6-1162-JDR-399
(CONFIDENTIALITY REQUESTED)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-21 AS
INDICATED BY "(XXX)"
Western Pacific Airlines, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, XX 00000
Subject: Letter Agreement No. 6-1162-JDR-399 to
Purchase Agreement No. 1947 --
Configuration Matters
This Letter Agreement amends Purchase Agreement No. 1947 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Western Pacific
Airlines, Inc. (Buyer) relating to Model 737-300 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Exterior Markings.
It is understood that Buyer intends to define unique exterior markings
for each Aircraft. Unless otherwise agreed, Buyer agrees to give Boeing notice
as soon as reasonably practicable, but no later than five (5) months prior to
the month during which an Aircraft is scheduled for delivery, of the definition
of the exterior markings for such Aircraft. Promptly after notification, Boeing
will advise Buyer as to whether the requested exterior markings can be applied
to the requested Aircraft prior to delivery.
In the event Boeing determines the requested unique exterior markings cannot be
applied prior to delivery or Buyer does not provide notice as required, as
directed by Buyer, the Aircraft will be delivered (i) with Buyer's previously
defined baseline exterior markings or (ii) with only those exterior markings
required to receive a Certificate of Airworthiness.
In the event the Aircraft is delivered with only those exterior markings
required to receive a Certificate of Airworthiness, Boeing will issue a credit
memorandum to Buyer at the time of delivery of the Aircraft in the amount of
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]. Such credit memorandum may be utilized by
Buyer for the purchase of Boeing proprietary spare parts, CFM International
(CFMI) proprietary spare engines and engine parts, other Boeing or CFMI goods
and services or applied against the balance of the purchase price of the
Aircraft for which such credit is issued,
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6-1162-JDR-399 Page 2
but may not be used for the purchase of other aircraft or application against
advance payments for any Aircraft.
2. Thrust Enhancement.
2.1 Documentation Revision. In recognition of Buyer's
requirement for aircraft operation at high altitude airports and high ambient
temperatures (Operation), Boeing agrees to provide Buyer FAA approved Flight
Manual Appendices for utilization of enhanced thrust for CFM56-3C-1 engines at
high altitude airports and high ambient temperatures for the Aircraft and for
CFM56-3C-1 powered Model 737-300 aircraft which are currently in or may be added
to Buyer's fleet. Such utilization of enhanced thrust will be for takeoff only
and will be subject to the proposed schedule and the limitations and operational
requirements set forth in master change 7200MP3286.
Upon delivery of such Flight Manual Appendices, Boeing will issue to Buyer a
credit memorandum in the amount of the then-current price(s) of the master
change(s) initiated to accomplish the Flight Manual revision(s), such credit
memorandum to be used only for the purchase of such master change(s) and may not
be used for the purchase of increased thrust.
2.2 Enhanced Thrust Utilization. Such Operation may
require an increase in the thrust rating of the CFM56-3C-1 engine from 22,000
pounds SLST to 23,500 pounds SLST. In recognition of the understanding that such
increase in the thrust rating will be utilized by Buyer on a limited basis, the
price of such increase in the thrust rating for each Aircraft is thirty (30)
percent of the difference between the then current prices at time of delivery of
the Aircraft for two CFM56-3C-1 engines rated at 23,500 pounds SLST and two
CFM56-3C-1 engines rated at 22,000 pounds SLST, subject to the following:
(i) The enhanced thrust is exclusively for use of Buyer and may
not be sold or transferred without the prior written consent
of CFM International (CFMI).
(ii) Such price will be payable directly to CFMI on a one-time
basis concurrent with delivery of each Aircraft to be operated
by Buyer utilizing such enhanced thrust.
(iii) Such enhanced thrust will not be utilized by Buyer for more
than fifteen (15) percent of Buyer's annual departures, on a
CFM56-3C-1 powered Model 737-300 fleet basis.
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6-1162-JDR-399 Page 3
(iv) Buyer will provide a written report to CFMI in January
of each year following delivery of the first Aircraft,
such report shall document Buyer's usage of the
enhanced thrust, as a percentage of departures for the
previous calendar year, for Buyer's CFM56-3C-1 powered
Model 737-300 fleet for which Buyer has purchased the
enhanced thrust (Buyer's Fleet).
2.3 Excess Annual Utilization. In the event Buyer's annual
utilization of the enhanced thrust during any given calendar year exceeds the
percentage of annual utilization previously paid for by Buyer (Excess Annual
Utilization), Buyer will be required to purchase the Excess Annual Utilization
for each Aircraft in Buyer's Fleet on December 31 of the year in which the
utilization of enhanced thrust exceeded the percentage of annual utilization
previously paid for by Buyer.
The price per aircraft for such Excess Annual Utilization will be calculated by
multiplying the applicable factor corresponding to the Excess Annual Utilization
shown on the schedule below times the then current price difference between two
such engines rated at 23,500 pounds SLST and two such engines rated at 22,000
pounds SLST (Then Current Price Difference), minus any amounts previously paid
by Buyer pursuant to paragraph 2.2 above and this paragraph 2.3.
Excess
Annual
Utilization Factor
----------- ------
16% - 20% 0.35
21% - 25% 0.40
26% - 30% 0.45
Over 30% 1.00
Note: Utilization is a departure in which enhanced thrust is
used. Annual utilization is the total number of departures
during a given year in which enhanced thrust is used
divided by the total number of Buyer's Fleet departures
for the same year, expressed as a percentage rounded to
the nearest whole percent.
In the event such Excess Annual Utilization exceeds thirty percent, the price
will be the Then Current Price Difference, reduced by (i) any amounts previously
paid by Buyer for utilization of the enhanced thrust pursuant to paragraph 2.2
above and this paragraph 2.3 and (ii) an additional amount determined by
multiplying the Then Current Price Difference times
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6-1162-JDR-399 Page 4
the aircraft credit factor defined in Letter Agreement 6-1162- JDR-394,
paragraph 1.1.
2.4 Payment For Excess Annual Utilization. In the event
Buyer exceeds fifteen percent annual utilization and is therefore required to
purchase the enhanced thrust for a higher percentage of annual utilization
pursuant to paragraph 2.3 above, such payment will be made on a one time basis
and the higher percentage of annual utilization so purchased will then be
allowed for subsequent calendar years with no further payment required by Buyer
for such higher percentage of annual utilization.
Buyer will make any such payment for Excess Annual Utilization, if any, directly
to CFMI concurrently with Buyer's submittal of the report of usage for the year
in which the usage exceeded the percentage of annual utilization previously paid
for by Buyer.
2.5 Aircraft Not Purchased Under the Agreement. In the
event Buyer intends to utilize enhanced thrust for aircraft not purchased under
the Agreement which are currently in or subsequently added to Buyer's fleet,
Boeing and Buyer acknowledge that Buyer will enter into a separate agreement
with CFMI, containing similar terms to those set forth herein, to provide for
such enhanced thrust and any required hardware revisions.
3. Alternate Forward Center of Gravity.
In recognition of Buyer's requirement for aircraft operation at high
altitude airports and high temperatures, Boeing agrees to provide Buyer FAA
approved Flight Manual Appendices and to revise the operations manual for use of
alternate forward center of gravity limits for the Aircraft and for the existing
Model 737- 300 aircraft in Buyer's fleet. Such utilization of alternate forward
center of gravity will be subject to the proposed schedule and to the
limitations set forth in master change 0220MP3322.
Upon delivery of such Flight Manual Appendices and operations manual revisions,
Boeing will issue to Buyer a credit memorandum in the amount of the then-current
price(s) of the master change(s) initiated to accomplish the Flight Manual and
operations manual revision(s), such credit memorandum to be used only for the
purchase of such master change(s).
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6-1162-JDR-399 Page 5
4. Confidentiality.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement are 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, except as provided in Letter Agreement 1947-1.
Very truly yours,
THE BOEING COMPANY
By
--------------------------------
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 1996
WESTERN PACIFIC AIRLINES, INC.
By
--------------------------------
Its
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