SkyWest Airlines 2013 Annual Report Download - page 62

Delaware in November 2010. We did not incur comparable expense during the year ended
December 31, 2012.
Other operating expenses. Other expenses, primarily consisting of property taxes, hull and liability
insurance, crew simulator training and crew hotel costs, decreased $10.4 million, or 4.3%, during the
year ended December 31, 2012, compared to the year ended December 31, 2011. The decrease in other
operating expenses was primarily due to the reduction in property tax expense resulting from refunds
received during the year ended December 31, 2012, a reduction in simulator training expense and a
reduction in legal and consulting expenses.
Total airline expenses. Total airline expenses (consisting of total operating and interest expenses)
decreased $248.4 million, or 6.7%, during the year ended December 31, 2012, compared to the year
ended December 31, 2011. 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
we record as revenue. The following table summarizes the amount of fuel and engine overhaul
expenses which are included in our total airline expenses for the periods indicated (dollar amounts in
thousands).
For the year ended December 31,
2012 2011 $ Change % Change
Total airline expense ......................... $3,445,765 $3,694,201 $(248,436) (6.7)%
Less: Fuel expense .......................... 426,387 592,871 (166,484) (28.1)%
Less: Engine overhauls Directly-Reimbursed Engine
Contracts ............................... 159,220 173,072 (13,852) (8.0)%
Less: CRJ200 engine overhauls reimbursed at fixed
hourly rate .............................. 55,183 77,582 (22,399) (28.9)%
Total airline expense excluding fuel and engine
overhauls and CRJ200 engine overhauls reimbursed
at fixed hourly rate ........................ $2,804,975 $2,850,676 $ (45,701) (1.6)%
Excluding fuel and engine overhaul costs and CRJ200 engine overhauls reimbursed at fixed hourly
rates, our total airline expenses decreased $45.7 million, or 1.6%, during the year ended December 31,
2012, compared to the year ended December 31, 2011. The percentage decrease in total airline
expenses, excluding fuel and engine overhauls, was different than the percentage increase in passenger
revenues, excluding fuel and engine overhaul reimbursements from major partners, due primarily to the
factors described above.
Summary of other income (expense) items:
Other expenses, net. Other expenses, net decreased $2.8 million during the year ended
December 31, 2012, compared to the year ended December 31, 2011. Other expenses primarily consist
of earnings and losses from our investments in TRIP and Air Mekong, which we account for under the
equity method of accounting. The decrease in other expenses was due primarily to our recognition of
our portion of the losses incurred by TRIP and Air Mekong during the applicable periods.
Adjustment to Purchase Accounting Gain. In connection with the preparation of ExpressJet’s 2010
tax return, an adjustment to the ExpressJet acquisition accounting was identified that resulted in an
increase to the acquired deferred tax liabilities of $5.7 million, which was reflected on the consolidated
statement of comprehensive income (loss) under the caption ‘‘Purchase accounting gain (adjustment)’’
for the year ended December 31, 2011. We did not incur comparable expenses during the year ended
December 31, 2012.
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