SkyWest Airlines 2012 Annual Report Download - page 25

Our ability to realize all of the anticipated benefits of our acquisition of ExpressJet Delaware will depend on
the successful integration of the operations previously conducted by Atlantic Southeast and ExpressJet
Delaware.
On November 12, 2010, we acquired ExpressJet Delaware through a merger of ExpressJet
Holdings, Inc. (‘‘ExpressJet Holdings’’), the sole shareholder of ExpressJet Delaware, with a wholly-
owned subsidiary of Atlantic Southeast (the ‘‘ExpressJet Merger’’). Effective December 31, 2011, we
combined the operations of Atlantic Southeast and ExpressJet Delaware through the ExpressJet
Combination. Many of the potential synergies of our acquisition of ExpressJet Delaware will only result
from the successful integration of the operations of Atlantic Southeast and ExpressJet Delaware, both
of which operated as independent airlines prior to the ExpressJet Combination. The integration of the
operations formerly conducted by Atlantic Southeast and ExpressJet Delaware has required, and will
continue to require, our management to devote significant attention and resources to combining the
business practices and operations of both airlines. We incurred significant costs, and devoted significant
management time, in our efforts to obtain a single operating certificate for the combined operations of
Atlantic Southeast and ExpressJet Delaware. Although that single operating certificate was issued by
the FAA on November 17, 2011, and the ExpressJet Combination was completed on
December 31, 2011, our management and employees will continue to devote significant attention and
resources to the successful integration of the operations formerly conducted by Atlantic Southeast and
ExpressJet Delaware, particularly with respect to the integration of the work groups of the two airlines.
The integration of the operations formerly conducted by Atlantic Southeast and ExpressJet
Delaware could result in the loss of key employees, diversion of management attention, the disruption
or interruption of, or the loss of momentum in, our ongoing businesses or inconsistencies in standards,
controls, procedures and policies, any of which could adversely affect our ability to maintain
relationships with passengers and employees or our ability to achieve the anticipated benefits of the
ExpressJet Merger, or could reduce our earnings or otherwise adversely affect our business and
financial results.
The integration of the Atlantic Southeast and ExpressJet Delaware workforces will present significant
challenges, including the possibility of labor-related disagreements that may adversely affect our operations.
The successful integration of Atlantic Southeast and ExpressJet Delaware and achievement of the
anticipated benefits of the ExpressJet Merger largely depend upon the successful combination of the
former employee groups of Atlantic Southeast and ExpressJet Delaware, and on maintaining productive
employee relations. The integration of the workforces of the two airlines will require the resolution of
potentially difficult issues relating to representation of various work groups and the relative seniority of
the work groups at each carrier. Unexpected delays, expenses or other challenges to integrating the
workforces could impact the anticipated synergies from the combination of Atlantic Southeast and
ExpressJet Delaware and affect ExpressJet’s operations and financial performance.
In order to integrate the former employee groups of Atlantic Southeast and ExpressJet Delaware,
ExpressJet must negotiate a joint collective bargaining agreement covering each combined employee
group. The process for integrating the former labor groups of ExpressJet Delaware and Atlantic
Southeast is governed by a combination of the RLA, the McCaskill-Bond Amendment, and where
applicable, the existing provisions of each company’s collective bargaining agreements and union policy.
Pending operational integration, ExpressJet will apply the terms of the existing collective bargaining
agreements unless other terms have been negotiated. Under the McCaskill-Bond Amendment, seniority
integration must be accomplished in a ‘‘fair and equitable’’ manner consistent with the process set forth
in the Allegheny-Mohawk Labor Protective Provisions or internal union merger policies, if applicable.
Employee dissatisfaction with the results of the seniority integration may lead to litigation that in some
cases could delay implementation of the integrated seniority list. The National Mediation Board has
exclusive authority to resolve representation disputes arising out of airline mergers.
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