SkyWest Airlines 2015 Annual Report Download - page 49

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EMB120 aircraft was triggered by our decision in November 2014 to remove the EMB120 aircraft from service by the
end of the second quarter of 2015. The special item additionally consisted of impairment charges to write-down certain
ERJ145 long-lived assets, including spare engines and capitalized aircraft improvements, to their estimated fair value
and accrued obligations on leased aircraft and related costs of $12.9 million. The special item associated with the
ERJ145 aircraft was triggered by our execution of an amended and restated contract with United in November 2014. The
amended and restated contract provides for accelerated lease termination dates of certain ERJ145 aircraft and advances
the termination date of the ExpressJet United ERJ Agreement to operate the ERJ145s from the year 2020 to 2017. The
special item also includes the write-down of assets associated with the disposition of our paint facility located in Saltillo,
Mexico of $4.8 million. We sold the Saltillo paint facility during the year ended December 31, 2014.
Station rentals and landing fees. Station rentals and landing fees expense decreased $63.7 million, or 55.5%,
during the year ended December 31, 2014, compared to the year ended December 31, 2013. The decrease in station
rentals and landing fees expense was primarily due to our major partners paying for an increased amount of station rents
and landing fees directly to the applicable airports related to our contract flying arrangements.
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For the year ended December 31,
2014 2013 $ Change % Change
Station rents and landing fees ............................... $ 51,024 $ 114,688 $ (63,664) (55.5)%
Less: Landing fee and station rent reimbursements from airline
partners ................................................. 23,800 95,175 (71,375) (75.0)%
Station rents and landing fees less station rent and landing fee
reimbursements from airline partners ......................... $ 27,224 $ 19,513 $ 7,711 39.5%
Other operating expenses. Other operating expenses, primarily consisting of property taxes, hull and liability
insurance, crew simulator training and crew hotel costs, increased $24.5 million, or 10.2%, during the year ended
December 31, 2014, compared to the year ended December 31, 2013. The increase in other operating expenses was
primarily due to additional crew lodging expenses attributable to the requirements of the Improvement Act. The increase
was also attributable to additional other operating expense items associated with incremental pro-rate operations in 2014.
Total airline expenses. Total airline expenses (consisting of total operating and interest expenses) increased
$65.3 million, or 2.0%, during the year ended December 31, 2014, compared to the year ended December 31, 2013.
Under our contract flying arrangements, we are reimbursed by our major airline partners for our actual fuel costs and
engine overhaul costs under our Directly-Reimbursed Engine Contracts. We record such reimbursements as revenue. The
following table summarizes the amount of fuel and engine overhaul expenses which are included in our total airline
expenses for the periods indicated (dollar amounts in thousands).
For the year ended December 31,
2014 2013 $ Change % Change
Total airline expense ........................ $ 3,278,594 $ 3,213,272 $ 65,322 2.0%
Less: directly-reimbursed fuel from airline
partners ................................. 76,675 91,925 (15,250) (16.6)%
Less: directly-reimbursed landing fee and station
rent from airline partners ................... 23,800 95,175 (71,375) (75.0)%
Less: directly-reimbursed engine maintenance
from airline partners ....................... 130,505 123,024 7,481 6.1%
Total airline expense excluding directly-
reimbursed fuel, landing fee, station rent and
engine maintenance ....................... $ 3,047,614 $ 2,903,148 $ 144,466 5.0%
Excluding directly-reimbursed fuel, station rent, landing fees and engine overhaul costs, our total airline
expenses increased $144.5 million, or 5.0%, during the year ended December 31, 2014, compared to the year ended
December 31, 2013. The increase in total airline expenses, excluding directly-reimbursed fuel, station rent, landing fees
and engine overhaul costs,, was primarily due to the special items recorded during 2014 of $74.8 million, and an increase
in salaries, wages and benefits and other operating expenses of $71.3 million, offset by a reduction in station rents and
landing fees of $63.7 million, as further explained above.