Frontier Airlines 2008 Annual Report Download - page 19

As of December 31, 2008, we operated 15 E140 aircraft for American under a fixed-fee code-share agreement and provided
80 flights per day as AmericanConnection.
On October 23, 2008, we amended the code-share agreement to remove two E140 aircraft from service on June 1,
2009. American will reimburse us for the monthly rental fees until the removed aircraft are sold, subleased or otherwise transferred as
long as we are using commercially reasonable efforts to dispose of the removed aircraft. The amendment also provided for a two year
extension on American's early termination option so that American may not early terminate the agreement prior to March 2012, and a
rate reduction which will be effective on April 1, 2009.
Under the code-share agreement, American retains all passenger, certain cargo and other revenues associated with each
flight, and is responsible for all revenue-related expenses. We share revenue with American for certain cargo shipments. Additionally,
certain operating costs are considered "pass through" costs and American has agreed to reimburse us the actual amount of costs we
incur for these items. Fuel, landing fees, hull and liability insurance and aircraft property tax costs are pass through costs and included
in our regional airline services revenue. Aircraft lease payments are also considered a pass through cost, but are limited to a specified
limit with respect to the first 20 aircraft put into service for American. American pays us periodically throughout the month on an
agreed schedule, subject to American's right to offset amounts we owe them under the code-share agreement. A reconciliation
payment will be made by American to us if uncontrollable cancellations exceed a specified level of scheduled block hours during any
calendar quarter.
If American terminates the code-share agreement for cause, American has a call option to require that we assign to American
all of its rights under the leases of aircraft, and to lease to American the aircraft to the extent we own them, used at that time under the
code-share agreement. If American exercises its call option, we are required to pay certain maintenance costs in transferring the
aircraft to American's maintenance program.
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, 2011. If American terminates the code-share agreement without cause, we have the right to put the leases
of the aircraft, or to sell the aircraft to American to the extent owned by us, used under the code-share agreement to American.
American also has a call option to require us to assign to American these leases. If we exercise our put or American exercises its call
right, both parties are obligated to implement a schedule to terminate the code-share agreement in an orderly fashion and transition the
aircraft from us to American.
-10-
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 16, 2009 Powered by Morningstar® Document Research℠