• Net Income: $90 million or $2.16 per diluted share for Q3 2024.
• Pre-Tax Income: $116 million for Q3 2024.
• Revenue: $913 million for Q3 2024, up 5% sequentially and 19% year-over-year.
• Contract Revenue: $761 million, up 4% sequentially and 20% year-over-year.
• Pro Rate and Charter Revenue: $123 million, up 15% sequentially and 11% year-over-year.
• Leasing and Other Revenue: $29 million, flat sequentially, up $5 million year-over-year.
• Deferred Revenue: $342 million cumulative deferred revenue to be recognized in future periods.
• Cash: $836 million at the end of Q3 2024.
• Debt: $2.7 billion at the end of Q3 2024, down from $3 billion at year-end 2023.
• Share Repurchase: 217,000 shares repurchased in Q3 for $16.3 million at an average price of $74.98 per share.
• CapEx: $97 million in Q3 2024, including the acquisition of one new E175 aircraft.
• Block Hours: Expected to increase by approximately 13% in 2024 compared to 2023.
• 2024 GAAP EPS: Expected to be in the low $7 area.
• 2025 GAAP EPS: Expected to be in the mid-$8 area.

• Warning! GuruFocus has detected 6 Warning Signs with SKYW.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SkyWest Inc (NASDAQ:SKYW) reported a net income of $90 million or $2.16 per diluted share for the third quarter of 2024.
• The company has reached a multi-year agreement with United to place 40 CRJ550s under SkyWest Airlines, enhancing its fleet and market position.
• SkyWest Inc (NASDAQ:SKYW) has improved captain availability and pilot staffing, with new hire classes filled through August of next year.
• The company anticipates a 13% increase in block hour production for the full year compared to last year, with expectations to reach pre-COVID levels by mid-2025.
• SkyWest Inc (NASDAQ:SKYW) has a strong balance sheet, with cash of $836 million and plans to repay over $400 million in debt in 2024.

Negative Points

• SkyWest Inc (NASDAQ:SKYW) expects maintenance expenses to increase significantly as they return aircraft to service, with an anticipated $40 million increase in the second half of 2024.
• The company faces challenges in its third-party MRO network, including labor and parts shortages, which could impact aircraft maintenance and service.
• SkyWest Inc (NASDAQ:SKYW) has approximately 30 dual-class CRJ aircraft and over 40 single-class CRJ200s parked, indicating underutilization of assets.
• The company is not considering reinstating its dividend at this time, which may not attract certain investor flows.
• SkyWest Inc (NASDAQ:SKYW) continues to face constraints in returning to some markets due to pilot availability and maintenance challenges, potentially delaying service restoration.

Q & A Highlights

Q: On the 40 airplanes going to United, are the 11 CRJ550s coming from another United Carrier or are they new? And what about the remaining 29 CRJ700s? A: The 11 CRJ550s were parked and not operating for another United Express operator for several years. Of the 29 CRJ700s, 19 are currently flying for United and will transition to CRJ550s, while the remaining 10 are a mix of stored and operating aircraft. - Wade Steel, Chief Commercial Officer

Q: How many CRJ700s will remain grounded after converting 10 into CRJ550s? A: We currently have 30 dual-class CRJ aircraft grounded, and this number will decrease by about 10, leaving some opportunities to bring more back into service. - Wade Steel, Chief Commercial Officer

Q: Can you clarify the increased maintenance expense? A: We expect maintenance expenses to be around $700 million this year, increasing to about $800 million next year, which translates to approximately $200 million per quarter. - Robert Simmons, Chief Financial Officer

Q: How many cities could SkyWest return to in 2025, considering pilot availability? A: We are actively looking at all markets we left, which is about 30% down from where we were. We aim to bring these back up, potentially taking until 2025 or 2026. - Wade Steel, Chief Commercial Officer

Q: Are the cities you plan to return to related to pro rate or capacity purchase agreements? A: It's a mix of both, but heavily weighted towards pro rate. - Russell Childs, President and CEO

Q: Does the conversion of CRJ550s run through CapEx, and is this why CapEx is increasing? A: Yes, the conversion goes through CapEx, and we are also purchasing 11 CRJ550s from United, contributing to the CapEx increase. - Wade Steel, Chief Commercial Officer

Q: Can you provide an update on pilot levels and how they affect CRJ flying? A: We are approaching 5,000 pilots and expect to be back to pre-pandemic levels by the first quarter. We aim to have more pilots than ever by mid-2025 to meet demand. - Russell Childs, President and CEO

Q: Is there any update on the charter front as you head into next year? A: We are optimistic about the charter operation, with bookings significantly higher than last year. We see strong opportunities in small communities and remain committed to pursuing them. - Russell Childs, President and CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.