Exhibit 10.17
6-1162-MDH-150
July 12, 1996
United Air Lines, Inc.
P.O. Box 66100
Chicago, Illinois 60666
Subject: Letter Agreement No. 6-1162-MDH-150 to
Purchase Agreement No. 1485, 1595, 1602, 1663
and 1670 - [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Gentlemen:
Reference is made to Purchase Agreement Nos. 1485, 1595, 1602,
1663 and 1670 (each individually a "Purchase Agreement", and
collectively the "Purchase Agreements") between The Boeing
Company ("Boeing") and United Air Lines, Inc. ("Buyer") relating
to the sale by Boeing and the purchase by Buyer of 737, 747, 757,
767 and 777 aircraft (hereinafter referred to as the Aircraft).
This letter agreement ("Letter Agreement"), when accepted by
Buyer, will become part of each Purchase Agreement and will
evidence our further agreement with respect to the matters set
forth below.
All terms used herein and in the Purchase Agreements, not defined
herein, shall have the same meaning as in such Purchase
Agreements. If there is any inconsistency between the terms of
this Letter Agreement and any such Purchase Agreement or any
Purchase Agreement Amendment thereto the terms of this Letter
Agreement will govern.
United Air Lines, Inc.
6-1162-MDH-150 Page 2
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
This letter Agreement sets forth certain business concessions
extended by Boeing to Buyer as part of the following Supplemental
Agreements to the Purchase Agreements {the Supplemental
Agreements}:
Supplemental Agreement No. 6 dated May 30, 1996 to
Purchase Agreement No. 1485
Supplemental Agreement No. 7 dated July 11, 1996 to
Purchase Agreement No. 1485
Supplemental Agreement No. 4 dated May 30, 1996 to
Purchase Agreement No. 1663
Supplemental Agreement No. 5 dated July 11, 1996 to
Purchase Agreement No. 1663
Supplemental Agreement No. 8 dated May 30, 1996 to
Purchase Agreement No. 1670
Supplemental Agreement No. 9 dated July 11, 1996 to
Purchase Agreement No. 1670
Each such Supplemental Agreement identified certain Aircraft to
be purchased by Buyer to satisfy certain commitments of Buyer as
set forth in Letter Agreement No. [*CONFIDENTIAL MATERIAL OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Such Aircraft
and their respective months and years of scheduled delivery are
set forth in Attachment No. 1 to this Letter Agreement
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] Aircraft and their respective months and
years of scheduled delivery are set forth in such Attachment No.
1 to this Letter Agreement [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
United Air Lines, Inc.
6-1162-MDH-150 Page 3
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] Such interest will be calculated using
the 90 day AA Federal Reserve Commercial Paper Composite rate as
posted on page 120 in Telerate (the Agreed Interest Rate), as on
the close of business on the first day of each quarter. The
accrued interest will be paid by wire transfer to Buyer on the
first business day of the following quarter. [*CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]
United Air Lines, Inc.
6-1162-MDH-150 Page 4
A = B x C/(D-E) where
A = [*CONFIDENTIAL
MATERIAL OMITTED
B = AND FILED
SEPARATELY WITH
C = THE SECURITIES
AND EXCHANGE
D = COMMISSION PURSUANT
TO A REQUEST
E = FOR CONFIDENTIAL
TREATMENT]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
1.2.1 Letter Agreement No. 1670-5R dated as of
December 18, 1990, accepted and agreed to by Buyer on August
2, 1991 is amended to delete the Model 747-422 Option
Aircraft listed in Attachment No. 2 hereto, and as so
amended such Letter Agreement No. 1670-5R shall remain in
full force and effect, and
1.2.2 the following letter agreements shall be
deemed canceled and of no further force and effect:
Letter Agreement No. Purchase Agreement
- ------------------- No.
Title ------------------
-----
1485-8* Option Aircraft (Block E) 1485
1663-5 Option Aircraft 1663
1595-4 Option Aircraft 1595
United Air Lines, Inc.
6-1162-MDH-150 Page 5
Notwithstanding the cancellation of Letter Agreement No. 1485-8,
Boeing and Buyer agree the provisions of paragraph 11
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] of Letter Agreement No. 6-1162-TML-388
shall be applicable to the [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
United Air Lines, Inc.
6-1162-MDH-150 Page 6
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
United Air Lines, Inc.
6-1162-MDH-150 Page 7
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
United Air Lines, Inc.
6-1162-MDH-150 Page 8
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
United Air Lines, Inc.
6-1162-MDH-150 Page 9
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Such interest under both advance payment schedules is to be
calculated at an annual rate of 9% on a 365/366 day year (simple
interest) up to and including the date of delivery of the
applicable Aircraft.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
2. Widebody Customer Support Matters.
---------------------------------
2.1 737-300/500 Thrust Reverser Warning Light.
-----------------------------------------
Following Boeing's receipt of Buyer's [*CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
Boeing shall ship to Buyer the following:
Part No. Qty. Description
------- --- -----------
65-73606-170 12 Engine Accessory Unit
United Air Lines, Inc.
6-1162-MDH-150 Page 10
2.2 Boeing Pilot Training Programs - Model 747/757/777.
--------------------------------------------------
For the Model 747, 757, 767 and 777 aircraft, following Boeing's
receipt of Buyer's [*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] Boeing shall provide to Buyer the following
quantity of sets of Boeing Pilot Training Programs:
Qty
Description per Model
----------- ---------
Flight Training CBT Courseware [*CONFIDENTIAL
(including Flight Crew Training MATERIAL OMITTED
and Cabin Attendant) AND FILED SEPARATELY
WITH THE SECURITIES
Flight Crew Video Briefings AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST
Full sized colored instrument FOR CONFIDENTIAL
panel configuration illustration TREATMENT]
Electrically Plotted or Computer
Graphics Metafile Format
2.3 Model 777 Simulator Data Package.
--------------------------------
Following Boeing's receipt of [*CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Boeing will
deliver to Buyer Model 777 Simulator Data Packages to allow Buyer
to:
2.3.1 Add 777 "B" Market capability to its "A"
Market Simulator; and
2.3.2 Add 777 "A" Market capability to its "B"
Market simulator.
2.4 Model 757 Simulator Data Package - 1997 Price.
---------------------------------------------
For Subsequent Sets of Model 757 Simulator Data Packages and
Concurrent Sets of Model 757 Simulator Data Packages purchased
under Letter Agreement No. 6-1162-GKW-263 to Purchase Agreement
No. 1485, Boeing shall extend to Buyer Boeing's 1997 price of
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] per Subsequent Set [*CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] per Concurrent Set.
United Air Lines, Inc.
6-1162-MDH-150 Page 11
2.5 Flight Simulator Hardware Support.
---------------------------------
2.5.1 For the Model 747 and 757, Boeing will work with
Buyer to pre-implement a set of either long lead, or a complete
set of, hardware for a new simulator in the required simulator
tail number. Buyer will submit to Boeing a "coverage" P/O which
will not be executed until selection of a simulator manufacturer
to be used in this pre-implementation. Boeing also pre-
implements generic simulator long-lead hardware that may be
allocated to Buyer with appropriate notification. Kits are
allocated based on notification, lead times, training needs,
airplane delivery, etc. Notification must occur in a timely
fashion or kits may not be available as required by Buyer. Once
the kit is allocated, Buyer will then have first right of refusal
on it. Only hardware requirement dates of greater than six
months on receipt of order will be accepted by Boeing for
hardware required in addition to allocated pre-implemented kit.
2.5.2 Required Boeing proprietary hardware may be
purchased at the then-current Boeing Spares Catalog prices. In
the event that Buyer elects to submit Purchase Orders to Boeing
for selected vendor hardware, such Purchase Orders shall be
processed by Boeing in the same manner as sustaining spares for
the Aircraft, in accordance with the applicable terms and
conditions of Spare Parts General Terms Agreement No. 22, dated
October 25, 1967 as amended and supplemented.
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] This service will apply to Buyer's Fleet
indicated above and will be provided [*CONFIDENTIAL MATERIAL OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] to Buyer for a
period of ten (10) years commencing with the delivery of
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
United Air Lines, Inc.
6-1162-MDH-150 Page 12
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
All Manuals specified in this paragraph 2.7 will be produced in
accordance with Air Transport Association (ATA) Specification
100, and to the revision level specified in the applicable
Purchase Agreement. [*CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT] If Boeing introduces and
offers new technical documentation formats not currently offered,
Buyer may elect to substitute the formats, in lieu of the
existing formats, at Boeing's then current price and applicable
terms and conditions.
United Air Lines, Inc.
6-1162-MDH-150 Page 13
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
United Air Lines, Inc.
6-1162-MDH-150 Page 14
4. Confidentiality.
---------------
This Letter Agreement is subject to the confidentiality
provisions of the following Letter Agreements.
Letter Agreement No. Purchase Agreement No.
- ------------------- ---------------------
6-1162-GKW-132 1485
6-1162-DLJ-886 1670
6-1162-DLJ-832 1663
6-1162-GKW-653 1595
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/ M. O. Hurt
--------------
Its Attorney in Fact
ACCEPTED AND AGREED TO this
Date: July 12, 1996
UNITED AIR LINES, INC.
By /s/ Douglas A. Hacker
-----------------
Its Senior Vice President and
Chief Financial Officer
Attachment No. 1 to
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SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Attachment No. 2 to
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[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Attachment No. 2 to
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[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Attachment No. 2 to
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[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Attachment No. 4 to
6-1162-MDH-150
[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Attachment No. 5 to
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[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
Attachment No. 6 to
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[*CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]