SkyWest Airlines 2008 Annual Report Download - page 20

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during the months from November through January and by inclement weather which occasionally
results in cancelled flights, principally during the winter months.
ITEM 1A. RISK FACTORS
In addition to factors discussed elsewhere in this Report, the following are important risks which could
adversely affect our future results. Additional risks and uncertainties not presently known to us or that we
currently do not deem material may also impair our business operations. If any of the risks we describe
below occur, or if any unforeseen risk develops, our operating results may suffer, our financial condition may
deteriorate, the trading price of our common stock may decline and investors could lose all or part of their
investment in us.
Risks Related to Our Operations
We are highly dependent on Delta, United and Midwest.
If any of our code-share agreements are terminated, we would be significantly impacted and likely
would not have an immediate source of revenue or earnings to offset such loss. A termination of any of
these agreements would likely have a material adverse effect on our financial condition, operating
revenues and net income unless we are able to enter into satisfactory substitute arrangements for the
utilization of the affected aircraft by other code-share partners, or, alternatively, obtain the airport
facilities and gates and make the other arrangements necessary to fly as an independent airline. We
may not be able to enter into substitute code-share arrangements, and any such arrangements we might
secure may not be as favorable to us as our current agreements. Operating our airline independent
from major partners would be a significant departure from our business plan, would likely be very
difficult and may require significant time and resources, which may not be available to us at that point.
The current terms of the SkyWest, SkyWest Airlines and ASA Delta Connection Agreements are
subject to certain early termination provisions. Delta’s termination rights include cross-termination
rights (meaning that a breach by SkyWest Airlines or ASA of its Delta Connection Agreement could,
under certain circumstances, permit Delta to terminate any or all of the Delta Connection
Agreements), the right to terminate each of the agreements upon the occurrence of certain force
majeure events (including certain labor-related events) that prevent SkyWest Airlines or ASA from
performance for certain periods and the right to terminate each of the agreements if SkyWest Airlines
or ASA, as applicable, fails to maintain competitive base rate costs, subject to certain rights of SkyWest
Airlines to take corrective action to reimburse Delta for lost revenues. The current term of the
SkyWest Airlines’ United Express Agreement is subject to certain early termination provisions and
subsequent renewals. United may terminate the United Express Agreement due to an uncured breach
by SkyWest Airlines of certain operational and performance provisions, including measures and
standards related to flight completions, baggage handling and on-time arrivals. The current term of the
SkyWest Airlines’ Midwest Services Agreement is subject to certain early termination provisions and
subsequent renewals. Midwest may terminate the Midwest Services Agreement due to an uncured
breach by SkyWest Airlines of certain operational and performance provisions, including measures and
standards related to customer complaints factor, the care check factor or the customer experience pulse
factor.
We currently use Delta’s, United’s and Midwest’s systems, facilities and services to support a
significant portion of our operations, including airport and terminal facilities and operations,
information technology support, ticketing and reservations, scheduling, dispatching, fuel purchasing and
ground handling services. If Delta, United or Midwest were to cease any of these operations or no
longer provide these services to us, due to termination of one of our code-share agreements, a strike or
other labor interruption by Delta, United or Midwest personnel or for any other reason, we may not be
able to replace these services on terms and conditions as favorable as those we currently receive, or at
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