V2500 General Terms of Sale Agreement [Side Letter No. 6] - IAE International Aero Engines AG and JetBlue Airways Corp.
[LETTERHEAD]
18 May 2001
JetBlue Airways Corporation
19 Old Kings Highway South, Suite 23
Darien, Connecticut 06820
Attention: Vice President and Treasurer
Subject: Side letter No. 6 to the V2500 General Terms of Sale Agreement between
JetBlue Airways Corporation and IAE International Aero Engines AG
dated May 4, 1999
Ladies and Gentlemen:
We refer to the V2500 General Terms of Sale Agreement between JetBlue Airways
Corporation ("JetBlue") and IAE International Aero Engines AG ("IAE") dated
May 4, 1999 (the "Agreement"). Capitalized terms used herein which are not
otherwise defined shall have the same meaning as those given to them in the
Agreement.
This Side Letter No. 6 describes certain additional Purchased Item scheduling
flexibility and payment terms.
1 The definition of "Aircraft" set forth in Clause 1.1 of the Contract
is removed in its entirety and replaced by the following new
Clause 1.1 as follows:
"1.1 "Aircraft" shall mean (i) the thirty-three (33) new Airbus
A320-200 aircraft each powered by V2527-A5 Propulsion Systems
bearing Rank No. 1 through 33 in the delivery schedule
attached as Exhibit B-1 hereto (the "Firm First Deal
Aircraft"), (ii) the thirty (30) new Airbus A320-200 aircraft
each powered by V2527-A5 Propulsion Systems bearing Rank No.
34 through 63 in the delivery schedule attached as Exhibit B-1
hereto (the "Firm Second Deal Aircraft; together with the
Firm First Deal Aircraft, the "Firm Aircraft"), (iii)
JetBlue's option to purchase thirty (30) new Airbus A320
family aircraft each powered by V2500-A5 Propulsion Systems
(the "Option A320 Aircraft"), and (iv) and reserve options to
purchase thirty (30) new Airbus A320 family aircraft each
powered by V2500-A5 Propulsion Systems (the "Reserve Option
Aircraft;" together with the Option A320 Aircraft, the "Option
Aircraft"), all for delivery as set forth in Exhibit B-1 to
this Contract."
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2. Exhibit B to the Contract is removed in its entirety and replaced by
new Exhibit B attached hereto.
3. Exhibits D-4 through D-9 of the Contract are replaced in their entirety
by new Exhibits D-4 through D-9 attached hereto.
4. Clause 2.2.2 of the Contract is removed in its entirety and replaced by
the following new Clause 2.2.2 as follows:
"2.2.2 JetBlue hereby places a firm and unconditional order with IAE
for the purchase of a minimum of eleven (11) new V2527-A5
spare Engines (the "Firm Spare Engines") for delivery
according to the schedule set forth in Exhibit B-2 to this
Contract."
5. Sections 1, 2 and 3 to Side Letter No. 1 to the Contract are replaced
in their entirety by new Sections 1 and 2 as follows:
"1. FLEET INTRODUCTORY ASSISTANCE CREDIT
1.1 To assist JetBlue with the introduction of the Firm Aircraft
into its fleet, IAE will issue a credit to JetBlue's account
with IAE in the amount of U.S.[****] per A320 aircraft for
each of the Firm First Deal Aircraft purchased by JetBlue and
U.S.[****] per A320 aircraft for each of the Firm Second
Deal Aircraft purchased by JetBlue.
1.2 Each such credit will be issued upon delivery to and
acceptance by JetBlue of the corresponding Firm Aircraft.
1.3 Furthermore, each such credit shall be escalated using the IAE
Escalation formula set forth in Exhibit B-2 to the Contract
from a base month of January 1999 with respect to the Firm
First Deal Aircraft and January 2000 with respect to the Firm
Second Deal Aircraft, to the earlier of: (a) the scheduled
delivery set forth in Exhibit B-1 to the Contract of the
corresponding Firm Aircraft; or (b) the actual delivery date
of the corresponding Firm Aircraft.
1.4 Each such credit described in Clause 1.1 may be used by
JetBlue towards the purchase of V2500 Spare Parts, tooling and
services from IAE, but unless JetBlue provides written notice
to IAE at least ninety (90) days prior to delivery of each
applicable Firm Aircraft, the total amount of such credit
available for such Aircraft shall be assigned to the Aircraft
Manufacturer to be applied toward the payment for the
Propulsion Systems for such Firm Aircraft. The net aircraft
price (which shall include the available Aircraft
Manufacturer's credit applicable to such Aircraft) of
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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any Aircraft to be financed by IAE shall reflect the full
amount of any IAE credit available for such Aircraft.
1.5 In the event any credit, or portion thereof, under Clause 1.4
is assigned to the Aircraft Manufacturer, JetBlue acknowledges
that the credit shall not vest in the Aircraft Manufacturer
until delivery to and acceptance by JetBlue of the respective
Firm Aircraft.
2. FLEET EXPANSION ASSISTANCE CREDIT
2.1 To assist JetBlue with the expansion of its V2500-A5 powered
A320 family fleet, IAE will issue a credit to JetBlue's
account with IAE in the amount of U.S.[****] per aircraft
for each of the V2524-A5 powered A319 Option Aircraft
purchased by JetBlue, a credit of U.S.[****] per aircraft
for each of the V2527-A5 powered A320 Option Aircraft
purchased by JetBlue, and a credit of U.S.[****] per
aircraft for each of the V2533-A5 powered A321-200 Option
Aircraft purchased by JetBlue.
2.2 Each such credit will be issued upon delivery to and
acceptance by JetBlue of the corresponding Option Aircraft.
2.3 Furthermore, each such credit shall be escalated using the IAE
Escalation formula set forth in Exhibit B-2 to the Contract
from a base month of January 2000, to the earlier of: (a) the
scheduled delivery set forth in Exhibit B-1 to the Contract of
the corresponding Option Aircraft; or (b) the actual delivery
date of the corresponding Option Aircraft.
2.4 Each such credit described in Clause 2.1 may be used by
JetBlue towards the purchase of V2500 Spare Parts, tooling and
services from IAE, but unless JetBlue provides written notice
to IAE at least ninety (90) days prior to delivery of each
applicable Option Aircraft, the total amount of such credit
available for such Aircraft shall be assigned to the Aircraft
Manufacturer to be applied toward the payment for the
Propulsion Systems for such Option Aircraft.
2.5 In the event any credit, or portion thereof, under this Clause
2.4 is assigned to the Aircraft Manufacturer, JetBlue
acknowledges that the credit shall not vest in the Aircraft
Manufacturer until delivery to and acceptance by JetBlue of
the respective Option Aircraft.
3. SPARE ENGINE ASSISTANCE CREDIT
3.1 To assist JetBlue in its purchase from IAE of new spare V2500
Engines to support the JetBlue Aircraft, IAE will issue to
JetBlue's account with IAE a credit in an amount equal to
[****] of the Basic Contract
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the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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Price of the Firm Spare Engines or Option Spare Engines, as
the case may be, delivered in accordance with the schedule set
forth in Exhibit B-2 to the Contract.
3.2 Each such credit amount, escalated from the base month of
January 1999 in accordance with the IAE Escalation Formula set
forth in Exhibit B-2 to the Contract, will be issued upon the
earlier of scheduled or actual delivery date of the
corresponding Firm or Option Spare Engine. Each such
credit may be used by JetBlue toward the final payment for the
corresponding Firm or Option Spare Engine or for the purchase
of V2500 spare parts from IAE.
3.3 Each such credit will be issued upon the delivery to and
acceptance by JetBlue of the corresponding spare Engine.
Acceptance by JetBlue of this credit from IAE shall be deemed
for this Contract confirmation of JetBlue's acceptance of the
corresponding spare Engine.
3.4 IAE agrees to make reasonable efforts to effect delivery of
the Purchased Items under Clause 2.5.1 Ex-Works (INCOTERMS
1990) Connecticut, U.S.A."
6. New Sections 7 and 8 are added to Side Letter No. 1 to the Contract as
follows:
"7. SPARE PARTS CREDITS
To assist JetBlue with procuring its stock of Spare Parts from IAE, IAE
will credit JetBlue's account with IAE in the amount of U.S.[****]
(January 2000 Dollars) following the delivery and acceptance by JetBlue
of its the thirty-fourth ranked aircraft in accordance with the
delivery schedule attached as Exhibit B-1 to this Contract. Such
credit shall be used by JetBlue for the purchase of Spare Parts or
spare Engines from IAE and shall be escalated using the IAE Escalation
formula set forth in Exhibit B-2 to the Contract from a base month of
January 2000.
In addition, IAE to further assist JetBlue with procuring its stock of
Spare Parts from IAE, IAE will credit JetBlue's account with IAE in the
amount of U.S.[****] (January 2000 Dollars) following the delivery
and acceptance by JetBlue of every fifth aircraft of the Firm and
Option Aircraft following the thirty-third ranked aircraft in
accordance with the delivery schedule attached as Exhibit B-1 to this
Contract (e.g., the aircraft ranked no. 38, 43, etc.). Such credits
shall be used by JetBlue for the purchase of Spare Parts or spare
Engines from IAE and shall be escalated using the IAE Escalation
formula set forth in Exhibit B-2 to the Contract from a base month of
January 2000.
8. [****]
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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[****]
9. FLEET HOUR AGREEMENT
JetBlue has the option prior to induction of its first Engine for a
restoration shop visit to have IAE provide a Fleet Hour Agreement
("FHA") to replace its existing Maintenance Cost Guarantee to provide
maintenance support for the V2500 Engine in its Aircraft fleet.
Details and rates would be provided by IAE upon request. An FHA would
be for a term of [****] years and would cover normal off-wing engine
shop visit maintenance for all components of the Engine except life
limited parts, vendor accessories, nacelle and buyer furnished
equipment. This maintenance would be undertaken at a facility selected
by IAE.
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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Except as expressly amended by this Side Letter No. 6 all provisions of the
Contract remain in full force and effect.
Very truly yours, Agreed to and Accepted on behalf of:
IAE International Aero Engines AG JetBlue Airways Corporation
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
----------------------------------- -----------------------------------
Name Name
Vice President - Business Vice President
----------------------------------- -----------------------------------
Title Title
May 18, 2001 May 21, 2001
----------------------------------- -----------------------------------
Date Date
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EXHIBIT B-1
AIRCRAFT DELIVERY SCHEDULES
As of May 2001
<Table>
<Caption>
RANK NO. AIRCRAFT DELIVERY
<S> <C> <C>
No. 1 Firm Aircraft [****] 2000
No. 2 Firm Aircraft [****] 2000
No. 3 Firm Aircraft [****] 2000
No. 4 Firm Aircraft [****] 2000
No. 5 Firm Aircraft [****] 2000
No. 6 Firm Aircraft [****] 2000
No. 7 Firm Aircraft [****] 2001
No. 8 Firm Aircraft [****] 2001
No. 9 Firm Aircraft [****] 2001
No. 10 Firm Aircraft [****] 2001
No. 11 Firm Aircraft [****] 2001
No. 12 Firm Aircraft [****] 2001
No. 13 Firm Aircraft [****] 2001
No. 14 Firm Aircraft [****] 2002
No. 15 Firm Aircraft [****] 2002
No. 16 Firm Aircraft [****] 2002
No. 17 Firm Aircraft [****] 2002
No. 18 Firm Aircraft [****] 2002
No. 19 Firm Aircraft [****] 2002
No. 20 Firm Aircraft [****] 2002
No. 21 Firm Aircraft [****] 2002
No. 22 Firm Aircraft [****] 2002
No. 23 Firm Aircraft [****] 2002
No. 24 Firm Aircraft [****] 2003
No. 25 Firm Aircraft [****] 2003
No. 26 Firm Aircraft [****] 2003
No. 27 Firm Aircraft [****] 2003
No. 28 Firm Aircraft [****] 2003
No. 29 Firm Aircraft [****] 2003
No. 30 Firm Aircraft [****] 2003
No. 31 Firm Aircraft [****] 2003
No. 32 Firm Aircraft [****] 2003
No. 33 Firm Aircraft [****] 2004
No. 34 Firm Aircraft* [****] 2004
No. 35 Firm Aircraft* [****] 2004
No. 36 Firm Aircraft* [****] 2004
No. 37 Firm Aircraft* [****] 2004
No. 38 Firm Aircraft* [****] 2004
No. 39 Firm Aircraft* [****] 2004
</Table>
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
<Page>
<Table>
<S> <C> <C>
No. 40 Firm Aircraft* [****] 2004
No. 41 Firm Aircraft* [****] 2004
No. 42 Firm Aircraft* [****] 2004
No. 43 Firm Aircraft* [****] 2004
No. 44 Firm Aircraft* [****] 2005
No. 45 Firm Aircraft* [****] 2005
No. 46 Firm Aircraft* [****] 2005
No. 47 Firm Aircraft* [****] 2005
No. 48 Firm Aircraft* [****] 2005
No. 49 Firm Aircraft* [****] 2005
No. 50 Firm Aircraft* [****] 2005
No. 51 Firm Aircraft* [****] 2005
No. 52 Firm Aircraft* [****] 2005
No. 53 Firm Aircraft* [****] 2005
No. 54 Firm Aircraft* [****] 2006
No. 55 Firm Aircraft* [****] 2006
No. 56 Firm Aircraft* [****] 2006
No. 57 Firm Aircraft* [****] 2006
No. 58 Firm Aircraft* [****] 2006
No. 59 Firm Aircraft* [****] 2007
No. 60 Firm Aircraft* [****] 2007
No. 61 Firm Aircraft* [****] 2007
No. 62 Firm Aircraft* [****] 2007
No. 63 Firm Aircraft* [****] 2007
*Firm Second Deal Aircraft
OPTION AIRCRAFT
---------------
No. 64 Option Aircraft [****] 2004
No. 65 Option Aircraft [****] 2004
No. 66 Option Aircraft [****] 2004
No. 67 Option Aircraft [****] 2004
No. 68 Option Aircraft [****] 2005
No. 69 Option Aircraft [****] 2005
No. 70 Option Aircraft [****] 2006
No. 71 Option Aircraft [****] 2006
No. 72 Option Aircraft [****] 2006
No. 73 Option Aircraft [****] 2006
No. 74 Option Aircraft [****] 2006
No. 75 Option Aircraft [****] 2006
No. 76 Option Aircraft [****] 2006
No. 77 Option Aircraft [****] 2007
No. 78 Option Aircraft [****] 2007
No. 79 Option Aircraft [****] 2007
No. 80 Option Aircraft [****] 2007
No. 81 Option Aircraft [****] 2007
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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No. 82 Option Aircraft [****] 2007
No. 83 Option Aircraft [****] 2007
No. 84 Option Aircraft [****] 2008
No. 85 Option Aircraft [****] 2008
No. 86 Option Aircraft [****] 2008
No. 87 Option Aircraft [****] 2008
No. 88 Option Aircraft [****] 2008
No. 89 Option Aircraft [****] 2008
No. 90 Option Aircraft [****] 2008
No. 91 Option Aircraft [****] 2008
No. 92 Option Aircraft [****] 2008
No. 93 Option Aircraft [****] 2008
</Table>
Under the terms of its purchase agreement with Airbus for the Aircraft, JetBlue
has the right to receive delivery positions for Purchase Right Aircraft (also
referred to as Reserve Option Aircraft hereunder) equal to the number of Option
Aircraft as to which JetBlue has exercised its option purchase rights. Airbus
has granted JetBlue conversion rights for each of the thirty (30) Option
Aircraft and Purchase Right Aircraft (also referred to as Reserve Option
Aircraft hereunder)from A320 Aircraft to the A321-200 or A319 aircraft type on
twenty-one months notice to Airbus. No dates are specified for delivery of these
Purchase Right Aircraft (also referred to as Reserve Option Aircraft hereunder).
Such delivery dates will be determined at the time options are exercised by
JetBlue.
<Table>
<Caption>
LEASED AIRCRAFT
YEAR NUMBER DELIVERY PERIOD
---- ------ ---------------
<S> <C> <C>
1999 1 (1) [****]
2000 3 (1) [****] (1) [****] (1) [****]
2001 4 (1) [****] (2) [****] (1) [****]
TOTAL 8 All of the leased aircraft have been
delivered
</Table>
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
<Page>
EXHIBIT B-2
PURCHASED ITEMS, PRICE,
ESCALATION FORMULA AND DELIVERY
As of May 2001
<Table>
<Caption>
Basic Contract
Rank Purchased Item Price Qty. Delivery Date
No. U.S. Dollars
(January 1999)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 V2527-A5 SPARE ENGINE: [****] 1 [****]/99*
2 V2527-A5 SPARE ENGINE: [****] 1 [****]/00*
3 V2527-A5 SPARE ENGINE: [****] 1 [****]/01
4 V2527-A5 SPARE ENGINE: [****] 1 [****]/02
5 V2527-A5 SPARE ENGINE: [****] 1 [****]/02
6 V2527-A5 SPARE ENGINE: [****] 1 [****]/03
7 V2527-A5 SPARE ENGINE: [****] 1 [****]/04
8 V2527-A5 SPARE ENGINE: [****] 1 [****]/05
9 V2527-A5 SPARE ENGINE: [****] 1 [****]/06
10 V2527-A5 SPARE ENGINE: [****] 1 [****]/07
11 V2527-A5 SPARE ENGINE: [****] 1 [****]/08
OPTION SPARE ENGINES
---------------------
V2524-A5 SPARE ENGINE: [****]
V2527-A5 SPARE ENGINE: [****]
V2533-A5 SPARE ENGINE: [****]
TOTAL 11
</Table>
-------------------------
*These spare Engines have been delivered to JetBlue.
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
<Page>
IAE ESCALATION FORMULA
1. Any unit base price or other sum expressed to be subject to escalation
from a base month to a month of delivery or other date of determination
in accordance with the IAE Escalation Formula will be subject to
escalation in accordance with the following formula:
P = Pb ( [****] L + [****] M + [****] E )
-- -- --
Lo Mo Eo
Where:
P = the invoiced purchase price or escalated sum rounded to the nearest
U.S. Dollar.
Pb = unit base price or other sum.
Lo = the "Average Hourly Earnings of Aircraft Engine and Engine Parts
Production Workers" SIC Code 3724 published by the Bureau of Labor
Statistics in the U.S. Department of Labor for the month preceding the
base month by four months.
L = the "Average Hourly Earnings of Aircraft Engine and Engine Parts
Production Workers" SIC Code 3724 for the month preceding the month of
delivery or other date of determination by four months.
Mo = the "Producer Price Index, Code 10, for Metals and Metal Products"
published by the Bureau of Labor Statistics in the U.S. Department of
Labor for the month preceding the base month by four months.
M = the "Producer Price Index, Code 10, for Metals and Metal Products"
for the month preceding the month of delivery or other date of
determination by four months.
Eo = the "Producer Price Index, Code 5, for Fuel and Related Products
and Power" published by the Bureau of Labor Statistics in the U.S.
Department of Labor for the month preceding the base month by four
months.
E = the "Producer Price Index, Code 5, for Fuel and Related Products
and Power" for the month preceding the month of delivery or other date
of determination by four months.
2. The values of the factors [****] L and [****] M and [****] E
-- -- --
Lo Mo Eo
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Rule 406 under the Securities Act of 1933, as amended.
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respectively, shall be determined to the nearest fourth decimal place.
If the fifth decimal is five or more, the fourth decimal place shall be
raised to the next higher number.
3. If the U.S. Department of Labor ceases to publish the above statistics
or modifies the basis of their calculation, then IAE may substitute any
officially recognized and substantially equivalent statistics.
4. The Basic Contract Prices contained in this Exhibit B are subject to
escalation from a Base Month of January 1999 to the month of delivery
using Lo, Mo and Eo values for September 1998.
5. If the application of the formula contained in this Exhibit B results
in a Purchase Price which is lower than the Basic Contract Price, the
Basic Contract Price will be deemed to be the Purchase Price for such
Supplies.
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EXHIBIT D-4
V2500 RELIABILITY GUARANTEE
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V2500 RELIABILITY GUARANTEE
I INTRODUCTION
IAE assures JetBlue that by the end of the [****] period commencing
with JetBlue's first commercial operation of Aircraft (including for
purposes of this Guarantee, the Leased Aircraft) powered by V2500
Engines, the cumulative Engine Shop Visit Rate will not exceed a
Guaranteed Rate of [****] per 1000 Eligible Engine flight hours.
Under this Guarantee, if the cumulative Engine Shop Visit Rate
exceeds the Guaranteed Rate, IAE will credit JetBlue's account with
IAE an amount of [****] U.S. Dollars for each Eligible Engine Shop
Visit determined to have been in excess of the Guaranteed Rate.
II GUARANTEE
A. PERIOD OF GUARANTEE
The Period of Guarantee will start on the date JetBlue
initiates commercial operation of its first Aircraft
(including for purposes of this Guarantee, the Leased
Aircraft) powered by Eligible Engines and will terminate
[****] years from that date.
B. ELIGIBLE ENGINES
The Engines that will be Eligible under this Guarantee shall
be new Firm Aircraft and new Firm Spare Engines which are
owned or operated by JetBlue during the Period of Guarantee
and which have been acquired pursuant to the Contract to which
this Guarantee is attached and the related proposal or
contract for delivery of Aircraft, and shall also include for
purposes of this Guarantee, the Leased Aircraft. The Engines
shall remain Eligible provided that JetBlue or its authorized
maintenance facility maintains them in accordance with the IAE
instructions and recommendations contained in the applicable
IAE publications including the latest Maintenance Management
Plan for JetBlue
C. ELIGIBLE SHOP VISITS
Eligible Shop Visits shall comprise the shop visits of
Eligible Engines required for the following reasons:
1. a Failure of a Part in such Eligible Engines;
2. foreign object damage caused by the ingestion of
birds, hailstones or runway gravel;
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3. an Airworthiness Directive issued by the applicable
Certification Authority;
4. maintenance as recommended by IAE; and
5. removal for LLP time expiration so long as minimum
build cycle requirement pursuant to the Maintenance
Management Plan is adhered to.
D. REPORTING OF ENGINE SHOP VISITS AND ENGINE FLIGHT HOURS
Eligible Shop Visits shall be reported to IAE by JetBlue
within thirty days after the date of such Engine Shop Visit
using IAE Form SVR Rev 1, July 95 together with such other
information as may be needed to determine the Eligibility of
the Engine Shop Visit. Each such Form shall be verified by an
authorized IAE Representative before submission. Should it be
necessary for him to disqualify a reported Engine Shop Visit,
supporting information will be furnished.
Flight hours accumulated by Eligible Engines during each
month during the Period of Guarantee shall be reported by
JetBlue within thirty days after each month's end to IAE on
IAE Form SVR Rev 1, July 95 unless other procedures are
established for the reporting of flight hours.
E. CREDIT ALLOWANCE CALCULATION
A credit of [****] U.S. Dollars will be granted by IAE for
each Eligible Engine Shop Visit determined as calculated
below to be in excess of the Guaranteed Rate during the
Period of Guarantee. An annual calculation will be made no
later than sixty days after each yearly anniversary of the
commencement of the Period of Guarantee provided that the
necessary Engine Shop Visit records and Eligible Engine
flight hour information have been reported to IAE.
Each annual calculation will be made using data that will
be cumulative from the start of the Period of Guarantee. An
interim credit will be granted, if necessary, following the
annual calculations for the second year and each subsequent
year of the Period of Guarantee. If subsequent annual
calculations show that on a cumulative basis, a previous
interim credit (or portion thereof) was excessive, such
excess amount shall be subject to repayment which will be
effected by IAE issuing a debit against JetBlue's account
with IAE. Credits and debits will be applied to JetBlue's
Air's account with IAE not later than thirty days following
a calculation for the second year and each subsequent year
of the Period of Guarantee, as applicable.
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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Credit Allowance = (AR - GR) x [****] U.S. Dollars
where:
AR = Total Eligible Engine Shop Visits during the period
of the calculation.
GR = [****]/1,000 x total Engine flight hours accumulated
on Eligible Engines during the period of the
calculation.
(NOTE: GR will be rounded to the nearest whole
number.)
III DEFINITIONS AND GENERAL CONDITIONS
All of the Definitions and General Conditions of the V2500 Engine and
Parts excluded by the General Conditions of the Policy shall be
excluded from this Guarantee except that Engine Shop Visits resulting
from ingestion of birds, hailstones or runway gravel shall be included
as Eligible under this Guarantee.
IV SPECIFIC CONDITIONS
A. The Guaranteed Rate is predicated on the use by JetBlue of:
1. An average flight cycle of no less than [****] hours;
2. Thrust levels which are derated an average of [****]
for Takeoff relative to full Takeoff
ratings;
3. An average Aircraft utilization equal to or less than
[****] flight hours per year;
4. An Aircraft and Engine delivery schedule in respect
of the Firm Aircraft, Leased Aircraft and Firm Spare
Engines as described in the Contract to which this
Guarantee is attached; and
5. An average ambient temperature at Takeoff which is no
greater than ISA + 3 DEG. C.
B. IAE reserves the right to make appropriate adjustments to the
Guaranteed Rate if there is, during the Period of Guarantee,
(a) a variation from the conditions upon which the Guaranteed
Rate is predicated, or (b) a discontinuation of operation by
JetBlue of any Engine or any V2500 powered Aircraft subsequent
to delivery to JetBlue, or (c) if JetBlue takes Option
Aircraft or Option Spare Engines.
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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C. In the event credits are issued under Section II, such credits
will be dedicated to the procurement of Parts aimed at
correction of the situations contributing to excess Engine
Shop Visits. Accordingly, JetBlue and IAE will establish
jointly the modifications or Parts to be selected, and JetBlue
will incorporate the changes into Eligible Engines.
V EXCLUSION OF BENEFITS
The intent of this Guarantee is to provide specified benefits to
JetBlue as a result of the failure of Eligible Engines to achieve the
reliability level stipulated in the Guarantee. It is not the intent,
however, to duplicate benefits provided JetBlue under any other
applicable guarantee, sales warranty, service policy, or any special
benefit of any kind as a result of the same failure. Therefore, the
terms and conditions of this Guarantee notwithstanding, if the terms of
this Guarantee should make duplicate benefits available to JetBlue from
IAE or any third-party, JetBlue may elect to receive the benefits under
this Guarantee or under any of the other benefits described above, but
not both.
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EXHIBIT D-5
V2500 DELAY AND CANCELLATION
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<Page>
V2500 DELAY AND CANCELLATION
I INTRODUCTION
IAE assures JetBlue that by the end of the fifteen [****] period
commencing with JetBlue's first commercial operation of Aircraft
(including for purposes of this Guarantee, the Leased Aircraft) powered
by V2500 Engines, the cumulative Engine-caused Delay and Cancellation
Rate will not exceed a Guaranteed Rate of [****] per 100 Aircraft
departures. Under this Guarantee, if the cumulative Engine-caused Delay
and Cancellation Rate is determined to have exceeded the Guaranteed
Rate over the Period of Guarantee, IAE will credit JetBlue's account
with IAE an amount of [****] U.S. Dollars for each excess Eligible
Delay and Cancellation determined to have been in excess of the
Guaranteed Rate.
II GUARANTEE
A. PERIOD OF GUARANTEE
The Period of Guarantee will start on the date JetBlue
initiates commercial operation of its first Aircraft
(including for purposes of this Guarantee, the Leased
Aircraft) powered by Eligible Engines and will terminate
[****] years from that date.
B. ELIGIBLE ENGINES
The Engines that will be Eligible under this Guarantee shall
be new Firm Aircraft and new Firm Spare Engines which are
owned or operated by JetBlue during the Period of Guarantee
and which have been acquired pursuant to the Contract to which
this Guarantee is attached and the related proposal or
contract for delivery of Aircraft, and shall also include for
purposes of this Guarantee, the Leased Aircraft. The Engines
shall remain Eligible provided that JetBlue or its authorized
maintenance facility maintains them in accordance with the IAE
instructions and recommendations contained in the applicable
IAE publications including the latest Maintenance Management
Plan for JetBlue
C. i) ELIGIBLE DELAY
An Eligible Delay shall occur when by a Failure of a Part in
an Eligible Engine installed in an Aircraft is the sole cause
of a delay in the final Departure of that Aircraft by more
than fifteen minutes after its programmed Departure in either
of the following instances:
1) an originating flight departing later than its
scheduled Departure time; or
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
<Page>
2) a through flight or a turnaround flight remaining on
the ground longer than its scheduled ground time.
C. ii) ELIGIBLE CANCELLATION
A single Cancellation shall occur when a Failure of a Part in
an Eligible Engine installed in an Aircraft is the sole cause
of the elimination of a Departure in either of the following
instances:
1) cancellation of a trip comprising a single flight
leg; or
2) cancellation of any or all of the flight legs of a
multiple leg trip.
C. iii)
A Departure which is cancelled after an Eligible Delay shall
be an Eligible Cancellation not an Eligible Delay.
C. iv)
Consecutive Delays and Cancellations for the same problem
because corrective action had not been taken will be excluded.
D. DEPARTURE
A Departure comprises the movement of an Aircraft from the
blocks for the purpose of an intended scheduled revenue flight
provided that there can be only one Departure for each
intended flight.
E. REPORTING OF ELIGIBLE DELAYS AND CANCELLATIONS
Eligible Delays and Cancellations shall be reported to IAE by
JetBlue within thirty days after the date of such Delay or
Cancellation using IAE Form DC Rev 1, July 95, together with
such other information as may be needed to determine the
Eligibility of the Delay or Cancellation. Each such Form shall
be verified by an authorized IAE Representative before
submission. Should it be necessary for him to disqualify a
reported Delay or Cancellation, supporting information will be
furnished.
Departures accumulated by Eligible Engines during each month
during the Period of Guarantee shall be reported by JetBlue
within thirty days after each month's end to IAE on IAE Form
DC Rev 1, July 95, unless other procedures are established for
the reporting of Departures.
F. CREDIT ALLOWANCE CALCULATION
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<Page>
A credit of [****] U.S. Dollars will be granted by IAE for
each Eligible Delay and Eligible Cancellation determined as
calculated below to be in excess of the Guaranteed Rate
during the Period of Guarantee. An annual calculation will be
made no later than sixty days after each yearly anniversary of
the commencement of the Period of Guarantee provided that the
necessary records of Delays, Cancellation and Departure have
been reported to IAE.
Each annual calculation will be made using data that will be
cumulative from the start of the Period of Guarantee. An
interim credit will be granted, if necessary, following the
annual calculations for the first year and each subsequent
year of the Period of Guarantee. If subsequent annual
calculations show that on a cumulative basis, a previous
interim credit (or portion thereof) was excessive, such excess
amount shall be subject to repayment which will be effected by
IAE issuing a debit against JetBlue's account with IAE.
Credits and debits will be applied to JetBlue's account with
IAE not later than thirty days following a calculation for the
second year and each subsequent year of the Period of
Guarantee, as applicable.
Credit Allowance = (ADC - GDC) x [****] U.S. Dollars
Where:
ADC = Total qualifying actual Engine Caused Delays and
Cancellations claimed and accepted as eligible during
the applicable period of the calculation.
GDC = ([****]/100) x total Departures accumulated on
Eligible Engines during the applicable period of
calculation.
III DEFINITIONS AND GENERAL CONDITIONS
All of the Definitions and General Conditions of the V2500 Engine and
Parts Service Policy shall apply to this Guarantee. Delays and
Cancellation excluded by the General Conditions of the Policy shall be
excluded from this Guarantee.
IV SPECIFIC CONDITIONS
A. The Guaranteed Rate is predicated on the use by JetBlue of:
1. An average flight cycle of no less than [****] hours;
2. Thrust levels which are derated an average of [****]
for Takeoff relative to full Takeoff
ratings;
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the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
<Page>
3. An average Aircraft utilization equal to or less than
3,800 flight hours per year;
4. An Aircraft and Engine delivery schedule in respect
of the Firm Aircraft, Leased Aircraft and Firm Spare
Engines as described in the Contract to which this
Guarantee is attached; and
5. An average ambient temperature at Takeoff which is no
greater than ISA + 3 DEG. C.
B. IAE reserves the right to make appropriate adjustments to the
Guaranteed Rate if there is, during the Period of Guarantee,
(a) a variation from the conditions upon which the Guaranteed
Rate is predicated, or (b) a discontinuation of operation by
JetBlue of any Engine or any V2500 powered Aircraft subsequent
to delivery to JetBlue, or (c) if JetBlue takes Option
Aircraft or Option Spare Engines.
C. In the event credits are issued under Section II, such credits
will be dedicated to the procurement of parts aimed at
correction of the situations contributing to excess Delays and
Cancellation. Accordingly, JetBlue and IAE will establish
jointly the modifications or Parts to be selected, and JetBlue
will incorporate the changes into Eligible Engines.
V EXCLUSION OF BENEFITS
The intent of this Guarantee is to provide specified benefits to
JetBlue as a result of the failure of Eligible Engines to achieve the
reliability level stipulated in the Guarantee. It is not the intent,
however, to duplicate benefits provided to JetBlue under any other
applicable guarantee, sales warranty, service policy, or any special
benefit of any kind as a result of the same failure. Therefore, the
terms and conditions of this Guarantee notwithstanding, if the terms of
this Guarantee should make duplicate benefits available to JetBlue from
IAE or any third-party, JetBlue may elect to receive the benefits under
this Guarantee or under any of the other benefits described above, but
not both.
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<Page>
EXHIBIT D-6
V2500 INFLIGHT SHUTDOWN GUARANTEE
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<Page>
V2500 INFLIGHT SHUTDOWN GUARANTEE
I INTRODUCTION
IAE assures JetBlue that by the end of the fifteen [****] period
commencing with JetBlue's first commercial operation of Aircraft
(including for purposes of this Guarantee, the Leased Aircraft) powered
by V2500 Engines, the cumulative Engine Inflight Shutdown Rate will not
exceed a Guaranteed Rate of [****] per 1000 Eligible Engine flight
hours. Under this Guarantee, if the cumulative Eligible Inflight
Shutdown Rate is determined to have exceeded the Guaranteed Rate over
the Period of Guarantee, IAE will credit JetBlue's account with IAE an
amount of [****] U.S. Dollars for each Eligible Inflight Shutdown
determined to have been in excess of the Guaranteed Rate.
II GUARANTEE
A. PERIOD OF GUARANTEE
The Period of Guarantee will start on the date JetBlue
initiates commercial operation of its first Aircraft
(including for purposes of this Guarantee, the Leased
Aircraft) powered by Eligible Engines and will terminate
[****] years from that date.
B. ELIGIBLE ENGINES
The Engines that will be Eligible under this Guarantee shall
be new Firm Aircraft and new Firm Spare Engines which are
owned or operated by JetBlue during the Period of Guarantee
and which have been acquired pursuant to the Contract to which
this Guarantee is attached and the related proposal or
contract for delivery of Aircraft, and shall also include for
purposes of this Guarantee, the Leased Aircraft. The Engines
shall remain Eligible provided that JetBlue or its authorized
maintenance facility maintains them in accordance with the IAE
instructions and recommendations contained in the applicable
IAE publications including the latest Maintenance Management
Plan for JetBlue
C. ELIGIBLE INFLIGHT SHUTDOWNS
Eligible Inflight Shutdowns shall comprise the inflight
shutdown of an Eligible Engine during a scheduled revenue
flight which is determined to have been caused by a Failure
of a Part of such Engine. Multiple inflight shutdowns of the
same Engine during the same flight leg for the same problem
will be counted as one Eligible Inflight Shutdown. A
subsequent inflight shutdown on a subsequent flight leg for
the same problem because corrective action has not been taken
will be excluded.
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
<Page>
D. REPORTING OF ELIGIBLE INFLIGHT SHUTDOWNS
Eligible Inflight Shutdowns shall be reported to IAE by
JetBlue within thirty days after the date of such Inflight
Shutdown using IAE Form IFSD Rev 1, July 95 together with such
other information as may be needed to determine the
Eligibility of the Inflight Shutdown. Each such Form shall be
verified by an authorized IAE Representative before
submission. Should it be necessary for him to disqualify a
reported Inflight Shutdown, supporting information will be
furnished.
Flight hours accumulated by Eligible Engines during each month
during the Period of Guarantee shall be reported by JetBlue
within thirty days after each month's end to IAE on IAE Form
IFSD Rev 1, July 95 unless other procedures are established
for the reporting of flight hours.
E. CREDIT ALLOWANCE CALCULATION
A credit of [****] U.S. Dollars will be granted by IAE for
each Eligible Inflight Shutdown determined as calculated below
to be in excess of the Guaranteed Rate during the Period of
Guarantee. An annual calculation will be made no later than
sixty days after each yearly anniversary of the commencement
of the Period of Guarantee provided that the necessary
Inflight Shutdown records and Eligible Engine flight hour
information have been reported to IAE.
Each annual calculation will be made using data that will be
cumulative from the start of the Period of Guarantee. An
interim credit will be granted, if necessary, following the
annual calculations for the second year and each subsequent
year of the Period of Guarantee. If subsequent annual
calculations show that on a cumulative basis, a previous
interim credit (or portion thereof) was excessive, such excess
amount shall be subject to repayment which will be effected
by IAE issuing a debit against JetBlue's account with IAE.
Credits and debits will be applied to JetBlue's account with
IAE not later than thirty days following a calculation for the
second year and each subsequent year of the Period of
Guarantee, as applicable.
The Credit Allowance = (AI - GI) x [****] U.S. Dollars
Where:
AI = Total Eligible Inflight Shutdowns during the period
of the calculation;
GI = ([****]/1,000) x total Engine flight hours
accumulated on Eligible Engines during the
period of the calculation.
(NOTE: GI will be rounded to the nearest whole number.)
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
<Page>
III DEFINITIONS AND GENERAL CONDITIONS
All of the Definitions and General Conditions of the V2500 Engine and
Parts Service Policy shall apply to this Guarantee. Engines and
Inflight Shutdowns excluded by the General Conditions of the Policy
shall be excluded from this Guarantee.
IV SPECIFIC CONDITIONS
A. The Guaranteed Rate is predicated on the use by JetBlue of:
1. An average flight cycle of no less than 1.9 hours;
2. Thrust levels which are derated an average of fifteen
percent (15%) for Takeoff relative to full Takeoff
ratings;
3. An average Aircraft utilization equal to or less
than 3,800 flight hours per year;
4. An Aircraft and Engine delivery schedule in respect
of the Firm Aircraft, Leased Aircraft and Firm Spare
Engines as described in the Contract to which this
Guarantee is attached; and
5. An average ambient temperature at Takeoff which is no
greater than ISA + 3-DEG.- C.
B. IAE reserves the right to make appropriate adjustments to the
Guaranteed Rate if there is, during the Period of Guarantee,
(a) a variation from the conditions upon which the Guaranteed
Rate is predicated, or (b) a discontinuation of operation by
JetBlue of any Engine or any V2500 powered Aircraft subsequent
to delivery to JetBlue, or (c) if JetBlue takes Option
Aircraft or Option Spare Engines.
C. In the event credits are issued under Section II, such credits
will be dedicated to the procurement of Parts aimed at
correction of the situations contributing to excess Inflight
Shutdowns. Accordingly, JetBlue and IAE will establish jointly
the modifications or Parts to be selected, and JetBlue will
incorporate the changes into Eligible Engines.
V EXCLUSION OF BENEFITS
The intent of this Guarantee is to provide specified benefits to
JetBlue as a result of the failure of Eligible Engines to achieve the
reliability level stipulated in the Guarantee. It is not the intent,
however, to duplicate benefits provided to JetBlue under any other
applicable guarantee, sales warranty, service policy, or any
Page 26 of 43
<Page>
special benefit of any kind as a result of the same failure. Therefore,
the terms and conditions of this Guarantee notwithstanding, if the terms
of this Guarantee should make duplicate benefits available to JetBlue from
IAE or any third-party, JetBlue may elect to receive the benefits under
this Guarantee or under any of the other benefits described above, but not
both.
May 2001
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<Page>
EXHIBIT D-7
V2500 FUEL CONSUMPTION RETENTION GUARANTEE
May 2001
Page 28 of 43
<Page>
V2500-A5 FUEL CONSUMPTION RETENTION GUARANTEE
I INTRODUCTION
IAE assures JetBlue that during the [****] year period commencing
with JetBlue's first commercial operation of Aircraft (including for
purposes of this Guarantee, the Leased Aircraft) powered by V2500-A5
Engines, the fleet average cruise fuel consumption for Eligible Engines
will not have increased by more than a Guaranteed Rate of [****]. Under
this Guarantee, if the fleet average cruise fuel consumption for
Eligible Engines exceeds the Guaranteed Rate at the end of the
Guarantee Period, IAE will credit JetBlue's account with IAE an amount
in respect of excess fuel consumed for that portion of the Period of
the Guarantee that the Guarantee level has been exceeded.
II GUARANTEE
A. PERIOD OF GUARANTEE
The Period of Guarantee will start on the date JetBlue
initiates commercial operation of its first Aircraft
(including for purposes of this Guarantee, the Leased
Aircraft) powered by Eligible Engines and will terminate
[****] years from that date.
B. ELIGIBLE ENGINES
The Engines that will be Eligible under this Guarantee shall
be new Firm Aircraft and new Firm Spare Engines which are
owned or operated by JetBlue during the Period of Guarantee
and which have been acquired pursuant to the Contract to which
this Guarantee is attached and the related proposal or
contract for delivery of Aircraft, and shall also include for
purposes of this Guarantee, the Leased Aircraft. The Engines
shall remain Eligible provided that JetBlue or its authorized
maintenance facility maintains them in accordance with the IAE
instructions and recommendations contained in the applicable
IAE publications including the latest Maintenance Management
Plan for JetBlue.
C. FUEL CONSUMPTION MEASUREMENT
The inflight data required for administration of this
Guarantee will be obtained by JetBlue during stable cruise
conditions using ECM data recordings and the ECM II software
available from IAE (requires the ECM sales order option from
Airbus).
Provided that:
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
Page 29 of 43
<Page>
a) the fuel consumption data for any Eligible Engine on
which the engine parameters indicate a possible
malfunction (including associated Aircraft systems),
other than normal gas path deterioration, that is
subsequently confirmed by maintenance action will not be
considered acceptable data, and
b) data which is obviously inaccurate under normal engine
monitoring practices will not be considered acceptable
data; this type of data will be rejected unless JetBlue
validity checks have established that Total Air
Temperature, Fuel Flow Aircraft and Engine Bleed Systems
and other Aircraft parameters are within normal
operating ranges.
D. PERIODIC FLEET AVERAGE CRUISE FUEL CONSUMPTION DETERIORATION
The Periodic Fleet Average Cruise Fuel Consumption
Deterioration shall be the average of the Cruise Fuel Flow
Deterioration for all installed Eligible Engines for a 30 day
reporting period. This is to be reported to IAE every 30 days.
E. FLEET AVERAGE CRUISE FUEL CONSUMPTION DETERIORATION
The Fleet Average Cruise Fuel Consumption Deterioration is the
average of the Periodic Fleet Average Cruise Fuel Consumption
Deterioration values for all 30 day periods during the Period
of Calculation (cumulative from start of Period of Guarantee
to end of the third, fifth, seventh, ninth, eleventh,
thirteenth and fifteenth years).
F. OPERATIONAL DATA
JetBlue shall provide the following data to IAE as indicated
during the Period of the Guarantee:
1. Total quantity of fuel consumed by Eligible Engines
during the Period (U.S. Gallons), every thirty days.
2. Average cost of fuel to JetBlue over the Period of
Guarantee (U.S. Dollars per U.S. Gallon), every
thirty days.
3. Aircraft operating hours for each 30 day period
during the Period of Guarantee
4. Engine maintenance action information, as requested.
Alternatively;
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<Page>
IAE is agreeable to the use of the Airbus performance model to
estimate the total fuel consumption during the period of
guarantee (using typical JetBlue V2500-A5 powered A320 family
aircraft operating characteristics). Average cost of fuel to
be agreed between IAE and JetBlue based on typical fuel costs
in the appropriate area of operation during the period of
guarantee. JetBlue shall notify IAE in writing of its
selection prior to the end of the first settlement period.
G. EXCESS FUEL CONSUMPTION CREDIT CALCULATION
If at the end of each Period of Calculation the Fleet Average Fuel
Consumption Deterioration exceeds the Guaranteed Rate, IAE will
grant JetBlue a credit in respect to excess fuel consumption
calculated in accordance with the following formula:
C = (D-GR)% YHF
where:
C = the amount of the credit in U.S. dollars
D = the Fleet Average Fuel Consumption Deterioration (in
percent)
GR = the Guaranteed Rate
Y = initial cruise fuel flow of new Eligible Engines expressed
in U.S. gallons per hour to be established within 30 days
of start of operation (per ECM II program)
H = the total of all flight hours flown by JetBlue's Eligible
Engines during that portion of the Period of Guarantee
that the Guarantee level has been exceeded.
F = The average net cost to JetBlue in U.S. Dollars per U.S.
Gallon of aviation fuel consumed by JetBlue during the
Period of Guarantee.
III DEFINITIONS AND GENERAL CONDITIONS
All of the Definitions and General Conditions of the V2500 Engine and
Parts Service Policy shall apply to this Guarantee. In the case of
conflict between the Definitions and General Conditions of the Service
Policy and the terms and conditions of this Plan, this Plan shall
govern.
IV SPECIFIC CONDITIONS
A. The Guaranteed Rate is predicated on the use by JetBlue of:
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<Page>
1. An average flight cycle of no less than 1.9 hours;
2. Thrust levels which are derated an average of fifteen
percent (15%) for Takeoff relative to full Takeoff
ratings;
3. An average Aircraft utilization equal to or less than
3,800 flight hours per year;
4. An Aircraft and Engine delivery schedule in respect of
the Firm Aircraft, Leased Aircraft and Firm Spare
Engines as described in the Contract to which this
Guarantee is attached; and
5. An average ambient temperature at Takeoff which is no
greater than ISA + 3-DEG.- C.
B. IAE reserves the right to make appropriate adjustments to the
Guaranteed Rate if there is, during the Period of Guarantee,
(a) a variation from the conditions upon which the Guaranteed
Rate is predicated, or (b) a discontinuation of operation by
JetBlue of any Engine or any V2500 powered Aircraft subsequent
to delivery to JetBlue, or (c) if JetBlue takes Option
Aircraft or Option Spare Engines.
V EXCLUSION OF BENEFITS
The intent of this Guarantee is to provide specified benefits to
JetBlue as a result of the failure of Eligible Engines to achieve the
performance level stipulated in the Guarantee. It is not the intent,
however, to duplicate benefits provided to JetBlue by IAE or any other
source under any applicable guarantee, sales warranty, service policy,
or any special benefit of any kind as a result of the same failure.
Therefore, the terms and conditions of this Guarantee notwithstanding,
if the terms of this Guarantee should make duplicate benefits
available to JetBlue, JetBlue may elect to receive the benefits under
this Guarantee or under any of the other benefits described above, but
not both.
Page 32 of 43
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EXHIBIT D-8
V2500 EXHAUST GAS TEMPERATURE GUARANTEE
Page 33 of 43
<Page>
V2500 EXHAUST GAS TEMPERATURE GUARANTEE
I INTRODUCTION
IAE assures JetBlue that during the first [****] hours of operation of
each V2500 Engine (including for purposes of this Guarantee, the Leased
Aircraft), the maximum stabilized takeoff exhaust gas temperature will
not exceed the Certified Limit. Under this Guarantee if it is confirmed
that the Certified Limit has been exceeded, IAE will credit JetBlue's
account with IAE in the amount of [****] USD. For the purpose of this
Guarantee, the Certified Limit is exceeded if the Engine will not
achieve the specified engine pressure ratio for takeoff thrust without
exceeding the Certified Limit for its Exhaust Gas Temperature.
II GUARANTEE
A. PERIOD OF GUARANTEE
The Period of Guarantee for each Eligible Engine will start on
the date JetBlue initiates commercial operation of its first
Aircraft (including for purposes of this Guarantee, the Leased
Aircraft) powered by such Engine and will terminate [****]
years from that date or upon the expiration of the first
[****] hours of operation of such Engine, whichever is the
sooner.
B. ELIGIBLE ENGINES
The Engines that will be Eligible under this Guarantee shall
be new Firm Aircraft and new Firm Spare Engines which are
owned or operated by JetBlue during the Period of Guarantee
and which have been acquired pursuant to the Contract to which
this Guarantee is attached and the related proposal or
contract for delivery of Aircraft, and shall also include for
purposes of this Guarantee, the Leased Aircraft. The Engines
shall remain Eligible provided that JetBlue or its authorized
maintenance facility maintains them in accordance with the IAE
instructions and recommendations contained in the applicable
IAE publications including the latest Maintenance Management
Plan for JetBlue
C. RESTORATION OF INSTALLED ENGINE
If during the Period of Guarantee, the maximum stabilized
takeoff exhaust gas temperature of an Eligible Engine
installed in an Aircraft operated by JetBlue exceeds the
Certified Limit, JetBlue shall undertake on-wing Engine
maintenance recommended by IAE, with technical assistance
provided by IAE, to restore the performance of that Engine.
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
Page 34 of 43
<Page>
D. CALIBRATION OF REMOVED ENGINE
If the performance of an installed Eligible Engine cannot be
restored by the maintenance recommended under Section II,
Paragraph C, JetBlue shall promptly remove such Engine from
the Aircraft and dispatch it at its cost for calibration in an
IAE designated test cell. If such calibration verifies that
the exhaust gas temperature of the Engine is not in excess of
the Certified Limit or it is established that any excess is
due to causes which are excluded by the General Conditions in
Section III, then the cost of such test cell calibration and
associated transportation will be borne by JetBlue.
E. CREDIT ALLOWANCE
A credit of [****] USD will be granted by IAE for each event
not meeting the requirements set forth in Section I of this
guarantee and as verified by Section II, Paragraph D above.
III SPECIFIC CONDITIONS
A. The Guaranteed Rate is predicated on the use by JetBlue of:
1. An average flight cycle of no less than [****]
hours;
2. Thrust levels which are derated an average of
[****] for Takeoff relative to full Takeoff
ratings;
3. An average Aircraft utilization equal to or less than
[****] flight hours per year;
4. An Aircraft and Engine delivery schedule in respect
of the Firm Aircraft, Leased Aircraft and Firm Spare
Engines as described in the Contract to which this
Guarantee is attached; and
5. An average ambient temperature at Takeoff which is no
greater than ISA + 3 DEG. C.
B. IAE reserves the right to make appropriate adjustments to the
Guaranteed Rate if there is, during the Period of Guarantee,
(a) a variation from the conditions upon which the Guaranteed
Rate is predicated, or (b) a discontinuation of operation by
JetBlue of any Engine or any V2500 powered Aircraft subsequent
to delivery to JetBlue, or (c) if JetBlue takes Option
Aircraft or Option Spare Engines.
IV DEFINITIONS AND GENERAL CONDITIONS
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
Page 35 of 43
<Page>
All of the Definitions and General Conditions of the V2500 Engine and
Parts Service Policy shall apply to this Guarantee. Engines excluded by
the General Conditions of the Policy shall be excluded from this
Guarantee.
V EXCLUSION OF BENEFITS
The intent of this Guarantee is to provide specified benefits to
JetBlue as a result of the failure of Eligible Engines to achieve the
performance level stipulated in the Guarantee. It is not the intent,
however, to duplicate benefits provided to JetBlue under any other
applicable guarantee, sales warranty, service policy, or any special
benefit of any kind as a result of the same failure. Therefore, the
terms and conditions of this Guarantee notwithstanding, if the terms of
this Guarantee should make duplicate benefits available to JetBlue from
IAE or any third-party, JetBlue may elect to receive the benefits under
this Guarantee or under any of the other benefits described above, but
not both.
Page 36 of 43
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EXHIBIT D-9
V2500 MAINTENANCE COST GUARANTEE
Page 37 of 43
<Page>
V2500 MAINTENANCE COST GUARANTEE
I INTRODUCTION
IAE assures JetBlue that by the end of the [****] year period
commencing with JetBlue's first commercial operation of Aircraft
(including for purposes of this Guarantee, the Leased Aircraft) powered
by V2500 Engines, the cumulative cost of Eligible Maintenance for
Eligible Engines will not, subject to escalation, exceed a Guaranteed
Cost Rate of U.S. [****] per Eligible Engine flight hour. Under this
Guarantee, if the cumulative cost per Eligible Engine flight hour for
Eligible Maintenance of JetBlue's Engines over the Period of the
Guarantee exceeds the escalated Guaranteed Cost Rate, IAE will credit
JetBlue's account with IAE an amount of [****] of the excess.
II GUARANTEE
A. PERIOD OF GUARANTEE
The Period of Guarantee will start on the date JetBlue
initiates commercial operation of its first Aircraft (including
for purposes of this Guarantee, the Leased Aircraft) powered by
Eligible Engines and will terminate [****] years from
that date.
B. ELIGIBLE ENGINES
The Engines that will be Eligible under this Guarantee shall
be new Firm Aircraft and new Firm Spare Engines which are
owned or operated by JetBlue during the Period of Guarantee
and which have been acquired pursuant to the Contract to
which this Guarantee is attached and the related proposal or
contract for delivery of Aircraft, and shall also include for
purposes of this Guarantee, the Leased Aircraft. The Engines
shall remain Eligible provided that JetBlue or its authorized
maintenance facility maintains them in accordance with the
IAE instructions and recommendations contained in the
applicable IAE publications including the latest Maintenance
Management Plan for JetBlue
C. ELIGIBLE MAINTENANCE
Eligible Maintenance shall comprise maintenance of Eligible
Engines or Parts thereof required for the following reasons:
1. a Failure of a Part in such Eligible Engines;
2. foreign object damage caused by the ingestion of
birds, hailstones or runway gravel;
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[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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<Page>
3. an Airworthiness Directive issued by the applicable
Certification Authority;
and
4. maintenance as recommended by IAE.
D. ELIGIBLE MAINTENANCE COSTS
Eligible Maintenance Costs shall comprise:
i) PARTS COSTS which shall comprise the costs to
JetBlue of all Parts removed from Eligible Engines
during Eligible Maintenance which are unfit for
further service except Parts removed upon expiry of
their Limited Life and vendor proprietary accessories
and parts therein;
ii) LABOR COSTS which shall comprise direct shop labor
man hours actually incurred during Eligible
Maintenance valued at the labor rate established by
IAE for JetBlue; and
iii) OUTSIDE SERVICES COSTS which shall comprise costs
invoiced to JetBlue for Eligible Proprietary Repair
Maintenance undertaken by outside contractors
approved by IAE.
E. NET MAINTENANCE COST
Within thirty days following each anniversary of the
commencement of the Period of Guarantee, JetBlue will report
to IAE the Eligible Maintenance Costs incurred by JetBlue
during the preceding year together with a statement of any
contributions received from IAE or third parties towards such
Eligible Maintenance Costs. Within the following sixty days,
IAE and JetBlue will jointly calculate the Net Maintenance
Cost for that year making appropriate reductions for
contributions received by JetBlue from IAE and third parties
and for disallowed costs incurred by JetBlue on maintenance
undertaken contrary to IAE recommendations or at labor rates
exceeding the warranty labor rate established by IAE or
otherwise excluded from this Guarantee.
F. GUARANTEED MAINTENANCE COST
Within thirty days following each anniversary of the
commencement of the Period of Guarantee, JetBlue will report
to IAE the flight hours of Eligible Engines operated by
JetBlue in the preceding year. Within the following sixty
days, IAE and JetBlue will jointly calculate the
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Guaranteed Maintenance Cost for JetBlue for that year using
the following formula:
GMC = A x Escalated GCR
where:
A is the flight hours of Eligible Engines operated by
JetBlue in that year;
Escalated GCR is the Escalated Guaranteed Cost Rate
for that year;
and the Escalated Guaranteed Cost Rate for any year is
calculated by determining the arithmetic average of the
Guaranteed Cost Rates calculated for each month of that year
using the IAE MCG Escalation Formula attached to this Contract
as Appendix A for the base month of 1 January 2000.
G. ANNUAL STATEMENT
Within one hundred and twenty days following the second and
each subsequent anniversary of the commencement of the Period
of Guarantee, IAE will credit JetBlue's account with IAE an
amount equal to [****] of the difference between the sum of
the Net Maintenance Costs for each preceding year and the sum
of the Guaranteed Maintenance Costs for each preceding year.
If subsequent annual calculations show that on a cumulative
basis, a previous interim credit (or portion thereof) was
excessive, such excess amount shall be subject to repayment
which will be effected by IAE issuing a debit against
JetBlue's account with IAE.
III DEFINITIONS AND GENERAL CONDITIONS
All of the Definitions and General Conditions of the V2500 Engine and
Parts Service Policy shall apply to this Guarantee. Engines and Engine
Maintenance excluded by the General Conditions of the Policy shall be
excluded from this Guarantee except that Engine Maintenance resulting
from ingestion of birds, hailstones or runway gravel shall be included
as Eligible under this Guarantee.
IV SPECIFIC CONDITIONS
A. The Guaranteed Cost Rate is predicated on the use by JetBlue
of:
1. An average flight cycle of no less than [****] hours;
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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<Page>
2. Thrust levels which are derated an average of fifteen
percent (15%) for Takeoff relative to full Takeoff
ratings;
3. An average Aircraft utilization equal to or less than
3,800 flight hours per year;
4. An Aircraft and Engine delivery schedule in respect
of the Firm Aircraft, Leased Aircraft and Firm Spare
Engines as described in the Contract to which this
Guarantee is attached; and
5. An average ambient temperature at Takeoff which is no
greater than ISA + 3 DEG. C.
B. IAE reserves the right to make appropriate adjustments to the
Guaranteed Rate if there is, during the Period of Guarantee,
(a) a variation from the conditions upon which the Guaranteed
Rate is predicated, or (b) a discontinuation of operation by
JetBlue of any Engine or any V2500 powered Aircraft subsequent
to delivery to JetBlue, or (c) if JetBlue takes Option
Aircraft or Option Spare Engines.
C. In the event credits are issued under Section II, Paragraph F,
such credits will be dedicated to the procurement of parts
aimed at correction of the situations contributing to excess
Engine Maintenance Costs. Accordingly, JetBlue and IAE will
establish jointly the modifications or Parts to be selected,
and JetBlue will incorporate the changes into Eligible
Engines.
V EXCLUSION OF BENEFITS
The intent of this Guarantee is to provide specified benefits to
JetBlue as a result of the failure of Eligible Engines to achieve the
maintenance cost level stipulated in the Guarantee. It is not the
intent, however, to duplicate benefits provided to JetBlue under any
other applicable guarantee, sales warranty, service policy, or any
special benefit of any kind as a result of the same failure. Therefore,
the terms and conditions of this Guarantee notwithstanding, if the
terms of this Guarantee should make duplicate benefits available to
JetBlue from IAE or any third-party, JetBlue may elect to receive the
benefits under this Guarantee or under any of the other benefits
described above, but not both.
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APPENDIX A
MCG ESCALATION FORMULA
1. MSR for each month shall be calculated from MSRb as follows:
n
MSR=MSRb([****] L + [****]M + [****]E )[****]
-- -- --
Lo Mo Eo
Where:
MSR and MSRb have the definitions given to them in the FHA;
n = the number of months after the Base Month for which the
Maintenance Service Charge is being calculated.
Lo = the "Average Hourly Earnings of Aircraft Engine and Engine
Parts Production Workers" SIC Code 3724 published by the
Bureau of Labor Statistics in the U.S. Department of Labor for
the month preceding the base month by four months.
L = the "Average Hourly Earnings of Aircraft Engine and Engine
Parts Production Workers" SIC Code 3724 for the month
preceding the month of delivery or other date of determination
by four months.
Mo = the "Producer Price Index, Code 10, for Metals and Metal
Products" published by the Bureau of Labor Statistics in the
U.S. Department of Labor for the month preceding the base
month by four months.
M = the "Producer Price Index, Code 10, for Metals and Metal
Products" for the month preceding the month of delivery or
other date of determination by four months.
Eo = the "Producer Price Index, Code 5, for Fuel and Related
Products and Power" published by the Bureau of Labor
Statistics in the U.S. Department of Labor for the month
preceding the base month by four months.
E = the "Producer Price Index, Code 5, for Fuel and Related
Products and Power" for the month preceding the month of
delivery or other date of determination by four months.
2. The values of the factors [****] L and [****] M and [****] E
-- -- --
Lo Mo Eo
----------
[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
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respectively, shall be determined to the nearest fourth decimal place.
If the fifth decimal is five or more, the fourth decimal place shall be
raised to the next higher number.
3. If the U.S. Department of Labor ceases to publish the above statistics
or modifies the basis of their calculation, then IAE may substitute any
officially recognized and substantially equivalent statistics.
4. If the application of the above formula would result in a purchase
price, which is lower than the unit base price, the unit base price
shall be deemed to be the purchase price for such supplies.
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