Exhibit 10.3(r)
IAE PROPRIETARY INFORMATION
CONFIDENTIAL
Exhibit 10.3(r)
(INTERNATIONAL AERO ENGINES LGO) [y01986y0198601.gif]
IAE Building
400 Main Street
East Hartford, CT 06108 USA
June 03, 2009
JetBlue Airways Corporation
118-29 Queens Blvd.
Forest Hills, NY 11375
Attention: Senior Vice President Treasurer

Subject:   Side Letter No. 27 to the V2500 General Terms of Sale Agreement
between JetBlue Airways Corporation and IAE International Aero Engines AG dated
May 4, 1999.

Dear Sir:
We refer to the General Terms of Sale Agreement dated May 4, 1999 between IAE
International Aero Engines AG (“IAE”) and JetBlue Airways Corporation
(“JetBlue”), as amended from time to time, such contract being hereinafter
referred to as the “Agreement”.
Unless expressly stated to the contrary, and to the extent possible, capitalized
terms used in this Side Letter Agreement No. 27 (“Side Letter No. 27”) shall
have the same meaning given to them in the Agreement. In the event of a conflict
between the terms and provisions of this Side Letter No. 27 and those of the
Agreement, this Side Letter No. 27 shall govern.
NOW, THEREFORE, the parties hereby as follows:

1.   Revision to Exhibits B-1 and Exhibit B-2

  1.1   The Parties hereby agree that Exhibit B-1 to the Agreement, Aircraft
Delivery Schedules, is hereby deleted in its entirety and replaced by the
revised delivery schedule attached as Appendix 1 hereto which captures the
amendments as set forth in Clause 2 below.     1.2   The Parties hereby agree
that Exhibit B-2 to the Agreement, Purchased Items, Price, Escalation Formula
and Delivery, is hereby deleted in its entirety and replaced by the revised
delivery schedule attached as Appendix 2 hereto which captures the amendments as
set forth in Clause 2 and Clause 3 below.

2.   Escalation Formula Clarification

  2.1   Effective as of May 1, 2006, the labor indices used in the escalation
formulae in Exhibit B-2 shall be as follows:

  2.1.1   The labor index used for the calculation of the Labor Ratio in
Escalation Formula I of Exhibit B-2, the “Average Hourly Earnings of Aircraft
Engine and Engine Parts Productions Workers SIC Code 3724”, is superseded by the
“North American Industry Classification System (NAICS) Wages and Salaries for
Aircraft Manufacturing (NAICS Code 336411), CIU2023211000000I”.

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IAE PROPRIETARY INFORMATION

  2.1.2   The labor index used for the calculation of the Labor Ratio in
Escalation Formula II of Exhibit B-2, the “Employment Cost Index (ECI) Wages and
Salaries for Aircraft Manufacturing SIC Code 3721”, is superseded by the “North
American Industry Classification System (NAICS) Wages and Salaries for Aircraft
Manufacturing (NAICS Code 336411), CIU2023211000000I”.

  2.2   Material indices WPU03 through WPU15 shall be used for the calculation
of the Material Ratio in Escalation Formula II of Exhibit B-2.

3.   Spare Engine Deferral

  3.1   The delivery of Spare Engine No. 19 (as listed in Exhibit B-2) is
deferred from [***], 2009 and rescheduled for delivery in [***], 2009.     3.2  
The deferral of the delivery of Spare Engine No. 19 from [***], 2009 to [***],
2009, as detailed above, [***], if any.     3.3   If JetBlue takes delivery of
Spare Engine No. 19 in [***] , 2009, the Purchase Price balance for Spare Engine
No. 19 shall only be escalated to [***] , 2009 in accordance with Formula I
contained in Exhibit B-2 to the Agreement. In the event that JetBlue takes
delivery of Spare Engine No. 19 after [***] , 2009, and if the delay is not
caused or requested by IAE, then the Purchase Price balance for Spare Engine
No. 19 shall be escalated to the month of delivery in accordance with the
Formula I contained in Exhibit B-2 to the Agreement.

Except as expressly amended by this Side Letter No. 27, all provisions of the
Agreement (as amended from time to time by various side letters and amendments)
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/ Debarshi Mandal
  /s/ Mark D. Powers
 
   
Name
  Name
 
   
Commercial Manager
  SVP Treasurer
 
   
Title
  Title
 
   
6/5/09
  6/4/09
 
   
Date
  Date

 

[***]   Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 2 of 13

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IAE PROPRIETARY INFORMATION
APPENDIX 1
Exhibit B-1
Aircraft Delivery Schedules
As of May 2009
Glossary Notes:

•   Delivered Aircraft are indicated by Italics typeface   •   Existing Firm
Aircraft are indicated by normal typeface   •   Incremental Firm Aircraft are
indicated by an asterisk (*)   •   2004 Incremental Aircraft, including all 2004
Incremental Aircraft and all Option Aircraft are indicated by bold typeface.   •
  Applicable escalation formulae, indicated for the calculation of Fleet
Introductory Assistance credits, are in accordance with Side Letter 13 to the
Agreement.

                  Rank No.   Aircraft   Month   Applicable Escalation   Year  
No. 1   Firm Aircraft   [***]   Formula I   2000 No. 2   Firm Aircraft   [***]  
Formula I   2000 No. 3   Firm Aircraft   [***]   Formula I   2000 No. 4   Firm
Aircraft   [***]   Formula I   2000 No. 5   Firm Aircraft   [***]   Formula I  
2000 No. 6   Firm Aircraft   [***]   Formula I   2000   No. 7   Firm Aircraft  
[***]   Formula I   2001 No. 8   Firm Aircraft   [***]   Formula I   2001 No. 9
  Firm Aircraft   [***]   Formula I   2001 No. 10   Firm Aircraft   [***]  
Formula I   2001 No. 11   Firm Aircraft   [***]   Formula I   2001 No. 12   Firm
Aircraft   [***]   Formula I   2001 No. 13   Firm Aircraft   [***]   Formula I  
2001   No. 14   Firm Aircraft   [***]   Formula I   2002 No. 15   Firm Aircraft
  [***]   Formula I   2002 No. 16   Firm Aircraft   [***]   Formula I   2002
No. 17   Firm Aircraft   [***]   Formula I   2002 No. 18   Firm Aircraft   [***]
  Formula I   2002 No. 19   Firm Aircraft   [***]   Formula I   2002 No. 20  
Firm Aircraft   [***]   Formula I   2002 No. 21   Firm Aircraft   [***]  
Formula I   2002 No. 22   Firm Aircraft   [***]   Formula I   2002 No. 23   Firm
Aircraft   [***]   Formula I   2002 No. 24   Firm Aircraft   [***]   Formula I  
2002 No. 25   Firm Aircraft   [***]   Formula I   2002 No. 26   Firm Aircraft  
[***]   Formula I   2002

 

[***]   Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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IAE PROPRIETARY INFORMATION

                  Rank No.   Aircraft   Month   Applicable Escalation   Year  
No. 27   Firm Aircraft   [***]   Formula I   2002 No. 28   Firm Aircraft   [***]
  Formula I   2002 No. 29   Firm Aircraft   [***]   Formula I   2002   No. 30  
Firm Aircraft   [***]   Formula I   2003 No. 31   Firm Aircraft   [***]  
Formula I   2003 No. 32   Firm Aircraft   [***]   Formula I   2003 No. 33   Firm
Aircraft   [***]   Formula I   2003 No. 34   Firm Aircraft   [***]   Formula I  
2003 No. 35   Firm Aircraft   [***]   Formula I   2003 No. 36   Firm Aircraft  
[***]   Formula I   2003 No. 37   Firm Aircraft   [***]   Formula I   2003
No. 38   Firm Aircraft   [***]   Formula I   2003 No. 39   Firm Aircraft   [***]
  Formula I   2003 No. 40   Firm Aircraft   [***]   Formula I   2003 No. 41  
Firm Aircraft   [***]   Formula I   2003 No. 42   Firm Aircraft   [***]  
Formula I   2003 No. 43   Firm Aircraft   [***]   Formula I   2003 No. 44   Firm
Aircraft   [***]   Formula I   2003   No. 45   Firm Aircraft   [***]   Formula I
  2004 No. 46   Firm Aircraft   [***]   Formula I   2004 No. 47   Firm Aircraft
  [***]   Formula I   2004 No. 48   Firm Aircraft   [***]   Formula I   2004
No. 49   Firm Aircraft   [***]   Formula I   2004 No. 50   Firm Aircraft   [***]
  Formula I   2004 No. 51   Firm Aircraft   [***]   Formula I   2004 No. 52  
Firm Aircraft   [***]   Formula I   2004 No. 53   Firm Aircraft   [***]  
Formula I   2004 No. 54   Firm Aircraft   [***]   Formula I   2004 No. 55   Firm
Aircraft   [***]   Formula I   2004* No. 56   Firm Aircraft   [***]   Formula I
  2004 No. 57   Firm Aircraft   [***]   Formula I   2004 No. 58   Firm Aircraft
  [***]   Formula I   2004 No. 59   Firm Aircraft   [***]   Formula I   2004*  
No. 60   Firm Aircraft   [***]   Formula I   2005 No. 61   Firm Aircraft   [***]
  Formula I   2005 No. 62   Firm Aircraft   [***]   Formula I   2005* No. 63  
Firm Aircraft   [***]   Formula I   2005 No. 64   Firm Aircraft   [***]  
Formula I   2005 No. 65   Firm Aircraft   [***]   Formula I   2005 No. 66   Firm
Aircraft   [***]   Formula I   2005 No. 67   Firm Aircraft   [***]   Formula I  
2005* No. 68   Firm Aircraft   [***]   Formula I   2005

 

[***]   Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 4 of 13

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IAE PROPRIETARY INFORMATION

                  Rank No.   Aircraft   Month   Applicable Escalation   Year  
No. 69   Firm Aircraft   [***]   Formula I   2005 No. 70   Firm Aircraft   [***]
  Formula I   2005 No. 71   Firm Aircraft   [***]   Formula I   2005* No. 72  
Firm Aircraft   [***]   Formula I   2005 No. 73   Firm Aircraft   [***]  
Formula I   2005 No. 74   Firm Aircraft   [***]   Formula I   2005* No. 75  
Firm Aircraft   [***]   Formula I   2005*   No. 76   Firm Aircraft   [***]  
Formula II   2006 No. 77   Firm Aircraft   [***]   Formula I   2006 No. 78  
Firm Aircraft   [***]   Formula I   2006* No. 79   Firm Aircraft   [***]  
Formula I   2006* No. 80   Firm Aircraft   [***]   Formula I   2006 No. 81  
Firm Aircraft   [***]   Formula I   2006* No. 82   Firm Aircraft   [***]  
Formula I   2006 No. 83   Firm Aircraft   [***]   Formula I   2006* No. 84  
Firm Aircraft   [***]   Formula I   2006* No. 85   Firm Aircraft   [***]  
Formula I   2006 No. 86   Firm Aircraft   [***]   Formula I   2006* No. 87  
Firm Aircraft   [***]   Formula I   2006* No. 88   Firm Aircraft   [***]  
Formula I   2006 No. 89   Firm Aircraft   [***]   Formula I   2006* No. 90  
Firm Aircraft   [***]   Formula I   2006* No. 91   Firm Aircraft   [***]  
Formula II   2006   No. 92   Firm Aircraft   [***]   Formula I   2007 No. 93  
Firm Aircraft   [***]   Formula I   2007 No. 94   Firm Aircraft   [***]  
Formula II   2007 No. 95   Firm Aircraft   [***]   Formula I   2007 No. 96  
Firm Aircraft   [***]   Formula I   2007 No. 97   Firm Aircraft   [***]  
Formula I   2007 No. 98   Firm Aircraft   [***]   Formula I   2007* No. 99  
Firm Aircraft   [***]   Formula I   2007* No. 100   Firm Aircraft   [***]  
Formula I   2007* No. 101   Firm Aircraft   [***]   Formula I   2007* No. 102  
Firm Aircraft   [***]   Formula I   2007* No. 103   Firm Aircraft   [***]  
Formula I   2007*   No. 104   Firm Aircraft   [***]   Formula I   2008* No. 105
  Firm Aircraft   [***]   Formula I   2008* No. 106   Firm Aircraft   [***]  
Formula I   2008* No. 107   Firm Aircraft   [***]   Formula I   2008* No. 108  
Firm Aircraft   [***]   Formula I   2008* No. 109   Firm Aircraft   [***]  
Formula I   2008* No. 110   Firm Aircraft   [***]   Formula I   2008*

 

[***]   Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 5 of 13

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IAE PROPRIETARY INFORMATION

                  Rank No.   Aircraft   Month   Applicable Escalation   Year  
No. 111   Firm Aircraft   [***]   Formula I   2008* No. 112   Firm Aircraft  
[***]   Formula I   2008* No. 113   Firm Aircraft   [***]   Formula I   2008*
No. 114   Firm Aircraft   [***]   Formula I   2008* No. 115   Firm Aircraft  
[***]   Formula I   2008*   No. 116   Firm Aircraft   [***]   Formula I   2009*
No. 117   Firm Aircraft   [***]   Formula I   2009* No. 118   Firm Aircraft  
[***]   Formula I   2009* No. 119   Firm Aircraft   [***]   Formula I   2010*
No. 120   Firm Aircraft   [***]   Formula I   2010* No. 121   Firm Aircraft  
[***]   Formula I   2010* No. 122   Firm Aircraft   Year   Formula I   2011*
No. 123   Firm Aircraft   Year   Formula I   2011* No. 124   Firm Aircraft  
Year   Formula I   2011* No. 125   Firm Aircraft   Year   Formula I   2011*
No. 126   Firm Aircraft   Year   Formula I   2011*   No. 127   Firm Aircraft  
Year   Formula I   2012* No. 128   Firm Aircraft   Year   Formula I   2012*
No. 129   Firm Aircraft   Year   Formula I   2012* No. 130   Firm Aircraft  
Year   Formula I   2012* No. 131   Firm Aircraft   Year   Formula I   2012*
No. 132   Firm Aircraft   Year   Formula I   2012* No. 133   Firm Aircraft  
Year   Formula II   2012 No. 134   Firm Aircraft   Year   Formula II   2012
No. 135   Firm Aircraft   Year   Formula II   2012 No. 136   Firm Aircraft  
Year   Formula II   2012 No. 137   Firm Aircraft   Year   Formula I   2012*
No. 138   Firm Aircraft   Year   Formula I   2012* No. 139   Firm Aircraft  
Year   Formula I   2012*   No. 140   Firm Aircraft   Year   Formula I   2013*
No. 141   Firm Aircraft   Year   Formula I   2013* No. 142   Firm Aircraft  
Year   Formula I   2013* No. 143   Firm Aircraft   Year   Formula II   2013
No. 144   Firm Aircraft   Year   Formula II   2013 No. 145   Firm Aircraft  
Year   Formula I   2013* No. 146   Firm Aircraft   Year   Formula II   2013
No. 147   Firm Aircraft   Year   Formula II   2013 No. 148   Firm Aircraft  
Year   Formula II   2013 No. 149   Firm Aircraft   Year   Formula II   2013
No. 150   Firm Aircraft   Year   Formula II   2013 No. 151   Firm Aircraft  
Year   Formula II   2013

 

[***]   Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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IAE PROPRIETARY INFORMATION

                  Rank No.   Aircraft   Month   Applicable Escalation   Year  
No. 152   Firm Aircraft   Year   Formula II   2013   No. 153   Firm Aircraft  
Year   Formula I   2014* No. 154   Firm Aircraft   Year   Formula II   2014
No. 155   Firm Aircraft   Year   Formula II   2014 No. 156   Firm Aircraft  
Year   Formula II   2014 No. 157   Firm Aircraft   Year   Formula II   2014
No. 158   Firm Aircraft   Year   Formula II   2014 No. 159   Firm Aircraft  
Year   Formula II   2014   No. 160   Firm Aircraft   Year   Formula II   2014
No. 161   Firm Aircraft   Year   Formula II   2014 No. 162   Firm Aircraft  
Year   Formula I   2014* No. 163   Firm Aircraft   Year   Formula II   2014
No. 164   Firm Aircraft   Year   Formula II   2014   No. 165   Firm Aircraft  
Year   Formula II   2015 No. 166   Firm Aircraft   Year   Formula II   2015
No. 167   Firm Aircraft   Year   Formula II   2015 No. 168   Firm Aircraft  
Year   Formula II   2015 No. 169   Firm Aircraft   Year   Formula I   2015*
No. 170   Firm Aircraft   Year   Formula I   2015* No. 171   Firm Aircraft  
Year   Formula I   2015* No. 172   Firm Aircraft   Year   Formula I   2015*
No. 173   Firm Aircraft   Year   Formula I   2015*

2004 Option Aircraft

                  Rank No.   Aircraft   Month   Applicable Escalation   Year  
No. 174   Option Aircraft   [***]Qtr   Formula II   2011 No. 175   Option
Aircraft   [***] Qtr   Formula II   2011 No. 176   Option Aircraft   [***] Qtr  
Formula II   2011   No. 177   Option Aircraft   [***] Qtr   Formula II   2012
No. 178   Option Aircraft   [***] Qtr   Formula II   2012 No. 179   Option
Aircraft   [***] Qtr   Formula II   2012 No. 180   Option Aircraft   [***] Qtr  
Formula II   2012   No. 181   Option Aircraft   [***] Qtr   Formula II   2013
No. 182   Option Aircraft   [***] Qtr   Formula II   2013 No. 183   Option
Aircraft   [***] Qtr   Formula II   2013 No. 184   Option Aircraft   [***] Qtr  
Formula II   2013 No. 185   Option Aircraft   [***] Qtr   Formula II   2013
No. 186   Option Aircraft   [***] Qtr   Formula II   2013

 

[***]   Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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IAE PROPRIETARY INFORMATION

                  Rank No.   Aircraft   Month   Applicable Escalation   Year  
No. 187   Option Aircraft   [***]Qtr   Formula II   2013   No. 188   Option
Aircraft   [***] Qtr   Formula II   2014 No. 189   Option Aircraft   [***] Qtr  
Formula II   2014 No. 190   Option Aircraft   [***] Qtr   Formula II   2014
No. 191   Option Aircraft   [***] Qtr   Formula II   2014 No. 192   Option
Aircraft   [***] Qtr   Formula II   2015 No. 193   Option Aircraft   [***] Qtr  
Formula II   2015 No. 194   Option Aircraft   [***] Qtr   Formula II   2015
No. 195   Option Aircraft   [***] Qtr   Formula II   2015

Option Aircraft to be delivered after December 31, 2011 are subject to IAE and
Airbus SAS concurrence on extension of the current purchase agreement between
the parties.
Leased Aircraft

          Year   Number   Delivery Dates
1999
  1   1 [***]
2000
  3   1 [***]1 [***],1 [***]
2001
  4   1 [***],1 [***],1 [***]
2003
  1   1 [***]
2004
  1   1 [***]

 

[***]   Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 8 of 13

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IAE PROPRIETARY INFORMATION
APPENDIX 2
Exhibit B-2
Purchased Items, Price, Escalation Formula and Delivery
As of May 2009
Glossary Notes:

•   Delivered Spare Engines are indicated by Italics typeface   •   Applicable
escalation formulae are in accordance with Side Letter 13 to the Agreement

                              Basic Contract                     Price          
          U.S Dollars       Applicable     Rank No.   Purchased Item   (January
2003)   Qty   Escalation   Delivery Date   No. 1   V2527-A5 Spare Engine:  
$[***]   1   Formula I   [***]/99 No. 2   V2527-A5 Spare Engine:   $[***]   1  
Formula I   [***]/00 No. 3   V2527-A5 Spare Engine:   $[***]   1   Formula I  
[***]/01 No. 4   V2527-A5 Spare Engine:   $[***]   1   Formula I   [***]/02
No. 5   V2527-A5 Spare Engine:   $[***]   1   Formula I   [***]/02 No. 6  
V2527-A5 Spare Engine:   $[***]   1   Formula I   [***]/03 No. 7   V2527-A5
Spare Engine:   $[***]   1   Formula I   [***]/04 No. 8   V2527-A5 Spare Engine:
  $[***]   1   Formula I   [***]/05 No. 9   V2527-A5 Spare Engine:   $[***]   1
  Formula I   [***]/05 No. 10   V2527-A5 Spare Engine:   $[***]   1   Formula II
  [***]/06 No. 11   V2527-A5 Spare Engine:   $[***]   1   Formula I   [***]/06
No. 12   V2527-A5 Spare Engine:   $[***]   1   Formula II   [***]/07 No. 13  
V2527-A5 Spare Engine:   $[***]   1   Formula I   [***]/07 No. 14   V2527-A5
Spare Engine:   $[***]   1   Formula I   [***]/07 No. 15   V2527-A5 Spare
Engine:   $[***]   1   Formula II   [***]/07 No. 16   V2527-A5 Spare Engine:  
$[***]   1   Formula I   [***]/07 No. 17   V2527-A5 Spare Engine:   $[***]   1  
Formula I   [***]/08 No. 18   V2527-A5 Spare Engine:   $[***]   1   Formula I  
[***]/08 No. 19   V2527-A5 Spare Engine:   $[***]   1   Formula I   [***]/09
No. 20   V2527-A5 Spare Engine:   $[***]   1   Formula I   [***]/10 No. 21  
V2527-A5 Spare Engine:   $[***]   1   Formula II   [***]/10 No. 22   V2527-A5
Spare Engine:   $[***]   1   Formula I   [***]/10 No. 23   V2527-A5 Spare
Engine:   $[***]   1   Formula I   [***]/11 No. 24   V2527-A5 Spare Engine:  
$[***]   1   Formula II   [***]/11 No. 25   V2527-A5 Spare Engine:   $[***]   1
  Formula I   [***]/11 No. 26   V2527-A5 Spare Engine:   $[***]   1   Formula I
  [***]/11 No. 27   V2527-A5 Spare Engine:   $[***]   1   Formula I   [***]/12
No. 28   V2527-A5 Spare Engine:   $[***]   1   Formula I   [***]/12

 

[***]   Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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IAE PROPRIETARY INFORMATION

                                                      Basic Contract            
                      Price                                   U.S Dollars      
      Applicable         Rank No.   Purchased Item     (January 2003)     Qty  
  Escalation     Delivery Date    
TOTAL
                    28                  

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IAE PROPRIETARY INFORMATION
EXHIBIT B-2
ESCALATION FORMULA I

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 “North American Industry Classification System (NAICS) Wages and
Salaries for Aircraft Manufacturing (NAICS Code 336411), CIU2023211000000I” as
published quarterly by the Bureau of Labor Statistics, U.S. Department of Labor
for the Labor for the month preceding the base month by four months.       L =
the “North American Industry Classification System (NAICS) Wages and Salaries
for Aircraft Manufacturing (NAICS Code 336411), CIU2023211000000I” as published
quarterly by the Bureau of Labor Statistics, U.S. Department of Labor 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 base month 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 base month by four
months.

                     
The values of the factors [***]
  L   + [***]   M   + [***]   E
 
  Lo       Mo       Eo

    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.       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.  
    The Basic Contract Prices contained in this Exhibit B are subject to
escalation from a Base Month of January 2003 to the month of delivery using
using Lo, Mo and Eo values for September 2002.       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.

 

[***]   Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 11 of 13

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IAE PROPRIETARY INFORMATION
ESCALATION FORMULA II

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:

         
Pi
  =   (Pb+F) x CPI where:
 
       
Pi
  =   the invoiced purchase price or escalated sum rounded to the nearest U.S.
Dollar.
 
       
Pb
  =   unit base price or other sum.
 
       
F
  =   [***] (N)(Pb)
 
       
N
  =   the calendar year of scheduled delivery or other date of determination
minus 2003
 
       
CPI
  =   [***] (L) + [***] (M)
 
       
L
  =   Labor Ratio defined below
 
       
M
  =   Material Ratio defined below

    IAE’s Composite Price Index (“CPI”) is the sum of [***] percent of the Labor
ratio and [***] percent of the Material Ratio, with the sum rounded to the
nearest ten thousandth.       The quarterly value published for the Employment
Cost Index will be deemed to apply to each month of the quarter.       The Labor
Ratio is the “North American Industry Classification System (NAICS) Wages and
Salaries for Aircraft Manufacturing (NAICS Code 336411), CIU2023211000000I” as
published quarterly by the Bureau of Labor Statistics, U.S. Department of Labor
for the arithmetic average of the fifth, sixth and seventh months (rounded to
the nearest tenth) preceding the month of scheduled delivery for each
engine/equipment; divided by the value of “North American Industry
Classification System (NAICS) Wages and Salaries for Aircraft Manufacturing
(NAICS Code 336411), CIU2023211000000I” for the arithmetic average of the fifth,
sixth and seventh months (rounded to the nearest tenth) preceding the Base
Month. To be clear the quarterly value of CIU2023211000000I will apply to each
month of a given quarter.       The Material Ratio is the “Producer Price Index,
Industrial Commodities, WPU03thru15”, as published monthly by the Bureau of
Labor Statistics, U.S. Department of Labor, for the arithmetic average of the
fifth, sixth and seventh months (rounded to the nearest tenth) preceding the
month of scheduled delivery for each engine/equipment; divided by the value for
Industrial Commodities for the arithmetic average of the fifth, sixth and
seventh months (rounded to the nearest tenth) preceding the Base Month.      
For a given month, the escalation shall be computed by using the applicable
Index value, which the Bureau has published as the time of delivery or other
date of determination.   2.   If the U.S. Department of Labor changes the base
year for determination of the Index values as defined above, such re-based
values will be incorporated in the escalation calculation.   3.   If the U.S.
Department of Labor revises the methodology used for the determination of the
values to be used to determine the CPI or, for any reason, has not released
values needed to determine the CPI, IAE, in its sole discretion, shall select a
substitute for such values from data published by the Bureau of Labor Statistics
or otherwise make revisions to the escalation formula such that the escalation
will as closely as possible approximate the result that would have been attained
by continuing the use of the original escalation formula and values as they may
have fluctuated during the applicable time period.

 

[***]   Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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IAE PROPRIETARY INFORMATION

4.   The invoiced purchase price, which in no event shall be less than the unit
base price, shall be the final price. If the calculated sum of L + M is less
than 1.0000, then the value of the sum is adjusted to 1.0000.

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