SkyWest Airlines 2012 Annual Report Download - page 56

contracts. The following table summarizes the gallons of fuel we purchased directly, and the change in
fuel price per gallon on our fuel expense, for the periods indicated:
For the year ended December,
(in thousands, except per gallon amounts) 2012 2011 % Change
Fuel gallons purchased ..................... 118,765 170,332 (30.3)%
Average price per gallon .................... $ 3.59 $ 3.48 3.2%
Fuel expense ............................. $426,387 $592,871 (28.1)%
Salaries Wages and Employee Benefits. Salaries, wages and employee benefits increased
$16.6 million, or 1.4%, during the year ended December 31, 2012, compared to the year ended
December 31, 2011. The average number of full-time equivalent employees increased 0.9% to 18,590
for the year ended December 31, 2012, from 18,418 for the year ended December 31, 2011. The
increase in the average number of full-time equivalent employees and resulting increase in labor costs
for the year ended December 31, 2012, compared to the year ended December 31, 2011, was primarily
due to an increase in block hours of 2.1% during the year ended December 31, 2012, compared to the
year ended December 31, 2011.
Aircraft maintenance, materials and repairs. Aircraft maintenance expense decreased $53.1 million,
or 7.4%, during the year ended December 31, 2012, compared to the year ended December 31, 2011.
The following table summarizes the amount of engine overhauls and engine overhaul reimbursements
included in our aircraft maintenance expense for the periods indicated (dollar amounts in thousands).
For the year ended December 31,
2012 2011 $ Change % Change
Aircraft maintenance, materials and repairs ............ $659,869 $712,926 $(53,057) (7.4)%
Less: Engine overhaul reimbursement from major partners 159,220 173,072 (13,852) (8.0)%
Less: CRJ200 engine overhauls reimbursed at fixed hourly
rate ....................................... 55,183 77,582 (22,399) (28.9)%
Other aircraft maintenance, materials and repairs ....... $445,466 $462,272 $(16,806) (3.6)%
Other aircraft maintenance, materials and repairs, decreased $16.8 million, or 3.6%, during the
year ended December 31, 2012, compared to the year ended December 31, 2011. The decrease in
aircraft maintenance expense excluding engine overhaul costs for the year ended December 31, 2012,
compared to the year ended December 31, 2011, was primarily due to fewer scheduled maintenance
events and our implementation of cost-reduction initiatives.
We recognize engine maintenance expense on our CRJ200 engines on an as-incurred basis as
maintenance expense. Under our Fixed-Rate Engine Contracts, we recognize revenue at fixed hourly
rates for mature engine maintenance on regional jet engines. Accordingly, the timing of engine
maintenance events associated with aircraft under the Fixed-Rate Engine Contracts can have a
significant impact on our financial results. During the year ended December 31, 2012, our CRJ200
engine expense under our Fixed-Rate Engine Contracts decreased $22.4 million compared to the year
ended December 31, 2011. The decrease in CRJ200 engine overhauls reimbursed under our Fixed-Rate
Engine Contracts was principally due to fewer scheduled engine maintenance events. We expect a
reduction in the number of scheduled engine maintenance events on our CRJ200s during 2013.
Under our Directly-Reimbursed Engine Contracts, we are reimbursed for engine overhaul costs by
our major partner at the time the maintenance event occurs. Such reimbursements are reflected as
passenger revenue in our consolidated statements of comprehensive income (loss).
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