1
EXHIBIT 10.86
PURCHASE AGREEMENT NUMBER 2021
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Relating to Boeing Model 747-400F Aircraft
P.A. No. 2021
CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED FOR
BRACKETED MATERIAL ("[ ]")
REDACTED PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
2
TABLE OF CONTENTS
SA
ARTICLES NUMBER
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1. Quantity, Model and Description
2. Delivery Schedule
3. Price
4. Payment
5. Miscellaneous
TABLE
1. Aircraft Information Table
EXHIBIT
A. Aircraft Configuration
B. Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS
CS1. Customer Support Variables
EE1. Engine Escalation/Engine Warranty and Patent Indemnity
SLP1. Service Life Policy Components
LETTER AGREEMENTS
2021-1 Seller Purchased Equipment
2021-2 Option Aircraft
2021-3 Escalation Sharing
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P.A. No. 2021
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SA
LETTER AGREEMENTS (CONTINUED) NUMBER
---------------------------- ------
2021-4 Demonstration Flights
2021-5 Spares Initial Provisioning
2021-6 Multiple Aircraft Operating Weights
2021-7 Promotion Support
6-1162-DSF-082 Aircraft Performance Guarantees
6-1162-DSF-083 Certain Contractual Matters
6-1162-DSF-084 Airframe Maintenance Cost Protection Program
6-1162-DSF-085 Open Configuration Matters
6-1162-DSF-086 Remedy for Deviation from Fuel Burn Objective
6-1162-DSF-098 Taxes - Boeing Opinion
6-1162-DSF-099 Special Purchase Agreement Provisions
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P.A. No. 2021
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Purchase Agreement No. 2021
between
The Boeing Company
and
Atlas Air, Inc.
------------------------------
This Purchase Agreement No. 2021 dated as of , 1997 between The Boeing
Company (Boeing) and Atlas Air, Inc. (Customer) relating to the purchase and
sale of Model 747-400F aircraft incorporates the terms and conditions of the
Aircraft General Terms Agreement dated as of , 1997 between the parties,
identified as AGTA-TLS (AGTA).
Article 1. Quantity, Model and Description.
The aircraft to be delivered to Customer will be designated as Model
747-400F aircraft (the Aircraft). Boeing will manufacture and sell to Customer
Ten (10) Aircraft to conform to the configuration described in Exhibit A, which
is part of this Purchase Agreement.
Article 2. Delivery Schedule.
The scheduled months of delivery of the Aircraft are listed in the attached
Table 1, which is part of this Purchase Agreement.
Article 3. Price.
3.1. Aircraft Basic Price. The Aircraft Basic Price in
subject to escalation dollars is listed in Table 1.
3.2. Advance Payment Base Prices. The Advance Payment Base
Prices listed in Table 1 were calculated utilizing the latest escalation
factors available to Boeing on the date of this Purchase Agreement projected to
the month of scheduled delivery.
3.3. The components of the Aircraft Basic Price and the
calculation of the Advance Payment Base Prices for the Aircraft are listed in
Table 1.
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P.A. No. 2021
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Article 4. Payment.
4.1. Boeing acknowledges receipt of a deposit in the amount shown
in Table 1 for each Aircraft (Deposit).
4.2. The standard advance payment schedule for the Model 747-400F
aircraft requires the purchaser to make certain advance payments, expressed in
a percentage of the Advance Payment Base Price of each aircraft beginning with
a payment of 1%, less the Deposit, on the effective date of the purchase
agreement for the aircraft. Additional advance payments for each aircraft are
due on the first business day of the months listed in the attached Table 1.
4.3. Since the scheduled delivery month of the first four (4)
Aircraft is less than 24 months from the date of the Purchase Agreement,
Customer will make a payment of 20%, less the Deposit, on the first Aircraft, a
payment of 15%, less the Deposit, on each of the next two Aircraft, a payment
of 5%, less the Deposit on the next Aircraft and a payment of 1%, less the
Deposit, on the remaining five (5) Aircraft upon signing the Purchase
Agreement. Customer will make additional advance payments for all the Aircraft
in accordance with the attached Table 1.
4.4. Customer will pay the balance of the Aircraft Price of each
Aircraft at delivery.
Article 5. Miscellaneous.
5.1. Aircraft Information Table. Table 1 consolidates information
contained in Articles 1, 2, 3 and 4 with respect to (i) quantity of Aircraft,
(ii) applicable Detail Specification, (iii) month and year of scheduled
deliveries, (iv) Aircraft Basic Price, (v) applicable escalation factors and
(vi) Advance Payment Base Prices and advance payments and their schedules.
5.2. Buyer Furnished Equipment Variables. Supplemental Exhibit BFE1
contains vendor selection dates, on dock dates and other variables applicable
to the Aircraft.
5.3. Customer Support Variables. Supplemental Exhibit CS1 contains
the variable information applicable to information, training services and other
things furnished by Boeing in support of the Aircraft.
5.4. Engine Escalation Variables. Supplemental Exhibit EE1 contains
the applicable engine escalation formula, the engine warranty and the engine
patent indemnity for the Aircraft.
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5.5. Service Life Policy Component Variables. Supplemental Exhibit
SLP1 lists the airframe and landing gear components covered by the Service Life
Policy for the Aircraft.
5.6. Negotiated Agreement; Entire Agreement. This Purchase
Agreement, including the provisions of Article 8.2 of the AGTA relating to
insurance, and Article 11 of Part 2 of Exhibit C of the AGTA relating to
DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES, has
been the subject of discussion and negotiation and is understood by the
parties; the Aircraft Price and other agreements of the parties stated in this
Purchase Agreement were arrived at in consideration of such provisions. This
Purchase Agreement, including the AGTA, contains the entire agreement between
the parties and supersedes all previous proposals, understandings, commitments
or representations whatsoever, oral or written, and may be changed only in
writing signed by authorized representatives of the parties.
* * * * * * * * * * * * * * * *
DATED AS OF JUNE 6, 1997
ATLAS AIR, INC. THE BOEING COMPANY
By /s/ M.A. Xxxxxxx By /s/ Xxxx X. Xxxxxx
------------------------- ------------------------
Its CEO Its Attorney-In-Fact
------------------------- ------------------------
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P.A. No. 2021
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Table 1GE to Purchase Agreement 2021
Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTGW: 747-400F 850,000 Detail Specification: D019U002 (5/7/97)
Engine Model/Thrust Level: CF6-80C2BIF 57,900 Price Base Year: Jul-95
Airframe Base Price: [ ]
Optional Features: [ ] Airframe Escalation Data:
--------- ------------------------
Sub-Total of Airframe and Features: [ ] Base Year Index (ECI): 130.10
Engine Price (Per Aircraft): [ ] Base Year Index (ICI): 123.60
Buyer Furnished Equipment (BFE) Estimate $0
Seller Purchased Equipment (SPE) Estimate: [ ] Engine Escalation Data:
Aircraft Basic Price (Excluding BFE/SPE): [ ] Base Year Index (CPI): 129.660
=========
Refundable Deposit per A/C at Proposal Acceptance: [ ]
------------------------------------------------------------------------------------------------------------------------------------
Advance Payment Per Aircraft
------------------------------------------------------------------------------------------------------------------------------------
Escalation Escalation Escalation Escalation Estimate (Amts. Due/Mos. Prior to Delivery)
------------------------------------------------------------------------------------------------------------------------------------
Delivery Number of Factor Factor Credit Adv Payment Base At Signing 24 Mos. 21/18/15/12/9/6 Total
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Mos.
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Date Aircraft (Airframe) (Engine) Memorandum Price Per A/P 1% 4% 5% 35%
------------------------------------------------------------------------------------------------------------------------------------
May-98 1 1.0813 1.05 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
June-98 1 1.0835 1.054 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Aug-98 1 1.0864 1.065 [ ] [ ] [ [ [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Sept-98 1 1.0877 1.068 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Apr-99 1 1.0961 1.067 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Jun-99 1 1.0995 1.074 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Feb-00 1 1.1363 1.09 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Mar-00 1 1.1409 1.093 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Aug-00 1 1.1622 1.105 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Apr-01 1 1.188 1.119 [ ] [ ] [ ] [ ] [ ] [ ]
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8
AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Exhibit A to Purchase Agreement Number 2021
A
P.A. No. 2021
9
AIRCRAFT CONFIGURATION
Dated
------------
relating to
BOEING MODEL 747-400F AIRCRAFT
The Detail Specification is Detail Specification D019U002TLS44F-1dated as
of TBD. Such Detail Specification will be comprised of Boeing Configuration
Specification D019U002 dated TBD as amended to incorporate the Options to be
listed below when configuration specification is complete, including the effects
on Manufacturer's Empty Weight (MEW) and Operating Empty Weight (OEW). Such
Options will be set forth in Xxxxxx Xxxxxxxx X000XXX0XXX00X-0, dated TBD. As
soon as practicable, Boeing will furnish to Buyer copies of the Detail
Specification, which copies will reflect such Options. The Aircraft Basic Price
will be revised to reflect and include all effects of such Options when
configuration specification is complete, except such Aircraft Basic Price does
not include the price effects of any Buyer Furnished Equipment or Seller
Purchased Equipment.
A-1
10
AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Exhibit B to Purchase Agreement Number 2021
B
P.A. No. 2021
11
Exhibit B to
Purchase Agreement No. 2021
Page 1
AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES
relating to
BOEING MODEL 747-400F AIRCRAFT
Both Boeing and Customer have certain documentation and approval
responsibilities at various times during the construction cycle of Customer's
Aircraft that are critical to making the delivery of each Aircraft a positive
experience for both parties. This Exhibit B documents those responsibilities and
indicates recommended completion deadlines for the actions to be accomplished.
X-0
X.X. Xx. 0000
00
Xxxxxxx X to
Purchase Agreement No. 2021
Page 2
1. GOVERNMENT DOCUMENTATION REQUIREMENTS.
Certain actions are required to be taken by Customer in advance of the scheduled
delivery month of each Aircraft with respect to obtaining certain government
issued documentation.
1.1. Airworthiness and Registration Documents.
Not later than 6 months prior to delivery of each Aircraft,
Customer will notify Boeing of the registration number to be painted on the
side of the Aircraft. In addition, and not later than 3 months prior to
delivery of each Aircraft, Customer will, by letter to the regulatory authority
having jurisdiction, authorize the temporary use of such registration numbers
by Boeing during the pre-delivery testing of the Aircraft.
Customer is responsible for furnishing any Temporary or Permanent Registration
Certificates required by any governmental authority having jurisdiction to be
displayed aboard the Aircraft after delivery.
1.2. Certificate of Sanitary Construction.
1.2.1. U.S. Registered Aircraft. Boeing will obtain from the
United States Public Health Service, a United States Certificate of Sanitary
Construction to be displayed aboard each Aircraft after delivery to Customer.
1.2.2. Non-U.S. Registered Aircraft. If Customer requires a
United States Certificate of Sanitary Construction at the time of delivery of
the Aircraft, Customer will give written notice thereof to Boeing at least 3
months prior to delivery. Boeing will then use its reasonable best efforts to
obtain the Certificate from the United States Public Health Service and present
it to Customer at the time of Aircraft delivery.
1.3. Customs Documentation.
1.3.1. Import Documentation. If the Aircraft is intended to be
exported from the United States, Customer must notify Boeing not later than 3
months prior to delivery of each Aircraft of any documentation required by the
customs authorities or by any other agency of the country of import.
1.3.2. General Declaration - U.S. If the Aircraft is intended to
be exported from the United States, Boeing will prepare Customs Form 7507,
General Declaration, for execution by U.S. Customs immediately prior to the
ferry flight of the Aircraft.
B-2
P.A. No. 2021
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Exhibit B to
Purchase Agreement No. 2021
Page 3
For this purpose, Customer will furnish to Boeing not later than 20 days prior
to delivery a complete crew and passenger list and a complete ferry flight
itinerary, including point of exit from the United States for the Aircraft.
If Customer intends, during the ferry flight of an Aircraft, to land at a U.S.
airport after clearing Customs at delivery, Customer must notify Boeing not
later than 20 days prior to delivery of such intention. If Boeing receives such
notification, Boeing will provide to Customer the documents constituting a
Customs permit to proceed, allowing such Aircraft to depart after any such
landing. Sufficient copies of completed Form 7507, along with passenger
manifest, will be furnished Customer to cover U.S. stops scheduled for the ferry
flight.
1.3.3. Export Declaration - U.S. If the Aircraft is intended to
be exported from the United States, Boeing will prepare Form 7525V and,
immediately prior to the ferry flight, will submit such Form to U.S. Customs in
Seattle in order to obtain clearance for the departure of the Aircraft,
including any cargo, from the United States. U.S. Customs will deliver the
Export Declaration to the U.S. Department of Commerce after export.
2. INSURANCE CERTIFICATES.
Unless provided earlier, Customer will provide to Boeing not later
than 30 days prior to delivery of the first Aircraft, a copy of the requisite
annual insurance certificate in accordance with the requirements of Article 8
of the AGTA.
3. NOTICE OF FLYAWAY CONFIGURATION.
Not later than 20 days prior to delivery of the Aircraft, Customer
will provide to Boeing a configuration letter stating the requested "flyaway
configuration" of the Aircraft for its ferry flight. This configuration letter
should include:
(i) the name of the company which is to furnish fuel for
the ferry flight and any scheduled post-delivery
flight training, the method of payment for such fuel,
and fuel load for the ferry flight;
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P.A. No. 2021
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Exhibit B to
Purchase Agreement No. 2021
Page 4
(ii) the cargo to be loaded and where it is to be stowed on
board the Aircraft and address where cargo is to be shipped
after flyaway;
(iii) any BFE equipment to be removed prior to flyaway and
returned to Boeing BFE stores for installation on
Customer's subsequent Aircraft;
(iv) a complete list of names and citizenship of each crew
member and non-revenue passenger who will be aboard the
ferry flight; and
(v) a complete ferry flight itinerary.
4. DELIVERY ACTIONS BY BOEING.
4.1. Schedule of Inspections. All FAA, Boeing, Customer and, if
required, U.S. Customs Bureau inspections will be scheduled by Boeing for
completion prior to delivery or departure of the Aircraft. Customer will be
informed of such schedules.
4.2. Schedule of Demonstration Flights. All FAA and Customer
demonstration flights will be scheduled by Boeing for completion prior to
delivery of the Aircraft.
4.3. Schedule for Customer's Flight Crew. Boeing will inform
Customer of the date that a flight crew is required for acceptance routines
associated with delivery of the Aircraft.
4.4. Fuel Provided by Boeing. Boeing will provide to Customer,
without charge, the amount of fuel shown in U.S. gallons in the table below for
the model of Aircraft being delivered and full capacity of engine oil at the
time of delivery or prior to the ferry flight of the Aircraft.
Aircraft Model Fuel Provided
-------------- -------------
737 1,000
747 4,000
757 1,600
767 2,000
777 3,000
X-0
X.X. Xx. 0000
00
Xxxxxxx X to
Purchase Agreement No. 2021
Page 5
4.5. Flight Crew and Passenger Consumables. Boeing will provide food,
coat hangers, towels, toilet tissue, drinking cups and soap for the first
segment of the ferry flight for the Aircraft.
4.6. Delivery Papers, Documents and Data. Boeing will have available
at the time of delivery of the Aircraft all delivery papers, documents and data
for execution and delivery as described below. If title for the Aircraft will
be transferred to Customer through a Boeing sales subsidiary and if the
Aircraft will be registered with the FAA, Boeing will pre-position in Oklahoma
City, Oklahoma, for filing with the FAA at the time of delivery of the Aircraft
an executed original Form 8050-2, Aircraft Xxxx of Sale, indicating transfer of
title to the Aircraft from Boeing's sales subsidiary to Customer.
4.7. Delegation of Authority. If specifically requested in advance by
Customer, Boeing will present a certified copy of a Resolution of Boeing's
Board of Directors, designating and authorizing certain persons to act on its
behalf in connection with delivery of the Aircraft.
5. DELIVERY ACTIONS BY CUSTOMER.
5.1. Aircraft Radio Station License. At delivery Customer will
provide its Aircraft Radio Station License to be placed on board the Aircraft
following delivery.
5.2. Aircraft Flight Log. At delivery Customer will provide the
Aircraft Flight Log for the Aircraft.
5.3. Delegation of Authority. Customer will present to Boeing at
delivery of the Aircraft an original or certified copy of Customer's Delegation
of Authority designating and authorizing certain persons to act on its behalf
in connection with delivery of the specified Aircraft.
B-5
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CUSTOMER SUPPORT VARIABLES
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Supplemental Exhibit CS1 to Purchase Agreement Number 2021
CS1
P.A. No. 2021
17
CUSTOMER SUPPORT VARIABLES
relating to
BOEING MODEL 747-400F AIRCRAFT
Customer and Boeing will conduct planning conferences approximately 12 months
before delivery of the first Aircraft, or as otherwise agreed, to develop and
schedule a customized Customer Support Program to be furnished by Boeing in
support of the Aircraft.
The customized Customer Services Program will be based upon and equivalent to
the entitlements summarized below.
Part 1: Maintenance and Flight Training Programs; Operations Engineering
Support
1. Maintenance Training.
1.1. Airplane General Familiarization Course; 1 class of 24
students;
1.2. Mechanical/Power Plant Systems Course; 2 classes of 15
students;
1.3. Electrical Systems Course; 2 classes of 15 students;
1.4. Avionics Systems Course; 2 classes of 15 students;
1.5. Corrosion Prevention & Control Course; 1 class of 10
students;
1.6. Aircraft Rigging Course; 1 class of 6 students;
1.7. Composite Repair for Technicians - Basic; 1 class of 8
students;
1.8. Cargo Loading Course - 1 class of 10 students.
1.9. Training materials will be provided to each student. In
addition, one set of training materials used in Boeing's
training program, including visual aids, Computer Based
Training Courseware, instrument panel wall charts,
text/graphics, video programs, etc. will be provided for use
in Customer's own training program.
CS1-1
P.A. No. 2021
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2. Flight Training.
2.1. Transition training for 8 flight crews (16 pilots) in 2 classes;
The training will consist of ground school (utilizing computer based training),
fixed base simulator, full flight simulator and actual aircraft training on
Customer's Aircraft.
2.2. Flight Dispatcher training; 2 classes of 6 students;
2.3. Flight Attendant training; 2 classes of 12 students;
2.4. Performance Engineer training in Boeing's regularly scheduled
courses; schedules are published twice yearly.
2.5. Training materials will be provided to each student. In
addition, one set of training materials as used in Boeing's training program,
including visual aids, Computer Based Training Courseware, instrument panel
wall charts, text/graphics, video programs, etc. will be provided for use in
Customer's own training program.
2.6. Additional Flight Operations Services:
a. Boeing flight crew personnel to assist in ferrying the first
aircraft to Customer's main base;
b. Instructor pilots for 90 calendar days for revenue service
training assistance;
c. An instructor pilot to visit Customer 6 months after revenue
service training to review Customer's flight crew operations for
a 2 week period.
3. Planning Assistance.
3.1. Maintenance and Ground Operations.
Upon request, Boeing will visit Customer's main base to evaluate
aircraft maintenance facilities, develop recommendations and assist in
maintenance planning.
3.2. Spares.
a) Recommended Spares Parts List (RSPL) customized RSPL, data and
documents will be provided to identify spare parts required for
Customer's support program.
CS1-2
P.A. No. 2021
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b) Illustrated Parts Catalog (IPC) A customized IPC in accordance
with ATA 100 will be provided.
c) Provisioning Training Provisioning training will be provided for
Customer's personnel at Boeing's facilities, where documentation
and technical expertise are available. Training is focused on the
initial provisioning process and calculations reflected in the
Boeing RSPL.
d) Spares Provisioning Conference A provisioning conference will be
conducted, normally at Boeing's facilities where technical data
and personnel are available.
4. Technical Data and Documents
4.1. Flight Operations.
Airplane Flight Manual
Operations Manual
Quick Reference Handbook
Weight and Balance Manual
Dispatch Deviation Procedures Guide
Flight Crew Training Manual
Baggage/Cargo Loading Manual
Performance Engineer's Manual
Jet Transport Performance Methods
FMC Supplemental Data Document
Operational Performance Software
4.2. Maintenance.
Aircraft Maintenance Manual
Wiring Diagram Manual
Systems Schematics Manual
Connector Part Number Options Document
Structural Repair Manual
Overhaul/Component Maintenance Manual
Standard Overhaul Practices Manual
Standard Wiring Practices Manual
Non-Destructive Test Manual
Service Bulletins and Index
Corrosion Prevention Manual
Fault Isolation Manual
Fuel Measuring Stick Calibration Document
CS1-3
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Power Plant Buildup Manual Built-In Test Equipment
(BITE) Manual Central Maintenance Computer System
Reporting Table In Service Activity Report All
Operator Letters Service Letters Structural Item
Interim Advisory Maintenance Tips Combined Index
4.3. Maintenance Planning.
Maintenance Planning Data Document
Maintenance Planning Data Tasks Masterfile
Maintenance Task Cards and Index
Maintenance Inspection Intervals Report
4.4. Spares.
Illustrated Parts Catalog
Standards Books
4.5. Facilities and Equipment Planning.
Facilities and Equipment Planning Document
Special Tool and Ground Handling Equipment
Drawings and Index
Supplementary Tooling Documentation
System Test Equipment Document
Illustrated Tool and Equipment List/Manual
Aircraft Recovery Document
Airplane Characteristics for Airport Planning
Document
Airplane Rescue and Fire Fighting Document
Engine Handling Document
4.6. Computer Software Index.
4.7. Supplier Technical Data.
Service Bulletins
Ground Support Equipment Data
Provisioning Information
Component Maintenance/Overhaul Manuals and Index
Publications Index
Product Support Supplier Directory
CS1-4
P.A. No. 2021
21
ENGINE ESCALATION,
ENGINE WARRANTY AND PATENT INDEMNITY
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Supplemental Xxxxxxx XX0 to Purchase Agreement Number 2021
EE1
P.A. No. 2021
22
ENGINE ESCALATION,
ENGINE WARRANTY AND PATENT INDEMNITY
relating to
BOEING MODEL 747-400F AIRCRAFT
1. ENGINE ESCALATION.
(a) The Aircraft Basic Price of each Aircraft set forth in Table 1 of the
Purchase Agreement includes an aggregate price for CF6-80C2 engines and all
accessories, equipment and parts provided by the engine manufacturer. The
adjustment in Engine price applicable to each Aircraft (Engine Price Adjustment)
will be determined at the time of Aircraft delivery in accordance with the
following formula:
P(e) = (P(b) x CPI ) - P(b)
Base Year Index (CPI), as set forth in Table 1
of the Purchase Agreement
(b) The following definitions will apply herein:
P(e) = Engine Price Adjustment
P(b) = Engine Base Price (per Aircraft), as set forth in Table
1 of the Purchase Agreement.
CPI is the Composite Price Index, a value determined using the Bureau
of Labor Statistics, U.S. Department of Labor actual data in
accordance with the formula below. The Index values utilized in the
formula will be the numbers shown in the actual data for the ninth
month prior to the month of scheduled Aircraft delivery or the ninth
month prior to the Base Year Dollars month set forth in Table 1.
CPI = L + C + M + E
L = The Labor Index will be equal to the quotient of the
value associated with the Aircraft Delivery Month
divided by the value associated with the Base Year
Dollar month in "Hourly Earnings of Aircraft Engines and
Engine Parts Production Workers" SIC 3724, multiplied
by 100 and then by 30%.
EE1-1
P.A. No. 2021
23
C = The Industrial Commodities Index will be equal to 30%
of the Producer Price Index for "all commodities other
than Farm and Foods," Code 3-15 associated with the
scheduled Aircraft delivery month.
M = The Metals and Metal Products Index will be equal to
30% of the Producer Price Index for "Metals and Metal
Products," Code 10 associated with the scheduled
Aircraft delivery month.
E = The Fuel Index will be equal to 10% of the Producer
Price Index for "Fuel and Related Products and Power,"
Code 5 associated with the scheduled Aircraft delivery
month.
The Engine Price Adjustment will not be made if it would result in a decrease in
the Engine Base Price.
(c) The values of the Average Hourly Earnings and Producer Price Indices used
will be those published as of a date 30 days prior to the scheduled Aircraft
delivery to Customer. Such values will be considered final and no Engine Price
Adjustment will be made after Aircraft delivery for any subsequent changes in
published Index values.
(d) In the event the Engine price escalation provisions are made non-enforceable
or otherwise rendered null and void by any agency of the United States
Government, or if the U.S. Department of Labor, Bureau of Labor Statistics (i)
substantially revises the methodology (in contrast to benchmark adjustments or
other corrections of previously published data) or (ii) discontinues publication
of any of the data referred to above, General Electric Company (GE) agrees to
meet jointly with Boeing and Customer, (to the extent such parties may lawfully
do so,) to jointly select a substitute for the revised or discontinued data;
such substitute data to lead in application to the same adjustment result,
insofar as possible, as would have been achieved by continuing the use of the
original data as it may have fluctuated had it not been revised or discontinued.
If such Engine price escalation provisions, methodology or data publication are
subsequently reinstated, Boeing will make adjustments consistent with the
agreements defined in this Supplemental Exhibit EE1.
NOTE: The factor (CPI divided by the base year index) by which the Engine
Base Price is to be multiplied will be expressed as a decimal and
rounded to the nearest thousandth. Any rounding of a number, as
required under this Supplemental Xxxxxxx XX0 with respect to
escalation of the Engine price, will be accomplished as follows: if
the first digit of the portion to be dropped from the number to be
rounded is five or greater, the preceding digit will be raised to
the next higher number.
EE1-2
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24
2. ENGINE WARRANTY AND PRODUCT SUPPORT PLAN.
Boeing has obtained from GE the right to extend to Customer the provisions of
GE's Warranty and Product Support Plan; subject, however, to Customer's
acceptance of the conditions set forth herein and in such Warranty and Product
Support Plan. Accordingly, Boeing hereby extends to Customer and Customer hereby
accepts the provisions of GE's Warranty and Product Support Plan hereinafter set
forth, and such Warranty and Product Support Plan shall apply to all CF6
turbofan engines including all Modules and Parts thereof (Engines) installed in
the Aircraft at the time of delivery or purchased from Boeing by Customer for
support of the Aircraft except that, if Customer and GE have executed a General
Terms Agreement, then the terms of that Agreement shall be substituted for and
supersede the below-stated provisions and such provisions shall be of no force
or effect and neither Boeing nor GE shall have any obligation arising therefrom.
In consideration for Boeing's extension of the GE Warranty and Product Support
Plan to Customer, Customer hereby releases and discharges Boeing from any and
all claims, obligations and liabilities whatsoever arising out of the purchase
or use of such CF6 turbofan engines and Customer hereby waives, releases and
renounces all its rights in all such claims, obligations and liabilities.
2.1. Title. GE warrants that at the date of delivery, GE has legal
title to and good and lawful right to sell its CF6 engine products and
furthermore warrants that such title is free and clear of all claims,
liens and encumbrances of any nature whatsoever.
2.2. Patents.
2.2.1. GE will handle all claims and defend any suit or
proceeding brought against Customer insofar as based on a
claim that any product or part furnished under this Agreement
constitutes an infringement of any patent of the United
States, and will pay all damages and costs awarded therein
against Customer. This paragraph will not apply to any product
or any part manufactured to Customer's design or to the
aircraft manufacturer's design. As to such product or part, GE
assumes no liability for patent infringement.
2.2.2. GE's liability hereunder is conditioned upon Customer
promptly notifying GE in writing and giving GE authority,
information and assistance (at GE's expense) for the defense
of any suit. In case said equipment or part is held in such
suit to constitute infringement and the use of said equipment
or part is enjoined, GE shall expeditiously, at its own
expense and at its option, either (1) procure for Customer the
rights to continue using said product or part; (2) replace the
same with satisfactory and noninfringing product or part; or
(3) modify the same so it becomes satisfactory and
noninfringing.
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The foregoing shall constitute the sole remedy of Customer
and the sole liability of GE for patent infringement.
2.2.3. The above provisions also apply to products which are
the same as those covered by this Agreement and are delivered
to Customer as part of the installed equipment on CF6 powered
Aircraft.
2.3. Initial Warranty. GE warrants that CF6 engine products will
conform to GE's applicable specifications and will be free from defects
in material and workmanship prior to Customer's initial use of such
products. The provisions of the GE CF6 Product Support Plan shall
apply.
2.4. Product Support Plan. GE warrants and extends to Customer the
provisions of GE's CF6 Product Support Plan in effect on the date of
the execution of this Purchase Agreement.
2.5. Warranty Pass On. GE will, upon the written request of Customer,
extend Warranty coverage to Engines, Modules and Parts sold by Customer
to another operator to the extent only, however, that such coverage
exists at the time of such sale and subject to the provisions of the
Warranty.
2.6. Limitations. THE PROVISIONS SET FORTH HEREIN ARE EXCLUSIVE AND ARE
IN LIEU OF ALL OTHER WARRANTIES WHETHER WRITTEN, ORAL OR IMPLIED. THERE
ARE NO IMPLIED WARRANTIES OF FITNESS OR MERCHANTABILITY. SAID
PROVISIONS SET FORTH THE MAXIMUM LIABILITY OF GE WITH RESPECT TO CLAIMS
OF ANY KIND, INCLUDING NEGLIGENCE, ARISING OUT OF MANUFACTURE, SALE,
POSSESSION, USE OR HANDLING OF THE PRODUCTS OR PARTS THEREOF OR
THEREFOR, AND IN NO EVENT SHALL GE'S LIABILITY TO CUSTOMER EXCEED THE
PURCHASE PRICE OF THE PRODUCT GIVING RISE TO CUSTOMER'S CLAIM OR
INCLUDE INCIDENTAL OR CONSEQUENTIAL DAMAGES.
EE1-4
P.A. No. 2021
26
SERVICE LIFE POLICY COMPONENTS
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Supplemental Exhibit SLP1 to Purchase Agreement Number 2021
SLP1
P.A. No. 2021
27
COVERED SERVICE LIFE COMPONENTS
relating to
BOEING MODEL 747 AIRCRAFT
This is the listing of Covered Components for the Aircraft which relate to Part
3, Boeing Service Life Policy of Exhibit C, Product Assurance Document to the
AGTA and is a part of Purchase Agreement No. 2021.
1. Wing.
(a) Upper and lower wing skins and stiffeners between the forward and
rear wing spars.
(b) Wing spar webs, chords, and stiffeners.
(c) Inspar wing ribs.
(d) Inspar splice plates and fittings.
(e) Engine strut support fittings attached directly to wing primary
structure.
(f) Wing to body structural attachments.
(g) Wing landing gear support structure.
(h) Wing center section lower beams, spanwise beams and floor beams
but not the seat tracks attached to the beams.
(i) Spoiler support beam.
(j) Support structure in the wing for spoilers and spoiler actuators,
for aileron hinges and reaction links; and for leading edge
devices and trailing edge flaps and winglet support fittings./
(k) Trailing edge flap tracks and carriages.
(l) Aileron, leading edge device and trailing edge flap internal,
fixed attachment and actuator support structure.
SLP1-1
P.A. No. 2021
28
2. Body.
(a) External surface skins and doublers, longitudinal stiffeners,
longerons and circumferential rings and frames between the
forward pressure bulkhead and the vertical stabilizer rear spar
bulkhead and structural support and enclosure for the APU but
excluding all system components and related installation and
connecting devices, insulation, lining, and decorative panels and
related installation and connecting devices.
(b) Window and windshield structure, but excluding the windows and
windshields.
(c) Fixed attachment structure of the passenger doors, cargo doors
and emergency exits, excluding door mechanisms and movable hinge
components. Xxxxx and frames around the body openings for the
passenger doors, cargo doors and emergency exists, excluding
scuff plates and pressure seals.
(d) Nose wheel well structure including the wheel well walls,
pressure deck, bulkheads, and landing gear beam support
structure.
(e) Wheel well structure for the wing and body gears including the
ceiling, bulkheads and gear support structure.
(f) Floor beams and support posts in the control cab, upper deck
accommodation area and passenger cabin area, but excluding seat
tracks.
(g) Forward and aft pressure bulkheads.
(h) Keel structure between the wing front spar bulkhead and the main
gear wheel well aft bulkhead, including splices.
(i) Tension ties aft of upper deck accommodation area.
(j) Wing front, and rear spar support bulkheads, and vertical and
horizontal stabilizer front and rear spar support bulkheads
including terminal fittings but excluding all system components
and related installation and connecting devices, insulation,
lining, and decorative panels and related installation and
connecting devices.
(k) Support structure in the body for the stabilizer pivot and
stabilizer screw.
SLP1-2
P.A. No. 2021
29
3. Vertical Tail.
(a) Skins and stiffeners between the auxiliary and rear spars.
(b) Front, rear and auxiliary spar chords, webs and stiffeners and
attachment fittings between vertical stabilizer and body.
(c) Inspar ribs.
(d) Stabilizer to body attachment fittings and auxiliary spar link.
(e) Support structure in the vertical stabilizer for rudder hinges,
reaction links and actuator.
(f) Rudder internal, fixed attachment and actuator support structure.
(g) Rudder hinges and supporting ribs, excluding bearings.
4. Horizontal Stabilizer.
(a) Upper and lower skins and stiffeners between the auxiliary and
rear spars.
(b) Front, rear and auxiliary spar chords, webs and stiffeners.
(c) Inspar ribs.
(d) Stabilizer center section and fittings splicing to outboard
stabilizer including pivot and screw support structure.
(e) Support structure in the horizontal stabilizer for the elevator
hinges, reaction links and actuators.
(f) Elevator internal, fixed attachment and actuator support
structure.
5. Engine Strut.
(a) Strut external surface skin and doublers and stiffeners.
(b) Internal strut chords, frames and bulkheads.
(c) Strut to wing fittings and diagonal brace.
(d) Engine mount support fittings attached directly to strut
structure.
SLP1-3
P.A. No. 2021
30
(e) For Aircraft equipped with General Electric or Xxxxx & Xxxxxxx
engines only, the engine-mounted support fittings.
6. Main Landing Gear (Wing Mounted).
(a) Outer cylinder.
(b) Inner cylinder.
(c) Truck beam.
(d) Axles.
(e) Walking beam and trunnion fork.
(f) Drag brace.
(g) Upper and lower side struts including spindles and universals.
(h) Orifice support.
7. Main Landing Gear (Body Mounted).
(a) Outer cylinder.
(b) Inner cylinder.
(c) Truck beam.
(d) Axles.
(e) Upper and lower drag struts including spindles and universals.
(f) Side brace.
(g) Orifice support.
8. Nose Landing Gear.
(a) Outer cylinder.
(b) Inner cylinder.
(c) Orifice support tube.
XXX0-0
X.X. Xx. 0000
00
(x) Upper and lower drag strut, including lock links.
(e) Side struts.
(f) Upper and lower tripod.
(g) Steering plates and steering collar.
(h) Torsion links.
(i) Axles.
NOTE: The Service Life Policy does not cover any bearings, bolts, bushings,
clamps, brackets, actuating mechanisms or latching mechanisms used in or
on the Covered Components.
XXX0-0
X.X. Xx. 0000
00
0000-0
Xxxxx Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Seller Purchased Equipment
Reference: Purchase Agreement No. 2021 (the Purchase Agreement) between The
Boeing Company (Boeing) and Atlas Air, Inc. (Customer) relating to
Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
Definition of Terms:
Seller Purchased Equipment (SPE): Buyer Furnished Equipment (BFE) that Boeing
purchases for Customer.
Developmental Buyer Furnished Equipment (DBFE): BFE not previously certified for
installation on the same model aircraft.
Developmental Seller Purchased Equipment (DSPE): DBFE which is converted to SPE.
This Letter Agreement does not include developmental avionics. Developmental
avionics are avionics that have not been previously certified for installation
on the same model aircraft.
1. Price.
Advance Payments. An estimated SPE price will be included in the Advance
Payment Base Price for the purpose of establishing the advance payments for the
Aircraft. The estimated price of this SPE for the Aircraft is United States [ ]
expressed in 1995 dollars.
Aircraft Price. The Aircraft Price will be adjusted to reflect (i) the
actual costs charged Boeing by the SPE suppliers, (ii) a handling fee of [ ] of
such costs and (iii)
P.A. No. 2021
Seller Purchased Equipment
33
2021-1
Page 2
transportation charges. If all DBFE, except for developmental avionics, is
converted to SPE, Boeing will waive the handling fee for all SPE.
2. Responsibilities.
2.1. Customer is responsible for:
(i) selecting the supplier on or before:
N/A (SFE) for galleys
June 6, 1997 for seats;
(ii) selecting a FAA certifiable part; and
(iii) providing to Boeing the SPE part specification/Customer
requirements.
2.2. Boeing is responsible for:
(i) placing and managing the purchase order with the supplier;
(ii) coordinating with the suppliers on technical issues;
(iii) ensuring that the delivered SPE complies with the part
specification;
(iv) obtaining certification of the Aircraft with the SPE installed;
and
(v) obtaining for Customer the supplier's standard warranty for the
SPE. SPE is deemed to be BFE for purposes of Part 2 of Exhibit
C, the Product Assurance Document.
3. Supplier Selection For SPE Galleys and Seats.
In addition to those responsibilities described above, for SPE galleys and
seats the following provisions apply with respect to Customer's selection of
suppliers:
Galley Requirements. Customer will provide Boeing the definitive galley
configuration requirements not later than June 6, 1997.
P.A. No. 2021
Seller Purchased Equipment
34
2021-1
Page 3
Bidder's List. For information purposes, Boeing will submit to Customer a
bidder's list of existing suppliers of seats and galleys within 120 days of the
supplier selection date shown above.
Request for Quotation (RFQ). Approximately 90 days prior to the supplier
selection date, Boeing will issue its RFQ inviting potential bidders to submit
bids for the galleys and seats within 30 days of the selection date.
Recommended Bidders. Not later than 15 days prior to the supplier selection
date, Boeing will submit to Customer a list of recommended bidders from which to
choose a supplier for the galleys and seats. The recommendation is based on an
evaluation of the bids submitted using price, weight, warranty and schedule as
the criteria.
Supplier Selection. If Customer selects a seat or galley supplier that is
not on the Boeing recommended list, such seat or galley will become BFE and the
provisions of Exhibit A, Buyer Furnished Equipment Provisions Document, of the
AGTA will apply.
4. Changes.
After this Letter Agreement is signed, changes to SPE may only be made by
and between Boeing and the suppliers. Customer's contacts with SPE suppliers
relating to design (including selection of materials and colors), weights,
prices or schedules are for informational purposes only. If Customer wants any
changes made, requests must be made directly to Boeing for coordination with the
supplier.
5. Proprietary Rights.
Boeing's obligation to purchase SPE will not impose upon Boeing any
obligation to compensate Customer or any supplier for any proprietary rights
Customer may have in the design of the SPE.
6. Remedies.
If Customer does not comply with the obligations above, Boeing may:
(i) delay delivery of the Aircraft;
(ii) deliver the Aircraft without installing the SPE;
P.A. No. 2021
Seller Purchased Equipment
35
2021-1
Page 4
(iii) substitute a comparable part and invoice Customer for the cost;
(iv) increase the Aircraft Price by the amount of Boeing's additional
costs attributable to such noncompliance.
7. Customer's Indemnification of Boeing.
Except as provided in Article 8.1.1 of AGTA-TLS, Customer will indemnify
and hold harmless Boeing from and against all claims and liabilities, including
costs and expenses (including attorneys' fees) incident thereto or incident to
successfully establishing the right to indemnification, for injury to or death
of any person or persons, including employees of Customer but not employees of
Boeing, or for loss of or damage to any property, including Aircraft (but not
the Aircraft before delivery), arising out of or in any way connected with any
nonconformance or defect in any SPE and whether or not arising in tort or
occasioned in whole or in part by the negligence of Boeing. This indemnity will
not apply with respect to any nonconformance or defect caused solely by Boeing's
installation of the SPE.
P.A. No. 2021
Seller Purchased Equipment
36
2021-1
Page 5
Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
----------------------------
Its Attorney-In-Fact
----------------------------
ACCEPTED AND AGREED TO this
Date: June 6 , 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
----------------------------
Its CEO
----------------------------
P.A. No. 2021
Seller Purchased Equipment
37
2021-2
Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Option Aircraft
Reference: Purchase Agreement No. 2021 (the Purchase Agreement) between
The Boeing Company (Boeing) and Atlas Air, Inc. (Customer)
relating to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends the Purchase Agreement. All terms used but not
defined in this Letter Agreement have the same meaning as in the Purchase
Agreement. Boeing agrees to manufacture and sell to Customer additional Model
747-400F aircraft as Option Aircraft. The delivery months, number of aircraft,
Advance Payment Base Price per aircraft, advance payment schedule, and option
exercise dates are listed in the Attachment to this Letter Agreement.
1. Aircraft Description and Changes
1.1. Aircraft Description: The Option Aircraft are described by the Detail
Specification listed in the Attachment.
1.2. Changes: The Detail Specification will be revised to include:
(i) Changes applicable to the basic Model 747-400F aircraft which
are developed by Boeing between the date of the Detail
Specification and the signing of the definitive agreement to
purchase the Option Aircraft;
(ii) Changes required to obtain required regulatory certificates; and
(iii) Changes mutually agreed upon.
2. Price
2.1. The pricing elements of the Option Aircraft are listed in the
Attachment.
2.2. Price Adjustments.
P.A. No. 2021
Option Aircraft
38
2021-2
Page 2
2.2.1. Optional Features. The price for Optional Features selected for the
Option Aircraft will be adjusted to Boeing's current prices as of the date of
execution of the definitive agreement for the Option Aircraft.
2.2.2. Escalation Adjustments. The Airframe Price and the price of Optional
Features for Option Aircraft delivering before January, 2003, will be escalated
on the same basis as the Aircraft.
The engine manufacturer's current escalation provisions, listed in Exhibit
Supplement EE1 have been estimated to the months of scheduled delivery using
commercial forecasts to calculate the Advance Payment Base Price listed in the
Attachment to this Letter Agreement. The engine escalation provisions will be
revised if they are changed by the engine manufacturer prior to the signing of a
definitive agreement for the Option Aircraft.
2.2.3. Base Price Adjustments. The Airframe Price and the Engine Price of
the Option Aircraft delivering before [ ], will be adjusted using current
commercial forecasts as of the date of signing of the definitive agreement for
the Option Aircraft.
2.2.4. Prices for Long Lead Time Aircraft. Boeing and the engine
manufacturer have not established prices and escalation provisions for Model
747-400F aircraft and engines for delivery in the year [ ] and after. When
prices and the pricing bases are established for the Model 747-400F aircraft
delivering in the year [ ] and after, the information listed in the Attachment
will be appropriately amended.
3. Payment.
3.1. Customer will pay a deposit to Boeing in the amount shown in the
Attachment for each Option Aircraft (Deposit), on the date of this Letter
Agreement. If Customer exercises an option, the Deposit will be credited against
the first advance payment due. If Customer does not exercise an option, Boeing
will retain the Deposit for that Option Aircraft.
3.2. Following option exercise, advance payments in the amounts and at the
times listed in the Attachment will be payable for the Option Aircraft. The
remainder of the Aircraft Price for the Option Aircraft will be paid at the time
of delivery.
P.A. No. 2021
Option Aircraft
39
2021-2
Page 3
4. Option Exercise.
4.1. Customer may exercise an option by giving written notice to Boeing on
or before the option exercise dates listed in the Attachment (Option Exercise
Date).
4.2. If Boeing must make production decisions which are dependent on
Customer exercising an option earlier than the Option Exercise Date, Boeing may
accelerate the Option Exercise Date subject to Customer's agreement. If Boeing
and Customer fail to agree to a revised Option Exercise Date, either party may
terminate the option and Boeing will refund to Customer, without interest, any
Deposit and advance payments received by Boeing with respect to the terminated
Aircraft.
P.A. No. 2021
Option Aircraft
40
2021-2
Page 4
5. Contract Terms.
Boeing and Customer will use their best efforts to reach a definitive agreement
for the purchase of an Option Aircraft, including the terms and conditions
contained in this Letter Agreement, in the Purchase Agreement, and other terms
and conditions as may be agreed upon. In the event the parties have not entered
into a definitive agreement within 30 days following option exercise, either
party may terminate the purchase of such Option Aircraft by giving written
notice to the other within 5 days.
Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
-----------------------------
Its Attorney-In-Fact
-----------------------------
ACCEPTED AND AGREED TO this
Date: June 6, 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
-----------------------------
Its CEO
-----------------------------
Attachment
P.A. No. 2021
Option Aircraft
41
Attachment 1GE to
Letter Agreement 2021-2
Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTGW: 747-400F 850,000 Detail Specification: D019U002(5/7/97)
Engine Model/Thrust Level: CF6-80C2BIF 57,900 Price Base Year: Jul-95
Airframe Base Price: [ ]
Optional Features: [ ] Airframe Escalation Data:
-------- ------------------------
Sub-Total of Airframe and Features: [ ] Base Year Index (ECI): 130.10
Engine Price (Per Aircraft): [ ] Base Year Index (ICI): 123.60
Buyer Furnished Equipment (BFE) Estimate [ ]
Seller Purchased Equipment (SPE) Estimate: [ ] Engine Escalation Data:
Aircraft Basic Price (Excluding BFE/SPE): [ ] Base Year Index (CPI): 129.660
Refundable Deposit per A/C at Proposal Acceptance: [ ]
------------------------------------------------------------------------------------------------------------------------------------
Advamce Payment Per Aircraft
------------------------------------------------------------------------------------------------------------------------------------
Escalation Escalation Escalation Escalation Estimate (Amts. Due/Mos. Prior to Delivery):
------------------------------------------------------------------------------------------------------------------------------------
Delivery Number of Factor Factor Credit Adv Payment Base At Signing 24 Mos. 21/18/15/12/9/6 Total
------------------------------------------------------------------------------------------------------------------------------------
Mos.
------------------------------------------------------------------------------------------------------------------------------------
Date Aircraft (Airframe) (Engine) Memorandum Price Per A/P 1% 4% 5% 35%
------------------------------------------------------------------------------------------------------------------------------------
Jul-99 1 1.1029 1.08 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Aug-99 1 1.108 1.084 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Sep-99 1 1.1126 1.087 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
May-00 1 1.1505 1.096 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Jul-00 1 1.1587 1.103 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Mar-01 1 1.1848 1.119 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
May-01 1 1.1912 1.122 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Jul-01 1 1.1954 1.134 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Aug-01 1 1.1956 1.137 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
Mar-02 1 1.1986 1.15 [ ] [ ] [ ] [ ] [ ] [ ]
------------------------------------------------------------------------------------------------------------------------------------
42
Attachment 1GE to
Letter Agreement 2021-2
Aircraft Delivery, Description, Price and Advance Payments
Delivery Option Exercise
Date Due on or
Before the
Following Date
-------------
July-99 [ ]
-------------
Aug-99 [ ]
-------------
Sep-99 [ ]
-------------
May-00 [ ]
-------------
Jul-00 [ ]
-------------
Mar-01 [ ]
-------------
May-01 [ ]
-------------
Jul-01 [ ]
-------------
Aug-01 [ ]
-------------
Mar-02 [ ]
-------------
Page 2
43
2021-3
Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Escalation Sharing
Reference: Purchase Agreement No. 2021 (the Purchase Agreement) between
The Boeing Company (Boeing) and Atlas Air, Inc. (Customer)
relating to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
1. Commitment.
Boeing agrees to share one-half of the escalation, up to a maximum of 3
percent per year, in each of the years 1997 and 1998 according to the terms in
paragraph 2 below. This applies to any of Customer's aircraft which are
scheduled to deliver after December 31, 1996. For the purpose of this Letter
Agreement such aircraft are referred to as "Eligible Aircraft."
All escalation calculations under this Letter Agreement will be made in
accordance with Exhibit D to the AGTA between Boeing and Customer, using actual
escalation indices published for the applicable period.
2. Escalation Credit Memo.
2.1. Calculation - Eligible Aircraft Delivering in 1997.
At the time of delivery of each Eligible Aircraft delivering in 1997,
Boeing will issue to Customer a credit memorandum (the 1997 Credit Memorandum)
which will be applied to the Aircraft Price of such Eligible Aircraft. The 1997
Credit Memorandum is calculated as follows:
P.A. No. 2021
Escalation Sharing
44
2021-3
Page 2
One-half of the difference between the airframe and special features
escalation calculated for a December 1996 aircraft delivery position, and
the escalation calculated for the month of delivery of the 1997 Eligible
Aircraft; provided however,
The maximum amount of the 1997 Credit Memorandum does not exceed 3 percent
pursuant to the following calculation:
At the time of the delivery of the 1997 Eligible Aircraft, the Base
Airframe Price and Special Features prices will be escalated to a December
1996 delivery month. The December 1996 escalated price will be referred to
in the following formula as the "December 1996 Index Amount". The 1997
Credit Memorandum for the 1997 Eligible Aircraft will not exceed an amount
equal to:
the December 1996 Index Amount times 0.03
2.2. Calculation - Eligible Aircraft Delivering in 1998.
At the time of delivery of each Eligible Aircraft delivering in 1998,
Boeing will issue to Customer a credit memorandum (the 1998 Credit Memorandum)
which shall be applied to the Aircraft Price of such Eligible Aircraft. The 1998
Credit Memorandum shall be calculated as follows:
(i) One-half of the difference between the airframe and special
features escalation calculated for a December 1997 aircraft delivery position,
and the escalation calculated for the month of delivery of the 1998 Eligible
Aircraft;
provided however,
The maximum amount of the 1998 Credit Memorandum shall not exceed 3 percent
pursuant to the following calculation:
At the time of the delivery of the 1998 Eligible Aircraft, the Base
Airframe Price and Special Features prices will be escalated to a
December 1997 delivery month. The December 1997 escalated price will
be referred to in the following formula as the "December 1997 Index
Amount." The 1998 Credit Memorandum for the 1998 Eligible Aircraft
will not exceed an amount equal to:
the December 1997 Index Amount times 0.03;
P.A. No. 2021
Escalation Sharing
45
2021-3
Page 3
and,
(ii) The amount calculated above in paragraph 2.1 for the 1997
Credit Memorandum calculated through December, 1997.
2.3. Eligible Aircraft Delivering after 1998.
For Eligible Aircraft delivering after the calendar year 1998, the
amount of the Credit Memorandum will be the amount calculated pursuant to
paragraph 2.2 above through December 1998. This credit memorandum amount will
be escalated from December 1998 to the month of delivery.
2.4. Advance Payment Base Price.
It is agreed that the Advance Payment Base Prices for the Eligible Aircraft
set forth in the Purchase Agreement include an estimate for the escalation
sharing Credit Memorandum pursuant to this Letter Agreement.
3. Escalating Credits (STE).
It is agreed that the credit memoranda specified in Letter Agreement No.
6-1162-DSF-083 which is expressed as a percentage of the escalated Aircraft
Price of the Eligible Aircraft, will be calculated using the same factors used
to develop the adjusted airframe escalation pursuant to this Letter Agreement.
P.A. No. 2021
Escalation Sharing
46
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Page 4
Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
--------------------------
Its Attorney-In-Fact
--------------------------
ACCEPTED AND AGREED TO this
Date: June 6 , 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
--------------------------
Its CEO
--------------------------
Attachment
P.A. No. 2021
Escalation Sharing
47
2021-4
Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Demonstration Flights
Reference: Purchase Agreement No. 2021 (the Purchase Agreement) between
The Boeing Company (Boeing) and Atlas Air, Inc. (Customer)
relating to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement shall have the same meaning as in
the Purchase Agreement.
Definition of Terms:
Correction Costs: Customer's direct labor costs and the cost of any material
required to correct a Flight Discrepancy where direct labor costs are equal to
the warranty labor rate in effect between the parties at the time such labor is
expended.
Flight Discrepancy: A failure or malfunction of an Aircraft, or the accessories,
equipment or parts installed on the Aircraft which results from a defect in the
Aircraft, Boeing Product, engine or Supplier Product or a nonconformance to the
Detail Specification for the Aircraft.
The AGTA provides that each aircraft will be test flown prior to delivery for
the purpose of demonstrating the functioning of such Aircraft and its equipment
to Customer; however, Customer may elect to waive this test flight. For each
test flight waived, Boeing agrees to provide Customer an amount of jet fuel at
delivery that, in addition to the standard fuel entitlement, totals the
following amount of fuel:
-------------------------------------------------------------------------
Aircraft Model Total Fuel Entitlement
(U.S. Gallons)
-------------------------------------------------------------------------
737 Full tank
-------------------------------------------------------------------------
747 22,000
-------------------------------------------------------------------------
757 8,000
-------------------------------------------------------------------------
767 9,000
-------------------------------------------------------------------------
777 14,000
-------------------------------------------------------------------------
P.A. No. 2021
Demo Flight Waiver
48
2021-4
Page 2
Further, Boeing agrees to reimburse Customer for any Correction Costs incurred
as a result of the discovery of a Flight Discrepancy during the first flight of
the aircraft by Customer following delivery to the extent such Correction Costs
are not covered under a warranty provided by Boeing, the engine manufacturer or
any of Boeing's suppliers.
Should a Flight Discrepancy be detected by Customer which requires the return of
the Aircraft to Boeing's facilities at Seattle, Washington, so that Boeing may
correct such Flight Discrepancy, Boeing and Customer agree that title to and
risk of loss of such Aircraft will remain with Customer. In addition, it is
agreed that Boeing will have responsibility for the Aircraft while it is on the
ground at Boeing's facilities in Seattle, Washington, as is chargeable by law to
a bailee for mutual benefit, but Boeing shall not be chargeable for loss of use.
To be reimbursed for Correction Costs, Customer shall submit a written itemized
statement describing any flight discrepancies and indicating the Correction Cost
incurred by Customer for each discrepancy. This request must be submitted to
Boeing's Contracts Regional Director at Renton, Washington, within ninety (90)
days after the first flight by Customer.
P.A. No. 2021
Demo Flight Waiver
49
2021-4
Page 3
Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
-------------------------
Its Attorney-In-Fact
-------------------------
ACCEPTED AND AGREED TO this
Date: June 6 , 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
--------------------------
Its CEO
--------------------------
Attachment
P.A. No. 2021
Demo Flight Waiver
50
2021-5
Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Spares Initial Provisioning
Reference: Purchase Agreement 2021 (the Purchase Agreement) between
The Boeing Company (Boeing) and Atlas Air, Inc. (Customer)
relating to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends the Purchase Agreement. All terms used but not
defined in this Letter Agreement have the same meaning as in the Purchase
Agreement.
1. Applicability.
This letter will apply to initial provisioning for the Model 747-400F Aircraft
covered by the Purchase Agreement.
2. Initial Provisioning Meeting.
Boeing will conduct an initial provisioning meeting (Initial
Provisioning Meeting) with Customer to establish mutually agreeable procedures
to accomplish Customer's initial provisioning of spare parts for the Aircraft.
The parties will agree, during the Initial Provisioning Meeting on the
operational data to be provided by Customer for Boeing's use in preparing its
quantity recommendations for initial provisioning of spare parts for the
Aircraft, exclusive of special tools, ground support equipment, engines and
engine parts (Provisioning Items). Such operational data to be provided by
Customer will be the data described in Section E of Boeing Manual D6-49090,
entitled "Initial Provisioning Implementation Manual, Boeing Model 757, 767,
777, 747-400 and 737-300, -400 and -500" (Boeing Initial Provisioning
Implementation Manual) which will be furnished to Customer prior to the Initial
Provisioning Meeting. The parties will also agree on the provisioning
documentation to be provided by Boeing. Such data will be essentially in
accordance with the provisions of Chapter 1 of ATA International Specification
2000, Revision 1, dated April 20, 1989, as described in Boeing Initial
Provisioning Implementation Manual
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D6-49090 (Provisioning Data). Boeing will provide instruction in the use of the
initial provisioning documentation. This instruction will be provided in
conjunction with the Initial Provisioning Meeting. In addition, the parties will
discuss spares ordering procedures and other matters related to the provisioning
for the Aircraft. The time and location for such Initial Provisioning Meeting
will be mutually agreed upon between the parties; however, Boeing and Customer
will use their best efforts to convene such meeting within 30 days after
execution of the Purchase Agreement.
3. Initial Provisioning Documentation.
3.1. Provisioning Data. Boeing will furnish Provisioning Data to
Customer on or about July 1, 1997. The Provisioning Data will be as complete as
possible and will cover Provisioning Items selected by Boeing for review by
Customer for initial provisioning for the Aircraft. The Provisioning Data will
set forth the prices for Provisioning Items which are Boeing Spare Parts (spare
parts that are manufactured by Boeing or pursuant to Boeing detailed design with
Boeing authorization) and such prices will be firm and remain in effect until
the date or dates set forth in Paragraph 4.1 below, by which orders must be
placed with Boeing. Boeing will, from time to time, until a date approximately
90 days following delivery of the last Aircraft or until the delivery
configuration of each of the Aircraft is reflected in the Provisioning Data,
whichever is later, furnish to Customer revisions to the Provisioning Data.
3.2. Provisioning IPC. Boeing will, on or about July 1, 1997, furnish
to Buyer a Boeing Illustrated Parts Catalog (IPC), (Provisioning IPC). The
Provisioning IPC will be as complete as possible and will cover Provisioning
Items selected by Boeing for review by Customer for initial provisioning for the
Aircraft. Boeing will, from time to time, until a date approximately 90 days
following delivery of the last Aircraft, or until the delivery configuration of
each of the Aircraft is reflected in the Provisioning IPC, whichever is later,
furnish to Customer revisions to the Provisioning IPC.
3.3. Buyer Furnished Equipment (BFE) Provisioning Data.
3.3.1. Boeing's Responsibility. Boeing will include BFE end
items in the Provisioning Data and Provisioning IPC for BFE installed on the
Aircraft provided such equipment has been installed by Boeing on other Boeing
aircraft of the same model and Boeing has sufficient data on the BFE.
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3.3.2. Customer's Responsibility. Customer will be responsible
for ensuring BFE data is provided to Boeing by the BFE supplier in a format
acceptable to Boeing for BFE not covered by 3.3.1 above. If the data is not
provided to Boeing in a timely manner and in a format acceptable to Boeing, such
BFE equipment will not be included in Boeing's Provisioning Data or IPC.
3.4. Other Data. Boeing will submit to Customer listings of Raw
Materials, Standard Parts and Bulk Materials to be used by Customer in the
maintenance and repair of the Aircraft.
4. Purchase from Boeing of Spare Parts as Initial Provisioning for the
Aircraft.
4.1. Boeing Spare Parts. Customer will place orders for Provisioning
Items by September 1, 1997; provided, however, that in those instances where
Boeing submits any revision to the Provisioning Data, Customer will place orders
for Boeing Spare Parts covered by such revision within 60 days following the
date of such submittal. At Customer's request, Boeing will process "controlled
shipments" by shipping full or partial quantities of an order on a schedule
specified by Customer, provided the final shipment is made no later han 24
months after receipt of the order.
4.2. Vendor Provisioning Items. Customer may place orders with Boeing
for Provisioning Items which are manufactured by vendors or to their detailed
design and are covered by the Provisioning Data as initial provisioning for the
Aircraft. The price to Customer for any such vendor Provisioning Item will be
112% of the vendor's quoted price to Boeing therefor. If Customer elects to
purchase such vendor Provisioning Items from Boeing, Customer will place its
orders therefor in accordance with the provisions of Paragraph 4.1 above.
4.3. Ground Support Equipment and Special Tools. Customer may place
orders with Boeing for ground support equipment (GSE) and special tools
manufactured by vendors which Customer determines it will initially require for
maintenance, overhaul and servicing of the Aircraft and/or engines. The price to
Customer for such GSE or special tools will be one hundred twelve percent (112%)
of the vendor's quoted price to Boeing therefor. If Customer elects to purchase
such GSE and special tools from Boeing, Customer will place its orders therefor
by the date set forth in Paragraph 4.1 above, or such later date as the parties
may mutually agree.
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4.4. Spare Engines and Engine Spare Parts. Customer may place orders
with Boeing for spare engines and/or engine spare parts which Customer
determines it will initially require for support of the Aircraft or for
maintenance and overhaul of the engines. The price to Customer for such spare
engines or such engine spare parts, will be 105% of the engine manufacturer's
quoted price to Boeing for the engine, and 112% of the engine manufacturer's
quoted price to Boeing for the engine spare parts. If Customer elects to
purchase such spare engines or engine spare parts through Boeing, Customer will
place its orders on a date to be mutually agreed upon during the Initial
Provisioning Meeting.
4.5. QEC Kits. Boeing will, on or about May 1, 1997, furnish to
Customer a listing of all components which could be included in the Quick Engine
Change (QEC) kits which may be purchased by Customer from Boeing. Customer
agrees to review such listing and indicate by marking on one copy of such
listing those components that Customer desires included in its QEC kits.
Customer will return such marked copy to Boeing within 30 days after Customer's
receipt of such listing. Within 30 days after Boeing's receipt of such marked
copy, Boeing will republish such listing to reflect only those components
selected by Customer and will provide copies of such republished listing to
Customer. Boeing will from time to time furnish revisions to such republished
listing until a date approximately 90 days after delivery of the last QEC kit
ordered by Customer for the Aircraft. Boeing will furnish to Customer as soon as
practicable a statement setting forth a firm price for the QEC kit configuration
selected by Customer. Customer agrees to place orders with Boeing for the QEC
kits for the Aircraft by July 1, 1997.
4.6. Terms and Conditions. Applicable terms and conditions of the
Customer Services General Terms Agreement between Boeing and Customer, if
executed, or the standard terms and conditions on a Spares Customer Account
Terms and Conditions form will be applicable to Provisioning Items ordered by
Customer from Boeing for the Aircraft.
5. Delivery.
Boeing will, insofar as reasonably possible, deliver to Customer the
Spare Parts ordered by Customer in accordance with the provisions of this letter
on dates reasonably calculated to conform to Customer's anticipated needs in
view of the scheduled deliveries of the Aircraft. Customer and Boeing will agree
upon the date to begin delivery of the Provisioning Spare Parts ordered in
accordance with this letter. Where appropriate, Boeing will arrange for shipment
of such Spare Parts, which are manufactured by vendors, directly to Customer
from the applicable vendor's facility. The routing and method of shipment for
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initial deliveries and all subsequent deliveries of such Spare Parts will be as
mutually agreed between Boeing and Customer.
6. Substitution for Obsolete Spare Parts.
6.1. Obligation to Substitute. In the event that, prior to delivery of
the first Aircraft pursuant to the Purchase Agreement, any Spare Part purchased
by Customer from Boeing in accordance with this letter is rendered obsolete or
unusable due to the redesign of the Aircraft or of any accessory, equipment or
part therefor, (other than a redesign at Customer's request), Boeing will
deliver to Customer new and usable Spare Parts in substitution for such obsolete
or unusable Spare Parts and Customer will return the obsolete or unusable Spare
Parts to Boeing. Boeing will credit Customer's account with Boeing with the
price paid by Customer for any such obsolete or unusable Spare Part and will
invoice Customer for the purchase price of any such substitute Spare Part
delivered to Customer.
6.2. Delivery of Obsolete Spare Parts and Substitutes Therefor.
Obsolete or unusable Spare Parts returned by Customer pursuant to Paragraph 6
will be delivered to Boeing at its Seattle Distribution Center, or such other
destination as Boeing may reasonably designate. Spare Parts substituted for such
returned obsolete or unusable Spare Parts will be delivered to Customer at
Boeing's Seattle Distribution Center, or such other Boeing shipping point as
Boeing may reasonably designate. Boeing will pay the freight charges for
shipment from Customer to Boeing of any such obsolete or unusable Spare Part and
for shipment from Boeing to Customer of any such substitute Spare Part.
7. Repurchase of Provisioning Items.
7.1. Obligation to Repurchase. During a period commencing 1 year after
delivery of the first Aircraft under the Purchase Agreement, and ending 5 years
after such delivery, Boeing will, upon receipt of Customer's written request and
subject to the exceptions in Paragraph 7.2 below, repurchase unused and
undamaged Provisioning Items which (i) were recommended by Boeing in the
Provisioning Data as initial provisioning for the Aircraft, (ii) were purchased
by Customer from Boeing, and (iii) are surplus to Customer's needs.
7.2. Exceptions. Boeing will not be obligated under Paragraph 7.1
above, to repurchase any of the following: (i) quantities of Provisioning Items
in excess of those quantities recommended by Boeing in the Provisioning Data for
the Aircraft, (ii) QEC Kits, Bulk Material Kits, Raw Material Kits, Service
Bulletin Kits, Standards Kits and compo-
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nents thereof (except those components listed separately in the Provisioning
Data), (iii) Provisioning Items for which an Order was received by Boeing more
than 5 months after delivery of the last Aircraft, (iv) Provisioning Items which
have become obsolete or have been replaced by other Provisioning Items as a
result of (a) Customer's modification of the Aircraft or (b) design improvements
by Boeing or the vendor (other than Provisioning Items which have become
obsolete because of a defect in design if such defect has not been remedied by
an offer by Boeing or the vendor to provide no charge retrofit kits or
replacement parts which correct such defect), and (v) Provisioning Items which
become excess as a result of a change in Customer's operating parameters,
provided to Boeing pursuant to the Initial Provisioning meeting in Paragraph 2,
which were the basis of Boeing's initial provisioning recommendations for the
Aircraft.
7.3. Notification and Format. Customer will notify Boeing, in writing,
when Customer desires to return Provisioning Items which Customer's review
indicates are eligible for repurchase by Boeing under the provisions of this
Paragraph 7. Customer's notification will include a detailed summary, in part
number sequence, of the Provisioning Items Customer desires to return. Such
summary will be in the form of listings, tapes, diskettes or other media as may
be mutually agreed between Boeing and Customer, and will include part number,
nomenclature, purchase order number, purchase order date and quantity to be
returned. Within 5 business days after receipt of Customer's notification,
Boeing will advise Customer, in writing, when Boeing's review of such summary
will be completed.
7.4. Review and Acceptance by Boeing. Upon completion of Boeing's
review of any detailed summary submitted by Customer pursuant to Paragraph 7.3,
Boeing will issue to Customer a Material Return Authorization (MRA) for those
Provisioning Items Boeing agrees are eligible for repurchase in accordance with
this Paragraph 7. Boeing will advise Customer of the reason that any Spare Part
included in Customer's detailed summary is not eligible for return. Boeing's MRA
will state the date by which Provisioning Items listed in the MRA must be
redelivered to Boeing and Customer will arrange for shipment of such
Provisioning Items accordingly.
7.5. Price and Payment. The price of each Provisioning Item repurchased
by Boeing pursuant to this Paragraph 7 will be an amount equal to 100% of the
original invoice price thereof. In the case of Provisioning Items manufactured
by a vendor which were purchased pursuant to Xxxxxxxxx 0, xxx xxxxxxxxxx price
will not include Boeing's 12% handling charge. Boeing will pay the repurchase
price by issuing a credit memorandum in favor of Customer which may be applied
against amounts due Boeing for the purchase of aircraft, Spare Parts, services
or the licensing of data.
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7.6. Delivery of Provisioning Items. Provisioning Items repurchased by
Boeing pursuant to this Paragraph 7 will be delivered to Boeing F.O.B. its
Seattle Distribution Center, or such other destination as Boeing may reasonably
designate. Customer will pay the freight charges for the shipment from Customer
to Boeing of any such Provisioning Items.
8. Obsolete Spare Parts and Surplus Provisioning Items - Title and Risk
of Loss.
Title to and risk of loss of any obsolete or unusable Spare Parts
returned to Boeing pursuant to Paragraph 6, will pass to Boeing upon delivery
thereof to Boeing. Title to and risk of loss of any Spare Part substituted for
an obsolete or unusable Spare Part pursuant to Paragraph 6, will pass to
Customer upon delivery thereof to Customer. Title to and risk of loss of any
Provisioning Item repurchased by Boeing pursuant to Paragraph 7, will pass to
Boeing upon delivery thereof to Boeing. With respect to the obsolete or unusable
Spare Parts which may be returned to Boeing and the Spare Parts substituted
therefor, pursuant to Paragraph 6, and the Provisioning Items which may be
repurchased by Boeing, pursuant to Paragraph 7, the party which has risk of loss
of any such Spare Part or Provisioning Item will have the responsibility of
providing any insurance coverage for it desired by such party.
9. Termination of Purchase Agreement for Excusable Delay.
In the event of termination of the Purchase Agreement with respect to
any Aircraft pursuant to Article 7.6 of The Aircraft General Terms Agreement
AGTA-TLS (AGTA-TLS) between Boeing and Customer such termination will, if
Customer so requests by written notice received by Boeing within 15 days after
such termination, also discharge and terminate all obligations and liabilities
of the parties as to any Spare Parts which Customer
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had ordered pursuant to the Provisions of this letter as initial provisioning
for such Aircraft and which are undelivered on the date Boeing receives such
written notice.
Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
--------------------------
Its Attorney-In-Fact
--------------------------
ACCEPTED AND AGREED TO this
Date: June 6, 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
--------------------------
Its CEO
--------------------------
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2021-6
Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Multiple Aircraft Operating Weights
Reference: Purchase Agreement No. 2021 (the Purchase Agreement) between
The Boeing Company (Boeing) and Atlas Air, Inc. (Customer)
relating to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
In this Letter Agreement, the term "Aircraft" means all Model 747-400F aircraft
that Customer legally owns or directly manages, whether purchased by Customer
under the Purchase Agreement or otherwise. It does not include any aircraft
which Customer may have obtained through an operating lease.
1. Operation at Multiple Gross Weights.
Customer has requested and Boeing agrees to provide the required documentation
to allow the operation of the Aircraft at alternate Maximum Take-Off Weights
(MTOW). Boeing will provide an FAA approved Airplane Flight Manual such that
each Aircraft will include a basic MTOW of 850,000 pounds and two alternate MTOW
of 875,000 pounds and 800,000 pounds in appendices to the Airplane Flight
Manual. Customer may operate the Aircraft at the weights provided at Customer's
sole discretion as long as the annual average operational weight of the
Customer's fleet does not exceed 850,000 pounds. It will be the responsibility
of Customer to obtain concurrence of the cognizant aviation authority to use the
Airplane Flight Manual and its appendices.
2. Payment Amounts.
Customer will pay to Boeing the amount of $[ ] ([ ]$ U.S. Subject to Escalation)
per Aircraft for this capability upon the delivery by Boeing of the Airplane
Flight Manual appendices described above. The weights and price shown above were
derived using the methods illustrated in Attachment A.
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Letter Agreement 2021-6
Page 2
3. Annual MTOW Use Report.
One year after the signing date of this Letter Agreement, and thereafter on an
annual basis, Customer will furnish to Boeing a MTOW Use Report signed by an
officer of Customer which reports the actual operating weights of the Aircraft
affected by this Letter Agreement in the previous year. If the actual
operational average gross weight utilization is greater than the average gross
weight purchased under this Letter Agreement, Customer will pay Boeing's then
current price per pound of difference above the average gross weight utilization
projected for the year for each Aircraft. If the actual operational average
gross weight utilization is less than the average gross weight projected under
this Letter Agreement or the MTOW Use Reports, no monetary credit will be given
to Customer for the difference.
4. Sale or Lease of Aircraft by Customer.
Concurrent with Customer's written notification to Boeing of its intent
to sell or lease one or more of its Aircraft (Disposed Aircraft) to a third
party (other than a subsidiary or affiliate of Customer,) Customer will elect
one of the following options with respect to each of the Disposed Aircraft:
4.1. Upon request Boeing will, at no charge to Customer, provide
documentation to limit a Disposed Aircraft's certified MTOW to the one certified
MTOW which will be the average gross weight value applicable as of the date of
Customer's request; or
4.2. If Customer desires to sell or lease a Disposed Aircraft certified
to operate at a higher MTOW than that specified in Paragraph 4.1, then Customer
may purchase, at Boeing's then current price for MTOW, the difference in pounds
between the average gross weight value applicable as of the date of Customer's
request and the MTOW desired, for a Disposed Aircraft; or
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Letter Agreement 2021-6
Page 3
4.3. If Customer desires to sell or lease a Disposed Aircraft certified
to operate at a lower MTOW than that specified in Paragraph 4.1, then Boeing
will, without charge or credit, provide documentation to limit a Disposed
Aircraft's certified MTOW to such lower value.
Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
--------------------------
Its Attorney-In-Fact
--------------------------
ACCEPTED AND AGREED TO this
Date: June 6, 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
--------------------------
Its CEO
--------------------------
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Atlas Air, Inc.
Attachment A to Letter Agreement 2021-6
Page 1
Calculation Method for Average Gross Weight and Price per Aircraft
Customer has agreed to purchase an average gross weight based on expected use of
each Aircraft within Customer's specific minor model fleet. An average gross
weight utilization will be calculated and charged against every Aircraft in that
minor model fleet. The minimum gross weight for any individual Aircraft in the
average calculation shall be the basic gross weight.
The price per Aircraft for the average gross weight was calculated as follows:
PM = (NT * WA * PW) - (NE * WE * PW)
-----------------------------
NT
The following definitions apply:
PM = Purchase Price of Multiple Operating Weight per aircraft
NT = Total number of aircraft in Customer's fleet including the Aircraft
WA = Weighted Average minus the basic weight (in pounds) per minor model
fleet
PW = Boeing's current price per pound for MTOW increases
NE = Number of previously purchased minor model aircraft in
Customer's fleet
WE = Total gross weight (in pounds) in excess of basic gross weight
previously purchased for NE aircraft
Example Calculation of Average Gross Weight
Customer owns ten 757-200 aircraft currently at 230,000 pounds MTOW, each of
which had a basic gross weight of 220,000 pounds at initial purchase, and is
purchasing five additional 757-200's. Therefore, NT = 15
Step 1. Determine routes to be flown in the upcoming year for all 15 aircraft,
and determine the MTOW needed to support each planned route.
27% of routes require 220,000 pounds or less
50% of routes require 230,000 pounds
23% of routes require 240,000 pounds
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Attachment A to Letter Agreement 2021-6
Page 2
Step 2. Convert percentage of routes into Aircraft.
15 aircraft * 27% = 4.05 aircraft, round to 4
15 aircraft * 50% = 7.50 aircraft, round to 8
15 aircraft * 23% = 3.45 aircraft, round to 3
----- --
15 aircraft 15
Step 3. Calculate weighted average of the entire minor model fleet
4 * 220,000 = 880,000
7 * 230,000 = 1,840,000
3 * 240,000 = 720,000
----------
Total Weight 3,440,000 / 15 aircraft = 229,333 pounds,
or 9,333 pounds above base MTOW per aircraft.
WA = 9,333 pounds
Step 4. Multiply NT times WA times current Boeing price per pound (PW).
15 * 9,333 * $55.22(1995$) = $7,730,524
Step 5. Determine value of weight previously purchased for the existing fleet,
by multiplying 10 Aircraft (NE) times 10,000 pounds (WE) times PW.
10 * 10,000 * $55.22(1995$) = $5,522,000
Step 6. Subtract the results in Step 5 from that of Step 4, and divide the
result by NT to determine Purchase Price of Multiple Operating Weight (PM).
$7,730,524 - $5,522,000 = $2,208,524
PM = $2,208,524/ 15 aircraft
PM = $147,200 per aircraft (Rounded to nearest $100)
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Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Promotion Support
Reference: Purchase Agreement No. 2021 (the Purchase Agreement) between
The Boeing Company (Boeing) and Atlas Air, Inc. (Customer)
relating to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
Boeing agrees to make available to Customer [ ] for Customer's marketing and
promotion programs associated with the introduction of the Model 747-400F
Aircraft into service. These programs may include marketing research; tourism
development; corporate identity; direct marketing; video tape, or still
photography; planning, design and production of collateral materials; management
of promotion program and advertising campaigns.
Following the execution of this Letter Agreement, a Boeing Airline Promotion
representative will meet with Customer's designated representative to discuss
the extent, selection, scheduling, and funds disbursement process for the
program.
Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
--------------------------
Its Attorney-In-Fact
--------------------------
ACCEPTED AND AGREED TO this
Date: June 6, 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
--------------------------
Its CEO
--------------------------
P.A. No. 2021
Promotion Support
64
0-0000-XXX-000
Xxxxx Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Aircraft Performance Guarantees
Reference: Purchase Agreement No. 2021 (the Purchase Agreement) between
The Boeing Company (Boeing) and Atlas Air, Inc. (Customer)
relating to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
Boeing agrees to provide Customer with the performance guarantees in the
Attachment to this Letter Agreement. These guarantees are exclusive and expire
upon delivery of the Aircraft to Customer.
Customer agrees not to disclose this Letter Agreement, attachments, or any other
information related to this Letter Agreement without prior written consent by
Boeing.
Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
--------------------------
Its Attorney-In-Fact
--------------------------
ACCEPTED AND AGREED TO this
Date: June 6 , 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
--------------------------
Its CEO
--------------------------
P.A. No. 2021
Performance Guarantees
65
Attachment to Letter Agreement
No. 6-1162-DSF-082
CF6-80C2BIF Engines
Page 1
MODEL 747-400 FREIGHTER PERFORMANCE GUARANTEES
SECTION CONTENTS
1 AIRCRAFT MODEL APPLICABILITY
2 FLIGHT PERFORMANCE
3 MANUFACTURER'S EMPTY WEIGHT
4 AIRCRAFT CONFIGURATION
5 GUARANTEE CONDITIONS
6 GUARANTEE COMPLIANCE
7 EXCLUSIVE GUARANTEES
66
Attachment to Letter Agreement
No. 6-1162-DSF-082
CF6-80C2BIF Engines
Page 2
1. AIRCRAFT MODEL APPLICABILITY
The guarantees contained in this Attachment (the "Performance
Guarantees") are applicable to the 747-400 Freighter Aircraft
with a maximum takeoff weight of 875,000 pounds, a maximum
landing weight of 652,000 pounds, and a maximum zero fuel
weight of 610,000 pounds, and equipped with Boeing furnished
CF6-80C2B1F engines.
2. FLIGHT PERFORMANCE
2.1. Mission
2.1.1. Mission Payload
The payload for a stage length of 5,695 nautical miles in
still air (equivalent to a distance of 5,990 nautical miles
with a 25 knot tailwind, representative of a Taipei to Los
Angeles route) using the conditions and operating rules
defines below, shall not be less than the following guarantee
value:
NOMINAL: [ ]
TOLERANCE: [ ]
GUARANTEE: [ ]
Conditions and operating rules:
Stage Length: The stage length is defined as the sum of the
distances for the climbout maneuver, climb,
cruise, and descent.
Takeoff: The airport altitude is 72 feet.
The airport temperature is 84 degrees F.
The runway length is 12,008 feet.
The clearway is 984 feet.
The stopway is 197 feet.
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No. 6-1162-DSF-082
CF6-80C2BIF Engines
Page 3
The runway slope is 0.08 percent downhill.
An Aircraft center of gravity location at the
most forward center of gravity limit.
Maximum takeoff thrust is used for the
takeoff.
The takeoff gross weight shall conform to FAA
Regulations.
Climbout Following the takeoff to 35 feet, the
Aircraft
Maneuver: accelerates to 250 KCAS while climbing to
1,500 feet above the departure airport
altitude and retracting flaps and landing
gear.
Climb: The Aircraft climbs from 1,500 feet above the
departure airport altitude to 10,000 feet
altitude at 283 KCAS.
The Aircraft then accelerates at a rate of
climb of 500 feet per minute to a climb speed
of 356 KCAS.
The climb continues at 356 KCAS until 0.84
Mach number is reached.
The climb continues at 0.84 Mach number to
the initial cruise altitude.
The temperature is ISA+10 degrees C during
climb.
Maximum climb thrust is used during climb.
Cruise: The Aircraft cruises at 0.84 Mach number.
The initial cruise altitude is 29,000 feet.
A step climb or multiple step climbs of
4,000 feet altitude may be used when
beneficial to minimize fuel burn.
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No. 6-1162-DSF-082
CF6-80C2BIF Engines
Page 4
The temperature is ISA+10 degrees C during
cruise.
The cruise thrust is not to exceed maximum
cruise thrust except during a step climb
when maximum climb thrust may be used.
Descent The Aircraft descends from the final cruise
altitude at 0.84 Mach number until 280 KCAS
is reached.
The descent continues at 280 KCAS to an
altitude of 10,000 feet. At that altitude the
Aircraft decelerates to 250 KCAS.
The descent continues at 250 KCAS to an
altitude of 1,500 feet above the destination
airport altitude.
Throughout the descent, the cabin pressure
will be controlled to a maximum rate of
descent equivalent to 300 feet per minute at
sea level.
The temperature is ISA+10 degrees C during
descent.
Approach and The Aircraft decelerates to the final
Landing approach speed while extending landing gear
Maneuver: and flaps, then descends and lands.
The destination airport altitude is 126 feet.
Fixed For the purpose of this guarantee and for the
Allowances: purpose of establishing compliance with this
guarantee, the following shall be used as
fixed quantities and allowances:
Operational Empty Weight minus Tare,
OEW: 350,000 Pounds
Engine Start and Taxi-out:
Fuel 2,000 Pounds
Time 0.333 Hours
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Attachment to Letter Agreement
No. 6-1162-DSF-082
CF6-80C2BIF Engines
Page 5
Takeoff and Climbout Maneuver:
Fuel 3,230 Pounds
Distance 7 Nautical Miles
Approach and Landing Maneuver:
Fuel 800 Pounds
Taxi-in (shall be consumed from the reserve
fuel):
Fuel 1,000 Pounds
Time 0.167 Hours
Usable reserve fuel remaining upon completion
of the approach and landing maneuver: 30,000
Pounds
For information purposes, the reserve fuel is
based either on a minimum 30,000 pounds of fuel
or on a standard day temperature and a) a
contingency fuel allowance equivalent to 10%
percent of the trip time from a point 82 percent
of the stage length from the takeoff through the
completion of the approach and landing maneuver
at the destination airport, starting at the end
of the mission cruise at an LRC Mach number, b)
a missed approach and flight to a 100 nautical
mile alternate airport, c) an approach and
landing maneuver at the alternate airport, and
d) a 30 minute hold at 1,500 feet, whichever is
larger.
2.1.2. Mission Block Fuel
The block fuel for a stage length of 5,695 nautical miles in
still air (equivalent to a distance of 5,990 nautical miles
with a 25 knot tailwind, representative of a Taipei to Los
Angeles route) with a 205,910 pound payload using the
conditions and operating rules defined below, shall not be
more than the following guarantee value:
NOMINAL: [ ]
TOLERANCE: [ ]
GUARANTEE: [ ]
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Conditions and operating rules are the same as Paragraph 2.1.1
except as follows:
Block Fuel: The block fuel is defined as the sum of the
fuel used for taxi-out, takeoff and climbout
maneuver, climb, cruise, descent, approach
and landing maneuver, and taxi-in.
Takeoff: The airport altitude is 72 feet.
The takeoff
gross weight
is not
limited by
the airport
conditions.
Fixed Allowances: For the purpose of this guarantee and for
the purpose of establishing compliance with
this guarantee, the following shall be used
as fixed quantities and allowances:
Operational Empty Weight minus Tare,
OEW: 350,000 Pounds
Takeoff and Climbout Maneuver:
Fuel 3,210 Pounds
Distance 7 Nautical Miles
Usable reserve fuel remaining upon
completion of the approach and landing
maneuver: 30,000 Pounds
2.1.3. Mission Payload
The payload for a stage length of 4,626 nautical miles in
still air (equivalent to a distance of 4,277 nautical miles
with a 38 knot headwind, representative
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of an Anchorage to Taipei route) using the conditions and
operating rules defined below, shall not be less than the
following guarantee value:
NOMINAL: [ ]
TOLERANCE: [ ]
GUARANTEE: [ ]
Conditions and operating rules are the same as Paragraph 2.1.1
except as follows:
Takeoff: The airport altitude is 144
feet. The airport tempera-
ture is 55 degrees F. The
runway length is 10,899 feet.
The runway slope is 0.27
percent downhill.
Cruise: The initial cruise altitude
is 28,000 feet.
Approach and Landing Maneuver: The destination airport
altitude is 72 feet.
Fixed Allowances: For the purpose of this
guarantee and for the purpose
of establishing compliance
with this guarantee, the
following shall be used as
fixed quantities and allow-
ances:
Operational Empty Weight
minus Tare,
OEW: 350,000 Pounds
Takeoff and Climbout
Maneuver:
Fuel 3,250 Pounds
Distance 7 Nautical Miles
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Usable reserve fuel remaining
upon completion of the
approach and landing
maneuver: 30,000 Pounds
2.1.4. Mission Block Fuel
The block fuel for a stage length of 4,626 nautical miles in
still air (equivalent to a distance of 4,277 nautical miles
with a 38 knot headwind, representative of an Anchorage
to,Taipei route) with a 251,220 pound payload using the
conditions and operating rules defined below, shall not be
more than the following guarantee value:
NOMINAL: [ ]
TOLERANCE: [ ]
GUARANTEE: [ ]
Conditions and operating rules are the same as Paragraph 2.1.3
except as follows:
Block Fuel: The block fuel is defined as the sum of the
fuel used for taxi-out, takeoff and climbout
maneuver, climb, cruise, descent, approach
and landing maneuver, and taxi-in.
Takeoff: The airport altitude is 144 feet.
The takeoff gross weight is not
limited by the airport conditions.
Cruise: The initial cruise altitude is 31,000 feet.
Fixed Allowances: For the purpose of this guarantee and for
the purpose of establishing compliance with
this guarantee, the following shall be used
as fixed quantities and allowances:
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Operational Empty Weight minus Tare,
OEW: 350,000 Pounds
Usable reserve fuel remaining upon
completion of the approach and landing
maneuver: 30,000 Pounds
2.1.5. Mission Payload
The payload for a stage length of 4,516 nautical miles in
still air (equivalent to a distance of 3,915 nautical miles
with a 67 knot headwind, representative of a Taipei to Abu
Dhabi route) using the conditions and operating rules defined
below, shall not be less than the following guarantee value:
NOMINAL: [ ]
TOLERANCE: [ ]
GUARANTEE: [ ]
Conditions and operating rules are the same as Paragraph 2.1.1
except as follows:
Cruise: The initial cruise altitude is 28,000 feet.
Fixed Allowances: For the purpose of this guarantee and for
the purpose of establishing compliance with
this guarantee, the following shall be used
as fixed quantities and allowances:
Operational Empty Weight minus Tare, OEW:
350,000 Pounds
Takeoff and Climbout Maneuver:
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Fuel 3,230 Pounds
Distance 7 Nautical Miles
Usable reserve fuel remaining upon
completion of the approach and landing
maneuver: 30,000 Pounds
2.1.6. Mission Block Fuel
The block fuel for a stage length of 4,516 nautical miles in
still air (equivalent to a distance of 3,915 nautical miles
with a 67 knot headwind, representative of a Taipei to Abu
Dhabi route) with a 256,040 pound payload using the conditions
and operating rules defined below, shall not be more than the
following guarantee value:
NOMINAL: [ ]
TOLERANCE: [ ]
GUARANTEE: [ ]
Conditions and operating rules are the same as Paragraph 2.1.5
except as follows:
Block Fuel: The block fuel is defined as the sum of the
fuel used for taxi-out, takeoff and climbout
maneuver, climb, cruise, descent, approach
and landing maneuver, and taxi-in.
Takeoff: The takeoff gross weight is not, limited by
the airport conditions.
Cruise: The initial cruise altitude is 31,000 feet.
Fixed Allowances: For the purpose of this guarantee and for
the purpose of establishing compliance with
this guarantee, the following shall be used
as fixed quantities and allowances:
Operational Empty Weight minus Xxxx,
00
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No. 6-1162-DSF-082
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OEW: 350,000 Pounds
Usable reserve fuel remaining upon
completion of the approach and landing
maneuver: 30,000 Pounds
2.1.7. Mission Payload
The payload for a stage length of 4,315 nautical miles in
still air (equivalent to a distance of 3,750 nautical miles
with a 66 knot headwind representative of an Hong Kong to
Bahrain route; using the conditions and operating rules
defined below, shall not be less than the following guarantee
value:
GUARANTEE: [ ]
Conditions and operating rules are the same as Paragraph 2.1.1
except as follows:
Takeoff: The airport altitude is 15 feet.
The airport temperature is 85 degrees F.
The runway length is 10,932 feet.
The clearway is 371 feet.
The following obstacle definition is
based on a straight-out departure
where obstacle height and distance are
specified with reference to
the liftoff end of the runway:
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Distance/Height
1. 10, 509 Feet 223 Feet
Cruise: The initial cruise altitude is 31,000
feet.
Approach and Landing Maneuver The destination airport altitude is and
6 feet.
Fixed Allowances: For the purpose of this guarantee and
for the purpose of establishing com-
pliance with this guarantee, the
following shall be used as fixed
quantities and allowances:
Operational Empty Weight minus Tare,
OEW: 350,000 Pounds
Takeoff and Climbout Maneuver:
Fuel 3,180 Pounds
Distance 7 Nautical Miles
Usable reserve fuel remaining upon
completion of the approach and landing
maneuver: 30,000 Pounds
2.1.8. Mission Block Fuel
The block fuel for a stage length of 4,315 nautical miles in
still air (equivalent to a distance of 3,750 nautical miles
with a 66 knot headwind, representative of an Hong Kong to
Bahrain route) with a 260,000 pound payload using the
conditions and operating rules defined below, shall not be
more than the following guarantee value:
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NOMINAL: [ ]
TOLERANCE: [ ]
GUARANTEE: [ ]
Conditions and operating rules are the same as Paragraph 2.1.7
except as follows:
Block Fuel: The block fuel is defined as the sum of the
fuel used for taxi-out, takeoff and climbout
maneuver, climb, cruise, descent, approach
and landing maneuver, and taxi-in.
Takeoff: The airport altitude is 15 feet.
The takeoff
gross weight
is not
limited by
the airport
conditions.
Fixed Allowances: For the purpose of this guarantee and for
the purpose of establishing compliance with
this guarantee, the following shall be used
as fixed quantities and allowances:
Operational Empty Weight minus Tare, OEW:
350,000 Pounds
Usable reserve fuel remaining upon
completion of the approach and landing
maneuver: 30,000 Pounds
3. MANUFACTURER'S EMPTY WEIGHT
The Manufacturer's Empty Weight (MEW) is guaranteed not to
exceed the value in Section 3-60-00 of Detail Specification
D019U002 plus one percent.
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4. AIRCRAFT CONFIGURATION
4.1. The guarantees contained in this Attachment are based on the
Aircraft configuration as defined in the original release of
Detail Specification D019U002 (hereinafter referred to as the
Detail Specification). Appropriate adjustment shall be made
for changes in such Detail Specification approved by the Buyer
and Boeing or otherwise allowed by the Purchase Agreement
which cause changes to the flight performance and/or weight
and balance of the Aircraft. Such adjustment shall be
accounted for by Boeing in its evidence of compliance with the
guarantees.
The Manufacturer's Empty Weight guarantee of Section 3 will be
adjusted by Boeing for the following in its evidence of
compliance with the guarantees:
(1) Changes to the Detail Specification including Change
Requests, Master Changes, Change Orders or any other changes
mutually agreed upon between the Buyer and Boeing or otherwise
allowed by the Purchase Agreement.
(2) The difference between the component weight allowances
given in Appendix IV of the Detail Specification and the
actual weights.
5. GUARANTEE CONDITIONS
5.1. All guaranteed performance data are based on the ICAO
International Standard Atmosphere (ISA) and specified
variations therefrom; altitudes are pressure
altitudes.
5.2. The FAA Regulations (FAR) referred to in this
Attachment are, unless otherwise specified, the
747-400 Certification Basis regulations specified in
the Type Certificate Data Sheet A20WE, Revision B,
dated June 8, 1989.
5.3. Requirement, or in the interpretation of any such
law, governmental regulation or requirement that
affects the certification basis for the Aircraft as
described in Paragraph 5.2, and as a result thereof,
a change is made to the configuration and/or the
performance of the Aircraft in order to obtain
certification, the guarantees set forth in this
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Attachment shall be appropriately modified to reflect any
such change.
5.4. The takeoff portion of the mission guarantees are based on
hard surface, level and dry runways with no wind or
obstacles, no clearway or stopway, 235 mph tires, with
anti-skid operative, and with the Aircraft center of gravity
at the most forward limit unless otherwise specified. The
takeoff performance is based on no engine bleed for air
conditioning or thermal anti-icing and the Auxiliary Power
Unit (APU) turned off. The improved climb performance
procedure will be used for takeoff as required.
5.5. The climb, cruise and descent portions of the mission
guarantees include allowances for normal power extraction
and engine bleed for normal operation of the air
conditioning system. Normal electrical power extraction
shall be defined as not less than a 100 kilowatts total
electrical load. Normal operation of the air conditioning
system shall be defined as pack switches in the "Normal"
position, the temperature control switches in the "Auto"
position that results in a nominal cabin temperature of
75 degrees F, and all air conditioning systems operating
normally. This operation allows a maximum cabin pressure
differential of 8.9 pounds per square inch, with a nominal
Aircraft cabin ventilation rate of 5,600 cubic feet per
minute including passenger cabin recirculation. The APU is
turned off unless otherwise specified.
5.6. The climb, cruise and descent portions of the mission
guarantees are based on an Aircraft center of gravity
location of 20 percent of the mean a aerodynamic chord.
5.7. Performance, where applicable, is based on a fuel Lower
Heating value (LHV) of 18,580 BTU per pound and a fuel
density of 6.75 pounds per U.S. gallon.
6. GUARANTEE COMPLIANCE
6.1. Compliance with the guarantees of Sections 2 and 3
shall be based on the conditions specified in those
sections, the Aircraft configuration of Section 4 and
the guarantee conditions of Section 5.
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6.2. Compliance with the takeoff portion of the mission
guarantees shall be based on the FAA approved
Airplane Flight Manual for the Model 747-400
Freighter.
6.3. Compliance with the climb, cruise and descent
portions of the mission guarantees shall be
established by calculations based on flight test data
obtained from an aircraft in a configuration 4,
similar to that defined by the Detail specification.
6.4. The OEW used for compliance with the mission
guarantees shall be the actual MEW plus the Standard
and Operational Items Allowance in Paragraph 3-60-0
of the Detail Specification.
6.5. Compliance with the Manufacturer's Empty Weight
guarantee shall be based on information in the
"Weight and Balance Control and Loading Manual
Aircraft Report."
6.6. The data derived from tests shall be adjusted as
required by conventional methods of correction,
interpolation or extrapolation in accordance with
established engineering practices to show compliance
with these guarantees.
6.7. Compliance shall be based on the performance of the
airframe and engines in combination, and shall not be
contingent on the engine meeting its manufacturer's
performance specification.
7. EXCLUSIVE GUARANTEES
The only performance guarantees applicable to the Aircraft are
those set forth in this Attachment.
81
6-1162-DSF-083
Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Certain Contractual Matters
Reference: Purchase Agreement No. 2021 (the Purchase Agreement) between
The Boeing Company (Boeing) and Atlas Air, Inc. (Customer)
relating to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
1. Basic Credit Memorandum.
In consideration of Customer's purchase of ten (10) firm Model
747-400F aircraft (Firm Aircraft), Boeing will issue a credit memorandum at time
of delivery of each Firm Aircraft to Customer in an amount equal to [ ] of the
Base Airframe Price (excluding special features, engines and BFE/SPE), expressed
in July 1995 dollars and subject to airframe escalation as described in Article
2.1.7 of the AGTA.
2. Customer Support Credit Memorandum.
In further consideration of Customer's purchase of the Firm
Aircraft, Boeing will issue a credit memorandum at delivery of each Firm
Aircraft to Customer in an amount equal to [ ] of the Base Airframe Price
(excluding special features, engines and BFE/SPE), expressed in July 1995
dollars and subject to airframe escalation as described in Article 2.1.7 of the
AGTA, for each of the Firm Aircraft.
3. [ ].
In further consideration of Customer's purchase of the Firm
Aircraft, Boeing will issue a credit memorandum at delivery of each Firm
Aircraft to Customer in an amount sufficient to offset the[ ], the [ ] and the [
] charges expressed in July 1995 dollars and subject to airframe escalation as
described in Article 2.1.7 of the AGTA. The amount of this credit memorandum
will be limited to [ ].
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4. [ ].
Notwithstanding the Advance Payment Schedule contained in Article 4.2 of
the Purchase Agreement, [ ]
Due Date of Payment Amount Due per Aircraft
(Percentage times Advance Payment Base Price)
1998 1999 & later
Deliveries Deliveries
At Definitive Agreement
15 months prior to the first
day of the scheduled delivery
month of the aircraft
12 months prior to the first
day of the scheduled delivery
month of the aircraft
9 months prior to the first day
of the scheduled delivery month
of the aircraft
Total
For each Aircraft Customer may elect to [ ] Advance Payments in accordance with
this Letter Agreement. Once an Advance Payment on a particular Aircraft has been
[ ], it will be assumed that all further Advance Payments on such Aircraft will
also be paid in accordance with the schedule above until Customer shall notify
Boeing otherwise.
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[ ] Amount is for any Aircraft, the amount equal to the
difference between the amount due according to the Advance Payment Schedule
pursuant to Article 4.2 of the Purchase Agreement and the amount due pursuant to
the [ ].
[ ] the sum of [ ]
for all Aircraft, less any [ ] paid.
Business Day is a day in which government offices and
financial institutions generally are open for business in the states of
Washington and New York. Interest on the [ ] will be charged at the fluctuating
rate of interest per annum equal to the six month London Interbank Offered Rate
(LIBOR) as published in the Wall Street Journal on the first business day of
each calendar quarter, plus two percent (2%).
5. Payment of Interest on [ ].
Interest will be paid on the first business day of each
calendar quarter by wire transfer to an account specified by Boeing . All
interest calculations will be computed on the basis of the actual number of days
elapsed and using a year of 360 days.
6. Conditions Precedent.
Paragraphs 4 and 5 of this Letter Agreement 6-1162-DSF-083
will become effective upon execution of said letter and upon execution
[ ] is satisfactory to Boeing.
7. Airframe Maintenance Cost Protection Program.
The standard price Boeing charges for a ten (10) year
Maintenance Cost Protection Program as described in Letter Agreement
6-1162-DSF-084 [ ] (95$ Subject to Escalation) per Aircraft. In consideration
of Customer's purchase of 10 firm Aircraft, Boeing will issue a credit
memorandum at delivery of each of the Firm Aircraft, to offset the charge.
8. Option Aircraft Matters.
8.1. The provisions of paragraphs 1, 3, 4, 5 and 6 of this
Letter Agreement will apply to up to ten (10) Option Aircraft when such Option
Aircraft are exercised by Customer.
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8.2. Notwithstanding Article 3.1 of Letter Agreement 2021-2,
Customer will pay a deposit to Boeing of [ ] for each Option Aircraft.(Deposit),
on the date of this Letter Agreement. If Customer exercises an option, the
Deposit will be credited against the first advance payment due. If Customer does
not exercise an option, Boeing will retain the deposit for that Option Aircraft.
9. Option Aircraft Delivery Flexibility.
Prior to the option exercise date for any option aircraft
contained in Letter Agreement 2021-2 to the Purchase Agreement, [ ]. Boeing
will, subject to available delivery positions and option exercise lead time
requirements, make reasonable efforts to accommodate Customer with a mutually
agreeable [ ].
10. Firm Aircraft Delivery Flexibility.
For Firm Aircraft delivering in 2000 and later, Customer may,
with eighteen (18) months notification,
[ ]. Boeing will, subject to available delivery positions, make reasonable
efforts to accommodate Customer with a mutually agreeable revised delivery
position. Customer may make such a change [ ].
11. Assignment of Credits.
The Credit Memoranda described in paragraphs 1 2, 3 and 4 of
this Letter Agreement are provided as a financial accommodation to Customer in
consideration of Customer becoming the operator of the Aircraft, and cannot be
assigned, in whole or in part, without the prior written consent of The Boeing
Company. [ ].
12. Airframe Maintenance Matters.
Boeing and Customer agree to jointly consider development of
airframe maintenance capability.
13. [ ].
Boeing offers to annually reimburse Atlas Air, Inc. (Customer)
for any increase in price for Boeing Model 747-400F [ ] will be made upon
resolution of the part number data submitted by Customer.
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[ ]
14. Application of Credit Memoranda.
Credit Memoranda issued to Customer pursuant to paragraphs 1,
2 and 3 above, may be used by Customer for the purchase from Boeing of Boeing
goods and services, or may be used (in whole or in part) by Customer for the
payment of the balance of the Aircraft Price due at the time of delivery of the
related Aircraft. The Credit Memoranda may not, however, be used to offset
payment of Advance Payments.
15. [ ].
[ ].
16. Performance Matters.
Pursuant to Letter Agreements 6-1162-DSF-082, 6-1162-DSF-084,
6-1162-DSF-086, 6-1162-DSF-095 and 6-1162-DSF-096, [ ].
17. Escalation Sharing.
Letter Agreement 2021-3 documents Boeing's commitment to share
escalation for Aircraft delivering in the years 1997 and 1998.
[ ].
18. Reconfirmation.
(a) Advance Payments. [ ]
(b) Request for Reconfirmation. Boeing may request that
Customer reconfirm its intent to take delivery of any Aircraft in its Scheduled
Delivery Month (Reconfirm) by sending to Customer a Reconfirmation Request Form
(Request) substantially in the form of the Attachment hereto, in the month
prior to but not less than ten (10) Business Days prior to the Reconfirmation
Date for the Aircraft. If Customer receives a Request, then Customer shall
Reconfirm in writing not later than three Business Days after the
Reconfirmation Date (the Reconfirmation Period) for the Aircraft.
Reconfirmation may be accomplished by countersigning and returning the Request
to Boeing. If Customer does not Reconfirm during the Reconfirmation Period,
then, without any act or notice required of Boeing, the Scheduled Delivery
Month for the Aircraft shall be deemed rescheduled as of the Reconfirmation
Date. Within ninety (90) days of the Reconfirmation Date Boeing shall notify
Customer of the Rescheduled Delivery Month, which month shall not be more than
24 months later than the Scheduled Delivery Month.
19. Confidential Treatment.
Customer understands that certain commercial and financial
information contained in this Letter Agreement are considered by Boeing as
confidential. Customer agrees that it will treat this Letter Agreement and the
information contained herein as confidential and will not, without the prior
written consent of Boeing, disclose this Letter Agreement or any information
contained herein to any other person or entity.
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Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
--------------------------
Its Attorney-In-Fact
--------------------------
ACCEPTED AND AGREED TO this
Date: June 6 , 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
--------------------------
Its CEO
--------------------------
P.A No. 2021
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87
Attachment to 6-1162-DSF-083
[Date]
[Letter No.]
ATLAS AIR, INC.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Request for Reconfirmation
Reference is made to Purchase Agreement No. 2021 dated as of June 6, 1997 as
amended and supplemented (the Agreement), between The Boeing Company (Boeing)
and Atlas Air, Inc. (Customer). All terms used herein and in the Agreement, and
not defined herein, will have the same meaning as in the Agreement.
Boeing hereby requests that Customer reconfirm its intent to take delivery of
__ Block ___ Model 747-444F Aircraft scheduled for delivery in _____________.
Very truly yours,
THE BOEING COMPANY
By
--------------------------
Its
--------------------------
The undersigned, Atlas Air, Inc., hereby reconfirms its intent to take delivery
of the Aircraft referenced above.
Date: , 1997
ATLAS AIR, INC.
By
--------------------------
Its
--------------------------
P.A. No. 1910
88
6-1162-DSF-084
Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Aircraft Maintenance Cost Protection Program
Reference: Purchase Agreement 2021 (the Purchase Agreement) between
The Boeing Company (Boeing) and Atlas Air, Inc. (Customer)
relating to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends the Purchase Agreement and Exhibit C of the AGTA.
All terms used but not defined in this Letter Agreement have the same meaning as
in the Purchase Agreement and AGTA.
In consideration of Customer's purchase of the Aircraft and in response to
Customer's request for contractual assurances regarding Aircraft maintenance
costs, Boeing agrees to amend Exhibit C (Product Assurance Document) of the AGTA
to include the aircraft maintenance material cost protection program described
herein (the Program).
1. Scope.
1.1. Covered Aircraft.
The Program applies to each of the Aircraft while operated by Customer on
Customer's routes during the Program Term, as defined in paragraph 1.2 below,
(the Covered Aircraft).
1.2. Program Term.
The term of the Program will be 10 consecutive years commencing on the
first day of the calendar quarter in which the first Covered Aircraft is
delivered by Boeing to Customer (Program Term).
1.3. Covered Maintenance Work.
The Program applies to materials consumed in the maintenance of the
airframe and component elements of the Covered Aircraft which are included in
aircraft systems 5, 7 through 11, relevant sections of 12 and 20, 21 through 57,
71, and 73 through 80 (as defined in the Air Transport Association of America,
Specification No. 100,
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"Specification for Manufacturer's Technical Data," dated 1984) when such
maintenance is performed in accordance with Customer's FAA approved maintenance
program and such materials are properly charged to the following work
descriptions:
(i) Scheduled Checks: All routine and required non-routine or corrective
maintenance performed by Customer during scheduled checks.
(ii) Non-scheduled Maintenance: All non-scheduled required maintenance.
(iii) Repair and Overhaul: Any required repair or overhaul of rotable or
repairable systems, accessories, equipment and parts.
(iv) Modifications: Modifications required to make changes recommended by
Boeing or Boeing suppliers pursuant to paragraphs 5.1 and 7.1 herein.
The Program applies only to the maintenance described above (Airframe
Maintenance) and does not apply to materials consumed with respect to Engines,
as defined in Xxxxxxx XX0 to the Purchase Agreement.
2. Basic Definitions.
2.1. "Fleet," for any Reporting Period, means the number of Covered
Aircraft operated by Customer on Customer's routes during such Reporting Period.
2.2. "Fleet Hours," for any Reporting Period, means the total airborne time
(aircraft takeoff to touchdown) accumulated by the Covered Aircraft during such
Reporting Period.
2.3. "Reporting Period" is a 12 month period commencing on either the date
the Program Term commences or on an anniversary thereof.
3. Maintenance Material Cost Program Measures.
3.1. Airframe Maintenance Material Cost.
"Airframe Maintenance Material Cost" is the actual cost paid by Customer
for materials required to perform the Aircraft Maintenance, whether performed
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by Customer or by others for Customer, exclusive of any surcharges, taxes,
duties, tariffs, interest or other similar charges added to the manufacturer's
standard price.
3.2. Cumulative Average Reported Material Cost.
The "Cumulative Average Reported Material Cost" or "Average Reported Cost,"
for any Reporting Period, is calculated as the aggregate Airframe Maintenance
Material Cost for all then-completed Reporting Periods divided by the Fleet
Hours for all such completed Reporting Periods.
3.3. Target Material Cost.
The "Target Material Cost" for the Covered Aircraft for any Reporting
Period is the projected net cost to Customer for materials set forth in
paragraph 3.1 above where such Target will be expressed as a dollar value per
flight hour.
3.3.1. The Target Material Cost in year 1996 dollars is based on a
projected average airborne time per flight for the fleet of 9.0 hours (Projected
Average Flight Time), as follows:
Reporting Reporting Reporting
Period 1 Period 2 Period 3
-------- -------- --------
Target Material Cost [ ] [ ] [ ]
Reporting Reporting Reporting
Period 4 Period 5 Period 6
Target Material Cost [ ] [ ] [ ]
Reporting Reporting Reporting
Period 7 Period 8 Period 9
Target Material Cost [ ] [ ] [ ]
Reporting
Period 10
Target Material Cost [ ] [ ] [ ]
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3.3.2. The Target Material Cost for any Reporting Period will be
adjusted for changes in material costs based on the following:
3.3.2.1 To reflect changes in inflation rates, the Target
Material Cost for such Reporting Period will be calculated by multiplying the
base Target Material Cost by the arithmetic average of the 12 monthly Producer
Price Indexes for "Aircraft parts and auxiliary equipment, n.e.c.," (Standard
Industrial Classification Code 3728) for such Reporting Period and dividing the
result by the arithmetic average of such Indices for the year 199X.
(The index described in this paragraph 3.3.2.1 will be obtained from the
publication "Producer Prices and Price Indexes" published by the U.S. Department
of Labor, Bureau of Labor Statistics or any comparable successor publication
published by the U.S. Department of Labor, Bureau of Labor Statistics or any
comparable successor agency).
3.3.2.2 If the actual average airborne time per flight for
the Fleet (Actual Average Flight Time) for any Reporting Period is different
from the Projected Average Flight Time of 9.0 hours, the Target Material Cost
for such Reporting Period will be adjusted to reflect such Actual Average
Flight Time for such Reporting Period in accordance with Attachment A to this
Program.
3.3.2.3 The Target Material Cost is based on (i) the number
of Covered Aircraft and the delivery schedule for such Covered Aircraft set
forth in the Agreement and (ii) a projected average utilization for the Covered
Aircraft during any Reporting Period of 5,100 flight hours. If the number of
Covered Aircraft or their delivery schedules are revised prior to or during the
Program Term as provided under or by amendment to the Agreement or the average
utilization for the Covered Aircraft during any Reporting Period exceeds 5,400
or is less than 4,800 flight hours, Boeing will have the right to revise the
Target Material Cost to reflect the impact of any such revisions or excess.
3.4. Cumulative Average Target Material Cost.
The "Cumulative Average Target Material Cost" or "Cumulative Average
Target Cost" as of any Reporting Period means (i) the sum of the products of
the Target Material Cost for each completed Reporting Period multiplied by the
Fleet Hours for
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each such completed Reporting Period (ii) divided by the total Fleet Hours for
all completed Reporting Periods.
4. Deficiency.
A "Deficiency" with respect to Airframe Maintenance Material Cost occurs
when the Cumulative Average Reported Cost for a Reporting Period exceeds [ ]% of
the Cumulative Average Target Cost as of such Reporting Period, all as may be
adjusted pursuant to the terms of the Program.
5. [ ]
5.1. If a [ ] exists, and Customer provides its reports to Boeing
pursuant to paragraph 6 herein, then Boeing will:
(i) [ ]
(ii) [ ]
[ ]
6. Administrative Requirements.
6.1. Customer will report to Boeing, within 90 days after the last day of
each Reporting Period, (i) the Cumulative Average Reported Cost broken down by
scheduled maintenance costs, non-scheduled maintenance costs, repair and
overhaul costs and modification costs, (ii) the Actual Average Flight Time for
the Fleet and (iii) the number of Covered Aircraft included in the Fleet.
Failure to file such reports within such 90 day period will constitute an
acknowledgment by Customer that there was no [ ] for that Reporting Period and
Boeing will not be obligated to provide any of the remedies arising under this
Program. However, if [ ] occurs, Customer will, within 90 days after the last
day of the applicable Reporting Period, report to Boeing the data identified
above for all then-completed Reporting Periods of the Program Term.
6.2. Customer's reports will include sufficient data to substantiate any
claimed [ ]. Upon request, Customer will submit to Boeing reasonable proof of
the existence of any Airframe Maintenance Material Cost claimed by Customer as
the basis of a Deficiency under the terms of this Program. Customer will
maintain and submit to Boeing such records, data and reports as may reasonably
be required to (i) determine cost elements
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of the Airframe Maintenance Material Cost, (ii) determine Cumulative Average
Reported Cost (broken down into the "work descriptions" set forth in paragraph
1.3 herein), (iii) identify the Fleet and calculate Fleet Hours, (iv) facilitate
the analysis of the problems causing any claimed Deficiency, (v) verify the
Actual Average Flight Time and (vi) when required, facilitate development of
appropriate remedial action with respect to any claimed Deficiency.
6.3. Customer will, if requested by Boeing, furnish, from time to time,
such additional information as is reasonably necessary to monitor the Program or
investigate any claimed Deficiency.
6.4. All reports submitted to Boeing will be addressed to the attention of:
Director - Warranties
Boeing Commercial Airplanes
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
7. Conditions and Limitations.
7.1. If Boeing or any Boeing supplier issues no-charge service bulletins or
service bulletins with no-charge retrofit kits which would reduce Airframe
Maintenance Material Cost, Customer will make any changes recommended by such
service bulletins and install such retrofit kits within 240 days after issuance
of such instructions or receipt of such kits at Customer's facility, or such
longer period as may be mutually agreed by the parties. In the event of
Customer's failure to comply with the time requirements of this paragraph 7.1,
all Airframe Maintenance Material Cost which would have been eliminated if such
service bulletins or retrofit kits had been incorporated, as determined by
Boeing, will be subtracted from Cumulative Average Reported Cost reported after
expiration of such time requirements.
7.2. Customer will promptly notify Boeing in writing of any existing or
contemplated variations in its maintenance cost accounting system or procedures
which affect or would affect the proper reporting of Airframe Maintenance
Material Cost. Boeing will have the right to adjust the Cumulative Average
Target Cost and the definition for Airframe Maintenance Material Cost to reflect
the effect of any such variations.
7.3. Boeing will have the right to audit and investigate all costs charged
by Customer to the "Work Descriptions" listed in paragraph 1.3 herein, as well
as the mainte-
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enance practices and procedures related thereto, at any reasonable time during
the Program Term. Boeing will also have the right to disapprove costs improperly
charged to such Work Descriptions. Boeing will provide Customer with written
notification of its disapproval of any such costs, and if Customer does not
provide proof that such costs are properly chargeable to such Work Descriptions
within 60 days after such notification, Boeing and Customer will determine the
amount to be deducted from the computation of the Average Reported Cost.
7.4. Boeing will have the right at all reasonable times to inspect and
review Customer's maintenance facilities, programs and procedures. If Boeing
recommends in writing reasonable changes in Customer's maintenance programs and
procedures which would reduce the Average Reported Cost and offers reasonable
proof that such changes will reduce such costs and Customer does not effect such
changes or Customer delays effecting such changes beyond the period set forth in
paragraph 7.1 herein, Boeing will have the right to adjust the Cumulative
Average Target Cost to reflect the increased costs which Boeing estimates will
result from Customer's failure or delay in effecting such changes.
7.5. The Airframe Maintenance Material Cost will not include the following:
costs arising from loss of, or damage to, any Covered Aircraft, or any
accessory, equipment or part thereof; any taxes, duties, tariffs, surcharges,
transportation, interest or overhead; the cost of initial or sustaining spare
parts or the depreciation of such spare parts; costs resulting from any
modification to the Covered Aircraft or any equipment, accessory or part thereof
other than modifications described under paragraph 1.3(iv) herein; costs
resulting from the negligent acts or omissions of Customer; costs resulting from
the improper operation, service, maintenance or overhaul of any Covered
Aircraft, or any system, accessory, equipment or part thereof; costs
attributable to loss of use, revenue or profit; costs of consumable fluids,
including fuel; costs due to acts of God, war, warlike operations,
insurrections, riots, fires, floods, explosions, accidents, epidemics or
quarantine restrictions; costs due to Government priorities, allocation
regulations or orders which affect materials or facilities needed for the
maintenance of Covered Aircraft; costs due to strikes or labor troubles causing
cessation, slowdown or interruption of work related to the maintenance of
Covered Aircraft; delay in transportation or inability to procure materials,
accessories, equipment or parts needed for the maintenance of Covered Aircraft;
or any other costs not included in Airframe Maintenance Material Cost as defined
in paragraph 3.1 herein.
7.6. Customer's Cumulative Average Reported Cost as of any Reporting Period
will be reduced by any of the following items to the extent that such items have
been included as part of such Cumulative Average Reported Cost:
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(i) the price for any part provided by Boeing or Boeing's
suppliers to Customer at no charge,
(ii) an amount equal to the difference between the
reported price for any part and the reduced price for such part as provided by
Boeing or Boeing's suppliers to Customer,
(iii) the amount of any credit memorandum or other payment
scheme, established in Customer's favor, related to the materials involved in
any warranty, maintenance material cost guarantee or similar agreement and
issued by Boeing or Boeing suppliers to Customer.
7.7. The Program will be suspended if during any Reporting Period the
average utilization for the Covered Aircraft is below 1,400 flight hours. Once
the average utilization for the Covered Aircraft exceeds the minimum average
utilization set forth above during any subsequent Reporting Period, the Program
will be resumed commencing on the first day of such subsequent Reporting Period.
Customer's report of Cumulative Average Reported Cost as of any Reporting Period
during the Program Term will exclude all Airframe Maintenance Material Cost
incurred and Fleet Hours accumulated by Customer during any Reporting Period in
which the Program was suspended as provided above. The Program will not be
extended to reflect any period wherein it was suspended.
7.8. At Boeing's request, Customer will assign to Boeing, any of Customer's
rights against the manufacturer of any equipment, accessory or part installed in
the Covered Aircraft as Boeing may reasonably require to fulfill its obligations
with respect to any remedy provided by Boeing hereunder.
7.9. THIS LETTER AGREEMENT AND THE RIGHTS AND REMEDIES OF CUSTOMER AND
OBLIGATIONS OF BOEING HEREIN ARE SUBJECT TO THE DISCLAIMER AND RELEASE AND
EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES PROVISIONS OF ARTICLE 12 OF THE
AGREEMENT.
For the purpose of this paragraph, the term "Boeing" means The Boeing Company,
its division, subsidiaries and affiliates, the assignees of each, and their
directors, officers, employees and agents.
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8. Covered Aircraft Configuration.
The target material cost set forth in this Program is based on the
configuration for the Covered Aircraft as set forth in Detail Specification
D-TBD dated TBD (Exhibit A to the Purchase Agreement). Such target material cost
may be equitably adjusted by mutual agreement to appropriately reflect any
changes to the actual configuration of the Covered Aircraft at the time of
delivery thereof to Customer. Equitable adjustments to such target material cost
may also be made by mutual agreement at any time during the Program Term to
reflect any additional changes in the configuration of the Covered Aircraft.
9. Duplicate Product Assurance Remedies.
It is agreed that Boeing will not be obligated to provide to Customer any
remedy under this Program which is a duplicate of any other remedy which has
been provided to Customer under any Part of Exhibit C (Product Assurance
Document) to the AGTA.
10. Confidential Treatment.
Customer understands that certain commercial and financial information
contained in this Letter Agreement and attachment(s) hereto are considered by
Boeing as confidential. Customer agrees that it will treat this Letter Agreement
and the information contained herein as confidential and will not, without the
prior written consent of Boeing, disclose this Letter Agreement or any
information contained herein to any other person or entity.
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If the foregoing correctly sets forth your understanding of our agreement with
respect to the matters treated above, please indicate your acceptance and
approval below.
Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
------------------------
Its Attorney-In-Fact
------------------------
ACCEPTED AND AGREED TO this
Date: June 6, 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
-----------------------
Its CEO
-----------------------
Attachments
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Attachment A to
Letter Agreement
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Actual Average Flight Time Adjustment
TMC for AAFT = TMC for PAFT x ( .65/AAFT + .35)
(.65 /PAFT + .35)
Where TMC = Target Material Cost
Where AAFT = Actual Average Flight Time
Where PAFT = Projected Average Flight Time
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Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Open Configuration Matters
Reference: Purchase Agreement 2021 (the Purchase Agreement) between The Boeing
Company (Boeing) and Atlas Air, Inc. (Customer) relating
to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends the Purchase Agreement. All terms used but not
defined in this Letter Agreement have the same meaning as in the Purchase
Agreement.
1. Aircraft Configuration.
1.1. Initial Configuration. The initial configuration of Customer's Model
747-400F Aircraft has been defined by Boeing Model 747-400 Freighter Airplane
Configuration Specification D019U002 as described in Article 1 and Exhibit A of
the Purchase Agreement (the Aircraft Configuration). Given the long period of
time between the Purchase Agreement signing and delivery of the first Aircraft,
Customer may have the desire to incorporate certain configuration changes
(Options) into the Aircraft Configuration.
1.2. Final Configuration Schedule. No later than 12 months prior to the
first Aircraft's scheduled delivery month, Boeing and Customer will discuss
potential Options. By May 16, 1997, Boeing will provide Customer with Option
proposals for those configuration changes that can be incorporated in Aircraft
production. By June 6, 1997, Customer will accept or reject these Options.
2. Effect on Purchase Agreement.
2.1. Basic Specification. Changes applicable to the basic Model 747-400F
aircraft which are developed by Boeing between the date of signing of the
Purchase Agreement and completion of the final configuration review described in
paragraph 1.2 above will be incorporated into the Aircraft Configuration by
written amendment.
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2.2. Exhibit A. The effects of all Options which are mutually agreed upon
between Boeing and Customer for incorporation into the Aircraft Configuration
will be incorporated into Exhibit A of the Purchase Agreement by written
amendment.
2.3. Performance Guarantees. Within 60 days after Customer's acceptance of
any Options, Boeing will provide to Customer revisions to the Performance
Guarantees to reflect the effects, if any, of the incorporation of such Options
on Aircraft performance. Such revisions will be incorporated by written
amendment.
2.4. Price Adjustments. The Aircraft Basic Price and Advance Payment Base
Price of each Aircraft included the amount of United States [ ] (95$) as an
estimate of the value of the Options which may be accepted and included in the
final Aircraft Configuration. The Aircraft Basic Price and the Advance Payment
Base Price of each Aircraft will be increased or decreased as required to
reflect the difference between such estimate and the actual prices plus any
required Seller Purchased Equipment, of the Options accepted by Customer.
3. Purchase Agreement Amendment.
Within 30 days after reaching agreement as to the final Aircraft
Configuration, Boeing will provide Customer an amendment to the Purchase
Agreement reflecting the effects of the configuration changes agreed to by the
parties.
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Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
----------------------
Its Attorney-In-Fact
----------------------
ACCEPTED AND AGREED TO this
Date: June 6, 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
----------------------
Its CEO
----------------------
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Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Remedy for Deviation from Fuel Burn Objective for
Model 747-400F Aircraft
Reference: Purchase Agreement No. 2021 (the Purchase Agreement)
between The Boeing Company (Boeing) and Atlas Air Inc.
(Customer) relating to Model 747-400F Aircraft (the
Aircraft)
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
Letter Agreement 6-1162-DSF-082 contains performance guarantees (the Performance
Guarantees) which include tolerances of [ ] from nominal levels for the block
fuel described in Paragraph 2.1.2 of the Performance Guarantees (the Block Fuel
Guarantee). Customer has requested that Boeing [ ].
In response to Customer's request, Boeing [ ] in the event that fuel burn
performance exceeds nominal block fuel performance as specified in paragraph
2.1.2 of the Attachment to Letter Agreement 6-1162-DSF-082 [ ].
1. Demonstration of Compliance.
Article 5.4 of the Aircraft General Terms Agreement AGTA-TLS between Boeing
and Customer (AGTA-TLS) provides a procedure for demonstration of compliance
with all performance guarantees prior to delivery. That same procedure will be
used to demonstrate compliance with [ ] which, if not met, will result in
economic remedies as described below.
2. Rights and Obligations in the Event the Aircraft [ ].
2.1. Aircraft Delivery.
In the event any Model 747-400F Aircraft, at the time of tender by Boeing
for delivery to Customer fails to comply with [ ], Cus-
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tomer shall not refuse to accept delivery of such Aircraft on account of such
noncompliance, subject to the terms and conditions hereinafter set forth.
2.2. Correction of Noncompliance with [ ].
2.2.1. To the extent economically and technically practicable, Boeing
will use its best reasonable efforts to design or cause to be designed, changes
to the Model 747-400F Aircraft which would diminish or correct the failure of
the Model 747-400F Aircraft to comply with [ ]. Such changes
shall hereinafter be called "Changes".
2.2.2. In the event Boeing develops or causes to be developed Changes
which Boeing believes are economically and technically practicable, Boeing will
promptly furnish such Changes at [ ] to Customer for each Model 747-400F
Aircraft. Such Changes shall be in the form of retrofit parts and/or
modification instructions. Boeing will also [ ] any direct labor reasonably
expended by Customer to incorporate such Changes. Such reimbursement shall be on
the basis of Boeing's [ ] then in effect with Customer.
2.2.3. Boeing shall not be obligated to furnish any Changes in
addition to those necessary to cause the Model 747-400F Aircraft to comply with
[ ].
2.3. Remedy for Non-Compliance with [ ].
2.3.1. In the event that Boeing has not, within one year after the
delivery of any Model 747-400 Aircraft which failed at the time of delivery to
comply with the [ ], designed or caused to be designed and
delivered to Customer, Changes as defined in Paragraph 2.2.1 above, [ ]
escalation in accordance with the provisions of Exhibit D to the AGTA as such
provisions are applied to the Airframe for the Aircraft. [ ] for
any portion of the deficiency corrected by Changes for that portion of the
preceding year subsequent to the delivery of such Changes to Customer.
2.3.2. [ ] above shall be [ ] by Boeing. In no
event shall the total, [ ] Customer pursuant to Paragraphs
2.3.1 above exceed [ ] for each Aircraft. Should an examination of
Customer's actual usage of the subject Aircraft indicate that the values used in
calulat-
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ting [ ] were excessive, Customer agrees to an adjustment in
[ ] accordingly.
2.3.3. The amount of performance improvement attributable to any Change
shall be determined by analysis based on data supplied by Boeing and certified
to be correct by Boeing. The amount of such improvement shall be deemed to be
the amount of performance improvement, stated in terms of Block Fuel, as
calculated using reasonable engineering interpretations and calculations based
on the data furnished pursuant to Article 5.4 of the AGTA-TLS and the data
furnished pursuant to this Paragraph 2.3.3.
3. [ ].
[ ] under this Letter Agreement shall be as a result of
operation of the Aircraft by Customer.
4. Confidential Treatment.
Customer understands that certain commercial and financial information
contained in this Letter Agreement, and any attachments hereto, is considered by
Boeing as confidential. Buyer agrees that it will treat this Letter Agreement
and the information contained herein as confidential and will not, without the
prior written consent of Boeing, disclose this Letter Agreement or any
information contained herein to any other person or entity.
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Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
------------------------
Its Attorney-In-Fact
------------------------
ACCEPTED AND AGREED TO this
Date: June 6, 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
------------------------
Its CEO
------------------------
106
Attachment to
6-1162-DSF-086
Page 1
[ ]
(CALENDAR YEARS 1999 AND ON)
(a) [ ] to be used for calculation of the remedy amount
which is due and payable for the calendar year 1998 and each
subsequent year shall be determined using the following equation:
[ ]
(b) The following definitions shall apply herein:
[ ]
Ca = The index of Commercial Jet fuel, Kerosene Base as
reflected in the Bureau of Labor Statistics, U.S.
Department of Labor "Producer Price Indexes" (Commodity
Code 05720301) for each month of the desired year of
Adjusted Remedy Value and calculated as an average value
for such year.
53.4 = The index of Commercial Jet fuel, Kerosene Base as
reflected in the Bureau of Labor Statistics, U.S.
Department of Labor "Producer Price Indexes" (Commodity
Code 05720301) for the month of July 1995 (1982 = 100).
TR = Customer's effective Corporate tax rate in effect at time
of [ ].
(c) In addition it is understood that at the time of [ ] calculation,
Boeing may be unable to determine the precise amount of such value
because the applicable fuel index used to determine Ca may not be
released by the Bureau of Labor Statistics, or if released, it may be
adjusted at a later date by such Bureau. Accordingly, the parties agree
as follows:
(i) The commercial jet fuel index to be used in calculating the [ ]
will be determined by utilizing the escalation provisions set
forth above. The most current Bureau of Labor Statistics for the
applicable month (including those noted as preliminary by the
Bureau of labor statistics) and available to
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Attachment to
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Boeing at the time the escalation calculation is made shall be
used to calculate [ ]. If no value has been released for the
applicable year, the "preliminary" values first available for
the nearest preceding months will be used.
(ii) Subsequent to calculation of the [ ], Boeing may from time
to time make adjustments to the value of the commercial jet
fuel index for such [ ] to reflect any changes in index
previously used to determine such [ ]. If the U.S.
Department of Labor revises any previously released index
value by removing or replacing such index, or by describing
such revision by footnote appendix or by any other method,
the revised value shall be used to revise the value of the
[ ]. Such adjustment(s) by Boeing, if any, shall be made
within 12 months thereafter.
(iii) If the U.S. Department of Labor substantially revises the
methodology (in contrast to benchmark adjustments or other
corrections of previously released data) or discontinues
publishing the commercial jet fuel index, the parties shall
select a substitute for the revised or discontinued
commercial jet fuel index, such substitute to lead in
application to the same adjustment result, insofar as
possible, as would have been achieved by continuing the use
of the original as it may have fluctuated had it not been
revised or discontinued. Appropriate revision of the formula
shall be made to accomplish this result. In the event
escalation provisions are made non enforceable or otherwise
rendered null and void by any agency of the United States
Government, the parties agree, to the extent they may
lawfully do so, to equitably adjust the price of any
affected ARV to reflect an allowance for increases in the
commercial jet fuel price.
NOTE: Any rounding of a number, as required under this Attachment
with respect to escalation of [ ], shall be accomplished as
follows: If the first digit of the portion to be dropped
from the number to be rounded is five or greater, the
preceding digit shall be raised to the next higher number.
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No. 6-1162-DSF-098
Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Taxes - Boeing Opinion
Reference: Purchase Agreement No. 2021 (the Purchase Agreement)
between The Boeing Company (Boeing) and Atlas Air
Inc.(Customer) relating to Model 747-400F Aircraft
(the Aircraft)
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
This letter has been prepared in response to Customer's concern with regard to
applicability of United States and Washington State taxes to the purchase by
Customer of the Aircraft. Boeing has agreed to furnish to Customer an opinion
regarding the imposition of any State of Washington or United States sales and
use taxes with respect to the sale and purchase of the Aircraft under the
Purchase Agreement. The following are Boeing's opinion and shall not serve as a
substitute for the advice of Customer's legal counsel.
1. Sale in State of Washington.
It is assumed and understood for purposes of this opinion, that the
delivery of the Aircraft is to be made to Customer in the State of Washington,
that title to the Aircraft will be either (i) transferred directly from Boeing
to Customer, and that the Aircraft is to be used by Customer in interstate and
foreign commerce for the transportation of property and persons for hire or (ii)
will be purchased by Customer or Customer's assignee solely for the purpose of
resale or lease, such resale or lease being in the regular course of Customer's
or Customer's assignee's business.
Present Washington law exempts from the Washington State sales tax any:
"Sales of airplanes ... for use in conducting interstate or foreign commerce by
transporting therein or therewith property and persons for hire ...; component
part of such airplanes ... in the course of constructing, repairing, cleaning,
altering, or improving the same ..." RCW 82.08.0262.
Present Washington law also exempts from the Washington State use tax:
"The use of any airplane ... used primarily in conducting interstate or foreign
commerce by trans-
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porting therein or therewith property and persons for hire ... and in respect to
use of tangible personal property which becomes a component part of any such
airplane ..." RCW 82.12.0254.
By its definition, present Washington Law exempts from Washington State
Sales Tax: "Sales to a person who ... purchases for the purpose of resale as
tangible personal property in the regular course of business without intervening
use by such person...." RCW 82.04.050.
Based on the foregoing, Boeing is of the opinion that under present law,
if the Exemption Certificate required by the rules of the Washington State Tax
Commission is given by Customer to Boeing, the sale of the Aircraft by Boeing
to Customer will not be subject to Washington sales or use tax, and Boeing need
not collect from Customer either a Washington sales tax or a Washington use tax
as a result of such sale.
As of the date of this opinion, Boeing is not aware of any implemented or
pending Washington State legislation that will impose a sales, use, value added
or similar transfer tax on the Aircraft within the period contemplated for
delivery of the Aircraft.
2. United States Taxes.
As of the date of this opinion, under present United States law, the sale,
and use of aircraft are not subject to taxes nor is Boeing aware of any
implemented or pending legislation which will impose a sales, use, value added
or similar transfer tax on the Aircraft within the period contemplated for
delivery of the Aircraft.
Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
----------------------
Its Attorney-In-Fact
----------------------
P.A. 2021
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6-1162-DSF-099
Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Subject: Special Purchase Agreement Provisions
Reference: Purchase Agreement No. 2021 (the Purchase Agreement) between
The Boeing Company (Boeing) and Atlas Air, Inc. (Customer)
relating to Model 747-400F aircraft (the Aircraft)
This Letter Agreement amends and supplements the Purchase Agreement. All terms
used but not defined in this Letter Agreement have the same meaning as in the
Purchase Agreement.
1. Special Provisions.
Boeing and Customer agree that the following provisions shall
apply in lieu of the provisions currently contained in the Purchase Agreement:
1.1. Article 8.2.1 to AGTA-TLS, Insurance Requirements is
revised in its entirety to read: "The Customer will purchase and maintain
insurance [ ], and provide a certificate of such insurance that names Boeing as
an additional insured for any and all claims and liabilities for injury to or
death of any person or persons, including employees of Customer but not
employees of Boeing, or for loss of or damage to any property, including any
aircraft, arising out of or in any way relating to Materials, Training, Services
or other things provided under Exhibit B of the AGTA, which will be incorporated
by reference into the applicable purchase agreement whether or not arising in
tort or occasioned by the negligence of Boeing, except with respect to legal
liability to persons or parties other than Customer or Customer's assignees
arising out of an accident caused solely by a product defect in an aircraft.
Customer will provide such certificate of insurance at least thirty (30) days
prior to the scheduled delivery of the first aircraft under a purchase
agreement. The insurance certificate will reference each aircraft delivered to
Customer pursuant to each applicable purchase agreement. Annual renewal
certificates will be submitted to Boeing before the expiration of the policy
periods. The form of the insurance certificate, attached as Appendix I, states
the terms, limits, provisions and coverages required by this Article 8.2.1. The
failure of Boeing to demand compliance with
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this 8.2.1 in any year will not in any way relieve Customer of its obligations
hereunder nor constitutes a waiver by Boeing of these obligations."
1.2. Exhibit A to AGTA-TLS, Buyer Furnished Equipment
Provisions Document, - Customer's configuration currently contains no items of
BFE. Should the configuration change to include any BFE, the Boeing BFE process
in place at that time will be the subject of discussion and negotiation between
Boeing and Customer.
1.3. Exhibit C to AGTA-TLS, Product Assurance Document, part
2, Article 4.5, Maximum Reimbursement is revised in its entirety to read:
"Unless previously agreed, the maximum reimbursement for Direct Labor and Direct
Materials used to Correct a defective Boeing Product will not exceed 65% of
Boeing's then-current sales price for a new replacement Boeing Product plus the
Direct Labor to remove and reinstall such Product."
1.4. Exhibit C to AGTA-TLS, Product Assurance Document, Part
2, Article 8.3.2, is revised in its entirety to read: "If Customer has a
critical parts shortage because Boeing has exceeded a Correction time objective
and Customer has procured spare Boeing Products for the defective Boeing Product
in quantities shown in Boeing's Recommended Spare Parts List (RSPL), [ ], then
Boeing will either expedite the Correction or provide a similar Product on a no
charge loan or lease basis until a Corrected Boeing Product is returned."
1.5. Letter Agreement 2021-1, paragraph 7, Customer's
Indemnification of Boeing, is revised in its entirety to read: "[ ] except as
provided in Article 8.1.1 of AGTA-TLS, Customer will indemnify and hold harmless
Boeing from and against all claims and liabilities, including costs and expense
(including attorneys' fees) incident thereto or incident to successfully
establishing the right to indemnification, for injury to or death of any person
or persons, including employees of Customer but not employees of Boeing, or for
loss of or damage to any property, including Aircraft (but not the Aircraft
before delivery), arising out of or in any way connected with any nonconformance
or defect in any SPE and whether or not arising in tort or occasioned in whole
or in part by the negligence of Boeing. This indemnity will not apply with
respect to any nonconformance or defect caused solely by Boeing's installation
of the SPE."
1.6. Exhibit C to AGTA-TLS, Part 2, Article 4.4, Credit Memo
Reimbursement, is revised in its entirety to read: "Boeing will make
reimbursements by credit
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memoranda which may be applied toward the purchase of Boeing goods and services.
[ ].
[ ]
1.8. Letter Agreement 2021-5, paragraph 7.5, Price and Payment, is revised
in its entirety to read: "The price of each provisioning item repurchased by
Boeing pursuant to this paragraph 7 will be an amount equal to 100% of the
original invoice price thereof. In the case of Provisioning Items manufactured
by a vendor which were purchased pursuant to Xxxxxxxxx 0, xxx xxxxxxxxxx price
will not include Boeing's 12% handling charge. Boeing will pay the repurchase
price by issuing a credit memorandum in favor of Customer which may be applied
against amounts due Boeing for the purchase of aircraft, Spare Parts, services
or the licensing of data, [ ].
2. Confidential Treatment.
Customer understands that certain commercial and financial information
contained in this Letter Agreement are considered by Boeing as confidential.
Customer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written consent
of Boeing, disclose this Letter Agreement or any information contained herein to
any other person or entity.
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Very truly yours,
THE BOEING COMPANY
By /s/ Xxxx X. Xxxxxx
----------------------
Its Attorney-In-Fact
----------------------
ACCEPTED AND AGREED TO this
Date: June 6 , 1997
ATLAS AIR, INC.
By /s/ M.A. Xxxxxxx
----------------------
Its CEO
----------------------
Attachment
[ ]
P.A. No. 2021
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