Code Share And Revenue Sharing Agreement

Exhibit 10.46


***TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTION 200.80(b)(4),
200.83 AND 240.24b-2


CODE SHARE AND REVENUE SHARING AGREEMENT


This CODE SHARE AND REVENUE SHARING AGREEMENT (the "Agreement") is made and entered into as of March 20, 2001, to be effective retroactive to February 1, 2001 (the "Contract Date"), by and between AMERICA WEST AIRLINES, INC., a Delaware corporation ("AWA"), and MESA AIRLINES, INC., a Nevada corporation ("Mesa").


RECITALS


A. AWA holds a certificate of public convenience and necessity issued by the Department of Transportation ("DOT") authorizing AWA to engage in the interstate and overseas air transportation of persons, property and mail between all points in the United States, its territories and possessions.


B. Mesa holds a certificate of public convenience and necessity issued by the DOT authorizing Mesa to engage in the interstate transportation of persons, property and mail in the United States, its territories and possessions.


C. AWA owns various trademarks, service marks and logos, including "America West Airlines," "America West Express," and distinctive exterior color decor and patterns on its aircraft, hereinafter referred to individually and collectively as the "AWA Service Marks."


D. AWA and Mesa entered into that certain Code Share and Revenue Sharing Agreement, dated July 15, 1998, as amended by those certain First and Second Amendments to Code Share and Revenue Sharing Agreement, dated January 4, 2000 and May 10, 2000, respectively (the "Original Agreement"), in order to provide scheduled air transportation services as America West Express and to share in revenue and costs of such services.


E. AWA and Mesa desire to terminate the Original Agreement and replace the Original Agreement, in its entirety, with the terms and conditions of this Agreement.


NOW, THEREFORE, in consideration of the promises, covenants, representations and warranties hereinafter set forth, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, AWA and Mesa agree as set forth below.


AGREEMENT


1. Effectiveness. This Agreement replaces the Original Agreement effective upon the date (the "Effective Date") that Mesa executes a binding agreement to acquire the CRJ Aircraft required to be provided by Mesa pursuant to Section 2.2.2 of this Agreement (the "Aircraft Contract"). Mesa shall provide AWA with written notice of the date the Aircraft Contract is executed together with copies of the Aircraft Contract. On the date of execution of the Aircraft Contract, all of the terms and provisions of this Agreement shall be effective retroactive to the Contract Date. On the Effective Date, the Original Agreement shall be terminated in its entirety. All sums payable pursuant to Section 6 of the Original Agreement between the Contract Date and Effective Date shall be recalculated pursuant to the terms of Section 7 of this Agreement, and AWA, subject to the rights regarding disputed amounts contained in Section 7.8, shall pay 2 additional and undisputed sums payable within 30 days after receipt of a written invoice for such recalculation. Until the Effective Date, AWA and Mesa shall continue to perform pursuant to the Original Agreement. If the Aircraft Contract is not executed by May 1, 2001, then this Agreement shall automatically terminate and the terms and conditions of the Original Agreement shall remain in full force and effect. Simultaneously with the execution of this Agreement, AWA and Mesa shall enter into an amendment to the Original Agreement providing for the addition of 3 CRJs under the Original Agreement if this Agreement is terminated pursuant to this Section.


As of the Contract Date, AWA and Mesa dispute certain amounts that are payable between AWA and Mesa under the Original Agreement (the "Disputed Amounts"). Mesa and AWA shall continue to work to resolve their respective obligations concerning the Disputed Amounts pursuant to the terms of the Original Agreement. This is a new and separate agreement from the Original Agreement. The terms of this Agreement shall not be used by either Mesa or AWA to determine or interpret the respective payment obligations of the parties for the Disputed Amounts. The respective obligations for the Disputed Amounts and other matters and disputes arising under the Original Agreement prior to the Contract Date shall be resolved pursuant to the terms, covenants, rights and remedies of the Original Agreement, shall not affect the rights, duties and obligations of AWA or Mesa under this Agreement and shall not permit AWA or Mesa to exercise any remedies under this Agreement. The intent of AWA and Mesa is to resolve any disputes concerning the Disputed Amounts or any other matters and disputes under the Original Agreement under the Original Agreement and not pursuant to this Agreement.


2. Rights, Responsibilities and Obligations of Mesa:


2.1 Flight Service. During the term of this Agreement, Mesa shall
operate America West Express air transportation services (the
"Flight Services"), using the Fleet of Aircraft established
pursuant to Section 2.2, to and from the cities and based upon
the schedule established from time to time by AWA (the
"Schedule") in written notice to Mesa (a "Schedule Notice").
For purposes of this Agreement, "Flights" means flights
operated pursuant to the Schedule. AWA may change the Schedule
by issuance of a Schedule Notice at any time. When creating a
Schedule, AWA shall: (i) take into account Mesa's aircraft
maintenance requirements; (ii) create a Schedule which will
permit Mesa to schedule flight crews in a manner consistent
with industry operational practices; (iii) schedule block
times based on AWA's internal block time policy; (iv) provide
for the following turn times: (a) in a hub location: 20
minutes for Beech 1900s and Dash 8s and 25 minutes for CRJs;
and (b) in other stations: 10 minutes for Beech 1900s, 15
minutes for Dash 8s and 20 minutes for CRJs; (v) take into
account airport facilities available for Aircraft handling;
(vi) provide for maintenance as required by Section 2.6.3 and
scheduled heavy maintenance on Aircraft as required from time
to time; and (vii) provide for at least 45 days prior notice
of any holiday cancellations. Mesa shall implement all changes
in the Schedule contained in a Schedule Notice in accordance
with AWA'S scheduling requirements within 60 days after
receipt of a Schedule Notice. Mesa or any of its affiliates
shall not provide any flight service for any other airline for
flights that originate in or end in Phoenix, Arizona.


2 3 So long as Air Midwest ("AM") is a wholly-owned subsidiary of Mesa Air Group, Inc., Mesa may subcontract with AM for the performance of those Flight Services, Other Services (as hereinafter defined), and other related obligations under this Agreement, which are to be performed by Mesa using the Beech 1900s (the "AM Services"). Mesa has delivered to AWA an assumption agreement pursuant to which AM agrees to perform all the duties and obligations of Mesa under this Agreement relating to the AM Services and to be bound by all of the liabilities, obligations, and duties of Mesa under this Agreement applicable to the AM Services, including, without limitation, the providing of flights, maintenance of aircraft, compliance with laws, maintenance of insurance and indemnification of AWA (the "Assumption Agreement"). AWA shall have no duty, obligation or liability to AM under this Agreement. All payments for the use and operation of the Beech 1900 Subfleet to be made by AWA under this Agreement shall be paid to Mesa. Mesa shall pay all sums payable to AM for the operation of the Beech 1900 Subfleet pursuant to a separate agreement between AM and Mesa to which AWA is not a party. Notwithstanding the foregoing, Mesa shall not be released, discharged, or relieved from any duties, liabilities or obligations set forth in this Agreement, including those arising from the AM Services performed by AM. AM shall be deemed a subcontractor of Mesa, and Mesa shall cause AM's performance of the AM Services to comply with all relevant terms and conditions of this Agreement. If either: (i) AM ceases to be a wholly-owned subsidiary of Mesa Air Group, Inc.; or (ii) AM fails to comply with the terms and conditions of this Agreement as required by the Assumption Agreement, then Mesa, within thirty (30) days after receipt of written notice from AWA, shall terminate the subcontractor relationship with AM, acquire the Beech 1900 Subfleet and perform the duties and obligations applicable to the Beech 1900 Subfleet pursuant to this Agreement.


Mesa, with the prior written consent of AWA, which consent shall not be unreasonably withheld, delayed or conditioned, may subcontract with a wholly owned subsidiary of Mesa Air Group, Inc. for the performance of certain Flight Services, Other Services and other related obligations under this Agreement, which are to be performed by Mesa using certain Aircraft on terms and conditions similar to the terms and conditions applicable to the subcontracting of the AM Services (the "Subcontracting of Services"). If AWA consents to the Subcontracting of Services, then AWA and Mesa shall execute an amendment to this Agreement permitting the Subcontracting of Services and setting forth the terms and conditions pursuant to which the Subcontracting of Services may occur (the "Subcontracting Amendment"). The Subcontracting of Services shall not occur until the Subcontracting Amendment and any documents required from the wholly-owned subsidiary have been executed by Mesa and the affiliate and delivered by AWA.


AM and any other affiliate to which services are subcontracted under this Agreement are referred to as the "Affiliated Service Providers."


3 4 2.2 Fleet.


2.2.1 Initial Fleet. As of the Contract Date, Mesa and AM provide
the Flight Services using the following aircraft
(collectively, the "Fleet"; with respect to any one aircraft
type, the "Subfleet"; and individually, the "Aircraft"):


Number Aircraft Type ("Subfleet")
------ --------------------------
12 deHavilland DHC-8-200 ("Dash 8")
5 Hawker-Beech 1900 ("Beech 1900")
22 Canadair Regional Jet-50 ("CRJ")


2.2.2 CRJ Fleet Expansion. Pursuant to the Aircraft Contract, Mesa
shall have the right to acquire an additional 83 CRJ Aircraft,
43 by virtue of firm orders (the "Firm Aircraft") and 40 by
virtue of options (the "Option Aircraft"), in the
configuration, with the seating capacity and at the times set
forth on Exhibit A, attached hereto. The Firm Aircraft and
Option Aircraft will consist of CRJ Models 200s, 700s and 900s
as set forth in Exhibit A. For purposes of this Agreement, the
CRJ Model 200s shall be a "CRJ Subfleet" and the CRJ Model
700s and 900s shall be a "CRJ Subfleet".


(a) Each of the Firm Aircraft shall be placed into Flight
Services by Mesa in the calendar months set forth on
Exhibit A (the "Delivery Schedule"). The Firm
Aircraft to be delivered in each of the calendar
months from and including October, 2003 to and
including June, 2004 may be either CRJ Model 700s or
900s (the "Convertible Firm Aircraft"). AWA, by
written notice to Mesa, given on or before the last
day of the 18th calendar month prior to the delivery
of each Convertible Firm Aircraft, shall advise Mesa
as to which model is to be added to the Fleet (the
"Firm Selection Notice"). For example, for the CRJ to
be delivered in October, 2003, AWA must provide the
Firm Selection Notice by April 31, 2002. If AWA does
not provide the Firm Selection Notice timely, then
AWA shall be deemed to have elected to have a CRJ
Model 700 added to the Fleet. Mesa shall provide AWA
with at least 90 days' prior written notice of the
week each of the Firm Aircraft will be placed into
Flight Service under this Agreement and at least 60
days' prior written notice of the date on which each
of the Firm Aircraft will be placed into Flight
Service under this Agreement (each, a "Scheduled
Delivery Date").


(b) AWA shall have the options to expand the CRJ Fleet by
up to 40 additional CRJs from the Option Aircraft. On
or before each option "Exercise Date" (as set forth
on Exhibit A), AWA, by written notice to Mesa (the
"Option Notice"), shall have the option to require
Mesa to increase the CRJ Subfleet by the addition of
the applicable CRJ Aircraft in the applicable "In
Service Months" (as set for on Exhibit A)(each, a
"Fleet Expansion Option"). Each Option Notice shall
specify whether AWA is selecting either a CRJ Model
700 or 900. If


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the Option Notice does not specify the CRJ Model,
then AWA shall be deemed to have selected a CRJ Model
700. The Fleet Expansion Options are separate and
individual options and may be exercised or not
exercised on a separate and individual basis. The
Aircraft that are the subject of each Fleet Expansion
Option shall be added to the Fleet by Mesa in the
applicable In Service Months. Mesa shall provide AWA
with at least 90 days prior written notice of the
week each Option Aircraft will be placed into Flight
Service under this Agreement and at least 60 days'
prior written notice of the Scheduled Delivery Date
for each Option Aircraft that is the subject of each
exercised Fleet Expansion Option.


(c) Mesa shall not be liable to AWA for the failure to
deliver any Firm Aircraft or Option Aircraft on the
Scheduled Delivery Date (a "Failed Delivery") if (i)
the failure to deliver is the result of the
manufacturer's failure to deliver the Aircraft to
Mesa as a result of acts of terrorism, hostilities,
war, strikes, labor disputes, work stoppages beyond
the manufacturer's control, fire, act of government
or court order; (ii) Mesa uses commercially
reasonable efforts to acquire a replacement aircraft
for the Aircraft that was not delivered; and (iii)
Mesa pays to AWA any compensation, damages or award
obtained by Mesa from the manufacturer as a result of
the Failed Delivery (an "Excused Failure"). In the
event of a Failed Delivery, Mesa shall use
commercially reasonable efforts to obtain the
applicable Aircraft as soon as practicable after the
Scheduled Delivery Date. If the Aircraft that is the
subject of a Failed Delivery is not delivered within
90 days after the Scheduled Delivery Date, then AWA
shall have the option to elect not to include such
Aircraft under this Agreement by providing written
notice to Mesa at any time prior to the actual
delivery of such Aircraft. If a Failed Delivery is
not the result of an Excused Failure, then AWA shall
have all rights and remedies under this Agreement for
such Failed Delivery.


2.2.3 Intentionally Omitted.


2.2.4 Fleet Reduction. Except as otherwise permitted by Section
2.2.5, upon 180 days' prior written notice from AWA, AWA,
subject to limitations set forth below, may require Mesa to
reduce the number of Aircraft in any Subfleet. AWA shall not
require Mesa to reduce: (i) the number of Aircraft in the Dash
8 Subfleet, Beech 1900 Subfleet or the combined CRJ Subfleets
by more than one Aircraft in any Six Calendar Month Period.
For purposes of this Agreement, "Six Calendar Month Period"
means each period during the Term (as defined below)
commencing on January l and ending on June 30 and commencing
on July 1 and ending on December 30, with the first Six
Calendar Month Period commencing on January 1, 2002; (ii) the
number of CRJ Model 200s for a period of 1 year measured from
the last date that a CRJ Model 200 is added to the CRJ
Subfleet; provided, however, that the Scheduled Delivery Date
shall be used to


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measure the date each CRJ Model 200 is added to the CRJ
Subfleet; (iii) the number of CRJ Model 700s and 900s for a
period of 1 year measured from the last date that a CRJ Model
700 or 900 is added to the CRJ Subfleet; provided, however,
that the Scheduled Delivery Date shall be used to measure the
date such CRJ Model 700 or 900 is added to the CRJ Subfleet;
and (iv) the Dash 8 Subfleet below 6 Aircraft.


2.2.5 Elimination of Beech 1900s and Dash 8s. Notwithstanding the
provisions of Section 2.2.4, AWA, at any time during the Term
after August 25, 2004, may require the Subfleet of Beech 1900s
to be reduced to zero by providing Mesa with at least 180 days
prior written notice of AWA's election to eliminate the Beech
1900s on or after such date (the "1900 Elimination Notice").
Notwithstanding the provisions of Section 2.2.4, AWA, at any
time during the Term after August 25, 2006, may require Mesa
to reduce the Subfleet of Dash 8s to zero by providing Mesa
with at least 180 days' prior written notice of AWA's election
to eliminate the Dash 8s on or after such date (the "Dash 8
Elimination Notice"). The 1900 Elimination Notice may be given
at any time during the Term on or after February 27, 2004. The
Dash 8 Elimination Notice may be given at any time during the
Term on or after February 27, 2006.


2.2.6 Spares. Mesa shall have available at least 1 spare Aircraft
available for Flight Services under this Agreement at any time
there are 35 or more CRJ Aircraft and at least 2 spare
Aircraft available for Flight Services under this Agreement at
any time there are 65 or more CRJ Aircraft. AWA shall pay the
Actual Costs, Guaranteed Non-Maintenance Costs (other than
overhead) and Guaranteed Maintenance Costs actually incurred
by or payable to Mesa for each spare Aircraft as provided in
Section 7.


2.2.7 Transition Costs. As of the Contract Date, all of the CRJ
Aircraft are 50 seat Aircraft. The Firm Aircraft and Option
Aircraft include CRJ-700 and CRJ-900 seat configurations (the
"New CRJ Types"). AWA shall reimburse Mesa for actual out-of
pocket costs and expenses incurred by Mesa in connection with
the induction of the New CRJ Types into Flight Services for a
period of 180 days after the induction of the first of each of
the New CRJ Types, not to exceed [...***...] for each of the
New CRJ Types (the "Transition Reimbursement"). The Transition
Reimbursement shall be paid by AWA within 30 days after
receipt of monthly written invoices together with commercially
reasonable evidence of the costs actually incurred by Mesa.


2.3 Other Services. In addition to the Flight Services, Mesa, subject to
AWA's payment of costs pursuant to Section 7.1.8, shall provide the
following services in connection with the Flight Services (the "Other
Services"): (i) curb-side service, other than at AWA Service Locations
(as defined below), in all locations where it is normal and customary
or where another airline offers curbside check-in; (ii) check-in
service with automated baggage tags and boarding pass printers in all
locations, other than AWA Service Locations; (iii) ticketing and
security services


***CONFIDENTIAL TREATMENT REQUESTED


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in accordance with the Federal Aviation Administration ("FAA") and AWA
directives and guidelines, as may be issued from time to time, and any
other directives or guidelines as Mesa and AWA may mutually approve, in
all locations, other than the AWA Service Locations; (iv) Qik-Check
service, to the extent used and supplied by AWA, at all gates used by
Mesa; (v) transfer of all baggage for passengers connecting from
Flights to AWA flights in a timely manner to ensure all baggage is
placed on those connecting flights; and (vi) transportation of mail and
other cargo (other than hazardous materials) on Flights, at the order
of AWA, to the extent of available aircraft capacity. Mesa, at its
expense, shall provide all facilities, machinery, equipment and
inventory required to efficiently, timely and in a manner consistent
with best airline industry practices provide the Other Services. Mesa
shall require personnel providing the Other Services to comply with all
rules, regulations and directives promulgated for all AWA operations
from time to time.


Mesa may outsource the Other Services performed by Mesa at any station
with the prior written consent of AWA, which consent shall not be
unreasonably withheld or delayed. Mesa shall cause any subcontractor to
which the Other Services are outsourced to comply with and perform all
of the duties and obligations imposed on Mesa in this Agreement
applicable to the Other Services that have been outsourced.


Notwithstanding the foregoing, AWA shall provide the services set forth
in subsections (i) - (iii) above at Phoenix Sky Harbor International
Airport, McCarron International Airport and any other airport that AWA
designates with at least 90 days' prior written notice to Mesa (the
"AWA Service Locations"). In the event AWA elects to convert any
airport to an AWA Service Location, then AWA shall: (i) either assume
Mesa's lease at the airport or reimburse Mesa for the actual
out-of-pocket costs and expenses incurred by Mesa in terminating the
lease, at AWA's election; (ii) reimburse Mesa for up to one week's
compensation actually paid to airport employees that are not offered
employment by AWA; and (iii) offer to purchase from Mesa or assume the
lease of any equipment owned or leased by Mesa at the airport that may
be used by AWA in AWA's operations and is in good condition and repair
for a price equal to the fair market value of such equipment at the
time of such offer.


2.4 Personnel; Training. Mesa shall hire, engage, employ and maintain a
sufficient number of competent, trained personnel and subcontractors,
including, but not limited to pilots, flight attendants, ground crew,
maintenance and cleaning personnel, baggage handling personnel and
customer service personnel necessary to provide the Flight Services and
Other Services as required by this Agreement. Subject to FAA approval,
CRJ pilots shall be qualified to fly all models of CRJs providing
Flight Services pursuant to this Agreement. CRJ pilots shall not be
scheduled or dedicated to any particular model line of CRJs without the
prior written consent of AWA. In addition, Mesa shall employ and
maintain a commercially reasonable number of reserve pilots and flight
attendants based in the Phoenix Metropolitan area based on the Flight
Services to be provided


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pursuant to this Agreement. Mesa shall cause all Mesa personnel
providing Flight Services or Other Services to wear uniforms approved
by AWA and shall comply with all appearance guidelines required of all
AWA personnel.


Mesa shall provide initial training, recurrent training and customer
service training to personnel and subcontractors reasonably identified
by AWA at programs approved by AWA. AWA shall provide applicable
training materials. In the event AWA becomes a hazardous materials
carrier, Mesa, at AWA's expense, shall conduct all hazardous materials
training required by AWA or AWA's other code share partners.


2.5 Service Quality and Level. All Flight Services and Other Services shall
be provided by Mesa at a service quality and level of service equal to
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