Frontier Airlines 2007 Annual Report Download - page 21

• if either party becomes insolvent, is not regularly paying its bills when due without just cause, takes any step leading to its
cessation as a going concern, makes an assignment of substantially all of its assets for the benefit of creditors or a similar disposition
of the assets of the business, or either ceases or suspends operations; or
• if either party fails to fulfill an obligation under the code-share agreements for a period of thirty days after written notice to
cure.
United also may terminate the code-share agreements upon at least thirty days notice and subject to our right to cure under
the following conditions:
• Our operations fall below certain minimum operating thresholds for a period of three consecutive months or any six month
period in a rolling 12 month period regarding controllable flight completion, mishandled bags and on-time performance; or
• We knowingly maintain falsified books or records or submit false reports of a material nature.
United may immediately terminate the respective code-share agreements if Chautauqua Airlines or Shuttle America operates,
except pursuant to preexisting agreements with US Airways and Delta, any additional aircraft or turboprop aircraft pursuant to a
marketing or code-share relationship with any party other than United to provide hub service at United’s hubs in Denver, Los Angeles,
San Francisco, Chicago, Washington, D.C. or Seattle. Chautauqua Airlines and Shuttle America also cannot engage or attempt to
engage, on its behalf or on behalf of a third party, in the business of providing air transportation at any of United’s hubs or for any
carrier that has or attempts to have hub operations at any of United’s hubs, or operate any additional aircraft or turbo props with any
party other than United to provide hub service at United’s hubs.
United has a call option to assume our ownership or leasehold interest in certain aircraft if we wrongfully terminate the
code-share agreements or if United terminates the agreements for our breach for certain reasons.
The Continental Code-Share Agreement
As of December 31, 2007, we operated 20 ERJ-145 aircraft and 24 CRJ-200 aircraft for Continental under a fixed-fee
code-share agreement and provided 270 flights per day between Houston, Cleveland and designated outlying cities.
In July 2006, we entered into a fixed-fee code-share agreement with Continental to provide and operate 44 aircraft as a
Continental Express carrier. During 2007 we transitioned 20 ERJ-145 aircraft from our US Airways operations and leased 24 CRJ-200
aircraft to fulfill the commitment. Continental was responsible for Chautauqua Airlines' reasonable out-of-pocket costs of preparing
each covered aircraft, other than the spare aircraft, up to a maximum amount, prior to its being placed into service. The CRJ-200
aircraft are operated under the agreement on terms generally equivalent to our CRJ-200 leases that vary from two to three years. The
ERJ-145 aircraft have a term of three to five years. Under certain conditions, Continental may extend the term on the aircraft up to
five additional years.
All fuel will be purchased directly by Continental and will not be charged back to Chautauqua Airlines. Under the agreement,
Continental purchases all capacity at predetermined rates and industry standard pass-through costs.
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 term of the agreement is effective as of January 8, 2007 and, unless earlier terminated or extended, will continue until
July 2012.
The agreement may be subject to early termination under various circumstances, including:
• immediately, by Continental, upon the occurrence of an event that constitutes cause, subject to prior written notice to us; or
• if either Continental or we commit a material breach of the code-share agreement, subject to two business days notice if we
breach the agreement and five business days notice if Continental breaches the agreement; or
•if there is a change in control of us.
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Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 21, 2008 Powered by Morningstar® Document Research℠