SkyWest Airlines 2011 Annual Report Download - page 54

Under our Delta Connection Agreements we are reimbursed for engine overhaul costs by Delta at
the time the maintenance event occurs. Under our Continental Express Agreement, we are also
reimbursed for actual engine overhaul costs by Continental at the time the expense is incurred. Such
reimbursements are reflected as passenger revenue in our consolidated statements of operations.
Aircraft rentals. Aircraft rental expense increased $34.6 million, or 11.1%, during the year ended
December 31, 2011, compared to the year ended December 31, 2010. The increase was primarily due
expansion of our operations following the completion of the ExpressJet Merger. Approximately,
$28.8 million of the additional aircraft rental expense was attributable to aircraft operated under the
ExpressJet United Express Agreement.
Depreciation and amortization. Depreciation and amortization expense increased $17.7 million, or
7.5%, during the year ended December 31, 2011, compared to the year ended December 31, 2010. The
increase in depreciation expense was primarily due to the expansion of our operations following the
completion of the ExpressJet Merger.
Station rentals and landing fees. Station rentals and landing fees expense increased $45.3 million,
or 35.0%, during the year ended December 31, 2011, compared to the year ended December 31, 2010.
The increase in station rentals and landing fees expense was primarily due to the expansion of our
operations following the completion of the ExpressJet Merger. Without the expansion of the ExpressJet
Delaware operations, station rentals and landing fees would have decreased, primarily due to our major
partners paying for certain station rents and landing fees directly to the applicable airports.
Ground handling service. Ground handling service expense increased $20.8 million, or 18.8%,
during the year ended December 31, 2011, compared to the year ended December 31, 2010. The
increase in ground handling service expense was primarily due to the expansion of our operations
following the completion of the ExpressJet Merger.
Acquisition-related costs. During the year ended December 31, 2011, we incurred $5.8 million of
direct severance, legal and advisor fees associated with the ExpressJet Merger and integration related
costs, including advisory fees to assist Atlantic Southeast and ExpressJet in their efforts to operate
under a single operating certificate.
Other expenses. Other expenses, primarily consisting of property taxes, hull and liability insurance,
crew simulator training and crew hotel costs, increased $66.8 million, or 38.5%, during the year ended
December 31, 2011, compared to the year ended December 31, 2010. The increase in other expenses
was primarily due to the expansion of our operations following the completion of the ExpressJet
Merger.
Interest. Interest expense decreased $6.1 million, or 7.1%, during the year ended December 31,
2011, compared to the year ended December 31, 2010. The decrease in interest expense was primarily
due to a decrease in long term debt. At December 31, 2011, we had $1,815.4 million of long term debt,
compared to $1,898.0 million of debt as of December 31, 2010.
Total Airline Expenses. Total airline expenses (consisting of total operating and interest expenses)
increased $1,044.4 million, or 39.4%, during the year ended December 31, 2011, compared to the year
ended December 31, 2010. We are reimbursed for our actual fuel costs by our major partners under
our contract flying arrangements. We record the amount of those reimbursements as revenue. Under
the SkyWest Airlines and ExpressJet Delta Connection Agreements and the Continental CPA, we are
reimbursed for our engine overhaul expense, which we record as revenue. The following table
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