Frontier Airlines 2008 Annual Report Download - page 22

The United Code-Share Agreements
As of December 31, 2008, we operated seven E145 aircraft and 33 E170 aircraft and provided 220 flights per day as United
Express.
On August 22, 2007, we amended our E170 Jet Services Agreement with United to provide for the operation of ten additional
aircraft as United Express for a total of 38 aircraft. Five of the aircraft, which transitioned from Delta, were placed into service during
the fourth quarter of 2008 and the remaining five are expected to be placed into service during the first quarter of 2009.
The fixed rates that we receive from United under the code-share agreements are annually adjusted in accordance with an
agreed escalation formula. Additionally, certain of our operating costs are considered "pass through" costs whereby United has agreed
to reimburse us the actual amount of costs we incur for these items. Fuel and oil, landing fees, war risk insurance, liability insurance
and aircraft property taxes are pass through costs and included in our regional airline services revenue. Beginning in January 2007,
United elected to provide fuel directly in certain locations, which eliminates a portion of our fuel expense and the related fuel
reimbursement (previously recorded as revenue).
The E170 code-share agreement terminates on June 30, 2019. We received notice from United on July 1, 2008 of their intent
to terminate the E145 code-share agreement effective December 31, 2009. United has the option of extending the E170 agreement for
five years or less. In addition, the code-share agreements may be terminated under the following conditions:
• 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 turboprops 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, 2008, we operated 20 E145 aircraft and 17 CRJ-200 aircraft for Continental under a fixed-fee code-share
agreement and provided 210 flights per day as Continental Express.
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 E145 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 is purchased directly by Continental and is not 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 and Continental's flight designator codes are also flown under Northwest's designator code.
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
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 16, 2009 Powered by Morningstar® Document Research℠