2014 ANNUAL REPORT Notice of 2015 Annual Meeting and Proxy Statement CURRENT C OMBI NED R O UTE SYSTEM Edmonton Saskatoon Calgary Kelowna Winnipeg Regina Vancouver International Falls Victoria Kalispell Willston Minot Spokane Devils Lake Bemidji Great Falls Hibbing Houghton/Hancock St. John’s Seattle/Tacoma Bismarck Fargo Pasco/Richland/ Missoula Quebec Helena Duluth Kennewick Lewiston Dickinson Jamestown Brainerd Iron Mountain Sault Ste Marie Butte Billings Bozeman Rhinelander Ottawa Montreal Portland Minneapolis/St. Paul Escanaba Pellston Green Bay Aberdeen Eau Claire Alpena Wausau Burlington Eugene Redmond/Bend Cody Rapid City Traverse City Halifax Gillette La Crosse Appleton Toronto Portland Boise Sun Valley Idaho Falls Sioux Falls Muskegon Saginaw North Bend Jackson Hole Rochester Rochester Syracuse Madison Grand Rapids Flint London Albany Manchester Twin Falls Buffalo Medford Pocatello Casper Milwaukee Lansing Detroit Elmira Boston Cedar Rapids Erie Windsor Locks Providence Crescent City Des Moines Kalamazoo Moline Chicago Cleveland South Bend Wilkes-Barre/Scranton Rock Springs (ORD, MDW) White Plains Laramie Omaha State College New York Eureka/Arcata Redding Elko Lincoln Peoria Bloomington Fort Wayne Harrisburg Salt Lake City Hayden/Steamboat Springs Akron/Canton Newark Columbus Philadelphia Reno Indianapolis Pittsburgh Allentown Vernal Denver Dayton Kansas City Springfield Aspen Colorado Springs Baltimore Sacramento Grand Junction Hays Manhattan St. Louis Cincinnati Washington, D.C. Louisville (DCA, IAD) Gunnison St. Louis Evansville Charleston Oakland Moab San Francisco Mammoth Lakes Montrose Pueblo Lexington Cedar City Wichita Springfield Charlottesville Richmond San Jose Durango Bristol/Kingsport/ Newport News/Williamsburg Fresno St. George Paducah Johnson City Roanoke Norfolk Monterey Las Vegas Nashville Knoxville Greensboro Amarillo Tulsa Northwest Arkansas Raleigh/Durham Bakersfield Flagstaff Santa Fe Fort Smith San Luis Obispo Chattanooga Asheville Fayetteville Oklahoma City Memphis New Bern Santa Maria Albuquerque Charlotte Santa Barbara Burbank Lubbock Lawton Little Rock Huntsville Greenville-Spartanburg Jacksonville Ontario Wichita Falls Columbia Wilmington Los Angeles Palm Springs Phoenix Dallas Columbus/ Atlanta Myrtle Beach Long Beach Orange County Tyler Starkville/ West Point Birmingham Charleston Carlsbad Hobbs (DAL, DFW) Augusta Yuma Tucson San Diego Monroe Montgomery Columbus Shreveport Midland Waco Longview Albany Savannah El Paso Jackson Meridian Alexandria Hattiesburg – Laurel Valdosta Fort Hood Gulfport Mobile Dothan Brunswick Easterwood Valparaiso Baton Rouge Jacksonville Beaumont Pensacola Tallahassee Austin New Orleans Panama City Gainesville Houston Lafayette Hermosillo San Antonio Corpus Christi Orlando Chihuahua West Palm Beach Laredo Harlingen Freeport McAllen Brownsville Fort Myers Monterrey Torreon Durango Key West Nassau Tampico George Town Los Cabos San Luis Potosi Aguascalientes Leon/Guanajuato Puerto Vallarta Guadalajara Queretaro Veracruz Morelia Mexico City Manzanillo Puebla Ixtapa Cuidad Del Carmen Villahermosa Oaxaca Huatulco Acapulco EFFECTIVE MARCH 2015 To our Shareholders: Thank you for your investment and interest in SkyWest, Inc. For the 2014 year, after excluding the impact of special charges, SkyWest generated net income of approximately $22 million, or approximately $0.42 per diluted share. Under GAAP, SkyWest reported a net loss of $24 million for the 2014 year, or $(0.47) per diluted share for 2014. The 2014 financial results were negatively impacted by severe weather in the first half of 2014 and by special charges recorded in the fourth quarter resulting from changes in our fleet plan. Several of the accomplishments highlighted below had a positive impact on SkyWest’s financial results, primarily in the second half of 2014. We anticipate many of these changes will continue to have a positive impact in 2015 and thereafter. After excluding the impact of the special charges, we believe the operating income generated during the second half of 2014 is a good indicator that SkyWest has made meaningful progress toward improving its long-term profitability. While there are clear accomplishments, we’ve also noted some key challenges that we anticipate for 2015 and our strategies for addressing those challenges. Our primary focus is providing a safe, reliable operation that translates into value for our customers, our employees and our shareholders. Accomplishments Through the end of 2014, SkyWest executed on specific, strategic goals that we expect will contribute to improved results going forward: • In June, SkyWest named Russell ‘‘Chip’’ Childs President of SkyWest, Inc. and Wade Steel Executive Vice President of the holding company. Subsequently, Alexandria Marren was named ExpressJet Airlines COO and Michael Thompson was promoted to SkyWest Airlines COO. Various changes in senior leadership at each operating entity, including those in Flight Ops and Maintenance, were also implemented in the latter half of 2014. • SkyWest successfully amended and reduced the contract length for 270 ExpressJet aircraft that have generated losses in recent years. We anticipate the reduced contract term will improve our long-term profitability and initiate additional capacity improvements. • ExpressJet Airlines executed significant operational improvements, moving from the lowest performance quartile in the first half of 2014 to the top performance quartile among the competition in Q3 and Q4 2014. • SkyWest settled a long-standing legal dispute with a major code-share partner. • SkyWest Airlines became certified to operate the Embraer E175 76-seat aircraft, initiating service in 2014. We expect to complete the remaining E175 deliveries for the United Express 40-aircraft contract by mid-2015. • SkyWest’s ability to finance new regional aircraft at attractive rates is a key competitive advantage in relationships with major code-share partners and was a factor in securing new E175 aircraft. • SkyWest secured a contract to begin operating seven E175 aircraft for Alaska Airlines in 2015. • SkyWest secured new flying contracts for 31 used aircraft provided by our major code-share partners. • SkyWest executed a simplified fleet strategy by initiating the removal of 43 EMB 120 aircraft, moving SkyWest Airlines to an all-jet operator in 2015. • SkyWest, Inc. received Air Transport World’s prestigious Regional Airline of the Year Award for 2014, marking the third time the airline has received that distinction. These accomplishments demonstrate execution on strategic goals in 2014. Moving forward, we remain focused on providing long-term value through continued progress in operating reliability and improved financial results while addressing and managing anticipated risks. Challenges For 2014, ExpressJet reported a segment loss of $118 million (pre-tax), of which approximately $88 million was attributed to the first half of 2014, when ExpressJet’s operations in Atlanta, Newark, Dulles, Chicago and Houston experienced unprecedented severe weather and flight cancellations. In the latter part of 2014, additional changes were made to help reduce operating losses, including several key leadership changes, operational procedural changes and a reduced ERJ 145 contract length. Despite these positive changes, several factors, such as managing through labor costs and attrition rates, aging aircraft maintenance costs, removing an anticipated significant number aircraft from service, and the impact of severe weather, may result in higher operating costs at ExpressJet and may limit our ability to improve ExpressJet’s financial results. Driving improvement at ExpressJet through ongoing focus on operational and financial performance remains a key objective in 2015. For 2014, SkyWest Airlines reported a segment profit of $77 million (pre-tax). The 2014 results for SkyWest Airlines include a special charge of $57 million associated with scheduled removal of the EMB 120 Brasilia in 2015. While we anticipate the transition to an all-jet fleet will provide operating efficiencies for SkyWest Airlines in the long-term, we may experience additional transition costs related to pilot training and other EMB 120 wind-down activities in 2015. Successfully transitioning SkyWest Airlines to an all-jet fleet is also a key objective in 2015. In 2015, various aircraft are scheduled for contract terminations under our fixed-fee flying agreements with our major partners. Where possible, our goal is to renew and extend these terminating contract arrangements at improved, current market rates. These scheduled contract terminations range from mid-2015 through 2016, while our underlying financing commitment on the aircraft extends beyond 2016. A clear challenge will be to extend terms or place these aircraft under a new code-share agreement that will provide improved economic returns. In the event that we are unsuccessful in extending such agreements or if we transition aircraft between code-share partners, we may experience inefficiencies and lost revenue during a transition period. In 2015, we will be focused on improving operating margins through improved renewal rates and reduced exposure to unprofitable aircraft. With increased regulations surrounding pilot qualification and an increase in major airline hiring to address mandatory retirements, one of our challenges for 2015 may be managing labor attrition rates and attracting qualified new employees. Maintaining our position as the employer of choice for aviation professionals will