SkyWest Airlines 2009 Annual Report Download - page 29

We may be unable to obtain all of the aircraft, engines, parts or related maintenance and support services we
require, which could have a material adverse impact on our operations and financial condition.
We rely on a limited number of aircraft types, and are dependent on Bombardier as the sole
manufacturer of our regional jets. For the year ended December 31, 2009, 47.6% of our available seat
miles were flown using CRJ200s, 37.6% of our available seat miles were flown using CRJ700s and
11.5% of our available seat miles were flown using CRJ900s. As of December 31, 2009, we had
commitments of approximately $98.0 million to purchase four CRJ700s. We expect to complete these
deliveries by the first quarter of 2010. Additionally, we have obtained options to acquire another 22
regional jets that can be delivered in 70 to 90-seat configurations. Delivery dates for these aircraft
remain subject to final determination as agreed upon by us and our major partners.
Any significant disruption or delay in the expected delivery schedule of our fleet would adversely
affect our business strategy and overall operations and could have a material adverse impact on our
operating results or our financial condition. Certain of Bombardier’s aerospace workers are represented
by unions and have participated in at least one strike in recent history. Any future prolonged strike at
Bombardier or delay in Bombardier’s production schedule as a result of labor matters could disrupt the
delivery of regional jets to us, which could adversely affect our planned fleet growth. We are also
dependent on General Electric as the sole manufacturer of our aircraft engines. General Electric also
provides parts, repair and overhaul services, and other types of support services on our engines. Our
operations could be materially and adversely affected by the failure or inability of Bombardier or
General Electric to provide sufficient parts or related maintenance and support services to us on a
timely or economical basis, or the interruption of our flight operations as a result of unscheduled or
unanticipated maintenance requirements for our aircraft or engines. In addition, the issuance of FAA
directives restricting or prohibiting the use of Bombardier aircraft types we operate would have a
material adverse effect on our business and operations.
Maintenance costs will likely continue to increase as the age of our regional jet fleet increases.
Our maintenance costs increased $54.4 million, or 14.3%, during the year ended December 31,
2009, compared to the year ended December 31, 2008. The average age of our CRJ200s is
approximately 8.3 years. Most of the parts on the CRJ200 fleet are no longer under warranty and we
have started to incur more heavy airframe inspections and engine overhauls on those aircraft. Our
maintenance costs are expected to continue to increase on our CRJ200 fleet. Under our SkyWest
Airlines United Express Agreement, specific amounts are included in the current rates for future
maintenance on CRJ200 engines used in SkyWest Airlines’ United Express operations. The ASA
United Express Agreement contains similar provisions. The actual cost of maintenance on CRJ200
engines may vary from the agreed upon rates. During the year ended December 31, 2009, our CRJ200
engine expense for aircraft operated under our SkyWest Airlines United Express Agreement increased
$29.7 million as compared to the year ended December 31, 2009.
Because the average age of our CRJ900s and CRJ700s as of December 31, 2009 was approximately
2.1 and 4.8 years, respectively, our CRJ900 and CRJ700 fleets require less maintenance now than we
anticipate they will require in the future. We have incurred relatively low maintenance expenses on our
CRJ900 and CRJ700 fleets because most of the parts on these aircraft are under multi-year warranties
and a limited number of heavy airframe checks and engine overhauls have occurred. Our maintenance
costs will increase significantly, both on an absolute basis and as a percentage of our operating
expenses, as our fleet ages and these warranties expire. Those increased costs will have a negative
impact on our financial results.
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