Core Viewpoint - SkyWest (SKYW) is experiencing strong demand and operational efficiency, enhancing its prospects and share performance, making it an attractive investment opportunity [1] Upsides for SkyWest - Earnings estimates for SkyWest have been revised upward by 3.14% for the current quarter and by 3% for 2025, indicating broker confidence in the stock [2] - The company's shares have increased by 33.9% over the past year, outperforming the Zacks Transportation – Airline industry's growth of 14.9% [3] - SkyWest has a positive earnings surprise history, exceeding the Zacks Consensus Estimate in the last four quarters with an average surprise of 17.3% [4] - The company holds a solid Zacks Rank of 2 (Buy) [4] Growth Factors - SkyWest is set to operate a total of 278 E175 aircraft by the end of 2026, with 16 additional units scheduled for delivery, highlighting the E175's importance in its fleet strategy [5] - In Q1 2025, SkyWest reported a 21.5% increase in total block hours, a 19.1% rise in departures, and a 13.6% increase in passengers carried, demonstrating strong demand [6] - The airline maintained a 99.9% adjusted flight completion rate and improved raw flight completion to 98.2%, reflecting operational reliability [6] Financial Position - SkyWest increased its share repurchase plan by $250 million in May 2025, raising total authorization to $272 million [7] - In Q1 2025, the company repurchased 141,000 shares for $13.7 million at an average price of $97.27 per share, up from 47,000 shares in Q4 2024 [9] - As of March 31, 2025, SkyWest had $34 million remaining under its current share repurchase program [9]

Core Viewpoint - SkyWest (SKYW) has shown strong stock performance recently, with a +21.5% return over the past month, outperforming the S&P 500 composite's +9.9% and the Zacks Transportation - Airline industry's +21.8% [1] Earnings Estimate Revisions - SkyWest is expected to post earnings of $2.30 per share for the current quarter, reflecting a year-over-year increase of +26.4% [4] - The consensus earnings estimate for the current fiscal year is $9.28, indicating a +19.4% change from the previous year [4] - For the next fiscal year, the consensus estimate is $9.89, showing a +6.6% increase from the prior year [5] - The Zacks Rank for SkyWest is 2 (Buy), indicating a positive outlook based on recent changes in earnings estimates [6] Projected Revenue Growth - The consensus sales estimate for the current quarter is $977.68 million, representing a year-over-year increase of +12.8% [10] - For the current fiscal year, the revenue estimate is $3.9 billion, indicating a +10.5% change, while the next fiscal year's estimate is $4.06 billion, reflecting a +4.2% change [10] Last Reported Results and Surprise History - SkyWest reported revenues of $948.46 million in the last quarter, a year-over-year increase of +18% [11] - The EPS for the same period was $2.42, compared to $1.45 a year ago, with a surprise of +18.63% over the consensus estimate [11][12] Valuation - SkyWest is graded A on the Zacks Value Style Score, indicating it is trading at a discount compared to its peers [16]

Group 1 - SkyWest (SKYW) has reached a significant support level and is considered a good investment pick from a technical perspective, having recently broken through the 200-day moving average, indicating a long-term bullish trend [1] - Over the past four weeks, SKYW has gained 7.5%, and it is currently ranked a Zacks Rank 2 (Buy), suggesting potential for further upward movement [2] - Positive earnings estimate revisions support the bullish case for SKYW, with no estimates decreasing in the past two months and three estimates increasing, alongside a rise in the consensus estimate [3]

Group 1 - SkyWest (NASDAQ: SKYW) is highlighted as a notable company in the aviation sector, particularly in the context of current economic uncertainties [1] - The management of SkyWest has a proven track record, suggesting potential resilience in navigating industry challenges [1] Group 2 - Crude Value Insights focuses on cash flow and companies in the oil and natural gas sector, emphasizing value and growth prospects [1] - The service offers subscribers access to a stock model account, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2]

Core Viewpoint - SkyWest (SKYW) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, particularly influenced by institutional investors [4]. - For SkyWest, the increase in earnings estimates suggests an improvement in the company's underlying business, likely leading to a rise in stock price [5]. Earnings Estimate Revisions - SkyWest is projected to earn $9.28 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 19.4% [8]. - Over the past three months, the Zacks Consensus Estimate for SkyWest has risen by 10.9%, indicating a positive trend in analyst expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks based on earnings estimate revisions, with only the top 20% of stocks receiving a 'Strong Buy' or 'Buy' rating, highlighting their potential for market-beating returns [9][10]. - SkyWest's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a favorable outlook for near-term stock performance [10].

Core Viewpoint - SkyWest (SKYW) shows potential for significant upside, with a mean price target of $116.60 indicating a 31.7% increase from the current price of $88.52 [1] Price Targets - The mean estimate consists of five short-term price targets with a standard deviation of $10.74, suggesting variability among analysts [2] - The lowest estimate of $100 indicates a 13% increase, while the highest estimate predicts a 43.5% surge to $127 [2] - A low standard deviation indicates a high degree of agreement among analysts regarding price movement [9] Analyst Sentiment - Analysts are optimistic about SkyWest's earnings prospects, as indicated by upward revisions in EPS estimates [11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 3.1%, with three estimates moving higher and no negative revisions [12] - SkyWest holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] Limitations of Price Targets - Price targets can mislead investors, as empirical research shows they rarely indicate actual stock price movements [7] - Analysts may set overly optimistic price targets due to business incentives, which can inflate expectations [8] - While price targets should not be ignored, they should be approached with skepticism and not be the sole basis for investment decisions [10]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores provide a framework for evaluating stocks based on value, growth, and momentum, aiding in identifying securities likely to outperform the market [2] Zacks Style Scores Overview - Stocks are rated from A to F based on their value, growth, and momentum characteristics, with A indicating the highest potential for outperformance [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5][6] Value Score - The Value Style Score focuses on identifying undervalued stocks by analyzing financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - The Growth Style Score assesses a company's future growth potential by examining projected and historical earnings, sales, and cash flow [4] Momentum Score - The Momentum Style Score identifies optimal entry points for stocks based on price trends and earnings estimate changes [5] VGM Score - The VGM Score combines the three Style Scores to highlight stocks with the best overall value, growth, and momentum characteristics [6] Zacks Rank Integration - The Zacks Rank utilizes earnings estimate revisions to simplify stock selection, with 1 (Strong Buy) stocks historically yielding an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [7][8] - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [9] Stock Highlight: SkyWest (SKYW) - SkyWest operates as a regional airline in the U.S. and currently holds a Zacks Rank of 3 (Hold) with a VGM Score of A [11] - The company is projected to achieve year-over-year earnings growth of 17.9% for the current fiscal year, supported by a Growth Style Score of B [11] - Recent analyst revisions have increased the Zacks Consensus Estimate for fiscal 2025 by $0.15 to $9.16 per share, with an average earnings surprise of 17.1% [12]

Core Insights - SkyWest, Inc. reported better-than-expected first-quarter 2025 results with earnings per share (EPS) of $2.42, surpassing the Zacks Consensus Estimate of $2.04 and improving 66% year-over-year. Revenues reached $948.5 million, exceeding the estimate of $931.4 million and increasing 18% year-over-year [1]. Revenue Performance - Revenues from flying agreements, which contributed 96.5% to total revenues, grew 17.6% from the prior year's figure of $915.99 million. The airline carried 13.6% more passengers year-over-year, and departures increased by 19.1% year-over-year. However, the passenger load factor decreased by 2.2 points to 78.6% [2]. Management Commentary - Chip Childs, CEO of SkyWest, emphasized the solid demand for their services despite uncertain macroeconomic factors. The company is focused on enhancing value for partners, improving service to smaller communities, and investing in fleet upgrades for long-term growth. A multi-year contract extension with Delta Air Lines for five CRJ700 and 11 CRJ900 aircraft was also announced [3]. Operating Expenses - Operating expenses totaled $809 million, reflecting a 15% increase from the previous year, primarily due to higher maintenance costs for the CRJ fleet and increased flight production, partially offset by operational efficiencies from better fleet utilization [4]. Financial Position - As of the end of the first quarter, SkyWest had cash and marketable securities amounting to $750.88 million, down from $801.62 million in the prior quarter. Long-term debt decreased to $2.07 billion from $2.14 billion [5]. Share Repurchase and Capital Expenditures - During the first quarter of 2025, SkyWest repurchased 141,000 shares for $13.7 million under its share repurchase program, with $34 million remaining available. Capital expenditures for the quarter were $73 million, which included the purchase of four CRJ550 aircraft and other fixed assets [6].

Financial Performance - Total operating revenues for the three months ended March 31, 2025, were $948.5 million, an 18.0% increase from $803.6 million for the same period in 2024[105] - Net income for the three months ended March 31, 2025, was $100.6 million, or $2.42 per diluted share, compared to $60.3 million, or $1.45 per diluted share, for the same period in 2024[105] - Operating revenues rose by 18.0% to $948,455,000 in Q1 2025 from $803,614,000 in Q1 2024[114] - Segment profit for SkyWest Airlines and SWC rose to $54.3 million in Q1 2025, a significant increase of $49.3 million or 986.3% compared to $5.0 million in Q1 2024[136] Operational Metrics - The number of aircraft in scheduled service or under contract increased from 475 as of March 31, 2024, to 488 as of March 31, 2025, representing a 2.7% increase[106] - Block hours increased from 289,801 for the three months ended March 31, 2024, to 352,155 for the same period in 2025, a rise of 21.5%[106] - Departures increased from 169,432 for the three months ended March 31, 2024, to 201,838 for the same period in 2025, a growth of 19.1%[108] - The number of passengers carried increased by 13.6% to 10,390,364 in Q1 2025 from 9,149,453 in Q1 2024[113] - Block hour production for SkyWest Airlines and SWC increased by 21.5%, from 289,801 hours in Q1 2024 to 352,155 hours in Q1 2025[137] Revenue Sources - Capacity purchase revenue increased by $108.0 million, or 15.9%, for the three months ended March 31, 2025, primarily due to an increase in completed block hours[107] - Prorate and SWC revenue increased by $29.7 million, or 29.4%, for the three months ended March 31, 2025, compared to the same period in 2024[107] - Capacity purchase agreements flight operations revenue increased by 17.5% to $639,153,000, driven by a 21.5% rise in block hour production[115] - Lease, airport services, and other revenues grew by 28.2% to $32,461,000, attributed to an increase in leased assets and lease rates[121] - SkyWest Airlines and SWC operating revenues increased by $154.8 million, or 23.9%, from $646.8 million in Q1 2024 to $801.7 million in Q1 2025[138] Expenses - Total operating expenses rose by $105.0 million, or 14.9%, for the three months ended March 31, 2025, due to increased direct operating expenses from a higher number of flights[108] - Total operating expenses increased by 14.9% to $809,078,000, with aircraft maintenance expenses rising by 43.8% to $209,100,000[122] - Salaries, wages, and benefits expenses increased by $26.3 million, or 7.5%, due to higher direct labor costs from increased flight operations[139] - Aircraft maintenance, materials, and repairs expenses surged by $60.4 million, or 42.8%, primarily due to increased maintenance activity on the CRJ fleet[140] Cash Flow and Debt - Cash and cash equivalents decreased from $801.6 million as of December 31, 2024, to $750.9 million as of March 31, 2025, a decline of $50.7 million[148] - Net cash provided by operating activities was $171.0 million for Q1 2025, an increase of $13.4 million or 8.5% compared to $157.6 million in Q1 2024[150] - Cash used in investing activities increased significantly to $66.1 million in Q1 2025 from $0.6 million in Q1 2024, reflecting higher capital expenditures[153] - As of March 31, 2025, the company had $2.6 billion in long-term debt, with an average effective interest rate of approximately 4.3%[162] Tax and Interest Rates - The average effective interest rate for Q1 2025 was 4.3%, compared to 4.1% in Q1 2024, while outstanding debt decreased from $2.9 billion to $2.6 billion[129] - The effective income tax rate decreased to 16.7% in Q1 2025 from 24.8% in Q1 2024, primarily due to a higher discrete tax benefit from employee equity awards[132] Future Commitments and Risks - The company plans to add a total of 15 new E175 aircraft with United from 2025 to 2026 and one new E175 aircraft with Alaska in 2025[101] - The company has a firm purchase commitment for 16 new E175 aircraft and 12 used CRJ900 airframes, with anticipated delivery dates extending into 2026 and 2025 respectively[159] - The company has guaranteed $24.0 million in promissory notes of third parties, secured by aircraft and engines[164] - The unsecured debt payable to the U.S. Treasury of $200.6 million had a fixed interest rate of 1.0% as of March 31, 2025, with an increase scheduled to the applicable SOFR rate plus 2.0% after five years[168] - The company expects continued impacts from inflation on costs, which may not be fully offset by price increases under capacity purchase agreements[169] - Seasonal fluctuations affect operations, with increased travel during summer months and decreased travel from November to February[166] - The company bears the economic risk of fuel price fluctuations on prorate and SWC operations, with a hypothetical 25% increase in fuel prices resulting in an additional $6.1 million in fuel expenses for the three months ended March 31, 2025[167] - The company has guaranteed obligations under the United Express Agreement and Delta Connection Agreement for the E175 aircraft[164]

Financial Data and Key Metrics Changes - The company reported a net income of $101 million or $2.42 per diluted share for Q1 2025, reflecting a slight increase in production compared to Q4 2024 [7][16] - Total revenue for Q1 was $948 million, up from $944 million in Q4 2024 and up 18% from $804 million in Q1 2024 [17] - The effective tax rate for Q1 was 17%, with a normalized EPS of $2.18 per share if the tax rate were 25% [16] Business Line Data and Key Metrics Changes - Contract revenue was $785 million, flat from Q4 2024 but up 16% from Q1 2024 [17] - Pro rate and charter revenue was $131 million, up 3% from Q4 2024 and up 29% from Q1 2024 [17] - Leasing and other revenue was $32 million, up 3% from Q4 2024 and up 28% from Q1 2024 [17] Market Data and Key Metrics Changes - The company completed over 30,000 more flights compared to the same quarter last year, achieving a 99.9% adjusted completion rate [8] - The dual-class aircraft generated 87% of block hour production during Q1, indicating strong demand in the regional market [12] Company Strategy and Development Direction - The company aims to restore or bring new service to underserved communities, redeploy and fully utilize its existing fleet, and prepare for the delivery of 16 new E175s over the next two years [10] - The competitive landscape is changing, and the company is focused on disciplined strategic decisions to advance market share through fleet acquisitions and flying agreements [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite macroeconomic uncertainties, highlighting strong partnerships and demand [15] - The company anticipates a 12% to 13% increase in block hour production for 2025 compared to 2024, driven by improved fleet utilization and ongoing strong demand [24][26] Other Important Information - The company ended Q1 with cash of $751 million, down from $802 million in the previous quarter, and has $39 million of cumulative deferred revenue to be recognized in future periods [19][18] - Capital expenditures for 2025 are expected to be approximately $575 to $600 million, including the purchase of eight new E175s [23] Q&A Session Summary Question: When will the company start conversations about extending contracts for E175s? - Management is optimistic about continuing to fly the E175s for major partners due to their good maintenance and performance [45][46] Question: What are the metrics for pacing share repurchases? - The company evaluates capital deployment broadly, prioritizing business growth while also taking advantage of favorable stock prices for share repurchases [46][48] Question: What is the status of the CRJ 200 fleet? - The company has successfully utilized many CRJ 200s in prorate and charter services, with ongoing demand for these assets [49][52] Question: How is the company addressing the DOT approval process for SkyWest Charter? - Management is awaiting final approval from the DOT, which has been delayed due to external factors [72][74] Question: How does the company view the leasing of aircraft versus integrating them into its own operations? - The company maintains a healthy lease portfolio while also evaluating opportunities to integrate leased aircraft into its operations as needed [81][82] Question: Are there any changes in customer scheduling due to demand fluctuations? - Management noted that while there is softening demand, they still see strong schedules and are prepared to adapt as necessary [88][90] Question: What is the company's stance on consolidation in the regional industry? - The company prefers organic growth and strategic asset acquisitions rather than pursuing mergers or acquisitions, focusing on enhancing partnerships [104][106]