SkyWest Airlines 2003 Annual Report Download - page 47

The above minimum rental payments do not include landing fees, which amounted to approximately $26,519,000, $19,739,000
and $14,877,000 for the years ended December 31, 2003, 2002 and 2001, respectively.
The Company self-insures a portion of its losses from claims related to workers' compensation, environmental issues, property
damage, medical insurance for employees and general liability. Losses are accrued based on an estimate of the ultimate aggregate
liability for claims incurred, using standard industry practices and the Company’s actual experience.
Under certain contracts, the Company has agreed to indemnify certain parties against legal liability arising out of actions by other
parties. The terms of these contracts range up to 20 years. Generally, the Company has liability insurance protecting the Company
for the obligations it has undertaken relative to these indemnities.
Purchase Commitments and Options
On September 15, 2003, the Company announced the completion of a firm order for 30, 70-seat CRJ700s for its United Express
operations. The Company presently anticipates that it will begin taking delivery of these aircraft in January 2004 and continue
through May 2005. The Company’s firm aircraft orders, as of December 31, 2003, consisted of orders for 30, 70-seat CRJ700s
scheduled for delivery through May 2005. Gross committed expenditures for these aircraft and related equipment, including
estimated amounts for contractual price escalations will be approximately $375 million in 2004 and $375 million in 2005. The
contract also includes options for another 80 aircraft that can be delivered in either 70 or 90-seat configurations. The Company
presently anticipates that delivery dates for these aircraft could start in June 2005 and continue through September 2008; however,
actual delivery dates remain subject to final determination as agreed upon by the Company and United.
Legal Matters
The Company is subject to certain legal actions which it considers routine to its business activities. As of December 31, 2003,
management believes, after consultation with legal counsel, that the ultimate outcome of such legal matters will not have a
material adverse effect on the Company’s financial position, liquidity or results of operations.
Concentration Risk and Significant Customers
The Company monitors the financial condition of its major partners and requires no collateral from its major partners or
customers. The Company maintains an allowance for doubtful accounts receivable based upon expected collectability of all
accounts receivable. The Company’s allowance for doubtful accounts totaled $59,000 and $723,000 as of December 31, 2003 and
2002, respectively. For the years ended December 31, 2003, 2002 and 2001, the Company’s contractual relationships with Delta
and United combined accounted for more than 98.4% of the Company’s total revenues.
As of December 31, 2003, the Company has demand deposits and money market accounts totaling $23,896,000 with Zions First
National Bank and $872,000 with Wells Fargo Bank. These balances exceed the $100,000 limit for insurance by the Federal
Deposit Insurance Corporation.
Government Compensation
The Emergency War Time Supplemental Appropriations Act of 2003 became effective on May 15, 2003, and the Company
received approximately $6.5 million under the act. This legislation provides for compensation to domestic airlines based on their
proportional share of passenger security and infrastructure security fees paid, as well as reimbursement for installing fortified
flight deck doors. This new legislation also provides for 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.
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