Frontier Airlines 2006 Annual Report Download - page 68

Delta, which represented 35% of our passenger revenues for the year ended December 31, 2006, is attempting to reorganize
its respective businesses under Chapter 11 of the bankruptcy code. In 2006, Delta utilized our smaller aircraft at less than historical
levels. 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 the Company's common stock.
We currently anticipate that our available cash resources, cash generated from operations and anticipated third party funding
arrangements will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12
months.
Aircraft Leases and Other Off-Balance Sheet Arrangements
We have significant obligations for aircraft and engines that are classified as operating leases and, therefore, are not reflected
as liabilities on our balance sheet. Aircraft leases expire between 2009 and 2022. As of December 31, 2006, our total mandatory
payments under operating leases for aircraft aggregated approximately $1.1 billion and total minimum annual aircraft rental payments
for the next 12 months under all non-cancelable operating leases is approximately $108.2 million. Other non-cancelable operating
leases consist of engines, terminal space, operating facilities, office space and office equipment. The leases expire through 2016. As of
December 31, 2006, our total mandatory payments under other non-cancelable operating leases aggregated approximately
$104.3 million. Total minimum annual other rental payments for the next 12 months are approximately $10.1 million.
Purchase Commitments
The Company has reached an agreement with US Airways to acquire and operate thirty 86 seat ERJ-175 regional jets. As of
December 31, 2006, the Company had firm orders to purchase 38 ERJ-170/175 regional jets. The current total list price of the 38
regional jets is $1.1 billion. During the year ended December 31, 2006, the Company made aircraft deposits in accordance with the
aircraft commitments of $67.6 million. The Company also has a commitment to acquire seven spare aircraft engines with a current list
price of approximately $30.5 million. These commitments are subject to customary closing conditions.
In July 2006, the Company announced that it had reached an agreement to operate forty-four 50-seat regional jets for
Continental. Twenty of the aircraft are ERJ-145 regional jets that will transition from the Company’s US Airways operations. The
Company has firm commitments to lease 24 CRJ-200 regional jets with lease terms from 24 to 36 months. As of December 31, 2006,
the Company had taken delivery of 4 CRJ-200 regional jets. All 44 of the aircraft are expected to be placed into service for
Continental between January and August 2007 and will be operated for terms that vary from two years to five years. Under certain
conditions Continental may extend the term on the aircraft up to five additional years.
In January 2007, the Company and Frontier entered into an agreement, whereby, Republic will operate for Frontier
seventeen, 76-seat Embraer 170 regional jets. Four of the seventeen aircraft are currently in the Republic fleet but not allocated to a
code-share partner and the remaining 13 aircraft will be funded by delivery positions available from Embraer.
We expect to fund future capital commitments through internally generated funds, third-party aircraft financings, and debt
and other financings.
We currently anticipate that our available cash resources, cash generated from operations and anticipated third-party
financing arrangements will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the
next 12 months. We may need to raise additional funds, however, to fund more rapid expansion, principally the acquisition of
additional aircraft, or meet unanticipated working capital requirements. It is possible that future funding may not be available to us on
favorable terms, or at all.
Our contractual obligations and commitments at December 31, 2006, include the following (in thousands):
Payments Due By Period
Less than 1-3 years 4-5 years Over Total
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 15, 2007 Powered by Morningstar® Document Research℠