<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 of 15(d) of the Securities
- --- Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
- --- Transition Report Pursuant to Section 13 of 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
------------- ----------------
Commission File No: 0-26432
AIRWAYS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 59-3315474
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
6280 HAZELTINE NATIONAL DRIVE
ORLANDO, FLORIDA 32822
(407) 859-1579
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of August 1, 1997
----- --------------------------------
Common stock
Par value $.01 per share 9,068,937
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AIRWAYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
1997
---------------------
ASSETS JUNE 30, MARCH 31,
-------- ---------
<S> <C> <C>
(Unaudited) (Audited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,672 $ 2,354
Restricted cash 10,411 12,670
Accounts receivable, net 3,956 4,212
Inventory, expendable parts and supplies 1,066 1,034
Prepaid expenses 4,257 4,020
Deferred income taxes 5,101 8,376
------- -------
TOTAL CURRENT ASSETS 26,463 32,666
------- -------
PROPERTY AND EQUIPMENT:
Flight equipment 35,093 34,485
Other property and equipment 9,631 9,405
Less: Accumulated depreciation (7,694) (6,192)
------- -------
37,030 37,698
------- -------
OTHER ASSETS:
Deferred income taxes 3,493 -
Goodwill, net 1,713 1,749
Lease and equipment deposits 1,774 1,244
Other assets, net 523 591
------- -------
TOTAL ASSETS $70,996 $73,948
======= =======
Continued
</TABLE>
1
<PAGE> 3
AIRWAYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
1997
---------------------
LIABILITIES AND STOCKHOLDERS' EQUITY JUNE 30, MARCH 31,
-------- ---------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $16,380 $18,022
Air traffic liability 13,441 16,198
Accrued liabilities 2,123 908
Current portion of long-term debt 3,476 3,157
Current portion of maintenance reserves 1,779 1,525
------- -------
TOTAL CURRENT LIABILITIES 37,199 39,810
Long-term debt, less current portion 11,188 10,539
Maintenance Reserves 2,343 3,186
Deferred income taxes 2,794 2,772
------- -------
TOTAL LIABILITIES 53,524 56,307
------- -------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value per share, 1,000,000 shares
authorized, no shares issued or outstanding - -
Common stock, $.01 par value per share, 19,000,000 shares
authorized, 9,067,937 and 9,065,937 shares issued and
outstanding at June 30 and March 31, 1997, respectively 91 91
Additional paid-in capital 26,621 26,618
Accumulated deficit (9,240) (9,068)
------- -------
TOTAL STOCKHOLDERS' EQUITY 17,472 17,641
------- -------
Commitments and contingencies - -
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $70,996 $73,948
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
AIRWAYS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share information)
<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED
JUNE 30,
--------------------
1997 1996
------- -------
<S> <C> <C>
OPERATING REVENUES:
Passenger $25,550 $28,557
Charter 562 23
General aviation and other 940 432
------- -------
TOTAL OPERATING REVENUES 27,052 29,012
------- -------
OPERATING EXPENSES:
Flight operations 10,480 11,148
Maintenance 5,447 6,492
Aircraft and traffic servicing 3,909 4,643
Reservations, sales and marketing 4,351 5,130
General and administrative 1,403 978
Depreciation and amortization 1,637 1,102
------- -------
TOTAL OPERATING EXPENSES 27,227 29,493
------- -------
OPERATING LOSS (175) (481)
Interest income and other (184) (359)
Interest expense 399 390
------- -------
LOSS BEFORE INCOME TAXES (390) (512)
Income tax benefit (218) (230)
------- -------
NET LOSS $ (172) $ (282)
======= =======
NET LOSS PER SHARE $ (0.02) $ (0.03)
======= =======
Weighted average shares outstanding 9,068 9,303
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
AIRWAYS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED
JUNE 30,
------------------
1997 1996
------ ------
<S> <C> <C>
Operating activities:
NET LOSS $ (172) $ (282)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED
BY (USED FOR) OPERATING ACTIVITIES:
Depreciation and amortization 1,637 1,105
Maintenance Reserves 1,546 585
Deferred income taxes (218) -
CHANGES IN CURRENT OPERATING ITEMS:
Restricted cash 2,260 2,448
Accounts receivable, net 255 723
Inventory, expendable parts and supplies (32) 82
Prepaid expenses and deposits (237) (323)
Accounts payable and accrued liabilities (2,472) 682
Air traffic liability (2,756) (3,514)
Income tax payable - (706)
------ ------
NET CASH FLOWS (USED FOR) PROVIDED BY OPERATING ACTIVITIES (189) 800
INVESTING ACTIVITIES:
Purchases of property and equipment (844) (1,095)
Decrease in other assets (530) (38)
------ ------
NET CASH FLOWS USED FOR INVESTING ACTIVITIES (1,374) (1,133)
</TABLE>
See accompanying notes to consolidated financial statements. (Continued)
4
<PAGE> 6
AIRWAYS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED
JUNE 30,
------------------
1997 1996
------ -------
<S> <C> <C>
FINANCING ACTIVITIES:
Proceeds from long-term debt 1,555 -
Repayments of long-term debt (676) (739)
Proceeds from issuance of common stock - 81
------ -------
NET CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES 879 (658)
------ -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (682) (991)
CASH AND CASH EQUIVALENTS AT BEGINNING OF QUARTER 2,354 16,437
------ -------
CASH AND CASH EQUIVALENTS AT END OF QUARTER $1,672 $15,446
====== =======
Supplemental disclosures of cash flow activities:
Cash paid for interest $ 358 $ 334
====== =======
Cash paid for income taxes $ - $ 475
====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 7
AIRWAYS CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
The financial statements included herein have been prepared by Airways
Corporation (the Company), without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. The information furnished in the
financial statements includes normal recurring adjustments and reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation of such financial statements. The Company's business is seasonal
and, accordingly, interim results are not indicative of results for a full
year. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
financial statements be read in conjunction with the financial statements for
the year ended March 31, 1997, and the notes thereto, included in the Company's
Form 10-K and the Company's Form 10-K/A (File No. 0-26432) filed with the
Securities and Exchange Commission.
(1) SPIN-OFF TRANSACTION
_______________________
In March 1995, AirTran Corporation, parent of the Company ("AirTran"),
Mesaba Aviation, Inc. and Northwest Airlines, Inc. ("Northwest") entered
into an agreement to spin-off AirTran's Orlando-based jet carrier and
fixed-base operations ("FBO") in Grand Rapids, Minnesota. On April 7,
1995, AirTran established the Company as a wholly owned subsidiary to
consolidate the above operations in order to facilitate the spin-off.
The spin-off, in the form of a one-for-one dividend of all of the
outstanding shares of the Company to the shareholders of AirTran, was
approved by AirTran's shareholders on August 29, 1995. The distribution
was made on September 7, 1995 to shareholders of record (other than
Northwest) on August 31, 1995.
AirTran Airways, Inc., which operates the Orlando-based jet carrier, was
previously a subsidiary of AirTran. The FBO had historically been a
division of AirTran. The following financial statements present the
results of the combined entities whereby significant intercompany accounts
and transactions are eliminated.
(2) NET LOSS PER SHARE
Net loss per share information for the quarters ended June 30, 1997 and
1996 were based on 9,067,104 and 9,303,140 shares outstanding,
respectively, calculated using the treasury method, fully-diluted basis.
Pursuant to the rules promulgated by the Financial Accounting Standards
Board, no common stock equivalents were included in the computation of
loss per share amounts in either quarter in order to ensure that the
reported loss per share would not be inadvertently minimized through
their inclusion.
6
<PAGE> 8
AIRWAYS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(3) AIRCRAFT
The Company's fleet, at June 30, 1997, consisted of six leased and four
owned Boeing 737 with average capacities of 126 passengers. The Company's
eleventh aircraft, leased from a major aircraft lessor, was delivered to
the Company on August 9, 1997.
(4) ROUTE MATTERS
During the three months ended June 30, 1997, the Company withdrew service
from Orlando to Chattanooga.
(5) LETTERS OF CREDIT
The Company's bank has issued eleven letters of credit totaling
$1,100,000. In the event advances under the facility are drawn, the
borrowings would bear interest at the bank's prime rate plus 1-1/4%.
No advances were outstanding under this facility as of or during either
of the quarters ended June 30, or March 31, 1997.
(6) LITIGATION
The Company is a party to ongoing legal proceedings arising in the
ordinary course of business. In the opinion of management, the
resolution of these matters will not have a material adverse effect on
the Company's financial position, results of operations, or its cash
flows.
(7) RECLASSIFICATION
Certain amounts in the June 30, 1996 consolidated financial statements
have been reclassified to conform with the presentation in this quarter.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
At June 30, 1997, the Company provided non-stop and direct scheduled passenger
air service between Orlando and 23 cities principally in the eastern half of
the United States. The following table shows the expansion of the Company's
route system. All flights are to and from Orlando unless otherwise noted.
<TABLE>
<CAPTION>
AS OF TOTAL NUMBER DEPARTURES
MONTH END OF AIRCRAFT PER MONTH SCHEDULED CITIES ADDED
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FISCAL YEAR 1997:
April 10 1,209 -
May 10 1,135 -
June 10 1,106 Greensboro
July 10 1,315 -
August 10 1,280 -
September 10 963 -
October 10 1,045 Chattanooga [*]
November 10 1,020 Toledo
December 10 1,034 Bloomington/Normal
January 10 1,060 -
February 10 1,075 Harrisburg, Charleston and Columbia
March 10 1,437 DesMoines and Moline
FISCAL YEAR 1998:
April 10 1,357 -
May 10 1,290 -
June 10 1,284 -
</TABLE>
[*] Service was discontinued.
In addition to the above service, the Company initiated service between
selected markets to facilitate a reduction in capacity.
8
<PAGE> 10
Airways generated operating losses of $172,000 and $282,000 for the quarters
ended June 30, 1997 and 1996 respectively, a decrease in operating loss of
$110,000. Pre-tax loss, as a percentage of total revenues, was 0.6% and 1.0%
in the quarters ended June 30, 1997 and 1996, respectively.
SELECTED OPERATING DATA
The table below sets forth selected operating data for the quarters ended June
30, 1997 and 1996.
<TABLE>
<CAPTION>
QUARTERS ENDED
--------------------------------------------------
JUNE 30, JUNE 30, PERCENTAGE
1997 1996 CHANGE
----------- ------------ ----------
<S> <C> <C> <C>
Available seat miles (1) 360,193,000 372,202,000 (3.2) %
Revenue passenger miles (2) 245,149,000 264,490,000 (7.3) %
Load factor (3) 68.1% 71.1% (3.0) %
Yield per revenue passenger mile (4) 10.4 10.8 (3.5) %
Passenger enplanements 287,716 303,108 (5.1) %
Departures 3,931 3,450 13.9 %
Miles 2,858,674 2,951,513 (3.1) %
Block Hours (5) 7,829 7,892 (.8) %
Average stage length (miles) (6) 735 893 (17.7) %
Average daily aircraft utilization (hours) 8.5 8.3 2.8 %
Aircraft (end of period) 10 10 -
Full-time equivalent employees (end of period) 576 429 34.3 %
</TABLE>
(1) The number of seats available for passengers multiplied by the number of
scheduled miles those seats are flown.
(2) The number of scheduled miles flown by revenue passengers.
(3) Revenue passenger miles divided by available
seat miles. Year over year percent change is measured only as percentage
points difference.
(4) Passenger revenue divided by revenue passenger miles.
(5) The number of hours aircraft were flown as measured from the time of
pushback from the gate to the time of arrival at the next airport's gate.
(6) The average length of the routes flown on AirTran's scheduled route system.
9
<PAGE> 11
The table below sets forth the major components of operating revenue and
expenses per ASM for the Company.
<TABLE>
<CAPTION>
QUARTERS ENDED JUNE 30,
------------------------
1997 1996
------- ------
<S> <C> <C>
Operating Revenue:
Passenger $ .071 $ .077
Charter .000 .000
Other .004 .001
------------ ------------
Total operating revenue .075 .078
------------ ------------
Operating expenses:
Flight operations .029 .030
Maintenance .015 .017
Aircraft and traffic servicing .011 .012
Reservations, sales, and marketing .012 .014
General and administrative .004 .003
Depreciation and amortization .005 .003
------------ ------------
Total operating expenses .076 .079
------------ ------------
Operating loss $ (.001) $ (.001)
============ ============
</TABLE>
RESULTS OF OPERATIONS FOR THE QUARTERS ENDED JUNE 30, 1997 AND 1996
OPERATING REVENUES
Total passenger revenues were $25,550,000 and $28,557,000 in the quarters ended
June 30, 1997 and 1996, respectively, a decrease of $3,007,000 or 10.5%. The
decrease is due to a 3.1% reduction in capacity available in this year's
quarter compared to the prior year and a lower load factor.
ASMs were 360,193,000 and 371,881,000 in the quarters ended June 30, 1997 and
1996, respectively, a decrease of 11,688,000 or 3.1%. This was principally
the result of the Company's rescheduling of the aircraft to make one available
at all times to serve as a spare. This was one of the initiatives designed to
improve the Company's completion factors and reliability performance. Revenue
Passenger Miles ("RPM"s) were 245,149,000 and 264,490,000 in the quarters ended
June 30, 1997 and 1996, respectively, a decrease of 19,341,000 or 7.3%. This
was driven by the decreased capacity and the reduced load factor. Load factors
were 68.1% and 71.1% in the quarters ended June 30, 1997 and 1996,
respectively, a decrease of three percentage points. The Easter holiday fell
in March this year and not in the first quarter as it did last year decreasing
the demand this year markedly.
AirTran also had charter revenue which is derived from making its airplanes
available to charter operators when they would otherwise not be efficiently
used. Charter revenues were $562,000 and $23,000 in the quarters ended June
30, 1997 and 1996, respectively, an increase of $539,000 or 2,343.5%. This
was entirely due to service the Company provided for another carrier during the
month of May 1997.
10
<PAGE> 12
In addition, the consolidated operations include other revenues, principally
cancellation revenue, change fees, liquor sales and the sales of the FBO which,
collectively, were $940,000 and $432,000 in the quarters ended June 30, 1997
and 1996, respectively, an increase of $508,000 or 117.5%. AirTran initiated
accounting processes in fiscal 1998 which enabled it to record cancellation
revenue and change fees more closely in line with when they were earned.
OPERATING EXPENSES
Flight operations expense includes expenses related directly to the operation
of aircraft except for depreciation and amortization of aircraft and aircraft
improvements. Expenses for hull and liability insurance, crew salaries and
their overnight expenses, aircraft fuel and flight operations administration
are all included in flight operations. Flight operations expenses were
$10,480,000 and $11,148,000 in the quarters ended June 30, 1997 and 1996,
respectively, a decrease of $668,000 or 6.0%. ASMs decreased by 3.2% and last
year's first quarter included $541,000 associated with aircraft which were
leased by the Company, on a short term basis, in an effort to ensure the
reliability of its schedule. Departures were 3,931 and 3,450 in the quarters
ended June 30, 1997 and 1996, respectively, an increase of 481 or 13.9% the
cost of which offset a portion of the decrease resulting from the reduced
capacity in this year's quarter.
Maintenance expense includes all expenses related to the upkeep of aircraft.
Such expenses include labor, parts, supplies and contract maintenance. The
direct costs of airframe and engine overhauls are generally expensed and, for
leased aircraft, paid monthly to the lessors in the form of reserves. For
owned aircraft, AirTran reserves on a per flight hour basis for future
maintenance that becomes due in the ordinary course. These reserves are
recorded on AirTran's balance sheet each month as the aircraft are flown. The
reserves are then available for major overhauls when they occur. When aircraft
are first delivered to the Company, and shortly thereafter, the cost of
overhauls of engines and airframes that may be required to render them fully
serviceable is capitalized and amortized over the period remaining until the
next scheduled overhaul. Maintenance expenses were $5,447,000 and $6,492,000
in the quarters ended June 30, 1997 and 1996, respectively, a decrease of
$1,045,000 or 16.1%. The Company spent $175,000 less this year on independent
consultants. In the prior year, the Company had engaged experts to assist in
evaluating the maintenance records and systems. As an outgrowth of those
reviews, the Company invested heavily in engines, airframes and related
equipment during last year's first quarter. Those repairs were charged to
expense. Block hours (which normally are a cost driver for maintenance) were
essentially unchanged and, therefore, did not contribute to the variance
between years.
Aircraft and traffic servicing expense includes all expenses incurred at
airports, including landing fees, facilities rental, station labor, ground
handling services and catering expenses. Aircraft and traffic servicing
expenses were $3,909,000 and $4,643,000 in the quarters ended June 30, 1997 and
1996, respectively, a decrease of $734,000 or 15.8%. Although the Company had
17.7% more flights during this years first quarter which drove upward a number
of expenses, the cost of interrupted trips for the Company's passengers dropped
by $ 957,000 or 92.1% from the prior year. The significant decrease is
largely a consequence of the Company's improved operating performance, having
completed over 99% of flights in this year's first quarter. Last year, the
extensive internal reviews and renovations of aircraft that were taking place
caused interruptions.
Reservations, sales and marketing expense includes all sales, marketing and
advertising expenses as well as the cost of reservations. Reservation expense
includes salaries of reservations personnel,
11
<PAGE> 13
computer reservation system and communication expenses and travel agent
commissions. Reservations, sales and marketing expenses were $4,351,000 and
$5,130,000 for the quarters ended June 30, 1997 and 1996, respectively, a
decrease of $779,000 or 15.2%. Although sales declined by 6.8% and a
resulting decrease was expected in Reservations, sales and marketing expense,
the Company was able to mitigate this cost further. A shift of customer mix
toward passengers booking directly with AirTran on its toll-free 1-800-AIR-TRAN
reservations line, as opposed to travel agencies, caused an increase in
reservation-related expenses (salaries and telephone expenses) of about
$227,000 or 44% over the prior year's first quarter. On the other hand, the
Company's CRS fees, ARC processing fees and travel agency commissions dropped
by nearly $500,000 or 20%. In addition, the Company's marketing department
reduced its media advertising since last year and established several
cooperative advertising arrangements with other companies to moderate its
advertising expense this year resulting in a reduction of $424,000 or 34%.
General and administrative expense includes the wages and benefits for both
companies' executive officers and various other administrative personnel. Also
included are costs for office supplies, legal expenses, accounting and
miscellaneous expenses. General and administrative expenses were $1,403,000
and $978,000 in the quarters ended June 30, 1997 and 1996, respectively, an
increase of $425,000 or 43.4%. The principal cause of the increased expense in
1997 was the continued development of headquarters and administrative
infrastructure.
Depreciation and amortization expense includes depreciation on equipment,
aircraft and aircraft improvements and amortization of leasehold improvements,
goodwill and aircraft and loan acquisition costs. Depreciation and
amortization expense were $1,637,000 and $1,102,000 in the quarters ended June
30, 1997 and 1996, respectively, an increase of $535,000 or 48.5%. The
increase is primarily due to depreciation on the added fixed assets since the
prior year. Property and Equipment at June 30, 1997 and 1996, respectively,
were $44,724,000 and $32,370,000, an increase of $12,354,000 or 38.2%. More
of the fixed assets added during the past year have shorter useful lives.
Largely, they represent capitalized improvements to aircraft and engines which
will benefit the Company until the next scheduled overhaul causing depreciation
expense to increase more rapidly than the underlying fixed assets.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $1,672,000 and $2,354,000 at June 30, 1997 and
March 31, 1997, respectively, a decrease of $682,000 or 29.0%. The use of cash
and cash equivalents from operating activities was $189,000. The principal
uses of cash and cash equivalents were for purchases of property and equipment
of $1,374,000 and payments on long-term debt of $676,000.
Restricted cash were $10,411,000 and $12,670,000 at June 30, 1997 and March
31, 1997, respectively, a decrease of $2,259,000 or 17.8%. The decrease in
restricted cash related to the seasonal decline in advance bookings since the
end of March.
Airways' consolidated current ratio was 0.71 and 0.82 to 1.0 at June 30, 1997
and March 31, 1997, respectively. The decrease in the ratio at June 30, 1997
was entirely due to the reclassification of $3,493,000 of deferred tax asset
from current to long term during the quarter.
During the quarter ended June 30, 1997, AirTran entered into the following
financing arrangement:
12
<PAGE> 14
- - One installment loan with a finance company and a bank in the amount of
$1,600,000 which is secured by one of the Company's owned aircraft. The
loan carries a fixed interest rate of 13%. The note requires payment of
principal and interest monthly which will amortize the loan by May 2002 and
has provisions allowing early repayment.
Airways had consolidated current assets of $26,463,000 and $32,666,000 as of
June 30, 1997 and March 31, 1997, respectively. Management believes that such
assets, along with internally generated funds as well as financing which
management believes is or will be made available, will satisfy projected
operating and capital needs. If AirTran increases its rate of growth over
current projections, acquires another company, purchases or leases more
aircraft than is presently planned, sustains further losses, or otherwise
requires additional capital, other sources of funds will need to be secured and
there is no assurance that such funds will be secured. During fiscal 1997, the
Company invested heavily in its aircraft and engines. Much of this investment
was paid for from funds generated the year before or from the Company's working
capital. As a consequence, the Company's working capital position weakened.
Therefore, several undertakings were initiated which are designed to strengthen
its position. They are as follows:
- - On June 13, 1997, the Company entered into a code-share agreement with
Comair, a large regional airline operating flights in Florida. The
code-share agreement permits AirTran Airways to sell tickets to its
passengers allowing them to connect in Orlando with Comair flights
continuing on to nine other Florida destinations other than Orlando. These
tickets will be sold to passengers under the tradename "AirTran's Florida
Connection". The Company began taking reservations on June 19 and carried
its first passenger that same day.
- - On July 3, 1997, the Company refinanced one of its aircraft by borrowing
$7,000,000 from ValuJet, Inc. and repaying a major commercial lender
approximately $3,200,000. The new loan is secured by one of the Company's
owned aircraft and matures in December 1997.
- - In addition, the Company has engaged an investment banker for the purpose
of refinancing the maintenance hangar it acquired at Orlando International
Airport last year. The hangar has an appraised value of $7,100,000 and the
Company's secured indebtedness on the hangar is approximately $1,400,000.
The Company intends to refinance the hangar during the second quarter of
the Company's 1998 fiscal year.
There can be no assurances that the hangar financing will be obtained nor that
the recently executed loan with ValuJet, Inc. will be able to be refinanced
when it comes due in December 1997.
The effect of inflation on the Company is not considered material.
SUBSEQUENT EVENT
On July 10, 1997, the Company announced that it had reached agreement with
ValuJet, Inc., the parent company of ValuJet Airlines, Inc., to merge with
Airways Corporation. In that connection, each shareholder will receive one
share of ValuJet, Inc. stock in exchange for each share of Airways Corporation.
There are several regulatory and other significant hurdles to be overcome in
order to consummate the merger. The Company expects for the merger to be
completed during the third quarter, however, there can be no assurance that
the merger will be completed.
13
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company's common stock is listed on the NASDAQ National Market under the
symbol "AAIR." Trading in the stock began on September 8, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
<S> <C>
10 Jet engine purchase and Loan Agreement between AirTran
Airways, Inc. and Greenwich Air Services, Inc. dated March 28, 1997
11 Statement regarding computation of per share earnings
27 Financial Data Schedule (for SEC use only)
</TABLE>
(b) Reports on Form 8-K:
None
14
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIRWAYS CORPORATION
Date: August 14, 1997 /s/ Mark B. Rinder
------------------------------------
Mark B. Rinder
Vice President, Finance and
Chief Financial Officer
15
<PAGE> 17
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
<TABLE>
<CAPTION>
<S> <C>
10 Jet engine purchase and Loan Agreement between AirTran
Airways, Inc. and Greenwich Air Services, Inc. dated March 28, 1997
11 Statement regarding computation of per share earnings
27 Financial Data Schedule (for SEC use only)
</TABLE>
<PAGE> 1
EXHIBIT 10
AIRCRAFT ENGINE SALES AGREEMENT
FOR
AIRTRAN AIRWAYS, INC.
THIS AIRCRAFT ENGINE SALES AGREEMENT ("Agreement") is made and entered into as
of March 28, 1997, by and between GREENWICH AIR SERVICES, INC., a Delaware
corporation, of 4590 N.W. 36th Street, Miami, Florida 33122 U.S.A., with a
mailing address of P.O. Box 522187, Miami, Florida, 33152 U.S.A. ("Seller" or
"Greenwich") and AIRTRAN AIRWAYS, INC., a Delaware corporation, of 6280
Hazeltine National Drive, Orlando, Florida 32822 ("Buyer").
I. AGREEMENT TO SELL. Seller hereby sells to Buyer and Buyer hereby
purchases from Seller the equipment described in ARTICLE II herein (the
"Equipment"), subject to the terms and provisions of this Agreement.
The Terms and Conditions to this Agreement, attached hereto as Exhibit
A, together with any Attachment thereto, Exhibit B, or Endorsements
identified below, are incorporated herein by reference.
II. EQUIPMENT. Two (2) Pratt & Whitney Engines (each having seven hundred
fifty (750) or more rated takeoff horsepower), including all parts
attached thereto, and further described as:
Engine Serviceable
(1) Make Model Configuration Serial No. Tag
---- ----- ------------- ---------- -----------
Pratt & Whitney JT8D-9A P&W Basic 656857 Greenwich
At February 28, 1997, Total Time Since New: 32,382:40
At February 28, 1997, Total Cycles Since New: 35,409
Engine Serviceable
(2) Make Model Configuration Serial No. Tag
---- ----- ------------- ---------- -----------
Pratt & Whitney JT8D-15 P&W Basic 687645 Greenwich
At February 28, 1997, Total Time Since New: 36,023:30
At February 28, 1997, Total Cycles Since New: 25,326
III. PURCHASE PRICE. The aggregate Purchase Price is One Million Two
Hundred Thousand U.S. Dollars ($1,200,000.00) allocated to the
Equipment as follows:
ESN 656857 $500,000.00
ESN 687645 $700,000.00
IV. PAYMENTS. Buyer shall pay to Seller the purchase price of this engine
and all other outstanding invoices and/or amounts owed to Seller in
accordance with the payment schedule found at Schedule I attached
hereto.
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V. INSPECTION. The Equipment is currently installed on Buyer's aircraft
and is under the complete control and direction of Buyer, therefore
Buyer hereby waives the Inspection of the Equipment. Buyer has
inspected and accepts the Engine records.
VI. DELIVERY. Delivery Date - On or before March 31, 1997.
Delivery Location - As installed on Buyer's aircraft.
VII. NOTICES.
If to Seller: If to Buyer:
Greenwich Air Services, Inc. AirTran Airways, Inc.
4590 N.W. 36th Street 6280 Hazeltine National Drive
Bldg. 23 MIAD Orlando, Florida 32822
Miami, Florida U.S.A. 33166 Attn: Carl Millican,
Attn: Sr. V.P. Business Development V.P. Maintenance
Fax: (305)526-7005 Fax: (407) 856-5867
VIII. MISCELLANEOUS.
a. Each Engine is sold under Seller's Standard Aircraft
Engine Service Warranty, attached hereto as Exhibit B, covering
workmanship accomplished at the last shop visit performed by
Seller, but otherwise in an "AS IS, WHERE IS" condition. The
warranty period shall be ninety (90) days or five hundred (500)
hours, whichever occurs first, from date of Delivery.
b. The Lease(s) between Seller and Buyer for the lease of these
Engines, shall terminate upon the execution of this Aircraft
Engine Sales Agreement by the two parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
GREENWICH AIR SERVICES, INC. AIRTRAN AIRWAYS, INC.
By:_________________________ By: /s/ Mark B. Rinder
---------------------------------
Name:_______________________ Name: Mark B. Rinder
-------------------------------
Title:______________________ Title: Vice President, Finance & CFO
------------------------------
Date:_______________________ Date: March 28, 1997
-------------------------------
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EXHIBIT A
TERMS AND CONDITIONS
for Aircraft Engine Sales Agreement dated March 28, 1997.
1. SUBJECT MATTER OF SALE
a. Any reference herein to Agreement shall mean the Aircraft Engine Sales
Agreement which refers to and incorporates this Terms and Conditions
document. Any capitalized term used herein and not defined herein
shall have the meaning set forth in the Agreement.
b. Any reference herein to Equipment shall mean any part of all of the
Equipment as the context may require, including one to more engines as
described in the Agreement (the "Engine" or "Engines" as the context
may require).
c. Seller will provide to Buyer complete and accurate records (in the
English language) pertaining to such Equipment.
2. PURCHASE PRICE AND PAYMENT
a. In consideration of Delivery (as hereinafter defined) to Buyer of the
Equipment, Buyer shall pay to Seller the Purchase Price stipulated in
the Agreement.
b. The Purchase Price shall be paid to Seller by Buyer in one or more
payments as specified in the Agreement.
c. Cash payments shall be made by wire transfer of good and unrestricted
bank funds to Seller's designated account.
3. INSPECTION
The Equipment is currently installed on Buyer's aircraft and is under the
complete control and direction of Buyer, therefore Buyer hereby waives the
Inspection of the Equipment. Buyer has inspected and accepts the Engine
records.
4. DELIVERY
a. Delivery of the Equipment (the "Delivery") is deemed to have happened
upon the last to occur of the following events:
i. The Equipment is, and has been, installed on Buyer's aircraft;
therefore, Delivery shall be effective upon the execution of the
Agreement;
ii. The initial payment required by Article IV of the Agreement has
been paid in full to Seller by Buyer; and
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<PAGE> 4
b. Upon Delivery of the Equipment to Buyer, Buyer shall execute and
deliver to Seller a receipt therefore substantially in the form set
forth in Attachment 1-A and 1-B attached hereto and made a part hereof.
c. All of the Equipment records in the possession of the Seller will be
provided to Buyer with Delivery of the Equipment.
5. TITLE & RISK OF LOSS
a. Title to the Equipment, including its records, shall pass to the Buyer
upon Seller's receipt of all payment amounts shown on Schedule I
attached hereto.
b. Upon transfer of title for any Equipment to Buyer, Seller shall
deliver to Buyer a Bill of Sale covering such Equipment, which Bill of
Sale shall be substantially in the form of Attachment 2-A and 2-B
attached hereto and made a part hereof.
c. The risk of loss shall pass to Buyer upon Delivery of such Equipment to
Buyer. Risk of loss, damage to or destruction of such Equipment and
its records shall forthwith transfer from Seller to Buyer.
d. Buyer agrees to maintain public liability insurance in an amount not
less than Three Hundred Fifty Million U.S. Dollars ($350,000,000.00).
Buyer shall cause its insurer to name Seller, its affiliates,
directors, officers, employees, agents, and representatives as
additional insureds, and to specifically state that the
indemnification requirements in Article 10 are insured as a
contractual obligation for two (2) years.
e. Buyer agrees to maintain aircraft hull and spares insurance covering
all risks, ground and flight, to the Engine in a minimum amount not
less than the Agreed Value of One Million Two Hundred Thousand U.S.
Dollars ($1,200,000.00). This insurance may include a deductible
not to exceed Two Hundred Fifty Thousand U.S. Dollars ($250,000.00).
Such policy shall include Seller as loss payee, as its interests may
appear, up until title passes to Buyer on Equipment.
6. TAXES
a. Buyer will indemnify, defend and hold Seller harmless from and
against any and all taxes of whatsoever kind of nature, including
costs or expenses incurred in connection therewith, except for taxes
levied against Seller based on its net income, which may be assessed
against, chargeable to or collectible from either Buyer or Seller by
any taxing authority of any country, federal, state or local
government, and which are based upon or levied or assessed with
respect to the sale of the Equipment hereunder to Buyer or the
subsequent operation, possession or use of the Equipment. If Seller is
required to pay any contested tax levied, than Buyer agrees to
immediately reimburse Seller for the full amount of such tax. If
Buyer elects to contest any tax levied against Seller which is to be
paid by Buyer hereunder, Buyer shall pay all costs of such contest,
including, but not limited to, attorney's fees.
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7. DELAYS
Seller shall not be responsible for, nor deemed to be in default on account
of, delay in delivery of the Equipment to Buyer due to force majeure
causes, including, but not limited to, acts of God or the public enemy;
civil war; insurrection or riots; fires; floods; exposions; earthquakes;
restrictions or strikes; government legislation, acts, orders, or
regulations; inability or failure of suppliers to deliver; or for any other
cause to the extent it is beyond Seller's control.
8. LIMITED WARRANTY AND DISCLAIMER
Seller represents and warrants to Buyer that:
a. At the time of Delivery of the Equipment to Buyer, Seller will have
good and sufficient legal and beneficial title to the Equipment
and have full power and lawful authority to transfer such title to
Buyer.
b. At the time of Delivery of the Equipment to Buyer, the Equipment will be
subject to no mortgage, pledge, lien, charge or other emcumbrance
(collectively, the "Liens").
c. EXCEPT AS OTHERWISE STATED HEREIN, THE EQUIPMENT, INCLUDING THE
COMPONENT PARTS THEREOF, BEING SOLD BY SELLER TO BUYER WILL BE
SOLD "AS IS" AND SELLER MAKES NO WARRANTIES, GUARANTEES OR
REPRESENTTIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE, THAT SHALL SURVIVE DELIVERY AS TO THE EQUIPMENT AND THE
COMPONENT PARTS THEREOF, INCLUDING BUT NOT LIMITED TO THE CONDITION OR
AIRWORTHINESS THEREOF; AND BUYER HEREBY WAIVES ALL OTHER WARRANTIES,
REMEDIES OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE, AND SELLER SHALL HAVE NO LIABILITY TO BUYER WITH RESPECT TO
FITNESS FOR ANY INTENDED PURPOSE AND MERCHANTABILITY, ANY OBLIGATION OF
SELLER ARISING FROM TORT OR STRICT LIABILITY TORT CLAIMS, OR FOR LOSS
OF USE, REVENUE OR PROFIT, OR FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES,
OR FOR ANY EXPENSE DIRECTLY OR INDIRECTLY ARISING FROM THIS TRANSACTION
AND THE USE OF THE EQUIPMENT OR ANY INABILITY TO USE THE EQUIPMENT
EITHER SEPARATELY OR IN COMBINATION WITH OTHER PARTS OR APPARATUS OR
FROM ANY OTHER CAUSE. Buyer acknowledges that the foregoing waivers
and agreements were agreed to by it in the course of bargaining and
negotiation with respect to the Agreement and that the Purchase Price
and other terms herein and in the Agreement reflect such waivers and
agreements by Buyer.
d. Seller makes no representation as to what use or application may be
made of the Equipment in the condition in which the Equipment
is delivered. Further, Seller makes no representation as to whether
the Equipment complies with, or is capable of being modified so as to
comply with, any present or future environmental restrictions or
requirements imposed by any governmental entity, including, but not
limited to, requirements with respect to noise abatement and emission
control. Buyer shall have the responsiblity of obtaining whatever
certifications, waivers or exemptions are necessary from applicable
government agencies for projected uses or applications of the
Equipment.
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<PAGE> 6
e. At Delivery to Buyer, each Engine will be in accordance with its Engine
records. Such records shall include all Engine records in the
possession of Seller, but not less than the following:
i. All shop records back to and including the last engine
heavy maintenance ("EHM").
ii. FAA 337 Forms for all shop services performed back to and
at the last EHM.
iii. All test cell reports back to and including last EHM.
iv. Status of compliance of current Airworthiness Directives, Alert
Service Bulletins and Service Bulletins; and method of
compliance.
v. Current disk profile.
vi. Installation and removal records for all life-limited parts,
providing 100% disk traceability to new.
vii. The current and all previous log books (if log books were
maintained).
f. Each Engine is originally manufactured by Pratt & Whitney.
g. Each Engine was not involved in an incident or accident; that is, each
Engine was not involved in an Abnormal Operational Circumstance
as defined by the manufacturer's Overhaul Standard Practices Manual or
comparable situations as defined by other engine manufacturers, which
resulted in an Engine being deemed by the manufacturer as unacceptable
for continued aircraft usage.
9. WARRANTIES ASSIGNMENT
Seller hereby assigns to Buyer any and all existing assignable warranties,
serviceable life policies and patent indemnities of manufacturers of the
Equipment.
10. INDEMNITY
a. Buyer hereby releases and agrees to indemnify, defend and save and
hold harmless Seller, its affiliates, directors, officers, agents
employees, and assigns from and against any and all liability, damages,
losses, expenses, and claims, including without limitation all
reasonable attorneys' fees and all other costs and expenses in
connection therewith and incident thereto, for death of or injury to
any persons whatsoever, including without limitation the affiliates,
officers, agents and employees of the parties hereto, and for loss of,
damage to, or delay in delivery of any property whatsoever, including
without limitation any aircraft on which the Equipment may be
installed and loss of use of the aircraft and any other property of the
parties hereto or of their affiliates, officers, agents or employees,
in any manner arising out of, incident to, or in connection with such
Equipment or the use, operation, storage, or testing of the Equipment,
subsequent to the Delivery of the Equipment to Buyer hereunder,
regardless of the negligence, active or passive of Seller; except to
the extent caused by the gross negligence or willful misconduct of
Seller.
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<PAGE> 7
b. NEITHER BUYER NOR SELLER SHALL BE LIABLE FOR SPECIAL,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES WHICH MAY RESULT
FROM PERFORMANCE OR FAILURE TO PERFORM UNDER THE AGREEMENT.
11. APPLICABLE LAW
This Agreement shall be deemed to have been made in Dade County,
Florida, and shall be interpreted, and the rights and liabilities of
the parties hereto determined in accordance with the law of the
State of Florida, U.S.A. without regard to conflicts of law
principles. The parties consent and hereby submit to the
exclusive jurisdiction of the state and federal courts located in
Dade County, Florida, U.S.A. for the determination of any and all
issues between the parties relating to the Agreement. Nothing in
this clause limits the right of Seller to bring proceedings in any
other court of competent jurisdiction; nor shall the bringing or
continuing of proceedings in one or more jurisdictions preclude
the bringing or continuing of proceedings in any other jurisdiction,
whether concurrently or otherwise. Buyer irrevocably waives any
objection which it may have at any time to the laying of the venue
of any proceedings in any court referred to in this section, to any
claim that any such proceedings have been brought in any inconvenient
forum, to any right to trial by jury in any proceedings, and to any
objection to service of process if such service is by certified mail,
return receipt requested, at the address provided, or updated as
provided herein.
12. NOTICES
All demands, notices and other communications required or given
pursuant to the Agreement shall be in writing, and shall be deemed
to have been duly given when personally delivered or when transmitted
by telex or facsimile reproduction, addressed as stated in the
Agreement.
13. BROKERS/FINDERS
Seller and Buyer each agree that it has not involved third parties
as brokers or finders in this transaction, and each party indemnifies
the other from liability for fees, commissions or other claims made
upon the other due to such claims caused by the indemnifying party.
14. CONFIDENTIALITY
The Agreement and all information contained in the Agreement are
confidential and proprietary to Seller and Buyer and are solely
for the internal use of the parties hereto. Disclosure to third
parties is prohibited, except as otherwise stated in the Agreement,
as required by law or order of a governmental authority, or as
required to enforce the terms of the Agreement.
15. MISCELLANEOUS
a. Any provision of the Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such
provisions in any other jurisdiction.
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<PAGE> 8
b. No term or provision of the Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which the enforcement of the change,
waiver, discharge or termination is sought.
c. Any ambiguities in the construction or interpretation of the
Agreement or any clause or provision herein shall not be construed or
resolved against a party solely because that party drafted the
Agreement.
d. The section headings contained herein are for convenience and
reference only and are not intended to define or limit the scope of any
provisions of the Agreement.
e. The Agreement contains the entire understanding of the parties
with respect to the purchase and sale of the Equipment, and no
warranties, representations or undertakings have been made or relied on
in entering into the Agreement by either party except as expressly set
forth herein. Any previous oral or written communications,
representations, agreements or understandings between Seller and Buyer
relating to the subject matter hereof are no longer of any force and
effect, are superseded and replaced in their entirety by the provisions
of the Agreement.
f. The Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns (where permitted) of the parties.
g. The Agreement may not be assigned by either party except with prior
written consent of the other party.
h. The Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same
instrument. A facsimile signature on any counterpart hereto will be
deemed an original for all purposes.
i. Any purchase order number assigned by Buyer to this transaction
shall be for control purposes only. Any terms which may be on or
attached to Buyer's purchase order or on the reverse side thereof will
not apply.
j. The prevailing party in any litigation to enforce the terms of
the Agreement shall be entitled to recover its reasonable and actual
attorney's fees from the losing party.
***
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<PAGE> 9
ATTACHMENT 1-A
DELIVERY RECEIPT
The undersigned, on behalf of and as the duly authorized agent of AIRTRAN
AIRWAYS, INC. ("Buyer") hereby acknowledges receipt from GREENWICH AIR
SERVICES, INC. ("Seller") of the delivery to Buyer at _____________________
at______________________o'clock P.M./A.M., this ______day of_________,1997, of
the following described engine:
One (1) Pratt & Whitney used JT8D-9A engine, serial number 656857, in
P&W basic configuration
in accordance with the terms of their Aircraft Engine Sales Agreement dated
March 28, 1997, pertaining to this transaction.
AIRTRAN AIRWAYS, INC.
By:
--------------------
Name:
------------------
Title:
-----------------
Date:
------------------
9
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ATTACHMENT 1-B
DELIVERY RECEIPT
The undersigned, on behalf of and as the duly authorized agent of AIRTRAN
AIRWAYS, INC. ("Buyer") hereby acknowledges receipt from GREENWICH AIR
SERVICES, INC. ("Seller") of the delivery to Buyer at ___________ at _________
o'clock P.M./A.M., this ____ day of _________ , 1997, of the following
described engine:
One (1) Pratt & Whitney used JT8D-15 engine, serial number 687645,
in P&W basic configuration
in accordance with the terms of their Aircraft Engine Sales Agreement dated
March 28, 1997, pertaining to this transaction.
AIRTRAN AIRWAYS, INC.
By:
-----------------------------
Name:
----------------------------
Title:
---------------------------
Date:
----------------------------
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ATTACHMENT 2-A
BILL OF SALE
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, GREENWICH AIR SERVICES, INC. (herein "Seller"), owner of the full
legal and beneficial title of the item described below (herein "Engine");"
One (1) Pratt & Whitney used JT8D-9A engine, serial number 656857,
in P&W basic configuration
does hereby sell, grant, transfer and deliver all its full legal and beneficial
title and interest in and to said Engine unto AIRTRAN AIRWAYS, INC. (herein
"Buyer") and its successors and assigns.
Seller hereby warrants to Buyer, its respective successors and assigns
that at the time of delivery of the Engine to Buyer, Seller was the lawful
owner of the Engine with good title thereto; that said Engine was free from all
claims, liens, encumbrances and rights of others; that Seller has good and
lawful right to sell the Engine; that title to the Engine is hereby conveyed to
Buyer free and clear of all claims, liens, encumbrances and rights of others;
and further Seller covenants and agrees that it will warrant and defend such
title against the claims and demands of all persons whomever arising from any
event or condition occurring prior to the delivery of the Engine by Seller to
Buyer; provided, however, that Seller's warranty of title and its obligation
to defend title to the Engine shall not apply to any defects in title arising
from Buyer's own acts.
This Bill of Sale is made pursuant to that certain Aircraft Engine Sales
Agreement made March 28, 1997, by and between Seller or and Buyer to which
reference is made and which sets forth the rights and obligations of the
parties.
IN WITNESS WHEREOF, we have set our hand and seal this ___ day of _____,
1997.
GREENWICH AIR SERVICES, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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ATTACHMENT 2-B
BILL OF SALE
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, GREENWICH AIR SERVICES, INC. (herein "Seller"), owner of the full
legal and beneficial title of the item described below (herein "Engine"):"
One (1) Pratt & Whitney used JT8D-15 engine, serial number 687645,
in P&W basic configuration
does hereby sell, grant, transfer and deliver all its full legal and beneficial
title and interest in and to said Engine unto AIRTRAN AIRWAYS, INC. (herein
"Buyer") and its successors and assigns.
Seller hereby warrants to Buyer, its respective successors and assigns
that at the time of delivery of the Engine to Buyer, Seller was the lawful
owner of the Engine with good title thereto; that said Engine was free from all
claims, liens, encumbrances and rights of others; that Seller has good and
lawful right to sell the Engine; that title to the Engine is hereby conveyed to
Buyer free and clear of all claims, liens, encumbrances and rights of others;
and further Seller convenants and agrees that it will warrant and defend such
title against the claims and demands of all persons whomever arising from any
event or condition occurring prior to the delivery of the Engine by Seller to
Buyer; provided, however, that Seller's warranty of title and its obligation to
defend title to the Engine shall not apply to any defects in title arising from
Buyer's own acts.
This Bill of Sale is made pursuant to that certain Aircraft Engine Sales
Agreement made March 28, 1997, by and between Seller and Buyer to which
reference is made and which sets forth the rights and obligations of the
parties.
IN WITNESS WHEREOF, we have set our hand and seal this ____ day of _______,
1997.
GREENWICH AIR SERVICES, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
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EXHIBIT B
AIRCRAFT ENGINE SERVICE WARRANTY
Greenwich warrants its serviced Engines against defective workmanship relating
to the work that Greenwich performs. Greenwich will repair any such Engine
that has failed for this reason. Greenwich's obligations are expressly limited
to correction of such defects by Greenwich at its expense and to specific
periods after redelivery of the Engine to Buyer, as follows:
If, within five hundred (500) hours of operation or ninety (90) days,
whichever occurs first, from date of Delivery, the Engine fails due to
a defect warrantable hereunder, Greenwich shall correct such defect at
no cost to Buyer.
This warranty covers all defects which Buyer can establish after Buyer's notice
to Greenwich of the defect as having occurred, provided:
(1) Buyer submits written notice of the defect within thirty(30) calendar
days of discovery; and
(2) the Engine is returned to Greenwich's facility, freight prepaid,
within sixty(60) calendar days after discovery, accompanied by a
written description of the nature of the defect; and
(3) after redelivery to Buyer, the Engine has not been improperly
installed by Buyer or by a subcontractor utilized by the Buyer; and
(4) subsequent to redelivery, the Engine was operated and maintained in
accordance with FAA and other applicable standards; was used under
normal operating conditions; was not subjected to misuse, abuse
neglect, accident or incident; was properly stored and was not
repaired or altered by anyone other than Greenwich; and
(5) the Engine is returned with all proper records and necessary
documents, all of which shall be in English; and
(6) the Engine has not been sold to another; and
(7) Buyer has met all of its financial obligations under the contract;
and
(8) the Engine has not incurred Foreign Object Damage or has not failed
as a result of the failure of Buyer supplied material.
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<PAGE> 14
This warranty expressly excludes correction of any defect in the Engine if it
must, following redelivery, be removed form operation due to performance or
material defects attributable to inadequacies or deficiencies in design,
materials or tooling as identified in applicable manufacturers' reports and
documents or due to problems generally recognized to be industry-wide.
Greenwich's total liability in connection with there service of Engines is
expressly limited to workmanship and any warranty for material will be the
warranty of the manufacturer of the material and Greenwich shall use its best
efforts to assist in obtaining that warranty for its Buyer.
Greenwich reserves the right to determine whether the failure of the Engine
falls under the terms of this warranty and will have the option of repairing,
reworking, restoring or replacing the Engine and returning it to service or
crediting Buyer on a prorata basis. After repair or rework, to correct any
such defect, the Engine will be returned to Buyer at Greenwich's expense.
The warranties provided for herein shall be for the benefit of Buyer, and no
other party.
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, GUARANTEES, OR
REPRESENTATIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE
INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, AND ANY OTHER LIABILITY OF ANY NATURE WHATSOEVER WITH
RESPECT TO WORK DONE, SERVICES PERFORMED OR PARTS OR MATERIALS PROVIDED BY
GREENWICH. WITHOUT LIMITATION OF THE FOREGOING, GREENWICH SHALL HAVE NO
LIABILITY FOR INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND DUE TO ANY DEFECT
IN WORKMANSHIP, ANY BUYER HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO SUCH DAMAGES.
THIS WARRANTY SHALL NOT BE ALTERED EXCEPT BY WRITTEN AMENDMENT TO THE AGREEMENT
BY AN AUTHORIZED OFFICER OF GREENWICH.
14
<PAGE> 1
EXHIBIT 11
AIRWAYS CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED JUNE 30,
-------------------------------
1997 1996
----------- ------------
<S> <C> <C>
PRIMARY COMPUTATION:
Net loss $ (172) $ (282)
Weighted average number of common
shares outstanding 9,069 9,303
------ ------
Net loss per common share $ (.02) $ (.03)
======= =======
FULLY DILUTED COMPUTATION:
Net loss $ (172) $ (282)
Weighted average number of common
shares outstanding 9,069 9,303
------ ------
Net loss per common share $ (.02) $ (.03)
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,672
<SECURITIES> 0
<RECEIVABLES> 3,956
<ALLOWANCES> 0
<INVENTORY> 1,066
<CURRENT-ASSETS> 24,463
<PP&E> 44,724
<DEPRECIATION> 7,694
<TOTAL-ASSETS> 70,996
<CURRENT-LIABILITIES> 37,199
<BONDS> 0
0
0
<COMMON> 91
<OTHER-SE> 17,381
<TOTAL-LIABILITY-AND-EQUITY> 70,996
<SALES> 27,052
<TOTAL-REVENUES> 27,052
<CGS> 0
<TOTAL-COSTS> 27,227
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 399
<INCOME-PRETAX> (390)
<INCOME-TAX> (218)
<INCOME-CONTINUING> (172)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (172)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
