Frontier Airlines 2010 Annual Report Download - page 153

(iii) 2016 Base Rate Costs.
(a).Operator and Delta hereby agree to meet prior to September 30, 2015, in order to establish the Base Rate Costs for calendar year 2016. In
connection therewith, by no later than thirty (30) days prior to the initial meeting between Operator and Delta, Operator shall provide Delta
with (i) [*]. Delta shall have the right to review, audit and provide comments and proposed revisions to such estimate, and such comments
and revisions shall be duly considered by Operator and, subject to (iii)(c) below, mutually agreed upon.
(b).Subject to the potential adjustments of the Base Rates Costs with respect to Airframe Maintenance, Engine Consumables and
Depreciation (parts and engines) as contemplated by Section 2(B) below, the Base Rate Costs for calendar year 2016 shall be determined as
follows: (i) the respective Base Rate Costs with respect to Pilot Wages and Flight Attendant Wages shall be based on the twelve (12) month
period of actual expenses incurred by Operator from September 1, 2014 through August 31, 2015 with respect to Pilot Wages and Flight
Attendant Wages, excluding any one-time or unusual items, [*]; (ii) the respective Base Rate Costs with respect to Maintenance Labor,
Airframe Maintenance (both per departure and per flight hour) and Engine Consumables shall be based on the historical costs and bona fide
good faith estimate provided by Operator pursuant to Section 2.A.(iii)(a) above and (iii) the Base Rate Costs with respect to Operations
Support, Overhead, Depreciation, Operations Expenses, SOC and Hangar Lease Costs shall be determined by multiplying each of the
respective Base Rate Costs in effect in calendar year 2015 for such Base Rate Costs by a percentage equal to the sum of [*] plus the CPI
Change for 2016 plus [*]. The parties acknowledge and agree that the establishment of the Base Rate Costs for calendar year 2016 pursuant
to this Section 2.A.(iii)(b) may result in an increase, decrease or no change of the Base Rate Costs for calendar year 2016 as compared to the
Base Rate Costs in effect for calendar year 2015.
(c).In the event that the parties are unable to agree on the Base Rate Costs for calendar year 2016 in accordance with Section 2.A.(iii)(b)
above, the parties further agree that (i) at the request of either party, and at the expense of the requesting party, the parties shall engage a
mutually agreed independent consultant to determine such Base Rate Costs, [*], and (ii) if no new Base Rate Costs have been adopted by
January 1, 2016, the Base Rate Costs in effect for calendar year 2015 shall be used on an interim basis as the Direct Costs and Base
Compensation for payment purposes for calendar year 2016, subject to reconciliation and retroactive adjustment upon the adoption of new
Base Rate Costs for calendar year 2016. Any determination by the independent consultant shall be binding on and implemented by the
parties.
(d).For the avoidance of doubt, the parties agree that effective on the Amendment Number Three Effective Date, Section 3G of the
Agreement is hereby deleted in its entirety and replaced with the following:
The Direct Costs and Base Compensation in effect for each calendar year will apply for all completed flights during
such calendar year, and with respect to the Base Rate Costs only, Operator will bear any risks of additional expenses
not reflected therein. Operator shall be entitled to payment of all Reimbursable Costs, Pass Through Costs and Other
Reimbursable Costs based on the actual amounts incurred during such calendar year. Operator will use its
commercially reasonable efforts consistent with the business practices and policies used to develop the first years
*Confidential
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