Commitments and Contingencies

Aircraft-Related Commitments and Financing Arrangements

The Company’s contractual purchase commitments consist primarily of aircraft and engine acquisitions through manufacturers and aircraft leasing companies. As of December 31, 2015, the Company's firm aircraft orders consisted of the following:



	Airbus				Third-Party Lessor
	A320ceo	A320neo	A321ceo	A321neo	A320neo (1)	Total
2016	3		9		5	17
2017	8		10			18
2018	2	6	5			13
2019		3		10		13
2020		13				13
2021		18				18
	13	40	24	10	5	92

(1) The Company has been notified by its third-party lessor that the delivery of one or more of these A320neos may be delayed until 2017. The Company does not believe this delay in delivery date to be significant.

The Company has four spare engine orders for V2500 SelectOne engines with IAE and nine spare engine orders for PurePower PW 1100G-JM engines with Pratt & Whitney. Spare engines are scheduled for delivery from 2017 through 2023. Purchase commitments for these aircraft and engines, including estimated amounts for contractual price escalations and pre-delivery payments, are expected to be approximately $592.9 million in 2016, $767.4 million in 2017, $620.5 million in 2018, $703.3 million in 2019, $705.5 million in 2020 and $812.1 million in 2021 and beyond. The Company has secured debt financing commitments of $455.8 million for 12 aircraft, scheduled for delivery in 2016. See “Notes to the Financial Statements—9. Debt and Other Obligations—2015-1 EETCs.” In addition, the Company has secured financing for five aircraft to be leased directly from a third party, also currently scheduled for delivery in 2016. The Company does not have financing commitments in place for the remaining 75 Airbus aircraft currently on firm order, which are scheduled for delivery in 2017 through 2021.

In July 2015, the Company executed an upgrade service agreement with Airbus Americas Customer Services Inc. (Airbus) to reconfigure the seating and increase capacity in 40 of the Company’s A320ceos from 178 to 182 seats (reconfiguration). The reconfiguration of the aircraft is expected to begin in the first quarter of 2016 and is expected to be completed in the first quarter of 2017. The cost of the reconfiguration is expected to be approximately $0.6 million per aircraft and purchase commitments for these are estimated to be approximately $15.0 million in 2016, $1.7 million in 2017 and none thereafter.

In September 2015, the Company executed a lease agreement with Wayne County Airport Authority (the Authority), which owns and operates Detroit Metropolitan Wayne County Airport (DTW). Under the lease agreement, the Company leases a 10-acre site, adjacent to the airfield at DTW, in order to construct, operate and maintain an approximately 126,000 square foot hangar facility (the project). The project allows for the development of a maintenance hangar in order to fulfill the requirements of the Company's growing fleet and will reduce dependence on third-party facilities and contract line maintenance. The lease agreement has a 30-year term with two 10-year extension options. Upon termination of the lease, title of the project, which will be fully depreciated, will automatically pass to the Authority. The Company estimates it will complete the project during the third quarter of 2016 at a cost of approximately $32.0 million.

As of December 31, 2015, the Company is contractually obligated to pay the following minimum guaranteed payments for its reservation system and advertising media in the amount of $5.1 million, $3.9 million and $2.6 million in 2016, 2017 and 2018, respectively. The Company's current agreement with its reservation system provider expires in 2018.

Litigation

The Company is subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. The Company believes the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on its financial position, liquidity or results of operations.

Employees

The Company has four union-represented employee groups that together represent approximately 73% of all employees at December 31, 2015. The Company had four union-represented employee groups that together represented approximately 67% of all employees at December 31, 2014. The table below sets forth the Company's employee groups and status of the collective bargaining agreements as of December 31, 2015.



Employee Groups	Representative	Amendable Date	Percentage of Workforce
Pilots	Air Line Pilots Association, International (ALPA)	August 2015	26%
Flight Attendants	Association of Flight Attendants (AFA-CWA)	August 2007	43%
Dispatchers	Transport Workers Union (TWU)	August 2018	1%
Ramp Service Agents	International Association of Machinists and Aerospace Workers (IAMAW)	June 2020	3%

In August 2014, under the supervision of the National Mediation Board (NMB), the Company and AFA-CWA reached a tentative agreement for a five-year contract with the Company's flight attendants. The tentative agreement was subject to ratification by the flight attendant membership. On October 1, 2014, the Company was notified that the flight attendants voted not to ratify the tentative agreement. The Company will continue to work with the AFA-CWA and the NMB towards a goal of reaching a mutually beneficial agreement.

On July 8, 2014, certain ramp service agents directly employed by the Company voted to be represented by the IAMAW. In May 2015, the Company entered into a five-year interim collective bargaining agreement with the IAMAW, including material economic terms, and the Company is continuing the process of negotiating a final collective bargaining agreement with the IAMAW. As of December 31, 2015, these ramp service agents served 1 of the 56 airports where the Company operates.

In August 2015, the Company's CBA with its pilot union, ALPA, became amendable and the Company is currently in discussions with ALPA on a new contract.

The Company is self-insured for health care claims, subject to a stop-loss policy, for eligible participating employees and qualified dependent medical claims, subject to deductibles and limitations. The Company’s liabilities for claims incurred but not reported are determined based on an estimate of the ultimate aggregate liability for claims incurred. The estimate is calculated from actual claim rates and adjusted periodically as necessary. The Company has accrued $4.3 million and $3.1 million, for health care claims as of December 31, 2015, and 2014, respectively.