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, 2016, the Company's firm aircraft orders consisted of the following:



	Airbus
	A320ceo	A320neo	A321ceo	Total
2017	4		11	15
2018	5	4	5	14
2019	1	12		13
2020		16		16
2021		18		18
	10	50	16	76

On April 27, 2016, the Company entered into an amendment to the Airbus A320 Family Purchase Agreement, by and between the Company and Airbus S.A.S., dated May 5, 2004 (Airbus Amendment), which included the conversion of ten Airbus A321neo orders to Airbus A320neo orders. The Company has three 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 $660.3 million in 2017, $649.8 million in 2018, $678.3 million in 2019, $824.4 million in 2020, $777.9 million in 2021, and $24.6 million in 2022 and beyond. As of December 31, 2016, the Company had secured financing commitments of $144.5 million for four aircraft, scheduled for delivery in 2017, and did not have financing commitments in place for the remaining 72 Airbus aircraft currently on firm order, which are scheduled for delivery in 2017 through 2021. In January 2017, the Company secured financing of $39.0 million for one additional aircraft, scheduled for delivery in 2017.

Interest commitments related to the secured debt financing of 29 delivered aircraft as of December 31, 2016 are $42.2 million in 2017, in $38.2 million 2018, $34.6 million in 2019, $30.9 million in 2020, $27.4 million in 2021, and $96.8 million in 2022 and beyond. For principal commitments related to these financed aircraft, refer to Note 11, Debt and Other Obligations. As of December 31, 2016, principal and interest commitments related to the Company's future secured debt financing of one undelivered aircraft under an EETC and three undelivered aircraft under bank debt are approximately $10.9 million in 2017, $13.0 million in 2018, $13.7 million in 2019, $13.2 million in 2020, $13.3 million in 2021, and $119.1 million in 2022 and beyond.

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 commenced in the first quarter of 2016 and is expected to be completed in the fourth quarter of 2017 for a remaining committed cost of $2.6 million, as of December 31, 2016. These amounts will be capitalized within flight equipment on the balance sheet.

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 first quarter of 2017 for a remaining committed cost of $7.3 million, as of December 31, 2016.

The Company is contractually obligated to pay the following minimum guaranteed payments for its reservation system, advertising media, data center, weather system and call center as of December 31, 2016: $5.7 million in 2017, $3.9 million in 2018, $0.3 million in 2019, $0.3 million in 2020, $0.1 million in 2021, and $0.0 million in 2022 and beyond. 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, 2016. The Company had four union-represented employee groups that together represented approximately 73% of all employees at December 31, 2015. The table below sets forth the Company's employee groups and status of the collective bargaining agreements as of December 31, 2016.



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)	May 2021	42%
Dispatchers	Transport Workers Union (TWU)	August 2018	1%
Ramp Service Agents	International Association of Machinists and Aerospace Workers (IAMAW)	June 2020	4%

In August 2015, the Company's collective bargaining agreement with its pilots, represented by ALPA, became amendable. In June 2016, ALPA requested the services of the National Mediation Board (NMB) to facilitate negotiations for an amended agreement and the Company joined ALPA in the request. The NMB has assigned a mediator and the parties continue to meet and work toward an amended agreement with the guidance of the mediator. Under the RLA, the parties' current agreement remains in effect until an amended agreement is reached.

In March 2016, 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. In May 2016, the flight attendants voted to approve the new five-year contract with the Company. In connection with this agreement, the Company paid a $9.6 million ratification incentive payment to the flight attendants recorded within salaries, wages and benefits in the statement of operations.

In July 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, covering material economic terms. In June 2016, the Company and the IAMAW reached an agreement on the remaining terms of the collective bargaining agreement, which is amendable in June 2020. As of December 31, 2016, these ramp service agents served 1 of the 59 airports where the Company operates.

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 $5.7 million and $3.7 million, for health care claims as of December 31, 2016, and 2015, respectively.