SkyWest Airlines 2010 Annual Report Download

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SkyWest - Seasonal
Milwaukee
Indianapolis
Winnipeg
Tucson
Spokane
Seattle/Tacoma
Sacramento
San Jose
San Francisco
Reno
Redmond/Bend Rapid City
Portland
Pasco/Richland/
Kennewick
Palm Springs
Oakland
Missoula
Medford
Las Vegas
Great Falls
Grand Junction
Fresno
Denver
Dallas
Chicago
Burbank
Bozeman
Boise
Albuquerque
Vancouver
Phoenix
Kalispell
Cincinnati
San Diego
Ontario
Colorado Springs
Orange County
Los Angeles
Helena
Eugene
San Antonio
Calgary
Idaho Falls
New Orleans
Memphis
Billings
Rock Springs
Kansas City
Cleveland
Gillette
Casper
Lexington
Duluth
Regina
Jackson Hole Grand Rapids
Minot
Akron
Saskatoon
Springfield
Springfield
South Bend
Santa Maria
Saginaw
Traverse City
Redding
Paducah
Peoria
Ottawa
London
Muskegon
Moline
ModestoMammoth Lakes
Lansing
Inyokern
Imperial/El Centro
Gunnison
Fort Wayne
Crescent City
Chico
Carlsbad
Monterey
Northwest Arkansas
Klamath Falls
North Bend
Wausau
Eau Claire
Houghton/Hancock
Durango
Yuma
San Luis Obispo Bakersfield
Victoria
Detroit
Hayden/Steamboat Springs
Aspen
Little Rock
Eagle County
Austin
Midland
Eureka/Arcata
Sioux Falls
Montrose
Huntsville
Columbus
Appleton
Atlanta
Santa Barbara
Twin Falls
Sun Valley
Pocatello
Minneapolis/St. Paul
La Crosse
Rochester
Long Beach
Lewiston Butte
Austin
Cedar City
Rock Springs
Elko
Grand Forks
St. George
Cody
Springfield
Roanoke
Harrisburg
Lincoln
Sioux Falls
Fargo
Cedar Rapids
Bismarck
Wilkes-Barre/Scranton
Allentown
Manzanillo
Ixtapa
Toronto
Moncton
Montreal
St. John’s
Quebec
Halifax
Villahermosa
Valparaiso
Veracruz
Torreon
Toluca
Tuxtla Gutierrez
Tampico
St. Louis
Saltillo
San Luis Potosi
Salt Lake City
Shreveport
Fort Myers
Richmond
Queretaro
Portland
Puerto Vallarta
Philadelphia
West Palm Beach
Puebla
Oaxaca
Mazatlan
Myrtle Beach
Monterrey
Mobile
Morelia
Miami
Manchester
Mc Allen
Mexico City
Orlando
Laredo
Lafayette
Lake Charles
Lubbock
Jacksonville
Jackson
Houston
Huatulco
Harlingen
Fort Hood Gulfport
Guadalajara
Newark
Durango
Washington, D.C.
Chihuahua
Corpus Christi
Cuidad Del Carmen
Baton Rouge
Brownsville
Boston
Leon/Guanajuato
Windsor Locks
Asheville
Aguascalientes
Alexandria
Acapulco
Amarillo
Northwest Arkansas Knoxville
Tulsa
Syracuse
Louisville
Savannah
Rochester
Raleigh/Durham
Providence
Pittsburgh
Norfolk
Omaha
Oklahoma City
Madison
Lexington
Wichita
Washington, D.C.
Greer
Greensboro
Green Bay
El Paso
Des Moines
Dayton
Charleston
Charlotte
Charleston
Columbia
Baltimore
Buffalo
Burlington
Nashville
Albany
Savannah
Rochester
Pensacola
New York
Dayton
Buffalo
Valdosta
Wilmington
Tampa
Tallahassee
Shreveport
Bloomington
Newport News/Williamsburg
Montgomery
Monroe
Mobile
Meridian
Melbourne
Fort Lauderdale
Key West
Newark
Killeen Jackson
Jacksonville
Gulfport
Gainesville
George Town
Fort
Walton
Beach
Flint
Fayetteville
New Bern
Evansville
Dothan
Daytona Beach
Columbus/
Starkville/
West Point
Columbus
Chattanooga
Brunswick
Bristol/Kingsport/
Johnson City
Baton Rouge
Augusta
Alexandria Albany Savannah
Charlottesville
Elmira
Omaha
Tulsa Nashville
Birmingham
Des Moines
White Plains
Wichita
Oklahoma City
Lexington
Knoxville
Madison
Lewisburg
Baltimore
Charleston
Asheville
St. Louis
Toronto
Louisville
Raleigh/Durham
Panama City
Savannah
Roanoke
Pittsburgh
Jacksonville
Greensboro/High Point/Winston-Salem
Charleston
Edmonton Edmonton
TM
Notice of 2010 Annual Meeting and Proxy Statement
T W O T H O U S A N D T E N A N N U A L R E P O R T

Table of contents

  • Page 1
    ... City Eau Claire Burlington Rapid City Cody Redmond/Bend Appleton Eugene Toronto Portland Gillette La Crosse Sun Valley Idaho Falls Sioux Falls Boise Muskegon Saginaw North Bend Rochester Syracuse Jackson Hole Rochester Milwaukee Grand Rapids Flint London Manchester Albany Twin Falls Pocatello...

  • Page 2
    ... Eau Claire Burlington Appleton Eugene Toronto Portland Gillette La Crosse Idaho Falls Sioux Falls Sun Valley Boise Muskegon Grand Saginaw North Bend Rochester Syracuse Jackson Hole Rochester Rapids Manchester Flint London Albany Twin Falls Pocatello Buffalo Casper Madison Medford Boston Milwaukee...

  • Page 3
    ....0 million, representing a 20% ownership position. TRIP intends to continue its growth strategy during 2011 and plans on introducing the Embraer 190 regional jet to complement its existing operations of flying Embraer 175 regional jets and ATR-42 and ATR-72 regional aircraft. We added an additional...

  • Page 4
    ... leadership and pilots were previously employed by Atlantic Southeast. We continue to evaluate other investment opportunities outside the domestic United States that meet certain financial and strategic objectives. Initially we thought 2010 would be a very quiet year, with little planned growth...

  • Page 5
    ... year ended December 31, 2010 OR អ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from Commission File No. 0-14719 to SKYWEST, INC. Incorporated under the Laws of Utah 444 South River Road St. George, Utah 84790 (435) 634-3000...

  • Page 6
    ... Compensation ...Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Item 13. Certain Relationships and Related Transactions ...Item 14. Principal Accountant Fees and Services ...PART IV Item 15. Exhibits and Financial Statement Schedules...

  • Page 7
    ... our anticipated financial performance. These statements include, but are not limited to, statements about our future growth and development plans, including our future financial and operating results, our plans for SkyWest Airlines, Atlantic Southeast and ExpressJet, the anticipated benefits of our...

  • Page 8
    ...domestic hubs and focus cities. SkyWest Airlines, Atlantic Southeast and ExpressJet generally provide regional flying to our partners under long-term, fixed-fee code-share agreements. Among other features of our fixed-fee agreements, our partners generally reimburse us for specified direct operating...

  • Page 9
    ... United Express flights, 490 were Delta Connection flights and 30 were AirTran-coded flights. SkyWest Airlines' operations are conducted from hubs located in Chicago (O'Hare), Denver, Los Angeles, Milwaukee, San Francisco and Salt Lake City. SkyWest Airlines' fleet as of December 31, 2010 consisted...

  • Page 10
    ... partner regional airlines are code-share agreement terms, customer service, aircraft types, fare pricing, flight schedules and markets and routes served. The combined operations of SkyWest Airlines, Atlantic Southeast and ExpressJet represent the largest regional airline operation in the United...

  • Page 11
    ...-letter flight designator codes to identify the regional airline's flights and fares in the central reservation systems, to paint its aircraft with the colors and/or logos of its code-share partner and to market and advertise its status as a carrier for the code-share partner. For example, SkyWest...

  • Page 12
    ...to market our status as Delta Connection, United Express Continental Express or AirTran. Under each of our code-share agreements, our passengers participate in the major partner's frequent flyer program, and the major partner provides additional services such as reservations, ticket issuance, ground...

  • Page 13
    ...under the SkyWest Airlines Delta Connection Agreement. Additionally, as of December 31, 2010, SkyWest Airlines operated 10 Brasilia turboprops under the Delta code under a revenue-sharing arrangement. SkyWest Airlines operates these aircraft to provide Delta Connection service between Delta hubs and...

  • Page 14
    ...directly reimbursed by Delta under the Atlantic Southeast Delta Connection Agreement include costs related to fuel, ground handling, and aircraft engine maintenance and ownership. The Atlantic Southeast Delta Connection Agreement also provides for incentive compensation based upon Atlantic Southeast...

  • Page 15
    ...December 31, 2010, SkyWest Airlines operated 70 CRJ700s, 83 CRJ200s and 38 Brasilia turboprops under the SkyWest Airlines United Express Agreement, flying a total of approximately 1,180 United Express flights per day between Chicago (O'Hare), Denver, Los Angeles, San Francisco, Washington Dulles and...

  • Page 16
    ... jets or turboprop aircraft pursuant to a marketing or code-share relationship with any party other than United to provide hub service at United's hubs in Chicago (O'Hare), Denver, San Francisco, Seattle/Tacoma, or Washington, D.C. (Dulles International Airport). Atlantic Southeast United Express...

  • Page 17
    ... operates four CRJ200s for AirTran under a pro-rate arrangement; either party may terminate the agreement upon 120 days written notice. Markets and Routes As of December 31, 2010, SkyWest Airlines and Atlantic Southeast scheduled the following daily flights as Delta Connection carriers: 644 flights...

  • Page 18
    ... AirTran carrier to or from Milwaukee International Airport. Our flight schedules are structured to facilitate the connection of our passengers with flights of our major partners at the airports we serve. Training and Aircraft Maintenance SkyWest Airlines, Atlantic Southeast and ExpressJet employees...

  • Page 19
    ... more than 50% of those employees vote for union representation. A certified labor union then enters into negotiations toward a collective bargaining agreement with the employer. Under the Railway Labor Act, a collective bargaining agreement between an airline and a labor union does not expire, but...

  • Page 20
    ... by unions, including the following employee groups. Approximate Number of Active Employees Represented Employee Group Representatives Status of Agreement Atlantic Southeast Pilots . . Atlantic Southeast Flight Attendants ...Atlantic Southeast Flight Controllers ...Atlantic Southeast Mechanics...

  • Page 21
    ... Southeast and ExpressJet and affect our financial performance. As of December 31, 2010, SkyWest and SkyWest Airlines collectively employed 9,067 full-time equivalent employees consisting of 4,475 pilots and flight attendants, 2,956 customer service personnel, 1,146 mechanics and other maintenance...

  • Page 22
    ..., SkyWest Airlines, Atlantic Southeast and ExpressJet have taken many steps, both voluntarily and as mandated by governmental agencies, to increase the safety and security of their operations. Some of the safety and security measures we have taken with our code-share partners include: aircraft...

  • Page 23
    ... SkyWest Airlines, Atlantic Southeast and ExpressJet United Express Agreements due to an uncured breach by SkyWest Airlines, Atlantic Southeast or ExpressJet of certain operational or performance provisions, including measures and standards related to flight completions, baggage handling and on-time...

  • Page 24
    ... amounts otherwise payable by United under the existing SkyWest Airlines United Express Agreement. The maximum deferral amount is $49 million and any amounts deferred accrue a deferral fee of 8%, payable weekly. United's right to defer such payments is scheduled to terminate on October 16, 2019...

  • Page 25
    ... provide that Delta has the right to require that certain contractual rates under those agreements shall not exceed the second lowest rates of all carriers within the Delta Connection Program. On November 19, 2010, SkyWest Airlines and Atlantic Southeast reached agreements with Delta related to the...

  • Page 26
    ... code-share agreements with our major partners could have an adverse effect on our operating results and financial condition. SkyWest, SkyWest Airlines, Atlantic Southeast and ExpressJet have entered into code-share agreements with Delta, United and Continental. For the year ended December 31, 2010...

  • Page 27
    ... International Airport), Orlando and Salt Lake City. Under the SkyWest Airlines United Express Agreement, growth is restricted in Chicago (O'Hare International Airport), Denver, San Francisco, Seattle/Tacoma and Washington D.C. (Dulles International Airport). Due to the fluctuations in our schedules...

  • Page 28
    ... our business. Our business is labor intensive, requiring large numbers of pilots, flight attendants, mechanics and other personnel. Labor costs constitute a significant percentage of our total operating costs. For example, during the year ended December 31, 2010, our salary, wage and benefit costs...

  • Page 29
    ... prices to our pro-rate customers by increasing fares our financial performance would be adversely impacted. The Airline Safety and Pilot Training Improvement Act of 2009 could negatively affect our operations and our financial condition. Prompted by the crash of a Colgan aircraft, which killed 50...

  • Page 30
    ..., at times, have been lower than the levels required by our code-share agreements. If our major partners schedule the utilization of our aircraft below historical levels (including taking into account the stage length and frequency of our scheduled flights), we may not be able to maintain operating...

  • Page 31
    ... 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 and Embraer as the sole manufacturers...

  • Page 32
    ... our hub airports, due to adverse weather or for any other reason, could have a material adverse impact on our operations. We currently operate primarily through hubs in Atlanta, Los Angeles, Milwaukee, San Francisco, Salt Lake City, Chicago, Denver, Cincinnati/Northern Kentucky, Houston, Washington...

  • Page 33
    ... insurance costs, increased government regulations and tightened credit markets, all of which have affected, and will continue to affect, the operations and financial condition of participants in the industry, including us, major carriers (including our major partners), competitors and aircraft...

  • Page 34
    ... carriers such as SkyWest Airlines, Atlantic Southeast and ExpressJet. The major airlines may also make other strategic changes such as changing or consolidating hub locations. If our major partners were to make changes such as these in their strategy and operations, our operations and financial...

  • Page 35
    ... 31, 2010, we had equity-based incentive plans under which 4,419,708 shares are reserved for issuance and an employee stock purchase plan under which 2,643,208 shares are reserved for issuance, both of which may dilute the ownership interest of our shareholders. Our Restated Articles also authorize...

  • Page 36
    ... and Atlantic Southeast Delta Connection Agreements. On January 25, 2011, SkyWest Airlines agreed to operate five CRJ700s for Alaska Airlines. SkyWest Airlines plans to lease these aircraft from Alaska Airlines for a nominal amount. Total expenditures for these aircraft and related flight equipment...

  • Page 37
    ... Delta and United will want us to continue to operate Brasilia turboprops in markets where passenger load and other factors make the operation of a regional jet impractical. As of December 31, 2010, SkyWest Airlines operated 48 Brasilia turboprops out of Los Angeles, San Francisco, Salt Lake City...

  • Page 38
    ... ground service equipment maintenance facility, aircraft parking, employee parking, a newly constructed 18,110 square-foot training facility and 71,209 square feet of newly renovated office space which is utilized as Atlantic Southeast's corporate headquarters. The lease agreement for the Aircraft...

  • Page 39
    ...'s three domestic hubs and various other locations, our passenger and baggage handling space is provided by Continental on varying terms depending on the prevailing practice at each location. Our management deems the current facilities of SkyWest, SkyWest Airlines, Atlantic Southeast and ExpressJet...

  • Page 40
    .... Atlantic Southeast and SkyWest Airlines v. Delta During the quarter ended December 31, 2007, Delta notified SkyWest, SkyWest Airlines and Atlantic Southeast of a dispute under the Delta Connection Agreements executed by Delta with SkyWest Airlines and Atlantic Southeast. The dispute relates to...

  • Page 41
    ... the ExpressJet Merger. For financial reporting purposes we accrue an estimated loss if the loss is probable and reasonably estimable. Because these conditions have not been satisfied, we did not record a loss related to the preceding matter as of December 31, 2010. ITEM 4. REMOVED AND RESERVED 37

  • Page 42
    ...Incentive Plan, and our Employee Stock Purchase Plan. See Note 9 to our Consolidated Financial Statements for the fiscal year ended December 31, 2010, included in Item 8 of this Report, for additional information regarding these plans. Issuer Purchases of Equity Securities Our Board of Directors has...

  • Page 43
    ... 2010, our Board of Directors authorized the repurchase of up to 20,000,000 shares of our common stock. Purchases are made at management's discretion based on market conditions and our financial resources. In addition, effective March 13, 2009, we entered into the SkyWest, Inc. Stock Repurchase Plan...

  • Page 44
    ... are: AirTran Holdings, Inc.; Alaska Air Group, Inc.: Allegiant Travel Co.; AMR Corp/DE; Delta Air Lines, Inc.; Great Lakes Aviation, LTD.; Hawaiian Holdings, Inc.; JetBlue Airways, Corp.; Pinnacle Airlines, Corp.; Republic Airways, Holdings Inc.; SkyWest, Inc. Southwest Airlines, United Continental...

  • Page 45
    ... our consolidated financial statements and related notes included elsewhere in this Report. Selected Consolidated Financial Data (amounts in thousands, except per share data): 2010(2) 2009 Year Ended December 31, 2008 2007 2006 Operating revenues ...Operating income ...Net income ...Net income per...

  • Page 46
    ... 0.7% was operated under the AirTran code-share agreement. SkyWest Airlines has been a code-share partner with Delta in Salt Lake City and United in Los Angeles since 1987 and 1997, respectively. In 1998, SkyWest Airlines expanded its relationship with United to provide service in Portland, Seattle...

  • Page 47
    ..., 2010, SkyWest Airlines operated as a Delta Connection carrier in Salt Lake City, a United Express carrier in Los Angeles, San Francisco, Denver, Chicago and the Pacific Northwest, and an AirTran carrier in Milwaukee, operating more than 1,700 total daily flights. Atlantic Southeast has been a code...

  • Page 48
    ...rate of all carriers within the Delta Connection Program. On October 23, 2009, Delta sent letters to SkyWest Airlines and Atlantic Southeast requiring them to either adjust the rates payable under their respective Delta Connection Agreements or accept termination of those agreements. Delta's letters...

  • Page 49
    ... SkyWest Airlines and Atlantic Southeast United Express Agreements and our AirTran code-share agreement increased $41.5 million compared to the year ended December 31, 2009. The increase in CRJ 200 engine overhauls reimbursed at a fixed hourly rate was principally due to scheduled engine maintenance...

  • Page 50
    ... engine overhauls based on the respective lease return dates. With respect to SkyWest Airlines, a third-party vendor provides our long-term engine services covering the scheduled and unscheduled repairs for engines on our CRJ700s operated under the SkyWest Airlines United Express Agreement. Under...

  • Page 51
    ... discount rate to be used in discounting future lease payments. These estimates are utilized by management in making computations as required by existing accounting standards that determine whether the lease is classified as an operating lease or a capital lease. All of our aircraft leases...

  • Page 52
    ...2010, compared to the year ended December 31, 2009. We are reimbursed for our actual fuel costs by our major partners under our contract flying arrangements. For financial reporting purposes, we record these reimbursements as operating revenue. Under the SkyWest Airlines and Atlantic Southeast Delta...

  • Page 53
    ... high number of flight cancellations, primarily due to weather problems in its Atlanta hub, during the year ended December 31, 2009. Additionally, on March 31, 2009, as a result of an internal audit, Atlantic Southeast grounded 60 CRJ200 aircraft in order to perform engine safety inspections...

  • Page 54
    ... Percent 2010 2009 Cents Per Cents Per ASM ASM Aircraft fuel ...Salaries, wages and benefits ...Aircraft maintenance, materials and repairs ...Aircraft rentals ...Depreciation and amortization ...Station rentals and landing fees ...Ground handling services ...Acquisition related costs ...Other...

  • Page 55
    ... SkyWest Airlines and Atlantic Southeast United Express Agreements and our AirTran code-share agreement increased $41.5 million compared to the year ended December 31, 2009. The increase in CRJ 200 engine overhauls reimbursed at a fixed hourly rate was principally due to scheduled engine maintenance...

  • Page 56
    ... in ground handling expense was due primarily to 16 new pro-rate stations SkyWest Airlines outsourced to other ground handlers since January 1, 2009. Acquisition-related costs. During the year ended December 31, 2010, we incurred $8.8 million of direct severance, legal and advisor fees associated...

  • Page 57
    ... partners under our contract flying arrangements. For financial reporting purposes, we record these reimbursements as operating revenues. Under the SkyWest Airlines and Atlantic Southeast Delta Connection Agreements, we are reimbursed for our engine overhaul expenses. We also record those engine...

  • Page 58
    ... earned under ground handling contracts where we provide ground handling services for our own aircraft is presented in the ''Passenger revenue'' line in our consolidated statements of income. Third, on October 23, 2009, Delta sent letters to SkyWest Airlines and Atlantic Southeast requiring them to...

  • Page 59
    ...employees resulting from United transitioning 16 stations from SkyWest Airlines to other ground handlers during the second quarter of 2008 and Delta transitioning 23 stations from SkyWest Airlines and Atlantic Southeast to other ground handlers during the second quarter of 2009. Aircraft maintenance...

  • Page 60
    ... fleets. Under the SkyWest Airlines United Express Agreement (and pursuant to a Services Agreement with Midwest prior to its termination on January 1, 2010), we recognize revenue in our consolidated statement of income at a fixed hourly rate for mature engine maintenance on regional jet engines...

  • Page 61
    ...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 Atlantic Southeast Delta Connection Agreements, we are reimbursed for our engine overhaul expense, which we record as revenue. The...

  • Page 62
    ...the timing of our payments of engine overhaul expenses. Cash Flows from Investing Activities. Net cash used in investing activities decreased $385.8 million or 68.5%, during the year ended December 31, 2010, compared to the year ended December 31, 2009. Our aircraft and rotable spare parts purchased...

  • Page 63
    ...-term debt at December 31, 2009. As of December 31, 2010, SkyWest Airlines had a $25 million line of credit. As of December 31, 2010 and 2009, SkyWest Airlines had no amount outstanding under the facility. The facility expires on March 31, 2011 and has a fixed interest rate of 4.50%. As of December...

  • Page 64
    ... and Atlantic Southeast Delta Connection Agreements. On January 25, 2011, SkyWest Airlines agreed to operate five CRJ700s for Alaska Airlines. SkyWest Airlines plans to lease these aircraft from Alaska Airlines for a nominal amount. Total expenditures for these aircraft and related flight equipment...

  • Page 65
    ... rate on the debt related to the Brasilia turboprop and CRJ aircraft was approximately 4.4% at December 31, 2010. Guarantees We have guaranteed the obligations of SkyWest Airlines under the SkyWest Airlines Delta Connection Agreement and the obligations of Atlantic Southeast under the Atlantic...

  • Page 66
    ...64% of our Brasilia turboprops flown in the United system were flown under pro-rate arrangements. As of December 31, 2010, we operated 18 CRJ200s for United under a pro-rate agreement and four CRJ200s under a pro-rate agreement with AirTran. The average price per gallon of aircraft fuel increased 46...

  • Page 67
    ... consolidated financial statements appearing in Item 8 of this Report. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information set forth below should be read together with the ''Management's Discussion and Analysis of Financial Condition and Results of Operations,'' appearing elsewhere...

  • Page 68
    ..., in accordance with the standards of the Public Company Accounting Oversight Board (United States), SkyWest, Inc. and subsidiaries' internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of...

  • Page 69
    SKYWEST, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) ASSETS December 31, 2010 December 31, 2009 CURRENT ASSETS: Cash and cash equivalents Marketable securities ...Restricted cash ...Income tax receivable ...Receivables, net ...Inventories, net ...Prepaid aircraft rents...

  • Page 70
    ...Dollars in thousands) LIABILITIES AND STOCKHOLDERS' EQUITY December 31, 2010 December 31, 2009 CURRENT LIABILITIES: Current maturities of long-term debt . Accounts payable ...Accrued salaries, wages and benefits . Accrued aircraft rents ...Taxes other than income taxes ...Other current liabilities...

  • Page 71
    ... handling and other ...Total operating revenues ...OPERATING EXPENSES: Salaries, wages and benefits ...Aircraft maintenance, materials and repairs Aircraft fuel ...Aircraft rentals ...Depreciation and amortization ...Station rentals and landing fees ...Ground handling services ...Acquisition related...

  • Page 72
    ... on marketable securities net of tax of $457 ...Total comprehensive income ...Exercise of common stock options and issuance of restricted stock ...Sale of common stock under employee stock purchase plan ...Stock based compensation expense related to the issuance of stock options ...Tax benefit from...

  • Page 73
    ... ...Stock based compensation expense ...Loss (gain) on sale of property and equipment ...Undistributed earnings of other companies ...Brasilia engine overhauls ...Purchase accounting gain ...Impairment on marketable securities ...Net increase in deferred income taxes ...Changes in operating assets...

  • Page 74
    ..., 2010, SkyWest Airlines operated as a Delta Connection carrier in Salt Lake City, a United Express carrier in Los Angeles, San Francisco, Denver, Chicago and the Pacific Northwest, and an AirTran carrier in Milwaukee, operating more than 1,700 total daily flights. Atlantic Southeast has been a code...

  • Page 75
    ... hubs located in Cleveland, Newark, Houston, Chicago (O'Hare) and Washington D.C. (Dulles International Airport). ExpressJet offered more than 1,300 daily scheduled departures as of December 31, 2010, of which approximately 1,050 were Continental Express flights and 250 were United Express flights...

  • Page 76
    ...of December 31, 2010 and 2009, respectively. Marketable Securities The Company's investments in marketable debt and equity securities are deemed by management to be available for sale and are reported at fair market value with the net unrealized appreciation (depreciation) reported as a component of...

  • Page 77
    ...allowance for flight equipment expendable parts is accrued based on estimated lives of the corresponding fleet types and salvage values. The inventory allowance as of December 31, 2010 and 2009 was $7.5 million and $6.6 million, respectively. These allowances are based on management estimates, which...

  • Page 78
    ..., landing gear and normal recurring maintenance are expensed as incurred. For leased aircraft, the Company is subject to lease return provisions that require a minimum portion of the ''life'' of an overhaul be remaining on the engine at the lease return date. For Brasilia Turboprop engine overhauls...

  • Page 79
    ... 2010 (1) Nature of Operations and Summary of Significant Accounting Policies (Continued) Passenger and Ground Handling Revenues The Company recognizes passenger and ground handling revenues when the service is provided. Under the Company's contract and pro-rate flying agreements with Delta, United...

  • Page 80
    ...rate of all carriers within the Delta Connection Program. On October 23, 2009, Delta sent letters to SkyWest Airlines and Atlantic Southeast requiring them to either adjust the rates payable under their respective Delta Connection Agreements or accept termination of those agreements. Delta's letters...

  • Page 81
    ...of December 31, 2010, Atlantic Southeast was operating 16 CRJ 200s as a United Express carrier. AirTran Code-Share Agreement On November 4, 2009, SkyWest Airlines entered into a code-share agreement with AirTran. Under the terms of the code-share agreement, SkyWest Airlines operates four CRJ200s for...

  • Page 82
    ... once the aircraft is placed into service. The Company's passenger and ground handling revenues could be impacted by a number of factors, including changes to the Company's code-share agreements with Delta, United, Continental or AirTran, integration of ExpressJet's operations as contemplated...

  • Page 83
    SKYWEST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2010 (1) Nature of Operations and Summary of Significant Accounting Policies (Continued) Income Taxes The Company recognizes a liability or asset for the deferred tax consequences of all temporary ...

  • Page 84
    ... to the carrying amount of $1,964.9 million as of December 31, 2009. Segment Reporting The accounting guidance requires disclosures related to components of a company for which separate financial information is available that is evaluated regularly by the Company's chief operating decision maker...

  • Page 85
    ... and annual reporting periods beginning after December 15, 2009, with one new disclosure effective after December 15, 2010. The Company adopted this guidance in full beginning with the interim period ended March 31, 2010. See Note 7. On September 23, 2009, the Financial Accounting Standards Board...

  • Page 86
    ... from integrating the operations of Atlantic Southeast and ExpressJet, as discussed above, and to incur certain one-time cash costs. The unaudited pro forma combined results of operations do not reflect these benefits or costs. Years ended December 31, 2010 2009 Revenue ...Net Income ...Basic...

  • Page 87
    ... at 3.72% to 3.86%, net of the benefits of interest rate subsidies through the Brazilian Export financing program, through 2011, secured by aircraft ...Notes payable to a financing company, due in semi-annual installments interest based on LIBOR secured by flight simulator equipment ... . $ 418,109...

  • Page 88
    ... 2009, SkyWest Airlines extended to United a secured term loan in the amount of $80 million. The term loan bears interest at a rate of 11%, with a ten-year amortization period. The loan was secured by certain ground equipment and certain airport slot rights held by United. On August 11, 2010, United...

  • Page 89
    ...): Year ended December 31, 2010 2009 2008 Computed ''expected'' provision for income taxes at the statutory rates ...Increase (decrease) in income taxes resulting from: Purchase accounting gain ...State income taxes, net of Federal income tax benefit ...Other, net ... ... $52,888 (5,455) 3,485...

  • Page 90
    ... leases 539 aircraft, as well as airport facilities, office space, and various other property and equipment under non-cancelable operating leases which are generally on a long-term net rent basis where the Company pays taxes, maintenance, insurance and certain other operating expenses applicable to...

  • Page 91
    ... ended December 31, 2010, 2009 and 2008, respectively. The Company's leveraged lease agreements, typically obligate the Company to indemnify the equity/owner participant against liabilities that may arise due to changes in benefits from tax ownership of the respective leased aircraft. The terms of...

  • Page 92
    ... jet aircraft during 2011. SkyWest Airlines plans to place these aircraft into operate these under the SkyWest Airlines Delta Connection Agreement. Additionally, the Company. announced plans to lease eight used CRJ700s from another operator. SkyWest Airlines and Atlantic Southeast plan to operate...

  • Page 93
    ... to this matter. Those settlement discussions were not successful; however, as a result of the settlement offer, the Company wrote off $5.9 million of related receivables as of December 31, 2010. SkyWest Airlines and Atlantic Southeast continue to vigorously pursue their claims set forth in the...

  • Page 94
    ... 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, 2010 and 2009...

  • Page 95
    ... by unions, including the following employee groups. Approximate Number of Active Employees Represented Employee Group Representatives Status of Agreement Atlantic Southeast Pilots . . Atlantic Southeast Flight Attendants ...Atlantic Southeast Flight Controllers ...Atlantic Southeast Mechanics...

  • Page 96
    ... of twelve months to fully recover. As of December 31, 2010, the Company continued to record interest on all of its auction rate security instruments. Any future fluctuations in fair value related to these instruments that the Company deems to be temporary, including any recoveries of previous write...

  • Page 97
    ...''Other assets'' in the Consolidated Balance Sheet Based on market conditions, the Company uses a discounted cash flow valuation methodology for auction rate securities. Accordingly, for purposes of the foregoing condensed consolidated financial statements, these securities were categorized as Level...

  • Page 98
    ... Stock Compensation On May 4, 2010, the Company's shareholders approved the adoption of the SkyWest Inc. 2010 Long-Term Incentive Plan, which provides for the issuance of up to 5,150,000 shares of common stock to the Company's directors, employees, consultants and advisors (the ''2010 Incentive Plan...

  • Page 99
    ... stock options to employees under the 2006 Incentive Plan. The following table shows the assumptions used and weighted average fair value for grants in the years ended December 31, 2010, 2009 and 2008. 2010 2009 2008 Expected annual dividend rate ...Risk-free interest rate ...Average expected life...

  • Page 100
    ... the year ended December 31, 2010, 2009 and 2008, the Company recorded equity-based compensation expense of $6.4 million, $7.9 million and $11.5 million, respectively. As of December 31, 2010, the Company had $5.2 million of total unrecognized compensation cost related to non-vested stock options...

  • Page 101
    SKYWEST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2010 (9) Capital Transactions (Continued) following table summarizes the stock option activity for all of the Company's plans for the years ended December 31, 2010, 2009 and 2008: 2010 2009 2008 ...

  • Page 102
    ... December 31, 2010, 2009 and 2008, respectively. Atlantic Southeast Retirement Plan Atlantic Southeast sponsors the Atlantic Southeast Airlines, Inc. Investment Savings Plan (the ''Atlantic Southeast Plan''). Employees who have completed 90 days of service and are 18 years of age are eligible for...

  • Page 103
    ... purchased semi-annually at a 5% discount based on the end of the period price. Employees can terminate their participation in the 2009 Stock Purchase Plan at anytime upon written notice. In February 1996, the Company's Board of Directors approved the SkyWest, Inc. 1995 Employee Stock Purchase Plan...

  • Page 104
    ... TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2010 (10) Retirement Plans and Employee Stock Purchase Plans (Continued) The 1995 Stock Purchase Plan was a compensatory plan under the accounting guidance because the shares were purchased semi-annually at a 15% discount based on the...

  • Page 105
    SKYWEST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2010 (13) Quarterly Financial Data (Unaudited) Unaudited summarized financial data by quarter for 2010 and 2009 is as follows (in thousands, except per share data): First Quarter Year Ended December ...

  • Page 106
    ..., 2010, those controls and procedures were effective to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Changes In Internal...

  • Page 107
    ... of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United...

  • Page 108
    ...' equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2010 of SkyWest, Inc. and subsidiaries and our report dated February 25, 2011 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Salt Lake City, Utah February 25, 2011 104

  • Page 109
    .... Headings in Proxy Statement ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE EXECUTIVE COMPENSATION SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS PRINCIPAL ACCOUNTANT FEES AND SERVICES...

  • Page 110
    .... United Express Agreement dated September 9, 2003, between United Air Lines, Inc., and SkyWest Airlines, Inc. Stock Option Agreement dated January 28, 1987 between Delta Air Lines, Inc. and SkyWest, Inc. Lease Agreement dated December 1,1989 between Salt Lake City Corporation and SkyWest Airlines...

  • Page 111
    ... Airlines, Inc. Agreement and Plan of Merger, dated August 3, 2010, by and among SkyWest, Inc., Express Delaware Merger Co. and ExpressJet Holdings Inc. Subsidiaries of the Registrant Consent of Independent Registered Public Accounting Firm Certification of Chief Executive Officer Certification...

  • Page 112
    ... audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Ernst & Young LLP Salt Lake City, Utah February 25, 2011 108

  • Page 113
    SKYWEST, INC. AND SUBSIDIARIES SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS For the Years Ended December 31, 2010, 2009 and 2008 (Dollars in thousands) Balance at Beginning of Year Additions Charged to Costs and Expenses Description Deductions Balance at End of Year Year Ended December 31, 2010...

  • Page 114
    ... 25, 2011. SKYWEST, INC. By: /s/ BRADFORD R. RICH Bradford R. Rich Executive Vice President and Chief Financial Officer (Principal Financial and Principal Accounting Officer) ADDITIONAL SIGNATURES Pursuant to the requirement of the Securities Act of 1934, as amended, this Annual Report on Form...

  • Page 115
    Name Capacities Date /s/ MARGARET S. BILLSON Margaret S. Billson Director February 25, 2011 /s/ HENRY J. EYRING Henry J. Eyring Director February 25, 2011 /s/ JAMES L. WELCH James L. Welch Director February 25, 2011 /s/ MICHAEL K. YOUNG Michael K. Young Director February 25, 2011 111

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    ... are invited to attend the Annual Meeting of Shareholders of SkyWest, Inc. scheduled to be held at 11:00 a.m., Tuesday, May 3, 2011, at our headquarters located at 444 South River Road, St. George, Utah. The accompanying Notice of Annual Meeting of Shareholders and Proxy Statement describe the items...

  • Page 118

  • Page 119
    SkyWest, Inc. 444 South River Road ɀ St. George, UT 84790 NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS OF SKYWEST, INC. Date: Time: Place: Tuesday, May 3, 2011 11:00 a.m., Mountain Daylight Time (MDT) SkyWest, Inc. Headquarters 444 South River Road St. George, Utah 84790 1. To elect nine directors ...

  • Page 120

  • Page 121
    ...SKYWEST, INC. To Be Held on Tuesday, May 3, 2011 TABLE OF CONTENTS Page Overview ...Proposal 1-Election of Directors ...Executive Officers ...Corporate Governance ...Meetings and Committees of the Board ...Compensation Discussion and Analysis ...Compensation Committee Report ...Summary Compensation...

  • Page 122

  • Page 123
    ... Solicitation This Proxy Statement, the accompanying Notice of Annual Meeting, proxy card and the Annual Report to Shareholders of SkyWest, Inc. (the ''Company'' or ''SkyWest'') are being mailed on or about March 15, 2011. The Board of Directors of the Company (the ''Board'') is soliciting your...

  • Page 124
    ... of the Company's shareholders regarding the compensation of the Company's named executive officers. FOR the ratification of the appointment of Ernst & Young, LLP as the Company's independent registered public accounting firm (independent auditors) for the year ending December 31, 2011. AGAINST the...

  • Page 125
    ... over the Internet. As a result, the Company is mailing to most of its shareholders a Notice of Internet Availability of Proxy Materials (the ''Notice'') instead of a paper copy of this Proxy Statement and the Company's 2010 Annual Report to Shareholders. The Notice contains instructions on how to...

  • Page 126
    ..., including information regarding the specific experience, qualifications, attributes and skills that led the Board and the Nominating and Corporate Governance Committee to conclude that he or she should serve as a director of the Company at the present time, in light of the Company's business and...

  • Page 127
    Jerry C. Atkin Age: Director Since: Committees: Principal Occupation: 62 1974 None Chairman of the Board and Chief Executive Officer of the Company and its three operating subsidiaries, SkyWest Airlines, Inc. (''SkyWest Airlines''), Atlantic Southeast Airlines, Inc. (''Atlantic Southeast'') and ...

  • Page 128
    ...national carrier of the Republic of Ghana, and Chief Executive Officer of Euro Sky, a company organized to explore the feasibility of operating a regional airline in Austria. From March 1991 to January 1993, Mr. Atkin was Director of Business and Economic Development for the State of Utah. The Board...

  • Page 129
    ...Airframe Systems and Aircraft Landing Systems and as Vice President of Engineering and Program Management. Prior to her employment with Honeywell International, Inc., she was Vice President of the MD-11, MD-80 and MD-90 programs at McDonnell Douglas. The Board nominated Ms. Billson, in part, because...

  • Page 130
    ... explored and pursued various growth and expansion opportunities. In connection with his service as Chairman of the Board of Leucadia, Mr. Cumming currently serves as a director on the following Leucadiaaffiliated companies, each with at-least 20% Leucadia direct ownership. • Jeffries Group, Inc...

  • Page 131
    ...Monitor Company, an internationally-recognized management consulting firm. Mr. Eyring is a sound strategic thinker who possesses the unique ability to apply his academic thought and studies to the practical day-to-day challenges of the Company's operations. His thoughtful application of business and...

  • Page 132
    ... knowledge in the areas of financial analysis, business strategy and investment management. In addition to his lengthy service as the Chairman and Chief Executive Officer of Western Alliance Bancorporation, Mr. Sarver was formerly a certified public accountant. Mr. Sarver's background and experience...

  • Page 133
    ..., and served as the Chairman and Chief Executive Officer of, International Lease Finance Corporation, which leases and finances commercial jet aircraft. Mr. Udvar-Hazy is recognized as one of the leading experts in the aviation industry, and contributes to the Board the wisdom and insight he has...

  • Page 134
    ...That experience includes extensive experience working with organized labor groups, including unions. Mr. Welch's insights have been particularly valuable to the Board as the Company has addressed labor and related issues arising in the operation of SkyWest Airlines and Atlantic Southeast, as well as...

  • Page 135
    ... to the U.S. Department of State. The Board nominated President Young, in part, because it believes he brings valuable international experience at a time when the Company is becoming more actively involved in evaluating and pursuing business opportunities outside the United States. President Young...

  • Page 136
    ... or its operating subsidiaries during the year 2010. Bradford R. Rich, 49, is the Executive Vice President and Chief Financial Officer of the Company, SkyWest Airlines, Atlantic Southeast and Express Jet, with responsibility for the common support areas of finance, treasury, investor relations and...

  • Page 137
    ... on the number of times that a director may stand for election. Retirement Directors are required to submit their resignation from the Board when their term expires upon reaching the age of 72 years old. The Board will accept the resignation unless the Nominating and Corporate Governance Committee...

  • Page 138
    ... Select Market, including those relating to director independence and to compensation of Audit & Finance Committee members. CEO Evaluation and Management Succession The Nominating and Corporate Governance Committee conducts an annual review to assess the performance of the Company's Chief Executive...

  • Page 139
    ... mail: Board of Directors or Name of Individual Director(s) c/o Corporate Secretary SkyWest, Inc. 444 South River Road St. George, UT 84790 Code of Ethics The Company has adopted a Code of Ethics for Directors and Senior Executive Officers, which is available on the Company's Web site, www.SkyWest...

  • Page 140
    ... CEO succession and the Company's compensation policies and related risks by regular reviews with management and the Compensation Committee's outside advisors. Whistleblower Hotline The Company has established a whistleblower hotline that enables employees, customers, suppliers and shareholders...

  • Page 141
    ... registered public accounting firm, the Company's internal auditors, and management to review and monitor the adequacy and effectiveness of reporting, internal controls, risk assessment and compliance with Company policies; • Review the Company's consolidated financial statements and related...

  • Page 142
    ... as a director. This information should be addressed to Jerry C. Atkin, Chairman and Chief Executive Officer of the Company, 444 South River Road, St. George, Utah 84790. As contemplated by the Company's Corporate Governance Guidelines, the Nominating and Corporate Governance Committee reviews the...

  • Page 143
    ... Company's executive compensation objectives, principles, practices and decisions as they relate to the following named executive officers of the Company (the ''Executives''): • Jerry C. Atkin, Chairman of the Board and Chief Executive Officer of the Company, SkyWest Airlines, Atlantic Southeast...

  • Page 144
    ... Committee performed such a review in 2010 that included a review of the executive compensation practices of peer airlines Midwest, Pinnacle, Express Jet, Republic, Airtran, Jet Blue, Alaska, Southwest, US Airways, American, Delta Air Lines, and United. The executive compensation procedures and the...

  • Page 145
    ... performance-based) • Retirement and other Benefits The compensation objectives for each Executive are more fully described in the following paragraphs. Actual compensation for the Executives for 2010 is reflected in the summary compensation table immediately following this section. Salary. Salary...

  • Page 146
    ...relationship maintenance with major airline partners, develop proactive strategy and general corporate development. The goals for the Presidents of SkyWest Airlines and Atlantic Southeast included operational performance goals of satisfactory levels of on-time departures, on-time arrivals and flight...

  • Page 147
    ... to the Net Income-based annual bonus and the individual goal annual bonus, the Committee also exercised discretion in 2010 and paid Bradford R. Holt, President of Atlantic Southeast and ExpressJet an additional $15,000 as a reward for the successful initial efforts related to the acquisition...

  • Page 148
    ..., restricted stock units, and performance units payable in cash. The three types of awards were used in an effort to link the Executives' long-term incentive compensation with the creation of shareholder value. The value of stock options and restricted stock units is directly related to the value...

  • Page 149
    ... purposes of the 2010 performance equity grants, ''Shareholder Return on Equity'' was equal to shareholder return on equity, adjusted to exclude timing differences between engine overhaul expenses and the related revenue collected from the Company's major partners. Earned performance unit awards are...

  • Page 150
    .... Retirement Benefits. The Company and SkyWest Airlines sponsor a 401(k) retirement plan for all eligible employees, including the Executives. Atlantic Southeast also maintains a substantially equivalent 401(k) plan for its eligible employees, including its President. Both plans are broad based, tax...

  • Page 151
    ... the SkyWest, Inc. 2002 Deferred Compensation Plan, a non-qualified deferred compensation plan for the benefit of officers and other highly compensated employees. The Chief Executive, CFO, and President of SkyWest Airlines participate in the deferred compensation plan. Atlantic Southeast also...

  • Page 152
    ... on the Company. COMPENSATION COMMITTEE REPORT The Committee has reviewed the foregoing compensation discussion and analysis and discussed with the Company's management the information set forth herein. Based on such review and discussions with management, the Committee recommended to the Board that...

  • Page 153
    ... Chief Executive Officer Bradford R. Rich ...Executive Vice President, Chief Financial Officer Russell A. Childs ...President and Chief Operating Officer- SkyWest Airlines, Inc. Bradford R. Holt ...President and Chief Operating Officer- Atlantic Southeast Airlines and ExpressJet 2010 $384,200 2009...

  • Page 154
    ...Atlantic Southeast Deferred Compensation Plan attributable to compensation earned for 2010; $3,905 in employer-paid health insurance premiums; $13,563 for a personal vehicle lease, and, $4,075 for personal use of the Company's recreational equipment. (14) All other compensation for Mr. Holt for 2009...

  • Page 155
    ... in the form of annual performance bonuses on November 11, 2009. (3) Annual performance bonuses earned for year 2010 and paid in 2011 are included in the ''Non-Equity Incentive Plan Compensation'' column for 2010 in the Summary Compensation Table and are as follows: Mr. Atkin-$283,700; Mr. Rich-$205...

  • Page 156
    OUTSTANDING EQUITY AWARDS AT YEAR-END This table provides information on the year-end 2010 holdings of stock options and other stock awards (restricted stock and restricted stock units) by the Executives. (b) Number of Securities Underlying Unexercised Options Exercisable (#) Option Awards (c) ...

  • Page 157
    .... For 2010 that discretionary employer contribution was 15% of the Executive's salary and annual bonus. Participant account balances under the SkyWest and Atlantic Southeast Deferred Compensation Plans are fully vested and will be paid by the Company to each Executive upon retirement or separation...

  • Page 158
    ... in column (d) reflect the notational earnings during 2010 credited to each Executive's account under the SkyWest Deferred Compensation Plan. These amounts are not reported in the Summary Compensation Table because they are based on market rates determined by reference to mutual funds that are...

  • Page 159
    ... the Atlantic Southeast Deferred Compensation Plan, and the annual rate of return for the calendar year ended December 31, 2010: Name of Fund Rate of Return American Century Equity Income-Inv ...American Century International Growth-Inv . . American Century Premium Money Market-Inv American Century...

  • Page 160
    ...Udvar-Hazy, a director of the Company, an industry expert fee of $6,000 during the year ended December 31, 2010. Jerry C. Atkin, Chairman of the Board and an employee of the Company, received no compensation for his service on the Board. Stock Awards Each non-employee director receives a stock award...

  • Page 161
    ...$101,900 $ 95,150 (1) Jerry C. Atkin, the Chairman of the Board and Chief Executive Officer of the Company, is not included in the foregoing table as he is an employee of the Company and receives no monetary compensation for his services as Chairman of the Board. (2) Represents the closing price of...

  • Page 162
    .... The Company is not aware of any other beneficial owner of more than 5% of the Common Stock. Amount of Beneficial Ownership Common Stock Shares Percent of Class Name Tradewinds Global Investors, LLC ...2049 Century Park East Los Angeles, CA 90067 Dimensional Fund Advisors LP ...6300 Bee Cave Road...

  • Page 163
    ... in the Company's Proxy Statement for the 2011 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the U.S. Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2010 Summary Compensation Table and the other related tables and...

  • Page 164
    ... the Company's shareholders address future Say-on-Pay proposals once every one, two, or three years. Shareholders also may, if they wish, abstain from casting a vote on this proposal. The Board values dialogue with its shareholders on executive compensation and other important corporate governance...

  • Page 165
    ..., Corporate Secretary of the Company, at 444 South River Road, St. George, Utah 84790. How does the Audit and Finance Committee conduct its meetings? During the year ended December 31, 2010, the Audit and Finance Committee met with the senior members of the Company's financial management team at...

  • Page 166
    sessions from time to time with representatives of E&Y, the Company's Chief Financial Officer, Protiviti and the Company's legal counsel, at which meetings candid discussions of financial management, accounting, internal controls and legal and compliance issues took place. Additionally, the Chairman...

  • Page 167
    ...Company's audited financial statements with the Company's management; and • Discussed with E&Y the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit and Finance Committees, as amended and as adopted by the Public Company Accounting Oversight Board...

  • Page 168
    ... Company's financial statements included in its Quarterly Reports on Form 10-Q, audits of the closing balance sheets of certain businesses acquired, and the review of the Company's registration statements. Audit-Related Fees During the years ended December 31, 2010 and 2009, the Company did not pay...

  • Page 169
    ...'s independence. Based upon these reviews and discussions, the Audit and Finance Committee recommended to the Board at the February 3, 2011 meeting of the Board that the Company's audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2010, filed...

  • Page 170
    ...the number of board seats. Supporting Statement of the International Brotherhood of Teamsters In order to provide shareholders a meaningful role in director elections, SkyWest's director election vote standard should be changed to a majority vote standard. A majority vote standard would require that...

  • Page 171
    ... a significant factor in the Company's consistent growth and financial stability, and has repeatedly demonstrated sound business judgment in its leadership of the Company. Consequently, the Board is hesitant to make a fundamental change to the Company's corporate governance system that already has...

  • Page 172
    ...Christensen, Corporate Secretary of the Company, 444 South River Road, St. George, Utah 84790. Beneficial owners sharing an address who are receiving multiple copies of proxy materials and annual reports and who wish to receive a single copy of such materials in the future will need to contact their...

  • Page 173
    OTHER BUSINESS The Company's management does not know of any other matter to be presented for action at the Meeting. ... to vote said proxy in accordance with their best judgment. 13MAR200820561689 Eric D. Christensen Vice President Planning, Corporate Secretary St. George, Utah March 15, 2011 51

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  • Page 175
    ...Street, Suite 400 Salt Lake City, UT 84101 Corporate Headquarters SkyWest, Inc. 444 South River Road St. George, UT 84790 Tel: (435) 634-3000 www.skywest.com BOARD OF DIRECTORS Jerry C. Atkin Chairman of the Board of Directors Elected Chairman 1991 Chief Executive Officer of SkyWest, Inc. Member of...

  • Page 176
    TM