10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

ý	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2006
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number 0-14719

SKYWEST, INC.

Incorporated under the laws of Utah	87-0292166
	(I.R.S. Employer ID No.)

444 South River Road
St. George, Utah 84790
(435) 634-3000

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes     ý     No     o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý         Accelerated filer o         Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes     o     No     ý

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at May 8, 2006
Common stock, no par value	63,681,415

SKYWEST, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

	Forward-Looking Statements
PART I	Financial Information:
Item 1	Financial Statements Consolidated Balance Sheets as of March 31, 2006 (unaudited) and December 31, 2005
	Consolidated Statements of Income for the Quarters ended March 31, 2006 (unaudited) and 2005
	Condensed Consolidated Statements of Cash Flows for the Quarters ended March 31, 2006 (unaudited) and 2005
	Notes to Condensed Consolidated Financial Statements
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3	Quantitative and Qualitative Disclosures About Market Risk
Item 4	Controls and Procedures
PART II	Other Information:
Item 1	Legal Proceedings
Item 1A	Risk Factors
Item 6	Exhibits
	Signature
Exhibit 31.1	Certification of Chief Executive Officer
Exhibit 31.2	Certification of Chief Financial Officer
Exhibit 32.1	Certification of Chief Executive Officer
Exhibit 32.2	Certification of Chief Financial Officer

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PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

SKYWEST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

ASSETS

	March 31, 2006			December 31, 2005
	(unaudited )
CURRENT ASSETS:
Cash and cash equivalents	$	147,407		$	140,614
Marketable securities	175,805			159,054
Restricted cash	22,100			24,823
Income tax receivable	1,395			12,534
Receivables, net	33,157			28,267
Inventories	72,226			68,611
Prepaid aircraft rents	223,216			178,762
Deferred tax assets	65,528			41,012
Other current assets	34,561			39,955
Total current assets	775,395			693,632
PROPERTY AND EQUIPMENT:
Aircraft and rotable spares	2,762,711			2,727,595
Deposits on aircraft	36,570			90,235
Buildings and ground equipment	154,165			150,426
	2,953,446			2,968,256
Less-accumulated depreciation and amortization	(436,352		)	(415,734		)
Total property and equipment, net	2,517,094			2,552,522
OTHER ASSETS
Intangible assets, net	32,436			33,043
Other assets	53,334			41,449
Total other assets	85,770			74,492
Total assets	$	3,378,259		$	3,320,646

See accompanying notes to consolidated financial statements.

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LIABILITIES AND STOCKHOLDERS’ EQUITY

	March 31, 2006			December 31, 2005
	(unaudited )
CURRENT LIABILITIES:
Current maturities of long-term debt	$	279,063		$	331,145
Accounts payable	82,648			95,283
Lines of credit	90,000			60,000
Accrued salaries, wages and benefits	53,676			53,105
Accrued aircraft rents	22,409			26,279
Taxes other than income taxes	19,258			18,224
Other current liabilities	35,952			31,881
Total current liabilities	583,006			615,917
OTHER LONG-TERM LIABILITIES	34,565			33,829
LONG-TERM LINE OF CREDIT	—			30,000
LONG-TERM DEBT, net of current maturities	1,461,218			1,422,758
DEFERRED INCOME TAXES PAYABLE	260,169			225,068
DEFERRED AIRCRAFT CREDITS	78,063			79,876
STOCKHOLDERS’ EQUITY:
Preferred stock, 5,000,000 shares authorized; none issued	—			—
Common stock, no par value, 120,000,000 shares authorized; 66,390,354 and 65,509,631 shares issued, respectively	380,034			364,535
Retained earnings	615,392			582,620
Treasury stock, at cost, 6,794,056 shares	(32,551		)	(32,551		)
Accumulated other comprehensive loss	(1,637		)	(1,406		)
Total Stockholders’ Equity	961,238			913,198
Total liabilities and stockholders’ equity	$	3,378,259		$	3,320,646

See accompanying notes to consolidated financial statements.

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SKYWEST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share amounts)

	Quarter Ended March 31,
	2006			2005
OPERATING REVENUES:
Passenger	$	734,426		$	335,557
Ground handling and other	8,429			4,735
Total operating revenues	742,855			340,292
OPERATING EXPENSES:
Flying operations	398,466			178,017
Customer service	99,676			55,778
Maintenance	78,311			32,032
Depreciation and amortization	45,489			21,032
General and administrative	38,050			18,987
Total operating expenses	659,992			305,846
OPERATING INCOME	82,863			34,446
OTHER INCOME (EXPENSE):
Interest income	2,907			2,962
Interest expense	(28,543		)	(6,646		)
Other	(1,097		)	—
Total other expense	(26,733		)	(3,684		)
INCOME BEFORE INCOME TAXES	56,130			30,762
PROVISION FOR INCOME TAXES	21,542			11,997
NET INCOME	$	34,588		$	18,765
Basic earnings per share	$	0.59		$	0.33
Diluted earnings per share	$	0.57		$	0.32
Weighted average common shares:
Basic	59,118			57,668
Diluted	60,417			58,197
Dividends declared per share	$	0.03		$	0.03

See accompanying notes to consolidated financial statements.

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SKYWEST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(In thousands)

	Quarter Ended March 31,
	2006			2005
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	44,823		$	(12,929	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(33,768		)	(69,584		)
Sales of marketable securities	16,786			70,060
Acquisition Disposition of property and equipment:
Aircraft and rotable spare parts	(17,076		)	(149,226		)
Deposits on aircraft	(416		)	(10,767		)
Buildings and ground equipment	(3,739		)	(1,767		)
Proceeds from sales of aircraft	5,776			11,734
Increase in other assets	(11,623		)	(2,305		)
NET CASH USED IN INVESTING ACTIVITIES	(44,060		)	(151,855		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt	7,093			140,980
Tax benefit from exercise of common stock options	382			—
Return of deposits on aircraft and rotable spare parts	7,572			17,810
Principal payments on long-term debt	(20,715		)	(5,489		)
Net proceeds from issuance of common stock	13,488			3
Payment of cash dividends	(1,790		)	(1,756		)
NET CASH PROVIDED BY FINANCING ACTIVITIES	6,030			151,548
Increase (Decrease) in cash and cash equivalents	6,793			(13,236		)
Cash and cash equivalents at beginning of period	140,614			113,020
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	147,407		$	99,784
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest, net of capitalized amounts	$	25,895		$	4,474
Income taxes	$	100		$	69
NON-CASH INVESTING AND FINANCING ACTIVITIES
Deposits applied to delivered aircraft	$	—		$	22,043
Debt transferred to operating lease	$	—		$	55,375

See accompanying notes to consolidated financial statements.

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SKYWEST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note A — Condensed Consolidated Financial Statements

The condensed consolidated financial statements of SkyWest, Inc. (“SkyWest, “we” or “us”) and its wholly-owned subsidiaries, SkyWest Airlines, Inc. (“SkyWest Airlines”) and Atlantic Southeast Airlines, Inc. (“ASA”) included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although we believe that the following disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the interim periods presented. All adjustments are of a normal recurring nature, unless otherwise disclosed. We suggest that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2005 and the Company’s Current Report on Form 8-K dated September 7, 2005.  The results of operations for the three months ended March 31, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006.

Note B – Acquisition of ASA

On September 7, 2005, we completed our acquisition of all of the issued and outstanding capital stock of ASA.  ASA is a regional airline with primary hub operations in Atlanta, Salt Lake City and Cincinnati.

Pursuant to the terms of the Stock Purchase Agreement entered into between us, Delta Air Lines, Inc. (“Delta”), and ASA Holdings, Inc. (“ASA Holdings”) we paid $421.3 million in cash for ASA, plus $5.3 million of transaction fees.  Additionally, as part of the purchase, we assumed approximately $1,251.3 million in long-term debt which combined with the amounts paid at closing, resulted in an aggregate purchase price of approximately $1,677.9 million. The purchase price of ASA has been adjusted to reflect certain post-closing adjustments related to ASA’s working capital as of September 7, 2005.

In connection with the acquisition of ASA, SkyWest Airlines and Delta entered into an Amended and Restated Delta Connection Agreement and ASA and Delta entered into a Second Amended and Restated Delta Connection Agreement (collectively, the ”Delta Connection Agreements”), whereby SkyWest Airlines and ASA agreed to provide regional airline service in the Delta flight system. Among other provisions, the Delta Connection Agreements provide for the transfer of certain ownership and lease rights among SkyWest Airlines, ASA, Delta and Comair Inc., a wholly-owned subsidiary of Delta (“Comair”).  As part of the Delta Connection Agreement, SkyWest Airlines, ASA, Delta and/or Comair, as applicable, have terminated two master sublease agreements with respect to ten Canadair CRJ200 Regional Jets (“CRJ200s”) and transferred to Delta ten CRJ200s financed in part by an affiliate of Bombardier, and ASA and Delta entered into a sublease agreement whereby ASA will sublease the ten CRJ200s from Delta.

Under the terms of the Stock Purchase Agreement, Delta and ASA Holdings have agreed to indemnify us, and we have agreed to indemnify Delta and ASA Holdings from damages suffered due to breaches of representations, warranties or covenants made in the Stock Purchase Agreement.  Recoveries under the indemnification provisions of the Purchase Agreement are subject to certain minimum losses per event, and an aggregate minimum for all losses.  Recoveries are also subject to an aggregate cap on all losses.

The acquisition value of ASA was accounted for using the purchase method of accounting.  Accordingly, the aggregate purchase price was assigned to the assets acquired and liabilities assumed based on fair market values at the respective purchase date.  We recorded an intangible of approximately $33 million relating to the acquisition of ASA.  The intangible is being amortized over fifteen years under the straight-line method.

Note C — Stock Options

In August 2000, our shareholders approved the adoption of two new stock option plans: the Executive Stock Incentive Plan (the “Executive Plan”) and the 2001 Allshare Stock Option Plan (the “Allshare Plan”). Both plans became effective January 1, 2001. These plans replaced our Combined Incentive and Non-Statutory Stock Option Plans (the “Prior Plans”); however, all outstanding options under Prior Plans remain outstanding. No further grants will be made under the Prior Plans. As of March 31, 2006, there were approximately 940,000 employee options outstanding under the Prior Plans. The Executive Plan provides for the issuance of options to purchase up to 4,000,000 shares of common stock to officers, directors and other management employees of which 3,696,477 options had been issued as of March 31, 2006. The Allshare Plan provides for the issuance of options to purchase up to 4,000,000 shares of common stock to employees of the Company, of which 2,508,961 options had been issued as of March 31, 2006. The Executive Plan and Allshare Plan are both administered by the Compensation Committee of our Board of Directors (the “Compensation Committee”) who designate option grants as either incentive or non-statutory. Incentive stock options are granted at not less than 100% of the market value of the underlying common stock on the date of grant. Non-statutory stock options are granted at a price as determined by the Compensation Committee.

Prior to January 1, 2006, we applied Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its stock-based compensation plans.  Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, requires pro forma information regarding net income and net income per share as if we had accounted for its stock options under the fair value method.  We did not record any stock-based compensation expense related to stock options for the year ended December 31, 2005.

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The following table contains the pro forma disclosures and the related impact on net income and net income per share (in thousands, except per share information):

	For quarters ended March 31,
	2006			2005
Net income:
As reported	$	34,588		$		18,765
Stock based compensation under fair value method	—			(1,600			)
Pro forma	$	34,588		$	17,165
Net income per common share:
Basic as reported	$		0.59	$	0.33
Basic pro forma				$	0.30
Diluted as reported	$		0.57	$	0.32
Diluted pro forma				$	0.29

Effective January 1, 2006 we adopted the fair value recognition provisions of SFAS. 123(R), Share-Based Payment, using the modified-prospective-transition method.  Under the modified-prospective-transition method, compensation cost recognized during the three months ended March 31, 2006 includes compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123(R).  Results for prior periods have not been restated.

The fair value of stock options has been estimated as of the grant date using the Black-Scholes option pricing model.  During the quarter ended March 31, 2006 we did not grant any stock options.  The following assumptions were used for grants for the years  ended December 31, 2005 and 2004: a risk-free interest rate of 3.87% for 2005 and 2.75% for 2004, a volatility factor of the expected common stock price of .391 for 2005 and .422 for 2004, a weighted average expected life of six years for the stock options granted in February 2005 and a weighted average expected life of four years for all previously granted options presented and an expected annual dividend rate of 0.70% for 2005 and 0.63% for 2004. We used historical data to estimate pre-vesting option forfeitures.  Forfeiture rates for the years 2005 and 2004 were 6.70% and 6.60%, respectively.  As required by SFAS 123(R), we recorded share-based compensation expense only for those options that are expected to vest.  The estimated fair value of the stock options is amortized over the vesting period of the respective stock option grants.

As a result of adopting SFAS No. 123(R) on January 1, 2006, our income before income taxes and net income for the quarter ended March 31, 2006 was $1.6 million and $1.3 million lower, respectively, than if we had continued to account for share-based compensation under Opinion 25.  Basic and diluted earnings per share for the quarter ended March 31, 2006 would have been $0.61    and $0.59, respectively, if the Company had not adopted SFAS No. 123(R), compared to reported basic and diluted earnings per share of $0.59 and $0.57, respectively.

The following table illustrates the impact of our adoption of SFAS No. 123(R) on selected operations line items for the three months ended March 31, 2006.

	As Reported Under SFAS No. 123 R		Under APB 25		Difference
Income before income tax	$	56,130	$	57,759	$	(1,629	)
Provision for income tax	21,542		21,900		358
Net Income	$	34,588	$	35,859	$	(1,271	)
Shares
Basic	59,118		59,118		59,118
Diluted	60,417		60,417		60,417
EPS
Basic	$	0.59	$	0.61	$	(0.02	)
Diluted	$	0.57	$	0.59	$	(0.02	)

Prior to the adoption of SFAS No. 123(R), we presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the Statement of Cash Flows.  SFAS No. 123(R) requires the cash flows resulting from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows.  The $382,000 excess tax benefit classified as a financing cash inflow would have been classified as an operating cash inflow if the company had not adopted SFAS No. 123(R).

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A summary of stock option activity under all option plans during the three months ended March 31, 2006 is as follows:

Options	Shares		Weighted Average Exercise		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
(Aggregate intrinsic value in thousands)
Outstanding at December 31, 2005	6,301,002		$	18.38
Granted	—
Exercised	(880,723	)
Cancelled	(16,408	)
Outstanding at March 31, 2006	5,403,871		$	18.87	7.0	$	48,605,291
Exercisable at March 31, 2006	2,550,650		$	19.97	5.3	$	23,729,685

The aggregate intrinsic value of options outstanding at March 31, 2006 is calculated as the difference between the exercise price of the underlying options and the closing market price as of March 31, 2006.

We had $9.4 million of total unrecognized compensation costs related to non-vested stock options.  Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.  We expect to recognize this cost over a weighted average period of 1.7 years.

We received $13.5 million in cash from option exercises during the three months ended March 31, 2006.

Note D — Marketable Securities

Our investments in marketable debt securities are deemed by management to be available for sale and are reported at fair market value with the net unrealized appreciation or depreciation reported as a component of accumulated other comprehensive loss in stockholders’ equity. At the time of sale, any realized appreciation or depreciation, calculated by the specific identification method, is recognized in interest income in operating results.  Our position in marketable debt securities as of March 31, 2006 and December 31, 2005 was as follows (in thousands):

	March 31, 2006
	(Unaudited)					December 31, 2005
Investment Types	Cost			Market Value		Cost			Market Value
Bonds and bond funds	173,458			170,812		155,192			152,929
Asset backed securities	5,068			4,993		6,167			6,125
	178,526			175,805		161,359			159,054
Unrealized
depreciation	(2,721		)	—		(2,305		)	—
Total	$	175,805		$	175,805	$	159,054		$	159,054

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Marketable securities had the following maturities as of March 31, 2006 (in thousands):

Maturities
Apr – Dec 2006	$	111,577
Year 2007 through 2010	3,315
Years 2011 through 2015	2,073
Thereafter	58,840

We classified all marketable securities as short-term since we have the intent to maintain a liquid portfolio and the right to redeem the securities within the next year.

Note E — Passenger and Ground Handling Revenue

We recognize passenger and ground handling revenues when the service is provided.  Under our contract and pro-rate flying agreements with Delta and United revenue is considered earned when the flight is completed.  In the event that our contractual rates have not been finalized at quarterly or annual financial statement dates, we record revenues based on a prior period’s approved rates, adjusted to reflect management’s current estimate of the results of the then-current contract negotiations.

On September 7, 2005, we completed our acquisition of all of the issued and outstanding capital stock of ASA from ASA Holdings, Inc. a subsidiary of Delta.  ASA is a regional airline with primary hub operations in Atlanta, Salt Lake City and Cincinnati.  In connection with the acquisition of ASA, SkyWest Airlines and ASA entered into Delta Connection Agreements with Delta, which became effective September 8, 2005.  On September 14, 2005, Delta filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code.  With the approval of the U.S. Bankruptcy Court charged with administration of Delta’s reorganization proceedings, Delta assumed the Delta Connection Agreements on October 6, 2005.

Each of the Delta Connection Agreements provides for a fifteen-year term, subject to early termination by Delta or SkyWest Airlines or ASA, as applicable, upon the occurrence of certain events.  Delta’s termination rights include (i) cross-termination rights between the two Delta Connection Agreements, (ii) the right to terminate each of the Delta Connection Agreements upon the occurrence of certain force major events, including certain labor-related events, that prevent SkyWest Airlines or ASA from performance for certain periods, and (iii) the right to terminate each of the ASA Delta Connection Agreements if SkyWest Airlines or ASA fails to maintain competitive base rate costs, subject to certain adjustment rights.  In addition to the termination rights, Delta has the right to extend the term of the Delta Connection Agreements upon the occurrence of certain events or at the expiration of the initial term.  SkyWest Airlines and ASA have the right to terminate their respective Delta Connection Agreements upon the occurrence of certain breaches by Delta, including the failure to cure payment defaults.  SkyWest Airlines and ASA also have cross-termination rights between the two Delta Connection Agreements.

Under the terms of the SkyWest Airlines Delta Connection Agreement, Delta agrees to compensate us for our direct costs associated with operating the Delta Connection flights, plus a payment based on block hours flown.  However, among other changes, the SkyWest Airlines Delta Connection Agreement established a multi-year rate reset provision.  Under the terms of the ASA Delta Connection Agreement, Delta agrees to compensate ASA for its direct costs associated with operating the Delta Connection flights, plus, if ASA completes a certain minimum percentage of its Delta Connection flights, an additional percentage of such costs.  Additionally, ASA’s Delta Connection Agreement provides for the payment of incentive compensation upon satisfaction of certain performance goals.  Under the ASA Delta Connection Agreement, excess margins over certain percentages must be returned or shared with Delta, depending on various conditions.  The parties to the Delta Connection Agreements make customary representations, warranties and covenants, and the agreements contain other provisions typical of agreements of this kind, including with respect to various operational, marketing and administrative matters.

The SkyWest Airlines and ASA Delta Connection Agreements also provide a weekly payment for an amount per aircraft designed to reimburse us for certain aircraft ownership costs. In accordance with Emerging Issues Task Force No. 01-08, Determining Whether an Arrangement Contains a Lease, the we have concluded that a component of its revenue under the Delta Connection Agreements is rental income, inasmuch as the Delta Connection Agreements identify the “right of use” of a specific type and number of aircraft over a stated period of time. The amounts deemed to be rental income under the Delta Connection Agreement for the quarters ended March 31, 2006 and 2005 were $67.6 million and $18.8 million, respectively.  These amounts were recorded in passenger revenue on our consolidated statements of income.

Effective July 31, 2003, SkyWest Airlines entered into the United Express Agreement, which sets forth the principal terms and

10

conditions governing our United Express operations.  The United Express Agreement has received all necessary approvals from the U.S. Bankruptcy Court.  Under the terms of the United Express Agreement, SkyWest Airlines is compensated primarily on a fee-per-completed-block hour and departure basis and is reimbursed for fuel and other costs.  Additionally, SkyWest Airlines is eligible for incentive compensation upon the achievement of certain performance criteria.

The United Express Agreement also provides a monthly reimbursement for an amount per aircraft designed to reimburse us for certain aircraft ownership costs. In accordance with EITF 01-08, the we have concluded that a component of its revenue under the United Express Agreement is rental income, inasmuch as the United Express Agreement identifies the “right of use” of a specific type and number of aircraft over a stated period of time. The amounts deemed to be rental income under the United Express Agreement for the quarters ended March 31, 2006 and 2005 were $49.7 and $37.4 million, respectively.  These amounts were recorded in passenger revenue on our consolidated statements of income.  The United Express Agreement contains certain provisions pursuant to which the parties could terminate the agreement, subject to certain rights of the other party, if certain performance criteria are not maintained.

Our revenues could be impacted by a number of factors, including changes to its code-share agreements with Delta and United, contract modifications resulting from contract re-negotiations and our ability to earn incentive payments contemplated under its code-share agreements.

The preparation of financial statements in conformity with accounting principals generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note F — Net Income Per Common Share

Basic net income per common share (“Basic EPS”) excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an antidilutive effect on net income per common share. During the quarter ended March 31, 2006 all options were included in the computation of Diluted EPS.  During the quarter ended March 31, 2005, options to acquire 3,779,000 shares were excluded from the computation of Diluted EPS as their impact was anti-dilutive.

The calculation of the weighted average number of common shares outstanding for Basic EPS and Diluted EPS for the periods indicated (in thousands, except per share data) is as follows:

	(Unaudited)
	For the quarters ended March 31,
	2006		2005
Numerator
Net Income	$	34,588	$	18,765
Denominator
Weighted average number of common shares outstanding	59,118		57,668
Effect of outstanding stock options	1,299		529
Weighted average number of shares for Diluted net income per common share	60,417		58,197
Basic earnings per share	$	0.59	$	0.33
Diluted earnings per share	$	0.57	$	0.32

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Note G – Comprehensive Income

We report comprehensive income in accordance with SFAS No. 130, Reporting Comprehensive Income, which establishes standards for reporting and displaying comprehensive income and its components in financial statements. Comprehensive income includes charges and credits to stockholders’ equity that are not the result of transactions with shareholders.  Also, our comprehensive income consisted of net income plus changes in unrealized depreciation on marketable securities, net of tax, for the periods indicted (in thousands):

	(Unaudited)
	For the quarters ended March 31,
	2006			2005
Net Income	$	34,588		$	18,765
Unrealized depreciation on marketable securities, net of tax	(231		)	(811		)
Comprehensive income	$	34,357		$	17,954

Note H – Long-term Debt and Lines of Credit

Long-term debt consisted of the following for the periods indicated (in thousands):

	March 31, 2006			December 31, 2005
	(Unaudited)
Notes payable to banks, due in semi-annual installments, variable interest based on LIBOR, or with interest rates ranging from 4.16% to 6.23% through 2012 to 2020, secured by aircraft	$	660,908		$	666,758
Notes payable to a financing company, due in semi-annual installments, variable interest based on LIBOR, or with interest rates ranging from 3.51% to 7.01% through 2006 to 2021, secured by aircraft	643,656			643,831
Notes payable to banks, due in semi-annual installments plus interest at 6.06% to 7.18% through 2021, secured by aircraft	294,002			297,624
Notes payable to a financing company, due in semi-annual installments plus interest at 5.78% to 6.23% through 2019, secured by aircraft	90,292			93,327
Notes payable to banks, due in monthly installments plus interest of 6.05% to 7.38% through 2020, secured by aircraft	30,876			31,406
Notes payable to banks, due in semi-annual installments, plus interest at 3.72% to 3.86%, net of the benefits of interest rate subsidies through the Brazilian Export financing program, through 2011, secured by aircraft	13,249			13,546
Notes payable to a bank, due in monthly installments interest based on LIBOR through 2012, interest rate at 7.9% secured by building	7,298			7,411
Long-term debt	$	1,740,281		$	1,753,903
Less current maturities	(279,063		)	(331,145		)
Long-term debt, net of current maturities	$	1,461,218		$	1,422,758

At March 31, 2006, the three-month and six-month LIBOR rates were 5.0% and 5.14%, respectively.   At December 31, 2005, the three-month and six-month LIBOR rates were 4.54% and 4.70%, respectively.

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The aggregate amounts of principal maturities of long-term debt as of March 31, 2006 were as follows (in thousands):

2007	279,063
2008	99,884
2009	104,111
2010	108,540
2011	113,199
Thereafter	1,035,484
	$	1,740,281

During 2005, we increased an existing $10.0 million line-of-credit facility, with a bank, to $40.0 million. As of March 31, 2006, we borrowed $30.0 million under the facility. The facility expires on January 31, 2007 and bears interest at a rate equal to prime less 0.25%, which was a net rate of 7.5% on March 31, 2006.  Additionally, we entered into another borrowing facility with a financing company and borrowed $60.0 million. The facility expired on March 21, 2006.  Prior to that date, we extended the due date on the line to September 30, 2006.  The facility bears interest on a floating basis which was 7.07% at March 31, 2006.  The borrowings under these facilities were paid off subsequent to March 31, 2006.

During the quarter ended March 31, 2006, we refinanced four ASA CRJ200s from short-term financing facilities into long-term financing facilities.

As of March 31, 2006, we had $34.9 million in letters of credit and surety bonds out standing with various banks and surety institutions.

Certain of our long-term debt arrangements contain limitations on, among other things, the sale or lease of assets and ratio of long-term debt to tangible net worth.  As of March 31, 2006, we were in compliance with all debt covenants contained in our long-term debt agreements. 

Note I – Commitments and Contingencies

We lease 262 aircraft, as well as airport facilities, office space, and various other property and equipment under non-cancelable operating leases which are generally on a long-term net rent basis where we pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased property.  We expect that, in the normal course of business, leases that expire will be renewed or replaced by other leases.  The following table summarizes future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of March  31, 2006 (in thousands):

April through December 2006	$	256,661
2007	302,277
2008	278,434
2009	293,723
2010	287,274
2011	284,170
Thereafter	1,924,928
	$	3,627,467

On March 31, 2006, we had commitments of approximately $463 million to purchase 17 CRJ900 aircraft and related flight equipment.  We currently anticipate that we will take delivery of these aircraft from April 2006 through April 2007.  We have also obtained options to acquire another 70 CRJ aircraft that can be delivered in either 70 or 90-seat configurations.  We presently anticipate that delivery dates for these aircraft could start in May 2007 and continue through April 2010; however, actual delivery dates remain subject to final determination as agreed upon by us and our code-share partners.

In January 2003, the FASB issued Interpretation No. 46, or (FIN 46), Consolidation of Variable Interest Entities, which requires the consolidation of variable interest entities. The majority of the our leased aircraft are owned and leased through trusts whose sole purpose is to purchase, finance and lease these aircraft to us; therefore, they meet the criteria of a variable interest entity. However, since these are single owner trusts in which we do not participate, we believe that we are not at risk for losses and are not considered the primary beneficiary. As a result, based on the current rules, we are not required to consolidate any of these trusts or any other entities in applying FIN 46. We believe that our maximum exposure under these leases is the aggregated amount of the remaining

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lease payments.

     We have leveraged lease agreements that typically agree to indemnify the equity/owner participant against liabilities that may arise due to changes in benefits from tax ownership of the respective leased aircraft.  The terms of these contracts range up to 18 years.   We did not accrue any liability relating to the indemnification to the equity/owner participant because the probability of this occurring is remote.

Note J – Legal Matters

We are subject to certain legal actions which we consider routine to our business activities.  As of March 31, 2006, we concluded, after consultation with legal counsel, that the ultimate outcome of such legal matters is not likely to have a material adverse effect on our financial position, liquidity or results of operations.

Note K – Subsequent Events

On April 17, 2006, we completed a public offering of 4,000,000 shares of common stock at a price of $26.05 per share. We received approximately $99.3 million in proceeds which were used for reduction of two revolving lines of credit, working capital and general corporate purposes.

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The following discussion and analysis presents factors that had a material effect on the results of operations of SkyWest, Inc. (“we” or “us”) during the quarters ended March 31, 2006 and 2005. Also discussed is our financial position as of the end of March 31, 2006 and 2005. You should read this discussion in conjunction with our consolidated financial statements, including the notes thereto, appearing elsewhere in this report or incorporated herein by reference.  This discussion and analysis contains forward-looking statements. Please refer to the sections of this Report entitled ‘‘Cautionary Statement Concerning Forward-Looking Statements’’ and “ Risk Factors” for discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

Through our wholly-owned subsidiaries, SkyWest Airlines, Inc. (“SkyWest Airlines”) and Atlantic Southeast Airlines, Inc. (“ASA”), we operate the largest regional airline in the United States.  As of March 31, 2006, SkyWest Airlines and ASA offered scheduled passenger and air freight service with approximately 2,360 total daily departures to 218 destinations in the United States, Canada, Mexico and the Caribbean.  Additionally, we provide ground handling services for approximately ten other airlines throughout our system.  As of March 31, 2006, our consolidated fleet consisted of 229 Bombardier CRJ200 Regional Jets (“CRJ200s”) (66 assigned to United Air Lines, Inc. (“United”) and 163 assigned to Delta Air Lines, Inc. (“Delta”), 92 Bombardier CRJ700 Regional Jets (“CRJ700s”) (52 assigned to United and 40 assigned to Delta), 62 Embraer EMB-120 Brasilia turboprops (“Brasilia turboprops”) (50 assigned to United and 12 assigned to Delta), and 12 Avions de Transport 72-210 turboprops (“ATR-72 turboprops”) (all assigned to Delta).  We believe our success in attracting multiple contractual relationships with major airline partners is attributable to our delivery of high-quality customer service with an all cabin-class fleet at a competitive cost structure.  For the month ended March 31, 2006, approximately 59.0% of our aggregate capacity was operated under the Delta code and approximately 41.0% was operated under the United code.

SkyWest Airlines has been a partner with Delta in Salt Lake City and United in Los Angeles since 1987 and 1997, respectively.  In 1998, SkyWest Airlines expanded its relationship with United to provide service in Portland, Seattle/Tacoma, San Francisco and additional Los Angeles markets.  In 2001, SkyWest Airlines expanded its operations to serve as the Delta Connection in Dallas/Fort Worth.  However, effective January 31, 2005, SkyWest Airlines re-deployed all its Delta Connection flights to Salt Lake City as a result of Delta’s decision to “de-hub” its Dallas/Fort Worth operations.  In 2004, SkyWest Airlines expanded its United Express operations to provide service in Chicago.  As of March 31, 2006, SkyWest Airlines operated as a Delta Connection carrier in Salt Lake City, and as a United Express carrier in Los Angeles, San Francisco, Denver, Chicago and the Pacific Northwest, operating more than 1,500 total daily flights.

On September 7, 2005, we completed the acquisition of ASA from Delta for $421.3 million in cash.  Additionally, as part of the purchase, we paid $5.3 million of transaction fees and ASA assumed approximately $1.25 billion in long-term debt.  In addition, we returned to Delta $50 million in deposits that Delta had previously paid on future ASA aircraft deliveries.  We believe the combination of SkyWest Airlines and ASA presents our company with new opportunities for growth through our two geographically-focused regional airline platforms – SkyWest Airlines in the Western United States and ASA in the Eastern United States.  We now provide the vast majority of regional airline service for Delta in Atlanta, its most important eastern hub, and Salt Lake City, its most important western hub.  In connection with the ASA acquisition, we have established new, separate, but substantially similar, long-term fixed-fee Delta Connection Agreements with Delta for both SkyWest Airlines and ASA.  We also obtained control of 26 gates in the Hartsfield-Jackson International Airport located in Atlanta, from which we currently provide service to Delta.  Delta has committed to provide to us opportunities to utilize 28 additional regional jets in our fleet by the end of 2007.  Delta has also agreed that, starting in 2008, ASA is guaranteed to maintain its percentage of total Delta Connection flights that it has in 2007, so long as its bid for additional regional flying is competitive with other regional carriers.

ASA has been a code-share partner with Delta in Atlanta since 1984.  ASA expanded its operations as a Delta Connection carrier to also include Cincinnati/Northern Kentucky and Salt Lake City in September 2002 and April 2003, respectively.  ASA operates approximately 850 daily flights, all in the Delta Connection system.

Historically, multiple contractual relationships have enabled us to reduce reliance on any single major airline code and to enhance and stabilize operating results through a mix of our controlled or “pro-rate” flying and contract flying.  On contract routes, the major

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airline partner controls scheduling, ticketing, pricing and seat inventories and we are compensated by the major airline partner at contracted rates based on the completed block hours, flight departures and other operating measures.  On pro-rate flights, we control scheduling, ticketing, pricing and seat inventories and receive a pro-rated portion of passenger fares.  Since August 1, 2003, substantially all of our flights have been contract flights.  For the quarter ended March 31, 2006, essentially all of our Brasilia turboprops flown for Delta were flown under pro-rate arrangements while approximately 92% of our Brasilia turboprops flown in the United system were flown under contractual arrangements, with the remaining eight percent flown under pro-rate arrangements.

In September 2005, Delta filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Prior to the date of Delta’s bankruptcy filing, each of SkyWest Airlines and ASA entered into an amended Delta Connection Agreement which provides for a
15-year term, subject to certain termination and extension rights.  Delta received all necessary approvals from the U.S. Bankruptcy Court and the Delta Connection Agreements were assumed by Delta on October 6, 2005.  Under the terms of its Delta Connection Agreement, SkyWest Airlines is compensated primarily on a fee-per-completed-block hour and departure basis, is reimbursed for fuel and other direct costs, and is paid a margin based on completed block hours.  Under its Delta Connection Agreement, ASA is compensated primarily on a fee-per-completed-block-hour basis, is directly reimbursed for fuel and other costs, and is paid a margin based on performance incentives. Notwithstanding the assumption by Delta of the Delta Connection Agreements, Delta’s bankruptcy filing could still lead to many other unforeseen expenses, risks and uncertainties for SkyWest Airlines, ASA or both.

Although Delta has reported that it intends to reorganize and emerge from its ongoing Chapter 11 bankruptcy proceeding, it could convert its reorganization proceeding to a liquidation proceeding under the U.S. Bankruptcy Code or liquidate some or all of its assets through one or more transactions with third parties.  Such events could jeopardize our Delta Connection operations, leave us unable to efficiently utilize the additional aircraft which we are currently obligated to purchase, or result in other outcomes which could have a material adverse effect on our operating results or financial condition.

Although a plan of reorganization has been confirmed in United’s bankruptcy proceedings, which became effective on February 1, 2006 (subject to pending appeals), there is no assurance that United’s plan will ultimately succeed.  Among other uncertainties, United’s order of confirmation is subject to pending appeals.  There is no assurance that United will be able to operate successfully under the terms of its plan.  In the event United is not able to perform successfully under the terms of its plan, our United Express operations could be jeopardized, which could have a material adverse effect on our operating results or financial condition.

On February 4, 2005, we announced that SkyWest had been selected by United to operate 20 new CRJ700s in its United Express operations, and that SkyWest had placed a firm order for these CRJ700s with Bombardier.  Deliveries of these aircraft began in the third quarter of 2005 and these deliveries were completed in March 2006.  Our total firm aircraft orders and commitments, as of March 31, 2006, consisted of orders for 17 Bombardier CRJ900 Regional Jets (“CRJ900s”) and commitments to lease six CRJ200’s from Delta.  Total expenditures for these aircraft and related flight equipment, including amounts for contractual price escalations are estimated to be approximately $463 million through April 2007.  Additionally, our agreement with Bombardier includes options for another 70 aircraft that can be delivered in either 70 or 90-seat configurations.  We presently anticipate that delivery dates for these aircraft could start in January 2007 and continue through April 2010; however, actual delivery dates remain subject to final determination as agreed upon by us and our code-share partners.

Cautionary Statement Concerning Forward-Looking Statements

Certain of the statements contained in this Quarterly Report on Form 10-Q 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 contract relationships, and our expected financial performance.  These statements include, but are not limited to, statements about the benefits of our acquisition of ASA, including our future financial and operating results, our plans for SkyWest Airlines and ASA, our objectives, expectations and intentions and other statements that are not historical facts.  You should also 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, or any applicable filings materializes, or any other underlying assumptions prove incorrect, our actual results 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:

• our ability to achieve anticipated potential benefits with respect to our acquisition of ASA;

• our ability to obtain and maintain financing necessary for operations and other purposes;

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• our ability to maintain adequate liquidity;

• the impact of high fuel prices on the airline industry;

• the impact of global instability, including the continued impact of the United States military presence in foreign countries, the September 11, 2001 terrorist attacks and the potential impact of future hostilities, terrorist attacks or other global events;

• our ability to attract and retain code-share partners;

• changes in our code-share relationships;

• the cyclical nature of the airline industry;

• competitive practices in the airline industry, including significant fare-restructuring activities, capacity reductions and bankruptcy and other airline restructurings by major and regional carriers, including Delta and United;

• global and national economic conditions;

• labor costs;

• security-related and insurance costs;

• weather conditions;

• government legislation and regulation;

• unfavorable resolution of negotiations with municipalities for the leasing of facilities;

• relations with ASA’s unionized employees and the impact and outcome of labor negotiations;

• unionization efforts among SkyWest Airlines’ employees; and

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

There may be other factors not identified above of which we are not currently aware that may affect matters discussed in the forward-looking statements, and 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 law.

Critical Accounting Policies

Our significant accounting policies are summarized in Note 1 to our consolidated financial statements for the year ended December 31, 2005, which are presented in our Annual Report on Form 10-K filed with the SEC on March 14, 2006.  Critical accounting policies are those policies that are most important to the preparation of our consolidated financial statements and require management’s subjective and complex judgments due to the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies relate to revenue recognition, aircraft maintenance, aircraft leases and impairment of long-lived assets and intangibles as discussed below. The application of these accounting policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results will differ, and could differ materially from such estimates.

Adoption of SFAS 123(R)

Prior to January 1, 2006, we applied Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its stock-based compensation plans.  Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, requires pro forma information regarding net income and net income per share as if the Company had accounted for its stock options under the fair value method.  We did not record any stock-based compensation expense related to stock options for the year ended December 31, 2005.

Effective January 1, 2006 the Company adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment, using the modified-prospective-transition method.  Under that modified-prospective-transition method, compensation cost recognized during the three months ended March 31, 2006 includes compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123(R).  Results for prior periods have not been restated.

The fair value of stock options has been estimated as of the grant date using the Black-Scholes option pricing model.  During the quarter ended March 31, 2006 we did not grant any stock options.  The following assumptions were used for grants for the years  ended December 31, 2005 and 2004: a risk-free interest rate of 3.87% for 2005 and 2.75% for 2004, a volatility factor of the expected common stock price of .391 for 2005 and .422 for 2004, a weighted average expected life of six years for the stock options granted in February 2005 and a weighted average expected life of four years for all previously granted options presented and an expected annual dividend rate of 0.70% for 2005 and 0.63% for 2004. We used historical data to estimate pre-vesting option forfeitures.  As required by SFAS 123(R), we recorded share-based compensation expense only for those options that are expected to vest.  Forfeiture rates for the years 2005 and 2004 were estimated to be 6.70% and 6.60%, respectively.  The estimated fair value of the stock options is amortized over the vesting period of the respective stock option grants.

We had $9.4 million of total unrecognized compensation cost related to non-vested stock options.  Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.  We expect to recognize this cost over a weighted average period of 1.7 years. 

Revenue Recognition

Passenger and ground handling revenues are recognized when service is provided. Under our contract and pro-rate flying agreements with our code-share partners, revenue is considered earned when the flight is completed. In the event that our contractual rates have not been finalized at quarterly or annual financial statement dates, we record revenues based on a prior period’s approved rates, adjusted to reflect management’s current estimate of the results of the then-current contract negotiations. Our agreements with our code-share partners contain certain provisions pursuant to which the parties could terminate the respective agreements, subject to certain rights of the other party, if certain performance criteria are not maintained. Our revenues could be impacted by a number of factors, including changes to the code-share agreements, contract modifications resulting from contract renegotiations and our ability to earn incentive payments contemplated under applicable agreements.

Maintenance

       We use the direct-expense method of accounting for our regional jet aircraft engine overhaul costs. Under this method, the maintenance liability is not recorded until the maintenance services are performed, thus substantially reducing significant estimates and judgments inherent under the accrual method. We use the “deferral method” of accounting for our Brasilia turboprop engine overhauls, which provides for engine overhaul costs to be capitalized and depreciated over the estimated useful life of the engine. For leased aircraft, we are subject to lease return provisions that require a minimum portion of the “life” of an overhaul be remaining on the engine at the lease return date. With respect to engine overhauls related to leased Brasilia turboprops to be returned, we adjust the estimated useful lives of the final engine overhauls based on the respective lease return dates. With respect to SkyWest Airlines, a third-party vendor provides our long-term engine services covering the scheduled and unscheduled repairs for engines on our CRJ700s. Under the terms of the

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agreement, we pay a set dollar amount per engine hour flown on a monthly basis and the third-party vendor assumes the obligation to repair the engines at no additional cost to us, subject to certain specified exclusions.

Aircraft Leases

The majority of SkyWest Airlines’ aircraft are leased from third parties, while ASA’s aircraft are primarily debt-financed on a long-term basis. In order to determine the proper classification of our leased aircraft as either operating leases or capital leases, we must make certain estimates at the inception of the lease relating to the economic useful life and the fair value of an asset as well as select an appropriate discount rate to be used in discounting future lease payments. These estimates are utilized by management in making computations as required by existing accounting standards that determine whether the lease is classified as an operating lease or a capital lease. All of our aircraft leases have been classified as operating leases, which results in rental payments being charged to expense over the terms of the related leases. Additionally, operating leases are not reflected in our condensed consolidated balance sheet and accordingly, neither a lease asset nor an obligation for future lease payments is reflected in our condensed consolidated balance sheet.

Impairment of Long-Lived and Intangible Assets

As of March 31, 2006, we had approximately $2.5 billion of property and equipment and related assets.  Additionally, as of March 31, 2006, we had approximately $32.4 million in net intangible assets.  In accounting for these long-lived and intangible assets, we make estimates about the expected useful lives of the assets, the expected residual values of certain of these assets, and the potential for impairment based on the fair value of the assets and the cash flows they generate.  We recorded an intangible of approximately $33.0 million relating to the acquisition of ASA.  The intangible is being amortized over fifteen years under the straight-line method.  As of March 31, 2006, we had recorded $572,117 in amortization expense.  Factors indicating potential impairment include, but are not limited to, significant decreases in the market value of the long-lived assets, a significant change in the condition of the long-lived assets and operating cash flow losses associated with the use of the long-lived assets.  On a periodic basis, we evaluate whether the book value of our aircraft is impaired in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  Based on the results of the evaluations, our management concluded no impairment was necessary as of March 31, 2006.  However, there is inherent risk in estimating the future cash flows used in the impairment test.  If cash flows do not materialize as estimated, there is a risk the impairment charges recognized to date may be inaccurate, or further impairment charges may be necessary in the future.

Results of Operations

Quarter Ended March 31, 2006 and 2005

Operating Statistics.   The following table sets forth the major operational statistics of our company and the percentage-of-change for the quarters identified below.

	For the quarters ended March 31,
	2006		2005		%Change
Passengers carried	7,408,714		3,720,376		99.1
Revenue passenger miles (000)	3,646,400		1,632,427		123.4
Available seat miles (000)	4,701,978		2,230,101		110.8
Passenger load factor	77.6	%	73.2	%	4.4	pts
Passenger breakeven load factor	71.9	%	67.2	%	4.7	pts
Yield per revenue passenger mile	20.10	¢	20.60	¢	(2.4	)
Revenue per available seat mile	15.80	¢	15.30	¢	3.3
Cost per available seat mile	14.60	¢	14.00	¢	4.3
Fuel cost per available seat mile	4.80	¢	3.70	¢	29.7
Average passenger trip length (miles)	492		439		12.1

Our total available seat miles, or ASMs generated during the quarter ended March 31, 2006 increased 110.8% from the quarter ended March 31, 2005.  The increase in ASMs was primarily a result of increasing the size of our aircraft fleet, including our acquisition of ASA, from 219 aircraft as of March 31, 2005, to 395 aircraft as of March 31, 2006.On the date we acquired ASA,

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ASA’s fleet consisted of 149 aircraft (35 CRJ700s, 102 CRJ200s and 12 ATRs).  In addition to the aircraft acquired in connection with the acquisition of ASA, we took delivery of 15 CRJ 700s during the quarter ended March 31, 2006.

Net Income.  Net income increased to $34.6 million, or $0.57 per diluted share, for the quarter ended March 31, 2006, compared to $18.8 million, or $0.32 per diluted share, for the quarter ended March 31, 2005.  Factors relating to the change in net income are discussed below.

Operating Revenues.  Operating revenues increased 118.3% for the quarter ended March 31, 2006, compared to the quarter ended March 31, 2005.  The increase in total operating revenues was primarily due to the acquisition of ASA.  Airline operating and interest expenses, excluding fuel charges, per ASM decreased 4.9% to 9.8¢ for the quarter ended March 31, 2006, from 10.3¢ for the quarter ended March 31, 2005.  The primary reason for the decrease was the increased capacity of our regional jet aircraft and the increase in stage lengths flown by our regional jet aircraft.

Passenger Revenues.  Passenger revenues, which represented 98.9% of consolidated operating revenues for the quarter ended March 31, 2006, increased 118.9% to $734.4 million for the quarter ended March 31, 2006, from $335.6 million, or 98.6% of consolidated operating revenues, for the quarter ended March 31, 2005.  Our passenger revenues, excluding fuel reimbursements from major partners, increased 100.6% for the quarter ended March 31, 2006.  The increase in passenger revenues excluding fuel was primarily due to a 110.8% increase in ASMs, principally as a result of our increase in operating aircraft to 395 aircraft as of March 31, 2006, from 219 aircraft as of March 31, 2005.  Revenue per ASM increased 3.3% to 15.8¢, from 15.3¢ for the quarter ended March 31, 2005, primarily due to an increase in fuel reimbursements from our major partners.  Passenger revenues include an amount designed to reimburse us for aircraft ownership costs.  The amount deemed to be rental income for the quarter ended March 31, 2006 was $117.3 million.

Passenger Load Factor.  Passenger load factor increased to 77.6% for the quarter ended March 31, 2006, from 73.2% for the quarter ended March 31, 2005.  The increase in load factor was due primarily to the further development of our relationships with United and Delta, whereby we supplement mainline service in previously established and developed markets.  Additionally, we are experiencing higher passenger acceptance of our regional jet aircraft.

Ground Handling and Other Revenue.  Total ground handling revenue for the quarter ended March 31, 2006 increased approximately 78.0% from the same period of 2005.  The increase was primarily related to contracts with United and Delta, whereby we perform the ground handling for several other regional airlines.

Total Airline Expenses Excluding Fuel.  Total airline expenses for the quarter ended March 31, 2006, excluding fuel charges (which are substantially reimbursable by our major partners), increased approximately 100.1% from the same period of 2005.  The increase was primarily a result of a 110.8% increase in ASMs (which resulted principally from the acquisition of ASA).  Total operating expenses for the quarter ended March 31, 2006 increased at a lower rate than ASM growth, primarily due to the increased operating efficiencies obtained from increased stage lengths flown by the regional jets.

Operating and Interest Expenses. Operating and interest expenses increased 120.3% to $688.5 million for the quarter ended March 31, 2006, compared to $312.5 million for the quarter ended March 31, 2005.  The increase in total operating and interest expenses was due principally to the acquisition of ASA.  As a percentage of consolidated operating revenues, total operating and interest expenses increased to 92.7% for the quarter ended March 31, 2006, from 91.8% for the quarter ended March 31, 2005.  The increase in operating and interest expenses as a percentage of consolidated operating revenues was primarily due to significant increases in fuel costs quarter-over-quarter.

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The following table sets forth information regarding our operating expense components for the quarters ended March 31, 2006 and 2005.  Operating expenses are expressed as a percentage of operating revenues. Individual expense components are also expressed as cents per ASM.

	Quarter ended March 31,
	2006						2005
	Amount		Percentage of Revenue		Cents per ASM		Amount		Percentage of Revenue		Cents Per ASM
	(in thousands)						(in thousands)
Salaries, wages and employee benefits	$	165,325	22.3	%	3.5	¢	$	83,414	24.5	%	3.6	¢
Aircraft costs	113,837		15.3		2.4		64,579		19.0		2.9
Maintenance	55,178		7.4		1.2		21,742		6.4		1.0
Fuel	224,663		30.2		4.8		81,418		23.9		3.7
Other airline expenses	100,989		13.6		2.1		54,692		16.1		2.5
Interest	28,543		3.8		0.6		6,646		2.0		0.3
Total airline expenses	$	688,535			14.6	¢	$	312,491			14.0	¢

The cost per ASM for salaries, wages and employee benefits decreased to 3.5¢ for the quarter ended March 31, 2006, compared to 3.6¢ for the quarter ended March 31, 2005.  The average number of full-time equivalent employees increased 82.6% to 13,080 for the quarter ended March 31, 2006 from 7,162 for the quarter ended March 31, 2005.  The increase in number of employees was due, in large part, to the acquisition of ASA and addition of personnel required for the new regional jet flying and ground handling operations within our United Express operations.

The cost per ASM for aircraft costs, including aircraft rent and depreciation, decreased to 2.4¢ for the quarter ended March 31, 2006, from 2.9¢ for the quarter ended March 31, 2005.  The decrease in cost per ASM was primarily due to the addition of ASA’s regional jet fleet and the addition of 45 CRJ700s, which have a lower operating cost per ASM than our existing CRJ200 and turboprop fleets.

The cost per ASM for maintenance expense increased to 1.2¢ for the quarter ended March 31, 2006, compared to 1.0¢ for the quarter ended March 31, 2005.  The increase was primarily relates to the timing of certain maintenance events during the quarter ended March 31, 2006.  Under our United Express Agreement, specific amounts are included in the rates and charges for mature maintenance on regional jet engines that we record as revenue.  However, consistent with the change to a direct expense maintenance policy, we record maintenance expense on our CRJ200 engines as it is incurred.  As a result, during the quarter ended March 31, 2006, we collected and recorded as revenue $6.5 million (pretax) under the United Express Agreement, with no material corresponding expense relative to CRJ200 engine maintenance overhauls.  Because the “Maintenance” line in the table set forth above does not include salaries, wages and employee benefits associated with our maintenance operations (those costs are stated separately in the table), the maintenance expense line in the above table differs from the maintenance line in our Condensed Consolidated Statements of Income.

The cost per ASM for fuel increased 29.7% to 4.8¢ for the quarter ended March 31, 2006, from 3.7¢ for the quarter ended March 31, 2005.  This increase was primarily due to the average price of fuel increasing to $2.09 per gallon during the quarter ended March 31, 2006, from $1.61 per gallon for the quarter ended March 31, 2005.

The cost per ASM for other expenses, primarily consisting of landing fees, station rentals, computer reservation system fees and hull and liability insurance, decreased 16.0% to 2.1¢ for the quarter ended March 31, 2006, from 2.5¢ for the quarter ended March 31, 2005. The decrease was primarily related to the increase in stage lengths flown by our regional jets.

Interest expense increased to approximately $28.5 million during the quarter ended March 31, 2006, from approximately $6.6 million during the quarter ended March 31, 2005.  The increase in interest expense was primarily due to the acquisition of ASA’s aircraft which are primarily financed with long-term debt.

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Liquidity and Capital Resources

We had working capital of $192.4 million and a current ratio of 1.3:1 at March 31, 2006, compared to working capital of $77.7 million and a current ratio of 1.1:1 at December 31, 2005. The increase was principally caused by the refinancing of certain aircraft to longer term facilities.  The principal sources of cash during the quarter ended March 31, 2006 were $44.8 million provided by operating activities, $16.8 million of proceeds from the sale of marketable securities, $7.6 million from returns on aircraft deposits, $7.1 million in proceeds from issuance of long-term debt, and $13.5 million from the sale of common stock in connection with the exercise of stock options under our stock option and employee stock purchase plans, and $5.7 million of proceeds from the sale of owned aircraft and $0.4 million in tax benefit from exercise options to purchase shares of common stock.  We invested $33.8 million in purchases of marketable securities, $17.1 million in flight equipment, $11.6 million in other assets, $3.7 million in buildings and ground equipment and $0.4 million in deposits for aircraft.  We made principal payments on long-term debt of $20.7 million, and paid $1.8 million in cash dividends.  These factors resulted in a $6.8 million increase in cash and cash equivalents during the quarter ended March 31, 2006.

We believe that in the absence of unusual circumstances, the working capital available to us will be sufficient to meet our present financial requirements, including expansion, capital expenditures, lease payments and debt service obligations for at least the next 12 months.

Our position in marketable securities, consisting primarily of bonds, bond funds and commercial paper, increased to $175.8 million at March 31, 2006, compared to $159.0 million at December 31, 2005.  The increase in marketable securities was due primarily to the $44.8 million in cash provided for through operating activities for the quarter.

At March 31, 2006, our total capital mix was 39.7% equity and 60.3% debt, compared to 39.1% equity and 60.9% debt at December 31, 2005.

During 2005, SkyWest Airlines increased an existing $10.0 million line-of-credit facility, with a bank, to $40.0 million. As of March 31, 2006, SkyWest Airlines had borrowed $30.0 million under the facility. The facility expires on January 31, 2007 and bears interest at a rate equal to prime less 0.25%, which was a net rate of 7.5% on March 31, 2006.  Additionally, SkyWest Airlines entered into another borrowing facility with a financing company and borrowed $60.0 million with interest payable on a floating basis, which interest rate was 7.07% at March 31, 2006.  Subsequent to March 31, 2006, we repaid in full all amounts borrowed under both facilities.

As of March 31, 2006, we had $34.9 million in letters of credit and surety bonds outstanding with various banks and surety institutions.

On March 31, 2006, we classified $22.1 million as restricted cash, related to our workers compensation policies and the purchase of ASA. On December 31, 2005, we classified $24.8& nbsp;million as restricted cash as required by our workers compensation policy.

On April 17, 2006, we completed a public offering of 4,000,000 shares of common stock at a price of $26.05 per share. We received approximately $99.3 million in proceeds which were used for reduction of two revolving lines of credit, working capital and general corporate purposes.

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Significant Commitments and Obligations

General

The following table summarizes our commitments and obligations stated in calendar years except as noted for each of the next five years and thereafter (in thousands):

	Total		Apr-Dec 2006		2007		2008		2009		2010		2011		Thereafter
Firm aircraft Commitments	$	463,000	$	243,000	$	220,000	$	—	$	—	$	—	$	—	$	—
Operating lease payments for aircraft and facility obligations	3,627,467		256,661		302,277		278,434		293,723		287,274		284,170		1,924,928
Principal maturities on long-term debt	1,740,281		258,977		99,063		103,175		107,588		112,193		114,454		944,831
Lines of Credit	90,000		60,000		30,000		—		—		—		—		—
Total commitments and obligations	$	5,920,748	$	818,638	$	651,340	$	381,609	$	401,311	$	399,467	$	398,624	$	2,869,759

Purchase Commitments and Options

On February 4, 2005, we announced that SkyWest Airlines had been selected by United to operate 20 new CRJ700s in its United Express operations, and that SkyWest Airlines had placed a firm order for these CRJ700s with Bombardier.  Deliveries of these aircraft began in the third quarter of 2005 and these deliveries were completed in March 2006.Our total firm aircraft orders and commitments as of March 31, 2006, consisted of orders for 17 CRJ900s and commitments to lease six CRJ200’s from Delta.  Total expenditures for these aircraft and related flight equipment, including amounts for contractual price escalations are estimated to be approximately $463 million.  Additionally, our agreement with Bombardier includes options for another 70 aircraft that can be delivered in either 70 or 90-seat configurations.  We presently anticipate that delivery dates for these aircraft could start in May 2007 and continue through April 2010; however, actual delivery dates remain subject to final determination as agreed upon by us and our code-share partners.

SkyWest Airlines has not historically funded a substantial portion of its aircraft acquisitions with working capital.  Rather, it has generally funded its aircraft acquisitions through a combination of operating leases and debt financing.  At the time of each aircraft acquisition, we evaluate the financing alternatives available, and selected one or more of these methods to fund the acquisition.  In the event that alternative financing can not be arranged at the time of delivery, Bombardier has financed aircraft acquisitions until more permanent arrangements can be made.  Subsequent to this initial acquisition of an aircraft, we may also refinance the aircraft or convert one form of financing to another (e.g., replacing debt financing with leveraged lease financing).

At present, we intend to satisfy our 2006 firm aircraft purchase commitment, as well as our acquisition of any additional aircraft, through a combination of operating leases and debt financing, consistent with our historical practices.  Based on current market conditions and discussions with prospective leasing organizations and financial institutions, we currently believe that we will be able to obtain financing for the committed acquisitions, as well as additional aircraft, without materially reducing the amount of working capital available for our operating activities.

Aircraft Lease and Facility Obligations

We also have significant long-term lease obligations primarily relating to our aircraft fleet.  At March 31, 2006, we had 262 aircraft under lease with remaining terms ranging from one to 18 years.  Future minimum lease payments due under all long-term operating leases were approximately $3.6 billion at March 31, 2006.  Assuming a 7.39% discount rate, which is the rate used to approximate the implicit rates within the applicable aircraft leases, the present value of these lease obligations would have been equal to approximately $2.3 billion at March 31, 2006.

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As part of our leveraged lease agreements, we typically agree to indemnify the equity/owner participant against liabilities that may arise due to changes in benefits from tax ownership of the respective leased aircraft.

Long-term Debt Obligations

Our total long-term debt at March 31, 2006 was $1,740.3 million, of which $1,733.0 million related to the acquisition of Brasilia turboprop, CRJ200 and CRJ700 aircraft and $7.3 million related to our corporate office building.   The average effective rate on the debt related to the Brasilia turboprop and CRJ200 aircraft was approximately 5.7% at March 31, 2006.  Approximately, $183.7 million of our current portion of long-term debt is expected to be refinanced into permanent long-term financing within the next year.

Seasonality

As is common in the airline industry, our pro-rate operations are favorably affected by increased travel, historically occurring in the summer months, and are unfavorably affected by decreased business travel during the months from November through January and by inclement weather which occasionally results in cancelled flights, principally during the winter months.

During the first quarter of 2005, we experienced significant weather-related cancellations, primarily in January, of 1,325 flights which is approximately 3.1% of total scheduled departures.  Based on historical averages for weather-related cancellations of one-half of one percent, it is estimated that we experienced approximately 1,100 more cancellations than normal during January 2005.  The cancellations contributed to an increase in certain cost components, while we were unable to record the revenue for the cancelled flights.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Aircraft Fuel

In the past, we have not experienced difficulties with fuel availability and we currently expect to be able to obtain fuel at prevailing prices in quantities sufficient to meet our future needs.  Pursuant to our contract flying arrangements, United will bear the economic risk of fuel price fluctuations on our United Express flights.  On our Delta Connection regional jet flights, Delta will bear the economic risk of fuel price fluctuations.  On the majority of our Delta Connection routes flown using Brasilia turboprops, we will bear the economic risk of fuel fluctuations.  At present, we believe that our results from operations will not be materially and adversely affected by fuel price volatility.

Interest Rates

Our earnings are affected by changes in interest rates due to the amounts of variable rate long-term debt and the amount of cash and securities held.  The interest rates applicable to variable rate notes may rise and increase the amount of interest expense.  We would also receive higher amounts of interest income on cash and securities held at the time; however, the market value of our available-for-sale securities would likely decline.  At March 31, 2006, we had variable rate notes representing 68.4% of our total long-term debt compared to 53.0% of our long-term debt at March 31, 2005.  For illustrative purposes only, we have estimated the impact of market risk using a hypothetical increase in interest rates of one percentage point for both variable rate long-term debt and cash and securities.  Based on this hypothetical assumption, we would have incurred an additional $3,200,000 in interest expense and received $850,000 in additional interest income for the quarter ended March 31, 2006.

We currently intend to finance the acquisition of aircraft through the manufacturer, third-party leases or long-term borrowings. Changes in interest rates may impact the actual cost to us to acquire these aircraft. To the extent we place these aircraft in service under our code-share agreements with Delta and United, our code-share agreements currently provide that reimbursement rates will be adjusted higher or lower to reflect any changes in our aircraft rental rates.

We have an interest rate swap agreement to manage our exposure on the debt instrument related to our headquarters. Our policies do not permit management to enter into derivative instruments for any purpose other than cash flow hedging purposes. Accordingly, we do not speculate using derivative instruments. We assess interest rate cash flow risk by identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.  The fair values of our derivative instruments are recognized as other current liabilities in the accompanying balance sheet.  In accordance with

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provisions of SFAS No. 133, we recorded a $197,000 and $473,000 liability at March 31, 2006 and 2005 respectively, in the accompanying consolidated balance sheets representing the fair value of the outstanding interest rate swap agreement.  We decreased interest expense by $147,000 and $218,000 during the years ended March 31, 2006 and 2005, respectively, relating to adjustments to the fair value and of the derivatives.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2006.  Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to our company required to be included in our reports filed or submitted under the Exchange Act.  There have been no significant changes (including corrective actions with regard to material weaknesses) in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced above.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to certain legal actions which we consider routine to our business activities.  As of March 31, 2006, our management believed, after consultation with legal counsel, that the ultimate outcome of such legal matters is not likely to have a material adverse effect on our financial position, liquidity or results of operations.  The most significant of these matters is summarized below:

Securities and Exchange Commission

Effective January 1, 2002, we changed our method of accounting for CRJ200 engine overhaul expenses. In connection with the change in accounting method, we restated our financial statements for the year ended December 31, 2001 and the first and second quarters of the year ended December 31, 2002. The restated financial information, together with a discussion of the change in accounting method, was presented in Amendment No. 1 on our Form 10-K/A for the year ended December 31, 2001 and Amendments No. 1 on our Forms 10-Q/A for the quarters ended June 30, 2002 and June 30, 2002. The staff of the SEC is currently conducting an investigation of the facts pertaining to the change in our accounting method and other changes presented in the restatement of our financial statements. We do not believe that any of the matters under investigation constitute a violation of law. In June 2005, after extensive discussions with the SEC staff, we presented to the SEC an offer to enter into a cease and desist order pursuant to which we would agree not to violate federal securities laws in the future. The SEC is currently evaluating our proposal; however, there can be no assurance that our offer will be accepted. We continue to cooperate with the SEC in an effort to resolve the investigation.

ITEM IA. RISK FACTORS

In addition to factors discussed elsewhere in this Report, the following are important risks which could adversely affect our future results.  We have updated the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2006 (our “Annual Report”), filed with the Securities and Exchange Commission on March 14, 2006, as set forth below. We do not believe any of the changes constitute material changes to the risk factors identified in our Annual Report.  Additional risks and uncertainties not presently known to us or that we currently do not deem material may also impair our business operations.  If  any of the risks we describe below occur, or if any unforeseen risk develops, our operating results may suffer, our financial condition may deteriorate, the trading price of our common stock may decline and investors could lose all or part of their investment in us.

Risks Related to Our Operations

We are highly dependent on Delta and United.

The current terms of the SkyWest Airlines and ASA Delta Connection Agreements are subject to certain early termination provisions.  Delta’s termination rights include cross-termination rights (meaning that a breach by SkyWest Airlines or ASA of its Delta Connection Agreement could, under certain circumstances, permit Delta to terminate both Delta Connection Agreements), the right to terminate each of the agreements upon the occurrence of certain force majeure events (including certain labor-related events) that prevent SkyWest Airlines or ASA from performance for certain periods and the right to terminate each of the agreements if SkyWest Airlines or ASA, as applicable, fails to maintain competitive base rate costs, subject to certain rights of SkyWest Airlines to take corrective action to reimburse Delta for lost revenues. The current term of our United Express Agreement is subject to certain early termination provisions and subsequent renewals.  United may terminate the United Express Agreement due to an uncured breach by SkyWest Airlines of certain operational and performance provisions, including measures and standards related to flight completions, baggage handling and on-time arrivals.

If any of our code-share agreements are terminated pursuant to the terms of those agreements, due to the bankruptcy and restructuring proceedings of Delta and United, or otherwise, we would be significantly impacted and likely would not have an immediate source of revenue or earnings to offset such loss.  A termination of any of these agreements would have a material adverse effect on our financial condition, operating revenues and net income unless we are able to enter into satisfactory substitute arrangements for the utilization of the affected aircraft by other code-share partners, or, alternatively, obtain the airport facilities and gates and make the other arrangements necessary to fly as an independent airline.  We may not be able to enter into substitute code-share arrangements, and any such arrangements we might secure may not be as favorable to us as our current agreements.  Operating our airline independent from major partners would be a significant departure from our business plan, would likely be very difficult and may require significant time and resources, which may not be available to us at that point.

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We currently use Delta’s and United’s systems, facilities and services to support a significant portion of our operations, including airport and terminal facilities and operations, information technology support, ticketing and reservations, scheduling, dispatching, fuel purchasing and ground handling services.  If Delta or United were to cease any of these operations or no longer provide these services to us, due to termination of one of our code-share agreements, a strike by Delta or United personnel or for any other reason, we may not be able to replace these services on terms and conditions as favorable as those we currently receive, or at all.  Since our revenues and operating profits are dependent on our level of flight operations, we could then be forced to significantly reduce our operations.  Furthermore, upon certain terminations of our code-share agreements, Delta and United could require us to sell or assign to them facilities and inventories, including maintenance facilities, we use in connection with the code-share services we provide.  As a result, in order to offer airline service after termination of any of our code-share agreements, we may have to replace these airport facilities, assets and services. We may be unable to arrange such replacements on satisfactory terms, or at all.

We may be negatively impacted by the troubled financial condition, bankruptcy proceedings and restructurings of Delta and United.

Substantially all of our revenues are attributable to our code-share agreements with Delta, which is currently reorganizing under Chapter 11 of the U.S. Bankruptcy Code, and United, which recently emerged from bankruptcy proceedings.  The U.S. Bankruptcy Courts charged with administration of the Delta and United bankruptcy cases have entered final orders approving the assumption of our code-share agreements.  Notwithstanding those approvals, these bankruptcies and restructurings present considerable continuing risks and uncertainties for our code-share agreements and, consequently, for our operations.

Although a plan of reorganization has been confirmed in the United bankruptcy proceedings, which became effective on February 1, 2006 (subject to pending appeals), and Delta reports that it intends to reorganize and emerge from its bankruptcy proceedings, there is no assurance that either of United or Delta will ultimately succeed in its reorganization efforts or that either Delta or United will remain a going concern over the long term.  Likewise, even though both Delta and United have assumed our code-share agreements with bankruptcy court approval, there is no assurance that these agreements will survive the Chapter 11 cases.  For example, the Delta reorganization could be converted to liquidation, or Delta could liquidate some or all of its assets through one or more transactions with one or more third parties with bankruptcy court approval.  In addition, Delta may not be able to confirm and consummate a successful plan of reorganization that provides for continued performance of its obligations under its code-share agreements with us.  In the event United is not able to perform successfully under the terms of its plan of reorganization, assumption of our United Express Agreement could be subjected to similar risks.

Other aspects of the Delta and United bankruptcies and reorganizations pose additional risks to our code-share agreements.  Delta may not be able to obtain bankruptcy court approval of various motions necessary for it to administer its bankruptcy case.  As a consequence, Delta may not be able to maintain normal commercial terms with vendors and service providers, including other code-share partners, that are critical to its operations.  Delta also may be unable to reach satisfactory resolutions of disputes arising out of collective bargaining agreements or to obtain sufficient financing to fund its business while it reorganizes.  These and other factors not identified here could delay the resolution of the Delta bankruptcy and reorganization significantly and could threaten Delta’s operations.  As to United, even though a plan of reorganization has been confirmed in the United bankruptcy proceedings, the order of confirmation is subject to pending appeals, and there is no assurance that United will be able to operate successfully under the terms of its confirmed plan.

In light of the importance of our code-share agreements with Delta and United to our business, the termination of these agreements or the failure of Delta to ultimately emerge from its bankruptcy proceeding could jeopardize our operations.  Such events could leave us unable to operate much of our current aircraft fleet and the additional aircraft we are obligated to purchase.  As a result, they could have a material adverse effect on our operations and financial condition.

Even though United has emerged from bankruptcy proceedings and if Delta is ultimately able to emerge from its bankruptcy proceedings, their respective financial positions will continue to pose risks for our operations.  Serial bankruptcies are not unprecedented in the commercial airline industry, and Delta and/or United could file for bankruptcy again after emergence from Chapter 11, in which case our code-share agreements could be subject to termination under the U.S. Bankruptcy Code.  Regardless of whether subsequent bankruptcy filings prove to be necessary, Delta and United have required, and will likely continue to require, our participation in efforts to reduce costs and improve their respective financial positions.  These efforts could result in lower utilization rates of our aircraft, lower departure rates on the contract flying portion of our business, and more volatile operating margins.  We believe that any of these developments could have a negative effect on many aspects of our operations and financial performance.

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We may not achieve the potential benefits of the ASA acquisition.

Our achievement of the potential benefits of the ASA acquisition will depend, in substantial part, on our ability to successfully implement our business strategy, including improving the utilization of equipment and facilities, increasing employee productivity and allocating overhead and administrative expenses over a larger platform.  We will be unable to achieve the potential benefits of the ASA acquisition unless we are able to efficiently integrate the SkyWest Airlines and ASA operating platforms in a timely manner.  The integration of SkyWest Airlines and ASA may be costly, complex and time-consuming, and the managements of SkyWest Airlines and ASA will have to devote substantial effort to such integration.  If we are not able to successfully achieve these objectives, the potential benefits of the ASA acquisition may not be realized fully or at all, or it may take longer to realize than expected.  In addition, assumptions underlying estimates of expected cost savings and expected revenues may be inaccurate, or general industry and business conditions may deteriorate.  Our combined operations with ASA may experience increased competition that limits our ability to expand our business.  We cannot assure you that the ASA acquisition will result in combined results of operations and financial condition consistent with our expectations or superior to what we and ASA could have achieved independently.  Nor do we represent to you that any estimates or projections we have developed or presented in connection with the ASA acquisition can or will be achieved.

The amounts we receive under our code-share agreements may be less than the actual amounts of the corresponding costs we incur.

Under our code-share agreements with Delta and United, we are compensated for certain costs we incur in providing services.  With respect to costs that are defined as “pass-through” costs, our code-share partner is obligated to pay to us the actual amount of the cost (and, with respect to the ASA Delta Connection Agreement, a pre-determined rate of return based upon the actual cost we incur).  With respect to other costs, our code-share partner is obligated to pay to us amounts based, in part, on pre-determined rates for certain costs.  During the quarter ended March 31, 2006, approximately 55% of our costs were pass-through costs and 45% of our costs were reimbursable at pre-determined rates.  These pre-determined rates may not be based on the actual expenses we incur in delivering the associated services.  If we incur expenses that are greater than the pre-determined reimbursement amounts payable by our code-share partners, our financial results will be negatively affected.

We have a significant amount of contractual obligations.

As of March 31, 2006, we had a total of approximately $1.7 billion in total long-term debt obligations.  Substantially all of this long-term debt was incurred in connection with the acquisition of aircraft, engines and related spare parts including debt assumed in the ASA acquisition.  We also have significant long-term lease obligations primarily relating to our aircraft fleet.  These leases are classified as operating leases and therefore are not reflected as liabilities in our condensed consolidated balance sheets.  At March 31, 2006, we had 262 aircraft under lease, with remaining terms ranging from one to 18 years.  Future minimum lease payments due under all long-term operating leases were approximately $3.6 billion at March 31, 2006.  At a 7.39% discount factor, the present value of these lease obligations was equal to approximately $2.3 billion at March 31, 2006.  As of March 31, 2006, we had commitments of approximately $463 million to purchase 17 CRJ900s and to lease six CRJ200’s, together with related flight equipment.  We expect to complete these deliveries by April 2007.  Our high level of fixed obligations could impact our ability to obtain additional financing to support additional expansion plans or divert cash flows from operations and expansion plans to service the fixed obligations.

There are risks associated with our regional jet strategy, including potential oversupply and possible passenger dissatisfaction.

Our selection of Bombardier Regional Jets as the primary aircraft for our existing operations and projected growth involves risks, including the possibility that there may be an oversupply of regional jets available for sale in the foreseeable future, due, in part, to the financial difficulties of regional and major airlines, including Delta, United, Northwest, Comair, Mesaba, and FLYi which is in the process of liquidating its regional jet fleet.  A large supply of regional jets may allow other carriers, or even new carriers, to acquire aircraft for unusually low acquisition costs, allowing them to compete more effectively in the industry, which may ultimately harm our operations and financial performance.

Our regional jet strategy also presents the risk that passengers may find the Bombardier Regional Jets to be less attractive than other aircraft, including other regional jets.  Recently, several other models of regional jets have been introduced by manufacturers other than Bombardier.  If passengers develop a preference for other regional jet models, our results of operation and financial condition could be negatively impacted.

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We may be limited from expanding our flying within the Delta and United flight systems, and there are constraints on our ability to provide airline services to airlines other than Delta and United.

Additional growth opportunities within the Delta and United flight systems are limited by various factors.  Except as currently contemplated by our existing code-share agreements, we cannot assure that Delta or United will contract with us to fly any additional aircraft.  We may not receive additional growth opportunities, or may agree to modifications to our code-share agreements that reduce certain benefits to us in order to obtain additional aircraft, or for other reasons.  Furthermore, the troubled financial condition, bankruptcies and restructurings of Delta and United may reduce the growth of regional flying within their flight systems.  Given the troubled nature of the airline industry, we believe that some of our competitors may be more inclined to accept reduced margins and less favorable contract terms in order to secure new or additional code-share operations.  Even if we are offered growth opportunities by our major partners, those opportunities may involve economic terms or financing commitments that are unacceptable to us.  Any one or more of these factors may reduce or eliminate our ability to expand our flight operations with our existing code-share partners.  Additionally, even if Delta and/or United choose to expand our fleet on terms acceptable to us, they may be allowed at any time to subsequently reduce the number of aircraft covered by our code-share agreements.  We also cannot assure you that we will be able to obtain the additional ground and maintenance facilities, including gates, and support equipment, to expand our operations.  The failure to obtain these facilities and equipment would likely impede our efforts to implement our business strategy and could materially adversely affect our operating results and our financial condition.

Delta and/or United may be restricted in increasing their business with us, due to “scope” clauses in the current collective bargaining agreements with their pilots that restrict the number and size of regional jets that may be operated in their flight systems not flown by their pilots.  Delta’s scope limitations restrict its partners from operating aircraft with over 70 seats even if those aircraft are operated for an airline other than Delta.  We cannot assure that these scope clauses will not become more restrictive in the future.  Any additional limit on the number of regional jets we can fly for our code-share partners could have a material adverse effect on our expansion plans and the price of our common stock.

Our business model depends on major airlines, including Delta and United, electing to contract with us instead of operating their own regional jets.  Some major airlines, including Delta, American, US Airways and JetBlue, own their own regional airlines or operate their own regional jets instead of entering into contracts with regional carriers.  We have no guarantee that in the future our code-share partners will choose to enter into contracts with us instead of operating their own regional jets.  Our partners are not prohibited from doing so under our code-share agreements.  A decision by Delta or United to phase out code-share relationships and instead acquire and operate their own regional jets could have a material adverse effect on our financial condition, results of operations or the price of our common stock.

Additionally, our code-share agreements limit our ability to provide airline services to other airlines in certain major airport hubs of each of Delta and United.  Under the SkyWest Airlines Delta Connection Agreement, our growth is contractually restricted in Atlanta, Cincinnati, Orlando and Salt Lake City.  Under the ASA Delta Connection Agreement, our growth is restricted in Atlanta, Cincinnati, New York (John F. Kennedy International Airport), Orlando and Salt Lake City.  Under SkyWest Airlines’ United Express Agreement, growth is restricted in Chicago (O’Hare International Airport), Denver, Los Angeles, San Francisco, Seattle/Tacoma and Washington D.C. (Dulles International Airport).

Increased labor costs, strikes, labor disputes and increased unionization of our workforces may adversely affect our ability to conduct our business.

Our business is labor intensive, requiring large numbers of pilots, flight attendants, mechanics and other personnel.  Labor costs constitute a significant percentage of our total operating costs.  For example, during the year ended March 31, 2006, our labor costs constituted approximately 24.0% of our total operating costs. Increases in our unionized labor costs could result in a material reduction in our earnings and affect our revenue under our code-share agreements. Any new collective bargaining agreements entered into by other regional carriers may also result in higher industry wages and increased pressure on us to increase the wages and benefits of our employees.  Future agreements with unionized and non-unionized employees may be on terms that are not as attractive as our current agreements or comparable to agreements entered into by our competitors.

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ASA’s pilots, flight attendants and flight controllers are represented by unions, including:  The Air Line Pilots Association, International, the Association of Flight Attendants – CNA and the Professional Airline Flight Control Association.  ASA’s pilots and flight attendants are currently working under open labor contracts, and ASA has been in negotiations with respect to such contracts since 2002 and 2003 respectively.  Negotiations with unions representing SkyWest Airlines’ employees could divert management attention and disrupt operations, which may result in increased operating expenses and lower net income.  Moreover, we cannot predict the outcome of any future negotiations relating to union representation or collective bargaining agreements.

SkyWest Airlines’ employees are not currently represented by any union; however, collective bargaining group organization efforts among those employees occur from time to time.  We recognize that such efforts will likely continue in the future and may ultimately result in some or all of SkyWest Airlines’ employees being represented by one or more unions.  Moreover, one or more unions representing ASA employees may seek a single carrier determination by the National Mediation Board, which could require SkyWest Airlines to recognize such union or unions as the certified bargaining representative of SkyWest Airlines’ employees.  One or more unions representing ASA employees may also assert that SkyWest Airlines’ employees should be subject to ASA collective bargaining agreements.  If SkyWest Airlines’ employees were to unionize or be deemed to be represented by one or more unions, negotiations with unions representing SkyWest Airlines’ employees could divert management attention and disrupt operations, which may result in increased operating expenses and lower net income.  Moreover, we cannot predict the outcome of any future negotiations relating to union representation or collective bargaining agreements.  Agreements reached in collective bargaining may increase operating expenses and lower operating results and net income.  If unionizing efforts among SkyWest Airlines’ employees are successful, we may be subjected to risks of work interruption or stoppage and/or incur additional administrative expenses associated with union representation.

If we are unable to reach labor agreements with any current or future unionized work groups, we may be subject to work interruptions or stoppages, which may adversely affect our ability to conduct our operations and may even allow Delta or United to terminate their respective code-share agreements.

We may be unable to obtain all of the aircraft, engines, parts or related maintenance and support services we require, which could have a material adverse impact on our business.

We rely on a limited number of aircraft types, and are dependent on Bombardier as the sole manufacturer of our regional jets.  For the quarter ended March 31, 2006, 58.0% of our “available seat miles” (which represents the number of seats available for passengers, multiplied by the number of miles those seats are flown (“ASMs”) were flown using CRJ200s, 35.0% of our ASMs were flown using CRJ700s, 5.0% of our ASMs were flown using Brasilia turboprops and 2.0% of our ASMs miles were flown using ATR-72 turboprops.  As of March 31, 2006, we had commitments of approximately $463 million to purchase 17 CRJ900s and to lease six CRJ200’s, together with related flight equipment.   Additionally, we had obtained options to acquire another 70 regional jets that can be delivered in either 70 or 90-seat configurations.  Delivery dates for these aircraft remain subject to final determination as agreed upon by us and our major partners.

Any significant disruption or delay in the expected delivery schedule of our fleet would adversely affect our business strategy and overall operations and could have a material adverse impact on our operating results or our financial condition.  Certain of Bombardier’s aerospace workers are represented by unions and have participated in at least one strike in recent history.  Any future prolonged strike at Bombardier or delay in Bombardier’s production schedule as a result of labor matters could disrupt the delivery of regional jets to us, which could adversely affect our planned fleet growth.  We are also dependent on General Electric as the manufacturer of our aircraft engines.  General Electric also provides parts, repair and overhaul services, and other types of support services on our engines. Our operations could be materially and adversely affected by the failure or inability of Bombardier or General Electric to provide sufficient parts or related maintenance and support services to us on a timely or economical basis, or the interruption of our flight operations as a result of unscheduled or unanticipated maintenance requirements for our aircraft or engines.  In addition, the issuance of FAA directives restricting or prohibiting the use of Bombardier aircraft types we operate would have a material adverse effect on our business and operations.

Maintenance costs will likely increase as the age of our regional jet fleet increases.

Because the average age of our CRJ700s and CRJ200s is approximately 1.4 and 4.3 years, respectively, our regional jet fleet requires less maintenance now than it will in the future.  We have incurred relatively low maintenance expenses on our regional jet fleet because most of the parts on our regional jet aircraft are under multi-year warranties and a limited number of heavy airframe checks and engine overhauls have occurred.  Our maintenance costs will increase significantly, both on an absolute basis and as a

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percentage of our operating expenses, as our fleet ages and these warranties expire.  Under our United Express Agreement, specific amounts are included in the rates for future maintenance on CRJ200 engines used in our United Express operations.  The actual cost of maintenance on CRJ200 engines may vary from the estimated rates.

If we incur problems with any of our third-party service providers, our operations could be adversely affected.

Our reliance upon others to provide essential services on behalf of our operations may limit our ability to control the efficiency and timeliness of contract services.  We have entered into agreements with contractors to provide various facilities and services required for our operations, including fuel supply and delivery, aircraft maintenance, services and ground facilities, and expect to enter into additional similar agreements in the future.  These agreements are subject to termination after notice.  Any material problems with the efficiency and timeliness of our automated or contract services could have a material adverse effect on our business, financial condition and results of operations.

Interruptions or disruptions in service at one of our hub airports, due to adverse weather or for any other reason, could have a material adverse impact on our operations.

We currently operate primarily through hubs in Atlanta, Los Angeles, San Francisco, Salt Lake City, Chicago, Denver, Cincinnati/Northern Kentucky and the Pacific Northwest.  Nearly all of our flights will either originate or fly into one of these hubs.  Our revenues depend primarily on our completion of flights and secondarily on service factors such as timeliness of departure and arrival.  Any interruptions or disruptions could, therefore, severely and adversely affect us.  Extreme weather can cause flight disruptions, and during periods of storms or adverse weather, fog, low temperatures, etc., our flights may be canceled or significantly delayed.  Hurricanes Katrina and Rita, in particular, caused severe disruption to air travel in the affected areas and adversely affected airlines operating in the region, including ASA.  We operate a significant number of flights to and from airports with particular weather difficulties, including Atlanta, Salt Lake City, Chicago and Denver.  A significant interruption or disruption in service at one of our hubs, due to adverse weather or otherwise, could result in the cancellation or delay of a significant portion of our flights and, as a result, could have a severe impact on our business, operations and financial performance.

Fluctuations in interest rates could adversely affect our liquidity, operating expenses and results.

A substantial portion of our indebtedness bears interest at fluctuating interest rates.  These are primarily based on the London interbank offered rate for deposits of U.S. dollars, or LIBOR.  LIBOR tends to fluctuate based on general economic conditions, general interest rates, federal reserve rates and the supply of and demand for credit in the London interbank market.  We have not hedged our interest rate exposure and, accordingly, our interest expense for any particular period may fluctuate based on LIBOR and other variable interest rates.  To the extent these interest rates increase, our interest expense will increase, in which event, we may have difficulty making interest payments and funding our other fixed costs and our available cash flow for general corporate requirements may be adversely affected.

Our business could be harmed if we lose the services of our key personnel.

Our business depends upon the efforts of our chief executive officer, Jerry C. Atkin, and our other key management and operating personnel.  We may have difficulty replacing management or other key personnel who leave and, therefore, the loss of the services of any of these individuals could harm our business.  We do not maintain key-man insurance on any of our executives.

The Securities and Exchange Commission staff is investigating our previous accounting treatment of certain maintenance costs.

Effective January 1, 2002, we changed our method of accounting for certain engine overhaul expenses.  In connection with this change, we restated our financial statements for the year ended December 31, 2001 and the first and second quarters of the year ended December 31, 2002.  The staff of the SEC has been investigating the facts pertaining to this change in accounting method and the related restatements.  We have cooperated with this investigation, and have offered to enter into a cease and desist order pursuant to which we would agree not to violate federal securities laws in the future.  The SEC is currently reviewing our offer.  If our offer is not accepted, we may be required to devote additional time and resources in responding to the investigation, and we could experience other adverse consequences.

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Risks Related to the Airline Industry

We may be materially affected by the uncertainty of the airline industry.

The airline industry has experienced tremendous challenges in recent years and will likely remain volatile for the foreseeable future.  Among other factors, the financial challenges faced by major carriers, including Delta, United and Northwest, the slowing U.S. economy and increased hostilities in Iraq, the Middle East and other regions have significantly affected, and are likely to continue to affect, the U.S. airline industry.  These events have resulted in declines and shifts in passenger demand, increased insurance costs, increased government regulations and tightened credit markets, all of which have affected, and will continue to affect, the operations and financial condition of participants in the industry, including us, major carriers (including our major partners), competitors and aircraft manufacturers.  These industry developments raise substantial risks and uncertainties which will affect us, major carriers (including our major partners), competitors and aircraft manufacturers in ways that we are unable to currently predict.

The airline industry is highly competitive and has undergone a period of consolidation and transition leaving fewer potential code-share partners.

The airline industry is highly competitive.  We not only compete with other regional airlines, some of which are owned by or operated as code-share partners of major airlines, but we also face competition from low-cost carriers and major airlines on many of our routes.  Low-cost carriers such as Southwest, JetBlue, US Airways, and AirTran, among others, operate at many of our hubs, resulting in significant price competition. Additionally, a large number of other carriers operate at our hubs, creating intense competition. Certain of our competitors are larger and have significantly greater financial and other resources than we do.  Moreover, federal deregulation of the industry allows competitors to rapidly enter our markets and to quickly discount and restructure fares.  The airline industry is particularly susceptible to price discounting because airlines incur only nominal costs to provide service to passengers occupying otherwise unsold seats.  Increased fare competition could adversely affect our operations and the price of our common stock.  The airline industry has undergone substantial consolidation, and it may in the future undergo additional consolidation.  Recent examples include the merger between America West Airlines and US Airways in September 2005, and American Airlines’ acquisition of the majority of Trans World Airlines’ assets in 2001.  Other developments include domestic and international code-share alliances between major carriers, such as the “SkyTeam Alliance,” that includes Delta, Continental and Northwest, among others.  Any additional consolidation or significant alliance activity within the airline industry could limit the number of potential partners with whom we could enter into code-share relationships and materially adversely affect our relationship with our code-share partners.

Terrorist activities or warnings have dramatically impacted the airline industry, and will likely continue to do so.

The terrorist attacks of September 11, 2001 and their aftermath have negatively impacted the airline industry in general, including our operations.  The primary effects experienced by the airline industry include a substantial loss of passenger traffic and revenue.  Although, to some degree, airline passenger traffic and revenue have recovered since the September 11^th attacks, additional terrorist attacks could have a similar or even more pronounced effect.  Even if additional terrorist attacks are not launched against the airline industry, there will be lasting consequences of the attacks, including increased security and insurance costs, increased concerns about future terrorist attacks, increased government regulation and airport delays due to heightened security.  Additional terrorist attacks and the fear of such attacks could negatively impact the airline industry, and result in further decreased passenger traffic and yields, increased flight delays or cancellations associated with new government mandates, as well as increased security, fuel and other costs.  We cannot provide any assurance that these events will not harm the airline industry generally or our operations or financial condition in particular.

Rapidly increasing fuel costs have adversely affected, and will likely continue to adversely affect, the operations and financial performance of the airline industry.

The price of aircraft fuel is unpredictable and has increased significantly in recent periods.  Higher fuel prices may lead to higher airfares, which would tend to decrease the passenger load of our code-share partners.  In the long run, such decrease will have an adverse effect on the number of flights such partner will ask us to provide and the revenues associated with such flights.  Additionally, fuel shortages have been threatened.  The future cost and availability of fuel to us cannot be predicted, and substantial fuel cost increases or the unavailability of adequate supplies of fuel may have a material adverse effect on our results of operations.  During periods of increasing fuel costs, our operating margins have been, and will likely continue to be, adversely affected.

We are subject to significant governmental regulation.

All interstate air carriers, including SkyWest Airlines and ASA, are subject to regulation by the DOT, the FAA and other governmental agencies.  Regulations promulgated by the DOT primarily relate to economic aspects of air service.  The FAA requires

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operating, air worthiness and other certificates; approval of personnel who may engage in flight, maintenance or operation activities; record keeping procedures in accordance with FAA requirements; and FAA approval of flight training and retraining programs.  We cannot predict whether we will be able to comply with all present and future laws, rules, regulations and certification requirements or that the cost of continued compliance will not have a material adverse effect on our operations.  We incur substantial costs in maintaining our current certifications and otherwise complying with the laws, rules and regulations to which we are subject.  A decision by the FAA to ground, or require time-consuming inspections of or maintenance on, all or any of our aircraft for any reason may have a material adverse effect on our operations.  In addition to state and federal regulation, airports and municipalities enact rules and regulations that affect our operations.  From time to time, various airports throughout the country have considered limiting the use of smaller aircraft, such as our aircraft, at such airports.  The imposition of any limits on the use of our aircraft at any airport at which we operate could have a material adverse effect on our operations.

The occurrence of an aviation accident would negatively impact our operations and financial condition.

An accident or incident involving one of our aircraft could result in significant potential claims of injured passengers and others, as well as repair or replacement of a damaged aircraft and its consequential temporary or permanent loss from service.  In the event of an accident, our liability insurance may not be adequate to offset our exposure to potential claims and we may be forced to bear substantial losses from the accident.  Substantial claims resulting from an accident in excess of our related insurance coverage would harm our operational and financial results.  Moreover, any aircraft accident or incident, even if fully insured, could cause a public perception that our operations are less safe or reliable than other airlines.

Risks Related to Our Common Stock

We can issue additional shares without shareholder approval.

Our Restated Articles of Incorporation, as amended (the “Restated Articles”), authorize the issuance of up to 120,000,000 shares of common stock, all of which may be issued without any action or approval by our shareholders.  As of March 31, 2006, we had 59,596,298 shares outstanding.  In addition, we have a stock option plan under which 4,562 shares are reserved for issuance, and an employee stock purchase plan under which 2,500,000 shares are reserved for issuance, both of which may dilute the ownership interests of our shareholders.  The issuance of any additional shares of common stock would further dilute the percentage ownership of existing shareholders.  Our Restated Articles also authorize the issuance of up to 5,000,000 shares of preferred stock.  Our board of directors has the authority to issue preferred stock with the rights and preferences, and at the price, which it determines.  Any shares of preferred stock issued would likely be senior to shares of our common stock in various regards, including dividends, payments upon liquidation and voting.  The value of our common stock could be negatively affected by the issuance of any shares of preferred stock.

We issued more shares of common stock than were authorized by our employee stock purchase plan, which could result in administrative sanctions or other adverse consequences.

During the quarter ended December 31, 2005, we discovered that in January and July 2005 we issued shares of common stock to our employees under the SkyWest, Inc. 1995 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”) that exceeded the number of shares authorized for issuance under the Employee Stock Purchase Plan.  In an effort to address the over issuance, we amended 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 Employee Stock Purchase Plan.  On February 8, 2006, after reviewing the issues associated with the over issuance, the staff of The Nasdaq Stock Market notified us that the  over issuance violated the shareholder approval rule set forth in Nasdaq Marketplace Rule 4350(i)(1)(A).  The Nasdaq staff letter also notified us 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 our shareholders, had the effect of restoring our 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.

Distribution of dividends may decrease or cease.

Historically, we have paid dividends in varying amounts on our common stock.  The future payment and amount of cash dividends will depend upon our financial condition and results of operations, loan covenants and other factors deemed relevant by our board of

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directors.  There can be no assurance that we will continue our practice of paying dividends on our common stock or that we will have the financial resources to pay such dividends.

Provisions of our charter documents and code-share agreements may affect the ability or desire of others to gain control of our company.

Our ability to issue preferred and common shares without shareholder approval may have the effect of delaying or preventing a change in control and may adversely affect the voting and other rights of the holders of our common stock, even in circumstances where such a change in control would be viewed as desirable by most investors.  The provisions of the Utah Control Shares Acquisition Act may also discourage the acquisition of a significant interest in or control of our company.  Additionally, our code-share agreements contain termination and extension trigger provisions related to change in control type transactions that may have the effect of deterring a change in control of our company.

ITEM 6: EXHIBITS

3.1	Amended and Restated Bylaws of SkyWest, Inc.
31.1	Certification of Chief Executive Officer
31.2	Certification of Chief Financial Officer
32.1	Certification of Chief Executive Officer
32.2	Certification of Chief Financial Officer

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, to be signed on its behalf by the undersigned, thereunto duly authorized, on May 10, 2006.

SKYWEST, INC.
By	/s/ Bradford R. Rich
	Bradford R. Rich
	Executive Vice President,
	Chief Financial Officer and Treasurer

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED BYLAWS

OF

SKYWEST, INC.

Approved by Resolution of the

Board of Directors dated May 2, 2006

ARTICLE 1 — OFFICES

1.1           Business Office.  The principal office of the corporation shall be located at any place either within or outside the State of Utah, as designated from time to time by the Board of Directors.  The corporation may have such other offices, either within or without the State of Utah as the Board of Directors may designate or as the business of the corporation may require from time to time.

1.2           Registered Office.  The registered office of the corporation shall be located within the State of Utah and may be, but need not be, identical with the principal office (if located within the State of Utah).  The address of the registered office may be changed from time to time.

ARTICLE 2 — SHAREHOLDERS

                2.1           Annual Meeting.  The annual meeting of shareholders shall be held each year after the close of the fiscal year on a date and at a time designated by the Board of Directors for the purpose of electing directors and for the transaction of such other business as may come before the meeting.  If the election of directors shall not be held on the date designated herein for the annual meeting of shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as may be convenient.

                2.2           Special Meetings.  Special meetings of the shareholders may be called at any time by the President or by the Board of Directors.  Special meetings of the shareholders may also be called by the holders of not less than one-tenth (1/10) of all the shares entitled to vote on any issue proposed to be considered at the proposed special meeting by delivery of one or more signed and dated written demands for the meeting stating the purpose for which it is to be held to the corporation’s Secretary or other designated officer.

                2.3           Place of Meetings.  Meetings of shareholders may be held at any place within or outside the State of Utah as designated by the Board of Directors.  In the absence of any such designation, meetings shall be held at the principal office of the corporation.

                2.4           Notice of Meetings.  Written or printed notice stating the place, date and hour of the meeting, and in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting or to any other shareholder entitled by the Utah Revised Business Corporation Act or the Articles of Incorporation to receive notice of the meeting.  Notice shall be deemed to be effective

at the earlier of: (1) when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid; (2) on the date shown on the return receipt if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee; (3) when received; or (4) five days after deposited in the United State mail, if mailed postpaid and correctly addressed to an address other than that shown in the corporation’s current record of shareholders.

                                If any shareholders’ meeting is adjourned to a different date, time or place, notice need not be given of the new date, time and place, if the new date, time and place is announced at the meeting before adjournment and if the meeting is to take place within thirty (30) days thereafter.  If, however, a new record date for the adjourned meeting is, or must be fixed, notice must be given pursuant to the requirements of this Section 2.4 to those persons who are shareholders as of the new record date.

                2.5           Waiver of Notice/Objection.  A shareholder may waive notice of the meeting (or any notice required by the Utah Revised Business Corporation Act, the Articles of Incorporation or these Bylaws) by a writing signed by the shareholder entitled to the notice, which is delivered to the corporation (either before or after the date and time stated in the notice) for inclusion in the minutes or filing with the corporate records.

                                A shareholder’s attendance at a meeting: (1) waives objection to lack of notice or defective notice of the meeting, unless the shareholder, at the beginning of the meeting, objects to holding the meeting or the transaction of any business at the meeting because of lack of notice or defective notice; and (2) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

                2.6           Fixing of Record Date.  For the purpose of determining shareholders of any voting group entitled to notice of or to vote at any meeting of shareholders, or shareholders entitled to receive payment of any distribution or dividend or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date.  Such record date shall not be more than seventy (70) days prior to the meeting or action requiring a determination of shareholders.  If no record date is so fixed by the board, the record date for determination of such shareholders shall be at the close of business on: (1) with respect to an annual shareholders’ meeting or any special shareholders’ meeting called by the board or any person specifically authorized by the board or these Bylaws to call a meeting, the day before the first notice is delivered to shareholders; (2) with respect to a special shareholders’ meeting demanded by the shareholders, the date the first shareholder signs the demand; (3) with respect to the payment of a share dividend, the date the Board of Directors authorizes the share dividend; (4) with respect to a distribution to shareholders (other than one involving a repurchase or reacquisition of shares), the date the board authorizes the distribution.

                                When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than 120 days after the date for the original meeting.

                2.7           Voting List.  The officers of the company shall prepare a list of the names of all of the shareholders who are entitled to be given notice of the meeting.  The list must be arranged by voting group and within each voting group by class or series of shares.  The list must be

alphabetical within each class or series and must show the address of, and the number of shares held by, each shareholder.

                                The shareholders’ list must be available for inspection by any shareholder, beginning on the earlier of ten (10) days before the meeting for which the list was prepared or two (2) business days after notice of the meeting is given and continuing throughout the meeting and any meeting adjournments, at the corporation’s principal office or at the place identified in the meeting notice in the city where the meeting will be held.  A shareholder or shareholder’s agent or attorney is entitled, on written demand to the corporation, and subject to the requirements of any other section of these Bylaws or by any applicable sections of the Utah Revised Business Corporation Act, to inspect and copy the list, during regular business hours and during the period it is available for inspection.  The corporation shall make the shareholders’ list available at the meeting, and any shareholder or any shareholder’s agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment, for any purpose germane to the meeting.

                2.8           Shareholder Quorum and Voting Requirements.  If the Articles of Incorporation or the Utah Revised Business Corporation Act provide for voting by a single voting group on a matter, action on that matter is taken when voted upon by that voting group.

                                If the Articles of Incorporation or the Utah Revised Business Corporation Act provide for voting by two (2) or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately.  One voting group may vote on a matter even though another voting group entitled to vote on the matter has not voted.

                                Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter.  Unless the Articles of Incorporation or the Utah Revised Business Corporation Act provide otherwise, a majority of the votes entitled to cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter.

                                Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting.

                                If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the Articles of Incorporation, these Bylaws or the Utah Revised Business Corporation Act require a greater number of affirmative votes.

                2.9           Proxies.  At all meetings of shareholders, a shareholder may vote in person or by proxy.  A shareholder may appoint a proxy (1) by signing an appointment form, either personally or by the shareholder’s attorney-in-fact or (2) by transmitting or authorizing the transmission of a telegram, teletype or other electronic transmission providing a written statement of the appointment to the proxy, to a proxy solicitor, proxy support service organization or other person duly authorized by the proxy to receive appointments as agent for the proxy, or to the corporation, provided that the transmitted appointment shall set forth or be transmitted with written evidence from which it can be determined that the shareholder transmitted or authorized the transmission of the appointment.  Such proxy shall be filed with the Secretary of the corporation or the other person authorized to tabulate votes before or at the time of the meeting.  No proxy shall be valid after eleven (11) months from the date of its execution unless otherwise provided in the proxy.

                2.10         Voting Shares.  Each outstanding share, regardless of class, shall be entitled to one vote, and each fractional share is entitled to a corresponding fractional vote, on each matter submitted to vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are limited or denied by the Articles of Incorporation or by the Utah Revised Business Corporation Act.

                                Except as provided by specific court order, no shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting.  Provided, however, the prior sentence shall not limit the power of the corporation to vote any shares, including its own shares, held by it in the fiduciary capacity.

                                Redeemable shares are not entitled to vote after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been deposited with a bank, trust company or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares.

                                Unless the Articles of Incorporation or the Utah Revised Business Corporation Act otherwise provide, at each election for directors, every shareholder entitled to vote at such election shall have the right to vote, in person or by proxy, all of the votes to which the shareholder’s shares are entitled for as many persons as there are directors to be elected and for whose election such shareholder has a right to vote.  Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting of shareholders at which a quorum is present.

                2.11         Corporation’s Acceptance of Votes.  If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of a shareholder, the corporation, if acting in good faith, is entitled to accept the vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder.

                                If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of a shareholder, the corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder if:  (1) the shareholder is an entity as defined in the Utah Revised Business Corporation Act and the name signed purports to be that of an officer or agent of the entity; (2) the name signed purports to be that of an administrator, executor, guardian or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver or proxy appointment; (3) the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver or proxy appointment; (4) the name signed purports to be that of a pledge, beneficial owner or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory’s authority to sign for the shareholder has been presented with respect to the vote, consent, waiver or proxy appointment; (5) two or more persons are the shareholder as cotenants or fiduciaries and the name signed purports to be the name of at least one of the cotenants or fiduciaries and the person signing appears to be acting on behalf of all the cotenants or fiduciaries.

                                The corporation is entitled to reject a vote, consent, waiver or proxy appointment if the Secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory’s authority to sign for the shareholder.

                                The corporation and its officer or agent who accepts or rejects a vote, consent, waiver or proxy appointment in good faith and in accordance with the standards of this section are not liable in damages to the shareholder for the consequences of the acceptance or rejection.

                                Corporate action based on the acceptance or rejection of a vote, consent, waiver or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise.

                2.12         Shareholder Action Without a Meeting.  Any action which may be taken at any annual or special meeting of the shareholders may be taken without a meeting and without prior notice, if one or more consents in writing, setting forth the actions so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof.

                2.13         Shareholder’s Right to Inspect Corporate Records.  The corporation shall keep as permanent records minutes of all meetings of its shareholders and Board of Directors, a record of all actions taken by the shareholders or Board of Directors without a meeting, a record of all actions taken by a committee of the Board of Directors in place of the Board of Directors on behalf of the corporation and records of all waivers of notices of meetings of shareholders, meetings of the Board of Directors or any meetings of committees of the Board of Directors.  The corporation shall maintain appropriate accounting records.

                                If a shareholder gives the corporation written notice of his demand at least five (5) business days before the date on which he wishes to inspect and copy the below listed records, the shareholder (or his agent or attorney) has the right to inspect and copy, during regular business hours, any of the following records, all of which the corporation is required to keep at its principal office:  (1) the Articles or restated Articles of Incorporation and all amendments to them currently in effect; (2) the Bylaws or restated Bylaws and all amendments to them currently in effect; (3) the minutes of all shareholders’ meetings and records of all action taken by shareholders without a meeting for the past three (3) years; (4) all written communications to shareholders generally within the past three (3) years, including the financial statement furnished for the past three (3) years to the shareholders; (5) a list of the names and business addresses of its current directors and officers; and, (6) the most recent annual report delivered to the Secretary of State.

                                In addition, if a shareholder gives the corporation a written demand made in good faith and for a proper purpose at least five (5) business days before the date on which he wishes to inspect and copy the below described records, and if the shareholder describes with reasonable particularity his purpose and the records the shareholder desires to inspect and the records are directly connected with his purpose, the shareholder (or his agent or attorney) is entitled to inspect and copy, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation:  (1) excerpts from minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors on behalf of the corporation, minutes of any meeting of the shareholders and records of action taken by the shareholders or Board of Directors without a meeting, to the extent not otherwise subject to inspection under this Section 2.13; (2) accounting records of the corporation; and (3) the record of shareholders (compiled no earlier than the date of the shareholder’s demand).

                                The right to copy records includes, if reasonable, the right to receive copies made by photographic, xerographic or other means.  The corporation may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the shareholder.  The charge may not exceed the estimated cost of production or reproduction of the records.

                2.14         Financial Statements.  Upon the written request of any shareholder, the corporation at its own expense shall mail to the shareholder the corporation’s most recent annual or quarterly financial statement showing in reasonable detail its assets, liabilities and results of its operations.

2.15         Nominations of Directors / Proposals For Items of Business: Annual Meetings.

(a)           Nominations of persons for elec­tion to the Board of Directors of the corporation and the proposal of business to be considered by the shareholders at an annual meeting of shareholders may be made (i) pursuant to the corporation’s notice of meeting delivered pursuant to these Bylaws, (ii) by or at the direction of the Chairman of the Board or the Board of Directors, or (iii) by any shareholder of the corporation who is entitled to vote at the meeting, who has complied with the notice procedures set forth in clauses (b) and (c) of this Section 2.15 and who was a shareholder of record at the time such notice is delivered to the secretary of the corporation.

(b)           For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (iii) of Section 2.15(a), the shareholder must have given timely notice thereof in writing to the secretary of the corporation and such other business must otherwise be a proper matter for shareholder action. To be timely, a shareholder’s notice shall be delivered to the secretary at the principal executive offices of the corporation not less than seventy (70) days nor more than ninety (90) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than twenty (20) days, or delayed by more than seventy (70) days, from such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the ninetieth day prior to such annual meeting and not later than the close of business on the later of the seventieth day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. Such shareholder’s notice shall set forth, (i) as to each person whom the shareholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securi­ties Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14a-101 thereunder, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (ii) as to any other business that the shareholder proposes to bring before the meeting, a brief de­scription of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (A) the name and address of such shareholder, as they appear on the corporation’s books, and of such beneficial owner and (B) the class and number of shares of the corporation which are owned beneficially and of record by such shareholder and such beneficial owner. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giv­ing of a shareholder’s notice as described above.

(c)           Notwithstanding anything in the second sentence of Section 2.15(b) to the contrary, in the event that the number of directors to be elected to the Board of Directors of the corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least eighty (80) days prior to the first anniversary of the preceding year’s annual meeting, a shareholder’s notice required by this Section 2.15 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive offices of the corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the corporation.

Section 2.16           Nominations of Directors / Proposals For Items of Business: Special Meetings. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the corporation’s notice of meeting pursuant to this Article.  Nominations of persons for election to the Board of Directors at a special meeting of shareholders at which directors are to be elected pursuant to the corporation’s notice of meeting may be made (a) by or at the direction of the Board of Directors or (b) by any shareholder of the corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in this Section 2.16 and who is a shareholder of record at the time such notice is delivered to the secretary of the corporation. In the event the corporation calls a special meeting of shareholders for the purpose of electing one or more directors to the Board of Directors, any such shareholder may nominate a person or persons (as the case may be), for election to such position(s) as are specified in the corporation’s notice of meeting, if the shareholder’s notice as required by Section 2.15(b) of this Article shall be delivered to the secretary at the principal executive offices of the corporation not earlier than the ninetieth day prior to such special meeting and not later than the close of business on the later of the seventieth day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a shareholder’s notice as described above.

Section 2.17.  Nominations of Directors / Proposals For Items of Business: General.  Only persons who are nominated in accordance with the procedures set forth in Sections 2.15 — 2.17 shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Article. Except as otherwise provided by law, the articles of incorporation or these Bylaws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Article and, if any proposed nomination or business is not in compliance with this Article, to declare that such defective proposal or nomination shall be disregarded. For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

ARTICLE 3 — BOARD OF DIRECTORS

                3.1           General Powers.  All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of, the Board of Directors, subject to any limitation set forth in the Articles of Incorporation or in a shareholder’s agreement authorized under the Utah Revised Business Corporation Act.

                3.2           Number of Directors and Qualification.  The authorized number of directors shall be as specified from time to time by resolution of the Board of Directors, but shall not be more than twelve (12) nor less than three (3).  Directors need not be residents of the State of Utah or shareholders of the corporation.

3.3           Election and Term of Office.  Directors shall be elected at each annual meeting of shareholders. The Board of Directors shall be authorized to set by resolution the number of directors of the corporation, provided that the number of directors shall in no case be less than three (3) or more than eleven (11). Each director shall be elected for a term of office to expire at the next annual meeting of shareholders after his or her election and until his or her successor shall have been duly elected and qualified, subject, however, to his or her earlier death, resignation or removal.  No decrease in the authorized number of directors shall have the effect of shortening the term of any incumbent director.

                3.4           Chairman of the Board.  The Board of Directors shall elect from among its members, one member to serve as Chairman.  The duties of the Chairman are to prepare the agenda, conduct the board meetings and to nominate members for election to the various committees as established by the Board of Directors.

                3.5           Lead Director.  The Board of Directors shall elect from among its members, one to serve as Lead Director.  The duty of the Lead Director is to act in the absence, death, inability or refusal to act, of the Chairman.

                3.6           Regular Meetings.  The Board of Directors may provide by resolution the time and place, either within or outside the State of Utah, for the holding of regular meetings without notice other than such resolution.

                3.7           Special Meetings.  Special meetings of the Board of Directors for any purpose or purposes may be called at any time by or at the request of the Chairman of the Board, the President or any two (2) directors.  The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or outside the State of Utah, as the place for holding any special meeting of the Board of Directors.

3.8           Notice.  Notice of the date, time and place of any special meeting shall be delivered personally or by telephone to each director or sent by first-class mail, confirmed facsimile or other electronic communication, charges prepaid, addressed to each director at that director’s address or facsimile number as it is shown on the records of the corporation.  If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting.  If the notice is delivered personally or by telephone or confirmed facsimile, it shall be delivered personally or by telephone or facsimile at least forty-eight (48) hours before the meeting begins.  Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving notice has reason to believe will promptly communicate it to the director.  Any director may waive notice of any meeting before or after the date and time of the meeting stated in the notice by delivering a written waiver signed by the director entitled to notice to the corporation to file in its corporate records.  A director’s attendance at or participation in a meeting waives any required notice to the director of the meeting unless the director at the beginning of the meeting or promptly upon the director’s arrival, objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice and does not thereafter vote for or assent to action taken at the meeting.

                3.9           Quorum.  One-third (1/3) of the authorized number of directors as fixed by resolution of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than one-third (1/3) is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice.

                3.10         Manner of Acting.  The act of a majority of the directors present at a meeting at which a quorum is present shall, unless the act of a greater number of directors is required by the Articles of Incorporation or these Bylaws, be the act of the Board of Directors.

                3.11         Vacancies and Newly Created Directorships.  Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining directors, through less than a quorum, or by the affirmative vote of the majority of shares entitled to vote for directors.  A director elected to fill a vacancy created other than by an increase in the number of directors shall be elected for the unexpired term of his predecessor in office.  If a director is elected to fill a vacancy created by reason of an increase in the number of directors, then the term of the director so elected expires at the next shareholders’ meeting at which directors are elected, unless the vacancy is filled by a vote of the shareholders, in which case the term shall expire on the later of (1) the next meeting of shareholders at which directors are elected or (2) the term designated for the director at the time of the creation of the position being filled.

                3.12         Committees.  The Board of Directors, by resolution adopted by the majority of the number of directors, may create one or more committees consisting of not less than two (2) directors, which committee or committees, to the extent provided in such resolution or in the Articles of Incorporation or these Bylaws, shall have and may exercise all the authority so provided; except that the designation of such committees and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law.  The following committees are established:  (1) Compensation; (2) Audit; and (3) Nomination.

                3.13         Fees and Compensation.  Directors may receive such compensation, if any, for their services and such reimbursement of expenses as may be fixed or determined by resolution of the Board of Directors.  This section shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee or otherwise and receiving compensation for those services.  No salaried director may receive compensation for board meetings or assignments unless specifically authorized by the Board of Directors.

                3.14         Presumption of Assent.  A director who is present at a meeting of the Board of Directors when corporate action is taken is considered to have consented to the action taken at the meeting unless:  (1) the director objects at the beginning of the meeting, or promptly upon arrival, to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to any action taken at the meeting; (2) the director contemporaneously requests his dissent or abstention as to any specific action to be entered into the minutes of the meeting; or (3) the director causes written notice of a dissent or abstention as to a specific action to be received by the presiding officer of the meeting before adjournment of the meeting or by the corporation promptly after adjournment of the meeting.

                3.15         Resignations.  A director may resign at any time by giving a written notice of resignation to either the Chairman of the Board of Directors, the President, a Vice-President or the Secretary or Assistant Secretary, if any.  Unless otherwise provided in the notice of

resignation, the resignation shall become effective when the notice is received by the designated officer or director.  If the resignation is to become effective at a future time, the Board of Directors may elect a successor to take office when the resignation becomes effective.

                3.16         Action by Written Consent.  Any action required to be taken at a meeting of the Board of Directors of the corporation or any other action which may be taken at a meeting of the Board of Directors or of a committee, may be taken without a meeting if a consent or consents in writing, setting forth the action so taken, shall be signed by all of the directors, or all of the members of the committee, as the case may be.  Such consent shall have the same legal effect as a unanimous vote of all the directors or members of the committee and may be described as such in any document.

                                Action taken in this section is effective at the time the last director signs a writing describing the action taken, unless the Board of Directors establishes a different effective date.

                3.17         Meetings by Telephone Conference Call.  Members of the Board of Directors, or any committee designed by the Board of Directors, may participate in a meeting of the Board of Directors or committee by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other.  Participation in such a meeting shall constitute presence in person at such meeting.

                3.18         Removal of Directors.  The shareholders may remove one or more directors at a meeting called for that purpose if notice has been given that a purpose of the meeting is such removal.  The removal may be with or without cause unless the Articles of Incorporation provide that directors may only be removed with cause.  If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove him.  If cumulative voting is not authorized, a director may be removed only if the number of votes cast to remove him exceeds the number of votes cast not to remove him.

                3.19         Board Member Emeritus.  The Board of Directors may appoint to the status of Board Member Emeritus individuals who have served as members of the Board of Directors and have retired as a member of the Board of Directors.  Persons holding such status will not be entitled to vote as a director and will receive no pay for attendance at meetings.

ARTICLE 4 — COMMITTEES OF DIRECTORS

                4.1           How Constituted.  The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, create one or more committees, each consisting of two (2) or more directors, to serve at the pleasure of the Board.  The Board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee.  The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors.

                4.2           Powers.  Each committee shall have and may exercise all powers relating to the business and affairs of the corporation as may be granted to it by the Board of Directors, except such powers as by law may not be delegated by the Board of Directors to a committee.

                4.3           Proceedings.  Each committee as may be designated hereunder by the Board of Directors may fix its own presiding and recording officer or officers and may meet at such place or places, at such time or times and upon such notice (or without notice if allowed by law) as it

shall determine from time to time.  It shall keep a record of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors next following.

                4.4           Quorum and Manner of Acting.  At all meetings of each committee as may be designated hereunder by the Board of Directors, the presence of members constituting two-thirds (2/3) of the total authorized membership of the committee shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of two-thirds (2/3) of the members present at any meeting at which a quorum is present shall be the act of such committee.  The members of each committee as may be designated hereunder by the Board of Directors, shall act only as a committee and the individual members thereof shall have no powers as such.

                4.5           Meetings by Telephone Conference Call, Consent.  Members of each committee as may be designated hereunder by the Board of Directors may participate in a meeting of the committee by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear each other.  Participation in such a meeting shall constitute presence in person at such a meeting.

                                Action may be taken by any committee without a meeting if all members thereof consent in writing, and the writing or writings are filed with the minutes of the proceedings of such committee.

                4.6           Resignations.  Any member of any committee as may be designated hereunder by the Board of Directors may resign at any time by delivering a written resignation to the Chairman of the Board, the President, the Secretary or Assistant Secretary, if any, or to the presiding officer of the committee of which he is a member, if any shall have been appointed and shall be in office. Unless otherwise specified therein, such resignation shall take effect upon delivery.

                4.7           Removal.   The Board of Directors may, at any time, remove any member of any committee designated by it hereunder either with or without cause.

                4.8           Vacancies.  If any vacancy shall occur in any committee designated by the Board of Directors hereunder, by reason of disqualification, death, resignation, removal or otherwise, the remaining members shall, until the filling of such vacancy, constitute the then total authorized membership of the committee and, provided that two (2) or more members are remaining, shall continue to act.  Such vacancy may be filled at any meeting of the Board of Directors.

                4.9           Compensation.  The Board of Directors may allow a fixed sum and expenses of attendance to any member of any committee designated by it hereunder who is not an active salaried employee of the corporation for attendance at each meeting of such committee.

ARTICLE 5 - OFFICERS

                5.1           Officers.Except as provided otherwise by a resolution of the Board of Directors, the officers of the corporation shall be a Chief Executive Officer, a President, one or more Vice Presidents, a Secretary, and a Treasurer, each of whom shall be approved by the Board of Directors.  Such other officers and assistants as may be deemed necessary may be approved by the Board of Directors.  Any two (2) or more offices may be held by the same person.

                5.2           Appointment, Term of Office, and Qualification.The officers of the corporation shall be approved by, and serve at the pleasure of, the Board of Directors, subject to any rights of an officer under any contract of employment.  Such approval of officers shall take place annually or at such other intervals as the Board of Directors may determine, and may be held at regular or

special meetings of the Board or by the written consent of the directors.  Each officer shall hold office until his or her successor shall have been duly appointed and qualified or until such officer’s death, resignation, or removal in the manner provided in these Bylaws.  The Chairman of the Board, if any, shall be and remain a director of the corporation during the term of his or her office.  No other officer need be a director of the corporation.

                5.3           Resignations.  Any officer may resign at any time by delivering a written notice of resignation to the Board of Directors, the Chief Executive Officer, or the Secretary.  Unless otherwise specified therein, such resignation shall take effect upon such delivery of the notice.  Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

                5.4           Removal.  Any officer may be removed by the Board of Directors or by a committee, if any, if so authorized by the Board of Directors, whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

                5.5           Vacancies and Newly Created Offices.  A vacancy in any office by reason of death, resignation, removal, disqualification, the creation of a new office, or otherwise, may be filled by the Board of Directors at any regular or special meeting or by the unanimous written consent of the directors.

                5.6           Chief Executive Officer.  The Chief Executive Officer shall, subject to the direction and supervision of the Board of Directors:  (i) have general and active control of the affairs and business of the corporation and general supervision of its officers, agents and employees; (ii) preside, in the absence of the Chairman of the Board, at all meetings of the shareholders and the Board of Directors, (iii) see that all orders and resolutions of the Board of Directors are carried into effect; and (iv) perform all other duties incident to the office of Chief Executive Officer and as from time to time may be assigned to the Chief Executive Officer by the Board of Directors.

                5.7           President.  The President shall, subject to the direction and supervision of the Chief Executive Officer:  (i) be responsible for the operational affairs of the corporation; and (ii) assist the Chief Executive Officer and perform such duties as may be assigned by the Chief Executive Officer or by the Board of Directors.  Such officer shall, at the request of the Chief Executive Officer, or in the absence of the Chief Executive Officer, or in the event of his or her inability or refusal to act, perform the duties of the Chief Executive Officer and when so acting, shall have all the powers of and be subject to all the restrictions on the Chief Executive Officer.

                5.8           Vice President.  The corporation may have one or more Vice Presidents, elected by the Board of Directors, who shall perform such duties as may be delegated by the Chief Executive Officer or the Board of Directors.

                5.9           Secretary.  The Secretary shall keep the minutes of the shareholders’ and of the directors’ meetings in one or more books provided for that purpose, see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law, be custodian of the corporate records and of the seal of the corporation and keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder, have general charge of the stock transfer books of the corporation, and in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer.  The Chief Executive Officer may appoint an Assistant

Secretary to aid the Secretary in the performance of the duties of the Secretary and may act for the Secretary in his or her absence as authorized by the Secretary.

                5.10         Treasurer.  If required by the directors, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with much surety or sureties as the directors shall determine.  He or she shall have charge and custody of and be responsible for all funds and securities of the corporation, receive and give receipts for monies due and payable to the corporation from any source whatsoever, deposit all such monies in the name of the corporation in such banks, trust companies, or other depositories as shall be selected in accordance with these Bylaws and in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer or by the directors.

                5.11         Salaries.  The salaries of other compensation of the officers of the corporation shall be fixed from time to time by the Board of Directors, except that the Board of Directors may delegate to any person or group of persons the power to fix the salaries or other compensation of any officers.  No officer shall be prevented from receiving any such salary or compensation by reason of the fact that he or she is also a director of the corporation.

                5.12         Surety Bonds.In case the Board of Directors shall so require, any officer or agent of the corporation shall provide the corporation with a bond, in such sums and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful performance of his or her duties to the corporation, including responsibility for negligence and for the accounting of all property, monies, or securities of the corporation which may come under his or her responsibility.

ARTICLE 6 - EXECUTION OF INSTRUMENTS, BORROWING OF MONEY

AND DEPOSIT OF CORPORATE FUNDS

6.1           Instruments.  The Board of Directors may authorize any officer, agent or agents to enter into any contract or execute and deliver any instrument in the name of, and on behalf of, the corporation, and such authority may be general or confined to specific instances.

6.2           Loans.  No loan or advance shall be contracted on behalf of the corporation, no negotiable paper or other evidence of its obligation under any loan or advance shall be issued in its name and no property of the corporation shall be mortgaged, pledged, hypothecated, transferred or conveyed as security for the payment of any loan, advance, indebtedness or liability of the corporation, unless and except as authorized by the Board of Directors. Any such authorization may be general or confined to specific instances.

6.3           Deposits.  All monies of the corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositories as the Board of Directors may select, or as from time to time may be selected by any officer or agent authorized so to do by the Board of Directors.

6.4           Checks, Drafts, etc.  All checks, drafts, acceptances, notes, endorsements and, subject to the provisions of these Bylaws, evidences of indebtedness of the corporation shall be signed by such officer or officers or such agent or agents of the corporation and in such manner as the Board of Directors from time to time may determine.  Endorsements for deposit to the credit of the corporation in any of its duly authorized depositories shall be in such manner as the Board of Directors from time to time may determine.

6.5           Bonds and Debentures.  Every bond or debenture issued by the corporation shall be evidenced by an appropriate instrument which shall be signed by the President or a Vice President and by the Secretary and may be sealed with the seal of the corporation.  The seal may be a facsimile, engraved or printed.  Where such bond or debenture is authenticated with the manual signature of an authorized officer of the corporation or other trustee designated by the indenture of trust or other agreement under which such security is issued, the signature of any of the corporation’s officers named thereon may be a facsimile.  In case any officer who signed, or whose facsimile signature has been used on any such bond or debenture, shall cease to be an officer of the corporation for any reason before the same has been delivered by the corporation, such bond or debenture may nevertheless be adopted by the corporation and issued and delivered as though the person who signed it or whose facsimile signature has been used thereon had not ceased to be such officer.

6.6           Sale, Transfer, etc. of Securities.  Sales, transfers, endorsements and assignments of shares of stocks, bonds and other securities owned by or standing in the name of the corporation and the execution and delivery on behalf of the corporation of any and all instruments in writing incident to any such sale, transfer, endorsement or assignment, shall be effected by the President, or by any Vice President, together with the Secretary, or by any officer or agent thereunto authorized by the Board of Directors.

6.7           Proxies.  Proxies to vote with respect to shares of stock of other corporations owned by or standing in the name of the corporation shall be executed and delivered on behalf of the corporation by the President or any Vice President and the Secretary of the corporation or by any officer or agent thereunto authorized by the Board of Directors.

ARTICLE 7 - CAPITAL STOCK

7.1           Stock Certificates.  The shares of the corporation shall be represented by certificates.  The certificates shall be signed by two (2) officers as designated by the Board of Directors, or in the absence of such designation, any two (2) of the following officers: the President, Vice President, Secretary or Assistant Secretary, if any, of the corporation. The certificates may be sealed with the seal of the corporation or a facsimile thereof.  The signatures of the designated officers upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation.  In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue.

If the corporation is authorized to issue different classes of shares or a different series within a class, the designations, preferences, limitations and relative rights applicable to each class, the variations in preferences, limitations, and relative rights determined for each series, and the authority of the Board of Directors to determine variations for any existing or future class or series, must be summarized on the front or back of each share certificate.  Alternatively, each certificate may state conspicuously on its front or back that the corporation will furnish the shareholder this information on request in writing and without charge.

Each certificate representing shares shall also state upon the face thereof: (1) the name of the issuing corporation and that it is organized under the laws of the State of Utah; (2) the name of the person to whom the certificate is issued; and (3) the number and class of shares, and the designation of the series, if any, which such certificate represents.

There shall be entered upon the stock transfer books of the corporation at the time of issuance of each share, the number of the certificate issued, the name and address of the person owning the shares represented thereby, the number and kind, class or series of such shares and the date of issuance thereof.  Every certificate exchanged or returned to the corporation shall be marked “Cancelled” with the date of cancellation.

7.2           Transfer of Stock.  Transfers of stock shall be made only upon the stock transfer books of the corporation kept at an office of the corporation or by transfer agents designated to transfer shares of the stock of the corporation.  Except where a certificate is issued in replacement of a lost or destroyed certificate as provided in these Bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor.  Except as otherwise provided by law, the corporation and transfer agents and registrars, if any, shall be entitled to treat the holder of record of any share or spares of stock as the absolute owner thereof for all purposes, and accordingly shall not be bound to recognize any legal, equitable or other claim to or interest in such share or shares on the part of any other person whether or not it or they shall have express’ or other notice thereof.

7.3           Restrictions on Transfer or Registration of Shares.  The Board of Directors may, as they may deem expedient, impose restrictions on the transfer or registration of transfer of shares of the corporation.  The restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction or otherwise consented to the restriction.

The restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by the Utah Revised Business Corporation Act and its existence is noted conspicuously on the front or back of the certificate.

7.4           Regulations.  Subject to the provisions of these Bylaws and of the Articles of Incorporation, the Board of Directors may make such rules and regulations as they may deem expedient concerning the issuance, transfer, redemption and registration of certificates for shares of the stock of the corporation.

7.5           Transfer Agents and Registrars.  The Board of Directors may appoint one or more transfer agents and one or more registrars with respect to the certificates representing shares of stock of the corporation, and may require all such certificates to bear the signature of either or both.  The Board of Directors may from time to time define the respective duties of such transfer agents and registrars.

7.6           Lost or Destroyed Certificates.  In the event of the loss or destruction of any certificate of stock, another certificate may be issued in its place pursuant to such regulations as the Board of Directors may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity.

7.7           Consideration for Shares.  The Board of Directors may authorize the issuance of shares for consideration consisting of any tangible or intangible property or benefits to the corporation, including cash, promissory notes, services performed contracts or arrangements for services to be performed, or other securities of the corporation.  The terms and conditions of any tangible or intangible property or benefit to be provided in the future to the corporation, including contracts or arrangements for services to be performed, shall be set forth in writing.  The

corporation may place in escrow shares issued in consideration for contracts, arrangements for future services or benefits or in consideration of a promissory note, or make other arrangements to restrict transfer of the shares issued for any such consideration, and may credit distributions in respect of the shares against the purchase price until the services are performed, the note is paid or the benefits are received.  If the specified future services are not performed, the note is not paid or the benefits are not received, the shares escrowed or restricted or the distributions credited may be cancel1ed in whole or part.

ARTICLE 8 - MAINTENANCE AND INSPECTION OF BOOKS AND RECORDS

The corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders and Board of Directors; and shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of the shares held by each. Any shareholder shall have the right to examine in person the corporation’s books and records as provided for in these Bylaws.

ARTICLE 9 - INDEMNIFICATION

9.1           Indemnification.  Except as provided in Section 9.2, the corporation shall, to the maximum extent and in the manner permitted by the Utah Revised Business Corporation Act, indemnify an individual made party to a proceeding because he is or was a director or officer of the corporation, against liability incurred in the proceeding if his conduct was in good faith, he reasonably believed that his conduct was in, or not opposed to, the corporation’s best interests and, in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.  Termination of the proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director or officer did not meet the standard of conduct described in this section.

Except as provided in Section 9.2, the corporation may, to the maximum extent and in the manner permitted by the Utah Revised Business Corporation Act, indemnify an individual made party to a proceeding because he is or was an employee, fiduciary or agent of the corporation, against liability incurred in the proceeding if his conduct was in good faith, he reasonably believed that his conduct was in, or not opposed to, the corporation’s best interests and, in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.  Termination of the proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the employee, fiduciary or agent did not meet the standard of conduct described in this section.

9.2           Certain Restrictions on Indemnification.  The corporation may not indemnify a director, officer, employee, fiduciary or agent of the corporation under Section 9.1, in connection with a proceeding by or in the right of the corporation in which such person was adjudged liable to the corporation, or in connection with any other proceeding charging that such person derived an improper personal benefit, whether or not involving action in his official capacity, in which proceeding he was adjudged liable on the basis that he derived an improper personal benefit, unless ordered by a court of competent jurisdiction.

9.3           Mandatory Indemnification.  The corporation shall indemnify a director or officer of the corporation who was successful, on the merits or otherwise, in the defense of any proceeding, or the defense of any claim, issue or matter in the proceeding, to which he was a party because he is or was a director or officer of the corporation, against reasonable expenses

incurred by him in connection with the proceeding or claim with respect to which he has been successful.

9.4           Determination.  The corporation may not indemnify a director or officer under Section 9.1 unless a determination has been made in the specific case that indemnification of the director or officer is permissible in the circumstances because the director or officer has met the applicable standard of conduct set forth in Section 9.1.  The corporation may not indemnify an employee, fiduciary or agent under Section 9.1 unless authorized and a determination has been made in the specific case that indemnification of the employee, fiduciary or agent is permissible in the circumstances because the employee, fiduciary or agent has met the applicable standard of conduct set forth in Section 9.1.  Such determination with respect to directors, officers, employees, fiduciaries or agents shall be made (1) by the Board of Directors by majority vote of those present at a meeting at which a quorum is present, and only those directors not parties to the proceeding shall be counted in satisfying the quorum, (2) if a quorum cannot be attained, by majority vote of a committee of the Board of Directors, which committee shall consist of two or more directors not parties to the proceeding, except that directors who are parties to the proceeding may participate in the designation of directors for the committee, (3) by special legal counsel selected by the Board of Directors or its committee in the manner prescribed in clauses (1) or (2) of this Section 9.4, or (4) by the shareholders, by a majority of the votes entitled to be cast by holders of qualified shares that are present in person or by proxy at a meeting. A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of action that complies with this section.  Shareholders’ action that otherwise complies with this section is not affected by the presence of holders, or the voting, of shares that are not qualified shares.

9.5           General Indemnification.  The indemnification and advancement of expenses provided by this Article 9 shall not be construed to be exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any Articles of Incorporation, bylaw, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

9.6           Advances.  The corporation may pay for or reimburse the reasonable expenses incurred by a director, officer, employee, fiduciary or agent of the corporation who is a party to a proceeding in advance of final disposition of the proceeding if: (1) such person furnishes to the corporation a written affirmation of his good faith belief that he has met the applicable standard of conduct described in Section 9.1, (2) such person furnishes to the corporation a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he did not meet the standard of conduct and (3) a determination is made that the facts then known to those making the determination would not preclude indemnification under this Article 9.

9.7           Scope of Indemnification.  The indemnification and advancement of expenses authorized by this Article 9 is intended to permit the corporation to indemnify to the fullest extent permitted by the laws of the State of Utah, any and all persons whom it shall have power to indemnify under such laws from and against any and all of the expenses, disabilities or other matters referred to in or covered by such laws.  Any indemnification or advancement of expenses hereunder shall, unless otherwise provided when the indemnification or advancement of expenses is authorized or ratified, continue as to a person who has ceased to be a director, officer, employee, fiduciary or agent and shall inure to the benefit of such person’s heirs, executors and administrators.

9.8           Insurance.  The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, fiduciary or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against or incurred by him in such capacity or arising out of his status in such capacity, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article 9 or the laws of the State of Utah, as the same may hereafter be amended or modified.

ARTICLE 10 — FISCAL YEAR

The fiscal year of the corporation shall commence on January 1 of each year and end the following December 31.

ARTICLE 11 - DIVIDENDS

The Board of Directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law.

ARTICLE 12 - AMENDMENTS

These Bylaws may be amended or replaced with new bylaws by the Board of Directors at any meeting or by the shareholders at any meeting.

ARTICLE 13 - SAVINGS CLAUSE

Whenever any part of these Bylaws is declared by a majority vote of the shareholders or Board of Directors, or by a judicial body to be invalid, such determination shall not affect the remainder of this instrument.  These Bylaws are to be construed as being consistent with the laws of the State of Utah and the Articles of Incorporation of SkyWest, Inc.

CERTIFICATE OF ADOPTION OF AMENDED AND RESTATED BYLAWS

OF

SKYWEST, INC.

Certificate by Secretary of Adoption by Board of Directors

The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of SkyWest, Inc. and that the foregoing Amended and Restated Bylaws were submitted to and approved and adopted by the Board of Directors of this corporation by resolution dated May 2, 2006.

IN WITNESS WHEREOF, the undersigned bas hereunto set his hand this 2nd day of May, 2006.

/s/ Eric Christensen, Secretary

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jerry C. Atkin, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of SkyWest, Inc. for the quarter ended March 31, 2006;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this report.

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reported that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2006

/s/ Jerry C. Atkin

Jerry C. Atkin

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Bradford R. Rich, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of SkyWest, Inc. for the quarter ended March 31, 2006;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this report.

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reported that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2006

/s/ Bradford R. Rich

Bradford R. Rich

Executive Vice President, Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on From 10-Q of SkyWest, Inc. (the “Company”) for the quarter ended March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jerry C. Atkin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jerry C. Atkin

Jerry C. Atkin

Chief Executive Officer

May 10, 2006

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT

TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on From 10-Q of SkyWest, Inc. (the “Company”) for the quarter ended March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bradford R. Rich, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Bradford R. Rich

Bradford R. Rich

Chief Financial Officer

May 10, 2006

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.