Core Viewpoint - SkyWest (SKYW) has received an upgrade to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, indicating a positive earnings outlook that could lead to increased stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that rising earnings estimates can lead to buying pressure and higher stock prices [4][5]. - For the fiscal year ending December 2025, SkyWest is expected to earn $10.33 per share, with a 3.9% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988, indicating a strong track record for this rating [7]. - The upgrade of SkyWest to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10].

Core Insights - Five stocks have been added to the Zacks Rank 1 (Strong Buy) List, indicating strong potential for investment returns Group 1: Stocks and Earnings Estimates - TAL Education Group (TAL) has seen a 5.1% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Flex Ltd. (FLEX) has experienced a 4% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Norwegian Cruise Line Holdings Ltd. (NCLH) has had a 3.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - SkyWest, Inc. (SKYW) has seen a 3.8% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Mitsui & Co., Ltd. (MITSY) has experienced a 3.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2]

Financial Performance - Total operating revenues for the three months ended September 30, 2025, were $1.1 billion, a 15.0% increase from $912.8 million for the same period in 2024[113]. - Net income for the three months ended September 30, 2025, was $116.4 million, or $2.81 per diluted share, compared to $89.7 million, or $2.16 per diluted share, for the same period in 2024[113]. - Total operating revenues rose by 15.0% to $1,050,029 thousand for the three months ended September 30, 2025, from $912,786 thousand in 2024[124]. - Operating revenues rose by 17.4% to $3,033,711 thousand for the nine months ended September 30, 2025, up from $2,583,518 thousand in 2024[145]. - Net income for the nine months ended September 30, 2025, was $337.2 million, or $8.14 per diluted share, compared to $225.6 million, or $5.44 per diluted share, in 2024[165]. Operational Metrics - The number of aircraft in scheduled service or under contract increased from 484 as of September 30, 2024, to 498 as of September 30, 2025, representing a 2.9% increase[114]. - Block hours increased from 334,459 for the three months ended September 30, 2024, to 384,247 for the same period in 2025, a 14.9% increase[114]. - Departures increased from 201,397 for the three months ended September 30, 2024, to 226,305 for the same period in 2025, a 12.4% increase[118]. - The number of passengers carried increased by 10.5% to 12,446,270 for the three months ended September 30, 2025, compared to 11,263,322 in 2024[123]. - The number of passengers carried grew by 12.3% to 34,929,392 for the nine months ended September 30, 2025, compared to 31,103,792 in 2024[144]. Revenue Sources - Capacity purchase revenue increased by $83.5 million, or 11.0%, for the three months ended September 30, 2025, primarily due to an increase in completed block hours[115]. - Prorate and SWC revenue increased by $44.3 million, or 36.1%, for the three months ended September 30, 2025, compared to the same period in 2024[115]. - Capacity purchase agreements flight operations revenue increased by 7.7% to $672,559 thousand for the three months ended September 30, 2025, compared to $624,342 thousand in 2024[125]. - Capacity purchase agreements flight operations revenue increased by 13.1% to $1,994,660 thousand, driven by higher block hour production[148]. Expenses - Total operating expenses increased by $94.5 million, or 12.1%, for the three months ended September 30, 2025, compared to the same period in 2024[116]. - Operating expenses increased by 12.1% to $875,886 thousand for the three months ended September 30, 2025, compared to $781,351 thousand in 2024[132]. - Aircraft maintenance expenses rose by 36.5% to $247,978 thousand for the three months ended September 30, 2025, from $181,652 thousand in 2024[134]. - Aircraft maintenance expenses rose by 36.4% to $695,963 thousand, primarily due to increased maintenance activity[154]. - Salaries, wages, and benefits for SkyWest Airlines and SWC increased by $14.2 million, or 3.8%, from $376.8 million in Q3 2024 to $391.0 million in Q3 2025[173]. Cash Flow and Debt - As of September 30, 2025, the company had $753.4 million in cash and cash equivalents, a decrease of $48.2 million from $801.6 million as of December 31, 2024[194]. - Net cash provided by operating activities increased by 39.9% to $708.9 million for the nine months ended September 30, 2025, compared to $506.6 million for the same period in 2024[197]. - Cash used in investing activities surged by 336.3% to $519.2 million for the nine months ended September 30, 2025, compared to $119.0 million for the same period in 2024[197]. - Long-term debt as of September 30, 2025, was $2.4 billion, with an average effective interest rate of approximately 4.3%[210]. Future Commitments - The company plans to add a total of 13 new E175 aircraft with United between Q4 2025 and the end of 2026[109]. - The company has a firm purchase commitment for 74 new E175 aircraft from Embraer, with delivery dates anticipated into 2032[207]. - The company intends to finance the firm purchase commitment for 74 E175 aircraft with approximately 75-85% debt and the remaining balance with cash[208].

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Core Viewpoint - SkyWest (SKYW) reported quarterly earnings of $2.81 per share, exceeding the Zacks Consensus Estimate of $2.56 per share, and showing an increase from $2.16 per share a year ago, indicating a positive earnings surprise of +9.77% [1][2] Financial Performance - SkyWest's revenues for the quarter ended September 2025 were $1.05 billion, surpassing the Zacks Consensus Estimate by 3.52%, and up from $912.79 million year-over-year [2] - The company has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Stock Performance and Outlook - SkyWest shares have declined approximately 3.5% since the beginning of the year, contrasting with the S&P 500's gain of 17.2% [3] - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at $2.25 for the upcoming quarter and $9.95 for the current fiscal year [4][7] Industry Context - The Transportation - Airline industry, to which SkyWest belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and earnings estimate revisions, which could impact SkyWest's stock performance [5]

Financial Data and Key Metrics Changes - SkyWest reported net income of $116 million, or $2.81 per diluted share for Q3 2025, reflecting a strong demand for its services [4] - Total Q3 revenue was $1.1 billion, up 15% from $913 million in Q3 2024, and up from $1 billion in Q2 2025 [9] - Q3 pre-tax income was $157 million, with an effective tax rate of 26% [9][10] - Cash at the end of Q3 was $753 million, up from $727 million in the previous quarter but down from $836 million in Q3 2024 [10] - Free cash flow generated in the first three quarters of 2025 was nearly $400 million, including $144 million in Q3 [11] Business Line Data and Key Metrics Changes - Contract revenue for Q3 was $844 million, slightly up from $842 million in Q2 2025 and significantly up from $761 million in Q3 2024 [9] - Pro-rate and charter revenue was $167 million in Q3, up from $145 million in Q2 and $123 million in Q3 2024 [9] - Leasing and other revenue was $39 million in Q3, down from $48 million in Q2 but up from $29 million in Q3 2024 [9] Market Data and Key Metrics Changes - SkyWest achieved over 185 days of 100% controllable completion year-to-date through Q3 2025, with over 2,500 daily scheduled departures [4] - Q3 block hours were up 2% compared to Q2 2025, with a projected 4% decrease in Q4 due to seasonality [19] Company Strategy and Development Direction - The company aims to restore or bring new service to underserved communities, redeploy its existing fleet, and prepare for future aircraft deliveries [8] - SkyWest plans to acquire and finance 30 additional E175s by the end of 2028 and repay approximately $500 million in debt in 2025 [12] - The company is focused on enhancing its fleet flexibility and maintaining strong partnerships to meet market demands [8][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth opportunities in 2026, including increased service to underserved communities and strong demand for pro-rate products [15] - The company is committed to navigating challenges posed by the federal government shutdown while honoring service commitments [5][27] - Management anticipates low single-digit percentage growth in block hours for 2026, translating into mid to high single-digit percentage growth in EPS [13][20] Other Important Information - The Department of Transportation finalized SkyWest Charter's commuter authorization, which is expected to provide future opportunities [5] - The company has secured firm delivery positions for 44 more E175s from 2028 to 2032, enhancing fleet flexibility [6] Q&A Session Summary Question: Can you walk us through the fleet and mixed benefit as you bring on more E175s? - Management noted that they expect to transition additional CRJ-550s into service and have strong pro-rate demand, which will offset some of the Delta-owned CRJ-900s being returned [23][24] Question: What is the status of Essential Air Service funding? - Management indicated that funding is secured through November 18, and they are committed to serving communities despite uncertainties regarding future reimbursements [26][27] Question: Can you clarify the multi-year agreement with United regarding CRJ-200s? - Management confirmed that the extended CRJ-200s are all contract airplanes, enhancing their partnership with United [28][29] Question: What is the impact of the 10% tariff from Brazil? - Management acknowledged the tariff's impact on small community service but emphasized their commitment to evolving and executing their strategy [34][35] Question: What are the net fleet additions expected for 2026? - Management projected flat to small increases in capacity purchase flying for 2026, with 20 CRJ-550s and 11 E175s being added, offset by the return of Delta-owned aircraft [38]

Financial Performance - SkyWest reported Q3 2025 net income of $116 million, or $2.81 per diluted share, up from $90 million, or $2.16 per diluted share in Q3 2024, representing a 29% increase in net income[1][4] - Revenue for Q3 2025 was $1.1 billion, an increase of $137 million, or 15%, compared to $913 million in Q3 2024[3] - Operating income for Q3 2025 was $174 million, up 33% from $131 million in Q3 2024[4] - Operating expenses increased to $876 million in Q3 2025, up $95 million, or 12%, from $781 million in Q3 2024, primarily due to higher block hour production[3] Operational Metrics - SkyWest's block hour production increased by 15% year-over-year, reflecting higher fleet utilization and strong demand[3] - For the three months ended September 30, 2025, total block hours increased by 14.9% to 384,247 hours compared to 334,459 hours in the same period of 2024[20] - The number of passengers carried in the three months ended September 30, 2025, was 12,446,270, reflecting a 10.5% increase from 11,263,322 passengers in the same period of 2024[20] - The passenger load factor for the three months ended September 30, 2025, was 84.0%, an increase of 0.3 percentage points from 83.7% in the same period of 2024[20] - SkyWest's CRJ700/CRJ550 block hours increased by 43.6% to 85,858 hours for the three months ended September 30, 2025, compared to 59,807 hours in the same period of 2024[20] - SkyWest's total departures for the three months ended September 30, 2025, increased by 12.4% to 226,305 compared to 201,397 in the same period of 2024[20] - The adjusted flight completion rate remained stable at 99.9% for both the three and nine months ended September 30, 2025[20] Cash and Debt Management - As of September 30, 2025, SkyWest had $753 million in cash and marketable securities, down from $802 million at the end of 2024[5] - Total debt decreased to $2.4 billion as of September 30, 2025, down from $2.7 billion at the end of 2024[5] Share Repurchase and Future Plans - SkyWest repurchased 244,000 shares of common stock for $26.6 million during Q3 2025, an increase of 25% from Q2 2025[6] - The company has a remaining availability of $240 million under its current share repurchase program as of September 30, 2025[6] - SkyWest anticipates nearly 300 E175 aircraft in its fleet by the end of 2028, with a purchase agreement for 44 additional E175s secured for delivery from 2028 to 2032[8] Revenue Recognition and Deferred Revenue - Revenue recognized in excess of fixed cash payments received for the three months ended September 30, 2025, was $18,647,000, compared to $17,082,000 in the same period of 2024[24] - Cumulative deferred revenue as of September 30, 2025, was $269,401,000, down from $322,369,000 as of December 31, 2024[24] Average Trip Length - The average trip length for the nine months ended September 30, 2025, was 457 miles, a decrease of 2.1% from 467 miles in the same period of 2024[20]

Core Insights - SkyWest, Inc. (SKYW) is set to report its third-quarter 2025 results on October 30, with a history of positive earnings surprises, averaging a beat of 21.92% over the last four quarters [1][2]. Financial Performance - The Zacks Consensus Estimate for SKYW's Q3 2025 revenues is $1.01 billion, reflecting an 11.13% year-over-year increase [3]. - The earnings per share (EPS) estimate for Q3 2025 has been revised upward by 4.07% to $2.56, indicating an 18.52% growth compared to the previous year [3][5]. Influencing Factors - Increased air travel demand and fleet modernization initiatives are expected to positively impact SKYW's performance [3][6]. - Over 90% of revenue growth is attributed to flying agreements, which are crucial for the company's top-line performance [3]. Challenges - Rising labor costs and geopolitical uncertainties may pressure Q3 margins, with a noted 0.00% Earnings Surprise Prediction (ESP) and a Zacks Rank of 4 indicating potential challenges [5][8]. - Persistent inflation, tariff-related pressures, and pilot shortages are expected to negatively affect operations [7]. Recent Performance - In Q2 2025, SkyWest reported an EPS of $2.91, surpassing the Zacks Consensus Estimate by 24.4% and showing a year-over-year improvement of 59.9% [9]. - Revenues for Q2 2025 were $1.04 billion, exceeding estimates by 5.3% and increasing 19.4% year over year [9].

Core Point - Brazil's state development bank has approved financing of 1.7 billion reais ($312.3 million) for the export of 13 Embraer aircraft to U.S. SkyWest Airlines [1] Financing Details - The financing amount is 1.7 billion reais, equivalent to $312.3 million [1] - The financing is specifically for the export of 13 aircraft [1] Company and Industry Implications - This financing indicates strong support for the aviation sector, particularly for Embraer, a key player in the aircraft manufacturing industry [1] - The deal with SkyWest Airlines highlights the ongoing demand for regional aircraft in the U.S. market [1]

Core Insights - SkyWest (SKYW) is experiencing significant challenges due to rising operating expenses and a deteriorating liquidity position, negatively impacting its profitability and attractiveness to investors [1] Financial Performance - The Zacks Consensus Estimate for SkyWest's earnings for the December quarter has been revised downward by 3.02% over the past 60 days, and for 2026, the estimate has been revised down by 2.09% [2] - SkyWest's shares have decreased by 2.9% year-to-date, while the Transportation - Airline industry has seen a 3% increase [3] - In Q2 2025, total operating expenses surged by 15.7% year-over-year, primarily due to rising labor and maintenance costs [6][7] - Labor costs accounted for 45.1% of total expenses, increasing by 9.9% from the previous year, while maintenance expenses rose by 30.3% year-over-year [8] Liquidity Position - SkyWest's current ratio has declined from 1.17 in 2022 to 0.73 in Q2 2025, indicating a weakening liquidity position and raising concerns about its ability to meet short-term obligations [9][7] Industry Context - SkyWest currently holds a Zacks Rank of 4 (Sell), and the industry rank is 157 out of 243, placing it in the bottom 35% of Zacks Industries [5] - The performance of the industry group is crucial, as studies indicate that 50% of a stock's price movement is related to its industry performance [6]