SkyWest Airlines 2009 Annual Report Download - page 23

the approximately $25 million withheld by Delta during December 2007. SkyWest Airlines and ASA are
also seeking recovery of additional amounts withheld by Delta subsequent to December 2007. Discovery
on all of SkyWest’s Airlines’ and ASA’s claims and defenses is in process. On September 4, 2009, Delta
filed a motion to dismiss the Amended Complaint in part. Delta asserts that the claims added by
SkyWest Airlines and ASA in the Amended Complaint should be dismissed based on legal arguments
set forth in Delta’s memorandum in support of its motion. On January 22, 2010, the Court granted
Delta’s motion in part, dismissing the claims under Georgia law for voluntary payment and mutual
departure from the strict terms of the Connection Agreements. SkyWest Airlines and ASA have filed
an application seeking an interlocutory appeal of the Court’s order and continue to vigorously pursue
their claims set forth in the Amended Complaint, to the extent permitted by the Court’s ruling on the
Motion to Dismiss, and their defenses to Delta’s counterclaims.
There can be no assurance that the dispute will be resolved consistent with the position taken by
SkyWest Airlines and ASA. If the dispute is not resolved consistent with the position taken by SkyWest
Airlines and ASA our financial results would be negatively impacted. The litigation may have other
negative effects on our relationship with Delta and our operations under the existing Delta Connection
Agreements.
Disagreements regarding the interpretation of our code-share agreements with our major partners could have
an adverse effect on our operating results and financial condition.
SkyWest and its subsidiaries have entered into code-share agreements with Delta and United. For
the year ended December 31, 2009, more than 98% of our ASMs were attributable to flights we flew
under those agreements. We anticipate that, for the foreseeable future, substantially all of our revenues
will be generated under existing or future code-share agreements.
Contractual agreements, such as our code-share agreements, are subject to interpretation and
disputes may arise under such agreements if the parties to an agreement apply different interpretations
to that agreement. Those disputes may divert management time and resources from the core operation
of the business, and may result in litigation, arbitration or other forms of dispute resolution.
In recent years we have experienced disagreements with our major partners regarding the
interpretation of various provisions of our code-share agreements. Some of those disagreements have
resulted in litigation (see the preceding risk factor entitled SkyWest Airlines and ASA are engaged in
litigation with Delta, which may negatively impact our financial results and our relationship with Delta),
and we may be subject to additional disputes and litigation in the future. Those disagreements have
also required a significant amount of management time and financial resources.
To the extent that we continue to experience disagreements regarding the interpretation of our
code-share or other agreements, we will likely expend valuable management time and financial
resources in our efforts to resolve those disagreements. Those disagreements may result in litigation,
arbitration or other proceedings. Furthermore, there can be no assurance that any or all of those
proceedings, if commenced, would be resolved in our favor. An unfavorable result in any such
proceeding could have adverse financial consequences or require us to modify our operations. Such
disagreements and their consequences could have an adverse effect on our operating results and
financial condition.
We have a significant amount of contractual obligations.
As of December 31, 2009, we had a total of approximately $2.0 billion in total long-term debt
obligations. Substantially all of this long-term debt was incurred in connection with the acquisition of
aircraft, engines and related spare parts. We also have significant long-term lease obligations primarily
relating to our aircraft fleet. These leases are classified as operating leases and therefore are not
reflected as liabilities in our consolidated balance sheets. At December 31, 2009, we had 284 aircraft
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