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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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Table of Contents
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Page
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PART I
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PART II
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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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A transatlantic joint venture with Air France and KLM, both of which are subsidiaries of the same holding company, and Alitalia.
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•
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A 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 joint venture with Aeroméxico with respect to trans-border operations on flights between the U.S. and Mexico. In addition to the joint venture, we acquired a non-controlling 49% equity stake in Grupo Aeroméxico, S.A.B. de C.V., the parent company of Aeroméxico. In addition, we and Aeroméxico have established a joint venture relating to an airframe maintenance, repair and overhaul operation located in Queretaro, Mexico.
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•
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A 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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In 2017, we entered into a joint venture with Korean Air Lines with respect to operations on transpacific routes between the United States and certain countries in Asia. We have not yet implemented this joint venture as it remains subject to receipt of required regulatory approvals in Korea.
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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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Republic Airline, Inc. ("Republic"), a subsidiary of Republic Airways Holdings, Inc.;
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•
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Compass Airlines, LLC ("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
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Gallons Consumed(1)
(in millions)
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Cost(1)(2) (in millions)
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Average Price Per Gallon(1)(2)
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Percentage of Total Operating Expense(1)(2)
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||||||
2017
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4,032
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$
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6,756
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$
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1.68
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19.2
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%
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2016
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4,016
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$
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5,985
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$
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1.49
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18.3
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%
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2015
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3,988
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$
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7,579
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$
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1.90
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23.0
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%
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(1)
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Includes the operations of our regional carriers operating under capacity purchase agreements.
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(2)
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Includes the impact of fuel hedge activity and refinery segment results.
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•
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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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•
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Delta Global Services provides services to us and to third parties, including staffing services, aviation solutions, professional security and training services.
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•
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Our vacation wholesale business, Delta 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
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Approximate Number of Active Employees Represented
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Union
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Date on which Collective Bargaining Agreement Becomes Amendable
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Delta Pilots
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13,234
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ALPA
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December 31, 2019
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Delta Flight Superintendents (Dispatchers)
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420
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PAFCA
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March 31, 2018
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Endeavor Air Pilots
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1,805
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ALPA
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January 1, 2024
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Endeavor Air Flight Attendants
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1,160
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AFA
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December 31, 2018
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Endeavor Air Dispatchers
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55
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PAFCA
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December 31, 2018
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Current Fleet(1)
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Commitments
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|||||
Aircraft Type
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Owned
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Capital Lease
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Operating Lease
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Total
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Average Age
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Purchase
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Lease
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Options
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B-717-200
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3
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13
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75
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91
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16.3
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—
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—
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—
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B-737-700
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10
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—
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—
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10
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8.9
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—
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—
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—
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B-737-800
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73
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4
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—
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77
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16.3
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—
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—
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—
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B-737-900ER
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52
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—
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37
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89
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2.3
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41
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—
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—
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B-757-200
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88
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9
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3
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100
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20.4
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—
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—
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—
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B-757-300
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16
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—
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—
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16
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14.9
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—
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—
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—
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B-767-300
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2
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—
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—
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2
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24.5
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—
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—
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—
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B-767-300ER
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55
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2
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—
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57
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21.7
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—
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—
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—
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B-767-400ER
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21
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—
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—
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21
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17.0
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—
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—
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—
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B-777-200ER
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8
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—
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—
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8
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18.1
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—
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—
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—
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B-777-200LR
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10
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—
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—
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10
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8.8
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—
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—
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—
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A319-100
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55
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—
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2
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57
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15.8
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—
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—
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—
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A320-200
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55
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3
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4
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62
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22.4
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—
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—
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—
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A321-200
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14
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—
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20
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34
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0.8
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93
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—
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—
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A321-200neo
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—
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—
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—
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—
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—
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100
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—
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100
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A330-200
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11
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—
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—
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11
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12.8
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—
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—
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—
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A330-300
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28
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—
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3
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31
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9.0
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—
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—
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—
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A330-900neo
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—
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—
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—
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—
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—
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25
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—
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—
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A350-900
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6
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—
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—
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6
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0.2
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19
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—
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—
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CS100
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—
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—
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—
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—
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—
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75
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—
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50
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MD-88
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92
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17
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—
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109
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27.5
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—
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—
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—
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MD-90
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65
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—
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—
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65
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20.9
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—
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—
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—
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Total
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664
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48
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144
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856
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16.7
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353
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—
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150
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(1)
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Excludes certain aircraft we own or lease that are operated by regional carriers on our behalf shown in the table below.
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Fleet Type
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Carrier
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CRJ-200
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CRJ-700
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CRJ-900
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Embraer 170
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Embraer 175
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Total
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Endeavor Air, Inc.(1)
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50
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—
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93
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—
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—
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143
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ExpressJet Airlines, Inc.(2)
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—
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33
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16
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—
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—
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49
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SkyWest Airlines, Inc.
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86
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27
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36
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—
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18
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167
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Compass Airlines, LLC
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—
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—
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—
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—
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36
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36
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Republic Airline, Inc.
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—
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—
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—
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20
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16
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36
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GoJet Airlines, LLC
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—
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22
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7
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—
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—
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29
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Total
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136
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82
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152
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20
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70
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460
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(1)
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Endeavor Air, Inc. is a wholly owned subsidiary of Delta.
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(2)
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During 2017, we and ExpressJet Airlines, Inc. agreed to early terminate our relationship by the end of 2018.
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Delivery in Calendar Years Ending
|
||||
Aircraft Purchase Commitments
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2018
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2019
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2020
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After 2020
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Total
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A321-200
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31
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32
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27
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3
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93
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A321-200neo
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—
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—
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16
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84
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100
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A330-900neo
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—
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—
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4
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21
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25
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A350-900
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5
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2
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2
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10
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19
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B-737-900ER
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23
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18
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—
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—
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41
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CS100
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15
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25
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16
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19
|
75
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Total
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74
|
77
|
65
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137
|
353
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Common Stock
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Cash Dividends Declared (per share)
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||||||||||
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High
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Low
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||||||||||
Fiscal 2017
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|||||||||
Fourth Quarter
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$
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56.84
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|
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$
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47.90
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|
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$
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0.305
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Third Quarter
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$
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55.75
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|
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$
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44.59
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|
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$
|
0.305
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Second Quarter
|
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$
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54.53
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|
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$
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43.81
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|
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$
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0.2025
|
|
First Quarter
|
|
$
|
52.00
|
|
|
$
|
44.47
|
|
|
$
|
0.2025
|
|
Fiscal 2016
|
|
|
|
|
||||||||
Fourth Quarter
|
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$
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52.76
|
|
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$
|
37.91
|
|
|
$
|
0.2025
|
|
Third Quarter
|
|
$
|
41.35
|
|
|
$
|
34.08
|
|
|
$
|
0.2025
|
|
Second Quarter
|
|
$
|
49.80
|
|
|
$
|
32.60
|
|
|
$
|
0.135
|
|
First Quarter
|
|
$
|
50.50
|
|
|
$
|
40.03
|
|
|
$
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0.135
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Period
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Total Number of Shares Purchased
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Average Price Paid Per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Approximate Dollar Value (in millions) of Shares That May Yet Be Purchased Under the Plan or Programs
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|||||||
October 2017
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1,382,740
|
|
$
|
52.67
|
|
1,382,740
|
|
|
$
|
4,925
|
|
November 2017
|
2,529,455
|
|
$
|
49.86
|
|
2,529,455
|
|
|
$
|
4,800
|
|
December 2017
|
2,321,176
|
|
$
|
54.34
|
|
2,321,176
|
|
|
$
|
4,675
|
|
Total
|
6,233,371
|
|
|
6,233,371
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||
(in millions, except share data)
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
Operating revenue
|
$
|
41,244
|
|
$
|
39,639
|
|
$
|
40,704
|
|
$
|
40,362
|
|
$
|
37,773
|
|
Operating expense
|
35,130
|
|
32,687
|
|
32,902
|
|
38,156
|
|
34,373
|
|
|||||
Operating income
|
6,114
|
|
6,952
|
|
7,802
|
|
2,206
|
|
3,400
|
|
|||||
Non-operating expense, net
|
(413
|
)
|
(316
|
)
|
(645
|
)
|
(1,134
|
)
|
(873
|
)
|
|||||
Income before income taxes
|
5,701
|
|
6,636
|
|
7,157
|
|
1,072
|
|
2,527
|
|
|||||
Income tax (provision) benefit
|
(2,124
|
)
|
(2,263
|
)
|
(2,631
|
)
|
(413
|
)
|
8,013
|
|
|||||
Net income
|
$
|
3,577
|
|
$
|
4,373
|
|
$
|
4,526
|
|
$
|
659
|
|
$
|
10,540
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share
|
$
|
4.97
|
|
$
|
5.82
|
|
$
|
5.68
|
|
$
|
0.79
|
|
$
|
12.41
|
|
Diluted earnings per share
|
$
|
4.95
|
|
$
|
5.79
|
|
$
|
5.63
|
|
$
|
0.78
|
|
$
|
12.29
|
|
Cash dividends declared per share
|
$
|
1.02
|
|
$
|
0.68
|
|
$
|
0.45
|
|
$
|
0.30
|
|
$
|
0.12
|
|
|
Year Ended December 31,
|
||||||||||||||
(in millions)
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
MTM adjustments and settlements
|
$
|
259
|
|
$
|
450
|
|
$
|
1,301
|
|
$
|
(2,346
|
)
|
$
|
276
|
|
Restructuring and other
|
—
|
|
—
|
|
(35
|
)
|
(716
|
)
|
(424
|
)
|
|||||
Loss on extinguishment of debt
|
—
|
|
—
|
|
—
|
|
(268
|
)
|
—
|
|
|||||
Investment MTM adjustments
|
(8
|
)
|
115
|
|
26
|
|
(134
|
)
|
—
|
|
|||||
Tax Cuts and Jobs Act
|
(150
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Release of tax valuation allowance and intraperiod income tax allocation
|
—
|
|
—
|
|
—
|
|
—
|
|
7,989
|
|
|||||
Total income (loss)
|
$
|
101
|
|
$
|
565
|
|
$
|
1,292
|
|
$
|
(3,464
|
)
|
$
|
7,841
|
|
|
December 31,
|
||||||||||||||
(in millions)
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
Total assets
|
$
|
53,292
|
|
$
|
51,261
|
|
$
|
53,134
|
|
$
|
54,005
|
|
$
|
52,104
|
|
Long-term debt and capital leases (including current maturities)
|
$
|
8,834
|
|
$
|
7,332
|
|
$
|
8,329
|
|
$
|
9,661
|
|
$
|
11,194
|
|
Stockholders' equity
|
$
|
13,910
|
|
$
|
12,287
|
|
$
|
10,850
|
|
$
|
8,813
|
|
$
|
11,643
|
|
|
Year Ended December 31,
|
||||||||||||||
Consolidated(1)
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
Revenue passenger miles (in millions)
|
217,712
|
|
213,098
|
|
209,625
|
|
202,925
|
|
194,988
|
|
|||||
Available seat miles (in millions)
|
254,325
|
|
251,867
|
|
246,764
|
|
239,676
|
|
232,740
|
|
|||||
Passenger mile yield
|
|
15.99
|
¢
|
|
15.85
|
¢
|
|
16.59
|
¢
|
|
17.22
|
¢
|
|
16.89
|
¢
|
Passenger revenue per available seat mile
|
|
13.69
|
¢
|
|
13.41
|
¢
|
|
14.10
|
¢
|
|
14.58
|
¢
|
|
14.15
|
¢
|
Total revenue per available seat mile
|
|
16.22
|
¢
|
|
15.74
|
¢
|
|
16.50
|
¢
|
|
16.84
|
¢
|
|
16.23
|
¢
|
Operating cost per available seat mile
|
|
13.81
|
¢
|
|
12.98
|
¢
|
|
13.33
|
¢
|
|
15.92
|
¢
|
|
14.77
|
¢
|
Passenger load factor
|
85.6
|
%
|
84.6
|
%
|
84.9
|
%
|
84.7
|
%
|
83.8
|
%
|
|||||
Fuel gallons consumed (in millions)
|
4,032
|
|
4,016
|
|
3,988
|
|
3,893
|
|
3,828
|
|
|||||
Average price per fuel gallon(2)
|
$
|
1.68
|
|
$
|
1.49
|
|
$
|
1.90
|
|
$
|
3.47
|
|
$
|
3.00
|
|
Full-time equivalent employees, end of period
|
86,564
|
|
83,756
|
|
82,949
|
|
79,655
|
|
77,755
|
|
(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 and refinery segment results.
|
|
Year Ended December 31,
|
Increase
|
% Increase
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Passenger
|
$
|
34,819
|
|
$
|
33,777
|
|
1,042
|
|
3.1
|
%
|
|
Cargo
|
729
|
|
668
|
|
61
|
|
9.1
|
%
|
|||
Other
|
5,696
|
|
5,194
|
|
502
|
|
9.7
|
%
|
|||
Total
|
$
|
41,244
|
|
$
|
39,639
|
|
$
|
1,605
|
|
4.0
|
%
|
|
|
Increase (Decrease)
vs. Year Ended December 31, 2016
|
||||||||||||||
(in millions)
|
Year Ended December 31, 2017
|
Passenger Revenue
|
RPMs (Traffic)
|
ASMs (Capacity)
|
Passenger Mile Yield
|
PRASM
|
Load Factor
|
|||||||||
Mainline
|
$
|
18,878
|
|
5.3
|
%
|
4.1
|
%
|
3.6
|
%
|
1.1
|
%
|
1.7
|
%
|
0.4
|
|
pts
|
Regional carriers
|
5,714
|
|
0.8
|
%
|
(2.5
|
)%
|
(2.6
|
)%
|
3.4
|
%
|
3.4
|
%
|
—
|
|
pts
|
|
Domestic
|
24,592
|
|
4.2
|
%
|
3.0
|
%
|
2.5
|
%
|
1.1
|
%
|
1.7
|
%
|
0.4
|
|
pts
|
|
Atlantic
|
5,292
|
|
2.1
|
%
|
4.8
|
%
|
0.3
|
%
|
(2.6
|
)%
|
1.7
|
%
|
3.6
|
|
pts
|
|
Pacific
|
2,366
|
|
(9.6
|
)%
|
(9.0
|
)%
|
(7.7
|
)%
|
(0.7
|
)%
|
(2.0
|
)%
|
(1.2
|
)
|
pts
|
|
Latin America
|
2,569
|
|
8.3
|
%
|
4.2
|
%
|
2.0
|
%
|
4.0
|
%
|
6.2
|
%
|
1.8
|
|
pts
|
|
Total
|
$
|
34,819
|
|
3.1
|
%
|
2.2
|
%
|
1.0
|
%
|
0.9
|
%
|
2.1
|
%
|
1.0
|
|
pt
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Loyalty programs
|
$
|
1,952
|
|
$
|
1,782
|
|
$
|
170
|
|
9.5
|
%
|
Administrative fees, club and on-board sales
|
1,252
|
|
1,205
|
|
47
|
|
3.9
|
%
|
|||
Ancillary businesses and refinery
|
1,412
|
|
1,129
|
|
283
|
|
25.1
|
%
|
|||
Baggage fees
|
908
|
|
881
|
|
27
|
|
3.1
|
%
|
|||
Other
|
172
|
|
197
|
|
(25
|
)
|
(12.7
|
)%
|
|||
Total
|
$
|
5,696
|
|
$
|
5,194
|
|
$
|
502
|
|
9.7
|
%
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Salaries and related costs
|
$
|
10,436
|
|
$
|
10,034
|
|
$
|
402
|
|
4.0
|
%
|
Aircraft fuel and related taxes
|
5,733
|
|
5,133
|
|
600
|
|
11.7
|
%
|
|||
Regional carriers expense
|
4,503
|
|
4,311
|
|
192
|
|
4.5
|
%
|
|||
Depreciation and amortization
|
2,235
|
|
1,902
|
|
333
|
|
17.5
|
%
|
|||
Contracted services
|
2,184
|
|
1,991
|
|
193
|
|
9.7
|
%
|
|||
Aircraft maintenance materials and outside repairs
|
1,992
|
|
1,823
|
|
169
|
|
9.3
|
%
|
|||
Passenger commissions and other selling expenses
|
1,787
|
|
1,710
|
|
77
|
|
4.5
|
%
|
|||
Landing fees and other rents
|
1,528
|
|
1,490
|
|
38
|
|
2.6
|
%
|
|||
Passenger service
|
1,067
|
|
907
|
|
160
|
|
17.6
|
%
|
|||
Profit sharing
|
1,065
|
|
1,115
|
|
(50
|
)
|
(4.5
|
)%
|
|||
Aircraft rent
|
351
|
|
285
|
|
66
|
|
23.2
|
%
|
|||
Other
|
2,249
|
|
1,986
|
|
263
|
|
13.2
|
%
|
|||
Total operating expense
|
$
|
35,130
|
|
$
|
32,687
|
|
$
|
2,443
|
|
7.5
|
%
|
|
Year Ended December 31,
|
Increase
|
% Increase
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Aircraft fuel and related taxes(1)
|
$
|
5,733
|
|
$
|
5,133
|
|
$
|
600
|
|
|
|
Aircraft fuel and related taxes included within regional carriers expense
|
1,023
|
|
852
|
|
171
|
|
|
||||
Total fuel expense
|
$
|
6,756
|
|
$
|
5,985
|
|
$
|
771
|
|
12.9
|
%
|
(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)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||||||||
Fuel purchase cost(1)
|
$
|
6,833
|
|
$
|
5,579
|
|
$
|
1,254
|
|
|
$
|
1.70
|
|
$
|
1.39
|
|
$
|
0.31
|
|
Airline segment fuel hedge losses(2)
|
33
|
|
281
|
|
(248
|
)
|
|
0.01
|
|
0.07
|
|
(0.06
|
)
|
||||||
Refinery segment impact(2)
|
(110
|
)
|
125
|
|
(235
|
)
|
|
(0.03
|
)
|
0.03
|
|
(0.06
|
)
|
||||||
Total fuel expense
|
$
|
6,756
|
|
$
|
5,985
|
|
$
|
771
|
|
|
$
|
1.68
|
|
$
|
1.49
|
|
$
|
0.19
|
|
MTM adjustments and settlements(3)
|
259
|
|
450
|
|
(191
|
)
|
|
0.06
|
|
0.11
|
|
(0.05
|
)
|
||||||
Total fuel expense, adjusted
|
$
|
7,015
|
|
$
|
6,435
|
|
$
|
580
|
|
|
$
|
1.74
|
|
$
|
1.60
|
|
$
|
0.14
|
|
(1)
|
Market price for jet fuel at airport locations, including related taxes and transportation costs.
|
(2)
|
Includes the impact of pricing arrangements between the airline and refinery segments with respect to the refinery's inventory price risk. For additional information regarding the refinery segment impact, see "Refinery Segment" below.
|
(3)
|
MTM adjustments and settlements include the effects of the derivative transactions discussed in Note 4 of the Notes to the Consolidated Financial Statements. For additional information and the reason for adjusting fuel expense, see "Supplemental Information" below.
|
|
Year Ended December 31,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2016
|
2015
|
|||||||||
Passenger
|
33,777
|
|
34,782
|
|
(1,005
|
)
|
(2.9
|
)%
|
|||
Cargo
|
668
|
|
813
|
|
(145
|
)
|
(17.8
|
)%
|
|||
Other
|
5,194
|
|
5,109
|
|
85
|
|
1.7
|
%
|
|||
Total
|
$
|
39,639
|
|
$
|
40,704
|
|
$
|
(1,065
|
)
|
(2.6
|
)%
|
|
|
Increase (Decrease)
vs. Year Ended December 31, 2015
|
||||||||||||||
(in millions)
|
Year Ended December 31, 2016
|
Passenger Revenue
|
RPMs (Traffic)
|
ASMs (Capacity)
|
Passenger Mile Yield
|
PRASM
|
Load Factor
|
|||||||||
Mainline
|
$
|
17,932
|
|
—
|
%
|
4.3
|
%
|
5.2
|
%
|
(4.1
|
)%
|
(5.0
|
)%
|
(0.8
|
)
|
pts
|
Regional carriers
|
5,672
|
|
(3.6
|
)%
|
0.6
|
%
|
1.0
|
%
|
(4.2
|
)%
|
(4.6
|
)%
|
(0.3
|
)
|
pts
|
|
Domestic
|
23,604
|
|
(0.9
|
)%
|
3.6
|
%
|
4.5
|
%
|
(4.4
|
)%
|
(5.2
|
)%
|
(0.6
|
)
|
pts
|
|
Atlantic
|
5,185
|
|
(6.5
|
)%
|
(1.7
|
)%
|
0.3
|
%
|
(4.9
|
)%
|
(6.8
|
)%
|
(1.7
|
)
|
pts
|
|
Pacific
|
2,616
|
|
(12.8
|
)%
|
(4.6
|
)%
|
(6.6
|
)%
|
(8.6
|
)%
|
(6.7
|
)%
|
1.8
|
|
pts
|
|
Latin America
|
2,372
|
|
(1.8
|
)%
|
3.5
|
%
|
0.8
|
%
|
(5.1
|
)%
|
(2.6
|
)%
|
2.3
|
|
pts
|
|
Total
|
$
|
33,777
|
|
(2.9
|
)%
|
1.7
|
%
|
2.1
|
%
|
(4.5
|
)%
|
(4.9
|
)%
|
(0.3
|
)
|
pts
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2016
|
2015
|
|||||||||
Loyalty programs
|
$
|
1,782
|
|
$
|
1,584
|
|
$
|
198
|
|
12.5
|
%
|
Administrative fees, club and on-board sales
|
1,205
|
|
1,261
|
|
(56
|
)
|
(4.4
|
)%
|
|||
Ancillary businesses and refinery(1)
|
1,129
|
|
1,158
|
|
(29
|
)
|
(2.5
|
)%
|
|||
Baggage fees
|
881
|
|
885
|
|
(4
|
)
|
(0.5
|
)%
|
|||
Other
|
197
|
|
221
|
|
(24
|
)
|
(10.9
|
)%
|
|||
Total
|
$
|
5,194
|
|
$
|
5,109
|
|
$
|
85
|
|
1.7
|
%
|
(1)
|
Ancillary businesses and refinery includes aircraft maintenance and staffing services we provide to third parties, our vacation wholesale operations and refinery sales to third parties. These revenues are not related to the generation of a seat mile.
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2016
|
2015
|
|||||||||
Salaries and related costs
|
$
|
10,034
|
|
$
|
8,776
|
|
$
|
1,258
|
|
14.3
|
%
|
Aircraft fuel and related taxes
|
5,133
|
|
6,544
|
|
(1,411
|
)
|
(21.6
|
)%
|
|||
Regional carriers expense
|
4,311
|
|
4,241
|
|
70
|
|
1.7
|
%
|
|||
Contracted services
|
1,991
|
|
1,848
|
|
143
|
|
7.7
|
%
|
|||
Depreciation and amortization
|
1,902
|
|
1,835
|
|
67
|
|
3.7
|
%
|
|||
Aircraft maintenance materials and outside repairs
|
1,823
|
|
1,848
|
|
(25
|
)
|
(1.4
|
)%
|
|||
Passenger commissions and other selling expenses
|
1,710
|
|
1,672
|
|
38
|
|
2.3
|
%
|
|||
Landing fees and other rents
|
1,490
|
|
1,493
|
|
(3
|
)
|
(0.2
|
)%
|
|||
Profit sharing
|
1,115
|
|
1,490
|
|
(375
|
)
|
(25.2
|
)%
|
|||
Passenger service
|
907
|
|
872
|
|
35
|
|
4.0
|
%
|
|||
Aircraft rent
|
285
|
|
250
|
|
35
|
|
14.0
|
%
|
|||
Other
|
1,986
|
|
2,033
|
|
(47
|
)
|
(2.3
|
)%
|
|||
Total operating expense
|
$
|
32,687
|
|
$
|
32,902
|
|
$
|
(215
|
)
|
(0.7
|
)%
|
|
Year Ended December 31,
|
(Decrease)
|
% (Decrease)
|
||||||||
(in millions)
|
2016
|
2015
|
|||||||||
Aircraft fuel and related taxes(1)
|
$
|
5,133
|
|
$
|
6,544
|
|
$
|
(1,411
|
)
|
|
|
Aircraft fuel and related taxes included within regional carriers expense
|
852
|
|
1,035
|
|
(183
|
)
|
|
||||
Total fuel expense
|
$
|
5,985
|
|
$
|
7,579
|
|
$
|
(1,594
|
)
|
(21.0
|
)%
|
(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)
|
2016
|
2015
|
|
2016
|
2015
|
||||||||||||||
Fuel purchase cost(1)
|
$
|
5,579
|
|
$
|
6,934
|
|
$
|
(1,355
|
)
|
|
$
|
1.39
|
|
$
|
1.74
|
|
$
|
(0.35
|
)
|
Airline segment fuel hedge losses(2)
|
281
|
|
935
|
|
(654
|
)
|
|
0.07
|
|
0.23
|
|
(0.16
|
)
|
||||||
Refinery segment impact(2)
|
125
|
|
(290
|
)
|
415
|
|
|
0.03
|
|
(0.07
|
)
|
0.10
|
|
||||||
Total fuel expense
|
$
|
5,985
|
|
$
|
7,579
|
|
$
|
(1,594
|
)
|
|
$
|
1.49
|
|
$
|
1.90
|
|
$
|
(0.41
|
)
|
MTM adjustments and settlements(3)
|
450
|
|
1,301
|
|
(851
|
)
|
|
0.11
|
|
0.33
|
|
(0.22
|
)
|
||||||
Total fuel expense, adjusted
|
$
|
6,435
|
|
$
|
8,880
|
|
$
|
(2,445
|
)
|
|
$
|
1.60
|
|
$
|
2.23
|
|
$
|
(0.63
|
)
|
(1)
|
Market price for jet fuel at airport locations, including related taxes and transportation costs.
|
(2)
|
Includes the impact of pricing arrangements between the airline and refinery segments with respect to the refinery's inventory price risk. For additional information regarding the refinery segment impact, see "Refinery Segment" below.
|
(3)
|
MTM adjustments and settlements include the effects of the derivative transactions discussed in Note 4 of the Notes to the Consolidated Financial Statements. For additional information and the reason for adjusting fuel expense, see "Supplemental Information" below.
|
|
Year Ended December 31,
|
|
(Unfavorable) Favorable
|
|||||||||||||
(in millions)
|
2017
|
2016
|
2015
|
|
2017 vs. 2016
|
2016 vs. 2015
|
||||||||||
Interest expense, net
|
$
|
(396
|
)
|
$
|
(388
|
)
|
$
|
(481
|
)
|
|
$
|
(8
|
)
|
$
|
93
|
|
Miscellaneous, net
|
(17
|
)
|
72
|
|
(164
|
)
|
|
(89
|
)
|
236
|
|
|||||
Total non-operating expense, net
|
$
|
(413
|
)
|
$
|
(316
|
)
|
$
|
(645
|
)
|
|
$
|
(97
|
)
|
$
|
329
|
|
Rating Agency
|
Current Rating
|
Outlook
|
Fitch
|
BBB-
|
Stable
|
Moody's
|
Baa3
|
Stable
|
Standard & Poor's
|
BBB-
|
Stable
|
(in millions, except repurchase price)
|
Share Repurchase Authorization
|
Average Repurchase Price
|
Planned Completion Date
|
Authorization Remaining
|
|||||||
May 2014 Program
|
$
|
2,000
|
|
$
|
42.86
|
|
December 31, 2016
|
Completed June 2015
|
|||
May 2015 Program
|
$
|
5,000
|
|
$
|
45.32
|
|
December 31, 2017
|
Completed September 2017
|
|||
May 2017 Program
|
$
|
5,000
|
|
$
|
52.13
|
|
December 31, 2020
|
|
$
|
4,675
|
|
|
Contractual Obligations by Year(1)
|
||||||||||||||||||||
(in millions)
|
2018
|
2019
|
2020
|
2021
|
2022
|
Thereafter
|
Total
|
||||||||||||||
Long-term debt (see Note 6)
|
|
|
|
|
|
|
|
||||||||||||||
Principal amount
|
$
|
2,183
|
|
$
|
1,359
|
|
$
|
1,983
|
|
$
|
345
|
|
$
|
2,009
|
|
$
|
660
|
|
$
|
8,539
|
|
Interest payments
|
349
|
|
247
|
|
171
|
|
131
|
|
82
|
|
120
|
|
1,100
|
|
|||||||
Capital lease obligations (see Note 7)
|
|
|
|
|
|
|
|
||||||||||||||
Principal amount
|
97
|
|
78
|
|
56
|
|
34
|
|
19
|
|
110
|
|
394
|
|
|||||||
Interest payments
|
19
|
|
14
|
|
9
|
|
7
|
|
5
|
|
16
|
|
70
|
|
|||||||
Operating lease payments (see Note 7)
|
1,735
|
|
1,589
|
|
1,430
|
|
1,156
|
|
1,036
|
|
9,290
|
|
16,236
|
|
|||||||
Aircraft purchase commitments (see Note 10)
|
3,570
|
|
3,370
|
|
3,270
|
|
3,880
|
|
2,450
|
|
1,740
|
|
18,280
|
|
|||||||
Contract carrier obligations (see Note 10)
|
1,772
|
|
1,603
|
|
1,320
|
|
793
|
|
723
|
|
1,975
|
|
8,186
|
|
|||||||
Employee benefit obligations (see Note 9)
|
149
|
|
144
|
|
130
|
|
120
|
|
113
|
|
5,916
|
|
6,572
|
|
|||||||
Other obligations
|
770
|
|
364
|
|
314
|
|
241
|
|
411
|
|
459
|
|
2,559
|
|
|||||||
Total
|
$
|
10,644
|
|
$
|
8,768
|
|
$
|
8,683
|
|
$
|
6,707
|
|
$
|
6,848
|
|
$
|
20,286
|
|
$
|
61,936
|
|
(1)
|
For additional information, see the Notes to the Consolidated Financial Statements referenced in the table above.
|
Change in Assumption
|
Effect on 2018
Pension Expense
|
Effect on Accrued
Pension Liability at
December 31, 2017
|
||||||
0.50% decrease in weighted average discount rate
|
|
$
|
(9
|
) million
|
|
$
|
1.4
|
billion
|
0.50% increase in weighted average discount rate
|
|
$
|
5
|
million
|
|
$
|
(1.2
|
) billion
|
0.50% decrease in expected long-term rate of return on assets
|
|
$
|
73
|
million
|
|
$
|
—
|
|
0.50% increase in expected long-term rate of return on assets
|
|
$
|
(73
|
) million
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||
(Unaudited)
(in millions, except per share data and statistics)
|
As Reported
|
Revenue from Contracts with Customers
|
Retirement Benefits
|
As Adjusted
|
|
As Reported
|
Revenue from Contracts with Customers
|
Retirement Benefits
|
As Adjusted
|
||||||||||||||||
Income statement:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Passenger revenue
|
$
|
34,819
|
|
$
|
2,297
|
|
$
|
—
|
|
$
|
37,116
|
|
|
$
|
33,777
|
|
$
|
2,189
|
|
$
|
—
|
|
$
|
35,966
|
|
Cargo revenue
|
729
|
|
15
|
|
—
|
|
744
|
|
|
668
|
|
16
|
|
—
|
|
684
|
|
||||||||
Other revenue
|
5,696
|
|
(2,418
|
)
|
—
|
|
3,278
|
|
|
5,194
|
|
(2,394
|
)
|
—
|
|
2,800
|
|
||||||||
Operating expense
|
(35,130
|
)
|
(92
|
)
|
50
|
|
(35,172
|
)
|
|
(32,687
|
)
|
(92
|
)
|
325
|
|
(32,454
|
)
|
||||||||
Non-operating expense
|
(413
|
)
|
(3
|
)
|
(50
|
)
|
(466
|
)
|
|
(316
|
)
|
(2
|
)
|
(325
|
)
|
(643
|
)
|
||||||||
Income tax provision
|
(2,124
|
)
|
(171
|
)
|
—
|
|
(2,295
|
)
|
|
(2,263
|
)
|
105
|
|
—
|
|
(2,158
|
)
|
||||||||
Net income
|
3,577
|
|
(372
|
)
|
—
|
|
3,205
|
|
|
4,373
|
|
(178
|
)
|
—
|
|
4,195
|
|
||||||||
Diluted earnings per share
|
$
|
4.95
|
|
$
|
(0.52
|
)
|
—
|
|
$
|
4.43
|
|
|
$
|
5.79
|
|
$
|
(0.24
|
)
|
—
|
|
$
|
5.55
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operating statistics:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Pre-tax margin
|
13.8
|
%
|
(0.4
|
)%
|
—
|
%
|
13.4
|
%
|
|
16.7
|
%
|
(0.6
|
)%
|
—
|
%
|
16.1
|
%
|
||||||||
Passenger mile yield(1)
|
|
15.99
|
¢
|
|
1.06
|
¢
|
—
|
|
|
17.05
|
¢
|
|
|
15.85
|
¢
|
|
1.03
|
¢
|
—
|
|
|
16.88
|
¢
|
||
PRASM(1)
|
|
13.69
|
¢
|
|
0.90
|
¢
|
—
|
|
|
14.59
|
¢
|
|
|
13.41
|
¢
|
|
0.87
|
¢
|
—
|
|
|
14.28
|
¢
|
||
TRASM(1)
|
|
16.22
|
¢
|
|
(0.04
|
)¢
|
—
|
|
|
16.18
|
¢
|
|
|
15.74
|
¢
|
|
(0.08
|
)¢
|
—
|
|
|
15.66
|
¢
|
||
CASM(1)
|
|
13.81
|
¢
|
|
0.04
|
¢
|
|
(0.02
|
)¢
|
|
13.83
|
¢
|
|
|
12.98
|
¢
|
|
0.04
|
¢
|
|
(0.13
|
)¢
|
|
12.89
|
¢
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance sheet:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred income taxes, net
|
$
|
935
|
|
$
|
419
|
|
$
|
—
|
|
$
|
1,354
|
|
|
$
|
3,064
|
|
$
|
589
|
|
$
|
—
|
|
$
|
3,653
|
|
Air traffic liability
|
4,888
|
|
(524
|
)
|
—
|
|
4,364
|
|
|
4,626
|
|
(546
|
)
|
—
|
|
4,080
|
|
||||||||
Frequent flyer deferred revenue (current and noncurrent)
|
4,118
|
|
2,082
|
|
—
|
|
6,200
|
|
|
3,926
|
|
1,877
|
|
—
|
|
5,803
|
|
||||||||
Other accrued and other noncurrent liabilities
|
3,969
|
|
241
|
|
—
|
|
4,210
|
|
|
3,785
|
|
268
|
|
—
|
|
4,053
|
|
||||||||
Retained earnings
|
9,636
|
|
(1,380
|
)
|
—
|
|
8,256
|
|
|
7,903
|
|
(1,009
|
)
|
—
|
|
6,894
|
|
(1)
|
Refer to the "Glossary of Defined Terms" below for the definition of these terms.
|
•
|
MTM adjustments and settlements. MTM adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period. Settlements represent cash received or paid on hedge contracts settled during the period. These items adjust fuel expense to show the economic impact of hedging, including cash received or paid on hedge contracts during the period. Adjusting for these items allows investors to better understand and analyze our core operational performance in the periods shown.
|
•
|
Investment MTM adjustments. We record our proportionate share of earnings from our equity investments in Virgin Atlantic and Aeroméxico in non-operating expense. We adjust for Virgin Atlantic's and Aeroméxico's MTM adjustments to allow investors to better understand and analyze our core financial performance in the periods shown.
|
|
Year Ended December 31,
|
|||||
(in millions)
|
2017
|
2016
|
||||
Pre-tax income
|
$
|
5,701
|
|
$
|
6,636
|
|
Adjusted for:
|
|
|
||||
MTM adjustments and settlements
|
(259
|
)
|
(450
|
)
|
||
Investment MTM adjustments
|
8
|
|
(115
|
)
|
||
Pre-tax income, adjusted for special items
|
$
|
5,450
|
|
$
|
6,071
|
|
•
|
Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The adjustment for aircraft fuel and related taxes (including our regional carriers) allows investors to better understand and analyze our non-fuel costs and year-over-year financial performance.
|
•
|
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 adjust for 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,
|
|||||
|
2017
|
2016
|
||||
CASM (cents)
|
|
13.81
|
¢
|
|
12.98
|
¢
|
Adjusted for:
|
|
|
||||
Aircraft fuel and related taxes
|
(2.66
|
)
|
(2.38
|
)
|
||
Other expenses
|
(0.58
|
)
|
(0.47
|
)
|
||
CASM-Ex, including profit sharing
|
|
10.57
|
¢
|
|
10.13
|
¢
|
|
Page
|
|
/s/ Ernst & Young LLP
|
We have served as the Company's auditor since 2006.
|
|
|
|
Atlanta, Georgia
|
|
February 23, 2018
|
|
|
|
December 31,
|
||||||
(in millions, except share data)
|
|
2017
|
|
2016
|
||||
ASSETS
|
||||||||
Current Assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,814
|
|
|
$
|
2,762
|
|
Short-term investments
|
|
825
|
|
|
487
|
|
||
Accounts receivable, net of an allowance for uncollectible accounts of $12 and $15 at December 31, 2017 and 2016, respectively
|
|
2,377
|
|
|
2,064
|
|
||
Fuel inventory
|
|
916
|
|
|
519
|
|
||
Expendable parts and supplies inventories, net of an allowance for obsolescence of $113 and $110 at December 31, 2017 and 2016, respectively
|
|
413
|
|
|
372
|
|
||
Prepaid expenses and other
|
|
1,499
|
|
|
1,247
|
|
||
Total current assets
|
|
7,844
|
|
|
7,451
|
|
||
|
|
|
|
|
||||
Property and Equipment, Net:
|
|
|
|
|
||||
Property and equipment, net of accumulated depreciation and amortization of $14,097 and $12,456 at December 31, 2017 and 2016, respectively
|
|
26,563
|
|
|
24,375
|
|
||
|
|
|
|
|
||||
Other Assets:
|
|
|
|
|
||||
Goodwill
|
|
9,794
|
|
|
9,794
|
|
||
Identifiable intangibles, net of accumulated amortization of $845 and $828 at December 31, 2017 and 2016, respectively
|
|
4,847
|
|
|
4,844
|
|
||
Deferred income taxes, net
|
|
935
|
|
|
3,064
|
|
||
Other noncurrent assets
|
|
3,309
|
|
|
1,733
|
|
||
Total other assets
|
|
18,885
|
|
|
19,435
|
|
||
Total assets
|
|
$
|
53,292
|
|
|
$
|
51,261
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
|
|
|
|
||||
Current maturities of long-term debt and capital leases
|
|
$
|
2,242
|
|
|
$
|
1,131
|
|
Air traffic liability
|
|
4,888
|
|
|
4,626
|
|
||
Accounts payable
|
|
3,674
|
|
|
2,572
|
|
||
Accrued salaries and related benefits
|
|
3,022
|
|
|
2,924
|
|
||
Frequent flyer deferred revenue
|
|
1,822
|
|
|
1,648
|
|
||
Fuel card obligation
|
|
1,067
|
|
|
431
|
|
||
Other accrued liabilities
|
|
1,858
|
|
|
1,907
|
|
||
Total current liabilities
|
|
18,573
|
|
|
15,239
|
|
||
|
|
|
|
|
||||
Noncurrent Liabilities:
|
|
|
|
|
||||
Long-term debt and capital leases
|
|
6,592
|
|
|
6,201
|
|
||
Pension, postretirement and related benefits
|
|
9,810
|
|
|
13,378
|
|
||
Frequent flyer deferred revenue
|
|
2,296
|
|
|
2,278
|
|
||
Other noncurrent liabilities
|
|
2,111
|
|
|
1,878
|
|
||
Total noncurrent liabilities
|
|
20,809
|
|
|
23,735
|
|
||
|
|
|
|
|
||||
Commitments and Contingencies
|
|
|
|
|
||||
|
|
|
|
|
||||
Stockholders' Equity:
|
|
|
|
|
||||
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 714,674,160 and 744,886,938 shares issued at December 31, 2017 and 2016, respectively
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
12,053
|
|
|
12,294
|
|
||
Retained earnings
|
|
9,636
|
|
|
7,903
|
|
||
Accumulated other comprehensive loss
|
|
(7,621
|
)
|
|
(7,636
|
)
|
||
Treasury stock, at cost, 7,476,181 and 14,149,229 shares at December 31, 2017 and 2016, respectively
|
|
(158
|
)
|
|
(274
|
)
|
||
Total stockholders' equity
|
|
13,910
|
|
|
12,287
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
53,292
|
|
|
$
|
51,261
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
Year Ended December 31,
|
||||||||||
(in millions, except per share data)
|
2017
|
|
2016
|
|
2015
|
||||||
Operating Revenue:
|
|
|
|
|
|
||||||
Passenger:
|
|
|
|
|
|
||||||
Mainline
|
$
|
29,105
|
|
|
$
|
28,105
|
|
|
$
|
28,898
|
|
Regional carriers
|
5,714
|
|
|
5,672
|
|
|
5,884
|
|
|||
Total passenger revenue
|
34,819
|
|
|
33,777
|
|
|
34,782
|
|
|||
Cargo
|
729
|
|
|
668
|
|
|
813
|
|
|||
Other
|
5,696
|
|
|
5,194
|
|
|
5,109
|
|
|||
Total operating revenue
|
41,244
|
|
|
39,639
|
|
|
40,704
|
|
|||
|
|
|
|
|
|
||||||
Operating Expense:
|
|
|
|
|
|
||||||
Salaries and related costs
|
10,436
|
|
|
10,034
|
|
|
8,776
|
|
|||
Aircraft fuel and related taxes
|
5,733
|
|
|
5,133
|
|
|
6,544
|
|
|||
Regional carriers expense
|
4,503
|
|
|
4,311
|
|
|
4,241
|
|
|||
Depreciation and amortization
|
2,235
|
|
|
1,902
|
|
|
1,835
|
|
|||
Contracted services
|
2,184
|
|
|
1,991
|
|
|
1,848
|
|
|||
Aircraft maintenance materials and outside repairs
|
1,992
|
|
|
1,823
|
|
|
1,848
|
|
|||
Passenger commissions and other selling expenses
|
1,787
|
|
|
1,710
|
|
|
1,672
|
|
|||
Landing fees and other rents
|
1,528
|
|
|
1,490
|
|
|
1,493
|
|
|||
Passenger service
|
1,067
|
|
|
907
|
|
|
872
|
|
|||
Profit sharing
|
1,065
|
|
|
1,115
|
|
|
1,490
|
|
|||
Aircraft rent
|
351
|
|
|
285
|
|
|
250
|
|
|||
Other
|
2,249
|
|
|
1,986
|
|
|
2,033
|
|
|||
Total operating expense
|
35,130
|
|
|
32,687
|
|
|
32,902
|
|
|||
|
|
|
|
|
|
||||||
Operating Income
|
6,114
|
|
|
6,952
|
|
|
7,802
|
|
|||
|
|
|
|
|
|
||||||
Non-Operating Expense:
|
|
|
|
|
|
||||||
Interest expense, net
|
(396
|
)
|
|
(388
|
)
|
|
(481
|
)
|
|||
Miscellaneous, net
|
(17
|
)
|
|
72
|
|
|
(164
|
)
|
|||
Total non-operating expense, net
|
(413
|
)
|
|
(316
|
)
|
|
(645
|
)
|
|||
|
|
|
|
|
|
||||||
Income Before Income Taxes
|
5,701
|
|
|
6,636
|
|
|
7,157
|
|
|||
|
|
|
|
|
|
||||||
Income Tax Provision
|
(2,124
|
)
|
|
(2,263
|
)
|
|
(2,631
|
)
|
|||
|
|
|
|
|
|
||||||
Net Income
|
$
|
3,577
|
|
|
$
|
4,373
|
|
|
$
|
4,526
|
|
|
|
|
|
|
|
||||||
Basic Earnings Per Share
|
$
|
4.97
|
|
|
$
|
5.82
|
|
|
$
|
5.68
|
|
Diluted Earnings Per Share
|
$
|
4.95
|
|
|
$
|
5.79
|
|
|
$
|
5.63
|
|
Cash Dividends Declared Per Share
|
$
|
1.02
|
|
|
$
|
0.68
|
|
|
$
|
0.45
|
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Net Income
|
$
|
3,577
|
|
|
$
|
4,373
|
|
|
$
|
4,526
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Net change in derivative contracts
|
(27
|
)
|
|
(43
|
)
|
|
(82
|
)
|
|||
Net change in pension and other benefits
|
(98
|
)
|
|
(360
|
)
|
|
163
|
|
|||
Net change in investments
|
140
|
|
|
42
|
|
|
(45
|
)
|
|||
Total Other Comprehensive Income (Loss)
|
15
|
|
|
(361
|
)
|
|
36
|
|
|||
Comprehensive Income
|
$
|
3,592
|
|
|
$
|
4,012
|
|
|
$
|
4,562
|
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
3,577
|
|
|
$
|
4,373
|
|
|
$
|
4,526
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
2,235
|
|
|
1,902
|
|
|
1,835
|
|
|||
Hedge derivative contracts
|
(7
|
)
|
|
(342
|
)
|
|
(1,366
|
)
|
|||
Deferred income taxes
|
2,071
|
|
|
2,223
|
|
|
2,581
|
|
|||
Pension, postretirement and postemployment payments greater than expense
|
(3,302
|
)
|
|
(717
|
)
|
|
(1,013
|
)
|
|||
Equity investment earnings
|
(1
|
)
|
|
(160
|
)
|
|
(35
|
)
|
|||
Changes in certain assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
(328
|
)
|
|
(147
|
)
|
|
(56
|
)
|
|||
Fuel inventory
|
(397
|
)
|
|
(140
|
)
|
|
155
|
|
|||
Hedge margin
|
(5
|
)
|
|
81
|
|
|
806
|
|
|||
Prepaid expenses and other current assets
|
(57
|
)
|
|
(26
|
)
|
|
(102
|
)
|
|||
Air traffic liability
|
262
|
|
|
123
|
|
|
207
|
|
|||
Frequent flyer deferred revenue
|
192
|
|
|
45
|
|
|
(301
|
)
|
|||
Profit sharing
|
(51
|
)
|
|
(383
|
)
|
|
734
|
|
|||
Accounts payable and accrued liabilities
|
992
|
|
|
285
|
|
|
(201
|
)
|
|||
Other, net
|
(33
|
)
|
|
88
|
|
|
157
|
|
|||
Net cash provided by operating activities
|
5,148
|
|
|
7,205
|
|
|
7,927
|
|
|||
|
|
|
|
|
|
||||||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Property and equipment additions:
|
|
|
|
|
|
||||||
Flight equipment, including advance payments
|
(2,704
|
)
|
|
(2,617
|
)
|
|
(2,223
|
)
|
|||
Ground property and equipment, including technology
|
(1,187
|
)
|
|
(774
|
)
|
|
(722
|
)
|
|||
Purchase of equity investments
|
(1,245
|
)
|
|
—
|
|
|
(500
|
)
|
|||
Purchase of short-term investments
|
(925
|
)
|
|
(1,707
|
)
|
|
(998
|
)
|
|||
Redemption of short-term investments
|
584
|
|
|
2,686
|
|
|
739
|
|
|||
Other, net
|
111
|
|
|
257
|
|
|
(251
|
)
|
|||
Net cash used in investing activities
|
(5,366
|
)
|
|
(2,155
|
)
|
|
(3,955
|
)
|
|||
|
|
|
|
|
|
||||||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Payments on long-term debt and capital lease obligations
|
(1,258
|
)
|
|
(1,709
|
)
|
|
(2,558
|
)
|
|||
Repurchase of common stock
|
(1,677
|
)
|
|
(2,601
|
)
|
|
(2,200
|
)
|
|||
Cash dividends
|
(731
|
)
|
|
(509
|
)
|
|
(359
|
)
|
|||
Fuel card obligation
|
636
|
|
|
211
|
|
|
(340
|
)
|
|||
Payments on hedge derivative contracts
|
(244
|
)
|
|
(451
|
)
|
|
(71
|
)
|
|||
Proceeds from hedge derivative contracts
|
20
|
|
|
291
|
|
|
429
|
|
|||
Proceeds from long-term obligations
|
2,454
|
|
|
450
|
|
|
1,038
|
|
|||
Other, net
|
70
|
|
|
58
|
|
|
(27
|
)
|
|||
Net cash used in financing activities
|
(730
|
)
|
|
(4,260
|
)
|
|
(4,088
|
)
|
|||
|
|
|
|
|
|
||||||
Net (Decrease) Increase in Cash and Cash Equivalents
|
(948
|
)
|
|
790
|
|
|
(116
|
)
|
|||
Cash and cash equivalents at beginning of period
|
2,762
|
|
|
1,972
|
|
|
2,088
|
|
|||
Cash and cash equivalents at end of period
|
$
|
1,814
|
|
|
$
|
2,762
|
|
|
$
|
1,972
|
|
|
|
|
|
|
|
||||||
Supplemental Disclosure of Cash Paid for Interest
|
$
|
390
|
|
|
$
|
385
|
|
|
$
|
452
|
|
Non-Cash Transactions:
|
|
|
|
|
|
||||||
Treasury stock contributed to our qualified defined benefit pension plans
|
$
|
350
|
|
|
$
|
350
|
|
|
$
|
—
|
|
Flight and ground equipment acquired under capital leases
|
$
|
261
|
|
|
$
|
86
|
|
|
$
|
111
|
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
Common Stock
|
Additional
Paid-In Capital |
Retained
Earnings |
Accumulated
Other Comprehensive Loss |
Treasury Stock
|
|
||||||||||||||||
(in millions, except per share data)
|
Shares
|
Amount
|
Shares
|
Amount
|
Total
|
|||||||||||||||||
Balance at January 1, 2015
|
845
|
|
$
|
—
|
|
$
|
13,621
|
|
$
|
2,816
|
|
$
|
(7,311
|
)
|
20
|
|
$
|
(313
|
)
|
$
|
8,813
|
|
Net income
|
—
|
|
—
|
|
—
|
|
4,526
|
|
—
|
|
—
|
|
—
|
|
4,526
|
|
||||||
Dividends declared
|
—
|
|
—
|
|
—
|
|
(359
|
)
|
—
|
|
—
|
|
—
|
|
(359
|
)
|
||||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
36
|
|
—
|
|
—
|
|
36
|
|
||||||
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $46.83(1) per share)
|
1
|
|
—
|
|
76
|
|
—
|
|
—
|
|
1
|
|
(60
|
)
|
16
|
|
||||||
Stock options exercised
|
2
|
|
—
|
|
18
|
|
—
|
|
—
|
|
—
|
|
—
|
|
18
|
|
||||||
Stock purchased and retired
|
(48
|
)
|
—
|
|
(779
|
)
|
(1,421
|
)
|
—
|
|
—
|
|
—
|
|
(2,200
|
)
|
||||||
Balance at December 31, 2015
|
800
|
|
—
|
|
12,936
|
|
5,562
|
|
(7,275
|
)
|
21
|
|
(373
|
)
|
10,850
|
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
4,373
|
|
—
|
|
—
|
|
—
|
|
4,373
|
|
||||||
Change in accounting principle
|
—
|
|
—
|
|
—
|
|
95
|
|
—
|
|
—
|
|
—
|
|
95
|
|
||||||
Dividends declared
|
—
|
|
—
|
|
—
|
|
(509
|
)
|
—
|
|
—
|
|
—
|
|
(509
|
)
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(361
|
)
|
—
|
|
—
|
|
(361
|
)
|
||||||
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $44.27(1) per share)
|
2
|
|
—
|
|
105
|
|
—
|
|
—
|
|
1
|
|
(40
|
)
|
65
|
|
||||||
Stock options exercised
|
3
|
|
—
|
|
32
|
|
—
|
|
—
|
|
—
|
|
—
|
|
32
|
|
||||||
Treasury stock, net, contributed to our qualified defined benefit pension plans
|
—
|
|
—
|
|
204
|
|
—
|
|
—
|
|
(8
|
)
|
139
|
|
343
|
|
||||||
Stock purchased and retired
|
(60
|
)
|
—
|
|
(983
|
)
|
(1,618
|
)
|
—
|
|
—
|
|
—
|
|
(2,601
|
)
|
||||||
Balance at December 31, 2016
|
745
|
|
—
|
|
12,294
|
|
7,903
|
|
(7,636
|
)
|
14
|
|
(274
|
)
|
12,287
|
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
3,577
|
|
—
|
|
—
|
|
—
|
|
3,577
|
|
||||||
Dividends declared
|
—
|
|
—
|
|
—
|
|
(731
|
)
|
—
|
|
—
|
|
—
|
|
(731
|
)
|
||||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
15
|
|
—
|
|
—
|
|
15
|
|
||||||
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $48.31(1) per share)
|
1
|
|
—
|
|
107
|
|
—
|
|
—
|
|
1
|
|
(39
|
)
|
68
|
|
||||||
Stock options exercised
|
2
|
|
—
|
|
28
|
|
—
|
|
—
|
|
—
|
|
—
|
|
28
|
|
||||||
Treasury stock, net, contributed to our qualified defined benefit pension plans
|
—
|
|
—
|
|
188
|
|
—
|
|
—
|
|
(8
|
)
|
155
|
|
343
|
|
||||||
Stock purchased and retired
|
(33
|
)
|
—
|
|
(564
|
)
|
(1,113
|
)
|
—
|
|
—
|
|
—
|
|
(1,677
|
)
|
||||||
Balance at December 31, 2017
|
715
|
|
$
|
—
|
|
$
|
12,053
|
|
$
|
9,636
|
|
$
|
(7,621
|
)
|
7
|
|
$
|
(158
|
)
|
$
|
13,910
|
|
(1)
|
Weighted average price per share
|
Derivative Type
|
Hedged Risk
|
Classification of Gains and Losses
|
Fuel hedge contracts
|
Fluctuations in 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 non-operating 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 non-operating expense
|
|
|
December 31,
|
|||||
(in millions, except for estimated useful life)
|
Estimated Useful Life
|
2017
|
2016
|
||||
Flight equipment
|
20-32 years
|
$
|
30,688
|
|
$
|
28,135
|
|
Ground property and equipment
|
3-40 years
|
7,665
|
|
6,581
|
|
||
Flight and ground equipment under capital leases
|
Shorter of lease term or estimated useful life
|
1,147
|
|
1,056
|
|
||
Advance payments for equipment
|
|
1,160
|
|
1,059
|
|
||
Less: accumulated depreciation and amortization(1)
|
|
(14,097
|
)
|
(12,456
|
)
|
||
Total property and equipment, net
|
|
$
|
26,563
|
|
$
|
24,375
|
|
(1)
|
Includes accumulated amortization for flight and ground equipment under capital leases in the amount of $668 million and $757 million at December 31, 2017 and 2016, respectively.
|
•
|
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 value amount based on market expectations (including present value techniques and option-pricing models).
|
|
December 31, 2017
|
Valuation
Technique
|
||||||||
(in millions)
|
Total
|
Level 1
|
Level 2
|
|||||||
Cash equivalents
|
$
|
1,357
|
|
$
|
1,357
|
|
$
|
—
|
|
(a)
|
Short-term investments
|
|
|
|
|
||||||
U.S. government and agency securities
|
93
|
|
84
|
|
9
|
|
(a)
|
|||
Asset- and mortgage-backed securities
|
173
|
|
—
|
|
173
|
|
(a)
|
|||
Corporate obligations
|
467
|
|
—
|
|
467
|
|
(a)
|
|||
Other fixed income securities
|
92
|
|
—
|
|
92
|
|
(a)
|
|||
Restricted cash equivalents and investments
|
38
|
|
38
|
|
—
|
|
(a)
|
|||
Long-term investments
|
513
|
|
485
|
|
28
|
|
(a)
|
|||
Hedge derivatives, net
|
|
|
|
|
||||||
Fuel hedge contracts
|
(66
|
)
|
(43
|
)
|
(23
|
)
|
(a)(b)
|
|||
Foreign currency exchange contracts
|
(17
|
)
|
—
|
|
(17
|
)
|
(a)
|
|
December 31, 2016
|
Valuation
Technique
|
||||||||
(in millions)
|
Total
|
Level 1
|
Level 2
|
|||||||
Cash equivalents
|
$
|
2,279
|
|
$
|
2,279
|
|
$
|
—
|
|
(a)
|
Short-term investments
|
|
|
|
|
|
|
||||
U.S. government securities
|
112
|
|
86
|
|
26
|
|
(a)
|
|||
Asset- and mortgage-backed securities
|
68
|
|
—
|
|
68
|
|
(a)
|
|||
Corporate obligations
|
295
|
|
—
|
|
295
|
|
(a)
|
|||
Other fixed income securities
|
12
|
|
—
|
|
12
|
|
(a)
|
|||
Restricted cash equivalents and investments
|
61
|
|
61
|
|
—
|
|
(a)
|
|||
Long-term investments
|
139
|
|
115
|
|
24
|
|
(a)
|
|||
Hedge derivatives, net
|
|
|
|
|
||||||
Fuel hedge contracts
|
(324
|
)
|
(26
|
)
|
(298
|
)
|
(a)(b)
|
|||
Foreign currency exchange contracts
|
27
|
|
—
|
|
27
|
|
(a)
|
(1)
|
See Note 9, "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 and refined products, as these commodities are highly correlated with the price of 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 10% to 28% 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 provided by counterparties who regularly trade in public markets. Discount rates used in these valuations vary based on maturity dates utilizing the London interbank offered rate ("LIBOR"). Futures contracts and options on futures contracts are traded on a public exchange and valued based on quoted market prices.
|
•
|
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
|
||||
Due in one year or less
|
$
|
323
|
|
||
Due after one year through three years
|
465
|
|
|||
Due after three years through five years
|
19
|
|
|||
Due after five years
|
18
|
|
|||
Total
|
$
|
825
|
|
•
|
Aeroméxico. During 2017, we completed a $622 million tender offer and executed derivative contracts for $173 million to obtain additional capital stock of Grupo Aeroméxico, increasing our ownership percentage to a non-controlling 49% equity stake in Grupo Aeroméxico.
|
•
|
Virgin Atlantic. We have a non-controlling 49% equity stake in Virgin Atlantic Limited, the parent company of Virgin Atlantic Airways.
|
•
|
GOL. We own 9% of the outstanding capital stock of GOL's parent company through ownership of its preferred shares. Driven by an improved outlook for the Brazilian economy and the financial performance of the company, the stock price of GOL's parent company has more than doubled since December 31, 2016 and exceeds the original cost of our investment. This unrealized gain of $56 million is recorded in AOCI.
|
•
|
China Eastern. We have a 3% equity interest in China Eastern. Because the investment agreement with China Eastern restricts our sale or transfer of these shares through the September 2018 quarter, we had previously recorded this investment at cost. As we are now within one year of the lapse of these restrictions, we began accounting for the investment during the September 2017 quarter as available-for-sale with changes in fair value recorded in AOCI. As of December 31, 2017, the unrealized gain recorded in AOCI was $106 million.
|
•
|
Air France-KLM. During 2017, we acquired 10% of the outstanding shares of our joint venture partner, Air France-KLM, for $450 million. Because our investment agreement restricts the sale or transfer of these shares for five years, we account for this investment at cost. We are working to develop a combined long-term joint venture with Air France-KLM and Virgin Atlantic as part of our investment strategy.
|
•
|
Republic Airways. During 2017, we acquired a 17% ownership interest in Republic Airways Holdings Inc. ("Republic"), in consideration for our unsecured claim in Republic’s bankruptcy case. This ownership interest is accounted for at cost as Republic's shares are not actively traded on a public exchange and we do not have the ability to exercise significant influence over Republic.
|
(in millions)
|
Volume
|
Final Maturity Date
|
Hedge Derivatives Asset
|
Other Noncurrent Assets
|
Hedge Derivatives Liability
|
Other Noncurrent Liabilities
|
Hedge Derivatives, net
|
||||||||||||
Designated as hedges
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency exchange contracts
|
23,512
|
|
Japanese yen
|
November 2019
|
1
|
|
1
|
|
(13
|
)
|
(6
|
)
|
(17
|
)
|
|||||
490
|
|
Canadian dollars
|
May 2020
|
||||||||||||||||
Not designated as hedges
|
|
|
|
|
|
|
|
||||||||||||
Fuel hedge contracts
|
249
|
|
gallons - crude oil and refined products
|
May 2019
|
638
|
|
8
|
|
(694
|
)
|
(18
|
)
|
(66
|
)
|
|||||
Total derivative contracts
|
|
|
$
|
639
|
|
$
|
9
|
|
$
|
(707
|
)
|
$
|
(24
|
)
|
$
|
(83
|
)
|
(in millions)
|
Volume
|
Final Maturity Date
|
Hedge Derivatives Asset
|
Other Noncurrent Assets
|
Hedge Derivatives Liability
|
Other Noncurrent Liabilities
|
Hedge Derivatives, net
|
||||||||||||
Designated as hedges
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency exchange contracts
|
54,853
|
|
Japanese yen
|
February 2019
|
31
|
|
3
|
|
(4
|
)
|
(3
|
)
|
27
|
|
|||||
335
|
|
Canadian dollars
|
January 2019
|
||||||||||||||||
Not designated as hedges
|
|
|
|
|
|
|
|
||||||||||||
Fuel hedge contracts (1)
|
197
|
|
gallons - crude oil and refined products
|
January 2018
|
360
|
|
—
|
|
(684
|
)
|
—
|
|
(324
|
)
|
|||||
Total derivative contracts
|
|
|
$
|
391
|
|
$
|
3
|
|
$
|
(688
|
)
|
$
|
(3
|
)
|
$
|
(297
|
)
|
(1)
|
As discussed above, we early settled $455 million of our airline segment's 2016 fuel hedge positions and entered into hedges designed to offset and effectively neutralize our 2017 airline segment hedge positions. The dollar amounts shown above primarily represent the offsetting derivatives that were used to neutralize the 2016 and 2017 airline segment hedge portfolio.
|
(in millions)
|
Hedge Derivatives Asset
|
Other Noncurrent Assets
|
Hedge Derivatives Liability
|
Other Noncurrent Liabilities
|
Hedge Derivatives, Net
|
||||||||||
December 31, 2017
|
|
|
|
|
|
||||||||||
Net derivative contracts
|
$
|
—
|
|
$
|
1
|
|
$
|
(68
|
)
|
$
|
(16
|
)
|
$
|
(83
|
)
|
December 31, 2016
|
|
|
|
|
|
||||||||||
Net derivative contracts
|
$
|
29
|
|
$
|
2
|
|
$
|
(326
|
)
|
$
|
(2
|
)
|
$
|
(297
|
)
|
|
Effective Portion Reclassified from AOCI to Earnings
|
|
Effective Portion Recognized in Other Comprehensive (Loss) Income
|
||||||||||
(in millions)
|
2017
|
2016
|
2015
|
|
2017
|
2016
|
2015
|
||||||
Foreign currency exchange contracts
|
10
|
|
37
|
|
198
|
|
|
(43
|
)
|
(68
|
)
|
(130
|
)
|
|
Carrying Value at December 31,
|
|||||
(in millions)
|
2017
|
2016
|
||||
International routes and slots
|
$
|
2,583
|
|
$
|
2,563
|
|
Delta tradename
|
850
|
|
850
|
|
||
SkyTeam-related assets
|
661
|
|
661
|
|
||
Domestic slots
|
622
|
|
622
|
|
||
Total
|
$
|
4,716
|
|
$
|
4,696
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||
(in millions)
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
||||||||
Marketing agreements
|
$
|
730
|
|
$
|
(677
|
)
|
|
$
|
730
|
|
$
|
(667
|
)
|
Contracts
|
193
|
|
(115
|
)
|
|
193
|
|
(108
|
)
|
||||
Other
|
53
|
|
(53
|
)
|
|
53
|
|
(53
|
)
|
||||
Total
|
$
|
976
|
|
$
|
(845
|
)
|
|
$
|
976
|
|
$
|
(828
|
)
|
|
Maturity
|
Interest Rate(s) Per Annum at
|
December 31,
|
|||||||||
(in millions)
|
Dates
|
December 31, 2017
|
2017
|
2016
|
||||||||
Pacific Facilities(1):
|
|
|
|
|
|
|
|
|
||||
Pacific Term Loan B-1(2)
|
October 2018
|
3.99%
|
variable(4)
|
$
|
1,048
|
|
$
|
1,059
|
|
|||
Pacific Revolving Credit Facility
|
October 2018
|
undrawn
|
variable(4)
|
—
|
|
—
|
|
|||||
2015 Credit Facilities(1):
|
|
|
|
|
|
|
|
|
||||
Term Loan Facility(2)
|
August 2022
|
4.07%
|
variable(4)
|
490
|
|
495
|
|
|||||
Revolving Credit Facility
|
August 2020
|
undrawn
|
variable(4)
|
—
|
|
—
|
|
|||||
Financing arrangements secured by aircraft:
|
|
|
|
|
|
|
|
|
||||
Certificates(3)
|
2018
|
to
|
2027
|
3.63%
|
to
|
8.02%
|
2,380
|
|
2,777
|
|
||
Notes(3)
|
2018
|
to
|
2027
|
1.81%
|
to
|
6.76%
|
1,961
|
|
2,488
|
|
||
Unsecured notes(5)
|
2020
|
to
|
2022
|
2.60%
|
to
|
3.63%
|
2,450
|
|
—
|
|
||
Other financings(3)(6)
|
2019
|
to
|
2030
|
0.00%
|
to
|
8.75%
|
210
|
|
293
|
|
||
Other revolving credit facilities(1)
|
2018
|
to
|
2019
|
undrawn
|
variable(4)
|
—
|
|
—
|
|
|||
Total secured and unsecured debt
|
|
|
|
|
|
|
8,539
|
|
7,112
|
|
||
Unamortized discount and debt issue cost, net
|
|
|
|
|
|
|
(99
|
)
|
(104
|
)
|
||
Total debt
|
|
|
|
|
|
|
8,440
|
|
7,008
|
|
||
Less: current maturities
|
|
|
|
|
|
|
(2,145
|
)
|
(1,009
|
)
|
||
Total long-term debt
|
|
|
|
|
|
|
$
|
6,295
|
|
$
|
5,999
|
|
(1)
|
Guaranteed by substantially all of our domestic subsidiaries (the "Guarantors").
|
(2)
|
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.
|
(3)
|
Due in installments.
|
(4)
|
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.
|
(5)
|
Includes notes issued in March and December 2017.
|
(6)
|
Primarily includes unsecured bonds and debt secured by certain accounts receivable and real estate.
|
Minimum fixed charge coverage ratio (1)
|
1.20:1
|
Minimum unrestricted liquidity
|
|
Unrestricted cash, permitted investments and undrawn revolving credit facilities
|
$2.0 billion
|
Minimum collateral coverage ratio (2)
|
1.60:1
|
(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 meet specified eligibility standards to (b) the sum of the aggregate outstanding obligations and certain other obligations.
|
Minimum unrestricted liquidity
|
|
Unrestricted cash, permitted investments and undrawn revolving credit facilities
|
$2.0 billion
|
Minimum collateral coverage ratio(1)
|
1.60:1
|
(1)
|
Defined as the ratio of (a) certain of the collateral that meet specified eligibility standards to (b) the sum of the aggregate outstanding obligations under the 2015 Credit Facilities and certain other obligations.
|
(in millions)
|
|
||
Revolving Credit Facility
|
$
|
1,500
|
|
Pacific Revolving Credit Facility
|
415
|
|
|
Other revolving credit facilities
|
535
|
|
|
Total availability under revolving credit facilities
|
$
|
2,450
|
|
(in millions)
|
Total Debt
|
|
Amortization of
Debt Discount and Debt Issuance Cost, net
|
|
|
||||||
2018
|
$
|
2,183
|
|
|
$
|
(42
|
)
|
|
|
||
2019
|
1,359
|
|
|
(30
|
)
|
|
|
||||
2020
|
1,983
|
|
|
(8
|
)
|
|
|
||||
2021
|
345
|
|
|
(6
|
)
|
|
|
||||
2022
|
2,009
|
|
|
(7
|
)
|
|
|
||||
Thereafter
|
660
|
|
|
(6
|
)
|
|
|
||||
Total
|
$
|
8,539
|
|
|
$
|
(99
|
)
|
|
$
|
8,440
|
|
|
December 31,
|
|||||
(in millions)
|
2017
|
2016
|
||||
Total debt at par value
|
$
|
8,539
|
|
$
|
7,112
|
|
Unamortized discount and debt issuance cost, net
|
(99
|
)
|
(104
|
)
|
||
Net carrying amount
|
$
|
8,440
|
|
$
|
7,008
|
|
Fair value
|
$
|
8,700
|
|
$
|
7,300
|
|
(in millions)
|
Total
|
||
2018
|
$
|
116
|
|
2019
|
92
|
|
|
2020
|
65
|
|
|
2021
|
41
|
|
|
2022
|
24
|
|
|
Thereafter
|
126
|
|
|
Total minimum lease payments
|
464
|
|
|
Less: amount of lease payments representing interest
|
(70
|
)
|
|
Present value of future minimum capital lease payments
|
394
|
|
|
Less: current obligations under capital leases
|
(97
|
)
|
|
Long-term capital lease obligations
|
$
|
297
|
|
(in millions)
|
Delta Lease Payments(1)
|
Contract Carrier Aircraft Lease Payments(2)
|
Total
|
||||||
2018
|
$
|
1,469
|
|
$
|
266
|
|
$
|
1,735
|
|
2019
|
1,322
|
|
267
|
|
1,589
|
|
|||
2020
|
1,189
|
|
241
|
|
1,430
|
|
|||
2021
|
983
|
|
173
|
|
1,156
|
|
|||
2022
|
883
|
|
153
|
|
1,036
|
|
|||
Thereafter
|
8,819
|
|
471
|
|
9,290
|
|
|||
Total minimum lease payments
|
$
|
14,665
|
|
$
|
1,571
|
|
$
|
16,236
|
|
(1)
|
Includes payments accounted for as construction obligations.
|
(2)
|
Represents the minimum lease obligations under our contract carrier agreements with Compass Airlines, LLC, ExpressJet Airlines, Inc., GoJet Airlines, LLC, Republic Airline, Inc. and SkyWest Airlines, Inc.
|
|
Pension Benefits
|
|
Other Postretirement and Postemployment Benefits
|
||||||||||
|
December 31,
|
|
December 31,
|
||||||||||
(in millions)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Benefit obligation at beginning of period
|
$
|
20,859
|
|
$
|
20,611
|
|
|
$
|
3,379
|
|
$
|
3,336
|
|
Service cost
|
—
|
|
—
|
|
|
87
|
|
68
|
|
||||
Interest cost
|
853
|
|
917
|
|
|
138
|
|
147
|
|
||||
Actuarial loss (gain)
|
1,068
|
|
411
|
|
|
183
|
|
115
|
|
||||
Benefits paid, including lump sums and annuities
|
(1,075
|
)
|
(1,071
|
)
|
|
(311
|
)
|
(318
|
)
|
||||
Participant contributions
|
—
|
|
—
|
|
|
28
|
|
31
|
|
||||
Settlements
|
(9
|
)
|
(9
|
)
|
|
—
|
|
—
|
|
||||
Benefit obligation at end of period(1)
|
$
|
21,696
|
|
$
|
20,859
|
|
|
$
|
3,504
|
|
$
|
3,379
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of period
|
$
|
10,301
|
|
$
|
9,374
|
|
|
$
|
784
|
|
$
|
884
|
|
Actual gain (loss) on plan assets
|
1,966
|
|
687
|
|
|
138
|
|
51
|
|
||||
Employer contributions
|
3,561
|
|
1,320
|
|
|
254
|
|
154
|
|
||||
Participant contributions
|
—
|
|
—
|
|
|
28
|
|
31
|
|
||||
Benefits paid, including lump sums and annuities
|
(1,075
|
)
|
(1,071
|
)
|
|
(338
|
)
|
(336
|
)
|
||||
Settlements
|
(9
|
)
|
(9
|
)
|
|
—
|
|
—
|
|
||||
Fair value of plan assets at end of period
|
$
|
14,744
|
|
$
|
10,301
|
|
|
$
|
866
|
|
$
|
784
|
|
|
|
|
|
|
|
||||||||
Funded status at end of period
|
$
|
(6,952
|
)
|
$
|
(10,558
|
)
|
|
$
|
(2,638
|
)
|
$
|
(2,595
|
)
|
(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)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Current liabilities
|
$
|
(32
|
)
|
$
|
(30
|
)
|
|
$
|
(121
|
)
|
$
|
(125
|
)
|
Noncurrent liabilities
|
(6,920
|
)
|
(10,528
|
)
|
|
(2,517
|
)
|
(2,470
|
)
|
||||
Total liabilities
|
$
|
(6,952
|
)
|
$
|
(10,558
|
)
|
|
$
|
(2,638
|
)
|
$
|
(2,595
|
)
|
|
|
|
|
|
|
||||||||
Net actuarial loss
|
$
|
(8,495
|
)
|
$
|
(8,515
|
)
|
|
$
|
(651
|
)
|
$
|
(570
|
)
|
Prior service credit
|
—
|
|
—
|
|
|
56
|
|
82
|
|
||||
Total accumulated other comprehensive loss, pre-tax
|
$
|
(8,495
|
)
|
$
|
(8,515
|
)
|
|
$
|
(595
|
)
|
$
|
(488
|
)
|
|
Pension Benefits
|
|
Other Postretirement and Postemployment Benefits
|
||||||||||||||||
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||
(in millions)
|
2017
|
2016
|
2015
|
|
2017
|
2016
|
2015
|
||||||||||||
Service cost
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
87
|
|
$
|
68
|
|
$
|
62
|
|
Interest cost
|
853
|
|
917
|
|
884
|
|
|
138
|
|
147
|
|
141
|
|
||||||
Expected return on plan assets
|
(1,143
|
)
|
(902
|
)
|
(879
|
)
|
|
(69
|
)
|
(74
|
)
|
(81
|
)
|
||||||
Amortization of prior service credit
|
—
|
|
—
|
|
—
|
|
|
(26
|
)
|
(26
|
)
|
(26
|
)
|
||||||
Recognized net actuarial loss
|
262
|
|
233
|
|
232
|
|
|
32
|
|
24
|
|
24
|
|
||||||
Settlements
|
3
|
|
3
|
|
3
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Net periodic cost(1)
|
$
|
(25
|
)
|
$
|
251
|
|
$
|
240
|
|
|
$
|
162
|
|
$
|
139
|
|
$
|
120
|
|
(1)
|
See Note 1 for discussion on ASU No. 2017-07, "Compensation - Retirement Benefits (Topic 715)."
|
|
December 31,
|
|||
Benefit Obligations(1)
|
2017
|
2016
|
||
Weighted average discount rate
|
3.69
|
%
|
4.20
|
%
|
|
Year Ended December 31,
|
|||||
Net Periodic Cost(1)
|
2017
|
2016
|
2015
|
|||
Weighted average discount rate - pension benefit
|
4.14
|
%
|
4.57
|
%
|
4.13
|
%
|
Weighted average discount rate - other postretirement benefit
|
4.19
|
%
|
4.53
|
%
|
4.13
|
%
|
Weighted average discount rate - other postemployment benefit
|
4.14
|
%
|
4.50
|
%
|
4.13
|
%
|
Weighted average expected long-term rate of return on plan assets
|
8.96
|
%
|
8.94
|
%
|
8.94
|
%
|
Assumed healthcare cost trend rate(2)
|
7.00
|
%
|
6.50
|
%
|
7.00
|
%
|
(1)
|
Future employee 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.
|
(2)
|
Healthcare cost trend rate at December 31, 2017 is assumed to decline gradually to 5.00% by 2026 and remain unchanged thereafter.
|
(in millions)
|
1% Increase
|
1% (Decrease)
|
||||
Increase (decrease) in total service and interest cost
|
$
|
1
|
|
$
|
(1
|
)
|
Increase (decrease) in the accumulated plan benefit obligation
|
9
|
|
(30
|
)
|
(in millions)
|
Pension Benefits
|
Other Postretirement and Postemployment Benefits
|
||||
2018
|
$
|
1,170
|
|
$
|
284
|
|
2019
|
1,177
|
|
291
|
|
||
2020
|
1,201
|
|
296
|
|
||
2021
|
1,220
|
|
297
|
|
||
2022
|
1,238
|
|
296
|
|
||
2023-2027
|
6,351
|
|
1,417
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
Valuation Technique
|
||||||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Total
|
|
Level 1
|
Level 2
|
Total
|
|
|||||||||||||
Equities and equity-related instruments
|
$
|
2,033
|
|
$
|
13
|
|
$
|
2,046
|
|
|
$
|
2,021
|
|
$
|
14
|
|
$
|
2,035
|
|
|
(a)
|
Delta common stock
|
801
|
|
—
|
|
801
|
|
|
386
|
|
—
|
|
386
|
|
|
(a)
|
||||||
Cash equivalents
|
735
|
|
697
|
|
1,432
|
|
|
228
|
|
1,240
|
|
1,468
|
|
|
(a)
|
||||||
Fixed income and fixed income-related instruments
|
17
|
|
3,648
|
|
3,665
|
|
|
8
|
|
1,190
|
|
1,198
|
|
|
(a)(b)
|
||||||
Benefit plan assets
|
$
|
3,586
|
|
$
|
4,358
|
|
$
|
7,944
|
|
|
$
|
2,643
|
|
$
|
2,444
|
|
$
|
5,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investments measured at net asset value ("NAV")(1)
|
|
|
$
|
7,378
|
|
|
|
|
$
|
5,724
|
|
|
|
||||||||
Total benefit plan assets
|
|
|
$
|
15,322
|
|
|
|
|
$
|
10,811
|
|
|
|
(1)
|
Investments that were measured at NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||
(in millions)
|
Fair Value
|
Redemption Frequency
|
Redemption Notice Period
|
Unfunded Commitments
|
|
Fair Value
|
Redemption Frequency
|
Redemption Notice Period
|
Unfunded Commitments
|
||||||||
Hedge funds and hedge fund-related strategies
|
$
|
4,768
|
|
(5)
|
2-120 Days
|
$
|
—
|
|
|
$
|
3,308
|
|
(5)
|
4-120 Days
|
$
|
—
|
|
Commingled funds, private equity and private equity-related instruments
|
1,375
|
|
(1) (3) (4)
|
10-30 Days
|
—
|
|
|
1,214
|
|
(1) (3) (4)
|
15-30 Days
|
525
|
|
||||
Fixed income and fixed income-related instruments
|
311
|
|
(2)
|
3-15 Days
|
—
|
|
|
270
|
|
(2)
|
5 Days
|
—
|
|
||||
Real assets
|
924
|
|
(3) (4)
|
N/A
|
94
|
|
|
698
|
|
(3) (4)
|
N/A
|
529
|
|
||||
Other
|
—
|
|
(1)
|
30 Days
|
—
|
|
|
234
|
|
(2)
|
2 Days
|
—
|
|
||||
Total investments measured at NAV
|
$
|
7,378
|
|
|
|
$
|
94
|
|
|
$
|
5,724
|
|
|
|
$
|
1,054
|
|
(1)
|
Monthly
|
(2)
|
Semi-monthly
|
(3)
|
Semi-annually
|
(4)
|
Annually
|
(5)
|
Various. Includes funds with weekly, monthly, semi-monthly, quarterly and custom redemption frequencies as well as funds with a redemption window following the anniversary of the initial investment.
|
(in millions)
|
Total
|
||
2018
|
$
|
3,570
|
|
2019
|
3,370
|
|
|
2020
|
3,270
|
|
|
2021
|
3,880
|
|
|
2022
|
2,450
|
|
|
Thereafter
|
1,740
|
|
|
Total
|
$
|
18,280
|
|
Aircraft Type
|
Purchase Commitments
|
|
A321-200
|
93
|
|
A321-200neo
|
100
|
|
A330-900neo
|
25
|
|
A350-900
|
19
|
|
B-737-900ER
|
41
|
|
CS100
|
75
|
|
Total
|
353
|
|
(1)
|
These amounts exclude contract carrier payments accounted for as operating leases of aircraft, which are described in Note 7.
|
Employee Group
|
Approximate Number of Active Employees Represented
|
|
Union
|
Date on which Collective Bargaining Agreement Becomes Amendable
|
|
Delta Pilots
|
13,234
|
|
|
ALPA
|
December 31, 2019
|
Delta Flight Superintendents (Dispatchers)
|
420
|
|
|
PAFCA
|
March 31, 2018
|
Endeavor Air Pilots
|
1,805
|
|
|
ALPA
|
January 1, 2024
|
Endeavor Air Flight Attendants
|
1,160
|
|
|
AFA
|
December 31, 2018
|
Endeavor Air Dispatchers
|
55
|
|
|
PAFCA
|
December 31, 2018
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2017
|
2016
|
2015
|
||||||
Current tax (provision) benefit:
|
|
|
|
|
|
|
|||
Federal
|
$
|
(4
|
)
|
$
|
—
|
|
$
|
(23
|
)
|
State and local
|
5
|
|
(28
|
)
|
(25
|
)
|
|||
International
|
(54
|
)
|
(12
|
)
|
(2
|
)
|
|||
Deferred tax provision:
|
|
|
|
|
|
|
|||
Federal
|
(1,911
|
)
|
(2,080
|
)
|
(2,409
|
)
|
|||
State and local
|
(160
|
)
|
(143
|
)
|
(172
|
)
|
|||
Income tax provision
|
$
|
(2,124
|
)
|
$
|
(2,263
|
)
|
$
|
(2,631
|
)
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
2015
|
|||
U.S. federal statutory income tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
State taxes, net of federal benefit
|
1.8
|
|
1.8
|
|
1.8
|
|
Decrease in valuation allowance
|
—
|
|
—
|
|
(0.2
|
)
|
Foreign tax rate differential
|
(2.2
|
)
|
(2.0
|
)
|
—
|
|
Tax Cuts and Jobs Act adjustment
|
2.6
|
|
—
|
|
—
|
|
Other
|
—
|
|
(0.7
|
)
|
0.2
|
|
Effective income tax rate
|
37.2
|
%
|
34.1
|
%
|
36.8
|
%
|
|
December 31,
|
|||||
(in millions)
|
2017
|
2016
|
||||
Deferred tax assets:
|
|
|
||||
Net operating loss carryforwards
|
$
|
1,440
|
|
$
|
2,485
|
|
Pension, postretirement and other benefits
|
2,545
|
|
5,259
|
|
||
Alternative minimum tax credit carryforward
|
379
|
|
379
|
|
||
Deferred revenue
|
1,024
|
|
1,544
|
|
||
Other
|
746
|
|
1,075
|
|
||
Valuation allowance
|
(19
|
)
|
(40
|
)
|
||
Total deferred tax assets
|
$
|
6,115
|
|
$
|
10,702
|
|
Deferred tax liabilities:
|
|
|
||||
Depreciation
|
$
|
3,936
|
|
$
|
5,701
|
|
Intangible assets
|
1,070
|
|
1,691
|
|
||
Other
|
174
|
|
246
|
|
||
Total deferred tax liabilities
|
$
|
5,180
|
|
$
|
7,638
|
|
|
|
|
||||
Net deferred tax assets
|
$
|
935
|
|
$
|
3,064
|
|
(in millions)
|
Pension and Other Benefits Liabilities(2)
|
Derivative Contracts
|
Investments
|
Total
|
||||||||
Balance at January 1, 2015 (net of tax effect of $1,279)
|
$
|
(7,517
|
)
|
$
|
222
|
|
$
|
(16
|
)
|
$
|
(7,311
|
)
|
Changes in value (net of tax effect of $41)
|
10
|
|
43
|
|
(45
|
)
|
8
|
|
||||
Reclassification into earnings (net of tax effect of $16)(1)
|
153
|
|
(125
|
)
|
—
|
|
28
|
|
||||
Balance at December 31, 2015 (net of tax effect of $1,222)
|
(7,354
|
)
|
140
|
|
(61
|
)
|
(7,275
|
)
|
||||
Changes in value (net of tax effect of $293)
|
(482
|
)
|
(19
|
)
|
42
|
|
(459
|
)
|
||||
Reclassification into earnings (net of tax effect of $57)(1)
|
122
|
|
(24
|
)
|
—
|
|
98
|
|
||||
Balance at December 31, 2016 (net of tax effect of $1,458)
|
(7,714
|
)
|
97
|
|
(19
|
)
|
(7,636
|
)
|
||||
Changes in value (net of tax effect of $32)
|
(264
|
)
|
(21
|
)
|
148
|
|
(137
|
)
|
||||
Reclassification into earnings (net of tax effect of $90)(1)
|
166
|
|
(6
|
)
|
(8
|
)
|
152
|
|
||||
Balance at December 31, 2017 (net of tax effect of $1,400)
|
$
|
(7,812
|
)
|
$
|
70
|
|
$
|
121
|
|
$
|
(7,621
|
)
|
(1)
|
Amounts reclassified from AOCI for pension and other benefits liabilities and for derivative contracts designated as foreign currency cash flow hedges are recorded in salaries and related costs and in passenger revenue, respectively, in the Consolidated Statements of Operations. The reclassification into earnings for investments relates to our investment in Grupo Aeroméxico and the related conversion to accounting under the equity method. The reclassification of the unrealized gain was recorded to non-operating expense in our Consolidates Statements of Operations.
|
(2)
|
Includes $700 million 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. We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to continuing operations.
|
(in millions)
|
Airline
|
Refinery
|
|
Intersegment Sales/Other
|
|
Consolidated
|
||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
40,742
|
|
$
|
5,039
|
|
|
|
|
$
|
41,244
|
|
||
Sales to airline segment
|
|
|
|
$
|
(886
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(3,240
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(411
|
)
|
(3)
|
|
|||||||
Operating income
|
6,004
|
|
110
|
|
|
|
|
6,114
|
|
|||||
Interest expense (income), net
|
403
|
|
(7
|
)
|
|
|
|
396
|
|
|||||
Depreciation and amortization
|
2,188
|
|
47
|
|
|
|
|
2,235
|
|
|||||
Total assets, end of period
|
51,165
|
|
2,127
|
|
|
|
|
53,292
|
|
|||||
Capital expenditures
|
3,743
|
|
148
|
|
|
|
|
3,891
|
|
|||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
39,406
|
|
$
|
3,843
|
|
|
|
|
$
|
39,639
|
|
||
Sales to airline segment
|
|
|
|
$
|
(695
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(2,658
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(257
|
)
|
(3)
|
|
|||||||
Operating income (loss)(4)
|
7,077
|
|
(125
|
)
|
|
|
|
6,952
|
|
|||||
Interest expense, net
|
386
|
|
2
|
|
|
|
|
388
|
|
|||||
Depreciation and amortization
|
1,862
|
|
40
|
|
|
|
|
1,902
|
|
|||||
Total assets, end of period
|
49,930
|
|
1,331
|
|
|
|
|
51,261
|
|
|||||
Capital expenditures
|
3,270
|
|
121
|
|
|
|
|
3,391
|
|
|||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
40,398
|
|
$
|
4,741
|
|
|
|
|
$
|
40,704
|
|
||
Sales to airline segment
|
|
|
|
$
|
(990
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(3,108
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(337
|
)
|
(3)
|
|
|||||||
Operating income(4)
|
7,512
|
|
290
|
|
|
|
|
7,802
|
|
|||||
Interest expense, net
|
481
|
|
—
|
|
|
|
|
481
|
|
|||||
Depreciation and amortization
|
1,805
|
|
30
|
|
|
|
|
1,835
|
|
|||||
Total assets, end of period
|
51,785
|
|
1,349
|
|
|
|
|
53,134
|
|
|||||
Capital expenditures
|
2,853
|
|
92
|
|
|
|
|
2,945
|
|
(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 exchange agreements, as discussed above, determined on a market price basis.
|
(3)
|
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 and refinery segments with respect to the refinery's inventory price risk.
|
(in millions)
|
2017
|
2016
|
2015
|
||||||
Liability at beginning of period
|
$
|
333
|
|
$
|
467
|
|
$
|
504
|
|
Payments
|
(103
|
)
|
(144
|
)
|
(127
|
)
|
|||
Additional expenses and other
|
7
|
|
10
|
|
90
|
|
|||
Liability at end of period
|
$
|
237
|
|
$
|
333
|
|
$
|
467
|
|
|
Year Ended December 31,
|
||||||||
(in millions, except per share data)
|
2017
|
2016
|
2015
|
||||||
Net income
|
$
|
3,577
|
|
$
|
4,373
|
|
$
|
4,526
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
720
|
|
751
|
|
797
|
|
|||
Dilutive effect of share-based awards
|
3
|
|
4
|
|
7
|
|
|||
Diluted weighted average shares outstanding
|
723
|
|
755
|
|
804
|
|
|||
|
|
|
|
||||||
Basic earnings per share
|
$
|
4.97
|
|
$
|
5.82
|
|
$
|
5.68
|
|
Diluted earnings per share
|
$
|
4.95
|
|
$
|
5.79
|
|
$
|
5.63
|
|
|
Three Months Ended,
|
|||||||||||
(in millions, except per share data)
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||
2017
|
|
|
|
|
||||||||
Operating revenue
|
$
|
9,148
|
|
$
|
10,791
|
|
$
|
11,060
|
|
$
|
10,245
|
|
Operating income
|
1,053
|
|
2,028
|
|
1,839
|
|
1,193
|
|
||||
Net income
|
603
|
|
1,224
|
|
1,178
|
|
572
|
|
||||
Basic earnings per share
|
$
|
0.83
|
|
$
|
1.68
|
|
$
|
1.64
|
|
$
|
0.81
|
|
Diluted earnings per share
|
$
|
0.82
|
|
$
|
1.68
|
|
$
|
1.64
|
|
$
|
0.80
|
|
2016
|
|
|
|
|
||||||||
Operating revenue
|
$
|
9,251
|
|
$
|
10,447
|
|
$
|
10,483
|
|
$
|
9,458
|
|
Operating income
|
1,540
|
|
2,423
|
|
1,969
|
|
1,020
|
|
||||
Net income
|
946
|
|
1,546
|
|
1,259
|
|
622
|
|
||||
Basic earnings per share
|
$
|
1.22
|
|
$
|
2.04
|
|
$
|
1.70
|
|
$
|
0.85
|
|
Diluted earnings per share
|
$
|
1.21
|
|
$
|
2.03
|
|
$
|
1.69
|
|
$
|
0.84
|
|
Atlanta, Georgia
|
/s/ Ernst & Young LLP
|
February 23, 2018
|
|
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
|
3,365,648
|
|
$
|
21.53
|
|
29,758,243
|
|
Equity compensation plans not approved by securities holders
|
—
|
|
—
|
|
—
|
|
|
Total
|
3,365,648
|
|
$
|
21.53
|
|
29,758,243
|
|
(1)
|
Includes a maximum of 1,487,298 shares of common stock that may be issued upon the achievement of certain performance conditions under outstanding performance share awards as of December 31, 2017.
|
(2)
|
Includes performance share awards, which do not have exercise prices. The weighted average exercise price of options is $38.59.
|
(3)
|
Reflects shares remaining available for issuance under Delta's Performance Compensation Plan. If any shares of our common stock are covered by an award under the Plan that expires, is canceled, forfeited or otherwise terminates without delivery of shares (including shares surrendered or withheld for payment of taxes related to an award), then such shares will again be available for issuance under the Plan except for (i) any shares tendered in payment of an option, (ii) shares withheld to satisfy any tax withholding obligation with respect to the exercise of an option or stock appreciation right ("SAR") or (iii) shares covered by a stock-settled SAR or other awards that were not issued upon the settlement of the award. Because 2,599,512 shares of restricted stock remain unvested and subject to forfeiture, these shares could again be available for issuance.
|
3.1(a)
|
3.1 (b)
|
3.2
|
10.1
|
10.2
|
10.3
|
10.4
|
10.5(a)
|
10.5(b)
|
10.5(c)
|
10.5(d)
|
10.6(a)
|
10.6(b)
|
10.7(a)
|
10.7(b)
|
10.7(c)
|
10.8(a)
|
10.8(b)
|
10.8(c)
|
10.9(a)
|
10.9(b)
|
10.9(c)
|
10.10
|
10.11
|
10.12
|
10.13
|
10.16(a)
|
10.16(b)
|
10.16(d)
|
10.17
|
10.18(a)
|
10.19
|
10.20
|
10.21
|
10.22
|
10.23
|
12.1
|
21.1
|
23.1
|
31.1
|
31.2
|
32
|
101.INS
|
XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL 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.
|
|
DELTA AIR LINES, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Edward H. Bastian
|
|
|
|
Edward H. Bastian
|
|
|
|
Chief Executive Officer
|
|
Signature
|
|
Title
|
|
|
|
/s/ Edward H. Bastian
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
Edward H. Bastian
|
|
|
|
|
|
/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/ Francis S. Blake
|
|
Chairman of the Board
|
Francis S. Blake
|
|
|
|
|
|
/s/ Daniel A. Carp
|
|
Director
|
Daniel A. Carp
|
|
|
|
|
|
/s/ Ashton B. Carter
|
|
Director
|
Ashton B. Carter
|
|
|
|
|
|
/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/ Jeanne P. Jackson
|
|
Director
|
Jeanne P. Jackson
|
|
|
|
|
|
/s/ George N. Mattson
|
|
Director
|
George N. Mattson
|
|
|
|
|
|
/s/ Douglas R. Ralph
|
|
Director
|
Douglas R. Ralph
|
|
|
|
|
|
/s/ Sergio A.L. Rial
|
|
Director
|
Sergio A.L. Rial
|
|
|
|
|
|
/s/ Kathy N. Waller
|
|
Director
|
Kathy N. Waller
|
|
EXHIBIT A-3
|
[***]
|
EXHIBIT A-4
|
CHANGE ORDERS TO A321 NEO AIRCRAFT STANDARD SPECIFICATION (SCNs)
|
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-2
|
CFM INTERNATIONAL PROPULSION SYSTEMS PRICE REVISION FORMULA
|
EXHIBIT C-3
|
INTERNATIONAL AERO ENGINES LLC PROPULSION SYSTEMS PRICE REVISION FORMULA
|
EXHIBIT D-1
|
FORM OF CERTIFICATE OF ACCEPTANCE (MOBILE DELIVERIES)
|
EXHIBIT D-2
|
FORM OF CERTIFICATE OF ACCEPTANCE (BLAGNAC/HAMBURG DELIVERIES)
|
EXHIBIT E-1
|
FORM OF BILL OF SALE (MOBILE DELIVERIES)
|
EXHIBIT E-2
|
FORM OF BILL OF SALE (BLAGNAC/HAMBURG DELIVERIES)
|
EXHIBIT G
|
TECHNICAL DATA INDEX
|
EXHIBIT H
|
MATERIAL SUPPLY AND SERVICES
|
EXHIBIT I
|
[INTENTIONALLY LEFT BLANK]
|
0
|
DEFINITIONS
|
1
|
SALE AND PURCHASE
|
2
|
SPECIFICATION
|
2.1
|
Aircraft Specification
|
2.1.1
|
The Aircraft shall be manufactured in accordance with the Standard Specification, as may already have been modified or varied prior to the date of the Agreement by the Specification Change Notices listed in Exhibits A-3 or A-4, as applicable.
|
2.2
|
Specification Amendment
|
2.2.1
|
Specification Change Notice
|
2.2.2
|
Development Changes
|
2.2.2.1
|
Manufacturer Specification Changes Notices
|
2.2.2.2
|
In the event of the Seller revising the Specification to incorporate Development Changes which have no adverse effect on any of the elements as set forth in Subclause 2.2.2.1 above, such revision will be performed by the Seller without the Buyer’s consent.
|
2.2.2.3
|
The Seller is considering turning certain items, which are currently BFE in the Specification, into SFE and the parties agree that such BFE items shall be excluded from the provisions of Subclauses 2.2.2.1 and 2.2.2.2 above and, should they become SFE, shall furthermore be chargeable to the Buyer.
|
2.3
|
Propulsion Systems
|
2.3.1
|
[***]
|
2.3.2
|
A321 NEO Propulsion Systems
|
2.4
|
Milestones
|
2.4.1
|
Customization Milestones Chart
|
2.4.2
|
Contractual Definition Freeze
|
3
|
PRICE
|
3.1
|
Base Price of the Aircraft
|
3.1.1
|
Base Price of the Airframe
|
3.1.1.1
|
[***]
|
(i)
|
[***]:
|
(ii)
|
[***]:
|
(iii)
|
[***]:
|
3.1.1.2
|
Base Price of the A321 NEO Airframe
|
(i)
|
the base price of the A321 NEO Airframe corresponding to the A321 NEO Standard Specification (including nacelles and thrust reversers, excluding BFE) and [***], which is:
|
(ii)
|
the sum of the base prices of any and all SCNs set forth in Exhibit A-4, which is:
|
(iii)
|
the base price of the master charge, which is applicable if a CFM LEAP-1A Propulsion System is selected, which is:
|
3.1.2
|
Base Price of Propulsion Systems
|
3.1.2.1
|
[***]
|
3.1.2.1.1
|
[***]
|
3.1.2.1.2
|
[***]
|
3.1.2.2
|
A321 NEO Propulsion Systems Base Price
|
3.1.2.2.1
|
The base price of a set of two (2) CFM LEAP-1A32 propulsion systems (the “A321 NEO Propulsion System A Base Price”) is:
|
3.1.2.2.2
|
The base price of a set of two (2) IAE LLC PW1133G-JM Propulsion systems, (the “A321 NEO Propulsion System B Base Price”), is:
|
3.2
|
Final Contract Price
|
(i)
|
the Base Price of the Airframe constituting a part of such Aircraft, as adjusted to the Delivery Date of such Aircraft in accordance with Subclause 4.1; and
|
(ii)
|
the price (as of delivery conditions prevailing in [***] of any SCNs or MSCN constituting a part of the Specification of such Aircraft that are entered into pursuant to Subclause 2.2 after the date of execution of the Agreement, as adjusted to the Delivery Date of such Aircraft in accordance with Subclause 4.1; and
|
(iii)
|
the Propulsion System Reference Price constituting a part of such Aircraft, as adjusted to the Delivery Date of such Aircraft in accordance with Subclause 4.2; and
|
(iv)
|
the aggregate of all increases or decreases to the Propulsion System Reference Price as agreed in any Specification Change Notice or part thereof applicable to the Propulsion System that are entered into after the date of the Agreement as adjusted to the Delivery Date in accordance with Subclause 4.2; and
|
(v)
|
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 Aircraft and specifically making reference to the Final Contract Price of an 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
|
3.3.3
|
The Buyer will pay all Taxes not assumed by the Seller under Clause 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.
|
4
|
PRICE REVISION
|
4.1
|
Airframe Price Revision Formula
|
4.2
|
Propulsion System Price Revision Formula
|
5
|
PAYMENT
|
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 Subclauses 10.2, 10.3, 10.5, 11.4, 11.5 and 21.2) 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.
|
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
|
5.4.2
|
Setoff Payments
|
5.5
|
Overdue Payments
|
5.6
|
Refund of Predelivery Payments
|
5.7
|
Proprietary Interest
|
5.8
|
Tender of Delivery
|
5.9
|
Payment in Full
|
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 between the Seller or its subcontractors’ personnel and the Buyer or its representative 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. In no event shall the Buyer or its representatives be permitted to inspect any aircraft other than the Aircraft.
|
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
|
(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
|
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 the Technical Acceptance Process of an Aircraft shall be conducted, and, in the event that the Buyer elects to attend such tests, 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 than an [***].
|
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 the 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 a new Technical Acceptance Process as is necessary to demonstrate the elimination of the non-compliance, 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.
|
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 tests scheduled for an Aircraft or fails to so cooperate, the Seller may complete them in the absence of the Buyer, whereupon the Buyer shall be deemed to have accepted the tests, if such tests demonstrate the satisfactory functioning of the Aircraft as aforesaid, and the Seller shall furnish such data with respect to such tests as the Buyer may reasonably request.
|
8.2
|
Aircraft Utilization
|
8.3
|
Certificate of Acceptance
|
8.4
|
Finality of Acceptance
|
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 months set forth in the table below (each, a “Scheduled Delivery Month”).
|
Rank
|
Aircraft Type
|
Scheduled Delivery [***]
|
Rank
|
Aircraft Type
|
Scheduled Delivery [***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
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[***]
|
[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
|
[***]
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[***]
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[***]
|
[***]
|
[***]
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[***]
|
[***]
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[***]
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[***]
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[***]
|
[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
|
9.1.2
|
Not later than [***] prior to the date scheduled for the acceptance tests 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 [***].
|
9.1.3
|
Not later than [***] prior to the date scheduled for the acceptance tests 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 [***], 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
|
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;
|
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.
|
10
|
EXCUSABLE DELAY AND TOTAL LOSS
|
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.
|
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 [***] may terminate this Agreement with respect to the affected Aircraft, by giving written notice to [***] party within [***] after the expiration of such [***]. 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 [***] may terminate this Agreement with respect to the affected Aircraft. Termination will be made by giving written notice to the [***] 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 the [***] period 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.
|
10.5
|
Termination Rights Exclusive
|
10.6
|
Remedies
|
11
|
INEXCUSABLE DELAY
|
11.1
|
Liquidated Damages
|
11.2
|
Renegotiation
|
11.3
|
Termination
|
11.4
|
Remedies
|
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 relating to performance or 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
|
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 defect’s 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
|
(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
|
(a)
|
[***], such work must require the technical expertise of the Seller, or
|
(b)
|
both of
|
(i)
|
[***], and
|
(ii)
|
[***]
|
(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)
|
claim number,
|
(l)
|
date of claim, and
|
(m)
|
date of delivery of an Aircraft or part to the Buyer.
|
12.1.7
|
In-house Warranty
|
|
(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.
|
(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
|
(e)
|
total claim value.
|
(a)
|
To determine direct labor costs, only man hours spent [***] 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)
|
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.
|
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;
|
(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
|
12.2.2.1
|
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,
|
12.2.2.2
|
replace such Item.
|
12.2.3
|
Seller’s Participation in the Cost
|
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 from time to time 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.
|
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
|
12.3
|
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 Clause 13 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 12.3.1 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.
|
12.4
|
Interface Commitment
|
12.4.1
|
Interface Problem
|
12.4.2
|
Seller’s Responsibility
|
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
|
(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;
|
(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,
|
(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.
|
12.6
|
Duplicate Remedies
|
12.7
|
Negotiated Agreement
|
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
|
13.4
|
WAIVER
|
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 Exhibit G hereto.
|
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 a block of numbers selected in the range from 0001 to 9999.
|
14.2.2
|
The sequence shall not be interrupted unless two (2) different Propulsion System 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
|
14.3.1
|
Supplier Equipment
|
14.3.2
|
Buyer Furnished Equipment
|
14.3.2.1
|
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 [***].
|
14.3.2.2
|
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 [***] after the date the BFE Data is provided.
|
14.3.2.3
|
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.
|
14.3.2.4
|
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.
|
14.3.2.5
|
The BFE Data shall be delivered in digital format (SGML) and/or in Portable Document Format (PDF), as agreed between the Buyer and the Seller.
|
14.3.2.6
|
[***]
|
14.4
|
Supply
|
14.4.1
|
Technical Data shall be supplied on-line and/or off-line, as set forth in Exhibit G hereto.
|
14.4.2
|
[***]
|
14.5
|
Delivery
|
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.
|
14.6
|
Revision Service
|
14.7
|
Service Bulletins (SB) Incorporation
|
14.8
|
Technical Data Familiarization
|
14.9
|
Customer Originated Changes
|
14.10
|
AirN@v Family Products
|
14.10.1
|
The Technical Data listed below are provided on DVD and include integrated software (hereinafter together referred to as the “AirN@v Family”).
|
14.10.2
|
The AirN@v Family covers several Technical Data domains, reflected by the following AirN@v Family products:
|
14.10.3
|
Further details on the Technical Data included in such products are set forth in Exhibit G.
|
14.10.4
|
Part 1 of Exhibit I to the Airbus A330-900neo Aircraft and A350-900 Aircraft Purchase Agreement, signed November 24th 2014 (the “2014 Exhibit I”) shall be deemed to be the licensing conditions for the use of AirN@v Family integrated software (the “End-User License Agreement for Airbus Software”) except that the following terms, as defined in Part 1 of 2014 Exhibit I shall be deleted and replaced with the meanings as set forth below in the “End-User License Agreement for Airbus Software” as used in the Agreement:
|
a.
|
“Agreement” means the Airbus A321 NEO Aircraft Purchase Agreement, dated as of December 15, 2017.
|
b.
|
“Aircraft” means [***].
|
14.10.5
|
The revision service and the license to use AirN@v Family products 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 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
|
The Technical Data set forth in Exhibit G, 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
|
Access to AirbusWorld shall be subject to the GTC.
|
14.11.4
|
The list of the Technical Data provided on-line may be extended from time to time.
|
14.11.5
|
Access to AirbusWorld shall be granted [***] for [***] Buyer’s users (including [***] Buyer’s Administrators) for the Technical Data related to the Aircraft which shall be operated by the Buyer.
|
14.11.6
|
For the sake of clarification, it is hereby specified that Technical Data accessed through AirbusWorld - which access shall be covered by the terms and conditions set forth in the GTC – shall remain subject to the conditions of this Clause 14.
|
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;
|
(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
|
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
|
14.14.2
|
Use of the PEP shall be limited to [***] 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
|
14.16
|
Confidentiality
|
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
|
In the event of the Seller authorizing the disclosure of this Clause 14 or any Technical Data or Software Services to third parties either under the Agreement or by an express prior written authorization and specifically, in the event of the Buyer intending 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”), the Buyer shall notify the Seller of such intention prior to any disclosure of this Clause 14 and/or the Technical Data and/or the Software Services to such Third Party.
|
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.
|
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
|
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 [***] prior to Delivery of the first Aircraft.
|
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.
|
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 provided [***]. 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)
|
[***].
|
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 [***] but more 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.
|
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, [***].
|
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
|
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.
|
16.8.2
|
Practical Training on Aircraft
|
16.9
|
Supplier and Propulsion System Manufacturer Training
|
16.10
|
Proprietary Rights
|
16.11
|
Confidentiality
|
16.12
|
Transferability
|
1
|
FLIGHT OPERATIONS TRAINING
|
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.
|
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 [***], except for structure maintenance training course(s).
|
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, [***].
|
17
|
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” 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;
|
17.1.2.5
|
Technical service to assist the Buyer with maintenance, overhaul, repair, operation and inspection of Supplier Parts as well as required tooling and spares provisioning.
|
17.1.3
|
Upon the Buyer’s request, the Seller shall provide the Buyer with Supplier Product Support Agreements familiarization training at no additional charge to the Buyer at the Seller’s facilities in Blagnac, France. An on-line training module shall be further available, at no additional charge to the Buyer, through AirbusWorld, access to which shall be subject to the GTC.
|
17.2
|
Supplier Compliance
|
17.3
|
Supplier Part Repair Stations
|
18
|
BUYER FURNISHED EQUIPMENT
|
18.1
|
Administration
|
18.1.1
|
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 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.
|
18.1.2
|
[***]
|
18.1.3
|
The Seller shall advise the Buyer of the dates, [***] from the date of signature of the Agreement, 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.
|
18.1.4
|
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.
|
18.1.5
|
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.
|
(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)
|
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;
|
(iii)
|
for major BFE, including, but not being limited to, seats, galleys and IFE (“Major BFE”) to participate on a mandatory basis in the specific meetings that take place between BFE Supplier selection and BFE delivery, namely:
|
(iv)
|
to attend the First Article Inspection (“FAI”) 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;
|
(v)
|
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. 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.
|
18.1.6
|
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
|
18.1.7
|
BFE delivered to the Seller’s Affiliate in Mobile, Alabama, as may be specified by the Seller pursuant to Clause 18.1.6.1, will be shipped according to the Incoterms 2010 “Delivered Duty Paid” Airbus Americas, Inc., Mobile, Alabama.
|
18.2
|
Applicable Requirements
|
(i)
|
be manufactured by a qualified BFE Supplier, and
|
(ii)
|
meet the requirements of the applicable Specification of the Aircraft, and
|
(iii)
|
be delivered with the relevant certification documentation, including but not limited to the DDP, and
|
(iv)
|
comply with the BFE Engineering Definition, and
|
(v)
|
comply with applicable requirements incorporated by reference to the Type Certificate and listed in the Type Certificate Data Sheet, and
|
(vi)
|
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
|
(vii)
|
not infringe any patent, copyright or other intellectual property right of the Seller any third party, and
|
(viii)
|
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.
|
18.3
|
Buyer’s Obligation and Seller’s Remedies
|
18.3.1
|
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 Subclause 18.1.4, 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,
|
18.3.2
|
In addition, in the event of any delay or failure mentioned in 18.3.1 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 [***]; or
|
(ii)
|
if the BFE is delayed by more than [***].
|
18.4
|
Title and Risk of Loss
|
18.5
|
Disposition of BFE Following Termination
|
18.5.1
|
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, [***].
|
18.5.2
|
[***]
|
18.5.3
|
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.
|
18.5.4
|
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.
|
18.5.5
|
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
|
19.2
|
Seller’s Designations
|
19.3
|
Assignment in Case of Resale or Lease
|
19.4
|
[***]
|
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
|
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.
|
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.
|
(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.
|
[***];
|
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.
|
[***]
|
21.4
|
Notice of Termination Event
|
21.5
|
Information Covenants
|
a.
|
Annual Financial Statements. As soon as available and in any event no later than the date that the Buyer furnishes such annual statements to the Securities and Exchange Commission or successor thereto (the “SEC”) (i) a copy of the SEC Form 10-K filed by the Buyer with the SEC for such fiscal year, or, if no such Form 10-
|
b.
|
Quarterly Financial Statements. As soon as available and in any event no later than the date that the Buyer furnishes such quarterly statements to the Securities and Exchange Commission or successor thereto, a copy of the SEC Form 10-Q filed by the Buyer with the SEC for such quarterly period, or, if no such Form 10-Q was filed by the Buyer with respect to any such quarterly period, the consolidated balance sheet of the Buyer and its Subsidiaries, as at the end of such quarterly period and the related consolidated statements of operations for such quarterly period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period and in each case setting forth comparative consolidated figures as of the end of and for the related periods in the prior fiscal year, all of which will be certified by an Authorized Officer of the Buyer, subject to changes resulting from audit and normal year-end audit adjustments.
|
c.
|
Debt Rescheduling. (i) Promptly upon the Buyer commencing negotiations with one or more of its significant creditors with a view to general readjustment or rescheduling of all or any material part of its indebtedness under circumstances in which a reasonable business person, in the exercise of prudent business judgment, would conclude that the Buyer would otherwise not be able to pay such indebtedness as it falls due, notice of commencement of such negotiations, and (ii) thereafter timely advice of the progress of such negotiations until such negotiations are terminated or completed.
|
d.
|
Acceleration of other indebtedness. Immediately upon knowledge by the Buyer that the holder of any bond, debenture, promissory note or any similar evidence of indebtedness of the Buyer or Affiliate thereof (“Other Indebtedness”) has demanded payment, given notice or exercised its right to a remedy having the effect of acceleration with respect to a claimed event of default under any Other Indebtedness, where the impact of the acceleration is likely to have a material adverse effect on the Buyer’s ability to perform its obligations under or in connection with the transactions contemplated by this Agreement, notice of the demand made, notice given or action taken by such holder and the nature and status of the claimed event of default and what the action the Buyer is taking with respect thereto.
|
e.
|
Other Information. Promptly upon transmission thereof, copies of any filings and registrations with, and reports to, the SEC by the Buyer or any of its Subsidiaries, and, with reasonable promptness, such other information or documents (financial or otherwise) as the Seller may reasonably request from time to time.
|
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.
|
22
|
MISCELLANEOUS PROVISIONS
|
22.1
|
Data Retrieval
|
22.2
|
Notices
|
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
|
(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
|
(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 of New York and had lawfully been served with such process in such state, it being understood that such designation and appointments shall become effective without further action on the part of its Secretary.
|
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
|
22.8
|
[***]
|
22.9
|
Severability
|
22.10
|
Alterations to Contract
|
22.11
|
Inconsistencies
|
22.12
|
Language
|
22.13
|
Headings
|
22.14
|
Counterparts
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
PA
|
|
CT1707017 PA A321 NEO EXECUTION
|
|
CT1707017 PA A321 NEO EXECUTION
|
|
CT1707017 PA A321 NEO EXECUTION
|
Exh A-3 1
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh A-4 1
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh B-1 1
|
SPECIFICATION CHANGE NOTICE
(SCN)
|
For
SCN Number
Issue
Dated
Page
|
Title :
Description :
Effect on weight :
• Manufacturer’s Weight Empty change :
• Operational Weight Empty change :
• Allowable Payload change :
Remarks / References
Specification changed by this SCN
This SCN requires prior or concurrent acceptance of the following SCN(s):
|
|
Price per aircraft
US DOLLARS:
AT DELIVERY CONDITIONS:
This change shall be effective on AIRCRAFT N° and subsequent,
provided approval is received by .
Buyer approval Seller approval
By : By :
Date : Date :
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh B-1 2
|
SPECIFICATION CHANGE NOTICE
(SCN)
|
For
SCN 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:
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh B-1 3
|
SPECIFICATION CHANGE NOTICE
(SCN)
|
For
SCN Number
Issue
Dated
Page
|
Scope of change (FOR INFORMATION ONLY)
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh B-1 4
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh B-2 1
|
MANUFACTURER’S SPECIFICATION CHANGE NOTICE
(MSCN)
|
For
MSCN Number
Issue
Dated
Page
|
|
Title :
Description :
Effect on weight :
• Manufacturer’s Weight Empty change :
• Operational Weight Empty change :
• Allowable Payload change :
Remarks / References
Specification changed by this MSCN
|
||
Price per aircraft
US DOLLARS:
AT DELIVERY CONDITIONS:
This change shall be effective on AIRCRAFT N° and subsequent,
provided MSCN is not rejected by .
Buyer approval Seller approval
By : By :
Date : Date :
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh B-2 2
|
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:
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh B-2 3
|
MANUFACTURER’S SPECIFICATION CHANGE NOTICE
(MSCN)
|
For
MSCN Number
Issue
Dated
Page
|
Scope of change (FOR INFORMATION ONLY)
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh B-2 4
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh B-3 1
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh B-3 2
|
CT1707017 PA A321 NEO EXECUTION
|
Exh C-1 1
|
(i)
|
[***], or
|
(ii)
|
[***], or
|
(iii)
|
[***];
|
CT1707017 PA A321 NEO EXECUTION
|
Exh C-1 2
|
CT1707017 PA A321 NEO EXECUTION
|
Exh C-1 3
|
1.
|
REFERENCE PRICE OF THE PROPULSION SYSTEMS
|
|
The Reference Price of a set of two (2) CFM INTERNATIONAL LEAP-1A26 Propulsion Systems is:
|
|
[***]
|
|
[***]
|
2.
|
REFERENCE PERIOD
|
3.
|
INDEXES
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh C-2
|
4.
|
REVISION FORMULA
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh C-2
|
5.
|
GENERAL PROVISIONS
|
5.1
|
Roundings
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
5.2
|
Final Index Values
|
5.3
|
Interruption of Index Publication
|
5.4
|
Annulment of the Formula
|
5.5
|
Limitation
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh C-2
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh C-2
|
1.
|
REFERENCE PRICE OF THE PROPULSION SYSTEMS
|
2.
|
BASE PERIOD
|
3.
|
INDEXES
|
4.
|
REVISION FORMULA
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh C-3
|
5.1
|
Roundings
|
5.2
|
Substitution of Indexes for Price Revision Formula
|
5.3
|
Final Index Values
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh C-3
|
5.4
|
Limitation
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh C-3
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh D-2 1
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh E-1 1
|
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: [•]
|
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh E 2
|
1
|
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)
|
2.1.1
|
[***]
|
2.1.2
|
[***]
|
2.1.3
|
[***]
|
2.2.1
|
[***]
|
2.2.2
|
[***]
|
2.2.3
|
[***]
|
2.2.4
|
[***]
|
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
|
[***]
|
2.3.3.2
|
[***]
|
PRIVILEDGED AND CONFIDENTIAL
|
Exh F 1
|
2.4.1
|
[***]
|
2.4.1.1
|
[***]
|
2.4.1.2
|
[***]
|
2.4.1.3
|
[***]
|
2.4.1.4
|
[***]
|
3
|
FUSELAGE
|
3.1.1
|
[***]
|
3.1.4
|
[***]
|
3.1.5
|
[***]
|
3.1.6
|
[***]
|
3.1.7
|
[***]
|
3.1.8
|
[***]
|
3.2.1
|
[***]
|
3.2.2
|
[***]s
|
3.2.3
|
[***]
|
4
|
STABILIZERS
|
4.1.1
|
[***]
|
PRIVILEDGED AND CONFIDENTIAL
|
Exh F 2
|
4.1.2
|
[***]
|
4.1.3
|
[***]
|
4.1.4
|
[***]
|
4.1.5
|
[***]
|
4.1.5.1
|
[***]
|
4.1.5.2
|
[***]
|
4.2.1
|
[***]
|
4.2.2
|
[***]
|
4.2.3
|
[***]
|
4.2.4
|
[***]
|
4.2.5
|
[***]
|
4.2.5.1
|
[***]
|
4.2.5.2
|
[***]
|
5
|
[***]
|
PRIVILEDGED AND CONFIDENTIAL
|
Exh F 3
|
1-
|
[***]
|
•
|
[***],
|
•
|
[***],
|
•
|
[***],
|
•
|
[***],
|
•
|
[***],
|
•
|
[***],
|
•
|
[***].
|
1.1-
|
[***]
|
MANUAL TITLE
|
ACCESS
|
FORMAT
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh G 1
|
2-
|
[***]
|
•
|
[***],
|
•
|
[***],
|
•
|
[***],
|
•
|
[***],
|
•
|
[***],
|
•
|
[***].
|
2.1-
|
[***]
|
3-
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh G 2
|
3.1
|
[***]
|
MANUAL TITLE
|
FORMAT
|
FORMAT
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
3.2
|
[***]
|
4-
|
[***]
|
4.1
|
[***]
|
4.2
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh G 3
|
MANUAL TITLE
|
FORMAT
|
FORMAT
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
4.3
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh G 4
|
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.
|
1.2.1
|
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
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh H 1
|
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;
|
(vi)
|
Issuance of credit and debt notes.
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh H 2
|
1.7.1
|
During the Term, the Buyer [***]
|
(i)
|
[***], or
|
(ii)
|
[***].
|
1.7.2
|
[***]:
|
(i)
|
[***]; and
|
(ii)
|
[***].
|
1.7.2.1
|
[***].
|
1.7.2.2
|
[***]
|
1.7.2.3
|
[***]
|
1.7.2.4
|
[***]
|
2.
|
INITIAL PROVISIONING
|
2.1
|
Period
|
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”).
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh H 3
|
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.
|
2.4.1
|
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 every [***] 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.
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh H 4
|
2.4.3
|
Supplementary Data
|
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.
|
(a)
|
[***]
|
(b)
|
[***]
|
(i)
|
[***];
|
(ii)
|
[***];
|
(iii)
|
[***];
|
(iv)
|
[***];
|
(v)
|
[***];
|
(vi)
|
[***];
|
(vii)
|
[***].
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh H 5
|
(d)
|
[***]:
|
(i)
|
[***];
|
(ii)
|
[***].
|
(e)
|
[***]
|
(f)
|
[***]
|
(g)
|
[***]
|
4.
|
WARRANTIES
|
(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.
|
4.1.1
|
Warranty Period
|
4.1.1.1
|
The warranty period for Seller Parts is [***] for new Seller Parts and eighteen (18) months for used Seller Parts from delivery of such parts to the Buyer.
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh H 6
|
4.1.1.2
|
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, [***].
|
4.2
|
Supplier Parts
|
4.3
|
Waiver, Release and Renunciation
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh H 7
|
(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;
|
(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 THE AGREEMENT;
|
(b)
|
LOSS OF, OR DAMAGE OF ANY KIND TO, ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THE AGREEMENT;
|
(c)
|
LOSS OF PROFITS AND/OR REVENUES;
|
(d)
|
ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh H 8
|
4.4
|
Duplicate Remedies
|
5.4
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh H 9
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh H 10
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
Exh I 1
|
1.
|
CREDIT MEMORANDA
|
1.1.1
|
In respect of each A321 NEO Aircraft that is sold by the Seller and purchased by the Buyer, the Seller shall provide to the Buyer the following [***]:
|
(i)
|
[***],
|
(ii)
|
[***],
|
1.1.2
|
The A321 NEO Aircraft [***].
|
1.2.1
|
In respect of each Aircraft that is sold by the Seller and purchased by the Buyer, the Seller shall provide [***].
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 1-1
|
(i)
|
[***],
|
(ii)
|
[***],
|
2.1
|
[***]:
|
(i)
|
[***];
|
(ii)
|
[***];
|
(iii)
|
[***]; and
|
(iv)
|
[***].
|
2.2
|
[***]:
|
(i)
|
[***], and
|
(ii)
|
[***], and
|
(iii)
|
[***], and
|
(iv)
|
[***].
|
2.3
|
[***]:
|
(i)
|
[***], and
|
(ii)
|
[***], and
|
(iii)
|
[***], and
|
(iv)
|
[***].
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 1-2
|
3
|
ASSIGNMENT
|
4
|
CONFIDENTIALITY
|
5
|
COUNTERPARTS
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 1-3
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 1-4
|
1
|
[***]
|
5.2.2
|
INTENTIONALLY LEFT BLANK
|
5.2.3.1
|
[***]:
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 2-1
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
5.2.3.2
|
[***]
|
5.2.3.3
|
[***]:
|
(i)
|
[***], and
|
(ii)
|
[***], and
|
(iii)
|
[***].
|
2
|
ASSIGNMENT
|
3
|
CONFIDENTIALITY
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 2-2
|
4
|
COUNTERPARTS
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 2-3
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 2-4
|
1.
|
[***]
|
(i)
|
[***]:
|
(a)
|
[***], and
|
(b)
|
[***],
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 3-1
|
(v)
|
[***]
|
(vi)
|
[***].
|
(vii)
|
[***]
|
(i)
|
[***].
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
(v)
|
[***]
|
(vi)
|
[***]
|
(vii)
|
[***]
|
1.3.2
|
[***]
|
(i)
|
[***], and
|
(ii)
|
[***].
|
1.3
|
[***]
|
1.3.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
||||||||||
[***]
|
[***]
|
[***]
|
[***]
|
||||||||||
[***]
|
[***]
|
[***]
|
[***]
|
||||||||||
[***]
|
[***]
|
[***]
|
[***]
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 3-2
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
1.3.4
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
1.3.5
|
[***]
|
1.4
|
[***]
|
1.5
|
[***]
|
2.
|
ASSIGNMENT
|
3.
|
CONFIDENTIALITY
|
4.
|
COUNTERPARTS
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 3-3
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 3-4
|
1
|
[***]
|
1.1
|
[***]
|
1.1.2
|
[***]:
|
(i)
|
[***], and
|
(ii)
|
[***], and
|
(iii)
|
[***], and
|
(iv)
|
[***].
|
1.1.2
|
[***]
|
1.1.3
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 4-1
|
(i)
|
[***]:
|
a.
|
[***] or,
|
b.
|
[***]or,
|
c.
|
[***].
|
(ii)
|
[***], or
|
(iii)
|
[***]:
|
a.
|
[***], or
|
b.
|
[***]
|
1.2
|
[***]
|
2
|
ASSIGNMENT
|
3
|
CONFIDENTIALITY
|
4
|
COUNTERPARTS
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 4-2
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 4-3
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 4-4
|
1.
|
[***]
|
2.
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]:
|
(i)
|
[***]; or
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 5-1
|
(ii)
|
[***].
|
2.3
|
[***]
|
3.
|
[***]
|
4.
|
[***]
|
5.
|
ASSIGNMENT
|
6.
|
CONFIDENTIALITY
|
7.
|
COUNTERPARTS
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 5-2
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 5-3
|
1
|
AIRCRAFT MODEL APPLICABILITY
|
(i)
|
[***],
|
(ii)
|
[***]
|
(iii)
|
[***]
|
2
|
FLIGHT PERFORMANCE
|
2.1
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-1
|
2.1.1
|
[***]
|
2.1.2
|
[***]
|
2.1.3
|
[***]
|
2.2
|
[***]
|
2.2.1
|
[***]
|
2.2.2
|
[***]
|
2.3
|
[***]
|
2.4
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-2
|
2.5
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
2.6
|
[***]
|
2.6.1
|
[***]:
|
2.6.2
|
[***]:
|
2.6.3
|
[***]:
|
2.7
|
[***]
|
2.7.1
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-3
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
2.7.2
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-4
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
2.7.3
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-5
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
2.7.4
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-6
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
2.7.5
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***],
|
3
|
[***]
|
3.1
|
[***]
|
3.2
|
[***]
|
4
|
[***]
|
4.1
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-7
|
4.2
|
[***]
|
4.2.1
|
[***]
|
4.2.2
|
[***]
|
4.2.3
|
[***]:
|
(i)
|
[***], and
|
(ii)
|
[***]:
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
4.3
|
[***]
|
4.3.1
|
[***]
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
4.3.2
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-8
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
5
|
ADJUSTMENT OF GUARANTEES
|
5.1
|
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 Certification, the Performance Guarantees shall be appropriately modified to reflect the effect of any such Rule Change.
|
5.2
|
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.
|
6
|
GUARANTEE CONDITIONS
|
6.1
|
All guaranteed performance data are based on the International Standard Atmosphere (ISA) and specified variations therefrom; altitudes are pressure altitudes.
|
6.2
|
[***]
|
6.3
|
[***]
|
6.4
|
[***]
|
6.5
|
[***]:
|
(i)
|
[***], and
|
(ii)
|
[***].
|
6.6
|
[***]
|
6.7
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-9
|
7
|
GUARANTEE COMPLIANCE
|
7.1
|
Compliance with the Performance Guarantees set forth in Paragraphs 2, 3 and 4 herein shall be based on the conditions specified in such paragraphs, adjustments pursuant to Paragraph 5 herein and the conditions set forth in Paragraph 6 herein.
|
7.2
|
[***]
|
7.3
|
[***]
|
7.4
|
[***]
|
7.5
|
[***]
|
7.6
|
[***]
|
7.7
|
[***]
|
7.8
|
[***]
|
7.9
|
[***]
|
8
|
EXCLUSIVE GUARANTEES
|
9
|
[***]
|
9.1
|
In the event that one or more A321neo 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)
|
[***];
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-10
|
(ii)
|
[***]; and
|
(iii)
|
[***].
|
9.3
|
In the event the Seller [***].
|
9.4
|
The Seller’s maximum liability in respect of deficiency in performance of any A321neo Aircraft shall be [***].
|
10
|
ASSIGNMENT
|
11
|
CONFIDENTIALITY
|
12
|
COUNTERPARTS
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-11
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-12
|
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEDGED AND CONFIDENTIAL
|
LA 6A-13
|
1
|
AIRCRAFT MODEL APPLICABILITY
|
(i)
|
[***],
|
(ii)
|
[***]
|
(iii)
|
[***]
|
2
|
FLIGHT PERFORMANCE
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 1
|
2.1
|
[***]
|
2.1.1
|
[***]
|
2.1.2
|
[***]
|
2.1.3
|
[***]
|
2.2
|
[***]
|
2.2.1
|
[***]
|
2.2.2
|
[***]
|
2.3
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 2
|
2.4
|
[***]
|
2.5
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
2.6
|
[***]
|
2.6.1
|
[***]:
|
2.6.2
|
[***]:
|
2.6.3
|
[***]:
|
2.7
|
[***]
|
2.7.1
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 3
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
2.7.2
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 4
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
2.7.3
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 5
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
2.7.4
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 6
|
[***]
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
2.7.5
|
[***]
|
(i)
|
[***], plus
|
(ii)
|
[***],
|
3
|
[***]
|
3.1
|
[***]
|
3.2
|
[***]
|
4
|
[***]
|
4.1
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 7
|
4.2
|
[***]
|
4.2.1
|
[***]
|
4.2.2
|
[***]
|
4.2.3
|
[***]:
|
(i)
|
[***], and
|
(ii)
|
[***]:
|
[***]
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
4.3
|
[***]
|
4.3.1
|
[***]
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
4.3.2
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 8
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
5
|
ADJUSTMENT OF GUARANTEES
|
5.1
|
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 Certification, the Performance Guarantees shall be appropriately modified to reflect the effect of any such Rule Change.
|
5.2
|
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.
|
6
|
[***]
|
6.1
|
All guaranteed performance data are based on the International Standard Atmosphere (ISA) and specified variations therefrom; altitudes are pressure altitudes.
|
6.2
|
[***]
|
6.3
|
[***]
|
6.4
|
[***]
|
6.5
|
[***]:
|
(i)
|
[***], and
|
(ii)
|
[***].
|
6.6
|
[***]
|
6.7
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 9
|
7
|
GUARANTEE COMPLIANCE
|
7.1
|
Compliance with the [***].
|
7.2
|
Compliance with the [***].
|
7.3
|
Compliance with the [***].
|
7.4
|
Compliance with the [***].
|
7.5
|
[***]
|
7.6
|
Compliance with the [***].
|
7.7
|
[***]
|
7.8
|
[***]
|
7.9
|
Compliance with the [***].
|
8
|
EXCLUSIVE GUARANTEES
|
9
|
REMEDIES
|
9.1
|
In the event that one or more A321neo 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)
|
[***]; and
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 10
|
(iii)
|
[***].
|
9.3
|
In the event the Seller [***].
|
9.4
|
The Seller’s maximum liability in respect of deficiency in performance of any A321neo Aircraft shall be [***].
|
10
|
ASSIGNMENT
|
11
|
CONFIDENTIALITY
|
12
|
COUNTERPARTS
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 11
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 12
|
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
||
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
[***]
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 6B - 13
|
1
|
DEFINITIONS
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 1
|
2
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]
|
3
|
[***]
|
3.1
|
[***]
|
3.2
|
[***]:
|
(a)
|
[***]; and
|
(b)
|
[***].
|
4
|
[***]
|
4.1
|
[***]:
|
(a)
|
[***];
|
(b)
|
[***];
|
(c)
|
[***];
|
(d)
|
[***];
|
(e)
|
[***];
|
(f)
|
[***].
|
4.2
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 2
|
4.3
|
[***]:
|
(a)
|
[***];
|
(b)
|
[***];
|
(c)
|
[***];
|
(d)
|
[***].
|
4.4
|
[***]
|
4.5
|
[***]
|
5
|
[***]
|
5.1
|
[***]
|
5.2
|
[***]
|
5.3
|
[***]
|
5.4
|
[***]
|
5.5
|
[***]
|
5.6
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 3
|
5.7
|
[***]
|
5.7.1
|
[***]
|
5.7.2
|
[***]
|
5.8
|
[***]
|
5.9
|
[***]:
|
(a)
|
[***],
|
(b)
|
[***], and
|
(c)
|
[***].
|
5.10
|
[***]:
|
(a)
|
[***],
|
(b)
|
[***],
|
(c)
|
[***],
|
(d)
|
[***],
|
(e)
|
[***],
|
(f)
|
[***],
|
(g)
|
[***],
|
(h)
|
[***]
|
(i)
|
[***],
|
(j)
|
[***],
|
(k)
|
[***],
|
(l)
|
[***],
|
(m)
|
[***],
|
(n)
|
[***]
|
(o)
|
[***],
|
(p)
|
[***], and
|
(q)
|
[***].
|
5.11
|
[***]:
|
(a)
|
[***], and
|
(b)
|
[***],
|
6
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 4
|
6.1
|
[***]
|
6.2
|
[***]:
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
|
[***]
|
[***]
|
[***]
|
6.3
|
[***]:
|
[***]
|
[***]
|
[***]
|
|
|
|
[***]
|
[***]
|
[***]
|
6.4
|
[***]:
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 5
|
[***]
|
[***]
|
[***]
|
|
|
|
[***]
|
[***]
|
[***]
|
|
|
|
[***]
|
[***]
|
[***]
|
|
|
|
[***]
|
[***]
|
[***]
|
|
|
|
[***]
|
[***]
|
[***]
|
6.5
|
[***]:
|
(a)
|
[***]
|
(b)
|
[***]
|
7
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 6
|
8
|
[***]
|
8.1
|
[***]
|
8.2
|
[***]
|
8.3
|
[***]
|
9
|
[***]
|
9.1
|
[***]
|
9.2
|
[***]
|
9.3
|
[***]:
|
(a)
|
[***] or,
|
(b)
|
[***].
|
9.4
|
[***]
|
10
|
[***]
|
11
|
[***]
|
12
|
[***]
|
12.1
|
[***]
|
12.2
|
[***]
|
13
|
ASSIGNMENT
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 7
|
14
|
CONFIDENTIALITY
|
15
|
COUNTERPARTS
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 8
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 9
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 10
|
1
|
[***]
|
-
|
[***]
|
-
|
[***]
|
-
|
[***]
|
-
|
[***]
|
-
|
[***]
|
-
|
[***]
|
-
|
[***]
|
-
|
[***]
|
4
|
[***]
|
5
|
[***]
|
6
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
|
LA 7 - 11
|
1
|
WARRANTIES
|
1.1
|
Warranties and Service Life Policy
|
1.1.1
|
Standard Warranty
|
1.1.2
|
Seller Service Life Policy
|
CT1707017 PA A321 NEO EXECUTION LA8 - 1
PRIVILEGED AND CONFIDENTIAL
|
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 8-6
|
(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.
|
CT1707017 PA A321 NEO EXECUTION LA8
PRIVILEGED AND CONFIDENTIAL
|
|
“Airbus Companies”
|
means Airbus S.A.S or its affiliates
|
"Confidential Information"
|
means any proprietary, confidential and sensitive commercial or technical information disclosed by the Disclosing Party (as defined below) to the Receiving Party (as defined below) in relation to or in anyway connected with the [***]
|
"Disclosing Party"
|
means Airbus;
|
"Employees"
|
means the employees, officers, directors, and agents of the Receiving Party;
|
"Receiving Party"
|
means the Company.
|
(b)
|
Only disseminate Confidential Information to Employees to the extent that such Employees have a demonstrable need to know the same in order to carry out their tasks in relation to the Project;
|
(c)
|
Ensure that all Employees who have access to Confidential Information are made aware of the confidential nature of the Confidential Information and of the obligations contained in this NDA;
|
(d)
|
Promptly notify the Disclosing Party if it becomes aware of a breach of any provision of this NDA by any of its Employees and take all the necessary measures to ensure that the disclosures in breach of this NDA cease immediately;
|
(e)
|
Except as authorized in writing by the Disclosing Party, only use, copy or reduce Confidential Information into tangible, visible or recorded form as is strictly necessary for the performance of the Project;
|
3.2
|
The obligations contained in Article 2 shall not apply to a specific disclosure of Confidential Information if such disclosure meets one of the following conditions:
|
(b)
|
It is further disclosed by the Receiving Party in confidence to any third party with the prior written consent of the Disclosing Party.
|
(a)
|
Neither Party shall publicly release any information relating to this NDA and the result of the discussions without the prior written consent of the other Party.
|
9.1
|
THIS NDA 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.
|
9.2
|
Each of the Company and AirbusLicensor and Licensee (i) hereby irrevocably submits itself to the exclusive jurisdiction of the courts sitting in the Borough of Manhattan, New York County, New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defence or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any defence based on sovereign or other immunity or that the suit, action or proceeding which is referred to in clause (i) above is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by these courts.
|
(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
|
[***]
|
CT1707017 PA A321 NEO EXECUTION LA8 - 2
PRIVILEGED AND CONFIDENTIAL
|
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 8-6
|
(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.
|
CT1707017 PA A321 NEO EXECUTION LA8
PRIVILEGED AND CONFIDENTIAL
|
|
“Airbus Companies”
|
means Airbus S.A.S or its affiliates
|
"Confidential Information"
|
means any proprietary, confidential and sensitive commercial or technical information disclosed by the Disclosing Party (as defined below) to the Receiving Party (as defined below) in relation to or in anyway connected with the [***]
|
"Disclosing Party"
|
means Airbus;
|
"Employees"
|
means the employees, officers, directors, and agents of the Receiving Party;
|
"Receiving Party"
|
means the Company.
|
(b)
|
Only disseminate Confidential Information to Employees to the extent that such Employees have a demonstrable need to know the same in order to carry out their tasks in relation to the Project;
|
(c)
|
Ensure that all Employees who have access to Confidential Information are made aware of the confidential nature of the Confidential Information and of the obligations contained in this NDA;
|
(d)
|
Promptly notify the Disclosing Party if it becomes aware of a breach of any provision of this NDA by any of its Employees and take all the necessary measures to ensure that the disclosures in breach of this NDA cease immediately;
|
(e)
|
Except as authorized in writing by the Disclosing Party, only use, copy or reduce Confidential Information into tangible, visible or recorded form as is strictly necessary for the performance of the Project;
|
3.2
|
The obligations contained in Article 2 shall not apply to a specific disclosure of Confidential Information if such disclosure meets one of the following conditions:
|
(b)
|
It is further disclosed by the Receiving Party in confidence to any third party with the prior written consent of the Disclosing Party.
|
(a)
|
Neither Party shall publicly release any information relating to this NDA and the result of the discussions without the prior written consent of the other Party.
|
9.1
|
THIS NDA 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.
|
9.2
|
Each of the Company and AirbusLicensor and Licensee (i) hereby irrevocably submits itself to the exclusive jurisdiction of the courts sitting in the Borough of Manhattan, New York County, New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defence or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any defence based on sovereign or other immunity or that the suit, action or proceeding which is referred to in clause (i) above is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by these courts.
|
2
|
TECHNICAL PUBLICATIONS
|
3
|
[***]
|
3.1
|
[***]
|
3.2
|
[***]:
|
4
|
[***]
|
4.1
|
[***]
|
4.1.1
|
[***]
|
4.1.2
|
[***]
|
4.1.3
|
[***]
|
4.1.4
|
[***]
|
4.2
|
[***]
|
4.2.1
|
[***]
|
4.2.2
|
[***]
|
4.2.3
|
[***]
|
4.2.4
|
[***]
|
CT1707017 PA A321 NEO EXECUTION LA8 - 3
PRIVILEGED AND CONFIDENTIAL
|
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 8-6
|
(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.
|
CT1707017 PA A321 NEO EXECUTION LA8
PRIVILEGED AND CONFIDENTIAL
|
|
“Airbus Companies”
|
means Airbus S.A.S or its affiliates
|
"Confidential Information"
|
means any proprietary, confidential and sensitive commercial or technical information disclosed by the Disclosing Party (as defined below) to the Receiving Party (as defined below) in relation to or in anyway connected with the [***]
|
"Disclosing Party"
|
means Airbus;
|
"Employees"
|
means the employees, officers, directors, and agents of the Receiving Party;
|
"Receiving Party"
|
means the Company.
|
(b)
|
Only disseminate Confidential Information to Employees to the extent that such Employees have a demonstrable need to know the same in order to carry out their tasks in relation to the Project;
|
(c)
|
Ensure that all Employees who have access to Confidential Information are made aware of the confidential nature of the Confidential Information and of the obligations contained in this NDA;
|
(d)
|
Promptly notify the Disclosing Party if it becomes aware of a breach of any provision of this NDA by any of its Employees and take all the necessary measures to ensure that the disclosures in breach of this NDA cease immediately;
|
(e)
|
Except as authorized in writing by the Disclosing Party, only use, copy or reduce Confidential Information into tangible, visible or recorded form as is strictly necessary for the performance of the Project;
|
3.2
|
The obligations contained in Article 2 shall not apply to a specific disclosure of Confidential Information if such disclosure meets one of the following conditions:
|
(b)
|
It is further disclosed by the Receiving Party in confidence to any third party with the prior written consent of the Disclosing Party.
|
(a)
|
Neither Party shall publicly release any information relating to this NDA and the result of the discussions without the prior written consent of the other Party.
|
9.1
|
THIS NDA 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.
|
9.2
|
Each of the Company and AirbusLicensor and Licensee (i) hereby irrevocably submits itself to the exclusive jurisdiction of the courts sitting in the Borough of Manhattan, New York County, New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defence or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any defence based on sovereign or other immunity or that the suit, action or proceeding which is referred to in clause (i) above is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by these courts.
|
5
|
[***]
|
6
|
[***]
|
(i)
|
[***],
|
(ii)
|
[***].
|
7
|
[***]
|
8
|
[***]
|
–
|
[***], or
|
–
|
[***], or
|
–
|
[***], or
|
–
|
[***]
|
CT1707017 PA A321 NEO EXECUTION LA8 - 4
PRIVILEGED AND CONFIDENTIAL
|
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 8-6
|
(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.
|
CT1707017 PA A321 NEO EXECUTION LA8
PRIVILEGED AND CONFIDENTIAL
|
|
“Airbus Companies”
|
means Airbus S.A.S or its affiliates
|
"Confidential Information"
|
means any proprietary, confidential and sensitive commercial or technical information disclosed by the Disclosing Party (as defined below) to the Receiving Party (as defined below) in relation to or in anyway connected with the [***]
|
"Disclosing Party"
|
means Airbus;
|
"Employees"
|
means the employees, officers, directors, and agents of the Receiving Party;
|
"Receiving Party"
|
means the Company.
|
(b)
|
Only disseminate Confidential Information to Employees to the extent that such Employees have a demonstrable need to know the same in order to carry out their tasks in relation to the Project;
|
(c)
|
Ensure that all Employees who have access to Confidential Information are made aware of the confidential nature of the Confidential Information and of the obligations contained in this NDA;
|
(d)
|
Promptly notify the Disclosing Party if it becomes aware of a breach of any provision of this NDA by any of its Employees and take all the necessary measures to ensure that the disclosures in breach of this NDA cease immediately;
|
(e)
|
Except as authorized in writing by the Disclosing Party, only use, copy or reduce Confidential Information into tangible, visible or recorded form as is strictly necessary for the performance of the Project;
|
3.2
|
The obligations contained in Article 2 shall not apply to a specific disclosure of Confidential Information if such disclosure meets one of the following conditions:
|
(b)
|
It is further disclosed by the Receiving Party in confidence to any third party with the prior written consent of the Disclosing Party.
|
(a)
|
Neither Party shall publicly release any information relating to this NDA and the result of the discussions without the prior written consent of the other Party.
|
9.1
|
THIS NDA 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.
|
9.2
|
Each of the Company and AirbusLicensor and Licensee (i) hereby irrevocably submits itself to the exclusive jurisdiction of the courts sitting in the Borough of Manhattan, New York County, New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defence or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any defence based on sovereign or other immunity or that the suit, action or proceeding which is referred to in clause (i) above is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by these courts.
|
9
|
ASSIGNMENT
|
10
|
CONFIDENTIALITY
|
11
|
COUNTERPARTS
|
CT1707017 PA A321 NEO EXECUTION LA8 - 5
PRIVILEGED AND CONFIDENTIAL
|
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 8-6
|
(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.
|
CT1707017 PA A321 NEO EXECUTION LA8
PRIVILEGED AND CONFIDENTIAL
|
|
“Airbus Companies”
|
means Airbus S.A.S or its affiliates
|
"Confidential Information"
|
means any proprietary, confidential and sensitive commercial or technical information disclosed by the Disclosing Party (as defined below) to the Receiving Party (as defined below) in relation to or in anyway connected with the [***]
|
"Disclosing Party"
|
means Airbus;
|
"Employees"
|
means the employees, officers, directors, and agents of the Receiving Party;
|
"Receiving Party"
|
means the Company.
|
(b)
|
Only disseminate Confidential Information to Employees to the extent that such Employees have a demonstrable need to know the same in order to carry out their tasks in relation to the Project;
|
(c)
|
Ensure that all Employees who have access to Confidential Information are made aware of the confidential nature of the Confidential Information and of the obligations contained in this NDA;
|
(d)
|
Promptly notify the Disclosing Party if it becomes aware of a breach of any provision of this NDA by any of its Employees and take all the necessary measures to ensure that the disclosures in breach of this NDA cease immediately;
|
(e)
|
Except as authorized in writing by the Disclosing Party, only use, copy or reduce Confidential Information into tangible, visible or recorded form as is strictly necessary for the performance of the Project;
|
3.2
|
The obligations contained in Article 2 shall not apply to a specific disclosure of Confidential Information if such disclosure meets one of the following conditions:
|
(b)
|
It is further disclosed by the Receiving Party in confidence to any third party with the prior written consent of the Disclosing Party.
|
(a)
|
Neither Party shall publicly release any information relating to this NDA and the result of the discussions without the prior written consent of the other Party.
|
9.1
|
THIS NDA 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.
|
9.2
|
Each of the Company and AirbusLicensor and Licensee (i) hereby irrevocably submits itself to the exclusive jurisdiction of the courts sitting in the Borough of Manhattan, New York County, New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defence or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any defence based on sovereign or other immunity or that the suit, action or proceeding which is referred to in clause (i) above is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by these courts.
|
CT1707017 PA A321 NEO EXECUTION LA8 - 6
PRIVILEGED AND CONFIDENTIAL
|
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 8-6
|
(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.
|
CT1707017 PA A321 NEO EXECUTION LA8
PRIVILEGED AND CONFIDENTIAL
|
|
“Airbus Companies”
|
means Airbus S.A.S or its affiliates
|
"Confidential Information"
|
means any proprietary, confidential and sensitive commercial or technical information disclosed by the Disclosing Party (as defined below) to the Receiving Party (as defined below) in relation to or in anyway connected with the [***]
|
"Disclosing Party"
|
means Airbus;
|
"Employees"
|
means the employees, officers, directors, and agents of the Receiving Party;
|
"Receiving Party"
|
means the Company.
|
(b)
|
Only disseminate Confidential Information to Employees to the extent that such Employees have a demonstrable need to know the same in order to carry out their tasks in relation to the Project;
|
(c)
|
Ensure that all Employees who have access to Confidential Information are made aware of the confidential nature of the Confidential Information and of the obligations contained in this NDA;
|
(d)
|
Promptly notify the Disclosing Party if it becomes aware of a breach of any provision of this NDA by any of its Employees and take all the necessary measures to ensure that the disclosures in breach of this NDA cease immediately;
|
(e)
|
Except as authorized in writing by the Disclosing Party, only use, copy or reduce Confidential Information into tangible, visible or recorded form as is strictly necessary for the performance of the Project;
|
3.2
|
The obligations contained in Article 2 shall not apply to a specific disclosure of Confidential Information if such disclosure meets one of the following conditions:
|
(b)
|
It is further disclosed by the Receiving Party in confidence to any third party with the prior written consent of the Disclosing Party.
|
(a)
|
Neither Party shall publicly release any information relating to this NDA and the result of the discussions without the prior written consent of the other Party.
|
9.1
|
THIS NDA 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.
|
9.2
|
Each of the Company and AirbusLicensor and Licensee (i) hereby irrevocably submits itself to the exclusive jurisdiction of the courts sitting in the Borough of Manhattan, New York County, New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defence or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any defence based on sovereign or other immunity or that the suit, action or proceeding which is referred to in clause (i) above is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by these courts.
|
A.
|
As part of its commitment in the Agreement, Airbus has agreed to [***]
|
C
|
In order to protect any such information, the Parties have decided to enter into this NDA. For avoidance of doubt, the Airbus Companies shall not be deemed to be third parties and any such information may freely circulate among them.
|
1.
|
DEFINITIONS
|
“Airbus Companies”
|
means Airbus S.A.S or its affiliates
|
"Confidential Information"
|
means any proprietary, confidential and sensitive commercial or technical information disclosed by the Disclosing Party (as defined below) to the Receiving Party (as defined below) in relation to or in anyway connected with the [***]
|
"Disclosing Party"
|
means Airbus;
|
"Employees"
|
means the employees, officers, directors, and agents of the Receiving Party;
|
"Receiving Party"
|
means the Company.
|
2.
|
OBLIGATIONS OF THE RECEIVING PARTY
|
(a)
|
Treat all Confidential Information received from the Disclosing Party as proprietary and confidential and unless expressly authorized in writing to do so by the Disclosing Party, shall not disclose any Confidential Information to third parties (except as provided herein) and shall only use such Confidential Information for purposes relating to the support of its own operations and network planning activities. .
|
(b)
|
Only disseminate Confidential Information to Employees to the extent that such Employees have a demonstrable need to know the same in order to carry out their tasks in relation to the Project;
|
(c)
|
Ensure that all Employees who have access to Confidential Information are made aware of the confidential nature of the Confidential Information and of the obligations contained in this NDA;
|
(d)
|
Promptly notify the Disclosing Party if it becomes aware of a breach of any provision of this NDA by any of its Employees and take all the necessary measures to ensure that the disclosures in breach of this NDA cease immediately;
|
(e)
|
Except as authorized in writing by the Disclosing Party, only use, copy or reduce Confidential Information into tangible, visible or recorded form as is strictly necessary for the performance of the Project;
|
(f)
|
Protect the Confidential Information with at least the same degree of care as it uses to protect its own Confidential Information but in no instance shall such standard be less than reasonable care;
|
(g)
|
Not remove, alter or deface any designations relating to the confidential or proprietary nature of the Confidential Information;
|
3.
|
LIMITS TO OBLIGATIONS ON THE RECEIVING PARTY
|
3.1
|
The obligations contained in Article 2 above shall not apply to Confidential Information:
|
(a)
|
Which is in the public domain at the time of disclosure or becomes part of the public domain after disclosure otherwise than through a breach of this NDA; or
|
(b)
|
For which the Receiving Party can provide evidence that it was in its lawful possession prior to disclosure to it by the Disclosing Party or which is lawfully and bona fide obtained thereafter by the Receiving Party from a third party who, to the knowledge or reasonable belief of the Receiving Party, did not receive such information directly or indirectly from the Disclosing Party when under a duty of confidentiality; or
|
(c)
|
For which the Receiving Party can provide proof that it was independently developed by the Receiving Party without prior knowledge of any Confidential Information obtained from the Disclosing Party.
|
3.2
|
The obligations contained in Article 2 shall not apply to a specific disclosure of Confidential Information if such disclosure meets one of the following conditions:
|
(a)
|
It has to be disclosed by reason of a governmental or judicial order or applicable law. In such a case, the Party having received such an order or being subject to such applicable law shall promptly inform the Disclosing Party of its obligation to disclose Confidential Information if possible prior to such disclosure and consult the Disclosing Party on the advisability of taking steps to limit the disclosure. If the Disclosing Party wishes to counter such order or applicable law, the Receiving Party shall provide reasonable assistance to it in doing so, at the Disclosing Party’s expense, provided that neither such time to consult, nor such reasonable assistance, shall compromise the obligation of the Party having received such an order to respond to such governmental or judicial order; or
|
(b)
|
It is further disclosed by the Receiving Party in confidence to any third party with the prior written consent of the Disclosing Party.
|
4.
|
PROPRIETARY RIGHTS
|
5.
|
PROVISIONS IN CASE OF BREACH
|
(a)
|
Termination
|
(b)
|
Traditional Remedies
|
(c)
|
Parties will be entitled to use other legal remedies available including, but not limited to injunction.
|
(a)
|
This NDA shall commence on the date first above written and shall continue for [***] or until both Parties agree in writing that such NDA is no longer needed and decide to cease it. Notwithstanding the termination of the NDA, all Confidential information that will have been disclosed prior to the date of termination shall remain confidential except if such information ceases to be confidential for the reasons mentioned in Article 3 above.
|
(b)
|
Upon termination each Party shall, upon request of the other Party, return, at the requester’s costs, or destroy any Confidential Information received by the other Party.
|
(a)
|
Neither Party shall publicly release any information relating to this NDA and the result of the discussions without the prior written consent of the other Party.
|
(b)
|
The invalidity, illegality or unenforceability of any provision of this NDA under any jurisdiction shall not affect the validity, legality or enforceability of any other provision hereof.
|
(c)
|
Each Party shall promptly advise the other in the event that it becomes aware of the possession, use or knowledge of any Confidential Information by any third party not authorized to possess, use or have such knowledge.
|
9.1
|
THIS NDA 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.
|
9.2
|
Each of the Company and Airbus (i) hereby irrevocably submits itself to the exclusive jurisdiction of the courts sitting in the Borough of Manhattan, New York County, New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto, and (ii) hereby waives, and agrees not to assert, by way of motion, as a defence or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, any defence based on sovereign or other immunity or that the suit, action or proceeding which is referred to in clause (i) above is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by these courts.
|
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)
|
[***]; and
|
(ii)
|
[***].
|
2.2
|
Emergency Services
|
(i)
|
[***];
|
(ii)
|
[***]; and
|
(iii)
|
[***].
|
2.3
|
[***]
|
3
|
PRICES
|
3.1
|
Price Condition
|
3.2
|
[***]
|
3.2.1
|
[***]
|
3.2.2
|
[***]
|
3.2.3
|
[***]
|
4
|
[***]
|
4.1
|
[***]:
|
(i)
|
[***], and
|
(ii)
|
[***].
|
4.2
|
[***]
|
5
|
[***]
|
a)
|
[***]
|
6
|
ASSIGNMENT
|
7
|
CONFIDENTIALITY
|
8
|
COUNTERPARTS
|
1
|
[***]
|
2
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]:
|
(i)
|
[***], or
|
(ii)
|
[***].
|
2.3
|
[***],
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 1
|
(6)
|
[***].
|
(9)
|
[***].
|
(ii)
|
[***].
|
2.4
|
The above commitments from the Seller are subject to the Buyer not being in default under [***] or the Agreement. Further, it is agreed and understood by the parties that any amounts that adjust in accordance with the Airframe Price Revision Formula or the Propulsion System Price Revision Formula shall be adjusted to the actual month and year of Delivery of such Undelivered Aircraft.
|
3
|
CLAUSE 0 - DEFINITIONS
|
3.1
|
Clause 0 of the Agreement is amended to delete the following defined term and replace it as follows:
|
3.2
|
Clause 0 of the Agreement is amended to add the following defined terms:
|
4
|
CLAUSE 2 - SPECIFICATION
|
5
|
CLAUSE 3 - PRICE
|
6
|
CLAUSE 5 - PAYMENT TERMS
|
6.1
|
Subclause 5.4 of the Agreement is deleted in its entirety and replaced as follows:
|
“5.4
|
Payment of Other Amounts
|
5.4.1
|
[***]
|
5.4.2
|
Setoff/Application of Payments
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 2
|
-
|
[***], or
|
-
|
[***],
|
6.2
|
Subclause 5.5 of the Agreement is deleted in its entirety and replaced as follows:
|
“5.5
|
Overdue Payments
|
7
|
CLAUSE 7 - CERTIFICATION
|
7.1
|
Subclause 7.3.3 of the Agreement is deleted in its entirety and replaced with the following:
|
7.2
|
A new Subclause 7.5 is added to the Agreement as follows:
|
8
|
CLAUSE 8 - THE BUYER’S ACCEPTANCE
|
8.1
|
Subclause 8.1.2 of the Agreement is deleted in its entirety and replaced with the following:
|
8.2
|
Subclause 8.2 of the Agreement is deleted in its entirety and replaced with the following:
|
(i)
|
[***],
|
(ii)
|
[***], or
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 3
|
(iii)
|
[***].
|
9
|
CLAUSE 9 - DELIVERY
|
9.3.2
|
[***]
|
10
|
CLAUSE 10 - EXCUSABLE DELAY
|
11
|
CLAUSE 11 - INEXCUSABLE DELAY
|
12
|
CLAUSE 20 - INDEMNIFICATION AND INSURANCE
|
13
|
CLAUSE 21 - TERMINATION FOR CERTAIN EVENTS
|
14
|
ASSIGNMENT
|
15
|
CONFIDENTIALITY
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 4
|
16
|
COUNTERPARTS
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 5
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 6
|
2.2.2.1
|
[***] If the Seller determines [***], the Seller shall (i) inform the Buyer of the technical results and (ii) provide the Buyer with an estimated commercial offer as well as the date by which acceptance of such offer shall be required. Following the Buyer’s acceptance of the technical and commercial offer, the Seller will produce an [***]. If such [***] by the Buyer, [***] shall be cancelled without charge to the Buyer.
|
2.2.2.2
|
In the event that the Buyer requests the Seller in writing to incorporate a proposed change (excluding Development Changes) in an Aircraft and the Seller agrees to such request but the change is not subsequently made the subject of an SCN for any reason (other than the Seller’s unreasonable refusal to sign the SCN or otherwise acting in bad faith), [***] and incurred by the Seller, provided that in the event the Seller’s reasonable estimate of the cost of developing such proposed change [***] after the Seller’s receipt of the Buyer’s request to incorporate a proposed change and secured the Buyer’s agreement prior to incurring any such costs.
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 7
|
2.2.3.2
|
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.
|
2.2.3.3
|
The Seller is considering turning certain items, which are currently BFE in the Specification, into Seller Furnished Equipment. If such BFE becomes Seller Furnished Equipment, it shall be excluded from the provisions of Subclauses 2.2.3.1 and 2.2.3.2 above and be chargeable to the Buyer, however, the price of such Seller Furnished Equipment shall not exceed the price of such BFE.
|
3.3.1
|
[***]
|
3.3.2
|
[***]
|
3.3.3
|
[***]:
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 8
|
(i)
|
[***]; and
|
(ii)
|
[***].
|
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
|
[***]
|
3.4.1
|
[***]
|
(i)
|
[***], and
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
3.4.3
|
[***]
|
(i)
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 9
|
(ii)
|
[***]
|
3.4.4
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
3.4.5
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
3.4.9
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 10
|
(i)
|
[***]
|
(ii)
|
[***]:
|
a.
|
[***]; and
|
b.
|
[***]; and
|
c.
|
[***]; or
|
d.
|
[***].
|
(iii)
|
[***].
|
3.4.10
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 11
|
10.6
|
[***]
|
(i)
|
[***], and
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 12
|
(ii)
|
[***].
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 13
|
(i)
|
[***],
|
(ii)
|
[***], or
|
(iii)
|
[***], or
|
(iv)
|
[***]
|
(v)
|
[***]
|
(vi)
|
[***]
|
(i)
|
[***], and
|
(ii)
|
[***].
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 14
|
11.8
|
[***]
|
11.9
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 15
|
20.1
|
[***]:
|
(A)
|
[***], and
|
(B)
|
[***].
|
20.2
|
[***]:
|
(A)
|
[***], and
|
(B)
|
[***].
|
20.3
|
[***] 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)
|
[***], and
|
(B)
|
[***].
|
(i)
|
[***],
|
(ii)
|
[***], and
|
(iii)
|
[***].
|
21.1
|
Any of the following shall be considered a material breach of, [***] (“Material Breach”):
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 16
|
(1)
|
[***], the Buyer [***] shall commence any case, proceeding or other action with respect [***] or 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 [***] or the Buyer for all or substantially all of its assets and such action is not stayed or dismissed [***], or the Seller or the Buyer makes a general assignment for the benefit of its creditors.
|
(3)
|
An action is commenced against the [***] 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
|
[***]
|
CT1707017 PA A321 NEO EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
LA 10 - 17
|
1
|
DELTA SHORT FORM
|
2
|
ASSIGNMENT
|
3
|
CONFIDENTIALITY
|
4
|
COUNTERPARTS
|
(1)
|
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:
|
(2)
|
“GAAP” means accounting principles generally accepted in the United States of America.
|
(3)
|
“Industry Group” means Alaska Air Group, Inc., American Airlines Group, Inc., JetBlue Airways Corporation, Southwest Airlines Co., and United Continental Holdings, Inc.
|
(4)
|
“Performance Period” means the period beginning on January 1, 2017 and ending on and including December 31, 2019.
|
(1)
|
“TRASM Performance” shall be measured based on the result of the following formula: (A÷B), expressed as a percentage, where:
|
(2)
|
“TRASM” for Delta shall be calculated by using Delta’s Available Seat Miles and Total Operating Revenue for the applicable periods and the following formula: (A÷B), where
|
(3)
|
The “Industry Group Average TRASM” shall be calculated by using the aggregate Available Seat Miles and aggregate Total Operating Revenue for the applicable periods and the following formula: (A÷B), where
|
(4)
|
“Available Seat Miles” means, for the subject company, the consolidated scheduled and non-scheduled total number of seats available for transporting passengers during a reporting period multiplied by the total number of miles flown during that period.
|
(5)
|
“Total Operating Revenue” means, subject to Section 4(b)(v)(B), 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 2016 calendar year to the average monthly NPS over the Performance Period, with (A) Delta’s NPS performance attributable to domestic travel accounting for 50% of the measure and (ii) Delta’s NPS performance attributable to international travel accounting for 50% of the measure. The criteria and methodology used to determine Delta’s NPS is described in a document titled, “‘Net Promoter’: Measuring Customer Satisfaction at Delta,” which was previously reviewed by the Committee. Company management will periodically report to the Company’s Board of Directors regarding Delta’s NPS.
|
(1)
|
The “Return on Invested Capital” for Delta shall be calculated by using Delta’s Average Adjusted Total Net Operating Income and Average Invested Capital for the applicable periods and the following formula (A÷B), where:
|
(2)
|
“Average Adjusted Total Net Operating Income” means, subject to Section 4(b)(v)(B), (i) Delta’s average 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 (A) items present in the line item “restructuring and other items” or such similar line item; (B) mark-to-market adjustments for hedges recorded in periods other than the settlement period; (C) other special, unusual or nonrecurring items which are disclosed in publicly available filings with the U.S. Securities and Exchange Commission (the “SEC”); and (D) implied interest in aircraft rent expense and amortized pension expense related to gains/losses that impact accumulated other comprehensive income (“AOCI”) multiplied by (ii) one minus Delta’s Effective Tax Rate for the applicable periods.
|
(3)
|
“Effective Tax Rate” means Delta’s effective income tax rate for the applicable periods as disclosed in publicly available filings with the SEC.
|
(4)
|
“Average Invested Capital” means, subject to Section 4(b)(v)(B), Delta’s total invested capital determined based on the average of thirteen calendar quarters measured from the last calendar quarter preceding the Performance Period using the following formula, (A+B), where:
|
(5)
|
“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, 2016 (the “Initial Value”) equal to the book value of equity determined in accordance with GAAP as of December 31, 2016, but excluding the impact of gains or losses as of December 31, 2016 associated with (1) the cumulative pension and other post-employment retirement benefits net balance recorded in AOCI; (2) the derivative contracts and associated items net balance recorded in AOCI; and (3) the deferred tax asset valuation allowance balance and (ii) using the following formula for each subsequent quarter thereafter, (A+B+C), where:
|
(6)
|
“Adjusted Gross Debt” for Delta shall be calculated quarterly based on its regularly prepared internal financial statements using the following formula (A+B), subject to Section 4(b)(v)(B), where:
|
(1)
|
“Relative TSR Performance” shall be calculated based on Delta’s TSR Percentile Ranking for the Performance Period.
|
(2)
|
“TSR Percentile Ranking” means the percentage of the S&P 500 Companies with Total Shareholder Return for the Performance Period that is less than or equal to Delta’s Total Shareholder Return. If the Company’s Total Shareholder Return is the same as another company’s Total Shareholder Return, the Company shall be treated as having the higher Total Shareholder Return. The percentile ranking shall be carried out to two decimal places.
|
(3)
|
“S&P 500 Companies” means all of the companies constituting the Standard & Poor’s 500 Index as of the first and last day of the Performance Period (excluding the Company) and which continue to be actively traded under the same ticker symbol on an established securities market through the end of the Performance Period.
|
(4)
|
“Total Shareholder Return” or “TSR” means, for Delta and each of the S&P 500 Companies, (i) the change in the average closing market price of its common stock (as quoted in the principal market on which it is traded over the 20 trading days immediately preceding the first and last day of the Performance Period), plus dividends and other distributions paid, divided by (ii) the average closing market price over the 20 trading days immediately preceding the first day of the Performance Period, all of which are adjusted for any changes in equity structure, including, without limitation, stock splits and stock dividends, and assuming that all cash dividends and cash distributions are immediately reinvested in common stock of the subject company using the closing market price on the ex-dividend date.
|
(1)
|
If there is a payout under the Company’s broad-based employee profit sharing program for ground and flight attendant employees (the “Profit Sharing Program”) for 2017, the Option shall vest and become exercisable with respect to one-third of the Shares on each of the following dates: (I) February 1, 2018 (the “First Option Installment”), (II) February 1, 2019 (the “Second Option Installment”) and (III) February 1, 2020 (the “Third Option Installment”); or
|
(2)
|
If there is no payout under the Profit Sharing Program for 2017, but there is a payout under the Profit Sharing Program for 2018, the Option shall vest and become exercisable with respect to (I) the First and Second Option Installments on February 1, 2019 and (II) the Third Option Installment on February 1, 2020; and
|
(1)
|
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:
|
(2)
|
“GAAP” means accounting principles generally accepted in the United States of America.
|
(3)
|
“Industry Group” means Alaska Air Group, Inc., American Airlines Group, Inc., JetBlue Airways Corporation, Southwest Airlines Co., and United Continental Holdings, Inc.
|
(4)
|
“Performance Period” means the period beginning on January 1, 2018 and ending on and including December 31, 2020.
|
(1)
|
“TRASM Performance” shall be measured based on the result of the following formula: (A÷B), expressed as a percentage, where:
|
(2)
|
“TRASM” for Delta shall be calculated by using Delta’s Available Seat Miles and Total Operating Revenue for the applicable periods and the following formula: (A÷B), where
|
(3)
|
The “Industry Group Average TRASM” shall be calculated by using the aggregate Available Seat Miles and aggregate Total Operating Revenue for the applicable periods and the following formula: (A÷B), where
|
(4)
|
“Available Seat Miles” means, for the subject company, the consolidated scheduled and non-scheduled total number of seats available for transporting passengers during a reporting period multiplied by the total number of miles flown during that period.
|
(5)
|
“Total Operating Revenue” means, subject to Section 4(b)(v)(B), the subject company’s total operating revenue for the applicable periods based on its regularly prepared and publicly available statements of operations prepared in
|
(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 2017 calendar year to the average monthly NPS over the Performance Period, with (A) Delta’s NPS performance attributable to domestic travel accounting for 50% of the measure and (ii) Delta’s NPS performance attributable to international travel accounting for 50% of the measure. The criteria and methodology used to determine Delta’s NPS is described in a document titled, “‘Net Promoter’: Measuring Customer Satisfaction at Delta,” which was previously reviewed by the Committee. Company management will periodically report to the Company’s Board of Directors regarding Delta’s NPS.
|
(1)
|
The “Return on Invested Capital” for Delta shall be calculated by using Delta’s Average Adjusted Total Net Operating Income and Average Invested Capital for the applicable periods and the following formula (A÷B), where:
|
(2)
|
“Average Adjusted Total Net Operating Income” means, subject to Section 4(b)(v)(B), (i) Delta’s average consolidated pre-tax income for the applicable periods based on its regularly prepared and publicly available statements of operations prepared in accordance with GAAP, but excluding (A) net interest expense; (B) items present in the line item “restructuring and other items” or such similar line item; (C) mark-to-market adjustments for hedges recorded in periods other than the settlement period; (D) other special, unusual or nonrecurring items which are disclosed in publicly available filings with the U.S. Securities and Exchange Commission (the “SEC”); and (E) implied interest in aircraft rent expense and amortized pension expense related to gains/losses that impact accumulated other comprehensive income (“AOCI”) multiplied by (ii) one minus Delta’s Effective Tax Rate for the applicable periods.
|
(3)
|
“Effective Tax Rate” means Delta’s effective income tax rate for the applicable periods as disclosed in publicly available filings with the SEC.
|
(4)
|
“Average Invested Capital” means, subject to Section 4(b)(v)(B), Delta’s total invested capital determined based on the average of thirteen calendar quarters measured from the last calendar quarter preceding the Performance Period using the following formula, (A+B), where:
|
(5)
|
“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, 2017 (the “Initial Value”) equal to the book value of equity determined in accordance with GAAP as of December 31, 2017, but excluding the impact of gains or losses as of December 31, 2017 associated with (1) the cumulative pension and other post-employment retirement benefits net balance recorded in AOCI; (2) the derivative contracts and associated items net balance recorded in AOCI; and (3) the deferred tax asset valuation allowance balance and (ii) using the following formula for each subsequent quarter thereafter, (A+B+C), where:
|
(6)
|
“Adjusted Gross Debt” for Delta shall be calculated quarterly based on its regularly prepared internal financial statements using the following formula (A+B), subject to Section 4(b)(v)(B), where:
|
(1)
|
“Relative TSR Performance” shall be calculated based on Delta’s TSR Percentile Ranking for the Performance Period.
|
(2)
|
“TSR Percentile Ranking” means the percentage of the S&P 500 Companies with Total Shareholder Return for the Performance Period that is less than or equal to Delta’s Total Shareholder Return. If the Company’s Total Shareholder Return is the same as another company’s Total Shareholder Return, the Company shall be treated as having the higher Total Shareholder Return. The percentile ranking shall be carried out to two decimal places.
|
(3)
|
“S&P 500 Companies” means all of the companies constituting the Standard & Poor’s 500 Index as of the first and last day of the Performance Period (excluding the Company) and which continue to be actively traded under the same ticker symbol on an established securities market through the end of the Performance Period.
|
(4)
|
“Total Shareholder Return” or “TSR” means, for Delta and each of the S&P 500 Companies, (i) the change in the average closing market price of its common stock (as quoted in the principal market on which it is traded over the 20 trading days immediately preceding the first and last day of the Performance Period), plus dividends and other distributions paid, divided by (ii) the average closing market price over the 20 trading days immediately preceding the first day of the Performance Period, all of which are adjusted for any changes in equity structure, including, without limitation, stock splits and stock dividends, and assuming that all cash dividends and cash distributions are immediately reinvested in common stock of the subject company using the closing market price on the ex-dividend date.
|
|
Performance Measure
|
Weighting
|
||
Threshold
(50% of Target)
|
Target
(100% of Target)
|
Maximum
(200% of Target)
|
|
|
TRASM Performance
|
Average TRASM Performance* minus 1.5% points
|
Average TRASM Performance*
|
Average TRASM Performance* plus 1.5% points or more
|
25.0%
|
Customer Service
Performance—Domestic |
+0% points
|
+1.5% points
|
+2.5% points or higher
|
12.50%
|
Customer Service
Performance—International |
|
|
|
|
Trans-Atlantic
|
+0.0% points
|
+1.0% points
|
+2.0% points or higher
|
6.25%
|
Trans-Pacific
|
+0.0% points
|
+2.0% points
|
+3.5% points or higher
|
3.125%
|
Latin America
|
+0.0% points
|
+1.5% points
|
+2.5% points or higher
|
3.125%
|
Return on Invested Capital
|
11.0%
|
13.0%
|
15.0% or higher
|
25.0%
|
Relative TSR Performance
|
25th percentile
|
50th percentile
|
75th percentile or higher
|
25.0%
|
(1)
|
If there is a payout under the Company’s broad-based employee profit sharing program for ground and flight attendant employees (the “Profit Sharing Program”) for 2018, the Option shall vest and become exercisable with respect to one-third of the Shares on each of the following dates: (I) February 1, 2019 (the “First Option Installment”), (II) February 1, 2020 (the “Second Option
|
(2)
|
If there is no payout under the Profit Sharing Program for 2018, but there is a payout under the Profit Sharing Program for 2019, the Option shall vest and become exercisable with respect to (I) the First and Second Option Installments on February 1, 2020 and (II) the Third Option Installment on February 1, 2021; and
|
|
Threshold
|
Target
|
Maximum
|
% of Target Absolute Financial Performance Measure Paid
|
50%
|
100%
|
200%
|
Required 2018 Pre-Tax Income
|
$6,504 Million
|
$7,869 Million
|
$8,794 Million
|
|
Threshold
|
Target
|
Maximum
|
% of Target Relative Financial Performance Measure Paid
|
50%
|
100%
|
200%
|
Delta’s 2018 Annual Pre-Tax Income Margin relative to Composite Performance of Industry Composite Group for the same period
|
Composite Performance
|
+2.5 points above Composite Performance
|
+3.5 points above Composite Performance
|
|
Threshold
|
Target
|
Maximum
|
Shared Rewards Program
|
|
|
|
% of Target Payout for this Performance Measure (75% Weighting)
|
37.50%
|
75%
|
150%
|
Number of monthly Shared Rewards Program goals actually met during 2018
|
21
|
28
|
35 or more
|
Delta Connection Goals
|
|
|
|
% of Target Payout for this Performance Measure (25% Weighting)
|
12.50%
|
25%
|
50%
|
Number of Delta Connection Goals actually met during 2018
|
9
|
14
|
19 or more
|
|
Completion Factor
2018 Goal |
On-Time Arrival Performance
2018 Goal |
||
Month in 2018
|
Relative CF
|
Absolute CF
|
Relative A0
|
Absolute A0
|
January
|
1st
|
96.8%
|
1st
|
66.6%
|
February
|
1st
|
96.1%
|
1st
|
66.3%
|
March
|
1st
|
98.8%
|
1st
|
68.0%
|
April
|
1st
|
99.4%
|
1st
|
72.9%
|
May
|
1st
|
99.8%
|
1st
|
72.4%
|
June
|
1st
|
98.8%
|
1st
|
68.0%
|
July
|
1st
|
98.2%
|
1st
|
68.2%
|
August
|
1st
|
98.3%
|
1st
|
69.2%
|
September
|
1st
|
99.3%
|
1st
|
73.5%
|
October
|
1st
|
99.5%
|
1st
|
75.1%
|
November
|
1st
|
99.5%
|
1st
|
73.1%
|
December
|
1st
|
97.9%
|
1st
|
66.4%
|
Overall
|
1st
|
98.6%
|
1st
|
70.0%
|
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, Compass, ExpressJet, GoJet, Endeavor Air, Republic Airlines 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 at 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)
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
Earnings before income taxes
|
$
|
5,701
|
|
$
|
6,636
|
|
$
|
7,157
|
|
$
|
1,072
|
|
$
|
2,527
|
|
Add (deduct):
|
|
|
|
|
|
||||||||||
Fixed charges from below
|
529
|
|
528
|
|
584
|
|
737
|
|
947
|
|
|||||
Capitalized interest
|
(58
|
)
|
(53
|
)
|
(36
|
)
|
(33
|
)
|
(29
|
)
|
|||||
Earnings as adjusted
|
$
|
6,172
|
|
$
|
7,111
|
|
$
|
7,705
|
|
$
|
1,776
|
|
$
|
3,445
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
||||||||||
Interest expense, including capitalized amounts and amortization of debt costs
|
$
|
483
|
|
$
|
472
|
|
$
|
534
|
|
$
|
691
|
|
$
|
891
|
|
Portion of rental expense representative of the interest factor
|
46
|
|
56
|
|
50
|
|
46
|
|
56
|
|
|||||
Fixed charges
|
$
|
529
|
|
$
|
528
|
|
$
|
584
|
|
$
|
737
|
|
$
|
947
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
11.67
|
13.47
|
13.19
|
|
2.41
|
|
3.64
|
|
|
|
|
NAME OF SUBSIDIARY
|
JURISDICTION OF INCORPORATION OR
ORGANIZATION
|
|
Aero Assurance Ltd.
|
Vermont
|
|
DAL Global Services, LLC
|
Delaware
|
|
Delta Flight Products, LLC
|
Delaware
|
|
Delta Material Services, LLC
|
Delaware
|
|
Delta Private Jets, Inc.
|
Kentucky
|
|
Endeavor Air, Inc.
|
Georgia
|
|
Epsilon Trading, LLC
|
Delaware
|
|
MIPC, LLC
|
Delaware
|
|
MLT Vacations, Inc. (d/b/a Delta Vacations)
|
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,
|
(5)
|
Registration Statement No. 333-212525 on Form S-8 pertaining to Delta Air Lines, Inc. Performance Compensation Plan,
|
(6)
|
Registration Statement No. 333-206258 on Form S-3 pertaining to Pass Through Certificates,
|
(7)
|
Registration Statement No. 333-209571 on Form S-3 pertaining to Common Stock, and
|
(8)
|
Registration Statement No. 333-216463 on Form S-3 pertaining to debt securities;
|
|
/s/ Ernst & Young LLP
|
Atlanta, Georgia
|
|
February 23, 2018
|
|
1.
|
I have reviewed this annual report on Form 10-K of Delta Air Lines, Inc. ("Delta") for the annual period ended December 31, 2017;
|
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 23, 2018
|
/s/ Edward H. Bastian
|
|
Edward H. Bastian
|
|
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Delta Air Lines, Inc. ("Delta") for the annual period ended December 31, 2017;
|
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 23, 2018
|
/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/ Edward H. Bastian
|
|
Edward H. Bastian
|
|
Chief Executive Officer
|
|
|
|
/s/ Paul A. Jacobson
|
|
Paul A. Jacobson
|
|
Executive Vice President and Chief Financial Officer
|
|
|