SkyWest Airlines 2002 Annual Report Download - page 27

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load factors as the Company transitioned to CRJs in additional markets. The increase was also due, in
part, to refinements in SkyWest’s flight schedules.
Total operating expenses and interest increased 22.9% to $536.3 million for the year ended
December 31, 2001, compared to $436.5 million for the year ended December 31, 2000. As a
percentage of consolidated operating revenues, total operating expenses and interest increased to
89.1% for the year ended December 31, 2001 from 83.5% for the year ended December 31, 2000. The
total increase in operating expenses as a percentage of consolidated operating revenues was primarily
due to the service disruption resulting from the September 11th terrorist attacks on the U.S., and
increased infrastructure and build-up costs associated with new aircraft deliveries in connection with
SkyWest’s planned expansion.
Airline operating costs per ASM (including interest expense) decreased 2.1% to 18.9¢ for the year
ended December 31, 2001 from 19.3¢ for the year ended December 31, 2000 despite the
September 11th events. The primary reason for the decrease was the increased capacity of CRJs, which
are less expensive to operate on an ASM basis than Brasilias. Additionally, during the year ended
December 31, 2001, the Company recognized approximately $8.2 million in funds received under the
Stabilization Act, which partially offset increased costs associated with the September 11, 2001 terrorist
attacks. Other factors relating to the change in operating expenses are discussed below.
Salaries, wages and employee benefits increased as a percentage of airline operating revenues to
27.8% for the year ended December 31, 2001 from 26.2% for the year ended December 31, 2000. The
increase was principally the result of the service disruption and the decrease in demand for airline
service resulting from the September 11th events. The average number of full-time equivalent
employees for the year ended December 31, 2001 was 4,726 compared to 4,160 for the year ended
December 31, 2000, an increase of 13.6%. The increase in number of employees was due in large part,
to the addition of personnel required for SkyWest’s expansion. Salaries, wages and employee benefits
per ASM decreased to 5.9¢ for the year ended December 31, 2001 compared to 6.1¢ for the year
ended December 31, 2000. The decrease in costs was due to the increase in stage lengths flown by
CRJs that have been added to SkyWest’s fleet and continued operational improvements.
Aircraft costs, including aircraft rent and depreciation, increased as a percentage of airline
operating revenues to 19.6% for the year ended December 31, 2001 from 16.9% for the year ended
December 31, 2000. The increase was due primarily to the early termination and return of seven leased
Brasilias flown under the United code. The termination of these leases resulted in a $3.4 million
write-off of unamortized engine overhauls related to the aircraft. Aircraft costs per ASM increased
slightly to 4.2¢ for the year ended December 31, 2001 from 3.9¢ for the year ended December 31, 2000.
The increase in costs was due to the $3.4 million write-off, a higher mix of new aircraft within the fleet
and build-up costs associated with the delivery of these new aircraft.
Maintenance expense increased as a percentage of airline operating revenues to 10.5% for the year
ended December 31, 2001 compared to 8.3% for the year ended December 31, 2000. The increase was
due primarily to airline operating revenues increasing only 15.1% period over period, while
ASMs increased 25.7%. The increase was also due to an adjustment to the CRJ engine overhaul
accrual based on a change to the hourly accrual rate and for actual overhaul costs in excess of amounts
previously accrued. Maintenance expense per ASM increased slightly to 2.2¢ for the year ended
December 31, 2001 from 1.9¢ for the year ended December 31, 2000 and increased 46.4% period over
period. These increases were due to the increase in ASMs and increased general maintenance costs in
connection with the return of seven Brasilias through lease termination as well as the adjustment to the
CRJ engine overhaul accrual.
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