SkyWest Jumps 11% in Past Month. Can SKYW Keep the Momentum Going?

SkyWest's 11% Rally Has Earnings Support

Second-quarter 2026 flying-agreement revenues increased 7.8% year over year to $1.06 billion. Total block hours rose 5.4% to 396,696 as higher fleet utilization and partner demand lifted production.

The quarter did not clear every earnings hurdle. Earnings of $2.54 per share missed the Zacks Consensus Estimate of $2.70, while revenues of $1.10 billion also fell short of the consensus mark. Even so, the shares gained 7.7% from the July 23 earnings release through Aug. 11.

SKYW's Contract Revenue Keeps Expanding

SkyWest ended June with $214 million of cumulative deferred revenue to be recognized in future periods. That balance reflects fixed cash payments received under capacity purchase agreements ahead of the related revenue recognition.

Management expects full-year 2026 block-hour production to increase about 5% from 2025. The outlook rests on continued demand from major airline partners, stronger prorate activity and improving utilization across the fleet.

SkyWest's Fleet Renewal Adds Growth Capacity

SkyWest secured a multiyear agreement to purchase and operate 11 new E175 aircraft for American Airlines Group Inc. AAL, with four deliveries scheduled for 2026 and seven for 2027. American uses third-party regional carriers, including SkyWest, to support its American Eagle network.

United Airlines Holdings, Inc. UAL is another key partner and uses regional carriers, including SkyWest, for United Express service. SkyWest expects seven additional E175 deliveries for United in the second half of 2026 and plans to operate 300 E175s by the end of 2027.

SKYW Still Faces Cost and Maintenance Pressure

Second-quarter operating expenses increased 9% year over year to $947 million, outpacing the 7% rise in revenues. Salaries, wages and benefits increased 9.4%, while aircraft fuel expense more than doubled as higher prices and added prorated production raised costs.

Execution risk remains tied to maintenance. SkyWest continues to face labor and parts shortages across its third-party maintenance, repair and overhaul network. Those constraints can slow the return of aircraft from heavy maintenance and reduce flexibility as production expands.

SkyWest's Signals Favor Balance Over Chasing

The operating setup supports continued production growth, but the stock's recent advance does not remove the earnings and execution risks. Higher costs, fuel sensitivity and maintenance constraints leave less room for operational setbacks as the fleet program expands.

SKYW currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. It has a solid Style score with a Value Score of A, Growth Score of C, Momentum Score of B and VGM Score of A. The favorable value and momentum characteristics are constructive, while the Growth Score is less supportive. With a Zacks Rank #3, the signals favor a measured stance rather than chasing the recent rally.

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This article originally published on Zacks Investment Research (zacks.com).

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