SkyWest Airlines 2002 Annual Report Download - page 15

continue in the future and may ultimately result in some or all of the Company’s employees being
represented by a union.
The Company is subject to significant governmental regulation
All interstate air carriers, including SkyWest, are subject to regulation by the DOT, the FAA and
other governmental agencies. Regulations promulgated by the DOT primarily relate to economic
aspects of air service. The FAA requires operating, air worthiness and other certificates; approval of
personnel who may engage in flight, maintenance or operation activities; record keeping procedures in
accordance with FAA requirements; and FAA approval of flight training and retraining programs. The
Company cannot predict whether it will be able to comply with all present and future laws, rules,
regulations and certification requirements or that the cost of continued compliance will not have a
material adverse effect on operations.
The occurrence of an aviation accident would negatively impact the Company’s operations and
financial condition
An accident or incident involving one of the Company’s aircraft could involve repair or
replacement of a damaged aircraft and its consequential temporary or permanent loss from service, and
significant potential claims of injured passengers and others. The Company is required by the DOT to
carry liability insurance. In the event of an accident, the Company’s liability insurance may not be
adequate and the Company may be forced to bear substantial losses from the accident. Substantial
claims resulting from an accident in excess of the Company’s related insurance coverage would harm
operational and financial results. Moreover, any aircraft accident or incident, even if fully insured,
could cause a public perception that the Company is less safe or reliable than other airlines.
ITEM 2. PROPERTIES
Flight Equipment
As of December 31, 2002, SkyWest owned or leased the following types of aircraft:
Scheduled Average
Number of Flight Cruising Average
Aircraft Passenger Range Speed Age
Type of Aircraft Owned Leased Capacity (Miles) (MPH) (Years)
Brasilia ...................... 21 55 30 300 300 7.4
Canadair Regional Jet ........... 6 67 50 850 530 2.0
SkyWest’s aircraft are turboprop and jet aircraft designed to operate more economically over
short-haul routes with lower passenger load factors than larger jet aircraft. These factors make it
economically feasible for SkyWest to provide high frequency service in markets with relatively low
volumes of passenger traffic. Passenger comfort features of these aircraft include stand-up headroom, a
lavatory, overhead baggage compartments and flight attendant service. Fiscal year 1995 marked the
introduction of the CRJs. As of February 28, 2003, SkyWest operated 84 of these aircraft on stage
lengths up to 850 miles.
During 2002, SkyWest took delivery of 26 CRJs in connection with the Delta Connection and
United Express expansion. Additionally, as of December 31, 2002, SkyWest had agreed to acquire an
additional 70 CRJs and related spare parts inventory and support equipment at an aggregate cost of
approximately $1.4 billion. SkyWest commenced delivery of these aircraft in January 2003 and deliveries
are scheduled to continue through January 2005. Depending on the state of the aircraft financing
market at the time of delivery, management will determine whether to acquire these aircraft through
third party, long-term loans or lease arrangements. SkyWest also has options to acquire 119 additional
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