SkyWest Q2 2026 Earnings Report

SkyWest EPS Results

• Actual EPS: $2.54
• Consensus EPS: $2.53
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $2.91

SkyWest Revenue Results

• Actual Revenue: $1.10 billion
• Expected Revenue: $1.11 billion
• Beat/Miss: Missed by -$9.39 million
• YoY Revenue Growth: +6.50%

SkyWest Announcement Details

• Quarter: Q2 2026
• Date: 7/23/2026
• Time: After Market Closes
• Conference Call Date: Thursday, July 23, 2026
• Conference Call Time: 4:30PM ET

SkyWest (NASDAQ:SKYW) (NASDAQ: SKYW) is a regional airline holding company that provides air transportation services through its primary subsidiary, SkyWest Airlines. The company operates flights under capacity purchase agreements with major carriers such as United Airlines, Delta Air Lines, American Airlines and Alaska Airlines. By specializing in regional connectivity, SkyWest links smaller communities to larger hubs using a fleet of regional jets and turboprop aircraft.

Headquartered in St. George, Utah, SkyWest oversees all aspects of its airline operations, including flight scheduling, crew training and aircraft maintenance. Its modern fleet features aircraft models such as the Embraer E175 and Bombardier CRJ Series, allowing the company to serve a diverse range of route profiles. Through these partnerships, SkyWest’s network extends across the United States, Canada and Mexico, providing feeder and point-to-point service that complements the route structures of its major airline partners.

Established in 1972 as a small intrastate carrier in Utah, SkyWest began scheduled service between St. George and Salt Lake City before expanding its route map through organic growth and strategic contracts. The company went public in 1978 and reorganized as a holding company in 2005 to streamline its operations and support future growth initiatives. Over the decades, SkyWest has built a reputation for operational reliability, cost efficiency and customer service in the regional aviation sector.

SkyWest Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: SkyWest reported Q2 2026 net income of $101 million, or $2.54 per diluted share, on 9% sequential revenue growth to $1.1 billion, reflecting strong demand for both contract and pro-rate flying.
• Positive Sentiment: The company announced a new American Airlines agreement for 11 E175s, with deliveries beginning in 2026, and said this supports its plan to reach 300 E175s by the end of 2027.
• Positive Sentiment: Management said pro-rate demand remains very strong, and fare increases have offset about 60% of the higher fuel costs in that business during Q2.
• Positive Sentiment: SkyWest continued to strengthen its balance sheet, ending Q2 with $601 million in cash, having reduced debt by about $1 billion since the end of 2022, and its board authorized an additional $250 million share repurchase program.
• Neutral Sentiment: Management guided to approximately 5% block hour growth for full-year 2026 and said full-year GAAP EPS should be around $11, though results remain sensitive to fuel-price volatility and fleet timing.

Presentation

[Operator]

I would now like to turn the call over to Rob Simmons, Chief Financial Officer. Sir, please go ahead.

[Robert Simmons, CFO at SkyWest]

Thanks everyone for joining us on the call today. As the operator indicated, this is Rob Simmons, SkyWest Chief Financial Officer. On the call with me today are Chip Childs, President and Chief Executive Officer, Wade Steel, SkyWest Airlines President and Chief Operating Officer, and Eric Woodward, Chief Accounting Officer. I'd like to start today by asking Eric to read the Safe Harbor. I will turn the time over to Chip for some comments. Following Chip, I will take us through the financial results. Wade will discuss the fleet and related flying arrangements. Following Wade, we will have the customary Q&A session with our sell side analyst. Eric?

[Eric Woodward, Chief Accounting Officer at SkyWest]

Today's discussion contains forward-looking statements that represent our current beliefs, expectations, and assumptions regarding future events and are subject to risks and uncertainties. We assume no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise. Actual results will likely vary and may vary materially from those anticipated, estimated, or projected for a number of reasons. Some of the factors that may cause such differences are included in our most recent Form 10-K and other reports and filings with the Securities and Exchange Commission. Now I'll turn the call over to Chip.

[Chip Childs, President and CEO at SkyWest]

Thank you, Rob and Eric. Good afternoon, everyone, and thank you for joining us on the call today. Today, SkyWest reported net income of $101 million, or $2.54 per diluted share for the Q2 of 2026. The second quarter's results include increased block hours and were affected by higher fuel costs impact our pro-rate business. We are pleased to continue to see very strong demand both in our contract and pro-rate flying despite a higher fuel cost. Similar to our major partners, that strong demand enabled us to offset about 60% of the fuel impact in the fair portion of our pro-rate business. Overall, our disciplined strategic choices and continued execution have strengthened our model and we remain well-positioned to adapt quickly to respond to market demands better than anybody else. During the quarter, our people delivered 99.9% adjusted completion on nearly 228,000 flights.

[Chip Childs, President and CEO at SkyWest]

We're incredibly proud to be named one of America's greatest workplaces in 2026 by Newsweek, as well as one of Fortune's World's Most Admired Companies in 2026. These accomplishments are made possible by SkyWest's more than 16,000 professionals and their commitment to excellence. I want to thank them for their ongoing teamwork to deliver in our challenging industry. Today we're pleased to announce an agreement with American Airlines for SkyWest to purchase and operate 11 new E175s with deliveries beginning this year. With 11 E175s expected during the second half of this year and 23 more in the next couple of years, we expect a total of 34 additional E175s by the end of 2028. Additionally, we continue converting CRJ700s to the customer favorite CRJ550. We're very excited about the CRJ450 service beginning for United Airlines this fall.

[Chip Childs, President and CEO at SkyWest]

With these transitions, we look forward to ultimately operating an all dual-class fleet. As I mentioned, pro-rate demand remains strong and we believe these fleet initiatives will benefit pro-rate growth. Our opportunities remain strong. We expect our growth will continue to come from three key areas. One, solid demand from our major partners and our solid E175 order book. Two, underserved communities with our pro-rate business. Three, execution of our fleet initiatives and conversions. The free cash flow that we continue to generate is still directed toward fleet growth opportunities, debt reduction, and share repurchase. We announced today that SkyWest's board of directors has also approved a $250 million increase to our existing stock repurchase program. Our steadfast commitment to maintaining a strong balance sheet and liquidity benefits our employees, our partners, and our shareholders.

[Chip Childs, President and CEO at SkyWest]

Additionally, we've continued to reduce our debt, and we now have $1 billion less debt than we did at the end of 2022. We also expect to have over 100 unencumbered E175s by the end of 2029. Overall, our debt ratios and leverage metrics are among the best in the industry. SkyWest continues to lead our industry in product and in the value of our diverse assets. We remain disciplined and steady as we execute on our growth opportunities by delivering on significant pro-rate demand, investing in our fleet, and preparing to receive our deliveries in the coming years for a total of 300 E175s by the end of 2027. Our discipline, strategic choices, and continued execution have strengthened our model and we remain well-positioned to adapt quickly and to respond to market demands better than anyone else in the industry. Rob will now take us through the financial data.

[Robert Simmons, CFO at SkyWest]

Today we reported a Q2 GAAP net income of $101 million, or $2.54 earnings per share. Q2 pre-tax income was $139 million 29% higher than Q1 pre-tax income on solid demand for our various contract and prorate products and sequential seasonality. Our weighted average share count for Q2 was 39.6 million, and our effective tax rate was 27.5%. Total Q2 revenue of $1.1 billion is up nine percent from $1 billion in Q1 2026 on strong block hour demand from our partners during a volatile quarter, and is up seven percent from $1 billion in Q2 2025. Q2 revenue includes contract revenue of $864 million, prorate and charter revenue of $201 million, and leasing and other revenue was $38 million.

[Robert Simmons, CFO at SkyWest]

These Q2 GAAP results include the effect of recognizing $27 million of previously deferred revenue this quarter, up slightly from the $24 million recognized in Q1 2026, and $23 million recognized in Q2 2025.

[Robert Simmons, CFO at SkyWest]

As of the end of Q2, we have $214 million of cumulative deferred revenue that will be recognized in future periods. Our prorate fuel expense was $61 million in Q2, compared to $28 million in Q2 2025. The year-over-year increase of $33 million was due to both a higher price per gallon, a $21 million negative impact, and incremental prorate production, a $12 million impact. The passenger fare portion of our prorate revenue received similar pricing increases as our major partners, partially offsetting the impact of our higher price per gallon in the area of 60% for Q2. Our price per gallon on our prorate flying was $4.45 in Q2, up from $2.88 in Q2 2025, and up from $3.40 in Q1. Let's discuss the balance sheet. We ended the quarter with cash of $601 million, slightly down from $627 million last quarter.

[Robert Simmons, CFO at SkyWest]

The ending cash balance for the quarter included the effects from, one, repaying $122 million in debt. Two, issuing $24 million of new debt financing ongoing fleet deliveries. Three, investing $139 million in CapEx, including the purchase of 1 E175. Four, buying back 833,000 shares of SkyWest stock in Q2 for $75 million. As of June 30th, we had $63 million remaining under our current share repurchase authorization, as announced today, the board has authorized an additional $250 million of share repurchase on top of the $63 million. Cash flow continues to be the key driver of our value creation strategy. We generated over $460 million of EBITDA during the first half of 2026, despite the headwind from prorate fuel costs.

[Robert Simmons, CFO at SkyWest]

Since the end of 2025, we reduced our total debt balance by approximately $100 million, invested over $240 million in CapEx for fleet and related assets, and repurchased $150 million of our shares. We expect to continue to deploy in a balanced way our ongoing generation of free cash flow by investing in our fleet, including financing the addition of 34 new E175s by the end of 2028, reducing our debt, and executing opportunistically our share repurchase program. By the end of 2029, we expect that we will have over 100 unencumbered E175s in our fleet portfolio. As a result of our capital deployment strategy, both our debt net of cash and leverage ratios continue at favorable levels, reflecting our ongoing initiative to de-lever and de-risk our balance sheet, positioning the balance sheet with the capacity for future accretive investment opportunities.

[Robert Simmons, CFO at SkyWest]

We expect to take 11 new E175s during the back half of 2026, seven new E175s for United, and four of the 11 E175s for American announced today. We anticipate our total CapEx in 2026 will be approximately $700 million. Consistent with our practice, let me update you on some color on 2026. For the full year 2026, we expect to see block hour production up approximately five percent from 2025. We anticipate our GAAP EPS for 2026 will be in the $11 area, subject to ongoing prorate fuel volatility. This assumes average jet fuel of $3.65 per gallon for the second half of 2026 on 28 million gallons of jet fuel needed in the second half for our prorate business.

[Robert Simmons, CFO at SkyWest]

In terms of how to think of quarterly EPS modeling for the back half of 2026, on a GAAP basis, we anticipate directionally that Q3, we expect to be down seasonally, or we expect to be seasonally the strongest quarter of the year, and Q4 should be down modestly from Q3. For other modeling purposes, we anticipate our maintenance activity in 2026 will continue approximately at 2025 levels as we invest in bringing more aircraft back into service. We also anticipate our effective tax rate for Q3 and Q4 will be similar to Q2 at approximately 27%-28%, translating to approximately 23%-24% for the full year 2026. We are optimistic about our ongoing growth possibilities in 2026 and 2027, including first, strong ongoing demand for block hours from our partners. Second, good demand in our prorate business as we continue to move back into underserved communities.

[Robert Simmons, CFO at SkyWest]

Third, placing a total of 36 new E175s into service from 2026 to 2028, including eight for United, 16 for Delta, 11 for American as announced today, and one for Alaska. We are also very pleased with the ongoing success of our CRJ-550 and CRJ-450 initiatives, and I will turn the call over to Wade, who will talk more about that next. We believe that we are positioned to convert strong cash flow generation over the next several years into long-term value creation benefiting our employees, our partners, and our capital providers as we execute against a variety of accretive opportunities. Wade?

[Wade Steel, President and COO at SkyWest Airlines]

Thank you, Rob. Today, we announced an agreement with American for 11 new E175s. The E175s are expected to replace 11 CRJ-700 SkyWest is currently flying under contract with American. We anticipate placing these CRJ-700s with one of our major partners, either through our prorate agreements, capacity purchase agreements, or a traditional lease. SkyWest is scheduled to purchase the 11 E175s from Embraer with delivery dates in 2026 and 2027. During the quarter, we took delivery of one new E175 for United. We currently have 67 future E175s on firm order with Embraer, including 16 for Delta, 11 for American and seven for United. We expect delivery of 11 more new E175s during the second half of this year. As an update on the firm order of 67 aircraft, 34 are allocated to our major partners. 33 are not yet assigned.

[Wade Steel, President and COO at SkyWest Airlines]

This order locks in delivery slots starting in 2027 through 2032. However, the order is structured with good flexibility to defer or terminate the aircraft in the event we don't arrange for a partner to take them. Our long-term fleet plan has positioned us well, and refleeting continues to be an important part of that strategy. With today's announced agreement with American, our E175 fleet total is scheduled to be 300 by the end of 2027, continuing to enhance SkyWest's position as the largest E175 operator in the world. We are also looking forward to deploying the CRJ450 later this year for United. We anticipate converting four - six aircraft per month starting this fall. We expect to have 40 CRJ450s under contract with United, and we plan to retrofit our pro-rate CRJ200s. We are optimistic the opportunity for the CRJ450 will reach a total of 100 aircraft.

[Wade Steel, President and COO at SkyWest Airlines]

Last quarter, we announced five E170s and reached an agreement with United to operate these as we expedite the conversion of CRJ700 to CRJ550. All five E170s are currently operating for United. As previously announced, we have a multi-year agreement to fly 50 CRJ550s with United. As of June 30, 36 CRJ550s were in service, and we're expecting the remaining 14 to enter service this year. Last year, we reinitiated a pro-rate agreement with American. We are currently operating eight aircraft under this agreement, with up to nine expected by year-end.

[Wade Steel, President and COO at SkyWest Airlines]

We look forward to expanding our relationship with American. Let me review our production. Our block hours increased nine percent from Q1 to Q2 2026. We also expect a slight increase in our Q3 block hours as compared to Q2. For the full year 2026, we anticipate that our block hours will be up approximately five percent compared to 2025.

[Wade Steel, President and COO at SkyWest Airlines]

This year, we expect to take delivery of 13 new E175s, place 23 CRJ550s into service, and capitalize on pro-rate demand. These gains are partially offset by the gradual return of approximately 19 lower-margin Delta-owned CRJ900s to Delta over the next couple of years. Our revenue seasonality has normalized. With improved utilization during the strong summer months, we still have approximately three dual-class CRJ aircraft currently undergoing heavy maintenance after transitioning from long-term storage. These aircraft are set to return to service in 2026 under existing flying agreements. Additionally, we have over 30 parked CRJ200s that will likely transition to the CRJ450 and further enhance our fleet flexibility. We continue to face challenges in our third-party MRO network, including labor and parts shortages. We expect maintenance expense in 2026 to remain consistent with 2025, even with the increase in block hours.

[Wade Steel, President and COO at SkyWest Airlines]

Demand for our pro-rate business remains extremely strong, supported by great community engagement. During the quarter, we added 10 aircraft to our pro-rate agreements to support the growing demand. We're continuing to see opportunities to restore SkyWest service to several communities, and we will continue working with airports to expand our reach. As discussed last quarter, growth in our pro-rate business contributes to a more seasonal model. The non-subsidized portion of our pro-rate revenue covered approximately 60% of fuel cost increases during the Q2. Demand is strong and similar to our major partners, we anticipate continued fare strength in our pro-rate markets. We remain confident in our ongoing efforts to reduce risk and enhance fleet flexibility. We are committed to collaborating with our major partners to deliver innovative solutions that meet the continued demand for our products. Okay, operator, we're ready for our Q&A now.

[Operator]

At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Savanthi Syth with Raymond James. Please go ahead.

[Savanthi Syth, Managing Director at Raymond James]

Hey, good morning, everyone. I guess maybe first, this is not the first time this year we've seen suddenly a sharp rise in fuel price in a very short period. I was curious, last time it was heading into the summer, more so this time it's heading into the winter. As you think about your pro-rate segment, are you having any kind of different conversations with partners? Or are you making any kind of different decisions this time versus earlier this year?

[Chip Childs, President and CEO at SkyWest]

Yeah, Savi, this is Chip. It was interesting you bring up, given what's happened last quarter and this quarter, because there was a lot of uncertainty. I think honestly, we're in a little more stable position right now relative to the conversation, and I think we've reflected that in our script. There's good, strong demand for block hours. There's good, strong demand relative to what's happening. We're not ignoring the volatility of oil under the circumstances, I think that hopefully you can get a tone from what our message is today that we're pressing forward quite strong with our partners and good conversations about strategies to continue to enhance value to them.

[Savanthi Syth, Managing Director at Raymond James]

Yeah. It came through, just wanted to clarify. It seems like maybe less of a shock this time and more prepared and knowing how to react to it. Maybe just on the pro-rate side, I noticed a charter fleet step down, your CRJs on the CPA/pro-rate side stepped up. Is there just more opportunity on the pro-rate side versus charter, or just how are you looking at those two segments?

[Wade Steel, President and COO at SkyWest Airlines]

That's a great question, Savi. This is Wade. The demand, as you know, for charter is pretty light in the summertime, we do take the opportunity to move those airplanes around where we find the most demand. We're seeing very strong demand in the pro-rate side, we decided to move several of those over to the SkyWest Airlines pro-rate/CPA flying, and we were able to utilize those and get very good flying with that. As far as SkyWest Charter, we're still looking at a lot of new technologies and things like that for SkyWest Charter. We're excited about the opportunities there to expand our reach into new and different markets with that entity as well.

[Savanthi Syth, Managing Director at Raymond James]

Helpful color. Thank you.

[Operator]

Your next question comes from the line of Michael Linenberg with Deutsche Bank. Please go ahead.

[Michael Linenberg, Managing Director at Deutsche Bank]

Hey, good afternoon. Wade, congrats on your promotion. I have a couple here. Just right off the bat, the replacement of the 11 CRJ700s at American with the E175s, how should we think about the improvement in profitability? I would think that the bigger airplanes will be more profitable for you. Is that a safe assumption or reasonable assumption?

[Wade Steel, President and COO at SkyWest Airlines]

Hey, Mike, this is Wade. First of all, thank you. Yeah, as far as the American side, the profitability of the E175s will be very consistent with our other fleets that we have. The 700s, we are going to find opportunities, as we said. We're in discussions with multiple partners about either pro-rate contract leasing these airplanes. The demand is still very strong. Yes, we definitely like the transaction. We're very happy that we were able to get that done with American.

[Michael Linenberg, Managing Director at Deutsche Bank]

You mentioned pro-rate contract leasing. What about conversions to 550s? Is that also?

[Wade Steel, President and COO at SkyWest Airlines]

Yes. When we convert them, they could potentially go into 550s for multiple of our partners, and we're looking at those opportunities right now.

[Michael Linenberg, Managing Director at Deutsche Bank]

Okay. How should we think, I guess this is more to Rob, taking on the additional 11 E175s? You told us about the revised CapEx number for 2026. Now we're at $700 million. How should we think about your debt profile? Does that tick back up a little bit as you take delivery of those airplanes?

[Robert Simmons, CFO at SkyWest]

Yeah. We'll be financing 11 of the new E175s this year, and adding new debt for that. We do expect that debt will continue to trend down over the next several years. If you look at the 700 in CapEx, Mike, about half of that is the new E175s. The 13 new E175s-

[Michael Linenberg, Managing Director at Deutsche Bank]

Okay

[Robert Simmons, CFO at SkyWest]

two that we've already done this year-

[Michael Linenberg, Managing Director at Deutsche Bank]

Yep

[Robert Simmons, CFO at SkyWest]

11 more that we'll do in the second half. The bulk of that is our nicely accretive E175 order book coming through for us.

[Michael Linenberg, Managing Director at Deutsche Bank]

Okay, great. Just one last one here. This is back to Wade. You had five CRJ-900s on lease to a third party, now they show back up in your fleet. I couldn't follow those. Where do they go from, and where are they now, the five from the CRJ-900s?

[Wade Steel, President and COO at SkyWest Airlines]

Yeah, that's a great question. One of them is currently in heavy maintenance, transitioning to one of our partners, either through a pro-rate or CPA. The other ones we're still working with our major partners on placing those with them. We're very optimistic that we'll be able to place those airplanes with one of our major partners in one of our three business segments, either contract, pro-rate, or leasing.

[Michael Linenberg, Managing Director at Deutsche Bank]

Wow. All right. That's great. Thanks, everyone.

[Operator]

Your next question comes from the line of Duane Pfennigwerth with Evercore ISI. Please go ahead.

[Duane Pfennigwerth, Senior Managing Director at Evercore ISI]

Hey, guys. Good afternoon. Just to follow up on some of Mike's questions on the E175s, it's a little surprising you could find slots within the year, within 2026. Is this all of your availability for this year? Would you be willing to tell us how many slots do you have in 2027? I know you mentioned, I think 33 through 2032, but wondering how many could potentially drop into 2027.

[Wade Steel, President and COO at SkyWest Airlines]

Duane, this is Wade. We were able to work with Embraer on that order. They were very creative in finding us some slots at the end of this year. They'll be at the very end of the year. We're very excited. We've got great partners in Embraer and GE and American to get that deal done. We're very happy about that. 2026 probably is pretty close to tapped out with those guys. 2027, we do have 17 now scheduled to come, and we anticipate all of those. We are working potentially to loosen up another couple slots here and there. Right now it is the 17 that we have firm coming in 2027.

[Duane Pfennigwerth, Senior Managing Director at Evercore ISI]

Okay, great. Thanks. Maybe you could just give us some insight into your thought process about the pacing of the buyback going forward. Is it a function of where the stock is trading, where it's priced, or is it more about the pacing of CapEx?

[Robert Simmons, CFO at SkyWest]

Hey, Duane, it's Rob here. It's sort of all of the above, I would say. When it comes to how we deploy capital, we try to maintain a balanced approach, remain opportunistic, whether that means we have a new opportunity like the new E175s for American that we announced today. We loved that accretive chance to deploy capital. As we've talked about, we continue to generate strong free cash flow. We're in the fortunate situation where we can take advantage opportunistically of a share price that we felt was mispriced, and we're pleased that we bought $75 million in each of the first two quarters of the year this year, in addition to being able to continue to pay down debt and continue to invest in our fleet. We're in the fortunate situation, Duane, that we can sort of do an all of the above.

[Duane Pfennigwerth, Senior Managing Director at Evercore ISI]

Okay. Thank you.

[Operator]

Your next question comes from the line of Thomas Fitzgerald with TD Cowen. Please go ahead.

[Thomas Fitzgerald, VP at TD Cowen]

Hi, everyone. Thanks so much for the time. Congrats to Wade and congrats on the American deal. How should we think about the cadence of those deliveries, both in the back half of the year and just throughout 2027? I don't know if it's more front half or back half weighted next year, or if it's kind of more of an even cadence throughout the year.

[Wade Steel, President and COO at SkyWest Airlines]

Tom, thank you first of all. On the delivery schedules for this year, the four American ones are at the very back end of Q4. Next year, the seven American ones are heavily weighted towards the first six months of the year. We have seven American ones coming in the first half of 2027, and we have 10 Delta ones that are kind of starting in the middle of the year and go through the end of the year.

[Thomas Fitzgerald, VP at TD Cowen]

Okay, great. That's really helpful color. Just given the American announcement and just given some of the other moving pieces with the fleet and things coming out of conversion, how should investors think about a rough ZIP code for block hour growth in 2027? I know it's still early, but is mid-single digits, is another year like this, in the ballpark of where people should be thinking? Thanks again for the time.

[Wade Steel, President and COO at SkyWest Airlines]

Tom, that's a great question. We're still looking at 2027 right now. As you can tell, we're still working on our fleet. We're finalizing our 2027 plans. I would just say let's stay tuned for that. We'll give a lot more color on that next quarter as we firm up our plans for 2027.

[Operator]

Your next question comes from the line of John Godden with Citigroup. Please go ahead.

[Max Lesnik, VP at Citigroup]

Hey, guys. This is Max on for John. Thanks for taking my question. Can you guys just give a little further insight into demand trends you've been seeing in the pro-rate business and on forward bookings fare later into the summer and fall, and how consumers have been reacting to fare increases that have been issued? Thanks.

[Chip Childs, President and CEO at SkyWest]

Thanks, Max. This is Chip. I think philosophically and practically speaking, I think we're still seeing very good demand relative to even what is a seasonal, somewhat drop-off in the fall area. Again, I think I'd go back to some of the things that we tried to discuss in our script that I think we're consistent with what our partners are saying relative to fares and how much recovery we can get of the fuel price volatility that we have. Overall, I think that we would still come back to a very strong demand model for both pro-rate and contract with our partners. It's also helpful that we're in the middle of transitioning to an all-dual-class fleet, and some of that's going to hit pro-rate as well. Being an all-dual-class fleet changes what we've been trying to do even the last decade.

[Chip Childs, President and CEO at SkyWest]

I think from our perspective, things look good in the fall, more importantly, I think long term, we're very comfortable and pleased with what we see as an outlook that we can talk about more next quarter.

[Max Lesnik, VP at Citigroup]

Great. Then I know you guys have discussed this on pro-rate being roughly 10% of your block hour production. Do you expect this business to grow over the long term as a percentage of your total production? Obviously, the trends here have been pretty robust. Just curious on your outlook here over the long term. Thanks.

[Chip Childs, President and CEO at SkyWest]

I think it depends on a lot of factors. I would say the trend today is obviously clear, and the data shows that it's growing faster than the contract side of our business. I think from our perspective, our overall strategy is to drive all of our product lines in equal fashion, both contract, leasing, charter, and pro-rate. From that perspective, I think what we're seeing in all of those aspects of our business model is very strong on everything. Certainly, the trend today is a little bit more on pro-rate. That may continue in the future, but it's not like it's something that we only want to continue to grow. There's a lot of good business lines that we're still actively working with some great partners to continue to provide some good value to them and our shareholders.

[Max Lesnik, VP at Citigroup]

Makes sense. Thank you.

[Operator]

Your next question comes from the line of Catherine O'Brien with Goldman Sachs. Please go ahead.

[Catherine O'Brien, VP at Goldman Sachs]

Hey, good afternoon, team. Another congratulations from me to Wade and on the American deal. Maybe just sticking with the American deal, how much of an impact are those four incremental E175s in American this year? It sounds like they're pretty year-end weighted. Just wondering if there are any other puts and takes on flying for the rest of your year besides those American planes. Maybe just my interpretation, but I think on the last call it sounded like you thought maybe you'd be a little under mid-single, and I wasn't sure if very back-end weighted American deliveries were enough to put you over back into mid-single. Just any incremental color there would be helpful. Thanks.

[Wade Steel, President and COO at SkyWest Airlines]

First of all, Catherine, thank you. As far as the American airplanes, they'll have very little impact on the block hours in 2026. I do want to reiterate, we are confident that we are going to increase year-over-year five percent in our block hours, and we're very confident we do not need the American airplanes to hit that five percent. We are very confident in our block hours and where we're going.

[Catherine O'Brien, VP at Goldman Sachs]

Got it. Then you've got the 11 CRJ-700s that are coming back from American, then a couple of the CRJ-900s Mike was asking you about that are coming off lease. It sounds like you're in discussions with your partners between placing them under pro-rate, contract, on lease. Could you just walk us through what the margin profile of each of those choices look like? I realize pro-rate may be more variable given moving fuel and demand, but just looking for higher-level comments. Thanks.

[Wade Steel, President and COO at SkyWest Airlines]

Yeah. On the margins, as you said, pro-rate at this moment is a little bit more variable, but our contracts will be very consistent with where anything we sign up will be very consistent with what we have today. Leasing does have a little bit higher margin attributes. We're looking at all of these options right now. Stay tuned. We'll get something figured out here really quick.

[Catherine O'Brien, VP at Goldman Sachs]

Okay, great. Thanks.

[Operator]

That concludes our question and answer session. I will now turn the call back over to Chip Childs for closing remarks.

[Chip Childs, President and CEO at SkyWest]

Thank you, Tiffany. Appreciate it, and we really appreciate everybody's interest on the call today. We're obviously in a position where we're trying to capitalize on the playbook that we've had over the last decade. We think that our opportunities are even better along those lines with strong capital, the best professionals in the industry, and some amazing partners. We'll continue to update you as we continue on our journey to continue to provide value to all of our stakeholders, and we will look forward to talking again in three months from now. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Robert Simmons, CFO
• Eric Woodward, Chief Accounting Officer
• Chip Childs, President and CEO
• Wade Steel, President and COO

Analysts

• Savanthi Syth, Managing Director at Raymond James
• Michael Linenberg, Managing Director at Deutsche Bank
• Duane Pfennigwerth, Senior Managing Director at Evercore ISI
• Thomas Fitzgerald, VP at TD Cowen
• Max Lesnik, VP at Citigroup
• Catherine O'Brien, VP at Goldman Sachs