The airline industry in the United States has traditionally been comprised of several major airlines, including Alaska, American, Delta and United, which offer scheduled flights to most major U.S. cities through a hub-and-spoke network, while low-cost carriers such as Southwest, JetBlue, Spirit, Allegiant, Frontier and Breeze generally have lower cost structures and operate using a point-to-point network strategy. Regional airlines, including SkyWest, typically operate smaller aircraft on shorter routes than major and low-cost carriers and generally enter into agreements with one or more major airlines to carry passengers booked and ticketed by the major airline between a hub and a smaller outlying city. The industry is highly competitive, with competition based on labor resources, code-share agreement terms, reliable flight operations, operating cost structure, ability to finance new aircraft, certification to operate certain aircraft types and geographical infrastructure supporting markets and routes served.
SkyWest's operations represent the largest regional airline operations in the United States. Primary competitors named in the filing include CommuteAir, Inc.; Endeavor Air, Inc. (owned by Delta); Envoy Air Inc., PSA Airlines, Inc. and Piedmont Airlines (owned by American); Horizon Air Industries, Inc. (owned by Alaska Air Group, Inc.); GoJet Airlines, LLC; and Republic Airways Holdings Inc. Major airlines typically award code-share flying agreements to regional airlines based primarily upon the following criteria: ability to fly contracted schedules, availability of labor resources including pilots, low operating cost, financial resources, geographical infrastructure, overall customer service levels relating to on-time arrival and flight completion percentages and the overall image of the regional airline.
SkyWest generates revenue through code-share agreements with four major airline partners — United, Delta, American and Alaska — under which it provides scheduled regional airline service. Under capacity purchase agreements, which represented approximately 84.3% of total flying agreements revenue for the year ended December 31, 2025, the major airline partner pays fixed rates based on completed flights, flight time and number of aircraft under contract and bears the risk of fuel price fluctuations. Under prorate agreements and SWC charter operations, which represented approximately 15.7% of total flying agreements revenue for the year ended December 31, 2025, SkyWest receives a percentage of passenger ticket revenues or charter fares and bears the operating costs including fuel. The business model is based on providing scheduled regional airline service under long-term, fixed-fee, code-share agreements, with the major airline partners controlling scheduling, ticketing, pricing and seat inventories on capacity purchase flights.
As of December 31, 2025, SkyWest's fleet consisted of 637 total aircraft, including 487 aircraft in scheduled service or under contract pursuant to code-share agreements. The fleet is composed of Embraer E175 regional jet aircraft (270 total, 270 in scheduled service), Canadair CRJ900 regional jet aircraft (51 total, 36 in scheduled service), Canadair CRJ700/CRJ550 regional jet aircraft (178 total, 123 in scheduled service), and Canadair CRJ200 regional jet aircraft (138 total, 58 in scheduled service). The E175, CRJ900, CRJ700 and CRJ550 have a multiple-class seat configuration with first-class seating, while the CRJ200 has a single-class seat configuration. SkyWest Leasing, a reportable segment, includes revenue associated with financing new aircraft with debt under capacity purchase agreements, currently consisting of E175 aircraft, and revenue and expense from leasing aircraft and engines to third parties; as of December 31, 2025, SkyWest Leasing leased 40 CRJ700 aircraft, five CRJ900 aircraft and regional jet aircraft engines to third parties. SWC, formed in 2022 and beginning operations in 2023, offers on-demand charter service using CRJ200 aircraft in a 30-seat configuration and as of December 31, 2025 had 11 aircraft available for on-demand charter service; in September 2025, the DOT granted SWC authorization to operate as a commuter air carrier.
During the year ended December 31, 2025, SkyWest made changes to its fleet including the addition of seven new E175 aircraft and one partner-financed E175 aircraft. The company has firm purchase commitments for 69 new E175 aircraft from Embraer with delivery dates anticipated into 2032, and firm purchase commitments to purchase two used E170 aircraft with anticipated delivery dates in 2026. Capacity purchase agreements exist with United for eight new E175 aircraft scheduled for delivery in 2026, with Alaska for one new E175 aircraft scheduled for delivery in 2026, with Delta for 16 new E175 aircraft (10 scheduled for delivery in 2027 and six in 2028), and with United for 23 used CRJ550 aircraft anticipated to be placed into service by the end of 2026. In January 2026, SkyWest extended the scheduled contract expirations on 40 E175 aircraft with United and 13 E175 aircraft with Delta. During the year ended December 31, 2025, SkyWest repurchased 0.8 million shares of its common stock for $84.5 million under a share repurchase program. In May 2025, the Board approved a $250.0 million increase to the existing stock repurchase program, which originally authorized up to $250.0 million in May 2023. As of December 31, 2025, SkyWest had repurchased 5,675,819 shares of its common stock for $286.9 million and had $213.1 million remaining availability under the stock repurchase program.
For the year ended December 31, 2025, total operating revenues were $4.1 billion 1, a 15.0% 2 increase compared to total operating revenues of $3.5 billion 3 for the year ended December 31, 2024. Net income was $428.3 million 4, or $10.35 per diluted share 5, for the year ended December 31, 2025, compared to net income of $323.0 million 6, or $7.77 per diluted share 7, for the year ended December 31, 2024. Total operating expenses increased $407.1 million 8, or 13.4% 9, for the year ended December 31, 2025 compared to the year ended December 31, 2024. Operating income was $617.8 million 10 for the year ended December 31, 2025, compared to $494.7 million 11 for the year ended December 31, 2024. Cash flows provided by operating activities were $940.4 million 12 for the year ended December 31, 2025, compared to $692.5 million 13 for the year ended December 31, 2024.
SkyWest has multiple growth vectors through fleet expansion under capacity purchase agreements with its major airline partners. The company has a capacity purchase agreement with United for eight new E175 aircraft scheduled for delivery in 2026, with Alaska for one new E175 aircraft scheduled for delivery in 2026, and with Delta for 16 new E175 aircraft (10 scheduled for delivery in 2027 and six scheduled for delivery in 2028). Additionally, SkyWest has capacity purchase agreements with United for 23 used CRJ550 aircraft that are anticipated to be placed into service by the end of 2026, and the company is in the process of converting its owned CRJ700s to CRJ550s. The company also has firm purchase commitments for 69 new E175 aircraft from Embraer with delivery dates anticipated into 2032 and firm purchase commitments to purchase two used E170 aircraft with anticipated delivery dates in 2026. In January 2026, SkyWest extended the scheduled contract expirations on 40 E175 aircraft with United and 13 E175 aircraft with Delta.
SkyWest is evaluating opportunities to use SWC as a commuter air carrier following the DOT granting SWC authorization to operate as a commuter air carrier in September 2025. The company has entered into a strategic arrangement with Eve Holding, Inc. to develop a network of deployment for Eve's electric vertical takeoff and landing (eVTOL) aircraft, which includes the option for SkyWest to purchase up to 100 eVTOL aircraft subject to an agreement of key commercial terms. SkyWest has also invested $25.0 million 14 in Contour, a 14 CFR Part 135 air carrier, as of December 31, 2025. The company has entered into a strategic engine leasing joint venture with a third party to lease engines to other parties.However, the company notes that under its capacity purchase agreements, a portion of compensation is based upon pre-determined rates applied to production statistics, and during the year ended December 31, 2025, approximately 93.0% 15 of code-share operating costs were reimbursable at pre-determined rates and 7.0% 16 were directly reimbursed pass-through costs. The company also notes that salaries, wages and benefits constituted approximately 45.3% 17 of total operating costs for the year ended December 31, 2025, and that various factors may cause the company to significantly increase compensation to labor groups.As of December 31, 2025, SkyWest had firm purchase commitments for 69 E175 aircraft and spare engines totaling $2.3 billion 18. The company intends to finance these firm purchase commitments with approximately 75-85% 19 debt and the remaining balance with cash, and intends to use cash to purchase the two used E170 aircraft. During the year ended December 31, 2025, SkyWest repurchased 0.8 million shares of its common stock for $84.5 million 20 under a share repurchase program. In May 2025, the Board approved a $250.0 million 21 increase to the existing stock repurchase program, which originally authorized up to $250.0 million 22 in May 2023. As of December 31, 2025, SkyWest had $213.1 million 23 remaining availability under the stock repurchase program. The company did not declare dividends for the years ended December 31, 2025 and 2024.
Structural headwinds and execution risks flagged by management include the highly competitive nature of the airline industry, with regional carriers owned by major airlines potentially having access to greater resources. The company notes that major airline scope limitations may restrict certain fleet-type growth opportunities. Additionally, the company experienced a high level of captain and first officer attrition during 2022 and 2023 which constrained capacity to operate full flight schedules, and while captain attrition eased in 2024 and the company was operating full flight schedules by the end of 2025, future elevated pilot attrition levels could constrain flight schedules. The company also notes that its prorate flying agreements with major airline partners permit each partner to terminate the agreement in its discretion by giving notice of 180 days or less.
The filing does not contain additional headwinds or constraints beyond those already discussed.
Management's message emphasizes that SkyWest has the largest regional airline operation in the United States and that the company's success is principally centered on its ability to meet the needs of its major airline partners by providing a reliable and safe operation at attractive economics. The primary objective in fleet changes is to improve profitability by adding new E175 aircraft and used dual-class aircraft to capacity purchase agreements or prorate agreements, and potentially removing older aircraft from service that typically require higher maintenance costs. Management highlights that during the year ended December 31, 2025, approximately 44.4% 29 of aircraft in scheduled service or under contract were operated for United, approximately 28.1% 30 for Delta, approximately 18.9% 31 for American and approximately 8.6% 32 for Alaska, and that historically, multiple contractual relationships with major airlines have enabled the company to reduce reliance on any single major airline code and enhance and stabilize operating results through a mix of capacity purchase and prorate agreements.
For the year ended December 31, 2025, total operating revenues were $4,058,202 thousand 33 compared to $3,527,920 thousand 34 for the year ended December 31, 2024. Net income was $428,334 thousand 35 for 2025 compared to $322,962 thousand 36 for 2024. Diluted earnings per share were $10.35 37 for 2025 compared to $7.77 38 for 2024. Operating income was $617,846 thousand 39 for 2025 compared to $494,657 thousand 40 for 2024. Total operating expenses were $3,440,356 thousand 41 for 2025 compared to $3,033,263 thousand 42 for 2024. Cash flows provided by operating activities were $940,364 thousand 43 for 2025 compared to $692,462 thousand 44 for 2024. As of December 31, 2025, total cash, cash equivalents and marketable securities were $706,909 thousand 45 compared to $801,628 thousand 46 as of December 31, 2024. Total long-term debt, including current maturities, was $2,392,084 thousand 47 as of December 31, 2025 compared to $2,672,375 thousand 48 as of December 31, 2024. The SkyWest Airlines and SWC segment generated segment profit of $262,968 thousand 49 for 2025 compared to $138,891 thousand 50 for 2024. The SkyWest Leasing segment generated segment profit of $302,623 thousand 51 for 2025 compared to $293,252 thousand 52 for 2024. The effective income tax rate was 24.3% 53 for 2025 compared to 25.3% 54 for 2024.
The business model is dependent on code-share agreements with four major airline partners, and as of December 31, 2025, 353 out of 487 aircraft in scheduled service were operated for either United or Delta; a termination of either relationship would significantly impact operations. The company has a significant amount of contractual long-term debt obligations totaling approximately $2.4 billion 24 as of December 31, 2025, including $2.2 billion 25 of debt used to finance aircraft and spare engines and $200.6 million 26 related to borrowings under Payroll Support Program Agreements with Treasury. The residual value of owned aircraft may be less than estimated in depreciation policies, with approximately $5.8 billion 27 of property and equipment and related assets net of accumulated depreciation as of December 31, 2025. The company may experience difficulty in recruiting, training and retaining a sufficient number of qualified pilots, as a shortage of captains caused a sequential reduction in annual block hours in 2022 and 2023, and although captain attrition levels eased in 2024 and the company was operating full flight schedules by the end of 2025, future elevated pilot attrition levels could constrain flight schedules. The company has guaranteed $12.6 million 28 in promissory notes of a third party in the event of default, secured by aircraft and engines.
Analysis on 9/29/2026
