SkyWest Airlines 2008 Annual Report Download - page 75

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SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2008
(4) Commitments and Contingencies (Continued)
using standard industry practices and the Company’s actual experience. Actual results could differ from
these estimates.
Purchase Commitments and Options
On October 12, 2007, the Company announced that 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, which will allow United Express to remove 23
30-seat Brasilia turboprops from the contract reimbursement model contemplated by the United
Express Agreement and add 66-seat regional jet aircraft for United Express. Generally, the turboprop
removals under the United Express Agreement are intended to occur in conjunction with deliveries of
new regional jet aircraft in order to facilitate a smooth transition in existing markets. Additionally,
SkyWest Airlines intends to exchange four CRJ200s for four CRJ900s in its Delta Connection
operations. These four CRJ200s are scheduled to be placed into service under other capacity purchase
agreements. On November 30, 2007, the Company announced that it placed a firm order with
Bombardier for the 22 new aircraft. During the fourth quarter of 2008, the Company took delivery of
three CRJ900s. The Company is scheduled to take delivery of the remaining aircraft during 2009 and
the first quarter of 2010.
On January 9, 2009, the Company announced that ASA has 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. The Company expects to acquire these aircraft
under sublease arrangements with Delta at nominal monthly amounts. ASA expects to take delivery of
these aircraft between February and May 2009. The aircraft will serve 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.
Additionally, the Company’s agreement with Bombardier includes options for another 22 aircraft
that can be delivered in either 70 or 90-seat configurations. Delivery dates for these aircraft remain
subject to final determination as we agree upon with our major partners.
The following table summarizes future purchase commitments as of December 31, 2008 (in
thousands):
Year ending December 31,
2009 ................................................... $361,684
2010 ................................................... 98,011
$459,695
Legal Matters
The Company is subject to certain legal actions which it considers routine to its business activities.
As of December 31, 2008, management believes, after consultation with legal counsel, that the ultimate
outcome of such legal matters is not likely to have a material adverse effect on the Company’s financial
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