SkyWest Airlines 2003 Annual Report Download - page 23

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Results of Operations
2003 Compared to 2002
Net Income. Net income decreased to $66.8 million, or $1.15 per diluted share, for the year ended December 31, 2003, compared
to $86.9 million, or $1.51 per diluted share, for the year ended December 31, 2002. Factors relating to the change in net income
are discussed below.
Passenger Revenues. Passenger revenues, which represented 99.3% of consolidated operating revenues for the year ended
December 31, 2003, increased 14.6% to $882.1 million for the year ended December 31, 2003, from $769.4 million or 99.4% of
consolidated operating revenues for the year ended December 31, 2002. The increase was primarily due to a 34.9% increase in
ASMs, principally as a result of the delivery of 39 additional CRJ200s during the year; however, this increase was partially offset
by the decrease in the fee-per-departure rates the Company is receiving from its major partners Eleven additional CRJ200s were
placed in service under the Delta Connection operations and 28 additional CRJ200s were placed in service under the United
Express operations. Due to lease expirations, the Company returned three CRJ200s to the original lessor during 2003. Passenger
revenues were also positively affected by the Company’s achievement of a 99.3% controllable completion factor and an actual
completion factor of 98.4% of scheduled flights. Revenue per ASM decreased 15.0% to 15.1¢ for the year ended December 31,
2003, from 17.8¢ for the year ended December 31, 2002, primarily due to an increase in ASMs produced by CRJ200s (resulting
in lower revenue per ASM pursuant to the terms of the Company’s agreements with Delta and United).
Passenger Load Factor. Passenger load factor increased to 71.9% for the year ended December 31, 2003, from 68.7% for the
year ended December 31, 2002. The increase in load factor was due primarily to the further development of relationships with
United and Delta whereby SkyWest is experiencing higher than average load factors as the Company adds CRJ200s in its new
markets. The increase was also due, in part, to refinements in flight schedules made by the Company’s major partners.
Total Airline Expenses Excluding Fuel. Total airline expenses for the year ended December 31, 2003, excluding fuel charges
(which are reimbursable by the Company’s major partners), increased approximately 14.2% from the same period of 2002. The
increase was primarily a result of a 34.9% increase in ASMs (which resulted principally from the expansion of SkyWest’s
CRJ200 fleet year-over-year). Total operating expenses for the year ended December 31, 2003 increased at a lower rate than
ASMs. The primary reason for the lower rate of increase was the increased stage lengths flown by the CRJ200s and the
aggressive cost reduction initiatives implemented by the Company during the year ended December 31, 2003.
Operating and Interest Expense. Operating expenses and interest increased 19.9% to $789.4 million for the year ended December
31, 2003, compared to $658.5 million for the year ended December 31, 2002. The increase in total operating expenses and
interest was due principally to the growth in SkyWest’s CRJ200 fleet year-over-year. As a percentage of consolidated operating
revenues, total operating expenses and interest increased to 88.9% for the year ended December 31, 2003, from 85.0% for the
year ended December 31, 2002. The increase in operating expenses and interest as a percentage of consolidated operating
revenues was primarily due to the reduction in the Company’s departure rates as operating revenues increased 14.7% year-over-
year, while total operating expenses and interest increased 19.9% year-over-year. The increase in interest expense was also
primarily due to the increase in debt financing of the Company’s new CRJ200s. Airline operating and interest expense per ASM
decreased 11.3% to 13.4¢ for the year ended December 31, 2003 from 15.1¢ for the year ended December 31, 2002. The primary
reason for the decrease was the increased capacity of CRJ200s, which are less expensive to operate on a per-ASM basis than
EMB120s.
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