SkyWest (SKYW – Free Report) shares have performed exceedingly well on the bourse in 2024. Shares of this St. George, UT-based carrier have skyrocketed 91.8% year over year, outperforming its industry’s 31.1% growth.
Image Source: Zacks Investment Research
Given the impressive price performance, let’s take a deeper dive to identify the factors driving growth at this regional carrier, which currently flaunts a Zacks Rank #1 (Strong Buy), and assess whether there is potential for continued gains.
SkyWest is benefiting from increased air travel demand, especially in the leisure sector. The rise in passenger numbers, along with ongoing fleet modernization initiatives, positions SKYW stock as an appealing investment opportunity for investors. Due to this surge in air travel, SkyWest experienced a significant 18.7% year-over-year revenue growth during the first nine months of 2024. This revenue increase was mainly fueled by a 19.1% rise in flying agreements, which now represent 96.8% of the company’s total revenues.
The company’s prospects are further bolstered by the supply chain challenge caused by Boeing‘s (BA – Free Report) production delays, which disrupted the fleet expansion plans of major U.S. airlines. This situation worked to SkyWest’s advantage by improving its pilot staffing. With large airlines facing growth hurdles and the risk of overstaffing, many have slowed or paused pilot hiring. As a result, the migration of pilots from regional carriers to mainline airlines has slowed, and some are now considering returning to regional carriers like SkyWest to secure their jobs. This shift is likely to enhance SkyWest’s fleet utilization and boost its revenues.
SkyWest Airlines operates a fleet of around 500 aircraft, serving more than 240 destinations across North America. Through partnerships with major carriers, SkyWest carried more than 38 million passengers in 2023. The company is also modernizing its fleet, with agreements to operate 278 E175 aircraft by the end of 2026. Additionally, in February 2024, SkyWest acquired a 25% stake in regional carrier Contour Airlines.
With air travel demand projected to stay strong, SKYW stock is likely to maintain its positive performance in the market in the new year as well.
Estimate Revisions to Head North
Driven by the positives discussed above, the Zacks Consensus Estimate for the fourth quarter of 2024, full-year 2024 and full-year 2025 have been revised 3%, 3% and 5.3% upward over the past 60 days, respectively.
Image Source: Zacks Investment Research
Another Airline Stock to Consider
Another top-ranked stock from the Zacks Airline industry is American Airlines (AAL – Free Report) ). AAL currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
AAL has an expected earnings growth rate of 16% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average beat of 124.4%. Shares of AAL have risen 29.8% in the past year.
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