Financial Data and Key Metrics Changes - SkyWest reported a net income of $120 million or $2.91 per diluted share for Q2 2025, reflecting higher production and strong demand [5][11] - Total Q2 revenue was $1 billion, up 9% from $948 million in Q1 2025 and up 19% from $867 million in Q2 2024 [11][12] - Contract revenue for Q2 was $842 million, up from $785 million in Q1 and $731 million in Q2 2024 [11] - Cash at the end of Q2 was $727 million, down from $751 million last quarter and $834 million at Q2 2024 [13] - Free cash flow generated in the first half of 2025 was over $200 million, including $68 million in Q2 [15] Business Line Data and Key Metrics Changes - Pro rate and charter revenue was $145 million in Q2, up from $131 million in Q1 and $107 million in Q2 2024 [12] - Leasing and other revenue was $47 million in Q2, up from $32 million in Q1 2025 and $29 million in Q2 2024 [12] - Q2 completed block hours were up 7% compared to Q1 2025, with a projected 14% increase in 2025 compared to 2024 [26] Market Data and Key Metrics Changes - Demand for air travel in small and mid-sized communities remains exceptionally strong, with no replacement for face-to-face connections [5][9] - The company anticipates a 2% increase in block hours for Q3 compared to Q2, with a return to seasonal patterns expected [26] Company Strategy and Development Direction - SkyWest plans to restore or bring new service to underserved communities, redeploy existing fleet, and prepare for future aircraft deliveries [10] - The company has secured agreements for 16 new E175s with Delta, with deliveries expected in 2027 and 2028 [7][19] - A new purchase agreement with Embraer for 60 firm aircraft has been established, enhancing fleet flexibility [22][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position despite macroeconomic uncertainties, emphasizing strong relationships with partners [9][10] - The effective tax rate is expected to be approximately 26% to 27% for the remainder of 2025 [18] - Management remains optimistic about growth opportunities in 2026, focusing on underserved communities and improved aircraft utilization [18][26] Other Important Information - The company has approximately $286 million of cumulative deferred revenue to be recognized in future periods [12] - Maintenance expenses are expected to remain at Q2 levels for the remainder of 2025 due to challenges in the third-party MRO network [27] Q&A Session Summary Question: Discussion on CRJ200 fleet opportunities - Management indicated that the CRJ200 fleet provides flexibility, with priorities to fly those aircraft and add to contracts with major partners [33][35] Question: MRO challenges and maintenance issues - Management acknowledged ongoing challenges with parts and labor but noted improvements are being made [36][37] Question: Tariff implications on aircraft costs - The 10% tariff paid was not on the full aircraft but on certain components, with ongoing monitoring of tariff impacts [43][45] Question: Recovery in the pro rate and small community market - Management reported strong demand in small communities, with supply chain challenges being the primary constraint [55][58] Question: Capital allocation and delivery timing - Management expressed flexibility in capital deployment, with options to buy back stock or invest in fleet [60][74] Question: Reactivation of dual-class aircraft - The reactivation of 25 dual-class aircraft is due to new flying agreements and previously parked aircraft being brought back into service [81][82]

Financial Data and Key Metrics Changes - SkyWest reported a net income of $120 million or $2.91 per diluted share for Q2 2025, reflecting higher production and strong demand [4][11] - Total revenue for Q2 was $1 billion, up 9% from $948 million in Q1 2025 and up 19% from $867 million in Q2 2024 [11][12] - Contract revenue was $842 million in Q2, up from $785 million in Q1 and $731 million in Q2 2024 [11] - Cash at the end of Q2 was $727 million, down from $751 million last quarter and $834 million at Q2 2024 [13][14] - Free cash flow generated in the first half of 2025 was over $200 million, including $68 million in Q2 [14] Business Line Data and Key Metrics Changes - Pro rate and charter revenue was $145 million in Q2, up from $131 million in Q1 and $107 million in Q2 2024 [12] - Leasing and other revenue was $47 million in Q2, up from $32 million in Q1 2025 and $29 million in Q2 2024 [12] - Q2 completed block hours were up 7% compared to Q1 2025, with a projected 14% increase in block hours for 2025 compared to 2024 [25] Market Data and Key Metrics Changes - Demand for air travel in small and mid-sized communities remains exceptionally strong, with no replacement for face-to-face connections facilitated by air travel [4][8] - The company anticipates a 2% increase in Q3 block hours compared to Q2, with a return to seasonal block hour patterns expected [25] Company Strategy and Development Direction - SkyWest announced an agreement to purchase and operate 16 new E175s under a multi-year contract with Delta, with deliveries expected to begin in 2027 [6][19] - The company is focused on restoring service to underserved communities, redeploying its existing fleet, and preparing for future aircraft deliveries [9][15] - SkyWest aims to maintain fleet flexibility and has secured delivery slots for 44 additional E175s from 2028 to 2032 [6][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position despite macroeconomic uncertainties, emphasizing strong relationships with partners and demand for services [8][9] - The effective tax rate is expected to be approximately 26% to 27% for the remainder of 2025, with GAAP EPS projected to be around $10 per share if growth opportunities are successfully executed [17][18] - Management remains optimistic about growth possibilities in 2026, focusing on increasing service to underserved communities and improving aircraft utilization [18][66] Other Important Information - The company has a strong balance sheet and liquidity, allowing for various growth opportunities, including acquiring additional aircraft and executing share repurchase programs [15][72] - SkyWest is experiencing challenges in its third-party MRO network, particularly with parts and labor, but is actively working to mitigate these risks [26][36] Q&A Session Summary Question: Discussion on CRJ200 fleet opportunities - Management indicated that the CRJ200 fleet provides flexibility, with priorities to fly those aircraft and add to current contracts with major partners [32][34] Question: Insights on MRO challenges - Management acknowledged ongoing challenges with parts and labor but noted improvements are being made [35][36] Question: Clarification on tariff impacts - The 10% tariff paid was not on the full aircraft cost but on certain components, with ongoing monitoring of tariff implications [43][44] Question: State of recovery in the pro rate and small community market - Management reported strong demand in small communities, with efforts to restore and enhance air service [52][56] Question: Capital allocation strategy - Management emphasized flexibility in capital deployment, with options for share repurchases and fleet investments [59][72] Question: Clarification on aircraft reactivation - The reactivation of 25 dual-class CRJ aircraft is due to new flying agreements and previously parked aircraft being brought back into service [79][80]

Financial Data and Key Metrics Changes - The company reported consolidated net income of $33.4 million, resulting in consolidated earnings per share of $1.81, with airline segment net income of $39 million yielding airline-only earnings per share of $2.11 [28] - Airline operating margin improved to 9.3%, up three percentage points year-over-year [7] - EBITDA for the airline segment reached $121 million, a 25% increase compared to Q1 2024, resulting in an EBITDA margin of 18.1% [28][29] Business Line Data and Key Metrics Changes - The airline achieved a controllable completion rate of 99.9% on 32,000 departures, a 14% increase from the previous year [6] - Ancillary revenue per passenger reached a record $79.28, up nearly 5% year-over-year, driven by the expansion of Allegiant Extra [22] - The number of active cardholders in the loyalty program increased by nearly 7% year-over-year [6] Market Data and Key Metrics Changes - The company experienced a 14.2% growth in total available seat miles (ASMs) with stage length increasing by about 1.6% [19] - Despite the growth, aircraft utilization increased by approximately 19% to 7.5 hours per aircraft per day, although it remains over 10% lower than other reported carriers [19] - The company anticipates a 15.5% year-over-year increase in ASMs for Q2 [23] Company Strategy and Development Direction - The company is focused on maintaining flexibility in capacity management and cost discipline to protect margins amid economic uncertainty [9][10] - Allegiant's strategic design emphasizes tactical utilization and a long-term fleet strategy aimed at minimizing fixed costs while maximizing profitability [10] - The company is pursuing a transaction related to the sale of the Sunseeker resort, which is expected to be completed by summer [15] Management's Comments on Operating Environment and Future Outlook - Management noted that while peak leisure demand remains healthy, they are adapting capacity in response to economic uncertainty and consumer confidence [8][9] - The company is optimistic about recent booking trends and anticipates continued strength in strategic initiatives [24] - Management emphasized the importance of operational flexibility and the ability to adapt to changing market conditions [16] Other Important Information - The company ended the quarter with $1.2 billion in available liquidity, including $926 million in cash and investments [31] - Total debt decreased by 10% year-over-year to $2 billion, reflecting proactive debt repayment strategies [31] - The company plans to reduce capital expenditures by $80 million for the year, adjusting to a more moderated CapEx environment [33] Q&A Session Summary Question: Can you discuss the margin trajectory for the second half of the year? - Management indicated that they will continue to aggressively manage capacity and costs to optimize margins, with the third quarter typically being the softest [41][42] Question: What is the status of the Sunseeker resort sale process? - The process remains on track for completion by summer, with a focus on well-capitalized counterparties [46] Question: What are the current fuel cost assumptions? - The company is using $2.4 per gallon for fuel cost assumptions for the remainder of the year [49] Question: Can you provide insights on the RASM expectations for Q2? - Management expects RASM to face greater year-over-year pressure in Q2 compared to Q1, with a mid-single-digit decline anticipated [66] Question: How does the company view potential M&A opportunities in the current environment? - Management believes that while consolidation in the industry is necessary, Allegiant's strong model positions it well to outperform without needing to pursue M&A aggressively [84][85]