SkyWest Airlines 2013 Annual Report Download - page 18

SkyWest Airlines American Agreement provides for incentives and penalties based upon SkyWest
Airlines’ performance, including on-time arrival performance, completion percentage rates and
customer complaints. Additionally, certain of SkyWest Airlines’ operating costs are reimbursed or paid
directly by American, including costs related to fuel.
The SkyWest Airlines American Agreement is scheduled to terminate in 2016. The SkyWest
Airlines American Agreement is subject to early termination in various circumstances including:
• if SkyWest Airlines or American fails to fulfill an obligation under the SkyWest Airlines
American Agreement for a period of 30 days after written notice to cure;
• if SkyWest Airlines’ operations fall below certain performance levels;
• subject to limitations imposed by the U.S. Bankruptcy Code, if the other party makes a general
assignment for the benefit of creditors or becomes insolvent; or
• if bankruptcy proceedings are commenced against the other party (subject to limitations imposed
by the U.S. Bankruptcy Code) and certain specified conditions are not satisfied.
ExpressJet American Agreement
On September 11, 2012, ExpressJet and American entered into the SkyWest Airlines American
Agreement. As of December 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 and other revenues associated with each flight.
In exchange for providing the designated number of flights and performing ExpressJet’s obligations
under the ExpressJet American Agreement, ExpressJet is entitled to receive from American
compensation (subject to an annual adjustment) of a fixed fee per completed block hour, a fixed fee
per completed departure, a fixed fee per passenger, and a fixed fee for overhead and aircraft costs. The
ExpressJet American Agreement provides for incentives and penalties based upon ExpressJet’s
performance, including on-time arrival performance, completion percentage rates and customer
complaints. Additionally, certain of ExpressJet’s operating costs are reimbursed or paid directly by
American, including costs related to fuel.
The ExpressJet American Agreement is scheduled to terminate in 2017. The ExpressJet American
Agreement is subject to early termination in various circumstances including:
• if ExpressJet or American fails to fulfill an obligation under the ExpressJet American
Agreement for a period of 30 days after written notice to cure;
• if ExpressJet’s operations fall below certain performance levels;
• subject to limitations imposed by the U.S. Bankruptcy Code, if the other party makes a general
assignment for the benefit of creditors or becomes insolvent; or
• if bankruptcy proceedings are commenced against the other party (subject to limitations imposed
by the U.S. Bankruptcy Code) and certain specified conditions are not satisfied.
SkyWest Airlines Alaska Capacity Purchase Agreement
On April 13, 2011, SkyWest Airlines and Alaska entered into the SkyWest Airlines Alaska Capacity
Purchase Agreement. As of December 31, 2013, SkyWest Airlines operated seven CRJ700s under the
SkyWest Airlines Alaska Capacity Purchase Agreement, flying approximately 25 Alaska flights per day
between Seattle or Portland and designated outlying destinations. Generally, under the SkyWest
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