Q2 2025 SkyWest Inc Earnings Call
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Hello, and thank you for standing by. My name is Tiffany and I will be your conference operator today.
Speaker Change: At this time I would like to welcome everyone to the Sky. West Inc, second quarter 2025 results. Call
All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star then my number 1 on your telephone keypad. I would now like to turn the call over to Rob Simmons Chief Financial Officer Rob. Please go ahead.
Thanks Tiffany and thanks everyone for joining us on the call today as the operator indicated. This is Rob Simmons. Skywest Chief Financial Officer
Speaker Change: on the call with me today are chip child's president and chief executive officer, Wade, steel, Chief commercial officer and Eric Woodward Chief accounting officer
Speaker Change: I'd like to start today by asking Eric to read the Safe Harbor.
Speaker Change: Then I will turn the time over to chip for some comments. Following chip, I will take us through the financial results. Then weighed will discuss the fleet and related flying Arrangements.
Speaker Change: Following Wade, we will have the customary Q&A session with our cell site analysts Eric.
Speaker Change: 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.
Speaker Change: We assume no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise,
Speaker Change: actual results will likely vary in VA and may vary materially from those anticipated estimated or projected for a number of reasons. Some of the factors that may cause such differences are included in our most recent recent form, 10K 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.
Speaker Change: The continued demand in small and mid-size, communities is as strong as we've ever seen it. And it's clear that there is no replacement for face-to-face connection facilitated by air travel.
Speaker Change: As we near and even exceed, our 2019 departures, our teams have worked, very hard to plan, execute and deliver an exceptional and consistent product. I want to thank our team of nearly 15,000 Aviation Professionals for their continued, teamwork and dedication to Excellence.
Also, during the quarter, we were excited to be named 1 of America's greatest, workplaces by Newsweek for the second year running.
We earned this Honor by working together with our people every day and we're proud to be, the only Regional Airline on the list.
We're committed to ensuring Sky. West Remains the premier place to build a rewarding career.
Last month, we announced an agreement to purchase and operate 16. New e175 under a multi-year contract with Delta, with deliveries expected to begin in 2027,
Speaker Change: We also secured firm, delivery positions, with embryo for 44 more, e175 from 2028 to 2032.
Speaker Change: As we shared previously, it is our intent to deliver those aircraft. These agreements continue to deliver unparalleled Fleet, flexibility for the future.
Speaker Change: our long-term position is secured with these 44 delivery slots, starting in 2028 through 2032, with flexibility to defer or cancel these aircraft
Speaker Change: In the near term, we anticipate our remaining embryo delivery scheduled for this year will be delayed into the fourth quarter or early 2026.
As we look ahead and evaluate the macroeconomic landscape with regard to tariffs, it's clear that our focus on fleet flexibility has prepared us very well.
I want to make a couple of important points as we plan for the near and long term.
Speaker Change: If implemented tariffs on Brazil are not expected to change our 2025 production forecast,
Speaker Change: However, we are not willing to pay a 50%, tariff on new aircraft deliveries.
Speaker Change: While all regional aircraft are produced outside, the United States. Sky West is best positioned in our segment of the industry to manage through these macroeconomic challenges.
Speaker Change: We have very strong relationships with our major partners and with Embry are all of whom are very interested in securing Sustainable Solutions.
Speaker Change: Undoubtedly, the fleet flexibility, we have developed over the last decade will continue to serve us. Well,
We look forward to continuing to deploy additional crj, 550s for our partners and we expect our existing crj Fleet to produce a creatively. Well, into the next decade.
Speaker Change: Demand for our product is very strong and Sky, West continues to lead our segment of the industry.
We remain disciplined and steady as we execute on our growth opportunities to 1, restore or bring new service to underserved communities.
Speaker Change: To redeploy and fully utilize our existing Fleet and 3 prepared to receive our deliveries in the coming years. For a total of nearly 300 e175 by the end of 2028.
We have spent several years getting our balance sheet and Fleet flexibility as well as reinvesting in our future growth.
we remain very confident that the steps that we have taken have this exceptionally positioned, despite ongoing macroeconomic uncertainty
overall, with our well-positioned Fleet,
Speaker Change: Excellent operation, and our strong Partners Partnerships and demand. We remain optimistic about 2025 and 2026.
We continue to play the long game and invest in our Fleet and future. To ensure we are in the best possible situation to respond to Market demands.
Speaker Change: Rival. Now, take us through the financial data.
Speaker Change: Today we reported a second quarter, gaap net income of 120 million or 2 dollars, 91 cents earnings per share.
Speaker Change: Q2 pre-tax income was 163 million. Our weighted average share count for Q2 was 41.4 million and our effective tax rate was 26%.
First, let's talk about Revenue. Total. Q2 revenue of 1 billion dollars is up 9%. From 948 million in q1 2025, and up 19% from 867 million in Q2 2024.
Speaker Change: 42 million up from 785 million in q1 and up from 731 million in Q2 2024.
Pro rate and Charter Revenue was 145 million. In Q2 up from 131 million in q1 and up from 107 million in Q2, 2024, Leasing, and other Revenue was 47 million in Q2 up from 32 million, in q1 2025, and up from 29 million in Q2 2024.
These Q2 Gap results include the effect of recognizing 23 million of previously, deferred revenue, this quarter up from the 130 in q1 2025, as of. The end of Q2, we have 286 million of cumulative, deferred revenue that will be recognized in future periods. We anticipate recognizing approximately 10 to 20 million dollars of previously, deferred revenue per quarter over the remainder of 2025 subject to production levels and other factors.
For modeling purposes, our EPS for the quarter included approximately 20 cents from discrete non-operating gains, primarily consisting of a mark-to-market gain on our Equity Investments and sale of fixed assets.
Speaker Change: Let me move to the balance sheet. We ended the quarter with cash of 727 million down from 751 Million last quarter and 834 million at Q2 2024.
Speaker Change: The decrease in cash, during the quarter included, the accretive actions of 1 repaying, 111 million in debt to buying back, 195,000 shares of Skye West stock in Q2 for 17.3 million. With the volatility in the equity markets in Q2, we opportunistically repurchased, 39% more shares than we bought in q1,
Speaker Change: as of June 30th, we had 267 million remaining under our current share repurchase authorization updated in May 2025,
Speaker Change: And 3 investing 169 million in capex, including the purchase of 2, new e175 for additional crj900 investment in our expanding crj. 550 Fleet, spare engines and other fixed assets.
Speaker Change: we ended Q2 with debt of 2.5 billion down from 2.7 billion dollars as of 12312024,
Speaker Change: Cash flow is an important component of our shareholder value creation calculus.
Speaker Change: We generated approximately 500 million dollars in free, cash flow in 2024.
Speaker Change: And deployed at primarily to de-lever and de-risk. The balance sheet to the benefit of our partners, our employees and our shareholders, we generated over $200 million in free cash flow in the first half of 2025, including 68 million in Q2, our strong balance, sheet and well-grounded. Liquidity are powerful tools as we pursue a variety of growth opportunities including acquiring and financing 30 additional 175s by the end of 2028 repaying. Approximately 490 million in debt in 2025 and continuing to execute opportunistically on our newly reauthorized.
Speaker Change: Share repurchase program.
Speaker Change: 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. It favorable levels that their lowest point in over a decade,
Possibly slip into 2026 without any impact on 2025 production.
Speaker Change: Consistent with our policy and practice. We are not giving any specific EPS guidance at this time, but let me give you a little additional color on 2025.
As Wade will discuss in a minute. We now anticipate our 2025 Block hours to be up approximately 14% over 20204
Speaker Change: The improved Outlook in our 2025 Block hours is driven primarily by improving Fleet utilization and availability and ongoing strong demand for our production.
Speaker Change: We now expect our 2025 gaap, EPS could be in the $10 per share area. If we are successful in executing, on the opportunities in front of us,
Speaker Change: We continue to expect to deliver solid operating leverage with 14% year-over-year production growth translating into a roughly 28% increase in EPS in 2025.
Speaker Change: For modeling purposes. We anticipate our maintenance activity will continue at Q2 levels adjusted for production.
Speaker Change: We also anticipate our effective tax rate will be approximately 26 to 27% for the remaining 2 quarters of 2025.
Speaker Change: We are Optum optimistic about our growth, possibilities going into 2026, including the following 3 Focus areas. First growth, in our ability to increase service to underserved communities driven. Partially, by the deployment of over 30 additional crj. 550 aircraft.
Second improved, aircraft utilization, and availability on our ERJ and crj fleets. And third placing 14 new e175 into service for United and Alaska by the end of 2026 and 16 new e175 for Delta in 2027 and 2028.
Speaker Change: We believe that our strong balance sheet operating leverage free cash flow and liquidity. And the actions. We will be taking to deploy our Capital against a variety of a creative opportunities will position us. Well to drive total shareholder returns.
Speaker Change: Wait.
Speaker Change: Thank you rob during the quarter. We announced a new flying agreement with Delta for 16 new e175 under a multi-year flying contract. The new the 16 new e175 are expected to replace 11, Skye West, own crj900 and 5.
Speaker Change: As we previously announced we have a multi-year flying agreement, for a total of 50 crj, 550s, with United, as of June 30th, we had 18 crj, 550s under contract and expect to operate 30 by the end of this year, with the last 20 entering service during 2026. I want to point out that this agreement represents net growth aircraft along with the additional new e175 is expected to arrive by the end of 2023.
Speaker Change: 6. We are excited about our continued, strong partnership with United.
We took delivery of 2 e175 for United during the quarter and paid the 10% tariff.
Speaker Change: We do expect to see delivery delays from embrya this year. And we now anticipate that the majority of our 2025 deliveries will be in the fourth quarter of the year or could be delayed into early 2026. The tariffs are also creating delivery uncertainty. If the 50% tariff with Brazil is implemented, we plan on working with our major partners and embrya to delay. The delivery until the Tariff situation is resolved, all parties are motivated to work together on the Tariff issue.
Speaker Change: Let me talk a little bit more about our new order of 60 firm aircraft of the 60 16 are allocated to our Delta agreement and 44 have, not yet been assigned to 1 of our major Partners. Our long-term Fleet plan has positioned us well, and re fleeting is an important part of that strategy.
Speaker Change: This order.
Speaker Change: Locks in delivery slots starting in 2027 through 2032. However, the order is structured with good flexibility to defer or terminate the aircraft. After we finish, the Delta deliveries expected in 2028, our e175 Fleet total will be, nearly 300, continuing to enhance Sky West position as the largest embryo, operator in the world.
Let me review our production. Q2 completed Block hours were up 7% compared to q1 2025, based on our current Q3 schedules from our major Partners. We anticipate a 2% increase in Q3 as compared to Q2 for the full year. We anticipate an increase of approximately 14% in 2025 compared to 2024 approaching our 2019 levels. We expect block our seasonality to return to the model as utilization, improves during the strong summer months, we still have approximately 25, parked dual class crj aircraft. That will be returned to service many of these aircraft are currently under flying agreements and will be operating in 2025 and 2026. We also have over 40, parked crj 2000. Further enhancing our overall Fleet flexibility
As we shared last quarter, we continue experiencing challenges in our third-party mro Network, including labor and parts challenges.
Speaker Change: We expect maintenance expense to be a Q2 levels for the remainder of 2025. As we 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 happen before the aircraft goes back into service. Our partners remain very engaged in supporting our efforts to restore production under a previously. Announced agreement with another Regional carrier. We expect to purchase 30 used crj900 airframes for 29 million. We expect to utilize many of these airframes for parts to mitigate any supply chain challenges. We may face over the next few years. We do anticipate operating 6 of these aircraft in the future. As of June 30th, we had closed on 10 of these aircraft.
As for our as our prorate business, demand remains extremely strong with great Community Support. We are seeing opportunities to return Sky, West, service to several communities. As we restore crj production, we will continue to work with the communities. We serve on the best way to expand our service as we discussed last quarter. That increase in our prorate business, will reintroduce more seasonality into our model. As typical with all Airlines, Q2 and Q3 are strong Revenue, quarters and Q3 and Q4.
Speaker Change: 4 are softer. We feel good about our ongoing effort to reduce risk and enhance Fleet, flexibility and remain committed to continuing our work. With each of our major Partners, to provide strong solutions, to the continued demand for our products.
Speaker Change: Okay. Operator. We're ready for our Q&A.
Speaker Change: At this time, if you would like to ask a question, press star, then the number 1 on your telephone keypad to withdraw your question simply press star 1. Again we will pause for just a moment to compile the Q&A roster.
Your first question comes from Hillary kokando with Deutsche Bank. Please go ahead.
Speaker Change: Calling in for Mike. Um,
Hillary Kokando: Could you talk about your crj, 200 Fleet? I think you had about, I think 53, unassigned uh crj 200s available for various opportunities. If you could, you know, kind of talk about what opportunities you're looking at uh, for the sale. Price would be great. Thank you.
Hi Harley. This is this is Wade. Um, so yeah, the crj 200 Fleet, um, is a fleet that gives us a lot of flexibility. As you said, we have about 50 airplanes that are parked. Um, you know, our current priority levels would be to continue to fly those and and add more to, uh, current contracts with our major Partners. Um, the second priority would be to fly, um, prorate with our major partners, and then the third is to, um, lease them out, um, to, to some of the people that we've talked to, in the past like contouring others and then also just consume uh, the excess parts and engines on those assets as well.
Speaker Change: Okay, great. And I was wondering you, you talked about the 29 airframes that, you know, that you're planning to use to part out, you know, just given the the mro and you know, M row challenges, if you could just kind of, you know, talk about what you're seeing out there. Like, how long do you think you know, those challenges? Um the last and you know just what you're seeing in terms of like the maintenance issues out there and the mro challenges?
Speaker Change: Yeah, that's a great question. Um, so we are buying 30, aircraft, we operate, we plan on operating 6 of those aircraft. So, there are 24 that we do plan on, um, partying out. Uh, there are challenges at the moment, especially, on the crj side, with parts and labor, as as we've talked, it is improving every day. Um, mhi is working diligently. We are working with them closely on how to mitigate these risks. But we do think it will continue on and that's why we have purchased these assets. So we don't know exactly how long but what we did want to do is de-risk the situation. And so we felt it was in our best interest to to buy those airplanes and kind of de-risk. The supply chain.
Just just just 1. Follow-up question. Is this coming from like engine from like, you know, just shortage of engines out there is this really coming or just other parts but or is it more of an engine issue?
Speaker Change: The the mhi issue is primarily an airframe issue. Um okay we are working with uh them on the airframe issues there. There's challenges also in the engines and we're working with GE on that side too. But but on the engine issue, we during Co, we did not stop doing engine events. We you know, during the pilot shortage we continued to do engine events. And so, as of this moment, we are in a good shape on the engine side because of the the advanced planning that we did on that.
Speaker Change: Okay, got it. Thank you, very helpful. Thank you very much.
Sabi Sith: Your next question comes from Sabi. Sith with Raymond James, please go ahead.
Hey, good afternoon. Um, I wonder if I can just touch on the Tariff topic. Uh, briefly just curious as you paid, the 10% Tariff was that on like a full aircraft cost or just, you know, certain components and therefore, maybe not 10% of the aircraft costs. And, and also just, I know there's a section, 232 investigation and I wonder if you have any
Sabi Sith: Understanding, as to, you know, if that how that goes, and how that might affect the, the Tariff discussion versus the 50% country level. Um, tariff.
Well Savvy, this is Chip just real quick. I will say that the Tariff that we have paid so far at the 10% is not on the full aircraft. You do a calculation of the you know, certain components that there's a lot of American components in a 175, particularly the engine. So it's not a full component. It's just, uh, you know, between a third and a half of the of, of what the, the 10%, uh, rate would be. So from that perspective, um, you know, it's not the full 10% on the entire airplane.
Sabi Sith: A couple of the other questions relative to the challenges associated with it at the industry level. Um, you know, we continue to monitor that type of stuff. We think that it's, you know, certainly would have an impact on certain level of tariffs that that are already integrated in the business model. Um, and then there will be obviously some challenges to the 50th at the same time. Um, and, you know, from that perspective there's I will say this, the, the teamwork between us our partners and embryo is exceptional. Uh, we do get a sense that people are understanding the importance of this to small communities in the United States, the impact economically of what this does for our country. So,
Sabi Sith: Uh we're also really well positioned to Pivot and be patient with that conversation and continue to execute on some pretty strong um growth possibilities within our partner structure.
Speaker Change: That that's helpful. Sure thanks and and if I might on the uh Skywest Charter, just getting the uh authorized a commuter, authorization wondering, if there's any update that there but just somewhat related, you know, now that you have an essay administrator that's um 1 permanent and 2 comes from the industry, you know, are you expecting to see any kind of positive or negative changes uh, in in terms of how the FAA might kind of move forward with things?
Well, I think that to be candid to start with the the status of the 380. We're very optimistic about that. I know that, you know, with an Administration changed we would have hoped that this would have happened sooner. Um, we know that the Department of Transportation has had a very busy 6 months since they've changed the administration. We're, we're very excited and confident that Brian Boudreau will be an exceptional, uh, FAA administrator. Um, we get along very well with him. It's good to have someone that has, you know, the insights that we do? I don't know. That's going to necessarily help the dot because the FAA gave us authorization to fly it in this uh, profile years ago. So, from that perspective, I think that the dot has still got a lot of things that are trying to work through from a new administrative perspective and the plans that we have with that Charter operation, you know, it's a it it's some of it is a little bit of a supply chain.
Speaker Change: Um, you know, issue that we need to be patient with. So I you know, I think that we we should see something hopefully here relatively soon, but we're optimistic eventually it's going to, it's going to happen and maybe on a timeline that maybe, you know, beneficial to us as well. Still.
Appreciate it. Thanks.
Speaker Change: Your next question comes from the line of Tom Fitzgerald with TD Cohen. Please go ahead
Tom Fitzgerald: Thanks so much for the time. Um, I I don't know if you, you might just providing like a state of the union of the recovery and the prorate and small community market. Um, I, I maybe it's hard just with how many spokes there are out there, but I don't know if I had a high level of there. Any broad, um, green shoots that you're seeing or any gating factors that are maybe delaying the recovery in certain places or things that are accelerating in other places.
Speaker Change: well, I I I
Speaker Change: General statement and then let Wade who is, you know, more detailed than that. Give some more feedback, you know, in general, we've seen some commentary in the public as of late, about small communities and I can tell you fundamentally, I just do not know what they're talking about. Um,
Speaker Change: Ever since Co hit small midsize communities, have very, very strong demand for our product. Um, right now we are still, you know, trying to do some things with supply chain challenges to meet that demand. Um,
Speaker Change: And like I said, in my script, I think we've seen it stronger than it's ever been. Before things have happened over the Last 5 Years, where communities who haven't had are service are being creative to to try to pull us. Pull us into certain markets to develop their economies. The the fund, the foundational economics of of service in small communities is stronger than it ever has been and communities recognize that. And you know, we have a large Fleet with a lot of opportunity that we can meet that need. We just, we have to be patient as we, you know, go back and address that. Let me turn over to wait and see if Wade has anything else to add. The, the only thing I would add the demand is, is extremely strong. There's there's many, many, many, many communities that we're working with right now to restore and enhance their current air service. Um, Sky West has a very unique offering, you know, we offer very good service with a co-chair and so the communities, understand the value as chips said, the supply chain is probably constraining us.
Speaker Change: Um, more than the demand at this moment. And so as we continue to work through that, through the end of this year and the first part of next year, um, we'll continue to restore that service. And so, you know, we've seen very good year-over-year growth quarter over quarter growth and we will continue to see that for the next um foreseeable future.
Speaker Change: Okay. Um, got it. That's really helpful. And then just a um um if there is any capex that gets deferred or pushed pushed to the right, due to delays. How are you thinking about um, Capital allocation, if, if there's any periodically stuff freed up, would you focus on the balance sheet, or would you like to buy back stock? Thanks again for the time.
Speaker Change: yeah, look I I think from a capex standpoint um, you know, we've got a lot of flexibility obviously, you know, we have um,
Speaker Change: You know, we've obviously proven ourselves, you know, capable and willing to buy back our own stock where, you know, we've got plenty of liquidity, plenty of free cash flow to, you know, continue to invest in our Fleet and our Fleet flexibility. So, you know, I, I think we're in a, you know, we're in a really strong place right now with a lot of optionality.
Speaker Change: The only thing I would add to that as well. If, if some of our current 175s get deferred, we have so much Fleet flexibility that we can, um, defer, the 175s continue to fly crj700 in those scoped slots. The 700s that were slated to go a crj, 550s will probably be delayed, but we will continue to operate the crj 2000s. And so that's really the fleet flexibility that. We've all been talking about for a long, long time. And so, this is why sky West is so uniquely positioned to be able to handle some of these challenges that may come with the supply chain, over the next couple of years.
Dwayne Finnick: Your next question comes from the line of Dwayne Finnick worth with Epicor isi. Please go ahead.
Dwayne Finnick: Hey thanks. Um so just assuming the Tariff uh uncertainty gets resolved either, you know, tariffs get to a reasonable place or
Dwayne Finnick: you and your partners figure it out. What um,
Dwayne Finnick: What is your, what is your early view for 26?
Dwayne Finnick: Block our growth and is this quarter kind of showing, you know, the operating leverage. You'd expect in terms of earnings growth relative to to block our growth as we think about 2026.
Speaker Change: So all Dwayne, I'll I'll I'll tackle that first. This is weighed and then uh, Robin chip can chime in as well on this. Um, so for for 2026 in my prepared remarks, we talked about that we have 25, dual class, crj airplanes that are currently parked that we are bringing out and going to be able to reactivate. And so, there is the natural growth from those airplanes. We have a lot and that will add to 2026 production that we have. And so, we do have the flexibility that we're going. We're not giving a 2026 guidance at this point, but we do feel, um, optimistic, there are still opportunities out there for us.
Speaker Change: Okay, I guess would you would you take a shot at a growth rate? You know, again assuming that you resolve these tariffs, um, Mid single digits, you know, low double digits, or could you potentially have a you know, another year like this?
Rob: Yeah. Hi this is Rob so I you know, we're not we're not going to give a number on this call, we'll probably talk more about it next quarter but you know what we would say is you know as as way pointed out that our growth opportunity is still very much intact. You know across you know different scenarios, different, tariff scenarios whatever we we're in the unique situation and unique position that you know we've got the crj fleet that we can just fly a little longer than we may have planned on, you know, uh 6 months ago or a year ago. So I I think our our growth story is very much intact and we'll give a little more color on 26. Um, next quarter in all likelihood, okay? I appreciate appreciate the attempt. Um, and then maybe in the repair remarks, I might have missed it. If you said it kind of quickly was there, a gain this quarter. And and if there was what were the assets that you actually sold
Speaker Change: Old, if you're willing to uh, speak to that.
Yeah, sure we had about 10 million dollars or about 20 cents, you know, EPS that were related to a couple of items, you know, 1 was, um, just a mark-to-market on some of our uh, Equity Investments that we have. And then some of it was just the gain on sale of of assets, as part of our, you know, normal practice to sell, you know, opportunistically sell assets. So we had about 10 million dollars in that category or about 20 cents for the quarter.
Speaker Change: Okay, very good. Thank you.
Your final question comes from the line of Katherine O'Brien with Goldman Sachs. Please go ahead.
Speaker Change: Did.
Speaker Change: So KD I I would answer your question that, you know, I mean, we have been trying to position ourselves over the past several years to, you know, strengthen our balance sheet, de-risk, our balance sheet de-lever, our balance sheet so that the answer to your question can be sort of all of the above, you know, where we have the ability to continue to execute on our share repurchase program. Obviously, we're interested in, you know, our order book and our reflecting activities that we've been, you know, going after. And you know, we feel, you know, very good about the optionality that we've got as a result of our of our strong Capital position in liquidity,
Speaker Change: That's great. And maybe just for my second question. Um, in the release you mentioned that you were working with your partners on optimizing delivery timing. Are we meant to infer from that that partners are asking you to push out deliveries? Given the current demand backdrop? Or is that more reflective of your commentary around potential, uh, delays from terrorists on the un75.
Chip Child: Yeah, this is Chip. I I would say that there's a lot of cohesive philosophies between us and our partners and embryo about dealing with tariffs. So when we mentioned, the fact that you could defer some, um again I think we probably overcooked the term flexibility, so much on this call. Hopefully, you kind of get the message, but from our perspective, that that conversation with our partners is very very poignant and, and it's not like
Chip Child: Like it's really a a any type of dynamic conversation. We're all on the exact same page. Everybody knows what the game plan is. Our job right now is to make sure when it comes to Capital allocation, we put our, you know, we put our situation into a decade-long matrix that we've had for quite some time. Look, at opportunities. Maybe there's some opportunities with some of this Fleet outside the United States that we could lease. Maybe there's some other creative things that, uh, that we may be talking about next quarter. I can tell you that the, the dynamic um, philosophy of how we can deal with. This is is somewhat exciting. But at the end of the day, if this can be settled, uh, we have plenty of capital and plenty of capability to to have that be our top priority. Take these airplanes when this gets resolved, if not go to second third, fourth and fifth option, uh and utilize the capital, you know, appropriately in that case. So look, we're very comfortable in the position that we were in. It's taken us, many, many years,
Chip Child: To get to this position to deal with these challenges, but I think that's part of the unique thing that we have with solid performance, great culture. Um, fantastic relationships with our people, great Partnerships, great manufacturers. All those things are coming together, uh, for this issue and we're not panicked at all. Uh, we feel like we've got some really good options to to deal with this and deploy Capital appropriately.
Chip Child: That's great. Maybe just a very quick follow up to that. I'm going to squeeze in a third 1 if you let me. Um so just to be clear like the the the optimizing the delivery slots has nothing to do with demand for those aircraft that comment was entirely focused and related on tariffs. That was that that could not be overestimated. The, the demand is not our problem for sure. I mean, demand for this stuff today like we've said in the script, it's it's as strong as we've ever seen it. Um, it just takes a little bit of a calculus to meet that demand today, and we've got a lot of good options to do so.
Chip Child: great, and maybe just on the
Chip Child: Of dual class crj aircraft that you're reactivating.
Chip Child: Is that because those got signed up for new flying agreements or they were already under agreements but you couldn't fly them before because, you know, mro, wait times or Pilots or something like that.
Chip Child: Yeah so it's okay. This is Wade. So the 25. It's a combination of that. We have purchased some that we that we parked for a while. There are also some that during the the co and pilot issues that we just parked and these are new flying Arrangements that we have signed up over the last 6 months that we are um restoring all of those airplanes and bringing them back. And so that's that's what's really creating all of that.
Chip Child: Great. Thanks for the extra time, guys.
Chip Child: That will conclude our question and and answer session. And I will now turn the call back over to chip Childs for closing remarks.
Chip Childs: Thank you Tiffany. Thank you everyone for your interest uh, in Sky West this quarter. We really appreciate uh, you paying attention to what we're trying to do as a company. We feel like we're in a fantastic position. Like I said, great people that we work with fantastic Partners, uh, great vendors, you know, a lot of challenges, um, demand is not 1 of the challenges meeting that demand uh, is 1 of the things that we get very very excited about particularly with the opportunities that we're uh considering and we look forward to updating you next quarter. Thank you.
Chip Childs: Thank you all for joining you may now. Disconnect
Chip Childs: please wait the conference will begin shortly.