SkyWest Airlines 2011 Annual Report Download - page 15

Download and view the complete annual report

Please find page 15 of the 2011 SkyWest Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 168

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168

82 CRJ200s and 35 Brasilia turboprops under the SkyWest Airlines United Express Agreement, flying a
total of approximately 1,110 United Express flights per day between Chicago (O’Hare), Denver,
Houston, Los Angeles, San Francisco, Washington Dulles and designated outlying destinations.
Generally, under the SkyWest Airlines United Express Agreement, United retains all air fares, cargo
rates, mail charges and other revenues associated with each flight.
In exchange for providing the designated number of flights and performing SkyWest Airlines’
obligations under the SkyWest Airlines United Express Agreement, SkyWest Airlines receives from
United compensation (subject to an annual adjustment) of a fixed fee per completed block hour, a
fixed fee per completed departure, a fixed fee per passenger, and a fixed fee for overhead and aircraft
costs. The SkyWest Airlines United Express Agreement provides for incentives based upon SkyWest
Airlines’ performance, including on-time arrival performance and completion percentage rates.
Additionally, certain of SkyWest Airlines’ operating costs are reimbursed by United, including costs
related to fuel and aircraft ownership. As of December 31, 2011, 26 of the 35 Brasilia turboprops and
17 of the 82 CRJ200s SkyWest Airlines operated under the SkyWest Airlines United Express
Agreement were operated under a revenue-sharing arrangement. On October 16, 2009, SkyWest
Airlines and United agreed to extend the right of SkyWest Airlines to operate 40 regional jet aircraft
under the SkyWest Airlines United Express Agreement until the end of their respective lease terms.
United has the option, upon twelve months prior notice, of extending the SkyWest Airlines United
Express Agreement for five years. The SkyWest Airlines United Express Agreement is subject to early
termination in various circumstances including:
• if SkyWest Airlines or United fails to fulfill an obligation under the SkyWest Airlines United
Express Agreement for a period of 60 days after written notice to cure;
• if SkyWest Airlines’ operations fall below certain performance levels for a period of three
consecutive months;
• subject to limitations imposed by the U.S. Bankruptcy Code, if the other party becomes
insolvent, fails to pay its debts when due, takes action leading to its cessation as a going concern,
makes an assignment of substantially all of its assets, or ceases or suspends operations;
• if bankruptcy proceedings are commenced against the other party (subject to limitations imposed
by the U.S. Bankruptcy Code) and certain specified conditions are not satisfied; or
• if SkyWest Airlines operates, subject to certain exceptions, any additional regional jets or
turboprop aircraft pursuant to a marketing or code-share relationship with any party other than
United to provide hub service at United’s hubs in Chicago (O’Hare), Denver, San Francisco,
Seattle/Tacoma, or Washington, D.C. (Dulles International Airport).
ExpressJet Continental CPA
Effective November 12, 2010, ExpressJet Delaware entered into the Continental CPA, whereby
ExpressJet Delaware agreed to provide regional airline service in the Continental flight system. The
rights and obligations of ExpressJet Delaware under the Continental CPA became the rights and
obligations of ExpressJet as a consequence of the ExpressJet Combination.
The Continental CPA provides for a ten-year term, subject to early termination by Continental or
ExpressJet upon the occurrence of certain events. Continental’s termination rights include the right to
terminate the Continental CPA if ExpressJet’s performance falls below identified standards (and such
failure is not cured within 60 days following receipt of notice), upon the occurrence of a labor strike
lasting for 15 days and material defaults under certain lease agreements relating to aircraft operated by
ExpressJet under the Continental CPA (provided that such material default is not cured within 60 days
following receipt of notice). ExpressJet’s termination rights include the right to terminate the
11