What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-13 compared with 2024-02-15 · 205 added, 185 removed, 730 unchanged (35% of the section changed)

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We have audited the accompanying consolidated balance sheets of SkyWest, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “financial statements”).

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of fixed overhead deferred revenue

Calculation of deferred revenue

Description of the Matter

At December 31, 2024, the Company’s deferred revenue balance totaled $337.5 million, of which $54.8 million was presented as a component of other current liabilities and $282.7 million was included in other long-term liabilities on the balance sheet.

The Company’s unbilled revenue balance totaled $7.3 million, of which $1.2 million was presented as a component of other current assets, and $6.1 million was included in other long-term assets on the balance sheet.

As discussed in Note 1 to the consolidated financial statements, under the Company’s capacity purchase agreements, the Company is paid a fixed amount per aircraft each month over the contract term.

recognizes revenue related to the fixed amount per aircraft per month based upon completed block hours proportionate to total forecasted block hours over the contract term.

To perform the allocation over the contract, the Company estimates revenue per block hour using historical data and forecasted flight activity.

Auditing the forecasted block hours over the term of the contract, which is the primary input used in the deferred revenue calculation, required extensive audit effort due to the estimation uncertainty of the forecasted block hours over the contract term.

The Company recognizes revenue related to the fixed amount per aircraft each month based upon completed block hours proportionate to total forecasted block hours over the remaining contract term.

To calculate the amount of revenue

to be recognized, the Company estimates revenue per block hour using historical data and forecasted block hour activity.

Auditing the forecasted block hours over the remaining term of the contract, which is the primary input used in the deferred revenue calculation, required extensive audit effort due to the estimation uncertainty of the forecasted block hours over the remaining contract term.

How We Addressed the Matter in Our Audit

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We also tested controls over management’s review of the data used in the deferred revenue calculation.

To test the Company’s estimated deferred revenue liability, we performed audit procedures that included, among others, assessing the methodology and assumptions used by the Company in the deferred revenue calculation, including testing of the forecasted block hours and validating completeness and accuracy of the underlying data used by the Company.

To test the Company’s deferred revenue liability, we performed audit procedures that included, among others, assessing the methodology and assumptions used by the Company in the deferred revenue calculation, including testing of the forecasted block hours and validating completeness and accuracy of the underlying data used by the Company.

Specifically, we compared management’s forecasted block hours to historical flight activity and existing flight schedules with partner airlines.

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Deposits on aircraft

Buildings and ground equipment

Buildings, ground equipment and other

Total property and equipment, gross

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Current maturities of long-term debt

Accounts payable

Accounts payable and accrued liabilities

Accrued salaries, wages and benefits

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Treasury stock, at cost, 43,310,324 and 42,615,347 shares as of December 31, 2024, and December 31, 2023, respectively

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Total stockholders’ equity

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Aircraft rentals

Special items

Payroll support grant

Other operating expenses

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Interest expense

Other income (loss), net

Other income, net

Total other expense, net

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Stock based compensation expense

Warrants issued to U.S.

Net unrealized depreciation on marketable securities, net of tax of $ 1,224

Balance at December 31, 2022

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Stock based compensation expense

Net unrealized depreciation on marketable securities, net of tax of $ 1,224

Treasury stock purchases and related excise tax

Net unrealized appreciation on marketable securities, net of tax of $ 1,329

Balance at December 31, 2023

Exercise of common stock options and vested employee stock awards

Vested employee stock awards

Employee income tax paid on vested equity awards

Sale of common stock under employee stock purchase plan

Issuance of common stock upon warrant exercise, net

Stock based compensation expense

Treasury stock purchases and related excise tax

Net unrealized appreciation on marketable securities, net of tax of $ 1,329

Treasury stock purchases

Net unrealized depreciation on marketable securities, net of tax of $ 51

Balance at December 31, 2024

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Net increase in deferred income taxes

Impairment on assets held for sale

Special items

Impairment (gain) on assets held for sale

Changes in operating assets and liabilities:

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Decrease (increase) in other current assets

Decrease in operating lease right-of-use assets

Decrease in operating lease liabilities

Decrease (increase) in operating lease right-of-use assets

Increase (decrease) in operating lease liabilities

Increase (decrease) in deferred revenue

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Aircraft deposits applied towards acquired aircraft

Decrease (increase) in other assets

Decrease (increase) in investments and financing activities with third parties and other assets

NET CASH USED IN INVESTING ACTIVITIES

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Derecognition of operating lease liabilities

Warrants issued to U.S.

Cash paid during the period for:

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Additionally, the Company provides airport customer service and ground handling services for other airlines throughout its system.

In 2022, the Company formed SkyWest Charter, LLC (“SWC”), which had its first revenue generating flight in May 2023.

In 2022, the Company formed SkyWest Charter, LLC (“SWC”), which began operations in 2023.

SWC offers an on-demand charter flight service.

As of December 31, 2023, the Company had 603 total aircraft in its fleet, including 485 aircraft in scheduled service or under contract under its code-share agreements, summarized as follows:

As of December 31, 2024, the Company had 624 total aircraft in its fleet, including 492 aircraft in scheduled service or under contract pursuant to its code-share agreements, summarized as follows:

CRJ700/CRJ550

Aircraft in scheduled service or under contract

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(1) As of December 31, 2024, other aircraft included:

supplemental spare aircraft supporting the Company’s code-share agreements that may be placed under future code-share or leasing arrangements, aircraft transitioning between code-share agreements with the Company’s major airline partners, aircraft held-for-sale or aircraft that are scheduled to be disassembled for use as spare parts.

supplemental spare aircraft supporting the Company’s code-share agreements that may be placed under future code-share or leasing arrangements, aircraft transitioning between code-share agreements with the Company’s major airline partners or aircraft that are scheduled to be disassembled for use as spare parts.

For the year ended December 31, 2024, approximately 43.9 % of the Company’s aircraft in scheduled service was operated for United, approximately 29.1 % was operated for Delta, approximately 18.5 % was operated for American and approximately 8.5 % was operated for Alaska.

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SkyWest Airlines operates the following aircraft manufactured by MHI RJ Aviation ULC, formerly known as Bombardier Aerospace (“Bombardier”):

CRJ900s, CRJ700s and CRJ200s, and E175s manufactured by Embraer.

The CRJ700, CRJ900 and E175 aircraft have a dual-class seat configuration typically configured with 65 to 76 seats.

The CRJ200 is typically a single-class 50 -seat aircraft.

SWC operates the CRJ200 in a 30 -seat configuration.

CRJ900s, CRJ700s , including a 50 -seat configuration of the CRJ700, commonly referred to as a “CRJ550,” and CRJ200s, and E175s manufactured by Embraer.

The CRJ700 , CRJ550 , CRJ900 and E175 aircraft, commonly referred to as “dual -class aircraft,” have a first class seat configuration typically configured between 50 to 76 seats.

SkyWest Airlines operates the CRJ200 as a single-class, 50 -seat aircraft and SWC operates the CRJ200 in a 30 -seat configuration.

Basis of Presentation

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Property and Equipment

Property and equipment are stated at cost and depreciated over their useful lives to their estimated residual values using the straight-line method as follows:

Property and equipment are stated at cost and depreciated over their useful lives to their estimated residual values using the straight-line basis.

The Company revises its estimated useful life and residual values assumptions when facts and circumstances occur, particularly as the Company’s CRJ fleet ages.

In the fourth quarter of 2024, the Company extended the CRJ700 contract with American and entered into agreements with United to place 40 CRJ550s under contract.

As a result, the Company extended the estimated useful lives of its CRJ700/CRJ550 fleet an average of three years and revised the residual values of the assets accordingly.

This resulted in a $ 3.0 million decrease in depreciation expense for the month ended December 31, 2024.

The decrease in depreciation related to these CRJ assets is expected to be significantly offset in 2025 by any depreciation expense from new investments in capital expenditures, including the eight E175 aircraft the Company anticipates taking delivery of throughout 2025.

The following summarizes the Company’s useful life and residual value assumptions as of December 31, 2024:

Depreciable Life

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Impairment of Long-Lived Assets

As of December 31, 2023, the Company had approximately $ 5.5 billion of property and equipment, net.

As of December 31, 2024, the Company had approximately $ 5.6 billion of property and equipment, net of accumulated depreciation.

In accounting for these long-lived assets, the Company makes estimates about the expected useful lives of the assets, the expected residual values of such assets, and the potential for impairment based on projected future cash flows and estimated fair value of the assets.

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Asset groupings are done at the aircraft type level.

During 2022, the Company committed to a plan to sell 14 CRJ700 aircraft, resulting in an impairment on the assets held for sale of $ 51.4 million.

During 2023, the Company wrote-down the assets held for sale for an additional $ 2.3 million.

See Note 8, “Assets Held for Sale” for more information on the assets held for sale.

Capitalized Interest

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The Company recognizes revenue under its flying agreements and under its lease, airport services and other service agreements when the service is provided under the applicable agreement.

Under the Company’s capacity purchase agreements with United, Delta, American and Alaska (each, a “major airline partner”), the major airline partner generally pays the Company a fixed-fee for each departure, flight hour (measured from takeoff to landing, excluding taxi time) or block hour (measured from takeoff to landing, including taxi time) incurred, and an amount per aircraft in service each month (a portion of which is accounted for as aircraft lease consideration), with additional incentives based on flight completion, on-time performance or other performance metrics.

The major airline partner also directly pays for or reimburses the Company for certain direct expenses incurred under the capacity purchase agreement, such as fuel,

airport landing fees and airport rents.

Under the Company’s capacity

purchase agreements with United, Delta, American and Alaska (each, a “major airline partner”), the major airline partner generally pays the Company a fixed-fee for each departure, flight hour (measured from takeoff to landing, excluding taxi time) or block hour (measured from takeoff to landing, including taxi time) incurred, and an amount per aircraft in service each month, with additional incentives based on flight completion, on-time performance or other performance metrics.

The major airline partner also directly pays for or reimburses the Company for certain direct expenses incurred under the capacity purchase agreement, such as fuel, airport landing fees and airport rents.

Under the capacity purchase agreements, the Company’s performance obligation is met when each flight is completed, measured in completed block hours, and is reflected in flying agreements revenue.

The transaction price for the capacity purchase agreements is determined from the fixed-fee consideration, incentive consideration and directly reimbursed expenses earned as flights are completed over the agreement term.

For the years ended December 31, 2023, 2022 and 2021, capacity purchase arrangements represented approximately 86.5 %, 88.0 % and 84.3 % of the Company’s flying agreements revenue, respectively.

Under the Company’s prorate arrangements (also referred to as a “prorate” agreements), the major airline partner and the Company negotiate a passenger fare proration formula, pursuant to which the Company receives a percentage of the ticket revenues for those passengers traveling for one portion of their trip on a Company airline and the other portion of their trip on the major airline partner.

For the years ended December 31, 2024, 2023 and 2022, capacity purchase agreements represented approximately 86.6 %, 86.5 % and 88.0 % of the Company’s flying agreements revenue, respectively.

Under the Company’s prorate agreements, the major airline partner and the Company negotiate a passenger fare proration formula, pursuant to which the Company receives a percentage of the ticket revenues for those passengers traveling for one portion of their trip on a Company airline and the other portion of their trip on the major airline partner.

Under the Company’s prorate flying agreements, the performance obligation is met and revenue is recognized when each flight is completed based upon the portion of the prorate passenger fare the Company determines that it will receive for each completed flight.

The transaction price for the prorate agreements is determined from the proration formula derived from each passenger ticket amount on each completed flight over the agreement term.

Certain routes under the Company’s prorate arrangements are subsidized by the U.S.

Certain routes under the Company’s prorate agreements are subsidized by the U.S.

Department of Transportation under the Essential Air Service (“EAS”) program, a program created to ensure small communities in the United States maintain a minimum level of scheduled air service.

The EAS contracts are generally two years in duration and the Company recognizes EAS revenue on a per-completed-flight basis pursuant to the terms of each contract.

The EAS contracts are generally between two to three years in duration and the Company recognizes EAS revenue on a per-completed-flight basis pursuant to the terms of each contract.

In the event the Company receives upfront consideration for an EAS contract, the Company recognizes the revenue on a per-completed flight basis over the EAS contract term.

Under the Company’s charter operations, SWC, the Company negotiates a fare for the charter flight with the customer.

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The Company allocates the total consideration received under its capacity purchase agreements between lease and non-lease components based on stand-alone selling prices.

A portion of the Company’s compensation under its capacity purchase agreements is designed to reimburse the Company for certain aircraft ownership costs.

The consideration for aircraft ownership costs varies by agreement but is intended to cover either the Company’s aircraft principal and interest debt service costs, its aircraft depreciation and interest expense or its aircraft lease expense costs while the aircraft is under contract.

The consideration received for the use of the aircraft under the Company’s capacity purchase agreements is accounted for as lease revenue, inasmuch as the agreements identify the “right of use” of a specific type and number of aircraft over a stated period of time.

The lease revenue associated with the Company’s capacity purchase agreements is accounted for as an operating lease and is reflected as flying agreements revenue on the Company’s consolidated statements of comprehensive income.

During the three months ended December 31, 2022, the Company amended certain of its capacity purchase agreements resulting in a portion of the Company’s aircraft lease revenue becoming variable beginning in the fourth quarter of 2022.

As a result of these capacity purchase agreement amendments executed in 2022, during the year ended December 31, 2023, the Company deferred recognizing lease revenue on $ 78.5 million of the allocated fixed monthly lease payments received during the year ended December 31, 2023, under the straight-line method.

The Company deferred recognizing lease revenue on $ 22.1 million of the allocated fixed monthly lease payments received during the year ended December 31, 2022, under the straight-line method.

The Company has not separately stated aircraft rental income and aircraft rental expense in the consolidated statement of

comprehensive income because the use of the aircraft is not a separate activity of the total service provided under the capacity purchase agreements.

A portion of the Company’s compensation under its capacity purchase agreements relates to operating the aircraft, identified as the non-lease component of the capacity purchase agreement.

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Accordingly, the Company’s revenue recognition will likely vary from the timing of cash receipts under the Company’s capacity purchase agreements.

The Company refers to cash received under its capacity purchase agreements prior to recognizing revenue as “deferred revenue,” and the Company refers to revenue recognized prior to billing its major airline partners under its capacity purchase agreements as “unbilled revenue” for each reporting period.

In 2023, the Company deferred recognizing revenue on $ 151.4 million of fixed monthly payments under certain agreements and unbilled revenue decreased by $ 12.6 million under certain other agreements, compared to deferring revenue of $ 18.7 million and recognizing $ 11.5 million of unbilled revenue in 2022.

agreements as “unbilled revenue” for each reporting period.

In 2024, the Company recognized $ 35.5 million of previously deferred revenue associated with the non-lease fixed monthly payments under certain agreements and increased unbilled revenue by $ 7.9 million under certain other agreements, compared to deferring revenue of $ 151.4 million and decreasing unbilled revenue by $ 12.6 million in 2023, and deferring revenue of $ 18.7 million and recognizing $ 11.5 million of unbilled revenue in 2022.

A portion of the Company’s compensation under its capacity purchase agreements is designed to reimburse the Company for certain aircraft ownership costs.

The Company recognizes fixed monthly lease payments as lease revenue using the straight-line basis over the capacity purchase agreement term and variable lease payments in the period when the block hours are completed.

The Company recognized $ 1.5 million of previously deferred lease revenue during the year ended December 31, 2024, whereas the Company deferred recognizing lease revenue of $ 78.5 million and $ 22.1 million during the years ended December 31, 2023 and 2022, respectively, for the fixed monthly lease payments under the straight-line basis.

The Company has not separately stated aircraft rental income and aircraft rental expense in the consolidated statement of comprehensive income because the use of the aircraft is not a separate activity of the total service provided under the capacity purchase agreements.

The Company’s total deferred revenue balance as of December 31, 2024, was $ 337.5 million, including $ 54.8 million in other current liabilities and $ 282.7 million in other long-term liabilities.

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In several of the Company’s agreements, the Company is eligible to receive incentive compensation upon the achievement of certain performance criteria.

The incentives are defined in the agreements and are measured and determined on a monthly, quarterly or semi-annual basis.

The incentives are defined in the agreements and are measured and determined on a monthly or annual basis.

At the end of each period during the term of an agreement, the Company calculates the incentives achieved during that period and recognizes revenue attributable to that agreement accordingly, subject to the variable constraint guidance under Accounting Standard Codification (“ASC”) Topic 606.

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(capacity purchase agreement)

CRJ700/CRJ550

Individual aircraft have scheduled removal dates under the agreement between 2025 and 2033

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(prorate agreement)

CRJ700/CRJ550

Terminable with 30 -day notice

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The number of aircraft listed above for each prorate agreement approximates the number of aircraft the Company uses to serve the prorate routes.

In addition to the contractual arrangements described above, as of December 31, 2023, SkyWest Airlines reached agreements to place the following E175 aircraft under a capacity purchase agreement with the respective partners:

Delta Air Lines

United Airlines

Alaska Airlines

Final delivery and in-service dates for aircraft to be placed under contract may be adjusted based on various factors.

When an aircraft is scheduled to be removed from a capacity purchase arrangement, the Company may, as practical under the circumstances, negotiate an extension with the respective major airline partner, negotiate the placement of the aircraft with another major airline partner, return the aircraft to the major airline partner when the aircraft is leased from the major airline partner, place owned aircraft for sale or pursue other uses for the aircraft.

Other uses for the aircraft may include placing the aircraft in a prorate agreement, leasing the aircraft or engines to a third party or disassembling aircraft components such as the engines and parts to be used as spare inventory.

Lease, airport services and other revenues primarily consists of revenue generated from aircraft and spare engines leased to third parties and from airport customer service agreements, such as gate and ramp agent services at various airports where the Company has been contracted by third parties to provide such services.

The following table

represents the Company’s lease, airport services and other revenues for the years ended December 31, 2023, 2022 and 2021 (in thousands):

In addition to the contractual agreements described above, as of December 31, 2024, SkyWest Airlines reached agreements with certain major airline partners to place additional aircraft under capacity purchase agreements as summarized below.

The Company is coordinating with its major airline partners to optimize the timing of upcoming fleet deliveries and the delivery timing referenced below is subject to change.

● Capacity purchase agreement with United for 15 new E175 aircraft.

Seven new E175 aircraft are currently scheduled for delivery in 2025 and eight new E175 aircraft are scheduled for delivery in 2026.

The Company anticipates financing the aircraft through debt.

● Capacity purchase agreement with Alaska for one new E175 aircraft.

The delivery date for the new E175 aircraft is currently scheduled for 2025.

The Company anticipates financing the aircraft through debt.

● Capacity purchase agreement with United for 30 used CRJ550 aircraft.

Pursuant to these agreements, the Company is in the process of acquiring four used CRJ550s and will convert 26 of its CRJ700s to CRJ550s.

The aircraft are anticipated to be placed into service in 2025 through the end of 2026.

When an aircraft is scheduled for expiration from a capacity purchase agreement, the Company may, as practical under the circumstances, negotiate an extension with the respective major airline partner, negotiate the placement of the aircraft with another major airline partner, return the aircraft to the major airline partner when the aircraft is provided by the major airline partner, place owned aircraft for sale or pursue other uses for the aircraft.

Other uses for the aircraft may include placing the aircraft in a prorate agreement, leasing the aircraft to a third party or disassembling aircraft components such as the engines and parts to be used as spare inventory.

Lease, airport services and other revenues primarily consist of revenue generated from aircraft and spare engines leased to third parties and from airport customer service agreements, such as gate and ramp agent services at various airports where the Company has been contracted by third parties to provide such services.

The following table represents the Company’s lease, airport services and other revenues for the years ended December 31, 2024, 2023 and 2022 (in thousands):

For the year ended December 31,

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Total future minimum rental income under operating leases

Of the Company’s $ 5.5 billion of property and equipment, net as of December 31, 2023, $ 216.0 million of regional jet aircraft and spare engines were leased to third parties under operating leases.

Of the Company’s $ 5.6 billion of property and equipment, net of accumulated depreciation as of December 31, 2024, $ 202.3 million of regional jet aircraft and spare engines were leased to third parties under operating leases.

The Company’s mitigation strategy for the residual asset risks of these assets includes leasing aircraft and engine types that can be operated by the Company in the event of a default.

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Other ancillary revenues commonly associated with airlines, such as baggage fee revenue, ticket change fee revenue and the marketing component of the sale of mileage credits, are retained by the Company’s major airline partners on flights that the Company operates under its code-share agreements.

As of December 31, 2023, the Company had $ 82.9 million in accounts receivable of which $ 73.6 million related to flying agreements.

As of December 31, 2022, the Company had $ 100.5 million in accounts receivable of which $ 73.7 million related to flying agreements.

As of December 31, 2024, the Company had $ 122.8 million in accounts receivable of which $ 105.2 million is related to flying agreements.

As of December 31, 2023, the Company had $ 82.9 million in accounts receivable of which $ 73.6 million is related to flying agreements.

Allowance for Credit Losses

The Company monitors publicly available credit ratings for entities for which the Company has a significant receivable balance.

The Company has an allowance for credit losses associated with its accounts receivable, notes receivable and third-party debt guarantees.

The Company monitors publicly available credit ratings for entities for which the Company has a significant receivable balance or guarantee.

As of December 31, 2024, the Company had gross receivables of $ 125.9 million in current assets and gross receivables of $ 225.2 million in other long-term assets.

The Company has established credit loss reserves based on publicly available historic default rates issued by a third party for companies with similar credit ratings, factoring in the term of the respective accounts receivable or note receivable.

As of December 31, 2023, the Company had gross receivables of $ 86.1 million in current assets and gross receivables of $ 199.8 million in other long-term assets.

receivable, notes receivable or guarantee.

During the year ended December 31, 2024, the Company recorded $ 3.6 million of adjustments to the credit loss reserve.

During the year ended December 31, 2023, the Company recorded $ 0.2 million of adjustments to the credit loss reserve and wrote-off $ 18.5 million in receivables that were fully reserved as of December 31, 2022.

There were no other significant changes in the outstanding accounts receivable, notes receivable or credit ratings of the entities.

There were no other significant changes in the outstanding accounts receivable, notes receivable, guarantees or credit ratings of the entities.

The following table summarizes the changes in allowance for credit losses:

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Treasury Warrants (1)

Employee Stock Awards

Unvested Employee Equity Awards

Total antidilutive securities

Department of the Treasury (“Treasury”) warrants to purchase shares of SkyWest common stock issued pursuant to the three Payroll Support Program Agreements and a loan agreement .

See Note 10, “Payroll Support Programs” and Note 11, “Capital Transactions” for further discussion on the warrants issued to Treasury.

Additionally, for the years ended December 31, 2023, 2022 and 2021, 334,000 , 146,000 and 140,000 performance share units (at target performance) were excluded from the computation of Diluted EPS since the Company had not achieved the minimum target thresholds for these units as of December 31, 2023, 2022 and 2021, respectively.

(1) Warrants originally issued to U.S.

Department of the Treasury (“Treasury”) to purchase shares of SkyWest common stock issued pursuant to the three Payroll Support Program Agreements and a loan agreement with the U.S.

See Note 9, “Capital Transactions” for further discussion on the warrants issued to Treasury.

Additionally, for the years ended December 31, 2024, 2023 and 2022, 209,000 , 334,000 and 146,000 performance share units (“PSUs”) (at target performance) were excluded from the computation of Diluted EPS since the Company had not achieved the minimum target thresholds for these PSUs as of December 31, 2024, 2023 and 2022, respectively.

The calculation of the weighted average number of common shares outstanding for Basic EPS and Diluted EPS are as follows for the years ended December 31, 2024, 2023 and 2022 (in thousands):

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Marketable securities are reported at fair value based on market quoted prices in the consolidated balance sheets.

If quoted prices in active markets are no longer available, the Company has estimated the fair values of these securities utilizing a discounted cash flow analysis.

These analyses consider, among other items, the collateralization underlying the security investments, the creditworthiness of the counterparty, the timing of expected future cash flows, and the expectation of the next time the security is expected to have a successful auction.

Certain investments in other companies are reported at fair value based on market quoted prices or using the Black Scholes Option Pricing model in the consolidated balance sheets.

The fair value of the Company’s long-term debt is estimated based on current rates offered to the Company for similar debt.

The fair value of the Company’s long-term debt, as disclosed in Note 3, is estimated based on current rates offered to the Company for similar debt.

Segment Reporting

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I nformation pertaining to the Company’s reportable segments is presented in Note 2, Segment Reporting .

The Company has two reportable segments:

(1) SkyWest Airlines and SWC and (2) SkyWest Leasing.

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update No.

2023-07, “Segment Reporting (ASC Topic 280) – Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

At December 31, 2024, the Company adopted Accounting Standards Update No.

2023-07, “Segment Reporting (ASC Topic 280) – Improvements to Reportable Segment Disclosures,” issued by the Financial Accounting Standards Board (FASB).

The standard is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This ASU also expands disclosure requirements to enable users of financial statements to better understand the entity’s measurement and assessment of segment performance and resource allocation.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

As required by the standard, the Company recast prior year segment disclosures to conform to the current year presentation.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

For further details, refer to Note 2, “Segment Reporting.”

In December 2023, the FASB issued Accounting Standards Update No.

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The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

In March 2024, the FASB issued Accounting Standards Update No.

2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (ASC Subtopic 220-40) – Disaggregation of Income Statement Expenses”, which enhances the transparency and comparability of financial statements by requiring companies to disclose more granular information about expense components.

The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

(2) Segment Reporting

GAAP requires disclosures related to components of a company for which separate financial information is available to, and regularly evaluated by, the Company’s chief operating decision maker when deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker is the chief executive officer.

The Company’s two reportable segments consist of (1) the operations of SkyWest Airlines and SWC and (2) SkyWest Leasing activities.

The Company’s chief operating decision maker analyzes the profitability of operating new aircraft financed through the issuance of debt, including the Company’s E175 fleet, separately from the profitability of the Company’s capital deployed for ownership and financing of such aircraft.

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 other flying or airport services agreements.

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.

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Additionally, aircraft removed from SkyWest Airlines’ operations and held for sale are included in the SkyWest Leasing segment.

The chief operating decision maker assesses performance for each segment and decides how to allocate resources based on income before income taxes.

The chief operating decision maker uses the segment profit or loss measure when assessing performance of the segment and monitors budget versus actual results to allocate resources for each segment predominantly in the annual budget and forecasting process.

The following represents the Company’s segment data for the years ended December 31, 2024, 2023, and 2022 (in thousands).

As required by the adoption of ASC 2023-07, the Company recast the 2023 and 2022 segment disclosures to conform to the current year presentation.

Year ended December 31, 2024

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Operating revenues

Operating expense

Depreciation and amortization expense

Salaries, wages and benefits

Aircraft maintenance, materials and repairs

Depreciation and amortization

Interest expense

Segment profit (loss) (2)

Other segment items (1)

Segment profit (2)

Total assets (as of December 31, 2024)

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Operating revenues

Operating expense

Depreciation and amortization expense

Salaries, wages and benefits

Aircraft maintenance, materials and repairs

Depreciation and amortization

Interest expense

Other segment items (1)

Segment profit (loss) (2)

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Operating revenues

Operating expense

Depreciation and amortization expense

Special items - impairment charges

Salaries, wages and benefits

Aircraft maintenance, materials and repairs

Depreciation and amortization

Interest expense

Segment profit (2)

Other segment items (1)

Segment profit (loss) (2)

Total assets (as of December 31, 2022)

Capital expenditures (including non-cash)

(1) Prorate revenue and airport customer service revenue are reflected in the SkyWest Airlines and SWC segment.

(2) Segment profit (loss) is equal to operating income less interest expense.

(1) Other segment items includes aircraft fuel;

airport related expenses;

aircraft rentals;

other operating expenses consisting primarily of property taxes, hull and liability insurance, simulator costs, crew per diem and crew hotel costs;

interest income and other income, net.

(2) Segment profit (loss) is equal to income before income taxes.

As a result of adopting ASC 2023-07, the Company included interest income and other income in the recast segment profit (loss) for each segment during the years ended December 31, 2023 and 2022.

(3) Long-term Debt

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Notes payable to U.S.

Government, interest due quarterly at 1.00 % through 2025 and based on SOFR plus 2.0 % from 2025 through 2031, unsecured

Government, interest due semi-annually at 1.00 % through 2025 and based on SOFR plus 2.0 % from 2025 through 2031, unsecured

Long-term debt

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The average effective interest rate on the Company’s debt was approximately 4.2 % and 4.1 % at December 31, 2024 and 2023, respectively.

During 2023, the Company took delivery of two new E175 aircraft that the Company financed through $ 44.7 million of long-term debt.

The debt associated with the two E175 aircraft has 12-year terms, is due in quarterly installments, and is secured by the E175 aircraft.

During 2023, the Company executed a promissory note for $ 25 million.

The promissory note has an eight-year term, is due in monthly installments, has a fixed annual interest rates of 5.6 % and is secured by spare engines.

During 2024, the Company took delivery of five new E175 aircraft that the Company financed through $ 116.2 million of long-term debt.

The debt associated with the five E175 aircraft has 12-year terms, is due in quarterly installments, and is secured by the E175 aircraft.

The aggregate amounts of principal maturities of long-term debt as of December 31, 2024 were as follows (in thousands):

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The fair value of the Company’s long-term debt is estimated based on current rates offered to the Company for similar debt.

Debt is primarily classified as Level 2 within the fair value hierarchy.

The fair value of debt is estimated using inputs classified as Level 2 within the fair value hierarchy.

The carrying value and fair value of the Company’s long-term debt as of December 31, 2024 and 2023, were as follows (in thousands):

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Year ended December 31,

Computed provision (benefit) for income taxes at the statutory rate

Computed provision for income taxes at the statutory rate

Increase (decrease) in income taxes resulting from:

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Valuation allowance changes affecting the provision for income taxes

Excess tax benefits from share-based compensation

Tax expense (benefit) from share-based compensation

Change in unrecognized tax benefit

Provision for income taxes

For the year ended December 31, 2023, the Company released a $ 1.1 million valuation allowance related to certain deferred tax assets associated with state net operating losses with a limited carry forward period.

For the year ended December 31, 2024 and December 31, 2023, the Company released a $ 0.6 million and $ 1.1 million, respectively, valuation allowance related to certain deferred tax assets associated with state net operating losses with a limited carry forward period.

For the year ended December 31, 2022, the Company recorded a $ 1.7 mi llion valuation allowance against certain deferred tax assets associated with state net operating losses with a limited carry forward period.

The decrease in the valuation allowance for 2023 was primarily based on changes in the Company's income tax projections by jurisdiction which increased the amount of deferred tax assets that are anticipated to be utilized prior to the deferred tax assets expiring.

The Company recorded a $ 0.9 million expense, $ 0.5 million expense and $ 0.1 million benefit from share-based compensation in 2023, 2022, and 2021, respectively, relating to ASU 2016-09 which requires excess tax benefits and deficiencies to be recognized in the income tax provision during the period stock options are exercised and stock awards vest.

The Company recorded a $ 7.6 million and $ 7.3 million tax benefit for the release of uncertain tax position under ASC Topic 740 for the years ended December 31, 2023 and December 31, 2022, respectively.

The decrease in this valuation allowance in 2024 was primarily based on changes in the Company's state income tax projections by jurisdiction which increased the amount of deferred tax assets that are anticipated to be utilized prior to the deferred tax assets expiring.

The Company recorded a $ 0.9 million benefit, a $ 0.9 million expense and $ 0.5 million expense from share-based compensation in 2024, 2023, and 2022, respectively, relating to ASU 2016-09 which requires excess tax benefits and deficiencies to be recognized in the income tax provision during the period stock options are exercised and stock awards vest.

The Company recorded a $ 0.7 million, $ 7.6 million, and $ 7.3 million tax benefit for the release of uncertain tax position under ASC Topic 740 in 2024, 2023 and 2022, respectively.

The significant components of the Company’s net deferred tax assets and liabilities as of December 31, 2024 and 2023, are as follows (in thousands):

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For the years ended December 31, 2023 and 2022, the Company recorded $ 191,000 , and $ 343,000 , respectively, of interest expense related to uncertain tax positions not offset by the Company's tax attributes.

The Company did not record a similar expense for the year ended December 31, 2024.

(5) Commitments and Contingencies

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The Company requires no collateral from its major airline partners or customers, but monitors the financial condition of its major airline partners.

Under the majority of the Company’s code-share agreements, the Company receives weekly payments from its major code-share partners that approximate a significant percentage of the

compensation earned for such period.

Under the majority of the Company’s code-share agreements, the Company receives weekly payments from its major code-share partners that approximate a significant percentage of the compensation earned for such period.

Additionally, the Company provides certain customer service functions at multiple airports for various airlines and the Company maintains a credit loss reserve based upon expected collectability of all accounts receivable.

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Although no SkyWest Airlines employees are represented by a national union, the majority of SkyWest Airline employees are covered by a written, stable and binding collective bargaining agreement under the Railway Labor Act, entered into between SkyWest Airlines and long-established labor associations, such as the SkyWest Airlines Pilot Association (“SAPA”).

Aircraft Purchase Commitments

As of December 31, 2023, the Company had a purchase commitment to purchase five new E175 aircraft in 2024, eight new E175 aircraft in 2025 and eight new E175 aircraft in 2026.

Aircraft and Other Purchase Commitments

As of December 31, 2024, the Company had a purchase commitment to purchase eight new E175 aircraft in 2025 and eight new E175 aircraft in 2026.

In addition to the above, in 2024, the Company 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.

At December 31, 2024, the Company estimates the remaining financing obligation under the agreement will be between $ 60.0 million and $ 70.0 million and anticipates closing on the remaining financings during 2025.

In 2022, the Company agreed to guarantee $ 19.8 million of debt for a 14 CFR Part 135 air carrier.

The debt is secured by the Part 135 air carrier’s aircraft and engines and has a five-year term.

In exchange for providing the guarantee, the Company received 6.5 % of the guaranteed amount as consideration, payable in the estimated value of common stock of the Part 135 air carrier.

During the year ended December 31, 2023, the Company sold all of its shares of common stock of the Part 135 air carrier and recorded a gain of $ 0.5 million in “Other income, net” on the Company’s consolidated statements of comprehensive income.

In exchange for providing the guarantee, the Company received 6.5 % of the guaranteed amount as consideration, payable in the estimated value of common stock of the Part 135 air carrier, all of which was sold in 2023.

The balance of the debt under the guarantee was $ 14.1 million as of December 31, 2024.

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The debt is secured by the school’s aircraft and engines and has a five-year term.

In exchange for providing the guarantee, the Company receives 2.0 % annually of the guaranteed amount as consideration in cash.

In exchange for providing the guarantee, the Company receives 2.0 % of the guaranteed amount annually as consideration in cash.

The balance of the debt under the guarantee was $ 10.6 million as of December 31, 2024.

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The Company used its incremental borrowing rate to discount the lease payments based on information available at lease commencement.

As of December 31, 2024, excluding aircraft financed by the Company’s major airline partners that the Company operates for them under contract, the Company leased eight aircraft under long-term lease agreements with remaining terms ranging from four to six years .

These eight aircraft are subleased to a third-party.

During the year ended December 31, 2023, the Company acquired 35 CRJ aircraft under early lease buyout arrangements with the lessors for $ 142.4 million.

The aircraft were in the Company’s operating fleet when the lease buyouts occurred.

As of December 31, 2023, excluding aircraft financed by the Company’s major airline partners that the Company operates for them under contract, the Company leased eight aircraft under long-term lease agreements with remaining terms ranging from five to seven years.

These eight aircraft are subleased to a third-party.

Airport facilities

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The remaining lease terms for facility space vary from one month to 32 years .

The Company’s

operating leases with lease rates that are variable based on airport operating costs, use of the facilities or other variable factors are excluded from the Company’s right-of-use assets and operating lease liabilities in accordance with accounting guidance.

The Company’s operating leases with lease rates that are variable based on airport operating costs, use of the facilities or other variable factors are excluded from the Company’s right-of-use assets and operating lease liabilities in accordance with accounting guidance.

As of December 31, 2024, the Company’s right-of-use assets were $ 87.7 million, the Company’s current maturities of operating lease liabilities were $ 20.4 million, and the Company’s noncurrent lease liabilities were $ 67.3 million.

During 2023, the Company paid $ 31.7 million in operating leases reflected as a reduction from operating cash flows.

During 2024, the Company paid $ 28.9 million under operating leases reflected as a reduction from operating cash flows.

The table below presents lease related terms and discount rates as of December 31, 2024:

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The Company presented the $ 54.3 million of assets held for sale at the lower of their current carrying value or their fair market value less costs to sell and included the amount in “Other current assets” on the Company’s consolidated balance sheet.

In March 2024, the Company decided not to sell the 14 CRJ700 aircraft based on improved pilot availability and reclassified them as held for use assets in “Aircraft and rotable spares” on the Company’s consolidated balance sheet.

The Company remeasured the fair value of the held for use assets at the time of the reclassification and, as a result, in 2024, the Company recorded a $ 4.2 million gain (pre-tax), as an offset to “Other Operating Expenses” in the Company’s consolidated statement of income, primarily due to the elimination of the estimated costs to sell the assets.

The fair values were based upon observable and unobservable inputs, including a third-party valuation, market trends and condition of the airframes and engines.

The assumptions used to determine the fair value of the assets held for sale are subject to inherent uncertainty and could produce a wide range of outcomes which the Company will continue to monitor in future periods as new information becomes available.

Prior to the ultimate sale of the assets, subsequent changes in the estimate of the fair value of the assets held for sale will be recorded as a gain or loss with a corresponding adjustment to the assets’ carrying value.

(9) Special Items

During 2021, the Company recorded a non-cash impairment charge of $ 84.6 million to write-down certain CRJ900 aircraft to their estimated fair value.

In 2021, the Company evaluated its CRJ900 fleet and related CRJ900 assets for impairment.

Pursuant to ASC 360-10, “Impairment and Disposal of Long-Lived Assets,” the Company determined that the asset group for the CRJ900 aircraft existed at the major airline partner level.

A recoverability test was performed utilizing estimated undiscounted future cash flows for the CRJ900 aircraft pursuant to applicable capacity purchase agreement terms and forecasted cash flow including the estimated value the Company would realize upon disposal of aircraft.

This was compared to the carrying value of the related assets resulting in a cash flow deficiency indicating that an impairment existed.

The impairment analysis required the Company to perform an assessment of the fair value of its long-lived assets related to the CRJ900 aircraft within the asset groups utilized in the recoverability test.

The Company engaged a third party to assist in determining the fair value of these aircraft.

These values were estimated based on listed market values or recent third-party market transactions for similar assets, adjusted by the related maintenance status of the fleet.

This special item impairment charge is reflected in the SkyWest Airlines operating expenses under Note 2, “Segment Reporting” for the year ended December 31, 2021.

(10) Payroll Support Programs

In 2020 and 2021, the Company entered into three Payroll Support Program Agreements with Treasury that provided certain payroll support relief payments, including the payroll support program established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (“PSP1”), the payroll support program established under the Consolidated Appropriations Act, 2021 (“PSP2”) and the payroll support program established under the American Rescue Plan Act of 2021 (“PSP3”), collectively “Payroll Support Programs”.

The relief payments were conditioned on the Company’s agreement to, among other things, refrain from conducting involuntary employee layoffs or furloughs through September 30, 2021.

Other conditions included restrictions on share repurchases and dividends through September 30, 2022, continuing EAS as directed by the U.S.

Department of Transportation and certain limitations on executive compensation.

The payments received under the payroll support programs included an amount in the form of a payroll grant and an amount in the form of an unsecured 10-year loan.

In return, the Company issued to Treasury warrants to purchase shares of the Company’s common stock.

During the year ended December 31, 2021, the Company recorded $ 422.7 million of payroll grant proceeds as an offset to operating expenses.

No grants were received or recognized during 2022 and 2023.

In 2020, in connection with the CARES Act, the Company entered into the Treasury Loan Agreement with Treasury (“Secured Loan”) and borrowed $ 60.0 million under the agreement and in conjunction therewith, issued warrants to purchase shares of the Company’s common stock.

During 2021, the Company repaid all amounts outstanding under the secured loan with Treasury, and in connection with such repayment, terminated the Secured Loan.

See Note 11, “Capital Transactions” for further discussion on the warrants issued to Treasury.

(9) Capital Transactions

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No shares of preferred stock are presently outstanding.

The Company’s Board of Directors is

authorized, without any further action by the shareholders of the Company, to (i) divide the preferred stock into series;

The Company’s Board of Directors is authorized, without any further action by the shareholders of the Company, to (i) divide the preferred stock into series;

(ii) designate each such series;

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On May 7, 2019, the Company’s shareholders approved the adoption of the SkyWest, Inc.

2019 Long-Term Incentive Plan, which provides for the issuance of up to 4,500,000 shares of common stock to the Company’s directors, employees, consultants and advisors (the “2019 Incentive Plan”).

The 2019 Incentive Plan provides for awards in the form of options to acquire shares of common stock, stock appreciation rights, restricted stock grants, restricted stock units and performance awards.

The 2019 Incentive Plan is subject to a fungible ratio concept, such that the issuance of stock options and stock appreciation rights reduces the number of available shares under the 2019 Incentive Plan on a 1 -for-1 basis, and the issuance of other awards reduces the number of available shares under the 2019 Incentive Plan on a 1.65 -for-1 basis.

The 2019 Incentive Plan is administered by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”).

As of December 31, 2023, the 2019 Incentive Plan had 2.6 million plan shares remaining available for future issuance, based on target for granted and unvested performance share units.

2019 Long-Term Incentive Plan, which provided for the issuance of up to 4,500,000 shares of common stock to the Company’s directors, employees, consultants and advisors (the “2019 Incentive Plan”).

On May 7, 2024, the Company’s shareholders

approved the amendment and restatement of the 2019 Incentive Plan (“Restated 2019 Incentive Plan”), providing an additional 1,298,000 shares of common stock to be issued.

The Restated 2019 Incentive Plan provides for awards in the form of options to acquire shares of common stock, stock appreciation rights, restricted stock grants, restricted stock units and performance awards.

The Restated 2019 Incentive Plan is subject to a fungible ratio concept, such that the issuance of stock options and stock appreciation rights reduces the number of available shares under the Restated 2019 Incentive Plan on a 1 -for-1 basis, and the issuance of other awards reduces the number of available shares under the Restated 2019 Incentive Plan on a 1.65 -for-1 basis.

The Restated 2019 Incentive Plan is administered by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”).

As of December 31, 2024, the Restated 2019 Incentive Plan had 3.5 million plan shares remaining available for future issuance, based on target payout for granted and unvested PSUs.

Stock Options

During the years ended December 31, 2024, 2023 and 2022, the Company did not grant any options to purchase shares of common stock to its employees.

The Company had no outstanding stock options as of December 31, 2023.

The Company had no outstanding stock options as of December 31, 2024 and 2023.

The following table summarizes the stock option activity for the years ended December 31, 2024, 2023 and 2022.

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Exercisable at December 31, 2023

The total intrinsic value of options to acquire shares of the Company’s common stock that were exercised was $ 0.1 million for the years ended December 31, 2023 and 2022, and $ 1.8 million for the year ended December 31, 2021.

The total intrinsic value of options to acquire shares of the Company’s common stock that were exercised was $ 0.1 million for the years ended December 31, 2023 and 2022.

The Company did not have any option exercises for the year ended December 31, 2024.

Restricted Stock Units (“RSUs”)

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Non-vested RSUs outstanding at December 31, 2024

Performance Share Units (“PSUs”)

During the year ended December 31, 2023, the Compensation Committee granted performance share units, which are performance-based restricted stock units, to certain Company employees.

Performance Share Units

During the year ended December 31, 2024, the Compensation Committee granted PSUs, which are performance-based restricted stock units, to certain Company employees.

The PSUs have a three-year vesting period, during which the recipient must remain employed with the Company.

The number of performance shares awardable from the 2023 grants can range from 0 % to 250 % of the original amount granted depending on the Company’s performance over three one-year measurement periods against the pre-established targets.

The Company’s compensation expense for performance share units is based upon the projected number of performance share units estimated to be awarded at the conclusion of the performance period.

During 2023, the Compensation Committee awarded 40 % of the shares related to the performance share grant in 2020 based on the Company’s performance for the three years ended December 31, 2022, measured against the pre-established targets for the same period.

This resulted in the forfeiture of 35,328 PSUs in 2023 from target related to the 2020 PSU grant.

The Compensation Committee will determine the achievement of performance results and corresponding vesting of performance shares for each year’s grant in 2021, 2022 and 2023 following the conclusion of the respective performance period.

At the end of each performance period, the number of shares awarded can range from 0 % to 250 % of the original target amount for performance share units granted in 2023, 2022 and 2021.

The number of PSUs awardable may exceed the target amount granted depending on the Company’s performance over three one-year measurement periods against the pre-established targets.

The Company’s compensation expense for PSUs is based upon the projected number of PSUs estimated to be awarded at the conclusion of the performance period.

During the 2024 year, the Company granted 118,021 PSUs at target performance, all of which were outstanding as of December 31, 2024 and have a potential payout of 236,042 shares, or 200 % of target, if the Company’s performance exceeds the pre-established goals for a maximum payout associated with this grant.

During the 2023 year, the Company granted 391,810 PSUs at target performance, all of which were outstanding as of December 31, 2024 and have a potential payout of 979,525 shares, or 250 % of target, if the Company’s performance exceeds the pre-established goals for a maximum payout associated with this grant.

During the 2022 year, the Company granted 225,345 PSUs at target performance, of which 219,054 were outstanding as of December 31, 2024 and have a potential payout of 547,635 shares, or 250 % of target, if the Company’s performance exceeds the pre-established goals for a maximum payout associated with this grant.

During 2024, the Compensation Committee determined the Company achieved 150 % of target and awarded 74,445 additional shares related to the performance share grant in 2021 based on the Company’s performance for the 2021 and 2022 performance periods, measured against the pre-established targets for each period.

The Compensation Committee determines the achievement of performance results and corresponding vesting of performance shares for each year’s grant following the conclusion of the respective performance period.

The following table summarizes the activity of PSUs for the years ended December 31, 2024, 2023 and 2022.

The number of PSUs granted in the table reflects target performance for the grant in each respective year.

The number of achieved PSUs (at, above, or below target) are reflected in the year the performance is certified by the Board, as indicated in the table:

The number of achieved PSUs (above or below the target grant) are reflected in the year the grant vests as additional or forfeited PSUs, as indicated in the table:

Weighted-Average

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Non-vested PSUs outstanding at December 31, 2023

PSUs forfeited from the 2020 grant due to performance

Additional PSUs awarded from the 2021 grant due to performance

Non-vested PSUs outstanding at December 31, 2024

During the year ended December 31, 2024, the Company granted 14,179 fully-vested shares of common stock and 2,632 restricted stock units to the Company’s directors with a weighted average grant-date fair value of $ 61.13 .

During the years ended December 31, 2023 and 2022, the Company granted fully-vested shares of common stock to the Company’s directors in the amounts of 37,534 and 24,423 shares, respectively, with a weighted average grant-date fair value of $ 18.65 and $ 32.86 , respectively.

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As of December 31, 2024, the Company had $ 20.1 million of total unrecognized compensation cost related to non-vested restricted stock grants and non-vested performance stock units.

Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures and estimates of the Company’s future performance for unvested performance share units.

Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures and estimates of the Company’s future performance for unvested PSUs.

The Company expects to recognize this cost over a weighted average period of 1.7 years.

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In 2020 and 2021, the Company issued to Treasury warrants to purchase shares of the Company’s common stock under the Payroll Support Programs and Secured Loan.

The warrants have a five-year term from the date of issuance.

The warrants had a five-year term from the date of issuance.

The weighted average grant-date fair value of these warrants was estimated using the Black-Scholes option pricing model.

The current holder of the warrants exercised all 785,226 warrants in 2024.

The Company settled the exercise through net share issuances of a total of 481,201 shares of common stock to the holder.

As of December 31, 2024, the Company had no warrants issued and outstanding.

The Company did not issue any warrants for the years ended December 31, 2024 and 2023.

The following table summarizes the warrants issued under the payroll support programs and secured loan facility:

Number of Warrants

Exercise Price

Weighted Average Grant-Date Fair Value

(10) Retirement Plans and Employee Stock Purchase Plans

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At December 31, 2024, $ 47.6 million remained available under the May 2023 authorization.

During the year ended December 31, 2024, the Company repurchased 0.6 million shares of common stock for $ 43.3 million at a weighted average price per share of $ 74.94 under the May 2023 stock repurchase program.

The Company did not record any excise tax related to the stock repurchases as Treasury Stock in the Company’s Stockholders Equity for the year ended December 31, 2024.

During the year ended December 31, 2023, the Company repurchased 10.6 million shares of common stock for $ 289.1 million at a weighted average price per share of $ 27.30 , of which $ 130.0 million was repurchased under the February 2019 stock repurchase program and $ 159.1 million was repurchased under the May 2023 stock repurchase program.

The Company also recorded $ 2.9 million of excise tax related to the stock repurchases as Treasury Stock in the Company’s Stockholders Equity for the year ended December 31, 2023.

The Company did not have any stock repurchases during the years ended December 31, 2022 and 2021.

The Company did not have any stock repurchases during the year ended December 31, 2022.

Additionally, during the years ended December 31, 2024, 2023 and 2022, the Company paid $ 6.9 million, $ 0.6 million and $ 1.2 million, respectively, for a net settlement of the income tax obligation on employee equity awards that vested during the applicable periods.

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Aero Engines requires unanimous approval from the Company and Regional One for all material transactions.

Although the Company determined Aero Engines is a variable interest entity, Aero Engines has no primary beneficiary as the voting rights are disproportionate to the ownership rights.

Although the Company determined Aero Engines is a variable interest entity, Aero Engines has no primary beneficiary as no one party has power over Aero Engines.

Accordingly, the Company accounts for its investment in Aero Engines under the equity method.

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Aero Engines had no debt outstanding as of December 31, 2024.

As of December 31, 2023, the Company’s investment balance in Aero Engines was $ 25.1 million.

The Company’s investment in Aero Engines has been recorded in “Other Assets” on the Company’s consolidated balance sheet.

The Company’s portion of the income generated by Aero Engines for the year ended December 31, 2023, was $ 0.2 million, which is recorded in “Other income (loss), net” on the Company’s consolidated statements of comprehensive income.

As of December 31, 2024, the Company’s investment balance in Aero Engines was $ 23.9 million and has been recorded in “Other Assets” on the Company’s consolidated balance sheet.

The Company’s portion of the income generated by Aero Engines for the year ended December 31, 2024, was $ 2.2 million, which is recorded in “Other income, net” on the Company’s consolidated statements of comprehensive income.

In December 2023, the Company invested $ 9.9 million for a 9.9 % ownership interest in Corporate Flight Management, Inc.

d/b/a C ontour Airlines (“Contour”), a 14 CFR Part 135 air carrier.

The Company holds one of five seats, or 20 % , on Contour’s board of directors.

In January 2024, the Company invested an additional $ 15.1 million in Contour.

The Company has a 25 % ownership interest in Contour at December 31, 2024 and holds one of five seats, or 20 % , on Contour’s board of directors.

Additionally, the Company received an option to acquire additional ownership interest in Contour, which had an expiration date of December 31, 2024.

The Contour arrangement also includes an asset provisioning agreement under which the Company will provide CRJ airframes, engines and rotable parts to Contour.

Subsequent to December 31, 2023, the Company increased its investment in Contour to $ 25.0 million for a 25.0 % ownership interest.

The Company accounts for its investment in Contour under the equity method where the investment is reported at cost and adjusted each period for the Company’s share of Contour’s income or loss, recorded on a one quarter lag.

Accordingly, no income or loss was recorded associated with the Company’s equity investment in Contour during the year ended December 31, 2023.

For the year ended December 31, 2024, the Company recorded income of $ 0.1 million related to its Contour investment, its portion of income generated by Contour, which was recorded in “Other income, net” on the Company’s consolidated statements of comprehensive income.

Additionally, for the year ended December 31, 2024, the Company recorded a loss of $ 3.7 million related to the expiration of a purchase option to acquire an additional ownership interest in Contour.

As of December 31, 2024, the Company’s investment balance in Contour of $ 21.4 million was recorded in “Other Assets” on the Company’s consolidated balance sheet.

At December 31, 2024, the Company had $ 10.8 million in notes receivable from Contour related to the sale of aircraft under the asset provisioning agreement.

The notes are secured by aircraft and collectible within four years .

The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable.

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In 2021, the Company entered into a strategic partnership with Eve UAM (“Eve”), to develop a network of deployment for Eve’s eVTOL aircraft.

The Company signed a non-binding letter of intent to purchase 100 eVTOL aircraft.

In 2022, the Company acquired 1,000,000 shares of common stock of Eve and a warrant giving the Company the right to acquire 1,500,000 shares of common stock of Eve at an exercise price of $ 0.01 per share.

The Company also received a put option from an Eve shareholder for the 1,000,000 shares of common stock of Eve payable in aircraft parts credits.

The intent of the put option is to reduce the Company’s investment risk in Eve, and the put option expires in December 2031.

The intent of the put option was to reduce the Company’s investment risk in Eve.

The Company is restricted from selling the shares underlying the warrant until May 2025, and the warrant expires in May 2032.

The Company acquired the shares of common stock, warrant and put option (collectively the “Eve Investments”) for $ 10.0 million.

The Company evaluated the Eve Investments under ASC Topic 321, “Investments – Equity Securities” and ASC Topic 815, “Derivatives and Hedging,” and recorded the Eve Investments

based on their pro rata share of the consideration paid using the fair value of the Eve Investments on the acquisition date, with subsequent changes in the fair value reported in earnings.

The Company evaluated the Eve Investments under ASC Topic 321, “Investments – Equity Securities” and ASC Topic 815, “Derivatives and Hedging,” and recorded the Eve Investments based on their pro rata share of the consideration paid using the fair value of the Eve Investments on the acquisition date, with subsequent changes in the fair value reported in earnings.

During the year ended December 31, 2023, the Company sold 600,411 shares of common stock of Eve, which concurrently forfeited the 600,411 shares subject to the put option from the Eve shareholder.

The shares of common stock of Eve are classified as Level 1 within the fair value hierarchy as Eve stock is actively traded on the New York Stock Exchange, and the value is determined using quoted market prices for the equity security.

The warrant and put option are classified as Level 3 within the fair value hierarchy (“Eve Level 3 Investments”), and the Company used the Black Scholes Option Pricing Model to determine the estimated fair market value of the Eve Level 3 Investments , including an expected volatility of 52 % , which is a significant unobservable input that was derived from historical volatility of comparable companies.

During the year ended December 31, 2024, the Company exercised the remainder of the put option and received aircraft parts credits in

exchange for the 399,589 shares of common stock.

At December 31, 2024, the Company’s only remaining investment in Eve was the warrant to acquire 1,500,000 shares of common stock of Eve.

The shares of common stock of Eve were classified as Level 1 within the fair value hierarchy as Eve stock is actively traded on the New York Stock Exchange, and the value is determined using quoted market prices for the equity security.

The warrant and put option (prior to the exercise of the put option) were classified as Level 3 within the fair value hierarchy (“Eve Level 3 Investments”).

The Company used the Black Scholes Option Pricing Model to determine the estimated fair market value of the Eve Level 3 Investments .

The table below shows the reconciliation of the Eve Level 3 Investments (in thousands):

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Balance at December 31, 2023

The Company recognized a realized gain of $ 2.1 million from the sale of the Eve shares, net of the forfeited put options, and unrealized losses of $ 3.1 million related to the Eve Investments, both were included in “Other income (loss), net” on the Company’s consolidated statements of comprehensive income for the year ended December 31, 2023.

As of December 31, 2023, the fair value of the Eve Investments was $ 15.4 million and was recorded in “Other Assets” on the Company’s consolidated balance sheet.

Exercise of put option for aircraft parts credits

Realized gain on exercise of put option

Unrealized loss

Balance at December 31, 2024

During the year ended December 31, 2024, the Company recorded a loss of $ 3.3 million in “Other income, net” on the Company’s consolidated statements of comprehensive income related to the Eve investments, including a realized gain of $ 3.4 million from the exercise of the put option, a realized loss of $ 1.4 million from the forfeited shares of Eve common stock and unrealized losses of $ 5.3 million.

During the year ended December 31, 2023, t he Company recorded a loss of $ 1.0 million in “Other income, net” on the Company’s consolidated statements of comprehensive income related to the Eve investments, including a realized g ain of $ 2.1 million from the sale of the Eve shares, net of the forfeited put options, and unrealized losses of $ 3.1 million.

As of December 31, 2024 and 2023, the fair value of the Eve Investments was $ 8.2 million and $ 15.4 million, respectively, and was recorded in “Other Assets” on the Company’s consolidated balance sheet.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data