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Segment Reporting

9 Months Ended

Sep. 30, 2019

Note 5 - Segment Reporting

Prior to the Company’s sale of ExpressJet on January 22, 2019, the Company’s three reporting segments consisted of the operations of SkyWest Airlines, ExpressJet and SkyWest Leasing activities. The segment information presented for ExpressJet reflects the period of time prior to the sale, when ExpressJet was operating as a subsidiary of the Company. The Company concluded that the sale of ExpressJet did not meet the criteria for a discontinued operation.

The Company’s chief operating decision maker analyzes the profitability of operating new aircraft financed through the issuance of debt, including the Company’s E175 fleet, separately from the profitability of the Company’s capital deployed for ownership and financing of such aircraft. The SkyWest Airlines segment includes revenue earned under the applicable fixed-fee contracts attributed to operating such aircraft and the respective operating costs. The SkyWest Leasing segment includes applicable revenue earned under the applicable fixed-fee contracts attributed to the ownership of new aircraft acquired through the issuance of debt and the respective depreciation and interest expense of such aircraft. The SkyWest Leasing segment also includes the activity of leasing regional jet aircraft and spare engines to third parties. The SkyWest Leasing segment’s total assets and capital expenditures include new aircraft acquired through the issuance of debt and assets leased to third parties.

The following represents the Company’s segment data for the three-month periods ended September 30, 2019 and 2018 (in thousands):


	Three months ended September 30, 2019
	SkyWest				SkyWest
	Airlines		ExpressJet		Leasing		Consolidated
Operating revenues (1)	$	641,947	$	—	$	118,348	$	760,295
Operating expense		560,646		—		53,208		613,854
Depreciation and amortization expense		43,353		—		49,442		92,795
Interest expense		3,165		—		28,441		31,606
Segment profit (loss) (2)		78,136		—		36,699		114,835
Total assets (as of September 30, 2019)		2,744,191		—		3,853,468		6,597,659
Capital expenditures (including non-cash)		67,394		—		34,597		101,991


	Three months ended September 30, 2018
	SkyWest				SkyWest
	Airlines		ExpressJet		Leasing		Consolidated
Operating revenues (1)	$	607,052	$	140,155	$	82,068	$	829,275
Operating expense		512,278		139,736		39,336		691,350
Depreciation and amortization expense		39,651		8,683		37,754		86,088
Interest expense		4,044		649		26,747		31,440
Segment profit (loss) (2)		90,730		(230)		15,985		106,485
Identifiable intangible assets, other than goodwill		—		1,224		—		1,224
Total assets (as of September 30, 2018)		2,251,563		565,266		3,368,031		6,184,860
Capital expenditures (including non-cash)		44,689		3,069		273,808		321,566

(1)	Prorate revenue and airport customer service revenue are primarily reflected in the SkyWest Airlines segment.

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

The following represents the Company’s segment data for the nine-month periods ended September 30, 2019 and 2018 (in thousands):


	Nine months ended September 30, 2019
	SkyWest				SkyWest
	Airlines		ExpressJet		Leasing		Consolidated
Operating revenues (1)	$	1,854,803	$	24,050	$	349,519	$	2,228,372
Operating expense		1,651,966		28,690		160,763		1,841,419
Depreciation and amortization expense		124,048		971		147,910		272,929
Special Items		18,508		3,361		—		21,869
Interest expense		10,699		—		86,185		96,884
Segment profit (loss) (2)		192,138		(4,640)		102,571		290,069
Total assets (as of September 30, 2019)		2,744,191		—		3,853,468		6,597,659
Capital expenditures (including non-cash)		184,019		—		468,213		652,232


	Nine months ended September 30, 2018
	SkyWest				SkyWest
	Airlines		ExpressJet		Leasing		Consolidated
Operating revenues (1)	$	1,750,827	$	444,943	$	222,420	$	2,418,190
Operating expense		1,505,298		455,084		105,030		2,065,412
Depreciation and amortization expense		115,979		30,044		100,363		246,386
Interest expense		12,722		2,264		71,499		86,485
Segment profit (loss) (2)		232,807		(12,405)		45,891		266,293
Identifiable intangible assets, other than goodwill		—		1,224		—		1,224
Total assets (as of September 30, 2018)		2,251,563		565,266		3,368,031		6,184,860
Capital expenditures (including non-cash)		121,010		5,996		827,065		954,071

(1)	Prorate revenue and airport customer service revenue are primarily reflected in the SkyWest Airlines segment.

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