SkyWest Airlines 2010 Annual Report Download - page 47

markets. In 2004, SkyWest Airlines expanded its United Express operations to provide service in
Chicago. In 2009, SkyWest Airlines entered into a code-share agreement with AirTran. As of
December 31, 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-share partner with Delta in Atlanta since 1984 and United
since February 2010. As of December 31, 2010, Atlantic Southeast operated as a Delta Connection
carrier in Atlanta and Cincinnati and a United Express carrier in Chicago and Washington, D.C.
(Dulles International Airport), operating approximately 900 daily flights.
On November 12, 2010, we completed the ExpressJet Merger. At the effective time of the
ExpressJet Merger, each issued and outstanding share of ExpressJet Holdings common stock (other
than shares of ExpressJet Holdings common stock owned by ExpressJet Holdings as treasury stock or
shares of ExpressJet Holdings common stock owned by SkyWest or any of its subsidiaries was
converted into the right to receive $6.75 per share in cash, payable to the holder thereof, without
interest. Based on the number of outstanding shares of ExpressJet Holdings common stock as of the
effective time of the ExpressJet Merger, the aggregate value of the ExpressJet Merger consideration
was $131.6 million. After taking into effect the number of shares acquired by SkyWest and its
subsidiaries prior to the effective time of the ExpressJet Merger, the aggregate value of the ExpressJet
Merger consideration was $136.5 million.
ExpressJet provides regional jet service principally in the United States, primarily from hubs
located in Cleveland, Newark, Houston, Chicago (O’Hare) and Washington Dulles. 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. ExpressJet’s fleet as of
December 31, 2010 consisted of 244 ERJ145s, 206 of which were flown for Continental, 35 were flown
for United and three were used in charter operations. ExpressJet’s Continental and United code-share
operations are conducted under the Continental CPA and the ExpressJet United Express Agreement,
pursuant to which ExpressJet is paid by Continental or United, as applicable, primarily on a
fee-per-completed block hour and departure basis, plus a margin based on performance incentives.
Historically, multiple contractual relationships have enabled us to reduce reliance on any single
major airline code and to enhance and stabilize operating results through a mix of contract flying and
our controlled or ‘‘pro-rate’’ flying. For the year ended December 31, 2010, contract flying revenue and
pro-rate revenue represented approximately 89% and 11%, respectively, of our total passenger
revenues. On contract routes, the major airline partner controls scheduling, ticketing, pricing and seat
inventories and we are compensated by the major airline partner at contracted rates based on the
completed block hours, flight departures and other operating measures. On pro-rate flights, we control
scheduling, ticketing, pricing and seat inventories and receive a pro-rated portion of passenger fares.
For the year ended December 31, 2010, essentially all of our Brasilia turboprops flown for Delta were
flown under pro-rate arrangements, while approximately 36% of our Brasilia turboprops flown in the
United system were flown under contractual arrangements, with the remaining 64% flown under
pro-rate arrangements. For the year ended December 31, 2010, approximately 89% of our CRJ200s
flown in the United system were flown under contractual arrangements, with the remaining 11% flown
under pro-rate arrangements. On November 4, 2009, SkyWest Airlines entered into a code-share
agreement with AirTran. Under the terms of the AirTran code-share agreement, SkyWest Airlines has
agreed to operate four CRJ200s for AirTran under a pro-rate arrangement.
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