SkyWest Airlines 2013 Annual Report Download - page 48

The significant items affecting our financial performance during the year ended December 31, 2013
are outlined below:
Revenue
Under certain of our flying contracts, certain expenses are subject to direct reimbursement from
our major partners and we record such reimbursements as passenger revenue. These reimbursed
expenses include fuel, landing fees, station rents and certain engine maintenance expenses. Our fuel
expense, landing fees, station rents and directly-reimbursed engine expense decreased by $331.0 million,
during the year ended December 31, 2013, from the year ended December 31, 2012, due primarily to
(i) 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. Excluding the impact of the decrease in direct fuel, landing fees,
station rents and engine maintenance expense and associated reimbursements from our major partners,
our passenger revenues increased $102.9 million for the year ended December 31, 2013, compared to
the year ended December 31, 2012, which was primarily due to an increase of approximately
83,000 hours of block-hour production primarily resulting from an increase in the fleet from
744 aircraft at December 31, 2012 to 757 aircraft at December 31, 2013.
Operating Expenses
Aircraft maintenance, materials and repair expense, excluding engine overhaul reimbursement from
our major partners and CRJ200 engine overhauls reimbursed at a fixed hourly rate increased
$78.5 million, or 17.6%, during the year ended December 31, 2013, compared to the year ended
December 31, 2012. The increase in aircraft maintenance, materials and repair expense, excluding
engine overhaul costs, for the year ended December 31, 2013, compared to the year ended
December 31, 2012, was primarily due to an increase in 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 our Fixed-Rate Engine Contracts, the
number of engine maintenance events and related expense we incur each reporting period operating
under the Fixed-Rate Engine Contracts has a direct impact on the comparability of our operating
income for the presented reporting periods. The CRJ200 Engine Overhaul Expense we incurred under
the Fixed-Rate Engine Contracts decreased $15.8 million during 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 during the
year ended December 31, 2013.
Salaries, wages and employee benefits increased $39.6 million, or 3.4%, during the year ended
December 31, 2013, compared to the year ended December 31, 2012. The increase in salaries, wages
and employee benefits was primarily due to an increase in crew and mechanic wages attributable to
increased departures and block-hour production and due to an increase in health insurance and
workers compensation expenses.
Other Items
Other, net included in Other Income (Expense), increased $21.0 million during the year ended
December 31, 2013, compared to the year ended December 31, 2012. The increase was primarily
attributable to the termination of our aircraft sub-lease with Air Mekong, and our recognition of
$5.1 million of other income primarily due to the maintenance deposits we collected during the year
ended December 31, 2013 and sale of our shares of Air Mekong. In conjunction with the sale of the
Air Mekong shares, we recognized a gain of $5.0 million. During the year ended December 31, 2012,
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