☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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38-1747023
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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2800 Executive Way
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Miramar
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Florida
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33025
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Voting Common Stock, $0.0001 par value
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SAVE
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New York Stock Exchange
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Non-Voting Common Stock, $0.0001 par value
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SAVE
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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(Do not check if a smaller reporting company)
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Emerging growth company
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☐
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Class
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Number of Shares
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Common Stock, $0.0001 par value per share
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68,455,011
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PART I
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Page
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PART II
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PART III
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PART IV
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•
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high aircraft utilization;
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•
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high-density seating configurations on our aircraft along with a simplified onboard product designed to lower costs;
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•
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minimal hub-and-spoke network inefficiencies;
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•
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highly productive workforce;
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•
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opportunistic outsourcing of operating functions;
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•
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operating a single-fleet type of Airbus A320-family aircraft that is one of the youngest and most fuel efficient in the United States and operated by common flight crews;
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•
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reduced sales, marketing and distribution costs through direct-to-consumer marketing;
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•
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efficient flight scheduling, including minimal ground times between flights; and
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•
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a company-wide business culture that is keenly focused on driving costs lower.
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•
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charging for checked and carry-on baggage;
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•
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passing through all distribution-related expenses;
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•
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charging for premium seats and advance seat selection;
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•
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maintaining consistent ticketing policies, including service charges for changes and cancellations;
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•
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generating subscription revenue from our $9 Fare Club low-fare subscription service;
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deriving brand-based revenues from proprietary services, such as our FREE SPIRIT affinity credit card program;
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•
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offering third-party travel products (travel packages), such as hotel rooms, ground transportation (rental and hotel shuttle products) and attractions (show or theme park tickets) packaged with air travel on our website; and
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•
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selling third-party travel insurance through our website.
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•
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keeping a consistent focus on maintaining low unit operating costs;
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•
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ensuring our sourcing arrangements with key third parties are regularly benchmarked against the best industry standards;
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•
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generating and maintaining an adequate level of liquidity to insulate against volatility in key cost inputs, such as fuel, and in passenger demand that may occur as a result of changing general economic conditions.
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Employee Groups
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Representative
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Amendable Date
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Pilots
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Air Line Pilots Association, International (ALPA)
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February 2023
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Flight Attendants
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Association of Flight Attendants (AFA-CWA)
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May 2021
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Dispatchers
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Professional Airline Flight Control Association (PAFCA)
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October 2023
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Ramp Service Agents
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International Association of Machinists and Aerospace Workers (IAMAW)
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June 2020
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Passenger Service Agents
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Transport Workers Union of America (TWU)
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NA
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•
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changes and volatility in general economic conditions, including the severity and duration of any downturn in the U.S. or global economy and financial markets;
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•
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changes in consumer preferences, perceptions, spending patterns or demographic trends, including any increased preference for higher-fare carriers offering higher amenity levels, and reduced preferences for low-fare carriers offering more basic transportation;
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•
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higher levels of unemployment and varying levels of disposable or discretionary income;
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•
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depressed housing and stock market prices; and
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•
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lower levels of actual or perceived consumer confidence.
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substantial loss of revenue and flight disruption costs caused by the grounding of all commercial air traffic in or headed to the United States by the FAA for days after the terrorist attacks;
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•
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increased security and insurance costs;
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•
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increased concerns about future terrorist attacks;
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•
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airport shutdowns and flight cancellations and delays due to security breaches and perceived safety threats; and
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significantly reduced passenger traffic and yields due to the subsequent dramatic drop in demand for air travel.
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•
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require a substantial portion of cash flow from operations for operating lease and maintenance deposit payments, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
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•
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limit our ability to make required pre-delivery deposit payments, or PDPs, including those payable to our aircraft and engine manufacturers for our aircraft and spare engines on order;
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•
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limit our ability to obtain additional financing to support our expansion plans and for working capital and other purposes on acceptable terms or at all;
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•
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make it more difficult for us to pay our other obligations as they become due during adverse general economic and market industry conditions because any related decrease in revenues could cause us to not have sufficient cash flows from operations to make our scheduled payments;
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•
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reduce our flexibility in planning for, or reacting to, changes in our business and the airline industry and, consequently, place us at a competitive disadvantage to our competitors with fewer fixed payment obligations; and
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•
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cause us to lose access to one or more aircraft and forfeit our rent deposits if we are unable to make our required aircraft lease rental and debt payments and our lessors or lenders exercise their remedies under the lease and debt agreements, including cross default provisions in certain of our leases and mortgages.
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•
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maintain profitability;
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•
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acquire delivery positions of and/or financing for new or used aircraft;
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•
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access airports located in our targeted geographic markets where we can operate routes in a manner that is consistent with our cost strategy;
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acquire new and used aircraft in accordance with our intended delivery schedule, and obtain sufficient spare parts or related support services from our suppliers on a timely basis;
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•
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gain access to international routes;
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•
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access sufficient gates and other services at airports we currently serve or may seek to serve; and
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maintain efficient utilization and capacity of our existing aircraft.
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•
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increases in airport rates and charges;
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•
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limitations on take-off and landing slots, airport gate capacity or other use of airport facilities;
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•
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termination of our airport use agreements, some of which can be terminated by airport authorities with little notice to us;
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•
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increases in airport capacity that could facilitate increased competition;
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•
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international travel regulations such as customs and immigration;
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•
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increases in taxes;
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changes in the law that affect the services that can be offered by airlines in particular markets and at particular airports;
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•
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restrictions on competitive practices;
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•
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the adoption of statutes or regulations that impact customer service standards, including security standards; and
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•
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the adoption of more restrictive locally-imposed noise regulations or curfews.
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announcements concerning our competitors, the airline industry or the economy in general;
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strategic actions by us or our competitors, such as acquisitions or restructurings;
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•
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increased price competition;
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•
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media reports and publications about the safety of our aircraft or the aircraft type we operate;
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•
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new regulatory pronouncements and changes in regulatory guidelines;
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•
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changes in the price of aircraft fuel;
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•
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announcements concerning the availability of the type of aircraft we use;
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•
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general and industry-specific economic conditions;
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changes in financial estimates or recommendations by securities analysts or failure to meet analysts’ performance expectations;
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•
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sales of our common stock or other actions by investors with significant shareholdings;
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trading strategies related to changes in fuel or oil prices; and
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•
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general market, political and economic conditions.
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our board of directors is divided into three classes, with each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors at an annual meeting;
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actions to be taken by our stockholders may only be effected at an annual or special meeting of our stockholders and not by written consent;
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special meetings of our stockholders can be called only by the Chairman of the Board or by our corporate secretary at the direction of our board of directors;
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•
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advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our stockholders may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and
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•
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our board of directors may, without stockholder approval, issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control.
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Aircraft Type
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Seats
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Average Age (years)
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Number of Aircraft
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Number Owned
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Number Leased
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A319
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145
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13.3
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31
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23
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8
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A320ceo
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174 - 182
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5.2
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64
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36
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28
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A320neo
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182
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1.2
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20
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2
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18
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A321
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228
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3.0
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30
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30
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—
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5.9
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145
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91
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54
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High
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Low
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Fiscal year ended December 31, 2018
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First Quarter
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$
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48.26
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$
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36.99
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Second Quarter
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39.61
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34.98
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Third Quarter
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49.27
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36.13
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Fourth Quarter
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64.59
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43.83
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Fiscal year ended December 31, 2019
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First Quarter
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$
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63.06
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$
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51.55
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Second Quarter
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58.30
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45.95
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Third Quarter
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55.05
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36.03
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Fourth Quarter
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41.37
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33.10
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ISSUER PURCHASES OF EQUITY SECURITIES
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||||||||||||||
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Period
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Total Number of Shares Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs
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||||||
October 1-31, 2019
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—
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$
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—
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—
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$
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—
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November 1-30, 2019
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2,004
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39.39
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—
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—
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December 1-31, 2019
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114
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38.48
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—
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—
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Total
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2,118
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$
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39.34
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—
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12/31/2014
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12/31/2015
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12/31/2016
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12/31/2017
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12/31/2018
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12/31/2019
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Spirit
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$
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100.00
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$
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52.73
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$
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76.55
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$
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59.34
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$
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76.63
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$
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53.33
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NYSE ARCA Airline Index
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$
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100.00
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$
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84.74
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$
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108.90
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$
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115.64
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$
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90.89
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$
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111.56
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NASDAQ Composite Index
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$
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100.00
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$
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107.11
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$
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116.72
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$
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151.41
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$
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147.16
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$
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201.22
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Year Ended December 31,
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||||||||||||||||||
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2019
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2018
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2017
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2016
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2015
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||||||||||
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(in thousands, except share and per-share data)
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Operating revenues:
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Passenger (1)
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$
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3,757,605
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$
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3,260,015
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$
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2,572,887
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$
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2,257,801
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$
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1,169,338
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Other (1)
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72,931
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63,019
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70,665
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62,220
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972,125
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|||||
Total operating revenue
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3,830,536
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3,323,034
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2,643,552
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2,320,021
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2,141,463
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|||||
Operating expenses:
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||||||||||
Aircraft fuel (2)
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993,478
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939,324
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615,581
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|
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447,553
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|
|
461,447
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|||||
Salaries, wages and benefits
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865,019
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|
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719,635
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527,959
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472,471
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|
|
377,508
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|||||
Landing fees and other rents
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256,275
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|
214,677
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180,655
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151,679
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|
|
131,077
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|||||
Depreciation and amortization
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225,264
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|
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176,727
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140,152
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101,136
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73,908
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|||||
Aircraft rent
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182,609
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177,641
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|
|
205,852
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201,675
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|
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211,531
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|||||
Distribution
|
153,770
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|
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137,001
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|
|
113,472
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|
|
96,895
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|
|
86,576
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|||||
Maintenance, materials and repairs
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143,575
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129,078
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110,439
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98,587
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80,448
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|||||
Loss on disposal of assets
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17,350
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9,580
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4,168
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4,187
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1,604
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|||||
Special charges (3)
|
717
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88,921
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12,629
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37,189
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|
673
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|||||
Other operating
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491,432
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379,536
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347,820
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267,191
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207,569
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|||||
Total operating expenses
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3,329,489
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|
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2,972,120
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2,258,727
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|
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1,878,563
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1,632,341
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|||||
Operating income
|
501,047
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|
|
350,914
|
|
|
384,825
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|
|
441,458
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|
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509,122
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|
|||||
Other (income) expense:
|
|
|
|
|
|
|
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||||||||||
Interest expense (4)
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101,350
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|
|
83,777
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|
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57,302
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|
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41,654
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|
|
20,382
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|||||
Capitalized interest (5)
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(12,471
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)
|
|
(9,841
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)
|
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(13,793
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)
|
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(12,705
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)
|
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(11,553
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)
|
|||||
Interest income
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(25,133
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)
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|
(19,107
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)
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(8,736
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)
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|
(5,276
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)
|
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(2,125
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)
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|||||
Other expense
|
875
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|
|
752
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|
|
366
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|
|
528
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|
|
15
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|
|||||
Special charges, non-operating (6)
|
—
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|
|
90,357
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|
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—
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|
|
—
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|
|
—
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|
|||||
Total other expense (income)
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64,621
|
|
|
145,938
|
|
|
35,139
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|
|
24,201
|
|
|
6,719
|
|
|||||
Income before income taxes
|
436,426
|
|
|
204,976
|
|
|
349,686
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|
|
417,257
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|
|
502,403
|
|
|||||
Provision (benefit) for income taxes (7)
|
101,171
|
|
|
49,227
|
|
|
(65,836
|
)
|
|
153,774
|
|
|
185,183
|
|
|||||
Net income
|
$
|
335,255
|
|
|
$
|
155,749
|
|
|
$
|
415,522
|
|
|
$
|
263,483
|
|
|
$
|
317,220
|
|
Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
4.90
|
|
|
$
|
2.28
|
|
|
$
|
6.00
|
|
|
$
|
3.75
|
|
|
$
|
4.39
|
|
Diluted
|
$
|
4.89
|
|
|
$
|
2.28
|
|
|
$
|
5.99
|
|
|
$
|
3.74
|
|
|
$
|
4.38
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
68,428,528
|
|
|
68,248,931
|
|
|
69,220,750
|
|
|
70,343,935
|
|
|
72,207,725
|
|
|||||
Diluted
|
68,558,629
|
|
|
68,430,832
|
|
|
69,376,930
|
|
|
70,507,596
|
|
|
72,426,060
|
|
(1)
|
Amounts prior to 2016 do not reflect the adoption of ASU No. 2014-09 (ASU 2014-09), "Revenue from Contracts with Customers," completed in the first quarter of 2018.
|
(2)
|
Aircraft fuel expense is the sum of (i) “into-plane fuel cost,” which includes the cost of jet fuel and certain other charges such as fuel taxes and oil, (ii) realized gains and losses related to fuel derivative contracts, if any, and (iii) unrealized gains and losses related to fuel derivative contracts, if any. The following table summarizes the components of aircraft fuel expense for the periods presented:
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Into-plane fuel cost
|
$
|
993,478
|
|
|
$
|
939,324
|
|
|
$
|
615,581
|
|
|
$
|
447,533
|
|
|
$
|
454,747
|
|
Realized losses (gains) related to fuel derivatives contracts, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,580
|
|
|||||
Unrealized losses (gains) related to fuel derivative contracts, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,880
|
)
|
|||||
Aircraft fuel expense
|
$
|
993,478
|
|
|
$
|
939,324
|
|
|
$
|
615,581
|
|
|
$
|
447,533
|
|
|
$
|
461,447
|
|
(3)
|
Special charges include: (i) for 2015, $0.7 million related to restructuring charges for outsourcing of ramps and passenger services; (i) for 2016, $37.2 million related to lease termination charges recognized in connection with the purchase of 7 aircraft formerly financed under operating lease agreements; (iii) for 2017, $12.6 million related to lease termination charges recognized in connection with the purchase of one engine and one aircraft formerly financed under operating lease agreements; (iv) for 2018, $88.7 million related to the ratification incentive payment made in connection with the new collective bargaining agreement with our pilots; (v) for 2019, $0.7 million related to the write-off of aircraft related credits resulting from the exchange of credits negotiated under the new purchase agreement with Airbus. Please see "Notes to Financial Statements—4. Special Charges" for further discussion.
|
(4)
|
Interest expense in 2015, 2016, 2017, 2018 and 2019 primarily relates to interest related to financing of purchasing aircraft.
|
(5)
|
Interest attributable to funds used to finance the acquisition of new aircraft, including PDPs is capitalized as an additional cost of the related asset. In 2015, 2016, 2017, 2018, and 2019, capitalized interest primarily represents interest related to the financing of purchased aircraft.
|
(6)
|
In 2018, special charges, non-operating of $90.4 million represents interest related to an aircraft purchase agreement for the acquisition of 14 A319 aircraft previously operated under operating leases. The contract was deemed a lease modification which resulted in a change of classification from operating leases to finance leases. Please see "Notes to Financial Statements—4. Special Charges" for further discussion.
|
(7)
|
During the twelve months ended December 31, 2017, we recorded a non-recurring income tax benefit of $196.7 million ($2.84 and $2.84 per basic and diluted share, respectively) due to the enactment of the Tax Cuts and Jobs Act of 2017.
|
|
As of December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Balance Sheet Data:
|
(in thousands)
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
978,957
|
|
|
$
|
1,004,733
|
|
|
$
|
800,849
|
|
|
$
|
700,900
|
|
|
$
|
803,632
|
|
Short-term investment securities
|
105,321
|
|
|
102,789
|
|
|
100,937
|
|
|
100,155
|
|
|
—
|
|
|||||
Total assets (8) (9) (10)
|
7,043,412
|
|
|
5,165,457
|
|
|
4,145,800
|
|
|
3,153,629
|
|
|
2,530,545
|
|
|||||
Long-term debt and finance leases, including current portion
|
2,219,305
|
|
|
2,188,331
|
|
|
1,502,928
|
|
|
981,713
|
|
|
646,330
|
|
|||||
Shareholders' equity (9)
|
2,261,332
|
|
|
1,928,504
|
|
|
1,762,574
|
|
|
1,385,184
|
|
|
1,225,310
|
|
(8)
|
Prior period amounts have been reclassified to conform to ASU No. 2015-17 (ASU 2015-17), "Income Taxes" issued in November 2015.
|
(9)
|
Amounts prior to 2016 do not reflect the adoption of ASU No. 2014-09 (ASU 2014-09), "Revenue from Contracts with Customers," completed in the first quarter of 2018.
|
(10)
|
Amounts prior to 2019 do not reflect the adoption of ASU No. 2016-02, "Leases (Topic 842)," completed in the first quarter of 2019.
|
|
Year Ended December 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||
Operating Statistics (unaudited) (A)
|
|
|
|
|
|
|
|
|
|
|||||
Average aircraft
|
135.2
|
|
|
118.9
|
|
|
103.6
|
|
|
86.2
|
|
|
72.7
|
|
Aircraft at end of period
|
145
|
|
|
128
|
|
|
112
|
|
|
95
|
|
|
79
|
|
Average daily aircraft utilization (hours)
|
12.3
|
|
|
12.1
|
|
|
11.6
|
|
|
12.4
|
|
|
12.7
|
|
Average stage length (miles)
|
1,002
|
|
|
1,032
|
|
|
999
|
|
|
979
|
|
|
987
|
|
Block hours
|
607,055
|
|
|
526,343
|
|
|
438,728
|
|
|
389,914
|
|
|
337,956
|
|
Departures
|
227,041
|
|
|
192,845
|
|
|
165,449
|
|
|
149,514
|
|
|
128,902
|
|
Passenger flight segments (thousands)
|
34,537
|
|
|
29,312
|
|
|
24,183
|
|
|
21,618
|
|
|
17,921
|
|
Revenue passenger miles (RPMs) (thousands)
|
35,245,285
|
|
|
30,623,379
|
|
|
24,605,512
|
|
|
21,581,611
|
|
|
17,995,311
|
|
Available seat miles (ASMs) (thousands)
|
41,783,001
|
|
|
36,502,982
|
|
|
29,592,819
|
|
|
25,494,645
|
|
|
21,246,156
|
|
Load factor (%)
|
84.4
|
|
|
83.9
|
|
|
83.1
|
|
|
84.7
|
|
|
84.7
|
|
Fare revenue per passenger flight segment ($)
|
54.63
|
|
|
58.14
|
|
|
56.38
|
|
|
55.42
|
|
|
65.25
|
|
Non-ticket revenue per passenger flight segment ($)
|
56.28
|
|
|
55.23
|
|
|
52.94
|
|
|
51.90
|
|
|
54.24
|
|
Total revenue per passenger segment ($)
|
110.91
|
|
|
113.37
|
|
|
109.32
|
|
|
107.32
|
|
|
119.49
|
|
Average yield (cents)
|
10.87
|
|
|
10.85
|
|
|
10.74
|
|
|
10.75
|
|
|
11.90
|
|
Total operating revenue per ASM (TRASM) (cents)
|
9.17
|
|
|
9.10
|
|
|
8.93
|
|
|
9.10
|
|
|
10.08
|
|
CASM (cents)
|
7.97
|
|
|
8.14
|
|
|
7.63
|
|
|
7.37
|
|
|
7.68
|
|
Adjusted CASM (cents) (B)
|
7.93
|
|
|
7.87
|
|
|
7.59
|
|
|
7.21
|
|
|
7.69
|
|
Adjusted CASM ex fuel (cents) (C)
|
5.55
|
|
|
5.30
|
|
|
5.51
|
|
|
5.45
|
|
|
5.50
|
|
Fuel gallons consumed (thousands)
|
470,939
|
|
|
412,256
|
|
|
343,709
|
|
|
302,781
|
|
|
255,008
|
|
Average fuel cost per gallon ($)
|
2.11
|
|
|
2.28
|
|
|
1.79
|
|
|
1.48
|
|
|
1.81
|
|
(A)
|
See “Glossary of Airline Terms” elsewhere in this annual report for definitions of terms used in this table.
|
(B)
|
Reconciliation of CASM to Adjusted CASM:
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||||
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
||||||||||||||||
CASM (cents)
|
|
|
7.97
|
|
|
|
|
8.14
|
|
|
|
|
7.63
|
|
|
|
|
7.37
|
|
|
|
|
7.68
|
|
||||||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Unrealized losses (gains) related to fuel derivative contracts
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
(3.9
|
)
|
|
(0.02
|
)
|
Loss on disposal of assets
|
17.4
|
|
|
0.04
|
|
|
9.6
|
|
|
0.03
|
|
|
4.2
|
|
|
0.01
|
|
|
4.2
|
|
|
0.02
|
|
|
1.6
|
|
|
0.01
|
|
|||||
Special charges
|
0.7
|
|
|
—
|
|
|
88.9
|
|
|
0.24
|
|
|
12.6
|
|
|
0.04
|
|
|
37.2
|
|
|
0.15
|
|
|
0.7
|
|
|
—
|
|
|||||
Supplemental rent adjustments related to lease modifications
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.1
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted CASM (cents)
|
|
|
7.93
|
|
|
|
|
7.87
|
|
|
|
|
7.59
|
|
|
|
|
7.21
|
|
|
|
|
7.69
|
|
(C)
|
Excludes aircraft fuel expense, loss on disposal of assets, special charges and supplemental rent adjustments related to lease modifications.
|
|
Year Ended 2019
|
|
% change 2019 versus 2018
|
|
Year Ended 2018
|
||||
Operating revenues:
|
|
|
|
|
|
||||
Fare (thousands)
|
$
|
1,886,855
|
|
|
10.7%
|
|
$
|
1,704,107
|
|
Non-fare (thousands)
|
1,870,750
|
|
|
20.2%
|
|
1,555,908
|
|
||
Passenger (thousands)
|
3,757,605
|
|
|
15.3%
|
|
3,260,015
|
|
||
Other (thousands)
|
72,931
|
|
|
15.7%
|
|
63,019
|
|
||
Total operating revenue (thousands)
|
$
|
3,830,536
|
|
|
15.3%
|
|
$
|
3,323,034
|
|
Total operating revenue per ASM (TRASM) (cents)
|
9.17
|
|
|
0.8%
|
|
9.10
|
|
||
Fare revenue per passenger flight segment
|
$
|
54.63
|
|
|
(6.0)%
|
|
$
|
58.14
|
|
Non-ticket revenue per passenger flight segment
|
56.28
|
|
|
1.9%
|
|
55.23
|
|
||
Total revenue per passenger flight segment
|
$
|
110.91
|
|
|
(2.2)%
|
|
$
|
113.37
|
|
|
Year Ended 2019
|
|
Change 2019 versus 2018
|
|
Year Ended 2018
|
||
|
CASM
|
|
Per-ASM Change
|
|
Percent change
|
|
CASM
|
Operating expenses:
|
|
|
|
|
|
|
|
Aircraft fuel
|
2.38¢
|
|
(0.19)¢
|
|
(7.4)%
|
|
2.57¢
|
Salaries, wages and benefits
|
2.07
|
|
0.10
|
|
5.1
|
|
1.97
|
Landing fees and other rentals
|
0.61
|
|
0.02
|
|
3.4
|
|
0.59
|
Depreciation and amortization
|
0.54
|
|
0.06
|
|
12.5
|
|
0.48
|
Aircraft rent
|
0.44
|
|
(0.05)
|
|
(10.2)
|
|
0.49
|
Distribution
|
0.37
|
|
(0.01)
|
|
(2.6)
|
|
0.38
|
Maintenance, materials and repairs
|
0.34
|
|
(0.01)
|
|
(2.9)
|
|
0.35
|
Loss on disposal of assets
|
0.04
|
|
0.01
|
|
NM
|
|
0.03
|
Special charges
|
—
|
|
(0.24)
|
|
NM
|
|
0.24
|
Other operating expenses
|
1.18
|
|
0.14
|
|
13.5
|
|
1.04
|
Total operating expense
|
|
|
|
|
|
|
|
CASM
|
7.97
|
|
(0.17)
|
|
(2.1)
|
|
8.14
|
Adjusted CASM (1)
|
7.93
|
|
0.06
|
|
0.8
|
|
7.87
|
Adjusted CASM ex fuel (2)
|
5.55
|
|
0.25
|
|
4.7
|
|
5.30
|
|
Year Ended December 31,
|
||||||||||||
2019
|
|
2018
|
|||||||||||
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
|||||||
CASM (cents)
|
|
|
7.97
|
|
|
|
|
8.14
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||
Loss on disposal of assets
|
$
|
17.4
|
|
|
0.04
|
|
|
$
|
9.6
|
|
|
0.03
|
|
Special charges
|
0.7
|
|
|
—
|
|
|
88.9
|
|
|
0.24
|
|
||
Supplemental rent adjustments related to lease modifications
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Adjusted CASM (cents)
|
|
|
7.93
|
|
|
|
|
7.87
|
|
(2)
|
Excludes aircraft fuel expense, loss on disposal of assets, special charges and supplemental rent adjustments related to lease modifications.
|
|
Year Ended December 31,
|
|
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
(in thousands, except per gallon amounts)
|
|
Percent Change
|
|||||||
Fuel gallons consumed
|
470,939
|
|
|
412,256
|
|
|
14.2
|
%
|
||
Into-plane fuel cost per gallon
|
$
|
2.11
|
|
|
$
|
2.28
|
|
|
(7.5
|
)%
|
Aircraft fuel expense (per statements of operations)
|
$
|
993,478
|
|
|
$
|
939,324
|
|
|
5.8
|
%
|
|
Year Ended December 31,
|
|
|
|||||
|
2019
|
|
2018
|
|
Change
|
|||
Website
|
66.6
|
%
|
|
67.1
|
%
|
|
(0.5
|
)
|
Third-party travel agents
|
26.8
|
|
|
27.1
|
|
|
(0.3
|
)
|
Call center
|
6.6
|
|
|
5.8
|
|
|
0.8
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||||||||||
|
|
(in thousands, except share and per-share amounts)
|
||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fare
|
|
$
|
342,695
|
|
|
$
|
439,549
|
|
|
$
|
476,660
|
|
|
$
|
445,203
|
|
|
$
|
416,345
|
|
|
$
|
515,696
|
|
|
$
|
493,376
|
|
|
$
|
461,438
|
|
Non-fare
|
|
346,446
|
|
|
396,801
|
|
|
411,296
|
|
|
401,365
|
|
|
421,720
|
|
|
478,734
|
|
|
479,977
|
|
|
490,319
|
|
||||||||
Total passenger revenues
|
|
$
|
689,141
|
|
|
$
|
836,350
|
|
|
$
|
887,956
|
|
|
$
|
846,568
|
|
|
$
|
838,065
|
|
|
$
|
994,430
|
|
|
$
|
973,353
|
|
|
$
|
951,757
|
|
Other revenues
|
|
14,997
|
|
|
15,421
|
|
|
16,374
|
|
|
16,227
|
|
|
17,731
|
|
|
18,526
|
|
|
18,615
|
|
|
18,059
|
|
||||||||
Total operating revenues
|
|
$
|
704,138
|
|
|
$
|
851,771
|
|
|
$
|
904,330
|
|
|
$
|
862,795
|
|
|
$
|
855,796
|
|
|
$
|
1,012,956
|
|
|
$
|
991,968
|
|
|
$
|
969,816
|
|
Operating income (loss)
|
|
(38,797
|
)
|
|
108,521
|
|
|
145,125
|
|
|
136,065
|
|
|
87,804
|
|
|
163,938
|
|
|
124,681
|
|
|
124,624
|
|
||||||||
Net income (loss)
|
|
$
|
(44,922
|
)
|
|
$
|
11,254
|
|
|
$
|
97,480
|
|
|
$
|
91,937
|
|
|
$
|
56,076
|
|
|
$
|
114,501
|
|
|
$
|
83,464
|
|
|
$
|
81,214
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
|
$
|
(0.66
|
)
|
|
$
|
0.16
|
|
|
$
|
1.43
|
|
|
$
|
1.35
|
|
|
$
|
0.82
|
|
|
$
|
1.67
|
|
|
$
|
1.22
|
|
|
$
|
1.19
|
|
Diluted
|
|
$
|
(0.66
|
)
|
|
$
|
0.16
|
|
|
$
|
1.42
|
|
|
$
|
1.34
|
|
|
$
|
0.82
|
|
|
$
|
1.67
|
|
|
$
|
1.22
|
|
|
$
|
1.18
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
|
68,222,396
|
|
|
68,251,241
|
|
|
68,254,165
|
|
|
68,267,372
|
|
|
68,379,707
|
|
|
68,439,261
|
|
|
68,441,899
|
|
|
68,452,317
|
|
||||||||
Diluted
|
|
68,222,396
|
|
|
68,310,287
|
|
|
68,502,822
|
|
|
68,687,272
|
|
|
68,515,454
|
|
|
68,620,330
|
|
|
68,544,690
|
|
|
68,553,114
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
|
March 31,
2018
|
|
June 30,
2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
March 31,
2019
|
|
June 30,
2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||
Other operating statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Aircraft at end of period
|
|
118
|
|
|
119
|
|
|
121
|
|
|
128
|
|
|
133
|
|
|
135
|
|
|
136
|
|
|
145
|
|
Average daily Aircraft utilization (hours)
|
|
12.0
|
|
|
12.6
|
|
|
12.4
|
|
|
11.5
|
|
|
12.2
|
|
|
12.8
|
|
|
12.5
|
|
|
11.7
|
|
Average stage length (miles)
|
|
1,025
|
|
|
1,051
|
|
|
1,033
|
|
|
1,019
|
|
|
1,029
|
|
|
1,004
|
|
|
979
|
|
|
998
|
|
Departures
|
|
44,982
|
|
|
49,404
|
|
|
50,386
|
|
|
48,073
|
|
|
52,175
|
|
|
58,517
|
|
|
59,314
|
|
|
57,035
|
|
Passenger flight segments (thousands)
|
|
6,537
|
|
|
7,554
|
|
|
7,856
|
|
|
7,365
|
|
|
7,820
|
|
|
8,953
|
|
|
9,004
|
|
|
8,760
|
|
Revenue passenger miles (RPMs) (thousands)
|
|
6,813,519
|
|
|
7,961,128
|
|
|
8,241,771
|
|
|
7,606,962
|
|
|
8,133,030
|
|
|
9,157,488
|
|
|
9,057,574
|
|
|
8,897,193
|
|
Available seat miles (ASMs) (thousands)
|
|
8,408,764
|
|
|
9,515,842
|
|
|
9,579,448
|
|
|
8,998,928
|
|
|
9,829,044
|
|
|
10,775,878
|
|
|
10,686,246
|
|
|
10,491,833
|
|
Load factor (%)
|
|
81.0
|
|
|
83.7
|
|
|
86.0
|
|
|
84.5
|
|
|
82.7
|
|
|
85.0
|
|
|
84.8
|
|
|
84.8
|
|
Fare revenue per passenger flight segment ($)
|
|
52.42
|
|
|
58.19
|
|
|
60.67
|
|
|
60.45
|
|
|
53.24
|
|
|
57.60
|
|
|
54.80
|
|
|
52.68
|
|
Non-ticket revenue per passenger flight segment ($)
|
|
55.29
|
|
|
54.57
|
|
|
54.44
|
|
|
56.70
|
|
|
56.20
|
|
|
55.54
|
|
|
55.37
|
|
|
58.03
|
|
Total operating revenue per ASM (TRASM) (cents)
|
|
8.37
|
|
|
8.95
|
|
|
9.44
|
|
|
9.59
|
|
|
8.71
|
|
|
9.40
|
|
|
9.28
|
|
|
9.24
|
|
CASM (cents)
|
|
8.84
|
|
|
7.81
|
|
|
7.93
|
|
|
8.08
|
|
|
7.81
|
|
|
7.88
|
|
|
8.12
|
|
|
8.06
|
|
Adjusted CASM (cents) (1)
|
|
7.76
|
|
|
7.76
|
|
|
7.92
|
|
|
8.04
|
|
|
7.79
|
|
|
7.86
|
|
|
8.03
|
|
|
8.01
|
|
Adjusted CASM ex fuel (cents) (2)
|
|
5.33
|
|
|
5.17
|
|
|
5.22
|
|
|
5.49
|
|
|
5.46
|
|
|
5.41
|
|
|
5.66
|
|
|
5.67
|
|
Fuel gallons consumed (thousands)
|
|
95,003
|
|
|
106,144
|
|
|
109,515
|
|
|
101,595
|
|
|
109,828
|
|
|
122,447
|
|
|
122,072
|
|
|
116,591
|
|
Average fuel cost per gallon ($)
|
|
2.15
|
|
|
2.32
|
|
|
2.36
|
|
|
2.26
|
|
|
2.09
|
|
|
2.16
|
|
|
2.08
|
|
|
2.10
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||||||
March 31,
2018
|
|
June 30,
2018
|
|
September 30,
2018
|
|
December 31,
2018
|
|
March 31,
2019
|
|
June 30,
2019
|
|
September 30,
2019
|
|
December 31,
2019
|
|||||||||||||||||||||||||
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|||||||||||||||||
CASM (cents)
|
|
8.84
|
|
|
|
7.81
|
|
|
|
7.93
|
|
|
|
8.08
|
|
|
|
7.81
|
|
|
|
7.88
|
|
|
|
8.12
|
|
|
|
8.06
|
|
||||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Loss on disposal of assets
|
0.8
|
|
0.01
|
|
|
4.6
|
|
0.05
|
|
|
1.1
|
|
0.01
|
|
|
3.0
|
|
0.03
|
|
|
1.9
|
|
0.02
|
|
|
1.6
|
|
0.01
|
|
|
13.4
|
|
0.13
|
|
|
0.5
|
|
—
|
|
Special charges (credits)
|
89.2
|
|
1.06
|
|
|
0.2
|
|
—
|
|
|
(0.7
|
)
|
(0.01
|
)
|
|
0.3
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
0.7
|
|
0.01
|
|
|||||
Supplemental rent adjustments related to lease modifications
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(4.3
|
)
|
(0.04
|
)
|
|
3.8
|
|
0.04
|
|
||
Adjusted CASM (cents)
|
|
7.76
|
|
|
|
7.76
|
|
|
|
7.92
|
|
|
|
8.04
|
|
|
|
7.79
|
|
|
|
7.86
|
|
|
|
8.03
|
|
|
|
8.01
|
|
|
|
Total
|
|
2020
|
|
2021 - 2022
|
|
2023 - 2024
|
|
2025 and beyond
|
||||||||||
Long-term debt (1)
|
|
$
|
2,214
|
|
|
$
|
222
|
|
|
$
|
442
|
|
|
$
|
506
|
|
|
$
|
1,044
|
|
Interest and fee commitments (2)
|
|
431
|
|
|
78
|
|
|
136
|
|
|
99
|
|
|
118
|
|
|||||
Finance and operating lease obligations
|
|
2,042
|
|
|
242
|
|
|
394
|
|
|
346
|
|
|
1,060
|
|
|||||
Flight equipment purchase obligations
|
|
6,955
|
|
|
988
|
|
|
868
|
|
|
1,494
|
|
|
3,605
|
|
|||||
Other (3)
|
|
134
|
|
|
22
|
|
|
34
|
|
|
28
|
|
|
50
|
|
|||||
Total future payments on contractual obligations
|
|
$
|
11,776
|
|
|
$
|
1,552
|
|
|
$
|
1,874
|
|
|
$
|
2,473
|
|
|
$
|
5,877
|
|
(1)
|
Includes principal only associated with senior term loans, fixed-rate loans, Class A, Class B, and Class C Series 2015-1 EETCs, Class AA, Class A, Class B, and Class C Series 2017-1 EETCs, and our revolving credit facility. Refer to “Notes to the Financial Statements—13. Debt and Other Obligations.”
|
(2)
|
Related to senior term loans, fixed-rate loans, and Class A, Class B, and Class C Series 2015-1 EETCs, and Class AA, Class A, Class B, and Class C Series 2017-1 EETCs. Includes interest accrued as of December 31, 2019 related to our variable-rate revolving credit facility.
|
(3)
|
Primarily related to our reservation system and other miscellaneous subscriptions and services. Refer to “Notes to the Financial Statements—18. Commitments and Contingencies.”
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Operating revenues:
|
|
|
|
|
|
||||||
Passenger
|
$
|
3,757,605
|
|
|
$
|
3,260,015
|
|
|
$
|
2,572,887
|
|
Other
|
72,931
|
|
|
63,019
|
|
|
70,665
|
|
|||
Total operating revenues
|
3,830,536
|
|
|
3,323,034
|
|
|
2,643,552
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Aircraft fuel
|
993,478
|
|
|
939,324
|
|
|
615,581
|
|
|||
Salaries, wages and benefits
|
865,019
|
|
|
719,635
|
|
|
527,959
|
|
|||
Landing fees and other rents
|
256,275
|
|
|
214,677
|
|
|
180,655
|
|
|||
Depreciation and amortization
|
225,264
|
|
|
176,727
|
|
|
140,152
|
|
|||
Aircraft rent
|
182,609
|
|
|
177,641
|
|
|
205,852
|
|
|||
Distribution
|
153,770
|
|
|
137,001
|
|
|
113,472
|
|
|||
Maintenance, materials and repairs
|
143,575
|
|
|
129,078
|
|
|
110,439
|
|
|||
Loss on disposal of assets
|
17,350
|
|
|
9,580
|
|
|
4,168
|
|
|||
Special charges
|
717
|
|
|
88,921
|
|
|
12,629
|
|
|||
Other operating
|
491,432
|
|
|
379,536
|
|
|
347,820
|
|
|||
Total operating expenses
|
3,329,489
|
|
|
2,972,120
|
|
|
2,258,727
|
|
|||
|
|
|
|
|
|
||||||
Operating income
|
501,047
|
|
|
350,914
|
|
|
384,825
|
|
|||
Other (income) expense:
|
|
|
|
|
|
||||||
Interest expense
|
101,350
|
|
|
83,777
|
|
|
57,302
|
|
|||
Capitalized interest
|
(12,471
|
)
|
|
(9,841
|
)
|
|
(13,793
|
)
|
|||
Interest income
|
(25,133
|
)
|
|
(19,107
|
)
|
|
(8,736
|
)
|
|||
Other expense
|
875
|
|
|
752
|
|
|
366
|
|
|||
Special charges, non-operating
|
—
|
|
|
90,357
|
|
|
—
|
|
|||
Total other (income) expense
|
64,621
|
|
|
145,938
|
|
|
35,139
|
|
|||
|
|
|
|
|
|
||||||
Income before income taxes
|
436,426
|
|
|
204,976
|
|
|
349,686
|
|
|||
Provision (benefit) for income taxes
|
101,171
|
|
|
49,227
|
|
|
(65,836
|
)
|
|||
|
|
|
|
|
|
||||||
Net income
|
$
|
335,255
|
|
|
$
|
155,749
|
|
|
$
|
415,522
|
|
Basic earnings per share
|
$
|
4.90
|
|
|
$
|
2.28
|
|
|
$
|
6.00
|
|
Diluted earnings per share
|
$
|
4.89
|
|
|
$
|
2.28
|
|
|
$
|
5.99
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
335,255
|
|
|
$
|
155,749
|
|
|
$
|
415,522
|
|
Unrealized gain (loss) on short-term investment securities and cash and cash equivalents, net of deferred taxes of $38, $44, and ($41)
|
167
|
|
|
30
|
|
|
(82
|
)
|
|||
Interest rate derivative loss reclassified into earnings, net of taxes of $76, $75, and $372
|
239
|
|
|
241
|
|
|
(37
|
)
|
|||
Other comprehensive income (loss)
|
$
|
406
|
|
|
$
|
271
|
|
|
$
|
(119
|
)
|
Comprehensive income
|
$
|
335,661
|
|
|
$
|
156,020
|
|
|
$
|
415,403
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
978,957
|
|
|
$
|
1,004,733
|
|
Short-term investment securities
|
105,321
|
|
|
102,789
|
|
||
Accounts receivable, net
|
73,807
|
|
|
47,660
|
|
||
Aircraft maintenance deposits, net
|
102,906
|
|
|
106,901
|
|
||
Income tax receivable
|
21,013
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
103,439
|
|
|
83,383
|
|
||
Total current assets
|
1,385,443
|
|
|
1,345,466
|
|
||
|
|
|
|
||||
Property and equipment:
|
|
|
|
||||
Flight equipment
|
3,730,751
|
|
|
3,257,215
|
|
||
Ground property and equipment
|
291,998
|
|
|
191,661
|
|
||
Less accumulated depreciation
|
(492,447
|
)
|
|
(332,864
|
)
|
||
|
3,530,302
|
|
|
3,116,012
|
|
||
Operating lease right-of-use assets
|
1,369,555
|
|
|
—
|
|
||
Pre-delivery deposits on flight equipment
|
291,930
|
|
|
236,775
|
|
||
Long-term aircraft maintenance deposits
|
67,682
|
|
|
138,738
|
|
||
Deferred heavy maintenance, net
|
361,603
|
|
|
249,010
|
|
||
Other long-term assets
|
36,897
|
|
|
79,456
|
|
||
Total assets
|
$
|
7,043,412
|
|
|
$
|
5,165,457
|
|
|
|
|
|
||||
Liabilities and shareholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
43,601
|
|
|
$
|
39,320
|
|
Air traffic liability
|
315,408
|
|
|
291,981
|
|
||
Current maturities of long-term debt and finance leases
|
258,852
|
|
|
163,557
|
|
||
Current maturities of operating leases
|
120,662
|
|
|
—
|
|
||
Other current liabilities
|
373,521
|
|
|
339,677
|
|
||
Total current liabilities
|
1,112,044
|
|
|
834,535
|
|
||
|
|
|
|
||||
Long-term debt and finance leases, less current maturities
|
1,960,453
|
|
|
2,024,774
|
|
||
Operating leases, less current maturities
|
1,218,014
|
|
|
—
|
|
||
Deferred income taxes
|
469,292
|
|
|
355,141
|
|
||
Deferred gains and other long-term liabilities
|
22,277
|
|
|
22,503
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Common stock: Common stock, $0.0001 par value, 240,000,000 shares authorized at December 31, 2019 and 2018, respectively; 70,148,386 and 69,871,535 issued and 68,455,011 and 68,269,567 outstanding as of December 31, 2019 and 2018, respectively
|
7
|
|
|
7
|
|
||
Additional paid-in-capital
|
379,380
|
|
|
371,225
|
|
||
Treasury stock, at cost: 1,693,375 and 1,601,968 as of December 31, 2019 and 2018, respectively
|
(72,455
|
)
|
|
(67,016
|
)
|
||
Retained earnings
|
1,955,187
|
|
|
1,625,481
|
|
||
Accumulated other comprehensive income (loss)
|
(787
|
)
|
|
(1,193
|
)
|
||
Total shareholders’ equity
|
2,261,332
|
|
|
1,928,504
|
|
||
Total liabilities and shareholders’ equity
|
$
|
7,043,412
|
|
|
$
|
5,165,457
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
335,255
|
|
|
$
|
155,749
|
|
|
$
|
415,522
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
|
|
||||||
Losses reclassified from other comprehensive income
|
315
|
|
|
315
|
|
|
335
|
|
|||
Share-based compensation
|
8,154
|
|
|
11,021
|
|
|
8,522
|
|
|||
Allowance for doubtful accounts (recoveries)
|
—
|
|
|
(11
|
)
|
|
(53
|
)
|
|||
Amortization of deferred gains, losses and debt issuance costs
|
8,654
|
|
|
8,819
|
|
|
7,944
|
|
|||
Depreciation and amortization
|
225,264
|
|
|
176,727
|
|
|
140,152
|
|
|||
Deferred income tax expense (benefit)
|
115,689
|
|
|
46,303
|
|
|
(492
|
)
|
|||
Loss on disposal of assets
|
17,350
|
|
|
9,580
|
|
|
4,168
|
|
|||
Lease termination costs
|
—
|
|
|
—
|
|
|
12,629
|
|
|||
Special charges, non-operating
|
—
|
|
|
90,357
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(26,147
|
)
|
|
1,674
|
|
|
(8,134
|
)
|
|||
Aircraft maintenance deposits, net
|
22,453
|
|
|
14,019
|
|
|
(37,930
|
)
|
|||
Long-term deposits and other assets
|
14,999
|
|
|
(4,803
|
)
|
|
(50,951
|
)
|
|||
Deferred heavy maintenance, net
|
(175,957
|
)
|
|
(190,381
|
)
|
|
(78,237
|
)
|
|||
Income tax receivable
|
(21,013
|
)
|
|
69,844
|
|
|
(69,844
|
)
|
|||
Prepaid income taxes
|
1,431
|
|
|
—
|
|
|
—
|
|
|||
Accounts payable
|
569
|
|
|
15,317
|
|
|
6,030
|
|
|||
Air traffic liability
|
23,429
|
|
|
28,270
|
|
|
43,527
|
|
|||
Other liabilities
|
(140,402
|
)
|
|
74,038
|
|
|
31,672
|
|
|||
Other
|
(822
|
)
|
|
(375
|
)
|
|
380
|
|
|||
Net cash provided by operating activities
|
409,221
|
|
|
506,463
|
|
|
425,240
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Purchase of available-for-sale investment securities
|
(122,410
|
)
|
|
(124,430
|
)
|
|
(107,246
|
)
|
|||
Proceeds from the maturity and sale of available-for-sale investment securities
|
120,830
|
|
|
122,947
|
|
|
105,906
|
|
|||
Proceeds from sale of property and equipment
|
—
|
|
|
11,400
|
|
|
—
|
|
|||
Pre-delivery deposits on flight equipment, net of refunds
|
(102,102
|
)
|
|
(177,424
|
)
|
|
(149,477
|
)
|
|||
Capitalized interest
|
(10,774
|
)
|
|
(8,729
|
)
|
|
(12,305
|
)
|
|||
Assets under construction for others
|
(7,936
|
)
|
|
(501
|
)
|
|
—
|
|
|||
Purchase of property and equipment
|
(192,437
|
)
|
|
(606,971
|
)
|
|
(628,881
|
)
|
|||
Net cash used in investing activities
|
(314,829
|
)
|
|
(783,708
|
)
|
|
(792,003
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
225,891
|
|
|
832,099
|
|
|
629,725
|
|
|||
Proceeds from stock options exercised
|
1
|
|
|
51
|
|
|
45
|
|
|||
Payments on debt obligations
|
(246,783
|
)
|
|
(137,275
|
)
|
|
(102,313
|
)
|
|||
Payments on finance lease obligations
|
(96,547
|
)
|
|
(205,720
|
)
|
|
(425
|
)
|
|||
Reimbursement for assets under construction for others
|
5,618
|
|
|
501
|
|
|
—
|
|
|||
Repurchase of common stock
|
(5,439
|
)
|
|
(1,162
|
)
|
|
(46,580
|
)
|
|||
Debt issuance costs
|
(2,909
|
)
|
|
(7,365
|
)
|
|
(13,740
|
)
|
|||
Net cash (used in) provided by financing activities
|
(120,168
|
)
|
|
481,129
|
|
|
466,712
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(25,776
|
)
|
|
203,884
|
|
|
99,949
|
|
|||
Cash and cash equivalents at beginning of period
|
1,004,733
|
|
|
800,849
|
|
|
700,900
|
|
|||
Cash and cash equivalents at end of period
|
$
|
978,957
|
|
|
$
|
1,004,733
|
|
|
$
|
800,849
|
|
Supplemental disclosures
|
|
|
|
|
|
||||||
Cash payments for:
|
|
|
|
|
|
||||||
Interest, net of capitalized interest
|
$
|
80,254
|
|
|
$
|
65,123
|
|
|
$
|
37,902
|
|
Income taxes paid (received), net
|
$
|
5,843
|
|
|
$
|
(73,489
|
)
|
|
$
|
5,826
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
||||||
Operating cash flows for operating leases (1)
|
$
|
191,004
|
|
|
—
|
|
|
—
|
|
||
Financing cash flows for finance leases (1)
|
$
|
674
|
|
|
—
|
|
|
—
|
|
||
Non-cash transactions:
|
|
|
|
|
|
||||||
Capital expenditures funded by finance lease borrowings
|
$
|
45,608
|
|
|
$
|
987
|
|
|
$
|
1,370
|
|
Capital expenditures funded by operating lease borrowings (1)
|
$
|
569,948
|
|
|
—
|
|
|
—
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total
|
||||||||||||
Balance at December 31, 2016
|
$
|
7
|
|
|
$
|
551,004
|
|
|
$
|
(218,692
|
)
|
|
$
|
1,054,210
|
|
|
$
|
(1,345
|
)
|
|
$
|
1,385,184
|
|
Share-based compensation
|
—
|
|
|
8,522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,522
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(46,580
|
)
|
|
—
|
|
|
—
|
|
|
(46,580
|
)
|
||||||
Proceeds from options exercised
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
||||||
Retirement of treasury stock
|
—
|
|
|
(199,418
|
)
|
|
199,418
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Changes in comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(119
|
)
|
|
(119
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
415,522
|
|
|
—
|
|
|
415,522
|
|
||||||
Balance at December 31, 2017
|
$
|
7
|
|
|
$
|
360,153
|
|
|
$
|
(65,854
|
)
|
|
$
|
1,469,732
|
|
|
$
|
(1,464
|
)
|
|
$
|
1,762,574
|
|
Share-based compensation
|
—
|
|
|
11,021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,021
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(1,162
|
)
|
|
—
|
|
|
—
|
|
|
(1,162
|
)
|
||||||
Proceeds from options exercised
|
—
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
||||||
Changes in comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
271
|
|
|
271
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
155,749
|
|
|
—
|
|
|
155,749
|
|
||||||
Balance at December 31, 2018
|
$
|
7
|
|
|
$
|
371,225
|
|
|
$
|
(67,016
|
)
|
|
$
|
1,625,481
|
|
|
$
|
(1,193
|
)
|
|
$
|
1,928,504
|
|
Effect of ASU No. 2016-02 implementation (refer to Note 2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,549
|
)
|
|
—
|
|
|
(5,549
|
)
|
||||||
Share-based compensation
|
—
|
|
|
8,154
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,154
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(5,439
|
)
|
|
—
|
|
|
—
|
|
|
(5,439
|
)
|
||||||
Proceeds from options exercised
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Changes in comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
406
|
|
|
406
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
335,255
|
|
|
—
|
|
|
335,255
|
|
||||||
Balance at December 31, 2019
|
$
|
7
|
|
|
$
|
379,380
|
|
|
$
|
(72,455
|
)
|
|
$
|
1,955,187
|
|
|
$
|
(787
|
)
|
|
$
|
2,261,332
|
|
1.
|
Summary of Significant Accounting Policies
|
|
Estimated Useful Life
|
Aircraft, engines and flight simulators
|
25 years
|
Spare rotables and flight assemblies
|
7 to 15 years
|
Other equipment and vehicles
|
5 to 7 years
|
Internal use software
|
3 to 10 years
|
Finance leases
|
Lease term or estimated useful life of the asset
|
Leasehold improvements
|
Lesser of lease term or estimated useful life of the improvement
|
Buildings
|
Lesser of lease term or 30 years
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Depreciation
|
$
|
155,326
|
|
|
$
|
129,412
|
|
|
$
|
83,154
|
|
Amortization of heavy maintenance
|
63,364
|
|
|
41,286
|
|
|
53,855
|
|
|||
Amortization of capitalized software
|
6,574
|
|
|
6,029
|
|
|
3,143
|
|
|||
Total depreciation and amortization
|
$
|
225,264
|
|
|
$
|
176,727
|
|
|
$
|
140,152
|
|
|
|
Year Ended December 31,
|
||||||||||
Non-fare revenue
|
Recognition method
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
Baggage
|
Time of departure
|
$
|
734,243
|
|
|
$
|
620,154
|
|
|
$
|
488,434
|
|
Passenger usage fee
|
Time of departure
|
669,177
|
|
|
531,459
|
|
|
411,742
|
|
|||
Advance seat selection
|
Time of departure
|
228,876
|
|
|
180,012
|
|
|
131,821
|
|
|||
Other
|
|
238,454
|
|
|
224,283
|
|
|
177,495
|
|
|||
Non-fare revenue
|
|
$
|
1,870,750
|
|
|
$
|
1,555,908
|
|
|
$
|
1,209,492
|
|
|
Consideration received from credit card mile programs
|
|
Portion of proceeds recognized immediately as marketing component
|
||||
Year Ended
|
(in thousands)
|
||||||
December 31, 2019
|
$
|
48,136
|
|
|
$
|
37,151
|
|
December 31, 2018
|
39,194
|
|
|
30,353
|
|
||
December 31, 2017
|
49,453
|
|
|
37,960
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Flight hour-based maintenance expense
|
$
|
78,253
|
|
|
$
|
68,039
|
|
|
$
|
54,802
|
|
Non-flight hour-based maintenance expense
|
65,322
|
|
|
61,039
|
|
|
55,637
|
|
|||
Total maintenance, materials and repairs
|
$
|
143,575
|
|
|
$
|
129,078
|
|
|
$
|
110,439
|
|
2.
|
Recent Accounting Developments
|
3.
|
Revenue Disaggregation
|
|
Twelve Months Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Operating revenues:
|
|
|
|
|
|
||||||
Fare
|
$
|
1,886,855
|
|
|
$
|
1,704,107
|
|
|
$
|
1,363,395
|
|
Non-fare
|
1,870,750
|
|
|
1,555,908
|
|
|
1,209,492
|
|
|||
Total passenger revenues
|
3,757,605
|
|
|
3,260,015
|
|
|
2,572,887
|
|
|||
Other
|
72,931
|
|
|
63,019
|
|
|
70,665
|
|
|||
Total operating revenues
|
$
|
3,830,536
|
|
|
$
|
3,323,034
|
|
|
$
|
2,643,552
|
|
4.
|
Special Charges
|
5.
|
Loss on Disposal of Assets
|
6.
|
Letters of Credit
|
7.
|
Credit Card Processing Arrangements
|
8.
|
Short-term Investment Securities
|
9.
|
Accrued Liabilities
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Salaries and wages
|
$
|
89,163
|
|
|
$
|
82,900
|
|
Airport obligations
|
80,134
|
|
|
52,029
|
|
||
Federal excise and other passenger taxes and fees payable
|
65,312
|
|
|
60,604
|
|
||
Aircraft maintenance
|
38,099
|
|
|
59,805
|
|
||
Fuel
|
28,510
|
|
|
25,368
|
|
||
Aircraft and facility lease obligations
|
20,656
|
|
|
15,149
|
|
||
Interest payable
|
16,941
|
|
|
18,086
|
|
||
Other
|
34,706
|
|
|
25,736
|
|
||
Other current liabilities
|
$
|
373,521
|
|
|
$
|
339,677
|
|
10.
|
Common Stock and Preferred Stock
|
11.
|
Stock-Based Compensation
|
|
Number of Shares
|
|
Weighted-Average
Grant Date Fair Value ($) |
||
Outstanding at December 31, 2018
|
297,797
|
|
|
47.95
|
|
Granted
|
148,120
|
|
|
53.41
|
|
Vested
|
(97,095
|
)
|
|
48.97
|
|
Forfeited
|
(15,856
|
)
|
|
53.00
|
|
Outstanding at December 31, 2019
|
332,966
|
|
|
49.84
|
|
|
Weighted-Average at Grant Date for Twelve Months Ended December 31, 2019
|
|
Weighted-Average at Grant Date for Twelve Months Ended December 31, 2018
|
|
||
Expected volatility factor
|
0.38
|
|
|
0.39
|
|
|
Risk free interest rate
|
2.50
|
|
%
|
2.11
|
|
%
|
Expected term (in years)
|
2.97
|
|
|
2.96
|
|
|
Expected dividend yield
|
—
|
|
%
|
—
|
|
%
|
|
Number of Awards
|
|
Weighted-Average Fair Value at Grant Date ($)
|
||
Outstanding at December 31, 2018
|
82,907
|
|
|
53.92
|
|
Granted
|
50,293
|
|
|
70.77
|
|
Vested
|
(29,293
|
)
|
|
56.84
|
|
Forfeited
|
(7,748
|
)
|
|
57.15
|
|
Outstanding at December 31, 2019
|
96,159
|
|
|
61.58
|
|
|
Number of Awards
|
|
Weighted-Average Fair Value at Grant Date ($)
|
||
Outstanding at December 31, 2018
|
41,454
|
|
|
49.81
|
|
Granted
|
24,861
|
|
|
60.11
|
|
Vested
|
(14,648
|
)
|
|
55.50
|
|
Forfeited
|
(3,873
|
)
|
|
52.10
|
|
Outstanding at December 31, 2019
|
47,794
|
|
|
53.24
|
|
12.
|
Earnings per Share
|
|
Year Ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
(in thousands, except per-share amounts)
|
|||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (1)
|
$
|
335,255
|
|
|
$
|
155,749
|
|
|
$
|
415,522
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares outstanding, basic
|
68,429
|
|
|
68,249
|
|
|
69,221
|
|
|||
Effect of dilutive stock awards
|
130
|
|
|
182
|
|
|
156
|
|
|||
Adjusted weighted-average shares outstanding, diluted
|
68,559
|
|
|
68,431
|
|
|
69,377
|
|
|||
Earnings per Share:
|
|
|
|
|
|
||||||
Basic earnings per common share (1)
|
$
|
4.90
|
|
|
$
|
2.28
|
|
|
$
|
6.00
|
|
Diluted earnings per common share (1)
|
$
|
4.89
|
|
|
$
|
2.28
|
|
|
$
|
5.99
|
|
|
|
|
|
|
|
||||||
Anti-dilutive weighted-average shares
|
143
|
|
|
145
|
|
|
85
|
|
13.
|
Debt and Other Obligations
|
|
|
As of
|
||||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
|||||||
|
|
(in millions)
|
|
(weighted-average interest rates)
|
||||||||||
Fixed-rate senior term loans due through 2027
|
|
$
|
296.1
|
|
|
$
|
382.4
|
|
|
4.02
|
%
|
|
4.10
|
%
|
Fixed-rate junior term loans due through 2022
|
|
—
|
|
|
31.1
|
|
|
N/A
|
|
|
6.90
|
%
|
||
Fixed-rate loans due through 2030
|
|
778.2
|
|
|
625.1
|
|
|
3.70
|
%
|
|
3.88
|
%
|
||
Fixed-rate class A 2015-1 EETC due through 2028
|
|
348.6
|
|
|
378.6
|
|
|
4.10
|
%
|
|
4.10
|
%
|
||
Fixed-rate class B 2015-1 EETC due through 2024
|
|
72.0
|
|
|
80.0
|
|
|
4.45
|
%
|
|
4.45
|
%
|
||
Fixed-rate class C 2015-1 EETC due through 2023
|
|
98.1
|
|
|
109.5
|
|
|
4.93
|
%
|
|
4.93
|
%
|
||
Fixed-rate class AA 2017-1 EETC due through 2030
|
|
228.4
|
|
|
242.5
|
|
|
3.38
|
%
|
|
3.38
|
%
|
||
Fixed-rate class A 2017-1 EETC due through 2030
|
|
76.1
|
|
|
80.8
|
|
|
3.65
|
%
|
|
3.65
|
%
|
||
Fixed-rate class B 2017-1 EETC due through 2026
|
|
70.6
|
|
|
83.7
|
|
|
3.80
|
%
|
|
3.80
|
%
|
||
Fixed-rate class C 2017-1 EETC due through 2023
|
|
85.5
|
|
|
85.5
|
|
|
5.11
|
%
|
|
5.11
|
%
|
||
Revolving credit facility due in 2021
|
|
160.0
|
|
|
135.3
|
|
|
3.12
|
%
|
|
3.72
|
%
|
||
Long-term debt
|
|
$
|
2,213.6
|
|
|
$
|
2,234.5
|
|
|
|
|
|
||
Less current maturities
|
|
214.0
|
|
|
162.8
|
|
|
|
|
|
||||
Less unamortized discount, net
|
|
40.4
|
|
|
47.7
|
|
|
|
|
|
||||
Total
|
|
$
|
1,959.2
|
|
|
$
|
2,024.0
|
|
|
|
|
|
|
|
December 31, 2019
|
||
|
|
(in millions)
|
||
2020
|
|
$
|
222.1
|
|
2021
|
|
273.8
|
|
|
2022
|
|
167.7
|
|
|
2023
|
|
310.1
|
|
|
2024
|
|
195.5
|
|
|
2025 and beyond
|
|
1,044.4
|
|
|
Total debt principal payments
|
|
$
|
2,213.6
|
|
|
Year Ended December 31,
|
||||||
2019
|
|
2018
|
|||||
|
(in thousands)
|
||||||
Fixed-rate senior term loans
|
$
|
15,225
|
|
|
$
|
16,869
|
|
Fixed-rate junior term loans
|
1,811
|
|
|
2,475
|
|
||
Fixed-rate term loans
|
25,828
|
|
|
19,615
|
|
||
Class A 2015-1 EETC
|
14,894
|
|
|
16,138
|
|
||
Class B 2015-1 EETC
|
3,377
|
|
|
3,781
|
|
||
Class C 2015-1 EETC
|
5,117
|
|
|
3,575
|
|
||
Class AA 2017-1 EETC
|
7,887
|
|
|
6,026
|
|
||
Class A 2017-1 EETC
|
2,843
|
|
|
2,172
|
|
||
Class B 2017-1 EETC
|
2,870
|
|
|
2,420
|
|
||
Class C 2017-1 EETC
|
4,367
|
|
|
2,478
|
|
||
Revolving credit facility
|
5,792
|
|
|
793
|
|
||
Finance leases
|
408
|
|
|
104
|
|
||
Commitment fees and other
|
2,217
|
|
|
262
|
|
||
Amortization of deferred financing costs
|
8,714
|
|
|
7,069
|
|
||
Total
|
$
|
101,350
|
|
|
$
|
83,777
|
|
14.
|
Leases and Aircraft Maintenance Deposits
|
|
|
Finance Leases
|
|
Operating Leases
|
|
Total Operating and Finance Lease Obligations
|
||||||||||||||
|
|
|
Aircraft and Spare Engine Leases
|
|
Property Facility Leases
|
|
Other
|
|
||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
2020
|
|
$
|
44,980
|
|
|
$
|
192,937
|
|
|
$
|
3,544
|
|
|
$
|
517
|
|
|
$
|
241,978
|
|
2021
|
|
606
|
|
|
192,539
|
|
|
3,532
|
|
|
—
|
|
|
196,677
|
|
|||||
2022
|
|
578
|
|
|
193,616
|
|
|
3,221
|
|
|
—
|
|
|
197,415
|
|
|||||
2023
|
|
202
|
|
|
181,667
|
|
|
2,570
|
|
|
—
|
|
|
184,439
|
|
|||||
2024
|
|
—
|
|
|
159,668
|
|
|
2,046
|
|
|
—
|
|
|
161,714
|
|
|||||
2025 and thereafter
|
|
—
|
|
|
921,721
|
|
|
138,696
|
|
|
—
|
|
|
1,060,417
|
|
|||||
Total minimum lease payments
|
|
$
|
46,366
|
|
|
$
|
1,842,148
|
|
|
$
|
153,609
|
|
|
$
|
517
|
|
|
$
|
2,042,640
|
|
Less amount representing interest
|
|
285
|
|
|
526,760
|
|
|
130,825
|
|
|
13
|
|
|
657,883
|
|
|||||
Present value of minimum lease payments
|
|
$
|
46,081
|
|
|
$
|
1,315,388
|
|
|
$
|
22,784
|
|
|
$
|
504
|
|
|
$
|
1,384,757
|
|
Less current portion
|
|
44,796
|
|
|
117,861
|
|
|
2,297
|
|
|
504
|
|
|
165,458
|
|
|||||
Long-term portion
|
|
$
|
1,285
|
|
|
$
|
1,197,527
|
|
|
$
|
20,487
|
|
|
$
|
—
|
|
|
$
|
1,219,299
|
|
|
Year ended December 31. 2019
|
||
|
(in thousands)
|
||
Finance lease cost
|
|
||
Amortization of leased assets
|
$
|
998
|
|
Interest of lease liabilities
|
674
|
|
|
Operating lease cost
|
|
||
Operating lease cost (1)
|
179,959
|
|
|
Short-term lease cost (1)
|
5,144
|
|
|
Variable lease cost (1)
|
140,417
|
|
|
Total lease cost
|
$
|
327,192
|
|
|
December 31, 2019
|
|
Weighted-average remaining lease term
|
|
|
Operating leases
|
13.0 years
|
|
Finance leases
|
0.1 years
|
|
Weighted-average discount rate
|
|
|
Operating leases
|
5.86
|
%
|
Finance leases
|
2.46
|
%
|
15.
|
Financial Instruments and Risk Management
|
16.
|
Defined Contribution 401(k) Plan
|
17.
|
Income Taxes
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(22,429
|
)
|
|
$
|
(2,178
|
)
|
|
$
|
(68,601
|
)
|
State and local
|
1,218
|
|
|
410
|
|
|
515
|
|
|||
Foreign
|
6,693
|
|
|
4,692
|
|
|
2,742
|
|
|||
Total current expense (benefit)
|
(14,518
|
)
|
|
2,924
|
|
|
(65,344
|
)
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
106,703
|
|
|
42,246
|
|
|
(9,349
|
)
|
|||
State and local
|
8,986
|
|
|
4,057
|
|
|
8,857
|
|
|||
Total deferred expense (benefit)
|
115,689
|
|
|
46,303
|
|
|
(492
|
)
|
|||
Total income tax expense (benefit)
|
$
|
101,171
|
|
|
$
|
49,227
|
|
|
$
|
(65,836
|
)
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Expected provision at federal statutory tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State tax expense, net of federal benefit
|
1.8
|
%
|
|
1.7
|
%
|
|
1.7
|
%
|
Revaluation of deferred taxes
|
(2.1
|
)%
|
|
—
|
%
|
|
(56.3
|
)%
|
Other
|
2.5
|
%
|
|
1.3
|
%
|
|
0.7
|
%
|
Total income tax expense (benefit)
|
23.2
|
%
|
|
24.0
|
%
|
|
(18.9
|
)%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Income tax credits
|
$
|
9,632
|
|
|
$
|
10,004
|
|
Net operating losses
|
13,604
|
|
|
155,670
|
|
||
Deferred revenue
|
8,824
|
|
|
6,824
|
|
||
Nondeductible accruals
|
14,133
|
|
|
14,691
|
|
||
Deferred manufacturing credits
|
2,813
|
|
|
—
|
|
||
Accrued maintenance
|
1,668
|
|
|
2,168
|
|
||
Equity compensation
|
2,851
|
|
|
2,592
|
|
||
Operating lease liability
|
305,161
|
|
|
—
|
|
||
Other
|
482
|
|
|
5,262
|
|
||
Valuation allowance
|
(1,746
|
)
|
|
(254
|
)
|
||
Deferred tax assets
|
357,422
|
|
|
196,957
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Deferred gain (loss) on leases, net
|
—
|
|
|
1,672
|
|
||
Accrued rent
|
—
|
|
|
6,068
|
|
||
Prepaid expenses
|
1,120
|
|
|
793
|
|
||
Property, plant and equipment
|
430,523
|
|
|
481,847
|
|
||
Deferred financing costs
|
154
|
|
|
189
|
|
||
Accrued aircraft and engine maintenance
|
84,479
|
|
|
61,529
|
|
||
Right-of-use asset
|
310,438
|
|
|
—
|
|
||
Deferred tax liabilities
|
826,714
|
|
|
552,098
|
|
||
Net deferred tax assets (liabilities)
|
$
|
(469,292
|
)
|
|
$
|
(355,141
|
)
|
18.
|
Commitments and Contingencies
|
Employee Groups
|
|
Representative
|
|
Amendable Date
|
|
Percentage of Workforce
|
Pilots
|
|
Air Line Pilots Association, International (ALPA)
|
|
February 2023
|
|
27%
|
Flight Attendants
|
|
Association of Flight Attendants (AFA-CWA)
|
|
May 2021
|
|
47%
|
Dispatchers
|
|
Professional Airline Flight Control Association (PAFCA)
|
|
October 2023
|
|
1%
|
Ramp Service Agents
|
|
International Association of Machinists and Aerospace Workers (IAMAW)
|
|
June 2020
|
|
3%
|
Passenger Service Agents
|
|
Transport Workers Union of America (TWU)
|
|
NA
|
|
3%
|
19.
|
Fair Value Measurements
|
|
As of December 31,
|
|
|
||||||||||||||
|
2019
|
|
2018
|
|
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Fair value level hierarchy
|
||||||||
|
(in millions)
|
|
|
||||||||||||||
Fixed-rate senior term loans
|
$
|
296.1
|
|
|
$
|
296.4
|
|
|
$
|
382.4
|
|
|
$
|
373.6
|
|
|
Level 3
|
Fixed-rate junior term loans
|
—
|
|
|
—
|
|
|
31.1
|
|
|
31.1
|
|
|
Level 3
|
||||
Fixed-rate term loans
|
778.2
|
|
|
823.6
|
|
|
625.1
|
|
|
600.1
|
|
|
Level 3
|
||||
2015-1 EETC Class A
|
348.6
|
|
|
372.2
|
|
|
378.6
|
|
|
374.8
|
|
|
Level 2
|
||||
2015-1 EETC Class B
|
72.0
|
|
|
74.5
|
|
|
80.0
|
|
|
78.1
|
|
|
Level 2
|
||||
2015-1 EETC Class C
|
98.1
|
|
|
100.5
|
|
|
109.5
|
|
|
107.9
|
|
|
Level 2
|
||||
2017-1 EETC Class AA
|
228.4
|
|
|
237.0
|
|
|
242.5
|
|
|
228.8
|
|
|
Level 2
|
||||
2017-1 EETC Class A
|
76.1
|
|
|
78.8
|
|
|
80.8
|
|
|
76.6
|
|
|
Level 2
|
||||
2017-1 EETC Class B
|
70.6
|
|
|
72.0
|
|
|
83.7
|
|
|
79.1
|
|
|
Level 2
|
||||
2017-1 EETC Class C
|
85.5
|
|
|
88.0
|
|
|
85.5
|
|
|
84.2
|
|
|
Level 2
|
||||
Revolving credit facility
|
160.0
|
|
|
160.0
|
|
|
135.3
|
|
|
135.3
|
|
|
Level 3
|
||||
Total long-term debt
|
$
|
2,213.6
|
|
|
$
|
2,303.0
|
|
|
$
|
2,234.5
|
|
|
$
|
2,169.6
|
|
|
|
|
Fair Value Measurements as of December 31, 2019
|
||||||||||||||
|
Total
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
||||||||
|
(in millions)
|
||||||||||||||
Cash and cash equivalents
|
$
|
979.0
|
|
|
$
|
979.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investment securities
|
105.3
|
|
|
105.3
|
|
|
—
|
|
|
—
|
|
||||
Assets held for sale
|
2.3
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
||||
Total assets
|
$
|
1,086.6
|
|
|
$
|
1,084.3
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Fair Value Measurements as of December 31, 2018
|
||||||||||||||
|
Total
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
||||||||
|
(in millions)
|
||||||||||||||
Cash and cash equivalents
|
$
|
1,004.7
|
|
|
$
|
1,004.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investment securities
|
102.8
|
|
|
102.8
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
1,107.5
|
|
|
$
|
1,107.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Assets Held for Sale Activity for the Twelve Months Ended December 31, 2019
|
||
|
(in millions)
|
||
Balance at December 31, 2018
|
$
|
—
|
|
Purchases
|
5.4
|
|
|
Sales
|
—
|
|
|
Total realized or unrealized gains (losses) included in earnings, net
|
(3.1
|
)
|
|
Balance at December 31, 2019
|
$
|
2.3
|
|
20.
|
Operating Segments and Related Disclosures
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
DOT—Domestic
|
$
|
3,462.8
|
|
|
$
|
2,990.7
|
|
|
$
|
2,432.1
|
|
DOT—Latin America and Caribbean
|
367.7
|
|
|
332.3
|
|
|
211.5
|
|
|||
Total
|
$
|
3,830.5
|
|
|
$
|
3,323.0
|
|
|
$
|
2,643.6
|
|
21.
|
Quarterly Financial Data (Unaudited)
|
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
|
|
(in thousands, except per-share amounts)
|
||||||||||||||
2019
|
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
|
$
|
855,796
|
|
|
$
|
1,012,956
|
|
|
$
|
991,968
|
|
|
$
|
969,816
|
|
Operating income
|
|
87,804
|
|
|
163,938
|
|
|
124,681
|
|
|
124,624
|
|
||||
Net income
|
|
56,076
|
|
|
114,501
|
|
|
83,464
|
|
|
81,214
|
|
||||
Basic earnings per share
|
|
0.82
|
|
|
1.67
|
|
|
1.22
|
|
|
1.19
|
|
||||
Diluted earnings per share
|
|
0.82
|
|
|
1.67
|
|
|
1.22
|
|
|
1.18
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
|
$
|
704,138
|
|
|
$
|
851,771
|
|
|
$
|
904,330
|
|
|
$
|
862,795
|
|
Operating income (loss)
|
|
(38,797
|
)
|
|
108,521
|
|
|
145,125
|
|
|
136,065
|
|
||||
Net income (loss)
|
|
(44,922
|
)
|
|
11,254
|
|
|
97,480
|
|
|
91,937
|
|
||||
Basic earnings (loss) per share
|
|
(0.66
|
)
|
|
0.16
|
|
|
1.43
|
|
|
1.35
|
|
||||
Diluted earnings (loss) per share
|
|
(0.66
|
)
|
|
0.16
|
|
|
1.42
|
|
|
1.34
|
|
|
|
Recoverability of aircraft maintenance deposits and accrual of lease return costs
|
Description of the Matter
|
|
At December 31, 2019, the Company recorded $170.6 million of aircraft maintenance deposits. As explained in Notes 1 and 14 to the financial statements, some of the Company’s aircraft and engine master lease agreements require the payment of maintenance reserves to aircraft lessors to be held as collateral in advance of performance of major maintenance activities. These lease agreements generally provide that maintenance reserves are reimbursable to the Company upon completion of the maintenance event. Maintenance reserve payments that are substantively and contractually related to the maintenance of the leased asset are accounted for as aircraft maintenance deposits to the extent they are expected to be recoverable. These lease agreements also often contain provisions that require the Company to return aircraft airframes, engines and other aircraft components to the lessor in a certain condition or pay an amount to the lessor based on the actual return condition. Management assesses the need to accrue lease return costs throughout the year or whenever facts and circumstances warrant an assessment. For the year ended December 31, 2019, the Company recorded $4.8 million of supplemental rent, which is made up of maintenance reserves paid to aircraft lessors that are not probable of being reimbursed, and probable and estimable lease return costs.
Auditing the recoverability of maintenance deposits and the estimate of lease return costs was complex because of the significant judgment involved in determining the timing of future maintenance events.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls that address the risks of material misstatement relating to the measurement of maintenance deposits and lease return costs. For example, we tested controls over management’s review of the estimated timing of future maintenance events.
To test the recoverability of maintenance deposits and the estimate of lease return costs, our audit procedures included, among others, testing the assumptions used and the accuracy and completeness of the underlying data used in the calculations. For example, to test the assumptions related to the timing of future maintenance events, we compared projected event timing to the time interval between recently completed maintenance events, regulatory requirements for aircraft and engine maintenance, current and projected utilization metrics for the aircraft, and changes to the fleet plan. We also tested the historical accuracy of management’s forecasts of maintenance events by comparing when recent maintenance events occurred to management’s initial projections.
|
Exhibit No.
|
|
Description of Exhibit
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
|
|
|
|
4.15
|
|
|
|
|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
4.18
|
|
|
|
|
|
4.19
|
|
|
|
|
|
4.20
|
|
|
|
|
|
4.21
|
|
|
|
|
|
4.22
|
|
|
|
|
|
4.23
|
|
|
|
|
|
4.24
|
|
|
|
|
|
4.25
|
|
|
|
|
|
4.26
|
|
|
|
|
|
4.27
|
|
|
|
|
|
4.28
|
|
|
|
|
|
4.29
|
|
|
|
|
|
4.30
|
|
|
|
|
|
4.31
|
|
|
|
|
|
4.32
|
|
|
|
|
|
4.33
|
|
|
|
|
|
4.34
|
|
|
|
|
|
4.35
|
|
|
|
|
|
4.36
|
|
|
|
|
|
4.37
|
|
|
|
|
|
4.38
|
|
|
|
|
|
4.39
|
|
|
|
|
|
4.40
|
|
|
|
|
|
4.41
|
|
|
|
|
|
4.42
|
|
|
|
|
|
4.43
|
|
|
|
|
|
4.44
|
|
|
|
|
|
4.45
|
|
|
|
|
|
4.46
|
|
|
|
|
|
4.47
|
|
|
|
|
|
4.48
|
|
|
|
|
|
4.49
|
|
|
|
|
|
4.50
|
|
|
|
|
|
4.51
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2+
|
|
|
|
|
|
10.3+
|
|
|
|
|
|
10.4†
|
|
|
|
|
|
10.5†
|
|
|
|
|
|
10.6†
|
|
|
|
|
|
10.7†
|
|
|
|
|
|
10.8†
|
|
|
|
|
|
10.9†
|
|
|
|
|
|
10.10†
|
|
|
|
|
|
10.11†
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13†
|
|
|
|
|
|
10.14†
|
|
|
|
|
|
10.15†
|
|
|
|
|
|
10.25†
|
|
|
|
|
|
10.26+
|
|
|
|
|
|
10.27+
|
|
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32
|
|
|
|
|
|
10.33
|
|
|
|
|
|
10.34+
|
|
|
|
|
|
10.35+
|
|
|
|
|
|
|
|
|
10.36
|
|
|
|
|
|
10.37
|
|
|
|
|
|
10.38
|
|
|
|
|
|
10.39
|
|
|
|
|
|
10.40+
|
|
|
|
|
|
10.41
|
|
|
|
|
|
10.42
|
|
|
|
|
|
10.43+
|
|
|
|
|
|
10.44+
|
|
|
|
|
|
10.45+
|
|
|
|
|
|
10.46+
|
|
|
|
|
|
23.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
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
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
†
|
Confidential treatment granted for certain portions of this Exhibit pursuant to Rule 406 under the Securities Act or Rule 24b-2 under the Exchange Act, which portions are omitted and filed separately with the Securities and Exchange Commission.
|
+
|
Indicates a management contract or compensatory plan or arrangement.
|
*
|
Exhibits 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise specifically stated in such filing.
|
|
SPIRIT AIRLINES, INC.
|
||
Date: February 5, 2020
|
By:
|
/s/ Scott M. Haralson
|
|
|
|
Scott M. Haralson
|
|
|
|
Senior Vice President and Chief Financial Officer
|
Signature
|
Title
|
Date
|
|
|
|
/s/ Edward M. Christie
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
February 5, 2020
|
Edward M. Christie
|
|
|
/s/ Scott M. Haralson
|
Senior Vice President, Chief Financial Officer (Principal Financial Officer)
|
February 5, 2020
|
Scott M. Haralson
|
|
|
/s/ Brian J. McMenamy
|
Vice President, Controller (Principal Accounting Officer)
|
February 5, 2020
|
Brian J. McMenamy
|
|
|
/s/ H. McIntyre Gardner
|
Director (Chairman of the Board)
|
February 5, 2020
|
H. McIntyre Gardner
|
|
|
/s/ Carlton D. Donaway
|
Director
|
February 5, 2020
|
Carlton D. Donaway
|
|
|
/s/ Mark B. Dunkerley
|
Director
|
February 5, 2020
|
Mark B. Dunkerley
|
|
|
/s/ Robert D. Johnson
|
Director
|
February 5, 2020
|
Robert D. Johnson
|
|
|
/s/ Barclay G. Jones
|
Director
|
February 5, 2020
|
Barclay G. Jones
|
|
|
/s/ Christine P. Richards
|
Director
|
February 5, 2020
|
Christine P. Richards
|
|
|
/s/ Myrna M. Soto
|
Director
|
February 5, 2020
|
Myrna M. Soto
|
|
|
/s/ Dawn M. Zier
|
Director
|
February 5, 2020
|
Dawn M. Zier
|
|
|
•
|
before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
|
•
|
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
•
|
on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
|
•
|
any merger or consolidation involving the corporation and the interested stockholder;
|
•
|
any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
|
•
|
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
|
•
|
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or
|
•
|
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits by or through the corporation.
|
•
|
any breach of the director’s duty of loyalty to us or our stockholders;
|
•
|
any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
|
•
|
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or
|
•
|
any transaction from which the director derived an improper personal benefit.
|
Exhibit B2
|
FORM OF A MANUFACTURER SPECIFICATION CHANGE NOTICE
|
2
|
SPECIFICATION
|
2.1
|
Aircraft Specification
|
2.2
|
Specification Amendment
|
2.2.1
|
Specification Change Notice
|
2.2.2
|
Development Changes
|
2.2.2.1
|
Manufacturer Specification Changes Notices
|
2.2.2.2
|
Seller may revise the Specification to incorporate Development Changes having no adverse effect on Aircraft performance, weight, Aircraft Base Price, Delivery Date of the Aircraft affected thereby or interchangeability or replaceability requirements under the Specification, without the Buyer’s consent. All such Development Changes shall be incorporated ***** the details of such changes shall be made available through the relevant application in AirbusWorld.
|
2.3
|
Aircraft Design Weights and Propulsion Systems
|
2.3.1
|
Aircraft design weights
|
|
MTOW
|
MLW
|
MZFW
|
A319 NEO Aircraft
|
*****
|
*****
|
*****
|
A320 NEO Aircraft
|
*****
|
*****
|
*****
|
A321 NEO Aircraft
|
*****
|
*****
|
*****
|
2.3.2
|
Propulsion Systems
|
|
CFM
|
IAE
|
A319 NEO
|
*****
|
*****
|
A320 NEO
|
*****
|
*****
|
A321 NEO
|
*****
|
*****
|
2.4
|
Milestones
|
2.4.1
|
Customization Milestones Chart
|
1)
|
the Buyer shall take certain actions and decisions, including the provision of certain information and documentation to the Seller;
|
2)
|
specific SCNs shall be executed; and
|
3)
|
the contractual definition of the Aircraft shall be finalized by way of execution of all SCNs (the “Contractual Definition Freeze” or “CDF”), in order to enable a) the Seller to manufacture the Aircraft and b) incorporation of such SCNs into the manufacturing of the Aircraft and the Delivery of the Aircraft in the Scheduled Delivery Month.
|
2.4.2.1
|
Any delay or failure by the Buyer to comply with any of the requirements referred to in Clauses 2.3 and 2.4.1 above may delay the performance by the Seller of its obligations under the Agreement and, in addition to any other rights and remedies available to the Seller under the Agreement and at law, shall in particular relieve the Seller of any obligation to deliver certain Aircraft within their respective Scheduled Delivery Month(s) *****.
|
2.4.2.2
|
*****
|
3.1
|
Base Price of the Aircraft
|
3.1.1
|
Base Price of the Airframe
|
(i)
|
the Airframe’s Base Price as defined in the Standard Specification, excluding Buyer Furnished Equipment but including nacelles, thrust reversers, and the Weights as set forth in Clause 2.3.1 above, which is:
|
(ii)
|
the sum of the Base Prices of all SCNs set forth in Appendix 1 to Exhibit A which is,
|
(iii)
|
the Base Price of the master charge, which is applicable if a CFM LEAP-1A Propulsion System is selected, which is:
|
3.1.2
|
Base Price of the Propulsion Systems
|
(b)
|
The IAE Propulsion Systems Base Prices have been computed from the IAE LLC Propulsion Reference Prices as set forth in Part 3 of Exhibit C to the Agreement.
|
3.2
|
Final Price of the Aircraft
|
(i)
|
the Base Price of the Airframe, as adjusted to the applicable Delivery Date of such Aircraft in accordance with Clause 4.1; plus
|
(ii)
|
the aggregate of all increases and decreases to the Base Price of the Airframe following execution of this Agreement as set out in any Specification Change Notice or MSCN applicable to the Airframe subsequent to the date of this Agreement in each case priced in ***** as revised to the date of the Delivery Date in accordance with the Seller Price Revision Formula; plus
|
(iii)
|
the Propulsion Systems Reference Price as adjusted to the Delivery Date of such Aircraft in accordance with Clause 4.2; plus
|
(iv)
|
the aggregate of all increases or decreases to the Propulsion Systems Reference Price as agreed in any Specification Change Notice applicable to the Propulsion Systems subsequent to the date of this Agreement as revised to the Delivery Date in accordance with Clause 4.2; plus
|
(v)
|
any other amount owed by the Buyer to the Seller pursuant to this Agreement and/or any other written agreement between the Buyer and Seller, *****.
|
4.1
|
Seller Price Revision Formula
|
4.2
|
Propulsion Systems Price Revision
|
4.2.1
|
The Reference Price is subject to adjustment up to and including the Delivery Date in accordance with the Propulsion Systems Price Revision Formula.
|
4.2.2
|
The Reference Price, the prices of any related equipment, the Propulsion Systems designation(s) and the Propulsion Systems Price Revision Formula are based on information that the Seller has received from the Propulsions Systems Manufacturer and are subject to amendment by the Propulsion Systems Manufacturer at any time prior to Delivery. If the Propulsion Systems Manufacturer makes any such amendment, the amendment shall be deemed to be incorporated into this Agreement and the Reference Price, the prices of the related equipment, the Propulsion Systems designation(s) and the Propulsion Systems Price Revision Formula shall be adjusted accordingly. The Seller agrees to notify the Buyer as soon as the Seller receives notice of any such amendment from the Propulsion Systems Manufacturer.
|
5.1
|
Seller’s Account
|
5.2
|
*****
|
5.3
|
Predelivery Payments
|
5.3.1
|
Predelivery Payments are nonrefundable and shall be paid by the Buyer to the Seller for the Aircraft.
|
5.3.2
|
“Predelivery Payment Reference Price” means, with respect to an Aircraft to be delivered in calendar year T, the amount determined in accordance with the following formula:
|
5.3.3
|
The Buyer shall pay Predelivery Payments on the dates and in the amounts set forth below.
|
Payment Date
|
Percentage of Predelivery Payment
Reference Price
|
|
*****
|
*****
|
*****
|
5.3.4
|
The Seller shall be entitled to hold and use any Predelivery Payment as absolute owner thereof and shall be under no obligation to segregate any Predelivery Payment, or any amount equal thereto, from the Seller’s funds generally.
|
5.4
|
Payment of Balance of the Final Price of the Aircraft
|
5.5
|
Taxes
|
5.7
|
*****
|
5.8
|
Overdue Payments
|
5.8.1
|
If any payment due to the Seller is not received by the Seller on the date when due, the Buyer shall pay to the Seller on demand *****.
|
5.9
|
Property Interest
|
5.10
|
Payment in Full
|
5.11
|
Other Charges
|
6.1
|
*****
|
6.2
|
Inspection
|
6.2.1
|
The Buyer or its duly authorized representatives (the "Buyer's Inspector(s)") shall be entitled to inspect the manufacture and assembly of the Airframe and all materials and parts obtained by the Seller for the manufacture and assembly of the Airframe (each an “Inspection”) on the following terms and conditions;
|
(i)
|
any Inspection shall be conducted pursuant to the Seller’s system of inspection and Airbus procedures, as developed under the supervision of the relevant Aviation Authority and disclosed in writing to the Buyer;
|
(ii)
|
the Buyer's Inspector(s) shall have access to such relevant technical data as is reasonably necessary for the purpose of the Inspection;
|
(iii)
|
any Inspection and any related discussions with the Seller and its personnel by the Buyer's Inspector(s) shall be at reasonable times during business hours and shall take place in the presence of the relevant inspection department personnel of the Seller;
|
(iv)
|
the Inspections shall be performed in a manner so as not to unduly delay or hinder the manufacture or assembly of the Aircraft, the performance of this Agreement by the Seller or any other work in progress at the Manufacture Facilities.
|
6.2.2
|
Location of Inspections
|
6.3
|
Seller's Service for Buyer's Inspector(s)
|
7.1
|
Type Certification
|
7.2
|
Export Certificate of Airworthiness
|
7.3
|
Specification Changes before Aircraft Ready for Delivery
|
7.4
|
*****
|
8.1
|
Technical Acceptance Process
|
8.1.1
|
Prior to Delivery, the Aircraft shall undergo a technical acceptance process developed by the Seller, the purpose of which is for the Seller to demonstrate to the Buyer compliance with the delivery requirements for such Aircraft under this Agreement (the "Technical Acceptance Process"). *****
|
8.1.2
|
The Technical Acceptance Process shall:
|
(i)
|
commence on a date notified by the Seller to the Buyer with no less than ***** advance notice,
|
(ii)
|
take place at the Delivery Location,
|
(iii)
|
be carried out by the personnel of the Seller, and
|
(iv)
|
include a technical acceptance flight that shall not exceed ***** unless additional time is necessary to complete the Technical Acceptance Process (including any additional test flights as may be required to complete the Technical Acceptance Process) (the “Technical Acceptance Flight”).
|
8.2
|
Buyer’s Attendance
|
8.2.1
|
Buyer's Inspectors shall be entitled to attend the Technical Acceptance Process.
|
8.2.2
|
If Buyer elects to attend the Technical Acceptance Process, the Buyer's Inspectors:
|
(i)
|
shall comply with the reasonable requirements of the Seller as advised to the Buyer, with the intention of completing the Technical Acceptance Process within *****, and
|
(ii)
|
may have a maximum of ***** of its representatives (no more than ***** of whom shall have access to the cockpit at any one time) accompany the Seller’s representatives on the Technical Acceptance Flight, during which the Buyer’s representatives shall comply with the instructions of the Seller’s representatives.
|
8.2.3
|
If the Buyer does not attend (other than as a result of the Seller’s failure to notify the Buyer as required by Clause 8.1.2(i)) or interferes with
|
8.3
|
Certificate of Acceptance
|
8.5
|
Aircraft Utilization
|
9.1
|
Delivery Schedule
|
9.1.1
|
Subject to Clauses 2, 7, 8, 10 and 18, the Seller shall have the Aircraft Ready for Delivery at the Delivery Location within the following quarters (each a “Scheduled Delivery Quarter”):
|
9.1.2
|
The scheduled delivery month (“Scheduled Delivery Month”) of each Aircraft shall be notified in writing to the Buyer by the Seller no later than *****.
|
9.1.3
|
The Seller shall give the Buyer at least ***** advance written notice of the anticipated date on which the Aircraft shall be Ready for Delivery. Such notice shall also include the starting date and the planned schedule of the Technical Acceptance Process. Thereafter the Seller shall notify the Buyer of any change to such dates.
|
9.2
|
Delivery Process
|
9.2.1
|
The Buyer shall send the Buyer's Inspectors to the Delivery Location in order to take Delivery of the Aircraft on the date the Aircraft is Ready for Delivery, and remove the Aircraft from the Delivery Location within *****.
|
9.2.2
|
The Seller shall deliver and transfer title to the Aircraft to the Buyer free and clear of all Liens (except for any Liens or encumbrances created by or on behalf of the Buyer) provided that the Balance of the Final Price of such Aircraft and all other amounts stated to be due hereunder on the Delivery Date have been paid by the Buyer pursuant to Clause 5.4 and that the Certificate of Acceptance has been signed and delivered to the Seller pursuant to Clause 8.3. The Seller shall provide the Buyer with (a) a bill of sale in (i) the form set forth in Exhibit E-1, if the Delivery Location is in Mobile, Alabama and (ii) in the form set forth in Exhibit E-2, if the Delivery Location is in any place other than Mobile, Alabama (the “Bill of Sale”), and/or (b) such other documentation confirming transfer of title and receipt of the Final Contract Price as may reasonably be requested by the Buyer and (c) if Mobile, Alabama is the Delivery Location, a warranty from Airbus S.A.S in the form of Exhibit J. Title to, property in and risk of loss of or damage to the Aircraft shall pass to the Buyer contemporaneously with the delivery by the Seller to the Buyer of such Bill of Sale.
|
9.2.3
|
If, when the Aircraft is Ready for Delivery, subject to 9.4, the Buyer fails to:
|
9.3
|
Flyaway
|
9.3.1
|
As applicable, the Buyer and the Seller shall cooperate to obtain any licenses that may be required by the Aviation Authority of the Delivery Location for the purpose of exporting the Aircraft.
|
9.3.2
|
***** The Buyer shall make direct arrangements with the supplying companies for the fuel and oil required for all post-Delivery flights.
|
9.4
|
Delivery on the date on which an Aircraft is Ready for Delivery
|
10.1
|
Scope of Excusable Delay
|
10.2
|
Consequences of Excusable Delay
|
(i)
|
the Seller shall notify the Buyer of such Excusable Delay as soon as practicable after becoming aware of the same;
|
(ii)
|
the Seller shall not be responsible for any damages arising from or in connection with such Excusable Delay suffered or incurred by the Buyer;
|
(iii)
|
the Seller shall not be deemed to be in default in the performance of its obligations hereunder as a result of such Excusable Delay;
|
(iv)
|
the Seller shall as soon as practicable after the removal of the cause of such delay resume performance of its obligations under this Agreement and in particular shall notify the Buyer of the revised Scheduled Delivery Month.
|
10.3
|
Termination on Excusable Delay
|
10.3.1
|
*****, then either party may terminate this Agreement with respect to the affected Aircraft, by giving written notice to the other party *****. However, the *****.
|
10.3.2
|
If the Seller advises the Buyer in its notice of a revised Scheduled Delivery Month pursuant to Clause 10.2.1(iv) that there shall be a delay in Delivery of an Aircraft of more than *****, then either party may terminate this Agreement with respect to the affected Aircraft. Termination shall be made by giving written notice to the other party within ***** after the Buyer's receipt of the notice of a revised Scheduled Delivery Month.
|
10.3.3
|
If this Agreement is not terminated under the terms of Clause 10.3.1 or 10.3.2, then the Seller shall be entitled to reschedule Delivery. The Seller shall notify the Buyer of the new Scheduled Delivery Month after the ***** referred to in Clause 10.3.1 or 10.3.2, and this new Scheduled Delivery Month shall be deemed to be an amendment to the applicable Scheduled Delivery Month in Clause 9.1.
|
10.4
|
Total Loss, Destruction or Damage
|
10.5
|
Termination Rights Exclusive
|
10.6
|
Remedies
|
11.1
|
*****
|
11.2
|
Renegotiation
|
11.3
|
Termination
|
11.4
|
Remedies
|
12
|
WARRANTIES AND SERVICE LIFE POLICY
|
12.1
|
Standard Warranty
|
12.1.1
|
Nature of Warranty
|
12.1.2
|
Exclusions
|
12.1.3
|
Warranty Period
|
12.1.4
|
Limitations of Warranty
|
12.1.4.1
|
*****
|
12.1.4.2
|
In the event of a defect covered by Clauses 12.1.1 (iii), 12.1.1 (iv) and 12.1.2 (ii) becoming apparent within the Warranty Period, the Seller shall also, if so requested by the Buyer in writing, correct such defect in any Aircraft which has not yet been delivered to the Buyer *****
|
12.1.4.3
|
Cost of inspection
|
12.1.5
|
Warranty Claim Requirements
|
(i)
|
the defect having become apparent within the Warranty Period;
|
(ii)
|
the Buyer having filed a warranty claim within ***** of discovering the defect;
|
(iii)
|
the Buyer having submitted to the Seller evidence reasonably satisfactory to the Seller that the claimed defect is due to a matter warranted under this Clause 12.1;
|
(iv)
|
the Seller having received a Warranty Claim substantially complying with the provisions of Clause 12.1.6 below.
|
12.1.6
|
Warranty Administration
|
12.1.6.1
|
Claim Determination
|
12.1.6.2
|
Transportation Costs
|
12.1.6.3
|
Return of an Aircraft
|
12.1.6.4
|
On Aircraft Work by the Seller
|
12.1.6.5
|
Warranty Claim Substantiation
|
(a)
|
description of defect and action taken, if any,
|
(b)
|
date of incident and/or removal date,
|
(c)
|
description of Warranted Part claimed to be defective,
|
(d)
|
part number,
|
(e)
|
serial number (if applicable),
|
(f)
|
position on Aircraft,
|
(g)
|
total flying hours or calendar time, as applicable, at the date of defect appearance,
|
(h)
|
time since last shop visit at the date of defect appearance,
|
(i)
|
Manufacturer Serial Number of the Aircraft and/or its registration,
|
(j)
|
Aircraft total flying hours and/or number of landings at the date of defect appearance,
|
(k)
|
Warranty Claim number,
|
(l)
|
date of Warranty Claim,
|
(m)
|
Delivery Date of Aircraft or Warranted Part to the Buyer,
|
12.1.6.6
|
Replacements
|
(i)
|
when the Seller has custody, possession, or control of a returned Aircraft, component, accessory, equipment or part to which the Buyer has title, the Seller shall have such responsibility therefor as is chargeable by law to a bailee for hire, but the Seller shall not be liable for loss of use, and;
|
(ii)
|
title to and risk of loss of a returned component, accessory, equipment or part shall pass to the Seller upon shipment by the Seller to the Buyer of any item furnished by the Seller to the Buyer as a replacement therefor.
|
12.1.6.7
|
Rejection
|
12.1.6.8
|
Inspection
|
12.1.7
|
Inhouse Warranty
|
12.1.7.1
|
Seller's Authorization
|
12.1.7.2
|
Conditions for Seller's Authorization
|
12.1.7.4
|
Inhouse Warranty Claim Substantiation
|
(a)
|
a report of technical findings with respect to the defect,
|
(b)
|
for parts required to remedy the defect:
|
(c)
|
detailed number of labor hours,
|
(d)
|
Inhouse Warranty Labor Rate,
|
(e)
|
total claim value.
|
12.1.7.5
|
Credit
|
12.1.7.6
|
Limitation
|
12.1.7.7
|
Scrapped Material
|
12.1.8
|
Standard Warranty in case of Pooling or Leasing Arrangements
|
12.1.9
|
Warranty for Corrected, Replaced or Repaired Warranted Parts
|
12.1.10
|
Accepted Industry Standard Practices Normal Wear and Tear
|
12.1.11
|
DISCLAIMER OF SELLER LIABILITY
|
12.2
|
Service Life Policy
|
12.2.1
|
In addition to the warranties set forth in Clause 12.1, the Seller further agrees that should a Failure occur in any Item (as these terms are defined hereinbelow) that has not suffered from an extrinsic force, then, subject to the general conditions and limitations set forth in Clause 12.2.4, the provisions of this Clause 12.2 shall apply.
|
(i)
|
"Item" means any item listed in Exhibit “F”;
|
(ii)
|
"Failure" means *****.
|
12.2.2
|
Periods and Seller's Undertakings
|
12.2.4
|
General Conditions and Limitations
|
12.2.4.1
|
The undertakings set forth in this Clause 12.2 shall be valid after the period of the Seller's warranty applicable to an Item under Clause 12.1.
|
12.2.4.2
|
The Buyer's remedies and the Seller's obligations and liabilities under this Service Life Policy are subject to compliance by the Buyer with the following conditions:
|
(i)
|
the Buyer shall maintain log books and other historical records with respect to each Item, adequate to enable the Seller to determine whether the alleged Failure is covered by this Service Life Policy and, if so, to define the portion of the costs *****;
|
(ii)
|
*****;
|
(iii)
|
the Buyer shall comply with the conditions of Clause 12.1.10;
|
(iv)
|
*****;
|
(v)
|
the Buyer shall report any breakage or defect in an Item in writing to the Seller within ***** after such breakage or defect becomes apparent to the Buyer, whether or not said breakage or defect can reasonably be expected to occur in any other aircraft, and the Buyer shall have provided to the Seller sufficient detail on the breakage or defect to enable the Seller acting reasonably to determine whether said breakage or defect is subject to this Service Life Policy.
|
12.2.4.3
|
Except as otherwise provided for in this Clause 12.2, any claim under this Service Life Policy shall be administered as provided for in, and shall be subject to the terms and conditions of, Clause 12.1.6.
|
12.2.4.4
|
In the event of the Seller having issued a modification applicable to an Aircraft, the purpose of which is to avoid a Failure, the Seller shall supply the necessary modification kit ***** that will be applicable to all operators subject to the same fleetwide coverage. If such a kit is so offered to the Buyer, then, to the extent of such Failure and any Failures that could ensue therefrom, the validity of the Seller's commitment under this Clause 12.2 shall be subject to the Buyer incorporating such modification in the relevant Aircraft, as promulgated by the Seller and in accordance with the Seller's instructions, within a reasonable time.
|
12.2.4.5
|
THIS SERVICE LIFE POLICY IS NEITHER A WARRANTY, PERFORMANCE GUARANTEE, NOR AN AGREEMENT TO MODIFY ANY AIRCRAFT OR AIRFRAME COMPONENTS TO CONFORM TO NEW DEVELOPMENTS OCCURRING IN THE STATE OF AIRFRAME DESIGN
|
12.3
|
Supplier Warranties and Service Life Policies
|
12.3.1
|
Definitions
|
12.3.1.1
|
“Supplier” means any supplier of Supplier Parts.
|
12.3.1.2
|
“Supplier Part” means any component, equipment, accessory or part installed in an Aircraft at the time of Delivery thereof and for which there exists a Supplier Product Support Agreement. For the sake of clarity, Propulsion Systems and Buyer Furnished Equipment and other equipment selected by the Buyer to be supplied by suppliers with whom the Seller has no existing enforceable warranty agreements are not Supplier Parts.
|
12.3.1.3
|
“Supplier Product Support Agreements” means agreements between the Seller and Suppliers, as described in Clause 17.1.2, containing enforceable and transferable warranties and, in the case of landing gear suppliers, service life policies for selected structural landing gear elements.
|
12.3.2
|
Supplier's Default
|
12.3.2.1
|
In the event of any Supplier, under any standard warranty obtained by the Seller pursuant to Clause 12.3.1, defaulting in the performance of any material obligation with respect thereto and subject to the Buyer first using its reasonable efforts to enforce its rights under such standard warranty and (ii) the Buyer submitting in reasonable time to the Seller reasonable evidence that such default has occurred, *****.
|
12.3.2.2
|
In the event of any Supplier, under any Supplier Service Life Policy obtained by the Seller pursuant to Clause 12.3.1, defaulting in the performance of any material obligation with respect thereto and subject to (i) the Buyer first using its reasonable efforts to enforce its rights under such Supplier Service Life Policy and (ii) the Buyer submitting in reasonable time to the Seller reasonable evidence that such default has occurred, *****.
|
12.3.2.3
|
At the Seller's request, the Buyer shall assign to the Seller, and the Seller shall be subrogated to, all of the Buyer's rights against the relevant Supplier with respect to and arising by reason of such default and shall provide reasonable assistance to enable the Seller to enforce the rights so assigned.
|
12.4
|
Interface Commitment
|
12.4.1
|
Interface Problem
|
12.4.2
|
Seller's Responsibility
|
12.4.3
|
Supplier's Responsibility
|
12.4.4
|
Joint Responsibility
|
12.4.5
|
General
|
12.4.5.1
|
All requests under this Clause 12.4 shall be directed to both the Seller and the affected Supplier.
|
12.4.5.2
|
Except as specifically set forth in this Clause 12.4, this Clause shall not be deemed to impose on the Seller any obligations not expressly set forth elsewhere in this Agreement.
|
12.4.5.3
|
All reports, recommendations, data and other documents furnished by the Seller to the Buyer pursuant to this Clause 12.4 shall be deemed to be delivered under this Agreement and shall be subject to the terms, covenants and conditions set forth in this Clause 12.
|
12.5
|
Exclusivity of Warranties
|
(1)
|
ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR ANY GENERAL OR PARTICULAR PURPOSE;
|
(2)
|
ANY IMPLIED OR EXPRESS WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
|
(3)
|
ANY RIGHT, CLAIM OR REMEDY FOR BREACH OF CONTRACT;
|
(4)
|
ANY RIGHT, CLAIM OR REMEDY FOR TORT, UNDER ANY THEORY OF LIABILITY, HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO, ACTIONS AND/OR CLAIMS FOR NEGLIGENCE, GROSS NEGLIGENCE, INTENTIONAL ACTS, WILLFUL DISREGARD, IMPLIED WARRANTY, PRODUCT LIABILITY, STRICT LIABILITY OR FAILURE TO WARN;
|
(5)
|
ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM COMMERCIAL CODE OR ANY OTHER STATE OR FEDERAL STATUTE;
|
(6)
|
ANY RIGHT, CLAIM OR REMEDY ARISING UNDER ANY REGULATIONS OR STANDARDS IMPOSED BY ANY INTERNATIONAL, NATIONAL, STATE OR LOCAL STATUTE OR AGENCY;
|
(7)
|
ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:
|
(a)
|
LOSS OF USE OR REPLACEMENT OF ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;
|
(b)
|
LOSS OF, OR DAMAGE OF ANY KIND TO, ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;
|
(c)
|
LOSS OF PROFITS AND/OR REVENUES;
|
(d)
|
ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.
|
12.6
|
Duplicate Remedies
|
12.7
|
Negotiated Agreement
|
(i)
|
the Specification has been agreed upon after careful consideration by the Buyer using its judgment as a professional operator of aircraft used in public transportation and as such is a professional within the same industry as the Seller;
|
(ii)
|
this Agreement, and in particular this Clause 12, has been the subject of discussion and negotiation and is fully understood by the Buyer; and
|
(iii)
|
the price of the Aircraft and the other mutual agreements of the Buyer set forth in this Agreement were arrived at in consideration of, inter alia, the provisions of this Clause 12, specifically including the waiver, release and renunciation by the Buyer set forth in Clause 12.5.
|
12.8
|
Disclosure to Third Party Entity
|
12.9
|
Transferability
|
13
|
PATENT AND COPYRIGHT INDEMNITY
|
13.1
|
Indemnity
|
13.1.1
|
Subject to the provisions of Clause 13.2.3, the Seller shall indemnify, defend and hold harmless the Buyer from and against any damages, costs and/or expenses including legal costs (excluding damages, costs, expenses, loss of profits and other liabilities in respect of or resulting from loss of use of the Aircraft) resulting from any infringement or claim of infringement by the Airframe (or any part or software installed therein at Delivery) of:
|
13.1.2
|
Clause 13.1.1 shall not apply to
|
13.1.3
|
In the event that the Buyer, due to circumstances contemplated in Clause 13.1.1, is prevented from using the Aircraft (whether by a valid judgment of a court of competent jurisdiction or by a settlement arrived at between claimant, Seller and Buyer), the Seller shall at its discretion and expense either:
|
13.2
|
Administration of Patent and Copyright Indemnity Claims
|
13.2.1
|
If the Buyer receives a written claim or a suit is threatened or commenced against the Buyer for infringement of a patent or copyright referred to in Clause 13.1, the Buyer shall:
|
(i)
|
forthwith notify the Seller giving particulars thereof;
|
(ii)
|
furnish to the Seller all data, papers and records within the Buyer's control or possession relating to such patent or claim;
|
(iii)
|
refrain from admitting any liability or making any payment or assuming any expenses, damages, costs or royalties or otherwise acting in a manner prejudicial to the defense or denial of such suit or claim provided always that nothing in this sub-Clause (iii) shall prevent the Buyer from paying such sums as may be required in order to obtain the release of the Aircraft, provided such payment is accompanied by a denial of liability and is made without prejudice;
|
(iv)
|
reasonably co-operate with, and render reasonable assistance to, the Seller *****, as may be pertinent to the defense or denial of the suit or claim;
|
(v)
|
reasonably act in such a way as to mitigate damages, costs and expenses and/or reduce the amount of royalties which may be payable.
|
13.2.2
|
The Seller shall be entitled either in its own name or on behalf of the Buyer to conduct negotiations with the party or parties alleging infringement and may assume and conduct the defense or settlement of any suit or claim in the manner which, in the Seller's opinion, it deems proper; provided that Seller shall upon Buyer’s request keep Buyer reasonably informed on such matter and to the extent that there is a settlement obligation imposed on the Buyer which is not covered by the indemnification obligations of the Seller, then such obligation shall require the prior written approval of Buyer, not to be unreasonably witheld.
|
13.2.3
|
The Seller's liability hereunder shall be conditional upon the strict and timely compliance by the Buyer with the terms of this Clause and is in lieu of any other liability to the Buyer express or implied which the Seller might incur at law as a result of any infringement or claim of infringement of any patent or copyright.
|
14.1
|
The OEM Technical Data shall be supplied in the English language using the aeronautical terminology in common use. Range, type, format and delivery schedule of the OEM Technical Data to be provided under this Agreement are outlined in Exhibit G hereto.
|
14.2
|
Aircraft Identification for OEM Technical Data
|
14.2.1
|
The following OEM Technical Data can be customized to the Aircraft:
|
14.2.2
|
The sequence *****.
|
14.2.3
|
The Buyer shall indicate to the Seller the Fleet Serial Number allocated to each Aircraft corresponding to the delivery schedule set forth in Clause 9.1 *****. Neither the designation of such Fleet Serial Numbers nor the subsequent allocation of the Fleet Serial Numbers to Manufacturer Serial Numbers for the purpose of producing certain customized OEM Technical Data shall constitute any property, insurable or other interest of the Buyer in any Aircraft prior to the Delivery of such Aircraft as provided for in this Agreement. To the extent that the Buyer provides Buyer Data for inclusion in the OEM Technical Data, such Buyer Data shall not change ownership by virtue of such inclusion and Clause 22.8 shall apply.
|
14.3
|
Integration of Equipment Data
|
14.3.1
|
Supplier Equipment
|
14.3.2
|
Buyer Furnished Equipment
|
14.3.2.1
|
The Seller shall introduce BFE data for Buyer Furnished Equipment that is installed on the Aircraft by the Seller (“BFE Data”) into the customized OEM Technical Data, ***** to the Buyer for the initial issue of the OEM Technical Data provided at or before Delivery of the first Aircraft, provided such BFE Data is provided in accordance with the conditions set forth in Clauses 14.3.2.2 through 14.3.2.5 no such ref.
|
14.3.2.2
|
The Buyer shall supply, or shall cause the BFE Supplier(s) to supply on Buyer’s behalf, BFE Data to the Seller *****.
|
14.3.2.3
|
The BFE Data shall be supplied in English and shall be established in compliance with the then applicable revision of *****, Information Standards for Aviation Maintenance.
|
14.3.2.4
|
The BFE Data shall be delivered in digital format and/or in Portable Document Format (PDF), as agreed between the Buyer and the Seller.
|
14.3.2.5
|
All costs related to the delivery to the Seller of the applicable BFE Data shall be *****
|
14.4
|
Supply
|
14.4.1
|
OEM Technical Data shall be supplied on-line and/or off-line, as set forth in Exhibit G hereto.
|
14.4.2
|
*****
|
14.4.3
|
Delivery
|
14.4.3.1
|
For OEM Technical Data provided off-line, such OEM Technical Data and corresponding revisions shall be sent to up to two (2) addresses as indicated by the Buyer.
|
14.4.3.2
|
OEM Technical Data provided off-line shall be delivered by the Seller at the Buyer’s named place of destination under DAP conditions. The term Delivered At Place (DAP) is defined in the Incoterms 2010 publication issued by the International Chamber of Commerce.
|
14.4.3.3
|
The OEM Technical Data shall be delivered according to a mutually agreed schedule to correspond with the Deliveries of Aircraft. The Buyer shall provide no less than ***** when requesting a change to such delivery schedule.
|
14.4.4
|
It shall be the responsibility of the Buyer to coordinate and satisfy local Aviation Authorities' requirements with respect to OEM Technical Data.
|
14.5
|
Revision Service
|
14.6
|
Service Bulletins (SB) Incorporation
|
14.7
|
OEM Technical Data Familiarization
|
14.8
|
Customer Originated Changes (COC)
|
14.9
|
AirN@v Family products
|
14.9.1
|
The OEM Technical Data listed below are provided on DVD and include integrated software (hereinafter together referred to as “AirN@v Family”).
|
14.9.2
|
The AirN@v Family covers several OEM Technical Data domains, reflected by the following AirN@v Family products:
|
14.9.3
|
AirN@v Family integrated software is subject to Part 1 of Exhibit I to the Agreement (the “End-User License Agreement for Airbus Software”).
|
14.9.4
|
The revision service and the license to use AirN@v Family products shall be granted *****. At the end of such Revision Service Period, the yearly revision service for AirN@v Family products ***** shall be provided to the Buyer *****.
|
14.10
|
On-Line Technical Data
|
14.10.1
|
The OEM Technical Data provided on-line shall be made available to the Buyer through the Airbus customer portal AirbusWorld (“AirbusWorld”).
|
14.10.2
|
The list of the OEM Technical Data provided on-line may be extended from time to time.
|
14.10.3
|
Access to the AirbusWorld portal shall be ***** of the Buyer’s users (including two (2) Buyer’s Administrators for the OEM Technical Data related to the Aircraft that are operated by the Buyer.
|
14.10.4
|
OEM Technical Data accessed through AirbusWorld portal are at all times subject to the conditions of this Clause 14.
|
14.11
|
Waiver, Release and Renunciation
|
14.12
|
Proprietary Rights
|
14.12.1
|
All proprietary rights relating to OEM Technical Data, including but not limited to patent, design and copyrights, shall remain with the Seller and/or its Affiliates, as the case may be.
|
14.12.2
|
The supply of the OEM Technical Data by Seller shall not be construed as any right for the Buyer to design or manufacture any aircraft or part thereof or any spare part.
|
14.13
|
Performance Engineer's Program
|
14.13.1
|
In addition to the OEM Technical Data, the Seller shall provide to the Buyer Software Services, which shall consist of the Performance Engineer's Programs (“PEP”) for the Aircraft type covered under this Agreement. Such PEP is composed of software components and databases, and its use is subject to the End-User License Agreement for Airbus Software (as set forth in Exhibit I to the Agreement).
|
14.13.2
|
Use of the PEP shall be limited to ***** to be used on the Buyer’s computers for the purpose of computing performance engineering data. The PEP is intended for use on ground only and shall not be placed or installed on board the Aircraft.
|
14.13.3
|
The license to use the PEP and the revision service shall be provided *****. At the end of such Revision Service Period, the PEP shall be provided to the Buyer *****.
|
14.14
|
Future Developments
|
14.15
|
Confidentiality
|
14.15.1
|
This Clause 14, the OEM Technical Data, the Software Services and their content are designated as confidential. All such OEM Technical Data and Software Services are provided to the Buyer for the sole use of the Buyer who undertakes not to disclose the contents thereof to any third party without the prior written consent of the Seller, except as permitted herein or therein pursuant to any government or legal requirement imposed upon the Buyer. The OEM Technical Data shall be deemed “Confidential Information” under Clause 22.8 of the Agreement.
|
14.15.2
|
*****
|
14.15.3
|
*****
|
14.15.4
|
*****
|
14.16
|
Transferability
|
14.17
|
*****
|
15
|
SELLER REPRESENTATIVE SERVICES
|
15.1
|
Seller Representatives
|
15.2
|
Location
|
15.3
|
Availability
|
15.3.1
|
The Parties acknowledge and agree that during the period defined in Clause 15.1, each Seller Representative may provide support to airlines other than the Buyer.
|
15.3.2
|
If, at the end of the Seller Representative’s assignment, as set out in Clause 15.1, the Buyer needs technical assistance in an AOG situation, the Buyer shall have ***** access to:
|
1)
|
AIRTAC (Airbus Technical AOG Centre); and
|
2)
|
the network of Seller Representatives of the Seller closest to the Buyer's main base, the contacts of which shall be provided to the Buyer.
|
15.4
|
Buyer's Support at the Buyer’s facilities
|
15.4.1
|
From the date of arrival of the first Seller Representative at the Buyer’s facilities and for as long as *****, the Buyer shall provide ***** suitable lockable office for the use of the Seller Representative(s), conveniently located with respect to the Buyer's maintenance facilities, with complete
|
15.4.2
|
If the Buyer requests any Seller Representative to travel on business to a city other than his/her usual place of assignment, *****.
|
15.4.3
|
The Buyer shall assist the Seller’s obtaining *****.
|
15.5
|
Withdrawal of the Seller Representative
|
16
|
TRAINING SUPPORT AND SERVICES
|
16.1
|
General
|
16.1.1
|
The Seller shall provide to the Buyer***** the training allowances set out in Appendix A to this Agreement.
|
16.1.2
|
The Parties shall mutually agree on the scheduling of training courses during a training conference (the “Training Conference”) which shall be held, to the extent possible *****.
|
16.2
|
Training Location
|
16.2.1
|
The Seller shall:
|
1)
|
provide training at one of its training centres ***** (each a “Seller Training Centre”), or
|
2)
|
if the unavailability of facilities or scheduling difficulties make training by the Seller at any Seller Training Centre impractical, ensure that the Buyer is provided with such training at another location selected by the Seller (each a “Seller Chosen Training Location”),
|
16.2.2
|
Upon the Buyer's request, the Seller may provide training at locations other than a Training Centre, including one of the Buyer's bases (each a “Buyer Chosen Training Location”), under terms and conditions to be agreed upon but subject to the provisions of Clause 16.5.
|
16.2.3
|
If the Buyer requests an Airbus training course to be conducted at a Buyer Chosen Training Location, the Buyer shall ensure that the training facilities at such location are suitably equipped with the adapted classroom space and equipment for such training. The Buyer shall to this effect provide all
|
16.3.1
|
With respect to training courses performed under this Agreement:
|
1)
|
for the duration of the training course at a Training Centre, the Seller shall make available to the trainees all necessary training media and training equipment; for the avoidance of doubt, such training equipment shall not include aircraft;
|
2)
|
the equipment and curricula used for the training of flight, cabin and maintenance personnel shall not be fully customized but shall be configured as necessary to obtain the relevant Aviation Authority’s approval;
|
3)
|
trainee documentation shall be made available to the trainees for the duration of the training course only, for the sole purpose of training, shall remain the property of the Seller and shall be returned to the Seller at the end of any training course;
|
4)
|
at the end of each training course provided at a Training Centre each trainee shall receive either an attestation, indicating that the trainee has attended such course, or a certificate of course completion indicating the outcome of the relevant evaluation at the end of such training, as applicable. No such certificate or attestation shall represent authority or qualification by any Aviation Authority but may be presented to an Aviation Authority by the recipient in order to obtain relevant formal qualification;
|
5)
|
when a training course is provided at a Seller Chosen Training Location, the Seller shall communicate to the Buyer the terms and conditions applicable to such training at the time it is offered.
|
16.3.2
|
Exchange of Training Courses
|
16.3.3
|
Timing of Requests, Rescheduling and Cancellation of Training Courses
|
16.3.4
|
All training allowances indicated in Appendix A hereto are the total allowances granted for the entire fleet of Aircraft, unless otherwise specified herein. Should this Agreement be terminated with respect to any or all Aircraft
|
16.3.5
|
If the Buyer does not use any or all of the training allowances provided pursuant to this Clause 16 within the timeframe set out in Appendix A *****.
|
16.4
|
Prerequisites and Conditions
|
16.4.1
|
The Buyer shall be responsible for ensuring that the trainees registered on a training course have the prerequisite knowledge and experience specified for such course in the CSC.
|
16.4.2
|
At the time of booking of a training course, and in no event later than ***** prior to each course, the Buyer shall provide the Seller with a list of the trainees for each course, together with evidence of the qualification, proficiency and professional experience of each trainee and such other information as the Seller may request.
|
-
|
prior to the start of a course, that a trainee does not meet the prerequisites set out in the CSC; or
|
-
|
at any time during a training course, that a trainee lacks the required level,
|
16.4.3
|
The Seller does in no case warrant and shall not be held liable for any trainee's performance as a result of any training provided hereunder. For the purposes of this Clause 16.4.3, the “Seller” shall be understood to include the Seller, any of its suppliers and subcontractors, its Affiliates and any of their respective insurers.
|
16.5
|
Logistics
|
16.5.1
|
Travel and living expenses for the Buyer's trainees shall be borne *****.
|
16.5.2
|
For any training provided by the Seller at a Buyer Chosen Training Location and for each Instructor providing support under this Clause 16 *****.
|
16.5.3
|
The Seller shall not be liable to the Buyer for any delay or cancellation in the performance of any training outside of the Seller's Training Centers arising as a result of the transportation of the Seller’s personnel.
|
16.6
|
Conditions Specific to Certain Training
|
16.6.1
|
Flight Support
|
1)
|
any such flight support shall be subject to the Seller’s prior consent;
|
2)
|
such Instructors shall only perform the above flight support to the extent they bear the relevant qualifications to do so; and
|
3)
|
such flight(s) shall be deducted from the remaining allowance set out in Appendix A hereto.
|
16.6.2
|
Provision of Aircraft
|
16.6.3
|
Validation of Licenses
|
16.7
|
Transferability
|
17.1
|
Equipment Supplier Product Support Agreements
|
17.1.1
|
The Seller has obtained enforceable and transferable product support agreements from Suppliers of Supplier Parts. The Seller will ***** to the Buyer transfer to the Buyer the Supplier Product Support Agreements, the benefit of which is hereby accepted by the Buyer. Said agreements become enforceable as soon as and for as long as an operator is identified as an Airbus aircraft operator.
|
17.1.2
|
These agreements are based on the "World Airlines Suppliers Guide", are made available online to the Buyer through AirbusWorld, and include Supplier commitments as contained in the Supplier Product Support Agreements which include the following provisions:
|
17.1.2.1
|
Technical data and manuals required to operate, maintain, service and overhaul the Supplier Parts shall be prepared in accordance with the applicable provisions of ATA Specification including revision service and be published in the English language. The Seller shall recommend that a software user guide, where applicable, be supplied in the form of an appendix to the Component Maintenance Manual. Such data shall be provided in compliance with the applicable ATA Specification;
|
17.1.2.2
|
Warranties and guarantees, including standard warranties. In addition, landing gear Suppliers shall provide service life policies for selected structural landing gear elements;
|
17.1.2.3
|
Training to ensure efficient operation, maintenance and overhaul of the Supplier Parts for the Buyer's instructors, shop and line service personnel;
|
17.1.2.4
|
Spares data in compliance with *****, initial provisioning recommendations, spare parts and logistic service including routine and expedite deliveries;
|
17.1.2.5
|
Technical service to assist the Buyer with maintenance, overhaul, repair, operation and inspection of Supplier Parts as well as required tooling and spares provisioning.
|
17.2
|
Supplier Compliance
|
17.3
|
Nothing in this Clause 17 shall be construed to prevent or limit the Buyer from entering into direct negotiations with a Supplier with respect to different or additional terms and conditions applicable to Suppliers Parts selected by the Buyer to be installed on the Aircraft.
|
17.4
|
Familiarization Training
|
18.1
|
Administration
|
18.1.1.1
|
In accordance with the Specification, the Seller shall install those items of equipment that are identified in the Specification as being furnished by the Buyer ("Buyer Furnished Equipment" or "BFE"), provided that the BFE and the supplier of such BFE (the “BFE Supplier”) are referred to in the Airbus BFE Product Catalog valid at the time the BFE Supplier is selected.
|
18.1.1.2
|
Notwithstanding the foregoing and without prejudice to Clause 2.4, if the Buyer wishes to install BFE manufactured by a supplier who is not referred to in the Airbus BFE Product Catalog, the Buyer shall so inform the Seller and the Seller shall conduct a feasibility study of the Buyer’s request, in order to consider approving such supplier, provided that such request is compatible with the Seller’s industrial planning and the associated Scheduled Delivery Month for the Buyer’s Aircraft. In addition, it is a prerequisite to such approval that the considered supplier be qualified by the Seller’s Aviation Authorities to produce equipment for installation on civil aircraft. ***** The Buyer shall cause any BFE supplier approved under this Clause 18.1.1.2 (each an “Approved BFE Supplier”) to comply with the conditions set forth in this Clause 18 and specifically Clause 18.2.
|
18.1.2.1
|
The Seller shall advise the Buyer of the dates by which, in the planned release of engineering for the Aircraft, the Seller requires a written detailed engineering definition encompassing a Declaration of Design and Performance (the “BFE Engineering Definition”). The Seller shall provide to the Buyer and/or the BFE Supplier(s), within an appropriate timeframe, the necessary interface documentation to enable the development of the BFE Engineering Definition.
|
18.1.2.2
|
The Seller shall also provide to the Buyer, sufficiently in advance to meet customary BFE leadtimes, a schedule of dates and the shipping addresses for delivery of the BFE and, where requested by the Seller, additional spare BFE to permit installation in the Aircraft and Delivery of the Aircraft in accordance with the Aircraft delivery schedule. The Buyer shall provide, or cause the BFE Suppliers to provide, the BFE by such dates in a serviceable condition, in order to allow performance of any assembly, installation, test or acceptance process in accordance with the Seller’s industrial schedule. In order to facilitate the follow-up of the timely receipt of BFE, the Buyer shall, upon the Seller’s request, provide to the Seller dates and references of all BFE purchase orders placed by the Buyer.
|
18.1.3
|
Without prejudice to the Buyer’s obligations hereunder, in order to facilitate the development of the BFE Engineering Definition, the Seller shall organize meetings between the Buyer and BFE Suppliers. The Buyer hereby agrees to participate in such meetings and to provide adequate technical and engineering expertise to reach decisions within the defined timeframe.
|
▪
|
to monitor the BFE Suppliers and ***** including but not limited to those set forth in the Customization Milestone Chart;
|
▪
|
that, should a timeframe, quality or other type of risk be identified at a given BFE Supplier, *****;
|
▪
|
for major BFE, including, but not being limited to, seats, galleys and IFE (“Major BFE”) to participate on a mandatory basis in the specific meetings that take place between BFE Supplier selection and BFE delivery, namely:
|
o
|
Preliminary Design Review (“PDR”),
|
o
|
Critical Design Review (“CDR”);
|
▪
|
to attend the First Article Inspection (“FAI”) for the first shipset of all Major BFE. Should the Buyer not attend such FAI, the Buyer shall delegate the FAI to the BFE Supplier and confirmation thereof shall be supplied to the Seller in writing;
|
▪
|
to attend the Source Inspection (“SI”) that takes place at the BFE Supplier’s premises prior to shipping, for each shipset of all Major BFE. Should the Buyer not attend such SI, the Buyer shall delegate the SI to the BFE Supplier and confirmation thereof shall be brought to the Seller in writing. *****
|
18.1.4
|
The BFE shall be imported into the location of final assembly of the Aircraft at the following addresses, as applicable:
|
18.1.4.2
|
BFE delivered to ***** and imported under a suspensive customs system ("Régime de l'entrepôt douanier ou régime de perfectionnement actif " or "Zollverschluss") without application of any ***** or customs duty. *****
|
18.2
|
Applicable Requirements
|
18.3.1
|
Any delay or failure by the Buyer or the BFE Suppliers in:
|
▪
|
complying with the foregoing warranty or in providing the BFE Engineering Definition or field service mentioned in Clause 18.1.2.2, or
|
▪
|
furnishing the BFE in a serviceable condition at the requested delivery date, or
|
▪
|
obtaining any required approval for such BFE equipment under the above mentioned Aviation Authorities’ regulations,
|
18.3.2
|
In addition, in the event of any delay or failure mentioned in 18.3.1 above, the Seller may:
|
18.4
|
Title and Risk of Loss
|
19.1
|
Seller’s Indemnities
|
19.2
|
Buyer’s Indemnities
|
19.3
|
Notice and Defense of Claims
|
19.4
|
Buyer Insurance
|
(a)
|
cause the Seller Indemnitees to be named as additional insured under the Buyer’s Comprehensive Aviation Legal Liability insurance policies, including War Risks and Allied Perils (such insurance to include the AVN 52E Extended Coverage Endorsement Aviation Liabilities or any further Endorsement replacing AVN 52E as may be available, including any excess coverage in respect of War and Allied Perils Third Parties Legal Liabilities Insurance that Buyer then maintains), and
|
(b)
|
with respect to the Buyer’s Hull All Risks and Hull War Risks insurances and Allied Perils, request the insurers of the Buyer’s hull insurance policies to waive all rights of subrogation against the Seller Indemnitees.
|
(i)
|
under the Comprehensive Aviation Legal Liability Insurances, the Buyer’s policies are primary and non-contributory to any insurance maintained by the Seller,
|
(ii)
|
such insurance can only be cancelled or materially altered by the giving of not less than ***** prior written notice thereof to the Seller, and
|
(iii)
|
under any such cover, all rights of subrogation against the Seller Indemnitees have been waived to the extent of the Buyer’s undertaking under Clause 19.2 and this Clause 19.4.
|
19.5
|
Seller Insurance
|
20 -
|
TERMINATION
|
20.1
|
Termination Events
|
20.2
|
Remedies in Event of Termination
|
20.2.1
|
If a Termination Event occurs, the Buyer shall be in material breach of this Agreement, and the Seller may elect any of the following remedies under the applicable law:
|
20.2.2
|
*****
|
20.2.3
|
*****
|
20.2.4.
|
The parties to this Agreement are commercially sophisticated parties acting within the same industry, and represented by competent counsel and the parties expressly agree and declare as follows:
|
20.3
|
Definitions
|
i.
|
“Affected Aircraft” – any or all Aircraft with respect to which *****
|
20.4
|
Notice of Termination Event
|
20.5
|
Information Covenants
|
20.6
|
Nothing contained in this Clause 20 shall be deemed to waive or limit the Seller’s rights or ability to request adequate assurance under Article 2, Section 609 of the Uniform Commercial Code (the "UCC"). It is further understood that any commitment of the Seller or the Propulsion Systems manufacturer to provide financing to the Buyer shall not constitute adequate assurance under Article 2, Section 609 of the UCC.
|
21.1
|
Assignments
|
21.2
|
Assignments on Sale, Merger or Consolidation - Buyer
|
21.3
|
Designation of Affiliates for Performance *****
|
21.4
|
Transfer of Rights and Obligations upon Reorganization *****
|
21.6.1
|
*****
|
21.6.2
|
*****
|
22.1
|
*****
|
22.2
|
Notices
|
22.3
|
Waiver
|
22.4
|
Certain Representations of the Parties
|
22.4.1
|
Buyer's Representations
|
(i)
|
the Buyer is a corporation organized and existing in good standing under the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under this Agreement;
|
(ii)
|
neither the execution and delivery by the Buyer of this Agreement, nor the consummation of any of the transactions by the Buyer contemplated thereby, nor the performance by the Buyer of the obligations thereunder, constitutes a breach of any agreement to which the Buyer is a party or by which its assets are bound;
|
(iii)
|
this Agreement has been duly authorized, executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer enforceable against the Buyer in accordance with its terms.
|
22.4.2
|
Seller's Representations
|
(i)
|
the Seller is organized and existing in good standing under the laws of the Republic of France and has the corporate power and authority to enter into and perform its obligations under the Agreement;
|
(ii)
|
neither the execution and delivery by the Seller of this Agreement, nor the consummation of any of the transactions by the Seller contemplated thereby, nor the performance by the Seller of the
|
(iii)
|
this Agreement has been duly authorized, executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms.
|
22.5
|
Interpretation and Law
|
22.5.1
|
[INTENTIONALLY OMITTED]
|
22.5.2
|
The assumption in Clause 22.5.1 made for the purpose of effecting the service of process shall not affect any assertion of diversity by either party hereto initiating a proceeding in the New York Federal Courts or seeking transfer to the New York Federal Courts on the basis of diversity.
|
22.5.3
|
Service of process in any suit, action or proceeding in respect of any matter as to which the Seller or the Buyer has submitted to jurisdiction under Clause 22.5 (i) may be made on the Seller by delivery of the same personally to CT Corporation, New York City offices as agent for the Seller, it being agreed
|
22.5.4
|
Headings
|
22.6
|
Waiver of Jury Trial
|
22.7
|
No Representations Outside of this Agreement
|
22.8
|
Confidentiality
|
22.9
|
Severability
|
22.10
|
Entire Agreement; amendments
|
22.11
|
Inconsistencies
|
22.12
|
Language
|
22.13
|
Counterparts
|
PRIVILEGED AND CONFIDENTIAL
|
Page 1/1
|
SPECIFICATION CHANGE NOTICE
(SCN)
|
For
SCN Number
Issue
Dated
Page
|
Title :
Description :
Effect on weight :
• Manufacturer’s Weight Empty change :
• Operational Weight Empty change :
• Allowable Payload change :
Remarks / References
Specification changed by this SCN
This SCN requires prior or concurrent acceptance of the following SCN (s):
|
|
Price per aircraft
US DOLLARS:
AT DELIVERY CONDITIONS:
This change will be effective on AIRCRAFT N° and subsequent.
Provided approval is received by
Buyer approval Seller approval
By : By :
Date : Date :
|
SPECIFICATION CHANGE NOTICE
(SCN)
|
For
SCN Number
Issue
Dated
Page
|
Specification repercussion:
After contractual agreement with respect to weight, performance, delivery, etc, the indicated part of the specification wording will read as follows:
|
SPECIFICATION CHANGE NOTICE
(SCN)
|
For
SCN Number
Issue
Dated
Page
|
Scope of change (FOR INFORMATION ONLY)
|
MANUFACTURER’S SPECIFICATION CHANGE NOTICE
(MSCN)
|
For
MSCN Number
Issue
Dated
Page
|
Title :
Description :
Effect on weight :
• Manufacturer’s Weight Empty change :
• Operational Weight Empty change :
• Allowable Payload change :
Remarks / References
Specification changed by this MSCN
|
|
Price per aircraft
US DOLLARS:
AT DELIVERY CONDITIONS:
This change will be effective on AIRCRAFT N° and subsequent.
Provided MSCN is not rejected by
Buyer approval Seller approval
By : By :
Date : Date :
|
MANUFACTURER’S SPECIFICATION CHANGE NOTICE
(MSCN)
|
For
MSCN Number
Issue
Dated
Page
|
Specification repercussion:
After contractual agreement with respect to weight, performance, delivery, etc, the indicated part of the specification wording will read as follows:
|
MANUFACTURER’S SPECIFICATION CHANGE NOTICE
(MSCN)
|
For
MSCN Number
Issue
Dated
Page
|
Scope of change (FOR INFORMATION ONLY)
|
PART 1
|
SELLER PRICE REVISION FORMULA
|
1
|
BASE PRICE
|
2
|
BASE PERIOD
|
3
|
INDEXES
|
4
|
REVISION FORMULA
|
5
|
GENERAL PROVISIONS
|
5.1
|
Roundings
|
5.2
|
Substitution of Indexes for Seller Price Revision Formula
|
(i)
|
the United States Department of Labor substantially revises the methodology of calculation of the Labor Index or the Material Index as used in the Seller Price Revision Formula, or
|
(ii)
|
the United States Department of Labor discontinues, either temporarily or permanently, such Labor Index or such Material Index, or
|
(iii)
|
the data samples used to calculate such Labor Index or such Material Index are substantially changed;
|
5.3
|
Final Index Values
|
5.4
|
Limitation
|
1.
|
REFERENCE PRICE OF THE PROPULSION SYSTEMS
|
|
The Reference Price of a set of two (2) CFM INTERNATIONAL LEAP Propulsion Systems is:
|
2.
|
REFERENCE PERIOD
|
3.
|
INDEXES
|
4.
|
REVISION FORMULA
|
5.
|
GENERAL PROVISIONS
|
5.1
|
Roundings
|
(i)
|
The Material index average (ICn) shall be rounded to the nearest second decimal place and the labor index average (ECIn) shall be rounded to the nearest first decimal place.
|
(ii)
|
CPIn shall be rounded to the nearest second decimal place.
|
(iii)
|
The final factor ***** shall be rounded to the nearest third decimal place.
|
5.2
|
Final Index Values
|
5.3
|
Interruption of Index Publication
|
5.4
|
Annulment of the Formula
|
5.5
|
Limitation
|
PART 3
|
PROPULSION SYSTEMS PRICE REVISION FORMULA
|
1.
|
REFERENCE PRICE OF THE PROPULSION SYSTEMS
|
2.
|
BASE PERIOD
|
3.
|
INDEXES
|
4.
|
REVISION FORMULA
|
5.
|
GENERAL PROVISIONS
|
5.1
|
Roundings
|
5.3
|
Final Index Values
|
5.4
|
Limitation
|
1
|
The Items covered by the Service Life Policy pursuant to Clause 12.2 are those Seller Items of primary and auxiliary structure described hereunder.
|
2
|
WINGS - CENTER AND OUTER WING BOX (LEFT AND RIGHT)
|
2.1
|
Wing Structure
|
2.1.1
|
Spars
|
2.1.2
|
Ribs and stringers inside the wing box
|
2.1.3
|
Upper and lower wing skin panels of the wing box
|
2.2
|
Fittings
|
2.2.1
|
Support structure and attachment fittings for the flap structure
|
2.2.2
|
Support structure and attachment fitting for the engine pylons
|
2.2.3
|
Support structure and attachment fitting for the main landing gear
|
2.2.4
|
Support structure and attachment fitting for the center wing box
|
2.3
|
Auxiliary Support Structure
|
2.3.1
|
For the slats:
|
2.3.1.1
|
Ribs supporting the track rollers on wing box structure
|
2.3.1.2
|
Ribs supporting the actuators on wing box structure
|
2.3.2
|
For the ailerons:
|
2.3.2.1
|
Hinge brackets and ribs on wing box rear spar or shroud box
|
2.3.2.2
|
Actuator fittings on wing box rear spar or shroud box
|
2.3.3
|
For airbrakes, spoilers, lift dumpers:
|
2.3.3.1
|
Hinge brackets and ribs on wing box rear spar or shroud box
|
2.3.3.2
|
Actuator fittings on wing box rear spar or shroud box
|
2.4
|
Pylon
|
2.4.1
|
For the Pylon Main Structural Box
|
2.4.1.1
|
Spars
|
2.4.1.2
|
Ribs
|
2.4.1.3
|
Skin, doublers and stiffeners
|
2.4.1.4
|
Support structure and attachment fitting for engine supports
|
3.1
|
Fuselage structure
|
3.1.1
|
Fore and aft bulkheads
|
3.1.2
|
Pressurized floors and bulkheads surrounding the main and nose gear wheel well and center wing box
|
3.1.3
|
Skins with doublers, stringers and frames from the forward pressure bulkheads to the frame supporting the rear attachment of horizontal stabilizer
|
3.1.4
|
Window and windscreen attachment structure but excluding transparencies
|
3.1.5
|
Passenger and cargo doors internal structure
|
3.1.6
|
Sills, excluding scuff plates, and upper beams surrounding passenger and cargo door apertures
|
3.1.7
|
Cockpit floor structure and passenger cabin floor beams excluding floor panels and seat rails
|
3.1.8
|
Keel beam structure
|
3.2
|
Fittings
|
3.2.1
|
Landing gear support structure and attachment fitting
|
3.2.2
|
Support structure and attachment fittings for the vertical and horizontal stabilizers
|
3.2.3
|
Support structure and attachment fitting for the APU
|
4
|
STABILIZERS
|
4.1
|
Horizontal Stabilizer Main Structural Box
|
4.1.1
|
Spars
|
4.1.2
|
Ribs
|
4.1.3
|
Upper and lower skins and stringers
|
4.1.4
|
Support structure and attachment fitting to fuselage and trim screw actuator
|
4.1.5
|
Elevator support structure
|
4.1.5.1
|
Hinge bracket
|
4.1.5.2
|
Servocontrol attachment brackets
|
4.2
|
Vertical Stabilizer Main Structural Box
|
4.2.1
|
Spars
|
4.2.2
|
Ribs
|
4.2.3
|
Skins and stringers
|
4.2.4
|
Support structure and attachment fitting to fuselage
|
4.2.5
|
Rudder support structure
|
4.2.5.1
|
Hinge brackets
|
4.2.5.2
|
Servocontrol attachment brackets
|
5
|
EXCLUSIONS
|
1-
|
Airbus Flight Operations Data Package
|
•
|
Flight Manual (FM),
|
•
|
Flight Crew Operating Manual (FCOM),
|
•
|
Flight Crew Training Manual (FCTM),
|
•
|
Quick Reference Handbook (QRH),
|
•
|
Cabin Crew Operating Manual (CCOM),
|
•
|
Master Minimum Equipment List (MMEL),
|
•
|
Weight and Balance Manual (WBM).
|
1.1-
|
Format of Data
|
2-
|
Airbus Maintenance Technical Data Package
|
•
|
Aircraft Maintenance Manual (AMM),
|
•
|
Aircraft Wiring Manual (AWM),
|
•
|
Aircraft Schematics Manual (ASM),
|
•
|
Aircraft Wiring Lists (AWL),
|
•
|
Illustrated Part Catalog (IPC),
|
•
|
Trouble Shooting Manual (TSM).
|
2.1-
|
Format of Data
|
3-
|
Non-customized Technical Data
|
4-
|
Additional Technical Data
|
4.1
|
In addition to the Flight Operations Data Package and the Maintenance Technical Data Package, the Seller shall provide, at Delivery of each Aircraft, on-line access to the Aircraft mechanical drawings that cover installation of structure and systems fitted on the Buyer’s Aircraft at Delivery.
|
4.2
|
***** of each Aircraft, the Seller shall provide:
|
•
|
the Electrical Load Analysis (ELA), in a format allowing further updating by the Buyer.
|
1.
|
GENERAL
|
1.1
|
Scope
|
1.1.1
|
This Exhibit H sets forth the terms and conditions for the support and services offered by the Seller to the Buyer with respect to Material (as defined below).
|
1.1.2
|
References made to Articles shall be deemed to refer to articles of this Attachment 1 to Appendix 3 unless otherwise specified.
|
1.1.3
|
For purposes of this Attachment 1 to Appendix 3:
|
1.1.4
|
the term “Supplier” shall mean any supplier providing any of the Material listed in Article 1.2.1 and the term “Supplier Part” shall mean an individual item of Material.
|
1.1.5
|
The term “SPEC 2000” means the “E-Business Specification for Materials Management” document published by the Air Transport Association of America.
|
1.2
|
Material Categories
|
1.2.1
|
Each of the following constitutes "Material" for purposes of this Attachment 1 to Appendix 3:
|
(ii)
|
Supplier Parts classified as Repairable Line Maintenance Parts (as defined in SPEC 2000);
|
(iii)
|
Supplier Parts classified as Expendable Line Maintenance Parts (as defined in SPEC 2000);
|
1.2.2
|
Propulsion Systems, engine exchange kits, their accessories and parts for any of the foregoing, are not covered under this Attachment 1 to Appendix 3.
|
1.3
|
Term
|
1.4
|
Airbus Material Store
|
1.4.1
|
AACS Spares Center
|
1.4.2
|
Material Support Center, Germany
|
1.4.3
|
Other Points of Shipment
|
1.4.3.1
|
In addition to the AACS Spares Center and the Airbus Material Center, the Seller and its Affiliates operate a global network of regional satellite stores (the “Regional Satellite Stores”). A list of such stores shall be provided to the Buyer upon the Buyer’s request.
|
1.4.3.2
|
The Seller reserves the right to effect deliveries from distribution centers other than the US Spares Center or the Airbus Material Center, which may include the Regional Satellite Stores or any other production or Supplier’s facilities.
|
1.5
|
Customer Order Desk
|
(i)
|
Management of order entries for all priorities, including Aircraft On Ground (“AOG”);
|
(ii)
|
Management of order changes and cancellations;
|
(iii)
|
Administration of Buyer’s routing instructions;
|
(iv)
|
Management of Material returns;
|
(v)
|
Clarification of delivery discrepancies;
|
(vi)
|
Issuance of credit and debt notes.
|
1.6
|
Commitments of the Buyer
|
1.6.1
|
During the Term, the Buyer agrees to purchase from
|
(a)
|
the Seller, AACS or the Seller’s licensee(s) the Seller Parts required for the Buyer's own needs; or
|
(b)
|
other operators or purchase Seller Parts from said operators or from distributors, provided said Seller Parts were originally designed by the Seller and manufactured by the Seller or its licensees.
|
1.6.2
|
Subject to the express further agreement of the Seller in relation to Article 1.6.2 (ii) below, the Buyer may manufacture, exclusively for its own use parts, equivalent to Seller Parts, provided, however, that it may only do so in one of the following circumstances:
|
(i)
|
after expiration of the Term, the concerned Seller Parts are out of stock;
|
(ii)
|
Seller Parts are needed to perform confirmed AOG repairs upon any Aircraft delivered under the Agreement and are not available from the Seller, its licensees or other approved sources within a lead time shorter than or equal to the time in which the Buyer can manufacture such parts with Airbus technical data assistance;
|
(iii)
|
when a Seller Part is identified as "Local Manufacture" in the Illustrated Parts Catalog.
|
1.6.3.1
|
The rights granted to the Buyer in Article 1.6.2 shall not in any way be construed as a license, nor shall they in any way obligate the Buyer to pay any license fee or royalty, nor shall they in any way be construed to affect the rights of third parties.
|
1.6.3.2
|
If the Buyer manufactures any parts pursuant to Article 1.6.2, the Buyer shall be solely responsible for such manufacturing and any use made of the
|
1.6.3.3
|
The Buyer shall allocate its own part number to any part manufactured in accordance with Article 1.6.2. The Buyer shall under no circumstances be allowed to use the Airbus part number of the Seller Part to which such manufactured part is intended to be equivalent.
|
1.6.3.4
|
The Buyer shall not be entitled to sell or lend any part manufactured under the provisions of Article 1.6.2 to any third party.
|
2.
|
INITIAL PROVISIONING
|
2.1
|
Period
|
2.2
|
Pre‑Provisioning Meeting
|
2.2.1
|
The Seller shall organize a free of charge pre‑provisioning meeting at AACS Spares Center or at the Airbus Material Center, or at any other agreed location, for the purpose of setting an acceptable schedule and working procedure for the preparation of the initial issue of the Provisioning Data and the Initial Provisioning Conference referred to in Articles 2.3 and 2.4 below (the “Pre-Provisioning Meeting”).
|
2.2.2
|
The free of charge Pre-Provisioning Meeting shall take place on an agreed date that is no later than nine (9) months prior to Scheduled Delivery Month of the first Aircraft, allowing a minimum preparation time of eight (8) weeks for the Initial Provisioning Conference.
|
2.3
|
Initial Provisioning Conference
|
2.4
|
Provisioning Data
|
2.4.1
|
Provisioning data generally in accordance with SPEC 2000, Chapter 1, for Material described in Articles 1.2.1 (i) through 1.2.1 (iii) ("Provisioning Data") shall be supplied by the Seller to the Buyer in the English language, in a format and timeframe to be agreed during the Pre-Provisioning Meeting.
|
2.4.1.1
|
Unless a longer revision cycle has been agreed, the Provisioning Data shall be revised ***** up to the end of the Initial Provisioning Period.
|
2.4.1.2
|
The Seller shall ensure that Provisioning Data is provided to the Buyer in time to permit the Buyer to perform any necessary evaluation and to place orders in a timely manner.
|
2.4.1.3
|
Provisioning Data generated by the Seller shall comply with the configuration of the Aircraft as documented *****.
|
(i)
|
Buyer modifications not known to the Seller,
|
(ii)
|
other modifications not approved by the Seller’s Aviation Authorities.
|
2.4.2
|
Supplier‑Supplied Data
|
2.4.3
|
Supplementary Data
|
2.5
|
Commercial Offer
|
2.6
|
Delivery of Initial Provisioning Material
|
2.6.1
|
During the Initial Provisioning Period, Initial Provisioning Material shall conform to the latest known configuration standard of the Aircraft for which such Material is intended as reflected in the Provisioning Data transmitted by the Seller.
|
2.6.2
|
The delivery of Initial Provisioning Material shall take place according to the conditions specified in the commercial offer mentioned in Article 2.5.
|
2.6.3
|
All Initial Provisioning Material shall be packaged in accordance with ATA 300 Specification.
|
2.7
|
Buy‑Back Period and Buy-Back of Initial Provisioning Surplus Material
|
(i)
|
four (4) hours after receipt of an AOG order;
|
(ii)
|
twenty‑four (24) hours after receipt of a critical order (imminent AOG or work stoppage);
|
(iii)
|
seven (7) days after receipt of an expedite order (urgent stock replenishment).
|
(i)
|
of any alleged shortages or overshipments;
|
(ii)
|
of any non-conformities of delivered Material.
|
(i)
|
Free Carrier (FCA) Airbus Material Center;
|
(ii)
|
Free Carrier (FCA) Seller’s Regional Satellite Stores;
|
(iii)
|
Free Carrier (FCA) Seller’s or Supplier’s facility for deliveries from any other Seller or Supplier facilities.
|
4.
|
WARRANTIES
|
4.1
|
Seller Parts
|
(i)
|
be free from defects in material.
|
(ii)
|
be free from defects in workmanship, including without limitation processes of manufacture.
|
(iii)
|
be free from defects arising from failure to conform to the applicable specification for such part.
|
4.1.1
|
Warranty Period
|
4.1.1.1
|
*****
|
4.1.1.2
|
Whenever any Seller Part that contains a defect for which the Seller is liable under Article 4.1 has been corrected, replaced or repaired pursuant to the terms of this Article 4.1, the period of the Seller's warranty with respect to such corrected, repaired or replacement Seller Part, as the case may be, shall be *****.
|
4.1.2
|
Buyer's Remedy and Seller's Obligation
|
4.2
|
Supplier Parts
|
4.3
|
Waiver, Release and Renunciation
|
(1)
|
ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR ANY GENERAL OR PARTICULAR PURPOSE;
|
(2)
|
ANY IMPLIED OR EXPRESS WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
|
(3)
|
ANY RIGHT, CLAIM OR REMEDY FOR BREACH OF CONTRACT;
|
(4)
|
ANY RIGHT, CLAIM OR REMEDY FOR TORT, UNDER ANY THEORY OF LIABILITY, HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO, ACTIONS AND/OR CLAIMS FOR NEGLIGENCE, GROSS NEGLIGENCE, INTENTIONAL ACTS, SHALLFUL DISREGARD, IMPLIED WARRANTY, PRODUCT LIABILITY, STRICT LIABILITY OR FAILURE TO WARN;
|
(5)
|
ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM COMMERCIAL CODE OR ANY OTHER STATE OR FEDERAL STATUTE;
|
(6)
|
ANY RIGHT, CLAIM OR REMEDY ARISING UNDER ANY REGULATIONS OR STANDARDS IMPOSED BY ANY INTERNATIONAL, NATIONAL, STATE OR LOCAL STATUTE OR AGENCY;
|
(7)
|
ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:
|
(a)
|
LOSS OF USE OR REPLACEMENT OF ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THE AGREEMENT;
|
(b)
|
LOSS OF, OR DAMAGE OF ANY KIND TO, ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THE AGREEMENT;
|
(c)
|
LOSS OF PROFITS AND/OR REVENUES;
|
(d)
|
ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.
|
4.4
|
Duplicate Remedies
|
5.
|
COMMERCIAL CONDITIONS
|
5.1
|
Delivery Terms
|
5.2
|
Payment Procedures and Conditions
|
5.3
|
Title
|
5.4
|
Cessation of Deliveries
|
6.
|
EXCUSABLE DELAY
|
7.
|
TERMINATION OF MATERIAL PROCUREMENT COMMITMENTS
|
8.
|
INCONSISTENCY
|
1.
|
DEFINITIONS AND INTERPRETATION
|
1.1.1
|
"Manufacturer" or any other person includes, without prejudice to the provisions of this Agreement restricting transfer or assignment, any successor and any assignee;
|
1.1.2
|
words importing the plural shall include the singular and vice versa;
|
1.1.3
|
any document shall include that document as amended, novated, assigned or supplemented;
|
1.1.4
|
a Clause or a Schedule is a reference to a clause of, or a schedule to, this Agreement;
|
1.1.5
|
any law, or to any specified provision of any law, is a reference to such law or provision as amended, substituted or re-enacted;
|
1.1.6
|
a "person" includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having separate legal personality) of two or more of the foregoing; and
|
1.1.7
|
"including" and similar words and terms shall not be construed as limiting and shall mean "including without limitation".
|
2.
|
EFFECTIVENESS
|
2.1
|
Effective Date
|
2.2
|
Amendment
|
3.
|
BENEFIT OF WARRANTIES
|
3.1
|
General
|
3.1.1
|
Pursuant to the terms of this Agreement, the Manufacturer agrees to make available to the Entitled Party (from time to time) the Warranties. The entitlement of any Entitled Party to make a claim under the Warranties shall be only as specified in this Agreement or as otherwise agreed in accordance with Clause 3.2 (Relevant Parties) (and any agreement otherwise between any or all of the Relevant Parties and/or any other person shall have no effect and shall not bind the Manufacturer).
|
3.1.2
|
The terms and conditions of the Warranties shall be binding upon the Entitled Party and shall apply to all claims made in respect of the Warranties (INCLUDING THE RELEASE, WAIVER AND RENUNCIATION IN CLAUSE 12.5 OF THE WARRANTIES, EACH AND EVERY DISCLAIMER (INCLUDING THE DISCLAIMERS OF ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PURPOSE) AND THE LIMITATIONS ON LIABILITY SET FORTH THEREIN). Only one Entitled Party shall be entitled to benefit from and to make a claim under the Warranties at any one time.
|
3.2
|
Relevant Parties
|
3.2.1
|
The Entitled Party on the Delivery Date shall be the Initial Entitled Party. Such person shall remain the Entitled Party unless and until a different Eligible Person is specified as the new Entitled Party in a Replacement Entitled Party Notice delivered in accordance with Clause 4.1.1 (Termination of Entitled Party’s Rights).
|
3.2.2
|
The Controlling Party on the Delivery Date shall be the Initial Controlling Party. Such person shall remain the Controlling Party unless and until a different Eligible Person is specified as the new Controlling Party in a Replacement Controlling Party Notice delivered in accordance with Clause 4.2.1 (Termination of Controlling Party’s Rights).
|
3.2.3
|
The Entitled Party and the Controlling Party may (but are not required to) be the same person.
|
3.3
|
Record of Relevant Parties
|
4.
|
TERMINATION OF WARRANTY RIGHTS
|
4.1
|
Termination of Entitled Party's Rights
|
4.1.1
|
With immediate and automatic effect at the time of the receipt by the Manufacturer of a Replacement Entitled Party Notice (the "Relevant Time"):
|
(a)
|
the Outgoing Entitled Party shall cease to be the Entitled Party;
|
(b)
|
the New Entitled Party shall be the Entitled Party; and
|
(c)
|
save to the extent of any claim or right to claim against the Manufacturer, in each case which prior to the Relevant Time (A) exists and (B) has been notified in writing to the Manufacturer in accordance with this Agreement:
|
(i)
|
all rights of the Outgoing Entitled Party under this Agreement shall terminate; and
|
(ii)
|
the Manufacturer shall have no liability whatsoever to the Outgoing Entitled Party in any respect under this Agreement.
|
4.1.2
|
Without prejudice to Clause 4.1.1 (Termination of Entitled Party’s Rights), a copy of a Replacement Entitled Party Notice shall be sent by the Controlling Party to the Outgoing Entitled Party for information, but the receipt or non-receipt of such copy by the Outgoing Entitled Party shall not affect the rights or obligations of any person under this Agreement.
|
4.1.3
|
For the purposes of this Clause 4.1 (Termination of Entitled Party’s Rights), the "Outgoing Entitled Party" means the person specified as such in the relevant Replacement Entitled Party Notice (being the person who, immediately prior to service thereof, was the Entitled Party) and the "New Entitled Party" means the person specified as such in the relevant Replacement Entitled Party Notice.
|
4.2
|
Termination of Controlling Party's Rights
|
4.2.1
|
With immediate and automatic effect upon the receipt by the Manufacturer of a Replacement Controlling Party Notice:
|
(a)
|
the Outgoing Controlling Party shall cease to be the Controlling Party;
|
(b)
|
the New Controlling Party shall be the Controlling Party;
|
(c)
|
all rights of the Outgoing Controlling Party under this Agreement shall terminate; and
|
(d)
|
the Manufacturer shall have no further liability whatsoever to the Outgoing Controlling Party in any respect under this Agreement.
|
4.2.2
|
Without prejudice to Clause 4.2.1 (Termination of Controlling Party’s Rights), a copy of a Replacement Controlling Party Notice shall be sent by the New Controlling Party to the Entitled Party for information, but the receipt or non-receipt of such
|
4.2.3
|
For the purposes of this Clause 4.2 (Termination of Controlling Party’s Rights), the "Outgoing Controlling Party" means the person specified as such in the relevant Replacement Controlling Party Notice (being the person who, immediately prior to service thereof, was the Controlling Party) and the "New Controlling Party" means the person specified as such in the relevant Replacement Controlling Party Notice.
|
4.3
|
Other Warranty Agreements
|
4.4
|
Lapse of Warranties
|
4.4.1
|
The entitlement of any Relevant Party to enforce the rights under any Warranty shall automatically lapse on the date on which that Warranty expires in accordance with this Agreement.
|
4.4.2
|
Following the date on which all Warranties have expired in accordance with this Agreement:
|
(a)
|
no change to the identity of the Controlling Party or the Entitled Party may be made hereunder; and
|
(b)
|
the Manufacturer shall cease to be under any obligation to maintain the record of the Relevant Parties pursuant to Clause 3.3 (Record of Relevant Parties).
|
5.
|
MANUFACTURER LIMIT OF LIABILITY
|
5.1
|
the Manufacturer shall not incur any Liability under this Agreement by reason of the Transaction Documents;
|
5.2
|
any performance by the Manufacturer that discharges its obligation in respect of any of the Warranties in favour of any Relevant Party in accordance with this Agreement will satisfy the respective interests of each Relevant Party from time to time, and nothing in this Agreement shall give rise to or impose upon the Manufacturer any several or duplicate liability with respect to such Warranties;
|
5.3
|
the Manufacturer shall (i) be entitled to rely conclusively on the information contained in any Relevant Notice, without enquiring as to the accuracy and validity of such Relevant Notice or to the entitlement of the party serving such Relevant Notice to serve it, (ii) have no duty so to enquire and (iii) not be liable for acting in accordance with such Relevant Notice;
|
5.4
|
in the event that a Relevant Party commences or has commenced against it any bankruptcy, insolvency, reorganization, receivership, suspension of payments, dissolution, liquidation, assignment for the benefit of creditors, moratorium, or other similar proceeding under debtor relief laws of the United States or any other applicable jurisdiction or the Manufacturer otherwise believes in good faith that it is or could be the subject of conflicting claims or another dispute hereunder as to the relative rights and interests of the Relevant Parties, the Manufacturer shall have the right to refrain from acting in accordance with any Relevant Notice until the Relevant Parties obtain a final and non-appealable order from a court of appropriate jurisdiction (which may be a bankruptcy court) setting forth the relative rights of the Relevant Parties and until such order is obtained the Manufacturer shall be permitted to perform hereunder to and on the instruction of the person that is the then Entitled Party designated prior to such proceeding, conflicting claim or other dispute having arisen and the Manufacturer shall have no liability to any other Relevant Party in connection therewith. Any Relevant Party shall indemnify, defend and hold harmless the Manufacturer from all Liabilities (including legal fees and expenses, including legal fees and expenses incurred in connection with the enforcement of this indemnity) incurred, imposed on, asserted against or suffered by the Manufacturer and arising out or related to any such proceeding, conflicting claim, dispute or court order;
|
5.5
|
without limiting the foregoing, the Manufacturer may refrain from doing anything and shall not be required to take any action that, in its good faith opinion, is contrary to any applicable law or regulation, may be otherwise actionable in any legal proceeding by any person or otherwise expose the Manufacturer to liability, and may do anything which, in its good faith opinion, is necessary or desirable to comply with any applicable law or regulation; and
|
5.6
|
the Manufacturer shall not be deemed to have knowledge of any change in the authority of any Relevant Party to exercise the rights established under this Agreement until the Manufacturer has received written notice thereof in accordance with this Agreement.
|
6.
|
PARTIAL INVALIDITY
|
7.
|
REMEDIES AND WAIVERS
|
8.
|
NOTICES
|
8.1
|
Form of Communication
|
8.1.1
|
if sent by post, five (5) Business Days after posting; and
|
8.1.2
|
if sent by fax, when confirmation of its clear transmission has been recorded on the sender's fax machine.
|
8.2
|
Relevant Parties’ Addresses
|
8.3
|
Manufacturer's Address
|
8.4
|
Electronic Mail
|
9.
|
BENEFIT OF AGREEMENT
|
10.
|
LAW AND JURISDICTION
|
10.1
|
Governing Law
|
10.2
|
Exclusive Jurisdiction
|
10.2.1
|
Pursuant to and in accordance with Section 5 1402 of the New York General Obligations Law, each of the Manufacturer and (by their signature of Relevant Notice(s)) the Relevant Parties irrevocably agrees that the United States District Court for the Southern District of New York sitting in The Borough of Manhattan and any New York state court sitting in the County of New York, New York, and all related appellate courts, shall have exclusive jurisdiction to hear and settle any suit, action, proceeding or other dispute arising out of or relating to this Agreement, including any claim or cause of action based upon or arising out of this Agreement or any dealings between the parties relating to the subject matter of this Agreement or the transactions contemplated hereby or the relationships being established hereunder and submits itself and its property to the jurisdiction of the foregoing courts with respect to such suit, action, proceeding or other dispute, hereby waiving any other jurisdictions which may be available thereto by reason of domicile or otherwise.
|
10.2.2
|
Each of the Manufacturer and (by their signature of Relevant Notice(s)) the Relevant Parties:
|
(a)
|
waives to the fullest extent permitted by law any objection which it may now or hereafter have to the courts referred to in Clause 10.2.1 (Exclusive Jurisdiction) on grounds of inconvenient forum or otherwise as regards suits, actions, proceedings or other disputes in connection with this Agreement;
|
(b)
|
waives to the fullest extent permitted by law any objection which it may now or hereafter have to the laying of venue of any suit, action, proceeding or other dispute arising out of or relating to this Agreement brought in the courts referred to in Clause 10.2.1 (Exclusive Jurisdiction); and
|
(c)
|
agrees that a judgment or order of any court referred to in Clause 10.2.1 (Exclusive Jurisdiction) in connection with this Agreement is conclusive and binding on it and may be enforced against it in the courts of any other jurisdiction as if made by the highest court in that other jurisdiction and accordingly will not seek to, nor be entitled to, contest and/or delay and/or obstruct registration or enforcement of any such judgment and/or award and/or order on grounds of public policy or otherwise.
|
10.2.3
|
Waiver of Jury Trial
|
10.3
|
Service of Process
|
(i)
|
in the case of the Entitled Party: the person that has the present right to possession of the Airframe, whether (a) as owner, mortgagee or pledgee or under a lease or other bailment of the Airframe or any analogous instrument or (b) as a duly appointed nominee of any such person;
|
(ii)
|
in the case of the Controlling Party: a person that either (a) has the present right to possession of the Airframe whether (x) as owner, mortgagee or pledgee or under a lease or other bailment of the Airframe or any analogous instrument or (y) as a duly appointed nominee of any such person; or (b) may have such right subject only to the enforcement of rights under the Transaction Documents; and
|
(iii)
|
in all cases, a person that is neither (a) subject to any sanctions or similar instruments such as would result in the Manufacturer being in breach of any laws or sanctions of the United States of America, France, the European Union or the United Nations by having a legal relationship under this Agreement with such person in respect of the Warranties and the Airframe nor (b) an aircraft manufacturer or a person owned or controlled by an aircraft manufacturer.
|
1
|
The Items covered by the Service Life Policy pursuant to Clause 12.2 are those Seller Items of primary and auxiliary structure described hereunder.
|
2
|
WINGS - CENTER AND OUTER WING BOX (LEFT AND RIGHT)
|
2.1
|
Wing Structure
|
2.1.1
|
Spars
|
2.1.2
|
Ribs and stringers inside the wing box
|
2.1.3
|
Upper and lower wing skin panels of the wing box
|
2.2
|
Fittings
|
2.2.1
|
Support structure and attachment fittings for the flap structure
|
2.2.2
|
Support structure and attachment fitting for the engine pylons
|
2.2.3
|
Support structure and attachment fitting for the main landing gear
|
2.2.4
|
Support structure and attachment fitting for the center wing box
|
2.3
|
Auxiliary Support Structure
|
2.3.1
|
For the slats:
|
2.3.1.1
|
Ribs supporting the track rollers on wing box structure
|
2.3.1.2
|
Ribs supporting the actuators on wing box structure
|
2.3.2
|
For the ailerons:
|
2.3.2.1
|
Hinge brackets and ribs on wing box rear spar or shroud box
|
2.3.2.2
|
Actuator fittings on wing box rear spar or shroud box
|
2.3.3
|
For airbrakes, spoilers, lift dumpers:
|
2.3.3.1
|
Hinge brackets and ribs on wing box rear spar or shroud box
|
2.3.3.2
|
Actuator fittings on wing box rear spar or shroud box
|
2.4
|
Pylon
|
2.4.1
|
For the Pylon Main Structural Box
|
2.4.1.1
|
Spars
|
2.4.1.2
|
Ribs
|
2.4.1.3
|
Skin, doublers and stiffeners
|
2.4.1.4
|
Support structure and attachment fitting for engine supports
|
3.1
|
Fuselage structure
|
3.1.1
|
Fore and aft bulkheads
|
3.1.4
|
Window and windscreen attachment structure but excluding transparencies
|
3.1.5
|
Passenger and cargo doors internal structure
|
3.1.6
|
Sills, excluding scuff plates, and upper beams surrounding passenger and cargo door apertures
|
3.1.7
|
Cockpit floor structure and passenger cabin floor beams excluding floor panels and seat rails
|
3.1.8
|
Keel beam structure
|
3.2
|
Fittings
|
3.2.1
|
Landing gear support structure and attachment fitting
|
3.2.2
|
Support structure and attachment fittings for the vertical and horizontal stabilizers
|
3.2.3
|
Support structure and attachment fitting for the APU
|
4
|
STABILIZERS
|
4.1
|
Horizontal Stabilizer Main Structural Box
|
4.1.1
|
Spars
|
4.1.2
|
Ribs
|
4.1.3
|
Upper and lower skins and stringers
|
4.1.4
|
Support structure and attachment fitting to fuselage and trim screw actuator
|
4.1.5
|
Elevator support structure
|
4.1.5.1
|
Hinge bracket
|
4.1.5.2
|
Servocontrol attachment brackets
|
4.2
|
Vertical Stabilizer Main Structural Box
|
4.2.1
|
Spars
|
4.2.2
|
Ribs
|
4.2.3
|
Skins and stringers
|
4.2.4
|
Support structure and attachment fitting to fuselage
|
4.2.5
|
Rudder support structure
|
4.2.5.1
|
Hinge brackets
|
4.2.5.2
|
Servocontrol attachment brackets
|
5
|
EXCLUSIONS
|
CC:
|
[Name of Buyer] [NB - N/A if Buyer is Initial Entitled Party or Initial Controlling Party]
|
1.
|
Unless otherwise defined, terms used in this notice bear the same meanings as those set forth in the airframe warranties agreement dated [•] entered into by Airbus S.A.S. in relation to the Airframe (the "Airframe Warranties Agreement").
|
2.
|
We hereby give notice that: (a) [•] is the Initial Entitled Party; and (b) [•] is the Initial Controlling Party.
|
3.
|
The contact details of the Initial Entitled Party for the purposes of clause 8.2 (Relevant Parties’ Addresses) of the Airframe Warranties Agreement are as follows:
|
4.
|
The contact details of the Initial Controlling Party for the purposes of clause 8.2 (Relevant Parties’ Addresses) of the Airframe Warranties Agreement are as follows:
|
5.
|
This is the Initial Notice.
|
6.
|
By its signature below and in consideration of the Manufacturer making available to it the rights specified under the Airframe Warranties Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the Initial Entitled Party hereby: (i) represents and warrants that it is an Eligible Person; and (ii) joins as party to, and agrees to be bound by and perform its obligations under (as, and for so long as it remains, the Entitled Party) the terms and conditions of, the Airframe Warranties Agreement.
|
7.
|
By its signature below and in consideration of the Manufacturer making available to it the rights specified under the Airframe Warranties Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the Initial Controlling Party hereby: (i) represents and warrants that it is an Eligible Person; and (ii) joins as party to, and agrees to be bound by and perform its obligations under (as, and for so long as it remains, the Controlling Party) the terms and conditions of, the Airframe Warranties Agreement.
|
8.
|
This notice shall be governed by and construed in accordance with the laws of the State of New York.
|
1.
|
Unless otherwise defined, terms used in this notice bear the same meanings as those set forth in the airframe warranties agreement dated [•] entered into by Airbus S.A.S. in relation to the Airframe (the "Airframe Warranties Agreement").
|
2.
|
[•] (the “Controlling Party”) hereby gives notice that, as from today's date: (a) [•] (being the “Outgoing Entitled Party” for the purposes of the Airframe Warranties Agreement) has ceased to be the Entitled Party; and (b) [•] (the “New Entitled Party”) is the new Entitled Party.
|
3.
|
The contact details of the New Entitled Party for the purposes of clause 8.2 (Relevant Parties’ Addresses) of the Airframe Warranties Agreement are as follows:
|
4.
|
This is a Replacement Entitled Party Notice.
|
5.
|
By its signature below and in consideration of the Manufacturer making available to it the rights specified under the Airframe Warranties Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the New Entitled Party hereby: (i) represents and warrants that it is an Eligible Person; and (ii) joins as party to, and agrees to be bound by and perform its obligations under (as, and for so long as it remains, the Entitled Party) the terms and conditions of, the Airframe Warranties Agreement.
|
6.
|
This notice shall be governed by and construed in accordance with the laws of the State of New York.
|
1.
|
Unless otherwise defined, terms used in this notice bear the same meanings as those set forth in the airframe warranties agreement dated [•] entered into by Airbus S.A.S. in relation to the Airframe (the "Airframe Warranties Agreement").
|
2.
|
We hereby give notice that, as from today's date: [•] (the “Outgoing Controlling Party”) has ceased to be the Controlling Party; and [•] (the “New Controlling Party”) is the new Controlling Party.
|
3.
|
The contact details of the New Controlling Party for the purposes of clause 8.2 (Relevant Parties’ Addresses) of the Airframe Warranties Agreement are as follows:
|
4.
|
This is a Replacement Controlling Party Notice.
|
5.
|
By its signature below and in consideration of the Manufacturer making available to it the rights specified under the Airframe Warranties Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the New Controlling Party hereby: (i) represents and warrants that it is an Eligible Person; and (ii) joins as party to, and agrees to be bound by and perform its obligations under (as, and for so long as it remains, the Controlling Party) the terms and conditions of, the Airframe Warranties Agreement.
|
6.
|
This notice shall be governed by and construed in accordance with the laws of the State of New York.
|
1
|
*****
|
2
|
ASSIGNMENT
|
3
|
MISCELLANEOUS
|
1
|
*****
|
2
|
ASSIGNMENT
|
3.1.1
|
The departure airport conditions (assumed representative of BOG runway 13R) are as defined below:
|
3.1.2
|
An allowance of 430 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.1.3
|
An allowance of 460 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.1.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum westbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.1.5
|
An allowance of 280 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.1.6
|
An allowance of 200 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.1.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.1.8
|
At the end of approach and landing, an amount of 7,760 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.2.2
|
An allowance of 430 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.2.3
|
An allowance of 360 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.2.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude
|
3.2.5
|
An allowance of 280 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.2.6
|
An allowance of 200 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.2.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.2.8
|
At the end of approach and landing, an amount of 8,030 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.3.2
|
An allowance of 430 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.3.3
|
An allowance of 390 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.3.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.3.5
|
An allowance of 290 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.3.6
|
An allowance of 200 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.3.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.3.8
|
At the end of approach and landing, an amount of 7,920 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
6.1
|
The performance certification requirements for the Aircraft, except where otherwise stated, are as stated in Section 02 of the Standard Specification.
|
6.2
|
For the determination of FAR take-off and landing performance a hard level dry runway surface with no runway strength limitation, no line-up allowance, no obstacles, zero wind, atmosphere according to ISA, except as otherwise stated, and the use of speedbrakes, flaps, associated speeds, landing gear, centre of gravity position and engines in the conditions liable to provide the best results are assumed.
|
6.3
|
When establishing take-off performance no air is bled from the engines for cabin air conditioning or anti-icing.
|
6.5
|
Where applicable the Performance Guarantees assume the use of an approved fuel with a density of 6.7 lb/USG and a Lower Heating Value of 18,590 BTU/lb.
|
7.1
|
Compliance with the Performance Guarantees shall be demonstrated using operating procedures and limitations in accordance with those defined by the Aviation Authority and by the Seller unless otherwise stated.
|
7.2
|
Compliance with the take-off, landing, one engine inoperative net ceiling and noise elements of the Performance Guarantees shall be demonstrated with reference to the approved Flight Manual.
|
7.3
|
Compliance with those parts of the Performance Guarantees defined in Clauses 2 and 3 above not covered by the requirements of the Aviation Authority shall be demonstrated by calculation based on data obtained during flight tests conducted on one (or more, at the Seller's discretion) A319neo aircraft of the same airframe/engine configuration as the Aircraft purchased by the Buyer and
|
7.4
|
Data derived from flight tests shall be adjusted as required using conventional methods of correction, interpolation or extrapolation in accordance with established aeronautical practices to show compliance with the Performance Guarantees.
|
7.5
|
Compliance with the Manufacturer's Weight Empty guarantee shall be demonstrated with reference to a weight compliance report.
|
7.6
|
The Seller undertakes to provide the Buyer with a report or reports demonstrating compliance with the Performance Guarantees at, or as soon as possible after, the Delivery of each Aircraft.
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof by the Aviation Authority made subsequent to the date of the Agreement (the “Change in Law”), and such a Change in Law affects the Aircraft configuration or performance or both, the Performance Guarantees shall be appropriately modified to reflect the effect of such change.
|
8.2
|
The Performance Guarantees apply to the Aircraft as described in the Performance Guarantees and may be adjusted in the event of:
|
10.1
|
Should an Aircraft fail to meet the Performance Guarantees specified in this Letter Agreement, the Seller shall use its reasonable endeavours to correct the deficiency to comply with the subject performance guarantee.
|
10.2
|
Should the Seller fail to develop and make available corrective means (including but not limited to kits, procedures, adjustment of design weights) of the above said deficiency, then the Seller shall for the affected Aircraft pay to the Buyer by way of liquidated damages subject to the Seller’s maximum liability set forth hereunder on each anniversary date of the Delivery Date of the affected Aircraft for as long as the deficiency remains an amount of:
|
10.2.1
|
***** based on the deficiency (expressed in percent) defined as the average of the deviations from the guaranteed values of the Specific Range and of the Mission Block Fuel guarantees (part of a percent to be prorated).
|
10.2.2
|
***** based on the deficiency (expressed in pounds) of the Mission Payload guarantees.
|
10.2.3
|
***** based on the deficiency (expressed in pounds) of the Manufacturer's Weight Empty guarantee.
|
10.3
|
In the event the Seller develops and makes available corrective means mentioned above the Seller shall pay to the Buyer the monthly prorated portion of the yearly liquidated damages due by the Seller on account of the year during which the corrective means are made available.
|
10.4
|
The Seller's maximum liability in respect of deficiency in performance of an Aircraft shall be limited to the payment of liquidated damages for a period of not more than ***** for that Aircraft, whichever occurs first. Payment of liquidated damages shall be deemed to settle all claims and remedies the Buyer would have against the Seller in respect of performance deficiencies.
|
3.1.1
|
The departure airport conditions (assumed representative of BOG runway 13R) are as defined below:
|
3.1.2
|
An allowance of 410 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.1.3
|
An allowance of 460 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.1.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum westbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.1.5
|
An allowance of 280 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.1.6
|
An allowance of 190 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.1.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.1.8
|
At the end of approach and landing, an amount of 7,850 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.2.2
|
An allowance of 410 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.2.3
|
An allowance of 360 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.2.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude
|
3.2.5
|
An allowance of 280 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.2.6
|
An allowance of 190 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.2.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.2.8
|
At the end of approach and landing, an amount of 7,960 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.3.2
|
An allowance of 410 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.3.3
|
An allowance of 380 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.3.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.3.5
|
An allowance of 280 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.3.6
|
An allowance of 190 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.3.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.3.8
|
At the end of approach and landing, an amount of 7,850 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
6.1
|
The performance certification requirements for the Aircraft, except where otherwise stated, are as stated in Section 02 of the Standard Specification.
|
6.2
|
For the determination of FAR take-off and landing performance a hard level dry runway surface with no runway strength limitation, no line-up allowance, no obstacles, zero wind, atmosphere according to ISA, except as otherwise stated, and the use of speedbrakes, flaps, associated speeds, landing gear, centre of gravity position and engines in the conditions liable to provide the best results are assumed.
|
6.3
|
When establishing take-off performance no air is bled from the engines for cabin air conditioning or anti-icing.
|
6.4
|
Climb, cruise, descent and holding performance elements of the Performance Guarantees include allowances for normal electrical load and for normal engine air bleed and power extraction associated with maximum cabin differential pressure as defined in the Standard Specification. Cabin air conditioning management during performance demonstration as described in Clause 7.3 below will be such as to optimize the Aircraft performance while meeting the minimum air conditioning requirements defined above. Unless otherwise stated no air is bled from the engines for anti-icing.
|
6.5
|
Where applicable the Performance Guarantees assume the use of an approved fuel with a density of 6.7 lb/USG and a Lower Heating Value of 18,590 BTU/lb.
|
7.1
|
Compliance with the Performance Guarantees shall be demonstrated using operating procedures and limitations in accordance with those defined by the Aviation Authority and by the Seller unless otherwise stated.
|
7.2
|
Compliance with the take-off, landing, one engine inoperative net ceiling and noise elements of the Performance Guarantees shall be demonstrated with reference to the approved Flight Manual.
|
7.3
|
Compliance with those parts of the Performance Guarantees defined in Clauses 2 and 3 above not covered by the requirements of the Aviation Authority shall be demonstrated by calculation based on data obtained during flight tests conducted on one (or more, at the Seller's discretion) A319neo aircraft of the same airframe/engine configuration as the Aircraft purchased by the Buyer and incorporated in the in-flight performance program and databases appropriate to the Aircraft.
|
7.4
|
Data derived from flight tests shall be adjusted as required using conventional methods of correction, interpolation or extrapolation in accordance with established aeronautical practices to show compliance with the Performance Guarantees.
|
7.5
|
Compliance with the Manufacturer's Weight Empty guarantee shall be demonstrated with reference to a weight compliance report.
|
7.6
|
The Seller undertakes to provide the Buyer with a report or reports demonstrating compliance with the Performance Guarantees at, or as soon as possible after, the Delivery of each Aircraft.
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof by the Aviation Authority made subsequent to the date of the Agreement (the “Change in Law”), and such a Change in Law affects the Aircraft configuration or performance or both, the Performance Guarantees shall be appropriately modified to reflect the effect of such change.
|
8.2
|
The Performance Guarantees apply to the Aircraft as described in the Performance Guarantees and may be adjusted in the event of:
|
10.1
|
Should an Aircraft fail to meet the Performance Guarantees specified in this Letter Agreement, the Seller shall use its reasonable endeavours to correct the deficiency to comply with the subject performance guarantee.
|
10.2
|
Should the Seller fail to develop and make available corrective means (including but not limited to kits, procedures, adjustment of design weights) of the above said deficiency, then the Seller shall for the affected Aircraft pay to the Buyer by way of liquidated damages subject to the Seller’s maximum liability set forth hereunder on each anniversary date of the Delivery Date of the affected Aircraft for as long as the deficiency remains an amount of:
|
10.2.1
|
***** based on the deficiency (expressed in percent) defined as the average of the deviations from the guaranteed values of the Specific Range and of the Mission Block Fuel guarantees (part of a percent to be prorated).
|
10.2.2
|
***** based on the deficiency (expressed in pounds) of the Mission Payload guarantees.
|
10.2.3
|
***** based on the deficiency (expressed in pounds) of the Manufacturer's Weight Empty guarantee.
|
10.3
|
In the event the Seller develops and makes available corrective means mentioned above the Seller shall pay to the Buyer the monthly prorated portion of the yearly liquidated damages due by the Seller on account of the year during which the corrective means are made available.
|
10.4
|
The Seller's maximum liability in respect of deficiency in performance of an Aircraft shall be limited to the payment of liquidated damages for a period ***** for that Aircraft, whichever occurs first. Payment of liquidated damages shall be deemed to settle all claims and remedies the Buyer would have against the Seller in respect of performance deficiencies.
|
3.1.1
|
The departure airport conditions (assumed representative of BOG runway 13R) are as defined below:
|
3.1.2
|
An allowance of 430 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.1.3
|
An allowance of 530 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.1.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum westbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.1.5
|
An allowance of 310 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.1.6
|
An allowance of 200 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.1.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.1.8
|
At the end of approach and landing, an amount of 8,500 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.2.2
|
An allowance of 430 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.2.3
|
An allowance of 390 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.2.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude
|
3.2.5
|
An allowance of 310 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.2.6
|
An allowance of 200 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.2.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.2.8
|
At the end of approach and landing, an amount of 8,590 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.3.2
|
An allowance of 430 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.3.3
|
An allowance of 420 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.3.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.3.5
|
An allowance of 310 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.3.6
|
An allowance of 200 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.3.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.3.8
|
At the end of approach and landing, an amount of 8,490 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
6.1
|
The performance certification requirements for the Aircraft, except where otherwise stated, are as stated in Section 02 of the Standard Specification.
|
6.2
|
For the determination of FAR take-off and landing performance a hard level dry runway surface with no runway strength limitation, no line-up allowance, no obstacles, zero wind, atmosphere according to ISA, except as otherwise stated, and the use of speedbrakes, flaps, associated speeds, landing gear, centre of gravity position and engines in the conditions liable to provide the best results are assumed.
|
6.3
|
When establishing take-off performance no air is bled from the engines for cabin air conditioning or anti-icing.
|
6.4
|
Climb, cruise, descent and holding performance elements of the Performance Guarantees include allowances for normal electrical load and for normal engine air bleed and power extraction associated with maximum cabin differential pressure as defined in the Standard Specification. Cabin air conditioning management during performance demonstration as described in Clause 7.3 below will be such as to optimize the Aircraft performance while meeting the minimum air conditioning requirements defined above. Unless otherwise stated no air is bled from the engines for anti-icing.
|
6.5
|
Where applicable the Performance Guarantees assume the use of an approved fuel with a density of 6.7 lb/USG and a Lower Heating Value of 18,590 BTU/lb.
|
7.1
|
Compliance with the Performance Guarantees shall be demonstrated using operating procedures and limitations in accordance with those defined by the Aviation Authority and by the Seller unless otherwise stated.
|
7.2
|
Compliance with the take-off, landing, one engine inoperative net ceiling and noise elements of the Performance Guarantees shall be demonstrated with reference to the approved Flight Manual.
|
7.3
|
Compliance with those parts of the Performance Guarantees defined in Clauses 2 and 3 above not covered by the requirements of the Aviation Authority shall be demonstrated by calculation based on data obtained during flight tests conducted on one (or more, at the Seller's discretion) A320neo aircraft of the same airframe/engine configuration as the Aircraft purchased by the Buyer and incorporated in the in-flight performance program and databases appropriate to the Aircraft.
|
7.4
|
Data derived from flight tests shall be adjusted as required using conventional methods of correction, interpolation or extrapolation in accordance with established aeronautical practices to show compliance with the Performance Guarantees.
|
7.5
|
Compliance with the Manufacturer's Weight Empty guarantee shall be demonstrated with reference to a weight compliance report.
|
7.6
|
The Seller undertakes to provide the Buyer with a report or reports demonstrating compliance with the Performance Guarantees at, or as soon as possible after, the Delivery of each Aircraft.
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof by the Aviation Authority made subsequent to the date of the Agreement (the “Change in Law”), and such a Change in Law affects the Aircraft configuration or performance or both, the Performance Guarantees shall be appropriately modified to reflect the effect of such change.
|
8.2
|
The Performance Guarantees apply to the Aircraft as described in the Performance Guarantees and may be adjusted in the event of:
|
10.1
|
Should an Aircraft fail to meet the Performance Guarantees specified in this Letter Agreement, the Seller shall use its reasonable endeavours to correct the deficiency to comply with the subject performance guarantee.
|
10.2
|
Should the Seller fail to develop and make available corrective means (including but not limited to kits, procedures, adjustment of design weights) of the above said deficiency, then the Seller shall for the affected Aircraft pay to the Buyer by way of liquidated damages subject to the Seller’s maximum liability set forth hereunder on each anniversary date of the Delivery Date of the affected Aircraft for as long as the deficiency remains an amount of:
|
10.2.1
|
***** based on the deficiency (expressed in percent) defined as the average of the deviations from the guaranteed values of the Specific Range and of the Mission Block Fuel guarantees (part of a percent to be prorated).
|
10.2.2
|
***** based on the deficiency (expressed in pounds) of the Mission Payload guarantees.
|
10.2.3
|
***** based on the deficiency (expressed in pounds) of the Manufacturer's Weight Empty guarantee.
|
10.3
|
In the event the Seller develops and makes available corrective means mentioned above the Seller shall pay to the Buyer the monthly prorated portion of the yearly liquidated damages due by the Seller on account of the year during which the corrective means are made available.
|
10.4
|
The Seller's maximum liability in respect of deficiency in performance of an Aircraft shall be limited to the payment of liquidated damages for a period ***** for that Aircraft, whichever occurs first. Payment of liquidated damages shall be deemed to settle all claims and remedies the Buyer would have against the Seller in respect of performance deficiencies.
|
3.1.1
|
The departure airport conditions (assumed representative of BOG runway 13R) are as defined below:
|
3.1.2
|
An allowance of 410 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.1.3
|
An allowance of 510 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.1.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum westbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.1.5
|
An allowance of 290 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.1.6
|
An allowance of 190 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.1.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.1.8
|
At the end of approach and landing, an amount of 8,500 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.2.2
|
An allowance of 410 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.2.3
|
An allowance of 380 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.2.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude
|
3.2.5
|
An allowance of 290 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.2.6
|
An allowance of 190 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.2.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.2.8
|
At the end of approach and landing, an amount of 8,590 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.3.2
|
An allowance of 410 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.3.3
|
An allowance of 400 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.3.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.3.5
|
An allowance of 290 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.3.6
|
An allowance of 190 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.3.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.3.8
|
At the end of approach and landing, an amount of 8,480 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
6.1
|
The performance certification requirements for the Aircraft, except where otherwise stated, are as stated in Section 02 of the Standard Specification.
|
6.2
|
For the determination of FAR take-off and landing performance a hard level dry runway surface with no runway strength limitation, no line-up allowance, no obstacles, zero wind, atmosphere according to ISA, except as otherwise stated, and the use of speedbrakes, flaps, associated speeds, landing gear, centre of gravity position and engines in the conditions liable to provide the best results are assumed.
|
6.3
|
When establishing take-off performance no air is bled from the engines for cabin air conditioning or anti-icing.
|
6.4
|
Climb, cruise, descent and holding performance elements of the Performance Guarantees include allowances for normal electrical load and for normal engine air bleed and power extraction associated with maximum cabin differential pressure as defined in the Standard Specification. Cabin air conditioning management during performance demonstration as described in Clause 7.3 below will be such as to optimize the Aircraft performance while meeting the minimum air conditioning requirements defined above. Unless otherwise stated no air is bled from the engines for anti-icing.
|
6.5
|
Where applicable the Performance Guarantees assume the use of an approved fuel with a density of 6.7 lb/USG and a Lower Heating Value of 18,590 BTU/lb.
|
7.1
|
Compliance with the Performance Guarantees shall be demonstrated using operating procedures and limitations in accordance with those defined by the Aviation Authority and by the Seller unless otherwise stated.
|
7.2
|
Compliance with the take-off, landing, one engine inoperative net ceiling and noise elements of the Performance Guarantees shall be demonstrated with reference to the approved Flight Manual.
|
7.3
|
Compliance with those parts of the Performance Guarantees defined in Clauses 2 and 3 above not covered by the requirements of the Aviation Authority shall be demonstrated by calculation based on data obtained during flight tests conducted on one (or more, at the Seller's discretion) A320neo aircraft of the same airframe/engine configuration as the Aircraft purchased by the Buyer and incorporated in the in-flight performance program and databases appropriate to the Aircraft.
|
7.4
|
Data derived from flight tests shall be adjusted as required using conventional methods of correction, interpolation or extrapolation in accordance with established aeronautical practices to show compliance with the Performance Guarantees.
|
7.5
|
Compliance with the Manufacturer's Weight Empty guarantee shall be demonstrated with reference to a weight compliance report.
|
7.6
|
The Seller undertakes to provide the Buyer with a report or reports demonstrating compliance with the Performance Guarantees at, or as soon as possible after, the Delivery of each Aircraft.
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof by the Aviation Authority made subsequent to the date of the Agreement (the “Change in Law”), and such a Change in Law affects the Aircraft configuration or performance or both, the Performance Guarantees shall be appropriately modified to reflect the effect of such change.
|
8.2
|
The Performance Guarantees apply to the Aircraft as described in the Performance Guarantees and may be adjusted in the event of:
|
10.1
|
Should an Aircraft fail to meet the Performance Guarantees specified in this Letter Agreement, the Seller shall use its reasonable endeavours to correct the deficiency to comply with the subject performance guarantee.
|
10.2
|
Should the Seller fail to develop and make available corrective means (including but not limited to kits, procedures, adjustment of design weights) of the above said deficiency, then the Seller shall for the affected Aircraft pay to the Buyer by way of liquidated damages subject to the Seller’s maximum liability set forth hereunder on each anniversary date of the Delivery Date of the affected Aircraft for as long as the deficiency remains an amount of:
|
10.2.1
|
***** based on the deficiency (expressed in percent) defined as the average of the deviations from the guaranteed values of the Specific Range and of the Mission Block Fuel guarantees (part of a percent to be prorated).
|
10.2.2
|
***** based on the deficiency (expressed in pounds) of the Mission Payload guarantees.
|
10.2.3
|
***** based on the deficiency (expressed in pounds) of the Manufacturer's Weight Empty guarantee.
|
10.3
|
In the event the Seller develops and makes available corrective means mentioned above the Seller shall pay to the Buyer the monthly prorated portion of the yearly liquidated damages due by the Seller on account of the year during which the corrective means are made available.
|
10.4
|
The Seller's maximum liability in respect of deficiency in performance of an Aircraft shall be limited to the payment of liquidated damages for a period ***** for that Aircraft, whichever occurs first. Payment of liquidated damages shall be deemed to settle all claims and remedies the Buyer would have against the Seller in respect of performance deficiencies.
|
3.1.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined in Clause 3.3.1 below.
|
3.1.2
|
An allowance of 430 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.1.3
|
An allowance of 500 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.1.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.1.5
|
An allowance of 380 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.1.6
|
An allowance of 210 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.1.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.1.8
|
At the end of approach and landing, an amount of 10,040 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.2.2
|
An allowance of 430 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.2.3
|
An allowance of 470 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.2.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.2.5
|
An allowance of 380 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.2.6
|
An allowance of 210 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.2.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.2.8
|
At the end of approach and landing, an amount of 10,100 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.3.2
|
An allowance of 430 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.3.3
|
An allowance of 500 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.3.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.3.5
|
An allowance of 380 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.3.6
|
An allowance of 210 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.3.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.3.8
|
At the end of approach and landing, an amount of 9,970 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
6.1
|
The performance certification requirements for the Aircraft, except where otherwise stated, are as stated in Section 02 of the Standard Specification.
|
6.2
|
For the determination of FAR take-off and landing performance a hard level dry runway surface with no runway strength limitation, no line-up allowance, no obstacles, zero wind, atmosphere according to ISA, except as otherwise stated, and the use of speedbrakes, flaps, associated speeds, landing gear, centre of gravity position and engines in the conditions liable to provide the best results are assumed.
|
6.3
|
When establishing take-off performance no air is bled from the engines for cabin air conditioning or anti-icing.
|
6.4
|
Climb, cruise, descent and holding performance elements of the Performance Guarantees include allowances for normal electrical load and for normal engine air bleed and power extraction associated with maximum cabin differential pressure as defined in the Standard Specification. Cabin air conditioning management during performance demonstration as described in Clause 7.3 below will be such as to optimize the Aircraft performance while meeting the minimum air conditioning requirements defined above. Unless otherwise stated no air is bled from the engines for anti-icing.
|
6.5
|
Where applicable the Performance Guarantees assume the use of an approved fuel with a density of 6.7 lb/USG and a Lower Heating Value of 18,590 BTU/lb.
|
7.1
|
Compliance with the Performance Guarantees shall be demonstrated using operating procedures and limitations in accordance with those defined by the Aviation Authority and by the Seller unless otherwise stated.
|
7.2
|
Compliance with the take-off, landing, one engine inoperative net ceiling and noise elements of the Performance Guarantees shall be demonstrated with reference to the approved Flight Manual.
|
7.3
|
Compliance with those parts of the Performance Guarantees defined in Clauses 2 and 3 above not covered by the requirements of the Aviation Authority shall be demonstrated by calculation based on data obtained during flight tests conducted on one (or more, at the Seller's discretion) A321neo aircraft of the same airframe/engine configuration as the Aircraft purchased by the Buyer and incorporated in the in-flight performance program and databases appropriate to the Aircraft.
|
7.4
|
Data derived from flight tests shall be adjusted as required using conventional methods of correction, interpolation or extrapolation in accordance with established aeronautical practices to show compliance with the Performance Guarantees.
|
7.5
|
Compliance with the Manufacturer's Weight Empty guarantee shall be demonstrated with reference to a weight compliance report.
|
7.6
|
The Seller undertakes to provide the Buyer with a report or reports demonstrating compliance with the Performance Guarantees at, or as soon as possible after, the Delivery of each Aircraft.
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof by the Aviation Authority made subsequent to the date of the Agreement (the “Change in Law”), and such a Change in Law affects the Aircraft configuration or performance or both, the Performance Guarantees shall be appropriately modified to reflect the effect of such change.
|
8.2
|
The Performance Guarantees apply to the Aircraft as described in the Performance Guarantees and may be adjusted in the event of:
|
10.1
|
Should an Aircraft fail to meet the Performance Guarantees specified in this Letter Agreement, the Seller shall use its reasonable endeavours to correct the deficiency to comply with the subject performance guarantee.
|
10.2
|
Should the Seller fail to develop and make available corrective means (including but not limited to kits, procedures, adjustment of design weights) of the above said deficiency, then the Seller shall for the affected Aircraft pay to the Buyer by way of liquidated damages subject to the Seller’s maximum liability set forth hereunder on each anniversary date of the Delivery Date of the affected Aircraft for as long as the deficiency remains an amount of:
|
10.2.1
|
***** on the deficiency (expressed in percent) defined as the average of the deviations from the guaranteed values of the Specific Range and of the Mission Block Fuel guarantees (part of a percent to be prorated).
|
10.2.2
|
***** based on the deficiency (expressed in pounds) of the Mission Payload guarantees.
|
10.2.3
|
***** based on the deficiency (expressed in pounds) of the Manufacturer's Weight Empty guarantee.
|
10.3
|
In the event the Seller develops and makes available corrective means mentioned above the Seller shall pay to the Buyer the monthly prorated portion of the yearly liquidated damages due by the Seller on account of the year during which the corrective means are made available.
|
10.4
|
The Seller's maximum liability in respect of deficiency in performance of an Aircraft shall be limited to the payment of liquidated damages for a period ***** for that Aircraft, whichever occurs first. Payment of liquidated damages shall be deemed to settle all claims and remedies the Buyer would have against the Seller in respect of performance deficiencies.
|
3.1.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined in Clause 3.3.1 below.
|
3.1.2
|
An allowance of 420 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.1.3
|
An allowance of 500 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.1.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.1.5
|
An allowance of 370 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.1.6
|
An allowance of 200 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.1.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.1.8
|
At the end of approach and landing, an amount of 10,040 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.2.2
|
An allowance of 420 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.2.3
|
An allowance of 460 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.2.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.2.5
|
An allowance of 360 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.2.6
|
An allowance of 200 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.2.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.2.8
|
At the end of approach and landing, an amount of 10,070 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3.1
|
The departure airport conditions (assumed representative of DFW runway 18L) are as defined below:
|
3.3.2
|
An allowance of 420 lb of fuel is assumed for 13 min APU, engine start and 14 min taxi-out.
|
3.3.3
|
An allowance of 490 lb of fuel is assumed for take-off and initial climb to 1,500 ft pressure altitude above departure airport with acceleration to climb speed.
|
3.3.4
|
Climb from 1,500 ft pressure altitude above departure airport to cruise altitude using maximum climb thrust, cruise at optimum eastbound flight levels at a fixed Mach number not less than 0.78 and descent to 1,500 ft pressure altitude above destination airport are conducted in ISA+5°C conditions. Climb and descent speeds below 10,000 ft shall be 250 knots CAS.
|
3.3.5
|
An allowance of 360 lb of fuel is assumed for 6 min approach and landing at destination airport.
|
3.3.6
|
An allowance of 200 lb of fuel is assumed for 9 min taxi-in (taken from the reserves).
|
3.3.7
|
Stage Distance is defined as the distance covered during climb, cruise and descent as described above.
|
3.3.8
|
At the end of approach and landing, an amount of 9,940 lb of fuel will remain in the tanks. This represents the estimated fuel required for:
|
6.1
|
The performance certification requirements for the Aircraft, except where otherwise stated, are as stated in Section 02 of the Standard Specification.
|
6.2
|
For the determination of FAR take-off and landing performance a hard level dry runway surface with no runway strength limitation, no line-up allowance, no obstacles, zero wind, atmosphere according to ISA, except as otherwise stated, and the use of speedbrakes, flaps, associated speeds, landing gear, centre of gravity position and engines in the conditions liable to provide the best results are assumed.
|
6.3
|
When establishing take-off performance no air is bled from the engines for cabin air conditioning or anti-icing.
|
6.4
|
Climb, cruise, descent and holding performance elements of the Performance Guarantees include allowances for normal electrical load and for normal engine air bleed and power extraction associated with maximum cabin differential pressure as defined in the Standard Specification. Cabin air conditioning management during performance demonstration as described in Clause 7.3 below will be such as to optimize the Aircraft performance while meeting the minimum air conditioning requirements defined above. Unless otherwise stated no air is bled from the engines for anti-icing.
|
6.5
|
Where applicable the Performance Guarantees assume the use of an approved fuel with a density of 6.7 lb/USG and a Lower Heating Value of 18,590 BTU/lb.
|
7.1
|
Compliance with the Performance Guarantees shall be demonstrated using operating procedures and limitations in accordance with those defined by the Aviation Authority and by the Seller unless otherwise stated.
|
7.2
|
Compliance with the take-off, landing, one engine inoperative net ceiling and noise elements of the Performance Guarantees shall be demonstrated with reference to the approved Flight Manual.
|
7.3
|
Compliance with those parts of the Performance Guarantees defined in Clauses 2 and 3 above not covered by the requirements of the Aviation Authority shall be demonstrated by calculation based on data obtained during flight tests conducted on one (or more, at the Seller's discretion) A321neo aircraft of the same airframe/engine configuration as the Aircraft purchased by the Buyer and incorporated in the in-flight performance program and databases appropriate to the Aircraft.
|
7.4
|
Data derived from flight tests shall be adjusted as required using conventional methods of correction, interpolation or extrapolation in accordance with established aeronautical practices to show compliance with the Performance Guarantees.
|
7.5
|
Compliance with the Manufacturer's Weight Empty guarantee shall be demonstrated with reference to a weight compliance report.
|
7.6
|
The Seller undertakes to provide the Buyer with a report or reports demonstrating compliance with the Performance Guarantees at, or as soon as possible after, the Delivery of each Aircraft.
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof by the Aviation Authority made subsequent to the date of the Agreement (the “Change in Law”), and such a Change in Law affects the Aircraft configuration or performance or both, the Performance Guarantees shall be appropriately modified to reflect the effect of such change.
|
8.2
|
The Performance Guarantees apply to the Aircraft as described in the Performance Guarantees and may be adjusted in the event of:
|
10.1
|
Should an Aircraft fail to meet the Performance Guarantees specified in this Letter Agreement, the Seller shall use its reasonable endeavours to correct the deficiency to comply with the subject performance guarantee.
|
10.2
|
Should the Seller fail to develop and make available corrective means (including but not limited to kits, procedures, adjustment of design weights) of the above said deficiency, then the Seller shall for the affected Aircraft pay to the Buyer by way of liquidated damages subject to the Seller’s maximum liability set forth hereunder on each anniversary date of the Delivery Date of the affected Aircraft for as long as the deficiency remains an amount of:
|
10.2.1
|
***** based on the deficiency (expressed in percent) defined as the average of the deviations from the guaranteed values of the Specific Range and of the Mission Block Fuel guarantees (part of a percent to be prorated).
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10.2.2
|
***** based on the deficiency (expressed in pounds) of the Mission Payload guarantees.
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10.2.3
|
***** based on the deficiency (expressed in pounds) of the Manufacturer's Weight Empty guarantee.
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10.3
|
In the event the Seller develops and makes available corrective means mentioned above the Seller shall pay to the Buyer the monthly prorated portion of the yearly liquidated damages due by the Seller on account of the year during which the corrective means are made available.
|
10.4
|
The Seller's maximum liability in respect of deficiency in performance of an Aircraft shall be limited to the payment of liquidated damages for a period ***** for that Aircraft, whichever occurs first. Payment of liquidated damages shall be deemed to settle all claims and remedies the Buyer would have against the Seller in respect of performance deficiencies.
|
1.
|
*****
|
2.
|
*****
|
3.
|
*****
|
4.
|
*****
|
5.
|
ASSIGNMENT
|
1.
|
*****
|
2
|
ASSIGNMENT
|
3.
|
MISCELLANEOUS
|
5.
|
ASSIGNMENT
|
6.
|
MISCELLANEOUS
|
1
|
*****
|
2
|
*****
|
3
|
ASSIGNMENT
|
1
|
DEFINITIONS
|
2
|
*****
|
3
|
*****
|
4
|
*****
|
5
|
*****
|
6
|
*****
|
7
|
*****
|
8
|
*****
|
9
|
ASSIGNMENT
|
10
|
MISCELLANEOUS
|
1
|
*****
|
2
|
ASSIGNMENT
|
(i)
|
the Buyer is a corporation organized and existing in good standing under the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under this ***** Agreement;
|
(ii)
|
neither the execution and delivery by the Buyer of this ***** Agreement, nor the consummation of any of the transactions by the Buyer contemplated thereby, nor the performance by the Buyer of the obligations thereunder, constitutes a breach of any agreement to which the Buyer is a party or by which its assets are bound;
|
(iii)
|
this ***** Agreement has been duly authorized, executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer enforceable against the Buyer in accordance with its terms.
|
(i)
|
the Seller is organized and existing in good standing under the laws of the Republic of France and has the corporate power and authority to enter into and perform its obligations under the ***** Agreement;
|
(ii)
|
neither the execution and delivery by the Seller of this ***** Agreement, nor the consummation of any of the transactions by the Seller contemplated thereby, nor the performance by the Seller of the obligations thereunder, constitutes a breach of any agreement to which the Seller is a party or by which its assets are bound;
|
(iii)
|
this ***** Agreement has been duly authorized, executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms.
|
(1)
|
Registration Statement (Form S-3 No. 333-223127) of Spirit Airlines, Inc. and the related Prospectus
|
(2)
|
Registration Statement (Form S-8 No. 333-206350) pertaining to the 2015 Incentive Award Plan
|
(3)
|
Registration Statement (Form S-8 No. 333-174812) pertaining to the Amended and Restated 2005 Incentive Stock Plan and the 2011 Equity Incentive Award Plan of Spirit Airlines, Inc.
|
Date: February 5, 2020
|
/s/ Edward M. Christie
|
|
Edward M. Christie
|
|
President and Chief Executive Officer
|
Date: February 5, 2020
|
/s/ Scott M. Haralson
|
|
Scott M. Haralson
|
|
Senior Vice President and Chief Financial Officer
|
(i.)
|
the Annual Report on Form 10-K of the Company for the year ended December 31, 2019 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii.)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 5, 2020
|
/s/ Edward M. Christie
|
|
Edward M. Christie
|
|
President and Chief Executive Officer
|
|
|
Date: February 5, 2020
|
/s/ Scott M. Haralson
|
|
Scott M. Haralson
|
|
Senior Vice President and Chief Financial Officer
|