SkyWest Airlines 2015 Annual Report Download - page 15

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rights and obligations of ExpressJet Delaware under the ExpressJet United ERJ Agreement became the rights and
obligations of ExpressJet as a consequence of the ExpressJet Combination. The rights and obligations of Continental
under the ExpressJet United ERJ Agreement became the rights and obligations of United as a consequence of United’s
merger with Continental in 2010. The ExpressJet United ERJ Agreement was amended and restated on November 7,
2014, which among other modifications, reduced the term of the agreement.
The ExpressJet United ERJ Agreement is scheduled to terminate in December 2017, subject to early termination
by United or ExpressJet upon the occurrence of certain events. United’s termination rights include the right to terminate
the ExpressJet United ERJ Agreement if ExpressJet’s performance falls below identified standards (and such failure is
not cured within 60 days following receipt of notice), upon the occurrence of a labor strike lasting 15 days or longer and
upon the occurrence of a material default under certain lease agreements relating to aircraft operated by ExpressJet under
the ExpressJet United ERJ Agreement (provided that such material default is not cured within 60 days following receipt
of notice). ExpressJet’s termination rights include the right to terminate the ExpressJet United ERJ Agreement if United
fails to make payment of $500,000 or more due to ExpressJet under the ExpressJet United ERJ Agreement and such
failure is not cured within five business days following receipt of notice. Additionally, effective January 1, 2018, United
has the right to extend the term for a 12-month period for a certain number of aircraft upon 180 days written notice.
United also has the right to extend the term for a second 12-month period for a certain number of aircraft upon 180 days
written notice.
Under the terms of the ExpressJet United ERJ Agreement, ExpressJet operates 166 ERJ145s and five ERJ135s
in the United flight system. All of such ERJ145s and ERJ 135s are leased to ExpressJet by United pursuant to sublease
or lease agreements. Upon the expiration of the ExpressJet United ERJ Agreement, ExpressJet is obligated to return the
subleased or leased aircraft to United. As of December 31, 2015, ExpressJet had removed four ERJ135s from service and
was in the process of returning such aircraft to United. During the 2016 calendar year, ExpressJet anticipates removing
20 ERJ145s and five ERJ135s from contract and intends to return the aircraft to United under the aircraft lease
agreement.
SkyWest Airlines American Agreement
On September 11, 2012, SkyWest Airlines and American entered into the SkyWest Airlines American
Agreement. The SkyWest Airlines American Agreement is scheduled to terminate in 2016 and is subject to early
termination in various circumstances including:
• if SkyWest Airlines or American fails to fulfill an obligation under the SkyWest Airlines American
Agreement for a period of 30 days after written notice to cure;
• if SkyWest Airlines’ operations fall below certain performance levels;
• subject to limitations imposed by the U.S. Bankruptcy Code, if the other party makes a general assignment
for the benefit of creditors or becomes insolvent; or
• if bankruptcy proceedings are commenced against the other party (subject to limitations imposed by the
U.S. Bankruptcy Code) and certain specified conditions are not satisfied.
ExpressJet American Agreement
On September 11, 2012, ExpressJet and American entered into the ExpressJet American Agreement. The
ExpressJet American Agreement is scheduled to terminate in 2017. The ExpressJet American Agreement is subject to
early termination in various circumstances including:
• if ExpressJet or American fails to fulfill an obligation under the ExpressJet American Agreement for a
period of 30 days after written notice to cure;