SkyWest Airlines 2013 Annual Report Download - page 5

13MAR200820562581 6MAR201214075785
partners will continue to purchase the majority of the fuel for our contract operations at this time.
After excluding the primary costs considered ‘‘pass-through’’ costs under our agreements, our total
operating revenues increased approximately $95 million, or 3.7% over 2012. The increase was generally
consistent with the increase in our block-hour production of 3.6% for the same period where total
block-hours produced for 2013 were 2,380,118.
Additionally, after excluding primary costs considered ‘‘pass-through’’ costs under our agreements,
our total operating expenses and interest expense for 2013 increased approximately $99 million, or
4.0%, over 2012. This percentage increase was generally consistent with the increase in our block-hour
production previously noted as 3.6%, as well as maintenance cost increases related to our aging fleet.
We produced net income of $59 million for the year ended December 31, 2013, compared to net
income of $51 million for 2012, an increase of approximately 15%.
As of December 31, 2013, we had approximately $670 million in cash and marketable securities,
which was a decrease of approximately $39 million compared to the amount at December 31, 2012. The
decrease was due primarily to our investing $40 million in deposits under our firm order for 40 E175
regional jet aircraft. Our long-term debt decreased by approximately $177 million as a result of normal
recurring debt payments. As a result of the strength of our balance sheet, we believe we are
well-positioned to finance our future growth and fleet replacement plans.
Aircraft Fleet
At December 31, 2013, our fleet consisted of 757 total aircraft. This compared to 744 total aircraft
as of December 31, 2012. The net increase of 13 aircraft resulted primarily from net additions of large
dual-class aircraft that are operated under our agreement with Delta. Of our total fleet of 757 aircraft
as of December 31, 2013, we operated 712 regional jets, with 511 aircraft in the 50-seat category and
201 aircraft in the 66 to 76-seat category. We anticipate reductions over the next several years of our
50-seat regional jet capacity in favor of larger 76-seat regional jet capacity, a shift intended to align us
more closely with the ‘‘scope clause’’ requirements of the collective bargaining agreements of our major
partners.
Thoughts on our Future
We are committed to providing successful resolutions for the continued challenges we are facing in
our business model and industry. Specifically, we will remain focused during 2014 on addressing our
challenges at ExpressJet Airlines as outlined and will continue to work with our major partners to
provide successful outcomes for both parties. We also believe the 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 profitability, thereby providing acceptable
returns to our shareholders.
We would like to take this opportunity to thank our nearly 20,000 employees and applaud them for
their efforts in providing quality service to our passengers and our partners. These aviation
professionals continue to make significant contributions to our success.
Sincerely,
Jerry C. Atkin Bradford R. Rich
Chairman and Chief Executive Officer President