SkyWest Airlines 2006 Annual Report Download - page 43

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37
aircraft ownership costs. The amount deemed to be rental income related to aircraft ownership costs for
the year ended 2006 was $486.6 million.
Passenger Load Factor. Passenger load factor increased to 78.3% for the year ended December 31,
2006, from 75.0% forthe yearended December 31, 2005. The increase in load factor wasdue primarily to
thefurther development of ourrelationships with United andDelta whereby SkyWestAirlines andASA
supplement mainline service in previously established and developed markets.
Ground Handling and Other Revenue. Totalground handling revenue for the year ended
December31, 2006 increased approximately 7.2% fromthe same period of 2005. Theincrease was
primarily related to additional citiesSkyWest Airlines was awarded ground handling contracts from our
major partners, whereby, SkyWest Airlines performs the ground handling for other regional airlines.
Total Airline Expenses Excluding Fuel. Total airline expenses for theyear ended December 31, 2006,
excluding fuel charges (which aresubstantially reimbursable by our major partners), increased
approximately 56.1% from the same period of 2005. The increase was primarily a result of a 58.9%
increase in ASMs (which resulted principally from the acquisitionof ASA in September 2005 and
additional aircraft delivered in 2006).Airline operatingand interest expenses, excluding fuel charges, per
ASMdecreased2.1% to 9.3¢ forthe year ended December 31, 2006, from 9.5¢ for theyear ended
December 31,2005. The primary reason for the decrease was the operating efficiencies obtained from
increased stage lengths flownby our regionaljets.
Operating and Interest Expenses.Operating and interest expensesincreased 61.0%to$2.89 billion for
the year ended December 31, 2006, compared to $1.80 billion forthe year ended December 31, 2005.The
increase in total operating and interest expenses was due principally to theacquisition of ASA in
September 2005 andadditional aircraft delivered in 2006. As apercentage of consolidatedoperating
revenues,total operatingand interest expenses increased to 92.9% for the year ended December 31, 2006,
from 91.5% for the year ended December 31, 2005. Theincrease in operating and interest expenses as a
percentage of consolidated operating revenues was primarily due to significant increasesin fuel costs year-
over-year.
Thefollowing tables set forth information regarding ouroperating expense components for theyears
ended December 31, 2006 and2005. Operating expenses are expressed as a percentageofoperating
revenues. Individual expense components arealso expressedas cents per ASM.
2006 2005
Amount
Percentage
of
Revenue
Cents
per
ASM Amount
Percentage
of
Revenue
Cents
Per
ASM
(in thousands) (in thousands)
Salaries, wages and employee
benefits.....................$673,96121.6 3.3$434,218 22.1 3.4
Aircraft costs. .................471,38115.1 2.3325,771 16.6 2.6
Maintenance..................220,7057.1 1.1129,626 6.6 1.0
Fuel..........................1,010,71732.5 5.0590,776 30.1 4.6
Other airlineexpenses. .........398,73212.8 2.0263,248 13.4 2.1
Interest.......................118,0023.8 0.653,331 2.7 0.4
Total airlineexpenses..........$2,893,49814.3 $1,796,97014.1
Thecost perASMof salaries, wages and employee benefits decreased to 3.3¢ for theyear ended
December31, 2006, compared to 3.4¢ for theyear ended December31, 2005. The averagenumber of full-
time equivalent employees increased 8.6% to 14,450 forthe year ended December 31, 2006 from 13,304 for
the year ended December 31, 2005. The increase in number of employees was primarily due to the addition