SkyWest Airlines 2015 Annual Report Download - page 13

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9
American Agreements
Pass through costs
Number of or costs paid
aircraft under Term / Termination directly by major
Agreement agreements Dates partner
SkyWest Airlines • CRJ 200 - 12 • Scheduled to expire in 2016 • Fuel
American Agreement • Upon expiration, aircraft may be renewed or extended • Landing fees
(fixed-fee agreement) • Station Rents, Deice
• Insurance
SkyWest Airlines • CRJ 200 - 5 • Terminable with 120 days' notice • None
American Pro-rate
Agreement (revenue-
sharing agreement)
ExpressJet American • CRJ 200 - 11 • Scheduled to expire in 2017 • Fuel
Agreement (fixed-fee • ERJ 145 - 16 • Upon expiration, aircraft may be renewed or extended • Landing fees
agreement) • Station Rents, Deice
• Insurance
ExpressJet American Pro-rate • CRJ 200 - 3 • Terminable with 120 days' notice • None
Agreement (revenue-sharing agreement)
As of December 31, 2015, we anticipate placing an additional 25 E175 aircraft with United, ten additional E175
aircraft with Alaska and 19 E175 aircraft with Delta. The delivery dates for the new aircraft are expected to take place
from January 2016 to June 2017.
SkyWest Airlines and ExpressJet Delta Connection Agreements
SkyWest Airlines and ExpressJet are each parties to a Delta Connection Agreement, pursuant to which SkyWest
Airlines and ExpressJet provide contract flight services for Delta. The SkyWest Airlines and ExpressJet Delta
Connection Agreements contain multi-year rate reset provisions that became operative in 2010 and reset each fifth year
thereafter. Delta additionally has the right to require that certain contractual rates under those agreements shall not
exceed the second lowest of all carriers within the Delta Connection program. SkyWest Airlines and ExpressJet have
agreed with Delta on contractual rates that are effective through December 31, 2015. A rate reset period became
effective on January 1, 2016.
The SkyWest Airlines Delta Connection Agreement is scheduled to terminate on December 31, 2022 for the
CRJ aircraft. The SkyWest Airlines Delta Connection Agreement is subject to early termination in various
circumstances, including:
• if SkyWest Airlines or Delta commits a material breach of the SkyWest Airlines Delta Connection
Agreement, subject to 30-day notice and cure rights;
• if SkyWest Airlines fails to conduct all flight operations and maintain all aircraft under the SkyWest
Airlines Delta Connection Agreement in compliance in all material respects with applicable government
regulations;
• if SkyWest Airlines fails to satisfy certain performance and safety requirements;
• if, under certain circumstances, Delta has a right to terminate the ExpressJet Delta Connection Agreement;
• if the other party files for bankruptcy, reorganization or similar action (subject to limitations imposed by
the U.S. Bankruptcy Code) or if either party makes an assignment for the benefit of creditors; or
• if SkyWest Airlines fails to maintain competitive base rate costs (provided, however, that SkyWest Airlines
has the right to adjust its rates prior to any such termination).
In October 2015, SkyWest Airlines reached an agreement with Delta to place 19 new E175 aircraft into service
pursuant to the SkyWest Airlines Delta Connection Agreement. Under the agreement, we anticipate that delivery of the