SkyWest Airlines 2010 Annual Report Download - page 17

lasting for 15 days and material defaults under certain lease agreements relating to aircraft operated by
ExpressJet under the Continental CPA (provided that such material default is not cured within 60 days
following receipt of notice). ExpressJet’s termination rights include the right to terminate the
Continental CPA if Continental fails to make payment of $500,000 or more due to ExpressJet under
the Continental CPA and such failure is not cured within five business days following receipt of notice.
Under the terms of the Continental CPA, ExpressJet operates 206 aircraft in the Continental flight
system. All of the aircraft are leased to ExpressJet by Continental pursuant to sublease or lease
agreements. Upon the expiration of the Continental CPA, ExpressJet is obligated to return the
subleased or leased aircraft to Continental.
Under the terms of the Continental CPA, Continental has agreed to compensate ExpressJet on a
monthly basis based on the block hours flown by ExpressJet and the weighted average number of
aircraft operated by ExpressJet under the Continental CPA. Additionally, ExpressJet may earn incentive
compensation for good operating performance, but is subject to financial penalties for poor operating
performance. The parties to the Continental CPA have made customary representations, warranties and
covenants, and the agreement contains other provisions typical of agreements of this kind, including
with respect to various operational, marketing and administrative matters.
ExpressJet United Express Agreement
ExpressJet and United are parties to the ExpressJet United Express Agreement entered into on
December 1, 2009. As of December 31, 2010, ExpressJet operated 35 ERJ-145s under the United
Express Agreement. Generally, under the ExpressJet 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 ExpressJet’s’
obligations under the ExpressJet United Express Agreement, ExpressJet receives from United
compensation (subject to an annual adjustment) of a fixed fee per completed block hour, fixed fee per
completed departure, fixed fee per passenger and a fixed fee for overhead and aircraft costs. The
ExpressJet United Express Agreement provides for incentives based upon ExpressJet’s performance,
including on-time arrival performance and completion percentage rates. Additionally, certain of
ExpressJet’s operating costs are reimbursed by United, including fuel costs.
The ExpressJet United Express Agreement expires in three tranches: the agreement expires with
respect to 13 aircraft on April 4, 2011, 11 aircraft on April 30, 2012 and 11 aircraft on April 30, 2013.
The ExpressJet United Express Agreement also contains a renewal option, at United’s election, for
additional periods up to a total term of five years. Under the agreement, United must notify ExpressJet
of its intention to renew each group of aircraft not less than six months prior to the end of the term
for such aircraft.
SkyWest Airlines 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 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 to or from Hartsfield—Jackson Atlanta International
Airport, 392 flights to or from Salt Lake City International Airport, 90 flights to or from Minneapolis
International Airport, 52 flights to or from Memphis International Airport, 48 flights to or from
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