SkyWest Airlines 2010 Annual Report Download - page 64

Significant Commitments and Obligations
General
The following table summarizes our commitments and obligations as noted for each of the next
five years and thereafter (in thousands):
Total 2011 2012 2013 2014 2015 Thereafter
Firm aircraft commitments . . . $ 193,536 $193,536 $ — $ — $ — $ — $ —
Operating lease payments for
aircraft and facility
obligations ............. 2,739,732 373,166 352,082 331,451 316,067 283,421 1,083,545
Interest commitments ....... 582,014 82,171 76,202 69,279 62,995 56,378 234,989
Principal maturities on
long-term debt .......... 1,897,975 159,039 202,991 157,413 163,256 170,283 1,044,993
Total commitments and
obligations ............. $5,413,257 $807,912 $631,275 $558,143 $542,318 $510,082 $2,363,527
Purchase Commitments and Options
On January 4, 2011, we announced SkyWest Airlines’ plans to acquire four additional regional jet
aircraft during 2011. SkyWest Airlines plans to place these aircraft into operation under the SkyWest
Airlines Delta Connection Agreement. Additionally, we have announced plans to lease eight used
CRJ700s from another operator. SkyWest Airlines and Atlantic Southeast plan to operate the eight
CRJ700s under the SkyWest Airlines and Atlantic Southeast Delta Connection Agreements. On
January 25, 2011, SkyWest Airlines agreed to operate five CRJ700s for Alaska Airlines. SkyWest
Airlines plans to lease these aircraft from Alaska Airlines for a nominal amount.
Total expenditures for these aircraft and related flight equipment, including amounts for
contractual price escalations, are estimated to be approximately $193.5 million through 2011.
We have not historically funded a substantial portion of our aircraft acquisitions with working
capital. Rather, we have generally funded our aircraft acquisitions through a combination of operating
leases and long-term debt financing. At the time of each aircraft acquisition, we evaluate the financing
alternatives available to us, and select one or more of these methods to fund the acquisition. In the
event that alternative financing cannot be arranged at the time of delivery, Bombardier has typically
financed our aircraft acquisitions until more permanent arrangements can be made. Subsequent to this
initial acquisition of an aircraft, we may also refinance the aircraft or convert one form of financing to
another (e.g., replacing debt financing with leveraged lease financing).
At present, we intend to satisfy our 2010 firm aircraft purchase commitment, as well as our
acquisition of any additional aircraft, through a combination of operating leases and debt financing,
consistent with our historical practices. Based on current market conditions and discussions with
prospective leasing organizations and financial institutions, we currently believe that we will be able to
obtain financing for our committed acquisitions, as well as additional aircraft, without materially
reducing the amount of working capital available for our operating activities. Nonetheless, recent
disruptions in the credit markets have resulted in greater volatility, decreased liquidity and limited
availability of capital, and there is no assurance that we will be able to obtain necessary funding or that,
if we are able to obtain necessary capital, the corresponding terms will be favorable or acceptable to us.
Aircraft Lease and Facility Obligations
We also have significant long-term lease obligations, primarily relating to our aircraft fleet. At
December 31, 2010, we had 539 aircraft under lease with remaining terms ranging from one to
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