Business description of SKYWEST-INC from last 10-k form


 PART I

        Unless otherwise indicated in this Report, "SkyWest," "we," "us," "our" and similar terms refer to SkyWest, Inc. and "SkyWest Airlines" refers to our wholly-owned subsidiary, SkyWest Airlines, Inc.

        Effective December 31, 2011, our subsidiary, ExpressJet Airlines, Inc. was merged into our subsidiary, Atlantic Southeast Airlines, Inc., with the surviving corporation named ExpressJet Airlines, Inc. (the "ExpressJet Combination"). In this Report, "Atlantic Southeast" refers to Atlantic Southeast Airlines, Inc. for periods prior to the ExpressJet Combination, "ExpressJet Delaware" refers to ExpressJet Airlines, Inc., a Delaware corporation, for periods prior to the ExpressJet Combination, and "ExpressJet" refers to ExpressJet Airlines, Inc., the Utah corporation resulting from the combination of Atlantic Southeast and ExpressJet Delaware, for periods subsequent to the consummation of the ExpressJet Combination.

Cautionary Statement Concerning Forward-Looking Statements

        Certain of the statements contained in this Report should be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as "may," "will," "expect," "intend," "anticipate," "believe," "estimate," "plan," "project," "could," "should," "hope," "likely," and "continue" and similar terms used in connection with statements regarding our outlook, the revenue environment, our contractual relationships, and our anticipated financial performance. These statements include, but are not limited to, statements about our future growth and development plans, including our future financial and operating results, our plans for SkyWest Airlines and ExpressJet, the anticipated benefits of our acquisition of ExpressJet Delaware and the ExpressJet Combination, our objectives, expectations and intentions and other statements that are not historical facts. Readers should keep in mind that all forward-looking statements are based on our existing beliefs about present and future events outside of our control and on assumptions that may prove to be incorrect. If one or more risks identified in this Report materializes, or any other underlying assumption proves incorrect, our actual results will vary, and may vary materially from those anticipated, estimated, projected, or intended. These risks and uncertainties include, but are not limited to, those described below in Item 1A., Risk Factors, and the following:

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    our ability to achieve potential benefits from the ExpressJet Combination;

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    relations with our employees, including organized labor groups at ExpressJet and the impact of labor negotiations and agreements with our unionized and non-unionized employees;

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    our labor and maintenance cost increasing at a faster rate than increases in our contractual rates;

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    changes in our code-share relationships;

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    competitive practices in the airline industry, including significant fare-restructuring activities, consolidation of major carriers (which reduces the number of potential code-share partners), capacity reductions and other restructurings by major and regional carriers;

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    global and national economic conditions;

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    the impact of increasing fuel prices on the airline industry;

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    ongoing litigation with Delta Air Lines, Inc. ("Delta");

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    our ability to attract and retain code-share partners;

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    the cyclical nature of the airline industry;

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    security-related and insurance costs;
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    weather conditions;

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    government legislation and regulation;

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    reduced utilization levels of our aircraft under our code-share agreements;

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    unionization efforts among SkyWest Airlines' employees; and

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    other risks and uncertainties listed from time to time in our reports filed with the SEC.

        There may be other factors that may affect matters discussed in forward-looking statements set forth in this Report, which factors may also cause actual results to differ materially from those discussed. We assume no obligation to publicly update any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these statements other than as required by applicable law.

ITEM 1.    BUSINESS

General

        Through SkyWest Airlines and ExpressJet, we offer scheduled passenger service with approximately 4,000 daily departures to destinations in the United States, Canada, Mexico and the Caribbean. Substantially all of our flights are operated as Delta Connection, United Express, Continental Express, US Airways Express or Alaska under code-share arrangements with Delta, United Air Lines, Inc. ("United"), Continental Airlines, Inc. ("Continental"), US Airways Group, Inc. ("US Airways") and Alaska Airlines ("Alaska"), respectively, with significant presence in Delta's, United's and Continental's key domestic hubs and focus cities. SkyWest Airlines and ExpressJet generally provide regional flying to our partners under long-term, fixed-fee code-share agreements. Among other features of our fixed-fee agreements, our partners generally reimburse us for specified direct operating expenses (including fuel expense, which is passed through to our partners), and pay us a fee for operating the aircraft.

        On December 31, 2011, Atlantic Southeast and ExpressJet Delaware completed the ExpressJet Combination. Since November 17, 2011, the operations formerly conducted by Atlantic Southeast and ExpressJet Delaware have been conducted under a single operating certificate issued by the U.S. Federal Aviation Administration (the "FAA"). We currently anticipate that we will complete the full integration of the operations of Atlantic Southeast and ExpressJet Delaware into ExpressJet during the next few years.

        SkyWest Airlines and ExpressJet have developed industry-leading reputations for providing quality, low-cost regional airline service during their long operating histories. SkyWest Airlines has been flying since 1972 and ExpressJet (and its predecessors) since 1979. As of December 31, 2011, our consolidated fleet consisted of a total of 732 aircraft, of which 443 were assigned to United and Continental, 268 were assigned to Delta, eight were in preparation for new code-share assignments, five were assigned to Alaska, four were subleased to affiliated entities, two were assigned to US Airways and two were subleased to unaffiliated entities. We currently operate two types of regional jet aircraft: the Bombardier Aerospace ("Bombardier") regional jet, which comes in three different configurations (the 50-seat Bombardier CRJ200 Regional Jet (the "CRJ200"), the 70-seat Bombardier CRJ700 Regional Jet (the "CRJ700") and the 70-90-seat Bombardier CRJ900 Regional Jet (the "CRJ900")) and the 50-seat Embraer ERJ-145 regional jet ("ERJ145"). We also operate the 30-seat Embraer Brasilia EMB-120 turboprop (the "Brasilia turboprop").

        We were incorporated in Utah in 1972. Our principal executive offices are located at 444 South River Road, St. George, Utah 84790, and our primary telephone number is (435) 634-3000. We maintain an Internet web site at www.skywest.com. Our website provides a link to the web site of the SEC, through which our annual, quarterly and current reports, as well as amendments to those reports,

are available. In addition, we provide electronic or paper copies of our filings free of charge upon request.

Our Operating Platforms

    SkyWest Airlines

        SkyWest Airlines provides regional jet and turboprop service primarily located in the midwestern and western United States. SkyWest Airlines offered approximately 1,650 daily scheduled departures as of December 31, 2011, of which approximately 1,110 were United Express flights, 500 were Delta Connection flights, 30 were Alaksa-coded flights and 10 were US Airways Express flights. SkyWest Airlines' operations are conducted from hubs located in Chicago (O'Hare), Denver, Los Angeles, Houston, Portland, Seattle, Phoenix, San Francisco and Salt Lake City. SkyWest Airlines' fleet as of December 31, 2011 consisted of 21 CRJ900s, all of which were flown for Delta; 96 CRJ700s, of which 70 were flown for United, 21 were flown for Delta and five were flown for Alaska; 153 CRJ200s, of which 82 were flown for United, 61 were flown for Delta, eight were in preparation for service under a code-share agreement with US Airways and two were flown for US Airways; and 45 Brasilia turboprops, of which 35 were flown for United and ten were flown for Delta.

        SkyWest Airlines currently conducts its Delta Connection operations pursuant to the terms of an Amended and Restated Delta Connection Agreement, which obligates Delta to compensate SkyWest Airlines for its direct costs associated with operating Delta Connection flights, plus a payment based on block hours flown (the "SkyWest Airlines Delta Connection Agreement"). SkyWest Airlines' United code-share operations are conducted under a United Express Agreement, pursuant to which SkyWest Airlines is paid primarily on a fee-per-completed block hour and departure basis, plus a margin based on performance incentives (the "SkyWest Airlines United Express Agreement"). During 2011, SkyWest Airlines entered into code-share agreements with Alaska and US Airways, pursuant to which SkyWest Airlines is paid primarily on a fee-per-completed block hour and departure basis, plus a fixed margin per aircraft each month.

    ExpressJet

        ExpressJet provides regional jet service principally in the United States, primarily from hubs located in Atlanta, Cleveland, Cincinnati, Chicago (O'Hare), Denver, Houston, Newark and Washington Dulles. The combined operations of Atlantic Southeast and ExpressJet Delaware offered more than 2,100 daily scheduled departures as of December 31, 2011, of which approximately 650 were Delta Connection flights and 1,450 were Continental Express or United Express flights. As of December 31, 2011, the combined fleet of Atlantic Southeast and ExpressJet Delaware consisted of ten CRJ900s (all of which were flown for Delta), 46 CRJ700s (all of which were flown for Delta), 113 CRJ200s (99 of which were flown for Delta and 14 of which were flown for United) and 242 ERJ145s all of which were flown for United or Continental.