SKYW

SkyWest is firing on all cylinders and the market is paying a regional-airline multiple for what is now a high-quality cash machine. FY2025 revenue grew 15.0% to $4.06B and net income jumped 32.6% to $428M, with operating income up 24.9% to $618M — operating margin expanded to 15.2% and ROE reached 15.6%, exceptional results for a capacity-purchase airline business. Diluted EPS of $10.35 against a $96.70 share price puts the P/E at just 9.3x and P/S at 1.0x, a discount that looks unwarranted given the trajectory from $34M net income in FY2023 to $323M in FY2024 to $428M in FY2025. Operating cash flow of $940M (+35.8%) dwarfs the $32M of capex, giving the company enormous discretionary firepower.

The filing language reinforces the durability of the model. SkyWest operates the largest US regional airline with 487 aircraft in scheduled service across four major partners — United (44.4%), Delta (28.1%), American (18.9%) and Alaska (8.6%) — and 84.3% of flying revenue comes from capacity-purchase agreements where the major partner bears ticketing, pricing and seat-inventory risk and pays SkyWest on block hours and departures. That insulates margins from passenger-fare volatility. The fleet pipeline is explicit and contracted: eight new E175s with United in 2026, 16 new aircraft with Delta in 2027-2028 replacing older CRJs, one E175 with Alaska in 2026, and 23 used CRJ550s being placed with United in 2026 — a multi-year visible growth runway tied to dual-class aircraft that command better economics.