SkyWest Airlines 2011 Annual Report Download - page 63

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financed our aircraft acquisitions until more permanent arrangements can be made. Subsequent to this
initial acquisition of an aircraft, we may also refinance the aircraft or convert one form of financing to
another (e.g., replacing debt financing with leveraged lease financing).
At present, we intend to fund our acquisition of any additional aircraft through a combination of
operating leases and debt financing, consistent with our historical practices. Based on current market
conditions and discussions with prospective leasing organizations and financial institutions, we currently
believe that we will be able to obtain financing for our committed acquisitions, as well as additional
aircraft, without materially reducing the amount of working capital available for our operating activities.
Nonetheless, recent disruptions in the credit markets have resulted in greater volatility, decreased
liquidity and limited availability of capital, and there is no assurance that we will be able to obtain
necessary funding or that, if we are able to obtain necessary capital, the corresponding terms will be
favorable or acceptable to us.
Aircraft Lease and Facility Obligations
We also have significant long-term lease obligations, primarily relating to our aircraft fleet. At
December 31, 2011, we had 556 aircraft under lease with remaining terms ranging from one to
17 years. Future minimum lease payments due under all long-term operating leases were approximately
$2.6 billion at December 31, 2011. Assuming a 5.2% discount rate, which is the average rate used to
approximate the implicit rates within the applicable aircraft leases, the present value of these lease
obligations would have been equal to approximately $2.0 billion at December 31, 2011.
Long-term Debt Obligations
As of December 31, 2011, we had $1.8 billion of long term debt obligations related to the
acquisition of CRJ200, CRJ700 and CRJ900 aircraft. The average effective interest rate on the debt
related to the CRJ aircraft was approximately 4.4% at December 31, 2011.
Guarantees
We have guaranteed the obligations of SkyWest Airlines under the SkyWest Airlines Delta
Connection Agreement and the obligations of ExpressJet under the ExpressJet Delta Connection
Agreement and SkyWest and ExpressJet have guaranteed the obligations of ExpressJet under the
Continental CPA.
New Accounting Standards
Fair Value Measurement and Disclosure Requirements
In May 2011, the Financial Accounting Standards Board (the ‘‘FASB’’) issued ‘‘Amendments to
Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.’’
The standard revises guidance for fair value measurement and expands the disclosure requirements. It
is effective prospectively for fiscal years beginning after December 15, 2011. We do not anticipate that
our adoption of this standard will have a material impact on our consolidated financial statements.
Presentation of Comprehensive Income
In June 2011, the FASB issued ‘‘Presentation of Comprehensive Income.’’ The standard revises the
presentation and prominence of the items reported in other comprehensive income. It is effective
retrospectively for fiscal years beginning after December 15, 2011, with early adoption permitted. We
intend to adopt this standard for the quarter ending March 31, 2012. We do not anticipate that the
adoption of this standard will have a material impact on our consolidated financial statements.
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