Frontier Airlines 2006 Annual Report Download - page 292

EXHIBIT D
Compensation
Base and Incentive Compensation.
1. Base Compensation. Frontier will pay to RAI, in respect of the Covered Aircraft, the rates set for on Appendix 1 to this
Exhibit D for each calendar month, times, the applicable Unit of Measure, times, in each case where the rate category is
indicated as being “Subject to Margin” on Appendix 1, a margin of [* ] (the “Margin”). Rates indicated as “Subject to
Escalation on Appendix 1 to this Exhibit D will be adjusted in accordance with Section 3.02 of this Agreement.
2. Pre-Bill Invoiced Amount. The Invoiced Amount calculated in accordance with Section 3.06 (a) of the Agreement will be
calculated by using the data from the Final Monthly Schedule and the Operational Assumptions for any given month as
follows:
a. the Invoiced Amount for each of the Fixed Cost cost elements will be calculated by multiplying (i) the Rate, times (ii) the
Unit of Measure (as set forth in the Final Monthly Schedule and the Operational Assumptions for the month), times (iii) the
Margin, where “W/A A/C” is the weighted average number of Covered Aircraft for the month and “Days” is the number of
calendar days in the month. The Rate for each Fixed Cost element will not change during the Term except for the annual
adjustment pursuant to Section 3.02 of the Agreement for those elements noted as “Subject to Escalation”; plus
b. the Invoiced Amount for each of the Variable Cost elements will be calculated by multiplying (i) the Rate, times (ii) the
Unit of Measure (as set forth in the Final Monthly Schedule and the Operational Assumptions for the month), times (iii) the
Margin, times (iv) (other than those determined by using the “W/A A/C” Unit of Measure) the Completion Factor Target
Threshold percentage as in effect at the time of calculation, where “Blk Hrs” are the block hours estimated to be flown by the
Covered Aircraft for the month, “W/A A/C” is the weighted average number of Covered Aircraft for the month, “Departures”
is the number of departures estimated to be made by the Covered Aircraft during the month, “Flt Hrs” are the flight hours
estimated to be flown by the Covered Aircraft for the month, “Pax” is the number of passengers estimated to be transported
by the Covered Aircraft during the month, and “1000 RPMS” is the estimated revenue passenger miles flown by the Covered
Aircraft during the month divided by 1,000. The Rate for each Variable Cost element will not change during the Term except
for (i) the annual adjustment pursuant to Section 3.02 of the Agreement for those elements noted as “Subject to Escalation,
and (ii) those elements noted as subject to “Periodic Adjustment” will be adjusted based on the actual costs of the related
insurance premiums paid by RAI, taking into account any increases or reductions in those premiums due to end of the
coverage year calculations based on RAI’s operational statistics.
3. Reconciled Costs. The Fixed Cost elements calculated by using the “W/A A/C” Unit of Measure, and the Variable Cost
elements will be reconciled pursuant to Section 3.06 (b) of the Agreement by calculating the difference between the Invoiced
Amount for such elements and the amount due for such elements based on the Rate for each Variable Cost element times the
actual Unit of Measure for the month.
4. Pass-Thru Costs. Frontier will reimburse RAI for each Pass-Thru Cost element in accordance with Section 3.06 (c) of the
Agreement. Pass-Thru Costs are actual costs incurred and are not subject to Margin, Escalation or Periodic Adjustment.
5. Incentive Compensation. With respect to each calendar month, incentive compensation shall be calculated as follows:
a. On-Time Bonus/Rebate. The reconciliation for any calendar month shall include, as applicable, a bonus (represented
by a payment by Frontier to RAI) or a rebate or offset (represented by a payment by RAI to Frontier), in each case in
respect of on-time performance, as determined pursuant to Appendix 2 to this Exhibit D .
b. Completion Factor Bonus/Rebate. The reconciliation for any calendar month shall include, as applicable, a bonus
(represented by a payment by Frontier to RAI) or a rebate or offset (represented by a payment by RAI to Frontier),
in each case in respect of RAI’s completion factor for the month, as determined pursuant to Appendix 2 to this
Exhibit D.
6.
Frontier Expenses. With respect to Scheduled Flights, in consideration of the provision by RAI of Regional Airline Services and
its compliance with the other terms and conditions of this Agreement, the following expenses shall be incurred directly
Frontier, provided that, should RAI incur any such expenses, RAI will be reimbursed for such expenses in accordance with
Section 3.06 (c) of the Agreement:
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 15, 2007 Powered by Morningstar® Document Research℠