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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): February 9, 1998
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SKYWEST, INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
UTAH 0-14719 87-0292166
- ------------------------------- -------------------- -------------------
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation) Identification No.)
</TABLE>
444 South River Road
St. George, Utah 84790
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(Address of principal executive offices, including zip code)
(435) 634-3000
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(Registrant's telephone number, including area code)
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TABLE OF CONTENTS
<TABLE>
<S> <C>
ITEM 5. OTHER EVENTS.................................................. 1
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS............................. 1
Exhibits...................................................... 1
SIGNATURE............................................................. 2
</TABLE>
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ITEM 5. OTHER EVENTS.
On February 9, 1998, SkyWest Airlines, Inc. ("SkyWest"), a wholly-owned
operating subsidiary of SkyWest, Inc. (the "Registrant"), and United Air Lines,
Inc. ("United") executed an amendment (the "Amendment") to the United Express
Agreement (the "United Express Agreement"), pursuant to which SkyWest operates
as a United Express carrier at United's hubs in Los Angeles and beginning June
1, 1998, in San Francisco, California. Under the United Express Agreement,
SkyWest presently offers United Express departures coordinated to connect with
United's flights from Los Angeles International Airport. The United Express
Agreement further contemplates that SkyWest will offer departures coordinated to
connect with United's flights from San Francisco International Airport. Under
the Amendment to the United Express Agreement, SkyWest will become the United
Express carrier in United's Seattle and Portland markets beginning April 23,
1998 and will also offer additional daily departures at United's hub in Los
Angeles. Specifically, the Amendment contemplates approximately 54 daily round
trips coordinated to connect with United's flights from Seattle/Tacoma
International Airport or Portland International Airport and an additional 51
daily round trips in Los Angeles. As United Express service is expanded or
initiated in these markets, SkyWest expects to place up to ten additional
EMB-120 Brasilia turbo-prop aircraft ("Brasilias") in service in the
Portland/Seattle markets beginning April 23, 1998 with up to 17 additional
Brasilias added in San Francisco beginning June 1, 1998. Expansion in Los
Angeles will initially be accomplished with existing aircraft. Brasilias will be
acquired and placed in service in these markets as needed through December 1998.
The United Express Agreement expires in September 2002 with respect to
operations in Los Angeles and in May 2008 with respect to operations in San
Francisco, Seattle and Portland, subject to termination by United upon 180 days'
notice. United may, however, terminate the United Express Agreement for cause
upon 30 days' written notice.
Copies of the Amendment and press releases relating thereto are attached
as exhibits to this Current Report on Form 8-K as Exhibits 99.1 and 99.2,
respectively.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits.
99.1 -- Amendment to United Express Agreement dated February 9, 1998
99.2 -- Press Releases dated February 11, 1998
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
SKYWEST, INC.
/s/ BRADFORD R. RICH
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Bradford R. Rich, Executive Vice
President and Chief Financial Officer
Date: February 11, 1998
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EXHIBIT 99.1
Disclosure Regarding Confidential Information:
Portions of Appendices D, F, G, H, I, PNW D and PNW F attached to this
Exhibit 99.1 to a Current Report on Form 8-K (consisting of portions of 13
multiple pages) have been omitted from this exhibit filed with the
Securities and Exchange Commission (the "Commission") by SkyWest, Inc. The
omitted portions, which are the subject of an application for confidential
treatment and have been filed separately with the Commission, are
identified in this exhibit by the placement of the following symbol: +.
AMENDMENT AGREEMENT
This AMENDMENT AGREEMENT (this "AMENDMENT"), dated as of
February 6, 1998, is between UNITED AIR LINES, INC. ("United"), and
SKYWEST AIRLINES, INC. ("CONTRACTOR"), hereby further amends and is made
a part of the United Express Agreement, which was effective on October
1, 1997 (the "AGREEMENT"), between these parties, and this Amendment is
effective as of April 23, 1998 (the "AMENDMENT EFFECTIVE DATE") upon
final execution of the Agreement.
1. INTRODUCTION. This Amendment, when fully executed by the parties hereto,
will become part of the Agreement and will evidence the parties' further
agreement with respect to the matters set forth below. All terms used herein,
unless otherwise defined in this Amendment, shall have the same meaning as in
the Agreement. The terms and conditions of the Agreement, to the extent not in
conflict with this Amendment, are hereby incorporated into this Amendment. In
the event of any conflict between any of the provisions of this Amendment and
the Agreement, the provisions of this Amendment shall govern.
2. TERM. The term of this Amendment becomes effective at 12:01 a.m.
Chicago, Illinois time, on the Amendment Effective Date, and shall terminate,
(a) WITH RESPECT TO THE LAX CITY PAIRS, on September 30, 2002;
unless it is terminated at an earlier date pursuant to one or more of the
provisions of the Agreement; provided, however, that this Amendment may be
terminated by United for convenience upon 180 days' prior written notice to
Contractor, which notice shall not be given earlier than September 30, 1999; and
(b) WITH RESPECT TO THE SFO CITY PAIRS AND THE PNW CITY PAIRS, on
May 31, 2008; unless it is terminated at an earlier date pursuant to one or more
of the provisions of the Agreement; PROVIDED, HOWEVER, that this Amendment, in
whole or in part, may be terminated at any time by United for convenience upon
180 days' prior written notice to Contractor.
3. APPENDICES. Existing APPENDICES B, D, F and G are amended and replaced
in their entirety by the attached APPENDICES B, D, F and G. The new appendices
PNW APPENDIX B, D, and F are added to the Agreement.
IN WITNESS WHEREOF, the parties have agreed to and executed this
Amendment by their authorized representatives as of the day and year first
written above on this Amendment.
UNITED AIR LINES, INC. SKYWEST AIRLINES, INC.
By: ___________________________ By: __________________________
Title: ________________________ Title: _______________________
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APPENDIX B
AIRPORT SERVICES
<TABLE>
<CAPTION>
Customer Service/ Customer Service/ Ground Handling Receipt/
Airport Ticket Counter * Gates Ramp Duties ** Dispatch
- ------- ----------------- ----------------- --------------- --------
<S> <C> <C> <C> <C>
I. EFFECTIVE OCTOBER 1, 1997
-------------------------
BUR United United United United
LAS United United United United
LAX United Contractor Contractor Contr.
MRY United United United United
PSP United United Contractor Contr.
SBA United United Contractor Contr.
SJC United United United United
II. EFFECTIVE APRIL 23, 1998
------------------------
SNA United United United United
</TABLE>
* Also including Small Package service.
** Any unique ground equipment which is needed to service Contractor's
aircraft will be provided by Contractor.
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APPENDIX D
CONTRACT CITY PAIRS
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<CAPTION>
City Pair Frequency *
- --------- -----------
Winter Summer
October 1 thru June 1 thru
May 31 September 30
------------ ------------
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I. EFFECTIVE OCTOBER 1, 1997 ("ORIGINAL LAX CITY PAIRS")
-------------------------
LAX - MRY + +
LAX - ONT + +
LAX - PSP + +
LAX - SAN + +
LAX - SJC + +
LAX - SBP + +
LAX - SBA + +
LAX - SMX + +
LAX - YUM + +
LAX - IPL + +
IPL - YUM + +
</TABLE>
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<TABLE>
<CAPTION>
City Pair Frequency *
- --------- -----------
Winter Summer
October 1 thru June 1 thru
May 31 September 30
------------ ------------
<S> <C> <C>
II. EFFECTIVE APRIL 23, 1998 ("APRIL 23 LAX CITY PAIRS")
------------------------
LAX - BFL + +
LAX - CLD + +
LAX - FAT + +
LAX - IYK + +
LAX - OXR + +
LAX - SNA + +
LAX - VIS + +
</TABLE>
* The daily flight frequency reflects the number of roundtrip(s) in a 30
seat EMB120 aircraft.** The flight frequency will be adjusted to reflect
normal reduced weekend and holiday schedules.
** Contractor's regional jet aircraft are not included in these operations.
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APPENDIX F
CONTRACT FEES
<TABLE>
<CAPTION>
City Pair Cost Per Departure * Cost Per Revenue Passenger **
- --------- -------------------- -----------------------------
<S> <C> <C>
I. EFFECTIVE OCTOBER 1, 1997
-------------------------
LAX - MRY + +
LAX - ONT + +
LAX - PSP + +
LAX - SAN + +
LAX - SJC + +
LAX - SBP + +
LAX - SBA + +
LAX - SMX + +
LAX - YUM + +
LAX - IPL + +
IPL - YUM + +
</TABLE>
* The cost per departure will be paid for each completed flight operation.
Flights operated in excess of the frequency outlined in Appendix D, must
be approved by United.
** Effective JANUARY 1, 1998, the Cost Per Revenue Passenger (except
IPL-YUM) shall be +.
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<TABLE>
<CAPTION>
City Pair Cost Per Departure * Cost Per Revenue Passenger **
- --------- -------------------- -----------------------------
<S> <C> <C>
II. EFFECTIVE APRIL 23, 1998
------------------------
LAX - BFL + +
LAX - CLD + +
LAX - FAT + +
LAX - IYK + +
LAX - OXR + +
LAX - SNA + +
LAX - VIS + +
</TABLE>
* The cost per departure will be paid for each completed flight operation.
Flights operated in excess of the frequency outlined in Appendix D, must
be approved by United.
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APPENDIX G
CONTRACT CITY PAIRS INCENTIVE PROGRAM
1. INCENTIVE PROGRAM. To compensate Contractor further for its investment
and to ensure that Contractor has a meaningful incentive to provide a high
quality operation, United will pay Contractor QUARTERLY INCENTIVE PAYMENTS
according to the QUARTERLY INCENTIVE FORMULA below using the + and +
corresponding to the ACTUAL PERFORMANCE LEVELS attained during the quarter for
each of the three (3) PERFORMANCE CATEGORIES set forth in the attached
PERFORMANCE INCENTIVE SCHEDULE. Any resulting Quarterly Incentive Payments based
upon City Pair System's + and + are separate from and based upon a separate set
of + and + than those set forth below for any other City Pair System.
2. QUARTERLY INCENTIVE FORMULA.
QUARTERLY INCENTIVE PAYMENT = A + B.
where, A = +
where, B = +
QUARTERLY CONTRACT CITY PAIR COST = C + D.
where, C = +
where, D = +
3. PERFORMANCE INCENTIVE SCHEDULE.
A. METHOD. For each calendar quarter and for Contractor's entire
United Express operations hereunder, determine Contractor's Performance Level
(A, B, C or D) within each of the Performance Categories + in the Performance
Incentive Schedule below. Then, separately for the various City Pair Systems
shown below, identify in the + and + schedule the figures corresponding to the
Performance Levels attained for each of the Performance Categories. Then,
separately for each City Pair System, add the three percentage figures together
yielding the +, and add the three dollar amounts together yielding the +. Apply
the resulting factors and rates in the Quarterly Incentive Formula to compute
the Quarterly Incentive Payment applicable to each City Pair System.
Note: "Departures" and "revenue passengers" are measured by the lift records
processed by United's Revenue Accounting Department.
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B. SCHEDULE.
PERFORMANCE CATEGORIES:
+
<TABLE>
<CAPTION>
Jan-Mar Apr-Jun Jul-Sep Oct-Dec
------- ------- ------- -------
<S> <C> <C> <C> <C>
Level A + + + +
Level B + + + +
Level C + + + +
Level D + + + +
</TABLE>
+
+
<TABLE>
Jan-Mar Apr-Jun Jul-Sep Oct-Dec
------- ------- ------- -------
<S> <C> <C> <C> <C>
Level A + + + +
Level B + + + +
Level C + + + +
Level D + + + +
</TABLE>
+
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+
<TABLE>
<CAPTION>
Jan-May and Sep-Nov Jun-Aug, Dec
------------------- ------------
<S> <C> <C>
Level A + +
Level B + +
Level C + +
Level D + +
</TABLE>
+
ORIGINAL LAX CITY PAIR SYSTEM
<TABLE>
<CAPTION>
+ + +
---------- ------- -------
<S> <C> <C> <C>
Level A + + +
Level B + + +
Level C + + +
Level D + + +
</TABLE>
APRIL 23 LAX CITY PAIR SYSTEM
<TABLE>
<CAPTION>
+ + +
---------- ------- -------
<S> <C> <C> <C>
Level A + + +
Level B + + +
Level C + + +
Level D + + +
</TABLE>
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SFO CITY PAIR SYSTEM
<TABLE>
<CAPTION>
+ + +
---------- ------- -------
<S> <C> <C> <C>
Level A + + +
Level B + + +
Level C + + +
Level D + + +
</TABLE>
PNW CITY PAIR SYSTEM
<TABLE>
<CAPTION>
+ + +
---------- ------- -------
<S> <C> <C> <C>
Level A + + +
Level B + + +
Level C + + +
Level D + + +
</TABLE>
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PNW APPENDIX B
AIRPORT SERVICES
<TABLE>
<CAPTION>
Customer Service/ Customer Service/ Ground Handling/ Receipt/
Airport Ticket Counter* Gates* Ramp Duties** Dispatch
- ------- ----------------- ----------------- ---------------- --------
<S> <C> <C> <C> <C>
SEA United Contractor Contractor Contractor
PDX United Contractor Contractor Contractor
EUG United United United United
MFR United United United United
</TABLE>
* Also including Small Package service.
** Any unique ground equipment which is needed to service Contractor's
aircraft will be provided by Contractor.
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PNW APPENDIX D
CONTRACT CITY PAIRS
<TABLE>
<CAPTION>
City Pair Frequency*
--------- ----------
<S> <C>
BLI-SEA +
EUG-SEA +
PDX-SEA +
PSC-SEA +
SEA-YKM +
EUG-PDX +
MFR-PDX +
PDX-PSC +
PDX-RDD +
PDX-RDM +
</TABLE>
* The daily flight frequency reflects the number of roundtrip(s) in a 30
seat EMB120 aircraft.** The flight frequency will be adjusted to reflect
normal reduced weekend and holiday schedules.
** Contractor's regional jet aircraft are not included in these operations.
12
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PNW APPENDIX F
CONTRACT FEES
<TABLE>
<CAPTION>
City Pair Cost Per Departure * Cost Per Revenue Passenger
--------- -------------------- --------------------------
<S> <C> <C>
BLI-SEA + +
EUG-SEA + +
PDX-SEA + +
PSC-SEA + +
SEA-YKM + +
EUG-PDX + +
MFR-PDX + +
PDX-PSC + +
PDX-RDD + +
PDX-RDM + +
</TABLE>
* The cost per departure will be paid for each completed flight operation.
Flights operated in excess of the frequency outlined in PNW Appendix D,
must be approved by United.
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EXHIBIT 99.2
[SKYWEST AIRLINES LETTERHEAD]
FOR IMMEDIATE RELEASE
SKYWEST AIRLINES ANNOUNCES EXPANSION IN NORTHWEST
ST. GEORGE, UT. February 11, 1998 (NASDAQ: SKYW) - SkyWest Airlines has
announced an expansion into the Pacific Northwest with new service from
Portland, Oregon and Seattle/Tacoma, Washington.
Effective April 23, 1998, the airline will initiate United Express service by
establishing two new hubs at Seattle/Tacoma International Airport and Portland
International Airport with service to nine destinations in Washington, Oregon
and California. The airline initially plans to operate approximately 54 daily
roundtrips and will provide frequent, convenient connections to partner United
Airlines, the largest carrier in the world.
Tentative schedule plans will incorporate service as follows:
PORTLAND SEATTLE/TACOMA
Eugene 6 Roundtrips Bellingham 7 Roundtrips
Medford 5 Roundtrips Eugene 2 Roundtrips
Pasco 2 Roundtrips Pasco 6 Roundtrips
Redding 2 Roundtrips Portland 12 Roundtrips
Redmond 6 Roundtrips Yakima 6 Roundtrips
Seattle/Tacoma 12 Roundtrips
All SkyWest United Express service will feature 30-passenger cabin-class
Brasilia aircraft. Ten new airplanes will be required to support the expansion.
"SkyWest is extremely pleased to have been chosen by United to provide the
regional feed it requires at Seattle and Portland," commented SkyWest Vice
President - Market Development, Steven Hart. "Our Northwest expansion will
provide an extension of the fine service we now provide as United Express in
California."
More than four months ago, SkyWest entered into a new marketing agreement with
United Airlines, becoming a United Express carrier for the first time in
several primarily Southern California markets. In January 1998, SkyWest
announced an expansion of the agreement wherein SkyWest will establish a new
hub at San Francisco serving several destinations in Northern California
beginning June 1, 1998. Once complete, SkyWest's United Express system will
include more than 600 daily flights and will make SkyWest among the largest
regional carriers in the United States.
This press release, as well as past releases, can be accessed on the SkyWest
Airlines Internet site at: http://www.skywest.com.
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[SKYWEST AIRLINES LETTERHEAD]
FOR IMMEDIATE RELEASE
SKYWEST AIRLINES ANNOUNCES ADDITIONAL
EXPANSION ON WEST COAST
ST. GEORGE, UT. February 11, 1998 (NASDAQ:SKYW) -- SkyWest Airlines announced
it will further expand its Los Angeles operation this spring when it initiates
United Express service to seven new Southern California markets.
On April 23, 1998, United Express service will begin from Los Angeles
International Airport to seven new SkyWest destinations: Bakersfield, Carlsbad,
Fresno, Inyokern, Orange County, Oxnard and Visalia. All service will
incorporate 30-passenger cabin-class Brasilia aircraft featuring in-flight
snack and beverage service, a lavatory and overhead/underseat storage areas.
Actual schedules are being finalized and will be announced shortly.
"SkyWest is anxious to further expand our growing United Express operation at
Los Angeles International Airport" commented SkyWest Vice President--Market
Development, Steven Hart. "With these service additions, travelers throughout
California will have more frequent, convenient access to United's worldwide
network than ever before".
On October 1, 1997, SkyWest entered into a new marketing agreement with United
Airlines, becoming a United Express carrier for the first time in several
primarily Southern California markets. In January 1998, SkyWest announced an
expansion of the agreement wherein SkyWest will establish a new hub at San
Francisco serving several destinations in Northern California beginning June 1,
1998. Once complete, SkyWest's United Express system will include more than 600
daily flights and will make SkyWest among the largest regional carriers in the
United States.
This press release, as well as past releases, can be accessed on the SkyWest
Airlines Internet site at: http:/www.skywest.com.
