EXHIBIT 10.13(c)
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION IN A CONFIDENTIAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL "[***]" IN THIS EXHIBIT
INDICATES THAT INFORMATION HAS BEEN OMITTED.
February 1, 2003
Xxxx Xxxxxx
Chief Executive Officer
FRONTIER AIRLINES, INC.
Frontier Center One
0000 Xxxxx Xxxx
Xxxxxx, XX 00000- 7312
Re: Letter Agreement No.1
Mesa Air Group, Inc./Frontier Airlines, Inc.
Regional Jet Code Share Agreement
Dear Xxxx:
The following Letter Agreement No. 1 ("Letter Agreement") modifies and amends terms
and conditions pursuant to which Mesa Air Group, Inc. ("Mesa") operates aircraft in
service for Frontier Airlines, Inc. ("Frontier") under that certain Code Share
Agreement dated September 4, 2001, as amended (the "Code Share Agreement") between the
parties.
This Letter Agreement, when agreed and executed by Mesa and Frontier, will evidence
our further agreement with respect to the matters set forth below.
Should there be any inconsistency between this Letter Agreement and the Code Share
Agreement with respect to the subject matter covered by the terms hereof, then this
Letter Agreement shall prevail.
The parties intend to transition from a prorate-based compensation method to a
"revenue guarantee" compensation method. The parties expressly recognize that certain
provisions contained in the Code Share Agreement are no longer applicable in light of
this new methodology, and that the Code Share Agreement shall be reasonably construed
in light of the new payment calculations and party responsibilities as defined herein.
The parties expressly adopt the following: Article 16 -Indemnification; Article 17
-Insurance; 18.1 Taxes; Article 19 -Force Majeure; all other provisions shall be
reasonably construed in light of this Letter Agreement.
Mesa and Frontier may execute this Letter Agreement in counterparts, including by
facsimile transmission, each of which will constitute one and the same document.
All terms not defined herein shall have the same meanings as those set forth in the
Code Share Agreement.
Number and
Type of Aircraft Four (4) CRJ-200 (the "Aircraft") currently operating under
the Code Share Agreement, dated as of September 4, 2001, as
amended.
Aircraft Utilization Aircraft shall be scheduled, taking into account heavy
scheduled maintenance requirements.
Term This Letter Agreement will continue in effect until August
1, 2003 unless, at least sixty (60) days prior to August 1,
2003, the parties enter into a mutually acceptable amendment.
Compensation (1) Fixed and Variable Costs. Frontier shall pay Mesa the
fixed and variable costs set forth in Exhibit A.
(2) Pass-though Costs. Frontier shall reimburse Mesa's
expenses for the pass-though costs listed on Exhibit A.
(3) Profit. A base profit margin of [***] percent shall be
paid on all such fixed, variable and pass-through costs (the
"Base Profit").
Payments (1) Frontier shall pay Mesa monthly, in advance, the
estimated amount of the fixed and variable costs, Base
Profit and pass-through costs based on the pro rata monthly
share of fixed costs together with Mesa's good faith
estimate of variable costs based on Frontier's scheduled
block hours and departures for such month (the "Estimated
Payment").
(2) Within ninety (90) days of the end of each month,
Frontier and Mesa shall adjust the Estimated Payment to
account for actual block hours flown and actual pass-though
costs (the "Adjusted Payment").
Mesa Responsibilities Mesa will at all times have operational control of the
Aircraft. Mesa will comply with all laws applicable to Mesa
as a U.S. air carrier, including, specifically, DOT and FAA
regulations. Mesa will provide all flight crews and
associated training. Mesa will be responsible for the
maintenance of the aircraft. Mesa will be responsible for
ground handling and station functions as agreed to by the
parties. Mesa will keep all books and records reasonably
necessary for accounting of the Code Share Agreement.
Frontier
Responsibilities Frontier will be responsible for scheduling, reservations,
marketing, ticketing and all matters related to customer
handling and customer service, including all DOT required
consumer and holding out responsibilities (except those
station customer handling functions specifically already
performed by Mesa) and Frontier will perform the ground,
baggage and ramp handling services at all other locations.
All schedules under this Letter Agreement shall be
consistent with prior Mesa schedules and industry practices.
Frontier shall provide Mesa with sixty (60) days advance
notice of any schedule changes.
Independent Contractor Mesa is and will act as an independent contractor for all
purposes under the Code Share Agreement and is not an agent
of Frontier. Frontier shall have no supervisory power or
control over the employees, agent of independent contractors
of Mesa.
Assignment None of the rights or obligations established by the Code
Share Agreement may be assigned in whole or in part without
the prior written consent of the other party; provided
however, that either party may assign its rights and
obligations to a wholly owned subsidiary or a successor
company though merger, asset sale, reorganization in
bankruptcy, or other operation of law.
Termination
for Default A) Mesa may terminate the Code Share Agreement immediately
if: (1) Frontier shall fail to make any payment when due;
(2) Frontier shall cease operating as an airline or have its
air carrier certificate(s) revoked, (3) Frontier shall fail
to perform any other obligation under the Code Share
Agreement which shall continue for thirty days after written
notice thereof by Mesa, or (4) in the event of (i) the
voluntary dissolution or liquidation of Frontier or (ii)
Frontier shall become insolvent, or (iii) Frontier shall
make an assignment for the benefit of creditors, (iv)
Frontier shall consent to the appointment of a trustee or
receiver for all or a substantial portion of its business,
or (v) the institution by or against Frontier of bankruptcy
reorganization or insolvency proceedings, and, with respect
to any involuntary case, shall not be dismissed, bonded or
discharged within sixty (60) days.
B) Frontier may terminate the Code Share Agreement
immediately if: (1) Mesa shall fail to maintain the required
insurances, (2) Mesa shall cease operating as an airline or
have its air carrier certificate(s) revoked, (3) Mesa shall
fail to perform any other obligation under the Code Share
Agreement which shall continue for thirty days after written
notice thereof by Frontier, or (4) in the event of (i) the
voluntary dissolution or liquidation of Mesa or (ii) Mesa
shall become insolvent, (iii) Mesa shall make an assignment
for the benefit of creditors, (iv) Mesa shall consent to the
appointment of a trustee or receiver for all or a
substantial portion of its business, or (v) the institution
by or against Mesa of bankruptcy reorganization or
insolvency proceedings, and, with respect to any involuntary
case, shall not be dismissed, bonded or discharged within
sixty (60) days.
If the foregoing terms are acceptable to Frontier, please have a designated
representative execute this letter in the space provided below.
MESA AIR GROUP, INC. FRONTIER AIRLINES, INC.
/s/ /s/
By: Xxxxxxx Xxxx By: Xxxx Xxxxxx
Title: President Title: Chief Executive Officer
EXHIBIT A
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