Item 1.01. Entry into a Material Definitive Agreement.





Loan Agreement

On September 29, 2020 (the "Closing Date"), SkyWest Airlines, Inc. ("SkyWest Airlines"), a wholly-owned subsidiary of SkyWest, Inc. (the "Company"), entered into a Loan and Guarantee Agreement, dated as of the Closing Date (the "Loan Agreement"), among SkyWest Airlines, as the borrower, the Company, as guarantor, the other guarantors party thereto from time to time, the United States Department of the Treasury (the "Treasury"), as lender, and the Bank of New York Mellon, as administrative agent and collateral agent. The Loan Agreement, as executed on the Closing Date, provides for a secured term loan facility (the "Facility") which permits SkyWest Airlines to borrow up to $573 million as further described below. The Company and SkyWest Airlines have been advised by the Treasury that it intends to allocate additional loans under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") in October 2020 and that such additional allocations are currently expected to cause the amount available to SkyWest Airlines under the Facility to increase, with such increased amount being subject to final approval by the Treasury. Any such increase will require a written amendment to the Loan Agreement executed by all of the parties thereto.

On the Closing Date, SkyWest Airlines borrowed $60 million under the Facility and may, at its option, borrow additional amounts in up to two subsequent borrowings until March 26, 2021. The proceeds from the Facility will be used for certain general corporate purposes and operating expenses in accordance with the terms and conditions of the Loan Agreement and the applicable provisions of the CARES Act.

Borrowings under the Facility will bear interest at a variable rate per annum equal to (a)(i) the London interbank offer rate divided by (ii) one (1) minus the Eurodollar Reserve Percentage (as defined in the Loan Agreement) plus (b) 3.00%. Accrued interest on the loans shall be payable in arrears on the first business day following the 14th day of each March, June, September and December (beginning with September 15, 2021), and on the Maturity Date (as defined below). The applicable interest rate for the $60 million loan drawn on the Closing Date under the Facility will be 3.37% per annum for the period from the Closing Date through September 15, 2021 at which time the interest rate will reset in accordance with the foregoing formula.

All advances under the Facility will be in the form of term loans, all of which will mature and be due and payable in a single installment on September 29, 2025 (the "Maturity Date"). Voluntary prepayments of loans under the Facility may be made, in whole or in part, by SkyWest Airlines, without premium or penalty, at any time and from time to time. Amounts prepaid may not be reborrowed. Mandatory prepayments of loans under the Facility are required, without premium or penalty, to the extent necessary to comply with SkyWest Airlines' covenants regarding the expiry of certain agreements constituting Collateral (as defined below), the debt service coverage ratio, certain dispositions of the Collateral, certain debt issuances secured by liens on the Collateral and certain indemnity, termination, liquidated damages or insurance payments related to the Collateral. In addition, if a "change of control" (as defined in the Loan Agreement) occurs with respect to the Company or SkyWest Airlines, SkyWest Airlines will be required to repay the loans outstanding under the Facility.

On the Closing Date, the obligations of SkyWest Airlines under the Loan Agreement are secured by aircraft engines and aircraft parts (collectively, the "Collateral"). SkyWest Airlines is permitted under the Loan Agreement to add certain types of assets to the Collateral and, subject to certain conditions, release Collateral, in each case from time to time at its discretion.

The Loan Agreement requires SkyWest Airlines, under certain circumstances, including within ten (10) business days prior to the last business day of March and September of each year, beginning March 2021, to appraise the value of the Collateral and recalculate the collateral coverage ratio. If the calculated collateral coverage ratio is less than 1.6 to 1.0, SkyWest Airlines will be required either to provide additional Collateral (which may include cash collateral) to secure its obligations under the Loan Agreement or repay the term loans under the Facility, in such amounts that the recalculated collateral coverage ratio, after giving effect to any such additional Collateral or repayment, is at least 1.6 to 1.0. Based on the appraisal submitted by SkyWest Airlines in connection with the execution of the Loan Agreement, the appraised value of the Collateral is presently in excess of the 2.0 to 1.0 initial collateral coverage ratio necessary to access the amount under the Facility.

The Loan Agreement also includes affirmative, negative and financial covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to pay dividends, repurchase common stock of the Company or make certain other payments, make certain investments, incur liens on the Collateral, dispose of the Collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions. In addition, under the Loan Agreement, the Company must maintain a minimum aggregate liquidity.

The Loan Agreement requires the Company to comply with the relevant provisions of the CARES Act, including, but not limited to, the provisions that prohibit the repurchase of the Company's common stock and the payment of common stock dividends, and those that restrict the payment of certain executive . . .

Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information provided in Item 1.01 above under the caption "Loan Agreement" is incorporated herein by reference to the extent responsive to Item 2.03.

Item 3.02. Unregistered Sales of Equity Securities.

The information provided in Item 1.01 above under the caption "Warrant Agreement and Warrants" is incorporated herein by reference to the extent responsive to Item 3.02.




Item 8.01. Other Events.

On September 29, 2020, the Company issued a press release captioned "SkyWest enters into a $573 million Secured Loan Facility under CARES Act." A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.





(d) Exhibits.



Exhibit
 Number                               Title of Document
  99.1       Press Release, dated September 29, 2020.

  104      Cover Page Interactive Data File (formatted in Inline XBRL and
           contained in Exhibit 101)










Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "forecasts," "expects," "intends," "believes," "anticipates," "estimates," "should," "likely" and similar expressions identify forward-looking statements. Such statements include, but are not limited to, statements about the expected timing and benefits of the secured term loan facility under the CARES Act and the related issuance of warrants and other statements that are not historical facts. All forward-looking statements included in this Current Report on Form 8-K are made as of the date hereof and are based on information available to the Company as of such date. The Company assumes no obligation to update any forward-looking statements for any reason. Readers should note that many factors could affect the future operating and financial results of the Company and the timing of certain events and could cause actual results to vary materially from those expressed in forward-looking statements set forth in this report. These factors include, but are not limited to, uncertainties regarding the impact of the secured term loan facility on the Company's business and operations, and the consequences of the COVID-19 outbreak to economic conditions, the travel industry and the Company's major partners in general and the financial condition and operating results of the Company in particular. Risk factors, cautionary statements and other conditions which could cause the Company's actual results to differ materially from management's current expectations are contained in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

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