SkyWest Secures Agreement to fly 20 Additional E175s for United
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Insights
The new agreement between SkyWest and United Airlines to place 20 partner-financed E175s under a four-year contract represents a significant development in the regional aviation sector. The financial arrangement, with aircraft being partner-financed rather than owned by SkyWest, may indicate a strategic move to maintain liquidity and reduce capital expenditure. It is essential to assess the impact of this agreement on SkyWest's balance sheet and cash flow statements, particularly the liabilities section, as partner financing could lead to different financial obligations compared to direct ownership.
Further, the addition of these aircraft is likely to increase SkyWest's operational capacity, potentially leading to higher revenues. However, it's crucial to monitor the company's load factors and route profitability to ensure that the expanded fleet translates into improved financial performance. The four-year duration of the contract also provides a medium-term visibility into SkyWest's revenue streams from United Airlines, which is positive for forecasting and valuation purposes.
This strategic partnership with United Airlines could enhance SkyWest's competitive position in the regional airline market. The E175 is a popular aircraft for its fuel efficiency and passenger comfort, which may allow SkyWest to secure more favorable routes and time slots. It is important to analyze market trends and the demand for regional flights to predict how this expansion might affect SkyWest's market share and bargaining power with other major airlines and partners.
Additionally, the timing of the deliveries aligns with a broader industry recovery from the impacts of the pandemic, suggesting that SkyWest is anticipating an increase in travel demand. The phased delivery schedule through 2026 also allows for flexibility in operations and fleet management, which is a prudent approach given the volatile nature of the airline industry.
The announcement underscores the continuing industry trend towards newer, more efficient regional jets like the E175, which are favored by airlines for their operational cost savings and ability to service short to mid-range routes. For stakeholders in the aerospace sector, this deal reaffirms the E175's market position and may influence the stock performance of its manufacturer, Embraer. It's important to analyze how this order might affect Embraer's production schedules and backlog, as well as the broader supply chain dynamics within the aerospace industry.
Moreover, the partner-financed aspect of the deal may reflect innovative financing structures that are emerging in the aerospace industry, which could set precedents for future aircraft orders and deliveries. Understanding these financial mechanisms is crucial for stakeholders to evaluate the risks and benefits associated with such agreements.
Partner-financed aircraft scheduled for deliveries this year
“We’re delighted to continue enhancing our United partnership and pleased that we’re able to deliver on the strong market demand,” said Chip Childs, President & CEO of SkyWest.
SkyWest is coordinating with its major airline partners to optimize the timing of upcoming announced fleet deliveries. The anticipated E175 future delivery dates summarized below are based on currently available information and are subject to change.
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2024(1) |
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2025 |
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2026 |
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Total |
Delta Air Lines |
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1 |
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ꟷ |
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ꟷ |
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1 |
United Airlines |
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24 |
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7 |
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8 |
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39 |
Alaska Airlines |
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ꟷ |
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1 |
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ꟷ |
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1 |
Total |
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25 |
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8 |
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8 |
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41 |
(1) 20 of the 25 E175 deliveries scheduled for 2024 are partner financed. |
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By the end of 2026, SkyWest is scheduled to operate a total of 278 E175 aircraft.
About SkyWest
SkyWest, Inc. is the holding company for SkyWest Airlines and SkyWest Leasing, an aircraft leasing company. SkyWest Airlines has a fleet of approximately 500 aircraft connecting passengers to over 240 destinations throughout
View source version on businesswire.com: https://www.businesswire.com/news/home/20240303190067/en/
Investor Relations
435.634.3200
Investor.relations@skywest.com
Corporate Communications
435.634.3553
corporate.communications@skywest.com
Source: SkyWest, Inc.
FAQ
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