SkyWest Airlines 2014 Annual Report Download - page 35

We are subject to significant governmental regulation.
All interstate air carriers, including SkyWest Airlines and ExpressJet, are subject to regulation by
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 operation activities; record
keeping procedures in accordance with FAA requirements; and FAA approval of flight training and
retraining programs. We cannot predict whether we will be able to comply with all present and future
laws, rules, regulations and certification requirements or that the cost of continued compliance will not
have a material adverse effect on our operations. We incur substantial costs in maintaining our current
certifications and otherwise complying with the laws, rules and regulations to which we are subject. A
decision by the FAA to ground, or require time-consuming inspections of or maintenance on, all or any
of our aircraft for any reason may have a material adverse effect on our operations. In addition to state
and federal regulation, airports and municipalities enact rules and regulations that affect our
operations. From time to time, various airports throughout the country have considered limiting the use
of smaller aircraft, such as our aircraft, at such airports. The imposition of any limits on the use of our
aircraft at any airport at which we operate could have a material adverse effect on our operations.
The occurrence of an aviation accident involving our aircraft would negatively impact our operations and
financial condition.
An accident or incident involving one of our aircraft could result in significant potential claims of
injured passengers and others, as well as repair or replacement of a damaged aircraft and its
consequential temporary or permanent loss from service. In the event of an accident, our liability
insurance may not be adequate to offset our exposure to potential claims and we may be forced to bear
substantial losses from the accident. Substantial claims resulting from an accident in excess of our
related insurance coverage would harm our operational and financial results. Moreover, any aircraft
accident or incident, even if fully insured, could cause a public perception that our operations are less
safe or reliable than other airlines.
Risks Related to Our Common Stock
We can issue additional shares without shareholder approval.
Our Restated Articles of Incorporation, as amended (the ‘‘Restated Articles’’), authorize the
issuance of up to 120,000,000 shares of common stock, all of which may be issued without any action or
approval by our shareholders. As of December 31, 2014, we had 51,186,025 shares outstanding. In
addition, as of December 31, 2014, we had equity-based incentive plans under which 4,080,423 shares
are reserved for issuance and an employee stock purchase plan under which 1,260,759 shares are
reserved for issuance, both of which may dilute the ownership interest of our shareholders. Our
Restated Articles also authorize the issuance of up to 5,000,000 shares of preferred stock. Our board of
directors has the authority to issue preferred stock with the rights and preferences, and at the price,
which it determines. Any shares of preferred stock issued would likely be senior to shares of our
common stock in various regards, including dividends, payments upon liquidation and voting. The value
of our common stock could be negatively affected by the issuance of any shares of preferred stock.
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