Stock Track | SkyWest Stock Soars on Impressive Q3 Earnings, Fleet Expansion Plans

Stock Track11-02

Shares of SkyWest Inc. (SKYW) surged 8.54% on November 1st, 2024, after the regional airline operator reported stellar third-quarter earnings that exceeded Wall Street's expectations. The company's net income for Q3 2024 stood at $90 million, or $2.16 per diluted share, significantly higher than analysts' consensus estimate of $1.92. Revenue jumped 19.1% year-over-year to $912.79 million, surpassing projections of $889 million.

The strong results were driven by robust growth across all of SkyWest's key business segments. Contract revenue rose 20% year-over-year to $761 million, while pro rate and charter revenue climbed 11% to $123 million. Leasing and other revenue also increased by $5 million compared to the prior year.

In a significant development, SkyWest announced a multi-year agreement with United Airlines to place 40 CRJ550s under its SkyWest Airlines subsidiary. The majority of these aircraft will be converted from SkyWest's existing CRJ700 fleet, with the remaining 11 being purchased from United. This fleet expansion is expected to enhance SkyWest's market position and increase its regional market share of large dual-class aircraft to 30%, up from 23% in 2019.

SkyWest also reported continued improvement in pilot staffing and captain availability, with new hire classes filled through August 2025. As a result, the company anticipates a 13% increase in block hour production for the full year 2024 compared to 2023, and expects to reach pre-COVID levels by mid-2025. This improved utilization is expected to drive further revenue and earnings growth in the coming years.

The company's strong financial position was evident in its plans to repay over $400 million in debt in 2024, following a debt reduction of a similar amount in 2023. SkyWest's cash balance stood at $836 million at the end of Q3 2024, and the company continued its share repurchase program, buying back 217,000 shares during the quarter for $16.3 million. Looking ahead, SkyWest expects its 2025 GAAP earnings per share to be in the mid-$8 area, reflecting its positive outlook and ongoing efforts to capitalize on market opportunities.

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