SkyWest Airlines 2006 Annual Report Download - page 27

21
respectively. Thecontract with ASA’s flight controllers became amendable in April 2006. Negotiations
with unions representingASA’semployees could divert management attention and disrupt operations,
which mayresultin increased operating expenses and lower net income. Moreover,we cannot predict the
outcome of any future negotiations relating to unionrepresentation or collective bargaining agreements.
SkyWest Airlines’ employees are not currently represented by any union; however, collective
bargaining group organization efforts among those employeesoccur from time to time. We recognize that
such efforts will likely continue in the future and may ultimately result in some or all of SkyWest Airlines’
employees being represented by one or more unions. Moreover, oneor more unions representing ASA
employees mayseek asingle carrier determination by the National Mediation Board, which couldrequire
SkyWest Airlines to recognize such union or unions as the certified bargaining representative of SkyWest
Airlines’ employees. One or more unions representing ASAemployees may also assert that SkyWest
Airlines’ employees should be subjectto ASA collective bargainingagreements. If SkyWest Airlines’
employees were to unionizeor be deemed to be represented by one or more unions, negotiations with
unions representingSkyWest Airlines’ employees could divert management attentionanddisrupt
operations, which may result in increased operating expenses and lower net income. Moreover, we cannot
predict the outcomeofany future negotiations relating to union representationorcollective bargaining
agreements. Agreements reached in collective bargaining may increase operating expenses and lower
operating results and net income. If unionizing efforts among SkyWest Airlines’ employees are successful,
we may be subjected to risks of work interruption or stoppage and/or incur additional administrative
expenses associatedwith union representation.
If we are unable to reach labor agreements with anycurrent or future unionized work groups, we may
be subjectto work interruptions or stoppages, which may adverselyaffect our ability to conduct our
operations and may even allowDelta, United or Midwest to terminate their respective code-share
agreements.
We may be unable to obtain all of the aircraft, engines, partsorrelated maintenance andsupport services
we require, which could have amaterial adverse impact on our business.
We rely on a limited number of aircraft types, and are dependent on Bombardier as thesole
manufacturer of ourregional jets. For the year endedDecember 31, 2006, 57.3% of our available seat
miles were flown using CRJ200s, 35.6% of our available seat miles were flown using CRJ700s and0.8% of
our available seatmiles were flown using CRJ900s. As of December 31,2006, we had commitments of
approximately $363.5 million to purchase eightCRJ900s,to place into service 11 CRJ200s throughthird-
partylease arrangements and to sublease 12 CRJ200’s from Delta,togetherwithrelatedflight equipment.
Additionally, we have obtainedoptions to acquire another38regionaljets thatcan be deliveredin 70 to
90-seat configurations. Delivery dates for these aircraft remain subject to final determination as agreed
upon by us and our major partners.
Any significant disruption or delay in the expected delivery schedule of our fleet would adversely
affect our business strategy and overalloperations and could have a material adverse impact on our
operating results or our financial condition. Certain of Bombardier’saerospace workers are represented by
unions and have participated in at least one strike in recent history. Any future prolonged strike at
Bombardier or delay in Bombardier’s production schedule as a result of labor matters could disrupt the
delivery of regional jets to us, which could adversely affect ourplanned fleetgrowth. We arealso
dependent on General Electric as the manufacturer of ouraircraft engines. General Electric also provides
parts, repair and overhaul services, andother types of support services on our engines. Our operations
could be materiallyand adverselyaffected by thefailure or inability of Bombardier or General Electric to
provide sufficient partsor related maintenance and support services to us on a timely or economical basis,
or the interruption of our flight operations as a result of unscheduled or unanticipated maintenance
requirements for our aircraft or engines. In addition, theissuance of FAA directives restricting or