SkyWest Airlines 2003 Annual Report Download - page 7

PART I
ITEM 1. BUSINESS
General
SkyWest, Inc. (the “Company”), through its wholly-owned subsidiary, SkyWest Airlines, Inc. (“SkyWest”), operates one of the
larger independent regional airlines in the United States. SkyWest offers scheduled passenger and air freight service with
approximately 1,100 daily departures to 105 cities in 26 states and three Canadian provinces. Additionally, SkyWest provides
customer handling services for approximately nine other airlines throughout SkyWest’s system. SkyWest has been a partner with
Delta Air Lines, Inc. (“Delta”) in Salt Lake City and United Airlines, Inc. (“United”) in Los Angeles since 1987 and 1997,
respectively. In 1998, SkyWest expanded its relationship with United to provide service in Portland, Seattle/Tacoma, San
Francisco and in additional Los Angeles markets. In 2001, SkyWest expanded its operations to serve as the Delta Connection in
Dallas/Fort Worth. In April 2003, SkyWest signed an agreement with Continental Airlines, Inc. (“Continental”) to supply
Continental with regional airline feed into Continental’s Houston hub effective on July 1, 2003. Today, SkyWest operates as a
Delta Connection carrier in Salt Lake City and Dallas/Fort Worth, as a United Express carrier in Los Angeles, San Francisco,
Denver, Chicago and the Pacific Northwest and as a Continental Connection carrier in Houston. SkyWest believes that its
success in attracting multiple contracts contractual relationships with major airline partners is attributable to its delivery of high-
quality customer service with an all cabin-class fleet. As of December 31, 2003, 51% of SkyWest’s capacity (measured in
“available seat miles” or “ASMs”) operated under the Delta code, 47% operated under the United code and 2% operated under the
Continental code. As of December 31, 2003, SkyWest operated a fleet of 76 Embraer EMB-120 Brasilia turboprops
(“EMB120s”) and 109 Bombardier Canadair Regional Jets (“CRJ200s”). On March 2, 2004, Delta awarded the Company the
rights to acquire seven additional CRJ200s, with deliveries currently expected to begin during the first quarter of 2005.
Historically, multiple contractual relationships with major airline partners have enabled SkyWest to reduce reliance on any single
major airline code and to enhance and stabilize operating results through a mix of SkyWest-controlled or “prorate” flying and
contract flying. On contract routes, the major airline partner controls scheduling, ticketing, pricing and seat inventories and
SkyWest receives from the major airline partner negotiated payments per-block-hour or flight departure and incentives related to
levels of customer service. On SkyWest-controlled flights, SkyWest controls scheduling, ticketing, pricing and seat inventories
and receives a prorated portion of passenger fares. All of the Company’s CRJ200 flights are flown under contract flying
arrangements. The Company’s EMB120s flown for Delta and Continental are flown under prorate arrangements. Approximately
90% of the Company’s EMB120s flown in the United system are flown under contractual arrangements, with the remaining ten
percent flown under prorate arrangements.
On September 15, 2003, the Company announced the completion of a firm order for 30, 70-seat CRJ700s for its United Express
operations with deliveries presently scheduled to begin in January 2004 and continue through May 2005. On February 10, 2004,
the Company further amended the order to include 10 additional CRJ200s and two additional CRJ700s, bringing the total order to
32 CRJ700s and 10 CRJ200s during this same delivery period. The contract also grants to the Company options to acquire an
additional 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.
Available Information
The Company files annual, quarterly and current reports and other information with the Securities and Exchange Commission (the
‘‘SEC’’ or the ‘‘Commission’’). These materials can be inspected and copied at the SEC’s Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of these materials may also be obtained by mail at prescribed rates from the SEC’s
Public Reference Room at the above address. Information about the Public Reference Room can be obtained by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The address of the SEC’s Internet site is http://www.sec.gov.
The Company maintains an Internet web site at http://www.skywest.com. The Company currently makes its most recent annual
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