Frontier Airlines 2007 Annual Report Download - page 77

Future maturities of debt are payable as follows for the years ending December 31:
2008 $ 131,700
2009 116,278
2010 123,702
2011 131,612
2012 140,039
Thereafter 1,270,249
Total $ 1,913,580
During the year ended December 31, 2007, the Company acquired 22 aircraft through debt financing totaling approximately
$438,252. The debt was obtained from banks and the aircraft manufacturer for twelve to fifteen year terms at interest rates ranging
from 6.22% to 7.28%.
7. COMMITMENTS
As of December 31, 2007, the Company leased 91 aircraft and 22 spare regional jet engines with varying terms extending
through 2029 and terminal space, operating facilities and office equipment with terms extending through 2026 under operating leases.
The components of rent expense for the years ended December 31 are as follows:
2007 2006 2005
Aircraft and engine rent $ 124,961 $ 94,773 $ 77,725
Other 6,008 5,315 4,225
Total rent expense $ 130,969 $ 100,088 $ 81,950
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 $4,852 per year through December 2014 for the ERJ-145 family of aircraft and $8,161 per year through December 2014
for the ERJ-170 family of aircraft. 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 long-term maintenance agreements with aviation equipment manufacturers for the ERJ-145 family of
aircraft and the CRJ-200 aircraft through June 2013 and December 2012, respectively. 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 through February
2010 for the CRJ-200 aircraft, October 2012 for the ERJ-145 family of aircraft and through December 2014 for the ERJ-170 family of
aircraft.
The Company has long-term maintenance agreements for wheels and brakes through June 2014 for the ERJ-145 family of
aircraft and through 2017 for the ERJ-170 family of aircraft. The agreement has an early termination penalty, if the Company removes
sellers 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 aircraft through December 2009.
Total payments under these long-term maintenance agreements were $76,832, $56,070 and $53,647 for the years ended
December 31, 2007, 2006 and 2005, 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 air frames and engines.
The Company is unable to estimate the liability for these return conditions as of December 31, 2007, because the leases expire
beginning in 2009. The Company will record a liability for these return conditions once the liability is probable and reasonably
estimable.
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Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 21, 2008 Powered by Morningstar® Document Research℠