SkyWest Airlines 2006 Annual Report Download - page 46

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Passenger Load Factor. Passenger load factor increased to 75.0% for the year ended December 31,
2005, from73.5% for the year ended December 31, 2004. The increase in load factor wasdue primarily to
the further development of our relationships with United andDelta whereby SkyWest Airlines
supplements mainline service in previously established and developed markets. Additionally, we are
experiencing higher passenger acceptance of ourregional jetaircraft.
Ground Handling and Other Revenue. Totalground handling revenue for the year ended
December31, 2005 increased approximately 55.5% from the same period of 2004. The increase was
primarily relatedto contracts with our major partners, whereby, SkyWest Airlines performs ground
handling services for other regional airlines.
Total Airline Expenses Excluding Fuel. Total airline expenses for theyear ended December 31, 2005,
excluding fuel charges (which aresubstantially reimbursable by our major partners), increased
approximately 55.2% from the same period of 2004. The increase was primarily a result of a 68.5%
increase in ASMs (which resulted principally from the acquisitionof ASA). Total operating expenses for
the year ended December 31, 2005 increasedat a lower rate than ASM growth, primarily dueto the
increased operating efficiencies obtained from increased stage lengths flown by the regional jets.
Operating and Interest Expenses.Operating and interest expensesincreased 74.5%to$1.80 billion for
the year ended December 31, 2005, compared to $1.03 billion forthe year ended December 31, 2004.The
increase in total operating and interest expenses was due principally to theacquisition of ASA. As a
percentage of consolidated operating revenues, total operating and interest expenses increased to 91.5%
for the year endedDecember 31, 2005, from 89.1% for the year ended December 31, 2004.The increase in
operating and interest expenses as apercentage of consolidated operating revenues was primarily due to
significant increasesinfuelcosts year-over-year.
Thefollowing tables set forth information regarding ouroperating expense components for theyears
ended December 31, 2005 and2004. Operating expenses are expressed as a percentageofoperating
revenues. Individual expense components arealso expressedas cents per ASM.
Year ended December 31,
20052004
Amount
Percentage
of
Revenue
Cents
per
ASMAmount
Percentage
of
Revenue
Cents
Per
ASM
(in thousands)(in thousands)
Salaries, wages and employee
benefits.....................$434,218 22.1 3.4 $282,676 24.5 3.8
Aircraft costs..................325,771 16.6 2.6 222,837 19.3 3.0
Maintenance ..................129,626 6.6 1.0 77,514 6.7 1.0
Fuel..........................590,776 30.1 4.6 252,556 21.8 3.3
Other airline expenses..........263,248 13.4 2.1 175,686 15.2 2.3
Interest.......................53,3312.7 0.418,239 1.60.2
Total airline expenses ..........$1,796,970 14.1 $1,029,508 13.6
Thecost perASMof salaries, wages and employee benefits decreased to 3.4¢ for theyear ended
December31, 2005, compared to 3.8¢ for theyear ended December31, 2004. The average number of full-
time equivalent employees increased 97.2% to 13,304 for the year ended December 31,2005 from 6,747 for
the year ended December 31, 2004. The increase in number of employees wasdue, in largepart,to the
acquisitionof ASA andadditionof personnelrequired for thenewregionaljet flying andground handling
operations within our United Express operations.
ThecostperASMforaircraftcosts, including aircraft rent and depreciation, decreased to 2.6¢ for the
year ended December31,2005, from 3.0¢ for theyear ended December 31,2004. Thedecrease in cost