On its first quarter 2011 earnings call, Republic Airways Holdings Inc. (the "Company") announced a program to restructure the Company's subsidiary, Frontier Airlines, Inc. ("Frontier"), by making changes to its network, fleet allocation and operating costs to improve overall business results by $100 million annually. A part of that effort included restructuring wages and benefits, including the Frontier pilots (the "Pilots") represented by the Frontier Airlines Pilot Association ("FAPA"). On June 10, 2011, Frontier reached a tentative agreement with FAPA pursuant to which FAPA agreed in principle to, among other things, (i) the postponement of certain pay increases, (ii) reduced Company contributions to the Pilots' 401(k) plan, (iii) reduced accruals for vacation days and sick days and (iv) an extension of the collective bargaining agreement by two years (collectively, the "Investment"). The agreement is subject to ratification by the Pilots and final board approval by the Company. The vote on ratification is expected to conclude by June 17, 2011.
In exchange for the Investment, FAPA will receive an equity stake in Frontier. The Company has agreed to certain other conditions which must be met during the term to continue the Investment by FAPA. Those conditions include aircraft growth at Frontier, a liquidity raise of at least $70 million by the Company through one or more debt issuances or other financings, material execution of Frontier's restructuring program by the end of 2011, and a good faith effort by the Company to attract equity investment(s) in Frontier that would reduce the Company's ownership of Frontier to a minority interest by December 31, 2014. In addition, the Company has agreed to establish a profit sharing program for Frontier employees.