Frontier Airlines 2005 Annual Report Download - page 18
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In addition, if there is a regulatory change that materially and adversely affects the economic value of the agreement to us or US
Airways, and we are unable to agree to amendments to the code-share agreement to alleviate those regulatory changes within 30 days,
the party materially and adversely affected may terminate the agreement upon not less than 90 days notice.
In certain circumstances, US Airways has the right to terminate from service up to five, or in other circumstances, up to 15 regional jet
aircraft. In no event is US Airways able to terminate more than two aircraft in any calendar month. We have the right to terminate
from service a specified number of regional jet aircraft (not to exceed 15 aircraft).
In general, we have agreed to indemnify US Airways and US Airways has agreed to indemnify us for any damages caused by any
breaches of our respective obligations under the code-share agreement or caused by our respective actions or inactions under the
code-share agreement.
US Airways pays us three times each month in advance based on agreed assumptions, which amount is reconciled at the end of the
month based on actual flight activity. The code-share agreement requires US Airways to pay our fixed costs and per aircraft per day
costs for a specified period of time in the event of a grounding of the Embraer regional jets as a result of a design or manufacturing
defect or a strike by our employees. If we do not perform the services under the agreement due to our failure to maintain the aircraft or
comply with FAA regulations, US Airways is not required to make any payments to us under the agreement during that time period. If
we cannot provide services for any other reason, including a US Airways strike, US Airways is required to pay us during that time
period the costs which are not dependent on operation of the aircraft.
Under a commuter slot option agreement that we and US Airways entered into on September 22, 2005, we purchased 113
commuter slots at Ronald Reagan Washington National Airport and 24 commuter slots at New York-LaGuardia Airport. Republic
assigned the right of use for these commuter slots to US Airways and these commuter slots are being operated by US Airways and US
Airways Express carriers under a licensing agreement for which US Airways pays us rent. Prior to the expiration of the agreement to
license the commuter slots, US Airways has the right to repurchase all, but not less than all, of the Washington and LaGuardia
commuter slots at a predetermined price.
-10-
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Research℠