SkyWest Airlines 2006 Annual Report Download - page 44

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38
of personnelrequired for the new regional jet flying andduetothe additionofpersonnel requiredfornew
cities addedto our ground handling service contracts.
ThecostperASMforaircraftcosts, including aircraft rent and depreciation, decreased to 2.3¢ for the
year ended December31,2006, from 2.6¢ for theyear ended December31, 2005. The decrease in cost per
ASMwasprimarilydue to theaddition of ASA’sregionaljet fleet andthe additionof nineCRJ900s and 15
CRJ 700s, which have alower operating cost per ASMthan CRJ200s and our existingturboprop fleets.
Thecost perASM for maintenanceexpense increased to 1.1¢for the year ended December31, 2006,
from 1.0¢for theyear ended December31, 2005. The increase in thecost perASM was primarily
attributed to timing of maintenance eventsassociated with ahigher average age of ourCRJ200 and
CRJ700 fleets.The“Maintenance” line in thetable set forth above does not include salaries, wagesand
employee benefitsassociated with our maintenance operations(those costs are included in the“Salary,
wages and employee benefits” line in thetable). Accordingly, the amount for “Maintenance” in the table
above differsfrom themaintenance expense in our Consolidated Statements of Income setforth in Item 8
below. Under theUnited Express Agreement, specific amounts are included in the rates charged to United
formature maintenance on regional jet engines thatwe record as revenue. However, consistent with the
direct expense maintenance policy, we record maintenance expenseon our CRJ200 engines as it is
incurred. As a result, during theyear ended December 31,2006, we collected and recorded as revenue
$27.7 million (pretax) under the United Express Agreement, with no material offset to CRJ200 engine
maintenanceoverhauls.
The cost perASM forfuelincreased 8.7% to 5.0¢ for the yearended December31, 2006, from 4.6¢
forthe year ended December31, 2005. This increasewas primarily due to the average price of fuel
increasing to $2.20 pergallon during theyear endedDecember31, 2006, from $2.05pergallon for the year
ended December 31, 2005.
Thecost perASM for other expenses, primarily consisting of landing fees, station rentals, computer
reservation system fees and hull and liability insurance, decreased4.8% to 2.0¢ for the year ended
December31, 2006, from 2.1¢ for the year ended December 31, 2005. The primary reason for the decrease
was the operating efficiencies obtained from increased stage lengths flown by ourregional jets.
Interest expense increasedto approximately $118.0 million during theyear ended December 31, 2006,
from approximately $53.3million during the year ended December 31, 2005. The increase in interest
expense was primarily due to the acquisition of ASA’s aircraft in September 2005which are primarily
financed with long-term debt.