SkyWest Airlines 2002 Annual Report Download - page 14

continue to require, the Company’s participation in efforts to reduce costs and improve the financial
position of the Company’s partners. Management believes these developments will impact many aspects
of the Company’s operations and financial performance. In particular, the Company anticipates that its
financial performance, including its margins, will be less predictable than in prior periods and will be
negatively impacted as the industry under goes significant restructuring.
Terrorist activities or warnings have dramatically impacted, and will likely continue to impact, the
Company
The terrorist attacks of September 11, 2001 and their aftermath have negatively impacted the
airline industry in general and the Company’s operations in particular. The primary effects experienced
by the airline industry included substantial losses of passenger traffic and related revenue, increased
security and insurance costs, increased concerns about future terrorist attacks, airport delays due to
heightened security and significantly reduced yields due to the decrease in demand for air travel.
Additional terrorist attacks, the fear of such attacks, the recent commencement of war in Iraq,
other hostilities in the Middle East or other regions could negatively impact the airline industry, and
result in further decreased passenger traffic and yields, increased flight delays or cancellations
associated with new government mandates, as well as increased security, fuel and other costs. The
Company cannot provide any assurance that these events will not adversely impact the airline industry
generally or the Company’s results of operations and financial condition.
The Company’s reliance on only two aircraft types exposes the Company to a number of potentially
significant risks
As of December 31, 2002, the Company had a fleet of 76 Brasilias and 73 CRJs. During the year
ended December 31, 2002, 73.5% of the Company’s ASMs were flown by CRJs and 26.5% were flown
by Brasilias. Additionally, as of December 31, 2002 the Company had commitments to acquire an
additional 70 CRJs through January 2005 and options to acquire an additional 119 CRJs. The
Company is subject to various risks related to its current fleet and the ability to operate the additional
aircraft that could materially or adversely effect its results of operations and financial condition,
including:
• the Company’s ability to obtain necessary financing to fulfill the Company’s contractual
obligations related to the acquisition of CRJs,
• breach by Bombardier, Inc. of the Company’s firm order contracts for the delivery of 70 CRJs or
any change in the delivery schedule of such CRJs,
• the interruption of fleet service as a result of unscheduled or unanticipated maintenance
requirements for such aircraft,
• the issuance of FAA directives restricting or prohibiting the use of Brasilias or CRJs, or
• the adverse public perception of an aircraft type as a result of an accident or other adverse
publicity
The possible unionization of the Company’s employees could impact the Company’s business
The employees of the Company are not currently represented by any union. Management is aware
that collective bargaining group organization efforts among its employees occur from time to time and
expect that such efforts will continue in the future. If unionizing efforts are successful, the Company
may be subjected to risks of work interruption or stoppage and/or incur additional administrative
expenses associated with union representation. Management recognizes that such efforts will likely
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