FIRST AMENDMENT TO UNITED EXPRESS AGREEMENT
Exhibit
10.41(a)
CONFIDENTIAL
TREATMENT
REQUESTED
PURSUANT TO RULE 24b-2
Certain
portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934. The omitted materials have been filed separately with the
Securities and Exchange Commission.
FIRST
AMENDMENT TO UNITED EXPRESS AGREEMENT
This
First Amendment to the United Express Agreement (the
“Amendment”) is effective as of August 21st,
2007 by and
between UNITED AIR LINES, INC., a Delaware corporation, with
its operations center located at 0000 Xxxx Xxxxxxxxx Xxxx, Xxx Xxxxx Xxxxxxxx,
Xxxxxxxx 00000 (“United”), and SHUTTLE America
Corp., having its principal mailing address at 0000 Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxxx, XX 00000 (“Contractor”).
WHEREAS,
the parties previously entered into that certain United Express Agreement dated
as of December 28th, 2006, United Contract # 172884 (the “Agreement”);
and
WHEREAS,
pursuant to Article XXXI of the Agreement, the parties may modify or amend
the
Agreement; and
WHEREAS,
Article II of the Agreement provides for the term of all ERJ-170 regional jet
aircraft subject to the Agreement; and
WHEREAS,
Article IV of the Agreement provides for the type and amount of aircraft to
be
used in the Agreement as outlined in Appendix B; and
WHEREAS,
Article VIII of the Agreement provides for an annual adjustment factor to
carrier controlled rates payable to the contractor as outlined in Appendix
E and
for specific aircraft ownership Amended credits; and
WHEREAS,
Appendix B provides for the schedule of a Fleet Plan; and
WHEREAS,
Appendix E provides for the schedule of Reimbursement Category Unit Rates and
Annual Adjustment Factors; and
WHEREAS,
the parties desire to amend the Agreement to provide for the addition of ten
(10) ERJ-170 aircraft by Contractor in accordance with the Fleet Plan set forth
on Appendix B.
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereby agree as follows:
I. DEFINITIONS
A. Defined
Terms. Capitalized terms used in this Amendment and not otherwise
defined in this Amendment shall have the meanings assigned to them in the
Agreement.
II. SCOPE,
TERM, and CONDITIONS
A. Contractor
and United have mutually agreed to add ten (10) ERJ-170 aircraft (aircraft
[*]
through [*]).
B. Article
II.B.1 Regional Jets Term of the Agreement shall be deleted in its entirety
and
replaced with the following: For any ERJ-170 regional jet aircraft
subject to this Agreement, the aircraft shall be divided into four (4)
tranches. The term of this Agreement for the first ERJ-170 tranche
(the first [*] aircraft delivered) shall expire on June 30, 2016. The
term of the Agreement for the second ERJ-170 tranche (the next [*] aircraft
delivered) shall expire on June 30, 2017. The term of the Agreement
for the third ERJ-170 tranche (the next [*] aircraft delivered) shall expire
on
June 30, 2018. The term of the Agreement for the fourth ERJ-170
tranche (the final [*] aircraft delivered) shall expire on June 30,
2019.
C. Article
IV.A.1.a.i Aircraft Types of the Agreement shall be deleted in its entirety
and
replaced with the following: [*] ERJ-170 aircraft which Contractor shall cause
to be delivered in a timeline substantially consistent with the schedule set
forth on Appendix B.
D. Article
VIII.A.5, Annual Adjustment Factors, of the Agreement shall be deleted in its
entirety and replaced with the following: Effective as of January
1st, 2008 and each January 1st thereafter for the term of this Agreement,
Contractor and United agree to increase or leave constant all Carrier Controlled
Costs, excluding aircraft ownership, within the Reimbursement Categories for
the
ensuing contract year by an amount equal to the then applicable Carrier
Controlled Costs multiplied by the applicable “Annual Adjustment Factors” as set
forth on Appendix E. Rates shall be adjusted in accordance with the
procedures set forth in Appendix E. Except as expressly provided in
this Agreement, the parties do not want to perform, and have not provided for
,
any additional rate changes, rate negotiations or rate setting
process. Annual CPI increases (if any) are to be capped at [*] for
the period of [*] through [*]. If during any year during this period
of this Agreement, CPI is negative, the rates that are subject to CPI adjustment
for such year will remain unchanged. Annual CPI increases (if any)
are to be capped at [*] for the period of [*] through [*]. If during
any year during this period of this Agreement, CPI is negative, the rates that
are subject to CPI adjustment for such year will remain
unchanged. Example: If as of January 1, 2008, the rate for
the Completed Block Hours Reimbursement Category is [*] per block hour and
the
CPI adjustment factor is [*], then the annual Carrier Controlled Cost element
effective as of such anniversary of this Agreement shall be [*] ([*] multiplied
by [*]).
E. Contractor
and United mutually agree that notwithstanding the provisions in Article
VIII.A.8.b, Amended Credit, the two (2) references to “[*] aircraft” in such
paragraph shall be amended such that in the [*] in which the [*] of the [*]
ERJ-145 aircraft operating for Chautauqua Airlines are removed from service,
the
article will be amended to reference “[*] Aircraft” and will be reduced by [*]
aircraft in conjunction with the early termination schedule of the remaining
ERJ-145 aircraft, accordingly such reference should not fall below “[*]
aircraft”, and will remain in effect through [*]. As of [*], Article
VIII.A.8.b, Amended Credit, will revert to incorporate the initial references
to
“[*] aircraft”.
____________
*Confidential
F. Contractor
and United mutually agree to the monthly aircraft ownership rate of [*] per
additional ERJ-170 as specified in this Amendment and as outlined in Attachment
B to this Amendment, the revised iteration of Appendix E to the
Agreement.
G. Attachment
A to this Amendment is the revised iteration of Appendix B to the Agreement
and
is modified to include specifics to the additions in fleet and the related
additions in schedule of aircraft.
H. Attachment
B to this Amendment is the revised iteration of Appendix E to the Agreement
and
is modified to include specifics to the annual adjustment rates and aircraft
ownership rates.
III. MISCELLANEOUS. Except
as otherwise amended herein, the Agreement will remain in full force and
effect. The terms of this Amendment are deemed to be incorporated in,
and made a part of, the Agreement. This Amendment may be executed in
any number of counterparts, by original or facsimile signature, each of which
when executed and delivered shall be deemed an original and such counterparts
together shall constitute one and the same instrument.
[Signature
Page Follows]
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*
Confidential
Execution
Version
IN
WITNESS WHEREOF, the parties hereto have by their duly authorized officers
caused this Amendment to be entered into and signed as of the day and year
first
above written.
| UNITED AIRLINES, INC. | SHUTTLE AMERICA CORP. | |||
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/s/
Xxxx
XxXxxxxx
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/s/
Xxxxx X.
Xxxxxxx
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Name:
Xxxx
XxXxxxxx
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Name:
Xxxxx X.
Xxxxxxx
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Title:
Executive Vice President & Chief Operating
Officer
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Title:
Chief
Executive Officer
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/s/
Xxxx
Xxxxxx
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Name:
Xxxx
Xxxxxx
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Title: Vice
President
Operational Services
United
Express and XXX
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Execution
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ATTACHMENT
A
APPENDIX
B
RJ-
70FLEET PLAN
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Delivery
Dates
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Units
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In-Service
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Spare
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Total
Deliveries
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10/17/2004
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3
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2
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1
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3
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11/1/2004
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11/21/2004
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12/1/2004
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12/19/2004
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10
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1/2/2005
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1/16/2005
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2/1/2005
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3/1/2005
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4/1/2005
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5/1/2005
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6/1/2005
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6/12/2005
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7/1/2005
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Sep-05
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2
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Oct-05
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Nov-05
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Nov-05
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Dec-05
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Note:
Contractor shall not be liable for any aircraft delivery delays resulting
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Execution
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ATTACHMENT
B
APPENDIX
E
REIMBURSEMENT
CATEGORIES
CARRIER
CONTROLLED COSTS IN 2007 ECONOMICS
United
shall pay Contractor the
following Reimbursement Category Unit Rates for Contractor’s United Express
flights operated using the aircraft set forth below:
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_________
*
Confidential
Execution
Version
REIMBURSEMENT
CATEGORIES
PASS-THRU
COSTS
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_________
*
Confidential
Execution
Version
DEFINITIONS
Descriptions
of Carrier Controlled Costs
General
Statement: Notwithstanding the following descriptions, any
costs incurred by Contractor that are described as Pass-Through Costs on this
Exhibit E shall not be considered Carrier Controlled Costs. Any costs
incurred by Contractor that are not Pass-Through Costs under the Agreement,
regardless of whether such costs are described below, shall be considered
Carrier Controlled Costs, except for those costs that are typically considered
the responsibility of the Ground Handling Provider as defined in United’s
contracts for ground handling services. The characterization of any
cost as a Carrier Controlled Cost in the following descriptions shall not impair
any provision of the Agreement that specifically requires United to reimburse
Contractor for such cost.
i) Flight
Crews (Captains, First Officers and Flight Attendants)
a) Wages,
benefits (including health insurance, pensions, 401k, and any other benefits),
payroll associated taxes and incentives (premiums for longevity, geography,
certificates/licenses, profit sharing, bonuses and any other incentives) for
all
paid hours (including but not exclusive of hours for reserve employees,
overtime, vacation, holidays, sick days, and paid leave) for the following
work
categories:
ii) Pilots
and Flight Attendants for all equipment types, including reserve crews and
any
other crews on the Contractor payroll.
iii) Pilot
and
Flight Attendant Administration and Management, including senior management
crew
scheduling, labor relations management.
iv) Domicile
administration.
a) All
uniform related charges for all of the above work categories, including
purchase, repair, and cleaning charges.
b) All
training associated with the work groups above, including but not exclusive
of:
v) Recurring
and Attrition: Any training expense that occurs annually for all
types of employees, new planes or attrition. Includes Labor payments
to those employees being trained (including all types of charges mentioned
in
paragraph i.a), trainer time and salary, equipment and facility rental, training
administration costs associated with recurring training, and any training
materials required. Excludes expenses associated with bringing new aircraft
into
the system.
vi) Ramp-up: Training
expense that occurs due to new planes taken on. Includes Labor
payments to those employees being trained (including all items in paragraph
i.a); Trainer time and salary; Equipment and facility rental; Training
administration costs associated with one-time training; Any training materials
required; Uniforms & headsets; Pilot navigational charts.
vii) Maintenance:
a) Maintenance
labor for all labor categories of aircraft mechanics, (e.g., engine specialists,
parts clerks, etc.), including base wages, benefits, payroll associated taxes
and incentives (premiums for longevity, geography, certificates/licenses, profit
sharing, bonuses and any other incentives) for all paid hours (including but
not
exclusive of overtime, holidays, vacation, sick days and paid
leave).
b) Maintenance
Overhead: All hangar, parts/storage shop and maintenance management
office rent and maintenance facility charges. All sundry and clerical items
associated with the management of Contractor’s maintenance function, including
but not exclusive of office supplies and furniture, maintenance schematic
drawings and manuals, maintenance IT hardware/software.
c) Maintenance
Management Overhead: Labor for all management and administration associated
with
the Contractor’s management of the maintenance function, including base wages,
benefits, payroll associated taxes and incentives (including premiums for
longevity, geography, certificates/licenses, profit sharing, bonuses and any
other incentives) for all paid hours (including but not exclusive of overtime,
vacation, holidays, sick days and paid leave).
d) Outsource
Maintenance Services: All charges net of warranty reimbursement for any and
all
services and/or products (including but not exclusive of components, line,
engine, airframe, C&D checks, avionics, APU) provided by a third party for
the maintenance of Contractor’s aircraft or maintenance functions.
e) Other
Maintenance: Parts, spares, tools, equipment and any other personnel, service
or
material expenses, associated with the maintenance of Contractor’s aircraft or
maintenance functions.
viii) Operations
a) XXX
(Remain Over Night): Hotel, transportation, and per diem for all
pilots and flight attendants.
b) Interrupted
Trip Expense: Includes all mishandled bag related expenses and all
hotel, transportation and meal accommodation expenses for any passenger
traveling on Contractor’s flights.
c) Catering
and on-board services: Includes all cost associated with providing
food (snack and beverage service) for passengers, excluding liquor. This
includes but is not limited to costs for the food and beverages,
catering supplies
d) Crew
Scheduling: Labor for all management and administration associated
with the Contractor’s crew scheduling function, including base wages, benefits,
payroll associated taxes and incentives (including premiums for longevity,
geography, certificates/licenses, profit sharing, bonuses and any other
incentives) for all paid hours (including but not exclusive of overtime,
vacation, holidays, sick days and paid leave). All Information
Technology related charges (e.g., systems, software and hardware) and other
costs associated with crew scheduling functions.
e) Dispatch/flight
operations center: Flight operations center and all costs associated
with it including personnel, facilities, management and systems.
ix) Corporate
Overhead
a) Headquarters
Facilities: All corporate real estate rent and associated facility
charges
b) Management
overhead: Labor for all management and administration whether or not based
in
Indianapolis, Indiana, including base wages, benefits, payroll associated taxes
and incentives (including premiums for longevity, geography,
certificates/licenses, profit sharing, bonuses and any other incentives) for
all
paid hours (including but not exclusive of overtime, vacation, holidays, sick
days and paid leave).
c) Other:
Out-sourced corporate overhead services (e.g., consulting, legal expenses),
other depreciation and any other overhead costs spread over multiple cost
categories (e.g., memberships, office supplies, employee testing, IT, insurance
costs that are not Pass-Through Costs, other repairs and maintenance, software
licensing, parking, safety office, flight standards, communications, etc.);
includes non-aircraft interest expense, if any.
x) Aircraft
Ownership
a) All
charges, except Aircraft Property Taxes (as described in the description of
Pass-Through Costs), associated with aircraft ownership including but not
exclusive of lease, depreciation, other financing expense, and related start-up
costs (including painting).
b) All
spare
engine ownership expense
c) Hull
Insurance – consists of premiums and other charges of insurers for Aircraft Hull
All Risks Insurance as described in the Agreement, plus fees and expenses of
insurance brokers in connection with the procurement or maintenance of such
insurance, and surplus lines tax.
Descriptions
of Pass-Through Costs
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1.
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Fuel
and Oil – consists of the cost of all aircraft fuel and oil, plus fuel
flow charges, into-plane fees, and de-fueling charges, and all applicable
taxes on any of the foregoing.
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2.
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Landing
Fees – consists of all airport landing fees, Aircraft Rescue Fire Fighter
(ARFF) charges or similar charges, apron fees, and any other fees
charged
by airport operators to cover airfield costs or other airport
facilities.
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3.
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War
Risk Insurance – consists of premiums and other charges of insurers for
War Risk and Allied Perils Insurance, plus fees and expenses of insurance
brokers in connection with the procurement or maintenance of such
insurance.
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4.
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Liability
Insurance – consists of premiums and other charges of insurers for all
other liability insurance as described in the Agreement, plus fees
and
expenses of insurance brokers in connection with the procurement
or
maintenance of such insurance.
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5.
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Aircraft
Property Taxes – consists of all property taxes (however designated,
including excise or franchise taxes imposed on the ownership of property,
ad valorem taxes, and special assessments or levies) related to aircraft,
spare parts and engines.
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6.
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Security
Charges – consists of all charges imposed by governmental agencies,
including the Transportation Security Administration (TSA) or any
other
entity performing functions of the TSA, or by any third-party contractor
of any governmental agency, with respect to airport security
services
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7.
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Engine
LLP Coverage – a part with a limitation on use stated in cumulative engine
flight hours or cycles, established by the OEM or the Federal Aviation
Administration.
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_________
*
Confidential
