Frontier Airlines 2005 Annual Report Download - page 85

REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, and 2003
(Dollars in thousands, except share and per share amounts)
1. ORGANIZATION & BUSINESS
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally
accepted in the United States of America and include the accounts of Republic Airways Holdings Inc. and its wholly-owned operating
subsidiaries (collectively “Republic” or the “Company”), Chautauqua Airlines, Inc. (“Chautauqua”), an Indiana Corporation and
certified air carrier; Shuttle America Corporation (“Shuttle America”), an Indiana Corporation and certified air carrier and Republic
Airline Inc. (“Republic Airline”) an Indiana Corporation and certified air carrier. Republic Airline received its air carrier operating
certificate in August 2005.
Effective May 6, 2005, Republic entered into a stock purchase agreement (the “Agreement”) with Shuttle America and
Shuttle Acquisition LLC (“Shuttle LLC”), pursuant to which the Company acquired all of the issued and outstanding common stock of
Shuttle America from Shuttle LLC. Consideration paid was a promissory note in the aggregate principal amount of $1,000 payable by
Republic to Shuttle LLC and the assumption of certain debt of Shuttle America totaling approximately $679. Because Republic and
Shuttle America was commonly controlled by Wexford Capital LLC (“Wexford”), the acquisition was accounted for in a manner
similar to pooling of interests. The consolidated financial statements give retroactive effect to the merger of Republic and Shuttle
America since they were under common control during the periods presented.
The Company operates as an air carrier providing scheduled passenger and air freight service as US Airways Express,
American Connection, Delta Connection and United Express under code-share agreements with US Airways, Inc. ("US Airways"),
AMR Corporation ("American"), Delta Air Lines, Inc. ("Delta") and United Air Lines, Inc. (“United”), respectively. The
Company has a code-share agreement with US Airways and offers passenger and air freight service from US Airways' hub and focus
airports in Philadelphia and Pittsburgh, Pennsylvania, Indianapolis, Indiana, Boston, Massachusetts, New York, New York
(LaGuardia) and Washington, D.C. Under the code-share agreement with American, the Company offers passenger and air freight
service from American's hub airport in St. Louis, Missouri. The code-share agreement with Delta offers passenger and air freight
service from Delta's hub and focus airports in Orlando, Cincinnati and Fort Lauderdale. Under the code-share agreement with
United, the Company offers passengers and air freight service from United’s hub airports in Chicago and Washington D.C, (Dulles
and National).
In August 2005, Republic Airline received its FAA Operating Certificate and began revenue service for US Airways, on
September 1, 2005, operating 72-seat ERJ-170 aircraft. Under the US Airways code-share agreement for 50 seat aircraft, which
expires in 2013, the Company provides service to designated areas utilizing jet aircraft. The US Airways code-share agreements with
the Company, as amended, allows the Company to operate up to 35 but not less than twenty 50 seat regional jets on a fixed-fee basis
with reimbursement of certain pass-through costs. As of December 31, 2005, the Company has thirty 50 seat regional jets dedicated to
US Airways' service.
On March 15, 2005, the Company and Wexford entered into an investment agreement with US Airways Group, Inc. and US
Airways. The agreement included provisions for the affirmation of an amended Chautauqua code-share agreement, a new jet service
agreement for the operation of ERJ-170 and ERJ-190 aircraft, a conditional $125,000 equity commitment and up to $110,000 in asset
related financing. The Bankruptcy Court approved the agreement on March 31, 2005.
On June 23, 2005, the Company received notification from US Airways Group that it would not be requested to make the
$125,000 equity investment, but US Airways notified the Company that it would exercise its right to receive up to $110,000 in asset
related financing in connection with its reorganization plan.
On September 21, 2005, the Company and US Airways entered into a global aircraft transaction agreement. Under this
agreement, the Company purchased 10 ERJ-170 aircraft owned by US Airways and leased the 10 aircraft back to US Airways subject
to their transfer to Republic Airline under a 10-year fixed-fee jet service agreement the Company entered into with US Airways on
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Research℠