SkyWest Airlines 2012 Annual Report Download - page 64

Acquisition-related costs. During the year ended December 31, 2011, we incurred $5.8 million of
direct severance, legal and advisor fees associated with the ExpressJet Merger and integration related
costs, including advisory fees to assist Atlantic Southeast and ExpressJet in their efforts to operate
under a single operating certificate.
Other expenses. Other expenses, primarily consisting of property taxes, hull and liability insurance,
crew simulator training and crew hotel costs, increased $66.8 million, or 38.5%, during the year ended
December 31, 2011, compared to the year ended December 31, 2010. The increase in other expenses
was primarily due to the expansion of our operations following the completion of the ExpressJet
Merger.
Interest. Interest expense decreased $6.1 million, or 7.1%, during the year ended December 31,
2011, compared to the year ended December 31, 2010. The decrease in interest expense was primarily
due to a decrease in long-term debt. At December 31, 2011, we had $1,815.4 million of long-term debt,
compared to $1,898.0 million of debt as of December 31, 2010.
Total Airline Expenses. Total airline expenses (consisting of total operating and interest expenses)
increased $1,044.4 million, or 39.4%, during the year ended December 31, 2011, compared to the year
ended December 31, 2010. 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
the Directly-Reimbursed Engine Contract and the United CPA, 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,
2011 2010 $ Change % Change
Total airline expense ........................ $3,694,201 $2,649,836 $1,044,365 39.4%
Less: Fuel expense .......................... 592,871 340,074 252,797 74.3%
Less: Engine overhaul reimbursement 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%
Total airline expense excluding fuel and engine
overhauls and CRJ200 engine overhauls reimbursed
at fixed hourly rate ........................ $2,850,676 $2,127,815 $ 722,861 34.0%
Excluding fuel and engine overhaul costs and CRJ200 engine overhauls reimbursed at fixed hourly
rates, our total airline expenses increased $722.9 million, or 34.0%, during the year ended
December 31, 2011, compared to the year ended December 31, 2010. The percentage increase in total
airline expenses, excluding fuel and engine overhauls, was more than the percentage increase in
passenger revenues, excluding fuel and engine overhaul reimbursements from major partners due
primarily to the factors described above.
Interest Income. Interest income decreased $6.1 million, or 42.7%, during the year ended
December 31, 2011, compared to the year ended December 31, 2010. The decrease in interest income
was due primarily to the retirement of a secured term loan that United repaid on August 11, 2010,
which had an interest rate of 11%.
Other, net. Other expenses, net, increased $14.0 million during the year ended December 31,
2011, compared to the year ended December 31, 2010. Other expenses primarily consist of earnings
and losses from our investments in TRIP and Air Mekong, which we account for under the equity
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