SkyWest Airlines 2007 Annual Report Download - page 46

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SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
(1) Nature of Operations and Summary of Significant Accounting Policies
SkyWest, Inc. (the “Company”), through its wholly-owned subsidiaries, SkyWest Airlines, Inc. (“SkyWest
Airlines”) and Atlantic Southeast Airlines, Inc. (“ASA”), operates the largest regional airline in the United States. As of
December 31, 2007, SkyWest and ASA offered scheduled passenger and air freight service with approximately 2,550 total
daily departures to 294 different destinations in the United States, Canada, Mexico and the Caribbean. Additionally, the
Company provides ground handling services for approximately ten other airlines throughout its system. As of December 31,
2007, the Company operated a fleet of 436 aircraft consisting of 246 50-seat Bombardier CRJ200 Regional Jet aircraft
(“CRJ200s”) (65 assigned to United Air Lines, Inc. (“United”), 166 assigned to Delta Air Lines, Inc. (“Delta”), 15 assigned
to Midwest Airlines, Inc.) 102 70-seat Bombardier CRJ 700 Regional Jet aircraft (“CRJ700s”) (52 assigned to United and 50
assigned to Delta), 17 70-90-seat Bombardier CRJ900 Regional Jet aircraft (“CRJ900”) (all assigned to Delta), 59 Embraer
Brasilia EMB-120 turboprops (“Brasilia Turboprops”) (48 assigned to United and 11 assigned to Delta), and 12 Avions de
Transport 72-210 (“ATR-72 turboprops”) (all assigned to Delta). For the year ended December 31, 2007, approximately
59.6% of the Company’ s capacity was operated under the Delta code, approximately 38.6% was operated under the United
code and approximately 1.8% 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. As of December 31, 2007, SkyWest Airlines operated approximately 1,750 total daily flights as a
Delta Connection carrier in Salt Lake City and a United Express carrier in Chicago (O’ Hare), Denver, Los Angeles, San
Francisco, Portland and Seattle/Tacoma. SkyWest Airlines believes its success in attracting multiple contractual relationships
with major airline partners is attributable to its delivery of high-quality customer service with an all cabin-class fleet at a
competitive cost structure.
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.
The Company provides a substantial majority of regional airline service for Delta in Atlanta and Salt Lake City. In
connection with its acquisition of ASA in September 2005, the Company established new, separate, but substantially similar,
long-term fixed-fee Delta Connection Agreements with Delta for both SkyWest Airlines and ASA. The Company also
obtained the right to use 29 gates in the Hartsfield-Jackson International Airport located in Atlanta, from which the Company
currently provides service to Delta. Delta has agreed that ASA and SkyWest Airlines will be scheduled to operate,
collectively, not less that 80% of all Delta Connection Program departures scheduled at Hartsfield-Jackson Atlanta
International Airport.
Basis of Presentation
The Company’ s consolidated financial statements include the accounts of SkyWest, Inc. and its wholly-owned
subsidiaries, SkyWest Airlines and ASA, with all inter-company transactions and balances having been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principals generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash
equivalents. The Company classified $14.7 million and $16.4 million of cash as restricted cash as required by the Company’ s