|
Delaware
|
|
87-0617894
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
27-01 Queens Plaza North
|
Long Island City
|
New York
|
11101
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value
|
JBLU
|
The NASDAQ Stock Market LLC
|
Large accelerated filer
|
☑
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
|
|
Page
|
PART I. FINANCIAL INFORMATION
|
|
|
|
PART II. OTHER INFORMATION
|
|
|
September 30, 2020
|
|
December 31, 2019
|
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,453
|
|
|
$
|
959
|
|
Investment securities
|
566
|
|
|
369
|
|
||
Receivables, less allowance (2020-$2; 2019-$1)
|
91
|
|
|
231
|
|
||
Inventories, less allowance (2020-$26; 2019-$22)
|
70
|
|
|
81
|
|
||
Prepaid expenses and other
|
275
|
|
|
146
|
|
||
Total current assets
|
3,455
|
|
|
1,786
|
|
||
PROPERTY AND EQUIPMENT
|
|
|
|
||||
Flight equipment
|
10,103
|
|
|
10,332
|
|
||
Predelivery deposits for flight equipment
|
441
|
|
|
433
|
|
||
Total flight equipment and predelivery deposits, gross
|
10,544
|
|
|
10,765
|
|
||
Less accumulated depreciation
|
2,799
|
|
|
2,768
|
|
||
Total flight equipment and predelivery deposits, net
|
7,745
|
|
|
7,997
|
|
||
Other property and equipment
|
1,210
|
|
|
1,145
|
|
||
Less accumulated depreciation
|
580
|
|
|
528
|
|
||
Total other property and equipment, net
|
630
|
|
|
617
|
|
||
Total property and equipment, net
|
8,375
|
|
|
8,614
|
|
||
OPERATING LEASE ASSETS
|
833
|
|
|
912
|
|
||
OTHER ASSETS
|
|
|
|
||||
Investment securities
|
3
|
|
|
3
|
|
||
Restricted cash
|
52
|
|
|
59
|
|
||
Other
|
715
|
|
|
544
|
|
||
Total other assets
|
770
|
|
|
606
|
|
||
TOTAL ASSETS
|
$
|
13,433
|
|
|
$
|
11,918
|
|
|
|
September 30, 2020
|
|
December 31, 2019
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
CURRENT LIABILITIES
|
|
|
|
||||
Accounts payable
|
$
|
407
|
|
|
$
|
401
|
|
Air traffic liability
|
1,253
|
|
|
1,119
|
|
||
Accrued salaries, wages and benefits
|
391
|
|
|
376
|
|
||
Other accrued liabilities
|
244
|
|
|
295
|
|
||
Current operating lease liabilities
|
113
|
|
|
128
|
|
||
Current maturities of long-term debt and finance lease obligations
|
400
|
|
|
344
|
|
||
Total current liabilities
|
2,808
|
|
|
2,663
|
|
||
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS
|
4,439
|
|
|
1,990
|
|
||
LONG-TERM OPERATING LEASE LIABILITIES
|
782
|
|
|
690
|
|
||
DEFERRED TAXES AND OTHER LIABILITIES
|
|
|
|
||||
Deferred income taxes
|
1,092
|
|
|
1,251
|
|
||
Air traffic liability - loyalty non-current
|
512
|
|
|
481
|
|
||
Other
|
83
|
|
|
44
|
|
||
Total deferred taxes and other liabilities
|
1,687
|
|
|
1,776
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 7)
|
|
|
|
||||
STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Preferred stock, $0.01 par value; 25 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 900 shares authorized, 431 and 427 shares issued and 273 and 282 shares outstanding at September 30, 2020 and December 31, 2019, respectively
|
4
|
|
|
4
|
|
||
Treasury stock, at cost; 158 and 145 shares at September 30, 2020 and December 31, 2019, respectively
|
(1,981
|
)
|
|
(1,782
|
)
|
||
Additional paid-in capital
|
2,355
|
|
|
2,253
|
|
||
Retained earnings
|
3,341
|
|
|
4,322
|
|
||
Accumulated other comprehensive (loss) income
|
(2
|
)
|
|
2
|
|
||
Total stockholders’ equity
|
3,717
|
|
|
4,799
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
13,433
|
|
|
$
|
11,918
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
OPERATING REVENUES
|
|
|
|
|
|
|
|
||||||||
Passenger
|
$
|
445
|
|
|
$
|
2,005
|
|
|
$
|
2,126
|
|
|
$
|
5,838
|
|
Other
|
47
|
|
|
81
|
|
|
169
|
|
|
225
|
|
||||
Total operating revenues
|
492
|
|
|
2,086
|
|
|
2,295
|
|
|
6,063
|
|
||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
||||||||
Aircraft fuel and related taxes
|
102
|
|
|
471
|
|
|
496
|
|
|
1,392
|
|
||||
Salaries, wages and benefits
|
482
|
|
|
580
|
|
|
1,560
|
|
|
1,731
|
|
||||
Landing fees and other rents
|
84
|
|
|
125
|
|
|
258
|
|
|
362
|
|
||||
Depreciation and amortization
|
127
|
|
|
134
|
|
|
407
|
|
|
385
|
|
||||
Aircraft rent
|
23
|
|
|
26
|
|
|
60
|
|
|
76
|
|
||||
Sales and marketing
|
24
|
|
|
74
|
|
|
84
|
|
|
215
|
|
||||
Maintenance, materials and repairs
|
111
|
|
|
158
|
|
|
344
|
|
|
482
|
|
||||
Other operating expenses
|
167
|
|
|
271
|
|
|
560
|
|
|
833
|
|
||||
Special items
|
(112
|
)
|
|
—
|
|
|
(214
|
)
|
|
14
|
|
||||
Total operating expenses
|
1,008
|
|
|
1,839
|
|
|
3,555
|
|
|
5,490
|
|
||||
OPERATING (LOSS) INCOME
|
(516
|
)
|
|
247
|
|
|
(1,260
|
)
|
|
573
|
|
||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(56
|
)
|
|
(18
|
)
|
|
(121
|
)
|
|
(57
|
)
|
||||
Capitalized interest
|
3
|
|
|
4
|
|
|
10
|
|
|
10
|
|
||||
Gain on equity method investments
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||
Interest income and other
|
(9
|
)
|
|
6
|
|
|
(10
|
)
|
|
7
|
|
||||
Total other income (expense)
|
(62
|
)
|
|
7
|
|
|
(121
|
)
|
|
(25
|
)
|
||||
(LOSS) INCOME BEFORE INCOME TAXES
|
(578
|
)
|
|
254
|
|
|
(1,381
|
)
|
|
548
|
|
||||
Income tax (benefit) expense
|
(185
|
)
|
|
67
|
|
|
(400
|
)
|
|
140
|
|
||||
NET (LOSS) INCOME
|
$
|
(393
|
)
|
|
$
|
187
|
|
|
$
|
(981
|
)
|
|
$
|
408
|
|
|
|
|
|
|
|
|
|
||||||||
(LOSS) EARNINGS PER COMMON SHARE:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(1.44
|
)
|
|
$
|
0.63
|
|
|
$
|
(3.58
|
)
|
|
$
|
1.36
|
|
Diluted
|
$
|
(1.44
|
)
|
|
$
|
0.63
|
|
|
$
|
(3.58
|
)
|
|
$
|
1.35
|
|
|
Three Months Ended September 30,
|
||||||
|
2020
|
|
2019
|
||||
NET (LOSS) INCOME
|
$
|
(393
|
)
|
|
$
|
187
|
|
Changes in fair value of derivative instruments, net of reclassifications into earnings, net of deferred taxes of $(1) and $0 in 2020 and 2019, respectively
|
1
|
|
|
(2
|
)
|
||
Total other comprehensive income (loss)
|
1
|
|
|
(2
|
)
|
||
COMPREHENSIVE (LOSS) INCOME
|
$
|
(392
|
)
|
|
$
|
185
|
|
|
|
|
|
||||
|
Nine Months Ended September 30,
|
||||||
|
2020
|
|
2019
|
||||
NET (LOSS) INCOME
|
$
|
(981
|
)
|
|
$
|
408
|
|
Changes in fair value of derivative instruments, net of reclassifications into earnings, net of deferred taxes of $1 and $(1) in 2020 and 2019, respectively
|
(4
|
)
|
|
2
|
|
||
Total other comprehensive (loss) income
|
(4
|
)
|
|
2
|
|
||
COMPREHENSIVE (LOSS) INCOME
|
$
|
(985
|
)
|
|
$
|
410
|
|
|
Nine Months Ended September 30,
|
||||||
|
2020
|
|
2019
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net (loss) income
|
$
|
(981
|
)
|
|
$
|
408
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
Deferred income taxes
|
(351
|
)
|
|
87
|
|
||
Impairment of long-lived assets
|
258
|
|
|
—
|
|
||
Depreciation
|
374
|
|
|
349
|
|
||
Amortization
|
33
|
|
|
36
|
|
||
Stock-based compensation
|
20
|
|
|
24
|
|
||
Gain on equity method investments
|
—
|
|
|
(15
|
)
|
||
Changes in certain operating assets and liabilities
|
242
|
|
|
314
|
|
||
Deferred CARES Act grant
|
49
|
|
|
—
|
|
||
Losses on sale-leaseback transactions
|
106
|
|
|
—
|
|
||
Other, net
|
27
|
|
|
(5
|
)
|
||
Net cash (used in) provided by operating activities
|
(223
|
)
|
|
1,198
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Capital expenditures
|
(529
|
)
|
|
(505
|
)
|
||
Predelivery deposits for flight equipment
|
(67
|
)
|
|
(172
|
)
|
||
Purchase of held-to-maturity investments
|
—
|
|
|
(353
|
)
|
||
Proceeds from the maturities of held-to-maturity investments
|
21
|
|
|
495
|
|
||
Purchase of available-for-sale securities
|
(1,162
|
)
|
|
(761
|
)
|
||
Proceeds from the sale of available-for-sale securities
|
944
|
|
|
730
|
|
||
Proceeds from sale-leaseback transactions
|
209
|
|
|
—
|
|
||
Other, net
|
(1
|
)
|
|
(11
|
)
|
||
Net cash (used in) investing activities
|
(585
|
)
|
|
(577
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
2,541
|
|
|
218
|
|
||
Proceeds from short-term borrowings
|
981
|
|
|
—
|
|
||
Proceeds from sale-leaseback transactions
|
236
|
|
|
—
|
|
||
Proceeds from issuance of common stock
|
22
|
|
|
27
|
|
||
Proceeds from issuance of stock warrants
|
28
|
|
|
—
|
|
||
Repayment of long-term debt and finance lease obligations
|
(272
|
)
|
|
(258
|
)
|
||
Repayment of short-term borrowings
|
(1,000
|
)
|
|
—
|
|
||
Acquisition of treasury stock
|
(167
|
)
|
|
(381
|
)
|
||
Other, net
|
—
|
|
|
(3
|
)
|
||
Net cash provided by (used in) financing activities
|
2,369
|
|
|
(397
|
)
|
||
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
1,561
|
|
|
224
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
1,018
|
|
|
533
|
|
||
Cash, cash equivalents and restricted cash at end of period(1)
|
$
|
2,579
|
|
|
$
|
757
|
|
|
|
|
|
|
|
Common
Shares |
|
Common
Stock |
|
Treasury
Shares |
|
Treasury
Stock |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
|
||||||||||||||
Balance at June 30, 2020
|
|
430
|
|
|
$
|
4
|
|
|
158
|
|
|
$
|
(1,981
|
)
|
|
$
|
2,340
|
|
|
$
|
3,734
|
|
|
$
|
(3
|
)
|
|
$
|
4,094
|
|
Net (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(393
|
)
|
|
—
|
|
|
(393
|
)
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Vesting of restricted stock units
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||||
CARES Act warrant issuance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||
Balance at September 30, 2020
|
|
431
|
|
|
$
|
4
|
|
|
158
|
|
|
$
|
(1,981
|
)
|
|
$
|
2,355
|
|
|
$
|
3,341
|
|
|
$
|
(2
|
)
|
|
$
|
3,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Common
Shares |
|
Common
Stock |
|
Treasury
Shares |
|
Treasury
Stock |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
|
||||||||||||||
Balance at June 30, 2019
|
|
425
|
|
|
$
|
4
|
|
|
129
|
|
|
$
|
(1,503
|
)
|
|
$
|
2,221
|
|
|
$
|
3,974
|
|
|
$
|
1
|
|
|
$
|
4,697
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
187
|
|
|
—
|
|
|
187
|
|
||||||
Other comprehensive (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Vesting of restricted stock units
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Shares repurchased
|
|
—
|
|
|
—
|
|
|
8
|
|
|
(125
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(125
|
)
|
||||||
Balance at September 30, 2019
|
|
425
|
|
|
$
|
4
|
|
|
137
|
|
|
$
|
(1,628
|
)
|
|
$
|
2,228
|
|
|
$
|
4,161
|
|
|
$
|
(1
|
)
|
|
$
|
4,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Common
Shares |
|
Common
Stock |
|
Treasury
Shares |
|
Treasury
Stock |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
|
||||||||||||||
Balance at December 31, 2019
|
|
427
|
|
|
$
|
4
|
|
|
145
|
|
|
$
|
(1,782
|
)
|
|
$
|
2,253
|
|
|
$
|
4,322
|
|
|
$
|
2
|
|
|
$
|
4,799
|
|
Net (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(981
|
)
|
|
—
|
|
|
(981
|
)
|
||||||
Other comprehensive (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Vesting of restricted stock units
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||||
Stock compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||||
Stock issued under Crewmember stock purchase plan
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||||
Shares repurchased
|
|
—
|
|
|
—
|
|
|
13
|
|
|
(192
|
)
|
|
32
|
|
|
—
|
|
|
—
|
|
|
(160
|
)
|
||||||
CARES Act warrant issuance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
||||||
Balance at September 30, 2020
|
|
431
|
|
|
$
|
4
|
|
|
158
|
|
|
$
|
(1,981
|
)
|
|
$
|
2,355
|
|
|
$
|
3,341
|
|
|
$
|
(2
|
)
|
|
$
|
3,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Common
Shares |
|
Common
Stock |
|
Treasury
Shares |
|
Treasury
Stock |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
|
||||||||||||||
Balance at December 31, 2018
|
|
422
|
|
|
$
|
4
|
|
|
116
|
|
|
$
|
(1,272
|
)
|
|
$
|
2,203
|
|
|
$
|
3,753
|
|
|
$
|
(3
|
)
|
|
$
|
4,685
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
408
|
|
|
—
|
|
|
408
|
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Vesting of restricted stock units
|
|
1
|
|
|
—
|
|
|
1
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||||
Stock compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
||||||
Stock issued under Crewmember stock purchase plan
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
||||||
Shares repurchased
|
|
—
|
|
|
—
|
|
|
20
|
|
|
(350
|
)
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
(375
|
)
|
||||||
Balance at September 30, 2019
|
|
425
|
|
|
$
|
4
|
|
|
137
|
|
|
$
|
(1,628
|
)
|
|
$
|
2,228
|
|
|
$
|
4,161
|
|
|
$
|
(1
|
)
|
|
$
|
4,764
|
|
|
September 30, 2020
|
|
December 31, 2019
|
||||
Available-for-sale securities
|
|
|
|
||||
Time deposits
|
$
|
561
|
|
|
$
|
325
|
|
Commercial paper
|
—
|
|
|
20
|
|
||
Debt securities
|
8
|
|
|
6
|
|
||
Total available-for-sale securities
|
569
|
|
|
351
|
|
||
Held-to-maturity securities
|
|
|
|
||||
Corporate bonds
|
—
|
|
|
21
|
|
||
Total held-to-maturity securities
|
—
|
|
|
21
|
|
||
Total investment securities
|
$
|
569
|
|
|
$
|
372
|
|
•
|
Introduced "Safety from the Ground Up", an initiative with a multi-layer approach that encompasses enhanced safety and cleaning measures on our flights, at our airports, and in our offices;
|
•
|
Instituted temperature checks for our customer-facing and support-center crewmembers;
|
•
|
Updated our sick leave policy to provide up to 14 days of paid sick leave for crewmembers who have been diagnosed with COVID-19 or are required to quarantine;
|
•
|
Implemented a framework for internal contact tracing, crewmember notification, and a return to work clearance process for all crewmembers, wherever they may be located;
|
•
|
Required face coverings for all crewmembers while boarding, in flight, and when physical distancing cannot be maintained;
|
•
|
Administered more frequent disinfecting of common surfaces and areas with high touchpoints in our facilities;
|
•
|
Enhanced daily and overnight cleaning of our aircraft and all facilities, using electrostatic spraying of disinfectant in the cabins of aircraft parked overnight at selected focus cities;
|
•
|
Required customers to wear face coverings during check-in, boarding, and inflight;
|
•
|
Limited the number of seats available to be sold on most flights; we plan to continue limiting the capacity on our flights to less than 70% through December 1, 2020;
|
•
|
Suspended group boarding and implemented a back-to-front boarding process to minimize passing in the aisle;
|
•
|
Eliminated layovers for crewmembers in New York City and worked with crew transportation companies to ensure physical distancing;
|
•
|
Implemented jump seat buffers on our flights to further promote physical distancing measures;
|
•
|
Provided enhanced flexibility to our customers by waiving change and cancel fees for customers with existing bookings made through February 28, 2021, while also extending the expiration date of travel credits issued between February 27, 2020 and June 30, 2020 for flight purchases to 24 months; and
|
•
|
Announced our partnership with Vault Health to provide discounted at-home COVID-19 testing to customers with pending travel plans.
|
•
|
Adjustments in flying capacity to align with the expected demand.
|
•
|
Renegotiated service rates with business partners and extended payment terms.
|
•
|
Implemented salary reductions of 20% to 50% for our officers through September 30, 2020, and 10% to 20% in the fourth quarter of 2020.
|
•
|
Offered crewmembers voluntary time off and separation programs, with most departures for the separation program occurring during the third quarter.
|
•
|
Executed a new $1.0 billion 364-day delayed draw term loan agreement in March 2020 and immediately drew down on the facility for the full amount available. This term loan facility was repaid during the third quarter.
|
•
|
Borrowed on our existing $550 million revolving credit facility in April 2020.
|
•
|
Executed a $150 million pre-purchase arrangement of TrueBlue® points with our co-brand credit card partner in April 2020.
|
•
|
Suspended non-critical capital expenditure projects.
|
•
|
Amended our purchase agreement with Airbus which changed the timing of our Airbus A321 and A220 deliveries in May 2020.
|
•
|
Suspended share repurchases.
|
•
|
Obtained $963 million of government funding under the Payroll Support Program of The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which is discussed further below.
|
•
|
Executed a $750 million term loan credit facility and immediately drew down on the facility for the full amount available in June 2020.
|
•
|
Entered into $445 million of sale-leaseback transactions; which is discussed further below.
|
•
|
Completed public placements of equipment notes in an aggregate principal amount of $923 million secured by 49 Airbus A321 aircraft in August 2020, which is discussed further in Note 4 to our condensed consolidated financial
|
•
|
Entered into a Loan and Guarantee agreement with the United States Department of the Treasury ("Treasury") under the Loan Program of the CARES Act which gives us access to loans in an aggregate principal amount of up to $1.14 billion until March 26, 2021, which is discussed further below. We made a drawing of $115 million under the Loan Program on September 29, 2020.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||
|
2020
|
2019
|
|
2020
|
2019
|
||||||||
Passenger revenue
|
|
|
|
|
|
||||||||
Passenger travel
|
$
|
420
|
|
$
|
1,914
|
|
|
$
|
1,973
|
|
$
|
5,563
|
|
Loyalty revenue - air transportation
|
25
|
|
91
|
|
|
153
|
|
275
|
|
||||
Other revenue
|
|
|
|
|
|
||||||||
Loyalty revenue
|
38
|
|
54
|
|
|
127
|
|
146
|
|
||||
Other revenue
|
9
|
|
27
|
|
|
42
|
|
79
|
|
||||
Total revenue
|
$
|
492
|
|
$
|
2,086
|
|
|
$
|
2,295
|
|
$
|
6,063
|
|
|
September 30, 2020
|
|
December 31, 2019
|
||||
Air traffic liability - passenger travel
|
$
|
1,020
|
|
|
$
|
929
|
|
Air traffic liability - loyalty program (air transportation)
|
703
|
|
|
661
|
|
||
Deferred revenue
|
42
|
|
|
10
|
|
||
Total
|
$
|
1,765
|
|
|
$
|
1,600
|
|
Balance at December 31, 2019
|
$
|
661
|
|
TrueBlue® points redeemed
|
(153
|
)
|
|
TrueBlue® points earned and sold
|
195
|
|
|
Balance at September 30, 2020
|
$
|
703
|
|
|
|
||
Balance at December 31, 2018
|
$
|
580
|
|
TrueBlue® points redeemed
|
(275
|
)
|
|
TrueBlue® points earned and sold
|
342
|
|
|
Balance at September 30, 2019
|
$
|
647
|
|
|
September 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value(2)
|
|
Carrying Value
|
|
Estimated Fair Value(2)
|
||||||||
Public Debt
|
|
|
|
|
|
|
|
||||||||
Fixed rate special facility bonds, due through 2036
|
$
|
42
|
|
|
$
|
43
|
|
|
$
|
42
|
|
|
$
|
46
|
|
Fixed rate enhanced equipment notes:
|
|
|
|
|
|
|
|
||||||||
2019-1 Series AA, due through 2032
|
574
|
|
|
414
|
|
|
581
|
|
|
586
|
|
||||
2019-1 Series A, due through 2028
|
179
|
|
|
146
|
|
|
181
|
|
|
186
|
|
||||
2019-1 Series B, due through 2027
|
114
|
|
|
142
|
|
|
—
|
|
|
—
|
|
||||
2020-1 Series A, due through 2032
|
628
|
|
|
611
|
|
|
—
|
|
|
—
|
|
||||
2020-1 Series B, due through 2028
|
170
|
|
|
213
|
|
|
—
|
|
|
—
|
|
||||
Non-Public Debt
|
|
|
|
|
|
|
|
||||||||
Fixed rate enhanced equipment notes, due through 2023
|
114
|
|
|
115
|
|
|
133
|
|
|
141
|
|
||||
Floating rate equipment notes, due through 2028
|
164
|
|
|
150
|
|
|
201
|
|
|
207
|
|
||||
Fixed rate equipment notes, due through 2028
|
935
|
|
|
920
|
|
|
1,107
|
|
|
1,201
|
|
||||
Floating rate term loan credit facility, due through 2024
|
709
|
|
|
750
|
|
|
—
|
|
|
—
|
|
||||
Unsecured CARES Act Payroll Support Program loan, due through 2030
|
259
|
|
|
192
|
|
|
—
|
|
|
—
|
|
||||
Secured CARES Act Loan, due through 2025
|
105
|
|
|
100
|
|
|
—
|
|
|
—
|
|
||||
2020 sale-leaseback transactions, due through 2024
|
235
|
|
|
262
|
|
|
—
|
|
|
—
|
|
||||
Citibank line of credit, due through 2023
|
546
|
|
|
520
|
|
|
—
|
|
|
—
|
|
||||
Total(1)
|
$
|
4,774
|
|
|
$
|
4,578
|
|
|
$
|
2,245
|
|
|
$
|
2,367
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net (loss) income
|
$
|
(393
|
)
|
|
$
|
187
|
|
|
$
|
(981
|
)
|
|
$
|
408
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average basic shares
|
272.4
|
|
|
294.0
|
|
|
274.3
|
|
|
300.1
|
|
||||
Effect of dilutive securities
|
—
|
|
|
1.9
|
|
|
—
|
|
|
1.7
|
|
||||
Weighted average diluted shares
|
272.4
|
|
|
295.9
|
|
|
274.3
|
|
|
301.8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(1.44
|
)
|
|
$
|
0.63
|
|
|
$
|
(3.58
|
)
|
|
$
|
1.36
|
|
Diluted
|
$
|
(1.44
|
)
|
|
$
|
0.63
|
|
|
$
|
(3.58
|
)
|
|
$
|
1.35
|
|
|
Jet fuel call spread option agreements
|
|
Fourth Quarter 2020
|
25
|
%
|
|
September 30, 2020
|
|
December 31, 2019
|
||||
Fuel derivatives
|
|
|
|
||||
Asset fair value recorded in prepaid expense and other(1)
|
$
|
—
|
|
|
$
|
8
|
|
Longest remaining term (months)
|
3
|
|
|
6
|
|
||
Hedged volume (barrels, in thousands)
|
680
|
|
|
2,112
|
|
||
Estimated amount of existing losses (gains) expected to be reclassified into earnings in the next 12 months
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Fuel derivatives
|
|
|
|
|
|
|
|
||||||||
Hedge effectiveness losses recognized in aircraft fuel expense
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
4
|
|
Losses on derivatives resulting from the discontinuance of hedge accounting recognized in interest income and other
|
1
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Hedge losses (gains) on derivatives recognized in comprehensive income
|
—
|
|
|
2
|
|
|
11
|
|
|
1
|
|
||||
Percentage of actual consumption economically hedged
|
27
|
%
|
|
—
|
%
|
|
25
|
%
|
|
5
|
%
|
|
September 30, 2020
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
1,330
|
|
|
$
|
160
|
|
|
$
|
—
|
|
|
$
|
1,490
|
|
Available-for-sale investment securities
|
—
|
|
|
569
|
|
|
—
|
|
|
569
|
|
|
December 31, 2019
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
611
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
641
|
|
Available-for-sale investment securities
|
—
|
|
|
351
|
|
|
—
|
|
|
351
|
|
||||
Aircraft fuel derivatives
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|
Aircraft Fuel Derivatives(1)(2)
|
|
Total
|
||||
Balance of accumulated (loss), at June 30, 2020
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
Reclassifications into earnings, net of deferred taxes of $(1)
|
1
|
|
|
1
|
|
||
Change in fair value, net of deferred taxes of $0
|
—
|
|
|
—
|
|
||
Balance of accumulated (loss), at September 30, 2020
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
||
Balance of accumulated income at June 30, 2019
|
$
|
1
|
|
|
$
|
1
|
|
Reclassifications into earnings, net of deferred taxes of $0
|
—
|
|
|
—
|
|
||
Change in fair value, net of deferred taxes of $0
|
(2
|
)
|
|
(2
|
)
|
||
Balance of accumulated (loss) at September 30, 2019
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
Aircraft Fuel Derivatives(1)(2)
|
|
Total
|
||||
Balance of accumulated income, at December 31, 2019
|
$
|
2
|
|
|
$
|
2
|
|
Reclassifications into earnings, net of deferred taxes of $(4)
|
7
|
|
|
7
|
|
||
Change in fair value, net of deferred taxes of $5
|
(11
|
)
|
|
(11
|
)
|
||
Balance of accumulated (loss), at September 30, 2020
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
|
|
|
||||
Balance of accumulated (loss), at December 31, 2018
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
Reclassifications into earnings, net of deferred taxes $(1)
|
3
|
|
|
3
|
|
||
Change in fair value, net of deferred taxes of $0
|
(1
|
)
|
|
(1
|
)
|
||
Balance of accumulated (loss), at September 30, 2019
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Special Items
|
|
|
|
|
|
|
|
||||||||
CARES Act payroll support grant recognition(1)
|
$
|
(332
|
)
|
|
$
|
—
|
|
|
$
|
(636
|
)
|
|
$
|
—
|
|
Fleet impairment(2)
|
56
|
|
|
—
|
|
|
258
|
|
|
—
|
|
||||
Severance and benefit costs(3)
|
58
|
|
|
—
|
|
|
58
|
|
|
—
|
|
||||
Losses on sale-leaseback transactions(4)
|
106
|
|
|
—
|
|
|
106
|
|
|
—
|
|
||||
Embraer E190 fleet transition costs(5)
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
6
|
|
||||
Union contract costs(6)
|
—
|
|
|
3
|
|
|
—
|
|
|
8
|
|
||||
Total
|
$
|
(112
|
)
|
|
$
|
—
|
|
|
$
|
(214
|
)
|
|
$
|
14
|
|
•
|
Introduced "Safety from the Ground Up", an initiative with a multi-layer approach that encompasses enhanced safety and cleaning measures on our flights, at our airports, and in our offices;
|
•
|
Instituted temperature checks for our customer-facing and support center crewmembers;
|
•
|
Updated our sick leave policy to provide up to 14 days of paid sick leave for crewmembers who have been diagnosed with COVID-19 or are required to quarantine;
|
•
|
Implemented a framework for internal contact tracing, crewmember notification, and a return to work clearance process for all crewmembers, wherever they may be located;
|
•
|
Required face coverings for all crewmembers while boarding, in flight, and when physical distancing cannot be maintained;
|
•
|
Administered more frequent disinfecting of common surfaces and areas with high touchpoints in our facilities;
|
•
|
Enhanced daily and overnight cleaning of our aircraft and all facilities, using electrostatic spraying of disinfectant in the cabins of aircraft parked overnight at selected focus cities;
|
•
|
Required customers to wear face coverings during check-in, boarding, and inflight;
|
•
|
Limited the number of seats available to be sold on most flights; we plan to continue limiting the capacity on our flights to less than 70% through December 1, 2020;
|
•
|
Suspended group boarding and implemented a back-to-front boarding process to minimize passing in the aisle;
|
•
|
Eliminated layovers for crewmembers in New York City and worked with crew transportation companies to ensure physical distancing;
|
•
|
Implemented jump seat buffers on our flights to further promote physical distancing measures;
|
•
|
Provided enhanced flexibility to our customers by waiving change and cancel fees for customers with existing bookings made through February 28, 2021, while also extending the expiration date of travel credits issued between February 27, 2020 and June 30, 2020 for flight purchases to 24 months; and
|
•
|
Announced our partnership with Vault Health to provide discounted at-home COVID-19 testing to customers with pending travel plans.
|
•
|
Adjustments in flying capacity to align with the expected demand.
|
•
|
Renegotiated service rates with business partners and extended payment terms.
|
•
|
Implemented salary reductions of 20% to 50% for our officers through September 30, 2020, and 10% to 20% in the fourth quarter of 2020.
|
•
|
Offered crewmembers voluntary time off and separation programs, with most departures for the separation program occurring during the third quarter.
|
•
|
Executed a new $1.0 billion 364-day delayed draw term loan agreement in March 2020 and immediately drew down on the facility for the full amount available. This term loan facility was repaid during the third quarter.
|
•
|
Borrowed on our existing $550 million revolving credit facility in April 2020.
|
•
|
Executed a $150 million pre-purchase arrangement of TrueBlue® points with our co-brand credit card partner in April 2020.
|
•
|
Suspended non-critical capital expenditure projects.
|
•
|
Amended our purchase agreement with Airbus which changed the timing of our Airbus A321 and A220 deliveries in May 2020.
|
•
|
Suspended share repurchases.
|
•
|
Obtained $963 million of government funding under Payroll Support Program of The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which is discussed further below.
|
•
|
Executed a $750 million term loan credit facility and immediately drew down on the facility for the full amount available in June 2020.
|
•
|
Entered into $445 million of sale-leaseback transactions; which is discussed further below.
|
•
|
Completed public placements of equipment notes in an aggregate principal amount of $923 million secured by 49 Airbus A321 aircraft in August 2020, which is discussed further in Note 3 to our condensed consolidated financial
|
•
|
Entered into a Loan and Guarantee agreement with the United States Department of the Treasury ("Treasury") under the Loan Program of the CARES Act which gives us access to loans in an aggregate principal amount of up to $1.14 billion until March 26, 2021, which is discussed further below. We made a drawing of $115 million under the Loan Program on September 29, 2020.
|
•
|
Third quarter system capacity decreased by 57.6% year over year.
|
•
|
Revenue decreased by $1.6 billion compared to the third quarter of 2019.
|
•
|
Operating revenue per available seat mile (RASM) for the three months ended September 30, 2020 decreased by 44.4% to 7.12 cents.
|
•
|
Operating expense for the three months ended September 30, 2020 decreased by 45.2% to $1.0 billion.
|
•
|
Operating expense per available seat mile (CASM) for the three months ended September 30, 2020 increased by 29.3% to 14.6 cents, due principally to lower capacity which reduced the number of available seat miles.
|
•
|
Our operating expense for the third quarter of 2020 included the effects of special items which were comprised of $332 million of CARES Act payroll support grants recognized as a contra-expense, $58 million of one-time costs associated with our voluntary crewmember separation programs, and $56 million of impairment charges on our Embraer E190 fleet. Special items did not have a material impact on our operating expenses for the third quarter of 2019. Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our operating expense decreased by 25.6% to $1.0 billion.
|
•
|
Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our cost per available seat mile (CASM ex-fuel)(1) increased by 75.7% to 14.64 cents.
|
•
|
Our reported loss per share for the third quarter of 2020 was $(1.44) compared to reported earnings per diluted share of $0.63 for the third quarter of 2019. Our results for the third quarter of 2020 and 2019 included the effects of special items. Excluding special items, our adjusted (loss) earnings per diluted share(1) for the third quarter of 2020 and 2019 were $(1.75) and $0.59, respectively.
|
•
|
We lowered our cash burn from approximately $8 million per day at the end of June to an average of approximately $6 million per during the third quarter of 2020.
|
(Revenues in millions; percent changes based on unrounded numbers)
|
Three Months Ended September 30,
|
|
Year-over-Year Change
|
||||||||||||
2020
|
|
2019
|
|
$
|
|
%
|
|||||||||
Passenger revenue
|
$
|
445
|
|
|
$
|
2,005
|
|
|
$
|
(1,560
|
)
|
|
(77.8
|
)%
|
|
Other revenue
|
47
|
|
|
81
|
|
|
(34
|
)
|
|
(42.0
|
)
|
|
|||
Total operating revenues
|
$
|
492
|
|
|
$
|
2,086
|
|
|
$
|
(1,594
|
)
|
|
(76.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Average Fare
|
$
|
206.73
|
|
|
$
|
181.26
|
|
|
$
|
25.47
|
|
|
14.1
|
%
|
|
Yield per passenger mile (cents)
|
15.10
|
|
|
14.39
|
|
|
0.71
|
|
|
4.9
|
|
|
|||
Passenger revenue per ASM (cents)
|
6.44
|
|
|
12.30
|
|
|
(5.86
|
)
|
|
(47.7
|
)
|
|
|||
Operating revenue per ASM (cents)
|
7.12
|
|
|
12.80
|
|
|
(5.68
|
)
|
|
(44.4
|
)
|
|
|||
Average stage length (miles)
|
1,313
|
|
|
1,132
|
|
|
181
|
|
|
16.0
|
|
|
|||
Revenue passengers (thousands)
|
2,151
|
|
|
11,061
|
|
|
(8,910
|
)
|
|
(80.6
|
)
|
|
|||
Revenue passenger miles (millions)
|
2,945
|
|
|
13,930
|
|
|
(10,985
|
)
|
|
(78.9
|
)
|
|
|||
Available Seat Miles (ASMs) (millions)
|
6,905
|
|
|
16,296
|
|
|
(9,391
|
)
|
|
(57.6
|
)
|
|
|||
Load Factor
|
42.6
|
%
|
|
85.5
|
%
|
|
|
|
(42.9
|
)
|
pts.
|
(in millions; per ASM data in cents; percent changes based on unrounded numbers)
|
Three Months Ended September 30,
|
|
Year-over-Year Change
|
|
Cents per ASM
|
||||||||||||||||||
2020
|
|
2019
|
|
$
|
|
%
|
|
2020
|
|
2019
|
|
% Change
|
|||||||||||
Aircraft fuel and related taxes
|
$
|
102
|
|
|
$
|
471
|
|
|
$
|
(369
|
)
|
|
(78.4
|
)%
|
|
1.47
|
|
|
2.89
|
|
|
(49.0
|
)%
|
Salaries, wages and benefits
|
482
|
|
|
580
|
|
|
(98
|
)
|
|
(16.9
|
)
|
|
6.98
|
|
|
3.56
|
|
|
96.1
|
|
|||
Landing fees and other rents
|
84
|
|
|
125
|
|
|
(41
|
)
|
|
(32.7
|
)
|
|
1.22
|
|
|
0.77
|
|
|
58.7
|
|
|||
Depreciation and amortization
|
127
|
|
|
134
|
|
|
(7
|
)
|
|
(5.0
|
)
|
|
1.84
|
|
|
0.82
|
|
|
124.2
|
|
|||
Aircraft rent
|
23
|
|
|
26
|
|
|
(3
|
)
|
|
(12.5
|
)
|
|
0.33
|
|
|
0.16
|
|
|
106.5
|
|
|||
Sales and marketing
|
24
|
|
|
74
|
|
|
(50
|
)
|
|
(68.3
|
)
|
|
0.34
|
|
|
0.46
|
|
|
(25.3
|
)
|
|||
Maintenance, materials and repairs
|
111
|
|
|
158
|
|
|
(47
|
)
|
|
(30.2
|
)
|
|
1.60
|
|
|
0.97
|
|
|
64.7
|
|
|||
Other operating expenses
|
167
|
|
|
271
|
|
|
(104
|
)
|
|
(38.1
|
)
|
|
2.43
|
|
|
1.66
|
|
|
46.0
|
|
|||
Special items
|
(112
|
)
|
|
—
|
|
|
(112
|
)
|
|
28,320.3
|
|
|
(1.61
|
)
|
|
—
|
|
|
66,968.7
|
|
|||
Total operating expenses
|
$
|
1,008
|
|
|
$
|
1,839
|
|
|
$
|
(831
|
)
|
|
(45.2
|
)%
|
|
14.60
|
|
|
11.29
|
|
|
29.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total operating expenses excluding special items(1)
|
$
|
1,120
|
|
|
$
|
1,839
|
|
|
$
|
(719
|
)
|
|
(39.1
|
)%
|
|
16.21
|
|
|
11.29
|
|
|
43.6
|
%
|
•
|
Contra-expense of $332 million, which represents the amount of CARES Act payroll support grants utilized during the period.
|
•
|
Impairment charges of $56 million on our Embraer E190 fleet.
|
•
|
Losses of $106 million related to sale-leaseback transactions.
|
•
|
One-time costs of $58 million, consisting of severance and health benefits, in connection with our voluntary separation programs.
|
(Revenues in millions; percent changes based on unrounded numbers)
|
Nine Months Ended September 30,
|
|
Year-over-Year Change
|
||||||||||||
2020
|
|
2019
|
|
$
|
|
%
|
|||||||||
Passenger revenue
|
$
|
2,126
|
|
|
$
|
5,838
|
|
|
$
|
(3,712
|
)
|
|
(63.6
|
)%
|
|
Other revenue
|
169
|
|
|
225
|
|
|
(56
|
)
|
|
(24.9
|
)
|
|
|||
Total operating revenues
|
$
|
2,295
|
|
|
$
|
6,063
|
|
|
$
|
(3,768
|
)
|
|
(62.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Average Fare
|
$
|
194.77
|
|
|
$
|
181.01
|
|
|
$
|
13.76
|
|
|
7.6
|
%
|
|
Yield per passenger mile (cents)
|
15.02
|
|
|
14.43
|
|
|
0.59
|
|
|
4.1
|
|
|
|||
Passenger revenue per ASM (cents)
|
8.78
|
|
|
12.22
|
|
|
(3.44
|
)
|
|
(28.1
|
)
|
|
|||
Operating revenue per ASM (cents)
|
9.48
|
|
|
12.69
|
|
|
(3.21
|
)
|
|
(25.3
|
)
|
|
|||
Average stage length (miles)
|
1,201
|
|
|
1,140
|
|
|
61
|
|
|
5.4
|
|
|
|||
Revenue passengers (thousands)
|
10,918
|
|
|
32,252
|
|
|
(21,334
|
)
|
|
(66.1
|
)
|
|
|||
Revenue passenger miles (millions)
|
14,153
|
|
|
40,446
|
|
|
(26,293
|
)
|
|
(65.0
|
)
|
|
|||
Available Seat Miles (ASMs) (millions)
|
24,209
|
|
|
47,762
|
|
|
(23,553
|
)
|
|
(49.3
|
)
|
|
|||
Load Factor
|
58.5
|
%
|
|
84.7
|
%
|
|
|
|
(26.2
|
)
|
pts.
|
(in millions; per ASM data in cents; percent changes based on unrounded numbers)
|
Nine Months Ended September 30,
|
|
Year-over-Year Change
|
|
Cents per ASM
|
||||||||||||||||||
2020
|
|
2019
|
|
$
|
|
%
|
|
2020
|
|
2019
|
|
% Change
|
|||||||||||
Aircraft fuel and related taxes
|
$
|
496
|
|
|
$
|
1,392
|
|
|
$
|
(896
|
)
|
|
(64.4
|
)%
|
|
2.05
|
|
|
2.92
|
|
|
(29.7
|
)%
|
Salaries, wages and benefits
|
1,560
|
|
|
1,731
|
|
|
(171
|
)
|
|
(9.9
|
)
|
|
6.44
|
|
|
3.62
|
|
|
77.8
|
|
|||
Landing fees and other rents
|
258
|
|
|
362
|
|
|
(104
|
)
|
|
(28.7
|
)
|
|
1.06
|
|
|
0.76
|
|
|
40.6
|
|
|||
Depreciation and amortization
|
407
|
|
|
385
|
|
|
22
|
|
|
5.5
|
|
|
1.68
|
|
|
0.81
|
|
|
108.1
|
|
|||
Aircraft rent
|
60
|
|
|
76
|
|
|
(16
|
)
|
|
(21.1
|
)
|
|
0.25
|
|
|
0.16
|
|
|
55.8
|
|
|||
Sales and marketing
|
84
|
|
|
215
|
|
|
(131
|
)
|
|
(61.0
|
)
|
|
0.35
|
|
|
0.45
|
|
|
(23.0
|
)
|
|||
Maintenance, materials and repairs
|
344
|
|
|
482
|
|
|
(138
|
)
|
|
(28.6
|
)
|
|
1.42
|
|
|
1.01
|
|
|
40.8
|
|
|||
Other operating expenses
|
560
|
|
|
833
|
|
|
(273
|
)
|
|
(32.7
|
)
|
|
2.32
|
|
|
1.74
|
|
|
32.7
|
|
|||
Special items
|
(214
|
)
|
|
14
|
|
|
(228
|
)
|
|
(1,674.9
|
)
|
|
(0.88
|
)
|
|
0.03
|
|
|
(3,207.0
|
)
|
|||
Total operating expenses
|
$
|
3,555
|
|
|
$
|
5,490
|
|
|
$
|
(1,935
|
)
|
|
(35.2
|
)%
|
|
14.69
|
|
|
11.50
|
|
|
27.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total operating expenses excluding special items(1)
|
$
|
3,769
|
|
|
$
|
5,476
|
|
|
$
|
(1,707
|
)
|
|
(31.2
|
)%
|
|
15.57
|
|
|
11.47
|
|
|
35.8
|
%
|
•
|
Contra-expense of $636 million, which represents the amount of CARES Act payroll support grants utilized during the period.
|
•
|
Impairment charges of $258 million on our Embraer E190 fleet.
|
•
|
Losses of $106 million related to sale-leaseback transactions.
|
•
|
One-time costs of $58 million, consisting of severance and health benefits, in connection with our voluntary separation programs.
|
|
Three Months Ended September 30,
|
|
Year-over-Year Change
|
|
Nine Months Ended September 30,
|
|
Year-over-Year Change
|
||||||||||||||||
(percent changes based on unrounded numbers)
|
2020
|
|
2019
|
|
%
|
|
2020
|
|
2019
|
|
%
|
||||||||||||
Operational Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue passengers (thousands)
|
2,151
|
|
|
11,061
|
|
|
(80.6
|
)
|
|
|
10,918
|
|
|
32,252
|
|
|
(66.1
|
)
|
|
||||
Revenue passenger miles (RPMs) (millions)
|
2,945
|
|
|
13,930
|
|
|
(78.9
|
)
|
|
|
14,153
|
|
|
40,446
|
|
|
(65.0
|
)
|
|
||||
Available seat miles (ASMs) (millions)
|
6,905
|
|
|
16,296
|
|
|
(57.6
|
)
|
|
|
24,209
|
|
|
47,762
|
|
|
(49.3
|
)
|
|
||||
Load factor
|
42.6
|
%
|
|
85.5
|
%
|
|
(42.9
|
)
|
pts
|
|
58.5
|
%
|
|
84.7
|
%
|
|
(26.2
|
)
|
pts
|
||||
Aircraft utilization (hours per day)
|
4.2
|
|
|
11.9
|
|
|
(64.7
|
)
|
|
|
5.5
|
|
|
11.9
|
|
|
(53.8
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average fare
|
$
|
206.73
|
|
|
$
|
181.26
|
|
|
14.1
|
|
|
|
$
|
194.77
|
|
|
$
|
181.01
|
|
|
7.6
|
|
|
Yield per passenger mile (cents)
|
15.10
|
|
|
14.39
|
|
|
4.9
|
|
|
|
15.02
|
|
|
14.43
|
|
|
4.1
|
|
|
||||
Passenger revenue per ASM (cents)
|
6.44
|
|
|
12.30
|
|
|
(47.7
|
)
|
|
|
8.78
|
|
|
12.22
|
|
|
(28.1
|
)
|
|
||||
Operating revenue per ASM (cents)
|
7.12
|
|
|
12.80
|
|
|
(44.4
|
)
|
|
|
9.48
|
|
|
12.69
|
|
|
(25.3
|
)
|
|
||||
Operating expense per ASM (cents)
|
14.60
|
|
|
11.29
|
|
|
29.3
|
|
|
|
14.69
|
|
|
11.50
|
|
|
27.8
|
|
|
||||
Operating expense per ASM, excluding fuel(1)
|
14.64
|
|
|
8.33
|
|
|
75.7
|
|
|
|
13.40
|
|
|
8.48
|
|
|
57.9
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Departures
|
32,124
|
|
|
94,191
|
|
|
(65.9
|
)
|
|
|
128,315
|
|
|
276,467
|
|
|
(53.6
|
)
|
|
||||
Average stage length (miles)
|
1,313
|
|
|
1,132
|
|
|
16.0
|
|
|
|
1,201
|
|
|
1,140
|
|
|
5.4
|
|
|
||||
Average number of operating aircraft during period
|
262.9
|
|
|
253.2
|
|
|
3.8
|
|
|
|
261.3
|
|
|
253.1
|
|
|
3.2
|
|
|
||||
Average fuel cost per gallon, including fuel taxes
|
$
|
1.23
|
|
|
$
|
2.06
|
|
|
(40.4
|
)
|
|
|
$
|
1.60
|
|
|
$
|
2.09
|
|
|
(23.3
|
)
|
|
Fuel gallons consumed (millions)
|
83
|
|
|
229
|
|
|
(63.7
|
)
|
|
|
310
|
|
|
666
|
|
|
(53.5
|
)
|
|
||||
Average number of full-time equivalent crewmembers
|
|
|
|
|
|
|
|
16,004
|
|
|
18,528
|
|
|
|
|
•
|
Adjustments in flying capacity to align with the expected demand.
|
•
|
Renegotiated service rates with business partners and extended payment terms.
|
•
|
Implemented salary reductions of 20% to 50% for our officers through September 30, 2020, and 10% to 20% in the fourth quarter of 2020.
|
•
|
Offered crewmembers voluntary time off and separation programs, with most departures for the separation program occurring in the third quarter.
|
•
|
Executed a new $1.0 billion 364-day delayed draw term loan agreement in March 2020 and immediately drew down on the facility for the full amount available. This term loan facility was repaid during the third quarter.
|
•
|
Borrowed on our existing $550 million revolving credit facility in April 2020.
|
•
|
Executed a $150 million pre-purchase arrangement of TrueBlue® points with our co-brand credit card partner in April 2020.
|
•
|
Suspended non-critical capital expenditure projects.
|
•
|
Amended our purchase agreement with Airbus which changed the timing of our Airbus A321 and A220 deliveries in May 2020.
|
•
|
Suspended share repurchases.
|
•
|
Obtained $963 million of funding under Payroll Support Program of the CARES Act.
|
•
|
Executed a $750 million term loan credit facility and immediately drew down on the facility for the full amount available in June 2020.
|
•
|
Entered into $445 million of sale-leaseback transactions; which is discussed further below.
|
•
|
Completed public placements of equipment notes in an aggregate principal amount of $923 million secured by 49 Airbus A321 aircraft in August 2020, which is discussed further in Note 3 to our condensed consolidated financial statements. The net proceeds were primarily used to repay the outstanding borrowings under the 364-day delayed draw term loan facility that was due to be repaid in March 2021.
|
•
|
Entered into a Loan and Guarantee Agreement with the United States Department of the Treasury ("Treasury") under the Loan Program of the CARES Act which gives us access to loans in an aggregate principal amount of up to $1.14 billion until March 26, 2021, which is discussed further below. We made a drawing of $115 million under the Loan Program on September 29, 2020.
|
•
|
Net proceeds of $913 million from the public placements of equipment notes;
|
•
|
Net proceeds of $259 million and $19 million from the issuance of unsecured term loan and warrants, respectively, in connection with the Payroll Support Program under the CARES Act;
|
•
|
Net proceeds of $105 million and $9 million from the issuance of secured term loan and warrants, respectively, in connection with the Loan Program under the CARES Act; and
|
|
Payments due in
|
||||||||||||||||||||||||||
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||||
Debt and finance lease obligations(1)
|
$
|
5.7
|
|
|
$
|
0.1
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
$
|
1.2
|
|
|
$
|
1.1
|
|
|
$
|
2.1
|
|
Operating lease obligations
|
1.2
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|
0.6
|
|
|||||||
Flight equipment purchase obligations(2)
|
7.8
|
|
|
0.2
|
|
|
1.0
|
|
|
0.9
|
|
|
1.7
|
|
|
1.9
|
|
|
2.1
|
|
|||||||
Other obligations(3)
|
2.6
|
|
|
0.1
|
|
|
0.3
|
|
|
0.4
|
|
|
0.4
|
|
|
0.4
|
|
|
1.0
|
|
|||||||
Total
|
$
|
17.3
|
|
|
$
|
0.4
|
|
|
$
|
2.1
|
|
|
$
|
2.1
|
|
|
$
|
3.4
|
|
|
$
|
3.5
|
|
|
$
|
5.8
|
|
Year
|
Airbus A321neo
|
|
Airbus A220
|
|
Total
|
2020
|
2
|
|
1
|
|
3
|
2021
|
8
|
|
7
|
|
15
|
2022
|
3
|
|
8
|
|
11
|
2023
|
11
|
|
19
|
|
30
|
2024
|
13
|
|
22
|
|
35
|
2025
|
11
|
|
12
|
|
23
|
2026
|
12
|
|
1
|
|
13
|
2027
|
14
|
|
—
|
|
14
|
Total
|
74
|
|
70
|
|
144
|
NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
|
|||||||||||||||||||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||||||||||
($ in millions; per ASM data in cents)
|
$
|
|
per ASM
|
|
$
|
|
per ASM
|
|
$
|
|
per ASM
|
|
$
|
|
per ASM
|
||||||||||||||||
Total operating expenses
|
$
|
1,008
|
|
|
$
|
14.60
|
|
|
$
|
1,839
|
|
|
$
|
11.29
|
|
|
$
|
3,555
|
|
|
$
|
14.69
|
|
|
$
|
5,490
|
|
|
$
|
11.50
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Aircraft fuel and related taxes
|
102
|
|
|
1.47
|
|
|
471
|
|
|
2.89
|
|
|
496
|
|
|
2.05
|
|
|
1,392
|
|
|
2.92
|
|
||||||||
Other non-airline expenses
|
7
|
|
|
0.10
|
|
|
10
|
|
|
0.07
|
|
|
29
|
|
|
0.12
|
|
|
32
|
|
|
0.07
|
|
||||||||
Special items
|
(112
|
)
|
|
(1.61
|
)
|
|
—
|
|
|
—
|
|
|
(214
|
)
|
|
(0.88
|
)
|
|
14
|
|
|
0.03
|
|
||||||||
Operating expenses, excluding fuel
|
$
|
1,011
|
|
|
$
|
14.64
|
|
|
$
|
1,358
|
|
|
$
|
8.33
|
|
|
$
|
3,244
|
|
|
$
|
13.40
|
|
|
$
|
4,052
|
|
|
$
|
8.48
|
|
NON-GAAP FINANCIAL MEASURE
|
|||||||||||||||
RECONCILIATION OF OPERATING EXPENSE, INCOME BEFORE TAXES, NET INCOME AND EARNINGS PER SHARE
EXCLUDING SPECIAL ITEMS AND GAIN ON EQUITY METHOD INVESTMENTS
|
|||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(in millions, except per share amounts)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Total operating revenues
|
$
|
492
|
|
|
$
|
2,086
|
|
|
$
|
2,295
|
|
|
$
|
6,063
|
|
|
|
|
|
|
|
|
|
||||||||
Total operating expenses
|
$
|
1,008
|
|
|
$
|
1,839
|
|
|
$
|
3,555
|
|
|
$
|
5,490
|
|
Less: Special items
|
(112
|
)
|
|
—
|
|
|
(214
|
)
|
|
14
|
|
||||
Total operating expenses excluding special items
|
$
|
1,120
|
|
|
$
|
1,839
|
|
|
$
|
3,769
|
|
|
$
|
5,476
|
|
|
|
|
|
|
|
|
|
||||||||
Operating (loss) income
|
$
|
(516
|
)
|
|
$
|
247
|
|
|
$
|
(1,260
|
)
|
|
$
|
573
|
|
Add back: Special items
|
(112
|
)
|
|
—
|
|
|
(214
|
)
|
|
14
|
|
||||
Operating (loss) income excluding special items
|
$
|
(628
|
)
|
|
$
|
247
|
|
|
$
|
(1,474
|
)
|
|
$
|
587
|
|
|
|
|
|
|
|
|
|
||||||||
Operating margin excluding special items
|
(127.6
|
)%
|
|
11.8
|
%
|
|
(64.2
|
)%
|
|
9.7
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
(Loss) income before income taxes
|
$
|
(578
|
)
|
|
$
|
254
|
|
|
$
|
(1,381
|
)
|
|
$
|
548
|
|
Add back: Special items
|
(112
|
)
|
|
—
|
|
|
(214
|
)
|
|
14
|
|
||||
Less: Gain on equity method investments
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||
(Loss) income before income taxes excluding special items and gain on equity method investments
|
$
|
(690
|
)
|
|
$
|
239
|
|
|
$
|
(1,595
|
)
|
|
$
|
547
|
|
|
|
|
|
|
|
|
|
||||||||
Pre-tax margin excluding special items and gain on equity method investments
|
(140.1
|
)%
|
|
11.4
|
%
|
|
(69.5
|
)%
|
|
9.0
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(393
|
)
|
|
$
|
187
|
|
|
$
|
(981
|
)
|
|
$
|
408
|
|
Add back: Special items
|
(112
|
)
|
|
—
|
|
|
(214
|
)
|
|
14
|
|
||||
Less: Income tax (expense) benefit related to special items
|
(28
|
)
|
|
—
|
|
|
(53
|
)
|
|
3
|
|
||||
Less: Gain on equity method investments
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||
Less: Income tax (expense) related to gain on equity method investments
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
||||
Net (loss) income excluding special items and gain on equity method investments
|
$
|
(477
|
)
|
|
$
|
176
|
|
|
$
|
(1,142
|
)
|
|
$
|
408
|
|
|
|
|
|
|
|
|
|
(Loss) Earnings Per Common Share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(1.44
|
)
|
|
$
|
0.63
|
|
|
$
|
(3.58
|
)
|
|
$
|
1.36
|
|
Add back: Special items, net of tax
|
(0.31
|
)
|
|
—
|
|
|
(0.58
|
)
|
|
0.03
|
|
||||
Less: Gain on equity method investments, net of tax
|
—
|
|
|
0.04
|
|
|
—
|
|
|
0.04
|
|
||||
Basic excluding special items and gain on equity method investments
|
$
|
(1.75
|
)
|
|
$
|
0.59
|
|
|
$
|
(4.16
|
)
|
|
$
|
1.35
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted
|
$
|
(1.44
|
)
|
|
$
|
0.63
|
|
|
$
|
(3.58
|
)
|
|
$
|
1.35
|
|
Add back: Special items, net of tax
|
(0.31
|
)
|
|
—
|
|
|
(0.58
|
)
|
|
0.03
|
|
||||
Less: Gain on equity method investments, net of tax
|
—
|
|
|
0.04
|
|
|
—
|
|
|
0.03
|
|
||||
Diluted excluding special items and gain on equity method investments
|
$
|
(1.75
|
)
|
|
$
|
0.59
|
|
|
$
|
(4.16
|
)
|
|
$
|
1.35
|
|
NON-GAAP FINANCIAL MEASURE
|
||||||||
RECONCILIATION OF FREE CASH FLOW
|
||||||||
|
|
Nine Months Ended September 30,
|
||||||
(in millions)
|
|
2020
|
|
2019
|
||||
Net cash (used in) provided by operating activities
|
|
$
|
(223
|
)
|
|
$
|
1,198
|
|
Less: Capital expenditures
|
|
(529
|
)
|
|
(505
|
)
|
||
Less: Predelivery deposits for flight equipment
|
|
(67
|
)
|
|
(172
|
)
|
||
Free Cash Flow
|
|
$
|
(819
|
)
|
|
$
|
521
|
|
Exhibit Number
|
|
Exhibit
|
4.1*
|
|
|
4.1(a)*
|
|
|
4.2
|
|
|
4.2(a)
|
|
|
4.2(b)
|
|
|
4.2(c)
|
|
|
4.2(d)***
|
|
|
4.2(e)***
|
|
|
4.2(f)***
|
|
|
4.2(g)***,
****
|
|
|
4.2(h)***,
****
|
|
|
4.2(i)***,
*****
|
|
|
4.2(j)***,
*****
|
|
|
4.2(k)
|
|
|
4.2(l)****
|
|
4.2(m)*****
|
|
|
4.3
|
|
|
4.3(a)
|
|
|
4.3(b)***
|
|
|
4.3(c)***
|
|
|
4.3(d)***, ******
|
|
|
4.3(e)******
|
|
|
4.3(f)
|
|
Form of Series 2019-1 Equipment Notes (incorporated by reference to Exhibit 4.11 to our Form 8-K filed on November 12, 2019, as amended by Exhibit 4.7 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020)
|
4.3(g)******
|
|
|
10.1*†
|
|
|
10.2*
|
|
|
10.3*,
***
|
|
|
10.4*,
***
|
|
|
10.5*,
***
|
|
|
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
|
104
|
|
Cover Page Interactive Data File (embedded within the Inline XBRL document)
|
†
|
|
Pursuant to Item 601(a)(5) of Regulation S-K, schedules have been omitted and will be furnished on a supplemental basis to the Securities and Exchange Commission upon request.
|
*
|
|
Filed herewith.
|
**
|
|
Furnished herewith.
|
***
|
|
Certain confidential information contained in this exhibit, marked by [***], has been omitted because it (i) is not material and (ii) would likely cause competitive harm to the Company if it were to be publicly disclosed.
|
****
|
|
Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 4.2(l), incorporated herein by reference to Exhibit 99.1 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020, contains a list of documents applicable to each Aircraft (other than Aircraft bearing Registration No. N946JL) that relate to the offering of the JetBlue Airways Pass Through Certificates, Series 2020-1, which documents are substantially identical to those which were filed as Exhibits 4.9 and 4.10 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020, incorporated by reference herein, except for the information identifying such Aircraft in question and various information relating to the principal amounts of the Equipment Notes relating to such Aircraft. Exhibit 99.1 sets forth the details by which such documents differ from the corresponding representative sample of documents filed as Exhibits 4.9 and 4.10 with respect to Aircraft bearing Registration No. N946JL.
|
*****
|
|
Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 4.2(m), incorporated herein by reference to Exhibit 99.2 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020, contains a list of documents applicable to each Aircraft (other than Aircraft bearing Registration No. N2002J) that relate to the offering of the JetBlue Airways Pass Through Certificates, Series 2020-1, which documents are substantially identical to those which were filed as Exhibits 4.11 and 4.12 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020, incorporated by reference herein, except for the information identifying such Aircraft in question and various information relating to the principal amounts of the Equipment Notes relating to such Aircraft. Exhibit 99.2 sets forth the details by which such documents differ from the corresponding representative sample of documents filed as Exhibits 4.11 and 4.12 with respect to Aircraft bearing Registration No. N2002J.
|
******
|
|
Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 4.3(g), incorporated herein by reference to Exhibit 99.1 to our Current Report on Form 8-K dated August 28, 2020 and filed on August 28, 2020, contains a list of documents applicable to each Aircraft (other than Aircraft bearing Registration No. N976JT) that relate to the offering of the JetBlue Airways Pass Through Certificates, Series 2019-1B, which documents are substantially identical to those which were filed as Exhibits 4.6 and 4.7 to our Current Report on Form 8-K dated August 28, 2020 and filed on August 28, 2020, incorporated by reference herein, except for the information identifying such Aircraft in question and various information relating to the principal amounts of the Equipment Notes relating to such Aircraft. Exhibit 99.3 sets forth the details by which such documents differ from the corresponding representative sample of documents filed as Exhibits 4.6 and 4.7 with respect to Aircraft bearing Registration No. N976JT.
|
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|
JETBLUE AIRWAYS CORPORATION
|
||||
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|
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|
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(Registrant)
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||
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|
|||||
Date:
|
|
November 9, 2020
|
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|
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By:
|
|
/s/ Alexander Chatkewitz
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Vice President, Controller, and
Chief Accounting Officer
(Principal Accounting Officer)
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WARRANT AGREEMENT
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Page
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|
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Article I
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|
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Closing
|
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1.1
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Issuance
|
1
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1.2
|
Initial Closing; Warrant Closing Date.
|
1
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1.3
|
Interpretation
|
2
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Article II
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Representations and Warranties
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2.1
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Representations and Warranties of the Company
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3
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Article III
|
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Covenants
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3.1
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Commercially Reasonable Efforts
|
6
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3.2
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Expenses
|
7
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3.3
|
Sufficiency of Authorized Common Stock; Exchange Listing
|
7
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Article IV
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Additional Agreements
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4.1
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Investment
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8
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4.2
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Legends
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8
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4.3
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Certain Transactions
|
9
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4.4
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Transfer of Warrants and Warrant Shares.
|
9
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4.5
|
Registration Rights
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9
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4.6
|
Voting of Warrant Shares
|
20
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Article V
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Miscellaneous
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5.1
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Survival of Representations and Warranties
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20
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5.2
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Amendment
|
21
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5.3
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Waiver of Conditions
|
21
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5.4
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Governing Law: Submission to Jurisdiction, Etc.
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21
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5.5
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Notices
|
21
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5.6
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Definitions
|
22
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5.7
|
Assignment
|
22
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5.8
|
Severability
|
22
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5.9
|
No Third Party Beneficiaries
|
22
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|
ii
|
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Term
|
|
Location of Definition
|
Affiliate
|
|
Annex B
|
Agreement
|
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Recitals
|
Appraisal Procedure
|
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Annex B
|
Board of Directors
|
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2.1(i)
|
Business Combination
|
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Annex B
|
Business Day
|
|
Annex B
|
Capitalization Date
|
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2.1(b)
|
Closing
|
|
1.2(a)
|
Common Stock
|
|
Annex B
|
Company
|
|
Recitals
|
Company Reports
|
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2.1(j)(i)
|
Exchange Act
|
|
Annex B
|
Governmental Authority
|
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5.6(a)
|
Holder
|
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4.5(k)(i)
|
Indemnitee
|
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4.5(g)(i)
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Initial Closing
|
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1.2(a)
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Lien
|
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5.6(c)
|
Loan Agreement
|
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Recitals
|
Material Adverse Effect
|
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5.6(d)
|
Organizational Documents
|
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5.6(e)
|
Pending Underwritten Offering
|
|
4.5(l)
|
Piggyback Registration
|
|
4.5(a)(iv)
|
register; registered; registration
|
|
4.5(k)(ii)
|
Registrable Securities
|
|
4.5(k)(iii)
|
Registration Commencement Date
|
|
4.5(a)(i)
|
Registration Expenses
|
|
4.5(k)(iv)
|
Rule 144; Rule 144A; Rule 159A; Rule 405; Rule 415
|
|
4.5(k)(v)
|
SEC
|
|
2.1(c)
|
Securities Act
|
|
Annex B
|
Selling Expenses
|
|
4.5(k)(vi)
|
Shelf Registration Statement
|
|
4.5(a)(ii)
|
Special Registration
|
|
4.5(i)
|
Stockholder Proposals
|
|
3.1(b)
|
Subsidiary
|
|
5.6(f)
|
Transfer
|
|
4.4
|
Treasury
|
|
Recitals
|
Warrant Closing Date
|
|
1.2(a)
|
Warrants
|
|
Recitals
|
Warrant Shares
|
|
Annex B
|
If in book-entry form through the Depositary:
|
|
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|
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Depositary Account Number:
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Name of Agent Member:
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If in certificated form:
|
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Social Security Number or Other Identifying Number:
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Name:
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Street Address:
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City, State and Zip Code:
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|
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Any unexercised Warrants evidenced by the exercising Warrantholder’s interest in the Warrant:
|
||
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|
|
Social Security Number or Other Identifying Number:
|
|
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|
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Name:
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|
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Street Address:
|
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|
|
|
City, State and Zip Code:
|
|
|
|
|
JETBLUE AIRWAYS CORPORATION
|
|
|
|
By:
|
/s/ Steve Priest
|
|
Name: Steve Priest
|
|
Title: Chief Financial Officer
|
|
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Attest:
|
|
|
|
By:
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/s/ Ursula L Hurley
|
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Name: Ursula L. Hurley
|
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Title: Treasurer
|
EXHIBIT A
|
‑ Assignment and Assumption
|
EXHIBIT B-1
|
‑ Form of U.S. Tax Compliance Certificate
|
EXHIBIT B-2
|
‑ Form of U.S. Tax Compliance Certificate
|
EXHIBIT B-3
|
‑ Form of U.S. Tax Compliance Certificate
|
EXHIBIT B-4
|
‑ Form of U.S. Tax Compliance Certificate
|
EXHIBIT C
|
Form of Note
|
EXHIBIT D
|
Form of Direct Agreement
|
EXHIBIT E
|
Form of Borrowing Request
|
(1)
|
the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;
|
(2)
|
the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;
|
(3)
|
the sum of: (a) the alternate benchmark rate that has been selected by (y) so long as the Initial Lender is a Lender, the Initial Lender and (z) otherwise, the Required Lenders and the Borrower, in each case, as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment;
|
(1)
|
for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Required Lenders:
|
(a)
|
the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;
|
(b)
|
the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and
|
(2)
|
for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by (y) so long as the Initial Lender is a Lender, the Initial Lender and (z) otherwise, the Required Lenders and the Borrower, in each case, for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar- denominated syndicated credit facilities;
|
(1)
|
in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);
|
(2)
|
in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein; or
|
(3)
|
in the case of an Early Opt-in Election, (y) so long as the Initial Lender is a Lender, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Administrative Agent and (z) otherwise, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Administrative Agent, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders.
|
(1)
|
a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
|
(2)
|
a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the
|
(3)
|
a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
|
(1)
|
(x) so long as the Initial Lender is a Lender, the Initial Lender and (y) otherwise, the Required Lenders, in each case notifying to the Administrative Agent that the Initial Lender or the Required Lenders have determined that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and
|
(2)
|
(x) so long as the Initial Lender is a Lender, the election by the Initial Lender and (y) otherwise, the joint election by the Required Lenders and the Borrower to trigger a fallback
|
4.
|
Code. The Internal Revenue Code of 1986, as amended from time to time.
|
5.
|
Crewmember. An employee of any Participating Corporation.
|
11.
|
Final Notification Date. The 60th day following a Participant’s Severance Event.
|
i.
|
Termination of Employment of the Participant by the Company or any of its subsidiaries other than for Cause;
|
ii.
|
Termination of Employment by the Company and an eligible Participant as part of a strategic reorganization program or other Company action in which the Company offers a defined voluntary opt out program for a limited period of time; provided, however, for the purposes of this Article II.19.ii, no Participant can be a Named Executive Officer as identified in the applicable proxy statement and as identified pursuant to the regulations promulgated under the Securities Exchange Act of 1934, as amended; or
|
iii.
|
Termination of Employment by the Participant for Good Reason.
|
(a)
|
Termination of Employment by the Company or any of its subsidiaries for Cause;
|
(b)
|
Voluntary Termination of Employment by a Participant without Good Reason or otherwise provided in Article II.19(ii);
|
(c)
|
Termination of Employment due to a Participant’s retirement in accordance with Company policy, and not due to Good Reason;
|
(d)
|
Termination of Employment due to Death or Disability of a Participant;
|
(e)
|
a Participant fails to return to active employment with the Company or its subsidiary after a cessation of active employment due to Disability or a leave of absence;
|
(f)
|
a Participant is offered, but refuses, employment with the Company or its subsidiary in a position that provides the Participant with substantially equivalent base pay and job responsibilities, as determined by the Plan Administrator, in its sole and absolute discretion, except to the extent such employment would constitute Good Reason;
|
(g)
|
the sale of all or part of the business assets of the Company or any subsidiary of the Company or the division or business unit that employs the Participant if the Participant is offered employment by the acquirer of such assets with substantially equivalent base pay and job responsibilities, as determined by the Plan Administrator, in its sole and absolute discretion, except to the extent such employment would constitute Good Reason; or
|
(h)
|
upon the formation of a joint venture or other business entity in which the Company or a subsidiary will directly or indirectly own some outstanding voting or other ownership interest if a Participant is offered employment by the joint venture entity or other business entity with substantially equivalent base pay and job responsibilities, as determined by the Plan Administrator, in its sole and absolute discretion, except to the extent such employment would constitute Good Reason.
|
1.
|
Cash severance, which, pursuant to Article V, is payable as salary continuation, for the number of Months of Base Pay set forth below based on the Participant’s job level as of the Participant’s Termination Date:
|
a.
|
Top Executives: 3 Months of Base Pay for each full Year of Service, subject to a minimum of 12 Months of Base Pay and a maximum of 24 Months of Base Pay.
|
b.
|
SLT: 1.5 Months of Base Pay for each full Year of Service, subject to a minimum of 12 Months of Base Pay and a maximum of 18 Months of Base Pay; provided, however, for a SLT member who has been employed by a Participating Corporation for less than a year at the Termination of Employment, the minimum shall be 6 Months of Base Pay; provided further, for a SLT member who was a member of SLT as of the date of the adoption of the Plan amendment in June 2020, the maximum shall be 24 Months of Base Pay (subject to the SLT member being otherwise qualified for such amount based on Years of Service).
|
c.
|
Vice Presidents: 1 Month of Base Pay for each full Year of Service, subject to a minimum of 9 Months of Base Pay and a maximum of 12 Months of Base Pay; provided, however, for a Vice President who has been employed by a Participating Corporation for less than a year at the Termination of Employment, the minimum shall be 4 Months of Base Pay.
|
d.
|
Directors: 0.75 Month of Base Pay for each full Year of Service, subject to a minimum of 6 Months of Base Pay and a maximum of 12 Months of Base Pay; provided, however, for a Director who has been employed by a Participating Corporation for less than a year at the Termination of Employment, the minimum shall be 2 Months of Base Pay.
|
e.
|
Subsidiary Heads and Directors shall receive Director level benefits. Except for members of SLT who are otherwise eligible, no other subsidiary Crewmembers are eligible for benefits under this Plan.
|
2.
|
Pro-rated Average Annual Bonus is an additional amount of severance equal to the product of (x) the Participant’s Average Annual Bonus, multiplied by (y) a fraction, the numerator of which is the number of full consecutive months during the calendar year in which the Participant’s Termination Date occurs in which the Participant worked on behalf of a Participating Corporation more than 15 days and the denominator of which is 12.
|
3.
|
Outstanding Equity Awards.
|
a.
|
Stock Options. If the Participant holds any outstanding stock option awards under the Equity Plans, the terms and conditions of the applicable plan and award agreements shall control the exercise, vesting, termination and forfeiture (as applicable) of such awards.
|
b.
|
Restricted Stock Units. If the Participant holds any outstanding Restricted Stock Unit awards under the Equity Plans, the terms and conditions of the applicable plan and award agreements shall control the vesting, termination and forfeiture (as applicable) of such awards; provided, however, that any such Restricted Stock Units that are scheduled to vest within the 11 calendar months following the calendar month of the Participant’s Termination Date shall continue to vest and be settled in shares of JetBlue common stock as if the Participant were still employed by the Company; provided further, that any such continued vesting shall only occur if the Participant executes a Separation and Release Agreement acceptable to the Company in its sole discretion within the time prescribed for execution by the Separation and Release Agreement and such Separation and Release Agreement becomes fully irrevocable by its terms.
|
c.
|
Performance Share Units. If the Participant holds any performance share units under the Equity Plans, the terms and conditions of the applicable plan and award agreements shall control the vesting, termination and forfeiture (as applicable) of such awards.
|
d.
|
Other Equity Awards. If the Participant holds any outstanding equity awards not described in Article IV.3 above under the Equity Plans, the terms and conditions of the applicable plan and award agreements shall control the exercise, vesting, termination and forfeiture (as applicable) of such awards.
|
4.
|
Additional Benefits.
|
a.
|
Medical/Dental Benefits.
|
(A)
|
For the Severance Period up to a maximum of twelve months, the Participant shall be eligible to continue to receive medical and dental benefits on the terms and conditions as if the Participant were actively employed (which includes the Participant being responsible for the Crewmember allocated portion of the cost of medical and dental benefits).
|
(B)
|
Following the time frame set forth in Article IV.4.a(A) above, and provided that the Participant is eligible for and timely elects continuation coverage under the Company’s group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Participant, and where applicable, his or her spouse and eligible dependents, may receive monthly COBRA continuation coverage for so long as the Participant pays the applicable monthly COBRA cost of such continuation coverage.
|
(C)
|
Notwithstanding the foregoing, the Company reserves the right, in its discretion, to restructure the foregoing continuation coverage arrangements set forth in (A) and (B) above, in any manner reasonably intended to avoid penalties or negative tax consequences to the Company or a Participant, or to take advantage, in the Company’s discretion, of healthcare alternatives put into place at the federal or state level, as determined by the Company in its sole and absolute discretion. Coverage may be terminated during this period to the extent permitted by COBRA, and Participants and their spouses and eligible dependents will be subject to any amendments made to the applicable plans. A Participant’s period of “continuation coverage” for purposes of COBRA shall be deemed to commence immediately following the conclusion of the Participant’s Severance Period. Participants will receive additional information regarding COBRA continuation coverage at or near the conclusion of the Severance Period.
|
(D)
|
Should the Participant fail to timely sign and not revoke the Separation and Release Agreement provided for in Article V, the Company shall have no further obligation to the Participant (other than pursuant to COBRA), and all benefits under this Article
|
b.
|
Career Transition Consulting Services. Company-paid career counseling and career transition consulting services with a cost of up to:
|
(A)
|
$30,000 for Top Executives,
|
(B)
|
$20,000 for SLT and Vice Presidents, and
|
(C)
|
$10,000 for Directors,
|
5.
|
Withholding. All payments made under the Plan shall be subject to all applicable employment, withholding and supplemental taxes, including local and FICA.
|
6.
|
No additional benefits. In connection with a Participant’s Severance Event, the Participant shall have no rights to any benefits other than Accrued Obligations and specifically provided pursuant to the Plan. A Participant shall not receive any benefits dependent on being employed by the Company following the Termination Date and during any applicable Severance Period.
|
a.
|
shall have no rights to participate in any of the following, as may be in effect from time to time:
|
•
|
the JetBlue Political Action Committee;
|
•
|
the JetBlue Crewmember Crisis Fund;
|
•
|
the JetBlue Airways Corporation Crewmember Stock Purchase Plan;
|
b.
|
shall not be eligible to receive any new equity grants;
|
c.
|
shall no longer have or accrue Buddy Passes, and any Buddy Pass travel previously booked shall be cancelled effective as of the Termination Date;
|
d.
|
shall not be eligible to receive travel benefits such as TransitChek;
|
e.
|
shall not be eligible to vest in any equity or stock option awards other than pursuant to the applicable plan and award agreement or as provided above in IV.3;
|
f.
|
shall not be eligible to receive any disability benefits (long term or short term) or life insurance, other than pursuant to the terms of the applicable disability or life insurance
|
g.
|
shall not be eligible to participate in the dependent care flexible spending account;
|
h.
|
shall not continue to accrue seniority for any reason whatsoever, including post- employment travel benefit status; and
|
i.
|
shall have no rights to further actively participate in the Company’s retirement or savings plan.
|
2.
|
Payment of cash severance. Any cash severance amounts described in Article
|
a)
|
the specific reason or reasons for the adverse benefit determination;
|
(a)
|
the specific reason or reasons for the adverse benefit determination on
|
(b)
|
reference to specific provisions of the Plan on which the adverse benefit
|
11.
|
Section 409A.
|
(a)
|
To the fullest extent practicable, amounts and other benefits payable under the Plan are intended to be comply with or be exempt from Code Section 409A, and the Plan and any associated documents shall be interpreted and construed in any manner that establishes an exemption from (or compliance with) the requirements of Code Section 409A. Any terms of the Plan that are undefined or ambiguous shall be interpreted in a manner that complies with Code Section 409A to the extent necessary to comply with Code Section 409A. If for any reason, such as imprecision in drafting, any provision of the Plan does not accurately reflect its intended establishment of an exemption from (or compliance with) Code Section 409A, as demonstrated by consistent interpretations or other evidence of intent, such provision shall be considered ambiguous as to its exemption from (or compliance with) Code Section 409A and shall be interpreted in a manner consistent with such intent. If, notwithstanding the foregoing provisions of this paragraph, any provision of the Plan would cause a Participant to incur any additional tax or interest under Code Section 409A, the Company shall interpret or reform such provision in a manner intended to avoid the incurrence by the Participant of any such additional tax or interest; provided that the Company shall maintain, to the maximum extent practicable, the original
|
(b)
|
A termination of employment shall not be deemed to have occurred for purposes of any provision of the Plan providing for the payment of any amounts or benefits that may be considered nonqualified deferred compensation under Code Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A, and, for purposes of any such provision of the Plan, references to a “Termination of Employment,” “termination” or like terms shall mean such a separation from service. The determination of whether and when a separation from service has occurred for purposes of the Plan shall be made in accordance with the presumptions set forth in Section 1.409A-1(h) of the Treasury Regulations.
|
(c)
|
Any provision of the Plan to the contrary notwithstanding, if at the time of a Participant’s separation from service, the Company determines that the Participant is a “specified employee,” within the meaning of Code Section 409A, based on an identification date of December 31, then to the extent any payment or benefit that the Participant becomes entitled to under the Plan on account of such separation from service would be considered nonqualified deferred compensation under Code Section 409A, such payment or benefit shall be paid or provided at the date which is the earlier of (i) six (6) months and one day after such separation from service, and (ii) the date of the Participant’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this paragraph shall be paid or provided to the Participant in an immediate lump-sum and any remaining payments and benefits due under the Plan shall be paid or provided in accordance with the normal payment dates specified for them herein.
|
(d)
|
Any reimbursements and in-kind benefits provided under the Plan that constitute deferred compensation within the meaning of Code Section 409A shall be made or provided in accordance with the requirements of Code Section 409A, including, without limitation, that (i) in no event shall any fees, expenses or other amounts eligible to be reimbursed by the Company under the Plan be paid later than the last day of the calendar year next following the calendar year in which the applicable fees, expenses or other amounts were incurred; (ii) the amount of expenses eligible for reimbursement, or in-kind benefits that the Company is obligated to pay or provide, in any given calendar year shall not affect the expenses that the Company is obligated to reimburse, or the in-kind benefits that the Company is obligated to pay or provide, in any other calendar year, provided that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect; (iii) the Participant’s right to have the Company pay or provide such reimbursements and in-kind benefits may not be liquidated or exchanged for any other benefit; and (iv) in no event shall the Company’s obligations
|
(e)
|
For purposes of Code Section 409A, a Participant’s right to receive any payments under the Plan shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under the Plan specifies a payment period with reference to a number of days (for example, “payment shall be made within 30 days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company. In no event may the Participant, directly or indirectly, designate the calendar year of any payment to be made under the Plan, to the extent such payment is subject to Code Section 409A.
|
(f)
|
The Company makes no representation or warranty and shall have no liability to any Participant or any other person if any provisions of the Plan are determined to constitute deferred compensation subject to Code Section 409A but do not satisfy an exemption from, or the conditions of, Code Section 409A.
|
14.
|
No Tax Gross Ups; Section 280G.
|
(a)
|
Nothing in the Plan shall be construed to entitle any Participant to receive tax gross up payments of any kind in connection with payments or benefits received under the Plan.
|
(b)
|
Notwithstanding any provision of the Plan to the contrary, in the event that any amount or benefit to be paid or provided under the Plan or otherwise to a Participant constitutes a “parachute payment” within the meaning of Section 280G of the Code, and but for this provision, would be subject to the excise tax imposed by Section 4999 of the Code, then the totality of those amounts shall be either: (i) delivered in full, or
|
PLAN FUNDING:
|
An unfunded employee welfare benefit plan whereby the Company provides severance benefits from its general assets
|
1.
|
The Parties aim to deliver significant customer benefits by creating a marketing alliance (the “Northeast Alliance” or “NEA”) designed to optimize each Party’s network to enhance the experience of passengers flying to and from certain airports in New York and Boston.
|
2.
|
As part of the NEA, American and JetBlue desire to enter into an enhanced bilateral codeshare relationship as well as frequent flyer program arrangements;
|
3.
|
The NEA is intended to encourage (i) the growth and enhancement of NEA Services including those resulting from implementing permitted codesharing and frequent flyer arrangements, (ii) the potential addition of new NEA Routes or optimization of existing NEA Routes, (iii) the facilitation of connections between the Scheduled Passenger Services of each Party and its Affiliate and Franchisees on NEA Routes; and to further the foregoing goals, (iv) the temporary sharing, leasing or subleasing of slots and gates at airports for New York and Boston.
|
4.
|
To best achieve the benefits of the NEA and to set forth the terms and conditions of the NEA, the Parties will establish a system of net mutual growth incentive payments set forth in an accompanying Mutual Growth Incentive Agreement (the “MGIA”) between the Parties entered into on the same date as this Agreement; and
|
5.
|
Both Parties acknowledge and agree that each will retain full control over all aspects of their respective businesses, including setting pricing for their services and making decisions regarding their capacity and their route networks.
|
1
|
DEFINITIONS AND EFFECTIVENESS
|
1.1
|
Definitions. Terms with their initial letters capitalized have the meanings set forth in Appendix A unless they are defined in the body of this Agreement.
|
1.2
|
Related Agreements. In connection with this Agreement, the Parties are entering into the MGIA on the same date as this Agreement, and promptly following the date of this Agreement, the Parties will enter into the Codeshare Agreement, the Frequent Flyer Program Agreements, and a Special Prorate Agreement (individually or collectively, as the context requires, the “Related Agreements”). The Parties may enter into additional agreements in the future in furtherance of the goals of the NEA, such as a [***]. Any such agreements will specifically reference this Agreement and upon their effectiveness will also be deemed “Related Agreements” for purposes of this Agreement.
|
1.3
|
Review by Competent Authorities. While this Agreement will become effective on the Effective Date, the Parties acknowledge that this Agreement and the Related Agreements may require the Parties to provide notice to a Competent Authority and may be subject to regulatory review or further government inquiry. The Parties agree that they cannot fully implement the NEA until each Party in its reasonable judgment believes such regulatory review or further government inquiry by a Competent Authority regarding the NEA has been completed, and implementation of the NEA would not entail unreasonable regulatory or litigation conditions or risks. Following the Effective Date, the Parties agree to use commercially reasonable efforts to (i) consult and cooperate with each other, at each Party’s own expense unless otherwise agreed, in connection with any review, proceedings, or other actions brought by a Competent Authority or private party relating to implementation of this Agreement and the Related Agreements and (ii) work with Competent Authorities to resolve any issues, objections or concerns such Competent Authorities may have, and, if necessary, amend this Agreement and the Related Agreements and/or enter into a subsequent agreement to resolve any outstanding issues, objections or concerns, provided that any such amendment or agreement is commercially reasonable to each Party and does not adversely impact in any material respect the value either Party seeks in entering into this Agreement or the Related Agreements. The Parties acknowledge and agree that any such amendment and/or subsequent agreement potentially entered into by the Parties that may be required to resolve issues, objections or concerns raised by Competent Authorities would be of a different nature than this Agreement and the Related Agreements in their forms originally contemplated and therefore neither Party is under any obligation to implement such amendment or subsequent agreement if, based on the Party’s reasonable judgment, it would constitute a Burdensome Condition, and in such circumstance, may terminate this Agreement and the Related Agreements in full pursuant to Section 5.9. The foregoing sentence expressly supersedes any termination provision in any of the Related Agreements. The Parties further agree that following the Implementation Date that these consultation and cooperation provisions will continue in force to the extent there is a change in circumstances that would in the reasonable judgment of a Party entail unreasonable regulatory or litigation conditions or risks.
|
1.4
|
Implementation Date. Upon the Parties’ mutual determination that implementation of the NEA would not entail unreasonable regulatory or litigation conditions or risks, the Parties will execute a written acknowledgement, and the date of such acknowledgement will be the “Implementation Date.” The Parties will undertake within [***]following the Implementation Date all of the activities indicated in this Agreement and in the Related Agreements to achieve full implementation of the NEA that had not yet been undertaken pending resolution of any issues, objections or concerns of Competent
|
2
|
ELEMENTS OF THE NEA
|
2.1
|
Geographic Scope of the NEA. The NEA will cover all NEA Services. [***]
|
2.2
|
Governing Agreement. The Parties agree that this Agreement will be the governing agreement for the NEA and unless expressly set forth to the contrary in the Related Agreements, the terms and conditions of this Agreement shall supersede any contradictory or inconsistent provisions in any of the Related Agreements.
|
2.3
|
Mutual Growth Incentive Agreement. To achieve the procompetitive benefits of the NEA and encourage investments in and improvements to each Party’s network under the NEA, the Parties agree to enter into the MGIA on the same date as this Agreement. The Parties agree that the MGIA will not be implemented until the Implementation Date of the NEA in accordance with Section 1.4.
|
2.4
|
Codeshare Agreement. The Parties agree to enter into the Codeshare Agreement in order to establish their codeshare relationship.
|
2.5
|
Frequent Flyer Program Agreements. The Parties agree to enter into the Frequent Flyer Program Agreements to establish the Parties’ loyalty program participation on the terms set forth in Appendix B.
|
2.6
|
Special Prorate Agreement. The Parties agree to enter into a Special Prorate Agreement on terms to be agreed.
|
2.7
|
Lounge Access Agreement. The Parties may enter into the Lounge Access Agreement to provide lounge access to eligible passengers.
|
3
|
OPERATION OF THE NEA
|
3.1
|
Network Growth and Consultation.
|
3.1.1
|
The Parties agree to use commercially reasonable efforts to coordinate the NEA Services, particularly with regard to Codeshared Flights, in order to minimize connecting passenger waiting time and to maximize passenger convenience and service, subject to the Parties’ respective operational constraints and commercial considerations. Notwithstanding this Article 3 or Article 4, each Party will continue to make independent decisions regarding pricing, capacity and network management for its Scheduled Passenger Services and will provide guidance to its business personnel responsible for implementation and management of the NEA to ensure such independent decision-making.
|
3.1.2
|
Without limiting the generality of the foregoing, the Parties shall, for the benefit of consumers:
|
3.1.2.1
|
[***]
|
3.1.2.2
|
develop a process to ensure timely communication [***]to plan resources effectively; and
|
3.1.2.3
|
regularly review performance of the NEA Services. [***]each Party will maintain its independent decision-making authority.
|
3.2
|
[***]
|
3.3
|
[***]
|
3.4
|
Slot Usage and Maintenance.
|
3.4.1
|
Each Party may temporarily lease or sublease Slots to the other Party at the NEA Airports from time to time during the term of this Agreement pursuant to the terms and conditions set forth in Appendix C.
|
3.4.2
|
During the term of this Agreement, the Parties agree that:
|
3.4.2.1
|
[***];
|
3.4.2.2
|
[***]; and
|
3.4.2.3
|
[***].
|
3.4.3
|
During the term of this Agreement, the Parties agree that:
|
3.4.3.1
|
[***]
|
3.4.3.2
|
[***].
|
4
|
MANAGEMENT OF THE NEA
|
4.1
|
Management Committee.
|
4.1.1
|
The Parties agree to appoint a Management Committee to oversee the NEA on behalf of the Parties in the manner and to the extent set forth herein. The Management Committee will consist of four representatives, two appointed by each Party, at least one of which will be at a level in terms of functionality within each organization substantially equivalent to Vice President. A member of the Management Committee may resign at any time. Upon the resignation, removal, death or disability of a member of the Management Committee, the appointing Party will have the exclusive right to appoint another individual subject to the qualifications set forth above. Each Party agrees to provide the other Party with prompt written notice of any change in the identity of its respective appointees to the Management Committee.
|
4.1.2
|
The Parties agree to hold regular meetings of the Management Committee at least quarterly (in person or by telephone) at mutually agreed times and locations.
|
4.1.3
|
The Management Committee will be responsible for and is hereby authorized to (i) ensure that the Parties are implementing the NEA pursuant to the terms of this Agreement and the Related Agreements; (ii) measure and report on the success of the NEA in achieving significant consumer benefits and the other commercial benefits (including financial) the Parties reasonably expect to achieve from this Agreement and the Related Agreements; (iii) implement and monitor protocols to limit the exchange of competitively sensitive information; and (iv) resolve or escalate any disputes between the Parties related to this Agreement and the Related Agreements.
|
4.2
|
Functional Committees. The Management Committee may from time to time designate and appoint standing or temporary Functional Committees to be tasked with overseeing a variety of functional areas, such as [***] The Management Committee may authorize these Functional Committees to ensure that the Parties are implementing the NEA pursuant to the terms of this Agreement and the Related Agreements with regards to their designated functional area. Each Functional Committee may include any reasonable number of representatives appointed by each Party, provided that each Party will only have one collective vote regardless of the number of representatives it appoints to a Functional Committee. Each relevant Functional Committee will be the first point of contact for resolution of disputes between the Parties related to this Agreement and the Related Agreements. Any unresolved disputes will be escalated to the Management Committee for resolution. Each Functional Committee will implement and monitor protocols to limit the exchange of competitively sensitive information between the Parties.
|
5
|
TERM AND TERMINATION
|
5.1
|
Term. This Agreement will commence on the Effective Date and will continue in effect until the fifth anniversary of the Effective Date, provided, however, that if during such initial five year period, one Party notifies the other that it does not want to proceed to another term absent material changes to this Agreement or the Related Agreements, the Parties will discuss in good faith amending this Agreement or the Related Agreements to address such Party’s concerns. If the Parties cannot reach agreement on amending the Agreement or the Related Agreements, this Agreement will automatically be extended for an [***] If no such notice is given during the initial five years of the term, this Agreement will be automatically extended for an additional five years until the tenth anniversary of the Effective Date. Thereafter, unless terminated early in accordance with this Article 5, this Agreement will renew for additional successive five year terms (each, a “Renewal Term”), unless either Party notifies the other Party in writing at least [***]in advance of the end of the then-current term that it does not desire to renew this Agreement.
|
5.2
|
Termination Rights. Either Party will be entitled to terminate this Agreement in accordance with Sections 3.4.3, 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 5.10 or 10.13, and the Parties will enter into the wind-down period set forth in Section 5.11 upon the effective date of
|
5.3
|
Termination for Convenience. At any time [***], either Party may terminate this Agreement for convenience [***] written notice to the other Party, [***].
|
5.4
|
Termination for Cause. Either Party may terminate this Agreement [***] written notice to the other Party upon a Material Default by the other Party, unless within such [***], the other Party cures its Material Default to the Party’s reasonable satisfaction.
|
5.5
|
Termination for Force Majeure. Either Party may terminate this Agreement upon written notice to the other Party upon a Force Majeure Event with respect to the other Party, which Force Majeure Event (i) has prevented such other Party from performing its material obligations under this Agreement for at least [***], and (ii) has a material adverse effect on the terminating Party.
|
5.6
|
Termination for Change of Control or Acquisition. Commencing on the Implementation Date, the following terms shall apply:
|
5.6.1
|
[***]
|
5.6.2
|
[***]
|
5.7
|
Termination Fees.
|
5.7.1
|
Termination for Convenience Fee. In the event either Party terminates the Agreement in accordance with Section 5.3, the terminating Party will pay, by wire transfer of immediately available funds on the effective date of any such termination, the non-terminating Party a termination fee (a “Termination for Convenience Fee”) as follows, with the applicable year measured according to the date on which the termination notice is provided:
|
5.7.2
|
Exclusivity Termination Fee. In the event either Party terminates this Agreement pursuant to Section 5.4 due to the other Party’s breach of its exclusivity obligations under the Related Agreements, the breaching Party will pay, by wire transfer of immediately available funds on the effective date of any such termination, the non-breaching Party a termination fee (an “Exclusivity Termination Fee”) as follows, with the applicable year measured according to the date on which the termination notice is provided:
|
Agreement year measured from the Effective Date
|
Exclusivity Termination Fee
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
5.7.3
|
Subsequent Exclusivity Termination Fee. In the event (i) this Agreement is terminated pursuant to Section 5.3 for convenience, and (ii) the Party terminating the Agreement for convenience enters into a relationship with a third party within the earlier of (a) [***]and (b) the end of the then-current term if the Agreement had not been terminated that would have been a breach of such Party’s exclusivity obligations under the Related Agreements if entered into prior to termination of the Related Agreements, then in addition to the Termination for Convenience Fee, such Party shall also pay the other Party a Subsequent Exclusivity Termination Fee by wire transfer of immediately available funds on the effective date of any such relationship. The “Subsequent Exclusivity Termination Fee” paid by the terminating Party in accordance with this Section 5.7.3 shall be an amount equal to (a) the amount set forth in Section 5.7.2 applicable to the year in which the deemed breach of exclusivity occurs, minus (b) the amount of the Termination for Convenience Fee received by the non-terminating party.
|
5.7.4
|
M&A Termination Fee. In the event either party terminates due to a Change of Control or Acquisition in accordance with Section 5.6, the termination fee payable shall be an amount equal to (i) [***]if the Agreement is terminated pursuant to Section 5.6.1, or (ii) [***]if the Agreement is terminated pursuant to Section 5.6.2 (each, as applicable, the “M&A Termination Fee”).
|
5.7.5
|
Contract Rejection Fee. In the event either Party successfully rejects this Agreement and the Related Agreements in any bankruptcy proceeding, the rejecting Party will pay, by wire transfer of immediately available funds on the effective date of any such rejection, the other Party a termination fee (a “Contract Rejection Fee”) as follows, with the applicable year measured according to the date on which the rejection of this Agreement and the Related Agreements is effective:
|
5.7.6
|
The parties acknowledge and agree that the Termination Fees are intended to be a non-punitive, fair and partial approximation of both (a) the amounts the Party receiving the Termination Fee has incurred to engage in and foster the NEA (e.g., costs of implementing new Services) as well as (b) the anticipated benefits the Party receiving the Termination Fee would have been likely to receive. The Parties agree that the Termination Fee constitutes liquidated damages, and not a penalty, and the payment thereof in such circumstances is supported by due and sufficient consideration. Notwithstanding anything to the contrary set forth in this Agreement, if this Agreement is terminated by either Party and the Termination Fee is paid to the non-terminating Party pursuant to this Section 5.7, then the payment to the non-terminating Party of the Termination Fee shall be the sole and exclusive remedy of the non-terminating Party and its Affiliates and Franchisees for any loss suffered by such Party and its Affiliates and Franchisees as a result of a breach by the other Party or its Affiliates or Franchisees of its obligations under the Related Agreement and the terminating Party shall have no right to, and agrees not to seek any money damages, whether in contract, tort or otherwise from the non-terminating Party or its Affiliates or Franchisees with respect to a breach of the terminating Party’s obligations under the Related Agreements.
|
5.7.7
|
Each Party acknowledges and agrees that the covenants and agreements set forth in this Section 5.7 are an integral part of the transactions contemplated by this Agreement and without these covenants and agreements, the Parties would not have entered into this Agreement. Accordingly, if the Party that owes the Termination Fee fails to pay the Termination Fee in a timely manner, and, in order to obtain such payment, the receiving Party makes a claim that results in a judgment against the paying Party, the paying Party will also pay to the receiving Party that Party’s reasonable costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with such suit, together with interest at the prime rate of Citibank N.A. in effect on the date such payment was required to be made.
|
5.8
|
Termination for Insolvency or Cessation of Operation. In the event of the dissolution, liquidation, winding up (or equivalent action) of one of the parties, or the failure by one of the parties to maintain its corporate existence, either in whole or with respect to a substantial portion of its business, or the cessation of operations of one of the parties for a period of more than ten days, the suspension or revocation of a party’s authority to operate as an airline for a period of more than [***]the filing by a party for bankruptcy protection (such as a Chapter 7 or Chapter 11 filing, subject to the exception for solvent reorganization as set forth below), the other party will be entitled to terminate this Agreement immediately upon delivery of written notice. Notwithstanding the foregoing, if a party undergoes solvent reconstruction or reorganization following which the reconstructed or reorganized entity owns all or substantially all of the assets owned by such party prior to the solvent reconstruction or reorganization, the other party will only have a right to termination under this Section 5.8 if as part of the bankruptcy or insolvency process a Competent Authority mandates, or such party elects to make, material changes in the current or future business operations of the party engaged in such process and the impact of those mandated or elected changes has a material adverse effect on the other party in connection with the NEA (e.g., if the party undergoing such reconstruction or reorganization is required to reduce the amount of flying to the NEA Airports by a greater proportional amount than its overall reduction in flying across its network); provided, however, that if a party going through reorganization has only elected (and is not mandated) to make changes that the other party believes have such a material adverse effect, the party seeking to terminate the Agreement must first notify the electing party that it views such changes to have such material adverse effect and the parties will negotiate in good faith if alternatives would have a different outcome. If, as a result of such negotiations, the reorganizing party elects not to make such changes (or other changes that would have a material adverse effect on the non-reorganizing party), then the non-reorganizing party cannot terminate the Agreement under this Section 5.8.
|
5.9
|
Termination for Governmental Actions. In the event that, as a result of any action of a Competent Authority, the NEA cannot be fully implemented in accordance with Section 1.3, or any material part of this Agreement or any of the Related Agreements is, or becomes, or will be declared illegal, invalid or unenforceable in any jurisdiction, or as a result of such action a Party determines in its sole discretion that a Burdensome Condition has been created, the Parties agree to promptly discuss the impact of the action and whether or not there are commercially workable solutions to modify this Agreement or the Related Agreements, or take other action to remove or otherwise resolve such regulatory or governmental issues, or address such illegality, invalidity or unenforceability, in good faith. If either Party determines in its sole discretion that no modification or change to this Agreement or the Related Agreements is feasible or that any resulting Burdensome Condition cannot be adequately alleviated, that Party may terminate this Agreement upon 30 days’ prior written notice to the other Party (such notice to be given no later than 30 days after the date such Party declares that no modification or change is feasible or that the resulting Burdensome Condition cannot be adequately alleviated). Notwithstanding the foregoing, if a Competent Authority declares this Agreement or the Related Agreements to be illegal and there is no commercially feasible way to render the Agreement or the Related Agreements legal, then the Parties shall immediately terminate this Agreement and the Related Agreements.
|
5.10
|
Termination for Delay in Implementation. If the Implementation Date has not occurred by [***], either Party may terminate this Agreement and all Related Agreements in full upon written notice to the other Party.
|
5.11
|
Effect of Termination.
|
5.11.1
|
Upon termination, including pursuant to Section 3.4.3, each Party agrees to provide reasonable assistance to the other Party to wind down the NEA. The Agreement will be in effect during a wind-down period not to exceed 12 months but only for purposes of this Section 5.11. This wind-down period is intended solely to fulfill existing bookings under applicable Related Agreements, and to minimize disruption to operations and to passengers as a result of the termination. Promptly upon receipt or provision of notice of termination, each Party may immediately implement restrictions preventing further bookings on flights such Party operates and may immediately cease marketing flights operated by the other Party. Each Party will use its commercially reasonable efforts to minimize any disruption caused to customers and to mitigate the costs incurred by the Parties on termination or expiration of this Agreement. Each Party will return, terminate the lease of or otherwise end its use of, all slots of the other Party that it shared with, or leased or subleased from the other Party in accordance with Appendix C, as well as all gates of the other Party that it is then currently using. The Parties agree to discuss in good faith and implement as mutually-agreed any actions needed to effectuate the termination of this Agreement no later than at the end of the notice period.
|
5.11.2
|
The terms of the MGIA and all provisions of this Agreement will continue with respect to the NEA Services during any termination notice period (that period being the time from provision of notice until the completion of the time period stated in this Agreement associated with the nature of termination). In addition, the MGIA will survive for any period required to complete the audit, reconciliation and payment processes set forth in that agreement that apply to any period during which the NEA Services under this Agreement were flown.
|
5.11.3
|
If either Party terminates this Agreement, the MGIA will also automatically terminate (subject to Section 5.11.2). In addition, the terminating Party would have the option to terminate one or more of the other Related Agreements. If the non-terminating Party objects to the terminating Party’s election, it shall notify the terminating Party and the Parties agree to promptly discuss in good faith the termination of the Related Agreements at issue. If the Parties do not reach agreement within [***], any Related Agreements that either Party wants to terminate, will terminate, subject to the wind-down provisions in Section 5.11.1 above.
|
5.11.4
|
Sections 1.1, 5.7.3, 5.11, 6, 7, 8, 9, 10.1, 10.5, 10.8, 10.13, Appendix A, Appendix C and Appendix D will survive any termination or expiration of this Agreement.
|
6
|
CONFIDENTIALITY
|
6.1
|
Except for discussions with, and the provision of this Agreement and the other agreements contemplated hereby to, the relevant Competent Authorities and except as expressly
|
6.2
|
Public announcements relating to this Agreement and the Related Agreements will be made jointly by the Parties in an agreed format and at a time agreed by the Parties. Neither Party will unreasonably withhold its agreement to such format and timing.
|
6.3
|
Each Party acknowledges and agrees that each Affected Party will have no adequate remedy at law if there is a breach or threatened breach of this Article 6 and, accordingly, each Affected Party will be entitled to seek an injunction or other equitable or similar preventative relief available under the laws of any jurisdiction against the breaching or potentially breaching Party or its representatives for such breach or threatened breach. Nothing herein will be construed as a waiver of any other legal or equitable remedies which may be available to any Affected Party in the event of a breach or threatened breach of this Article 6 and any Affected Party may pursue any other such remedy, including the recovery of damages.
|
7
|
NOTICES
|
7.1
|
Any notice or communication required or permitted hereunder must be in writing and sent by (i) personal delivery, (ii) expedited delivery service with proof of delivery, or (iii) registered or certified mail, postage prepaid, or electronic transmission with confirmed receipt, addressed as follows:
|
To American:
|
American Airlines, Inc.
1 Skyview Drive
MD 8D202
Fort Worth, Texas 76155
U.S.A.
Attn: Managing Director - Strategic Alliances
Email: anmol.bhargava@aa.com
with a copy to:
American Airlines, Inc.
1 Skyview Drive
MD 8B503
Fort Worth, Texas 76155
U.S.A.
Attn: Deputy General Counsel
|
|
Email: legal.notices@aa.com
|
To JetBlue:
|
JetBlue Airways Corporation
27-01 Queens Plaza North
Long Island City, New York 11101
U.S.A.
Attn: Vice President Airline Partnerships
Email: B6AirlinePartnerships@jetblue.com
with a copy to:
JetBlue Airways Corporation
27-01 Queens Plaza North
Long Island City, New York 11101
U.S.A.
Attn: General Counsel
Email: Brandon.Nelson@jetblue.com
|
8
|
GOVERNING LAW; VENUE
|
8.1
|
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES ARISING OUT OF OR DIRECTLY RELATING TO THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THEIR CONFLICT OF LAWS PRINCIPLES) INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
|
8.2
|
Any dispute arising out of or in connection with the validity, interpretation, performance or consequences of this Agreement shall be referred to the competent federal district courts in New York City, New York.
|
8.3
|
In addition to any other remedy available to a Party under this Agreement, and without limiting Section 5.7, in the event of a dispute, the non-prevailing Party shall pay the prevailing Party’s reasonable costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with any suit or proceeding arising from such dispute.
|
9
|
CONSEQUENTIAL DAMAGES
|
9.1
|
EXCEPT (A) FOR DAMAGES ARISING FROM PERSONAL INJURY OR DEATH, (B) DAMAGES ARISING FROM FRAUD OR GROSS NEGLIGENCE; (C) FOR THE PAYMENT OF THE TERMINATION FEES AS SET FORTH IN SECTION 5.7, AND (D) FOR DAMAGES ARISING FROM THE BREACH OF ANY CONFIDENTIALITY, PRIVACY OR DATA SECURITY OBLIGATIONS, NEITHER PARTY NOR ITS AFFILIATES WILL BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF REVENUE, LOSS OF CONTRACT, LOSS OF ANTICIPATED SAVINGS, OR ANY INDIRECT OR CONSEQUENTIAL LOSS, WHETHER ARISING UNDER THIS AGREEMENT OR THE MUTUAL GROWTH INCENTIVE AGREEMENT, AND WHETHER BASED ON A CLAIM OF CONTRACT, TORT (INCLUDING NEGLIGENCE), BREACH OF STATUTORY DUTY, OR ARISING FROM ANY BREACH, OR FAILURE TO PERFORM OR IMPROPER PERFORMANCE UNDER THIS AGREEMENT OR THE MUTUAL GROWTH INCENTIVE AGREEMENT EVEN IF SUCH PARTY OR ITS AFFILIATES KNEW OR SHOULD HAVE KNOWN OF THE EXISTENCE OF SUCH DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY RELEASES AND WAIVES ANY CLAIMS AGAINST THE OTHER PARTY REGARDING SUCH DAMAGES. THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ANY RELATED AGREEMENTS OTHER THAN THE MUTUAL GROWTH INCENTIVE AGREEMENT; PROVIDED, HOWEVER, THAT IN THE EVENT ANY OF THE EXCLUSIONS IN SUBCLAUSES (A) THROUGH (D) APPLY, NONE OF THE LIMITATIONS IN THIS SECTION OR ANY RELATED AGREEMENT SHALL APPLY, AND THE NON-BREACHING PARTY SHALL BE FREE TO PURSUE ANY AND ALL REMEDIES AND DAMAGES PERMITTED AT EQUITY AND IN LAW, PROVIDED FURTHER THAT IN ALL CASES, LOST PROFITS DAMAGES MUST BE (I) CONSISTENT WITH AND PROVEN UNDER NEW YORK LAW, AND (II) LIMITED BY THE TERM OF THE AGREEMENT.
|
10
|
MISCELLANEOUS
|
10.1
|
Data Protection and Privacy. The Parties will each comply with all Applicable Law and regulation regarding privacy and protection of personal data. Without limiting the foregoing, each Party agrees to comply with the Proprietary Rights, Privacy and Data Security Addendum attached hereto as Appendix D, which will survive any expiration or termination of this Agreement.
|
10.2
|
Affiliates and Franchisees. To the extent this Agreement or a Related Agreement provides for or contemplates participation of a Party’s Affiliates or Franchisees to comply with the terms of this Agreement or a Related Agreement, the Parties will include such Affiliates and use commercially reasonable efforts to include such Franchisees (including for the avoidance of doubt any future Franchisees) in the activities. If a Party acquires
|
10.3
|
Compliance with Laws and Regulations. Each Party represents, warrants, and agrees that performance of its respective obligations under this Agreement will be conducted in compliance in all material relevant respects with and it will have all required licenses under any Applicable Law.
|
10.4
|
Amendment. This Agreement may be amended only by a written instrument signed by both Parties. Execution may be effected by delivery of PDF signature pages and acknowledgement of receipt thereof to the delivering Party.
|
10.5
|
Waiver. A Party does not waive any right under this Agreement by failing to insist on compliance with any of the terms of this Agreement or by failing to exercise any right hereunder. Any waivers granted hereunder are effective only if recorded in a writing signed by the Party granting such waiver. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
|
10.6
|
Assignment. Neither Party may assign, novate or transfer or permit the assignment, novation or transfer of this Agreement (or any rights hereunder) without the prior written consent of the other Party, which consent may be withheld in such Party’s sole discretion.
|
10.7
|
Independent Contractor. Each Party is an independent contractor. Nothing in this Agreement is intended or will be construed to create or establish any agency relationship (except to the extent a Party is expressly in writing designated to serve as agent for the other Party), legal partnership, joint venture or any other separate incorporated or unincorporated entity or fiduciary relationship between the Parties in the United States or any other country where provisions of this Agreement may need to be implemented. Neither Party has authority to act for or to incur any obligations on behalf of or in the name of the other Party and neither Party will be liable to any third party for actions of the other Party. Each Party will remain an entirely separate corporate entity and will retain independent decision-making and managerial authority regarding all matters.
|
10.8
|
Third parties. This Agreement is binding upon and inures to the benefit of the Parties and their successors and permitted assigns. Subject to Section 10.2, all rights, remedies and obligations of the Parties hereunder will accrue and apply solely to such Parties and their successors and assigns and there is no intent to benefit any third parties.
|
10.9
|
Force Majeure. Neither Party will be liable for delays or failures to perform under this Agreement caused by a Force Majeure Event, provided that no obligation to make a payment will be excused or limited by virtue of any Force Majeure Event.
|
10.10
|
Further Assurances. Subject to Applicable Law, each Party will perform such further acts and execute and deliver such further instruments and documents at such Party’s expense, as may be required by Applicable Law or as may be reasonably requested by the other Party to carry out and effectuate the purposes of this Agreement.
|
10.11
|
Counterparts. This Agreement may be executed in counterparts, which taken together will constitute one and the same instrument. Execution may be effected by delivery of PDF signature pages.
|
10.12
|
Headings; Construction. The headings used in this Agreement are for convenience only and have no interpretive value. This Agreement is the product of negotiations between the Parties and will be construed as if jointly prepared and drafted by them, and no provision hereof will be construed for or against any Party by reason of ambiguity in language, rules of construction against the drafting Party, or similar doctrine. The definitions used in this Agreement will be equally applicable to both the singular and the plural forms of such terms. References in this Agreement to Sections will refer to sections of the main text of this Agreement unless stated otherwise. As used in this Agreement, the words “include” and “including,” and variations thereof, will be deemed to be followed by the words “without limitation” and the words “commercially reasonable efforts” will mean “all reasonable but commercially prudent endeavors.”
|
10.13
|
Severability. If any provision of this Agreement is determined by any court or governmental authority to be unenforceable, the Parties intend that this Agreement be enforced as if the unenforceable provisions were not present and that any partially valid and enforceable provisions be enforced to the extent that they are enforceable. If, in the reasonable opinion of either Party, any such severance affects the commercial basis of this Agreement, the Party agrees to inform the other Party and the Parties will negotiate in good faith to agree upon modification of this Agreement so as to maintain the balance of the commercial interests of the Parties. If, however, such negotiations are not successfully concluded within 90 days from the date a Party has informed the other Party that the commercial basis has been affected, either Party may terminate this Agreement by giving at least a further 30 days’ prior written notice to the other Party.
|
10.14
|
Entire Agreement. This Agreement and the Related Agreements constitute the entire agreement of the Parties with respect to their subject matter and, as of the date first written above, terminate and supersede any prior or contemporaneous agreements, discussions, undertakings and understandings, whether written or oral, expressed or implied, between the Parties with respect to the same subject. Neither Party has entered into this Agreement or the Related Agreements in reliance upon any statement, representation, warranty, undertaking, assurance, promise, understanding or other provision made by or on behalf of the other Party, any of its representatives or any other person which is not expressly set out in this Agreement or the Related Agreements.
|
Summary of Agreement
|
American and JetBlue will enter into mutual frequent flyer program participation agreements (each a “Frequent Flyer Participation Agreement”) on a reciprocal basis pursuant to which each Party will be permitted to participate in the other Party’s frequent flyer loyalty program (American’s AAdvantage Program and JetBlue’s TrueBlue Program, respectively) such that each Party’s frequent flyer program members (“Program Members”) will be able to (i) earn loyalty program miles by travelling on the other Party’s flights system wide, and (ii) redeem their loyalty program points for award travel on the other Party’s flights systemwide.
|
Accrual Eligibility
|
Each Party will allow the other Party’s Program Members to accrue frequent flyer program mileage/points by purchasing travel on the original Party’s eligible accrual flights. The Parties will define in the Frequent Flyer Participation Agreement which of such Party’s flights are eligible for accrual (“Accrual Flights”), and the rate at which accrual miles or points will accrue for each type of flight (which will vary based on the class of service purchased, the marketing airline of such flight, and certain other flight specific factors).
|
Accrual Fees
|
The Parties will negotiate in good faith the cost per frequent flyer program mile/point each Party will pay to the other Party for each accrual mile or point that is accrued on its Accrual Flights by the other Party’s Program Members.
|
Award Travel
|
Each Party will allow the other Party’s Program Members to redeem frequent flyer program miles or points for travel on the original Party’s eligible award travel flights. The Parties will define in the Frequent Flyer Participation Agreements which of such Party’s flights are eligible for such redemption (“Award Flights”).
|
Award Travel Fees
|
The Parties will negotiate in good faith the amounts payable by each Party for each Award Flight ticket that is redeemed, issued and flown by its Program Members on the other Party’s Award Flight.
|
Reporting
|
The Parties will report regularly (weekly/monthly) with information to facilitate calculation of payments, mileage accruals and award travel redemption. Each Party will cooperate to reconcile any discrepancies in any reporting, and to permit the other Party to perform audits to verify the accuracy of any delivered reports.
|
Term and Termination
|
Each Frequent Flier Participation Agreement will have a perpetual term, except that subject to the clause below regarding termination as it relates to the NEA Agreement, [***], unless sooner terminated in accordance with its terms.
Neither Party may terminate a Frequent Flier Participation Agreement without cause as provided above effective prior to the effective date of termination of the NEA Agreement. The Frequent Flier Participation Agreements will also specify (a) a right to terminate the agreements if the NEA Agreement is terminated, and (b) a mechanism by which the Parties will negotiate whether to keep these agreements in effect if the NEA Agreement is terminated.
|
Exclusivity
|
[***].
|
a.
|
Effectiveness of the slot arrangements contemplated by this Appendix are subject to the receipt of all required consents and approvals necessary for the consummation of the transaction as set forth herein, including any of the foregoing required by the FAA or other applicable Governmental Authority.
|
b.
|
Effectiveness of each Slot Lease is subject to the receipt of all required consents and approvals necessary for the consummation of the transaction as set forth herein, including any of the foregoing required by the FAA or other applicable Governmental Authority.
|
c.
|
Each Party shall use commercially reasonable efforts to satisfy the conditions precedent to the effectiveness of these slot arrangements and the effectives of each Slot Lease.
|
a.
|
If the FAA or any other applicable Governmental Agency recalls, withdraws, takes control of or otherwise restricts use of any Leased Slot for any reason, provided action and such withdrawal or restriction is not the result of or in connection with (i) a failure by the Receiving Party to comply with the Use Provisions or other applicable Slot Regulations, or (ii) a breach of the Agreement, then (A) the Management Committee will determine an equitable accommodation, including substituting alternative slots, in the best interests of the NEA, and (B) neither Party shall have any liability to the other as a result of such withdrawal or restriction.
|
b.
|
If the cause for the loss or restriction on a Leased Slot is because of (i) non-compliance by the Receiving Party with the Use Provisions or any other Slot Regulation or (ii) a breach of the Agreement, the Receiving Party shall transfer to the Providing Party, without cost to the Providing Party, a substitute Slot (at the same airport as the airport to which such Leased Slot relates) for each affected Slot. Each such substitute Slot shall be of the same frequency as the applicable Leased Slot and within one hour variation of the applicable Leased Slot. In the event that the Receiving Party is unable to transfer a substitute slot to the Providing Party within three months after the recall, withdrawal, taking of control of or other restriction by the appropriate governing authority of the use of a Leased Slot because of non-compliance by the Receiving Party with the Use Provisions, then the Receiving Party shall pay to the Providing Party as liquidated damages, by wire transfer of immediately available funds, the then-current fair market value of the affected Leased Slot and upon such payment, this Agreement shall terminate as to such Leased Slot. The fair market value shall be determined by a mutually acceptable appraiser within ten business days after the expiration of such three month period (each of American and JetBlue shall assist the slot appraiser in finalizing such determination within such ten day period) and the Receiving Party shall pay such fair market value within five days after such determination.
|
•
|
as a disclosing Party (the “Providing Party”), it will not disclose any Covered Personal Data to the other Party (the “Receiving Party”) save where this is lawful and in a form which is lawful;
|
•
|
the sharing of the Covered Personal Data pursuant to the Related Agreements is carried out in accordance with any notices supplied to and consents, if any, obtained from Data Subjects; and
|
•
|
it will not Process any Covered Personal Data other than in accordance with Data Law applicable to such Party in its performance or receipt of services under the Related Agreements or to the Covered Personal Data.
|
between
|
American Airlines, Inc., a corporation organized under the laws of the State of Delaware, United States of America, having its principal office at 1 Skyview Drive, Fort Worth, Texas 76155, United States of America (“American”),
|
and
|
JetBlue Airways Corporation, a corporation organized under the laws of Delaware, having its principal office at 27-01 Queens Plaza North, Long Island City, New York 11101, United States of America (“JetBlue”).
|
1.
|
DEFINITIONS AND GENERAL TERMS
|
1.1
|
Terms with their initial letters capitalized shall have the meanings ascribed to them in Annex A of this Agreement or where they are elsewhere defined herein (including the Annexes hereto). Such ascribed meanings shall be equally applicable to both the singular and plural forms of such terms. American and JetBlue may each be referred to as a “Party” and may collectively be referred to as the “Parties.”
|
1.2
|
The Parties will comply with Applicable Law. The Parties further agree that, except to the extent that they are inconsistent or conflict with the terms of this Agreement or the ITA, accepted industry procedures and agreements relating to the interlining of passengers and baggage, including those set forth in the IATA Resolution 780 Interline Traffic Agreement – Passenger shall apply to the provision of air transport and the related transactions contemplated by this Agreement.
|
2.
|
CODESHARE SERVICE
|
2.1
|
The Parties shall mutually designate certain flights on which the Parties shall place their respective Codes (each, a “Codeshared Flight”), which may include flights operated by their Authorized Affiliates and Authorized Wet Lessors, serving the city-pairs (each city-pair, a “Codeshared Route”) identified in writing via email concurrence by the Parties from time to time without formally amending this Agreement. The initial list of Codeshared Routes on which the Parties and their Authorized Affiliates and Authorized Wet Lessors may codeshare is attached hereto as Annex B.
|
2.2
|
Detailed procedures for implementing this Agreement will be set forth in the Procedures Manual, which will be prepared by the Parties in conjunction with this Agreement. The Procedures Manual, including any amendments or supplements thereto agreed in writing between the Parties from time to time, shall be incorporated by reference into and made a part of this Agreement; provided, however, that the terms of this Agreement shall prevail in the event of a conflict between a provision of this Agreement and any provision of the Procedures Manual.
|
2.3
|
The Operating Carrier for each Codeshared Flight shall provide to the Codeshared Passengers, at a minimum, the same standard of customer service as it provides to its own
|
2.4
|
The Parties shall use commercially reasonable efforts to coordinate their service schedules to maximize the convenience, and minimize the waiting time, of passengers making connections between the Codeshared Flights and other flights operated by the Parties; provided, however, that neither Party is obligated to operate specific flights or service schedules and each Party retains the right to determine the service schedules of its own flights.
|
2.5
|
The Parties may add or discontinue Codeshared Flights, as may be mutually agreed, without formally amending this Agreement. [***]
|
2.6
|
Except as otherwise provided in the Procedures Manual, in the event of any flight cancellation or other schedule irregularity, involuntary rerouting or denied boarding by the Operating Carrier with respect to a Codeshared Flight, the Operating Carrier shall:
|
(a)
|
ensure that all passengers shall be handled in accordance with the same policies and procedures to avoid any discrimination against a Codeshared Passenger;
|
(b)
|
at its own cost and expense (except to the extent such irregularity, involuntary rerouting or denied boarding is caused by the Marketing Carrier), accommodate and/or pay denied boarding compensation or otherwise compensate Codeshared Passengers, in the same manner as its own passengers and subject to the provisions of the Procedures Manual and Applicable Law; and
|
(c)
|
notify the Marketing Carrier in accordance with the Procedures Manual.
|
2.7
|
The Conditions of Carriage of the Marketing Carrier, including its limits of liability to passengers, shall govern the transportation of Codeshared Passengers, and the Conditions of Carriage of the Operating Carrier, including its limits of liability to passengers, shall apply to those passengers traveling on the Codeshared Flights under the Code of the Operating Carrier. The respective Conditions of Carriage of the Parties shall be notified to the passengers to the extent and in the manner required by Applicable Law, rules and regulations. Notwithstanding anything in this Section 2.7, the liability of the Parties to each other with respect to passenger claims shall be governed by Sections 17 and 18. Neither Party shall be obligated to change its Conditions of Carriage pursuant to this Agreement.
|
2.8
|
(a) The Party that is the Operating Carrier (or whose Authorized Affiliate or Authorized Wet Lessor is the Operating Carrier) shall ensure that each Codeshared Flight shall be operated under its operating certificate or under the operating certificate of [***].
|
(b)
|
If there is a change in the carrier scheduled to operate a Codeshared Flight, the Operating Carrier shall promptly notify the Marketing Carrier of such change as outlined in the Procedures Manual. The Marketing Carrier shall take all appropriate steps to ensure that Codeshared Passengers are notified of the change as soon as possible. The Marketing Carrier may thereupon continue to notify Codeshared Passengers of the change in accordance with its customer service policies if it is able to do so but the Operating Carrier shall take primary responsibility for notifying all Codeshared Passengers still booked under the Marketing Carrier Code of the change at time of check-in. The Parties shall endeavor to share passenger contact information in accordance with the A4A/IATA Reservations Interline Message Procedures – Passengers (“AIRIMP”) Section 3.20.1. In the event re-accommodation is necessary either because the substituted carrier is not an Authorized Affiliate or Authorized Wet Lessor, or because a Codeshared Passenger who is notified of such a change elects not to travel on the substituted carrier, the notifying carrier shall at its own cost and expense re-accommodate the Codeshared Passenger unless the passenger seeks a refund, in which event the Marketing Carrier shall be responsible for making such refund in accordance with its fare rules, Conditions of Carriage and Applicable Law.
|
2.9
|
[***]
|
3.
|
IMPLEMENTATION AND EXPENSES
|
3.1
|
Implementation of this Agreement shall be subject to the following conditions precedent:
|
(a)
|
the execution of a Special Prorate Agreement and a Mutual Emergency Assistance Agreement, in form and substance satisfactory to American and JetBlue;
|
(b)
|
receipt by American and JetBlue of all necessary Government Approvals;
|
(c)
|
successful completion by American and JetBlue of the IOSA registration; and
|
(d)
|
successful implementation and testing of codeshare passenger and baggage processing automation pursuant to the Interline Traffic Agreement.
|
3.2
|
Each Party shall bear its own costs and expenses of performance under this Agreement, including costs and expenses associated with the following, unless otherwise agreed in writing between the Parties:
|
(a)
|
any systems to support the automation of procedures and settlement relating to the Codeshared Flights (e.g., PNR exchange, yield management, revenue accounting, etc.), including routine maintenance thereof,
|
(b)
|
roadside, exterior, check-in, concourse, gate and baggage service signage placed at airports and city ticket offices in locations served by the Codeshared Flights in order to facilitate travel on the Codeshared Flights, and
|
(c)
|
all real property and facilities (whether leased or owned) necessary for such Party’s business operations at airports or otherwise.
|
3.3
|
Each Party shall retain all right, title and interest in systems, software, signage, equipment and facilities funded by it. Ownership of jointly-funded items shall be determined by the Parties in advance of each specific project.
|
4.
|
INVENTORY CONTROL AND PROCEDURES
|
4.1
|
Codeshare inventory availability of Marketing Flights will be controlled by the Operating Carrier as set forth in the Procedures Manual. [***]Detailed procedures for implementing and maintaining seat inventory access are contained in the Procedures Manual.
|
4.2
|
The Parties will map inventory classes of the Marketing Carrier to inventory classes of the Operating Carrier for the Codeshared Flights in accordance with the Procedures Manual. The Parties will endeavor to map the average coupon value of the Marketing Carrier’s inventory classes to comparable classes of the Operating Carrier to provide similar access for bookings made by the Marketing Carrier for passengers yielding comparable revenue values; it being understood, however, that the Operating Carrier retains ultimate control over the opening, closing and other management of seat inventory availability on Codeshared Flights. Each Party shall use commercially reasonable efforts to provide equal inventory access to Codeshared Passengers in inventory classes where such passengers yield comparable revenues as the Operating Carrier’s passengers.
|
4.3
|
This Section 4 shall govern the published fares of the Marketing Carrier offered on Codeshared Flights as follows:
|
(a)
|
[***]
|
(b)
|
In the event of the Marketing Carrier’s breach of Sections 4.3(a), (b), (c) or (d), the Operating Carrier shall have the right in its sole discretion after one (1) day’s prior written notice to the Marketing Carrier, to restrict or close the inventory access of the Marketing Carrier or remove the Code of the Marketing Carrier from the flight(s) in question or to temporarily remove its own Code from the flight(s) operated by the defaulting Party on the Routes where the breach occurred.
|
(c)
|
Nothing in this Agreement shall prevent the Marketing Carrier from (i) initiating and operating its own service in any origin and destination city pair at any time; or (ii) offering any fare(s), discount(s) or rebate(s) of any kind for interline itineraries valid on airlines, other than American or JetBlue, on any origin and destination city pair.
|
4.4
|
Each Party shall establish fares and rates independently, subject to the provisions of the applicable air transport agreements between the United States, on the one hand, and the
|
5.
|
MARKETING AND PRODUCT DISPLAY
|
5.1
|
The Codeshared Flights will be marketed and promoted by the Marketing Carrier under its Code. Each Party shall be responsible to ensure that its respective advertising and promotions comply with all applicable governmental laws, rules and regulations of any applicable Competent Authority. Without limiting the foregoing, the Marketing Carrier shall comply with 14 C.F.R. Parts 257 and 258 and any other applicable rules regarding the disclosure and holding out of Codeshared Flights provided for herein in the jurisdiction where such rules apply. The Marketing Carrier shall disclose to the extent required by Applicable Law through industry-approved schedule and selling mechanisms (as defined in the Procedures Manual), to consumers, travel agents and others selling the Codeshared Flights, as well as through any advertising, point-of-sale disclosures, and any other appropriate means, that each Codeshared Flight is a flight of and operated by the Operating Carrier. Such information shall be given before a reservation is made and in any event at the earliest reasonable opportunity and before the passenger arrives at the airport, in accordance with Applicable Law. In addition, each Party shall use commercially reasonable efforts to implement procedures to disclose the Operating Carrier and the appropriate departure and arrival terminal at the earliest possible opportunity and in particular at the point of sale, in email confirmations, and through each Party’s website and self-service manage-reservation portals.
|
5.2
|
The Marketing Carrier shall identify the Codeshared Flights, in accordance with Applicable Law, in Airline Guides, CRSs, GDSs, and other sources of airline schedule information using the Marketing Carrier’s Code. Any costs incurred for the publication of Marketing Flights or connections to and from such flights in Airline Guides, CRSs, GDSs, and other sources of airline schedule information shall be borne by the Marketing Carrier. Each Party shall include the Codeshared Flights in its CRSs.
|
5.3
|
If the Marketing Carrier is not authorized to offer air transport services for a particular local Codeshared Route, the Marketing Carrier shall file its standard schedule data for the Codeshared Flights on such Codeshared Route using the traffic restriction code “O” or “Y” (or any successor code), as appropriate, as defined in the IATA Standard Schedules Information Manual, Appendix G, in order to suppress the display of the Marketing Flights on such local Codeshared Route(s) (i.e., the Marketing Flights on such route will be limited to passengers connecting online to another flight marketed and/or operated by the Marketing Carrier).
|
5.4
|
Unless otherwise agreed, all information and advertising materials produced with the aim of promoting the Codeshared Flights shall clearly identify both Parties. Any joint advertising and promotion of the Codeshared Flights shall be agreed upon by the Parties in advance, and approved in final form in writing, and the costs of such joint advertising and promotion shall be shared pursuant to prior agreement at the time for that advertising or promotion. In the absence of prior agreement, each Party will bear its own costs associated with such joint advertising or promotion campaign.
|
5.5
|
Each Party may use its own flight number in referencing the Codeshared Flights except that only the Operating Carrier’s flight number shall be used in actual flight operations (e.g., air traffic control).
|
6.
|
TRAFFIC DOCUMENT ISSUANCE AND FINANCIAL SETTLEMENT
|
6.1
|
Upon the execution of a Special Prorate Agreement and the implementation of the Procedures Manual, this Section 6 may be amended by mutual agreement of the Parties.
|
6.2
|
Passenger traffic documents for use on the Codeshared Flights may be issued by either Party, or by third parties with whom the Parties from time to time have interline traffic agreements.
|
6.3
|
All Marketing Carrier Flight Coupons honored on Codeshared Flights shall be uplifted by the Operating Carrier, which will be responsible for processing and billing of such documents. The Operating Carrier shall bill uplifted coupons to the Ticketing Carrier using routine applicable interline settlement processes and procedures. Marketing Carrier Flight Coupons will be prorated and billed according to the special prorate agreement between the Operating Carrier and the Ticketing Carrier, or, in the absence of an applicable special prorate agreement, in accordance with the IATA Prorate Manual-Passenger (“IATA PMP”), as applicable.
|
6.4
|
[***]The Marketing Carrier shall be entitled to review and, if appropriate, dispute, via correspondence, the Operating Carrier’s calculation of the Codeshare Commission; provided, however, the Operating Carrier must receive notice of such dispute within [***]from the relevant clearance month. Any resulting payments will be processed through the Airlines Clearing House.
|
6.5
|
The Ticketing Carrier, if the Marketing Carrier or the Operating Carrier, shall receive the Interline Service Charge and/or Ticket Handling Fee, as provided in the Interline Traffic Agreement, if applicable. In the event the Ticketing Carrier is a third party, the Ticketing Carrier will receive the Interline Service Charge and/or Ticket Handling Fee as agreed between the Operating Carrier and such third party.
|
6.6
|
Differences that may appear after the billing process has been completed shall be resolved in accordance with the dispute procedures set forth in the ACH Manual of Procedure.
|
6.7
|
In a sufficient amount of time before the Implementation Date, the Parties will implement means to fully support the provision of ticket sales data for (i) all such sales made at its own offices and (ii) the majority of such sales made on its behalf by systems (GDSs and CRSs) supporting travel agent and Internet site sales by each Party to the other Party using the “TCN Exchange” process coordinated by ATPCO. The Marketing Carrier will be responsible, throughout the term of this Agreement, for updating its Marketing Flight numbers with ATPCO.
|
7.
|
FACILITIES
|
7.1
|
The Parties acknowledge the importance of maintaining functional and accurate signs or agreed-upon digital alternatives identifying the Operating Carrier and the Marketing Carrier, as appropriate, to facilitate passenger convenience and to avoid passenger confusion at
|
8.
|
TRAINING
|
8.1
|
Except as otherwise agreed, each Party shall provide or arrange, at its own cost and expense, all initial and recurring training of its personnel to facilitate the Codeshared Flights and operations at airports served by the Codeshared Flights, including reservations and ticket offices, and other points of contact between the Parties and the public. This training shall include passenger service, reservations and sales activities, and in-flight service involving the Codeshared Flights, all as more fully described in the Procedures Manual.
|
8.2
|
During the term of the Agreement, the Parties agree to share any general training materials (excluding materials that incorporate trade secrets and legal advice) developed to support the Codeshared Flights. All intellectual property or similar rights to any materials exchanged shall remain with the Party that originally developed such materials.
|
9.
|
SECURITY
|
9.1
|
The Parties shall use commercially reasonable means to cooperate, each at their own expense unless otherwise agreed for a particular airport, in matters of security procedures, requirements, and obligations at all airports served by the Codeshared Flights where each Party operates.
|
9.2
|
The Operating Carrier reserves the right to apply the provisions of its own security programs to the carriage of all passengers, baggage and cargo on board the Codeshared Flights operated by that Operating Carrier, provided that such security programs shall, at a minimum, comply with the standards set forth by the relevant Competent Authorities and be reasonably acceptable to the Marketing Carrier, with the understanding that safety and security are of the utmost importance to both carriers. Such provisions may include any then-applicable procedures used for the physical screening of passengers, baggage or cargo, interviewing of passengers, and/or selective loading of baggage or cargo.
|
9.3
|
The checking of the travel documents of each Codeshared Passenger and the handling of Codeshared Passengers who are Inadmissible Passengers (as such term is defined in IATA Resolution 701, as modified, supplemented or amended from time to time) shall be done in accordance with the procedures outlined in the Procedures Manual.
|
10.
|
SAFETY AND MAINTENANCE
|
10.1
|
The Operating Carrier has operational control of the aircraft and final authority and responsibility concerning the operation and safety of the aircraft and its passengers, including Codeshared Passengers. The Operating Carrier shall employ the same high standards of safety, security and loss prevention policies on the Codeshared Flights as on its own flights. Emergency support shall, at a minimum, be in accordance with the Mutual Emergency Assistance Agreement in force between the Parties.
|
10.2
|
The Operating Carrier shall have sole responsibility for the maintenance of its leased and owned aircraft, and for other equipment used in connection with the Codeshared Flights. Maintenance of such aircraft and equipment must, at a minimum, comply with the standards imposed by the relevant aeronautical authorities.
|
10.3
|
The Marketing Carrier shall have the right, at its own cost, to review and observe the Operating Carrier’s operations of Codeshared Flights, and/or to conduct a reasonable safety and/or service review of the Operating Carrier’s operations, manuals, and procedures reasonably related to the Codeshared Flights (the “Marketing Carrier Reviews”), at such intervals as the Marketing Carrier shall reasonably request. The Marketing Carrier Reviews shall be coordinated with the Operating Carrier so as to avoid disruptions to the Operating Carrier’s operations. Such reviews will be limited to areas that reasonably relate to the Operating Carrier’s safety standards and service obligations under this Agreement. NOTWITHSTANDING THE FOREGOING, THE MARKETING CARRIER DOES NOT UNDERTAKE ANY RESPONSIBILITY OR ASSUME ANY LIABILITY FOR ANY ASPECT OF THE OPERATING CARRIER’S OPERATIONS, NOR SHALL THE OPERATING CARRIER BE ENTITLED TO ASSERT ANY RESPONSIBILITY OR ASSUMPTION OF LIABILITY ON THE PART OF THE MARKETING CARRIER FOR THE OPERATING CARRIER’S OPERATIONS.
|
10.4
|
Each Party represents and warrants that it shall maintain its IOSA registered operator status and successfully complete any follow-up audits as required by the IOSA rules and regulations (as they are in force from time to time).
|
11.
|
FREE AND REDUCED RATE TRANSPORTATION
|
11.1
|
Unless otherwise provided by relevant agreements between the Operating Carrier and other parties, including the Marketing Carrier, neither the Marketing Carrier, nor the Operating Carrier, nor any third party, shall be entitled to ticket industry non-revenue or discounted (i.e., agency discount, industry discount, etc.) travel on the Marketing Flights, and the Operating Carrier shall not honor any Marketing Carrier Flight Coupons for such industry non-revenue or discounted travel, except at the Operating Carrier’s expense.
|
12.
|
OTHER MARKETING PROGRAMS
|
12.1
|
The Frequent Flyer Participating Carrier Agreements shall govern the participation of each Party in the other Party’s frequent flyer program.
|
12.2
|
[***]
|
13.
|
TRADEMARKS AND CORPORATE IDENTIFICATION
|
13.1
|
Each of JetBlue and American acknowledges for all purposes that any and all names, logos, insignia, trademarks, service marks, and trade names of the other, whether registered or not (“Marks”), are renown worldwide and shall at all times remain the exclusive property of the other Party, and may not be used without the prior written consent of such Party, except as set forth herein. Each of JetBlue and American further acknowledges that any goodwill or other rights that arise as a result of the use by it of the other Party’s Marks, as permitted under this Agreement, shall accrue solely to the benefit of the Party owning such Marks,
|
13.2
|
Subject to the terms and conditions set forth in this Section 13, each of JetBlue and American hereby grants to the other a non-exclusive, non-transferable, royalty-free license for the term of this Agreement to use their respective service marks (“JetBlue Airways” for JetBlue and “American Airlines” for American, each a “Licensed Trademark”) in connection with the offering of availability on Codeshared Flights by each Marketing Carrier and the marketing, advertising and promotion of the Codeshared Flights contemplated by this Agreement and the Frequent Flyer Participating Carrier Agreement. Each Party shall provide the other Party with samples of all materials that use the Licensed Trademarks prior to their first public use or display, and will only use such materials after receiving the licensing Party’s prior written approval of the materials and intended use; provided, that listing Codeshared Flights on a Party’s website will not require prior approval by the other Party. Each Party may immediately suspend or terminate, in whole or in part, the other Party’s license to use any of the licensing Party’s Licensed Trademarks if, in the licensing Party’s sole discretion, the other Party’s use of the Licensed Trademarks does not meet the licensing Party’s approval, or should the licensing Party wish to modify, replace or update its service marks, upon commercially reasonable notice.
|
13.3
|
Except as expressly provided herein, no right, property, license, permission or interest of any kind in the use of any name, logo, logotype, insignia, service mark, trademark, trade name, copyright, corporate goodwill or other proprietary intellectual property owned by either Party or its respective Affiliates is intended to be given to or acquired by the other Party, its agents, servants or other employees by the execution or performance of this Agreement. Neither Party hereto shall use any of the other Party’s or such Party’s respective Affiliates’ Marks, copyrights, or other proprietary intellectual property, including, but not limited to, the names “American Airlines, Inc.,” “American Airlines,” “American,” “American Eagle,” “AAdvantage,” “Envoy Air,” “Envoy,” “Piedmont Airlines,” “Piedmont,” “PSA Airlines,” “PSA,” “JetBlue Airways Corporation,” “JetBlue Airways,” “JetBlue,” “JetBlue Travel Products,” “JetBlue Vacations,” “Mint,” or “TrueBlue” in any marketing, advertising or promotional collateral, including credit card and telecom solicitations, except where each specific use has been approved in advance by the other Party. When such approval is granted, either Party shall comply with any and all conditions that the other Party may impose to protect the use of any of that Party’s Marks, copyrights or other proprietary intellectual property.
|
13.4
|
Without limiting the foregoing, each Party agrees to use the Licensed Trademarks only in a manner approved in advance and in writing by the Party owning such Licensed Trademarks. Each Licensed Trademark shall be marked with an ®, TM or SM or other symbol, as appropriate, and reference a legend indicating that “JetBlue Airways is a service mark of JetBlue Airways Corporation” or “American Airlines is a service mark of American Airlines, Inc.”, as the case may be, or similar words to that effect.
|
13.5
|
Each Party agrees that all advertising and promotional materials bearing the Licensed Trademarks in relation to air transportation services contemplated by this Agreement shall meet the quality and presentation standards as set forth by the Party owning the relevant Licensed Trademark.
|
13.6
|
Each Party has sole discretion to determine the acceptability of both the quality and presentation of advertising and promotional materials using its Licensed Trademark.
|
13.7
|
Each Party is responsible for providing to its own authorized agents and airport locations the agreed promotional materials bearing the Licensed Trademarks.
|
14.
|
REPRESENTATIONS AND WARRANTIES
|
14.1
|
Each of JetBlue and American hereby represents and warrants to the other as follows:
|
(a)
|
It is a duly incorporated and validly existing corporation, in good standing under the laws of its jurisdiction of incorporation; is an air carrier duly authorized to act as such by the government of its country of incorporation; and has the requisite corporate power and authority to enter into and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement by it have been duly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by it, and, assuming due authorization, execution, and delivery by the other Party hereto, this Agreement constitutes its legal, valid, and binding obligation, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited or modified by the effect of bankruptcy, insolvency or other similar laws affecting creditors’ rights generally, and the application of general principles of equity and public policy.
|
(b)
|
The execution, delivery or performance by it of this Agreement, shall not: (i) contravene, conflict with or cause a default under (A) any Applicable Law, rule or regulation binding on it, or (B) any provision of its Charter, Certificate of Incorporation, Bylaws or other documents of corporate governance; or (ii) contravene, or cause a breach or violation of, any agreement or instrument to which it is a Party or by which it is bound, except where such conflict, contravention or breach would not have a material adverse effect on it and its Affiliates, or on the operations of it or its Affiliates, taken as a whole, or on its ability to perform this Agreement.
|
(c)
|
The execution, delivery and performance by it of this Agreement do not require the consent or approval of, or the giving of notice to, the registration with, the recording or filing of any documents with, or the taking of any other action in respect of, any Competent Authority, any trustee or holder of any of its indebtedness or obligations, any stockholder or any other Person or entity, other than the Governmental Approvals (to be obtained by it, as indicated in Annex E), except where failure to obtain or take such action would not have a material adverse effect on it or a material adverse effect on the transactions contemplated in this Agreement.
|
(d)
|
Each of the foregoing representations and warranties shall survive the execution and delivery of this Agreement.
|
(e)
|
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTIES OR REPRESENTATIONS TO THE OTHER PARTY AND EACH PARTY HEREBY DISCLAIMS ANY AND ALL
|
15.
|
GOVERNMENTAL APPROVALS
|
15.1
|
Unless otherwise agreed between the Parties, the Codeshared Flights shall not commence until all required Governmental Approvals are received. Each Party shall use all commercially reasonable efforts to obtain those Governmental Approvals for which it has been allocated responsibility under Annex E, and any other Governmental Approvals that may hereafter be identified. Unless otherwise agreed, each Party shall bear its own costs and expenses for any foreign Governmental Approvals required for the placement of the Marketing Code.
|
15.2
|
[***]
|
15.3
|
If the Parties obtain none of the Governmental Approvals required for the Codeshared Routes listed in Annex B [***], or if all of such Governmental Approvals are given with substantial unfavorable restrictions or conditions (each Party to determine in its sole discretion the reasonableness of such restrictions or conditions), the Parties shall negotiate in good faith to find an equitable solution to enable the commencement of the Codeshared Route(s). If a solution cannot be formulated [***], either Party may terminate this Agreement [***] prior written notice to the other Party.
|
15.4
|
Each Party shall immediately provide the other Party with copies of any correspondence or notices it receives from any Competent Authority with respect to the Codeshared Routes, Codeshared Flights or this Agreement, including with respect to the airworthiness of the aircraft used for the Codeshared Flights or noncompliance by the Operating Carrier with operational, training or safety rules and procedures.
|
16.
|
TERM AND TERMINATION
|
16.1
|
This Agreement shall become effective on the date first written above (“Effective Date”) and shall remain in effect until it is terminated pursuant to Section 15.3 (Governmental Approval), Section 16.2 (Termination Events), Section 16.3 (Suspension Right), Section 21.1 (Force Majeure) or Section 27.1 (Severability). Implementation of this Agreement shall be on the Implementation Date, subject to the Parties’ execution of the Mutual Emergency Assistance Agreement.
|
16.2
|
In addition to any other termination rights provided herein, this Agreement may be terminated as follows, provided that such termination shall not be effective prior to the effective date of termination of either Party’s participation in the NEA Agreement:
|
(a)
|
at any time by mutual written consent of the Parties hereto;
|
(b)
|
by either Party at any time by providing at least [***]prior written notice to the other Party, [***];
|
(c)
|
in the event of termination of the NEA Agreement, this Agreement shall terminate with effect from the expiry of the relevant termination notice period under the NEA Agreement or at such other time as the Parties may agree, unless this Agreement is continued in effect after termination of the NEA Agreement in accordance with the terms of that agreement;
|
(d)
|
by the non-breaching Party upon the breach of a material term, covenant, representation or warranty of this Agreement (other than a breach of a payment obligation under Section 6 of this Agreement or the failure to otherwise pay any undisputed sums due pursuant to this Agreement), including a failure to comply with any material obligations and procedures set forth in the Procedures Manual, provided that the non-breaching Party provides the breaching Party prior written notice describing the alleged breach with as much particularity as reasonably practicable. Termination under this Section 16.2(d) shall not be effective if the breaching Party corrects such breach within [***]following receipt of such notice. If such breach cannot be corrected within [***]following receipt of such notice, and the breaching Party so advises the non-breaching Party, the non-breaching Party, in its sole discretion, may give the breaching Party an additional period of time not to exceed [***]to correct the breach, provided that the breaching Party has taken action reasonably contemplated to correct such breach following receipt of the notice;
|
(e)
|
by the non-breaching Party upon the breach of a payment obligation under Section 6 of this Agreement or the failure to otherwise pay any undisputed sums due to the non-breaching Party pursuant to this Agreement by the breaching Party, after the non-breaching Party provides the breaching Party at least [***]prior written notice describing, with as much particularity as practical, the alleged breach, and the breaching Party does not, within [***]following receipt of such notice, correct such breach; or
|
(f)
|
at any time by either Party upon written notice if the other Party (i) makes an assignment for the benefit of creditors; (ii) suspends the payment of or admits in writing its inability to pay, or generally fails to pay, its debts as they become due; (iii) has suspended (as declared by a clearing house) its transactions with banks and/or other financial institutions or proposes or commences a moratorium upon or extension or composition of its debts; (iv) has issued against it any writ, execution, process or abstract of judgment that may have a material adverse effect on it and that is not dismissed, satisfied or stayed within [***]; or (v) files a petition for bankruptcy, composition, corporate reorganization, corporate liquidation, arrangement or special liquidation proceedings; or (vi) ceases all or a substantial part of its operations (other than due to Force Majeure as defined in Section 21.1).
|
16.3
|
Throughout the term of this Agreement, either Party has the right to suspend performance of or terminate this Agreement immediately by giving written notice to the other Party in the event that it has reason to suspect or believe or in the event that:
|
(a)
|
the other Party has suffered a significant emergency or serious incident or accident or received a serious threat that relates to any of that Party’s flights or to a Codeshared Flight or Codeshared Route; or
|
(b)
|
the other Party has received from any relevant Competent Authority notice that it has failed to comply with applicable safety or security requirements, including, without limitation, maintaining its IOSA registered operator status; or
|
(c)
|
the United States Department of Transportation (“DOT”), the United States Department of Defense (“DOD”), the United States Department of Justice (“DOJ”), or the United States Department of Homeland Security (“DHS”) has ordered in writing or orally that the Marketing Carrier’s Code be removed from Codeshared Flights or Codeshared Routes operated by the Operating Carrier for any reason whatsoever.
|
16.4
|
Subject to Section 16.5, in the event of termination of this Agreement the Marketing Carrier shall, in its sole discretion take all reasonable actions to confirm and preserve reservations on the Operating Carrier for passengers scheduled to be traveling on Marketing Carrier Tickets and, as applicable, endorse or otherwise modify or reissue such tickets to permit use on the Operating Carrier. The Operating Carrier shall accept passengers traveling on such tickets as if such reservations had been booked through the Operating Carrier using ordinary interline procedures but giving effect to the revenue settlement methodology provided for in Section 6 of this Agreement.
|
16.5
|
In the event that this Agreement is terminated by the Operating Carrier pursuant to Section 16.2(e) or 16.2(f), the Operating Carrier, in its sole discretion, may decline any or all passengers scheduled to be traveling on Marketing Carrier Tickets. The Marketing Carrier shall be solely responsible for transferring the reservations of such passengers to other carriers or making other alternative arrangements.
|
16.6
|
In addition to any provisions which by their express terms will survive termination or expiration of this Agreement, the following Sections shall survive the termination or expiration of this Agreement: Sections 1.1, 3.3, 6.2 through 6.6, 8.2, 13.1, 13.3, 16.4 through 16.6, 17, 19, 22, 23, 24, 25, 27, and 30 through 33. Expiration or termination of this Agreement does not affect any rights of either Party which arose prior to the effective date of such termination or expiration, or which otherwise relate to or which may arise at any future time for any breach or non-observance of obligations occurring prior to the effective date of termination or expiration.
|
17.
|
INDEMNIFICATION
|
17.1
|
Without prejudice to any other written agreement or arrangement of either Party to indemnify the other Party, the Party that is the Operating Carrier (or whose Authorized Affiliate or Authorized Wet Lessor is the Operating Carrier) shall indemnify, defend, and hold harmless the Marketing Carrier and its Affiliates and their respective directors, officers, employees and agents (each individually, or all collectively a, “Marketing Carrier Indemnified Party”) from and against any and all Damages arising out of, caused by, or occurring in connection with (or alleged to arise out of, be caused by, or occurring in connection with) any of the following:
|
(a)
|
the death of or injury to or delay of persons, or delay or loss of or damage to property (including aircraft, equipment, baggage, mail or cargo) occurring while such persons or property are under the control or in the custody of, or being transported by, the Operating Carrier (including, for the avoidance of doubt, Damages arising out of the death of or injury to Codeshared Passengers traveling on Marketing Carrier Tickets irrespective of conditions or liability limits that apply or may purport to apply);
|
(b)
|
the death of or injury to, or loss or damage to property of, third parties not carried on board the aircraft operated by the Operating Carrier but occurring in connection with such operations;
|
(c)
|
negligent acts or omissions of the Operating Carrier related to its obligations under this Agreement, other than Damages to the extent addressed in Section 17.1(a) or (b) or Section 17.2(a) or (b);
|
(d)
|
the Operating Carrier’s breach of any of its representations or warranties set forth in Section 14 of this Agreement;
|
(e)
|
infringement of a third party’s intellectual property or similar rights by the Operating Carrier’s logos, trademarks, service marks or trade names; or
|
(f)
|
Unauthorized use/access of a computer system or to any non-public private information of Operating Carrier or its customers.
|
17.2
|
Subject to the indemnities provided in Section 17.1(a), and without prejudice to any other written agreement or arrangement of either Party to indemnify the other Party, the Party that is the Marketing Carrier (or whose Affiliate is the Marketing Carrier) shall indemnify, defend, and hold harmless the Operating Carrier and its Affiliates and their respective directors,
|
(a)
|
the death of or injury to or delay of persons, or delay or loss of or damage to property (including aircraft, equipment, baggage, mail or cargo) occurring while such persons or property are under the control or in the custody of, or being transported by, the Operating Carrier, but only to the extent caused by the willful misconduct of the Marketing Carrier;
|
(b)
|
the death of or injury to, or loss or damage to property of, third parties not carried on board the aircraft operated by the Operating Carrier but occurring in connection with such operations, but only to the extent caused by the willful misconduct of the Marketing Carrier;
|
(c)
|
negligent acts or omissions of the Marketing Carrier that are related to its obligations under this Agreement, other than Damages to the extent addressed in Section 17.1(a) or (b) or Section 17.2(a) or (b);
|
(d)
|
passenger claims based on the Marketing Carrier’s failure to properly issue, deliver and complete transportation documentation in accordance with the provisions of the standard IATA or other applicable ticketing procedures, including, the failure to put a proper notice of the limits of liability under the Warsaw Convention, as amended, or the Montreal Convention of 1999, as amended, on such documentation (it being understood that in ticketing Codeshared Passengers, the Marketing Carrier is entitled to apply the limits of liability provided for in its own Conditions of Carriage); provided, however, that the Marketing Carrier shall only be liable under this Section 17.2(d) for that portion of any Damages that is in excess of the Damages against which the Operating Carrier would have been required to indemnify the Marketing Carrier under Section 17.1(a) if the Marketing Carrier had properly complied with all IATA ticketing procedures;
|
(e)
|
the Marketing Carrier’s breach of its representations or warranties set forth in Section 14 of this Agreement;
|
(f)
|
infringement of a third party’s intellectual property or similar rights by the Marketing Carrier’s logos, trademarks, service marks or trade names; or
|
(g)
|
Unauthorized use/access of a computer system or to any non-public private information of Marketing Carrier or its customers, except to the extent caused by the gross negligence or willful misconduct of an Operating Carrier Indemnified Party.
|
17.3
|
A Party (the “Indemnified Party”) that believes it is entitled to indemnification from the other Party (the “Indemnifying Party”) pursuant to the terms of this Agreement with respect to a claim for Damages (i.e., a third party claim) shall provide the Indemnifying Party with written notice (an “Indemnification Notice”) of such claim (provided, however, that the failure to give such notice shall not relieve the Indemnifying Party of its obligations
|
17.4
|
Each Indemnified Party shall have the right, but not the duty, to participate in the defense of any claim with attorneys of its own choosing and at its own cost, without relieving the Indemnifying Party of any obligations hereunder. In addition, even if the Indemnifying Party assumes the defense of a claim, the Indemnified Party shall have the right to assume control of the defense of any claim from the Indemnifying Party at any time, and to elect to settle or defend against such claim; provided, however, the Indemnifying Party shall have no indemnification obligations with respect to such claim except for the costs and expenses of the Indemnified Party (other than attorneys’ fees incurred in participating in the defense of such claim) incurred prior to the assumption of the defense of the claim by the Indemnified Party.
|
17.5
|
Each Party further agrees to indemnify, defend and hold harmless the other Party from and against any and all Taxes (as defined in Annex A), or Assessments (as defined in Section 19.5), as the case may be, levied upon or advanced by the Indemnified Party, but that ultimately the Indemnifying Party would be responsible for paying, which resulted from any transaction or activity contemplated by this Agreement.
|
18.
|
INSURANCE
|
18.1
|
The Operating Carrier shall procure and maintain for the benefit of the Marketing Carrier during the term of this Agreement with insurance carriers of known financial responsibility, insurance of the type and in the amounts listed below:
|
(a)
|
Third Party Legal Liability in respect of all operations, including but not limited to aircraft (owned and non-owned) liability (including risks hijacking and allied perils), passenger and crew baggage and personal effects, funeral and repatriation expenses (including crew), all reasonable expenses arising out of the Family Assistance Act (United States) and/or similar regulations applying elsewhere in the world, cargo, mail, hangarkeepers, comprehensive general liability, or its equivalent including
|
(b)
|
The Operating Carrier shall maintain a combined single limit of liability of not less than [***]per any one occurrence for each aircraft, including bodily injury, death, personal injury, property damage, passenger (including Codeshared Passengers and other revenue and non-revenue passengers) legal liability and war and allied perils combined, over all coverages and in the aggregate as applicable, but (i) personal injury limited to [***]per offense and in the annual aggregate except with respect to passengers (including Codeshared Passengers and other revenue and non-revenue passengers), and (ii) war and allied perils may be subject to an annual aggregate limit.
|
(c)
|
Hull all risk insurance, including war risk, and such policy shall include a waiver of subrogation in favor of the Marketing Carrier to the extent of the indemnity specified in Section 17.1.
|
(d)
|
Worker’s compensation and employer’s liability insurance, or such other similar or equivalent insurance carried outside of the United States, in accordance with statutory limits.
|
(e)
|
Privacy liability and information security/cyber insurance in the amount of [***]. Such policy shall be maintained for a minimum of [***]after the expiration or earlier termination of this Agreement or shall arrange for a [***]extended discovery (tail) provision if the policy is not renewed.
|
18.2
|
The Operating Carrier shall provide the Marketing Carrier with certificates of insurance evidencing such coverage no less than [***]prior to the commencement of the first Codeshared Flight, and thereafter within five [***]after the date of any renewal of such coverage. The certificates must indicate that the above coverage shall not be canceled or materially altered without [***]advance written notice to the Marketing Carrier. The notice period in respect of war and allied perils coverage shall be [***]or such lesser period as is or may be available in accordance with the policy providing such coverage.
|
19.
|
TAXES
|
19.1
|
Subject to Section 19.4, each Party shall be responsible for any net or gross income or franchise taxes (or taxes of a similar nature) on the revenues or income or any measure thereof which is attributable to it in connection with the sale of air transportation pursuant to this Agreement.
|
19.2
|
The Party that acts as the Ticketing Carrier in respect of any particular transaction shall collect, except as otherwise prohibited by law, all Ticket Taxes relating to tickets sold or travel documents issued by it with respect to air transport pursuant to this Agreement. The Parties hereby agree as follows:
|
(a)
|
The Ticketing Carrier shall collect, report and remit to the taxation authorities any non-interlineable Ticket Taxes levied in connection with sales of the Codeshared Flights.
|
(b)
|
The Ticketing Carrier shall collect any interlineable Ticket Taxes levied in connection with the sales of the Codeshared Flights. If the Ticketing Carrier is American, JetBlue shall report for any interlineable Ticket Taxes levied in connection with the sales of the Codeshared Flights to American and bill such interlineable Ticket Taxes in accordance with the Interline Traffic Agreement. If the Ticketing Carrier is JetBlue, American shall report for any interlineable Ticket Taxes levied in connection with the sales of the Codeshared Flights to JetBlue and bill such interlineable Ticket Taxes in accordance with the Interline Traffic Agreement. If the Ticketing Carrier is a third party, the Operating Carrier shall report any interlineable Ticket Taxes levied in connection with the sales of the Codeshared Flights to the Ticketing Carrier and bill such interlineable Ticket Taxes in accordance with the interline traffic agreement, or as may be otherwise agreed, between the Operating Carrier and the Ticketing Carrier. The Operating Carrier shall remit to taxation authorities all such interlineable Ticket Taxes.
|
(c)
|
The Operating Carrier may bill the Ticketing Carrier for any Ticket Taxes due or payable on or measured by passenger enplanement and payable or remittable by the Operating Carrier or the Marketing Carrier in accordance with industry guidelines outlined in the IATA Revenue Accounting Manual (“IATA-RAM”).
|
(d)
|
If the Ticketing Carrier is a third party, the Marketing Carrier shall use commercially reasonable efforts to cause such third party to implement the foregoing provisions.
|
19.3
|
Notwithstanding the provisions of Section 19.2, if the Ticketing Carrier is prohibited by law from collecting certain Ticket Taxes in the country where tickets are sold or where travel documents are issued, then the Ticketing Carrier is relieved only from collecting such Ticket Taxes so prohibited by law and (i) if the Marketing Carrier is the Ticketing Carrier it shall notify the Operating Carrier, and (ii) if a third party is the Ticketing Carrier the Marketing Carrier shall cause the Ticketing Carrier to notify the Operating Carrier, within thirty (30) days of the enactment of such laws which Ticket Taxes it is prohibited from collecting and render reasonable assistance to the Operating Carrier so that procedures can be implemented to collect such Ticket Taxes from the passenger.
|
19.4
|
Both Parties acknowledge that the tax laws of the countries in which they may operate in connection with the Codeshared Flights may require withholding of Taxes on certain of the payments that either of the Parties or their agents (the “Payor”) may be required to pay to the other Party (the “Payee”), under this Agreement. It is agreed that payments to the Payee shall be exclusive of such withholding, provided, however, that the Payor shall inform the Payee in writing with at least [***]advance notice of its intent to withhold the Taxes and the legal basis for such withholding. The Payor shall inform the Payee:
|
(a)
|
within [***]of receipt by the Payor of any directives that may be given to the Payor by such taxation authority; and
|
(b)
|
within [***]of payment by the Payor to the relevant taxation authority the amounts withheld by Payor.
|
19.5
|
If either Party receives notice from any taxation authority with respect to any assessment or potential assessment or imposition of any Tax (collectively, an “Assessment”) relating to this Agreement, that the other Party may be responsible for paying, directly or indirectly, the Party so notified shall inform the other Party in writing within [***]of receipt of such notice (provided, however, that the failure to give such notice shall not relieve the receiving Party of its obligations hereunder except to the extent that such failure is materially prejudicial to the other Party). If the Party receiving such notice from a taxation authority is or will be required to pay any Assessment for which the other Party is ultimately responsible, it shall be entitled to be indemnified against such Assessment in accordance with Section 17.5. The Indemnifying Party shall have the option to defend or contest such Assessment in accordance with the procedures set forth in Section 17.
|
20.
|
JOINT MANAGEMENT COMMITTEE
|
20.1
|
Coincident with the execution of this Agreement, American and JetBlue will create a joint management committee (the “Committee”). [***]The Committee will endeavor to meet annually (in person or by telephone) at a mutually agreed time and location and will meet at such additional times as it determines appropriate for the performance of its responsibilities or as reasonably requested by either Party. Each meeting will be conducted in accordance with an agenda to be determined as described below. Either Party may place an item on the agenda of any meeting of the Committee.
|
20.2
|
The Committee will oversee the management of the transactions and relationships contemplated in this Agreement, and, in that capacity, will review the planning and implementation of the cooperative services of American and JetBlue, and their respective airline Affiliates. [***]The Committee will consider ways to improve the performance and efficiency of the cooperative services to reduce costs and to increase the benefits afforded to American and JetBlue by the relationship. [***]The Committee will resolve any differences between the Parties on a fair and amicable basis. In performing its responsibilities, the Committee will be mindful of, and will comply with, all laws and regulations applicable to American and JetBlue, including, laws and regulations governing competition between American and JetBlue.
|
20.3
|
For only so long as the NEA Agreement is in effect, this Section 20 will be superseded by the terms regarding governance set forth in the NEA Agreement.
|
21.
|
FORCE MAJEURE
|
21.1
|
Except with respect to the performance of payment, confidentiality, and indemnity obligations, which shall be unconditional under this Agreement, neither Party shall be liable for delays in or failure to perform under this Agreement to the extent that such delay or failure (an “Excusable Delay”) (a) is caused by any act of God, war, act of terrorism,
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22.
|
GOVERNING LAW AND DISPUTE RESOLUTION
|
22.1
|
This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of New York (without regard to its conflict of laws principles) including all matters of construction, validity and performance.
|
22.2
|
All disputes arising out of or in connection with this Agreement shall be finally settled under the Rules of Arbitration of the American Arbitration Association (the “Rules”) by a panel of arbitrators appointed in accordance with such Rules. The arbitration panel shall consist of three (3) arbitrators who are knowledgeable about the legal, marketing, and other business aspects of the airline industry, and fluent in the English language. The arbitration may be conducted by only one (1) arbitrator if JetBlue and American agree in advance of the arbitration on a mutually acceptable individual. The arbitration proceedings shall take place in New York, New York, and shall be conducted in the English language.
|
22.3
|
Each Party irrevocably submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any State Court sitting in New York, for purposes of enforcing any arbitral award or for other legal proceedings arising out of this Agreement or any transactions contemplated in this Agreement. Each Party, to the fullest extent it may effectively do so under substantive governing law applicable to this Agreement, also irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court and any objection that it may have as to venue or inconvenient forum in respect of claims or actions brought in such court.
|
22.4
|
American irrevocably designates, appoints, authorizes and empowers as its agent for service of process the Secretary of State of the State of New York or C.T. Corporation System at its offices presently located at 111 Eighth Avenue, New York, NY 10011, to receive and acknowledge on behalf of American any process, notices, or other documents that may be served in any suit, action, or proceeding of the nature referred to in this Section 22 in any State or Federal court sitting in New York. American has empowered the Secretary of State of the State of New York or C.T. Corporation System as its agent for service of process by the granting of power of attorney. JetBlue irrevocably designates, appoints, authorizes and empowers as its agent for service of process the Secretary of State of the State of New York, to receive and acknowledge on behalf of JetBlue any process, notices, or other documents that may be served in any suit, action, or proceeding of the nature referred to in this Section 22 in any State or Federal court sitting in New York. JetBlue has empowered the Secretary of State of the State of New York as its agent for service of process by the granting of power of attorney. Such designation and appointment will continue unless and until notice is given. Nothing in this Section 22 affects the right of any Party to serve process in any manner permitted by law, or limits any right that any Party may have to bring proceedings against
|
22.5
|
JetBlue and American each acknowledge that the transactions contemplated in this Agreement involve commercial activity carried on in the United States of America. To the extent that either Party or any of its property is or becomes entitled at any time to any immunity on the grounds of sovereignty or otherwise, including under the Foreign Sovereign Immunities Act of 1976 of the United States of America, from any legal action, suit, arbitration proceeding or other proceeding, from set‑off or counterclaim, from the jurisdiction of any court of competent jurisdiction, from service of process, from attachment prior to judgment or after judgment, from attachment in aid of execution or levy or execution resulting from a decree or judgment, from judgment or from jurisdiction, that Party for itself and its property does hereby irrevocably and unconditionally waive all rights to, and agrees not to plead or claim any such immunity with respect to its obligations, liabilities or any other matter arising out of or in connection with this Agreement or its subject matter. The foregoing waiver and agreement is not subject to withdrawal in any jurisdiction.
|
22.6
|
In addition to any other remedy available to a Party under this Agreement, in the event of a dispute, the non-prevailing Party shall pay the prevailing Party’s reasonable costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with any suit or proceeding arising from such dispute.
|
22.7
|
For only so long as the NEA Agreement is in effect, this Section 22 will be superseded by the terms regarding governing law and dispute resolution set forth in the NEA Agreement.
|
23.
|
DATA PROTECTION, PRIVACY AND COVENANT TO COMPLY WITH ALL LAWS
|
23.1
|
The Parties agree to comply with the terms regarding data protection, privacy and compliance with laws set forth in the NEA Agreement. At any time when this Agreement is in effect but the NEA Agreement is not, the Parties agree to comply with the terms regarding data protection, privacy and compliance with laws set forth in the NEA Agreement as the Parties renegotiate this Agreement.
|
23.2
|
In performing its obligations under this Agreement, each Party shall, at its own cost and expense, fully comply with, and have all licenses under, all applicable federal, state, provincial and local laws, rules and regulations of the United States and all third countries including rules and regulations promulgated by the U.S. National Transportation Safety Board, U.S. Department of Transportation, U.S. Federal Aviation Administration, the U.S. Department of Defense, the U.S. Department of Homeland Security. Each Party further agrees to participate in (i) the Advance Passenger Information System (“APIS”) program whereby the Operating Carrier will, upon request, supply U.S. Customs and Border Protection (“CBP”) with the required passenger manifest data from its flight(s) inbound to and outbound from the United States at the time of departure; (ii) the DHS Electronic System for Travel Authorization (“ESTA”), and (iii) the DHS Secure Flight program.
|
23.3
|
If either Party has notice that a provision of this Agreement is contrary to any Applicable Laws or governmental regulations, that Party shall immediately notify the other Party in writing, such notice to include a description of the perceived violation of regulation and
|
24.
|
PUBLICITY
|
24.1
|
Except as required by Applicable Law, neither Party may issue any written press release concerning this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed.
|
25.
|
CONFIDENTIALITY
|
25.1
|
Except as necessary to obtain any Government Approvals or as otherwise provided below, each Party shall, and shall ensure that its directors, officers, employees, Affiliates, and professional advisors (collectively, the “Representatives”), at all times, maintain strict confidence and secrecy in respect of all Confidential Information of the other Party (including its Affiliates) received directly or indirectly as a result of this Agreement. If a Party (the “Disclosing Party”) is requested to disclose any Confidential Information of the other Party (the “Affected Party”) under the terms of a subpoena or order issued by a court or an order or request issued by a governmental authority (each a “Request”), it shall (a) notify the Affected Party immediately of the existence, terms, and circumstances surrounding such Request, (b) consult with the Affected Party on the advisability of taking legally available steps to resist or narrow such Request and provide the Affected Party, reasonable time and assistance, as applicable under the terms of and circumstances surrounding such Request, to take appropriate action to resist or narrow such Request, and (c) furnish only such portion of the Confidential Information as it is required to disclose, as reasonably determined by the Disclosing Party’s legal counsel, to comply with such Request and use commercially reasonable efforts to obtain an order or other reliable assurance that confidential treatment shall be accorded to the disclosed Confidential Information. Each Party agrees to transmit Confidential Information only to such of its Representatives as required for the purpose of implementing and administering this Agreement, and shall inform such Representatives of the confidential nature of the Confidential Information and instruct such Representatives to treat such Confidential Information in a manner consistent with this Section 25.1.
|
25.2
|
Within [***] after the termination of this Agreement, each Party shall, either deliver to the other Party or destroy all copies of the other Party’s Confidential Information in its possession or the possession of any of its Representatives (including, any reports, memoranda or other materials prepared by such Party or at its direction) and purge all copies encoded or stored on magnetic or other electronic media or processors, unless and only to the extent that the Confidential Information is necessary for the continued administration and operation of such Party’s programs or is reasonably necessary in connection with the resolution of any dispute between the Parties.
|
25.3
|
Each Party acknowledges and agrees that in the event of any breach of this Section 25, the Affected Party shall be irreparably and immediately harmed and could not be made whole by monetary Damages. Accordingly, it is agreed that, in addition to any other remedy at law or in equity, the Affected Party shall be entitled to an injunction or injunctions (without the posting of any bond and without proof of actual Damages) to prevent breaches or threatened breaches of this Section 25 and/or to compel specific performance of this Section 25.
|
25.4
|
The confidentiality obligations of the Parties under this Section 25 shall survive the Termination Date or expiration of this Agreement for a period of [***].
|
25.5
|
For only so long as the NEA Agreement is in effect, Section 25 will be superseded by the terms regarding confidentiality set forth in the NEA Agreement
|
26.
|
ASSIGNMENT
|
26.1
|
Neither Party may assign or otherwise convey any of its rights under this Agreement, or delegate or subcontract any of its duties hereunder, without the prior written consent of the other Party; provided, however, that each of American and JetBlue may assign, subcontract or delegate any of its rights, duties or obligations under this Agreement to any of its Affiliates provided that such assignment and/or delegation shall not relieve American or JetBlue of any of its obligations under this Agreement.
|
27.
|
SEVERABILITY
|
27.1
|
If any provision of this Agreement is or becomes illegal, invalid or unenforceable under the law of any jurisdiction, such provision shall be severed from this Agreement in the jurisdiction in question and shall not affect the legality, validity or enforceability of the remaining provisions of this Agreement nor the legality, validity or the enforceability of such provision under the law of any other jurisdiction; unless, in the reasonable opinion of either Party, any such severance affects the commercial basis of this Agreement, in which case the Party shall so inform the other Party and the Parties shall negotiate in good faith to agree upon modification of this Agreement so as to maintain the balance of the commercial interests of the Parties. If, however, such negotiations are not successfully concluded within [***]from the date a Party has informed the other that the commercial basis has been affected, either Party may terminate this Agreement by giving at least [***]prior written notice to the other Party.
|
28.
|
EXCLUSIVITY
|
28.1
|
This Agreement is non-exclusive and does not preclude either Party from entering into or maintaining marketing relationships, including codesharing, with other airlines. During the term of this Agreement, JetBlue shall not, and shall cause its Affiliates not to:
|
(a)
|
[***]or
|
(b)
|
[***]
|
28.2
|
The foregoing Section 28.1 shall not apply to any established codeshared arrangements in force as of the Effective Date between JetBlue and third parties, and any future renewals or modifications of such commitments.
|
29.
|
FURTHER ASSURANCES
|
29.1
|
Each Party shall perform such further acts and execute and deliver such further instruments and documents at such Party’s cost and expense as may be required by Applicable Law,
|
30.
|
AFFILIATES
|
30.1
|
If and to the extent the transactions or activities contemplated by this Agreement require the cooperation or participation of an Affiliate or an Authorized Wet Lessor that is not a party hereto, then its Parent Carrier shall cause such Affiliate or Authorized Wet Lessor to cooperate or participate in such transaction or activity. Without limiting the generality of the foregoing, if such Affiliate or Authorized Wet Lessor operates as an Operating Carrier in connection with this Agreement and is not a party to a separate codesharing agreement or addendum hereto with respect to such operations, its Parent Carrier shall cause it to comply with all obligations imposed on an Operating Carrier hereunder as if such Affiliate or Authorized Wet Lessor were a party hereto. The Parent Carrier shall be jointly and severally obligated and liable with such Affiliate or Authorized Wet Lessor for all such obligations, including, the indemnity and insurance requirements of this Agreement. In addition, the Parent Carrier shall cause such Affiliate or Authorized Wet Lessor to perform such acts and execute and deliver such further instruments and documents as may reasonably be required by the other Party to provide for such cooperation and participation, including, execution of an addendum providing for such Affiliate or Authorized Wet Lessor to become a party to this Agreement.
|
31.
|
MISCELLANEOUS
|
31.1
|
Except where otherwise wholly superseded by a prevailing agreement, this Agreement contains the entire agreement between the Parties relating to its subject matter, and supersedes any prior understandings or agreements between the Parties regarding the same subject matter. This Agreement may not be amended or modified except in writing signed by a duly authorized Representative of each Party.
|
31.2
|
The relationship of the Parties hereunder shall be that of independent contractors. Neither Party is intended to have, and neither of them shall represent to any other Person that it has, any power, right or authority to bind the other, or to assume, or create, any obligation or responsibility, express or implied, on behalf of the other, except as expressly required by this Agreement or as otherwise permitted in writing. Nothing in this Agreement shall be construed to create between the Parties and/or the Parties’ Representatives any partnership, joint venture, employment relationship, franchise or agency (except that the Operating Carrier shall have supervisory control over all passengers during any Codeshared Flight, including any employees, agents or contractors of the Marketing Carrier who are on board any such Codeshared Flight).
|
31.3
|
In the event that there occurs a substantial change in market conditions in general or in the condition of either Party, which change is not substantially the result of an act or omission of the Party requesting a change or amendment to this Agreement, and which change has a material adverse effect on either Party to this Agreement, including but not limited to those scenarios contemplated in Section 16.3(a)-(c), then American or JetBlue may propose a review of or amendment to this Agreement to limit or expand any of the terms, to extend the relationship to additional activities or city‑pair destinations or otherwise to modify in
|
31.4
|
All rights, remedies and obligations of the Parties hereto shall accrue and apply solely to the Parties hereto and their permitted successors and assigns; there is no intent to benefit any third parties, including the creditors of either Party.
|
31.5
|
This Agreement may be executed and delivered by the Parties in separate counterparts, each of which when so executed and delivered shall be an original, but all of which taken together shall constitute one and the same instrument.
|
31.6
|
No failure to exercise and no delay in exercising, on the part of any Party, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof of the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. The failure of any Party to insist upon a strict performance of any of the terms or provisions of this Agreement, or to exercise any option, right or remedy herein contained, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in full force and effect. No waiver by any Party of any term or provision of this Agreement shall be deemed to have been made unless expressed in writing and signed by such Party.
|
31.7
|
This Agreement is the product of negotiations between JetBlue and American, and shall be construed as if jointly prepared and drafted by them, and no provision hereof shall be construed for or against any Party by reason of ambiguity in language, rules of construction against the drafting Party, or similar doctrine. The headings to the clauses, sub-clause and parts of this Agreement are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. The terms “this Agreement,” “hereof,” “hereunder” and any similar expressions refer to this Agreement and not to any particular Section or other portion hereof. As used in this Agreement, the words “include” and “including,” and variations thereof, will be deemed to be followed by the words “without limitation” and “discretion” means sole discretion.
|
31.8
|
Although translations of this Agreement may be made into any other language for the convenience of the Parties, the English version will govern for all purposes of the interpretation and performance of this Agreement.
|
32.
|
CONSEQUENTIAL DAMAGES
|
32.1
|
EXCEPT FOR (A) BREACHES OF ANY CONFIDENTIALITY, PRIVACY, DATA SECURITY OBLIGATIONS, AND (B) DAMAGES RESULTING FROM BREACH OF SECTION 28.1, NEITHER PARTY SHALL BE LIABLE FOR ANY EXEMPLARY, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOST REVENUES, LOST PROFITS OR LOST PROSPECTIVE ECONOMIC ADVANTAGE, ARISING FROM ANY PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT, EVEN IF SUCH PARTY KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY THEREOF, AND EACH PARTY HEREBY RELEASES AND WAIVES
|
33.
|
NOTICES
|
33.1
|
Unless otherwise expressly required in this Agreement or the Procedures Manual, all notices, reports, invoices and other communications required or permitted to be given to or made upon a Party to this Agreement shall be in writing, shall be addressed as provided below and shall be considered as properly given and received: (i) when delivered, if delivered in person (and a signed acknowledgment of receipt is obtained); (ii) by electronic transmission upon receipt of a confirmation from the recipient via electronic transmission; (iii) three (3) Business Days after dispatch, if dispatched by a recognized express delivery service that provides signed acknowledgments of receipt; or (iv) seven (7) Business Days after deposit in the applicable postal service delivery system. For the purposes of notice, the addresses of the Parties shall be as set forth below; provided, however, that either Party shall have the right to change its address for notice to any other location by giving at least three (3) Business Days prior written notice to the other Party in the manner set forth above.
|
•
|
“PAOREQ” or “Product Availability Request” means the EDIFACT message in which the Marketing Carrier requests an Operating Carrier’s availability;
|
•
|
“PAORES” or “Product Availability Response” means the EDIFACT message in which the Operating Carrier responds to the Marketing Carrier’s availability request;
|
•
|
“ITAREQ” or “Inventory Adjustment Request” means the EDIFACT message in which the Marketing Carrier communicates a sale from the Operating Carrier’s inventory; and
|
•
|
“ITARES” or “Inventory Adjustment Response” means the EDIFACT message in which the Operating Carrier confirms the Marketing Carrier’s sale of its inventory.
|
|
Codeshare Commission
|
[***]
|
|
|
|
|
|
1.
|
Compliance with 49 U.S.C. 41720.
|
1.1
|
Definitions. Terms with their initial letters capitalized have the meanings set forth in Appendix 1 unless they are defined in the body of this Agreement or in the body of other appendices.
|
1.2
|
Implementation of this Agreement. While this Agreement will become effective on the Effective Date, the Parties acknowledge that this Agreement and other elements of the NEA may require the Parties to provide notice to a Competent Authority and may be subject to regulatory review or further government inquiry. The Parties agree that they may be unable to fully implement the NEA and therefore this Agreement until each Party in its reasonable judgment believes such regulatory review or further government inquiry by a Competent Authority regarding the NEA and this Agreement has been completed. Pursuant to Sections 1.3 and 1.4 of the NEA Agreement, upon the Parties’ mutual determination that implementation of the NEA would not entail unreasonable regulatory or litigation conditions or risks, the “Implementation Date” as defined in the NEA Agreement will be the “Implementation Date” for this Agreement. The Parties will act in good faith to undertake within 30 days following the Implementation Date the activities indicated in this Agreement.
|
1.3
|
Supremacy of this Agreement. This Agreement shall take precedence over any provisions of the NEA Agreement, the Codeshare Agreement and the Frequent Flyer Program Agreements that are inconsistent with regard to the specific subject matter of this Agreement.
|
1.4
|
Worked Examples. Appendix 4 contains worked examples of the calculations described below and in Appendix 2. These worked examples are for illustrative purposes only. To the extent that there is any conflict between the worked examples in Appendix 4 and any formulae, calculations or other terms of this Agreement, including any other Appendices, such other formulae, calculations and terms shall supersede the worked examples.
|
2.1
|
Mutual Growth Incentive Payment Arrangements. The Mutual Growth Incentive Payments will be calculated using the formulas set forth in this Article 2
|
3.1
|
Carrier Surcharge Remittance. Where a Party acts as a Ticketing Carrier with respect to the Services of an Operating Carrier (the “Operating Carrier Services”), the Ticketing Carrier will collect any Carrier Surcharges for the Operating Carrier Services on behalf of the Operating Carrier and shall remit to the Operating Carrier any Carrier Surcharges applicable to an uplifted flight coupon for the Operating Carrier Services that are attributable to the Operating Carrier in accordance with the methodologies and procedures described in the
|
3.1.1
|
For sector-based Carrier Surcharges, the Ticketing Carrier will remit to the Operating Carrier the Carrier Surcharges actually collected for the sectors included in the Operating Carrier Services.
|
3.1.2
|
For Carrier Surcharges based on the origin and destination (“O&D”) of the applicable flight, the Parties will establish a process to be mutually agreed that will determine the proration of Carrier Surcharges. The Ticketing Carrier will then remit to the Operating Carrier the agreed-upon prorated proportion of the applicable Carrier Surcharges for the sectors included in the Operating Carrier Services.
|
3.1.3
|
For the avoidance of doubt, for purposes of Mutual Growth Incentive Payment Arrangements under Article 2, Carrier Surcharges collected by a Ticketing Carrier and remitted to the Operating Carrier that are attributable to the Operating Carrier Services that are: [***].
|
4.1
|
Quarterly Procedures for Calculation of Carrier Reporting Items and Final Calculations.
|
4.1.1
|
Periodic Revenue Statement. Within [***]after the end of each quarterly Accounting Period or [***]after the end of the final quarterly Accounting Period for each Year, as applicable, each Party agrees to prepare, or cause to be prepared, and deliver to the other Party a preliminary report (a Party’s “Periodic Revenue Statement”) containing its Carrier Reporting Items for such Accounting Period, in the currencies for each line item specified in Appendix 2 in a format to be mutually agreed by the Parties. The Carrier Reporting Items shall include any adjustments to amounts reported in a previous Accounting Period as a result of such adjusted amounts becoming available in the ordinary course in accordance with the NEA Standard Accounting Principles. Any such adjusted amounts shall reflect the IATA Exchange Rate effective at the date of conversion in accordance with Appendix 2. The Periodic Revenue Statement will contain explanations of material trends or changes, such as any material customer policy changes or similar developments that occurred during the applicable Accounting Period. The Carrier Reporting Items set forth in the first Periodic Revenue Statement include, to the extent applicable, the Carrier Reporting Items applicable to any Scheduled Passenger Services of the Parties on all NEA Routes.
|
4.1.2
|
Reporting of Periodic Final Calculations. Following review by each Party of the other Party’s Periodic Revenue Statements, but in any event by no later than [***]following the end of each quarterly Accounting Period, each Party shall prepare, or cause to be prepared, and deliver to the other Party the final calculations of its Carrier Reporting Items for that Accounting Period (the “Periodic Final Calculations”) in an updated Periodic Revenue Statement, marked to show any changes from such Party’s initial Periodic Revenue Statement for that Accounting Period, including an explanation of any material variances from such Party’s initial Periodic Revenue Statement.
|
4.1.3
|
Final Determination of Relevant Amounts. Subject to the provisions of Section 4.7, each Party’s Periodic Mutual Growth Incentive Payment for a quarterly Accounting Period shall be calculated based on the Periodic Final Calculations of each Party. If the Parties are then in a good faith dispute regarding their respective Periodic Final Calculations for that Accounting Period, they shall each make any Periodic Mutual Growth Incentive Payment that they in good faith believe is required and seek to resolve their dispute regarding the disputed portion as soon as possible thereafter.
|
4.2
|
Periodic Mutual Growth Incentive Payments. Upon completion of the calculation process outlined in Section 4.1 for each quarterly Accounting Period, each Party agrees to pay the other Party [***] Where the result of the foregoing is a positive number, the paying Party shall pay the receiving Party the Periodic Mutual Growth Incentive Payment. Where the result of the foregoing is a negative number, the paying Party shall pay the receiving Party the positive value of the negative number. Each Party agrees to make any payments required by this Section 4.2 through the Airlines Clearing House in accordance with its procedures, within [***]following the end of the applicable Accounting Period.
|
4.3
|
Periodic Correcting Payments. Without limiting Section 4.7, if during any Year, before the Final Mutual Growth Incentive Payment is determined pursuant to Section 4.4, the Parties determine that prior Periodic Mutual Growth Incentive Payments within that Year were not calculated in accordance with this Agreement or the NEA Standard Accounting Principles, then, the next Periodic Mutual Growth Incentive Payment shall be adjusted accordingly.
|
4.4
|
Annual Procedures for Calculation of Carrier Reporting Items and Final Calculations.
|
4.4.1
|
Annual Revenue Statement. Each Party’s final Periodic Revenue Statement for each Year will also serve as its “Annual Revenue Statement” for purposes of this Section 4.4.
|
4.4.2
|
Review of Annual Revenue Statements. Each Party shall instruct its external auditors to carry out and complete an agreed-upon procedures review, or other review as agreed between the Parties, of its Annual Revenue Statement for the purposes of issuing, within [***]after receipt of the other Party’s Annual Revenue Statement, a report of factual findings to confirm whether the Included Revenue, Included Costs and Capacity for that Year have been calculated in accordance with the terms of this Agreement and the NEA Standard Accounting Principles (“Annual Auditor
|
4.4.3
|
Reporting of Annual Final Calculations. Each Party agrees to prepare, or cause to be prepared, and deliver to the other Party within [***]following each Party’s receipt of its Annual Auditor Report, the final calculations of its Carrier Reporting Items for that Year, which reflect the findings of the Annual Auditor Report (the “Annual Final Calculations”). Each Party agrees to present its Annual Final Calculations in an updated Annual Revenue Statement, marked to show any changes from such Party’s initial Annual Revenue Statement for that Year, including an explanation of any material variances from such Party’s initial Annual Revenue Statement.
|
4.4.4
|
Objections to Annual Final Calculations. Within [***]after the receipt of the other Party’s Annual Auditor Report, each Party will complete its review of the other Party’s Annual Final Calculations and notify the other Party in writing regarding any aspect of such Party’s Annual Final Calculations that it believes may not have been prepared in accordance with this Agreement or the NEA Standard Accounting Principles (or if based on estimates, any aspect it believes may not have been reasonably estimated) and specifying the changes proposed to be made in order for such Annual Final Calculations to be viewed as conforming to this Agreement and the NEA Standard Accounting Principles. The other Party shall then have [***]after the receipt of such objection to review and to respond to the objection.
|
4.4.5
|
Final Determination of Relevant Amounts. Subject to the provisions of Section 4.9, each Party’s Final Mutual Growth Incentive Payment for a Year shall be calculated based on the Annual Final Calculations of each Party. If the Parties are then in a good faith dispute regarding their respective Annual Final Calculations for that Year, they shall each make any Final Mutual Growth Incentive Payment that they in good faith believe is required and seek to resolve their dispute regarding the disputed portion as soon as possible thereafter.
|
4.5
|
Final Mutual Growth Incentive Payment. Upon completion of the calculation process outlined in Section 4.4 for each Year, [***]. Each Party agrees to make any payments required
|
4.6
|
Interest on Late Payments. If any payment amount hereunder is overdue, and it is determined that a Party owed such amount to the other Party, then the Party owing such amount shall pay interest at the Default Rate on the amount owed to the other Party, from the last date on which the proper payment was due until the date actually paid.
|
4.7
|
Interest Accrual. Interest shall not accrue except in accordance with Section 4.6.
|
4.8
|
Errors in Calculation of NEA Revenue Amount. If it is determined by the Parties or the auditors that any Annual Revenue Statement was not calculated in accordance with this Agreement or the NEA Standard Accounting Principles (the Year or Stub Period represented by such Annual Revenue Statement, an “Incorrect Year”), then each Party’s Retained Revenue or other payments under this Article 4 shall be restated for each such Incorrect Year and a corresponding correcting payment (a “Correcting Payment”) will be made by the Party that received more than it was due. In addition, the Parties will make any necessary conforming changes to the Base Period Data. [***] A Party that wishes to claim that a Year or a Stub Period is an Incorrect Year shall promptly notify the other Party of its claim in order that discussions among the Parties may be commenced.
|
4.9
|
Audit Process; Retention of Records.
|
4.9.1
|
Audit Process. From the Effective Date, subject to Applicable Law, each Party agrees to, and agrees to cause its Affiliates and Franchisees to, promptly make available to the other Party’s third party auditors any financial data and other information necessary to perform the calculations required by this Agreement and confirm the accuracy of such Party’s payments in accordance with this Agreement and the NEA Standard Accounting Principles. For the purposes of the foregoing sentence, promptly shall be deemed to mean within ten (10) Business Days with respect to information that is readily available and, with respect to other information, as promptly as reasonably practicable. Neither Party will be required to disclose information to the other Party in breach of any confidentiality obligation to a third party but will disclose it to the other Party’s auditors if required under this Section 4.9 provided that the auditors are subject to confidentiality obligations.
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4.9.2
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Access. From the Effective Date, for the purposes of Section 4.9.1 upon reasonable notice, and subject to Applicable Law, the Parties shall, and shall cause each of their respective Affiliates and Franchisees to, afford the other Party’s auditors reasonable access during normal business hours upon reasonable prior notice to all of their, and their respective Affiliates’ and Franchisees’ personnel, books and records (including their accounting information and the outputs of their accounting systems), reasonably required to calculate and confirm the applicable financial figures necessary to calculate the Mutual Growth Incentive Payment amounts.
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4.9.3
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Retention of Records. Each Party shall retain such output and backup as may reasonably be required to verify the calculations of payments due under this
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5.1
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Each Party shall be solely responsible for any net or gross income, franchise or gross receipts taxes (or taxes of a similar nature) imposed with respect to any income received or profits recognized for tax purposes by such Party in connection with the transactions contemplated by this Agreement.
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5.2
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Nothing in this Agreement is intended or shall be construed to constitute a transfer of any assets or to create or establish any legal partnership, joint venture or any other separate incorporated or unincorporated entity or fiduciary relationship among or between the Parties for tax purposes in the United States or any other country where provisions of this Agreement may need to be implemented. Furthermore, unless required by any Applicable Law, no Party will make any tax election, file a declaration and/or statement or tax return which is or may be construed to be inconsistent with or detrimental to the intent of the Parties to not create a partnership for tax purposes in any jurisdiction (whether national, provincial, state or a local subdivision) in any country, nor withhold or deduct tax payments under this Agreement on the assumption that there is a partnership or similar entity. The Parties shall promptly consult from time to time with respect to appropriate disclosure by the Parties and in response to any tax audit, tax appeal, tax litigation or request for a tax ruling in which tax aspects of this Agreement are subject to review. The Parties shall keep each other reasonably informed with respect to material developments regarding any such tax audit, tax appeal, tax litigation or request for a tax ruling. Each Party agrees not to bind the other Party with respect to any tax audit, tax appeal or tax litigation. Without limiting the preceding sentence, each Party shall be considered to have retained such rights and obligations (if any) as are provided for under any Applicable Law with respect to any tax examination, proposed adjustment or proceeding relating to this Agreement.
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5.3
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Each Party agrees to notify the other Party promptly upon receipt from any governmental tax authority of any notice or request for information relating to this Agreement, or the assessment of any tax relating to this Agreement. The Parties agree to consult with each other in connection with the drafting of responses made to the government tax authority.
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5.4
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The Parties shall consult on the selection of outside tax counsel and other tax advisors retained to jointly represent the Parties on tax matters relating to this Agreement and the sharing of expenses for the retention of the tax advisor on an equal basis or such other formula that best ensures an equitable allocation of burden as may be agreed to by the Parties.
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5.5
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Each Party shall have the right to seek the opinion of independent tax counsel relating to this Agreement with the understanding and intent to share information with the other Party as appropriate. Each Party agrees to consult with the other Party prior to disclosing any tax opinion with respect to this Agreement to any governmental tax authority.
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5.6
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Notwithstanding any provision herein, this Agreement does not change the obligation or liability of either Party to timely collect and remit any transportation taxes, government user
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5.7
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In the event one Party pays a tax that the other Party is responsible for under the Mutual Growth Incentive Payment Arrangements, such other Party shall promptly reimburse the Party for taxes paid on its behalf to the extent not creditable or refundable. Advance notice shall be provided to such other Party and applicable documentation of taxes paid.
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5.8
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The Parties acknowledge and agree that all payments made to a Party under this Agreement will be made without deduction or withholding for taxes except to the extent that any such deduction or withholding is required by Applicable Law at the time of payment. The Party that is required to make such withholding (the “Paying Party”) shall: (a) deduct those taxes from such payment; (b) timely remit the taxes to the proper taxing authority; and (c) send evidence of the obligation together with proof of tax payment to the recipient Party (the “Payee Party”) on a timely basis following such tax payment; provided, however, that before making any such deduction or withholding, the Paying Party shall give the Payee Party notice of the intention to make such deduction or withholding (such notice, which shall include the authority, basis and method of calculation for the proposed deduction or withholding, shall be given at least a reasonable period of time before such deduction or withholding is required, in order for such Payee Party to obtain reduction of or relief from such deduction or withholding). Each Party agrees to cooperate, and cause its Affiliates and Franchisees to cooperate, with the other Parties in claiming refunds or exemptions from such deductions or withholdings to the extent permitted under Applicable Law, including under any relevant agreement or treaty which is in effect. In the event that a liability is imposed by a taxing authority upon the Paying Party in respect of a failure to withhold taxes on an amount payable or allocable to the Payee Party under this Agreement, the Payee Party shall indemnify and hold harmless the Paying Parties from any and all liabilities, claims and losses with respect to such failure to withhold, provided that (i) the Paying Party shall notify the Payee Party promptly upon the receipt of any claim from a taxing authority which might give rise to an indemnification under this Section 5.8 (although the Paying Party’s delay in promptly notifying the Payee Party shall only reduce the Payee Party’s liability to indemnify the Paying Party to the extent that the Payee Party is prejudiced by such delay); (ii) the Payee Party shall be entitled to participate, at its own expense, and with counsel of its choosing, in the defense of any claim which may give rise to liability under this Section 5.8; and (iii) the Paying Party may not settle any liability with a taxing authority, to the extent such settlement would create a liability for the Payee Party under this Section 5.8, without the prior written consent of the Payee Party, which consent will not be unreasonably withheld, conditioned or delayed. Each Party and any other recipient of payments under this Agreement shall provide to the other Parties, at the time or times reasonably requested by such other Parties or as required by Applicable Law, such properly completed and duly executed documentation (for example, IRS Forms W-8 or W-9) in the form required by the relevant tax authorities as will permit payments made under this Agreement to be made without, or at a reduced rate of, withholding for taxes.
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5.9
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Notwithstanding anything to the contrary herein, any amounts payable by one Party to the other Party under this Agreement shall be exclusive of value added tax, goods and services
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6.1
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Term. This Agreement will remain in effect for as long, but only for as long, as the NEA Agreement remains in effect and for any wind down period as set forth therein. A Party shall be entitled to terminate this Agreement only in accordance with the NEA Agreement. This Agreement and the NEA Agreement set out the only circumstances in which this Agreement will terminate.
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6.2
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Effect of Termination. Termination of this Agreement shall be without prejudice to any rights or liabilities that accrued under this Agreement prior to termination. Sections 1.1, 4.9.3, 5, 6.2, 6.3, 7 and Appendix 1 shall survive any termination or expiration of this Agreement.
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6.3
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Payments upon Termination. If this Agreement terminates, the effective end date for Mutual Growth Incentive Payment Arrangements will be deemed to be the date of the last NEA Route flight’s scheduled departure on the effective date of termination. Following the conclusion of the final quarterly or annual Accounting Period, as applicable, the Parties will calculate the prorated amounts and adjustments for such Accounting Period and determine all payments to be made in accordance with the procedures for determining the Final Mutual Growth Incentive Payment in Section 4.5.
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7.1
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The following provisions of the NEA Agreement will apply to this Agreement and are hereby incorporated herein mutatis mutandis: Articles 6 (Confidentiality), 7 (Notices), 8 (Governing Law; Venue), 9 (Consequential Damages), and 10 (Miscellaneous).
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(i)
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“Included Revenue” of a Party shall mean [***]
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Route
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GCD
(in miles) |
Route
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GCD
(in miles) |
Route
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GCD
(in miles) |
[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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Fleet Type
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Equivalent-Seats
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Fleet Type
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Equivalent-Seats
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[***]
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[***]
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[***]
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[***]
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Mutual Growth Incentive Payment Worked Example – Calculating Incentive Payment of 2021
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[***]
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1.
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I have reviewed this Quarterly Report on Form 10-Q of JetBlue Airways Corporation;
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2.
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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;
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3.
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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 the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’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 the registrant and have:
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a)
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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 the registrant, 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;
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b)
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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;
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c)
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evaluated the effectiveness of the registrant’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
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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November 9, 2020
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By:
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/s/ ROBIN HAYES
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Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of JetBlue Airways Corporation;
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2.
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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;
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3.
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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 the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’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 the registrant and have:
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a)
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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 the registrant, 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;
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b)
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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;
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c)
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evaluated the effectiveness of the registrant’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
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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November 9, 2020
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By:
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/s/ STEVE PRIEST
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Chief Financial Officer
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Date:
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November 9, 2020
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By:
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/s/ ROBIN HAYES
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Chief Executive Officer
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Date:
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November 9, 2020
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By:
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/s/ STEVE PRIEST
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Chief Financial Officer
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