SkyWest Airlines 2012 Annual Report Download - page 17

ExpressJet American Agreement
On September 11, 2012, ExpressJet and American entered into the ExpressJet American
Agreement. During the first quarter of 2013, ExpressJet is scheduled to begin operating 11 CRJ200s
under the ExpressJet American Agreement between Dallas and designated outlying destinations.
Generally, under the ExpressJet 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 ExpressJet’s obligations
under the ExpressJet American Agreement, ExpressJet is entitled to receive 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
ExpressJet American Agreement provides for incentives and penalties based upon ExpressJet’s
performance, including on-time arrival performance, completion percentage rates and customer
complaints. Additionally, certain of ExpressJet’s operating costs are reimbursed or paid directly by
American, including costs related to fuel.
The ExpressJet American Agreement is scheduled to terminate in 2017. The ExpressJet American
Agreement is subject to early termination in various circumstances including:
• if ExpressJet or American fails to fulfill an obligation under the ExpressJet American
Agreement for a period of 30 days after written notice to cure;
• if ExpressJet’s 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.
SkyWest Airlines Alaska Capacity Purchase Agreement
On April 13, 2011, SkyWest Airlines and Alaska entered into the SkyWest Airlines Alaska Capacity
Purchase Agreement. As of December 31, 2012, SkyWest Airlines operated five CRJ700s under the
SkyWest Airlines Alaska Capacity Purchase Agreement, flying approximately 25 Alaska flights per day
between Seattle or Portland and designated outlying destinations. Generally, under the SkyWest
Airlines Alaska Capacity Purchase Agreement, Alaska 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 Alaska Capacity Purchase Agreement, SkyWest Airlines receives
from Alaska 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. Additionally, certain of SkyWest Airlines’ operating costs are reimbursed or paid directly
by Alaska, including costs related to fuel and aircraft ownership.
The SkyWest Airlines Alaska Capacity Purchase Agreement is scheduled to terminate in 2018. The
SkyWest Airlines Alaska Capacity Purchase Agreement is subject to early termination in various
circumstances including:
• if SkyWest Airlines or Alaska fails to fulfill an obligation under the SkyWest Airlines Alaska
Capacity Purchase Agreement for a period of 30 days after written notice to cure;
• if SkyWest Airlines’ operations fall below certain performance levels;
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