SKYWEST INC

Previous wording

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 six-month periods ended June 30, 2025 and 2024. Also discussed is our financial condition as of June 30, 2025, and December 31, 2024. You should read this discussion in conjunction with our condensed consolidated financial statements for the three and six months ended June 30, 2025, 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.

Current wording

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, 2025 and 2024. Also discussed is our financial condition as of September 30, 2025, and December 31, 2024. You should read this discussion in conjunction with our condensed consolidated financial statements for the three and nine months ended September 30, 2025, 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.

Previous wording

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, the timing of scheduled aircraft deliveries, fleet expansion and transition and anticipated fleet size for SkyWest in upcoming periods, expected production levels in future periods and associated staffing challenges, 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”) to optimize the delivery of aircraft under previously announced agreements and quickly placing new aircraft deliveries into service, the expected terms, timing and benefits related to SkyWest’s leasing, strategic partnership and joint venture transactions, SkyWest’s provision of assets to Corporate Flight Management, Inc. d/b/a Contour Airlines (“Contour”), scheduled flight service to smaller communities, 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 …

Excerpt shortened here; the source contains the full paragraph.

Current wording

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, the timing of scheduled aircraft deliveries, fleet expansion and transition and anticipated fleet size for SkyWest in upcoming periods, expected production levels in future periods and associated staffing challenges, 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 quickly placing new aircraft deliveries into service, the expected terms, timing and benefits related to SkyWest’s leasing, strategic partnership and joint venture transactions, SkyWest’s provision of assets to Corporate Flight Management, Inc. d/b/a Contour Airlines (“Contour”), scheduled flight service to smaller communities, 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 an…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

internationally and the cost of service providers located outside of the United States; 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, 2024, 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.

Current wording

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 potential impact of a U.S. government shut-down on air traffic controller staffing and federal Essential Air Service subsidies; 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, 2024, 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.

Previous wording

We have the largest regional airline operation in the United States through our operating subsidiary SkyWest Airlines, Inc. (“SkyWest Airlines”). As of June 30, 2025, we offered scheduled passenger and air freight service with approximately 2,530 total daily departures to destinations in the United States, Canada and Mexico. Our fleet of Embraer E175 regional jet aircraft (“E175”), 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. During 2022, we formed SkyWest Charter, LLC (“SWC”), which offers on-demand charter services using CRJ200 aircraft in a 30-seat configuration. As of June 30, 2025, we had 632 total aircraft in our fleet, including 502 aircraft in scheduled service or under contract pursuant to our code-share agreements, summarized as follows:

Current wording

We have the largest regional airline operation in the United States through our operating subsidiary SkyWest Airlines, Inc. (“SkyWest Airlines”). As of September 30, 2025, we offered scheduled passenger and air freight service with approximately 2,400 total daily departures to destinations in the United States, Canada and Mexico. Our fleet of Embraer E175 regional jet aircraft (“E175”), 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. During 2022, we formed SkyWest Charter, LLC (“SWC”), which offers on-demand charter services using CRJ200 aircraft in a 30-seat configuration. As of September 30, 2025, we had 634 total aircraft in our fleet, including 498 aircraft in scheduled service or under contract pursuant to our code-share agreements, summarized as follows:

Previous wording

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 “capacity purchase agreement,” or we receive a percentage of applicable passenger ticket revenues on the designated flights we operate, referred to as “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 June 30, 2024, to June 30, 2025, we made changes to our fleet, including the addition of seven new E175 aircraft and 10 partner-financed E175 aircraft.

Current wording

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 “capacity purchase agreement,” or we receive a percentage of applicable passenger ticket revenues on the designated flights we operate, referred to as “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, 2024, to September 30, 2025, we made changes to our fleet, including the addition of six new E175 aircraft and one partner-financed E175 aircraft.

Previous wording

We anticipate our fleet will continue to evolve, as we are scheduled to add a total of 13 new E175 aircraft with United from 2025 to 2026, 16 new E175 aircraft with Delta from 2027 to 2028 (which are expected to replace 11 CRJ900s and five CRJ700s SkyWest is currently flying under contract with Delta) and one new E175 aircraft with Alaska in 2025. We also have multiple agreements with United to place 32 used CRJ550 aircraft into service throughout 2025 and 2026. Timing of placing these additional aircraft into service, including delivery timing on acquired aircraft, may be subject to change as we are coordinating with our major airline partners in response to labor availability or other factors. 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 CRJ aircraft” to capacity purchase

Current wording

We anticipate our fleet will continue to evolve, as we are scheduled to add a total of 13 new E175 aircraft with United between the fourth quarter of 2025 and the end of 2026, 16 new E175 aircraft with Delta from 2027 to 2028 (which are expected to replace 11 CRJ900s and five CRJ700s SkyWest is currently flying under contract with Delta) and one new E175 aircraft with Alaska in 2026. We also have multiple agreements with United to place 29 used CRJ550 aircraft into service between the fourth quarter of 2025 and the end of 2026. Timing of placing these additional aircraft into service, including delivery timing on acquired aircraft, may be subject to change as we are coordinating with our

Previous wording

As of June 30, 2025, approximately 45.6% of our aircraft in scheduled service or under contract were operated for United, approximately 28.3% were operated for Delta, approximately 17.7% were operated for American and approximately 8.4% were operated for Alaska.

Current wording

As of September 30, 2025, approximately 44.8% of our aircraft in scheduled service or under contract were operated for United, approximately 28.3% were operated for Delta, approximately 18.5% were operated for American and approximately 8.4% were operated for Alaska.

Previous wording

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 capacity purchase agreements and prorate agreements. For the six months ended June 30, 2025, our capacity purchase revenue represented approximately 85.5% of our total flying agreements revenue and our prorate and SWC revenue, combined, represented approximately 14.5% 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.

Current wording

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 capacity purchase agreements and prorate agreements. For the nine months ended September 30, 2025, our capacity purchase revenue represented approximately 84.8% of our total flying agreements revenue and our prorate and SWC revenue, combined, represented approximately 15.2% 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.

Previous wording

We had total operating revenues of $1.0 billion for the three months ended June 30, 2025, a 19.4% increase compared to total operating revenues of $867.1 million for the three months ended June 30, 2024. We had net income of $120.3 million, or $2.91 per diluted share, for the three months ended June 30, 2025, compared to net income of $75.6 million, or $1.82 per diluted share, for the three months ended June 30, 2024. The significant items affecting our revenue and operating expenses during the three months ended June 30, 2025, are outlined below:

Current wording

We had total operating revenues of $1.1 billion for the three months ended September 30, 2025, a 15.0% increase compared to total operating revenues of $912.8 million for the three months ended September 30, 2024. We had net income of $116.4 million, or $2.81 per diluted share, for the three months ended September 30, 2025, compared to net income of $89.7 million, or $2.16 per diluted share, for the three months ended September 30, 2024. The significant items affecting our revenue and operating expenses during the three months ended September 30, 2025, are outlined below:

Previous wording

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 475 as of June 30, 2024 to 502 as of June 30, 2025, or by 5.7%; and the number of block hours increased from 317,462 for the three months ended June 30, 2024 to 376,269 for the three months ended June 30, 2025, or by 18.5%, due to an increase in the number of aircraft operating under our capacity purchase agreements and an increase in thescheduled daily utilization of our aircraft driven by an increase in the number of available captains. As of the date of this Quarterly Report on Form 10-Q, the Company believes its scheduled aircraft utilization is no longer constrained by the number of available captains.

Current wording

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 484 as of September 30, 2024 to 498 as of September 30, 2025, or by 2.9%; and the number of block hours increased from 334,459 for the three months ended September 30, 2024 to 384,247 for the three months ended September 30, 2025, or by 14.9%, due to an increase in the number of aircraft operating under our capacity purchase agreements and an increase in thescheduled daily utilization of our aircraft driven by an increase in the number of available captains. As of the date of this Quarterly Report on Form 10-Q, the Company believes its scheduled aircraft utilization is no longer constrained by the number of available captains.

Previous wording

Our capacity purchase revenue increased $111.0 million, or 15.2%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily as a result of an increase in completed block hours for the comparable periods. As a result of a higher number of passengers carried on our prorate routes and an increase in the number of prorate and charter flights operated year-over-year, our prorate and SWC revenue increased $38.4 million, or 35.8%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

Current wording

Our capacity purchase revenue increased $83.5 million, or 11.0%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily as a result of an increase in completed block hours for the comparable periods. As a result of a higher number of passengers carried on our prorate routes and an increase in the number of prorate and charter flights operated year-over-year, our prorate and SWC revenue increased $44.3 million, or 36.1%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

Previous wording

Our total operating expenses increased $117.6 million, or 15.7%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. 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 for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. Departures increased from 189,325 for the three months ended June 30, 2024 to 222,874 for the three months ended June 30, 2025, or by 17.7%, and our total block hours increased 18.5% for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. Additional details regarding the increase in our operating expenses are described in the section of this Report entitled “Results of Operations.”

Current wording

three months ended September 30, 2025, compared to the three months ended September 30, 2024. Departures increased from 201,397 for the three months ended September 30, 2024 to 226,305 for the three months ended September 30, 2025, or by 12.4%, and our total block hours increased 14.9% for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. Additional details regarding the increase in our operating expenses are described in the section of this Report entitled “Results of Operations.”

Previous wording

Our significant accounting policies are summarized in Note 1 to our consolidated financial statements for the year ended December 31, 2024, 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, 2024. 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. There have been no significant changes in our critical accounting estimates during the six months ended June 30, 2025.

Current wording

Our significant accounting policies are summarized in Note 1 to our consolidated financial statements for the year ended December 31, 2024, 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, 2024. 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. There have been no significant changes in our critical accounting estimates during the nine months ended September 30, 2025.

Previous wording

The following table sets forth our major operational statistics and the associated percentage changes for the periods identified below. The increase in block hours, departures and passengers carried during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was primarily dueto additional aircraft operating under our capacity purchase agreements andan increase in the number of available captains during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, which allowed for a higher scheduled utilization of our aircraft.

Current wording

The following table sets forth our major operational statistics and the associated percentage changes for the periods identified below. The increase in block hours, departures and passengers carried during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, was primarily dueto additional aircraft operating under our capacity purchase agreements andan increase in the number of block hours incurred per aircraft as the number of available captains did not limit our flight schedules during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, which allowed for a higher scheduled utilization of our aircraft.

Previous wording

The increase in “Capacity purchase agreements flight operations revenue” of $182.8 million, or 16.0%, was primarily due to a 20.0% increase in block hour production and an increase in the recognition of revenue that was previously deferred related to fixed monthly payments for flight operations received under our capacity purchase agreements for the six months ended June 30, 2025, compared to the six months ended June 30, 2024. Under our capacity purchase agreements, we are paid a fixed amount per month per aircraft over the contract term. We recognize the total projected fixed monthly payments per aircraft as revenue proportionately to the number of block hours we complete for each reporting period, relative to the estimated number of block hours we anticipate completing over the remaining contract term. Under our capacity purchase agreements, the performance obligation of each completed flight is measured in block hours incurred for each completed flight. Based on the number of completed block hours during the six months ended June 30, 2025, we recognized $27.0 million of previously deferred revenue, net of unbilled revenue, related to the non-lease fixed monthly payments we received associated with our flight operations revenues. For the six months ended June 30, 2024, we recognized $5.4 million of previously deferred revenue, net of unbilled revenue, related to non-lease fixed monthly payments received associated with our flight operations revenues. The timing of our revenue

Current wording

The increase in “Capacity purchase agreements flight operations revenue” of $48.2 million, or 7.7%, was primarily due to an increase in block hour production from aircraft under our capacity purchase agreements, offset by a decrease in the recognition of revenue that was previously deferred related to fixed monthly payments for flight operations received under our capacity purchase agreements for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. Under our capacity purchase agreements, we are paid a fixed amount per month per aircraft over the contract term. We recognize the total projected fixed monthly payments per aircraft as revenue proportionately to the number of block hours we complete for each reporting period, relative to the estimated number of block hours we anticipate completing over the remaining contract term. Under our capacity purchase agreements, the performance obligation of each completed flight is measured in block hours incurred for each completed flight. Based on the number of completed block hours during the three months ended September 30, 2025, we recognized $11.3 million of previously deferred revenue, net of unbilled revenue, related to the non-lease fixed monthly payments we received associated with our flight operations revenues. For the three months ended September 30, 2024, we recognized $18.2 million of previously deferred revenue, net of unbilled revenue, related to non-lease fixed monthly payments received associated with our flight operations revenues. The timing of our revenue recognition related to the fixed payments associated with our flight operations will be adjusted over the remaining contract term for each capacity

Previous wording

recognition related to the fixed payments associated with our flight operations will be adjusted over the remaining contract term for each capacity purchase agreement based on the number of block hours we complete each reporting period relative to the number of block hours we anticipate completing over the remaining contract term of each capacity purchase agreement.

Current wording

purchase agreement based on the number of block hours we complete each reporting period relative to the number of block hours we anticipate completing over the remaining contract term of each capacity purchase agreement.

Previous wording

The increase in“Capacity purchase agreements aircraft lease revenue” of $23.1 million, or 17.0%, was primarily due to the addition of aircraft under our capacity purchase agreements from June 30, 2024 and a contract extension that reallocated certain fixed monthly lease revenue from flight operations revenue under one of our capacity purchase agreements in 2025 based on relative standalone selling prices of the lease and non-lease components. Under our capacity purchase agreements, a portion of the consideration we are paid is designed as reimbursement for certain aircraft ownership costs and is considered lease revenue, including fixed monthly payments and variable payments. We recognize the fixed monthly lease payments as lease revenue using the straight-line basis over the capacity purchase agreement term and variable lease payments are recognized in the period when the block hours are completed. Additionally, werecognized $5.6 million of previously deferred lease revenue, net of unbilled revenue, during the three months ended June 30, 2025, using the straight-line basis for fixed monthly lease payments, compared to recognizing $0.5 million of previously deferred revenue during the three months ended June 30, 2024.

Current wording

The increase in“Capacity purchase agreements aircraft lease revenue” of $35.2 million, or 25.8%, was primarily due to the addition of aircraft under our capacity purchase agreements from September 30, 2024 and a contract extension that reallocated certain fixed monthly lease revenue from flight operations revenue under one of our capacity purchase agreements in 2025 based on relative standalone selling prices of the lease and non-lease components. Under our capacity purchase agreements, a portion of the consideration we are paid is designed as reimbursement for certain aircraft ownership costs and is considered lease revenue, including fixed monthly payments and variable payments. We recognize the fixed monthly lease payments as lease revenue using the straight-line basis over the capacity purchase agreement term and variable lease payments are recognized in the period when the block hours are completed. Additionally, werecognized $5.8 million of previously deferred lease revenue, net of unbilled revenue, during the three months ended September 30, 2025, using the straight-line basis for fixed monthly lease payments, compared to recognizing $0.5 million of previously deferred revenue, net of unbilled revenue, during the three months ended September 30, 2024.

Previous wording

The deferred revenue balance applicable to each contract will be recorded as revenue over the term of each respective contract. For clarity, under our “Capacity purchase agreements flight operations revenue” and “Capacity purchase agreements aircraft lease revenue” combined, we recognized $23.0 million of previously deferred revenue, net of unbilled revenue, during the three months ended June 30, 2025, compared to recognizing $5.5 million of deferred revenue, net of unbilled revenue, during the three months ended June 30, 2024. Our total deferred revenue balance associated with our “Capacity purchase agreements flight operations revenue” and our “Capacity purchase agreements aircraft lease revenue,” net of unbilled revenue, was $286.5 million as of June 30, 2025, compared to total deferred revenue, net of unbilled revenue, of $322.4 million as of December 31, 2024.

Current wording

The deferred revenue balance applicable to each contract will be recorded as revenue over the term of each respective contract. For clarity, under our “Capacity purchase agreements flight operations revenue” and “Capacity purchase agreements aircraft lease revenue” combined, we recognized $17.1 million of previously deferred revenue, net of unbilled revenue, during the three months ended September 30, 2025, compared to recognizing $18.7 million of deferred revenue, net of unbilled revenue, during the three months ended September 30, 2024. Our total deferred revenue balance associated with our “Capacity purchase agreements flight operations revenue” and our “Capacity purchase agreements aircraft lease revenue,” net of unbilled revenue, was $269.4 million as of September 30, 2025, compared to total deferred revenue, net of unbilled revenue, of $322.4 million as of December 31, 2024.

Previous wording

The increase in prorate agreements and SWC revenue of $68.1 million, or 32.7%, was primarily due to an increase in prorate passengers and passenger revenue we received on routes we operated under our prorate agreements driven by an increase in available captains duringthe six months ended June 30, 2025, compared to the six months ended June 30, 2024. Additionally, a portion of the increase was attributed to an increase in SWC revenue during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Current wording

The increase in prorate agreements and SWC revenue of $44.3 million, or 36.1%, was primarily due to an increase in prorate passengers and passenger revenue we received on routes we operated under our prorate agreements duringthe three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase in prorate passengers as compared to the prior year period was primarily driven by an increase in departures due to the improvement in the number of available captains during the three months ended September 30, 2025.

Previous wording

The increase in lease, airport services and other revenues of $18.8 million, or 64.8%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was primarily due to an increase in revenue from maintenance services provided to third parties.

Current wording

The increase in lease, airport services and other revenues of $9.5 million, or 32.3%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, was primarily due to an increase in revenue from maintenance services provided to third parties.

Previous wording

Salaries, wages and benefits. The $35.2 million, or 9.9%, increase in salaries, wages and benefits was primarily due to an increase in direct labor costs that resulted from the higher number of flights we operated during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Current wording

Salaries, wages and benefits. The $14.2 million, or 3.8%, increase in salaries, wages and benefits was primarily due to an increase in direct labor costs that resulted from the higher number of flights we operated, partially offset by operating efficiencies from higher utilization of our aircraft, during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Previous wording

Aircraft maintenance, materials and repairs. The $55.6 million, or 30.3%, increase in aircraft maintenance expense was primarily due to incremental maintenance costs incurred on our CRJ fleet and an increase in our flight volume, which increased our maintenance activity and related expenses, including maintenance services provided to third parties, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Current wording

Aircraft maintenance, materials and repairs. The $66.3 million, or 36.5%, increase in aircraft maintenance expense was primarily due to incremental maintenance costs incurred on our CRJ fleet, an increase in our flight volume, which increased our maintenance activity and related expenses, and maintenance services provided to third parties for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Previous wording

Depreciation and amortization. The $6.7 million, or 6.9%, decrease in depreciation and amortization expense was primarily a result of extending the estimated useful lives on our CRJ700/CRJ550 fleet by an average of three years and revising the residual values of the assets accordingly during the fourth quarter of 2024, offset by an increase in depreciation expense related to the acquisition of seven new E175 aircraft and spare engines since June 30, 2024.

Current wording

Depreciation and amortization. The $4.2 million, or 4.3%, decrease in depreciation and amortization expense was primarily a result of extending the estimated useful lives on our CRJ700/CRJ550 fleet by an average of three years and revising the residual values of the assets accordingly during the fourth quarter of 2024, offset by an increase in depreciation expense related to the acquisition of six new E175 aircraft and spare engines since September 30, 2024.

Previous wording

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. 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. The $16.5 million, or 43.0%, increase in airport-related expenses for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily due to an increase in subcontracted airport services, station rents, weather-related aircraft deicing costs and landing fees as a result of an increase in the number of flights we operated under our prorate agreements.

Current wording

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 $9.2 million, or 40.8%, increase in airport-related expenses for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, 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.

Previous wording

*Aircraft fuel.*The $6.1 million, or 28.7%, increase in fuel cost was primarily due to an increase in the number of flights we operated under our prorate agreements and under SWC and the corresponding increase in gallons of fuel we purchased, offset by a decrease in our average fuel cost per gallon from $3.32 for the three months ended June 30, 2024 to $2.88 for the three months ended June 30, 2025. We purchase and incur expense for all fuel on flights operated under our prorate agreements and SWC. 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 SWC, for the periods indicated:

Current wording

*Aircraft fuel.*The $11.5 million, or 50.6%, increase in fuel cost was primarily due to an increase in the number of flights we operated under our prorate agreements and under SWC and the corresponding increase in gallons of fuel we purchased, offset by a decrease in our average fuel cost per gallon from $3.10 for the three months ended September 30, 2024 to $3.04 for the three months ended September 30, 2025. We purchase and incur expense for all fuel on flights operated under our prorate agreements and SWC. 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 SWC, for the periods indicated:

Previous wording

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 $17.7 million, or 24.1%, increase in other operating expenses was primarily related to an increase in our credit loss reserve as a result of our assessment of higher credit risk of certain outstanding receivables as of June 30, 2025 and an increase in 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 June 30, 2025, compared to the three months ended June 30, 2024.

Current wording

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 $2.5 million, or 3.2%, decrease in other operating expenses was primarily related to a decrease in simulator and other training costs attributed to a reduction in newly hired pilots, partially offset by an increase in 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, 2025, compared to the three months ended September 30, 2024.

Previous wording

Interest Expense. Interest expense decreased $2.4 million, or 8.3%, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. The decrease in interest expense was primarily related to a decrease in outstanding debt. At June 30, 2025 we had $2.5 billion of outstanding debt, compared to $2.8 billion at June 30, 2024. Our average effective interest rate for the three months ended June 30, 2025 and 2024, was 4.3% and 4.1%, respectively.

Current wording

Interest Expense. Interest expense decreased $2.2 million, or 7.9%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The decrease in interest expense was primarily related to a decrease in outstanding debt. At September 30, 2025 we had $2.4 billion of outstanding debt, compared to $2.7 billion at September 30, 2024. Our average effective interest rate for the three months ended September 30, 2025 and 2024, was 4.3% and 4.1%, respectively.

Previous wording

Interest income. Interest income decreased $0.9 million, from $12.0 million for the three months ended June 30, 2024, to $11.1 million for the three months ended June 30, 2025. The decrease in interest income was primarily related to a decrease in our marketable securities balance from $692.5 million at June 30, 2024, to $678.7 million at June 30, 2025.

Current wording

Interest income. Interest income decreased $1.9 million, from $12.5 million for the three months ended September 30, 2024, to $10.6 million for the three months ended September 30, 2025. The decrease in interest income was primarily related to a decrease in interest rates on our marketable securities from September 30, 2024 to September 30, 2025.

Previous wording

Other income (expense), net. Other income, net of expenses increased $9.1 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024. 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, net of expenses was primarily a result of an increase in the fair value of our investments in other companies and gains on the sale of assets for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Current wording

Other income (expense), net. Other income, net of expenses decreased $2.0 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. 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, net of expenses was primarily a result of a decrease in the fair value of our investments in other companies, offset by gains on the sale of assets for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Previous wording

*Provision for income taxes.*For the three months ended June 30, 2025 and 2024, our effective income tax rates were 26.3% and 26.0%, respectively, which included the statutory federal income tax rate of 21% and other reconciling income tax items, including state income taxes, and the impact of non-deductible expenses. The effective tax rate for the comparable periods did not significantly change.

Current wording

*Provision for income taxes.*For the three months ended September 30, 2025 and 2024, our effective income tax rates were 26.0% and 22.8%, respectively, which included the statutory federal income tax rate of 21% and other reconciling income tax items, including state income taxes, and the impact of non-deductible expenses. The increase in the effective tax rate was primarily related to a discrete tax benefit from the release of a previously recorded uncertain tax position liability and a discrete tax benefit from a release of the valuation allowance on state net operating losses anticipated to be utilized prior to expiration for the three months ended September 30, 2024, compared to no benefits for such items for the three months ended September 30, 2025.

Previous wording

Net income. Primarily due to the factors described above, we generated net income of $120.3 million, or $2.91 per diluted share, for the three months ended June 30, 2025, compared to net income of $75.6 million, or $1.82 per diluted share, for the three months ended June 30, 2024.

Current wording

Net income. Primarily due to the factors described above, we generated net income of $116.4 million, or $2.81 per diluted share, for the three months ended September 30, 2025, compared to net income of $89.7 million, or $2.16 per diluted share, for the three months ended September 30, 2024.

Previous wording

The following table sets forth our major operational statistics and the associated percentage changes for the periods identified below. The increase in block hours, departures and passengers carried during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily dueto additional aircraft operating under

Current wording

The following table sets forth our major operational statistics and the associated percentage changes for the periods identified below. The increase in block hours, departures and passengers carried during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, was primarily dueto additional aircraft operating under our capacity purchase agreements andan increase in the number of block hours incurred per aircraft as the number of available captains did not limit our flight schedules during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, which allowed for a higher scheduled utilization of our aircraft.

Previous wording

The increase in “Capacity purchase agreements flight operations revenue” of $87.8 million, or 14.8%, was primarily due to an 18.5% increase in block hour production and an increase in the recognition of revenue that was previously deferred related to fixed monthly payments for flight operations received under our capacity purchase agreements for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. Under our capacity purchase agreements, we are paid a fixed amount per month per aircraft over the contract term. We recognize the total projected fixed monthly payments per aircraft as revenue proportionately to the number of block hours we complete for each reporting period, relative to the estimated number of block hours we anticipate completing over the remaining contract term. Under our capacity purchase agreements, the performance obligation of each completed flight is measured in block hours incurred for each completed flight. Based on the number of completed block hours during the three months ended June 30, 2025, we recognized $17.4 million of previously deferred revenue, net of unbilled revenue, related to the non-lease fixed monthly payments we received associated with our flight operations revenues. For the three months ended June 30, 2024, we recognized $5.0 million of previously deferred revenue, net of unbilled revenue, related to non-lease fixed monthly payments received associated with our flight operations revenues. The timing of our revenue recognition related to the fixed payments associated with our flight operations will be adjusted over the remaining contract term for each capacity purchase agreement based on the number of block hours we complete each reporting period relative to the number of block hours we anticipate completing over the remaining contract term of each capacity purchase agreement.

Current wording

The increase in “Capacity purchase agreements flight operations revenue” of $231.0 million, or 13.1%, was primarily due to an increase in block hour production from aircraft under our capacity purchase agreements and an increase in the recognition of revenue that was previously deferred related to fixed monthly payments for flight operations received under our capacity purchase agreements for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. Under our capacity purchase agreements, we are paid a fixed amount per month per aircraft over the contract term. We recognize the total projected fixed monthly payments per aircraft as revenue proportionately to the number of block hours we complete for each reporting period, relative to the estimated number of block hours we anticipate completing over the remaining contract term. Under our capacity purchase agreements, the performance obligation of each completed flight is measured in block hours incurred for each completed flight. Based on the number of completed block hours during the nine months ended September 30, 2025, we recognized $38.3 million of previously deferred revenue, net of unbilled revenue, related to the non-lease fixed monthly payments we received associated with our flight operations revenues. For the nine months ended September 30, 2024, we recognized $23.6 million of previously deferred revenue, net of unbilled revenue, related to non-lease fixed monthly payments received associated with our flight operations revenues. The timing of our revenue recognition related to the fixed payments associated with our flight operations will be adjusted over the remaining contract term for each capacity purchase agreement based on the number of block hours we complete each reporting period relative to the number of block hours we anticipate completing over the remaining contract term of each capacity purchase agreement.

Previous wording

The increase in“Capacity purchase agreements aircraft lease revenue” of $36.1 million, or 13.4%, was primarily due to the addition of aircraft under our capacity purchase agreements from June 30, 2024 and a contract extension that reallocated certain fixed monthly lease revenue from flight operations revenue based on relative standalone selling prices of the lease and non-lease components under one of our capacity purchase agreements during the six months ended June 30, 2025. Under our capacity purchase agreements, a portion of the consideration we are paid is designed as reimbursement for certain aircraft ownership costs and is considered lease revenue, including fixed monthly payments and variable payments. We recognize the fixed monthly lease payments as lease revenue using the straight-line basis over the capacity purchase agreement term and variable lease payments are recognized in the period when the block hours are completed. Additionally, werecognized $8.9 million of previously deferred lease revenue, net of unbilled revenue, during the six months ended June 30, 2025, using the straight-line basis for fixed monthly lease payments, compared to recognizing $1.0 million of previously deferred revenue during the six months ended June 30, 2024.

Current wording

The increase in“Capacity purchase agreements aircraft lease revenue” of $71.4 million, or 17.6%, was primarily due to the addition of aircraft under our capacity purchase agreements from September 30, 2024 and a contract extension that reallocated certain fixed monthly lease revenue from flight operations revenue based on relative standalone selling prices of the lease and non-lease components under one of our capacity purchase agreements during the nine months ended September 30, 2025. Under our capacity purchase agreements, a portion of the consideration we are paid is designed as reimbursement for certain aircraft ownership costs and is considered lease revenue, including fixed monthly payments and variable payments. We recognize the fixed monthly lease payments as lease revenue using the straight-line basis over the capacity purchase agreement term and variable lease payments are recognized in the period when the block hours are completed. Additionally, werecognized $14.7 million of previously deferred lease revenue, net of unbilled revenue, during the nine months ended September 30, 2025, using the straight-line basis for fixed monthly lease payments, compared to recognizing $1.5 million of previously deferred revenue, net of unbilled revenue, during the nine months ended September 30, 2024.

Previous wording

The deferred revenue balance applicable to each contract will be recorded as revenue over the term of each respective contract. For clarity, under our “Capacity purchase agreements flight operations revenue” and “Capacity purchase agreements aircraft lease revenue” combined, we recognized $35.9 million of previously deferred revenue, net of unbilled revenue, during the six months ended June 30, 2025, compared to recognizing $6.4 million of deferred revenue, net of unbilled revenue, during the six months ended June 30, 2024. Our total deferred revenue balance associated with our “Capacity purchase agreements flight operations revenue” and our “Capacity purchase agreements aircraft lease revenue,” net of unbilled revenue, was $286.5 million as of June 30, 2025, compared to total deferred revenue, net of unbilled revenue, of $322.4 million as of December 31, 2024.

Current wording

The deferred revenue balance applicable to each contract will be recorded as revenue over the term of each respective contract. For clarity, under our “Capacity purchase agreements flight operations revenue” and “Capacity purchase agreements aircraft lease revenue” combined, we recognized $53.0 million of previously deferred revenue, net of unbilled revenue, during the nine months ended September 30, 2025, compared to recognizing $25.1 million of deferred revenue, net of unbilled revenue, during the nine months ended September 30, 2024.

Previous wording

The increase in prorate agreements and SWC revenue of $38.4 million, or 35.8%, was primarily due to an increase in prorate passengers and passenger revenue we received on routes we operated under our prorate agreements duringthe three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily driven by an increase in available captains.

Current wording

The increase in prorate agreements and SWC revenue of $112.4 million, or 34.0%, was primarily due to an increase in prorate departures, passengers and passenger revenue we received on routes we operated under our prorate agreements driven by an improvement in the number of available captains duringthe nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. Additionally, a portion of the increase was attributed to

Previous wording

The increase in lease, airport services and other revenues of $25.9 million, or 47.7%, was primarily due to an increase in maintenance services provided to third parties and an increase in the number of leased assets and lease rates for leases to third parties during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Current wording

The increase in lease, airport services and other revenues of $35.4 million, or 42.3%, was primarily due to an increase in maintenance services provided to third parties, an increase in the number of leased assets, and an increase in lease rates during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Previous wording

Salaries, wages and benefits. The $61.6 million, or 8.7%, increase in salaries, wages and benefits was primarily due to an increase in direct labor costs that resulted from the higher number of flights we operated during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Current wording

Salaries, wages and benefits. The $75.7 million, or 7.0%, increase in salaries, wages and benefits was primarily due to an increase in direct labor costs that resulted from the higher number of flights we operated, partially offset by operating efficiencies from higher utilization of our aircraft during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Previous wording

Aircraft maintenance, materials and repairs. The $119.3 million, or 36.3%, increase in aircraft maintenance expense was primarily due incremental maintenance costs incurred on our CRJ fleet and an increase in our flight volume, which increased our maintenance activity and related expenses, and an increase in maintenance service activities provided to third parties for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Current wording

Aircraft maintenance, materials and repairs. The $185.6 million, or 36.4%, increase in aircraft maintenance expense was primarily due incremental maintenance costs incurred on our CRJ fleet, an increase in our flight volume, which increased our maintenance activity and related expenses, and an increase in maintenance service activities provided to third parties for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Previous wording

Depreciation and amortization. The $13.1 million, or 6.8%, decrease in depreciation and amortization expense was primarily a result of extending the estimated useful lives on our CRJ700/CRJ550 fleet by an average of three years and revising the residual values of the assets accordingly during the fourth quarter of 2024, offset by an increase in depreciation expense related to the acquisition of seven new E175 aircraft and spare engines since June 30, 2024.

Current wording

Depreciation and amortization. The $17.3 million, or 6.0%, decrease in depreciation and amortization expense was primarily a result of extending the estimated useful lives on our CRJ700/CRJ550 fleet by an average of three years and revising the residual values of the assets accordingly during the fourth quarter of 2024, offset by an increase in depreciation expense related to the acquisition of six new E175 aircraft and spare engines since September 30, 2024.