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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Delaware
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58-0218548
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Post Office Box 20706
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Atlanta, Georgia
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30320-6001
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including area code: (404) 715-2600
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.0001 per share
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New York Stock Exchange
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Large accelerated filer
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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(Do not check if a smaller reporting company)
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Table of Contents
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Page
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PART I
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PART II
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Financial Highlights - 201
4 Compared to 2013
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Results of Operations - 201
4 Compared to 2013
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Results of Operations - 20
13 Compared to 2012
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Page
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PART III
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PART IV
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•
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our international joint ventures, particularly our transatlantic joint venture with Air France-KLM and Alitalia and our transatlantic joint venture with Virgin Atlantic;
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•
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our alliances with other foreign airlines, including Aeroméxico and GOL and our membership in SkyTeam, a global airline alliance; and
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•
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agreements with multiple domestic regional carriers, which operate as Delta Connection
®
.
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•
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A transatlantic joint venture with Air France and KLM, both of which are subsidiaries of the same holding company, and Alitalia, which generally covers routes between North America and Europe.
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•
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A transatlantic joint venture with Virgin Atlantic Airways with respect to operations on non-stop routes between the United Kingdom and North America. In addition to the joint venture, we own a non-controlling 49% equity stake in Virgin Atlantic Limited, the parent company of Virgin Atlantic Airways.
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•
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A transpacific joint venture with Virgin Australia Airlines and its affiliated carriers with respect to operations on transpacific routes between North America and Australia/New Zealand.
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•
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ExpressJet Airlines, Inc. and SkyWest Airlines, Inc., both subsidiaries of SkyWest, Inc.;
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•
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Shuttle America Corporation, a subsidiary of Republic Airways Holdings, Inc.;
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•
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Compass Airlines, Inc. (“Compass”) and GoJet Airlines, LLC, both subsidiaries of Trans States Holdings, Inc. (“Trans States”); and
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•
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Endeavor Air, Inc., which is a wholly-owned subsidiary of ours.
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Year
|
Gallons Consumed
(1)
(Millions)
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Cost
(1)(2)
(Millions)
|
Average Price Per Gallon
(1)(2)
|
Percentage of Total Operating Expense
(1)(2)
|
||||||
2014
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3,893
|
|
$
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13,512
|
|
$
|
3.47
|
|
35
|
%
|
2013
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3,828
|
|
$
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11,464
|
|
$
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3.00
|
|
33
|
%
|
2012
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3,769
|
|
$
|
12,251
|
|
$
|
3.25
|
|
36
|
%
|
(1)
|
Includes the fuel consumption costs of our regional carriers operating under capacity purchase agreements.
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(2)
|
Includes fuel hedge (losses) gains under our fuel hedging program of $
(2.0) billion
,
$493 million
and $(66) million for
2014
,
2013
and
2012
, respectively.
|
•
|
In addition to providing maintenance and engineering support for our fleet of over 900 aircraft, our MRO operation, known as Delta TechOps, serves aviation and airline customers from around the world.
|
•
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Our staffing services business, Delta Global Services, provides staffing services, professional security, training services and aviation solutions.
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•
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Our vacation wholesale business, MLT Vacations, provides vacation packages to third-party consumers.
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•
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Our private jet operations, Delta Private Jets, provides aircraft charters, aircraft management and programs allowing members to purchase flight time by the hour.
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Employee Group
|
Approximate Number of Active Employees Represented
|
|
Union
|
Date on which Collective Bargaining Agreement Becomes Amendable
|
Delta Pilots
|
11,530
|
|
ALPA
|
December 31, 2015
|
Delta Flight Superintendents (Dispatchers)
|
380
|
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PAFCA
|
March 31, 2018
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Endeavor Air Pilots
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1,300
|
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ALPA
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January 1, 2020
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Endeavor Air Flight Attendants
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1,000
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AFA
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December 31, 2018
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Endeavor Air Dispatchers
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60
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DISTWU
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December 31, 2018
|
|
Current Fleet
(1)
|
|
Commitments
|
|
||||
Aircraft Type
|
Owned
|
Capital Lease
|
Operating Lease
|
Total
|
Average Age
|
Purchase
(2)
|
Lease
|
Options
(2)
|
B-717-200
|
—
|
6
|
46
|
52
|
12.9
|
—
|
36
|
—
|
B-737-700
|
10
|
—
|
—
|
10
|
5.7
|
—
|
—
|
—
|
B-737-800
|
73
|
—
|
—
|
73
|
13.7
|
—
|
—
|
—
|
B-737-900ER
|
21
|
—
|
10
|
31
|
0.6
|
69
|
—
|
30
|
B-747-400
|
5
|
8
|
—
|
13
|
22.4
|
—
|
—
|
—
|
B-757-200
|
90
|
16
|
18
|
124
|
19.8
|
—
|
—
|
—
|
B-757-300
|
16
|
—
|
—
|
16
|
11.6
|
—
|
—
|
—
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B-767-300
|
11
|
3
|
2
|
16
|
23.7
|
—
|
—
|
—
|
B-767-300ER
|
51
|
5
|
2
|
58
|
18.5
|
—
|
—
|
1
|
B-767-400ER
|
21
|
—
|
—
|
21
|
13.6
|
—
|
—
|
2
|
B-777-200ER
|
8
|
—
|
—
|
8
|
14.7
|
—
|
—
|
—
|
B-777-200LR
|
10
|
—
|
—
|
10
|
5.5
|
—
|
—
|
3
|
B-787-8
|
—
|
—
|
—
|
—
|
—
|
18
|
—
|
—
|
A319-100
|
55
|
—
|
2
|
57
|
12.7
|
—
|
—
|
—
|
A320-200
|
51
|
—
|
18
|
69
|
19.6
|
—
|
—
|
—
|
A321-200
|
—
|
—
|
—
|
—
|
—
|
45
|
—
|
—
|
A330-200
|
11
|
—
|
—
|
11
|
9.5
|
—
|
—
|
—
|
A330-300
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21
|
—
|
—
|
21
|
9.1
|
10
|
—
|
—
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A330-900neo
|
—
|
—
|
—
|
—
|
—
|
25
|
—
|
—
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A350-900
|
—
|
—
|
—
|
—
|
—
|
25
|
—
|
—
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MD-88
|
76
|
41
|
—
|
117
|
24.2
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—
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—
|
—
|
MD-90
|
57
|
8
|
—
|
65
|
17.6
|
—
|
—
|
—
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Total
|
587
|
87
|
98
|
772
|
16.9
|
192
|
36
|
36
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(1)
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Excludes certain aircraft we own or lease, which are operated by regional carriers on our behalf shown in the table below.
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(2)
|
Our purchase commitment for
18
B-787-8 aircraft and option agreements for B-767-300ER, B-767-400ER and B-777-200LR aircraft provide for certain aircraft substitution rights.
|
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Fleet Type
|
|
|||||
Carrier
|
CRJ-200
|
CRJ-700
|
CRJ-900
(3)
|
Embraer 145
|
Embraer 170
|
Embraer 175
|
Total
|
Endeavor Air, Inc.
(1)
|
64
|
—
|
79
|
—
|
—
|
—
|
143
|
ExpressJet Airlines, Inc.
|
53
|
41
|
28
|
—
|
—
|
—
|
122
|
SkyWest Airlines, Inc.
|
48
|
19
|
32
|
—
|
—
|
—
|
99
|
Compass Airlines, Inc.
|
—
|
—
|
—
|
—
|
6
|
36
|
42
|
Chautauqua Airlines, Inc.
(2)
|
—
|
—
|
—
|
41
|
—
|
—
|
41
|
Shuttle America Corporation
|
—
|
—
|
—
|
—
|
14
|
16
|
30
|
GoJet Airlines, LLC
|
—
|
22
|
—
|
—
|
—
|
—
|
22
|
Total
|
165
|
82
|
139
|
41
|
20
|
52
|
499
|
(1)
|
Endeavor Air, Inc. is a wholly-owned subsidiary of Delta.
|
(2)
|
As of January 1, 2015, Chautauqua Airlines, Inc. and all related aircraft were absorbed into the operations of Shuttle America Corporation.
|
(3)
|
In addition, we have purchase commitments for
two
CRJ-900 aircraft that will be operated by our regional carriers and options for an additional
30
CRJ-900 aircraft.
|
|
Delivery in Calendar Years Ending
|
||||
Aircraft Purchase Commitments
|
2015
|
2016
|
2017
|
After 2017
|
Total
|
B-737-900ER
|
19
|
19
|
19
|
12
|
69
|
B-787-8
|
—
|
—
|
—
|
18
|
18
|
A321-200
|
—
|
15
|
15
|
15
|
45
|
A330-300
|
4
|
4
|
2
|
—
|
10
|
A330-900neo
|
—
|
—
|
—
|
25
|
25
|
A350-900
|
—
|
—
|
6
|
19
|
25
|
CRJ-900
|
2
|
—
|
—
|
—
|
2
|
Total
|
25
|
38
|
42
|
89
|
194
|
|
Delivery in Calendar Years Ending
|
||||
Aircraft Options
|
2015
|
2016
|
2017
|
After 2017
|
Total
|
B-737-900ER
|
—
|
5
|
6
|
19
|
30
|
B-767-300ER
|
—
|
—
|
1
|
—
|
1
|
B-767-400ER
|
—
|
1
|
1
|
—
|
2
|
B-777-200LR
|
1
|
2
|
—
|
—
|
3
|
CRJ-900
|
4
|
24
|
2
|
—
|
30
|
Total
|
5
|
32
|
10
|
19
|
66
|
|
Common Stock
|
Cash Dividends Declared (per share)
|
|||||||||
|
High
|
Low
|
|||||||||
Fiscal 2014
|
|
|
|
||||||||
Fourth Quarter
|
|
$
|
50.16
|
|
|
$
|
30.12
|
|
$
|
0.09
|
|
Third Quarter
|
|
$
|
40.97
|
|
|
$
|
34.59
|
|
$
|
0.09
|
|
Second Quarter
|
|
$
|
42.66
|
|
|
$
|
30.54
|
|
$
|
0.06
|
|
First Quarter
|
|
$
|
35.85
|
|
|
$
|
27.26
|
|
$
|
0.06
|
|
Fiscal 2013
|
|
|
|
||||||||
Fourth Quarter
|
|
$
|
29.44
|
|
|
$
|
23.63
|
|
$
|
0.06
|
|
Third Quarter
|
|
$
|
24.10
|
|
|
$
|
18.30
|
|
$
|
0.06
|
|
Second Quarter
|
|
$
|
19.43
|
|
|
$
|
13.94
|
|
—
|
|
|
First Quarter
|
|
$
|
17.25
|
|
|
$
|
11.97
|
|
—
|
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Approximate Dollar Value (in millions) of Shares That May Yet Be Purchased Under the Plan or Programs
|
||||||
October 2014
|
4,001,416
|
|
$
|
37.29
|
|
4,001,416
|
|
$
|
1,501
|
|
November 2014
|
7,718,441
|
|
$
|
42.68
|
|
7,718,441
|
|
$
|
1,172
|
|
December 2014
|
508,707
|
|
$
|
44.23
|
|
508,707
|
|
$
|
1,150
|
|
Total
|
12,228,564
|
|
|
12,228,564
|
|
|
|
Year Ended December 31,
|
||||||||||||||
(in millions, except share data)
|
2014
|
2013
|
2012
|
2011
|
2010
|
||||||||||
Operating revenue
|
$
|
40,362
|
|
$
|
37,773
|
|
$
|
36,670
|
|
$
|
35,115
|
|
$
|
31,755
|
|
Operating expense
|
38,156
|
|
34,373
|
|
34,495
|
|
33,140
|
|
29,538
|
|
|||||
Operating income
|
2,206
|
|
3,400
|
|
2,175
|
|
1,975
|
|
2,217
|
|
|||||
Other expense, net
|
(1,134
|
)
|
(873
|
)
|
(1,150
|
)
|
(1,206
|
)
|
(1,609
|
)
|
|||||
Income before income taxes
|
1,072
|
|
2,527
|
|
1,025
|
|
769
|
|
608
|
|
|||||
Income tax (provision) benefit
|
(413
|
)
|
8,013
|
|
(16
|
)
|
85
|
|
(15
|
)
|
|||||
Net income
|
$
|
659
|
|
$
|
10,540
|
|
$
|
1,009
|
|
$
|
854
|
|
$
|
593
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share
|
$
|
0.79
|
|
$
|
12.41
|
|
$
|
1.20
|
|
$
|
1.02
|
|
$
|
0.71
|
|
Diluted earnings per share
|
$
|
0.78
|
|
$
|
12.29
|
|
$
|
1.19
|
|
$
|
1.01
|
|
$
|
0.70
|
|
Cash dividends declared per share
|
$
|
0.30
|
|
$
|
0.12
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||||||||||||
(in millions)
|
2014
|
2013
|
2012
|
2011
|
2010
|
||||||||||
MTM adjustments
|
$
|
2,346
|
|
$
|
(276
|
)
|
$
|
(27
|
)
|
$
|
26
|
|
$
|
—
|
|
Restructuring and other
|
716
|
|
424
|
|
452
|
|
242
|
|
227
|
|
|||||
Loss on extinguishment of debt
|
268
|
|
—
|
|
118
|
|
68
|
|
391
|
|
|||||
Virgin Atlantic MTM adjustments
|
134
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Release of tax valuation allowance and intraperiod income tax allocation
|
—
|
|
(7,989
|
)
|
—
|
|
—
|
|
—
|
|
|||||
Merger-related items
|
—
|
|
—
|
|
—
|
|
—
|
|
233
|
|
|||||
Total
|
$
|
3,464
|
|
$
|
(7,841
|
)
|
$
|
543
|
|
$
|
336
|
|
$
|
851
|
|
|
December 31,
|
||||||||||||||
(in millions)
|
2014
|
2013
|
2012
|
2011
|
2010
|
||||||||||
Total assets
|
$
|
54,121
|
|
$
|
52,252
|
|
$
|
44,550
|
|
$
|
43,499
|
|
$
|
43,188
|
|
Long-term debt and capital leases (including current maturities)
|
$
|
9,777
|
|
$
|
11,342
|
|
$
|
12,709
|
|
$
|
13,791
|
|
$
|
15,252
|
|
Stockholders' equity (deficit)
|
$
|
8,813
|
|
$
|
11,643
|
|
$
|
(2,131
|
)
|
$
|
(1,396
|
)
|
$
|
897
|
|
|
Year Ended December 31,
|
||||||||||||||
Consolidated
(1)
|
2014
|
2013
|
2012
|
2011
|
2010
|
||||||||||
Revenue passenger miles (millions)
|
202,925
|
|
194,988
|
|
192,974
|
|
192,767
|
|
193,169
|
|
|||||
Available seat miles (millions)
|
239,676
|
|
232,740
|
|
230,415
|
|
234,656
|
|
232,684
|
|
|||||
Passenger mile yield
|
|
17.22
|
¢
|
|
16.89
|
¢
|
|
16.46
|
¢
|
|
15.70
|
¢
|
|
14.11
|
¢
|
Passenger revenue per available seat mile
|
|
14.58
|
¢
|
|
14.15
|
¢
|
|
13.78
|
¢
|
|
12.89
|
¢
|
|
11.71
|
¢
|
Operating cost per available seat mile
|
|
15.92
|
¢
|
|
14.77
|
¢
|
|
14.97
|
¢
|
|
14.12
|
¢
|
|
12.69
|
¢
|
Passenger load factor
|
84.7
|
%
|
83.8
|
%
|
83.8
|
%
|
82.1
|
%
|
83.0
|
%
|
|||||
Fuel gallons consumed (millions)
|
3,893
|
|
3,828
|
|
3,769
|
|
3,856
|
|
3,823
|
|
|||||
Average price per fuel gallon
(2)
|
$
|
3.47
|
|
$
|
3.00
|
|
$
|
3.25
|
|
$
|
3.06
|
|
$
|
2.33
|
|
Average price per fuel gallon, adjusted
(3)
|
$
|
2.87
|
|
$
|
3.07
|
|
$
|
3.26
|
|
$
|
3.05
|
|
$
|
2.33
|
|
Full-time equivalent employees, end of period
|
79,655
|
|
77,755
|
|
73,561
|
|
78,392
|
|
79,684
|
|
(1)
|
Includes the operations of our regional carriers under capacity purchase agreements. Full-time equivalent employees exclude employees of regional carriers that we do not own.
|
(2)
|
Includes the impact of fuel hedge activity.
|
(3)
|
Non-GAAP financial measure defined and reconciled in "Operating Expense" sections of Results of Operations - 2014 compared to 2013 and 2013 compared to 2012.
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2014
|
2013
|
|||||||||
Passenger:
|
|
|
|
|
|||||||
Mainline
|
$
|
28,688
|
|
$
|
26,534
|
|
$
|
2,154
|
|
8
|
%
|
Regional carriers
|
6,266
|
|
6,408
|
|
(142
|
)
|
(2
|
)%
|
|||
Total passenger revenue
|
34,954
|
|
32,942
|
|
2,012
|
|
6
|
%
|
|||
Cargo
|
934
|
|
937
|
|
(3
|
)
|
—
|
%
|
|||
Other
|
4,474
|
|
3,894
|
|
580
|
|
15
|
%
|
|||
Total operating revenue
|
$
|
40,362
|
|
$
|
37,773
|
|
$
|
2,589
|
|
7
|
%
|
|
|
Increase (Decrease)
vs. Year Ended December 31, 2013
|
||||||||||||||
(in millions)
|
Year Ended December 31, 2014
|
Passenger Revenue
|
RPMs
(Traffic)
|
ASMs (Capacity)
|
Passenger Mile Yield
|
PRASM
|
Load Factor
|
|||||||||
Domestic
|
$
|
17,017
|
|
12
|
%
|
7
|
%
|
4
|
%
|
5
|
%
|
8
|
%
|
2.0
|
|
pts
|
Atlantic
|
5,826
|
|
3
|
%
|
—
|
%
|
1
|
%
|
3
|
%
|
2
|
%
|
(0.8
|
)
|
pts
|
|
Pacific
|
3,421
|
|
(4
|
)%
|
(1
|
)%
|
—
|
%
|
(3
|
)%
|
(4
|
)%
|
(0.9
|
)
|
pts
|
|
Latin America
|
2,424
|
|
15
|
%
|
17
|
%
|
18
|
%
|
(2
|
)%
|
(2
|
)%
|
(0.7
|
)
|
pts
|
|
Total mainline
|
28,688
|
|
8
|
%
|
5
|
%
|
4
|
%
|
3
|
%
|
4
|
%
|
0.7
|
|
pts
|
|
Regional carriers
|
6,266
|
|
(2
|
)%
|
(2
|
)%
|
(4
|
)%
|
(1
|
)%
|
2
|
%
|
1.9
|
|
pts
|
|
Total consolidated
|
$
|
34,954
|
|
6
|
%
|
4
|
%
|
3
|
%
|
2
|
%
|
3
|
%
|
0.9
|
|
pts
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2014
|
2013
|
|||||||||
Aircraft fuel and related taxes
|
$
|
11,668
|
|
$
|
9,397
|
|
$
|
2,271
|
|
24
|
%
|
Salaries and related costs
|
8,120
|
|
7,720
|
|
400
|
|
5
|
%
|
|||
Regional carrier expense
|
5,237
|
|
5,669
|
|
(432
|
)
|
(8
|
)%
|
|||
Aircraft maintenance materials and outside repairs
|
1,828
|
|
1,852
|
|
(24
|
)
|
(1
|
)%
|
|||
Depreciation and amortization
|
1,771
|
|
1,658
|
|
113
|
|
7
|
%
|
|||
Contracted services
|
1,749
|
|
1,665
|
|
84
|
|
5
|
%
|
|||
Passenger commissions and other selling expenses
|
1,700
|
|
1,603
|
|
97
|
|
6
|
%
|
|||
Landing fees and other rents
|
1,442
|
|
1,410
|
|
32
|
|
2
|
%
|
|||
Profit sharing
|
1,085
|
|
506
|
|
579
|
|
114
|
%
|
|||
Passenger service
|
810
|
|
762
|
|
48
|
|
6
|
%
|
|||
Aircraft rent
|
233
|
|
209
|
|
24
|
|
11
|
%
|
|||
Restructuring and other items
|
716
|
|
402
|
|
314
|
|
NM
(1)
|
|
|||
Other
|
1,797
|
|
1,520
|
|
277
|
|
18
|
%
|
|||
Total operating expense
|
$
|
38,156
|
|
$
|
34,373
|
|
$
|
3,783
|
|
11
|
%
|
(1)
|
Due to the nature of amounts recorded within restructuring and other items, a year-over-year comparison is not meaningful. For a discussion of charges recorded in restructuring and other items, see
Note 17
of the Notes to the Consolidated Financial Statements.
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions, except per gallon data)
|
2014
|
2013
|
|||||||||
Aircraft fuel and related taxes
(1)
|
$
|
11,668
|
|
$
|
9,397
|
|
$
|
2,271
|
|
|
|
Aircraft fuel and related taxes included within regional carrier expense
|
1,844
|
|
2,067
|
|
(223
|
)
|
|
||||
Total fuel expense
|
$
|
13,512
|
|
$
|
11,464
|
|
$
|
2,048
|
|
18
|
%
|
|
|
|
|
|
|||||||
Total fuel consumption (gallons)
|
3,893
|
|
3,828
|
|
65
|
|
2
|
%
|
|||
Average price per gallon
|
$
|
3.47
|
|
$
|
3.00
|
|
$
|
0.47
|
|
16
|
%
|
(1)
|
Includes the impact of fuel hedging and refinery results described further in the table below.
|
|
|
|
Average Price Per Gallon
|
||||||||||||||||
|
Year Ended December 31,
|
Increase
(Decrease)
|
|
Year Ended December 31,
|
Increase (Decrease)
|
||||||||||||||
(in millions, except per gallon data)
|
2014
|
2013
|
|
2014
|
2013
|
||||||||||||||
Fuel purchase cost
|
$
|
11,350
|
|
$
|
11,792
|
|
$
|
(442
|
)
|
|
$
|
2.91
|
|
$
|
3.09
|
|
$
|
(0.18
|
)
|
Airline segment fuel hedge losses (gains)
(1)
|
2,258
|
|
(444
|
)
|
2,702
|
|
|
0.58
|
|
(0.12
|
)
|
0.70
|
|
||||||
Refinery segment impact
(1)
|
(96
|
)
|
116
|
|
(212
|
)
|
|
(0.02
|
)
|
0.03
|
|
(0.05
|
)
|
||||||
Total fuel expense
|
$
|
13,512
|
|
$
|
11,464
|
|
$
|
2,048
|
|
|
$
|
3.47
|
|
$
|
3.00
|
|
$
|
0.47
|
|
MTM adjustments
|
(2,346
|
)
|
276
|
|
(2,622
|
)
|
|
(0.60
|
)
|
0.07
|
|
(0.67
|
)
|
||||||
Total fuel expense, adjusted
|
$
|
11,166
|
|
$
|
11,740
|
|
$
|
(574
|
)
|
|
$
|
2.87
|
|
$
|
3.07
|
|
$
|
(0.20
|
)
|
(1)
|
Includes the impact of pricing arrangements between the airline and refinery segments with respect to the refinery's inventory price risk.
|
|
Year Ended December 31,
|
Increase
|
% Increase
|
||||||||
(in millions)
|
2013
|
2012
|
|||||||||
Passenger:
|
|
|
|
|
|||||||
Mainline
|
$
|
26,534
|
|
$
|
25,173
|
|
$
|
1,361
|
|
5
|
%
|
Regional carriers
|
6,408
|
|
6,581
|
|
(173
|
)
|
(3
|
)%
|
|||
Total passenger revenue
|
32,942
|
|
31,754
|
|
1,188
|
|
4
|
%
|
|||
Cargo
|
937
|
|
990
|
|
(53
|
)
|
(5
|
)%
|
|||
Other
|
3,894
|
|
3,926
|
|
(32
|
)
|
(1
|
)%
|
|||
Total operating revenue
|
$
|
37,773
|
|
$
|
36,670
|
|
$
|
1,103
|
|
3
|
%
|
|
|
Increase (Decrease)
vs. Year Ended December 31, 2012
|
||||||||||||||
(in millions)
|
Year Ended December 31, 2013
|
Passenger Revenue
|
RPMs
(Traffic)
|
ASMs (Capacity)
|
Passenger Mile Yield
|
PRASM
|
Load Factor
|
|||||||||
Domestic
|
$
|
15,204
|
|
8
|
%
|
1
|
%
|
2
|
%
|
6
|
%
|
5
|
%
|
(0.8
|
)
|
pts
|
Atlantic
|
5,657
|
|
3
|
%
|
1
|
%
|
(1
|
)%
|
2
|
%
|
3
|
%
|
1.2
|
|
pts
|
|
Pacific
|
3,561
|
|
(2
|
)%
|
1
|
%
|
(1
|
)%
|
(2
|
)%
|
(1
|
)%
|
1.3
|
|
pts
|
|
Latin America
|
2,112
|
|
11
|
%
|
11
|
%
|
8
|
%
|
(1
|
)%
|
2
|
%
|
2.3
|
|
pts
|
|
Total mainline
|
26,534
|
|
5
|
%
|
2
|
%
|
2
|
%
|
3
|
%
|
4
|
%
|
0.3
|
|
pts
|
|
Regional carriers
|
6,408
|
|
(3
|
)%
|
(6
|
)%
|
(3
|
)%
|
3
|
%
|
1
|
%
|
(1.8
|
)
|
pts
|
|
Total consolidated
|
$
|
32,942
|
|
4
|
%
|
1
|
%
|
1
|
%
|
3
|
%
|
3
|
%
|
—
|
|
pts
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2013
|
2012
|
|||||||||
Aircraft fuel and related taxes
|
$
|
9,397
|
|
$
|
10,150
|
|
$
|
(753
|
)
|
(7
|
)%
|
Salaries and related costs
|
7,720
|
|
7,266
|
|
454
|
|
6
|
%
|
|||
Regional carrier expense
|
5,669
|
|
5,647
|
|
22
|
|
—
|
%
|
|||
Aircraft maintenance materials and outside repairs
|
1,852
|
|
1,955
|
|
(103
|
)
|
(5
|
)%
|
|||
Depreciation and amortization
|
1,658
|
|
1,565
|
|
93
|
|
6
|
%
|
|||
Contracted services
|
1,665
|
|
1,566
|
|
99
|
|
6
|
%
|
|||
Passenger commissions and other selling expenses
|
1,603
|
|
1,590
|
|
13
|
|
1
|
%
|
|||
Landing fees and other rents
|
1,410
|
|
1,336
|
|
74
|
|
6
|
%
|
|||
Profit sharing
|
506
|
|
372
|
|
134
|
|
36
|
%
|
|||
Passenger service
|
762
|
|
732
|
|
30
|
|
4
|
%
|
|||
Aircraft rent
|
209
|
|
272
|
|
(63
|
)
|
(23
|
)%
|
|||
Restructuring and other items
|
402
|
|
452
|
|
(50
|
)
|
NM
(1)
|
|
|||
Other
|
1,520
|
|
1,592
|
|
(72
|
)
|
(5
|
)%
|
|||
Total operating expense
|
$
|
34,373
|
|
$
|
34,495
|
|
$
|
(122
|
)
|
—
|
%
|
(1)
|
Due to the nature of amounts recorded within restructuring and other items, a year-over-year comparison is not meaningful. For a discussion of charges recorded in restructuring and other items, see
Note 17
of the Notes to the Consolidated Financial Statements.
|
|
Year Ended December 31,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions, except per gallon data)
|
2013
|
2012
|
|||||||||
Aircraft fuel and related taxes
(1)
|
$
|
9,397
|
|
$
|
10,150
|
|
$
|
(753
|
)
|
|
|
Aircraft fuel and related taxes included within regional carrier expense
|
2,067
|
|
2,101
|
|
(34
|
)
|
|
||||
Total fuel expense
|
$
|
11,464
|
|
$
|
12,251
|
|
$
|
(787
|
)
|
(6
|
)%
|
|
|
|
|
|
|||||||
Total fuel consumption (gallons)
|
3,828
|
|
3,769
|
|
59
|
|
2
|
%
|
|||
Average price per gallon
|
$
|
3.00
|
|
$
|
3.25
|
|
$
|
(0.25
|
)
|
(8
|
)%
|
(1)
|
Includes the impact of fuel hedging and refinery results described further in the table below.
|
|
|
|
Average Price Per Gallon
|
||||||||||||||||
|
Year Ended December 31,
|
Increase
(Decrease)
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
||||||||||||||
(in millions, except per gallon data)
|
2013
|
2012
|
|
2013
|
2012
|
||||||||||||||
Fuel purchase cost
|
$
|
11,792
|
|
$
|
12,122
|
|
$
|
(330
|
)
|
|
$
|
3.09
|
|
$
|
3.23
|
|
$
|
(0.14
|
)
|
Airline segment fuel hedge (gains) losses
(1)
|
(444
|
)
|
66
|
|
(510
|
)
|
|
(0.12
|
)
|
0.01
|
|
(0.13
|
)
|
||||||
Refinery segment impact
(1)
|
116
|
|
63
|
|
53
|
|
|
0.03
|
|
0.01
|
|
0.02
|
|
||||||
Total fuel expense
|
$
|
11,464
|
|
$
|
12,251
|
|
$
|
(787
|
)
|
|
$
|
3.00
|
|
$
|
3.25
|
|
$
|
(0.25
|
)
|
MTM adjustments
|
276
|
|
27
|
|
249
|
|
|
0.07
|
|
0.01
|
|
0.06
|
|
||||||
Total fuel expense, adjusted
|
$
|
11,740
|
|
$
|
12,278
|
|
$
|
(538
|
)
|
|
$
|
3.07
|
|
$
|
3.26
|
|
$
|
(0.19
|
)
|
(1)
|
Includes the impact of pricing arrangements between the airline and refinery segments with respect to the refinery's inventory price risk.
|
|
Year Ended December 31,
|
|
Favorable (Unfavorable)
|
|||||||||||||
(in millions)
|
2014
|
2013
|
2012
|
|
2014 vs. 2013
|
2013 vs. 2012
|
||||||||||
Interest expense, net
|
$
|
(650
|
)
|
$
|
(852
|
)
|
$
|
(1,005
|
)
|
|
$
|
202
|
|
$
|
153
|
|
Loss on extinguishment of debt
|
(268
|
)
|
—
|
|
(118
|
)
|
|
(268
|
)
|
118
|
|
|||||
Miscellaneous, net
|
(216
|
)
|
(21
|
)
|
(27
|
)
|
|
(195
|
)
|
6
|
|
|||||
Total other expense, net
|
$
|
(1,134
|
)
|
$
|
(873
|
)
|
$
|
(1,150
|
)
|
|
$
|
(261
|
)
|
$
|
277
|
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2014
|
2013
|
2012
|
||||||
Current tax (provision) benefit:
|
|
|
|
||||||
Federal
|
$
|
21
|
|
$
|
24
|
|
$
|
—
|
|
State and local
|
(9
|
)
|
(3
|
)
|
15
|
|
|||
International
|
(11
|
)
|
1
|
|
(14
|
)
|
|||
Deferred tax (provision) benefit:
|
|
|
|
||||||
Federal
|
(424
|
)
|
7,197
|
|
(4
|
)
|
|||
State and local
|
10
|
|
794
|
|
(13
|
)
|
|||
Income tax (provision) benefit
|
$
|
(413
|
)
|
$
|
8,013
|
|
$
|
(16
|
)
|
|
Contractual Obligations by Year
(1)
|
||||||||||||||||||||
(in millions)
|
2015
|
2016
|
2017
|
2018
|
2019
|
Thereafter
|
Total
|
||||||||||||||
Long-term debt (see Note 8)
|
|
|
|
|
|
|
|
||||||||||||||
Principal amount
|
$
|
1,111
|
|
$
|
1,326
|
|
$
|
2,137
|
|
$
|
2,028
|
|
$
|
1,158
|
|
$
|
1,709
|
|
$
|
9,469
|
|
Interest payments
|
404
|
|
335
|
|
266
|
|
208
|
|
130
|
|
328
|
|
1,671
|
|
|||||||
Capital lease obligations (see Note 9)
|
|
|
|
|
|
|
|
||||||||||||||
Principal amount
|
108
|
|
106
|
|
78
|
|
40
|
|
28
|
|
38
|
|
398
|
|
|||||||
Interest payments
|
49
|
|
33
|
|
19
|
|
11
|
|
5
|
|
4
|
|
121
|
|
|||||||
Operating lease payments
|
|
|
|
|
|
|
|
||||||||||||||
Noncancelable payments (see Note 9)
|
1,707
|
|
1,493
|
|
1,323
|
|
1,120
|
|
929
|
|
6,169
|
|
12,741
|
|
|||||||
Future aircraft leases
|
25
|
|
49
|
|
49
|
|
47
|
|
48
|
|
445
|
|
663
|
|
|||||||
Aircraft purchase commitments (see Note 12)
|
1,480
|
|
1,970
|
|
2,390
|
|
2,230
|
|
1,060
|
|
4,820
|
|
13,950
|
|
|||||||
Contract carrier obligations (see Note 12)
|
2,220
|
|
1,930
|
|
1,720
|
|
1,550
|
|
1,430
|
|
2,370
|
|
11,220
|
|
|||||||
Employee benefit obligations (see Note 11)
|
770
|
|
680
|
|
650
|
|
740
|
|
680
|
|
8,320
|
|
11,840
|
|
|||||||
Other obligations
|
630
|
|
310
|
|
260
|
|
180
|
|
70
|
|
210
|
|
1,660
|
|
|||||||
Total
|
$
|
8,504
|
|
$
|
8,232
|
|
$
|
8,892
|
|
$
|
8,154
|
|
$
|
5,538
|
|
$
|
24,413
|
|
$
|
63,733
|
|
(1)
|
For additional information, see the Notes to the Consolidated Financial Statements referenced in the table above.
|
Change in Assumption
|
Effect on 2015
Pension Expense
|
Effect on Accrued
Pension Liability at
December 31, 2014
|
0.50% decrease in weighted average discount rate
|
-$4 million
|
+$1.5 billion
|
0.50% increase in weighted average discount rate
|
-$3 million
|
-$1.4 billion
|
0.50% decrease in expected long-term rate of return on assets
|
+$48 million
|
—
|
0.50% increase in expected long-term rate of return on assets
|
-$48 million
|
—
|
•
|
MTM adjustments.
MTM adjustments are based on market prices at the end of the reporting period for contracts settling in future periods. Such market prices are not necessarily indicative of the actual future value of the underlying hedge in the contract settlement period. Therefore, excluding these adjustments allows investors to better understand and analyze the company's core operational performance in the periods shown.
|
•
|
Restructuring and other.
Because of the variability in restructuring and other, the exclusion of this item is helpful to investors to analyze our recurring core operational performance in the periods shown.
|
•
|
Loss on extinguishment of debt.
Because of the variability in loss on extinguishment of debt, the exclusion of this item is helpful to investors to analyze the company's recurring core operational performance in the periods shown.
|
•
|
Virgin Atlantic MTM adjustments
. We record our proportionate share of earnings from our equity investment in Virgin Atlantic in other expense. We exclude Virgin Atlantic's MTM adjustments to allow investors to better understand and analyze the company’s financial performance in the periods shown.
|
|
Year Ended December 31,
|
|||||
(in millions)
|
2014
|
2013
|
||||
Pre-tax income
|
$
|
1,072
|
|
$
|
2,527
|
|
Items excluded:
|
|
|
||||
MTM adjustments
|
2,346
|
|
(276
|
)
|
||
Restructuring and other
|
716
|
|
424
|
|
||
Loss on extinguishment of debt
|
268
|
|
—
|
|
||
Virgin Atlantic MTM adjustments
|
134
|
|
—
|
|
||
Pre-tax income, adjusted
|
$
|
4,536
|
|
$
|
2,675
|
|
•
|
Aircraft fuel and related taxes.
The volatility in fuel prices impacts the comparability of year-over-year financial performance. The exclusion of aircraft fuel and related taxes (including our regional carriers) allows investors to better understand and analyze our non-fuel costs and our year-over-year financial performance.
|
•
|
Profit sharing.
We exclude profit sharing because this exclusion allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.
|
•
|
Restructuring and other.
Because of the variability in restructuring and other, the exclusion of this item is helpful to investors to analyze our recurring core operational performance in the periods shown.
|
•
|
Other expenses.
Other expenses include aircraft maintenance and staffing services we provide to third parties, our vacation wholesale operations and refinery cost of sales to third parties. Because these businesses are not related to the generation of a seat mile, we exclude the costs related to these sales to provide a more meaningful comparison of the costs of our airline operations to the rest of the airline industry.
|
|
Year Ended December 31,
|
|||||
|
2014
|
2013
|
||||
CASM
|
|
15.92
|
¢
|
|
14.77
|
¢
|
Items excluded:
|
|
|
||||
Aircraft fuel and related taxes
|
(5.64
|
)
|
(4.92
|
)
|
||
Profit sharing
|
(0.45
|
)
|
(0.22
|
)
|
||
Restructuring and other
|
(0.30
|
)
|
(0.17
|
)
|
||
Other expenses
|
(0.37
|
)
|
(0.32
|
)
|
||
CASM-Ex
|
|
9.16
|
¢
|
|
9.14
|
¢
|
(1)
|
Projections based upon the (increase) decrease to unhedged fuel cost as compared to the jet fuel price per gallon of $1.60, excluding transportation costs and taxes, at January 31, 2015 and estimated fuel consumption of 3.6 billion gallons for the period from February 1, 2015 to December 31, 2015.
|
(2)
|
Projections based on average futures prices by contract settlement month compared to futures prices at January 31, 2015.
|
(3)
|
Projections represent margin estimates for the entire fuel hedge portfolio at January 31, 2015, including contracts settling in 2016.
|
|
Page
|
Consolidated Balance Sheets - December 31, 2
014 and 2013
|
|
Atlanta, Georgia
|
/s/ Ernst & Young LLP
|
February 10, 2015
|
|
|
December 31,
|
||||||
(in millions, except share data)
|
2014
|
|
2013
|
||||
ASSETS
|
|||||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,088
|
|
|
$
|
2,844
|
|
Short-term investments
|
1,217
|
|
|
959
|
|
||
Accounts receivable, net of an allowance for uncollectible accounts of $21 and $23
at December 31, 2014 and 2013, respectively |
2,297
|
|
|
1,609
|
|
||
Hedge margin receivable
|
925
|
|
|
3
|
|
||
Fuel inventory
|
534
|
|
|
706
|
|
||
Expendable parts and supplies inventories, net of an allowance for obsolescence of $127 and $118
at December 31, 2014 and 2013, respectively
|
318
|
|
|
357
|
|
||
Hedge derivatives asset
|
1,078
|
|
|
585
|
|
||
Deferred income taxes, net
|
3,275
|
|
|
1,736
|
|
||
Prepaid expenses and other
|
733
|
|
|
852
|
|
||
Total current assets
|
12,465
|
|
|
9,651
|
|
||
|
|
|
|
||||
Property and Equipment, Net:
|
|
|
|
||||
Property and equipment, net of accumulated depreciation and amortization of $9,340 and $7,792 at December 31, 2014 and 2013, respectively
|
21,929
|
|
|
21,854
|
|
||
|
|
|
|
||||
Other Assets:
|
|
|
|
||||
Goodwill
|
9,794
|
|
|
9,794
|
|
||
Identifiable intangibles, net of accumulated amortization of $793 and $738
at December 31, 2014 and 2013, respectively |
4,603
|
|
|
4,658
|
|
||
Deferred income taxes, net
|
4,320
|
|
|
4,992
|
|
||
Other noncurrent assets
|
1,010
|
|
|
1,303
|
|
||
Total other assets
|
19,727
|
|
|
20,747
|
|
||
Total assets
|
$
|
54,121
|
|
|
$
|
52,252
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||||
Current Liabilities:
|
|
|
|
||||
Current maturities of long-term debt and capital leases
|
$
|
1,216
|
|
|
$
|
1,547
|
|
Air traffic liability
|
4,296
|
|
|
4,122
|
|
||
Accounts payable
|
2,622
|
|
|
2,300
|
|
||
Accrued salaries and related benefits
|
2,266
|
|
|
1,926
|
|
||
Hedge derivatives liability
|
2,772
|
|
|
146
|
|
||
Frequent flyer deferred revenue
|
1,580
|
|
|
1,861
|
|
||
Other accrued liabilities
|
2,127
|
|
|
2,250
|
|
||
Total current liabilities
|
16,879
|
|
|
14,152
|
|
||
|
|
|
|
||||
Noncurrent Liabilities:
|
|
|
|
||||
Long-term debt and capital leases
|
8,561
|
|
|
9,795
|
|
||
Pension, postretirement and related benefits
|
15,138
|
|
|
12,392
|
|
||
Frequent flyer deferred revenue
|
2,602
|
|
|
2,559
|
|
||
Other noncurrent liabilities
|
2,128
|
|
|
1,711
|
|
||
Total noncurrent liabilities
|
28,429
|
|
|
26,457
|
|
||
|
|
|
|
||||
Commitments and Contingencies
|
|
|
|
||||
|
|
|
|
||||
Stockholders' Equity:
|
|
|
|
||||
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 845,048,310 and 869,484,981 shares issued at December 31, 2014 and 2013, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
12,981
|
|
|
13,982
|
|
||
Retained earnings
|
3,456
|
|
|
3,049
|
|
||
Accumulated other comprehensive loss
|
(7,311
|
)
|
|
(5,130
|
)
|
||
Treasury stock, at cost, 19,790,077 and 18,041,848 shares at December 31, 2014 and 2013, respectively
|
(313
|
)
|
|
(258
|
)
|
||
Total stockholders' equity
|
8,813
|
|
|
11,643
|
|
||
Total liabilities and stockholders' equity
|
$
|
54,121
|
|
|
$
|
52,252
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
Year Ended December 31,
|
||||||||||
(in millions, except per share data)
|
2014
|
|
2013
|
|
2012
|
||||||
Operating Revenue:
|
|
|
|
|
|
||||||
Passenger:
|
|
|
|
|
|
||||||
Mainline
|
$
|
28,688
|
|
|
$
|
26,534
|
|
|
$
|
25,173
|
|
Regional carriers
|
6,266
|
|
|
6,408
|
|
|
6,581
|
|
|||
Total passenger revenue
|
34,954
|
|
|
32,942
|
|
|
31,754
|
|
|||
Cargo
|
934
|
|
|
937
|
|
|
990
|
|
|||
Other
|
4,474
|
|
|
3,894
|
|
|
3,926
|
|
|||
Total operating revenue
|
40,362
|
|
|
37,773
|
|
|
36,670
|
|
|||
|
|
|
|
|
|
||||||
Operating Expense:
|
|
|
|
|
|
||||||
Aircraft fuel and related taxes
|
11,668
|
|
|
9,397
|
|
|
10,150
|
|
|||
Salaries and related costs
|
8,120
|
|
|
7,720
|
|
|
7,266
|
|
|||
Regional carrier expense
|
5,237
|
|
|
5,669
|
|
|
5,647
|
|
|||
Aircraft maintenance materials and outside repairs
|
1,828
|
|
|
1,852
|
|
|
1,955
|
|
|||
Depreciation and amortization
|
1,771
|
|
|
1,658
|
|
|
1,565
|
|
|||
Contracted services
|
1,749
|
|
|
1,665
|
|
|
1,566
|
|
|||
Passenger commissions and other selling expenses
|
1,700
|
|
|
1,603
|
|
|
1,590
|
|
|||
Landing fees and other rents
|
1,442
|
|
|
1,410
|
|
|
1,336
|
|
|||
Profit sharing
|
1,085
|
|
|
506
|
|
|
372
|
|
|||
Passenger service
|
810
|
|
|
762
|
|
|
732
|
|
|||
Aircraft rent
|
233
|
|
|
209
|
|
|
272
|
|
|||
Restructuring and other items
|
716
|
|
|
402
|
|
|
452
|
|
|||
Other
|
1,797
|
|
|
1,520
|
|
|
1,592
|
|
|||
Total operating expense
|
38,156
|
|
|
34,373
|
|
|
34,495
|
|
|||
|
|
|
|
|
|
||||||
Operating Income
|
2,206
|
|
|
3,400
|
|
|
2,175
|
|
|||
|
|
|
|
|
|
||||||
Other Expense:
|
|
|
|
|
|
||||||
Interest expense, net
|
(650
|
)
|
|
(852
|
)
|
|
(1,005
|
)
|
|||
Loss on extinguishment of debt
|
(268
|
)
|
|
—
|
|
|
(118
|
)
|
|||
Miscellaneous, net
|
(216
|
)
|
|
(21
|
)
|
|
(27
|
)
|
|||
Total other expense, net
|
(1,134
|
)
|
|
(873
|
)
|
|
(1,150
|
)
|
|||
|
|
|
|
|
|
||||||
Income Before Income Taxes
|
1,072
|
|
|
2,527
|
|
|
1,025
|
|
|||
|
|
|
|
|
|
||||||
Income Tax (Provision) Benefit
|
(413
|
)
|
|
8,013
|
|
|
(16
|
)
|
|||
|
|
|
|
|
|
||||||
Net Income
|
$
|
659
|
|
|
$
|
10,540
|
|
|
$
|
1,009
|
|
|
|
|
|
|
|
||||||
Basic Earnings Per Share
|
$
|
0.79
|
|
|
$
|
12.41
|
|
|
$
|
1.20
|
|
Diluted Earnings Per Share
|
$
|
0.78
|
|
|
$
|
12.29
|
|
|
$
|
1.19
|
|
Cash Dividends Declared Per Share
|
$
|
0.30
|
|
|
$
|
0.12
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Net Income
|
$
|
659
|
|
|
$
|
10,540
|
|
|
$
|
1,009
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Net gain on foreign currency and interest rate derivatives
|
3
|
|
|
482
|
|
|
211
|
|
|||
Net change in pension and other benefit liabilities
|
(2,194
|
)
|
|
2,984
|
|
|
(2,019
|
)
|
|||
Net gain (loss) on investments
|
10
|
|
|
(19
|
)
|
|
(3
|
)
|
|||
Total Other Comprehensive (Loss) Income
|
(2,181
|
)
|
|
3,447
|
|
|
(1,811
|
)
|
|||
Comprehensive (Loss) Income
|
$
|
(1,522
|
)
|
|
$
|
13,987
|
|
|
$
|
(802
|
)
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2014
|
|
2013
|
|
2012
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
659
|
|
|
$
|
10,540
|
|
|
$
|
1,009
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
1,771
|
|
|
1,658
|
|
|
1,565
|
|
|||
Amortization of debt discount, net
|
59
|
|
|
154
|
|
|
193
|
|
|||
Hedge derivative contracts
|
2,186
|
|
|
(86
|
)
|
|
(209
|
)
|
|||
Deferred income taxes
|
414
|
|
|
(7,991
|
)
|
|
17
|
|
|||
Pension, postretirement and postemployment expense less than payments
|
(723
|
)
|
|
(624
|
)
|
|
(208
|
)
|
|||
Restructuring and other items
|
758
|
|
|
285
|
|
|
184
|
|
|||
Extinguishment of debt
|
268
|
|
|
—
|
|
|
118
|
|
|||
Equity investment loss (earnings)
|
106
|
|
|
(24
|
)
|
|
—
|
|
|||
SkyMiles used pursuant to advance purchase under American Express Agreements
|
—
|
|
|
(333
|
)
|
|
(333
|
)
|
|||
Changes in certain assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
(302
|
)
|
|
90
|
|
|
(116
|
)
|
|||
Restricted cash and cash equivalents
|
62
|
|
|
231
|
|
|
(51
|
)
|
|||
Fuel inventory
|
172
|
|
|
(87
|
)
|
|
(451
|
)
|
|||
Hedge margin
|
(922
|
)
|
|
14
|
|
|
14
|
|
|||
Prepaid expenses and other current assets
|
58
|
|
|
28
|
|
|
(134
|
)
|
|||
Air traffic liability
|
174
|
|
|
426
|
|
|
216
|
|
|||
Frequent flyer deferred revenue
|
(238
|
)
|
|
(121
|
)
|
|
(115
|
)
|
|||
Accounts payable and accrued liabilities
|
228
|
|
|
213
|
|
|
899
|
|
|||
Other, net
|
217
|
|
|
131
|
|
|
(122
|
)
|
|||
Net cash provided by operating activities
|
4,947
|
|
|
4,504
|
|
|
2,476
|
|
|||
|
|
|
|
|
|
||||||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Property and equipment additions:
|
|
|
|
|
|
||||||
Flight equipment, including advance payments
|
(1,662
|
)
|
|
(2,117
|
)
|
|
(1,196
|
)
|
|||
Ground property and equipment, including technology
|
(587
|
)
|
|
(451
|
)
|
|
(772
|
)
|
|||
Purchase of Virgin Atlantic shares
|
—
|
|
|
(360
|
)
|
|
—
|
|
|||
Purchase of short-term investments
|
(1,795
|
)
|
|
(959
|
)
|
|
(958
|
)
|
|||
Redemption of short-term investments
|
1,533
|
|
|
1,117
|
|
|
1,019
|
|
|||
Other, net
|
48
|
|
|
14
|
|
|
(55
|
)
|
|||
Net cash used in investing activities
|
(2,463
|
)
|
|
(2,756
|
)
|
|
(1,962
|
)
|
|||
|
|
|
|
|
|
||||||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Payments on long-term debt and capital lease obligations
|
(2,928
|
)
|
|
(1,461
|
)
|
|
(2,864
|
)
|
|||
Repurchase of common stock
|
(1,100
|
)
|
|
(250
|
)
|
|
—
|
|
|||
Cash dividends
|
(251
|
)
|
|
(102
|
)
|
|
—
|
|
|||
Proceeds from long-term obligations
|
1,020
|
|
|
268
|
|
|
1,965
|
|
|||
Other, net
|
19
|
|
|
225
|
|
|
144
|
|
|||
Net cash used in financing activities
|
(3,240
|
)
|
|
(1,320
|
)
|
|
(755
|
)
|
|||
|
|
|
|
|
|
||||||
Net (Decrease) Increase in Cash and Cash Equivalents
|
(756
|
)
|
|
428
|
|
|
(241
|
)
|
|||
Cash and cash equivalents at beginning of period
|
2,844
|
|
|
2,416
|
|
|
2,657
|
|
|||
Cash and cash equivalents at end of period
|
$
|
2,088
|
|
|
$
|
2,844
|
|
|
$
|
2,416
|
|
|
|
|
|
|
|
||||||
Supplemental Disclosure of Cash Paid for Interest
|
$
|
560
|
|
|
$
|
698
|
|
|
$
|
834
|
|
Non-Cash Transactions:
|
|
|
|
|
|
||||||
Flight equipment under capital leases
|
$
|
28
|
|
|
$
|
67
|
|
|
$
|
28
|
|
Built-to-suit leased facilities
|
7
|
|
|
114
|
|
|
214
|
|
|||
American Express advance purchase of restricted SkyMiles
|
—
|
|
|
285
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
Common Stock
|
Additional
Paid-In Capital |
Retained
Earnings (Accumulated Deficit) |
Accumulated
Other Comprehensive Loss |
Treasury Stock
|
|
||||||||||||||||
(in millions, except per share data)
|
Shares
|
Amount
|
Shares
|
Amount
|
Total
|
|||||||||||||||||
Balance at January 1, 2012
|
861
|
|
$
|
—
|
|
$
|
13,999
|
|
$
|
(8,398
|
)
|
$
|
(6,766
|
)
|
16
|
|
$
|
(231
|
)
|
$
|
(1,396
|
)
|
Net income
|
—
|
|
—
|
|
—
|
|
1,009
|
|
—
|
|
—
|
|
—
|
|
1,009
|
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,811
|
)
|
—
|
|
—
|
|
(1,811
|
)
|
||||||
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $10.91
(1)
per share)
|
5
|
|
—
|
|
54
|
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
51
|
|
||||||
Stock options exercised
|
2
|
|
—
|
|
16
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
|
||||||
Balance at December 31, 2012
|
868
|
|
—
|
|
14,069
|
|
(7,389
|
)
|
(8,577
|
)
|
16
|
|
(234
|
)
|
(2,131
|
)
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
10,540
|
|
—
|
|
—
|
|
—
|
|
10,540
|
|
||||||
Dividends declared
|
—
|
|
—
|
|
—
|
|
(102
|
)
|
—
|
|
—
|
|
—
|
|
(102
|
)
|
||||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
3,447
|
|
—
|
|
—
|
|
3,447
|
|
||||||
Shares of common stock issued and compensation expense associated with equity awards and other (Treasury shares withheld for payment of taxes, $14.97
(1)
per share)
|
5
|
|
—
|
|
90
|
|
—
|
|
—
|
|
2
|
|
(24
|
)
|
66
|
|
||||||
Stock options exercised
|
6
|
|
—
|
|
73
|
|
—
|
|
—
|
|
—
|
|
—
|
|
73
|
|
||||||
Stock purchased and retired
|
(10
|
)
|
—
|
|
(250
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(250
|
)
|
||||||
Balance at December 31, 2013
|
869
|
|
—
|
|
13,982
|
|
3,049
|
|
(5,130
|
)
|
18
|
|
(258
|
)
|
11,643
|
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
659
|
|
—
|
|
—
|
|
—
|
|
659
|
|
||||||
Dividends declared
|
—
|
|
—
|
|
—
|
|
(252
|
)
|
—
|
|
—
|
|
—
|
|
(252
|
)
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,181
|
)
|
—
|
|
—
|
|
(2,181
|
)
|
||||||
Shares of common stock issued and compensation expense associated with equity awards and other (Treasury shares withheld for payment of taxes, $31.46
(1)
per share)
|
3
|
|
—
|
|
81
|
|
—
|
|
—
|
|
2
|
|
(55
|
)
|
26
|
|
||||||
Stock options exercised
|
2
|
|
—
|
|
18
|
|
—
|
|
—
|
|
—
|
|
—
|
|
18
|
|
||||||
Stock purchased and retired
|
(29
|
)
|
—
|
|
(1,100
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,100
|
)
|
||||||
Balance at December 31, 2014
|
845
|
|
$
|
—
|
|
$
|
12,981
|
|
$
|
3,456
|
|
$
|
(7,311
|
)
|
20
|
|
$
|
(313
|
)
|
$
|
8,813
|
|
(1)
|
Weighted average price per share
|
Derivative Type
|
Hedged Risk
|
Classification of Gains and Losses
|
Fuel hedge contracts
|
Increases in jet fuel prices
|
Aircraft fuel and related taxes
|
Interest rate contracts
|
Increases in interest rates
|
Interest expense, net
|
Foreign currency exchange contracts
|
Fluctuations in foreign currency exchange rates
|
Passenger revenue
|
|
Impact of Unrealized Gains and Losses
|
|
Accounting Designation
|
Effective Portion
|
Ineffective Portion
|
Not designated as hedges
|
Change in fair value of hedge is recorded in earnings
|
|
Designated as cash flow hedges
|
Market adjustments are recorded in AOCI
|
Excess, if any, over effective portion of hedge is recorded in other expense
|
Designated as fair value hedges
|
Market adjustments are recorded in long-term debt and capital leases
|
Excess, if any, over effective portion of hedge is recorded in other expense
|
|
|
December 31,
|
|||||
(in millions, except for estimated useful life)
|
Estimated Useful Life
|
2014
|
2013
|
||||
Flight equipment
|
21-30 years
|
$
|
24,313
|
|
$
|
23,373
|
|
Ground property and equipment
|
3-40 years
|
5,198
|
|
4,596
|
|
||
Flight and ground equipment under capital leases
|
Shorter of lease term or estimated useful life
|
1,141
|
|
1,296
|
|
||
Advance payments for equipment
|
|
617
|
|
381
|
|
||
Less: accumulated depreciation and amortization
(1)
|
|
(9,340
|
)
|
(7,792
|
)
|
||
Total property and equipment, net
|
|
$
|
21,929
|
|
$
|
21,854
|
|
(in millions)
|
Airline
|
Refinery
|
|
Intersegment Sales/Other
|
|
Consolidated
|
||||||||
Year Ended December 31, 2014
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
40,217
|
|
$
|
6,959
|
|
|
|
|
$
|
40,362
|
|
||
Sales to airline segment
|
|
|
|
$
|
(1,313
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(5,104
|
)
|
(2)
|
|
|||||||
Sales of refined products to third parties
|
|
|
|
(397
|
)
|
(3)
|
|
|||||||
Operating income
(4)
|
2,110
|
|
96
|
|
|
|
|
2,206
|
|
|||||
Interest expense, net
|
650
|
|
—
|
|
|
|
|
650
|
|
|||||
Depreciation and amortization
|
1,745
|
|
26
|
|
|
|
|
1,771
|
|
|||||
Total assets, end of period
|
53,012
|
|
1,109
|
|
|
|
|
54,121
|
|
|||||
Capital expenditures
|
2,184
|
|
65
|
|
|
|
|
2,249
|
|
|||||
Year Ended December 31, 2013
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
37,773
|
|
$
|
7,003
|
|
|
|
|
$
|
37,773
|
|
||
Sales to airline segment
|
|
|
|
$
|
(1,156
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(5,352
|
)
|
(2)
|
|
|||||||
Sales of refined products to third parties
|
|
|
|
(495
|
)
|
(3)
|
|
|||||||
Operating income (loss)
(4)
|
3,516
|
|
(116
|
)
|
|
|
|
3,400
|
|
|||||
Interest expense, net
|
852
|
|
—
|
|
|
|
|
852
|
|
|||||
Depreciation and amortization
|
1,641
|
|
17
|
|
|
|
|
1,658
|
|
|||||
Total assets, end of period
|
51,080
|
|
1,172
|
|
|
|
|
52,252
|
|
|||||
Capital expenditures
|
2,516
|
|
52
|
|
|
|
|
2,568
|
|
|||||
Year Ended December 31, 2012
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
36,670
|
|
$
|
1,347
|
|
|
|
|
$
|
36,670
|
|
||
Sales to airline segment
|
|
|
|
$
|
(213
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(1,121
|
)
|
(2)
|
|
|||||||
Sales of refined products to third parties
|
|
|
|
(13
|
)
|
(3)
|
|
|||||||
Operating income (loss)
(4)
|
2,238
|
|
(63
|
)
|
|
|
|
2,175
|
|
|||||
Interest expense, net
|
1,005
|
|
—
|
|
|
|
|
1,005
|
|
|||||
Depreciation and amortization
|
1,561
|
|
4
|
|
|
|
|
1,565
|
|
|||||
Total assets, end of period
|
43,386
|
|
1,164
|
|
|
|
|
44,550
|
|
|||||
Capital expenditures
|
1,637
|
|
331
|
|
|
|
|
1,968
|
|
(1)
|
Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery.
|
(2)
|
Represents value of products delivered under our strategic agreements, as discussed above, determined on a market price basis.
|
(3)
|
Represents sales of refined products to third parties. These sales were at or near cost; accordingly, the margin on these sales is de minimis.
|
(4)
|
Includes the impact of pricing arrangements between the airline segment and refinery segment with respect to the refinery's inventory price risk.
|
•
|
Level 1.
Observable inputs such as quoted prices in active markets;
|
•
|
Level 2
. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
|
•
|
Level 3
. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
(a)
|
Market approach
. Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; and
|
(b)
|
Income approach.
Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models).
|
(in millions)
|
December 31, 2014
|
Level 1
|
Level 2
|
Valuation
Technique
|
||||||
Cash equivalents
|
$
|
1,612
|
|
$
|
1,612
|
|
$
|
—
|
|
(a)
|
Short-term investments
|
|
|
|
|
||||||
U.S. government and agency securities
|
59
|
|
—
|
|
59
|
|
(a)
|
|||
Asset- and mortgage-backed securities
|
392
|
|
—
|
|
392
|
|
(a)
|
|||
Corporate obligations
|
749
|
|
—
|
|
749
|
|
(a)
|
|||
Other fixed income securities
|
17
|
|
—
|
|
17
|
|
(a)
|
|||
Restricted cash equivalents and investments
|
37
|
|
37
|
|
—
|
|
(a)
|
|||
Long-term investments
|
118
|
|
90
|
|
28
|
|
(a)(b)
|
|||
Hedge derivatives, net
|
|
|
|
|
||||||
Fuel hedge contracts
|
(1,848
|
)
|
(167
|
)
|
(1,681
|
)
|
(a)(b)
|
|||
Interest rate contracts
|
(7
|
)
|
—
|
|
(7
|
)
|
(a)(b)
|
|||
Foreign currency exchange contracts
|
73
|
|
—
|
|
73
|
|
(a)
|
(in millions)
|
December 31, 2013
|
Level 1
|
Level 2
|
Valuation
Technique
|
||||||
Cash equivalents
|
$
|
2,487
|
|
$
|
2,487
|
|
$
|
—
|
|
(a)
|
Short-term investments
|
|
|
|
|
|
|
||||
U.S. government securities
|
959
|
|
959
|
|
—
|
|
(a)
|
|||
Restricted cash equivalents and investments
|
118
|
|
118
|
|
—
|
|
(a)
|
|||
Long-term investments
|
109
|
|
80
|
|
29
|
|
(a)(b)
|
|||
Hedge derivatives, net
|
|
|
|
|
||||||
Fuel hedge contracts
|
314
|
|
16
|
|
298
|
|
(a)(b)
|
|||
Interest rate contracts
|
(67
|
)
|
—
|
|
(67
|
)
|
(a)(b)
|
|||
Foreign currency exchange contracts
|
257
|
|
—
|
|
257
|
|
(a)
|
(1)
|
See
Note 11
, “Employee Benefit Plans,” for fair value of benefit plan assets.
|
•
|
Fuel Contracts.
Our fuel hedge portfolio consists of options, swaps and futures. The hedge contracts include crude oil, diesel fuel and jet fuel, as these commodities are highly correlated with the price of jet fuel that we consume. Option contracts are valued under an income approach using option pricing models based on data either readily observable in public markets, derived from public markets or provided by counterparties who regularly trade in public markets.
Volatilities used in these valuations ranged from 26% to 57% depending on the maturity dates, underlying commodities and strike prices of the option contracts.
Swap contracts are valued under an income approach using a discounted cash flow model based on data either readily observable or derived from public markets. Discount rates used in these valuations vary with the maturity dates of the respective contracts and are based on LIBOR. Futures contracts and options on futures contracts are traded on a public exchange and valued based on quoted market prices.
|
•
|
Interest Rate Contracts.
Our interest rate derivatives consist of swap contracts and are valued primarily based on data readily observable in public markets.
|
•
|
Foreign Currency Exchange Contracts.
Our foreign currency derivatives consist of Japanese yen and Canadian dollar forward contracts and are valued based on data readily observable in public markets.
|
(in millions)
|
Available-
For-Sale
|
||||
December 31, 2014
|
|
||||
Due in one year or less
|
$
|
175
|
|
||
Due after one year through three years
|
791
|
|
|||
Due after three years through five years
|
163
|
|
|||
Due after five years
|
88
|
|
|||
Total
|
$
|
1,217
|
|
(in millions)
|
Notional Balance
|
Final Maturity Date
|
Hedge Derivatives Asset
|
Other Noncurrent Assets
|
Hedge Derivatives Liability
|
Other Noncurrent Liabilities
|
Hedge Derivatives, net
|
|||||||||||||
Designated as hedges
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts (fair value hedges)
|
$
|
416
|
|
U.S. dollars
|
August 2022
|
5
|
|
—
|
|
—
|
|
(12
|
)
|
(7
|
)
|
|||||
Foreign currency exchange contracts
|
77,576
|
|
Japanese yen
|
October 2017
|
25
|
|
49
|
|
(1
|
)
|
—
|
|
73
|
|
||||||
511
|
|
Canadian dollars
|
||||||||||||||||||
Not designated as hedges
|
|
|
|
|
|
|
|
|
||||||||||||
Fuel hedge contracts
|
8,604
|
|
gallons - crude oil, diesel and jet fuel
|
December 2016
|
1,048
|
|
3
|
|
(2,771
|
)
|
(128
|
)
|
(1,848
|
)
|
||||||
Total derivative contracts
|
|
|
$
|
1,078
|
|
$
|
52
|
|
$
|
(2,772
|
)
|
$
|
(140
|
)
|
$
|
(1,782
|
)
|
(in millions)
|
Hedge Derivatives Asset
|
Other Noncurrent Assets
|
Hedge Derivatives Liability
|
Other Noncurrent Liabilities
|
Hedge Derivatives, Net
|
||||||||||
December 31, 2014
|
|
|
|
|
|
||||||||||
Net derivative contracts
|
$
|
29
|
|
$
|
49
|
|
$
|
(1,723
|
)
|
$
|
(137
|
)
|
$
|
(1,782
|
)
|
December 31, 2013
|
|
|
|
|
|
||||||||||
Net derivative contracts
|
$
|
456
|
|
$
|
116
|
|
$
|
(19
|
)
|
$
|
(49
|
)
|
$
|
504
|
|
|
Effective Portion Reclassified from AOCI to Earnings
|
|
Effective Portion Recognized in Other Comprehensive Income (Loss)
|
||||||||||||||||
|
Year Ended December 31,
|
||||||||||||||||||
(in millions)
|
2014
|
2013
|
2012
|
|
2014
|
2013
|
2012
|
||||||||||||
Fuel hedge contracts
|
$
|
—
|
|
$
|
—
|
|
$
|
15
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(15
|
)
|
Interest rate contracts
|
(31
|
)
|
—
|
|
(5
|
)
|
|
38
|
|
28
|
|
14
|
|
||||||
Foreign currency exchange contracts
|
158
|
|
135
|
|
(25
|
)
|
|
(34
|
)
|
133
|
|
212
|
|
||||||
Total designated
|
$
|
127
|
|
$
|
135
|
|
$
|
(15
|
)
|
|
$
|
4
|
|
$
|
161
|
|
$
|
211
|
|
|
Carrying Amount at December 31,
|
|||||
(in millions)
|
2014
|
2013
|
||||
International routes and slots
|
$
|
2,287
|
|
$
|
2,287
|
|
Delta tradename
|
850
|
|
850
|
|
||
SkyTeam related assets
|
661
|
|
661
|
|
||
Domestic slots
|
622
|
|
622
|
|
||
Total
|
$
|
4,420
|
|
$
|
4,420
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||
(in millions)
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
||||||||
Marketing agreements
|
$
|
730
|
|
$
|
(648
|
)
|
|
$
|
730
|
|
$
|
(602
|
)
|
Contracts
|
193
|
|
(92
|
)
|
|
193
|
|
(83
|
)
|
||||
Other
|
53
|
|
(53
|
)
|
|
53
|
|
(53
|
)
|
||||
Total
|
$
|
976
|
|
$
|
(793
|
)
|
|
$
|
976
|
|
$
|
(738
|
)
|
|
Maturity
|
Interest Rate(s) Per Annum at
|
December 31,
|
|||||||||
(in millions)
|
Dates
|
December 31, 2014
|
2014
|
2013
|
||||||||
Pacific Facilities
(1)(2)
:
|
|
|
|
|
|
|
|
|
||||
Pacific Term Loan B-1
(3)
|
October 2018
|
3.25%
|
variable
(6)
|
$
|
1,078
|
|
$
|
1,089
|
|
|||
Pacific Term Loan B-2
(3)
|
April 2016
|
2.41%
|
variable
(6)
|
392
|
|
396
|
|
|||||
Pacific Revolving Facility
|
October 2017
|
undrawn
|
variable
(6)
|
—
|
|
—
|
|
|||||
2011 Credit Facilities
(1)(4)
:
|
|
|
|
|
|
|
|
|
||||
Term Loan Facility
(3)
|
April 2017
|
3.25%
|
variable
(6)
|
1,327
|
|
1,341
|
|
|||||
Revolving Credit Facility
|
April 2016
|
undrawn
|
variable
(6)
|
—
|
|
—
|
|
|||||
Other secured financing arrangements:
|
|
|
|
|
|
|
|
|
||||
Certificates
(5)(7)
|
2015
|
to
|
2023
|
4.75%
|
to
|
9.75%
|
3,226
|
|
3,834
|
|
||
Aircraft financings
(5)(7)
|
2015
|
to
|
2026
|
0.62%
|
to
|
6.76%
|
2,988
|
|
3,787
|
|
||
Other financings
(5)(8)
|
2015
|
to
|
2031
|
0.00%
|
to
|
5.25%
|
305
|
|
627
|
|
||
Other revolving credit facilities
(1)
|
2015
|
to
|
2017
|
undrawn
|
variable
(6)
|
—
|
|
—
|
|
|||
Total secured debt
|
|
|
|
|
|
|
9,316
|
|
11,074
|
|
||
Other unsecured debt
(5)
|
2015
|
to
|
2035
|
3.01%
|
to
|
9.00%
|
153
|
|
154
|
|
||
Total secured and unsecured debt
|
|
|
|
|
|
|
9,469
|
|
11,228
|
|
||
Unamortized discount, net
|
|
|
|
|
|
|
(90
|
)
|
(383
|
)
|
||
Total debt
|
|
|
|
|
|
|
9,379
|
|
10,845
|
|
||
Less: current maturities
|
|
|
|
|
|
|
(1,109
|
)
|
(1,449
|
)
|
||
Total long-term debt
|
|
|
|
|
|
|
$
|
8,270
|
|
$
|
9,396
|
|
(1)
|
Guaranteed by substantially all of our domestic subsidiaries (the "Guarantors").
|
(2)
|
Secured by a first lien on our Pacific route authorities and certain related assets.
|
(3)
|
Borrowings must be repaid annually in an amount equal to
1%
per year of the original principal amount (paid in equal quarterly installments), with the balance due on the final maturity date.
|
(4)
|
Secured by liens on certain of our and the Guarantors' assets, including accounts receivable, flight equipment, ground property and equipment, certain aircraft, spare engines and parts, certain non-Pacific international routes, domestic slots, real estate and certain investments. These assets also secure
$250 million
of certain fuel hedging obligations pari passu (i.e., on equal priority) with the term loan and revolver.
|
(5)
|
Due in installments.
|
(6)
|
Interest rate equal to LIBOR (generally subject to a floor) or another index rate, in each case plus a specified margin. Additionally, certain aircraft and other financings are comprised of variable rate debt.
|
(7)
|
Secured by aircraft.
|
(8)
|
Primarily includes loans secured by spare parts, spare engines and real estate.
|
|
Pacific Facilities
|
2011 Credit Facilities
|
Minimum fixed charge coverage ratio
(1)
|
1.20:1
|
1.20:1
|
Minimum unrestricted liquidity
|
|
|
Unrestricted cash and permitted investments
|
n/a
|
$1.0 billion
|
Unrestricted cash, permitted investments and undrawn revolving credit facilities
|
$2.0 billion
|
$2.0 billion
|
Minimum collateral coverage ratio
(2)
|
1.60:1
|
1.67:1
(3)
|
(1)
|
Defined as the ratio of (a) earnings before interest, taxes, depreciation, amortization and aircraft rent and other adjustments to net income to (b) the sum of gross cash interest expense (including the interest portion of our capitalized lease obligations) and cash aircraft rent expense, for the 12-month period ending as of the last day of each fiscal quarter.
|
(2)
|
Defined as the ratio of (a) certain of the collateral that meets specified eligibility standards to (b) the sum of the aggregate outstanding obligations and certain other obligations.
|
(3)
|
Excluding the non-Pacific international routes from the collateral for purposes of the calculation, the required minimum collateral coverage ratio is
0.75:1
.
|
(in millions)
|
|
||
Revolving Credit Facility
|
$
|
1,225
|
|
Pacific Revolving Credit Facility
|
450
|
|
|
Other revolving credit facilities
|
228
|
|
|
Total availability under revolving credit facilities
|
$
|
1,903
|
|
Years Ending December 31,
(in millions)
|
Total Secured and Unsecured Debt
|
Amortization of Debt Discount, net
|
|
||||||
2015
|
$
|
1,111
|
|
$
|
(19
|
)
|
|
||
2016
|
1,326
|
|
(21
|
)
|
|
||||
2017
|
2,137
|
|
(19
|
)
|
|
||||
2018
|
2,028
|
|
(15
|
)
|
|
||||
2019
|
1,158
|
|
(12
|
)
|
|
||||
Thereafter
|
1,709
|
|
(4
|
)
|
|
||||
Total
|
$
|
9,469
|
|
$
|
(90
|
)
|
$
|
9,379
|
|
|
December 31,
|
|||||
(in millions)
|
2014
|
2013
|
||||
Total debt at par value
|
$
|
9,469
|
|
$
|
11,228
|
|
Unamortized discount, net
|
(90
|
)
|
(383
|
)
|
||
Net carrying amount
|
$
|
9,379
|
|
$
|
10,845
|
|
Fair value
|
$
|
9,800
|
|
$
|
11,600
|
|
Years Ending December 31,
(in millions)
|
Total
|
||
2015
|
$
|
157
|
|
2016
|
139
|
|
|
2017
|
97
|
|
|
2018
|
51
|
|
|
2019
|
33
|
|
|
Thereafter
|
42
|
|
|
Total minimum lease payments
|
519
|
|
|
Less: amount of lease payments representing interest
|
(121
|
)
|
|
Present value of future minimum capital lease payments
|
398
|
|
|
Less: current obligations under capital leases
|
(107
|
)
|
|
Long-term capital lease obligations
|
$
|
291
|
|
Years Ending December 31,
(in millions)
|
Delta Lease Payments
(1)
|
Contract Carrier Aircraft Lease Payments
(2)
|
Total
|
||||||
2015
|
$
|
1,363
|
|
$
|
344
|
|
$
|
1,707
|
|
2016
|
1,187
|
|
306
|
|
1,493
|
|
|||
2017
|
1,056
|
|
267
|
|
1,323
|
|
|||
2018
|
881
|
|
239
|
|
1,120
|
|
|||
2019
|
747
|
|
182
|
|
929
|
|
|||
Thereafter
|
5,873
|
|
296
|
|
6,169
|
|
|||
Total minimum lease payments
|
$
|
11,107
|
|
$
|
1,634
|
|
$
|
12,741
|
|
(1)
|
Includes payments accounted for as construction obligations. See
Note 6
.
|
(2)
|
Represents the minimum lease obligations under our Contract Carrier agreements with Compass Airlines, Inc., ExpressJet Airlines, Inc., GoJet Airlines, LLC, Shuttle America Corporation (“Shuttle America”) and SkyWest Airlines, Inc.
|
|
Pension Benefits
|
|
Other Postretirement and Postemployment Benefits
|
||||||||||
|
December 31,
|
|
December 31,
|
||||||||||
(in millions)
|
2014
|
2013
|
|
2014
|
2013
|
||||||||
Benefit obligation at beginning of period
|
$
|
19,060
|
|
$
|
21,489
|
|
|
$
|
3,205
|
|
$
|
3,582
|
|
Service cost
|
—
|
|
—
|
|
|
52
|
|
49
|
|
||||
Interest cost
|
928
|
|
861
|
|
|
155
|
|
143
|
|
||||
Actuarial loss (gain)
|
2,923
|
|
(2,212
|
)
|
|
338
|
|
(301
|
)
|
||||
Benefits paid, including lump sums and annuities
|
(1,055
|
)
|
(1,078
|
)
|
|
(307
|
)
|
(313
|
)
|
||||
Participant contributions
|
—
|
|
—
|
|
|
44
|
|
45
|
|
||||
Benefit obligation at end of period
(1)
|
$
|
21,856
|
|
$
|
19,060
|
|
|
$
|
3,487
|
|
$
|
3,205
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of period
|
$
|
8,937
|
|
$
|
8,196
|
|
|
$
|
1,043
|
|
$
|
1,004
|
|
Actual gain on plan assets
|
556
|
|
905
|
|
|
57
|
|
129
|
|
||||
Employer contributions
|
917
|
|
914
|
|
|
160
|
|
191
|
|
||||
Participant contributions
|
—
|
|
—
|
|
|
44
|
|
45
|
|
||||
Benefits paid, including lump sums and annuities
|
(1,055
|
)
|
(1,078
|
)
|
|
(322
|
)
|
(326
|
)
|
||||
Fair value of plan assets at end of period
|
$
|
9,355
|
|
$
|
8,937
|
|
|
$
|
982
|
|
$
|
1,043
|
|
|
|
|
|
|
|
||||||||
Funded status at end of period
|
$
|
(12,501
|
)
|
$
|
(10,123
|
)
|
|
$
|
(2,505
|
)
|
$
|
(2,162
|
)
|
(1)
|
At the end of each year presented, our accumulated benefit obligations for our pension plans are equal to the benefit obligations shown above.
|
|
Pension Benefits
|
|
Other Postretirement and Postemployment Benefits
|
||||||||||
|
December 31,
|
|
December 31,
|
||||||||||
(in millions)
|
2014
|
2013
|
|
2014
|
2013
|
||||||||
Current liabilities
|
$
|
(28
|
)
|
$
|
(22
|
)
|
|
$
|
(139
|
)
|
$
|
(139
|
)
|
Noncurrent liabilities
|
(12,473
|
)
|
(10,101
|
)
|
|
(2,366
|
)
|
(2,023
|
)
|
||||
Total liabilities
|
$
|
(12,501
|
)
|
$
|
(10,123
|
)
|
|
$
|
(2,505
|
)
|
$
|
(2,162
|
)
|
|
|
|
|
|
|
||||||||
Net actuarial loss
|
$
|
(8,409
|
)
|
$
|
(5,349
|
)
|
|
$
|
(465
|
)
|
$
|
(103
|
)
|
Prior service credit
|
—
|
|
—
|
|
|
135
|
|
161
|
|
||||
Total accumulated other comprehensive income (loss), pre-tax
|
$
|
(8,409
|
)
|
$
|
(5,349
|
)
|
|
$
|
(330
|
)
|
$
|
58
|
|
|
Pension Benefits
|
|
Other Postretirement and
Postemployment Benefits
|
||||||||||||||||
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||
(in millions)
|
2014
|
2013
|
2012
|
|
2014
|
2013
|
2012
|
||||||||||||
Service cost
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
52
|
|
$
|
49
|
|
$
|
56
|
|
Interest cost
|
928
|
|
861
|
|
930
|
|
|
155
|
|
143
|
|
164
|
|
||||||
Expected return on plan assets
|
(829
|
)
|
(734
|
)
|
(705
|
)
|
|
(84
|
)
|
(84
|
)
|
(77
|
)
|
||||||
Amortization of prior service credit
|
—
|
|
—
|
|
—
|
|
|
(26
|
)
|
(26
|
)
|
(21
|
)
|
||||||
Recognized net actuarial loss
|
134
|
|
221
|
|
143
|
|
|
4
|
|
25
|
|
23
|
|
||||||
Settlements
|
—
|
|
6
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Special termination benefits
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
116
|
|
||||||
Net periodic cost
|
$
|
233
|
|
$
|
354
|
|
$
|
368
|
|
|
$
|
101
|
|
$
|
107
|
|
$
|
261
|
|
Defined contribution plan costs
|
551
|
|
490
|
|
426
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Total cost
|
$
|
784
|
|
$
|
844
|
|
$
|
794
|
|
|
$
|
101
|
|
$
|
107
|
|
$
|
261
|
|
|
December 31,
|
|||
Benefit Obligations
(1)(2)
|
2014
|
2013
|
||
Weighted average discount rate
|
4.14
|
%
|
5.01
|
%
|
|
Year Ended December 31,
|
|||||
Net Periodic Cost
(2)
|
2014
|
2013
|
2012
|
|||
Weighted average discount rate - pension benefit
|
4.99
|
%
|
4.10
|
%
|
4.95
|
%
|
Weighted average discount rate - other postretirement benefit
(3)
|
4.88
|
%
|
4.00
|
%
|
4.63
|
%
|
Weighted average discount rate - other postemployment benefit
|
5.00
|
%
|
4.13
|
%
|
4.88
|
%
|
Weighted average expected long-term rate of return on plan assets
|
8.94
|
%
|
8.94
|
%
|
8.94
|
%
|
Assumed healthcare cost trend rate
(4)
|
7.00
|
%
|
7.00
|
%
|
7.00
|
%
|
(1)
|
Our
2014
and
2013
benefit obligations are measured using a mortality table projected to
2022
and
2017
, respectively.
|
(2)
|
Future compensation levels do not impact our frozen defined benefit pension plans or other postretirement plans and impact only a small portion of our other postemployment liability.
|
(3)
|
Our assumptions reflect various remeasurements of certain portions of our obligations and represent the weighted average of the assumptions used for each measurement date.
|
(4)
|
Assumed healthcare cost trend rate at
December 31, 2014
is assumed to decline gradually to
5.00%
by
2024
and remain level thereafter.
|
(in millions)
|
1% Increase
|
1% Decrease
|
||||
Increase (decrease) in total service and interest cost
|
$
|
1
|
|
$
|
(2
|
)
|
Increase (decrease) in the accumulated plan benefit obligation
|
14
|
|
(28
|
)
|
(in millions)
|
Pension Benefits
|
Other Postretirement and Postemployment Benefits
|
||||
2015
|
$
|
1,124
|
|
$
|
278
|
|
2016
|
1,133
|
|
272
|
|
||
2017
|
1,153
|
|
265
|
|
||
2018
|
1,173
|
|
256
|
|
||
2019
|
1,191
|
|
257
|
|
||
2020-2024
|
6,229
|
|
1,305
|
|
|
December 31, 2014
|
|
December 31, 2013
|
|
|
||||||||||||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Valuation Technique
|
||||||||||||||||
Equities and equity-related instruments
|
$
|
699
|
|
$
|
1,486
|
|
$
|
—
|
|
$
|
2,185
|
|
|
$
|
1,774
|
|
$
|
2,391
|
|
$
|
—
|
|
$
|
4,165
|
|
|
(a)
|
Fixed income and fixed income-related instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Sovereign fixed income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
45
|
|
—
|
|
45
|
|
|
(a)(b)
|
|||||||||
Credit-related fixed income
|
—
|
|
470
|
|
124
|
|
594
|
|
|
—
|
|
525
|
|
59
|
|
584
|
|
|
(a)(b)
|
||||||||
Other fixed income
|
18
|
|
617
|
|
—
|
|
635
|
|
|
—
|
|
870
|
|
—
|
|
870
|
|
|
(a)(b)
|
||||||||
Private equity
|
—
|
|
—
|
|
1,213
|
|
1,213
|
|
|
—
|
|
—
|
|
1,366
|
|
1,366
|
|
|
(a)(b)
|
||||||||
Real assets
|
—
|
|
—
|
|
663
|
|
663
|
|
|
—
|
|
—
|
|
688
|
|
688
|
|
|
(a)(b)
|
||||||||
Hedge funds
|
31
|
|
—
|
|
2,214
|
|
2,245
|
|
|
—
|
|
—
|
|
552
|
|
552
|
|
|
(a)(b)
|
||||||||
Cash equivalents
|
4
|
|
2,428
|
|
—
|
|
2,432
|
|
|
28
|
|
1,582
|
|
—
|
|
1,610
|
|
|
(a)
|
||||||||
Other
|
—
|
|
—
|
|
384
|
|
384
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(a)(b)
|
||||||||
Total benefit plan assets
|
$
|
752
|
|
$
|
5,001
|
|
$
|
4,598
|
|
$
|
10,351
|
|
|
$
|
1,802
|
|
$
|
5,413
|
|
$
|
2,665
|
|
$
|
9,880
|
|
|
|
(in millions)
|
Private Equity
|
Real Estate
|
Hedge Funds
|
Fixed Income
|
Other
|
Total
|
||||||||||||
Balance at January 1, 2013
|
$
|
1,466
|
|
$
|
613
|
|
$
|
484
|
|
$
|
13
|
|
$
|
—
|
|
$
|
2,576
|
|
Actual return on plan assets:
|
|
|
|
|
|
|
||||||||||||
Related to assets still held at the reporting date
|
98
|
|
61
|
|
49
|
|
2
|
|
—
|
|
210
|
|
||||||
Related to assets sold during the period
|
64
|
|
19
|
|
—
|
|
—
|
|
—
|
|
83
|
|
||||||
Purchases, sales and settlements, net
|
(262
|
)
|
(5
|
)
|
19
|
|
44
|
|
—
|
|
(204
|
)
|
||||||
Balance at December 31, 2013
|
1,366
|
|
688
|
|
552
|
|
59
|
|
—
|
|
2,665
|
|
||||||
Actual return on plan assets:
|
|
|
|
|
|
|
||||||||||||
Related to assets still held at the reporting date
|
(116
|
)
|
(39
|
)
|
167
|
|
(17
|
)
|
(9
|
)
|
(14
|
)
|
||||||
Related to assets sold during the period
|
107
|
|
37
|
|
38
|
|
1
|
|
—
|
|
183
|
|
||||||
Purchases, sales and settlements, net
|
(144
|
)
|
(23
|
)
|
1,457
|
|
81
|
|
393
|
|
1,764
|
|
||||||
Balance at December 31, 2014
|
$
|
1,213
|
|
$
|
663
|
|
$
|
2,214
|
|
$
|
124
|
|
$
|
384
|
|
$
|
4,598
|
|
Years Ending December 31,
(in millions)
|
Total
|
||
2015
|
$
|
1,480
|
|
2016
|
1,970
|
|
|
2017
|
2,390
|
|
|
2018
|
2,230
|
|
|
2019
|
1,060
|
|
|
Thereafter
|
4,820
|
|
|
Total
|
$
|
13,950
|
|
(1)
|
These amounts exclude Contract Carrier payments accounted for as operating leases of aircraft, which are described in
Note 9
. The contingencies described below under “Contingencies Related to Termination of Contract Carrier Agreements” are also excluded from this table.
|
Employee Group
|
Approximate Number of Active Employees Represented
|
Union
|
Date on which Collective Bargaining Agreement Becomes Amendable
|
Delta Pilots
|
11,530
|
ALPA
|
December 31, 2015
|
Delta Flight Superintendents (Dispatchers)
|
380
|
PAFCA
|
March 31, 2018
|
Endeavor Air Pilots
|
1,300
|
ALPA
|
January 1, 2020
|
Endeavor Air Flight Attendants
|
1,000
|
AFA
|
December 31, 2018
|
Endeavor Air Dispatchers
|
60
|
DISTWU
|
December 31, 2018
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2014
|
2013
|
2012
|
||||||
Current tax (provision) benefit:
|
|
|
|
|
|
|
|||
Federal
|
$
|
21
|
|
$
|
24
|
|
$
|
—
|
|
State and local
|
(9
|
)
|
(3
|
)
|
15
|
|
|||
International
|
(11
|
)
|
1
|
|
(14
|
)
|
|||
Deferred tax (provision) benefit:
|
|
|
|
|
|
|
|||
Federal
|
(424
|
)
|
7,197
|
|
(4
|
)
|
|||
State and local
|
10
|
|
794
|
|
(13
|
)
|
|||
Income tax (provision) benefit
|
$
|
(413
|
)
|
$
|
8,013
|
|
$
|
(16
|
)
|
|
Year Ended December 31,
|
|||||
|
2014
|
2013
|
2012
|
|||
U.S. federal statutory income tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
State taxes, net of federal benefit
|
2.00
|
|
3.0
|
|
3.3
|
|
Decrease in valuation allowance
|
(2.40
|
)
|
(367.5
|
)
|
(40.8
|
)
|
Income tax allocation
|
—
|
|
12.7
|
|
—
|
|
Other
|
3.90
|
|
(0.4
|
)
|
4.0
|
|
Effective income tax rate
|
38.50
|
%
|
(317.2
|
)%
|
1.5
|
%
|
|
December 31,
|
|||||
(in millions)
|
2014
|
2013
|
||||
Deferred tax assets:
|
|
|
||||
Net operating loss carryforwards
|
$
|
4,782
|
|
$
|
6,024
|
|
Pension, postretirement and other benefits
|
6,033
|
|
4,982
|
|
||
Fuel derivatives MTM adjustments
|
777
|
|
—
|
|
||
AMT credit carryforward
|
357
|
|
378
|
|
||
Deferred revenue
|
1,824
|
|
1,965
|
|
||
Other
|
659
|
|
698
|
|
||
Valuation allowance
|
(46
|
)
|
(177
|
)
|
||
Total deferred tax assets
|
$
|
14,386
|
|
$
|
13,870
|
|
Deferred tax liabilities:
|
|
|
||||
Depreciation
|
$
|
4,663
|
|
$
|
4,799
|
|
Intangible assets
|
1,684
|
|
1,704
|
|
||
Other
|
444
|
|
639
|
|
||
Total deferred tax liabilities
|
$
|
6,791
|
|
$
|
7,142
|
|
|
|
|
||||
Net deferred tax assets
|
$
|
7,595
|
|
$
|
6,728
|
|
|
December 31,
|
|||||
(in millions)
|
2014
|
2013
|
||||
Current deferred tax assets, net
|
$
|
3,275
|
|
$
|
1,736
|
|
Noncurrent deferred tax assets, net
|
4,320
|
|
4,992
|
|
||
Total deferred tax assets, net
|
$
|
7,595
|
|
$
|
6,728
|
|
(in millions)
|
2014
|
2013
|
2012
|
||||||
Valuation allowance at beginning of period
|
$
|
177
|
|
$
|
10,963
|
|
$
|
10,705
|
|
Income tax provision
|
(9
|
)
|
(975
|
)
|
(432
|
)
|
|||
Other comprehensive income tax benefit
|
(3
|
)
|
(1,186
|
)
|
690
|
|
|||
Expirations
|
(91
|
)
|
—
|
|
—
|
|
|||
Release of valuation allowance
|
(28
|
)
|
(8,310
|
)
|
—
|
|
|||
Other
|
—
|
|
(315
|
)
|
—
|
|
|||
Valuation allowance at end of period
|
$
|
46
|
|
$
|
177
|
|
$
|
10,963
|
|
(in millions)
|
Pension and Other Benefits Liabilities
|
Derivative Contracts
(3)
|
Investments
|
Total
|
||||||||
Balance at January 1, 2012
|
$
|
(6,288
|
)
|
$
|
(474
|
)
|
(4
|
)
|
$
|
(6,766
|
)
|
|
Changes in value (net of tax effect of $0)
|
(2,168
|
)
|
196
|
|
(3
|
)
|
(1,975
|
)
|
||||
Reclassification into earnings (net of tax effect of $0)
(1)
|
149
|
|
15
|
|
—
|
|
164
|
|
||||
Balance at December 31, 2012
|
(8,307
|
)
|
(263
|
)
|
(7
|
)
|
(8,577
|
)
|
||||
Changes in value (net of tax effect of $0)
|
2,760
|
|
296
|
|
(19
|
)
|
3,037
|
|
||||
Reclassification into earnings (net of tax effect of $321)
(1)
|
224
|
|
186
|
|
—
|
|
410
|
|
||||
Balance at December 31, 2013
(2)
|
(5,323
|
)
|
219
|
|
(26
|
)
|
(5,130
|
)
|
||||
Changes in value (net of tax effect of $1,276)
|
(2,267
|
)
|
83
|
|
10
|
|
(2,174
|
)
|
||||
Reclassification into earnings (net of tax effect of $4)
(1)
|
73
|
|
(80
|
)
|
—
|
|
(7
|
)
|
||||
Balance at December 31, 2014
(2)
|
$
|
(7,517
|
)
|
$
|
222
|
|
$
|
(16
|
)
|
$
|
(7,311
|
)
|
(1)
|
Amounts reclassified from AOCI for pension and other benefits liabilities are recorded in salaries and related costs in the Consolidated Statements of Operations. Amounts reclassified from AOCI for derivative contracts designated as foreign currency cash flow hedges and interest rate cash flow hedges are recorded in passenger revenue and interest expense, net, respectively, in the Consolidated Statements of Operations. Amounts reclassified from AOCI for investments are recorded in interest income in the Consolidated Statements of Operations.
|
(2)
|
Includes
$1.9 billion
of deferred income tax expense, primarily related to pension obligations, that will not be recognized in net income until the pension obligations are fully extinguished, which is not expected to occur for at least 25 years.
|
(3)
|
Included
$321 million
of deferred income tax expense that remained in AOCI until December 2013 when all amounts in AOCI that related to derivative contracts designated as fuel cash flow hedges were recognized in the Consolidated Statement of Operations.
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2014
|
2013
|
2012
|
||||||
Fleet, facilities and other
|
$
|
758
|
|
$
|
402
|
|
$
|
293
|
|
Severance and related costs
|
71
|
|
—
|
|
237
|
|
|||
Routes and slots
|
—
|
|
—
|
|
(78
|
)
|
|||
Settlements
|
(113
|
)
|
—
|
|
—
|
|
|||
Total restructuring and other items
|
$
|
716
|
|
$
|
402
|
|
$
|
452
|
|
|
Severance and Related Costs
|
|
Lease Restructuring
|
||||||||||||||||
(in millions)
|
2014
|
2013
|
2012
|
|
2014
|
2013
|
2012
|
||||||||||||
Liability at beginning of period
|
$
|
—
|
|
$
|
49
|
|
$
|
46
|
|
|
$
|
168
|
|
$
|
77
|
|
$
|
64
|
|
Additional costs and expenses
|
71
|
|
—
|
|
126
|
|
|
349
|
|
114
|
|
45
|
|
||||||
Payments
|
(29
|
)
|
(46
|
)
|
(123
|
)
|
|
(55
|
)
|
(18
|
)
|
(32
|
)
|
||||||
Other
|
—
|
|
(3
|
)
|
—
|
|
|
—
|
|
(5
|
)
|
—
|
|
||||||
Liability at end of period
|
$
|
42
|
|
$
|
—
|
|
$
|
49
|
|
|
$
|
462
|
|
$
|
168
|
|
$
|
77
|
|
|
Year Ended December 31,
|
||||||||
(in millions, except per share data)
|
2014
|
2013
|
2012
|
||||||
Net income
|
$
|
659
|
|
$
|
10,540
|
|
$
|
1,009
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
836
|
|
849
|
|
845
|
|
|||
Dilutive effect of share-based awards
|
9
|
|
9
|
|
5
|
|
|||
Diluted weighted average shares outstanding
|
845
|
|
858
|
|
850
|
|
|||
|
|
|
|
||||||
Basic earnings per share
|
$
|
0.79
|
|
$
|
12.41
|
|
$
|
1.20
|
|
Diluted earnings per share
|
$
|
0.78
|
|
$
|
12.29
|
|
$
|
1.19
|
|
|
Three Months Ended,
|
|||||||||||
(in millions, except per share data)
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||
2014
|
|
|
|
|
||||||||
Operating revenue
|
$
|
8,916
|
|
$
|
10,621
|
|
$
|
11,178
|
|
$
|
9,647
|
|
Operating income (loss)
|
620
|
|
1,579
|
|
835
|
|
(828
|
)
|
||||
Net income (loss)
|
213
|
|
801
|
|
357
|
|
(712
|
)
|
||||
Basic earnings (loss) per share
|
$
|
0.25
|
|
$
|
0.95
|
|
$
|
0.43
|
|
$
|
(0.86
|
)
|
Diluted earnings (loss) per share
|
$
|
0.25
|
|
$
|
0.94
|
|
$
|
0.42
|
|
$
|
(0.86
|
)
|
2013
|
|
|
|
|
||||||||
Operating revenue
|
$
|
8,500
|
|
$
|
9,707
|
|
$
|
10,490
|
|
$
|
9,076
|
|
Operating income
|
222
|
|
914
|
|
1,563
|
|
701
|
|
||||
Net income
|
7
|
|
685
|
|
1,369
|
|
8,479
|
|
||||
Basic earnings per share
|
$
|
0.01
|
|
$
|
0.81
|
|
$
|
1.61
|
|
$
|
10.02
|
|
Diluted earnings per share
|
$
|
0.01
|
|
$
|
0.80
|
|
$
|
1.59
|
|
$
|
9.89
|
|
|
Three Months Ended,
|
|||||||||||
(in millions)
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||
2014
|
|
|
|
|
||||||||
MTM adjustments
|
$
|
(34
|
)
|
$
|
1
|
|
$
|
(347
|
)
|
$
|
(1,966
|
)
|
Restructuring and other
|
(49
|
)
|
(30
|
)
|
(570
|
)
|
(67
|
)
|
||||
Loss on extinguishment of debt
|
(18
|
)
|
(111
|
)
|
(134
|
)
|
(5
|
)
|
||||
Virgin Atlantic MTM adjustments
|
(8
|
)
|
—
|
|
(7
|
)
|
(119
|
)
|
||||
Total loss
|
$
|
(109
|
)
|
$
|
(140
|
)
|
$
|
(1,058
|
)
|
$
|
(2,157
|
)
|
|
|
|
|
|
||||||||
2013
|
|
|
|
|
|
|
|
|||||
Restructuring and other
|
$
|
(102
|
)
|
$
|
(34
|
)
|
$
|
(128
|
)
|
$
|
(160
|
)
|
MTM adjustments
|
24
|
|
(125
|
)
|
285
|
|
92
|
|
||||
Release of tax valuation allowance
|
—
|
|
—
|
|
—
|
|
7,989
|
|
||||
Total (loss) income
|
$
|
(78
|
)
|
$
|
(159
|
)
|
$
|
157
|
|
$
|
7,921
|
|
Atlanta, Georgia
|
/s/ Ernst & Young LLP
|
February 10, 2015
|
|
Plan Category
|
(a) No. of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(1)
|
(b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
(2)
|
(c) No. of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
(3)
|
||||
Equity compensation plans approved by securities holders
|
7,954,302
|
|
$
|
10.99
|
|
27,331,339
|
|
Equity compensation plans not approved by securities holders
|
—
|
|
—
|
|
—
|
|
|
Total
|
7,954,302
|
|
$
|
10.99
|
|
27,331,339
|
|
(1)
|
Includes a maximum of 1,162,770 shares of common stock that may be issued upon the achievement of certain performance conditions under outstanding performance share awards as of
December 31, 2014
.
|
(2)
|
Includes performance share awards, which do not have exercise prices. The weighted average exercise price of options is $12.88.
|
(3)
|
Reflects shares remaining available for issuance under Delta's 2007 Performance Compensation Plan. If any shares of our common stock are covered by an award under the 2007 Plan that is canceled, forfeited or otherwise terminates without delivery of shares (including shares surrendered or withheld for payment of the exercise price of an award or taxes related to an award), then such shares will again be available for issuance under the 2007 Plan. Because 5,010,476 shares of restricted stock remain unvested and subject to forfeiture, these shares could again be available for issuance.
|
|
DELTA AIR LINES, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Richard H. Anderson
|
|
|
|
Richard H. Anderson
|
|
|
|
Chief Executive Officer
|
|
Signature
|
|
Title
|
|
|
|
/s/ Richard H. Anderson
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
Richard H. Anderson
|
|
|
|
|
|
/s/ Paul A. Jacobson
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
Paul A. Jacobson
|
|
|
|
|
|
/s/ Craig M. Meynard
|
|
Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
Craig M. Meynard
|
|
|
|
|
|
/s/ Edward H. Bastian
|
|
President and Director
|
Edward H. Bastian
|
|
|
|
|
|
/s/ Francis S. Blake
|
|
Director
|
Francis S. Blake
|
|
|
|
|
|
/s/ Roy J. Bostock
|
|
Director
|
Roy J. Bostock
|
|
|
|
|
|
/s/ John S. Brinzo
|
|
Director
|
John S. Brinzo
|
|
|
|
|
|
/s/ Daniel A. Carp
|
|
Chairman of the Board
|
Daniel A. Carp
|
|
|
|
|
|
/s/ David G. DeWalt
|
|
Director
|
David G. DeWalt
|
|
|
|
|
|
/s/ William H. Easter III
|
|
Director
|
William H. Easter III
|
|
|
|
|
|
/s/ Mickey P. Foret
|
|
Director
|
Mickey P. Foret
|
|
|
|
|
|
/s/ Shirley C. Franklin
|
|
Director
|
Shirley C. Franklin
|
|
|
|
|
|
/s/ David R. Goode
|
|
Director
|
David R. Goode
|
|
|
|
|
|
/s/ George N. Mattson
|
|
Director
|
George N. Mattson
|
|
|
|
|
|
/s/ Paula Rosput Reynolds
|
|
Director
|
Paula Rosput Reynolds
|
|
|
|
|
|
/s/ Sergio A.L. Rial
|
|
Director
|
Sergio A.L. Rial
|
|
|
|
|
|
/s/ Kenneth C. Rogers
|
|
Director
|
Kenneth C. Rogers
|
|
|
|
|
|
/s/ Kenneth B. Woodrow
|
|
Director
|
Kenneth B. Woodrow
|
|
3.1(a)
|
Delta's Amended and Restated Certificate of Incorporation (Filed as Exhibit 3.1 to Delta's Current Report on Form 8-K as filed on April 30, 2007).*
|
3.1 (b)
|
Amendment to Amended and Restated Certificate of Incorporation (Filed as Exhibit 3.1 to Delta's Current Report on Form 8-K as filed on June 27, 2014).*
|
3.2
|
Delta's By-Laws (Filed as Exhibit 3.1 to Delta's Current Report on Form 8-K as filed on June 27, 2014).*
|
10.1
|
Credit and Guaranty Agreement, dated as of April 20, 2011, among Delta Air Lines, Inc., as Borrower, the subsidiaries of the Borrower named as Guarantors, each of the several Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent for the Lenders, J.P. Morgan Securities LLC, Goldman Sachs Lending Partners LLC, UBS Securities LLC, Barclays Capital, the investment banking division of Barclays Bank PLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arrangers, J.P. Morgan Securities LLC, Barclays Capital, Citigroup Global Markets Inc., Credit Suisse AG, Cayman Islands Branch, Deutsche Bank Securities Inc., Goldman Sachs Lending Partners, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as joint bookrunners, Goldman Sachs Lending Partners, LLC and UBS Securities LLC, as co-syndication agents, and Barclays Bank and Bank of America, N.A., as co-documentation agents (Filed as Exhibit 10.1 to Delta's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011).*
|
10.2
|
Credit and Guaranty Agreement, dated as of October 18, 2012, among Delta Air Lines, Inc., as Borrower, the subsidiaries of the Borrower named as Guarantors, each of the several Lenders party thereto, Barclays Bank PLC, as administrative agent, Wilmington Trust, National Association, as Collateral Trustee, Deutsche Bank Securities Inc. and UBS Securities LLC, as Co-Syndication Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc., as co-documentation agents, Barclays Bank PLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and UBS Securities LLC, as joint lead arrangers, and Barclays Bank PLC, BNP Paribas Securities Corp, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as joint bookrunners (Filed as Exhibit 10.2 to Delta's Annual Report on Form 10-K for the year ended December 31, 2012).*
|
10.3
|
Transaction Framework Agreement among Delta, Delta Master Executive Council, Northwest Master Executive Council and Air Line Pilots Association, International dated as of June 26, 2008 (Filed as Exhibit 10 to Delta's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).*
|
10.4
|
Letter Agreement, dated April 14, 2008, by and among Delta Air Lines, Inc., the Master Executive Council of Delta, and Air Line Pilots Association, International dated April 14, 2008 (Filed as Exhibit 10.2 to Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).*
|
10.5
|
Anchor Tenant Agreement dated as of December 9, 2010 between JFK International Air Terminal LLC and Delta Air Lines, Inc. (Filed as Exhibit 10.4 to Delta's Annual Report on Form 10-K for the year ended December 31, 2010).*
|
10.6
|
Supplemental Agreement No. 13 to Purchase Agreement Number 2022, dated August 24, 2011, between The Boeing Company and Delta relating to Boeing Model 737NG Aircraft (the “B-737NG Purchase Agreement”) (Filed as Exhibit 10.1 to Delta's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).*/**
|
10.7
|
Letter Agreements, dated August 24, 2011, relating to the B-737NG Purchase Agreement (Filed as Exhibit 10.2 to Delta's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).*/**
|
10.8(a)
|
Aircraft General Terms Agreement, dated October 21, 1997, between Boeing and Delta (Filed as Exhibit 10.6 to Delta's Quarterly Report on Form 10-Q for the quarter ended December 31, 1997).*/**
|
10.8(b)
|
Letter Agreement, dated August 24, 2011, relating to Revisions to Aircraft General Terms Agreement dated October 21, 1997 and the B-737NG Purchase Agreement (Filed as Exhibit 10.3(b) to Delta's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).*/**
|
10.9
|
Airbus A330-900neo Aircraft and A350-900 Aircraft Purchase Agreement dated as of November 24, 2014 between Airbus S.A.S and Delta Air Lines, Inc.**
|
10.10(a)
|
Delta Air Lines, Inc. 2007 Performance Compensation Plan (Filed as Exhibit 10.1 to Delta's Current Report on Form 8-K filed on March 22, 2007).*
|
10.10(b)
|
First Amendment to the Delta Air Lines, Inc. 2007 Performance Compensation Plan (Filed as Exhibit 10.12(b) to Delta's Annual Report on Form 10-K for the year ended December 31, 2008).*
|
10.10(c)
|
Form of Delta 2007 Performance Compensation Plan Award Agreement for Officers (Filed as Exhibit 10.1 to Delta's Current Report on Form 8-K filed on April 30, 2007).*
|
10.11(a)
|
Delta Air Lines, Inc. Officer and Director Severance Plan, as amended and restated as of January 2, 2009, as further amended October 20, 2009 (Filed as Exhibit 10.11(a) to Delta's Annual Report on Form 10-K for the year ended December 31, 2009).*
|
10.11(b)
|
Amendment to the Delta Air Lines, Inc. Officer and Director Severance Plan, as amended and restated as of January 2, 2009, as further amended October 20, 2009 (Filed as Exhibit 10.11(b) to Delta's Annual Report on Form 10-K for the year ended December 31, 2009).*
|
10.12
|
Description of Certain Benefits of Members of the Board of Directors and Executive Officers (Filed as Exhibit 10.2 to Delta's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011).*
|
10.13(a)
|
Delta Air Lines, Inc. 2012 Long Term Incentive Program (Filed as Exhibit 10.15 to Delta's Annual Report on Form 10-K for the year ended December 31, 2011).*
|
10.13(b)
|
Model Award Agreement for the Delta Air Lines, Inc. 2012 Long Term Incentive Program (Filed as Exhibit 10.2 to Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).*
|
10.14(a)
|
Delta Air Lines, Inc. 2013 Long Term Incentive Program (Filed as Exhibit 10.14 to Delta's Annual Report on Form 10-K for the year ended December 31, 2012).*
|
10.14(b)
|
Model Award Agreement for the Delta Air Lines, Inc. 2013 Long Term Incentive Program (Filed as Exhibit 10.1 to Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013).*
|
10.16
|
Delta Air Lines, Inc. 2015 Long Term Incentive Program.
|
10.17
|
Delta Air Lines, Inc. 2014 Management Incentive Plan (Filed as Exhibit 10.17 to Delta's Annual Report on Form 10-K for the year ended December 31, 2013).*
|
10.18
|
Delta Air Lines, Inc. 2015 Management Incentive Plan.
|
10.19(a)
|
Delta Air Lines, Inc. Transition Award Program (Filed as Exhibit 10.17 to Delta's Annual Report on Form 10-K for the year ended December 31, 2012).*
|
10.19(b)
|
Model Award Agreement for the Delta Air Lines, Inc. Transition Award Program (Filed as Exhibit 10.2 to Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013).*
|
10.20
|
Letter Agreement dated as of June 11, 2008 between counsel for and on behalf of Mickey P. Foret and Aviation Consultants, LLC, and counsel for and on behalf of Northwest Airlines, Inc. (Filed as Exhibit 10.22 to Delta's Annual Report on Form 10-K for the year ended December 31, 2008).*
|
10.21(a)
|
Northwest Airlines, Inc. Excess Pension Plan for Salaried Employees (2001 Restatement) (Filed as Exhibit 10.28 to Northwest's Annual Report on Form 10-K for the year ended December 31, 2006).*
|
10.21(b)
|
First Amendment of Northwest Airlines Excess Pension Plan for Salaried Employees (2001 Restatement) (Filed as Exhibit 10.3 to Northwest's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).*
|
10.21(c)
|
Third Amendment of Northwest Airlines Excess Pension Plan for Salaried Employees (2001 Restatement) (Filed as Exhibit 10.1 to Northwest's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).*
|
10.22
|
Delta Air Lines, Inc. Restoration Long Term Disability Plan (Filed as Exhibit 10.24 to Delta's Annual Report on Form 10-K for the year ended December 31, 2011).*
|
10.23
|
Letter Agreement, dated February 2, 2012 between Delta Air Lines, Inc. and Richard H. Anderson (Filed as Exhibit 10.25 to Delta's Annual Report on Form 10-K for the year ended December 31, 2011).*
|
10.24
|
Letter Agreement, dated February 2, 2012 between Delta Air Lines, Inc. and Richard B. Hirst (Filed as Exhibit 10.26 to Delta's Annual Report on Form 10-K for the year ended December 31, 2011).*
|
10.25
|
Terms of 2013 Restricted Stock Awards for Non-Employee Directors (Filed as Exhibit 10.1 to Delta’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013).*
|
10.26
|
Terms of 2014 Restricted Stock Awards for Non-Employee Directors (Filed as Exhibit 10.1 to Delta’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014).*
|
12.1
|
Statement regarding computation of ratio of earnings to fixed charges for each fiscal year in the five-year period ended December 31, 2014.
|
21.1
|
Subsidiaries of the Registrant.
|
23.1
|
Consent of Ernst & Young LLP.
|
31.1
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
|
32
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 2002.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Incorporated by reference.
|
**
|
Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to requests for confidential treatment.
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
i
|
EXHIBIT A-1
|
A330-300 AIRCRAFT STANDARD SPECIFICATION
|
|
|
EXHIBIT A-2
|
A350-900 AIRCRAFT STANDARD SPECIFICATION
|
|
|
EXHIBIT A-3
|
A330-900neo AIRCRAFT SPECIFICATION CHANGE NOTICES
|
|
|
EXHIBIT A-4
|
A350-900 AIRCRAFT SPECIFICATION CHANGE NOTICES
|
|
|
EXHIBIT B-1
|
FORM OF SPECIFICATION CHANGE NOTICE
|
|
|
EXHIBIT B-2
|
FORM OF MANUFACTURER’S SPECIFICATION CHANGE NOTICE
|
|
|
EXHIBIT B-3
|
FORM OF [***]
|
|
|
EXHIBIT C
|
AIRBUS PRICE REVISION FORMULA
|
|
|
EXHIBIT D
|
FORM OF CERTIFICATE OF ACCEPTANCE
|
|
|
EXHIBIT E
|
FORM OF BILL OF SALE
|
|
|
EXHIBIT F
|
SERVICE LIFE POLICY – LIST OF ITEMS
|
|
|
EXHIBIT G-1
|
A330-900neo TECHNICAL DATA INDEX
|
|
|
EXHIBIT G-2
|
A350-900 TECHNICAL DATA INDEX
|
|
|
EXHIBIT H
|
MATERIAL SUPPLY AND SERVICES
|
|
|
EXHIBIT I
|
LICENSES AND ON-LINE SERVICES
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
ii
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
1
|
0.
|
DEFINITIONS
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
2
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
3
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
4
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
5
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
6
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
7
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
8
|
(i)
|
the definition of a singular shall apply to plurals of the same words;
|
(ii)
|
“include” and “including” are not limiting except when used in the computation of time periods;
|
(iii)
|
“hereby,” “herein,” “hereof,” “hereunder,” “the Agreement,” “this Agreement,” and any like words refer to the Agreement and not a particular Clause thereof; and
|
(iv)
|
a reference herein to a Clause, Subclause, Exhibit, Attachment or Appendix without further reference is to the relevant Clause, Subclause, Exhibit, Attachment or Appendix of the Agreement.
|
(v)
|
References in the Agreement to any statute shall be to such statute as amended or modified and in effect at the time any such reference is operative.
|
(vi)
|
Terms and conditions in the Agreement that are specific to (i) the A330-900neo Aircraft shall not be applicable to the A350-900 Aircraft and (ii) the A350-900 Aircraft shall not be applicable to the A330-900neo Aircraft. Unless otherwise specified, all other terms and conditions in the Agreement shall be applicable to both A330-900neo Aircraft and A350-900 Aircraft.
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
9
|
1.
|
SALE AND PURCHASE
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
10
|
2.
|
SPECIFICATIONS
|
2.1
|
A330-900neo Aircraft Specification
|
2.1.1
|
The A330-900neo Aircraft shall be manufactured in accordance with A330-900neo Standard Specification as set forth in Subclause 2.1.1.3 hereunder.
|
2.1.1.1
|
A330-900neo Aircraft Standard Specification
|
2.1.1.2
|
New Engine Option
|
2.1.1.2.1
|
[***]
|
2.1.1.2.2
|
A330-900neo Aircraft Weights
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
11
|
|
[***]
|
MTOW
(“Maximum Take-off Weight”)
|
[***]
|
MLW
(“Maximum Landing Weight”)
|
[***]
|
MZFW
(“Maximum Zero Fuel Weight”)
|
[***]
|
2.1.1.3
|
Upon its issuance, the A330-900neo Standard Specification shall automatically supersede the combination of the A330-300 Standard Specifications and the New Engine Option Changes.
|
2.1.2
|
A330-900neo Propulsion Systems
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
12
|
2.1.3
|
A330-900neo Aircraft Milestones
|
2.1.3.1
|
Customization Milestones Chart
|
2.1.3.2
|
Contractual Definition Freeze
|
2.2
|
A350-900 Aircraft Specification
|
2.2.1
|
The A350-900 Aircraft shall be manufactured in accordance with the A350-900 Standard Specification, as may already have been modified or varied prior to the date of the Agreement by the Specification Change Notices listed in Exhibit A-4.
|
2.2.1.1
|
[***]
|
2.2.1.2
|
A350XWB Family Aircraft – Comprehensive Offer
|
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|
2.2.1.3
|
The appendix to the A350XWB Family ADD lists the equipment that shall be ACS Equipment. Such ACS Equipment shall be supplied by manufacturers qualified by the Seller as ACS Suppliers. Those contracted at the date hereof are listed in the A350XWB Family ADD. The Buyer shall select the ACS Equipment from the A350XWB Family ADD applicable at the time of the corresponding customization, by the dates specified in the Customization Milestone Chart. The Buyer shall confirm its selection by written notice to the Seller by the date set forth in the Customization Milestone Chart, which will be subsequently formalized through the SCN process described in Subclause 2.3.1.
|
(a)
|
at the price and associated price revision conditions jointly notified to the Seller by the Buyer and the ACS Supplier, or
|
(b)
|
at the catalogue price applicable to such ACS Equipment at the time of the order.
|
2.2.1.4
|
Without prejudice to Subclause 22.11 of the Agreement, in the event of any inconsistency between the terms of this Agreement and the terms contained in the A350-900 Standard Specification, the terms of this Agreement shall prevail over the terms of the A350-900 Standard Specification, to the extent of such inconsistency. For the purpose of this Subclause 2.2.1.4, the term Agreement shall not include the A350-900 Standard Specification.
|
2.2.2
|
A350-900 Aircraft Propulsion Systems
|
2.2.3
|
A350-900 Aircraft Milestones
|
2.2.3.1
|
Contractual Definition Freeze Date
|
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14
|
2.2.3.2
|
Customization Milestone Chart
|
•
|
the Buyer needs to take certain decisions and actions; and
|
•
|
the Buyer needs to provide certain information and documentation; and
|
•
|
the Buyer needs to notify the Seller of the BFE Premium Class Seats, together with the selected In-Flight Entertainment equipment (the “
BFE IFE
”), and associated BFE Suppliers selected by the Buyer, if applicable; such notification to be made in advance of the Initial Technical Coordination Meeting (ITCM); and
|
•
|
the Buyer needs to notify the Seller of the ACS Seats, together with the selected In-Flight Entertainment equipment supplied by an ACS Supplier (the “
ACS IFE
”), and associated ACS Suppliers selected by the Buyer; such notification to be made in advance of the Cabin Definition Closure Meeting (CDCM); and
|
•
|
the CDCM for ACS Equipment and the ITCM for BFE Premium Class Seats, if applicable, shall be held at the A350XWB Customer Definition Centre in Hamburg, Germany, [***], and
|
•
|
SCNs must be executed in order to integrate into the A350-900 Aircraft Specification any items requested by the Buyer from the options set forth in the Seller’s A350XWB Family ADD applicable at the time of customization or any other items that the Buyer wishes to have installed in the A350-900 Aircraft as per Subclauses 2.2.4 and 18.
|
2.2.4
|
A350-900 Aircraft Cabin Customization
|
2.2.4.1
|
Notwithstanding Subclause 2.1.3.2, it is the Seller’s aim to provide the Buyer with flexibility with regard to the definition of the specification of the A350-900 Aircraft cabin, while maintaining the Scheduled Delivery Month of the A350-900 Aircraft. The Buyer may hence proceed with the definition of the cabin exclusively through the selection of catalogue cabin solutions and options (“
Catalogue Items
”) developed by the Seller in the A350XWB Family
|
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|
2.2.4.2
|
Alternative BFE Premium Seats for First and Business Class
|
•
|
they shall be manufactured exclusively by suppliers, who are qualified by the Seller as ACS Suppliers of seats; and
|
•
|
they shall be compliant with the interfaces predefined by the Seller and communicated to the above ACS Suppliers; and
|
•
|
any BFE IFE equipment to be incorporated into the BFE Premium Class Seats shall be exclusively BFE items developed by a qualified ACS Supplier.
|
2.3
|
Specification Amendment
|
2.3.1
|
Specification Change Notice
|
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|
2.3.2
|
Development Changes
|
2.3.2.1
|
Manufacturer Specification Changes Notices
|
2.3.2.1.1
|
The Specification may be amended by the Seller through a Manufacturer Specification Change Notice (“
MSCN
”), which will be substantially in the form set out in Exhibit B-2 hereto and will set out the MSCN’s Aircraft embodiment rank as well as, in detail, the particular change to be made to the Specification and the effect, if any, of such change on performance, weight, Base Price of the Aircraft, Delivery Date of the Aircraft affected thereby and interchangeability or replaceability requirements under the Specification.
|
2.3.2.1.2
|
Except when the MSCN is necessitated by an Aviation Authority directive or by equipment obsolescence, in which case the MSCN will be accomplished without requiring the Buyer’s consent, if the MSCN adversely affects the performance, weight, Base Price , Delivery Date of the Aircraft affected thereby or the interchangeability or replaceability requirements under the Specification, the Seller will notify the Buyer of a reasonable period of time during which the Buyer must accept or reject such MSCN. If the Buyer does not notify the Seller of the rejection of the MSCN within such period, the MSCN will be deemed accepted by the Buyer and the corresponding modification will be accomplished.
|
2.3.2.2
|
In the event of the Seller revising the Specification to incorporate Development Changes which have no adverse effect on any of the elements set forth in Subclause 2.3.2.1 above, such revision will be performed by the Seller without the Buyer’s consent.
|
3.1
|
A330-900neo Aircraft Price
|
3.1.1
|
The base price of the A330-900neo Aircraft (the “
A330-900neo Aircraft Base Price
”) is the sum of:
|
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17
|
(i)
|
The base price of the A330-900neo Aircraft corresponding to the A330-900neo Standard Specification, including the A330-900neo Propulsion Systems, New Engine Option Changes and the design weights as set out in Subclause 2.1.1.2.2 (excluding Buyer Furnished Equipment), which is:
|
(ii)
|
The base price of the preliminary Specification Change Notices, as listed in Exhibit A-3, which for budgetary purposes can be estimated at:
|
3.1.2
|
The A330-900neo Aircraft Base Price has been established in accordance with the economic conditions prevailing in the Base Period.
|
3.1.3
|
[***]
|
3.1.4
|
A330-900neo Final Contract Price
|
(i)
|
the A330-900neo Aircraft Base Price as adjusted to the Delivery Date of such Aircraft in accordance with Subclause 4.1; plus
|
(ii)
|
the aggregate of all increases or decreases to the A330-900neo Aircraft Base Price as agreed in any Specification Change Notice entered into pursuant to Subclause 2.3 after the date of execution of this Agreement and as adjusted to the Delivery Date in accordance with Subclause 4.1; plus
|
(iii)
|
any other amount resulting from any other provisions of the Agreement and/or any other written agreement between the Buyer and the Seller with respect to the A330-900neo Aircraft.
|
3.2
|
A350-900 Aircraft Price
|
3.2.1
|
The A350-900 Aircraft Base Price is the sum of:
|
(i)
|
the base price of the A350-900 Aircraft as defined in the A350-900 Standard Specification (excluding BFE and ACS Equipment) (the “
A350-900 Aircraft Base Price
”), which is :
|
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|
18
|
(ii)
|
the sum of the base prices of any and all SCNs set forth in Exhibit A-4, which is :
|
3.2.2
|
The A350-900 Aircraft Base Price has been established in accordance with the economic conditions prevailing in the Base Period.
|
3.2.3
|
Airbus Contracted Supplier (“
ACS
”) Equipment Price
|
3.2.4
|
A350-900 Final Contract Price
|
(i)
|
the A350-900 Aircraft Base Price as adjusted to the Delivery Date of such A350-900 Aircraft in accordance with Subclause 4.1; and
|
(ii)
|
the aggregate of all increases or decreases to the A350-900 Aircraft Base Price as agreed in any Specification Change Notice entered into pursuant to Subclause 2.3 after the date of execution of this Agreement as adjusted to the Delivery Date of such A350-900 Aircraft in accordance with Subclause 4.1; and
|
(iii)
|
the price of any and all ACS Equipment selected by the Buyer in the applicable Seller’s A350-900 Family Aircraft Description Document and purchased by the Seller, either at the catalogue price applicable at the time of the order (including any catalogue price revision applicable at the time of the purchase order) or at the price
|
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|
19
|
(iv)
|
any other amount resulting from any other provisions of the Agreement and/or any other written agreement between the Buyer and the Seller relating to the A350-900 Aircraft.
|
3.3
|
Taxes
|
3.3.1
|
The amounts stated in this Agreement to be payable by the Buyer are exclusive of value added tax (“
VAT
”) chargeable under the laws of any jurisdiction and accordingly the Buyer shall pay any VAT chargeable with respect to any Aircraft, component, accessory, equipment, part or service delivered or furnished under this Agreement
|
3.3.2
|
The Seller will pay all other Taxes (except for Taxes based on or measured by the income of the Buyer or any Taxes levied against the Buyer for the privilege of doing business in any jurisdiction), levied, assessed, charged or collected, on or prior to Delivery of any Aircraft, for or in connection with the manufacture, assembly, sale and delivery under this Agreement of such Aircraft or any parts, instructions or data installed thereon or incorporated therein (except Buyer Furnished Equipment referred to in Clause 18).
|
3.3.3
|
The Buyer will pay all Taxes not assumed by the Seller under Subclause 3.3.2, except for Taxes based on or measured by the income of the Seller or any Taxes levied against the Seller for the privilege of doing business in any jurisdiction.
|
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|
4.1
|
Airbus Price Revision Formula
|
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|
5.
|
PAYMENT TERMS
|
5.1
|
The Buyer shall pay all sums due hereunder in immediately available funds in United States dollars by credit to:
|
5.2
|
Predelivery Payments
|
5.2.1
|
Predelivery Payments are non-refundable (although amounts equal to Predelivery Payments may be paid to the Buyer pursuant to Subclause 11.3) and shall be paid by the Buyer to the Seller for the Aircraft.
|
5.2.2
|
The Predelivery Payment Reference Price for an Aircraft to be delivered in calendar year T is determined in accordance with the following formula:
|
5.2.3
|
Predelivery Payments shall be paid according to the following schedule.
|
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22
|
5.2.4
|
The Seller shall be entitled to hold and use any Predelivery Payment as absolute owner thereof, subject only to the obligation to deduct an amount equal to Predelivery Payments from the Final Contract Price of the Aircraft, when calculating the balance of the Final Contract Price of such Aircraft. The Seller shall be under no obligation to segregate any Predelivery Payment, or any amount equal thereto, from the Seller’s funds generally.
|
5.3
|
Payment of Final Contract Price
|
5.4
|
Payment of Other Amounts
|
5.4.1
|
Application of Payments
|
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23
|
5.4.2
|
Setoff Payments
|
5.5
|
Overdue Payments
|
5.6
|
Refund of Predelivery Payments
|
5.7
|
Proprietary Interest
|
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|
5.8
|
Tender of Delivery
|
5.9
|
Payment in Full
|
5.10
|
[***]
|
5.10.1
|
[***]
|
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|
25
|
5.10.2
|
[***]
|
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26
|
6.
|
PLANT REPRESENTATIVES - INSPECTION
|
6.1
|
Manufacture Procedures
|
6.2
|
Inspection Procedures
|
6.2.1
|
All work to be carried out on the Aircraft and all materials and parts thereof shall at all reasonable times during business hours be open to inspection by duly authorized representatives of the Buyer or its designee at the works of the Seller and, if possible, at the works of their respective subcontractors, and such representatives (subject to the indemnities set forth in Clause 20 herein) shall, to carry out the aforesaid inspection, have access to such relevant technical data as is reasonably necessary for this purpose (except that, if access to any part of the respective works where construction is in progress or materials or parts are stored is restricted for security reasons, the Seller shall be allowed a reasonable time to make the items available for inspection elsewhere).
|
6.2.2
|
For the purposes of Subclause 6.2.1 above and commencing with the date of the Agreement until the Delivery of the last Aircraft, [***].
|
6.2.3
|
All inspections, examinations and discussions with the Seller or its subcontractors’ engineering or other personnel by the Buyer and its said representatives shall be performed in such manner as not to unreasonably delay or hinder the work to be carried out on the Aircraft or the proper performance of the Agreement.
|
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|
7.
|
CERTIFICATION
|
7.1
|
Type Certification
|
7.2
|
Export Certificate of Airworthiness
|
7.3
|
Specification Changes before Aircraft Ready for Delivery
|
7.3.1
|
If, any time before the date on which the Aircraft is Ready for Delivery, any law, rule or regulation is enacted, promulgated, becomes effective and/or an interpretation of any law, rule or regulation is issued by the EASA that requires any change to the Specification for the purposes of obtaining the Export Certificate of Airworthiness (a “
Change in Law
”), the Seller shall make the required modification and the parties hereto shall sign an SCN or MSCN.
|
7.3.2
|
The Seller shall as far as practicable, but at its sole discretion and without prejudice to Subclause 7.3.3, take into account the information available to it concerning any proposed law, rule or regulation or interpretation that could become a Change in Law, in order to minimize the costs of changes to the Specification as a result of such proposed law, regulation or interpretation becoming effective before the applicable Aircraft is Ready for Delivery.
|
7.3.3
|
The cost of implementing the required modifications referred to in Subclause 7.3.1 will be:
|
(i)
|
[***], and
|
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|
(ii)
|
[***].
|
7.3.4
|
Notwithstanding the provisions of Subclause 7.3.3, if a Change in Law relates to an item of BFE or to the Propulsion System the costs related thereto shall be borne in accordance with such arrangements as may be made separately between the Buyer and the manufacturer of the BFE or the Propulsion System, as applicable, and the Seller shall have no obligation with respect thereto.
|
7.4
|
Specification Changes after Aircraft Ready For Delivery
|
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|
8.
|
THE BUYER’S ACCEPTANCE
|
8.1
|
Acceptance Procedures
|
8.1.1
|
The Seller or any Affiliate thereof acting as the Seller’s designee shall give to the Buyer not less than [***] of the proposed time when Technical Acceptance Process of an Aircraft shall be conducted, and, in the event that the Buyer elects to attend such Technical Acceptance Process (as defined below), the Buyer shall comply with the reasonable requirements of the Seller with the intention of completing the Technical Acceptance Process within [***] after commencement. The Technical Acceptance Process shall take place at the Delivery Location, and shall be carried out by the personnel of the Seller (accompanied, if the Buyer so wishes, by representatives of the Buyer [***] shall have access to the cockpit at any one time). During flight tests, these representatives shall comply with the instructions of the Seller’s representatives. The Seller shall not normally be required in the course of such Technical Acceptance Process to fly any of the Aircraft for more [***].
|
8.1.2
|
[INTENTIONALLY LEFT BLANK]
|
8.1.3
|
Prior to Delivery, the Aircraft shall undergo a technical acceptance process developed by the Seller (the "
Technical Acceptance Process
"). Completion of the Technical Acceptance Process shall demonstrate the satisfactory functioning of Aircraft and be considered to demonstrate compliance with the Specification. Should it be established that the Aircraft does not comply with the Technical Acceptance Process requirements, the Seller shall without hindrance from the Buyer be entitled to carry out any necessary changes and, as soon as practicable thereafter, resubmit the Aircraft to such further Technical Acceptance Process as is necessary to demonstrate the elimination of the non-compliance. [***].
|
8.1.4
|
In the event that the Buyer, after having received proper notice in accordance with Subclause 8.1.1, does not attend the Technical Acceptance Process scheduled for an Aircraft or fails to so cooperate, the Seller may complete any of them in the absence of the Buyer, whereupon the Buyer shall be deemed to have accepted the Technical Acceptance Process, if such Technical Acceptance Process demonstrates the satisfactory functioning of the Aircraft as aforesaid, and the Seller shall furnish such data with respect to such Technical Acceptance Process as the Buyer may reasonably request.
|
8.1.5
|
If the Technical Acceptance Process for an Aircraft is not successfully completed or there is a defect, the Seller,[***], shall give notice to the Buyer specifying such unsuccessful completion or defect. Thereafter the Seller shall, without hindrance from the Buyer, carry out any necessary changes and, as soon as practicable thereafter, resubmit the Aircraft for a new Technical Acceptance Process to demonstrate the elimination of the defect, such Technical Acceptance Process to be held and carried out in accordance with Subclause 8.1, provided, however, that rather than accept a delay in Delivery of any such Aircraft, the Buyer and the Seller may agree to deliver such Aircraft with subsequent correction of the defect by the Buyer at the Seller’s expense in accordance with the provisions of Clause 12 herein.
|
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|
8.2
|
Aircraft Utilization
|
8.3
|
Certificate of Acceptance
|
8.4
|
Finality of Acceptance
|
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|
9.
|
DELIVERY
|
9.1
|
Delivery Schedule
|
9.1.1
|
Subject to the provisions of the Agreement, the Seller shall have the Aircraft Ready for Delivery at the Delivery Location, and the Buyer shall accept the same, during the quarters set forth in the table below (each a “
Scheduled Delivery Quarter
”)
|
Rank
|
Aircraft type
|
Scheduled Delivery Period
|
Rank
|
Aircraft type
|
Scheduled Delivery Period
|
1
|
A350-900
|
2Q 2017
|
26
|
[***]
|
[***]
|
2
|
[***]
|
[***]
|
27
|
[***]
|
[***]
|
3
|
[***]
|
[***]
|
28
|
[***]
|
[***]
|
4
|
[***]
|
[***]
|
29
|
[***]
|
[***]
|
5
|
[***]
|
[***]
|
30
|
[***]
|
[***]
|
6
|
[***]
|
[***]
|
31
|
[***]
|
[***]
|
7
|
[***]
|
[***]
|
32
|
[***]
|
[***]
|
8
|
[***]
|
[***]
|
33
|
[***]
|
[***]
|
9
|
[***]
|
[***]
|
34
|
[***]
|
[***]
|
10
|
[***]
|
[***]
|
35
|
[***]
|
[***]
|
11
|
[***]
|
[***]
|
36
|
[***]
|
[***]
|
12
|
[***]
|
[***]
|
37
|
[***]
|
[***]
|
13
|
[***]
|
[***]
|
38
|
[***]
|
[***]
|
14
|
[***]
|
[***]
|
39
|
[***]
|
[***]
|
15
|
[***]
|
[***]
|
40
|
[***]
|
[***]
|
16
|
[***]
|
[***]
|
41
|
[***]
|
[***]
|
17
|
[***]
|
[***]
|
42
|
[***]
|
[***]
|
18
|
A330-900neo
|
[***] 2019
|
43
|
[***]
|
[***]
|
19
|
[***]
|
[***]
|
44
|
[***]
|
[***]
|
20
|
[***]
|
[***]
|
45
|
[***]
|
[***]
|
21
|
[***]
|
[***]
|
46
|
[***]
|
[***]
|
22
|
[***]
|
[***]
|
47
|
[***]
|
[***]
|
23
|
[***]
|
[***]
|
48
|
[***]
|
[***]
|
24
|
[***]
|
[***]
|
49
|
[***]
|
[***]
|
25
|
[***]
|
[***]
|
50
|
[***]
|
[***]
|
9.1.2
|
Not later than [***] prior to the start of the relevant Scheduled Delivery Quarter, the Seller shall give the Buyer notice of the anticipated month within the Scheduled Delivery Quarter during which each Aircraft shall be Ready for Delivery (the “
Scheduled Delivery Month
”) provided that no more than [***] shall be scheduled for Delivery pursuant to this Subclause 9.1.2 in any calendar month.
|
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|
9.1.3
|
Not later than [***] to the date scheduled for the Technical Acceptance Process set forth in Subclause 8.1.1 for a particular Aircraft, the Seller shall give the Buyer notice of whether it anticipates each Aircraft shall be Ready for Delivery in the first half or second half of the Scheduled Delivery Month.
|
9.1.4
|
Not later than [***] to the date scheduled for the Technical Acceptance Process set forth in Subclause 8.1.1 for a particular Aircraft, the Seller shall give the Buyer notice of the anticipated date on which each Aircraft shall be Ready for Delivery.
|
9.2
|
Title
|
9.2.1
|
The Buyer shall, within [***] after the date on which the Aircraft is Ready for Delivery, sign the Certificate of Acceptance, pay the Balance of the Final Contract Price and send its representatives to the Delivery Location to take Delivery of, and collect, the Aircraft.
|
9.2.2
|
The Seller shall deliver and transfer title to the Aircraft free and clear of all encumbrances to the Buyer provided that the Balance of the Final Contract Price has been paid by the Buyer pursuant to Subclause 5.3 and that the Certificate of Acceptance has been signed and delivered to the Seller pursuant to Subclause 8.3. The Seller shall provide the Buyer with a bill of sale as attached hereto in Exhibit E (the “
Bill of Sale
”) and/or other documents confirming transfer of title and receipt of the Balance of Final Price as may reasonably be requested by the Buyer.
|
9.2.3
|
9.2.3.1 Should the Buyer fail, within the period specified in Subclause 9.2.1, to:
|
(i)
|
deliver the signed Certificate of Acceptance to the Seller; or
|
(ii)
|
pay the Balance of the Final Contract Price for the Aircraft to the Seller and take Delivery of the Aircraft;
|
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|
9.3
|
Flyaway
|
9.3.1
|
The Buyer and the Seller will cooperate to obtain any licenses that may be required by the Aviation Authority of the Delivery Location for the purpose of exporting the Aircraft.
|
9.3.2
|
All expenses of, or connected with, flying the Aircraft from the Delivery Location after Delivery will be borne by the Buyer. The Buyer will make direct arrangements with the supplying companies for the fuel and oil required for all post-Delivery flights.
|
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|
10.1
|
Scope of Excusable Delay
|
10.2
|
Consequences of Excusable Delay
|
10.2.1
|
If an Excusable Delay occurs:
|
(i)
|
the Seller will notify the Buyer of such Excusable Delay as soon as practicable after becoming aware of the same;
|
(ii)
|
the Seller will not be responsible for any damages arising from or in connection with such Excusable Delay suffered or incurred by the Buyer;
|
(iii)
|
the Seller will not be deemed to be in default in the performance of its obligations hereunder as a result of such Excusable Delay;
|
(iv)
|
the Seller will as soon as practicable after the removal of the cause of such delay resume performance of its obligations under this Agreement and in particular will notify the Buyer of the revised Scheduled Delivery Month.
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10.3
|
Termination on Excusable Delay
|
10.3.1
|
If any Delivery is delayed as a result of an Excusable Delay for a period of more than [***] after the last day of the Scheduled Delivery Month, then either party may terminate this Agreement with respect to the affected Aircraft, by giving written notice to the other party within [***] after the expiration of such [***] period. However, the Buyer will not be entitled to terminate this Agreement pursuant to this Subclause 10.3.1 if the Excusable Delay is caused directly or indirectly by the action or inaction of the Buyer.
|
10.3.2
|
If the Seller advises the Buyer in its notice of a revised Scheduled Delivery Month pursuant to Subclause 10.2.1(iv) that there will be a delay in Delivery of an Aircraft of more than [***] after the last day of the Scheduled Delivery Month, then either party may terminate this Agreement with respect to the affected Aircraft. Termination will be made by giving written notice to the other party within [***] after the Buyer's receipt of the notice of a revised Scheduled Delivery Month.
|
10.3.3
|
If this Agreement is not terminated under the terms of Subclause 10.3.1 or 10.3.2, then the Seller will be entitled to reschedule Delivery. The Seller will notify the Buyer of the new Scheduled Delivery Month after [***] referred to in Subclause 10.3.1 or 10.3.2, and this new Scheduled Delivery Month will be deemed to be an amendment to the applicable Scheduled Delivery Month in Subclause 9.1.
|
10.4
|
Total Loss, Destruction or Damage
|
(i)
|
the Buyer notifies the Seller within [***] of the date of receipt of the Seller's notice that it desires the Seller to provide a replacement aircraft during the month quoted in the Seller’s notice; and
|
(ii)
|
the parties execute an amendment to this Agreement recording the change in the Scheduled Delivery Month.
|
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10.5
|
Termination Rights Exclusive
|
10.6
|
Remedies
|
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11.
|
INEXCUSABLE DELAY
|
11.1
|
Liquidated Damages
|
11.1.1
|
A330-900neo Aircraft
|
11.1.1.1
|
Should an A330-900neo Aircraft not be Ready for Delivery within [***] after the last day of the Scheduled Delivery Month of such A330-900neo Aircraft and such delay is not a result of an Excusable Delay or Total Loss, then such delay shall be termed an “
Inexcusable Delay
”. In the event of an Inexcusable Delay, then the Buyer shall have the right to claim, and the Seller shall pay by way of liquidated damages to the Buyer for each day of delay in the Delivery commencing on the date falling [***] after the last day of the Scheduled Delivery Month:
|
11.1.2
|
A350-900 Aircraft
|
11.1.2.1
|
Should an A350-900 Aircraft not be Ready for Delivery within [***] after the last day of the Scheduled Delivery Month of such A350-900 Aircraft due to an Inexcusable Delay, then the Buyer shall have the right to claim, and the Seller shall pay by way of liquidated damages to the Buyer for each day of delay in the Delivery commencing on the date falling [***] after the last day of the Scheduled Delivery Month:
|
11.1.3
|
The Buyer's right to be paid damages in respect of the A350-900 Aircraft is conditional upon the Buyer submitting a claim in respect of such liquidated damages in writing to the Seller not later than [***] after the last day of the Scheduled Delivery Period of the affected A350-900 Aircraft.
|
11.2
|
Renegotiation
|
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11.3
|
Termination
|
11.4
|
Remedies
|
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12.
|
WARRANTIES AND SERVICE LIFE POLICY
|
12.1
|
Standard Warranty
|
12.1.1
|
Nature of Warranty
|
(i)
|
be free from defects in material,
|
(ii)
|
be free from defects in workmanship, including, without limitation, processes of manufacture,
|
(iii)
|
be free from defects in design (including, without limitation, selection of materials) having regard to the state of the art at the date of such design, and
|
(iv)
|
be free from defects arising from failure to conform to the Specification, except as to those portions of the Specification where it is expressly stated that such portions of the Specification are estimates or approximations or design aims.
|
12.1.2
|
Exceptions
|
(i)
|
any defect in the Seller’s workmanship in respect of the installation of such items in the Aircraft, including any failure by the Seller to conform to the installation instructions of the manufacturers of such items that invalidates any applicable warranty from such manufacturers, shall constitute a defect in workmanship for the purpose of this Subclause 12.1 and be covered by the warranty set forth in Subclause 12.1.1(ii), and
|
(ii)
|
any defect inherent in the Seller’s design of the installation, in view of the state of the art at the date of such design, that impairs the use of such items shall constitute a defect in design for the purposes of this Subclause 12.1 and be covered by the warranty set forth in Subclause 12.1.1(iii).
|
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12.1.3
|
Warranty Period
|
12.1.4
|
Buyer’s Remedy and Seller’s Obligation
|
12.1.4.1
|
The Buyer’s remedy and the Seller’s obligation and liability under Subclauses 12.1.1 and 12.1.2 hereinabove are limited to, at the Seller’s expense and option, the repair, replacement or correction of, or the supply of modification kits rectifying the defect to, any defective Warranted Part. Alternatively, the Seller may at its sole option furnish a credit to the Buyer for the future purchase of Material equal to the price at which the Buyer is then entitled to acquire a replacement for the defective Warranted Part. Nothing herein contained shall obligate the Seller to correct any failure to conform to the Specification with respect to components, equipment, accessories or parts that the parties agree in writing at the time of delivery of the affected Aircraft are acceptable deviations or have no material adverse effect on the use, operation or performance of an Aircraft.
|
12.1.4.2
|
In the event a defect covered by Subclause 12.1.1(iii) becomes apparent within the applicable period set forth in Subclause 12.1.3, and the Seller is obligated to correct such defect, the Seller shall also, if so requested by the Buyer in writing and following consultation between Buyer and Seller, make such correction in any Aircraft that has not already been delivered to the Buyer. However, the Seller shall not be responsible nor deemed to be in default on account of any delay in delivery of any Aircraft or otherwise, in respect of performance of the Agreement, due to the Seller’s undertaking to make such correction and, rather than accept a delay in delivery of any such Aircraft, the Buyer and the Seller may agree to deliver such Aircraft with subsequent correction of the defect by the Buyer at the Seller’s expense, or the Buyer may elect to accept delivery and thereafter file a Warranty Claim as though the defect had become apparent immediately after delivery of such Aircraft.
|
12.1.5
|
Warranty Claim Requirements
|
(i)
|
the existence of a defect covered by the provisions of this Subclause 12.1,
|
(ii)
|
the defects having become apparent within the applicable warranty period, as set forth in Subclause 12.1.3.,
|
(iii)
|
the Buyer’s having submitted to the Seller proof reasonably satisfactory to the Seller that the claimed defect is due to a matter embraced within this Subclause 12.1, and
|
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(iv)
|
the Buyer’s having returned as soon as reasonably practicable the Warranted Part claimed to be defective to such repair facilities as may be designated by the Seller, except where the Buyer elects to repair a defective Warranted Part in accordance with the provisions of Subclause 12.1.7, and
|
(v)
|
the Seller’s having received a Warranty Claim fulfilling the conditions of and in accordance with the provisions of Subclause 12.1.6 below.
|
12.1.6
|
Warranty Administration
|
(i)
|
Claim Determination
|
(ii)
|
Transportation and Insurance Costs
|
(iii)
|
Return of an Aircraft
|
(iv)
|
On-Aircraft Work by the Seller
|
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|
(a)
|
[***], such work must require the technical expertise of the Seller, or
|
(b)
|
both of
|
(i)
|
[***]
|
(ii)
|
[***]
|
(v)
|
Warranty Claim Substantiation
|
(a)
|
description of defect and action taken, if any,
|
(b)
|
date of incident and/or of removal,
|
(c)
|
description of the defective part,
|
(d)
|
part number,
|
(e)
|
serial number (if applicable),
|
(f)
|
position on Aircraft,
|
(g)
|
total flying hours or calendar times, as applicable, at the date of appearance of a defect,
|
(h)
|
time since last shop visit at the date of defect appearance,
|
(i)
|
Manufacturer’s serial number of the Aircraft and/or its registration number,
|
(j)
|
Aircraft total flying hours and/or number of landings at the date of defect appearance,
|
(k)
|
Warranty Claim number,
|
(l)
|
date of Warranty Claim, and
|
(m)
|
date of delivery of an Aircraft or part to the Buyer.
|
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(vi)
|
Replacements
|
(vii)
|
Rejection
|
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|
12.1.7
|
In-house Warranty
|
(i)
|
Authorization
|
(ii)
|
Conditions of Authorization
|
(a)
|
only if adequate facilities and qualified personnel are available to the Buyer,
|
(b)
|
in accordance with the Seller’s written instructions set forth in documents such as the Aircraft Maintenance Manual, Component Maintenance Manual (Manufacturer), Component Maintenance Manual (Vendor) and Structural Repair Manual, and
|
(c)
|
only to the extent specified by the Seller, or, in the absence of such specification, to the extent reasonably necessary to correct the defect, in accordance with the standards set forth in Subclause 12.1.10..
|
(iii)
|
Seller’s Rights
|
(iv)
|
In-house Warranty Claim Substantiation
|
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|
(a)
|
a report of technical findings with respect to the defect,
|
(b)
|
for parts required to remedy the defect:
|
(c)
|
detailed number of labor hours,
|
(d)
|
agreed In-house Warranty Labor Rate (defined below in Subclause 12.1.7(v)(a)), and
|
(e)
|
total claim value.
|
(v)
|
Credit
|
(a)
|
To determine direct labor costs, only man hours spent on [***] of the Warranted Part alone shall be counted. Man hours required for maintenance work concurrently being carried out on the Aircraft or Warranted Part shall not be included.
|
(b)
|
The man hours counted as set forth above shall be multiplied by an agreed labor rate representing [***] of the Buyer’s composite average hourly labor
|
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|
(c)
|
Direct material costs are determined by the prices at which the Buyer acquired such material, excluding any parts and materials used for overhaul and furnished free of charge by the Seller.
|
(vi)
|
Limitation on Credit
|
(vii)
|
Scrapped Material
|
(viii)
|
LIMITATIONS ON LIABILITY OF SELLER
|
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|
12.1.8
|
Standard Warranty Transferability
|
12.1.9
|
Warranty for Corrected, Replacement or Repaired Warranted Parts
|
12.1.10
|
Good Airline Operation - Normal Wear and Tear
|
(i)
|
any Aircraft or component, equipment, accessory or part thereof that has been repaired, altered or modified after delivery by a party other than the Seller or in a manner other than that set forth in Subclause 12.1.7 or otherwise approved by the Seller or otherwise approved by the Seller;
|
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|
(ii)
|
any Aircraft or component, equipment, accessory or part thereof that has been operated in a damaged state; or
|
(iii)
|
any component, equipment, accessory or part from which the trademark, trade name, part or serial number or other identification marks have been removed.
|
12.2
|
Seller Service Life Policy
|
12.2.1
|
Definitions
|
12.2.1.1
|
“
Item
” means any of the Seller components, equipment, accessories or parts listed in Exhibit F hereto which are installed on an Aircraft at any time during the period of effectiveness of the Service Life Policy as defined below in Subclause 12.2.2.
|
12.2.1.2
|
“
Failure
” means any breakage of, or defect in, an Item that has occurred, that can reasonably be expected to occur on a repetitive or fleetwide basis, and that materially impairs the utility or safety of the Item, [***].
|
12.2.2
|
Periods and Seller’s Undertaking
|
(a)
|
design and furnish to the Buyer a correction for such Item subject to a Failure and provide any parts required for such correction (including Seller designed standard parts but excluding industry standard parts unless a part of an Item), or,
|
(b)
|
replace such Item.
|
12.2.3
|
Seller’s Participation in the Cost
|
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|
12.2.4
|
General Conditions and Limitations
|
12.2.4.1
|
Notwithstanding Subclause 12.2.3, the undertakings given in this Subclause 12.2 shall not be valid during the period applicable to an Item under Subclause 12.1.
|
12.2.4.2
|
The Buyer’s remedy and the Seller’s obligation and liability under this Service Life Policy are subject to compliance by the Buyer with the following conditions precedent:
|
(i)
|
The Buyer shall maintain log books and other historical records with respect to each Item adequate to enable determination as to whether the alleged Failure is covered by this Service Life Policy and, if so, to define the portion of the cost to be borne by the Seller in accordance with Subclause 12.2.3 above.
|
(ii)
|
The Buyer shall keep the Seller informed of any significant incidents relating to an Aircraft, howsoever occurring or recorded, if the failure to so inform the Seller materially prejudices the Seller’s position.
|
(iii)
|
The conditions of Subclause 12.1.10 shall have been complied with.
|
(iv)
|
The Buyer shall carry out specific structural inspection programs for monitoring purposes as may be established by the Seller. Such programs shall be, to the extent possible, compatible with the Buyer’s operational requirements and shall be carried out at the Buyer’s expense. Reports relating thereto shall be regularly furnished to the Seller.
|
(v)
|
In the case of any breakage or defect, the Buyer shall report the same in writing to the Seller within [***] after any breakage or defect in an Item becomes apparent, whether or not said breakage or defect can reasonably be expected to occur in any other Aircraft, and the Buyer shall inform the Seller in sufficient detail about the breakage or defect to enable the Seller to determine whether said breakage or defect is subject to this Service Life Policy.
|
12.2.4.3
|
Except as otherwise provided in this Subclause 12.2, any claim under this Service Life Policy shall be administered as provided in, and shall be subject to the terms and conditions of, Subclause 12.1.6.
|
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|
12.2.4.4
|
In the event that the Seller shall have issued a modification applicable to an Aircraft, the purpose of which is to avoid a Failure, the Seller shall offer to supply to the Buyer the necessary modification kit free of charge or under a pro rata formula established by mutual agreement between the Buyer and the Seller. If such a kit is so offered to the Buyer, then, in respect of such Failure and any Failures that could ensue therefrom, the validity of the Seller’s commitment under this Subclause 12.2 shall be subject to the Buyer’s incorporating such modification in the relevant Aircraft, within a reasonable time, as promulgated by the Seller and in accordance with the Seller’s instructions.
|
12.2.4.5
|
THIS SERVICE LIFE POLICY IS NEITHER A WARRANTY, PERFORMANCE GUARANTEE, NOR AN AGREEMENT TO MODIFY ANY AIRCRAFT OR AIRFRAME COMPONENTS TO CONFORM TO NEW DEVELOPMENTS OCCURRING IN THE STATE OF AIRFRAME DESIGN AND MANUFACTURING ART. THE SELLER’S OBLIGATION UNDER THIS SUBCLAUSE 12.2 IS TO MAKE ONLY THOSE CORRECTIONS TO THE ITEMS OR FURNISH REPLACEMENTS THEREFOR AS PROVIDED IN THIS SUBCLAUSE 12.2. THE BUYER’S SOLE REMEDY AND RELIEF FOR THE NONPERFORMANCE OF ANY OBLIGATION OR LIABILITY OF THE SELLER ARISING UNDER OR BY VIRTUE OF THIS SERVICE LIFE POLICY SHALL BE IN MONETARY DAMAGES, LIMITED TO THE AMOUNT THE BUYER REASONABLY EXPENDS IN PROCURING A CORRECTION OR REPLACEMENT FOR ANY ITEM THAT IS THE SUBJECT OF A FAILURE COVERED BY THIS SERVICE LIFE POLICY AND TO WHICH SUCH NONPERFORMANCE IS RELATED, LESS THE AMOUNT THAT THE BUYER OTHERWISE WOULD HAVE BEEN REQUIRED TO PAY UNDER THIS SUBCLAUSE 12.2 IN RESPECT OF SUCH CORRECTED OR REPLACEMENT ITEM. WITHOUT LIMITING THE EXCLUSIVITY OF WARRANTIES AND GENERAL LIMITATIONS OF LIABILITY PROVISIONS SET FORTH IN SUBCLAUSE 12.5, THE BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL CLAIMS TO ANY FURTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES, ARISING UNDER OR BY VIRTUE OF THIS SERVICE LIFE POLICY.
|
12.2.5
|
Transferability
|
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|
12.3
|
Supplier and ACS Supplier Warranties
|
12.3.1
|
Seller’s Support
|
12.3.2
|
Supplier’s Default
|
12.3.2.1
|
In the event that any Supplier under any standard warranty or indemnity against patent infringements obtained by the Seller pursuant to Subclause 12.3.1 or Subclause 13.1 hereof defaults in the performance of any material obligation under such warranty or indemnity against patent infringements with respect to a Supplier Part, and the Buyer submits within a reasonable time to the Seller reasonable proof that such default has occurred, then Subclause 12.1 or Clause 13 of the Agreement shall apply to the extent the same would have been applicable had such Supplier Part been a Warranted Part except that, for obligations covered under Subclause 12.1, the shorter of (i) the Supplier’s warranty period as indicated in the Supplier Product Support Agreements and (ii) the Seller’s warranty period as indicated in Subclause 12.1.3 of the Agreement shall apply.
|
12.3.2.2
|
In the event that any Supplier under any Supplier Service Life Policy obtained by the Seller pursuant to Subclause 12.3 hereof defaults in the performance of any material obligation with respect thereto, and the Buyer submits within reasonable time to the Seller reasonable proof that such default has occurred, then Subclause 12.2 of the Agreement shall apply to the extent the same would have been applicable had such component, equipment, accessory or part been listed in Exhibit F hereto.
|
12.3.2.3
|
At the Seller’s request, the Buyer shall assign to the Seller, and the Seller shall be subrogated to, all of the Buyer’s rights against the relevant Supplier, with respect to and arising by reason of such default and the Buyer shall provide reasonable assistance to enable the Seller to enforce the rights so assigned.
|
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12.3.3
|
ACS Supplier Warranties
|
12.3.2.2
|
ACS Supplier's Default
|
(a)
|
agrees and acknowledges that it shall have no right of recourse against the Seller with respect to any default by an ACS Supplier; and
|
(b)
|
waives to the fullest extent permitted by applicable law any right of recourse against the Seller (in contract and/or at law) with respect to any default by an ACS Supplier,
|
12.4
|
Interface Commitment
|
12.4.1
|
Interface Problem
|
12.4.2
|
Seller’s Responsibility
|
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|
12.4.3
|
Supplier’s Responsibility
|
12.4.4
|
Joint Responsibility
|
12.4.5
|
General
|
12.4.5.1
|
All requests under this Subclause 12.4 shall be directed both to the Seller and the affected Suppliers.
|
12.4.5.2
|
Except as specifically set forth in this Subclause 12.4, this Subclause 12.4 shall not be deemed to impose on the Seller any obligations not expressly set forth elsewhere in the Agreement.
|
12.4.5.3
|
All reports, recommendations, data and other documents furnished by the Seller to the Buyer pursuant to this Subclause 12.4 shall be deemed to be delivered under the Agreement and shall be subject to the terms, covenants and conditions set forth in this Clause 12 and in Subclause 22.7.
|
12.5
|
EXCLUSIVITY OF WARRANTIES AND GENERAL LIMITATIONS OF LIABILITY
|
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|
(1)
|
ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR ANY GENERAL OR PARTICULAR PURPOSE;
|
(2)
|
ANY IMPLIED OR EXPRESS WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
|
(4)
|
ANY RIGHT, CLAIM OR REMEDY FOR TORT, UNDER ANY THEORY OF LIABILITY, HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO, ACTIONS AND/OR CLAIMS FOR NEGLIGENCE, GROSS NEGLIGENCE, INTENTIONAL ACTS, WILLFUL DISREGARD, IMPLIED WARRANTY, PRODUCT LIABILITY, STRICT LIABILITY OR FAILURE TO WARN;
|
(5)
|
ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM COMMERCIAL CODE OR ANY OTHER STATE OR FEDERAL STATUTE;
|
(6)
|
ANY RIGHT, CLAIM OR REMEDY ARISING UNDER ANY REGULATIONS OR STANDARDS IMPOSED BY ANY INTERNATIONAL, NATIONAL, STATE OR LOCAL STATUTE OR AGENCY;
|
(7)
|
ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:
|
(a)
|
LOSS OF USE OR REPLACEMENT OF ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;
|
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|
(b)
|
LOSS OF, OR DAMAGE OF ANY KIND TO, ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;
|
12.6
|
Duplicate Remedies
|
12.7
|
Negotiated Agreement
|
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|
13.
|
PATENT INDEMNITY
|
13.1
|
Scope
|
(i)
|
any British, French, German, Spanish or US patent, or
|
(ii)
|
any patent issued under the laws of any other country in which the Buyer may lawfully operate the Aircraft, provided that:
|
(a)
|
from the time of design of such Aircraft, accessory, equipment or part and until infringement claims are resolved, such country and the flag country of the Aircraft is each a party to the Chicago Convention on International Civil Aviation of December 7, 1944, and is fully entitled to all benefits of Article 27 thereof, or in the alternative,
|
(b)
|
from such time of design and until infringement claims are resolved, such country and the flag country of the Aircraft is each a party to the International Convention for the Protection of Industrial Property of March 20, 1883 (known as the “
Paris Convention”
).
|
13.2
|
Seller’s Action
|
13.3
|
Seller’s Obligation
|
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|
13.4
|
WAIVER
|
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|
14.
|
TECHNICAL PUBLICATIONS
|
14.1
|
Scope
|
14.1.1
|
Except as otherwise set forth in this Clause 14, the Technical Data shall be supplied in the English language using the aeronautical terminology in common use.
|
14.1.2
|
Range, form, type, format, quantity and delivery schedule of the Technical Data to be provided under the Agreement are outlined in Exhibits G-1 and G-2 hereto. In respect of the A350-900 Aircraft, all Technical Data shall be available on-line as set forth in Subclause 14.4. For purposes of this Agreement, Technical Data provided off-line shall relate only to the A330-900neo Aircraft.
|
14.2
|
Aircraft Identification for Technical Data
|
14.2.1
|
For those Technical Data that are customized to the Buyer’s Aircraft, the Buyer agrees to the allocation of fleet serial numbers (“
Fleet Serial Numbers
”) in the form of blocks of numbers selected in the range from 0001 to 9999.
|
14.2.2
|
The sequence shall not be interrupted unless two (2) different Propulsion Systems or two (2) different models of Aircraft are selected.
|
14.2.3
|
The Buyer shall indicate to the Seller the Fleet Serial Number allocated to each Aircraft corresponding to the delivery schedule set forth in Subclause 9.1 no later than [***] before the Scheduled Delivery Month of the first Aircraft. Neither the designation of such Fleet Serial Numbers nor the subsequent allocation of the Fleet Serial Numbers to Manufacturer Serial Numbers for the purpose of producing certain customized Technical Data shall constitute any property, insurable or other interest of the Buyer in any Aircraft prior to the Delivery of such Aircraft as provided for in the Agreement.
|
14.3
|
Integration of Equipment Data
|
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|
14.3.1
|
Supplier Equipment
|
14.3.2
|
Airbus Contracted Supplier Equipment
|
14.3.3
|
Buyer Furnished Equipment
|
14.3.3.1
|
The Seller shall introduce Buyer Furnished Equipment data for Buyer Furnished Equipment that is installed on the Aircraft by the Seller (hereinafter “
BFE Data
”) into the customized Technical Data, at no additional charge to the Buyer for the initial issue of the Technical Data provided at or before Delivery of the first Aircraft provided such BFE Data is provided in accordance with the conditions set forth in Subclauses [***] through [***].
|
14.3.3.2
|
The Buyer shall supply, or shall cause the BFE Supplier(s) to supply on its behalf, the BFE Data to the Seller at least [***] prior to the Scheduled Delivery Month of the first Aircraft. If the Buyer does not supply such BFE Data to the Seller by such time, then the Seller shall, at no additional cost to the Buyer, incorporate such BFE Data at the first scheduled revision following [***]s after the date the BFE Data is provided.
|
14.3.3.3
|
The Buyer shall supply the BFE Data to the Seller in English and in compliance with the then applicable revision of ATA Specification 2200 (iSpec 2200), Information Standards for Aviation Maintenance or, in respect to the A350-900 Aircraft, in compliance with S1000D Specification jointly defined by the ASD (Aerospace and Defense Industries Association of Europe), AIA (Aerospace Industries Association) and ATA (Air Transport Association of America), as applicable.
|
14.3.3.4
|
The Buyer and the Seller shall agree on the requirements for the provision to the Seller of BFE Data for “on-aircraft maintenance”, such as but not limited to timeframe, media and format in which the BFE Data shall be supplied to the Seller, in order to manage the BFE Data integration process in an efficient, expeditious and economic manner.
|
14.3.3.5
|
The BFE Data shall be delivered in digital format and/or in Portable Document Format (PDF), as agreed between the Buyer and the Seller.
|
14.3.3.6
|
[***]
|
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14.4
|
Supply
|
14.4.1
|
In respect of the A330-900neo Aircraft, Technical Data shall be supplied on-line and/or off-line, as set forth in Exhibit G-1 hereto. In respect of the A350-900 Aircraft, all Technical Data shall be made available on-line through the relevant services on the Seller’s customer portal AirbusWorld (“
AirbusWorld
”).
|
14.4.2
|
[***]
|
14.5
|
Delivery of off-line Technical Data
|
14.5.1
|
For Technical Data provided off-line, such Technical Data and corresponding revisions shall be sent to up to two (2) addresses as indicated by the Buyer.
|
14.5.2
|
Technical Data provided off-line shall be delivered by the Seller at the Buyer’s named place of destination under DAP conditions. The term Delivered At Place (DAP) is defined in the Incoterms 2010 publication issued by the International Chamber of Commerce, (the “
DAP – Incoterm
”).
|
14.5.3
|
The Technical Data shall be delivered according to a mutually agreed schedule to correspond with the Deliveries of Aircraft. The Buyer shall provide no less than [***] notice when requesting a change to such delivery schedule.
|
14.5.4
|
It shall be the responsibility of the Buyer to coordinate and satisfy local Aviation Authorities’ requirements with respect to Technical Data. Reasonable quantities of such Technical Data shall be supplied by the Seller [***] to the Buyer at the Buyer’s named place of destination. Notwithstanding the foregoing, and in agreement with the relevant Aviation Authorities, preference shall be given to the on-line access to such Buyer’s Technical Data through AirbusWorld.
|
14.6
|
Revision Service
|
14.7
|
Service Bulletins (SB) Incorporation
|
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14.8
|
Technical Data Familiarization
|
14.9
|
Customer Originated Changes
|
14.10
|
AirN@v and the Advanced Consultation Tool
|
14.10.1
|
AirN@v Family Products
|
14.10.1.1
|
In respect of the A330-900neo Aircraft, the Technical Data listed below are provided on DVD and include integrated software (hereinafter together referred to as the “
AirN@v Family
”).
|
14.10.1.2
|
The AirN@v Family covers several Technical Data domains, reflected by the following AirN@v Family products:
|
14.10.2
|
Advanced Consultation Tool
|
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14.10.2.1
|
In respect of the A350-900 Aircraft, some Technical Data shall be made available through several domains listed below and shall be provided on-line through an Advanced Consultation Tool, which shall include the necessary navigation software and viewer to browse the Technical Data (hereinafter together referred to as “
Advanced Consultation Tool
”).
|
14.10.2.2
|
The Advanced Consultation Tool encompasses the following domains:
|
14.10.3
|
Further details on the Technical Data included in the products set forth in Subclauses [***] and [***] are set forth in Exhibits G-1 and G-2.
|
14.10.4
|
The licensing conditions for the use of AirN@v Family integrated software and the Advanced Consultation Tool shall be set forth in Part 1 of Exhibit I to the Agreement (the “
End-User License Agreement for Airbus Software
”).
|
14.10.5
|
The revision service and the license to use AirN@v Family products and the Advanced Consultation Tool shall be granted free of charge for the duration of the corresponding Revision Service Period. At the end of such Revision Service Period, the yearly revision service for AirN@v Family products and the Advanced Consultation Tool and the associated license fee shall be provided to the Buyer under the commercial conditions set forth in the Seller’s then current Customer Services Catalog.
|
14.11
|
On-Line Technical Data
|
14.11.1
|
All Technical Data set forth in Exhibit G-2 and the Technical Data set forth in Exhibit G-1, which is provided on-line, shall be made available to the Buyer through AirbusWorld, access to which shall be subject to the AirbusWorld GTC.
|
14.11.2
|
Such provision shall be [***] for the duration of the corresponding Revision Service Period.
|
14.11.3
|
The list of the Technical Data provided on-line may be extended from time to time. For any Technical Data which is or becomes available on-line, the Seller reserves the right to suppress other formats for the concerned Technical Data. Should the Seller elect to proceed with such format suppression and should the Buyer be interested in participating in the associated pilot phase, the Seller shall invite the Buyer to take part in said pilot phase.
|
14.11.4
|
Access to AirbusWorld shall be granted [***] of the Buyer’s users (including [***] Buyer’s Administrators) for the Technical Data related to the Aircraft which shall be operated by the Buyer.
|
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|
14.11.5
|
For the avoidance of doubt, Technical Data accessed through AirbusWorld - which access shall be covered by the AirbusWorld GTC – shall remain subject to the conditions of this Clause 14.
|
14.11.6
|
Should AirbusWorld provide access to Technical Data in software format, the use of such software shall be further subject to the conditions of the End-User License Agreement for Airbus Software.
|
14.12
|
Waiver, Release and Renunciation
|
(1)
|
ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR ANY GENERAL OR PARTICULAR PURPOSE;
|
(2)
|
ANY IMPLIED OR EXPRESS WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
|
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(3)
|
ANY RIGHT, CLAIM OR REMEDY FOR BREACH OF CONTRACT;
|
(4)
|
ANY RIGHT, CLAIM OR REMEDY FOR TORT, UNDER ANY THEORY OF LIABILITY, HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO, ACTIONS AND/OR CLAIMS FOR NEGLIGENCE, GROSS NEGLIGENCE, INTENTIONAL ACTS, WILLFUL DISREGARD, IMPLIED WARRANTY, PRODUCT LIABILITY, STRICT LIABILITY OR FAILURE TO WARN;
|
(5)
|
ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM COMMERCIAL CODE OR ANY OTHER STATE OR FEDERAL STATUTE;
|
(6)
|
ANY RIGHT, CLAIM OR REMEDY ARISING UNDER ANY REGULATIONS OR STANDARDS IMPOSED BY ANY INTERNATIONAL, NATIONAL, STATE OR LOCAL STATUTE OR AGENCY;
|
(7)
|
ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:
|
(a)
|
LOSS OF USE OR REPLACEMENT OF ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;
|
(b)
|
LOSS OF, OR DAMAGE OF ANY KIND TO, ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;
|
(c)
|
LOSS OF PROFITS AND/OR REVENUES;
|
(d)
|
ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.
|
14.13
|
Proprietary Rights
|
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|
14.13.1
|
All proprietary rights, including but not limited to patent, design and copyrights, relating to Technical Data shall remain with the Seller and/or its Affiliates as the case may be.
|
14.13.2
|
Whenever the Agreement and/or any Technical Data provides for manufacturing by the Buyer, the consent given by the Seller shall not be construed as any express or implicit approval whatsoever of the Buyer or of the manufactured products. The supply of the Technical Data shall not be construed as any further right for the Buyer to design or manufacture any Aircraft or part thereof or spare part.
|
14.14
|
Performance Engineer’s Program
|
14.14.1
|
In addition to the Technical Data provided under Clause 14, the Seller shall provide to the Buyer Software Services, which shall consist of the Performance Engineer’s Programs (“
PEP
”) for the Aircraft type covered under the Agreement. Such PEP is composed of software components and databases and its use is subject to the license conditions set forth in to the conditions of the End-User License Agreement for Airbus Software.
|
14.14.2
|
Use of the PEP shall be [***] to be used on the Buyer’s computers for the purpose of computing performance engineering data. The PEP is intended [***].
|
14.14.3
|
The license to use the PEP and the revision service shall be provided [***] for the duration of the corresponding Revision Service Period as set forth in Subclause 14.5.
|
14.14.4
|
At the end of such PEP Revision Service Period, the PEP shall be provided to the Buyer at the standard commercial conditions set forth in the Seller’s then current Customer Services Catalog.
|
14.15
|
Future Developments
|
14.15.1
|
The Seller continuously monitors technological developments and applies them to Technical Data, document and information systems’ functionalities, production and methods of transmission.
|
14.15.2
|
The Seller shall implement and the Buyer shall accept such new developments, it being understood that the Buyer shall be informed in due time by the Seller of such new developments and their application and of the date by which the same shall be implemented by the Seller. [***]
|
14.16
|
Confidentiality
|
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|
14.16.1
|
This Clause 14, the Technical Data, the Software Services and their content are designated as confidential. All such Technical Data and Software Services are provided to the Buyer for the sole use of the Buyer who undertakes not to disclose the contents thereof to any third party without the prior written consent of the Seller save as permitted therein or pursuant to any government or legal requirement imposed upon the Buyer.
|
14.16.2
|
Should the Buyer wish (i) to disclose this Clause 14 and/or any Technical Data and/or the Software Services to a Third Party or (ii) specifically, if the Buyer intends to designate a maintenance and repair organization or a third party to perform the maintenance of the Aircraft or to perform data processing on its behalf (each a “
Third Party
”), then the Buyer shall request the Seller’s written authorization to disclose such data.
|
14.16.3
|
The Buyer hereby undertakes to cause such Third Party to agree to be bound by the conditions and restrictions set forth in this Clause 14 with respect to the disclosed Clause, Technical Data or Software Services and shall cause such Third Party to (i) enter into a confidentiality agreement, inclusive of appropriate licensing conditions, with the Seller, and (ii) commit to use the Technical Data solely for the purpose of maintaining the Buyer’s Aircraft, and the Software Services exclusively for processing the Buyer’s data.
|
14.17
|
Transferability
|
15.
|
FIELD ASSISTANCE
|
15.1
|
Customer Support Representative(s)
|
15.1.1
|
In addition to the services of Seller customer support representative(s) (each a “
Seller Representative
”), provided by the Seller in prior agreement between the Seller and the Buyer, the Seller shall provide [***] to the Buyer [***] of exclusive services of a Seller Representative(s) at the Buyer’s main base or such other locations as the parties may agree at Delivery of the first Aircraft.
|
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15.1.2
|
In providing the services as described hereabove, any Seller Representatives, or any Seller employee(s) providing services to the Buyer hereunder, are deemed to be acting in an advisory capacity only and at no time shall they be deemed to be acting as Buyer’s employees or agents, either directly or indirectly.
|
15.1.3
|
The Seller shall cause similar services to be provided by representatives of the Propulsion System Manufacturer and Suppliers, when necessary and applicable.
|
15.2
|
Buyer’s Support
|
15.2.1
|
From the date of arrival of the first Seller Representative and for the duration of the assignment, the Buyer shall provide [***] a suitable lockable office, conveniently located with respect to the Buyer’s maintenance facilities, with complete office furniture and equipment including telephone, internet, email and facsimile connections for the sole use of the Seller Representative(s). All related communication costs shall be borne by [***].
|
15.2.2
|
[***]
|
15.2.3
|
INTENTIONALLY LEFT BLANK
|
15.2.4
|
Should the Buyer request any Seller Representative referred to in Subclause 15.1 above to travel on business to a city other than his usual place of assignment, [***].
|
15.2.5
|
The Buyer shall assist the Seller in obtaining from the civil authorities of the Buyer’s country those documents that are necessary to permit the Seller Representative to live and work in the Buyer’s country. Failure of the Seller to obtain the necessary documents shall relieve the Seller of any obligation to the Buyer under the provisions of Subclause 15.1.
|
15.2.6
|
INTENTIONALLY LEFT BLANK
|
15.2.7
|
In the event that the Buyer elects to relocate one of the Seller Representatives on a temporary basis, [***]. [***]
|
15.3
|
Withdrawal of the Seller Representative
|
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|
16.
|
TRAINING
|
16.1
|
General
|
16.1.1
|
This Clause 16 sets forth the terms and conditions for the supply of training support and services for the Buyer’s personnel to support the Aircraft operation.
|
16.1.2
|
The range, quantity and validity of training to be provided free of charge under the Agreement are covered in Appendix A to this Clause 16.
|
16.1.3
|
Scheduling of training courses covered in Appendix A shall be mutually agreed during a training conference (the “
Training Conference
”) that shall be held no later than [***].
|
16.2
|
Training Location
|
16.2.1
|
The Seller shall provide training at an affiliated training center in Miami, U.S.A. or such other of its training centers as agreed upon by the Seller and the Buyer (individually a “
Seller’s Training Center
” and collectively, the “
Seller’s Training Centers
”).
|
16.2.2
|
If the unavailability of facilities or scheduling difficulties make training by the Seller at any Seller’s Training Center impractical, the Seller shall ensure that the Buyer is provided with such training at another location designated by the Seller.
|
16.2.3
|
Upon the Buyer’s request, the Seller may also provide certain training at a location other than the Seller’s Training Centers, including one of the Buyer’s bases, if and when practicable for the Seller, under terms and conditions to be mutually agreed upon. In such event, all additional charges listed in Subclauses 16.5.2 and 16.5.3 shall be borne by the Buyer.
|
16.2.4
|
If the Buyer requests training at a location as indicated in Subclause 16.2.3 and requires such training to be an Airbus approved course, the Buyer undertakes that the training facilities shall be approved prior to the performance of such training. The Buyer shall, as necessary and in due time prior to the performance of such training, provide access to the training facilities set forth in Subclause 16.2.3 to the Seller’s and the competent Aviation Authority’s representatives for approval of such facilities.
|
16.3
|
Training Courses
|
16.3.1
|
Training courses shall be as described in the Seller’s customer services catalog (the “
Seller’s Customer Services Catalog
”). The Seller’s Customer Services Catalog also sets forth the minimum and maximum number of trainees per course.
|
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|
16.3.2
|
The following terms and conditions shall apply to training performed by the Seller:
|
(i)
|
Training courses shall be the Seller’s standard courses as described in the Seller’s Customer Services Catalog valid at the time of execution of the course. The Seller shall be responsible for all training course syllabi, training aids and training equipment necessary for the organization of the training courses; for the avoidance of doubt, for the purpose of performing training, such training equipment does not include aircraft.
|
(ii)
|
The training equipment and the training curricula used for the training of flight, cabin and maintenance personnel shall not be fully customized but shall be configured in order to obtain the relevant Aviation Authority’s approval and to support the Seller’s training programs.
|
(iii)
|
Training data and documentation for trainees receiving the training at the Seller’s Training Centers shall be [***]. Training data and documentation shall be marked “FOR TRAINING ONLY” and as such are supplied for the sole and express purpose of training; training data and documentation shall not be revised.
|
16.3.3
|
When the Seller’s training courses are provided by the Seller’s instructors (individually an “
Instructor
” and collectively “
Instructors
”) the Seller shall deliver a Certificate of Recognition or a Certificate of Course Completion (each a “
Certificate
”) or an attestation (an “
Attestation
”), as applicable, at the end of any such training course. Any such Certificate or Attestation shall not represent authority or qualification by any Aviation Authority but may be presented to such Aviation Authority in order to obtain relevant formal qualification.
|
16.3.4
|
[***]:
|
(i)
|
[***];
|
(ii)
|
[***];
|
(iii)
|
[***].
|
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16.3.5
|
Rescheduling and Cancellation
|
16.3.5.1
|
Should the Buyer use none or only part of the training to be provided pursuant to this Clause 16, [***].
|
16.3.5.2
|
Should the Buyer decide to cancel or reschedule, fully or partially, and irrespective of the location of the training, a training course, a minimum advance notification of at least [***] prior to the relevant training course start date is required. Any later cancellation or change, when courses cannot be allocated to other customers, shall be deducted from the training allowances defined herein or shall be charged to the Buyer, as applicable.
|
16.3.5.3
|
If the notification occurs less than [***] prior to such training, when courses cannot be allocated to other customers, a cancellation fee corresponding to [***] of such training shall be, as applicable, either deducted from the training allowance defined in Appendix A or invoiced at the Seller’s then applicable price, provided that the courses cannot be allocated to other customers.
|
16.3.5.4
|
If the notification occurs less than [***] prior to such training, when courses cannot be allocated to other customers, a cancellation fee corresponding to [***] of such training shall be, as applicable, either deducted from the training allowance defined in Appendix A or invoiced at the Seller’s then applicable price. provided that the courses cannot be allocated to other customers.
|
16.3.5.5
|
All courses exchanged under Subclause 16.3.4 shall remain subject to the provisions of this Subclause 16.3.5.
|
16.4
|
Prerequisites and Conditions
|
16.4.1
|
Training shall be conducted in English and all training aids used during such training shall be written in English using common aeronautical terminology.
|
16.4.2
|
The Buyer hereby acknowledges that all training courses conducted pursuant to this Clause 16 are “Standard Transition Training Courses” and not “Ab Initio Training Courses”.
|
16.4.3
|
Trainees shall have the prerequisite knowledge and experience specified for each course in the Seller’s Customer Services Catalog.
|
16.4.4
|
The Buyer shall be responsible for the selection of the trainees and for any liability with respect to the entry knowledge level of the trainees.
|
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|
16.4.5
|
The Seller reserves the right to verify the trainees’ proficiency and previous professional experience.
|
16.4.6
|
The Seller shall provide to the Buyer during the Training Conference an “Airbus Pre-Training Survey” for completion by the Buyer for each trainee.
|
16.4.7
|
If the Seller determines at any time during the training that a trainee lacks the required level, following consultation with the Buyer, such trainee shall be withdrawn from the program or, upon the Buyer’s request, the Seller may be consulted to direct the above mentioned trainee(s), if possible, through any other required additional training, which shall be at the Buyer’s expense.
|
16.4.8
|
The Seller shall in no case warrant or otherwise be held liable for any trainee’s performance as a result of any training provided.
|
16.5
|
Logistics
|
16.5.1
|
Trainees
|
16.5.1.1
|
Living and travel expenses for the Buyer’s trainees shall be borne by the Buyer.
|
16.5.1.2
|
Notwithstanding the above, when training is done at the Seller’s affiliated training center in Miami, U.S.A, [***].
|
16.5.1.3
|
It shall be the responsibility of the Buyer to make all necessary arrangements relative to authorizations, permits and/or visas necessary for the Buyer’s trainees to attend the training courses to be provided hereunder. Rescheduling or cancellation of courses due to the Buyer’s failure to obtain any such authorizations, permits and/or visas shall be subject to the provisions of Subclauses 16.3.5.1 thru 16.3.5.4.
|
16.5.2
|
Training at External Location - Seller’s Instructors
|
16.5.2.1
|
In the event of training being provided at the Seller’s request at any location other than the Seller’s Training Centers, as provided for in Subclause 16.2.2, [***].
|
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|
16.5.2.2
|
In the event of training being provided by the Seller’s Instructor(s) at any location other than the Seller’s Training Centers at the Buyer’s request, [***].
|
16.5.2.3
|
Living Expenses
|
16.5.2.4
|
Air Travel
|
16.5.2.5
|
Buyer’s Indemnity
|
16.5.3
|
Training Material and Equipment Availability - Training at External Location
|
16.6
|
Flight Operations Training
|
16.6.1
|
Flight Crew Training Course
|
16.6.2
|
Flight Crew Line Initial Operating Experience
|
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|
16.6.3
|
Type Specific Cabin Crew Training Course
|
16.6.4
|
Training on Aircraft
|
16.7
|
Performance / Operations Courses
|
16.8
|
Maintenance Training
|
16.8.1
|
The Seller shall provide maintenance training for the Buyer’s ground personnel as further set forth in Appendix A to this Clause 16.
|
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|
16.8.2
|
Practical Training on Aircraft
|
16.9
|
Supplier and Propulsion System Manufacturer Training
|
16.10
|
Proprietary Rights
|
16.11
|
Confidentiality
|
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|
16.12
|
Transferability
|
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|
1.
|
FLIGHT OPERATIONS TRAINING
|
1.1
|
Flight Crew Training (standard transition course)
|
1.2
|
Flight Crew Line Initial Operating Experience
|
1.3
|
Type Specific Cabin Crew Training Course
|
1.4
|
Airbus Training Credits
|
1.5
|
Airbus Simulator and APT Trainer Availability
|
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|
2.
|
PERFORMANCE / OPERATIONS COURSE(S)
|
3.
|
MAINTENANCE TRAINING
|
3.1
|
The Seller shall provide to the Buyer [***] of maintenance training [***] for the Buyer’s personnel which may be used for any maintenance course in the Seller’s Customer Services Catalogue.
|
3.2
|
The Seller shall provide to the Buyer [***].
|
4.
|
TRAINEE DAYS ACCOUNTING
|
4.1
|
For instruction at the Seller’s Training Centers: [***]. The number of trainees originally registered at the beginning of the course shall be counted as the number of trainees to have taken the course.
|
4.2
|
For instruction outside of the Seller’s Training Centers: [***] Seller Instructor equals the actual number of trainees attending the course or a [***] trainee days, [***].
|
4.3
|
For structure maintenance training courses outside the Seller’s Training Center(s), [***].
|
4.4
|
For practical training, whether on training devices or on aircraft, [***] trainee days.
|
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17.
|
SUPPLIER AND ACS SUPPLIERS PRODUCT SUPPORT
|
17.1
|
Supplier Product Support Agreements
|
17.1.1
|
The Seller has obtained enforceable and transferable product support agreements from Suppliers of Supplier Parts listed in the Specification, the benefit of which is hereby accepted by the Buyer. Said agreements become enforceable as soon as and for as long as one or more commercial airlines anywhere in the world operate Airbus aircraft.
|
17.1.2
|
These agreements are based on the “
World Airlines Suppliers Guide
” and include Supplier commitments as contained in the “
Supplier Product Support
Agreements
” and are made available to the Buyer through the SPSA Application, which include the following provisions:
|
17.1.2.1
|
Technical Data and manuals required to operate, maintain, service and overhaul the Supplier Parts. Such Technical Data and manuals shall be prepared in accordance with the applicable provisions of ATA Specification including revision service and be published in the English language. The Seller shall recommend that a software user guide, where applicable, be supplied in the form of an appendix to the Component Maintenance Manual, such data shall be provided in compliance with the applicable ATA Specification;
|
17.1.2.2
|
Warranties and guarantees, including standard warranties. In addition, landing gear Suppliers shall provide service life policies for selected structural landing gear elements;
|
17.1.2.3
|
Training to ensure efficient operation, maintenance and overhaul of the Supplier Parts for the Buyer’s instructors, shop and line service personnel;
|
17.1.2.4
|
Spares data in compliance with ATA iSpecification 2200, initial provisioning recommendations, spare parts and logistic service including routine and expedite deliveries;
|
17.2
|
Supplier Compliance
|
17.3
|
Supplier Part Repair Stations
|
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17.4
|
ACS Suppliers Support Agreements
|
17.4.1
|
The Seller has obtained enforceable and transferable product support agreements from ACS Suppliers of ACS Equipment, the benefit of which is hereby accepted by the Buyer. Said agreements become enforceable as soon as and for as long as one or more commercial airlines anywhere in the world operate Airbus aircraft.
|
17.4.2
|
These agreements are based on the "World Airlines Suppliers Guide", are made available to the Buyer through the SPSA Application, and include ACS Supplier commitments contained in the “Airbus Contracted Suppliers Support Agreements”. Such commitments shall be substantially the same as those included in the Supplier Product Support Agreements, and detailed in Subclause 17.1.2, except that guarantees, if any, shall be negotiated and agreed directly between the Buyer and the corresponding ACS Supplier.
|
17.4.3
|
ACS Supplier Compliance
|
17.4.4
|
The Seller shall monitor ACS Suppliers’ compliance with support commitments defined in the Airbus Contracted Suppliers Support Agreements and shall provide assistance to the Buyer as may reasonably be required.
|
17.5
|
Nothing in this Subclause 17.4 shall be construed to prevent or limit the Buyer from entering into direct negotiations with a Supplier or an ACS Supplier with respect to different or additional terms and conditions applicable to Suppliers Parts or ACS Equipment selected by the Buyer to be installed on the Aircraft.
|
17.6
|
Familiarization Training
|
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|
18.
|
BUYER FURNISHED EQUIPMENT AND ACS EQUIPMENT
|
18.1
|
Buyer Furnished Equipment
|
18.1.1
|
Administration
|
18.1.1.1
|
In accordance with the Specification, the Seller shall install those items of equipment that are identified in the Specification as being furnished by the Buyer (“
Buyer Furnished Equipment
” or “
BFE
”), provided that (i) in respect of the A330-900neo Aircraft, the BFE and the supplier of such BFE (the “
BFE Supplier
”) are referred to in the Airbus BFE Product Catalog valid at the time the BFE Supplier is selected and (ii) in respect of the A350-900 Aircraft, the Supplier of BFE is an Airbus Contracted Supplier.
|
18.1.1.2
|
Notwithstanding the foregoing and without prejudice to Subclause 2.1.3, if the Buyer wishes to install BFE manufactured by a supplier who is not referred to in the Airbus BFE Product Catalog (applicable to the A330-900neo but not the A350-900 Aircraft), the Buyer shall so inform the Seller and the Seller shall conduct a feasibility study of the Buyer’s request, in order to consider approving such supplier, [***]. In addition, it is a prerequisite to such approval that the considered supplier is qualified by the Seller’s Aviation Authorities to produce equipment for installation on civil aircraft. [***] The Buyer shall cause any BFE supplier approved under this Subclause 18.1.1.2 (each an “
Approved BFE Supplier
”) to comply with the conditions set forth in this Clause 18 and specifically Subclause 18.1.2.
|
18.1.1.3
|
The Seller shall advise the Buyer of the dates, [***], by which, in the planned release of engineering for the Aircraft, the Seller requires a written detailed engineering definition encompassing a Declaration of Design and Performance (the “
BFE Engineering Definition
”). The Seller shall provide to the Buyer and/or the BFE Supplier(s), within an appropriate timeframe, the necessary interface documentation to enable the development of the BFE Engineering Definition.
|
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18.1.1.4
|
The Seller shall also provide [***] to the Buyer a schedule of dates and the shipping addresses for delivery of the BFE and, where requested by the Seller, additional spare BFE to permit installation in the Aircraft and Delivery of the Aircraft in accordance with the Aircraft delivery schedule. The Buyer shall provide, or cause the BFE Suppliers to provide, the BFE by such dates in a serviceable condition, in order to allow performance of any assembly, installation, test or acceptance process in accordance with the Seller’s industrial schedule. In order to facilitate the follow-up of the timely receipt of BFE, the Buyer shall, upon the Seller’s request, provide to the Seller dates and references of all BFE purchase orders placed by the Buyer.
|
18.1.1.5
|
Without prejudice to the Buyer’s obligations hereunder, in order to facilitate the development of the BFE Engineering Definition, the Seller shall organize meetings between the Buyer and BFE Suppliers. The Buyer hereby agrees to participate in such meetings and to provide adequate technical and engineering expertise to reach decisions within the defined timeframe.
|
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|
(i)
|
to monitor the BFE Suppliers and ensure that they shall enable the Buyer to fulfill its obligations, including but not limited to those set forth in the Customization Milestone Chart;
|
(ii)
|
to place BFE purchase orders in a timely manner in order to ensure delivery of the corresponding BFE in accordance with the dates provided as per Subclause 18.1.1.4.
|
(iii)
|
that, should a timeframe, quality or other type of risk be identified at a given BFE Supplier, the Buyer shall allocate resources to such BFE Supplier so as not to jeopardize the industrial schedule of the Aircraft;
|
(iv)
|
for major BFE, including, but not being limited to, seats, galleys and IFE (“
Major BFE for the A330-900neo Aircraft
”), and for BFE Premium Class Seats, BFE IFE, and major BFE for A350-900 Aircraft, to participate on a mandatory basis in the specific meetings that take place between BFE Supplier selection and BFE delivery, namely:
|
(a)
|
Preliminary Design Review (“
PDR
”),
|
(b)
|
Critical Design Review (“
CDR
”);
|
(v)
|
to attend the First Article Inspection (“
FAI
”) for the A330-900neo Aircraft for the first shipset of all Major BFE. Should the Buyer not attend such FAI, the Buyer shall delegate the FAI to the BFE Supplier and confirmation thereof shall be supplied to the Seller in writing;
|
(vi)
|
to attend the Source Inspection (“
SI
”) that takes place at the BFE Supplier’s premises prior to shipping, for each shipset of all Major BFE for the A330-900neo Aircraft; and for each shipset of all BFE Premium Class seats and when applicable BFE IFE and major BFE of the A350-900 Aircraft. Should the Buyer not attend such SI, the Buyer shall delegate the SI to the BFE Supplier and confirmation thereof shall be brought to the Seller in writing. Should the Buyer not attend the SI, the Buyer shall be deemed to have accepted the conclusions of the BFE Supplier with respect to such SI.
|
18.1.1.6
|
The BFE shall be imported into FRANCE or into GERMANY by the Buyer under a suspensive customs system (“
Régime de l’entrepôt douanier ou régime de perfectionnement actif
“ or “
Zollverschluss
”) without application of any French or German tax or customs duty, [***], to the following shipping addresses:
|
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|
18.1.2
|
Applicable Requirements
|
(i)
|
be manufactured and supplied by a qualified BFE Supplier, and
|
(iii)
|
be, in respect of the A350-900 Aircraft only, and in the case of BFE Premium Class Seats and IFE equipment, supplied by a qualified ACS Supplier, and
|
(iv)
|
be delivered with the relevant certification documentation, including but not limited to the DDP, and
|
(v)
|
comply with the BFE Engineering Definition, and
|
(vi)
|
comply with applicable requirements incorporated by reference to the Type Certificate and listed in the Type Certificate Data Sheet, and
|
(vii)
|
be approved by the Aviation Authority issuing the Export Airworthiness Certificate and by the Buyer’s Aviation Authority for installation and use on the Aircraft at the time of Delivery of the Aircraft, and
|
(viii)
|
not infringe any patent, copyright or other intellectual property right of the Seller any third party, and
|
(ix)
|
not be subject to any legal obligation or other encumbrance that may prevent, hinder or delay the installation of the BFE in the Aircraft and/or the Delivery of the Aircraft.
|
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|
18.2
|
Airbus Contracted Supplier Equipment
|
18.2.1.1
|
Administration
|
18.2.1.2
|
ACS Selection
|
18.2.1.2.1
|
The Buyer shall select ACS Equipment and all associated features out of the options proposed by the Seller in the A350XWB Family ADD applicable at the time of customization. The definition of the selected ACS Equipment and its features shall be frozen prior to the TCM.
|
18.2.1.2.2
|
With respect to ACS Seats, it is hereby agreed that any IFE equipment to be incorporated into such ACS Seats shall be exclusively ACS Catalogue Items.
|
18.2.1.3
|
Meetings with ACS Suppliers
|
18.3
|
Buyer’s Obligation and Seller’s Remedies
|
18.3.1.1
|
Any delay or failure by the Buyer or the BFE Suppliers in:
|
(i)
|
complying with the foregoing warranty or in providing the BFE Engineering Definition or field service mentioned in Subclauses 18.1.1.3 or 18.1.1.4, as applicable, or
|
(ii)
|
furnishing the BFE in a serviceable condition at the requested delivery date, or
|
(iii)
|
obtaining any required approval for such BFE equipment under the above mentioned Aviation Authorities’ regulations,
|
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18.3.2
|
In addition, in the event of any delay or failure mentioned in 18.3.1.1 above, the Seller may:
|
(i)
|
select, purchase and install equipment similar to the BFE at issue, in which event the Final Price of the affected Aircraft shall [***]
|
(ii)
|
if the BFE is delayed by more than [***].
|
18.3.3
|
Title and Risk of Loss
|
18.3.4
|
Disposition of BFE Following Termination
|
18.3.4.1
|
If a termination of the Agreement pursuant to the provisions of Clause 21 occurs [***] with respect to an Aircraft in which all or any part of the BFE has been installed prior to the date of such termination, [***].
|
18.3.4.2
|
[***]
|
18.3.4.3
|
The Seller shall notify the Buyer as to those items of BFE [***]. The Buyer shall have no claim against the Seller for damage, loss or destruction of any item of BFE removed from the Aircraft and not removed from Seller’s facility within such period.
|
18.3.4.4
|
The Buyer shall have no claim against the Seller for damage to or destruction of any item of BFE damaged or destroyed in the process of being removed from the Aircraft, provided that the Seller shall use reasonable care in such removal.
|
18.3.4.5
|
The Buyer shall grant the Seller title to any BFE items that cannot be removed from the Aircraft [***].
|
19.
|
ASSIGNMENT
|
19.1
|
Successors and Assigns
|
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|
19.2
|
Seller’s Designations
|
19.3
|
Assignment in Case of Resale or Lease
|
19.4
|
[***]
|
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|
20.
|
INDEMNITIES AND INSURANCE
|
20.1
|
Seller’s Indemnities
|
(a)
|
claims for injuries to, or death of, the Seller’s directors, officers, agents or employees, or loss of, or damage to, property of the Seller or its employees when such Losses occur during or are incidental to either party’s exercise of any right or performance of any obligation under this Agreement, and
|
(b)
|
claims for injuries to, or death of, third parties, or loss of, or damage to, property of third parties, occurring during or incidental to the Technical Acceptance Flights.
|
20.2
|
Buyer’s Indemnities
|
(a)
|
claims for injuries to, or death of, the Buyer’s directors, officers, agents or employees, or loss of, or damage to, property of the Buyer or its employees, when such Losses occur during or are incidental to either party’s exercise of any right or performance of any obligation under this Agreement, and
|
(b)
|
claims for injuries to, or death of, third parties, or loss of, or damage to, property of third parties, occurring during or incidental to (i) the provision of Seller Representatives services under Clause 15 including services performed on board the aircraft or (ii) the provision of Aircraft Training Services to the Buyer.
|
20.3
|
Notice and Defense of Claims
|
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|
20.4
|
Insurance
|
(a)
|
cause the Seller, its Affiliates, its subcontractors and each of their respective directors, officers, agents and employees to be named as additional insured under the Buyer’s Comprehensive Aviation Legal Liability insurance policies, including War Risks and Allied Perils (such insurance to include the AVN 52E Extended Coverage Endorsement Aviation Liabilities or any further Endorsement replacing AVN 52E as may be available as well as any excess coverage in respect of War and Allied Perils Third Parties Legal Liabilities Insurance), and
|
(b)
|
with respect to the Buyer’s Hull All Risks and Hull War Risks insurances and Allied Perils, cause the insurers of the Buyer’s hull insurance policies to waive all rights of subrogation against the Seller, its Affiliates, its subcontractors and each of their respective directors, officers, agents, employees and insurers.
|
(i)
|
under the Comprehensive Aviation Legal Liability Insurances, the Buyer’s policies are primary and non-contributory to any insurance maintained by the Seller,
|
(ii)
|
such insurance can only be cancelled or materially altered by the giving of not less than [***] or such lesser period as may be customarily available in respect of War Risks and Allied Perils) prior written notice thereof to the Seller, and
|
(iii)
|
under any such cover, all rights of subrogation against the Seller, its Affiliates, its subcontractors and each of their respective directors, officers, agents, employees and insurers have been waived.
|
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|
21.
|
TERMINATION
|
21.1
|
Termination Events
|
(1)
|
The Buyer or any of its Affiliates commences in any jurisdiction any case, proceeding or other action with respect to the Buyer or any of its Affiliates or their properties relating to bankruptcy, insolvency, reorganization, winding-up, liquidation, dissolution or other relief from, or with respect to, or readjustment of, its debts or obligations.
|
(2)
|
An action is commenced in any jurisdiction seeking the appointment of a receiver, trustee, custodian or other similar official for the Buyer or any of its respective Affiliates or for all or any substantial part of their respective assets, and such action remains unstayed, undismissed or undischarged for [***], or the Buyer or any of its Affiliates makes a general assignment for the benefit of its creditors.
|
(3)
|
An action is commenced in any jurisdiction against the Buyer or any of its respective Affiliates seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of their respective assets, and such action remains unstayed, undismissed or undischarged for [***].
|
(4)
|
The Buyer or any of its Affiliates becomes the object, in any jurisdiction, of a case, proceeding or action similar or analogous to any of the events mentioned in Subclause 21.1(1), (2) or (3).
|
(5)
|
The Buyer or any of its Affiliates is generally not able, or is expected to be unable to, or will admit in writing its inability to, pay its debts as they become due.
|
(6)
|
The Buyer or any of its Affiliates commences negotiations with significant creditors, existing or potential, either with the intention of restructuring all or a substantial part of all of its outstanding obligations or in preparation for a bankruptcy filing under the U.S. Bankruptcy Code.
|
(7)
|
The Buyer or any of its Affiliates fails to make (i) any payment required to be made under this Agreement or any other material agreement between the Buyer or any of its Affiliates and the Seller or any of its Affiliates when such payment is due, (ii) any Predelivery Payment required to be made under this Agreement when such payment is due, (iii) payment of all or part of the Final Price of any Aircraft required to be made under this Agreement; (iv) any payment to a Lessor with respect to any Leased Aircraft.
|
(8)
|
The Buyer repudiates, cancels or terminates this Agreement in whole or in part.
|
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|
(9)
|
The Buyer defaults in its obligation to take delivery of an Aircraft as provided in the Agreement.
|
(10)
|
The Buyer or any of its Affiliates defaults in the observance or performance of any other covenant, undertaking or obligation contained in this Agreement or any other material agreement between the Buyer or its Affiliates, on the one hand, and the Seller or its Affiliates on the other hand, provided that, if such breach or default is capable of being cured and such breach or default is not cured within any specified cure period.
|
(11)
|
Any other event that the parties agree in writing constitutes a Termination Event.
|
21.2
|
Remedies in Event of Termination
|
21.2.1
|
If a Termination Event occurs, the Buyer will be in material breach of this Agreement, and the Seller can elect any of the following remedies under the applicable law:
|
(A)
|
[***];
|
(B)
|
[***];
|
(C)
|
[***]; and/or
|
(D)
|
[***]
|
21.2.2
|
In the event Seller elects a remedy under any of Subclauses 21.2.1(A), (B) or (C), above:
|
(A)
|
[***];
|
(B)
|
[***]; and
|
(C)
|
[***]
|
21.2.3
|
If the Seller elects a Termination under Subclause 21.2.1(D) above:
|
(A)
|
[***]:
|
(i)
|
[***];
|
(ii)
|
[***];
|
(iii)
|
[***];
|
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|
(iv)
|
[***];
|
(v)
|
[***];
|
(vi)
|
[***]; and
|
(vii)
|
[***]
|
(B)
|
[***]
|
21.2.4
|
The parties to this Agreement are commercially sophisticated parties acting within the same industry, and represented by competent counsel and the parties expressly agree and declare as follows:
|
(A)
|
[***];
|
(B)
|
[***]; and
|
(C)
|
[***].
|
21.3
|
Definitions
|
(i)
|
“
Affected Aircraft
” – any or all Aircraft with respect to which the Seller has cancelled or terminated this Agreement pursuant to Subclause 21.2.1(D),
|
(ii)
|
“
Applicable Date
” – for any Affected Aircraft, the date the Seller issues the notice [***] pursuant to Subclause 21.2.3(B).
|
(iii)
|
“[***]” - will have the same meaning as the “Final Contract Price” of the Aircraft as that term is defined in Subclauses 3.1.4 and 3.2.4, [***].
|
21.4
|
Notice of Termination Event
|
21.5
|
Information Covenants
|
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|
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|
21.6
|
Nothing contained in this Clause 21 will be deemed to waive or limit the Seller’s rights or ability to request adequate assurance under Article 2, Section 609 of the Uniform Commercial Code (the “
UCC”
). It is further understood that any commitment of the Seller or the Propulsion Systems manufacturer to provide financing to the Buyer will not constitute adequate assurance under Article 2, Section 609 of the UCC.
|
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|
22.
|
MISCELLANEOUS PROVISIONS
|
22.1
|
Data Retrieval
|
22.2
|
Notices
|
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|
22.3
|
Waiver
|
22.4
|
INTENTIONALLY LEFT BLANK
|
22.5
|
Certain Representations of the Parties
|
22.5.1
|
Buyer's Representations
|
(i)
|
the Buyer is a corporation organized and existing in good standing under the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under this Agreement;
|
(ii)
|
neither the execution and delivery by the Buyer of this Agreement, nor the consummation of any of the transactions by the Buyer contemplated thereby, nor the performance by the Buyer of the obligations thereunder, constitutes a breach of any agreement to which the Buyer is a party or by which its assets are bound; and
|
(iii)
|
this Agreement has been duly authorized, executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer enforceable against the Buyer in accordance with its terms.
|
22.5.2
|
Seller's Representations
|
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|
(i)
|
the Seller is organized and existing in good standing under the laws of the Republic of France and has the corporate power and authority to enter into and perform its obligations under the Agreement;
|
(ii)
|
neither the execution and delivery by the Seller of this Agreement, nor the consummation of any of the transactions by the Seller contemplated thereby, nor the performance by the Seller of the obligations thereunder, constitutes a breach of any agreement to which the Seller is a party or by which its assets are bound; and
|
(iii)
|
this Agreement has been duly authorized, executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms.
|
22.6
|
INTERPRETATION AND LAW
|
22.6.1
|
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND THE PERFORMANCE THEREOF SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.
|
22.6.2
|
The Buyer for itself and its successors and assigns hereby designates and appoints the Secretary of the Buyer duly elected from time to time as its legal agent and attorney-in-fact upon whom all processes against the Buyer in any suit, action or proceeding in respect of any matter as to which it has submitted to jurisdiction under Subclause 22.6 may be served with the same effect as if the Buyer were a corporation organized under the laws of the State
|
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|
22.6.3
|
The assumption in Subclause 22.6.1 made for the purpose of effecting the service of process shall not affect any assertion of diversity by either party hereto initiating a proceeding in the New York Federal Courts or seeking transfer to the New York Federal Courts on the basis of diversity.
|
22.6.4
|
Service of process in any suit, action or proceeding in respect of any matter as to which the Seller or the Buyer has submitted to jurisdiction under Subclause 22.6.1 may be made on the Seller by delivery of the same personally or by dispatching the same via Federal Express, UPS, or similar international air courier service prepaid to: CT Corporation, New York City offices as agent for the Seller, it being agreed that service upon CT Corporation shall constitute valid service upon the Seller or by any other method authorized by the laws of the State of New York, and (ii) may be made on the Buyer by delivery of the same personally or by dispatching the same by Federal Express, UPS, or similar international air courier service prepaid, return receipt requested to: Corporation Service Company, 80 State Street, Albany, New York 12207-2543, or by any other method authorized by the laws of the State of New York; provided in each case that failure to deliver or mail such copy shall not affect the validity or effectiveness of the service of process.
|
22.7
|
Confidentiality
|
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|
22.8
|
[***]
|
22.9
|
Severability
|
22.10
|
Alterations to Contract
|
22.11
|
Inconsistencies
|
22.12
|
Language
|
22.13
|
Headings
|
22.14
|
Counterparts
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
100
|
|
AIRBUS S.A.S.
|
|
|
|
|
|
/s/ John J. Leahy
|
|
|
|
|
|
By:
|
John J. Leahy
|
|
Title:
|
Chief Operating Officer, Customers
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
PRIVILEDGED AND CONFIDENTIAL
|
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CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
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1
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1
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2
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1
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2
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2
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3
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4
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Exh B-2
1
/4
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Exh B-2
2
/4
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MANUFACTURER’S SPECIFICATION CHANGE NOTICE
(MSCN)
|
For
MSCN Number
Issue
Dated
Page
|
Specification repercussion:
After contractual agreement with respect to weight, performance, delivery, etc, the indicated part of the specification wording shall read as follows:
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
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Exh B-2
3
/4
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MANUFACTURER’S SPECIFICATION CHANGE NOTICE
(MSCN)
|
For
MSCN Number
Issue
Dated
Page
|
Scope of change
(FOR INFORMATION ONLY)
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.Docx
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Exh B-2
4
/4
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Exh B-3
1
/2
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Exh B-3
2
/2
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1.
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BASE PRICE
|
2.
|
BASE PERIOD
|
3.
|
INDEXES
|
4.
|
REVISION FORMULA
|
5.
|
GENERAL PROVISIONS
|
5.1
|
Roundings
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
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Exh. D
1
/3
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5.2
|
Substitution of Indexes for
[***]
|
(i)
|
[***], or
|
(ii)
|
[***], or
|
(iii)
|
[***];
|
5.3
|
Final Index Values
|
5.4
|
Limitation
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
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Exh. D
2
/3
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Exh. D
3
/3
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AIRFRAME:
|
[ENGINES/PROPULSION SYSTEMS]:
|
AIRBUS Model A3[•]-[•]
|
[Insert name of engine or propulsion system manufacturer] Model [•]
|
MANUFACTURER’S
SERIAL NUMBER: [•] |
ENGINE SERIAL NUMBERS:
LH: [•]
RH: [•]
|
REGISTRATION MARK: [•]
|
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
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Exh. E
1
/2
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Exh. E
2
/2
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CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
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Exh. F
1
/4
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1.
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The Items covered by the Service Life Policy pursuant to Subclause 12.2 are those Seller Items of primary and auxiliary structure described hereunder.
|
2.
|
WINGS - CENTER AND OUTER WING BOX (LEFT AND RIGHT)
|
2.1
|
Wing Structure
|
2.1.1
|
[***]
|
2.1.2
|
[***]
|
2.1.3
|
[***]
|
2.2
|
Fittings
|
2.2.1
|
[***]
|
2.2.2
|
[***]
|
2.2.3
|
[***]
|
2.2.4
|
[***]
|
2.3
|
Auxiliary Support Structure
|
2.3.1
|
[***]
|
2.3.1.1
|
[***]
|
2.3.1.2
|
[***]
|
2.3.2
|
[***]
|
2.3.2.1
|
[***]
|
2.3.2.2
|
[***]
|
2.3.3
|
[***]
|
2.3.3.1
|
[***]
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. F
2
/4
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2.3.3.2
|
[***]
|
2.4
|
Pylon
|
2.4.1
|
[***]
|
2.4.1.1
|
[***]
|
2.4.1.2
|
[***]
|
2.4.1.3
|
[***]
|
2.4.1.4
|
[***]
|
3.
|
FUSELAGE
|
3.1
|
Fuselage structure
|
3.1.1
|
[***]
|
3.1.2
|
[***]
|
3.1.3
|
[***]
|
3.1.4
|
[***]
|
3.1.5
|
[***]
|
3.1.6
|
[***]
|
3.1.7
|
[***]
|
3.1.8
|
[***]
|
3.2
|
Fittings
|
3.2.1
|
[***]
|
3.2.2
|
[***]
|
3.2.3
|
[***]
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. F
3
/4
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4.
|
STABILIZERS
|
4.1
|
Horizontal Stabilizer Main Structural Box
|
4.1.1
|
[***]
|
4.1.2
|
[***]
|
4.1.3
|
[***]
|
4.1.4
|
[***]
|
4.1.5
|
[***]
|
4.1.5.1
|
[***]
|
4.1.5.2
|
[***]
|
4.2
|
Vertical Stabilizer Main Structural Box
|
4.2.1
|
[***]
|
4.2.2
|
[***]
|
4.2.3
|
[***]
|
4.2.4
|
[***]
|
4.2.5
|
[***]
|
4.2.5.1
|
[***]
|
4.2.5.2
|
[***]
|
5.
|
[***]
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
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Exh. F
4
/4
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CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
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Exh. G-1
1
/5
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1.
|
[***]
|
1.1
|
[***]
|
1.2
|
[***]
|
2.
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. G-1
2
/5
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3.
|
[***]
|
4.
|
[***]
|
4.1
|
[***].
|
4.2
|
[***]
|
5.
|
[***]
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. G-1
3
/5
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Exh. G-2
4
/4
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1.
|
[***]
|
1.1
|
[***]
|
1.2
|
[***]
|
2.
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]
|
3.
|
[***]
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. G-2
5
/4
|
4.
|
[***]
|
4.1
|
[***]
|
5.
|
[***]
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. G-2
6
/4
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. H
1
/12
|
1.
|
GENERAL
|
1.1
|
Scope
|
1.1.1
|
This Exhibit H sets forth the terms and conditions for the support and services offered by the Seller to the Buyer with respect to Material (as defined below).
|
1.1.2
|
References made to Articles shall be deemed to refer to articles of this Exhibit H unless otherwise specified.
|
1.1.3
|
For purposes of this Exhibit H:
|
(i)
|
The term “
Supplier
” shall mean any supplier providing any of the Material listed in Article 1.2.1 and the term “
Supplier Part
” shall mean an individual item of Material.
|
(ii)
|
The term “
SPEC 2000
” means the “E-Business Specification for Materials Management” document published by the Air Transport Association of America.
|
1.2
|
Material Categories
|
1.2.1
|
Each of the following constitutes “
Material
” for purposes of this Exhibit H:
|
(i)
|
Seller parts;
|
(ii)
|
Supplier Parts classified as Repairable Line Maintenance Parts (as defined in SPEC 2000);
|
(iii)
|
Supplier Parts classified as Expendable Line Maintenance Parts (as defined in SPEC 2000);
|
(iv)
|
Seller and Supplier ground support equipment and specific-to-type tools.
|
1.2.2
|
[***]
|
1.3
|
Term
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. H
2
/12
|
1.4
|
Airbus Material Store
|
1.4.1
|
US Spares Center
|
1.4.2
|
Material Support Center, Germany
|
1.4.3
|
Other Points of Shipment
|
1.4.3.1
|
In addition to the US Spares Center and the Airbus Material Center, the Seller and its Affiliates operate a global network of regional satellite stores (the “
Regional Satellite Stores
”). A list of such stores shall be provided to the Buyer upon the Buyer’s request.
|
1.4.3.2
|
Subject to Article 1.4.1, the Seller reserves the right to effect deliveries from distribution centers other than the US Spares Center or the Airbus Material Center, which may include the Regional Satellite Stores or any other production or Supplier’s facilities.
|
1.5
|
Customer Order Desk
|
(i)
|
Management of order entries for all priorities, including Aircraft On Ground (“
AOG
”);
|
(ii)
|
Management of order changes and cancellations;
|
(iii)
|
Administration of Buyer’s routing instructions;
|
(iv)
|
Management of Material returns;
|
(v)
|
Clarification of delivery discrepancies;
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. H
3
/12
|
1.6
|
Commitments of the Buyer
|
1.6.1
|
During the Term, the Buyer [***]
|
(i)
|
[***],
|
(ii)
|
[***].
|
1.6.2
|
[***]
|
1.6.2.1
|
[***]
|
1.6.2.2
|
[***]
|
1.6.2.3
|
[***]
|
1.6.2.4
|
[***]
|
2.
|
INITIAL PROVISIONING
|
2.1
|
Period
|
2.2
|
Pre‑Provisioning Meeting
|
2.2.1
|
The Seller shall organize a pre‑provisioning meeting at the US Spares Center or at the Airbus Material Center, or at any other agreed location, for the purpose of setting an acceptable schedule and working procedure for the preparation of the initial issue of the Provisioning Data and the Initial Provisioning Conference referred to in Articles 2.3 and 2.4 below (the “
Pre-Provisioning Meeting
”).
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. H
4
/12
|
2.2.2
|
The Pre-Provisioning Meeting shall take place on an agreed date that is no later than [***] prior to Scheduled Delivery Month of the first Aircraft, allowing a minimum preparation time of [***] for the Initial Provisioning Conference.
|
2.3
|
Initial Provisioning Conference
|
2.4
|
Provisioning Data
|
2.4.1
|
Provisioning data generally in accordance with SPEC 2000, Chapter 1, for Material described in Articles 1.2.1 (i) through 1.2.1 (iii) (“
Provisioning Data
”) shall be supplied by the Seller to the Buyer in the English language, in a format and timeframe to be agreed during the Pre-Provisioning Meeting.
|
2.4.1.1
|
Unless a longer revision cycle has been agreed, the Provisioning Data shall be revised [***] up to the end of the Initial Provisioning Period.
|
2.4.1.2
|
The Seller shall ensure that Provisioning Data is provided to the Buyer in time to permit the Buyer to perform any necessary evaluation and to place orders in a timely manner.
|
2.4.1.3
|
Provisioning Data generated by the Seller shall comply with the configuration of the Aircraft as documented [***] before the date of issue.
|
(i)
|
Buyer modifications not known to the Seller, or
|
(ii)
|
other modifications not approved by the Seller’s Aviation Authorities.
|
2.4.2
|
Supplier‑Supplied Data
|
2.4.3
|
Supplementary Data
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. H
5
/12
|
2.5
|
Commercial Offer
|
2.6
|
Delivery of Initial Provisioning Material
|
2.6.1
|
During the Initial Provisioning Period, Initial Provisioning Material shall conform to the latest known configuration standard of the Aircraft for which such Material is intended as reflected in the Provisioning Data transmitted by the Seller.
|
2.6.2
|
The delivery of Initial Provisioning Material shall take place (i) according to the conditions specified in the commercial offer mentioned in Article 2.5 and (ii) at a location designated by the Buyer.
|
2.6.3
|
All Initial Provisioning Material shall be packaged in accordance with ATA 300 Specification.
|
2.7
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
(d)
|
[***]
|
(e)
|
[***]
|
(f)
|
[***]
|
(g)
|
[***]
|
3.
|
OTHER MATERIAL SUPPORT
|
4.
|
WARRANTIES
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. H
6
/12
|
4.1
|
Seller Parts
|
(i)
|
be free from defects in material.
|
(ii)
|
be free from defects in workmanship, including without limitation processes of manufacture.
|
(iii)
|
be free from defects in design having regard to the state of the art of such design; and
|
(iv)
|
be free from defects arising from failure to conform to the applicable specification for such part.
|
4.1.2
|
Warranty Period
|
4.1.2.1
|
The warranty period for Seller Parts is [***] from delivery of such parts to the Buyer.
|
4.1.2.2
|
Whenever any Seller Part that contains a defect for which the Seller is liable under Article 4.1 has been corrected, replaced or repaired pursuant to the terms of this Article 4.1, the period of the Seller’s warranty with respect to such corrected, repaired or replacement Seller Part, as the case may be, [***].
|
4.1.3
|
Buyer’s Remedy and Seller’s Obligation
|
4.2
|
Supplier Parts
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. H
7
/12
|
4.3
|
Waiver, Release and Renunciation
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. H
8
/12
|
4.4
|
Duplicate Remedies
|
5.
|
COMMERCIAL CONDITIONS
|
5.1
|
Delivery Terms
|
5.2
|
Payment Procedures and Conditions
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. H
9
/12
|
5.3
|
Title
|
5.4
|
[***]
|
6.
|
EXCUSABLE DELAY
|
7.
|
[***]
|
8.
|
INCONSISTENCY
|
CT1404840_PA_A330-900neo_A350-900_EXECUTION.docx
|
Exh. H
10
/12
|
Part 2
|
END-USER SUBLICENSE AGREEMENT FOR SUPPLIER SOFTWARE
|
1
|
DEFINITIONS
|
•
|
Airbus Part 25 and/or FAR 25 certified software that are installed on board the Aircraft and bear a part number of the Licensor, excluding any software embedded in any component, furnishing or equipment installed on the Aircraft and itself bearing a part number (“
On Board Certified Software
”).
|
•
|
Software provided by Airbus and intended to be used on ground or that are installed on board the Aircraft and that are not Part 25 and/or FAR 25 certified - whether or not bearing a part number of the Licensor - excluding any software embedded in any component, furnishing or equipment installed on the Aircraft and itself bearing a part number (“
Software Product
”) either:
|
◦
|
delivered in binary code to be installed and used on the Licensee hardware (“
Standard License
”), or
|
◦
|
delivered as a service where the Licensee will be authorized to use the Airbus Software through a network connection (“
Saas License
”).
|
2
|
LICENSE
|
3
|
ASSIGNMENT AND DELEGATION
|
3.1
|
Assignment
|
3.1.1
|
On Board Certified Software
|
3.1.2
|
Software Products
|
3.2
|
Delegation
|
4
|
COPIES
|
5
|
TERM
|
5.1
|
On Board Certified Software
|
5.2
|
Software Products
|
6
|
CONDITIONS OF USE
|
a)
|
not permit any parent, subsidiary, affiliate, agent or third party to use the Airbus Software in any manner not permitted by this Software License, including, but not limited to, any outsourcing, loan, commercialization of the Airbus Software or commercialization by merging the Airbus Software into another software or adapting the Airbus Software, without the prior written consent from the Sublicensor;
|
b)
|
do its utmost to maintain the Airbus Software and the Documentation in good working condition, in order to ensure the correct operation thereof;
|
c)
|
use the Airbus Software in accordance with its Documentation and ensure that the personnel using the Airbus Software has received appropriate training;
|
d)
|
use the Airbus Software exclusively in the technical environment defined in the applicable Documentation, except as otherwise agreed in writing between the parties;
|
e)
|
except as permitted by applicable law, not alter, reverse engineer, modify, correct, translate, disassemble, decompile or adapt the Airbus Software, nor integrate all or part of the Airbus Software in any manner whatsoever into another software product,
|
f)
|
should the Licensor or the Sublicensor have elected to provide the source code to the Licensee, have the right to study and test the Airbus Software, under conditions to be expressly specified by the Licensor or the Sublicensor, but in no event shall the Licensee have the right to correct, modify or translate the Airbus Software;
|
g)
|
except with respect to Software Products intended to be used on ground, use the Airbus Software exclusively on the referenced machines and the declared sites;
|
h)
|
not attempt to discover or re-write the Airbus Software source codes in any manner whatsoever;
|
i)
|
not delete any identification or declaration relative to the intellectual property rights, trademarks or any other information related to ownership or intellectual property rights in the Airbus Software;
|
j)
|
except as permitted hereunder, not pledge, sell, distribute, grant, sublicense, lease, lend, whether on a free-of-charge basis or against payment, or permit access on a time-sharing basis or any other utilization of the Airbus Software, whether in whole or in part, for the benefit of a third party.
|
7
|
TRAINING
|
8
|
PROPRIETARY RIGHTS - RIGHT TO CORRECT AND MODIFY
|
8.1
|
The Airbus Software is proprietary to the Licensor or the Licensor has acquired the intellectual property rights necessary to grant this Software License to the Sublicensor. The copyright and all other proprietary rights in the Airbus Software are and shall remain the property of the Licensor.
|
8.2
|
The Licensor reserves the right to correct and modify [***] any Airbus Software at its sole discretion [***]. In the event of the Licensee failing to install any Update(s) [***], the Licensor and the Sublicensor shall be relieved of any warranty or liability of any kind with respect to [***] of the Airbus Software [***].
|
9
|
COPYRIGHT
[***]
INDEMNITY
|
9.1
|
Indemnity
|
9.1.1
|
Subject to the provisions of Article 9.2.3, the Licensor and/or the Sublicensor shall defend and indemnify the Licensee, [***] from and against any [***], damages, costs and expenses including legal costs (excluding damages, costs, expenses, loss of profits and other liabilities in respect of or resulting from loss of use of the Aircraft) resulting from any infringement, or claim of infringement, by any Airbus Software provided by the Licensor or the Sublicensor, [***] of any copyright [***], provided that the Licensor's and Sublicensor’s obligation to indemnify shall be limited to infringements in countries which, at the time of the infringement or alleged infringement, are members of The Berne Convention and recognize computer software as a "work" under the Berne Convention.
|
9.1.2
|
[***], in the event that the Licensee is prevented from using the Airbus Software for infringement of a copyright [***] referred to in Article 9.1.1 (whether by a valid judgment of a court of competent jurisdiction or by a settlement arrived at between claimant, Licensor and Licensee), the Licensor and/or the Sublicensor shall at its expense either:
|
(i)
|
procure for the Licensee the right to use the same free of charge to the Licensee; or
|
(ii)
|
[***] replace the infringing part of the Airbus Software as soon as possible with a non-infringing substitute complying in all other respects with the requirements of this Software License.
|
9.2
|
Administration of Copyright
[***]
Indemnity Claims
|
9.2.1
|
If the Licensee receives a written claim or a suit is threatened or commenced against the Licensee for infringement of a copyright [***] referred to in Article 9.1 as a result of the use of the Airbus Software, the Licensee shall:
|
(i)
|
forthwith notify the Licensor giving particulars thereof;
|
(ii)
|
furnish to the Licensor all data, papers and records within the Licensee’s control or possession relating to such claim or suit;
|
(iii)
|
refrain from admitting any liability or making any payment or assuming any expenses, damages, costs or royalties or otherwise acting in a manner prejudicial to the defense or denial of such suit or claim provided always that nothing in this sub-Article (iii) shall prevent the Licensee from paying such sums as may be required in order to obtain the release of the Aircraft, provided such payment is accompanied by a denial of liability and is made without prejudice;
|
(iv)
|
fully co-operate with, and render all such assistance to the Licensor as be may be pertinent to the defense or denial of the suit or claim;
|
(v)
|
act in such way as to mitigate damages and/or reduce the amount of royalties that may be payable as well as to minimize costs and expenses.
|
9.2.2
|
The Licensor or Sublicensor shall be entitled, either in its own name or on behalf of the Licensee, to conduct negotiations with the party or parties alleging infringement and may assume and conduct the defense or settlement of any suit or claim in the manner, which it deems proper.
|
9.2.3
|
The Licensor’s and the Sublicensor’s obligations and the Licensee’s remedies hereunder are dependent upon the strict and timely compliance by the Licensee with the terms of this Clause 9 and of Clauses 6(e), 6(h), 6(i) and 8.2, [***] are exclusive and in substitution for, and the Licensee hereby waives, releases and renounces all other obligations and liabilities of the Licensor and the Sublicensor and rights, claims and remedies of the Licensee against the Licensor and the Sublicensor, express or implied, arising by law or otherwise with respect to any infringement or claim of infringement of any copyright [***].
|
10
|
CONFIDENTIALITY
|
11
|
ACCEPTANCE
|
12
|
WARRANTY
|
12.1
|
On Board Certified Software
|
12.2
|
Software Products
|
12.3
|
The Licensor and the Sublicensor shall be relieved of any obligations under Articles 12.1 and 12.2 to the extent of:
|
(i)
|
Airbus Software defects or non-conformities caused by alterations or modifications to the Airbus Software carried out without the prior approval of the Licensor;
|
(ii)
|
Airbus Software defects or non-conformities caused by negligence of the Licensee or other causes [***];
|
(iii)
|
Failure of the Licensee to install any Update in accordance with Article 8 hereof;
|
(iv)
|
Airbus Software defects or non-conformities caused by errors in or modifications of or updates to operating systems, databases or other software or hardware with which the Airbus Software interfaces, where such elements have not been provided by the Licensor [***].
|
12.4
|
Waiver, release and renunciation
|
(A)
|
ANY WARRANTY AGAINST HIDDEN DEFECTS;
|
(B)
|
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;
|
(C)
|
ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
|
(D)
|
ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY, WHETHER IN CONTRACT OR IN TORT AND WHETHER OR NOT ARISING FROM THE LICENSOR’S NEGLIGENCE, ACTUAL OR IMPUTED; AND
|
(E)
|
ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OR DAMAGE TO ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART, SOFTWARE, DATA OR SERVICES DELIVERED UNDER THE AGREEMENT, FOR LOSS OF USE, REVENUE OR PROFIT OR FOR ANY OTHER DIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES.
|
13
|
LIMITATION OF LIABILITY
|
14
|
EXCUSABLE DELAYS
|
14.1
|
The Licensor shall not be responsible nor be deemed to be in default on account of delays in delivery of any Airbus Software or Update due to causes reasonably beyond the Licensor’s or its subcontractors’ control including but not limited to: natural disasters, fires, floods, explosions or earthquakes, epidemics or quarantine restrictions, serious accidents, total or constructive total loss, any act of the government of the country of the Licensee or the governments of the countries of Licensor or its subcontractors, war, insurrections or riots, failure of transportation, communications or services, strikes or labor troubles causing cessation, slow down or interruption of services, inability after due and timely diligence to procure materials, accessories, equipment or parts, failure of a subcontractor or supplier to furnish materials, accessories, equipment or parts due to causes reasonably beyond such subcontractor's or supplier's control or failure of the Licensee to comply with its obligations arising out of the present Software License.
|
14.2
|
The Licensor shall, as soon as practicable after becoming aware of any delay falling within the provisions of this Article, notify the Licensee of such delay and of the probable extent thereof and shall, subject to the conditions as hereinafter provided and as soon as practicable after the removal of the cause or causes for delay, resume delivery of the delayed Airbus Software or Update.
|
15
|
TERMINATION
|
15.1
|
[***]
|
15.2
|
[***]
|
15.3
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
15.4
|
In the event of termination by Licensee pursuant to Clause 15.1 or termination by Licensor or Sublicensor pursuant to Clause 15.2 or 15.3(b) or 15.3(c), the Licensee shall no longer have any right to use the Airbus Software that is subject to such termination and shall return to the Sublicensor all copies of the subject Airbus Software and any relating Documentation.
|
16
|
GENERAL PROVISIONS
|
16.1
|
This Software License is an Exhibit to the Agreement and integrally forms part thereof. As a result, any non-conflicting terms of the Agreement are deemed incorporated herein to the extent they are relevant in the context of this Software License.
|
16.2
|
Notwithstanding the terms of Clause 22.10 of the Agreement, in the event of any inconsistency or discrepancy between any term of this Software License and any term of the Agreement (including any other Exhibit or Appendices thereto or other Parts of this Exhibit I), the terms of this Software License shall take precedence over the conflicting terms of the Agreement to the extent necessary to resolve such inconsistency or discrepancy.
|
16.3
|
THIS SOFTWARE LICENSE SHALL BE GOVERNED BY AND CONSTRUED AND THE PERFORMANCE THEREOF SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.
|
16.4
|
[***]
|
16.5
|
[***]
|
1
|
DEFINITIONS
|
2
|
LICENSE
|
3
|
ASSIGNMENT AND DELEGATION
|
3.1
|
Assignment
|
3.2
|
Delegation
|
4
|
COPIES
|
5
|
TERM
|
6
|
CONDITIONS OF USE
|
a)
|
not permit any parent, subsidiary, affiliate, agent or other third party to use the Supplier Software in any manner, including, but not limited to, any outsourcing, loan, commercialization of the Supplier Software or commercialization by merging the Supplier Software into another software or adapting the Supplier Software, without the prior written consent from the Supplier;
|
b)
|
do its utmost to maintain the Supplier Software and the relating documentation in good working condition, in order to ensure the correct operation thereof;
|
c)
|
use the Supplier Software in accordance with such documentation and the User Guide, and ensure that the personnel using the Supplier Software has received appropriate training;
|
d)
|
use the Supplier Software exclusively in the technical environment defined in the applicable User Guide, except as otherwise agreed in writing between the parties;
|
e)
|
except as permitted by applicable law, not alter, reverse engineer, modify, correct, translate, disassemble, decompile or adapt the Supplier Software, nor integrate all or part of the Supplier Software in any manner whatsoever into another software product; nor create a software product derived from the Supplier Software save with the Supplier’s prior written approval;
|
f)
|
should the Sublicensor or the Supplier have elected to provide the source code to the Sublicensee, have the right to study and test the Supplier Software, under conditions to be expressly specified by the Sublicensor or the Sub-Sublicensor, but in no event shall the Sublicensee have the right to correct, modify or translate the Supplier Software;
|
g)
|
not attempt to discover or re-write the Supplier Software source codes in any manner whatsoever;
|
h)
|
not delete any identification or declaration relative to the intellectual property rights, trademarks or any other information related to ownership or intellectual property rights in the Supplier Software;
|
i)
|
not pledge, sell, distribute, grant, sublicense, lease, lend, whether on a free-of-charge basis or against payment, or permit access on a time-sharing basis or any other utilization of the Supplier Software, whether in whole or in part, for the benefit of a third party;
|
7
|
TRAINING
|
8
|
PROPRIETARY RIGHTS - RIGHT TO CORRECT AND MODIFY
|
8.1
|
The Supplier Software is proprietary to the Supplier and the Sublicensor represents and warrants that it has been granted the intellectual property rights necessary to grant this Software Sublicense. The copyright and all other proprietary rights in the Supplier Software are and shall remain the property of the Supplier.
|
8.2
|
The Supplier may correct or modify its Supplier Software from time to time at its sole discretion and the Sublicensee shall not undertake any correction or modification of the Supplier Software without the Sublicensor’s or the Sub-Sublicensor’s prior written approval.The Sublicensee shall install any Updates provided either by the Supplier or the Sublicensor in accordance with the time schedule notified with the provision of such Update(s). In the event of the Sublicensee failing to install any such Update(s), both the Sublicensor and the Supplier shall be relieved of any warranty or liability of any kind with respect to the conformity or operation of the Supplier Software.
|
9
|
COPYRIGHT INDEMNITY
|
10
|
CONFIDENTIALITY
|
11
|
ACCEPTANCE
|
12
|
WARRANTY
|
13
|
LIABILITY AND INDEMNITY
|
14
|
EXCUSABLE DELAYS
|
14.1
|
None of the Sublicensor, the Sub-Sublicensor or the Supplier(s) shall be responsible nor be deemed to be in default on account of delays in delivery of any Supplier Software or Updates due to causes reasonably beyond the Sublicensor’s, the Sub-Sublicensor’s or
|
14.2
|
The Sublicensor or the Sub-Sublicensor shall, and/or shall cause the Supplier to, as soon as practicable after becoming aware of any delay falling within the provisions of this Article, notify the Sublicensee of such delay and of the probable extent thereof and shall, subject to the conditions as hereinafter provided and as soon as practicable after the removal of the cause or causes for delay, resume delivery of the delayed Supplier Software or Update.
|
15
|
TERMINATION
|
16
|
GENERAL PROVISIONS
|
16.1
|
This Software Sublicense is an Exhibit to the Agreement and integrally forms part thereof. As a result, any non-conflicting terms of the Agreement are deemed incorporated herein to the extent they are relevant in the context of this Software Sublicense.
|
16.2
|
Notwithstanding the terms of Clause 22.10 of the Agreement, in the event of any inconsistency or discrepancy between any term of this Software Sublicense and any term of the Agreement (including any Appendix or other Exhibits thereto), the terms of this Software Sublicense shall take precedence over the conflicting terms of the Agreement to the extent necessary to resolve such inconsistency or discrepancy.
|
16.3
|
The Sublicensee acknowledges that the Supplier Software covered under the present Sub-license Agreement is also subject to the conditions relative to each Supplier Software set forth in the corresponding Supplier Product Support Agreement. In the event of any inconsistency between the terms of this Sub-license Agreement and the terms contained in the corresponding Supplier Product Support Agreement, the latter shall prevail to the extent of such inconsistency.
|
16.4
|
This Software Sublicense is subject to and construed and the performance thereof shall be determined in accordance with the laws in effect in the State of New York without regard to conflict of laws principles that could result in the application of the
|
1.
|
DEFINITIONS
|
2.
|
LICENSE
|
3.
|
ASSIGNMENT AND DELEGATION
|
3.1
|
Assignment
|
3.2
|
Delegation
|
4.
|
COPIES
|
5.
|
TERM
|
6.
|
CONDITIONS OF USE
|
a)
|
not permit any parent, subsidiary, affiliate, agent or other third party to use the ACS Supplier Software in any manner, including, but not limited to, any outsourcing, loan, commercialization of the ACS Supplier Software or commercialization by merging the ACS Supplier Software into another software or adapting the ACS Supplier Software, without the prior written consent from the ACS Supplier;
|
b)
|
do its utmost to maintain the ACS Supplier Software and the relating documentation in good working condition, in order to ensure the correct operation thereof;
|
c)
|
use the ACS Supplier Software in accordance with such documentation and the User Guide, and ensure that the personnel using the ACS Supplier Software has received appropriate training;
|
d)
|
use the ACS Supplier Software exclusively in the technical environment defined in the applicable User Guide, except as otherwise agreed in writing between the parties;
|
e)
|
except as permitted by applicable law, not alter, reverse engineer, modify, correct, translate, disassemble, decompile or adapt the ACS Supplier Software, nor integrate all or part of the ACS Supplier Software in any manner whatsoever into another software product; nor create a software product derived from the ACS Supplier Software save with the ACS Supplier’s prior written approval;
|
f)
|
should the ACS Sublicensor or the ACS Supplier have elected to provide the source code to the ACS Sublicensee, have the right to study and test the ACS Supplier Software, under conditions to be expressly specified by the ACS Sublicensor, but in no event shall the ACS Sublicensee have the right to correct, modify or translate the ACS Supplier Software;
|
g)
|
not attempt to discover or re-write the ACS Supplier Software source codes in any manner whatsoever;
|
h)
|
not delete any identification or declaration relative to the intellectual property rights, trademarks or any other information related to ownership or intellectual property rights in the ACS Supplier Software;
|
i)
|
not pledge, sell, distribute, grant, sublicense, lease, lend, whether on a free-of-charge basis or against payment, or permit access on a time-sharing basis or any other utilization of the ACS Supplier Software, whether in whole or in part, for the benefit of a third party;
|
7.
|
TRAINING
|
8.
|
PROPRIETARY RIGHTS - RIGHT TO CORRECT AND MODIFY
|
8.1
|
The ACS Supplier Software is proprietary to the ACS Supplier and the ACS Sublicensor represents and warrants that it has been granted the intellectual property rights necessary to grant this ACS Software Sublicense. The copyright and all other proprietary rights in the ACS Supplier Software are and shall remain the property of the ACS Supplier.
|
8.2
|
The ACS Supplier may correct or modify its ACS Supplier Software from time to time at its sole discretion and the ACS Sublicensee shall not undertake any correction or modification of the ACS Supplier Software without the Sublicensor’s or the ACS Sublicensor’s prior written approval. The ACS Sublicensee shall install any Updates provided either by the ACS Supplier or the ACS Sublicensor in accordance with the time schedule notified with the provision of such Update(s). In the event of the ACS Sublicensee failing to install any such Update(s), both the ACS Sublicensor and the ACS Supplier shall be relieved of any warranty or liability of any kind with respect to the conformity or operation of the ACS Supplier Software.
|
9.
|
COPYRIGHT INDEMNITY
|
10.
|
CONFIDENTIALITY
|
11.
|
ACCEPTANCE
|
12.
|
WARRANTY
|
13.
|
LIABILITY AND INDEMNITY
|
14.
|
EXCUSABLE DELAYS
|
14.1
|
None of the ACS Sublicensor, the Sub-Sublicensor or the ACS Supplier(s) shall be responsible nor be deemed to be in default on account of delays in delivery of any ACS
|
14.2
|
The Sublicensor or the ACS Sublicensor shall, and/or shall cause the ACS Supplier to, as soon as practicable after becoming aware of any delay falling within the provisions of this Article, notify the ACS Sublicensee of such delay and of the probable extent thereof and shall, subject to the conditions as hereinafter provided and as soon as practicable after the removal of the cause or causes for delay, resume delivery of the delayed ACS Supplier Software or Update.
|
15.
|
TERMINATION
|
16.
|
GENERAL PROVISIONS
|
16.1
|
This ACS Software Sublicense is an Exhibit to the Agreement and integrally forms part thereof. As a result, any non-conflicting terms of the Agreement are deemed incorporated herein to the extent they are relevant in the context of this ACS Software Sublicense.
|
16.2
|
In the event of any inconsistency or discrepancy between any term of this ACS Software Sublicense and any term of the Agreement (including any Appendix or other Exhibits thereto), the terms of this ACS Software Sublicense shall take precedence over the conflicting terms of the Agreement to the extent necessary to resolve such inconsistency or discrepancy.
|
16.3
|
The ACS Sublicensee acknowledges that the ACS Supplier Software covered under the present ACS Software Sublicense is also subject to the conditions relative to each ACS Supplier Software set forth in the
corresponding
Airbus Contracted Suppliers Support Agreements. In the event of any inconsistency between the terms of this ACS Sublicense
|
16.4
|
This
Software
Sublicense is subject to and construed and the performance thereof shall be determined in accordance with the laws in effect in the State of New York without regard to conflict of laws principles that could result in the application of the laws of any other jurisdiction. All disputes arising in connection with this Software Sublicense shall be submitted to the competent courts of New York, and the parties hereby agree to submit to the jurisdiction of those courts.
|
1
|
CREDIT MEMORANDA
|
1.1
|
A330-900neo Aircraft
|
1.1.1
|
In respect of each A330-900neo Aircraft that is sold by the Seller and purchased by the Buyer, the Seller shall provide to the Buyer the following [***]
|
(i)
|
[***],
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
(v)
|
[***]
|
(vi)
|
[***]
|
(vii)
|
[***]
|
(viii)
|
[***]
|
1.1.2
|
The A330-900neo Aircraft [***].
|
1.1.3
|
The A330-900neo Aircraft [***].
|
1.1.4
|
[***]
|
1.1.5
|
[***]
|
1.1.6
|
[***]
|
1.1.7
|
[***]
|
1.1.8
|
[***]
|
1.1.9
|
[***]
|
1.1.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
1.2
|
A350-900 Aircraft
|
1.2.1
|
In respect of each A350-900 Aircraft that is sold by the Seller and purchased by the Buyer, the Seller shall provide to the Buyer the following [***]:
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
(v)
|
[***]
|
(vi)
|
[***]
|
(vii)
|
[***]
|
(viii)
|
[***]
|
1.2.2
|
[***]
|
1.2.3
|
[***]
|
1.2.4
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***].
|
1.2.5
|
[***]
|
1.2.6
|
[***]
|
1.2.7
|
[***]
|
1.2.8
|
[***]
|
1.2.9
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
1.3
|
[***]
|
1.3.1
|
[***]
|
(a)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(b)
|
[***]
|
1.3.2
|
[***]
|
(a)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(b)
|
[***]
|
1.4
|
[***]
|
1.5
|
[***]
|
2
|
[***]
|
2.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
2.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
3
|
ASSIGNMENT
|
4
|
CONFIDENTIALITY
|
5
|
COUNTERPARTS
|
1
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2
|
[***]
|
2.1.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
2.1.2
|
[***]
|
2.1.3
|
[***]
|
3
|
ASSIGNMENT
|
4
|
CONFIDENTIALITY
|
5
|
COUNTERPARTS
|
1.
|
FLEXIBILITY
|
1.1
|
A330-900neo Flexibility
|
1.1.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
1.1.1.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
1.1.1.3
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
1.1.2
|
[***] Aircraft [***]
|
1.1.2.1
|
The Seller grants the Buyer the right to [***] certain [***], subject to the following:
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
1.1.2.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
The Seller’s obligation to comply with an A330-900neo [***] shall be subject to the provisions of Paragraph 1.3.
|
1.1.2.3
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
1.2
|
A350-900 Flexibility
|
1.2.1
|
[***]
|
1.2.1.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
1.2.1.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
1.2.1.3
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
1.2.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
1.2.2.2
|
[***]
|
(i)
|
The Buyer shall provide written notice to the Seller [***] A350-900 [***] no later than [***] to [***]. Such notice shall include [***] of the A350-900 Aircraft the Buyer wishes to [***] in accordance with paragraph 1.2.2.1 (iii) above.
|
(ii)
|
No later than [***] after receipt of the Buyer’s notice, the Seller shall respond to the Buyer in writing to communicate the [***].
|
(iii)
|
[***]
|
(iv)
|
The Seller’s obligation to comply with an A350-900 [***] shall be subject to the provisions of Paragraph 1.3.
|
1.2.2.3
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
1.3
|
General provisions applicable to Flexibility Rights
|
1.3.1
|
[***]
|
1.3.2
|
[***]
|
1.3.3
|
[***]
|
1.3.4
|
[***]
|
2.
|
[***]
|
2.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
2.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
3.
|
ASSIGNMENT
|
4.
|
CONFIDENTIALITY
|
5.
|
COUNTERPARTS
|
1.
|
[***]
|
1.1
|
[***]
|
1.2
|
[***]
|
1.2.1
|
[***]
|
1.2.2
|
[***]
|
1.2.3
|
[***]
|
1.3
|
[***]
|
1.4
|
[***]
|
1.4.1
|
[***]
|
1.4.2
|
[***]
|
1.4.3
|
[***]
|
2.
|
[***]
|
2.1
|
[***]
|
2.1.1
|
Clause 2.2.3.1 of the Agreement is deleted in its entirety and is replaced with the following:
|
2.1.2
|
Sublause 2.2.4 of the Agreement is deleted in its entirety and is replaced with the following:
|
|
[***]
|
|
[***]
|
2.1.3
|
Clause 18.1.1.2 of the Agreement is deleted in its entirety and replaced by the following:
|
2.1.4
|
Clause 18.1.2 (iii) of the Agreement is deleted in its entirety and is replaced by the following:
|
2.2
|
[***]
|
2.3
|
[***]
|
2.4
|
[***]
|
2.4.1
|
[***]
|
3.
|
CLAUSE 2 - SPECIFICATION
|
4.
|
ASSIGNMENT
|
5.
|
CONFIDENTIALITY
|
6.
|
COUNTERPARTS
|
2.3.2.1
|
[***]
|
2.3.2.2
|
[***]
|
2.3.3.2
|
In the event of the Seller revising the Specification to incorporate Development Changes which have no adverse effect on the performance, weight, Base Price, Delivery Date of the Aircraft affected thereby or the interchangeability or replaceability requirements under the Specification, such revision shall be performed by the Seller without the Buyer’s consent. In such cases, the Buyer shall have access to the details of such changes through the relevant application in AirbusWorld.
|
1
|
AIRCRAFT MODEL APPLICABILITY
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
2
|
FLIGHT PERFORMANCE
|
2.1
|
Takeoff
|
2.1.1
|
Takeoff Performance at
[***]
|
2.2
|
Speed
|
2.3
|
[***]
|
2.3.1
|
[***]
|
2.3.2
|
[***]
|
2.3.3
|
[***]
|
2.4
|
[***]
|
2.4.1
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.4.2
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.4.3
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.5
|
[***]
|
2.5.1
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.5.2
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.6
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.7
|
[***]
|
-
|
the [***] of the Aircraft as defined in Paragraph 1 herein ([***] according to Section [***] of the Standard Specification, subject to adjustments as defined in Paragraph 7.2 herein)
|
-
|
[***]
|
3
|
[***]
|
4
|
SOUND LEVELS
|
4.1
|
Exterior Noise - Acoustic Certification Levels
|
4.2
|
Interior Noise During Flight
|
4.2.1
|
Cockpit
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
4.2.2
|
Cabin
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
5
|
GUARANTEE CONDITIONS
|
5.1
|
The certification requirements for the Aircraft, except where otherwise noted, will be as stated in Section 02 of the Standard Specification.
|
5.2
|
For the determination of take-off performance, [***].
|
5.3
|
When establishing take-off [***].
|
5.4
|
[***]
|
5.5
|
The engines will be operated [***].
|
5.6
|
Speech Interference Level (“SIL”) is defined as the [***].
|
5.7
|
All guaranteed interior noise levels refer to [***].
|
5.8
|
Where applicable, the Performance Guarantees assume the use of an approved fuel having a density of [***].
|
6
|
GUARANTEE COMPLIANCE
|
6.1
|
Compliance with the Performance Guarantees shall be demonstrated [***].
|
6.2
|
Compliance with the take-off and certification noise levels classification elements of the guarantees set forth in Paragraph 4.1 herein will be demonstrated with [***].
|
6.3
|
Compliance with [***].
|
6.4
|
Compliance with the [***] guarantee shall be demonstrated [***].
|
6.5
|
Compliance with [***].
|
6.6
|
The Seller undertakes to furnish the Buyer [***].
|
7
|
ADJUSTMENT OF GUARANTEES
|
7.1
|
In the event that any change to any law, governmental regulation or requirement or interpretation thereof by any governmental agency (a “Rule Change”) is made subsequent to the date of the Agreement and such Rule Change affects the Aircraft configuration or performance, or both, that is required to obtain Type Certificate, the Performance Guarantees shall be appropriately modified to reflect the effect of any such Rule Change.
|
7.2
|
The Performance Guarantees may be adjusted in the event of:
|
(i)
|
any configuration change which is the subject of an SCN and is not set forth in Paragraph 1 herein, and
|
(ii)
|
changes required to obtain the Type Certificate which require changes to the performance or weight of the Aircraft.
|
8
|
EXCLUSIVE GUARANTEES
|
9
|
REMEDIES
|
9.1
|
In the event that any one or more of the A330neo Aircraft fails to comply with any of the Performance Guarantees, the Seller shall [***].
|
9.2
|
In the event of non-compliance with any of the guarantees set forth in [***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
9.3
|
In the event the Seller [***].
|
9.4
|
The Seller’s maximum liability in respect of deficiency in performance of any A330-900neo Aircraft will be [***].
|
9.5
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
10
|
ASSIGNMENT
|
11
|
CONFIDENTIALITY
|
12
|
COUNTERPARTS
|
1
|
AIRCRAFT MODEL APPLICABILITY
|
(i)
|
[***]
|
(ii)
|
[***]
|
2
|
FLIGHT PERFORMANCE
|
2.1
|
Takeoff
|
2.1.1
|
Takeoff Performance at
[***]
|
2.1.2
|
Takeoff Performance at
[***]
|
2.1.3
|
Takeoff Performance at
[***]
|
2.2
|
Speed
|
2.3
|
[***]
|
2.3.1
|
[***]
|
2.3.2
|
[***]
|
2.3.3
|
[***]
|
2.4
|
[***]
|
2.4.1
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.4.2
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.4.3
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.5
|
[***]
|
2.5.1
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.5.2
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.6
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.7
|
[***]
|
-
|
the [***] of the Aircraft as defined in Paragraph 1 above ([***] according to Section [***]of the Standard Specification, subject to adjustments as defined in Paragraph 7.2)
|
-
|
[***]
|
3
|
USABLE LOAD
|
4
|
SOUND LEVELS
|
4.1
|
Exterior Noise - Acoustic Certification Levels
|
4.2
|
Interior Noise During Flight
|
4.2.1
|
Cockpit
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
4.2.2
|
Cabin
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
5
|
GUARANTEE CONDITIONS
|
5.1
|
The certification requirements for the Aircraft, except where otherwise noted, will be as stated in Section 02 of the Standard Specification.
|
5.2
|
For the determination of take-off performance, [***].
|
5.3
|
When establishing take-off [***].
|
5.4
|
Climb, cruise and descent performance associated with the guarantees contained herein will include [***].
|
5.5
|
The engines will be operated [***].
|
5.6
|
Speech Interference Level (“SIL”) is defined as [***].
|
5.7
|
All guaranteed interior noise levels refer to [***].
|
5.8
|
Where applicable, the Performance Guarantees assume the use of an approved fuel having a density of [***].
|
6
|
GUARANTEE COMPLIANCE
|
6.1
|
Compliance with the Performance Guarantees shall be demonstrated [***].
|
6.2
|
Compliance with the take-off and certification noise levels classification elements of the guarantees set forth in Paragraph 4.1 herein will be demonstrated [***].
|
6.3
|
Compliance [***].
|
6.4
|
Compliance with the [***] guarantee shall be demonstrated with [***].
|
6.5
|
Compliance with the [***].
|
6.6
|
The Seller undertakes to furnish the Buyer [***].
|
7
|
ADJUSTMENT OF GUARANTEES
|
7.1
|
In the event that any change to any law, governmental regulation or requirement or interpretation thereof by any governmental agency (a “Rule Change”) is made subsequent to the date of the Agreement and such Rule Change affects the Aircraft configuration or performance, or both, that is required to obtain Type Certificate, the Performance Guarantees shall be appropriately modified to reflect the effect of any such Rule Change.
|
7.2
|
The Performance Guarantees may be adjusted in the event of:
|
(i)
|
any configuration change which is the subject of an SCN and is not set forth in Paragraph 1 above, and
|
(ii)
|
changes required to obtain the Type Certificate which require changes to the performance or weight of the Aircraft.
|
8
|
EXCLUSIVE GUARANTEES
|
9
|
REMEDIES
|
9.1
|
In the event that any one or more of the A350-900 Aircraft fails to comply with any of the Performance Guarantees, the Seller shall [***].
|
9.2
|
In the event of non-compliance with any of the guarantees set forth in [***]:
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
9.3
|
In the event the Seller [***].
|
9.4
|
The Seller’s maximum liability in respect of deficiency in performance of any A350-900 Aircraft will be [***].
|
9.5
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
10
|
ASSIGNMENT
|
11
|
CONFIDENTIALITY
|
12
|
COUNTERPARTS
|
1
|
DEFINITIONS
|
2
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]
|
3
|
[***]
|
3.1
|
[***]
.
|
3.2
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
4
|
[***]
|
4.1
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
(d)
|
[***]
|
(e)
|
[***]
|
(f)
|
[***]
|
4.2
|
[***]
|
4.3
|
[***]
|
4.4
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
(d)
|
[***]
|
(e)
|
[***]
|
4.5
|
[***]
|
4.6
|
[***]
|
5
|
[***]
|
5.1
|
[***]
|
5.2
|
[***]
|
5.3
|
[***]
|
5.4
|
[***]
|
5.5
|
[***]
|
5.6
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
5.7
|
[***]
|
5.7.1
|
[***]
|
5.7.2
|
[***]
|
5.8
|
[***]
|
5.9
|
[***]
|
5.10
|
[***]
|
5.11
|
[***]
|
6
|
[***]
|
6.1
|
[***]
.
|
6.2
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
6.3
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
6.4
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
6.5
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
7
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
8
|
[***]
|
8.1
|
[***]
|
8.2
|
[***]
|
8.3
|
[***]
|
9
|
[***]
|
9.1
|
[***]
|
9.2
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
9.3
|
[***]
|
10
|
[***]
|
11
|
[***]
|
12
|
[***]
|
12.1
|
[***]
|
12.2
|
[***]
|
13
|
ASSIGNMENT
|
14
|
CONFIDENTIALITY
|
15
|
COUNTERPARTS
|
1
|
DEFINITIONS
|
2
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]
|
3
|
[***]
|
3.1
|
[***]
|
3.2
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
4
|
[***]
|
4.1
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
(d)
|
[***]
|
(e)
|
[***]
|
(f)
|
[***]
|
4.2
|
[***]
|
4.3
|
[***]
|
4.4
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
(d)
|
[***]
|
(e)
|
[***]
|
4.5
|
[***]
|
4.6
|
[***]
|
5
|
[***]
|
5.1
|
[***]
|
5.2
|
[***]
|
5.3
|
[***]
|
5.4
|
[***]
|
5.5
|
[***].
|
5.6
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
5.7
|
[***]
|
5.7.1
|
[***]
|
5.7.2
|
[***]
|
5.8
|
[***]
|
5.9
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
5.10
|
[***]
|
5.11
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
6
|
[***]
|
6.1
|
[***]
|
6.2
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
6.3
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
6.4
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
6.5
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
7
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
8
|
[***]
|
8.1
|
[***]
|
8.2
|
[***]
|
8.3
|
[***]
|
9
|
[***]
|
9.1
|
[***]
|
9.2
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
9.3
|
[***]
|
10
|
[***]
|
11
|
[***]
|
12
|
[***]
|
12.1
|
[***]
|
12.2
|
[***]
|
13
|
ASSIGNMENT
|
14
|
CONFIDENTIALITY
|
15
|
COUNTERPARTS
|
1
|
WARRANTIES
|
1.1
|
Warranties and Service Life Policy
|
1.1.1
|
Standard Warranty
|
(i)
|
design and furnish to the Buyer a correction for such Item subject to a Failure and provide any parts required for such correction (including Seller designed standard parts but excluding industry standard parts unless a part of an Item), or
|
(ii)
|
replace such Item.
|
1.1.3
|
[***]
|
1.1.4
|
[***]
|
1.1.5
|
[***]
|
2
|
TECHNICAL PUBLICATIONS
|
2.1
|
Clause 14.6 of the Agreement is deleted in its entirety and replaced with the following:
|
3
|
[***]
|
3.1
|
[***]
|
3.1.1
|
[***]
|
3.1.1.1
|
The Seller grants to the Buyer, [***].
|
3.1.1.2
|
[***]
|
(a)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(b)
|
[***]
|
3.1.2
|
[***]
|
(A)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
3.1.3
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
3.2
|
[***]
|
3.2.1
|
[***]
|
3.2.1.1
|
[***]
|
3.2.1.2
|
[***]
|
(a)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(b)
|
[***]
|
3.2.2
|
[***]
|
(A)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
3.2.3
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
4
|
[***]
|
5
|
ASSIGNMENT
|
6
|
CONFIDENTIALITY
|
7
|
COUNTERPARTS
|
1
|
DEFINITIONS AND UNDERTAKINGS
|
1.1
|
For [***] (the “
Term
”), the Seller shall (i) maintain, or cause to be maintained, a stock of Seller Parts (as defined below), reasonably adequate to meet the requirements of the Buyer for the Aircraft, and (ii) sell and deliver such Seller Parts (in each case, together with all necessary documentation and data) in accordance with the provisions of this Letter Agreement.
|
1.2
|
For the purposes of this Letter Agreement, the term “
Seller Parts
” means the Seller's proprietary parts bearing a part number of the Seller or for which the Seller has the exclusive sales rights.
|
2
|
DELIVERY
|
2.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
2.2
|
Emergency Services
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
2.3
|
[***]
|
3
|
PRICES
|
3.1
|
Price Condition
|
3.2
|
[***]
|
3.2.1
|
[***]
|
3.2.2
|
[***]
|
3.2.3
|
[***]
|
4
|
[***]
|
4.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
4.2
|
[***]
|
5
|
[***]
|
6
|
ASSIGNMENT
|
7
|
CONFIDENTIALITY
|
8
|
COUNTERPARTS
|
1
|
[***]
|
2
|
CLAUSE 0 - DEFINITIONS
|
2.1
|
Clause 0 of the Agreement is amended to delete the following defined term and replace it as follows:
|
2.2
|
Clause 0 of the Agreement is amended to add the following defined terms:
|
3
|
CLAUSE 3 - PRICE
|
4
|
CLAUSE 5 - PAYMENT TERMS
|
4.1
|
Subclause 5.4 of the Agreement is deleted in its entirety and replaced as follows:
|
“5.4
|
Payment of Other Amounts
|
5.4.1
|
[***]
|
4.2
|
Subclause 5.5 of the Agreement is deleted in its entirety and replaced as follows:
|
“5.5
|
Overdue Payments
|
4.3
|
Subclause 5.10 of the Agreement is deleted in its entirety.
|
5
|
CLAUSE 7 - CERTIFICATION
|
5.1
|
Subclauses 7.3 and 7.4 of the Agreement are deleted in their entirety and replaced with the following:
|
“7.3
|
Specification Changes before Aircraft Ready for Delivery
|
7.3.1
|
[***]
|
7.3.2
|
The Seller shall as far as practicable,
[***]
, take into account the information available to it concerning any proposed law, rule or regulation or interpretation that
|
7.3.3
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
7.3.4
|
[***]
|
7.4
|
Specification Changes after Certificate of Acceptance
|
5.2
|
A new Subclause 7.5 is added to the Agreement as follows:
|
6
|
CLAUSE 8 - THE BUYER’S ACCEPTANCE
|
6.1
|
Subclause 8.1.2 of the Agreement is deleted in its entirety and replaced with the following:
|
6.2
|
Subclause 8.2 of the Agreement is deleted in its entirety and replaced with the following:
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
7
|
CLAUSE 9 - DELIVERY
|
8
|
CLAUSE 10 - EXCUSABLE DELAY
|
9
|
CLAUSE 11 - INEXCUSABLE DELAY
|
10
|
CLAUSE 20 - INDEMNIFICATION AND INSURANCE
|
11
|
CLAUSE 21 - TERMINATION FOR CERTAIN EVENTS
|
12
|
ASSIGNMENT
|
13
|
CONFIDENTIALITY
|
14
|
COUNTERPARTS
|
3.3.1
|
The Seller shall bear and pay the amount of
[***]
|
3.3.2
|
The Buyer shall bear and pay the amount of
[***]
|
3.3.3
|
The Seller shall
[***]
|
3.3.4
|
It is expressly understood and agreed that
[***]
|
3.3.5
|
It is expressly understood and agreed that
[***]
|
3.3.6
|
[***]
|
3.3.7
|
[***]
|
3.3.8
|
[***]
|
3.3.9
|
[***]
|
3.3.10
|
[***]
|
3.3.11
|
Taxes and Disputes
|
10.6
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
11
|
INEXCUSABLE DELAY
|
11.1
|
[***]
|
11.1.1
|
[***]
|
11.1.2
|
[***]
|
11.2
|
[***]
|
11.2.1
|
[***]
|
11.2.2
|
[***]
|
11.2.3
|
[***]
|
11.2.4
|
[***]
|
11.4
|
[***]
|
11.4.1
|
[***]
|
11.4.2
|
[***]
|
11.4.3
|
[***]
|
11.7
|
[***]
|
11.8
|
[***]
|
20.1
|
[***]
|
20.2
|
[***]
|
(A)
|
[***]
|
(B)
|
[***]
|
20.3
|
[***]
|
(A)
|
[***]
|
(B)
|
[***]
|
20.4
|
[***] Upon receipt of such notice, the Indemnitor (unless otherwise agreed by the Indemnified Party and the Indemnitor) shall assume and conduct the defense, or settlement, of such claim or suit. [***] Notice of the claim or suit shall be accompanied by all information pertinent to the matter as is reasonably available to the Indemnified Party and shall be followed by such cooperation by the Indemnified Party as the Indemnitor or its counsel may reasonably request, at the expense of the Indemnitor.
|
(A)
|
[***]
|
(B)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
21.1
|
Any of the following shall be considered a material breach of, [***] (“
Material Breach
”):
|
(1)
|
[***], the Buyer or any [***] shall commence any case, proceeding or other action with respect to [***] the Buyer in any jurisdiction relating to bankruptcy, insolvency, reorganization or relief from debtors or seeking a reorganization, arrangement, winding-up, liquidation, dissolution or other relief with respect to its debts and such case, proceeding or action is not dismissed [***].
|
(2)
|
An action is commenced seeking the appointment of a receiver, trustee, custodian or other similar official for [***] the Buyer for all or substantially all of its assets and such action is not stayed or dismissed [***] or the Buyer makes a general assignment for the benefit of its creditors.
|
(3)
|
An action is commenced against [***] or the Buyer seeking [***].
|
(4)
|
[***]
|
(5)
|
[***]
|
(6)
|
The Buyer fails to make any [***] Payment required to be made pursuant to the Agreement when such payment comes due or fails to make payment [***] required to be made pursuant to Subclause 5.3 of the Agreement.
|
(7)
|
[***]
|
(8)
|
[***]
|
(9)
|
[***]
|
(10)
|
[***]
|
(11)
|
[***]
|
21.2
|
[***]
|
1.
|
[***]
|
2.
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]
|
2.3
|
[***]
|
2.4
|
[***]
|
2.5
|
[***]
|
3.
|
[***]
|
4.
|
[***]
|
5.
|
[***]
|
6.
|
ASSIGNMENT
|
7.
|
CONFIDENTIALITY
|
8.
|
COUNTERPARTS
|
1.
|
[***]
|
2.
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]
|
2.3
|
[***]
|
2.4
|
[***].
|
2.5
|
[***]
|
3.
|
[***]
|
4.
|
[***]
|
5.
|
[***]
|
6.
|
ASSIGNMENT
|
7.
|
CONFIDENTIALITY
|
8.
|
COUNTERPARTS
|
0
|
[***]
|
1
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2
|
[***]
|
2.1
|
[***]
|
a)
|
[***]
|
b)
|
[***]
|
2.2
|
[***]
|
3
|
[***]
|
3.1
|
[***]
|
3.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
4
|
[***]
|
4.1
|
[***]
|
4.2
|
[***]
|
4.3
|
[***]
|
4.4
|
[***]
|
5
|
[***]
|
a)
|
[***]
|
b)
|
[***]
|
6
|
[***]
|
6.1
|
[***]
|
a)
|
[***]
|
b)
|
[***]
|
6.2
|
[***]
|
6.2.1
|
[***]
|
6.2.2
|
[***]
|
6.2.3
|
[***]
|
6.3
|
[***]
|
7
|
[***]
|
7.1
|
[***]
|
7.2
|
[***]
|
7.3
|
[***]
|
7.4
|
[***]
|
7.5
|
[***]
|
(i)
|
[***]
|
8
|
[***]
|
8.1
|
[***]
|
-
|
[***]
|
-
|
[***]
|
-
|
[***]
|
-
|
[***]
|
-
|
[***]
|
8.2
|
[***]
|
9
|
[***]
|
9.2
|
[***]
|
9.3
|
[***]
|
10
|
[***]
|
11
|
ASSIGNMENT
|
12
|
CONFIDENTIALITY
|
13
|
COUNTERPARTS
|
0
|
[***]
|
1
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2
|
[***]
|
2.1
|
[***]
|
i)
|
[***]
|
ii)
|
[***]
|
b)
|
[***]
|
i)
|
[***]
|
ii)
|
[***]
|
2.2
|
[***]
|
3
|
[***]
|
3.1
|
[***]
|
3.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
4
|
[***]
|
4.1
|
[***]
|
4.2
|
[***]
|
4.3
|
[***]
|
4.4
|
[***]
|
5
|
[***]
|
a)
|
[***]
|
b)
|
[***]
|
6
|
[***]
|
6.1
|
[***]
|
a)
|
[***]
|
b)
|
[***]
|
6.2
|
[***]
|
6.2.1
|
[***]
|
6.2.2
|
[***]
|
6.2.3
|
[***]
|
6.3
|
[***]
|
7
|
[***]
|
7.1
|
[***]
|
7.2
|
[***]
|
7.3
|
[***]
|
7.4
|
[***]
|
7.5
|
[***]
|
(i)
|
[***]
|
8
|
[***]
|
8.1
|
[***]
|
8.2
|
[***]
|
9
|
[***]
|
9.2
|
[***]
|
9.3
|
[***]
|
10
|
[***]
|
11
|
ASSIGNMENT
|
12
|
CONFIDENTIALITY
|
13
|
COUNTERPARTS
|
1
|
[***]
|
2
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]
|
2.2.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
2.2.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
2.3
|
[***]
|
2.4
|
[***]
|
3
|
ASSIGNMENT
|
4
|
CONFIDENTIALITY
|
5
|
COUNTERPARTS
|
(1)
|
“
Composite Performance
” means, for purposes of determining the total Average Annual Operating Income Margin of the Industry Composite Group, the result obtained by treating the members of the Industry Composite Group as if they were one combined entity.
|
(2)
|
The “
Conversion Formula
” will apply to convert from cash to Shares the payout, if any, of a Performance Award to a person who is an Executive Officer Participant at the time of such payout. First, the cash amount of the payout is calculated in the same manner as if the payout is being made in cash. Next, the cash amount is converted into a number of Shares based on the following formula: A ÷ B, where:
|
(3)
|
“
GAAP
” means accounting principles generally accepted in the United States of America.
|
(4)
|
“
Industry Composite Group
” means Alaska Air Group, Inc., American Airlines Group, Inc., JetBlue Airways Corporation, Southwest Airlines Co., and United Continental Holdings, Inc.
|
(5)
|
“
Performance Period
” means the period beginning on January 1, 2015 and ending on and including December 31, 2017.
|
(1)
|
The “
Average Annual Operating Income Margin
” for Delta and each member of the Industry Composite Group shall be calculated by using the subject company’s Operating Income and Total Operating Revenue for the applicable periods and the following formula: (A ÷ B ), where:
|
(2)
|
“
Operating Income
” means, subject to Section 4(b)(v)(B) below, the subject company’s consolidated operating income for the applicable periods based on its statements of operations contained in reports on Forms 10-Q and 10-K filed with the Securities and Exchange Commission (“
SEC
”) prepared in accordance with GAAP, but excluding: (i) items presented in the line item “restructuring and other items” or such similar line item; (ii) mark-to-market adjustments for fuel hedges recorded in periods other than the settlement period; (iii) other special, unusual, or nonrecurring items which are disclosed in publicly available filings with the SEC; and (iv) expenses with respect to any annual broad-based employee profit sharing plan, program or similar arrangement.
|
(3)
|
“
Total Operating Revenue
” means, subject to Section 4(b)(v)(B) below, the subject company’s total operating revenue for the applicable periods based on its regularly prepared and publicly available statements of operations prepared in accordance with GAAP;
provided
, with respect to Delta, Total Operating Revenue shall exclude the portion of revenue associated with refinery sales to third parties net of exchange.
|
(1)
|
The “
Customer Service Performance
” for Delta shall be measured based on the percentage point improvement in Delta’s average monthly Net Promoter Score (“
NPS
”) from the 2014 calendar year to the average monthly NPS over the Performance Period, with (A) Delta’s NPS performance attributable to domestic travel accounting for 60% of the
|
(D)
|
Return on Invested Capital.
|
(1)
|
The “
Return on Invested Capital
” for Delta shall be calculated by using Delta’s Adjusted Total Operating Income and Average Invested Capital for each individual calendar year during the Performance Period (2015, 2016, and 2017) and the following formula (A
/
B), where:
|
(2)
|
“
Adjusted Total Operating Income
” means, subject to Section 4(b)(v)(B) below, Delta’s consolidated operating income for the applicable periods based on its regularly prepared and publicly available statements of operations prepared in accordance with GAAP, but excluding, (i) items present in the line item “restructuring and other items” or such similar line item; (ii) mark-to-market adjustments for fuel hedges recorded in periods other than the settlement period; (iii) other special, unusual, or nonrecurring items which are disclosed in publicly available filings with the SEC; and (iv) implied interest in aircraft rent expense, and amortized pension expense related to gains/losses that impact accumulated other comprehensive income (“
AOCI
”).
|
(3)
|
“
Average Invested Capital”
means, subject to Section 4(b)(v)(B) below, Delta’s total invested capital determined based on the average of a trailing five calendar quarters measured from the last calendar quarter preceding each calendar year of the Performance Period,
4
using the following formula, (A+B), where:
|
(4)
|
“Adjusted Book Value of Equity”
for Delta shall be calculated quarterly based on its regularly prepared internal financial statements (i) with an initial starting value for the quarter ending December 31, 2014 (the “
Initial Value
”) equal to the book value of equity determined in accordance with GAAP as of December 31, 2014, but excluding the impact of gains or losses
|
(5)
|
“Adjusted Net Debt”
for Delta shall be calculated quarterly based on its regularly prepared internal financial statements using the following formula (A+B-C), subject to Section 4(b)(v)(B), where:
|
|
Average Annual Operating
Income Margin |
+
|
Customer Service
Performance--Domestic |
+
|
Customer Service
Performance--International |
||||||
|
Performance Measure
|
|
% of Target
Earned x
Weight |
Performance Measure
|
|
% of Target
Earned x
Weight |
|
Performance Measure
|
|
% of Target
Earned x
Weight |
|
|
Maximum
|
20.0% above Composite Performance
|
200%
x 50%
|
|
Maximum
|
+4.2% points or higher
|
200%
x 15%
|
|
Maximum
|
+7.5% points or higher
|
200%
x 10%
|
|
Target
|
Composite Performance
|
100%
x 50%
|
|
Target
|
+2.5% points
|
100%
x 15%
|
|
Target
|
+3.5% points
|
100%
x 10%
|
|
Threshold
|
20.0% below Composite Performance
|
50%
x 50%
|
|
Threshold
|
+0% points
|
50%
x 15%
|
|
Threshold
|
+2.0% points
|
50%
x 10%
|
(1)
|
If there is a payout under the Company’s broad-based employee profit sharing program (the “
Profit Sharing Program
”) for 2015, the Option shall vest and become exercisable with respect to one-third of the Shares on each of the following dates: (I) February 1, 2016 (the “
First Option Installment
”), (II) February 1, 2017 (the “
Second Option Installment
”)
and (III) February 1, 2018 (the “
Third Option Installment
”); or
|
(2)
|
If there is no payout under the Profit Sharing Program for 2015, but there is a payout under the Profit Sharing Program for 2016, the Option shall vest and become exercisable with respect to (I) the First and Second Option Installments on February 1, 2017 and (II) the Third Option Installment on February 1, 2018; and
|
|
Threshold
|
Target
|
Maximum
|
% of Target Financial Performance Measure
Paid
|
50%
|
100%
|
200%
|
Required 2015 Pre-Tax
Income
|
$5,089 Million
|
$6,649 Million
|
$7,360 Million
|
|
Threshold
|
Target
|
Maximum
|
% of Target Revenue Performance Measure Paid
|
50%
|
100%
|
200%
|
Delta’s 2015 TRASM over 2014 TRASM relative to Industry Group Average TRASM for the same period
|
2014 TRASM minus 0.50% points
|
2014 TRASM
|
2014 TRASM plus 0.50% points or more
|
|
|
|
|
|
|
Completion Factor
2015 Goal |
On-Time Arrival Performance
2015 Goal |
||
Month in 2015
|
Relative CF
|
Absolute CF
|
Relative A14
|
Absolute A14
|
January
|
2nd
|
97.1%
|
2nd
|
81.6%
|
February
|
2nd
|
97.2%
|
2nd
|
82.6%
|
March
|
2nd
|
98.0%
|
2nd
|
81.8%
|
April
|
2nd
|
98.5%
|
2nd
|
83.8%
|
May
|
2nd
|
98.3%
|
2nd
|
83.1%
|
June
|
2nd
|
97.4%
|
2nd
|
79.6%
|
July
|
2nd
|
97.1%
|
2nd
|
79.4%
|
August
|
2nd
|
98.4%
|
2nd
|
82.6%
|
September
|
2nd
|
98.9%
|
2nd
|
85.7%
|
October
|
2nd
|
98.7%
|
2nd
|
84.7%
|
November
|
2nd
|
98.7%
|
2nd
|
85.5%
|
December
|
2nd
|
97.1%
|
2nd
|
79.2%
|
Overall
|
2nd
|
98.0%
|
2nd
|
82.5%
|
A.
|
The primary source of reported metrics used to calculate performance will be each Delta Connection carrier’s data which flows into Delta’s data warehouse.
|
B.
|
All domestic and international Delta Connection carrier system operations subject to capacity purchase agreements and/or revenue proration agreements will be included in the performance measures, including the operations of Chautauqua, Compass, ExpressJet, GoJet, Endeavor Air, Shuttle America and SkyWest, but excluding any revenue proration operations with respect to which passenger reservations are not reflected on Delta’s reservations system (the “
Delta Connection Program
”). In the event that a carrier enters or leaves the Delta Connection Program, that carrier’s operations will be included or excluded from the performance measures as applicable.
|
C.
|
The monthly calculation for completion factor will be as follows:
|
1.
|
Add all Delta Connection scheduled system operations for the month.
|
2.
|
Add all Delta Connection system completed flights for the month (including flights canceled by one carrier and covered by another via an extra section, which also includes flights changed to Delta aircraft).
|
3.
|
Divide the result of C.2 by the result of C.1 for a combined Delta Connection system completion factor.
|
D.
|
The monthly calculation for on-time performance will be as follows:
|
1.
|
Add all Delta Connection completed system operations for the month.
|
2.
|
Add all Delta Connection system on time operations for the month. On time operations are defined as the number of flights that arrive at the scheduled destination within 15 minutes of the scheduled arrival time.
|
3.
|
Divide the result of D.2 by the result of D.1 for a combined Delta Connection system on-time performance measure.
|
E.
|
All calculations will be performed and validated by Delta Connection Operations.
|
F.
|
The comparator group for the relative measure shall include the regional portfolios for Alaska Air Group, Inc., United Continental Holdings, Inc. and American Airlines Group, Inc.
and the data is compiled by a third party selected by the Company.
|
|
Year Ended December 31,
|
||||||||||||||
(in millions, except for ratio data)
|
2014
|
2013
|
2012
|
2011
|
2010
|
||||||||||
Earnings (loss) before income taxes
|
$
|
1,072
|
|
$
|
2,527
|
|
$
|
1,025
|
|
$
|
769
|
|
$
|
608
|
|
Add (deduct):
|
|
|
|
|
|
||||||||||
Fixed charges from below
|
737
|
|
947
|
|
1,116
|
|
1,202
|
|
1,315
|
|
|||||
Capitalized interest
|
(33
|
)
|
(29
|
)
|
(21
|
)
|
(9
|
)
|
(6
|
)
|
|||||
Earnings (loss) as adjusted
|
$
|
1,776
|
|
$
|
3,445
|
|
$
|
2,120
|
|
$
|
1,962
|
|
$
|
1,917
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
||||||||||
Interest expense, including capitalized amounts and amortization of debt costs
|
$
|
691
|
|
$
|
891
|
|
$
|
1,044
|
|
$
|
1,122
|
|
$
|
1,226
|
|
Portion of rental expense representative of the interest factor
|
46
|
|
56
|
|
72
|
|
80
|
|
89
|
|
|||||
Fixed charges
|
$
|
737
|
|
$
|
947
|
|
$
|
1,116
|
|
$
|
1,202
|
|
$
|
1,315
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
2.41
|
3.64
|
1.90
|
|
1.63
|
|
1.46
|
|
|
Year Ended December 31,
|
||||||||||||||
(in millions)
|
2014
|
2013
|
2012
|
2011
|
2010
|
||||||||||
MTM adjustments
|
$
|
2,346
|
|
$
|
(276
|
)
|
$
|
(27
|
)
|
$
|
26
|
|
$
|
—
|
|
Restructuring and other
|
716
|
|
424
|
|
452
|
|
242
|
|
227
|
|
|||||
Loss on extinguishment of debt
|
268
|
|
—
|
|
118
|
|
68
|
|
391
|
|
|||||
Virgin Atlantic MTM adjustments
|
134
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Merger-related items
|
—
|
|
—
|
|
—
|
|
—
|
|
233
|
|
|||||
Total
|
$
|
3,464
|
|
$
|
148
|
|
$
|
543
|
|
$
|
336
|
|
$
|
851
|
|
|
|
|
NAME OF SUBSIDIARY
|
JURISDICTION OF INCORPORATION OR
ORGANIZATION
|
|
Aero Assurance Ltd.
|
Vermont
|
|
DAL Global Services, LLC
|
Delaware
|
|
Delta Private Jets, Inc.
|
Kentucky
|
|
Endeavor Air, Inc.
|
Georgia
|
|
Epsilon Trading, LLC
|
Delaware
|
|
MIPC, LLC
|
Delaware
|
|
MLT Vacations, Inc.
|
Minnesota
|
|
Monroe Energy, LLC
|
Delaware
|
|
New Sky, Ltd.
|
Bermuda
|
(1)
|
Registration Statement No. 333-142424 on Form S-8 pertaining to Delta Air Lines, Inc. 2007 Performance Compensation Plan,
|
(2)
|
Registration Statement No. 333-149308 on Form S-8 pertaining to Delta Air Lines, Inc. 2007 Performance Compensation Plan,
|
(3)
|
Registration Statement No. 333-154818 on Form S-8 pertaining to Delta Air Lines, Inc. 2007 Performance Compensation Plan, and
|
(4)
|
Registration Statement No. 333-151060 on Form S-8 pertaining to Northwest Airlines Corporation 2007 Stock Incentive Plan;
|
|
/s/ Ernst & Young LLP
|
Atlanta, Georgia
|
|
February 10, 2015
|
|
1.
|
I have reviewed this
annual report
on Form
10-K
of Delta Air Lines, Inc. (“Delta”) for the
fiscal year
ended
December 31, 2014
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Delta as of, and for, the periods presented in this report;
|
4.
|
Delta's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Delta and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Delta, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of Delta's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in Delta's internal control over financial reporting that occurred during Delta's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Delta's internal control over financial reporting; and
|
5.
|
Delta's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Delta's auditors and the Audit Committee of Delta's Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Delta's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in Delta's internal control over financial reporting.
|
February 10, 2015
|
/s/ Richard H. Anderson
|
|
Richard H. Anderson
|
|
Chief Executive Officer
|
1.
|
I have reviewed this
annual report
on Form
10-K
of Delta Air Lines, Inc. (“Delta”) for the
fiscal year
ended
December 31, 2014
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Delta as of, and for, the periods presented in this report;
|
4.
|
Delta's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Delta and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Delta, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of Delta's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in Delta's internal control over financial reporting that occurred during Delta's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Delta's internal control over financial reporting; and
|
5.
|
Delta's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Delta's auditors and the Audit Committee of Delta's Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Delta's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in Delta's internal control over financial reporting.
|
February 10, 2015
|
/s/ Paul A. Jacobson
|
|
Paul A. Jacobson
|
|
Executive Vice President and Chief Financial Officer
|
1.
|
such Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Delta.
|
|
/s/ Richard H. Anderson
|
|
Richard H. Anderson
|
|
Chief Executive Officer
|
|
|
|
/s/ Paul A. Jacobson
|
|
Paul A. Jacobson
|
|
Executive Vice President and Chief Financial Officer
|
|
|