SkyWest(SKYW) - 2025 Q4 - Annual Report

Financial Performance - Total operating revenues for the year ended December 31, 2025, were $4.1 billion, a 15.0% increase from $3.5 billion in 2024[204] - Net income for 2025 was $428.3 million, or $10.35 per diluted share, compared to $323.0 million, or $7.77 per diluted share, in 2024[204] - Total operating expenses increased by $407.1 million, or 13.4%, primarily due to higher direct operating expenses from increased flights[207] - SkyWest Airlines and SWC segment profit increased by $124.1 million, or 89.3%, for the year ended December 31, 2025, reaching $263.0 million[237] - Net cash provided by operating activities increased by $247.9 million or 35.8% to $940.4 million for the year ended December 31, 2025[252] Operational Metrics - The number of block hours increased from 1.3 million in 2024 to 1.5 million in 2025, representing a 14.7% increase[205] - Departures increased from 766,742 in 2024 to 863,513 in 2025, a rise of 12.6%[207] - The average passenger load factor was 81.5% in 2025, down from 82.8% in 2024, a decrease of 1.3 percentage points[210] - Block hour production for SkyWest Airlines and SWC increased by 14.7%, from 1,292,040 hours in 2024 to 1,481,723 hours in 2025[238] Revenue Sources - Capacity purchase revenue rose by $319.3 million, or 10.8%, due to an increase in completed block hours[206] - Prorate and SWC revenue increased by $153.0 million, or 33.5%, in 2025 compared to 2024[206] - Lease, airport services, and other revenues rose by $57.9 million, or 50.3%, for the year ended December 31, 2025, attributed to increased maintenance services and leased assets[219] - Prorate agreements and SWC revenue increased by $153.0 million, or 33.5%, for the year ended December 31, 2025, due to higher prorate departures and passenger revenue[218] Expenses - Total operating expenses increased by $407.1 million, or 13.4%, for the year ended December 31, 2025, compared to 2024[220] - Aircraft maintenance, materials, and repairs expense increased by $231.1 million, or 32.4%, for the year ended December 31, 2025, primarily due to higher flight volume and maintenance costs[221] - The company experienced a significant increase in aircraft maintenance, materials, and repairs, which rose by $38.6 million or 138.6% to $66.4 million for the year ended December 31, 2025[246] - Salaries, wages, and benefits expense represented 45.3% of total operating expenses for the year ended December 31, 2025[284] Debt and Cash Flow - Cash and cash equivalents decreased from $801.6 million in 2024 to $706.9 million in 2025, a decline of $94.7 million or 11.8%[250] - As of December 31, 2025, total long-term debt decreased to $2.4 billion from $2.7 billion in 2024, a reduction of $0.3 billion[250] - Interest expense decreased by $9.9 million, or 8.7%, for the year ended December 31, 2025, due to a reduction in outstanding debt from $2.7 billion to $2.4 billion[227] - Interest expenses decreased by $8.7 million or 8.6% to $92.7 million, attributed to a reduction in outstanding debt[243] Future Commitments and Expectations - SkyWest has firm purchase commitments for 69 new E175 aircraft from Embraer, with delivery dates anticipated into 2032[261] - The company expects to continue facing inflationary pressures impacting costs, which may not be fully offset through price increases under capacity purchase agreements[284] - A hypothetical 25% increase in salaries, wages, and benefits during the year ended December 31, 2025, would have increased operating expenses by approximately $389.8 million[284] - A hypothetical 25% increase in fuel prices potentially incurring an additional $30.1 million in fuel expenses[281] Deferred Revenue - Total deferred revenue balance as of December 31, 2025, was $264.6 million, down from $322.4 million as of December 31, 2024[217] - For the year ended December 31, 2025, the company recognized $13.9 million of previously deferred lease revenue and $5.6 million of unbilled revenue under the straight-line basis[270] - The company recognized $30.1 million of previously deferred fixed monthly payments as revenue and $8.2 million of unbilled revenue in 2025[272] Asset Management - As of December 31, 2025, the company had approximately $5.8 billion in property and equipment net of accumulated depreciation[275] - The fleet included 637 total aircraft as of December 31, 2025, with 487 in scheduled service or under contract[199] - Approximately 44.4% of aircraft in scheduled service were operated for United Airlines, 28.1% for Delta, 18.9% for American, and 8.6% for Alaska[202]