SkyWest Airlines 2014 Annual Report Download - page 56

SkyWest Airlines Segment Profit. SkyWest Airlines segment profit decreased $61.9 million, or
44.4%, during the year ended December 31, 2014, compared to the year ended December 31, 2013.
The decrease in the SkyWest Airlines’ segment profit was due primarily to the following factors:
• SkyWest Airlines operating revenue increased by $61.1 million or 3.3%, for the 2014 year
compared to the 2013 year. The increase was primarily due to the additional E175 operations we
began in 2014, increased government subsidies applicable to certain routes we operated and
improvements in the provisions of certain of our flying contracts since 2013. The increase in
operating revenue was partially offset by additional expenses described below.
• SkyWest Airlines airline expense included special items of $57.1 million for impairment charges
to write-down owned EMB120 aircraft, including capitalized engine overhaul costs, and related
long-lived assets to their estimated fair value and accrued obligations on leased aircraft and
related costs.
• SkyWest Airlines airline expense included an increase in salaries, wages and employee benefits
of $41.1 million, or 7.2%, for the 2014 year compared to the 2013 year, primarily due to direct
labor costs associated with our increased pro-rate and E175 operations during the year, and
increased labor related costs attributable to the implementation of the Improvement Act.
• SkyWest Airlines’ airline expense included an increase in other direct operating costs of
$24.8 million, or 2.2%, during the 2014 year, compared to the 2013 year, primarily due to other
operating expenses associated with the additional pro-rate and E175 operations and additional
crew hotel expenses due to crew scheduling inefficiencies resulting from the Improvement Act.
ExpressJet Segment Loss. ExpressJet segment loss increased $68.9 million, or 140.7%, during the
year ended December 31, 2014, compared to the year ended December 31, 2013. The increase in
ExpressJet segment loss was due primarily to the following factors:
• ExpressJet’s operating revenue decreased by $119.5 million, or 8.1%, for the 2014 year
compared to the 2013 year. The decrease in operating revenue was primarily due to a reduction
in the ExpressJet fleet size and severe weather that negatively impacted the operations in the
first half of 2014. These two factors resulted in a decrease in block hour production of
107,220 hours at ExpressJet, or 8.1%, for 2014 compared to 2013.
• ExpressJet airlines expenses included special items of $12.9 million for impairment charges to
write-down certain ERJ145 long-lived assets, including spare engines and capitalized aircraft
improvements, to their estimated fair value and accrued obligations on leased aircraft and
related costs. ExpressJet also had $4.8 million in special charges associated with the write-down
of its paint facility located in Saltillo, Mexico that was sold in 2014.
• ExpressJet’s airline expense decreased $50.5 million, or 3.3%, for the 2014 year compared to the
2013 year. The decrease was not proportionate to the decrease in operating revenue for the
comparable periods due to the inefficiencies and costs associated with the weather cancellations
experienced in the first half of 2014 and additional expenses, including pilot training, associated
with the implementation of the Improvement Act in 2014 compared to 2013.
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