SkyWest Airlines 2012 Annual Report Download - page 57

Aircraft rentals. Aircraft rentals decreased $12.9 million, or 3.7%, during the year ended
December 31, 2012, compared to the year ended December 31, 2011. The decrease was primarily due
to aircraft lease renewals at lower rates.
Depreciation and amortization. Depreciation and amortization expense decreased $2.2 million, or
0.9%, during the year ended December 31, 2012, compared to the year ended December 31, 2011. The
decrease in depreciation expense was primarily due to certain rotable assets being fully depreciated
during 2012 and a lower volume of capital expenditures.
Station rentals and landing fees. Station rentals and landing fees expense decreased $5.0 million,
or 2.9%, during the year ended December 31, 2012, compared to the year ended December 31, 2011.
The decrease in station rentals and landing fees expense was primarily due to our major partners
paying for certain station rents and landing fees directly to the applicable airports.
Ground handling service. Ground handling service expense decreased $6.3 million, or 4.8%, during
the year ended December 31, 2012, compared to the year ended December 31, 2011. The decrease in
ground handling service expense was primarily due to a reduction in outsourced ground handling
services resulting from the termination of SkyWest Airlines’ AirTran code share agreement during the
year ended December 31, 2011.
Acquisition-related costs. During the year ended December 31, 2011, we incurred $5.8 million of
direct severance, legal and advisor fees associated with Atlantic Southeast’s acquisition of ExpressJet
Delaware in November 2010. We did not incur comparable expense during the year ended
December 31, 2012.
Other operating expenses. Other expenses, primarily consisting of property taxes, hull and liability
insurance, crew simulator training and crew hotel costs, decreased $10.4 million, or 4.3%, during the
year ended December 31, 2012, compared to the year ended December 31, 2011. The decrease in other
operating expenses was primarily due to the reduction in property tax expense resulting from refunds
received during the year ended December 31, 2012, a reduction in simulator training expense and a
reduction in legal and consulting expenses.
Total airline expenses. Total airline expenses (consisting of total operating and interest expenses)
decreased $248.4 million, or 6.7%, during the year ended December 31, 2012, compared to the year
ended December 31, 2011. We are reimbursed for our actual fuel costs by our major partners under
our contract flying arrangements. We record the amount of those reimbursements as revenue. Under
our Directly-Reimbursed Engine Contracts, we are reimbursed for our engine overhaul expense, which
we record as revenue. The following table summarizes the amount of fuel and engine overhaul
expenses which are included in our total airline expenses for the periods indicated (dollar amounts in
thousands).
For the year ended December 31,
2012 2011 $ Change % Change
Total airline expense ......................... $3,445,765 $3,694,201 $(248,436) (6.7)%
Less: Fuel expense .......................... 426,387 592,871 (166,484) (28.1)%
Less: Engine overhauls Directly-Reimbursed Engine
Contracts ............................... 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)%
Total airline expense excluding fuel and engine
overhauls and CRJ200 engine overhauls reimbursed
at fixed hourly rate ........................ $2,804,975 $2,850,676 $ (45,701) (1.6)%
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