SkyWest Airlines 2015 Annual Report Download - page 16

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• if ExpressJet’s operations fall below certain performance levels;
• subject to limitations imposed by the U.S. Bankruptcy Code, if the other party makes a general assignment
for the benefit of creditors or becomes insolvent; or
• if bankruptcy proceedings are commenced against the other party (subject to limitations imposed by the
U.S. Bankruptcy Code) and certain specified conditions are not satisfied.
SkyWest Airlines Alaska Agreement
On April 13, 2011, SkyWest Airlines and Alaska entered into the SkyWest Airlines Alaska Capacity Purchase
Agreement. The SkyWest Airlines Alaska Capacity Purchase Agreement is scheduled to terminate in 2018.
SkyWest and Alaska amended the SkyWest Airlines Alaska Capacity Purchase Agreement to establish a
12-year fixed-fee arrangement for SkyWest to operate 15 new E175 aircraft for Alaska. Under the amended agreement,
SkyWest Airlines began service in July 2015 and five E175 aircraft had been delivered as of December 31, 2015. We
anticipate deliveries of the remaining E175 aircraft will continue through mid-2017. The E175 agreement has a 12-year
term for each of the aircraft subject to the agreement. The SkyWest Airlines Alaska Capacity Purchase Agreement is
subject to early termination in various circumstances including:
• if SkyWest Airlines or Alaska fails to fulfill an obligation under the SkyWest Airlines Alaska Capacity
Purchase Agreement for a period of 30 days after written notice to cure;
• if SkyWest Airlines’ operational performance falls below certain performance levels;
• subject to limitations imposed by the U.S. Bankruptcy Code, if the other party makes a general assignment
for the benefit of creditors or becomes insolvent; or
• if bankruptcy proceedings are commenced against the other party (subject to limitations imposed by the
U.S. Bankruptcy Code) and certain specified conditions are not satisfied.
Segment Financial Information
See Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in
Item 7 of this Report, and Note 2 to our Consolidated Financial Statements for the fiscal year ended December 31, 2015,
included in Item 8 of this Report, for financial information regarding our business segments.
Training and Aircraft Maintenance
SkyWest Airlines and ExpressJet provide substantially all training to their crew members and maintenance
personnel at their respective training facilities. SkyWest Airlines and ExpressJet employees perform routine airframe and
engine maintenance along with periodic inspections of equipment at their respective maintenance facilities. SkyWest
Airlines and ExpressJet also use third-party vendors for certain airframe and engine maintenance work.
Fuel
Our fixed-fee agreements with Delta, United, American and Alaska provide that fuel costs we incur under those
agreements are to be reimbursed, thereby reducing our exposure to fuel price fluctuations. Under our pro-rate agreements
we are responsible for the costs we incur under those agreements and are exposed to fuel price fluctuations which we buy
directly from our fuel suppliers. During the year ended December 31, 2015, United and Delta purchased the majority of
the fuel for our aircraft flying under their respective fixed-fee agreements under contract directly from their fuel vendors.
Historically, we have not experienced problems with the availability of fuel, and believe we will be able to obtain fuel in
quantities sufficient to meet our existing and anticipated future requirements at competitive prices. Standard industry