8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):  February 8, 2006

SKYWEST, INC.

(Exact name of registrant as specified in its charter)

Utah	0-14719	87-0292166
(State or other jurisdiction of	(Commission	(I.R.S. Employer
incorporation or organization)	File Number)	Identification No.)
444 South River Road St. George, Utah		84790
(Address of principal executive offices)		(Zip Code)

(435) 634-3000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02—RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On February 9, 2006, SkyWest, Inc. (“SkyWest”) issued a press release announcing its financial results for the quarter and year ending December 31, 2005.  The full text of SkyWest’s press release, together with related unaudited financial and operating highlights, is furnished herewith as Exhibit 99.1.  The information in this paragraph (including Exhibit 99.1) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

ITEM 3.01—NOTICE OF DELISTING OR FAILURE TO SATISFY A CONTINUED LISTING RULE OR STANDARD; TRANSFER OF LISTING

During the quarter ended December 31, 2005, SkyWest discovered that in January and July 2005 it had issued shares of common stock under its Employee Stock Purchase Plan (the “Purchase Plan”) that exceeded the number of shares authorized for issuance under the Purchase Plan.  On February 8, 2006, after reviewing the issues associated with the over issuance, including SkyWest’s amendment of the SkyWest, Inc. Executive Stock Incentive Plan (the “Executive Plan”) and the SkyWest, Inc. 2001 Allshare Stock Option Plan (the “Allshare Plan”) to reduce the number of shares issuable pursuant to those plans by a number that exceeded the number of shares issued in excess of the number of shares authorized pursuant to the Purchase Plan, the staff of The Nasdaq Stock Market notified SkyWest that the issuance of shares of common stock in excess of the number of shares authorized pursuant to the Purchase Plan was in violation of the shareholder approval rule set forth in Nasdaq Marketplace Rule 4350(i)(1)(A).  The Nasdaq staff letter also notified SkyWest that the reduction in the number of shares issuable pursuant to the Executive Plan and the Allshare Plan, both of which had been previously approved by SkyWest shareholders, had the effect of restoring SkyWest’s compliance with Marketplace Rule 4350(i)(1)(A).  The Nasdaq staff letter indicates that, as of the date of the letter, the matter is closed.

Forward-Looking Statements

In addition to historical information, this release contains forward-looking statements.  “SkyWest” may, from time-to-time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements encompass SkyWest’s beliefs, expectations, hopes or intentions regarding future events.  Words such as “expects,” “intends,” “believes,” “anticipates,” “should,” “likely” and similar expressions identify forward-looking statements.  All forward-looking statements included in this release are made as of the date hereof and are based on information available to SkyWest as of such date.  SkyWest assumes no obligation to update any forward-looking statement. Actual results will vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others: bankruptcy proceedings of Delta Air Lines, Inc.; the failure to integrate the operations and employees of SkyWest and Atlantic Southeast Airlines, Inc. (“ASA”) and achieve the anticipated synergies as a result of the acquisition; the failure SkyWest Airlines, Inc. and ASA to successfully operate as anticipated under the terms of their respective Delta Connection Agreements; the impact of negotiations with ASA’s organized labor forces and the impact of the costs of such labor forces on SkyWest’s operations and financial condition; the failure to accurately forecast acquisition-related costs; and the challenges of competing successfully in a highly competitive and rapidly changing industry.  Other factors that may cause actual results to vary from SkyWest’s expectations include developments associated with fluctuations in the economy and the demand for air travel; bankruptcy proceedings involving United Air Lines, Inc.; ongoing negotiations between SkyWest and its major partners regarding their contractual relationships;

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variations in market and economic conditions; employee relations and labor costs;  rapidly escalating fuel costs; the degree and nature of competition; potential fuel shortages in markets where SkyWest Airlines, Inc. or ASA operates; the impact of weather-related or other natural disasters on air travel and airline costs; the ability of SkyWest Airlines, Inc. and ASA to expand services in new and existing markets and to maintain profit margins in the face of pricing pressures; aircraft deliveries; SkyWest’s ability to obtain financing; and other unanticipated factors.  Risk factors, cautionary statements and other conditions which could cause actual results to differ from management’s current expectations are contained in SkyWest’s filings with the Securities and Exchange Commission, including the section of SkyWest’s Annual Report on Form 10-K, entitled “Factors That May Affect Future Results.”

ITEM 9.01—FINANCIAL STATEMENTS AND EXHIBITS

The following is filed as an exhibit to this report:

Exhibit Number	Title of Document	Location
99.1	Press release dated February 9, 2006	Attached

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SKYWEST, INC.
Date: February 9, 2006	By	/s/ Bradford R. Rich
	Bradford R. Rich, Executive Vice President,
	Chief Financial Officer and Treasurer

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EX-99.1

EXHIBIT 99.1

NEWS RELEASE

For Further Information Contact:

Michael J. Kraupp

Vice President Finance and Assistant Treasurer

Telephone:  (435) 634-3212

Fax:  (435) 634-3205

FOR IMMEDIATE RELEASE:  February 9, 2006

SKYWEST ANNOUNCES FOURTH QUARTER AND
2005 ANNUAL EARNINGS

St. George, Utah—SkyWest, Inc. (SkyWest) (NASDAQ: SKYW) today reported operating revenues of $742.4 million for the quarter ended December 31, 2005, a 127.2% increase, compared to $326.7 million for the same period last year. SkyWest reported net income of $38.7 million for the quarter ended December 31, 2005, or $0.64 per diluted share, an 82.1% increase, compared to $21.2 million of net income or $0.37 per diluted share for the same period last year.

SkyWest reported operating revenues of $2.0 billion for the year ended December 31, 2005, a 69.9% increase, compared to $1.2 billion for the same period last year. SkyWest reported net income of $112.3 million for the year ended December 31, 2005, or $1.90 per diluted share, a 37.0% increase, compared to $82.0 million of net income or $1.40 per diluted share for the same period last year.

On September 7, 2005, SkyWest completed the acquisition of Atlantic Southeast Airlines (ASA) from Delta Air Lines, Inc. for the purchase price of $426.6 million. The total purchase price of $426.6 million and $50 million related to certain aircraft financing deposits were paid to Delta at closing and in December 2005 when Delta obtained authorization from the U.S. Bankruptcy Court to affirm its renegotiated Delta Connection agreements with SkyWest Airlines and ASA. As a result of the acquisition, ASA became a wholly-owned subsidiary of SkyWest and SkyWest’s consolidated operations and financial results for periods subsequent to September 7, 2005, reflect the financial and operating results of ASA (including the addition of 153 aircraft operated by ASA for such periods). The following discussion of the primary items of significance for SkyWest includes the operating activity of ASA during the period of the acquisition date through December 31, 2005.

The primary items of significance affecting SkyWest’s financial performance during the fourth quarter of 2005 are outlined below:

Total operating revenues for the fourth quarter of 2005 increased primarily as a result of a 125.4% increase in available seat miles (ASMs) and due to increased fuel cost reimbursements by SkyWest Airlines’s and ASA’s major partners that are recorded as operating revenues under contract flying arrangements.

Total operating expenses and interest per ASM for the fourth quarter of 2005, excluding fuel charges, of $243.2 million or $0.052 per ASM, decreased approximately 8.8% to $0.093 from $0.102 for the same

quarter of 2004, primarily as a result of acquiring 30 new 70-seat regional jet aircraft since December 31, 2004.

Total ASMs for the fourth quarter of 2005 increased 125.4% from the fourth quarter of 2004, primarily as a result of SkyWest increasing its fleet size to 380 aircraft as of December 31, 2005, from 210 aircraft as of December 31, 2004. During the quarter, SkyWest took delivery of five new 70-seat regional jet aircraft. At December 31, 2005, SkyWest’s fleet consisted of 306 regional jets (108 United and 198 Delta), 62 EMB-120 aircraft (49 United and 13 Delta) and 12 ATR-72 aircraft (12 Delta). During the fourth quarter of 2005, SkyWest generated 4.72 billion ASMs, compared to 2.09 billion ASMs during the same period of 2004.

On September 14, 2005, Delta together with certain affiliated entities, filed a voluntary petition for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of New York. On October 6, 2005, the U.S. Bankruptcy Court for the Southern District of New York authorized Delta to assume its obligations under the Delta Connection agreements for both SkyWest Airlines and ASA that were entered into in conjunction with SkyWest’s acquisition of ASA. The court’s approval was not appealed and subsequently, during the quarter ended December 31, 2005, SkyWest released $120 million of the previously escrowed funds deposited by SkyWest at closing of the ASA acquisition.

At December 31, 2005, SkyWest had approximately $324.5 million in cash and marketable securities ($24.8 million restricted cash relating primarily to collateral for worker’s compensation policies and remaining escrow for the ASA acquisition), compared to approximately $549.7 as of December 31, 2004 ($9.2 million restricted cash related to collateral for worker’s compensation policies). During the quarter, SkyWest took delivery of five new 70-seat regional jet aircraft from Bombardier and financed the new aircraft acquisitions with long-term permanent U.S. leveraged leases and third party long-term debt.

SkyWest’s long-term debt was $1.42 billion as of December 31, 2005, compared to $463.2 million at December 31, 2004, as a result of the acquisition of ASA previously noted. SkyWest has significant long-term lease obligations that are recorded as operating leases and are not reflected as liabilities on SkyWest’s consolidated balance sheets. At a 7.0% discount factor, the present value of these lease obligations was approximately $2.1 billion as of December 31, 2005.

Under SkyWest Airlines’s United Express agreement, specific amounts are included in the rates charged for mature maintenance on regional jet aircraft engines that SkyWest records as revenue. However, consistent with the change to a time and material maintenance policy, as more fully described in SkyWest’s Annual Report on Form 10-K for the year ended December 31, 2004, SkyWest records maintenance expense on its regional jet aircraft engines as the maintenance events occur. As a result, during the fourth quarter of 2005, SkyWest collected and recorded as revenue $5.3 million (pretax) under the United Express agreement with no corresponding offset for regional jet engine maintenance overhauls since there were none incurred.

During the quarter ended December 31, 2005, SkyWest discovered that in January and July 2005 it had issued shares of common stock under its Employee Stock Purchase Plan (the Purchase Plan) that exceeded the number of shares authorized for issuance under the Purchase Plan. On February 8, 2006, after reviewing the issues associated with the over issuance, including SkyWest’s amendment of the SkyWest, Inc. Executive Stock Incentive Plan (the Executive Plan) and the SkyWest, Inc. 2001 Allshare Stock Option Plan (the Allshare Plan) to reduce the number of shares issuable pursuant to those plans by a number that exceeded the number of shares issued in excess of the number of shares authorized pursuant to the Purchase Plan, the staff of The Nasdaq Stock Market notified SkyWest that the issuance of shares of common stock in excess of the number of shares authorized pursuant to the

Purchase Plan was in violation of the shareholder approval rule set forth in Nasdaq Marketplace Rule 4350(i)(1)(A). The Nasdaq staff letter also notified SkyWest that the reduction in the number of shares issuable pursuant to the Executive Plan and the Allshare Plan, both of which had been previously approved by SkyWest shareholders, had the effect of restoring SkyWest’s compliance with Marketplace Rule 4350(i)(1)(A). The Nasdaq staff letter indicates that, as of the date of the letter, the matter is closed.

SkyWest Airlines, based in St. George, Utah, and ASA, based in Atlanta, Georgia are wholly owned subsidiaries of SkyWest. SkyWest Airlines operates as United Express and Delta Connection carriers under contractual agreements with United Airlines and Delta Air Lines. ASA operates as a Delta Connection carrier under a contractual agreement with Delta Air Lines. System-wide, SkyWest serves a total of approximately 218 cities in the United States, Canada, Mexico and the Caribbean, with approximately 2,400 daily departures. This press release and additional information regarding SkyWest and its subsidiaries can be accessed at www.skywest.com.

In addition to historical information, this release contains forward-looking statements. “SkyWest” may, from time-to-time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements encompass SkyWest’s beliefs, expectations, hopes or intentions regarding future events. Words such as “expects,” “intends,” “believes,” “anticipates,” “should,” “likely” and similar expressions identify forward-looking statements. All forward-looking statements included in this release are made as of the date hereof and are based on information available to SkyWest as of such date. SkyWest assumes no obligation to update any forward-looking statement. Actual results will vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others: Delta’s bankruptcy proceedings; the failure to integrate the operations and employees of SkyWest and ASA and achieve the anticipated synergies as a result of the acquisition; the failure to successfully operate as anticipated under the terms of the Delta Connection Agreements; the impact of negotiations with ASA’s organized labor forces and the impact of the costs of such labor forces on SkyWest’s operations and financial condition; the failure to accurately forecast acquisition-related costs; and the challenges of competing successfully in a highly competitive and rapidly changing industry. Other factors that may cause actual results to vary from SkyWest’s expectations include developments associated with fluctuations in the economy and the demand for air travel; bankruptcy proceedings involving United; ongoing negotiations between SkyWest and its major partners regarding their contractual relationships; variations in market and economic conditions; employee relations and labor costs;  rapidly escalating fuel costs; the degree and nature of competition; potential fuel shortages in markets where SkyWest Airlines or ASA operates; the impact of weather-related or other natural disasters on air travel and airline costs; the ability of SkyWest Airlines and ASA to expand services in new and existing markets and to maintain profit margins in the face of pricing pressures; aircraft deliveries; SkyWest’s ability to obtain financing; and other unanticipated factors. Risk factors, cautionary statements and other conditions which could cause actual results to differ from management’s current expectations are contained in SkyWest’s filings with the Securities and Exchange Commission, including the section of SkyWest’s Annual Report on form 10-K, entitled “Factors That May Affect Future Results.”

(more)

SKYWEST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars and Shares in Thousands, Except per Share Amounts)

	Three Months Ended December 31,						Year Ended December 31,
	2005			2004			2005			2004
Operating revenues:
Passenger	$	734,459		$	322,903		$	1,938,450		$	1,139,580
Ground handling and other	7,905			3,785			25,598			16,464
	742,364			326,688			1,964,048			1,156,044
Operating expenses:
Flying operations	409,328			171,248			1,079,292			577,492
Customer service	94,359			50,656			271,746			180,578
Maintenance	78,989			32,172			186,675			113,537
Depreciation and amortization	45,037			19,369			115,275			76,817
General and administrative	29,281			16,425			90,652			62,844
	656,994			289,870			1,743,640			1,011,268
Operating income	85,370			36,818			220,408			144,776
Other income (expense):
Interest income	2,778			3,496			12,943			10,050
Interest expense	(27,821		)	(4,899		)	(53,331		)	(18,239		)
Gain (loss) on sale of marketable securities and equipment	191			—			(394		)	—
	(24,852		)	(1,403		)	(40,782		)	(8,189		)
Income before income taxes	60,518			35,415			179,626			136,587
Provision for income taxes	21,834			14,166			67,359			54,635
Net income	$	38,684		$	21,249		$	112,267		$	81,952
Basic earnings per share	$	0.66		$	0.37		$	1.94		$	1.42
Diluted earnings per share	$	0.64		$	0.37		$	1.90		$	1.40
Weighted average common shares:
Basic	58,218			57,458			57,851			57,858
Diluted	60,197			57,967			58,933			58,350

Unaudited Operating Highlights

	Three Months Ended December 31,								Year Ended December 31,
Operating Highlights	2005			2004			% Change		2005			2004			% Change
Passengers carried	7,355,036			3,612,943			103.6		20,343,975			13,424,520			51.5
Revenue passenger miles (000)	3,538,828			1,532,583			130.9		9,538,906			5,546,069			72.0
Available seat miles (000)	4,717,972			2,092,730			125.4		12,718,973			7,546,318			68.5
Passenger load factor	75.0		%	73.2		%	1.8	pts	75.0		%	73.5		%	1.5	pts
Passenger breakeven load factor	69.2		%	66.0		%	3.2	pts	68.6		%	65.5		%	3.1	pts
Yield per revenue passenger mile	$	0.208		$	0.211		(1.4	)	$	0.203		$	0.205		(1.0	)
Revenue per available seat mile	$	0.157		$	0.156		.6		$	0.154		$	0.153		.7
Cost per available seat mile	$	0.145		$	0.141		2.8		$	0.141		$	0.136		3.7
Fuel cost per available seat mile	$	0.052		$	0.039		33.3		$	0.046		$	0.033		39.4
Average passenger trip length	481			424			13.4		469			413			13.6

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