SkyWest Airlines 2012 Annual Report Download - page 16

ExpressJet United Express Agreements
ExpressJet and United are parties to two ExpressJet United Express Agreements, consisting of a
United Express Agreement initially executed between ExpressJet Delaware and United, dated
December 1, 2009, and a United Express Agreement initially executed between Atlantic Southeast and
United, dated February 10, 2010. As of December 31, 2012, ExpressJet operated 22 ERJ145s and
14 CRJ200s under the United Express Agreements. Generally, under the ExpressJet United Express
Agreements, 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 ExpressJet’s obligations
under the ExpressJet United Express Agreements, ExpressJet receives from United compensation
(subject to an annual adjustment) of a fixed fee per completed block hour, fixed fee per completed
departure, fixed fee per passenger and a fixed fee for overhead and aircraft costs. The ExpressJet
United Express Agreements provide for incentives based upon ExpressJet’s performance, including
on-time arrival performance and completion percentage rates. Additionally, certain of ExpressJet’s
operating costs are reimbursed by United, including fuel costs.
ExpressJet’s rights to fly aircraft under the ExpressJet United Express Agreements expire in two
tranches: the agreements expire with respect to 22 ERJ145s on April 30, 2015, and 14 CRJ200s during
2015. Under the agreements, United must notify ExpressJet of its intention to renew each tranche of
aircraft not less than six months prior to the end of the term for such aircraft.
SkyWest Airlines American Agreement
On September 11, 2012, SkyWest Airlines and American entered into the SkyWest Airlines
American Agreement. As of December 31, 2012, SkyWest Airlines operated 12 CRJ200s under the
SkyWest Airlines American Agreement, flying approximately 85 American Eagle flights per day
between Los Angeles and designated outlying destinations. Generally, under the SkyWest Airlines
American Agreement, American 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 American Agreement, SkyWest Airlines receives from American
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 American Agreement provides for incentives and penalties based upon SkyWest
Airlines’ performance, including on-time arrival performance, completion percentage rates and
customer complaints. Additionally, certain of SkyWest Airlines’ operating costs are reimbursed or paid
directly by American, including costs related to fuel.
The SkyWest Airlines American Agreement is scheduled to terminate in 2016. The SkyWest
Airlines American Agreement is subject to early termination in various circumstances including:
• if SkyWest Airlines or American fails to fulfill an obligation under the SkyWest Airlines
American Agreement for a period of 30 days after written notice to cure;
• if SkyWest Airlines’ operations fall below certain performance levels;
• subject to limitations imposed by the U.S. Bankruptcy Code, if the other party makes a general
assignment for the benefit of creditors or becomes insolvent; or
• 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.
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