SkyWest Airlines 2011 Annual Report Download - page 4

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6MAR201214075785
13MAR200820562581
reducing our overhead costs and taking advantage of economies of scale in purchasing and maintenance planning.
Our scale makes us the partner most capable of flexibly meeting our partner needs.
Aircraft Replacement Strategy
SkyWest has been working on developing a new, integrated aircraft replacement and acquisition strategy that
takes into account an aircraft’s total lifecycle costs and leverages our scale, financial position and our relationships
in the industry. We believe this innovative approach will allow us to more effectively manage the costs of aging
aircraft, while also providing our major partners with additional benefits. Accomplishing these objectives will
become an increasingly important component in our ability to compete and uniquely positions us for future
opportunities.
Increased Coordination and Integration
We recognize that we have just begun the process of capitalizing on the benefits of enhanced integration, not
just for ExpressJet, but also between ExpressJet and SkyWest Airlines. With improved coordination and teamwork
amongst the leadership teams in 2012, we have identified several high-value initiatives that will further drive our
scale advantages and allow us to effectively utilize the full weight of the 700+ aircraft that we operate. We see this
as a significant source of long-term value creation for SkyWest.
Growing Relationships with New Partners
We believe the new relationships developed with US Airways and Alaska Airlines have the potential to
provide opportunities for organic growth, and we remain focused on expanding these relationships, as well as
pursuing and implementing new relationships with additional major partners.
Rate Negotiations with Existing Partners
Talks with major partners are centered on ensuring the model remains mutually beneficial while at the same
time addressing the environmental and economic changes in the industry. These talks have been centered on two
key components; 1) restructuring rates in the short-term and 2) addressing the changes in stage length and
utilization that have adversely impacted our profitability. These discussions are ongoing and represent a strategic
initiative and we believe the strength of our relationships and the quality of our service will allow us to reach a
satisfactory conclusion.
Long-term Contracts with Re-fleet Rights
SkyWest is in a strong position in our fleet replacement strategy, which will give us the opportunity to replace
aging aircraft with, newer, and in some cases, larger aircraft, which will positively impact both our partners’ costs
and our margins.
Stock Repurchase
We continue to believe in the long-term value of our stock and we demonstrated that by repurchasing
outstanding shares under a board approved stock repurchase program. During 2011, we acquired approximately
4.1 million shares at a cost of $60.6 million. As a result of our continued purchases in 2011, we have acquired a
cumulative total of 18.4 million shares at a cumulative cost of approximately $337.7 million. At December 31, 2011,
our remaining authorization under this program was 1.6 million shares and we will consider additional stock
repurchases as determined by current market and economic conditions.
Driving Growth
All of the strategies outlined above are designed to maintain SkyWest’s position as the regional partner of
choice in North America and as leaders of our industry. We believe these efforts will help us to continue to serve
our customer needs in the most efficient and responsive ways possible and will enable us to drive profitable
organic growth. This growth is not for its own sake, but it allows us to continue to more effectively utilize all of
our assets and to more effectively manage our overall cost structure.
In closing, we would like to thank our over 21,000 employees for the work that they do every day to keep
these airlines flying. Thank you for your hard work and quality service you provide to our passengers and partners.
Thank you again for your investment in SkyWest. We are working hard to deliver a profitable 2012 and
beyond.
Sincerely,
Jerry C. Atkin Bradford R. Rich
Chairman and Chief Executive Officer President