SkyWest Airlines 2014 Annual Report Download - page 33

arrangements with our major partners, we are directly reimbursed for interest expense on debt-financed
aircraft as a pass-through cost. The reimbursement of the interest expense is recorded as passenger
revenue in our consolidated statements of income. Thus, a decline in interest expense associated with
contract aircraft would likely be offset by a reduced aircraft ownership cost passed through to our
major partners. Interest expense decreased $2.7 million, or 3.9%, during the year ended December 31,
2014, compared to the year ended December 31, 2013. The decrease in interest expense was
substantially due to a decrease in interest rates and the majority of this reduction was passed through
to our major partners. Interest income decreased $0.4 million, or 11.0% during the year ended
December 31, 2014, compared to the year ended December 31, 2013. Interest income is not a
component of our contractual arrangements with our major partners. If interest rates were to decline,
our major partners would receive the principal benefit of the interest expense decline, since interest
expense is generally passed through to our major partners; however, if declining interest rates reduce
our interest income, our financial results will be negatively affected.
If we have a failure in our technology or if we have security breaches of our information technology
infrastructure, our business and financial condition may be adversely affected.
The performance and reliability of our technology are critical to our ability to compete effectively.
Any internal technological error or failure or large-scale external interruption in the technological
infrastructure we depend on, such as power, telecommunications or the internet, may disrupt our
internal network. Any individual, sustained or repeated failure of technology could impact our ability to
conduct our business and result in increased costs. Our technological systems and related data may be
vulnerable to a variety of sources of interruption due to events beyond our control, including natural
disasters, terrorist attacks, telecommunications failures, computer viruses, hackers and other security
issues.
In addition, as a part of our ordinary business operations, we collect and store sensitive data,
including personal information of our passengers and employees and information of our business
partners. Our information systems are subject to an increasing threat of continually evolving
cybersecurity risks. Unauthorized parties may attempt to gain access to our systems or information
through fraud or other means of deception. The methods used to obtain unauthorized access, disable
or degrade service or sabotage systems are constantly evolving, and may be difficult to anticipate or to
detect for long periods of time. We may not be able to prevent all data security breaches or misuse of
data. The compromise of our technology systems resulting in the loss, disclosure, misappropriation of,
or access to, customers’, employees’ or business partners’ information could result in legal claims or
proceedings, liability or regulatory penalties under laws protecting the privacy of personal information,
disruption to our operations and damage to our reputation, any or all of which could adversely affect
our business and financial condition.
Our business could be harmed if we lose the services of our key personnel.
Our business depends upon the efforts of our chief executive officer, Jerry C. Atkin, and our other
key management and operating personnel. We may have difficulty replacing management or other key
personnel who cease to be employed by us and, therefore, the loss of the services of any of these
individuals could harm our business. We do not maintain key-person insurance on any of our executive
officers.
Risks Related to the Airline Industry
We may be materially affected by uncertainties in the airline industry.
The airline industry has experienced tremendous challenges in recent years and will likely remain
volatile for the foreseeable future. Among other factors, the financial challenges faced by major and
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