SkyWest Airlines 2010 Annual Report Download - page 53

reimbursements included in our passenger revenues for the periods indicated (dollar amounts in
thousands).
For the year ended December 31,
2010 2009 $ Change % Change
Passenger revenues .......................... $2,724,276 $2,582,238 $ 142,038 5.5%
Less: Fuel reimbursement from major partners ...... 258,523 360,309 (101,786) (28.2)%
Less: Engine overhaul reimbursement from major
partners ................................ 106,241 112,556 (6,315) (5.6)%
Passenger revenue excluding fuel and engine overhauls
reimbursements ........................... $2,359,512 $2,109,373 $ 250,139 11.9%
Passenger revenues. Passenger revenues increased $142.0 million, or 5.5%, during the year ended
December, 31 2010, compared to the year ended December 31, 2009. Our passenger revenues,
excluding fuel and engine overhaul reimbursements from major partners, increased $250.1 million, or
11.9%, during the year ended December 31, 2010, compared to the year ended December 31, 2009.
The increase in passenger revenues, excluding fuel and engine overhaul reimbursements, was primarily
due to four factors. First, Atlantic Southeast experienced an abnormally 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 in accordance
with the manufacturer’s recommendations. Consequently, Atlantic Southeast cancelled approximately
750 more flights than normal as a result of the severe weather and the aircraft grounding during the
three months ended March 31, 2009.Those calculations contributed to an increase in passenger revenue
of approximately $7.6 million for the year ended December 31, 2010, compared to 2009. Second, our
block hour production increased 13.5% during the year end December 31, 2010, compared to the year
ended December 31, 2009.The increase in block hours was primarily due to SkyWest Airlines taking
incremental delivery of 18 CRJ 700s since April 1, 2009 and the completion of ExpressJet Merger on
November 12, 2010. Third, during the three months ended December 31, 2010, SkyWest Airlines and
Atlantic Southeast finalized certain contractual rates from September 8, 2008 through December 31,
2010 with Delta. As a result, we recorded $10.3 million in additional revenue as a result of the
finalization of contractual rates during the quarter ended December 31, 2010. Fourth, under the terms
of the SkyWest Airlines and Atlantic Southeast Delta Connection Agreements, Delta has agreed to
compensate SkyWest Airlines and Atlantic Southeast for initiatives that directly result in pass through
cost savings. Delta agreed to share such savings with SkyWest Airlines and Atlantic Southeast on an
equal basis for a twelve-month period. During the three months ended December 31, 2010, Delta paid,
and SkyWest Airlines and Atlantic Southeast recognized, approximately $6.9 million in cost savings
revenue.
Ground handling and other. Total ground handling and other revenues increased $9.5 million, or
30.3%, during the year ended December 31, 2010, compared to the year ended December 31, 2009.
The increase was primarily related to aircraft rental revenue to other airlines. During the year ended
December 31, 2010, we obtained leases for four CRJ900s and subleased the aircraft to Air Mekong. In
addition, ExpressJet had approximately $4.3 million in ground handling and other revenue during 2010.
Individual expense components are also expressed in the following table on the basis of cents per
ASM. ASM is a common metric used in the airline industry to measure an airline’s passenger capacity.
ASMs reflect both the number of aircraft in an airline’s fleet and the seat capacity for the aircraft in
the fleet. As the size of our fleet is the underlying driver of our operating costs, the primary basis for
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