Form 10-Q Quarterly Report For Period Ended September 30, 2006

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2006

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 000-49697

REPUBLIC AIRWAYS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

DELAWARE	06-1449146
(State or other jurisdiction of	(I.R.S. Employer Identification Number)
incorporation or organization)

8909 Purdue Road, Suite 300, Indianapolis, Indiana 46268

(Address of principal executive offices) (Zip Code)

(317) 484-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

_____________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. o Yes x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) o Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of October 20, 2006, the latest practicable date.

	Outstanding on
Class	October 20, 2006

Common Stock	42,456,802

TABLE OF CONTENTS

	*Part I - Financial Information*
Item 1.	Financial Statements:	3

	Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2006 and December 31, 2005.	3

	Condensed Consolidated Statements of Income (Unaudited) for the Three Months and Nine Months Ended September 30, 2006 and 2005.	4

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2006 and 2005.	5

	Noted to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13

Item 4.	Controls and Procedures	13

	*Part II - Other Information*

Item 1A.	Risk Factors	13

Item 6.	Exhibits	14

	Signatures	15

Exhibit 10.1 Amendment No. 16 to Purchase Agreement DCT-014/2004 by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline Inc., dated July 21, 2006.

Exhibit 10.2 Amendment No. 8 to Letter Agreement DCT-015/2004 by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline Inc., dated July 21, 2006.

Exhibit 10.3 First Amendment to Amended & Restated Chautauqua Jet Service Agreement by and between US Airways, Inc. and Chautauqua Airlines, Inc., dated July 21, 2006.

Exhibit 10.4 Second Amendment to Republic Jet Service Agreement by and between US Airways, Inc. and Republic Airline Inc., dated July 21, 2006.

Exhibit 10.5 Capacity Purchase Agreement by and between Continental Airlines, Inc., Republic Airways Holdings Inc. and Chautauqua Airlines, Inc., dated July 21, 2006.

Exhibit 31.1 Certification of Chief Executive Officer

Exhibit 31.2 Certification of Chief Financial Officer

Exhibit 32.1 Certification of Chief Executive Officer

Exhibit 32.2 Certification of Chief Financial Officer

All other items of this report are inapplicable

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PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
	September 30,			December 31,
	2006			2005
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	172,772		$	162,005
Receivables—net of allowance for doubtful accounts of $341 and $343 respectively		15,853			16,701
Inventories		29,195			18,756
Prepaid expenses and other current assets		11,406			13,841
Restricted cash		4,753			1,218
Deferred income taxes		3,626			3,656

Total current assets		237,605			216,177
Aircraft and other equipment—net		1,891,670			1,662,236
Other assets		172,243			144,199
Goodwill		13,335			13,335

Total	$	2,314,853		$	2,035,947

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt	$	87,006		$	73,935
Accounts payable		14,252			13,353
Accrued liabilities		86,139			71,648

Total current liabilities		187,397			158,936
Long-term debt—less current portion		1,487,777			1,339,505
Deferred credits		25,206			23,137
Deferred income taxes		127,603			89,671

Total liabilities		1,827,983			1,611,249
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.001 par value; 5,000,000 shares authorized; no shares issued or outstanding
Common stock, $.001 par value; one vote per share; 75,000,000 shares authorized; 42,431,802 and 41,787,685 shares issued and outstanding, respectively		42			42
Additional paid-in capital		280,365			277,505
Warrants		8,574			8,574
Accumulated other comprehensive loss		(3,951	)		(4,176	)
Accumulated earnings		201,840			142,753

Total stockholders' equity		486,870			424,698

Total	$	2,314,853		$	2,035,947

See accompanying notes to condensed consolidated financial statements (unaudited).

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REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
OPERATING REVENUES:
Passenger	$	301,314		$	227,365		$	828,920		$	643,402
Charter revenue and ground handling		1,098			1,853			6,704			8,723
Other		3,720			1,020			12,165			1,120

Total operating revenues		306,132			230,238			847,789			653,245

OPERATING EXPENSES:
Wages and benefits		46,415			38,679			130,155			105,482
Aircraft fuel		89,766			71,193			248,426			199,540
Landing fees		11,382			8,183			30,468			22,961
Aircraft and engine rent		25,130			19,849			69,876			57,508
Maintenance and repair		28,953			19,004			75,856			56,580
Insurance and taxes		4,710			4,363			13,980			12,479
Depreciation and amortization		23,824			15,945			67,322			43,944
Other		19,398			15,597			54,675			45,818

Total operating expenses		249,578			192,813			690,758			544,312

OPERATING INCOME		56,554			37,425			157,031			108,933

OTHER INCOME (EXPENSE):
Interest expense		(22,942	)		(16,217	)		(66,772	)		(42,508	)
Other income		2,633			1,792			7,247			3,184

Total other income (expense)		(20,309	)		(14,425	)		(59,525	)		(39,324	)

INCOME BEFORE INCOME TAXES		36,245			23,000			97,506			69,609

INCOME TAX EXPENSE		14,313			9,029			38,419			27,418


NET INCOME	$	21,932		$	13,971		$	59,087		$	42,191

BASIC NET INCOME PER COMMON SHARE	$	0.52		$	0.36		$	1.41		$	1.25

DILUTED NET INCOME PER COMMON SHARE	$	0.50		$	0.35		$	1.36		$	1.22

See accompanying notes to condensed consolidated financial statements (unaudited).

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REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)

	Nine Months Ended
	September 30,
	2006			2005

NET CASH PROVIDED BY OPERATING ACTIVITIES	$ 167,816			$121,534

INVESTING ACTIVITIES:
Purchase of aircraft and other equipment		(76,807	)		(100,582	)
Proceeds from sale of spare aircraft equipment		3,556			2,394
Aircraft deposits and other		(47,708	)		(77,480	)
Aircraft deposits returned		21,953			28,529

NET CASH FROM INVESTING ACTIVITIES		(99,006	)		(147,139	)

FINANCING ACTIVITIES:
Payments on short-term/long-term debt		(55,270	)		(35,038	)
Proceeds from short-term/long-term debt					650
Proceeds from common stock offerings, net					186,776
Proceeds from exercise of common stock options		1,904			254
Payments on settlement of treasury locks					(4,694	)
Proceeds from settlement of treasury locks					192
Payments of debt issue costs		(4,677	)		(5,406	)

NET CASH FROM FINANCING ACTIVITIES		(58,043	)		142,734

NET CHANGE IN CASH AND CASH EQUIVALENTS		10,767			117,129

CASH AND CASH EQUIVALENTS—Beginning of period		162,005			46,220

CASH AND CASH EQUIVALENTS—End of period	$	172,772		$	163,349

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID FOR INTEREST AND INCOME TAXES:
Interest paid	$	65,544		$	37,109
Income taxes paid		701			580

NON-CASH TRANSACTIONS:
Aircraft, inventories, and other equipment purchased through financing arrangements	$	216,610		$	523,850
Refinancing aircraft debt from manufacturer to debt permanently financed		132,291			149,501
Parts, training and lease credits from aircraft manufacturer		(6,930	)
Fair value of interest rate hedges					(4,012	)
Note payable and deemed distribution to Wexford Capital LLC					1,000

See accompanying notes to condensed consolidated financial statements (unaudited).

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REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share and per share amounts)

1. Basis of Presentation

The unaudited condensed consolidated financial statements of Republic Airways Holdings Inc. and its subsidiaries (the “Company”) as of September 30, 2006 and for the three and nine months ended September 30, 2006 and 2005 included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The subsidiaries include Chautauqua Airlines, Inc. (“Chautauqua Airlines”), Republic Airline Inc. (“Republic Airline”) and Shuttle America Corporation (“Shuttle America”). Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the interim periods presented. All adjustments are of a normal recurring nature, unless otherwise disclosed. The results of operations for the three and nine months ended September 30, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed February 27, 2006.

New Accounting Standards

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that we recognize in our financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective beginning January 1, 2007. We have not yet completed our assessment of the impact of this statement on our financial statements.

In September 2006, the FASB issued AUG AIR-1, Accounting for Planned Major Maintenance Activities, which clarifies the accounting methods that are acceptable for major maintenance expenses. The Company uses the direct expense method, which is in accordance with this pronouncement.

In September 2006, the FASB issued Statements of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007. We have not yet completed our assessment of the impact of this statement on our financial statements.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. The bulletin provides guidance on assessing materiality of the effects of prior year misstatements when quantifying current year misstatements. We have considered this bulletin and concluded that it will not have a material impact on our financial statements.

2. Risk Management

Beginning in April 2004, in anticipation of financing the purchase of regional jet aircraft on firm order with the manufacturer, the Company entered into fourteen treasury lock agreements with notional amounts totaling $373,500 and a weighted average interest rate of 4.47% with expiration dates through June 2005. Management designated the treasury lock agreements as cash flow hedges of forecasted transactions. The treasury lock agreements were settled at each respective settlement date, which were the purchase dates of the respective aircraft. The Company settled ten agreements during 2005 and the net amount paid was $4,502. As of September 30, 2005, all of the treasury locks had been settled. Amounts paid or received on the settlement date are reclassified to interest expense over the term of the respective aircraft debt. The Company reclassified $75 and $75, net of tax, to interest expense during the three month period ended September 30, 2005 and 2006, respectively, and reclassified $212 and $225, net of tax, to interest expense during the nine month period ended September 30, 2005 and 2006, respectively.

3. Comprehensive Income

Comprehensive income includes changes in the fair value of interest rate hedges that qualify as cash flow hedges in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted. The difference between net income and comprehensive income for the three and nine months ended September 30, 2006 and 2005 is detailed in the following table:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005

Net income	$	21,932	$	13,971	$	59,087	$	42,191

Net unrealized gain on unsettled treasury locks, net of tax								2,407

Net realized loss on settled treasury locks, net of tax								(2,702	)

Other comprehensive income	$	21,932	$	13,971	$	59,087	$	41,896

Accumulated other comprehensive loss as of September 30, 2006 and December 31, 2005 consists of the net unrealized loss on settled treasury locks, net of tax, of $3,951 and $4,176, respectively.

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4. Stock Compensation

The Company maintains stock-based compensation plans which allow for the issuance of nonqualified stock options to officers, other key employees of the Company, and to members of the Board of Directors. Prior to 2006, the Company accounted for the stock option plans under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations (APB 25). Stock options granted that had an exercise price below the market value were recorded as stock compensation expense in 2001 thru 2005. Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB Statement No. 123(R), Share-Based Payment (SFAS No. 123(R)). This statement applies to all awards granted after the effective date and to modifications, repurchases or cancellations of existing awards. Additionally, under the modified prospective method of adoption, the Company recognizes compensation expense for the portion of outstanding awards on the adoption date for which the requisite service period has not yet been rendered based on the grant-date fair value of those awards calculated under SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123). SFAS 123(R) also requires that forfeitures be estimated over the vesting period of an award, rather than being recognized as a reduction of compensation expense when the forfeiture actually occurs.

The following table illustrates the effect on net income from continuing operations and earnings per share from continuing operations if the Company had applied the fair value recognition provisions of SFAS 123(R) to stock-based employee compensation in fiscal year 2005.

	Three Months			Nine Months
	Ended			Ended
	September 30, 2005			September 30, 2005
Net income available for common shareholders, as reported	$	13,971		$	42,191

Add: Stock-based employee compensation expense determined under the intrinsic value based method, net of tax		11			75
Deduct: Stock-based employee compensation expense determined under the fair value based method, net of tax		(383	)		(1,315	)
Pro forma net income available for common shareholders	$	13,599		$	40,951

Pro forma net income available per common share:
Basic	$	0.35		$	1.21
Diluted	$	0.34		$	1.18

The fair value of options granted is determined using the Black-Scholes option pricing model. There were 15,000 stock options granted to non-employee directors during the three and nine months ended September 30, 2005.

Employee Stock Options

In connection with employment agreements for certain key employees, the Company granted options to purchase shares of the Company's common stock with exercise prices ranging from $1.75 to $13.00. These stock options vest ratably over the term of the employment agreements (generally 48 months) and are exercisable for five years following the vesting dates. Additional options have been granted and these options vest ratably over periods ranging from 8 months to 48 months, and are exercisable until 10 years from the date of grant.

The 2002 Equity Incentive Plan provides for the granting of up to 2,180,000 shares of our common stock. The stock options vest ratably over 48 months and were granted with exercise prices equal to market prices on the grant date. The options expire ten years from the date of grant. Options are granted to officers and key employees selected by the Compensation Committee of the Board of Directors.

Non-employee Director Stock Options

The Company has also granted options for non-employee directors under the 2002 Equity Incentive Plan at a price equal to the fair market value of the Common Stock on the date of the grant. Each non-employee director was automatically granted options to purchase shares of common stock in May 2004 on the day prior to commencement of the initial public offering. The options vest over a 3 year period with 1/24 of the shares vesting monthly for the first 12 months and 1/48 of the shares vesting monthly over the remaining 24 months. The non-employee directors are to receive 2,500 options on the first trading day after each annual meeting of stockholders at which he or she is re-elected as a non-employee director. These options vest ratably over 12 months of continuous service. The non-employee options are exercisable until 10 years from the date of grant. During the nine months ended September 30, 2006, 15,000 stock options were granted to non-employee directors.

The following table summarizes the activity under the Company's stock option plans for the nine months ended September 30, 2006:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value In Thousands
Outstanding at January 1, 2006		2,624,435		$	9.17
Granted		55,000			15.88
Exercised		(644,118	)		2.96
Forfeited		(74,800	)		13.17
Outstanding at September 30, 2006		1,960,517		$	11.25		7.1 years	$	8,380

Exercisable at September 30, 2006		1,370,017		$	10.22		6.4 years	$	7,262

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During the three and nine months ended September 30, 2006, $343 ($206 net of tax) and $957 ($574 net of tax), respectively were charged to expense relating to the stock option plans. The total intrinsic value of options exercised during the nine month period ended September 30, 2006 was $8,370. The Company has a policy of issuing new common shares to satisfy the exercise of stock options. As of September 30, 2006, there was $1,916 of total unrecognized pre-tax compensation cost related to non-vested share-based compensation arrangements granted under the stock option plans that is expected to be recognized through 2010.

In addition to stock options, the Company has issued warrants to a code-share partner. Warrants issued have been accounted for under SFAS No. 123 and EITF 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, at fair value on the measurement date. Accordingly, there is no impact on the accounting for warrants from the adoption of SFAS 123(R).

5. Net Income Per Common Share

Net income per common share is based on the weighted average number of shares outstanding during the period. The following is a reconciliation of the weighted average common shares for the basic and diluted per share computations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005

Weighted-average common shares outstanding for basic net income per common share		42,205,300		39,283,985		41,995,676		33,885,551

Effect of dilutive employee stock options and warrants		1,333,880		865,846		1,301,173		739,211

Adjusted weighted-average common shares outstanding and assumed conversions for diluted net income per common share		43,539,180		40,149,831		43,296,849		34,624,762

Employee stock options and warrants of 1,816,620 for the nine months ended September 30, 2005 are not included in the calculation of diluted net income per share due to their anti-dilutive impact. There were no employee stock options and warrants excluded from the calculation in the three months ended September 30, 2005 and 2006 and the nine months ended September 30, 2006.

6. Debt

During the nine months ended September 30, 2006, the Company purchased 10 aircraft, all of which were debt-financed. The debt was obtained from banks and the aircraft manufacturer for terms between 12 and 15 years at interest rates ranging from 4.75% to 7.52%. The total debt incurred for the 10 aircraft was $176,050.

During the three months ended September 30, 2006, the Company purchased five previously leased ERJ-145 aircraft from the lessors. Debt was obtained for $40,560 from a third-party lender for a term of ten years at interest rates between 8.46% and 8.49%.

Chautauqua Airlines’ debt agreements with the bank were amended during the nine months ended September 30, 2006 to a Republic Airways Holdings Inc. consolidated agreement. The Company’s debt agreements with the bank contain restrictive covenants that require, among other things, that the Company maintain a certain fixed charge coverage ratio and a debt to earnings leverage ratio. The Company was not in compliance with one of its ratios at September 30, 2006; however, it received a waiver from the bank. Debt with the bank as of September 30, 2006 and December 31, 2005 of $2,142 and $2,624 respectively, is classified within the current portion of long-term debt.

7. Commitments and Contingencies

As of September 30, 2006, the Company has one ERJ-170 regional jet on order to be delivered during the three months ending December 31, 2006. During the three months ended September 30, 2006, the Company reached an agreement to purchase 30 ERJ-175 regional jet aircraft from the manufacturer. The current total list price for these 31 regional jets is $928,119. The Company has a commitment to obtain financing for all 31 of these regional jets. The Company also has a commitment to acquire nine spare aircraft engines with a current list price of approximately $34,000. These commitments are subject to customary closing conditions.

During the nine months ended September 30, 2006, the Company made aircraft deposits in accordance with the aircraft commitments of $44,200. The aircraft deposits are included in other assets. All payments were made from cash generated from operations.

In July 2006, the Company announced that it had reached an agreement to operate forty-four 50-seat regional jets for Continental Airlines, Inc. Twenty of the aircraft are ERJ-145 regional jets that will be transitioned from the Company’s current US Airways operations. The Company expects the remaining 24 aircraft to be used CRJ-200 regional jets, acquired on short-term operating leases consistent with the terms of the Continental agreement. All 44 of the aircraft are expected to be placed into service for Continental between January and July 2007 and will be operated for terms that vary from two years to five years. Under certain conditions Continental may extend the term on the aircraft up to five additional years.

8. Subsequent Event

Consistent with the Company's agreement with Continental, the Company entered into an agreement on October 24, 2006, which will provide lease arrangements for 12 used CRJ-200LR regional aircraft with lease terms from 24 to 36 months. In addition, the Company entered into a letter of intent to lease 12 used CRJ-200LR regional aircraft. The Company took delivery of the first aircraft under the Agreement on November 1, 2006.

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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements. The Company may, from time to time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements encompass the Company’s beliefs, expectations, hopes or intentions regarding future events. Words such as "expects," "intends," "believes," "anticipates," "should," "likely" and similar expressions identify forward-looking statements. All forward-looking statements included in this release are made as of the date hereof and are based on information available to the Company as of such date. The Company assumes no obligation to update any forward-looking statement. Actual results may vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others, the risks discussed in our Annual Report on Form 10-K and our other filings made with the Securities and Exchange Commission, which discussions are incorporated into this Quarterly Report on Form 10-Q by reference. As used herein, "unit cost" means operating cost per Available Seat Mile (ASM).

Overview

We are a holding company that owns Chautauqua Airlines, Inc., Republic Airline Inc. and Shuttle America Corporation. As of September 30, 2006, we offered scheduled passenger service on approximately 1,000 flights daily to 91 cities in 36 states, Canada, Mexico and the U.S. Virgin Islands pursuant to code-share agreements with American, US Airways, Delta Air Lines and United Airlines Inc. Currently, substantially all of our flights are operated as US Airways Express, AmericanConnection, Delta Connection or United Express with portions of their regional service, including service out of their hubs and focus cities in Boston, Chicago, Fort Lauderdale, Indianapolis, New York, Orlando, Philadelphia, Pittsburgh, Washington, D.C. and St. Louis. We have established Chautauqua to operate regional jets having 50 or fewer seats; Shuttle America to operate regional jets having 70-seats; and Republic Airline to operate regional jets having more than 70-seats.

The Company has long-term, fixed-fee code-share agreements with each of its partners that are subject to the Company maintaining specified performance levels. Pursuant to these fixed-fee agreements, which provide for minimum aircraft utilization at fixed rates, the Company is authorized to use its partners' two-letter flight designation codes to identify its flights and fares in the Company’s partners' computer reservation systems, to paint its aircraft in the style of the partners, to use their service marks and to market the Company as a carrier for its partners. In addition, in connection with a marketing agreement among Delta, Continental Airlines and Northwest Airlines, certain of the routes that the Company flies using Delta's flight designator code are also flown under Continental's or Northwest's designator codes. The Company believes that fixed-fee agreements reduce its exposure to fluctuations in fuel prices, fare competition and passenger volumes. The Company’s development of relationships with multiple major airlines has enabled them to reduce its dependence on any single airline and allocate its overhead more efficiently, allowing the Company to reduce the cost of its services to the Company’s major airline partners. For the three and nine months ended September 30, 2006, respectively, US Airways accounted for approximately 24% and 23% of the Company’s passenger revenues, Delta accounted for approximately 36% and 35% of the Company’s passenger revenues, American accounted for approximately 10% and 11% of the Company’s passenger revenues and United accounted for approximately 30% and 31% of the Company’s passenger revenues.

On July 21, 2006, we entered into a capacity purchase agreement or “Capacity Agreement” with, Continental Airlines, Inc. and Chautauqua, pursuant to which Chautauqua will operate forty-four 50 seat regional jets in the Continental Express operation. Under the Capacity Agreement, Continental will purchase all the capacity from the aircraft at predetermined rates. The Capacity Agreement will become effective as of the date when the first aircraft is placed into service and will expire upon the exit date of the last aircraft pursuant to the Capacity Agreement, subject to early termination by either party for cause or in case of breach by the other party. The first aircraft is expected to be placed into service in January 2007 and the last aircraft by July 2007.

On July 21, 2006, we amended our jet service agreement between US Airways and Chautauqua. The amendment, among other things, removes 20 aircraft from service under the agreement.

On July 21, 2006, we also amended the jet service agreement between US Airways and Republic Airline. The amendment, among other things, provides for the addition of thirty 86 seat Embraer 175 aircraft to be placed into service under the terms of the agreement as US Airways Express. The new Embraer 175 aircraft will replace 20 existing 50 seat Embraer 145s operated for US Airways Express by Chautauqua which we will transition to Continental under the Capacity Agreement during the first half of 2007. The aircraft added under the amended agreement will each have a term of twelve years.

Certain Statistical Information

	Operating Expenses per ASM in cents
	Three Months Ended September 30,				Nine Months Ended September 30,
	2006		2005		2006		2005

Wages and benefits		1.87		2.29		1.94		2.25
Aircraft fuel		3.62		4.21		3.71		4.24
Landing fees		0.46		0.48		0.45		0.49
Aircraft and engine rent		1.01		1.17		1.04		1.22
Maintenance and repair		1.17		1.12		1.13		1.20
Insurance and taxes		0.19		0.26		0.21		0.27
Depreciation and amortization		0.96		0.94		1.00		0.93
Other		0.78		0.92		0.82		0.97
Total operating expenses		10.06		11.39		10.30		11.57

Interest expense		0.93		0.96		1.00		0.90

Total operating expenses and interest expense		10.99		12.35		11.30		12.47

Total operating expenses and interest expense less fuel		7.37		8.14		7.59		8.23

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The following table sets forth the major operational statistics and the percentage-of-change for the periods identified below:

	Three Months Ended September 30,									Nine Months Ended September 30,
	Increase/(Decrease)									Increase/(Decrease)
	2006			2005/2006			2005			2006			2005/2006			2005
Revenue passengers		3,456,979			44.9	%		2,385,522			9,340,356			38.0	%		6,769,088
Revenue passenger miles (1)		1,808,115,466			56.8	%		1,153,478,260			4,918,382,705			51.6	%		3,243,886,882
Available seat miles (2)		2,479,659,340			46.5	%		1,692,544,465			6,702,457,749			42.4	%		4,705,310,182
Passenger load factor (3)		72.9	%		4.7pp			68.2	%		73.4	%		4.5pp			68.9	%
Cost per available seat mile (cents) (4)		10.99			(11.0	%)		12.35			11.30			(9.4	%)		12.47
Average price per gallon of fuel (5)		$2.28			6.0	%		$2.15			$2.22			18.1	%		$1.88
Fuel gallons consumed (6)		38,988,147			18.4	%		32,917,940			111,202,605			5.5	%		105,408,462
Block hours (7)		149,288			23.9	%		120,454			407,540			18.1	%		345,061
Average length of aircraft flight (miles)		512			6.9	%		479			517			9.8	%		471
Average daily utilization of each aircraft (hours) (8)		10.6			1.0	%		10.5			10.4			(1.9	%)		10.6
Actual aircraft in service at end of the period		170			16.4	%		146			170			16.4	%		146

(1) Revenue passenger miles are the number of scheduled miles flown by revenue passengers.

(2) Available seat miles is the number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.

(3) Revenue passenger miles divided by available seat miles.

(4) Total operating and interest expenses divided by available seat miles.

(5) Cost of aircraft fuel, including fuel taxes and into-plane fees.

(6) Excludes miscellaneous fuel and fuel consumed for US Airways Express operations in 2006. US Airways elected to provide fuel directly beginning in May 2005.

(7) Hours from takeoff to landing, including taxi time.

(8) Average number of hours per day that an aircraft flown in revenue service is operated (from gate departure to gate arrival).

Three Months Ended September 30, 2006 Compared to Three Months Ended September 30, 2005

Operating revenue in 2006 increased by 33.0%, or $75.9 million, to $306.1 million in 2006 compared to $230.2 million in 2005. The increase was due to the additional regional jets added to the fixed-fee flying. Forty additional 70-seat regional jets were placed into fixed-fee service since September 30, 2005. Twenty-five were added for US Airways, 13 were added for Delta, and two were added for United. Other operating revenue increased $2.7 million due to sublease revenue on aircraft and payments from US Airways for the use of aircraft take-off and landing slots.

Total operating and interest expenses increased by 30.4% or $63.5 million, to $272.5 million in 2006 compared to $209.0 million in 2005 due to the increase in flight operations. The unit cost on total operating and interest expenses, excluding fuel charges, decreased 9.5% to 7.4¢ in 2006 from 8.1¢ in 2005. Factors relating to the change in operating expenses are discussed below.

Wages and benefits increased by 20.0%, or $7.7 million, to $46.4 million for 2006 compared to $38.7 million for 2005. The increase was mainly due to a $6.6 million increase in flight crew, maintenance operations and indirect wage expenses to support the increase in 70-seat regional jet operations and a $1.9 million increase in employee benefit costs. These increases were partially offset by a $1.3 million decrease in the wage expense for Customer Service employees due to the elimination of ground handling operations for American in St. Louis in March 2006. The unit cost decreased to 1.9¢ in 2006 from 2.3¢ in 2005.

Aircraft fuel expense increased 26.1%, or $18.6 million, to $89.8 million for 2006 compared to $71.2 million for 2005 due to an 18.4% increase in the amount of gallons consumed and a 6.0% increase in the average fuel price. The average price per gallon was $2.15 in 2005 and $2.28 in 2006. The unit cost decreased to 3.6¢ in 2006 from 4.2¢ in 2005.

Landing fees increased by 39.1%, or $3.2 million, to $11.4 million in 2006 compared to $8.2 million in 2005. The increase is due to a 19.0% increase in departures, combined with a 20.1% higher average landing weight per departure, due to the additional 70-seat regional jets. The unit cost remained unchanged at 0.5¢.

Aircraft and engine rent increased by 26.6%, or $5.3 million, to $25.1 million in 2006 compared to $19.8 million in 2005 due to a $7.1 million increase attributable to the addition of 15 leased regional jets since September 2005, partially offset by a $1.8 million decrease attributable to the removal of 7 leased turboprops and the effect of purchasing five previously leased aircraft during the third quarter of 2006. The unit cost decreased to 1.0¢ in 2006 from 1.2¢ in 2005.

Maintenance and repair expenses increased by 52.4%, or $9.9 million, to $29.0 million in 2006 compared to $19.0 million for 2005. The increase is mainly due to an increase in flying the 70-seat regional jet aircraft. Additionally, maintenance expenses on small jets (37-50 seats) increased $2.3 million over 2005 due mainly to contractual rate increases on certain of our engines under a long-term maintenance agreement, which are reimbursed as pass-through expenses. The unit cost increased to 1.2¢ in 2006 from 1.1¢ in 2005.

Insurance and taxes increased 8.0% or $0.3 million to $4.7 million in 2006 compared to $4.4 million in 2005 due to the increase in regional jet operations, but was partially offset by a decrease in third-party insurance rates. The unit cost decreased to 0.2¢ in 2006 from 0.3¢ in 2005.

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Depreciation and amortization increased 49.4%, or $7.9 million, to $23.8 million in 2006 compared to $15.9 million in 2005 due mainly to $6.8 million of additional depreciation on forty, 70-seat regional jet aircraft purchased since September 30, 2005 and $0.9 million of amortization for aircraft take-off and landing slots. The unit costs increased to 1.0¢ in 2006 from 0.9¢ in 2005.

Other expenses increased 24.4%, or $3.8 million, to $19.4 million in 2006 from $15.6 million in 2005, due primarily to $7.3 million of increases in flight crew training and travel expenses, passenger catering costs, and administrative expenses to support the increased 70-seat regional jet operations, offset by a decrease of $3.4 million in payments made to American in 2005 related to operating 70-seat aircraft at Chautauqua.. The unit cost decreased to 0.8¢ in 2006 from 0.9¢ in 2005.

Interest expense increased 41.5% or $6.7 million, to $22.9 million in 2006 from $16.2 million in 2005 primarily due to interest on debt related to the delivery of forty, 70-seat regional jet aircraft since September 30, 2005. The weighted average interest rate increased to 6.0% in 2006 from 5.6% in 2005. The unit cost decreased to 0.9¢ in 2006 from 1.0¢ in 2005.

We incurred income tax expense of $14.3 million during 2006, compared to $9.0 million in 2005. The effective tax rate for 2006 of 39.5% is higher than the statutory rate due primarily to state income taxes. The effective tax rate for 2005 was 39.3%.

Nine Months Ended September 30, 2006 Compared to Nine Months Ended September 30, 2005

Operating revenue in 2006 increased by 29.8%, or $194.5 million, to $847.8 million in 2006 compared to $653.2 million in 2005. The increase was due to the additional regional jets added to the fixed-fee flying. Forty additional 70-seat regional jets were placed into fixed-fee service since September 30, 2005. Twenty-five were added for US Airways, 13 were added for Delta, and two were added for United. Other operating revenue increased $11.0 million due to sublease revenue on aircraft and payments from US Airways for the use of aircraft take-off and landing slots.

Total operating and interest expenses increased by 29.1% or $170.7 million, to $757.5 million in 2006 compared to $586.8 million in 2005 due to the increase in flight operations of the 70-seat regional jets. The unit cost on total operating and interest expenses, excluding fuel charges, decreased 7.8% to 7.6¢ in 2006 from 8.2¢ in 2005. Factors relating to the change in operating expenses are discussed below.

Wages and benefits increased by 23.4%, or $24.7 million, to $130.2 million for 2006 compared to $105.5 million for 2005. The increase was primarily due to a $21.0 million increase in flight crew, maintenance operations and indirect wage expenses to support the increase in 70-seat regional jet operations and a $4.7 million increase in employee benefit costs. These increases were offset by a $2.9 million decrease in the wage expense for Customer Service employees due to the elimination of ground handling operations for American in St. Louis in March 2006. The unit cost decreased to 1.9¢ in 2006 from 2.3¢ in 2005.

Aircraft fuel expense increased 24.5%, or $48.9 million, to $248.4 million for 2006 compared to $199.5 million for 2005 due mainly to a 18.1% increase in the average fuel price. The average price per gallon was $2.22 in 2006 compared to $1.88 in 2005. Beginning in May 2005, we stopped recording fuel expense and the related revenue reimbursement for US Airways operations because US Airways elected to provide the fuel directly for the aircraft that are operated by us as US Airways Express. The unit cost decreased to 3.7¢ in 2006 from 4.2¢ in 2005.

Landing fees increased by 32.7%, or $7.5 million, to $30.5 million in 2006 compared to $23.0 million in 2005. The increase is due to higher average landing weight per departure due to the additional 70-seat regional jets and a 12.9% increase in departures. The unit cost remained unchanged at 0.5¢.

Aircraft and engine rent increased by 21.5%, or $12.4 million, to $69.9 million in 2006 compared to $57.5 million in 2005 due to a $16.2 million increase attributable to the addition of 15 leased regional jets since September 2005, partially offset by a $3.8 million decrease attributable to the removal of 7 leased turboprops and the effect of purchasing five previously leased aircraft during the third of 2006. The unit costs decreased to 1.0¢ in 2006 from 1.2¢ in 2005.

Maintenance and repair expenses increased by 34.1%, or $19.3 million, to $75.9 million in 2006 compared to $56.6 million for 2005. The increase is due mainly to an increase in flying the 70-seat regional jet aircraft. Additionally, maintenance expenses on small jets (37-50 seats) increased $4.5 million over 2005 due mainly to contractual rate increases on certain of our engines under a long-term maintenance agreement, which are reimbursed as pass-through expenses. The increase in regional jet expenses was partially offset by a decrease of $6.0 million from 2005 maintenance expenses as a result of the removal of the turboprops. The unit cost decreased to 1.1¢ in 2006 from 1.2¢ in 2005.

Insurance and taxes increased 12.0%, or $1.5 million to $14.0 million in 2006 compared to $12.5 million in 2005 due to the increase in regional jet operations, but was partially offset by a decrease in third-party insurance rates. The unit cost decreased to 0.2¢ in 2006 from 0.3¢ in 2005.

Depreciation and amortization increased 53.2%, or $23.4 million, to $67.3 million in 2006 compared to $43.9 million in 2005 due primarily to $20.3 million of additional depreciation on forty 70- seat regional jet aircraft purchased since September 30, 2005 and approximately $2.8 million of amortization for aircraft take-off and landing slots. The unit cost increased to 1.0¢ in 2006 from 0.9¢ in 2005.

Other expenses increased 19.3%, or $8.9 million, to $54.7 million in 2006 from $45.8 million in 2005, due primarily to $14.4 million of increases in flight crew training and travel expenses, passenger catering costs, and administrative expenses to support the increased 70-seat regional jet operations, offset by a decrease of $6.2 million in payments made to American in 2005 related to operating 70-seat aircraft at Chautauqua. The unit cost decreased to 0.8¢ in 2006 from 1.0¢ in 2005.

Interest expense increased 57.1% or $24.3 million, to $66.8 million in 2006 from $42.5 million in 2005 primarily due to interest on debt related to the purchase of forty 70-seat regional jet aircraft since September 30, 2005. The weighted average interest rate increased to 6.1% in 2006 from 5.4% in 2005. The unit cost increased to 1.0¢ in 2006 from 0.9¢ in 2005.

We incurred income tax expense of $38.4 million during 2006, compared to $27.4 million in 2005 due to higher pre-tax income. The effective tax rate for 2006 and 2005 of 39.4% is higher than the statutory rate due primarily to state income taxes.

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MASTER FACILITY

AND

GROUND HANDLING AGREEMENT

among

Continental Airlines, Inc.

Republic Airways Holdings Inc.

and

Chautauqua Airlines, Inc.

Executed as of July 21, 2006

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MASTER FACILITY AND GROUND HANDLING AGREEMENT

This Master Facility and Ground Handling Agreement (this “Agreement”), dated as of July 21, 2006 is among Continental Airlines, Inc., a Delaware corporation (“Continental”), Republic Airways Holdings Inc., a Delaware corporation (“Parent”) and Chautauqua Airlines, Inc., an Indiana corporation and a wholly-owned subsidiary of Parent (“Carrier” and, collectively with Parent, “Contractor”).

WHEREAS, Continental, Parent and Carrier are parties to that certain Capacity Purchase Agreement, dated as of July 21, 2006 (as amended from time to time, the “Capacity Purchase Agreement”);

WHEREAS, Continental, Parent and Carrier desire to establish the terms by which both Continental and Contractor will use and share airport facilities in furtherance of the Capacity Purchase Agreement, to include, without limitation, the mutual or coordinated use of airport facilities at any airport in or out of which Continental operates any flight or Contractor operates any Scheduled Flight, and the terms by which each of them will provide certain ground handling services for the other at certain airports in furtherance of the Capacity Purchase Agreement;

NOW, THEREFORE, for and in consideration of the mutual covenants and obligations hereinafter contained, Continental and Contractor agree as follows:

Section 1. Defined Terms. Capitalized terms used in this Agreement (including, unless otherwise defined therein, in the Exhibits, Schedules and Annexes to this Agreement) and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Capacity Purchase Agreement. The following terms shall have the meanings set forth below:

“Airport Authority” shall mean any municipal, county, state or federal governmental authority, or any private authority, owning or operating any Applicable Airport with authority to lease, convey or otherwise grant rights to use any airport facilities.

“Applicable Airport” shall mean any Continental Airport or Contractor Airport.

“Continental Airport” shall mean (i) each Hub Airport and (ii) each other airport at which Continental provides or arranges for the provision of ground handling services pursuant to the Continental Ground Handling Agreement.

“Continental Ground Handling Agreement” shall mean that certain IATA Standard Ground Handling Agreement (April 1993 version) between Continental and Contractor, together with Annex A thereto (Ground Handling Services, April 1993 version), and Annex B thereto substantially in the form of Exhibit C hereto (or as otherwise agreed) providing for the provision by or on behalf of Continental to Contractor of ground handling services at the airports specified therein.

“Contractor Airport” shall mean any airport at which Contractor provides or arranges for the provision of ground handling services pursuant to the Contractor Ground Handling Agreement (except for any Hub Airport), and any other airport into or out of which Contractor operates any Scheduled Flight and which is not a Continental Airport.

“Contractor Ground Handling Agreement” shall mean that certain IATA Standard Ground Handling Agreement (April 1993 version) between Contractor and Continental, together with Annex A thereto (Ground Handling Services, April 1993 version), and Annex B thereto substantially in the form of Exhibit D hereto (or as otherwise agreed) providing for the provision by or on behalf of Contractor to Continental and, at Continental’s request from time to time, its codeshare partners, of ground handling services at the airports specified therein.

“Contractor Services” shall mean Regional Airline Services as contemplated by the Capacity Purchase Agreement and the ground handling services contemplated by the Contractor Ground Handling Agreement.

“Contractor Terminal Facility” shall mean any Terminal Facility to the extent owned, leased, subleased or otherwise retained or used by Contractor for the provision of Contractor Services.

“Hub Airport” shall mean, as of any date of determination, [^*].

“Non-Terminal Facilities” shall mean all maintenance, training, office and other facilities and spaces at an Applicable Airport or adjacent thereto that are not Terminal Facilities.

“Terminal Facilities” shall mean all terminal facilities and spaces leased, subleased or otherwise retained or used by a party at an Applicable Airport, including without limitation all all passenger lounges, passenger holding areas, aircraft parking positions (which may or may not be adjacent to a passenger holding area) and associated ramp spaces, gates (including loading bridges and associated ground equipment parking areas), ticketing counters, curbside check-in facilities, baggage makeup areas, inbound baggage areas, crew rooms, in-terminal office spaces, associated employee parking areas and other terminal facilities.

___________

*Confidential

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“Transfer” shall mean any lease, sublease, assignment, disposition or other transfer.

Section 2. Lease, Use and Modification of Airport Facilities.

(a) Continental and Contractor agree that the use by Contractor of all Terminal Facilities at all Applicable Airports for the provision of Contractor Services shall be at the direction of Continental. In furtherance of this Section 2(a), from time to time, and notwithstanding the execution of any lease, sublease or other agreement pursuant to this Section 2, at the request and direction of Continental and subject to Section 2(b), and subject to the provisions of Sections 6(c) and 6(f) relating to Transfers in connection with certain terminations, Contractor shall:

(i) use its commercially reasonable efforts to enter into a lease, sublease or other appropriate agreement with any Airport Authority at any Applicable Airport for the lease, sublease or use of any Terminal Facilities used or to be used in connection with the provision of Contractor Services;

(ii) use its commercially reasonable efforts to amend, modify or terminate any agreement with any Airport Authority at any Applicable Airport for the lease, sublease or use of any Contractor Terminal Facilities;

(iii) use its commercially reasonable efforts to obtain the consent of any relevant Airport Authority at any Applicable Airport for the Transfer to Continental or its designee of any lease, sublease or other agreement in respect of any Contractor Terminal Facility, or for the right of Continental or its designee to use any Contractor Terminal Facility;

(iv) enter into a sublease substantially in the form of Exhibit A hereto (or as otherwise agreed) for the sublease to Continental or its designee of Contractor’s interest in any Contractor Terminal Facility;

(v) enter into an assignment substantially in the form of Exhibit B hereto (or as otherwise agreed) for the assignment to Continental or its designee of Contractor’s interest in any Contractor Terminal Facility;

(vi) enter into a sublease substantially in the form of Exhibit A hereto (or as otherwise agreed) for the sublease to Contractor of Continental’s interest in any Terminal Facility used or to be used in connection with the provision of Contractor Services;

(vii) enter into an assignment substantially in the form of Exhibit B hereto (or as otherwise agreed) for the assignment to Contractor of Continental’s interest in any Terminal Facility used or to be used in connection with the provision of Contractor Services; and

(viii) take any other action reasonably requested by Continental in furtherance of this Section 2(a).

(b) The assignments and subleases to be entered into pursuant to Section 2(a) shall be subject to the rights of the Applicable Airports in such Terminal Facilities and to the receipt of all necessary consents from Airport Authorities and other third parties to such sublease or assignment.

(c) Each of Contractor and Continental shall pay for all landing fees for its flights at all Applicable Airports, and to the extent that the other party is obligated to make such payments under any applicable lease or other agreement, the first party hereby indemnifies and agrees to hold harmless the other party for all such amounts.

(d) Contractor shall perform in a timely manner all obligations under all leases, subleases and other agreements to which Contractor is or becomes a party for the use of Contractor Terminal Facilities, including without limitation making in a timely manner all payments of rent and other amounts due under such agreement, and shall use commercially reasonable efforts to keep such agreements in effect (or to promptly renew or extend such agreements on substantially similar terms as directed by Continental).

(e) Contractor shall obtain the written consent of Continental prior to entering into any lease or other agreement for the use or modification of, or otherwise relating to, any Contractor Terminal Facilities (or other airport facilities which would become Contractor Terminal Facilities), or amending or modifying in any manner any such agreement, or consenting to any of the same.

(f) Contractor shall give Continental at least 30 days’ prior written notice before ceasing to use any Contractor Terminal Facilities, provided that no such notice shall be required where such use is ceasing because Continental has informed Contractor that no Scheduled Flights will be scheduled in or out of such location.

Section 3. Exclusivity.

Each Contractor Terminal Facility used for the provision of Regional Airline Services shall be used by Contractor exclusively for the provision of Contractor Services, and may not be used by Contractor in connection with any other flights, including any flights using an Uncovered Aircraft, or for any other purpose; provided that the foregoing limitation shall not apply to:

(i) baggage claim and other similar facilities that are leased or otherwise made available to all air carriers at such airport on a common-use or joint-use basis; or

(ii) to any facilities that are properly required by an Airport Authority to be made available for use by others in accordance with any applicable agreement that is in place as of the date hereof or has been approved by Continental under Section 2(f).

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Section 4. Ground Handling.

(a) Each of Continental and Contractor shall enter into the Continental Ground Handling Agreement. Notwithstanding the identity of the lessee, sublessor or sublessee under any lease or other agreement relating to any Terminal Facilities, Continental shall use commercially reasonable efforts to provide Contractor with access to all Terminal Facilities at each Continental Airport, and at any Contractor Airport where Continental is the lessee or sublessee, in each case as reasonably necessary for the provision of Regional Airline Services. In connection with Continental granting to Contractor access to any Terminal Facilities leased by Continental pursuant to this Section 4(a), Contractor covenants and agrees, for the benefit of Continental and its lessor, that Contractor shall not, by its use and occupancy of such facilities, violate any of the provisions of such lease or other agreements relating thereto which have been made available to Contractor, and that it shall not knowingly permit any breach of any of the obligations of Continental under such agreements, and Contractor further agrees to release and indemnify Continental in respect of such facilities to the same extent as provided in Section 11 of the Form of Sublease Agreement attached hereto as Exhibit A (which provisions are hereby incorporated by reference), as if a sublease in respect of such facilities had been entered into by Continental and Contractor.

(b) Each of Continental and Contractor shall enter into the Contractor Ground Handling Agreement. Notwithstanding the identity of the lessee, sublessor or sublessee under any lease or other agreement relating to any Terminal Facilities, Contractor shall use commercially reasonable efforts to provide Continental or its designee with access to all Terminal Facilities at each Contractor Airport, and at any Continental Airport where Contractor is the lessee or sublessee, in each case as reasonably necessary for Continental’s or such designee’s operations for which Contractor is providing ground handling services pursuant to the Contractor Ground Handling Agreement. In connection with Contractor granting to Continental access to any Terminal Facilities leased by Contractor pursuant to this Section 4(b), Continental covenants and agrees, for the benefit of Contractor and its lessor, that Continental shall not, by its use and occupancy of such facilities, violate any of the provisions of such lease or other agreements relating thereto which have been made available to Contractor, and that it shall not knowingly permit any breach of any of the obligations of Contractor under such agreements, and Continental further agrees to release and indemnify Contractor in respect of such facilities to the same extent as provided in Section 11 of the Form of Sublease Agreement attached hereto as Exhibit A (which provisions are hereby incorporated by reference), as if a sublease in respect of such facilities had been entered into by Contractor and Continental.

Section 5. Capital Costs and Modification Designs.

(a) Contractor Funded. Contractor shall fund all capital expenditures required to be made by Continental or Contractor under any lease or other appropriate agreement pertaining to Terminal Facilities to which either of them is a party:

(i) in connection with any Terminal Facility used for the provision of Contractor Services at any Contractor Airport; provided, that Contractor shall not be required to fund any expenditures that are subject to the provisions of Section 5(b)(i);

(ii) in connection with any non-passenger-related Terminal Facility (including crew rooms, break rooms and office space) used exclusively or dedicated exclusively to Contractor at any Continental Airport; and

(iii) in respect of ground handling equipment of the type described in Paragraph 1.1.3 of the Continental Ground Handling Agreement as being supplied by the Carrier (as defined therein);

provided, however, that Contractor shall not make any capital expenditures pursuant to the foregoing clauses (i) and (ii) unless Continental has specifically approved such capital expenditure, which approval shall not be unreasonably withheld if such capital expenditures are required by an applicable Airport Authority or if required under the terms of an applicable lease or other applicable agreement in effect as of the date hereof or to which Continental shall have consented pursuant to Section 2(e); and provided, further, that Contractor shall not be required to make any capital expenditures in respect of ground handling equipment of the type described in Paragraph 1.1.3 of the Contractor Ground Handling Agreement as being supplied by the Carrier (as defined therein).

-47-

(b) Continental Funded. Continental shall fund all capital expenditures required to be made by Continental or Contractor under any lease or other appropriate agreement pertaining to Terminal Facilities to which either of them is a party:

(i) in respect of any Terminal Facility used for the provision of Contractor Services as required in connection with a change to the Continental Marks or the other Identification, except for such capital expenditures made as a part of Contractor’s customary refurbishment expenditures;

(ii) in respect of any Terminal Facility used for the provision of Contractor Services at any Continental Airport; provided, that Continental shall not be required to fund any expenditures that are subject to the provisions of Section 5(a)(ii); and

(iii) in respect of ground handling equipment of the type described in Paragraph 1.1.3 of the Contractor Ground Handling Agreement as being supplied by the Carrier (as defined therein);

provided, however, that Continental shall not be required to make any capital expenditures in respect of ground handling equipment of the type described in Paragraph 1.1.3 of the Continental Ground Handling Agreement as being supplied by the Carrier (as defined therein).

(c) Airport Conversion. If during the Term a Contractor Airport becomes a Continental Airport, then Continental shall purchase from Contractor at their book value at such time (as reflected on Contractor’s books) all fixtures and other unremovable capitalized items located at the Contractor Terminal Facilities at such Airport that have been paid for by Contractor pursuant to clause (i) of Section 5(a) and approved by Continental pursuant to the proviso to Section 5(a); provided that any payment under this Section 5(c) shall not be in duplication of any payment made under Section 6. If a Continental Airport becomes a Contractor Airport, then Contractor shall have no obligation to Continental in respect of expenditures that have been made prior to such conversion pursuant to Section 5(b).

(d) Reimbursements. Any reimbursement (whether or not made in the form of a rental credit) by any Airport Authority of any capital expenditures made by Contractor or Continental and referenced in this Section 5 shall be remitted to the party (Contractor or Continental) that funded such capital expenditures, except that any such reimbursement in respect of fixtures or other capitalized items purchased by Continental pursuant to Section 5(c) shall be remitted to Continental, and provided that any such reimbursement to Contractor shall be applied, for all purposes relating to the Capacity Purchase Agreement, as a reduction of book value of the asset or assets in respect of which such capital expenditure was made.

(e) Modification Designs. The designs (including the design and construction specifications and scope of work) for any modification of Contractor Terminal Facilities, including without limitation all modifications funded by capital expenditures pursuant to Section 5, shall be generated by Continental and shall be consistent with the Continental Marks and other Identification. The contractors hired to make such modifications shall be selected by Continental. All such modifications, including without limitation all modifications funded by capital expenditures pursuant to Section 5, shall be consistent with the requirements of the applicable leases or other relevant agreements in respect of such Terminal Facilities.

Section 6. Transfer of Terminal Facilities.

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(a) Except as otherwise provided in Section 2(a), Section 5(c) or this Section 6, during the Term Contractor shall not Transfer all or any portion of its interest in any Contractor Terminal Facility. Any purported Transfer of an interest in a Contractor Terminal Facility in violation of Section 2(a), Section 5(c) or this Section 6 shall be void and ineffectual ab initio.

(b) Upon the termination or other non-temporary cessation of all Scheduled Flights into or out of any Applicable Airport at which there are any Contractor Terminal Facilities (including in connection with the termination of the Capacity Purchase Agreement), Continental shall provide written notice as soon as practicable (but in no event later than 20 Business Days after such termination or other non-temporary cessation) to Contractor of Continental’s intention to retain for itself or its designee any Contractor Terminal Facilities at such Applicable Airport.

(c) If, pursuant to a notice delivered pursuant to Section 6(b), Continental or its designee is retaining any or all of the Contractor Terminal Facilities, then Continental shall purchase from Contractor, at their book value (as reflected on Contractor’s books) at the time such notice is delivered, all fixtures and other unremovable capitalized items paid for by Contractor (with Continental’s approval pursuant to Section 5) in connection with the use of such Contractor Terminal Facilities; provided that any payment under this Section 6(c) shall not be in duplication of any payment made under Section 5(c). In addition, Contractor shall use commercially reasonable efforts to assign the rights and obligations of the lease or other applicable agreements with regard to such Contractor Terminal Facilities to Continental or its designee, in which event Continental shall assume such rights and obligations applicable to such Contractor Terminal Facilities, including without limitation the obligation to make all rental or similar payments from and after the date of such assignment, but not including any amounts owed in respect of any breach by Contractor of such lease or applicable agreements. Prior to the consummation of such assignment, Contactor shall continue to fulfill its obligations under such lease or other applicable agreements; provided that Continental shall promptly reimburse Contractor for all rental or similar payments applicable to such Contractor Terminal Facilities from the date of such notice until the lease or applicable agreements are assigned, but not including any amounts owed in respect of any breach by Contractor of such lease or applicable agreements.

(d) If, pursuant to a notice delivered pursuant to Section 6(b), Continental is not retaining one or more of the Contractor Terminal Facilities (such Contractor Terminal Facilities not so retained, the “Continental Rejected Facilities”), then Contractor shall provide written notice as soon as practicable (but in no event later than 20 Business Days after receipt of a notice pursuant to Section 6(b)) to Continental of Contractor’s intention to retain or reject the Continental Rejected Facilities; provided that if such termination of Scheduled Flights is pursuant to a termination of the Capacity Purchase Agreement for Cause, then, without limiting any of Continental’s remedies under the Capacity Purchase Agreement, Contractor shall retain all of the Continental Rejected Facilities.

(e) If, pursuant to a notice delivered pursuant to, or the proviso of, Section 6(d), Contractor is retaining any of the Continental Rejected Facilities, then Continental’s obligations under this Agreement shall terminate with respect to those Continental Rejected Facilities as of the date of such notice.

(f) If pursuant to a notice delivered pursuant to Section 6(d), Contractor is not retaining one or more of the Continental Rejected Facilities (such Continental Rejected Facilities not so retained, the “Contractor Rejected Facilities”), then Continental shall purchase from Contractor, at their book value (as reflected on Contractor’s books) at the time such notice is delivered, all fixtures and other unremovable capitalized items paid for by Contractor (with Continental’s approval pursuant to Section 5) in connection with the use of the Contractor Rejected Facilities. In addition, at Continental’s direction, Contractor shall use commercially reasonable efforts to either (i) terminate the lease or other agreement applicable with respect to any such Contractor Rejected Facility, (ii) assign the rights and obligations of such leases or other applicable agreements to Continental or its designee, in which event Continental shall assume such rights and obligations applicable to such Contractor Rejected Facilities, including without limitation the obligation to make all rental or similar payments from and after the date of such assignment, including any termination payments, but not including any amounts owed in respect of any breach by Contractor of such lease or applicable agreements; provided that any payment under this Section 6(f) shall not be in duplication of any payment made under Section 5(c), or (iii) continue to fulfill its obligations under such lease or other applicable agreements; provided that Continental shall promptly reimburse Contractor for all rental or similar payments applicable to such Contractor Rejected Facilities from the date of Contractor’s notice until the leases or applicable agreements terminate or are otherwise assigned, but not including any amounts owed in respect of any breach by Contractor of such lease or applicable agreements.

(g) Notwithstanding any other provision of this Section 6, if Contractor returns to or otherwise reuses any Contractor Rejected Facility or begins the use of any other Terminal Facilities at such airport reasonably similar to any Contractor Rejected Facility (other than at the written direction of Continental pursuant to Section 2 or otherwise pursuant to the Capacity Purchase Agreement) within six months of the termination or other non-temporary cessation of all Scheduled Flights to such airport, then Contractor shall reimburse Continental for all amounts paid to Contractor pursuant to this Section 6.

(h) For purposes of this Agreement, the parties agree that the cessation of seasonal Scheduled Flights upon the end of the relevant season shall constitute a temporary cessation if such Scheduled Flights are expected to resume in the subsequent relevant season.

7. Term. This Agreement shall terminate at the end of the Term; provided that, any right or obligation hereunder that is specifically extended beyond the termination of this Agreement shall be so extended.

8. Continental Inventory, Equipment and Non-Terminal Facilities. After receipt of notice by Continental from time to time of inventory or equipment available for acquisition from Continental, Contractor agrees to use reasonable commercial efforts to satisfy all of its inventory or equipment acquisition requirements in connection with the provision of Contractor Services by acquiring items of such inventory and equipment from Continental. After receipt of notice by Continental from time to time of any Non-Terminal Facilities available for lease or sublease from Continental, Contractor agrees to use reasonable commercial efforts to satisfy all of its Non-Terminal Facility requirements in connection with the provision of Contractor Services by leasing or subleasing any such Non-Terminal Facilities from Continental.

9. Cooperation. Notwithstanding any other provision of this Agreement, each of the parties hereto shall use commercially reasonable efforts to comply in a timely manner with all reasonable requests of the other parties made from time to time that are in furtherance of this Agreement.

10. Relationship of the Parties. Nothing in this Agreement shall be interpreted or construed as establishing among the parties a partnership, joint venture or other similar arrangement.

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11. Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon the parties hereto and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by a party hereto without the prior written consent of the other parties.

12. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The Agreement may be executed by facsimile signature.

13. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas (excluding Texas choice-of-law principles that might call for the application of the law of another jurisdiction) as to all matters, including matters of validity, construction, effect, performance and remedies.

14. Arbitration. Any Claims arising out of or related to this Agreement shall be resolved by binding arbitration pursuant to the provisions of Section 11.08 of the Capacity Purchase Agreement.

15. Confidentiality. Except as required by law or in any proceeding to enforce the provisions of this Agreement, Continental, Parent and Carrier hereby agree not to publicize or disclose to any third party the terms or conditions of this Agreement or any exhibit, schedule or appendix hereto without the prior written consent of the other parties hereto. Except as required by law or in any proceeding to enforce the provisions of this Agreement, Continental, Parent and Carrier hereby agree not to disclose to any third party any confidential information or data, both oral and written, received from the other in connection with this Agreement and designated as such by the other, without the prior written consent of the party providing such confidential information or data. If any party is served with a subpoena or other process requiring the production or disclosure of any of such agreements or information, then the party receiving such subpoena or other process, before complying with such subpoena or other process, shall immediately notify the other parties of same and permit said other parties a reasonable period of time to intervene and contest disclosure or production. Upon termination of this Agreement, each party must return to each other any confidential information or data received from the other and designated as such by the party providing such confidential information or data which is still in the recipient’s possession or control.

16. Equitable Remedies. Each of Continental, Parent and Carrier acknowledges and agrees that under certain circumstances the breach by Continental, Parent or Carrier of a term or provision of this Agreement will materially and irreparably harm the other party, that money damages will accordingly not be an adequate remedy for such breach and that the non-defaulting party, in its sole discretion and in addition to its rights under this Agreement and any other remedies it may have at law or in equity, may apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any breach of the provisions of this Agreement.

17. Subject to Capacity Purchase Agreement. Notwithstanding anything to the contrary contained in this Agreement, the provisions of this Agreement shall be subject in all respects to any provisions of the Capacity Purchase Agreement that require any true-up or reconciliation payment be made by Continental, Parent or Carrier.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date and year first written above.


	CONTINENTAL AIRLINES, INC.

	By:	/s/ Jeffery A. Smisek
		Jeffery A. Smisek
		Title: President


	CHAUTAUQUA AIRLINES, INC.

	By:	/s/ Bryan Bedford
		Name: Bryan Bedford
		Title: Chairman & CEO


	REPUBLIC AIRWAYS HOLDINGS INC.

	By:	/s/ Bryan Bedford
		Name: Bryan Bedford
		Title: Chairman, President & CEO

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EXHIBIT A

to the Master Facility and Ground Handling Agreement

FORM OF SUBLEASE AGREEMENT

This Sublease Agreement (this “Agreement”), dated as of the __ day of __________, by and between __________, a __________ corporation (“Sublessor”), whose address is __________, and __________, a __________ corporation (“Sublessee”), whose address is __________.

WITNESSETH:

WHEREAS, Sublessor and Sublessee are parties to that certain Master Facility and Ground Handling Agreement dated as of ●, 2006 ( the Master Facility Agreement");

WHEREAS, Sublessor has entered into various agreements (such agreements, as the same may have been or may from time to time be amended, the “Prime Agreements”) with other parties (“Prime Lessors”) pursuant to which the Prime Lessors have conferred upon Sublessor the right to use certain premises;

WHEREAS, Sublessor desires to allow Sublessee the right to use certain portions of the premises that Sublessor has the right to use pursuant to the Prime Agreements (such portions, together with such associated rights and privileges, such as reasonable and necessary ingress and egress thereto to the extent permitted by the applicable Prime Agreement, are described on Schedule 1 attached hereto and are hereinafter referred to as the "Subleased Premises”); and,

WHEREAS, Sublessee desires to hire and take said Subleased Premises as provided herein, in accordance with the terms and conditions hereinafter set forth.

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, Sublessor and Sublessee agree as follows:

1- Subleased Premises

a)	Sublessor hereby lets unto Sublessee and Sublessee hereby hires and takes from Sublessor the Subleased Premises in accordance with the terms and conditions hereof.

b)	Sublessee agrees and accepts the associated rights and privileges granted under the Prime Agreements, subject, however, to the following limitations and reservations, and subject to other terms and conditions set forth in this Agreement:

(1)

The Prime Agreements, insofar as they relate to the Subleased Premises, and such Prime Agreements are hereby incorporated by this reference as if fully set forth herein.

(2)

Sublessee covenants and agrees, for the benefit of Sublessor and the Prime Lessors, that it shall not, by its use and occupancy of the Subleased Premises, violate any of the provisions of the Prime Agreements relating thereto, and that it shall not knowingly permit any breach of any of the obligations of Sublessor under such Prime Agreements. Sublessee covenants and agrees that this Agreement shall be in all respects subject and subordinate to the Prime Agreements relating thereto. Nothing contained in this Agreement shall be deemed to confer upon Sublessee any rights that are not granted by or are in conflict with the applicable Prime Agreement.

(3)

Sublessor reserves the right to enter upon the Subleased Premises at any time during an emergency to take such action therein as may be required for the protection of persons or property and at other reasonable times for the purpose of inspection, maintenance, making repairs, replacements, alterations or improvements (to the Subleased Premises or to other areas), showing to prospective subtenants or other users, and for other purposes permitted elsewhere in this Agreement.

2 - CONDITION OF SUBLEASED PREMISES AND ALTERATIONS

Except to the extent that Sublessor has been granted representations or warranties under the Prime Agreements regarding the condition of the Subleased Premises the benefit of which may, pursuant to the applicable Prime Agreement and applicable law, inure to Sublessee (in which case such representations and warranties shall be deemed made by Sublessor in favor of Sublessee), Sublessee accepts the Subleased Premises AS-IS, WITH ALL FAULTS, LATENT OR KNOWN. Subject to the foregoing, Sublessor MAKES NO WARRANTIES, GUARANTEES, OR REPRESENTATIONS OF ANY KIND EITHER EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, PERTAINING TO THIS AGREEMENT OR THE PROPERTY DESCRIBED IN THIS AGREEMENT. Subject to the foregoing, SUBLESSEE HEREBY WAIVES, AND SUBLESSOR EXPRESSLY DISCLAIMS ALL WARRANTIES, GUARANTEES AND REPRESENTATIONS, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING BUT NOT LIMITING THE GENERALITY OF THE FOREGOING, ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR REGARDING THE CONDITION OF THE PROPERTY. Subject to the forgoing, IN NO EVENT SHALL SUBLESSOR’S LIABILITY OF ANY KIND UNDER THIS AGREEMENT INCLUDE ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES EVEN IF SUBLESSOR SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF POTENTIAL LOSS OR DAMAGE.

Any alterations will be the sole responsibility and expense of the Sublessee and will require the prior written approval of Sublessor and, if required under the applicable Prime Agreement, the respective Prime Lessor.

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3 - TERM

The term of this Agreement shall commence as of the date of first occupancy of the Subleased Premises by Sublessee and (unless sooner terminated as hereinafter provided) shall continue in effect thereafter until terminated pursuant to the provisions of this Agreement or the Master Facility Agreement, but under no circumstances shall it continue beyond the term of the Prime Agreement (as the same may be extended) relating to such portion of the Subleased Premises.

4 - RENTAL

For the use of the Subleased Premises, Sublessee agrees to pay to Sublessor the amounts set forth for each separate Subleased Premises location on Schedule 2 attached hereto.

5 - UTILITIES AND SERVICES

Sublessor shall not be liable for any interruptions of utilities or services arising from repairs, alterations, or improvements on or about the Subleased Premises, except (and only) to the extent that the Prime Lessor of such portion of the Subleased Premises is liable to Sublessor for such event. Sublessee shall pay Sublessor an equitably allocated pro rata share of any electrical, gas, water or other utility costs associated with the use by Sublessee of the Subleased Premises.

6 - GOVERNMENT REQUIREMENTS

Sublessee shall procure from all governmental authorities having jurisdiction over the operations of Sublessee at the Subleased Premises, all licenses, certificates, permits or other authorization which may be necessary for the conduct of its operations. Sublessee shall also at all times promptly observe, comply with, and execute the provisions of any and all present and future governmental laws, rules, regulations, requirements, orders and directives which may apply to the operations of Sublessee on the Subleased Premises or its occupancy thereof.

7 - RULES, REGULATION & ADMINISTRATION

Sublessee covenants and agrees to observe and obey the applicable rules and regulations promulgated by the applicable Prime Lessor and all reasonable rules and regulations promulgated by Sublessor for the conduct of tenants and subtenants at the Subleased Premises; and to observe and obey all present rules and regulations issued by Sublessor and/or the respective Prime Lessor for safety, health, preservation of the Subleased Premises, security and all reasonable rules and regulations promulgated in writing in the future by Sublessor and/or the respective Prime Lessor.

8 - OTHER OBLIGATIONS OF SUBLESSEE

Sublessee, in its use of all of the Subleased Premises and related facilities, and in the conduct of its operations, shall:

Conduct its operations in an orderly and proper manner. Sublessee shall not create or generate or permit the creation or generation of vibrations that could reasonably be regarded as posing a material risk of damage to the Subleased Premises; unreasonably loud noises; the emission of steam, gases or unpleasant or noxious odors; nor in any other manner annoy, disturb or be offensive to other tenants or users of the premises or common areas.

b)	Comply with all applicable federal, state and local laws, ordinances, regulations and orders. Without limiting the generality of the foregoing, to the extent that the activities of Sublessee shall be subject to the same, Sublessee shall comply with the following:

Compliance with Regulations. Sublessee shall comply with the regulations relative to nondiscrimination in federally assisted programs of the United States Department of Transportation (hereinafter “DOT”) Title 49, Code of Federal Regulations, Part 21, as they may be amended from time to time (“Regulations”), which are herein incorporated by reference and made a part of this Agreement.

Nondiscrimination Generally. Sublessee shall not discriminate on the grounds of race, color, sex, creed or national origin in the selection and retention of subcontractors, including procurements of materials and leases of equipment.

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Solicitations for Subcontractors, Including Procurements of Materials and Equipment. If required by the Regulations, in all solicitations either by competitive bidding or negotiation made by Sublessee for work to be performed under a subcontract, including procurements of materials or leases of equipment, each potential subcontractor or supplier shall be notified by Sublessee of Sublessee’s obligations under the Regulations relative to nondiscrimination on the grounds of race, color, or national origin.

Information and Reports. Sublessee shall provide all information and reports required by the Regulations or directives issued pursuant thereto and shall permit access to its books, records, accounts other sources of information, and its facilities as may be determined by the airport sponsor or the Federal Aviation Administration (the “FAA”) to be pertinent to ascertain compliance with such Regulations, orders, and instructions. Where any information required of Sublessee is in the exclusive possession of another who fails or refuses to furnish this information, Sublessee shall so certify to the airport sponsor or the FAA, as appropriate, and shall set forth what efforts it has made to obtain the information.

Nondiscrimination Covenant. Sublessee hereby covenants and agrees, as a covenant running with the land, that in the event facilities are constructed, maintained, or otherwise operated by Sublessee on the Subleased Premises for a purpose for which a DOT program or activity is extended or for another purpose involving the provision of similar services or benefits, Sublessee shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to 49 CFR Part 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation, and as said Regulations may be amended. Sublessee hereby covenants and agrees, as a covenant running with the land: (1) that no person on the grounds of race, color, sex, creed or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of the Subleased Premises, (2) that in the construction of any improvements on, over, or under such Subleased Premises and the furnishing of services thereon, no person on the grounds of race, color, sex, creed or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination, (3) that Sublessee shall use the Subleased Premises in compliance with all other requirements imposed by or pursuant to 49 CFR Part 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation, and as said Regulations may be amended. Sublessee assures that it will comply with pertinent statutes, Executive Orders and such rules as are promulgated to assure that no person shall, on the grounds of race, creed, color, national origin, sex, age, or handicap be excluded from participating in any activity conducted with or benefiting from Federal assistance.

Control the demeanor and appearance of its officers, and employees so as to maintain professional standards and upon objection from Sublessor or the respective Prime Lessor concerning the conduct, demeanor, or appearance of any person, Sublessee shall immediately take all steps necessary to remove the cause of the objection.

Not allow garbage, debris, or other waste materials (whether solid, liquid or gaseous) to collect or accumulate on the Subleased Premises or in access and service areas of the Subleased Premises used by Sublessee, and Sublessee shall cause to be removed from the Subleased Premises any debris and other waste material generated by Sublessee. Sublessee shall use all due care when effecting removal of all such waste and shall effect such removal pursuant to the applicable regulations existing at Subleased Premises for the removal of waste as promulgated by the respective Prime Lessor, Sublessor or others having jurisdiction. Sublessee shall keep all lobbies, vestibules and steps within the Subleased Premises free from dirt and rubbish.

e)	Sublessee is responsible to maintain at all times the Subleased Premises and all equipment, fixtures, and materials used by Sublessee thereon, or in other areas, in a clean and sanitary manner.

It is intended that the standards and obligations imposed by this section shall be maintained or complied with by Sublessee in addition to its compliance with any applicable governmental laws, ordinances and regulations currently in effect or which may be enacted.

9 - MAINTENANCE AND REPAIR

Sublessee shall take good care of the Subleased Premises while they are under Sublessee’s control and shall make or cause to be made at its own expense all installations, repairs, replacements, redecorating and other maintenance necessary to keep the Subleased Premises, and equipment, fixtures, furnishings and signs therein clean and in good condition and repair; all of which shall be in accordance with the standards of the facility and of a quality and class not inferior to the original material or workmanship. All maintenance and repair work undertaken by Sublessee shall be done in a good and workmanlike manner, leaving the Subleased Premises free of liens for labor and materials.

Sublessee shall maintain the Subleased Premises and conduct its operations in such manner that at no time during the letting hereunder will it do or knowingly permit to be done any act or thing upon the Subleased Premises which will invalidate or conflict with any fire and casualty insurance policies covering the Subleased Premises, or any part thereof, or the Subleased Premises, or any part thereof, or which may create a hazardous condition so as to increase the risk normally attendant upon the operations contemplated hereunder, and Sublessee shall promptly observe and comply with any and all present and future rules and regulations, requirements, orders and directions of Fire Underwriters Association or of any other board or organization which may exercise similar functions. Any increase in fire or casualty insurance premiums attributable to Sublessee’s acts or omissions under this Agreement shall be promptly reimbursed by Sublessee, upon receipt of Sublessor’s invoice therefor.

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10 - RELATIONSHIP

It is expressly understood and agreed that Sublessee is and shall be an independent contractor and operator, responsible for its acts or omissions in connection with its use and occupancy of the Subleased Premises and any related areas used by Sublessee.

11 - RELEASE AND INDEMNITY

Release

Sublessee agrees that Sublessor shall not be liable for any loss or damage to any property of any persons (including property of Sublessee, its officers, directors, employees, agents, customers, concessionaires, vendors, contractors or invitees), occasioned by theft, fire, acts of God, or any governmental body or authority, injunction, riot, war, other tenants of the Subleased Premises or the premises of which the Subleased Premises are a part, or any damage or inconvenience which may arise through repair, or alteration of the Subleased Premises, or failure to make repairs in a timely manner, or the unavailability of utilities, or for any other cause, except to the extent caused by the gross negligence or willful misconduct of Sublessor or the respective Prime Lessor, it being agreed that this release shall apply to claims resulting from the negligence of Sublessor or such Prime Lessor. Sublessor agrees that any waivers of claims for property damage contained in the respective Prime Agreement made by the Prime Lessor thereunder shall inure to the benefit of Sublessee to the extent permitted by the applicable Prime Agreement and applicable law.

Indemnity

Anything in this Agreement to the contrary notwithstanding, and without limiting Sublessee’s obligation to provide insurance pursuant to Article 12 hereunder, Sublessee covenants and agrees that it shall indemnify, defend and save harmless Sublessor, its affiliates (other than Sublessee), any affected Prime Lessor, and their respective directors, officers, employees, agents, successors and assigns (“Indemnitees”), from and against all liabilities, losses, damages, penalties, claims, costs, charges and expenses, causes of action and judgments of any nature whatsoever, including without limitation reasonable attorney's fees, costs and related expenses that may be imposed upon or incurred by the Indemnitees by reason or arising out of any of the following, except if caused by the negligence or willful misconduct of any such Indemnitee (it being acknowledged, however, that if the indemnification obligations of Sublessor under the respective Prime Agreement requires Sublessor to indemnify such Prime Lessor (or other parties therein identified) Sublessee shall be required to indemnify such Prime Lessor and other identified parties to the same extent; and that such indemnification duties may apply even where an Indemnitee under the applicable Prime Agreement is negligent or otherwise at fault):

Any occupancy, management or use of the Subleased Premises, or areas surrounding the Subleased Premises or the service areas, parking areas, or pedestrian areas in or around the Subleased Premises, by Sublessee or any of its directors, officers, agents, contractors, servants, employees, licensees, invitees, successors and assigns;

d)	Any negligence on the part of Sublessee or any of its directors, officers, agents, contractors, servants, employees, licensees, invitees, successors and assigns;

c)	Any accident, injury to or death of any person, or damage to or destruction of any property of Sublessee or its officers, directors, employees, agents, customers, concessionaires, vendors, contractors or invitees occurring in or on the Subleased Premises; or

d)	Any failure on the part Sublessee to comply with any of the covenants, agreements, terms or conditions contained in this Agreement.

12 - INSURANCE

Without limiting Sublessee’s obligation to indemnify Sublessor as provided for in this Agreement, Sublessee shall procure and maintain, at its own cost and expense, at all times during the term of this Agreement, insurance of the following types in amounts not less than those indicated with insurers satisfactory to Sublessor:

Comprehensive public liability insurance with limits of not less than [*] per occurrence for death or bodily injury; workers compensation insurance with statutory limits; and employer's liability insurance of not less than [^*] in limits.

___________

*Confidential

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Such insurance shall contain the following endorsements:

(1)

Name Sublessor and the respective Prime Lessor, its parents and subsidiaries, their respective directors, officers, employees, agents, successors and assigns, as Additional Insureds as it pertains to this Agreement and the respective Subleased Premises. Upon written notice from Sublessor, Sublessee shall promptly cause any other party required to be named by as an Additional Insured under the Prime Agreement to be so named.

(2)	Include a Severability of Interest (Cross Liability) provision whereby such insurance applies separately to each insured to the extent of Sublessee’s indemnity obligations hereunder.

(3)	Include a breach of warranty clause in favor of the Additional Insureds, whereby such insurance shall not be invalidated by any breach of warranty by Sublessee.

(4)	Include a blanket contractual liability clause to cover the liability and indemnity assumed by the Sublessee under this Agreement.

(5)	Provide that such insurance is primary without right of contribution from Sublessor’s insurance.

(6)	Provide that Sublessor is not obligated for payment of any premiums, deductibles, retention or other self-insurances thereunder.

(7)	Provide for 30 days advance notice to Sublessor and the respective Prime Lessor, by registered or certified mail, of any cancellation, reduction, lapse or other material change.

(8)	Include a Waiver of Subrogation clause in favor of the Additional Insureds.

The indemnities and insurance provisions contained or referred to herein shall survive the expiration or other termination of this Agreement.

13 - ASSIGNMENT

This Agreement and the rights and obligations created hereunder may not be assigned or delegated by Sublessee without the prior written consent of Sublessor and, if required of Sublessor under the applicable Prime Agreement, the applicable Prime Lessor; but subject to the foregoing, this Agreement and the rights and obligations of the parties hereby created, shall be binding upon and inure to the benefit of the parties hereto, their respective successors, assigns and legal representatives. Sublessor reserves the right to assign or transfer its interest hereunder without notice.

14 - WAIVER

The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the party entitled to enforce such term, but such waiver shall be effective only if it is in writing signed by the party against which such waiver is to be asserted. Unless otherwise expressly provided in this Agreement, no delay or omission on the part of any party in exercising any right or privilege under this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right or privilege under this Agreement operate as a waiver of any other right or privilege under this Agreement nor shall any single or partial exercise of any right or privilege preclude any other or further exercise thereof or the exercise of any other right or privilege under this Agreement. No failure by either party to take any action or assert any right or privilege hereunder shall be deemed to be a waiver of such right or privilege in the event of the continuation or repetition of the circumstances giving rise to such right unless expressly waived in writing by the party against whom the existence of such waiver is asserted.

15 - FORCE MAJEURE

Neither party shall be deemed in violation of this Agreement if it is prevented from performing any of its non-monetary obligations hereunder by any labor or industrial dispute; civil disturbance; vandalism or act of a public enemy; shortage of labor, energy or material; court order, regulation, action or non-action of any governmental authority; weather condition; natural disaster; act of God; or other circumstances not reasonably within its control, and which, with the exercise of due diligence, it is unable to overcome; provided that, the provisions of this Article 15 shall not apply where the time period for Sublessor to perform its obligations under the Prime Agreement would not be extended upon the occurrence of any of the foregoing. Each party shall give the other immediate notice of such interruption, shall make all reasonable efforts to eliminate it as soon as possible, and at its conclusion, shall resume performance in accordance with its obligations hereunder; provided that, neither party shall be required to settle or compromise any strike or other labor dispute to so eliminate such interruption.

16 - NOTICE

All notices made pursuant to this Agreement shall be in writing and shall be deemed given upon (a) a transmitter’s confirmation of a receipt of a facsimile transmission (but only if followed by confirmed delivery of a standard overnight courier the following Business Day or if delivered by hand the following Business Day), or (b) confirmed delivery of a standard overnight courier or delivered by hand, to the parties at the following addresses:

if to Sublessor:

[insert]

if to Sublessee:

[insert]

or to such other address as either party hereto may have furnished to the other party by a notice in writing in accordance with this Article 16.

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17 - TERMINATION

Without limiting any rights of Sublessor, either at law or in equity, to exercise any remedies available to Sublessor as may be afforded by operation of law, this Agreement may be terminated as follows:

Immediately upon termination or expiration of the respective Prime Agreement (notwithstanding that such agreement may remain in effect as to space other than the Subleased Premises), or upon expiration or termination of Sublessor’s right to grant Sublessee the right to occupy and use the applicable portion of the Subleased Premises.

Immediately without notice to Sublessee if Sublessee files a voluntary petition in bankruptcy or if proceedings in bankruptcy shall be instituted against it and not dismissed within 30 days, or that a court shall take jurisdiction of Sublessee or its assets pursuant to proceedings brought under the provisions of any Federal Reorganization Act, or that a receiver of Sublessee’s assets shall be appointed and such taking or appointment shall not be stayed or vacated within a period of 30 days.

c)	Immediately upon written notice to Sublessee, if Sublessee fails to pay any installment of rent or additional rent within 10 days after receipt of written notice that the same was not paid when due.

Immediately upon written notice to Sublessee, if Sublessee fails to perform, keep, and observe any of the terms, covenants or conditions herein contained on the part of Sublessee to be performed, kept, or observed and such failure continues for 30 days after the date of written notice thereof is sent to Sublessee; provided that, if Sublessor would have a lesser period of time to cure such default under the applicable Prime Agreement, then Sublessee shall only be permitted the time period that Sublessor would be permitted to cure such default, less 48 hours; it being further agreed that Sublessor may, but shall not be obligated to, take any action it reasonably deems necessary or advisable at Sublessee’ expense to cure such default if such default causes interference with Sublessor’s operations or if it is determined by Sublessor, acting reasonably, that such default is likely to result in Sublessor’s loss of the use of the Subleased Premises pursuant to the Prime Agreement.

e)	Immediately by either party upon the acquisition or condemnation of the Subleased Premises by eminent domain, in which event Sublessee shall have no claim for the unexpired term nor a claim for any part of the award made for the Subleased Premises.

In the event that this Agreement is terminated in accordance with the foregoing provisions prior to the expiration of the term after a default by Sublessee hereunder, Sublessor may (but shall not be obligated to) relet the Subleased Premises for a term and upon any conditions it may deem proper. In no event will Sublessee be entitled to receive any payment from Sublessor if the profits from such reletting exceed the rental reserved to be paid hereunder by Sublessee. Any termination by Sublessor under this section shall not affect or impair the right of Sublessor to recover actual damages occasioned by any default by Sublessee that may be recoverable under applicable law.

18 - SURRENDER OF SUBLEASED PREMISES

Upon expiration or other termination of this Agreement, Sublessee shall remove all its signs, trade fixtures and any other personal property, repair all damage caused by removal, and surrender the Subleased Premises in good order and condition, reasonable wear and tear excepted. If Sublessee fails to surrender possession as aforestated, Sublessor may re-enter and repossess the Subleased Premises without further notice (any personal property therein being deemed abandoned by Sublessee) and Sublessee hereby waives service of any notice of intention to re-enter and/or right to redeem that may be granted by applicable laws.

Sublessor agrees that on payment of the rents and any other payments due, and performance of the covenants and agreements on the part of Sublessee to be performed hereunder, Sublessee shall peaceably have and enjoy the Subleased Premises for the uses granted to Sublessee hereunder, subject to Sublessor’s continued rights under the applicable Prime Agreement and any limitations otherwise stated herein.

20 - CONDITIONS

It is agreed that if required under the terms of the applicable Prime Agreement, the use of the Subleased Premises by Sublessee is subject to the consent and approval of the applicable Prime Lessor. If written consent by any Prime Lessor is denied after reasonable efforts by the parties hereto to obtain such consent, then either party may, at its option (but without limiting any of Sublessor’s rights in respect of any breach of the terms hereof prior to such rescission) rescind its signature hereon and thereafter this Agreement shall become null and void (but only as to the portion of the Subleased Premises covered by such Prime Agreement), and the parties shall become discharged from all further unaccrued liabilities hereunder. If the consent of any Prime Lessor is required, then for purposes of submittal of this Agreement for the consent of such Prime Lessor, it is agreed that Schedule 1 may be redacted so as to describe only the portion of the Subleased Premises as are leased by Sublessor from such Prime Lessor and so as to set forth only the respective Prime Agreements that pertain to the Subleased Premises.

21 - TAXES

If Sublessor shall be assessed for taxes on any of the Sublessee’s leasehold improvements, equipment, furniture, fixtures, personal property or business operations, Sublessee shall pay to Sublessor the amount of such taxes within 10 days after delivery of a written statement thereof.

[signature page follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

SUBLESSOR SUBLESSEE

BY: __________________________ BY: ___________________________

_______________ _____________________

DATE: _______________________ DATE: _________________________

Schedules to be added:

Schedule 1 - Description of Subleased Premises

Schedule 2 - Rental Amounts for Subleased Premises

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EXHIBIT B

to the Master Facility and Ground Handling Agreement

FORM OF ASSIGNMENT

This Agreement (this “Agreement”) is made and entered into, and is to be effective on, this the ____ day of ____________ (the “Effective Date”), by ____________, a ____________ corporation (“Assignor”) and ____________, a ____________ corporation (“Assignee”), [and the ____________ (“Airport Lessor”)].

W I T N E S S E T H:

WHEREAS, Assignor leases space], designated on Exhibit(s) _____ attached hereto and made a part hereof (together the “Premises”), at ____________ at the ____________ Airport, ____________ (the “Airport”) under a certain [Airport Use and Lease Agreement dated ____________, (as amended, hereinafter referred to as the “Lease”)] between Assignor and the Airport Lessor;

WHEREAS, a copy of the Lease has been provided to Assignee and is incorporated herein by reference;

WHEREAS, Assignee operates at the Airport and from portions of the Premises;

WHEREAS, Assignor desires to assign to Assignee [all] [a portion] of Assignor’s remaining right, title and interest in the Lease [insofar (and only insofar) as the Lease pertains to certain leased premises and improvements described on the attached Annex 1], such space herein called the “Assigned Space” and the improvements located within the Assigned Space are herein called the “Assigned Space Improvements”. The Assigned Space and Assigned Space Improvements are herein called the “Assigned Premises”;

WHEREAS, Assignee desires to accept such assignment from Assignor;

[WHEREAS, such assignment requires the prior written consent of the Airport Lessor];

[WHEREAS, pursuant to the Lease, such assignment does not require the consent of the Airport Lessor (but written notice of such assignment is required to be given to the Airport Lessor)].

NOW, THEREFORE, in consideration of the assignment herein made and of the mutual agreements and covenants hereinafter set forth, the parties hereto agree as follows:

1. DEMISE AND USE Effective on the Effective Date, Assignor hereby assigns to Assignee all of the interest of the lessee under the Lease [insofar (and only insofar) as the Lease pertains to the Assigned Premises].

2. ACCEPTANCE OF ASSIGNMENT Assignee accepts the foregoing assignment of the Lease [insofar (and only insofar) as the Lease pertains to the Assigned Premises] and covenants with Assignor, from and after the Effective Date, to pay all rent and other charges provided for in the Lease, as amended and to perform and observe all of the other covenants, conditions and provisions in the Lease, as amended, to be performed or observed by or on the part of Assignor as tenant under the Lease [in respect of the Assigned Premises].

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3. WARRANTIES Assignor hereby warrants and covenants that (i) except for the rights and interests of the Airport Lessor under the Lease, Assignor is now the sole owner of all rights and interests in and to the Assigned Premises, (ii) the Lease[, as it relates to the Assigned Premises,] is in full force and effect, (iii) Assignor has complied with all terms and provisions of the Lease [as it relates to the Assigned Premises] and same is not currently in default and Assignor knows of no condition which with the passage of time or giving of notice might constitute a default under the Lease by any party, and (iv) the Assigned Premises and the Lease [, insofar as it relates to the Assigned Premises,] are free from all liens and encumbrances. A copy of the Lease (and all amendments thereto) are attached as Annex 2.

Subject to the foregoing, Assignee accepts the Assigned Premises and equipment thereon “AS IS” and acknowledges that there is, with respect to the Assigned Premises and equipment thereon, NO WARRANTY, REPRESENTATION, OR CONDITION OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE, and that none shall be implied by law. Except as stated in this Agreement, Assignee acknowledges that Assignor has made no representations with respect to the Assigned Premises or equipment. Final determination of the suitability of the Assigned Premises or equipment for the use contemplated by Assignee is the sole responsibility of Assignee, and Assignor shall have no responsibility in connection with such suitability.

4. ASSIGNEE TO COMPLY WITH LEASE TERMS Assignee agrees to perform and observe all of the covenants, conditions and terms of the Lease relating to the period of time from and after the Effective Date [(insofar, but only insofar, as the same related to the Assigned Premises)], and to protect, defend, indemnify and hold harmless Assignor from and against all claims, damages, and expenses of any kind asserted by any person or entity, including the Lessor, arising out of the nonperformance, nonobservance or improper performance or observance of the covenants, conditions or terms of the Lease [(insofar, but only insofar, as the same relates to the Assigned Premises)]. Assignor shall comply with all remaining terms of the Lease, to the extent any non-compliance could adversely affect Assignee rights in or to the Assigned Premises. Assignor agrees to protect, defend, indemnify and hold harmless Assignee from and against all claims, damages, and expenses of any kind asserted by any person or entity, including the Airport Lessor, arising out of the nonperformance, nonobservance or improper performance or observance prior to the Effective Date of the covenants, conditions or terms of the Lease [(insofar, but only insofar as the same relates to or effects the Assigned Premises)]. Nothing herein shall be construed as to obligate Assignee to be responsible in any way for any hazardous material located in, or the environmental condition of, the Assigned Premises as of the Effective Date to the extent not caused by or arising from Assignee’s operations.

5. APPROVALS [This Agreement shall not become effective unless and until the consent of the Airport Lessor is given by execution of consents for the assignments herein made, which consents shall be requested on the standard form for such consents by the lessor as attached hereto as Annex 3. Assignor and Assignee hereby mutually agree to expeditiously take any and all actions, and to cooperate fully with each other, with respect to obtaining any approvals, authorizations, licenses or similar items that may be necessary or desirable in order to carry out the agreements set forth herein or contemplated hereby. The parties hereto agree to request the consent of the Lessor on the consent form attached hereto as Annex 3. The parties agree to make such reasonable changes to such form as may be required by Lessor.]

[Consent by Airport Lessor. Airport Lessor, as evidenced by its execution below, does hereby consent to this Assignment, [releases Assignor from all of its responsibilities and obligations under the Lease that are attributable to the period of time after the Effective Date, and] agrees to look solely to Assignee for performance of all obligations thereafter under the Lease [as it relates to the Assigned Premises].]

[Acknowledgement. Assignor and Airport Lessor hereby represent to Assignee that the Lease is currently in full force and effect, and that they know of no events of default relating to the Lease or the Assigned Premises as of the date hereof.]

6. APPLICABLE LAW [The laws of the State where the Assigned Premises are located shall be used in interpreting this Agreement and in determining the rights of the parties under it.]

7. SEVERABILITY If any part of this Agreement is held to be invalid by final judgment of any court of competent jurisdiction, the part held invalid shall be modified to the extent necessary to make it valid or, if necessary, excised, and the remainder of the Agreement shall continue to remain effective.

8. ENTIRE AGREEMENT This Agreement contains the entire agreement between the parties with respect to its subject matter and may not be changed in any way, except by a written instrument executed by the parties and, if necessary, approved by the Airport Lessor.

9. SUCCESSORS AND ASSIGNS The provisions of this Agreement shall be binding on the parties, their successors and assigns.

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IN WITNESS WHEREOF, the parties have properly executed this Agreement effective the date first above written.

ATTEST: [ASSIGNOR]

____________________________ BY:_____________________________

TITLE:__________________________

DATE:__________________________

ATTEST: [ASSIGNEE]

____________________________ BY:_____________________________

TITLE:__________________________

DATE:

[Consent of Airport Lessor

By: _________________________

Name:

Title:

Date: _______________________]

Exhibits to be Attached:

Annex 1 - Description of Assigned Space

Annex 2 - Copy of Lease

Annex 3 - Request for Consent

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ANNEX 1

to the Form of Assignment

DESCRIPTION OF ASSIGNED SPACE

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ANNEX 2

to the Form of Assignment

COPY OF LEASE

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ANNEX 3

to the Form of Assignment

REQUEST FOR CONSENT TO ASSIGNMENT

____________, a ____________ corporation (“Assignor”) and ____________, a ____________ corporation (“Assignee”) hereby apply to the [____________] (the “Airport Lessor”) for its consent to an Assignment attached as Exhibit “A” and dated ____________ (the “Effective Date”), for premises described therein (the “Assigned Premises”) as required by the [____________ Use and Lease Agreement] (the “Agreement”) with ____________ for certain premises at ____________ Airport. As consideration for the granting of the aforesaid consent and without limitation of any right or remedy of the Airport Lessor as set out in the Agreement, Assignor and Assignee agree with the Airport Lessor as follows:

Assignor represents to Assignee that to its knowledge as of the date hereof, the agreement dated ____________, by and between the Airport Lessor, as Lessor, and Assignor, as Lessee, is in full force and effect and there are no rental fees in arrears and no notices of termination or default are outstanding.

2.	The parties hereto recognize and agree that the cancellation, termination, or expiration of the Agreement shall serve to terminate Assignor’s and Assignee’s rights and obligations concerning the Assigned Premises.

3.	All notices to Assignee (as Lessee) with respect to the Assigned Premises pursuant to the Agreement shall hereinafter be sent to Assignee at the following address:

_______________

4.	In addition, it is expressly understood and agreed as follows:

(a)	That by the granting of this consent to Assignment, the Airport Lessor is not consenting in advance to any future subleases or assignments of the Assigned Premises or any other facilities by [either Assignor or] Assignee.

(b)	That no future amendment, modification or alteration to the Assignment shall be or become effective without prior notice to and approval by the Airport Lessor if required by the provisions of the Agreement.

(c)

That Airport Lessor, as evidenced by it execution of this consent below, [releases Assignor from all of its responsibilities and obligations under the Lease that are attributable to the period of time after the Effective Date, and] agrees to look solely to Assignee for performance of all obligations thereafter under the Lease [as it relates to the Assigned Premises].

(d)	[That Assignor and Airport Lessor hereby represent to Assignee that the Lease is currently in full force and effect, and that they know of no events of default relating to the Lease or the Assigned Premises as of the date hereof.]

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The parties accept the foregoing acknowledgments and agreements and the Airport Lessor hereby consents to the Assignment attached as Exhibit “A”. However, the terms of the Agreement and this Request for Consent shall prevail over any conflicting terms or provisions contained in Exhibit “A” hereto.

FOR THE AIRPORT LESSOR: FOR [ASSIGNOR]:

APPROVED APPROVED

________________________________ ________________________________

Name: Name:

Title: Director, Department of Aviation Title:____________________________

Date:__________________________ Date:___________________________

FOR [ASSIGNEE]:

APPROVED

ATTEST/SEAL:

________________________________ _________________________________

Name: Name:

Title: Corporate Secretary Title:_____________________________

Date:____________________________ Date:_____________________________

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EXHIBIT C

to the Master Facility and Ground Handling Agreement

FORM OF CONTINENTAL GROUND HANDLING AGREEMENT

(Continental as Handling Company, Contractor as Carrier)

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CONTINENTAL GROUND HANDLING AGREEMENT

(Continental as Handling Company, Contractor as Carrier)

AHM 810 - Annex B

STANDARD GROUND HANDLING AGREEMENT

SIMPLIFIED PROCEDURE

ANNEX B.SYS.0 - LOCATIONS AGREED SERVICES, FACILITIES AND CHARGES

to the Standard Ground Handling Agreement (SGHA) of April 1993

Between: Chautauqua Airlines, Inc.

8909 Purdue Road, Suite 300

Indianapolis, IN 46268

Attention: Chief Financial Officer

(hereinafter referred to as the “Carrier”)

And: Continental Airlines, Inc.

1600 Smith Street

Mail Stop HQSLG

Houston, Texas 77002

(hereinafter referred to as the “Handling Company”)

effective from: July 21, 2006

This Annex B.SYS.0

for the location : The Handling Company shall provide ground handling services as provided herein for Scheduled Flights at the airports set forth on Schedule 1 hereto.

In addition to the airports on Schedule 1, the Handling Company shall also provide ground handling services to the Carrier for Scheduled Flights pursuant to the terms hereof at each additional airport to which Scheduled Flights are scheduled to fly after the date hereof (each, a “New Airport”) unless the Handling Company gives at least 90 days’ prior written notice (or such shorter period of time as is reasonably practicable) before the commencement of Scheduled Flights to such New Airport that the Handling Company elects not to provide ground handling services at such airport. Schedule 1 shall be amended to reflect each such addition. The Handling Company may also elect, upon at least 90 days’ prior written notice to the Carrier, to provide ground handling services as provided herein to the Carrier for Scheduled Flights at any airport to which Scheduled Flights fly at the time of such election. Schedule 1 shall be amended to reflect each such addition.

Notwithstanding the foregoing, the Handling Company may elect to terminate the provision of services by the Handling Company pursuant hereto at any airport upon at least 90 days’ prior written notice to the Carrier and in any event only at such time as the Carrier, using its commercially reasonable efforts, is able to provide the ground handling services provided by the Handling Company hereunder with respect to Scheduled Flights at such airport.

In addition, the provisions of this agreement shall terminate with respect to any airport to which Scheduled Flights cease to be scheduled (other than a temporary cessation, it being understood that the cessation of seasonal Scheduled Flights upon the end of the relevant season shall constitute a temporary cessation if such Scheduled Flights are expected to resume in the subsequent relevant season). Schedule 1 shall be amended to reflect each such termination.

is valid from: July 21, 2006

and replaces: N/A

Capitalized terms used herein that are not defined herein or in the Standard Ground Handling Agreement of April 1993 as published by the International Air Transport Association (the “Main Agreement”) or in Annex A thereto, shall have the meanings given to such terms in the Capacity Purchase Agreement among Carrier, Handling Company and Republic Airways Holdings Inc., Carrier’s parent, as amended from time to time (the “Capacity Purchase Agreement”) or the Master Facility and Ground Handling Agreement among Carrier, Handling Company and Republic Airways Holdings Inc., as amended from time to time.

This Annex B is prepared in accordance with the simplified procedure whereby the Carrier and the Handling Company agree that the terms and conditions of the Main Agreement and Annex A to the Main Agreement shall apply as if such terms were repeated here in full, except as otherwise modified pursuant to this Annex B. By signing this Annex B, the parties confirm that they are familiar with the aforementioned Main Agreement and Annex A. The Main Agreement and Annex A, as modified pursuant to this Annex B shall be referred to herein as the “Agreement.”

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PARAGRAPH 1 - HANDLING CHARGES

1.1	The Handling Company shall provide the services of Annex A enumerated below for the Carrier’s Scheduled Flights at the locations set forth above:

1.1.1. For services of the Annex A in its:

SECTION 1 - REPRESENTATION AND ACCOMMODATION:

1.1.2., 1.1.3., 1.1.4.

1.2.1., 1.2.2, 1.2.3.

SECTION 2 - LOAD CONTROL AND COMMUNICATION:

2.1.3.

2.2.1., 2.2.2., 2.2.3.

SECTION 4 - PASSENGERS AND BAGGAGE:

4.1.1., 4.1.2., 4.1.3., 4.1.4., 4.1.5., 4.1.6, 4.1.7.(in accordance with the Baggage Resolution System Agreement, 4.2., 4.3., 4.4.1., 4.4.2. (a), 4.4.4. (a)(c), 4.4.5., 4.4.6., 4.4.7.

SECTION 5 - CARGO AND MAIL:

5.1. thru 5.5 (CO’s cargo products)

SECTION 6 - RAMP:

6.1., 6.2.1., 6.2.2. (a), 6.2.3. (on request at ad hoc rate), 6.3., 6.4.3., 6.4.4., 6.4.5., 6.4.6. (a)(b), 6.4.7., 6.4.8., 6.4.9., 6.4.12., 6.5.1. (on request at ad hoc rate), 6.6.1., 6.7.1.

SECTION 7 - AIRCRAFT SERVICING:

7.2.2., 7.3., 7.6.2. (ad hoc rates apply)

1.1.2.

NO FEES FOR SERVICES COVERED UNDER THE SECTIONS LISTED ABOVE:

The ground handling services to be provided hereunder shall be provided in consideration of the mutual obligations of the Handling Company and the Carrier set forth in the Capacity Purchase Agreement among the Carrier, the Handling Company and Parent, with no fee charged hereunder; provided that the additional charges specified in Paragraph 2 below shall apply when applicable; and provided further that the Carrier will be responsible for all airport landing fees and other airport taxes or charges, and shall make payment directly therefor (unless Contractor is instructed in writing by Continental that Continental will make such payment directly).

1.1.3

EQUIPMENT PROVIDED BY CARRIER:

Notwithstanding anything contained in Paragraph 1.1.1 to the contrary, at each airport that does not constitute a Hub Airport, the Carrier shall be responsible for supplying all ground handling equipment that is usable only for regional jets or turboprops of the type used by Contractor for Scheduled Flights (as opposed to other types of jets flown by the Handling Company), which, as of the date hereof, is the equipment set forth on Schedule 2 hereto, and which equipment shall not be used by Handling Company for any purpose other than providing ground handling services to Carrier. At all Hub Airports, the Handling Company shall be responsible for supplying such equipment. As between Handling Company and Carrier, Handling Company shall be responsible for supplying all other ground handling equipment necessary for the provision of ground handling services hereunder.

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PARAGRAPH 2 - ADDITIONAL CHARGES

2.1	Services in Annex A which are not included in Paragraph 1 of this Annex and all other additional services when available will be charged for as follows:

2.1.1.

Overtime. If, upon Carrier’s request, the Handling Company agrees to provide additional personnel in order to handle a flight outside of the scheduled arrival and departure times or for any other reason, the Handling Company will not charge Carrier more than the Handling Company’s actual cost of providing such additional personnel.

PARAGRAPH 3 - DISBURSEMENTS

3.1	At the Handling Company’s request, disbursements made on behalf of the Carrier shall be reimbursed to the Handling Company at cost.

PARAGRAPH 4 -SETTLEMENT OF ACCOUNT

4.1

All payments to be made pursuant to this Agreement shall be subject to the setoff provisions of the Capacity Purchase Agreement. Notwithstanding Article 7.2 of the Main Agreement, and subject to such setoff provisions of the Capacity Purchase Agreement, settlement of account shall be effected through the IATA Clearing House via the Airlines Clearing House in accordance with the Rules and Regulations of the IATA Clearing House and the Airlines Clearing House.

PARAGRAPH 5 - TERMINATION OF AGREEMENT

5.1

This Agreement may be terminated by either party at any time following the termination of the Capacity Purchase Agreement; provided, that this Agreement may not be terminated pursuant to this sentence during the Wind-Down Period with respect to any location to which Scheduled Flights continue to fly during such Wind-Down Period. If the Carrier fails to make payments as agreed upon in Paragraph 4.1., the Handling Company may terminate the Agreement upon twenty-four (24) hours notice by letter, teletype or facsimile.

PARAGRAPH 6 - TRANSFER OF SERVICES

6.1	In accordance with Article 3.1 of the Main Agreement, the Handling Company may subcontract the services of Annex A as necessary in order to support the Carrier’s operation.

PARAGRAPH 7 - OTHER MODIFICATIONS TO MAIN AGREEMENT

7.1	Sections 2.2, 3.2, 11.4, 11.5, 11.6, 11.7 and 11.10 and Article 9 of the Main Agreement shall not apply to this Agreement.

7.2	Handling Company and Carrier agree that all third-parties engaged by Carrier or Handling Company as of the date hereof, or engaged by Handling Company after the date hereof, to provide ground handling services to Carrier at any of the airports listed on Schedule 1 hereto are hereby approved for all purposes of Section 3.1 and Section 3.2, as appropriate, of the Main Agreement.

7.3

Carrier specifically acknowledges that Article 8 of the Main Agreement provides that Handling Company is not to be responsible for, and that Carrier is to indemnify Handling Company in respect of, legal liability for certain claims arising out of the provision of ground handling services even in circumstances where Handling Company is negligent, and Carrier agrees not to contend otherwise.

7.4	This Agreement shall be governed by and construed in accordance with the laws of the State of Texas as provided in Section 11.14 of the Capacity Purchase Agreement.

7.5	Any Claims arising out of or related to this Agreement shall be resolved by binding arbitration pursuant to the provisions of Section 11.08 of the Capacity Purchase Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers duly authorized thereuntu, as of the 21st day of July, 2006.

Handling Company:			Carrier:
Continental Airlines, Inc.			Chautauqua Airlines, Inc.
/s/ Jeffery A. Smisek			/s/ Bryan Bedford

Name: Jeffery A. Smisek Title: President			Name: Bryan Bedford Title: Chairman & CEO

Schedule 1 Airports

Schedule 2 Carrier Equipment

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AHM 810 - Annex B

Schedule 1

CONTINENTAL AIRPORTS [To Be Provided]

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AHM 810 - Annex B

Schedule 2

CARRIER EQUIPMENT

[to be added]

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EXHIBIT D

to the Master Facility and Ground Handling Agreement

FORM OF CONTRACTOR GROUND HANDLING AGREEMENT

(Contractor as Handling Company, Continental as Carrier)

-73-

CONTRACTOR GROUND HANDLING AGREEMENT

(Contractor as Handling Company, Continental as Carrier)

AHM 810 - Annex B

STANDARD GROUND HANDLING AGREEMENT

SIMPLIFIED PROCEDURE

ANNEX B.SYS.0 - LOCATIONS AGREED SERVICES, FACILITIES AND CHARGES

to the Standard Ground Handling Agreement (SGHA) of April 1993

Between: Continental Airlines, Inc.

1600 Smith Street

Mail Stop HQSLG

Houston, Texas 77002

(hereinafter referred to as the “Carrier”)

And: Chautauqua Airlines, Inc.

8909 Purdue Road, Suite 300

Indianapolis, IN 46268

Attention: Chief Financial Officer

(hereinafter referred to as the “Handling Company”)

effective from: July 21, 2006

This Annex B.SYS.0

for the location: The Handling Company shall provide ground handling services as provided herein at the airports set forth on Schedule 1 hereto.

The Carrier may elect, at its sole discretion and upon at least 90 days notice to the Handling Company, to require the Handling Company to provide ground handling services to the Carrier at any airport other than a Hub Airport. Schedule 1 shall be amended to reflect each such addition.

Notwithstanding the foregoing, the Carrier may elect, at its sole discretion and upon at least 90 days’ prior written notice to the Handling Company, to terminate the provision of services covered hereunder by the Handling Company at any airport. In addition, the provisions of this agreement shall terminate with respect to any airport to which Scheduled Flights cease to be scheduled (other than a temporary cessation, it being understood that the cessation of seasonal Scheduled Flights upon the end of the relevant season shall constitute a temporary cessation if such Scheduled Flights are expected to resume in the subsequent relevant season). Schedule 1 shall be amended to reflect each such termination.

is valid from: July 21, 2006

and replaces: N/A

Capitalized terms used herein that are not defined herein or in the Standard Ground Handling Agreement of April 1993 as published by the International Air Transport Association (the “Main Agreement”) or in Annex A thereto, shall have the meanings given to such terms in the Capacity Purchase Agreement among Carrier, Handling Company and Republic Airways Holdings Inc., Handling Company’s parent, as amended from time to time (the “Capacity Purchase Agreement”) or the Master Facility and Ground Handling Agreement among Carrier, Handling Company and Republic Airways Holdings Inc., as amended from time to time.

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PARAGRAPH 1 - HANDLING CHARGES

1.1	The Handling Company shall provide the services of Annex A enumerated below for the Carrier’s scheduled flights at the locations set forth above:

1.1.1.

For services of the Annex A in its:

SECTION 1 - REPRESENTATION AND ACCOMMODATION:

1.1.2., 1.1.3., 1.1.4.

1.2.1., 1.2.2, 1.2.3.

SECTION 2 - LOAD CONTROL AND COMMUNICATION:

2.1.3.

2.2.1., 2.2.2., 2.2.3.

SECTION 4 - PASSENGERS AND BAGGAGE:

4.1.1., 4.1.2., 4.1.3., 4.1.4., 4.1.5., 4.1.6, 4.1.7.(in accordance with the Baggage Resolution System Agreement, 4.2., 4.3., 4.4.1., 4.4.2. (a), 4.4.4. (a)(c), 4.4.5., 4.4.6., 4.4.7.

SECTION 5 - CARGO AND MAIL:

5.1. thru 5.5 (CO’s cargo products)

SECTION 6 - RAMP:

6.1., 6.2.1., 6.2.2. (a), 6.2.3. (on request at ad hoc rate), 6.3., 6.4.3., 6.4.4., 6.4.5., 6.4.6. (a)(b), 6.4.7., 6.4.8., 6.4.9., 6.4.12., 6.5.1. (on request at ad hoc rate), 6.6.1., 6.7.1.

SECTION 7 - AIRCRAFT SERVICING:

7.2.2., 7.3., 7.6.2. (ad hoc rates apply)

1.1.2.

FEES FOR SERVICES COVERED UNDER THE SECTIONS LISTED ABOVE:

The charges set forth below do not include airport landing fees, or any other airport taxes or charges. The Carrier will be responsible for such charges at its own expense and shall make payment directly therefor.

Flight Fee:

The Carrier shall pay to the Handling Company a Base Per Flight Fee for the ground handling services listed above to be provided hereunder, which fee shall equal the Handling Company’s cost of providing such services, as reasonably determined by the Handling Company and subject to the audit rights of the Carrier as set forth in Section 3.05 of the Capacity Purchase Agreement.

1.1.3

EQUIPMENT PROVIDED BY CARRIER:

Notwithstanding anything contained in Paragraph 1.1.1 to the contrary, at each airport, the Carrier shall be responsible for supplying all ground handling equipment that is usable only for jet aircraft other than regional jets, which, as of the date hereof, is the equipment set forth on Schedule 2 hereto, and which equipment shall not be used by Handling Company for any purpose other than providing ground handling services to Carrier. As between Handling Company and Carrier, Handling Company shall be responsible for supplying all other ground handling equipment necessary for the provision of ground handling services hereunder.

PARAGRAPH 2 - ADDITIONAL CHARGES

2.1	Services in Annex A which are not included in Paragraph 1 of this Annex and all other additional services when available will be charged for as follows:

2.1.1.

Overtime. If, upon Carrier’s request, the Handling Company agrees to provide additional personnel in order to handle a flight outside of the scheduled arrival and departure times or for any other reason, the Handling Company will charge Carrier the Handling Company’s actual cost of providing such additional personnel.

2.1.2.

Supplies. The Carrier will furnish the Handling Company those items specific to its operation, such as, but not limited to, cabin appearance supplies, (i.e. safety cards, pillows and blankets), baggage tags, forms, ticket envelopes, tariffs, timetables, etc. Any materials or supplies provided to the Carrier by the Handling Company will be charged back to the Carrier at the Handling Company’s replacement cost.

2.1.3.

Third Party Services. The Carrier shall, at the Handling Company’s discretion, be responsible for the cost and/or a pro-rata share of the cost, whichever is applicable, incurred by the Handling Company for outside vendor services, such as, but not limited to, water/lavatory services, cabin appearance, ramp handling services, bussing services, aircraft de-icing, aircraft washing and aircraft maintenance services, skycaps, security screening, armed guard and armored car services, baggage claim security, janitorial services, baggage delivery services, wheel chair services, electric cart services, denied boarding compensation, distressed passenger meals and overnight accommodation, etc.

2.1.4.

De-Icing. For de-icing services provided by the Handling Company, the Handling Company shall charge the Carrier the procurement cost of fluids and all other actual costs of the Handling Company for providing such de-icing services including the Handling Company’s actual labor costs associated with such services.

2.1.5.

Training. The Carrier agrees to reimburse the Handling Company for all associated out-of-pocket expenses required to train the Handling Company’s employees in the Carrier’s procedures and administrative requirements.

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PARAGRAPH 3 - DISBURSEMENTS

3.1	Disbursements made on behalf of the Carrier shall be reimbursed to the Handling Company at cost.

PARAGRAPH 4 -SETTLEMENT OF ACCOUNT

4.1

Notwithstanding Article 7.2 of the Main Agreement and subject to the setoff provisions of the Capacity Purchase Agreement, settlement of account shall be effected through the IATA Clearing House via the Airlines Clearing House in accordance with the Rules and Regulations of the IATA Clearing House and the Airlines Clearing House.

PARAGRAPH 5 - TERMINATION OF AGREEMENT

5.1

This Agreement may be terminated by either party at any time following the termination of the Capacity Purchase Agreement; provided, that this Agreement may not be terminated pursuant to this sentence during the Wind-Down Period with respect to any location to which Scheduled Flights continue to fly during such Wind-Down Period. If the Carrier fails to make payments as agreed upon in Paragraph 4.1., the Handling Company may terminate the agreement upon twenty-four (24) hours notice by letter, teletype or facsimile.

PARAGRAPH 6 - TRANSFER OF SERVICES

6.1	In accordance with Article 3.1 of the Main Agreement, the Handling Company may subcontract the services of Annex A as necessary in order to support the Carrier’s operation.

PARAGRAPH 7 - OTHER MODIFICATIONS TO MAIN AGREEMENT

7.1

Upon the request of the Carrier from time to time at its sole discretion, and for so long as requested by the Carrier during the Term of this Agreement, the Handling Company shall provide ground handling services pursuant to this Agreement, for the fees specified for such services herein, at any location covered by this Annex B to any of the Carrier’s codeshare partners.

7.2	Sections 2.2, 3.2, 11.4, 11.5, 11.6, 11.7 and 11.10 and Article 9 of the Main Agreement shall not apply to this Agreement.

7.3 Handling Company and Carrier agree that all third-parties engaged by Carrier or Handling Company as of the date hereof, or engaged by Carrier after the date hereof, to provide ground handling services to Carrier at any of the airports listed on Schedule 1 hereto are hereby approved for all purposes of Section 3.1 and Section 3.2, as appropriate, of the Main Agreement.

7.4

In connection with the determination of the Base Per Flight Fee pursuant to Section 1.1.2 above and the charges pursuant to Section 2 above, Handling Company shall make available for inspection by Carrier and its outside auditors, within a reasonable period of time after Carrier makes a written request therefor, all of Handling Company’s books and records (including all financial and accounting records) relating to this Agreement and the provision of services hereunder by Handling Company. Each of Carrier and its outside auditors shall be entitled to make copies and notes of such information as it deems necessary and to discuss such records with Handling Company’s Chief Financial Officer or such other employees or agents of Handling Company knowledgeable about such records. Upon the reasonable written request of Carrier or its outside auditors, Handling Company will cooperate with Carrier and its outside auditors to permit Carrier and its outside auditors access to Handling Company’s outside auditors for purposes of reviewing such records.

7.5

7.6	This Agreement shall be governed by and construed in accordance with the laws of the State of Texas as provided in Section 11.14 of the Capacity Purchase Agreement.

7.7	Any Claims arising out of or related to this Agreement shall be resolved by binding arbitration pursuant to the provisions of Section 11.08 of the Capacity Purchase Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers duly authorized thereunto, as of the 21st day of July, 2006.

Carrier:			Handling Company:
Continental Airlines, Inc.			Chautauqua Airlines, Inc.
By:			By:
/s/ Jeffery A. Smisek			/s/ Bryan Bedford

Name: Jeffery A. Smisek Title: President			Name: Bryan Bedford Title: Chairman & CEO

Schedule 1 Airports

Schedule 2 Carrier Equipment

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AHM 810 - Annex B

Schedule 1

CONTRACTOR AIRPORTS (To Be Provided)

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AHM 810 - Annex B

Schedule 2

CARRIER EQUIPMENT

[to be added]

Item 6.	Exhibits

	(a)	Exhibits

	10.1*	Amendment No. 16 to Purchase Agreement DCT-014/2004 by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline Inc., dated July 21, 2006.

	10.2*	Amendment No. 8 to Letter Agreement DCT-015/2004 by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline Inc., dated July 21, 2006.

	10.3*	First Amendment to Amended & Restated Chautauqua Jet Service Agreement by and between US Airways, Inc. and Chautauqua Airlines, Inc., dated July 21, 2006.

	10.4*	Second Amendment to Republic Jet Service Agreement by and between US Airways, Inc. and Republic Airline Inc., dated July 21, 2006

	10.5*	Capacity Purchase Agreement by and between Continental Airlines, Inc., Republic Airways Holdings Inc. and Chautauqua Airlines, Inc., dated July 21, 2006.

	31.1	Certification by Bryan K. Bedford, Chairman of the Board, Chief Executive Officer and President of Republic Airways Holdings Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, in connection with Republic Airways Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

	31.2	Certification by Robert H. Cooper, Executive Vice President and Chief Financial Officer of Republic Airways Holdings Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, in connection with Republic Airways Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

	32.1	Certification by Bryan K. Bedford, Chairman of the Board, Chief Executive Officer and President of Republic Airways Holdings Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with Republic Airways Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

	32.2	Certification by Robert H. Cooper, Executive Vice President and Chief Financial Officer of Republic Airways Holdings Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with Republic Airways Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

	*	A request for confidential treatment was filed for certain portions of the indicated document. Confidential portions have been omitted and filed separately with the Commission as required by Rule 24b-2 of the Commission.

	REPUBLIC AIRWAYS HOLDINGS INC.
	(Registrant)






Dated: November 9, 2006	By: /s/ Bryan K. Bedford
	Bryan K. Bedford
	Chairman of the Board, Chief Executive Officer and President
	(principal executive officer)



Dated: November 9, 2006	By: /s/ Robert H. Cooper
	Robert H. Cooper
	Executive Vice President and Chief Financial Officer
	(principal financial and accounting officer)

Aircraft	Aircraft Basic Price	Economic Condition
***	***	***

Firm A/C	Delivery Month	*******	***	Firm A/C	Delivery Month	***	***
1	Sep 2004	***	***	42	***	***	***
2	***	***	***	43	***	***	***
3	***	***	***	44	***	***	***
4	***	***	***	45	***	***	***
5	***	***	***	46	***	***	***
6	***	***	***	47	***	***	***
7	***	***	***	48	***	***	***
8	***	***	***	49	***	***	***
9	***	***	***	50	***	***	***
10	***	***	***	51	***	***	***
11	***	***	***	52	***	***	***
12	***	***	***	53	***	***	***
13	***	***	***	54	***	***	***
14	***	***	***	55	***	***	***
15	***	***	***	56	***	***	***
16	***	***	***	57	***	***	***
17	***	***	***	58	***	***	***
18	***	***	***	59	***	***	***
19	***	***	***	60	***	***	***
20	***	***	***	61	***	***	***
21	***	***	***	62	***	***	***
22	***	***	***	63	***	***	***
23	***	***	***	64	***	***	***
24	***	***	***	65	***	***	***
25	***	***	***	66	***	***	***
26	***	***	***	67	***	***	***
27	***	***	***	68	***	***	***
28	***	***	***	69	***	***	***
29	***	***	***	70	***	***	***
30	***	***	***	71	***	***	***
31	***	***	***	72	***	***	***
32	***	***	***	73	***	***	***
33	***	***	***	74	***	***	***
34	***	***	***	75	***	***	***
35	***	***	***	76	***	***	***
36	***	***	***	77	***	***	***
37	***	***	***	78	Jul 2008	***	***
38	***	***	***
39	***	***	***
40	***	***	***
41	***	***	***

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6.	*: * is hereby amended by deleting * and replacing it with *.

7.	Changes

3.1	Article 3.1 of the Purchase Agreement is hereby deleted and replaced by the following:

	“3.1 Buyer agrees to pay Embraer, subject to the terms and conditions of this Agreement, in United States dollars, the following amount per unit Basic Prices:

4.1	The third sentence of the first paragraph of Article 4.1 is hereby deleted and replaced as follows:

	“Buyer has already paid to Embraer prior to the execution of Amendment No. 16 to this Agreement a * initial deposit (the “Initial Deposit”) per Firm Aircraft on order prior thereto and , and **.”

4.2	The penultimate sentence of the last paragraph of Article 4.1 is hereby deleted and replaced as follows:

	“Any progress payment for * that would otherwise be due * shall be due ***.”

7.3	Article 11.7 is hereby amended by deleting the first sentence thereof and replacing it with the following:

	“Except *, should an EMBRAER 170 Aircraft not comply with the terms and conditions of Attachment “A” or an EMBRAER 175 Aircraft not comply with the terms and conditions of Attachment “A-1” or Attachment “A-2”, as applicable, Buyer shall be entitled to either *.

Option A/C	Delivery Month	Option A/C	Delivery Month	Option A/C	Delivery Month
1	Jul 2008	26	***	51	***
2	***	27	***	52	***
3	***	28	***	53	***
4	***	29	***	54	***
5	***	30	***	55	***
6	***	31	***	56	***
7	***	32	***	57	***
8	***	33	***	58	***
9	***	34	***	59	***
10	***	35	***	60	***
11	***	36	***	61	***
12	***	37	***	62	***
13	***	38	***	63	***
14	***	39	***	64	***
15	***	40	***	65	***
16	***	41	***	66	***
17	***	42	***	67	***
18	***	43	***	68	***
19	***	44	***	69	***
20	***	45	***	70	***
21	***	46	***	71	***
22	***	47	***	72	***
23	***	48	***	73	***
24	***	49	***	74	***
25	***	50	***	75	Sep 2012

EMBRAER - Empresa Brasileira de Aeronáutica S.A.			Republic Airline Inc.
/s/ Frederico Fleury Curado			/s/ Bryan Bedford

Name: Frederico Fleury Curado Title: Executive Vice President More Title: Airline Market			Name: Bryan Bedford Title: President


/s/ Jose Luis D. Molina

Name: Jose Luis d. Molina Title: Director of Contracts More Title: Airline Market
Date: July 21, 2006			Date: July 21, 2006
Place: Sao Jose Dos Campos, SP, Brazil			Place: Indianapolis

Witness: Carlos Martins Dutra			Witness: Lars-Erik Arnell

Name: Carlos Martins Dutra			Name: Lars-Erik Arnell


	REPUBLIC AIRWAYS HOLDINGS INC.

	By:	/s/ Bryan Bedford

		Name: Bryan Bedford Title: President




	By:	/s/ Lars Erik Arnell

		Name: Lars-Erik Arnell
		Title: Vice President

		Date: July 21, 2006
		Place: Indianapolis

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6.1	The only performance guarantees applicable to the Aircraft are those set forth in this document. The performance guarantees set forth herein are established between Buyer and Embraer and may not be transferred or assigned to others, unless by previous written consent of Embraer.

6.2	THE GUARANTEES, OBLIGATIONS AND LIABILITIES OF EMBRAER, AND REMEDIES OF BUYER SET FORTH IN THIS PERFORMANCE 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 ASSIGNED OF EMBRAER, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY ACHIEVED PERFORMANCE.

1.	Spare Parts Credit:

1.1	Article 1(ii) of the Letter Agreement shall be deleted and replaced by the following:

	“(ii) Spare Parts Credit: Embraer will provide a spare parts (except for engines, engine related parts and APU), ground support equipment and test equipment credit of *. This* credit shall be made available to Buyer upon *. If for any reason , then Buyer shall . only be made available to Buyer in the event there is no outstanding balance due from Buyer to Embraer related to the purchase of such Aircraft. If * credit is not so made available to Buyer because * such credit shall be made available at such time thereafter . Any portion of such credit which remains unused shall be deemed to have been waived by Buyer, and no further compensation shall be due from Embraer to Buyer for such * credit(s). Such * credit(s) shall be applied *.”

1.2	Article 1 of the Letter Agreement shall be amended to insert the following subsection (viii) after subsection (vii):
	“(viii) ***

2.	Aircraft Purchase Price

2.1	Article 2.4 of the Letter Agreement * for *.

3.	Special * Condition:** Article 8 of the Letter Agreement shall be deleted and replaced by the following:

	“8. Special * Condition:**

4.	*******

5.	Schedule 5: Schedule 5 to the Letter Agreement is hereby deleted and replaced by the attached 2^nd Amended and Restated Schedule 5 to this Amendment No.8.

6.	*******

7.	Conversion

7.1	Buyer shall have the right to *** as provided in Article 4 of the Letter Agreement (Conversion).

7.2	The first 2 paragraphs of Article 4.a shall be deleted and replaced by the following:
	“Buyer shall have the flexibility to request the conversion of any Aircraft into the EMBRAER 170, EMBRAER 175 (configured as either an Airways 175 Aircraft or Delta 175 Aircraft), the EMBRAER 190, or the EMBRAER 195 jet aircraft (collectively, the “Conversion Aircraft”), provided *. To exercise the conversion of an Aircraft, Buyer shall send a written notice to Embraer to such effect at least * prior to the scheduled delivery date of the Aircraft that Buyer intends to convert, if the Conversion Aircraft is *, or * prior to the scheduled delivery date of the Aircraft that Buyer intends to convert, if the Conversion Aircraft is ***, in which case such scheduled delivery date shall be the scheduled delivery date of the Conversion Aircraft.”

7.3	7.3 The last paragraph of Article 4.a shall be deleted and replaced with the following:

	“Except as provided in this **, all terms and conditions applicable to an Aircraft that has been converted pursuant this Article 4 shall apply mutatis mutandis* to the Conversion Aircraft.”

7.4	Article 4.b shall be deleted and replaced with the following:

	“b) EMBRAER 175 Conversion Aircraft Offer Price: The Basic Price for each Conversion Aircraft that is configured as an Airways 175 Aircraft or Delta 175 Aircraft (the “175 Conversion Aircraft”) ***.”

7.5	Article 4 of the Letter Agreement - Conversion, a new Article 4.e shall be added as follows:

	“e) EMBRAER 170 Conversion Aircraft Offer Price:

	The Basic Price for each Conversion Aircraft that is an EMBRAER 170 Aircraft (the “170 Conversion Aircraft”) ***.

7.6	The penultimate paragraph of Article 4 shall be deleted and replaced with the following:

	“Each 170 Conversion Aircraft shall be configured as per Attachment A to the Purchase Agreement, each 175 Conversion Aircraft shall be configured as an Airways 175 Aircraft or a Delta 175 Aircraft (as specified in the applicable conversion notice) and each 190 Conversion Aircraft or 195 Conversion Aircraft shall be configured as per Exhibit 3, and shall be available to Buyer at each relevant Conversion Aircraft Basic Price and in ***.”

8.	*******

9.	*******

9.1	The * for * shall be *. For the avoidance of doubt, * under the Agreement.

10.	*******

10.1	Embraer shall ***.

10.2	* shall *.

10.3	The * shall * and the * shall be *.

11.	Miscellaneous

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

Name: Carlos Martins Dutra			Name: Lars-Erik Arnell

Aircraft:	* Aircraft scheduled for delivery under the Agreement *.

***:	Republic Airline Inc., a wholly-owned subsidiary of Republic Airways Holdings Inc. (“Parent”), with a parent guarantee consistent with those generally offered in the US for airlines of same size and financial condition as Buyer, as Debt Providers may require with it being understood that there shall be *. Except in connection with , Buyer shall not be entitled to assign any support provided or to be provided pursuant to **.

Net Aircraft Purchase Price:	The escalated Aircraft Purchase Price as defined in the Agreement, to be shown on the relevant invoice, and excluding BFE items, * as well as any and all taxes, VAT, imposts, levies, and duties accrued either in Brazil or USA *.

***:	*

* Provider:	*

Terms:	Buyer agrees to cooperate reasonably and in good faith with Embraer and/or any prospective * Provider in documenting and closing the financing transactions on an expedited basis. Buyer shall also provide financial and other information requested by such persons, subject to the execution of confidentiality agreements as appropriate. * shall be **. * If * provides shall agree to **.

Financed Amount:	*, with Buyer to pay * at delivery.

Security:	*, the relevant * Provider shall receive a perfected security interest qualifying for the protections of Section 1110 of the Bankruptcy Code. The security interest shall be ***.

Debt Term:	* years, payable in . for * shall be *, then it may , . A * shall be *. At * request, * may *.


*** Rate:	The * shall be . The * * shall be equal to , provided that , the * shall be * but *.

*** Fees	If required by *, Buyer shall . Buyer shall also . Embraer may, * require Buyer to *. If Buyer , Embraer shall **.

Financing Cooperation:	Unless Buyer and Embraer agree * shall select a * which Buyer *. The * for the * shall include (1) an * on terms consistent with *, * or as *, (2) an agreement that * may continue to * and that ; (3) a requirement that ; and (4) other terms reasonably agreed by . Embraer shall . During the term of * will not *. In addition, * will not *. Buyer furthermore agrees that it shall *.

*:	* pursuant to * are ***:

	(1) Absence of any material adverse change in the business, operations or financial condition of Parent or Buyer as reflected in Parent’s year-end audited financial statements for the year ended December 31, 2005. (2) Absence of litigation by or against Buyer or any Parent subsidiary, which is reasonably expected to have a material adverse effect upon the operations of Buyer. (3) No * that * or ***.
	(4) No changes or amendments to Section 1110 of the United States Bankruptcy Code as currently legislated and interpreted (“Section 1110”) in a manner that would materially adversely affect the financing parties in a United States aircraft financing, and that has had a materially adverse effect on the aircraft financing market. (5) Buyer shall be an air carrier eligible for the protections of Section 1110.

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	(6) There shall not be a monetary or material default by Buyer or any affiliate with respect to the pertinent financing parties and Embraer or any affiliate at the time of financing, and no material default under the EMB-145 Purchase Agreement. (7) All reasonable legal fees, disbursements and out-of-pocket expenses of Embraer (excluding amounts associated with basic delivery documents such as bills of sale and partial assignments of rights under the relevant purchase agreement) and any party associated with the financing hereunder of such Aircraft relating to such financing (excluding amounts that Embraer is obligated to pay under *) (“Expenses”), shall be paid by Buyer at closing or upon demand thereafter. After each financing and refinancing of * for any Aircraft hereunder, Embraer and Buyer shall determine *. If the * Embraer shall at Buyer’s request * Buyer shall . (8) Additional customary conditions precedent in aircraft financings as may be required by the lender, including but not limited to issuance of required legal opinions. (9) Parent shall continue to *.

*	*

CHAUTAUQUA AIRLINES, INC.			US AIRWAYS, INC.
/s/ Bryan Bedford			/s/ W. Douglas Parker

Name: Bryan Bedford Title: President			Name: W. Douglas Parker Title: Chairman, President and CEO

Aircraft	Removal	Aircraft	Removal
No.	Date	No.	Date

35	*[]**	17	*[]**
34	*[]**	16	*[]**
33	*[]**	15	*[]**
32	*[]**	14	*[]**
31	*[]**	13	*[]**
30	*[]**	12	*[]**
29	*[]**	11	*[]**
28	*[]**	10	*[]**
27	*[]**	9	*[]**
26	*[]**	8	*[]**
25	*[]**	7	*[]**
24	*[]**	6	*[]**
23	*[]**	5	*[]**
22	*[]**	4	*[]**
21	*[]**	3	*[]**
20	*[]**	2	*[]**
19	*[]**	1	*[]**
18	*[]**

Andrew Nocella	with a copy delivered to:
Senior Vice President - Planning	Deputy General Counsel
4000 E. Sky Harbor Boulevard	4000 E. Sky Harbor Boulevard
Phoenix, Arizona 85034	Phoenix, Arizona 85034
andrew.nocella@usairways.com	Fax: (480) 693-5932
Telephone: (480) 693-8222
Fax: (480) 693-5954

REPUBLIC AIRLINE INC.			US AIRWAYS, INC.
/s/ Bryan Bedford			/s/ W. Douglas Parker

Name: Bryan Bedford Title: President			Name: W. Douglas Parker Title: Chairman, President & CEO

Aircraft	In-Service	Aircraft	In-Service
No.	Date	No.	Date

Section 2.01 Capacity Purchase
Section 2.02 Flight-Related Revenues
Section 2.03 Pass Travel
Section 2.04 Conversion of Covered Aircraft Livery