SkyWest Airlines 2007 Annual Report Download - page 32

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Passengers Carried and Passenger Load Factor. Our passenger load factor decreased to 77.9% for the year ended
December 31, 2007, from 78.3% for the year ended December 31, 2006. During the year ended December 31, 2007,
approximately 98% of our ASMs were generated by our contract flying, where Delta, United or Midwest controls scheduling,
ticketing, pricing and seat inventories. Our contract-flying routes primarily supplement Delta, United and Midwest mainline
service in previously established and developed markets. Changes made by Delta, United and Midwest in their respective
ticket pricing, scheduling and seat inventories impact our load factor.
Revenue per Available Seat Mile. Our revenue per ASM decreased to 14.7¢ for the year ended December 31, 2007,
from 15.4¢ for the year ended December 31, 2006. Under our contract flying arrangements with Delta and United, we are
compensated for our direct fuel expenses, which we record as revenue. The average cost per gallon of fuel increased to $2.41
per gallon during the year ended December 31, 2007 from $2.20 during the year ended December 31, 2006. However, despite
the increase in the average cost per gallon, during the year ended December 31, 2007, United purchased fuel directly from a
fuel vendor for our aircraft operated out of Chicago, San Francisco, Los Angeles and Denver, which reduced our fuel costs
and related passenger revenue compared to the year ended December 31, 2006 by approximately $152.1 million.
Our operating revenues increased 8.3% to $3.4 billion for the year ended December 31, 2007, compared to
$3.1 billion for the year ended December 31, 2006. The increase in operating revenues was primarily due to the increase in
our fleet size from 410 aircraft as of December 31, 2006 to 436 aircraft as of December 31, 2007.
Our passenger revenues, which represented 99.0% of our consolidated operating revenues for the year ended
December 31, 2007, increased 8.3% to $3.3 billion for the year ended December 31, 2007, from $3.1 billion, or 99.1% of
consolidated operating revenues, for the year ended December 31, 2006. Our passenger revenues, excluding fuel
reimbursements from major partners, increased 9.6% for the year ended December 31, 2007, compared to the year ended
December 31, 2006. The increase in passenger revenues (excluding fuel reimbursements) was primarily due to a 13.7%
increase in ASMs, principally as a result of our increase in operating aircraft to 436 aircraft as of December 31, 2007, from
410 aircraft as of December 31, 2006. The increase in passenger revenues (excluding fuel reimbursements) was less than the
increase in ASMs, primarily due to operating efficiencies obtained from increased stage lengths flown by our regional jets.
Our total ground handling and other revenues for the year ended December 31, 2007 increased approximately 17.3%
from the year ended December 31, 2006. The increase was primarily related to higher volume of flights serviced under
ground handling contracts with United and Delta, whereby we perform ground handling services for ten other airlines.
Cost per Available Seat Mile. Our cost per ASM decreased to 13.7¢ for the year ended December 31, 2007 from
14.3¢ for the year ended December 31, 2006. The decrease in cost per ASM was primarily due to the decrease in our cost of
fuel per ASM to 4.6¢ for the year ended December 31, 2007, from 5.0¢ for the year ended December 31, 2006. The decrease
in the cost per ASM for fuel was primarily due to United purchasing fuel directly for our aircraft in certain locations as
discussed above. Changes in the components of our other operating expenses are discussed in the table below.
The following table sets forth information regarding our operating expense components for the years ended
December 31, 2007 and 2006. Operating expenses are expressed as a percentage of operating revenues. Individual expense
components are also expressed as cents per ASM.
2007 2006
Amount
Percentage
of
Revenue
Cents
per
ASM Amount
Percentage
of
Revenue
Cents
Per
ASM
(in thousands) (in thousands)
Salaries, wages and employee benefits..................... $726,947 21.5% 3.2¢ $673,961 21.6% 3.3¢
Aircraft costs............................................................. 503,387 14.9 2.2 471,381 15.1 2.3
Maintenance.............................................................. 297,960 8.8 1.3 220,705 7.1 1.1
Fuel ........................................................................... 1,062,080 31.5 4.6 1,010,717 32.5 5.0
Other airline expenses............................................... 439,434 13.0 1.9 398,732 12.8 2.0
Interest ...................................................................... 126,320 3.7 0.5 118,002 3.8 0.6
Total airline expenses ............................................... $3,156,128 13.7 $2,893,498 14.3
Salary Wages and Employee Benefits. The cost per ASM for salaries, wages and employee benefits decreased to
3.2¢ for the year ended December 31, 2007 from 3.3¢ for the year ended December 31, 2006. The average number of full-
time equivalent employees increased 1.7% to 14,694 for the year ended December 31, 2007, from 14,450 for the year ended
December 31, 2006. The increase in number of employees was primarily due to the addition of personnel required to operate