Capacity Purchase Agreements with United and American

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Capacity Purchase Agreements with United and American

3. Capacity Purchase Agreements with United and American

In February 2017, Air Wisconsin entered into the United capacity purchase agreement. A dispute exists under the agreement with respect to certain recurring amounts owed to Air Wisconsin by United. In October 2022, United initiated arbitration under the United capacity purchase agreement and requested a declaration that it does not owe any of the amounts claimed by Air Wisconsin. Air Wisconsin expects that, unless the parties reach a settlement before then, the arbitration hearing will occur in July 2023 and that the arbitrators will make their award in August 2023. In December 2022 and February 2023, Air Wisconsin sent United notices of termination of the agreement. In the arbitration, United has contested Air Wisconsin’s right to terminate the agreement. In accordance with the termination provisions of the agreement, and in response to Air Wisconsin’s first termination notice, United delivered in January 2023 a revised wind-down schedule. Following the delivery of that revised schedule, in February 2023, the parties agreed, in a sixth amendment to the United capacity purchase agreement, to a replacement wind-down schedule that provides for the withdrawal of aircraft from the agreement beginning in January 2023 and continuing until early June 2023, at which time all of Air Wisconsin’s remaining aircraft will be withdrawn from the agreement, and Air Wisconsin will cease flying for United. For its revenue calculations, Air Wisconsin has assumed that it will cease flying for United in June 2023. For additional information, refer to Note 8, Commitments and Contingencies.

In August 2022, Air Wisconsin entered into the American capacity purchase agreement, pursuant to which Air Wisconsin has agreed to provide up to 60 CRJ-200 regional jet aircraft for regional airline services for American. Air Wisconsin commenced flying operations for American in March 2023. American will become Air Wisconsin’s sole airline partner once all aircraft are removed from United’s flying operations, which is scheduled to occur in early June 2023. In February 2023, American and Air Wisconsin entered into a first amendment to the American capacity purchase agreement which revised compensation rates for 2023 through 2027 and obligated American to a fixed payment to assist Air Wisconsin with current pilot compensation.