Frontier Airlines 2005 Annual Report Download - page 25

Download and view the complete annual report

Please find page 25 of the 2005 Frontier Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

The initial term of the ERJ-135/145 code-share agreement is until May 31, 2016. At the end of the term, Delta has the right to extend
the agreement for an additional five years on the same terms and conditions. If either we or Chautauqua enter into a merger where we
are not the surviving entity or the ultimate beneficial ownership of the surviving entity following a merger is not substantially similar
(i.e., at least 75% common ownership) to the ultimate beneficial ownership of us or Chautauqua prior to the merger (which we refer to
as a merger), or if a party acquires more than 49% of our voting power or outstanding common stock or that of Chautauqua (with
limited exceptions) (which we refer to as a change in control), Delta shall have the right to extend the term of the code-share
agreement for an additional ten years beyond the applicable termination date of the agreement.
The agreement may be subject to early termination under various circumstances including:
• if either Delta or we file for bankruptcy, reorganization or similar action (or if any such action is imminent) or if either Delta or we
make an assignment for the benefit of creditors;
• if either Delta or we commit a material breach of the code-share agreement, subject to 30 days notice and cure rights; or
• upon the occurrence of an event of force majeure that continues for a period of two or more consecutive months, subject to 30 days
prior written notice to the party affected by the force majeure event.
In addition, Delta may immediately terminate the code-share agreement upon the occurrence of one or more of the following
events:
• if there is a change in control of us;
• if there is a merger involving us;
• if Delta is unsatisfied with the product quality we are providing 30 days after it has supplied us written notice of its dissatisfaction
and has proposed remedial measures;
• if we fail to maintain a specified completion rate with respect to the flights we operate for Delta during a specified period; or
• if our level of safety is not reasonably satisfactory to Delta, subject to 30 days notice and cure period.
In addition, Delta may terminate the code-share agreement at any time, with or without cause, if it provides us 180 days written notice,
provided that such notice shall not be given prior to November 2009. If Delta does choose to eliminate any aircraft at that time, it may
not reduce the number of aircraft in service to less than 12 during the 12-month period following the 180 day initial notice period
unless it completely terminates the agreement. We refer to this as Delta's partial termination right.
If Delta exercises its partial termination right or if we terminate the code-share agreement because of Delta's bankruptcy or insolvency,
a breach of the agreement by Delta or because of an event of force majeure has occurred that continues for at least two consecutive
months, we may require Delta to either purchase or sublease any of the terminated aircraft we own at a specified price or to assume
the lease of any aircraft that we lease. If we choose not to exercise this "put" right upon any termination by Delta, Delta has the right
to require us to sell or sublease to them the terminated aircraft we own for a specified amount or to assume the leases of the terminated
aircraft that we lease. Delta may also exercise this "call" right if it terminates the code-share agreement for any of the reasons set forth
above.
In general, we have agreed to indemnify Delta and Delta 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.
Pursuant to the agreement, Delta must give us notice if it changes the location of the hub from which we fly for them from Orlando
and Fort Lauderdale to another location, except that Delta cannot change the hub location to St. Louis, Memphis, Kansas City,
Nashville or any other location within 50 statute miles of St. Louis, Missouri.
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Research℠