Frontier Airlines 2004 Annual Report Download - page 8

Forward - Looking Statements
In addition to historical information, this Annual Report on Form 10
- K contains forward - looking statements. Republic Airways Holdings Inc. (the “Company” ) 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 our belief,
expectations, hopes or intentions regarding future events. Words such as “may,” “
will, ” “should,” “expect,” “plan,” ‘intend,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” or “continue,” the negative of such terms or other terminology to identify forward
- looking statements. All forward - looking statements included in this Annual Report
on Form 10
- K are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any forward - looking statement. Our
results could differ materially from those anticipated in these forward
- looking statements for many reasons, including, among others, the “Risk Factors” set forth herein.”
PAR T I
ITEM 1. BUSINESS
General
Overview
We are a holding company that operates Chautauqua Airlines, Inc. ( “ Chautauqua ” ) and Republic Airline Inc. ( “ Republic ” ). Chautauqua is a regional airline offering, as of December 31,
2004, scheduled passenger service on approximately 700 flights daily to 73 cities in 31 states and the Bahamas pursuant to code - share agreements with AMR Corp., the parent of American
Airlines, Inc. ( “ American ” ), US Airways, Inc. ( “ US Airways ” ), Delta Air Lines, Inc. ( “ Delta ” ) and United Air Lines, Inc. ( “ United ” ). Currently, all of Chautauqua's flights are operated as US
Airways Express, AmericanConnection, Delta Connection and United Express, providing US Airways, American, Delta and United with portions of their regional service, including service out of
their hubs and focus cities in Boston, Chicago, Fort Lauderdale, Indianapolis, New York, Orlando, Philadelphia, Pittsburgh, Washington, D.C., and St. Louis. We established Republic Airline as
our regional platform for the ERJ - 170 aircraft family. In February 2004, Republic Airline entered into a code - share agreement with United Air Lines, Inc. pursuant to which Republic Airline is
required to place into service for United, by June 2005, subject to delivery of aircraft from the manufacturer, 23 70 - seat regional jets. These jets will fly, as United Express flights, the routes that
United designates. Currently, as Republic Airline is not yet certified to fly aircraft, Chautauqua is operating 16 ERJ - 170s for United. These aircraft will be flown by Republic Airline after its
certification, which is expected to be received in June 2005. In January 2005, we, Delta and Republic Airline entered into a code - share agreement whereby Republic Airline will operate 16 ERJ -
170s for Delta, subject to Republic Airline ’ s receipt of its certification.
We have long - term, fixed - fee code - share agreements with each of our partners that are subject to our maintaining specified performance levels. Pursuant to these fixed - fee agreements,
which provide for minimum aircraft utilization at fixed rates, we are authorized to use our partners' two - letter flight designation codes to identify our flights and fares in our partners' computer
reservation systems, to paint our aircraft in the style of our partners, to use their service marks and to market ourselves as a carrier for our partners. In addition, in connection with a marketing
agreement among Delta, Continental Airlines and Northwest Airlines, certain of the routes that we fly using Delta's flight designator code are also flown under Continental's or Northwest's
designator codes. We believe that fixed - fee agreements reduce our exposure to fluctuations in fuel prices, fare competition and passenger volumes. Our development of relationships with multiple
major airlines has enabled us to reduce our dependence on any single airline and allocate our overhead more efficiently, allowing us to reduce the cost of our services to our major airline partners.
For the year ended December 31, 2004, US Airways accounted for 41% of our operating revenues, Delta accounted for 35% of our operating revenues, American accounted for 17% of our
operating revenues and United accounted for 7% of our operating revenues. In February 2003, we and America West mutually agreed to terminate our code - share agreement and we
concurrently agreed with Delta to allocate the aircraft previously designated for America West to Delta.
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