SkyWest Airlines 2002 Annual Report Download - page 45

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(2) Long-term Debt
Long-term debt consisted of the following as of December 31, 2002 and 2001 (in thousands):
2002 2001
Notes payable to banks, due in semi-annual installments plus
interest at 6.06% to 6.45% through 2018, secured by aircraft $ 63,722 $ 50,086
Notes payable to banks, due in semi-annual installments plus
interest at 3.72% to 3.86%, net of the benefits of interest
rate subsidies through the Brazilian Export financing
program, through 2011, secured by aircraft ............. 20,339 22,438
Note payable to bank, due in semi-annual installments plus
interest at 7.18% through 2012, secured by aircraft ....... 15,080 15,808
Notes payable to banks, due in monthly installments including
interest at 6.70% to 7.37% through 2006, secured by aircraft 11,490 15,674
Note payable to bank, due in semi-annual installments plus
interest based on six- month LIBOR (1.38% at
December 31, 2002) through 2016, secured by aircraft ..... 14,482 15,044
Note payable to bank, due in monthly installments plus
interest based on LIBOR through 2012, secured by buildings 8,772 —
Other notes payable, secured by aircraft ................. 4,026 6,789
137,911 125,839
Less current maturities ............................. (12,532) (12,151)
$125,379 $113,688
The aggregate amounts of principal maturities of long-term debt as of December 31, 2002 were as
follows (in thousands):
Year ending December 31,
2003 ................................................... $ 12,532
2004 ................................................... 11,831
2005 ................................................... 11,736
2006 ................................................... 7,731
2007 ................................................... 8,056
Thereafter ............................................... 86,025
$137,911
The Company’s long-term debt was incurred in connection with the acquisition of Brasilia and
CRJ aircraft. Certain amounts related to the Brasilia aircraft are supported by continuing subsidy
payments through the export support program of the Federative Republic of Brazil. The subsidy
payments reduce the stated interest rates to an average effective rate of approximately 3.7%, on
$15.5 million of the long-term debt, at December 31, 2002. The continuing subsidy payments are at risk
to the Company if the Federative Republic of Brazil does not meet its obligations under the export
support program. While the Company has no reason to believe, based on information currently
available, that the Company will not continue to receive these subsidy payments from the Federative
Republic of Brazil in the future, there can be no assurance that such a default will not occur. On the
remaining long-term debt related to the Brasilia aircraft of $20.3 million, the lender has assumed the
risk of the subsidy payments which has reduced the average effective rate on this debt to approximately
3.8% at December 31, 2002. The average effective rate on the debt related to the CRJ aircraft of
$93.3 million was 6.1% at December 31, 2002, and is not subject to subsidy payments.
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