SkyWest Airlines 2008 Annual Report Download - page 46

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amount of fuel and engine overhaul reimbursements included in our passenger revenues (dollar
amounts in thousands).
Year end December 31,
2008 2007 $ Change % Change
Passenger revenues ........................... $3,466,287 $3,342,131 $124,156 3.7%
Less: Fuel reimbursement from major partners ....... 1,185,201 1,034,630 150,571 14.6%
Less: Engine overhaul reimbursement from major
partners ................................. 120,101 67,961 52,140 76.7%
Passenger revenue excluding fuel and engine overhauls
reimbursements ............................ $2,160,985 $2,239,540 $(78,555) (3.5)%
Passenger revenues. Passenger revenues increased $124.2 million, or 3.7%, during the year ended
December 31, 2008, compared to the year ended December 31, 2007. The increase in passenger
revenues was primarily due to an increase in fuel and engine overhaul reimbursements from our major
partners. The fuel reimbursement from our major partners increased $150.6 million or 14.6%, during
the year ended December 31, 2008, compared to the year ended December 31, 2007. Our passenger
revenues, excluding fuel and engine overhaul reimbursements from major partners, decreased
$78.6 million, or 3.5%, during the year ended December 31, 2008, compared to the year ended
December 31, 2007 . In June 2008, we were notified that Midwest was in the process of organizing a
financial restructuring. We subsequently reached agreement with Midwest to reduce the number of
aircraft operating under the Midwest Services Agreement from 21 aircraft to 12 aircraft. As part of the
modified agreement, we agreed to defer a portion of Midwest’s weekly payment obligations from
July 1, 2008 through November 30, 2008. The amount we agreed to defer, plus certain amounts
Midwest owed us at June 30, 2008, are payable, with interest, by Midwest in four equal quarterly
payments starting on August 31, 2009. Because of the unique modified payment terms associated with
the deferred amounts, we did not recognize the revenue associated with the deferred payments in our
consolidated statements of income for the year ended December 31, 2008. The total amount of
deferred payments for the year ended December 31, 2008 is $9.0 million.
Ground handling and other. Total ground handling and other revenues decreased $2.2 million, or
7.0%, during the year ended December 31, 2008, compared to the year ended December 31, 2007.
Revenue earned under other ground handling contracts where we provide ground handling services for
other airlines is presented in the ‘‘Ground handling and other’’ line in our consolidated statements of
income. The decrease was primarily related to the lower volume of flights serviced under ground
handling contracts with United and Delta, whereby we perform ground handling services for several
other regional airlines.
Individual expense components are also expressed in the following table on the basis of cents per
ASM. ASM is a common metric used in the airline industry to measure an airline’s passenger capacity.
ASMs reflect both the number of aircraft in an airline’s fleet and the seat capacity for the aircraft in
the fleet. As the size of our fleet is the underlying driver of our operating costs, the primary basis for
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