SkyWest Airlines 2008 Annual Report Download - page 52

Download and view the complete annual report

Please find page 52 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

increase in maintenance expense, excluding engine overhaul costs, was principally due to other
scheduled maintenance events.
Under the United Express and Midwest Services Agreements, we recognize revenue at a fixed
hourly rate for mature engine maintenance on regional jet engines. We record the gross amount of that
maintenance revenue in our consolidated statements of income, and we recognize engine maintenance
expense on our CRJ 200 regional jet engines on an as incurred basis as maintenance expense in our
consolidated statements of income. As a result, during the year ended December 31, 2007, we collected
and recorded $30.3 million (pretax) of revenue in excess of our maintenance expense under the United
Express Agreement and the Midwest Services Agreement, which is intended to compensate us for the
expense of future engine maintenance overhauls.
Aircraft rentals. Aircraft rentals increased $12.9 million or 4.6% during the year ended
December 31, 2007, compared to the year ended December 31, 2006. The increase in aircraft rents was
primarily due to the addition of ten CRJ200s, nine CRJ700s and one CRJ900 that were financed
through leases.
Depreciation and amortization. Depreciation and amortization expense increased $19.1 million , or
10.0%, during the year ended December 31, 2007, compared to the year ended December 31, 2006.
The increase in depreciation and amortization was primarily due to the addition of one CRJ200, one
CRJ700 and seven CRJ900s that were financed using long-term debt.
Station rentals and landing fees. Station rentals and landing fees expense increased $16.8 million ,
or 14.1%, during the year ended December 31, 2007, compared to the year ended December 31, 2006.
The increase in station rentals and landing fees expense was primarily due to the addition of 26 aircraft
during 2007.
Ground handling service. Ground handling service expense increased $6.3 million , or 4.7%,
during the year ended December 31, 2007, compared to the year ended December 31, 2006. The
increase in ground handling was less than the increase the increase in ASMs, primarily due to Delta
assuming responsibility from ASA in June 2007 for the performance of customer service functions in
Atlanta.
Other expenses. Other expenses, primarily consisting of property taxes, hull and liability insurance,
crew simulator training, crew hotel costs, increased $17.6 million , or 12.1%, during the year ended
December 31, 2007, compared to the year ended December 31, 2006. The increase in other expenses
was primarily due to the addition of 26 aircraft during 2007.
Interest. Interest expense increased $8.3 million, or 7.0% during the year ended December 31,
2007 compared to the year ended December 31, 2006. The increase in depreciation and amortization
was primarily due to the addition of one CRJ200, one CRJ700 and seven CRJ900s that were financed
through long-term debt.
Total Airline Expenses. Total airline expenses (consisting of total operating and interest expenses)
increased $262.6 million, or 9.1%, during the year ended December 31, 2007, compared to the year
ended December 31, 2006. We are reimbursed for our actual fuel costs by our major partners under
our contract flying arrangements. We record the amount of those reimbursements as revenue. Under
the SkyWest Airlines and ASA Delta Connection Agreements, we are reimbursed for our engine
overhaul expense, which we record as revenue. The following table summarizes the amount of fuel and
48