SkyWest Airlines 2009 Annual Report Download - page 19

Insurance
SkyWest Airlines and ASA maintain insurance policies we believe are of types customary in the
industry and in amounts we believe are adequate to protect against material loss. These policies
principally provide coverage for public liability, passenger liability, baggage and cargo liability, property
damage, including coverages for loss or damage to our flight equipment, and workers’ compensation
insurance. We cannot assure, however, that the amount of insurance we carry will be sufficient to
protect us from material loss.
Seasonality
Our results of operations for any interim period are not necessarily indicative of those for the
entire year, since the airline industry is subject to seasonal fluctuations and general economic
conditions. Our operations are somewhat favorably affected by pleasure travel on our pro-rate routes,
historically contributing to increased travel in the summer months, and are unfavorably affected by
decreased business travel during the months from November through January and by inclement
weather which occasionally results in cancelled flights, principally during the winter months.
ITEM 1A. RISK FACTORS
In addition to factors discussed elsewhere in this Report, the following are important risks which could
adversely affect our future results. Additional risks and uncertainties not presently known to us or that we
currently do not deem material may also impair our business operations. If any of the risks we describe
below occur, or if any unforeseen risk develops, our operating results may suffer, our financial condition may
deteriorate, the trading price of our common stock may decline and investors could lose all or part of their
investment in us.
Risks Related to Our Operations
We are highly dependent on Delta and United.
If any of our code-share agreements with Delta or United are terminated, we would be
significantly impacted and likely would not have an immediate source of revenue or earnings to offset
such loss. A termination of any of these agreements would likely have a material adverse effect on our
financial condition, operating revenues and net income unless we are able to enter into satisfactory
substitute arrangements for the utilization of the affected aircraft by other code-share partners, or,
alternatively, obtain the airport facilities and gates and make the other arrangements necessary to fly as
an independent airline. We may not be able to enter into substitute code-share arrangements, and any
such arrangements we might secure may not be as favorable to us as our current agreements.
Operating our airline independent from major partners would be a significant departure from our
business plan, would likely be very difficult and may require significant time and resources, which may
not be available to us at that point.
The current terms of the SkyWest, SkyWest Airlines and ASA Delta Connection Agreements are
subject to certain early termination provisions. Delta’s termination rights include cross-termination
rights (meaning that a breach by SkyWest, SkyWest Airlines or ASA of its Delta Connection
Agreement could, under certain circumstances, permit Delta to terminate any or all of the Delta
Connection Agreements), the right to terminate each of the agreements upon the occurrence of certain
force majeure events (including certain labor-related events) that prevent SkyWest Airlines or ASA
from performance for certain periods and the right to terminate each of the agreements if SkyWest
Airlines or ASA, as applicable, fails to maintain competitive base rate costs, subject to certain rights of
SkyWest Airlines to take corrective action to reimburse Delta for lost revenues. The current terms of
the SkyWest Airlines and ASA United Express Agreements are subject to certain early termination
provisions and subsequent renewals. United may terminate the SkyWest Airlines and ASA United
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