Skip to content
    SKYW
    Earnings call· Jun 2026(Q2 FY26)

    SKYWEST INC SKYW

    Jul 23, 2026 Source

    Executive summary

    SkyWest, Inc. Q2 FY26 — Strong E175 Order Book and Capital Deployment

    SkyWest reported strong Q2 FY26 results driven by increased block hours and robust demand in both contract and prorate flying. The company announced a significant expansion of its E175 fleet with American, alongside ongoing CRJ conversions, reinforcing its fleet modernization strategy. Despite higher fuel costs impacting the prorate business, the company demonstrated strong capital deployment through debt reduction and share repurchases, maintaining a solid balance sheet and positioning for continued growth.

    Highlights

    6

    • Reported net income of $101 million or $2.54 per diluted share for Q2 FY26.

    • Achieved total Q2 revenue of $1.1 billion, representing a 9% increase from Q1 FY26 and 7% from Q2 FY25.

    • Announced an agreement with American for 11 new E175s, with deliveries commencing in H2 2026.

    • Reduced total debt by $1 billion since the end of 2022, including $100 million since the end of 2025.

    • Generated over $460 million of EBITDA during the first half of 2026, despite fuel cost headwinds.

    • Maintained strong operational performance with a 99.9% adjusted completion rate on nearly 228,000 flights.

    Concerns

    2

    • Experienced a $21 million negative impact from higher fuel prices per gallon in the prorate business during Q2 FY26 compared to Q2 FY25.

    • Continued to face challenges in the third-party MRO network, including labor and parts shortages.

    Guidance & targets

    25
    CategoryTargetConfidence
    Total additional E175s
    34 additional E175s
    high materiality
    High
    Total E175s in fleet
    300 E175s
    high materiality
    High
    Unencumbered E175s
    over 100 unencumbered E175s
    medium materiality
    High
    Total CapEx
    approximately $700 million
    high materiality
    High
    Block hour production growth
    up approximately 5%
    high materiality
    High
    GAAP EPS
    in the $11 area
    high materiality
    High
    Average jet fuel price assumption
    $3.65 per gallon
    medium materiality
    High
    Jet fuel needed for prorate business
    28 million gallons
    medium materiality
    High
    Q3 2026 GAAP EPS seasonality
    seasonally the strongest quarter of the year
    low materiality
    Medium
    Q4 2026 GAAP EPS seasonality
    down modestly from Q3
    low materiality
    Medium
    Maintenance activity
    remain consistent with 2025 levels
    medium materiality
    High
    Effective tax rate
    approximately 27% to 28%
    low materiality
    High
    Full-year effective tax rate
    approximately 23% to 24%
    low materiality
    High
    New E175s into service
    36 new E175s
    high materiality
    High
    New E175 deliveries (H2 2026)
    11 new E175s
    high materiality
    High
    CRJ450 conversions
    4 to 6 aircraft per month
    medium materiality
    High
    Total CRJ450s under contract with United
    40 CRJ450s
    medium materiality
    High
    Total CRJ450 opportunity
    total of 100 aircraft
    medium materiality
    Medium
    Remaining CRJ550s to enter service
    remaining 14
    medium materiality
    High
    Prorate aircraft with American
    up to 9 expected
    low materiality
    High
    Q3 block hours
    slight increase
    low materiality
    Medium
    New E175 deliveries (H2 2026) - specific split
    7 new E175s for United and 4 of the 11 E175s for American
    high materiality
    High
    E175 deliveries (2027)
    17 now scheduled to come
    high materiality
    High
    E175 deliveries (2027) - specific split
    7 American ones coming in the first half of 2027. And then we have 10 Delta ones that are kind of starting in the middle of the year and go through the end of the year.
    high materiality
    High
    CRJ900 returns to Delta
    approximately 19 lower-margin Delta-owned CRJ900
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Contract Revenue
    Part of total Q2 revenue of $1.1 billion.
    		$864 million———
    Prorate and Charter Revenue
    Part of total Q2 revenue of $1.1 billion. Prorate business experienced strong demand.
    		$201 million———
    Leasing and Other Revenue
    Part of total Q2 revenue of $1.1 billion.
    		$38 million———

    Operational metrics

    30
    Net income
    $101 million
    Q2 2026

    SkyWest reported net income of $101 million or $2.54 per diluted share for the second quarter of 2026.

    Diluted EPS
    $2.54
    Q2 2026

    SkyWest reported net income of $101 million or $2.54 per diluted share for the second quarter of 2026.

    Pretax income
    $139 million29% higher than Q1 pretax income
    Q2 2026

    Q2 pretax income was $139 million, 29% higher than Q1 pretax income on solid demand for our various contract and prorate products and sequential seasonality.

    Weighted average share count
    39.6 million
    Q2 2026

    Our weighted average share count for Q2 was 39.6 million

    Effective tax rate
    27.5%
    Q2 2026

    and our effective tax rate was 27.5%.

    Total revenue
    $1.1 billionup 9% from $1 billion in Q1 2026 and up 7% from $1 billion in Q2 2025
    Q2 2026

    Total Q2 revenue of $1.1 billion is up 9% from $1 billion in Q1 2026 on strong block hour demand from our partners during a volatile quarter and is up 7% from $1 billion in Q2 2025.

    Deferred revenue recognized
    $27 millionup slightly from the $24 million recognized in Q1 2026 and $23 million recognized in Q2 2025
    Q2 2026

    These Q2 GAAP results include the effect of recognizing $27 million of previously deferred revenue this quarter, up slightly from the $24 million recognized in Q1 2026 and $23 million recognized in Q2 2025.

    Cumulative deferred revenue
    $240 million
    as of Q2 2026

    As of the end of Q2, we have $240 million of cumulative deferred revenue that will be recognized in future periods.

    Prorate fuel expense
    $61 millioncompared to $28 million in Q2 2025
    Q2 2026

    Our prorate fuel expense was $61 million in Q2 compared to $28 million in Q2 2025. The year-over-year increase of $33 million was due to both a higher price per gallon, a $21 million negative impact and incremental prorate production, a $12 million impact.

    Prorate fuel price per gallon
    $4.45up from $2.88 in Q2 2025 and up from $3.40 in Q1
    Q2 2026

    Our price per gallon on our prorate flying was $4.45 in Q2, up from $2.88 in Q2 2025 and up from $3.40 in Q1.

    Cash balance
    $601 millionslightly down from $627 million last quarter
    as of Q2 2026

    We ended the quarter with cash of $601 million, slightly down from $627 million last quarter.

    Debt repayment
    $122 million
    Q2 2026

    repaying $122 million in debt

    New debt financing
    $24 million
    Q2 2026

    issuing $24 million of new debt financing, new debt financing ongoing fleet deliveries

    CapEx investment
    $139 million
    Q2 2026

    investing $139 million in CapEx, including the purchase of 1 E175

    Shares repurchased
    833,000 shares
    Q2 2026

    buying back 833,000 shares of SkyWest stock in Q2 for $75 million.

    Remaining share repurchase authorization
    $63 million
    as of June 30

    As of June 30, we had $63 million remaining under our current share repurchase authorization.

    Additional share repurchase authorization
    $250 millionon top of the $63 million
    announced today

    And as announced today, the Board has authorized an additional $250 million of share repurchase on top of the $63 million.

    EBITDA
    $460 million
    first half of 2026

    We generated over $460 million of EBITDA during the first half of 2026 despite the headwind from prorate fuel costs.

    Total debt reduction
    approximately $100 million
    since end of 2025

    Since the end of 2025, we reduced our total debt balance by approximately $100 million

    CapEx for fleet and related assets
    over $240 million
    since end of 2025

    invested over $240 million in CapEx for fleet and related assets

    Shares repurchased (since end of 2025)
    $150 million
    since end of 2025

    and repurchased $150 million of our shares.

    E175s on firm order with Embraer
    67
    current

    We currently have 67 future E175 on firm order with Embraer, including 16 for Delta, 11 for American and 7 for United. As an update on the firm order of 67 aircraft, 34 are allocated to our major partners. 33 are not yet assigned. This order locks in delivery slots starting in '27 through 2032.

    CRJ550s in service
    36
    as of June 30

    As of June 30, 36 CRJ550s were in service

    Prorate aircraft with American
    8
    current

    we are currently operating 8 aircraft under this agreement with up to 9 expected by year-end.

    Block hours increase
    9%from Q1 to Q2 2026
    Q1 to Q2 2026

    Our block hours increased 9% from Q1 to Q2 2026.

    Dual-class CRJ aircraft undergoing heavy maintenance
    approximately 3
    current

    we still have approximately 3 dual-class CRJ aircraft currently undergoing heavy maintenance after transitioning from long-term storage.

    Parked CRJ200s
    over 30
    current

    Additionally, we have over 30 parked CRJ200s that will likely transition to the CRJ450 and further enhance our fleet flexibility.

    Prorate aircraft added
    10
    Q2 2026

    During the quarter, we added 10 aircraft to our prorate agreements to support the growing demand.

    Prorate fuel cost recapture rate
    approximately 60%
    Q2 2026

    The passenger fare portion of our prorate revenue received similar pricing increases as our major partners, partially offsetting the impact of our higher price per gallon in the area of 60% for Q2. The nonsubsidized portion of our prorate revenue covered approximately 60% of fuel cost increases during the second quarter.

    Shares repurchased
    $75 million in each
    Q1 and Q2 2026

    we bought $75 million in each of the first 2 quarters of the year this year

    Industry KPIs

    5
    MetricValueDetails
    Fuel$4.45USD/gallon
    Capacityup approximately 5%%
    Fleet mro67aircraft
    Unit revenue60%%
    Demand indicatorsvery strong demand

    Product announcements

    3
    ProductTypeDetails
    E175s for Americanlaunch
    CRJ450 service for Unitedlaunch
    CRJ550 conversionsupdate

    Deals & partnerships

    2
    AmericanAgreement for SkyWest to purchase and operate 11 new E175s.

    SkyWest announced an agreement with American for the purchase and operation of 11 new E175s, with deliveries starting in 2026. These aircraft will replace CRJ700s currently under contract with American.

    UnitedAgreement to operate 5 E170s as CRJ550 conversions are expedited.

    SkyWest reached an agreement with United to operate 5 E170s, which are currently in service, to expedite the conversion of CRJ700s to CRJ550.

    Capital programs

    2
    E175 Fleet Expansion (American)underway
    Funding: new debt financing
    Start: 2026

    Benefit: 11 new E175s

    Agreement with American for SkyWest to purchase and operate 11 new E175s with deliveries beginning this year. These E175s are expected to replace 11 CRJ700s currently flying under contract with American. 4 of these 11 E175s are expected in H2 2026, and 7 in H1 2027.

    E175 Fleet Expansion (Total)underway
    Period spend: approximately $700 million
    Spent to date: over $240 million
    Funding: ongoing generation of free cash flow
    Start: 2026

    Benefit: 36 new E175s into service from 2026 to 2028

    We expect to continue to deploy in a balanced way our ongoing generation of free cash flow by investing in our fleet including financing the addition of 34 new E175s by the end of 2028. Placing a total of 36 new E175s into service from 2026 to 2028, including 8 for United, 16 for Delta, 11 for American and 1 for Alaska. Approximately half of the $700 million total CapEx for 2026 is for new E175s.

    Risks & headwinds

    2
    Higher fuel costsQ2 2026, ongoing volatility expected

    $21 million negative impact from higher price per gallon in Q2 2026 compared to Q2 2025.

    Mitigation: Partially offset by similar pricing increases in prorate passenger fares (60% recapture rate in Q2). Strong demand for block hours and prorate flying.

    Third-party MRO network challenges2026

    Labor and parts shortages.

    Mitigation: Expect maintenance expense in 2026 to remain consistent with 2025 levels despite increased block hours.

    What to watch in Q3 FY26

    4

    2027 Block Hour Growth

    next quarter
    CurrentStill finalizing plans
    TargetSpecific guidance for 2027 block hour growth

    Why it matters

    Provides insight into future capacity deployment and revenue trajectory, crucial for investment thesis.

    We're still looking at 2027 right now. As you can tell, we're still working on our fleet. We're finalizing our 2027 plans. So I would just say, let's stay tuned⏳ for that. We'll give a lot more color on that next quarter as we firm up our plans for 2027.

    Q&A highlights

    7

    How is SkyWest adapting to recurring fuel price spikes, especially in the prorate segment, compared to earlier in the year?

    Management stated they are in a more stable position now, with strong demand for both block hours and prorate flying helping to offset fuel volatility. They are pressing forward with partners on strategies to enhance value.

    “I think honestly, we're in a little more stable position right now relative to the conversation. And I think we've reflected that in our script. There's good strong demand for block hours, is good, strong demand relative to what's happening.”

    asked by Savanthi Syth · answered by Russell A. Childs

    2 min read5 chapters

    Detailed Narrative

    01

    Fleet Modernization and Expansion

    SkyWest is actively modernizing its fleet, with plans to ultimately operate an all dual-class fleet. This strategy includes the acquisition of 34 additional E175s by the end of 2028, which will bring the total E175 fleet to 300 by the end of 2027. The company is also converting CRJ700s to CRJ550s and launching CRJ450 service for United, with an optimistic outlook for up to 100 CRJ450 aircraft. This fleet initiative aims to enhance flexibility and meet strong market demand.

    02

    Prorate Business Growth and Demand

    The prorate business continues to experience very strong demand, supported by community engagement and opportunities to restore service to underserved communities. Despite higher fuel costs, the company was able to offset approximately 60% of the fuel impact in the fare portion of its prorate business in Q2 FY26. SkyWest added 10 aircraft to its prorate agreements during the quarter to support this growing demand, with expectations for continued fair strength.

    03

    Capital Allocation and Balance Sheet Strength

    SkyWest maintains a strong balance sheet, having reduced total debt by $1 billion since the end of 2022 and $100 million since the end of 2025. The company generated over $460 million in EBITDA during the first half of 2026. Capital deployment is balanced, focusing on fleet growth opportunities, debt reduction, and share repurchases, with an additional $250 million authorized for buybacks, reflecting a commitment to long-term value creation.

    04

    Operational Performance and Challenges

    The company achieved a 99.9% adjusted completion rate on nearly 228,000 flights in Q2 FY26, demonstrating strong operational execution. However, SkyWest continues to face challenges in its third-party MRO network, including labor and parts shortages. These MRO issues are expected to keep maintenance expenses consistent with 2025 levels, even with the anticipated increase in block hours for 2026.

    05

    Strategic Partnerships and Future Outlook

    SkyWest announced a new agreement with American for 11 E175s, which will replace CRJ700s currently flying for American. The company has 67 future E175s on firm order with Embraer, structured with flexibility to defer or terminate unassigned aircraft. Management expressed optimism for ongoing growth in 2026 and 2027, driven by strong partner demand, prorate business expansion, and continued execution of fleet initiatives.

    AI-generated summary of the company’s earnings call. Not investment advice.