Nature of Operations and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2025

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations and Summary of Significant Accounting Policies

(1) Nature of Operations and Summary of Significant Accounting Policies

SkyWest, Inc. (the “Company”), through its subsidiary, SkyWest Airlines, Inc. (“SkyWest Airlines”) operates the largest regional airline in the United States. As of December 31, 2025, SkyWest Airlines offered scheduled passenger service under code-share agreements with United Airlines, Inc. (“United”), Delta Air Lines, Inc. (“Delta”), American Airlines, Inc. (“American”) and Alaska Airlines, Inc. (“Alaska”) with approximately 2,260 total daily departures to destinations in the United States, Canada and Mexico. Additionally, the Company provides airport customer service and ground handling services for other airlines throughout its system. In 2022, the Company formed SkyWest Charter, LLC (“SWC”), which began operations in 2023. SWC offers an on-demand charter flight service. As of December 31, 2025, the Company had 637 total aircraft in its fleet, including 487 aircraft in scheduled service or under contract pursuant to its code-share agreements, summarized as follows:

	E175	CRJ900	CRJ700/CRJ550	CRJ200	Total
United	121	—	37	58	216
Delta	87	32	18	—	137
American	20	4	68	—	92
Alaska	42	—	—	—	42
Aircraft in scheduled service or under contract	270	36	123	58	487
SWC	—	—	—	11	11
Leased to third parties	—	5	40	—	45
Other (1)	—	10	15	69	94
Total Fleet	270	51	178	138	637

(1) As of December 31, 2025, other aircraft included: supplemental spare aircraft supporting the Company’s code-share agreements that may be placed under future code-share or leasing agreements, aircraft scheduled to be placed under a code-share agreement with one of the Company’s major airline partners or aircraft that are scheduled to be disassembled for use as spare parts.

For the year ended December 31, 2025, approximately 44.4% of the Company’s aircraft in scheduled service was operated for United, approximately 28.1% was operated for Delta, approximately 18.9% was operated for American and approximately 8.6% was operated for Alaska.

SkyWest Airlines has been a code-share partner with Delta since 1987, United since 1997, Alaska since 2011 and American since 2012. As of December 31, 2025, SkyWest Airlines operated as a Delta Connection carrier primarily in Salt Lake City, Detroit, Los Angeles, Minneapolis and the Pacific Northwest, a United Express carrier primarily in Los Angeles, San Francisco, Denver, Houston and Chicago, an American carrier primarily in Chicago, Dallas, Los Angeles and Phoenix and an Alaska carrier primarily in the Pacific Northwest.

SkyWest Airlines operates the following aircraft manufactured by MHI RJ Aviation ULC, formerly known as Bombardier Aerospace (“Bombardier”): CRJ900s, CRJ700s, including a 50-seat configuration of the CRJ700, commonly referred to as a “CRJ550,” and CRJ200s, and E175s manufactured by Embraer S.A. (“Embraer”). The CRJ700, CRJ550, CRJ900 and E175 aircraft, commonly referred to as “dual-class aircraft,” have a first class seat configuration typically configured between 50 to 76 seats. SkyWest Airlines operates the CRJ200 as a single-class, 50-seat aircraft and SWC operates the CRJ200 in a 30-seat configuration.

Basis of Presentation

The Company’s consolidated financial statements include the accounts of the Company and the SkyWest Airlines and SWC and SkyWest Leasing segments, with all inter-company transactions and balances having been eliminated.

In preparing the accompanying consolidated financial statements, the Company has reviewed, as determined necessary by the Company’s management, events that have occurred after December 31, 2025, through the filing date of the Company’s annual report with the U.S. Securities and Exchange Commission.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company had no restricted cash as of December 31, 2025 and 2024.

Marketable Securities

The Company’s investments in debt securities are classified as available-for-sale and are reported at fair market value with the net unrealized appreciation (depreciation) reported as a component of accumulated other comprehensive income in stockholders’ equity. At the time of sale, any realized appreciation or depreciation, calculated by the specific identification method, is recognized in other income and expense. The Company’s position in marketable securities as of December 31, 2025 and 2024 was as follows (in thousands):

			Gross unrealized		Gross unrealized
At December 31, 2025	Amortized Cost		holding gains		holding losses		Fair market value
Marketable securities:
Bond and bond funds	$	487,331	$	443	$	(75)	$	487,699
Commercial Paper		96,537		—		—		96,537
Total marketable securities	$	583,868	$	443	$	(75)	$	584,236

			Gross unrealized			Gross unrealized
At December 31, 2024	Amortized Cost		holding gains		holding losses		Fair market value
Marketable securities:
Bond and bond funds	$	462,111	$	313	$	(91)	$	462,333
Commercial Paper		111,933		—		—		111,933
Total marketable securities	$	574,044	$	313	$	(91)	$	574,266

As of December 31, 2025 and 2024, the Company had classified $584.2 million and $574.3 million of marketable securities, respectively, as short-term because it had the intent to maintain a liquid portfolio and the ability to redeem the securities within one year. 

Inventories

Inventories include expendable parts and supplies and are valued at cost (FIFO basis) less an allowance for obsolescence based on historical part turnover, excess parts and management’s expectations of future operations. Expendable inventory parts are charged to expense as used. An obsolescence allowance for flight equipment expendable parts is accrued based on estimated lives of the corresponding fleet types, anticipated part usage and salvage values. The inventory allowance as of December 31, 2025 and 2024, was $32.3 million and $28.8 million, respectively.

Property and Equipment

Property and equipment are stated at cost and depreciated over their useful lives to their estimated residual values using the straight-line basis. The Company revises its estimated useful life and residual values assumptions when facts and circumstances occur, particularly as the Company’s CRJ fleet ages. Effective November 1, 2025, the Company extended the estimated useful lives of certain CRJ airframes and CRJ rotable spare parts by five to seven years to align with the Company’s long-term fleet plan and adjusted residual values on its spare engines to reflect current market conditions. Additionally, at December 31, 2025, the Company extended the useful lives of certain spare engines and E175 rotable spare parts by 7 to 12 years to align with the Company’s long-term fleet plan. The effect of these changes was not material to the consolidated financial statements. The following summarizes the Company’s useful life and residual value assumptions as of December 31, 2025:

Assets	Depreciable Life	Current Residual Value
Aircraft, rotable spares, and spare engines	up to 27 years	up to 20	%
Ground equipment	up to 10 years	0	%
Office equipment	up to 5 years	0	%
Leasehold improvements	Shorter of 15 years or lease term	0	%
Buildings	20 - 39.5 years	0	%

Impairment of Long-Lived Assets

As of December 31, 2025, the Company had approximately $5.8 billion of property and equipment, net of accumulated depreciation. In accounting for these long-lived assets, the Company makes estimates about the expected useful lives of the assets, the expected residual values of such assets, and the potential for impairment based on projected future cash flows and estimated fair value of the assets. Factors indicating potential impairment include, but are not limited to, significant decreases in the market value of the long-lived assets, a significant change in the condition of the long-lived assets and operating cash flow losses associated with the use of the long-lived assets. On a periodic basis, the Company evaluates whether impairment indicators are present. When considering whether or not impairment of long-lived assets exists, the Company groups similar assets together at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and compare the undiscounted cash flows for each asset group to the net carrying amount of the assets supporting the asset group. Asset groupings are done at the aircraft type level.

Capitalized Interest

Interest is capitalized on aircraft purchase deposits as a portion of the cost of the asset and is depreciated over the estimated useful life of the asset. During the years ended December 31, 2025, 2024 and 2023, the Company capitalized interest costs of approximately $3.5 million, $3.3 million and $1.5 million, respectively.

Maintenance

The Company operates under a U.S. Federal Aviation Administration approved continuous inspection and maintenance program. The Company uses the direct expense method of accounting for its regional jet engine overhauls. The Company has engine services agreements with third-party vendors to provide long-term engine services covering the scheduled and unscheduled repairs for most of its aircraft. Under the terms of the agreements, the Company pays a fixed dollar amount per engine hour flown per month and the third-party vendors will assume the responsibility to repair the engines at no additional cost to the Company, subject to certain specified exclusions. Maintenance costs under these contracts are recognized when the engine hour is flown pursuant to the terms of each contract. The repair costs for engines not covered by these hourly service agreements are expensed when repair services are incurred. The costs of maintenance for airframe and avionics components, landing gear and other recurring maintenance are expensed as incurred.

Flying Agreements and Airport Customer Service and Other Revenues

The Company recognizes revenue under its flying agreements and under its lease, airport services and other service agreements when the service is provided under the applicable agreement. Under the Company’s capacity purchase agreements with United, Delta, American and Alaska (each, a “major airline partner”), the major airline partner

generally pays the Company a fixed-fee for each departure, flight hour (measured from takeoff to landing, excluding taxi time) or block hour (measured from takeoff to landing, including taxi time) incurred, and an amount per aircraft in service each month, with additional incentives based on flight completion, on-time performance or other performance metrics. The major airline partner also directly pays for or reimburses the Company for certain direct expenses incurred under the capacity purchase agreement, such as fuel, airport landing fees and airport rents. Under the capacity purchase agreements, the Company’s performance obligation is met when each flight is completed, measured in completed block hours, and is reflected in flying agreements revenue. The transaction price for the capacity purchase agreements is determined from the fixed-fee consideration, incentive consideration and directly reimbursed expenses earned as flights are completed over the agreement term. For the years ended December 31, 2025, 2024 and 2023, capacity purchase agreements represented approximately 84.3%, 86.6% and 86.5% of the Company’s flying agreements revenue, respectively.

Under the Company’s prorate agreements, the major airline partner and the Company negotiate a passenger fare proration formula, pursuant to which the Company receives a percentage of the ticket revenues for those passengers traveling for one portion of their trip on a Company airline and the other portion of their trip on the major airline partner. Under the Company’s prorate agreements, the performance obligation is met and revenue is recognized when each flight is completed based upon the portion of the prorate passenger fare the Company determines that it will receive for each completed flight. The transaction price for the prorate agreements is determined from the proration formula derived from each passenger ticket amount on each completed flight over the agreement term. Certain routes under the Company’s prorate agreements are subsidized by the U.S. Department of Transportation under the Essential Air Service (“EAS”) program, a program created to ensure small communities in the United States maintain a minimum level of scheduled air service. The EAS contracts are generally between two and three years in duration and the Company recognizes EAS revenue on a per-completed-flight basis pursuant to the terms of each contract. In the event the Company receives upfront consideration for an EAS contract, the Company recognizes the revenue on a per-completed flight basis over the EAS contract term. Under the Company’s charter operations, SWC, the Company negotiates a fare for the charter flight with the customer. The performance obligation is met and revenue is recognized upon completion of the flight. For the years ended December 31, 2025, 2024 and 2023, prorate agreements and SWC revenue represented approximately 15.7%, 13.4%, and 13.5% of the Company’s flying agreements revenue, respectively.

The following table represents the Company’s flying agreements revenue by type for the years ended December 31, 2025, 2024 and 2023 (in thousands):

	For the year ended December 31,
	2025		2024		2023
Capacity purchase agreements flight operations revenue (non-lease component)	$	2,590,735	$	2,415,598	$	1,976,743
Capacity purchase agreements fixed aircraft lease revenue		441,262		303,134		296,047
Capacity purchase agreements variable aircraft lease revenue		242,743		236,676		180,218
Prorate agreements and SWC revenue		610,413		457,390		381,389
Flying agreements revenue	$	3,885,153	$	3,412,798	$	2,834,397

The Company allocates the total consideration received under its capacity purchase agreements between lease and non-lease components based on stand-alone selling prices. A portion of the Company’s compensation under its capacity purchase agreements relates to operating the aircraft, identified as the non-lease component of the capacity purchase agreement. The Company recognizes revenue attributed to the non-lease component received as fixed-fees for each departure, flight hour or block hour on an as-completed basis for each reporting period. The Company recognizes revenue attributed to the non-lease component received as fixed monthly payments per aircraft proportionate to the number of block hours completed during each reporting period, relative to the estimated number of block hours the Company anticipates completing over the remaining contract term. Accordingly, the Company’s revenue recognition will likely vary from the timing of cash receipts under the Company’s capacity purchase agreements. The Company refers to cash received under its capacity purchase agreements prior to recognizing revenue as “deferred revenue,” and the Company refers to revenue recognized prior to billing its major airline partners under its capacity purchase agreements as “unbilled revenue” for each reporting period.

A portion of the Company’s compensation under its capacity purchase agreements is designed to reimburse the Company for certain aircraft ownership costs. The consideration for aircraft ownership costs varies by agreement but is intended to compensate the Company for providing its aircraft under the contract. The consideration received for the use of the aircraft under the Company’s capacity purchase agreements is accounted for as lease revenue, inasmuch as the agreements identify the “right of use” of a specific type and number of aircraft over a stated period of time. The lease revenue associated with the Company’s capacity purchase agreements is accounted for as an operating lease and is reflected as flying agreements revenue on the Company’s consolidated statements of comprehensive income. The Company recognizes fixed monthly lease payments as lease revenue using the straight-line basis over the capacity purchase agreement term and variable lease payments in the period when the block hours are completed. The Company has not separately stated aircraft rental income and aircraft rental expense in the consolidated statement of comprehensive income because the use of the aircraft is not a separate activity of the total service provided under the capacity purchase agreements.

The following table summarizes the amount of deferred revenue, recognition of previously deferred revenue and change in unbilled revenue for the fixed monthly non-lease and lease payments received under the Company’s capacity purchase agreements for the years ended December 31, 2025, 2024 and 2023 (in thousands):

	Year ended December 31,
	2025		2024		2023
Non-lease fixed monthly payments:
Deferred recognition of revenue on fixed monthly payments received	$	—	$	—	$	(151,320)
Revenue recognized that was deferred in previous period		30,053		35,501		—
Increase (decrease) in unbilled revenue		8,192		7,871		(12,601)
Total non-lease revenue recognized (deferred)		38,245		43,372		(163,921)
Lease fixed monthly payments:
Deferred recognition of revenue on fixed monthly payments received		—		—		(78,550)
Revenue recognized that was deferred in previous period		13,934		1,536		—
Increase (decrease) in unbilled revenue		5,581		—		—
Total lease revenue recognized (deferred)		19,515		1,536		(78,550)
Total revenue recognized (deferred)	$	57,760	$	44,908	$	(242,471)

The Company's unbilled revenue and deferred revenue balances were reflected in the following balance sheet line items at December 31, 2025 and 2024 (in thousands):

	December 31,		December 31,
	2025		2024
Unbilled revenue - other current assets	$	1,133	$	1,133
Unbilled revenue - other long-term assets		26,661		14,032
Total unbilled revenue		27,794		15,165
Deferred revenue - other current liabilities		163,894		54,789
Deferred revenue - other long-term liabilities		128,509		282,745
Total deferred revenue		292,403		337,534
Net deferred revenue balance	$	264,609	$	322,369

The Company’s capacity purchase and prorate agreements include weekly provisional cash payments from the respective major airline partner based on a projected level of flying each month. The Company and each major airline partner subsequently reconcile these payments to the actual completed flight activity on a monthly or quarterly basis.

In several of the Company’s agreements, the Company is eligible to receive incentive compensation upon the achievement of certain performance criteria. The incentives are defined in the agreements and are measured and determined on a monthly or annual basis. At the end of each period during the term of an agreement, the Company calculates the incentives achieved during that period and recognizes revenue attributable to that agreement accordingly, subject to the variable constraint guidance under Accounting Standard Codification (“ASC”) Topic 606.

The following summarizes the significant provisions of each code-share agreement the Company has with each major airline partner through SkyWest Airlines:

United Express Agreements
Agreement	Aircraft type	Number of Aircraft	Term / Termination Dates
United Express Agreements	• E175	121	Individual aircraft have scheduled
(capacity purchase agreements)	• CRJ700/CRJ550	37	removal dates under the agreements
	• CRJ200	30	between 2026 and 2033
United Express Prorate Agreement	• CRJ200	28*	Terminable with 120-day notice
Total under United Express Agreements		216
Delta Connection Agreements
Agreement	Aircraft type	Number of Aircraft	Term / Termination Dates
Delta Connection Agreement	• E175	87	Individual aircraft have scheduled
(capacity purchase agreement)	• CRJ900	32	removal dates under the agreement
	• CRJ700	4	between 2026 and 2034
Delta Connection Prorate Agreement	• CRJ550	14*	Terminable with 30-day notice
Total under Delta Connection Agreements		137
American Agreements
Agreement	Aircraft type	Number of Aircraft	Term / Termination Dates
American Agreement	• E175	20	Individual aircraft have scheduled
(capacity purchase agreement)	• CRJ700	68	removal dates under the agreement
			between 2027 and 2032
American Prorate Agreement	• CRJ900	4*	Terminable with 180-day notice
Total under American Agreements		92
Alaska Agreement
Agreement	Aircraft type	Number of Aircraft	Term / Termination Dates
Alaska Agreement	• E175	42	Individual aircraft have scheduled
(capacity purchase agreement)			removal dates under the agreement
			between 2030 and 2034

* The Company’s prorate agreements are based on specific routes, not a specific aircraft count. The number of aircraft listed above for each prorate agreement approximates the number of aircraft the Company uses to serve the prorate routes.

In addition to the contractual agreements described above, as of December 31, 2025, SkyWest Airlines reached agreements with certain major airline partners to place additional aircraft under capacity purchase agreements as summarized below. The Company is coordinating with its major airline partners and aircraft manufacturer regarding the timing of upcoming fleet deliveries and the delivery timing referenced below is subject to change.

● Capacity purchase agreement with United for eight new E175 aircraft, which are scheduled for delivery in 2026. The Company anticipates financing the aircraft through debt.

● Capacity purchase agreement with Alaska for one new E175 aircraft, which is scheduled for delivery in 2026. The Company anticipates financing the aircraft through debt.

● Capacity purchase agreement with Delta for 16 new E175 aircraft. 10 new E175 aircraft are currently scheduled for delivery in 2027 and six new E175 aircraft are scheduled for delivery in 2028. The Company anticipates financing the aircraft through debt.

● Capacity purchase agreement with United for 23 used CRJ550 aircraft that are anticipated to be placed into service by the end of 2026. Pursuant to these agreements, the Company is in the process of converting its owned CRJ700s to CRJ550s.

In January 2026, the Company extended the scheduled contract expirations on 40 E175 aircraft with United and 13 E175 aircraft with Delta. The termination dates in the table above reflect the January 2026 extensions.

When an aircraft is scheduled for expiration from a capacity purchase agreement, the Company may, as practical under the circumstances, negotiate an extension with the respective major airline partner, negotiate the placement of the aircraft with another major airline partner, return the aircraft to the major airline partner when the aircraft is provided by the major airline partner, place owned aircraft for sale or pursue other uses for the aircraft. Other uses for the aircraft may include placing the aircraft in a prorate agreement, leasing the aircraft to a third party or disassembling aircraft components such as the engines and parts to be used as spare inventory.

Lease, airport services and other revenues primarily consist of revenue generated from aircraft and spare engines leased to third parties, maintenance services provided to third parties and airport customer service agreements, such as gate and ramp agent services at various airports where the Company has been contracted by third parties to provide such services. The following table represents the Company’s lease, airport services and other revenues for the years ended December 31, 2025, 2024 and 2023 (in thousands):

	For the year ended December 31,
	2025		2024		2023
Operating lease fixed revenue	$	66,316	$	56,063	$	47,554
Operating lease variable revenue		32,557		28,877		18,420
Airport customer service and other revenue		74,176		30,182		35,061
Lease, airport services and other	$	173,049	$	115,122	$	101,035

The following table summarizes future minimum rental income under operating leases primarily related to leased aircraft and engines that had remaining non-cancelable lease terms as of December 31, 2025 (in thousands):

2026	$	46,677
2027		43,359
2028		42,475
2029		40,948
2030		24,658
Thereafter		1,323
Total future minimum rental income under operating leases	$	199,440

Of the Company’s $5.8 billion of property and equipment, net of accumulated depreciation as of December 31, 2025, $238.7 million of regional jet aircraft and spare engines were leased to third parties under operating leases. The Company’s mitigation strategy for the residual asset risks of these assets includes leasing aircraft and engine types that can be operated by the Company in the event of a default. Additionally, the operating leases typically have specified lease return condition requirements paid by the lessee to the Company and the Company typically maintains inspection rights under the leases.

The transaction price for airport customer service agreements is determined from an agreed-upon rate by location applied to the applicable number of flights handled by the Company over the agreement term.

The Company’s operating revenues could be impacted by several factors, including changes to the Company’s code-share agreements with its major airline partners, changes in flight schedules, contract modifications resulting from contract renegotiations, the Company’s ability to earn incentive payments contemplated under the Company’s code-share agreements and settlement of reimbursement disputes with the Company’s major airline partners.

Other ancillary revenues commonly associated with airlines, such as baggage fee revenue, ticket change fee revenue and the marketing component of the sale of mileage credits, are retained by the Company’s major airline partners on flights that the Company operates under its code-share agreements.

As of December 31, 2025, the Company had $159.8 million in accounts receivable of which $129.0 million is related to flying agreements. As of December 31, 2024, the Company had $122.8 million in accounts receivable of which $105.2 million is related to flying agreements.

Allowance for Credit Losses

The Company has an allowance for credit losses associated with its accounts receivable, notes receivable and third-party debt guarantees. The Company monitors publicly available credit ratings for entities for which the Company has a significant receivable balance or guarantee. As of December 31, 2025, the Company had gross receivables of $163.3 million in current assets and gross receivables of $266.3 million in other long-term assets. As of December 31, 2024, the Company had gross receivables of $125.9 million in current assets and gross receivables of $225.2 million in other long-term assets. The Company has established credit loss reserves based on publicly available historic default rates issued by a third party for companies with similar credit ratings, factoring in the amount and term of the Company’s respective accounts receivable, notes receivable or guarantees. During the year ended December 31, 2025, the Company increased its credit loss reserve by $7.5 million primarily due to the increase in receivables from December 31, 2024 to December 31, 2025 and the Company’s assessment of higher credit risk of certain outstanding receivables. During the year ended December 31, 2024, the Company recorded $3.6 million of adjustments as reductions to the credit loss reserve. During the year ended December 31, 2023, the Company recorded $0.2 million of adjustments to the credit loss reserve and wrote-off $18.5 million in receivables that were fully reserved as of December 31, 2022. There were no other significant changes in the outstanding accounts receivable, notes receivable, guarantees or credit ratings of the entities.

The following table summarizes the changes in allowance for credit losses:

	Allowance for Credit Losses
Balance at December 31, 2022		37,385
Adjustments to credit loss reserves		(185)
Write-offs charged against allowance		(18,501)
Balance at December 31, 2023		18,699
Adjustments to credit loss reserves		(3,628)
Write-offs charged against allowance		—
Balance at December 31, 2024	$	15,071
Adjustments to credit loss reserves		7,520
Write-offs charged against allowance		(82)
Balance at December 31, 2025	$	22,509

Income Taxes

The Company recognizes a net liability or asset for the deferred tax consequences of all temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements that are expected to result in taxable or deductible amounts in future years when the reported amounts of the assets and liabilities are recovered or settled.

Net Income Per Common Share

Basic net income per common share (“Basic EPS”) excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue common stock

were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income per common share. Securities that could potentially dilute Basic EPS in the future, and which were excluded from the calculation of Diluted EPS because inclusion of such share would be anti-dilutive, are as follows (in thousands):

	Year Ended December 31,
	2025		2024		2023
Treasury Warrants (1)		—		—		286
Unvested Employee Equity Awards		—		—		15
Total antidilutive securities		—		—		301

(1) Warrants originally issued to U.S. Department of the Treasury (“Treasury”) to purchase shares of SkyWest common stock issued pursuant to the three Payroll Support Program Agreements and a loan agreement with the U.S. Treasury. See Note 9, “Capital Transactions” for further discussion on the warrants issued to Treasury.

Additionally, for the years ended December 31, 2025, 2024 and 2023, 79,000, 209,000 and 334,000 performance share units (“PSUs”) (at target performance) were excluded from the computation of Diluted EPS because the Company had not achieved the minimum target thresholds for these PSUs as of December 31, 2025, 2024 and 2023, respectively.

The calculation of the weighted average number of common shares outstanding for Basic EPS and Diluted EPS are as follows for the years ended December 31, 2025, 2024 and 2023 (in thousands):

	Year Ended December 31,
	2025		2024		2023
Numerator:
Net income	$	428,334	$	322,962	$	34,342
Denominator:
Basic earnings per share weighted average shares		40,314		40,262		43,940
Dilution due to employee equity awards and warrants		1,089		1,285		659
Diluted earnings per share weighted average shares		41,403		41,547		44,599
Basic earnings per share	$	10.62	$	8.02	$	0.78
Diluted earnings per share	$	10.35	$	7.77	$	0.77

Comprehensive Income

Comprehensive income includes charges and credits to stockholders’ equity that are not the result of transactions with the Company’s shareholders, including changes in unrealized appreciation or depreciation on marketable debt securities.

Fair Value of Financial Instruments

The carrying amounts reported in the consolidated balance sheets for receivables and accounts payable approximate fair values because of the immediate or short-term maturity of these financial instruments. Marketable securities are reported at fair value based on market quoted prices in the consolidated balance sheets. Certain investments in other companies are reported at fair value based on market quoted prices or using the Black Scholes Option Pricing model in the consolidated balance sheets. The fair value of the Company’s long-term debt, as disclosed in Note 3, is estimated based on current rates offered to the Company for similar debt.

Segment Reporting

GAAP requires disclosures related to components of a company for which separate financial information is available to, and regularly evaluated by, the Company’s chief operating decision maker when deciding how to allocate

resources and in assessing performance. The Company’s two reportable segments consist of (1) the operations of SkyWest Airlines and SWC (collectively, “SkyWest Airlines and SWC”) and (2) SkyWest Leasing activities. Information pertaining to the Company’s reportable segments is presented in Note 2, Segment Reporting.

Recent Accounting Pronouncements

At December 31, 2025, the Company adopted Accounting Standards Update No. 2023-09 (“ASU 2023-09”), “Income Taxes (ASC Topic 740) – Improvements to Income Tax Disclosures,” issued by the Financial Accounting Standards Board (FASB). The standard enhances the transparency, effectiveness and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. As required by the standard, the Company recast prior year disclosures to conform to the current year presentation. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. For further details, refer to Note 4, Income Taxes.

In March 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (ASC Subtopic 220-40) – Disaggregation of Income Statement Expenses”, which enhances the transparency and comparability of financial statements by requiring companies to disclose more granular information about expense components. As clarified in ASU 2025-01, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the effective date,” the guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.