Exhibit 10.1 Amendment 11 to Purchase Agreement DCT0142004


    EXHIBIT
      10.1

    CONFIDENTIAL
      TREATMENT

    REQUESTED
      PURSUANT TO RULE 24b-2

    
Certain
      portions of this exhibit have been omitted
      pursuant to a request for confidential treatment under Rule 24b-2 of the
      Securities Exchange Act of 1934. The omittted materials have been filed
      separately with the Securities and Exchange Commission.

    CONFIDENTIAL


    AMENDMENT
      No. 11 TO PURCHASE AGREEMENT DCT-014/2004

    


    


    This
      Amendment No. 11 to Purchase Agreement DCT-014/2004, dated as of August 30,
      2005
      (“Amendment No. 11”) relates to the Purchase Agreement DCT-014/2004 (the
“Purchase Agreement”) executed between Embraer - Empresa Brasileira de
      Aeronáutica S.A. (“Embraer”) and Republic Airline Inc. (“Buyer”) dated March 19,
      2004 as amended from time to time (collectively referred to herein as
“Agreement”). This Amendment No. 11 is between Embraer and Buyer, collectively
      referred to herein as the “Parties”.

    


    This
      Amendment No. 11 sets forth additional agreements between the parties in regard
      to various model ERJ 170-100SU aircraft which will be operated by Buyer or
      a
      Sibling (as defined in Section 14.2 of the Purchase Agreement) and which were
      either delivered or to be delivered pursuant to Purchase Agreement DCT-021/03
      (the “US Airways Purchase Agreement”), between Embraer and US Airways Group,
      Inc. ("US Airways Group").

    


    Except
      as
      otherwise provided for herein all terms of the Purchase Agreement shall remain
      in full force and effect. All capitalized terms used in this Amendment No.
      11,
      which are not defined herein shall have the meaning given in the Purchase
      Agreement. In the event of any conflict between this Amendment No. 11 and the
      Purchase Agreement the terms, conditions and provisions of this Amendment No.
      11
      shall control. 

    


    WHEREAS,
      according to Buyer, pursuant to the terms and conditions of the Aircraft
      Transaction Agreement between Republic Airways Holdings Inc. (“Holdings”) and US
      Airways, Inc. (“US Airways”), Holdings has agreed to cause Buyer or a Sibling to
      (i) to accept delivery from Embraer of three (3) new ERJ 170-100 SU aircraft
      (the “New US Airways Aircraft”) pursuant to lease agreements with an owner
      trustee on behalf of an affiliate of General Electric Capital Corporation
      ("GECC"), immediately following the owner trustee's purchase of such aircraft
      pursuant to an assignment of the US Airways Purchase Agreement; (ii) acquire
      ten
      (10) used ERJ 170-100 SU aircraft (the “Owned Aircraft”) from US Airways,
[*];
      and
      (iii) assume the leases from US Airways under which fifteen (15) additional
      used
      ERJ 170-100 SU aircraft (“GECC Aircraft”) are currently leased by an owner
      trustee for an affiliate of GECC to US Airways.

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    WHEREAS,
      Buyer
      and Embraer have agreed that the New US Airways Aircraft, the Owned Aircraft
      and
      the GECC Aircraft shall be incorporated in the Purchase Agreement pursuant
      to
      the terms and conditions specified in this Amendment No. 11. 

    


    NOW,
      THEREFORE,
      for
      good and valuable consideration which is hereby acknowledged Embraer and Buyer
      hereby agree as follows:

    


    
      	1.  	
              Aircraft
                Serial
                Numbers and Registration
                Marks

            


    

    


    
      	1.1  	
              The
                New
                US
                Airways Aircraft are specifically identified as
                follows:

            


    

    


    
      	 	
               

              Serial
                Number

               

            	
               

              Registration
                Mark

               

            
	
               

              1)

               

            	
              [*]

            	
              [*]

            
	
               

              2)

               

            	
              [*]

            	
              [*]

            
	
               

              3)

               

            	
              [*]

            	
              [*]

            


    

    


    
      	1.2  	
              The
                Owned Aircraft
                and their delivery dates from Embraer to US Airways are specifically
                identified as follows:

            


    

     

    
      	 	
               

              Serial
                Number

               

            	
               

              Registration
                Mark

               

            	
               

              Delivery
                Date from Embraer

               

            
	
               

              1)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              2)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              3)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              4)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              5)

               

            	
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              6)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              7)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              8)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              9)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              10)

               

            	
              [*]

            	
              [*]

            	
              [*]

            


    

    


    
      	1.3  	
              The
                GECC Aircraft
                and their delivery dates from Embraer to US Airways
                are specifically identified as
                follows:

            


    

    


    
      	 	
               

              Serial
                Number

               

            	
               

              Registration
                Mark

               

            	
               

              Delivery
                Date from Embraer

               

            
	
               

              1)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              2)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              3)

               

            	
              [*]

            	
              [*]

            	
              [*]

            


    

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              4)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              5)

               

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

              6)

               

            	
              [*]

            	
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              7)

               

            	
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              8)

               

            	
              [*]

            	
              [*]

            	
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              9)

               

            	
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              10)

               

            	
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              [*]

            	
              [*]

            
	
               

              11)

               

            	
              [*]

            	
              [*]

            	
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              12)

               

            	
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              13)

               

            	
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              14)

               

            	
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              [*]

            
	
               

              15)

               

            	
              [*]

            	
              [*]

            	
              [*]

            


    

    


    
      	1.4  	
              Buyer
                shall make commercially reasonable efforts to [*]
                and of [*]
                and whether Buyer [*].

            


    

    


    
      	2.  	
              Product
                Support

            


    

    


    
      	2.1  	
              After
                delivery of the New US Airways Aircraft to Buyer, Buyer shall have
                the
                right to [*]
                in
                accordance with [*]

            


    

     

    [*][*].

    


    
      	2.2  	
              Embraer
                shall provide the following [*]
                in
                accordance with [*]

            


    

     

    [*][*][*]

    


    
      	2.3  	
              For
                each New US Airways Aircraft, Owned Aircraft and GECC Aircraft, the
                following product support provisions shall apply at the time such
                aircraft
                becomes subject to the Republic Warranty (as provided in Section
                3 below):
                

            


    

     

    [*][*] 

     

    [*] 

     

    [*]


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      	3.  	
              Warranty
                and Patent Indemnity

            


    

    


    
      	3.1  	
              Upon
                delivery, each New US Airways Aircraft shall be warranted pursuant
                to
                [*] 

            


    

     

    
      	3.2  	
              At
                the time each [*],
                the relevant Owned Aircraft shall be [*].

            


    

     

    
      	3.3  	
              At
                the time the lease for a GECC Aircraft is assigned to Buyer or a
                Sibling,
                such aircraft shall be warranted pursuant to [*].

            


    

     

    
      	3.4  	
              For
                each New US Airways Aircraft, Owned Aircraft and GECC Aircraft
                [*]
                shall apply. 

            


    

     

    
      	3.5  	
              Each
                New US Airways Aircraft, Owned Aircraft and GECC Aircraft shall be
                subject
                to Article 15 of the Purchase Agreement -- "Restrictions and Patent
                Indemnity"— at the time such aircraft becomes [*].
                

            


    

     

    
      	3.6  	
              For
                the avoidance of doubt, at the time each New US Airways Aircraft,
                Owned
                Aircraft and GECC Aircraft becomes [*]
                Buyer shall [*].

            


    

     

    
      	4.  	
              Other
                Guarantees

            


    

    


    
      	4.1  	
              Attachment
                E to the Purchase Agreement is hereby deleted and replaced by the
                new
                Attachment E to this Amendment No. 11. The New US Airways Aircraft,
                the
                Owned Aircraft and the GECC Aircraft shall be [*].

            


    

    


    
      	4.2  	
              Attachment
                F to the Purchase Agreement is hereby deleted and replaced by the
                new
                Attachment F to this Amendment No. 11. The New US Airways Aircraft,
                the
                Owned Aircraft and the GECC Aircraft shall be [*].
                

            


    

    


    
      	4.3  	
              The
                Service Life Guarantee under Attachment G to the Purchase Agreement
                ("Attachment G") shall [*].

            


    

     

    
      	5.  	
              Spare
                Parts Credit 

            


    

    


    
      	5.1  	
              Buyer
                [*]
                as
                provided in this Article 5. 

            


    

     

    
      	5.2  	
              The
                [*]
                shall be [*]only
                after [*].
                

            


    

     

    
      	5.3  	
              The
                [*]
                shall be [*]. 

            


    

     

    
      	5.4  	
              When
                the [*] Buyer
                may [*].
                

            


    

     

    
      	5.5  	
               [*].

            


    

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      	6.  	
              Exercise
                of Rights By Siblings

            


    

    


    The
      exercise of rights by a Sibling shall be subject to the provisions of Section
      14.1 of the Purchase Agreement; provided that [*].


    


    
      	7.  	
              Miscellaneous
                

            


    

    All
      other
      provisions of the Agreement which have not been specifically amended or modified
      by this Amendment No. 11 shall remain valid in full force and effect without
      any
      change. This Amendment No. 11 may be executed in counterparts (including by
      facsimile), which together shall constitute one amendment.

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      of page intentionally left in blank]

    


    


    


    


    


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    IN
      WITNESS WHEREOF, EMBRAER and BUYER, by their duly authorized officers, have
      entered into and executed this Amendment No. 11 to Purchase Agreement to be
      effective as of the date first written above.

    


    


    
      	
              EMBRAER
                - Empresa Brasileira de Aeronáutica S.A.

            	
              Republic
                Airline Inc. 

            
	
               

              By
                /s/ Antonio Luiz Pizarro Manso

              Name: Antonio
                Luiz Pizarro Manso

              Title: Executive
                Vice President  Corporate
                & CFO

            	
               

              By /s/
                Bryan Bedford

              Name: Bryan
                Bedford

              Title:
                President & CEO

            
	
               

              By /s/
                Jose Luis D. Molina

              Name: Jose
                Luis D. Molina

              Title: Director
                of Contracts

              Airline
                Market

            	
               

              Date: 

              Place: 

            
	
               

              Date: August
                30, 2005

              Place: Sao
                Jose dos Campos, SP, Brazil

            	 


    

    


    


    
      
        	 	 	 	 
	Witness:
                /s/ Carlos Martins Dutra	 	 	Witness:
                /s/ Lars-Erik Arnell
	
                

              	 	 	
                

              
	Name:
                Carlos Martins Dutra
	 	 	    Name:
                Lars-Erik
                ArnellTitle



      



     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     


    


    EXHIBIT
      A

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    ATTACHMENT “E”
      - DIRECT MAINTENANCE COST GUARANTEE


     

    
      	I.  	
              Embraer,
                subject to the terms, conditions and limitations contained in this
                Attachment, shall guarantee the incurred direct maintenance cost
                (the
                “Maintenance Cost Guarantee”) for the fleet of Aircraft subject of the
                Purchase Agreement as follows:

            


    

     

    
      	a.  	
              The
                Maintenance Guarantee for the Aircraft shall be for the period that
                begins
                at [*]
                (“Guarantee Term”). [*]

            


    

     

    
      	b.  	
              For
                the [*]
                period commencing with the first Aircraft Actual Delivery Date, the
                Achieved cumulative Maintenance Cost - AMC for replacement, repair,
                overhauls and inspections of Buyer's Aircraft, shall not exceed a
                Maintenance Cost Guarantee (“MCG,”)
                rate of: 

            


    

     

    
      	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            


    

     

    
      	c.  	
              For
                the [*]
                period commencing with the first Aircraft Actual Delivery Date, the
                Achieved cumulative Maintenance Cost - AMC for replacement, repair,
                overhauls and inspections of Buyer's Aircraft, shall not exceed a
                Maintenance Cost Guarantee ("MCG,")
                rate of: 

            


    

     

    
      
        	
                [*]

              	
                [*]

              	
                [*]

              
	
                [*]

              	
                [*]

              	
                [*]

              


      



    
      	d.  	
              The
                [*]
                shall be [*]
                in
                accordance with [*].

            


    

     

    
      	e.  	
              Measurement
                will be computed annually on the anniversary date of [*].
                The results will be reconciled year by year until [*].

            


    

     

    
      	f.  	
              In
                the event at the end of each annual measurement period, the AMC is
                higher
                than the MCG, Embraer shall provide [*]
                to
                Buyer as provided for below:

            


    

     

    [*]

     

    [*]

     

    
      	g.  	
              Buyer
                shall use [*]
                efforts to calculate and submit to Embraer the AMC quarterly, in
                electronic format, [*]
                after the end of each quarter during the Guarantee Term. In the event
                that
                Buyer fails to submit such data to Embraer as described in the preceding
                sentence, Embraer shall send a written notice to Buyer requesting
                such
                data, and the guarantee contained in this Attachment shall terminate
                in
                the event Buyer fails to submit the AMC to Embraer within [*]
                of
                such written notice. 

            


    

     

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          ATTACHMENT “E”
            - DIRECT MAINTENANCE COST
            GUARANTEE

        

      

    


     

    The
      Parties shall use [*]
      efforts
      to reach an agreement over the data annually within [*]
      after
      the submission of AMC in regard to any fourth quarter. In the event that the
      AMC
      contains [*]
      that is
      out of the reasonable control of [*],
      the
      Parties shall also discuss the reasons for such [*]
      and
      whether it should be included in the calculation of the AMC. Any credit amount
      will be credited to Buyer [*]
      after
      the agreement regarding the annual period. Such credit may be used by Buyer
      only
      toward [*].

     

    
      	h.  	
              This
                Maintenance Guarantee is based upon the following assumptions, and
                any
                change to the assumptions shall result in an appropriate recalculation
                of
                the MCG rate specified in items “b” and “c” above, at Embraer
                criteria.

            


    

     

    Fleet
      Size: A
      minimum
      fleet size of [*].

     

    Assumptions
      01

     

    
      	§  	
              Economic
                condition:
                [*] 

            


    

     

    
      	§  	
              Utilization:
                The guarantee covers a minimum of [*]
                flight hours per cycle, [*]
                APU hour per flight hour plus or minus [*]
                APU hour per flight hour and [*]
                APU cycle per flight cycle plus or minus [*]
                APU cycle per flight cycle. Buyer's
                fleet-wide average
                annual Aircraft utilization shall be [*]
                flight hours, plus or minus [*].

            


    

     

    
      	§  	
              Labor
                rate: [*]
                per man-hour [*]

            


    

     

    
      	§  	
              Maintenance
                Review Board Report: MRB
                170.

            


    

     

     

    Assumptions
      02

     

    
      	§  	
              Economic
                condition:
                July 2003. 

            


    

     

    
      	§  	
              Utilization:
                The guarantee covers a minimum of 1.2 flight hours per cycle, 0.7
                APU hour
                per flight hour plus or minus 5% APU hour per flight hour and 1.0
                APU
                cycle per flight cycle plus or minus 5% APU cycle per flight cycle.
                Buyer's
                fleet-wide average
                annual Aircraft utilization shall be 3,500 flight hours, plus or
                minus
                5%.

            


    

     

    
      	§  	
              Labor
                rate:
                US$ 35.00 per man-hour (to be escalated in accordance with Attachment
                D to
                the Purchase Agreement).

            


    

     

    
      	§  	
              Maintenance
                Review Board Report: MRB
                170.

            


    

     

    
      	i.  	
              The
                following are the elements covered under this Maintenance
                Guarantee: 

            


    

     

    
      	1.  	
              Material
                cost for non-repairable parts purchased from or through Embraer and
                / or
                Embraer approved vendors.

            


    

     

    
      	2.  	
              Overhaul/repair
                costs incurred at Embraer approved repair
                facilities.

            


    

     

    
      	3.  	
              Expendable
                which can be accounted for on an unit basis, i.e. filters, gaskets,
                excluding wire, rivets, nuts, bolts, washers, pins, brackets, tie
                wraps.

            


    

     

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      	4.  	
              Parts
                and materials consumed through scheduled maintenance according to
                the
                Maintenance Review Board Report
                (MRB).

            


    

     

    
      	j.  	
              The
                following elements are not covered under this guarantee:
                

            


    

     

    
      	1.  	
              Costs
                associated with taxes, levies, imposts, customs
                fees.

            


    

     

    
      	2.  	
              Shipping,
                receiving, ferry, packing, storage, warehousing and insurance
                expenses.

            


    

     

    
      	3.  	
              General
                administrative and overhead
                expenses.

            


    

     

    
      	4.  	
              Restoration
                expenses incurred due to damage to or failure of Aircraft, components
                or
                parts caused by accident, incident, FOD or Acts of God, negligence,
                abuse,
                misuse and/or maintenance errors.

            


    

     

    
      	5.  	
              When
                the Aircraft or any of its parts has/have been altered or modified
                by
                Buyer, without prior approval from Embraer or from the manufacturer
                of the
                parts through a service bulletin, provided such approvals have not
                been
                unreasonably withheld. 

            


    

     

    
      	6.  	
              Consumables
                including but not limited to fluids, water, oils, sealants, washing
                compounds, cleansers, solvents, and
                lubricants.

            


    

     

    
      	7.  	
              Labor
                costs (excluding the [*]
                related to [*]
                and [*]
                service bulletins implementation, provided that [*]
                have been [*]
                in
                writing [*]
                in
                order [*].

            


    

     

    
      	8.  	
              Normal
                line operations activities (i.e. Aircraft servicing) including but
                not
                limited to walkaround (i.e. visual inspection), fueling, parking,
                washing,
                lavatory servicing and gallery
                servicing.

            


    

     

    
      	9.  	
              Service
                bulletins and or airworthiness
                directives.

            


    

     

    
      	10.  	
              Parts
                or components returned from vendors with “no-fault” found, i.e.,
                re-certification charges without any repair and associated labor.
                Any part
                removed and replaced from an Aircraft which does not solve the Aircraft
                problem (poor troubleshooting) and associated
                labor.

            


    

     

    
      	11.  	
              Leasing
                or loan fees related to the aircraft or any of its parts which are
                being
                used in place of an unserviceable
                unit.

            


    

     

    
      	12.  	
              Any
                part supplied on a “no-charge basis” or for which a warranty credit or
                replacement part has been supplied.

            


    

     

    
      	13.  	
              Aircraft
                downtime costs.

            


    

     

    
      	14.  	
              Any
                parts that are changed during scheduled or unscheduled maintenance,
                due to
                failure, which are still under the warranty period and, are not submitted
                to Embraer or the suppliers for warranty
                credit.

            


    

     

    
      	15.  	
              Cabin
                equipment and furnishing materials, such as but not limited to carpets,
                seat covers, galley equipment and passenger
                commodities.

            


    

     

    
      	16.  	
              Spare
                parts prices that exceed the prices obtainable from Embraer, provided,
                in
                the event that [*]
                a
                reasonable time frame, [*]may
                [*]
                and [*]
                will reasonably agree on [*].

            


    

     

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          ATTACHMENT “E”
            - DIRECT MAINTENANCE COST GUARANTEE

        

      

    

     

     

    
      
        	17. 	In cases of deterioration, wear, breakage, damage
                or any
                other defect resulting from the use of inadequate packing methods
                when
                returning items to Embraer or its
                representatives. 


      
 

      
        	 
                18.  	
                Maintenance
                  problems caused by Buyer’s negligence or misuse of parts or Buyer’s
                  failure to take all maintenance actions on the Aircraft as recommended
                  in
                  all applicable maintenance
                  manuals.

              


      

    

     

    
      	19.  	
              Maintenance
                problems involving Aircraft or parts that has / have been involved
                in an
                accident, or when parts either defective or not complying to
                manufacturer’s design or specification have been
                used.

            


    

     

    
      	20.  	
              Maintenance
                problems involving parts that have had their identification marks,
                designation, seal or serial number altered or
                removed.

            


    

     

    
      	21.  	
              Extraordinary
                costs incurred as a result of any labor disruption or dispute involving
                a
                significant work action that affects in whole or part the Aircraft’s
                normal operation or maintenance.

            


    

     

    
      	22.  	
              Engines,
                related parts and related LRU
                costs.

            


    

     

    
      	23.  	
              Nacelle
                and Thrust Reverser.

            


    

     

    
      	24.  	
              BFE
                (Buyer Furnished Equipment) and / or BIE (Buyer Installed Equipment)
                costs.

            


    

     

    
      	25.  	
              Maintenance
                reserves.

            


    

     

    
      	26.  	
              GSE
                (Ground Support Equipment) costs.

            


    

     

    
      	27.  	
              For
                the purpose of calculating the Achieved Maintenance Cost Guarantee,
                the
                materials and labor costs related to the New US Airways Aircraft,
                Owned
                Aircraft and GECC Aircraft shall be accounted for at the time these
                aircraft start their revenue service by Buyer under this Purchase
                Agreement. All previous materials cost and labor costs shall be
                disregarded. The total number of previous flight hours and cycles
                of such
                additional aircraft (New US Airways Aircraft, Owned Aircraft and
                GECC
                Aircraft) New US Airways Aircraft, Owned Aircraft and GECC Aircraft
                shall
                be considered.

            


    

     

    
      	II.  	
              The
                foregoing maintenance guarantee is provided subject to Buyer’s adherence
                to the following general
                conditions:

            


    

     

    
      	a.  	
              Airplane
                Operation: Aircraft shall be operated in airline service in accordance
                with the applicable Air Authority regulations and as recommended
                by
                Embraer through the official and updated Operations and Airplane
                Flight
                Manual.

            


    

     

    
      	b.  	
              Inspection
                Program: The Aircraft shall be maintained in accordance with the
                current
                Maintenance Review Board Report - (MRB), and the checks shall in
                no event
                occur at a [*]
                Buyer’s Maintenance Program must have provisions for escalating the checks
                interval as soon as the applicable Air Authority allows. Buyer’s program
                should also include the use of task cards to assist the maintenance
                personnel in performing inspection
                task.

            


    

     

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      	c.  	
              Aircraft
                Manuals: Buyer shall keep a complete set of Embraer recommended manuals
                up-to-date and available to airline personnel for assisting them
                with the
                maintenance and operation of the Aircraft. A set of recommended manuals
                or
                a electronic link to the data should be available at all maintenance
                bases
                (line or heavy) and shall be maintained with the latest revisions
                at all
                times.

            


    

     

    
      	d.  	
              Warranty:
                Buyer shall have at minimum, one person which will be dedicated to
                the
                Aircraft warranty program. This person(s) will be trained by Embraer
                warranty department on the correct procedures for filing Buyer warranty
                claims in accordance with mutually agreed format. This person(s)
                shall
                also be responsible for the filing of warranty claims directly to
                suppliers for credit, repair or
                replacement.

            


    

     

    
      	e.  	
              Parts
                Repair: All shop repairs shall be performed in Embraer’s or Embraer’s
                suppliers’ authorized repair shops.

            


    

     

    
      	f.  	
              Staff
                levels: Buyer shall have available reasonable staff to properly maintain
                the Aircraft during scheduled and unscheduled maintenance. This shall
                include, but not be limited to, mechanics, electricians, avionics
                specialists, inspectors, cleaners, ground personnel and flight crews
                licensed or certified by the applicable Air Authority as required
                by the
                applicable Air Authority
                regulations.

            


    

     

    
      	g.  	
              Training:
                Buyer is required to put in place a training program approved by
                the local
                airworthiness authority, which, at a minimum, shall include the following
                items:

            


    

     

    
      	1.  	
              initial
                and recurrent training for pilots in the
                Aircraft;

            


    

     

    
      	2.  	
              initial
                and recurrent training for flight attendants in the Aircraft;
                and

            


    

     

    
      	3.  	
              initial
                and recurrent training for the maintenance staff (airframe, powerplant,
                electric avionics specialists) in the
                Aircraft.

            


    

     

    A
      reasonable number of maintenance specialist will require supplier’s
      training.

     

    Buyer
      is
      required to train to the above standards a reasonable number of new hired
      employee who will work in or on the Aircraft.

     

    
      	h.  	
              Spare
                Parts Limitation: Spare parts price shall not exceed the prices obtainable
                from Embraer. In the event that Embraer cannot supply a part to Buyer
                in a
                reasonable time frame, Embraer may authorize the purchase of such
                part by
                Buyer from a third party at a price in excess of Embraer’s price, Embraer
                and Buyer will mutually agree on the portion of such price to be
                included
                in this guarantee provided Buyer maintained the minimum stock level
                recommended by Embraer.

            


    

     

    
      	i.  	
              Buyer
                will be required to provide Embraer an every three month service
                bulletin
                status report, containing service bulletin number, Aircraft serial
                number,
                Aircraft total time and total
                cycles.

            


    

     

    
      	j.  	
              Ground
                Support Equipment: Embraer shall provide Buyer a list of tooling
                and
                ground support equipment required to maintain the Aircraft, this
                list
                shall be subject to Buyer’s reasonable approval. Buyer will be required to
                maintain these levels of required tooling and ground support equipment
                in
                good working order at all times.

            


    

     

    
      	k.  	
              Reliability
                Reporting: Buyer is to provide monthly to Embraer an Aircraft reliability
                report. This report shall include Aircraft total time and cycles,
                component removals, shop finding reports and tear down reports (for
                each
                failure completed) by authorized agencies and SDR’s (Service Difficult
                Report) with date, Aircraft registration, problem description, maintenance
                action, and part number and serial number of the components removed
                and
                installed. Buyer shall use the ATA 100 chapter breakdown format for
                all
                reports.

            


    

     

    
      	l.  	
              Accounting
                System:

            


    

     

    
      	1.  	
              Buyer
                shall have an accounting system, subject to Embraer’s reasonable approval,
                which demonstrates the ability to discriminate between chargeable
                and
                non-chargeable costs and expenses. Buyer’s accounting system shall be
                presented to Embraer, upon Embraer’s written request, [*]
                before [*]

            


    

     

    
      	2.  	
              Upon
                Embraer’s written request, Buyer shall also provide on a [*]
                basis an activity and expenditure report satisfactory to Embraer,
                in
                electronic format and in accordance with Embraer’s Service News Letter for
                data exchange. 

            


    

     

    
      	3.  	
              Upon
                Embraer’s written request, Embraer and Buyer may convene frequently
                meetings to address issues concerning the AMC and to identify methods
                to
                decrease Buyer’s maintenance costs. At a minimum, Embraer and Buyer shall
                have two meetings per year to confirm and compute all costs claimed
                by
                Buyer. Buyer shall permit Embraer access to all Buyer data which
                can be
                used to verify any reports produced pursuant to this Attachment.
                

            


    

     

    
      	m.  	
              Duplicated
                Guarantee: If Buyer negotiates directly with any of Embraer’s
                suppliers/vendors a particular maintenance cost guarantee or equivalent
                program (including fleet hour agreements), or an alternative support
                program with Embraer, the Parties shall negotiate in good faith and
                agree
                on the
                portion of cost related to this equipment/system that shall be excluded
                from the MCG rate, specified in Article I.b and I.c, and shall result
                in
                an appropriate recalculation of the
                MCG.

            


    

     

    
      	III.  	
              Buyer
                shall not unreasonably reject Embraer’s recommendations, changes or
                solutions to elements of maintenance that would result in cost savings,
                as
                reasonably determined by the
                Parties.

            


    

     

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      	IV.  	
              EXCEPT
                AS OTHERWISE PROVIDED IN THIS AGREEMENT THE GUARANTEES, OBLIGATIONS
                AND
                LIABILITIES OF EMBRAER, AND REMEDIES OF BUYER SET FORTH IN THIS AIRCRAFT
                MAINTENANCE COST GUARANTEE ARE EXCLUSIVE AND IN SUBSTITUTION FOR,
                AND
                BUYER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER RIGHTS, CLAIMS,
                DAMAGES AND REMEDIES OF BUYER AGAINST EMBRAER OR ANY ASSIGNEE OF
                EMBRAER,
                EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO
                ANY
                GUARANTEED LEVEL OF AIRCRAFT MAINTENANCE
                COSTS.

            


    

     

     

    
      	V.  	
              The
                guarantee hereby expressed is established between Embraer and Buyer
                and it
                cannot be transferred or assigned to others, unless stated in this
                Agreement or by previous written consent of
                Embraer.

            


    

     

     

     

    


    


    



    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    


    ATTACHMENT
      "F" - SCHEDULE RELIABILITY GUARANTEE


     

    I. Definitions.
      

     

    a. Available
      for Dispatch: An Aircraft which is on the ground and cleared for dispatch by
      signature of Buyer's responsible maintenance personnel at least [*]
      before
      the scheduled departure time of the initial flight in any given day shall be
      deemed to be "available for dispatch".

     

    b. Maintenance
      Interruption. 

     

    1. A
      maintenance interruption occurs when the malfunction of an item, or necessary
      checking and/or corrective actions, cause a revenue flight not to take place
      or
      a flight delay exceeding [*].

     

    2. For
      the
      purposes of this guarantee, only the initial Maintenance Interruption shall
      be
      accounted as interruption. Maintenance Interruption of any or all flights on
      subsequent days arising from the initial Maintenance Interruption shall not
      constitute an additional Maintenance Interruption.

     

    3. Before
      a
      flight may be considered as a Maintenance Interruption for the purpose of this
      Schedule Reliability Guarantee the Aircraft must be inspected for mechanical
      failure or malfunction.

     

    4. A
      repetitive problem, which caused an actual maintenance interruption and was
      not
      previously corrected, shall not be counted as a Maintenance
      Interruption.

     

    5. To
      be
      accounted as a Maintenance Interruption, any malfunction reported, either verbal
      or written, must result in maintenance corrective action. “No-trouble-found” or
“could not duplicate” or “reset” events shall not be accounted as Maintenance
      Interruption.

     

    6. A
      maintenance interruption that occurs due to failures of systems or parts from
      suppliers or vendors that have a separate maintenance interruption guarantee
      agreement with Buyer, and which is not assigned to Embraer, shall not be
      considered as a Maintenance Interruption.

     

    c. Achieved
      Dispatch Reliability Percentage (“ADRP”).

     

    ADRP
      is
      the actual dispatch reliability percentage obtained by Buyer's fleet of Aircraft
      in regular revenue service, which are the subject of this
      Agreement.

     

    ADRP
      shall be computed monthly commencing with [*]
      by
      Buyer, as follows:

     

    [*] 

     

    II. Embraer,
      subject to the conditions and limitations expressed herein, will guarantee
      the
      Aircraft’s schedule reliability percentage as follows: 

     

    


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          ATTACHMENT
            "F" - SCHEDULE RELIABILITY
            GUARANTEE

        

      

    


     

    a. The
      average ADRP for the first [*]
      period
      after [*]
      delivered under the Purchase Agreement, shall be [*];
      for the
[*]
      the ADPR
      shall be [*];
      for the
[*]
      the ADPR
      shall be [*];
      for the
[*]
      the ADPR
      shall be [*],
      for the
[*]
      (the
“Final Period”) the ADPR shall be [*].

     

    b. In
      the
      event that the ADRP in any of the [*]
      periods
      referred to above is lower than GDR for the relevant period, Embraer shall
      diligently, after notification by Buyer:

     

    1. Make
      recommendations concerning Buyer's programs, publications and maintenance and
      operational policies to improve ADRP.

     

    2. Take
      all
      measures, as deemed necessary and appropriate by Embraer when vendor action
      does
      not provide the required improvement in the ADRP.

     

    3. [*]
      Embraer
      shall issue a proposal to Buyer showing the price of the relevant Service
      Bulletin and the effectiveness of such modification for Buyer.

     

    c. In
      the
      event the average ADRP at the end of any of the [*]
      periods
      described in paragraph “II.a.” is [*]
      for such
      period, Embraer shall credit Buyer for Maintenance Interruptions calculated
      according to the following formula:


     

    [*] [*] 

     

     

    In
      the
      event the average ADRP at the end of any of the [*]
      periods
      described in paragraph “II.a.” above is [*]
      for such
      period, the [*]
      calculated according to the formula above shall be [*].
      

     

    Measurements
      will be calculated and submitted by Buyer [*]
      after
      the end of each [*]
      referred
      to in Article II a. herein. The Parties shall do their efforts to reach an
      agreement over the data [*]
      of the
      submission thereof. Any achieved credit amount will be credited to Buyer or
      to
      Embraer [*]
      after
      each agreement date for each of the [*]
      periods.
      Buyer may use such credit only toward [*].
      Embraer
      may use such credit only for [*].

     

    The
      sum
      of all credits under this Dispatch Reliability Guarantee shall not exceed
[*]
      for
      Buyer’s entire Aircraft fleet for the [*]
      periods.

     

    d. This
      dispatch reliability guarantee is based upon the following assumptions provided
      by Buyer, and any change to the assumptions shall be cause for reevaluation
      or
      adjustments of this guarantee upon the reasonable agreement of the
      Parties.

     

    Fleet
      Size:
      Minimum
[*].

     

     

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          ATTACHMENT
            "F" - SCHEDULE RELIABILITY
            GUARANTEE

        

      

    


     

    Utilization:
      The
      guarantee covers a minimum of [*]
      flight
      hours per cycle, [*]
      APU hour
      per flight hour plus or minus [*]
      APU hour
      per flight hour and [*]
      APU
      cycle per flight cycle plus or minus [*]
      APU
      cycle per flight cycle. Buyer's
      fleet-wide average
      annual Aircraft utilization shall be [*]
      flight
      hours, plus or minus [*].

     

    For
      all
      purposes of this guarantee, the regularly scheduled revenue Aircraft departures
      and the Maintenance Interruptions related to the SAC Aircraft, Owned Aircraft
      and GECC Aircraft shall be accounted for at the time these aircraft start their
      revenue service by Buyer under this Purchase Agreement. All previous regularly
      scheduled revenue Aircraft departures and Maintenance Interruptions shall be
      disregarded.

     

    e. The
      following elements are not covered under this guarantee: 

     

    - Interruptions
      of scheduled flights due to reasons other than Aircraft mechanical failures,
      including without limitation:

    - Air
      Traffic Control

    - Weather,
      acts of God, FOD, wars, riots, third party criminal acts

    - Accidents

    - Incident

    - Negligence

    - Conditions
      that exist prior to dispatch which lead to a flight interruption and could
      have
      been prevented by maintenance prior to dispatch (including but not limited
      to
      worn, flat and cut tires, servicing (ATA Chapter 12), dead batteries, and worn
      brakes)

    - Hard
      landing.

    - Late
      out
      of maintenance 

    - Force
      majeure

    - Crew
      refusal

    - Optional
      equipment other than that identified on Attachment “A” to this
      Agreement

    - Operational
      delays or cancellations not related to maintenance

    - Passenger
      and/or baggage loading

    - Non-availability
      of spares or equipment 

    - Non-availability
      of personnel 

    - Operation
      interruptions or Maintenance Interruptions, which occurred due to items, related
      in the Minimum Equipment List (“MEL”) issued and/or approved by the local
      regulatory authority was followed

    - If
      the
      Aviation Authority grounds Buyer's fleet, or one of Buyer’s
      Aircraft

    - Maintenance
      problems caused by Buyer’s negligence or misuse of parts or Buyer’s failure to
      take all maintenance actions on the Aircraft as recommended in all applicable
      maintenance manuals

     

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          ATTACHMENT
            "F" - SCHEDULE RELIABILITY
            GUARANTEE

        

      

    


     

    - Maintenance
      problems involving Aircraft or parts that has/have been involved in an accident,
      or when parts either defective or not complying to manufacturer’s design or
      specification have been used. 

    - Maintenance
      problems involving parts that have had their identification marks, designation,
      seal or serial number altered or removed

    - Maintenance
      problem resulting from inadequate packing for shipment and storage

    - A
      flight
interruption
      shall
      not be considered as a Maintenance Interruption if, at the time of the
      interruption, Buyer has a spare aircraft in its fleet, even though for a
      different model, that could commercially reasonable be used to avoid such
      interruption and is not otherwise deployed in service

    - Regulatory
      changes compliance

    - Cancellations
      or delays caused by components repaired in non-approved local airworthiness
      authority shop

    - Flight
      cancellation or delay occurred due to one same problem on the same Aircraft
      within fourteen (14) consecutive days period. 

     

    III. The
      foregoing dispatch reliability guarantee is provided subject to Buyer's
      adherence in all material respects to the following general
      conditions:

    a. Airplane
      Operation: Aircraft shall be operated in airline service in accordance with
      the
      Aviation Authority regulations and as recommended by Embraer through the
      official and most updated Operations and Airplane Flight Manual. Buyer shall
      have available one spare Aircraft for each twenty Aircraft at all
      times.

     

    b. Inspection
      Program: The Aircraft shall be maintained in accordance with the most current
      MRB document. Buyer’s program must have provisions for escalating the checks
      intervals as soon as the Aviation Authority allows. Buyer’s program should also
      include the use of task cards to assist the maintenance personnel in performing
      inspection tasks. 

     

    c. Aircraft
      Manuals: Buyer shall keep a complete set of Embraer recommended manuals
      up-to-date and available to airline personnel for assisting them with the
      maintenance and operation of the Aircraft. A set of recommended manuals should
      be available at all maintenance bases (line or heavy) and shall be maintained
      with the latest revisions at all times. 

     

    d. MEL:
      Buyer shall keep its MEL up to date, with the most current issue. 

     

    e. Stocking
      Levels: Buyer shall be responsible to stock and maintain the recommended spare
      parts list (RSPL) in inventory, throughout the guarantee period. There shall
      be
      a minimum inventory level at each line maintenance base along with the major
      parts being stored at the heavy maintenance facility. In the event during the
      ADR meetings, the Aircraft does not achieve the guaranteed values, and if the
      cause of this non-performance is the lack of spare parts initially recommended
      by Embraer for the RSPL and not purchased by Buyer, this guarantee will not
      be
      applicable. Embraer is to receive annually an inventory list from the Buyer
      that
      shows current stocking levels and the locations of all Aircraft spare parts
      and
      will make any recommendations on additional inventory if needed. 

     

    f. Parts
      Repair: All shop repairs shall be performed in Embraer’s or Embraer’s suppliers'
      authorized repair shops. 

     

    g. Staff
      Levels: Buyer shall have available reasonable staff to properly maintain the
      Aircraft during scheduled and unscheduled maintenance. This shall include,
      but
      not be limited to, mechanics, electricians, avionics specialists, inspectors,
      cleaners, ground personnel and flight crews licensed or certified by the
      Aviation Authority as required by Aviation Authority regulations. 

     

    h. Training:
      Buyer is required to put in place a training program approved by the Aviation
      Authority, which, at a minimum, shall include the following items: 

     

    1. Initial
      and recurrent training for pilots in the Aircraft;

     

    2. Initial
      and recurrent training for flight attendants in the Aircraft; and

     

    3. Initial
      and recurrent training for the maintenance staff (airframe, power plant,
      electric avionics specialists) in the Aircraft. 

     

    Any
      maintenance specialist (engine, APU, avionics) will require suppliers' training.
      

     

    Buyer
      is
      required to train to the above standards any new hired employee who will work
      in
      or on the Aircraft. 

     

    i. Aircraft
      Cleaning: Buyer shall keep the Aircraft reasonably clean, inside and out, by
      commercial airline standards at all times. This includes without limitation,
      the
      engines, wheel wells, nacelles, landing gear and flight control areas.


     

    j. Service
      Bulletins: When Embraer recommends that Buyer implement a service bulletin
      which
      improves performance or dispatch reliability, enhances flight operations or
      decreases maintenance costs, [*]
      and
      Buyer concludes by a cost benefit analysis that the SB is commercially
      reasonable, Embraer Customer Support Department shall contact Buyer's Vice
      President of Maintenance, in writing, with recommendations that the service
      bulletin be complied with. Buyer will schedule the Aircraft for incorporation
      of
      such service bulletin [*],
      but,
      subject to Embraer agreement which shall not be unreasonably withheld, Buyer
      may
      schedule it for incorporation during a maintenance check, so as to minimize
      interruption to scheduled service.

     

    k. Ground
      Support Equipment: Embraer shall provide Buyer two lists of tooling and ground
      support equipment required to maintain the Aircraft, which lists shall be
      subject to Buyer's reasonable approval. One list will cover line maintenance
      bases while the other will apply to heavy maintenance facilities. Buyer will
      be
      required to maintain these levels of required tooling and ground support
      equipment in good working order at all times. 


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          ATTACHMENT
            "F" - SCHEDULE RELIABILITY
            GUARANTEE

        

      

    


     

    l. Reliability
      Reporting: Buyer shall monthly provide to Embraer, in electronic format, a
      reliability and maintenance cost report in accordance with the latest revision
      of the Embraer’s Service News Letter for data exchange.

     

    m. Rejection:
      Buyer shall not unreasonably reject Embraer's recommendations / changes /
      solutions which in Embraer's opinion, would result in an improvement in Buyer's
      dispatch reliability. Any such rejection shall be cause for re-evaluation and/or
      adjustment of this guarantee. Anything in this Agreement to the contrary
      notwithstanding, Buyer shall not be required to comply with or implement, and
      the benefits and rights provided Buyer hereunder will not be adversely affected
      by, Buyer’s not complying with or implementing any Embraer recommendation /
      changes / solutions (including without limitation, recommended service
      bulletins) or any provision of applicable product literature for which
      compliance is not mandated by the local airworthiness authority rules and
      regulations if Buyer has determined in good faith that such recommendation
      /
      change / solution or provision of such product literature is not reasonably
      expected to result in a net economic benefit to Buyer in light of all applicable
      facts and circumstances, including, without limitation, the number of man-hours
      reasonably estimated by Embraer to be required to accomplish such recommendation
      / change / solution, the labor cost to be incurred, the potential reduction
      in
      maintenance costs to be realized, the time value of money and the period which
      would be required for such savings resulting from the improvement in dispatch
      reliability to offset the labor and other costs associated with such man-hours
      (provided that Buyer may not consider any benefits to Buyer under any product
      guarantees to the extent resulting from Buyer’s decision to comply or not to
      comply with or implement a recommendation, change, or solution).

     

    n. Certification
      or Regulatory Changes: The achieved maintenance interruption shall not take
      into
      account those interruptions, which were originated by conformity to mandatory
      regulatory change.

     

    o. Achieved
      Dispatch Reliability Review Meeting: An Achieved Dispatch Reliability Review
      Meeting shall be scheduled, if necessary, and at the end of each six (6) month
      period of Buyer's Aircraft operation. Representatives of Buyer and Embraer
      shall
      participate in the meetings and will: 

     

    1. Review
      current Achieved Dispatch Reliability; 

     

    2. Eliminate
      irrelevant or non-Aircraft-intrinsic interruption claims from computed
      cancellation rates; and

     

    3. Review
      Buyer's compliance with Service Bulletins as required by Article III.j herein,
      review disputed claims, and consider methods for improvement of Achieved
      Dispatch Reliability. 

     

    Buyer
      shall permit Embraer access to all Buyer data which can be used in understanding
      and analyzing the dispatch reliability failure.

     

    p. Duplicated
      Guarantee: If Buyer negotiates directly with any of Embraer’s suppliers/vendors
      a particular dispatch or completion reliability guarantee, or an alternative
      support program with Embraer, this
      amount shall be excluded from the guarantee rate, specified in Article III.a,
      and shall result in an appropriate recalculation of this guarantee in accordance
      with Embraer criteria.

     

    IV. Suspension

     

    
      	a.  	
              This
                guarantee shall be automatically suspended and shall not apply during
                the
                period of any labor disruption or dispute involving a significant
                work
                action, which affects in whole or in part the Aircraft normal operation
                and maintenance.

            


    

     

    
      	b.  	
              This
                guarantee shall be automatically suspended and shall not apply during
                the
                computation period of which worldwide EMBRAER 170 fleet (excluding
                Buyer’s
                Aircraft) average dispatch reliability percentage is at least 1%
                higher
                than Buyer’s Aircraft dispatch reliability
                percentage.

            


    

     

    V. Buyer
      will not include in the calculation of the ADRP Maintenance Interruptions
      occurring under any of the circumstances listed below:

     

    a. When
      the
      Aircraft has been used in an attempt to break records, or subjected to
      experimental flights, or in any other way not in conformity with the flight
      manual or the airworthiness certificate, or subject to any manner of use in
      contravention of the applicable aerial navigation or other regulations or rules,
      issued or recommended by government authorities of whatever country in which
      the
      Aircraft is operated, when accepted and recommended by ICAO; and

     

    b. When
      the
      Aircraft or any of its parts has/have been altered or modified by Buyer, without
      prior approval from Embraer or from the manufacturer of the parts through a
      service bulletin, provided such approval has not been unreasonably
      withheld.

     

    VI. THE
      GUARANTEES, OBLIGATIONS AND LIABILITIES OF EMBRAER, AND REMEDIES OF BUYER SET
      FORTH IN THIS SCHEDULE RELIABILITY GUARANTEE ARE EXCLUSIVE AND IN SUBSTITUTION
      FOR, AND BUYER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER RIGHTS, CLAIMS,
      DAMAGES AND REMEDIES OF BUYER AGAINST EMBRAER OR ANY ASSIGNEE OF EMBRAER,
      EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY ACHIEVED
      DISPATCH RELIABILITY.

     

    VII. The
      terms
      and conditions of this dispatch reliability guarantee do not alter, modify
      or
      impair, in any way, the terms and conditions of Attachment “C“ (Aircraft
      Warranty Certificate) to the Purchase Agreement.

     

    VIII. The
      guarantee hereby expressed is established between Embraer and Buyer and it
      cannot be transferred or assigned to others, unless by previous written consent
      of Embraer.