What changed in this filing

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Item 1. Business

2022-02-17 compared with 2021-02-22 · 144 added, 144 removed, 235 unchanged (55% of the section changed)

Through SkyWest Airlines, we offer scheduled passenger service to destinations in the United States, Canada, Mexico and the Caribbean.

Substantially all of our flights are operated as Delta Connection, United Express, American Eagle or Alaska Airlines flights under code-share arrangements (commercial agreements between airlines that, among other things, allow one airline to use another airline’s flight designator codes on its flights) with Delta, United, American or Alaska, respectively.

As of December 31, 2020, we offered approximately 1,770 daily departures, of which approximately 620 were Delta Connection flights, 740 were United Express flights, 260 were American Eagle flights and

150 were Alaska Airlines flights.

Substantially all of our flights are operated as United Express, Delta Connection, American Eagle or Alaska Airlines flights under code-share arrangements (commercial agreements between airlines that, among other things, allow one airline to use another airline’s flight designator codes on its flights) with United, Delta, American

or Alaska, respectively.

As of December 31, 2021, we offered approximately 2,080 daily departures, of which approximately 870 were United Express flights, 650 were Delta Connection flights, 410 were American Eagle flights and 150 were Alaska Airlines flights.

The number of flights we operated during 2021 was negatively impacted by the COVID-19 pandemic.

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The major airline partners either directly pay for or reimburse us for specified direct operating expenses, including fuel expenses.

Our operations are conducted principally at airports that support our major airline partners’ route network, including Chicago (O’Hare), Dallas, Denver, Detroit, Houston, Los Angeles, Minneapolis, Phoenix, Salt Lake City, San Francisco and Seattle.

Our operations are conducted principally at airports that support our major airline partners’ route networks, including Chicago (O’Hare), Dallas, Denver, Detroit, Houston, Los Angeles, Minneapolis, Phoenix, Salt Lake City, San Francisco and Seattle.

SkyWest has been flying since 1972.

During our long operating history, we have developed an industry-leading reputation for providing quality regional airline service.

As of December 31, 2020, we had 601 total aircraft in our fleet, including 452 aircraft in scheduled service under our code-share agreements, summarized as follows:

Aircraft in scheduled service

As of December 31, 2021, our fleet consisted of aircraft manufactured by Embraer S.A.

(“Embraer”) and Bombardier Aerospace (“Bombardier”), including the E175 regional jet aircraft (“E175”), the Canadair CRJ900 regional jet aircraft (“CRJ900”), the Canadair CRJ700 regional jet aircraft (“CRJ700”) and the Canadair CRJ200 regional jet aircraft (“CRJ200”).

As of December 31, 2021, we had 629 total aircraft in our fleet, including 509 aircraft in scheduled service or under contract under our code-share agreements, summarized as follows:

Aircraft in scheduled service or under contract

Leased to third parties

*As of December 31, 2020, these aircraft have been removed from service and are in the process of being placed under a leasing arrangement with a third party, are aircraft transitioning between code-share agreements with our major airline partners and being used as supplemental spare aircraft, are available for future code-share agreements or are in the process of being parted out.

As of December 31, 2020, our fleet scheduled for service consisted of aircraft manufactured by Bombardier Aerospace (“Bombardier”) and Embraer S.A.

(“Embraer”) summarized as follows:

Aircraft Type

Seat Configuration

*As of December 31, 2021, other aircraft included:

supplemental spare aircraft supporting our code-share agreements which may be used in future code-share or leasing arrangements, aircraft transitioning between code-share agreements with our major airline partners, or aircraft that are scheduled to be disassembled for use as spare parts.

**The Company took delivery of the 18 E175 aircraft under its contract with American as of December 31, 2021.

The 18 E175 aircraft are scheduled to begin service in 2022.

Bombardier and Embraer are the primary manufacturers of regional jets operated in the United States and offer many of the amenities of larger commercial jet aircraft, including flight attendant service, a stand-up cabin, overhead and under seat storage, lavatories and in-flight snack and beverage service.

The Bombardier CRJ900 and CRJ700 aircraft and the Embraer E175 (“E175”) aircraft we operate are configured with a first-class seating section.

The Bombardier CRJ900 and CRJ700 aircraft and the Embraer E175 aircraft we operate are configured with a first-class seating section.

The Bombardier CRJ200 aircraft we operate are configured with single-class seating.

The speed of Bombardier and Embraer regional jets is comparable to larger aircraft operated by major airlines, and they have a range of approximately 1,600 miles and 2,100 miles, respectively.

As of December 31, 2021, our fleet seat configuration by aircraft type is summarized as follows:

Aircraft Type

Seat Configuration

We were incorporated in Utah in 1972.

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We maintain an internet website at inc.skywest.com, which provides links to our annual, quarterly and current reports and any amendments to those reports filed with or furnished to the Securities and Exchange Commission (“SEC”).

We use our investor relations website as a

means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Investors should monitor our website, in addition to following our press releases, SEC filings and public conferences calls and webcasts.

Information relating to our corporate governance is also included on our investor relations website.

The information on our website does not constitute part of this Report.

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SkyWest Leasing

SkyWest Leasing is a reportable segment which includes revenue associated with our financing of new aircraft with debt under our capacity purchase agreements, currently consisting of our E175 dual-class regional jet aircraft, and the depreciation and interest expense of our E175 aircraft.

SkyWest Leasing is a reportable segment that includes revenue associated with our financing of new aircraft with debt under our capacity purchase agreements, currently consisting of our E175 aircraft, and the depreciation and interest expense of our E175 aircraft.

The SkyWest Leasing segment additionally includes the revenue and expense from leasing aircraft and engines to third parties.

The SkyWest Leasing segment’s total assets and capital expenditures include the acquired E175 aircraft, and aircraft and engines leased to third parties.

As of December 31, 2020, SkyWest Leasing leased two CRJ200 aircraft, 34 CRJ700 aircraft and five CRJ900 aircraft and regional jet aircraft engines to third parties.

As of December 31, 2021, SkyWest Leasing leased 34 CRJ700 aircraft, five CRJ900 aircraft and regional jet aircraft engines to third parties.

ExpressJet was a reportable segment prior to our sale of ExpressJet in January 2019.

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(“Horizon”) (owned by Alaska Air Group, Inc.);

GoJet Airlines, LLC, Mesa Air Group, Inc.

GoJet Airlines, LLC;

Mesa Air Group, Inc.

and Republic Airways Holdings Inc.

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Generally, the airline industry is sensitive to changes in general economic conditions.

Economic downturns, combined with competitive pressures, have contributed to a number of reorganizations, bankruptcies, liquidations and business combinations among major and regional carriers.

Economic downturns, combined with competitive pressures, have contributed to a number of reorganizations, bankruptcies, liquidations and

business combinations among major and regional carriers.

The effect of economic downturns may be somewhat mitigated by our predominantly contract-based flying arrangements.

If, however, any of our major airline partners experience a prolonged decline in the number of passengers or are negatively affected by low ticket prices or high fuel prices, they may seek rate reductions in future code-share agreements, or materially reduce scheduled flights in order to

reduce their costs.

In addition, adverse weather conditions can impact our ability to complete scheduled flights and can have a negative impact on our operations and financial condition.

Also, major airline scope limitations may restrict growth opportunities for the regional carriers.

Additionally, attrition of our pilots or other workgroups may reduce our flying schedules and have a negative impact on our operations and financial condition.

Impact of the COVID-19 Pandemic

COVID-19, which was declared a global health pandemic by the World Health Organization in March 2020, has continued to spread around the world and driven the implementation and continuation of significant, government-imposed measures to prevent or reduce its spread, including travel restrictions, closing of borders, “shelter in place” orders and business closures.

Consequently, we and our major airline partners have experienced an unprecedented decline in the demand for air travel, which has materially and adversely affected our revenues, particularly under our prorate arrangements (as defined below).

The continued spread of the virus and the ongoing global pandemic has affected nearly all of the domestic and international networks of our major airline partners for whom we conduct flight operations and rely on to set our flight schedules.

While the length and severity of the reduction in demand due to COVID-19 is uncertain, we presently expect a continued negative impact on our results of operations in 2021 and possibly thereafter.

In response to these developments, we have implemented measures to focus on the personal safety of our passengers and employees, while at the same time seeking to mitigate the impact on our financial position and operations.

These measures include, but are not limited to, the following:

Focus on the Personal Safety of Passengers and Employees.

The safety and well-being of our passengers and employees are our priorities in every decision we make.

As the COVID-19 pandemic has developed, we have taken numerous steps to help passengers and employees take appropriate safety measures on the ground and in the air in keeping with current Centers for Disease Control and Prevention recommendations, including:

● Working with our major airline partners to enhance our aircraft cleaning procedures.

● Working with our major airline partners to provide masks for crewmembers and ensuring that all fleet service personnel have the necessary personal protective equipment for disinfecting the aircraft.

● Providing a number of options to employees who are diagnosed with COVID-19, including pay protection and extended leave options.

● Implementing workforce social distancing and protection measures, and enhanced cleaning of our facilities, including training facilities, using methods and products similar to what we are using on our aircraft.

Capacity Reductions.

Beginning in March 2020, we and our major airline partners experienced an unprecedented decrease in demand for air travel and expect this decline from pre-COVID-19 flight levels to continue throughout 2021 and possibly thereafter.

We depend on our major airline partners to contract with us to operate scheduled flights.

Therefore, in response to this decreased demand, we have significantly reduced our capacity.

Prior to the COVID-19 pandemic, we anticipated operating approximately 2,400 to 2,500 daily departures on average during each quarter of 2020.

Due to COVID-19 related scheduled reductions, we operated approximately 2,300, 900, 1,500 and 1,700 average daily departures during the three months ended March 31, June 30, September 30 and December 31, 2020, respectively.

We anticipate the number of daily scheduled flights we operate may not return to pre-COVID-19 levels by the end of 2021.

We continue to work with our major airline partners regarding future schedules and make further demand-driven adjustments to our capacity as needed.

During 2020, we removed 55 CRJ200 regional aircraft from the SkyWest Airlines Delta Connection Agreement.

These 55 aircraft had scheduled contract expirations in 2020 and were not extended due to decreased demand.

We also terminated our American Prorate Agreement on seven CRJ200 aircraft in the second quarter of 2020 and we may have further reductions in the number of CRJ200 aircraft operating under our prorate agreements with our other major airline partners.

These 62 CRJ200 aircraft removed from the aforementioned Delta and American agreements were fully depreciated upon removal from service and had no outstanding financing.

We may receive requests by our major airline partners to defer deliveries of new or used aircraft that were previously scheduled for delivery in 2021 and 2022.

Cost Reductions.

With the reduction in revenue, we have, and may continue to implement, cost saving initiatives, including:

● Reducing employee-related costs including by:

o Offering voluntary unpaid leave to employees.

o Temporarily suspending all non-scale pay increases.

o Temporarily instituting a company-wide hiring freeze.

o Furloughed various employees in administrative and overhead positions.

● Delaying non-essential projects and reducing or suspending other discretionary spending.

Although future passenger demand in 2021 and beyond is currently uncertain, given the directional increases in our scheduled flight levels from April 2020 through January 2021, we believe it is an important long-term strategy to retain our pilots, flight attendants and mechanics when reasonably possible, to enhance our ability to respond to increased demand from our major airline partners in 2021.

We will continue to evaluate our labor strategy in 2021.

At December 31, 2020, we had $1,530.4 million in total available liquidity, consisting of $825.9 million in cash and marketable securities, $39.5 million available under SkyWest Airlines’ line of credit and an additional $665.0 million related to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) under our secured loan and guarantee agreement (the “Treasury Loan Agreement”) with the U.S.

Department of the Treasury (“Treasury”).

See Note 2 “Impact of the COVID-19 Pandemic,” to the consolidated financial statements for more information on the Treasury Loan Agreement.

COVID-19, which was declared a global health pandemic by the World Health Organization in March 2020, had a significant, negative impact on our business, revenue and financial results in 2020 with moderate improvement in 2021.

The ongoing spread of the virus and its variants continues to negatively impact our business, and the domestic and international networks of our major airline partners for whom we conduct flight operations and rely on to set our flight schedules.

Various factors outside our control may impact the demand for air travel and our flight schedules, such as the distribution and efficacy of vaccines, government-imposed vaccine mandates, new variants of the virus, and continued or new government travel restrictions.

Additionally, indirect factors, such as employee attrition, workforce shortages and third-party labor shortages that may result in delays in outsourced maintenance work and availability of aircraft parts, will likely impede the timing of our recovery from the pandemic and impact operations in 2022 and possibly thereafter, even if passenger demand returns to pre-COVID-19 levels.

In response to the COVID-19 pandemic, we have implemented measures to focus on the personal safety of our passengers and employees, while at the same time seeking to mitigate the impact on our financial position and operations.

These measures include, but are not limited to, working with our major airline partners to enhance cleaning procedures for our aircraft and our training and other facilities, provide masks for crewmembers and ensuring that all fleet service personnel have the necessary personal protective equipment for disinfecting the aircraft, and encouraging vaccination for our employees through paid-time off incentives and education.

Capacity and flight schedule impact.

We completed the following number of flights and related block hours in 2019, 2020 and 2021, demonstrating our ongoing flight schedule recovery from the COVID-19 pandemic:

For the year ended December 31,

Although the number of flights we completed and related block hours incurred in 2021 was 89.1% and 90.1% of 2019 levels, respectively, future passenger demand in 2022 and beyond is uncertain.

Additionally, a significant increase in hiring of our pilots by major airlines, low-cost carrier airlines and air freight companies may negatively impact our attrition rates and our ability to operate flight schedules requested by our major airline partners.

We may receive requests by our major airline partners, or we may request our major airline partners to defer deliveries of new or used aircraft that were previously scheduled for delivery in 2022 and 2023.

At December 31, 2021, we had $904.0 million in total available liquidity, consisting of $860.4 million in cash and marketable securities, and $43.6 million available under SkyWest Airlines’ line of credit with a bank.

Additionally, we have approximately $1.5 billion in unpledged aircraft engines and aircraft parts that we temporarily used as collateral in 2020 and 2021.

Industry Overview

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Low-cost carriers, such as Southwest Airlines Co.

(“Southwest”) and JetBlue Airways Corporation (“JetBlue”), generally have lower cost structures than major airlines, which permits them to offer flights to and from many of the same markets as the major airlines, but at lower prices.

(“Southwest”), JetBlue Airways Corporation (“JetBlue”), Spirit Airlines, Inc.

(“Spirit”) and Frontier Group Holdings, Inc.

(“Frontier”), generally have lower cost structures than major airlines, which permits them to offer flights to and from many of the same markets as the major airlines, but at lower prices.

Low-cost carriers typically operate using a point-to-point network strategy, rather than a hub-and-spoke network.

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Code-share agreements also generally obligate the major airline to provide services such as reservations, ticketing, ground support and gate access to the regional airline, and the major airline often coordinates marketing, advertising and other promotional efforts.

In exchange, the regional airline provides a designated number of low-capacity (usually between 50 and 76 seats) flights between larger airports served

by the major airline and surrounding cities, usually in lower-volume markets.

In exchange, the regional airline provides a designated number of low-capacity (usually between 50 and 76 seats) flights between larger airports served by the major airline and surrounding cities, usually in lower-volume markets.

The financial arrangements between the regional airlines and their code-share partners usually involve either capacity purchase arrangements or prorate arrangements as explained below:

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Substantially all costs associated with the regional airline flight are borne by the regional airline.

In a prorate arrangement, the regional airline may realize increased profits as ticket prices and passenger loads increase or fuel prices decrease and, correspondingly, the regional airline may realize decreased profits as ticket prices and passenger loads decrease or fuel prices increase.

We have code-share agreements with Delta, United, American and Alaska.

During the year ended December 31, 2020, approximately 87% of our flying agreements revenue related to capacity purchase agreement flights, where Delta, United, American and Alaska controlled scheduling, ticketing, pricing and seat inventories.

The remainder of our flying agreements revenue during the year ended December 31, 2020 related to prorate flights for Delta, United or American, where we controlled scheduling, pricing and seat inventories, and shared passenger fares with Delta, United or American according to prorate formulas.

We ceased operating under a prorate agreement with American during the 2020 calendar year.

In a prorate arrangement, the regional airline may realize increased profits as ticket prices and passenger loads increase or fuel prices

decrease and, correspondingly, the regional airline may realize decreased profits as ticket prices and passenger loads decrease or fuel prices increase.

We have code-share agreements with United, Delta, American and Alaska.

During the year ended December 31, 2021, approximately 84% of our flying agreements revenue related to capacity purchase agreement flights, where United, Delta, American and Alaska controlled scheduling, ticketing, pricing, and seat inventories.

The remainder of our flying agreements revenue during the year ended December 31, 2021, related to prorate flights for United or Delta, where we controlled scheduling, pricing and seat inventories, and shared passenger fares with United or Delta according to prorate formulas.

The routes placed under our prorate arrangements typically include flight service between one of our partners’ hub cities and a city not served under our capacity purchase arrangements.

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The following summaries of our code-share agreements with our major airline partners do not purport to be complete and are qualified in their entirety by reference to the applicable agreement.

Delta Connection Agreements

United Express Agreements

Aircraft type

Number of Aircraft

Term / Termination Dates

Delta Connection Agreement

(capacity purchase arrangement)

Individual aircraft have scheduled removal dates from 2021 to 2030

United Express Agreements

(capacity purchase agreement)

Individual aircraft have scheduled removal dates under the agreement between 2024 and 2029

• The average remaining term of the aircraft under contract is 4.2 years

Delta Connection Prorate Agreement (prorate arrangement)

United Express Prorate Agreement

(prorate agreement)

Terminable with 120-day notice

United Express Agreements

Total under United Express Agreements

Delta Connection Agreements

Aircraft type

Number of Aircraft

Term / Termination Dates

United Express Agreements

(capacity purchase arrangement)

Individual aircraft have scheduled removal dates under the agreement between 2022 and 2029

Delta Connection Agreement

(capacity purchase agreement)

Individual aircraft have scheduled removal dates from 2022 to 2031

• The average remaining term of the aircraft under contract is 5.5 years

United Express Prorate Agreement (prorate arrangement)

Delta Connection Prorate Agreement

(prorate agreement)

Terminable with 30-day notice

Total under Delta Connection Agreements

American Capacity Purchase Agreement

Aircraft type

Number of Aircraft

Term / Termination Dates

American Agreement

(capacity purchase arrangement)

(capacity purchase agreement)

Individual aircraft have scheduled removal dates from 2024 to 2032

• The average remaining term of the aircraft under contract is 4.8 years

Total under American Agreements

Alaska Capacity Purchase Agreement

Aircraft type

Number of Aircraft

Term / Termination Dates

Alaska Agreement

(capacity purchase arrangement)

● Individual aircraft have scheduled removal dates from 2027 to 2030

(capacity purchase agreement)

Individual aircraft have scheduled removal dates in 2030

• The average remaining term of the aircraft under contract is 8.6 years

In addition to the aircraft operating under the respective arrangements outlined above, SkyWest Airlines has agreed with its major airline partners to place additional aircraft under a capacity purchase arrangement as summarized below.

We are coordinating with our major airline partners to optimize the timing of upcoming fleet deliveries in response to COVID-19 and the delivery timing referenced below is subject to change.

● Capacity purchase agreement with American for 20 new E175 aircraft.

Aircraft deliveries are anticipated to begin in the third quarter of 2021 and continue into 2022.

All 20 E175s are expected to be placed into service in 2022.

We are coordinating with our major airline partners to optimize the timing of upcoming fleet deliveries and the delivery timing referenced below is subject to change.

● Capacity purchase agreement with American for two new E175 aircraft.

Aircraft deliveries are scheduled for early 2022, and the aircraft are expected to be placed into service in 2022.

We anticipate financing the aircraft through debt.

● Capacity purchase agreement with American for 25 used CRJ700 aircraft.

The aircraft are anticipated to be placed into service throughout 2021.

● Capacity purchase agreement with Delta for 16 new E175 aircraft.

The delivery dates for the 16 new E175 aircraft are currently scheduled for 2022, and the aircraft are expected to be placed into service in 2022.

We anticipate financing the aircraft through debt.

The 16 E175 aircraft are expected to replace 16 CRJ900 aircraft that are scheduled to be removed from the capacity purchase agreement with Delta.

We are evaluating alternative uses for our CRJ900s that will be displaced by the 16 E175 aircraft.

● Capacity purchase agreement with Alaska for eleven new E175 aircraft.

The delivery dates for the eleven new E175 aircraft are currently scheduled for 2022 and 2023, and the aircraft are expected to be placed into service in 2022 and 2023.

● Capacity purchase agreement with American for eleven used CRJ700 aircraft.

The aircraft are anticipated to be placed into service by the end of 2023.

We anticipate using CRJ700s we already possess that are not currently under contract with a major airline partner to fulfill this agreement.

Following the placement of these 25 CRJ700s, we are scheduled to have a total of 90 CRJ700s under a capacity purchase agreement with American.

● Capacity purchase agreement with Delta for one new CRJ900 aircraft.

The aircraft is anticipated to be placed into service in 2021 and Delta is expected to finance this aircraft.

Delta Connection Agreements

We and Delta are parties to a Delta Connection Agreement (the "Delta Connection Agreement"), pursuant to which we provide contract flight services for Delta.

The Delta Connection Agreement has a latest scheduled termination date of 2030.

The Delta Connection Agreement is subject to early termination in various circumstances, including:

● if we or Delta commit a material breach of the Delta Connection Agreement, subject to 30-day notice and cure rights;

● if we fail to conduct all flight operations and maintain all aircraft under the Delta Connection Agreement in compliance in all material respects with applicable government regulations;

● if we fail to satisfy certain performance and safety requirements;

● if either party files for bankruptcy, reorganization or similar action (subject to limitations imposed by the U.S.

Bankruptcy Code) or makes an assignment for the benefit of creditors.

● In January 2022, we extended the term for 19 CRJ700 aircraft under contract with United for three years with new expiration dates scheduled between 2025 and 2026.

United Express Agreements

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Bankruptcy Code, if bankruptcy proceedings are commenced against either party and certain specified conditions are not satisfied.

Delta Connection Agreements

We and Delta are parties to a Delta Connection Agreement (the "Delta Connection Agreement"), pursuant to which we provide contract flight services for Delta.

The Delta Connection Agreement has a latest scheduled termination date of 2031.

The Delta Connection Agreement is subject to early termination in various circumstances, including:

● if we or Delta commit a material breach of the Delta Connection Agreement, subject to 30-day notice and cure rights;

● if we fail to conduct all flight operations and maintain all aircraft under the Delta Connection Agreement in compliance in all material respects with applicable government regulations;

● if we fail to satisfy certain performance and safety requirements;

● if either party files for bankruptcy, reorganization or similar action (subject to limitations imposed by the U.S.

Bankruptcy Code) or makes an assignment for the benefit of creditors.

American Agreement

We and American are parties to an agreement (the “American Agreement”) for the operation of CRJ700 aircraft.

The American Agreement for CRJ700 aircraft is scheduled to terminate in 2026 and is subject to early termination in various circumstances including:

We and American are parties to an agreement (the “American Agreement”) for the operation of E175 and CRJ700 aircraft.

The American Agreement has a latest scheduled termination date of 2032 and is subject to early termination in various circumstances including:

● if we or American fail to fulfill any obligation under the American Agreement for a period of 30 days after written notice to cure;

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We and Alaska are parties to a Capacity Purchase Agreement (the “Alaska Agreement”) for the operation of E175 aircraft.

Each aircraft placed under the agreement has a 12-year term and the last aircraft placed into service with

Alaska is scheduled to terminate in 2030.

Each aircraft placed under the agreement has a 12-year term and the last aircraft placed into service with Alaska is scheduled to terminate in 2030.

The Alaska Agreement is subject to early termination in various circumstances including:

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We also use third-party vendors for certain airframe and engine maintenance work.

Our capacity purchase agreements with Delta, United, American and Alaska require the respective major airline partner to pay for fuel costs, either directly to the fuel vendor or reimburse us for the fuel costs we incur under those agreements, thereby reducing our exposure to fuel price fluctuations.

Under our prorate agreements with Delta and United, we are responsible for the costs to operate the flights, including fuel costs, and therefore we are exposed to fuel price fluctuations for flights operated under our prorate agreements.

During the year ended December 31, 2020, United, Delta and American purchased the majority of the fuel for our aircraft flying under their respective capacity purchase agreements directly from their fuel vendors.

Historically, we have not experienced problems with the availability of fuel and believe we will be able to obtain fuel in quantities sufficient to meet our existing and anticipated future requirements at competitive prices.

Standard industry fuel purchase contracts generally do not provide protection against fuel price increases, nor do they ensure availability of supply.

Our capacity purchase agreements with United, Delta, American and Alaska require the respective major airline partner to pay for fuel costs, either directly to the fuel vendor or to reimburse us for the fuel costs we incur under those agreements, thereby reducing our exposure to fuel price fluctuations.

Under our prorate agreements with United and Delta, we are responsible for the costs to operate the flights, including fuel costs, and therefore we are exposed to fuel price fluctuations for flights operated under our prorate agreements.

During the year ended December 31, 2021, our major airlines partners purchased the majority of the fuel for our aircraft flying under their respective capacity purchase agreements directly from their fuel vendors or reimbursed us for the fuel costs we incurred under the capacity purchase agreements.

Historically, we have not experienced sustained material problems with the availability of fuel and believe we will be able to obtain fuel in quantities sufficient to meet our existing and anticipated future requirements at

competitive prices.

We typically purchase fuel from third-party suppliers for our prorate agreements.

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Employee Profile

As of December 31, 2020, we employed 12,502 full- time equivalent employees, consisting of 5,090 pilots, 3,834 flight attendants, 961 airport operations personnel, 1,269 mechanics, 777 other maintenance personnel, 162 dispatchers and 409 operational support and administrative personnel.

As of December 31, 2021, we employed 15,205 total employees, consisting of 5,705 pilots, 4,790 flight attendants, 1,784 airport operations personnel, 1,408 maintenance technicians, 821 other maintenance personnel, 168 dispatchers and 529 operational support and administrative personnel.

Our total employees at December 31, 2021, included 1,647 part-time employees.

All our employees are employed by SkyWest Airlines.

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If either party wishes to modify the terms of any such agreement, it must notify the other party in the manner prescribed by the RLA and/or described in the agreement.

After receipt of such notice, the parties must meet for direct negotiations, and if no

agreement is reached, either party may request the National Mediation Board to initiate a process including mediation, arbitration, and a potential “cooling off” period that must be followed before either party may engage in “self-help.” “Self-help” includes, among other things, a strike by the representative or the imposition of proposed changes to the collective bargaining agreement by the airline.

After receipt of such notice, the parties must meet for direct negotiations, and if no agreement is reached, either party may request the National Mediation Board to initiate a process including mediation, arbitration, and a potential “cooling off” period that must be followed before either party may engage in “self-help.” “Self-help” includes, among other things, a strike by the representative or the imposition of proposed changes to the collective bargaining agreement by the airline.

Congress and the President have the authority to prevent “self-help” by enacting legislation that, among other things, imposes a settlement on the parties.

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They also have the right to reject union representation.

At SkyWest our people are our most valued assets, and the success of our business is dependent on having an engaged and effective workforce.

We respect every individual's quality of life and are committed to promoting dignity and trust in all we do.

We strive to be the partner of choice and employer of choice.

Health & Safety

Safety is the primary focus and foundation of culture with our first guiding principle being Health and Safety First.

Safety is the primary focus and foundation of our culture with our first guiding principle being Health and Safety First.

We expect our employees to think, plan, communicate and act appropriately to prevent injury, illness or harm to themselves, fellow employees, passengers and aircraft.

In response to the COVID-19 pandemic SkyWest launched various programs and initiatives to enhance the health and safety for employees, including:

● Enhanced cleaning and sanitization protocols across all aircraft and facilities

● Establishing social distancing procedures for employees

● Implementing mask requirement protocols

● Providing gloves, masks and other personal protective equipment and cleaning supplies

● Requiring daily health assessments for on-duty employees

● Implementing protocols to address COVID-19 cases and potential exposure

● Adding work-from-home flexibility for administrative employees

● Regular, ongoing communication regarding impacts of the COVID-19 pandemic, including health and safety protocols and procedures

We have also implemented a Safety Management System (“SMS”) that is designed to identify, track and help mitigate potential safety risks before an incident or accident occurs.

Our employees receive required SMS training to stay current with all SMS resources provided by our safety department.

SkyWest’s Safety Management System (SMS) integrates an intentional safety culture into every work group and every employee process from new hire through retirement, focusing on industry-best practices in safety competencies and behaviors.

Training is required for every SkyWest employee, regardless of position.

SkyWest’s SMS is designed to identify, track, and help mitigate potential safety risks before an incident or accident occurs.

Employees are encouraged to participate in our voluntary programs to report potential safety concerns or violations to reduce safety risk, including, but not limited to our Aviation Safety Action Program and Safety Concern Report.

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Each report is reviewed by an Event Review Committee who helps identify any potential trends and whether corrective actions have been put into place to prevent the problem from occurring in the future.

● Safety Concern Report is a confidential program that allows all employees to identify potential safety risks within the operation.

Each is reviewed and investigated, as needed, by the Safety and Quality Department.

● Safety Concern Reporting is a confidential program that allows all employees to identify potential safety risks within the operation.

Each report is reviewed and investigated, as needed, by the Safety Department.

Employees may also report safety concerns to their direct manager, the facility manager, a facility safety committee member or confidentially through our safety hotline.

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Our recruiting focus generally targets key aviation technical roles, especially pilots and mechanics.

We seek qualified individuals through publishing all positions on both internal and external career websites, supporting

professional development leads, investment in targeted advertising, social media outreach, employee referrals and relationships with community-based organizations and educational institutions.

We seek qualified individuals through publishing positions on both internal and external career websites, supporting professional development leads, investment in targeted advertising, social media outreach, employee referrals and relationships with community-based organizations and educational institutions.

School Partnerships and Development.

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We typically recruit pilots and maintenance technicians that have completed required coursework from an accredited flight or maintenance school, respectively, and have obtained other applicable certifications.

We also provide other programs to enhance our recruiting efforts towards individuals who are in process of completing their training, including a Pilot Pathway Program and a Maintenance Apprentice Program.

We also provide other programs to enhance our recruiting efforts towards individuals who are in process of completing their training, including a Pilot Pathway Program and an Aviation Maintenance Technician (AMT) Pathway Program.

● The SkyWest Pilot Pathway Program provides a direct path for qualified pilots seeking to begin their aviation career in the regional airline industry.

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Each participant may also participate in SkyWest recruiting events and outreach programs on their way to fulfilling commercial pilot jobs.

● The SkyWest Maintenance Apprentice Program provides a career path for maintenance technicians seeking employment with SkyWest.

Participants benefit from the SkyWest Maintenance Apprentice Program through accelerated starting seniority at SkyWest, guaranteed final interview and access to mechanic advisors.

On-going Training and Retention

● The SkyWest AMT Pathway Program provides a career path for maintenance technicians seeking employment with SkyWest.

Participants benefit from the SkyWest AMT Pathway Program through accelerated starting seniority at SkyWest, guaranteed final interview and access to mechanic advisors.

Ongoing Training and Retention.

SkyWest invests in retaining its professionals by providing a range of talent development opportunities, including mandatory compliance training, new hire training and general professional development, as well as engaging in the training of leaders through leadership development courses.

Our training programs include full-motion flight simulators for pilots and cabin trainers for flight attendants.

Our training programs include full-motion flight simulators for pilots, on-the-job training for technicians, and cabin trainers for flight attendants.

We also reinforce our guiding principles, including but not limited to, health and safety, excellent service and quality, and respect and teamwork through our training and development programs, as well as through our employee appreciation and recognition programs.

As the larger airlines recover from the COVID-19 pandemic and look to hire pilots, we anticipate seeing a significant turnover of our pilots, specifically our captains.

As we work to train and promote our first officers to captains, we will likely have higher training costs.

Additionally, if our captain attrition levels exceed our upgrade replacement levels, we will likely need to reduce future flight schedules with our major airline partners, negatively impacting our revenue.

Diversity & Inclusion

Our approach is to hire the best qualified individuals, regardless of race, religion, gender, national origin, disability, sexual orientation or similar classifications.

We believe every employee brings unique education, skills and life experiences to SkyWest that supplement our ability to achieve our commitment to excellence to our customers and passengers.

As of December 31, 2021, approximately 40% and 28% of our workforce were women and people of color, respectively.

We believe every employee brings unique education, skills and life experiences to SkyWest that supplement our ability to achieve our commitment to excellence and to our customers and passengers.

As part of SkyWest’s commitment to diversity, we have:

● Organized an Inclusion Council made up of frontline employees who work directly with the executive team to continue enhancing SkyWest’s culture of respect and inclusion.

● Organized an Inclusion Council made up of frontline employees who work directly with the C-Suite to continue enhancing SkyWest’s culture of respect and inclusion.

● Developed required training for all employees, which reviews our company policies, provides opportunities to apply policy to real-world examples, and reaffirms our commitment to diversity and inclusion.

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Regulations promulgated by the DOT primarily relate to economic aspects of air service.

The FAA requires operating, air worthiness and other certificates;

The FAA requires operating, airworthiness and other certificates;

approval of personnel who may engage in flight, maintenance or operating activities;

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The FAA can also issue maintenance directives and other mandatory orders relating to, among other things, grounding of aircraft, inspection of aircraft, installation of new safety-related items and the mandatory removal and replacement of aircraft parts.

We believe SkyWest is in compliance in all material respects with FAA regulations and holds all operating and airworthiness certificates and licenses which are necessary to conduct our operations.

We believe SkyWest complies, in all material respects, with FAA regulations and holds all operating and airworthiness certificates and licenses which are necessary to conduct our operations.

We maintain current certifications and otherwise comply with the laws, rules and regulations to which we are subject.

Our flight operations, maintenance programs, recordkeeping and training programs are conducted under FAA approved procedures.

All air carriers operating in the United States are required to comply with federal laws and regulations pertaining to noise abatement and engine emissions.

All air carriers operating in the United States are required to comply with federal laws and regulations pertaining to noise abatement and

engine emissions.

All such air carriers are also subject to certain provisions of the Federal Communications Act of 1934, as amended, because of their extensive use of radio and other communication facilities.

SkyWest is also subject to certain federal and state laws relating to protection of the environment, labor relations and equal employment opportunity.

We believe SkyWest is in compliance in all material respects with these laws and regulations.

We believe SkyWest complies, in all material respects, with these laws and regulations.

Environmental Matters

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As the largest regional airline in the United States, we remain committed to lowering our environmental footprint while continuing to offer the best service to our customers and the communities we serve.

Our largest source of emissions and environmental impact comes from utilizing jet fuel on flights operated under our code-share agreements with our major airline partners.

Under our capacity purchase agreements, our major airline partners purchase the aircraft fuel we consume, select the aircraft type we operate, and set flight schedules, all of which are variables which impact fuel consumption efficiencies.

During 2021, we produced approximately 5.7 million metric tons of CO 2 e from fuel burned, using industry emissions factors, on flights we operated under our code-share agreements.

We are largely dependent on direction from our major airline partners regarding long-term fuel saving initiatives such as engine innovations reducing fuel consumption, use of sustainable alternative fuels, carbon sequestration programs, air traffic flow routing efficiencies, and similar initiatives.

Each of our major airline partners may pursue alternative strategies and goals to reduce carbon emissions on flights we operate under our code-share agreements that may impact the rate at which we are able to reduce our carbon emissions, if at all.

We anticipate our major airline partners will take responsibility for carbon emissions incurred on our contract flights.

Alternatively, we may purchase carbon offsets as an alternative strategy to reduce our carbon emissions.

Our board of directors has oversight of our environment-related performance.

Through the use of software and training, we heavily monitor and manage our fuel trends and fuel consumption which leads to better fuel conservation and reductions in emissions.

When possible, we try to mitigate the use of fuel, including by taxiing with the use of a single engine, taking

steps to improve the efficiency of aircraft routing and using ground power when the plane is parked at the gate.

Through software and training, we heavily monitor and manage our fuel trends and fuel consumption which leads to better fuel management and reductions in emissions.

When possible, we conserve fuel burned by utilizing single engine taxi procedures, improving the efficiency of aircraft routing, using performance-based navigation procedures to reduce track miles, and using ground power when parked at the gate.

Additionally, we collaborate with aircraft and engine manufacturers and our major airline partners regarding innovations and emerging technologies that could improve fuel efficiencies and minimize environmental impact.

We participate with our major airline partners in recycling programs, and we have implemented recycling initiatives in our facilities to reduce the amount of paper, plastic and other recyclables going to landfills.

We have worked aggressively to reduce our reliance on paper manuals and have converted, or are in the process of converting, our manuals and our maintenance logs into electronic form, further eliminating unnecessary waste while increasing efficiencies.

We have worked aggressively to reduce our reliance on paper manuals, further eliminating unnecessary waste while increasing efficiencies.

We have entered into a strategic partnership with Eve UAM, LLC (“Eve”), an Embraer company, to develop a network of deployment for Eve’s electric vertical takeoff and landing (“eVTOL”) aircraft.

This partnership includes the option for SkyWest to purchase up to 100 eVTOL aircraft.

Eve anticipates its four-passenger eVTOL aircraft will be certified and available for service after 2025.

Safety and Security

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We maintain insurance policies we believe are of types customary in the industry and in amounts we believe are adequate to protect against material loss.

These policies principally provide coverage for public liability, passenger liability, baggage and cargo liability, property damage, including coverage for loss or damage to our flight equipment, and workers’ compensation insurance.

These policies principally provide coverage for public liability, passenger

liability, baggage and cargo liability, property damage, including coverage for loss or damage to our flight equipment, and workers’ compensation insurance.

Our results of operations for any interim period are not necessarily indicative of those for the entire year, in part because the airline industry is subject to seasonal fluctuations and changes in general economic conditions.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business