SkyWest Airlines 2007 Annual Report Download - page 28

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The following terms used in this section and elsewhere in this Report have the meanings indicated below:
“Revenue passenger miles” represents the number of miles flown by revenue passengers.
“Available seat miles” represents the number of seats available for passengers multiplied by the number of miles the
seats are flown.
“Passenger load factor” represents the percentage of aircraft seating capacity that is actually utilized (revenue
passenger miles divided by available seat miles).
“Passenger breakeven load factor” is the passenger load factor that will result in operating revenues being equal to
operating expenses, assuming constant revenue per passenger mile and expenses.
“Yield per passenger mile” represents the average amount one passenger pays to fly one mile.
“Passenger revenue per available seat mile” represents passenger revenue divided by available seat miles.
“Operating cost per available seat mile” represents operating expenses plus interest divided by available seat miles.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis presents factors that had a material effect on our results of operations during
the years ended December 31, 2007, 2006 and 2005. Also discussed is our financial position as of the end of December 31,
2007 and 2006. You should read this discussion in conjunction with our consolidated financial statements, including the
notes thereto, appearing elsewhere in this Report or incorporated herein by reference. This discussion and analysis contains
forward-looking statements. Please refer to the sections of this Report entitled “Cautionary Statement Concerning
Forward-Looking Statements” and “Item 1A. Risk Factors” for discussion of some of the uncertainties, risks and
assumptions associated with these statements.
Overview
Through SkyWest Airlines and ASA, we operate the largest regional airline in the United States. As of
December 31, 2007, SkyWest Airlines and ASA offered scheduled passenger and air freight service with more than 2,550
total daily departures to 294 destinations in the United States, Canada, Mexico and the Caribbean. Additionally, as of
December 31, 2007, we provided ground handling services for approximately ten other airlines throughout our system. As of
December 31, 2007, we operated a combined fleet of 436 aircraft consisting of 246 CRJ200s (65 assigned to United, 166
assigned to Delta and 15 assigned to Midwest) 102 CRJ700s (52 assigned to United and 50 assigned to Delta), 17 CRJ900s
(all assigned to Delta), 59 Brasilia turboprops (48 assigned to United and 11 assigned to Delta), and 12 ATR-72 turboprops
(all assigned to Delta). We believe our success in attracting multiple contractual relationships with major airline partners is
attributable to our delivery of high-quality customer service with an all cabin-class fleet at a competitive cost structure. For
the month ended December 31, 2007, approximately 59.1% of our aggregate capacity was operated under the Delta code,
approximately 37.6% was operated under the United code and approximately 3.3% was operated under the Midwest code.
SkyWest Airlines has been a partner with Delta in Salt Lake City and United in Los Angeles since 1987 and 1997,
respectively. In 1998, SkyWest Airlines expanded its relationship with United to provide service in Portland, Seattle/Tacoma,
San Francisco and additional Los Angeles markets. In 2004, SkyWest Airlines expanded its United Express operations to
provide service in Chicago. SkyWest Airlines and Midwest entered into the Midwest Services Agreement on December 20,
2006. Under the terms of the Midwest Services Agreement, SkyWest Airlines has agreed to operate up to 25 CRJ200s. The
initial 15 aircraft were delivered by September 30, 2007. On January 16, 2008, the Company announced that SkyWest
Airlines agreed to operate additional aircraft under the Midwest Services Agreement. We serve markets from Midwest’ s
current hubs in Milwaukee and Kansas City. As of December 31, 2007, SkyWest Airlines operated as a Delta Connection
carrier in Salt Lake City, a United Express carrier in Los Angeles, San Francisco, Denver, Chicago and the Pacific
Northwest, and a Midwest Connect carrier in Milwaukee and Kansas City operating more than 1,750 total daily flights.
ASA has been a code-share partner with Delta in Atlanta since 1984. ASA expanded its operations as a Delta
Connection carrier to also include Cincinnati and Salt Lake City in September 2002 and April 2003, respectively. ASA
operates approximately 750 daily flights, all in the Delta Connection system.