SkyWest Airlines 2013 Annual Report Download - page 19

Airlines Alaska Capacity Purchase Agreement, Alaska 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 SkyWest Airlines’
obligations under the SkyWest Airlines Alaska Capacity Purchase Agreement, SkyWest Airlines receives
from Alaska 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. Additionally, certain of SkyWest Airlines’ operating costs are reimbursed or paid directly
by Alaska, including costs related to fuel and aircraft ownership.
The SkyWest Airlines Alaska Capacity Purchase Agreement is scheduled to terminate in 2018. The
SkyWest Airlines Alaska Capacity Purchase Agreement is subject to early termination in various
circumstances including:
• if SkyWest Airlines or Alaska fails to fulfill an obligation under the SkyWest Airlines Alaska
Capacity Purchase 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.
SkyWest Airlines US Airways Express Agreement
On November 17, 2011, SkyWest Airlines and US Airways entered into the SkyWest Airlines US
Airways Express Agreement. As of December 31, 2013, SkyWest Airlines operated 10 CRJ200s and
4 CRJ900s under the SkyWest Airlines US Airways Express Agreement, flying a total of approximately
90 US Airways Express flights per day between Phoenix and designated outlying destinations.
Additionally, as of December 31, 2013, SkyWest Airlines operated one CRJ200s under a revenue-
sharing 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 the designated number of flights and performing SkyWest Airlines’
obligations under the SkyWest Airlines US Airways Express Agreement, SkyWest Airlines receives from
US Airways 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 SkyWest Airlines US Airways Express Agreement provides for incentives and penalties based
upon SkyWest Airlines’ performance, including on-time arrival performance and completion percentage
rates. Additionally, certain of SkyWest Airlines’ operating costs are reimbursed by US Airways,
including costs related to fuel and insurance.
The SkyWest Airlines US Airways Agreement is scheduled to terminate in 2015. The SkyWest
Airlines US Airways Express Agreement is subject to early termination in various circumstances
including:
• if SkyWest Airlines or US Airways fails to fulfill an obligation under the SkyWest Airlines US
Airways Express 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 becomes
insolvent, fails to pay its debts when due, takes action leading to its cessation as a going concern,
makes an assignment of substantially all of its assets, or ceases or suspends operations; or
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