SkyWest Airlines 2012 Annual Report Download - page 4

6MAR201214075785
13MAR200820562581
and operating expenses for the six-month period ending June 30, 2013 as a result of our major partner’s
direct fuel purchases during that period. At that point, we anticipate that our major partners will be directly
purchasing fuel for our entire contract flying operations.
After excluding certain reimbursable costs under our contract flying arrangements, such as fuel and
certain engine overhaul expenses, we were able to increase our total operating revenues by approximately
$79 million as a result of experiencing increases in block hour production by 2.1% or approximately
47,000 hours as well as increased performance incentive payments based on improved operational
performance such as completion of flights and timeliness of flights. We also received normal expected
contract rate escalations. In addition, after excluding reimbursable costs such as fuel and certain engine
overhaul expenses from total operating expenses, we were able to reduce our total operating costs by
approximately $70 million in spite of increased block hour production. These efforts helped to increase our
operating margin 3.6 percentage points to 4.7 percent for the year ended December 31, 2012 compared to
2011. Further, we produced net income of approximately $51 million for the year ended December 31, 2012
compared to a net loss of approximately ($27) million for 2011.
We ended 2012 with approximately $709 million in cash and marketable securities which was an increase
of approximately $62 million compared to our position at December 31, 2011 of approximately $647 million.
Our long-term debt decreased by approximately $136 million as a result of normal recurring debt payments
and our net debt position (i.e. total debt less cash and marketable securities) decreased approximately
$236 million or a reduction of 20.2 percent. As a result of the strength of our balance sheet and our liquidity
position, we believe we are well-positioned to finance future growth and short-term fleet replacement plans.
Aircraft Fleet
At December 31, 2012, our fleet consisted of 744 total aircraft. This compares to 732 total aircraft as of
December 31, 2011. The net increase of 12 aircraft resulted primarily from net additions in our large
dual-class regional jet fleet and the receipt of these aircraft under our Delta agreement during 2012. Of the
744 total aircraft, our fleet consisted primarily of regional jets (702) and we anticipate reductions over the
next several years of our 50-seat regional jet capacity in favor of larger 76-seat regional jet capacity as this
aligns more closely with the ‘‘scope clause’’ requirements of the collective bargaining agreements of our
major partners.
Forward Thinking
We believe our overall strategic positioning has value based on our size and breadth of operations, our
experienced and talented people and financial resources that are unmatched in our regional market.
We are very pleased to report the progress made during 2012, both financially and operationally and
believe we are moving towards achieving our objectives with regards to our improved profitability plan. By
returning to profitability and improving our overall financial condition we have again placed ourselves as
leaders in this industry and positioned ourselves to be selected as a carrier of choice by US majors who have
regional aircraft needs. Our two airline operating platforms allow us to offer scale and we can fulfill needs of
multiple parties. We also have the financial resources to finance growth as needed and due to our current
liquidity and balance sheet position can offer immediate solutions to major partners.
We continue to rely on our 20,000 employees and their ability to offer unmatched quality and service to
our passengers and our partners. We are grateful for their significant contributions to the success of our
company.
Sincerely,
Jerry C. Atkin Bradford R. Rich
Chairman and Chief Executive Officer President