Frontier Airlines 2006 Annual Report Download - page 199

4. Example. The Grade Width for A, C and D level performance will be automatically computed on an annual basis
once the numbers for the bottom of B Performance Levels are established. For example, if the Contractor’s Monthly Operating Goal
for the Controllable Completion Operating Category is determined to be [*], that is the bottom of the B-Performance Level. Applying
the methodology, in the performance Grade Width table referenced above, the bottom of the A- Performance Level would be [*] ([*]
plus [*]). Furthermore, the bottom of the C Performance Level would be [*] ([*] minus [*]). Based on these numbers the Grade
Widths, before application of any Seasonality Adjustment Factors would be as follows:
Level A=[*]
Level B=[*]
Level C=[*]
Level D=[*]
5. United and Contractor have developed a Monthly Incentive Payment (“Markup”) program (“Incentive Program”) that
is based upon Contractor’s scheduled operating goals established herein (“Operating Goals” or “Monthly Operating Goals”).
Contractor’s performance is evaluated with respect to actual (i) on-time performance, (ii) controllable flight completion rates (iii)
baggage handling, and (iv) customer repurchase intent on all flights operated by Contractor as United Express. Contractor’s actual
performance (“Performance Level” or “Level of Performance”) with respect to each of these four operating goals will be used to
determine the amount of Markup applicable to the Carrier Controlled Costs pursuant to the procedures set forth herein
6. Seasonality Adjustment. At the beginning of each year, after Contractor’s Monthly Operating Goals for the year
have been calculated by the methodology outlined above but before Contractor’s Monthly Operating Goals are finalized, Contractor
may create the final Performance Level goals by multiplying any of the three Contractor’s Monthly Operating Goals by a seasonality
factor developed by Contractor provided that the twelve (12) month straight average of each of Contractor’s Monthly Operating Goals
remains unchanged after seasonality factors are applied.
D. WIRE TRANSFER AND RECONCILIATION
1. On a monthly basis and in a format to be set by United, Contractor will provide an estimate of its monthly Carrier
Controlled Costs with Markup, assuming C Level Performance and assuming a [*] Completion factor and a [*] load factor, plus its
Pass Through Costs (which are never subject to Markup) with the exception of Markup on aircraft ownership costs and Markup on the
one-time start-up costs for new aircraft, each of which shall be paid in full. This estimate will be based upon the schedule to be
operated during the upcoming month and shall be provided no later than 7 days prior to the start of the month in which the wire
transfers shall be made. [*] If such day falls on a Saturday the payment will be made the previous business day. If such day falls on a
Sunday or Holiday the payment will be made on the following business day. If United objects to such estimate, United retains the right
to withhold payment of only such costs that are objected to by United, which will then be subject to the reconciliation process outlined
in Article VIII.D.2. If United objects to such estimate, it shall provide written notice of such objection, which shall include a detailed
statement of the specific grounds for its objection, within 3 business days after its receipt of such estimate.
2. Complete Reconciliation of Carrier Controlled Costs (and associated Markup) according to actual Performance
Levels, and Pass Through Costs paid under Article VIII.D.1 and as established in accordance with the terms of this Agreement, shall
be completed by United on a monthly basis, but no later than 180 days after month’s end:
a. Monthly Reconciliation - Carrier Controlled Costs. On or before the thirtieth (30th) day after the last day of each
calendar month, Contractor shall submit to United a report detailing actual operational statistics pertaining to the payment of Carrier
Controlled Costs, with a content reasonably determined by United, in a format mutually agreeable to United and Contractor. United
and Contractor agree to make a good faith effort to reconcile any differences in operational statistics data used to calculate
reconciliation payments and if necessary round to the nearest 1/10th of 1%, or if equidistant, to the nearest even 1/10th of 1%.
b. Monthly Reconciliation - Pass Through Costs. On or before the ninetieth (90th) day after the last day of each
calendar month, Contractor shall submit to United (in a format to be determined by United) documentation sufficient to support its
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 15, 2007 Powered by Morningstar® Document Research℠