Frontier Airlines 2006 Annual Report Download - page 59

Deferred Warrant Charge
Pursuant to our code-share agreements with Delta, we have fully vested, issued and outstanding warrants to Delta as follows:
Issued
Number
of Shares
Exercise
Price
Expiration
Date
June 2002 825,000$ 12.50(1) June 2012
June 2004 825,000 12.35(1) May 2014
February 2003 396,000 13.00 February 2013
October 2003 165,000 12.35 October 2013
March 2004 264,000 12.35 March 2014
December 2004 960,000 11.60 December 2014
(1) The exercise price is subject to downward adjustment, if we issue additional shares of our common stock in certain instances.
The deferred warrant charge as of December 31, 2006 was approximately $6.5 million which is amortized over the term of
the Delta code-share agreement, as amended. The annual reduction in revenue is a non-cash charge of approximately $565,000.
On March 13, 2007, we and Delta amended out code-share agreements. The amendments, if approved, provide for early removal of all 15 ERJ-135
aircraft between September 2008 and April 2009 at a rate of 2 aircraft per month, and an approximate 3% reduction in the reimbursement rates on the Company's
ERJ-145/170 aircraft for the remaining term of the agreements. In return for these amended terms, Delta has agreed that we will have a negotiated pre-petition
claim in the amount of $91 million, and Delta, will surrender all of its warrants on approximately 3.4 million shares of our common stock.
Certain Statistical Information
Years Ended December 31,
Operating Expenses per ASM in cents
2006 2005 2004
Wages and benefits 1.92 2.19 2.43
Aircraft fuel(2) 3.55 4.25 3.77
Passenger fees and commissions — — 0.06
Landing fees 0.46 0.46 0.52
Aircraft and engine rent 1.03 1.18 1.61
Maintenance and repair 1.15 1.17 1.52
Insurance and taxes 0.19 0.25 0.29
Depreciation and amortization 1.01 0.99 0.75
Impairment loss and accrued aircraft return costs
(1) (0.02) (0.06) 0.03
Other 0.87 0.95 1.03
Total operating expenses 10.16 11.38 12.01
Plus interest expense 1.00 0.97 0.62
Total operating and interest expenses 11.16 12.35 12.63
Total operating and interest expenses excluding
aircraft fuel 7.61 8.10 8.86
(1) We recorded impairment losses and accrued aircraft return cost of $1.4 million in 2004. In 2005, we reversed a $4.2 million
reserve after an agreement to return all the Saab turboprop aircraft to lessors was executed and all liabilities were settled. In 2006, we
recorded a $2.1 million gain relating to the disposition of Saab aircraft and spare parts.
(2) Beginning in May 2005, we do not record fuel expense and the related revenue for US Airways operations because US Airways
pays for fuel directly.
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Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 15, 2007 Powered by Morningstar® Document Research℠