SkyWest Airlines 2009 Annual Report Download - page 82

SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2009
(5) Commitments and Contingencies (Continued)
alternative or supplemental obligations created by prior conduct into the Delta Connection
Agreements. The Court granted the Motion to Dismiss with respect to claims for estoppel, unilateral
mistake, and mutual mistake contained in the Complaint. The Court’s ruling affects the current posture
of the case, but does not preclude pursuit of the claim for breach of contract or the claim for
declaratory relief, under which SkyWest Airlines and ASA continue to seek recovery of all amounts
withheld by Delta.
On July 31, 2009, SkyWest Airlines and ASA filed an Amended Complaint in the lawsuit adding
claims under Georgia law for voluntary payment and mutual departure from the strict terms of the
Delta Connection Agreements. Under those claims, SkyWest Airlines and ASA seek recovery of all of
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. SkyWest Airlines and ASA filed an
opposition to the motion on October 9, 2009. 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 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.
For financial reporting purposes the Company accrues an estimated loss if the loss is probable and
reasonably estimable. Because these conditions have not been satisfied, the Company had not recorded
a loss related to the preceding dispute as of December 31, 2009.
Concentration Risk and Significant Customers
The Company requires no collateral from its major partners or customers but monitors the
financial condition of its major partners. The Company maintains an allowance for doubtful accounts
receivable based upon expected collectability of all accounts receivable. The Company’s allowance for
doubtful accounts totaled $47,000 as of December 31, 2009 and 2008. For the years ended
December 31, 2009, 2008 and 2007, the Company’s contractual relationships with Delta and United
combined accounted for approximately 97.3%, 94.1% and 93.3%, respectively of the Company’s total
revenues.
Employees
As of December 31, 2009 the Company and SkyWest Airlines collectively employed 8,654 full-time
equivalent employees consisting of 4,232 pilots and flight attendants, 2,833 customer service personnel,
1,106 mechanics and other maintenance personnel, and 483 administration and support personnel.
None of these employees are currently represented by a union. The Company is aware, however, that
collective bargaining group organization efforts among SkyWest Airlines’ employees occur from time to
time and the Company anticipates that such efforts will continue in the future.
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