SkyWest Airlines 2008 Annual Report Download - page 42

Download and view the complete annual report

Please find page 42 of the 2008 SkyWest Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

Our maintenance costs increased $83.7 million, or 28.1%, during the year ended December 31,
2008, compared to the year ended December 31, 2007. The increase was primarily related to the timing
of engine overhaul events. Our engine overhaul expense increased approximately $54.8 million during
the year ended December 31, 2008 compared to the year ended December 31, 2007. The majority of
the engine overhauls related to aircraft operated under our Delta Connection Agreements and we were
reimbursed for such engine overhaul costs by Delta. Such reimbursements are reflected as passenger
revenue in our consolidated statements of income. The increase in maintenance costs, excluding engine
overhaul costs was principally due to other scheduled maintenance events on our aging CRJ200 and
CRJ700 aircraft. Additionally, since December 31, 2007, we added four used CRJ200s and two used
CRJ700s to our fleet. Compared to new aircraft, used aircraft typically experience higher maintenance
costs during the first year of service.
Total available seat miles (‘‘ASMs’’) for the year ended December 31, 2008 decreased 4.1%,
compared to the year ended December 31, 2007, primarily as a result of our major partners decreasing
the utilization of our aircraft and a reduction in the number of aircraft we operated for Midwest.
During the year ended December 31, 2008, we generated 22.0 billion ASMs, compared to 23.0 billion
ASMs during the year ended December 31, 2007.
At December 31, 2008, we had approximately $705.2 million in cash and cash equivalents,
restricted cash and marketable securities, compared to approximately $660.4 million as of December 31,
2007. During the year ended December 31, 2008, we spent approximately $102.6 million to purchase
and retire approximately 5.4 million shares of our common stock. During the year ended December 31,
2008, we acquired three new CRJ 900s, which were financed through long-term debt agreements. We
also acquired two used CRJ 700s under sublease arrangements with a major partner at nominal
monthly amounts. We also acquired four used CRJ200s, which we financed under long-term debt
arrangements.
Outlook
On October 12, 2007, we announced SkyWest Airlines’ plans to acquire 22 additional regional jet
aircraft through 2010, 18 of which SkyWest Airlines intends to operate for United Express, as part of
an aircraft transition plan. We believe this transition plan will allow United Express to remove 23
30-seat Brasilia turboprops from operation under the United Express Agreement and add 66 seat
regional jet aircraft for United Express flying. Generally, the turboprop removals are intended to occur
in conjunction with deliveries of new regional jet aircraft in order to ensure a smooth transition in
existing markets. Additionally, SkyWest Airlines intends to exchange four 50-seat CRJ200s for four
CRJ900s configured with 76 seats in its Delta Connection operations. On November 30, 2007, we
announced that SkyWest Airlines placed a firm order for 22 aircraft with Bombardier. During the
fourth quarter of 2008, SkyWest Airlines took delivery of three CRJ900s. SkyWest Airlines is scheduled
to take delivery of the remaining aircraft during 2009 and the first quarter of 2010.
On January 9, 2009, we announced that ASA reached an agreement with Delta to operate an
additional ten CRJ900 regional jet aircraft. The aircraft were previously ordered by Delta and are now
being contracted for flying with ASA. ASA expects to take delivery of these aircraft between February
and May 2009. We expect to acquire these aircraft under sublease arrangements with Delta at nominal
monthly amounts. ASA intends to use the aircraft as replacements for 20, 50-seat CRJ200s that are
scheduled for removal from contract service between April 2010 and August 2010, which is earlier than
the existing scheduled termination dates as contained in the Delta Connection Agreement.
As of December 31, 2008, the 12 ATR-72 turboprops were no longer in revenue service, and ASA
expects to return the aircraft to the lessor by February 28, 2009.
38