UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from . . . . . . to . . . . . .
Commission file number 1-8957
ALASKA AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Alaska 92-0009235
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19300 Pacific Highway South, Seattle, Washington 98188
(Address of principal executive offices)
Registrant's telephone number, including area code: (206) 431-7079
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The registrant has 500 common shares, par value $1.00, outstanding at
September 30, 1996.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Attached are the following Alaska Airlines, Inc. (the Company or Alaska)
unaudited financial statements: (i) balance sheets as of September 30, 1996
and December 31, 1995; (ii) statements of income for the quarters and nine
months ended September 30, 1996 and 1995; (iii) statement of shareholder's
equity for the nine months ended September 30, 1996; and, (iv) statements
of cash flows for the nine months ended September 30, 1996 and 1995. Also
attached are the accompanying notes to the Company's financial statements
that have changed significantly during the nine months ended September 30,
1996. These statements, which should be read in conjunction with the
financial statements in the Company's annual report on Form 10-K for the
year ended December 31, 1995, include all adjustments that are, in the
opinion of management, necessary for a fair presentation of the results for
the interim periods. The adjustments made were of a normal recurring
nature.
The Company is a wholly owned subsidiary of Alaska Air Group, Inc. (Air
Group) whose principal subsidiaries are Alaska Airlines, Inc. and Horizon
Air Industries, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Third Quarter 1996 Compared with Third Quarter 1995
The net income for the third quarter of 1996 was $31.5 million compared
with a net income of $28.3 million in 1995. Operating income for the third
quarter of 1996 was $57.0 million compared to $55.2 million for 1995. The
1996 quarter included $7.6 million for estimated employee profit sharing
expense (compared to zero for 1995) and a $3.8 million gain on sale of
assets (compared to a $0.7 million loss in 1995). Excluding these items,
operating income increased $4.9 million reflecting higher passenger load
factors. Airline financial and statistical data is shown following the
financial statements. A discussion of this data follows.
Operating revenues increased 11.7% to $382.8 million. Passenger revenues,
which accounted for 90% of total operating revenues, increased 13.5% on a
14.5% rise in passenger traffic. Capacity increased 7.0%, primarily due to
more flying in the Alaska, Mexico and Nevada markets. Essentially all
markets experienced increases in load factors, while the system load factor
increased 4.6 points from 66.0% in 1995 to 70.6% in 1996. System passenger
yields were down 0.8% reflecting lower fares in the Alaska and Mexico
markets, offset by higher fares in the California markets.
Freight and mail revenues decreased 3.0%, reflecting increased competition
in the Alaska markets. Other-net revenues decreased 1.2% due to lower
revenues from providing services to other airlines.
The table below shows the major operating expense elements on a cost per
available seat mile (ASM) basis for Alaska for the third quarters of 1996
and 1995.
Operating Expenses Per ASM (In Cents)
1996 1995 Change % Change
Wages and benefits 2.44 2.41 .03 1
Employee profit sharing .19 - .19 NM
Aircraft fuel 1.38 1.08 .30 28
Aircraft maintenance .32 .31 .01 3
Aircraft rent .88 .91 (.03) (3)
Commissions .63 .56 .07 13
Depreciation & amortization .35 .38 (.03) (8)
Loss (gain) on sale of assets (.09) .02 (.11) NM
Landing fees and other rentals .32 .32 - -
Other 1.53 1.52 .01 1
Total 7.95 7.51 .44 6
NM = Not Meaningful
Alaska's higher unit costs were primarily due to employee profit sharing
and higher fuel prices. Significant unit cost changes are discussed below.
Estimated profit sharing expense increased the cost per ASM by .19 cents.
Actual profit sharing is based on full year results. Hence, this expense
item for full year 1996 could change depending on fourth quarter results.
For purposes of estimating profit sharing, the income for the fourth
quarter of 1996 was assumed to be comparable to the fourth quarter of 1995.
This is an assumption, not a forecast, and using this assumption, Alaska is
fully accrued for estimated 1996 profit sharing expense as of September 30,
1996.
Fuel expense per ASM increased 28%, due to a 27% increase in the price of
fuel. Approximately one fourth of the fuel price increase was due to a 4.3
cent Federal excise tax on domestic fuel consumption that began October 1,
1995.
Commission expense per ASM increased 13% because passenger revenues, upon
which commissions are paid, increased more than ASM growth. Commission
expense as a percentage of passenger revenue was 7.4% in 1996 compared to
7.1% in 1995.
Depreciation and amortization expense per ASM decreased 8% due to the sale
(and leaseback) of two aircraft at the end of the first quarter and a 4%
increase in aircraft utilization.
The gain on sale of assets in 1996 is primarily due to the sale of a jet
aircraft. A new accounting standard requires that gains or losses on long-
lived assets be included in operating income.
Other Income (Expense) Non-operating expense decreased from $6.1 million to
$4.1 million primarily due to lower interest rates on variable debt and
smaller average debt balances.
Nine Months 1996 Compared with Nine Months 1995
The net income for the nine months ended September 30, 1996 was $45.3
million, compared with net income of $24.0 million in 1995. Operating
income for the first nine months of 1996 was $91.0 million compared to
$63.8 million for 1995.
Operating revenues increased 15.7% to $1.005 billion, primarily due to a
16.4% rise in passenger traffic. Capacity increased 8.5%, primarily due to
increases in the Alaska, Nevada and Mexico markets. The load factor
increased 4.4 points from 61.5% in 1995 to 65.9% in 1996. Passenger yields
rose 1.2% to 11.86 cents in 1996, reflecting an improved balance between
supply and demand for air travel on the West Coast.
Operating expenses increased 13.6% to $913.8 million on a capacity increase
of 8.5%. Unit costs increased 4.7%, generally for the same reasons as
noted above in the third quarter comparison.
Other Income (Expense) Non-operating expense decreased from $22.4 million
to $14.4 million generally for the same reasons as noted above in the third
quarter comparison.
Income Tax Expense Accounting standards require the Company to provide for
income taxes each quarter based on its estimate of the effective tax rate
for the full year. The volatility of air fares and the seasonality of the
Company's business make it very difficult to estimate full-year pretax
results. In addition, a relatively small change in pretax results can
cause a significant change in the effective tax rate due to the magnitude
of nondeductible expenses, such as goodwill amortization and employee per
diem costs. In estimating the 40.9% tax rate for the first nine months of
1996, the Company considered a variety of factors, including the U.S.
federal rate of 35%, estimates of nondeductible expenses and state income
taxes, and the 43.5% tax rate used for full year 1995. This rate is
evaluated each quarter and adjustments are made if necessary.
LIQUIDITY AND CAPITAL RESOURCES
The table below presents the major indicators of financial condition and
liquidity.
Sep 30, 1996 Dec 31, 1995 Change
(In millions, except debt-to-equity)
Cash and marketable securities $ 131.2 $ 134.9 $ (3.7)
Working capital (deficit) (54.4) (91.4) 37.0
Long-term debt and
capital lease obligations 255.8 322.5 (66.7)
Shareholders' equity 356.7 311.4 45.3
Debt-to-equity 42%:58% 51%:49% NA
The Company's cash and marketable securities portfolio decreased by $4
million during the first nine months of 1996. Operating activities
provided $205 million of cash during this period. Additional cash was
provided by the sale and leaseback of three B737-400 aircraft ($86 million)
and the sale of one MD-80 aircraft ($17 million). Cash was used for the
purchase of two new MD-83 aircraft, one used B737-400 aircraft, one
previously leased B737-200C, airframe and engine overhauls and other
capital expenditures ($141 million), and aircraft purchase deposits ($33
million). Cash was also used to repay $66 million of short-term borrowings
and $73 million of debt (including $52 million repaid early)
Commitments During the first nine months of 1996, lease commitments
increased approximately $141 million due to the sale and leaseback of three
B737-400 aircraft. In addition, Alaska ordered 12 Boeing 737-400 aircraft
along with an option to acquire 12 more. The value of the order, based on
the manufacturer's list price, is about $540 million. Alaska expects to
finance the planes with either leases, long-term debt or internally
generated cash. The new B737-400s will be phased in over the next three
years, with the first plane scheduled to enter the fleet in June 1997. The
new planes will replace 12 older McDonnell Douglas MD-80s.
Shareholders' equity increased to 58% of capital, an improvement of 9
percentage points, due to the $45 million year-to-date net income and the
early repayment of debt.
Alaska has commitments, during the fourth quarter of 1996, to replace its
$75 million credit facility with a $125 million credit facility with
substantially the same terms and conditions.
PART II. OTHER INFORMATION
ITEM 5. Other Information
The U.S. 10% passenger ticket tax, the 6.25% cargo waybill tax and the $6
per passenger international departure tax expired on December 31, 1995. It
was reinstated effective August 27, 1996 for travel through December 31,
1996.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit #10.1 - Agreement dated September 18, 1996 between Alaska
Airlines, Inc. and Boeing for the purchase of 12 Boeing 737-400 aircraft.
Exhibit 27 - Financial data schedule.
# Confidential treatment has been requested as to a portion of this
document.
(b) The following report on Form 8-K was filed during the third quarter of
1996:
(1) Agreement to acquire 12 Boeing 737-400 aircraft filed on September
24, 1996
Signatures
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ALASKA AIRLINES, INC.
Registrant
Date: November 4, 1996
/s/ John F. Kelly
John F. Kelly
Chairman, President and Chief Executive Officer
/s/ Harry G. Lehr
Harry G. Lehr
Senior Vice President/Finance (Principal Financial Officer)
BALANCE SHEET
Alaska Airlines, Inc.
ASSETS
Sep. 30, Dec. 31,
(In Millions) 1996 1995
Current Assets
Cash and cash equivalents $51.8 $25.6
Marketable securities 79.4 109.3
Receivables from related companies 129.8 118.6
Receivables - net 74.1 55.5
Inventories and supplies 27.6 29.0
Prepaid expenses and other assets 66.9 65.9
Total Current Assets 429.6 403.9
Property and Equipment
Flight equipment 765.2 785.3
Other property and equipment 199.1 187.9
Deposits for future flight equipment 50.7 33.1
1,015.0 1,006.3
Less accumulated depreciation and amortization 292.6 271.6
722.4 734.7
Capital leases
Flight and other equipment 44.4 44.4
Less accumulated amortization 24.9 23.4
19.5 21.0
Total Property and Equipment - Net 741.9 755.7
Intangible Assets - Subsidiaries 15.1 15.5
Other Assets 82.3 91.4
Total Assets $1,268.9 $1,266.5
See accompanying notes to financial statements.
BALANCE SHEET
Alaska Airlines, Inc.
LIABILITIES AND SHAREHOLDER'S EQUITY
Sep. 30, Dec. 31,
(In Millions) 1996 1995
Current Liabilities
Accounts payable $73.4 $81.4
Accrued aircraft rent 42.3 32.9
Accrued wages, vacation and payroll taxes 47.5 36.6
Other accrued liabilities 60.7 55.2
Short-term borrowings
(Interest rate: 1995 - 6.2%) - 65.9
Air traffic liability 166.5 123.7
Note payable to related company 64.8 64.8
Current portion of long-term debt and
capital lease obligations 28.8 34.8
Total Current Liabilities 484.0 495.3
Long-Term Debt and Capital Lease Obligations 255.8 322.5
Other Liabilities and Credits
Deferred income taxes 84.6 57.4
Deferred income 11.8 12.6
Other liabilities 76.0 67.3
172.4 137.3
Shareholder's Equity 0.0 0.0
Common stock, $1 par value 0.0 0.0
Authorized: 1,000 shares
Issued: 1996 and 1995 - 500 shares 0.0 0.0
Capital in excess of par value 225.8 225.8
Retained earnings 130.9 85.6
356.7 311.4
Total Liabilities and Shareholder's Equity $1,268.9 $1,266.5
See accompanying notes to financial statements.
STATEMENT OF INCOME
Alaska Airlines, Inc.
Three Months Ended September 30
(In Millions) 1996 1995
Operating Revenues
Passenger $344.3 $303.4
Freight and mail 22.6 23.3
Other - net 15.9 16.1
Total Operating Revenues 382.8 342.8
Operating Expenses
Wages and benefits 108.0 92.3
Aircraft fuel 56.7 41.2
Aircraft maintenance 12.9 11.9
Aircraft rent 36.2 35.0
Commissions 25.6 21.4
Depreciation and amortization 14.3 14.6
Loss (gain) on sale of assets (3.8) 0.7
Landing fees and other rentals 13.0 12.4
Other 62.9 58.1
Total Operating Expenses 325.8 287.6
Operating Income 57.0 55.2
Other Income (Expense)
Interest income 2.7 3.5
Interest expense (7.1) (10.0)
Interest capitalized 0.1 -
Other - net 0.2 0.4
(4.1) (6.1)
Income before income tax 52.9 49.1
Income tax expense 21.4 20.8
Net Income $31.5 $28.3
See accompanying notes to financial statements.
STATEMENT OF INCOME
Alaska Airlines, Inc.
Nine Months Ended September 30
(In Millions) 1996 1995
Operating Revenues
Passenger $892.1 $757.4
Freight and mail 63.4 63.6
Other - net 49.3 47.4
Total Operating Revenues 1,004.8 868.4
Operating Expenses
Wages and benefits 294.3 258.2
Aircraft fuel 148.9 111.6
Aircraft maintenance 40.8 35.2
Aircraft rent 108.4 102.7
Commissions 69.0 57.2
Depreciation and amortization 42.4 43.9
Loss (gain) on sale of assets (3.6) 1.4
Landing fees and other rentals 37.5 35.1
Other 176.1 159.3
Total Operating Expenses 913.8 804.6
Operating Income 91.0 63.8
Other Income (Expense)
Interest income 8.4 7.1
Interest expense (23.6) (30.7)
Interest capitalized 0.1 -
Other - net 0.7 1.2
(14.4) (22.4)
Income before income tax 76.6 41.4
Income tax expense 31.3 17.4
Net Income $45.3 $24.0
See accompanying notes to financial statements.
STATEMENT OF SHAREHOLDER'S EQUITY
Alaska Airlines, Inc.
Common Stock
Capital in
$1 Par Excess of Retained
(In Millions) Value Par Value Earnings Total
Balances at December 31, 1995 $ - $225.8 $85.6 $311.4
Net income for the nine months
ended September 30, 1996 45.3 45.3
Balances at September 30, 1996 $ - $225.8 $130.9 $356.7
See accompanying notes to financial statements.
STATEMENT OF CASH FLOWS
Alaska Airlines, Inc.
Nine Months Ended September 30 (In Millions) 1996 1995
Cash and cash equivalents at beginning of period $25.6 $11.3
Cash flows from operating activities:
Net income 45.4 24.0
Adjustments to reconcile net income to cash:
Depreciation and amortization 42.4 43.9
Amortization of airframe and engine overhauls 20.9 16.0
Loss (gain) on disposition of assets (3.6) 1.4
Increase in deferred income taxes 27.1 17.4
Decrease (increase) in accounts receivable 6.1 (21.8)
Decrease (increase) in other current assets 0.6 (3.5)
Increase in air traffic liability 43.0 16.0
Increase in other current liabilities 17.6 27.5
Other-net 5.6 (2.9)
Net cash provided by operating activities 205.1 118.0
Cash flows from investing activities:
Proceeds from disposition of assets 18.6 2.1
Purchases of marketable securities (45.6) (62.3)
Sales and maturities of marketable securities 75.4 70.2
Restricted deposits 0.3 (0.8)
Flight equipment deposits returned - 8.9
Additions to flight equipment deposits (33.2) -
Additions to property and equipment (141.4) (37.7)
Net cash used in investing activities (125.9) (19.6)
Cash flows from financing activities:
Proceeds from short-term borrowings - 4.0
Repayment of short-term borrowings (65.9) (29.0)
Proceeds from sale and leaseback transactions 85.6 -
Long-term debt and capital lease payments (72.7) (24.1)
Loan repayments to related companies - (2.8)
Net cash used in financing activities (53.0) (51.9)
Net increase in cash and cash equivalents 26.2 46.5
Cash and cash equivalents at end of period $51.8 $57.8
Supplemental disclosure of cash paid during the period for:
Interest (net of amount capitalized) $23.7 $30.4
Income taxes 7.5 0.1
Noncash investing and financing activities:
1996 - Alaska Airlines transferred an MD-83 aircraft to Alaska Air Group
in exchange for a $36 million receivable.
1995 - None
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS THAT HAVE CHANGED SIGNIFICANTLY DURING THE
NINE MONTHS ENDED SEPTEMBER 30, 1996
Alaska Airlines, Inc.
Note 1. Commitments (See Note 6 to Financial Statements at December 31,
1995)
During the first quarter of 1996, Alaska's lease commitments increased
approximately $96 million due to the sale and leaseback of two B737-400
aircraft under 18-1/2-year operating leases. During the third quarter of
1996, Alaska's lease commitments increased approximately $45 million due to
the sale and leaseback of one B737-400 aircraft under an 18-year operating
lease.
During the third quarter of 1996, Alaska ordered 12 Boeing 737-400 aircraft
along with an option to acquire 12 more. The value of the order, based on
the manufacturer's list price, is about $540 million.
Alaska Airlines Financial and Statistical Data
Quarter Ended Sep 30 Nine Months Ended Sep 30
% %
1996 1995 Change 1996 1995 Change
Financial Data (in millions):
Operating Revenues:
Passenger $344.3 $303.4 13.5 $892.1 $757.4 17.8
Freight and mail 22.6 23.3 (3.0) 63.4 63.6 (0.3)
Other - net 15.9 16.1 (1.2) 49.3 47.4 4.0
Total Operating Revenues 382.8 342.8 11.7 1,004.8 868.4 15.7
Operating Expenses:
Wages and benefits 100.4 92.3 8.8 286.7 258.2 11.0
Employee profit sharing 7.6 0.0 NM 7.6 0.0 NM
Aircraft fuel 56.7 41.2 37.6 148.9 111.6 33.4
Aircraft maintenance 12.9 11.9 8.4 40.8 35.2 15.9
Aircraft rent 36.2 35.0 3.4 108.4 102.7 5.6
Commissions 25.6 21.4 19.6 69.0 57.2 20.6
Depreciation and amort. 14.3 14.6 (2.1) 42.4 43.9 (3.4)
Loss (gain) on sale of assets (3.8) 0.7 NM (3.6) 1.4 NM
Landing fees and other rent 13.0 12.4 4.8 37.5 35.1 6.8
Other 62.9 58.1 8.3 176.1 159.3 10.5
Total Operating Expenses 325.8 287.6 13.3 913.8 804.6 13.6
Operating Income 57.0 55.2 3.3 91.0 63.8 42.6
Interest income 2.7 3.5 8.4 7.1
Interest expense (7.1) (10.0) (23.6) (30.7)
Interest capitalized 0.1 0.0 0.1 0.0
Other - net 0.2 0.4 0.7 1.2
(4.1) (6.1) (14.4) (22.4)
Income Before Income Tax $52.9 $49.1 $76.6 $41.4
Operating Statistics:
Revenue passengers (000) 3,420 2,954 15.8 9,001 7,548 19.2
RPM's (000,000) 2,893 2,528 14.5 7,524 6,464 16.4
ASM's (000,000) 4,100 3,831 7.0 11,409 10,512 8.5
Passenger load factor 70.6% 66.0% 4.6 pts 65.9% 61.5% 4.4 pts
Breakeven load factor 59.7% 54.4% 5.3 pts 60.4% 58.1% 2.3 pts
Yield per passenger mile 11.90c 12.00c (0.8) 11.86c 11.72c 1.2
Operating revenue per ASM 9.34c 8.95c 4.4 8.81c 8.26c 6.6
Operating expenses per ASM 7.95c 7.51c 5.8 8.01c 7.65c 4.7
Fuel cost per gallon 77.6c 61.0c 27.1 73.5c 60.7c 21.1
Average number of employees 7,877 7,243 8.8 7,562 6,944 8.9
Acft utilization (block hr) 11.9 11.4 4.3 11.4 10.9 4.9
Operating fleet at period-end 75 74 1.4 75 74 1.4
NM = Not Meaningful
c= cents
Exhibit 10.1
PURCHASE AGREEMENT
between
THE BOEING COMPANY
and
ALASKA AIRLINES, INC.
Relating to Boeing Model 737 Aircraft
Purchase Agreement Number 1954
TABLE OF CONTENTS
Page SA
Number Number
ARTICLES
1. Subject Matter of Sale 1-1
2. Delivery, Title and Risk
of Loss 2-1
3. Price of Aircraft 3-1
4. Taxes 4-1
5. Payment 5-1
6. Excusable Delay 6-1
7. Changes to the Detail
Specification 7-1
8. Federal Aviation Requirements and
Certificates and Export License 8-1
9. Representatives, Inspection,
Flights and Test Data 9-1
10. Assignment, Resale or Lease 10-1
11. Termination for Certain Events 11-1
12. Product Assurance; Disclaimer and
Release; Exclusion of Liabilities;
Customer Support; Indemnification
and Insurance 12-1
13. Buyer Furnished Equipment and
Spare Parts 13-1
14. Contractual Notices and Requests 14-1
15. Miscellaneous 15-1
TABLES
1. Aircraft Deliveries and
Descriptions S-1
TABLE OF CONTENTS
SA
Number
EXHIBITS
A Aircraft Configuration
B Product Assurance Document
C Customer Support Document
D Price Adjustments Due to
Economic Fluctuations -
Airframe and Engines
E Buyer Furnished Equipment
Provisions Document
F Defined Terms Document
LETTER AGREEMENTS
1954-1 Promotion Support
1954-2 Seller Purchased Equipment
1954-3 Option Aircraft.......................
1954-4 Spares Initial Provisioning...........
1954-5 Escalation Sharing....................
1954-6 Waiver of Aircraft Demonstration
Flights...........
1954-7 Additional Purchase Agreement .........
Provisions.............................
TABLE OF CONTENTS
SA
Number
RESTRICTED LETTER AGREEMENTS
6-1162-DSF-003 [Confidential Treatment Requested]
6-1162-DSF-004 [Confidential Treatment Requested]
6-1162-DSF-005 [Confidential Treatment Requested]
6-1162-DSF-006 [Confidential Treatment Requested]
6-1162-DSF-008 [Confidential Treatment Requested]
6-1162-DSF-009 [Confidential Treatment Requested]
6-1162-DSF-012 [Confidential Treatment Requested]
6-1162-DSF-016 Special Purchase Agreement Provisions
[Confidential Treatment Requested]
PURCHASE AGREEMENT NO. 1954
Relating to
BOEING MODEL 737-490 AIRCRAFT
This Agreement is entered into as of September 18, 1996 by and
between The Boeing Company, a Delaware corporation, with its principal
office in Seattle, Washington (Boeing), and Alaska Airlines, Inc., an
Alaska corporation, with its principal office in the City of Seattle, State
of Washington (Buyer).
Accordingly, Boeing and Buyer agree as follows:
ARTICLE 1. Subject Matter of Sale.
1.1 The Aircraft. Boeing will manufacture and deliver to Buyer
and Buyer will purchase and accept delivery from Boeing of twelve (12)
Boeing Model 737-490 aircraft (the Aircraft) manufactured in
accordance with Boeing detail specification D6-38900-4-1C dated August 29,
1996, as described in Exhibit A, as modified from time to time in
accordance with this Agreement (Detail Specification).
1.2 Additional Goods and Services. In connection with the sale
of the Aircraft, Boeing will also provide to Buyer certain other things
under this Agreement, including data, documents, training and services, all
as described in this Agreement.
1.3 Performance Guarantees. Any performance guarantees
applicable to the Aircraft will be expressly included in this Agreement.
Where performance guarantees are included in this Agreement other than
within the Detail Specification, such guarantees will be treated as being
incorporated in the Detail Specification by this reference.
1.4 Defined Terms. For ease of use, certain terms are treated as
defined terms in this Agreement. Such terms are identified with a capital
letter and set forth and/or defined in Exhibit F.
ARTICLE 2. Delivery, Title and Risk of Loss.
2.1 Time of Delivery. The Aircraft will be delivered to Buyer by
Boeing, and Buyer will accept delivery of the Aircraft, in accordance with
the schedule set forth in Table 1.
2.2 Notice of Target Delivery Date. Boeing will give Buyer
notice of the Target Delivery Date of the Aircraft approximately 30 days
prior to the scheduled month of delivery.
2.3 Notice of Delivery Date. Boeing will give Buyer at least 7
days notice of the delivery date of the Aircraft. If an Aircraft delivery
is delayed beyond such delivery date due to the responsibility of Buyer,
Buyer will reimburse Boeing for all costs incurred by Boeing as a result of
such delay, including amounts for storage, insurance, Taxes, preservation
or protection of the Aircraft and interest on payments due.
2.4 Place of Delivery. The Aircraft will be delivered at a
facility selected by Boeing in the State of Washington, unless mutually
agreed otherwise.
2.5 Title and Risk of Loss. Title to and risk of loss of an
Aircraft will pass from Boeing to Buyer upon delivery of such Aircraft, but
not prior thereto.
2.6 Bill of Sale. Upon delivery of an Aircraft Boeing will
deliver to Buyer a bill of sale conveying good title to such Aircraft, free
of any encumbrances.
ARTICLE 3. Price of Aircraft.
3.1 Definitions.
3.1.1 Special Features are the features incorporated in
Exhibit A which have been selected by Buyer.
3.1.2 Base Airframe Price is the Aircraft Basic Price
excluding the price of Special Features and Engines.
3.1.3 Engine Price is the price established by the Engine
manufacturer for the Engines installed on the Aircraft including all
accessories, equipment and parts set forth in Exhibit D.
3.1.4 Aircraft Basic Price is comprised of the Base Airframe
Price, the Engine Price and the price of the Special Features.
3.1.5 Economic Price Adjustment is the adjustment to the
Aircraft Basic Price (Base Airframe, Engine and Special Features) as
calculated pursuant to Exhibit D.
3.1.6 Aircraft Price is the total amount Buyer is to pay for
the Aircraft at the time of delivery.
3.2 Aircraft Basic Price.
The Aircraft Basic Price, expressed in July 1995 dollars, is
set forth below:
Base Airframe Price: [Confidential Treatment Requested]
Special Features [Confidential Treatment Requested]
Engine Price [Confidential Treatment Requested]
Aircraft Basic Price [Confidential Treatment Requested]
3.3 Aircraft Price. The Aircraft Price will be established at
the time of delivery of such Aircraft to Buyer and will be the sum of:
3.3.1 the Aircraft Basic Price, which is [Confidential
Treatment Requested]
3.3.2 the Economic Price Adjustments for the Aircraft Basic
Price, as calculated pursuant to the formulas set forth in Exhibit D (Price
Adjustments Due to Economic Fluctuations - Airframe and Engine); plus
3.3.3 other price adjustments made pursuant to this
Agreement or other written agreements executed by Boeing and Buyer.
3.4 Advance Payment Base Price.
3.4.1 Advance Payment Base Price. For advance payment
purposes, the following estimated delivery prices of the Aircraft have been
established, using currently available forecasts of the escalation factors
used by Boeing as of the date of signing this Agreement. The Advance
Payment Base Price of each Aircraft is set forth in Table 1.
ARTICLE 4. Taxes.
4.1 Taxes. Buyer will pay all Taxes imposed by any domestic or
foreign taxing authority arising out of or in connection with this
Agreement or performance pursuant to it. In this Agreement, "Taxes" are
defined as all taxes, fees, charges or duties and any interest, penalties,
fines, or other additions to tax, including, but not limited to, sales,
use, value added, gross receipts, stamp, excise, transfer and similar
taxes, except U.S. federal income taxes and Washington State business and
occupation tax imposed on Boeing.
4.2 Taxes Relating to Buyer Furnished Equipment. Buyer is
responsible for the proper filing of all tax returns, reports and
declarations and payment of all taxes related to or imposed on Buyer
Furnished Equipment.
4.3 Reimbursement of Boeing. Buyer will promptly reimburse
Boeing on demand, net of additional taxes thereon, for any Taxes that are
imposed on and paid by Boeing or for which Boeing is responsible for
collecting.
ARTICLE 5. Payment.
5.1 Advance Payment Schedule. Advance payment for each Aircraft
will be made to Boeing by Buyer as follows:
Due Date of Payment Amount Due /per Aircraft/
(Percentage times
Advance Payment Base Price)
Upon signing the Agreement 1% (less the
Deposit)
24 months prior to the first 4%
day of the scheduled delivery
month of the Aircraft
21 months prior to the first 5%
day of the scheduled delivery
month of the Aircraft
18 months prior to the first 5%
day of the scheduled delivery
month of the Aircraft
12 months prior to the first 5%
day of the scheduled delivery
month of the Aircraft
9 months prior to the first 5%
day of the scheduled delivery
month of the Aircraft
6 months prior to the first 5%
day of the scheduled delivery
month of the Aircraft/
Total 30%
5.2 Payment at Delivery. The Aircraft Price, less Advance
Payments received by Boeing, is due on delivery of such Aircraft to Buyer.
5.3 Form of Payments. All payments due hereunder will be made by
Buyer to Boeing by unconditional deposit in a bank account in the United
States designated by Boeing or in other immediately available funds. All
prices and payments set forth in this Agreement are in United States
Dollars.
5.4 Monetary and Government Regulations. Buyer will be
responsible for complying with all monetary control regulations and for
obtaining necessary governmental authorizations related to payments
hereunder.
ARTICLE 6. Excusable Delay.
6.1 General. Boeing will not be liable for or be deemed to be in
default under this Agreement on account of any delay in delivery of any
Aircraft or other performance hereunder arising out of causes such as:
acts of God; war, armed hostilities, riots, fires, floods, earthquakes or
serious accidents; governmental acts or failures to act affecting
materials, facilities or Aircraft; strikes or labor troubles causing
cessation, slowdown or interruption of work; damage to an Aircraft; failure
of or delay in transportation; or inability, after due and timely
diligence, to procure materials, systems, accessories, equipment or parts;
or arising out of any other cause to the extent it is beyond Boeing's
control or not occasioned by Boeing's fault or negligence. A delay
resulting from such causes is referred to as an "Excusable Delay".
6.2 Excusable Delay of 12 Months.
6.2.1 Anticipated Delay. If Boeing concludes, based on its
appraisal of the facts and normal scheduling procedures, that due to an
Excusable Delay, delivery of an Aircraft will be delayed more than 12
months beyond the month in which delivery is scheduled, Boeing will
promptly so notify Buyer in writing and either party may then terminate
this Agreement with respect to such Aircraft by giving written notice to
the other within 15 days after receipt by Buyer of Boeing's notice.
Failure of a party to terminate the purchase of an Aircraft for an
Excusable Delay pursuant to this paragraph results in a waiver of that
party's right to terminate the purchase of such Aircraft for any delay in
delivery caused by such Excusable Delay.
6.2.2 Actual Delay. If, due to an Excusable Delay, delivery
of an Aircraft is delayed for more than 12 months beyond the month in which
delivery is scheduled, and such right to terminate has not been waived
under paragraph 6.2.1, either party may terminate this Agreement with
respect to such Aircraft by giving written notice to the other within 15
days after the expiration of such 12-month period.
6.3 Aircraft Damaged Beyond Repair. If, prior to delivery, an
Aircraft is destroyed or damaged beyond economic repair due to any cause,
Boeing will promptly notify Buyer in writing and either party may then
terminate this Agreement with respect to such Aircraft. If Boeing does not
so terminate this Agreement with respect to such Aircraft, such notice will
specify the earliest date reasonably possible, consistent with Boeing's
other contractual commitments and production capabilities, by which Boeing
will deliver a replacement for such Aircraft. This Agreement will
thereupon terminate as to such Aircraft, unless Buyer gives Boeing written
notice, within 30 days after receipt of Boeing's notice, that Buyer desires
the proposed replacement for such Aircraft.
6.4 Agreement Revision. If an Aircraft is delayed, or destroyed
or damaged beyond economic repair, and this Agreement is not terminated
pursuant to this Article, this Agreement will be appropriately revised.
6.5 Agreement Termination.
6.5.1 Termination under this Article will discharge all
obligations and liabilities of Boeing and Buyer hereunder with respect to
terminated Aircraft and all related undelivered items and services, except
that Boeing will return to Buyer, without interest, all advance payments
related to such Aircraft,
6.5.2 If either party terminates this Agreement as to any
Aircraft pursuant to this Article, Boeing may, upon written notice to Buyer
within 30 days after such termination, purchase from Buyer any Buyer
Furnished Equipment related to such Aircraft, at the invoice prices paid,
or contracted to be paid, by Buyer.
6.6 Exclusive Rights. The termination rights set forth in this
Article are in substitution for any and all other rights of termination or
contract lapse or any other claim arising by operation of law by virtue of
delays in performance covered by this Article.
ARTICLE 7. Changes to the Detail Specification.
7.1 Development Changes. Boeing may, at its own expense and
without Buyer's consent, incorporate Development Changes in the Detail
Specification and the Aircraft prior to delivery to Buyer. Development
Changes are defined as changes to the basic specification for
Model 737 aircraft that do not affect the Aircraft Purchase Price
or adversely affect Aircraft delivery, guaranteed weight, guaranteed
performance or compliance with the interchangeability or replaceability
requirements set forth in the Detail Specification. If Boeing makes
changes pursuant to this paragraph, Boeing will promptly notify Buyer of
such changes.
7.2 Change Orders. The Detail Specification and associated
provisions of this Agreement may be amended by Change Order or other
written agreement, which will state the particular changes to be made and
any effect on design, performance, weight, balance, time of delivery,
Aircraft Basic Price and Advance Payment Base Price.
ARTICLE 8. Federal Aviation Requirements and Certificates.
8.1 FAA Certificates.
8.1.1 Boeing will obtain from the Federal Aviation
Administration (FAA):
8.1.1.1 a Type Certificate (transport category)
issued pursuant to Part 21 of the Federal Aviation Regulations for the type
of aircraft covered by this Agreement, and
8.1.1.2 a Standard Airworthiness Certificate for each
Aircraft issued pursuant to Part 21 of the Federal Aviation Regulations,
which will be provided to Buyer with delivery of the Aircraft.
8.1.2 Boeing will not be obligated to obtain any other
certificates or approvals for the Aircraft.
8.1.3 If the use of either FAA certificate is discontinued
prior to delivery of an Aircraft, references in this Agreement to such
discontinued certificate will be deemed references to its superseding FAA
certificate. If the FAA does not issue a superseding certificate, Boeing's
only obligation under this paragraph will be to comply with the Detail
Specification.
8.2 FAA Manufacturer Changes.
8.2.1 If the FAA, or any other governmental agency having
jurisdiction, requires any change to the Aircraft, data relating to the
Aircraft, or testing of the Aircraft in order to obtain the Standard
Airworthiness Certificate (Manufacturer Change), such Manufacturer Change
will be made prior to delivery of such Aircraft.
8.2.2 If prior to Aircraft delivery a Manufacturer Change is
required to be incorporated in an Aircraft, it will be incorporated at no
charge to Buyer, unless the requirement is promulgated subsequent to the
date of this Agreement, in which case Buyer will pay Boeing's
charge only for Aircraft scheduled for delivery to Buyer 18 months or more
after the date of this Agreement.
8.3 FAA Operator Changes.
8.3.1 Boeing will deliver each Aircraft with the changes in
equipment incorporated (or, at Boeing's sole discretion, with suitable
provisions for the incorporation of such equipment) that is required by
Federal Aviation Regulations which (i) are generally applicable with
respect to transport category aircraft to be used in United States
certified air carriage and (ii) have to be complied with on or before the
date of delivery of such Aircraft (Operator Changes).
8.3.2 If Operator Changes are incorporated in an Aircraft,
Buyer will pay Boeing's charge applicable to such Aircraft.
8.4 Delays; Changes to this Agreement. If delivery of an
Aircraft is delayed due to the incorporation of a Manufacturer Change or an
Operator Change, the delivery of the Aircraft will be appropriately revised
to reflect such delay. This Agreement will also be revised to reflect
appropriate changes in the Aircraft Price, design, performance, weight and
balance due to the incorporation of a Manufacturer Change or an Operator
Change.
ARTICLE 9. Representatives, Inspection,
Flights and Test Data.
9.1 Office Space at Boeing. From a date 12 months prior to
delivery of the first Aircraft, and until the delivery of the last
Aircraft, Boeing will furnish, without additional charge, suitable office
space and equipment in or conveniently located near its plant in Seattle
for the accommodation of up to three (3) personnel of Buyer.
9.2 Inspection by Buyer. Designated representatives of Buyer may
inspect the manufacturing of the Aircraft at all reasonable times.
However, if access to any part of Boeing's plant is restricted by the
United States Government, Boeing will be allowed a reasonable time to
arrange for inspection elsewhere. All inspections by Buyer's
representatives will be performed so as not to hinder manufacture or
performance by Boeing.
9.3 Aircraft Flight. Prior to delivery, each Aircraft will be
flown by Boeing for such periods as may be required to demonstrate to Buyer
the function of the Aircraft and its equipment in accordance with Boeing's
production flight test procedures. The aggregate duration of such flights
will be not less than 1-1/2 hours or more than 4 hours. Five persons
designated by Buyer may participate in such flights as observers.
9.4 Test Data. Boeing will furnish to Buyer, as soon as
practicable, flight test data obtained on an aircraft of the type purchased
hereunder, certified as correct by Boeing, to evidence compliance with any
performance guarantees set forth in this Agreement. Any Performance
Guarantee will be deemed to be met if reasonable engineering
interpretations and calculations based on such flight test data establish
that the Aircraft would, if actually flown, comply with such guarantee.
9.5 Special Aircraft Test Requirements. Boeing may use the
Aircraft for flight and ground tests prior to delivery to Buyer, without
reduction in the Aircraft Purchase Price, if such tests are deemed
necessary by Boeing to:
9.5.1 obtain or maintain the Type Certificate or Standard
Airworthiness Certificate for the Aircraft; or
9.5.2 evaluate aircraft improvement changes that may be
offered for production or retrofit incorporation in any aircraft.
9.6 Indemnity. Boeing will indemnify and hold harmless Buyer and
Buyer's observers from and against all claims and liabilities, including
costs and expenses (including attorneys' fees) incident thereto, for injury
to or death of any person or persons, including employees of Boeing but
excluding employees, officers or agents of Buyer, or for loss of or damage
to any property, arising out of or in connection with the operation of the
Aircraft during all demonstration and test flights conducted under the
provisions of this Article, whether or not arising in tort or occasioned in
whole or in part by the negligence of Buyer or any of Buyer's observers,
whether active, passive or imputed.
ARTICLE 10. Assignment, Resale or Lease.
10.1 Assignment. This Agreement will inure to the benefit of and
be binding upon each of the parties hereto and their respective successors
and assigns. Neither the rights nor the duties of either party under this
Agreement may be assigned or delegated, or contracted to be assigned or
delegated, in whole or part, without the prior written consent of the other
party, except that:
10.1.1 Either party may assign its interest to a corporation
that (i) results from any merger or reorganization of such party or (ii)
acquires substantially all the assets of such party;
10.1.2 Boeing may assign its rights to receive money; and
10.1.3 Boeing may assign all or any part of its rights and
obligations under this Agreement to any wholly owned subsidiary of Boeing,
provided that Boeing will remain fully and solely responsible to Buyer for
all obligations and liabilities as the seller of the Aircraft, and Buyer
will continue to deal exclusively with Boeing.
10.2 Transfer by Buyer at Delivery. Buyer may, and at Buyer's
request Boeing will, take any action reasonably required for the purpose of
causing an Aircraft, at time of delivery, to be subjected to an equipment
trust, conditional sale, lien or other arrangement for the financing by
Buyer of such Aircraft. No action taken by either party pursuant to this
paragraph, however, will require Boeing to divest itself of title to or
possession of such Aircraft until delivery and payment therefor pursuant to
this Agreement.
10.3 Sale by Buyer After Delivery. If, following delivery of any
Aircraft, Buyer sells such Aircraft (including any sale for financing
purposes), then all of Buyer's rights with respect to such Aircraft under
this Agreement will inure to the benefit of the purchaser of such Aircraft,
effective upon Boeing's receipt of such purchaser's express written
agreement, in form satisfactory to Boeing, to be bound by and to comply
with all applicable terms, conditions and limitations of this Agreement.
10.4 Lease by Buyer After Delivery. If, following delivery of any
Aircraft, Buyer leases such Aircraft, Buyer will not assign to the lessee
of such Aircraft any rights under this Agreement without Boeing's prior
written consent, which consent will not be unreasonably withheld.
10.5 No Increase in Boeing Liability. No action taken by Buyer or
Boeing relating to the assignment, resale or lease of any Aircraft or this
Agreement will subject Boeing to any liability beyond that in this
Agreement or modify in any way Boeing's obligations under this Agreement.
10.6 Exculpatory or Indemnity Clause in Post-Delivery Sale or
Lease. If, following delivery of an Aircraft, Buyer sells or leases such
Aircraft and obtains from the transferee an exculpatory or indemnity clause
protecting Buyer, Buyer will include the same protection for Boeing.
ARTICLE 11. Termination for Certain Events.
11.1 Termination. This Agreement may be terminated at any time
with regard to undelivered Aircraft and items and unperformed services by
notice in writing by either party hereto if the other party:
11.1.1 Ceases doing business as a going concern, suspends all
or substantially all its business operations, makes an assignment for the
benefit of creditors, is insolvent, or generally does not pay its debts, or
admits in writing its inability to pay its debts; or
11.1.2 Petitions for or acquiesces in the appointment of any
receiver, trustee or similar officer to liquidate or conserve its business
or any substantial part of its assets; commences any legal proceeding such
as insolvency, bankruptcy, reorganization, readjustment of debt,
dissolution or liquidation available for the relief of financially
distressed debtors; or becomes the object of any such proceeding, unless
such proceeding is dismissed or stayed within a reasonable period, not to
exceed 60 days.
11.2 Repayment of Advance Payments. If this Agreement is
terminated with regard to any Aircraft by Buyer under this Article, Boeing
will repay to Buyer, without interest, any advance payments received by
Boeing from Buyer with respect to such Aircraft.
ARTICLE 12. Product Assurance; Disclaimer and Release; Exclusion of
Liabilities; Customer Support; Indemnification and Insurance.
12.1 Product Assurance. Boeing and Buyer are bound by the
provisions of Exhibit B hereto (Product Assurance Document).
12.2 DISCLAIMER AND RELEASE. THE WARRANTIES, OBLIGATIONS AND
LIABILITIES OF BOEING AND THE REMEDIES OF BUYER SET FORTH IN THE PRODUCT
ASSURANCE DOCUMENT ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND BUYER HEREBY
WAIVES, RELEASES AND RENOUNCES, ALL OTHER WARRANTIES, OBLIGATIONS AND
LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF BUYER
AGAINST BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH
RESPECT TO ANY NONCONFORMANCE OR DEFECT IN ANY AIRCRAFT OR OTHER THING
PROVIDED UNDER THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO:
(A) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;
(B) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;
(C) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN
TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF
BOEING (WHETHER ACTIVE, PASSIVE OR IMPUTED); AND
(D) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR
LOSS OF OR DAMAGE TO ANY AIRCRAFT.
12.3 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL
HAVE NO OBLIGATION OR LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING
WARRANTY), TORT (INCLUDING ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE) OR
OTHERWISE, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL
OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT IN
ANY AIRCRAFT OR OTHER THING PROVIDED UNDER THIS AGREEMENT.
12.4 Definitions. For the purposes of this Article, the term
"BOEING" means The Boeing Company, its divisions, subsidiaries and
affiliates, the assignees of each, and their directors, officers, employees
and agents.
12.5 Customer Support and Indemnification; Insurance. Boeing and
Buyer are bound by the provisions of Exhibit C hereto (Customer Support
Document), which includes indemnification and insurance requirements
related to the use of Customer Support Services.
ARTICLE 13. Buyer Furnished Equipment and Spare Parts.
13.1 Buyer Furnished Equipment. Boeing and Buyer are bound by the
provisions of Exhibit E (Buyer Furnished Equipment Document), which
includes indemnification requirements related to Buyer Furnished Equipment.
13.2 Purchase of Boeing Spare Parts. Boeing will sell to Buyer
and Buyer will purchase from Boeing materials, spare parts, assemblies,
tools and items of equipment relating to the Aircraft pursuant to Customer
Services General Terms Agreement No. 90.
ARTICLE 14. Contractual Notices and Requests.
All notices and requests relating to this Agreement will be in
English, and may be transmitted by any customary means of written
communication addressed as follows:
Buyer: Alaska Airlines
19300 Pacific Highway South
Attention: Senior Vice President
Finance
Copy to: Associate General Counsel
Facsimile No. (206) 433-3379
Boeing: Boeing Commercial Airplane Group
P.O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
Attention: Vice President - Contracts
Mail Stop 75-38
Facsimile No. (206) 237-1706
or to such other address as specified elsewhere herein or as otherwise
directed in writing by either party. The effective date of any such notice
or request will be the date on which it is received by the addressee.
ARTICLE 15. Miscellaneous.
15.1 Government Approval. Boeing and Buyer will use their best
reasonable efforts to assist each other in obtaining any United States
Governmental agency consents or approvals necessary or appropriate to
effect certification and sale of the Aircraft under this Agreement.
15.2 Headings. Article and paragraph headings used in this
Agreement are for convenient reference only and are not intended to affect
the interpretation of this Agreement.
15.3 Entire Agreement; Amendments. This Agreement contains the
entire agreement between the parties concerning the subject matter hereof
and supersedes all previous proposals, understandings, commitments or
representations whatsoever, oral or written. This Agreement may be changed
only in writing signed by authorized representatives of Boeing and Buyer,
except in the case of certain changes permitted or required by this
Agreement.
15.4 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY THE LAW OF
THE STATE OF WASHINGTON, U.S.A., EXCLUSIVE OF WASHINGTON'S CONFLICTS OF
LAWS RULES.
15.5 Negotiated Agreement. This Agreement, including the
provisions of Article 12 relating to DISCLAIMER AND RELEASE, the Exclusion
of Consequential and Other Damages, and the provisions relating to
indemnification and insurance set forth in this Agreement, has been the
subject of discussion and negotiation and is fully understood by the
parties; the Aircraft Purchase Price and other agreements of the parties
set forth in this Agreement were arrived at in consideration of such
provisions.
*************************
ALASKA AIRLINES
THE BOEING COMPANY
By /s/ Harry G. Lehr By /s/ Dawn S. Foster
Its Senior Vice President Finance Its Attorney-In-Fact
Table 1 to
Purchase Agreement 1954
Aircraft Deliveries and Descriptions
Model 737-490 Aircraft
Detail Specification No. and Date - D6-38900-4-1C 8-29-96
Exhibit Number - A
Month/Year Quantity of
of Delivery Aircraft Price
June 1997 One (1) [Confidential Treatment Requested]
July 1997 Two (2) [Confidential Treatment Requested]
January 1998 One (1) [Confidential Treatment Requested]
February 1998 One (1) [Confidential Treatment Requested]
March 1998 One (1) [Confidential Treatment Requested]
April 1998 One (1) [Confidential Treatment Requested]
May 1998 One (1) [Confidential Treatment Requested]
August 1998 One (1) [Confidential Treatment Requested]
September 1998 One (1) [Confidential Treatment Requested]
March 1999 One (1) [Confidential Treatment Requested]
May 1999 One (1) [Confidential Treatment Requested]
AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
ALASKA AIRLINES, INC.
Exhibit A to Purchase Agreement Number 1954
AIRCRAFT CONFIGURATION
Dated September 18, 1996
relating to
BOEING MODEL 737-490 AIRCRAFT
The Detail Specification is Detail Specification D6-38900-4-1C
dated as of August 29, 1996. Such Detail Specification will be comprised
of Detail Specification D6-38900-4-1 Revision T dated February 3, 1995 as
amended to incorporate the applicable specification language to reflect the
effect of the changes set forth in the Change Requests listed below
(configuration of leased ILFC Model 737-4Q8 Aircraft PW251), including the
effects of such changes on Manufacturer's Empty Weight (MEW) and Operating
Empty Weight (OEW). Such Change Requests are set forth in Boeing Document
D6-77136. As soon as practicable, Boeing will furnish to Buyer copies of
the Detail Specification, which copies will reflect the effect of such
changes. The Aircraft Basic Price reflects and includes all effects of
such changes of price, except such Aircraft Basic Price does not include
the price effects of Change Requests changing Buyer Furnished Equipment to
Seller Purchased Equipment.
Price
Per Aircraft
Change No./Title (1995$ STE)
1110MP3354 [CTR]*
EXTERIOR DECORATIVE FINISH - COURTAULDS DESOTHANE
HS HIGH SOLIDS TOPCOAT IN LIEU OF EXISTING TOPCOAT
2520CH3688 [CTR]*
INTERIOR ARRANGEMENT REVISION - (8) BFE FIRST
CLASS SEATS AND (132) BFE TOURIST CLASS SETAS
2524MP3498 [CTR]*
BFE CLOSET AND BFE CLASS DIVIDER - REVISION
2527MP3125 [CTR]*
PASSENGER COMPARTMENT FLOOR COVERING -
INSTALLATION OF NEW BFE CARPETING
3435CH3033 [CTR]*
FLIGHT DYNAMICS CAPTAIN ONLY HEAD UP
GUIDANCE SYSTEM - COMPLETE BFE INSTALLATION -
ILFC/ALASKA AIRLINES EFIS EQUIPED AIRPLANES
3446MP3147 [CTR]*
GROUND PROXIMITY WARNING SYSTEM - BANK ANGLE
CALLOUT REVISION
3458CH3040 [CTR]*
INSTALL PARTIAL PROVISIONS FOR GLOBAL
POSITIONING SYSTEM
3458MP3114 [CTR]*
GLOBAL POSITIONING SYSTEM (GPS) - INSTALLATION -
HONEYWELL, INC.
3461CH3199 [CTR]*
FMC - REVISION - INSTALLATION OF A SECOND
4 MCU, UPDATE 7 FMC INTO EXISTING PARTIAL
PROVISIONS
TOTAL $[CTR]*
[CTR]* - Confidential Treatment Requested
PRODUCT ASSURANCE DOCUMENT
between
THE BOEING COMPANY
and
ALASKA AIRLINES
Exhibit B to Purchase Agreement Number 1954
PRODUCT ASSURANCE DOCUMENT NO. 1954
Dated
Relating to
BOEING MODEL 737-490 AIRCRAFT
This Product Assurance Document is Exhibit B to and forms a part of
Purchase Agreement No. 1954 between The Boeing Company (Boeing) and Alaska
Airlines (Buyer) relating to the purchase of Boeing Model 737-490 aircraft.
This Product Assurance Document consists of the following parts:
PART A Boeing Warranty
PART B Warranty Repairs and Modifications by Buyer
PART C Boeing Service Life Policy
PART D Boeing Indemnity Against Patent Infringement
PART D-1 Boeing Indemnity Against Copyright Infringement
PART E Supplier Warranties and Patent Indemnities
PART F Engine Manufacturer Warranties
PART G Boeing Interface Commitment
PART H General
PART A
BOEING WARRANTY
1. Warranties.
Subject to the exceptions set forth herein, Boeing warrants that, at
the time of delivery, each Aircraft, including all installed systems,
accessories, equipment and parts, will:
1.1 conform to the Detail Specification, as it may be changed
pursuant to this Agreement, except such portions stated to be estimates,
approximations, design objectives, or design criteria, or described as not
guaranteed;
1.2 be free from defects in material and workmanship, including
process of manufacture; and
1.3 be free from defects in design, including selection of (i)
materials and (ii) process of manufacture, in view of the state of the art
at the time of design.
For purposes of this Boeing Warranty, nonconformance with the Detail
Specification, defects in material or workmanship and defects in design may
hereinafter be called "defects" or a "defect", and the term "system",
"accessory", "equipment" or "part" may hereinafter be called "item" or
"items."
2. Exceptions.
The warranties above will not apply to BFE. The warranty above
covering material and workmanship and the warranty above covering design
will not apply to Engines or to any other item purchased by Boeing but not
manufactured to Boeing's detailed design. However, any defect in the
Boeing workmanship installing such BFE, Engines or other items in an
Aircraft will constitute a defect in workmanship.
3. Survival of Warranties.
Neither the warranty of conformance to the Detail Specification
applicable to Engines and other items purchased by Boeing but not
manufactured to Boeing's detailed design, nor any Performance Guarantees,
will
survive delivery of the Aircraft. The remaining warranties set forth
herein will survive delivery of the Aircraft, subject to the limitations
and conditions set forth herein.
4. Warranty Periods and Claims.
4.1 The warranty periods are:
4.1.1 As to a defect in conformance to the Detail
Specification, 36 months after delivery of each Aircraft, and
4.1.2 As to a defect in material, workmanship or design in
any item, 36 months after delivery of each Aircraft in which such item was
initially installed.
4.2 Boeing's Product Assurance Regional Manager at Renton,
Washington must receive the warranty claim in writing at the earliest
practicable time after the defect becomes apparent but in no event later
than 90 days after expiration of the applicable warranty period.
4.3 Such warranty claim must include the data set forth below
and, if requested by Boeing, reasonable evidence that the claimed defect
did not result from any act or omission of Buyer.
4.3.1 Identity of the item or Aircraft involved, including
Boeing part number, serial number if applicable, nomenclature and the
quantity claimed to be defective;
4.3.2 Identity of the Aircraft on which the claimed item was
installed as original equipment;
4.3.3 Date the claimed defect became apparent which will be
the date such defect was discovered by Buyer or the warranty date set forth
in a Boeing service bulletin or service letter, whichever date occurs
first; and
4.3.4 Description of the claimed defect and circumstances,
including Boeing service bulletin or Boeing service letter number if claim
involves a service bulletin or letter.
4.4 Upon completion of Boeing's warranty claim investigation,
including examination of any item or Aircraft returned to Boeing, Boeing
will provide a written disposition of its warranty claim findings to Buyer.
In the event Boeing rejects Buyer's warranty claim, Boeing will provide
reasonable substantiation of such rejection in its disposition.
5. Remedies.
Buyer's remedies under this Boeing Warranty are as follows:
5.1 As to a defect in conformance to the Detail Specification,
the correction at Boeing's expense of such defect; provided, however, that
Boeing will not be obligated to correct any defect that has no material
adverse effect on the maintenance, use or operation of the Aircraft. The
warranty period for the corrected item will be the unexpired warranty
period for the defective item.
5.2 As to a defect in material or workmanship, (i) the repair at
Boeing's expense of such defect or, (ii) at Boeing's option, the
replacement of such item with a similar item free from defect or the
issuance of a credit memorandum to reimburse Buyer for a spare part
previously purchased from Boeing as the replacement for such defective
item. The warranty period for either correction will be the unexpired
warranty period for the defective item.
5.3 As to a defect in design, the correction at Boeing's expense
of such defect. The warranty period for such correction is 18 months from
receipt by Buyer of corrective material or the end of the original design
warranty period for the defective item, whichever is later.
5.4 Boeing will issue a credit memorandum to reimburse Buyer at
the Warranty Labor Rate for the direct labor hours required for removal
from the Aircraft of a defective item and the reinstallation in the
Aircraft of the corrected item.
6. Returned Items.
Unless otherwise provided in this Agreement, the Aircraft or item
claimed to be defective must be returned to Boeing as soon as practicable.
Buyer may also provide specific technical repair or correction instructions
with such return. The absence of such instructions will evidence Buyer's
authorization for Boeing to proceed using Boeing information and data. The
following criteria will apply with respect to return of Aircraft or items
to Boeing:
6.1 As to Aircraft:
6.1.1 An Aircraft may be returned only if
6.1.1.1 substantially all the work to be performed by
Boeing is covered by this Boeing Warranty, and
6.1.1.2 Buyer does not have the capability to
perform, nor is it practical for Boeing personnel to perform, the warranty
work away from Boeing's facilities.
6.1.2 All warranty work will be performed at Boeing's
expense, with reasonable efforts to minimize Aircraft out-of-service time.
In addition, Boeing will reimburse Buyer by issuing a credit memorandum for
the cost of fuel, oil and landing fees incurred in ferrying the Aircraft to
Boeing's facilities and in ferrying the Aircraft back to Buyer's
facilities. Buyer will minimize the length of both ferry flights.
6.1.3 Any nonwarranty work performed by Boeing will be paid
for by Buyer at Boeing's then-standard rates.
6.1.4 A separate agreement based on Boeing's then-standard
form will be entered into to cover the return of and work on such Aircraft.
6.2 As to any system, accessory, equipment or part:
6.2.1 All warranty work will be performed at Boeing's
expense, with reasonable efforts to minimize item out-of-service time for
items returned.
6.2.2 Boeing's turnaround-time objectives for repair or
replacement are: 10 working days for avionic and electronic items and 30
working days for other items when corrected at Boeing's facilities, or 40
working days when corrected at the facilities of a Boeing subcontractor.
Turnaround time starts the date Boeing receives the returned item, together
with Buyer's warranty claim describing the work, and ends the date of
shipment by Boeing of such item. If a turnaround-time objective is not
achieved and a resultant critical parts shortage is experienced by Buyer,
and Buyer has procured spare parts for such item in accordance with the
Boeing Recommended Spare Parts List, Boeing will, upon request from Buyer,
either:
6.2.2.1 expedite repair or replacement of the item or
6.2.2.2 provide a similar item on a no-charge loan or
no-charge lease basis until the repaired or replaced item is provided to
Buyer.
6.2.3 The freight charge for shipment to Boeing of any item
will be paid by Buyer; however, Boeing will reimburse Buyer by issuing a
credit memorandum for such charge for any item determined to be defective
under this Boeing Warranty. The freight charge for the return shipment to
Buyer of any such defective item which has been repaired, replaced or
corrected pursuant to this Boeing Warranty will be paid by Boeing.
6.3 Title to and risk of loss of any Aircraft or item returned to
Boeing will at all times remain with Buyer and/or any other owner of such
Aircraft or item, except that at the time Boeing ships a replacement item
to Buyer, title to and risk of loss (i) for the returned item will pass to
Boeing and (ii) for the replacement item will pass to Buyer. While Boeing
has care, custody and control of an Aircraft or item, Boeing will have only
such liabilities as a bailee for mutual benefit would have, but will not be
liable for loss of use.
7. Nonrepairable Items.
Buyer may scrap any defective nonrepairable item having a
then-current Boeing spare part selling price of $2,000 or less and make a
claim for a replacement item. For a defective nonrepairable item having a
then-current Boeing spare part selling price greater than $2,000, an
authorized Boeing representative must confirm the nonrepairability of any
such item. Buyer's claim for an item with a spare part selling price
exceeding $2,000 must include such confirmation.
8. Reimbursement for Certain Inspection Labor Costs.
8.1 In addition to the remedies set forth in this Boeing
Warranty, Boeing will reimburse Buyer by issuing a credit memorandum at the
Warranty Labor Rate for the direct labor hours expended by Buyer in
performing inspections of the Aircraft to determine whether or not a
covered defect exists in any system, accessory, equipment or part
manufactured to Boeing's detailed design, provided that:
8.1.1 such inspections are recommended by a Boeing service
bulletin or service letter issued by Boeing within 36 months after delivery
of such Aircraft, and
8.1.2 such reimbursement will not apply to any inspections
performed as an alternative to accomplishing corrective action when such
corrective action is available to Buyer at the time such inspections are
performed.
8.2 If a covered defect is determined to exist as a result of the
foregoing inspections, the remedies under this Boeing warranty will apply
to Aircraft in warranty as of the warranty date set forth in the applicable
Boeing service bulletin or service letter or the date the defect was
discovered by Buyer, whichever date occurs first.
9. Wear and Tear.
Normal wear and tear and the need for regular maintenance and
overhaul will not constitute a defect.
10. Disclaimer and Release; Exclusion of Liabilities.
This Part A and the rights and remedies of Buyer and obligations of
Boeing herein are subject to the Disclaimer and Release and Exclusion of
Consequential and Other Damages provisions of Article 12 of this Agreement.
11. Buyer's Indemnification of Boeing.
The provisions of Part E, "Buyer's Indemnification of Boeing and
Insurance" of Exhibit C, will apply to all warranty work performed by
Boeing hereunder in accordance with Buyer's specific technical repair or
correction instructions, to the extent any legal liability of Boeing is
based upon the content of such instructions.
PART B
WARRANTY REPAIRS AND MODIFICATIONS BY BUYER
1. General.
To expedite the return to service of any defective Aircraft or
systems, accessories, equipment and parts (items) that Boeing is obligated
to correct under the Boeing Warranty, repairs and modifications may, at
Buyer's option, be performed by Buyer (work) and charged to Boeing, subject
to the following:
2. Scope.
This option applies only to items manufactured to Boeing's detailed
design. The warranty and notice periods and all other conditions and
limitations applicable to the Boeing Warranty apply to this option.
3. Repairs and Modifications.
All work will be performed in accordance with Boeing's written
instructions, using parts and materials as may be furnished by Boeing
and/or Boeing approved parts and materials as may be furnished by Buyer.
4. Claims for Reimbursement.
Buyer's claim for reimbursement must be submitted in writing to
Boeing promptly after completion of the work. Such claim must include the
data set forth in paragraph 4.3 of Part A of this Exhibit B and the
following:
4.1 Description of the work performed by Buyer;
4.2 Date work was completed by Buyer;
4.3 Itemized account of the direct labor hours expended in
performing the work; and
4.4 Itemized account of the direct materials incorporated in the
work.
5. Reimbursement.
Upon approval of Buyer's claim for reimbursement, Boeing will
reimburse Buyer by issuing a credit memorandum as follows:
5.1 Direct Labor.
At the Warranty Labor Rate specified herein for labor hours
expended by Buyer's direct labor employees in performing the work,
including removal, disassembly, inspection, bench testing, reassembly,
final inspection, and reinstallation, but not to exceed Boeing's estimate
of required labor hours, and excluding time for overhaul.
5.2 Direct Materials.
At the invoice cost to Buyer for all direct materials
incorporated in the work, excluding (i) materials used for overhaul, (ii)
materials furnished by Boeing at no charge, (iii) materials which exceed
Boeing's estimate of required materials, and (iv) allowances for handling,
overhead, taxes, customs duties and the like.
5.3 Warranty Labor Rate.
The Warranty Labor Rate is $41.25 per hour or 150% of Buyer's
average direct hourly labor rate, whichever is greater. For this purpose,
"average direct hourly labor rate" is defined as the average hourly rate
(excluding all fringe benefits, premium-time allowances, social charges,
business taxes and the like) paid by Buyer to Buyer's employees whose jobs
are directly related to the performance of the work. Prior to or
concurrently with submittal of Buyer's first claim for labor reimbursement,
Buyer will notify Boeing of Buyer's then-current average direct hourly
labor rate, and thereafter notify Boeing of any material change in such
rate. Boeing may require data from Buyer to substantiate such rates.
5.4 Limitation.
The total reimbursement with respect to the direct labor and
direct materials incorporated in the work, will not exceed 65% of Boeing's
then-current sales price for the item unless a greater percentage is
established for a particular item by written agreement between Boeing and
Buyer.
All claims for reimbursement will be subject to audit by Boeing. Boeing
will promptly notify Buyer of Boeing's disposition of each claim submitted
hereunder.
6. Replaced Parts.
If component parts of any assembly are replaced by Buyer, the
replaced parts will be tagged with the assembly part number, the serial
number and the warranty claim number and retained for a period of 60 days
following the date of submittal of Buyer's claim, so as to be made
available for Boeing's inspection. Such parts may be scrapped after such
60-day period.
PART C
BOEING SERVICE LIFE POLICY
1. Definitions.
1.1 "Airframe Component" means any of the primary structural
elements of the wing, fuselage, or vertical or horizontal stabilizer set
forth in Attachment A hereto and installed in an Aircraft at the time of
delivery.
1.2 "Landing Gear Component" means any of the primary structural
elements of the landing gear set forth in Attachment A and installed in an
Aircraft at the time of delivery.
1.3 "Spare Component" means any component set forth in
Attachment A that was furnished to Buyer pursuant to this Policy or
purchased by Buyer from Boeing as a spare part.
1.4 "Covered Component" means an Airframe Component, a Landing
Gear Component or a Spare Component.
1.5 "Failure" means any breakage or defect in a Covered
Component.
1.6 "Failed Component" means a Covered Component in which a
Failure has occurred.
2. Service Life Policy.
If a Failure occurs in any Covered Component within the following
periods, Boeing will promptly, at a price calculated pursuant to this
Policy, either (i) design and furnish to Buyer materials required to
correct the Failed Component (excluding industry standard parts) or (ii)
furnish to Buyer a replacement Covered Component:
2.1 As to any Airframe Component or Landing Gear Component,
within 12 years after delivery of the Aircraft in which such component was
initially installed; or
2.2 As to any Spare Component, within 12 years after delivery of
such Spare Component, or within 12 years after delivery by Boeing of the
last new Model 737 aircraft to Buyer, whichever first expires.
3. Price.
The price that Buyer will pay for the correction or replacement of a
Failed Component will be calculated pursuant to the following formula:
P = CT
144
where:
P = price to Buyer
C = Boeing spare parts sales price at time of correction or
replacement
T = total age in months of the Failed Component from the date of
delivery to Buyer to the date of Failure.
4. Conditions and Limitations.
Boeing's obligations under this Policy are conditioned upon the
following:
4.1 Buyer must notify Boeing of the Failure within three months
after it becomes apparent to Buyer.
4.2 Buyer must provide reasonable evidence that the claimed
Failure is covered by this Policy and if requested by Boeing, that such
Failure was not the result of (i) the breakage of or a defect in a
component not covered by this Policy, (ii) an extrinsic force, (iii) an act
or omission of Buyer, or (iv) operation or maintenance contrary to
applicable regulations or Boeing's instructions.
4.3 If return of a Failed Component is practicable and requested
by Boeing, Buyer will return such Failed Component to Boeing at Boeing's
expense.
4.4 Buyer's rights and remedies under this Policy are limited to
the receipt of corrective materials or replacement components at prices
calculated in accordance with this Policy.
5. Disclaimer and Release; Exclusion of Liabilities.
This Part C and the rights and remedies of Buyer and the obligations
of Boeing herein are subject to the Disclaimer and Release and Exclusion of
Consequential and Other Damages provisions of Article 12 of this Agreement.
COVERED AIRFRAME AND LANDING GEAR COMPONENTS
1. Wing.
(a) Upper and lower skins and stiffeners between the forward and
rear wing spars.
(b) Wing spar webs, chords and stiffeners.
(c) Inspar wing ribs.
(d) Inspar splice plates and fittings.
(e) Main landing gear support structure.
(f) Wing center section floor beams, lower beams and spanwise
beams, but not the seat tracks attached to floor beams.
(g) Engine strut support fittings attached directly to wing
primary structure.
(h) Wing-to-body structural attachments.
(i) Support structure in the wing for spoilers and spoiler
actuators; for aileron hinges and reaction links; and for
leading edge devices and trailing edge flaps.
(j) Trailing edge flap tracks and carriages.
(k) Aileron, leading edge device and trailing edge flap internal,
fixed attachment and actuator support structure.
2. Body.
(a) External surface skins and doublers, longitudinal stiffeners,
longerons and circumferential rings and frames between the
forward pressure bulkhead and the vertical stabilizer rear
spar bulkhead and structural support and enclosure for the
APU but excluding all system components and related
installation and connecting devices, insulation, lining, and
decorative panels and related installation and connecting
devices.
(b) Window and windshield structure but excluding the windows and
windshields.
(c) Fixed attachment structure of the passenger doors, cargo
doors and emergency exits, excluding door mechanisms and
movable hinge components. Sills and frames around the body
openings for the passenger doors, cargo doors and emergency
exits, excluding scuff plates and pressure seals.
(d) Nose wheel well structure, including the wheel well walls,
pressure deck, bulkheads, and gear support structure.
(e) Main gear wheel well structure including pressure deck and
landing gear beam support structure.
(f) Floor beams and support posts in the control cab and
passenger cabin area, but excluding seat tracks.
(g) Forward and aft pressure bulkheads.
(h) Keel structure between the wing front spar bulkhead and the
main gear wheel well aft bulkhead including splices.
(i) Wing front and rear spar support bulkheads, and vertical and
horizontal stabilizer front and rear spar support bulkheads
including terminal fittings but excluding all system
components and related installation and connecting devices,
insulation, lining, decorative panels and related
installation and connecting devices.
(j) Support structure in the body for the stabilizer pivot and
stabilizer screw.
3. Vertical Stabilizer.
(a) External skins between front and rear spars.
(b) Front, rear and auxiliary spar chords, webs and stiffeners
and attachment fittings.
(c) Inspar ribs.
(d) Rudder hinges and supporting ribs, excluding bearings.
(e) Support structure in the vertical stabilizer for rudder
hinges, reaction links and actuators.
(f) Rudder internal, fixed attachment and actuator support
structure.
4. Horizontal Stabilizer.
(a) External skins between front and rear spars.
(b) Front and rear spar chords, webs and stiffeners.
(c) Inspar ribs.
(d) Stabilizer center section including hinge and screw support
structure.
(e) Support structure in the horizontal stabilizer for the
elevator hinges, reaction links and actuators.
(f) Elevator internal, fixed attachment and actuator support
structure.
5. Engine Strut.
(a) Strut external surface skin and doublers and stiffeners.
(b) Internal strut chords, frames and bulkheads.
(c) Strut to wing fittings and diagonal brace.
(d) Engine mount support fittings attached directly to strut
structure and including the engine-mounted support fittings.
6. Main Landing Gear.
(a) Outer cylinder.
(b) Inner cylinder, including axles.
(c) Upper and lower side struts, including spindles, universals
and reaction links.
(d) Drag strut.
(e) Bell crank.
(f) Orifice support tube.
(g) Trunnion link.
(h) Downlock links including spindles and universals.
(i) Torsion links.
(j) Actuator beam, support link and beam arm.
7. Nose Landing Gear.
(a) Outer cylinder.
(b) Inner cylinder, including axles.
(c) Orifice support tube.
(d) Upper and lower drag strut, including lock links.
(e) Steering plates and steering collars.
(f) Torsion links.
NOTE: The Service Life Policy does not cover any bearings, bolts,
bushings, clamps, brackets, actuating mechanisms or latching
mechanisms used in or on the Covered Components.
PART D
BOEING INDEMNITY AGAINST PATENT INFRINGEMENT
1. Indemnity.
Subject to the provisions of this Part D, Boeing will indemnify and
hold harmless Buyer from and against all claims, suits, actions,
liabilities, damages and costs arising out of actual or alleged
infringement, by any Aircraft or any system, accessory, equipment or part
(item) installed thereon at the time of Aircraft delivery, of any patent
issued under the laws of any country in which Buyer lawfully operates the
Aircraft (Country).
2. Exceptions.
2.1 This indemnity will not apply unless, from the time of design
of the allegedly infringing Aircraft or item until the resolution of the
infringement claim, the Country and flag country of the Aircraft: (i) are
fully bound by the Chicago Convention on International Civil Aviation of
December 7, 1944, and are fully entitled to all benefits of Article 27
thereof, or (ii) have been parties to the International Convention for the
Protection of Industrial Property (Paris Convention).
2.2 This indemnity will not apply to Buyer Furnished Equipment,
Engines, any system, accessory, equipment or part that was not manufactured
to Boeing's detailed design, or to any system, accessory, equipment or part
manufactured to Boeing's detailed design without Boeing's authorization.
3. Conditions and Limitations.
Buyer's remedy and Boeing's obligations hereunder are subject to the
following:
3.1 Buyer must give Boeing written notice within 10 days after
Buyer receives notice of a suit or action against Buyer alleging
infringement or within 20 days after Buyer receives a written claim of
infringement.
3.2 Following receipt of such notice Boeing may conduct
negotiations with any party claiming infringement and may intervene in any
suit or action. Whether or not Boeing intervenes, Boeing will be entitled
at any stage of the proceedings to assume or control the defense.
3.3 Buyer will (i) promptly furnish to Boeing all data, records
and assistance within Buyer's control which are material to any such claim,
suit or action and (ii) (except as to amounts mandated by a judgment)
obtain Boeing's prior approval to pay or assume any liabilities, damages,
royalties or costs.
3.4 Boeing's obligations and Buyer's remedies herein exclude
Buyer's incidental or consequential damages and liabilities, costs, loss of
revenue or loss of profit resulting from loss of use, but include, at
Boeing's option, replacing the infringing item or otherwise curing any
infringement on account of which use of the Aircraft by Buyer is prevented.
3.5 Boeing's obligations and Buyer's remedies herein are
exclusive and in substitution for, and Buyer hereby waives, releases and
renounces, all other indemnities, obligations and liabilities of Boeing and
any assignee of Boeing, and all other rights, remedies and claims,
including claims for damages, direct, incidental or consequential, of Buyer
against Boeing or any assignee of Boeing, express or implied, arising by
law or otherwise, with respect to any actual or alleged patent infringement
or the like by any Aircraft or any item installed therein.
PART D-1
BOEING INDEMNITY AGAINST COPYRIGHT INFRINGEMENT
1. Indemnity.
Subject to the following, Boeing will indemnify Buyer with respect
to claims, suits, damages and costs arising out of copyright infringement
by any computer software included with the Aircraft when the Aircraft is
first delivered by Boeing (Aircraft Software).
2. Exceptions, Limitations and Conditions.
2.1 Boeing will have no obligation to indemnify Buyer relative to
Buyer Furnished Equipment, engines, software not manufactured to Boeing's
detailed design, or software manufactured to Boeing's detailed design
without Boeing's written authorization.
2.2 Boeing's obligation to indemnify Buyer is limited to
infringements (a) in countries where Buyer lawfully operates the Aircraft
(Countries) and (b) where, from the time of creation of the allegedly
infringing software until the resolution of the infringement claim, the
Countries and flag country of the Aircraft are members of The Berne Union
and recognize computer software as a "work" under The Berne Convention.
2.3 Boeing will have no obligation or liability for loss of use,
revenue or profit, or for any other incidental or consequential damages.
2.4 Boeing may, at its option, replace any infringing or
allegedly infringing Aircraft Software (or item containing Aircraft
Software) with a noninfringing equivalent.
2.5 Buyer must inform Boeing in writing (a) within 10 days after
Buyer receives notice of a suit or other formal action against Buyer
alleging copyright infringement involving Aircraft Software and (b) within
30 days after Buyer receives any allegation or claim in the nature of
copyright infringement involving Aircraft Software.
2.6 Boeing may negotiate with any party claiming infringement and
may intervene or assume control of the defense at any stage in any
infringement suit or action.
2.7 Buyer will promptly furnish to Boeing all data, records and
assistance within Buyer's possession or control which may be material to
any copyright infringement claim, suit or action relating to Aircraft
Software.
2.8 Other than as required by a final judgment entered by a court
of competent jurisdiction, Buyer will not make any payment or commitment to
pay, assume any obligation, or make any material concession relative to any
copyright infringement for which Boeing may otherwise be obligated.
2.9 The obligations of Boeing and remedies of Buyer set forth in
this Part are exclusive and in substitution for, and Buyer hereby waives,
releases and renounces, all other indemnities, obligations, and liabilities
of Boeing and all other rights, claims and remedies of Buyer against
Boeing, express or implied, arising by law or otherwise, with respect to
any actual or alleged copyright infringement or the like by any Aircraft or
any item included in any Aircraft.
PART E
SUPPLIER WARRANTIES AND PATENT INDEMNITIES
1. Supplier Warranties and Supplier Patent Indemnities.
Boeing will use diligent efforts to obtain adequate warranties and
indemnities against patent infringement enforceable by Buyer from
manufacturers (Suppliers) of systems, accessories, equipment or parts
installed on the Aircraft at the time of delivery that were selected and
purchased by Boeing, but not manufactured to Boeing's detailed design.
Boeing will furnish copies of such warranties and patent indemnities to
Buyer prior to delivery of the first Aircraft.
2. Boeing Assistance in Administration of Supplier Warranties.
Buyer will be responsible for submitting warranty claims directly to
Suppliers; however, if Buyer experiences problems enforcing any Supplier
warranty obtained by Boeing for Buyer, Boeing will conduct an investigation
of such problems and assist Buyer in the resolution of such claims.
3. Boeing Support in Event of Supplier Default.
3.1 If any Supplier defaults in the performance of a material
obligation under a design, material or workmanship warranty obtained by
Boeing for Buyer, and Buyer provides evidence to Boeing that such default
has occurred, then the equivalent warranty and related provisions set forth
in this Product Assurance Document will apply to the claimed defect.
3.2 At Boeing's request, Buyer will assign to Boeing, and Boeing
will be subrogated to, Buyer's rights against the manufacturer providing
such Supplier warranty.
PART F
ENGINE MANUFACTURER'S WARRANTY
AND PRODUCT SUPPORT PLAN
Boeing has obtained from CFM International, Inc. (CFM) the right to extend
to Buyer the provisions of CFM's New Engine Warranty set forth in CFM's
"CFM56 Product Support Plan"; subject, however, to Buyer's acceptance of
the conditions set forth herein and in such product support plan.
Accordingly, Boeing hereby extends to Buyer, and Buyer hereby accepts, the
provisions of such CFM warranty and such provisions shall apply to CFM56
turbo-fan engines installed in the Aircraft at the time of delivery to
Buyer except that, if Buyer and CFM have executed a General Terms
Agreement, then the terms of that Agreement shall be substituted for and
supersede the below-stated provisions and such provisions shall be of no
force or effect and neither Boeing nor CFM shall have any obligation
arising therefrom. In consideration for such extension, Buyer hereby
releases and discharges Boeing from any and all claims, obligations and
liabilities whatsoever arising out of the purchase or use of said installed
CFM56 engines and releases and discharges CFM from any and all claims,
obligations and liabilities whatsoever arising out of the purchase or use
of said installed CFM56 engines except as expressly assumed by CFM in such
Product Support Plan or in such General Terms Agreement between Buyer and
CFM.
CFM INTERNATIONAL, INC. WARRANTY
1. Title.
CFM International (CFM) warrants that at the date of delivery, CFM
has legal title to and good and lawful right to sell its CFM56 turbo-fan
engines (Engines, including all Modules and Parts thereof) and related
engine products, and furthermore warrants that such title is free and clear
of all claims, liens and encumbrances of any nature whatsoever.
2. Patents.
A. CFM shall handle all claims and defend any suit or proceeding
brought against Buyer insofar as based on a claim that any product or part
furnished under this Agreement constitutes an infringement of any patent of
the United States, and shall pay all damages and costs awarded therein
against Buyer. This paragraph shall not apply to any product or any part
manufactured to Buyer's design or to the aircraft manufacturer's design.
As to such product or part, CFM assumes no liability for patent
infringement.
B. CFM's liability hereunder is conditioned upon Buyer promptly
notifying CFM in writing and giving CFM authority, information and
assistance (at CFM's expense) for the defense of any suit. In case said
equipment or part is held in such suit to constitute infringement and the
use of said equipment or part is enjoined, CFM shall expeditiously, at its
own expense and at its option, either (1) procure for Buyer the rights to
continue using said product or part; (2) replace the same with satisfactory
and noninfringing product or part; (3) modify the same so it becomes
satisfactory and noninfringing. CFM shall not be responsible to Buyer for
consequential damages including costs, expenses, liabilities, and/or loss
resulting from loss of use of an allegedly infringing product or part
hereunder. The foregoing shall constitute the sole remedy of Buyer and the
sole liability of CFM for patent infringement.
C. The above provisions also apply to products which are the
same as those covered by this Agreement and are delivered to Buyer as part
of the installed equipment on CFM56 powered Aircraft.
3. Initial Warranty.
CFM warrants that CFM56 turbo-fan engines and related engine
products will conform to CFM's applicable specifications and will be free
from defects in material and workmanship prior to Buyer's initial use of
such products. The provisions of CFM's "CFM56 Product Support Plan" will
apply.
4. Product Support Plan.
CFM has agreed to offer to Buyer, for application to each CFM56-3
engine delivered on an Aircraft, the CFM "CFM56 Product Support Plan" which
is in effect on the date of delivery of such engine to Buyer.
5. LIMITATIONS.
THE PROVISIONS SET FORTH HEREIN ARE EXCLUSIVE AND ARE IN LIEU OF ALL
OTHER WARRANTIES WHETHER WRITTEN, ORAL OR IMPLIED. THERE ARE NO IMPLIED
WARRANTIES OF FITNESS OR MERCHANTABILITY. SAID PROVISIONS SET FORTH THE
MAXIMUM LIABILITY OF CFM WITH RESPECT TO CLAIMS OF ANY KIND, INCLUDING
NEGLIGENCE, ARISING OUT OF MANUFACTURE, SALE, POSSESSION, USE OR HANDLING
OF THE PRODUCTS OR PARTS THEREOF OR THEREFOR, AND IN NO EVENT SHALL CFM'S
LIABILITY TO BUYER EXCEED THE PURCHASE PRICE OF THE PRODUCT GIVING RISE TO
BUYER'S CLAIM OR INCLUDE INCIDENTAL OR CONSEQUENTIAL DAMAGES. AS USED
HEREIN, THE TERM "CFM" SHALL INCLUDE CFM INTERNATIONAL, INC. AND CFM
INTERNATIONAL, S.A. THE LIMITS OF LIABILITY SET FORTH ABOVE SHALL APPLY TO
ANY AND ALL CLAIMS, AS ABOVE DEFINED, AGAINST CFM INTERNATIONAL, INC., CFM
INTERNATIONAL, S.A., GENERAL ELECTRIC COMPANY (GE), AND SOCIETE NATIONALE
D'ETUDE ET DE CONSTRUCTION DE MOTEURS D'AVIATION (SNECMA) AND IN NO EVENT
SHALL SUCH CLAIMS EXCEED IN THE AGGREGATE THE PRICE OF THE PRODUCT GIVING
RISE TO THE CLAIM.
PART G
BOEING INTERFACE COMMITMENT
1. Interface Problems.
If Buyer experiences technical problems in the operation of an
Aircraft or its systems, the cause of which is not readily identifiable by
Buyer but which Buyer believes to be attributable to the design
characteristics of the Aircraft or its systems (Interface Problem), Boeing
will, without additional charge to Buyer, promptly conduct an investigation
and analysis to determine the cause or causes of the Interface Problem and
to recommend such corrective action as may be feasible. Buyer will furnish
to Boeing all data and information in Buyer's possession relevant to the
Interface Problem, and will cooperate with Boeing in the conduct of
investigations and tests. Boeing will promptly advise Buyer at the
conclusion of its investigation of Boeing's opinion as to the causes of the
Interface Problem and Boeing's recommendation as to corrective action.
2. Boeing Responsibility.
If Boeing determines that the Interface Problem is primarily
attributable to the design of any item manufactured to Boeing's detailed
design, Boeing will correct the design of such item to the extent of any
then-existing obligations of Boeing under the provisions of the applicable
Boeing Warranty or Boeing Service Life Policy.
3. Manufacturer Responsibility.
If Boeing determines that the Interface Problem is primarily
attributable to the design of an item not manufactured to Boeing's detailed
design, Boeing will assist Buyer in processing a warranty claim against the
manufacturer of such item.
4. Joint Responsibility.
If Boeing determines that the Interface Problem is partially
attributable to the design of an item manufactured to Boeing's detailed
design and partially to the design of an item not manufactured to Boeing's
detailed design, Boeing will seek a solution to the Interface Problem
through the cooperative efforts of Boeing and the manufacturer of the other
item and will promptly advise Buyer of resulting corrective actions and
recommendations.
5. General.
Buyer will, if requested by Boeing, assign to Boeing any of Buyer's
rights against any manufacturer as Boeing may require to fulfill its
obligations hereunder.
6. Disclaimer and Release; Exclusion of Liabilities.
This Part G and the rights and remedies of Buyer and the obligations
of Boeing herein are subject to the Disclaimer And Release and Exclusion of
Consequential and Other Damages provisions of Article 12 of this Agreement.
PART H
GENERAL
1. Duplicate Product Assurance Remedies.
Boeing will not provide or be requested to provide multiple remedies
for any claim made pursuant to the provisions of this Product Assurance
Document.
2. Notices.
References to "Boeing" in connection with notices or communications
throughout this Product Assurance Document mean Boeing's Product Assurance
Regional Manager at Renton, Washington.
CUSTOMER SUPPORT DOCUMENT
between
THE BOEING COMPANY
and
ALASKA AIRLINES, INC.
Exhibit C to Purchase Agreement Number 1954
CUSTOMER SUPPORT DOCUMENT NO. 1954
Dated
Relating to
BOEING MODEL 737-490 AIRCRAFT
This Customer Support Document is Exhibit C to and forms a part of
Purchase Agreement No. 1954 between The Boeing Company (Boeing) and Alaska
Airlines, Inc. (Buyer) relating to the purchase of Boeing Model 737-
490 aircraft. This Customer Support Document consists of the following
parts:
PART A Boeing Maintenance Training Program
PART B Boeing Customer Support Services
PART C Boeing Flight Training Program
PART D Technical Data and Documents
PART E Buyer's Indemnification of Boeing and Insurance
PART F Alleviation or Cessation of Performance
PART A
BOEING MAINTENANCE TRAINING PROGRAM
1. General.
This Part describes the maintenance training to be provided by
Boeing (Maintenance Training) at Boeing's training facility at or near
Seattle. The Maintenance Training will be provided at no additional charge
to Buyer, except as otherwise provided herein.
All instruction, examinations and materials shall be prepared and presented
in the English language and in the units of measure used by Boeing.
Buyer will be responsible for the living expenses of Buyer's personnel
during Maintenance Training. For Maintenance Training provided at or near
Seattle, Boeing will transport Buyer's personnel between their local
lodging and the training facility.
2. Maintenance Training Program.
In conjunction with earlier sales to Buyer of the same model type
aircraft as the Aircraft, Boeing has provided to Buyer comprehensive
maintenance training and/or materials for such aircraft. If requested by
Buyer at least 12 months prior to delivery of the first Aircraft, Boeing
agrees to provide 1 Maintenance Training course consisting of classroom
training to acquaint up to 15 of Buyer's personnel with any operational,
structural or systems differences between the first Aircraft scheduled for
delivery pursuant to this Agreement and the last aircraft of the same model
type for which maintenance training and/or materials were delivered by
Boeing to Buyer that are significant to the maintenance of the Aircraft.
Such course will be scheduled by mutual agreement of Boeing's and Buyer's
maintenance training organizations.
3. Training Materials.
Boeing will provide Buyer with a narrative description defining the
expected time to teach the various differences between the first Aircraft
scheduled for delivery pursuant to this agreement and the last aircraft of
the same model type for which maintenance training and/or materials were
delivered by Boeing to Buyer.
If Buyer chooses to have Boeing provide a differences Maintenance Training
course, Boeing will provide at the beginning of the course, 1 copy of a
training manual for the differences training course to each student
attending such course. Boeing will also provide to the Buyer 1 set of
visual aid projection transparencies and 1 set of black and white
reproducible masters of the training manual graphics and text utilized in
the Maintenance Training class. No revision service will be provided for
such training manuals and materials.
If Buyer chooses not to have Boeing provide a differences Maintenance
Training course, Boeing will provide to Buyer at Buyer's direction, 1 set
of visual aid projection transparencies and 1 set of black and white
reproducible masters of the training manual graphics and text that would
have been utilized in a differences Maintenance Training class. Delivery
of requested materials will satisfy difference training entitlements as
defined herein. No revision service will be provided for such training
manuals and materials.
4. Training at a Facility Other Than Boeing's.
If seasonably requested, Boeing will conduct the classroom training
described above at a mutually acceptable alternate training site, subject
to the following conditions:
4.1 Buyer will be responsible for providing acceptable classroom
space and training equipment required to present the Boeing courseware.
4.2 Buyer will pay Boeing's then-current per diem charge for each
Boeing instructor for each day, or fraction thereof, such instructor is
away from Seattle, including travel time.
4.3 Buyer will reimburse Boeing for round-trip transportation for
Boeing's instructors and training materials between Seattle and such
alternate training site.
4.4 Buyer will pay, or reimburse Boeing for, all taxes, fees,
duties, licenses, permits and similar expenses incurred by Boeing and its
employees as a result of Boeing's providing the training at such alternate
site.
4.5 Those portions of training that require the use of Boeing's
training devices, if any, will be conducted at Boeing-designated
facilities.
PART B
BOEING CUSTOMER SUPPORT SERVICES
1. General.
This Part describes the support services to be provided by Boeing at
no additional charge to Buyer, unless otherwise specified herein. Except
with respect to Field Services, the services described in this Part will be
provided by Boeing during a period commencing with delivery of the first
Aircraft and continuing so long as one Aircraft is regularly operated by
Buyer in commercial air transport service.
2. Field Service Engineering.
Boeing will furnish field service representation to advise Buyer on
maintenance and operation of the Aircraft (Field Services) as follows:
2.1 Field Services will be available to Buyer at or near Buyer's
main maintenance or engineering facility beginning prior to delivery of
each Aircraft and terminating 12 months after delivery of each such
Aircraft (Field Service Period(s)). If such Field Service Periods overlap,
the Field Services will be provided concurrently.
2.2 Buyer will furnish at no charge to Boeing suitable office
space and equipment that will include desks, chairs, file cabinets and an
electrical power source in, or convenient to, Buyer's facility where
each/any Boeing representative is providing Field Services. As required,
Buyer will assist each representative providing Field Services with visas,
work permits, customs, mail handling, identification passes, and local
airport authorities.
2.3 In addition to the Field Services referred to above, the
services of any Boeing field service representative will also be available
to Buyer anywhere Buyer may land the Aircraft.
2.4 Boeing may, from time to time, provide additional support
services in the form of Boeing personnel visiting Buyer's facilities to
work with Buyer's personnel in an advisory capacity.
3. Additional Engineering Support Services.
Boeing will, if requested by Buyer in writing, provide technical
advisory assistance with respect to the Aircraft and accessories, equipment
and parts manufactured to Boeing's detailed design and installed in the
Aircraft at the time of delivery. Such technical advisory assistance,
which will be provided from Seattle, will include:
3.1 analysis of and comment on any Aircraft service or
operational problem experienced by Buyer in order to determine the nature
of the problem and its cause and to suggest possible solutions;
3.2 analysis of and comment on Buyer's engineering releases
relating to structural repairs of the Aircraft not covered by Boeing's
Structural Repair Manual; and
3.3 analysis of and comment on Buyer's engineering proposals for
changes in, or replacement of, parts, accessories or equipment manufactured
to Boeing's detailed design (excluding computer software embedded or
included therein); provided that Boeing will not analyze or comment on any
such change or replacement which constitutes a major structural change, nor
on any engineering release related thereto, unless Buyer's request for such
analysis and comment is accompanied by complete detailed drawings,
substantiating data (including data, if any, required by applicable
government agencies), all stress or other appropriate analysis, and a
specific statement from Buyer of the kind of review and response desired by
Buyer.
4. Special Services.
4.1 Facilities, Ground Equipment and Maintenance Planning
Assistance.
Boeing will, at Buyer's request, send qualified Boeing
engineering representatives to Buyer's main base to evaluate Buyer's
technical facilities, tools and equipment for servicing and maintaining the
Aircraft, to recommend changes where necessary and to assist in the
formulation of Buyer's overall maintenance plan.
4.2 Additional Services.
Boeing may, at Buyer's request, provide additional special
services with respect to the Aircraft after delivery, which may include
such items as Master Changes (Kits and/or Data), training and maintenance
and repair of the Aircraft. Providing such additional services will be
subject to (i) mutually acceptable price, schedule and scope of work and
(ii) Boeing's then-current standard contract therefor including disclaimer
and release, exclusion of consequential and other damages and
indemnification and insurance requirements.
4.3 Post-Delivery Aircraft Services.
If Boeing performs unanticipated work on an Aircraft after
delivery of such Aircraft, but prior to its initial departure flight, or
upon its return to Boeing's facilities prior to completion of such flight,
the following provisions will apply:
4.3.1 Title to and risk of loss of any such Aircraft will at
all times remain with Buyer.
4.3.2 The provisions of the Boeing Warranty set forth in
Exhibit B of this Agreement will apply to such work.
4.3.3 Buyer will reimburse Boeing for such work to the
extent not covered by the Boeing Warranty applicable to the Aircraft.
4.3.4 The Disclaimer and Release and Exclusion of
Consequential and Other Damages provisions set forth in Article 12 of this
Agreement and the indemnification and insurance provisions set forth in
this Exhibit C will apply to such Boeing work.
4.3.5 In performing such work, Boeing may rely upon the
commitment authority of Buyer's personnel requesting such work.
5. Additional Informational Services.
Boeing may, from time to time, provide Buyer with additional
services in the form of information about the Aircraft or other aircraft of
the same type, including information concerning design, manufacture,
operation, maintenance, modification, repair and in-service experience.
PART C
BOEING FLIGHT TRAINING PROGRAM
1. General.
This Part describes the flight training to be provided by Boeing
(Flight Training) at or near Seattle, or at some other location to be
determined pursuant to this Part. The Flight Training will be provided at
no additional charge to Buyer, except as otherwise provided herein.
All instruction, examinations and materials will be prepared and presented
in the English language and in the units of measure used by Boeing.
Buyer will be responsible for the living expenses of Buyer's personnel
during the Flight Training Program. For Flight Training provided at or
near Seattle, Boeing will transport Buyer's personnel between their local
lodging and the training facility.
2. Flight Training Program.
In conjunction with earlier sales to Buyer of aircraft of the same
model type as the Aircraft, Boeing has provided to Buyer comprehensive
flight training for such aircraft. If requested by Buyer at least 12
months prior to delivery of the first Aircraft, Boeing agrees to provide,
if required, 1 classroom training class to acquaint up to 15 of Buyer's
personnel with any operational, systems and performance differences
significant to the operation of the Aircraft, between the first Aircraft
scheduled for delivery pursuant to this Agreement and the last aircraft of
the same model type as the aircraft previously delivered by Boeing to
Buyer. Such course will be scheduled by mutual agreement of Boeing's and
Buyer's flight training organizations.
3. Training Materials.
Any training materials, if required, that are used in Flight
Training shall be provided to Buyer at the conclusion of such class. No
revision service shall be provided for such training materials.
4. Training at a Facility Other Than Boeing's.
If seasonably requested, Boeing will conduct the Flight Training at
a mutually acceptable alternate training site, subject to the following
conditions:
4.1 Buyer will be responsible for providing classroom space
acceptable to Boeing, a flight simulator and training equipment required to
present the Boeing courseware.
4.2 Buyer will pay Boeing's then-current per diem charge for each
Boeing instructor for each day, or fraction thereof, such instructor is
away from Seattle, including travel time.
4.3 Buyer will reimburse Boeing for round-trip transportation for
Boeing's flight training instructors and materials between Seattle and such
alternate site.
4.4 Buyer will pay, or reimburse Boeing for, all taxes, fees,
duties, licenses, permits and similar expenses incurred by Boeing and its
employees as a result of Boeing's providing the training at such alternate
site.
4.5 Those portions of the training that require the use of
Boeing's training devices, if any, will be conducted at Boeing-designated
facilities.
PART D
TECHNICAL DATA AND DOCUMENTS
1. General.
Boeing will furnish to Buyer the data and documents set forth herein
at no additional charge to Buyer, unless otherwise specified herein. Such
data and documents will, where applicable, be prepared essentially in
accordance with the provisions of Revision 29 excluding FRM/FIM/ to Air
Transport Association of America Specification No. 100, dated June 1, 1956,
entitled "Specification for Manufacturers' Technical Data," with the
following specific exceptions: The Illustrated Parts Catalog, will be
prepared essentially in accordance with the provisions of Revision 28. The
Overhaul and Component Maintenance Manuals will be written to the ATA
Revision level established for the airplane model the component was
originally used on. Such data and documents are only intended to provide
Buyer with pertinent information on components, equipment and installations
designed by Boeing for aircraft of the same model type as the Aircraft.
Such data and documents will be in English and in the units of measure used
by Boeing, except as otherwise specified herein or as may be required to
reflect Aircraft instrumentation.
Digitally-produced data and documents will, where applicable, be prepared
essentially in accordance with the provisions of Revision 0 of Air
Transport Association of America (ATA) Specification 2100, dated
January 1994, entitled "Digital Data Standards for Aircraft Support."
2. Treatment of Data and Documents.
2.1 The data and documents provided by Boeing under this
Agreement ("Documents") are licensed to Buyer. They contain confidential,
proprietary and/or trade secret information belonging to Boeing; and Buyer
will treat them in confidence and use and disclose them only for Buyer's
own internal purposes as specifically authorized herein. If Buyer makes
copies of any Documents, the copies will also belong to Boeing and be
treated as Documents under this Agreement. Buyer will preserve all
restrictive legends and proprietary notices on all Documents and copies.
2.2 All Documents will only be used: (a) for the purpose of
maintenance, repair, or modification of an Aircraft or spare part as
permitted in the Spare Parts GTA or Customer Services GTA between Buyer and
Boeing, and then only in connection with an Aircraft or spare part for
which the Document in question is tabulated or identified by Boeing serial
number, and (b) for the purpose of Buyer's own development and manufacture
of training devices for use by Buyer, in connection with the Aircraft.
2.3 Any Document may be provided to Buyer's contractors for
maintenance, repair, or modification of the Aircraft; and Airplane Flight
Manuals, Operations Manuals, Aircraft Maintenance Manuals, Wiring Diagram
Manuals, System Schematics Manuals, Component Maintenance/Overhaul Manuals
and assembly and installation drawings may be provided to Buyer's
contractors for development and manufacture of training devices for use by
Buyer, but in both cases, only if Buyer's contractor is, at the time of
transfer of Documents, bound by a Boeing Customer Services GTA, or other
appropriate proprietary information protection agreement with Boeing,
applicable to the Documents.
3. Document Formats and Quantities.
The Attachment is provided to record the quantities and formats of
Documents provided to Buyer which are applicable to aircraft previously
delivered by Boeing of the same model type as the Aircraft. Revisions to
such Documents will be provided as necessary to reflect the configuration,
at time of delivery, of the Aircraft to which this Part applies. Space is
provided in the Attachment for Buyer and Boeing to indicate changes,
mutually agreed upon concurrently with signing this Agreement, in the
quantities and formats of such Documents to be hereinafter provided.
In the event Boeing determines that revisions would not be appropriate for
any of the Documents described in the Attachment, Boeing reserves the right
to furnish to Buyer, in lieu of such revisions, a separate publication of
such Document for the Aircraft in the same format and quantity as indicated
in the Attachment. Revision service for such publication shall be the same
as for the Document it replaces.
4. Revision Service.
Further revisions to any such Documents will be provided as set
forth in the purchase agreement, purchase agreement supplement, or as may
have been amended by the parties, for such aircraft.
5. Supplier Technical Data.
Boeing will continue to maintain the supplier data program referred
to in the purchase agreement or purchase agreement supplement under which
data and documents for Buyer's aircraft of the same model type as the
Aircraft were originally provided to Buyer. As indicated in such prior
purchase agreement or supplement, the provisions of such supplier data
program are not applicable to items of Buyer Furnished Equipment.
6. Additional Data and Documents.
If Boeing provides data or documents other than Documents which are
not covered by a Boeing Customer Services GTA or other proprietary
information protection agreement between Boeing and Buyer, all such data
and documents will be considered things delivered under this Agreement and
treated as Documents.
7. Buyer's Shipping Address.
Boeing will ship the Documents furnished hereunder to Buyer's
shipping address for data and documents previously provided to Boeing.
Buyer shall promptly notify Boeing of any change to such address.
A. FLIGHT OPERATIONS:
1. Airplane Flight Manual 22 51 Printed 1 Side
NOTE: An additional copy is
placed aboard each
airplane at delivery
as required by FAR's.
2. Operations Manual and Quick 5 Printed 2 Sides
Reference Handbook 1 Diskette
3. Weight and Balance Control
and Loading Manual 2 Reproduced
4. Dispatch Deviation 6 Printed 2 Sides
Procedures Guide
5. Flight Crew Training Manual 12 Printed 2 Sides
6. Performance Engineer's Manual 2
Printed 2 Sides
7. Jet Transport Performance 0 Printed 2 Sides
Methods
(total quantity - all models)
8. FMC Supplemental Data Document 0
Printed 2 Sides
9. Operational Performance
Software (OPS)
a. Inflight and Report Software 0
Digital Magnetic
Tape
0 Diskette, IBM
Compatible
3.5 Inch (720KB
or
1.44MB)
0 Diskette,
Macintosh
3.5 Inch (800KB
or
1.4MB)
b. Airplane Performance 0 Digital Magnetic
Monitoring (APM/HISTRY) Tape
Software Diskette, IBM
Compatible:
0 3.5 Inch (720KB
or
1.44MB)
0 5.25 Inch (360KB
or
1.2MB)
(737,747,757,767)
0 Diskette,
Macintosh
3.5 Inch (800KB
or
1.4MB)
c. Takeoff Analysis Software 0 Digital Magnetic
Tape
Diskette, IBM
Compatible:
0 3.5 Inch (720KB
or
1.44MB)
0 5.25 Inch (360KB
or
1.2MB)
(737,747,757,767)
0 Diskette,
Macintosh
3.5 Inch (800KB
or
1.4MB)
d. Landing Analysis Software 0 Digital Magnetic
Tape
Diskette, IBM
Compatible:
0 3.5 Inch (720KB
or
1.44MB)
0 5.25 Inch (360KB
or
1.2MB)
(737,747,757,767)
0 Diskette,
Macintosh
3.5 Inch (800KB
or
1.4MB)
10. ETOPS Guide Vol. III 2 Printed 2 Sides
(Operational Guidelines
and Methods)/
B. MAINTENANCE
1. Aircraft Maintenance Manual 1 Printed 2 Sides
0 Printed 1 Side
40 Microfilm, 16mm
Duplicate
0 Microfilm, 16mm
Master
0 Digital Format
2. Wiring Diagram Manual 1 35mm Aperture
Cards of all
Wiring Diagrams
and Charts
0 Standard Printed
Copies of Entire
Manual
12 Standard Printed
Copies of all
sections except
EDP portion
0 EDP portion in
Microfilm, 16mm,
Duplicate
0 EDP portion in
Microfilm, 16mm,
Master
14 Entire Manual,
Microfilm, 16mm,
Duplicate
0 Entire Manual,
Microfilm, 16mm,
Master
0 Digital Format
3. System Schematics Manual 20 Printed 2 Sides
0 35mm Aperture
Cards
10 Microfilm, 16mm,
Duplicate
0 Microfilm, 16mm,
Master
(737,747,757,767
)
0 Digital Format
4. Connector Part Number 2 Printed 2 Sides
Options Document
5. Structural Repair Manual 5 30 Printed 2 Sides
0 Printed 1 Side
12 Microfilm, 16mm,
Duplicate
0 Microfilm, 16mm,
Master
0 Magnetic Tape
Text (Print File
Format)
Illustrations
(CGM Format)
6. Component Maintenance/ 4 Printed 2 Sides
Overhaul Manuals
6 Microfilm, 16mm,
Duplicate
0 Microfilm, 16mm,
Master
0 Magnetic Tape
Text (Print File
Format)
Illustrations
(CGM Format)
7. Chapter 20 Standard 0 Printed 2 Sides
Overhaul Practices Manual
(total quantity - all models) 0
Printed 1 Side
12 Microfilm, 16mm,
Duplicate
0 Microfilm, 16mm,
Master
8. Chapter 20 Standard Wiring 5 Printed 2 Sides
Practices Manual
(total quantity - all models) 25
Microfilm,
16mm, Duplicate
0 Microfilm, 16mm,
Master
9. Nondestructive Test 0 Printed 2 Sides
Manual
0 Printed 1 Side
2 Microfilm, 16mm,
Duplicate
0 Microfilm, 16mm,
Master
0 Magnetic Tape
Text (Print File
Format)
Illustrations
(CGM Format)
10. Service Bulletins 2 Printed 2 Sides
11. Service Bulletins Index 1 Printed 2 Sides
12. Corrosion Prevention Manual 5 Printed 2 Sides
0 Printed 1 Side
0 Microfilm, 16mm,
Duplicate
0 Microfilm, 16mm,
Master
0 Magnetic Tape
Text (Print File
Format)
Illustrations
(CGM Format)
13. Fuel Measuring Stick 3/ A/C Printed 1 Side
Calibration Document
Check One:
U. S. Gallons X
Imperial Gallons
Pounds
Kilograms
Liters
14. Power Plant Buildup Manual 10 Printed 2 Sides
0 Printed 1 Side
0 Microfilm (16mm)
Duplicate
0 Microfilm (16mm)
Master
15. FMS BITE Manual 25 Printed 2 Sides
0 Microfilm, 16mm,
Duplicate
0 Microfilm, 16mm,
Master/
16. In-Service Activity Report 2 Printed 2 sides
17. All Operator Letter 2 Printed 1 or
2 sides
18. Service Letters 3 Printed 1 or
2 sides
19. Structural Item Interim 2 Printed 1 or
Advisory 2 sides
20. Maintenance Tips 2 Printed 1 or
2 sides
21. Combined Index 1 Printed 2 sides
1 Digital Format
C. MAINTENANCE PLANNING
1. Maintenance Planning 3 Printed 2 sides
Data Documents
0 Microfilm (16mm)
Duplicate
0 Microfilm (16mm)
Master
0 Digital Format
2. Maintenance Task Cards 1 Printed 1 Side
0 Microfilm (16mm)
Duplicate
0 Microfilm (16mm)
Master
1 Digital Format
3. Maintenance Task Card Index 1 Printed 2 sides
0 Digital Format
(777)
4. Maintenance Inspection 2 Printed 2 sides
Intervals Report
(total quantity - all models)
D. SPARES
1. Illustrated Parts Catalog 0 Printed 2 Sides
(select one format only)
0 Printed 1 Side
35 Microfilm (16mm)
Duplicate
0 Microfilm (16mm)
Master
2. Standards Books
a. Index 0 Printed 2 Sides
2 Microfilm (16mm)
Duplicate
b. Parts Standards 0 Printed 2 Sides
2 Microfilm (16mm)
Duplicate
c. Parts Specifications 0 Printed 2 Sides
2 Microfilm (16mm)
Duplicate
d. Standards for Repair 0 Printed 2 Sides
1 Microfilm (16mm)
Duplicate
e. Obsolete Standards 0 Printed 2 Sides
1 Microfilm (16mm)
Duplicate
f. Commercial Markers 0 Printed 2 Sides
1 Microfilm (16mm)
Duplicate
g. Commercial Markers 737 0 Printed 2 Sides
1 Microfilm (16mm)
Duplicate
h. Passenger Cabin Symbology 0 Printed 2 Sides
(Commercial Placards)
1 Microfilm (16mm)
Duplicate
i. Process Standards 0 Printed 2 Sides
4 Microfilm (16mm)
Duplicate
j. Material Standards 0 Printed 2 Sides
1 Microfilm (16mm)
Duplicate
k. Drafting Standards Practices 0
Printed 2 Sides
1 Microfilm (16mm)
Duplicate
l. Specification Support 0 Printed 2 Sides
Standards
0 Microfilm (16mm)
Duplicate
E. FACILITIES AND EQUIPMENT PLANNING
1. Facilities and Equipment 4 Printed 2 Sides
Planning Document
0 Microfilm (16mm)
Master (777)
2. Special Tool and Ground 1 Microfilm,
(35mm)
Handling Equipment Drawings Duplicate in
Aperture Card
Format
3. Special Tool and Ground 2 Printed 2 Sides
Handling Equipment Drawings
Index
4. Supplementary Tooling 1 Printed 2 Sides
Documentation
(total quantity - all models)
5. System Test Equipment 2 Printed 1 Side
Document
6. Illustrated Tool and 2 Printed 2 Sides
Equipment List/Manual
0 Printed 1 Side
1 Microfilm, 16mm,
Duplicate
0 Microfilm, 16mm,
Master
7. Aircraft Recovery Document 6 Printed 2 Sides
8. Airplane Characteristics for 2 Printed 2 sides
Airport Planning
9. Airplane Rescue and Fire 2 Printed 2 Sides
Fighting Document (total
quantity - all models)
10. Engine Handling Document 2 Printed 2 Sides
F. Configuration, Maintenance 2 Printed 2 Sides
and Procedures for Extended
Range Operations Document/
G. ETOPS Guide Vol. I 2 Printed 2 Sides
(Configuration, Maintenance
and Procedures Supplement)/
H. ETOPS Guide Vol. II 2 Printed 2 Sides
(Maintenance Programs Guidelines)
(total quantity - all models)/
I. Computer Software Index 2 Printed 2 Sides
(total quantity - all models)
J. Supplier Technical Data
1. Service Bulletins 2 Printed
2. Ground Support Equipment 4 Printed
Data
3. Provisioning Information 2 Printed
4. Component Maintenance/ 3 Printed
Overhaul Manuals
5. Component Maintenance/ 5 Printed
Overhaul Manuals Index
(total quantity - all models)
6. Publications Index 3 Printed
7. Product Support Supplier 1 Printed
Directory (total quantity -
all models)
PART E
BUYER'S INDEMNIFICATION OF BOEING AND INSURANCE
1. Buyer's Indemnification Of Boeing.
Buyer hereby indemnifies and holds harmless Boeing from and against
all claims and liabilities, including costs and expenses (including
attorneys' fees) incident thereto or incident to successfully establishing
the right to indemnification, for injury to or death of any person or
persons, including employees of Buyer but not employees of Boeing, or for
loss of or damage to any property, including Aircraft, arising out of or in
any way related to the performance by Boeing of training, services or other
obligations pursuant to this Exhibit C, whether or not arising in tort or
occasioned in whole or in part by the negligence of Boeing, whether active,
passive or imputed.
1.1 With regard to training, services and obligations other than
Revenue Service Training, the foregoing indemnification will not apply to
the legal liability to persons or parties other than Buyer or Buyer's
assignees arising out of an accident caused solely by a product defect in
an Aircraft.
1.2 With regard to Revenue Service Training, the foregoing
indemnification will apply to the legal liability to persons or parties
other than Buyer or Buyer's assignees, even if arising out of an accident
caused solely by a product defect in an Aircraft.
2. Buyer's Insurance.
Evidence of insurance will be required 30 days prior to the
scheduled delivery of the first Aircraft. Accordingly, Buyer will provide
certificates of insurance specifically referencing the Agreement and
paragraph 1 of this Part E. In addition to showing policy number, limits
of liability, and effective dates of coverage, such certificates will
contain but not be limited to the following provisions:
2.1 Hull All Risk; Hull War & Allied Perils Insurance.
Insurers and/or reinsurers will hold harmless and waive all
rights of subrogation against Boeing for any damages or claims arising out
of these Exhibit C services.
2.2 Aircraft Liability Insurance.
(a) To name Boeing as an additional insured in connection
with the performance by Boeing of training, services, or other obligations
provided under this Exhibit C.
(b) To provide that the insurance arranged herein will be
primary and without right of contribution with respect to any other
insurance which may be available for the protection of Boeing.
(c) To provide that all provisions of the insurance,
except the limits of liability, will operate to give each insured or
additional insured the same protection as if there were a separate policy
issued covering each insured or additional insured.
(d) To provide that no act, omission, breach of any
warranty or condition, or misrepresentation on the part of the Insured or
any other person or party (other than by Boeing) will void, exclude,
minimize, or adversely change this coverage as it applies to Boeing.
2.3 For Coverages Specified in 2.1 and 2.2.
(a) Acknowledgment that the insurers and/or reinsurers are
aware of and have seen a copy of the Agreement and accept and insure the
risks and indemnity herein to the extent of the coverage and endorsements
as described in this certificate.
(b) To give 30 day written notice of cancellation,
termination or adverse material alteration of the policies (7 day written
notice in the event of War Risk or such lesser period as may be in effect
with prior notice).
(c) That Boeing will not be responsible for payment, set
off, or assessment of any kind of any premiums in connection with the
policies, endorsements or coverages described herein.
(d) For the purpose of this Part E, "Boeing" is defined as
The Boeing Company, its divisions, subsidiaries, affiliates, the assignees
of each and their respective directors, officers, employees and agents.
If more than one Aircraft is to be delivered under the Purchase Agreement,
the insurance certificates must reference all Aircraft when delivered or
separate certificates must be supplied for each Aircraft. The certificates
of insurance will be kept current and valid.
PART F
Alleviation or Cessation of Performance
Boeing will not be required to provide any services, training, data or
goods at a facility while:
1. a labor stoppage or dispute in progress involving Buyer
exists;
2. wars or warlike operations, riots or insurrections in the
country where such facility is located exist;
3. conditions at such facility which, in the opinion of Boeing,
are detrimental to the general health, welfare or safety of its personnel
and/or their families exist;
4. the United States Government refuses permission to any Boeing
personnel or their families to enter the country where such facility is
located, or recommends that any Boeing personnel or their families leave
such country; or
5. the United States Government refuses Boeing permission to
deliver goods or services to the country where such facility is located.
Boeing further reserves the right, upon the occurrence of any of such
events, subsequent to the location of Boeing personnel at Buyer's facility,
to immediately and without prior notice relocate its personnel and their
families to a place of Boeing's choosing. Any delay resulting therefrom
will be deemed a delay by mutual agreement.
AIRFRAME AND ENGINE PRICE ADJUSTMENT
between
THE BOEING COMPANY
and
ALASKA AIRLINES, INC.
Exhibit D to Purchase Agreement Number 1954
PRICE ADJUSTMENT DUE TO
ECONOMIC FLUCTUATIONS
AIRFRAME PRICE ADJUSTMENT
(1995 Base Price)
1. Formula.
The Airframe Price Adjustment will be determined at the time of
Aircraft delivery in accordance with the following formula:
Pa = (P)(L + M - 1)
Where:
Pa = Airframe Price Adjustment.
L = .65 x ECI
130.1
M = .35 x ICI
123.6
P = Aircraft Basic Price (as set forth in Article 3.2 of this
Agreement) less the base price of Engines (as defined in this
Exhibit D) in the amount of $[Confidential Treatment
Requested].
ECI = A value using the "Employment Cost Index for workers in
aerospace manufacturing" (aircraft manufacturing, standard
industrial classification code 3721, compensation, base month
and year June 1989 = 100), as released by the Bureau of Labor
Statistics, U.S. Department of Labor on a quarterly basis for
the months of March, June, September and December, calculated
as follows: A three-month arithmetic average value (expressed
as a decimal and rounded to the nearest tenth) will be
determined using the months set forth in the table below for
the applicable Aircraft, with the released Employment Cost
Index value described above for the month of March also being
used for the months of January and February; the value for June
also used for April and May; the value for September also used
for July and August; and the value for December also used for
October and November.
ICI = The three-month arithmetic average of the released monthly
values for the Industrial Commodities Index as set forth in the
"Producer Prices and Price Index" (Base Year 1982 = 100) as
released by the Bureau of Labor Statistics, U.S. Department of
Labor values (expressed as a decimal and rounded to the nearest
tenth) for the months set forth in the table below for the
applicable Aircraft.
In determining the value of L, the ratio of ECI divided by 130.1
will be expressed as a decimal rounded to the nearest ten-thousandth and
then multiplied by .65 with the resulting value also expressed as a decimal
and rounded to the nearest ten-thousandth.
In determining the value of M, the ratio of ICI divided by 123.6
will be expressed as a decimal rounded to the nearest ten-thousandth and
then multiplied by .35 with the resulting value also expressed as a decimal
and rounded to the nearest ten-thousandth.
Months to be Utilized
Month of Scheduled in Determining the
Aircraft Delivery Value of ECI and ICI
January June B, July B, Aug. B
February July B, Aug. B, Sept. B
March Aug. B, Sept. B, Oct. B
April Sept. B, Oct. B, Nov. B
May Oct. B, Nov. B, Dec. B
June Nov. B, Dec. B, Jan. D
July Dec. B, Jan. D, Feb. D
August Jan. D, Feb. D, Mar. D
September Feb. D, Mar. D, Apr. D
October Mar. D, Apr. D, May D
November Apr. D, May D, June D
December May D, June D, July D
The following definitions of B and D will apply:
B = The calendar year before the year in which the scheduled month
of delivery as set forth in Article 2.1 occurs.
D = The calendar year during which the scheduled month of delivery
as set forth in Article 2.1 occurs.
2. If at the time of delivery of an Aircraft Boeing is unable to
determine the Airframe Price Adjustment because the applicable values to be
used to determine the ECI and ICI have not been released by the Bureau of
Labor Statistics, then:
2.1 The Airframe Price Adjustment, to be used at the time of
delivery of each of the Aircraft, will be determined by utilizing the
escalation provisions set forth above. The values released by the Bureau
of Labor Statistics and available to Boeing 30 days prior to scheduled
Aircraft delivery will be used to determine the ECI and ICI values for the
applicable months (including those noted as preliminary by the Bureau of
Labor Statistics) to calculate the Airframe Price Adjustment. If no values
have been released for an applicable month, the provisions set forth in
Paragraph 2.2 below will apply. If prior to delivery of an Aircraft the
U.S. Department of Labor changes the base year for determination of the ECI
or ICI values as defined above, such rebased values will be incorporated in
the Airframe Price Adjustment calculation. The payment by Buyer to Boeing
of the amount of the Purchase Price for such Aircraft, as determined at the
time of Aircraft delivery, will be deemed to be the payment for such
Aircraft required at the delivery thereof.
2.2 If prior to delivery of an Aircraft the U.S. Department of
Labor substantially revises the methodology used for the determination of
the values to be used to determine the ECI and ICI values (in contrast to
benchmark adjustments or other corrections of previously released values),
or for any reason has not released values needed to determine the
applicable Aircraft Airframe Price Adjustment, the parties will, prior to
delivery of any such Aircraft, select a substitute for such values from
data published by the Bureau of Labor Statistics or other similar data
reported by non-governmental United States organizations, such substitute
to lead in application to the same adjustment result, insofar as possible,
as would have been achieved by continuing the use of the original values as
they may have fluctuated during the applicable time period. Appropriate
revision of the formula will be made as required to reflect any substitute
values. However, if within 24 months from delivery of the Aircraft the
Bureau of Labor Statistics should resume releasing values for the months
needed to determine the Airframe Price Adjustment, such values will be used
to determine any increase or decrease in the Airframe Price Adjustment for
the Aircraft from that determined at the time of delivery of such Aircraft.
2.3 In the event escalation provisions are made non-enforceable
or otherwise rendered null and void by any agency of the United States
Government, the parties agree, to the extent they may lawfully do so, to
equitably adjust the Purchase Price of any affected Aircraft to reflect an
allowance for increases or decreases in labor compensation and material
costs occurring since February, 1995, which is consistent with the
applicable provisions of paragraph 1 of this Exhibit D.
3. For the calculations herein, the values released by the Bureau of
Labor Statistics and available to Boeing 30 days prior to scheduled
Aircraft delivery will be used to determine the ECI and ICI values for the
applicable months (including those noted as preliminary by the Bureau of
Labor Statistics) to calculate the Airframe Price Adjustment.
Note: Any rounding of a number, as required under this Exhibit D with
respect to escalation of the airframe price, will be accomplished as
follows: if the first digit of the portion to be dropped from the
number to be rounded is five or greater, the preceding digit will be
raised to the next higher number.
ENGINE PRICE ADJUSTMENT - CFM INTERNATIONAL, INC.
(1995 BASE PRICE)
(a) The Aircraft Basic Price of each Aircraft set forth in
Article 3.1 of this Agreement includes an aggregate price for CFM56-3C-1
engines and all accessories, equipment and parts therefor provided by the
engine manufacturer (collectively in this Exhibit D called "Engines") of
[Confidential Treatment Requested]. The adjustment in Engine price
applicable to each Aircraft ("Engine Price Adjustment" herein) will be
determined at the time of Aircraft delivery in accordance with the
following formula:
D1 = (Pb x CPI ) - Pb
138.27
(b) The following definitions will apply herein:
D1 = Engine Price Adjustment
Pb = Aggregate Engine Base Price as set forth in Paragraph (a)
above.
CPI = The Composite Price Index as determined in accordance with
the formula set forth below. The Index values referred to
below, to be used in determining the CPI, will be for the
ninth month prior to the month of scheduled Aircraft
delivery. Such Index values will be those prepared by the
Bureau of Labor Statistics, U.S. Department of Labor.
CPI = L + M1 + M2 + M3
L = The Labor Index for such month will be the quotient,
expressed as a decimal and rounded to the nearest
thousandth, of the "Hourly Earnings of Aircraft
Engines and Engine Parts Production Workers" SIC 3724,
for such month divided by Eleven Dollars and Sixteen
Cents ($11.16). Such quotient will be multiplied by
100 and then by fifty-five percent (55%) with the
value resulting from the latter multiplication
expressed as a decimal and rounded to the nearest
hundredth.
M1 = The Industrial Commodities Index for such month will
be equal to ten percent (10%) of the Producer Price
Index for "all commodities other than Farm and Foods,"
Code 3-15, (Base Year 1982 = 100) for such month,
expressed as a decimal and rounded to the nearest
hundredth.
M2 = The Metals and Metal Products Index for such month
will be equal to twenty-five percent (25%) of the
Producer Price Index for "Metals and Metal Products,"
Code 10, (Base Year 1982 = 100) for such month
expressed as a decimal and rounded to the nearest
hundredth.
M3 = The Fuel Index for such month will be equal to ten
percent (10%) of the Producer Price Index for "Fuel
and Related Products and Power," Code 5, (Base Year
1982 = 100) for such month expressed as a decimal and
rounded to the nearest hundredth.
138.27 = Composite Price Index for October, 1994.
The factor (CPI divided by 138.27) by which the Aggregate Engine Base Price
is to be multiplied will be expressed as a decimal and rounded to the
nearest thousandth.
The Engine Price Adjustment will not be made if it would result in a
decrease in the aggregate Engine base price.
(c) The values of the Average Hourly Earnings and Producer Price Indices
used in determining the Engine Price Adjustment will be those published by
the Bureau of Labor Statistics, U.S. Department of Labor as of a date 30
days prior to the scheduled Aircraft delivery to Buyer. Such values will
be considered final and no Engine Price Adjustment will be made after
Aircraft delivery for any subsequent changes in published Index values.
(d) If the U.S. Department of Labor, Bureau of Labor Statistics (i)
substantially revises the methodology (in contrast to benchmark adjustments
or other corrections of previously published data) or (ii) discontinues
publication of any of the data referred to above, CFMI agrees to meet
jointly with Boeing and Buyer to jointly select a substitute for the
revised or discontinued data; such substitute data to lead in application
to the same adjustment result, insofar as possible, as would have been
achieved by continuing the use of the original data as it may have
fluctuated had it not been revised or discontinued.
Appropriate revision of the Engine Price Adjustment provisions set forth
above will be made to accomplish this result for the affected Engines.
In the event the Engine price escalation provisions are made
non-enforceable or otherwise rendered null and void by any agency of the
United States Government, CFMI agrees to meet with Boeing and Buyer to
jointly agree, to the extent such parties may lawfully do so, to adjust
equitably the purchase price of any affected Engine(s) to reflect an
allowance for increases in labor, material and fuel costs that have
occurred from the period represented by the CPI to the ninth month
preceding the month of scheduled delivery of the applicable aircraft.
NOTE: Any rounding of a number, as required under this Exhibit D with
respect to escalation of the Engine price, will be accomplished as
follows: if the first digit of the portion to be dropped from the
number to be rounded is five or greater, the preceding digit will be
raised to the next higher number.
BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT
between
THE BOEING COMPANY
and
ALASKA AIRLINES
Exhibit E to Purchase Agreement Number 1954
BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT
Dated
Relating to
BOEING MODEL 737 AIRCRAFT
This Buyer Furnished Equipment Provisions Document is Exhibit E to
and forms a part of Purchase Agreement No. 1954, between The Boeing Company
(Boeing) and Alaska Airlines (Buyer) relating to the purchase of Boeing
Model 737-490 aircraft.
BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT
1. General.
Certain equipment to be installed in the Aircraft is furnished to
Boeing by Buyer at Buyer's expense. This equipment is designated "Buyer
Furnished Equipment" (BFE) and is listed in the Detail Specification. On
or before October 1, 1996, Boeing will provide to Buyer a BFE Requirements
On-Dock/Inventory Document (BFE Document) or an electronically transmitted
BFE Report which may be periodically revised, setting forth the items,
quantities, on-dock dates and shipping instructions relating to the in
sequence installation of BFE. For planning purposes, a preliminary BFE on-
dock schedule is set forth in the attachment to this Exhibit.
2. Supplier Selection.
Buyer will:
2.1 Select and notify Boeing of the suppliers of the following
BFE items by the following dates:
Galley System September 30,1996
Seats (passenger) September 30, 1996
2.2 Meet with Boeing and such selected BFE suppliers promptly
after such selection to:
2.2.1 complete BFE configuration design requirements for
such BFE; and
2.2.2 confirm technical data submittal dates for BFE
certification.
3. Buyer's Obligations.
Buyer will:
3.1 comply with and cause the supplier to comply with the
provisions of the BFE Document or BFE Report;
3.1.1 deliver technical data (in English) to Boeing as
required to support installation and FAA certification in accordance with
the schedule provided by Boeing or as mutually agreed upon during the BFE
meeting referred to above;
3.1.2 deliver BFE including production and/or flight
training spares to Boeing in accordance with the quantities and schedule
provided therein; and
3.1.3 deliver appropriate quality assurance documentation to
Boeing as required with each BFE part (D6-56586, "BFE Product Acceptance
Requirements");
3.2 authorize Boeing to discuss all details of the BFE directly
with the BFE suppliers;
3.3 authorize Boeing to conduct or delegate to the supplier
quality source inspection and supplier hardware acceptance of BFE at the
supplier location;
3.3.1 require supplier's contractual compliance to Boeing
defined source inspection and supplier delegation programs, including
availability of adequate facilities for Boeing resident personnel; and
3.3.2 assure that Boeing identified supplier's quality
systems be approved to Boeing document D1-9000;
3.4 provide necessary field service representation at Boeing's
facilities to support Boeing on all issues related to the installation and
certification of BFE;
3.5 deal directly with all BFE suppliers to obtain overhaul data,
provisioning data, related product support documentation and any warranty
provisions applicable to the BFE;
3.6 work closely with Boeing and the BFE suppliers to resolve any
difficulties, including defective equipment, that arise;
3.7 be responsible for modifying, adjusting and/or calibrating
BFE as required for FAA approval and for all related expenses;
3.8 warrant that the BFE will meet the requirements of the Detail
Specification; and
3.9 be responsible for providing equipment which is FAA
certifiable at time of Aircraft delivery, or for obtaining waivers from the
applicable regulatory agency for non-FAA certifiable equipment.
4. Boeing's Obligations.
Other than as set forth below, Boeing will provide for the
installation of and install the BFE and obtain certification of the
Aircraft with the BFE installed.
5. Nonperformance by Buyer.
If Buyer's nonperformance of obligations in this Exhibit or in the
BFE Document causes a delay in the delivery of the Aircraft or causes
Boeing to perform out-of-sequence or additional work, Buyer will reimburse
Boeing for all resulting expenses and be deemed to have agreed to any such
delay in Aircraft delivery. In addition Boeing will have the right to:
5.1 provide and install specified equipment or suitable alternate
equipment and increase the price of the Aircraft accordingly; and/or
5.2 deliver the Aircraft to Buyer without the BFE installed.
6. Return of Equipment.
BFE not installed in the Aircraft will be returned to Buyer in
accordance with Buyer's instructions and at Buyer's expense.
7. Title and Risk of Loss.
Title to and risk of loss of BFE will at all times remain with Buyer
or other owner. Boeing will have only such liability for BFE as a bailee
for mutual benefit would have, but will not be liable for loss of use.
8. Indemnification of Boeing.
Buyer hereby indemnifies and holds harmless Boeing from and against
all claims and liabilities, including costs and expenses (including
attorneys' fees) incident thereto or incident to successfully establishing
the right to indemnification, for injury to or death of any person or
persons, including employees of Buyer but not employees of Boeing, or for
loss of or damage to any property, including any Aircraft, arising out of
or in any way connected with any nonconformance or defect in any BFE and
whether or not arising in tort or occasioned in whole or in part by the
active, passive or imputed negligence of Boeing. This indemnity will not
apply with respect to any nonconformance or defect caused solely by
Boeing's installation of the BFE.
9. Patent Indemnity.
Buyer hereby indemnifies and holds harmless Boeing from and against
all claims, suits, actions, liabilities, damages and costs arising out of
any actual or alleged infringement of any patent or other intellectual
property rights by BFE or arising out of the installation, sale or use of
BFE by Boeing.
10. Definitions.
For the purposes of the above indemnities, the term "Boeing"
includes The Boeing Company, its divisions, subsidiaries and affiliates,
the assignees of each, and their directors, officers, employees and agents.
BOEING MODEL 737-400 AIRCRAFT
Item Preliminary On-Dock Dates
June, 1997 July, 1997
Aircraft Aircraft
Seats 4/11/97 5/13/97
Galleys 4/8/97 5/8/97
Electronics 4/2/97 5/2/97
Furnishings 4/4/97 5/6/97
July, 1997 January, 1998
Aircraft Aircraft
Seats 5/15/97 11/3/97
Galleys 5/12/97 10/29/97
Electronics 5/6/97 10/24/97
Furnishings 5/8/97 10/23/97
February, 1998 March, 1998
Aircraft Aircraft
Seats 12/5/97 1/15/98
Galleys 12/2/97 1/12/98
Electronics 11/25/97 1/7/98
Furnishings 12/2/97 1/12/98
BOEING MODEL 737-400 AIRCRAFT
Item Preliminary On-Dock Dates
April, 1998 May, 1998
Aircraft Aircraft
Seats 2/12/98 3/16/98
Galleys 2/9/98 3/11/98
Electronics 2/4/98 3/5/98
Furnishings 2/9/98 3/10/98
August, 1998 September, 1998
Aircraft Aircraft
Seats 6/5/98 7/10/98
Galleys 6/2/98 7/7/98
Electronics 5/28/98 6/30/98
Furnishings 6/3/98 7/6/98
March, 1999 May 1999
Aircraft Aircraft
Seats 1/8/99 3/5/99
Galleys 1/5/99 3/2/99
Electronics 12/21/98 2/24/99
Furnishings 1/4/99 3/1/99
DEFINED TERMS DOCUMENT
between
THE BOEING COMPANY
and
ALASKA AIRLINES
Exhibit F to Purchase Agreement Number 1954
DEFINED TERMS DOCUMENT
Dated
Relating to
BOEING MODEL 737-490 AIRCRAFT
This Document is Exhibit F to and forms a part of Purchase Agreement
No. 1954 (Agreement) between The Boeing Company (Boeing) and Alaska
Airlines (Buyer) relating to the purchase of Boeing Model 737-490 aircraft.
The following is a list of those terms and their definitions as used
and not otherwise defined in this Agreement. Such terms are identified in
the Agreement by the use of an initial capital letter.
Advance Payment Base
Price
Boeing's estimate of the
Aircraft Price is set
forth in Article 3.
Article 3, Paragraph
3,4
Agreement
Purchase Agreement
No. 1954, including all
Exhibits, the Detail
Specification,
attachments, letter
agreements and other
written modifications and
amendments thereto.
Opening paragraph
of the Agreement
Aircraft (includes
"the", "all",
"first", "last"
"such", etc.)
The aircraft described in
Article 1, Para. 1.1.
Article 1, Para. 1.1
Aircraft Basic Price
The amount set forth in
Article 3, Para. 3.1.4.
Article 3, Para.
3.1.4
Aircraft Price
The total amount Buyer is
to pay for an Aircraft
which is described in
Article 3, Para. 3.1.6.
Article 3, Para.
3.1.6
Aircraft Software
The computer software
included with the Aircraft
when the Aircraft is
delivered by Boeing,
described in Exhibit B,
Part D-1, Para. 1.
Exhibit B, Part D-1,
Para 1
Airframe Component
A component described in
Exhibit B, Part C, Para.
1.1
Exhibit B Part C
Para. 1.1
Article
An Article of the
Agreement.
Article 6, Para. 6.4
Base Airframe Price
The airframe price
described in Article 3,
Para. 3.1.2.
Article 3,
Para. 3.1.2
Boeing
The Seller of the Aircraft
identified in the opening
paragraph of the
Agreement.
Opening paragraph of
the Agreement
Boeing Warranty
Part A of Exhibit B to the
Agreement.
Exhibit B, Part A,
Para. 1
Buyer
The purchaser of the
Aircraft identified in the
opening paragraph of the
Agreement.
Opening paragraph of
the Agreement
Buyer Furnished
Equipment or BFE
Equipment provided by
Buyer pursuant to Exhibit
E for installation by
Boeing on the Aircraft.
Article 4.2
Buyer Furnished
Equipment Document
Document provided by
Boeing to Buyer defining
requirements for BFE.
Exhibit E, Para. 1.
Article 13, Para.
13.1
Certificate of
Airworthiness
The certificate issued by
the FAA pursuant to Part
21 of the Federal Aviation
Regulations for each of
the Aircraft purchased
under this Agreement as
described in Article 8.
Article 8, Para.
8.1.1.2 (referred to
therein as Standard
Airworthiness
Certificate)
Change Order
A change to the Detail
Specification, as
described in Article 7,
Para. 7.2.
Article 7, Para. 7.2
Covered Component
An Airframe Component as
described in Exhibit B,
Part C, Para. 1.4.
Exhibit B Part C
Para. 1.4
Customer Support
Document
Exhibit C to the
Agreement.
Article 12, Para.
12.5
Customer Support
Services
The Boeing services,
training and other
obligations described in
Exhibit C to the
Agreement.
Article 12, Para.
12.5
Deposit
The money paid by Buyer to
Boeing as part of the
acceptance of the Aircraft
proposal.
Article 5, Para. 5.1
Detail Specification
The Boeing document that
describes the
specifications of the
Aircraft modified from
time to time to include
developmental and Buyer
requested changes.
Article 1, Para. 1.1
Development
Change(s)
Changes to the basic
specification that do not
affect price, delivery,
guaranteed weight,
performance or
interchangeability as
described in Article 7,
Para. 7.1.
Article 7, Para. 7.1
Disclaimer and
Release
The Disclaimer and Release
set forth in Article 12,
Para. 12.2.
Article 12,
Para. 12.2
Documents
The data and documents
provided by Boeing under
the Agreement.
Exhibit C, Part D
Para. 2
Economic Price
Adjustment
Article 3, Para. 3.1.5.
Article 3,
Para. 3.1.5
Engine(s)
The engines installed on
the Aircraft as described
in the Detail
Specification.
Article 3,
Para. 3.1.2
Engine Price
The price of the Engines
installed on the Aircraft
set forth in Exhibit D,
including all accessories,
equipment and parts
therefor provided by the
Engine manufacturer.
Article 3, Para.
3.1.3
Engine Price
Adjustment
The adjustment to the
Engine Price as required
by Article 3, Para. 3.1.2,
and as calculated pursuant
to Exhibit D.
Exhibit D
Excusable Delay
A delay resulting from any
of the causes described in
Article 6, Para. 6.1.
Article 6, Para. 6.1
FAA
The Federal Aviation
Administration of the
Department of
Transportation of the
United States, including
the Administrator of the
Federal Aviation
Administration, the
National Transportation
Safety Board and any other
authority or agency of the
Federal Government of the
United States having like
jurisdiction.
Article 8, Para.
8.1.1
Failed Component
A component as described
in Exhibit B, Part C,
Para. 1.6.
Exhibit B Part C
Para. 1.6
Failure
Any breakage or defect as
described in Exhibit B,
Part C, Para. 5.
Exhibit B Part C
Para. 1.5
Federal Aviation
Regulations
The United States Federal
Aviation Regulations and,
if they are redesignated
or discontinued, any
comparable regulations or
parts thereof issued by
the FAA.
Article 8, Para.
8.1.1.1
Field Service(s)
Boeing-provided services
as described in Exhibit C,
Part B, Para. 2.
Exhibit C, Part B,
Para. 2
Field Service Period
The length of time Boeing
provides Field Service to
Buyer as described in
Exhibit C, Part B, Para.
2.1.
Exhibit C, Part B,
Para. 2.1
Flight Training
Program
The program of flight
training described in
Exhibit C, Part C, Para.
3.
Exhibit C, Part C,
Para. 2
Interface Problem
A technical problem
attributed to the design
characteristics of the
Aircraft or its systems,
as described in Exhibit B,
Part G, Para. 1.
Exhibit B, Part G,
Para. 1
Landing Gear
Component
A component as described
in Exhibit B, Part C,
Para. 1.2.
Exhibit B Part C
Para. 1.2
Maintenance Training
Program
The program of training
described in Exhibit C,
Part A, Para. 3.
Exhibit C, Part A,
Para. 2
Manufacturer
Change(s)
A change to the Aircraft
or performance required of
Boeing as described in
Article 8, Para. 8.2.1.
Article 8, Para.
8.2.1
Operator Change(s)
A change to the Aircraft
described in Article 8,
Para. 8.3.1.
Article 8, Para.
8.3.1
Performance
Guarantees
The written guarantees
regarding the operational
performance of the
Aircraft set forth in the
Agreement or the Detail
Specification.
Article 1, Para. 1.3
Policy (Boeing
Service Life Policy)
Exhibit B, Part C, Para.
2.
Exhibit B, Part C,
Para. 2
Product Assurance
Document
Exhibit B of the
Agreement.
Article 12, Para.
12.1
Revenue Service
Training
Flight Training conducted
on the Aircraft during
revenue service with cargo
and/or passengers on
board.
Exhibit C, Part E,
Para. 1.1
Spare Component
A component as described
in Exhibit B, Part C,
Para. 1.3.
Exhibit B Part C
Para. 1.3
Special Features
Article 3, Para. 3.1.1.
Article 3,
Para. 3.1.1
Standard
Airworthiness
Certificate
A certificate issued by
the FAA, pursuant to Part
21 of the Federal Aviation
Regulations as described
in Article 8,
Para. 8.1.1.2.
Article 8, Para.
8.1.1.2
Target Delivery Date
A non binding estimated
delivery date provided for
Buyer's planning purposes,
described in Article 2.
Article 2, Para. 2.2
Taxes
The term "Taxes" defined
in Article 4, Para. 4.1.
Article 2, Para. 2.3
Type Certificate
A certificate issued by
the FAA pursuant to Part
21 of the Federal Aviation
Regulations described in
Article 8, Para. 8.1.1.1.
Article 8,
Para. 8.1.1.1
Warranty Labor Rate
The hourly labor rate
defined in Exhibit B, Part
B, Para. 5.3.
Exhibit B, Part B,
Para. 5.3
1954-1
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 1954-1 to
Purchase Agreement No. 1954 -
Promotion Support
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the
Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. Planning Meeting.
Boeing will assist Buyer in the introduction of the Aircraft by
providing to Buyer certain promotion support. Promptly after execution of
the Agreement and before any funds are disbursed, a Boeing Airline
Promotion representative will meet with Buyer's designated representatives
to discuss the extent, selection, scheduling, and dispursement process for
the promotion support to be provided.
2. Support Level.
Boeing will make available to Buyer up to [Confidential Treatment
Requested] for Buyer's marketing communications programs. Programs include
marketing research; tourism development; corporate identity; direct
marketing; video tape, film or still photography requirements; planning,
design and production of collateral materials; management of promotion
programs; and advertising campaigns. The intent of this funding program is
to encourage the use of the Aircraft benefits in support of Buyer's
marketing communications programs, as Boeing and Buyer mutually agree.
Prior to any funds being disbursed, Boeing and Buyer will meet to mutually
agree on the marketing communications programs related to Buyer's
introduction and operation of the Aircraft.
Boeing's obligation to provide the support will commence at the time the
purchase of the Aircraft becomes firm (not subject to cancellation by
either party) and will terminate 2 years from the date the first Aircraft
is delivered to Buyer. There will be no cash payments or other support in
lieu thereof.
3. Additional Support.
Additional promotional support may be provided by Boeing subject to
the parties reaching mutual agreement as to the type of services, timing
and price.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
1954-2
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 1954-2 to
Purchase Agreement No. 1954 -
Seller Purchased Equipment
This Letter Agreement amends Letter Agreement 1954-2 of Purchase Agreement
No. 1954 dated as of even date herewith (the Agreement) between The Boeing
Company (Boeing) and Alaska Airlines, Inc. (Buyer) relating to Model 737-
400 aircraft (the Aircraft).
For purposes of this Letter Agreement the following definitions apply:
Seller Purchased Equipment (SPE) is Buyer Furnished Equipment (BFE) that
Boeing purchases for Buyer.
Developmental Buyer Furnished Equipment (DBFE) is all BFE not previously
certified for installation on the same model aircraft.
Developmental Seller Purchased Equipment (DSPE) is DBFE which is converted
to SPE.
This Letter Agreement does not include developmental avionics.
Developmental avionics are avionics that have not been previously certified
for installation on the same model aircraft.
Boeing and Buyer acknowldege that there are no items of DBFE or DSPE in
Buyer's detail specification D6-38900-1C dated August 29, 1996.
All other terms used herein and in the Agreement, and not defined above,
will have the same meaning as in the Agreement.
Buyer has requested that Boeing purchase as SPE the BFE which has been
changed to SPE as reflected in the Detail Specification. Accordingly,
Boeing and Buyer agree as follows:
1. Price.
Advance Payments. An estimated SPE price will be included in the
Aircraft Advance Payment Base Price for the purpose of establishing the
advance payments for each Aircraft. The estimated price of the SPE for
each Aircraft as identified in the Detail Specification as of the date
hereof, is [Confidential Treatment Requested] expressed in 1995 STE
dollars.
Aircraft Price. The Aircraft Price will be adjusted to reflect (i)
the actual costs charged Boeing by the SPE suppliers, (ii) a handling fee
of [Confidential Treatment Requested]% of such costs and (iii)
transportation charges. If at some future date, Buyer's configuration is
revised to include any DBFE and all DBFE, except for developmental
avionics, is converted to SPE, Boeing will waive the handling fee for all
SPE.
2. Responsibilities.
2.1 If Buyer elects to convert additional BFE to
SPE, Buyer is responsible for:
(i) selecting the supplier on or before:
Not Applicable for galleys
Not Applicable for seats;
(ii) selecting a FAA certifiable part; and
(iii) providing to Boeing the SPE part specification/Buyer
requirements.
2.2. Boeing is responsible for:
(i) placing and managing the purchase order with the
supplier;
(ii) coordinating with the suppliers on technical issues;
(iii) ensuring that the delivered SPE complies with the part
specification;
(iv) obtaining certification of the Aircraft with the SPE
installed; and
(v) obtaining for Buyer the supplier's standard warranty
for the SPE. SPE is deemed to be BFE for purposes of Exhibit B, the
Product Assurance Document, of the Agreement.
3. Changes.
After this Letter Agreement is signed, changes to SPE may only be
made by and between Boeing and the suppliers. Buyer's contacts with SPE
suppliers relating to design (including selection of materials and colors),
weights, prices or schedules are for informational purposes only. If Buyer
wants changes made to any of the above, requests must be made directly to
Boeing for negotiating with the supplier.
5. Proprietary Rights.
Boeing's obligation to purchase SPE will not impose upon Boeing any
obligation to compensate Buyer or any supplier for any proprietary rights
Buyer may have in the design of the SPE.
6. Remedies.
If Buyer does not comply with the obligations above, Boeing may:
(i) delay delivery of the Aircraft;
(ii) deliver the Aircraft without installing the SPE;
(iii) substitute a comparable part and invoice Buyer for the cost;
(iv) increase the Aircraft Price by the amount of Boeing's
additional costs attributable to such noncompliance.
7. Buyer's Indemnification of Boeing.
Buyer will indemnify and hold harmless Boeing from and against all
claims and liabilities, including costs and expenses (including attorneys'
fees) incident thereto or incident to successfully establishing the right
to indemnification, for injury to or death of any person or persons,
including employees of Buyer but not employees of Boeing, or for loss of or
damage to any property, including Aircraft, arising out of or in any way
connected with any nonconformance or defect in any SPE and whether or not
arising in tort or occasioned in whole or in part by the negligence of
Boeing, whether active, passive or imputed. This indemnity will not apply
with respect to any nonconformance or defect caused solely by Boeing's
installation of the SPE.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
1954-3
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 1954-3 to Purchase Agreement No. 1954 -
Option Aircraft
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft
(Aircraft).
All terms not defined herein will have the same meaning as in the
Agreement.
In consideration of Buyer's purchase of the Aircraft, Boeing agrees to
manufacture and sell to Buyer up to twelve (12) additional Model 737-400
Aircraft (Option Aircraft) [Confidential Treatment Requested] as described
in paragraph 1 of Attachment A hereto, and subject to the terms and
conditions set forth below.
1. Delivery.
1.1 The Option Aircraft will be delivered to Buyer during or before
the months set forth in the following schedule:
Month and Year Number of
of Delivery Option Aircraft
July 1999 One (1)
August 1999 One (1)
October 1999 One (1)
November 1999 One (1)
December 1999 One (1)
January 2000 One (1)
February 2000 One (1)
April 2000 Two (2)
December 2000 One (1)
January 2001 One (1)
February 2001 One (1)
2. Price.
The estimated delivery prices (Advance Payment Base Price) of the
Option Aircraft set forth in Attachment A include an allowance of
$[Confidential Treatment Requested](1995$ STE) for the special features
listed in paragraph 1 of Attachment A and an estimate for Seller Purchased
Equipment in the amount of $[Confidential Treatment Requested] (1995$ STE).
The Advance Payment Base Price excludes any amount for items of BFE. The
Option Aircraft pricing elements and associated pricing terms and
conditions are in Attachment A.
3. Option Aircraft Deposit.
In consideration of Boeing's grant to Buyer of options to purchase
the Option Aircraft as set forth herein, and concurrent with the execution
of the Purchase Agreement for the Aircraft, Buyer will pay a deposit to
Boeing of $[Confidential Treatment Requested] for each Option Aircraft (the
Option Deposit). In the event Buyer exercises an option herein for an
Option Aircraft, the amount of the Option Deposit for such Option Aircraft
will be credited against the first advance payment due for such Option
Aircraft pursuant to the advance payment schedule set forth in Article 5 of
the Purchase Agreement.
In the event that Buyer does not exercise its option to purchase a
particular Option Aircraft pursuant to the terms and conditions set forth
herein, Boeing shall be entitled to retain the Option Deposit for such
Option Aircraft.
4. Option Exercise.
To exercise its option to purchase the Option Aircraft, Buyer shall
give written notice thereof to Boeing on or before the first business day
of the month in each Option Exercise Date shown below:
Option Aircraft
Delivery Date Option Exercise Date
July 1999 On or before February 1, 1998
August 1999 On or before February 1, 1998
October 1999 On or before May 1, 1998
November 1999 On or before May 1, 1998
December 1999 On or before May 1, 1998
January 2000 On or before August 1, 1998
February 2000 On or before August 1, 1998
April 2000 On or before October 1, 1998
December 2000 On or before May 1, 1999
January 2001 On or before May 1, 1999
February 2001 On or before May 1, 1999
5. Contract Terms.
Within thirty (30) days after Buyer exercises an option to purchase
Option Aircraft pursuant to paragraph 4 above, Boeing and Buyer will use
their best reasonable efforts to enter into a supplemental agreement
amending the Purchase Agreement to add the applicable Option Aircraft to
the Purchase Agreement as a firm Aircraft as provided in Paragraph 7, below
(the Option Aircraft Supplemental Agreement).
6. [Confidential Treatment Requested]
7. Applicability.
Except as otherwise specifically provided in this Letter Agreement,
all the applicable terms, conditions and provisions of the Purchase
Agreement shall apply to all Option Aircraft [Confidential Treatment
Requested]that are added to the Purchase Agreement by an Option Aircraft
Supplemental Agreement as firm Aircraft.
If the foregoing accurately reflects your understanding of the matters
treated herein, please so indicate by signature below.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
Attachments
Model 737-400 Aircraft
1. Option and [Confidential Treatment Requested] Aircraft Description
and Changes.
1.1 Aircraft Description. The Option Aircraft and [Confidential
Treatment Requested] Aircraft are described by Detail Specification D6-
38900-4-1C dated August 29, 1996, as revised to include:
(1) CFM56-3C-1 Engine Installation
(2) The following special features:
As described in Exhibit A to the
Agreement
1.2 Changes. The Detail Specification will be revised to
include:
(1) Changes applicable to the basic Model 737-400 aircraft
which are developed by Boeing between the date of the Detail Specification
and the signing of a definitive agreement to purchase the Option Aircraft.
(2) Changes mutually agreed upon.
(3) Changes required to obtain a Standard Certificate of
Airworthiness.
2. Price Description - Model 737-400
2.1 Price Elements Per Aircraft
[Confidential Treatment Requested]
2.2 Price Adjustments.
2.2.1 Special Features. The price for Special Features
selected for the Option Aircraft will be adjusted to Boeing's then-current
prices as of the date of execution of the definitive agreement for the
Option Aircraft.
2.2.2 Escalation Adjustments. For Option Aircraft
delivering before January, 2002, the Base Airframe Price and the price of
Special Features will be escalated according to the provisions of Exhibit D
to the Agreement.
The engine manufacturer's current escalation provisions, shown in Exhibit D
to the Agreement, were used to calculate the advance payment base prices
shown herein. Such engine escalation provisions will be revised if they
are changed by the engine manufacturer prior to the signing of a definitive
agreement for the Option Aircraft and the then-current engine escalation
provisions will be incorporated into such agreement.
2.2.3 Base Price Adjustments. The Base Airframe Price and
the Engine Price of the Option Aircraft will be adjusted to Boeing's and
the engine manufacturer's then-current prices as of the date of execution
of the definitive agreement for the Option Aircraft.
3. Advance Payment Schedules, Prices and Adjustments.
3.1 Buyer will pay to Boeing advance payments for the Option
Aircraft pursuant to the following schedule.
Amount Due per Option Aircraft
(Percentage times
Due Date of Payment Advance Payment Base Price)
Upon signing of the definitive 1% (less the
agreement Deposit)
24 months prior to the first 4%
day of the scheduled delivery
month of the Option Aircraft/
21 months prior to the first 5%
day of the scheduled delivery
month of the Option Aircraft
18 months prior to the first 5%
day of the scheduled delivery
month of the Option Aircraft
12 months prior to the first 5%
day of the scheduled delivery
month of the Option Aircraft
9 months prior to the first 5%
day of the scheduled delivery
month of the Option Aircraft
6 months prior to the first 5%
day of the scheduled delivery
month of the Option Aircraft
Total 30%
Any advance payments past due as of the date of signing the definitive
purchase agreement for the Option Aircraft are due and payable on the date
of such signing.
3.2 Option Aircraft advance payment base prices will be increased
or decreased, as appropriate, at the time of signing of the definitive
purchase agreement for the Option Aircraft, using the then-current
forecasted airframe and engine escalation factors used by Boeing, to
determine the amount of the advance payments to be made by Buyer for the
Option Aircraft.
1954-4
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 1954-4 to
Purchase Agreement No. 1954 -
Spares Initial Provisioning
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the
Aircraft).
All terms used herein and in the Purchase Agreement, and not defined
herein, will have the same meaning as in the Agreement.
1. Applicability.
This letter will apply to initial provisioning for the Model 737-400
Aircraft covered by the Agreement.
2. Initial Provisioning Meeting.
Boeing will conduct an initial provisioning meeting (Initial
Provisioning Meeting) with Buyer to establish mutually agreeable procedures
to accomplish Buyer's initial provisioning of spare parts for the Aircraft.
The parties will agree, during the Initial Provisioning Meeting on the
operational data to be provided by Buyer for Boeing's use in preparing its
quantity recommendations for initial provisioning of spare parts for the
Aircraft, exclusive of special tools, ground support equipment, engines and
engine parts (Provisioning Items). Such operational data to be provided by
Buyer will be the data described in Section E of Boeing Manual D6-49090,
entitled "Initial Provisioning Implementation Manual, Boeing Model 757,
767, 777, 747-400 and 737-300, -400 and -500" (Boeing Initial Provisioning
Implementation Manual) which will be furnished to Buyer prior to the
Initial Provisioning Meeting. The parties will also agree on the
provisioning documentation to be provided by Boeing. Such data will be
essentially in accordance with the provisions of Chapter 1 of ATA
International Specification 2000, Revision 1, dated April 20, 1989, as
described in Boeing Initial Provisioning Implementation Manual D6-49090
(such data will be hereinafter referred to collectively as the
"Provisioning Data"). Boeing will provide instruction in the use of the
initial provisioning documentation. This instruction will be provided in
conjunction with the Initial Provisioning Meeting. In addition, the
parties will discuss spares ordering procedures and other matters related
to the provisioning for the Aircraft. The time and location for such
Initial Provisioning Meeting will be mutually agreed upon between the
parties; however, Boeing and Buyer will use their best efforts to convene
such meeting within 30 days after execution of the Agreement.
3. Initial Provisioning Documentation.
3.1 Provisioning Data. Boeing will furnish Provisioning Data to
Buyer on or about September 20, 1996. The Provisioning Data will be as
complete as possible and will cover Provisioning Items selected by Boeing
for review by Buyer for initial provisioning for the Aircraft. The
Provisioning Data will set forth the prices for Provisioning Items which
are Boeing Spare Parts and such prices will be firm and remain in effect
until the date or dates set forth in Paragraph 4.1, Boeing Spare Parts, by
which orders must be placed with Boeing. Boeing will, from time to time,
until a date approximately 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, furnish to Buyer revisions to
the Provisioning Data.
3.2 Provisioning IPC. Boeing will, on or about September 20,
1996, furnish to Buyer a Boeing Illustrated Parts Catalog (IPC),
hereinafter referred to as the "Provisioning IPC." The Provisioning IPC
will be as complete as possible and will cover Provisioning Items selected
by Boeing for review by Buyer for initial provisioning for the Aircraft.
Boeing will, from time to time, until a date approximately 90 days
following delivery of the last Aircraft, or until the delivery
configuration of each of the Aircraft is reflected in the Provisioning IPC,
whichever is later, furnish to Buyer revisions to the Provisioning IPC.
3.3 Buyer Furnished Equipment (BFE) Provisioning Data.
3.3.1 Boeing's Responsibility. Boeing will include BFE end
items in the Provisioning Data and Provisioning IPC for BFE installed on
Buyer's Aircraft provided such equipment has been installed on other
Aircraft by Boeing and Boeing has data on the BFE.
3.3.2 Buyer's Responsibility. Buyer will be responsible for
ensuring BFE data is provided to Boeing by the BFE supplier in a format
acceptable to Boeing for BFE not covered by 3.3.1 above. If the data is
not provided to Boeing in a timely manner and in a format acceptable to
Boeing, such BFE equipment will not be included in Boeing's Provisioning
Data or IPC.
3.4 Other Data. Boeing will submit to Buyer listings of Raw
Materials, Standard Parts and Bulk Materials to be used by Buyer in the
maintenance and repair of the Aircraft.
4. Purchase from Boeing of Spare Parts as Initial Provisioning for the
Aircraft.
4.1 Boeing Spare Parts. Buyer will place orders for Provisioning
Items by October 20, 1996; provided, however, that in those instances where
Boeing submits any revision to the Provisioning Data, Buyer will place
orders for Boeing Spare Parts covered by such revision within 60 days
following the date of such submittal. At Buyer's request, Boeing will
process "controlled shipments" by shipping full or partial quantities of an
order on a schedule specified by Buyer, provided the final shipment is made
no later than 24 months after receipt of the order.
4.2 Vendor Provisioning Items. Buyer may place orders with
Boeing for Provisioning Items which are manufactured by vendors or to their
detailed design and are covered by the Provisioning Data as initial
provisioning for the Aircraft. The price to Buyer for any such vendor
Provisioning Item will be [Confidential Treatment Requested]% of the
vendor's quoted price to Boeing therefor. If Buyer elects to purchase such
vendor Provisioning Items from Boeing, Buyer will place its orders therefor
in accordance with the provisions of Paragraph 4.1, Boeing Spare Parts.
4.3 Ground Support Equipment and Special Tools. Buyer may place
orders with Boeing for ground support equipment (GSE) and special tools
manufactured by vendors which Buyer determines it will initially require
for maintenance, overhaul and servicing of the Aircraft and/or engines.
The price to Buyer for such GSE or special tools will be [Confidential
Treatment Requested]% of the vendor's quoted price to Boeing therefor. If
Buyer elects to purchase such GSE and special tools from Boeing, Buyer will
place its orders therefor by the date set forth in Paragraph 4.1, Boeing
Spare Parts or such later date as the parties may mutually agree.
4.4 Spare Engines and Engine Spare Parts. Buyer may place orders
with Boeing for spare engines and/or engine spare parts which Buyer
determines it will initially require for support of the Aircraft or for
maintenance and overhaul of the engines. The price to Buyer for such spare
engines or such engine spare parts, will be [Confidential Treatment
Requested]% of the engine manufacturer's quoted price to Boeing for the
engine, and [Confidential Treatment Requested]% of the engine
manufacturer's quoted price to Boeing for the engine spare parts. If Buyer
elects to purchase such spare engines or engine spare parts through Boeing,
Buyer will place its orders on a date to be mutually agreed upon during the
Initial Provisioning Meeting.
4.5 QEC Kits. Boeing will, on or about September 20, 1996,
furnish to Buyer a listing of all components which could be included in the
Quick Engine Change (QEC) kits which may be purchased by Buyer from Boeing.
Buyer agrees to review such listing and indicate by marking on one copy of
such listing those components that Buyer desires included in its QEC kits.
Buyer will return such marked copy to Boeing within 30 days after Buyer's
receipt of such listing. Within 30 days after Boeing's receipt of such
marked copy, Boeing will republish such listing to reflect only those
components selected by Buyer and will provide copies of such republished
listing to Buyer. Boeing will from time to time furnish revisions to such
republished listing until a date approximately 90 days after delivery of
the last QEC kit ordered by Buyer for the Aircraft. Boeing will furnish to
Buyer as soon as practicable a statement setting forth a firm price for the
QEC kit configuration selected by Buyer. Buyer agrees to place orders with
Boeing for the QEC kits for the Aircraft by October 20, 1996.
4.6 Payment for Provisioning Items. The payment provisions of
the General Terms Agreement between Boeing and Buyer will be applicable to
Provisioning Items ordered by Buyer from Boeing for the Aircraft.
5. Delivery.
Boeing will, insofar as reasonably possible, deliver to Buyer the
Spare Parts ordered by Buyer in accordance with the provisions of this
letter on dates reasonably calculated to conform to Buyer's anticipated
needs in view of the scheduled deliveries of the Aircraft. Buyer and
Boeing will agree upon the date to begin delivery of the Provisioning Spare
Parts ordered in accordance with this letter. Where appropriate, Boeing
will arrange for shipment of such Spare Parts, which are manufactured by
vendors, directly to Buyer from the applicable vendor's facility. The
routing and method of shipment for initial deliveries and all subsequent
deliveries of such Spare Parts will be as mutually agreed between Boeing
and Buyer.
6. Substitution for Obsolete Spare Parts.
6.1 Obligation to Substitute. In the event that, prior to
delivery of the first Aircraft pursuant to the Agreement, any Spare Part
purchased by Buyer from Boeing in accordance with this letter is rendered
obsolete or unusable due to the redesign of the Aircraft or of any
accessory, equipment or part therefor, (other than a redesign at Buyer's
request), Boeing will deliver to Buyer new and usable Spare Parts in
substitution for such obsolete or unusable Spare Parts and Buyer will
return the obsolete or unusable Spare Parts to Boeing. Boeing will credit
Buyer's account with Boeing with the price paid by Buyer for any such
obsolete or unusable Spare Part and will invoice Buyer for the purchase
price of any such substitute Spare Part delivered to Buyer.
6.2 Delivery of Obsolete Spare Parts and Substitutes Therefor.
Obsolete or unusable Spare Parts returned by Buyer pursuant to this
Item will be delivered to Boeing at its Seattle Distribution Center, or
such other destination as Boeing may reasonably designate. Spare Parts
substituted for such returned
obsolete or unusable Spare Parts will be delivered to Buyer at Boeing's
Seattle Distribution Center, or such other Boeing shipping point as Boeing
may reasonably designate. Boeing will pay the freight charges for the
shipment from Buyer to Boeing of any such obsolete or unusable Spare Part
and for the shipment from Boeing to Buyer of any such substitute Spare
Part.
7. Repurchase of Provisioning Items.
7.1 Obligation to Repurchase Peculiar Provisioning Items. During
a period commencing 1 year after delivery of the first Aircraft under the
Agreement, and ending 5 years after such delivery, Boeing will, upon
receipt of Buyer's written request and subject to the exceptions in
Paragraph 7.2, Exceptions, repurchase unused and undamaged Provisioning
Items which were peculiar to the Aircraft as compared to the delivery
configuration of Model 737-400 Aircraft previously purchased by Buyer from
Boeing, and (i) were recommended by Boeing in the Provisioning Data as
initial provisioning for the Aircraft, (ii) were purchased by Buyer from
Boeing, and (iii) are surplus to Buyer's needs.
7.2 Exceptions. Boeing will not be obligated under
Paragraph 7.1, Obligation to Repurchase, 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 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 (a) Buyer's
modification of the Aircraft or (b) design improvements by Boeing or the
vendor (other than Provisioning Items which have become obsolete because of
a defect in design if such defect has not been remedied by an offer by
Boeing or the vendor to provide no charge retrofit kits or replacement
parts which correct such defect), and (v) Provisioning Items which become
excess as a result of a change in Buyer's operating parameters, provided to
Boeing pursuant to the Initial Provisioning meeting in Paragraph 2, which
were the basis of Boeing's initial provisioning recommendations for the
Aircraft.
7.3 Notification and Format. Buyer will notify Boeing, in
writing, when Buyer desires to return Provisioning Items which Buyer's
review indicates are eligible for repurchase by Boeing under the provisions
of this Repurchase of Provisioning Items paragraph. Buyer's notification
will include a detailed summary, in part number sequence, of the
Provisioning Items Buyer 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 Buyer, and will include part number, nomenclature,
purchase order number, purchase order date and quantity to be returned.
Within 5 business days after receipt of Buyer's notification, Boeing will
advise Buyer, in writing, when Boeing's review of such summary will be
completed.
7.4 Review and Acceptance by Boeing. Upon completion of Boeing's
review of any detailed summary submitted by Buyer pursuant to
Paragraph 7.3, Boeing will issue to Buyer a Material Return Authorization
(MRA) for those Provisioning Items Boeing agrees are eligible for
repurchase in accordance with this Repurchase of Provisioning Items
paragraph. Boeing will advise Buyer of the reason that any spare part
included in Buyer'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 Buyer will arrange for shipment of such
Provisioning Items accordingly.
7.5 Price and Payment. The price of each Provisioning Item
repurchased by Boeing pursuant to this Repurchase of Provisioning Items
paragraph will be an amount equal to 100% of the original invoice price
thereof. In the case of Provisioning Items manufactured by a vendor which
were purchased pursuant to Paragraph 4, Purchase from Boeing of Spare Parts
as Initial Provisioning for the Aircraft, hereof the repurchase price will
not include Boeing's [Confidential Treatment Requested]% handling charge.
Boeing will pay the repurchase price by issuing a credit memorandum in
favor of Buyer which may be applied against amounts due Boeing for the
purchase of aircraft, Spare Parts, services or data.
7.6 Delivery of Provisioning Items. Provisioning Items
repurchased by Boeing pursuant to this Repurchase of Provisioning Items
paragraph will be delivered to Boeing F.O.B. at its Seattle Distribution
Center, or such other destination as Boeing may reasonably designate.
Buyer will pay the freight charges for the shipment from Buyer to Boeing of
any such Provisioning Items.
8. Obsolete Spare Parts and Surplus Provisioning Items - Title and Risk
of Loss.
Title to and risk of loss of any obsolete or unusable Spare Parts
returned to Boeing pursuant to Paragraph 6, Substitution for Obsolete Spare
Parts, will pass to Boeing upon delivery thereof to Boeing. Title to and
risk of loss of any Spare Part substituted for an obsolete or unusable
Spare Part pursuant to Paragraph 6, Substitution for Obsolete Spare Parts,
will pass to Buyer upon delivery thereof to Buyer. Title to and risk of
loss of any Provisioning Item repurchased by Boeing pursuant to
Paragraph 7, Repurchase of Provisioning Items, will pass to Boeing upon
delivery thereof to Boeing. With respect to the obsolete or unusable Spare
Parts which may be returned to Boeing and the Spare Parts substituted
therefor, pursuant to Paragraph 6, and the Provisioning Items which may be
repurchased by Boeing, pursuant to Paragraph 7, the party which has risk of
loss of any such Spare Part or Provisioning Item will have the
responsibility of providing any insurance coverage for it desired by such
party.
9. Supplier Support.
Boeing has entered, or anticipates entering, into product support
agreements with suppliers (Boeing Suppliers) of major system components
manufactured by such Suppliers to be installed on the Aircraft (Supplier
Components). Such product support agreements commit, or are expected to
commit, the Boeing Suppliers to provide to Boeing's Buyers and/or the
Buyer's designees support services with respect to the Supplier Components
which can be reasonably expected to be required during the course of normal
operation. This support includes but is not limited to shelf-stock of
certain spare parts, emergency spare parts, timely delivery of spare parts,
and technical data related to the Supplier Components. Copies of such
product support agreements will be provided to Buyer on or about September
20, 1996 in Boeing Document D6-56115, Volumes 1 and 2. In the event Buyer
has used due diligence in attempting to resolve any difficulty arising in
normal business transactions between Buyer and a Boeing Supplier with
respect to product support for a Supplier Component manufactured by such
Supplier and if such difficulty remains unresolved, Boeing will, if
requested by Buyer, assist Buyer in resolving such difficulty. Assistance
will be provided by the Spares Supplier Support and Data Management
Organization within the Boeing Buyer Services Division.
10. Termination of Agreement for Excusable Delay.
In the event of termination of the Agreement with respect to any
Aircraft
(i) pursuant to Article 6.2 of the Agreement, or
(ii) pursuant to Article 6.3 of the Agreement
such termination will, if Buyer so requests by written notice received by
Boeing within 15 days after such termination, also discharge and terminate
all obligations and liabilities of the parties as to any Spare Parts which
Buyer had ordered pursuant to the Provisions of this letter as initial
provisioning for such Aircraft and which are undelivered on the date Boeing
receives such written notice.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
1954-5
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 1954-5 to
Purchase Agreement No. 1954 -
Escalation Sharing
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the
Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. Commitment.
Boeing agrees to share one-half of the escalation up to a maximum of
3 percent per year in each of the years 1997 and 1998, as more fully
described in paragraph 2 below, for any of Buyer's aircraft which are
scheduled to deliver after December 31, 1996 (to include the twelve Firm,
twelve Option and 24 Conditional Option Aircraft that are the subject of
the Agreement). For the purpose of this Letter Agreement such aircraft are
referred to as "Eligible Aircraft."
All escalation calculations under this Letter Agreement will be made in
accordance with Exhibit D to the Agreement entitled "Price Adjustment Due
to Economic Fluctuations - Airframe Price Adjustment" (hereinafter referred
to as "Exhibit D"), using actual escalation indices published for the
applicable period.
2. Escalation Credit Memo.
2.1 Calculation - Eligible Aircraft Delivering in 1997.
At the time of delivery of each Eligible Aircraft delivering
in 1997, Boeing will issue to Buyer a credit memorandum (the 1997 Credit
Memorandum) which shall be applied to the Purchase Price of such Aircraft.
The 1997 Credit Memorandum shall be calculated as follows:
One-half of the difference between the airframe and special features
escalation calculated for a December 1996 aircraft delivery
position, and the escalation calculated for the month of delivery of
the 1997 Eligible Aircraft;
provided however,
The maximum amount of the 1997 Credit Memorandum shall not exceed 3
percent pursuant to the following calculation:
At the time of the delivery of the 1997 Eligible Aircraft, the
Base Airframe Price and Special Features prices will be
escalated to a December 1996 delivery month. The December 1996
escalated price will be referred to in the following formula as
the "December 1996 Index Amount". The 1997 Credit Memorandum
for the 1997 Eligible Aircraft will not exceed an amount equal
to:
the December 1996 Index Amount times 0.03
2.2 Calculation - Eligible Aircraft Delivering in 1998.
At the time of delivery of each Eligible Aircraft delivering
in 1998, Boeing will issue to Buyer a credit memorandum (the 1998 Credit
Memorandum) which shall be applied to the Purchase Price of such Aircraft.
The 1998 Credit Memorandum shall be calculated as follows:
(i) One-half of the difference between the airframe and special
features escalation calculated for a December 1997 aircraft delivery
position, and the escalation calculated for the month of delivery of
the 1998 Eligible Aircraft;
provided however,
The maximum amount of the 1998 Credit Memorandum shall not exceed 3
percent pursuant to the following calculation:
At the time of the delivery of the 1998 Eligible Aircraft, the
Base Airframe Price and Special Features prices will be
escalated to a December 1997 delivery month. The December 1997
escalated price will be referred to in the following formula as
the "December 1997 Index Amount." The 1998 Credit Memorandum
for the 1998 Eligible Aircraft will not exceed an amount equal
to:
the December 1997 Index Amount times 0.03;
and,
(ii) The amount calculated above in paragraph 2.1 for the 1997
Credit Memorandum calculated through December, 1997.
2.3 Eligible Aircraft Delivering after 1998.
For Eligible Aircraft delivering after the calendar year
1998, the amount of the Credit Memorandum will be the amount calculated
pursuant to paragraph 2.2 above through December 1998. This credit
memorandum amount will be escalated pursuant to the Airframe Adjustment
Formula contained in Exhibit D of the Agreement, from December 1998 to the
month of delivery.
3. Advance Payment Base Price.
It is agreed that the Advance Payment Base Prices for the Eligible
Aircraft set forth in Article 3.4 of the Agreement includes an estimate for
the escalation sharing Credit Memorandum pursuant to this Letter Agreement.
4. Escalating Credits (STE).
It is agreed that the credit memoranda amount specified in Letter
Agreement No.6-1162-DSF-008 which is expressed [Confidential Treatment
Requested] will be calculated upon the Aircraft Price at delivery.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
1954-6
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 1954-6
Purchase Agreement No. 1954 -
Waiver of Aircraft Demonstration Flights
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the
Aircraft).
All terms not defined herein have the same meaning as in the Agreement.
1. Fuel Entitlement at Delivery.
At the time of delivery of the Aircraft, Boeing will provide to
Buyer, at no charge, 1000 gallons of jet fuel.
2. Waiver of Demonstration Flight.
Notwithstanding the provisions of the Agreement requiring the
Aircraft to be test flown prior to delivery for the purpose of
demonstrating to Buyer the functioning of such Aircraft and its equipment,
upon written notice to Boeing 90 days prior to the scheduled date of the
Aircraft delivery, or as agreed between the parties in writing, Buyer may
waive such flight. With respect to each waived demonstration flight, the
following provisions will apply:
3. Additional Fuel.
Promptly after delivery of the Aircraft, Boeing will load on the
Aircraft an amount of jet fuel which together with the 1,000 gallons
provided at delivery, equals a full tank.
4. Reimbursement for Correction of Flight Discrepancies.
4.1 Ferry Flight.
Except for Aircraft to be used promptly after delivery for
Boeing flight crew training provided to Buyer at or near Seattle,
Washington, Boeing will reimburse Buyer for Buyer's direct labor costs (as
defined below) and the cost of any material (Correction Costs) required to
correct any flight discrepancy detected by Buyer while the Aircraft is
being ferried from Seattle, Washington, to Buyer's main base, to the extent
such Correction Costs and labor costs are not covered under a warranty
provided by Boeing or by any of its suppliers. Within 90 days after the
date of such ferry flight Buyer will submit to Boeing's Director, Product
Assurance Contracts, at Renton, Washington, a written itemized statement
describing any such flight discrepancy and indicating the Correction Costs
incurred by Buyer for the correction of such flight discrepancy.
4.2 Definitions.
For purposes of reimbursement under this paragraph; (i)
Buyer's direct labor costs will be determined using the Warranty Labor Rate
in effect between the parties as of the date such labor is expended, and
(ii) flight discrepancies mean any failure or malfunction of such Aircraft,
or the accessories, equipment, systems and parts installed therein which
results from a defect in such Aircraft, accessories, equipment, systems and
parts or a nonconformance to the Detail Specification for such Aircraft
which was present at the time of delivery of the Aircraft to Buyer and
which, if detected during a Boeing predelivery demonstration flight, would
have been reported in the pilot's flight discrepancy report and would have
been corrected by Boeing prior to the delivery of such Aircraft to Buyer.
5. Return of Aircraft.
If any flight discrepancy as defined above is detected by Buyer
during the ferry flight of any Aircraft, which requires the return of such
Aircraft to Boeing's facilities at Seattle, Washington, for correction by
Boeing, title to and risk of loss of such Aircraft will at all times remain
with Buyer and Boeing will have such responsibility for such Aircraft while
it is on the ground at Boeing's Seattle, Washington, facilities as is
chargeable by law to a bailee for mutual benefit, but Boeing will not be
chargeable for loss of use.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
1954-7
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 1954-7
Purchase Agreement No. 1954 -
Additional Purchase Agreement Provisions
Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the
Aircraft).
All terms not defined herein have the same meaning as in the Agreement.
1. Boeing and Buyer agree that the following provisions shall apply in
lieu of the provisions currently contained in the subject Agreement:
1.1 Article 2.3 - Notice of Delivery Date, is revised to read:
"Boeing will give Buyer at least 10 days notice of the delivery date of the
Aircraft....".
1.2 Article 2.6 - Bill of Sale, is revised in its entirety to
read: "Upon delivery of an Aircraft Boeing will deliver to Buyer a bill of
sale conveying good title to such Aircraft, free of any and all
encumbrances, and such other documents of title as Buyer may reasonably
request."
1.3 Article 7.1 - Developmental Changes. The last line of the
article is revised to read: "If Boeing makes changes pursuant to this
paragraph, Boeing will promptly notify Buyer of such changes and provide
documentation of associated detail specification updates."
1.4 Article 7.2 - Change Orders, is revised to add: "Change
Orders will include only changes previously accepted by Buyer in writing."
1.5 Notwithstanding Article 8.1.2, Boeing will provide a
Certificate of Sanitary Construction at the time of delivery of each
Aircraft.
1.6 Article 8.1.3 is revised to read "...If the FAA (or any
successor U.S. governmental agency) does not issue a superseding
certificate, Boeing's only....".
1.7 Article 9.3 - Aircraft Flight. The paragraph shall be
revised to add "Boeing will continue its practice of permitting Buyer's
licensed and qualified pilot observer to participate in flying the Aircraft
provided that the flights shall always be under the command of Boeing's
pilot."
1.8 Exhibit B, Part A, Paragraph 4.2 is revised to add: "Boeing
may release service bulletins or service letters advising Buyer of the
availability of certain warranty remedies. When such advice is provided,
Buyer will be deemed to have fulfilled the requirements for discovery of
the defect and submittal of notice in this Exhibit C as of the date
specified in the service bulletin or service letter."
1.9 Pursuant to Exhibit B, Part A, Paragraph 6.2.2, for purposes
of this agreement, "Boeing Recommended Spare Parts List" shall be defined
as that negotiated spare parts list developed jointly by Buyer and Boeing
Spares Organization using operating parameters supplies by Buyer.
1.10 Exhibit B, Part B, Paragraph 5.2 - Direct Materials, is
revised to read: "...(iii) materials which exceed Boeing's reasonable
estimate of required materials, and...".
1.11 Exhibit B, Part B, Paragraph 5.4 - Limitation, is revised to
read: "The total reimbursement with respect to the direct labor and direct
materials incorporated in an item, will not exceed...".
1.12 Exhibit B, Part B, Paragraph 6 - Replaced Parts, is revised
to read: "...the warranty claim number and, if the part has a then-current
Boeing spare part selling price of more than $2,000, retained for a period
of 60 days....".
1.13 Exhibit B, Part G, Paragraph 3 - Manufacturer Responsibility,
is revised to add: "Boeing shall also take such actions as are reasonable
in an effort to obtain a correction of the Interface Problem."
1.14 Exhibit B, Part H, Paragraph 1 - Duplicate Product Assurance
Remedies, is revised to add: "In other words, Buyer may at its option,
make a claim under the Warranty, if applicable, or the Service Life Policy,
if applicable, but not both."
1.15 Exhibit C, Part A, Paragraph 2 - Maintenance Training
Program, is revised to read: "...If requested by Buyer by December 1, 1996,
Boeing agrees to provide....".
1.16 Exhibit C, Part C, Paragraph 2, - Flight Training Program, is
revised to read: "...If requested by Buyer by December 1, 1996, Boeing
agrees to provide....".
1.17 Exhibit C, Part A and Part C, Paragraph 4.3 are revised to
read: "...materials between Seattle and such alternate training site away
from Seattle."
1.18 Exhibit C, Part A and Part C, Paragraph 4.4 are revised to
read: "...providing the training at such alternate site away from Seattle."
If the foregoing accurately reflects your understanding of the matters
treated herein, please so indicate by signature below.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
6-1162-DSF-003
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 6-1162-DSF-003 to
Purchase Agreement No. 1954 -
Model 737-400 Aircraft [Confidential Treatment Requested]
This Letter Agreement amends Purchase Agreement No. 1954 (the Agreement)
between The Boeing Company (Boeing) and Alaska Airlines, Inc. (Buyer)
relating to the Model 737-400 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein will
have the same meaning as in the Agreement.
1. [Confidential Treatment Requested]
2. Confidential Treatment. Buyer understands that certain commercial
and financial information contained in this Letter Agreement including any
attachments hereto is considered by Boeing as confidential. Buyer agrees
that it will treat this Letter Agreement and the information contained
herein as confidential and will not, without the prior written consent of
Boeing, disclose this Letter Agreement or any information contained herein
to any other person or entity except as provided in Letter Agreement 6-
1162-DSF-005.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
Attachment
Attachment to Letter Agreement No. 6-1162-DSF-003
[Confidential Treatment Requested]
6-1162-DSF-004
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 6-1162-DSF-004 to
Purchase Agreement No. 1954 -
Model 737-800 [Confidential Treatment Requested]
This Letter Agreement amends Purchase Agreement No. 1954 (the Agreement)
between The Boeing Company (Boeing) and Alaska Airlines, Inc. (Buyer)
relating to the Model 737-800 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein will
have the same meaning as in the Agreement.
1. [Confidential Treatment Requested]
2. Confidential Treatment. Buyer understands that certain commercial
and financial information contained in this Letter Agreement including the
attachment hereto is considered by Boeing as confidential. Buyer agrees
that it will treat this Letter Agreement and the information contained
herein as confidential and will not, without the prior written consent of
Boeing, disclose this Letter Agreement or any information contained herein
to any other person or entity except as provided in Letter Agreement 6-
1162-DSF-005.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
Attachment
Attachment to Letter Agreement No. 6-1162-DSF-004
[Confidential Treatment Requested]
6-1162-DSF-005
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 6-1162-DSF-005 to
Purchase Agreement No. 1954 -
Disclosure of Confidential Information
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the
Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. Buyer understands that certain commercial and financial information
contained in the documents listed below (Confidential Documents) is
considered by Boeing as confidential.
2. Buyer agrees that it will treat the Confidential Documents and the
information contained therein as confidential and will not, without the
prior written consent of Boeing, disclose such Confidential Documents or
any information contained therein to any other person or entity except as
may be required by (i) applicable law or governmental regulations, or (ii)
for financing the Aircraft in accordance with the provisions of Article 10
of the Agreement.
3. In connection with any such disclosure or filing of the Confidential
Documents, or the information contained therein pursuant to any such
applicable law or governmental regulation, Buyer will request and use its
best reasonable efforts to obtain confidential treatment of such
Confidential Documents and the information contained therein. Boeing
agrees to cooperate with Buyer in making and supporting its request for
confidential treatment.
Schedule of Confidential Documents
[Confidential Treatment Requested]
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
6-1162-DSF-006
Alaska Airlines, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 6-1162-DSF-006
Purchase Agreement No. 2954
[Confidential Treatment Requested]
Objective for Model 737-800 Aircraft
Reference is made to Purchase Agreement No. 1954 dated as of even date
herewith (the Agreement) between The Boeing Company (Boeing) and Alaska
Airlines, Inc. (Buyer) relating to the sale by Boeing and the purchase by
Buyer of up to twelve (12) Model 737-400 Option Aircraft [Confidential
Treatment Requested]. Such Option Aircraft and [Confidential Treatment
Requested] may be substituted to Model 737-800 Aircraft, pursuant to the
conditions in Letter Agreement No. 6-1162-DSF-008.
This letter, when accepted by Buyer contemporaneously with the execution
of the Agreement, will become part of the Agreement and will evidence our
further agreement with respect to the matters set forth below.
All terms used herein and in the Agreement, and not defined herein, shall
have the same meaning as the Agreement.
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
1. [Confidential Treatment Requested]
2. [Confidential Treatment Requested]
3. [Confidential Treatment Requested]
4. Confidential Treatment.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement, and any attachments hereto, is
considered by Boeing as confidential. Buyer agrees that it will treat
this Letter Agreement and the information contained herein as confidential
and will not, without the prior written consent of Boeing, disclose this
Letter Agreement or any information contained herein to any other person
or entity except as provided in Letter Agreement No. 6-1162-DSF-005.
If the foregoing correctly sets forth your understanding of our agreement
with respect to the matters treated above, please indicate your acceptance
and approval below.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
[Confidential Treatment Requested]
6-1162-DSF-008
Alaska Airlines
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 6-1162-DSF-008 to
Purchase Agreement No. 1954 -
Special Matters
Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the
Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. Basic Credit Memorandum.
In consideration of Buyer's purchase of twelve (12) firm Model 737-
400 aircraft (Firm Aircraft) and twelve (12) option Model 737-400 aircraft
(Option Aircraft), Boeing shall issue a credit memorandum at time of
delivery of each Firm and Option Aircraft to Buyer in an amount equal to
[Confidential Treatment Requested] of Base Airframe plus Engine Price for
Model 737-400/500/300 aircraft (Current Generation Aircraft) or Base
Aircraft price for Model 737-800/700/600 aircraft (New Generation
Aircraft), [Confidential Treatment Requested].
BASIC CREDIT MEMORANDA [Confidential Treatment Requested]
MODEL FIRM AND OPTION
TYPE AIRCRAFT
737-400 [Confidential Treatment Requested]
737-800 [Confidential Treatment Requested]
737-700 [Confidential Treatment Requested]
737-300 [Confidential Treatment Requested]
737-600 [Confidential Treatment Requested]
737-500 [Confidential Treatment Requested]
1.1 Model Substitution. Should Buyer elect to change an option
Aircraft model type pursuant to paragraph 4 herein and substitute from a
Model 737-400 to a Current Generation or New Generation Aircraft, the
applicable basic credit memorandum and amount as designated above would
apply against [Confidential Treatment Requested].
1.2 [Confidential Treatment Requested]
1.3 Application Of Credit Memoranda.
All Credit Memoranda will be issued to Buyer at time of the delivery
of each Aircraft to which they relate unless otherwise stated herein. Once
issued, the Basic Credit Memoranda may be used by Buyer for the purchase
from Boeing of Boeing goods and services, or may be used (in whole or in
part) by Buyer for the payment of the balance of the Aircraft Price due at
the time of delivery of the related Aircraft. The Basic Credit Memoranda
may not, however, be used for the payment of Advance Payments.
2. [Confidential Treatment Requested]
3. [Confidential Treatment Requested]
4. Option Aircraft.
4.1 Model Substitution. [Confidential Treatment Requested].
4.2 Performance Matters. [Confidential Treatment Requested].
5. [Confidential Treatment Requested]
6. [Confidential Treatment Requested]
7. [Confidential Treatment Requested]
8. 737-800 Introductory Support Credit Memoranda.
In consideration of Buyer's requirements for spares and training
support for New Generation Model 737 Aircraft should Buyer elect to take
delivery of a New Generation Model 737 aircraft, Boeing agrees to provide a
credit memorandum in the amount of [Confidential Treatment Requested] per
New Generation Model 737 Aircraft. Such credit memorandum will be made
available to Buyer six (6) months prior to delivery of each New Generation
Model 737 Aircraft and may be used for Boeing spares and /or training
support (in excess of training entitlements for Model 737-400 operators
introducing Model 737-600/-700/-800 Aircraft similar to the entitlement
described in Attachment B. to which Buyer will be entitled upon exercise of
a firm Model 737-600/-700/-800 Option Aircraft) as required by Buyer for
introduction of the Model 737-600/-700 or -800 aircraft into Buyer's fleet.
9. Assignment of Credits.
[Confidential Treatment Requested].
10. Confidential Treatment. Buyer understands that certain commercial
and financial information contained in this Letter Agreement including any
attachments hereto is considered by Boeing as confidential. Buyer agrees
that it will treat this Letter Agreement and the information contained
herein as confidential and will not, without the prior written consent of
Boeing, disclose this Letter Agreement or any information contained herein
to any other person or entity except as provided in Letter Agreement 6-
1162-DSF-005.
If the foregoing accurately reflects your understanding of the matters
treated herein, please so indicate by signature below.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
Attachment A [Confidential Treatment Requested]
Attachment B to 6-1162-DSF-008
(8 pages)
PART A
BOEING MAINTENANCE TRAINING PROGRAM
1. General.
This Part describes the maintenance training to be provided by
Boeing (Maintenance Training) at Boeing's training facility at or near
Seattle. The Maintenance Training will be provided at no additional charge
to Buyer, except as otherwise provided herein. If any part of the
Maintenance Training is not used by Buyer prior to delivery of the first
Aircraft, Boeing will not be obligated to provide such Maintenance Training
at a later date, unless the parties have otherwise agreed in writing.
All instruction, examinations and materials shall be prepared and presented
in the English language and in the units of measure used by Boeing.
Buyer will be responsible for the living expenses of Buyer's personnel
during Maintenance Training. For Maintenance Training provided at or near
Seattle, Boeing will transport Buyer's personnel between their local
lodging and the training facility.
2. Maintenance Training Planning Conference.
No later than 12 months prior to delivery of Buyer's first Aircraft,
Boeing and Buyer will conduct a planning conference in order to schedule
and discuss the Maintenance Training.
3. Maintenance Training Program.
The Maintenance Training Program will (i) consist of classroom
presentations supported by training materials and aids and (ii) if
practicable, include an escorted tour of aircraft production areas and/or
flight lines. The Maintenance Training will include the following courses:
3.1 Mechanical/Power Plant Systems Course.
This course provides mechanical instruction on the
maintenance of the Aircraft and its systems, including engine systems.
Electrical instruction, where necessary, will be provided in order to
clarify mechanical system operation.
One class; up to 15 students.
3.2 Electrical Systems Course.
This course provides electrical instruction on the
maintenance of the Aircraft and its systems, including engine systems.
Mechanical instruction, where necessary, will be provided in order to
clarify electrical system operation.
One class; up to 15 students.
3.3 Avionics Systems Course.
This course provides instruction on the maintenance of the
Aircraft automatic flight control systems, communications and navigation
systems. It is oriented to those personnel who specialize in trouble
analysis and line maintenance on avionics systems.
One class; up to 15 students.
3.4 Aircraft Rigging Course.
This course provides instruction on aircraft rigging so as to
provide Buyer's specialist personnel with the necessary information to rig
all flight control surfaces, landing gear components, aircraft doors and
engines. The conditions set forth in paragraph 4 below will be applicable
with respect to Boeing's providing such course.
One class; up to 6 students at a mutually acceptable alternate facility.
3.5 Advanced Composite Repair Course.
This course provides instruction for Buyer's structural
repair personnel and promotes understanding of the design philosophy,
inspection and repair of advanced composite components.
One class; up to 8 students.
4. Training at a Facility Other Than Boeing's.
If requested prior to the conclusion of the Maintenance Training
Planning Conference, Boeing will conduct the classroom training described
above (except for the Advanced Composite Repair Course) at a mutually
acceptable alternate training site, subject to the following conditions:
4.1 Buyer will be responsible for providing acceptable classroom
space and training equipment required to present the Boeing courseware.
4.2 Buyer will pay Boeing's then-current per diem charge for each
Boeing instructor for each day, or fraction thereof, such instructor is
away from Seattle, including travel time.
4.3 Buyer will reimburse Boeing for round-trip transportation for
Boeing's instructors and training materials between Seattle and such
alternate training site.
4.4 Buyer will pay, or reimburse Boeing for, all taxes, fees,
duties, licenses, permits and similar expenses incurred by Boeing and its
employees as a result of Boeing's providing the training at such alternate
site.
4.5 Those portions of training that require the use of Boeing's
training devices shall be conducted at Boeing-designated facilities.
5. Supplier Training.
The Maintenance Training includes sufficient information on the
location, operation and servicing of Aircraft equipment, accessories and
parts provided by suppliers to support line maintenance functions.
If Buyer requires additional maintenance training with respect to any
supplier-provided equipment, accessories or parts, Buyer will schedule such
training directly with the supplier. If Buyer experiences difficulty in
scheduling such training, Boeing will, if requested, assist Buyer in
coordinating and scheduling such training.
6. Student Training Material.
No revision service will be provided for the material provided
hereunder.
6.1 Manuals.
Boeing will provide at the beginning of each Maintenance
Training course 1 copy of a training manual or equivalent for each student
attending such course.
6.2 Panel Description/Component Locator Guide/
Field Trip Checklist Manual.
Boeing will provide 1 copy of a Panel Description/Component
Locator Guide/Field Trip Checklist Manual for each student in each
applicable Maintenance Training course.
7. Other Training Material.
At the conclusion of the Maintenance Training Program, Boeing will
provide to Buyer 1 set of the following training materials, as used in the
full Aircraft systems courses. Revision service will not be provided for
these materials.
7.1 Visual Aids.
7.1.1 Blackline 8-1/2 x 11-inch projection transparencies.
7.1.2 Full-scale instrument panel wall charts in the form of
black and white copies and mylar reproducible copies.
7.1.3 Training slides.
7.2 Reproducible Masters.
8-1/2 x 11-inch prints suitable for black and white
reproduction of all graphics and applicable text.
7.3 Video Programs.
Video programs on 3/4-inch U-matic or 1/2-inch VHS cassette
formats in NTSC, PAL or SECAM standards, as selected by Buyer.
7.4 Computer-Based Training (CBT) Courseware.
CBT courseware, and instructions for courseware installation
and operation.
7.5 Shipment of Materials.
The training materials described above will be shipped to
Buyer 30 days after completion of the first class of each applicable
Maintenance Training course.
7.6 Training Material - Aircraft Configuration.
The visual aids and reproducible masters (except training
slides and CBT) described above will, at the conclusion of the shipments
thereof, reflect the configuration of the first Aircraft as delivered to
Buyer. CBT Courseware will reflect the major configuration of the first
Aircraft delivered to Buyer.
8. Course Completion Records.
At the completion of the Maintenance Training, Boeing will provide
Buyer with course completion records consisting of the following:
8.1 Master copies of all examinations given.
8.2 Attendance and examination records for each student.
8.3 Certificate of completion for each course each student
successfully completes.
PART C
BOEING FLIGHT TRAINING PROGRAM
1. General.
This Part describes the flight training to be provided by Boeing
(Flight Training) at or near Seattle, or at some other location to be
determined pursuant to this Part. The Flight Training will be provided at
no additional charge to Buyer, except as otherwise provided herein.
All instruction, examinations and materials will be prepared and presented
in the English language and in the units of measure used by Boeing.
Buyer will be responsible for the living expenses of Buyer's personnel
during the Flight Training Program. For Flight Training provided at or
near Seattle, Boeing will transport Buyer's personnel between their local
lodging and the training facility.
2. Flight Training Differences Program.
In conjunction with earlier sales to Buyer of aircraft of the same
model type as the Aircraft, Boeing has provided to Buyer comprehensive
flight training for such aircraft. If requested by Buyer at least 12
months prior to delivery of the first Aircraft, Boeing agrees to provide,
if required, 1 classroom training class to acquaint up to 4 cockpit crews
of Buyer's personnel with any operational, systems and performance
differences significant to the operation of the Aircraft, between the first
Aircraft scheduled for delivery pursuant to this Agreement and the last
aircraft of the same model type as the aircraft previously delivered by
Boeing to Buyer. Such course will be scheduled by mutual agreement of
Boeing's and Buyer's flight training organizations.
3. Student Training Material.
Student training material, in Boeing's then-standard format, will be
provided to Buyer's personnel (1 set per student) as listed below. No
revision service will be provided for the material provided hereunder.
Operations Manual
Quick Reference Handbook
4. Other Training Material.
At the conclusion of the Differences Flight Training, Boeing will
provide 1 set of the following materials, as used in the Flight Training
Program. Revision service will not be provided for these materials.
4.1 Computer Based Training (CBT).
Boeing will provide a copy of Boeing developed CBT materials
used in the Flight Training Program. The CBT Courseware will reflect the
major configuration of Buyer's first Aircraft. Buyer will require certain
equipment and materials in order to use the CBT Program. Equipment and
materials required to run the CBT Program will be procured by Buyer at
Buyer's expense. The CBT materials provided include the following:
4.1.1 1 copy of lesson files supplied on CD-ROM disc.
4.1.2 1 paper copy of loading and operation instructions for
installing the lessons on an MS-DOS compatible Personal Computer or File
Server.
4.1.3 1 copy of the runtime software required to run the CBT
lessons.
4.2 Full-Scale Color Instrument Panel Wall Charts.
5. Training at a Facility Other Than Boeing's.
If seasonably requested, Boeing will conduct the Flight Training at
a mutually acceptable alternate training site, subject to the following
conditions:
5.1 Buyer will be responsible for providing classroom space
acceptable to Boeing, a flight simulator and training equipment required to
present the Boeing courseware.
5.2 Buyer will pay Boeing's then-current per diem charge for each
Boeing instructor for each day, or fraction thereof, such instructor is
away from Seattle, including travel time.
5.3 Buyer will reimburse Boeing for round-trip transportation for
Boeing's flight training instructors and materials between Seattle and such
alternate site.
5.4 Buyer will pay, or reimburse Boeing for, all taxes, fees,
duties, licenses, permits and similar expenses incurred by Boeing and its
employees as a result of Boeing's providing the training at such alternate
site.
5.5 Those portions of the training that require the use of
Boeing's training devices, if any, will be conducted at Boeing-designated
facilities.
Buyer has rights of substitution for the Option [Confidential Treatment
Requested] from Model 737-400 to Model 737-600/-700/-800 Aircraft,
described as follows:
Model 737-600/-700/-800
1. Description and Changes.
1.1 Aircraft Description.
1.1.1 The Model 737-600 is described by Configuration
Specification D6-38808-E dated September 15, 1995, as revised to include:
(1) CFM56-7B18 Engine Installation.
(2) Increase MTOW to 129,500 Pounds.
1.1.2 The Model 737-700 is described by Configuration
Specification D6-38808-E dated September 15, 1995 as revised to include:
(1) CFM56-7B20 Engine Installation.
(2) Increase MTOW to 138,000 Pounds.
1.1.3 The Model 737-800 is described by Configuration
Specification D6-38808-E dated September 15 1995 as revised to include:
(1) CFM56-7B24 Engine Installation.
(2) Increase MTOW to 160,000 Pounds.
1.2 Changes. The Configuration Specification will be revised to
include:
(1) Changes applicable to the basic Model 737-600/-700/-800
aircraft which are developed by Boeing between the date of the
Configuration Specification and the signing of a definitive agreement to
purchase the Option Aircraft.
(2) Changes mutually agreed upon.
(3) Changes required to obtain a Standard Certificate of
Airworthiness.
2. Price Description.
Aircraft Special
Price Features
(95$) Price (95$)
Model 737-600 [Confidential Treatment Requested]
Model 737-700 [Confidential Treatment Requested]
Model 737-800 [Confidential Treatment Requested]
6-1162-DSF-009
Alaska Airlines
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 6-1162-DSF-009 to
Purchase Agreement No. 1954 -
Special Purchase Agreement Provisions
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the
Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. Boeing and Buyer agree that the following provisions shall apply in
lieu of the provisions currently contained in the subject Agreement:
1.1 Article 4.1 Taxes, [Confidential Treatment Requested].
1.2 Article 5.3 - Form of Payments. [Confidential Treatment
Requested].
1.3 Article 6 - Excusable Delay. [Confidential Treatment
Requested].
1.4 Article 6.5.2, [Confidential Treatment Requested].
1.5 Pursuant to Article 8.2.2 and Article 8.3.2, [Confidential
Treatment Requested].
1.6 Article 9.5.2 [Confidential Treatment Requested].
1.7. Article 10.6 - Exculpatory or Indemnity Clause in
Post-delivery Sale or Lease, [Confidential Treatment Requested].
1.8 Exhibit B, Part A, Paragraph 2 - Exceptions. [Confidential
Treatment Requested].
1.9 Exhibit B, Part A, Paragraph 5.1 and Paragraph 5.2,
[Confidential Treatment Requested].
1.10 Exhibit B, Part A, Paragraph 11 - Buyers' Indemnification of
Boeing, [Confidential Treatment Requested].
1.11 Exhibit B, Part B, Paragraph 4 - Joint Responsibility,
[Confidential Treatment Requested].
1.12 Exhibit C, Part D, Paragraphs 2.3 [Confidential Treatment
Requested].
1.13 Exhibit C, Part D, Technical Data and Documents [Confidential
Treatment Requested].
1.14 Exhibit C, Part E, Paragraph 1.1 [Confidential Treatment
Requested].
1.15 Exhibit C, Part E, Paragraph 1.2 [Confidential Treatment
Requested].
1.16 Exhibit C, Part E, Paragraph 2.2 (a) [Confidential Treatment
Requested].
1.17 Exhibit C, Part E, Paragraph 2.3 (a) [Confidential Treatment
Requested].
1.18 Exhibit C, Part E, Paragraph 2.3 (b) [Confidential Treatment
Requested].
1.19 Exhibit E, Paragraph 5.1 - [Confidential Treatment Requested].
1.20 Paragraph 8 of Exhibit E - Buyer Furnished Equipment
Provisions Document of the Agreement, and Paragraph 7 of Letter Agreement
1954-2 - Seller Purchased Equipment [Confidential Treatment Requested].
1.21 Attachment A to Letter Agreement 1954-3, Paragraph 2.2.1 -
Special Features [Confidential Treatment Requested].
1.22 Attachment A to Letter Agreement 1954-3, Paragraph 2.2.3 -
Base Price Adjustments [Confidential Treatment Requested].
1.23 Attachment A to Letter Agreement 1954-3, Paragraph 2.2.2 -
Escalation Adjustments [Confidential Treatment Requested].
2. Confidential Treatment. Buyer understands that certain commercial
and financial information contained in this Letter Agreement including any
attachments hereto is considered by Boeing as confidential. Buyer agrees
that it will treat this Letter Agreement and the information contained
herein as confidential and will not, without the prior written consent of
Boeing, disclose this Letter Agreement or any information contained herein
to any other person or entity except as provided in Letter Agreement 6-
1162-DSF-005.
If the foregoing accurately reflects your understanding of the matters
treated herein, please so indicate by signature below.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
6-1162-DSF-012
Alaska Airlines
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 6-1162-DSF-012 to
Purchase Agreement No. 1954 -
[Confidential Treatment Requested]-
Letter of Intent
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc. (Buyer) relating to Model 737-400 aircraft (the
Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
Boeing and Buyer do hereby agree to enter into negotiation to come to
agreement on [Confidential Treatment Requested] at such time that Buyer
firms up a Model 737-800 Option Aircraft subject to the following terms:
1) Intent - [Confidential Treatment Requested].
2) Program Term - The length of the Program [Confidential Treatment
Requested].
3) Methodology - [Confidential Treatment Requested].
4. Remedy - [Confidential Treatment Requested].
5. [Confidential Treatment Requested].
6. Conditions and Limitations - [Confidential Treatment Requested].
Attached to this Letter of Intent is a draft Program which will form the
basis of the agreement to be entered into after Buyer firms up delivery of
a Model 737-800 Option Aircraft.
If the foregoing accurately reflects your understanding of the matters
treated herein, please so indicate by signature below.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
Attachment A [Confidential Treatment Requested]
Attachment B [Confidential Treatment Requested]
6-1162-DSF-016
Alaska Airlines
19300 Pacific Highway South
Seattle, Washington 98188
Subject: Letter Agreement No. 6-1162-DSF-016 to
Purchase Agreement No. 1954 -
Special Purchase Agreement Provisions
Related [Confidential Treatment Requested]
This Letter Agreement amends Purchase Agreement No. 1954 dated as of even
date herewith (the Agreement) between The Boeing Company (Boeing) and
Alaska Airlines, Inc.
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
In consideration for Buyer's participation and cooperation in development
and certification of [Confidential Treatment Requested] to the Model 737-
400 Aircraft, Boeing and Buyer agree to the following:
1. [Confidential Treatment Requested]
2. Boeing agrees to make best reasonable effort to ensure production
incorporation on Buyer's Aircraft assuming a decision to offer such feature
is made by Boeing. [Confidential Treatment Requested].
3. Buyer agrees to pay [Confidential Treatment Requested].
2. Confidential Treatment. Buyer understands that certain commercial
and financial information contained in this Letter Agreement including any
attachments hereto is considered by Boeing as confidential. Buyer agrees
that it will treat this Letter Agreement and the information contained
herein as confidential and will not, without the prior written consent of
Boeing, disclose this Letter Agreement or any information contained herein
to any other person or entity except as provided in Letter Agreement 6-
1162-DSF-005.
If the foregoing accurately reflects your understanding of the matters
treated herein, please so indicate by signature below.
Very truly yours,
THE BOEING COMPANY
By /s/ Dawn S. Foster
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: September 18, 1996
ALASKA AIRLINES
By /s/ Harry G. Lehr
Its Senior Vice President Finance
Attachment to
6-1162-DSF-016
Page 1
[Confidential Treatment Requested]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALASKA
AIRLINES INC. THIRD QUARTER 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 51800
<SECURITIES> 79400
<RECEIVABLES> 203900
<ALLOWANCES> 0
<INVENTORY> 27600
<CURRENT-ASSETS> 429600
<PP&E> 1059400
<DEPRECIATION> 317500
<TOTAL-ASSETS> 1268900
<CURRENT-LIABILITIES> 484000
<BONDS> 255800
0
0
<COMMON> 1
<OTHER-SE> 356699
<TOTAL-LIABILITY-AND-EQUITY> 1268900
<SALES> 1004800
<TOTAL-REVENUES> 1004800
<CGS> 913800
<TOTAL-COSTS> 913800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23600
<INCOME-PRETAX> 76600
<INCOME-TAX> 31300
<INCOME-CONTINUING> 45300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45300
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
