SkyWest Airlines 2004 Annual Report Download - page 14

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SkyWest's aircraft are turboprop and regional jet aircraft designed to operate more economically over short-haul routes with lower
passenger load factors than larger jet aircraft. These factors make it economically feasible for SkyWest to provide high frequency
service in markets with relatively low volumes of passenger traffic. Passenger comfort features of these aircraft include stand-up
headroom, a lavatory, overhead baggage compartments and flight attendant service. Fiscal year 1995 marked the introduction of
the CRJ200s. As of December 31, 2004, SkyWest operated 121 of 125 of these aircraft on stage lengths up to approximately 500
miles. During 2004, the Company introduced the CRJ700. As of December 31, 2004, SkyWest operated these 12 CRJ700s on
stage lengths up to approximately 800 miles.
The Company’s firm aircraft orders, as of December 31, 2004, consisted of orders for 20, 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 $500 million from January 2005 through May 31, 2005. The Company has
also obtained 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.
The Company’s total long-term debt at December 31, 2004 was $495.8 million, of which $487.9 million related to the acquisition
of EMB120 and CRJ200 aircraft and $7.9 million related to the acquisition of the Company’s corporate office building. The
average effective rate on the debt related to the EMB120 and CRJ200 aircraft of $487.9 million was approximately 4.4% at
December 31, 2004.
As part of the Company’s leveraged lease agreements, the Company typically indemnifies the equity/owner participant against
liabilities that may arise due to changes in benefits from tax ownership of the respective leased aircraft.
Ground Facilities
Employees of SkyWest perform substantially all routine airframe and engine maintenance and periodic inspection of equipment.
Maintenance is performed primarily at facilities in Palm Springs, California; Salt Lake City, Utah; and Fresno, California.
SkyWest owns or leases the following properties:
xSkyWest owns a 56,600 square foot maintenance facility in Palm Springs, California.
xSkyWest leases a 90,000 square foot aircraft maintenance and training facility at the Salt Lake City International Airport. The
Salt Lake City facility consists of 40,000 square feet of maintenance facilities and 50,000 square feet of training and other
facilities. The Salt Lake City facility was originally constructed by the Company and sold to and leased back from the Salt
Lake City Airport Authority. SkyWest is leasing the facility under an operating lease arrangement over a 36-year term.
xSkyWest leases a 90,000 square foot maintenance hanger and a 15,000 square foot office facility in Fresno, California.
xSkyWest leases a 28,000 square foot maintenance hanger in Tucson, Arizona.
xSkyWest leases a 131,300 square feet facility [at Salt Lake International Airport]. This facility consists of a 58,400 square
foot maintenance hangar and 72,900 square feet of training and office space. In January 2002, the Company entered into a
sale lease-back agreement with the Salt Lake Airport Authority. Under the agreement, the Company received approximately
$18 million in cash in exchange for the newly constructed facility and entered into a 26 year operating lease agreement. The
sales price was equal to the construction costs and no gain or loss was recognized.
xSkyWest leases ticket counters, check-in and boarding and other facilities in the passenger terminal areas in the majority of
the airports it serves and staffs these facilities with SkyWest personnel. Delta and United provide ticket handling and/or
ground support services for SkyWest in 79 of the 117 airports SkyWest serves.
xSkyWest owns its corporate headquarters located in a 63,000 square foot building and a newly constructed 55,000 square foot
building in St. George, Utah. The newly constructed facility is adjacent to the old office building and includes office space
for maintenance management and flight operations including pilot management, dispatch and flight attendant management.