SkyWest Airlines 2013 Annual Report Download - page 56

Other aircraft maintenance, materials and repairs, 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 expense excluding engine overhaul costs for the year ended December, 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.
We recognize engine maintenance expense on our CRJ200 engines on an as-incurred basis as
maintenance expense. Under our Fixed-Rate Engine Contracts, we recognize revenue at fixed hourly
rates for mature engine maintenance on regional jet engines. Accordingly, the timing of engine
maintenance events associated with aircraft under the Fixed-Rate Engine Contracts can have a
significant impact on our financial results. During the year ended December 31, 2013, our CRJ200
engine expense under our Fixed-Rate Engine Contracts decreased $15.8 million compared to the year
ended December 31, 2012. The decrease in CRJ200 engine overhauls reimbursed under our Fixed-Rate
Engine Contracts was principally due to fewer scheduled engine maintenance events.
Under our Directly-Reimbursed Engine Contracts, we are reimbursed for engine overhaul costs by
our applicable major partner at the time the maintenance event occurs. Such reimbursements are
reflected as passenger revenue in the same amount and during the same period we recognized the
expense in our consolidated statements of comprehensive income.
Aircraft rentals. Aircraft rentals decreased $8.3 million, or 2.5%, during the year ended
December 31, 2013, compared to the year ended December 31, 2012. The decrease was primarily due
to aircraft lease renewals at lower rates during 2013.
Depreciation and amortization. Depreciation and amortization expense decreased $7.0 million, or
2.8%, during the year ended December 31, 2013, compared to the year ended December 31, 2012. The
decrease in depreciation and amortization expense was primarily due to certain rotable assets being
fully depreciated during the year ended 2013 and a lower volume of capital expenditures.
Station rentals and landing fees. Station rentals and landing fees expense decreased $55.2 million,
or 32.5%, during the year ended December 31, 2013, compared to the year ended December 31, 2012.
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, rather than requiring
us to make those payments and obtain reimbursement from our major partners.
Ground handling service. Ground handling service expense increased $4.0 million, or 3.2%, during
the year ended December 31, 2013, compared to the year ended December 31, 2012. The increase in
ground handling service expense was primarily due to SkyWest Airlines outsourcing the customer
service and ramp functions of several prorate stations.
Other expenses. Other expenses, primarily consisting of property taxes, hull and liability insurance,
crew simulator training and crew hotel costs, increased $9.4 million, or 4.1%, during the year ended
December 31, 2013, compared to the year ended December 31, 2012. The increase in other expenses
during the year ended December 31, 2013 was primarily due to the increase in property tax expense
due to refunds received during the year ended December 31, 2012 (primarily a pass-through cost under
our flying contracts) and an increase in legal expense due to the settlement of Delta’s claims related to
travel by certain employees of SkyWest Airlines and ExpressJet.
Total airline expenses. Total airline expenses (consisting of total operating and interest expenses)
decreased $232.5 million, or 6.7%, during the year ended December 31, 2013, compared to the year
ended December 31, 2012. We are reimbursed for our actual fuel costs by our major partners under
our contract flying arrangements. We record the amount of those reimbursements as revenue. Under
our Directly-Reimbursed Engine Contracts, we are reimbursed for our engine overhaul expense, which
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