SkyWest Airlines 2010 Annual Report Download - page 15

The Atlantic Southeast Delta Connection Agreement is scheduled to terminate on September 8,
2020, unless Delta elects to exercise its option to extend the term for up to four additional five-year
terms. The Atlantic Southeast Delta Connection Agreement is subject to early termination in various
circumstances including:
• if Atlantic Southeast or Delta commits a material breach of the Atlantic Southeast Delta
Connection Agreement, subject to 30-day notice and cure rights;
• if Atlantic Southeast fails to conduct all flight operations and maintain all aircraft under the
Atlantic Southeast Delta Connection Agreement in compliance in all material respects with
applicable government regulations;
• if Atlantic Southeast fails to satisfy certain performance and safety requirements;
• if, under certain circumstances, Delta has a right to terminate the SkyWest Airlines Delta
Connection Agreement;
• if the other party files for bankruptcy, reorganization or similar action (subject to limitations
imposed by the U.S. Bankruptcy Code) or if either party makes an assignment for the benefit of
creditors; or
• if Atlantic Southeast fails to maintain competitive base rate costs (provided that Atlantic
Southeast has the right to adjust its rates prior to any such termination).
SkyWest, Inc. Delta Connection Agreement
In December 2006, we entered into a Delta Connection Agreement which awarded us the right to
operate 12 CRJ700s, previously operated by Comair. This Delta Connection Agreement is ancillary to,
and satisfied certain obligations of Delta under the Atlantic Southeast Delta Connection Agreement.
We have the right to designate either SkyWest Airlines or Atlantic Southeast to operate the 12 aircraft
to provide service, primarily to and from Delta’s Cincinnati hub through February 2012 (subject to
Delta’s right to extend the arrangement for up to three additional three-year terms). Under the
arrangement, Delta has agreed to pay Atlantic Southeast or SkyWest Airlines, as applicable, a fixed-fee
per completed block hour, a fixed-fee per completed departure, a fixed-fee for overhead, a one-time
start-up payment for each aircraft delivered and incentive payments based upon performance, including
on-time arrival performance and completion percentage rates. Additionally, Delta has agreed to
reimburse SkyWest Airlines or Atlantic Southeast, as applicable, for certain operating costs under this
Delta Connection Agreement.
SkyWest Airlines United Express Agreement
SkyWest Airlines and United are parties to the SkyWest Airlines United Express Agreement
entered into on July 31, 2003. As of 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 designated outlying destinations. Generally, under the
SkyWest Airlines United Express Agreement, United retains all air fares, cargo rates, mail charges and
other revenues associated with each flight.
In exchange for providing the designated number of flights and performing SkyWest Airlines’
obligations under the SkyWest Airlines United Express Agreement, SkyWest Airlines receives from
United compensation (subject to an annual adjustment) of a fixed fee per completed block hour, a
fixed fee per completed departure, a fixed fee per passenger, and a fixed fee for overhead and aircraft
costs. The SkyWest Airlines United Express Agreement provides for incentives based upon SkyWest
Airlines’ performance, including on-time arrival performance and completion percentage rates.
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