SkyWest Airlines 2013 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ...Modesto San Jose St. George Fresno Monterey Las Vegas Flagstaff Santa Fe Tulsa Amarillo Oklahoma City Albuquerque Lubbock Dallas Tyler Phoenix Bakersfield San Luis Obispo Santa Maria Santa Barbara Burbank Ontario Los Angeles Palm Springs Long Beach Orange County Carlsbad Yuma San Diego Tucson El...

  • Page 3
    ... current projected availability for the E2 is 2020. In our report to shareholders for 2012, we outlined an agreement that was reached with American Airlines, Inc., to operate 23 CRJ200 regional jet aircraft as American Eagle. SkyWest Airlines began flying 12 of these aircraft at Los Angeles, CA in...

  • Page 4
    ...fourth quarter of 2013 in hiring additional crew members to meet the new regulations. Further experience and clarifications of the rules are required in order to assess the long-term impact of the rule changes. We continue to face the challenge of maintenance costs that exceed the contractual annual...

  • Page 5
    ... industry will continue to adapt over time by reducing 50-seat capacity in favor of more dual-class, larger-gauge aircraft in order to meet the needs of our major partners. Our objectives remain clear in that we need to continue to adapt our business model to allow for long-term sustainability and...

  • Page 6
    ... year ended December 31, 2013 OR អ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 0-14719 SKYWEST, INC. Incorporated under the Laws of Utah 444 South River Road St. George, Utah 84790 (435) 634-3000...

  • Page 7
    ... Accounting and Financial Disclosure ...Item 9A. Controls and Procedures ...Item 9B. Other Information ...PART III Item 10. Directors, Executive Officers and Corporate Governance ...Item 11. Executive Compensation ...Item 12. Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 8
    ... SkyWest Airlines and ExpressJet, we offer scheduled passenger service with approximately 4,000 daily departures to destinations in the United States, Canada, Mexico and the Caribbean. Substantially all of our flights are operated as Delta Connection, United Express, US Airways Express, American...

  • Page 9
    ... executive offices are located at 444 South River Road, St. George, Utah 84790, and our primary telephone number is (435) 634-3000. We maintain an Internet web site at www.skywest.com. Our website provides a link to the web site of the SEC, through which our annual, quarterly and current reports...

  • Page 10
    ...), Denver, Houston, Detroit, Memphis, Newark, Minneapolis and Washington Dulles. ExpressJet offered more than 2,200 daily scheduled departures as of December 31, 2013, of which approximately 700 were Delta Connection flights, 1,400 were United Express flights and 100 were American Eagle flights. As...

  • Page 11
    ... to our pro-rate flying include fare pricing, customer service, routes served, flight schedules, aircraft types and relationships with major partners. The combined operations of SkyWest Airlines and ExpressJet represent the largest regional airline operation in the United States. However, many...

  • Page 12
    ... its status as a carrier for the code-share partner. For example, SkyWest Airlines flies out of Chicago (O'Hare), Washington Dulles, Denver, Houston, Los Angeles and San Francisco as United Express, out of Salt Lake City, Detroit and Minneapolis as Delta Connection, out of Seattle and Portland as...

  • Page 13
    ... generally require us to paint our aircraft with their colors and logos and to market our status as Delta Connection, United Express, American Eagle, US Airways Express or Alaska, as applicable. Under each of our code-share agreements, our passengers participate in the major partner's frequent flyer...

  • Page 14
    ... include costs related to fuel, ground handling, and aircraft engine maintenance and aircraft ownership. The ExpressJet Delta Connection Agreement also provides for incentive compensation based upon ExpressJet's performance, including on-time arrival performance and completion percentage rates. 9

  • Page 15
    ... 31, 2013, SkyWest Airlines operated 70 CRJ700s, 78 CRJ200s and 36 Brasilia turboprops under the SkyWest Airlines United Express Agreement, flying a total of approximately 1,050 United Express flights per day between Chicago (O'Hare), Denver, Houston, Los Angeles, San Francisco or Washington Dulles...

  • Page 16
    ...any party other than United to provide hub service at United's hubs in Chicago (O'Hare), Denver, San Francisco, Seattle/Tacoma, or Washington, D.C. (Dulles International Airport). On May 16, 2013, SkyWest Airlines and United entered into a United Express Agreement to operate 40 new Embraer E175 dual...

  • Page 17
    ... Airlines operated 12 CRJ200s under the SkyWest Airlines American Agreement, flying approximately 80 American Eagle flights per day between Los Angeles and designated outlying destinations. Generally, under the SkyWest Airlines American Agreement, American retains all air fares, cargo rates, mail...

  • Page 18
    ...31, 2013, ExpressJet operated 11 CRJ200s under the ExpressJet American Agreement, flying approximately 100 American Eagle flights per day between Dallas and designated outlying destinations. Generally, under the ExpressJet American Agreement, American retains all air fares, cargo rates, mail charges...

  • Page 19
    ...as of December 31, 2013, SkyWest Airlines operated one CRJ200s under a revenuesharing arrangement. Generally, under the SkyWest Airlines US Airways Express Agreement, US Airways retains all air fares, cargo rates, mail charges and other revenues associated with each flight. In exchange for providing...

  • Page 20
    ... the other party (subject to limitations imposed by the U.S. Bankruptcy Code) and certain specified conditions are not satisfied. Training and Aircraft Maintenance SkyWest Airlines and ExpressJet employees perform substantially all routine airframe and engine maintenance and periodic inspection of...

  • Page 21
    ... based upon their union affiliations prior to the ExpressJet Combination. Approximate Number of Active Employees Represented Employee Group Representatives Status of Agreement Atlantic Southeast Pilots ...Atlantic Southeast Flight Attendants ...Atlantic Southeast Flight Controllers ...Atlantic...

  • Page 22
    ... performance. As of December 31, 2013, SkyWest and SkyWest Airlines collectively employed 9,717 full-time equivalent employees, consisting of 5,661 pilots and flight attendants, 2,461 customer service personnel, 1,400 mechanics and other maintenance personnel, and 195 administration and support...

  • Page 23
    ... we incur. Under our code-share agreements with Delta, United, American, Alaska and US Airways, we are compensated for certain costs we incur in providing services. With respect to costs that are defined as ''pass-through'' costs, our code-share partner is obligated to pay to us the actual amount...

  • Page 24
    ... our business. Our business is labor intensive, requiring large numbers of pilots, flight attendants, mechanics and other personnel. Labor costs constitute a significant percentage of our total operating costs. For example, during the year ended December 31, 2013, our salary, wage and benefit costs...

  • Page 25
    ... our operations and our financial condition. The Airline Safety and Pilot Training Improvement Act of 2009 (the ''Improvement Act'') was enacted in August of 2010 and became effective August 2013. The Improvement Act adds new certification requirements for entry-level commercial pilots, requires...

  • Page 26
    ... departure from our business plan, would likely be very difficult and would likely require significant time and resources, which may not be available to us at that point. The current terms of the SkyWest Airlines and ExpressJet Delta Connection Agreements are subject to certain early termination...

  • Page 27
    ...-time arrivals. We currently use the systems, facilities and services of Delta and United to support a significant portion of our operations, including airport and terminal facilities and operations, information technology support, ticketing and reservations, scheduling, dispatching, fuel purchasing...

  • Page 28
    ...our major partners could have an adverse effect on our operating results and financial condition. SkyWest, SkyWest Airlines and ExpressJet are parties to code-share agreements with Delta and United. For the year ended December 31, 2013, approximately 94.5% of our ASMs were attributable to flights we...

  • Page 29
    ...does not approve the addition of the E175 aircraft type to SkyWest Airlines' certificate before the scheduled in-service date with United, SkyWest Airlines could be in breach of its code-share agreement with United and many aspects of our operations and financial condition could be impacted. We have...

  • Page 30
    ..., our growth is restricted in Atlanta, Cincinnati, New York (John F. Kennedy International Airport), Orlando and Salt Lake City. Under the SkyWest Airlines United Express Agreement, growth is restricted in Chicago (O'Hare International Airport), Denver, San Francisco, Seattle/Tacoma and Washington...

  • Page 31
    ... on our operations. We currently operate primarily through hubs in Atlanta, Los Angeles, Houston, Minneapolis, Detroit, San Francisco, Salt Lake City, Chicago, Denver, Houston, Washington, D.C., Newark, Cleveland and the Pacific Northwest. Nearly all of our flights either originate from or fly into...

  • Page 32
    ... and availability of jet fuel and in the event we are unable to pass on increased fuel prices to our pro-rate customers by increasing fares our financial performance would be adversely impacted. Reduced utilization levels of our aircraft under our code-share agreements would adversely impact our...

  • Page 33
    ... more than 300 50-seat aircraft within the Delta Connection system. In addition to reducing the number of 50-seat jets under contract, major airlines have reduced the utilization of regional aircraft, thereby reducing the revenue paid to regional airlines under capacity purchase agreements (See the...

  • Page 34
    ... if we lose the services of our key personnel. Our business depends upon the efforts of our chief executive officer, Jerry C. Atkin, and our other key management and operating personnel. We may have difficulty replacing management or other key personnel who cease to be employed by us and, therefore...

  • Page 35
    ... and yields, increased flight delays or cancellations associated with new government mandates, as well as increased security, fuel and other costs. We cannot provide any assurance that these events will not harm the airline industry generally or our operations or financial condition in particular...

  • Page 36
    ... our operational and financial results. Moreover, any aircraft accident or incident, even if fully insured, could cause a public perception that our operations are less safe or reliable than other airlines. Risks Related to Our Common Stock We can issue additional shares without shareholder approval...

  • Page 37
    ... As of December 31, 2013, our fleet consisted of the following types of owned and leased aircraft: Number of Owned Aircraft Number of Leased Aircraft Passenger Capacity Scheduled Flight Range (miles) Average Cruising Speed (mph) Average Age (years) Aircraft Type CRJ200s ...CRJ700s ...CRJ900s...

  • Page 38
    ... jet impractical. As of December 31, 2013, SkyWest Airlines operated 45 Brasilia turboprops out of Los Angeles, San Francisco, Salt Lake City, Seattle/Tacoma and Portland. SkyWest Airlines' Brasilia turboprops are generally used in its California markets, which are characterized by high frequency...

  • Page 39
    ... square-foot hangar and a 46,000 square-foot office facility in Colorado Springs, Colorado. • SkyWest Airlines leases a 42,000 square-foot maintenance hangar facility in South Bend, Indiana. ExpressJet Facilities • ExpressJet leases an aircraft hangar complex consisting of 203,000 square feet of...

  • Page 40
    ... use in its aircraft painting business. • ExpressJet leases a 27,225 square-foot aircraft maintenance hangar in Kansas City, Missouri. The lease agreement is scheduled to expire on November 30, 2016. Our management deems the current facilities of SkyWest, SkyWest Airlines and ExpressJet as being...

  • Page 41
    ...discovery, and depositions, Delta voluntarily dismissed its Counterclaim. Discovery in that action was not complete at the time of dismissal. On February 14, 2011, SkyWest Airlines and Atlantic Southeast voluntarily dismissed their claims in the Superior Court, and filed a new complaint (the ''State...

  • Page 42
    ... our common stock is Zions First National Bank, Salt Lake City, Utah. Dividends During 2013 and 2012, our Board of Directors declared regular quarterly dividends of $0.04 per share. Securities Authorized for Issuance Under Equity Compensation Plans The following table contains information regarding...

  • Page 43
    ... traded on the Nasdaq Stock Market or the New York Stock Exchange. The members of the Peer Group are: Alaska Air Group, Inc.: Allegiant Travel Co.; American Airlines Group, Inc.; Delta Air Lines, Inc.; Hawaiian Holdings, Inc.; JetBlue Airways, Corp.; Republic Airways, Holdings Inc.; SkyWest...

  • Page 44
    ...Data 2013 2012 Year Ended December 31, 2011 2010 2009 Block hours ...Departures ...Passengers carried ...Revenue passenger miles (000) ...Available seat miles (000) ...Revenue per available seat mile ...Cost per available seat mile ...Average passenger trip length ...Number of operating aircraft at...

  • Page 45
    ... operated for US Airways and approximately 2.6% was operated for American. Under a fixed-fee flying arrangement, the major airline generally pays the regional airline a fixed fee for each departure, with additional incentives based on completion of flights, on-time performance and baggage handling...

  • Page 46
    ... presented in this Report. The third item is the compensation we receive for engine maintenance under our fixed-fee arrangements. Under our United, American, US Airways and Alaska flying contracts, a portion of our compensation is based upon fixed hourly rates the aircraft is in operation, which is...

  • Page 47
    ... contract routes, the major airline partner controls scheduling, ticketing, pricing and seat inventories and we are compensated by the major airline partner at contracted rates based on completed block hours, flight departures and other operating measures. Financial Highlights We had total operating...

  • Page 48
    ... the number of scheduled maintenance events and the replacement and repair of aircraft parts and components at ExpressJet and SkyWest Airlines. Because we use the direct-expense method of accounting for our CRJ200 engines and because we recognize revenue using the applicable fixed hourly rates under...

  • Page 49
    ... scheduled to be removed, 41 CRJ200s are subleased from Delta for a nominal amount, and are scheduled to be returned to Delta without obligation to us. On May 16, 2013, SkyWest Airlines and United entered into a United Express Agreement to operate 40 new Embraer E175 dual-class regional jet aircraft...

  • Page 50
    ..., we expense the engine maintenance costs as flight hours are incurred on the engines and using the contractual rate set forth in the agreement. Aircraft Leases The majority of SkyWest Airlines' aircraft are leased from third parties, while ExpressJet's aircraft flying for Delta are primarily debt...

  • Page 51
    ... as of December 31, 2013. Stock-Based Compensation Expense We estimate the fair value of stock options as of the grant date using the Black-Scholes option pricing model. We use historical data to estimate option exercises and employee termination in the option pricing model. The expected term of...

  • Page 52
    ... the year ended December 31, 2013, compared to the year ended December 31, 2012. The decrease in CRJ200 engine overhaul expense was primarily due to a reduction in the number of scheduled engine maintenance events. • SkyWest Airlines' non-pass-through operating revenue increased by $65.9 million...

  • Page 53
    ...compared to the year ended December 31, 2012, which was primarily attributable to an increase in scheduled maintenance events and the replacement and repair of aircraft parts and components. • SkyWest Airlines' ground handling service expense increased $9.3 million, or 12.6%, during the year ended...

  • Page 54
    ...31, 2013, from the year ended December 31, 2012, due primarily (i) to our major partners purchasing an increased volume of fuel, landing fees and station rents directly from vendors on flights we operated under our code-share agreements and (ii) a reduction in the number of engine maintenance events...

  • Page 55
    ... 31, 2013 Amount 2012 Amount $ Change Amount % Change Percent 2013 Cents Per ASM 2012 Cents Per ASM Aircraft fuel ...Salaries, wages and benefits ...Aircraft maintenance, materials and repairs ...Aircraft rentals ...Depreciation and amortization . Station rentals and landing fees . Ground handling...

  • Page 56
    ... in the number of scheduled maintenance events and the replacement and repair of aircraft parts and components at ExpressJet and SkyWest Airlines. We recognize engine maintenance expense on our CRJ200 engines on an as-incurred basis as maintenance expense. Under our Fixed-Rate Engine Contracts, we...

  • Page 57
    ...indicated (dollar amounts in thousands). 2013 For the year ended December 31, 2012 $ Change % Change Total airline expense ...Less: Fuel expense ...Less: Engine overhauls Directly-Reimbursed Engine Contracts ...Less: CRJ200 engine overhauls reimbursed at fixed hourly rate ... ... $3,213,272 193,513...

  • Page 58
    ... overhaul expense incurred under the SkyWest Airlines Fixed-Rate Engine Contracts decreased $22.6 million. The decrease in CRJ200 engine overhaul expense was primarily due to a reduction in the number of scheduled engine maintenance events. • Non-pass-through operating revenue increased by $46...

  • Page 59
    • ExpressJet salaries, wages and employee benefits decreased $7.8 million, primarily due to integration benefits and aircraft scheduling inefficiencies experienced in 2011 that were not replicated during 2012. • Aircraft maintenance expense, excluding reimbursed engine overhauls, decreased $19.4...

  • Page 60
    ... 31, 2012 Amount 2011 Amount $ Change Amount % Change Percent 2012 Cents Per ASM 2011 Cents Per ASM Aircraft fuel ...Salaries, wages and benefits ...Aircraft maintenance, materials and repairs ...Aircraft rentals ...Depreciation and amortization . Station rentals and landing fees . Ground handling...

  • Page 61
    ... 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...

  • Page 62
    ...2012 For the year ended December 31, 2011 $ Change % Change Total airline expense ...Less: Fuel expense ...Less: Engine overhauls Directly-Reimbursed Engine Contracts ...Less: CRJ200 engine overhauls reimbursed at fixed hourly rate... Air Mekong during the applicable periods. Adjustment to Purchase ...

  • Page 63
    ... year ended December 31, 2012. The increase was primarily due to our receipt of $49 million of cash from United during the year ended December 31, 2013 for amounts previously deferred under the United Express Agreement. This increase was mostly offset by changes in our working capital accounts. Cash...

  • Page 64
    ..., the working capital currently available to us, together with our projected cash flows from operations, will be sufficient to meet our present financial requirements, including anticipated expansion, planned capital expenditures, and scheduled lease payments and debt service obligations for...

  • Page 65
    ... to our contract flying arrangements, United, Delta, Alaska, American and US Airways have agreed to bear the economic risk of fuel price fluctuations on our contracted flights. We bear the economic risk of fuel price fluctuations on our pro-rate operations. For the year ended December 31, 2013...

  • Page 66
    ... the extent we place these aircraft in service under our code-share agreements with Delta, United, or other carriers, our code-share agreements currently provide that reimbursement rates will be adjusted higher or lower to reflect changes in our aircraft rental rates. Auction Rate Securities We have...

  • Page 67
    ..., in accordance with the standards of the Public Company Accounting Oversight Board (United States), SkyWest, Inc. and subsidiaries' internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of...

  • Page 68
    SKYWEST, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) ASSETS December 31, 2013 December 31, 2012 CURRENT ASSETS: Cash and cash equivalents Marketable securities ...Restricted cash ...Income tax receivable ...Receivables, net ...Inventories, net ...Prepaid aircraft rents...

  • Page 69
    ...) (Dollars in thousands) LIABILITIES AND STOCKHOLDERS' EQUITY December 31, 2013 December 31, 2012 CURRENT LIABILITIES: Current maturities of long-term debt . Accounts payable ...Accrued salaries, wages and benefits . Accrued aircraft rents ...Taxes other than income taxes ...Income tax payable...

  • Page 70
    ...2011 2013 OPERATING REVENUES: Passenger ...Ground handling and other ...Total operating revenues ...OPERATING EXPENSES: Salaries, wages and benefits ...Aircraft maintenance, materials and repairs Aircraft rentals ...Depreciation and amortization ...Aircraft fuel ...Station rentals and landing fees...

  • Page 71
    ...of common stock options and issuance of restricted stock ...Sale of common stock under employee stock purchase plan ...Stock based compensation expense related to the issuance of stock options and restricted stock . . Tax benefit from exercise of common stock options Treasury stock purchases ...Cash...

  • Page 72
    ... ...Stock based compensation expense ...Loss (gain) on sale of property and equipment ...Undistributed losses (earnings) of other companies ...Capitalized Brasilia engine overhauls ...Adjustment to purchase accounting gain ...Net increase (decrease) in deferred income taxes ...Changes in operating...

  • Page 73
    ... 31, 2013, SkyWest Airlines operated as a Delta Connection carrier in Salt Lake City and Minneapolis, a United Express carrier in Los Angeles, San Francisco, Denver, Houston, Chicago and the Pacific Northwest, an Alaska carrier in Seattle/ Tacoma and Portland, a US Airways carrier in Phoenix and an...

  • Page 74
    ... 31, 2013, ExpressJet operated as a Delta Connection carrier in Atlanta and Detroit and a United Express carrier in Chicago (O'Hare), Washington, D.C. (Dulles International Airport), Cleveland, Newark, Houston and Denver. Basis of Presentation The Company's consolidated financial statements include...

  • Page 75
    ... allowance for flight equipment expendable parts is accrued based on estimated lives of the corresponding fleet types and salvage values. The inventory allowance as of December 31, 2013 and 2012 was $10.1 million and $9.2 million, respectively. These allowances are based on management estimates...

  • Page 76
    .... Maintenance The Company operates under an FAA-approved continuous inspection and maintenance program. The Company uses the direct expense method of accounting for its regional jet engine overhauls wherein the expense is recorded when the overhaul event occurs. The Company has an engine services...

  • Page 77
    ... by the Company's major airline partners on flights that the Company operates under its code-share agreements. In the event that the contractual rates under the agreements have not been finalized at quarterly or annual financial statement dates, the Company records revenues based on the lower of...

  • Page 78
    ... - 41 • CRJ 900 - 28 • Fuel • Engine Maintenance • Landing fees, Station Rents, Deice Insurance • Performance based financial incentives • Rate per block hour, per departure and per aircraft under contract SkyWest Airlines Prorate Agreement • EMB 120 - 9 • CRJ200 - 8 • None...

  • Page 79
    ... Policies (Continued) United Express Agreements Number of aircraft under contract • CRJ 200 - 61 • CRJ700 - 70 • EMB 120 - 9 Pass through costs or costs paid directly by major partner • Fuel • Landing fees, Station Rents, Deice • Insurance Agreement SkyWest Airlines United Express...

  • Page 80
    ... the passenger fare revenue SkyWest Airlines US Airways Express Prorate Agreement • CRJ200 - 1 • None American Agreement Number of aircraft under contract • CRJ200 - 12 Pass through costs or costs paid directly by major partner • Fuel • Landing fees, Station Rents, Deice • Insurance...

  • Page 81
    SKYWEST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2013 (1) Nature of Operations and Summary of Significant Accounting Policies (Continued) Under the Company's code-share agreements with Delta, United, Alaska, US Airways and American, the compensation...

  • Page 82
    ... are reported at fair value based on market quoted prices in the consolidated balance sheets. If quoted prices in active markets are no longer available and the Company has estimated the fair values of these securities utilizing a discounted cash flow analysis as of December 31, 2013. These...

  • Page 83
    ... carrying amount of $1,642.0 million as of December 31, 2012. Segment Reporting Generally accepted accounting principles require disclosures related to components of a company for which separate financial information is available to, and regularly evaluated by, the Company's chief operating decision...

  • Page 84
    ... FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2013 (2) Segment Reporting (Continued) The following represents the Company's segment data for the years ended December 31, 2013, 2012 and 2011 (in thousands). Year ended December 31, 2013 SkyWest Airlines ExpressJet Other Consolidated Operating...

  • Page 85
    ... line of credit. As of December 31, 2013 and 2012, SkyWest Airlines had no amount outstanding under the facility. The facility expires on March 31, 2014 and has a variable interest rate of Libor plus 3.0%. As of December 31, 2013, the Company had $88.5 million in letters of credit and surety bonds...

  • Page 86
    SKYWEST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2013 (4) Income Taxes The provision for income taxes includes the following components (in thousands): Year ended December 31, 2013 2012 2011 Current tax provision (benefit): Federal ...State ......

  • Page 87
    .... The Company's valuation allowance is related to certain deferred tax assets with a limited carryforward period. The Company does not anticipate utilizing these deferred tax assets prior to the lapse of the carry-forward period. At December 31, 2013, the Company had federal net operating losses of...

  • Page 88
    ... leases 570 aircraft, as well as airport facilities, office space, and various other property and equipment under non-cancelable operating leases which are generally on a long-term net rent basis where the Company pays taxes, maintenance, insurance and certain other operating expenses applicable to...

  • Page 89
    ...discovery, and depositions, Delta voluntarily dismissed its Counterclaim. Discovery in that action was not complete at the time of dismissal. On February 14, 2011, SkyWest Airlines and Atlantic Southeast voluntarily dismissed their claims in the Superior Court, and filed a new complaint (the ''State...

  • Page 90
    ... fair dealing. Delta moved for partial dismissal of the State Court Complaint, which motion was denied in its entirety. Discovery in the State Court lawsuit has concluded. On July 19, 2013, the parties filed cross motions for partial summary judgment. SkyWest Airlines and ExpressJet filed a motion...

  • Page 91
    ... ...ExpressJet Delaware Dispatchers . . ExpressJet Delaware Stock Clerks . . During December 2013, the Airline Pilots Association International (''ALPA''), which represents the Atlantic Southeast pilot and ExpressJet Delaware pilot groups, conducted a vote of the two employee groups, seeking...

  • Page 92
    ...discounted cash flow valuation methodology for auction rate securities. Accordingly, for purposes of the foregoing consolidated financial statements, these securities were categorized as Level 3 securities. The Company's ''Marketable Securities'' classified as Level 2 primarily utilize broker quotes...

  • Page 93
    ...of TRIP that allowed the Company to put its investment to TRIP's majority shareholder at an established price based on a 5% annual rate of return over the investment period. On July 12, 2012, the Company sold its interest in TRIP for a price of $42 million. The purchase price is scheduled to be paid...

  • Page 94
    ... any conversion privileges. Stock Compensation On May 4, 2010, the Company's shareholders approved the adoption of the SkyWest Inc. 2010 Long-Term Incentive Plan, which provides for the issuance of up to 5,150,000 shares of common stock to the Company's directors, employees, consultants and advisors...

  • Page 95
    ...granted 173,560 stock options to employees under the 2010 Incentive Plan. The following table shows the assumptions used and weighted average fair value for grants in the years ended December 31, 2013, 2012 and 2011. 2013 2012 2011 Expected annual dividend rate ...Risk-free interest rate ...Average...

  • Page 96
    SKYWEST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2013 (8) Capital Transactions (Continued) $13.41. The following table summarizes the restricted stock activity as of December 31, 2013, 2012 and 2011: Number of Shares Weighted-Average Grant-Date Fair...

  • Page 97
    SKYWEST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2013 (8) Capital Transactions (Continued) following table summarizes the stock option activity for all of the Company's plans for the years ended December 31, 2013, 2012 and 2011: 2013 2012 2011 ...

  • Page 98
    ...December 31, 2013, 2012 and 2011, respectively. ExpressJet and Atlantic Southeast Retirement Plan ExpressJet (formerly Atlantic Southeast) sponsors the Atlantic Southeast Airlines, Inc. Investment Savings Plan (the ''Atlantic Southeast Plan''). Employees who have completed 90 days of service and are...

  • Page 99
    ... 2009 Stock Purchase Plan at any time upon written notice. The following table summarizes purchases made under the 2009 Employee Stock Purchase Plans during the years ended December 31, 2013, 2012 and 2011: Year Ended December 31, 2013 2012 2011 Number of shares purchased ...Average price of shares...

  • Page 100
    SKYWEST, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2013 (11) Related-Party Transactions The Company's President, Chairman of the Board and Chief Executive Officer, serves on the Board of Directors of Zions Bancorporation (''Zions''). The Company ...

  • Page 101
    ... our management, including our Chief Executive Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control During the three months ended December 31, 2013, we did not make any changes in our internal control over financial...

  • Page 102
    ... of Independent Registered Public Accounting Firm The Board of Directors and Stockholders SkyWest, Inc. We have audited SkyWest, Inc. and subsidiaries' internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued...

  • Page 103
    ... Annual Meeting of Shareholders scheduled for May 6, 2014. We intend to file our definitive proxy statement with the SEC not later than 120 days after December 31, 2013, pursuant to Regulation 14A of the Exchange Act. Headings in Proxy Statement ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE...

  • Page 104
    ... 2003, between United Air Lines, Inc., and SkyWest Airlines, Inc. Stock Option Agreement dated January 28, 1987 between Delta Air Lines, Inc. and SkyWest, Inc. Lease Agreement dated December 1,1989 between Salt Lake City Corporation and SkyWest Airlines, Inc. Master Purchase Agreement dated November...

  • Page 105
    ...Aircraft Purchase Agreement, dated December 7, 2012, between Mitsubishi Aircraft Corporation and SkyWest Inc. Letter Agreement dated December 7, 2012, between Mitsubishi Aircraft Corporation and SkyWest, Inc. Purchase Agreement COM0028-13 between Embraer S.A. and SkyWest Inc. dated February 15, 2013...

  • Page 106
    ... No. 1 to Current Report on Form 8-K/A filed on June 25, 2013 (14) Incorporated by reference to the exhibits to Registrant's Annual Report on Form 10-K filed on February 24, 2012 (15) Incorporated by reference to the exhibits to Registrant's Quarterly Report on Form 10-Q filed on August 7, 2013, as...

  • Page 107
    ...express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Ernst & Young LLP Salt Lake City...

  • Page 108
    SKYWEST, INC. AND SUBSIDIARIES SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS For the Years Ended December 31, 2013, 2012 and 2011 (Dollars in thousands) Balance at Beginning of Year Additions Charged to Costs and Expenses Description Deductions Balance at End of Year Year Ended December 31, 2013...

  • Page 109
    ... requirement of the Securities Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons in the capacities and on the dates indicated. Name Capacities Date /s/ JERRY C. ATKIN Jerry C. Atkin Chairman of the Board and Chief Executive Officer (Principal...

  • Page 110
    ... February 14, 2014 /s/ RONALD J. MITTELSTAEDT Ronald J. Mittelstaedt Director February 14, 2014 /s/ ROBERT G. SARVER Robert G. Sarver Director February 14, 2014 /s/ KEITH E. SMITH Keith E. Smith Director February 14, 2014 /s/ JAMES L. WELCH James L. Welch Director February 14, 2014 105

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    SkyWest, Inc. 444 South River Road ɀ St. George, UT 84790 March 19, 2014 Dear Shareholder: You are invited to attend the Annual Meeting of Shareholders of SkyWest, Inc. scheduled to be held at 11:00 a.m., Tuesday, May 6, 2014, at our headquarters located at 444 South River Road, St. George, Utah, ...

  • Page 113
    ...Inc. 444 South River Road ɀ St. George, UT 84790 NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS OF SKYWEST, INC. Date: Time: Place: Tuesday, May 6, 2014 11:00 a.m., Mountain Daylight Time (MDT) SkyWest, Inc. Headquarters 444 South River Road St. George, Utah 84790 1. To elect ten directors of SkyWest...

  • Page 114
    ... of Shareholders of SKYWEST, INC. To Be Held on Tuesday, May 6, 2014 TABLE OF CONTENTS Page Overview ...Proposal 1-Election of Directors ...Executive Officers ...Corporate Governance ...Meetings and Committees of the Board ...Compensation Discussion and Analysis ...Compensation Committee Report...

  • Page 115
    ...This Proxy Statement, the accompanying Notice of Annual Meeting, proxy card and the Annual Report to Shareholders of SkyWest, Inc. (the ''Company'' or ''SkyWest'') are being mailed on or about March 19, 2014. The Board of Directors of the Company (the ''Board'') is soliciting your proxy to vote your...

  • Page 116
    ... the following ways: • by mailing a revised proxy card to the Chief Financial Officer and Treasurer of the Company; • by changing your vote on the Internet website; • by using the telephone voting procedures; or • by voting in person at the Meeting. What vote will be required to approve each...

  • Page 117
    ..., the 2013 Annual Report to Shareholders and a form of proxy card or voting instruction card. All shareholders who do not receive a Notice will receive a paper copy of the proxy materials by mail. The Company believes this process will allow it to provide its shareholders with the information they...

  • Page 118
    ..., including information regarding the specific experience, qualifications, attributes and skills that led the Board and its Nominating and Corporate Governance Committee to conclude that he or she should serve as a director of the Company at the present time, in light of the Company's business and...

  • Page 119
    ... None Chairman of the Board and Chief Executive Officer of the Company and its two operating subsidiaries, SkyWest Airlines, Inc. (''SkyWest Airlines'') and ExpressJet Airlines, Inc. (''ExpressJet'') Mr. Atkin joined the Company in July 1974 as a director and the Company's Director of Finance. In...

  • Page 120
    ... record, his many achievements, awards and other forms of recognition in the accounting profession, his extensive training in accounting practices and fraud detection, and his outstanding past service on the Board. Other Directorships: ...Mr. Albrecht currently serves as a director of Red...

  • Page 121
    ... of Ghana, and Chief Executive Officer of Euro Sky, a company organized to explore the feasibility of operating a regional airline in Austria. From March 1991 to January 1993, Mr. Atkin was Director of Business and Economic Development for the State of Utah. The Board's nomination of Mr. Atkin...

  • Page 122
    ... large complex organizations to the Board's Compensation and Nominating and Corporate Governance Committees. Additionally, in her service as a director, Ms. Billson draws upon her vast knowledge of developing and executing strategies to deliver financial results. Other Directorships: ...Ms. Billson...

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    ...an internationally-recognized management consulting firm. Mr. Eyring is a sound strategic thinker who possesses the unique ability to apply his academic thought and studies to the practical day-to-day challenges of the Company's operations. His thoughtful application of business and legal principles...

  • Page 124
    ...to his career in waste management, he spent three years in the air freight industry. Waste Connections is publicly-traded on the New York Stock Exchange. Mr. Mittelstaedt holds a bachelor's degree in Business Economics and Finance from the University of California-Santa Barbara. The Board recognizes...

  • Page 125
    ...Chief Executive Officer of California Bank and Trust from 1995 to 2001. Prior to 1995, he served as the President of National Bank of Arizona. The Board nominated Mr. Sarver, in part, because of his significant knowledge in the areas of financial analysis, business strategy and investment management...

  • Page 126
    ... the role of Chief Executive Officer. Boyd Gaming is publicly-traded on the New York Stock Exchange. Mr. Smith holds a bachelor's degree in Accounting from Arizona State University. He currently serves as Chairman of the Los Angeles Branch of the Federal Reserve Bank of San Francisco. He also serves...

  • Page 127
    ... of the Compensation Committee; Member of the Safety and Compliance Committee Chairman and Chief Executive Officer of Air Lease Corporation Mr. Udvar-Hazy has been engaged in aircraft leasing and finance for over 40 years. Prior to his current engagement with Air Lease Corporation, which leases...

  • Page 128
    ...includes extensive experience working with organized labor groups, including unions. Mr. Welch's insights have been particularly valuable to the Board as the Company has addressed labor and related issues arising in the operation of SkyWest Airlines, as well as issues associated with the acquisition...

  • Page 129
    ..., including safety, quality, flight operations, maintenance and customer service. He also oversees SkyWest Airline's operational relationships with American, Delta, United, U.S. Airways and Alaska. Mr. Childs was initially employed with the Company in January 2001 as Senior Director/Controller and...

  • Page 130
    ... for annually reviewing with the Board the desired skills and characteristics of directors, as well as the composition of the Board as a whole. Terms and Limitations All directors currently stand for election each year. The Board does not believe it should establish a limit on the number of times...

  • Page 131
    ... those relating to director independence and to compensation of Audit and Finance Committee members. CEO Evaluation and Management Succession The Nominating and Corporate Governance Committee conducts an annual review to assess the performance of the Company's Chief Executive Officer. The Nominating...

  • Page 132
    ...-management directors as a group in writing by regular mail. The following address may be used by those who wish to send such communications by regular mail: Board of Directors or Name of Individual Director(s) c/o Chief Financial Officer and Treasurer SkyWest, Inc. 444 South River Road St. George...

  • Page 133
    ...CEO succession and the Company's compensation policies and related risks by regular reviews with management and the Compensation Committee's outside advisors. The Board and the Safety and Compliance Committee monitor management's administration of airline flight operations safety and compliance with...

  • Page 134
    ...the Company's website, www.SkyWest.com. The table below shows current membership for each of the standing Board committees. Audit & Finance Compensation Nominating & Corporate Governance Safety and Compliance W. Steve Albrecht* Henry J. Eyring Robert G. Sarver Keith E. Smith James L. Welch * Henry...

  • Page 135
    ...'s general compensation philosophy and oversee the development and implementation of the Company's compensation programs; • Recommend to the Board the base salary, incentive compensation and any other compensation for the Company's Chief Executive Officer and review and approve the Chief Executive...

  • Page 136
    ... of the Board and Chief Executive Officer of the Company, 444 South River Road, St. George, Utah 84790. As contemplated by the Company's Corporate Governance Guidelines, the Nominating and Corporate Governance Committee reviews the appropriate skills and characteristics required of directors in the...

  • Page 137
    ... during the year ended December 31, 2013, was an officer or employee of the Company in 2013 or any time prior thereto. None of the members of the Compensation Committee during the year ended December 31, 2013, had any relationship with the Company requiring disclosure under Item 404 of Regulation...

  • Page 138
    ... Financial Officer and Treasurer of the Company, SkyWest Airlines and ExpressJet (the ''CFO''); • Russell A. Childs, President and Chief Operating Officer of SkyWest Airlines; and • Bradford R. Holt, President and Chief Operating Officer of ExpressJet. The compensation discussion and analysis...

  • Page 139
    ... the vesting of stock options, restricted stock, restricted stock units and performance units generally is accelerated upon a change in control of the Company. The Executives serve at the will of the Board, which enables the Board to terminate the employment of any Executive with discretion as...

  • Page 140
    ... executives. The Executives' salaries are set at levels that the Compensation Committee believes are generally competitive with the compensation paid to officers in similar positions at other airlines. Salary adjustments are considered annually and influenced by growth of the Company's operations...

  • Page 141
    ... year-end, the Compensation Committee reviewed the actual net income and financial results for the year, as well as other items taken into account in setting the annual net income and financial targets, and determined the extent to which the applicable goals were met. 2013 Operational and Individual...

  • Page 142
    .... In granting stock options and restricted stock units to the Executives, the Compensation Committee also considers the impact of the grant on the Company's financial performance, as determined in accordance with the requirements of Financial Accounting Standards Board Accounting Standards...

  • Page 143
    ...restricted stock units vest. The purpose of the restricted stock unit component is to support continued employment through volatile economic and stock market conditions, to manage dilution overhang, and to align officers' interests with maintaining shareholder value already created. The Compensation...

  • Page 144
    ... principal contributing factors to long-term shareholder value. For 2013, the actual adjusted shareholder pretax earnings was $99 million, which resulted in each Executive earning 50% of his performance units (subject to risk of forfeiture in the event of termination prior to February 13, 2016). The...

  • Page 145
    ... Compensation Table applicable to the heading ''All Other Compensation'' below, are reasonable, competitive and consistent with overall executive compensation objectives. Those benefits consist primarily of employer-paid premiums on health, dental and eye insurance, a personal automobile allowance...

  • Page 146
    ... tax year (other than the Company's principal financial officer). The limit does not apply to compensation that meets the requirements of Section 162(m) of the Code for ''qualified performance-based compensation'' (i.e., compensation paid only if the executive meets pre-established, objective goals...

  • Page 147
    ... COMMITTEE REPORT The Compensation Committee has reviewed the foregoing compensation discussion and analysis and discussed with the Company's management the information set forth herein. Based on such review and discussions with management, the Compensation Committee recommended to the Board that...

  • Page 148
    ... $260,400 President and Chief 2012 $254,000 Operating Officer- 2011 $254,000 SkyWest Airlines, Inc. Bradford R. Holt ...2013 $260,400 President and Chief 2012 $254,000 Operating Officer- 2011 $254,000 ExpressJet Michael J. Kraupp ...2013 $179,900 Chief Financial Officer 2012 $175,500 And Treasurer...

  • Page 149
    ... for 2013; $5,195 in employer-paid health insurance premiums; $14,760 for a personal vehicle allowance; $4,362 for personal use of the Company's recreational equipment; and $1,580 in discretionary matching contributions under the SkyWest 401(k) Plan. All other compensation for Mr. Rich for 2012...

  • Page 150
    ...'s audited financial statements for the year ended December 31, 2013, which are included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. On February 13, 2013, the Company granted stock options, restricted stock units and performance unit awards payable...

  • Page 151
    Outstanding Equity Awards at Year-End The following table provides information on the year-end 2013 holdings of stock options and other stock awards (restricted stock and restricted stock units) by the Executives. (b) Number of Securities Underlying Unexercised Options Exercisable (#) Option Awards ...

  • Page 152
    ...and earns a rate of return based upon certain notational, self-directed investment options offered under the applicable plan. Each Executive's account under the SkyWest Deferred Compensation Plan and ExpressJet Deferred Compensation Plan, as applicable, is also credited with a discretionary employer...

  • Page 153
    ...The amounts in column (c) reflect the amounts of employer contributions credited under the applicable deferred compensation plan for 2013 at the rate of 15% of each Executive's 2013 base salary and 2012 bonus which was paid in 2013. The amounts reported in column (c) are also included in the amounts...

  • Page 154
    ... if an Executive's employment had terminated on December 31, 2013, or the Company had undergone a change in control on December 31, 2013. These benefits are in addition to benefits generally available to all salaried employees of the Company in connection with a termination of employment, such as...

  • Page 155
    ... in the case of restricted stock units and stock options, by multiplying the number of underlying shares by the closing price of the Common Stock on the last trading day of 2013 ($14.79 per share) and, in the case of stock options, by then subtracting the applicable option exercise price: Name Early...

  • Page 156
    ...C. Atkin, the Company's Chairman of the Board and Chief Executive Officer, serves as a director of Zions. The Company maintains a line of credit and certain bank accounts with Zions. Zions is an equity participant in leveraged leases on ten aircraft operated by the Company's subsidiaries. Zions also...

  • Page 157
    ... an annual fee of $15,000. Jerry C. Atkin, who is the Chairman of the Board and an employee of the Company, received no compensation for his service on the Board. Stock Awards Each non-employee director receives a stock award annually. On February 13, 2013, each of the non-employee directors, other...

  • Page 158
    ... Chief Executive Officer of the Company, is not included in the foregoing table as he is an employee of the Company and receives no monetary compensation for his services as Chairman of the Board. (2) Represents the closing price of the Common Stock awarded on the grant date of (a) February 13, 2013...

  • Page 159
    ... outstanding shares of Common Stock. The information following is as reported in their filings with the Securities and Exchange Commission. The Company is not aware of any other beneficial owner of more than 5% of the Common Stock. Amount of Beneficial Ownership Common Stock Shares Percent of Class...

  • Page 160
    ... Board and the Compensation Committee (which is composed solely of independent directors), value the opinion of the Company's shareholders and will consider the outcome of the vote when addressing future compensation arrangements. We are required under current law to hold this advisory ''Say-on-Pay...

  • Page 161
    ... employees include its Chief Executive Officer and each of its other three most highly-paid Executives, other than the Chief Financial Officer. There is, however, an exception to the $1,000,000 annual limit for compensation earned pursuant to certain performance-based awards. A performance-based...

  • Page 162
    ... completed on time; percentage of scheduled flights completed; lost passenger baggage per passenger or per seat mile; aircraft utilization; revenue per employee; and implementation, completion or attainment of measurable objectives with respect to commercialization, projects, service volume levels...

  • Page 163
    ... compensation'' exception to Code Section 162(m) for each 12 months in a performance period. Each of the above limits is subject to adjustment for certain changes in the Company's capitalization, such as stock dividends, stock splits, combinations or similar events. If an award expires, terminates...

  • Page 164
    ...firm (independent auditors) to examine the consolidated financial statements of the Company for the year ending December 31, 2014. The Company is seeking shareholder ratification of such action. It is expected that representatives of Ernst & Young LLP will attend the Meeting and be available to make...

  • Page 165
    ... website at www.SkyWest.com, and is also available in print, free of charge, upon request. Requests for a printed copy of the Audit and Finance Committee charter should be submitted to Michael J. Kraupp, Chief Financial Officer and Treasurer of the Company, at 444 South River Road, St. George, Utah...

  • Page 166
    ...on an anonymous basis) of complaints about financial and control matters. The Audit and Finance Committee also has implemented a policy that addresses when the Company may recruit personnel who formerly were employed by the Company's independent registered public accounting firm. In other cases, the...

  • Page 167
    ..., 2013? Based upon its review and the discussions with management and the Company's independent registered public accounting firm, the Audit and Finance Committee recommended to the Board that the audited consolidated financial statements for the Company be included in the Company's Annual Report on...

  • Page 168
    ... Committee has reviewed and discussed the fees paid to EY during the year ended December 31, 2013, for audit, audit-related, tax and other services, which are set forth below under ''Fees Paid to Independent Registered Public Accounting Firm.'' Because the Company did not pay to EY any fees for non...

  • Page 169
    ...'s financial statements included in its Quarterly Reports on Form 10-Q, audits of the closing balance sheets of certain businesses acquired, and the review of the Company's registration statements. Audit-Related Fees During the years ended December 31, 2013 and 2012, the Company did not pay any fees...

  • Page 170
    .... Based upon these reviews and discussions, the Audit and Finance Committee recommended to the Board at the February 12, 2014 meeting of the Board that the Company's audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2013, filed with...

  • Page 171
    ... furnished to the Company. Based solely on a review of copies of reports furnished to the Company, or written representations that no reports were required, the Company believes that during 2013 its executive officers, directors and 10% holders complied with all filing requirements of Section 16 of...

  • Page 172
    ... Proxy Statement and the Company's 2013 Annual Report to Shareholders should submit a request in writing to Michael J. Kraupp, Chief Financial Officer and Treasurer of the Company, 444 South River Road, St. George, Utah 84790. Beneficial owners sharing an address who are receiving multiple copies of...

  • Page 173
    ... closing sales price on The Nasdaq Global Select Market at March 5, 2014) (1) Incentive stock options, (2) non-qualified stock options, (3) restricted stock, (4) restricted stock units, (5) other share-based awards, (6) stock appreciation rights and (7) performance awards, including annual and long...

  • Page 174
    ...Compensation Committee at time of each grant. In the event of a change of control with respect to the Company, unless otherwise provided in the applicable award agreement: (i) stock options and stock appreciation rights become fully exercisable and performance awards, restricted stock and restricted...

  • Page 175
    ... awards. The primary recipients of awards under the 2010 Plan will be our officers, other key employees, managers and pilots. Administration. The 2010 Plan is administered by the Compensation Committee. The Compensation Committee has the authority to interpret and construe all provisions of the 2010...

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    Stock Options. The Compensation Committee may from time to time award options to any participant subject to the limitations described above. Stock options give the holder the right to purchase shares of the Common Stock within a specified time at a specified price. Two types of stock options may be ...

  • Page 177
    ... Code, the annual compensation paid to a publicly-traded corporation's named executive officers (other than the principal or chief financial officer) may not be deducted to the extent it exceeds $1 million for any such named executive officer. However, an exception to that non-deduction rule applies...

  • Page 178
    ... completed on time; percentage of scheduled flights completed; lost passenger baggage per passenger or per seat mile; aircraft utilization; revenue per employee; and implementation, completion or attainment of measurable objectives with respect to commercialization, projects, service volume levels...

  • Page 179
    ... of restricted shares of Common Stock generally will not be subject to tax until the shares are no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Code (the ''Restrictions''). At such time, the recipient will be subject to tax at ordinary income rates on...

  • Page 180
    ... be treated as compensation that is taxable as ordinary income to the participant. Restricted Stock Units. Generally, no income will be recognized upon the award of restricted stock units. The recipient of a restricted stock unit award generally will be subject to tax at ordinary income rates on any...

  • Page 181
    ... of the Code; and (iii) an ''independent director'' for purpose of the rules of the applicable Securities Exchange on which the Shares are traded, to the extent required by such rules. 2.6. ''Consultant'' shall mean any consultant or advisor who is a natural person and who provides services to the...

  • Page 182
    ... the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine. 2.16. ''Other Share-Based Award'' shall have the meaning set forth in Section 8.1. 2.17. ''Participant'' shall mean an Employee, Director or Consultant...

  • Page 183
    .... 2.30 ''Restricted Stock Unit Award'' shall have the meaning set forth in Section 7.1. 2.31. ''Securities Exchange'' means the principal U.S. national securities exchange on which the Shares are listed and traded on the date in question. As of the date hereof, the applicable Securities Exchange is...

  • Page 184
    ...applicable Limitations applicable...time to time be adopted by the Board, to: (i) select the Employees, Directors and Consultants to whom Awards may from time to time be granted hereunder; (ii) determine the type or types of Awards to be granted to each Participant hereunder; (iii) determine the number...

  • Page 185
    ... fixing the time and place of its meetings. Notwithstanding the foregoing, any action or determination by the Committee specifically affecting or relating to a Director on the Committee shall require the prior approval of the Board. (c) To the extent not inconsistent with applicable law, including...

  • Page 186
    ... Company at its principal business office or such other office as the Committee may from time to time direct, and shall be in such form, containing such further provisions consistent with the provisions of the Plan, as the Committee may from time to time prescribe. In no event may any Option granted...

  • Page 187
    ...Change in Control as defined in Section 11.3); or (iii) take any other action with respect to a Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the Securities Exchange on which the Shares are then traded. 7. RESTRICTED STOCK AND RESTRICTED STOCK UNITS...

  • Page 188
    ... to each Participant. 7.3. Rights of Holders of Restricted Stock and Restricted Stock Units. (a) Unless otherwise provided in the applicable Award Agreement, beginning on the date of grant of the Restricted Stock Award and subject to execution of the Award Agreement, the Participant shall become...

  • Page 189
    ... of other Awards granted under the Plan and other earned cash-based compensation. Other Share-Based Awards shall be subject to such vesting restrictions as are imposed by the Committee covering a period of time specified by the Committee (the ''Vesting Period''). 8.2. Award Agreements. The terms...

  • Page 190
    ... completed on time; percentage of scheduled flights completed; lost passenger baggage per passenger or per seat mile; aircraft utilization; revenue per employee; and implementation, completion or attainment of measurable objectives with respect to commercialization, projects, service volume levels...

  • Page 191
    ...Restricted Stock Unit Award or Other Share-Based Award (or in which the Company is the ultimate parent corporation and continues the Award), if a Participant's employment with such successor company (or the Company) or a subsidiary thereof terminates within 24 months following such Change in Control...

  • Page 192
    ... the restrictions, limitations and other conditions applicable to Restricted Stock and Restricted Stock Units outstanding as of the date of such termination of employment shall lapse and the Restricted Stock and Restricted Stock Units shall become free of all restrictions, limitations and conditions...

  • Page 193
    ... the holders thereof immediately prior to the Business Combination, (ii) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 50% or more of...

  • Page 194
    ... by such person, a Change in Control of the Company shall then occur. 12. GENERALLY APPLICABLE PROVISIONS 12.1. Amendment and Termination of the Plan. The Board may, from time to time, alter, amend, suspend or terminate the Plan as it shall deem advisable, subject to any requirement for stockholder...

  • Page 195
    ... Committee and recorded by the Company (or its designee) in an electronic recordkeeping system used for the purpose of tracking one or more types of Awards as the Committee may provide; in each case and if required by the Committee, the Award Agreement shall be executed or otherwise electronically...

  • Page 196
    ... or affect any right that the Company or any Subsidiary may have to terminate the employment or service of (or to demote or to exclude from future Awards under the Plan) any such Employee, Director or Consultant at any time for any reason ''at will.'' Except as specifically provided by the Committee...

  • Page 197
    ... Board or board of directors of the applicable Subsidiary. 13.8. Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally...

  • Page 198
    ...applicable to Awards to Employees or Consultants providing services in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy... limitation, the SEC), the Company will not under any circumstance be required to...

  • Page 199
    ... OFFICERS OF SKYWEST AIRLINES, INC. Russell A. Childs President and Chief Operating Officer Previously Vice President - Controller and Sr. Director - Controller James K. Boyd Vice President - Customer Service Previously Director of Stations and Station Manager Bill Dykes Vice President - Maintenance...

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