EXHIBIT 10.13(b)
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION IN A CONFIDENTIAL TREATMENT REQUEST
UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE
SYMBOL "[***]" IN THIS EXHIBIT INDICATES THAT INFORMATION HAS BEEN OMITTED.
AMENDMENT NO.2 TO
CODESHARE AGREEMENT
This Amendment No. 2 (the "Amendment") is made and entered into as of
August 1, 2002 (the "Effective Date"), by and between Frontier Airlines, Inc.
("Frontier'"), a corporation organized under the laws of Colorado, and Mesa
Airlines, Inc. ("Mesa"), a corporation organized under the laws of Nevada,
RECITALS:
A. Mesa and Frontier have entered into a Codeshare Agreement,
dated as of September 4, 2001 (the "Codeshare Agreement").
All capitalized terms used in this Amendment, but not defined
herein, shall have the meaning given to such terms in the
Codeshare Agreement.
B. Both Mesa and Frontier recognize the importance of maintaining
high levels of service in order to attract and retain passengers.
C. One such way to attract and retain passengers is to operate the
scheduled flights and do so on-time.
DEFINITIONS:
A. Completion Benchmark: Frontier Airlines' completion rate for its
network-wide operations during the same month it is used to benchmark
Mesa's performance.
B. On-time Benchmark: Frontier Airlines' on-time departure performance
rate for its network-wide operations during the same month it is
used to benchmark Mesa's performance. An on-time departure is when
an aircraft leaves the gate between zero to fifteen minutes after
scheduled departure, otherwise the departure is not considered on-time.
C. Incentive Penalty: The amount to be paid as a penalty for the
difference between the actual number of flights completed or
performed on time and the Completion or the On-time Benchmarks.
NOW, THEREFORE, in consideration of the recitals and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Mesa
and Frontier agree to amend the Codeshare Agreement by adding the following subsection
as follows:
14.2 (d) Fees will be assessed to incentivise Mesa to operate those flights
marketed under the Frontier Airlines (F9) code in a manner equal
or exceeding the performance of Frontier Airlines' operations.
Mesa shall be penalized if performance falls below either the
Completion Benchmark or the On-time Benchmark for any given month.
1. Determination of number of flights to be penalized.
a) In order to determine if Mesa flights fall below the completion
levels required by the Codeshare Agreement, Frontier will first
multiply the Completion Benchmark by the total number of Mesa
scheduled departures for the month, then subtract the number of
Mesa flights operated during the month. If the result is a positive
number, this is the number of flights to be penalized for failing
to meet the completion performance requirements (see example in
section l (c)).
b) In order to determine if Mesa flights fall below the on-time levels
required by the Codeshare Agreement, Frontier will first multiply
the On-time Benchmark by the total number of Mesa scheduled departures
for the month then subtract the number of Mesa flights operated
on-time during the month, If the result is a positive number, this is
the number of flights to be penalized for failing to meet the on-time
performance requirements (see example in section 1 (c)).
c) Sample Calculations
1. By way of illustration, the following is a sample Completion
Penalty Calculation. If, for example, in the month of August, Frontier
completes 98% of its flights, the Completion Benchmark for August is 98%.
Further, if Mesa has scheduled 758 flights for that month, it needs to
complete a minimum of 743 flights to meet the Completion Benchmark.
If Mesa completes only 730 flights during the month of August, it will
pay an Incentive Penalty for the thirteen flights it failed to complete.
2. By way of illustration, the following is a sample On-time
Penalty Calculation. If, for example, in the month of August, Frontier
performs 88% of its flights on-time, the On-time Benchmark for August
is 88%. Further, if Mesa has scheduled 758 flights for that month, it
needs to complete a minimum of 667 flights on-time in order to meet the
On-time Benchmark. If Mesa completes only 567 flights on-time during
the month of August it will pay an Incentive Penalty for the one hundred
flights it failed to complete on-time.
2. Penalty fees
a) For each flight below the Completion Benchmark, Mesa shall pay Frontier
$[***]. This penalty will double for each consecutive month Mesa fails
to meet the Completion Benchmark.
b) For each flight below the On-time Benchmark, Mesa shall pay Frontier
$[***]. This penalty will double for each consecutive month Mesa fails
to meet the On-Time Benchmark.
c) The maximum fine for each month will not exceed $[***].
d) In the event that Mesa's completion rate exceeds the Completion Benchmark
by [***] or more percentage points and Mesa's on-time performance exceeds
the On-Time Benchmark by [***] or more percentage points in the same month,
Frontier will pay Mesa [***].
3. Settlement of Penalty Fees
a) Penalties are only to be paid if Mesa falls below the benchmark performance
set by Frontier Airlines.
b) Mesa is to pay any penalties for performance which drops below the
benchmark requirements within 30 days of receipt of Frontier's notice
informing Mesa that it failed to meet the benchmark. Frontier is to
pay any penalties as described in section 2d within 30 days after
completing the benchmark review. Frontier will complete a benchmark
review at least once every six months.
4. Exchange of Performance data.
Frontier and Mesa are to exchange performance figures weekly relative to their
performance, and specifically for the percentage of departures leaving on-time
within 15 minutes of schedule and percentage of scheduled flights departed.
5. This Amendment shall be in full force and effect during the entire
term of the Codeshare Agreement.
MESA AIRLINES, INC.
By: /s/
Name: ▇▇▇▇ ▇▇▇▇
Title: President
FRONTIER AIRLINES, INC.
By: /s/
Name: ▇▇▇▇ ▇▇▇▇▇
Title: V.P. Marketing and Planning