Frontier Airlines 2006 Annual Report Download - page 98

7. COMMITMENTS
As of December 31, 2006, the Company leases 68 regional jets and 18 spare regional jet engines with varying terms
extending through 2023 and terminal space, operating facilities and office equipment with terms extending through 2016 under
operating leases. The components of rent expense for the years ended December 31 are as follows:
2006 2005 2004
Aircraft and engine rent $ 94,773 $ 77,725 $ 74,514
Other 5,315 4,225 3,320
Total rent expense $ 100,088 $ 81,950 $ 77,834
The Company has long-term maintenance agreements with an avionics equipment manufacturer and maintenance provider
that has a guaranteed minimum annual flight hour requirement. The minimum guaranteed amount based on the Company's current
operations is $4,384 per year through December 2014 for the ERJ-145 family of regional jets and $5,130 per year through December
2014 for the ERJ-170 regional jets. The Company did not record a liability for this guarantee because the Company does not believe
that any aircraft will be utilized below the minimum flight hour requirement during the term of the agreement.
The Company has a long-term maintenance agreement with an aviation equipment manufacturer through April 2009. The
agreement has a penalty payment provision if more than twenty percent of the Company's aircraft are removed from service based on
the annual flight activity prior to the date of removal. The Company did not record a liability for this penalty provision because the
Company does not believe that more than twenty percent of their aircraft will be removed from service during the term of the
agreement.
The Company has long-term maintenance agreements based upon flight activity with engine manufacturers and maintenance
providers through October 2012 for the ERJ-145 family of regional jets and through December 2014 for the ERJ-170 regional jets.
The Company has long-term maintenance agreements for wheels and brakes through June 2014. The agreement has an early
termination penalty, if the Company removes seller's equipment from certain aircraft, sells or leases certain aircraft to a third party or
terminates the services prior to expiration of the agreement. The Company did not record a liability for this penalty provision, because
the Company does not believe the contract will be terminated prior to the expiration date.
The Company has a long-term agreement to provide, manage and repair certain airframe components and spare parts on the
CRJ-200 regional jets through December 2009.
Total payments under these long-term maintenance agreements were $56,070, $53,647, and $39,982 for the years ended
December 31, 2006, 2005 and 2004, respectively.
As part of the Company's lease agreements, the Company typically indemnifies the lessor of the respective aircraft against
liabilities that may arise due to changes in benefits from tax ownership or tax laws of the respective leased aircraft. The Company has
not recorded a liability for these indemnifications because they are not estimable. The Company is responsible for all other
maintenance costs of its aircraft and must meet specified return conditions upon lease expiration for both the airframes and engines.
The Company is unable to estimate the liability for these return conditions as of December 31, 2006, because the leases expire
beginning in 2009. The Company will record a liability for these return conditions once the liability is estimable.
Future minimum payments under non-cancelable operating leases are as follows for the years ending December 31:
Regional Jet Aircraft Other Total
2007 $ 108,226 $ 10,121 $ 118,347
2008 107,220 9,752 116,972
2009 101,407 9,273 110,680
2010 99,463 8,851 108,314
2011 92,164 8,825 100,989
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 15, 2007 Powered by Morningstar® Document Research℠