SkyWest Airlines 2014 Annual Report Download - page 3

To our Shareholders:
Thank you for your investment and interest in SkyWest, Inc. For the 2014 year, after excluding the
impact of special charges, SkyWest generated net income of approximately $22 million, or
approximately $0.42 per diluted share. Under GAAP, SkyWest reported a net loss of $24 million for the
2014 year, or $(0.47) per diluted share for 2014. The 2014 financial results were negatively impacted by
severe weather in the first half of 2014 and by special charges recorded in the fourth quarter resulting
from changes in our fleet plan. Several of the accomplishments highlighted below had a positive impact
on SkyWest’s financial results, primarily in the second half of 2014. We anticipate many of these
changes will continue to have a positive impact in 2015 and thereafter. After excluding the impact of
the special charges, we believe the operating income generated during the second half of 2014 is a
good indicator that SkyWest has made meaningful progress toward improving its long-term profitability.
While there are clear accomplishments, we’ve also noted some key challenges that we anticipate for
2015 and our strategies for addressing those challenges. Our primary focus is providing a safe, reliable
operation that translates into value for our customers, our employees and our shareholders.
Accomplishments
Through the end of 2014, SkyWest executed on specific, strategic goals that we expect will
contribute to improved results going forward:
• In June, SkyWest named Russell ‘‘Chip’’ Childs President of SkyWest, Inc. and Wade Steel
Executive Vice President of the holding company. Subsequently, Alexandria Marren was named
ExpressJet Airlines COO and Michael Thompson was promoted to SkyWest Airlines COO.
Various changes in senior leadership at each operating entity, including those in Flight Ops and
Maintenance, were also implemented in the latter half of 2014.
• SkyWest successfully amended and reduced the contract length for 270 ExpressJet aircraft that
have generated losses in recent years. We anticipate the reduced contract term will improve our
long-term profitability and initiate additional capacity improvements.
• ExpressJet Airlines executed significant operational improvements, moving from the lowest
performance quartile in the first half of 2014 to the top performance quartile among the
competition in Q3 and Q4 2014.
• SkyWest settled a long-standing legal dispute with a major code-share partner.
• SkyWest Airlines became certified to operate the Embraer E175 76-seat aircraft, initiating
service in 2014. We expect to complete the remaining E175 deliveries for the United Express
40-aircraft contract by mid-2015.
• SkyWest’s ability to finance new regional aircraft at attractive rates is a key competitive
advantage in relationships with major code-share partners and was a factor in securing new
E175 aircraft.
• SkyWest secured a contract to begin operating seven E175 aircraft for Alaska Airlines in 2015.
• SkyWest secured new flying contracts for 31 used aircraft provided by our major code-share
partners.
• SkyWest executed a simplified fleet strategy by initiating the removal of 43 EMB 120 aircraft,
moving SkyWest Airlines to an all-jet operator in 2015.
• SkyWest, Inc. received Air Transport World’s prestigious Regional Airline of the Year Award for
2014, marking the third time the airline has received that distinction.
These accomplishments demonstrate execution on strategic goals in 2014. Moving forward, we
remain focused on providing long-term value through continued progress in operating reliability and
improved financial results while addressing and managing anticipated risks.