SkyWest Airlines 2008 Annual Report Download - page 34

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• ASA leases from Atlanta Telecom Center Acquisition, LLC. 63,800 square-foot warehouse
facility located at the Hartsfield- Jackson Atlanta International Airport. The lease agreement has
a ten-year term and is scheduled to expire on February 26, 2012.
• ASA leases smaller aircraft line maintenance facilities in Atlanta, Georgia; Cincinnati, Ohio;
Columbia, South Carolina; Fort Walton Beach, Florida; Montgomery, Alabama and Shreveport,
Louisiana.
• ASA leases from the City of Atlanta Department of Aviation 13 gates and other premises of the
Central Passenger Terminal Complex (CPTC) located on Concourse C at Hartsfield-Jackson
Atlanta International Airport. The CPTC lease agreement has a twenty -year term and is
scheduled to expire on September 20, 2010.
• ASA leases from the City of Atlanta Department of Aviation three priority use gates on
Concourse C at Hartsfield-Jackson Atlanta International Airport. The priority use gate
agreement is scheduled to expire on September 20, 2010.
• ASA sub-leases from US Airways six gates on Concourse D at Hartsfield-Jackson Atlanta
International Airport. The sub-lease agreement is scheduled to expire on September 20, 2010.
• ASA leases ticket counter, check-in, boarding and support facilities in the passenger terminal
areas in the majority of the airports it serves and staffs those facilities with ASA personnel.
Other airlines, including Delta, provide ticket handling and/or ground support services for ASA
in 74 of the 110 airports ASA serves.
Our management deems SkyWest Airlines’ and ASA’s current facilities as being suitable and
necessary to support existing operations and believes these facilities will be adequate for the
foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
We are subject to certain legal actions which we consider routine to our business activities. As of
December 31, 2008, our management believed, after consultation with legal counsel, that the ultimate
outcome of such legal matters is not likely to have a material adverse effect on our financial position,
liquidity or results of operations. However, the following is a significant outstanding legal matter.
ASA and SkyWest Airlines v. Delta Air Lines
During the quarter ended December 31, 2007, Delta notified SkyWest, SkyWest Airlines and ASA
of a dispute under the Delta Connection Agreements executed by Delta with SkyWest Airlines and
ASA. The dispute relates to allocation of liability for certain irregular operations (‘‘IROP’’) expenses
that are paid by SkyWest Airlines and ASA to their passengers under certain situations. As a result,
Delta withheld a combined total of approximately $25 million (pretax) from one of the weekly
scheduled wire payments to SkyWest and ASA during December 2007. Delta continues to withhold a
portion of the funds we believe are payable as weekly scheduled wire payments to SkyWest and ASA.
As of December 31, 2008, we had recognized a cumulative total of $32.4 million of revenue associated
with funds withheld by Delta. On February 1, 2008, SkyWest Airlines and ASA filed a lawsuit in
Georgia state court disputing Delta’s treatment of the matter (the ‘‘Complaint’’). Delta filed an Answer
to the Complaint and a Counterclaim against SkyWest Airlines and ASA on March 24, 2008. Delta’s
Counterclaim alleges that ASA and SkyWest Airlines breached the Delta Connection Agreements by
invoicing Delta for the IROP expenses that were paid pursuant to Delta’s policies, and claims only a
portion of those expenses may be invoiced to Delta. Delta seeks unspecified damages in its
Counterclaim.
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