Exhibit 10.1
PURCHASE AGREEMENT NUMBER 3134
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Relating to Boeing Model 747-8 Freighter Aircraft
TABLE OF CONTENTS
ARTICLES SA NUMBER
- -------- ---------------
1. Quantity, Model and Description
2. Delivery Schedule
3. Price
4. Payment
5. Miscellaneous
TABLE
- ------
1. Aircraft Information Table
2. Option Aircraft Information Table
3. Purchase Rights Aircraft Information Table
EXHIBIT
- --------
A. Aircraft Configuration
B. Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS
- ----------------------
AE1. Escalation Adjustment/Airframe and Optional Features
CS1. Customer Support Variables
EE1. Engine Escalation/Engine Warranty and Patent Indemnity
SLP1. [ * ] Service Life Policy [ * ]
i
LETTER AGREEMENTS
- -------------------
3134 - 01 Open Configuration Matters
3134 - 02 Spare Parts Initial Provisioning
RESTRICTED LETTER AGREEMENTS
- -----------------------------
6-1162-ILK-0203 747-8 Freighter Special Matters Letter
6-1162-ILK-0204 747-8 Freighter Performance Retention Commitment
6-1162-ILK-0205 Airworthiness Directive Cost Participation Program
6-1162-ILK-0206 Maintenance Cost Protection Program
6-1162-ILK-0207 Special Matters relating to [ * ]
6-1162-ILK-0208 Promotional Support Agreement
6-1162-ILK-0209 Aircraft Performance Guarantees
6-1162-ILK-0210 Remedy for Deviation from Block Fuel Guarantees
6-1162-ILK-0211 Demonstration Flight Waiver
6-1162-ILK-0214 Right to Purchase Additional Aircraft
6-1162-ILK-0215 Option Aircraft
6-1162-ILK-0216 Service Reliability Guarantee
ii
Purchase Agreement No. 3134
between
The Boeing Company
and
ATLAS AIR, INC.
------------------------
This Purchase Agreement No. 3134 dated as of September 8, 2006
between The Boeing Company (BOEING) and ATLAS AIR, INC. (CUSTOMER) relating to
the purchase and sale of Model 747-8 Freighter aircraft together with all
tables, exhibits, supplemental exhibits, letter agreements and other attachments
thereto, if any, (PURCHASE AGREEMENT) incorporates the terms and conditions of
the Aircraft General Terms Agreement dated as of JUNE 6,1997 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 747-8 Freighter aircraft (the AIRCRAFT). Boeing will manufacture and sell
to Customer Aircraft conforming to the configuration described in Exhibit A in
the quantities listed in Table 1 to the Purchase Agreement.
Article 2. DELIVERY SCHEDULE.
-----------------
The scheduled months of delivery of the Aircraft are listed in
the attached Table 1. Exhibit B describes certain responsibilities for both
Customer and Boeing in order to accomplish the delivery of the Aircraft.
Article 3. PRICE.
-----
3.1 AIRCRAFT BASIC PRICE. The Aircraft Basic Price is listed in
Table 1 in subject to escalation dollars. The engine prices for the 747-8
Freighter Aircraft are included in the Airframe Price.
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.
1
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 747-8
Freighter aircraft requires Customer to make certain advance payments, expressed
in a percentage of the Advance Payment Base Price of each Aircraft beginning
with a payment of l%, less the Deposit, on the effective date of the Purchase
Agreement for the Aircraft. Additional advance payments for each Aircraft are
due as specified in and on the first business day of the months listed in the
attached Table 1.
4.3 For any Aircraft whose scheduled month of delivery is less
than 24 months from the date of this Purchase Agreement, the total amount of
advance payments due for payment upon signing of this Purchase Agreement will
include all advance payments which are past due in accordance with the standard
advance payment schedule set forth in paragraph 4.2 above.
4.4 Customer will pay the balance of the Aircraft Price of each
Aircraft at delivery.
Article 5. ADDITIONAL TERMS.
----------------
5.1 EXCUSABLE DELAY. Article 7.1 of the basic articles of the
AGTA is revised to read as follows:
7.1 GENERAL. Boeing will not be liable for any delay in the
scheduled delivery month of an aircraft or other performance under a purchase
agreement caused by (i) acts of God; (ii) war or armed hostilities; (iii)
government acts or priorities; (iv) fires, floods, or earthquakes; (v) strikes
or labor troubles causing cessation, slowdown, or interruption of work; (vi)
inability, after due and timely diligence, to procure materials, systems,
accessories, equipment or parts; (vii) inability, after due and timely
diligence, to obtain type certification; or (viii) any other cause to the extent
such cause is beyond Boeing's control and not occasioned by Boeing's fault or
negligence. A delay resulting from any such cause is defined as an EXCUSABLE
DELAY.
5.2 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.
2
5.3 ESCALATION ADJUSTMENT/AIRFRAME AND OPTIONAL FEATURES.
Supplemental Exhibit AE1 contains the applicable airframe and optional features
escalation formula.
5.4 BUYER FURNISHED EQUIPMENT VARIABLES. Supplemental Exhibit
BFE1 contains vendor selection dates and other variables applicable to the
Aircraft./
5.5 CUSTOMER SUPPORT VARIABLES. Information, training, services
and other things furnished by Boeing in support of introduction of the Aircraft
into Customer's fleet are described in Supplemental Exhibit CS1.
5.6 SERVICE LIFE POLICY COMPONENT VARIABLES. Supplemental Exhibit
SLP1 lists the airframe and landing gear components covered by the Service Life
Policy for the Aircraft (COVERED COMPONENTS).
5.7 PUBLIC ANNOUNCEMENT. Each of Customer and Boeing reserves the
right to make a public announcement regarding Customer's purchase of the
Aircraft upon approval of its press release by the other party's public
relations department or other authorized representative.
5.8 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 SEPTEMBER 8, 2006:
-----------------
ATLAS AIR, INC. THE BOEING COMPANY
[ * ]
/s/ William J. Flynn
- --------------------------------------------- -----------------------------
BY: Mr. William J. Flynn BY: [ * ]
--------------------------------------- -----------------------------
ITS: President and Chief Executive Officer ITS: Attorney In Fact
--------------------------------------- -----------------------------
3
TABLE 1 TO
PURCHASE AGREEMENT NO. 3134
AIRCRAFT INFORMATION TABLE FOR THE 747-8F AIRCRAFT
AIRFRAME MODEL/MTOW: 747-8F 970,000 pounds DETAIL SPECIFICATION: D019U020 (7/31/2006)
ENGINE MODEL/THRUST: GENX-2B67 66,500 pounds AIRFRAME PRICE BASE YEAR/ESCALATION
FORMULA: [ * ] [ * ]
AIRFRAME PRICE: $ [ * ] ENGINE PRICE BASE YEAR/ESCALATION
FORMULA: N/A N/A
OPTIONAL FEATURES: $ [ * ]
---------------
AIRFRAME ESCALATION DATA:
SUB-TOTAL OF AIRFRAME AND
FEATURES: $ [ * ] BASE YEAR INDEX (ECI): [ * ]
ENGINE PRICE (PER AIRCRAFT): $ [ * ] BASE YEAR INDEX (CPI): [ * ]
AIRCRAFT BASIC PRICE (EXCLUDING BFE/SPE): $ [ * ]
===============
BUYER FURNISHED EQUIPMENT (BFE) ESTIMATE: $ 0
SELLER PURCHASED EQUIPMENT (SPE) ESTIMATE: $ 0
REFUNDABLE DEPOSIT/AIRCRAFT AT PROPOSAL
ACCEPT: $ [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
ESCALATION ADVANCE PAYMENT PER AIRCRAFT (AMTS. DUE/MOS. PRIOR TO
ESCALATION ESTIMATE DELIVERY):
DELIVERY NUMBER OF FACTOR AIRCRAFT MANUFACTURER ADV PAYMENT BASE ---------------------------------------------------------
DATE AIRCRAFT (AIRFRAME) BLOCK SERIAL NUMBER PRICE PER A/P [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ]
Feb-2010 1 [ * ] A 37562 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] 1 [ * ] A 37563 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] 1 [ * ] A 37564 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] 1 [ * ] A 37565 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] 1 [ * ] A 37566 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] 1 [ * ] A 37567 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] 1 [ * ] A 37561 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] 1 [ * ] A 37568 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] 1 [ * ] A 37569 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] 1 [ * ] A 37570 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] 1 [ * ] A 37571 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
Oct-2011 1 [ * ] A 37572 [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
Total: 12
TABLE 2 TO
PURCHASE AGREEMENT NO. 3134
OPTION AIRCRAFT DELIVERY, DESCRIPTION, PRICE AND ADVANCE PAYMENTS
AIRFRAME MODEL/MTOW: 747-8F 970,000 pounds DETAIL SPECIFICATION: D0 19U020 (7/31/2006)
ENGINE MODEL/THRUST: GENX-2B67 66,500 pounds AIRFRAME PRICE BASE YEAR/ESCALATION
FORMULA: [ * ] [ * ]
AIRFRAME PRICE: $ [ * ] ENGINE PRICE BASE YEAR/ESCALATION
FORMULA: N/A N/A
OPTIONAL FEATURES: $ [ * ]
--------------
AIRFRAME ESCALATION DATA:
SUB-TOTAL OF AIRFRAME AND
FEATURES: $ [ * ] BASE YEAR INDEX (ECI): [ * ]
ENGINE PRICE (PER AIRCRAFT): $ [ * ] BASE YEAR INDEX (CPI): [ * ]
AIRCRAFT BASIC PRICE (EXCLUDING BFE/SPE): $ [ * ]
==============
BUYER FURNISHED EQUIPMENT (BFE) ESTIMATE: $ 0
SELLER PURCHASED EQUIPMENT (SPE) ESTIMATE: $ 0
NON-REFUNDABLE DEPOSIT/AIRCRAFT AT DEF
AGREEMT: $ [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
ESCALATION
ESCALATION ESTIMATE
DELIVERY NUMBER OF FACTOR ADV PAYMENT BASE ADVANCE PAYMENT PER AIRCRAFT (AMTS. DUE/MOS. PRIOR TO
DATE AIRCRAFT (AIRFRAME) PRICE PER A/P DELIVERY):
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL: [ * ]
TABLE 3 TO
PURCHASE AGREEMENT NO. 3134
PURCHASE RIGHTS AIRCRAFT INFORMATION TABLE
Customer may elect to exercise up to [ * ] Purchase Rights Aircraft for delivery
from [ * ] through [ * ], inclusive.
Such election will require a minimum of [ * ] written notice from the month of
requested delivery and will be subject to available position (STAP) subject to
conditions as follows:
1.1.1 purchase rights are offered to Customer on a non-
exclusive basis;
1.1.2 the terms and conditions of Article 3. (PRICE) are
applicable as follows:
1.1.2.1 The Airframe Price, Optional Features Price and
Aircraft Basic Price will be adjusted to
Boeing's then current prices for such elements
as of the date of execution of the definitive
purchase agreement for the aircraft for which
the purchase rights are exercised.
1.1.2.2 The escalation indices and methodology used to
estimate the Advance Payment Base Prices will be
adjusted to Boeing's then current provisions for
such elements as of the date of execution of the
definitive purchase agreement.
REMAINING PURCHASE RIGHTS FOR AIRCRAFT WITH DELIVERY TO OCCUR FROM [ * ] THROUGH
[ * ], INCLUSIVE: [ * ]
AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Exhibit A to Purchase Agreement Number 3134
A
AIRCRAFT CONFIGURATION
Dated DECEMBER 2005
relating to
BOEING MODEL 747-8 FREIGHTER (747-8 F) AIRCRAFT
The Customer Airplane Description is based on Boeing Airplane Description
D019U022 dated 90 days after firm configuration. Such Airplane Description will
be comprised of Boeing Airplane Description D019U020, Revision C, dated July 31,
2006 (BASELINE SPECIFICATION), or later Boeing Airplane Description version then
released, as amended to incorporate the Options accepted by Customer as more
fully discussed in Letter Agreement 3134, Open Configuration Matters (OPEN
CONFIGURATIONS MATTER LETTER). The [ * ] on the Aircraft will be equal or better
than that [ * ].
The Detail Specification is the Baseline Specification and will be
revised to include Options accepted by Customer as more fully discussed in the
Open Configurations Matter Letter. Customer will have the chance to make input
on [ * ].
The Aircraft Basic Price does not include an estimated price or price for
Options, Buyer Furnished Equipment or Seller Purchased Equipment.
A
AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Exhibit B to Purchase Agreement Number 3134
B
AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES
relating to
BOEING MODEL 747-8 FREIGHTER 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. This Exhibit
B documents those responsibilities and indicates Boeing's recommended completion
deadlines for the actions to be accomplished.
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 [ * ] 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 [ * ] 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.
NON-U.S. REGISTERED AIRCRAFT. Customer requires, and
Boeing will provide Customer as a "no cost" option, a United States
Certificate of Sanitary Construction at the time of delivery of the Aircraft.
Boeing will obtain the Certificate from the United States Public Health Service
and present it to Customer at the time of Aircraft delivery.
B-1
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 [ * ] PRIOR TO DELIVERY of each Aircraft of any documentation from
Boeing required from Boeing 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. For this purpose,
Customer will furnish to Boeing not later than [ * ] PRIOR TO DELIVERY all
information required by U.S. Customs or U.S. Immigration and Naturalization
Service, including without limitation (i) a complete crew and passenger list
identifying the names, birth dates, passport numbers and passport expiration
dates of all crew and passengers and (ii) 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 [ * ] 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 to 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, [ * ], 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 [ * ] 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.
B-2
3. NOTICE OF FLYAWAY CONFIGURATION.
Not later than [ * ] 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;
(ii) the cargo to be loaded and where it is to be stowed on
board the Aircraft, the address where cargo is to be shipped after
flyaway and notification of any hazardous materials requiring special
handling;
(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
- --------------- -----------------
747 [ * ]
B-3
4.5 FLIGHT CREW AND PASSENGER CONSUMABLES. Boeing will provide
reasonable quantities of 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 certain delivery papers,
documents and data for execution and delivery. 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 Bill of Sale, indicating transfer of
title to the Aircraft from Boeing's sales subsidiary to Customer. It is
understood by the parties that the Convention on International Interests in
Mobile Equipment and the Protocol to the Convention on Matters Specific to
Aircraft Equipment and the regulations issued thereunder (collectively, the
"Cape Town Convention") will be applicable to the Purchase Agreement. The
parties agree that each shall appoint an administrator and/or a professional
registry user entity, as applicable, that can consent to the registration of
Customer's international interest in the Aircraft with the international
registry located in Dublin, Ireland (the "International Registry"). Further,
Boeing shall consent to Customer's filing of its international interest in the
Aircraft after passage of title to the Aircraft from Boeing to the Customer,
provided that such filing is correct and complete.
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-4
ESCALATION ADJUSTMENT
AIRFRAME AND OPTIONAL FEATURES
--------------------------------------
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Supplemental Exhibit AE1 to Purchase Agreement Number 3134
FOR MODEL 747-8 FREIGHTER AIRCRAFT: THE AIRFRAME PRICE INCLUDES THE ENGINE PRICE
AT ITS BASIC THRUST LEVEL.
AE1
1. FORMULA
----------
Airframe and Optional Features price adjustments (Airframe Price
Adjustment) are used to allow prices to be stated in current year dollars at the
signing of this Purchase Agreement and to adjust the amount to be paid by
Customer at delivery for the effects of economic fluctuation. The Airframe Price
Adjustment will be determined at the time of Aircraft delivery in accordance
with the following formula:
Pa = [ * ]
Where:
Pa = Airframe Price Adjustment. (For Models
717-200, 737-600, 737-700, 737-800, 737-900,
747-8, 777-200LR, 777-F, and 777-300ER the
Airframe Price includes the Engine Price at
its basic thrust level.)
P = Airframe Price plus the price of the
Optional Features (as set forth in Table 1
of this Purchase Agreement).
L = [ * ]
Where:
[ * ] is the base year airframe escalation
index (as set forth in Table 1 of this
Purchase Agreement);
[ * ] is the three-month arithmetic average
value of [ * ] for October, November,
and December [ * ], using [ * ];
[ * ] is the three-month arithmetic average
value of [ * ] for October, November,
and December [ * ], using the [ * ]; and
[ * ] is a value determined using the U.S.
Department of Labor, Bureau of Labor
Statistics, [ * ], calculated by
establishing a three-month arithmetic
average value (expressed as a decimal and
rounded to the nearest tenth) using the
values for the 11th, 12th, and 13th months
prior to the month of scheduled delivery of
the applicable Aircraft. As the [ * ] values
are only
AE1-1
released on a quarterly basis, the value
released for the first quarter will be used
for the months of January, February, and
March; the value released for the second
quarter will be used for the months of
April, May, and June; the value released for
the third quarter will be used for the
months of July, August, and September; the
value released for the fourth quarter will
be used for the months of October, November,
and December.
M = [ * ]
Where:
[ * ] is the base year airframe escalation
index (as set forth in Table 1 of this
Purchase Agreement); and
[ * ] is a value determined using the U.S.
Department of Labor, Bureau of Labor
Statistics, [ * ], calculated as a 3-month
arithmetic average of the released monthly
values (expressed as a decimal and rounded
to the nearest tenth) using the values for
the 11th, 12th, and 13th months prior to the
month of scheduled delivery of the
applicable Aircraft.
As an example, for an Aircraft scheduled to be delivered in
the month of July, the months of June, July, and August of the
preceding year will be utilized in determining the value of
ECI-R and CPI.
Note: i. In determining the values of L and M, all calculations and
resulting values will be expressed as a decimal rounded to the nearest
ten-thousandth.
ii. [ * ] is the numeric ratio attributed to labor in the Airframe
Price Adjustment formula.
iii. [ * ] is the numeric ratio attributed to materials in the Airframe
Price Adjustment formula.
iv. The denominators (base year indices) are the actual average values
reported by the U.S. Department of Labor, Bureau of Labor Statistics.
The actual average values are calculated as a 3-month arithmetic
average of the released monthly values (expressed as a decimal and
rounded to the nearest tenth) using the values for the 11th, 12th, and
13th months prior to the airframe
AE1-1
base year. The applicable base year and corresponding denominator is
provided by Boeing in Table 1 of this Purchase Agreement.
v. The final value of Pa will be rounded to the nearest dollar.
vi. The Airframe Price Adjustment will not be made if it will result in
a decrease in the Aircraft Basic Price.
2. VALUES TO BE UTILIZED IN THE EVENT OF UNAVAILABILITY.
2.1 If the Bureau of Labor Statistics substantially revises the
methodology used for the determination of the values to be used to determine the
[ * ] 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 Airframe Price Adjustment, the parties will, prior to
the delivery of any such Aircraft, select a substitute from other Bureau of
Labor Statistics data or similar data reported by non-governmental
organizations. Such substitute will result in the same adjustment, insofar as
possible, as would have been calculated utilizing the original values adjusted
for fluctuation during the applicable time period. However, if within 24 months
after 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 the Aircraft.
2.2 Notwithstanding Article 2.1 above, if prior to the scheduled
delivery month of an Aircraft the Bureau of Labor Statistics changes the base
year for determination of the [ * ] values as defined above, such re-based
values will be incorporated in the Airframe Price Adjustment calculation.
2.3 In the event escalation provisions are made non-enforceable or
otherwise rendered void by any agency of the United States Government, the
parties agree, to the extent they may lawfully do so, to equitably adjust the
Aircraft Price of any affected Aircraft to reflect an allowance for increases or
decreases consistent with the applicable provisions of paragraph 1 of this
Supplemental Exhibit AE1 in labor compensation and material costs occurring
since August of the year prior to the price base year shown in the Purchase
Agreement.
2.4 If within 12 months of Aircraft delivery, the published index
values are revised due to an acknowledged error by the Bureau of Labor
Statistics, the Airframe Price Adjustment will be re-calculated using the
revised index values (this does not include those values noted as preliminary by
the Bureau of Labor Statistics). A credit memorandum or supplemental invoice
will be issued for the Airframe Price Adjustment difference. Interest charges
will not apply for the period of original invoice to issuance of credit
memorandum or supplemental invoice.
NOTE: i. The values released by the Bureau of Labor Statistics and
available to Boeing [ * ] prior to the first day of the scheduled
delivery month of an
AE1-1
Aircraft will be used to determine the [ * ] values for the applicable
months (including those noted as preliminary by the Bureau of Labor
Statistics) to calculate the Airframe Price Adjustment for the Aircraft
invoice at the time of delivery. The values will be considered final
and no Airframe Price Adjustments will be made after Aircraft delivery
for any subsequent changes in published Index values, subject always to
paragraph 2.4 above.
ii. The maximum number of digits to the right of the decimal after
rounding utilized in any part of the Airframe Price Adjustment equation
will be 4, where rounding of the fourth digit will be increased to the
next highest digit when the 5th digit is equal to 5 or greater.
AE1-1
CUSTOMER SUPPORT VARIABLES
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Supplemental Exhibit CS1 to Purchase Agreement Number 3134
CS1
CUSTOMER SUPPORT VARIABLES
relating to
BOEING MODEL 747-8 FREIGHTER 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.
1. MAINTENANCE TRAINING.
1.1 Airplane General Familiarization Course; [ * ] class of [ * ]
students;
1.2 Mechanical/Power Plant Systems Course; [ * ] classes of [ * ]
students;
1.3 Electrical Systems Course; [ * ] classes of [ * ] students;
1.4 Avionics Systems Course; [ * ] classes of [ * ] students;
1.5 Corrosion Prevention & Control Course: [ * ] class of [ * ]
students;
1.6 Aircraft Rigging Course; [ * ] class of [ * ] students;
1.7 Composite Repair for Technicians - Basic; [ * ] class of [ * ]
students;
1.8 Cargo Loading Course - [ * ] class of [ * ] 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.
1.10 Wherever possible and upon request by Customer, preceding
shall be held at Customer's facilities located in the United
States of America.
CS1-1
2. FLIGHT TRAINING.
2.1 Transition training for [ * ] flight crews ([ * ] pilots) in [
* ] 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; [ * ] classes of [ * ] students;
2.3 Flight Attendant training; [ * ] classes of [ * ] 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, Flight Attendant Manuals, 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 [ * ] calendar days for revenue
service training assistance;
c. An instructor pilot to visit Customer [ * ] months
after revenue service training to review Customer's
flight crew operations for a [ * ] week period.
CS1-2
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 nine months before first aircraft.
When available, the RSPL for the basic configuration
747-8 freighter aircraft shall be provided by Boeing
to the Customer.
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 but may be held at Customer's
facilities in the United States of America.
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
Performance Engineer's Manual
Jet Transport Performance Methods
FMC Supplemental Data Document
Operational Performance Software
Fault Reporting Manual
ETOPS Guide Vol. III
CS1-3
Flight Planning and Performance Manual
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
Power Plant Buildup Manual
Central Maintenance Computer System Reporting Table
In Service Activity Report
All Operator Letters
Service Letters
Structural Item Interim Advisory
Maintenance Tips
Combined Index
Baggage/Cargo Loading Manual (747 and 767 Aircraft)
4.3. MAINTENANCE PLANNING.
Maintenance Planning Data Document
Maintenance Planning Data Tasks Masterfile
Maintenance Task Cards and Index
Maintenance Inspection Intervals Report
ETOPS Guide Vol. II
Configuration Maintenance and Procedures for Extended Range
Operations
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
Illustrated Tool and Equipment List/Manual
Aircraft Recovery Document
Airplane Characteristics for Airport Planning Document
CS1-4
Airplane Rescue and Fire Fighting Document
Engine Handling Document
ETOPS Guide Vol. I
4.6. SUPPLIER TECHNICAL DATA.
Service Bulletins
Ground Support Equipment Data
Provisioning Information
Component Maintenance/Overhaul Manuals and Index
Publications Index
Product Support Supplier Directory
CS1-5
ENGINE ESCALATION,
ENGINE WARRANTY AND PATENT INDEMNITY
between
THE BOEING COMPANY
and
ATLAS AIR, INC.
Supplemental Exhibit EE1 to Purchase Agreement Number 3134 (PURCHASE AGREEMENT)
EE1
ENGINE ESCALATION,
ENGINE WARRANTY AND PATENT INDEMNITY
relating to
BOEING MODEL 747-8 Freighter AIRCRAFT
1. ENGINE ESCALATION. No separate engine escalation methodology is defined for
the 747-8 Freighter Aircraft. Pursuant to the Purchase Agreement, the engine
prices for these Aircraft are included in and will be escalated in the same
manner as the Airframe Price.
2. ENGINE WARRANTY AND PRODUCT SUPPORT PLAN. Boeing has obtained from General
Electric Company (GE) GE's guarantee that GE will extend directly to Customer
GE's warranty, special guarantees and product support services (hereinafter
collectively referred to as the "WARRANTY"); subject, however, to Customer's
acceptance of the conditions set forth in the Warranty.
In consideration for Boeing's having obtained GE's guarantee to provide the
Warranty directly to the 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 Engines and Customer hereby waives, releases
and renounces all its rights in all such claims, obligations and liabilities.
THE WARRANTY GE EXTENDS DIRECTLY TO CUSTOMER IS EXCLUSIVE, AND IS IN LIEU OF ALL
OTHER WARRANTIES WHETHER WRITTEN. ORAL OR IMPLIED. THERE ARE NO IMPLIED
WARRANTIES OF FITNESS OR MERCHANTABILITY.
EE1
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Supplemental Exhibit SLP1
[ * ] Service Life Policy [ * ]
[GRAPHIC OMITTTED]
Reference: Purchase Agreement No. 3134
(the PURCHASE AGREEMENT)
between The Boeing Company
(BOEING) and Atlas Air, Inc.
(CUSTOMER) relating to Model
747-8 Freighter 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.
[ * ] warranty period for each Boeing Product
through the first occurrence of Customer's
inspection of each such Boeing Product. [ * ]
the parties agree as follows.
1.0 WARRANTY PERIOD.
Article 3 of Part 2 of Exhibit C to the AGTA is
[ * ]:
"3.1 WARRANTY. The warranty period
begins on the date of aircraft or
Boeing Product delivery DELIVERY)
and ends at the applicable time
specified in subsections 3.1(i)
through 3.1(iii) below:
(i) for Boeing aircraft models 777-200,
-300, 737-600, -700, -800, -900,
787 or new aircraft models designed
and manufactured with similar, new
technology the warranty period ends
[ * ] after Delivery;
(ii) for 747-8 Freighter Customer
Aircraft, the warranty period ends
[ * ] after Delivery;
(iii) in addition, for a Boeing Product
installed at the time of delivery
in a 747-8 Freighter Customer
Aircraft but not inspected during
the initial [ * ] warranty period,
the warranty period continues until
the date upon which Customer first
inspects such Boeing Product
pursuant to its Boeing Maintenance
Planning Data Document but not
later than [ * ] of such 747-8
Customer Aircraft;
(iv) for any other Boeing aircraft model
the warranty period ends [ * ]
after Delivery."
3.0 CUSTOMER'S OBLIGATIONS.
Article 6.2 of Part 2 of Exhibit C to the
AGTA is [ * ] the following provision:
[GRAPHIC OMITTED]
"(xi) for 747-8 Freighter Customer
Aircraft claims submitted after the
[ * ] warranty period, the specific
reference within the Boeing
Maintenance Planning Data Document
to the inspection requirement for
such Boeing Product."
4.0 SERVICE LIFE POLICY.
Article 2.2 of Part 3 of Exhibit C to the
AGTA is amended to read as follows:
"2.2.1 The policy period for SLP
Components initially installed on an
aircraft is [ * ] after the date of
delivery of the aircraft except that for
SLP components initially installed on a
747-8 Freighter Customer Aircraft the
policy period is [ * ] after the date of
delivery of the 747-8 Freighter Customer
Aircraft. For this purpose only, the term
SLP Components shall also include control
surfaces, landing gear doors, and
wing-to-body fairings.
2.2.2 The policy period for SLP [
* ] purchased from Boeing by Customer as
spare parts is [ * ] from delivery of such
SLP [ * ] or [ * ] from the date of
delivery of the last aircraft produced by
Boeing of a specific model whichever first
expires, except that for the 747-8
Freighter Customer Aircraft such policy
period is [ * ] from delivery of such SLP
component or [ * ] from the date of
delivery of the last 747-8 Freighter
Customer Aircraft produced by Boeing
whichever first expires."
Article 3 of Part 3 of Exhibit C to the AGTA is
[ * ] as follows:
"3. PRICE.
The price Customer will pay for
replacement of a failed SLP Component will
be calculated pursuant to the following
formulas:
(i) For 747-8 Freighter Customer
Aircraft only:
P = C(T-[ * ])
----------
[ * ]
where:
P = price to Customer for the
replacement part
C = SLP Component sales price at
time of Correction
T = total age in months of the
failed SLP Component from
the date of delivery to
Customer to the date of
discovery of such condition
and is greater than [ * ]."
If the foregoing correctly sets forth your
understanding of our agreement with respect to
matters described above, please indicate your
acceptance and approval below.
Very truly yours,
THE BOEING COMPANY
By [ * ]
-------------------------------
Its Attorney-In-Fact
-------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
----------------------------------------------
By: Mr. William J. Flynn
-----------------------------------------
Its: President and Chief Executive Officer
-----------------------------------------
Subject: Open Configuration Matters (LETTER AGREEMENT)
Reference: Purchase Agreement 3134 (the PURCHASE AGREEMENT) between The
Boeing Company (BOEING) and Atlas Air, Inc. (CUSTOMER) relating
to Model 747-8 Freighter 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 747-8 Freighter Aircraft has been defined by Boeing Model 747-8 Freighter
basic specification D019U020, Revision C, dated July 31, 2006 (the BASIC
SPECIFICATION) as described in Article 1 and Exhibit A of the Purchase Agreement
(the AIRCRAFT CONFIGURATION). The Basic Specification describes the major
changes associated with the 747-8 Freighter airplane relative to the model
747-400 Freighter airplane, as such model 747-400 Freighter airplane is
described in specification D019U002, Revision H, dated March 29, 2006. 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. For the
avoidance of doubt, Attachment A to this Letter Agreement identifies [ * ].
1.2 FINAL CONFIGURATION SCHEDULE. No later than [ * ] prior to the
first Aircraft's scheduled delivery month, Boeing and Customer will discuss
potential Options. Within [ * ] after that meeting, Boeing will provide Customer
with Option proposals for those configuration changes that can be incorporated
in Aircraft production. Customer will then have [ * ] to accept or reject these
Options.
2. EFFECT ON PURCHASE AGREEMENT.
2.1 BASIC SPECIFICATION. [ * ] 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. For the avoidance of doubt, Boeing shall not
revise the Aircraft Basic Price and the Advance Payment Base Price of each
Aircraft for [ * ], except as permitted under Articles 3 and 4 of Aircraft
General Terms Agreement dated as of JUNE 6, 1997 between the parties, identified
as AGTA-TLS (AGTA). Additionally Boeing shall not charge the Customer for items
shown as features that are basic to the Model 747-8 Freighter aircraft (as the
Basic Configuration is described in paragraph l.l herein) [ * ].
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 [ * ] 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 no amount (zero) as an estimate of the
value of the Options and any related Seller Purchased Equipment 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 of the Options accepted by Customer.
3. PURCHASE AGREEMENT AMENDMENT.
Within [ * ] 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.
4. CONFIDENTIAL TREATMENT.
Customer understands that certain commercial and financial information
contained in this Letter Agreement is 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. In the event that Customer in good
faith concludes (based upon an opinion of counsel) that disclosure of
information contained in this Letter Agreement may be required by applicable law
or governmental regulations, Customer shall advise Boeing in writing prior to
such disclosure, if possible, or, if not possible, then promptly upon receiving
such order or upon identifying such need to comply, in order to enable Boeing to
take whatever steps it deems necessary to protect its interests in this regard,
and Customer will, in any event, disclose only that portion of the information
which it is legally required to disclose and Customer will use its reasonable
endeavors to protect the confidentiality of such information to the widest
extent possible in the circumstances.
Very truly yours,
THE BOEING COMPANY
By [ * ]
-----------------------------------------
Its Attorney-In-Fact
-----------------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
/s/ William J. Flynn
- ---------------------------------------------
By: Mr. William J. Flynn
---------------------------------------
Its: President and Chief Executive Officer
---------------------------------------
ATTACHMENT A TO Letter Agreement
[ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
REFERENCE
ATA OPTION NUMBER TITLE COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
ATTACHMENT A TO Letter Agreement
[ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
REFERENCE
ATA OPTION NUMBER TITLE COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
ATTACHMENT A TO Letter Agreement
[ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
REFERENCE
ATA OPTION NUMBER TITLE COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
ATTACHMENT A TO Letter Agreement
[ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
REFERENCE
ATA OPTION NUMBER TITLE COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Spare Parts Initial Provisioning
Reference: a) Purchase Agreement No. 3134 (the PURCHASE AGREEMENT)
between The Boeing Company (BOEING) and Atlas Air,
Inc. (CUSTOMER) relating to Model 747-8 Freighter
aircraft (the AIRCRAFT)
b) Customer Services General Terms Agreement No. 7U
(CSGTA) between Boeing and Customer, dated November
12, 1997
This letter agreement (LETTER AGREEMENT) is entered into on the date below and
amends and supplements the CSGTA. All capitalized terms used but not defined in
this Letter Agreement have the same meaning as in the CSGTA, except for
"Aircraft" which will have the meaning as defined in the Purchase Agreement.
In order to define the process by which Boeing and Customer will (i) identify
those Spare Parts and Standards critical to Customer's successful introduction
of the Aircraft into service and its continued operation, (ii) place Orders
under the provisions of the CSGTA as supplemented by the provisions of this
Letter Agreement for those Spare Parts and Standards, and (iii) manage the
return of certain of those Spare Parts which Customer does not use, the parties
agree as follows.
1. DEFINITIONS.
"PROVISIONING DATA" means the documentation provided by Boeing to Customer,
including but not limited to the Recommended Spare Parts List (RSPL),
identifying all Boeing initial provisioning requirements for the Aircraft.
"PROVISIONING ITEMS" means the Spare Parts and Standards identified by Boeing as
initial provisioning requirements in support of the Aircraft, excluding special
tools, ground support equipment (GSE), engines and engine parts.
"PROVISIONING PRODUCTS GUIDE" means the Boeing Manual D6-81834 entitled "Spares
Provisioning Products Guide".
2. PHASED PROVISIONING.
2.1 PROVISIONING PRODUCTS GUIDE. One year prior to the initial
provisioning meeting Boeing will furnish to Customer a copy of the Provisioning
Products Guide.
2.2 INITIAL PROVISIONING MEETING. On or about twelve (12) months prior
to delivery of the first Aircraft the parties will conduct an initial
provisioning meeting, where the procedures, schedules, and requirements for
training will be established to accomplish phased provisioning of Spare Parts
and Standards for the Aircraft in accordance with the Provisioning Products
Guide
2.3 PROVISIONING DATA. During the initial provisioning meeting Customer
will provide to Boeing the operational parameter information described in
Chapter 6 of the Provisioning Products Guide. After review and acceptance by
Boeing of such Customer information, Boeing will prepare the Provisioning Data.
Such Provisioning Data will be furnished to Customer on or about ninety (90)
days after Boeing finalizes the engineering drawings for the Aircraft. The
Provisioning Data will be as complete as possible and will cover Provisioning
Items selected by Boeing for review by Customer for initial provisioning of
Spare Parts and Standards for the Aircraft. Boeing will furnish to Customer
revisions to the Provisioning Data until approximately ninety (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.
2.4 BUYER FURNISHED EQUIPMENT (BFE) PROVISIONING DATA. Unless otherwise
advised by Boeing, Customer will provide or ensure its BFE suppliers provide to
Boeing the BFE data in scope and format acceptable to Boeing, in accordance with
the schedule established during the initial provisioning meeting.
3. PURCHASE FROM BOEING OF SPARE PARTS AND STANDARDS AS INITIAL PROVISIONING FOR
THE AIRCRAFT.
3.1 SCHEDULE. In accordance with schedules established during the
initial provisioning meeting, Customer may place Orders for Provisioning Items
and any ground support equipment (GSE), special tools or engine spare parts
which Customer determines it will initially require for maintenance, overhaul
and servicing of the Aircraft and/or engines.
3.2 PRICES OF INITIAL PROVISIONING SPARE PARTS.
3.2.1 BOEING SPARE PARTS. The Provisioning Data will set forth
the prices for those Provisioning Items other than items listed in Article 3.3,
below, that are Boeing Spare Parts, and such prices will be firm and remain in
effect for ninety (90) days from the date the price is first quoted to Customer
in the Provisioning Data.
3.2.2 SUPPLIER SPARE PARTS. Boeing will provide estimated
prices in the Provisioning Data for Provisioning Items other than items listed
in Article 3.3,
below, that are Supplier Spare Parts. The price to Customer for any Supplier
Spare Parts that are Provisioning Items or for any items ordered for initial
provisioning of GSE, special tools manufactured by suppliers, or engine spare
parts will be [ * ] of the supplier's list price for such items.
3.3 QEC KITS, STANDARDS KITS, RAW MATERIAL KITS, BULK MATERIALS KITS
AND SERVICE BULLETIN KITS. In accordance with schedules established during the
initial provisioning meeting, Boeing will furnish to Customer a listing of all
components which could be included in the quick engine change (QEC) kits,
Standards kits, raw material kits, bulk materials kits and service bulletin kits
which may be purchased by Customer from Boeing. Customer will select, and
provide to Boeing its desired content for the kits. Boeing will furnish to
Customer as soon as practicable thereafter a statement setting forth a firm
price for such kits. Customer will place Orders with Boeing for the kits in
accordance with schedules established during the initial provisioning meeting.
4. DELIVERY.
For Spare Parts and Standards ordered by Customer in accordance with Article 3
of this Letter Agreement, Boeing will, insofar as reasonably possible, deliver
to Customer such Spare Parts and Standards 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 and Standards ordered in accordance with this
Letter Agreement. Where appropriate, Boeing will arrange for shipment of such
Spare Parts and Standards which are manufactured by suppliers directly to
Customer from the applicable supplier's facility. The routing and method of
shipment for initial deliveries and all subsequent deliveries of such Spare
Parts and Standards will be as established at the initial provisioning meeting
and thereafter by mutual agreement.
5. SUBSTITUTION FOR OBSOLETE SPARE PARTS.
5.1 OBLIGATION TO SUBSTITUTE PRE-DELIVERY. In the event that, prior to
delivery of the first Aircraft, any Spare Part purchased by Customer from Boeing
in accordance with this Letter Agreement as initial provisioning for the
Aircraft is rendered obsolete or unusable due to the redesign of the Aircraft or
of any accessory, equipment or part thereof (other than a redesign at Customer's
request) Boeing will deliver to Customer at no charge new and usable Spare Parts
in substitution for such obsolete or unusable Spare Parts and, upon such
delivery, Customer will return the obsolete or unusable Spare Parts to Boeing.
5.2 DELIVERY OF OBSOLETE SPARE PARTS AND SUBSTITUTES. Obsolete or
unusable Spare Parts returned by Customer pursuant to this Article 5 will be
delivered to Boeing at its Seattle Distribution Center or such other U.S.
destination as Boeing may reasonably designate. Spare Parts substituted for such
returned obsolete or unusable Spare Parts will be delivered to Customer in
accordance with the CSGTA. Boeing will pay the freight charges for the shipment
from Customer to Boeing of any such obsolete or unusable Spare Part and for the
shipment from Boeing to Customer of any such substitute Spare Part.
6. REPURCHASE OF PROVISIONING ITEMS.
6.1 OBLIGATION TO REPURCHASE. During a period commencing [ * ] after
delivery of the first Aircraft, and ending [ * ] after such delivery, Boeing
will, upon receipt of Customer's written request and subject to the exceptions
in Article 6.2, 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.
6.2 EXCEPTIONS. Boeing will not be obligated under Article 6.1 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 components thereof (except those components listed
separately in the Provisioning Data), (iii) Provisioning Items for which an
Order was received by Boeing more than five (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 Customer's modification of
the Aircraft, and (v) Provisioning Items which become excess as a result of a
material change in Customer's operating parameters, as provided to Boeing
pursuant to the initial provisioning meeting and which were the basis of
Boeing's initial provisioning recommendations for the Aircraft.
6.3 NOTIFICATION AND FORMAT. Customer will notify Boeing, in writing
when Customer desires to return Provisioning Items under the provisions of this
Article 6. 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 five (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, but such review must in any event be completed
within 30 business days after receipt of such notification.
6.4 REVIEW AND ACCEPTANCE BY BOEING. Upon completion of Boeing's review
of any detailed summary submitted by Customer pursuant to Article 6.3, Boeing
will issue to Customer a Material Return Authorization (MRA) for those
Provisioning Items Customer and Boeing agree are eligible for repurchase in
accordance with this Article 6. Boeing will advise Customer of the reason that
any Provisioning Item 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.
6.5 PRICE AND PAYMENT. The price of each Provisioning Item repurchased
by Boeing pursuant to this Article 6 will be an amount equal to 100% of the
original
invoice price thereof except that the repurchase price of Provisioning Items
purchased pursuant to Article 3.2.2 will not include Boeing's [ * ] 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 Spare Parts or Standards.
6.6 DELIVERY OF REPURCHASED PROVISIONING ITEMS. Provisioning
Items repurchased by Boeing pursuant to this Article 6 will be delivered to
Boeing F.O.B. at its Seattle Distribution Center or such other U.S. destination
as Boeing may reasonably designate.
7. TITLE AND RISK OF LOSS.
Title and risk of loss of any Spare Parts or Standards delivered to Customer by
Boeing in accordance with this Letter Agreement will pass from Boeing to
Customer in accordance with the applicable provisions of the CSGTA. Title to and
risk of loss of any Spare Parts or Standards returned to Boeing by Customer in
accordance with this Letter Agreement will pass to Boeing upon delivery of such
Spare Parts or Standards to Boeing in accordance with the provisions of Article
5.2 or Article 6.6, herein, as appropriate.
8. TERMINATION FOR EXCUSABLE DELAY.
In the event of termination of the Purchase Agreement pursuant to Article 7 of
the AGTA with respect to any Aircraft, such termination will, if Customer so
requests by written notice received by Boeing within fifteen (15) days after
such termination, also discharge and terminate all obligations and liabilities
of the parties as to any Spare Parts or Standards which Customer had ordered
pursuant to the provisions of this Letter Agreement as initial provisioning for
such Aircraft and which are undelivered on the date Boeing receives such written
notice.
9. ORDER OF PRECEDENCE.
In the event of any inconsistency between the terms of this Letter Agreement and
the terms of any other provisions of the CSGTA, the terms of this Letter
Agreement will control.
Very truly yours,
THE BOEING COMPANY
By [ * ]
---------------------------------------
Its Attorney-In-Fact
---------------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
/s/ Mr. William J. Flynn
- --------------------------------------------
By: Mr. William J. Flynn
---------------------------------------
Its: President and Chief Executive Officer
---------------------------------------
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Special Matters Letter: 747-8
Freighter Aircraft
Purchase Agreement No. 3134 (the
PURCHASE AGREEMENT) between The Boeing
Company (BOEING) and Atlas Air, Inc.
[GRAPHIC OMITTED] (CUSTOMER) relating to Model 747-ADVF
aircraft consisting of twelve (12)
firm Boeing Model 747-8 Freighter
Aircraft (FIRM AIRCRAFT), [ * ] to
purchase Boeing Model 747-8 Freighter
Aircraft (OPTION AIRCRAFT) and [ * ]
to purchase Boeing Model 747-8
Freighter Aircraft (PURCHASE RIGHT
AIRCRAFT), collectively (AIRCRAFT)
This letter agreement (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.
Boeing will provide the Customer,
concurrently with the delivery of each of the
Aircraft, a credit memorandum equal to [ * ] of
the Airframe Price as set forth in Table 1 of
the Purchase Agreement, escalated to the month
of delivery in the same manner as the Airframe
Price as described in Supplemental Exhibit AE-1
and in conformance with terms and conditions of
paragraph 19 of this Letter Agreement (BASIC
CREDIT MEMORANDUM). Customer may apply the Basic
Credit Memorandum to the balance of the Aircraft
Price due at the time of delivery of each
Aircraft or in payment for Boeing proprietary
spare parts or other Boeing goods and services,
but not for advance payments on Aircraft.
2 [ * ]
3 [ * ]
[GRAPHIC OMITTED]
4 [ * ]
5 [ * ]
6 [ * ]
[GRAPHIC OMITTED]
7 [ * ]
8 [ * ]
[GRAPHIC OMITTED]
9 [ * ]
[ * ]
[GRAPHIC OMITTED]
10 [ * ]
[GRAPHIC OMITTED]
11 [ * ]
12 [ * ]
[GRAPHIC OMITTED]
13 [ * ]
If Customer accepts as part of
Customer's configuration the [ * ] for the
Aircraft, Boeing will provide the Customer,
concurrently with the delivery of each Aircraft,
a credit memorandum equal to the [ * ].
Specifics for this option are being finalized
for the 747-8F aircraft and Customer will be
provided with details on the specifics [ * ]) as
soon as Boeing has such information available.
The parties intend that the credit memorandum
shall include the [ * ] and [ * ]. The parties
shall document the effect of any Customer [ * ]
be made so that appropriate letter agreements
and other documents under the Purchase Agreement
through a supplemental agreement.
14 DEFERRED ADVANCE PAYMENT SCHEDULES.
14.1 In lieu of the standard advance
payment schedule set forth in Article 4.2 of the
Purchase Agreement, Boeing hereby offers
Customer the [ * ] advance payment schedule, as
follows:
Standard
Schedule
Amount Due
Due Date of Payment Amount Due per per Aircraft
Unless otherwise stated: Aircraft (percentage of
The convention is the number of (percentage of Aircraft's
months prior to the first day of the Aircraft's Advance
scheduled delivery month of the Advance Payment Payment Base Cumulative
Aircraft Base Price) Price) Delta
[GRAPHIC OMITTED]
Two days after the execution of [ * ] [ * ] [ * ]
definitive agreement for the Aircraft
[ * ] months [ * ] [ * ] [ * ]
[ * ] months [ * ] [ * ] [ * ]
[ * ] months [ * ] [ * ] [ * ]
[ * ] months [ * ] [ * ] [ * ]
[ * ] months [ * ] [ * ] [ * ]
[ * ] months [ * ] [ * ] [ * ]
[ * ] months [ * ] [ * ] [ * ]
[ * ] months [ * ] [ * ] [ * ]
[ * ] months [ * ] [ * ] [ * ]
Total Advance Payments [ * ] [ * ]
14.2 Customer agrees to pay interest on
the difference between the payments made
pursuant to the [ * ] Advance Payment Schedule
to amounts otherwise due under the Standard
Advance Payment Schedule set forth in Table 1 of
the Purchase Agreement and those paid pursuant
to subparagraph 14.1. The interest rate will be
the three-month London Interbank Rate (LIBOR)
plus [ * ] per annum (DEFERRED INTEREST RATE).
Interest will compound quarterly and will be due
and payable to Boeing each calendar quarter, in
arrears. For payments by Customer exceeding the
Standard Schedule (including interest accrued
thereon at the Deferred Interest Rate as
described in the last sentence of this
subparagraph 14.2, the Accelerated Payment) and
until the date on which the cumulative
Accelerated Payment total is exceeded by the
cumulative Standard Payment total, Boeing shall
credit (as a reduction of interest that is
otherwise payable by the Customer) the Customer
with interest accruing on the net Accelerated
Payments from the date of receipt by Boeing at
the Deferred Interest Rate.
14.3 Boeing agrees, pursuant to the
terms of this subparagraph 14.3, to [ * ] the
aggregate amount of advance payments paid by or
on behalf of Customer to Boeing (noting that
Option Aircraft deposits for unexercised options
are not considered advance payments for the
purposes of this [ * ] commitment) with respect
to this Letter Agreement (including all
successor definitive agreements) at [ * ] (the [
* ]). This [ * ] applies to the Firm Aircraft.
Boeing will further agree to
maintain this [ * ] at [ * ] for exercised
Purchase Rights Aircraft and/or Option Aircraft
either of which become firm pursuant to a
supplemental agreement.
15 DEFAULT AND UTILIZATION OF ADVANCE PAYMENTS.
In the event of a default of any of
Customer's obligations under any agreement with
Boeing or its affiliates with respect to the
Aircraft (OBLIGATIONS), Boeing may, in addition
to exercising any rights it may have under any
such agreement or applicable law (including
rights of set off or recoupment), apply any or
[GRAPHIC OMITTED] all payments made by Customer with respect to an
Aircraft to cure, in part or in whole, any
default with respect to any of the Obligations
without prior notice to Customer (any
requirement of prior Boeing notice being
expressly waived by Customer to the extent
permitted by applicable law). Immediately upon
Boeing application, the amount of advance
payments received by Boeing for purposes of the
applicable purchase agreement shall be reduced
by an amount equal to the amount so applied (the
APPLIED AMOUNT). Customer shall be obligated to
pay to Boeing an amount equal to the Applied
Amount and shall make its payment by wire
transfer within ten (10) days after Customer
receives notice from Boeing of the Applied
Amount.
16 INTRODUCTORY SUPPORT.
For avoidance of doubt, "[ * ]
Entitlement" is set forth in Supplemental
Exhibit CS1. Customer and Boeing will conduct
planning conferences approximately 12 months
before delivery of the first Aircraft, or on a
basis as otherwise agreed, to develop and
schedule a customized Boeing furnished Customer
Support Program in support of the Aircraft. In
consideration of Customer's purchase of the
Aircraft, Boeing shall provide customized
Customer Services Program that will be based
upon and equivalent to [ * ] (versus [ * ])
entitlements without cost to the Customer for
the upgrade to [ * ] entitlement.
17 AIRCRAFT MODEL SUBSTITUTION.
Customer may substitute the purchase of
Boeing Model 747-8 Intercontinental passenger
aircraft (SUBSTITUTE AIRCRAFT) described in
Attachment 1 in place of any of the Aircraft,
subject to the following terms and conditions:
17.1 Customer will provide written
notice of its intention to substitute the
purchase of an Aircraft with the purchase of a
Substitute Aircraft, no later than the first day
of the month that is twenty four months prior to
the scheduled month of delivery of the Aircraft
for which it will be substituted (NOTICE OF
SUBSTITUTION);
17.2 Customer's substitution right is
conditioned upon Boeing's having production
capability for the Substitute Aircraft in the
scheduled delivery month of the Aircraft for
which it will be substituted.
17.3 If Boeing is unable to manufacture
the Substitute Aircraft described in the Notice
of Substitution in the scheduled delivery month
of the Aircraft for which it will be
substituted, then Boeing shall promptly make a
written offer of an alternate
delivery month for Customer's consideration and
written acceptance within thirty days of its
receipt of such offer.
17.4 Customer and Boeing shall execute a
definitive agreement for the purchase of the
Substitute Aircraft within thirty (30) days of
Customer's Notice of Substitution or of
Customer's acceptance of an alternate delivery
month in accordance with subparagraph 17.3
above.
17.5 In no event shall a Substitute
Aircraft be available for delivery prior to July
of 2010.
[GRAPHIC OMITTED] 17.6 Customer will allow Boeing to use
each Substitute Aircraft for first of model
testing relating to the development and
certification of the Model 747-8
Intercontinental passenger aircraft. Details of
flight tests, schedules and applicable terms and
conditions will be the subject of mutual
agreement.
17.7 The offer of Substitute Aircraft
hereunder is contingent upon Boeing having
reached a final agreement with the engine
manufacturer for the engines on the Boeing Model
747-8 Intercontinental passenger aircraft.
17.8 The Airframe Base Price, Optional
Features Prices, Engine Price and Aircraft Basic
Price will be established using Boeing's
then-current prices for such elements as of the
date of execution of the definitive purchase
agreement for the Substitute Aircraft. Excluding
the Enhanced Incentive Credit Memorandum and the
Firm Order Increase Credit Memorandum, all
elements of the Letter Agreement related herein
that apply to the Firm Aircraft shall also apply
to the Substitute Aircraft. For the avoidance of
doubt, neither the Enhanced Incentive Credit
Memorandum nor the Firm Order Increase Credit
Memorandum shall apply to any Substitute
Aircraft.
18 OPTION AIRCRAFT [ * ] FLEXIBILITY.
Boeing will offer the following
flexibility regarding the [ * ] for the Option
Aircraft: [ * ] will be due at time of execution
of the Purchase Agreement, and the [ * ] will be
[ * ] from the anniversary of the execution of
the Purchase Agreement.
19 [ * ].
Boeing will facilitate Aircraft purchase
for the Customer by [ * ] for the Airframe Price
of [ * ] through the period ending [ * ] for
each Firm Aircraft and up to four other Aircraft
(Additional Aircraft). For each Additional
Aircraft, [ * ] be in accordance with Boeing's
standard [ * ] for the period beginning with [ *
]. The Purchase Agreement utilizes the [ * ];
however, the parties agree that Customer may in
its sole discretion elect the [ * ] to replace
the [ * ] in the Purchase Agreement if written
notice is provided by Customer to Boeing no
later than [ * ]. The parties shall
document the effect of any Customer decision to
select the [ * ] so that appropriate letter
agreements and other documents under the
Purchase Agreement can be added through a
supplemental agreement.
20 PURCHASE RIGHTS AIRCRAFT.
The business consideration for each
Purchase Rights Aircraft [ * ], expressed in
current base year dollars in effect at the time,
[GRAPHIC OMITTED] subject to the same escalation as is applied
against the Airframe Price as described in
Supplemental Exhibit AE-1 and in conformance
with the terms and conditions of paragraph 19 of
this Letter Agreement.
21 CREDIT MEMO REIMBURSEMENT.
Exhibit C to AGTA-TLS, Part 2, Article
4.4, CREDIT MEMO REIMBURSEMENT, is amended to
read as follows:
Boeing will make reimbursements by
credit memoranda which may be applied toward the
purchase of Boeing goods and services. Boeing
shall make such reimbursements by wire transfer
in lieu of credits up to once per quarter. Any
reimbursement will be in an amount equal to the
current net balance of outstanding approved
warranty claims less any outstanding balance on
Customer's account.
22 PERFORMANCE REVIEW REQUIREMENT.
A performance review meeting will be
held at a mutually agreeable location in the
United States of America between senior levels
of Boeing and the Customer (vice president level
or the equivalent for each party) at minimum on
an annual basis (quarterly if performance
guarantees are not being achieved) to begin no
later than three months after the month in which
the first Aircraft under this Purchase Agreement
shall be delivered.
23 ASSIGNMENT.
Any assignment by Customer of any
benefits, entitlements, or services described in
this Agreement requires Boeing's prior written
consent. Further, Customer will not reveal to
any third party the amount of the credit
memoranda provided to Customer by Boeing without
Boeing's prior written consent and subject to
such circumstances as Boeing may reasonably
require.
Boeing will not unreasonably withhold
consent to Customer's request to assign, as
security, rights in the Purchase Agreement if
done for purposes of obtaining financing or for
such other purpose consistent with fulfilling
its obligations under the Purchase Agreement.
Boeing's consent will be conditioned on all
parties accepting Boeing's customary conditions
for consenting to an assignment, including, but
not limited to, the following: assignor and
assignee indemnification of Boeing for any
actions taken by an assignee under any
assignment agreement; Boeing's right to exercise
the manufacturer's
option to assume Customer's rights under the
Purchase Agreement in the event of a default
under an assignment agreement; and
confidentiality. A Party that is
(i) bound by a customary
confidentiality
agreement;
(ii) neither an airplane
manufacturer nor an
airline; and
(iii) responding to a Customer
request for proposals to
provide financing of
Aircraft pursuant to the
Purchase Agreement,
including pre-delivery
payment financing
shall be deemed a "Financing Party".
[GRAPHIC OMITTED] Without Boeing's consent, Customer may
represent to any Financing Party that Boeing
will provide to that Financing Party,
concurrently with the delivery of each of the
Aircraft to that Financing Party, a financier
credit memorandum equal to 41.5% of the Airframe
Price as set forth in Table 1 of the Purchase
Agreement, escalated to the month of delivery in
the same manner as the Airframe Price as
described in Supplemental Exhibit AE-1 and in
conformance with terms and conditions of
paragraph 23 of this Letter Agreement (Financier
Credit Memorandum). Insofar as such Financing
Party is concerned, Article 14.1, 14.2 and the
Financier Credit Memorandum shall be in lieu of
any other provision in the Letter Agreement.
When the Customer identifies a Financing Party
and the preliminary terms of an assignment under
which predelivery payment financing (PDP) or
aircraft purchase financing could be provided,
at Customer's request, Boeing agrees to enter
into discussions with the Customer to consider
whether an additional credit memorandum can be
assigned, with the goal of helping Customer
obtain third-party financing.
Boeing will consent to any reasonable
request by Customer to assign the Purchase
Agreement to an affiliate provided that Boeing
is provided with an adequate guarantee of
performance of all obligations under this
Purchase Agreement and in a form reasonably
satisfactory to Boeing.
Customer understands that Boeing is not
required under any circumstances to consent to
an assignment that would constitute a novation.
The foregoing provisions are intended to
supplement, and not to supersede, the assignment
provisions of the AGTA, which address delivery
date and post-delivery assignments, merger-type
assignments, and other matters.
24 [ * ] OPTION.
Customer may elect an option which will
be offered by Boeing to add up to two (2)
alternate [ * ] and two (2) alternate [ * ]. The
Operational Weight Modification Option will
include applicable changes to all associated [ *
] including but not limited to the [ * ], the [
* ], as well as the software necessary for
Customer to own or operate the Aircraft in
revenue service with such Aircraft pursuant to
the airworthiness requirements of the FAA.
Should the [ * ]
[ * ] be elected by the Customer, a credit
memorandum equal to the cost of the provisions,
equipment and [ * ] comprising the [ * ] will
be provided by Boeing to the Customer.
25 [ * ] OPTION.
Solely to the extent certified or
otherwise available, Customer may elect an
option which will be offered by [ * ] at any
point in time prior to that date that is twelve
months prior to the delivery of an Aircraft to
select [ * ]. The [ * ] Option will include
applicable changes to all associated [ * ]
[GRAPHIC OMITTED] including but not limited to the [ * ], as well
as the software necessary for Customer to own or
operate the Aircraft in revenue service with
such Aircraft pursuant to the airworthiness
requirements of the FAA. Should the [ * ] Option
be elected by the Customer, a credit memorandum
equal to the cost of the provisions, equipment
and technical publications comprising the [ * ]
Option will be provided by Boeing to the
Customer.
26 PAYMENT DUE AT SIGNING OF PURCHASE
AGREEMENT.
Notwithstanding any payment requirement
set forth in the Purchase Agreement, Customer
may defer the payment(s) that would otherwise be
required at signing to any date on or before
OCTOBER 2, 2006; HOWEVER, ALL MONIES PAID IN
CONNECTION WITH THE PROPOSAL ACCEPTANCE BY
CUSTOMER TO BOEING SHALL BECOME NON- REFUNDABLE
AS OF THE DATE OF EXECUTION OF THIS LETTER
AGREEMENT.
27 CONFIDENTIAL TREATMENT.
Customer understands that certain
commercial and financial information contained
in this Letter Agreement is 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. In the event that Customer in good
faith concludes (based upon an opinion of
counsel) that disclosure of information
contained in this Letter Agreement may be
required by applicable law or governmental
regulations, Customer shall advise Boeing in
writing prior to such disclosure, if possible,
or, if not possible, then promptly upon
receiving such order or upon identifying such
need to comply, in order to enable Boeing to
take whatever steps it deems necessary to
protect its interests in this regard, and
Customer will, in any event, disclose only that
portion of the information which it is legally
required to disclose and Customer will use its
reasonable endeavors to protect the
confidentiality of such information to the
widest extent possible in the circumstances.
Very truly yours,
THE BOEING COMPANY
By: [ * ]
---------------------------------------
Its: ATTORNEY IN FACT
---------------------------------------
Accepted and agreed to this 8TH day of SEPTEMBER
of 2006.
ATLAS AIR, INC.
/s/ William J. Flynn
-------------------------------------------
By: /s/ Mr. William J. Flynn
---------------------------------------
Its: President and Chief Executive Officer
---------------------------------------
1. Substitute Aircraft Description and Changes.
1.1 Substitute Aircraft Description.
For the purpose of Customer's evaluation of this
Proposal, the Substitute Aircraft is described by Boeing
747-8 Intercontinental Airplane Description, Document
No. D019U019, Rev. D, dated July 18, 2006, (AIRCRAFT
DESCRIPTION). The Detail Specification to be included in
the definitive purchase agreement will be derived from
the Aircraft Description.
For this Proposal, the Aircraft Description and
the prices shown in Attachment B include:
Model 747-8 Intercontinental passenger aircraft
1.2 Changes.
The Boeing Detail Specification will
be revised to include:
(1) Changes applicable to the Model 747-8
Intercontinental passenger aircraft which are developed
by Boeing between the date of the Aircraft Description
and the signing of the definitive purchase agreement;
(2) Selections mutually agreed upon; and
(3) Selections required to obtain a Standard or
Export Certificate of Airworthiness.
2. Foreign Regulatory Requirements.
The Aircraft Price includes the administrative effort
required to obtain type certification from the FAA and
EASA and either a standard airworthiness certificate or
an export certificate of airworthiness, as applicable,
from the FAA. The Aircraft Price also includes an amount
that Boeing has determined to be typical of costs
incurred by Boeing in achieving certification by other
regulatory authorities (STANDARD COSTS) but (i) does not
include any amount relating to changes to the
configuration of the Aircraft required by a country of
import which varies from or is in addition to the
airworthiness requirements of the FAA for the issuance
of a Standard Airworthiness Certificate and (ii) does
not include any costs in excess of Standard Costs such
as special fees or costs of special activities (such as
Aircraft testing, flight time, simulator time, or
lengthy technical reviews) which might be required by a
particular aviation authority as a condition of
achieving certification.
Accordingly, the Aircraft price may be adjusted for
Boeing's price for any configuration change to any
Aircraft required by a country of import which varies
from or is in addition to the airworthiness requirements
of the FAA for the issuance of a Standard Airworthiness
Certificate and for any costs in excess of Standard
Costs which are incurred by Boeing in achieving
certification.
Exclusively as pursuant to the requirements of Article 9, [ * ] Credit
Memorandum: the Manufacturer shall offer to provide to the Purchaser with the
following [ * ]:
o [ * ]
[ * ]:
o [ * ]
THE BOEING COMPANY
P.O. Box 3707
Seattle, WA 98124-2207
Atlas Air, Inc.
2000 Westchester Ave
PURCHASE NY 10577-2543
U.S.A.
[GRAPHIC OMITTED]
Subject: 747-8 Freighter Performance Retention
Commitment
Reference: Purchase Agreement No. 3134 (the
PURCHASE AGREEMENT) between The
Boeing Company (BOEING) and Atlas
Air, Inc. (CUSTOMER) relating to
Boeing Model 747-8 Freighter Aircraft
(AIRCRAFT).
This Letter Agreement (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 recognizes that performance
retention within reasonable limits is essential
to maintain the economy of operation of the
Aircraft. Therefore the parties hereto agree as
follows with respect to performance retention.
1. AIRCRAFT COMMITMENT.
For the purposes of this Letter
Agreement, the Covered Aircraft shall be defined
as a fleet of not less than twelve (12) new
Aircraft equipped with GEnx-2B67 engines
delivered by Boeing to Customer.
Boeing commits to Customer that, for the
Covered Aircraft, the Cumulative Fleet Average
Fuel Mileage Deterioration, as defined in
Attachment A, during the Performance Retention
Term, as defined in paragraph 2.2 below, will
not exceed the levels shown in the table below
(AIRCRAFT COMMITMENT).
----------------------------------------------------------------------------------------------------
Time After Delivery of First Covered Aircraft Cumulative Fleet Average
Fuel Mileage
Deterioration
(%)
----------------------------------------------------------------------------------------------------
[ * ] [ * ]
----------------------------------------------------------------------------------------------------
[ * ] [ * ]
[ * ] [ * ]
----------------------------------------------------------------------------------------------------
[ * ] [ * ]
[ * ] [ * ]
----------------------------------------------------------------------------------------------------
[ * ] [ * ]
[ * ] [ * ]
----------------------------------------------------------------------------------------------------
[ * ] [ * ]
[ * ] [ * ]
----------------------------------------------------------------------------------------------------
If the Cumulative Fleet Average Fuel
Mileage Deterioration of the Covered Aircraft is
determined to have increased to anextent greater
than the
Aircraft Commitment set forth above, Customer's
remedies and Boeing's obligations and
liabilities shall be as set forth in this Letter
Agreement.
2. APPLICABILITY AND PERFORMANCE RETENTION
TERM.
[GRAPHIC OMITTED]
This Letter Agreement shall be
applicable to the Covered Aircraft, including
the engines installed on the Covered Aircraft,
whether purchased from Boeing as installed
engines or purchased directly from the engine
manufacturer (ENGINE MANUFACTURER) as new spare
engines for support of the Covered Aircraft
during the Performance Retention Term of this
Letter Agreement.
2.1 DELIVERY SCHEDULE FOR COVERED
AIRCRAFT.
For the purposes of this Letter
Agreement, it is anticipated that Boeing shall
deliver the Covered Aircraft to Customer in
accordance with the delivery schedule set forth
in the table below. If the fleet size and
delivery schedule is significantly different,
the Aircraft Commitment may be appropriately
adjusted to reflect such changes.
----------------------------------
Aircraft Delivery Date
----------------------------------
1 2/2010
----------------------------------
2 [ * ]
----------------------------------
3 [ * ]
----------------------------------
4 [ * ]
----------------------------------
5 [ * ]
----------------------------------
6 [ * ]
----------------------------------
7 [ * ]
----------------------------------
8 [ * ]
----------------------------------
9 [ * ]
----------------------------------
10 [ * ]
----------------------------------
11 [ * ]
----------------------------------
12 10/2011
----------------------------------
2.2 PERFORMANCE RETENTION TERM.
Boeing's and Customer's rights and
obligations pursuant to this Letter Agreement
for the Covered Aircraft shall commence on the
date the first such Covered Aircraft is
delivered to Customer and shall expire [ * ]
(PERFORMANCE RETENTION TERM).
3. CONDITIONS.
3.1 OPERATION AND MAINTENANCE.
Customer shall operate and maintain the
Covered Aircraft in accordance with Customer's
FAA-approved operations and maintenance
programs. Customer shall operate and maintain
the engines in accordance with the Operation and
Maintenance Manuals and Customer's Maintenance
Program as mutually agreed to by Boeing,
Customer and Engine Manufacturer.
3.2 POWERBACK.
[GRAPHIC OMITTED]
It is specifically agreed that reverse
thrust will not be used for normal ground
maneuvering (POWERBACK) of the Covered Aircraft,
unless required for exceptional operational
situations. Customer will promptly notify Boeing
of any use of Powerback under such situations.
Boeing and Customer mutually agree to determine,
through good faith technical negotiation, the
impact of such uses of Powerback on a Covered
Aircraft's cruise fuel mileage and to apply the
appropriate adjustments in the calculations of
performance levels and/or remedies under this
Letter Agreement.
3.3 FLIGHT CYCLE UTILIZATION AND DERATE.
The parties agree that the Aircraft
Commitment, as set forth in Paragraph 1 above,
is predicated upon Customer's planned
utilization of not more than [ * ] flight cycles
per Covered Aircraft per year, whichever is
less, during the Performance Retention Term, and
where the engines are operated with an average
minimum derate of at least [ * ]. In the event
Customer employs a Covered Aircraft during the
Performance Retention Term of this Letter
Agreement within the Customer's system such that
the utilization is greater than [ * ] flight
cycles per Covered Aircraft per year, and/or the
average engine derate is less than [ * ], the
parties agree to make adjustments to the Basic
Data, defined in Paragraph 4 below, solely with
respect to such Covered Aircraft, as a
consequence of such greater utilization and/or
reduced derate, if appropriate.
4. DETERMINATION OF FUEL MILEAGE
DETERIORATION.
For the purposes of this Letter
Agreement, fue1 mileage deterioration shall be
determined on the basis of the cruise fuel
mileage performance of each Covered Aircraft in
accordance with Attachment A.
Following the delivery of each Covered Aircraft
to Customer by Boeing, and continuing until
expiration of the Performance Retention Term,
Customer shall record, analyze, and forward to
Boeing cruise fuel mileage data obtained on such
Covered Aircraft as specified in Attachment B
(BASIC DATA).
5. NOTICE OF PERFORMANCE DETERIORATION.
Following evaluation of the Basic Data
by Customer, if Customer believes the Cumulative
Fleet Average Fuel Mileage Deterioration exceeds
the Aircraft Commitment, Customer shall give
Boeing prompt written notice thereof.
6. ELECTION OF ACTIONS.
Upon Boeing's receipt of any notice that
the Cumulative Fleet Average Fuel Mileage
Deterioration exceeds the Aircraft Commitment,
Boeing and Customer, as appropriate, will take
the following actions:
6.1 DATA.
[GRAPHIC OMITTED]
Boeing will evaluate the Basic Data. At
its option, Boeing may accomplish such
evaluation by analysis of Customer's raw ACMS
data or by obtaining additional performance data
on such Covered Aircraft in accordance with
Attachment B. Such additional data may include
data acquired during revenue service with Boeing
personnel aboard as observers. The Basic Data
and any additional data obtained by Boeing in
its evaluation shall be appropriately adjusted
to reflect any material changes elected by
Customer to the Covered Aircraft or engines
which have occurred subsequent to delivery of
the Covered Aircraft. Additionally, adjustments
will be applied for any relevant factors as
agreed by Customer and Boeing (e.g.,
inaccuracies in flight deck instrumentation, a
sudden increase in deterioration that is
attributed to a foreign object damage event such
as severe hail and the additional rate of
deterioration for Aircraft used for pilot
training.) If Boeing and Customer are in
disagreement as to such evaluation of the Basic
Data, such disagreement shall be resolved by
good faith technical negotiation between the
parties.
6.2 SURVEYS.
If Customer's cruise fuel mileage data
is confirmed as correctly indicating that the
Cumulative Fleet Average Fuel Mileage
Deterioration exceeds the Aircraft Commitment,
Boeing shall, at its option, perform or cause
the Engine Manufacturer to perform (1) a survey
of Customer's operating procedures for such
Covered Aircraft and engines, and (2) a
conformity survey of the airframe and engines of
such Covered Aircraft. If the surveys confirm
that one or more of the engines have been
operated for more than [ * ] since new or for
more than [ * ] since performance refurbishment.
Boeing and/or Engine Manufacturer shall address
the benefit of refurbishment of such engine(s)
in its recommended corrective actions. Boeing
agrees that it will only perform such
inspections at reasonable times and upon
reasonable notice and shall not interfere with
Customer's normal day-to-day operations.
6.3 WEIGHT.
Boeing may request that Customer weigh
such Covered Aircraft, in which event Customer
agrees to weigh such Covered Aircraft in
conjunction with its normally scheduled
maintenance and will report its findings to
Boeing.
6.4 CORRECTIVE ACTIONS.
Boeing shall promptly make such
recommendations to Customer that Boeing believes
would result in improvement of the cruise fuel
mileage performance of such Covered Aircraft
based on analysis of the surveys and available
data pursuant to Paragraphs 6.1 - 6.3. Boeing,
Engine Manufacturer and Customer shall
thereafter mutually agree on the appropriate
corrective action to
be taken based on any such recommendations.
Corrective actions, which involve maintenance
due to operations or maintenance not in
accordance with paragraph 3.1 and/or
refurbishment outside of the limits outlined in
paragraphs 6.2 and 6.5, both on-wing and
off-wing, shall be performed at no cost to
Boeing and/or Engine Manufacturer.
6.5 IMPROVEMENT PARTS AND ENGINE
REFURBISHMENT.
[GRAPHIC OMITTED]
Following the completion of any
corrective action pursuant to Paragraph 6.4, if
subsequent Basic Data show that the Cumulative
Fleet Average Fuel Mileage Deterioration exceeds
the applicable Aircraft Commitment, Boeing shall
have the option to provide or cause to be
provided to Customer, at no charge, (except life
used on engine parts or parts utilized for
maintenance) any airplane drag improvement parts
and/or engine TSFC improvement parts [GRAPHIC
(IMPROVEMENT PARTS) which, when installed in
such Covered Aircraft or engines, would result
in an improvement in the cruise fuel mileage
performance. Boeing shall provide and/or shall
cause Engine Manufacturer to provide, as
appropriate, reimbursement for Customer's
incorporation of such improvements, corrections,
or changes at the warranty labor rate then in
effect between Boeing and Customer or Engine
Manufacturer and Customer, as applicable. Boeing
and/or Engine Manufacturer shall give Customer
reasonable advance written notice of the
estimated on-dock date at Customer's maintenance
base for any such Improvement Parts.
If Boeing elects to provide or causes to
be provided Improvement Parts for such Covered
Aircraft or engines, then Customer and Boeing
shall mutually agree upon the details of such an
Improvement Parts program. To the extent Boeing
and/or Engine Manufacturer are required to
support such a program, such support shall be
provided at no charge to Customer.
If Customer elects to incorporate
Improvement Parts in such Covered Aircraft
and/or engines, they shall be incorporated in a
timely manner and in accordance with Boeing and
Engine Manufacturer instructions.
If Customer elects not to incorporate
Improvement Parts in such Covered Aircraft
and/or engines, or if Customer elects not to
refurbish an engine which has exceeded [ * ]
cycles since new or [ * ] cycles since
performance refurbishment, and for which Engine
Manufacturer has recommended refurbishment as
part of its recommended corrective actions,
subsequent Basic Data shall be appropriately
adjusted by an amount consistent with the
improvement in cruise fuel mileage performance
which would have been realized had such
Improvement Parts been incorporated or had such
engine refurbishment been performed; provided,
however, any such improvement in cruise fuel
mileage performance shall be reasonably
substantiated by Boeing to Customer.
7. PAYMENTS.
In the event that the Basic Data shows
that Cumulative Fleet Average Fuel Mileage
Deterioration exceeds the Aircraft Commitment,
and Boeing has failed to design or cause the
Engine Manufacturer to design, Improvement Parts
to correct such failure and deliver same to
Customer, such failure will result in the
economic remedies as described below. No payment
shall be made for any portion of the deficiency
corrected for by Improvement Parts that have not
been incorporated in the Covered Aircraft (i)
within ninety (90) days after the delivery of
such Improvement Parts to Customer for
modifications that can be accomplished during
line maintenance or (ii) within a mutually
agreed upon period of time for more extensive
modifications.
7.1 FLEET COMPENSATION.
[GRAPHIC OMITTED]
Boeing will pay to Customer annually for
a period not exceeding [ * ] after the delivery
of the first Covered Aircraft, an amount equal
to the Fleet Annual Compensation for the
immediately preceding Annual Period. The "FLEET
ANNUAL COMPENSATION" is the sum of each [ * ].
[GRAPHIC The "MONTHLY [ * ] AMOUNT" is defined
as and shall be calculated for any month (y) in
a given calendar year when the Current
Cumulative Fleet Average [ * ], as defined in
Paragraph 6 of Attachment A, of the Covered
Aircraft exceeds the Aircraft Commitment in
accordance with the following formula:
[ * ]
7.2 CREDIT MEMORANDUM.
Payments to Customer pursuant to
Paragraph 7.1 above shall be by credit
memorandum issued by Boeing and/or Engine
Manufacturer. Any payments made under this
Letter Agreement shall be as a result of
operation of the Aircraft by Customer.
7.3. CREDIT ADJUSTMENTS.
The amount of performance improvement
attributable to any Improvement Parts 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 improvement as calculated
using reasonable
engineering interpretations and calculations
based on the data furnished pursuant to Article
5.4 of AGTA-TLS and the data furnished pursuant
to this Paragraph 7.3
7.4 ANNUAL LIMITATION ON AMOUNT OF
CREDITS.
The total Annual Excess Fuel Burn Amount
credits Boeing and/or Engine Manufacturer is
obligated to issue pursuant to this Letter
Agreement shall not exceed [ * ] in an Annual
Period per Covered Aircraft, or as adjusted by
Boeing for changes in the price of Kerosene
Base, Commercial Jet Fuel in accordance with the
formula set forth in the Attachment C hereto for
each Aircraft in any Annual Period.
8. DUPLICATION OF BENEFITS
[GRAPHIC OMITTED]
Boeing and Customer agree that it is not
the intent of the parties under this Letter
Agreement to cause Boeing and/or Engine
Manufacturer to provide duplicate benefits to
Customer for the same event which results in
Customer's unjust enrichment, provided that, in
the case of any such duplicate benefits,
Customer shall be entitled to elect to receive
the benefit which is most favorable to Customer.
9. ASSIGNMENT PROHIBITED.
Notwithstanding any other provisions of
the Purchase Agreement, the rights and
obligations described in this Letter Agreement
are provided to Customer in consideration of
Customer's becoming the operator of the
Aircraft, and cannot be assigned, in whole or in
part, without the prior written consent of
Boeing.
10. EXCLUSIVE REMEDY.
Performance of the commitments made in
this Letter Agreement by Boeing in accordance
with the terms and conditions of this Letter
Agreement is in substitution for all other
damages and remedies recoverable by Customer
from Boeing and shall constitute complete, full
and final settlement and satisfaction of all
Boeing's obligations and liabilities to Customer
arising out of failure of a Covered Aircraft to
comply with the Aircraft Commitment. Customer
hereby waives and releases all other rights,
remedies, claims and causes of action against
Boeing relating to the failure of any Covered
Aircraft to comply with the Aircraft Commitment.
11. CONFIDENTIAL TREATMENT.
Customer understands that certain
commercial and financial information contained
in this Letter Agreement is 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. In the event that Customer in good
disclosure, if possible, or, if not possible,
then promptly upon receiving such order or upon
identifying such need to comply, in order to
enable Boeing to take whatever steps it deems
necessary to protect its interests in this
regard, and Customer will, in any event,
disclose only that portion of the information
which it is legally required to disclose and
Customer will use its reasonable endeavors to
protect the confidentiality of such information
to the widest extent possible in the
circumstances.
[GRAPHIC OMITTED]
If the foregoing correctly sets forth your
understanding of our agreement with respect to
the matters treated above, please indicate pour
acceptance and approval below.
Very truly yours,
THE BOEING COMPAY
By [ * ]
---------------------------------
Its Attorney-In-Fact
---------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
/s/ William J. Flynn
-----------------------------------------
By: /s/ Mr. William J. Flynn
-------------------------------------
Its:President and Chief Executive
Officer
-------------------------------------
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
THE BOEING COMPANY
P.O. Box 3707
Seattle, WA 98124-2207
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Airworthiness Directive Cost
Participation Program
Reference: Purchase Agreement No. 3134 (the
PURCHASE AGREEMENT) between The
Boeing Company (Boeing) and Atlas
Air, Inc. (CUSTOMER) relating to
Model 747-8 Freighter aircraft
(the AIRCRAFT)
[GRAPHIC OMITTED]
This letter agreement (LETTER AGREEMENT) amends
and supplements the Purchase Agreement. It
grants to Customer the Airworthiness Directive
Cost Participation Program described herein (the
PROGRAM). All terms used but not defined in this
Letter Agreement have the same meaning as in the
Purchase Agreement.
1. SCOPE.
This Program applies to any Boeing
Product installed in the Aircraft at the time of
delivery that is modified or replaced with
Boeing-designed corrective materials to comply
with terminating actions specified in FAA
Airworthiness Directives when the defects are of
the type covered by the material and workmanship
or design warranties set forth in Exhibit C,
Product Assurance Document, of the AGTA.
2. TERM.
The term of the Program is [ * ] after
delivery of each Aircraft.
3. BOEING PARTICIPATION.
3.1 MATERIALS. If any corrective
materials are required as described under
paragraph 1 above during the term of this
Program, Boeing will promptly furnish such
materials to Customer (including Boeing-designed
standard parts but excluding industry standard
parts such as MS and NAS standards) at a price
determined in accordance with the following
formula:
P = CT
--
[ * ]
P = Price to Customer.
C = The Boeing then-current sales
price for such materials
T = Total age in months (to the nearest
month) of the Aircraft in which such
materials are installed from the date of
delivery of such Aircraft to the date of
completion of such installation. H 3.2
LABOR. Any labor reimbursement for
Customer's installation of materials in
[GRAPHIC the Aircraft that Boeing is
required to provide to Customer pursuant
to the provisions of paragraph 1 above,
will be provided to Customer in an
amount as determined by the following
formula:
R = L [1 - (T/[ * ])]
[GRAPHIC OMITTED]
R = Reimbursement amount provided to
Customer.
L = The product of Customer's direct labor
man-hours expended in actual
installation of corrective materials in
the Aircraft, but not to exceed Boeing's
reasonable estimate of the man-hours
required for the performance thereof by
Customer, multiplied by the then-current
Warranty Labor Rate.
T = Total age in months (to the nearest
month) of the Aircraft in which such
materials are installed from the date of
delivery of such Aircraft to the date of
completion of such installation.
4. GENERAL CONDITIONS AND LIMITATIONS.
4.1 Customer's written notice of claim
(for the avoidance of doubt, this is a notice of
Customer's intent to file a detailed claim)
under this Program must be received by Boeing's
Warranties Regional Manager within 3 months from
the date of issuance of any applicable
Airworthiness Directive.
4.2 THE DISCLAIMER AND RELEASE and
EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES
provisions stated in Article 11 of Part 2 of
Exhibit C of the AGTA apply to this Program.
5. CONFIDENTIAL TREATMENT.
Customer understands that certain
commercial and financial information contained
in this Letter Agreement is 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. In the event that Customer in good
faith concludes (based upon an opinion of
counsel) that disclosure of information
contained in this Letter Agreement may be
required by applicable law or governmental
regulations. Customer shall advise Boeing in
writing prior to such disclosure, if possible,
or, if not possible, then promptly upon
receiving such order or upon identifying such
need to comply, in order to enable Boeing to
take
whatever steps it deems necessary to protect its
interests in this regard, and Customer will, in
any event, disclose only that portion of the
information which it is legally required to
disclose and Customer will use its reasonable
endeavors to protect the confidentiality of such
information to the widest extent possible in the
circumstances.
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,
[GRAPHIC OMITTED]
THE BOEING COMPANY
By [ * ]
Its Attorney-In-Fact
---------------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
/s/ William J. Flynn
-------------------------------------------
By: Mr. William J. Flynn
-------------------------------------------
Its: President and Chief Executive Officer
-------------------------------------------
THE BOEING COMPANY
P.O. Box 3707
Seattle, WA
98124-2207
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Maintenance Cost Protection
Reference: Purchase Agreement 3134 (the PURCHASE
AGREEMENT) between The Boeing
Company (BOEING) and Atlas Air, Inc.
(CUSTOMER) relating to Model 747-8
Freighter aircraft (the AIRCRAFT)
[GRAPHIC OMITTED]
This letter agreement including without
limitation all attachments and amendments hereto
(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.
RECITALS
A. Customer has requested a program which will
either demonstrate the projected maintenance
costs for the Aircraft or, if such projected
costs are not demonstrated, provide Customer
specific remedies.
B. In response to Customer's request Boeing
offers the following maintenance cost program
(PROGRAM) for estimating and validating the
maintenance costs incurred by Customer in the
operation of the Aircraft and providing specific
remedies to Customer in the event maintenance
costs for the Aircraft as defined in this Letter
Agreement exceed specified values.
AGREEMENT
1.0 COVERED AIRCRAFT.
The Program shall apply to each of the Aircraft
operated by Customer on Customer's routes during
the Program Term (COVERED AIRCRAFT).
2.0 PROGRAM TERM.
The Program shall begin on the first day of the
month in which the first Covered Aircraft is
delivered by Boeing to Customer, continue [ * ]
and consist of [ * ] beginning on the date the
Program Term commences and thereafter on the
yearly anniversary thereof (REPORTING
PERIOD(S)).
3.0 COVERED MAINTENANCE.
The maintenance costs covered by the Program
shall be the costs (as more fully defined
herein) of labor performed and materials used in
the airframe, airframe component and engine line
maintenance of the Covered Aircraft where the
maintenance is performed as part of a
maintenance program approved by Customer's
regulatory authority (COVERED MAINTENANCE).
4.0 PROGRAM COMMITMENT.
[GRAPHIC OMITTED]
The Cumulative Actual Maintenance Cost shall not
exceed the Cumulative Target Maintenance Cost as
these terms are defined in this Article 4
(PROGRAM COMMITMENT). If the performance of the
Covered Aircraft does not comply with the
Program Commitment (NON COMPLIANCE), Customer
shall have the remedies specified in Article 8,
below.
4.1 CUMULATIVE ACTUAL MAINTENANCE COST
means the aggregate Actual Maintenance Cost of
Covered Maintenance for all then-completed
Reporting Periods divided by the Fleet Flight
Hours for all such completed Reporting Periods.
4.2 ACTUAL MAINTENANCE COST means the
sum of (i) the Direct Material Cost, (ii) the
Direct Labor Cost, (iii) the Subcontracted
Maintenance Labor Cost, and (iv) the
Subcontracted Maintenance Material Cost incurred
by Customer during a Reporting Period for
Covered Maintenance, where:
4.2.1 DIRECT MATERIAL COST means the
actual cost paid by Customer for materials
required to perform the Covered Maintenance in a
Reporting Period, as reported by Customer and
adjusted by Boeing pursuant to the provisions of
this Letter Agreement and exclusive of those
costs and other charges as set forth in Article
9; and
4.2.2 DIRECT LABOR COST means the
product of Direct Labor Hours and Labor Rate,
where:
4.2.2.1 DIRECT LABOR HOURS
means the hours actually expended by Customer in
performing the Covered Maintenance during a
Reporting Period, as reported by Customer and
adjusted by Boeing pursuant to the provisions of
this Letter Agreement exclusive of time consumed
by employees while waiting for work, traveling
to or from work, training, vacation, sick leave,
or in any other similar absences from the actual
maintenance work; and
4.2.2.2 LABOR RATE means the
average direct hourly labor rate during such
Reporting Period, as reported by Customer and
adjusted by Boeing pursuant to the provisions of
this Letter Agreement exclusive of fringe
benefits, premium time allowances, social
charges and
business taxes paid to Customer's employees who
actually perform the Covered Maintenance; and
4.2.3 SUBCONTRACTED
MAINTENANCE LABOR COST means the cost as
reported by Customer and adjusted by Boeing
pursuant to the provisions of this Letter
Agreement incurred by Customer for labor for
Covered Maintenance performed for Customer
during a Reporting Period by either a third
party certified to perform such Covered
Maintenance pursuant to 14 United States Code of
Federal Regulations, Part 145, or European Union
Commission Regulation EC 2042/2003, Part 145.
4.2.4 SUBCONTRACTED
MAINTENANCE MATERIAL COST means the cost as
reported by Customer and adjusted by Boeing
pursuant to the provisions of this Letter
Agreement incurred by Customer for materials for
Covered Maintenance performed for Customer
during a Reporting Period by either a third
party certified to perform such Covered
Maintenance pursuant to 14 United States Code of
Federal Regulations, Part 145, or European Union
Commission Regulation EC 2042/2003, Part 145.
4.3 FLEET FLIGHT HOURS means the total
airborne time (aircraft takeoff-to-touchdown)
accumulated by all of the Covered Aircraft
during a Reporting Period.
[GRAPHIC OMITTED]
4.4 FLEET LANDINGS means the total
number of landings accumulated by all the
Covered Aircraft during a Reporting Period.
4.5 CUMULATIVE TARGET MAINTENANCE COST
means the value calculated at the end of each
completed Reporting Period by multiplying the
Target Maintenance Cost for each completed
Reporting Period by the Fleet Flight Hours
reported by Customer for each such completed
Reporting Period, adding the products together
and dividing the sum by the total Fleet Flight
Hours for all completed Reporting Periods.
4.6 TARGET MAINTENANCE COST means the
sum of the target Direct Material Cost, target
Direct Labor Cost, target Subcontracted
Maintenance Labor Cost and target Subcontracted
Maintenance Material Cost for a Reporting
Period, determined or recalculated by Boeing as
appropriate pursuant to the provisions of this
Letter Agreement and provided to Customer
pursuant Attachments C and F to this Letter
Agreement, as applicable.
5.0 CALCULATION OF TARGET MAINTENANCE COST.
5.1 No later than six (6) months prior
to delivery of the first Covered Aircraft,
Customer will provide to Boeing the maintenance
cost data and operational assumptions described
on Attachment A for Customer's model 747-400F
fleet covering the most recent [ * ] continuous
years of operation (MAINTENANCE COST BENCHMARK
DATA).
5.2 Using the methodology set forth in
Attachment B, Boeing will adjust the Maintenance
Cost Benchmark Data to a mature maintenance
level for Customer's model 747-400F fleet
(MATURE BENCHMARK FLEET VALUE).
Boeing will then decrease the Mature
Benchmark Fleet Value by [ * ] to establish the
mature equivalent maintenance cost for the
Covered Aircraft (MATURE EQUIVALENT MAINTENANCE
COST).
[GRAPHIC OMITTED]
Using the methodology in Attachment B,
Boeing will derive from the Mature Equivalent
Maintenance Cost the baseline cost elements
described in Table 1 of Attachment B (COVERED
AIRCRAFT MAINTENANCE COST BASELINE VALUES).
Using the operational assumptions
provided by Customer in Attachment A for the
Covered Aircraft, the Covered Aircraft
Maintenance Cost Baseline Values and the
methodology set forth in Attachment B, Boeing
will then derive the target mature maintenance
cost for the Covered Aircraft (TARGET MATURE
MAINTENANCE COST).
Finally, Boeing will apply the age
adjustment methodology set forth in Attachment B
to the Target Mature Maintenance Cost to
establish Target Maintenance Costs for the
Covered Aircraft for each Reporting Period and
will report such values to Customer in the form
specified in Attachment C.
5.3 Boeing will recalculate the Target
Maintenance Costs in the circumstances and using
the methodology provided in Attachment B and
will report any recalculated Target Maintenance
Costs to Customer in the form specified in
Attachment F.
6.0 REPORTING OF ACTUAL MAINTENANCE DATA.
6.1 Within 90 days after the last day of
each Reporting Period Customer will complete and
return to Boeing Attachment D to provide to
Boeing the data specified therein for that
Reporting Period. Customer will report costs in
Customer's currency.
6.2 Failure to provide the data
specified in Article 6.1 to Boeing within the
specified 90 day period shall constitute
Customer's acknowledgment that the performance
of the Covered Aircraft complies with the
Program Commitment. If the Covered Aircraft
subsequently should fail to perform in a manner
consistent with the Program Commitment, however,
Customer will, within 90 days after the last day
of the Reporting Period in which such
Noncompliance occurs, report to Boeing the data
specified on Attachment D for all then-completed
Reporting Periods of the Program Term.
7.0 CALCULATION OF ACTUAL MAINTENANCE COSTS AND
COMPLIANCE WITH THE PROGRAM COMMITMENT.
7.1 Subject to the limitations described
in Article 9. within 30 days after receiving
Customer's report pursuant to Article 6.0 for
each Reporting Period, Boeing will use the data
provided by the Customer in such report and the
methodology in Attachment B to calculate the
Cumulative Actual Maintenance Cost for the
Covered Aircraft as of the end of such Reporting
Period and will provide to Customer a report in
content and form as shown in Attachment E.
Boeing will convert values expressed in
Customer's currency to U.S. Dollars as described
in Attachment B in order to perform the
computations and comparisons contemplated by
this Letter Agreement. Monetary amounts
determined and reported by Boeing will be
expressed in U.S. dollars.
[GRAPHIC OMITTED]
7.2 If the data determined pursuant to
Article 7.1 indicates that the performance of
the Covered Aircraft for the applicable
Reporting Periods does not comply with the
Program Commitment, Customer will, upon request,
submit to Boeing sufficient information to allow
Boeing to verify:
7.2.1 the data reported by
Customer pursuant to Article 6,
7.2.2 the data does not
reflect assumptions other than those relied upon
in developing the Target Maintenance Costs, and
7.2.3 the data is consistent
with all provisions of this Letter Agreement
7.3 If after completing the verification
and analysis described in Article 7.2, the data
indicates that the performance of the Covered
Aircraft for the applicable Reporting Periods
does not comply with the Program Commitment,
Boeing will take corrective action as defined in
Article 8.0; provided that throughout the period
of such Noncompliance, Customer, upon request,
submits to Boeing such information as is
necessary for Boeing to:
7.3.1 analyze the problems
causing such Noncompliance, and
7.3.2 develop, when required,
appropriate corrective action.
7.4 At Customer's request, Boeing will
provide Customer sufficient information to
verify the data described in Article 7.1 and 7.3
and the calculations used to produce that data.
8.0 CORRECTIVE ACTION.
Should corrective action pursuant to Article 7.3
be appropriate, Boeing will:
8.1.1 investigate the
circumstances and possible causes of the
Noncompliance
8.1.2. provide technical
assistance to Customer in the form of analysis
and recommendations for reducing Actual
Maintenance Cost
8.1.3 If necessary, Boeing
will initiate a design review of the systems,
accessories, equipment or parts determined by
Boeing to be the primary cause of the
Noncompliance and, when in Boeing's judgment a
redesign is indicated as a technically and
economically practicable means of complying with
the Program Commitment, Boeing will redesign or
cause the redesign of such items, and
[GRAPHIC OMITTED]
8.1.4. If such redesign
results in retrofit kits being offered by Boeing
or Boeing's suppliers, Boeing will provide such
kits or cause such kits to be provided at no
charge to Customer. Boeing will also reimburse,
at Boeing's then existing warranty labor rate
Customer's reasonable Direct Labor Costs for
incorporation of any such kit manufactured to
Boeing's or Boeing's supplier's detailed design.
Such reimbursement will be provided pursuant to
Exhibit C, "Product Assurance Document." of the
AGTA.
8.2 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 corrective action provided
by Boeing hereunder.
9.0 CONDITIONS AND LIMITATIONS.
9.1 If, with the intent of reducing the
cost of Covered Maintenance, Boeing or any
supplier issues service bulletins, service
letters or other written instructions or offers
no-charge retrofit kits, Customer and its
subcontractors will comply with such
instructions or install such kits (COMPLY)
within a period of two hundred forty (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 (RESPONSE PERIOD). If Customer or any of
its subcontractors does not Comply within the
Response Period, after expiration of such
Response Period all maintenance costs which
Boeing determines would have been eliminated if
such instructions or kits had been incorporated
will be subtracted from the Actual Maintenance
Costs reported.
9.2 Customer will promptly notify Boeing
in writing of any variations in its maintenance
cost accounting system or procedures or those of
its subcontractors which would affect the proper
reporting of Actual Maintenance Costs. Boeing
will make adjustments to the Cumulative Target
Maintenance Cost to reflect the effect of any
such variations.
9.3 Upon reasonable notice to Customer,
Boeing will have the right to audit all Actual
Maintenance Cost Data reported by Customer
during the Program Term, as well as the
maintenance practices and procedures related
thereto. Customer will also obtain from its
subcontractors permission for Boeing to audit
from time to time and upon reasonable notice
such subcontractors' maintenance records and
practices during the Program as they pertain to
the Covered Aircraft. Boeing will have the right
to disapprove costs it deems improperly reported
or for
which it does not receive sufficient data to
verify either the Direct Labor Hours performed
or the Direct Material Costs incurred in
performing such maintenance. Boeing will provide
Customer written notification of its disapproval
of any such costs, and, if Customer does not
provide proof within 60 days after such
notification that such costs are properly
chargeable, Boeing's disapproval will be deemed
final and conclusive and Boeing will deduct such
costs from the computation of Actual Maintenance
Costs.
9.4 Upon reasonable notice to Customer,
Boeing may inspect Customer's maintenance
facilities, programs and procedures. If Boeing
recommends in writing reasonable changes to
Customer's or its subcontractors' maintenance
programs and procedures which would reduce
Actual Maintenance Costs and Customer or its
subcontractors do not implement such changes or
delay implementing such changes beyond the
Response Period set forth in Article 9.1,
Boeing, will adjust the Actual Maintenance Costs
that have been reported to deduct the increased
maintenance costs which Boeing estimates
resulted from the failure or delay in
implementing such changes.
9.5 Actual Maintenance Cost will not include
any of the following costs:
(a) Costs arising from loss of, or
damage to, any Covered Aircraft,
or any system, accessory,
equipment or part thereof.
(b) Any taxes, duties, tariffs,
surcharges, transportation,
insurance, interest or overhead.
(c) The costs of initial or sustaining
spare parts inventory or the
depreciation of such spare parts;
costs resulting from any
modification to the Covered
Aircraft or any system, equipment,
accessory or part thereof other
than modifications described under
Articles 8.1.4 and 9.1 herein.
(d) Costs resulting from the negligent
acts or omissions of Customer.
(e) Costs resulting from the failure
to comply with Boeing's or
Boeing's suppliers' applicable
written instructions for the
operation, service, maintenance or
overhaul of any Covered Aircraft,
or any system, accessory,
equipment or part thereof.
(f) Costs attributable to loss of use,
revenue or profit.
(g) Costs of consumable fluids,
including fuel.
(h) Costs due to acts of God, war,
armed hostilities, riots, fires,
floods, earthquakes or serious
accidents, governmental acts
or failure to act affecting
materials, facilities or aircraft
needed for the maintenance of
Covered Aircraft.
(i) Costs due to strikes or labor
troubles causing cessation,
slowdown or interruption of work
related to the maintenance of
Covered Aircraft.
[GRAPHIC OMITTED]
(j) Costs resulting from failure of or
delay in transportation or
inability, after due and timely
diligence, to procure materials,
systems, accessories, equipment or
parts needed for the maintenance
of Covered Aircraft.
(k) Amounts for any part provided by
Boeing or Boeing's suppliers to
Customer at no charge.
(1) Amounts 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.
(m) Amounts related to any warranty,
maintenance cost guarantee or
similar agreement, for which there
is a credit memorandum or other
payment scheme established in
Customer's favor and issued by
Boeing or Boeing's suppliers to
Customer.
9.6 The Program will be suspended if during
any Reporting Period the average
utilization for the Covered Aircraft is
less than the flight hour amounts shown
in the table below:
AIRCRAFT MODEL FLIGHT HOURS
747 3,000
The Program will resume on the first day of any
subsequent Reporting Period during which the
average utilization for the Covered Aircraft
exceeds that set forth above. The Actual
Maintenance Cost, Cumulative Actual Maintenance
cost, and the Cumulative Target Maintenance Cost
as of the end of any Reporting Period during the
Program Term will exclude all Actual Maintenance
Cost and Fleet Flight Hours accumulated 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.
10.0 NOTICE.
10.1 All reports submitted to Boeing
will be addressed to the attention of:
Director - BCA Warranty and Supplier
Support Contracts
Boeing Commercial Airplanes
P.O. Box 3707 Mail Code 2L-46
Fax: 425-237-1706
Seattle, Washington 98124-2207
10.2 All reports submitted to
Customer will be addressed to the
attention of:
Vice President Technical Operations
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
11.0 CONFIDENTIAL TREATMENT.
[GRAPHIC OMITTED]
Customer understands that certain
commercial and financial information contained
in this Letter Agreement is 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. In the event that Customer in good
faith concludes (based upon an opinion of
counsel) that disclosure of information
contained in this Letter Agreement may be
required by applicable law or governmental
regulations. Customer shall advise Boeing in
writing prior to such disclosure, if possible,
or, if not possible, then promptly upon
receiving such order or upon identifying such
need to comply, in order to enable Boeing to
take whatever steps it deems necessary to
protect its interests in this regard, and
Customer will, in any event, disclose only that
portion of the information which it is legally
required to disclose and Customer will use its
reasonable endeavors to protect the
confidentiality of such information to the
widest extent possible under the circumstances.
12.0 EXCLUSIVE REMEDY.
The remedies provided in Article 8 of
this Letter Agreement are Customer's exclusive
remedies in the event of Noncompliance and are
in lieu of all other damages, claims, and
remedies of Customer arising at law or otherwise
for Noncompliance, Customer hereby waives and
renounces all other claims and remedies arising
at law or otherwise for any such Noncompliance.
13.0 ASSIGNMENT PROHIBITED.
Notwithstanding any other provisions of
the Purchase Agreement, the rights and
obligations described in this Letter Agreement
are provided 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 Boeing.
14.0 DISCLAIMER, RELEASE AND EXCLUSION.
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 EXHIBIT C, PRODUCT
ASSURANCE DOCUMENT, OF THE AGTA.
[GRAPHIC OMITTED]
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: [ * ]
--------------------------------------
Its Attorney-In-Fact
--------------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
-----------------
ATLAS AIR, INC.
/s/ William J. Flynn
------------------------------------------
By: /s/ Mr. William J. Flynn
--------------------------------------
Its: President and Chief Executive Officer
-------------------------------------
ATTACHMENT A: MAINTENANCE COST BENCHMARK DATA AND COVERED AIRCRAFT
OPERATIONAL ASSUMPTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
AIRLINE'S HISTORIC BENCHMARK DATA
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
1:____ 2:____ 3:____ 4:____ 5:____
- ------------------------------------------------------------------------------------------------------------------------------------
Direct Labor Cost
($ per Flight Hour)
- ------------------------------------------------------------------------------------------------------------------------------------
Direct Material Cost
($ per Flight Hour)
- ------------------------------------------------------------------------------------------------------------------------------------
Subcontract Maintenance
Cost ($ per Flight Hour)
- ------------------------------------------------------------------------------------------------------------------------------------
Direct Labor Rate
($ per Labor Hour)
- ------------------------------------------------------------------------------------------------------------------------------------
Maintenance
Subcontracted. %
- ------------------------------------------------------------------------------------------------------------------------------------
Subcontract Labor Rate
($ per Labor Hour)
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Fleet Landings
(Total for Year)
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Fleet Fight Hours
(Total for Year)
- ------------------------------------------------------------------------------------------------------------------------------------
Average. Fleet Size for
Year (Number of Airplanes)
- ------------------------------------------------------------------------------------------------------------------------------------
Average Fleet Age:
o In Flight Hours
o In Landings
o In Years
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONAL ASSUMPTIONS FOR COVERED AIRCRAFT
- -------------------------------------------------------
Direct Labor Rate
($ per Labor Hour)
- -------------------------------------------------------
Maintenance
Subcontracted.%
- -------------------------------------------------------
Subcontract Labor Rate
($ per Labor Hour)
- -------------------------------------------------------
Annual Fleet Landings
(Total for Year)
- -------------------------------------------------------
Annual Fleet Fight Hours
(Total for Year)
- -------------------------------------------------------
ATTACHMENT-B - ADJUSTMENTS
Boeing will adjust as described in this Attachment B the Maintenance Cost
Benchmark Data submitted in Attachment A, the Target Maintenance Costs reported
in Attachment C and Actual Maintenance Cost Data reported in Attachment D.
1.0 CURRENCY EXCHANGE RATE.
Boeing will convert maintenance cost data submitted in the Customer's currency
to U. S. Dollars by multiplying such reported costs by the applicable exchange
rate published in the U.S. edition of the Wall Street Journal on the day (not
including weekends or U. S. national holidays) nearest to the midpoint of the
applicable Reporting Period.
2.0 ESCALATION INDICES.
2.1 MATERIAL PRICE INFLATION.
The measure of material price inflation will be the Producer
Price Index for "Other Aircraft Parts and Auxiliary Equipment Mfg" ((North
American Industry Classification System (NAICS) code 336413, BLS Series ID =
PCU336413)) obtained from the publication "Producer Prices and Price Indexes"
published monthly by the U.S. Department of Labor, Bureau of Labor Statistics
(BLS) or any comparable successor publication published by the U.S. Department
of Labor Bureau of Labor Statistics or any comparable successor agency (Material
Index).
2.2 LABOR PRICE INFLATION.
The measure of labor price inflation will be the "Employment
Cost Index for workers in aircraft manufacturing - Wages and Salaries" (ECI code
3721) obtained from the publication published quarterly 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 (Labor Index). As the Labor Index values are only
released on a quarterly basis, the value released for the month of March will be
used for the months of January and February, the value for the month of June
will be used for the months of April and May; the value for the month of
September will be used for the months of July and August; and the value for the
month of December will be used for the months of October and November.
3.0 BENCHMARK METHOD FOR DETERMINING TARGET MAINTENANCE COSTS.
3.1 The Target Maintenance Costs will be determined for the Covered
Aircraft as specified in subparagraphs 3.l (a) through 3.1 (g) of this
Attachment B.
(a) The Direct Material Costs reported in the maintenance Cost
Benchmark Data will be revised to values expressed in base year 2006
(Base Year) by multiplying such costs by the ratio of the average of
the values for the Material Index published during the twelve months of
the Base Year to the average of the values for the Material Index
published for the months in which such Direct Material Costs were
incurred.
(b) The Direct Labor Costs reported in the Maintenance Cost
Benchmark Data will be revised to values expressed in the Base Year by
multiplying such costs by the ratio of the average of the values for
the Labor Index published during the twelve months of the Base Year to
the average of the values for the Labor Index published for the months
in which the Benchmark Direct Material Costs were incurred.
(c) The methodology and the applicable factors will be used as
set forth in paragraph 5.6 of this Attachment B to convert the
Benchmark Maintenance Cost Data to a Mature Benchmark Fleet Value,
which reflects a maturity factor equal to 1.00.
(d) Next Boeing will decrease the Mature Benchmark Fleet Value
by the percentage specified in Article 5.2 of the Letter Agreement to
determine the Mature Equivalent Maintenance Cost for the Covered
Aircraft.
(e) From the Mature Equivalent Maintenance Cost Boeing will
derive the Covered Aircraft Maintenance Cost Baseline Values for the
elements described in Table 1 of this Attachment:
TABLE 1: Covered Aircraft Maintenance Cost Baseline
------------------------------------------------------------------------
Labor Labor
Material $ Material $ Hours per Hours per
per FH per Cycle FH Cycle
------------------------------------------------------------------------
AA BB CC DD
- ------------------------------------------------------------------------------------------------------------------
Line
A Check
C or 1 C-3C Check
D/SI or 4C/SI Check
Brakes
Wheels/Tires
Landing Gear
APU
Other Components
QEC Line
==================================================================================================================
(f) The following formulas, the Covered Aircraft Maintenance
Cost Baseline Values and the operational assumptions for the Covered
Aircraft
provided by Customer in Attachment A to the Letter Agreement will be
used to generate the Target Mature Maintenance Cost for the Covered
Aircraft, where the Target Mature Maintenance Cost is the sum of the
values derived in the following formulas:
Target Mature Material Cost (or TMC) = ((BB + (Average Flight
Time * AA))/Average Flight Time) * (1 - Subcontract %) *
In-house Material Factor
Target Mature Labor Cost (or TLC) = (((DD + (Average Flight
Time * CC)) * In-house Labor Rate)/Average Flight Time) * ( 1
- Subcontract %) * In-house Labor Factor
Target Mature Subcontract Material Cost (or TSMC) = ((BB +
(Average Flight Time * AA))/Average Flight Time) *
(Subcontract %) * Contract Material Factor
Target Mature Subcontract Labor Cost (or TSLC) = (((DD +
(Average Flight Time * CC)) * Subcontract Labor Rate)/Average
Flight Time) * (Subcontract %) * Contract Labor Factor
Where: In-house Material Factor, In-house Labor Factor,
Contracted Material Factor, and Contracted Labor Factor will
have values (1) determined by Boeing and provided to the
Customer on Attachment C and, if applicable, Attachment F and
(2) are derived by dividing the Direct Material Cost, Direct
Labor Cost, and Subcontracted Maintenance Cost reported in
Attachment A (or subsequently in Attachment D) by fleet wide
industry averages which Boeing derives from published industry
sources and data collected from airlines.
(g) Then the methodology and the applicable factors set forth
in paragraph 5.6 of this Attachment B will be applied to the Target
Mature Maintenance Cost to determine the Target Maintenance Cost for
the Covered Aircraft for each Reporting Period.
4.0 REPORTING PERIOD ADJUSTMENTS.
The reported Direct Material Cost for a Reporting Period and the reported
Subcontracted Maintenance Material Cost for a Reporting Period will be revised
to values express in the Base Year by multiplying such costs by the ratio of the
average of the values of the Material Index published for the twelve months of
the Base Year to the average of the values for the Material Index published
during twelve months of the applicable Reporting Period.
The reported Direct Labor Cost for a Reporting Period and the reported
Subcontracted Maintenance Labor Cost for a Reporting Period will be revised (1)
by multiplying the reported Direct Labor Cost by the ratio of the Labor Rate
specified in the operational assumptions section of Attachment A to the
Customer's then-current Labor Rate, as reported in Attachment D, and (2) by
multiplying the reported Subcontracted Maintenance Labor Cost by the ratio of
the Subcontracted Maintenance Labor Rate specified in the operational
assumptions section of Attachment A to the Subcontracted Maintenance Labor Rate
as reported in Attachment D.
5.0 RECALCULATION OF TARGET MAINTENANCE COST.
5.1 AIRFRAME MAINTENANCE PERFORMED BY OTHERS.
If during any Reporting Period, the operational assumptions
reported in Attachment A and subsequently reported in Attachment D with regard
to airframe maintenance performed by others (Subcontracted Maintenance) are
different by more than +/- 10% (absolute value), the In-house Material Factor,
In-house Labor Factor, Contracted Material Factor, and Contracted Labor Factor,
as applicable, will be revised by Boeing by dividing the reported maintenance
costs in Attachment D by fleet wide industry averages which Boeing derives from
published industry sources and data collected from airlines. Using such revised
factors the Target Maintenance Cost for that Reporting Period will then be
adjusted as specified in paragraph 5.3 below.
5.2 AVERAGE FLIGHT TIME.
If the Actual Average Flight Time (AAFT) for any Reporting
Period differs from the Projected Average Flight Time (PAFT) of _______ hours by
more than +/- 0.5 Flight Hours, the target Direct Material Cost (TMC) and target
Direct Labor Cost for that Reporting Period will be adjusted using the
methodology as specified in paragraph 5.3 below to reflect the AAFT, where:
5.2.1 ACTUAL AVERAGE FLIGHT TIME (AAFT) is obtained by
dividing Total Fleet Flight Hours reported in Attachment D by Total Fleet
Landings reported in Attachment D, and
5.2.2 PROJECTED AVERAGE FLIGHT TIME (PAFT) is obtained by
dividing Total Fleet Flight Hours reported in the Operational Assumptions
section of Attachment A by Total Fleet Landings reported in the Operational
Assumptions section of Attachment A.
5.3 METHOD FOR RECALCULATING TARGET MAINTENANCE COST.
As permitted by paragraph 5.1 or 5.2 of this Attachment B, the
Target Maintenance Cost for a Reporting Period will be recalculated using the
following formulas and using the operational assumptions provided by the
Customer for the Reporting Period in Attachment D to the Letter Agreement:
Recalculated Target Material Cost (or RTMC) = ((BB + (Average Flight Time *
AA))/Average Flight Time) * (1 - Subcontract %) * In-house Material Factor
Recalculated Target Labor Cost (or RTLC) = (((DD + (Average Flight Time
* CC)) * In-house Labor Rate)/Average Flight Time) * (1- Subcontract %)
* In- house Labor Factor
Recalculated Target Subcontract Material Cost (or RTSMC) = ((BB +
(Average Flight Time * AA))/Average Flight Time) * (Subcontract %) *
Contract Material Factor
Recalculated Target Subcontract Labor Cost (or RTSLC) = (((DD +
(Average Flight Time * CC)) * Subcontract Labor Rate)/Average Flight
Time) * (Subcontract %) * Contract Labor Factor
WHERE: AA, BB, CC and DD have the values reported for those
elements on Attachment C to the Letter Agreement.
5.4 COVERED AIRCRAFT.
The Target Maintenance Cost is based on the number of Covered
Aircraft. If the number of Covered Aircraft changes during any Reporting Period,
the Target Maintenance Cost will be recalculated for that Reporting Period to
address any change to the average fleet age by using the methodology specified
in paragraph 5.6, below.
5.5 DELIVERY SCHEDULE.
The Target Maintenance Cost is based on the delivery schedule
of Covered Aircraft as described in Table 1 of the Purchase Agreement. If the
delivery schedule for the Covered Aircraft changes during any Reporting Period,
the Target Maintenance Cost will be recalculated for that Reporting Period and
subsequent Reporting Periods to address any resulting changes to the average
fleet age using the methodology specified in paragraph 5.6, below.
5.6 AGE ADJUSTMENT.
Age Adjustments will be based on the average fleet age during
a Reporting Period and the factors set forth in the table below.. Maintenance
Cost Benchmark Data will be adjusted to Maturity by dividing the cost for a
given period by the Maturity Factor which corresponds to the average fleet age.
The Target Maintenance Cost will be calculated by multiplying the Target Mature
Maintenance Cost by the maturity factor corresponding to the average age of the
Covered Aircraft at the time of the Reporting Period.
5.7 COVERED AIRCRAFT CONFIGURATION.
Target Maintenance Costs set forth in this Program are based
on the configuration for the Covered Aircraft as set forth in Exhibit A to the
Purchase Agreement as of the date of signing of the Purchase Agreement. Such
Target Maintenance Costs may be recalculated as appropriate to reflect the
configuration of the Covered Aircraft at the time of delivery to Customer and to
reflect any changes to the configuration occurring during the Program Term.
- ------------------------------------------------------------------------------------------------------------------------------------
MATURITY FACTORS
MSG-3 AIRPLANES
- ------------------------------------------------------------------------------------------------------------------------------------
FLT HRS/YR 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000
- ------------------------------------------------------------------------------------------------------------------------------------
MATURITY FACTOR
-----------------------------------------------------------------------------------------------------------------
0 0.250 0.250 0.250 0.250 0.250 0.250 0.250 0.250 0.250 0.250
1 0.380 0.380 0.380 0.380 0.380 0.380 0.380 0.380 0.380 0.380
2 0.650 0.650 0.650 0.650 0.650 0.650 0.650 0.650 0.650 0.650
3 0.840 0.840 0.840 0.840 0.840 0.840 0.840 0.840 0.840 0.840
4 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920
5 0.965 0.965 0.965 0.965 0.965 0.965 0.965 0.965 0.965 0.965
6 0.980 0.980 0.980 0.980 0.980 0.980 0.980 0.980 0.980 0.980
7 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
8 1 1 1 1 1 1 1 1 1 1
9 1 1 1 1 1 1 1 1 1 1
10 1 1 1 1 1 1 1 1 1 1
11 1 1 1 1 1 1 1 1 1 1
12 1 1 1 1 1 1 1 1 1 1
13 1 1 1 1 1 1 1 1 1 1
14 1 1 1 1 1 1 1 1 1 1
15 1.015 1.020 1.025 1.030 1.035 1.040 1.045 1.050 1.055 1.060
16 1.030 1.040 1.050 1.060 1.070 1.080 1.090 1.100 1.110 1.120
17 1.045 1.060 1.075 1.090 1.105 1.120 1.135 1.150 1.165 1.180
18 1.060 1.080 1.100 1.120 1.140 1.160 1.180 1.200 1.220 1.240
19 1.075 1.100 1.125 1.150 1.175 1.200 1.225 1.250 1.275 1.300
20 1.090 1.120 1.150 1.180 1.210 1.240 1.270 1.300 1.330 1.360
21 1.105 1.140 1.175 1.210 1.245 1.280 1.315 1.350 1.385 1.420
22 1.120 1.160 1.200 1.240 1.280 1.320 1.360 1.400 1.440 1.480
23 1.135 1.180 1.225 1.270 1.315 1.360 1.405 1.450 1.495 1.540
24 1.150 1.200 1.250 1.300 1.350 1.400 1.450 1.500 1.550 1.600
25 1.165 1.220 1.275 1.330 1.385 1.440 1.495 1.550 1.605 1.660
26 1.180 1.240 1.300 1.360 1.420 1.480 1.540 1.600 1.660 1.720
27 1.195 1.260 1.325 1.390 1.455 1.520 1.585 1.650 1.715 1.780
28 1.210 1.280 1.350 1.420 1.490 1.560 1.630 1.700 1.770 1.840
29 1.233 1.310 1.388 1.465 1.543 1.620 1.698 1.775 1.853 1.930
30 1.255 1.340 1.425 1.510 1.595 1.680 1.765 1.850 1.935 2.020
31 1.278 1.370 1.463 1.555 1.648 1.740 1.833 1.925 2.018 2.110
32 1.300 1.400 1.500 1.600 1.700 1.800 1.900 2.000 2.100 2.200
33 1.323 1.430 1.538 1.645 1.753 1.860 1.968 2.075 2.183 2.290
34 1.345 1.460 1.575 1.690 1.805 1.920 2.035 2.150 2.265 2.380
35 1.368 1.490 1.613 1.735 1.858 1.980 2.103 2.225 2.348 2.470
36 1.390 1.520 1.650 1.780 1.910 2.040 2.170 2.300 2.430 2.560
37 1.413 1.550 1.688 1.825 1.963 2.100 2.238 2.375 2.513 2.650
38 1.435 1.580 1.725 1.870 2.015 2.160 2.305 2.450 2.595 2.740
39 1.458 1.610 1.763 1.915 2.068 2.220 2.373 2.525 2.678 2.830
40 1.480 1.640 1.800 1.960 2.120 2.280 2.440 2.600 2.760 2.920
- ------------------------------------------------------------------------------------------------------------------------------------
Note: For all intermediate utilization, interpolate between factors
Maturity is defined as a maturity factor of one (1).
ATTACHMENT C - TARGET MAINTENANCE COST FOR COVERED AIRCRAFT AND COVERED AIRCRAFT
MAINTENANCE BASELINE
To: Atlas Air, Inc.
Reference: Letter Agreement No. 6-1162-ILK-0206 to Purchase Agreement
No. 3134
Airframe Maintenance Cost Protection Program
Subject: Target Maintenance Cost reported pursuant to Article 5.2 of
the referenced Letter Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
Target Target Target Target
Direct Direct Subcontracted Subcontracted Projected
Average Labor Material Maintenance Maintenance Target
Reporting Fleet Fleet Cost + Cost + Labor Cost Material Cost = Maint. Cost
PERIOD Size Age ($ PER FLT HR) ($ PER FLT HR) ($ PER FLT HR) ($ PER FLT HR) ($ PER FLT HR)
- ------------------------------------------------------------------------------------------------------------------------------------
One $ + $ + $ =
- ------------------------------------------------------------------------------------------------------------------------------------
Two $ + $ + $ =
- ------------------------------------------------------------------------------------------------------------------------------------
Three $ + $ + $ =
- ------------------------------------------------------------------------------------------------------------------------------------
Four $ + $ + $ =
- ------------------------------------------------------------------------------------------------------------------------------------
Five $ + $ + $ =
- ------------------------------------------------------------------------------------------------------------------------------------
COVERED AIRCRAFT MAINTENANCE COST BASELINE VALUES
-------------------------------------------------------
Material $ Material $ Labor Labor
Hours per Hours per
per FH per Cycle FH Cycle
-------------------------------------------------------
AA BB CC DD
- -----------------------------------------------------------------------------------------------------
Line
A Check
C or 1C-3C Check
D/SI or 4C/SI Check
Brakes
Wheels/Tires
Landing Gear
APU
Other Components
QEC Line
=====================================================================================================
To: Director - BCA Warranty and Supplier Suport
Boeing Commercial Airplanes
P.O. Box 3707 Mail Stop 76-02
Fax: 206-544-9171
Seattle, Washington 98124-2207
Reference: Letter Agreement No. 6-1162-ILK-0206 to Purchase Agreement No.
3134 Airframe Maintenance Cost Protection Program
Subject: Data reported pursuant to Article 6.0 of the referenced Letter
Agreement.
Reporting Period No. ______
Beginning date __________ ending date __________
Currency of the costs shown below: _________
- ------------------------------------------------------------------------------------------------------------------------------------
Subcontracted Subcontracted
Direct Direct Maintenance Labor Maintenance Material
Actual Labor Cost Material Cost Costs Costs
Maintenance Costs (total cost) (total cost) (total cost) (total cost)
- ------------------------------------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------------------------------
Note: The above labor costs have been calculated in accordance with Article 4.2.
of the referenced Letter Agreement and are exclusive of time consumed by
employees while waiting for work, traveling to or from work, training, vacation,
sick leave, or in any other similar absences from the actual maintenance work.
The above material costs have been calculated in accordance with Article 4.2 of
the referenced Letter Agreement and exclude all costs described in Article 9.0
therein.
- ------------------------------------------------------
Direct Labor Rate
($ per Labor Hour)
- ------------------------------------------------------
Maintenance
Subcontracted. %
- ------------------------------------------------------
Subcontract Labor Rate
($ per Labor Hour)
- ------------------------------------------------------
Annual Fleet Landings
(Total for Year)
- ------------------------------------------------------
Annual Fleet Fight Hours
(Total for Year)
- ------------------------------------------------------
Average Number of
Covered Aircraft
- ------------------------------------------------------
The above labor rate has been calculated in accordance with Article 4.2 of the
Letter Agreement and excludes, without limitation, all fringe benefits, premium
time allowances, social charges and business taxes.
By Date
-------------------------------------- ------------------------
Its
--------------------------------
To: Atlas Air, Inc.
Reference: Letter Agreement No 6-1162-ILK-0206 to Purchase Agreement No.
3134 Airframe Maintenance Guarantee
Subject: Data reported pursuant to Article 7.0 of the referenced Letter
Agreement.
Reporting Period No. ______
Beginning date _________ ending date _________
Actual Maintenance Costs as reported by Customer expressed in U.S. Dollars:
- ------------------------------------------------------------------------------------------------------------------------------------
Subcontracted Subcontracted
Direct Direct Maintenance Labor Maintenance Material
Actual Labor Cost Material Cost Costs Costs
Maintenance Costs (total cost) (total cost) (total cost) (total cost)
- ------------------------------------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------------------------------
Actual Maintenance Costs and Target Maintenance Costs as determined by Boeing
expressed in U.S. dollars.
- ------------------------------------------------------------------------------------------------------------------------------------
Reporting Reporting Reporting Reporting Reporting
Period 1 Period 2 Period 3 Period 4 Period 5
- ------------------------------------------------------------------------------------------------------------------------------------
Year
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Year dollars
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Direct Labor Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Direct Material Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Subcontracted Maintenance Labor Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Subcontracted Maintenance Material Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Total Actual Maintenance Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Actual Maintenance Cost
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Fleet Flight Hours
- ------------------------------------------------------------------------------------------------------------------------------------
Total Fleet Landings
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Covered Aircraft
- ------------------------------------------------------------------------------------------------------------------------------------
Per man-hour Labor Rate
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Material Inflation factor
- ------------------------------------------------------------------------------------------------------------------------------------
Currency Exchange factor
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Target Labor Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Target Material Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Target Maintenance Cost
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cumulative Target
Maintenance Cost
- --------------------------------------------------------------------------------
Very truly yours,
THE BOEING COMPANY
Reported by
---------------------------------
Its
---------------------------------
Date
---------------------------------
ATTACHMENT F - RECALCULATED AND ADJUSTED TARGET
MAINTENANCE COST FOR COVERED AIRCRAFT
To: Atlas Air, Inc.
Reference: Letter Agreement No. 6-1162-ILK-0206 to Purchase
Agreement No. 3134
Airframe Maintenance Cost Protection Program
Subject: Data reported pursuant to Article 5.3 of the referenced
Letter Agreement.
- ------------------------------------------------------------------------------------------------------------------------------------
Average Target + Target + Target Target = Projected
Fleet Direct Direct Subcontracted Subcontracted Target
Age Labor Material Maintenance Maintenance Maintenance
Reporting Fleet Cost Cost Labor Cost Material Cost Cost
PERIOD Size ($ PER FLT HR) ($ PER FLT HR) ($ PER FLT HR) ($ PER FLT HR) ($ PER FLT HR)
- ------------------------------------------------------------------------------------------------------------------------------------
One $ + $ + $ =
- ------------------------------------------------------------------------------------------------------------------------------------
Two $ + $ + $ =
- ------------------------------------------------------------------------------------------------------------------------------------
Three $ + $ + $ =
- ------------------------------------------------------------------------------------------------------------------------------------
Four $ + $ + $ =
- ------------------------------------------------------------------------------------------------------------------------------------
Five $ + $ + $ =
- ------------------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
[GRAPHIC OMITTED]
Subject: Special Matters relating to [ * ]
Reference: Purchase Agreement No. 3134 (the
PURCHASE AGREEMENT) between The
Boeing Company (Boeing) and Atlas
Air, Inc. (CUSTOMER) relating to
Model 747-8 Freighter aircraft
(AIRCRAFT)
This letter agreement (LETTER AGREEMENT) amends
and supplements the Purchase Agreement. All
terns used but not defined in this Letter
Agreement have the same meaning as in the
Purchase Agreement.
RECITALS
[ * ]
AGREEMENT
[ * ]
Very truly yours,
THE BOEING COMPANY
By: [ * ]
----------------------------------------
[GRAPHIC OMITTED]
Its: Attorney In Fact
----------------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
/s/ William J. Flynn
----------------------------------------------
By: Mr. William J. Flynn
----------------------------------------
Its: President and Chief Executive Officer
----------------------------------------
THE BOEING COMPANY
P.O. Box 3707
Seattle, WA 98124-2207
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Promotional Support Agreement
Reference: Purchase Agreement No. 3134 (the
PURCHASE AGREEMENT) between The
Boeing Company (Boeing) and Atlas
Air, Inc. (CUSTOMER) relating to
Model 747-8 Freighter aircraft
(Aircraft).
[GRAPHIC OMITTED]
This letter agreement (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.
RECITAL.
Boeing and Customer wish to enter into an
agreement pursuant to which each party will
contribute equally to promotional programs in
support of the entry into service of the
Aircraft as more specifically provided below.
AGREEMENT.
1. DEFINITIONS.
1.1 "Covered Aircraft" shall mean those
Aircraft identified on Table 1 to the Purchase
Agreement as of the date of signing of this
Letter Agreement.
1.2 "Promotional Support" shall mean
marketing and promotion programs in support of
the entry into service of the Covered Aircraft
such as marketing research, tourism development,
corporate identity, direct marketing, video tape
or still photography, planning, design and
production of collateral materials, management
of promotion programs, advertising campaigns or
such other marketing and promotional activities
as the parties may mutually agree.
1.3 "Commitment Limit" shall have the
meaning set forth in Article 2, below.
1.4 "Performance Period" shall mean the
period beginning one (1) year before and ending
one (1) year after delivery of the first Covered
Aircraft; however, up to [ * ] of the
co-branding matching fund will be made available
to the airlines for announcement/marketing
purposes as the North American Launch airline
for the 747-8 between the [ * ] and [ * ].
1.5 "Qualifying Third Party Fees" shall
mean fees paid by Customer during the
Performance Period to third party providers for
Promotional Support provided to Customer during
the Performance Period.
2. COMMITMENT.
As more particularly set forth in this Letter
Agreement Boeing agrees to provide Promotional
Support to Customer at a value not to exceed [ *
] for the first Covered Aircraft delivered to
Customer and not to exceed [ * ] per Covered
Aircraft for each Covered Aircraft delivered to
Customer thereafter (COMMITMENT LIMIT).
[GRAPHIC OMITTED]
3. METHODS OF PERFORMANCE.
Subject to the Commitment Limit, Customer may
elect to receive the Promotional Support in
either or any combination of the following ways:
3.1 At Customer's request and with
respect to a mutually agreed project, Boeing
will provide Promotional Support during the
Performance Period directly to Customer in value
equivalent to Qualifying Third Party Fees.
3.2 Boeing will reimburse [ * ] of
Customer's payments of Qualifying Third Party
Fees provided that Customer provides Boeing
copies of paid invoices for such Qualifying
Third Party Fees no later than [ * ] months
after the delivery of the first Covered
Aircraft. There will be no cash payments or
other support in lieu thereof.
4. COMMENCEMENT DATE.
Boeing's obligation to provide Promotional
Support will commence when the purchase of the
Covered Aircraft becomes firm (not subject to
cancellation by either party). For the avoidance
of doubt, the commencement date shall be the
later of the date on which the Purchase
Agreement is executed by the Customer and the
corporate resolution authorizing the purchase is
effective.
5. PROJECT APPROVAL.
Following the execution of this Letter
Agreement, a Boeing Airline Marketing Services
representative will meet with Customer's
designated representative to review and approve
the extent, selection, scheduling, and funds
disbursement process for the Promotional Support
to be provided pursuant to this Letter
Agreement.
6. CONFIDENTIALITY.
Customer understands that certain
commercial and financial information contained
in this Letter Agreement is 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. In the event that Customer in good
faith concludes (based upon an opinion of
counsel) that disclosure of information
contained in this Letter Agreement may be
required by applicable law or governmental
regulations, Customer shall advise Boeing in
writing prior to such disclosure, if possible,
or, if not possible, then promptly upon
receiving such order or upon identifying such
need to comply, in order to enable Boeing to
take whatever steps it deems necessary to
protect its interests in this regard, and
Customer will, in any event, disclose only that
portion of the information which it is legally
required to disclose and Customer will use its
reasonable endeavors to protect the
confidentiality of such information to the
widest extent possible in the circumstances.
[GRAPHIC OMITTED]
Very truly yours,
THE BOEING COMPANY
By [ * ]
-------------------------------------------
Its Attorney-In-Fact
-------------------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
[GRAPHIC OMITTED]
/s/ William J. Flynn
--------------------------------------------
By: Mr. William J. Flynn
--------------------------------------
Its: President and Chief Executive Officer
--------------------------------------
THE BOEING COMPANY
P.O. Box 3707
Seattle, WA 98124-2207
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Aircraft Performance Guarantees
Reference: Purchase Agreement No. 3134
(the PURCHASE AGREEMENT) I
between The Boeing Company
(BOEING) and Atlas Air, Inc.
(CUSTOMER) relating to Boeing
Model 747-8 Freighter aircraft
(the AIRCRAFT)
[GRAPHIC OMITTED]
This letter agreement (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. These
guarantees are exclusive and expire upon
delivery of the Aircraft to Customer.
Customer understands that certain commercial and
financial information contained in this Letter
Agreement is 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. In the event that Customer in good
faith concludes (based upon an opinion of
counsel) that disclosure of information
contained in this Letter Agreement may be
required by applicable law or governmental
regulations, Customer shall advise Boeing in
writing prior to such disclosure, if possible,
or, if not possible, then promptly upon
receiving such order or upon identifying such
need to comply, in order to enable Boeing to
take whatever steps it deems necessary to
protect its interests in this regard, and
Customer will, in any event, disclose only that
portion of the information which it is legally
required to disclose and Customer will use its
reasonable endeavors to protect the
confidentiality of such information to the
widest extent possible in the circumstances.
Very truly yours,
THE BOEING COMPANY
By [ * ]
--------------------------------
Its Attorney-In-Fact
--------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
[GRAPHIC OMITTED] /s/ William J. Flynn
------------------------------------------
By: Mr.William J. Flynn
------------------------------------------
Its: President and Chief Executive Officer
------------------------------------------
BOEING PROPRIETARY
MODEL 747-8F PERFORMANCE GUARANTEES
FOR ATLAS AIR, INC.
SECTION CONTENTS
1 AIRCRAFT MODEL APPLICABILITY
2 FLIGHT PERFORMANCE
3 MANUFACTURER'S EMPTY WEIGHT
4 SOUND LEVELS
5 RUNWAY LOADING
6 AIRCRAFT CONFIGURATION
7 GUARANTEE CONDITIONS
8 GUARANTEE COMPLIANCE
9 EXCLUSIVE GUARANTEES
1 AIRCRAFT MODEL APPLICABILITY
[ * ]
2 FLIGHT PERFORMANCE
2.1 MISSION
[ * ]
2.1.1 MISSION PAYLOAD
[ * ]
[ * ]
[ * ]
2.1.2 MISSION BLOCK FUEL
[ * ]
2.1.3 MISSION PAYLOAD
[ * ]
[ * ]
[ * ]
2.1.4 MISSION BLOCK FUEL
[ * ]
2.1.5 MISSION PAYLOAD
[ * ]
[ * ]
[ * ]
[ * ]
2.1.6 MISSION BLOCK FUEL
[ * ]
2.1.7 MISSION PAYLOAD
[ * ]
[ * ]
[ * ]
2.1.8 MISSION BLOCK FUEL
[ * ]
2.1.9 CUSTOMER WEIGHT CHANGES
[ * ]
2.1.10 STANDARD AND OPERATIONAL ITEMS ALLOWANCES
[ * ]
3 MANUFACTURER'S EMPTY WEIGHT
[ * ]
4 SOUND LEVELS
4.1 CERTIFICATION
[ * ]
4.2 FLYOVER CONDITION
[ * ]
4.3 LATERAL CONDITION
[ * ]
4.4 APPROACH CONDITION
[ * ]
4.5 DEPARTURE CONDITION
[ * ]
4.6 CUMULATIVE NOISE CERTIFICATION MARGIN TO CHAPTER 4 /
STAGE 4 RULE
[ * ]
5 RUNWAY LOADING
5.1 MAXIMUM ACN VALUE - FLEXIBLE PAVEMENT - PRELIMINARY
The Aircraft Classification Number (ACN) for flexible pavement
having subgrade Codes A through D, at the maximum taxi weight
of 441,345 kilograms (973,000 pounds) with 94.6% of the load
on the main gear and with the main gear tires at a tire
pressure of 220 pounds per square inch, shall not exceed the
following guarantee value:
[ * ]
5.2 MAXIMUM ACN VALUE - RIGID PAVEMENT
The Aircraft Classification Number (ACN) for rigid pavement
having subgrade Codes A through D, at the maximum taxi weight
of 441,345 kilograms (973,000 pounds) with 94.6% of the load
on the main gear and with the main gear tires at a tire
pressure of 220 pounds per square inch, shall not exceed the
following guarantee value:
[ * ]
6 AIRCRAFT CONFIGURATION
6.1 The guarantees contained in this Attachment arc based on the
Aircraft configuration as defined in the original release of
Detail Specification TBD (hereinafter referred to as the
Detail Specification). Appropriate adjustment shall be made
for changes in such Detail Specification approved by the
Customer 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.
6.2 The guarantee payloads of Paragraph 2.1.1, 2.1.3, 2.1.5, and
2.1.7 and the specified payloads of the guarantee block fuels
of Paragraphs 2.1.2, 2.1.4, 2.1.6, and 2.1.8 will be adjusted
by Boeing for the effect of the following in its evidence of
compliance with the guarantees:
(1) Changes to the Detail Specification or any other changes
mutually agreed upon between the Customer 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.
7 GUARANTEE CONDITIONS
7.1 [ * ].
7.2 The FAA Regulations (FAR) referred to in this Attachment are,
unless otherwise specified, Code of Federal Regulations 14,
Part 25, amended by Amendments 25-1 through 25-117, subject to
the approval of the Federal Aviation Administration.
7.3 In the event a change is made to any law, governmental
regulation or 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 4.1 or 7.2, 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 Attachment shall be appropriately modified to
reflect any such change.
7.4 [ * ].
7.5 [ * ].
7.6 [ * ].
7.7 [ * ].
7.8 [ * ].
8 GUARANTEE COMPLIANCE
8.1 Compliance with the guarantees of Sections 2, 3, 4 and 5 shall
be based on the conditions specified in those sections, the
Aircraft configuration of Section 6 and the guarantee
conditions of Section 7.
8.2 Compliance with the takeoff portion of the mission guarantees
and the community sound level guarantees of Sections 4.1
through 4.6 shall be based on the FAA approved Airplane Flight
Manual for the Model 747- 8F.
8.3 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 similar to that defined by the Detail
Specification.
8.4 [ * ].
8.5 [ * ].
8.6 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. A
compliance report and cruise fuel mileage substantiation
document will be provided. More information can be provided as
necessary at customer's request.
8.7 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.
9 EXCLUSIVE GUARANTEES
The only performance guarantees applicable to the Aircraft are
those set forth in this Attachment.
THE BOEING COMPANY
P.O. Box 3707
Seattle, WA 98124-2207
Atlas Air, Inc.
2000 Westchester Ave
PURCHASE NY 10577-2543
U.S.A.
Subject: Remedy for Deviation from Block
Fuel Guarantees
Reference: Purchase Agreement No. 3134 (the
PURCHASE AGREEMENT) between The
Boeing Company (BOEING) and
Atlas Air, Inc. (CUSTOMER)
relating to Model 747-8
Freighter Aircraft (AIRCRAFT)
[GRAPHIC OMITTED] This Letter Agreement (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.
The attachment to Letter Agreement
6-1162-ILK-0209 contains performance guarantees
(the PERFORMANCE GUARANTEES) applicable to the
Aircraft in accordance with such Letter
Agreement, which includes Mission Block Fuel
guarantees. Customer has requested that Boeing
provide an assurance that fuel burn performance,
as indicated by the Mission Block Fuel
guarantees, of the Aircraft is not worse than
the applicable guarantee level.
In response to Customer's request, Boeing offers
the following program and economic remedies in
the event that the guarantee compliance report
furnished to Customer for the Aircraft pursuant
to Article 5.4 of the AGTA shows demonstrated
values for the Mission Block Fuel guarantees
which are worse than the guarantee values.
1. DEMONSTRATION OF COMPLIANCE.
1.1 STANDARD METHOD.
Article 5.4 of the AGTA provides
a procedure for demonstration of compliance with
the Performance Guarantees prior to delivery.
That method will be used to demonstrate
compliance with the Mission Block Fuel
guarantees which, if not met, will result in the
economic remedies as described beginning in
paragraph 2.
1.2 POST-DELIVERY RECOURSE.
If, during the first thirty (30) days after each
Covered Aircraft begins revenue service (Initial
Monitoring Period), as Customer acquires cruise
fuel mileage data using the methodology
described in Attachment B of Letter Agreement
6-1162-ILK-0204 (747-8 Freighter Performance
Retention Commitment) on such Aircraft, Customer
is concerned the fuel mileage level of such
Aircraft when combined with the delivered MEW of
that airplane would not have met the
Performance Guarantees, Customer may request
that Boeing perform the following actions:
1) Investigate the fuel mileage
of that airplane using Paragraphs 6.1,
Attachment A and Attachment B of the 747-8
Freighter Performance Retention Commitment as
guidelines.
2) Review airplane weighing
information for reconciliation with the
Performance Guarantees.
3) If the fuel mileage data obtained in
the Initial Monitoring Period is not sufficient
to determine the fuel mileage level of the
airplane within adequate accuracy, it may be
[GRAPHIC OMITTED] necessary that Customer support participation in
revenue service flight survey by Boeing
observers or support limited dedicated flight
testing on their aircraft for the purposes of
acquiring cruise fuel mileage performance data
to be used in further evaluation of the Fuel
Mileage Performance Level of the airplane.
Boeing may provide the services of up to two
performance engineers at no charge to Customer
to accompany such revenue or test flights.
If these actions determine the airplane
would not have been in compliance with the
Performance Guarantees at the time of delivery,
then such non-compliance will result in the
economic remedies as described beginning in
paragraph 2.
2. RIGHTS AND OBLIGATIONS IN THE EVENT THE
AIRCRAFT FAILS TO MEET THE MISSION BLOCK
FUEL GUARANTEES.
2.1 AIRCRAFT DELIVERY.
In the event any Aircraft, at the time
of tender by Boeing for delivery to Customer
fails to comply with the Mission Block Fuel
guarantees, Customer shall not refuse to accept
delivery of such Aircraft because of such
noncompliance, subject to the terms and
conditions hereinafter set forth.
2.2 CORRECTION OF NONCOMPLIANCE WITH THE
MISSION BLOCK FUEL GUARANTEES.
2.2.1 To the extent economically
and technically practicable, Boeing will use its
best reasonable efforts to design, or cause to
be designed by the Engine Manufacturer, airplane
drag improvement parts and/or engine TSFC
improvement parts (IMPROVEMENT PARTS) which,
when installed in such Aircraft or engines,
would result in an improvement in the cruise
fuel mileage performance. Boeing shall provide
and/or shall cause Engine Manufacturer to
provide, as appropriate, reimbursement for
Customer's incorporation of such improvements,
corrections, or changes at the warranty labor
rate then in effect between Boeing and Customer
or Engine Manufacturer and Customer, as
applicable. Changes related to Engines shall
apply also to spare Engines on terms not less
favorable to Customer. Boeing and/or Engine
Manufacturer shall give Customer reasonable
advance written notice of the
estimated on-dock date at
Customer's maintenance base for any such
Improvement Parts.
[GRAPHIC OMITTED]
2.2.2 If Boeing elects to
provide or causes to be provided Improvement
Parts for such Aircraft or engines, then
Customer and Boeing shall mutually agree upon
the details of such an Improvement Parts
program. To the extent Boeing and/or Engine
Manufacturer are required to support such a
program, such support shall be provided at no
charge to Customer.
2.2.3 If Customer elects to
incorporate Improvement Parts in such Aircraft
and/or engines, they shall be incorporated
within a mutually agreed upon period of time,
but in no event to exceed ninety (90) days after
the delivery of such Improvement Parts to
Customer for modifications that can be
accomplished on the line. Improvement Parts with
more extensive modifications requiring a shop
visit shall be installed within the mutually
agreed period of time. All Improvement Parts
shall be incorporated in accordance with Boeing
and Engine Manufacturer instructions.
2.2.4 Boeing shall not be
obligated to furnish any Improvement Parts in
addition to those necessary to cause the
Aircraft to comply with the Mission Block Fuel
guarantees.
3. PAYMENTS.
In the event that Boeing has not
designed (or caused to be designed by the Engine
Manufacturer) and delivered to Customer.
Improvement Parts to correct the failure of the
Aircraft to meet the Mission Block Fuel
guarantees within 60 days from delivery of the
Aircraft, such failure will result in the
economic remedies as described below. No payment
shall be made for any portion of the deficiency
corrected for by Improvement Parts that have not
been incorporated (i) within ninety (90) days
after the delivery of such Improvement Parts to
Customer for modifications that can be
accomplished on the line or (ii) for more
extensive modifications requiring a shop visit
within the mutually agreed upon period of time.
3.1 ANNUAL EXCESS FUEL BURN AMOUNT.
Boeing will pay to Customer annually for
a period not exceeding [ * ] after the delivery
of each such Aircraft, an amount equal to the
Annual [ * ] Amount for the immediately
preceding calendar year. The "ANNUAL [ * ]
AMOUNT" is the sum of each Monthly [ * ] Amount
(as defined below) for all months in such Annual
Period. The "MONTHLY [ * ] AMOUNT" is defined as
and shall be calculated in accordance with the
following formula:
[ * ]
[GRAPHIC OMITTED]
[ * ]
[GRAPHIC OMITTED]
3.2 LIMITATION ON CREDITS FOR FUEL
COMPENSATION.
3.2.1 Payments to Customer pursuant to
Paragraph 3.1 above shall be by credit
memorandum issued by Boeing and/or Engine
Manufacturer.
3.2.2 In no event shall the total
aggregate amount paid by Boeing and/or Engine
Manufacturer to Customer pursuant to Paragraph
3.1 above exceed [ * ] in an Annual Period per
Aircraft, or as adjusted by Boeing for changes
in the price of Kerosene Base, Commercial Jet
Fuel in accordance with the formula set forth in
the Attachment A hereto for each Aircraft in any
Annual Period. Any payments made under this
Letter Agreement shall be as a result of
operation of the Aircraft by Customer.
3.3 CREDIT ADJUSTMENTS.
The amount of performance improvement
attributable to any Improvement Parts 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 improvement as calculated
using reasonable engineering interpretations and
calculations based on the data furnished
pursuant to Article 5.4 of AGTA-TLS and the data
furnished pursuant to this Paragraph 3.3.
4. DUPLICATION OF BENEFITS.
Boeing and Customer agree that it is not
the intent of the parties under this Letter
Agreement to cause Boeing and/or engine
manufacturer to provide duplicate benefits to
Customer for the same event which results in
Customer's unjust enrichment, provided that, in
the case of any such duplicate benefits,
Customer shall be entitled to elect to receive
the benefit which is most favorable to Customer.
5. ASSIGNMENT PROHIBITED.
Notwithstanding any other provisions of
the Purchase Agreement, the rights and
obligations described in this Letter Agreement
are provided to
Customer in consideration of Customer's becoming
the operator of the Aircraft, and cannot be
assigned, in whole or in part, without the prior
written consent of Boeing.
6. EXCLUSIVE REMEDY.
Performance of the commitments made in
this letter agreement by Boeing in accordance
with the terms and conditions of this letter
agreement is in substitution for all other
damages and remedies recoverable by Customer
from Boeing and shall constitute complete, full
and final settlement and satisfaction of all
Boeing's obligation and liabilities to Customer
arising out of failure of the Aircraft to meet
the Mission Block Fuel guarantees. Customer
hereby waives and releases all other rights,
remedies, claims and causes of action against
Boeing relating to the failure of the Aircraft
to meet the Mission Block Fuel guarantees.
7. CONFIDENTIAL TREATMENT.
[GRAPHIC OMITTED]
Customer understands that certain
commercial and financial information contained
in this Letter Agreement is 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. In the event that Customer in good
faith concludes (based upon an opinion of
counsel) that disclosure of information
contained in this Letter Agreement may be
required by applicable law or governmental
regulations, Customer shall advise Boeing in
writing prior to such disclosure, if possible,
or, if not possible, then promptly upon
receiving such order or upon identifying such
need to comply, in order to enable Boeing to
take whatever steps it deems necessary to
protect its interests in this regard, and
Customer will, in any event, disclose only that
portion of the information which it is legally
required to disclose and Customer will use its
reasonable endeavors to protect the
confidentiality of such information to the
widest extent possible in the circumstances.
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,
[GRAPHIC OMITTED]
THE BOEING COMPANY
By [ * ]
----------------------------------------
Its ATTORNEY IN FACT
----------------------------------------
ACCEPTED AND AGREED TO:
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
By /s/ William J. Flynn
----------------------------------------
Its President and Chief Executive Officer
----------------------------------------
[ * ]
[ * ]
BOEING COMMERCIAL AIRPLANES
P.O. Box 3707
Seattle, WA 98124-2207
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Demonstration Flight Waiver
Reference: Purchase Agreement No. 3134 (the
PURCHASE AGREEMENT) between The Boeing
Company (BOEING) and Atlas Air, Inc.
(CUSTOMER) relating to Model 747-8
freighter aircraft consisting of twelve
(12) firm Boeing Model 747-8 Freighter
Aircraft (FIRM Aircraft), one (1) option
to purchase Boeing Model 747-8 Freighter
[GRAPHIC OMITTED] Aircraft (OPTION AIRCRAFT) and thirteen
(13) rights to purchase Boeing Model
747-8 Freighter Aircraft (PURCHASE
RIGHTS AIRCRAFT), collectively
(AIRCRAFT)
This letter agreement (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,
including the standard fuel entitlement, totals
the following amount of fuel:
--------------------------------------------------------
AIRCRAFT TOTAL FUEL ENTITLEMENT
MODEL (U.S. GALLONS)
--------------------------------------------------------
747-8 [ * ]
--------------------------------------------------------
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. Any rectifications of such Flight
Discrepancy performed will carry at least the
original Aircraft or, as applicable, the Engine
Manufacturer or Supplier warranty.
[GRAPHIC OMITTED]
Should a Flight Discrepancy be detected by
Customer which requires the return of the
Aircraft to Boeing's facilities at Seattle (a
FLIGHT DISCREPANCY RETURN), 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 to costs reflected in
Exhibit C, Part 2, Article 10,2 of the AGTA,
Boeing shall reimburse Customer for [ * ] not to
exceed [ * ] per each occurrence of a Flight
Discrepancy Return. 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.
CONFIDENTIAL TREATMENT.
Customer understands that certain
commercial and financial information contained
in this Letter Agreement is 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. In the event that Customer in good
faith concludes (based upon an opinion of
counsel) that disclosure of information
contained in this Letter Agreement may be
required by applicable law or governmental
regulations, Customer shall advise Boeing in
writing prior to such disclosure, if possible,
or. if not possible, then promptly upon
receiving such order or upon identifying such
need to comply, in order to enable Boeing to
take whatever steps it deems necessary to
protect its interests in this regard, and
Customer will, in any event, disclose only that
portion of the information which it is legally
required to disclose and Customer will use its
reasonable endeavors to protect the
confidentiality of such information to the
widest extent possible in the circumstances.
Very truly yours,
THE BOEING COMPANY
By: [ * ]
----------------------------------------
Its: Attorney-In-Fact
----------------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
/s/ William J. Flynn
----------------------------------------
By: Mr. William J. Flynn
----------------------------------------
Its: President and Chief Executive Officer
----------------------------------------
THE BOEING COMPANY
P.O. Box 3707
Seattle, WA 98124-2207
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Right to Purchase Additional Aircraft
References: (a) Purchase Agreement No. 3134 (the
PURCHASE AGREEMENT) between The
Boeing Company (BOEING) and
Atlas Air, Inc. (CUSTOMER)
relating to Model 747-8
Freighter aircraft; and
(b) Special Matters Letter: 747-8
Freighter Aircraft, Letter
Agreement 6-1162-ILK-0203
(the SPECIAL MATTERS LETTER).
This letter agreement (LETTER AGREEMENT) amends
and supplements the Purchase Agreement. All
capitalized terms used but not defined in this
Letter Agreement have the same meaning as in the
Purchase Agreement. The Special Matters Letter
contains the business considerations which may
be applicable to aircraft acquired through the
exercise of a purchase right.
1.0 RIGHT TO PURCHASE INCREMENTAL AIRCRAFT.
Subject to the terms and conditions
contained herein, in addition to the Aircraft
described in Table 1 to the Purchase Agreement
as of the date of execution of this Letter
Agreement, Customer will have the right to
purchase (PURCHASE RIGHT) THIRTEEN (13)
additional Boeing Model 747-8 FREIGHTER aircraft
on the terms and conditions described in this
Letter Agreement (PURCHASE RIGHTS AIRCRAFT).
2.0 DELIVERY.
The Purchase Rights Aircraft are offered
subject to available position for delivery
during the period [ * ].
3.0 NOTICE OF EXERCISE AND PAYMENT OF
DEPOSIT.
Customer shall give written notice to
Boeing (NOTICE OF EXERCISE) of its desire to
exercise a Purchase Right. Such notice shall be
accompanied by payment by electronic transfer to
the account specified below of Boeing's then
standard proposal deposit for 747-8 Freighter
aircraft (DEPOSIT) for each Purchase Rights
Aircraft subject to the Notice of Exercise. The
Deposit will be applied against the first
advance payment due for each such Purchase
Rights Aircraft.
[ * ]
At the time of its receipt of each Notice of
Exercise and related Deposit(s), Boeing will
advise Customer as to the availability of the
delivery month(s) requested.
4.0 [ * ]
[ * ]
[GRAPHIC OMITTED]
5.0 CONFIGURATION.
5.1 Subject to the provisions of Article
5.2, below, the configuration for the Purchase
Rights Aircraft will be the detail specification
for Boeing Model 747-8 Freighter aircraft at the
revision level in effect at the time of the
Notice of Exercise. Such detail specification
will be revised to include
(i) changes applicable to such detail
specification that are developed by Boeing
between the date of the Notice of Exercise
and the signing of the definitive
agreement to purchase the Purchase Rights
Aircraft,
(ii) changes required to obtain required
regulatory certificates, and
(iii) other changes as mutually agreed.
5.2 Boeing reserves the right to
configure the Purchase Rights Aircraft starting
from a different configuration specification,
provided that it can achieve the same
configuration which would result pursuant to the
provisions of Article 5.1.
6.0 PRICE.
The Aircraft Price of each Purchase
Rights Aircraft shall be determined in
accordance with the provisions of the Purchase
Agreement using [ * ] at the time of signing of
the definitive agreement [ * ], except that the
airframe price for such Purchase Rights Aircraft
shall be the sum of
(i) the price quoted for such airframe
(including engine) in Table 1 to the Purchase
Agreement at the date of signing of this
Letter Agreement and
[GRAPHIC OMITTED]
(ii) Boeing's [ * ] associated with any
changes to the airframe from that described
in the detail specification identified in
Table 1 to the Purchase Agreement at the date
of signing of the Letter Agreement after
giving effect to all credit memos.
Advance payments are required for each
Purchase Rights Aircraft. The remainder of the
Aircraft Price will be due at delivery of each
Purchase Rights Aircraft. The methodology used
to estimate the Advance Payment Base Prices will
be that specified in the Purchase Agreement at
the date of signing of this Letter Agreement,
and the escalation indices used to estimate the
Advance Payment Base Prices will be adjusted to
Boeing's then current forecasts for such
elements as of the date of signing of the
definitive agreement for the Purchase Rights
Aircraft and shall be escalated in the same
manner as the Airframe Price as described in
Supplemental Exhibit AE-1 and in conformance
with the terms and conditions of paragraph 19 of
the Special Matters Letter.
7.0 DEFINITIVE PURCHASE AGREEMENT.
Following Customer's exercise of a
Purchase Right in accordance with the terms and
conditions stated herein and Boeing's
identification of an available delivery position
acceptable to Customer, the parties will sign a
definitive agreement for the purchase of such
Purchase Rights Aircraft within 60 calendar days
of such exercise. Such definitive agreement will
include the provisions then contained in the
Purchase Agreement as modified to reflect the
provisions of this Letter Agreement and any
additional mutually agreed terms and conditions.
8.0 GENERAL EXPIRATION OF RIGHTS.
8.1 Each Purchase Right shall expire at
the time of execution of the purchase agreement
for the applicable Purchase Rights Aircraft, or,
if no such purchase agreement is executed, at
11:59 pm (Seattle time) on [ * ].
9.0 ASSIGNMENT.
The Purchase Rights described in this
Letter Agreement cannot be assigned, in whole or
in part, without the prior written consent of
Boeing.
10.0 CONFIDENTIAL TREATMENT.
Customer understands that certain
commercial and financial information contained
in this Letter Agreement is 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. In the event that Customer in good
faith concludes (based upon an opinion of
counsel) that disclosure of information
contained in this Letter Agreement may be
required by applicable law or governmental
regulations, Customer shall advise Boeing in
writing prior to such disclosure, if possible,
or, if not possible, then promptly upon
receiving such order or upon identifying such
need to comply, in order to enable Boeing to
take whatever steps it deems necessary to
protect its interests in this regard, and
Customer will, in any event, disclose only that
portion of the information which it is legally
required to disclose and Customer will use its
reasonable endeavors to protect the
confidentiality of such information to the
widest extent possible in the circumstances.
Very truly yours,
THE BOEING COMPANY
By [ * ]
--------------------------------
Its Attorney-In-Fact
--------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
/s/ William J. Flynn
---------------------------------------------
By: Mr. William J. Flynn
----------------------------------------
Its: President and Chief Executive Officer
----------------------------------------
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Option Aircraft
Reference: (a) Purchase Agreement 3134 (the
PURCHASE AGREEMENT) between The Boeing
Company (BOEING) and Atlas Air, Inc.
(CUSTOMER) relating to Model 747-8
Freighter aircraft (the AIRCRAFT): and
[GRAPHIC OMITTED]
(b) Special Matters Letter: 747-8
Freighter Aircraft, Letter
Agreement 6-1162-ILK-0203 (the
SPECIAL MATTERS LETTER).
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. The Special Matters
Letter contains the business considerations
which may be applicable to aircraft acquired
through the exercise of an option. If Customer
exercises its option, Boeing agrees to
manufacture and sell to Customer additional
Model 747-8 Freighter aircraft as OPTION
AIRCRAFT. The delivery months, number of
aircraft, Advance Payment Base Price per
aircraft and advance payment schedule are listed
in the Attachment to this Letter Agreement. The
Airframe Price shown includes the Engine Price.
1.0 AIRCRAFT DESCRIPTION AND CHANGES.
1.1 AIRCRAFT DESCRIPTION: The Option
Aircraft is 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 747-8
Freighter 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.
2.0 PRICE.
2.1 The pricing elements of the Option
Aircraft are listed in the Attachment.
2.2 PRICE ADJUSTMENTS.
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 will be escalated
in the same manner as the Airframe Price as
[GRAPHIC OMITTED] described in Supplemental Exhibit AE-1 and in
conformance with the terms and conditions of
paragraph 19 of the Special Matters Letter
Agreement.
2.2.3 BASE PRICE ADJUSTMENTS. The
Airframe Price of the Option Aircraft shall be
as set forth in the Attachment to this Letter
Agreement.
3.0 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.
3.3 Notwithstanding sub-paragraph 3.1
and 3.2 above, in accordance with paragraph 18
of the Special Matters Letter, Customer may
elect to [ * ].
4.0 Option Exercise.
4.1 Customer may exercise an option by
giving written notice to Boeing on or before the
date [ * ] prior to the delivery dates listed in
the Attachment (Option Exercise Date).
4.2 [ * ] at September 11, 2006: If
Boeing must make production decisions which are
dependent on Customer's 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 Option Aircraft.
In the event of an exercise pursuant to this
Article 4.2:
4.2.1 From the date of exercise by
Customer pursuant to this
Article 4.2 until the date of
exercise set forth by Article
4.1 herein, Boeing shall credit
(as a reduction of interest that
[GRAPHIC OMITTED] is otherwise payable by the
Customer) the Customer with
interest at the Deferred
Interest Rate set forth in
Article 14.2 of the Special
Matters Letter to accrue on the
difference between
4.2.1.1 [ * ] of the Advance
Payment Base Price and
4.2.1.2 the non-refundable
Option Deposit;
4.2.2 Notwithstanding any requirement
set forth by the Special Matters
Letter, Customer shall have no
requirement for advance payments
until twenty four months prior
to the scheduled delivery month
(provided by Boeing pursuant to
Article 4.3. herein) at which
point advance payments in the
amounts and at the times listed
in the Attachment will be
payable for the Option Aircraft.
Such advance payment amounts are
eligible for deferral pursuant
to the Article 14 of the Special
Matters Letter. The remainder of
the Aircraft Price for the
Option Aircraft will be paid at
the time of delivery.
4.3 Boeing shall provide Customer with
the scheduled delivery month at the time of
option exercise pursuant to either Article 4.1
or 4.2 herein.
5.0 CONTRACT TERMS.
Boeing and Customer will document the
exercise of the option for the purchase of an
Option Aircraft, in accordance with the terms
and conditions contained in this Letter
Agreement, in the Purchase Agreement, and any
other terms and conditions as may be agreed
upon, by executing a Supplemental Agreement with
respect to the Purchase Agreement, within 30
days following option exercise.
6.0 CONFIDENTIAL TREATMENT.
Boeing and Customer understand that
certain information contained in this Letter
Agreement, including any attachments hereto, is
considered by both parties to be confidential.
Boeing and Customer agree that each party will
treat this Letter Agreement and the information
contained herein as confidential and will not,
without the other party's prior written consent,
disclose this Letter Agreement or any
information contained herein to any other
person. In the event that Customer in good faith
concludes (based upon an opinion of counsel)
that disclosure of information contained in this
[GRAPHIC OMITTED] Letter Agreement may be required by applicable
law or governmental regulations, Customer shall
advise Boeing in writing prior to such
disclosure, if possible, or, if not possible,
then promptly upon receiving such order or upon
identifying such need to comply, in order to
enable Boeing to take whatever steps it deems
necessary to protect its interests in this
regard, and Customer will, in any event,
disclose only that portion of the information
which it is legally required to disclose and
Customer will use its reasonable endeavors to
protect the confidentiality of such information
to the widest extent possible in the
circumstances.
Very truly yours,
THE BOEING COMPANY
By [ * ]
-------------------------------------
Its Attorney-In-Fact
-------------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
/S/ William J. Flynn
------------------------------------------------
By: Mr. William J. Flynn
-------------------------------------------
Its: President and Chief Executive Officer
-------------------------------------------
Attachment
AIRFRAME MODEL/MTOW: 747-8F 970,000 pounds
ENGINE MODEL/THRUST: GENX-2B67 66,500 pounds
AIRFRAME PRICE: $ [ * ]
OPTIONAL FEATURES: $ [ * ]
-------------------
SUB-TOTAL OF AIRFRAME AND FEATURES: $ [ * ]
ENGINE PRICE (PER AIRCRAFT): $ [ * ]
AIRCRAFT BASIC PRICE (EXCLUDING BFE/SPE): $ [ * ]
===================
BUYER FURNISHED EQUIPMENT (BFE) ESTIMATE: $ 0
SELLER PURCHASED EQUIPMENT (SPE) ESTIMATE: $ 0
NON-REFUNDABLE DEPOSIT/AIRCRAFT AT DEF AGREEMT: $ [ * ]
DETAIL SPECIFICATION: D019U020 (7/31/2006)
AIRFRAME PRICE BASE * ]
YEAR/ESCALATION FORMULA: [ * ] [
ENGINE PRICE BASE /A
YEAR/ESCALATION FORMULA: N/A N
AIRFRAME ESCALATION DATA:
- ------------------------------
BASE YEAR INDEX (ECI): [ * ]
BASE YEAR INDEX (CPI): [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
ADVANCE PAYMENT PER AIRCRAFT (AMTS. DUE/MOS. PRIOR TO
ESCALATION SCALATION ESTIMATE DELIVERY):
DELIVERY NUMBER OF FACTOR ADV PAYMENT BASE -----------------------------------------------------
DATE AIRCRAFT (AIRFRAME) PRICE PER A/P * ]
[ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL: [ * ]
Atlas Air, Inc.
2000 Westchester Avenue
Purchase, NY 10577-2543
Subject: Aircraft Schedule Reliability Program
[GRAPHIC OMITTED]
Reference: Purchase Agreement No. 3134 (the
Purchase Agreement) between The Boeing
Company (Boeing) and Atlas Air, Inc.
(Customer) relating to Model 747-8
Freighter aircraft (the Aircraft)
This letter agreement (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.
1.0 DEFINITION OF TERMS.
1.1 "ACHIEVED MECHANICAL SCHEDULE RELIABILITY"
shall mean a number calculated pursuant to the
following formula:
100 X (1 - INT/RevFlights)
where: INT equals the number of Chargeable
Schedule Interruptions occurring during an
Analysis Period, and RevFlights equals the
number of Scheduled Revenue Departures occurring
during the same Analysis Period.
1.2 "ANALYSIS PERIOD" shall mean any four
consecutive calendar months of Scheduled Revenue
Departures.
1.3 "AVERAGE FLIGHT LENGTH" shall mean the
flight hours during an Analysis Period divided
by the number of Scheduled Revenue Departures
during the same Analysis Period.
1.4 "CHARGEABLE SCHEDULE INTERRUPTION" OR
"INTERRUPTION" shall mean a cancellation,
turn-back, diverted landing or delayed departure
of any scheduled revenue flight of a Covered
Aircraft which is greater than 15 minutes, other
than as provided in Section 4, below, and
results directly from a mechanical malfunction
of such Covered Aircraft, or any system,
accessory, equipment or part (including engines)
installed thereon.
1.5 "COVERED AIRCRAFT" shall mean those Aircraft
operated by Customer on Customer's routes during
the Program Term.
1.6 "PROGRAM" shall mean the rights and
obligations defined in this Letter Agreement.
1.7 "PROGRAM TERM" shall mean the eight
consecutive years commencing on the
delivery date of the first Covered
Aircraft.
[GRAPHIC OMITTED]
1.8 "SCHEDULED REVENUE DEPARTURE" shall mean
any departure of a Covered Aircraft for
a scheduled revenue flight segment;
including, but not limited to, (i) any
departure of a Covered Aircraft for a
charter flight or extra section flight;
or (ii) any canceled departure of a
flight segment (iii) a positioning
flight needed to initiate a revenue
flight.
2. PROGRAM DESCRIPTION.
Mechanical schedule reliability targets
for the Covered Aircraft (Mechanical Schedule
Reliability Target(s)) during the Program Term
are as follows:
------------------------------------------------
Mechanical Schedule
Program Term Reliability Target
------------------------------------------------
[ * ] [ * ]
------------------------------------------------
[ * ] [ * ]
------------------------------------------------
[ * ] [ * ]
------------------------------------------------
These Mechanical Schedule Reliability Targets
are based on an average flight length of [ * ]
flight hours per Scheduled Revenue Departure for
Covered Aircraft in revenue service operations.
The Mechanical Schedule Reliability Targets are
subject to change based on changes in the
Customer's actual Average Flight Length and
other factors under Customer's control.
3. REMEDIAL ACTION.
3.1 Following the first four months of
Scheduled Revenue Departures, if Customer
notifies Boeing that the Achieved Mechanical
Schedule Reliability for the Analysis Period is
more than [ * ] percentage point below the
Mechanical Schedule Reliability Target (Agreed
Threshold Value) for such Analysis Period,
Boeing will:
3.1.1 Investigate the
circumstances and possible causes for an
Achieved Mechanical Schedule Reliability lower
than the Agreed Threshold Value;
3.1.2 Provide technical
assistance to Customer in the form of analysis
and recommendations of a kind and nature which
Boeing determines to be best suited for
improving the Achieved Mechanical Schedule
Reliability;
3.1.3 Initiate a design review
of the system, accessory, equipment or part
(other than engines and engine parts) which are
determined by Boeing to be the primary cause of
an Achieved Mechanical Schedule Reliability
lower than the Agreed Threshold Value;
3.1.4 When in Boeing's
judgment a redesign is indicated as a
technically and economically practical means of
improving the Achieved Mechanical Schedule
Reliability, redesign or cause the redesign of
such system, accessory, equipment or part;
[GRAPHIC OMITTED]
3.1.5 If such redesign results
in retrofit kits being offered by Boeing or
Boeing's suppliers, provide such kits or cause
such kits to be provided, at Customer's request,
at no charge to Customer and reimburse
Customer's reasonable direct labor costs for
incorporation of any such kit manufactured to
Boeing's detailed design. Such reimbursement
will be provided pursuant to Boeing Warranty
(Article 11 of Part 2 of Exhibit C, Product
Assurance Document, of the AGTA); and
3.1.6 If Boeing determines
that the design of engines or engine parts is
the primary cause of an Achieved Mechanical
Schedule Reliability lower than the Agreed
Threshold Value, Boeing will, if requested by
Customer, take whatever reasonable action is
permitted under Boeing's contracts with the
engine manufacturer in an effort to obtain
correction of such design.
4. INTERRUPTION EXCLUSIONS.
An Interruption does not include any
cancellation, turn-back, diverted landing or
delayed departure of any scheduled revenue
flight of any Covered Aircraft which is caused
by any of the following events:
(i) Late arrival of an inbound flight;
(ii) Late return from out-of-service
status;
(iii) Operation, service, maintenance
or overhaul of such Covered Aircraft or any
system, accessory, equipment or part (including
engines) installed thereon, in a manner other
than in accordance with Customer's approved
instructions and requirements;
(iv) Logistics problems such as lack of
spare parts at stations where spares could
reasonably be expected to be available, as
determined in accordance with industry standard
provisioning practices, or inordinate delays in
the availability of spares, unless such delays
are caused by Boeing or other appropriately
trained personnel at any location where any
maintenance of the Covered Aircraft is
performed;
(v) A malfunction caused by any
extrinsic force such as foreign object damage;
(vi) Failure to utilize the FAA
approved minimum equipment list (MEL) to defer
corrective maintenance, or failure to correct
any deferred item within the time period
specified in such MEL;
(vii) Buyer Furnished Equipment;
(viii) Tires;
(ix) Normal brake wear;
(x) Acts or omissions of Customer or
any strikes or labor troubles causing cessation,
slowdown or interruption of work related to the
operation or maintenance of the Covered
Aircraft; or
[GRAPHIC OMITTED]
(xi) Any other cancellation, turn-back,
diverted landing or delayed departure which
cannot fairly be attributed to mechanical
malfunction of the Covered Aircraft, or any
system, accessory, equipment or part (including
engines) installed on the Covered Aircraft.
If a Covered Aircraft is used as a
substitute for some other aircraft or some other
aircraft is used as a substitute for a Covered
Aircraft and the revenue flight affected by such
substitution departs without a cancellation,
turn-back, diverted landing or delay greater
than 15 minutes, then no Chargeable Schedule
Interruption will be deemed to have occurred. If
an Interruption occurs as a result of a
malfunction of the substitute aircraft/Covered
Aircraft, such Interruption will be charged
against the aircraft/Covered Aircraft initially
scheduled for the flight rather than its
substitute. An Interruption, which affects a
subsequent segment or flight for a Covered
Aircraft, will count as only one Interruption
unless such Interruption is separate from and
unrelated to the initial Interruption.
5. ADMINISTRATIVE REQUIREMENTS.
5.1 Customer will provide status
reports every month (Reporting Period).
[GRAPHIC OMITTED]
5.2 The Customer's status reports shall
include the data required to calculate the
Achieved Mechanical Schedule Reliability for
each month of the Reporting Period using the
formulas described in Section 1.0, above, and a
list of the Chargeable Schedule Interruptions
for the Reporting Period. Customer shall submit
such data to Boeing electronically in accordance
with the provisions of Boeing Document D6-81692.
All data submitted pursuant to
Subsection 5.2 will be addressed to the
attention of:
MANAGER - [ * ]
Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207
5.3 Customer claim reports will include
the data described in Subsection 5.2 above and
sufficient data to substantiate any claimed
Chargeable Schedule
Interruption. Customer will submit to Boeing
reasonable proof that any claimed Chargeable
Schedule Interruption does in fact constitute a
Chargeable Schedule Interruption. In addition,
Customer will maintain and submit to Boeing such
data as may reasonably be required to:
(i) determine Achieved
Mechanical Schedule Reliability,
(ii) analyze the problems
causing any claimed Chargeable Schedule
Interruption, and
(iii) when required, develop
appropriate remedial action.
[GRAPHIC OMITTED]
5.4 Failure to file the status reports
or provide the information as specified in
Subsections 5.1 through 5.3, above, will
constitute an acknowledgment by Customer that
the Achieved Mechanical Schedule Reliability is
equal to or greater than the Agreed Threshold
Value for such Analysis Period, and Boeing will
not be obligated to provide any of the remedies
arising under this Program for such Analysis
Period.
5.5 All reports submitted to Boeing
will be addressed to the attention of:
Director - Warranty & Supplier Product Support
Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207
6. CONDITIONS AND LIMITATIONS.
6.1 If, to improve schedule
reliability, Boeing or any Boeing supplier
issues service bulletins, service letters or
other written instructions (Instructions) or
offers no-charge retrofit kits, Customer will
accomplish such Instructions or install such
kits within a period of [ * ] after availability
of such Instructions or kits at Customer's
facility or such longer period as may be
established by mutual agreement of the parties
(the IMPLEMENTATION PERIOD). If Customer does
not accomplish the Instructions or install the
kits within the Implementation Period,
Chargeable Schedule Interruptions relating to
the systems, accessories, equipment or parts
affected by such Instructions or kits will be
excluded from this Program from the end of the
Implementation Period until such time as
Customer notifies Boeing that Customer has
incorporated such Instructions or kits on all
affected Aircraft.
6.2 Boeing may inspect at all
reasonable times Customer's maintenance
facilities and review its maintenance programs
and procedures. If Boeing recommends in writing
reasonable changes in Customer's maintenance
programs and procedures which would improve the
Achieved Mechanical Schedule Reliability and
Customer does not effect such changes within the
Implementation Period, Boeing will have the
right to redefine the Chargeable Schedule
Interruptions after the end of the
Implementation Period so as to eliminate
interruptions which Boeing estimates result from
Customer's failure to effect the recommended
changes within such time period.
6.3 If, for any Analysis Period, the
actual Average Flight Length or other factors
affecting schedule reliability of the Covered
Aircraft change significantly, the Mechanical
Schedule Reliability Target for such Analysis
Period will be appropriately adjusted by the
parties.
6.4 At Boeing's request, Customer will
assign to Boeing any of Customer's rights
against any manufacturer of any system,
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.
[GRAPHIC OMITTED]
6.5 THE DISCLAIMER AND RELEASE and
EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES
provisions stated in Article 11 of Exhibit C of
the AGTA apply to this Program.
7. CONFIDENTIAL TREATMENT.
Boeing and Customer understand that
certain information contained in this Letter
Agreement, including any attachments hereto, is
considered by both parties to be confidential.
Boeing and Customer agree that each party will
treat this Letter Agreement and the information
contained herein as confidential and will not,
without the other party's prior written consent,
disclose this Letter Agreement or any
information contained herein to any other
person. In the event that Customer in good faith
concludes (based upon an opinion of counsel)
that disclosure of information contained in this
Letter Agreement may be required by applicable
law or governmental regulations, Customer shall
advise Boeing in writing prior to such
disclosure, if possible, or, if not possible,
then promptly upon receiving such order or upon
identifying such need to comply, in order to
enable Boeing to take whatever steps it deems
necessary to protect its interests in this
regard, and Customer will, in any event,
disclose only that portion of the information
which it is legally required to disclose and
Customer will use its reasonable endeavors to
protect the confidentiality of such information
to the widest extent possible in the
circumstances.
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 [ * ]
----------------------------------------
[GRAPHIC OMITTED]
Its Attorney-In-Fact
----------------------------------------
ACCEPTED AND AGREED TO this
Date: SEPTEMBER 8, 2006
ATLAS AIR, INC.
/s/ William J. Flynn
--------------------------------------------
BY: Mr. William J. Flynn
----------------------------------------
Its:President and Chief Executive Officer
----------------------------------------