SkyWest Airlines 2006 Annual Report Download - page 10

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4
•unionization efforts amongSkyWest Airlines’ employees; and
•other risks and uncertainties listed fromtime to time in our reports filed with the SEC.
Theremay be other factors that may affect mattersdiscussed in theforward-looking statements, and
may also causeactual results to differ materially fromthose discussed. We assumeno obligation to publicly
updateany forward-looking statement to reflect actual results, changesin assumptions or changes in other
factors affecting these statements other than as required by law.
ITEM 1. BUSINESS
General
We are a holding company that operates two independent, wholly-owned subsidiaries, SkyWest
Airlines andASA. SkyWestAirlines andASA areregionalairlines offering scheduledpassenger service
with over 2,400 daily departures to 229 destinations in the United States, Canada, Mexicoand the
Caribbean. Substantially all of our flights are operated as either Delta Connection or United Express
under code-sharearrangements with Delta or United, with significant presence in their keydomestic hubs
and focuscities. SkyWest Airlinesand ASA generally provide regional flying to our partners under long-
term, fixed-fee code-share agreements. Among other features of our fixed-fee agreements, ourpartners
generally reimburse us for specified direct operating expenses (including fuel expense, which is passed
through to our partners), andpay us afeefor operatingthe aircraft.
SkyWest AirlinesandASAhave developed industry-leading reputations for providing quality,low-
cost regional airline serviceduring theirlong operating histories—SkyWest Airlines has been flyingsince
1972 and ASA since 1979. As of December, 31, 2006, our consolidated fleet consisted of atotalof 410
aircraft, of which 244were in service with Delta and 166 were in service with United. We currently operate
onetype of regional jet aircraft in three different configurations, the 40- and 50-seat Bombardier CRJ200
Regional Jet(the “CRJ200”), the70-seat Bombardier CRJ700 Regional Jet(the “CRJ700”) and the 70-90-
seat BombardierCRJ900 Regional Jet (the“CRJ900”), and twotypes of turboprop aircraft, the30-seat
Embraer Brasilia EMB-120turboprop (the “Brasilia turboprop”)and the 66-seat Avions de Transport
72-210 turboprop (the “ATR-72 turboprop”). SkyWest Airlines and ASA have combined firm orders to
acquire eight additional newCRJ900s to be flown for Delta. Additionally, SkyWest Airlines andASA have
plansto placeinto service 15 additional CRJ200s and12 additional CRJ700sduringthe year ending
December 31,2007. In addition, we have options to acquire 38 additionalBombardier Regional Jets over
thenext twoyears. We believe theoption aircraft, which range in seating configurations between 50 and 90
seats, position us to capitalizeon additional growth opportunities with our existing and other potential
code-share partners. Of those additionalaircraft, we anticipate that the12 CRJ700s will be subleased from
Delta, 11 CRJ200swill be provided through short-term lease arrangements with third parties and SkyWest
Airlines will provide four CRJ200s which are currently operated as spare aircraft.
On September 7, 2005, we completed the acquisition of ASA from Delta. We believe the combination
of SkyWest Airlines and ASApresents our company with opportunities for growth throughour two
geographically-focused regional airline platforms –SkyWest Airlines in theWestern United States and
ASA in theEastern United States. We now provide the vast majority of regional airline service for Delta in
Atlanta, its most important eastern hub, and Salt Lake City, its most important western hub. In connection
with the ASAacquisition, we establishedseparate, but substantiallysimilar, long-term fixed-fee Delta
Connection Agreements with Delta for both SkyWest Airlines and ASA. We also obtainedcontrol of 29
gates in the Hartsfield-Jackson International Airport locatedin Atlanta, from which we currently provide
service to Delta. Delta has committed to provide to us opportunities to utilize 20 additional regional jets in
our fleet by the end of 2007. Delta hasalso agreed that, starting in 2008, ASA will have the rightto
maintainitspercentage of total DeltaConnection flights that it has in 2007, so long as its bids for
additional regional flying are competitive with other regionalcarriers.