SkyWest Airlines 2009 Annual Report Download - page 58

alternatives available to us, and select one or more of these methods to fund the acquisition. In the
event that alternative financing cannot be arranged at the time of delivery, Bombardier has typically
financed our aircraft acquisitions until more permanent arrangements can be made. Subsequent to this
initial acquisition of an aircraft, we may also refinance the aircraft or convert one form of financing to
another (e.g., replacing debt financing with leveraged lease financing).
At present, we intend to satisfy our 2009 firm aircraft purchase commitment, as well as our
acquisition of any additional aircraft, through a combination of operating leases and debt financing,
consistent with our historical practices. Based on current market conditions and discussions with
prospective leasing organizations and financial institutions, we currently believe that we will be able to
obtain financing for our committed acquisitions, as well as additional aircraft, without materially
reducing the amount of working capital available for our operating activities. Nonetheless, recent
disruptions in the credit markets have resulted in greater volatility, decreased liquidity and limited
availability of capital, and there is no assurance that we will be able to obtain necessary funding or that,
if we are able to obtain necessary capital, the corresponding terms will be favorable or acceptable to us.
Aircraft Lease and Facility Obligations
We also have significant long-term lease obligations primarily relating to our aircraft fleet. At
December 31, 2009, we had 284 aircraft under lease with remaining terms ranging from one to
17 years. Future minimum lease payments due under all long-term operating leases were approximately
$2.9 billion at December 31, 2009. Assuming a 5.8% discount rate, which is the average rate used to
approximate the implicit rates within the applicable aircraft leases, the present value of these lease
obligations would have been equal to approximately $2.1 billion at December 31, 2009.
Long-term Debt Obligations
As of December 31, 2009, we had $1,964.9 million of long term debt obligations related to the
acquisition of Brasilia turboprop, CRJ200, CRJ700 and CRJ900 aircraft. The average effective interest
rate on the debt related to the Brasilia turboprop and CRJ aircraft was approximately 4.3% at
December 31, 2009.
Guarantees
We have guaranteed the obligations of SkyWest Airlines under the SkyWest Airlines Delta
Connection Agreement and the obligations of ASA under the ASA Delta Connection Agreement.
New Accounting Standards
In June 2009, the Financial Accounting Standards Board (‘‘FASB’’) issued Accounting Standards
Codification (‘‘ASC’’) ASC 810 (originally issued as Statement of Financial Accounting Standards
(‘‘SFAS’’) No. 167, Amendments to FASB Interpretation No. 46(R). Among other items, ASC 810
responds to concerns about the application of certain key provisions of FIN 46(R), including those
regarding the transparency of the involvement with variable interest entities. ASC 810 is effective for
calendar year companies beginning on January 1, 2010. We do not believe the adoption of ASC 810 will
have a significant impact on our financial position, results of operations or cash flows.
On September 23, 2009, the FASB ratified Emerging Issues Task Force Issue No. 08-1, Revenue
Arrangements with Multiple Deliverables (‘‘EITF 08-1’’). EITF 08-1 updates the current guidance
pertaining to multiple-element revenue arrangements included in ASC Subtopic 605-25, which
originated primarily from EITF 00-21, also titled Revenue Arrangements with Multiple Deliverables.
EITF 08-1 will be effective for annual reporting periods beginning January 1, 2011 for calendar-year
entities. We are currently evaluating the impact of EITF 08-1 on our financial position, results of
operations and cash flows.
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