SkyWest Airlines 2012 Annual Report Download - page 63

overhaul reimbursements included in our aircraft maintenance expense for the periods indicated (dollar
amounts in thousands).
For the year ended December 31,
2011 2010 $ Change % Change
Aircraft maintenance, materials and repairs ........... $712,926 $487,466 $225,460 46.3%
Less: Engine overhaul reimbursed from major partners . . . 173,072 106,241 66,831 62.9%
Less: CRJ200 engine overhauls reimbursed at fixed hourly
rate ....................................... 77,582 75,706 1,876 2.5%
Other aircraft maintenance, materials and repairs ....... $462,272 $305,519 $156,753 51.3%
Other aircraft maintenance, materials and repairs increased $156.8 million, or 51.3%, during the
year ended December 31, 2011, compared to the year ended December 31, 2010. The increase in
maintenance expense, excluding engine overhaul costs, was principally due to the expansion of our
operations following the completion of the ExpressJet Merger, higher than expected maintenance costs
on scheduled events due to our aging fleet and replacement of aircraft parts and repairs in advance of
our schedule.
We recognize engine maintenance expense on our CRJ200 regional jet 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 Fixed-Rate Engine Contracts can have a significant
impact on our financial results. During the year ended December 31, 2011, our CRJ200 engine expense
under our Fixed-Rate Engine Contracts increased $1.9 million compared to the year ended
December 31, 2010. The increase in CRJ200 engine overhauls reimbursed under our Fixed-Rate Engine
Contracts was principally due to scheduled engine maintenance events.
Under our Directly-Reimbursed Engine Contracts, we are reimbursed for engine overhaul costs by
our major partners at the time the maintenance event occurs. Such reimbursements are reflected as
passenger revenue in our consolidated statements of comprehensive income (loss).
Aircraft rentals. Aircraft rental expense increased $34.6 million, or 11.1%, during the year ended
December 31, 2011, compared to the year ended December 31, 2010. The increase was primarily due
expansion of our operations following the completion of the ExpressJet Merger. Approximately,
$28.8 million of the additional aircraft rental expense was attributable to aircraft operated under the
ExpressJet United Express Agreement.
Depreciation and amortization. Depreciation and amortization expense increased $17.7 million, or
7.5%, during the year ended December 31, 2011, compared to the year ended December 31, 2010. The
increase in depreciation expense was primarily due to the expansion of our operations following the
completion of the ExpressJet Merger.
Station rentals and landing fees. Station rentals and landing fees expense increased $45.3 million,
or 35.0%, during the year ended December 31, 2011, compared to the year ended December 31, 2010.
The increase in station rentals and landing fees expense was primarily due to the expansion of our
operations following the completion of the ExpressJet Merger. Without the expansion of the ExpressJet
Delaware operations, station rentals and landing fees would have decreased, 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 increased $20.8 million, or 18.8%,
during the year ended December 31, 2011, compared to the year ended December 31, 2010. The
increase in ground handling service expense was primarily due to the expansion of our operations
following the completion of the ExpressJet Merger.
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