American Trans Air, Inc.
0000 Xxxx Xxxxxxxxxx Xx.
Xxxxxxxxxxxx Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Subject: Spares Initial Provisioning
Reference: Purchase Agreement 2262 (the Purchase Agreement) between The
Boeing Company (Boeing) and American Trans Air, Inc. (Customer) relating to
Model 737-83N aircraft (the Aircraft)
This Letter Agreement is entered into on the date below, and amends and
supplements the Purchase Agreement. All terms used but not defined in this
Letter Agreement have the same meaning as in the Purchase Agreement.
1. Applicability.
-------------
This letter will apply to initial provisioning for the Model
737-83N Aircraft purchased by Customer under the Purchase Agreement.
2. Initial Provisioning Meeting.
----------------------------
Boeing will conduct an initial provisioning meeting (Initial
Provisioning Meeting) with Customer to establish mutually agreeable procedures
to accomplish Customer's initial provisioning of spare parts for the Aircraft.
The parties will agree, during the Initial Provisioning Meeting on the
operational data to be provided by Customer for Boeing's use in preparing its
quantity recommendations for initial provisioning of spare parts for the
Aircraft, exclusive of special tools, ground support equipment, engines and
engine parts (Provisioning Items). Such operational data to be provided by
Customer will be the data described in Chapter 6 of Boeing Manual D6-81834,
entitled "Spares Provisioning Products Guide" (Boeing Spares Provisioning
Products Guide) which will be furnished to Customer prior to the Initial
Provisioning Meeting. The parties will also agree on the provisioning
documentation to be provided by Boeing as described in Boeing Spares
Provisioning Products Guide (such data will be hereinafter referred to
collectively as the "Provisioning Data"). Boeing will provide instruction in the
use of the initial provisioning documentation. This instruction will be provided
in conjunction with the Initial Provisioning Meeting. In addition, the parties
will discuss spares ordering procedures and other matters related to the
provisioning for the Aircraft. The time and location for such Initial
Provisioning Meeting will be mutually agreed upon between the parties; however,
Boeing and Customer will use their best efforts to convene such meeting within
30 days after execution of the Purchase Agreement.
3. Initial Provisioning Documentation.
----------------------------------
3.1 Provisioning Data. Boeing will furnish Provisioning Data to
Customer on or about August 25, 2000. The Provisioning Data will be as complete
as possible and will cover Provisioning Items selected by Boeing for review by
Customer for initial provisioning for the Aircraft. The Provisioning Data will
set forth the prices for Provisioning Items which are Boeing Spare Parts and
such prices will be firm and remain in effect until the date or dates set forth
below in Paragraph 4.1, Boeing Spare Parts, by which orders must be placed with
Boeing. Boeing will, from time to time, until a date approximately 90 days
following delivery of the last Aircraft or until the delivery configuration of
each of the Aircraft is reflected in the Provisioning Data, whichever is later,
furnish to Customer revisions to the Provisioning Data.
3.2 Provisioning IPC. Boeing will, on or about August 18, 2000,
furnish to Customer a Boeing Illustrated Parts Catalog (IPC), hereinafter
referred to as the "Provisioning IPC". The Provisioning IPC will be as complete
as possible and will cover Provisioning Items selected by Boeing for review by
Customer for initial provisioning for the Aircraft. Boeing will, from time to
time, until a date approximately 90 days following delivery of the last
Aircraft, or until the delivery configuration of each of the Aircraft is
reflected in the Provisioning IPC, whichever is later, furnish to Customer
revisions to the Provisioning IPC.
3.3 Buyer Furnished Equipment (BFE) Provisioning Data.
-------------------------------------------------
3.3.1 Boeing's Responsibility. Boeing will include BFE end items in the
Provisioning Data and Provisioning IPC for BFE installed on Customer's Aircraft
provided such equipment has been installed on other Aircraft by Boeing and
Boeing has data on the BFE.
3.3.2 Customer's Responsibility. Customer will be responsible for ensuring
BFE data is provided to Boeing by the BFE supplier in a format acceptable to
Boeing for BFE not covered by 3.3.1 above. If the data is not provided to Boeing
in a timely manner and in a format acceptable to Boeing, such BFE equipment will
not be included in Boeing's Provisioning Data or IPC.
3.4 Other Data. Boeing will submit to Customer listings of Raw
Materials,Standard Parts and Bulk Materials to be used by Customer in the
maintenance and repair of the Aircraft.
4. Purchase from Boeing of Spare Parts as Initial Provisioning for the
Aircraft.
4.1 Boeing Spare Parts. Customer will place orders for Provisioning Items
by November 17, 2000; provided, however, that in those instances where Boeing
submits any revision to the Provisioning Data, Customer will place orders for
Boeing Spare Parts covered by such revision within 60 days following the date of
such submittal. At Customer's request, Boeing will process "controlled
shipments" by shipping full or partial quantities of an order on a schedule
specified by Customer, provided the final shipment is made no later than 24
months after receipt of the order.
4.2 Supplier Provisioning Items. Customer may place orders with Boeing for
Provisioning Items which are manufactured by suppliers or to their detailed
design and are covered by the Provisioning Data as initial provisioning for the
Aircraft. The price to Customer for any such supplier Provisioning Item will be
112% of the supplier's quoted price to Boeing therefor. If Customer elects to
purchase such supplier Provisioning Items from Boeing, Customer will place its
orders therefor in accordance with the provisions of Paragraph 4.1, Boeing Spare
Parts.
4.3 Ground Support Equipment and Special Tools. Customer may place orders
with Boeing for ground support equipment (GSE) and special tools manufactured by
suppliers which Customer determines it will initially require for maintenance,
overhaul and servicing of the Aircraft and/or engines. The price to Customer for
such GSE or special tools will be one hundred twelve percent (112%) of the
supplier's quoted price to Boeing therefor. If Customer elects to purchase such
GSE and special tools from Boeing, Customer will place its orders therefor by
the date set forth in Paragraph 4.1, Boeing Spare Parts or such later date as
the parties may mutually agree.
4.4 Spare Engines and Engine Spare Parts. Customer may place orders with
Boeing for spare engines and/or engine spare parts which Customer determines it
will initially require for support of the Aircraft or for maintenance and
overhaul of the engines. The price to Customer for such spare engines or such
engine spare parts, will be 105% of the engine manufacturer's quoted price to
Boeing for the engine, and 112% of the engine manufacturer's quoted price to
Boeing for the engine spare parts. If Customer elects to purchase such spare
engines or engine spare parts through Boeing, Customer will place its orders on
a date to be mutually agreed upon during the Initial Provisioning Meeting.
4.5 QEC Kits. Boeing will, on or about June 30, 2000, furnish to Customer a
listing of all components which could be included in the Quick Engine Change
(QEC) kits which may be purchased by Customer from Boeing. Customer agrees to
review such listing and indicate by marking on one copy of such listing those
components that Customer desires included in its QEC kits. Customer will return
such marked copy to Boeing within 30 days after Customer's receipt of such
listing. Within 30 days after Boeing's receipt of such marked copy, Boeing will
republish such listing to reflect only those components selected by Customer and
will provide copies of such republished listing to Customer. Boeing will from
time to time furnish revisions to such republished listing until a date
approximately 90 days after delivery of the last QEC kit ordered by Customer for
the Aircraft. Boeing will furnish to Customer as soon as practicable a statement
setting forth a firm price for the QEC kit configuration selected by Customer.
Customer agrees to place orders with Boeing for the QEC kits for the Aircraft by
August 25, 2000.
4.6 Payment for Provisioning Items. The payment provisions of the Customer
Services General Terms Agreement (CSGTA) between Boeing and Customer will be
applicable to Provisioning Items ordered by Customer from Boeing for the
Aircraft.
5. Delivery.
--------
Boeing will, insofar as reasonably possible, deliver to Customer
the Spare Parts ordered by Customer in accordance with the provisions of this
letter on dates reasonably calculated to conform to Customer's anticipated needs
in view of the scheduled deliveries of the Aircraft. Customer and Boeing will
agree upon the date to begin delivery of the Provisioning Spare Parts ordered in
accordance with this letter. Where appropriate, Boeing will arrange for shipment
of such Spare Parts, which are manufactured by suppliers, directly to Customer
from the applicable supplier's facility. The routing and method of shipment for
initial deliveries and all subsequent deliveries of such Spare Parts will be as
mutually agreed between Boeing and Customer.
6. Substitution for Obsolete Spare Parts.
-------------------------------------
6.1 Obligation to Substitute. In the event that, prior to delivery
of the first Aircraft pursuant to the Purchase Agreement, any Spare Part
purchased by Customer from Boeing in accordance with this letter is rendered
obsolete or unusable due to the redesign of the Aircraft or of any accessory,
equipment or part therefor, (other than a redesign at Customer's request),
Boeing will deliver to Customer new and usable Spare Parts in substitution for
such obsolete or unusable Spare Parts and Customer will return the obsolete or
unusable Spare Parts to Boeing. Boeing will credit Customer's account with
Boeing with the price paid by Customer for any such obsolete or unusable Spare
Part and will invoice Customer for the purchase price of any such substitute
Spare Part delivered to Customer.
6.2 Delivery of Obsolete Spare Parts and Substitutes Therefor.
Obsolete or unusable Spare Parts returned by Customer pursuant to this Item will
be delivered to Boeing at its Seattle Distribution Center, or such other
destination as Boeing may reasonably designate. Spare Parts substituted for such
returned obsolete or unusable Spare Parts will be delivered to Customer at
Boeing's Seattle Distribution Center, or such other Boeing shipping point as
Boeing may reasonably designate. Boeing will pay the freight charges for the
shipment from Customer to Boeing of any such obsolete or unusable Spare Part and
for the shipment from Boeing to Customer of any such substitute Spare Part.
7. Repurchase of Provisioning Items.
--------------------------------
7.1 Obligation to Repurchase. During a period commencing 1 year
after delivery of the first Aircraft under the Purchase Agreement, and ending 5
years after such delivery, Boeing will, upon receipt of Customer's written
request and subject to the exceptions in Paragraph 7.2, Exceptions, repurchase
unused and undamaged Provisioning Items which (i) were recommended by Boeing in
the Provisioning Data as initial provisioning for the Aircraft, (ii) were
purchased by Customer from Boeing, and (iii) are surplus to Customer's needs.
7.2 Exceptions. Boeing will not be obligated under Paragraph 7.1,
Obligation to Repurchase, to repurchase any of the following: (i) quantities of
Provisioning Items in excess of those quantities recommended by Boeing in the
Provisioning Data for the Aircraft, (ii) QEC Kits, Bulk Material Kits, Raw
Material Kits, Service Bulletin Kits, Standards Kits and components thereof
(except those components listed separately in the Provisioning Data), (iii)
Provisioning Items for which an order was received by Boeing more than 5 months
after delivery of the last Aircraft, (iv) Provisioning Items which have become
obsolete or have been replaced by other Provisioning Items as a result of (a)
Customer's modification of the Aircraft or (b) design improvements by Boeing or
the supplier (other than Provisioning Items which have become obsolete because
of a defect in design if such defect has not been remedied by an offer by Boeing
or the supplier to provide no charge retrofit kits or replacement parts which
correct such defect), and (v) Provisioning Items which become excess as a result
of a change in Customer's operating parameters, provided to Boeing pursuant to
the Initial Provisioning meeting in Paragraph 2, which were the basis of
Boeing's initial provisioning recommendations for the Aircraft.
7.3 Notification and Format. Customer will notify Boeing, in
writing, when Customer desires to return Provisioning Items which Customer's
review indicates are eligible for repurchase by Boeing under the provisions of
this Repurchase of Provisioning Items paragraph. Customer's notification will
include a detailed summary, in part number sequence, of the Provisioning Items
Customer desires to return. Such summary will be in the form of listings, tapes,
diskettes or other media as may be mutually agreed between Boeing and Customer,
and will include part number, nomenclature, purchase order number, purchase
order date and quantity to be returned. Within 5 business days after receipt of
Customer's notification, Boeing will advise Customer, in writing, when Boeing's
review of such summary will be completed.
7.4 Review and Acceptance by Boeing. Upon completion of Boeing's
review of any detailed summary submitted by Customer pursuant to Paragraph 7.3,
Boeing will issue to Customer a Material Return Authorization (MRA) for those
Provisioning Items Boeing agrees are eligible for repurchase in accordance with
this Repurchase of Provisioning Items paragraph. Boeing will advise Customer of
the reason that any spare part included in Customer's detailed summary is not
eligible for return. Boeing's MRA will state the date by which Provisioning
Items listed in the MRA must be redelivered to Boeing and Customer will arrange
for shipment of such Provisioning Items accordingly.
7.5 Price and Payment. The price of each Provisioning Item
repurchased by Boeing pursuant to this Repurchase of Provisioning Items
paragraph will be an amount equal to 100% of the original invoice price thereof.
In the case of Provisioning Items manufactured by a supplier which were
purchased pursuant to Paragraph 4, Purchase from Boeing of Spare Parts as
Initial Provisioning for the Aircraft, hereof the repurchase price will not
include Boeing's 12% handling charge. Boeing will pay the repurchase price by
issuing a credit memorandum in favor of Customer which may be applied against
amounts due Boeing for the purchase of aircraft, Spare Parts, services or data.
7.6 Delivery of Provisioning Items. Provisioning Items repurchased
by Boeing pursuant to this Repurchase of Provisioning Items paragraph will be
delivered to Boeing F.O.B. at its Seattle Distribution Center, or such other
destination as Boeing may reasonably designate. Customer will pay the freight
charges for the shipment from Customer to Boeing of any such Provisioning Items.
8. Obsolete Spare Parts and Surplus Provisioning Items - Title and Risk of
Loss.
Title to and risk of loss of any obsolete or unusable Spare Parts
returned to Boeing pursuant to Paragraph 6, Substitution for Obsolete Spare
Parts, will pass to Boeing upon delivery thereof to Boeing. Title to and risk of
loss of any Spare Part substituted for an obsolete or unusable Spare Part
pursuant to Paragraph 6, Substitution for Obsolete Spare Parts, will pass to
Customer upon delivery thereof to Customer. Title to and risk of loss of any
Provisioning Item repurchased by Boeing pursuant to Paragraph 7, Repurchase of
Provisioning Items, will pass to Boeing upon delivery thereof to Boeing. With
respect to the obsolete or unusable Spare Parts which may be returned to Boeing
and the Spare Parts substituted therefor, pursuant to Paragraph 6, and the
Provisioning Items which may be repurchased by Boeing, pursuant to Paragraph 7,
the party which has risk of loss of any such Spare Part or Provisioning Item
will have the responsibility of providing any insurance coverage for it desired
by such party.
9. Supplier Support.
----------------
Boeing has entered, or anticipates entering, into product support
agreements with suppliers (Boeing Suppliers) of major system components
manufactured by such Suppliers to be installed on the Aircraft (Supplier
Components). Such product support agreements commit, or are expected to commit,
the Boeing Suppliers to provide to Boeing's customers and/or such customer's
designees support services with respect to the Supplier Components which can be
reasonably expected to be required during the course of normal operation. This
support includes but is not limited to shelf-stock of certain spare parts,
emergency spare parts, timely delivery of spare parts, and technical data
related to the Supplier Components. Copies of such product support agreements
will be provided to Customer on or about September 22, 2000, in Boeing Document
D6-56115, Volumes 1 and 2. In the event Customer has used due diligence in
attempting to resolve any difficulty arising in normal business transactions
between Customer and a Boeing Supplier with respect to product support for a
Supplier Component manufactured by such Supplier and if such difficulty remains
unresolved, Boeing will, if requested by Customer, assist Customer in resolving
such difficulty. Assistance will be provided by the Customer Supplier Services
organization.
10. Termination for Excusable Delay.
-------------------------------
In the event of termination of the Purchase Agreement with respect
to any Aircraft pursuant to Article 7 of the AGTA, such termination will, if
Customer so requests by written notice received by Boeing within 15 days after
such termination, also discharge and terminate all obligations and liabilities
of the parties as to any Spare Parts which Customer had ordered pursuant to the
provisions of this letter as initial provisioning for such Aircraft and which
are undelivered on the date Boeing receives such written notice.
Very truly yours,
THE BOEING COMPANY
By
------------------------------------------
Its Attorney-In-Fact
--------------------------------------
ACCEPTED AND AGREED TO this
Date: , 2000
-------------------------------
AMERICAN TRANS AIR, INC.
By
------------------------------------------
Its
------------------------------------------
