SkyWest Airlines 2014 Annual Report Download - page 22

The successful combination of ExpressJet Delaware and Atlantic Southeast and achievement of the
anticipated benefits of our acquisition of ExpressJet Delaware will depend significantly on the results of
our efforts to integrate the employee groups of Atlantic Southeast and ExpressJet Delaware and on
maintaining productive employee relations. During December 2013 and January 2014, the Airline Pilots
Association International (‘‘ALPA’’), which represents the Atlantic Southeast pilot and ExpressJet
Delaware pilot groups, conducted a vote of the two employee groups, seeking approval of a joint
collective bargaining agreement that ExpressJet had negotiated with ALPA representatives. The two
employee groups rejected the joint collective bargaining agreement, which resulted in the agreements
with those employee groups remaining amendable as indicated in the foregoing table. The decision of
those employee groups to reject the joint collective bargaining agreement has precluded us from
realizing some of the savings we had hoped to achieve through the ExpressJet Combination. ExpressJet
intends to resume negotiations with ALPA in an effort to negotiate an acceptable agreement.
The integration of the workforces of ExpressJet Delaware and Atlantic Southeast has been, and we
anticipate it will continue to be, challenging. Completing the integration of the workforces of the two
airlines will require the resolution of potentially difficult issues relating to representation of various
work groups and the relative seniority of the work groups at each carrier. Unexpected delays or
expenses or other challenges to integrating the workforces could impact the anticipated synergies from
the ExpressJet Combination and affect our financial performance.
As of December 31, 2014, SkyWest and SkyWest Airlines collectively employed 9,642 full-time
equivalent employees, consisting of 6,209 pilots and flight attendants, 1,743 customer service personnel,
1,497 mechanics and other maintenance personnel, and 193 administration and support personnel.
None of these employees are currently represented by a union. Collective bargaining group
organization efforts among SkyWest Airlines’ employees do, however, occur from time to time and we
anticipate that such efforts will continue in the future. If unionization efforts are successful, we may be
subjected to risks of work interruption or stoppage and/or incur additional expenses associated with
increased union representation of our employees. Neither SkyWest nor SkyWest Airlines has ever
experienced a work stoppage due to a strike or other labor dispute, and we consider SkyWest Airlines’
relationships with its employees to be good.
Government Regulation
All interstate air carriers, including SkyWest Airlines and ExpressJet, are subject to regulation by
the U.S. Department of Transportation (the ‘‘DOT’’), the FAA and other governmental agencies.
Regulations promulgated by the DOT primarily relate to economic aspects of air service. The FAA
requires operating, air worthiness and other certificates; approval of personnel who may engage in
flight, maintenance or operating activities; record-keeping procedures in accordance with FAA
requirements; and FAA approval of flight training and retraining programs. Generally, governmental
agencies enforce their regulations through, among other methods, certifications, which are necessary for
the continued operations of SkyWest Airlines and ExpressJet, and proceedings, which can result in civil
or criminal penalties or revocation of operating authority. The FAA can also issue maintenance
directives and other mandatory orders relating to, among other things, grounding of aircraft, inspection
of aircraft, installation of new safety-related items and the mandatory removal and replacement of
aircraft parts.
We believe SkyWest Airlines and ExpressJet are in compliance in all material respects with FAA
regulations and hold all operating and airworthiness certificates and licenses which are necessary to
conduct their respective operations. We incur substantial costs in maintaining current certifications and
otherwise complying with the laws, rules and regulations to which SkyWest Airlines and ExpressJet are
subject. SkyWest Airlines’ and ExpressJet’s flight operations, maintenance programs, record keeping
and training programs are conducted under FAA approved procedures. All air carriers operating in the
United States of America are required to comply with federal laws and regulations pertaining to noise
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