SKYWEST INC Q3 FY2024 earnings call

• SkyWest honored as one of America's best midsized companies by Time Magazine; completed over 20,000 more flights than Q3 2023 with 99.9% adjusted completion.
• Reached agreement with United for 40 CRJ550s, with majority from existing CRJ700 fleet; 20 additional E175s slated for delivery by end of 2026, bringing total to 278.
• Over 87% block hour production from dual-class aircraft; improved captain availability and pilot staffing balance; block hour production expected up ~13% in 2024.
• Maintenance expense to increase in 2025 as utilization rises; strong demand for regional lift, especially in underserved markets; prorate business demand remains strong.

Total Q3 revenue was $913 million, up 5% sequentially from Q2 2024 and 19% from Q3 2023. Contract revenue was $761 million, up 4% QoQ and 20% YoY. Prorate and charter revenue was $123 million, up 15% QoQ and 11% YoY. Leasing and other revenue was $29 million, flat QoQ and up $5 YoY. As of Q3 end, cumulative deferred revenue was $342 million.

• Expect block hour production up ~13% in 2024, ~10% in 2025. 2024 GAAP EPS expected in low $7 area, 2025 in mid-$8 area if execution goes well.
• Anticipate recognizing similar deferred revenue in Q4 as Q3; 40 CRJ550s to be deployed with United, 15 CRJ550s to Delta by Q1 2025; 20 E175s to be placed into service by end of 2026.

• Maintenance network challenges including labor and parts issues; constraints in bringing back some cities due to maintenance and pilot staffing; seasonality in prorate business with Q1 and Q4 typically softer.

Q: On the 40 airplanes going to United, details on where the aircraft are coming from and remaining CRJ700s?

A: 11 CRJ550s purchased from United (parked), 29 from existing CRJ700 fleet; ~30 dual-class CRJs and over 40 CRJ200s parked, with priority to fly them under contract or prorate.

Q: Clarification on maintenance expense?

A: Maintenance expense expected to be ~$200 million per quarter, with 2024 around $700-800 million, 2025 higher.

Q: Cities that could come back online in 2025?

A: Actively looking at ~30% of markets that were lost, with potential to bring back many cities, including new ones not previously considered.

Q: Capital allocation and dividend?

A: Not considering reinstating dividend at this point.

Q: Charter front update?

A: Optimistic about Charter with bigger bookings in winter months than previous years, driven by corporate travel and sports teams.