SKYWEST INC 10-Q

ITEM 2:   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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-month periods ended March 31, 2026 and 2025. Also discussed is our financial condition as of March 31, 2026, and December 31, 2025. You should read this discussion in conjunction with our condensed consolidated financial statements for the three months ended March 31, 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. Cautionary Statement Concerning Forward-Looking 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, the timing of scheduled aircraft deliveries and returns, fleet expansion, changes in aircraft seat configurations, transition and anticipated fleet size for SkyWest in upcoming periods, expected production levels in future periods and associated recovery from captain staffing challenges, 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 21 Table of Contents 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; 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. There may be other factors that may affect matters discussed in forward-looking statements set forth in this Report, which factors may also cause actual results to differ materially from those discussed. We assume no obligation to publicly update any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these statements other than as required by applicable law. Overview We have the largest regional airline operation in the United States through our operating subsidiary SkyWest Airlines, Inc. (“SkyWest Airlines”). As of March 31, 2026, we offered scheduled passenger and air freight service with approximately 2,370 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”) 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 March 31, 2026, we had 639 total aircraft in our fleet, including 500 aircraft in scheduled service or under contract pursuant to our code-share agreements, summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ E175 ​ CRJ900 ​ ​ ​ CRJ700 ​ CRJ550 ​ ​ ​ CRJ200 ​ ​ ​ Total United 121 ​ — ​ 8 ​ 30 ​ 67 226 Delta ​ 87 ​ 34 ​ 2 ​ 16 ​ — ​ 139 American 20 ​ 4 ​ 68 ​ — ​ — 92 Alaska 43 ​ — ​ — ​ — ​ — 43 Aircraft in scheduled service or under contract ​ 271 ​ 38 ​ 78 ​ 46 ​ 67 ​ 500 SWC ​ — ​ — ​ — ​ — ​ 11 ​ 11 Leased to third parties — ​ 5 ​ 1 ​ 41 ​ — ​ 47 Operational spares (1) ​ — ​ 7 ​ 14 ​ — ​ 24 ​ 45 In storage (2) — ​ — ​ — ​ — ​ 36 ​ 36 Total Fleet 271 ​ 50 ​ 93 ​ 87 ​ 138 ​ 639 (1) Includes supplemental spare aircraft supporting our code-share agreements or aircraft undergoing cabin reconfigurations. (2) Aircraft in storage may be available for future flying opportunities. 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 March 31, 2025, to March 31, 2026, we made changes to our fleet, including the addition of eight 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 eight new E175 aircraft with United in 2026 and 16 new E175 aircraft with Delta between 2027 and 2028 (which are expected to replace 15 CRJ900s and two CRJ700s we are currently flying under contract with Delta). We also have multiple agreements with United to place 18 used CRJ550 aircraft into service between 2026 and 2027. 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 22 Table of Contents major airline partners in response to labor availability or other factors. As of March 31, 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 three months ended March 31, 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 March 31, 2026, approximately 45.2% of our aircraft in scheduled service or under contract were operated for United, approximately 27.8% were operated for Delta, approximately 18.4% were operated for American and approximately 8.6% 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 three months ended March 31, 2026, our capacity purchase revenue represented approximately 82.8% of our total flying agreements revenue and our prorate and SWC revenue, combined, represented approximately 17.2% 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. First Quarter Summary We had total operating revenues of $1.0 billion for the three months ended March 31, 2026, a 6.8% increase compared to total operating revenues of $948.5 million for the three months ended March 31, 2025. We had net income of $101.7 million, or $2.50 per diluted share, for the three months ended March 31, 2026, compared to net income of $100.6 million, or $2.42 per diluted share, for the three months ended March 31, 2025. The significant items affecting our revenue and operating expenses during the three months ended March 31, 2026, are outlined below: Revenue 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 488 as of March 31, 2025 to 500 as of March 31, 2026, or by 2.5%; and the number of block hours increased from 352,155 for the three months ended March 31, 2025 to 362,933 for the three months ended March 31, 2026, or by 3.1%, primarily due to an increase in the number of aircraft operating under our capacity purchase agreements . Our capacity purchase revenue increased $24.5 million, or 3.1%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily as a result of an increase in completed block hours for the comparable 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 $37.4 million, or 28.6%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Operating Expenses Our total operating expenses increased $80.4 million, or 9.9%, for the three months ended March 31, 2026, compared to the three months ended March 31, 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 operated and higher 23 Table of Contents pilot training costs for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Departures increased from 201,838 for the three months ended March 31, 2025 to 204,019 for the three months ended March 31, 2026, or by 1.1%, and our total block hours increased 3.1% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Additional details regarding the increase in our operating expenses are described in the section of this Report entitled “Results of Operations.” Fleet Activity The following table summarizes our fleet scheduled for service or under contract as of: ​ ​ ​ ​ ​ ​ ​ Aircraft in Service or Under Contract ​ ​ ​ March 31, 2026 ​ ​ ​ December 31, 2025 ​ ​ ​ March 31, 2025 E175s 271 270 262 CRJ900s 38 36 35 CRJ700s 78 82 88 CRJ550s ​ 46 ​ 41 ​ 26 CRJ200s 67 58 77 Total 500 487 488 Critical Accounting Policies and Estimates 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 three months ended March 31, 2026. Recent Accounting Pronounceme nts See Note 1 to the condensed consolidated financial statements for a description of recent accounting pronouncements. Results of Operations Three Months Ended March 31, 2026 and 2025 Operational Statistics 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 March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to additional aircraft operating under our capacity purchase 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 March 31, 2026, compared to the three months ended March 31, 2025. 24 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended March 31, Block hours by aircraft type: ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ % Change E175s 211,459 ​ 207,362 ​ 2.0 % CRJ900s ​ 27,970 ​ 22,988 ​ 21.7 % CRJ700s ​ 57,703 ​ 64,005 ​ (9.8) % CRJ550s ​ 24,471 ​ 11,072 ​ 121.0 % CRJ200s 41,330 ​ 46,728 ​ (11.6) % Total block hours ​ 362,933 ​ 352,155 ​ 3.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Departures 204,019 ​ 201,838 ​ 1.1 % Passengers carried 10,332,510 ​ 10,390,364 ​ (0.6) % Passenger load factor 78.0 % 78.6 % (0.6) pts Average passenger trip length (miles) 472 ​ 465 ​ 1.5 % Operating Revenues The following table summarizes our operating revenue for the periods indicated (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Flying agreements ​ $ 977,885 ​ $ 915,994 ​ $ 61,891 ​ 6.8 % Lease, airport services and other ​ 35,292 ​ 32,461 ​ 2,831 ​ 8.7 % Total operating revenues ​ $ 1,013,177 ​ $ 948,455 ​ $ 64,722 6.8 % 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 agreements, providing maintenance services to other airlines and providing airport counter, gate and ramp services. We disaggregate our flying agreements revenue into the following categories (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended March 31, ​ ​ 2026 ​ 2025 ​ $ Change ​ % Change Capacity purchase agreements flight operations revenue ​ ​ ​ $ 633,869 ​ ​ ​ $ 639,153 ​ ​ ​ $ (5,284) ​ ​ ​ (0.8) % Capacity purchase agreements aircraft lease revenue ​ 175,828 ​ 146,027 ​ 29,801 20.4 % Prorate agreements and SWC revenue ​ 168,188 ​ ​ 130,814 ​ ​ 37,374 28.6 % Flying agreements revenue ​ $ 977,885 ​ $ 915,994 ​ $ 61,891 6.8 % Combined “Capacity purchase agreements flight operations revenue” and “Capacity purchase agreements aircraft lease revenue” increased 3.1% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, driven primarily by a 3.1% increase in block hour production during the three months ended March 31, 2026, compared to the three months ended March 31, 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 March 31, 2025. The increase in prorate agreements and SWC revenue of $37.4 million, or 28.6%, for the three months ended March 31, 2026, compared to the three months ended March 31, 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 March 31, 2026, compared to the three months ended March 31, 2025. The increase in lease, airport services and other revenues of $2.8 million, or 8.7%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to an increase in the number of 25 Table of Contents leased assets and an increase in lease rates during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Operating Expenses Individual expense components attributable to our operations are set forth in the following table (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended March 31, ​ ​ 2026 ​ 2025 ​ $ Change ​ % Change Salaries, wages and benefits ​ $ 422,104 ​ $ 377,311 ​ $ 44,793 ​ 11.9 % Aircraft maintenance, materials and repairs ​ 213,027 ​ 209,100 ​ 3,927 1.9 % Depreciation and amortization ​ 90,216 ​ 89,446 ​ 770 0.9 % Airport-related expenses ​ 36,170 ​ 27,823 ​ 8,347 30.0 % Aircraft fuel ​ 38,904 ​ 24,488 ​ 14,416 58.9 % Other operating expenses ​ 89,070 ​ 80,910 ​ 8,160 10.1 % Total operating expenses ​ $ 889,491 ​ $ 809,078 ​ $ 80,413 9.9 % Salaries, wages and benefits. The $44.8 million, or 11.9%, increase in salaries, wages and benefits for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to an increase in direct labor costs supporting the higher number of flights we operated during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, and due to an increase in pilot training costs associated with higher attrition rates since March 31, 2025 . Aircraft maintenance, materials and repairs. The $3.9 million, or 1.9%, increase in aircraft maintenance expense for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to an increase in our flight volume, which increased our maintenance activity and related expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025 . Depreciation and amortization. The $0.8 million, or 0.9%, increase in depreciation and amortization expense for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to an increase in depreciation expense related to the acquisition of eight new E175 aircraft and spare engines since March 31, 2025, offset by certain CRJ aircraft and engines that were depreciated to their estimated residual value since March 31, 2025. 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 $8.3 million, or 30.0%, increase in airport-related expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, 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. Aircraft fuel. The $14.4 million, or 58.9%, increase in fuel cost for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to an increase in the number of flights we operated under our prorate agreements and under SWC and the corresponding increase in gallons of fuel we purchased, and an increase in our average fuel cost per gallon from $3.03 for the three months ended March 31, 2025 to $3.40 for the three months ended March 31, 2026. We purchase and incur expense for all fuel on flights operated under our prorate agreements and SWC. 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, for the periods indicated: 26 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended March 31, (in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ % Change Fuel gallons purchased ​ ​ 11,429 ​ ​ 8,073 ​ 41.6 % Fuel expense ​ $ 38,904 ​ $ 24,488 58.9 % 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 million, or 10.1%, increase in other operating expenses 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 March 31, 2026, compared to the three months ended March 31, 2025. Summary of interest expense, interest income, other expense, net and provision for income taxes Interest expense. The $2.7 million, or 9.8%, decrease in interest expense for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily related to a decrease in outstanding debt. At March 31, 2026 we had $2.4 billion of outstanding debt, compared to $2.6 billion at March 31, 2025. Our average effective interest rate for the three months ended March 31, 2026 and 2025, was 4.4% and 4.3%, respectively. Interest income. Interest income decreased $1.5 million, from $10.1 million for the three months ended March 31, 2025, to $8.6 million for the three months ended March 31, 2026. The decrease in interest income was primarily related to a decrease in interest rates on our marketable securities from March 31, 2025 to March 31, 2026. Other expense, net. Other expense, net of income decreased $1.6 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Other 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, net of income was primarily the result of a smaller decrease in the fair value of our investments in other companies for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. ​ Provision for income taxes. For the three months ended March 31, 2026 and 2025, our effective income tax rates were 5.6% and 16.7%, respectively, which included the statutory federal income tax rate of 21% and other reconciling income tax items, including state income taxes, the impact of non-deductible expenses and a discrete tax benefit on employee equity awards that vested during the period. The decrease in the effective tax rate was primarily related to a higher discrete tax benefit from additional tax deductions generated from employee equity awards that vested for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Net income. Primarily due to the factors described above, we generated net income of $101.7 million, or $2.50 per diluted share, for the three months ended March 31, 2026, compared to net income of $100.6 million, or $2.42 per diluted share, for the three months ended March 31, 2025. Our Business Segments Three Months Ended March 31, 2026 and 2025 For the three months ended March 31, 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. 27 Table of Contents The following table sets forth our SkyWest Airlines and SWC segment data for the three months ended March 31, 2026 and 2025 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended March 31, ​ ​ (dollar amounts in thousands) ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Operating revenues ​ $ 855,182 ​ $ 801,651 ​ $ 53,531 6.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries, wages and benefits ​ ​ 421,439 ​ ​ 376,646 ​ ​ 44,793 ​ 11.9 % Aircraft maintenance, materials and repairs ​ ​ 206,492 ​ ​ 201,476 ​ ​ 5,016 ​ 2.5 % Depreciation and amortization ​ ​ 37,346 ​ ​ 37,748 ​ ​ (402) ​ (1.1) % Interest expense ​ ​ 2,735 ​ ​ 2,981 ​ ​ (246) ​ (8.3) % Other segment items (1) ​ ​ 161,660 ​ ​ 128,530 ​ ​ 33,130 ​ 25.8 % SkyWest Airlines and SWC Segment profit (2) ​ $ 25,510 ​ $ 54,270 ​ $ (28,760) ​ (53.0) % (1) Other segment items for SkyWest Airlines and SWC include aircraft fuel; airport related expenses; other operating expenses consisting primarily of property taxes, hull and liability insurance, simulator costs, crew per diem and crew hotel costs and credit loss reserves; interest income and other expense , net. (2) Segment profit is equal to income before income taxes. SkyWest Airlines and SWC Segment Profit. SkyWest Airlines and SWC segment profit was $25.5 million for the three months ended March 31, 2026, compared to $54.3 million for the three months ended March 31, 2025. SkyWest Airlines and SWC block hour production increased 3.1%, from 352,155 for the three months ended March 31, 2025 to 362,933 for the three months ended March 31, 2026, primarily due to additional aircraft operating under our capacity purchase 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 March 31, 2026 are set forth below. SkyWest Airlines and SWC operating revenues increased $53.5 million, or 6.7%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to an increase in block hour production and higher prorate revenue during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. SkyWest Airlines and SWC’s salaries, wages and benefits expense increased $44.8 million, or 11.9%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to an increase in direct labor costs that resulted from the higher number of flights we operated during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, and due to an increase in pilot training costs associated with higher attrition rates since March 31, 2025. SkyWest Airlines and SWC’s aircraft maintenance, materials and repairs expense increased $5.0 million, or 2.5%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to higher flight volume, which increased the maintenance activity and related expenses, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. SkyWest Airlines and SWC’s depreciation and amortization expense decreased $0.4 million, or 1.1%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to certain CRJ aircraft and engines that were depreciated to their estimated residual value since March 31, 2025, offset by an increase in depreciation from the acquisition of additional assets, including engines and used CRJ900 airframes, since March 31, 2025. SkyWest Airlines and SWC’s interest expense decreased $0.2 million, or 8.3%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to a decrease in outstanding debt from March 31, 2025 to March 31, 2026. 28 Table of Contents SkyWest Airlines and SWC’s other segment items increased $33.1 million, or 25.8%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily related to an increase in fuel costs, airport-related expenses, such as subcontracted airport services, station rents, weather-related aircraft deicing costs and landing fees and other operating costs, such as crew per diem and crew hotel costs, as a result of the higher number of flights we operated during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The following table sets forth our SkyWest Leasing segment data for the three months ended March 31, 2026 and 2025 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended March 31, ​ ​ (dollar amounts in thousands) ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Operating revenues ​ $ 157,995 ​ $ 146,804 ​ $ 11,191 7.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries, wages and benefits ​ ​ 665 ​ ​ 665 ​ ​ — ​ — % Aircraft maintenance, materials and repairs ​ ​ 6,535 ​ ​ 7,624 ​ ​ (1,089) ​ (14.3) % Depreciation and amortization ​ ​ 52,870 ​ ​ 51,698 ​ ​ 1,172 ​ 2.3 % Interest expense ​ ​ 21,730 ​ ​ 24,137 ​ ​ (2,407) ​ (10.0) % Other segment items (1) ​ ​ (6,065) ​ ​ (3,768) ​ ​ (2,297) ​ 61.0 % SkyWest Leasing Segment profit (2) ​ $ 82,260 ​ $ 66,448 ​ $ 15,812 ​ 23.8 % (1) Other segment items for SkyWest Leasing include other operating expenses consisting primarily of property taxes and credit loss reserves; aircraft rentals; interest income and other expense , net. (2) Segment profit is equal to income before income taxes. SkyWest Leasing Segment Profit. SkyWest Leasing profit increased $15.8 million, or 23.8%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025 , primarily due to an increase in revenue earned under our capacity purchase agreements attributed to the ownership of new E175 aircraft acquired since March 31, 2025 and a decrease in interest expense due to a decrease in outstanding debt from March 31, 2025 to March 31, 2026. Liquidity and Capital Resources As of March 31, 2026, we had $627.3 million in cash and cash equivalents and marketable securities. As of March 31, 2026, we had $75.4 million available for borrowings under our line of credit. Given our available liquidity as of March 31, 2026, 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 cash, cash equivalents and marketable securities decreased from $706.9 million as of December 31, 2025 to $627.3 million as of March 31, 2026, or by $79.6 million. Our total long-term debt, including current maturities, was $2.4 billion as of both March 31, 2026 and December 31, 2025. Additionally, during the three months ended March 31, 2026, we repurchased 782,900 shares of our common stock for $75.3 million under a share repurchase program authorized by our Board of Directors. At March 31, 2026, our total capital mix (measured as a ratio of total stockholder equity and total long-term debt, including current maturities) was 53.3% equity and 46.7% total long-term debt, compared to 53.4% equity and 46.6% total long-term debt at December 31, 2025. As of March 31, 2026, and December 31, 2025, we had $47.5 million and $47.2 million, respectively, in letters of credit and surety bonds outstanding with various banks and surety institutions. We had no restricted cash as of March 31, 2026, and December 31, 2025. 29 Table of Contents Sources and Uses of Cash 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 three months ended March 31, 2026 and 2025, and our total cash and marketable securities positions as of March 31, 2026, and December 31, 2025 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ $ Change ​ ​ ​ % Change Net cash provided by operating activities ​ $ 144,477 ​ $ 171,023 ​ $ (26,546) ​ (15.5) % Net cash used in investing activities ​ (82,828) ​ (66,109) ​ (16,719) 25.3 % Net cash used in financing activities ​ (118,481) ​ (153,303) ​ 34,822 (22.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ ​ ​ December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ 2025 ​ $ Change ​ % Change Cash and cash equivalents ​ $ 65,841 ​ $ 122,673 ​ $ (56,832) (46.3) % Marketable securities ​ 561,413 ​ 584,236 ​ (22,823) (3.9) % Total ​ $ 627,254 ​ $ 706,909 ​ $ (79,655) (11.3) % Cash Flows provided by Operating Activities Our cash flows provided by operating activities was $144.5 million for the three months ended March 31, 2026, compared to $171.0 million for the three months ended March 31, 2025. 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, stock-based 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 decrease in our cash flow from operations for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to a decrease in income before income taxes for the three months ended March 31, 2026, compared the three months ended March 31, 2025, and an increase in accounts payable due to the timing of cash payments for the comparable periods. Cash Flows used in Investing Activities Our cash flows used in investing activities was $82.8 million for the three months ended March 31, 2026, compared to cash flows used in investing activities of $66.1 million for the three months ended March 31, 2025. 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 various long-term asset and long-term liability accounts. 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 $68.4 million for the three months ended March 31, 2025, to $105.0 million for the three months ended March 31, 2026. 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 $29.0 million used in the acquisition of property and equipment for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to the acquisition of one new E175 aircraft and spare engines during the three months ended March 31, 2026. Cash Flows used in Financing Activities Our cash flows used in financing activities was $118.5 million for the three months ended March 31, 2026, compared to cash used in financing activities of $153.3 million for the three months ended March 31, 2025. Our 30 Table of Contents financing cash flows are typically impacted by various factors including proceeds from issuance of debt, principal payments on debt obligations and repurchases of our common stock. The $34.8 million decrease in cash used in financing activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to an increase of $115.0 million in proceeds from the issuance of long-term debt for the purchase of one new E175 aircraft and engine financings, net of principal payments on long-term debt, offset by an increase of $18.4 million in cash used for employee income taxes paid on vested equity awards in lieu of shares and an increase of $61.7 million in cash used to purchase treasury stock during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Significant Commitments and Obligations General See Note 7, “Leases, Commitments, Guarantees and Contingencies,” to the condensed consolidated financial statements for our commitments and obligations for each of the next five years and thereafter. Purchase Commitments and Options As of March 31, 2026, we had a firm purchase commitment for 68 new E175 aircraft from Embraer with delivery dates anticipated into 2032. At the time of each aircraft acquisition, we evaluate the financing alternatives available to 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 68 E175 aircraft with approximately 75-85% debt and the remaining balance with cash. Aircraft Lease and Facility Obligations 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 three years to four years as of March 31, 2026. These eight leased aircraft are subleased to a third party. Future minimum lease payments due under all long-term operating leases were approximately $119.4 million at March 31, 2026. 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 $82.9 million at March 31, 2026. Long-term Debt Obligations As of March 31, 2026, we had $2.4 billion of long-term debt, which consisted of $2.2 billion of debt used to finance aircraft and spare engines and $200.6 million of unsecured debt payable to the U.S. Department of the Treasury (“Treasury”). The average effective interest rate on our debt obligations was approximately 4.4% at March 31, 2026. Under our capacity purchase agreements, our major airline partners compensate us for our costs of the aircraft on a monthly basis. The consideration for aircraft ownership costs we receive varies by agreement but is intended to compensate us for our ownership of the aircraft while the aircraft is under contract. Guarantees We have guaranteed the obligations of SkyWest Airlines under the United Express Agreement and the Delta Connection Agreement for the E175 aircraft. In addition, we have guaranteed certain other obligations under our aircraft financing and leasing agreements. 31 Table of Contents We have guaranteed $12.2 million in promissory notes of a third party in the event the third party defaults on its payments. The third party’s loans are secured by aircraft and engines. Seasonality Our results of operations for any interim period are not necessarily indicative of those for an entire year, because the airline industry is subject to seasonal fluctuations and general economic conditions. Our operations are somewhat favorably affected by increased travel on our prorate routes, historically occurring during the summer months, and unfavorably affected by decreased travel during the months of November through February and by inclement weather, which may occasionally or frequently, depending on the severity of the inclement weather in any given winter, result in cancelled flights during the winter months.