SkyWest Airlines 2015 Annual Report Download - page 26

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fuel. Major reductions in the availability of jet fuel or significant increases in its cost, or a continuation of high fuel
prices for a significant period of time, would have a material adverse impact on us.
Pursuant to our fixed-fee arrangements, our major partners have agreed to bear the economic risk of fuel price
fluctuations on our contracted flights. However, we bear the economic risk of fuel price fluctuations on our pro-rate
operations. As of December 31, 2015, we operated 26 CRJ200s under a pro-rate agreement with United. We also
operated 21 CRJ200s under a pro-rate agreement with Delta, and eight CRJ200s under a pro-rate agreement with
American. Our operating and financial results with respect to these pro-rate arrangements can be negatively affected by
the price of jet fuel in the event we are unable to increase our passenger fares. Additionally in the event of prolonged low
fuel prices, our competitors may lower their passenger ticket prices on routes that compete with our pro-rate markets,
which could negatively impact our passenger load factors.
The issuance of operating restrictions applicable to one of the fleet types we operate could negatively impact our
business and financial condition.
We rely on a limited number of aircraft types, and are dependent upon Bombardier and Embraer as the sole
manufacturers of our aircraft. The issuance of FAA or manufacturer directives restricting or prohibiting the use of
Bombardier or Embraer aircraft types we operate could negatively impact our business and financial results. We are also
dependent upon General Electric and Rolls Royce as the sole manufacturers of our aircraft engines. Our operations
could be materially and adversely affected by the failure or inability of Bombardier, Embraer, General Electric or Rolls
Royce to provide sufficient parts or related maintenance and support services to us on a timely manner, or the
interruption of our flight operations as a result of unscheduled or unanticipated maintenance requirements for our aircraft
or engines.
Certain flying arrangements with our major partners are terminable upon notice of 120 days or less.
Certain of our flying agreements with our major partners permit the major partner to terminate the agreement in
its discretion by giving us notice of 120 days or less. If one of our major partners elects to terminate a flying agreement
with notice of 120 days or less, our ability to use the aircraft under an alternative agreement with similar economics may
be limited, which could negatively impact our financial results. Additionally, even if we can subsequently place the
aircraft into service with a different major airline partner, of which there can be no assurance, we likely would incur
inefficiencies and incremental costs, such as changing the aircraft livery, during the transition period, which would
negatively impact our financial results.
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.