SkyWest Airlines 2007 Annual Report Download - page 19

18
SkyWest Airlines’ employees are not currently represented by any union; however, collective bargaining group
organization efforts among those employees occur 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, one or more unions representing ASA employees may seek a single carrier determination by the National
Mediation Board, which could require SkyWest Airlines to recognize such union or unions as the certified bargaining
representative of SkyWest Airlines’ employees. One or more unions representing ASA employees may also assert that
SkyWest Airlines’ employees should be subject to ASA collective bargaining agreements. If SkyWest Airlines’ employees
were to unionize or be deemed to be represented by one or more unions, negotiations with unions representing SkyWest
Airlines’ employees could divert management attention and disrupt operations, which may result in increased operating
expenses and lower net income. Moreover, we cannot predict the outcome of any future negotiations relating to union
representation or collective 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
associated with union representation.
If we are unable to reach labor agreements with any current or future unionized work groups, we may be subject to
work interruptions or stoppages, which may adversely affect our ability to conduct our operations and may even allow Delta,
United or Midwest to terminate their respective code-share agreement.
We may be unable to obtain all of the aircraft, engines, parts or related maintenance and support services we require,
which could have a material adverse impact on our business.
We rely on a limited number of aircraft types, and are dependent on Bombardier as the sole manufacturer of our
regional jets. For the year ended December 31, 2007, 52.2% of our available seat miles were flown using CRJ200s, 35.8% of
our available seat miles were flown using CRJ700s and 6.4% of our available seat miles were flown using CRJ900s. As of
December 31, 2007, we had commitments of approximately $557.8 million to purchase four CRJ900s, 18 CRJ700s, four
CRJ200s and sublease two CRJ700s. We expect to complete these deliveries by the first quarter of 2010. Additionally, we
have obtained options to acquire another 22 regional jets that can be delivered in 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 overall operations and could have a material adverse impact on our operating results or our financial
condition. Certain of Bombardier’ s aerospace 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 our planned fleet growth. We are also
dependent on General Electric as the manufacturer of our aircraft engines. General Electric also provides parts, repair and
overhaul services, and other types of support services on our engines. Our operations could be materially and adversely
affected by the failure or inability of Bombardier or General Electric to provide sufficient parts or 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, the issuance of FAA directives restricting
or prohibiting the use of Bombardier aircraft types we operate would have a material adverse effect on our business and
operations.
Maintenance costs will likely increase as the age of our regional jet fleet increases.
Because the average age of our CRJ900s, CRJ700s and CRJ200s, as of December 31, 2007, was approximately 1.1,
3.3 and 6.2 years, respectively, our regional jet fleet requires less maintenance now than it will in the future. We have
incurred relatively low maintenance expenses on our regional jet fleet because most of the parts on our regional jet aircraft
are under multi-year warranties and a limited number of heavy airframe checks and engine overhauls have occurred. Our
maintenance costs will increase significantly, both on an absolute basis and as a percentage of our operating expenses, as our
fleet ages and these warranties expire. Under our United Express Agreement and Midwest Services Agreement, specific
amounts are included in the current rates for future maintenance on CRJ200 engines used in our United Express and Midwest
Connect operations. The actual cost of maintenance on CRJ200 engines may vary from the estimated rates.
If we incur problems with any of our third-party service providers, our operations could be adversely affected.
Our reliance upon others to provide essential services on behalf of our operations may limit our ability to control the
efficiency and timeliness of contract services. We have entered into agreements with contractors to provide various facilities
and services required for our operations, including fuel supply and delivery, aircraft maintenance, services and ground