Letter Agreement No. 3427-07



 Exhibit 10.4 

3427-07 
 United Air Lines, Inc. 

PO Box 60100 
 Chicago, IL 60601-0100 

 

			
	Subject:	  	Spare Parts Initial Provisioning
		
	Reference:	  	 a)      Purchase Agreement No. 3427 (Purchase Agreement) between The Boeing Company (Boeing) and
United Air Lines, Inc. (Customer) relating to Model 787-8 aircraft (Aircraft)

		
		  	 b)      Spare Parts General Terms Agreement No. 22 (Spares GTA) between Boeing and
Customer


 This letter agreement (Letter Agreement) is entered into on the date below and amends and supplements the Spares
GTA. All capitalized terms used but not defined in this Letter Agreement have the same meaning as in the Spares GTA, except for “Aircraft” which will have the meaning as defined in the Purchase Agreement. 

In order to define the process by which Boeing and Customer will (i) identify those Spare Parts and Standards critical to Customer’s successful
introduction of the Aircraft into service and its continued operation, (ii) place Orders under the provisions of the Spares GTA as supplemented by the provisions of this Letter Agreement for those Spare Parts and Standards, and
(iii) manage the return of certain of those Spare Parts which Customer does not use, the parties agree as follows. 
 1.
Definitions. 
 “Bulk Material” means composites, tapes, sealants, oil, compounds, and miscellaneous materials as specified in
the Maintenance Manual. 
 “Provisioning Data” means the documentation provided by Boeing to Customer, including but not limited to
the Recommended Spare Parts List (RSPL), identifying all Boeing initial provisioning requirements for the Aircraft. 
 “Provisioning
Items” means the Spare Parts and Standards identified by Boeing as initial provisioning requirements in support of the Aircraft, excluding special tools, ground support equipment (GSE) quick engine change (QEC) kits, engines and engine parts.

  


			
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 United Air Lines, Inc. 

3427-07 
  

 “Provisioning Products Guide” means the Boeing Manual D6-81834 entitled “Spares
Provisioning Products Guide”. 
 “QEC Kit” means the necessary contained parts to build up a spare engine as supplied by the
engine manufacturer to a line replaceable unit. 
 “Raw Material” means items such as miscellaneous extrusions, aluminum sheeting,
rubber sheeting, tubing, honeycomb, wire, etc. that are likely to be consumed during general repair and line maintenance of the aircraft 

“Standard Part” means expendable hardware items having a relatively high usage and application and is normally available from industrial supply
outlets, includes such items as nuts, bolts, screws, fasteners, rivets, resistors, capacitors, diodes, etc. 
 2. Phased Provisioning.

 2.1 Provisioning Products Guide. Prior to the initial provisioning meeting Boeing will furnish to Customer a copy of
the Provisioning Products Guide. 
 2.2 Initial Provisioning Meeting. On or about [CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] prior to delivery of the first Aircraft the parties will conduct an initial provisioning meeting, where the procedures, schedules, and requirements for training will
be established to accomplish phased provisioning of Spare Parts and Standards for the Aircraft in accordance with the Provisioning Products Guide. If the lead time from execution of the Purchase Agreement until delivery of the first Aircraft is less
than [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT], the initial provisioning meeting will be established as soon as reasonably possible after execution of the Purchase
Agreement. 
 2.3 Provisioning Data. During the initial provisioning meeting Customer will provide to Boeing the
operational parameter information described in Chapter 6 of the Provisioning Products Guide. After review and acceptance by Boeing of such Customer information, Boeing will prepare the Provisioning Data. Such Provisioning Data will be furnished to
Customer on or about ninety (90) days after Boeing finalizes the engineering drawings for the Aircraft. The Provisioning Data will be as complete as possible and will cover Provisioning 

 

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 United Air Lines, Inc. 

3427-07 
  

 
Items selected by Boeing for review by Customer for initial provisioning of Spare Parts and Standards for the Aircraft. Boeing will furnish to Customer revisions to the Provisioning Data
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] until approximately ninety (90) days following delivery of the last Aircraft or until the delivery configuration of each
of the Aircraft is reflected in the Provisioning Data, whichever is later. Upon mutual agreement during the initial provisioning meeting, Boeing will make its representative available to support Customer’s Spare Provisioning activities related
to major milestone events, starting with the initial implementation through the first heavy maintenance check for the first Aircraft. This will be accomplished by a combination of on site support at the Customer and/or dedicated focal at Boeing base
upon the requirements and statement of work associated with the activity. 
 2.4 Buyer Furnished Equipment (BFE) Provisioning
Data. Customer will provide or cause its BFE suppliers to provide to Boeing the BFE provisioning data in scope and format acceptable to Boeing, in accordance with the schedule established during the initial provisioning meeting. Boeing will
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]. 

2.5 [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] 

3. Purchase from Boeing of Spare Parts and Standards as Initial Provisioning for the Aircraft. 

3.1 Schedule. In accordance with schedules established during the initial provisioning meeting, Customer may place Orders for
Provisioning Items and any GSE, special tools, QEC kits, or engine spare parts which Customer determines it will initially require for maintenance, overhaul and servicing of the Aircraft and/or engines. 

3.2 Prices of Initial Provisioning Spare Parts. 

3.2.1 Boeing Spare Parts. The Provisioning Data will set forth the prices for those Provisioning Items, that are Boeing Spare
Parts, and such prices will be firm and remain in effect for ninety (90) days from the date the firm price is first quoted to Customer in the Provisioning Data. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT] 
  

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 United Air Lines, Inc. 

3427-07 
  

 3.2.2 Supplier Spare Parts. Boeing will provide supplier catalog prices in the
Provisioning Data for Provisioning Items that are Supplier Spare Parts. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] The price to Customer for any Supplier Spare Parts that
are Provisioning Items or for any items ordered for initial provisioning of GSE, special tools manufactured by suppliers QEC kits, or engine spare parts will be one hundred twelve percent (112%) of the supplier’s list price for such items.

 4. Delivery. 
 For Spare
Parts and Standards ordered by Customer in accordance with Article 3 of this Letter Agreement, Boeing will, insofar as reasonably possible, deliver to Customer such Spare Parts and Standards on dates reasonably calculated to conform to
Customer’s anticipated needs in view of the scheduled deliveries of the Aircraft. Customer and Boeing will agree upon the date to begin delivery of the provisioning Spare Parts and Standards ordered in accordance with this Letter Agreement.
Where appropriate, Boeing will arrange for shipment of such Spare Parts and Standards which are manufactured by suppliers directly to Customer from the applicable supplier’s facility. The routing and method of shipment for initial deliveries
and all subsequent deliveries of such Spare Parts and Standards will be as established at the initial provisioning meeting and thereafter by mutual agreement. 

5. Substitution for Obsolete Spare Parts. 

5.1 Obligation to Substitute Pre-Delivery. In the event that, prior to delivery of the first Aircraft, any Spare Part purchased by
Customer from Boeing in accordance with this Letter Agreement as initial provisioning for the Aircraft, is rendered obsolete or unusable due to the redesign (i) of the Aircraft, (ii) of any accessory, equipment or part thereof (other than
a redesign at Customer’s request) [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]. Boeing will deliver to Customer at no charge new and usable Spare Parts in substitution
for such obsolete or unusable Spare Parts and, upon such delivery, Customer will return the obsolete or unusable Spare Parts to Boeing. 

5.2 Delivery of Obsolete Spare Parts and Substitutes. Obsolete or unusable Spare Parts returned by Customer pursuant to this
Article 5 will be delivered to Boeing at its Seattle Distribution Center or such other destination as Boeing may reasonably designate. Spare Parts substituted for such returned obsolete or unusable Spare Parts will be delivered to Customer in
accordance with the Spares GTA. Boeing will pay the freight charges for the shipment from Customer to Boeing of any such obsolete or unusable Spare Part and for the shipment from Boeing to Customer of any such substitute Spare Part. 

 

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BOEING / UNITED PROPRIETARY 









 United Air Lines, Inc. 

3427-07 
  

 6. Repurchase of Provisioning Items. 

6.1 Obligation to Repurchase. During a period commencing one (1) year after delivery of the first Aircraft, and ending five
(5) years after such delivery, Boeing will, upon receipt of Customer’s written request and subject to the exceptions in Article 6.2, repurchase unused and undamaged Provisioning Items which (i) were recommended by Boeing in the
Provisioning Data as initial provisioning for the Aircraft, (ii) were purchased by Customer from Boeing, and (iii) are surplus to Customer’s needs. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT] 
 6.2 Exceptions. Boeing will not be obligated under Article 6.1 to repurchase
any of the following: (i) quantities of Provisioning Items which Customer purchased in excess of those quantities recommended by Boeing in the initial Provisioning Data for the Aircraft, (ii) QEC kits, bulk material kits, raw material
kits, service bulletin kits, Standards kits and components thereof (except those components listed separately in the Provisioning Data), (iii) Provisioning Items for which an Order was received by Boeing more than five (5) months after
delivery of the last Aircraft , (iv) Provisioning Items which have become obsolete or have been replaced by other Provisioning Items as a result of Customer’s modification of the Aircraft, and (v) Provisioning Items which become
excess as a result of a Customer originated change in Customer’s operating parameters, as provided to Boeing pursuant to the initial provisioning meeting and which were the basis of Boeing’s initial provisioning recommendations for the
Aircraft. 
 6.3 Notification and Format. Customer will notify Boeing, in writing when Customer desires to return
Provisioning Items under the provisions of this Article 6. Customer’s notification will include a detailed summary, in part number sequence, of the Provisioning Items Customer desires to return. Such summary will be in the form of listings,
data files or other media as may be mutually agreed between Boeing and Customer and will include part number, nomenclature, purchase order number, purchase order date and quantity to be returned. Within five (5) business days after receipt of
Customer’s notification, Boeing will advise Customer in writing when Boeing’s review of such summary will be completed. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] 
 6.4 Review and Acceptance by Boeing. Upon completion of Boeing’s thirty (30) business day
review of any detailed summary submitted by Customer pursuant to Article 6.3, Boeing will issue to Customer a Material 

 

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 United Air Lines, Inc. 

3427-07 
  

 
Return Authorization (MRA) for those Provisioning Items Boeing agrees are eligible for repurchase in accordance with this Article 6. Boeing will advise Customer of the reason that any
Provisioning Item included in Customer’s detailed summary is not eligible for return. Boeing’s MRA will state the date and shipping provisions by which Provisioning Items listed in the MRA must be redelivered to Boeing, and Customer will
arrange for shipment of such Provisioning Items accordingly. 
 6.5 Price and Payment. The price of each Provisioning
Item repurchased by Boeing pursuant to this Article 6 will be an amount equal to 100% of the original invoice price thereof except that the repurchase price of Provisioning Items purchased pursuant to Article 3.2.2 will not include Boeing’s 12%
handling charge. Boeing will pay the repurchase price by issuing a credit memorandum in favor of Customer which may be applied against amounts due Boeing for the purchase of Spare Parts or Standards. 

6.6 Delivery of Repurchased Provisioning Items. Provisioning Items repurchased by Boeing pursuant to this Article 6 will be
delivered to Boeing F.O.B. at its Seattle Distribution Center or such other destination as Boeing may reasonably designate. 
 7. Title and
Risk of Loss. 
 Title and risk of loss of any Spare Parts or Standards delivered to Customer by Boeing in accordance with this Letter
Agreement will pass from Boeing to Customer in accordance with the applicable provisions of the Spares GTA. Title to and risk of loss of any Spare Parts or Standards returned to Boeing by Customer in accordance with this Letter Agreement will pass
to Boeing upon delivery of such Spare Parts or Standards to Boeing in accordance with the provisions of Article 5.2 or Article 6.6, herein, as appropriate. 

8. Termination for Excusable Delay. 
 In
the event of termination of the Purchase Agreement pursuant to Article 7 of the AGTA with respect to any Aircraft, such termination will, if Customer so requests by written notice received by Boeing within fifteen (15) days after such
termination, also discharge and terminate all obligations and liabilities of the parties as to any Spare Parts or Standards which Customer had ordered pursuant to the provisions of this Letter Agreement as initial provisioning for such Aircraft and
which are undelivered on the date Boeing receives such written notice. 
  

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 United Air Lines, Inc. 

3427-07 
  

 9. Order of Precedence. 

In the event of any inconsistency between the terms of this Letter Agreement and the terms of any other provisions of the Spares GTA, the terms of this
Letter Agreement will control. 
 10. Customer Support General Terms Agreement 

Boeing and Customer will make reasonable effort to execute the Customer Services General Terms Agreement (CSGTA) no later than December 31, 2010.

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 P.A. No. 3427 

Spare_Parts_Initial_Provisioning 

BOEING / UNITED PROPRIETARY 









 United Air Lines, Inc. 

3427-07 
  


			
	Very truly yours,
	
	THE BOEING COMPANY
		
	By	 	 /s/ Nobuko Wiles

		
	Its	 	Attorney-In-Fact
	
	ACCEPTED AND AGREED TO this
		
	Date:	 	February 19, 2010
	
	UNITED AIR LINES, INC.
		
	By	 	 /s/ Kathryn A. Mikells

		
	Its	 	Executive Vice President and Chief Financial Officer


 

 P.A. No. 3427 

Spare_Parts_Initial_Provisioning 

BOEING / UNITED PROPRIETARY 









 Attachment A to 3427-07 
  


 1. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] 
 2. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] 
  

 P.A. No. 3427 

Spare_Parts_Initial_Provisioning 

BOEING / UNITED PROPRIETARY