SkyWest Airlines 2008 Annual Report Download - page 24

Our business model depends on major airlines, including Delta, United and Midwest, electing to
contract with us instead of operating their own regional jets. Some major airlines, including Delta,
American and Alaska Airlines, own their own regional airlines or operate their own regional jets
instead of entering into contracts with regional carriers. We have no guarantee that in the future our
code-share partners will choose to enter into contracts with us instead of operating their own regional
jets. Our partners are not prohibited from doing so under our code-share agreements. A decision by
Delta, United or Midwest to phase out code-share relationships and instead acquire and operate their
own regional jets could have a material adverse effect on our financial condition, results of operations
or the price of our common stock.
Additionally, our code-share agreements limit our ability to provide airline services to other
airlines in certain major airport hubs of each of Delta and United. Under the SkyWest Airlines Delta
Connection Agreement, our growth is contractually restricted in Atlanta, Cincinnati, Orlando and Salt
Lake City. Under the ASA Delta Connection Agreement, our growth is restricted in Atlanta,
Cincinnati, New York (John F. Kennedy International Airport), Orlando and Salt Lake City. Under
SkyWest Airlines’ United Express Agreement, growth is restricted in Chicago (O’Hare International
Airport), Denver, San Francisco, Seattle/Tacoma and Washington D.C. (Dulles International Airport).
Economic and industry conditions constantly change, and negative economic conditions in the United States
and other countries may create challenges for us that could materially and adversely affect our business and
results of operations.
Our business and our results of operations are affected by many changing economic and other
conditions beyond our control, including, among others:
• recent disruptions in the credit markets have resulted in greater volatility, less liquidity, widening
of credit spreads, and decreased availability of financing. As a result of these factors, there can
be no assurance that financing will be available to us on acceptable terms, if at all. An inability
to obtain necessary additional financing on acceptable terms would have an adverse impact on
us and on our ability to sustain our operations.
• actual or potential changes in international, national, regional and local economic, business and
financial conditions, including recession, inflation, higher interest rates, wars, terrorist attacks or
political instability;
• changes in consumer preferences, perceptions, spending patterns or demographic trends;
• changes in the competitive environment due to industry consolidation and other factors;
• actual or potential disruptions to U.S. air traffic control systems;
• outbreaks of diseases that affect travel behavior; and
• weather and natural disasters.
In addition, due to generally greater demand for air travel during the summer, our revenues in the
second and third quarters of the year tend to be stronger than revenues in the first and fourth quarters
of the year.
Reduced utilization levels of our aircraft under our code-share agreements would adversely impact our
financial results.
Our code-share agreements set forth minimum levels of flight operations which our major partners
are required to schedule for our operations and we are required to provide. These minimum flight
operating levels are intended to compensate us for reduced operating efficiencies caused by production
decreases made by our major partners under our respective code-share agreements. Generally, our
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