(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
AIRFRAME AND ENGINE PRICE ADJUSTMENT
between
THE BOEING COMPANY
and
WESTERN PACIFIC AIRLINES, INC.
Exhibit D to Purchase Agreement Number 1947
P.A. No. 1947 D
K/WPA
Exhibit D
Page 1
PRICE ADJUSTMENT DUE TO
ECONOMIC FLUCTUATIONS
AIRFRAME PRICE ADJUSTMENT
(1995 Base Price)
1. Formula.
The Airframe Price Adjustment will be determined at the time of
Aircraft delivery in accordance with the following formula:
Pa = (P)(L + M - 1)
Where:
Pa = Airframe Price Adjustment.
L = .65 x ECI
-----
130.1
M = .35 x ICI
-----
123.6
P = Aircraft Basic Price (as set forth in Article 3.2 of this
Agreement) less the base price of Engines (as defined in this
Exhibit D) in the amount of [XXXXXXXX].
ECI = A value using the "Employment Cost Index for workers in
aerospace manufacturing" (aircraft manufacturing, standard
industrial classification code 3721, compensation, base month
and year June 1989 = 100), as released by the Bureau of Labor
Statistics, U.S. Department of Labor on a quarterly basis for
the months of March, June, September and December, calculated
as follows: A three-month arithmetic average value (expressed
as a decimal and rounded to the nearest tenth) will be
determined using the months set forth in the table below for
the applicable Aircraft, with the released Employment Cost
Index value described above for the month of March also being
used for the months of January and February; the value for
June also used for April and May; the value for September also
used for July and August; and the value for December also used
for October and November.
P.A. No. 1947 D-1
K/WPA
Exhibit D
Page 2
ICI = The three-month arithmetic average of the released monthly
values for the Industrial Commodities Index as set forth in
the "Producer Prices and Price Index" (Base Year 1982 = 100)
as released by the Bureau of Labor Statistics, U.S. Department
of Labor values (expressed as a decimal and rounded to the
nearest tenth) for the months set forth in the table below for
the applicable Aircraft.
In determining the value of L, the ratio of ECI divided by 130.1 will
be expressed as a decimal rounded to the nearest ten-thousandth and then
multiplied by .65 with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.
In determining the value of M, the ratio of ICI divided by 123.6 will
be expressed as a decimal rounded to the nearest ten-thousandth and then
multiplied by .35 with the resulting value also expressed as a decimal and
rounded to the nearest ten-thousandth.
Months to be Utilized
Month of Scheduled in Determining the
Aircraft Delivery Value of ECI and ICI
January June B, July B, Aug. B
February July B, Aug. B, Sept. B
March Aug. B, Sept. B, Oct. B
April Sept. B, Oct. B, Nov. B
May Oct. B, Nov. B, Dec. B
June Nov. B, Dec. B, Jan. D
July Dec. B, Jan. D, Feb. D
August Jan. D, Feb. D, Mar. D
September Feb. D, Mar. D, Apr. D
October Mar. D, Apr. D, May D
November Apr. D, May D, June D
December May D, June D, July D
The following definitions of B and D will apply:
B = The calendar year before the year in which the
scheduled month of delivery as set forth in Article
2.1 occurs.
D = The calendar year during which the scheduled
month of delivery as set forth in Article 2.1
occurs.
P.A. No. 1947 D-2
K/WPA
Exhibit D
Page 3
2. If at the time of delivery of an Aircraft Boeing is unable to determine the
Airframe Price Adjustment because the applicable values to be used to determine
the ECI and ICI have not been released by the Bureau of Labor Statistics, then:
2.1 The Airframe Price Adjustment, to be used at the time of delivery
of each of the Aircraft, will be determined by utilizing the escalation
provisions set forth above. The values released by the Bureau of Labor
Statistics and available to Boeing 30 days prior to scheduled Aircraft delivery
will be used to determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor Statistics) to
calculate the Airframe Price Adjustment. If no values have been released for an
applicable month, the provisions set forth in Paragraph 2.2 below will apply. If
prior to delivery of an Aircraft the U.S. Department of Labor changes the base
year for determination of the ECI or ICI values as defined above, such rebased
values will be incorporated in the Airframe Price Adjustment calculation. The
payment by Buyer to Boeing of the amount of the Purchase Price for such
Aircraft, as determined at the time of Aircraft delivery, will be deemed to be
the payment for such Aircraft required at the delivery thereof.
2.2 If prior to delivery of an Aircraft the U.S. Department of Labor
substantially revises the methodology used for the determination of the values
to be used to determine the ECI and ICI values (in contrast to benchmark
adjustments or other corrections of previously released values), or for any
reason has not released values needed to determine the applicable Aircraft
Airframe Price Adjustment, the parties will, prior to delivery of any such
Aircraft, select a substitute for such values from data published by the Bureau
of Labor Statistics or other similar data reported by non-governmental United
States organizations, 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 values as they may have fluctuated during the
applicable time period. Appropriate revision of the formula will be made as
required to reflect any substitute values. However, if within 24 months from
delivery of the Aircraft the Bureau of Labor Statistics should resume releasing
values for the months needed to determine the Airframe Price Adjustment, such
values will be used to determine any increase or decrease in the Airframe Price
Adjustment for the Aircraft from that determined at the time of delivery of such
Aircraft. Boeing will provide Buyer a supplemental invoice to reflect such
increase in the Airframe Price Adjustment or a supplemental credit invoice to
reflect such decrease in the Airframe Price Adjustment.
P.A. No. 1947 D-3
K/WPA
Exhibit D
Page 4
2.3 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 Purchase Price of any affected Aircraft to reflect an allowance for
increases or decreases in labor compensation and material costs occurring since
February, 1995, which is consistent with the applicable provisions of paragraph
1 of this Exhibit D.
3. For the calculations herein, the values released by the Bureau of Labor
Statistics and available to Boeing 30 days prior to scheduled Aircraft delivery
will be used to determine the ECI and ICI values for the applicable months
(including those noted as preliminary by the Bureau of Labor Statistics) to
calculate the Airframe Price Adjustment.
Note: Any rounding of a number, as required under this Exhibit D
with respect to escalation of the airframe 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.
P.A. No. 1947 D-4
K/WPA
Exhibit D
Page 5
ENGINE PRICE ADJUSTMENT - CFM INTERNATIONAL, INC.
(1995 BASE PRICE)
(a) The Aircraft Basic Price of each Aircraft set forth in Article 3 of this
Agreement includes an aggregate price for CFM56-3C-1 engines and all
accessories, equipment and parts therefor provided by the engine manufacturer
(collectively in this Exhibit D called "Engines") of [XXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]. The adjustment
in Engine price applicable to each Aircraft ("Engine Price Adjustment" herein)
will be determined at the time of Aircraft delivery in accordance with the
following formula:
D1 = (Pb x CPI ) - Pb
------
138.27
(b) The following definitions will apply herein:
D1 = Engine Price Adjustment
Pb = Aggregate Engine Base Price as set forth in
Paragraph (a) above.
CPI = The Composite Price Index as determined in
accordance with the formula set forth below. The
Index values referred to below, to be used in
determining the CPI, will be for the ninth month
prior to the month of scheduled Aircraft delivery.
Such Index values will be those prepared by the
Bureau of Labor Statistics, U.S.
Department of Labor.
CPI = L + M1 + M2 + M3
L = The Labor Index for such month will
be the quotient, expressed as a
decimal and rounded to the nearest
thousandth, of the "Hourly Earnings
of Aircraft Engines and Engine Parts
Production Workers" SIC 3724, for
such month divided by [XXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX]. Such
quotient will be multiplied by 100
and then by fifty-five percent (55%)
with the value resulting from the
latter multiplication expressed as a
decimal and rounded to the nearest
hundredth.
P.A. No. 1947 D-5
K/WPA
Exhibit D
Page 6
M1 = The Industrial Commodities Index
for such month will be equal to ten
percent (10%) of the Producer Price
Index for "all commodities other than
Farm and Foods," Code 3-15, (Base
Year 1982 = 100) for such month,
expressed as a decimal and rounded to
the nearest hundredth.
M2 = The Metals and Metal Products Index
for such month will be equal to
twenty-five percent (25%) of the
Producer Price Index for "Metals and
Metal Products," Code 10, (Base Year
1982 = 100) for such month expressed
as a decimal and rounded to the
nearest hundredth.
M3 = The Fuel Index for such month will
be equal to ten percent (10%) of the
Producer Price Index for "Fuel and
Related Products and Power," Code 5,
(Base Year 1982 = 100) for such month
expressed as a decimal and rounded to
the nearest hundredth.
138.27 = Composite Price Index for October, 1994.
The factor (CPI divided by 138.27) by which the Aggregate Engine Base Price is
to be multiplied will be expressed as a decimal and rounded to the nearest
thousandth.
The Engine Price Adjustment will not be made if it would result in a decrease in
the aggregate Engine base price.
(c) The values of the Average Hourly Earnings and Producer Price Indices used in
determining the Engine Price Adjustment will be those published by the Bureau of
Labor Statistics, U.S. Department of Labor as of a date 30 days prior to the
scheduled Aircraft delivery to Buyer. 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) 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, CFMI agrees to meet jointly with Boeing
and Buyer to jointly select a substitute for the revised or discontinued data;
such substitute data to lead in application to
P.A. No. 1947 D-6
K/WPA
Exhibit D
Page 7
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.
Appropriate revision of the Engine Price Adjustment provisions set forth above
will be made to accomplish this result for the affected Engines.
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,
CFMI agrees to meet with Boeing and Buyer to jointly agree, to the extent such
parties may lawfully do so, to adjust equitably the purchase price of any
affected Engine(s) to reflect an allowance for increases in labor, material and
fuel costs that have occurred from the period represented by the CPI to the
ninth month preceding the month of scheduled delivery of the applicable
aircraft.
NOTE: Any rounding of a number, as required under this Exhibit D 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.
P.A. No. 1947 D-7
K/WPA
