SkyWest(SKYW) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents SkyWest, Inc.'s unaudited condensed consolidated financial statements and detailed notes for the periods ended June 30, 2025 Item 1. Financial Statements This section provides SkyWest, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flow statements, with comprehensive explanatory notes Consolidated Balance Sheets This section presents the consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 | (Dollars in billions) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Total assets | $ 7.17 | $ 7.14 | | Total current assets | $ 1.06 | $ 1.12 | | Total liabilities | $ 4.59 | $ 4.73 | | Total stockholders' equity | $ 2.58 | $ 2.41 | - Total assets increased by $34.2 million from December 31, 2024, to June 30, 2025. Total stockholders' equity increased by $173.6 million, while total liabilities decreased by $142.0 million over the same period[7][10] Consolidated Statements of Comprehensive Income This section details the consolidated statements of comprehensive income, including revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024 | (In millions, except per share amounts) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total operating revenues | $ 1,035.2 | $ 867.1 | $ 1,983.7 | $ 1,670.7 | | Total operating expenses | $ 865.1 | $ 747.5 | $ 1,674.2 | $ 1,451.6 | | Operating income | $ 170.1 | $ 119.6 | $ 309.5 | $ 219.1 | | Net income | $ 120.3 | $ 75.6 | $ 220.8 | $ 135.9 | | Basic earnings per share | $ 2.98 | $ 1.88 | $ 5.46 | $ 3.38 | | Diluted earnings per share | $ 2.91 | $ 1.82 | $ 5.32 | $ 3.28 | - For the three months ended June 30, 2025, total operating revenues increased by 19.4% YoY, and net income increased by 59.1% YoY. For the six months ended June 30, 2025, total operating revenues increased by 18.7% YoY, and net income increased by 62.5% YoY[13] Consolidated Statements of Stockholders' Equity This section outlines changes in consolidated stockholders' equity, including common stock, retained earnings, and treasury stock, for the period ended June 30, 2025 | (In millions) | Balance at Dec 31, 2024 | Balance at June 30, 2025 | | :------------- | :---------------------- | :----------------------- | | Common Stock | $777.1 | $788.3 | | Retained Earnings | $2,594.2 | $2,815.0 | | Treasury Stock | $(962.7) | $(1,020.9) | | Total Stockholders' Equity | $2,408.8 | $2,582.4 | - Total stockholders' equity increased by $173.6 million from December 31, 2024, to June 30, 2025, primarily driven by net income of $220.8 million, partially offset by treasury stock purchases of $30.9 million[16][199] Condensed Consolidated Statements of Cash Flows This section presents the condensed consolidated statements of cash flows, detailing operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | (In millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $ 428.1 | $ 323.0 | | Net cash used in investing activities | $ (372.7) | $ (76.0) | | Net cash used in financing activities | $ (234.5) | $ (253.5) | | Decrease in cash and cash equivalents | $ (179.0) | $ (6.5) | | Cash and cash equivalents at end of period | $ 48.3 | $ 141.8 | - Net cash provided by operating activities increased by 32.5% YoY to $428.1 million for the six months ended June 30, 2025. Net cash used in investing activities significantly increased by 390.4% YoY to $372.7 million, primarily due to increased property and equipment acquisitions and aircraft deposits. Net cash used in financing activities decreased by 7.5% YoY to $234.5 million[22][191][192][194][198] Notes to Condensed Consolidated Financial Statements This section provides detailed notes explaining the basis of presentation, accounting policies, and specific financial statement line items (1) Condensed Consolidated Financial Statements This note clarifies the basis of presentation for the unaudited financial statements and discusses recent accounting pronouncements - The financial statements are unaudited and prepared in accordance with SEC rules and GAAP, reflecting all necessary recurring adjustments. The Company is evaluating the impact of new FASB ASUs on income tax disclosures (ASU 2023-09) and expense disaggregation (ASU 2024-03), effective for annual periods beginning after December 15, 2024, and December 15, 2026, respectively[24][26][27] (2) Operating Revenues This note details the composition of operating revenues, including flying agreements and other revenue sources, and related credit loss allowances - Flying agreements revenue is primarily derived from fixed-fee capacity purchase agreements (85.5% of flying agreements revenue for H1 2025) and prorate agreements (14.5% for H1 2025)[30][31] | (in millions) | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Flying agreements revenue | $ 987.5 | $ 838.2 | $ 1,903.5 | $ 1,616.5 | | Lease, airport services and other | $ 47.7 | $ 28.9 | $ 80.2 | $ 54.3 | - The Company has 502 aircraft in scheduled service or under contract as of June 30, 2025, and plans to add 13 new E175 aircraft with United (2025-2026), 16 new E175 aircraft with Delta (2027-2028), and one new E175 aircraft with Alaska (2025). Additionally, 32 CRJ550 aircraft are anticipated to be placed into service with United by end of 2026[38][39][40][41][43] | Allowance for Credit Losses (in millions) | Amount | | :--------------------------------------- | :----- | | Balance at December 31, 2024 | $ 15.1 | | Adjustments to credit loss reserves | $ 10.1 | | Write-offs charged against allowance | $ (0.1) | | Balance at June 30, 2025 | $ 25.1 | (3) Capital Transactions This note describes capital transactions, including restricted stock units and performance share grants to employees - During the six months ended June 30, 2025, the Company granted 25,359 restricted stock units and 59,165 performance shares to employees, with a three-year vesting period and a weighted average fair value of $118.96 per share. Stock-based compensation expense for the period was $9.9 million[52][54] (4) Stock Repurchase This note provides information on the Company's stock repurchase program, including authorization and recent activity - The Board approved a $250 million increase to the existing stock repurchase program in May 2025, bringing the total authorized to $500 million. As of June 30, 2025, $266.6 million remained available. During the six months ended June 30, 2025, the Company repurchased 335,843 shares for $31.0 million at an average price of $92.24 per share[55][56] (5) Net Income Per Common Share This note presents the calculation of basic and diluted net income per common share for the reported periods | (in millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $ 120.3 | $ 75.6 | $ 220.8 | $ 135.9 | | Basic earnings per share | $ 2.98 | $ 1.88 | $ 5.46 | $ 3.38 | | Diluted earnings per share | $ 2.91 | $ 1.82 | $ 5.32 | $ 3.28 | - 216,000 performance shares (at target) were excluded from Diluted EPS computation for the six months ended June 30, 2025, as minimum target thresholds were not met[59] (6) Segment Reporting This note outlines the Company's reportable segments, SkyWest Airlines and SWC, and SkyWest Leasing, with their financial performance - The Company has two reportable segments: SkyWest Airlines and SWC (operations) and SkyWest Leasing (aircraft ownership/financing and third-party leasing). Segment profit is assessed based on income before income taxes[60][61][62] | (in millions) | SkyWest Airlines and SWC (3 months ended June 30, 2025) | SkyWest Leasing (3 months ended June 30, 2025) | Consolidated (3 months ended June 30, 2025) | | :------------- | :------------------------------------------------------ | :--------------------------------------------- | :------------------------------------------ | | Operating revenues | $ 869.3 | $ 165.9 | $ 1,035.2 | | Segment profit | $ 90.3 | $ 72.9 | $ 163.1 | | Total assets (as of June 30, 2025) | $ 3,086.2 | $ 4,087.9 | $ 7,174.1 | | Capital expenditures (including non-cash) | $ 74.3 | $ 65.2 | $ 139.5 | | (in millions) | SkyWest Airlines and SWC (6 months ended June 30, 2025) | SkyWest Leasing (6 months ended June 30, 2025) | Consolidated (6 months ended June 30, 2025) | | :------------- | :------------------------------------------------------ | :--------------------------------------------- | :------------------------------------------ | | Operating revenues | $ 1,671.0 | $ 312.7 | $ 1,983.7 | | Segment profit | $ 144.5 | $ 139.3 | $ 283.8 | | Total assets (as of June 30, 2025) | $ 3,086.2 | $ 4,087.9 | $ 7,174.1 | | Capital expenditures (including non-cash) | $ 193.2 | $ 65.2 | $ 258.4 | (7) Leases, Commitments, Guarantees and Contingencies This note details the Company's lease obligations, firm purchase commitments for aircraft, and other financial guarantees - As of June 30, 2025, the Company had operating lease right-of-use assets of $79.9 million and total operating lease liabilities of $79.9 million. The weighted-average remaining lease term for operating leases is 11.0 years with a weighted-average discount rate of 6.3%[72][73] | (in millions) | Total | Jul - Dec 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | | :------------- | :----------- | :------------- | :-------- | :-------- | :-------- | :-------- | :------------ | | Operating lease payments | $ 118.7 | $ 10.5 | $ 19.0 | $ 16.1 | $ 10.9 | $ 9.1 | $ 53.1 | | Firm aircraft and spare engine commitments | $ 2,434.0 | $ 206.8 | $ 229.2 | $ 323.3 | $ 329.1 | $ 309.2 | $ 1,036.5 | | Interest commitments | $ 378.9 | $ 52.5 | $ 89.3 | $ 66.1 | $ 49.2 | $ 36.9 | $ 84.9 | | Principal maturities on long-term debt | $ 2,514.6 | $ 266.9 | $ 535.1 | $ 490.2 | $ 320.3 | $ 216.7 | $ 685.4 | | Total commitments and obligations | $ 5,446.3 | $ 536.7 | $ 872.6 | $ 895.7 | $ 709.4 | $ 572.0 | $ 1,859.9 | - The Company has firm purchase commitments for 74 new E175 aircraft (through 2032) and 21 used CRJ900 airframes (2025). It also guarantees $13.3 million of debt for a 14 CFR Part 135 air carrier to support pilot hiring pipeline[75][77][80] (8) Fair Value Measurements This note describes the fair value measurements of financial assets, including cash, marketable securities, and investments | (in millions) | Fair Value Measurements as of June 30, 2025 | | :------------- | :------------------------------------------ | | Total Assets Measured at Fair Value | $ 737.3 | | Cash and Cash Equivalents (Level 1) | $ 48.3 | | Marketable Securities (Level 2) | $ 678.7 | | Investments in Other Companies (Level 3) | $ 10.3 | - Marketable securities, primarily bonds and commercial paper, are classified as Level 2 and valued using broker quotes in non-active markets. Investments in other companies are classified as Level 3, requiring unobservable inputs[81][82] (9) Long-term Debt This note provides details on the Company's long-term debt, including aircraft financing and unsecured debt to the U.S. Treasury | (in millions) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Total long-term debt (including current portion) | $ 2,514.6 | $ 2,692.6 | | Carrying value | $ 2,514.6 | $ 2,692.6 | | Fair value | $ 2,457.8 | $ 2,612.8 | - As of June 30, 2025, total long-term debt was $2.51 billion, consisting of $2.3 billion for aircraft/spare engines and $200.6 million unsecured debt to the U.S. Treasury. The average effective interest rate was approximately 4.3%. The Company financed two new E175 aircraft with $47.1 million in long-term debt during the period[85][86] - SkyWest Airlines has a $100.0 million line of credit, with $25.0 million issued in letters of credit, leaving $75.0 million available as of June 30, 2025. The line of credit expires March 25, 2028, with a variable interest rate of 3.5% plus one-month SOFR[87] (10) Investments in Other Companies This note describes the Company's equity method investments in Aero Engines, LLC and Contour Airlines, and its warrant in Eve Holding, Inc - The Company holds a 75% ownership in Aero Engines, LLC, accounted for under the equity method, with an investment balance of $12.1 million as of June 30, 2025. It also holds a 25% ownership in Contour Airlines, accounted for under the equity method, with an investment balance of $22.2 million as of June 30, 2025[90][91] - The Company's remaining investment in Eve Holding, Inc. is a warrant to acquire 1,500,000 shares, classified as a Level 3 fair value investment. Its fair value increased by $2.1 million to $10.3 million as of June 30, 2025, recognized as an unrealized gain[96][97] (11) Income Taxes This note presents the effective income tax rates and factors influencing tax expense for the reported periods | Period | Effective Tax Rate | | :----- | :----------------- | | H1 2025 | 22.2% | | H1 2024 | 25.5% | - The effective tax rate for H1 2025 was 22.2%, lower than H1 2024 (25.5%), primarily due to a higher discrete tax benefit from additional tax deductions generated from employee equity awards that vested[98][99][163] (12) Legal Matters This note addresses the Company's legal proceedings and management's assessment of their potential financial impact - Management believes 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 as of June 30, 2025[100] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of SkyWest, Inc.'s financial condition, operational results, and liquidity for the reported periods Cautionary Statement Concerning Forward-Looking Statements This statement advises readers about forward-looking information in the report, highlighting inherent risks and uncertainties - The report contains forward-looking statements identified by words like 'may,' 'will,' 'expect,' 'intend,' and 'anticipate,' related to outlook, operations, revenue environment, contractual relationships, and financial performance. These statements are subject to various risks and uncertainties, including competition, economic conditions, demand for air travel, infectious diseases, pilot availability, regulatory issues, financing, fuel costs, and global instability[102] Overview This section provides a general overview of SkyWest's business model, fleet operations, and strategic focus on code-share agreements - SkyWest operates the largest regional airline in the U.S., with approximately 2,530 daily departures to destinations in the U.S., Canada, and Mexico. As of June 30, 2025, the total fleet comprised 632 aircraft, with 502 in scheduled service or under code-share agreements[106] | Aircraft in Service or Under Contract | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :---------------- | :------------ | | E175s | 265 | 262 | 248 | | CRJ900s | 36 | 36 | 41 | | CRJ700s/CRJ550s | 121 | 119 | 99 | | CRJ200s | 80 | 75 | 87 | | Total | 502 | 492 | 475 | - The business model relies on code-share agreements, with capacity purchase agreements accounting for 85.5% of flying agreements revenue and prorate/SWC revenue for 14.5% for the six months ended June 30, 2025. The fleet is evolving with additions of new E175 aircraft and used CRJ aircraft to improve profitability[107][108][109][111] Second Quarter Summary This section summarizes key financial and operational highlights for the second quarter of 2025, including revenue and net income growth | (in millions, except per share) | Q2 2025 | Q2 2024 | % Change | | :------------------------------ | :-------- | :-------- | :------- | | Total operating revenues | $1,035.2 | $867.1 | 19.4% | | Net income | $120.3 | $75.6 | 59.1% | | Diluted EPS | $2.91 | $1.82 | 59.9% | - The increase in revenue was driven by a 5.7% increase in aircraft in service and an 18.5% increase in block hours, attributed to more aircraft under capacity purchase agreements and an increase in available captains. Capacity purchase revenue increased by 15.2%, and prorate/SWC revenue increased by 35.8% YoY[113][114] - Total operating expenses increased by 15.7% due to higher direct operating expenses from increased flight volume (17.7% increase in departures, 18.5% increase in block hours)[115] Fleet Activity This section details changes in the Company's aircraft fleet, including additions and removals, and their impact on operational capacity | Aircraft in Service or Under Contract | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :---------------- | :------------ | | E175s | 265 | 262 | 248 | | CRJ900s | 36 | 36 | 41 | | CRJ700s/CRJ550s | 121 | 119 | 99 | | CRJ200s | 80 | 75 | 87 | | Total | 502 | 492 | 475 | - The number of aircraft in service or under contract increased from 475 at June 30, 2024, to 502 at June 30, 2025, primarily driven by additions of E175s and CRJ700s/CRJ550s[117] Critical Accounting Policies and Estimates This section discusses the significant accounting policies and estimates that require management judgment in financial reporting - Critical accounting policies include revenue recognition, long-lived assets, and income tax, which involve significant management judgment and assumptions. No significant changes in critical accounting estimates occurred during the six months ended June 30, 2025[118] Recent Accounting Pronouncements This section outlines new FASB accounting standards updates and their potential impact on the Company's financial statements - The Company is evaluating the potential impact of new FASB ASUs on income tax disclosures (ASU 2023-09) and expense disaggregation (ASU 2024-03)[26][27][119] Results of Operations This section provides a detailed analysis of the Company's operating revenues and expenses for the reported periods Three Months Ended June 30, 2025 and 2024 This section analyzes the operational statistics, revenues, and expenses for the three months ended June 30, 2025, compared to 2024 | Operational Statistics (Q2) | 2025 | 2024 | % Change | | :-------------------------- | :---------- | :---------- | :------- | | Total block hours | 376,269 | 317,462 | 18.5% | | Departures | 222,874 | 189,325 | 17.7% | | Passengers carried | 12,092,758 | 10,691,017 | 13.1% | | Passenger load factor | 82.8% | 84.4% | (1.6)pts | | Operating Revenues (Q2, in millions) | 2025 | 2024 | $ Change | % Change | | :------------------------------------ | :---------- | :---------- | :------- | :------- | | Flying agreements | $987.5 | $838.2 | $149.3 | 17.8% | | Lease, airport services and other | $47.7 | $28.9 | $18.8 | 64.8% | | Total operating revenues | $1,035.2 | $867.1 | $168.1 | 19.4% | | Operating Expenses (Q2, in millions) | 2025 | 2024 | $ Change | % Change | | :------------------------------------ | :---------- | :---------- | :------- | :------- | | Salaries, wages and benefits | $390.2 | $355.0 | $35.2 | 9.9% | | Aircraft maintenance, materials and repairs | $238.9 | $183.3 | $55.6 | 30.3% | | Depreciation and amortization | $90.2 | $96.8 | $(6.7) | (6.9)% | | Airport-related expenses | $27.1 | $17.5 | $9.6 | 54.6% | | Aircraft fuel | $27.5 | $21.3 | $6.1 | 28.7% | | Other operating expenses | $91.2 | $73.5 | $17.7 | 24.1% | | Total operating expenses | $865.1 | $747.5 | $117.6 | 15.7% | - Net income for Q2 2025 was $120.3 million ($2.91 diluted EPS), up from $75.6 million ($1.82 diluted EPS) in Q2 2024, driven by increased block hours and revenue recognition, partially offset by higher operating expenses[140] Six Months Ended June 30, 2025 and 2024 This section analyzes the operational statistics, revenues, and expenses for the six months ended June 30, 2025, compared to 2024 | Operational Statistics (H1) | 2025 | 2024 | % Change | | :-------------------------- | :---------- | :---------- | :------- | | Total block hours | 728,424 | 607,263 | 20.0% | | Departures | 424,712 | 358,757 | 18.4% | | Passengers carried | 22,483,122 | 19,840,470 | 13.3% | | Passenger load factor | 80.8% | 82.7% | (1.9)pts | | Operating Revenues (H1, in millions) | 2025 | 2024 | $ Change | % Change | | :------------------------------------ | :---------- | :---------- | :------- | :------- | | Flying agreements | $1,903.5 | $1,616.5 | $287.0 | 17.8% | | Lease, airport services and other | $80.2 | $54.3 | $25.9 | 47.7% | | Total operating revenues | $1,983.7 | $1,670.7 | $313.0 | 18.7% | | Operating Expenses (H1, in millions) | 2025 | 2024 | $ Change | % Change | | :------------------------------------ | :---------- | :---------- | :------- | :------- | | Salaries, wages and benefits | $767.6 | $706.0 | $61.6 | 8.7% | | Aircraft maintenance, materials and repairs | $448.0 | $328.7 | $119.3 | 36.3% | | Depreciation and amortization | $179.6 | $192.7 | $(13.1) | (6.8)% | | Airport-related expenses | $54.9 | $38.4 | $16.5 | 43.0% | | Aircraft fuel | $51.9 | $42.5 | $9.5 | 22.3% | | Other operating expenses | $172.2 | $143.3 | $28.9 | 20.1% | | Total operating expenses | $1,674.2 | $1,451.6 | $222.6 | 15.3% | - Net income for H1 2025 was $220.8 million ($5.32 diluted EPS), up from $135.9 million ($3.28 diluted EPS) in H1 2024, driven by increased block hours and revenue, partially offset by higher operating expenses[164] Our Business Segments This section analyzes the financial performance of SkyWest Airlines and SWC, and SkyWest Leasing segments - SkyWest Airlines and SWC segment profit increased by 182.3% to $90.3 million for Q2 2025 and by 290.9% to $144.5 million for H1 2025, primarily due to increased block hour production and operating revenues[168][170][179][181] - SkyWest Leasing segment profit increased by 3.8% to $72.9 million for Q2 2025, driven by increased maintenance services revenue and lower depreciation. However, for H1 2025, SkyWest Leasing profit decreased by 4.2% to $139.3 million, mainly due to an increase in credit loss reserves, partially offset by decreased interest expense and depreciation[177][187] Liquidity and Capital Resources This section discusses the Company's cash position, marketable securities, debt, and capital expenditure plans | (in millions) | June 30, 2025 | December 31, 2024 | $ Change | % Change | | :------------- | :------------ | :---------------- | :--------- | :------- | | Cash and cash equivalents | $ 48.3 | $ 227.4 | $ (179.0) | (78.7)% | | Marketable securities | $ 678.7 | $ 574.3 | $ 104.4 | 18.2% | | Total | $ 727.0 | $ 801.6 | $ (74.6) | (9.3)% | - As of June 30, 2025, total liquidity (cash, cash equivalents, and marketable securities) was $727.0 million, a 9.3% decrease from December 31, 2024. The Company had $75.0 million available under its line of credit[188][191] - The capital mix at June 30, 2025, was 50.8% equity and 49.2% total long-term debt, shifting from 47.4% equity and 52.6% debt at December 31, 2024, indicating an improved equity position relative to debt[189] - Cash flows from operating activities increased by $105.1 million (32.5%) to $428.1 million for H1 2025. Cash used in investing activities increased significantly by $296.7 million (390.4%) to $372.7 million, primarily due to increased property and equipment acquisitions and aircraft deposits[191][192][194][197] - The Company intends to finance its firm purchase commitment for 74 E175 aircraft with 75-85% debt and the remainder with cash, and to use cash for the 21 used CRJ900 airframes[202] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section assesses the Company's exposure to market risks, including fuel prices, interest rates, and labor costs Aircraft Fuel This section discusses the Company's exposure to aircraft fuel price fluctuations and mitigation strategies - Major airline partners bear the economic risk of fuel price fluctuations on contracted flights. SkyWest bears this risk for its prorate and SWC operations, which represented approximately 14.5% of total flying agreements revenue for H1 2025. A hypothetical 25% increase in fuel price would result in an additional $13.0 million in fuel expense for H1 2025[208] Interest Rates This section details the Company's exposure to interest rate changes on its long-term debt and financing arrangements - Long-term debt secured by aircraft and spare engines has fixed interest rates. Reimbursement rates under capacity purchase agreements are adjusted to reflect interest rates at financing closing, mitigating the impact of future interest rate changes on new aircraft acquisitions. Of the $200.6 million unsecured debt to Treasury, $138.6 million has a fixed 1% rate, and $62.0 million has a variable SOFR + 2.0% rate[209] Labor and Inflation Risk This section addresses the impact of labor costs and inflationary pressures on the Company's operating expenses - The Company expects continued inflationary pressures on costs, particularly salaries, wages, and benefits, which represented 45.8% of total operating expenses for H1 2025. A hypothetical 25% increase in these costs would raise operating expenses by approximately $191.9 million. Inability to offset these costs or retain qualified personnel could harm business and operating results[210][211][212] Item 4. Controls and Procedures This section reports on the effectiveness of the Company's disclosure controls and internal control over financial reporting Disclosure Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting under the Exchange Act[213] Changes in Internal Control This section reports on any material changes in the Company's internal control over financial reporting - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the Company's internal control during the six months ended June 30, 2025[214] PART II. OTHER INFORMATION This section provides additional information not covered in Part I, including legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings This section addresses the Company's involvement in legal actions and management's assessment of their potential impact - As of June 30, 2025, management believes that the ultimate outcome of routine legal matters is not likely to have a material adverse effect on the Company's financial position, liquidity, or results of operations[215] Item 1A. Risk Factors This section refers to the comprehensive discussion of risk factors that could materially affect the Company's business - Readers should carefully consider the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2024, and other SEC filings, as these could materially affect the Company's business, financial condition, and results of operations. Additional unknown or immaterial risks may also adversely affect the business[216] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Company's stock repurchase program, including recent activity and remaining authorization | Period (Q2 2025) | Total Number of Shares Purchased | Average Price Paid Per Share | | :----------------------- | :------------------------------- | :--------------------------- | | April 1, 2025 - April 30, 2025 | 144,657 | $ 85.46 | | May 1, 2025 - May 31, 2025 | 39,128 | $ 96.80 | | June 1, 2025 - June 30, 2025 | 11,400 | $ 100.48 | | Total | 195,185 | $ 88.61 | - In May 2025, the Board approved a $250 million increase to the stock repurchase program. As of June 30, 2025, $266.6 million remained available under the program, after repurchasing 195,185 shares for $17.3 million during Q2 2025[218] Item 5. Other Information This section confirms no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[219] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including corporate documents and certifications - Exhibits include Restated Articles of Incorporation, Amended and Restated Bylaws, CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), and Inline XBRL documents[220] Signature This section contains the official signature block for the Quarterly Report on Form 10-Q - The Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, was signed on July 25, 2025, by Robert J. Simmons, Chief Financial Officer of SkyWest, Inc[221][222][223]