SkyWest surges 4.2% on United-Delta contract extensions
Regional airline secures multi-year E175 agreements while full-year profit jumps 33%
SkyWest shares jumped 4.2% in Thursday trading after the regional airline operator secured multi-year contract extensions with two of its largest partners and delivered full-year earnings that exceeded expectations despite fourth-quarter headwinds from the government shutdown.
The St. George, Utah-based company reported net income of $91 million, or $2.21 per diluted share, for the fourth quarter of 2025, compared with analyst estimates of $2.25 per share, according to MarketBeat. Revenue climbed 8% year-over-year to $1.0 billion for the quarter, the company announced in a BusinessWire release.
While quarterly results fell short of projections, investors focused on SkyWest's stronger full-year performance and strategic contract victories. For the full year 2025, net income reached $428 million, or $10.35 per diluted share, representing a 33% increase from 2024.
The company secured multi-year contract extensions with both United Airlines and Delta Air Lines for its Embraer E175 aircraft fleet. The United agreement covers 40 aircraft, while the Delta extension encompasses 13 E175s, according to Financial Times data. These agreements provide revenue visibility and strengthen SkyWest's position as the primary regional operator for major U.S. carriers.
"We remain focused on operating a high-quality, reliable product that our major airline partners value," the company stated in its earnings announcement, highlighting the strategic importance of long-term partner relationships in the regional aviation model.
The fourth-quarter results reflected pressure from a late-2025 government shutdown, which caused the Federal Aviation Administration to reduce air traffic by 10% across 40 high-volume markets, affecting thousands of flights. Additionally, funding for the Essential Air Service program was expected to lapse in October 2025 due to the shutdown, according to aviation industry publication CH-Aviation. SkyWest, a major recipient of EAS funds, committed to maintaining service to affected communities despite potential funding interruptions.
Beyond contract extensions, SkyWest made significant progress strengthening its balance sheet. The company reduced debt by approximately $300 million during 2025, bringing total debt outstanding to $2.5 billion by the end of the second quarter—down from $2.7 billion at the end of 2024, according to Seeking Alpha transcript analysis. The company's debt levels and leverage ratios reached their lowest point in over a decade.
SkyWest also returned capital to shareholders through an expanded repurchase program. The Board of Directors approved a $250 million increase to its share buyback authorization in May 2025, bringing total authorized capacity to approximately $272 million, according to Nasdaq coverage. The company repurchased 141,000 shares for $14 million in the first quarter of 2025 and an additional 195,000 shares for $17.3 million in the second quarter, leaving roughly $213 million of remaining authorization as of mid-year.
Analysts maintain an optimistic outlook on SkyWest, with a consensus price target of $128.33—more than 26% above current levels—according to market data. Five analysts rate the stock a buy, while one recommends hold, with no sell ratings. The stock currently trades at 9.4 times trailing earnings, a discount to the broader market multiple.
The regional airline sector has benefited from post-pandemic travel recovery, though it faces challenges including pilot shortages, rising operational costs, and uncertainty around federal funding for essential service routes. SkyWest's diversified partnership model with multiple major carriers provides some insulation against individual partner performance issues.
Looking ahead, SkyWest plans to take delivery of additional E175 aircraft under existing agreements, with 16 new aircraft scheduled for Delta operation beginning in 2027. The company also holds secured slots with Embraer for 44 additional E175 aircraft for potential deliveries between 2028 and 2032, contingent on future agreements, providing flexibility for fleet expansion or replacement.
Investors will be watching for updates on capacity utilization, pricing trends with major partners, and the company's ability to maintain operational reliability despite ongoing staffing and air traffic control challenges in the broader aviation system.