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 $101 million or $2.42 per diluted share for Q1 2025, reflecting a slight increase in production compared to Q4 2024 [5][11] - Total Q1 revenue was $948 million, up from $944 million in Q4 2024 and up 18% from $804 million in Q1 2024 [12] - Q1 pretax income was $121 million, with an effective tax rate of 17% [11] Business Line Data and Key Metrics Changes - Contract revenue for Q1 was $785 million, flat from Q4 2024 but up 16% from Q1 2024 [12] - Pro rate and charter revenue was $131 million, up 3% from Q4 2024 and up 29% from Q1 2024 [12] - Leasing and other revenue was $32 million, up 3% from Q4 2024 and up 28% from Q1 2024 [12] Market Data and Key Metrics Changes - The company completed over 30,000 more flights in Q1 2025 compared to the same quarter last year, achieving a 99.9% adjusted completion rate [6] - The dual-class aircraft generated 87% of block hour production during Q1 [8] Company Strategy and Development Direction - SkyWest 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 [7][9] - The company is focused on smart investments in its people and fleet while maintaining a disciplined approach to growth opportunities [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite macroeconomic uncertainties, highlighting strong demand for their services [10] - The company anticipates a 12% to 13% increase in block hour production in 2025 compared to 2024, driven by improved fleet utilization and ongoing strong demand [18] Other Important Information - The company ended Q1 with cash of $751 million, down from $821 million in Q1 2024, and reduced debt to $2.6 billion [13][15] - SkyWest expects capital expenditures for 2025 to be approximately $575 million to $600 million, including the purchase of eight new E175s [17] Q&A Session Summary Question: When will discussions about extending contracts for E175s begin? - Management is optimistic about continuing to fly the E175s for their major partners due to their good maintenance and performance [30][31] Question: What are the guardrails for pacing future share purchases? - The company evaluates capital deployment quarterly and has repurchased about 22% of its shares since early 2023 [32][34] Question: What is the status of the CRJ200 fleet? - Approximately 80 CRJ200s are currently flying, with some being used in SkyWest Charter and others sold or leased [35][37] Question: How are customers scheduling flights given stronger peaks and weaker off-peak periods? - Management noted that while there is strong demand, they are still in a catch-up mode with partners due to ongoing pilot shortages [41][42] Question: What is the outlook for SkyWest Charter? - The company anticipates that the majority of aircraft will return to SkyWest Charter as demand fluctuates seasonally [45][46] Question: What is the status of the DOT approval process for SkyWest Charter? - Management is awaiting final approval from the DOT, which has been delayed due to chaotic conditions in Washington, D.C. [54][57] Question: How does the company view consolidation in the regional industry? - Management prefers organic growth and strategic asset acquisitions rather than mergers, emphasizing their focus on enhancing partnerships [80][82]