Frontier Airlines 2010 Annual Report Download - page 82

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US Airways Code-Share Agreements
The code-share agreement for the E145 aircraft terminates in July 2014. The code-share agreement for the E170/175 aircraft
terminates in September 2015 with respect to the 20 E170 aircraft and eight of the E175 aircraft. The remaining 30 E175 aircraft terminate
12 years from each aircraft’ s in-service date and therefore would terminate from February 2019 to July 2020. US Airways may terminate the
code-share agreements at any time for cause upon not less than 90 days notice and subject to our right to cure under certain conditions.
The Delta Code-Share Agreements
The code-share agreements for the E145 and E170/175 aircraft terminate in May 2016 and January 2019, respectively, subject to
certain extension rights. Delta may terminate the code-share agreements at any time, with or without cause, if it provides us 180 days written
notice, for the E145 regional jet code-share agreement, and July 2015 for the E170/175 regional jet code-share agreement. With respect to the
E145 agreement, if Delta chooses to terminate any aircraft early, it may not reduce the number of aircraft in service to less than 12 during the
12-month period following the 180 day initial notice period unless it completely terminates the code-share agreement. We refer to this as
Delta's partial termination right.
If Delta exercises this right under either agreement or if we terminate either agreement for cause, we have the right to require
Delta either to purchase, sublease or assume the lease of aircraft leased by us with respect to any of the aircraft we previously operated for
Delta under that agreement.
The United Code-Share Agreements
The E170 code-share agreement terminates on June 30, 2019. The E145 code-share agreement was terminated effective January
2010. The E145 aircraft were transitioned to our Frontier operations or returned to our lessor during 2010. United has the option of
extending the E170 agreement for five years or less. In addition, the code-share agreements may be terminated under certain conditions.
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 American Code-Share Agreement
The term of the American code-share agreement continues until February 1, 2013. However, 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. The agreement may be subject to termination for
cause prior to that date under various circumstances.
The Continental Code-Share Agreement
As of December 31, 2010, we operated 15 E145 aircraft for Continental under a fixed-fee code-share agreement and provided 88
flights per day as Continental Express.
Unless otherwise extended or amended, the E145 code-share agreement terminates on September 4, 2012. Seven of the aircraft are
expected to come out of service in 2011 and the final eight aircraft are expected to come out of service in 2012. Under certain conditions,
Continental may extend the term on the aircraft up to five additional years.
Concentrations
As of December 31, 2010, substantially all fixed-fee service revenues are derived from code-share agreements with US Airways,
Delta, American, United, and Continental. Termination of any of these code-share agreements could have a material adverse effect on the
Company’ s financial position, results of operations and cash flows.
During the years ended December 31, 2010, 2009, and 2008, US Airways was approximately 15%, 23%, and 25%, and United was
approximately 12%, 21%, and 21% of the Company’ s operating revenue, respectively.
Frontier operates primarily out of the Denver and Milwaukee airports with 95% of our flights originating or departing from the
Milwaukee or Denver airports. A reduction in the Company’ s market share, increased competition, or reduced passenger