Frontier Airlines 2006 Annual Report Download - page 197

C. OPERATING GOALS
For each calendar month and for Contractor’s entire United Express operations, Contractor’s actual Performance Level shall
be measured as the combined performance of Contractor’s and Chautauqua Airlines, Inc.’s United Express operations with respect to
each of four Operating Goals. To establish the Total Markup to be applied hereunder, add together the four applicable Markup Points
(percentage figures) associated with the relevant Performance Metrics set forth on Appendix F, yielding a sum that is designated as
the Total Markup Factor. Multiply the Total Markup Factor by the total aggregate Carrier Controlled Costs for the month in
question, and the resultant amount is designated as the Markup as detailed in Appendix F.
1. Operating Goals Methodology. Up until the earlier of i.) the time at which Contractor first has [*] aircraft in
schedule for United Express or ii.) Contractor has operated for [*] months for United Express, Contractor will be paid a “B” level
markup across all operating goals. After which the Contractor’s Monthly Operating Goals for the calendar year will be established
using one of the two predetermined methodologies set forth below and will take effect on January 1 of each year.
a. When United’s annual Mainline performance (defined as performance for United Airlines’ domestic, mainline flights, weighted by
departures) for any of the four Operating Goals for the most recent calendar year completed is better than United Express Best
Practice Operating Performance for the most recent calendar year completed, the below methodology shall be used to determine the
goal for upcoming calendar year for that individual Operating Goal.
i. Contractor’s On-Time Zero (“On-Time Zero or On-Time”) Operating Goal is
calculated as equal to United’s Operating Mainline Performance (United Airlines’ domestic mainline flights, weighted by
departures), adjusted downwards [*] percentage points then adjusted for regional differences. Regional differences will be
accounted for by taking the resulting goal generated by the previous sentence and multiplying that number by the quotient of
the weighted average of United Mainline On Time Zero performance for the hubs in which Contractor operates (weighted by
Contractor hub departures) and the United Mainline System On Time Zero Performance (performance for United Airlines’
domestic mainline flights, weighted by departures).
ii. Contractor’s Controllable Flight Completion (“Controllable Completion” or
“Controllable Flight Completion”) Operating Goal is equal to United’s system-wide Mainline Operating Performance
(United Airlines’ domestic mainline flights, weighted by departures) for its own operation adjusted downward by [*]
percentage points. Controllable Flight Completion excludes cancellations due to weather, Air Traffic Control (“ATC”)
cancellations, requests by United to cancel flights in conjunction with the Ground Delay Program, acts or omissions by
United, its agents and ground service providers and emergency airworthiness directives.
iii. Contractor’s Mishandled Bag (“Mishandled Bags”) Operating Goal is calculated as
equal to United’s system-wide Operating Performance (domestic performance, weighted by departures) for its own operation
adjusted upward by [*] points then adjusted for regional differences. Regional differences will be accounted for by taking the
resulting goal generated by the previous sentence and multiplying that number by the quotient of the weighted average of
United Mainline Mishandled Bag performance (domestic flights, for the hubs in which Contractor operates (weighed by
Contractor hub departures) and the United Mainline System Mishandled Bag Performance (domestic performance, weighted
by departures.)
iv. Contractor’s Year 1 Repurchase Intent (“Repurchase Intent or RPI”) Operating
Goal will be United Express Best Practice minus [*] percentage points. Concurrent with the annual goal setting process,
starting in year [*] and ending in year [*], the [*] percentage points referenced in the previous sentence will be reduced by [*]
percentage points each year such that in year [*], and for every year thereafter Contractor’s Repurchase Intent (“Repurchase
Intent or RPI”) Operating Goal will be United Express Best Practice Performance minus [*] percentage points.
b. When United’s Mainline performance (domestic mainline flights, weighted by departures) for any of the
four Operating Goals for the most recent calendar year completed is worse than United Express Best Practice Operating Performance
for the most recent calendar year completed, the below methodology shall be used to determine the goal for the upcoming year for that
individual Operating Goal.
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 15, 2007 Powered by Morningstar® Document Research℠