index=52&type=section&id=Our%20Business%20Segments) The company operates two segments: SkyWest Airlines and SWC, which reported a $30.3 million loss in Q3 2023, and SkyWest Leasing, which remained profitable with a $47.0 million profit Segment Profit (Loss) - Q3 (in thousands USD) | Segment Profit (Loss) - Q3 (in thousands) | 2023 | 2022 | $ Change | | :--- | :--- | :--- | :--- | | **SkyWest Airlines and SWC** | $(30,269) | $(2,039) | $(28,230) | | **SkyWest Leasing** | $47,017 | $44,332 | $2,685 | | **Total Segment Profit** | $16,748 | $42,293 | $(25,545) | [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2023, the company maintained a strong liquidity position with $819.5 million in cash and marketable securities, despite using $244.1 million for stock repurchases and having $3.1 billion in long-term debt Liquidity (in thousands USD) | Liquidity (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $125,330 | $102,984 | | **Marketable securities** | $694,171 | $944,231 | | **Total** | **$819,501** | **$1,047,215** | - The company has a firm purchase commitment for **23 new E175 aircraft** from Embraer with delivery dates anticipated through 2026[181](index=181&type=chunk) - As of September 30, 2023, the company had **$3.1 billion** of long-term debt, with an average effective interest rate of approximately **4.1%**[184](index=184&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies its main market risks as aircraft fuel prices, interest rates, and labor/inflation, with labor costs representing 47.0% of total operating expenses - The company bears the economic risk of fuel price fluctuations on its prorate operations, which accounted for **12.8%** of total flying agreements revenue for the nine months ended September 30, 2023[190](index=190&type=chunk) - As of September 30, 2023, all long-term debt had **fixed interest rates**, mitigating interest rate risk on existing debt[191](index=191&type=chunk) - Labor and inflation pose a significant risk, as salaries, wages, and benefits represented **47.0%** of total operating expenses for the first nine months of 2023[193](index=193&type=chunk) [Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter, with no material changes in internal control over financial reporting during the period - Management concluded that as of September 30, 2023, the company's disclosure controls and procedures were **effective**[197](index=197&type=chunk) - No changes in internal control over financial reporting occurred during the nine months ended September 30, 2023, that materially affected, or are reasonably likely to materially affect, internal controls[198](index=198&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal actions but does not expect them to have a material adverse effect on its financial position, liquidity, or results of operations - As of September 30, 2023, management believes that the outcome of routine legal actions is **not likely to have a material adverse effect** on the company[199](index=199&type=chunk) [Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) This section directs investors to the comprehensive risk factors detailed in the company's Annual Report on Form 10-K for the year ended December 31, 2022, and other SEC filings, without introducing new factors - The report refers to the Risk Factors section in the Annual Report on Form 10-K for the year ended December 31, 2022, for a detailed discussion of potential risks[200](index=200&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the third quarter of 2023, the company repurchased 1.19 million shares of its common stock for approximately $50.0 million, with $135.9 million remaining available for repurchase | Period | Total Shares Purchased | Average Price Paid Per Share | Remaining Authorization (in thousands USD) | | :--- | :--- | :--- | :--- | | July 2023 | 363,957 | $41.21 | $170,922 | | August 2023 | 477,258 | $41.91 | $150,922 | | September 2023 | 350,743 | $42.77 | $135,922 | | **Q3 Total** | **1,191,958** | **$41.95** | **$135,922** | [Exhibits](index=66&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which primarily include certifications from the CEO and CFO as required by the Sarbanes-Oxley Act, and interactive data files (XBRL) - The exhibits filed with this report include certifications from the Chief Executive Officer (31.1, 32.1) and Chief Financial Officer (31.2, 32.2), along with Inline XBRL documents[202](index=202&type=chunk)

SkyWest, Inc. (NASDAQ:SKYW) Q3 2023 Earnings Conference Call October 26, 2023 4:30 PM ET Company Participants Robert Simmons - Chief Financial Officer Eric Woodward - Chief Accounting Officer Chip Childs - President & Chief Executive Officer Wade Steel - Chief Commercial Officer Conference Call Participants Michael Linenberg - Deutsche Bank Savi Syth - Raymond James Helane Becker - Cowen Catherine O'Brien - Goldman Sachs Duane Pfennigwerth - Evercore ISI Operator Ladies and gentlemen, thank you for standing ...

Table of Contents SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-14719 SKYWEST, INC. Incorporated under the laws of Utah 87-0292166 (I.R.S. Employer ID No.) 444 South River Road St. George, Utah 84790 (435) 63 ...