SKYW 10-K & 10-Q changes, risk factors and insider trading

There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information. Because we rely on third-party vendors and service providers for functions critical to our business, including information technology infrastructure and services, successful cyberattacks that disrupt or result in unauthorized access to third-party IT Systems can materially impact our operations and financial results. Remote and hybrid working arrangements at our company (and at many third-party service providers) also increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks. Additionally, any integration of artificial intelligence into our operations, products or services, or those of our third party vendors, service providers or airline partners, is expected to pose new or unknown cybersecurity risks and challenges.

We and certain of our third-party service providers have in the past experienced cybersecurity incidents. ForWe example,expect assuch previouslyincidents disclosed,to our flight service was interruptedcontinue in 2021varying due to a cyberattack that resulted in the installation of malware on our systems. The incident was considered fully remediateddegrees and settled through our insurer in 2023, and we are not aware of any ongoing liability. We cannot assure our cybersecurity risk management program will prevent such incidents from occurring in the future. While no incidents have had a material impact on our operations or financial results to date, we cannot guarantee that material incidents will not occur in the future as further described in “Item 1C. Cybersecurity”. Although we previously carried cybersecurity insurance coverage in the past, we currently do not have cybersecurity insurance coverage. Any cybersecurity incident or other adverse impact to the availability, integrity or confidentiality of our IT Systems or Confidential Information could compromise our ability to operate flights or technology systems, result in the loss of Confidential Information, legal claims or proceedings (such as class actions), regulatory investigations and enforcement actions, liability or regulatory penalties, disruption to our operations, damage to our reputation, loss of existing or future customers and/or significant incident response, system restoration or remediation and future compliance costs. Any or all of the foregoing could adversely affect our business, results of operations and financial condition.

We currently operate primarily through hubs supporting our major airline partners’ route networks across the United States. Nearly all of our flights either originate from or fly into one of these hubs. Our revenues depend primarily on our completion of flights and secondarily on service factors such as timeliness of departure and arrival. Any interruptions or disruptions could, therefore, severely and adversely affect us. Extreme weather such as hurricanes or tornados can cause flight disruptions, and, during periods of storms or adverse weather, our flights may be canceled or significantly delayed. We operate a significant number of flights to and from airports with potential winter related or other weather difficulties, including but not limited to, Chicago, Dallas, Denver, Detroit, Houston, Minneapolis, Salt Lake City and San Francisco. A significant interruption or disruption in service at one of our hubs, due to adverse weather, system malfunctions, air traffic control disruptions, airport construction, security closuresclosures, protests or otherwise, could result in the cancellation or delay of a significant portion of our flights and, as a result, could have a severe adverse impact on our operations and financial performance.

The United States has recently enacted significant tariffs in excess of historical levels, and proposedUnited States trade policies continue to enactevolve. significant new tariffs. Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy andAccordingly, there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. There continues to exist significant uncertainty about the future relationship between the United States and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets,markets. andThe mayrecently significantlyenacted tariffs have had a significant impact on the cost of aircraft parts and supplies sourced internationallyinternationally, orincluding impactbut not limited to, the costnon-U.S. ofmanufactured servicecomponents providersused located outside ofon the UnitedE175 States,aircraft whichwe inimport turnfrom wouldBrazil. These added costs negatively impact us.

We receive information related to employees and other individuals in order to run our business. Laws, regulations and other requirements relating to the privacy, security and handling of information about individuals, alongside the application and interpretation of such requirements, are constantly evolving and developing and subject to change.change, creating a complex compliance environment. There has been heightened legislative and regulatory focus on data privacy and security in the United States and elsewhere, including in relation to cybersecurity incidents, and it is possible that new laws, amendments to or interpretations of existing laws, regulations and other requirements may require us to incur significant costs, implement new processes or change our handling of information and business operations. In addition, any failure or perceived failure by us to comply with laws, regulations and other requirements relating to the privacy, security and handling of information could result in legal claims or proceedings (including class actions), regulatory investigations or enforcement actions. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. Further, these proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust. If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected.

As of December 31, 2024,2025, 359353 out of our total 492487 aircraft in scheduled service were operating under a capacity purchase agreement or a prorate agreement with either United or Delta. If our code-share relationship with United or Delta were terminated, our operations would be significantly impacted and we would not likely have an immediate source of revenue or earnings to offset such loss. A termination of either of these relationships would likely have a material adverse effect on our financial condition, operating revenues and net income unless we are able to enter into satisfactory substitute arrangements for the utilization of the affected aircraft by other code-share partners, or, alternatively, obtain the airport facilities and gates and make the other arrangements necessary to fly as an independent airline. We may not be able to enter into substitute code-share agreements, and any such arrangements we might secure may not be as favorable to us as our current agreements. Operating SkyWest Airlines as an airline independent from our major airline partners would be a significant departure from our business plan and would likely require significant time and resources and may not be a viable alternative.

Under our capacity purchase agreements with our major airline partners, a portion of our compensation is based on pre-determined rates that are applied to our production, such as block hours, for the period. We also receive fixed monthly payments related to overhead costs and aircraft ownership costs from our major airline partners. Reduced utilization of our aircraft under our capacity purchase agreements will likely have a material adverse impact on the results of our operations and financial condition. DuringIn therecent yearyears, endedcompensation December 31, 2022, we amendedunder our capacity purchase agreements with certain major airline partners thathave reduceda certainlower futurepercentage of contractual fixed monthly payments and increaseda futurehigher percentage of contractual variable payments. A compensation structure that is weighted more to utilization and less to fixed payments could have a material adverse impact on the results of our operations and financial condition if utilization levels decrease. Additionally, amendments to our capacity purchase agreements that result in changes to our future scheduled fixed monthly payments will likely impact the timing of our revenue recognition. During the year ended December 31, 2024,2025, the revenue we recognized was $44.9$57.8 million more than the fixed monthly cash payments received. As of December 31, 2025, we have received a cumulative total of $264.6 million in fixed monthly cash payments that we have not recognized as revenue. Although we currently anticipate we will recognize previously deferred revenue for the year ending December 31, 2026, future contract amendments or reduced utilization levels of our aircraft could negatively impact the timing of our revenue recognition.

While our prorate agreements and SWC revenue increased $76.0$153.0 million, or 19.9%,33.5%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, there is no assurance our prorate revenue or SWC revenue will continue to increase in 20252026 or thereafter. Future increases in prorate revenue is based on several factors subject to change including, but not limited to, passenger demand on prorate routes, approval of new routes with our major airline partners, maintenance required to return parked aircraft for service and labor availability. Additionally, there is no assurance we will continue to be awarded subsidy contracts under the Essential Air Service (EAS) program on applicable prorate routes from the DOT going forward. Additionally, there is no assurance the EAS program will continue to receive funding by the U.S. Government. Future increases in SWC revenue is also based on several factors subject to change including, but not limited to, corporate or institutional demand for charter flights, competition for charter business and availability of other charter alternatives, such as ground transportation. Additionally, SWC appliedwas forgranted commuter authority from the DOT in 2022,2025, which if approved, may allowallowing SWC to expand its route strategy. There is no assurance that the DOTSWC will approvebe SWC’sawarded EAS markets or other commuter authorityroutes application.in the future, nor that demand for its services will materialize as anticipated.

We have previously experienced disagreements with our major airline partners regarding the interpretation of various provisions of our code-share agreements. Some of those disagreements have resulted in litigation, and we may be subject to additional disputes and litigation in the future. Furthermore, there can be no assurance that any or all future disputes and related proceedings, if commenced, would be resolved in our favor. An unfavorable result in any such proceeding could have adverse financial consequences or require us to modify our operations. Such disagreements and their consequences could have an adverse effect on our relationship with our major airline partners, operating results and financial condition.

In 2022 we formed a new subsidiary, SWC, which had its first revenue generating charter flight in 2023. SWC offers on-demand charter service using CRJ200 aircraft in a 30 or less seat configuration under its own FAA operating certificate. As we growpursue operations,growth opportunities with SWC, there may be significant risks, including that SWC may divert management’s attention or the Company’s resources from our core business and strategiesstrategies. and thatAdditionally, the anticipated objectives of SWCSWC, such as those associated with its recent DOT approval to operate under commuter authority, may not materialize or may take longer to materialize than anticipated, including but not limited to SWC’s pending application with the DOT to operate under commuter authority.anticipated.

Under our capacity purchase agreements with our major airline partners, a portion of our compensation is based upon pre-determined rates typically applied to production statistics (such as departures, block hours, flight hours and number of aircraft in service each month). The primary operating costs intended to be compensated by the pre-determined rates include our labor and training costs, aircraft maintenance expenses and overhead costs. During the year ended December 31, 2025, approximately 93.0% of our code-share operating costs were reimbursable at pre-determined rates and 7.0% of our code-share operating costs were directly reimbursed costs, often referred to as pass-through costs. Our business is labor intensive, requiring large numbers of pilots, flight attendants, mechanics and other personnel. Labor costs constitute a significant percentage of our total operating costs. Increases in our labor costs could result in a material reduction in our earnings. For example, during the years ended December 31, 20242025 and 2023,2024, our salary, wage and benefit costs constituted approximately 48.3%45.3% and 46.7%48.3% of our total operating costs, respectively. Various factors may result in higher attrition rates that could cause us to significantly increase compensation to our labor groups, such as higher compensation offered by other airlines andor companiesother infactors impacting the airline industry and/or general labor costs increasesmarket in the United States. Our inability to offset increased labor costs through rate increases under our capacity purchase agreements with all our major airline partners could negatively impact our operating costs.profitability. Currently, we believe our labor costs are competitive relative to other regional airlines. However, we cannot provide assurance that our labor costs going forward will remain competitive because of changes in supply and demand for labor in the regional airline industry. We compete against other airlines and businesses for labor in many highly skilled positions. If we are unable to hire, train and retain qualified employees at a reasonable cost, sustain employee engagement in our strategic vision, or if we are unsuccessful at implementing succession plans for our key staff, we may be unable to grow or sustain our business. Labor costs to recruit, incentivize and retain skilled employees may significantly increase in the future due to increased competition for the limited number of qualified industry personnel. Attrition rates that exceed our ability to hire and replace applicable workgroups could negatively impact our ability to generate revenue, negatively impact our operating results, increase our training and labor costs and our business prospects could be harmed.

Additionally, under our capacity purchase agreements with United, Delta, American and Alaska, a portion of our compensation is based upon pre-determined rates typically applied to production statistics (such as departures, block hours, flight hours and number of aircraft in service each month). The primary operating costs intended to be compensated by the pre-determined rates include our labor and training costs, certain aircraft maintenance expenses and overhead costs. During the year ended December 31, 2024, approximately 92.2% of our code-share operating costs were reimbursable at pre-determined rates and 7.8% of our code-share operating costs were directly reimbursed costs, often referred to as pass-through costs. Additionally, our aircraft maintenance costs may increase annually as our fleet ages at a higher rate than our pre-determined rates in our capacity purchase agreements. Also, on an individual aircraft basis, various in-depth maintenance procedures are typically scheduled to occur at multi-year intervals, which can result in maintenance expense fluctuations year-to-year. If our operating costs for labor, aircraft maintenance and overhead costs exceed the compensation earned from our pre-determined rates under our capacity purchase agreements, our financial position and operating results will be negatively affected.

Any new labor agreement entered into by other regional carriers with their work forces may result in higher industry wages and increase pressure on us to increase the wages and benefits of our employees. If our labor agreements become uncompetitive,uncompetitive with respect to employee compensation or work rules, we may experience higher employee attrition and low employee job satisfaction, which may negatively impact our operating and financial results.

Our employees are represented by in-house associations; however, organizing efforts to join national unions among those employees occur from time to time. Such efforts will likely continue in the future and may ultimately result in some or all of our employees being represented by one or more national unions. If our employees were to unionize or be deemed to be represented by one or more national unions, negotiations with these unions could divert management’s attention and disrupt operations. Additionally, representation by a national union may limit our ability to have open communications with our employees, negatively impact our company culture and deter our ability to amend and increase our compensation packages for market conditions in a timely manner.manner, which may result in higher employee dissatisfaction and attrition. Moreover, we cannot predict the outcome of any future negotiations relating to union representation or collective bargaining agreements. A national union soliciting to represent our employees may represent employees at mainline carriers or other regional airlines and may have conflicting interests with those of our employees or SkyWest. Future collective bargaining agreements involving a national union and our employees may negatively impact our relationship with our employees and have an adverse impact on our operating and financial results.

Pursuant to our capacity purchase agreements, our major airline partners have agreed to bear the economic risk of fuel price fluctuations on our contracted flights. However, we bear the economic risk of fuel price fluctuations on our prorate and SWC operations. As of December 31, 2024,2025, we operated 2528 CRJ200s under a prorate agreement with UnitedUnited, and one CRJ900 and 16 CRJ700s or14 CRJ550s under a prorate agreement with Delta.Delta and 10 CRJ900s under a prorate agreement with American. As of December 31, 2024,2025, we had 1811 CRJ200s available for on-demand charter service through SWC. Our operating and financial results with respect to these prorate agreements and charter services can be negatively affected by the price of jet fuel in the event we are unable to increase our passenger fares. Additionally, in the event of prolonged low fuel prices, our competitors may lower their passenger ticket prices on routes that compete with our prorate or charter markets, which could negatively impact our prorate and charter revenue.

Our business depends upon the efforts of our president and chief executive officer, Russell A. Childs, and our other key management and operating personnel. We may have difficulty replacing management or other key personnel who cease to be employed by us and, therefore, the loss of the services of any of these individuals could harm our business. We do not maintain key-person insurance on any of our executive officers.

In 2022, we agreed to guarantee debt for a 14 CFR Part 135commuter air carrier.carrier that operates smaller aircraft than we operate. The debt is secured by the Part 135 air carrier’s aircraft and engines and has a five-year term. At December 31, 2024,2025, the outstanding debt for the guarantee was $14.1 million. In 2023, we agreed to guarantee debt for an aviation school. The debt is secured by the school’s aircraft and engines and has a five-year term. At December 31, 2024, the outstanding debt for the guarantee was $10.6$12.6 million. The purpose of thesethis arrangementsarrangement is to increase the potential number of commercial pilots in the Company’sour hiring pipeline.pipeline, particularly for commercial pilots who are interested in progressing their career and operating larger regional aircraft at SkyWest Airlines. In the event of default, if we are unable to sell the collateral, or the fair value is less than the required payment, it could negatively impact our financial condition and financial results. Additionally, there is no guarantee that the relationship with thethis entitiesentity will have a favorable effect on our ability to recruit pilots.

As of December 31, 2024,2025, we had a total of approximately $2.7$2.4 billion in total long-term debt obligations. Our long-term debt obligations included $2.5$2.2 billion of debt used to finance aircraft and spare engines and $200.6 million related to borrowings under the Payroll Support Program Agreements with U.S. Department of the Treasury (“Treasury”). OurVarious highchanges levelin ofairline fixedindustry obligationsand macroeconomic or other conditions could negatively impact our ability to obtain additional financing to support additional expansion plans or divert cash flows from operations and expansion plans to service the fixed obligations.

Under our capacity purchase agreements, our major airline partners compensate us for our costs of owning the aircraft on a monthly basis. The aircraft compensation structure varies by agreement but is intended to covercompensate eitherus for using our aircraft principal and interest debt service costs or our aircraft depreciation and interest expense while the aircraft is under contract. In the event any of our major airline partners defaults under a capacity purchase agreement or we are unable to extend the flying contract terms on aircraft withthat we have ongoing financial obligations,obligations for, our financial position and financial results could be materially adversely affected.

If our liquidity is materially diminished, we might not be able to timely pay our leasesdebt andor debtsother obligations or comply with certain covenants under SkyWest Airlines’ line of credit or with other material provisions of our contractual obligations.

As of December 31, 2024,2025, we have firm purchase commitments for 1669 E175 aircraft and spare engines totaling $481.5$2.3 million.billion. Over the next several years, ifas we continue to add new aircraft to our fleet, we anticipate using significant amounts of capital to acquire these aircraft.

There can be no assurance that our operations will generate sufficient cash flow or liquidity to enable us to obtain the necessary aircraft acquisition financing to replace our current fleet, or to make required debt service payments related to our existing or anticipated future obligations. Even if we meet all required debt, leasedebt and purchaseother financial obligations, the sizeamount of theseour long-term obligations could negatively affect our financial condition and results of operations in many ways, including:

We leased five CRJ900 aircraft, 3540 CRJ700/CRJ550 aircraft, and several CRJ aircraft engines to third parties as of December 31, 2024.2025. In the event a lessee defaults under the terms of the lease agreement, we may incur additional costs, including legal and other expenses necessary to repossess the aircraft or engines, particularly if the lessee is contesting the proceedings or is in bankruptcy. We could also incur substantial maintenance, refurbishment or repair costs if a defaulting lessee fails to pay such costs and where such maintenance, refurbishment or repairs are necessary to put the aircraft or engines in suitable condition for remarketing or sale. We may also incur storage costs associated with any aircraft or engine that we repossess and are unable to place immediately with another lessee. Even if we are able to immediately place a repossessed aircraft or engine into service ourselves, or place the aircraft and engines under another lessee, we may not be able to do so at a similar or favorable lease rate. A lessee default under one of our lease agreements could negatively affect our financial condition, cash flow and results of operations.

We have entered into a strategic engine leasing joint venture that operates under joint control with a third party that involvesmay significantnot risk.meet our investment objectives.

We have entered into a strategic engine joint venture with a third party to lease engines to other parties. This strategic venture involves significantinvestment risks, including:

We entered into aan partnershiparrangement with a third party to develop demand for electric-powered aircraft that involves significant uncertainty and risk.

We have entered into a strategic partnershiparrangement with Eve Holding, Inc. (“Eve”, formerly EVE UAM, LLC, an Embraer company), to develop a network of deployment for Eve’s eVTOL aircraft. To support this effort, SkyWest may provide assistance to Eve on vehicle design, vertiport specifications and the certification roadmap for eVTOL operations. This strategic partnershiparrangement involves significant uncertainty risks, including:

The effect of any, or some combination, of the foregoing risks could affect our partnershiparrangement with Eve and future benefits may not materialize.

As of December 31, 2024,2025, we held a1.1 warrant giving us the right to acquire 1,500,000million shares of common stock of Eve at(NYSE: an exercise price of $0.01 per share.EVEX). At December 31, 2024,2025, the fair value of theour warrantholdings in Eve was $8.2$4.3 million and futurethere reductionsis inno assurance the trading market pricevalue of Eve’sEve common stock will likely negatively impact our net income.increase.

In May 2023, our board of directors approved a share repurchase program, pursuant to which we are authorized to repurchase up to $250 million of our common stock.stock and in May 2025, the Board approved a $250 million increase to the existing stock repurchase program. Under our May 2023 repurchase program we are authorized to repurchase such shares of common stock at prevailing market prices in the open market, in privately negotiated transactions or by other means in accordance with federal securities laws. Depending on market conditions and other factors, such repurchases may commence or be suspended from time to time by management without prior notice. The actual timing, number and value of shares repurchased will be determined by our management in its discretion. The number of shares of common stock that we may repurchase, including pursuant to the share repurchase program, will depend upon our financial condition and results of operations and other factors deemed relevant by our board of directors. There also can be no assurance that we will continue repurchasing shares of common stock under our May 2023current authorization, that our board of directors will approve additional share repurchase programs in the future or that we will have the financial resources to repurchase shares of common stock in the future.

Volatility in our common stock price may prevent holders from selling shares at or above the prices paid for them. During the year ended December 31, 2024,2025, our common stock closing price varied between a high of $115.11$123.72 and a low of $48.82.$79.41. The market price of our common stock may fluctuate significantly for a variety of reasons, includingincluding, but not limited to: general market, political and other economic conditions; labor availability, including regional airline pilots; new regulatory pronouncements or changes in regulatory guidelines; announcements concerning the airline industry, our major airline partners or competitors; the market’s reaction to our quarterly or annual earnings or those of other companies in the airline industry; failure to meet financial analysts’ performance expectations or changes in recommendations by financial analysts for our common stock or the stock of other airlines; significant sales of our common stock, and other risks described in these “Risk Factors.” In recent periods, the stock market has experienced extreme declines and volatility, significantly impacting the market price of securities issued by many companies, including us and other companies in our industry.

Our ability to issue shares of preferred and common stock without shareholder approval may have the effect of delaying or preventing a change in control and may adversely affect the voting and other rights of the holders of our common stock, even in circumstances where such a change in control would be viewed as desirable by most investors. The provisions of the Utah Control Shares Acquisitions Act may also discourage the acquisition of a significant interest in or control of our Company. Additionally, our code-share agreements contain termination and extension trigger provisions related to change in control type transactions that may have the effect of deterring a change in control of our Company.

We have the largest regional airline operation in the United States.States through our operating subsidiary SkyWest Airlines. As of December 31, 2024,2025, we offered scheduled passenger and air freight service with approximately 2,1902,260 total daily departures to destinations in the United States, Canada and Mexico. Our fleet of E175, CRJ900, CRJ700 and CRJ550 have a multiple-class seat configuration, whereas our CRJ200 have a single-class seat configuration. During 2022, we formed SWC, which offers on-demand charter services using CRJ200 aircraft in a 30-seat configuration. As of December 31, 2024,2025, we had 624637 total aircraft in our fleet, including 492487 aircraft in scheduled service or under contract pursuant to our code-share agreements, summarized as follows:

Our business model is based on providing scheduled regional airline service under code-share agreements (commercial agreements between airlines that, among other things, allow one airline to use another airline’s flight designator codes on its flights) with our major airline partners. In exchange for such services, our major airline partners pay us either fixed fees to operate the flight, referred to as “capacity purchase agreement,” or we receive a percentage of applicable passenger ticket revenues on the designated flights we operate, referred to as “prorate agreement.” Our success is principally centered on our ability to meet the needs of our major airline partners by providing a reliable and safe operation at attractive economics. During the year ended December 31, 2024,2025, we made changes to our fleet, including the addition of fiveseven new E175 aircraft and 20one partner-financed E175 aircraft.

We anticipate our fleet will continue to evolve, as we are scheduled to add a total of 15eight new E175 aircraft with United fromin 20252026, 16 new aircraft with Delta between 2027 and 2028 (which are expected to 2026replace 12 CRJ900s and four CRJ700s we are currently flying under contract with Delta) and one new E175 aircraft with Alaska in 2025.2026. We also have multiple agreements with United to place 3023 used CRJ550 aircraft into service throughout 2025 andin 2026. Timing of placing these additional aircraft into service, including delivery timing on acquired aircraft, may be subject to change as we are coordinating with our major airline partners in response to labor availability or other factors. Our primary objective in the fleet changes is to improve our profitability by adding new E175 aircraft and used CRJ700, CRJ550, CRJ900 and E175 aircraft, commonly referred to as “dual-class CRJ aircraft,aircraft” due to the first-class seat offerings, to our capacity purchase agreements or prorate agreements, and potentially removing older aircraft from service that typically require higher maintenance costs.

Historically, multiple contractual relationships with major airlines have enabled us to reduce our reliance on any single major airline code and to enhance and stabilize operating results through a mix of our capacity purchase agreements and our prorate flying agreements. For the year ended December 31, 2024,2025, our capacity purchase revenue represented approximately 86.6%84.3% of our total flying agreements revenue and our prorate and SWC revenue, combined, represented approximately 13.4%15.7% of our total flying agreements revenue. On capacity purchase routes, the major airline partner controls scheduling, ticketing, pricing and seat inventories and we are compensated by the major airline partner at contracted rates based on completed block hours (measured from takeoff to landing, including taxi time), flight departures, the number of aircraft under contract and other operating measures. We control scheduling, pricing and seat inventories on certain prorate routes, and we share passenger fares with our major airline partners according to prorate formulas. We are also responsible for the operating costs of the prorate flights, including fuel and airport costs.

The number of aircraft we have in scheduled service or under contract pursuant to our code-share agreements and the number of block hours we incur on our flights are primary drivers of our flying agreements revenue under our capacity purchase agreements. The number of flights we operate and the corresponding number of passengers we carry are the primary drivers of our revenue under our prorate flying agreements. The number of aircraft we have in scheduled service or under contract pursuant to our code-share agreements increaseddecreased from 485 as of December 31, 2023, to 492 as of December 31, 2024, to 487 as of December 31, 2025, or by 1.4%1.0%; and the number of block hours increased from 1.141.3 million in 20232024 to 1.291.5 million in 2024,2025, or by 13.3%,14.7%, primarily due to an increase in the scheduled daily utilization of our aircraft driven by an increase in the number of available captains.

Our capacity purchase revenue increased $502.4$319.3 million, or 20.5%,10.8%, from 20232024 to 2024,2025, primarily as a result of an increase in completed block hours for the comparable period and recognizing previously deferred revenue for the year ended December 31, 2024, compared to deferring the recognition of revenue on fixed monthly payments we received during the year ended December 31, 2023.periods. As a result of a higher number of passengers carried on our prorate routes and an increase in the number of prorate and charter flights operated year-over-year, our prorate and SWC revenue increased $76.0$153.0 million, or 19.9%,33.5%, in 2024,2025, as compared to 2023.2024.

The following table summarizes our fleet scheduled forin service or under contract as of December 31, 2024 and December 31, 2025:

During 2024,2025, we took delivery of fiveseven new E175 aircraft and placed the aircraft into service under capacity purchase agreementsagreements, and we placed 20one partner-financed E175 aircraft into service under a capacity purchase agreement. We placed 2318 SkyWest owned CRJ550 aircraft into service under a capacity purchase agreement or prorate agreement, while removing 2214 CRJ700 aircraft from flying agreements. We placed four SkyWest owned CRJ900 aircraft into service under a prorate agreement while removing four partner-financed CRJ900 aircraft from flying agreements. We also removed 1417 CRJ200 aircraft from service during 2024.2025. We are evaluating alternative uses for the CRJ200 aircraft removed from service.

The following table sets forth our major operational statistics and the associated percentage changes for the periods identified below. The increase in block hours, departures and passengers carried during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was primarily due to an increase in the number of block hours incurred per aircraft as the number of available captains did not significantly limit our flight schedules during 2024,2025, compared to 2023,2024, which allowed for a higher scheduled utilization of our aircraft.

Flying agreements revenue primarily consists of revenue earned on flights we operate under our capacity purchase agreements and prorate agreements with our major airline partners and on-demand charter flights. Lease, airport services and other revenues consist of revenue earned from leasing aircraft and spare engines to third parties separate from our capacity purchase agreementsagreements, providing maintenance services to other airlines and providing airport counter, gate and ramp services.

The increase in “Capacity purchase agreements flight operations revenue” of $438.9 million, or 22.2%, was primarily due to a 13.3% increase in block hour production and a decrease in deferred revenue related to fixed monthly payments for flight operations received under our capacity purchase agreements for the year ended December 31, 2024, compared to the year ended December 31, 2023. Under our capacity purchase agreements, we are paid a fixed amount per month per aircraft over the contract term. We recognize the total projected fixed monthly payments per aircraft as revenue proportionately to the number of block hours we complete for each reporting period, relative to the estimated number of block hours we anticipate completing over the remaining contract term. Under our capacity purchase agreements, the performance obligation of each completed flight is measured in block hours incurred for each completed flight. Beginning January 1, 2024, certain scheduled fixed monthly payments under our capacity purchase agreements transitioned to variable payments, which was the primary driver in recognizing previously deferred revenue during the year ended December 31, 2024, whereas we deferred recognizing revenue associated with the fixed monthly payments for the year ended December 31, 2023. Based on the number of completed block hours during the year ended December 31, 2024,2025, we recognized $43.4a total of $38.3 million of previously deferred revenue,revenue net ofand unbilled revenue,revenue related to the non-lease fixed monthly payments we received associated with our flight operations revenues. For the year ended December 31, 2023,2024, we deferredrecognized recognizinga $164.0total of $43.4 million of revenue,previously netdeferred ofrevenue and unbilled revenue,revenue related to the non-lease fixed monthly payments received associated with our flight operations revenues. The timing of our revenue recognition related to the fixed payments associated with our flight operations will be adjusted over the remaining contract term for each capacity purchase agreement based on the number of block hours we complete each reporting period relative to the number of block hours we anticipate completing over the remaining contract term of each capacity purchase agreement.

The increase in “Capacity purchase agreements aircraft lease revenue” of $63.5$144.2 million, or 13.3%,26.7%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily duedriven toby a transitionchange fromin certainthe scheduledmix fixedof monthly lease payments to variable lease paymentsaircraft under our capacity purchase agreements beginningfrom Januarythe 1,year 2024.ended December 31, 2024 and a capacity purchase agreement contract extension in 2025 that decreased the allocation of certain fixed monthly revenue from flight operations revenue and increased the allocation of such payments to aircraft lease revenue based on relative standalone selling prices of the lease and non-lease components for the year ended December 31, 2025. Under our capacity purchase agreements, a portion of the consideration we are paid is designed as reimbursement for certain aircraft ownership costs and is considered lease revenue, including fixed monthly payments and variable payments. We recognize the fixed monthly lease payments as lease revenue using the straight-line basis over the capacity purchase agreement term and variable lease payments are recognized in the period when the block hours are completed. WeAdditionally, we recognized $1.5a total of $19.5 million of previously deferred lease revenue and unbilled revenue during the year ended December 31, 2024,2025, using the straight-line basis for fixed monthly lease payments, whereascompared weto recognizing a total of $1.5 million of previously deferred recognizingrevenue $78.5and millionunbilled revenue during the year ended December 31, 2023.2024.

The deferred revenue balance applicable to each contract will be recorded as revenue over the term of each respective contract. For clarity, under our “Capacity purchase agreements flight operations revenue” and “Capacity purchase agreements aircraft lease revenue” combined, we recognized $44.9a total of $57.8 million of previously deferred revenue,revenue net ofand unbilled revenue,revenue during the year ended December 31, 2024,2025, compared to deferringrecognizing revenue,a nettotal of unbilled$44.9 revenue,million of $242.5previously milliondeferred revenue and unbilled revenue during the year ended December 31, 2023.2024. Our total deferred revenue balance, associated with our “Capacity purchase agreements flight operations revenue” and our “Capacity purchase agreements aircraft lease revenue,” net of unbilled revenue, was $322.4$264.6 million as of December 31, 2024,2025, compared to total deferred revenue, net of unbilled revenue of $367.3$322.4 million as of December 31, 2023.2024.

The increase in prorate agreements and SWC revenue of $76.0$153.0 million, or 19.9%,33.5%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to an increase in prorate departures, passengers and passenger revenue we received on routes we operated under our prorate agreements driven by an improvement in the number of available captains during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023. Additionally, a portion of the increase was attributed to an increase in SWC revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023, as SWC began operations in 2023.2024.

The increase in lease, airport services and other revenues of $14.1$57.9 million, or 13.9%,50.3%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to an increase in maintenance services provided to third parties, an increase in the number of leased assetsassets, and increase in lease rates for leases to third parties during 20242025 compared to 2023.2024.

Salaries, wages and benefits. The $141.3$95.4 million, or 10.7%,6.5%, increase in salaries, wages and benefits for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to an increase in direct labor costs that resulted from the higher number of flights we operatedoperated, partially offset by operating efficiencies from higher utilization of our aircraft during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024.

Aircraft maintenance, materials and repairs. The $39.2$231.1 million, or 5.8%,32.4%, increase in aircraft maintenance expense for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to higherincremental maintenance costs incurred on our CRJ fleet, an increase in our flight volume, which increased our maintenance activity and related expenses, and an increase in maintenance service activities provided to third parties for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024.

Airport-related expenses. Airport-related expenses include airport-related customer service costs such as outsourced airport gate and ramp agent services, airport security fees, passenger interruption costs, deicing, landing fees and station rents. The $35.8 million, or 41.7%, increase in airport-related expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to an increase in subcontracted airport services, station rents, weather related aircraft deicing costs and landing fees as a result of an increase in the number of flights we operated under our prorate agreements. For clarity, our employee airport customer service labor costs are reflected in salaries, wages and benefits and customer service labor costs we outsource to third parties are included in airport-related expenses. The $13.2 million, or 18.2%, increase in airport-related expenses for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to an increase in subcontracted airport services, weather related aircraft deicing costs and landing fees as a result of an increase in the number of flights we operated under our prorate agreements.

Other operating expenses. Other operating expenses primarily consist of aircraft rentals, property taxes, hull and liability insurance, simulator costs, crew per diem, crew hotel costs and credit loss reserves. The $26.2$31.2 million, or 9.8%,10.4%, increase in other operating expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily related to an increase in other operating costs,expenses associated with our higher flight volume in 2025 compared to 2024, such as crew per diem and crew hotel costs, and an increase in our credit loss reserve in 2025 as a result of theour assessment of higher numbercredit risk of flightscertain weoutstanding operated during 2024, compared to 2023.receivables.

Interest Expense.expense. The $16.6$9.9 million, or 12.7%,8.7%, decrease in interest expense for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily related to a decrease in outstanding debt from $3.0 billion at December 31, 2023 to $2.7 billion at December 31, 2024.2024 to $2.4 billion at December 31, 2025. Our average effective interest rate for 20242025 and 20232024 was 4.2%4.3% and 4.1%,4.2%, respectively.

Other income, net. Other income, net decreasedof $19.4expenses increased $5.0 million infor 2024,the year ended December 31, 2025, compared to 2023.the year ended December 31, 2024. Other income, net primarily consists of the realizedunrealized and unrealizedrealized gains orand losses on our investments in other companies, income or loss related to our equity method investments and gains or losses on the sale of assets. The decreaseincrease in other income, net of expenses was primarily due to a decreaseresult of an increase in gains from the salefair value of assets and a decrease in unrealized gains on our investments in other companies for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024.

Provision for income taxes. For the years ended December 31, 2024,2025, and December 31, 2023,2024, our effective income tax rates were 25.3%24.3% and 14.8%,25.3%, respectively, which included the statutory federal income tax rate of 21%21.0% and other reconciling income tax items, including state income taxes and the impact of non-deductible expenses. For the year ended December 31, 2023,2025, the lower effective tax rate was primarily related to a higher deduction benefit ofrelated $7.6to millionemployee forequity theawards releasethat ofvested ain previously2025 recordedcompared uncertainto tax position liability.2024. Our income tax provision rate may fluctuate each reporting period based on various factors including, but not limited to, the amount of our non-deductible operating expenses, relative to our income before income taxes.

Our reportingreportable segments consist of (1) the operations of SkyWest Airlines and SWC, which had its first revenue generating flight in 2023,SWC (collectively, “SkyWest Airlines and SWC”) and (2) SkyWest Leasing activities.

Our chief operating decision maker analyzes the profitability of operating aircraft under our code-share agreements separately from the profitability of financingour capital deployed for new aircraft acquired through debt and cashthe placedrelated under our capacity purchase agreements, currently consistingfinancings of such aircraft, including our E175 fleet, and our return on such aircraft financing.fleet. The SkyWest Airlines and SWC segment includes revenue earned under the applicable capacity purchase agreements attributed to operating such aircraft and the respective operating costs, and revenue and operating expenses attributed to otherprorate flying oragreements, airport services agreements and charter flight services. The SkyWest Leasing segment includes applicable revenue earned under the applicable capacity purchase agreements attributed to the ownership of new aircraft acquired through the issuance of debt and the respective depreciation and interest expense of such aircraft. The SkyWest Leasing segment also includes the activity of acquiring and leasing used regional jet aircraft and spare engines to third parties and other activities. The SkyWest Leasing segment’s total assets and capital expenditures include new aircraft acquired through the issuance of debt and our aircraft and engines leased to third parties. Additionally, aircraft removed from SkyWest Airlines operations and held for sale are included in the SkyWest Leasing segment.

SkyWest Airlines and SWC Segment Profit (Loss).Profit. SkyWest Airlines and SWC segment profit was $263.0 million for the year ended December 31, 2025, compared to $138.9 million for the year ended December 31, 2024, compared to a segment loss of $165.2 million for the year ended December 31, 2023.2024.

SkyWest Airlines and SWC’sSWC otheroperating segment itemsrevenues increased $48.7$509.7 million, or 11.8%,17.5%, primarily related to an increase in other operating costs, such as crew per diem and crew hotel costs, as a result of the higher number of flights we operated duringfor the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, offset by a decrease in aircraft rent expenseprimarily due to thean early lease buyouts of 35 CRJ aircraftincrease in 2023.block hour production during the year ended December 31, 2025, compared to the year ended December 31, 2024.

As of December 31, 2024,2025, we had $801.6$706.9 million in cash,cash and cash equivalents and marketable securitiessecurities. andAs $75.1of December 31, 2025, we had $75.6 million available for borrowings under our line of credit. Given our available liquidity as of December 31, 2024,2025, we believe the working capital currently available to us will be sufficient to meet our present financial requirements, including planned capital expenditures, scheduled lease payments and debt service obligations for at least the next 12 months.

Our total of cash, cash equivalents and marketable securities decreased from $835.2 million as of December 31, 2023, to $801.6 million as of December 31, 2024, to $706.9 million as of December 31, 2025, or by $33.6$94.7 million. Our total long-term debt, including current maturities decreased from $3.0 billion as of December 31, 2023, to $2.7 billion as of December 31, 2024, to $2.4 billion as of December 31, 2025, or by $0.3 billion, primarily due to scheduled debt payments for the 20242025 year, partially offset by debt issued to finance fiveseven new E175 aircraft. Additionally, we usedrepurchased $43.3 million to repurchase 0.60.8 million shares of our common stock for $84.5 million under a share repurchase program authorized by our Board of Directors during the year ended December 31, 2024.2025. At December 31, 2024,2025, our total capital mix (measured as a ratio of total stockholder equity and total long-term debt, including current maturities) was 47.4%53.4% equity and 52.6%46.6% total long-term debt, compared to 41.3%47.4% equity and 58.7%52.6% total long-term debt at December 31, 2023.2024.

Cash Position and Liquidity. The following table provides a summary of the net cash provided by (used in) our operating, investing and financing activities for the years ended December 31, 20242025 and 2023,2024, and our total cash and marketable securities positions as of December 31, 20242025 and December 31, 20232024 (in thousands).:

Our cash flows provided by operating activities was $940.4 million for the year ended December 31, 2025, compared to $692.5 million for the year ended December 31, 2024, compared to $736.3 million for the year ended December 31, 2023.2024. Our operating cash flows are typically impacted by various factors including our net income, adjusted for non-cash expenses and gains such as depreciation expense, assetstock impairment charges, stock-basedbased compensation expense and gains or losses on the disposal of assets; and timing of cash payments and cash receipts attributed to our various current asset and liability accounts, such as accounts receivable, inventory, accounts payable, income taxes, accrued liabilities, deferred revenue and unbilled revenue.

The decreaseincrease in our cash flow from operations for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was primarily due to an increase in income before income taxes for the year ended December 31, 2025, compared to the year ended December 31, 2024, and an increase in accounts payable and other liabilities due to the timing of cash payments on our current liability accounts, timing of cash receipts on our accounts receivables and a decrease in cash received in excess of revenue recognized for the yearcomparable ended December 31, 2024, compared to the year ended December 31, 2023, offset by an increase in net income, adjusted for non-cash items and deferred income taxes, for the year ended December 31, 2024, compared to the year ended December 31, 2023.periods.

Our cash flows used in investing activities was $651.8 million for the year ended December 31, 2025, compared to cash flows used in investing activities of $228.6 million for the year ended December 31, 2024, compared to $23.2 million for the year ended December 31, 2023.2024. Our investing cash flows are typically impacted by various factors including our capital expenditures, such as the acquisition of aircraft and spare engines; deposit payments and refunds of previously made deposits on new aircraft; purchase and sales of marketable securities; proceeds from the sale of assets; and timing of cash payments and cash receipts attributed to our variousinvestments long-termin assetother and long-term liability accounts.entities.

Excluding the purchase and sale of marketable securities, which results in the transfer of dollars between our investments in marketable securities and our cash accounts, our cash used in investing activities increased from $284.6 million for the year ended December 31, 2023, to $341.2 million for the year ended December 31, 2024.2024, Theto increase$642.0 inmillion cashfor usedthe inyear investingended activities,December excluding31, 2025. Excluding the transfer of dollars between our investments in marketable securities and our cash accounts, the remaining increase in cash used in investing activities was primarily due to an increase of $59.4$267.3 million used in the acquisition of property and equipment and an increase of $57.8 million used for aircraft deposits for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, primarily due to the acquisition of fiveseven new E175 aircraft inand 2024.spare Additionally, there was an increaseengines in our cash used to acquire other long-term assets, including our investment in Contour, for the year ended December 31, 2024, offset by a decrease of $47.5 million in aircraft deposits in 2024, compared to 2023.2025.

The $283.1$8.5 million decreaseincrease in cash used in financing activities for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was primarily due to aan decreaseincrease of $248.6$41.6 million in cash used to purchase treasury stock and an increase of $46.5$20.3 million in proceedscash from the issuance of long-term debt, offset by an increase of $5.3 million in principal payments on long-term debt and an increase of $6.3 millionused for employee income taxes paid on vested equity awards in lieu of shares, offset by an increase of $53.6 million in proceeds from the issuance of long-term debt for the purchase of seven new E175 aircraft, net of principal payments on long-term debt during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024.

The following table summarizes our commitments and obligations for future minimum rental payments required under operating leases that had initial or remaining non-cancelable lease terms as of December 31, 2025, firm aircraft and spare engine commitments, interest commitments and principal maturities on long-term debt as noted for each of the next five years and thereafter (in thousands):

In addition to the table above, in 2024, we entered into a master equipment purchase agreement with another airline to acquire certain airframes and engines and lease the assets back to the airline under a five-year term. We accounted for the transaction as a failed sale-leaseback in accordance with Accounting Standard Codification Topic 842 as the criteria for a sale were not met. At December 31, 2024,2025, we estimateestimated the remaining financing obligation under the agreement will be between $60.0$20.0 million and $70.0$25.0 million and anticipateanticipated closing on the remaining financings during 2025.2026.

We are coordinating with our major airline partners and aircraft manufacturers on the timing of upcoming fleet deliveries under previously announced deals. The anticipated future aircraft delivery dates are subject to change. As of December 31, 2024,2025, we had a firm purchase commitment for 1669 new E175 aircraft from Embraer with delivery dates anticipated into 2026.2032. We also have ahad firm purchase commitmentcommitments to purchase fourtwo used CRJ550E170 aircraft with anticipated delivery dates in 2025.2026.

At the time of each aircraft acquisition, we evaluate the financing alternatives available to us,us and select one or more of these methods to fund the acquisition. In recent years, we have issued long-term debt to finance our new aircraft. At present, we intend to fund our aircraft purchase commitments through a combination of cash on hand and debt financing. Based on current market conditions and discussions with prospective leasing organizations and financial institutions, we currently believe that we will be able to obtain financing for our committed acquisitions, as well as additional aircraft. We intend to finance the firm purchase commitment for 1669 E175 aircraft with approximately 75-85% debt and the remaining balance with cash. We intend to funduse cash to purchase the purchase of the fourtwo used CRJ550E170 aircraft through cash on hand.aircraft.

We also have long-term lease obligations, primarily relating to our facilities, aircraft and engines. Excluding aircraft financed by our major airline partners that we operate for them under contract, we had eight aircraft under lease with remaining terms ranging from fourthree years to sixfive years as of December 31, 2024.2025. These eight leased aircraft are subleased to a third party. Future minimum lease payments due under all long-term operating leases were approximately $129.3$119.0 million at December 31, 2024.2025. Assuming a 6.2% discount rate, which is the average incremental borrowing rate we anticipate we would have incurred on debt obtained over a similar term to acquire these assets, the present value of these lease obligations would have been equal to approximately $87.7$81.9 million at December 31, 2024.2025.

Under our capacity purchase agreements, our major airline partners compensate us for our costs of owning the aircraft on a monthly basis. The consideration for aircraft compensationownership structurecosts we receive varies by agreement but is intended to covercompensate eitherus for our aircraftownership principalof and interest debt service costs, ourthe aircraft depreciation and interest expense or our aircraft lease expense costs while the aircraft is under contract.

The following discussion and analysis presents factors that had a material effect on the results of operations of SkyWest, Inc. (“SkyWest,” “we” or “us”) during the three-monththree- and six-month periods ended MarchJune 31,30, 2026 and 2025. Also discussed is our financial condition as of MarchJune 31,30, 2026, and December 31, 2025. You should read this discussion in conjunction with our condensed consolidated financial statements for the three and six months ended MarchJune 31,30, 2026, including the notes thereto, appearing elsewhere in this Report. This discussion and analysis contains forward-looking statements. Please refer to the section of this Report entitled “Cautionary Statement Concerning Forward-Looking Statements” for discussion of uncertainties, risks and assumptions associated with these statements.

Certain of the statements contained in this Report should be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “hope,” “likely,” and “continue” and similar terms used in connection with statements regarding our outlook, anticipated operations, the revenue environment, our contractual relationships, and our anticipated financial performance. These statements include, but are not limited to, statements about the continued demand for our product, the effect of economic conditions on SkyWest’s business, financial condition and results of operations, SkyWest’s plans with respect to share repurchases, the timing of scheduled aircraft deliveries and returns, fleetincluding expansion,with changesrespect to aircraft for which SkyWest holds firm delivery positions or purchase rights, the transition of the new E175 aircraft to replace existing aircraft in aircraftSkyWest’s seatfleet configurations,and the timing thereof, transition of SkyWest’s CRJ200 fleet to the CRJ450 configuration, fleet expansion and anticipated fleet size for SkyWest in upcoming periods, expected production levels in future periods and associated recovery from captain staffing challenges,periods, pilot attrition trends, SkyWest’s coordination with United Airlines, Inc. (“United”), Delta Air Lines, Inc. (“Delta”), American Airlines, Inc. (“American”) and Alaska Airlines, Inc. (“Alaska”) (each, a “major airline partner” and together, “major airline partners”) regarding the delivery of aircraft under previously announced agreements and timing of placing new aircraft deliveries into service, the expected terms, timing and benefits related to SkyWest’s leasing, strategic arrangements, strategic agreements and equity investments in third parties, the potential use of SkyWest Charter, LLC (“SWC”) as a commuter air carrier, SkyWest’s provision of assets to Corporate Flight Management, Inc. d/b/a Contour Airlines, increasing the utilization and efficiency of all fleet types as well as SkyWest’s future financial and operating results, plans, objectives, expectations, estimates, intentions and outlook, and other statements that are not historical facts. All forward-looking statements included in this Report are made as of the date hereof and are based on information available to SkyWest as of such date. SkyWest assumes no obligation to update any forward-looking statements unless required by law. Readers should note that many factors could affect the future operating and financial results of SkyWest and could cause actual results to vary materially from those expressed in forward-looking statements set forth in this Report. These factors include, but are not limited to the challenges of competing successfully in a highly competitive and rapidly changing industry; developments associated with fluctuations in the economy and the demand for air travel, including related to inflationary pressures, and related decreases in customer demand and spending; uncertainty regarding potential future outbreaks of infectious diseases or other health concerns, and the consequences of such outbreaks to the travel industry, including travel demand and travel behavior, and our major airline partners in general and the financial condition and operating results of SkyWest in particular; the prospects of entering into agreements with existing or other carriers to fly new aircraft; uncertainty regarding timing and performance of key third-party service providers; ongoing negotiations between SkyWest and its major airline partners regarding their contractual obligations; uncertainties regarding operation of new aircraft; the ability to attract and retain qualified pilots, mechanics and other personnel in operations; the impact of regulatory issues such as pilot rest rules and qualification requirements; the ability to obtain aircraft financing; the financial stability of SkyWest’s major airline partners and any potential impact of their financial condition on the operations of SkyWest; fluctuations in flight schedules, which are determined by the major airline partners for whom SkyWest conducts flight operations; variations in market and economic conditions; significant aircraft debt commitments; estimated useful life of long-lived assets, residual aircraft values and related asset impairments; labor relations and costs; the impact of global instability; rapidly fluctuating fuel costs and potential fuel shortages; the impact of weather-related, natural disasters and other air safety incidents on air travel and airline costs; aircraft deliveries; uncertainty regarding ongoing international hostilities, including those between Russia and Ukraine, Israel and Hamas, and Israel, the United States and Iran, and the related impacts on macroeconomic conditions, fuel costs and the international operations of any of our major airline partners as a result of such conflicts; the availability of parts used in connection with maintenance and repairs of the aircraft; the availability of suitable replacement aircraft for aging aircraft; the impact of enacted and proposed U.S. tariffs on global economic conditions and the financial markets, passenger demand, the cost of aircraft parts and supplies sourced internationally and the cost of service providers located outside of the United States; the impact of potential future U.S. government shutdowns on air traffic controller staffing, flight cancellations and federal Essential Air Service subsidies; the possibility that the stock repurchase program may be suspended or discontinued at any time; as well as the other factors identified under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, under the heading “Risk Factors” in Part II, Item 1A of this Report, elsewhere in this Report, in our other filings with the Securities and Exchange Commission (the “SEC”) and other unanticipated factors.

We have the largest regional airline operation in the United States through our operating subsidiary SkyWest Airlines, Inc. (“SkyWest Airlines”). As of MarchJune 31,30, 2026, we offered scheduled passenger and air freight service with approximately 2,3702,510 total daily departures to destinations in the United States, Canada and Mexico. Our fleet of Embraer E175 regional jet aircraft (“E175”), Canadair CRJ900 regional jet aircraft (“CRJ900”), Embraer E170 regional jet aircraft (“E170”) and Canadair CRJ700 regional jet aircraft (“CRJ700”), including a 50-seat configuration of the CRJ700 aircraft, commonly referred to as a “CRJ550,” have a multiple-class seat configuration, whereas our Canadair CRJ200 regional jet aircraft (“CRJ200”) have a single-class seat configuration. SWC offers on-demand charter services using CRJ200 aircraft in a 30-seat configuration. As of MarchJune 31,30, 2026, we had 639642 total aircraft in our fleet, including 500517 aircraft in scheduled service or under contract pursuant to our code-share agreements, summarized as follows:

Our business model is based on providing scheduled regional airline service under code-share agreements (commercial agreements between airlines that, among other things, allow one airline to use another airline’s flight designator codes on its flights) with our major airline partners. In exchange for such services, our major airline partners pay us either fixed fees to operate the flight, referred to as “capacity purchase agreement,” or we receive a percentage of applicable passenger ticket revenues on the designated flights we operate, referred to as “prorate agreement.” Our success is principally centered on our ability to meet the needs of our major airline partners by providing a reliable and safe operation at attractive economics. From MarchJune 31,30, 2025, to MarchJune 31,30, 2026, we made changes to our fleet, including the addition of eightseven new E175 aircraft and one partner-financed E175 aircraft.

We anticipate our fleet will continue to evolve, as we are scheduled to add a total of eightseven new E175 aircraft with United in 2026, 11 new E175 aircraft with American between 2026 and 2027 (which are expected to replace 11 CRJ700s we are currently flying under contract with American) and 16 new E175 aircraft with Delta between 2027 and 2028 (which are expected to replace 1516 CRJ900s and two CRJ700sCRJs we are currently flying under contract with Delta). We also have multiple agreements with United to place 1812 used CRJ550 aircraft into service betweenin 2026 and 2027.2026. Timing of placing these additional aircraft into service, including delivery timing on acquired aircraft, may be subject to change as we are coordinating with our major airline partners in response to labor availability or other factors.change. As of MarchJune 31,30, 2026, we operated 19 CRJ900s owned by Delta, and we anticipate returning these 19 aircraft to Delta over the next two years. Our primary objective in the fleet changes is to improve our profitability by adding new E175 aircraft and used CRJ700, CRJ550, CRJ900 and E175 aircraft, commonly referred to as “dual-class aircraft” due to the first-class seat offerings, to our capacity purchase agreements or prorate agreements, and potentially removing older aircraft from service that typically require higher maintenance costs. Additionally, during the threesix months ended MarchJune 31,30, 2026, we announced a new configuration of the CRJ200 aircraft that will have 41 seats, including seven first-class seats (referred to as a “CRJ450” aircraft). We anticipate operating the first CRJ450 in scheduled service by the end of 2026. We anticipate completing the conversion of approximately 50 CRJ200s to the CRJ450 configuration by 2028.

As of MarchJune 31,30, 2026, approximately 45.2%46.2% of our aircraft in scheduled service or under contract were operated for United, approximately 27.8%26.9% were operated for Delta, approximately 18.4%18.6% were operated for American and approximately 8.6%8.3% were operated for Alaska.

Historically, multiple contractual relationships with major airlines have enabled us to reduce our reliance on any single major airline code and to enhance and stabilize operating results through a mix of our capacity purchase agreements and our prorate agreements. For the threesix months ended MarchJune 31,30, 2026, our capacity purchase revenue represented approximately 82.8%81.9% of our total flying agreements revenue and our prorate and SWCcharter revenue, combined, represented approximately 17.2%18.1% of our total flying agreements revenue. On capacity purchase routes, the major airline partner controls scheduling, ticketing, pricing and seat inventories and we are compensated by the major airline partner at contracted rates based on completed block hours (measured from takeoff to landing, including taxi time), flight departures, the number of aircraft under contract and other operating measures. We control scheduling, pricing and seat inventories on certain prorate routes, and we share passenger fares with our major airline partners according to prorate formulas. We are also responsible for the operating costs of the prorate flights, including fuel and airport costs.

FirstSecond Quarter Summary

We had total operating revenues of $1.1 billion for the three months ended June 30, 2026, a 6.5% increase compared to total operating revenues of $1.0 billion for the three months ended MarchJune 31, 2026, a 6.8% increase compared to total operating revenues of $948.5 million for the three months ended March 31,30, 2025. We had net income of $101.7$100.7 million, or $2.50$2.54 per diluted share, for the three months ended MarchJune 31,30, 2026, compared to net income of $100.6$120.3 million, or $2.42$2.91 per diluted share, for the three months ended MarchJune 31,30, 2025. The significant items affecting our revenue and operating expenses during the three months ended MarchJune 31,30, 2026, are outlined below:

The number of aircraft we have in scheduled service or under contract pursuant to our code-share agreements and the number of block hours we incur on our flights are primary drivers of our flying agreements revenue under our capacity purchase agreements. The number of flights we operate and the corresponding number of passengers we carry are the primary drivers of our revenue under our prorate agreements. The number of aircraft we have in scheduled service or under contract pursuant to our code-share agreements increased from 488502 as of MarchJune 31,30, 2025 to 500517 as of MarchJune 31,30, 2026, or by 2.5%3.0%; and the number of block hours increased from 352,155376,269 for the three months ended MarchJune 31,30, 2025 to 362,933396,696 for the three months ended MarchJune 31,30, 2026, or by 3.1%,5.4%, primarily due to an increase in the number of aircraft operating under our capacity purchase agreements.agreements and higher scheduled utilization of our aircraft under contract.

Our capacity purchase revenue increased $24.5$21.6 million, or 3.1%,2.6%, for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, primarily as a result of an increase in completed block hours for the comparable periods. AsOur prorate and charter revenue increased $55.4 million, or 38.1%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily as a result of aan higherincrease in the number of passengers carried on our prorate routesroutes, a higher average revenue per passenger and an increase in the number of prorate and charter flights operated year-over-year, our prorate and SWC revenue increased $37.4 million, or 28.6%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.year-over-year.

Our total operating expenses increased $80.4$81.8 million, or 9.9%,9.5%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The increase in operating expenses was primarily due to an increase in our direct operating expenses associated with the increase in the number of flights we operatedoperated, higher fuel costs and higher pilot training costs for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. Departures increased from 201,838222,874 for the three months ended MarchJune 31,30, 2025 to 204,019227,960 for the three months ended MarchJune 31,30, 2026, or by 1.1%,2.3%, and our total block hours increased 3.1%5.4% for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. Additional details regarding the increase in our operating expenses are described in the section of this Report entitled “Results of Operations.”

Our significant accounting policies are summarized in Note 1 to our consolidated financial statements for the year ended December 31, 2025, and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are presented in our Annual Report on Form 10-K for the year ended December 31, 2025. Critical accounting policies are those policies that are most important to the preparation of our consolidated financial statements and require management’s subjective and complex judgments due to the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies relate to revenue recognition, long-lived assets, and income tax. The application of these accounting policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results will likely differ, and may differ materially, from such estimates. There have been no significant changes in our critical accounting estimates during the threesix months ended MarchJune 31,30, 2026.

Three Months Ended MarchJune 31,30, 2026 and 2025

The following table sets forth our major operational statistics and the associated percentage changes for the periods identified below. The increase in block hours and departures during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, was primarily due to additional aircraft operating under our capacity purchase agreements, additional routes operated under our prorate agreements and an increase in the number of block hours incurred per aircraft due to the higher scheduled utilization of our aircraft during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Combined “Capacity purchase agreements flight operations revenue” and “Capacity purchase agreements aircraft lease revenue” increased 3.1%2.6% for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, driven primarily by a 3.1%5.4% increase in block hour production during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The increase in aircraft lease revenue and decrease in flight operations revenue was primarily due to a reallocation of variable consideration between non-lease and lease components based on relative standalone selling prices as a result of capacity purchase agreement contract amendments entered into since MarchJune 31,30, 2025.

The increase in prorate agreements and SWCcharter revenue of $37.4$55.4 million, or 28.6%,38.1%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, was primarily due to an increase in prorate departures, passengers and passenger revenue we received on routes we operated under our prorate agreements during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

The increasedecrease in lease, airport services and other revenues of $2.8$9.5 million, or 8.7%,19.9%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, was primarily due to ana increasedecrease in therevenue numberfrom ofmaintenance leasedservices assetsprovided andto anthird increase in lease ratesparties during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Salaries, wages and benefits. The $44.8$36.6 million, or 11.9%,9.4%, increase in salaries, wages and benefits for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, was primarily due to an increase in direct labor costs supporting the higher number of flights we operated during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, and due to an increase in pilot training costs associated with higher pilot attrition rates since MarchJune 31,30, 2025.

Aircraft maintenance, materials and repairs. The $3.9$4.0 million, or 1.9%,1.7%, increase in aircraft maintenance expense for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, was primarily due to an increase in our flight volume, which increased our maintenance activity and related expenses for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.2025, partially offset by a reduction in maintenance services provided to third parties for the comparable periods.

Depreciation and amortization. The $0.8$2.3 million, or 0.9%,2.6%, increase in depreciation and amortization expense for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, was primarily due to an increase in depreciation expense related to the acquisition of eightseven new E175 aircraft and spare engines since MarchJune 31, 2025, offset by certain CRJ aircraft and engines that were depreciated to their estimated residual value since March 31,30, 2025.

Aircraft fuel. The $14.4$33.1 million, or 58.9%,120.6%, increase in fuel cost for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, was primarily due to an increase in the number of flights we operated under our prorate agreements and undercharter SWCoperations and the corresponding increase in gallons of fuel we purchased,purchased and an increase in our average fuel cost per gallon from $3.03$2.88 for the three months ended MarchJune 31,30, 2025 to $3.40$4.45 for the three months ended MarchJune 31,30, 2026. We purchase and incur expense for all fuel on flights operated under our prorate agreements and SWC.charter operations. All fuel costs incurred under our capacity purchase agreements are either purchased directly by our major airline partner, or if purchased by us, we record the direct reimbursement as a reduction to our fuel expense. The following table summarizes the gallons of fuel we purchased under our prorate agreements and SWC,charter operations, for the periods indicated:

Other operating expenses. Other operating expenses primarily consist of aircraft rentals, property taxes, hull and liability insurance, simulator costs, crew per diem, crew hotel costs and credit loss reserves. The $8.2$0.3 million, or 10.1%,0.3%, increase in other operating expenses for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025 was primarily due to higher training‑related hotel costs, driven by pilot training, and an increase in other operating costs as a result of the higher number of flights we operated during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. These increases were partially offset by a decrease in our credit loss reserve expense during the three months ended June 30, 2026, reflecting the elevated credit loss reserve expense recognized during the three months ended June 30, 2025 from our assessment of higher credit risk losses of certain outstanding receivables.

Summary of interest expense, interest income, other expense,income (expense), net and provision for income taxes

Interest expense. The $2.7$1.6 million, or 9.8%,6.2%, decrease in interest expense for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 was primarily related to a decrease in outstanding debt. At MarchJune 31,30, 2026 we had $2.4$2.3 billion of outstanding debt, compared to $2.6$2.5 billion at MarchJune 31,30, 2025. Our average effective interest rate for the three months ended MarchJune 31,30, 2026 and 2025, was 4.4% and 4.3%, respectively.

Interest income. Interest income decreased $1.5$2.3 million, fromor $10.1 million20.4%, for the three months ended MarchJune 31,30, 2025,2026, as compared to $8.6 million for the three months ended MarchJune 31,30, 2026.2025. The decrease in interest income was primarily related to a decrease in interest rates on our marketable securities from MarchJune 31,30, 2025 to MarchJune 31,30, 2026.

Other expense,income (expense), net. Other expense,income (expense), net of income decreased $1.6$9.3 million for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. Other expense,income (expense), net primarily consists of the unrealized and realized gains and losses on our investments in other companies, income or loss related to our equity method investments and gains or losses on the sale of assets. The decrease in other expense,income (expense), net of income was primarily the result of a smaller decrease in the fair value of our investments in other companies and a decrease in the gain on the sale of assets for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Provision for income taxes. For the three months ended MarchJune 31,30, 2026 and 2025, our effective income tax rates were 5.6%27.5% and 16.7%,26.3%, respectively, which included the statutory federal income tax rate of 21% and other reconciling income tax items, including state income taxes, and the impact of non-deductible expenses and a discrete tax benefit on employee equity awards that vested during the period.expenses. The decreaseincrease in the effective tax rate was primarily related to a higher discrete tax benefit from additional tax deductions generated from employeegreater equitynon-deductible awards that vestedexpense for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Net income. Primarily due to the factors described above, we generated net income of $101.7$100.7 million, or $2.50$2.54 per diluted share, for the three months ended MarchJune 31,30, 2026, compared to net income of $100.6$120.3 million, or $2.42$2.91 per diluted share, for the three months ended MarchJune 31,30, 2025.

Three Months Ended MarchJune 31,30, 2026 and 2025

For the three months ended MarchJune 31,30, 2026, our reportable segments, which were the basis of our internal financial reporting, consisted of (1) the operations of SkyWest Airlines and SWC (collectively, “SkyWest Airlines and SWC”) and (2) SkyWest Leasing activities. Our segment disclosure relates to components of our business for which separate financial information is available to, and regularly evaluated by, our chief operating decision maker.

The following table sets forth our SkyWest Airlines and SWC segment data for the three months ended MarchJune 31,30, 2026 and 2025 (in thousands):

SkyWest Airlines and SWC Segment Profit. SkyWest Airlines and SWC segment profit was $25.5$58.2 million for the three months ended MarchJune 31,30, 2026, compared to $54.3$90.3 million for the three months ended MarchJune 31,30, 2025.

SkyWest Airlines and SWC block hour production increased 3.1%,5.4%, from 352,155376,269 for the three months ended MarchJune 31,30, 2025 to 362,933396,696 for the three months ended MarchJune 31,30, 2026, primarily due to additional aircraft operating under our capacity purchase agreements and prorate agreements, and an increase in the utilization of our aircraft. Significant items contributing to the SkyWest Airlines and SWC segment profit for the three months ended MarchJune 31,30, 2026 are set forth below.