SkyWest Airlines 2003 Annual Report Download - page 2

Download and view the complete annual report

Please find page 2 of the 2003 SkyWest Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 63

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63

conditions in the administration of the contract. It also includes 7 additional 50-seat
regional jet aircraft scheduled for delivery during 2005 and which we expect to fly in
our Delta Connection operations.
Early in 2003 we began an aggressive campaign to reduce our operating costs in order
to provide value to our major partners and remain competitive long-term. We were
able to reduce our cost per available seat mile 11.4% to $0.134 per available seat mile
by purchasing only essential capital items, hiring only essential front line personnel,
reducing management and salaried personnel compensation in varying amounts and
seeking price reductions from vendors supplying goods and services to our company.
The assistance and cooperation of our employees and vendors has been essential in
achieving our results and creating a platform for future growth.
On September 15, 2003, we announced the completion of a firm order with
Bombardier Aerospace for 30, 70-seat regional jet aircraft that will be flown in our
United Express operations. We began taking delivery of these aircraft in January
2004. Just after year-end we announced an additional firm order with Bombardier
Aerospace for another 12 regional jet aircraft, also to be flown in United Express
operations, consisting of 10, 50-seat and two, 70-seat regional jet aircraft.
As a result of these orders and announcements, we plan to take delivery of 27
regional jets during 2004 and 22 during 2005. We expect these aircraft acquisitions to
generate approximately 28% growth in available seat miles for 2004 and
approximately 30% for 2005.
We also added Continental Airlines as a third code-sharing partner during the year.
We operate 9 EMB-120 aircraft out of the Houston hub in their behalf. We are proud
to be part of the Continental Connection system and renew the business relationship
that we had with Continental during 1995-1997.
Our balance sheet remains one of the strongest in the industry. We ended the year
with $480.4 million in cash and marketable securities. During the year we invested
approximately $70.0 million in cash capital expenditures, approximately $66.8
million in aircraft acquisitions, approximately $25.6 million in long-term debt
reductions and approximately $4.6 million in dividends. After investing in these
items, the combined balance of cash and marketable securities increased
approximately $55 million.
As we have previously communicated, our objective is to continue to be the highest
quality and maintain a competitive cost structure in the aircraft that we operate. We
believe we can accomplish this by first, recognizing and treating the customers that
we serve in a way so that they prefer and choose our service and second, recognize
our responsibility to our major code-sharing partners by providing service that will
create long-term value. We intend to continue to pursue opportunities with other
major U.S. airlines in order to diversify our existing risk. Finally, we know that