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SkyWest (SKYW)
NASDAQ:SKYW
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SkyWest
(NASDAQ:SKYW)
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Rating:74Outperform
Price Target:
$114.00
▲(4.87% Upside)
Action:UpgradedDate:02/20/26
The score is primarily driven by strong financial performance (improving profitability and cash generation with better leverage) and a supportive valuation (low P/E). Earnings call guidance and sentiment add confidence but are tempered by near-term seasonality and maintenance/MRO cost pressures, while technicals indicate only moderate trend strength.
Positive Factors
Capacity Purchase Agreements
SkyWest’s core capacity purchase agreement model transfers much passenger/revenue risk to major airline partners, producing steady fee-based revenue and high contract visibility. That structural business model supports predictable cash flows and long-term revenue stability versus point-to-point ticket risk.
Improving Cash Generation
Material OCF and FCF improvement in 2025 strengthened the firm’s ability to fund capex, reduce debt, and buy back shares. Sustainable cash generation enhances financial flexibility, funds fleet investment, and reduces reliance on external financing across industry cycles when results remain resilient.
Fleet Commitments & Contract Extensions
Large E175 orderbook and multiyear contract extensions with majors provide durable capacity visibility and route economics. Firm commitments and near-term deliveries underpin growth planning, aid fleet commonality, and reduce remarketing and utilization risk over the next several years.
Negative Factors
High Absolute Debt
Despite leverage improvement, a $2.4B debt load leaves balance sheet exposure to downturns and interest cost variability. Material absolute debt can constrain strategic optionality, amplify cyclicality in results, and limit the speed of buybacks or discretionary investment during stress periods.
Cyclical Cash Flow & Revenue Volatility
Historical swings in revenue and free cash flow highlight industry cyclicality and sensitivity to capacity, demand, and timing. Such volatility complicates multi-year planning, heightens refinancing and liquidity risk in downturns, and can force trade-offs between capex, debt paydown, and returns to shareholders.
Elevated Maintenance & Fleet Re-entry Workload
Bringing long-stored aircraft back into service raises near-term maintenance spend, strains third-party MRO capacity, and delays revenue generation from those assets. Persistent MRO cost pressure and re-entry workload can compress margins and slow capacity rollout relative to fleet delivery plans.
SkyWest (SKYW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.31B
Dividend YieldN/A
Average Volume (3M)264.12K
Price to Earnings (P/E)10.4
Beta (1Y)1.03
Revenue Growth19.27%
EPS Growth78.26%
CountryUS
Employees12,876
SectorIndustrials
Sector Strength72
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)2.21
Shares Outstanding40,406,673
10 Day Avg. Volume229,605
30 Day Avg. Volume264,119
Financial Highlights & Ratios
PEG Ratio0.29
Price to Book (P/B)1.47
Price to Sales (P/S)1.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.53
Enterprise Value/Revenue1.63
Enterprise Value/Gross Profit4.86
Enterprise Value/Ebitda6.73
Forecast
1Y Price Target
$128.50Price Target Upside18.20% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)11.49
Revenue Forecast (FY)$4.32B
SkyWest Business Overview & Revenue Model
Company DescriptionSkyWest, Inc., through its subsidiaries, operates a regional airline in the United States. The company operates through two segment, SkyWest Airlines and SkyWest Leasing. It also leases regional jet aircraft and spare engines to third parties. As of December 31, 2021, the company's fleet consisted of 629 aircraft; and provided scheduled passenger and air freight services with approximately 2,080 total daily departures to various destinations in the United States, Canada, Mexico, and the Caribbean. In addition, it offers airport customer and ground handling services for other airlines. SkyWest, Inc. was incorporated in 1972 and is headquartered in St. George, Utah.
How the Company Makes MoneySkyWest generates revenue primarily through its capacity purchase agreements with major airlines, where it operates regional flights on behalf of these partners. Under these agreements, SkyWest is reimbursed for operating expenses and receives a fee per flight, which provides a stable and predictable revenue stream. Additionally, the company earns revenue from ticket sales for flights operated under its own brand, as well as ancillary services such as baggage fees and in-flight sales. The company benefits from its strategic partnerships with major airlines, which enhance its market reach and allow it to leverage the existing networks of these airlines to fill seats, thus driving profitability.
SkyWest Key Performance Indicators (KPIs)
Any
Revenue by Segment
Shows how different business areas contribute to overall revenue, indicating diversification and potential growth opportunities.
Shows how different business areas contribute to overall revenue, indicating diversification and potential growth opportunities.
Data provided by:
The Fly
The FlySkyWest Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call presented multiple strong financial and operational wins — notable profit growth (31% pretax increase), robust EBITDA, meaningful free cash flow, significant debt reduction, active share buybacks, and major E175 contract extensions and orderbook expansion — while acknowledging near-term headwinds from a government shutdown impact, elevated maintenance/MRO pressures, sharper seasonality (Q1 EPS pressure), and the workload of returning parked aircraft to service. On balance, the company’s durable cash generation, strengthened balance sheet, fleet commitments, and demonstrated operating leverage outweigh the near-term challenges.Q4-2025 Updates
Positive Updates
Strong Full-Year Profitability
2025 net income of $428 million or $10.35 per diluted share; Q4 GAAP net income of $91 million or $2.21 per diluted share; Q4 pretax income $125 million and full-year pretax income $506 million, up 31% year-over-year.
Production Growth and Operating Leverage
Full-year block hours increased 15% versus 2024 and the model converted that production growth into a 31% increase in pretax income, demonstrating strong operating leverage.
Improved EBITDA and Cash Generation
2025 EBITDA of $982 million (up over $100 million versus 2024) and free cash flow of over $400 million for 2025; nearly $1 billion in free cash flow generated over the last two years.
Debt Reduction and Balance Sheet Strengthening
Repaid $492 million of debt in 2025; total debt down to $2.4 billion from $2.7 billion at 12/31/2024 (roughly a 10% reduction year-over-year); total debt ~$1 billion lower than end of 2022; unencumbered equipment of approximately $1.5 billion.
Share Repurchase Activity
Share repurchases of $85 million in 2025 (nearly 850,000 shares, a 50% increase in shares repurchased versus 2024); Q4 repurchases of 268,000 shares for $27 million; $213 million remaining under current authorization.
Fleet Commitments and Contract Extensions
Multiyear extensions for 40 E175s with United and 13 E175s with Delta; no major E175 contract expirations until late 2028; firm order for 69 E175s (25 allocated to majors, 44 unassigned); expect nearly 300 E175s by 2028.
Planned Capacity and CapEx
Expect mid-single-digit percentage growth in block hours for 2026 and anticipated full-year EPS in the mid-$11 area; anticipate 9 E175 deliveries in 2026 and approximately $600–$625 million in total CapEx for 2026 (roughly flat with 2025).
Operational Performance
Achieved more than 250 days of 100% controllable completion in 2025, regularly ran over 2,500 daily scheduled departures, and continue strong completion and reliability metrics versus peers.
Negative Updates
Government Shutdown Impact
Mandated flight cancellations from the November government shutdown reduced Q4 results by approximately $7 million (about $0.13 per share), including roughly 2,000 cancelled flights and 3,000 cancelled block hours.
Seasonality and Near-Term EPS Pressure
Management expects sharper seasonality in 2026 with Q1 EPS flat to down versus Q4 2025, reflecting return to pre-COVID seasonality and strong summer concentration of production.
Elevated Maintenance Costs and MRO Challenges
Ongoing third-party MRO network challenges (labor and parts) elevated maintenance expense; bringing aircraft out of long-term storage increases near-term maintenance spend and maintenance expense expected to remain at 2025 levels into 2026.
Cash Balance Decline
Ending Q4 cash of $707 million, down from $802 million a year earlier and from $753 million in Q3 2025, reflecting debt repayments, CapEx ($214 million in Q4) and share repurchases.
Deferred Revenue Recognition Changes
Q4 included recognition of $5 million in previously deferred revenue (down from $17 million in Q3 2025 and $20 million in Q4 2024); $265 million of cumulative deferred revenue remains to be recognized, and recent contract extensions pushed some recognition timing.
Parked Aircraft & Fleet Re-entry Workload
Approximately 20 parked dual-class CRJ aircraft and over 40 parked CRJ200s require heavy maintenance/return-to-service; this creates near-term operational and maintenance workload and expense before these aircraft generate revenue.
Offsetting Fleet Returns
Return of 19 Delta-owned CRJ900s over the next couple years will partially offset growth from new deliveries, though returns are expected at a slower cadence than previously anticipated.
Company Guidance
SkyWest’s 2026 guidance calls for mid‑single‑digit block‑hour growth versus 2025 and full‑year EPS in the mid‑$11s (Q1 EPS expected flat‑to‑down versus Q4 2025 GAAP EPS of $2.21, with Q2 and Q3 the strongest quarters); an effective tax rate of ~24% (lower in Q1) and maintenance expense roughly in line with 2025. Management expects nine E175 deliveries in 2026, to place 23 CRJ‑550s into service, to redeploy ~20 parked dual‑class CRJs (and has over 40 parked CRJ200s available), and projects the E175 fleet to approach nearly 300 by 2028. Capital spending is forecast at $600–625 million in 2026 (about flat with ~ $580 million in 2025), there is $265 million of deferred revenue remaining (modeling recognition roughly $20–25 million per quarter), and the company intends to continue debt reduction while funding fleet investment and opportunistic share repurchases.SkyWest Financial Statement Overview
Summary
Strong multi-year recovery with materially higher margins and profitability, improving leverage and returns on equity, and robust 2025 operating/free cash flow. Offsetting factors are cyclical volatility (historically uneven revenue/FCF) and still-material absolute debt (~$2.4B), which can amplify downturn risk.Income Statement
Profitability has improved meaningfully: net margin rose from ~1% (2023) to ~9% (2024) and ~11% (2025), alongside higher operating profitability. Revenue growth re-accelerated to ~20% (2024) and surged in 2025, though the historical pattern is uneven (including a 2020 loss and a 2023 revenue decline). Overall, the income statement shows a solid post-downturn recovery with some cyclical volatility risk.78
Positive
Balance Sheet
Leverage has been trending better, with debt-to-equity improving from ~1.63 (2020) to ~0.87 (2025), and equity building over time. Returns on shareholder capital also strengthened materially, rising to ~15.6% in 2025 versus low-single-digits in 2021–2023. However, absolute debt remains sizable (about $2.4B in 2025), which keeps the balance sheet more exposed to industry cycles than low-leverage peers.70
Positive
Cash Flow
Cash generation is strong and improving: operating cash flow increased to ~$940M in 2025, and free cash flow rebounded sharply (with very strong growth in 2025). Free cash flow also covered net income well in 2025 (about 1.0x), signaling good earnings quality that year. The main weakness is volatility—free cash flow was negative in 2022 and lower in 2024—suggesting capital spending and cash conversion can swing materially.82
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 4.06B | 3.53B | 2.94B | 3.00B | 2.71B |
| Gross Profit | 2.50B | 788.96M | 372.19M | 499.31M | 193.72M |
| EBITDA | 1.03B | 930.36M | 554.35M | 614.22M | 713.93M |
| Net Income | 428.33M | 322.96M | 34.34M | 72.95M | 111.91M |
Balance Sheet | |||||
| Total Assets | 7.39B | 7.14B | 7.03B | 7.86B | 7.13B |
| Cash, Cash Equivalents and Short-Term Investments | 706.91M | 801.63M | 835.22M | 1.05B | 860.41M |
| Total Debt | 2.39B | 2.76B | 3.09B | 3.54B | 3.35B |
| Total Liabilities | 4.64B | 4.73B | 4.91B | 5.51B | 4.86B |
| Stockholders Equity | 2.75B | 2.41B | 2.11B | 2.35B | 2.27B |
Cash Flow | |||||
| Free Cash Flow | 0.00 | 364.18M | 420.01M | -202.22M | 150.42M |
| Operating Cash Flow | 0.00 | 692.46M | 736.33M | 480.38M | 831.82M |
| Investing Cash Flow | 0.00 | -228.63M | -23.23M | -904.89M | -698.52M |
| Financing Cash Flow | 0.00 | -384.75M | -667.81M | 269.08M | -90.60M |
SkyWest Technical Analysis
Positive
108.71
Price Trends
102.13
Positive
100.82
Positive
104.26
Positive
Market Momentum
1.44
Negative
60.16
Neutral
77.24
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SKYW, the sentiment is Positive. The current price of 108.71 is above the 20-day moving average (MA) of 103.89, above the 50-day MA of 102.13, and above the 200-day MA of 104.26, indicating a bullish trend. The MACD of 1.44 indicates Negative momentum. The RSI at 60.16 is Neutral, neither overbought nor oversold. The STOCH value of 77.24 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SKYW.
SkyWest Risk Analysis
SkyWest disclosed 41 risk factors in its most recent earnings report. SkyWest reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
SkyWest Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $4.31B | 10.41 | 16.62% | ― | 19.27% | 78.26% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
57 Neutral | $1.06B | 20.73 | 8.83% | ― | 4.27% | 28.47% | |
56 Neutral | $6.02B | 62.04 | 2.36% | ― | 31.50% | -49.15% | |
56 Neutral | $1.88B | ― | -4.29% | ― | 3.29% | -983.31% | |
52 Neutral | $1.07B | -7.74 | -27.87% | ― | 1.77% | -1964.48% | |
50 Neutral | $2.12B | -3.34 | -25.29% | ― | -2.49% | 47.88% |
* Industrials Sector Average
SKYW
SkyWest
108.71
9.80
9.91%
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SNCY
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ULCC
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.