SkyWest Airlines 2007 Annual Report Download - page 5

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ITEM 1. BUSINESS
General
Through SkyWest Airlines and ASA, our wholly-owned subsidiaries, we offer scheduled passenger service with
over 2,550 daily departures to 294 destinations in the United States, Canada, Mexico and the Caribbean. Substantially all of
our flights are operated as either Delta Connection, United Express or Midwest Connect flights under code-share
arrangements with Delta, United or Midwest Airlines, Inc. (“Midwest”), respectively, with significant presence in their key
domestic hubs and focus cities. SkyWest Airlines and ASA generally provide regional flying to our partners under long-term,
fixed-fee code-share agreements. Among other features of our fixed-fee agreements, our partners generally reimburse us for
specified direct operating expenses (including fuel expense, which is passed through to our partners), and pay us a fee for
operating the aircraft.
SkyWest Airlines and ASA have developed industry-leading reputations for providing quality, low-cost regional
airline service during their long operating histories—SkyWest Airlines has been flying since 1972 and ASA since 1979. As
of December, 31, 2007, our consolidated fleet consisted of a total of 436 aircraft, of which 256 were in service with Delta,
165 were in service with United and 15 were in service with Midwest. We currently operate one type of regional jet aircraft
in three different configurations, the 50-seat Bombardier CRJ200 Regional Jet (the “CRJ200”), the 70-seat Bombardier
CRJ700 Regional Jet (the “CRJ700”) and the 70-90-seat Bombardier CRJ900 Regional Jet (the “CRJ900”), and two types of
turboprop aircraft, the 30-seat Embraer Brasilia EMB-120 turboprop (the “Brasilia turboprop”) and the 66-seat Avions de
Transport 72-210 turboprop (the “ATR-72 turboprop”).
We believe SkyWest Airlines and ASA present opportunities for growth through our two geographically-focused
regional airline platforms—SkyWest Airlines in the Western United States and ASA in the Eastern United States. SkyWest
Airlines provides regional airline service for United in Los Angles, San Francisco, Chicago and Denver. We also provide the
vast majority of regional airline service for Delta in Atlanta, its most important eastern hub, and Salt Lake City, its most
important western hub. We have separate, but substantially similar, long-term fixed-fee Delta Connection Agreements with
Delta for both SkyWest Airlines and ASA. We also control 29 gates in the Hartsfield-Jackson International Airport located in
Atlanta, from which we currently provide service to Delta. Delta has agreed that ASA and SkyWest Airlines will operate,
collectively, not less than 80% of all Delta Connection program departures scheduled at Hartsfield-Jackson Atlanta
International Airport.
We were incorporated in Utah in 1972. Our principal executive offices are located at 444 South River Road,
St. George, Utah 84790, and our primary telephone number is [phone]. We maintain an Internet web site at
www.skywest.com. Our website provides a link to the web site of the SEC, through which our annual, quarterly and current
reports, as well as amendments to those reports, are available. In addition, we provide electronic or paper copies of our filings
free of charge upon request.
Our Operating Platforms
SkyWest Airlines
SkyWest Airlines provides regional jet and turboprop service in the Midwestern and Western United States.
SkyWest Airlines offered approximately 1,750 daily scheduled departures as of December 31, 2007, of which approximately
1,150 were United Express flights, 525 were Delta Connection flights and 75 were Midwest flights. SkyWest Airlines’
operations are conducted from hubs located in Chicago (O’ Hare), Denver, Kansas City, Los Angeles, Milwaukee, San
Francisco and Salt Lake City. SkyWest Airlines’ fleet as of December 31, 2007 consisted of 17 70 to 90-seat CRJ900s, all of
which were flown for Delta, 65 70-seat CRJ700s, of which 52 were flown for United and 13 for Delta; 136 50-seat CRJ200s,
of which 65 were flown for United, 56 were flown for Delta and 15 were flown for Midwest, and 59 30-seat Brasilia
turboprops, of which 48 were flown for United and 11 were flown for Delta. SkyWest Airlines currently conducts its Delta
Connection operations pursuant to the terms of an Amended and Restated Delta Connection Agreement which obligates
Delta to compensate SkyWest Airlines for its direct costs associated with operating Delta Connection flights, plus a payment
based on block hours flown (the “SkyWest Airlines Delta Connection Agreement”). In addition, the SkyWest Airlines Delta
Connection Agreement provides for us to increase our profitability if we reduce our total costs. SkyWest Airlines’ United
code-share operations are conducted under a United Express Agreement pursuant to which SkyWest Airlines is paid
primarily on a fee-per-completed block hour and departure basis plus a margin based on performance incentives (the “United
Express Agreement”). Under the United Express Agreement, excess margins over certain percentages must be returned or
shared with United, depending on various conditions. SkyWest Airlines and Midwest are parties to an Airlines Services
Agreement entered into on December 20, 2006 (the “Midwest Services Agreement”). Under the terms of the Midwest