Right time. - Regional Airline Association

have a chance of getting this business by
picking up the pieces.
In addition, Delta's recent announcement
of its plans to enhance domestic feed for
its international operations at JFK with
regional flying further offers growth
opportunities for stronger regionals. Today,
Mesa announced it is supporting Delta in
this endeavor by expanding its strategic
partnership with Delta, under which it will
fly 12, 37-seat de Havilland Dash 8
aircraft. The Dash 8s covered under this
agreement are readily available, in our
opinion, and will be incremental to the 16
Dash 8 aircraft currently operated by
Mesa. The term of the new agreement is
three years. The aircraft will be operated
under a capacity purchase arrangement
similar to Mesa's existing Delta Connection
agreement under which it flies
50-seat regional jets. We believe the
increased regional jet flying at JFK will be
handled by Comair.
These potential developments could be a
major opportunity for SkyWest and a
major threat to Pinnacle, Mesaba and
ExpressJet. If these developments occur,
we believe the strong will get stronger and
the weak will get weaker. This fits into our
theory that consolidation will occur in the
Airline Sector: Stock Price Performance
Indices
regional industry and the survivors will
have the scale and financial capacity
necessary to diversify operations and seek
new business. SkyWest will not have the
field for new business all to themselves
and possibly could not handle all of the
opportunities available. Therefore, we
believe that there will be opportunities for
other regionals for new business, including
those that have good operating records,
low costs, financial resources and possibly
already have operational experience with
larger RJs, which would include Republic
and Mesa.
Quarter Week Year
Ticker 2000 2001 2002 2003 2004 2005 to date to date to date
Dow Industrials INDU -6% -7% -17% 25% 3% -1% -1% 1% 3%
Dow Transports TRAN -1% -10% -13% 30% 26% 10% 1% 2% 10%
S&P 500 SPX -10% -13% -23% 26% 9% 3% -3% 0% 0%
AMEX Airline Index XAL 10% -48% -56% 58% -2% -9% -11% 4% -9%
Crude Oil Price USCRWTIC 5% -26% 57% 4% 34% 40% 5% -2% 15%
Major Carriers
AMR Corporation AMR 31% -43% -70% 96% -15% 103% -12% 2% 7%
Continental Airlines CAL 16% -49% -72% 124% -17% 57% -4% 3% 21%
Delta Airlines DAL 1% -42% -59% -2% -37% -90% 32% 5% 0%
Northwest Airlines (m) NWAC 35% -48% -53% 72% -14% -95% 31% 5% 9%
UAL Corporation (m) UALA -50% -65% -89% 13% -20% -27% -21% 14% -28%
Mean 7% -49% -69% 61% -20% -10% 5% 6% 2%
Median 16% -48% -70% 72% -17% -27% -4% 5% 7%
Regional Carriers
ExpressJet XJT NA NA NA 46% -14% -37% -24% 6% -30%
Mesa Air Group (m) MESA 47% 7% -46% 209% -37% 32% -21% 1% -13%
Pinnacle Airlines (m) PNCL NA NA NA NA 0% -52% 1% -1% 0%
Republic Airways (m) RJET NA NA NA NA NA 15% 10% 2% 7%
Skywest (m) SKYW 105% -11% -49% 38% 11% 34% -16% 3% -8%
Mean 76% -2% -47% 98% -10% -2% -10% 2% -9%
Median 76% -2% -47% 46% -7% 15% -16% 2% -8%
Low Cost Carriers
AirTran Airways AAI 60% -9% -41% 205% -10% 50% -24% 12% -14%
Alaska Air Group ALK -15% -2% -26% 26% 23% 7% 7.2% 1% 6%
Frontier Airlines (m) FRNT 172% -18% -60% 111% -20% -19% -19% 2% -32%
JetBlue Airways (m) JBLU NA NA NA 47% -12% -1% 8% 7% -25%
Southwest Airlines LUV 108% -17% -25% 16% 1% 1% -9% 4% -1%
US Airways Group LCC NA NA NA NA NA NA 13% -5% 22%
Mean 81% -12% -38% 81% -4% 8% -4% 4% -7%
Median 84% -13% -33% 47% -10% 1% -1% 3% -8%
Source: Reuters and Calyon Securities (USA) calculations.
RAA 2006 Annual Report 29
FINANCIAL REVIEW