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Travel Demand Boosts SkyWest (SKYW) Amid Rising Expenses

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We have recently updated a report on SkyWest, Inc. (SKYW - Free Report) .

SkyWest has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of quality and sustainability of growth.

With improvement in air-travel demand, SkyWest carried 72.2% more passengers in 2021 compared with the year-ago level. As a result, the passenger load factor expanded 1820 percentage points to 74.6% in 2021. With air-travel demand continuing to improve, the load factor is likely to be impressive going forward as well.

SKYW’s fleet-modernization efforts are commendable as well. To modernize its fleet, SkyWest entered into an agreement with Delta to purchase and operate 16 new E175 aircraft in August. Per the agreement, the 16 new E175 aircraft will be put into service through 2022-end.

Rising maintenance expenses are a concern for SkyWest. Aircraft maintenance, materials and repairs expenses increased 20.3% year over year in 2020. In 2021, expenses for aircraft maintenance, materials and repairs increased even more (32%). Aircraft fuel costs surged 73.4% in 2021, with oil prices moving north. Due to an increase in the components, total operating costs (up 20.8% in 2021) are escalating and limiting bottom-line growth.

Zacks Rank & Stocks to Consider

SkyWest currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Transportation sector are Expeditors International of Washington, Inc. (EXPD - Free Report) , Old Dominion Freight Line, Inc. (ODFL - Free Report) and Triton International Limited (TRTN - Free Report) .

Expeditors has an earnings surprise of 34.2%, having surpassed the Zacks Consensus Estimate in all of the past four quarters.  Expeditors is being aided by the uptick in airfreight revenues. We are optimistic about the company’s buyout of Fleet Logistics’ Digital Platform. The acquisition has boosted Expeditors’ online LTL shipping platform, Koho. The move is in line with the company's focus on Digital Solutions.

EXPD currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected EPS (three to five years) growth rate for Old Dominion is pegged at 16%. Old Dominion is benefiting from strong performance in the LTL segment owing to improved freight conditions. In 2021, revenues from the LTL services segment increased 30.7% on a year-over-year basis.

Driven by the tailwinds, the stock has increased 28.7% in the past year.  ODFL currently carries a Zacks Rank #2 (Buy).

The long-term expected EPS (three to five years) growth rate for Triton is pegged at 10%. Gradual increases in trade volumes and container demand bode well for the company. With easing coronavirus-led restrictions in the United States and Europe, the company saw a strong rebound in its business in the third, the fourth of 2020 as well as in each of the four quarters of 2021.

Driven by the tailwinds, the stock has increased 7.2% in the past year. TRTN currently carries a Zacks Rank #2.