SkyWest Airlines 2010 Annual Report Download - page 31

or similar events (war-risk coverage). At the same time, these insurers significantly increased the
premiums for aviation insurance in general.
The U.S. government has agreed to provide commercial war-risk insurance for U.S.-based airlines
through December 31, 2011, covering losses to employees, passengers, third parties and aircraft. If the
U.S. government ceases to provide such insurance beyond that date, or reduces the coverage provided
by such insurance, we will attempt to purchase insurance coverage, likely with a narrower scope, from
commercial insurers at an additional cost. To the extent this coverage is not available at commercially
reasonable rates, we would be adversely affected.
While the price of commercial insurance had declined since the period immediately after the 2001
terrorist attacks, in the event commercial insurance carriers further reduce the amount of insurance
coverage available to us, or significantly increase the cost of obtaining such coverage, we would be
adversely affected.
We could be adversely affected by an outbreak of a disease that affects travel behavior.
In the second quarter of 2009, there was an outbreak of the H1N1 flu virus which had an adverse
impact throughout our network. In 2003, there was an outbreak of Severe Acute Respiratory Syndrome
(‘‘SARS’’), which had an adverse impact on travel behavior. In addition, in the past there have been
concerns about outbreaks or potential outbreaks of other diseases, such as avian flu. Any outbreak of a
disease (including a worsening of the outbreak of the H1N1 flu virus) that affects travel behavior could
have a material adverse impact on our operating results and financial condition. In addition, outbreaks
of disease could result in quarantines of our personnel or an inability to access facilities or our aircraft,
which could adversely affect our operations and financial condition.
We may be unable to obtain 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 of our aircraft. For the year ended December 31, 2010, 41.5% of our available
seat miles were flown using CRJ200s, 38.1% of our available seat miles were flown using CRJ700s and
11.4% of our available seat miles were flown using CRJ900s. As of December 31, 2010, we had
commitments of approximately $193.5 million to purchase four new CRJ700s and lease eight used
CRJ700s. We expect to complete these deliveries by fourth quarter of 2011.
Any significant disruption or delay in the expected delivery schedule of our fleet would adversely
affect our business strategy and overall operations and could have a material adverse impact on our
operating results or our financial condition. Certain of Bombardier’s aerospace workers are represented
by unions and have participated in at least one strike in recent history. Any future prolonged strike at
Bombardier or delay in Bombardier’s production schedule as a result of labor matters could disrupt the
delivery of regional jets to us, which could adversely affect our planned fleet growth. We are also
dependent on General Electric and Rolls Royce as the sole manufacturers of our aircraft engines.
General Electric and Rolls Royce also provide parts, repair and overhaul services, and other types of
support services on our engines. Our operations could be materially and adversely affected by the
failure or inability of Bombardier, Embraer, General Electric and/or Rolls Royce to provide sufficient
parts or related maintenance and support services to us on a timely or economical basis, or the
interruption of our flight operations as a result of unscheduled or unanticipated maintenance
requirements for our aircraft or engines. In addition, the issuance of FAA directives restricting or
prohibiting the use of Bombardier aircraft types we operate would have a material adverse effect on
our business and operations.
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