SkyWest Airlines 2012 Annual Report Download - page 29

We may be limited from expanding our flying within the Delta and United flight systems, and there are
constraints on our ability to provide airline services to airlines other than Delta and United.
Additional growth opportunities within the Delta and United flight systems are limited by various
factors. Except as currently contemplated by our existing code-share agreements, we cannot assure that
Delta and United will contract with us to fly any additional aircraft. We may not receive additional
growth opportunities, or may agree to modifications to our code-share agreements that reduce certain
benefits to us in order to obtain additional aircraft, or for other reasons. Given the troubled nature of
the airline industry, we believe that some of our competitors may be more inclined to accept reduced
margins and less favorable contract terms in order to secure new or additional code-share operations.
Even if we are offered growth opportunities by our major partners, those opportunities may involve
economic terms or financing commitments that are unacceptable to us. Any one or more of these
factors may reduce or eliminate our ability to expand our flight operations with our existing code-share
partners. We also cannot provide any assurance that we will be able to obtain the additional ground
and maintenance facilities, including gates, and support equipment, to expand our operations. The
failure to obtain these facilities and equipment would likely impede our efforts to implement our
business strategy and could materially and adversely affect our operating results and our financial
condition.
Our business model depends on major airlines, including Delta and United, electing to contract
with us instead of operating their own regional jets. Some major airlines own their own regional
airlines or operate their own regional jets instead of entering into contracts with regional carriers. We
have no guarantee that in the future our code-share partners will choose to enter into contracts with us
instead of operating their own regional jets. Our partners are not prohibited from doing so under our
code-share agreements. A decision by Delta or United to phase out code-share relationships and
instead acquire and operate their own regional jets could have a material adverse effect on our
financial condition, results of operations or the price of our common stock.
Additionally, our code-share agreements limit our ability to provide airline services to other
airlines in certain major airport hubs of each of Delta and United. Under the SkyWest Airlines Delta
Connection Agreement, our growth is contractually restricted in Atlanta, Cincinnati, Orlando and Salt
Lake City. Under the ExpressJet Delta Connection Agreement, our growth is restricted in Atlanta,
Cincinnati, New York (John F. Kennedy International Airport), Orlando and Salt Lake City. Under the
SkyWest Airlines United Express Agreement, growth is restricted in Chicago (O’Hare International
Airport), Denver, San Francisco, Seattle/Tacoma and Washington D.C. (Dulles International Airport).
Due to the fluctuations in our schedules, which are established primarily by our major partners, there
may be times that the number of flights we fly to and from a particular airport may exceed the
limitations set forth in one or more of our code-share agreements. The breach of those limitations
could constitute a breach of the applicable code-share agreement, which could have a material adverse
effect on our operations.
Economic and industry conditions constantly change, and negative economic conditions in the United States
and other countries may create challenges for us that could materially and adversely affect our operations and
financial condition.
Our operations and financial condition are affected by many changing economic and other
conditions beyond our control, including, among others:
• disruptions in the credit markets, which have resulted in greater volatility, less liquidity, widening
of credit spreads, and decreased availability of financing;
• actual or potential changes in international, national, regional and local economic, business and
financial conditions, including recession, inflation, higher interest rates, wars, terrorist attacks or
political instability;
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