Frontier Airlines 2006 Annual Report Download - page 100

The Company’s firm orders and options with an aircraft manufacturer are shown below as of December 31, 2006:
Commitments as of December 31, 2006
Firm Options Total
Aircraft Orders with Aircraft Manufacturer:
ERJ-170/175 38 79 117
8. CONTINGENCIES
The Company is subject to certain legal and administrative actions which management considers routine to their business
activities. As of December 31, 2006, management believes, after consultation with legal counsel, the ultimate outcome of any pending
legal matters will not have a material adverse effect on the Company's financial position, liquidity or results of operations.
Under the American code-share agreement, the Company is subject to American’s scope restrictions. The Company paid
American $6,466 in 2005 for operating ERJ-170 aircraft for United at Chautauqua in violation of the scope restrictions of the
American code-share agreement. These payments terminated in September 2005 when the ERJ-170 aircraft were no longer operated
by Chautauqua.
American may terminate the code-share agreement without cause upon 180 days notice, provided that such notice may not be
given prior to September 30, 2008. If American exercises this right, it is required to reimburse us for certain costs and the Company
and American have certain "put" and "call" rights with respect to the aircraft we operate for them.
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.
United has a call option to assume our ownership or leasehold interest in certain aircraft if we wrongfully terminate the
code-share agreements or if United terminates the agreements for our breach of certain reasons.
As of December 31, 2006, approximately 76% of the Company's workforce is employed under union contracts. The union
contract for Customer Service is currently amendable. In addition, the union contracts for pilots and dispatchers are amendable in
2007.
9. RELATED PARTY TRANSACTIONS
Fees are paid to Wexford Capital LLC (“Wexford Capital”) for administrative functions not performed by the Company. Fees
incurred were approximately $324, $1,065, and $241 for the years ended December 31, 2006, 2005 and 2004, respectively. In
addition, included in accrued liabilities were $26 and $307 due to Wexford Capital as of December 31, 2006 and 2005, respectively.
On April 16, 2004, the Company made a payment of $2,800 on the subordinated note payable to WexAir LLC (“WexAir”).
The payment consisted of $1,400 for principal and $1,400 for accrued interest. In May 2004, the maturity date of the subordinated
note payable to affiliate was extended to June 13, 2004. On June 2, 2004, the Company fully repaid the principal balance of $19,100
of the subordinated note payable to WexAir and accrued interest of $80. During 2005, the Company incurred $450 of expenses
relating to a stock offering on behalf of WexAir LLC.
The Company purchased Shuttle America from Shuttle Acquisition LLC, an affiliate of Wexford Capital on May 6, 2005 for
$1,000 and the assumption of $679 in debt. The Company entered into a note payable with WexAir for the $1,000 purchase price, and
the note was repaid in November 2005. In addition, for Wexford Capital's assistance in structuring the investment agreement with US
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 15, 2007 Powered by Morningstar® Document Research℠