Skywest Inc 10-Q for FY2026 Q3
Skywest Inc (SKYW)
About this 10-Q
Skywest Inc filed this 10-Q on October 30, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
SkyWest, Inc. reported operating revenues of $1.12 billion for the three months ended September 30, 2026, up 6.4%, and net income of $119.5 million, or $3.08 per diluted share, versus $116.4 million and $2.81 in 2025. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.12B
- up 6.4% from $1.05B a year earlier
- Net income
- $119.52M
- up 2.7% from net income of $116.36M a year earlier
- Diluted EPS
- $3.08
- up 9.6% from $2.81 a year earlier
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
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Incorporated under the laws of | | |
| | (I.R.S. Employer ID No.) |
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(Address of principal executive offices and telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on which Registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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| Accelerated filer ◻ | |
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Non-accelerated filer ◻ | | Smaller reporting company |
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Emerging growth company | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
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Class | | Outstanding at October 23, 2026 |
Common stock, no par value | |
SKYWEST, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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| Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 | |
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Exhibit 31.1 | Certification of Chief Executive Officer | | |
Exhibit 31.2 | Certification of Chief Financial Officer | | |
Exhibit 32.1 | Certification of Chief Executive Officer | | |
Exhibit 32.2 | Certification of Chief Financial Officer | | |
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SKYWEST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
| | (unaudited) | | | | |
CURRENT ASSETS: | | | | | | |
Cash and cash equivalents | | $ | | | $ | |
Marketable securities | |
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Receivables, net | |
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Inventories, net | |
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Other current assets | |
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Total current assets | |
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PROPERTY AND EQUIPMENT: | | | | | | |
Aircraft and rotable spares | |
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Deposits on aircraft | |
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Buildings, ground equipment and other | |
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Total property and equipment, gross | |
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Less-accumulated depreciation and amortization | |
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Total property and equipment, net | |
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OTHER ASSETS: | | | | | | |
Operating lease right-of-use assets | | | | | | |
Long-term receivables and other assets | |
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Total other assets | |
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Total assets | | $ | | | $ | |
See accompanying notes to condensed consolidated financial statements.
3
SKYWEST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS’ EQUITY
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
| | (unaudited) | | | | |
CURRENT LIABILITIES: | | | | | | |
Current maturities of long-term debt | | $ | | | $ | |
Accounts payable and accrued liabilities | |
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Accrued salaries, wages and benefits | |
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Current maturities of operating lease liabilities | |
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Taxes other than income taxes | |
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Other current liabilities | |
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Total current liabilities | |
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LONG-TERM DEBT, net of current maturities | |
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DEFERRED INCOME TAXES PAYABLE | |
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NONCURRENT OPERATING LEASE LIABILITIES | |
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OTHER LONG-TERM LIABILITIES | |
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COMMITMENTS AND CONTINGENCIES (Note 7) | | | | | | |
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STOCKHOLDERS’ EQUITY: | | | | | | |
Preferred stock, | |
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Common stock, | |
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Retained earnings | |
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Treasury stock, at cost, | |
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Accumulated other comprehensive income (loss) | | | ( | | | |
Total stockholders’ equity | |
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Total liabilities and stockholders’ equity | | $ | | | $ | |
See accompanying notes to condensed consolidated financial statements.
4
SKYWEST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(In thousands, except per share amounts)
| | Three months ended | | Nine months ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
OPERATING REVENUES: | | | | | | | | | | | | |
Flying agreements | | $ | | | $ | | | $ | | | $ | |
Lease, airport services and other | |
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Total operating revenues | |
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OPERATING EXPENSES: | | | | | | | | | | | | |
Salaries, wages and benefits | |
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Aircraft maintenance, materials and repairs | |
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Depreciation and amortization | |
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Aircraft fuel | |
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Airport-related expenses | |
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Other operating expenses | |
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Total operating expenses | |
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OPERATING INCOME | |
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OTHER INCOME (EXPENSE): | | | | | | | | | | | | |
Interest income | |
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Interest expense | |
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Other income (expense), net | |
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Total other expense, net | |
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INCOME BEFORE INCOME TAXES | |
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PROVISION FOR INCOME TAXES | |
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NET INCOME | | $ | | | $ | | | $ | | | $ | |
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BASIC EARNINGS PER SHARE | | $ | | | $ | | | $ | | | $ | |
DILUTED EARNINGS PER SHARE | | $ | | | $ | | | $ | | | $ | |
Weighted average common shares: | | | | | | | | | | | | |
Basic | |
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Diluted | |
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COMPREHENSIVE INCOME: | | | | | | | | | | | | |
Net income | | $ | | | $ | | | $ | | | $ | |
Net unrealized appreciation (depreciation) on marketable securities, net of taxes | |
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TOTAL COMPREHENSIVE INCOME | | $ | | | $ | | | $ | | | $ | |
See accompanying notes to condensed consolidated financial statements.
5
SKYWEST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands)
| | | | | | | | | | | Accumulated | | | | |||||
| | | | | | | | | | | Other | | | | |||||
| | Common Stock | | Retained | | Treasury Stock | | Comprehensive | | | | ||||||||
| | Shares | | Amount | | Earnings | | Shares | | Amount | | Income (Loss) | | Total | |||||
Balance at December 31, 2025 |
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| ( | | $ | ( | | $ | | | $ | |
Net income |
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Stock issued under the long-term incentive plan |
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Employee income tax paid on vested equity awards | | — | | | — | | | — | | ( | | | ( | | | — | | | ( |
Sale of common stock under employee stock purchase plan |
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Stock-based compensation expense |
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Treasury stock purchases and related excise tax | | — | |
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Net unrealized depreciation on marketable securities, net of tax of $ | | — | | | — | | | — | | — | | | — | | | ( | | | ( |
Balance at March 31, 2026 | | | | $ | | | $ | | | ( | | $ | ( | | $ | ( | | $ | |
Net income |
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Stock issued under the long-term incentive plan | | | |
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Stock-based compensation expense | | — | |
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Treasury stock purchases and related excise tax | | — | |
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Net unrealized depreciation on marketable securities, net of tax of $ | | — | | | — | | | — | | — | | | — | | | ( | | | ( |
Balance at June 30, 2026 |
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Net income |
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Sale of common stock under employee stock purchase plan |
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Stock-based compensation expense | | — | |
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Treasury stock purchases and related excise tax | | — | |
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Net unrealized depreciation on marketable securities, net of tax of $ | | — | | | — | | | — | | — | | | — | | | ( | | | ( |
Balance at September 30, 2026 |
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| ( | | $ | ( | | $ | ( | | $ | |
See accompanying notes to condensed consolidated financial statements.
6
SKYWEST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands)
| | | | | | | | | | | | | | Accumulated | | | | ||
| | | | | | | | | | | | | | | Other | | | | |
| | Common Stock | | Retained | | Treasury Stock | | Comprehensive | | | | ||||||||
| | Shares | | Amount | | Earnings | | Shares | | Amount | | Income | | Total | |||||
Balance at December 31, 2024 |
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Net income |
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Stock issued under the long-term incentive plan |
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Employee income tax paid on vested equity awards | | — | | | — | | | — | | ( | | | ( | | | — | | | ( |
Sale of common stock under employee stock purchase plan |
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Stock-based compensation expense |
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Treasury stock purchases | | — | |
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Net unrealized depreciation on marketable securities, net of tax of $ | | — | | | — | | | — | | — | | | — | | | ( | | | ( |
Balance at March 31, 2025 | | | | $ | | | $ | | | ( | | $ | ( | | $ | | | $ | |
Net income |
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Stock issued under the long-term incentive plan | | | | | — | | | — |
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Stock-based compensation expense | | — | |
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Treasury stock purchases | | — | |
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Net unrealized depreciation on marketable securities, net of tax of $ | | — | | | — | | | — | | — | | | — | | | ( | | | ( |
Balance at June 30, 2025 |
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Net income |
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Sale of common stock under employee stock purchase plan | | | | | | |
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Stock-based compensation expense | | — | |
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Treasury stock purchases and related excise tax | | — | |
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Net unrealized appreciation on marketable securities, net of tax of $ | | — | | | — | | | — | | — | | | — | | | | | | |
Balance at September 30, 2025 |
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| ( | | $ | ( | | $ | | | $ | |
See accompanying notes to condensed consolidated financial statements.
7
SKYWEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands)
| | Nine months ended | ||||
| | September 30, | ||||
| | 2026 | | 2025 | ||
NET CASH PROVIDED BY OPERATING ACTIVITIES | | $ | | | $ | |
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CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | |
Purchases of marketable securities | |
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Sales of marketable securities | |
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Acquisition of property and equipment: | | | | | | |
Aircraft and rotable spare parts | |
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Buildings and ground equipment | |
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Deposits paid on aircraft | | | ( | | | ( |
Proceeds from the sale of property and equipment | |
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Decrease in other assets, net | |
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NET CASH USED IN INVESTING ACTIVITIES | |
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CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | |
Proceeds from issuance of long-term debt | | | | | | |
Principal payments on long-term debt | |
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Payment of debt issuance cost | | | ( | | | ( |
Net proceeds from issuance of common stock | |
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Employee income tax paid on vested equity awards | | | ( | | | ( |
Purchase of treasury stock and related excise tax | |
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NET CASH USED IN FINANCING ACTIVITIES | |
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Decrease in cash and cash equivalents | |
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Cash and cash equivalents at beginning of period | |
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CASH AND CASH EQUIVALENTS AT END OF PERIOD | | $ | | | $ | |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | |
Non-cash investing and financing activities: | | | | | | |
Change in accrued capital expenditures for the period | | $ | | | $ | ( |
Cash paid during the period for: | | | | | | |
Interest, net of capitalized amounts | | $ | | | $ | |
Income taxes, net of refunds | | $ | | | $ | |
See accompanying notes to condensed consolidated financial statements.
8
SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Condensed Consolidated Financial Statements
Basis of Presentation
The condensed consolidated financial statements of SkyWest, Inc. (“SkyWest” or the “Company”), its operating subsidiary SkyWest Airlines, Inc. (“SkyWest Airlines”), its leasing subsidiary SkyWest Leasing, Inc. (“SkyWest Leasing”) and its charter service subsidiary SkyWest Charter, LLC (“SWC”) included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the interim periods presented. All adjustments are of a normal recurring nature, unless otherwise disclosed. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The results of operations for the three and nine months ended September 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions.
Recent Accounting Pronouncements
In March 2024, the Financial Accounting Standards Board issued Accounting Standards Update No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Accounting Standards Codification (“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.
Change in Accounting Estimate
Effective July 1, 2026, the Company revised the estimated useful lives of its Embraer E175 regional jet aircraft (“E175”), spare engines supporting the Company’s E175 fleet and related rotable spare parts from
For the three and nine months ended September 30, 2026, these estimate revisions reduced depreciation expense by approximately $
9
(2) Operating Revenues
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 fixed-fee agreements (referred to as “capacity purchase” agreements) with United Airlines, Inc. (“United”), Delta Air Lines, Inc. (“Delta”), American Airlines, Inc. (“American”) and Alaska Airlines, Inc. (“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 nine months ended September 30, 2026 and 2025, capacity purchase agreements represented approximately
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 aircraft and the other portion of their trip on the major airline partner. Under the Company’s prorate 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 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 between and
The following table disaggregates the Company’s flying agreements revenue by type for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| | For the three months ended September 30, | | For the nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Capacity purchase agreements flight operations revenue (non-lease component) | | $ | | | $ | | | $ | | | $ | |
Capacity purchase agreements fixed aircraft lease revenue | | | | | | | | | | | | |
Capacity purchase agreements variable aircraft lease revenue | |
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Prorate agreements and charter revenue | |
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Flying agreements revenue | | $ | | | $ | | | $ | | | $ | |
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 relates to operating the aircraft, identified as the non-lease component of the capacity purchase agreement. The Company recognizes revenue attributed to the non-lease component received as fixed-fees for each departure, flight hour or block hour on an as-completed basis for each reporting period. The Company recognizes revenue attributed to the non-lease component received as fixed monthly payments per aircraft proportionate to the
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number of block hours completed during each reporting period, relative to the estimated number of block hours the Company anticipates completing over the remaining contract term. 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.
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 compensate the Company for providing its aircraft under the 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. 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 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 following table summarizes the amount of deferred revenue, recognition of previously deferred revenue and change in unbilled revenue for revenue recognized that is in excess of (or less than) the fixed monthly non-lease and lease payments received under the Company’s capacity purchase agreements for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| | For the three months ended September 30, | | For the nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Non-lease fixed monthly payments: | | | | | | | | | | | | |
Revenue deferred on fixed monthly payments received | | $ | — | | $ | — | | $ | — | | $ | — |
Revenue recognized that was deferred in a prior period | |
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Increase in unbilled revenue | | | | | | | | | | | | |
Total non-lease revenue recognized in excess of fixed monthly payments received during the period | | $ | | | $ | | | $ | | | $ | |
Lease fixed monthly payments: | | | | | | | | | | | | |
Revenue deferred on fixed monthly payments received | | $ | — | | $ | — | | $ | — | | $ | — |
Revenue recognized that was deferred in a prior period | | | | | | | | | | | | |
Increase in unbilled revenue | |
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| |
Total lease revenue recognized in excess of fixed monthly payments received during the period | | $ | | | $ | | | $ | | | $ | |
Total revenue recognized in excess of fixed monthly payments received during the period | | $ | | | $ | | | $ | | | $ | |
11
The Company's unbilled revenue and deferred revenue balances were reflected in the following balance sheet line items at September 30, 2026 and December 31, 2025 (in thousands):
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Unbilled revenue reflected in Other current assets | | $ | | | $ | |
Unbilled revenue reflected in Other long-term assets | | | | | | |
Total unbilled revenue | | $ | | | $ | |
| | | | | | |
Deferred revenue reflected in Other current liabilities | | | | | | |
Deferred revenue reflected in Other long-term liabilities | | | | | | |
Total deferred revenue | | $ | | | $ | |
Net deferred revenue balance | | $ | | | $ | |
The Company’s capacity purchase and prorate agreements include weekly provisional cash payments from the respective major airline partner based on a projected level of flying each month. The Company and each major airline partner subsequently reconcile these payments to the actual completed flight activity on a monthly or quarterly basis.
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 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 ASC Topic 606.
As of September 30, 2026, the Company had
United Express Agreements | | | | | | |
Agreement | | Aircraft type | | Number of Aircraft | | Term / Termination Dates |
United Express Agreements | | • E175 | | | Individual aircraft have scheduled | |
(capacity purchase agreements) | | • E170 | | | removal dates under the agreements | |
| | • CRJ550 | | | between 2026 and 2035 | |
| | • CRJ200 | | | | |
| | | | | | |
United Express Prorate Agreement | | • CRJ200 | | | Terminable with | |
Total under United Express Agreements | | | | | | |
| | | | | | |
Delta Connection Agreements | | | | | | |
Agreement | | Aircraft type | | Number of Aircraft | | Term / Termination Dates |
Delta Connection Agreement | | • E175 | | | Individual aircraft have scheduled | |
(capacity purchase agreement) | | • CRJ900 | | | removal dates under the agreement | |
| | | | | | between 2026 and 2035 |
| | | | | | |
Delta Connection Prorate Agreement | | • CRJ550 | | | Terminable with | |
Total under Delta Connection Agreements | | | | | | |
| | | | | | |
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American Agreements | | | | | | |
Agreement | | Aircraft type | | Number of Aircraft | | Term / Termination Dates |
American Agreement | | • E175 | | | Individual aircraft have scheduled | |
(capacity purchase agreement) | | • CRJ900 | | | removal dates under the agreement | |
| | • CRJ700 | | | between 2027 and 2032 | |
| | | | | | |
American Prorate Agreement | | • CRJ900 | | | Terminable with | |
| | • CRJ700 | | | | |
Total under American Agreements | | | | | | |
| | | | | | |
Alaska Agreement | | | | | | |
Agreement | | Aircraft type | | Number of Aircraft | | Term / Termination Dates |
Alaska Agreement | | • E175 | | | Individual aircraft have scheduled | |
(capacity purchase agreement) | | | | | | removal dates under the agreement |
| | | | | | between 2030 and 2038 |
| * | The Company’s prorate agreements are based on specific routes, not a specific aircraft count. 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 agreements described above, SkyWest Airlines reached agreements with certain major airline partners to place additional aircraft under capacity purchase agreements as summarized below. The delivery timing referenced below is subject to change.
| ● | Capacity purchase agreement with United for |
| ● | Capacity purchase agreement with American for |
| ● | Capacity purchase agreement with Delta for |
| ● | Capacity purchase agreement with United for five used CRJ550 aircraft that are anticipated to be placed into service by the end of 2026. Pursuant to this agreement, the Company is in the process of converting its owned CRJ700s to CRJ550s. |
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, maintenance services provided to third parties and 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.
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| | For the three months ended September 30, | | For the nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Operating lease fixed revenue | | $ | | | $ | | | $ | | | $ | |
Operating lease variable revenue | | | | | | | | | | | | |
Airport customer service and other revenue | | | | | | | | | | | | |
Lease, airport services and other | | $ | | | $ | | | $ | | | $ | |
The following table summarizes future minimum rental income under operating leases primarily related to leased aircraft and engines that had remaining non-cancelable lease terms as of September 30, 2026 (in thousands):
October 2026 - December 2026 | | $ | |
2027 | |
| |
2028 | |
| |
2029 | |
| |
2030 | |
| |
Thereafter | |
| |
Total future minimum rental income under operating leases | | $ |
Of the Company’s $
The transaction price for airport customer service agreements is determined from an agreed-upon rate by location applied to the applicable number of flights handled by the Company over the agreement term.
The Company’s operating revenues could be impacted by several factors, including changes to the Company’s code-share agreements with its major airline partners, changes in flight schedules, contract modifications resulting from contract renegotiations, the Company’s ability to earn incentive payments contemplated under the Company’s code-share agreements and settlement of reimbursement disputes with the Company’s major airline partners.
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.
Allowance for Credit Losses
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 September 30, 2026, the Company had gross receivables of $
14
The following table summarizes the changes in allowance for credit losses (in thousands):
| | Allowance for Credit Losses | |
Balance at December 31, 2025 | | $ | |
Adjustments to credit loss reserves | | | ( |
Write-offs charged against allowance | | | ( |
Balance at September 30, 2026 | | $ | |
(3) Capital Transactions
Stock-Based Compensation
During the nine months ended September 30, 2026, the Company granted
Additionally, during the nine months ended September 30, 2026, the Company granted
The Company accounts for forfeitures of restricted stock units and performance shares when forfeitures occur. The estimated fair value of the performance shares and restricted stock units is amortized over the applicable vesting periods. Stock-based compensation expense for the performance shares is based on the Company’s anticipated outcome of achieving the performance metrics. During the nine months ended September 30, 2026 and 2025, the Company recorded pre-tax stock-based compensation expense of $
(4) Stock Repurchase
The Company’s Board of Directors (the “Board”) adopted a stock repurchase program in May 2023, which authorizes the Company to repurchase shares of the Company’s common stock in the public market or in private transactions, from time to time, at prevailing prices. Under the stock repurchase program, the Board initially authorized up to $
During the nine months ended September 30, 2026, the Company repurchased
(5) Net Income Per Common Share
Basic net income per common share (“Basic EPS”) excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue common stock
15
were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income per common share. During the three and nine months ended September 30, 2026 and 2025,
The calculation of the weighted average number of common shares outstanding for Basic EPS and Diluted EPS are as follows for the periods indicated (in thousands, except per share data):
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 |
| 2026 | | 2025 | ||||
Numerator: | | | | | | | | | | | | |
Net income | | $ | | | $ | | | $ | | | $ | |
Denominator: | | | | | | | | | | | | |
Basic earnings per share weighted average shares | |
| | |
| | |
| | |
| |
Dilution due to employee equity awards | |
| | |
| | |
| | |
| |
Diluted earnings per share weighted average shares | |
| | |
| | |
| | |
| |
| | | | | | | | | | | | |
Basic earnings per share | | $ | | | $ | | | $ | | | $ | |
Diluted earnings per share | | $ | | | $ | | | $ | | | $ | |
(6) 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
The Company’s chief operating decision maker analyzes the profitability of aircraft separately from the profitability of the Company’s capital deployed for new aircraft and the related aircraft financings, including the Company’s E175 fleet. 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 prorate agreements and 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. The SkyWest Leasing segment also includes the activity of leasing regional jet aircraft and spare engines to third parties and other activities. The SkyWest Leasing segment’s total assets and capital expenditures include new aircraft acquired through the issuance of debt and assets leased to third parties.
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.
16
The following represents the Company’s segment data for the three-month periods ended September 30, 2026 and 2025 (in thousands).
| | Three months ended September 30, 2026 | |||||||
| | SkyWest Airlines | | SkyWest | | | |||
| | and SWC | | Leasing | | Consolidated | |||
Operating revenues | | $ | | | $ | | | $ | |
| | | | | | | | | |
Salaries, wages and benefits | |
| | |
| | |
| |
Aircraft maintenance, materials and repairs | |
| | |
| | |
| |
Depreciation and amortization | |
| | |
| | |
| |
Interest expense | |
| | |
| | |
| |
Other segment expense (income) items(1) | | | | | | ( | | | |
Segment profit(2) | | $ | | | $ | | | $ | |
| | | | | | | | | |
Total assets (as of September 30, 2026) | | $ | | | $ | | | $ | |
Capital expenditures (including non-cash) | | $ | | | $ | | | $ | |
Deposits paid on aircraft | | $ | — | | $ | | | $ | |
| | Three months ended September 30, 2025 | |||||||
| | SkyWest Airlines | | SkyWest | | | |||
| | and SWC | | Leasing | | Consolidated | |||
Operating revenues | | $ | | | $ | | | $ | |
| | | | | | | | | |
Salaries, wages and benefits | | | | |
| | | | |
Aircraft maintenance, materials and repairs | | | | |
| | | | |
Depreciation and amortization | | | | |
| | | | |
Interest expense | | | | |
| | | | |
Other segment expense (income) items(1) | | | | | | ( | | | |
Segment profit(2) | | $ | | | $ | | | $ | |
| | | | | | | | | |
Total assets (as of September 30, 2025) | | $ | | | $ | | | $ | |
Capital expenditures (including non-cash) | | $ | | | $ | | | $ | |
Deposits paid on aircraft | | $ | — | | $ | — | | $ | — |
| (1) |
| (2) | Segment profit is equal to income before income taxes. |
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The following represents the Company’s segment data for the nine-month periods ended September 30, 2026 and 2025 (in thousands).
| | Nine months ended September 30, 2026 | |||||||
| | SkyWest Airlines | | SkyWest | | | |||
| | and SWC | | Leasing | | Consolidated | |||
Operating revenues | | $ | | | $ | | | $ | |
| | | | | | | | | |
Salaries, wages and benefits | | | | | | | | | |
Aircraft maintenance, materials and repairs | | | | | | | | | |
Depreciation and amortization | | | | | | | | | |
Interest expense | | | | | | | | | |
Other segment expense (income) items(1) | | | | | | ( | | | |
Segment profit(2) | | $ | | | $ | | | $ | |
| | | | | | | | | |
Total assets (as of September 30, 2026) | | $ | | | $ | | | $ | |
Capital expenditures (including non-cash) | | $ | | | $ | | | $ | |
Deposits paid on aircraft | | $ | — | | $ | | | $ | |
| | Nine months ended September 30, 2025 | |||||||
| | SkyWest Airlines | | SkyWest | | | |||
| | and SWC | | Leasing | | Consolidated | |||
Operating revenues | | $ | | | $ | | | $ | |
| | | | | | | | | |
Salaries, wages and benefits | | | | | | | | | |
Aircraft maintenance, materials and repairs | | | | | | | | | |
Depreciation and amortization | | | | | | | | | |
Interest expense | | | | | | | | | |
Other segment expense (income) items(1) | | | | | | ( | | | |
Segment profit(2) | | $ | | | $ | | | $ | |
| | | | | | | | | |
Total assets (as of September 30, 2025) | | $ | | | $ | | | $ | |
Capital expenditures (including non-cash) | | $ | | | $ | | | $ | |
Deposits paid on aircraft | | $ | — | | $ | | | $ | |
| (1) |
| (2) | Segment profit is equal to income before income taxes. |
(7) Leases, Commitments, Guarantees and Contingencies
The Company leases property and equipment under operating leases. For leases with durations longer than 12 months, the Company recorded the related operating lease right-of-use asset and operating lease liability at the present value of lease payments over the term. The Company used its incremental borrowing rate to discount the lease payments based on information available at lease commencement.
Aircraft
As of September 30, 2026, excluding aircraft financed by the Company’s major airline partners that the Company operates for them under contract, the Company leased
18
Airport facilities
The Company has operating leases for facility space including airport terminals, office space, cargo warehouses and maintenance facilities. The Company generally leases this space from government agencies that control the use of the various airports. The remaining lease terms for facility space vary from
Leases
As of September 30, 2026, the Company’s right-of-use assets were $
The table below presents lease related terms and discount rates as of September 30, 2026:
Weighted-average remaining lease term for operating leases | |
Weighted-average discount rate for operating leases |
The Company’s lease costs for the three and nine months ended September 30, 2026 and 2025 included the following components (in thousands):
| | For the three months ended September 30, | | For the nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Operating lease cost | | $ | | | $ | | | $ | | | $ | |
Variable and short-term lease cost | |
| | |
| | |
| | |
| |
Sublease income | | | ( | | | ( | | | ( | | | ( |
Total lease cost | | $ | | | $ | |
| $ | | | $ | |
As of September 30, 2026, the Company leased aircraft, airport facilities, office space and other property and equipment under non-cancelable operating leases, which are generally under long-term agreements pursuant to which the Company pays taxes, maintenance, insurance and certain other operating expenses applicable to the leased property. The Company expects that, in the normal course of business, such operating leases that expire will be renewed or replaced by other leases.
As of September 30, 2026, the Company had a firm purchase commitment for
19
The following table summarizes the Company’s commitments and obligations for future minimum rental payments required under operating leases that had initial or remaining non-cancelable lease terms as of September 30, 2026, firm aircraft and spare engine commitments, interest commitments and principal maturities on long-term debt as noted for each of the next five years and thereafter (in thousands):
| | Total | | Oct - Dec 2026 | | 2027 | | 2028 | | 2029 | | 2030 | | Thereafter | |||||||
Operating lease payments for aircraft and facility obligations | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Firm aircraft and spare engine commitments |
| | | | | | | | | | | | | | | | | | | | |
Interest commitments |
| | | | | | | | | | | | | | | | | | | | |
Principal maturities on long-term debt |
| | | | | | | | | | | | | | | | | | | | |
Total commitments and obligations | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
In addition to the table 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
Guarantees
In 2022, the Company agreed to guarantee $
The Company recorded the estimated credit loss associated with the guarantees based on publicly available historical default rates issued by a third party for companies with similar credit ratings, factoring the collateral and guarantee term.
(8) Fair Value Measurements
The Company holds certain assets that are required to be measured at fair value in accordance with GAAP. The Company determined the fair value of these assets based on the following three levels of inputs:
Level 1 | | — | | Quoted prices in active markets for identical assets or liabilities. |
Level 2 | | — | | Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Some of the Company’s marketable securities primarily utilize broker quotes in a non-active market for valuation of these securities. |
Level 3 | | — | | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, therefore requiring an entity to develop its own assumptions. |
20
As of September 30, 2026, and December 31, 2025, the Company held certain assets that are required to be measured at fair value on a recurring basis.
| | Fair Value Measurements as of September 30, 2026 | ||||||||||
| | Total | | Level 1 | | Level 2 | | Level 3 | ||||
Marketable Securities | | | | | | | | | | | | |
Bonds and bond funds | | $ | | | $ | — | | $ | | | $ | — |
Commercial paper | |
| | |
| — | |
| | |
| — |
| | | | | | — | | | | | | — |
Investments in Other Companies | | | | | | | | | — | | | — |
Cash and Cash Equivalents | | | | | | | | | — | | | — |
Total Assets Measured at Fair Value | | $ | | | $ | | | $ | | | $ | — |
| | Fair Value Measurements as of December 31, 2025 | ||||||||||
| | Total | | Level 1 | | Level 2 | | Level 3 | ||||
Marketable Securities | | | | | | | | | | | | |
Bonds and bond funds | | $ | | | $ | — | | $ | | | $ | — |
Commercial paper | |
| | |
| — | |
| | |
| — |
| | | | | | — | | | | | | — |
Investments in Other Companies | | | | | | | |
| — | |
| — |
Cash and Cash Equivalents | | | | | | | | | — | | | — |
Total Assets Measured at Fair Value | | $ | | | $ | | | $ | | | $ | — |
The Company’s “Marketable Securities” classified as Level 2 securities primarily utilize broker quotes in a non-active market for valuation of these securities.
The Company did not make any significant transfers of securities between Level 1, Level 2 and Level 3 during the nine months ended September 30, 2026. The Company’s policy regarding the recording of transfers between levels is to record any such transfers at the end of the reporting period.
As of September 30, 2026, and December 31, 2025, the Company classified $
(9) Long-term Debt
Long-term debt consisted of the following as of September 30, 2026, and December 31, 2025 (in thousands):
| | September 30, 2026 | | | December 31, 2025 |
Current portion of long-term debt | $ | | $ | ||
Current portion of unamortized debt issue cost, net | | ( | | | ( |
Current portion of long-term debt, net of debt issue costs | $ | | $ | ||
| | | | | |
Long-term debt, net of current maturities | $ | | $ | ||
Long-term portion of unamortized debt issue cost, net | | ( | | | ( |
Long-term debt, net of current maturities and debt issue costs | $ | | $ | ||
| | | | | |
Total long-term debt (including current portion) | $ | | $ | ||
Total unamortized debt issue cost, net | | ( | | | ( |
Total long-term debt, net of debt issue costs | $ | | $ |
21
As of September 30, 2026, the Company had $
During the nine months ended September 30, 2026, the Company took delivery of
During the nine months ended September 30, 2026, the Company executed promissory notes for $
As of September 30, 2026 and December 31, 2025, the Company had $
As of September 30, 2026, SkyWest Airlines had a $
The Company’s debt agreements are not traded on an active market and are recorded at carrying value on the Company’s consolidated balance sheet. 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 debt is estimated using inputs classified as Level 2 within the fair value hierarchy.
| | September 30, 2026 | | December 31, 2025 | ||
Carrying value | | $ | | $ | ||
Fair value | | $ | | $ | ||
(10) Investments in Other Companies
Equity Method Investments
During 2019, the Company created a joint venture with Regional One, Inc. (“Regional One”) and, as of September 30, 2026, has invested a total of $
22
In December 2023, the Company invested $
The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable.
Fair Value Method Investment
In 2021, the Company entered into a strategic arrangement with Eve Holding, Inc. (“Eve”), to develop a network of deployment for Eve’s electric vertical takeoff and landing aircraft. As of September 30, 2026 and December 31, 2025, the Company held
(11) Income Taxes
The Company’s effective tax rate for the nine months ended September 30, 2026 and 2025 was
(12) Legal Matters
The Company is subject to certain legal actions which it considers routine to its business activities. As of September 30, 2026, the Company’s management believed, after consultation with legal counsel, that the ultimate outcome of such legal matters was not likely to have a material adverse effect on the Company’s financial position, liquidity or results of operations.
23
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- and nine-month periods ended September 30, 2026 and 2025. Also discussed is our financial condition as of September 30, 2026, and December 31, 2025. You should read this discussion in conjunction with our condensed consolidated financial statements for the three and nine months ended September 30, 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, SkyWest’s plans with respect to share repurchases, the timing of scheduled aircraft deliveries and returns, including with respect to aircraft for which SkyWest holds firm delivery positions or purchase rights, the transition of the new E175 aircraft to replace existing aircraft in SkyWest’s fleet and the timing thereof, transition of SkyWest’s CRJ200 fleet to the CRJ450 configuration, fleet expansion and anticipated fleet size for SkyWest in upcoming periods, expected production levels in future periods, 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, 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 events, 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
24
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 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; the possibility that the stock repurchase program may be suspended or discontinued at any time; 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 September 30, 2026, we offered scheduled passenger and air freight service with approximately 2,450 total daily departures to destinations in the United States, Canada and Mexico. Our fleet of Embraer E175 regional jet aircraft (“E175”), Embraer E170 regional jet aircraft (“E170”), 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. SkyWest Charter, LLC (“SWC”) offers on-demand charter services using CRJ200 aircraft in a 30-seat configuration. As of September 30, 2026, we had 645 total aircraft in our fleet, including 522 aircraft in scheduled service or under contract pursuant to our code-share agreements, summarized as follows:
| | E175 | | E170 | | CRJ900 | | CRJ700 | | CRJ550 | | CRJ200 | | Total |
United |
| 126 | | 5 | | — | | — | | 43 | | 69 |
| 243 |
Delta | | 87 | | — | | 33 | | — | | 18 | | — | | 138 |
American |
| 20 | | — | | 11 | | 67 | | — | | — |
| 98 |
Alaska |
| 43 | | — | | — | | — | | — | | — |
| 43 |
Aircraft in scheduled service or under contract | | 276 | | 5 | | 44 | | 67 | | 61 | | 69 | | 522 |
SWC | | — | | — | | — | | — | | — | | 9 | | 9 |
Leased to third parties |
| — | | — | | — | | 1 | | 41 | | — | | 42 |
Operational spares (1) | | 1 | | 1 | | 1 | | 9 | | — | | 24 | | 36 |
In storage(2) |
| — | | — | | — | | — | | — | | 36 | | 36 |
Total Fleet |
| 277 | | 6 | | 45 | | 77 | | 102 | | 138 | | 645 |
| (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 a “capacity purchase agreement,” or we receive a percentage of applicable passenger ticket revenues on the designated flights we operate, referred to as a “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 September 30, 2025, to September 30, 2026, we made changes to our fleet, including the addition of 11 new E175 aircraft.
We anticipate our fleet will continue to evolve, as we are scheduled to add a total of three new E175 aircraft with United in 2026, 11 new E175 aircraft with American between 2026 and 2027 (which are expected to replace 11
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CRJ700s we are currently flying under contract with American) and 16 new E175 aircraft with Delta between 2027 and 2028 (which are expected to replace 16 CRJs we are currently flying under contract with Delta). We also have multiple agreements with United to place five used CRJ550 aircraft into service by the end of 2026. Timing of placing these additional aircraft into service, including delivery timing on acquired aircraft, may be subject to change. As of September 30, 2026, we operated 16 CRJ900s owned by Delta, and we anticipate returning these 16 aircraft to Delta over the next year. 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 nine months ended September 30, 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 September 30, 2026, approximately 46.6% of our aircraft in scheduled service or under contract were operated for United, approximately 26.4% were operated for Delta, approximately 18.8% were operated for American and approximately 8.2% 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 nine months ended September 30, 2026, our capacity purchase revenue represented approximately 81.2% of our total flying agreements revenue and our prorate and charter revenue, combined, represented approximately 18.8% 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.
Third Quarter Summary
We had total operating revenues of $1.12 billion for the three months ended September 30, 2026, a 6.4% increase compared to total operating revenues of $1.05 billion for the three months ended September 30, 2025. We had net income of $119.5 million, or $3.08 per diluted share, for the three months ended September 30, 2026, compared to net income of $116.4 million, or $2.81 per diluted share, for the three months ended September 30, 2025. The significant items affecting our revenue and operating expenses during the three months ended September 30, 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 498 as of September 30, 2025 to 522 as of September 30, 2026, or by 4.8%, and the number of block hours increased from 384,247 for the three months ended September 30, 2025 to 401,727 for the three months ended September 30, 2026, or by 4.5%, primarily due to an increase in the number of aircraft operating under our capacity purchase agreements.
Our capacity purchase revenue increased $22.1 million, or 2.6%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily as a result of an increase in completed block hours for the comparable periods. Our prorate and charter revenue increased $50.8 million, or 30.4%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily as a result of an increase in the number of passengers carried on our prorate routes, a higher average revenue per passenger and an increase in the number of prorate and charter flights operated year-over-year.
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Operating Expenses
Our total operating expenses increased $65.4 million, or 7.5%, for the three months ended September 30, 2026, compared to the three months ended September 30, 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, higher fuel costs and higher pilot training costs for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase in operating expenses was partially offset by a reduction in depreciation expense due to a revision of the estimated useful lives of our E175 aircraft during the three months ended September 30, 2026, as discussed under “Critical Accounting Policies and Estimates.” Departures increased from 226,305 for the three months ended September 30, 2025 to 229,595 for the three months ended September 30, 2026, or by 1.5%, and our total block hours increased 4.5% for the three months ended September 30, 2026, as compared to the three months ended September 30, 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 | | September 30, 2026 | | December 31, 2025 | | September 30, 2025 |
E175s |
| 276 |
| 270 |
| 265 |
E170s | | 5 | | — | | — |
CRJ900s |
| 44 |
| 36 |
| 38 |
CRJ700s |
| 67 |
| 82 |
| 86 |
CRJ550s | | 61 | | 41 | | 36 |
CRJ200s |
| 69 |
| 58 |
| 73 |
Total |
| 522 |
| 487 |
| 498 |
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.
Effective July 1, 2026, we revised the estimated useful lives of our E175 aircraft, spare engines supporting our E175 fleet and related rotable spare parts from 22 years to 30 years. We concurrently revised the estimated residual value of our E175 aircraft from 20% to 18% of original acquisition cost. The revisions were based on recent extensions of our E175 flying contracts, our experience with previous contract extensions on our CRJ fleet, the operating longevity of our older CRJ fleet, the absence of an alternative 76-seat regional jet currently in production and our overall experience operating regional jet aircraft. For the three and nine months ended September 30, 2026, these estimate revisions reduced depreciation expense by approximately $18.5 million. These revisions represent changes in accounting estimates and were applied prospectively beginning July 1, 2026.
There have been no other significant changes in our critical accounting estimates during the nine months ended September 30, 2026.
Recent Accounting Pronouncements
See Note 1 to the condensed consolidated financial statements for a description of recent accounting pronouncements.
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Results of Operations
Three Months Ended September 30, 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 September 30, 2026, compared to the three months ended September 30, 2025, was primarily due to additional aircraft operating under our capacity purchase agreements and additional routes operated under our prorate agreements during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
| | For the three months ended September 30, | |||||
Block hours by aircraft type: | | 2026 | | 2025 | | % Change | |
E175s |
| 229,514 | | 221,665 | | 3.5 | % |
E170s | | 3,120 | | — | | NM | |
CRJ900s | | 30,725 | | 24,270 | | 26.6 | % |
CRJ700s | | 58,220 | | 67,974 | | (14.3) | % |
CRJ550s | | 33,325 | | 17,884 | | 86.3 | % |
CRJ200s |
| 46,823 | | 52,454 | | (10.7) | % |
Total block hours | | 401,727 | | 384,247 | | 4.5 | % |
|
| | | | | | |
|
| | | | | | |
Departures |
| 229,595 | | 226,305 | | 1.5 | % |
Passengers carried |
| 11,993,721 | | 12,446,270 | | (3.6) | % |
Passenger load factor |
| 81.0 | % | 84.0 | % | (3.0) | pts |
Average passenger trip length (miles) |
| 462 | | 457 | | 1.1 | % |
NM= Not meaningful
Operating Revenues
The following table summarizes our operating revenue for the periods indicated (dollar amounts in thousands):
| | For the three months ended September 30, | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Flying agreements | | $ | 1,084,115 | | $ | 1,011,284 | | $ | 72,831 | | 7.2 | % |
Lease, airport services and other | |
| 33,240 | |
| 38,745 | |
| (5,505) | | (14.2) | % |
Total operating revenues | | $ | 1,117,355 | | $ | 1,050,029 | | $ | 67,326 |
| 6.4 | % |
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.
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We disaggregate our flying agreements revenue into the following categories (dollar amounts in thousands):
| | For the three months ended September 30, | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Capacity purchase agreements flight operations revenue |
| $ | 675,821 |
| $ | 672,559 |
| $ | 3,262 |
| 0.5 | % |
Capacity purchase agreements aircraft lease revenue | | | 190,448 | | | 171,636 | | | 18,812 | | 11.0 | % |
Prorate agreements and charter revenue | |
| 217,846 | |
| 167,089 | |
| 50,757 |
| 30.4 | % |
Flying agreements revenue |
| $ | 1,084,115 |
| $ | 1,011,284 |
| $ | 72,831 |
| 7.2 | % |
Combined “Capacity purchase agreements flight operations revenue” and “Capacity purchase agreements aircraft lease revenue” increased 2.6% for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, driven primarily by a 4.5% increase in block hour production during the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The larger increase in aircraft lease revenue relative to the increase 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 September 30, 2025.
The increase in prorate agreements and charter revenue of $50.8 million, or 30.4%, for the three months ended September 30, 2026, compared to the three months ended September 30, 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 September 30, 2026, compared to the three months ended September 30, 2025.
The decrease in lease, airport services and other revenues of $5.5 million, or 14.2%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, was primarily due to a decrease in revenue from maintenance services provided to third parties during the three months ended September 30, 2026, compared to the three months ended September 30, 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 September 30, | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Salaries, wages and benefits | | $ | 429,747 | | $ | 391,634 | | $ | 38,113 | | 9.7 | % |
Aircraft maintenance, materials and repairs | |
| 239,427 | |
| 247,978 | |
| (8,551) |
| (3.4) | % |
Depreciation and amortization | |
| 76,280 | |
| 92,474 | |
| (16,194) |
| (17.5) | % |
Aircraft fuel | |
| 66,303 | |
| 34,216 | |
| 32,087 |
| 93.8 | % |
Airport-related expenses | |
| 38,258 | |
| 31,876 | |
| 6,382 |
| 20.0 | % |
Other operating expenses | |
| 91,311 | |
| 77,708 | |
| 13,603 |
| 17.5 | % |
Total operating expenses | | $ | 941,326 | | $ | 875,886 | | $ | 65,440 |
| 7.5 | % |
Salaries, wages and benefits. The $38.1 million, or 9.7%, increase in salaries, wages and benefits for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, was primarily due to an increase in direct labor costs supporting the higher number of flights we operated during the three months ended September 30, 2026, compared to the three months ended September 30, 2025, and due to an increase in pilot training costs associated with higher pilot attrition rates since September 30, 2025.
Aircraft maintenance, materials and repairs. The $8.6 million, or 3.4%, decrease in aircraft maintenance expense for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, was primarily due to lower discrete maintenance events and a reduction in maintenance services provided to third parties, partially offset by an increase in our flight volume, which increased our maintenance activity and related expenses, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
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Depreciation and amortization. The $16.2 million, or 17.5%, decrease in depreciation and amortization expense for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, was primarily due to a revision of the estimated useful lives of our E175 aircraft, as discussed under “Critical Accounting Policies and Estimates,” partially offset by increased depreciation expense from additions to property and equipment, including the acquisition of 11 new E175 aircraft and spare engines since September 30, 2025.
Aircraft fuel. The $32.1 million, or 93.8%, increase in fuel cost for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, was primarily due to an increase in the number of flights we operated under our prorate agreements and charter operations and the corresponding increase in gallons of fuel we purchased and an increase in our average fuel cost per gallon from $3.04 for the three months ended September 30, 2025 to $4.56 for the three months ended September 30, 2026. We purchase and incur expense for all fuel on flights operated under our prorate agreements and charter operations. 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 charter operations, for the periods indicated:
| | For the three months ended September 30, | |||||||
(in thousands) | | 2026 | | 2025 | | % Change | |||
Fuel gallons purchased | | | 14,539 | | | 11,270 | | 29.0 | % |
Fuel expense | | $ | 66,303 | | $ | 34,216 |
| 93.8 | % |
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 $6.4 million, or 20.0%, increase in airport-related expenses for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, was primarily due to an increase in subcontracted airport services, station rents 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.
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 $13.6 million, or 17.5%, increase in other operating expenses for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025 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 September 30, 2026, compared to the three months ended September 30, 2025.
Summary of interest expense, interest income, other income (expense), net and provision for income taxes
Interest expense. The $1.0 million, or 3.8%, decrease in interest expense for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 was primarily due to debt repayments, partially offset by the interest on new debt issued at higher interest rates since September 30, 2025.
Interest income. Interest income decreased $2.5 million, or 23.4%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The decrease in interest income was primarily related to a decrease in our marketable securities from September 30, 2025 to September 30, 2026.
Other income (expense), net. Other income (expense), net increased $1.9 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. Other income (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 increase in other income (expense), net was primarily due to unrealized losses recognized during the three months ended September 30, 2025 that did not recur in the three months ended September 30, 2026.
Provision for income taxes. For the three months ended September 30, 2026 and 2025, our effective income tax rates were 25.1% and 26.0%, respectively, which included the statutory federal income tax rate of 21% and other
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reconciling income tax items, including state income taxes and the impact of non-deductible expenses. The decrease in the effective tax rate for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025 was the result of a discrete tax benefit resulting from a change in the estimated state tax rate used to value deferred taxes for the three months ended September 30, 2026, offset by greater non-deductible expense for the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
Net income. Primarily due to the factors described above, we generated net income of $119.5 million, or $3.08 per diluted share, for the three months ended September 30, 2026, compared to net income of $116.4 million, or $2.81 per diluted share, for the three months ended September 30, 2025.
Nine Months Ended September 30, 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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily due to additional aircraft operating under our capacity purchase agreements and additional routes operated under our prorate agreements during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
| | For the nine months ended September 30, | |||||
Block hours by aircraft type: | | 2026 | | 2025 | | % Change | |
E175s |
| 670,964 | | 648,593 | | 3.4 | % |
E170s | | 4,611 | | — | | NM | |
CRJ900s | | 89,458 | | 69,929 | | 27.9 | % |
CRJ700s | | 174,396 | | 200,037 | | (12.8) | % |
CRJ550s | | 85,898 | | 45,224 | | 89.9 | % |
CRJ200s |
| 136,029 | | 148,888 | | (8.6) | % |
Total block hours | | 1,161,356 | | 1,112,671 | | 4.4 | % |
|
| | | | | | |
|
| | | | | | |
Departures |
| 661,574 | | 651,017 | | 1.6 | % |
Passengers carried |
| 34,264,378 | | 34,929,392 | | (1.9) | % |
Passenger load factor |
| 79.8 | % | 82.0 | % | (2.2) | pts |
Average passenger trip length (miles) |
| 464 | | 457 | | 1.5 | % |
NM= Not meaningful
Operating Revenues
The following table summarizes our operating revenue for the periods indicated (dollar amounts in thousands):
| | For the nine months ended September 30, | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Flying agreements | | $ | 3,126,549 | | $ | 2,914,789 | | $ | 211,760 | | 7.3 | % |
Lease, airport services and other | |
| 106,734 | |
| 118,922 | |
| (12,188) | | (10.2) | % |
Total operating revenues | | $ | 3,233,283 | | $ | 3,033,711 | | $ | 199,572 |
| 6.6 | % |
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.
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We disaggregate our flying agreements revenue into the following categories (dollar amounts in thousands):
| | For the nine months ended September 30, | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Capacity purchase agreements flight operations revenue | | $ | 1,986,903 | | $ | 1,994,660 | | $ | (7,757) | | (0.4) | % |
Capacity purchase agreements aircraft lease revenue | |
| 552,768 | |
| 476,781 | |
| 75,987 |
| 15.9 | % |
Prorate agreements and charter revenue | |
| 586,878 | | | 443,348 | | | 143,530 |
| 32.4 | % |
Flying agreements revenue | | $ | 3,126,549 | | $ | 2,914,789 | | $ | 211,760 |
| 7.3 | % |
Combined “Capacity purchase agreements flight operations revenue” and “Capacity purchase agreements aircraft lease revenue” increased 2.8% for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, driven primarily by a 4.4% increase in block hour production during the nine months ended September 30, 2026, compared to the nine months ended September 30, 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 September 30, 2025.
The increase in prorate agreements and charter revenue of $143.5 million, or 32.4%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
The decrease in lease, airport services and other revenues of $12.2 million, or 10.2%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily due to a decrease in revenue from maintenance services provided to third parties during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
Operating Expenses
Individual expense components attributable to our operations are set forth in the following table (dollar amounts in thousands):
| | For the nine months ended September 30, | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Salaries, wages and benefits | | $ | 1,278,677 | | $ | 1,159,188 | | $ | 119,489 | | 10.3 | % |
Aircraft maintenance, materials and repairs | |
| 695,382 | |
| 695,963 | |
| (581) |
| (0.1) | % |
Depreciation and amortization | |
| 258,993 | |
| 272,070 | |
| (13,077) |
| (4.8) | % |
Aircraft fuel | |
| 165,770 | |
| 86,163 | |
| 79,607 |
| 92.4 | % |
Airport-related expenses | |
| 107,028 | |
| 86,815 | |
| 20,213 |
| 23.3 | % |
Other operating expenses | |
| 271,888 | |
| 249,864 | |
| 22,024 |
| 8.8 | % |
Total operating expenses | | $ | 2,777,738 | | $ | 2,550,063 | | $ | 227,675 |
| 8.9 | % |
Salaries, wages and benefits. The $119.5 million, or 10.3%, increase in salaries, wages and benefits for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily due to an increase in direct labor costs supporting the higher number of flights we operated during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, and due to an increase in pilot training costs associated with higher pilot attrition rates since September 30, 2025.
Aircraft maintenance, materials and repairs. The $0.6 million, or 0.1%, decrease in aircraft maintenance expense for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily due to lower discrete maintenance events and a reduction in maintenance services provided to third parties, partially offset by an increase in our flight volume, which increased our maintenance activity and related expenses, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
Depreciation and amortization. The $13.1 million, or 4.8%, decrease in depreciation and amortization expense for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily
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due to a revision of the estimated useful lives of our E175 aircraft, as discussed under “Critical Accounting Policies and Estimates,” partially offset by increased depreciation expense from additions to property and equipment, including the acquisition of 11 new E175 aircraft and spare engines since September 30, 2025.
Aircraft fuel. The $79.6 million, or 92.4%, increase in fuel cost for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily due to an increase in the number of flights we operated under our prorate agreements and charter operations and the corresponding increase in gallons of fuel we purchased and an increase in our average fuel cost per gallon from $2.98 for the nine months ended September 30, 2025 to $4.19 for the nine months ended September 30, 2026. We purchase and incur expense for all fuel on flights operated under our prorate agreements and charter operations. 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 charter operations, for the periods indicated:
| | For the nine months ended September 30, | |||||||
(in thousands) | | 2026 | | 2025 | | % Change | |||
Fuel gallons purchased | | | 39,592 | | | 28,870 | | 37.1 | % |
Fuel expense | | $ | 165,770 | | $ | 86,163 |
| 92.4 | % |
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 $20.2 million, or 23.3%, increase in airport-related expenses for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily due to an increase in subcontracted airport services, station rents 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.
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 $22.0 million, or 8.8%, increase in other operating expenses for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025 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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. These increases were partially offset by elevated credit loss reserves we recorded during the nine months ended September 30, 2025 that did not continue to elevate during the nine months ended September 30, 2026.
Summary of interest expense, interest income, other income (expense), net and provision for income taxes
Interest expense. The $5.3 million, or 6.6%, decrease in interest expense for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 was primarily due to debt repayments, partially offset by the interest on new debt issued at higher interest rates since September 30, 2025.
Interest income. Interest income decreased $6.2 million, or 19.6%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. The decrease in interest income was primarily related to a decrease in our marketable securities from September 30, 2025 to September 30, 2026.
Other income (expense), net. Other income (expense), net decreased $5.8 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. Other income (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 income (expense), net was primarily the result of a decrease in the gain on the sale of assets and a decrease in the fair value of our investments in other companies for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
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Provision for income taxes. For the nine months ended September 30, 2026 and 2025, our effective income tax rates were 20.7% and 23.5%, 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 for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025 was primarily due to a discrete tax benefit resulting from a change in the estimated state tax rate used to value deferred taxes for the nine months ended September 30, 2026 and a higher discrete tax benefit from additional tax deductions generated from employee equity awards that vested for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
Net income. Primarily due to the factors described above, we generated net income of $321.9 million, or $8.11 per diluted share, for the nine months ended September 30, 2026, compared to net income of $337.2 million, or $8.14 per diluted share, for the nine months ended September 30, 2025.
Our Business Segments
Three Months Ended September 30, 2026 and 2025
For the three months ended September 30, 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.
The following table sets forth our SkyWest Airlines and SWC segment data for the three months ended September 30, 2026 and 2025 (in thousands):
| | For the three months ended September 30, | ||||||||||
| | (dollar amounts in thousands) | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Operating revenues | | $ | 961,124 | | $ | 892,618 | | $ | 68,506 |
| 7.7 | % |
| | | | | | | | | | | | |
Salaries, wages and benefits | | | 429,082 | | | 390,969 | | | 38,113 | | 9.7 | % |
Aircraft maintenance, materials and repairs | | | 233,736 | | | 236,745 | | | (3,009) | | (1.3) | % |
Depreciation and amortization | | | 40,662 | | | 40,778 | | | (116) | | (0.3) | % |
Interest expense | | | 3,805 | | | 2,662 | | | 1,143 | | 42.9 | % |
Other segment items(1) | | | 194,995 | | | 144,963 | | | 50,032 | | 34.5 | % |
SkyWest Airlines and SWC Segment profit(2) | | $ | 58,844 | | $ | 76,501 | | $ | (17,657) | | (23.1) | % |
| (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 income (expense), net. See results of operations for the three months ended September 30, 2026 for a discussion of significant changes associated with these items. |
| (2) | Segment profit is equal to income before income taxes. |
SkyWest Airlines and SWC Segment Profit. SkyWest Airlines and SWC segment profit was $58.8 million for the three months ended September 30, 2026, compared to $76.5 million for the three months ended September 30, 2025.
SkyWest Airlines and SWC block hour production increased 4.5%, from 384,247 for the three months ended September 30, 2025 to 401,727 for the three months ended September 30, 2026, primarily due to additional aircraft operating under our capacity purchase agreements and prorate agreements. Significant items contributing to the SkyWest Airlines and SWC segment profit for the three months ended September 30, 2026 are set forth below.
SkyWest Airlines and SWC operating revenues increased $68.5 million, or 7.7%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to an increase in block hour
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production and higher prorate revenue during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
SkyWest Airlines and SWC’s salaries, wages and benefits expense increased $38.1 million, or 9.7%, for the three months ended September 30, 2026, compared to the three months ended September 30, 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 September 30, 2026, compared to the three months ended September 30, 2025, and due to an increase in pilot training costs associated with higher pilot attrition rates since September 30, 2025.
SkyWest Airlines and SWC’s aircraft maintenance, materials and repairs expense decreased $3.0 million, or 1.3%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to lower discrete maintenance events, partially offset by an increase in our flight volume, which increased our maintenance activity and related expenses, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
SkyWest Airlines and SWC’s depreciation and amortization expense decreased $0.1 million, or 0.3%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The majority of our depreciation associated with our E175 fleet and related fixed assets is reflected in the SkyWest Leasing segment. Accordingly, the SkyWest Airlines and SWC segment had no significant change in its depreciation expense for the three months ended September 30, 2026 and 2025.
SkyWest Airlines and SWC’s interest expense increased $1.1 million, or 42.9%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to higher interest rates on new debt for engine financings since September 30, 2025.
SkyWest Airlines and SWC’s other segment items increased $50.0 million, or 34.5%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily related to an increase in fuel costs of $32.1 million, which reflected a higher number of prorate flights we operated and an increase in the cost per gallon of fuel; airport-related expenses, such as subcontracted airport services, station rents 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 September 30, 2026, compared to the three months ended September 30, 2025.
The following table sets forth our SkyWest Leasing segment data for the three months ended September 30, 2026 and 2025 (in thousands):
| | For the three months ended September 30, | ||||||||||
| | (dollar amounts in thousands) | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Operating revenues | | $ | 156,231 | | $ | 157,411 | | $ | (1,180) |
| (0.7) | % |
| | | | | | | | | | | | |
Salaries, wages and benefits | | | 665 | | | 665 | | | — | | — | % |
Aircraft maintenance, materials and repairs | | | 5,691 | | | 11,233 | | | (5,542) | | (49.3) | % |
Depreciation and amortization | | | 35,618 | | | 51,696 | | | (16,078) | | (31.1) | % |
Interest expense | | | 20,830 | | | 22,949 | | | (2,119) | | (9.2) | % |
Other segment items(1) | | | (7,216) | | | (9,800) | | | 2,584 | | (26.4) | % |
SkyWest Leasing Segment profit(2) | | $ | 100,643 | | $ | 80,668 | | $ | 19,975 | | 24.8 | % |
| (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 income (expense), net. |
| (2) | Segment profit is equal to income before income taxes. |
SkyWest Leasing Segment Profit. SkyWest Leasing profit increased $20.0 million, or 24.8%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to a decrease in depreciation expense as a result of a revision of the estimated useful lives of our E175 aircraft, as discussed under
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“Critical Accounting Policies and Estimates,” and a decrease in incremental maintenance services provided to third parties, which decreased operating revenue and contributed to the reduction in aircraft maintenance, materials and repair expense for the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
Nine Months Ended September 30, 2026 and 2025
For the nine months ended September 30, 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.
The following table sets forth our SkyWest Airlines and SWC segment data for the nine months ended September 30, 2026 and 2025 (in thousands):
| | For the nine months ended September 30, | ||||||||||
| | (dollar amounts in thousands) | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Operating revenues | | $ | 2,756,961 | | $ | 2,563,605 | | $ | 193,356 |
| 7.5 | % |
| | | | | | | | | | | | |
Salaries, wages and benefits | | | 1,276,682 | | | 1,157,193 | | | 119,489 | | 10.3 | % |
Aircraft maintenance, materials and repairs | | | 671,349 | | | 654,830 | | | 16,519 | | 2.5 | % |
Depreciation and amortization | | | 118,442 | | | 117,531 | | | 911 | | 0.8 | % |
Interest expense | | | 10,298 | | | 8,830 | | | 1,468 | | 16.6 | % |
Other segment items(1) | | | 537,643 | | | 404,189 | | | 133,454 | | 33.0 | % |
SkyWest Airlines and SWC Segment profit(2) | | $ | 142,547 | | $ | 221,032 | | $ | (78,485) | | (35.5) | % |
| (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 income (expense), net. See results of operations for the nine months ended September 30, 2026 for a discussion of significant changes associated with these items. |
| (2) | Segment profit is equal to income before income taxes. |
SkyWest Airlines and SWC Segment Profit. SkyWest Airlines and SWC segment profit was $142.5 million for the nine months ended September 30, 2026, compared to $221.0 million for the nine months ended September 30, 2025.
SkyWest Airlines and SWC block hour production increased 4.4%, from 1,112,671 for the nine months ended September 30, 2025 to 1,161,356 for the nine months ended September 30, 2026, primarily due to additional aircraft operating under our capacity purchase agreements and prorate agreements, and an increase in the utilization of our aircraft. Significant items contributing to the SkyWest Airlines and SWC segment profit for the nine months ended September 30, 2026 are set forth below.
SkyWest Airlines and SWC operating revenues increased $193.4 million, or 7.5%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to an increase in block hour production and higher prorate revenue during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
SkyWest Airlines and SWC’s salaries, wages and benefits expense increased $119.5 million, or 10.3%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to an increase in direct labor costs that resulted from the higher number of flights we operated during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, and due to an increase in pilot training costs associated with higher pilot attrition rates since September 30, 2025.
SkyWest Airlines and SWC’s aircraft maintenance, materials and repairs expense increased $16.5 million, or 2.5%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily
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due to higher flight volume, which increased the maintenance activity and related expenses, partially offset by lower discrete maintenance events, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
SkyWest Airlines and SWC’s depreciation and amortization expense increased $0.9 million, or 0.8%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to an increase in depreciation from the acquisition of additional assets, including engines and used airframes, since September 30, 2025. The majority of our depreciation associated with our E175 fleet and related fixed assets is reflected in the SkyWest Leasing segment.
SkyWest Airlines and SWC’s interest expense increased $1.5 million, or 16.6%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to higher interest rates on new debt for engine financings since September 30, 2025.
SkyWest Airlines and SWC’s other segment items increased $133.5 million, or 33.0%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily related to an increase in fuel costs of $79.6 million, which reflected a higher number of prorate flights we operated and an increase in the cost per gallon of fuel; airport-related expenses, such as subcontracted airport services, station rents 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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
The following table sets forth our SkyWest Leasing segment data for the nine months ended September 30, 2026 and 2025 (in thousands):
| | For the nine months ended September 30, | ||||||||||
| | (dollar amounts in thousands) | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Operating revenues | | $ | 476,322 | | $ | 470,106 | | $ | 6,216 |
| 1.3 | % |
| | | | | | | | | | | | |
Salaries, wages and benefits | | | 1,995 | | | 1,995 | | | — | | — | % |
Aircraft maintenance, materials and repairs | | | 24,033 | | | 41,133 | | | (17,100) | | (41.6) | % |
Depreciation and amortization | | | 140,551 | | | 154,539 | | | (13,988) | | (9.1) | % |
Interest expense | | | 63,728 | | | 70,465 | | | (6,737) | | (9.6) | % |
Other segment items(1) | | | (17,549) | | | (17,997) | | | 448 | | (2.5) | % |
SkyWest Leasing Segment profit(2) | | $ | 263,564 | | $ | 219,971 | | $ | 43,593 | | 19.8 | % |
| (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 income (expense), net. |
| (2) | Segment profit is equal to income before income taxes. |
SkyWest Leasing Segment Profit. SkyWest Leasing profit increased $43.6 million, or 19.8%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, due to an increase in revenue earned under our capacity purchase agreements attributed to the ownership of new E175 aircraft acquired since September 30, 2025; a decrease in incremental maintenance services provided to third parties, which partially offset the increase in operating revenue and contributed to the reduction in aircraft maintenance, materials and repair expense; a decrease in depreciation expense as a result of a revision of the estimated useful lives of our E175 aircraft, as discussed under “Critical Accounting Policies and Estimates”; and a decrease in interest expense due to debt repayments, partially offset by the interest on new debt issued at higher interest rates since September 30, 2025.
Liquidity and Capital Resources
As of September 30, 2026, we had $568.9 million in cash and cash equivalents and marketable securities. As of September 30, 2026, we had $79.0 million available for borrowings under our line of credit. Given our available liquidity as of September 30, 2026, we believe the working capital currently available to us will be sufficient to meet our present
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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 $568.9 million as of September 30, 2026, or by $138.0 million. Our total long-term debt, including current maturities, was $2.4 billion as of December 31, 2025 and September 30, 2026. Additionally, during the nine months ended September 30, 2026, we repurchased 2,353,281 shares of our common stock for $224.8 million under a stock repurchase program authorized by our Board of Directors. At September 30, 2026, our total capital mix (measured as a ratio of total stockholder equity and total long-term debt, including current maturities) was 54.3% equity and 45.7% total long-term debt, compared to 53.4% equity and 46.6% total long-term debt at December 31, 2025.
As of September 30, 2026, and December 31, 2025, we had $45.3 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 September 30, 2026, and December 31, 2025.
Sources and Uses of Cash
Cash Position and Liquidity. The following table provides a summary of the net cash provided by or used in our operating, investing and financing activities for the nine months ended September 30, 2026 and 2025, and our total cash and marketable securities positions as of September 30, 2026, and December 31, 2025 (in thousands):
| | For the nine months ended September 30, | ||||||||||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Net cash provided by operating activities | | $ | 567,615 | | $ | 708,860 | | $ | (141,245) | | (19.9) | % |
Net cash used in investing activities | |
| (319,668) | |
| (519,207) | |
| 199,539 |
| (38.4) | % |
Net cash used in financing activities | |
| (298,869) | |
| (372,487) | |
| 73,618 |
| (19.8) | % |
| | September 30, | | December 31, | | | | | |
| ||
| | 2026 | | 2025 | | $ Change | | % Change | ||||
Cash and cash equivalents | | $ | 71,751 | | $ | 122,673 | | $ | (50,922) |
| (41.5) | % |
Marketable securities | |
| 497,177 | |
| 584,236 | |
| (87,059) |
| (14.9) | % |
Total | | $ | 568,928 | | $ | 706,909 | | $ | (137,981) |
| (19.5) | % |
Cash Flows provided by Operating Activities
Our cash flows provided by operating activities were $567.6 million for the nine months ended September 30, 2026, compared to $708.9 million for the nine months ended September 30, 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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily driven by a decrease in current liabilities, excluding current maturities of long-term debt, due to the timing of cash payments for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, and a decrease in income before income taxes for the comparable periods.
Cash Flows used in Investing Activities
Our cash flows used in investing activities were $319.7 million for the nine months ended September 30, 2026, compared to cash flows used in investing activities of $519.2 million for the nine months ended September 30, 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;
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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 $384.8 million for the nine months ended September 30, 2025, to $405.6 million for the nine months ended September 30, 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 in the cash used for capital expenditures, including aircraft deposits for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
Cash Flows used in Financing Activities
Our cash flows used in financing activities were $298.9 million for the nine months ended September 30, 2026, compared to cash used in financing activities of $372.5 million for the nine months ended September 30, 2025. Our 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 $73.6 million decrease in cash used in financing activities for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily due to an increase of $261.2 million in proceeds from the issuance of long-term debt, net of principal payments on long-term debt, offset by an increase of $168.6 million in cash used to purchase treasury stock and an increase of $18.4 million in cash used for employee income taxes paid on vested equity awards in lieu of shares during the nine months ended September 30, 2026, compared to the nine months ended September 30, 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 September 30, 2026, we had a firm purchase commitment for 63 new E175 aircraft from Embraer with delivery dates anticipated into 2031.
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 63 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 September 30, 2026. These eight leased aircraft are subleased to a third party. Future minimum lease payments due under all long-term operating leases were approximately $120.4 million at September 30, 2026. Assuming a 6.3% 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 $84.1 million at September 30, 2026.
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Long-term Debt Obligations
As of September 30, 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 4.7% at September 30, 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.
We have guaranteed $11.4 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in market risk from the information provided in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report on Form 10-K for the year ended December 31, 2025, except as follows:
Aircraft Fuel
In the past, we have not experienced sustained material difficulties with fuel availability, and we currently expect to be able to obtain fuel at prevailing prices in quantities sufficient to meet our future needs. Pursuant to our capacity purchase agreements, United, Delta, American and Alaska have agreed to bear the economic risk of fuel price fluctuations on our contracted flights. We bear the economic risk of fuel price fluctuations on our prorate and charter operations. For the three months ended September 30, 2026, approximately 20.1% of our total flying agreements revenue was derived from prorate agreements and charter operations. For the three months ended September 30, 2026, the average price per gallon of aircraft fuel was $4.56. For illustrative purposes only, we have estimated the impact of the market risk of fuel price fluctuations on our prorate and charter operations using a hypothetical increase of 25% in the price per gallon we purchase. Based on this hypothetical assumption, we would have incurred an additional $16.6 million in fuel expense for the three months ended September 30, 2026.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, performed an evaluation of our disclosure controls and procedures, which have been designed to ensure that information we are required to disclose in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, accurately and within the time periods specified in the rules and forms of the SEC. Our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of
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September 30, 2026, those controls and procedures were effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control
During the quarter ended September 30, 2026, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject to certain legal actions which we consider routine to our business activities. As of September 30, 2026, our management believed, after consultation with legal counsel, that the ultimate outcome of such legal matters was not likely to have a material adverse effect on our financial position, liquidity or results of operations.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, and in our other filings with the SEC, which factors could materially affect our business, financial condition and results of operations. The risks described in our reports filed with the SEC are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Our Board of Directors has adopted a stock repurchase program which authorizes us to repurchase shares of our common stock in the public market or in private transactions, from time to time, at prevailing prices. Our stock repurchase program adopted in May 2023 authorized the repurchase of up to $250.0 million of our common stock. The Board approved a $250.0 million increase to the existing stock repurchase program in May 2025 and an additional $250.0 million increase to the existing stock repurchase program in July 2026. The following table summarizes the repurchases under our stock repurchase program during the three months ended September 30, 2026:
| | Total Number of Shares Purchased | | Average Price Paid Per Share | | Total Number of Shares Purchased as Part of a Publicly Announced Program (1) | | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program (in Thousands) | ||
July 1, 2026 - July 31, 2026 | | 263,125 | | $ | 102.43 | | 263,125 | | $ | 286,250 |
August 1, 2026 - August 31, 2026 | | 198,440 | | $ | 105.68 | | 198,440 | | $ | 265,278 |
September 1, 2026 - September 30, 2026 | | 275,960 | | $ | 97.84 | | 275,960 | | $ | 238,278 |
Total | | 737,525 | | $ | 101.59 | | 737,525 | | $ | 238,278 |
| (1) | In May 2023, our Board of Directors approved a stock repurchase program and authorized us to repurchase up to $250.0 million of our common stock. In May 2025, the Board approved a $250.0 million increase to the existing stock repurchase program and an additional $250.0 million increase to the existing stock repurchase program in July 2026. Purchases are made at management’s discretion based on market conditions and financial resources. As of September 30, 2026, we had repurchased 8,029,100 shares of our common stock for $511.7 million and had $238.3 million remaining availability under the stock repurchase program. |
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ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2026, no director or officer of the Company
ITEM 6. EXHIBITS
3.1 | | |
3.2 | | |
*†10.1 | | |
*†10.2 | | |
31.1 | | |
31.2 | | |
32.1 | | |
32.2 | | |
101.INS | | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
________________________________________
* | Pursuant to Item 601(a)(5) of Regulation S-K promulgated by the Securities and Exchange Commission, certain exhibits and schedules to this agreement have been omitted. Such exhibits and schedules are described in the referenced agreement. The Company hereby agrees to furnish to the Securities and Exchange Commission, upon its request, any or all of such omitted exhibits or schedules. |
† Certain portions of this exhibit (indicated by asterisks) have been omitted pursuant to Item 601(b)(10) of Regulation S-K promulgated by the Securities and Exchange Commission.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, to be signed on its behalf by the undersigned, thereunto duly authorized, on October 30, 2026.
| SKYWEST, INC. | |
| | |
| By | /s/ Robert J. Simmons |
| | Robert J. Simmons |
| | Chief Financial Officer |
43
Exhibit 10.1
Certain identified information has been excluded from this exhibit because it is both (i) not material and (ii) the type that the registrant treats as private or confidential. The omitted information is indicated by [***].
EXECUTION VERSION
AMENDMENT NUMBER FIFTY to
AMENDED AND RESTATED DELTA CONNECTION AGREEMENT
This Amendment Number Fifty (this “Amendment”), dated effective as of September 15, 2026 (“Amendment Number Fifty Effective Date”), to the Amended and Restated Delta Connection Agreement dated and effective September 8, 2005 (as amended from time to time, the “Agreement”), is between Delta Air Lines, Inc., 1030 Delta Boulevard, Atlanta, Georgia 30320 (“Delta”), and SkyWest Airlines, Inc. (“SkyWest” or “Operator”), 444 South River Road, St. George, Utah 84790. Delta and SkyWest each a “Party” and collectively, the “Parties”.
WHEREAS, Delta and SkyWest are parties to the Agreement; and
WHEREAS, pursuant to Amendment Forty-Four to the Agreement dated August 4, 2023 (“Amendment Forty-Four”), SkyWest agreed to provide certain Operator Owned Engines (as defined in Amendment Forty-Four) for use by SkyWest with respect to SkyWest’s operations pursuant to the Agreement; and
WHEREAS, Delta and SkyWest desire to amend certain provisions of the Agreement; and
NOW, THEREFORE, for and in consideration of the mutual undertakings set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Delta and SkyWest, intending to be legally bound, hereby agree to amend the Agreement as follows:
SECTION 1.Defined Terms. All capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Agreement.
SECTION 2.Amendments.
2.1Exhibit A of Amendment Forty-Eight. Exhibit A of Amendment Number Forty-Eight to the Agreement dated effective June 16, 2025 (“Amendment Forty-Eight”), as such Exhibit A was amended and restated by Amendment Number Forty-Nine to the Agreement dated effective as of January 1, 2026, is hereby amended and restated as set forth on Schedule 1 hereto.
SECTION 3.Operator Owned Engines. With respect to Operator Owned Engines provided by SkyWest pursuant to Section 3.2 of Amendment Forty-Four, the Parties agree as follows:
3.1As of the Amendment Number Fifty Effective Date, (A) clause (i) of Section 3.2.2 of Amendment Forty-Four shall not apply and (B) all Operator Owned Engines made available by SkyWest pursuant to Section 3.2 of Amendment Forty-Four shall be deemed Incremental SkyWest Spare Engines.
3.2From and after [***], the Incremental SW Spare Engine Fee will be [***] and commencing [***], such fee shall increase by [***].
3.3At the time of the return to Delta of any Delta Controlled Bombardier Dual Class Aircraft, if Incremental SkyWest Spare Engines are then attached to such Delta Controlled Bombardier Dual Class Aircraft, SkyWest will lease each such Incremental SkyWest Spare Engine to Delta or an Affiliate of Delta, at Delta’s discretion, pursuant to a mutually acceptable engine lease agreement, provided, the engine lease rate shall be [***] and commencing [***], such engine lease rate shall increase by [***].
1
SECTION 4.Miscellaneous.
4.1This Amendment constitutes the entire understanding of the Parties with respect to the subject matter hereof, and any other prior or contemporaneous agreements, whether written or oral, are expressly superseded hereby.
4.2The Amendment may be executed in any number of counterparts, including via facsimile, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument.
4.3Except as specifically stated herein, all other terms and conditions of the Agreement shall remain in full force and effect. In the event of any conflict between the terms of this Amendment and the Agreement, the terms of this Amendment shall prevail.
[remainder of page intentionally left blank – signature page follows]
2
IN WITNESS WHEREOF, the Parties have executed this Amendment by their undersigned duly authorized representatives.
SkyWest Airlines, Inc. | | Delta Air Lines, Inc. | ||||
| | | ||||
By: | /s/ Wade Steel | | | By: | /s/ Joseph Eddy | |
| | | ||||
Name: Wade Steel | | Name: Joseph Eddy | ||||
| | | ||||
Title: President and COO | | Title: Managing Director, Delta Connection | ||||
| | | ||||
Date: 09-15-2026 | | Date: 09-15-2026 | ||||
[signature page to Amendment Number Fifty]
SCHEDULE 1
Amended and Restated Exhibit A to Amendment Forty-Eight
[see attached]
EXHIBIT A
[***]
Exhibit 10.2
Certain identified information has been excluded from this exhibit because it is both (i) not material and (ii) the type that the registrant treats as private or confidential. The omitted information is indicated by [***].
AMENDMENT No. 3 TO PURCHASE AGREEMENT COM0247-25 |
This Amendment No.3 (COM0397-26) (the “Amendment No. 3”) dated as of September 14, 2026 is between EMBRAER S.A., a corporation existing under the laws of Brazil, with office at Avenida Brigadeiro Faria Lima, 2170, in the City of São José dos Campos, State of São Paulo, Brazil (“Embraer”) and SKYWEST, INC. (“Buyer”), collectively referred to herein as the “Parties”, and constitutes an amendment and modification to Purchase Agreement COM0247-25 dated June 17, 2025 as amended and assigned from time to time (the “Purchase Agreement”).
All capitalized terms not otherwise defined herein shall have the same meaning when used herein as provided in the Purchase Agreement, and in case of any conflict between this Amendment No.3 and the Purchase Agreement, this Amendment No.3 shall control.
WHEREAS, Buyer wishes to advance the Contractual Delivery Date of [***] Aircraft from [***], with specific configuration according to Attachment A1;
NOW, THEREFORE, for good and valuable consideration, which is hereby acknowledged, Embraer and Buyer hereby agree as follows:
1. DELIVERY
Attachment “E” to the Purchase Agreement is hereby deleted and replaced in its entirety by Attachment “E” attached to this Amendment No. 3. The Contractual Delivery Date of the Aircraft is as provided in Attachment “E” attached hereto.
2. [***]
3. REINSTATEMENT OF PURCHASE AGREEMENT
All other provisions and conditions of the referenced Purchase Agreement, as well as its related Attachments and Letter Agreement, which are not specifically modified by this Amendment No. 3, will remain in full force and effect without any change.
4. COUNTERPARTS
This Amendment No. 3 may be executed by the Parties hereto in any number of separate counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument and all of which when taken together will constitute one and the same instrument.
This Amendment No. 3 may be signed and exchanged by e-mail attaching a copy of the signed Agreement in portable document format with originals to follow by an internationally recognized courier.
Amendment No. 3 to Purchase Agreement COM0247-25 COM0397-26 | Page 1 of 2 |
AMENDMENT No. 3 TO PURCHASE AGREEMENT COM0247-25 |
IN WITNESS WHEREOF, Embraer and Buyer, by their duly authorized officers, have executed this Amendment No. 3 to be effective on the date first written above.
EMBRAER S.A. | | SKYWEST, INC. | |||||||
| | | |||||||
By: | /s/ Marcelo Pereira Santiago | | | By: | /s/ Wade Steel | | |||
| | | |||||||
Name: Marcelo Pereira Santiago | | Name: Wade Steel | |||||||
Title: VP Contracts & Asset Mgmt | | Title: Chief Commercial Officer | |||||||
| | | |||||||
By: | /s/ Marc Thomas Ahlgrimm | | | | |||||
| | | | | |||||
Name: Marc Thomas Ahlgrimm | | | |||||||
Title: Director, Contracts | | | |||||||
| | | |||||||
Place: | São José dos Campos, SP, Brazil | | | Place: | St. George, Utah, USA | | |||
Amendment No. 3 to Purchase Agreement COM0247-25 COM0397-26 | Page 2 of 2 |
ATTACHMENT “E” AIRCRAFT DELIVERY SCHEDULE |
Aircraft Delivery Schedule (ref. Purchase Agreement Article 5)
[***]
Attachment “E” to Purchase Agreement COM0247-25 Amendment No. 3 COM0397-26 | Page 1 of 1 |
Exhibit 31.1
CERTIFICATION
I, Russell A. Childs, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of SkyWest, Inc. for the quarter ended September 30, 2026. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this report. |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 30, 2026 | |
| |
/s/ Russell A. Childs | |
| |
Russell A. Childs | |
Chief Executive Officer and President | |
Exhibit 31.2
CERTIFICATION
I, Robert J. Simmons, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of SkyWest, Inc. for the quarter ended September 30, 2026. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this report. |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 30, 2026 | |
| |
/s/ Robert J. Simmons | |
| |
Robert J. Simmons | |
Chief Financial Officer | |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of SkyWest, Inc. (the “Company”) for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Russell A. Childs, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Russell A. Childs | |
| |
Russell A. Childs | |
Chief Executive Officer and President | |
October 30, 2026 | |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 32.2
CERTIFICATION PURSUANT
TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of SkyWest, Inc. (the “Company”) for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert J. Simmons, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Robert J. Simmons | |
| |
Robert J. Simmons | |
Chief Financial Officer | |
October 30, 2026 | |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.