Welcome to the SkyWest third quarter 2008 earnings conference call. For your information all participants will be in a listen only mode. There will be an opportunity for you to ask questions at the end of today’s presentation. (Operator Instructions) Please note this conference is being recorded. I would now like to turn the conference to Mr. Brad Rich, Executive Vice President and CFO.

Thanks to all of you for joining us this morning. We do greatly appreciate your interest and your time this morning. We all know there are a lot of things going on that are occupying peoples’ attention particularly this morning following an important and significant day yesterday. So very honestly we do appreciate your time. Before we get started let me just introduce to who is joining me this morning from SkyWest and participating in the call. I have Chip Childs, President and Chief Operating Officer of SkyWest Airlines with me. Brad Holt, the President and Chief Operating Officer of Atlantic Southeast Airlines is also with us via phone line this morning. I have Mike Kraupp, our Vice President of Finance and Treasurer with us this morning participating who also handles our investor relations activities. In fact I will turn the time right now to Mike to read our forward-looking statement.

In addition to historical information this release and conference call may contain forward-looking statements. SkyWest may from time to time make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements encompass SkyWest’s beliefs, expectations, hopes or intentions regarding future events. Words such as expect, intends, believes, anticipates, should, likely and other similar expressions identify forward-looking statements. All forward-looking statements included in this release and conference call are made as of the date hereof and are based on information available to SkyWest as of such date. SkyWest assumes no obligation to update any forward-looking statement. Actual results will vary and may vary materially from those anticipated, estimated, projected or expected for a number of reasons.

Wit that let’s go ahead and jump right into a discussion of the third quarter results. It has been an interesting quarter from many perspectives. It’s been challenging in some ways but actually quite productive and many things have come to light here in the quarter that we actually are optimistic and feeling quite good about. From an overall perspective just looking specifically at the financial performance obviously we had some challenges during the quarter and from that perspective only from all accounts it’s been a difficult quarter. I will use primarily as the outline for the discussion today the press release that went out this morning. I assume that those of you participating on the call this morning have access to our release. Let’s just start right into that and discuss the results for the quarter. As you can see from the release we reported operating revenues of $934.1 million compared to $875.6 million for the same period last year. We reported $26.2 million of net income or $0.45 in diluted earnings per share which compared to $42.9 million of net income and $0.68 in diluted EPS for the same period last year. When you roll those quarterly results into our year-to-date nine month performance we reported $2.75 billion of operating revenue for the nine months compared to $2.52 billion for the same period last year. We generated $91.7 million in net income or $1.55 in diluted EPS compared to $118.3 million in net income and $1.83 in diluted EPS for the same nine months of last year. In discussing some of the significant items that affected our financial performance for the quarter I think first of all the thing that I would point out and that we need to keep in mind as an overall frame of reference…

(Operator Instructions) Please limit yourself to one question and a single follow up. Our first question will come from Michael Linenberg – Merrill Lynch. Michel Linenberg – Merrill Lynch: I have a couple questions here, Brad when we look at the information that you provided regarding the lawsuit you indicated that you recognized the total of $32.4 million of revenue. When you say recognized did that show up in the revenue line this quarter and what was the catalyst for that and is the first time that you’ve actually recognized revenue with the money that Delta has held back related to this issue?

The fat in the matter is that when this was brought to our attention actually just about a year ago, the amount in dispute in that time I think was right on $25 million. The only issue here is that a the present time the total amount that has been recorded into revenue and that really is in dispute or you could say the total amount of our exposure to this is $32.4 million. Michel Linenberg – Merrill Lynch: It’s $32.4 million and now that’s associated with funds that Delta has withheld. How much have they withheld at this point? Because I believe at the end of the June quarter I think it was $32.5 million. Are we still at $32.5 million or as of September 30th is that number a bit higher and are they still withholding money?

No, they’re still withholding money. The issue here that I’m talking about is just how much of what they’ve withheld, how much have we booked and therefore if we were to lose the suit, how much do we have exposed. That number is $32.4 million. The dispute is ongoing and Delta continues to withhold money according to their interpretation of how IROP expenses should work in the contracts. Michel Linenberg – Merrill Lynch: My second question regarding the Delta files a motion to dismiss the complaint, you did provide a full paragraph in how that played out. In layperson’s terms, can you explain what you’re able to pursue and maybe what you’re not able to pursue? It looked like that there was some bit where they received a favorable ruling from the court. It looked like that you also received a favorable. Can you part and parcel where things stand and maybe what you’re not able to pursue or fight?

Mike, obviously we have to be very careful and I’m going to be very sensitive about what we talk about in a public forum relative to ongoing litigation. What I will say is that probably something that’s not unusual in this type of litigation is that there are several aspects to and several points included within our complaint. That was that Delta filed a motion for dismissal on all of the points. The Judge granted in favor on some and not in favor on others. From our perspective the fundamentals of our case, the fundamentals of our complaint are still alive and will be heard by the court.

Our next question will come from Duane Pfenningwerth – Raymond James. Duane Pfenningwert – Raymond James: I was wondering if there was any revenue that was actually written off in the quarter from Midwest as opposed to rolled to a note?

Duane, the answer to that question is that all deferred amounts that Midwest owes us have been rolled into the note, but all of those amounts although they’ve been rolled into a note, simply due to, I hate to say it this way, due to our assessment of their financial condition, we have not recorded any of that in revenue. The other way to say that is we fully reserved all of those amounts. So 100% of our exposure with the note, in other words, has been reserved. Duane Pfenningwert – Raymond James: Is there a one time impact this quarter so if you excluded that full reserve, what would the margin look like excluding this one time issue?

The impact of that in the quarter alone was I think we disclosed at $4.6 million. So of the total $7.7 million that’s in the note, the original $3.1 million we took last quarter, $4.6 million we took this quarter. Duane Pfenningwert – Raymond James: Brad, you went through it just quickly, what are the deliveries in the fourth quarter and in 2009 in total and can you talk about the financing commitments you have in place there?

The first of the 900s will deliver here in just a couple of weeks. But more important than the delivery dates, we have service dates beginning one in November, one in December and two in January. Those are the four CRJ-900s. Then the 700s begin delivering early next year with service dates that are basically an aircraft a month May through August. Then we have two in September, four in October, two in December and then the remaining six are basically two a month January, February, March. Duane Pfenningwert – Raymond James: On your interest expense, I assume maybe what’s happening is some owned aircraft were converted to leases or maybe you’ve paid off some debt. Can you just add some detail on why that’s come down so much the last couple quarters?

I didn’t highlight in the discussion only because we do have some variable rate debt. The majority of it is in the ASA fleet so as rates have come down the variable rates have adjusted down, that’s the primary reason for the decrease in the interest expense. I didn’t highlight it because the interest expense related to aircraft ownership is a pass through. So it affects both expense and revenue the same way, it has no impact on income.

Our next question will come from Bob Mcadoo – Avondale Partners LLC. Bob Mcadoo – Avondale Partners LLC: A couple things, we got off on deliveries on Duane’s question and he had also asked you about financing on these airplanes. Where do you stand on that? We didn’t get that?

Before I answer the question, Bob, let me just make a general statement. We’ve been given a note or two here in the room that particularly the webcast portion of the audio has been breaking up and in and out. We’re not quite sure what the problem is, we know it’s happening. We apologize for it, but there’s not a whole lot that I know we can do about it. I guess I can do nothing more than just apologize that we have some audio breaking up, in and out over the Internet broadcast and we apologize for it. Bob, to the question, first of all obviously this question is getting a lot f attention. We’re taking a lot of phone calls from people asking about our ability finance the aircraft. We are very confident in our ability to get debt financing for these airplanes. We don’t think that’s going to be a problem at all. If we choose just to own and acquire with straight debt financing, we don’t think that’s going to be a problem at all. In fact we have advance commitments for the debt on these airplanes. What we are trying to do, is still our preference is to have some mix of leveraged lease or investor lease as a mix so that they’re not all just 100% financed. The reason for that is primarily driven by the fact if we go out and take 22 brand new aircraft all on our balance sheet, we can’t fully utilize the tax benefits currently so we’d just as soon spread that around to people who can utilize the benefits currently in some form of a tax lease. Bob, I know you understand this very well. So our preference is to have a mix of some leasing, some owned aircraft, so the equity participation remains very difficult. We are working with some parties. We’re not that optimistic about our ability to place leverage leases right now, but if we can’t we have an advance commitments for the debt to debt finance 100% of the deliveries. Bob Mcadoo – Avondale Partners LLC: Given what you said about how variable interest expense is a pass through, to the extent that the interest rates get ugly to try to get all these done over the next several months, is that higher interest rate also going to turn into a pass through for these two contracts?

Yes, so what that means is that we need to proactively enter discussions with the partners that have those airplanes and jointly come up with a strategic plan whether to continue to let these rates float or whether we should take advantage of options to fix, they’re embedded in the contracts. Bob Mcadoo – Avondale Partners LLC: A couple other little quickies, the Brazilias that are grounding, are those all in the prorate side or do you have any Brazilias that are on contract?

Brazilias on contract, Bob I’m not sure I understand the question. Bob Mcadoo – Avondale Partners LLC: The arrangements under which you are flying the Brazilias, are they all prorate arrangements or do you have some normal, like you have on your RJs, where you fly so much an hour kind of contract deals?

Yes, of the total Brazilia fleet, 24 of them are still in contract, CPA type arrangements. The remainder, those are the aircraft that are flying in prorate. Bob Mcadoo – Avondale Partners LLC: The ones that are leaving the system, are they contract Brazilias or are they prorate Brazilias?

Contract. Bob Mcadoo – Avondale Partners LLC: So these new airplanes that are coming in that are “replacing Brazilias” are replacing Brazilias on contract?

Yes. Bob Mcadoo – Avondale Partners LLC: Obviously as fuel prices come down recently I assume it’s helping the prorate side of the house. I know prorate has never been a big number but can you can you give us an idea of, of your fuel expense line, how many gallons do you have in terms of prorate gallons versus contract or pass through gallons so we can get a sense of what the windfall, I don’t know if it’s called a windfall, but the benefit that you’re getting because you don’t have to pay here what you were paying another 90 to 120 days ago on fuel.

Our fuel burn in the prorate system is about 1 million gallons a month. Is that the number you’re after, Bob? Bob Mcadoo – Avondale Partners LLC: That’s what I’m looking for. Is there a way to split out the passenger revenue line, the $900 million line into prorate versus contract in round numbers?

Bob, you’re getting into some detail here that I don’t have immediately available. We certainly have it. If you want to call us after, we can give you that. Bob Mcadoo – Avondale Partners LLC: Just call Mike and he’ll come up with it?

Yes.

Our next question will come from Keith Weissman – Calyon Securities. Keith Weissman – Calyon Securities: I wanted to ask you about your flying levels with Delta. Have they been running at minimum levels or above in the third quarter?

I think it’s fair to say they are, yes, very near minimum requirements. Keith Weissman – Calyon Securities: And with the merger complete with Northwest, do you foresee any changes to the contracts or any discussions happening where they might try to change the nature of the contract, the amount of aircraft under contractor anything related to the contract?

This is a good question, a couple of things come to mind. I’ll try to be short and succinct in answering this, but first of all the majority of the fleet with Delta obviously is under contract. We don’t expect any changes there other than Delta’s ability to deliver a schedule that will either be at or above the minimum requirements or it may be below. If it’s below to deal with whatever issues Delta sees fit to address within their schedule. If it’s below the minimum requirements, then a rate adjustment is required in the contract. So Delta certainly has the latitude to do that. The other part of this that we’re trying to be very sensitive to is that I’m sure we’re not the only ones that have heard Delta make reference to their CRJ fleet and the fact that if they had their preference they would fly fewer CRJ-200s. Obviously some of those comments have been made when fuel prices were at their peak. With fuel prices easing, maybe that will affect their perception of the CRJ-200 flying, or I should say 50 seat regional jet flying. We suspect that it will, but at the end of the day, I’m sure that if they had their preference they would have a material decrease in 50CRJs. We are doing everything we can to try to address that in cooperation with Delta and trying to find alternate uses for the 50 seat lift. We have several initiatives under way, things that we’re pursuing and investigating and analyzing to try to deal with that. Nothing right here imminent to announce or anything like that. We are trying to do what we can to creatively find some solutions to that issue. It’s kind of a multi-faceted issue, but I hate to ever answer questions just by saying well we have a contract that says we need to fly these. But that is the case. The only really issue there is in spite of what the contract says, we’re trying to proactively come up with some solutions and then if Delta does choose to go below minimum requirements in utilization, there’s a rate adjustment required. The thing that’s been difficult is when we have schedules where there’s not a lot of consistency and continuity to the schedules. Because if the schedules go under requirements but then pop up the next month, we really can’t make any meaningful long term corrections in our expenses to deal with it. That’s where it really becomes counterproductive to our financial performance. Keith Weissman – Calyon Securities: I might have missed this, but with the aircraft going from 21 to 12 at Midwest, what’s happening with those nine aircraft?

We are utilizing those aircraft in some respects in spare aircraft for a couple of the airplanes. First of all the aircraft are for sale. We’re trying to relocate the aircraft, either find alternate uses or just outright sell the aircraft. While we’re trying to sell the aircraft, we have some of them that are being used to fill in for aircraft out for overhaul, [c-checks], whatever so they’re being used really as maintenance spares. But we’re also trying to do the best we can to utilize the aircraft everywhere from charters to just some other ancillary type flying, but to just to bridge this time period until we get them sold or relocated. Keith Weissman – Calyon Securities: And how do you see the sale markets? I imagine it’s pretty slow right now.

It’s not as slow as some would think. Actually there are some significant efforts that are being invested in relocating and placing some of these aircraft. We actually are more optimistic about this than some might assume. Keith Weissman – Calyon Securities: One last one on Midwest, what is the priority of claim on the Midwest note? If they were to file for bankruptcy down the line, would you be basically out of that money or would you have some type of priority on it?

No special priority. We’ll line up with the rest of the unsecured creditors.

Our next question will come from Lily Ng – Merrill Lynch. Lily Ng – Merrill Lynch: Just a really quick question regarding your investment in Trip, have you made any progress regarding negotiating some capacity purchase agreement with the network carriers on Brazil? Any update on that would be great.

I’ll just say that there is interest there by more than one carrier, but the discussions are very early.

Our next question will come from Bob Mcadoo – Avondale Partners LLC. Bob Mcadoo – Avondale Partners LLC: On the ATR you used the term going away, I think was the way you said it. Does that mean that Delta has decided to permanently ground those and were those planes that when you bought ASA, were those planes that were some of the assets you bought or are those the planes that are on lease?

Those are on lease, Bob, and from day one in the discussions for the acquisition of ASA, those airplanes were scheduled to terminate. Actually the leases did terminate and we re-entered very short term leases at Delta’s request I think primarily just to give Delta a little more time to evaluate what they wanted to do with the fleet and what portions they wanted to replace and how they wanted to replace and that sort of thing. The lease extensions are just expiring and the airplanes will go back, but we really have no exposure there. We don’t like ATR parts exposure or anything like that to deal with. This was anticipated, it has been anticipated for a long time. It obviously is a meaningful issue from the standpoint that it’s a reduction of the fleet at ASA and so how that impacts crews and infrastructure and all that certainly is an issue. But it is something we’ve known about for a long time. Bob Mcadoo – Avondale Partners LLC: Do you have enough turnover in the Eastern half of your system in terms of personnel so that it doesn’t mean layoffs or whatever, that you can work through this as something you’ve been able to plan for? Maybe not quite as smooth as you’d like it sounds like.

Yes.

We also have a question from Michael Linenberg – Merrill Lynch. Michael Linenberg – Merrill Lynch: Something that I forgot, just to follow up something, Brad I think you made the point that you said you were very confident in the company’s ability to get debt financing for these airplanes coming in. I may have missed this, did you address the equity and are you planning to take all those airplanes and put them on balance sheet or do you think you’ll be able to get some equity participation? What does the market look like on that front?

Again, very confident that we have 100% of the aircraft covered on straight debt, straight debt would mean that we bring the airplanes on balance sheet. We don’t think that’s most optimal because we can’t currently utilize all the tax benefits so we would love to have some equity participation. The equity participation is very difficult to come by particularly in this market. We’re trying to be very candid, I’m not that optimistic about equity participants. Michael Linenberg – Merrill Lynch: One more, I know you talked about whether it was inefficiencies or reduced utilization, reduced production that impacted your numbers in the quarter. That said, you’re on time and completion factor performance for SkyWest and maybe more specifically ASA, you saw significant improvement over the past three, four, five months. It seemed like ASA is now like a top five carrier and we’re looking at all carriers. I’m just wondering how much in the goal to improve operating performance, and it seems like every regional carrier now is under the thumb of their major partners who there’s a lot of demands out there about performance. Was some of that in order to achieve those solid numbers? Did some of that result in maybe stretched block times, etc. and maybe drive some of that additional cost? Any color on that front would be great.

I don’t know what color to add to it other than I think your assessment is very accurate. There certainly has been some of that but I think the main thing to keep in mind is that obviously our major partners, they’re managing block time reliability very specifically. That’s certainly at work here but the fundamentals of keeping our crews productive, implementing technology that’s required to enhance your reliability just to maintenance and the fundamentals of flowing crews and all those things that impact reliability, we remain very focused on those types of issues. That’s the part we can control. The controllable elements of reliability, we’re remaining very focused on and both Chip and Brad at the respective entities, I think under their leadership we remain very focused on those issues and it’s showing up in the numbers.

This does conclude today’s question-and-answer session. I would like to turn the conference back over to Mr. Rich for any closing remarks.

I won’t take any more of your time with a lot of closing remarks. Again, we just thank you for your interest and your time today. In spite of some of the difficulties and challenges, we still remain very optimistic about the future. Again, thank you very much and we’ll conclude the call.

This does conclude today’s conference call. Thank you for attending.