SKYW - NASDAQ

Hello, and welcome, everyone, to the SkyWest, Inc. Fourth Quarter and Full Year 2025 Results Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. At this time, I would like to turn the conference over to Rob Simmons, Chief Financial Officer. Please go ahead.

Thanks, Audra, and thanks, everyone, for joining us on the call today. As the operator indicated, this is Rob Simmons, SkyWest's Chief Financial Officer. On the call with me today are Chip Childs, President and Chief Executive Officer, Wade Steele, Chief Commercial Officer, and Eric Woodward, Chief Accounting Officer. I'd like to start today by asking Eric to read the safe harbor. Then I will turn the time over to Chip for some comments. Following Chip, I will take us through the financial results, then Wade will discuss the fleet and related flying arrangements. Following Wade, we'll have the customary Q&A session with our sell-side analysts. Eric?

Today's discussion contains forward-looking statements that represent our current beliefs, expectations, and assumptions regarding future events and are subject to risks and uncertainties. We assume no obligation to update any forward-looking statement whether as a result of new information, future events, or otherwise. Actual results will likely vary and may vary materially from those anticipated, estimated, or projected for a number of reasons. Of the factors that may cause such differences are included in our most recent Form 10-K and other reports and filings with the Securities and Exchange Commission. And now I'll turn the call over to Chip.

Thank you, Rob and Eric. Good afternoon, everyone, and thank you for joining us on the call today. Today, SkyWest reported net income of $91 million or $2.21 per diluted share for the 2025 fourth quarter and full year net income of $428 million or $10.35 per diluted share. These results reflect the challenges of the fourth quarter as well as the overall improved production in 2025 compared to the previous year. For the 2025 year, our model converted a growth of 15% in production to a 31% increase in pretax income, reflecting the strong operating leverage within our model. We're also pleased to announce extensions on key flying agreements, 40 E175s with United and 13 E175s with Delta. These agreements continue to strengthen our partnerships and demonstrate the ongoing long-term demand for our product. Our fleet flexibility has never been more important. And while our E175 flying agreements are further solidified, we continue to leverage our extensive CRJ assets. Our ongoing investments in and the diversity of our fleet ensure we're well-positioned to adapt to future market demands. I'm humbled and honored that SkyWest was named a Fortune World's Most Admired Companies for 2026. A distinction our people helped us earn for the third time now. SkyWest was named in the top 10, the only regional airline on the list. This is an outstanding accomplishment, and I'm so proud of our exceptional team. Throughout 2025, SkyWest Airlines achieved more than 250 days of 100% controllable completion, a solid team accomplishment during the year, we regularly reached over 2,500 daily scheduled departures. The fourth quarter was unusually challenging starting out with the government shutdown, and mandatory flight reductions and leading right into the peak holiday season travel. I want to thank our team of over 15,000 aviation professionals for their continued teamwork and dedication to excellence. As expected, we were disproportionately affected with more canceled flights than our major partners during the mandatory flight reductions, and we experienced a modest impact from the shutdown. Rob will talk more about that in a minute. We continue executing to derisk our model. The contract extensions we announced today with United and Delta deliver ongoing revenue stability. With all of our dual-class fleet, both CRJ and ERJ now under contract, we have no major E175 contract expirations until late 2028. Additionally, over the past three years, we've reduced our debt by $1 billion. All this work continues to place us in a solid position of long-term strength. The investments we're making today set us up well for 2027 and beyond. SkyWest continues to lead our segment of the industry in service and in value of our diverse assets. Remain disciplined and steady. As we execute on our growth opportunities by delivering on significant pro rate demand investing and fully utilize our existing fleet and preparing to receive our deliveries in the coming years for a total of nearly 300 E175s by 2028. We spent years strengthening our balance sheet and fleet flexibility. As well as reinvesting in our future growth. Continue to play the long game and invest in our fleet and our future to ensure we're in the best possible position to respond to market demands in a way that no one else can. Rob will now take us through the financial data.

Today, we reported a fourth quarter GAAP net income of $91 million or $2.21 earnings per share. Q4 pretax income was $125 million. Our weighted average share count for Q4 was 41.3 million, and our effective tax rate was 27%. Let's start today with revenue. Total Q4 revenue of $1 billion is down seasonally from $1.1 billion in Q3 2025, and up 8% from $944 million in Q4 2024. Q4 revenue includes contract of $803 million, down from $844 million in Q3 2025 and up from $786 million in Q4 2024. Pro rate and charter revenue was $167 million in Q4, flat with Q3 2025 and up from $126 million in Q4 2024. Leasing and other revenue was $54 million in Q4, up from $39 million in Q3 and up from $32 million in Q3 2024, driven by discrete maintenance services provided to third parties. For comparability purposes, the mandated flight cancellations from the government shutdown in November negatively impacted our Q4 2025 results by $7 million or $0.13 in earnings per share. Additionally, these Q4 GAAP results include the effect of recognizing $5 million of previously deferred revenue this quarter, down from the $17 million recognized in Q3 2025. And $20 million recognized in Q4 2024. As of the end of Q4, we have $265 million of cumulative deferred revenue, that will be recognized in future periods. As we close out 2025, here are a few financial highlights to recap our 2025 year. Our pretax income in 2025 of $506 million was up 31% from 2024 on a 15% increase in block hours reflecting the strong operating leverage in our model. Our EBITDA for 2025 was $982 million, up over $100 million from 2024. Our free cash flow for 2025 was over $400 million, providing the liquidity to invest in our long-term CRJ fleet initiatives and other accretive capital deployment opportunities. We've repaid $492 million of debt in 2025 part of a 10% reduction to our debt balance since 2024, including the effect from seven new E175s we financed in 2025. We ended Q4 with debt of $2.4 billion down from $2.7 billion as of 12/31/2024. We used $85 million in 2025 for share repurchase doubling our investment from 2024. We bought nearly 850,000 shares in 2025, up 50% from the shares bought in 2024. Now let's discuss the balance sheet. We ended the quarter with cash of $707 million down from $753 million last quarter and down from $802 million at Q4 2024. The ending cash balance for the quarter included the effects from repaying $155 million in debt investing $214 million in CapEx, including the purchase of five E175s and buying back 268,000 shares of SkyWest stock in Q4 for $27 million. As of December 31, we had $213 million remaining under our current share repurchase authorization. Cash flow is obviously an important driver of our capital deployment strategy. Over the last two years, we generated nearly $1 billion in free cash flow and deployed it primarily to delever and derisk the balance sheet to the benefit of our partners, our employees, and our shareholders. Our balance sheet and liquidity are powerful tools as we pursue a variety of growth and capital opportunities for 2026 and beyond, including acquiring and financing 29 additional E175s, by 2028 and continuing to pay down our debt. As we remain focused on improving our return on invested capital, we'd like to highlight the following. Both our debt net of cash and leverage ratios continue at favorable levels and are at their lowest point in over a decade. Our total debt level is $1 billion lower today than it was at the end of 2022 in spite of acquiring and debt financing 14 E175s. During that time. The total 2025 capital funding our growth initiatives was approximately $580 million, including the purchase of seven new E175s. CRJ 900 airframes, and aircraft and engines supporting our CRJ 550 opportunity. We expect to take nine new E175s during 2026. And we anticipate approximately $600 to $625 million in total CapEx in 2026 approximately flat with 2025, except for two incremental 175 deliveries. Consistent with our practice, we're not giving any specific EPS guidance today. Let me update you on some commentary on 2026. We gave last quarter. For 2026, we now expect to see mid single digit percentage growth in block hours over 2025, moderately up from the color we provided last quarter. We also now anticipate our earnings per share for 2026 will be in the mid $11 area up modestly from our expectation last quarter. In addition to this full year EPS color, we would expect sharper quarterly seasonality a bit more like pre-COVID patterns with our Q1 2026 EPS being flat to down from Q4 2025 GAAP EPS and with Q2 and Q3 being the strongest quarters of the year. For modeling purposes, we anticipate our maintenance activity in 2026 will continue approximately at current rates as we invest in bringing more aircraft back into service. We also anticipate our effective tax rate will be approximately 24% for 2026, similar to 2025, including a lower expected rate in Q1 than the remaining quarters. We are optimistic about our growth possibilities going into 2026, including the following three focus areas. First, growth in our ability to increase service to underserved communities driven partially by the redeployment of approximately 20 parked dual-class CRJ aircraft and strong utilization of the existing fleet. Second, good demand for our pro rate product. And third, placing nine new E175s into service for United and Alaska by the end of 2026 and six new E175s for Delta in 2027 and 2028. We believe that we are positioned to drive long-term total shareholder returns by deploying our strong balance sheet and free cash flow generation against a variety of accretive opportunities. Wade?

Thank you, Rob. Today, we announced a multiyear extension of 40 E175s with United and 13 with Delta. These extensions continue to solidify our flying agreements with United and Delta through the end of this decade. We now have no contract expirations on E175 until 2028. During the quarter, we took delivery of five new E175s for United. We currently have 69 E175s on firm order with Embraer, including 16 for Delta, eight for United, and one for Alaska. We expect delivery of nine new E175s this year. Let me talk a little more about our firm order of 69 aircraft. Of the 69, 25 aircraft are allocated to our major partners. And 44 are not yet assigned. Our long-term fleet plan has positioned us well and continues to be an important part of that strategy. This order locks in delivery slots starting in 2027 through 2032. However, the order is structured with good flexibility to defer or terminate the aircraft in the event we don't arrange for a partner to take them. After we finish the Delta deliveries expected in 2028, our E175 fleet will be nearly 300. Continuing to enhance SkyWest's position as the biggest E175 operator in the world. Last quarter, we announced an agreement with United to extend up to 40 CRJ200s into the 2030s. These aircraft were set to expire at the end of 2025, and we're pleased with the continued strength of our United agreement. As we previously announced, we have a multiyear flying agreement for a total of 50 CRJ 550s with United. As of December 31, we had 27 CRJ 550s in service and expect the last 23 entering service later this year. We have begun a prorate agreement with American. We are currently operating four aircraft under this agreement. With up to nine aircraft expected by the end of 2026. We are excited to expand our relationship with American. Let me review our production. For the full year 2025, we increased block hours by 15% compared to 2024. We anticipate that our 2026 block hours will be up mid single digit percentage compared to 2025. For 2026, we delivery of nine new E175s, placing 23 CRJ 550s into service capitalizing on strong prorate demand, and anticipating an increase in fleet utilization. These increases are offset by the return of 19 Delta owned CRJ900s over the next couple of years to Delta. We anticipate the return of these aircraft will be at a slower cadence than we originally anticipated. Our revenue seasonality has returned to the model as utilization improves during the strong summer months. We still have approximately 20 parked dual-class CRJ aircraft that will be returned to service. Many of these aircraft are currently under flying agreements and will begin operating in 2026. We also have over 40 parked CRJ200s further enhancing our overall fleet flexibility. Also during the quarter, we canceled approximately 2,000 flights and 3,000 block hours due to the government shutdown. These cancellations decreased our results by approximately $7 million. This is net of any reimbursements from our major partners. As we shared during the year, we continue experiencing challenges in our third-party MRO network. Including labor and parts challenges. We expect our 2026 maintenance expense to be consistent with our 2025 levels. As we continue to bring aircraft out of long-term storage and service the current fleet as production continues to increase. As you would expect, the maintenance expense will before the aircraft goes back into service. As far as our prorate business, demand remains extremely strong. With great community support, we are seeing opportunities to return SkyWest service to several communities. And we will continue to work with airports we serve on the best way to expand our service. As we discussed last quarter, the increase in our prorate business results in an increasingly seasonal model consistent with the typical industry seasonality, we expect Q1 production will be flat to down from Q4. We feel good about our ongoing efforts to reduce risk and enhance fleet flexibility and remain committed to continuing our work with each of our major partners to provide strong, innovative solutions to the continued demand for our products.

Okay, operator. We're ready for our Q and A now.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press 1 on your telephone keypad to raise your hand and join the queue. We'll take our first question from Savi Syth at Raymond James.

Hey. Good morning. Hey. Good afternoon, everyone. Just on the FAA cuts in the last quarter, I was kinda curious on how that was handled in. I know usually when there are weather events, that know, there's a lot more coverage of of the coffee incurred. So I was wondering if you can expand a little bit more on on, you know, why there was that level of impact.

Savi, this is Chip. I think I think you're thinking about weather is kind of consistent with the government shutdown. Obviously, as we said on our script. You know, we had a fairly strong cancellation relative to what happened in the industry. And honestly, we're okay with that. We have, you know, various provisions in our contract to help mitigate that. But in the partnership spirit that we have with these partners, know, we're gonna do things together to get through some of these challenges. And extensive as the last one was, certainly, it had an impact on us. But, you know, again, this is something that you work with your partners with and make sure that you do what you need to to take care customers and crews and partners and everything. And so it worked out well. And we don't wanna do it again, obviously, but but from that perspective, the way you're thinking about it being like a a a weather and IROP event was extensively longer, but consistent within the contract.

Understood. I wonder if I can on the extensions that that are happening this year, I'm guessing a lot of those are aircraft that are coming you know, fully paid in the next year or two. Wondering if you could provide kind of a update on your on unencumbered assets and kinda where they are today and and, you know, where you see them kinda going by maybe the end of this year and and next year?

Yes. Savi, this is Rob. In terms of unencumbered assets, we have a very strong portfolio of those. That can be converted into debt, obviously, very easily. But we have know, somewhere in the neighborhood of $1.5 billion of unencumbered, equipment at this point.

And does that step up quite a bit? This year, next year, or is it just a kind of a maybe a steady increase? How should we think about as those E175s start coming off contract.

Yeah. I think, Savi, that you're you're exactly right. It's certainly increases as more of them become paid off. We're in a great position today with our unencumbered assets. And as we discussed and as Rob discussed about the debt repayments and stuff that those obviously, the or number of assets unencumbered continues to increase relatively aggressively. Over the next several years as E175s become paid for.

Awesome. Thank you.

We'll move next to Duane Pfennigwerth at Evercore ISI.

Hey. Thank you. With respect to your order book, and I think you have capacity out to 2028, maybe some availability 2027. Can you speak to how discussions are evolving around placement of the next kind of slug of new aircraft you can take delivery of?

Yeah, Duane. This is Wade. So, yeah, we have an order of 69 aircraft currently on order with Embraer. 24 of those are under contract with our major partners, 16 for Delta, eight for United, and one for for Alaska. So we we're always talking to them about, the order book. So our orders the the deliveries that are coming in '27 are all spoken for. The majority of them in '28 are spoken for. So after that, it's really twenty nine, thirty, 31. And beyond that we're still working with our major partners. But those conversations are ongoing, and we're very optimistic about continuing to to work with them and place them.

Thanks. And then, I'm sure there was noise around shutdown and maybe some weather, but can you speak to the underlying trend in utilization and kind of what your target is? And where you're at relative to that target in terms of utilization recovery? Thanks for taking the questions.

Duane. That's a that's a great question. So, yeah, we've seen positive trends in in aircraft utilization for sure. And as we are looking at our schedules going into the '26, those trends are continuing to, be be extremely positive for us, honestly. And so we will get better utilization out of our assets. We are seeing that. It's it's slightly higher than what we had anticipated last quarter. That's why the guidance on block hours did go up. That's one of the reasons. And so yeah, we're we're optimistic about the increased utilization on our fleet and where and where it's going.

Thank you.

We'll move next to Catherine O'Brien at Goldman Sachs.

Hey. Good afternoon, everyone. Thanks for the time. Just one more on the E175 renewals. It's really helpful to know your next renewal isn't until the 2028. Could you provide any color on on how the terms of these renewals compared to the prior purchase CPAs that they were on. You know? Was there any impact in the rate discussions to the fact that, you know, you guys don't there's no already debt associated or or or that didn't factor in and and the terms look pretty similar. Thanks.

Yeah. Katie, this is Chip. I I would I would basically say that the contracts, as you continue to go through the maturity of the life of the aircraft, certainly evolve. Certainly, certain things, contracts, because this is such a dynamic industry change. Various things that we thought were important five years ago have changed to other things are more important today. So I won't I will I will certainly underline that there's a lot of evolution that takes place mostly due to market conditions. In large, I think you're mostly asking about, you know, economics and that type of stuff with the renewals. I would only say that everything is roughly economically very similar to what we've you know, experienced in the past. Although there's some things embedded within the contract that evolve for, you know, just changing market conditions that help both of us as partners. The dynamics of the conversation is good because of the outstanding demand that's in the marketplace right now. So in all honesty, we try to be very transparent very present with our partners all the time, and the conversations you know, are very, very good. Particularly, as you know, this is a tough industry to be in, and you have to be in that mode with your partners all the time to be dynamic and and being able to evolve. And I don't know of anybody in the industry that can evolve as as well as we can. So that's kind of the kinda how the contract conversations go, and we're gonna continue to prepare for future ones to to make it even easier. So

That's great. Maybe just one quick follow-up if you allow just to make sure. I don't wanna put words in your mouth. But on the economics, under the terms of the agreement, that looks pretty similar to, okay, this is now you know, thirteen year old aircraft versus a brand new aircraft. Like, the if there were I don't and I actually don't know if there's a step down usually when you move from the first contract to a contract under a CPA agreement. But, like, whatever that normal step between contract one and contract two, that's what it looks like here for these. Is that right? The the the rate economics are very

consistent with where they were before. So we we will see a a very consistent level of revenue continuing on with these airplanes in the future.

Oh, that's great. Then just for my second question, you know, maintenance elevated here you know, around the industry, we're seeing that. Not not surprised. Rates, slots are tight. Can you walk us through how much of the maintenance is on aircraft under contract? And what is for aircraft that are, you know, currently parked not on contract? And on that second group of air of aircraft, like, how like, you know, you're you're putting in the work now. You talked about being flexible. That's a competitive advantage. Are you pretty advanced in conversations around some of these aircraft you're working on now that you might have an MRO slot for, or or this is really just, like, if a partner calls, you could answer. Just trying to understand, you know, much you're investing and and what you think the prospects are for return on that investment. Thanks.

No. That that's a great question. So as as I talked about a little bit in my script, we have 20 aircraft that are currently parked or have been parked that are in heavy maintenance. That are going to be done very shortly that are going into contracts that are the contracts are signed. They're ready to go. They're just waiting for the airplane to be done with its maintenance cycles. And so, obviously, the maintenance come comes in advance of the airplane being returned to service. And so there are 20 airplanes that will be going through that that return of maintenance right now. That's the 20 dual class airplanes. We also have some CRJ200s. That I said we have 40 of those parked, and we are returning some of those to service. And we do believe you know, we we know very good opportunities in the marketplace for those. And, we're very optimistic that we will find a very good revenue model for those.

Thanks so much.

We'll go next to Mike Linenberg at Deutsche.

Yeah. Hey. Yeah. Talking about a very good revenue model. I mean, I we're sort of watching the build out of Chicago and it does seem like a lot of the growth at least at that hub over the next several months is going to be driven by regional flying. Are you able to capitalize on both of your relationships with those carriers to to grow into that market or is it one-sided?

Yeah. Mike, that's a that's a great question. We work with each of our major partners. As as you know, under these capacity purchase agreements, they dictate the schedule. They dictate where these aircraft fly. They tell us where to go. And so we are working with each of our major partners on the deployment of where they would like these airplanes, and we will operate these at the extreme highest levels of reliability. That that that are out there. And so we will work with each of our major partners where they wish to deploy those, and we will and that's how the CPAs work.

Okay. And then just, my second question, Rob, on the the revenue piece, you know, the revenue recognized in excess of fixed cash payments. Obviously, that came down quarter over quarter. How is that trending? Are we back to sort of $5 million a quarter as we march through 2026? Or is there, like, how should we think about that with respect to modeling? Thanks for taking my question.

Yeah. Sure, Mike. No. I I think, you know, Q4 was a little down as we extended some of the contracts and pushed out some of the recognition of deferred revenue. But in 2026, for modeling purposes, you know, I would suggest, you know, you're probably in the 20 to $25 million quarter, area for you know, recognizing the you know, deferred revenue that remains. And, again, there's $265 million of deferred revenue that remains to be recognized.

So Rob, to clarify, the the extension was you know, the and what was announced today, right, I guess, maybe that drove part of it, right, to extend the E175 flying with both Delta and United? That's right. Yeah. Those those contract extensions, you know, all

push out the timing of the recognition of the deferred revenue.

Alright. That's what I thought. And then just lastly, one other piece. I when and it may have been Chip or you know, or you who talked about this seasonality where earnings will be down March over Q4, obviously, because, you know, now we're getting back more normal seasonality with respect to your pro rate business. When we think about down, are we thinking down on the reported Q4 number? Or should we think down from a Q4 number that would not be impacted by government shutdown? I'm just again, this is modeling.

Just to make it easy, I mean, it's just the gap number that we reported You know, we do expect that it'll be flat to down. In Q1, again, because of the sharper seasonality in the model.

Okay. Makes sense. Alright. Thanks for taking my question.

Mike.

We'll move next to John Godden at Citi.

Hey, guys. Thank you for taking my question. I wanted to to sensitize and and brainstorm a bit about the eleven fifty. You guys mentioned operating leverage a few times in the prepared remarks. We're seeing that in the numbers. If in a couple quarters, eleven fifty is becoming 12, you know, What happened? Just help us kinda sensitize that a bit and and and I'd love to just kind of you know, hear your thoughts.

Yeah, John. And, again, welcome. The, you know, the the guidance for the for next year, the mid 11 guidance, I think, is something that we always look at there being a possibility of of, you know, coming in either ahead of that or or behind it. But as as Wade mentioned, you know, in his in his script, you know, we see strong demand in various areas of our of our model right now, in know, including prorate and contract. And so, you know, as things play out, we'll continue to you know, update the street on on how we're seeing the year evolving. But, you know, right now, we were you know, bringing up both our expectation around production and our expectation around earnings for the year compared to what we were seeing a quarter ago.

Mhmm. Do you think that prorate would be the biggest swing factor?

So the there's three or four things, you know, that will affect our block hours. Pro rate being one of them. I would say the the more meaningful one is probably the increase in utilization that we are anticipating and and seeing from from each of our major partners. Then also just the return to service of some of our airplane of the that have been parked over the for a while. So those those are really the three drivers that that will help us increase production, which in in turn increases the profitability.

Got it. And and if I could ask about the balance sheet. Certainly moving in the right direction. For for some time. I think you guys mentioned no contract extensions for for a bit. It it seems like we may be know, in a window here where we can potentially deploy the balance sheet more more offensively, more strategically. I'm curious if that's how you think about it. Could there be a change to the attitude toward buybacks? Or maybe there's other calls for cash that you think are even more exciting.

Yeah, John. I I think, you know, when it comes to the sort of topic of capital allocation or the balance sheet, You know, I think we're comfortable enough and confident in our free cash flow generation going forward that feel like we're in sort of an all of the above position where know, we can continue to invest in the fleet like we have been, which we love doing. We can continue to delever and derisk you know, the model and the balance sheet as, you know, as we talked about you know, we've been paying down our debt you you know, with a good cadence over time. And finally, you know, as we've proven, you know, we've you know, we're strong believers in the value creation possibilities of share repurchase. And so I think we're in a position with the balance sheet that's got the liquidity and the strength and the leverage that will allow us to do all of the above.

Got it. Thanks, guys. Appreciate it.

We'll go next to Tom Fitzgerald at TD Cowen.

Hi, everyone. Thanks so much for the time. Was a pretty big jump in lease airport services and other revenue this quarter, and I was just kind of curious what drove that. Was that maybe third party engine overhaul work or or something else?

That's right. I mean, and it you know, there's a piece of it on the revenue side and another piece in maintenance. So yeah, it was it was a engine deal with the third party.

Okay. Great. That's that's really helpful. And then just as any any updates on the charter business as as you look out into 2020 And I don't know if that could be a driver of incremental positivity for the year, maybe around the World Cup or this summer or maybe not, just given that else is going be utilized in the core business? Thanks again for the time.

Yeah. Tom, this is Chip. Yeah. It's real quick. It's a great question about SkyWest Charter. You know, we've got a lot of leeway and permission to do a lot of very cool things with that. Certainly, we're seeing as of right now significant demand with sports teams and everything. In fact, it's demand that we can meet honestly, because of aircraft availability. We're we're seeing certainly a very strong demand for SkyWest Airlines aircraft at this time that we're we're trying to fulfill with our major partners. As you know, that's that's the core of what our business is is try to take care of these four customers of ours. So it does put, some of our initial objectives with SkyWest Charter on the back burner. We're not saying that it's never gonna happen. We mentioned on the call several times, we have a lot of CRJ 200 aircraft available. And there's a lot of and we've also talked about MRO. Availability and getting these aircraft available to us. So I would not say that 2026 is going to be a, you know, historically huge year for Charter because of the backlog of supply chain issues we have with certain MROs and the fleet that we have. But we still have the same long-term objectives that we've always had with that the demand and the things that we can do with that enterprise are still extraordinarily promising. But I think you can get a tone on the call. There's just a lot of demand, and we're trying to get as much you know, aircraft resources in place to meet that demand for 2026. So hopefully, we can do some other things, in '27 or '28 with that with that enterprise.

Next, we'll take a follow-up from Savi Syth at Raymond James.

Hey. Thanks for the follow-up. Just wondering you know, operationally, you've been kinda executing really well and and know, as your partners need extra lift, I think you've been able to step in from time to time. Was curious, and I think the industry as a whole, the operational execution has kinda taken a leg up maybe versus kinda ten, fifteen years ago. Curious how you stack up compared to some of these kinda internal partners at at your, you know, mainline like the internal regional airlines, how how do you stack up in terms of performance and execution?

Hey, Savi. This is Wade. That's that's a great question. Question. You know, SkyWest, you you can look at some of the DOT data. SkyWest is always a very high performer on on our a 14, our completion percentages. So you know, that is one thing that we emphasize around highly is just our execution to our mainline partners and then also ultimately their customers. And so know, we we put a lot of emphasis around that, and we are typically the one of the top tier performers. So yes.

I I I would add just one thing also, Savi. I think I think you have to have the utmost respect to our people and certainly our management team because we're one of the only airlines in the world that has four customers that strategically, at times, operate for completely different ways, yet we have to consolidate that operation into exceptional overall performance in our own way. So we're we're we're used to this challenge. We've been doing it for decades. And to that end, our our people are fantastic at making sure that they meet our objectives and what we wanna do and also meet the needs of our partners. But I can tell you, the level of effort and talent that it takes to go as many days as we indicated with, you know, zero with a 100% controllable completion over 250 days this last year is exceptional. And to that end, you know, we're doing it in a in a way which we're trying to to make four partners happy along way, which we do a pretty good job of, which is why they keep giving us contract extensions and more flying. So, from that perspective, on a micro level and a macro level, we're pretty proud of the efforts that our people put forth in those endeavors.

That's helpful. And if I might just follow-up on John's question about use of you know, the how you're thinking about the use of cash. Any are there any kind of liquidity targets or leverage targets that you want to stay within?

So, Savi, you know, as we've said in the past, we really have a a bright line number But, again, you know, we wanna be careful that we have the liquidity in the balance sheet. Capacity to make sure we can monetize all the opportunities that are in front of us. And, again, those opportunities are numerous right now in terms of you know, investing in this in the the the fleet and and other other ways that we can deploy the balance sheet. So I think as you see the progress that we've made over the past few years, we're in a great place from a balance sheet leverage standpoint. We haven't been in a lower leverage position in a decade. We're in a great position in terms of liquidity. We've got plenty of you know, unpledged collateral if we were to need it. And so, you know, again, I think that that that provides the for us to to look at all of our accretive opportunities and and monetize them.

Got it. Thank you.

And we'll take a follow-up from Catherine O'Brien at Goldman Sachs.

Hey again. I just I was thinking about your answer to that question on the CRJ opportunities. And so a follow-up there. You know, on those 40 CRJs you're investing in, you noted that you know of good opportunities for those. Are any of those slated to come out of the shop this year? And and if they did and you execute on one of the opportunities you noted, would that be incremental to your current mid single digit block hour growth rate? Thanks.

That's a great question. A lot of that is baked into our our operating plans already. Obviously, if we do have ups upside especially for the summertime, a lot of that, we know what's front of us. We know the opportunities right there. And so if we do get the air out quicker, then there could be sooner opportunities for us. We are looking at opportunities in the fall, and we are looking at, those opportunities right now. And so potentially, you know, eight, nine months from now, for sure, there could be some additional opportunities that that we're looking at. But things that are know, for the summer, six months in advance of us, that's all pretty much in our operating plans right now.

Great. Thanks for the extra time.

And that concludes our Q&A session. I will now turn the conference back over to Chip Childs for closing remarks.

Thank you, Audra. Again, thank you all so much for your interest in SkyWest. We are very proud of what's happened in 2025, but mostly we're very focused and, grateful for the opportunities which we have and put ourselves in a good position with our people in '26 and beyond. And we look forward to giving the first quarter update in three months from now. So thanks for your interest.