Note 5 - Segment Reporting

The Company’s three reporting segments consist of the operations of SkyWest Airlines, ExpressJet and SkyWest Leasing activities. Corporate overhead expenses incurred by the Company are allocated to the operating expenses of SkyWest Airlines and ExpressJet.

The Company’s chief operating decision maker analyzes the profitability of operating the E175 aircraft (including operating costs and associated revenue) separately from the profitability of the Company’s ownership, financing costs and associated revenue of the Company’s E175 aircraft (including depreciation expense, interest expense and associated revenue). The SkyWest Leasing segment includes revenue attributed to the Company’s E175 aircraft ownership related revenues under the applicable fixed-fee contracts and the depreciation and interest expense of the Company’s E175 aircraft. The SkyWest Leasing segment’s total assets and capital expenditures include the acquired E175 aircraft. The SkyWest Leasing segment additionally includes the ownership and activity of four CRJ200 aircraft leased to a third party.

The following represents the Company’s segment data for the three-month periods ended June 30, 2018 and 2017 (in thousands):


	Three months ended June 30, 2018
	SkyWest				SkyWest
	Airlines		ExpressJet		Leasing		Consolidated
Operating revenues (1)	$	587,480	$	143,707	$	74,328	$	805,515
Operating expense		494,143		148,525		36,169		678,837
Depreciation and amortization expense		38,841		10,200		33,673		82,714
Interest expense		4,202		788		23,821		28,811
Segment profit (loss) (2)		89,135		(5,606)		14,338		97,867
Identifiable intangible assets, other than goodwill		—		2,448		—		2,448
Total assets (as of June 30, 2018)		2,222,784		563,198		3,127,111		5,913,093
Capital expenditures (including non-cash)		40,039		1,588		323,090		364,717


	Three months ended June 30, 2017
	SkyWest				SkyWest
	Airlines		ExpressJet		Leasing		Consolidated
Operating revenues (1) (3)	$	519,708	$	211,819	$	59,985	$	791,512
Operating expense (3)		442,600		214,864		27,452		684,916
Depreciation and amortization expense		32,530		11,710		26,966		71,206
Interest expense		5,735		1,088		20,240		27,063
Segment profit (loss) (2) (3)		71,373		(4,133)		12,293		79,533
Identifiable intangible assets, other than goodwill		—		7,124		—		7,124
Total assets (as of June 30, 2017) (3)		2,235,863		529,175		2,580,107		5,345,145
Capital expenditures (including non-cash)		25,346		4,501		265,955		295,802

(1)

Prorate revenue, Airport customer service and other revenues is primarily reflected in the SkyWest Airlines segment.

(2)

Segment profit (loss) is equal to operating income less interest expense.

(3)

Amounts adjusted due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). See Note 1 to the financial statements contained in Part I, Item 1 of this report for additional information.

The following represents the Company’s segment data for the six-month periods ended June 30, 2018 and 2017 (in thousands):


	Six months ended June 30, 2018
	SkyWest				SkyWest
	Airlines		ExpressJet		Leasing		Consolidated
Operating revenues (1)	$	1,143,775	$	304,788	$	140,352	$	1,588,915
Operating expense		993,019		315,349		65,694		1,374,062
Depreciation and amortization expense		76,327		21,362		62,609		160,298
Interest expense		8,678		1,615		44,752		55,045
Segment profit (loss) (2)		142,078		(12,176)		29,906		159,808
Identifiable intangible assets, other than goodwill		—		2,448		—		2,448
Total assets (as of June 30, 2018)		2,222,784		563,198		3,127,111		5,913,093
Capital expenditures (including non-cash)		76,322		2,926		553,257		632,505


	Six months ended June 30, 2017
	SkyWest				SkyWest
	Airlines		ExpressJet		Leasing		Consolidated
Operating revenues (1) (3)	$	984,624	$	440,266	$	113,788	$	1,538,678
Operating expense (3)		859,931		444,146		51,711		1,355,788
Depreciation and amortization expense		64,347		26,235		50,738		141,320
Interest expense		11,535		2,202		37,875		51,612
Segment profit (loss) (2) (3)		113,158		(6,082)		24,202		131,278
Identifiable intangible assets, other than goodwill		—		7,124		—		7,124
Total assets (as of June 30, 2017) (3)		2,235,863		529,175		2,580,107		5,345,145
Capital expenditures (including non-cash)		58,777		10,155		449,969		518,901

(1)

Prorate revenue, Airport customer service and other revenues is primarily reflected in the SkyWest Airlines segment.

(2)

Segment profit (loss) is equal to operating income less interest expense.

(3)