SkyWest Airlines 2009 Annual Report Download - page 55

Aircraft rentals. Aircraft rentals increased $1.3 million or 0.5% during the year ended
December 31, 2008, compared to the year ended December 31, 2007. The increase in aircraft rentals
was primarily due to the addition of two used CRJ700s that were financed through long-term leases.
Depreciation and amortization. Depreciation and amortization expense increased $11.3 million , or
5.4%, during the year ended December 31, 2008, compared to the year ended December 31, 2007. The
increase in depreciation and amortization was primarily due to the addition of four CRJ200 and three
CRJ900s that were financed using long-term debt.
Station rentals and landing fees. Station rentals and landing fees expense decreased $3.7 million ,
or 2.8%, during the year ended December 31, 2008, compared to the year ended December 31, 2007.
Our station rentals and landing fee costs can be impacted based upon the volume of passengers carried
and the number of departures. The decrease in station rentals and landing fees expense was primarily
due to a 2.7% decrease in passengers carried and a 3.6% decrease in departures during the year ended
December 31, 2008.
Ground handling service. Ground handling service expense decreased $34.2 million , or 24.4%,
during the year ended December 31, 2008, compared to the year ended December 31, 2007. The
decrease in ground handling was due primarily to Delta assuming responsibility from ASA in June 2007
for the performance of customer service functions in Atlanta and United transitioning 16 stations from
SkyWest Airlines to other ground handlers during the second quarter of 2008.
Other expenses. Other expense, primarily consisting of property taxes, hull and liability insurance,
crew simulator training and crew hotel costs, decreased $2.8 million , or 1.7%, during the year ended
December 31, 2008, compared to the year ended December 31, 2007. The decrease in other expenses
was primarily due to the decrease in crew simulator training and crew hotel costs. These decreases
were due primarily to fewer training events in 2008, primarily caused by lower production such as a
decrease of 3.6% in departures during the year ended December 31, 2008.
Interest. Interest expense decreased $20.3 million, or 16.0% during the year ended December 31,
2008 compared to the year ended December 31, 2007. The decrease in interest expense was
substantially due to a decrease in interest rates. At December 31, 2008, we had variable rate notes
representing 46.6% of our total long-term debt . The majority of our variable rate notes are based on
the three-month and six-month LIBOR rates. At December 31, 2008, the three-month and six-month
LIBOR rates were 1.43% and 1.75%, respectively. At December 31, 2007, the three-month and
six-month LIBOR rates were 4.70% and 4.60%, respectively.
Total Airline Expenses. Total airline expenses (consisting of total operating and interest expenses)
increased $191.0 million, or 6.1%, during the year ended December 31, 2008, compared to the year
ended December 31, 2007. We are reimbursed for our actual fuel costs by our major partners under
our contract flying arrangements. We record the amount of those reimbursements as revenue. Under
the SkyWest, SkyWest Airlines and ASA Delta Connection Agreements, we are reimbursed for our
engine overhaul expense, which we record as revenue. The following table summarizes the amount of
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