SkyWest Airlines 2015 Annual Report Download - page 43

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Ground handling and other. Total ground handling and other revenues decreased $3.9 million, or 5.6%, during
the year ended December 31, 2015, compared to the year ended December 31, 2014. Ground handling and other revenue
primarily consists of ground handling services we provide to third-party airlines and government subsidies we receive for
operating certain routes under our pro-rate agreements. Revenues associated with ground handling services we provide
for our aircraft are recorded as passenger revenues. The decrease in ground handling and other revenue was primarily
due to a reduction in the number of locations for which SkyWest Airlines provided ground handling services to third
party airlines during 2015, which was partially offset by an increase volume of departures during the 2015 year on routes
subject to government subsidies.
Individual expense components attributable to our operations are expressed in the following table on the basis
of cents per ASM (dollar amounts in thousands).
For the year ended December 31,
2015 2014 $ Change % Change 2015 Cents 2014 Cents
Amount Amount Amount Percent Per ASM Per ASM
Salaries, wages and benefits ......................... $ 1,203,312 $ 1,258,155 $ (54,843) (4.4)% 3.4 3.3
Aircraft maintenance, materials and repairs ............. 604,863 682,773 (77,910) (11.4)% 1.7 1.8
Aircraft rentals .................................. 273,696 305,334 (31,638) (10.4)% 0.8 0.8
Depreciation and amortization ....................... 264,507 259,642 4,865 1.9 % 0.7 0.7
Aircraft fuel .................................... 118,124 193,247 (75,123) (38.9)% 0.3 0.5
Ground handling services .......................... 82,694 123,917 (41,223) (33.3)% 0.2 0.3
Special items .................................... — 74,777 (74,777) NM — 0.2
Station rentals and landing fees ...................... 54,167 51,024 3,143 6.2 % 0.2 0.1
Other ......................................... 259,685 263,730 (4,045) (1.5)% 0.7 0.7
Total operating expenses ........................... $ 2,861,048 $ 3,212,599 $ (351,551) (10.9)% 8.0 8.4
Interest expense .................................. 75,850 65,995 9,855 14.9 % 0.2 0.2
Total airline expenses ............................. $ 2,936,898 $ 3,278,594 $ (341,696) (10.4)% 8.2 8.6
Salaries, Wages and Employee Benefits. Salaries, wages and employee benefits decreased $54.8 million, or
4.4%, during the year ended December 31, 2015, compared to the year ended December 31, 2014. The decrease in
salaries, wages and employee benefits was primarily due to the decrease in our fleet size and related decrease in the
number of departures and block hours compared to the year ended December 31, 2014, which was partially offset by
additional training costs for the E175 deliveries and an increase in employee benefit costs.
Aircraft maintenance, materials and repairs. Aircraft maintenance expense decreased $77.9 million, or 11.4%,
during the year ended December 31, 2015, compared to the year ended December 31 2014. The following table
summarizes the effect of directly-reimbursed engine maintenance costs under our fixed-fee flying arrangements included
in our aircraft maintenance expense for the periods indicated (dollar amounts in thousands).
For the year ended December 31,
2015 2014 $ Change % Change
Aircraft maintenance, materials and repairs ................... $ 604,863 $ 682,773 $ (77,910) (11.4)%
Less: directly-reimbursed engine maintenance from airline partners 94,142 130,505 (36,363) (27.9)%
Other aircraft maintenance, materials and repairs ............... $ 510,721 $ 552,268 $ (41,547) (7.5)%
Other aircraft maintenance, materials and repairs, excluding our directly-reimbursed engine overhaul costs,
decreased $41.5 million, or 7.5%, during the year ended December 31, 2015, compared to the year ended December 31,
2014. The decrease in aircraft maintenance expense (excluding directly-reimbursed engine overhaul costs) was primarily
due to a reduction in direct maintenance costs resulting from a reduced fleet size, partially offset by an increase in
power-by-the-hour maintenance costs associated with the additional E175 aircraft added to our fleet since 2014.
The decrease in our engine overhaul costs incurred under our Directly-Reimbursed Engine Contracts, was
primarily due to a reduced number of engine overhaul events in 2015 compared to 2014.
Aircraft rentals. Aircraft rentals decreased $31.6 million, or 10.4%, during the year ended December 31, 2015,
compared to the year ended December 31, 2014. The decrease was primarily due to a reduction in the number of leased
aircraft in our fleet and lower aircraft lease renewal rates since 2014.