SkyWest Airlines 2002 Annual Report Download - page 24

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51. FIN No. 46 addresses the consolidation by business enterprises of
variable interest entities, as defined. FIN No. 46 applies immediately to variable interests in variable
interest entities created after January 31, 2003, and to variable interests in variable interest entities
obtained after January 31, 2003. FIN No. 46 requires certain disclosures in financial statements issued
after January 31, 2003 if it is reasonably possible that the Company will consolidate or disclose
information about variable interest entities when FIN No. 46 becomes effective. The application of this
interpretation is not expected to have a material effect on the Company’s financial statements since the
Company does not have investments in any variable interest entities.
Results of Operations
The following table sets forth information regarding the Company’s operating expense components.
Airline operating expenses are expressed as a percentage of total airline operating revenues. Total
operating expenses and interest are expressed as a percentage of total consolidated revenues. Individual
expense components are also expressed as cents per ASM.
Year Ended December 31,
2002 2001 2000
Percent Cents Percent Cents Percent Cents
Of Per Of per Of per
Amount Revenue ASM Amount Revenue ASM Amount Revenue ASM
Salaries, wages and employee
benefits ................ $200,715 25.9% 4.6 $167,590 27.8% 5.9 $136,771 26.2% 6.1
Aircraft costs .............. 160,853 20.8 3.7 118,072 19.6 4.2 88,280 16.9 3.9
Maintenance .............. 54,041 7.0 1.2 63,242 10.5 2.2 43,206 8.3 1.9
Fuel..................... 97,899 12.6 2.2 72,202 12.0 2.6 67,827 13.0 3.0
Other airline expenses ....... 142,822 18.4 3.3 123,376 20.5 4.3 96,942 18.5 4.3
US government assistance ..... (1,438) (0.2) 0.0 (8,181) (1.4) (0.3) — 0.0 0.0
Interest .................. 3,611 0.5 0.1 — 0.0 0.0 2,511 0.5 0.1
Total airline expenses ........ 658,503 15.1 536,301 18.9 435,537 19.3
Other ................... — — 924
Total operating expenses and
interest ................. $658,503 85.0% 15.1 $536,301 89.1% 18.9 $436,461 83.4% 19.3
2002 Compared to 2001
Net income for the year ended December 31, 2002 increased to $86.9 million, or $1.51 per share
on a diluted basis, compared to $50.5 million or $0.88 per share on a diluted basis for the year ended
December 31, 2001. Net income for the year ended December 31, 2002 includes the cumulative effect
of a change in accounting principle of $8.6 million (net of taxes of $5.5 million). Consolidated
operating revenues increased 28.7% to $774.4 million for the year ended December 31, 2002, from
$601.9 million for the year ended December 31, 2001.
Passenger revenues, which represented 99.4% of consolidated operating revenues, increased 29.1%
to $769.4 million for the year ended December 31, 2002 from $596.0 million or 99.0% of consolidated
operating revenues for the year ended December 31, 2001. The increase was due primarily to a 72.7%
increase in revenue passenger miles, principally as a result of the delivery of additional CRJs over the
past twelve months. The Company continued to increase its services with its code-sharing partners and
placed 26 additional CRJs in service during the year ended December 31, 2002. Nine of these aircraft
were placed in service under the Delta Connection operations and 17 were placed in service under the
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