SkyWest Airlines 2003 Annual Report Download - page 26

Year ended December 31,
2002 2001
Amount
Percentage
of
Revenue
Cents
per
ASM Amount
Percentage
of
Revenue
Cents
Per
ASM
(in thousands) (in thousands)
Salaries, wages and employee benefits $ 200,715 25.9 4.6 $ 167,590 27.8 5.9
Aircraft costs 160,853 20.8 3.7 118,072 19.6 4.2
Maintenance 54,041 7.0 1.2 63,242 10.5 2.2
Fuel 97,899 12.6 2.2 72,202 12.0 2.6
Other airline expenses 142,822 18.4 3.3 123,376 20.5 4.3
US government assistance (1,438) (0.2) 0.0 (8,181) (1.4) (0.3)
Interest 3,611 0.5 0.1 - 0.0 0.0
Total airline expenses $ 658,503 15.1 $ 536,301 18.9
The cost per ASM for salaries, wages and employee benefits decreased to 4.6¢ for the year ended December 31, 2002, compared
to 5.9¢ for the year ended December 31, 2001. The decrease was primarily the result of the increase in stage lengths flown by
CRJ200s. The average number of full-time equivalent employees increased 7.5% to 5,079 for the year ended December 31, 2002,
from 4,726 for the year ended December 31, 2001. The increase in number of employees was due in large part, to the addition of
personnel required for SkyWest’s current and anticipated expansion.
The cost per ASM for aircraft costs, including aircraft rent and depreciation, decreased to 3.7¢ for the year ended December 31,
2002, from 4.2¢ for the year ended December 31, 2001. The decrease in cost–per-ASM was primarily due to the increase in the
number of CRJ200s that were added to the fleet during the twelve months ended December 31, 2002, resulting in an increase in
stage lengths year-over-year.
The cost per ASM for maintenance expense decreased to 1.2¢ for the year ended December 31, 2002, compared to 2.2¢ for the
year ended December 31, 2001. The decrease in cost per ASM was primarily due to the greater stage lengths flown by the
CRJ200s, a higher mix of new aircraft within the fleet and the favorable timing of certain maintenance-related events. Under the
Company’s United Express Agreement, specific amounts are included in the rates and charges for mature maintenance on its
CRJ200 engines as it incurred. As a result, during the year ended December 31, 2002, the Company collected and recorded as
revenue, approximately $5.9 million (pretax) under the United Express Agreement, with no corresponding offset for regional jet
engine maintenance overhauls since none were incurred.
The cost per ASM for fuel decreased to 2.2¢ for the year ended December 31, 2002, from 2.6¢ for the year ended December 31,
2001. This decrease was primarily due to the average price of fuel decreasing 5.8% per gallon, to $0.97 as of December 31, 2002,
from $1.03 as of December 31, 2001. Pursuant to the terms of the Company’s agreements with its major partners, substantially
all fuel costs are reimbursed by the Company’s major partners.
The cost per ASM of other expenses, primarily consisting of commissions, landing fees, station rentals, computer reservation
system fees and hull and liability insurance decreased 23.3% to 3.3¢ for the year ended December 31, 2002, from 4.3¢ for the
year ended December 31, 2001. The decrease in cost per ASM was primarily due to the increase in the number of CRJ200s that
have been added to SkyWest’s fleet and the Company taking advantage of a government program related to war-risk liability and
hull insurance coverage whereby the Company’s liability insurance premiums decreased substantially.
Interest expense increased to approximately $3.6 million during the year ended December 31, 2002. The increase in interest
expense was due primarily to the decrease in the amount of interest available for capitalization in 2002. All interest expense was
capitalized during the year ended December 31, 2001.
Liquidity and Capital Resources
The Company had working capital of $518.4 million and a current ratio of 4.4:1 at December 31, 2003, compared to working
capital of $391.8 million and a current ratio of 4.2:1 at December 31, 2002. The principal sources of funds during the year ended
December 31, 2003 were $625.1 million of proceeds from the issuance of long-term debt, $157.7 million provided by operating
activities, $33.7 million in proceeds from the sale-lease back of CRJ200s and $6.8 million from the sale of common stock in
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