Frontier Airlines 2008 Annual Report Download - page 77

9. COMMITMENTS
As of December 31, 2008, the Company leased 88 aircraft and 22 spare 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:
2008 2007 2006
Aircraft and engine rent $ 134,206 $ 124,961 $ 94,773
Other 7,072 6,008 5,315
Total rent expense $ 141,278 $ 130,969 $ 100,088
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 $3,975 per year through December 2014 for the E145 family of aircraft and $8,161 per year through December 2014 for
the E170 family of aircraft. The liability for this guarantee is immaterial.
The Company has long-term maintenance agreements with aviation equipment manufacturers for the E145 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 liability for this guarantee is immaterial.
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 E145 family of aircraft and through December 2014 for the E170 family of
aircraft.
The Company has long-term maintenance agreements for wheels and brakes through June 2014 for the E145 family of
aircraft and through February 2017 for the E170 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 liability for this guarantee is immaterial.
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. Based on the Company’s projected lease return schedule of the aircraft, the Company
believes it will not meet the minimum requirement for the remaining term and has recorded a liability of $1,200 as of December 31,
2008.
Total payments under these long-term maintenance agreements were $101,872, $76,832 and $56,070 for the years ended
December 31, 2008, 2007 and 2006, 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 recorded a liability for the return conditions of $4,263 as of December 31, 2008, for the CRJ-200 aircraft being returned
to the lessor.
Future minimum payments under non-cancelable operating leases are as follows for the years ending December 31:
Aircraft Other Total
2009 $ 119,254 $ 11,972 $ 131,226
2010 105,648 11,351 116,999
2011 96,860 11,418 108,278
2012 94,354 11,444 105,798
2013 91,671 11,487 103,158
Thereafter 468,854 63,928 532,782
Total $ 976,641 $ 121,600 $ 1,098,241
As of December 31, 2008, the Company had firm orders to purchase three E170/175 aircraft all of which are currently
allocated to code-share agreements. The current total list price of the three aircraft is $105,000. The Company has received
commitments from third parties to finance all of these aircraft. During the year ended December 31, 2008, the Company paid aircraft
deposits totaling $20,884 in accordance with the aircraft commitments. Aircraft deposits are included in intangible and other assets.
The Company also has a commitment to acquire seven spare aircraft engines with a current list price of approximately $31,800. These
commitments are subject to customary closing conditions.
The Company’s firm orders and options with an aircraft manufacturer are shown below as of December 31, 2008:
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 16, 2009 Powered by Morningstar® Document Research℠