SkyWest: Fleet And Margin Expansion To Drive Further Upside

Summary

• In 3Q24, SKYW generated $913 million in revenues, posting a growth of 19.19% y/y. During this period, margins improved substantially. Net margin increase to 9.86% from 3.13% in 3Q23.
• Expect the continued strength in the industry to serve as strong tailwinds for SKYW. SKYW expects 2025 block hours to increase by 10% y/y, in-line with ACI passenger growth estimates.
• Expect revenue capacity to surge from SKYW's fleet expansion plans and new agreements with United Airlines.
• Valuation analysis suggests that SKYW is trading below its fair value. A potential upside of more than 30% exists.

Boarding1Now

Introduction

Based on my analysis, Skywest (NASDAQ:SKYW) presents an attractive opportunity for investors looking to gain exposure in the aviation and air travel industry. Apart from industry tailwinds, SKYW's fleet expansion plans will continue to expand the company's revenue capacity and

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in SKYW over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.