Exhibit 10.1
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTION 200.80(B)(4),
200.83 AND 240.24b-2
CODE SHARE AND REVENUE SHARING AGREEMENT
This CODE SHARE AND REVENUE SHARING AGREEMENT (the "Agreement") is made
and entered into as of March 20, 2001, to be effective retroactive to February
1, 2001 (the "Contract Date"), by and between AMERICA WEST AIRLINES, INC., a
Delaware corporation ("AWA"), and MESA AIRLINES, INC., a Nevada corporation
("Mesa").
R E C I T A L S
A. AWA holds a certificate of public convenience and necessity issued
by the Department of Transportation ("DOT") authorizing AWA to engage in the
interstate and overseas air transportation of persons, property and mail between
all points in the United States, its territories and possessions.
B. Mesa holds a certificate of public convenience and necessity issued
by the DOT authorizing Mesa to engage in the interstate transportation of
persons, property and mail in the United States, its territories and
possessions.
C. AWA owns various trademarks, service marks and logos, including
"America West Airlines," "America West Express," and distinctive exterior color
decor and patterns on its aircraft, hereinafter referred to individually and
collectively as the "AWA Service Marks."
D. AWA and Mesa entered into that certain Code Share and Revenue
Sharing Agreement, dated July 15, 1998, as amended by those certain First and
Second Amendments to Code Share and Revenue Sharing Agreement, dated January 4,
2000 and May 10, 2000, respectively (the "Original Agreement"), in order to
provide scheduled air transportation services as America West Express and to
share in revenue and costs of such services.
E. AWA and Mesa desire to terminate the Original Agreement and replace
the Original Agreement, in its entirety, with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the promises, covenants,
representations and warranties hereinafter set forth, and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, AWA
and Mesa agree as set forth below.
A G R E E M E N T
1. Effectiveness. This Agreement replaces the Original Agreement effective upon
the date (the "Effective Date") that Mesa executes a binding agreement to
acquire the CRJ Aircraft required to be provided by Mesa pursuant to Section
2.2.2 of this Agreement (the "Aircraft Contract"). Mesa shall provide AWA with
written notice of the date the Aircraft Contract is executed together with
copies of the Aircraft Contract. On the date of execution of the Aircraft
Contract, all of the terms and provisions of this Agreement shall be effective
retroactive to the Contract Date. On the Effective Date, the Original Agreement
shall be terminated in its entirety. All
sums payable pursuant to Section 6 of the Original Agreement between the
Contract Date and Effective Date shall be recalculated pursuant to the terms of
Section 7 of this Agreement, and AWA, subject to the rights regarding disputed
amounts contained in Section 7.8, shall pay additional and undisputed sums
payable within 30 days after receipt of a written invoice for such
recalculation. Until the Effective Date, AWA and Mesa shall continue to perform
pursuant to the Original Agreement. If the Aircraft Contract is not executed by
May 1, 2001, then this Agreement shall automatically terminate and the terms and
conditions of the Original Agreement shall remain in full force and effect.
Simultaneously with the execution of this Agreement, AWA and Mesa shall enter
into an amendment to the Original Agreement providing for the addition of 3 CRJs
under the Original Agreement if this Agreement is terminated pursuant to this
Section.
As of the Contract Date, AWA and Mesa dispute certain amounts that are payable
between AWA and Mesa under the Original Agreement (the "Disputed Amounts"). Mesa
and AWA shall continue to work to resolve their respective obligations
concerning the Disputed Amounts pursuant to the terms of the Original Agreement.
This is a new and separate agreement from the Original Agreement. The terms of
this Agreement shall not be used by either Mesa or AWA to determine or interpret
the respective payment obligations of the parties for the Disputed Amounts. The
respective obligations for the Disputed Amounts and other matters and disputes
arising under the Original Agreement prior to the Contract Date shall be
resolved pursuant to the terms, covenants, rights and remedies of the Original
Agreement, shall not affect the rights, duties and obligations of AWA or Mesa
under this Agreement and shall not permit AWA or Mesa to exercise any remedies
under this Agreement. The intent of AWA and Mesa is to resolve any disputes
concerning the Disputed Amounts or any other matters and disputes under the
Original Agreement under the Original Agreement and not pursuant to this
Agreement.
2. Rights, Responsibilities and Obligations of Mesa:
2.1 Flight Service. During the term of this Agreement, Mesa shall
operate America West Express air transportation services (the
"Flight Services"), using the Fleet of Aircraft established
pursuant to Section 2.2, to and from the cities and based upon
the schedule established from time to time by AWA (the
"Schedule") in written notice to Mesa (a "Schedule Notice").
For purposes of this Agreement, "Flights" means flights
operated pursuant to the Schedule. AWA may change the Schedule
by issuance of a Schedule Notice at any time. When creating a
Schedule, AWA shall: (i) take into account Mesa's aircraft
maintenance requirements; (ii) create a Schedule which will
permit Mesa to schedule flight crews in a manner consistent
with industry operational practices; (iii) schedule block
times based on AWA's internal block time policy; (iv) provide
for the following turn times: (a) in a hub location: 20
minutes for Beech 1900s and Dash 8s and 25 minutes for CRJs;
and (b) in other stations: 10 minutes for Beech 1900s, 15
minutes for Dash 8s and 20 minutes for CRJs; (v) take into
account airport facilities available for Aircraft handling;
(vi) provide for maintenance as required by Section 2.6.3 and
scheduled heavy maintenance on Aircraft as required from time
to time; and (vii) provide for at least 45 days prior notice
of any holiday cancellations. Mesa shall implement all changes
in the Schedule contained in a Schedule Notice in accordance
with
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AWA's scheduling requirements within 60 days after receipt of
a Schedule Notice. Mesa or any of its affiliates shall not
provide any flight service for any other airline for flights
that originate in or end in Phoenix, Arizona.
So long as Air Midwest ("AM") is a wholly-owned subsidiary of
Mesa Air Group, Inc., Mesa may subcontract with AM for the
performance of those Flight Services, Other Services (as
hereinafter defined), and other related obligations under this
Agreement, which are to be performed by Mesa using the Beech
1900s (the "AM Services"). Mesa has delivered to AWA an
assumption agreement pursuant to which AM agrees to perform
all the duties and obligations of Mesa under this Agreement
relating to the AM Services and to be bound by all of the
liabilities, obligations, and duties of Mesa under this
Agreement applicable to the AM Services, including, without
limitation, the providing of flights, maintenance of aircraft,
compliance with laws, maintenance of insurance and
indemnification of AWA (the "Assumption Agreement"). AWA shall
have no duty, obligation or liability to AM under this
Agreement. All payments for the use and operation of the Beech
1900 Subfleet to be made by AWA under this Agreement shall be
paid to Mesa. Mesa shall pay all sums payable to AM for the
operation of the Beech 1900 Subfleet pursuant to a separate
agreement between AM and Mesa to which AWA is not a party.
Notwithstanding the foregoing, Mesa shall not be released,
discharged, or relieved from any duties, liabilities or
obligations set forth in this Agreement, including those
arising from the AM Services performed by AM. AM shall be
deemed a subcontractor of Mesa, and Mesa shall cause AM's
performance of the AM Services to comply with all relevant
terms and conditions of this Agreement. If either: (i) AM
ceases to be a wholly-owned subsidiary of Mesa Air Group,
Inc.; or (ii) AM fails to comply with the terms and conditions
of this Agreement as required by the Assumption Agreement,
then Mesa, within thirty (30) days after receipt of written
notice from AWA, shall terminate the subcontractor
relationship with AM, acquire the Beech 1900 Subfleet and
perform the duties and obligations applicable to the Beech
1900 Subfleet pursuant to this Agreement.
Mesa, with the prior written consent of AWA, which consent
shall not be unreasonably withheld, delayed or conditioned,
may subcontract with a wholly-owned subsidiary of Mesa Air
Group, Inc. for the performance of certain Flight Services,
Other Services and other related obligations under this
Agreement, which are to be performed by Mesa using certain
Aircraft on terms and conditions similar to the terms and
conditions applicable to the subcontracting of the AM Services
(the "Subcontracting of Services"). If AWA consents to the
Subcontracting of Services, then AWA and Mesa shall execute an
amendment to this Agreement permitting the Subcontracting of
Services and setting forth the terms and conditions pursuant
to which the Subcontracting of Services may occur (the
"Subcontracting Amendment"). The Subcontracting of Services
shall not occur until the Subcontracting Amendment and any
documents required from the wholly-owned subsidiary have been
executed by Mesa and the affiliate and delivered by AWA.
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AM and any other affiliate to which services are subcontracted
under this Agreement are referred to as the "Affiliated
Service Providers."
2.2 Fleet.
2.2.1 Initial Fleet. As of the Contract Date, Mesa and AM
provide the Flight Services using the following
aircraft (collectively, the "Fleet"; with respect to
any one aircraft type, the "Subfleet"; and
individually, the "Aircraft"):
Number Aircraft Type ("Subfleet")
------ --------------------------
12 deHavilland DHC-8-200 ("Dash 8")
0 Xxxxxx-Xxxxx 0000 ("Xxxxx 1900")
22 Canadair Regional Jet-50 ("CRJ")
2.2.2 CRJ Fleet Expansion. Pursuant to the Aircraft
Contract, Mesa shall have the right to acquire an
additional 83 CRJ Aircraft, 43 by virtue of firm
orders (the "Firm Aircraft") and 40 by virtue of
options (the "Option Aircraft"), in the
configuration, with the seating capacity and at the
times set forth on Exhibit A, attached hereto. The
Firm Aircraft and Option Aircraft will consist of CRJ
Models 200s, 700s and 900s as set forth in Exhibit A.
For purposes of this Agreement, the CRJ Model 200s
shall be a "CRJ Subfleet" and the CRJ Model 700s and
900s shall be a "CRJ Subfleet".
(a) Each of the Firm Aircraft shall be placed
into Flight Services by Mesa in the calendar
months set forth on Exhibit A (the "Delivery
Schedule"). The Firm Aircraft to be
delivered in each of the calendar months
from and including October, 2003 to and
including June, 2004 may be either CRJ Model
700s or 900s (the "Convertible Firm
Aircraft"). AWA, by written notice to Mesa,
given on or before the last day of the 18th
calendar month prior to the delivery of each
Convertible Firm Aircraft, shall advise Mesa
as to which model is to be added to the
Fleet (the "Firm Selection Notice"). For
example, for the CRJ to be delivered in
October, 2003, AWA must provide the Firm
Selection Notice by April 31, 2002. If AWA
does not provide the Firm Selection Notice
timely, then AWA shall be deemed to have
elected to have a CRJ Model 700 added to the
Fleet. Mesa shall provide AWA with at least
90 days' prior written notice of the week
each of the Firm Aircraft will be placed
into Flight Service under this Agreement and
at least 60 days' prior written notice of
the date on which each of the Firm Aircraft
will be placed into Flight Service under
this Agreement (each, a "Scheduled Delivery
Date").
(b) AWA shall have the options to expand the CRJ
Fleet by up to 40 additional CRJs from the
Option Aircraft. On or before each option
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"Exercise Date" (as set forth on Exhibit A),
AWA, by written notice to Mesa (the "Option
Notice"), shall have the option to require
Mesa to increase the CRJ Subfleet by the
addition of the applicable CRJ Aircraft in
the applicable "In Service Months" (as set
for on Exhibit A)(each, a "Fleet Expansion
Option"). Each Option Notice shall specify
whether AWA is selecting either a CRJ Model
700 or 900. If the Option Notice does not
specify the CRJ Model, then AWA shall be
deemed to have selected a CRJ Model 700. The
Fleet Expansion Options are separate and
individual options and may be exercised or
not exercised on a separate and individual
basis. The Aircraft that are the subject of
each Fleet Expansion Option shall be added
to the Fleet by Mesa in the applicable In
Service Months. Mesa shall provide AWA with
at least 90 days prior written notice of the
week each Option Aircraft will be placed
into Flight Service under this Agreement and
at least 60 days' prior written notice of
the Scheduled Delivery Date for each Option
Aircraft that is the subject of each
exercised Fleet Expansion Option.
(c) Mesa shall not be liable to AWA for the
failure to deliver any Firm Aircraft or
Option Aircraft on the Scheduled Delivery
Date (a "Failed Delivery") if: (i) the
failure to deliver is the result of the
manufacturer's failure to deliver the
Aircraft to Mesa as a result of acts of
terrorism, hostilities, war, strikes, labor
disputes, work stoppages beyond the
manufacturer's control, fire, act of
government or court order; (ii) Mesa uses
commercially reasonable efforts to acquire a
replacement aircraft for the Aircraft that
was not delivered; and (iii) Mesa pays to
AWA any compensation, damages or award
obtained by Mesa from the manufacturer as a
result of the Failed Delivery (an "Excused
Failure"). In the event of a Failed
Delivery, Mesa shall use commercially
reasonable efforts to obtain the applicable
Aircraft as soon as practicable after the
Scheduled Delivery Date. If the Aircraft
that is the subject of a Failed Delivery is
not delivered within 90 days after the
Scheduled Delivery Date, then AWA shall have
the option to elect not to include such
Aircraft under this Agreement by providing
written notice to Mesa at any time prior to
the actual delivery of such Aircraft. If a
Failed Delivery is not the result of an
Excused Failure, then AWA shall have all
rights and remedies under this Agreement for
such Failed Delivery.
2.2.3 Intentionally Omitted.
2.2.4 Fleet Reduction. Except as otherwise permitted by
Section 2.2.5, upon 180 days' prior written notice
from AWA, AWA, subject to limitations set forth
below, may require Mesa to reduce the number of
Aircraft in any Subfleet. AWA shall not require Mesa
to reduce: (i) the number of Aircraft in the Dash 8
Subfleet, Beech 1900 Subfleet or the combined CRJ
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Subfleets by more than two Aircraft in any Six
Calendar Month Period. For purposes of this
Agreement, "Six Calendar Month Period" means each
period during the Term (as defined below) commencing
on January 1 and ending on June 30 and commencing on
July 1 and ending on December 30, with the first Six
Calendar Month Period commencing on January 1, 2002;
(ii) the number of CRJ Model 200s for a period of 1
year measured from the last date that a CRJ Model 200
is added to the CRJ Subfleet; provided, however, that
the Scheduled Delivery Date shall be used to measure
the date each CRJ Model 200 is added to the CRJ
Subfleet; (iii) the number of CRJ Model 700s and 900s
for a period of 1 year measured from the last date
that a CRJ Model 700 or 900 is added to the CRJ
Subfleet; provided, however, that the Scheduled
Delivery Date shall be used to measure the date such
CRJ Model 700 or 900 is added to the CRJ Subfleet;
and (iv) the Dash 8 Subfleet below 6 Aircraft.
2.2.5 Elimination of Beech 1900s and Dash 8s.
Notwithstanding the provisions of Section 2.2.4, AWA,
at any time during the Term after August 25, 2004,
may require the Subfleet of Beech 1900s to be reduced
to zero by providing Mesa with at least 180 days
prior written notice of AWA's election to eliminate
the Beech 1900s on or after such date (the "1900
Elimination Notice"). Notwithstanding the provisions
of Section 2.2.4, AWA, at any time during the Term
after August 25, 2006, may require Mesa to reduce the
Subfleet of Dash 8s to zero by providing Mesa with at
least 180 days' prior written notice of AWA's
election to eliminate the Dash 8s on or after such
date (the "Dash 8 Elimination Notice"). The 1900
Elimination Notice may be given at any time during
the Term on or after February 27, 2004. The Dash 8
Elimination Notice may be given at any time during
the Term on or after February 27, 2006.
2.2.6 Spares. Mesa shall have available at least 1 spare
Aircraft available for Flight Services under this
Agreement at any time there are 35 or more CRJ
Aircraft and at least 2 spare Aircraft available for
Flight Services under this Agreement at any time
there are 65 or more CRJ Aircraft. AWA shall pay the
Actual Costs, Guaranteed Non-Maintenance Costs (other
than overhead) and Guaranteed Maintenance Costs
actually incurred by or payable to Mesa for each
spare Aircraft as provided in Section 7.
2.2.7 Transition Costs. As of the Contract Date, all of the
CRJ Aircraft are 50 seat Aircraft. The Firm Aircraft
and Option Aircraft include CRJ-700 and CRJ-900 seat
configurations (the "New CRJ Types"). AWA shall
reimburse Mesa for actual out-of-pocket costs and
expenses incurred by Mesa in connection with the
induction of the New CRJ Types into Flight Services
for a period of 180 days after the induction of the
first of each of the New CRJ Types, not to exceed
[***] for each of the New CRJ Types
----------
*** Confidential Treatment Requested
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(the "Transition Reimbursement"). The Transition
Reimbursement shall be paid by AWA within 30 days
after receipt of monthly written invoices together
with commercially reasonable evidence of the costs
actually incurred by Mesa.
2.3 Other Services. In addition to the Flight Services, Mesa,
subject to AWA's payment of costs pursuant to Section 7.1.8,
shall provide the following services in connection with the
Flight Services (the "Other Services"): (i) curb-side service,
other than at AWA Service Locations (as defined below), in all
locations where it is normal and customary or where another
airline offers curbside check-in; (ii) check-in service with
automated baggage tags and boarding pass printers in all
locations, other than AWA Service Locations; (iii) ticketing
and security services in accordance with the Federal Aviation
Administration ("FAA") and AWA directives and guidelines, as
may be issued from time to time, and any other directives or
guidelines as Mesa and AWA may mutually approve, in all
locations, other than the AWA Service Locations; (iv)
Qik-Check service, to the extent used and supplied by AWA, at
all gates used by Mesa; (v) transfer of all baggage for
passengers connecting from Flights to AWA flights in a timely
manner to ensure all baggage is placed on those connecting
flights; and (vi) transportation of mail and other cargo
(other than hazardous materials) on Flights, at the order of
AWA, to the extent of available aircraft capacity. Mesa, at
its expense, shall provide all facilities, machinery,
equipment and inventory required to efficiently, timely and in
a manner consistent with best airline industry practices
provide the Other Services. Mesa shall require personnel
providing the Other Services to comply with all rules,
regulations and directives promulgated for all AWA operations
from time to time.
Mesa may outsource the Other Services performed by Mesa at any
station with the prior written consent of AWA, which consent
shall not be unreasonably withheld or delayed. Mesa shall
cause any subcontractor to which the Other Services are
outsourced to comply with and perform all of the duties and
obligations imposed on Mesa in this Agreement applicable to
the Other Services that have been outsourced.
Notwithstanding the foregoing, AWA shall provide the services
set forth in subsections (i) - (iii) above at Phoenix Sky
Harbor International Airport, XxXxxxxx International Airport
and any other airport that AWA designates with at least 90
days' prior written notice to Mesa (the "AWA Service
Locations"). In the event AWA elects to convert any airport to
an AWA Service Location, then AWA shall: (i) either assume
Mesa's lease at the airport or reimburse Mesa for the actual
out-of-pocket costs and expenses incurred by Mesa in
terminating the lease, at AWA's election; (ii) reimburse Mesa
for up to one week's compensation actually paid to airport
employees that are not offered employment by AWA; and (iii)
offer to purchase from Mesa or assume the lease of any
equipment owned or leased by Mesa at the airport that may be
used by AWA in AWA's operations and
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is in good condition and repair for a price equal to the fair
market value of such equipment at the time of such offer.
2.4 Personnel; Training. Mesa shall hire, engage, employ and
maintain a sufficient number of competent, trained personnel
and subcontractors, including, but not limited to pilots,
flight attendants, ground crew, maintenance and cleaning
personnel, baggage handling personnel and customer service
personnel necessary to provide the Flight Services and Other
Services as required by this Agreement. Subject to FAA
approval, CRJ pilots shall be qualified to fly all models of
CRJs providing Flight Services pursuant to this Agreement. CRJ
pilots shall not be scheduled or dedicated to any particular
model line of CRJs without the prior written consent of AWA.
In addition, Mesa shall employ and maintain a commercially
reasonable number of reserve pilots and flight attendants
based in the Phoenix Metropolitan area based on the Flight
Services to be provided pursuant to this Agreement. Mesa shall
cause all Mesa personnel providing Flight Services or Other
Services to wear uniforms approved by AWA and shall comply
with all appearance guidelines required of all AWA personnel.
Mesa shall provide initial training, recurrent training and
customer service training to personnel and subcontractors
reasonably identified by AWA at programs approved by AWA. AWA
shall provide applicable training materials. In the event AWA
becomes a hazardous materials carrier, Mesa, at AWA's expense,
shall conduct all hazardous materials training required by AWA
or AWA's other code share partners.
2.5 Service Quality and Level. All Flight Services and Other
Services shall be provided by Mesa at a service quality and
level of service equal to or greater than the service quality
and level of service provided by AWA to the extent applicable
to the type of Aircraft used to provide the Flight Services.
All Aircraft shall be equipped with service amenities
necessary to provide the service quality and level of service
required by this Section. If AWA changes AWA's service
requirements and as a result Mesa will be required to make any
capital upgrades to any Aircraft, Mesa, in writing, shall
advise AWA of the need for such upgrades together with the
estimated cost to complete such upgrades (the "Upgrade
Notice"). If, after receipt of the Upgrade Notice, AWA, in
writing, elects to require Mesa to comply with such changes in
service requirements, then AWA, within 30 days after receipt
of a written notice, shall reimburse Mesa for the actual
out-of-pocket capital costs incurred by Mesa in making such
capital upgrades. If AWA does not approve the making of the
capital upgrades, then Mesa shall not be required to meet the
new AWA service requirements.
2.6 Maintenance.
2.6.1 Obligation. Mesa, at its own cost and expense, shall
be responsible for the service, repair, maintenance,
overhauling and testing of each Aircraft: (i) in
compliance with the maintenance program for each
Aircraft as approved by the FAA and pursuant to all
applicable aircraft maintenance
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manuals applicable to each Aircraft; (ii) so as to
keep each Aircraft in good and safe operating
condition; and (iii) so as to keep the Aircraft in
such operating condition as may be necessary to
enable the airworthiness certification of the
Aircraft to be maintained in good standing. Mesa
shall retain full authority and control over the
service, repair, maintenance, overhauling and testing
of each Aircraft. AWA shall have no obligations or
duties with respect to the service, repair,
maintenance, overhauling or testing of any Aircraft.
2.6.2 Ground Equipment. Mesa, at its sole cost and expense,
shall service, repair, maintain and clean (or cause
to be serviced, repaired, maintained or cleaned) all
ground equipment and facilities in accordance with
AWA guidelines, provided by AWA to Mesa, for
cleaning, maintenance and appearance.
2.6.3 Location. Mesa shall maintain three maintenance
bases, currently located in Fresno, California for
CRJs, Grand Junction, Colorado for Dash 8s, and
Farmington, New Mexico for Beech 1900s. Each Schedule
prepared by AWA shall provide for not less than 20%
of the Dash 8s and CRJs and 1 of the Beech 1900s to
remain overnight at the applicable maintenance base
each night. AWA acknowledges that a separate
maintenance base shall be maintained by Mesa for each
CRJ Subfleet. One Aircraft shall remain overnight for
10 hours and the remainder for at least 8 hours. Mesa
shall not relocate any maintenance base, without the
prior written consent of AWA, which consent may be
withheld if the new location fails to meet AWA's
maintenance base requirements. Each CRJ maintenance
base shall be staffed and equipped to maintain a
fleet of up to 25 Aircraft. Mesa shall add
maintenance bases as necessary to provide the Flight
Services and Other Services at locations which meet
AWA's maintenance base requirements and are approved
by AWA. AWA, by providing Mesa with at least 180
days' prior written notice, may require Mesa to close
any maintenance base. Upon Mesa assigning to AWA all
of its right, title and interest in the lease of the
maintenance base that is closed (together with any
required landlord consent), AWA shall reimburse Mesa
for all actual out-of-pocket costs and expenses
incurred by Mesa in closing such maintenance bases.
2.7 Emergency Operations. Mesa and AWA shall coordinate to develop
a plan that complies with applicable Regulations (as defined
below) to be implemented in the event of any incident
involving personal injury or death to a passenger or crew
member on a Flight. The emergency response teams of AWA and
Mesa shall coordinate their efforts and shall cooperate fully
in response to such emergency.
2.8 Fleet Configuration, Cleanliness and Appearance.
2.8.1 Configuration. All Dash 8 and Beech 1900 Aircraft in
the Fleet on the Contract Date and Dash 8 and Beech
1900 Aircraft added to the Fleet shall have a
passenger seating configuration and seating capacity
as provided on
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the Aircraft in the Fleet on the Contract Date. Each
CRJ in the Fleet on the Contract Date shall retain
the seating configuration and capacity as exists on
the Contract Date. Each CRJ added to the Fleet
pursuant to Section 2.2 shall have the seating
configuration and capacity as provided for such
Aircraft on Exhibit A. AWA, at AWA's cost and
expense, may require Mesa to reconfigure or change
the seating capacity of an Aircraft. All such
requested changes shall be implemented within 180
days after Mesa's receipt of written request from
AWA.
2.8.2 Cleanliness. Mesa, at its sole cost and expense,
shall cause all Aircraft to be cleaned and maintained
in an appearance in accordance with cleaning
standards, requirements and guidelines promulgated by
AWA from time to time and provided to Mesa in
writing.
2.9 Post-Departure Procedures. Mesa shall perform airport
post-departure procedures (as defined in AWA's Customer
Service Manual) and be responsible for securing and
controlling all the contents in the ticket lift envelopes. All
ticket lift envelopes should be forwarded and co-mailed to
ELP/NPC within 24 hours after flight operations. Mesa shall be
liable for losses to AWA as a result of the loss, misuse,
theft or forgery of AWA passenger tickets (including lifted
flight coupons and auditor's coupons for sold tickets) in
Mesa's possession or control or the associated cash receipts.
If actual documented losses to AWA resulting from erroneous or
fraudulent system transactions due to Mesa's or its employees'
failure to adhere to AWA policies and procedures exceed the
actual documented losses incurred by AWA from erroneous or
fraudulent system transactions, calculated monthly on a rate
per passenger per month basis for each airline (the "Excess
Losses"), then Mesa, within 10 days after receipt of written
demand together with the calculation of Excess Losses, shall
pay to AWA an amount equal to the Excess Losses times the
number of passengers flown on Flights during the applicable
calendar month.
2.10 Other Aircraft Handling and Ground Services. Mesa, at AWA's
request, shall provide the Other Services and aircraft ground
handling services for flights and aircraft operated by AWA and
its code share partners at stations at which Mesa provides the
Other Services pursuant to Section 2.3. The costs and expenses
of providing such Other Services and aircraft ground handling
shall be charged to the airline (other than AWA) at market
rates and in the case of AWA at actual out-of-pocket cost to
Mesa plus 8%.
2.11 Airport Slots. Upon each written request by AWA to Mesa, Mesa
or the Affiliated Service Providers, as applicable, shall
transfer the rights to airport slots operated by Mesa and used
for America West Express service at New York LaGuardia (LGA),
Chicago X'Xxxx (ORD), Xxxxxx Xxxxxx Washington National (DCA)
and any other slot controlled airports to any carrier(s)
designated by AWA; provided, however, that Mesa or the
Affiliated Service Providers, as applicable, shall not be
required to transfer any slots at slot controlled airports
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acquired by Mesa or the Affiliated Service Providers, as
applicable, and used for flights other than Flights pursuant
to this Agreement. Upon receiving such request from AWA, Mesa
shall prepare and process, within thirty (30) days, all
documentation necessary to execute the transfer of the airport
slots requested by AWA in its notice.
2.12 MAPPER System. AWA and Mesa, at AWA's cost and expense, shall
use commercially reasonable efforts to install AWA's internal
MAPPER System ("MAPPER System") at all airport stations to and
from which Flight Services are provided by September 1, 2001.
AWA, at AWA's cost and expense, shall train Mesa personnel on
the use of the MAPPER System. The MAPPER System shall be
installed in all new stations when such stations are
activated. Mesa shall cause its employees and subcontractors
to input all flight and other operational and passenger data
and information that the MAPPER System is capable of receiving
as soon as such data and information is available. All
operational statistics for each Flight shall be input into the
MAPPER System within 1 hour after each departure. Commencing
on the 90th day after the MAPPER System is installed at a
station, if Mesa fails to input any information or data into
the MAPPER System, then Mesa, within 10 days after receipt of
written demand, shall pay to AWA an amount equal to $100.00
for each entry not made. Mesa shall not be required to pay a
penalty for any data not entered into the MAPPER System as a
result of a system failure. Absent manifest error, MAPPER
System data, information and records shall be the controlling
data, information and records for all statistics used for
purposes of calculation of penalties, payments and bonuses
under this Agreement. No penalty for failure to input data
shall be assessed more than 180 days after the date the data
was to be entered.
3. Rights, Responsibilities and Obligations of AWA.
3.1 Flight Management Items. AWA, in its sole discretion, shall:
(i) designate from time to time, pursuant to each Schedule
Notice, the routes on and destinations to which Mesa is to
provide the Flight Services and the times of departure for the
Flights; (ii) set the fares to be paid for such Flights by the
passengers; and (iii) be responsible for the passenger
booking, yield management and overbooking of Flights, limited
only by the Fleet required to be maintained by Mesa pursuant
to this Agreement.
3.2 Marketing/Revenue. AWA, in its sole discretion and at its sole
cost, shall market, advertise and sell tickets on all Flights.
AWA shall provide all reservation services for the Flight
Services and shall pay all ticketing and advertising expenses,
credit card charges, travel agent commissions and CRS fees
applicable to such services. AWA shall be entitled to retain,
and Mesa shall pay to AWA, all revenue and income generated by
the Flight Services. Mesa shall provide to AWA all tickets and
other revenue documentation collected or lifted by Mesa. Mesa,
on a daily basis, shall remit to AWA any revenue collected by
Mesa in connection with the Flight Services and Other Services
into bank accounts
11
established by AWA. Mesa shall be responsible for any revenue
shortfall not remitted to AWA and shall pay such shortfall
within 10 days after receipt of written demand from AWA which
demand shall document the shortfall in reasonable detail. AWA
shall process Mesa lifted passenger lift documents using
standard industry pricing procedures. Mesa agrees to cooperate
with AWA on any special pricing or reporting requirements.
Mesa shall supply AWA with specific traffic reporting
requirements.
3.3 Airport Services. AWA, at its sole cost and expense, shall:
(i) provide curb-side service, check-in service, ticketing and
security services at AWA Service Locations for all Flights;
(ii) transfer all baggage for passengers connecting from AWA
flights to Flights in a timely manner to ensure all baggage is
placed on those connecting Flights; and (iii) provide such
other ground services selected by AWA at locations selected by
AWA in writing to Mesa. To the extent Other Services are
provided by AWA, the costs of such services shall not be
included in the Actual Costs or Guaranteed Non-Maintenance
Costs. AWA shall pay the rent for the terminal and gates at
Sky Harbor Airport.
3.4 Other Code Share Partners. AWA shall have the right to enter
into code share, joint marketing, charter or other
alliance-type agreements with any other flight service
commuter operator to provide flight services to any
destinations or for any routes. AWA may permit any of AWA's
other code share partners to place their code on any Flight.
AWA or its code share partners shall pay all costs and
expenses incurred by Mesa in placing such other code on such
Flights.
3.5 Charters. AWA, at its sole discretion, may market charter
flights on the Aircraft. Mesa shall operate such charter
flights provided flight crews and Aircraft are available and
not otherwise subject or committed to maintenance
requirements. Mesa is required to operate the charters in a
manner consistent with the terms of this Agreement. In respect
of any charter flight, AWA and Mesa, in good faith, shall
negotiate the costs and expenses to be paid by AWA for such
services. Mesa, upon 90 days' prior written notice to AWA, may
use any Aircraft for company business; provided, however, that
no such trips may disrupt scheduled Flights. If such trips
disrupt scheduled Flights, Mesa, within 10 days after receipt
of written demand, shall pay to AWA an amount equal to [***]
times the number of Flights disrupted (the "Disruption Fee").
If the Disruption Fee is not paid timely, then AWA may offset
the Disruption Fee against the next amounts due by AWA to
Mesa.
3.6 Executive Travel. AWA shall provide Mesa with travel cards for
the five top executives of Mesa for business travel and
personal travel on AWA flights on the same terms and
conditions as provided to AWA officers. Mesa is not permitted
to offer barter travel on AWA flights or Flights in exchange
for goods or services. In the event of any breach of the terms
of this Section, Mesa, within 10 days after
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receipt of written request, shall pay to AWA the full coach
fare for the flight(s) taken in violation of the terms of this
Section.
4. Compliance with Regulations.
4.1 Regulations. Mesa shall perform its obligations and duties
under this Agreement, including, without limitation, all
Flight Services and Other Services in full compliance with any
and all applicable laws, ordinances, codes, statutes, orders,
directives, mandates, requirements, rules and regulations,
whether now in effect or hereafter adopted or promulgated, of
all governmental agencies having jurisdiction over Mesa's
operations, including but not limited to the FAA and the DOT
(collectively, "Regulations").
4.2 Flight Operations. Mesa shall be responsible for the operation
of each Aircraft and the safe performance of the Flights in
accordance with the Regulations and airline industry standard
practice and shall retain full authority, operational control
and possession of the Aircraft to do so. Mesa, its agents or
employees, for the purpose of the safe performance of the
Flights, shall have absolute discretion in and shall have sole
responsibility for all matters concerning the preparation of
each Aircraft for its Flights, and all other matters relating
to the technical operation of the Aircraft. Mesa, insofar as
such relates to the safe operation of a Flight, shall have
sole and absolute discretion as to the load carried and its
distribution and as to the decision whether such Flight shall
be taken. Mesa shall be solely responsible for and AWA shall
have no obligations or duties with respect to the dispatch of
all Flights.
4.3 Registration. All Aircraft shall remain registered in the
United States of America in accordance with the Regulations.
4.4 Disclosure. Mesa, upon 2 business days' prior written request,
shall provide AWA the opportunity to review all operating
specifications, operational regulations, manuals and
calculations with respect to all Aircraft and flight
statistics with respect to all Flights at Mesa's corporate or
other relevant offices where such records are located.
4.5 Review/Audit. AWA or its independent accountants, upon 2
business days' prior written notice, may review, at Mesa's
corporate office, airport ticket offices and other relevant
offices, all records, books, logs, files, documentation and
information maintained by Mesa, or any of its maintenance or
service contracts, in connection with Flight operation, safety
and regulatory compliance, employee training, Flight dispatch,
Aircraft use, operation, maintenance and repair, Flight
incidents and governmental orders, mandates and requirements.
AWA, to the extent AWA deems necessary, may make unannounced
visits and inspections at airport ticket offices and stations
to insure Mesa's and its employees', agents' and contractors'
compliance with the terms and conditions of this Agreement.
13
4.6 Reporting. This Agreement shall be treated as a code share for
DOT reporting requirements. AWA shall provide Mesa with such
information necessary for Mesa to make the DOT reports and
disclosures.
5. Operational Performance Criteria, Incentives and Penalties.
5.1 DOT Complaint Rate Criteria. Mesa shall not permit its annual
DOT Complaint Rate (defined below) for Flight Services to
exceed the annual DOT Complaint Rate of AWA. The "DOT
Complaint Rate" is defined as the number of consumer
complaints received by the DOT for a given calendar year
expressed in terms of the number of complaints per 100,000
passengers flown during that calendar year by Mesa and AWA;
provided, however, that the DOT Complaint Rate shall exclude
consumer complaints relating solely to (i) overbooking; (ii)
fares; (iii) Aircraft size or suitability; (iv) schedule; and
(v) food service. For purposes of this Agreement, "AWA's DOT
Complaint Rate" shall mean AWA's actual DOT Complaint Rate
multiplied by 1.05. DOT complaints made against AWA for
America West Express service shall be allocated to Mesa for
the purpose of calculating Mesa's and AWA's DOT Complaint
Rates. If Mesa's DOT Complaint Rate exceeds AWA's DOT
Complaint Rate in any calendar year during the Term of this
Agreement, Mesa, within 10 days after receipt of written
demand from AWA, shall pay to AWA a penalty equal to [***]
multiplied by the amount by which Mesa's DOT Complaint Rate
exceeds AWA's DOT Complaint Rate. For example, if AWA's DOT
Complaint Rate for a given year is [***] per 100,000
passengers and Mesa's is [***] per 100,000 passengers, Mesa
would pay AWA the product of [***] x [***]. On each
anniversary date of the Contract Date, the penalty payment
amount shall be increased by the increase in the CPI, as
determined in accordance with Section 7.4.
5.2 Mishandled Baggage Rate Criteria. Commencing January 1, 2002,
Mesa shall not permit its monthly MBR (defined below) for
Flight Services to exceed the monthly MBR of AWA. The "MBR" is
defined as the number of lost baggage claims entered into the
world tracer system for a given month expressed in the terms
of the number of entries per 1,000 bags handled during that
calendar month by Mesa and AWA. Mesa shall enter all lost
baggage claims into the world tracer system within 2 hours
after the lost baggage claim is made by a passenger. If Mesa's
MBR exceeds AWA's MBR by [***] or more any calendar month
during the Term of this Agreement, Mesa, within 10 days after
receipt of written demand from AWA, shall pay to AWA a penalty
equal to [***]. If Mesa's MBR exceeds AWA's MBR for three
consecutive calendar months, Mesa, within 10 days after
receipt of written demand, shall pay to AWA an additional
penalty of [***] for such three-month period and for each
consecutive month thereafter that Mesa's MBR exceeds AWA's
MBR, the penalty shall be [***] per month. On each anniversary
date of the Contract Date, the penalty payment amount shall be
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14
increased by the increase in the CPI, as determined in
accordance with Section 7.4.
5.3 On Time Performance Rate Criteria. Mesa shall not permit
Mesa's OTP Rate (as defined below) for any Six Month Period
(as defined below) to fall below: (i) [***] percentage points
above AWA's OTP Rate for Schedules operated by Mesa out of the
Phoenix Sky Harbor International hub; and (ii) [***]
percentage points below the Industry's OTP Rate (as defined
below) for Schedules operated out of the Columbus, Ohio hub
(the "OTP Rate Threshold"). The Phoenix Sky Harbor
International hub and Columbus hub are each referred to as a
"Hub." The "OTP Rate" is defined as the percentage determined
by dividing the number of flight segments not Delayed (as
defined below) by the total number of flight segments during
the applicable Six Month Period. The "Industry's OTP Rate"
shall be the industry standard rate for flights in and out of
the Columbus, Ohio airport, calculated in accordance with the
methodology set forth on Exhibit F, attached hereto. For
purposes of this Agreement, "Delayed" means a flight segment
that does not arrive at the destination within 15 minutes
after the scheduled arrival time. All Flights will be included
for calculating the OTP Rate. A canceled flight (except ones
cancelled because of no passengers and the reasons set out in
Section 5.4(v)) is a Delayed flight. To the extent that Mesa's
OTP Rate for either Hub Schedule falls below the applicable
OTP Rate Threshold for any Six Month Period, Mesa, within 10
days after receipt of written demand, shall pay to AWA the OTP
Penalty Amount (as defined below) for each percentage point,
or portion thereof, by which Mesa's OTP Rate for either Hub
Schedule falls below the OTP Rate Threshold for such Six Month
Period. The "OTP Penalty Amount" for each Hub is an amount
equal to [***] times a fraction, the numerator of which is the
daily average of Aircraft providing Flight Services to and
from the Hub during the applicable Six Month Period and the
denominator of which is the daily average of all Aircraft
providing Flight Services during the applicable Six Month
Period. On each anniversary date of the Contract Date the
dollar amounts used for calculating the OTP Penalty Amount
shall be increased by the increase in the CPI, as determined
in accordance with Section 7.4. AWA, within 10 days after
receipt of written demand, shall pay to Mesa [***] for each
percentage point, or portion thereof, by which Mesa's OTP Rate
system wide exceeds [***] for any Calendar Quarter. On each
anniversary date of the Contract Date, the bonus amount shall
be increased by the increase in CPI, as determined in
accordance with Section 7.4. "Six Month Period" means each
January 1 - June 30 and July 1 - December 31 and "Calendar
Quarter" means each 3 calendar month period commencing January
1 of each year.
5.4 Flight Completion Factor. Mesa shall not permit its FCF
(defined below) for any Calendar Quarter to fall below: (i)
[***] for Schedules operated out of the Phoenix Sky Harbor
International Airport Hub; and (ii) [***] for Schedules
operated out of the Columbus, Ohio Hub (each, an "FCF
Threshold"). "FCF" is
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15
defined as the percentage of published, scheduled Flights
completed for a Calendar Quarter. Flights not completed due
to: (i) weather; (ii) cancellation or overflight because of no
passengers; (iii) air traffic control cancellations; (iv)
cancellations resulting from an emergency airworthiness
directive from the FAA affecting all aircraft similarly
equipped to the Aircraft in any Subfleet (not just those owned
or operated by Mesa); or (v) cancellations resulting from the
sole acts or omissions of AWA or its employees, including,
without limitation, damage to an Aircraft, will not be
included in either the numerator or denominator for
calculating the FCF. Mesa, within 10 days after receipt of
written demand, shall pay to AWA the FCF Penalty Amount for
each tenth of a percentage point, or portion thereof, by which
Mesa's FCF for either Hub Schedule falls below the applicable
FCF Threshold. The "FCF Penalty Amount" for each Hub is an
amount equal to [***] times a fraction, the numerator of which
is the daily average of Aircraft providing Flight Services to
and from the Hub during the Calendar Quarter and the
denominator of which is the daily average of all Aircraft
providing Flight Services under this Agreement during the
Calendar Quarter. On each anniversary date of the Contract
Date the dollar amount used for calculating the FCF Penalty
Amount shall be increased by the increase in the CPI, as
determined in accordance with Section 7.4. AWA, within 10 days
after receipt of written demand, shall pay to Mesa [***] for
each tenth of a percentage point by which Mesa's FCF system
wide exceeds [***] in any Calendar Quarter. On each
anniversary date of the Contract Date, the bonus amount shall
be increased by the increase in CPI, as determined in
accordance with Section 7.4.
5.5 Records. Within 5 days after the end of each calendar month
Mesa shall provide to AWA statements certified by Mesa's chief
financial officer as to Mesa's OTP Rate and FCF for the prior
calendar month and, as applicable, the prior Calendar Quarter
and Six Month Period, together with such supporting
documentation and information as AWA may request. AWA or its
designee, upon 2 business days' prior written notice, may
review, at Mesa's corporate or other relevant offices, all
records and files maintained by Mesa in connection with
on-time performance and flight completions. If AWA's or its
designee's review of the records or files reveals that Mesa
has under or overstated, as applicable, Mesa's OTP Rate or
FCF, then Mesa, upon demand, shall pay all sums due based on
the accurate calculations, the actual out-of-pocket costs and
expenses of AWA in completing such review and the applicable
penalties payable based on such new calculation. If such under
or overstatement is willful or intentional, then Mesa, within
10 days after receipt of written demand, shall pay to AWA an
amount equal to [***] per occurrence.
5.6 Limitation on Applicability of Standards, Criteria,
Incentives, and Penalties. AWA acknowledges that Mesa and the
Affiliated Service Providers operate flights and provide
flight services and other services under their own names
and/or under names or service marks other than America West
Express using
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*** Confidential Treatment Requested
16
aircraft that are not included in the Fleet and that are not
subject to this Agreement. Notwithstanding any other term,
condition or provision hereof to the contrary, the standards,
criteria, incentives and penalties set forth above in this
Section 5 apply only to Flight Services, Flights and Other
Services performed by Mesa and the Affiliated Service
Providers hereunder operating as America West Express and not
to any other flights, flight services or other services
performed by Mesa and the Affiliated Service Providers under
their own names or under a name or service xxxx other than
America West Express. Thus, in calculating Mesa's DOT
Complaint Rate, the MBR, the OTP Rate, the FCF, and all
incentives and penalties set forth above, only Flight Services
and Other Services performed by Mesa and the Affiliated
Service Providers under the service xxxx America West Express
shall be taken into account in calculating such rates and
assessing such incentives and penalties.
6. Irregular Operations. The misconnect and denied boarding benefits
provided by Mesa to passengers (each, a "Misconnect Benefit Package")
shall be similar in amount and scope to those offered by AWA in similar
circumstances and geographic areas (the "AWA Standards"). AWA shall not
be required to reimburse Mesa for any Misconnect Benefit Package which
is in excess of the AWA Standards.
7. Payment of Fees/Revenue Sharing. Commencing on the Effective Date and
retroactive to the Contract Date, Mesa and AWA hereby agree to pay the
following sums as consideration for this Agreement and the provision of
the Flight Services and Other Services provided for herein:
7.1 Mesa Actual Costs. AWA, in accordance with Section 7.5, shall
reimburse to Mesa the following actual costs and expenses
actually paid by Mesa in connection with performing the Flight
Services and Other Services ("Actual Costs"):
7.1.1 Hull insurance premiums and commissions paid by Mesa
for each Aircraft for the prior calendar month.
Insurance shall be allocated and paid by AWA on a
monthly basis equally over the applicable premium
period for which the insurance is paid. Insurance
shall be prorated by Mesa in any premium period
during which an Aircraft is added or deleted from
this Agreement. If the monthly insurance payments
made by AWA are less than the actual premiums paid by
Mesa, then AWA shall pay such excess in the month
Mesa pays the insurance premiums. If the monthly
payments made by AWA exceed the actual insurance
premiums, then AWA shall be entitled to a credit
against the next payment of the Actual Costs in an
amount equal to such overpayment. Mesa, within 10
days after receipt, shall provide AWA with copies of
all premium notices received for insurance premiums.
7.1.2 Liability insurance premiums and commissions paid by
Mesa for the Flight Services on a revenue passenger
mile basis. Insurance shall be allocated and paid on
a monthly basis equally over the applicable premium
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period for which the insurance is paid. Insurance
shall be prorated by Mesa in any premium
period during which this Agreement commences,
terminates or expires. If the monthly insurance
payments made by AWA are less than the actual
premiums paid by Mesa, then AWA shall pay such excess
in the month Mesa pays the insurance premiums. If the
monthly payments made by AWA exceed the actual
insurance premiums, then AWA shall be entitled to a
credit against the next payment of the Actual Costs
in an amount equal to such overpayment. Mesa, within
10 days after receipt, shall provide AWA with copies
of all premium notices received for insurance
premiums.
7.1.3 Property taxes paid by Mesa for each Aircraft or the
Fleet. Property taxes shall be allocated and paid on
a monthly basis equally over the applicable tax
period for which the property taxes are assessed and
paid. If an Aircraft is added to the Fleet after
property taxes are assessed for a tax period and Mesa
does not owe taxes for such Aircraft for such tax
period, then AWA shall not pay property taxes on the
Aircraft for such tax period. AWA shall pay the full
year property taxes for the year in which an Aircraft
is deleted from the Fleet in the manner provided
herein if such Aircraft is not placed in revenue
service outside this Agreement (in which case such
taxes shall be prorated). If the monthly tax payments
made by AWA are less than the actual property taxes
assessed and paid by Mesa, then AWA shall pay such
excess in the month Mesa pays the property taxes. If
the monthly payments made by AWA exceed the actual
property taxes assessed, then AWA shall be entitled
to a credit against the next payment of Actual Costs
in an amount equal to such overpayment. Mesa, within
10 days after receipt, shall provide AWA with copies
of all tax notices received for property taxes
assessed against any portion of the Fleet.
7.1.4 De-Icing expenses paid by Mesa for each Aircraft for
the prior calendar month.
7.1.5 Fuel costs paid by Mesa during the prior calendar
month, calculated as gallons of fuel burned per hour.
If in any calendar month Mesa's estimated fuel costs
exceed the Actual Costs for fuel for such calendar
month by more than 3%, then thereafter, for the
purpose of calculating Estimated Costs pursuant to
Section 7.5 below, Mesa shall use AWA's fuel forecast
for the fuel costs.
7.1.6 Landing fees calculated per Flight departure incurred
during the prior calendar month.
7.1.7 Security outside AWA Service Locations calculated per
America West Express passenger.
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7.1.8 Passenger and ground handling costs incurred at
stations maintained by Mesa more particularly
described on Exhibit B ("Station Costs"), not to
exceed in each calendar year the amount set forth in
the budget for each calendar year (the "Station
Budget"); provided, however, that if AWA changes a
Schedule and such change in the Schedule directly
results in any Station Costs exceeding the amount set
forth in the Station Budget, then Station Costs shall
include such costs in excess of the Station Budget to
the extent directly attributable to the Schedule
change. The Station Budget for each calendar year,
together with such backup information requested by
AWA, shall be prepared and provided to AWA by Mesa on
or before October 1 of the prior calendar year. The
Station Budget shall be based on Mesa's commercially
reasonable estimate of the actual costs that are to
be incurred during the next calendar year. If AWA
does not approve the Station Budget for any station,
then AWA may convert such station to an AWA Service
Location pursuant to Section 2.3.
Mesa shall not enter into any contract with an affiliate to
provide the services or materials for which AWA pays the
Actual Costs unless such contract is on commercially
reasonable terms substantially similar to those available in
the market place for arms-length transactions with third
parties. In the event any of the services or materials for
which AWA pays the Actual Costs are purchased for the Flight
Services and Other Services provided by this Agreement and for
other services provided by Mesa and its affiliates, then the
costs of such services and materials shall be equitably
allocated to Actual Costs payable by AWA such that AWA only
pays for the portion of such costs attributable to the Flight
Services or Other Services provided by this Agreement. Mesa
shall use commercially reasonable efforts to operate the
Flight Services and Other Services in an efficient and cost
effective manner to minimize the Actual Costs payable by AWA
while maintaining the quality and quantity of services
required by this Agreement. Mesa shall take all commercially
reasonable actions to minimize the taxes imposed on the Fleet.
If requested by AWA, in writing, AWA on behalf of Mesa may
pursue any tax protest or contest for property taxes imposed
on the Fleet or any Aircraft in the Fleet in the manner
prescribed by applicable law. An "affiliate" of Mesa means any
person or entity controlling, controlled by or under common
control with Mesa.
7.2 Mesa Guaranteed Costs. AWA, in accordance with Section 7.5,
shall pay to Mesa:
(a) the lesser of: (i) the actual costs and expenses
associated with certain of the Flight Services and
Other Services (the "Guaranteed Non-Maintenance
Costs") set forth in the cost and expense categories
set forth in Exhibit C, attached hereto (the
"Guaranteed Non-Maintenance Costs Schedule"), or (ii)
the amounts set forth in the Guaranteed
Non-Maintenance Costs Schedule for each cost and
expense category set forth in Exhibit C, attached
hereto (the "Guaranteed Non-Maintenance Costs Caps");
and
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(b) an amount for maintenance costs and expenses equal to
the amounts set forth on Exhibit D (the "Guaranteed
Maintenance Costs").
The Guaranteed Non-Maintenance Costs Caps and Guaranteed
Maintenance Costs shall be adjusted on each anniversary of the
Contract Date in accordance with Section 7.4 below. If the
Term of this Agreement commences or expires or an Aircraft is
added or eliminated from the Fleet on other than the first or
last day of a calendar month, then the Guaranteed
Non-Maintenance Costs and Guaranteed Maintenance Costs payable
by AWA under this Agreement or for such Aircraft shall be
prorated based on the actual number of days this Agreement is
in effect or the Aircraft is in the Fleet during such month
and the actual number of days in such month. Payment of
Guaranteed Non-Maintenance Costs and Guaranteed Maintenance
Costs for an Aircraft shall commence on the Aircraft Scheduled
Delivery Date unless the Aircraft is delivered late in which
case payment will begin on the actual delivery date. If an
Aircraft, at AWA's written request, is placed into Flight
Services prior to the Scheduled Delivery Date, then payment of
the Guaranteed Non-Maintenance Costs and Guaranteed
Maintenance Costs for such Aircraft shall commence on the date
requested by AWA.
7.3 Contract Negotiation. AWA may assist Mesa in the negotiation
of contracts for the provision of materials or services
subject to the Actual Costs, Guaranteed Non-Maintenance Costs
and Guaranteed Maintenance Costs provided Mesa is not subject
to an existing contract for such services or materials.
7.4 Guaranteed Costs Adjustment.
7.4.1 CPI Adjustment. For the purposes of calculating CPI
increases in Guaranteed Non-Maintenance Costs Caps,
increases in the Guaranteed Maintenance Costs,
increases in bonuses or penalties pursuant to Section
5 or increases in the base EAS Subsidies pursuant to
Section 7.7 the following definitions and formulas
shall be applied:
(a) Definition. "CPI" shall mean the Consumer
Price Index, U.S. City Average, Urban Wage
Earners and Clerical Workers, All Items
(base index year 1982-84 = 100) as published
by the United States Department of Labor,
Bureau of Labor Statistics. If the manner in
which the Consumer Price Index as determined
by the Bureau of Labor Statistics shall be
substantially revised, including, without
limitation, a change in the base index year,
an adjustment shall be made by the parties
in such revised index which would produce
results equivalent, as nearly as possible,
to those which would have been obtained if
such Consumer Price Index had not been so
revised. If the Consumer Price Index shall
become unavailable to the public because
publication is not readily available to
enable the parties to make the adjustment
referred to in this Section, then the
parties shall mutually agree to substitute
therefor a comparable
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index based upon changes in the cost of
living or purchasing power of the consumer
dollar published by any other governmental
agency or, if no such index shall be
available, then a comparable index published
by a major bank or other financial
institution or by a university or a
recognized financial publication.
(b) Adjustment Formula. On each anniversary of
the Contract Date (each an "Adjustment
Date"), to determine the amount of
adjustment or increase based on CPI, the
applicable Guaranteed Non-Maintenance Costs
Caps, the Guaranteed Maintenance Costs,
bonuses or penalties and EAS Subsidies, as
applicable, in effect for the prior year,
shall be adjusted by multiplying the
Guaranteed Non-Maintenance Costs Caps on the
Guaranteed Non-Maintenance Costs Schedule,
the Guaranteed Maintenance Costs, bonuses or
penalties and EAS Subsidies, as applicable,
in effect for the prior year, by a fraction,
the numerator which shall be the CPI for the
third full calendar month immediately
preceding the Adjustment Date, and the
denominator of which shall be the CPI for
the same calendar month in the immediately
preceding calendar year (the "Adjustment").
7.4.2 Governmental Requirements. If any governmental rule,
order, regulation or requirement affecting: (i) all
aircraft similarly equipped as the Aircraft in any
Subfleet (not just those owned by Mesa); or (ii) all
airlines flying similar equipment as the Aircraft
(not just Mesa), results in an increase in any of the
Guaranteed Non-Maintenance Costs or Guaranteed
Maintenance Costs such that the actual Guaranteed
Non-Maintenance Costs or Guaranteed Maintenance Costs
will exceed the then applicable Guaranteed
Non-Maintenance Costs Cap or amounts set forth on
Exhibit D for the Guaranteed Maintenance Costs, then
the applicable Guaranteed Non-Maintenance Costs Cap
or Guaranteed Maintenance Costs shall be increased by
such amount, as of the effective date of such
governmental regulation, rule, order or requirement.
7.4.3 Amendment. Mesa and AWA shall execute an amendment to
Exhibit C and Exhibit D within 10 days after each
adjustment occurs pursuant to this Section 7.4. The
failure to execute such an amendment shall not affect
the effectiveness of any adjustment or the bases for
any subsequent adjustment. Each adjusted Guaranteed
Non-Maintenance Costs Cap and Guaranteed Maintenance
Costs shall be effective until the next adjustment of
such Guaranteed Non-Maintenance Costs Cap and
Guaranteed Maintenance Costs pursuant to this Section
7.4.
7.4.4 Guaranteed Maintenance Costs Reconciliation. Within
180 days after the expiration or termination of this
Agreement, AWA, by written notice to Mesa, may review
and audit Mesa's records and files relevant to the
actual
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maintenance costs paid by Mesa in the categories set
forth on Exhibit D. If AWA's review of the records
and files reveals that the actual maintenance costs
paid by Mesa during the term of this Agreement was
less than the sum of all the Guaranteed Maintenance
Costs paid by AWA during the term of this Agreement
(the "Excess Maintenance Payments"), then Mesa,
within 30 days after receipt of written demand, shall
pay to AWA an amount equal to the Excess Maintenance
Payments. The terms and conditions of this Section
shall survive the termination or expiration of this
Agreement. Mesa shall maintain and retain all
maintenance cost and expense records and files for
the entire Term of this Agreement and for at least
one year after the expiration or termination of this
Agreement.
7.5 Payment of Actual and Guaranteed Non-Maintenance Costs.
7.5.1 Estimates. AWA shall pay to Mesa the estimated Actual
Costs, Guaranteed Non-Maintenance Costs (using the
Guaranteed Maintenance Costs Caps) and Guaranteed
Maintenance Costs for each calendar month based on a
98% FCF (the "Estimated Costs") as follows: By the
20th day of each calendar month, Mesa shall provide
AWA with a good faith statement of the Estimated
Costs for the following calendar month. On or before
the 7th, 14th, 21st and 28th day of each calendar
month (or next business day thereafter if any such
dates is other than a business day), AWA shall pay
25% of the Estimated Costs for such calendar month.
7.5.2 Monthly Reconciliation. On or before the 120th day
after the last day of each calendar month, Mesa shall
submit to AWA a statement of the actual Guaranteed
Non-Maintenance Costs (using for each monthly
statement the applicable Guaranteed Non-Maintenance
Costs Caps), the Guaranteed Maintenance Costs and
Actual Costs incurred by Mesa (the "Incurred Costs")
and payable by AWA for such calendar month (the
"Incurred Costs Statement"). If the Estimated Costs
paid by AWA in any calendar month exceed the Incurred
Costs in any calendar month, then Mesa, together with
the Incurred Costs Statement for such calendar month,
shall reimburse AWA the amount by which the Estimated
Costs paid by AWA exceeded the Incurred Costs. If the
Incurred Costs in any calendar month exceed the
Estimated Costs paid by AWA in any calendar month,
then AWA, subject to the rights and procedures set
forth in Section 7.8, within 45 days after receipt of
the Incurred Costs Statement, shall reimburse and pay
to Mesa the amount by which the Incurred Costs exceed
the Estimated Costs paid by AWA for the subject
calendar month.
7.5.3 Annual Reconciliation. At any time within 120 days
after the expiration of each Contract Year (as
defined below), AWA, upon 2 Business Days prior
written notice to Mesa, may review and audit, or
cause its independent accountants to review and
audit, all records and files (including computer
databases) maintained by Mesa and relevant to the
22
calculation of the actual Guaranteed Non-Maintenance
Costs incurred by Mesa during the prior Contract Year
(the "GNMC Audit"). If the GNMC Audit reveals that
the actual Guaranteed Non-Maintenance Costs actually
paid by Mesa during the prior Contract Year was less
than the sum of all the Guaranteed Non-Maintenance
Costs Caps paid by AWA during such Contract Year (the
"Excess Non-Maintenance Payments"), then Mesa, within
30 days after receipt of written demand from AWA,
shall pay AWA an amount equal to the Excess
Non-Maintenance Payment. If Mesa does not pay the
Excess Non-Maintenance Payments to AWA timely, then
AWA shall have the setoff rights contained in Section
7.9 below. For the purposes of this section,
"Contract Year" means each one year period commencing
on April 1 of each calendar year and expiring on
March 31 of the next calendar year. For the purposes
of the first "Contract Year", the year shall commence
on the Contract Date and expire on March 31, 2002.
For purposes of the last Contract Year, the Contract
Year shall commence on April 1 and expire on the
Expiration Date. For the purpose of determining the
actual Guaranteed Non-Maintenance Costs incurred in
providing the Flight Services and Other Services,
Guaranteed Non-Maintenance Costs subject to
allocation to the Flight Services and Other Services
shall be allocated to this Agreement by Mesa using
the same methodology used by Mesa in establishing the
Guaranteed Non-Maintenance Costs Caps.
7.5.4 Finality. The Incurred Costs Statement issued by Mesa
shall include all and be the final statement for the
Guaranteed Non-Maintenance Costs and Actual Costs
payable by AWA for the period covered by each
Incurred Costs Statement. AWA shall not be obligated
to pay any Guaranteed Non-Maintenance Costs or Actual
Costs for a period that are not included in the
applicable Incurred Costs Statement when initially
issued by Mesa to AWA.
7.6 Revenue Sharing. Commencing in the first calendar month after
the month in which the Effective Date occurs, AWA shall pay to
Mesa, by the 20th day of each calendar month, an amount equal
to the product obtained by multiplying the Segment Revenue
Percentage by the Segment Revenue generated during the prior
calendar month. For purposes of this Agreement, the following
terms have the following definitions:
"Segment Revenue" means the portion of the total fares paid by
passengers allocated to the Flights flown by Mesa or the
Affiliated Service Providers pursuant to this Agreement, less
all taxes, assessments, airport charges and other governmental
and quasi-governmental charges included in the fares. For
calculating Segment Revenue, the portion of the revenue
attributed to the Mesa Flight segment shall be determined in
accordance with Straight Prorate Rule 11B of the Passenger
Tariff Manual produced by the Airline Tariff Publishing
Company.
23
"Segment Revenue Percentage" means the following percentages
based on the type of Aircraft used to fly the Flight which
creates the Segment Revenue allocable to Mesa Flight segment:
Aircraft Segment Revenue Percentage
-------- --------------------------
Beech 1900 [***]
Dash 8 [***]
CRJ Model 200 [***]
CRJ Model 700 [***]
CRJ Model 900 [***]
7.7 Subsidies. Mesa, within 30 days after receipt, shall rebate to
AWA all EAS subsidies paid to Mesa by any governmental
entities for Flights (the "EAS Subsidies"). Notwithstanding
the foregoing to the contrary, if Mesa causes any EAS
Subsidies to be increased to an amount in excess of the EAS
Subsidies in effect on the Contract Date, increased annually
on the anniversary of each Contract Date by an amount equal to
an increase in the CPI as calculated pursuant to Section
7.4.1, then AWA shall pay to Mesa 50% of any such increase
within 30 days after receipt of written demand. AWA shall not
be responsible to the DOT for continuing service in any EAS
market. Notwithstanding the foregoing, if AWA directs Mesa to
bid to provide flight service to any EAS market, then AWA
shall be responsible for all liabilities incurred in
connection with discontinuing such service prior to the
expiration of any DOT hold-in order. AWA shall be entitled to
retain all payments, subsidies, revenue guarantees or other
similar payments generated from the Flight Services flown
under this Agreement and negotiated by AWA.
7.8 Records, Statements and Audit Rights. Mesa shall maintain
separate accounting books and records for the Flight Services
and Other Services performed by Mesa under this Agreement. All
Incurred Costs Statements and other requests for payment made
by Mesa pursuant to this Section 7 shall be accompanied by
such supporting information, documentation and calculations
described on Exhibit E, attached hereto, and as AWA may
reasonably request from time to time (the "Backup
Information"). If AWA disputes the amount set forth in any
statement or the Backup Information is inadequate, incomplete
or inaccurate, then AWA shall pay the undisputed portion of
such statement and the portions for which the Backup
Information is adequate, complete and accurate, timely, and
together with such payment provide Mesa with a written
statement of any disputed amount and the amounts for which the
Backup Information is inadequate, incomplete or inaccurate.
AWA and Mesa shall meet and confer to resolve any disputed
amount and inadequate, incomplete or inaccurate Backup
Information within 30 days after AWA provides notice of the
dispute. Disputed amounts and amounts for which
----------
*** Confidential Treatment Requested
24
the Backup Information is inadequate, incomplete or inaccurate
shall not be payable until the dispute is resolved and then
shall be payable within 10 days after the dispute is resolved.
AWA, upon 2 business days' prior written notice, may review
and audit, or cause its independent accountants to review and
audit, all records and files (including computer data bases)
maintained by Mesa and relevant to the calculation of the
payments required to be made by AWA pursuant to this
Agreement. If AWA's review of the records and files reveals
that Mesa has overcharged AWA or underpaid AWA, then Mesa
shall pay to AWA, upon demand, the overpayments and/or
underpayments and the costs and expenses of AWA incurred in
completing such review and audit and, if such overcharge or
underpayment is willful or intentional or exceeds more than
10% of the sums actually payable or receivable by AWA, then
Mesa, within 10 days after receipt of written demand, shall
pay to AWA an amount equal to 3 times the overcharge or
underpayment. Mesa shall maintain all records, files,
information, data and documentation (including computer data
bases) used in calculating the sums payable or receivable by
AWA under this Agreement in good condition and order at Mesa's
corporate headquarters. AWA shall not be required to pay any
sums, and shall be entitled to receive a refund of any sum
paid, for which Mesa is unable to provide supporting
information, documentation or data.
7.9 Setoff. All undisputed sums payable by Mesa to AWA pursuant to
this Agreement may, at AWA's election, be setoff against
amounts next due by AWA to Mesa pursuant to this Agreement.
8. Term and Termination.
8.1 Term. The term of this Agreement (the "Term") commences on the
Effective Date retroactive to the Contract Date (the
"Commencement Date") and shall expire ("Expiration Date") on
the 8th anniversary of the date that the last CRJ Aircraft is
added to the Fleet pursuant to Section 2.2.2 of the Agreement
(the "Last Delivery Date), unless earlier terminated as
provided in this Agreement. AWA, by written notice to Mesa at
least 180 days prior to the Expiration Date, may extend the
Expiration Date to the 10th anniversary of the Last Delivery
Date.
8.2 Early Termination. If: (i) Mesa's OTP Rate for the Phoenix Hub
falls below AWA's OTP Rate for the Phoenix Hub for five of any
six calendar months or (ii) Mesa's FCF for the Phoenix Hub
falls below 96% for five of any of six consecutive calendar
months (each, a "Cancellation Event"), AWA, at its election,
may by written notice (a "Performance Notice") inform Mesa
that if the Cancellation Event is not cured within one hundred
twenty (120) days from receipt of such Performance Notice (the
"Cure Period"), AWA, at its option may give a Termination
Notice (as defined below). If the Cancellation Event relates
to Mesa's OTP Rate, the cure shall be effected by Mesa
bringing its OTP Rate for such Hub to a rate that is equal to
or above AWA's OTP Rate at the Phoenix Hub
25
during the Cure Period. If the Cancellation Event relates to
the Mesa's FCF for the Phoenix Hub, the cure shall be effected
by Mesa bringing its FCF at the Phoenix Hub to 97% or higher
during the Cure Period. If, after the Cure Period has expired
and Mesa has not cured the Cancellation Event as set forth
above, then AWA at any time during the thirty (30) day period
following the lapse of the Cure Period without cure may, upon
90 days' prior written notice to Mesa ("Termination Notice"),
terminate this Agreement. Such termination right shall be in
addition to any penalty payments set forth in Section 5 and
termination rights for an Event of Default pursuant to Section
13.
8.3 Change of Control. This Agreement may be terminated by either
AWA or Mesa providing the other party with at least 90 days'
prior written notice (the "Change Termination Notice") in the
event of a change of control of the other party or a sale of
substantially all of the other party's assets. "Change of
Control" means any "person" or "group" (each as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) either
becomes the beneficial owner (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of voting securities of
either party (or securities converted into or exchangeable for
such voting securities) representing 50% or more of the
combined voting power of all voting securities of the party
(on a fully diluted basis) or otherwise has the ability,
directly or indirectly, to elect a majority of the board of
directors of the party or any person or two or more persons
acting in concert shall have acquired by contract or
otherwise, or shall have entered into a contract or
arrangement that, upon consummation thereof, will result in
its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence on the management or
policies of the party.
8.4 Effect of Termination. If AWA elects to terminate this
Agreement pursuant to this Section 8, AWA, in the Termination
Notice, shall establish as the termination date any date
between 90 and 180 days after delivery of the Termination
Notice or Change Termination Notice, as applicable. Mesa shall
continue to provide the Flight Services and Other Services
required by this Agreement until the termination date set
forth in the Termination Notice or Change Termination Notice,
as applicable. AWA and Mesa shall make all payments as
required by this Agreement for the period through and
including the termination date set forth in the Termination
Notice or Change Termination Notice, as applicable.
9. Service Xxxx License For Services Provided By Mesa.
9.1 Grant of License. For the payment of $1.00, AWA hereby grants
to Mesa a non-exclusive, non-transferable license to use such
AWA Service Marks as AWA may designate, in writing, from time
to time in connection with the Flight Services and Other
Services to be rendered by Mesa; provided, however, that at
any time prior to expiration or termination of this Agreement
AWA may alter, amend or revoke the license hereby granted and
require Mesa's use of any new or different AWA Service Xxxx in
conjunction with the Flight Services and Other Services
provided hereunder as AWA may determine in its sole discretion
and judgment.
26
9.2 Operation under AWA Service Marks/Aircraft Decor. Mesa, at its
expense (subject to reimbursement in the next sentence), shall
cause the Fleet and any replacement or additional Aircraft
utilized by Mesa, or any of the Affiliated Service Providers,
to provide the Flight Services, to be painted, marked and
decorated to bear AWA Service Marks, consisting of AWA
aircraft exterior and interior color decor and pattern
provided by AWA and the name "America West Express." AWA shall
reimburse Mesa for 50% of the costs of painting, decorating or
marking any new CRJ added to the Fleet pursuant to Section
2.2. Upon written notice from AWA, which shall include the
specifications for any such changes in AWA Service Marks and
exterior or interior aircraft decor and patterns, Mesa shall
effect changes in the aircraft decor and patterns within 12
months from the date of such notice. AWA shall reimburse Mesa
for the cost of repainting the Fleet in the event that AWA
changes its logo and color decor and pattern from the design
existing as of the Effective Date. Mesa shall use and display
suitable signs on the interior and exterior of each Aircraft
identifying Mesa as the operator of the Services, such signs
shall be subject to the prior written consent of AWA as to
nature, size and location provided that the signs shall comply
with all Regulations. AWA shall reimburse Mesa for the actual
costs and expenses of repainting any Aircraft eliminated from
the Fleet pursuant to Section 2.2. All announcements, displays
or literature used or viewed by Mesa customers on Flights
shall highlight "America West Express." No such announcements,
displays or literature shall reference "Mesa Airlines," other
than to identify Mesa or the operator of the Services, on
briefing cards or as required by the Regulations.
9.3 Terms and Conditions Governing Service Xxxx License.
9.3.1 Mesa hereby acknowledges AWA's ownership of the AWA
Service Marks, further acknowledges the validity of
the AWA Service Marks, and agrees that it shall not
do anything in any way to infringe or abridge upon
AWA's rights in the AWA Service Marks or directly or
indirectly to challenge the validity of the AWA
Service Marks.
9.3.2 To assure that the production, appearance and quality
of the AWA Service Marks is consistent with AWA's
reputation for high quality and the goodwill
associated with the AWA Service Marks, Mesa agrees to
maintain a level of quality consistent with AWA's
quality in the Flight Services and Other Services it
provides pursuant to this Agreement and to follow
AWA's written instructions regarding use of AWA's
Service Marks, as they may be amended from time to
time.
9.3.3 Mesa agrees that, in providing the Flight Services
and Other Services, it shall not advertise or make
use of the AWA Service Marks without the prior
written consent of AWA. AWA shall have absolute
discretion to withhold its consent concerning any and
all such advertising and use of the AWA Service Marks
in any advertising by Mesa. In the event AWA approves
the use of such AWA Service Marks in any advertising,
such
27
advertising shall identify AWA as the owner of such
Service Marks and conform with any additional
requirements specified by AWA.
9.3.4 To the extent that Mesa is licensed to use the AWA
Service Marks, the AWA Service Marks shall be used
only in connection with the Flight Services and Other
Services specifically covered by this Agreement and
not in connection with any other business or activity
of Mesa or any other entity.
9.3.5 Nothing in this Agreement shall be construed to give
Mesa the exclusive right to use the AWA Service Marks
or abridge AWA's right to use and license the AWA
Service Marks, and AWA hereby reserves the right to
continue to use the AWA Service Marks and to license
such other uses of the AWA Service Marks as AWA may
desire.
9.3.6 No term or provision of this Agreement shall be
construed to preclude the use of the AWA Service
Marks, including "America West Express," or the
aircraft exterior color decor and patterns by other
individuals or entities not covered by this
Agreement.
9.3.7 Upon the termination or expiration of this Agreement,
the license and use of the AWA Service Marks by Mesa
shall cease and such use shall not thereafter occur.
10. Liability and Indemnification.
10.1 Relationship Between the Parties. Nothing contained in this
Agreement will be deemed to create any agency or partnership
or similar relationship between AWA and Mesa. Nothing
contained in this Agreement will be deemed to authorize either
AWA or Mesa to bind or obligate the other. Mesa and the
Affiliated Service Providers and their employees engaged in
performing the Flight Services and Other Services shall be
employees of Mesa or the Affiliated Service Providers for all
purposes, and under no circumstances shall be deemed to be
employees, agents or independent contractors of AWA. AWA and
its employees engaged in performing the obligations of AWA
under this Agreement shall be employees, agents and
independent contractors of AWA for all purposes, and under no
circumstances shall be deemed to be employees, agents or
independent contractors of Mesa. Pursuant to this Agreement,
Mesa and the Affiliated Service Providers shall act, for all
purposes, as independent contractors and not as agents for
AWA. AWA shall have no supervisory power or control over any
employees engaged by Mesa and the Affiliated Service Providers
in connection with their performance hereunder, and all
complaints or requested changes in procedures shall be
transmitted by AWA to a designated officer of Mesa. Nothing
contained in this Agreement shall be intended to limit or
condition Mesa's and the Affiliated Service Providers' control
over their operations or the conduct of their business as air
carriers, and Mesa and the Affiliated Service Providers and
their principals assume all risks of financial losses which
may result form the operation of the
28
Flight Services and Other Services to be provided by Mesa and
the Affiliated Service Providers hereunder.
10.2 Indemnification by Mesa. Mesa agrees to indemnify, defend and
hold harmless AWA, its directors, officers, employees, agents,
parent corporation, subsidiaries and affiliates for, from and
against any and all loss, liability, claim, damage, penalty,
fine, charge, cause of action, demand, cost and expense
(including attorneys' and consultants' fees and costs)
whatsoever (collectively, "Damages"), as incurred, arising out
of, resulting from or incurred in connection with: (i) the
provision of the Flight Services and Other Services by Mesa
and the Affiliated Service Providers or any of their
employees, agents, licensees, contractors, suppliers, officers
or directors; (ii) Mesa's or the Affiliated Service Providers'
breach of this Agreement; (iii) damage or destruction of
property of any person, or injury or death of any person,
caused by, arising out of, or in connection with any act or
omission of Mesa or the Affiliated Service Providers, their
employees, agents, licensees, contractors, suppliers, officers
or directors; (iv) any taxes, impositions, assessments or
other governmental charges incurred by Mesa in providing the
Flight Services or Other Services or imposed on any revenue
generated by this Agreement (except as set forth in Section
7.1.3); (v) passenger complaints or claims by passengers using
the Flight Services; (vi) the failure or discontinuance of
service to any EAS market (except as specified in Section
7.7); and (vii) failure to comply with any Regulations. Mesa
agrees to indemnify, defend and hold harmless AWA, its
officers, directors, employees, agents, parent corporation,
subsidiaries and affiliates for, from and against any and all
Damages as incurred, arising out of, resulting from or
incurred in connection with any claims for consideration for
performance by the Affiliated Service Providers. Mesa shall
reimburse AWA or other Indemnified Party (as defined below)
for any legal and any other expenses reasonably incurred in
investigating, preparing or defending against any claim or
action arising out of or relating to any of the foregoing.
10.3 Indemnification by AWA. AWA agrees to indemnify, defend and
hold harmless Mesa, its directors, officers, employees,
agents, parent corporation, subsidiaries and affiliates for,
from and against any and all Damages, as incurred, arising out
of, resulting from or incurred in connection with: (i) AWA's
breach of this Agreement; (ii) damage or destruction of
property of any person, or injury or death of any person,
caused by, arising out of, or in connection with any act or
omission of AWA, its employees, agents, licensees,
contractors, suppliers, officers or directors in performing
AWA's obligations under this Agreement to the extent not
covered by Mesa's or the Affiliated Service Providers'
insurance required to be maintained by this Agreement; and
(iii) any taxes, impositions, assessments or other
governmental charges incurred by AWA for revenue received by
AWA under this Agreement. AWA shall reimburse Mesa or other
Indemnified Party (as defined below) for any legal and any
other expenses reasonably incurred in investigating, preparing
or defending against any claim or action arising out of or
relating to any of the foregoing.
29
10.4 Conduct of Indemnification Proceedings. The person or entity
claiming indemnification hereunder is referred to as the
"Indemnified Party" and the party against whom such claims are
asserted hereunder is referred to as the "Indemnifying Party".
Each Indemnified Party shall give reasonably prompt notice to
the Indemnifying Party of any action or proceeding or
assertion or threat of claim commenced against it in respect
of which indemnity may be sought hereunder, but failure to so
notify the Indemnifying Party (i) shall not relieve the
Indemnifying Party from any liability which it may have under
the indemnity agreement provided in this Agreement, unless and
to the extent it did not otherwise learn of such action,
threat or claim and the lack of notice by the Indemnified
Party results in the forfeiture by the Indemnifying Party of
substantial rights and defenses and (ii) shall not, in any
event, relieve the Indemnifying Party from any obligations to
the Indemnified Party other than the indemnification
obligation provided under Sections 10.2 and 10.3 above. If the
Indemnifying Party elects within a reasonable time after
receipt of notice, the Indemnifying Party may assume the
defense of the action or proceeding at Indemnifying Party's
own expense with counsel chosen by the Indemnifying Party and
approved by the Indemnified Party; provided, however, that, if
the Indemnified Party reasonably determines upon advice of
counsel that a conflict of interest exists where it is
advisable for the Indemnified Party to be represented by
separate counsel or that, upon advice of counsel, there may be
legal defenses available to it which are different from or in
addition to those available to the Indemnifying Party, then
the Indemnified Party shall be entitled to separate counsel at
the Indemnifying Party's expense, which counsel shall be
chosen by the Indemnified Party in its sole discretion. If the
Indemnifying Party does not assume the defense, after having
received the notice referred to in the second sentence of this
Section, the Indemnifying Party will pay the reasonable fees
and expenses of counsel for the Indemnified Party. Unless and
until a final judgment that an Indemnified Party is not
entitled to the costs of defense under the foregoing
provision, the Indemnifying Party shall reimburse, promptly as
they are incurred, the Indemnified Party's costs of defense.
The Indemnifying Party shall not settle or compromise any
claim for which an Indemnified Party is entitled to indemnity
without the prior written consent of the Indemnified Party.
10.5 Insurance.
10.5.1 Mesa, at all times during the Term of this Agreement,
shall have and maintain and shall cause the
Affiliated Service Providers to have and maintain in
full force and effect, policies of insurance
satisfactory to AWA, of the types of coverage, and in
the minimum amounts stated below with insurance
companies satisfactory to AWA and under terms and
conditions satisfactory to AWA, including insurance
coverage on all Aircraft used to provide Flight
Services. Unless otherwise specified, the minimum
amounts of insurance coverage required hereunder
shall be per occurrence, combined single limit for
all insurance coverage required hereunder.
30
1. Aircraft Liability and Ground $250,000,000 per Occurrence Combined Single
Liability Insurance (including Limit of Liability for CRJs and Dash 8s and
Commercial General Liability) $150,000,000 per Occurrence Combined Single
Limit of Liability for Beech 1900s
a. Bodily Injury and Personal Injury - Included in Combined Single Limit
Passengers
b. Bodily Injury and Personal Injury - Included in Combined Single Limit
Third Parties
c. Property Damage Included in Combined Single Limit
Per Accident
------------
2. Worker's Compensation Insurance Statutory
(Company Employees)
3. Employers' Liability (Company Employees) $500,000
4. All Risk Hull Insurance on Aircraft Replacement Cost or Such Lesser Amount as
Performing Services Hereunder may be Consented to by AWA, in writing
5. Baggage Liability $1,250 (per Passenger)
6. Cargo Liability $100,000 any One Aircraft
$100,000 any One Disaster with Terms,
Limitations and Conditions Acceptable to AWA
10.5.2 The parties hereby agree that from time to time
during the Term of this Agreement, AWA may require
Mesa and the Affiliated Service Providers to have and
maintain amounts of insurance coverage different from
those amounts set forth in Section 10.5.1, should
AWA, in its reasonable judgment, deem the
circumstances and conditions of the Flight Services
and Other Services to require increases in any or all
of the foregoing minimum insurance coverages.
31
10.5.3 Mesa shall cause all policies of insurance which it
and the Affiliated Service Providers maintain
pursuant to this Agreement, to be duly and properly
endorsed by Mesa's and the Affiliated Service
Providers' insurance underwriters as follows:
10.5.3.1 To provide that any waiver of rights of
subrogation against other parties by Mesa or
the Affiliated Service Providers shall not
affect the coverage provided hereunder with
respect to AWA.
10.5.3.2 To provide that Mesa's and the Affiliated
Service Providers' underwriters shall waive
any and all subrogation rights against AWA,
its directors, officers, agents and
employees without regard to any breach of
warranty by Mesa or the Affiliated Service
Providers or to provide other evidence of
such waiver of recourse against AWA, its
directors, officers, agents, or employees as
shall be acceptable to AWA.
10.5.3.3 Be duly and properly endorsed to provide
that each such policy or policies or any
part or parts thereof shall not be canceled,
terminated, or materially altered, changed
or amended by Mesa's and the Affiliated
Service Providers' insurance underwriters,
until after 30 days' written notice to AWA
which 30 days' written notice shall commence
to run from the date such notice is actually
received by AWA.
10.5.4 With respect to policies of insurance described as
Aircraft Liability and Ground Liability Insurance,
Mesa will provide that Mesa's and the Affiliated
Service Providers' policies:
10.5.4.1 Endorse AWA, its directors, officers,
agents, parents, subsidiaries and employees
as Additional Insureds thereunder.
10.5.4.2 Constitute primary insurance for such claims
and acknowledge that any other insurance
policy or policies of AWA will be secondary
or excess insurance;
10.5.4.3 Cover AWA's costs of defending against such
insured claims including, without
limitation, to the extent permitted by the
policies, costs incurred in the retention of
separate legal counsel of its choice; and
10.5.4.4 Provide a cross-liability clause acceptable
to AWA, and a specific contractual liability
insurance provision covering liability
assumed by Mesa and the Affiliated Service
Providers under this Agreement.
32
10.5.5 With respect to policies of insurance for coverage
described as Aircraft Liability and Ground Liability
Insurance and All Risk Hull Insurance, Mesa shall
cause its insurance underwriters to provide a breach
of warranty clause.
10.5.6 All aircraft hull insurance provided pursuant to this
Agreement shall be provided on agreed value basis
and, except with the consent of AWA, shall not be
subject to more than the standard market deductibles.
In the event of loss, settled on the basis of a total
loss, all losses shall be payable in full.
10.5.7 Upon request by AWA, Mesa shall furnish to AWA
evidence satisfactory to AWA of the aforesaid
insurance coverage and endorsements, including
certificates certifying that the aforesaid insurance
policy or policies with the aforesaid policy limits
are duly and properly endorsed as aforesaid and are
in full force and effect.
10.5.8 With respect to policies of insurance obtained
directly from foreign underwriters, Mesa shall cause
such insurance underwriters to provide that AWA may
maintain against Mesa's and the Affiliated Service
Providers' underwriters a direct action in the United
States upon such insurance policies and to this end
to provide a standard service of suit clause
designating an agent for service of process in the
United States of America.
10.5.9 In the event Mesa or the Affiliated Service Providers
fails to maintain in full force and effect any of the
insurance and endorsements described in Section 10.5,
AWA shall have the right (but not the obligation) to
procure and maintain such insurance or any part
thereof. The cost of such insurance shall be payable
by Mesa to AWA upon demand by AWA. The procurement of
such insurance or any part thereof by AWA shall not
discharge or excuse Mesa's or the Affiliated Service
Providers' obligation to comply with the provisions
of Section 10.5. Mesa agrees not to cancel, terminate
or materially alter, change or amend any of the
policies referred to in Section 10.5 without 30 days'
prior written notice to AWA of its intent to cancel,
terminate or materially alter, change or amend said
policies or insurance which 30 day notice period
shall commence to run from the date notice is
actually received by AWA.
10.5.10 AWA shall maintain cargo liability coverage, in types
and amounts required by law, for all air freight
transported by Mesa or the Affiliated Service
Providers under an AWA airbill on any Flights.
11. Confidentiality.
11.1 AWA and Mesa agree that the terms of this Agreement shall be
treated as confidential and shall not be disclosed to third
parties without the express written
33
consent of AWA and Mesa, or as required by law. In the event
of disclosure required by law, only those portions of this
Agreement required to be disclosed shall be disclosed. The
disclosing party shall make good faith efforts to minimize the
portions to be disclosed and shall seek confidential treatment
by the receiving party or agency for any portions disclosed.
In the event of one party being served a subpoena or discovery
request, prior to responding to the subpoena or request, the
party served shall notify the other party to provide the other
party an opportunity to contest the disclosure of any terms of
this Agreement.
11.2 "Confidential Information" means any information in any form,
including, without limitation, the terms of this Agreement,
written documents, oral communications, recordings, videos,
software, data bases, business plans, and electronic and
magnetic media, provided to or observed by AWA or Mesa
pursuant to this Agreement, including information owned or
provided by either party to the other party, except for
information generally available to the public. AWA and Mesa
agree that they shall maintain all Confidential Information in
confidence and use such Confidential Information solely for
purposes of performance under this Agreement. Such
Confidential Information shall be distributed within each
party's company only to personnel and to its legal counsel,
auditors and other consultants on a need-to-know basis for
purposes related to this Agreement or in compliance with a
court order or statutory or regulatory requirements. Except
for legal counsel and auditors, and as permitted by Section
11.1, in no event shall either party disclose Confidential
Information to any third parties except subcontractors and
independent consultants and then only if approved by both
parties in writing in advance of such disclosure. Confidential
Information does not include information that is available to
the general public other than as a result of disclosure by the
disclosing party or information that was known or
independently developed by the receiving party prior to
disclosure, as evidenced by records kept in the ordinary
course of business.
11.3 Mesa acknowledges and agrees that any Confidential Information
shared or given to AWA pursuant to this Agreement may be
shared by AWA on a confidential basis with America West
Holdings Corporation, The Leisure Company and other
subsidiaries and affiliates of AWA. AWA acknowledges and
agrees that any Confidential Information shared or given to
Mesa pursuant to this Agreement may be shared by Mesa on a
confidential basis with Mesa Air Group, Inc. and other
subsidiaries or affiliates of Mesa.
12. Taxes. Mesa shall pay, prior to delinquency, all airport, property,
sales, use, excise or any other taxes, impositions, assessments or
other governmental charges incurred in connection with the provision of
the Flight Services and Other Services under this Agreement and all
taxes imposed or any sums paid by AWA to Mesa under this Agreement. AWA
shall pay, prior to delinquency, all taxes imposed on any sums paid by
Mesa to AWA under this Agreement.
34
13. Defaults and Remedies.
13.1 Default by Mesa. The occurrence of any one or more of the
following events shall constitute a material default and
breach of this Agreement by Mesa (an "Event of Default"):
13.1.1 The failure of Mesa to make any payment required to
be made by Mesa to AWA hereunder, as and when due,
and such failure continues for 10 business days after
Mesa's receipt of written notice from AWA;
13.1.2 If Mesa or any of the Affiliated Service Providers is
required by the FAA or DOT to suspend a substantial
portion of its operations for any safety reason and
has not resumed such operation within 3 business days
of the suspension or if Mesa suspends a substantial
portion of the Flight Services for any other reason,
except as a result of an emergency airworthiness
directive from the FAA affecting all aircraft
similarly equipped to the Aircraft (not just those
owned or operated by Mesa);
13.1.3 The failure of Mesa or any of the Affiliated Service
Providers to observe or perform any of the covenants,
conditions or provisions of this Agreement to be
observed or performed by Mesa or any of the
Affiliated Service Providers, other than as described
in Sections 8 or 13.1.1 or 13.1.2 above, and such
failure shall continue for a period of 15 days after
written notice thereof from AWA to Mesa or such
longer period as may be reasonably necessary to
complete the cure of such failure (not to exceed an
additional 30 days); provided Mesa commences such
cure during the initial 15-day period and
continuously and diligently pursues the cure to
completion;
13.1.4 (i) the cessation of Mesa's business operations as a
going concern; (ii) the making by Mesa of any general
assignment, or general arrangement for the benefit of
creditors; (iii) the failure of Mesa to generally pay
Mesa's debts as they come due or Mesa's written
admission of its inability to pay its debts as they
come due; (iv) the filing by or against Mesa of a
petition to have Mesa adjudged bankrupt or a petition
for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of
petition filed against Mesa, the same is dismissed,
stayed or vacated within 60 days); (v) an
adjudication of Mesa's insolvency; (vi) appointment
of a trustee or receiver to take possession of
substantially all of Mesa's assets which is not
dismissed, stayed or vacated within 60 days; or (vii)
the attachment, execution or other judicial seizure
of all of Mesa's assets.
13.1.5 Upon an Event of Default, AWA may: (a) by written
notice to Mesa (a "Default Termination Notice")
terminate this Agreement effective as of the date set
forth in the Default Termination Notice which date
shall not be less than 30 nor more than 180 days
after the date of the Default unless
35
the event in 13.1.2 occurs, in which case immediate;
and/or (b) pursue all other rights and remedies
available at law or in equity to AWA for the Event of
Default, including, without limitation, injunctive
relief, specific performance and damages. After
receipt of a Default Termination Notice, Mesa and the
Affiliated Service Providers shall continue to
provide the Flight Services and Other Services in
accordance with this Agreement until the termination
date set forth in the Default Termination Notice. No
remedy or election by AWA hereunder shall be deemed
exclusive, but shall, wherever possible, be
cumulative with all other rights and remedies at law
or in equity.
13.2 AWA Default. The occurrence of any one or more of the
following events shall constitute a material default and
breach of this Agreement by AWA (an "AWA Event of Default"):
13.2.1 The failure of AWA to make any payment required to be
made to Mesa by AWA hereunder, as and when due, and
such failure continues for 10 business days after
AWA's receipt of written notice from Mesa;
13.2.2 The failure of AWA to observe or perform any of the
covenants, conditions or provisions of this Agreement
to be observed or performed by AWA, and such failure
shall continue for a period of 15 days after written
notice thereof from Mesa to AWA or such longer period
as may be reasonably necessary to complete the cure
of such failure (not to exceed an additional 30
days); provided AWA commences such cure during the
initial 15-day period and continuously and diligently
pursues the cure to completion;
13.2.3 (i) the cessation of AWA's business operations as a
going concern; (ii) the making by AWA of any general
assignment, or general arrangement for the benefit of
creditors; (iii) the failure of AWA to generally pay
AWA's debts as they come due or AWA's written
admission of its inability to pay its debts as they
come due; (iv) the filing by or against AWA of a
petition to have AWA adjudged bankrupt or a petition
for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of
petition filed against AWA, the same is dismissed,
stayed or vacated within 60 days); (v) an
adjudication of AWA's insolvency; (vi) appointment of
a trustee or receiver to take possession of
substantially all of AWA's assets which is not
dismissed, stayed or vacated within 60 days; or (vii)
the attachment, execution or other judicial seizure
of all of AWA's assets which is not dismissed, stayed
or vacated within 60 days.
13.2.4 Upon the occurrence and continuance of an AWA Event
of Default, Mesa may: (a) by written notice to AWA
(an "AWA Default Notice") terminate this Agreement
effective as of the date set forth in the AWA Default
Notice which date shall not be less than 30 nor more
than 180 days after the date of the AWA Event of
Default; and/or (b) pursue all other rights
36
and remedies available at law or in equity to Mesa
for the AWA Event of Default, including, without
limitation, injunctive relief, specific performance
and damages. After receipt of an AWA Default Notice,
AWA shall continue to perform its obligations under
this Agreement until the termination date set forth
in the AWA Default Notice. No remedy or election by
Mesa hereunder shall be deemed exclusive, but shall,
wherever possible, be cumulative with all other
rights and remedies at law or in equity.
14. Records and Reports.
14.1 Retention of Records. Mesa shall keep accurate and complete
books and records of all Flight Services and Other Services
performed under this Agreement as well as any additional
records that the parties agree may be required in accordance
with AWA's procedures and the Regulations. Mesa shall retain
such records in accordance with applicable law, AWA's
procedures and the Regulations.
14.2 Provision of Financial Records. Upon AWA's request, and until
such time as AWA advises Mesa that such reports are no longer
necessary, Mesa shall furnish to AWA, within 60 days following
the close of the first three fiscal quarters of Mesa,
unaudited financial statements including Mesa's current
corporate balance sheets and profit and loss statements, and
within 120 days after the close of its fiscal year, Mesa shall
furnish AWA with audited financial statements of Mesa (or its
parent company) including, either separately or on a
consolidated basis, the balance sheet and profit and loss
statements of that party. The appropriate reports filed on
Form 10-Q and 10-K shall be satisfactory to fulfill such
obligation.
14.3 Provision of Additional Records. Mesa shall promptly furnish
AWA with a copy of every report that it prepares and is
required to submit to the DOT, FAA, National Transportation
Safety Board or any other governmental agency, relating to any
accident or incident involving an Aircraft used in performing
Flight Services under this Agreement, when such accident or
incident is claimed to have resulted in the death of or
substantial injury to any person or the loss of, damage to, or
destruction of any property.
14.4 Additional Reports. Mesa shall promptly notify AWA in writing
of: (i) any change in or relinquishment of control of Mesa;
(ii) any agreement contemplating such a change or
relinquishment with a copy of such agreement, if in writing,
to AWA; or (iii) any change or contemplated change in the
Chief Executive Officer position of Mesa.
15. Miscellaneous Provisions.
15.1 Notices. All notices, consents, approvals or other instruments
required or permitted to be given by either party pursuant to
this Agreement shall be in writing and given by: (i) hand
delivery; (ii) facsimile; (iii) express overnight delivery
service; or (iv) certified or registered mail, return receipt
requested. Notices shall be provided to the parties and
addresses (or facsimile numbers, as
37
applicable) specified below and shall be effective upon
receipt or the rejection of such delivery, except if delivered
by facsimile outside of business hours in which case they
shall be effective on the next succeeding business day:
If to AWA: America West Airlines, Inc.
0000 X. Xxx Xxxxxx Xxxx.
Xxxxxxx, Xxxxxxx 00000
Attn: Vice President and General Counsel
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
If to Mesa: Mesa Air Group
000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: General Counsel
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
15.2 Waiver and Amendment. No provisions of this Agreement shall be
deemed waived or amended except by a written instrument
unambiguously setting forth the matter waived or amended and
signed by the party against which enforcement of such waiver
or amendment is sought. Waiver of any matter shall not be
deemed a waiver of the same or any other matter on any future
occasion.
15.3 Captions. Captions are used throughout this Agreement for
convenience of reference only and shall not be considered in
any manner in the construction or interpretation hereof.
15.4 Attorneys' Fees. In the event of any judicial or other
adversarial proceeding between the parties concerning this
Agreement, the prevailing party shall be entitled to recover
its attorneys' fees and other costs in addition to any other
relief to which it may be entitled.
15.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject
matter hereof, and there are no other representations,
warranties or agreements, written or oral, between AWA and
Mesa with respect to the subject matter of this Agreement.
15.6 Jurisdiction; Choice of Law. For purposes of any action or
proceeding arising out of this Agreement, the parties hereto
hereby expressly submit to the jurisdiction of all federal and
state courts located in the State of Arizona. This Agreement
shall be governed by and construed in accordance with the laws
of the State of Arizona.
15.7 Severability. If this Agreement, any one or more of the
provisions of this Agreement, or the applicability of this
Agreement or any one or more of the provisions of this
Agreement to a specific situation, shall be held invalid,
illegal
38
or unenforceable or in violation of any contract or agreement
to which Mesa or AWA are a party, then AWA and Mesa shall in
good faith amend and modify this Agreement, consistent with
the intent of Mesa and AWA, as evidenced by this Agreement, to
the minimum extent necessary to make it or its application
valid, legal and enforceable and in accordance with the
applicable agreement or contract, and the validity or
enforceability of all other provisions of this Agreement and
all other applications of any such provision shall not be
affected thereby.
15.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
15.9 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of AWA and Mesa and their respective successors
and permitted assigns.
15.10 No Assignment. The rights, obligations and duties of AWA and
Mesa under this Agreement may not be assigned or delegated,
except as may otherwise be mutually agreed by AWA and Mesa, in
their sole and absolute discretion.
AWA:
America West Airlines, Inc.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board and
Chief Executive Officer
MESA:
Mesa Airlines, Inc.,
a Nevada corporation
By: /s/ Xxxxxxxx X. Xxxxxxxx
Name: Xxxxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
39
EXHIBITS
Exhibit A Delivery Schedule
Exhibit B Station Costs
Exhibit C Guaranteed Non-Maintenance Costs
Exhibit D Guaranteed Maintenance Costs
Exhibit E Backup Information
40
EXHIBIT A
DELIVERY SCHEDULE
-----------------------------------------------------------------------------------------------------------------------
Convertible
In Service Months Additional Firm Firm Firm Option
Delivery Month XXX-000 XXX-000 XXX-000 CRJ-7/900 CRJ 7/900
-----------------------------------------------------------------------------------------------------------------------
Seating Configuration 50Y 6F/58Y 6F/74Y
-----------------------------------------------------------------------------------------------------------------------
Apr-01 [***]
May-01
Jun-01 [***]
July-01
Aug-01
Sep-01 [***]
Oct-01
Nov-01 [***]
Dec-01 [***]
-----------------------------------------------------------------------------------------------------------------------
Jan-02 [***]
Feb-02 [***]
Mar-02 [***]
Apr-02 [***] [***]
May-02 [***]
Jun-02 [***] [***]
July-02
Aug-02 [***]
Sep-02 [***]
Oct-02 [***]
Nov-02 [***]
Dec-02 [***]
-----------------------------------------------------------------------------------------------------------------------
Jan-03 [***]
Feb-03
Mar-03 [***] [***]
Apr-03 [***] [***]
May-02 [***] [***]
Jun-03 [***] [***]
July-03 [***] [***]
Aug-03 [***] [***]
Sep-03 [***] [***]
Oct-03 [***] [***]
Nov-03 [***] [***]
Dec-03 [***] [***]
-----------------------------------------------------------------------------------------------------------------------
Jan-04 [***] [***]
Feb-04 [***] [***]
Mar-04 [***] [***]
Apr-04 [***] [***]
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
May-04 [***]
Jun-04 [***]
July-04 [***]
Aug-04 [***]
Sep-04 [***]
Oct-04 [***]
Nov-04 [***]
Dec-04 [***]
-----------------------------------------------------------------------------------------------------------------------
Each calendar month [***]
thereafter through Oct-07
-----------------------------------------------------------------------------------------------------------------------
[***] [***] [***] [***] [***]
[***]
[***]
[***]
----------
*** Confidential Treatment Requested
EXHIBIT B
STATION COSTS
[***]
Note 1 - Some or all of these expenses are already included in pass through
amounts.
----------
*** Confidential Treatment Requested
EXHIBITS C AND D - PAGE 1
(SEE NOTE 4)
GUARANTEED NON-MAINTENANCE COSTS (EXHIBIT C)
------------------------------------------------------------------------------------------------------------------
COST CATEGORY UNIT B1900D DHC-82 CRJ 200 CRJ 700 CRJ 900
------------------------------------------------------------------------------------------------------------------
Aircraft Lease & Overhead A/C MONTH
Note 1 Ownership [***] [***] [***] [***] [***]
Note 2 Overhead [***] [***] [***] [***] [***]
Note 2 Crew XXX [***] [***] [***] [***] [***]
Total [***] [***] [***] [***] [***]
Flight Crew BLK HR
Note 3 Pilot [***] [***] [***] [***] [***]
Note 3 Flight Attendant [***] [***] [***] [***] [***]
Total [***] [***] [***] [***] [***]
Note 2 Dispatchers DEP [***] [***] [***] [***] [***]
GUARANTEED MAINTENANCE COSTS (EXHIBIT D)
----------------------------------------------------------------------------------------------------
COST CATEGORY UNIT B1900D DHC-82 CRJ 200 CRJ 700 CRJ 900
----------------------------------------------------------------------------------------------------
Maintenance cost per aircraft A/C MONTH
Note 2 MX Employees [***] [***] [***] [***] [***]
Note 2 Engine & APU Depreciation [***] [***] [***] [***] [***]
---------------------------------------------------
Total [***] [***] [***] [***] [***]
Maintenance Base Cost BASE/MONTH
Note 2 Rent & Utilities [***] [***] [***] [***] [***]
Note 2 Personnel [***] [***] [***] [***] [***]
Note 2 Parts Depreciation [***] [***] [***] [***] [***]
Note 2 Equipment Depreciation [***] [***] [***] [***] [***]
---------------------------------------------------
Total [***] [***] [***] [***] [***]
Maintenance cost per block hour BLK HR
Note 2 Engine MX - Contractual [***] [***] [***] [***] [***]
Note 2 Engine MX - Other [***] [***] [***] [***] [***]
Note 2 Airframe MX [***] [***] [***] [***] [***]
---------------------------------------------------
Total [***] [***] [***] [***] [***]
Maintenance cost per departure DEP
Note 2 Airframe MX [***] [***] [***] [***] [***]
Note 2 Engine MX [***] [***] [***] [***] [***]
---------------------------------------------------
Total [***] [***] [***] [***] [***]
Note 1 - These items will be adjusted on each contract date based on CPI as
defined in the contract.
Note 2 - [***].
Note 3 - The maintenance reserve rates above are based on the following
operating assumptions---changes to these assumptions will Result in revised
costs and/or guarantees from our engine and airframe manufacturers. If that
occurs both parties agree to mutually agree to new rates as stated above. Mesa
will furnish America West with a sensitivity chart of these costs as part of our
final contract with the manufacturer.
Note 4 - [***].
ASSUMPTIONS:
Flight Hours Per Year [***] [***] [***]
----------------------------
Average Flight Hours Per Cycle [***] [***] [***]
----------
*** Confidential Treatment Requested
EXHIBITS C AND D - PAGE 2
CRJ -2000 A/C OWNERSHIP SCHEDULE
----------------------------------------------------------------------------
MONTHLY
----------------------------------------------------------------------------
TAIL AMOUNT
----------------------------------------------------------------------------
1 [***] [***]
2 [***] [***]
3 [***] [***]
4 [***] [***]
5 [***] [***]
6 [***] [***]
7 [***] [***]
8 [***] [***]
9 [***] [***]
10 [***] [***]
11 [***] [***]
12 [***] [***]
13 [***] [***]
14 [***] [***]
15 [***] [***]
16 [***] [***]
17 [***] [***]
18 [***] [***]
19 [***] [***]
20 [***] [***]
21 [***] [***]
22 [***] [***]
23 [***] [***]
24 [***] [***]
25 [***] [***]
----------------------------------------------------------------------------
----------------------------------------------------------------------------
AVERAGE [***]
----------------------------------------------------------------------------
----------
*** Confidential Treatment Requested
EXHIBIT E
MESA CODESHARE
Minimum Required Backup - Trueup Xxxxxxxx
COSTS BACKUP REQUIRED MINIMUM FREQUENCY
----- --------------- -----------------
Actual Costs (All use actual $ rates)
Hull Insurance Insurance Policy/Xxxx Annually or when changes occur
Liability Insurance Insurance Policy Xxxx/ Annually or when changes occur
Property Taxes All Invoices & Assessment Notices Semi-Annually
De-Icing All Invoices Monthly
Fuel Costs Station Invoices Audited Basis
Catering All Invoices Monthly
Landing Fees All Invoices Monthly
Security Service All Invoices Monthly
Station Rent All Invoices Monthly
CRJ Leases Lease Payment Schedule Every new Delivery or Change in Lease
Station Costs All Invoices Monthly
