SkyWest Airlines 2011 Annual Report Download - page 53

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during the year ended December 31, 2011, compared to the year ended December 31, 2010. The
following table summarizes the gallons of fuel we purchased directly, and the change in fuel price per
gallon on our fuel expense, for the periods indicated:
For the year ended December,
(in thousands, except per gallon amounts) 2011 2010 % Change
Fuel gallons purchased ..................... 170,332 124,094 37.3%
Average price per gallon .................... $ 3.48 $ 2.74 27.0%
Fuel expense ............................. $592,871 $340,074 74.3%
Salaries, wages and benefits. Salaries, wages and benefits increased $390.1 million, or 51.0%,
during the year ended December 31, 2011, compared to the year ended December 31, 2010. The
average number of full-time equivalent employees increased 37.8% to 18,418 for the year ended
December 31, 2011, from 13,363 for the year ended December 31, 2010, due primarily to the expansion
of our operations following the completion of the ExpressJet Merger.
Aircraft maintenance, materials and repairs. Aircraft maintenance, materials and repair costs
increased $225.5 million, or 46.3%, during the year ended December 31, 2011, compared to the year
ended December 31, 2010. The following table summarizes the amount of engine overhauls and engine
overhaul reimbursements included in our aircraft maintenance expense for the periods indicated (dollar
amounts in thousands).
For the year ended December 31,
2011 2010 $ Change % Change
Aircraft maintenance, materials and repairs ........... $712,926 $487,466 $225,460 46.3%
Less: Engine overhaul reimbursed from major partners . . . 173,072 106,241 66,831 62.9%
Less: CRJ 200 engine overhauls reimbursed at fixed hourly
rate ....................................... 77,582 75,706 1,876 2.5%
Aircraft maintenance excluding reimbursed engine
overhauls and CRJ 200 engine overhauls reimbursed at
fixed hourly rate ............................. $462,272 $305,519 $156,753 51.3%
Aircraft maintenance expense, excluding reimbursed engine overhauls and CRJ 200 engine
overhauls reimbursed at fixed hourly rates, increased $156.8 million, or 51.3%, during the year ended
December 31, 2011, compared to the year ended December 31, 2010. The increase in maintenance
expense, excluding engine overhaul costs, was principally due to the expansion of our operations
following the completion of the ExpressJet Merger, higher than expected maintenance costs on
scheduled events due to our aging fleet and replacement of aircraft parts and repairs in advance of our
schedule.
We recognize engine maintenance expense on our CRJ200 regional jet engines on an as-incurred
basis as maintenance expense. Under the SkyWest Airlines and ExpressJet United Express Agreements,
we recognize revenue at fixed hourly rates for mature engine maintenance on regional jet engines.
Accordingly, the timing of engine maintenance events associated with aircraft under the SkyWest
Airlines and ExpressJet United Express Agreements can have a significant impact on our financial
results. During the year ended December 31, 2011, our CRJ200 engine expense under our SkyWest
Airlines and ExpressJet United Express Agreements increased $1.9 million compared to the year ended
December 31, 2010. The increase in CRJ 200 engine overhauls reimbursed at a fixed hourly rate was
principally due to scheduled engine maintenance events. We anticipate the number of scheduled engine
maintenance events experienced during the year ended December 31, 2011 will likely continue through
the middle of 2012, after which we expect a reduction in the number of scheduled engine maintenance
events.
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