EXHIBIT 10.6(d)
CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO RULE 406
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933. THE OMITTED
MATERIALS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
FOURTH AMENDMENT
This Agreement (the "Amendment") is entered into and made as of December
18, 2002, as a Fourth Amendment to the Chautauqua Jet Service Agreement dated as
of March 19, 1999 by and between US Airways, Inc. ("US Airways") and Chautauqua
Airlines, Inc. ("Chautauqua") as previously amended (the "Jet Service
Agreement").
WITNESSETH:
WHEREAS, US Airways and Chautauqua have entered into the Jet Service
Agreement;
WHEREAS US Airways and Chautauqua have entered into the First Amendment to
the Jet Service Agreement dated as of September 6, 2000;
WHEREAS US Airways and Chautauqua have entered into the Second Amendment to
the Jet Service Agreement dated as of December 20, 2000;
WHEREAS US Airways and Chautauqua have entered into the Third Amendment to
the Jet Service Agreement dated as of July 11, 2001;
WHEREAS, US Airways and Chautauqua desire to amend certain provisions of
the Jet Service Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which is acknowledged, and intending to be legally bound, US
Airways and Chautauqua hereby agree as follows:
1. The effectiveness of this Amendment shall be conditioned on and
subject to the entry of a final order (the "Order") of the bankruptcy court
having jurisdiction over US Airways' case (the "Case") under Chapter 11, Title
11 of the United States Code (the "Bankruptcy Code") (a) authorizing and
directing US Airways to assume under Section 365 of the Bankruptcy Code (i) the
Jet Service Agreement, and (ii) the Service Agreement between US Airways and
Shuttle Acquisition LLC dated as of October 4, 2001 and assigned by Shuttle
Acquisition LLC to Shuttle
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America Corporation (the "Shuttle Agreement"), and (b) approving the terms of
this Amendment and the Republic Jet Service Agreement between US Airways and
Republic Airways, Inc. or another entity mutually acceptable to US Airways and
Republic Airways, Inc. (the "Republic Agreement") and authorizing and directing
US Airways to enter into and be bound by this Amendment and the Republic
Agreement. In the event the Order is not entered on or before February 3, 2003
subject to extension by Chautauqua in its sole discretion, this Amendment shall
be null and void and of no force or effect. The Order shall provide that, except
as provided herein, US Airways' obligations under the Jet Service Agreement and
this Amendment shall be post-petition, administrative obligations of US Airways
under Section 503 of the Bankruptcy Code. Notwithstanding the foregoing, in the
event that either (c) US Airways fails to confirm a chapter 11 plan of
reorganization in the Case (a "Plan") under which US Airways will operate
(either directly, through subsidiaries or through code share partners) regional
jet aircraft, or (d) the Case is dismissed or converted to a case under chapter
7 of the Bankruptcy Code and as a result thereof US Airways suspends or
discontinues flight operations or (e) if, prior to, upon or in connection with
the consummation of a Plan, US Airways consummates a sale or sales of a material
portion of its assets (whether pursuant to a plan of reorganization or
otherwise) and such sale or sales causes the number of jets in US Airways'
mainline fleet to fall below the threshold of 233 jets (whether through the
assumption and assignment of leases, the sale of jets subject to mortgages, the
rejection of leases or the abandonment of jets, in each case, previously used in
connection with sold assets) and US Airways ceases to offer (either directly,
through subsidiaries or through code share partners) any regional jet services
US Airways may terminate the Jet Service Agreement and this Amendment by
providing 10 business days prior written notice to Chautauqua of such
termination. In such event, US Airways shall be deemed to have breached the Jet
Service Agreement and this Amendment as of the effective date of such
termination (the "Breach Date") and Chautauqua shall have, subject to objection
as provided below: (x) an allowed administrative claim for any obligations
arising before the Breach Date and (y) an allowed general unsecured pre-petition
claim for future damages resulting from such termination and for obligations
that become due and payable after the Breach Date. In each case the amount of
the respective claim shall be subject to the ordinary process, including the
right of parties in interest to object to the amount (but only the amount) of
the claim. In addition, subject
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to Chautauqua's right of setoff for any administrative claim, Chautauqua agrees
to refund to US Airways any amounts paid on account of services to be performed
after the Breach Date within 5 business days after receipt of written demand
from US Airways.
2. Section 2.1 of the Jet Service Agreement is hereby deleted in its
entirety and replaced with the following:
"SECTION 2.1 SCHEDULE REQUIREMENTS
At all times during the term of this Agreement and any amendment or extension
thereof, Chautauqua will schedule and operate US Airways Express air
transportation service between various U.S. domestic city-pairs and between
various U.S.-Canadian city-pairs selected in accordance with the immediately
succeeding sentence (hereinafter referred to as the "Service") using EMB-145LR
fifty (50) seat jet aircraft bearing the US Airways Express livery. The Service
provided by such EMB-145LR aircraft shall be based on the implementation
schedule set forth in Exhibit 2.1, attached hereto and made a part hereof,
provided that Chautauqua's obligation to place Aircraft Nos. 27 - 35 into
service or to place such Aircraft into service on the dates set forth on Exhibit
2.1 shall be subject to Chautauqua's ability to obtain financing for such
Aircraft on terms acceptable to Chautauqua in its discretion and subject to US
Airways' prompt review and approval, such approval not to be unreasonably
withheld or delayed, of the financial impact of such terms on its costs of
operation under this Agreement. Any Aircraft that are hereafter placed into
Service under the terms of this Agreement shall have the same mechanical
configuration and engine performance rating as the Aircraft that have already
been placed into Service. To the extent that the parties jointly agree to
substitute other types of aircraft to provide the Service, the parties hereby
agree that the costs of operation of such aircraft shall be appropriately
adjusted and the cost model contained in this agreement amended in a manner
consistent with the principles used to reflect the costs of EMB-145LR aircraft
herein for such aircraft-specific items as [ * ] ; provided, however, that the
payment of "Profit" to Chautauqua pursuant to Section 5.5, as amended hereunder,
shall not be modified as a result of such substitution unless by mutual
agreement. The city-pairs from which the air transportation services are to be
provided by Chautauqua pursuant to this Agreement will be
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selected by US Airways, in its sole discretion, subject only to operational and
safety requirements, minimum and maximum schedule requirements, and the other
parameters set forth in Exhibit 2.1(a). US Airways may, on [ * ] days advance
written notice to Chautauqua, designate changes in the following: city-pairs
served, aircraft routings or flight frequencies, provided that the new
city-pairs, aircraft routings, and flight frequencies continue to satisfy the
parameters set forth in Exhibit 2.1(a)."
3. Exhibits 2.1 and 2.1(a) of the Jet Service Agreement are hereby
deleted in their entirety and replaced with Exhibits 2.1 and 2.1(a) attached
hereto.
4. Section 2.2 of the Jet Service Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"SECTION 2.2 SCHEDULING PARAMETERS
US Airways shall control and direct the scheduled use of the Aircraft. US
Airways agrees to take into consideration Chautauqua's operational requirements
for XXX maintenance and crew productivity and legality, including the
requirements set forth on Exhibit 2.1(a). The cost model attached as Exhibit 5.1
will be based on the minimum and maximum Block Hour utilization (excluding
spares) provided in Exhibit 2.1(a). The baseline Block Hour utilization will be
assumed to be an average of [ * ] per day per aircraft (excluding spares). In
the event that it is necessary to add any additional maintenance bases or crew
domiciles beyond those currently in effect, the parties to this agreement will
determine mutually acceptable locations for such additional maintenance and crew
domiciles with the goal of reducing operational cost and complexity subject to
US Airways scheduling requirements."
5. Section 5.4(a) of the Jet Service Agreement is hereby deleted in
its entirety and the following is substituted in lieu thereof:
"(a) Commencing on the later of the effective date of this Amendment No. 4
and November 1, 2002, US Airways will pay Chautauqua on each of the 1st,
10th and 20th day of each month 33 1/3 % of the amount based upon the
Pricing Model's estimated
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figures, such amount being referred to as the Base Compensation Rate,
provided that Chautauqua provides US Airways an invoice for each such
payment no later than [ * ] days prior to the due date of such payment, and
further provided that in the event US Airways does not receive an invoice
on a timely basis, it shall pay Chautauqua within [ * ] days after its
receipt of an invoice."
6. Section 7.1 of the Jet Service Agreement shall be deleted in its
entirety and the following substituted in lieu thereof:
"7.1 EFFECTIVE DATE AND TERM
This Agreement is effective as of March 19, 1999 and Services provided
hereunder will continue, without interruption, until March 1, 2012, unless
it is terminated on an earlier date pursuant to the provisions of this
Article 7 of the Agreement. US Airways will have the right to extend the
term of this Agreement by three (3) years upon twelve (12) month's
notice prior to the end of the initial term."
7. Section 5.1 of the Jet Service Agreement is amended as follows:
"Exhibit 5.1 of the Jet Service Agreement is hereby deleted in its entirety and
the revised Exhibit 5.1 attached hereto is substituted in lieu thereof. In the
event US Airways and Chautauqua agree to further increase the number of Aircraft
operated under the Jet Service Agreement, Exhibit 5.1 shall apply with respect
to such additional Aircraft."
8. A new Section 6.5 is added to the Jet Service Agreement as follows:
"US Airways shall have the right in its sole discretion to provide Aircraft Hull
and Liability Insurance at the levels specified in Section 6 of the Jet Service
Agreement and on terms otherwise reasonably acceptable to Chautauqua, its
lenders and aircraft lessors in lieu of paying Chautauqua the amounts specified
for such insurance on Exhibit 5.1, provided that US Airways provides Chautauqua
with 90 days prior written notice of its election to provide such insurance."
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9. Article 8 of the Jet Service Agreement is hereby deleted in
its entirety and the following is substituted in lieu thereof:
"ARTICLE 8 PERFORMANCE PLAN
SECTION 8.1 PERFORMANCE PLAN METRICS
Chautauqua's operating performance for the fleet of Aircraft in the Service
under this Agreement will be tracked by US Airways each day based upon the
following metrics:
FLEET LAUNCH: "Fleet Launch Percentage" is defined as the percent of
the Aircraft departing within [ * ] minutes of the scheduled departure
time on its first flight of the day, excluding delays and secondary delays
attributable to operational factors that are beyond the direct control of
Chautauqua (including, without limitation, weather, air traffic control,
ground stops, ground handling delays, or aircraft damage caused by US
Airways personnel or contractors, other than affiliates of Chautauqua, or
acts of God) under this Agreement.
ON TIME DEPARTURE PERCENTAGE: "On Time Departure Percentage" is defined
as the percentage of Aircraft departures completed within [ * ] minutes
of its scheduled departure time, excluding delays and secondary delays
attributable to operational factors that are beyond the direct control of
Chautauqua (including, without limitation, weather, air traffic control,
ground stops, ground handling delays, or aircraft damage caused by US
Airways personnel or contractors, other than affiliates of Chautauqua, or
acts of God) under this Agreement.
COMPLETION PERCENTAGE: "Completion Percentage" is defined as the
percentage of scheduled Aircraft departures completed, excluding
cancellations and secondary cancellations attributable to operational
factors that are beyond the direct control of Chautauqua (including,
without limitation, weather, air traffic control, ground stops, ground
handling delays, or aircraft damage caused by US
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Airways personnel or contractors, other than affiliates of Chautauqua, or
acts of God) under this Agreement.
Within sixty (60) days after the end of each calendar month during the term
of this Agreement, US Airways will compute the metrics defined above and
provide to Chautauqua a summary statement showing the operating performance
of Chautauqua.
SECTION 8.2 PERFORMANCE PLAN PENALTIES/INCENTIVES
(a) PERFORMANCE PENALTIES. If [ * ] or more of the following conditions
are met over any [ * ] period commencing with the period [ * ] and
continuing thereafter [ * ] , from [ * ] and from [ * ] of each [ * ] (a
"Performance Measurement Period"), then Chautauqua shall pay to US Airways
[ * ] each calendar month until cured (i.e., until [ * ] of the performance
metrics exceed the condition established below for such calendar month),
unless the reason for such failure to meet such condition qualifies as a
Performance Exception as defined in Section 8.3 below:
(i) Chautauqua's Fleet Launch Percentage is less than [ * ] (ii)
Chautauqua's On Time Departure Percentage is less than [ * ] (iii)
Chautauqua's Completion Percentage is less than [ * ]
(b) PERFORMANCE INCENTIVES. If [ * ] of the following conditions are
met over any Performance Measurement Period, then US Airways shall pay to
Chautauqua [ * ] for each calendar month in such Performance Measurement
Period for which [ * ] such metrics are met.
(i) Chautauqua's Fleet Launch Percentage is greater than [ * ] ;
(ii) Chautauqua's On Time Departure Percentage is greater than [ * ] ;
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(iii) Chautauqua's Completion Percentage is greater than [ * ] .
SECTION 8.3 PERFORMANCE EXCEPTIONS
A "Performance Exception" with respect to the a failure on the part of
Chautauqua to achieve the performance metrics of Fleet Launch Percentage,
On Time Departure Percentage and Completion Percentage as defined in
Section 8.2(a) or the Completion Percentage under Section 7.3(b) shall be
deemed to have occurred if any of the following conditions are met:
(a) A performance metric of the same or lesser magnitude (as measured on a
percentage basis) was experienced by US Airways and/or other air
carriers performing flying in the same or comparable (i.e.,
geographically similar) origin-destination points during the same time
period and flying a similar number of cycles per day;
(b) The failure to achieve the performance metric is directly attributable
to (i) a labor dispute, strike or slowdown, or (ii) the performance of
one or more specific aircraft within the Aircraft (including FAA
action) or one or more specific routes flown by the aircraft within
the Aircraft, and such performance is caused by aircraft scheduling
decisions made by US Airways or aircraft damage caused by US Airways
personnel performing, or third party personnel contracted by US
Airways to perform, ground support services related to this Agreement.
In the event of such specific aircraft or route issue, Chautauqua
shall promptly notify US Airways in writing of the issue and each
party shall promptly take steps to coordinate a commercially
reasonable cure for such issue. In the event US Airways receives
written notice of an issue within its control to correct, US Airways
will promptly provide written notice to Chautauqua of the date by
which such issue is expected to be cured and will adjust Chautauqua's
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affected performance metrics to the extent affected by such issue
during the period prior to such cure taking effect."
10. A new Section 5.9 is added to the Jet Service Agreement as follows:
"Notwithstanding any provision of the Jet Service Agreement to the contrary,
Chautauqua agrees that it shall waive any claim to payment of [ * ] (the
"Concession Amount") which has been previously invoiced to US Airways as partial
payment for services performed under the Jet Service Agreement during the period
October 1, 2001 through December 31, 2001, provided that in the event the Jet
Service Agreement is terminated for any reason other than by reason of
Chautauqua's breach of its obligations under the Jet Service Agreement,
including without limitation a termination under Section 7.2, 7.3 or 7.4 of the
Jet Service Agreement or a termination pursuant to Section 1(c), (d) or (e) of
the Fourth Amendment to this Agreement, Chautauqua shall have an allowed claim
against US Airways in such amount, which in the event a plan of reorganization
has not been confirmed in the case as of such date, shall be treated as a
general unsecured pre-petition claim against US Airways, in the full amount of
the Concession Amount."
11. The following shall be added as Section 5.10 of the Jet Service
Agreement:
"SECTION 5.10 TRUE-UP INVOICES
The parties agree that all true-up invoices for any month shall be
submitted no later than 120 days after the last day of such month."
12. Section 7.3(b) of the Jet Service Agreement is deleted in its entirety
and the following is substituted in lieu thereof:
"(b) If Chautauqua's Completion Percentage falls below the following
standard due to cancellations attributable to operational deficiencies that
are within the responsibility of Chautauqua under this Agreement, and
excluding cancellations caused by any Performance Exception:
[ * ] commencing no sooner than January 1, 2004.
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13. A new Section 5.11 is added to the Jet Service Agreement as follows:
"For each calendar month during the period from (i) the date that the Order
becomes a final order until (ii) the earlier of (A) the date that a plan is
confirmed in the Case or (B) the date that the Case is dismissed or converted to
a Case under Chapter 7 of the Bankruptcy Code (the "Credit Period"), Chautauqua
shall provide US Airways with a credit in arrears of [ * ] (the "Monthly
Credit"). The amount of the Monthly Credit shall be prorated for the first and
last months during the Credit Period. Each Monthly Credit may be used by US
Airways as a credit against any amounts subsequently payable to Chautauqua under
the terms of the Jet Service Agreement."
14. A new Section 5.12 is added to the Jet Service Agreement as follows:
"Chautauqua agrees that it will use its commercially reasonable efforts to
facilitate the handling of code-share passengers and the processing of alliance
partner frequent flyer miles pursuant to domestic and international code-share
alliance relationships entered into by US Airways."
15. A new Section 5.13 is added to the Jet Service Agreement as follows:
"Chautauqua acknowledges that the placement of Aircraft 27 - 35 into the
Service under this Agreement is subject to compliance with the US Airways ALPA
"jets for jobs" protocol as ratified August 8, 2002 and amended December 13,
2002."
16. Except as specifically amended hereby, the Jet Service Agreement
remains unchanged in all other respects. Upon its effectiveness as
provided in Section 1 above, this Amendment, together with the Jet
Service Agreement, will be the complete and binding understanding of
the parties with respect to the matters addressed herein.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized representatives as of the day and year first above
written.
US AIRWAYS, INC. CHAUTAUQUA AIRLINES, INC.
/s/ N. Xxxxx Xxxxx /s/ Xxxxx X. Xxxxxxx
------------------------------- -----------------------------
By: N. Xxxxx Xxxxx By: Xxxxx X. Xxxxxxx
Title: Senior Vice President Title: President
Corporate Development
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EXHIBIT 2.1 IMPLEMENTATION SCHEDULE OF AIRCRAFT DEPLOYMENT
NUMBER OF CUMULATIVE NUMBER OF
DATE AIRCRAFT AIRCRAFT
---- --------- --------------------
Dec 2002 [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
Nov 2003 [ * ] 35
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EXHIBIT 2.1(a)-SCHEDULE REQUIREMENTS
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The weekly scheduled for the Aircraft specified by US Airways must meet the
following minimum and maximum schedule parameters.
MINIMUM MAXIMUM
------- -------
Scheduled Block Hours per Aircraft per Day [ * ] [ * ]
Scheduled Departures per Aircraft per Day [ * ] [ * ]
Available Seat Miles per Aircraft per Day [ * ] [ * ]
Note: the above minimum and maximum schedule parameters apply only to
those Aircraft scheduled in revenue service, not to spare aircraft.
US Airways will meet the following criteria in devising the schedule:
1. Aircraft Turn Times
For operations at US Airways designated hubs (for purposes of this
Agreement only, Pittsburgh, Boston, Washington-National, New York
XxXxxxxxx, Xxxxxxxxx, Philadelphia, and Dulles and any other hubs that US
Airways may establish) the minimum turn time (defined as the time from
Aircraft blocking to Aircraft unblocking) will be thirty (30) minutes. For
operations at a non US Airways hub, the minimum turn time will be
twenty-five (25) minutes.
2. Aircraft Maintenance Requirements
Once Chautauqua operates a minimum of [ * ] Aircraft, [ * ] Aircraft will
be scheduled for a minimum of [ * ] hours of overnight maintenance per
Aircraft for [ * ] days per week.
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3. IND and CMH Operations
US Airways will provide at all times during the term of this Agreement a
schedule of regional jet departures, including frequencies and overnight
turnarounds, that operate on behalf of US Airways from Columbus, Ohio (CMH)
and Indianapolis, Indiana (IND) to all other US Airways service points
sufficient to support required maintenance activity for the Aircraft at
Chautauqua's primary maintenance bases in CMH and IND.
4. Maintenance Bases
The schedule will allow for the establishment by Chautauqua of primary
maintenance bases in IND and CMH.
5. Crew Overnights
The schedule will allow for single overnights of crews in outstations and
will not require Chautauqua to schedule any continuous duty overnights. Any
additional costs associated with continuous duty overnights or high-speed
overnights shall be for the account of US Airways and shall be invoiced
separately by Chautauqua as a pass through cost.
5. Crew Bases
The schedule shall allow for the operation by Chautauqua of the following
crew bases: [ * ] .
7. Hub Arrivals/Departures
At least [ * ] of the scheduled flights will arrive at or depart from a hub
or from IND or CMH.
8. Consent to Schedule Changes
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To the extent that US Airways' schedule falls outside of the criteria set
forth herein, US Airways shall request Chautauqua to consent to such
schedule and Chautauqua shall not unreasonably withhold such consent,
provided that the schedule being requested will not impose additional costs
upon Chautauqua and/or make Chautauqua's compliance with its performance
requirements more difficult, further provided that US Airways shall have
the right to reimburse Chautauqua for such additional costs and/or adjust
the performance criteria so that the immediately preceding proviso shall no
longer be applicable to the schedule request in question.
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EXHIBIT 5.1
[ * ]
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