Frontier Airlines 2006 Annual Report Download - page 86

REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, and 2004
(Dollars in thousands, except share and per share amounts)
1. ORGANIZATION & BUSINESS
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally
accepted in the United States of America and include the accounts of Republic Airways Holdings Inc., a Delaware Corporation, and
its wholly-owned operating subsidiaries (collectively “Republic” or the “Company”), Chautauqua Airlines, Inc. (“Chautauqua”), an
Indiana Corporation and certified air carrier; Shuttle America Corporation (“Shuttle America”), an Indiana Corporation and certified
air carrier; and Republic Airline Inc. (“Republic Airline”) an Indiana Corporation and certified air carrier.
Effective May 6, 2005, the Company entered into a stock purchase agreement (the “Agreement”) with Shuttle America and
Shuttle Acquisition LLC (“Shuttle LLC”), pursuant to which the Company acquired all of the issued and outstanding common stock of
Shuttle America from Shuttle LLC. Consideration paid was a promissory note in the aggregate principal amount of $1,000 payable by
Republic to Shuttle LLC and the assumption of certain debt of Shuttle America totaling approximately $679. Because Republic and
Shuttle America were commonly controlled by Wexford Capital LLC (“Wexford”), the acquisition was accounted for in a manner
similar to a pooling of interests.
The Company operates as an air carrier providing scheduled passenger and air freight service as US Airways Express,
AmericanConnection, Delta Connection and United Express under code-share agreements with US Airways, Inc. ("US Airways"),
AMR Corporation ("American"), Delta Air Lines, Inc. ("Delta") and United Air Lines, Inc. (“United”), respectively. The
Company has code-share agreements with US Airways offering passenger and air freight service from US Airways' hub and focus
airports in Philadelphia and Pittsburgh, Pennsylvania, Indianapolis, Indiana, Boston, Massachusetts, New York, New York
(LaGuardia) and Washington, D.C. Under the code-share agreement with American, the Company offers passenger and air freight
service from American's hub airport in St. Louis, Missouri. The code-share agreements with Delta offer passenger and air freight
service from Delta's hub and focus airports in Atlanta, Georgia, Columbus, Ohio and Cincinnati, Ohio. Under the code-share
agreements with United, the Company offers passengers and air freight service from United’s hub airports in Chicago, Illinois and
Washington D.C, (Dulles and National).
The code-share agreements with US Airways for the ERJ-145, ERJ-170 and ERJ-175 regional jets terminate in March 2013,
September 2015, and July 2020, respectively; however, under certain conditions, US Airways may terminate the code-share
agreements at any time for cause upon not less than 90 days notice and subject to the Company’s right to cure.
The term of the American code-share agreement continues until February 1, 2013. American may reduce the term by one
year each time that the Company fails to achieve an agreed performance level. American may only exercise this right three times
during the term of the code-share agreement. Under certain circumstances, the agreement may be subject to termination for cause prior
to that date.
The code-share agreements with Delta for the ERJ-135/145 and ERJ-170 regional jets terminate in May 2016 and January
2019, respectively. Delta may terminate the code-share agreements at any time, with or without cause, if it provides 180 days written
notice, provided that such notice shall not be given prior to 2009 for the ERJ-135/145 regional jet agreement and 2013 for the
ERJ-170 regional jet agreement.
The United code-share agreements terminate on June 30, 2014 and June 30, 2015, respectively, for the ERJ-145 and ERJ-170
regional jets. United has the option of extending the agreements for five years or less; however, the ERJ-145 code-share agreement
may be terminated by United upon 18 months prior written notice provided that such notice shall not be delivered prior to December
31, 2008. In addition, under certain conditions, United may terminate the code-share agreements.
The code-share agreements provide the Company with a nonexclusive license to the code-share partners' trademarks, as well
as general air carrier support services, and contain provisions relating to the size and use of aircraft, insurance and service
requirements. The code-share partners are required to provide reservation systems, and under certain code-share agreements, the
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 15, 2007 Powered by Morningstar® Document Research℠