SkyWest Airlines 2003 Annual Report Download - page 25

flight deck doors. This new legislation also provides the suspension of passenger and infrastructure fees from June 1, 2003
through December 31, 2003 and an extension of war risk liability and hull insurance coverage through August 2004. During the
year ended December 31, 2003, the Company did not record the benefits of amounts received, as the Company anticipates that a
significant portion of the payments received by the Company will be payable to its major partners pursuant to the terms of the
Company’s agreements with those partners. These amounts have been recorded as other current liabilities in the Company’s
consolidated balance sheet as of December 31, 2003.
Interest expense increased to approximately $9.9 million during the year ended December 31, 2003, from approximately $3.6
million during the year ended December 31, 2002. The increase in interest expense was primarily due to additional long-term
debt financing of $372.8 million related to the CRJ200s acquired by the Company during the year ended December 31, 2003.
2002 Compared to 2001
Net Income. Net income increased to $86.9 million, or $1.51 per diluted share, for the year ended December 31, 2002 compared
to $50.5 million, or $0.88 per diluted share, for the year ended December, 2001. The $86.9 million of net income for the year
ended December 31, 2002 reflects previously disclosed adjustments to certain revenue and expense items related to changes in the
Company’s maintenance policy. Factors relating to the change in net income are discussed below.
Passenger Revenues. Passenger revenues, which represented 99.4% of consolidated operating revenues for the year ended
December 31, 2002, 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 primarily due to a 53.5% increase in
ASMs, principally as a result of SkyWest’s placement of 26 additional CRJ200s in service during the year. Nine CRJ200s were
placed in service under the Delta Connection operations and 17 CRJ200s were placed in service under the United Express
operations. Passenger revenues were also positively affected by the Company’s achievement of a 99.0% controllable completion
factor and an actual completion factor of 98.0% of scheduled flights during the year ended December 31, 2002. Revenue per
ASM decreased 16.0% to 17.8¢ for the year ended December 31, 2002, from 21.2¢ for the year ended December 31, 2001,
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 68.7% for the year ended December 31, 2002, from 61.1% for the
year ended December 31, 2001. The increase in load factor was due primarily to the further development of relationships with
United and Delta whereby SkyWest experienced higher than average load factors as the Company added 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, 2002, excluding fuel charges
(which are reimbursable by the Company’s major partners), increased approximately 20.8% from the same period in 2001. The
increase was primarily a result of a 53.5% increase in ASMs due to the respective growth in the CRJ200 fleet year-over-year.
Total operating expenses for the year ended December 31, 2002 increased at a lower rate than ASMs. The primary reason for the
lower rate of increase was the increased stage lengths flown by CRJ200s and the aggressive cost reduction initiatives
implemented by the Company during the year ended December 31, 2001.
Operating and Interest Expenses. Operating expenses and interest increased 22.8% to $658.5 million for the year ended
December 31, 2002, compared to $536.3 million for the year ended December 31, 2001. The increase in total operating expenses
and interest was due principally to the growth in size of the Company’s CRJ200 fleet. As a percentage of consolidated operating
revenues, total operating expenses and interest decreased to 85.0% for the year ended December 31, 2002, from 89.1% for the
year ended December 31, 2001, primarily as a result of economic efficiency realized from the deliveries of new CRJ200s. The
Company’s CRJ200s are less expensive to operate on an ASM basis than EMB120s. Airline operating cost per ASM (including
interest expense) decreased 20.1% to 15.1¢ for the year December 31, 2002, from 18.9¢ for the year ended December 31, 2001.
The decrease was primarily due to the increased capacity of the CRJ200s, which are less expensive to operate on a per-ASM basis
than EMB120s.
The following tables set forth information regarding the Company’s operating expense components for the years ended December
31, 2002 and 2001. Operating expenses are expressed as a percentage of operating revenues. Individual operating and interest
expense components are also expressed as cents per ASM.
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