SkyWest Airlines 2015 Annual Report Download - page 28

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We are subject to significant governmental regulation.
All interstate air carriers, including SkyWest Airlines and ExpressJet, are subject to regulation by the DOT, the
FAA and other governmental agencies. Regulations promulgated by the DOT primarily relate to economic aspects of air
service. The FAA requires operating, air worthiness and other certificates; approval of personnel who may engage in
flight, maintenance or operation activities; record keeping procedures in accordance with FAA requirements; and FAA
approval of flight training and retraining programs. We cannot predict whether we will be able to comply with all present
and future laws, rules, regulations and certification requirements or that the cost of continued compliance will not have a
material adverse effect on our operations. We incur substantial costs in maintaining our current certifications and
otherwise complying with the laws, rules and regulations to which we are subject. A decision by the FAA to ground, or
require time-consuming inspections of or maintenance on, all or any of our aircraft for any reason may have a material
adverse effect on our operations. In addition to state and federal regulation, airports and municipalities enact rules and
regulations that affect our operations. From time to time, various airports throughout the country have considered
limiting the use of smaller aircraft, such as our aircraft, at such airports. The imposition of any limits on the use of our
aircraft at any airport at which we operate could have a material adverse effect on our operations.
The occurrence of an aviation accident involving our aircraft would negatively impact our operations and financial
condition.
An accident or incident involving one of our aircraft could result in significant potential claims of injured
passengers and others, as well as repair or replacement of a damaged aircraft and its consequential temporary or
permanent loss from service. In the event of an accident, our liability insurance may not be adequate to offset our
exposure to potential claims and we may be forced to bear substantial losses from the accident. Substantial claims
resulting from an accident in excess of our related insurance coverage would harm our operational and financial results.
Moreover, any aircraft accident or incident, even if fully insured, could cause a public perception that our operations are
less safe or reliable than other airlines.
Risks Related to Our Common Stock
We can issue additional shares without shareholder approval.
Our Restated Articles of Incorporation, as amended (the “Restated Articles”), authorize the issuance of up to
120,000,000 shares of common stock, all of which may be issued without any action or approval by our shareholders. As
of December 31, 2015, we had 51,004,985 shares outstanding. In addition, as of December 31, 2015, we had
equity-based incentive plans under which 4,259,137 shares are reserved for issuance and an employee stock purchase
plan under which 1,006,631 shares are reserved for issuance, both of which may dilute the ownership interest of our
shareholders. Our Restated Articles also authorize the issuance of up to 5,000,000 shares of preferred stock. Our board of
directors has the authority to issue preferred stock with the rights and preferences, and at the price, which it determines.
Any shares of preferred stock issued would likely be senior to shares of our common stock in various regards, including
dividends, payments upon liquidation and voting. The value of our common stock could be negatively affected by the
issuance of any shares of preferred stock.
The amount of dividends we pay may decrease or we may not pay dividends.
Historically, we have paid dividends in varying amounts on our common stock. The future payment and amount
of cash dividends will depend upon our financial condition and results of operations, loan covenants and other factors
deemed relevant by our board of directors. There can be no assurance that we will continue our practice of paying
dividends on our common stock or that we will have the financial resources to pay such dividends.
The amount of common stock we repurchase may decrease from historical levels, or we may not repurchase any
additional shares of common stock.
Historically, we have repurchased shares of our common stock in varying amounts. Our future repurchases of
shares of common stock, if any, and the number of shares of common stock we may repurchase will depend upon our
financial condition, results of operations, loan covenants and other factors deemed relevant by our Board of Directors.