Good day and welcome to the SkyWest Second Quarter 2014 Earnings Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Chip Childs, President of SkyWest. Please go ahead.

Thank you, Yusuf. Good morning and welcome everybody, we appreciate your interest in SkyWest and we hope that the call today can provide you with a good reconciliation of events that have happened in the second quarter of this year, as well as provide you with some of our strategic perspective moving forward. I have to apologize, I'm on the back end of a summer cold so I'll try to be clear and minimize maybe some coughing that may happen in the meantime. But let me give you a brief introduction of everybody that we have here on the call today. We have Jerry Atkin, CEO of SkyWest Incorporated; we have Brad Rich, Chief Commercial Officer of SkyWest Inc.; we have Wade Steel, Executive Vice President of SkyWest Inc.; we also have Brad Holt, President and Chief Operating Officer of ExpressJet; Mike Thompson, Chief Operating Officer of SkyWest Airlines, Mike Kraupp, Vice President and Treasurer as well as Eric Woodward, our Chief Accounting Officer at SkyWest Inc. The outline of the call that we want to do today is going to proceed in this fashion, we are going to have Mike Kraupp, read us the forward-looking statement. We want to have Jerry give us some opening remarks relative to his perception of current events at SkyWest today. We will have Wade review the reconciliation of our quarter performance and some of the items that are contained there in. We will have Brad Rich give a liquidity and cash flow update. I will give some forward-looking insights as to our strategy moving forward and then afterward we will open it up for question. So from that, Mike, we will start with you.

Okay. We will be making statements during this conference call which are considered forward-looking. Such statements are based on our current beliefs, expectations and assumptions regarding future events and are subject to risks and uncertainties. Words such as expects, intends, believes, anticipates, should, likely and similar expressions identify forward-looking statements. All forward-looking statements expressed in this call are made as of the date hereof and are based on information available to us at this time. We assume no obligation to update any forward-looking statement. Actual results will vary and may vary materially from those anticipated, estimated, projected, or expected for a number of reasons, including those discussed in today's press release or expressed during this conference call or set forth in our 2013 Form 10-K and other reports and filings with the Securities and Exchange Commission.

Thanks Mike. We will turn the time over to you, Jerry.

Good morning and thank you for your interest. I'm going to give an overall status of our challenges and update on our progress with ExpressJet and reaffirm the continued progress and consistency of SkyWest Airlines. The acquisition of ExpressJet in late 2010 and the accompanying contract for flying 40 seat aircraft accounts for most of the current ExpressJet's financial losses. Combining ExpressJet and ASA cost more than we thought and didn't achieve the amount of synergies savings we expected. Additionally obtaining an efficient and combined labor contract with all group simply hasn't happened. At the same time, ExpressJet's operating performance has not met expectations. However, with the naming of new leadership inside and outside of ExpressJet altered structure and implementation of a number of improved processes as well as renewed focus on delivering to our major partners, operating performance has steadily improved over the past few months. In ExpressJet delivered the top performance of the seven contract United Express carriers for controllable completion in both June and July and was the second from the top performer in Delta connection in those same two months. We see additional opportunities to make improvements and sustain upper tire performance for all ExpressJet partners although we have not fixed all of ExpressJet's challenge and opportunity areas we are encouraged by the progress made thus far. SkyWest Airlines financial results are slightly better than planned for the first half of 2014 and forecast to be on track for the balance of the year. The SkyWest Airlines earning plan for 2014 was a bit less than the actual 2013 results primarily due to the cost of adding the E175 aircraft to the certificate and placing 20 of those new aircraft into service for United. SkyWest Airlines will bring 20 more E175 aircraft into service for United in 2015. We do expect that we will fix and reduce the amount of contract flying at ExpressJet resulting in repairing the financial challenge over time. Our focus will be on increasing earnings through a number of avenues including some reduction in the size of fleet in the 50-seat aircraft type as well as simplifying and increasing the efficiency and the quality of our operations. In May, we really find some leadership positions at the holding company to help address our current challenges and get additional attention in areas of focus, so we can better address the size we are today. Chip Childs and Wade Steel are an important part of that change that should result in increased value for our shareholders. Thank you, again, for your interest today.

Thanks Jerry. Wade, how about taking us through the reconciling items this quarter?

Yes. Thanks Chip. Thanks Jerry. For Q2 2014, our net loss was $14.7 million or $0.29 per diluted share. This compares to net income of $20.7 million or $0.39 per diluted share for the same period a year ago. There are four main items that negatively affected our profitability. Our crew cost increased by $20.6 million for the quarter. These costs include labor, hotel, per diem, and simulator cost. The increase in crew costs are affected by a few main items. First, FAR117, this is the new flight we continue to roll that affect how we can schedule our crews, FAR117 has increased the number of pilots we need to staff our schedule and increase the number of hotel night and the amount of per diem we pay. Second, the induction of the E175 aircraft. We are hiring and training pilots for this aircraft. We will continue to take delivery of the E175 through the middle of 2015. Third, pilot attrition, we have been hiring at both airlines to keep up with pilot attrition. The majority of the pilot attrition is due to the hiring from our major partners. The second item affecting our profitability was the decrease in passenger revenue, 9.8 million of this decrease is due to two reasons, first, we earned lower performance in incentives under our flying contracts. As many of you know, we get paid in markup based on our certain operating metrics such as completion and D zero. We also have unfavorable contract settlements with our major partners. The third item affecting our profitability as we wrote-off certain assets associated with our paint facility in Saltillo due to the fact that this facility is no longer being used. We also wrote-off obsolete equipment that resulted in a combined write-off of $6.8 million. The fourth item is our tax provision. During the quarter, we increased our evaluation allowance on certain state NOLs by approximately $5 million. We also made a change in estimate for our effective tax rate for the year that resulted in an increase to our tax provision. Chip?

Thanks Wade. Brad?

Okay. Thank you, Chip. Obviously, we will see a decrease in our cash to marketable securities over $200 million since year end some brief but specific comments regarding our cash and securities we felt was very important. There are admittedly portions or components of the decrease that are more concerning with others. The most concerning aspect of the decrease in cash is related to $46 million as a result of the pre-tax loss. Those of you that have been following and understanding our models understand the ExJet model has very little depreciation and most of the loss is coming from ExpressJet are in fact cash losses. There is also a decrease; it's attributable to the increase in our prepaid rent. That portion of the decrease is less concerning given that's a timing related issue although there are quarterly fluctuations in our prepaid rent accounts when we look at this over the next few years on an annual basis, this really is a timing issue, the increase in prepaids will be very small increase in 2015 and then by 2016 that will reserve and turn positive. We also invested heavily in the first six months of the year in E175 program, those investments consist of both the investment in parts and spare engine and a spare engine of approximately $26 million and then we have invested $34 million in equity in the interim financing of the eight aircraft that were done prior to quarter end. The portion of the equity investment we expect to come back into cash in the near term as we replaced the interim finances with permanent and lease financing on those aircrafts. We also invested another $20 million in the ERJ200 program, the good thing about these investments both in the 175 and the 200s are the…

All right, thanks Brad for that reconciliation. At this point on the call, I want to spend a little bit of time to be very concise about some of your views and perspectives going forward to make sure that that you all have a good understanding about what our thinking is with the current situation and what we think that the opportunities are. First and foremost, among the four things I want to have a conversation about is, our perception is that partner credibility is paramount to everything that we are going to do going forward to fix the current situation within our entities. And the credibility goes further than just a strong relationship with our partners. It's quite simply our partners who want a very strong product that's sustainable, predictable and reliable. And everything that we do on a go forward basis is to take care not just the relationship with those partnerships but to make sure that we have some of the best credibility in the industry and we have relationships that are going to work for both ourselves and the partner. The other concept that we want to make sure that we learned over the last three years or so with the bigger isn't necessarily better. We are anchoring more of our philosophy and the fact the better is better. As you can see from the press release, we have a large number of aircraft that are expiring within the next 18 months. We think that provides some opportunities for us to do some right bandwidth sizing to make sure that we get back to delivering the product that we need with our partners and delivering their expectations. And we are not as much interested in size anymore as much as we have been relative to quality…

Thank you. (Operator Instructions) Our first question comes from Duane Pfennigwerth with Evercore. Please go ahead.

Yes. Good morning. Just on ExpressJet, I'm sorry if I missed it in the release, how much did ExpressJet actually lose in the June quarter?

So we haven't necessarily disclosed that today and we typically don't disclose that on the call. We are going to be filing our 10-Q…

By the end of the week.

By the end of the week, we'll file the 10-Q and you'll be able to look at the segments in the 10-Q just to see the difference between the different entities there.

Okay. But, I mean it was substantially loss making, I guess based on your tone and I guess the real question is, how long before you think you can get that back to breakeven and just to be fair, I mean I think the message from the company has been one of the restructuring and a transition of ExpressJet for sometime. So maybe you could just help us understand what are the specific things you're doing that are different than the things you tried in the past to turn this asset around?

That's a good question. I think that the difference between where we are today, I'm going to say it sits at a very high level Duane and kind of leave at that. I think the difference is where are today, where we've been in the past is you got a couple of factors. One, we have the element of a very strong flexibility relative to the fleet that we see in the upcoming couple of years 18-month timeframe. I think that we have become a little bit more impatient if you will relative to extending aircraft. Some of the aircraft that are going to be going away over the next 18 months have been previously extended with some patience of hoping that we are going to get some things right internally with ExpressJet and I think that it's not that we don't have a very fundamental strategy to make ExpressJet a long-term sustainable product. I think in the next upcoming years, we have fleet flexibility to deal with a very wide range of bandwidth issues that are creating, what I view it's some operating promise within the entity as well as the ability to remove what we view has some of the most unprofitable flying at ExpressJet and the entire enterprise. And as we do that, I think it's going to – as we take that fleet out, it's going to put us in a position where we can do with the bandwidth items better. And then also, first and foremost getting back to the original point of the call, making sure that we can first and foremost deliver a very, very solid operation to our partners which in turn will give us more opportunity to try to look at ways in which that we can be creative from a revenue perspective to help as well. But again, I think that some of those conversations are ongoing with our partners, but I think the fleet flexibility that we are seeing is going to provide a good baseline to move it in a different direction once we've seen in the past.

Okay, appreciate that. And then just lastly, I don't know if you prepared to do it today but I think it would be helpful if you could kind of give us a sense kind of rough numbers of – for each of these 50 seaters that you take out. So, I think you talked about 56 this year and over a 100 next year. Like what is the level of profit improvement or how much are you losing per aircraft to help us kind of gauge the rate of margin expansion. But, I assume even though they're losing making, maybe they're also contributing to you overhead. So, any help you can give us and how to think about that would be great.

That is a great point and we anticipate to do that in the future. I think that it's a little bit premature today to do that because of, Duane what it sounds like, you see the many variables in dealing with this, I mean first and foremost we have to coordinate that with the partners, we have to coordinate that economically from a geographic perspective and we got to make sure that we mitigate the impact of all this with our employees. We do anticipate in the next three months, we'll have a lot more visibility for that one.

Thank you.

Our next question comes from Helane Becker with Cowen and Company.

Thanks operator. Hi, guys. Thanks for the time. Just a couple of questions here. Can you say how much the cancellations are affected by the runway closures in San Francisco and New York during the second quarter?

Well, I will tell you that – I mean Helane, by the way, thanks for the question. I think it's a very good question because it's something that we both have been – both entities have been proactively dealing with for about the last six to seven months. I think that from the perspective of both, I won't tell you that we have the numbers note down exactly. I will tell you that these are two runway closures that we've been trying to proactively work diligently with United for about six to seven months. I think on the San Francisco side, we have mitigated it relatively down to zero impact in a way that we have tried to progress with a very difficult runway construction. And then on the New York side, it's probably about the same, I think it has been, you know New York is New York, incrementally trying to figure out how much of it related to the runway construction I would say it's probably not materially given just a natural operations in New York anyway.

But, if I look at not to be difficult but if I look at your flight cancellation at SkyWest over the past month, let’s say you got compared to say the first quarter of the year by monthly. You guys never cancelled flights at SkyWest. And all of a sudden I'm seeing numbers like yesterday, you cancelled 42 flights in head for diversions. And I'm seeing numbers in the 30s and 40s like on a daily basis. And that must be runway related. So, the point is really when you go to United, and you say hey look we can't deal with this, this is ridiculous and it's contributing to our losses. You need to come back and give us A) schedule that works and B) money to compensate what's their reaction.

I'm going to split this and let Mike Thompson to take a bit of a conversation about the cancel that you've seen in the timeframe you've talked about and then I'll go bit of a dialog on that as well.

Okay. This is Mike Thompson. As far as the cancellations are concerned, I mean a lot of those cancellations are due to ATC, weather. We've had some other operational challenges as it relates to some crew issues. We're at our minimum staffing levels right now based on the high block hour numbers. That's something that we expect to have some relief within the ball, but as it relates to the runway construction in San Francisco, certainly we have seen an uptick in the number of cancellations as it relates to our San Francisco operation, our overall operation.

Thanks Mike. And I think relative to that plan, I think your observations are very true but that have to be Canada. I think that most of the cancellations are due to just rating very, very high volume of flying at the SkyWest. We've never flown in the block hours at SkyWest that we are flying now. I think that we are pushing the maintenance side hard, I think we're pushing the crew side hard. I think from all of that perspective, it's not a situation we go back to our partners and say give us more money, we have to take some ownership of some of this. And there is a very high volume of flying right now. Given your comment about how we handle this on go forward basis, we are very transparent with our partners and we see these issues and we're transparent when they're happening. And, they all, when we see these operational issues that something that they're contributing to. We have a very good dialogue in order to deal with this, but we probably have some more ownership on this than just blaming the runway and whole of the partners.

Got it. And then, can you say of ExpressJet, what percent is Delta and what percent is United?

Brad Holt?

Well, we're on the ExpressJet side, the United part of their operation is in the 60% range, 40% Delta and pretty much everything we do on the Delta side of it is out of Orlando and Detroit on the East Coast.

Got it. Okay. And then, just on the pilot situation. I think at one point, maybe on the last conference call you guys said you were losing like 20 to 30 pilots a month. And, if I think of about the next 18 months, you’ve got 157 aircrafts that are coming on fleet which theoretically would free up 1570 pilots to reallocate to the 175. So am I thinking about that correctly and that issues with pilot hiring maybe mitigate at some point in the next six months?

I would say primarily it's not that simple but the math certainly goes in our favor in dealing with taking away that amount of fleet, it's not a simple formula, but I think that your overall high level assumption is correct.

Okay. Great. Well, thank you for answering the questions. And good luck with this process.

Thank you, Helane. Appreciate your support. Thanks.

Our next question comes from Savi Syth with Raymond James.

Hey, good morning everyone. Just on the contract performance incentive side, could you help me understand – I know there was a little bit of weather in April, but could you help me understand just what, where the issues are – because it obviously means the deterioration from the level of performance in the prior year.

Yes, Wade you want to give a little more color on that?

Yes. The performance incentives are kind of split between both airlines at this point. There has been a reduction in the controllable completion factor at both airlines and we've had some financial consequences of the reductions.

So, I think Savi, in a little bit more detail, I think when you look at what's happening with the operating performance starting I think in April and May, we've seen some good stuff in June and July. So we've seen a good trend, I think that's a good message to outline and we see a very strong trend from particularly on the ExpressJet side. But, April and May, we're not good, I mean we need to own up to like we just told Helane, some of the stuff that we have in airlines related to maintenance cancels and crew cancels, just some other ways in which we've been operating the fleet. It's been a bit of a struggle relative to the summer given the volume particularly on the SkyWest side. And the number one thing as I stated earlier in my messaging is that we have to have credibility with our partners. Again, we have very trends, that we got to make them not just trends, we got to make them very strong standards of both airlines.

And maybe you can expand on like so what did you do in June and July that improve the performance or was it just a matter of kind of – the crew kind of catching up?

I think, let me give a little bit of background into what the process is, it's not necessarily something that I have done in my involvement in ExpressJet or anything because they got some fantastic people that are extremely smart. I think there's been certainly a strong urgency to improve operating performance. I think that we provided some assistance to make sure that there are the right things happening in probably three or four critical areas. We've had some management turnover out of the ExpressJet, we took Mike Gibson out and put him over maintenance at ExpressJet; we promoted Brad Sheehan. These are two very topnotch operating folks. I think it helped us utilize spares better. I think that with Terry Vais with the dispatch program over there. We've provided some very good strategic insight. They have a lot of strong asset. They got a lot of strong people out there. I think that from a strategic perspective, we've got some good new processes in some of these places and some different thinking that's going on. And I think people are embracing the change in making it more of a standard.

Understood. And then just a follow-up on one of Helane's questions about, so you do have the 50 seaters likely coming off contract and that will free up some pilots. But, does that mean that there will be increased pilot training cost related to getting them to the E175 level?

Not compared to what I think that we're seeing today on an incremental basis now.

Okay. And then finally just on the pilot cost that you saw this quarter, I was hoping you could help us understand a little bit more of a breakout as to maybe what might be reoccurring and what might be just kind of one-time as you ramp up or just ramp up to cover any rules or ramp up to get E175 pilots training.

Yes. Let me let Wade start with that one and I may follow up with some comments.

Yes. So there were three main items in there, the FAR117. There is clearly that, that will be a reoccurring item. We are getting better and better at each airlines managing the new referral and understanding them and getting more efficient with them. And so that the level of expense that we have this quarter is high, we're getting better at it but there will be reoccurring expect FAR 117. As far as the hiring some pilot attrition, as we've discussed on the call, we expect that to decrease just due to the amount of aircraft that will be going away. And then the hirings for the 175 kind of as you stated, there will be some cost associated with that getting folks from a different aircraft tied to the 175. And so, we will some additional expense on that through the middle of 2015.

Okay. Any kind of ability to give us levels on each of those buckets?

I think given like what we said earlier, I think given the fluidity of what's happening on some of these fleet transitions were not prepared to give anymore guidance relative to those items, but we will probably be in a position to do a better job at that in the quarter call.

Understood. Thanks very much.

Thank you.

Next question comes from Michael Linenberg with Deutsche Bank

Good morning everyone. Just two questions here, can you give us on the Delta situation, it looks like that's been cleaned up. We mentioned that in the press release. What were – what were some of the puts and takes in that agreement? How did that play out?

I think that we'll keep this at a very high level. Mike, thanks for your question. I think that, relative to that as you know that's been a longstanding issue. I think that what we did to reconcile that was something that we thought was not only important to the relationship, but important from a business perspective and mostly important to have a resolution to that and move forward and not have to spend time, energy, careers and money trying to continue to resolve that, I will just carry that I think that it's been amicable between Delta and us in resolving that issue. We're happy to have it behind us and then add little to no impact on the financial statement.

Okay. That's good. And then my second question is when I look at ExpressJet, there is obviously issues with the airplanes. But I know in the past that I think there is also issue with labor cost, there is probably few other things. When you sort of look at in holistically which seem like that ExpressJet as a whole would be a very good candidate for the Chapter 11 bankruptcy process. And I'm constructing it all, my question is how have you considered that, why have it gone down that path, and could it be that maybe SkyWest is a guarantor on some of the debt? I mean, are there cross-default provisions where if ExpressJet were to go to the Chapter 11 process, it would put the holding company at risk. So I mean because this has been ongoing for sometime, it would seem like you could clean up a lot fairly quickly, and then have a vehicle or a regional platform that would be one of the most cross providers of regional service which I think would actually be quite attractive to your partners. Just to get your thoughts on that, I mean I realize it's a pretty comprehensive question.

Yes, Mike you're hitting the new guy hard man.

Sorry about that.

It actually is a very, very good question. I will say that certainly understand as a representative of our shareholders and your insights on that, it's our job to consider all things in a solution and under the circumstances. We have not taken that approach seriously. We fundamentally believe that the dynamics of the industry and our relationships with our partners is going to fundamentally provide what we believe is a likely better scenario down the road to get this thing sustainable. It's not going to be an easy road; it's not going to be a quick road. We think, with the fleet flexibility, the dynamics of the industry and what partners want, we believe that we can do some things without a Chapter 11 bankruptcy on that entity to move it forward and take care of the people that are associated with making sure it's successful, and that's employees and shareholders and stakeholders alike. From a cost perspective, I think that there are certainly some challenges there. I think we've been very clear that the primary challenge at ExpressJet is not necessarily the cost side. Although there are those issues, but the contract side with some of our major partners, and that's what we're focused on today. So while I think we appreciate the concept and we appreciate the insight on it, that's something that we certainly have done some due diligence on. There is a lot of air on that process that we won't get into with the call that may have an impact on the holding company, may not have an impact on the holding company, but overall we are more optimistic about a different approach to resolve the issue before we go down that path.

Okay. Thanks. And then if I could just squeeze in one last one on the taxes. Can you just run through because you did take that reversal and obviously that drove a much larger loss. Can you just – can you walk through that tax piece and what we should expect for the rest of the year?

Yes. Wade, why don't you take that?

Yes. So, as far as the current quarters, to your point, there is two items. Number one is the valuation allowance against some NOLs and that was approximately $5 million. And then the second piece that affected this quarter was the change in estimate related to our effective tax rate that drove our reversal of the benefit that we recorded in Q1. So, that's what happened this quarter. Going forward, if you look out it for the next six months, it will be very close to the statutory rate within each quarter there maybe a little bit of differences but overall for the last six months of the year, it will approximate the statutory that we have.

Okay. Thank you very much.

Thanks Mike.

Our next question comes from Glenn Engel of Bank of America.

Good morning. A few questions. One, the comment about the second half being profitable, did that include or exclude the $20 million gain?

It includes.

And would you be profitable without the $20 million gain, or you don't want to go into that?

We believe we would be profitable without the $20 million gain.

Second of the 156 planes, 50 seaters that are leaving, can you give a rough breakout of what's CRJs and what's ERJs, and also what percentage of those you get to share the capital cost as well

Yes, Mike.

Okay. Glenn, let me give you this for the last six months and then 2015. For the last six months of 2014, ExpressJet will retire a total of 52 aircrafts that consist of 17 CRJ200 and 35 ERJ145, SkyWest Airlines will have four CRJ200s during that timeframe. And in 2015, ExpressJet will have a total of 79 aircraft removed from service, 20 of those are CRJ200s and 59 of those are ERJ145 and SkyWest Airlines has 22 of the CRJ200s on that. And if this will happen that underlying financing typically will run the same time that these contracts expire, so we won't necessarily have much of any tail risk with regards to those.

And finally, you often in the quarter gave the engine revenue expense mismatch and what prorate revenues were this year versus last year.

Yes. With regards to the engine CRJ engine 200 overhaul issue. We decided not to disclose that anymore within the confine to the press release primarily because on a year-over-year basis, the numbers are about the same, it will be slightly positive this year and we're on track for achieving that. So, for that reason, that's come out of the actual release. And then also with regards to prorate revenue in the quarter, it was $109 million.

And last year was?

Last year was like 88.

That's up a lot, okay. Thank you very much.

Thank you, Glenn.

Our next question comes from Bob McAdoo of Imperial Capital.

Yes. Just starting to think about the uneconomic or the unprofitable kind of work. I think Jerry had mentioned that one of the bigger issues has been the acquired contract that you got when you were at ExpressJet and looking at the number of airplanes that are coming off as Mike just described once that are ExpressJet ERJs. I assume those are part of that piece but there is a lot these that are not part of that. And I'm curious how much – what percent of the old acquired legacy ExpressJet stuff is still going to be there and still be burden once you get rid off these 100 some airplanes, is it…

I would tell you, I think it's around 155 to 160.

Still there?

Still there by the end of 2015.

Secondly, if you have pilot issues in terms of recruiting and whatever, why do you continue to do the prorate -- because prorate is sometimes it's a good month, sometimes it's a bad month and it never seems to be that much profits. Why do you continue to do the prorate business at all? Why don't you just kind of wind that down and use those pilots for – to supply some of your other needs?

I think your point, Bob, is spot on. I think when we look at our segments, whether prorate or contract, I think when we look at our most unprofitable segments within the entire enterprise, it doesn't matter if it's prorate or contract, we're going to get out of the most profitable stuff the soonest and then start of the – the least profitable stuff soonest, and then make a procession that way. Because we do have some prorate stuff that is performing better than the contract side. We have some prorate stuff that's not performing as much as what we should. So you're right in that there's a very strong balance as this fleet goes away, we are looking at those pockets of profitability to make sure that we're maximizing and eliminating the non-profit operations.

I guess I was just thinking is, my assumption has been if it's on prorate it's something that neither one of your partners probably values that much or they be putting it on contract. And so if credibility and ability to satisfy the needs of your partners was a big deal maybe it would make sense not to fly some stuff that they don't think is that important and make those people available. And then also on the pilot issues, are the 175s coming down, are they all going to be over on the SkyWest Airlines side or there going to be some on each side. And I guess the question is, as you wind down the ExpressJet, is there an issue of having new airplanes on one side, but surplus pilots on the other, is there ways for those guys to go back and forth at all or is that bolluxed up with union rules?

Okay. So I'm going to try to answer, there is a couple of things that I'm going to start real quick by saying all the 175s are coming to SkyWest Airlines as it's contracted with United. As those come over there really is not a formula or program where we can trade pass back and forth for them. There is some very clear rules and guidelines relative to that stuff. However, I think the most important part is, when we take a look at these fleet reductions in light of the pilot attrition that's happening. We are going to do our best to manage the impacts to people and try to match it. So from that perspective, we are going to do our beset to make sure that the things work is fluidly with our people as possible in all of this transition.

Okay. Thank you.

I'm showing no further questions. This concludes our question-and-answer session. I would now like to turn the conference back over to Chip for any closing remarks.

Thanks Yusuf. We really appreciate your interest in our current situation. We certainly view the situation that's something that's fluid. We would like to maybe given some more insight as to some of the things that are developing. We can say that there is a significant amount of development relative to our partners, relative to our strategic thinking to get the overall enterprise back in a very strong position to take care of our employees, our stakeholders and our shareholders and from that perspective, I think that we have a lot of work to do. We are hopeful to provide maybe some more guidance in the next quarter relative to some of the specifics of that work. And there is not a data goes by that none of us around this table would hear in a humble by the level of effort that happens. At most enterprises in order to accomplish the growth we had. We still fundamentally believe the biggest asset that we have or the people everyday that do a fantastic job. We are optimistic about reflexibility we have relative to the problem and we are also optimistic about our partner credibility and some of the relationships that we have to progress this thing over the long-term. So thank you very much and we will end the call at this time.

The conference has now concluded. Thank you attending today's presentation. You may now disconnect.