SkyWest Airlines 2010 Annual Report Download - page 75

SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2010
(1) Nature of Operations and Summary of Significant Accounting Policies (Continued)
Southeast was operating those 16 CRJ200s under the Atlantic Southeast United Express Agreement.
The Atlantic Southeast United Express Agreement is a capacity purchase agreement with a five-year
term, and other terms which are generally consistent with the SkyWest Airlines United Express
Agreement.
On November 12, 2010, the Company completed the acquisition of ExpressJet via the merger of
Express Delaware Merger Co., a wholly-owned subsidiary of Atlantic Southeast (‘‘Merger Subsidiary’’),
with and into ExpressJet Holdings, Inc., the parent company of ExpressJet (‘‘ExpressJet Holdings’’),
with ExpressJet Holdings continuing as the surviving company in the merger and becoming a wholly-
owned subsidiary of Atlantic Southeast (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 the Company 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 the
Company, Merger Subsidiary and any other subsidiaries of the Company prior to the effective time of
the ExpressJet Merger, the aggregate value of the 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 D.C. (Dulles International
Airport). 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 Embraer ERJ-145 regional jets
(‘‘ERJ145’’), 206 of which were flown for Continental, 35 of which were flown for United and three of
which were flown in charter operations. ExpressJet’s Continental and United code-share operations are
conducted under a Capacity Purchase Agreement executed between ExpressJet and Continental
(‘‘Continental CPA’’) and a United Express Agreement executed between ExpressJet and United (‘‘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.
Basis of Presentation
The Company’s consolidated financial statements include the accounts of SkyWest, Inc. and its
subsidiaries, including SkyWest Airlines, Atlantic Southeast and ExpressJet, with all inter-company
transactions and balances having been eliminated.
In preparing the accompanying consolidated financial statements, the Company has reviewed, as
determined necessary by the Company’s management, events that have occurred after December 31,
2010, up until the filing of our annual report with the U.S. Securities and Exchange Commission.
71