Frontier Airlines 2007 Annual Report Download - page 19

• if we or American become insolvent or fail to pay our debts as they become due, the other party may terminate the
agreement subject to five business days notice and rights of assurance;
• failure by us or American to perform the material terms, covenants or conditions of the code-share agreement, which
includes the American standards of service, subject to 30 day notice and cure rights;
• if we or American fail to make a payment when due, subject to five business days notice and cure rights;
• if either party suspends or is required to suspend its operations due to any safety reason, the other party may terminate the
agreement on five days notice;
• if American, in its reasonable discretion, determines that we materially breached a representation or warranty to them that
creates a serious and imminent threat to the safe operation of AmericanConnection services, American may immediately terminate the
code-share agreement;
• if we fail to achieve specified levels of operating performance in completion factor, on-time arrivals, customer complaints
and baggage, American may terminate the agreement, subject to corrective action plan and adherence to such plan; or
• if either party assigns, by operation of law or otherwise, the code-share agreement without the written consent of the other
party, subject to five days notice and cure rights, or if we enter into any merger, sale or acquisition of all or substantially all of our
assets or a majority of our outstanding voting interests with an air carrier other than an entity that is under common control with us.
American may terminate the code-share agreement without cause upon 180 days notice, provided that such notice may not be
given prior to September 30, 2008. If American exercises this right, it is required to reimburse us for certain costs and we and
American have certain "put" and "call" rights with respect to the aircraft we operate for them.
If American terminates the code-share agreement for any reason prior to September 30, 2008, or we terminate the code-share
agreement prior to September 30, 2008, due to a breach of the agreement by American, American has agreed to reimburse us for
certain price concessions that we granted American.
The Delta Code-Share Agreements
In March 2007, we amended our fixed-fee agreements with Delta. On March 27, 2007 the United States Bankruptcy Court
for the Southern District of New York approved the amended agreements. Key terms of the amended agreements include the removal
of all 15 ERJ-135 aircraft beginning in September 2008 at a rate of two aircraft per month, and effective May 1, 2007, an approximate
3% permanent reduction of block hour fees charged on our remaining 24 ERJ-145 and our 16 ERJ-170 aircraft.
On August 22, 2007, we amended our Jet Services Agreement with Delta to provide for the replacement of 16 ERJ-170
regional aircraft operating as Delta Connection with 16 ERJ-175 regional jet aircraft. The new aircraft are expected to be placed into
service during the second half of 2008 and the first quarter of 2009.
As of December 31, 2007, we operated 15 ERJ-135 aircraft, 24 ERJ-145 aircraft, including two spares, and 16 ERJ-170
aircraft for Delta under fixed-fee code-share agreements. As of December 31, 2007, we provided 330 flights per day as Delta
Connection between Cincinnati, Columbus and Atlanta and designated outlying cities. In connection with a marketing agreement
among Delta, Continental and Northwest Airlines, certain of the routes that we fly using Delta's and Continental’s flight designator
codes are also flown under Northwest's designator code.
The code-share agreements for the ERJ-145 and ERJ-170 aircraft 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 us 180 days written notice, provided
that such notice shall not be given prior to November 2009 for the ERJ-145 regional jet code-share agreement and July 2015 for the
ERJ-170 regional jet code-share agreement. If Delta does choose to eliminate any aircraft at that time, it may not reduce the number
of aircraft in service to less than 12 during the 12-month period following the 180 day initial notice period unless it completely
terminates the code-share agreement. We refer to this as Delta's partial termination right.
If Delta exercises this right under either agreement or if we terminate either agreement for cause, we have the right to require
Delta either to purchase, sublease or assume the lease of aircraft leased by us with respect to any of the aircraft we previously operated
for Delta under that agreement. If we choose not to exercise this right, or if Delta terminates either agreement for cause, Delta may
require us to sell or sublease to it or Delta may assume the lease of aircraft leased by us with respect to any of the aircraft we
previously operated for it under that agreement.
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Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 21, 2008 Powered by Morningstar® Document Research℠