SkyWest Airlines 2009 Annual Report Download - page 53

partners. The fuel reimbursement from our major partners increased $150.6 million, or 14.6%, during
the year ended December 31, 2008, compared to the year ended December 31, 2007. Our passenger
revenues, excluding fuel and engine overhaul reimbursements from major partners, decreased
$78.6 million, or 3.5%, during the year ended December 31, 2008, compared to the year ended
December 31, 2007. In June 2008, SkyWest Airlines was notified that Midwest was in the process of
organizing a financial restructuring. SkyWest Airlines subsequently reached agreement with Midwest to
reduce the number of aircraft operating under the Midwest Services Agreement from 21 aircraft to 12
aircraft. As part of the modified agreement, SkyWest Airlines agreed to defer a portion of Midwest’s
weekly payment obligations from July 1, 2008 through November 30, 2008. The amount SkyWest
Airlines agreed to defer, plus certain amounts Midwest owed SkyWest Airlines at June 30, 2008, were
initially scheduled for repayment starting on August 31, 2009; however, in June 2009, SkyWest Airlines
and Midwest reached a mutual understanding to terminate the Midwest Services Agreement, remove
the remaining SkyWest Airlines aircraft from Midwest service and further restructure Midwest’s
payment obligation to SkyWest Airlines SkyWest Airlines agreed to cancel an unsecured note from
Midwest in the amount of approximately $9.3 million in exchange for a $4.0 million payment from
Midwest that is guaranteed by Republic Airways Holdings, Inc. The unsecured note related to certain
deferred payments Midwest owed SkyWest Airlines from services provided under the Midwest Services
Agreement.
Ground handling and other. Total ground handling and other revenues decreased $2.2 million, or
7.0%, during the year ended December 31, 2008, compared to the year ended December 31, 2007.
Revenue earned under other ground handling contracts where we provide ground handling services for
other airlines is presented in the ‘‘Ground handling and other’’ line in our consolidated statements of
income. The decrease was primarily related to the lower volume of flights serviced under ground
handling contracts with United and Delta, whereby we perform ground handling services for several
other regional airlines.
Individual expense components are expressed in the following table on the basis of cents per ASM
for the periods indicated. ASM is a common metric used in the airline industry to measure an airline’s
passenger capacity. The size of our fleet is the underlying driver of our operating costs, the primary
basis for our presentation in this Item 7 is on a cost per ASM basis to discuss significant changes in our
costs not proportionate to the relative changes in our fleet size (dollar amounts in thousands).
Year ended December 31,
2008 2007 $ Change % Change
2008 2007
Cents Per Cents Per
Amount Amount Amount Percent ASM ASM
Aircraft fuel ...................... $1,220,618 $1,062,079 $158,539 14.9% 5.5 4.6
Salaries, wages and benefits ........... 724,094 726,947 (2,853) (0.4)% 3.3 3.2
Aircraft maintenance, materials and
repairs ......................... 381,653 297,960 83,693 28.1% 1.7 1.3
Aircraft rentals .................... 295,784 294,443 1,341 0.5% 1.4 1.3
Depreciation and amortization ......... 220,195 208,944 11,251 5.4% 1.0 0.9
Station rentals and landing fees ........ 132,017 135,757 (3,740) (2.8)% 0.6 0.6
Ground handling services ............. 106,135 140,374 (34,239) (24.4)% 0.5 0.6
Other ........................... 160,522 163,304 (2,782) (1.7)% 0.7 0.7
Total operating expenses ............. 3,241,018 3,029,808 211,210 7.0% 14.7 13.2
Interest .......................... 106,064 126,320 (20,256) (16.0)% 0.5 0.5
Total airline expenses ................ $3,347,082 $3,156,128 190,954 6.1% 15.2 13.7
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