10-Q

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 June 30, 2015

¨ 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 001-36718

VIRGIN AMERICA INC.

(Exact name of registrant as specified in its charter)

Delaware	20-1585173
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
555 Airport Boulevard Burlingame, CA 94010 (Address of Principal Executive Offices) (Zip Code) (650) 762-7000 (Registrant’s telephone number, including area code)

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.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	¨

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

As of July 22, 2015, the registrant had 43,412,080 shares of common stock outstanding.

Virgin America Inc.

FORM 10-Q

INDEX

PART I	FINANCIAL INFORMATION
	Item 1. Financial Statements	3
	Condensed Consolidated Balance Sheets - June 30, 2015 and December 31, 2014	3
	Consolidated Statements of Operations - Three Months and Six Months Ended June 30, 2015 and 2014	5
	Consolidated Statements of Comprehensive Income (Loss) - Three Months and Six Months Ended June 30, 2015 and 2014	6
	Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2015 and 2014	7
	Notes to Condensed Consolidated Financial Statements	8
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3. Quantitative and Qualitative Disclosures about Market Risk	32
	Item 4. Controls and Procedures	32
PART II	OTHER INFORMATION
	Item 1. Legal Proceedings	33
	Item 1A. Risk Factors	33
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	48
	Item 3. Defaults Upon Senior Securities	48
	Item 4. Mine Safety Disclosures	48
	Item 5. Other Information	48
	Item 6. Exhibits	48
	Signatures	49
	Exhibit Index	50

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PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Virgin America Inc.

Condensed Consolidated Balance Sheets

(in thousands)

	June 30, 2015		December 31, 2014
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	500,457	$	394,643
Receivables, net		30,191		23,414
Prepaid expenses and other assets		35,404		20,874
Total current assets		566,052		438,931
Property and equipment:
Property and equipment, net		80,998		73,207
Pre-delivery payments for flight equipment		117,501		94,280
Total property and equipment, net		198,499		167,487
Aircraft maintenance deposits		223,104		211,946
Aircraft lease deposits		49,292		50,758
Restricted cash		19,744		18,775
Other non-current assets		127,032		112,279
		419,172		393,758
Total assets	$	1,183,723	$	1,000,176

See accompanying notes to the condensed consolidated financial statements.

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Virgin America Inc.

Condensed Consolidated Balance Sheets

(in thousands)

	June 30, 2015			December 31, 2014
	(unaudited)
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	52,725		$	52,821
Air traffic liability		223,187			150,479
Other current liabilities		92,573			100,723
Long-term debt-current portion		68,656			33,824
Total current liabilities		437,141			337,847
Long-term debt-related parties		40,477			38,848
Long-term debt		40,000			57,416
Other long-term liabilities		102,647			106,812
Total liabilities		620,265			540,923
Contingencies and commitments (Note 4)
Stockholders’ equity
Preferred stock		—			—
Common stock		434			431
Additional paid-in capital		1,238,505			1,237,944
Accumulated deficit		(675,241	)		(753,016	)
Accumulated other comprehensive loss		(240	)		(26,106	)
Total stockholders’ equity		563,458			459,253
Total liabilities and stockholders’ equity	$	1,183,723		$	1,000,176

See accompanying notes to the condensed consolidated financial statements.

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Virgin America Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Operating revenues:
Passenger	$	359,709		$	358,108		$	649,073		$	636,148
Other		41,177			40,737			78,165			76,087
Total operating revenues		400,886			398,845			727,238			712,235
Operating expenses:
Aircraft fuel		93,743			131,664			182,301			247,423
Salaries, wages and benefits		74,758			59,318			139,490			113,143
Aircraft rent		45,708			45,861			90,690			92,357
Landing fees and other rents		34,071			33,286			68,054			65,507
Sales and marketing		30,704			28,615			57,083			53,177
Aircraft maintenance		12,656			16,409			26,489			35,453
Depreciation and amortization		4,225			3,484			8,328			6,753
Other operating expenses		37,363			33,082			71,762			64,427
Total operating expenses		333,228			351,719			644,197			678,240
Operating income:		67,658			47,126			83,041			33,995
Other income (expense):
Interest expense-related-party		(822	)		(9,558	)		(1,628	)		(18,940	)
Interest expense		(1,616	)		(951	)		(2,831	)		(1,484	)
Capitalized interest		1,242			635			2,309			1,116
Other income (expense), net		(1,109	)		(2	)		(2,428	)		258
Total other expense		(2,305	)		(9,876	)		(4,578	)		(19,050	)
Income before income tax		65,353			37,250			78,463			14,945
Income tax expense		364			267			688			316
Net income	$	64,989		$	36,983		$	77,775		$	14,629
Net income per share:
Basic	$	1.50		$	20.42		$	1.80		$	8.08
Diluted	$	1.47		$	11.92		$	1.75		$	4.72
Shares used for computation:
Basic		43,298			702			43,239			702
Diluted		44,083			1,992			44,538			1,992

See accompanying notes to the condensed consolidated financial statements

5

Virgin America Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Net income	$	64,989	$	36,983	$	77,775	$	14,629
Derivative financial instruments, net of tax:
Change in unrealized losses (gains)		4,569		1,518		1,551		(1,227	)
Net losses reclassified into earnings		9,080		484		24,315		501
Other comprehensive income (loss)		13,649		2,002		25,866		(726	)
Total comprehensive income	$	78,638	$	38,985	$	103,641	$	13,903

See accompanying notes to the condensed consolidated financial statements

6

Virgin America Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

	Six Months Ended June 30,
	2015			2014
	(unaudited)			(unaudited)
Cash flows from operating activities:	$	130,920		$	25,059
Cash flows from investing activities:
Acquisition of property and equipment and intangible assets		(16,273	)		(31,070	)
Pre-delivery payments for flight equipment		(5,805	)		(9,182	)
Net cash used in investing activities		(22,078	)		(40,252	)
Cash flows from financing activities:
Net proceeds of equity issuance		1,526			8
Proceeds of term loan facility		—			40,000
Debt issuance costs		(818	)		(494	)
Shares repurchased for tax withholding on vesting of restricted stock units		(3,736	)		—
Net cash provided by (used in) financing activities		(3,028	)		39,514
Net increase in cash and cash equivalents		105,814			24,321
Cash and cash equivalents, beginning of period		394,643			155,659
Cash and cash equivalents, end of period	$	500,457		$	179,980
Non-cash transactions:
Non-cash loan borrowings on pre-delivery payments for flight equipment		17,416			—

See accompanying notes to the condensed consolidated financial statements

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Notes to the Condensed Consolidated Financial Statements

(1) Basis of Presentation

The condensed consolidated financial statements of Virgin America Inc. (the “Company”) for the three and six months ended June 30, 2014 include the accounts of the Company and its variable interest entity, VX Employee Holdings LLC, for which it was the primary beneficiary until all of the shares held by VX Employee Holdings LLC were sold to the public as part of the Company’s initial public offering (the “IPO”) in November 2014 as discussed below. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s 2014 audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (“2014 Form 10-K”).

These unaudited condensed consolidated financial statements have been prepared as required by the U.S. Securities Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted as permitted by the SEC. The financial statements include all adjustments, including normal recurring adjustments and other adjustments, which are considered necessary for a fair presentation of the Company’s financial position and results of operations. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for the entire year. Certain prior year amounts have been reclassified to conform to current year presentation. These amounts were not material to any of the periods presented.

In November 2014, concurrent with the pricing of the IPO, the Company entered into a recapitalization agreement (the “2014 Recapitalization”) with certain security-holders to exchange or extinguish the majority of its then-outstanding related-party debt and accrued interest (the “Related-Party Notes”) with contractual value of $684.8 million at the time and all of its convertible preferred stock and outstanding warrants. The Company repaid $156.5 million of certain Related-Party Notes with $56.5 million from the proceeds of the IPO and $100.0 million from the release of cash collateral to the Company in connection with a $100.0 million letter of credit facility issued on its behalf to certain of its credit card processors by the Virgin Group (the “Letter of Credit Facility”, which has since been terminated). The Company issued a new $50.0 million note to the Virgin Group (the “Post-IPO Note”) in exchange for the cancellation of $50.0 million of certain Related-Party Notes previously outstanding and held by the Virgin Group. The Company recorded the Post-IPO Note at the estimated fair value of $38.5 million. The Company exchanged the remainder of the Related-Party Notes for 22,159,070 shares of common stock based on the IPO offering price and the remaining outstanding contractual value of the debt, except for principal and accrued interest under certain secured notes issued in December 2011 and certain secured notes issued in May 2013 both held by Cyrus Capital, which were converted at a premium of 117% of the outstanding contractual value. The Company also converted each of 1,950,937 shares of convertible preferred stock and Class A, Class A-1, Class B, Class C and Class G common stock into shares of common stock on a one-to-one basis and exchanged related-party warrants to purchase 26,067,475 shares of common stock for 5,742,543 shares of common stock with the remaining related-party warrants to purchase 16,175,126 shares of common stock canceled in their entirety. For additional information, see the consolidated financial statements included in the 2014 Form 10-K.

During the three months ended June 30, 2015, the Company recorded an immaterial correction related to prior period Elevate loyalty revenue to increase passenger revenue and decrease deferred revenue by $3.2 million. The Company assessed the materiality of this adjustment for each quarterly and annual period and determined that the adjustment was immaterial to all reported periods.

Receivables, net

Receivable, net includes credit card holdbacks and other receivables. Credit card holdbacks and related receivables are amounts due from credit card processors associated with sales for future travel and are carried at cost. Under the terms of the Company’s credit card processing agreements, certain proceeds from advance ticket sales are held back to serve as collateral by the credit card processors, due to the Company’s credit and in part to cover any possible refunds or chargebacks that may occur. These holdbacks are short-term, as the travel for which they relate occurs within twelve months. In June 2015, the Company entered into agreements with its credit card processors to reduce the holdback requirements to 0% and, in connection with this the $100.0 million Letter of Credit Facility was terminated. The credit card processors have the right to increase the credit card holdback amount in the future depending on the Company’s financial performance. If the Company’s credit card processors were to implement a new holdback requirement, it would be funded through withholding proceeds from future ticket sales made through credit card transactions. As of June 30, 2015, the Company recorded $18.6 million in credit card receivables. As of December 31, 2014, the Company had no net holdbacks outstanding as a result of the Letter of Credit Facility and $9.6 million of credit card receivables.

8

New Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) jointly issued a comprehensive new revenue recognition standard that will replace most existing revenue recognition standards under U.S. GAAP and International Financial Reporting Standards (“IFRS”). The new standard will require the Company to recognize revenue when goods or services are transferred to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. As a result, the Company will need to use more judgments and estimates to determine when and how revenue is recognized than U.S. GAAP currently requires. The new standard will become effective for the Company on January 1, 2018. The Company believes the most significant effect of this accounting standards update will be the elimination of the incremental cost method for frequent flyer accounting, which would require the Company to re-value its liability earned by customers associated with flights points with a relative fair value approach. The Company is continuing to evaluate the new guidance and plans to provide additional information about its expected financial effect at a future date.

In February 2015, the FASB issued an accounting standards update that eliminates the deferral of FAS 167, which has allowed entities with interests in certain investment funds to follow the previous consolidation guidance in FIN 46(R), and makes other changes to both the variable interest model and the voting model. In some cases, consolidation conclusions will change. In other cases, reporting entities will need to provide additional disclosures about entities that currently aren’t considered variable interest entities (VIEs) but will be considered VIEs under the new guidance provided they have a variable interest in those VIEs. The guidance will be effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company does not expect this accounting standards update to have a material impact on the consolidated financial statements.

In April 2015, the FASB issued an accounting standards update that simplifies the guidance related to presentation of debt issuance costs. The guidance requires presentation of debt issuance costs on the balance sheet as a direct deduction from the face amount of that note, consistent with debt discounts. The guidance is to be applied retrospectively to the financial periods presented as a change in accounting principle. The guidance will be effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company does not expect this accounting standards update to have a material impact on the consolidated financial statements.

In June 2015, the FASB issued an accounting standards update that corrects differences between original accounting guidance and the accounting guidance codification, clarifies the accounting guidance, corrects references and makes minor improvements affecting a variety of accounting topics. Transition guidance varies based on the amendments in the update. The amendments in the update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect this accounting standards update to have a material impact on the consolidated financial statements.

(2) Fair Value

The accounting guidance establishes a fair value hierarchy as follows:

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Level 1	Observable inputs such as quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the assets or liabilities.
Level 3	Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities.

The following is a listing of the Company’s assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the fair value hierarchy as of June 30, 2015 and December 31, 2014 respectively (in thousands):

	June 30, 2015 (unaudited)
	Level 1		Level 2			Level 3		Total
Assets (Liability)
Cash equivalents	$	444,803	$	—		$	—	$	444,803
Restricted cash		19,744		—			—		19,744
Heating oil collars - fuel derivative instruments		—		—			—		—
Brent calls - fuel derivative instruments		—		1			—		1
Heating oil swaps - fuel derivative instruments		—		201			—		201
Jet fuel swaps - fuel derivative instruments		—		(259	)		—		(259	)
Interest rate swaps		—		42			—		42
	$	464,547	$	(15	)	$	—	$	464,532
	December 31, 2014
	Level 1		Level 2			Level 3		Total
Assets (Liability)
Cash equivalents	$	339,211	$	—		$	—	$	339,211
Restricted cash		18,775		—			—		18,775
Heating oil collars - fuel derivative instruments		—		(27,170	)		—		(27,170	)
Brent calls - fuel derivative instruments		—		50			—		50
	$	357,986	$	(27,120	)	$	—	$	330,866

A portion of the Company’s debt is privately negotiated with related parties. The estimated fair value of related-party debt was $45.9 million and $38.8 million at June 30, 2015 and December 31, 2014, respectively. The estimated fair value of the non-related party debt includes financing associated with aircraft pre-delivery payments of $68.7 million and $51.2 million at June 30, 2015 and December 31, 2014 and a $40.0 million financing of airport slots. The Company uses significant unobservable inputs in determining discounted cash flows to estimate the fair value, and therefore, such amounts are categorized as Level 3 in the fair value hierarchy.

(3) Financial Derivative Instruments and Risk Management

Fuel Hedges

To manage economic risks associated with the fluctuations of aircraft fuel prices, since 2012, the Company has hedged a targeted percentage of its forecasted fuel requirements over the following 12 months with a rolling strategy of entering into call options for crude oil and collar contracts for heating oil in the longer term, three to 12 months before the expected fuel purchase date; then prior to maturity of these contracts, within three months of the fuel purchase, the Company exited these contracts by entering into offsetting trades and locking in the price of a percentage of its fuel requirements through the purchase of fixed forward pricing (“FFP”) contracts in jet fuel. In 2015, the Company eliminated the use of call options and collars from its fuel hedging program and began utilizing forward swaps on jet fuel, heating oil and crude oil to lock in future fuel purchase prices.

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The Company utilizes FFP contracts with its fuel service provider as part of its risk management strategy, wherein fixed prices are negotiated for set volumes of future purchases of fuel. The Company takes physical delivery of the future purchases. The Company has applied the normal purchase and normal sales exception for these commitments. As of June 30, 2015, the total commitment related to FFP contracts was $38.6 million, for which the related fuel will be purchased during 2015.

The Company designates the majority of its fuel hedge derivatives contracts as cash flow hedges under the applicable accounting standard, if they qualify for hedge accounting. Under hedge accounting, all periodic changes in the fair value of the derivatives designated as effective hedges are recorded in accumulated other comprehensive income (loss) (“AOCI”) until the underlying fuel is purchased, at which point the deferred gain or loss will be recorded as fuel expense. In the event that the Company’s fuel hedge derivatives do not qualify as effective hedges, the periodic changes in fair value of the derivatives are included in fuel expense in the period they occur. If the Company terminates a fuel hedge derivative contract prior to its settlement date, the cumulative gain or loss recognized in AOCI at the termination date will remain in AOCI until the terminated intended transaction occurs. In the event it becomes improbable that such event will occur, the cumulative gain or loss is immediately reclassified into earnings. All cash flows associated with purchasing and settling of fuel hedge derivatives are classified as operating cash flows in the accompanying condensed consolidated statements of cash flows.

Interest Rate Swaps

In April 2015, the Company executed debt facility agreements to finance the Company’s 2015 aircraft deliveries. Refer to Note 4 - Contingencies and Commitments for additional information. The Company entered into interest rate swaps in May 2015 to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to future interest payments on the committed financing for an aircraft to be delivered in November 2015. The interest rate swaps hedge the risk of changes in the Company’s cash flows (i.e., interest payments attributable to changes in the three-month USD-LIBOR-BBA swap rate, the designated benchmark interest rate being hedged) on an amount of the debt principal equal to the committed financing amount. As such, the swap terms match the payment terms on the debt. The interest rate swaps are designated cash flow hedges. The gains and losses related to the changes in fair value of the swaps are included in AOCI in the accompanying condensed consolidated balance sheet. The effect of such swaps is to convert the floating interest rate to a fixed rate until the aircraft is delivered in November 2015, when the debt funding occurs. Hedge accounting will cease once the interest rate has been contractually fixed upon aircraft delivery, and the outstanding AOCI balance associated with the interest rate swap will be amortized using the interest method over the term of the debt. The fair value of the interest rate swaps is reflected in other current assets in the accompanying condensed consolidated balance sheet. The measurement of hedge effectiveness is based on the hypothetical-derivative method in which the cumulative change in the fair value of the hedging instrument will be compared to the cumulative change in fair value of the hypothetical derivative.

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The following tables present the fair value of derivative assets and liabilities that are designated and not designated as hedging instruments, as well as the location of the asset and liability balances within the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014 (in thousands):

Derivatives designated as cash flow hedges	Consolidated balance sheet location		Fair value of derivatives as of
			June 30, 2015			December 31, 2014
			(unaudited)
Fuel derivative instruments—Heating oil collars		Current liabilities		—			(24,762	)
Fuel derivative instruments—Brent calls		Current liabilities		—			(84	)
Fuel derivative instruments—Heating oil swaps		Current liabilities		317			—
Fuel derivative instruments—Jet fuel swaps		Current liabilities		(259	)		—
Interest rate swaps		Current assets		42			—
Total current assets (liabilities)			$	100		$	(24,846	)
Derivatives not designated as cash flow hedges	Consolidated balance sheet location		Fair value of derivatives as of
			June 30, 2015			December 31, 2014
			(unaudited)
Fuel derivative instruments—Heating oil collars		Current liabilities		—			(2,408	)
Fuel derivative instruments—Brent calls		Current liabilities		1			134
Fuel derivative instruments—Heating oil swaps		Current liabilities		(116	)		—
Total current assets (liabilities)			$	(115	)	$	(2,274	)

As of June 30, 2015, the Company had no margin call balances with its counterparties. At December 31, 2014, the Company had deposited $14.4 million as collateral with one of its counterparties to comply with margin call requirements related to fuel derivative losses that exceed the portfolio’s credit limit. The Company had recorded the margin call deposits in other current liabilities in the accompanying condensed consolidated balance sheet as of December 31, 2014, offsetting the net hedge liability of $27.1 million. Thus the total net current hedge liability was $12.7 million at December 31, 2014.

The following table summarizes the effect of fuel derivative instruments in the condensed consolidated statements of operations for the three and six months ended June 30, 2015 and 2014 (in thousands):

Derivatives accounted for as hedging instruments under ASC 815	Consolidated financial statement location	Gains (losses) on derivative contracts for the three months ended						Gains (losses) on derivative contracts for the six months ended
		June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Fuel derivative instruments	Aircraft fuel expense	$	(9,219	)	$	(549	)	$	(24,434	)	$	(677	)
Total impact to the consolidated statements of operations		$	(9,219	)	$	(549	)	$	(24,434	)	$	(677	)

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Derivatives not accounted for as hedging instruments under ASC 815	Consolidated financial statement location	Gains (losses) on derivative contracts for the three months ended					Gains (losses) on derivative contracts for the six months ended
		June 30, 2015		June 30, 2014			June 30, 2015		June 30, 2014
		(unaudited)		(unaudited)			(unaudited)		(unaudited)
Fuel derivative instruments	Aircraft fuel expense	$	800	$	(476	)	$	353	$	(928	)
Total impact to the consolidated statements of operations		$	800	$	(476	)	$	353	$	(928	)

At June 30, 2015, the Company estimated that approximately $0.3 million of net derivative losses related to its cash flow fuel hedges included in AOCI will be reclassified into earnings within the next nine months.

Interest rate swaps did not affect the condensed consolidated statement of operations as of June 30, 2015. At June 30, 2015, the Company estimates that an immaterial amount of net derivative gains related to its interest rate swaps included in AOCI will be reclassified into earnings within the next twelve months.

The effect of fuel derivative instruments designated as cash flow hedges and the underlying hedged items on the condensed consolidated statements of operations for the three and six months ended June 30, 2015 and 2014, respectively, is summarized as follows (in thousands):

Derivatives designated as cash flow hedges	Amount of gain (loss) recognized in AOCI on derivatives (Effective portion)					Gain (loss) reclassified from AOCI into income (Fuel expense or Interest expense) (Effective portion)						Amount of gain (loss) recognized into income (Ineffective portion)
	Three Months Ended,					Three Months Ended,						Three Months Ended,
	June 30, 2015		June 30, 2014			June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
	(unaudited)		(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Fuel derivative instruments	$	4,527	$	1,518		$	(9,080	)	$	(484	)	$	(139	)	$	(65	)
Interest rate swaps		42		—			—			—			—			—
Derivatives designated as cash flow hedges	Amount of gain (loss) recognized in AOCI on derivatives (Effective portion)					Gain (loss) reclassified from AOCI into income (Fuel expense or Interest expense) (Effective portion)						Amount of gain (loss) recognized into income (Ineffective portion)
	Six Months Ended,					Six Months Ended,						Six Months Ended,
	June 30, 2015		June 30, 2014			June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
	(unaudited)		(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Fuel derivative instruments	$	1,509	$	(1,227	)	$	(24,315	)	$	(501	)	$	(119	)	$	(176	)
Interest rate swaps		42		—			—			—			—			—

13

The notional amounts of the Company’s outstanding fuel and debt payment related derivatives are summarized as follows (in millions):

	June 30, 2015		December 31, 2014
	(unaudited)
Derivatives designated as hedging instruments:
Fuel derivative instruments—Heating oil collars (gallons)		0		36
Fuel derivative instruments—Brent calls (gallons)		0		16
Fuel derivative instruments—Heating oil swaps (gallons)		9		0
Fuel derivative instruments—Jet fuel swaps (gallons)		28		0
Interest rate swaps (dollars)	$	39	$	0
Derivatives not designated as hedging instruments:
Fuel derivative instruments—Heating oil collars (gallons)		0		3
Fuel derivative instruments—Brent calls (gallons)		11		13
Fuel derivative instruments—Heating oil swaps (gallons)		2		0
Fuel derivative instruments—Jet fuel swaps (gallons)		0		0
Interest rate swaps (dollars)	$	0	$	0

As of June 30, 2015, the Company had entered into fuel derivative contracts for approximately 30% of its forecasted aircraft fuel requirements for the next nine months at a weighted-average cost per gallon of $1.86 (excluding related fuel taxes).

The Company presents its fuel derivative instruments at net fair value in the accompanying condensed consolidated balance sheets. The Company’s master netting arrangements with counterparties allow for net settlement under certain conditions. As of June 30, 2015 and December 31, 2014, information related to these offsetting arrangements was as follows (in thousands):

	June 30, 2015 (unaudited)
	Derivatives offset in consolidated balance sheet									Derivatives eligible for offsetting
	Gross derivative amounts			Gross derivative amounts offset in consolidated balance sheet			Net amount			Gross derivative amounts			Gross derivative amounts eligible for offsetting			Net amount
Fair value of assets	$	2,176		$	(2,176	)	$	—		$	2,176		$	(2,176	)	$	—
Fair value of liabilities		(2,233	)		2,176			(57	)		(2,233	)		2,176			(57	)
Margin call deposits								—									—
Total							$	(57	)							$	(57	)
	December 31, 2014
	Derivatives offset in consolidated balance sheet									Derivatives eligible for offsetting
	Gross derivative amounts			Gross derivative amounts offset in consolidated balance sheet			Net amount			Gross derivative amounts			Gross derivative amounts eligible for offsetting			Net amount
Fair value of assets	$	256		$	(256	)	$	0		$	256		$	(256	)	$	0
Fair value of liabilities		(27,376	)		256			(27,120	)		(27,376	)		256			(27,120	)
Margin call deposits								14,390									14,390
Total								(12,730	)								(12,730	)

14

The fuel derivative agreements the Company has with its counterparties may require the Company to pay all, or a portion of, the outstanding loss positions related to these contracts in the form of a margin call prior to their scheduled maturities. The amount of collateral posted, if any, is adjusted based on the fair value of the fuel hedge derivatives. The Company did not have any collateral posted related to outstanding fuel hedge contracts at June 30, 2015 and had $14.4 million of collateral posted related to outstanding fuel hedge contracts at December 31, 2014, which is reflected in the table above.

(4) Contingencies and Commitments

(a) Contingencies

The Company is subject to legal proceedings, claims and investigations arising in the ordinary course of business. While the outcome of these matters is currently not determinable, the Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on its condensed consolidated financial position, results of operations or cash flows.

The Company is party to routine contracts under which it indemnifies third parties for various risks. The Company has not accrued any liability for these indemnities, as the amounts are neither determinable nor estimable.

In its aircraft related agreements, as is typical of commercial arrangements made in order to purchase, finance and operate commercial aircraft, the Company indemnifies the manufacturer, the financing parties and other related parties against liabilities that arise from the manufacture, design, ownership, financing, use, operation and maintenance of the aircraft for tort liability, whether or not these liabilities arise out of or relate to the negligence of these indemnified parties, except for their gross negligence or willful misconduct. The Company believes that it will be covered by insurance subject to deductibles for most tort liabilities and related indemnities as described above with respect to the aircraft the Company will operate. Additionally, if there is a change in the law that results in the imposition of any reserve, capital adequacy, special deposit or similar requirement the result of which is to increase the cost to the lender, the Company will pay the lender the additional amount necessary to compensate the lender for the actual cost increase. The Company cannot estimate the potential amount of future payments under the foregoing indemnities.

(b) Commitments

Pre-Delivery Payments and Financing for Flight Equipment

In December 2010, the Company entered into a purchase agreement with Airbus for 60 A320 aircraft, including 30 A320neo aircraft, the first commercial order for the new eco-efficient engine option. Under the terms of the Company’s aircraft purchase agreement, the Company is committed to making pre-delivery payments at varying dates prior to delivery.

In December 2012, the Company amended its 2010 aircraft purchase agreement with Airbus reducing its order of 60 A320 aircraft to 40 aircraft and deferring delivery dates to begin in 2015. Under the amended agreement, the Company also obtained cancellation rights for the last 30 of the 40 aircraft, which cancellation rights are exercisable in groups of five aircraft two years prior to the stated delivery periods in 2020 to 2022, subject to loss of deposits and credits as a cancellation fee. All of the deposits have been reapplied according to the new delivery schedule except for $11.0 million which was converted into a credit earned upon delivery of the last 10 of the 40 aircraft. The Company has evaluated the recoverability of the deposits, credits and related capitalized interest in connection with the anticipated purchase of aircraft in future periods and determined them to be recoverable. If the Company ultimately exercises its cancellation rights for up to 30 aircraft, it would incur a loss of deposits and credits of up to $26.0 million held by Airbus as a cancellation fee, but would not be required to pay any additional funds. Because the Company concluded that the deposits and credits are recoverable and that it is not likely to incur cancellation fees, the Company did not record such fees. The Company maintains $117.5 million of pre-delivery payments, of which $91.5 million relates to the first 10 and $26.0 million to the last 30 aircraft, in its accompanying condensed consolidated balance sheets as of June 30, 2015, $68.7 million of which was financed by a third party and all of which is payable in 2015 and 2016.

15

Committed expenditures not subject to cancellation rights for these aircraft and separately sourced spare engines, including estimated amounts for contractual price escalations and pre-delivery payment deposits, will total approximately $213.9 million in the remainder of 2015 and $209.6 million in 2016. The Company believes that its cash resources and commercially available aircraft financing will be sufficient to satisfy these purchase commitments. In April 2015, the Company executed debt facility agreements to finance the Company’s 2015 aircraft deliveries for $195.0 million with three financing parties. These financings will represent approximately 80% of the net purchase price of the five A320 CEO aircraft. Each of the loans will be closed and funded on the date of each aircraft delivery from July through December 2015. The Company will finance an aggregate of $168.6 million through the senior debt facilities, subject to 12-year repayment terms, and $26.4 million through the subordinated debt facility, subject to six-year repayment terms. All of the debt will accrue interest which, if fixed at the applicable LIBOR swap rate for the weighted average life of the loan, would average approximately 5.0%. As of June 30, 2015, senior debt in the amount of $102.6 million has been fixed under these agreements at an aggregate interest rate of 4.77% and is not subject to further changes in interest rates. Principal and interest will be payable quarterly in arrears. Loans related to two of the aircraft are pre-payable with a premium prior to the third anniversary of such advance date and at par thereafter, subject to payment of early termination charges, if applicable. Loans related to three of the aircraft are not pre-payable prior to the third anniversary of the issuance date and are pre-payable at par thereafter, subject to payment of early termination charges, if applicable. The debt facility agreements have no financial covenants. The Company entered into interest rate swaps on the underlying base indexed interest rates for $33 million notional of aircraft financing with a 12-year term at 2.36% and for $6 million of the subordinated aircraft financing at 1.70% with a six-year term. See Note 3, Financial Derivative Instruments and Risk Management for more information.

In July 2015, the Company took delivery of the first of five aircraft scheduled to be delivered in 2015.

Letter of Credit Facility

In connection with the 2014 Recapitalization, the Virgin Group arranged for a $100.0 million Letter of Credit Facility issued on behalf of the Company to certain companies that process substantially all of the Company’s credit card transactions. The Letter of Credit Facility would have only become an obligation of the Company if one or both of its credit card processors had drawn on the Letter of Credit Facility. The Letter of Credit Facility was canceled in June 2015 upon the elimination of the credit card holdback requirement by the Company’s primary credit card processors.

The note purchase agreement for the Post-IPO Note provides that the term of the Post-IPO Note will reduce from eight to six years in the event that the Letter of Credit Facility is terminated within the first six years of issuance. As a result of the cancellation of the Letter of Credit Facility, the Post-IPO Note and the related accrued interest will become payable in November 2020.

Summary of Future Payment Obligations

As of June 30, 2015, the Company has the following contractual payment commitments (in thousands):

Year	Long-term debt including related- party (1)		Aircraft and engine purchases (2)		Aircraft and engine leases (3)		Maintenance deposits (4)		Other leases (5)		Total
2015	$	33,824	$	213,918	$	112,277	$	5,645	$	13,373	$	379,037
2016		34,832		209,583		217,457		8,968		26,547		497,387
2017		—		—		204,303		9,367		26,712		240,382
2018		40,000		—		188,903		10,186		23,541		262,630
2019		51,534		—		172,562		10,814		16,888		251,798
Thereafter		—		—		487,888		36,900		34,265		559,053
	$	160,190	$	423,501	$	1,383,390	$	81,880	$	141,326	$	2,190,287

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(1) Includes accrued interest; excludes future interest of $15.5 million to be accrued through and payable in November 2020 on the Post-IPO Note.

(2) Represents non-cancelable contractual payment commitments for aircraft and engines; includes $195.0 million of aircraft financing obtained for 2015 deliveries.

(3) Represents future minimum lease payments under non-cancelable operating leases with initial terms in excess of one year, including renewal payments for signed lease extensions and excluding lease rebates.

(4) Represents the fixed portion of supplemental rent under lessor contracts for maintenance reserve payment commitments; excludes variable future amounts that will be based on actual flight hours.

(5) Represents future minimum lease payments under non-cancelable building, airport station and equipment leases.

The table above excludes the Company’s commitment to pay royalties in 2015 of 0.5% of the Company’s operating revenue for the use of the Company’s brand name to a related party. This license fee will increase to 0.7% starting in the first quarter of 2016 until the Company’s total annual revenue exceeds $4.5 billion, at which time the annual license fee would resume to 0.5%. For additional information, see the consolidated financial statements included in the 2014 Form 10-K.

(5) Income Taxes

The Company’s effective tax rates are lower than the federal statutory rate of 35% primarily because of the impact of changes to existing valuation allowances. The Company continues to provide a valuation allowance for its deferred tax assets in excess of deferred tax liabilities because the Company concluded that it is more likely than not that such deferred tax assets will ultimately not be realized.

(6) Related-Party Transactions

The Company licenses the use of its brand name from certain entities affiliated with Virgin Enterprises Limited, a company incorporated in England and Wales (“VEL”). VEL is an affiliate of one of the Company’s largest stockholders, the Virgin Group, which has one designee on the Company’s board of directors. The Company paid license fees of $2.0 million during each of the three months ended June 30, 2015 and 2014 and $3.7 million and $3.6 million for the six months ended June 30, 2015 and 2014. The Company had accrued unpaid royalty fees of $2.0 million and $1.8 million at June 30, 2015 and December 31, 2014.

As of June 30, 2015 the Virgin Group, through its affiliates including VX Holdings L.P., owned approximately 18.9% of the Company’s issued and outstanding voting stock and all of the outstanding related-party debt. In order to comply with requirements under U.S. law governing the ownership and control of U.S. airlines, at least 75% of the voting stock of the Company must be held by U.S. citizens and at least two-thirds of the Company’s board of directors must be U.S. citizens. U.S. citizen investors owned over 75% of the voting stock of the Company, of which Cyrus Aviation Holdings, LLC, the largest single U.S. investor, owned approximately 28.8% as of June 30, 2015.

As of June 30, 2015, 27.1% of the Company’s $149.1 million debt was held by related-party investors. In connection with the 2014 Recapitalization, the Company reduced related-party debt with a carrying value of $728.3 million to $38.5 million. The Company incurred $0.8 million and $9.6 million of related-party interest expense for the three months ended June 30, 2015 and 2014 and $1.6 million and $18.9 million for the six months ended June 30, 2015 and 2014. Commencing in November 2014, the Company began to incur an annual commitment fee on the $100.0 million Letter of Credit Facility issued by the Virgin Group. The fee was equal to 5.0% per annum of the daily maximum amount available to be drawn, accruing on a daily basis from the date of issuance and was payable quarterly. For the three and six months ended June 30, 2015, the Company recorded $1.1 million and $2.5 million in commitment fees in the accompanying condensed consolidated statements of operations. In June 2015, the Company canceled the Letter of Credit Facility in conjunction with the elimination of the credit card holdback requirement and is no longer incurring related commitment fees. The Post-IPO Note provided for a reduction of the term of the Note from eight to six years in the event of early termination of the Letter of Credit Facility. In connection with the cancellation of the Letter of Credit Facility in June 2015, and as required by the related note purchase agreement, the term of the Post-IPO Note issued to Virgin Group was reduced from eight to six years.

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(7) Net Income Per Share

Employee equity share options and unvested shares granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of of in-the-money options, unvested restricted stock units, and shares to be issued under the Company’s ESPP. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are collectively assumed to be used to repurchase shares.

Basic and diluted net income per share were computed using the two-class method for periods prior to the completion of the IPO, which is an allocation method that determines net income per share for common stock and participating securities.

The following table sets forth the computation of the Company’s basic and diluted net income per share attributable to common stock for the periods presented (in thousands, except per share data):

	Three Months Ended June 30,					Six Months Ended June 30,
	2015		2014			2015		2014
	(unaudited)		(unaudited)			(unaudited)		(unaudited)
BASIC:
Net income	$	64,989	$	36,983			77,775	$	14,629
Less: net income allocated to participating securities		—		(22,658	)		—		(8,962	)
Net income attributable to common shareholders	$	64,989	$	14,325		$	77,775	$	5,667
Weighted-average common shares outstanding		43,298		702			43,239		702
Basic net income per share	$	1.50	$	20.42		$	1.80	$	8.08
DILUTED:
Net income	$	64,989	$	36,983		$	77,775	$	14,629
Less: net income allocated to participating securities		—		(13,230	)		—		(5,233	)
Net income attributable to common shareholders	$	64,989	$	23,753		$	77,775	$	9,396
Weighted-average common shares outstanding-basic		43,298		702			43,239		702
Effect of dilutive potential common shares		785		1,290			1,299		1,290
Weighted-average common shares outstanding-diluted		44,083		1,992			44,538		1,992
Diluted net income per share	$	1.47	$	11.92		$	1.75	$	4.72

The following warrants and director and employee stock awards were excluded from the calculation of diluted net earnings per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented (share data, in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Warrants to purchase common stock		—		42,243		—		42,243
Stock option awards		22		—		18		—

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this report, the words “expect,” “estimate,” “plan,” “anticipate,” “indicate,” “believe,” “forecast,” “guidance,” “outlook,” “may,” “will,” “would,” “should,” “seek,” “target” and similar expressions are intended to identify forward-looking statements. Forward-looking statements represent our expectations and beliefs concerning future events, based on information available to us on the date of the filing of this report, and are subject to various risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at which or by which such performance or results will be achieved. Factors that could cause actual results to differ materially from those referenced in the forward-looking statements include those listed in Part I, Item 1A, “Risk Factors” and in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report. We disclaim any intent or obligation to update or revise any of the forward-looking statements, whether in response to new information, unforeseen events, changed circumstances or otherwise, except as required by applicable law.

Overview

Virgin America is a premium-branded, low-cost airline based in California that provides scheduled air travel in the continental United States and Mexico. We operate primarily from our focus cities of Los Angeles and San Francisco, with a smaller presence at Dallas Love Field, to other major business and leisure destinations in North America. We provide a distinctive offering for our passengers, whom we call guests, that is centered around our brand and our premium travel experience, while at the same time maintaining a low-cost structure through our point-to-point network and high utilization of our efficient A320 fleet. As of June 30, 2015, we provided service to 21 airports in the United States and Mexico with a fleet of 53 narrow-body aircraft.

Second Quarter 2015 Highlights

Our pre-tax income for the second quarter of 2015 was $65.4 million, an increase of $28.1 million as compared to the second quarter of 2014. Several factors contributed to our significant improvement in earnings:

• Operating Revenue: Total revenue increased $2.0 million, or 0.5%, from an increase in revenue per available seat mile (RASM) of 0.6%, on a slight decrease in capacity. Our passenger revenue per available seat mile (PRASM) was positively impacted by a $3.2 million adjustment related to Elevate loyalty revenue which increased PRASM by 0.9%. The majority of our markets within our network showed improved revenue performance in the second quarter of 2015 as compared to the second quarter of 2014. Our transcontinental flights from New York to Los Angeles and to San Francisco experienced high demand with lower average fares as a result of the introduction of additional capacity into the market by competitors, resulting in a year-over-year PRASM reduction in these markets. Our operations at Dallas Love Field (“DAL”), which began in the third quarter of 2014, are still developing. The markets we serve from DAL are experiencing large increases in capacity by us and other airlines, growing levels of traffic and low average fares. These routes produce PRASM well below our average PRASM but are showing signs of improvement as the markets mature.

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• Operating Cost: Our total operating expenses declined $18.5 million, or 5.3%, primarily from sharply lower fuel costs. Our average cost per gallon of jet fuel declined 29.9% from the second quarter of 2014, resulting in a decrease in aircraft fuel expense of $37.9 million. In addition, our aircraft maintenance expense declined $3.8 million due to decreased scheduled heavy airframe maintenance checks. Salaries, wages and benefits expense increased $15.4 million from the second quarter of 2014, primarily from an increase in accrued profit-sharing and profit-sharing-related payroll taxes of $4.0 million, increases in equity related compensation of $1.3 million and increases for teammate compensation, 401K contributions and benefits related to our 2015 compensation and benefits initiatives implemented earlier in 2015. We expect salaries, wages and benefits to increase throughout 2015 compared to 2014 as we align compensation across most work groups with industry average pay rates. However, we expect the salaries, wages and benefits rate increases that we are experiencing in 2015 will moderate in 2016 and beyond and be more aligned with long-term domestic inflation trends.

• Net Other Expense: Our net interest and other expense decreased $7.6 million as a result of the decrease in related-party debt from the restructuring of our balance sheet in connection with our initial public offering in November 2014.

We operated a total fleet of 53 aircraft in both the second quarters of 2015 and 2014. Our capacity remained consistent year-over-year.

In July 2015, subsequent to second quarter end, we took delivery of the first of five A320 aircraft scheduled to be delivered in the second half of 2015. We also are scheduled to take delivery of five A320 aircraft in the first half of 2016. We expect to add new markets from this expansion as well as increase frequency in some of our existing markets. We currently expect to purchase these aircraft and finance the majority of the purchase price with long-term debt obtained from commercial banks. The operating lease on one of existing 53 aircraft is scheduled to terminate in the first quarter of 2016. We are in discussions with this lessor and expect to extend this operating lease.

In connection with our aircraft deliveries, in April 2015, we announced service from San Francisco to Honolulu and Maui, to begin in the fourth quarter of 2015. Hawaii markets from the west coast have many of the characteristics of markets where we have historically been successful, including very high demand with a large number of flights already operated by multiple competitors, average fares similar to those of long-haul markets where we currently have profitable operations and higher than those of other leisure markets in our network and a high level of origin passengers in California, where we have an established presence.

Results of Operations

Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014

For the three months ended June 30, 2015, our net income was $65.0 million, an increase of $28.0 million as compared to $37.0 million for the same period in 2014. Our operating income of $67.7 million for the three months ended June 30, 2015 increased by $20.5 million from the prior year period. Our operating margin increased by 5.1 points to 16.9% in the three months ended June 30, 2015 as compared to 11.8% for the three months ended June 30, 2014.

Our operating capacity, as measured by available seat miles (ASMs), remained relatively consistent for the three months ended June 30, 2015 as compared to the same period in 2014. Our number of passengers increased by 4.4% in the three months ended June 30, 2015 year-over-year due to reduction in stage length from changes in our route network, and our yield increased by 0.3%.

Our cost per available seat mile (CASM) decreased by 5.3% to 10.41 cents for the three months ended June 30, 2015 as compared to 10.99 cents for the same period in 2014. This was primarily a result of lower fuel costs, partially offset by increased salaries, wages and benefits.

In addition, interest expense for the three months ended June 30, 2015 decreased by $8.1 million from the prior year period, primarily as a result of a recapitalization agreement (our 2014 Recapitalization) with security holders to exchange or extinguish the majority of our then outstanding related-party debt and accrued interest.

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Operating Revenues

	Three Months Ended June 30,						Change
	2015			2014			Amount			%
Operating revenues (in thousands):
Passenger	$	359,709		$	358,108		$	1,601			0.4
Other		41,177			40,737			440			1.1
Total operating revenues	$	400,886		$	398,845		$	2,041			0.5
Operating statistics:
Available seat miles (millions)		3,200			3,202			(2	)		(0.1	)
Revenue passenger miles (millions)		2,722			2,719			3			0.1
Average stage length (statute miles)		1,421			1,482			(61	)		(4.1	)
Load factor		85.1	%		84.9	%		0.2			pts
Total passenger revenue per available seat mile—PRASM (cents)		11.24			11.18			0.06			0.5
Total revenue per available seat mile—RASM (cents)		12.53			12.46			0.07			0.6
Yield (cents)		13.21			13.17			0.04			0.3
Average fare	$	199.30		$	207.09		$	(7.79	)		(3.8	)
Passengers (thousands)		1,805			1,729			76			4.4

Passenger revenue for the three months ended June 30, 2015 increased 0.4% from the three months ended June 30, 2014 on flat capacity as measured by our ASMs. Second quarter 2015 PRASM increased 0.5% year-over-year. PRASM was positively impacted by a $3.2 million adjustment related to Elevate loyalty revenue which increased PRASM by 0.9%. Total RASM for the three months ended June 30, 2015 increased 0.6% from the three months ended June 30, 2014, primarily from the increase in PRASM and 1.1% increase in other revenue.

Other revenue for the three months ended June 30, 2015 increased 1.1% from the three months ended June 30, 2014 primarily due to higher ancillary fee revenue from reserved seat assignments and priority boarding in our main cabin.

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Operating Expenses

	Three Months Ended June 30,				Change						Cost per ASM				Change
	2015		2014		Amount			%			2015		2014		%
											(in cents)
Operating expenses (in thousands):
Aircraft fuel	$	93,743	$	131,664	$	(37,921	)		(28.8	)		2.93		4.12		(28.9	)
Salaries, wages and benefits		74,758		59,318		15,440			26.0			2.34		1.85		26.5
Aircraft rent		45,708		45,861		(153	)		(0.3	)		1.43		1.43		—
Landing fees and other rents		34,071		33,286		785			2.4			1.06		1.03		2.9
Sales and marketing		30,704		28,615		2,089			7.3			0.96		0.89		7.9
Aircraft maintenance		12,656		16,409		(3,753	)		(22.9	)		0.40		0.52		(23.1	)
Depreciation and amortization		4,225		3,484		741			21.3			0.13		0.11		18.2
Other operating expenses		37,363		33,082		4,281			12.9			1.16		1.04		11.5
Total operating expenses	$	333,228	$	351,719	$	(18,491	)		(5.3	)		10.41		10.99		(5.3	)
Operating statistics:
Available seat miles (millions)		3,200		3,202		(2	)		(0.1	)
Average stage length (statute miles)		1,421		1,482		(61	)		(4.1	)
Departures		15,722		15,137		585			3.9
CASM (excluding fuel)		7.48		6.87		0.61			8.9
CASM (excluding fuel and profit sharing)		7.27		6.79		0.48			7.1
Fuel cost per gallon	$	2.18	$	3.11		(0.93	)		(29.9	)
Fuel gallons consumed (thousands)		42,915		42,281		634			1.5
Teammates (FTE)		2,565		2,500		65			2.6

Aircraft fuel

Aircraft fuel expense for the three months ended June 30, 2015, which includes the effect of our fuel hedges, decreased by $37.9 million, or 28.8%, from the three months ended June 30, 2014. The decrease was primarily due to a decrease of $0.93, or 29.9%, in the average fuel cost per gallon offset in part by a 1.5% increase in fuel consumption, and $8.4 million of net fuel hedge losses.

We maintain an active hedging program to reduce the impact of sudden, sharp increases in fuel prices. We enter into a variety of hedging instruments, such as forward swaps, options and collar contracts on jet fuel and highly correlated commodities such as heating oil and crude oil. We also use fixed forward pricing agreements, or FFPs, which allow us to lock in the price of jet fuel for specified quantities and at specified locations in future periods. At June 30, 2015, we had entered into derivative hedging instruments and FFPs for approximately 46% of our then-expected nine-month fuel requirements, with all of our then existing hedge contracts expected to settle by the end of the first quarter of 2016. Due in part to the impact of declining fuel prices, we recorded $8.4 million in fuel hedge net losses in the three months ended June 30, 2015, which include the effect of $0.6 million offsetting unrealized gains associated with undesignated fuel hedges that will mature after June 30, 2015.

Salaries, wages and benefits

Salaries, wages and benefits expense for the three months ended June 30, 2015 increased by $15.4 million, or 26.0%, from the three months ended June 30, 2014. Salaries and wages for flight crews increased significantly as a result of our 2015 pay initiatives that were implemented earlier in 2015 due to the competitive marketplace for talent and the increasing average seniority of our teammates. In addition, profit sharing and related payroll tax expense for the three months ended June 30, 2015 increased by $4.0 million year-over-year. Under our annual profit sharing program, we accrued a pro rata portion of our expected total annual 2015 profit sharing amount during the quarter , which is based on current internal projections of 2015 pre-tax income. Our profit sharing plan provides for profit sharing on pre-tax income above a threshold based on $1.5 million times the weighted average number of aircraft in our fleet. For the full year 2015, we estimate the threshold to be approximately $81.0 million.

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Our overall benefit plan costs for the three months ended June 30, 2015 increased from the prior year period due to an increase in the amount of the 401(k) match benefits paid to our teammates and an increase in healthcare costs.

We expect salaries, wages and benefit expense in 2015 to grow at a faster rate than our capacity as market and tenure-related adjustments continue. In 2015, we implemented a new employee stock purchase program under which employees may purchase our stock at a 10% discount of the market value at the end of each offering period. Also, a new discretionary 401(k) company contribution called “401(k) Plus” went into effect, under which we make additional 401(k) contributions of 4.5% of salary for pilots and 1.5% for all other teammates, subject to approval by our Board of Directors annually.

Additionally, in 2015 we began incurring costs associated with hiring and training new teammates in connection with our new aircraft deliveries.

Aircraft rent

Aircraft rent expense remained relatively constant for the three months ended June 30, 2015 from the three months ended June 30, 2014.

Landing fees and other rents

Landing fees and other rents expense for the three months ended June 30, 2015 increased by $0.8 million, or 2.4%, from the three months ended June 30, 2014, primarily as a result of rate increases for facilities at our destination airports.

Sales and marketing

Sales and marketing expense for the three months ended June 30, 2015 increased $2.1 million, or 7.3%, from the three months ended June 30, 2014, in part due to higher spending on advertising associated with new markets and higher distribution costs.

Aircraft maintenance

Aircraft maintenance expense for the three months ended June 30, 2015 decreased by $3.8 million, or 22.9% from the three months ended June 30, 2014. There were no significant heavy airframe maintenance events scheduled for the second quarter of 2015 while multiple maintenance events were completed in the same period in 2014. We expect to incur additional maintenance costs during the third quarter related to an engine maintenance overhaul.

Depreciation and amortization

Depreciation and amortization expense increased by $0.7 million, or 21.3%, for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014, primarily due to depreciation of additional aircraft leasehold improvements and amortization of our new software licenses.

Other operating expenses

Other operating expense increased by $4.3 million, or 12.9%, for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014, primarily from increased legal and professional fees related to becoming a public company, higher catering costs and increased crew and teammate travel costs.

Other Income (Expense)

Other income (expense) for the three months ended June 30, 2015 decreased by $7.6 million, or 76.7%, from the three months ended June 30, 2014, primarily due to the $8.7 million reduction in related-party interest expense as a result of the 2014 Recapitalization. In November 2014 in connection with the 2014 Recapitalization, we reduced our remaining related-party debt and accrued interest to a recorded value of $38.5 million with an effective interest rate of 8.5%. See our consolidated financial statements included in our 2014 Form 10-K for further details and a discussion of the accounting for these transactions. The effective interest rate increased to 9.8% in June 2015 as a result of the change in the term of the Post-IPO Note in connection with the cancellation of the Letter of Credit Facility described in Note 1 - Basis of Presentation.

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Income Taxes

The income tax provision associated with our income in 2015 was largely offset by the release of a valuation allowance against net deferred tax assets. For the three months ended June 30, 2015, we recorded tax expense of $0.4 million resulting from the difference between the book and tax basis of indefinite-lived intangible assets that are not available to cover net deferred tax assets subject to a valuation allowance.

Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

For the six months ended June 30, 2015, our net income was $77.8 million. This was an increase of $63.2 million as compared to $14.6 million for the same period in 2014. Our operating income of $83.0 million for the six months ended June 30, 2015 increased by $49.0 million compared to the six months ended June 30, 2014. Our operating margin increased by 6.6 points to 11.4% in the six months ended June 30, 2015 as compared to 4.8% in the six months ended June 30, 2014.

Our operating capacity, as measured by ASMs, increased by 0.7% for the six months ended June 30, 2015 from the same period in 2014. Our number of passengers increased by 3.7% in the six months ended June 30, 2015 year-over-year, and our yield increased by 0.8%.

Our CASM decreased by 5.6% to 10.70 cents for the six months ended June 30, 2015 as compared to 11.34 cents for the same period in 2014. This was primarily a result of lower fuel costs, partially offset by increased salaries, wages and benefits.

In addition, interest expense for the six months ended June 30, 2015 decreased by $16.0 million from the prior year period, primarily as a result of our 2014 Recapitalization.

Operating Revenues

	Six Months Ended June 30, 2015						Change
	2015			2014			Amount			%
Operating revenues (in thousands):
Passenger	$	649,073		$	636,148		$	12,925			2.0
Other		78,165			76,087			2,078			2.7
Total operating revenues	$	727,238		$	712,235		$	15,003			2.1
Operating statistics:
Available seat miles (millions)		6,019			5,979			40			0.7
Revenue passenger miles (millions)		4,979			4,917			62			1.3
Average stage length (statute miles)		1,423			1,445			(22	)		(1.5	)
Load factor		82.7	%		82.2	%		0.5			pts
Total passenger revenue per available seat mile—PRASM (cents)		10.78			10.64			0.14			1.3
Total revenue per available seat mile—RASM (cents)		12.08			11.91			0.17			1.4
Yield per passenger mile (cents)		13.04			12.94			0.1			0.8
Average fare	$	195.06		$	198.27		$	(3.21	)		(1.6	)
Passengers (thousands)		3,328			3,208			120			3.7

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Passenger revenue for the six months ended June 30, 2015 increased 2.0% from the six months ended June 30, 2014 on a 0.7% increase in capacity as measured by our ASMs. PRASM increased 1.3% year-over-year due to a 0.8% increase in passenger yield and a 0.5 point increase in load factor and was positively affected by a $2.8 million adjustment related to Elevate loyalty revenue which increased PRASM by 0.5%. Total RASM for the six months ended June 30, 2015 increased 1.4% from the six months ended June 30, 2014, primarily from the increase in PRASM and 2.7% increase in other revenue.

Other revenue for the six months ended June 30, 2015 increased 2.7% from the six months ended June 30, 2014 primarily due to increased advertising and brand revenues on our co-branded consumer credit card program and higher ancillary fee revenue from reserved seat assignments and priority boarding in our main cabin, partially offset by no charter revenue as compared to prior year.

Operating Expenses

	Six Months Ended June 30, 2015				Change						Cost per ASM				Change
	2015		2014		Amount			%			2015		2014		%
											(in cents)
Operating expenses (in thousands):
Aircraft fuel	$	182,301	$	247,423	$	(65,122	)		(26.3	)		3.03		4.13		(26.6	)
Salaries, wages and benefits		139,490		113,143		26,347			23.3			2.32		1.89		22.8
Aircraft rent		90,690		92,357		(1,667	)		(1.8	)		1.51		1.54		(1.9	)
Landing fees and other rents		68,054		65,507		2,547			3.9			1.13		1.10		2.7
Sales and marketing		57,083		53,177		3,906			7.3			0.95		0.89		6.7
Aircraft maintenance		26,489		35,453		(8,964	)		(25.3	)		0.44		0.59		(25.4	)
Depreciation and amortization		8,328		6,753		1,575			23.3			0.14		0.11		27.3
Other operating expenses		71,762		64,427		7,335			11.4			1.18		1.09		8.3
Total operating expenses	$	644,197	$	678,240	$	(34,043	)		(5.0	)		10.70		11.34		(5.6	)
Operating statistics:
Available seat miles (millions)		6,019		5,979		40			0.7
Average stage length (statute miles)		1,423		1,445		(22	)		(1.5	)
Departures		29,550		28,962		588			2.0
CASM (excluding fuel)		7.67		7.21		0.46			6.4
CASM (excluding fuel and profit sharing)		7.53		7.16		0.37			5.2
Fuel cost per gallon	$	2.28	$	3.14		(0.86	)		(27.4	)
Fuel gallons consumed (thousands)		79,941		78,828		1,113			1.4
Teammates (FTE)		2,565		2,500		65			2.6

Aircraft fuel

Aircraft fuel expense for the six months ended June 30, 2015, which includes the effect of our fuel hedges, decreased by $65.1 million, or 26.3%, from the six months ended June 30, 2014. The decrease was primarily due to a decrease of $0.86, or 27.4%, in the average fuel cost per gallon offset in part by a 1.4% increase in fuel consumption, and $24.1 million of net fuel hedge losses.

Salaries, wages and benefits

Salaries, wages and benefits expense for the six months ended June 30, 2015 increased by $26.3 million, or 23.3%, from the six months ended June 30, 2014. Salaries and wages for flight crews increased significantly as a result of our 2015 pay and benefits initiatives implemented due to the competitive marketplace for talent and from the increasing average seniority of our teammates. Salaries, wages and benefits expense for the six months ended June 30, 2015 also included an increase of $6.1 million in profit sharing expense and related payroll tax expense. Under our annual profit sharing program, we accrued a pro rata portion of our estimated 2015 total profit sharing expense, which is based on current internal projections of 2015 pre-tax income. Our profit sharing plan provides for profit sharing on pre-tax income above a threshold which is based on $1.5 million times the weighted average number of aircraft in our fleet. For the full year 2015, we estimate the threshold to be approximately $81.0 million.

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Our overall benefit plan costs for the six months ended June 30, 2015 increased from the prior year period due to an increase in the amount of the 401(k) match benefits paid to our teammates and an increase in healthcare costs.

Aircraft rent

Aircraft rent expense remained relatively constant for the six months ended June 30, 2015 from the six months ended June 30, 2014.

Landing fees and other rents

Landing fees and other rent expense for the six months ended June 30, 2015 increased by $2.5 million, or 3.9%, from the six months ended June 30, 2014, primarily as a result of rate increases for facilities at our destination airports.

Sales and marketing

Sales and marketing expense for the six months ended June 30, 2015 increased $3.9 million, or 7.3%, from the six months ended June 30, 2014, in part due to higher spending on advertising associated with new markets and higher distribution costs.

Aircraft maintenance

Aircraft maintenance expense for the six months ended June 30, 2015 decreased by $9.0 million, or 25.3% from the six months ended June 30, 2014. There were no significant heavy airframe maintenance events scheduled for the six months ended June 30, 2015 while multiple maintenance events were completed in the same period in 2014.

Depreciation and amortization

Depreciation and amortization expense increased by $1.6 million, or 23.3%, for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014, primarily due to depreciation of our new software licenses and additional aircraft leasehold improvements.

Other operating expenses

Other operating expense increased by $7.3 million, or 11.4%, for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014, primarily related to higher legal and professional fees primarily associated with becoming a public company and higher guest services and supplies and teammate travel costs.

Other Income (Expense)

Other income (expense) for the six months ended June 30, 2015 decreased by $14.5 million, or 76.0%, from the six months ended June 30, 2014, primarily due to the $17.3 million reduction in related-party interest expense as a result of the 2014 Recapitalization. In November 2014, in connection with the 2014 Recapitalization, we reduced our remaining related-party debt and accrued interest to a recorded value of $38.5 million with an effective interest rate of 8.5%.

Income Taxes

The income tax provision associated with our income in 2015 was largely offset by the release of a valuation allowance against net deferred tax assets. For the six months ended June 30, 2015, we recorded tax expense of $0.7 million resulting from the difference between the book and tax basis of indefinite-lived intangible assets that are not available to cover net deferred tax assets subject to a valuation allowance.

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The following table sets forth our operating statistics for the three months and six months ended June 30, 2015 and 2014:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			% Change				2015			2014			% Change
Operating Statistics (unaudited):
Available seat miles—ASMs (millions)		3,200			3,202			(0.1	)			6,019			5,979			0.7
Departures		15,722			15,137			3.9				29,550			28,962			2.0
Average stage length (statute miles)		1,421			1,482			(4.1	)			1,423			1,445			(1.5	)
Aircraft in service—end of period		53			53			—				53			53			—
Fleet utilization		11.2			11.3			(0.9	)			10.7			10.7			—
Passengers (thousands)		1,805			1,729			4.4				3,328			3,208			3.7
Average fare	$	199.30		$	207.09			(3.8	)		$	195.06		$	198.27			(1.6	)
Yield per passenger mile (cents)		13.21			13.17			0.3				13.04			12.94			0.8
Revenue passenger miles—RPMs (millions)		2,722			2,719			0.1				4,979			4,917			1.3
Load factor		85.1	%		84.9	%		0.2		pts		82.7	%		82.2	%		0.5		pts
Passenger revenue per available seat mile—PRASM (cents)		11.24			11.18			0.5				10.78			10.64			1.3
Total revenue per available seat mile—RASM (cents)		12.53			12.46			0.6				12.08			11.91			1.4
Cost per available seat mile—CASM (cents)		10.41			10.99			(5.3	)			10.70			11.34			(5.6	)
CASM, excluding fuel (cents) (1)		7.48			6.87			8.9				7.67			7.21			6.4
CASM, excluding fuel and profit sharing (cents) (1)		7.27			6.79			7.1				7.53			7.16			5.2
Fuel cost per gallon	$	2.18		$	3.11			(29.9	)		$	2.28		$	3.14			(27.4	)
Fuel gallons consumed (thousands)		42,915			42,281			1.5				79,941			78,828			1.4
Teammates (FTE)		2,565			2,500			2.6				2,565			2,500			2.6

(1) Refer to our “Reconciliation of GAAP to Non-GAAP Financial Measures” note for more information on these non-GAAP measures.

Liquidity and Capital Resources

As of June 30, 2015, our principal sources of liquidity were cash and cash equivalents of $500.5 million. We also had restricted cash of $19.7 million as of June 30, 2015. Restricted cash primarily represents cash collateral securing our letters of credit for airport facility leases.

As of June 30, 2015, we had $68.7 million of short-term debt and $80.5 million of long-term debt, of which $40.5 million was related-party debt. Included in our long-term debt balance is a five-year term loan credit facility we entered into in April 2014 for $40.0 million to finance airport slot purchases. This loan was funded in two tranches in April and May 2014. Principal is repayable in full at the end of five years. We accrue interest on this loan at a variable rate based on LIBOR and pay quarterly in arrears.

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Currently our single largest capital expense is the acquisition cost of our aircraft. We operate 53 of our 54 existing aircraft under operating leases, which required a smaller up-front investment than if we had financed these aircraft with debt. Pre-delivery payments, or PDPs, relating to future deliveries under our agreement with Airbus, are required at various times prior to each aircraft’s delivery date. As of June 30, 2015, we had paid $117.5 million of PDPs to Airbus, $68.7 million of which were financed by a third-party payable upon delivery of aircraft. Subsequent to quarter end, we took delivery of our first of 10 aircraft scheduled to be received in 2015 and 2016. We expect that committed expenditures for the remaining nine future aircraft deliveries between August 2015 and June 2016, including separately sourced spare engines and related aircraft equipment, estimated amounts for contractual price escalations and PDPs, will total approximately $213.9 million in 2015 and $209.6 million in 2016. In April 2015, we entered into long-term debt financing agreements with three financing parties with respect to the first five aircraft deliveries in 2015 for a total of $195.0 million. We expect to finance approximately 80% of the net purchase price of these aircraft through these financing arrangements. We have entered into nonbinding term sheets for similar financing commitments with third-party lenders for the five A320 aircraft to be delivered to us in 2016, and expect to complete these financing agreements during the third quarter of 2015. We do not have financing commitments in place for the remaining 30 Airbus aircraft orders scheduled for delivery between 2020 and 2022. We have the right to cancel the remaining 30 aircraft, and as a result, these are not considered firm commitments. If we ultimately exercise our cancellation rights for up to 30 aircraft, we would incur a loss of deposits and credits of up to $26.0 million previously paid to Airbus as a cancellation fee.

In June 2015, we entered into agreements with our credit card processors to reduce our holdback requirements to 0%, and in connection with this, our $100.0 million Letter of Credit Facility was terminated. The credit card processors have the right to increase the credit card holdback amount depending on our future financial performance. If our credit card processors were to implement a holdback requirement, it would be funded through withholding proceeds from future ticket sales made through credit card transactions.

We expect to meet our obligations as they become due through available cash, internally generated funds from our operating cash flows, supplemented by financing activities as necessary and as they may become available to us, although we cannot assure that adequate financing will be available on acceptable terms, or at all. We cannot predict what the effect on our business and financial position might be from the extremely competitive environment in which we operate or from events beyond our control, such as volatile fuel prices, economic conditions, weather-related disruptions, the impact of airline bankruptcies, restructurings or consolidations, U.S. military actions or acts of terrorism. We believe the working capital available to us will be sufficient to meet our cash requirements for at least the next 12 months.

Cash Flows

The following table presents information regarding our cash flows in the six months ended June 30, 2015 and 2014:

	Six Months Ended June 30,
	2015			2014
Net cash provided by operating activities	$	130,920		$	25,059
Net cash used in investing activities		(22,078	)		(40,252	)
Net cash provided by (used in) financing activities		(3,028	)		39,514
Net increase in cash and cash equivalents		105,814			24,321
Cash and cash equivalents, end of period		500,457			179,980

Net Cash Flow Provided By Operating Activities

During the six months ended June 30, 2015, net cash flow provided by operating activities was $130.9 million. We had net income of $77.8 million adjusted for the following non-cash items: depreciation and amortization of $8.3 million, share-based compensation expense of $2.8 million, $2.8 million of unrealized fuel hedge gains, and paid in-kind interest expense of $1.6 million. Air traffic liability, net of credit card holdbacks, contributed $63.7 million of operating cash flow, primarily due to an annual $33.0 million advance payment from our co-branded credit card partner and due to the elimination of holdback requirements by our credit card processors. We increased our maintenance deposits by $21.5 million, primarily due to our reserve payments for future maintenance events. Other non-current assets increased by $13.9 million primarily due to expensing rent on a straight-line basis at a rate that is lower than our cash payments during the period.

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During the six months ended June 30, 2014, net cash flow provided by operating activities was $25.1 million. We had net income of $14.6 million adjusted for the following non-cash items: paid in-kind interest expense of $11.5 million and depreciation and amortization of $6.8 million. We increased our maintenance deposits by $20.1 million, primarily due to our reserve payments for future maintenance events. Air traffic liability, net of credit card holdbacks, contributed $17.3 million of cash flow, primarily due to a $23.0 million additional advance payment from our new co-branded credit card partner in January 2014, offset in part by the timing of credit card settlements. Other non-current assets increased by $14.3 million primarily due to expense exceeding cash payments. Our accounts payable increased by $10.0 million primarily due to the timing of our payments.

Net Cash Flows Used In Investing Activities

During the six months ended June 30, 2015, net cash flow used in investing activities was $22.1 million. We invested $16.3 million in flight equipment and software and made $5.8 million in net pre-delivery payments for our aircraft scheduled to be delivered in 2015 and 2016.

During the six months ended June 30, 2014, net cash flow used in investing activities was $40.3 million. We invested $31.1 million in domestic airport operating rights, flight equipment and software and made $9.2 million in net pre-delivery payments for our aircraft scheduled to be delivered in 2015 and 2016.

Net Cash Flows Provided By (Used In) Financing Activities

Cash flow used in financing was $3.0 million in the six months ended June 30, 2015 primarily as a result of a stock repurchase of $3.7 million to satisfy minimum tax withholding requirements for the vesting of restricted stock.

Cash flow provided by financing activities was $39.5 million in the six months ended June 30, 2014 primarily as a result of our April 2014 credit facility to purchase domestic airport operating rights. We expect to take delivery of five aircraft in the last half of 2015. We plan to fund the purchase of these aircraft through a mix of debt financing and operating cash. We finalized the debt financing arrangements totaling $195.0 million for the 2015 aircraft deliveries in April 2015.

Commitments and Contractual Obligations

The following table presents aggregate information about our contractual payment commitments as of June 30, 2015 and the periods in which payments are due (in thousands):

	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
Long-term debt including related-party (1)	$	160,190	$	33,824	$	34,832	$	91,534	$	—
Aircraft and engine purchases (2)		423,501		213,918		209,583		—		—
Aircraft and engine leases (3)		1,383,390		112,277		421,760		361,465		487,888
Maintenance deposits (4)		81,880		5,645		18,335		21,000		36,900
Other leases (5)		141,326		13,373		53,259		40,429		34,265
	$	2,190,287	$	379,037	$	737,769	$	514,428	$	559,053

(1) Includes accrued interest; excludes future interest of $15.5 million to be accrued through and payable in November 2020 on the Post-IPO Note.

(2) Represents non-cancelable contractual payment commitments for aircraft and engines, includes $195.0 million of aircraft financing obtained for 2015 deliveries.

(3) Represents future minimum lease payments under non-cancelable operating leases with initial terms in excess of one year, including renewal payments for signed lease extensions and excluding lease rebates.

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(4) Represents the fixed portion of supplemental rent under lessor contracts for maintenance reserve payment commitments; excludes variable future amounts that will be based on actual flight hours.

(5) Represents future minimum lease payments under non-cancelable building, airport station and equipment leases.

The table above does not include our commitment to pay royalties to the Virgin Group pursuant to amended and restated license agreements related to our use of the Virgin name and brand.

Certain of our aircraft operating leases and debt instruments include certain financial covenants and cross-default provisions. As of June 30, 2015, we were in compliance with all covenants under these agreements.

Critical Accounting Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates” included in our 2014 Form 10-K.

Reconciliation of GAAP to Non-GAAP Financial Measures

Consolidated operating cost per available seat mile, excluding fuel and profit sharing is a non-GAAP financial measure that we use as a measure of our performance. CASM is a common metric used in the airline industry. We exclude aircraft fuel and profit sharing from operating cost per available seat mile to determine CASM ex-fuel and profit sharing. We believe that CASM excluding fuel and profit sharing provides investors the ability to measure financial performance excluding items beyond our control, such as (i) fuel costs, which are subject to many economic and political factors beyond our control, and (ii) profit sharing, which is sensitive to volatility in earnings. We believe this measure is more indicative of our ability to manage costs and is more comparable to measures reported by other major airlines.

We believe this non-GAAP measure provides a more meaningful comparison of our results to others in the airline industry and our prior year results. Investors should consider this non-GAAP financial measure in addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP. Further, our non-GAAP information may be different from the non-GAAP information provided by other companies.

The following table provides the reconciliation of operating expense per ASM excluding fuel and profit sharing for the three months ended June 30, 2015 and 2014:

	Three Months Ended June 30,
	2015				2014
	$		per ASM		$		per ASM
	(in thousands)		(in cents)		(in thousands)		(in cents)
Total operating expenses	$	333,228		10.41	$	351,719		10.99
Less: Aircraft fuel		93,743		2.93		131,664		4.12
Operating expenses, excluding fuel		239,485		7.48		220,055		6.87
Less: Profit sharing and payroll taxes related to profit sharing		6,743		0.21		2,755		0.08
Operating expense, excluding fuel and profit sharing	$	232,742		7.27	$	217,300		6.79

The following table provides the reconciliation of operating expense per ASM excluding fuel and profit sharing for the six months ended June 30, 2015 and 2014:

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	Six Months Ended June 30,
	2015				2014
	$		per ASM		$		per ASM
	(in thousands)		(in cents)		(in thousands)		(in cents)
Total operating expenses	$	644,197		10.70	$	678,240		11.34
Less: Aircraft fuel		182,301		3.03		247,423		4.13
Operating expenses, excluding fuel		461,896		7.67		430,817		7.21
Less: 2015 profit sharing and payroll taxes related to 2014 profit sharing		8,839		0.14		2,740		0.05
Operating expense, excluding fuel and profit sharing	$	453,057		7.53	$	428,077		7.16

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to market risks in the ordinary course of our business. These risks include commodity price risk, specifically with respect to aircraft fuel, as well as interest rate risk. The adverse effects of changes in these markets could pose a potential loss as discussed below. The sensitivity analysis provided does not consider the effects that such adverse changes may have on overall economic activity, nor does it consider additional actions we may take to mitigate our exposure to such changes. Actual results may differ.

Aircraft Fuel. Our results of operations can vary materially, due to changes in the price and availability of aircraft fuel and are also impacted by the number of aircraft in use and the number of flights we operate. Aircraft fuel expense for the six months ended June 30, 2015 and 2014 represented approximately 28.3% and 36.5% of our operating expenses, respectively. Increases in aircraft fuel prices or a shortage of supply could have a material adverse effect on our operations and results of operations. Based on June 30, 2015 aircraft fuel market prices and our projected 2015 fuel consumption, a 10% increase in the average price per gallon would increase our current year aircraft fuel expense, including the impact of our outstanding hedged positions, by approximately $10.3 million. To manage economic risks associated with the fluctuations of aircraft fuel prices, we periodically enter into FFPs, forward swaps, call options for crude oil and collar contracts for heating oil. As of June 30, 2015, we had entered into fuel derivative contracts and FFPs that fixed or established a floor on the price associated with 46% of our forecasted aircraft fuel requirements for the next nine months at an approximate cost per gallon of $1.86 (excluding related fuel taxes), which is in excess of current market prices. All of our currently existing fuel hedge contracts are expected to settle by the end of the first quarter of 2016.

The fair value of our fuel derivative contracts as of June 30, 2015 was a net asset of $0.1 million. The fair value of our fuel derivative contracts as of December 31, 2014 was a net liability of $27.1 million offset by margin call deposits of $14.4 million, resulting in an overall net liability of $12.7 million. We measure our fuel derivative instruments at fair value, which is determined using standard option valuation models that use observable market inputs including contractual terms, market prices, yield curves, fuel price curves and measures of volatility. Changes in the related commodity derivative instrument cash flows may change by more or less than the fair value based on further fluctuations in futures prices. Outstanding financial derivative instruments expose us to credit loss in the event of non-performance by the counterparties to the agreements. As of June 30, 2015, we believed the credit exposure related to these fuel forward contracts was minimal and do not expect the counterparties to fail to meet their obligations.

Interest Rates. We are subject to market risk associated with changing interest rates, due to LIBOR-based interest rates on an applicable portion of our aircraft pre-delivery payments loan and airport slot financing. A hypothetical 10% change in LIBOR for the six months ended June 30, 2015 would have had an immaterial effect on total interest expense for the six months ended June 30, 2015.

Our remaining long-term debt consists of a fixed rate note payable. A hypothetical 10% change in market interest rates as of June 30, 2015 would have no effect on our interest expense but would reduce the fair value of our fixed-rate related-party debt instrument by $1.7 million.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2015. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2015, our disclosure controls and procedures were effective at the reasonable assurance level in ensuring that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”) and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our fiscal quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART 2. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. We currently believe that the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on our financial position, liquidity or results of operations.

ITEM 1A. RISK FACTORS

Our business involves significant risks, some of which are described below. You should carefully consider these risks, as well as the other information in this report, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments described below, as well as additional risks and uncertainties not presently known to us or that we currently deem immaterial, could materially adversely affect our business, results of operations, financial condition and growth prospects.

Our business has been and in the future may be materially adversely affected by the price and availability of aircraft fuel. High fuel costs and increases in fuel prices or a shortage or disruption in the supply of aircraft fuel would have a material adverse effect on our business.

The price of aircraft fuel may be high or volatile. The cost of aircraft fuel is highly volatile and is our largest individual operating expense, accounting for 39.4%, 37.7% and 35.8% of our operating expenses for 2012, 2013, 2014, respectively. High fuel costs or increases in fuel costs (or in the price of crude oil) could materially adversely affect our business. Since August 2014, the price of jet fuel has fallen substantially, which benefits us by lowering our expenses. However, because fuel prices are highly volatile, the price of jet fuel may increase significantly at any time. We may be more susceptible to fuel-price volatility than most of our competitors since fuel represents a larger proportion of our total costs due to the longer average stage length of our flights.

Availability of aircraft fuel may be low. Our business is also dependent on the availability of aircraft fuel (or crude oil), which is not predictable. Weather-related events, natural disasters, terrorism, wars, political disruption or instability involving oil-producing countries, changes in governmental or cartel policy concerning crude oil or aircraft fuel production, labor strikes or other events affecting refinery production, transportation, taxes or marketing, environmental concerns, market manipulation, price speculation and other unpredictable events may drive actual or perceived fuel supply shortages. Shortages in the availability of, or increases in demand for, crude oil in general, other crude-oil-based fuel derivatives and aircraft fuel in particular could result in increased fuel prices and could materially adversely affect our business.

Fare increases may not cover increased fuel costs. We may not be able to increase ticket prices sufficiently to cover increased fuel costs, particularly when fuel prices rise quickly. We sell a significant number of tickets to passengers well in advance of travel, and, as a result, fares sold for future travel may not reflect increased fuel costs. In addition, our ability to increase ticket prices to offset an increase in fuel costs is limited by the competitive nature of the airline industry and the price sensitivity associated with air travel, particularly leisure travel, and any increases in fares may reduce the general demand for air travel.

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Our fuel hedging program may not be effective. We cannot assure you our fuel hedging program, including our FFP contracts, which we use as part of our hedging strategy, will be effective or that we will maintain a fuel hedging program. Even if we are able to hedge portions of our future fuel requirements, we cannot guarantee that our hedge contracts will provide an adequate level of protection against increased fuel costs or that the counterparties to our hedge contracts will be able to perform. Certain of our fuel hedge contracts may contain margin funding requirements that could require us to post collateral to counterparties in the event of a significant drop in fuel prices. Additionally, our ability to realize the benefit of declining fuel prices will be delayed by the impact of fuel hedges in place, and we may record significant losses on fuel hedges during periods of declining prices. A failure of our fuel hedging strategy, significant margin funding requirements, overpaying for fuel through the use of FFPs or our failure to maintain a fuel hedging program could prevent us from adequately mitigating the risk of fuel price increases and could materially adversely affect our business.

The airline industry is exceedingly competitive, and we compete against both legacy airlines and low-cost carriers; if we are not able to compete successfully in the domestic airline industry, our business will be materially adversely affected.

The domestic airline industry is characterized by significant competition from both large legacy airlines and low-cost carriers, or LCCs. Airlines compete for passengers with a variety of fares, discounts, route networks, flight schedules, flight frequencies, frequent flyer programs and other products and services, including seating, food, entertainment and other on-board amenities. Airlines also compete on the basis of customer-service performance statistics, such as on-time arrivals, customer complaints and mishandled baggage reports. We face significant competition from both large legacy airlines and LCCs on the routes we operate, and if we are unable to compete effectively, our business will be materially adversely affected.

Large legacy airlines have numerous competitive advantages in competing for airline passengers, particularly following the consolidation in the domestic airline industry that occurred between 2008 and 2013, which resulted in the creation of four dominant domestic airlines with significant breadth of network coverage and financial resources. We face competition from one or more of these legacy carriers with respect to nearly all of the routes we serve. The legacy carriers have a number of competitive advantages relative to us that may enable them to attain higher average fares, more passenger traffic and a greater percentage of business passengers than we attain. These advantages include a much larger route network with domestic and international connections, more flights and convenient flight schedules in routes that overlap with ours. These carriers also offer frequent flyer programs and lounge access benefits that reward and create loyalty with travelers, particularly business travelers. Moreover, several legacy carriers have corporate travel contracts that direct employees to fly with a preferred carrier. The enormous route networks operated by these airlines, combined with their marketing and partnership relationships with regional airlines and international alliance partner carriers, allow them to generate increased passenger traffic from domestic and international cities. Our smaller, point-to-point route network and lack of connecting traffic and marketing alliances puts us at a competitive disadvantage to legacy carriers, particularly with respect to our appeal to higher-fare business travelers.

Each of the legacy carriers operates a much larger fleet of aircraft and has greater financial resources than we do, which permits them to add service in response to our entry into new markets. For example, United Airlines operates a hub at San Francisco International Airport (SFO) and has engaged in aggressive competitive practices, such as increasing seat capacity by introducing larger-gauge aircraft or adding incremental flights in response to our entry into new markets served from SFO. Due to our relatively small size, we are more susceptible to a fare war or other competitive activities in one or more of the markets we serve, which could prevent us from attaining the level of passenger traffic or maintaining the level of ticket sales required to sustain profitable operations in new or existing markets.

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LCCs also have numerous competitive advantages in competing for airline passengers. LCCs generally offer a more basic service to travelers and therefore have lower cost structures than other airlines. The lower cost structure of LCCs permits them to offer flights to and from many of the same markets as most major airlines, which are defined by the U.S. Department of Transportation, or DOT, as U.S.-based air carriers with annual operating revenues in excess of one billion dollars during a fiscal year, but at lower prices. LCCs also typically fly direct, point-to-point flights, which tends to improve aircraft and crew scheduling efficiency. Many LCCs also provide only a single class of service, thereby avoiding the incremental cost of offering premium-class services like those that we offer.

In addition, some LCCs have a relentless focus on lowering costs and provide only a very basic level of service to passengers. These carriers configure their aircraft with high-density seating configurations and offer minimal amenities during the flight, and as a result, they incur lower unit costs than we do. Some LCCs also charge ancillary fees for basic services that we provide free of charge, such as making a reservation, printing boarding passes at the airport and carrying bags onboard the cabin for stowage in the overhead bins. In general, LCCs have lower unit costs and therefore are able to offer lower base fares.

If we fail to implement our business strategy successfully, our business will be materially adversely affected.

Our business strategy is to target business and leisure travelers who are willing to pay a premium for our newer aircraft, more comfortable seating, better customer service and the latest on-board amenities while maintaining a cost structure that is lower than that of the legacy airlines that these business and premium travelers have historically favored. We may not be successful in attracting enough passengers willing to pay a premium over the fares offered by the LCCs, which we require to offset the additional costs embedded within our premium service model. In addition, American Airlines, Delta Air Lines, United Airlines and JetBlue Airways are increasing the quality of their seating and on-board amenities in some of the routes where they compete with us, making it more challenging to attract passengers who are loyal to those airlines. Continuing to grow our business profitably is also critical to our business strategy. Growth poses various operational and financial challenges, including securing additional financing for aircraft acquisition, obtaining airport gates and facilities at congested airports that serve business and premium travelers and hiring qualified personnel while maintaining our culture, which we believe is vital to the continued success of our airline. We cannot assure you that we will be able to successfully and profitably expand our fleet, enter new markets or grow existing markets in order to achieve additional economies of scale and maintain or increase our profitability. If we are unsuccessful in deploying our strategy, or if our strategy is unsustainable, our business will be materially adversely affected.

Threatened or actual terrorist attacks or security concerns involving airlines could materially adversely affect our business.

Past terrorist attacks against airlines have caused substantial revenue losses and increased security costs. As a result, any actual or threatened terrorist attack or security breach, even if not directly against an airline, could materially adversely affect our business by weakening the demand for air travel and resulting in increased safety and security costs for us and the airline industry generally. Terrorist attacks made directly on a domestic airline, or the fear of such attacks or other hostilities (including elevated national threat warnings or selective cancellation or redirection of flights due to terror threats), would have a negative impact on the airline industry and materially adversely affect our business.

Unauthorized incursions of our information technology infrastructure could compromise the personally identifiable information of our guests, prospective guests or employees and expose us to liability, damage our reputation and materially adversely affect our business.

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In the processing of our customer transactions and as part of our ordinary business operations, we and certain of our third-party service providers collect, process, transmit and store a large volume of personally identifiable information, including email addresses and home addresses and financial data such as credit card information. The security of the systems and network where we and our service providers store this data is a critical element of our business, and these systems and our network may be vulnerable to computer viruses, hackers and other security issues. Recently, several high profile consumer-oriented companies have experienced significant data breaches, which have caused those companies to suffer substantial financial and reputational harm. While we believe that we have taken appropriate precautions to avoid an unauthorized incursion of our computer systems, we cannot assure you that our precautions are either adequate or implemented properly to prevent a data breach and its adverse financial and reputational consequences to our business. We are also subject to laws relating to privacy of personal data. The compromise of our technology systems resulting in the loss, disclosure, misappropriation of or access to the personally identifiable information of our guests, prospective guests or employees could result in governmental investigation, civil liability or regulatory penalties under laws protecting the privacy of personal information, any or all of which could disrupt our operations and materially adversely affect our business. Additionally, any material failure by us or our service providers to maintain compliance with the Payment Card Industry security requirements or to rectify a data security issue may result in fines and restrictions on our ability to accept credit cards as a form of payment.

We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems could materially adversely affect our business.

We are highly dependent on technology and computer systems and networks to operate our business. These technologies and systems include our computerized airline reservation system, flight operations systems, telecommunications systems, airline website, maintenance systems and check-in kiosks.

In order for our operations to work efficiently, our website and reservation system must be able to accommodate a high volume of traffic, maintain secure information and deliver flight information. We depend on our reservation system, which is hosted and maintained under a long-term contract by a third-party service provider, to issue, track and accept electronic tickets, conduct check-in, board and manage our passengers through the airports we serve and provide us with access to global distribution systems, which enlarge our pool of potential passengers. In May 2011, we experienced significant reservations system outages, which resulted in lost ticket sales on our website which materially adversely affected our business and goodwill. If our reservation system fails or experiences interruptions again, and we are unable to book seats for a period of time, we could lose a significant amount of revenue as customers book seats on other airlines, and our reputation could be harmed.

We also rely on third-party service providers to maintain our flight operations systems, and if those systems are not functioning, we could experience service disruptions, which could result in the loss of important data, increase our expenses, decrease our operational performance and temporarily stall our operations. Replacement services may not be readily available on a timely basis, at competitive rates or at all, and any transition time to a new system may be significant. In the event that one or more of our primary technology or systems vendors fails to perform and a replacement system is not available, our business could be materially adversely affected.

Our business could be materially adversely affected from an accident or safety incident involving our aircraft.

An accident or safety incident involving one of our aircraft could expose us to significant liability and a public perception that our airline is unsafe or unreliable. In the event of a major accident, we could be subject to significant personal injury and property claims. While we maintain liability insurance in amounts and of the type generally consistent with industry practice, the amount of such coverage may not be adequate to cover fully all claims, and we may be forced to bear substantial losses from an accident. In addition, any accident or incident involving one of our aircraft (or an accident involving another Virgin-branded airline), even if fully insured, could harm our reputation and result in a loss of future passenger demand if it creates a public perception that our operation is unsafe or unreliable as compared to other airlines or means of transportation. As a result, any accident or safety incident involving our aircraft could materially adversely affect our business.

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The demand for airline services is sensitive to changes in economic conditions, and another recession would weaken demand for our services and materially adversely affect our business.

The demand for business and leisure travel is affected by U.S. and global economic conditions. Unfavorable economic conditions have historically reduced airline travel spending. For most leisure consumers, travel is a discretionary expense, and during unfavorable economic conditions, travelers have often replaced air travel with car travel or other forms of ground transportation or have opted not to travel at all. Likewise, during unfavorable economic conditions, businesses have foregone or deferred air travel. Travelers have also reduced spending by purchasing less expensive tickets, which can result in a decrease in average revenue per seat. Because we have relatively high fixed costs, much of which cannot be mitigated during periods of lower demand for air travel, our business is particularly sensitive to changes in U.S. economic conditions. A reduction in the demand for air travel due to unfavorable economic conditions also limits our ability to raise fares to counteract increased fuel, labor and other costs. If U.S. or global economic conditions are unfavorable or uncertain for an extended period of time, it would materially adversely affect our business.

We have a limited operating history and have only recorded two years of profit, and we may not sustain or increase profitability in the future.

We have a history of losses and only a limited operating history upon which you can evaluate our business and prospects. While we recorded an annual profit in 2013, 2014 and the first six months of 2015, we cannot assure you that we will be able to sustain or increase profitability on a quarterly or an annual basis. In turn, this may cause the trading price of our common stock to decline and may materially adversely affect our business.

Airlines are subject to extensive regulation and taxation by governmental authorities, and compliance with new regulations and any new or higher taxes will increase our operating costs and may materially adversely affect our business.

We are subject to extensive regulatory and legal compliance requirements. Congress regularly passes laws that affect the airline industry, and the DOT, the Federal Aviation Administration, or FAA, and the Transportation Security Administration, or TSA, continually issue regulations, orders, rulings and guidance relating to the operation, safety and security of airlines that require significant expenditures and investment by us. For example, the DOT has broad authority over airlines to prevent unfair and deceptive practices and has used this authority to impose numerous airline regulations, including rules and fines relating to airline advertising, pricing, baggage compensation, denied boarding compensation and tarmac delayed flights. The DOT frequently considers the adoption of new regulations, such as rules relating to congestion-based landing fees at airports and limits or disclosures concerning ancillary passenger fees. For example, in June 2014, the DOT issued a notice of proposed rulemaking to further enhance passenger protections that addresses several areas of regulation, including post-purchase ticket increases, ancillary fee disclosures and code-share data reporting and disclosure.

Compliance with existing requirements drives administrative, legal and operational costs and subjects us to potential fines, and any new regulatory requirements issued by the DOT may increase our compliance costs, reduce our revenues and materially adversely affect our business.

The FAA has broad authority to address airline safety issues, including inspection authority over our flight, technical and safety operations, and has the ability to issue mandatory orders relating to, among other things, the grounding of aircraft, installation of mandatory equipment and removal and replacement of aircraft parts that have failed or may fail in the future. Any decision by the FAA to require aircraft inspections, complete aircraft maintenance or ground aircraft types operated by us could materially adversely affect our business. For example, on January 4, 2014, the FAA’s new and more stringent pilot flight and duty time requirements under Part 117 of the Federal Aviation Regulations took effect, which has increased costs and could further increase our costs in the future.

The FAA also has extensive authority to address airspace/airport congestion issues and has imposed limitations on take-off and landing slots at four airports: Ronald Reagan Washington National Airport (DCA), LaGuardia Airport (LGA), John F. Kennedy International Airport (JFK) and Newark Liberty International Airport (EWR). The FAA could reduce the number of slots allocated at these airports or impose new slot restrictions at other airports.

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The Port Authority of New York & New Jersey maintains a so-called “perimeter rule” that prohibits, with certain exceptions, weekday non-stop flights longer than 1,500 statutory miles from LGA, a restriction that does not exist at JFK and EWR. We currently have a limited number of take-off and landing slots at LGA, compared to certain of our competitors. If the LGA perimeter rule were relaxed or eliminated, it could increase competition at LGA for high-revenue longer haul routes favored by business travelers and higher revenue passengers. If New York business travelers and higher revenue passengers elect to travel out of LGA rather than JFK and EWR, airports that are farther from Manhattan, the financial performance of our operations at JFK and EWR may be materially adversely affected. Additionally, we may not have sufficient slots at LGA to compete, which could materially adversely affect our business.

We are also subject to restrictions imposed by federal law that require that no more than 24.9% of our stock be voted, directly or indirectly, by persons who are not U.S. citizens, that no more than 49.9% of our outstanding stock be owned by persons who are not U.S. citizens and that our president and at least two-thirds of the members of our board of directors and senior management be U.S. citizens. For more information on these requirements, see “-Our corporate charter and bylaws include provisions limiting voting and ownership by non-citizens and specifying an exclusive forum for stockholder disputes.” We are currently in compliance with these ownership restrictions. Our high level of foreign ownership may limit our opportunity to participate in U.S. government travel contracts and the Civilian Reserve Air Fleet program, however, if we are unable to satisfy policies and procedures of the U.S. Department of Defense for the mitigation of foreign ownership, control or influence required of cleared U.S. contractors.

Domestic airlines are also subject to significant taxation, including taxes on jet fuel, passenger tickets and security fees to compensate the federal government for its role in regulating airlines, providing air traffic controls and implementing security measures related to airlines and airports. In July 2014, the TSA implemented an increased passenger security fee at a flat rate of $5.60 per passenger. Any significant increase in ticket taxes or security fees could weaken the demand for air travel, increase our costs and materially adversely affect our business.

Many aspects of airlines’ operations are also subject to increasingly stringent environmental regulations, and growing concerns about climate change may result in the imposition of additional regulation. Since the domestic airline industry is highly price sensitive, we may not be able to recover from our passengers the cost of compliance with new or more stringent environmental laws and regulations, which could materially adversely affect our business. Although we do not expect the costs of complying with current environmental regulations will have a material adverse effect on our business, we cannot assure you that the costs of complying with environmental regulations would not materially adversely affect us in the future.

Almost all commercial service airports are owned and/or operated by units of local or state governments. Airlines are largely dependent on these governmental entities to provide adequate airport facilities and capacity at an affordable cost. Many airports have increased their rates and charges to air carriers because of higher security costs, increased costs related to updated infrastructures and other costs. Additional laws, regulations, taxes and airport rates and charges have been proposed from time to time that could significantly increase the cost of airline operations or reduce the demand for air travel. Although lawmakers may impose these additional fees and consider them “pass-through” costs, we believe that a higher total ticket price will influence consumer purchase and travel decisions and may result in an overall decline in passenger traffic, which could materially adversely affect our business.

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Our ability to obtain financing or access capital markets may be limited.

We have significant obligations to purchase aircraft and spare engines that we have on order from Airbus and CFM International, or CFM, and we have historically relied solely on lessors to provide financing for our aircraft acquisition needs. In April 2015, we entered into financing transactions with three lenders to finance the purchase of five aircraft scheduled for delivery in 2015 under our existing purchase agreement with Airbus. As of June 30, 2015, committed expenditures for these aircraft and spare engines, including estimated amounts for contractual price escalations and $117.5 million of net pre-delivery payment commitments, were approximately $423.5 million in the aggregate. Because we may not have sufficient liquidity or creditworthiness to fund the purchase of additional aircraft and engines in 2016, we expect to seek external financing for these expenses. There are a number of factors that may affect our ability to raise financing or access the capital markets, including our liquidity and credit status, our operating cash flows, market conditions in the airline industry, U.S. and global economic conditions, the general state of the capital markets and the financial position of the major providers of commercial aircraft financing. We cannot assure you that we will be able to source external financing for our planned aircraft acquisitions or for other significant capital needs, and if we are unable to source financing on acceptable terms, or unable to source financing at all, our business could be materially adversely affected. To the extent we finance our activities with additional debt, we may become subject to financial and other covenants that may restrict our ability to pursue our strategy or otherwise constrain our growth and operations.

In addition, we may be unable to fully finance future aircraft acquisitions if the aircraft are perceived to be less valuable for any reason. We presently have nine Airbus A320-family, current engine option, or A320ceo, aircraft on order for delivery between August 2015 and June 2016. If Airbus’s newer A320neo-family aircraft provide expected improvements in the fuel consumption and an increase in nautical mile range, the Airbus A320ceo-family aircraft may be perceived to be less valuable. If we are unable to fully finance our acquisition of the aircraft on order for delivery in 2016, our business may be materially adversely affected.

The “Virgin” brand is not under our control, and negative publicity related to the Virgin brand name could materially adversely affect our business.

We believe the “Virgin” brand, which is integral to our corporate identity, represents quality, innovation, creativity, fun, a sense of competitive challenge and employee-friendliness. We license rights to the Virgin brand from certain entities affiliated with the Virgin Group on a non-exclusive basis. The Virgin brand is also licensed to and used by a number of other companies, including two airlines, Virgin Atlantic Airways and Virgin Australia Airlines, operating in other geographies. We rely on the general goodwill of consumers and our employees, whom we call teammates, towards the Virgin brand as part of our internal corporate culture and external marketing strategy. Consequently, any adverse publicity in relation to the Virgin brand name or its principals, particularly Sir Richard Branson who is closely associated with the brand, or in relation to another Virgin-branded company over which we have no control or influence, could have a material adverse effect on our business.

We obtain our rights to use the Virgin brand under agreements with certain entities affiliated with the Virgin Group, and we would lose those rights if these agreements are terminated or not renewed.

We are party to license agreements with certain entities affiliated with the Virgin Group pursuant to which we obtain rights to use the Virgin brand. The licensor may terminate the agreements upon the occurrence of a number of specified events including if we commit a material breach of our obligations under the agreements that is uncured for more than 10 business days or if we materially damage the Virgin brand. If we lose our rights to use the Virgin brand, we would lose the goodwill associated with our brand name and be forced to develop a new brand name, which would likely require substantial expenditures, and our business would likely be materially adversely affected.

We are subject to labor-related disruptions that could materially adversely affect our business.

On August 13, 2014, our inflight teammates (whom other airlines refer to as flight attendants), representing approximately 32% of our workforce at the time, voted for representation by the Transport Workers Union, or TWU. As a result, the TWU has been certified as the representative of our inflight teammates, and we are engaged with the TWU in a collective bargaining process for a first contract for those teammates in accordance with the requirements of the Railway Labor Act.

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On June 4, 2015, our pilots, representing approximately 22% of our workforce as of such date, voted for representation by the Air Line Pilots Association, or ALPA. As a result, ALPA has been certified as the representative of our pilots, and we are engaged with ALPA in a collective bargaining process for a first contract for those teammates in accordance with the requirements of the Railway Labor Act.

Although we currently have a direct relationship with our remaining teammates, airline workers are one of the most heavily unionized private-sector employee groups, and any of our other non-management teammates could also seek to unionize. If we are not able to reach agreement with the TWU or ALPA on the terms of the collective bargaining agreements for each of our inflight teammates, or pilots, respectively, or if one or more of our other teammate groups elects a union to represent them, it could create a risk of work stoppages, which could materially adversely affect our business.

We depend on the Los Angeles and San Francisco markets to be successful.

Most of our current flights operate from our two focus cities of Los Angeles and San Francisco. In 2014, passengers to and from Los Angeles International Airport (LAX) and to and from SFO accounted for 43.2% and 54.1% of our total passengers. We believe that concentrating our service offerings in this way allows us to maximize our investment in personnel, aircraft and ground facilities and to leverage sales and marketing efforts in those regions. As a result, we are highly dependent on the LAX and SFO markets.

At LAX, we operate out of Terminal Three under an airport lease agreement that runs through 2019, subject to earlier expiration depending on our completion of certain leasehold improvement projects. Under the LAX lease, we have the preferential use of six airport gates and shared access with other airlines to additional common-use gates. At SFO, we primarily operate out of recently renovated Terminal Two, under an operating lease that runs through June 2021, with the occasional use of a gate in the international terminal for flights from Mexico. Under the SFO lease, we have preferential access to seven Terminal Two gates, shared access with other airlines to one common-use Terminal Two gate and shared access to international terminal gates. In the past, we have used SFO international gates for domestic flights. As gate space is limited at both LAX and SFO, we cannot assure you that our gate access at each airport is capable of handling our planned growth in operations for at least the next several years.

However, both LAX and SFO are high-traffic airports with limited excess facilities and capacity, which may restrict our growth at these two bases or may even constrict our existing operations. If either LAX or SFO are fully utilized by other airlines, we may be unable to increase our operations at such airport. Additionally, under our LAX and SFO leases, each airport has reserved the right to reevaluate the airlines’ collective utilization of the airport facilities to re-allocate preferential gates among the airlines based on certain usage standards. If we are unable to meet current or future minimum usage standards, we may lose access to our preferential gates. If we are unable to increase flights in these and other key markets, if any events cause a reduction in demand for air transportation in these key markets, if increases in competition cause us to reduce fares in these key markets, or if we lose access to our preferential gates, our business may be materially adversely affected.

Our quarterly results of operations fluctuate due to a number of factors, including seasonality.

We expect our quarterly results of operations to continue to fluctuate due to a number of factors, including actions by our competitors, price changes in aircraft fuel and the timing and amount of maintenance expenses. As a result of these and other factors, quarter-to-quarter comparisons of our results of operations may not be reliable indicators of our future performance. In addition, seasonality may cause our quarterly results of operations to fluctuate since passengers tend to fly more during the summer months and less in the winter months. We cannot assure you that we will find profitable markets in which to operate during the winter season. Lower demand for air travel during the winter months may materially adversely affect our business.

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We have a significant amount of fixed obligations.

The airline business is capital intensive, and many airlines, including us, are highly leveraged. We currently lease 53 of our 54 aircraft, and these leases contain provisions requiring the payment of monthly rent regardless of usage. As of June 30, 2015, we had undiscounted future operating lease obligations of approximately $1.4 billion, as well as significant maintenance reserve requirements associated with these leases that are variable in nature. In addition, we have ordered aircraft and spare engines from Airbus and CFM for delivery over the next eight years. Under those agreements, we are obligated to make PDPs to Airbus and CFM on regular intervals in advance of the delivery of our ordered aircraft and spare engines. Moreover, we expect to incur additional fixed expenses as we take delivery of new aircraft, with nine aircraft scheduled for delivery between August 2015 and June 2016 that are non-cancelable and 30 aircraft scheduled for delivery in 2020 through 2022 that can be canceled by forfeiting amounts on deposit with Airbus.

The amount of our current and expected future fixed obligations could strain our cash flows from operations, reducing the availability of our cash flows to fund working capital, capital expenditures and other general corporate purposes and limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete. Our substantial fixed obligations could reduce our credit, which would negatively impact our ability to obtain additional financing and could place us at a competitive disadvantage compared to less leveraged competitors and competitors that have better access to capital resources or more favorable terms. We cannot assure you that we will be able to generate sufficient cash flows from our operations or from capital market activities to pay our debt and other fixed obligations as they become due or that we will be able to finance these obligations on favorable terms, or at all. If we are unable to generate sufficient cash flows for any reason, we may be unable to meet our fixed obligations, and our business may be materially adversely affected. In particular, if we are unable to make our required aircraft lease rental payments, we could lose access to one or more aircraft and forfeit our rent deposits, and our lessors could exercise their remedies under the lease agreements. Also, an event of default under any of our leases and our debt financing agreements could trigger cross-default provisions under other agreements.

Our credit card processors have the right to impose larger holdbacks which could have a material adverse effect on our business.

Most of our tickets are sold to customers using credit cards as the form of payment. Our credit card processors have rights in their agreements to hold back receivable monies related to tickets sold for future travel services (i.e., a “holdback”). Any related holdback is remitted to us shortly after the customer travels. Holdbacks are commonly imposed on newer or less creditworthy airlines. Until recently, we had significant holdback requirements with our two primary credit card processors, Elavon Inc. for Visa/MasterCard and American Express. On June 5, 2015, Elavon agreed to reduce the Company’s holdback to zero percent (0%), and on June 15, 2015, the Company entered into an amendment with American Express pursuant to which American Express agreed to remove the letter of credit requirement, effectively reducing the Company’s holdback to zero. However, Elavon and Amex each have the right to restore the holdback in the future depending on the Company’s financial performance. Any re-imposition of our holdbacks by Elavon or Amex will immediately and negatively impact our liquidity, which may materially adversely affect our business.

Significant flight delays, cancellations or aircraft unavailability may materially adversely affect our business.

Various factors, many of which are beyond our control, such as air traffic congestion at airports, other air traffic control problems, security requirements, unscheduled maintenance and adverse weather conditions, can cause flight delays or cancellations or cause certain of our aircraft to be unavailable for a period of time. SFO, one of our two primary focus airports, is particularly vulnerable to air traffic constraints and other delays due to fog and inclement weather. Factors that cause flight delays frustrate passengers, and reduced aircraft availability could lead to customer dissatisfaction that harms our reputation. Additionally, if we are forced to cancel a flight due to an event within our control, we will be liable to re-accommodate our guests, including by purchasing tickets for them on other airlines. If one or more of our aircraft is unavailable to fly revenue service for any amount of time, our capacity will be reduced. Significant flight delays, cancellations or aircraft unavailability for any reason could have a material adverse effect on our business.

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Our maintenance costs will increase as our fleet ages.

As of June 30, 2015, the average age of aircraft in our fleet of Airbus A320-family aircraft was 6.3 years. Our aircraft will require more scheduled and unscheduled maintenance as they age. We are beginning to incur substantial costs for major maintenance visits for our aircraft, and because of the pattern of our historical fleet growth, we expect to have several aircraft undergoing major maintenance at roughly the same time. These more significant maintenance activities result in out-of-service periods during which certain of our aircraft are unavailable to fly passengers. Any significant increase in maintenance and repair expenses, as well as resulting out-of-service periods, could have a material adverse effect on our business.

We expect that costs associated with the final qualifying major engine maintenance events for our aircraft will be amortized over the remaining lease term rather than until the next estimated major maintenance event, because we account for major maintenance under the deferral method. This could result in significantly higher depreciation and amortization expense related to major maintenance in the last few years of the leases as compared to the expenses in earlier periods.

In addition, the terms of our lease agreements for our 53 leased aircraft require us to pay supplemental rent, also known as maintenance reserves, to our lessor in advance of the performance of major maintenance, resulting in our recording significant aircraft maintenance deposits on our consolidated balance sheet. However, the payments made after the final qualifying major engine maintenance event during the lease term are generally fully expensed, as the majority of these amounts are not reimbursable from the lessor. As such, it will result in both additional rent expense and depreciation and amortization expense for previously capitalized maintenance being recorded in the period after the final qualifying major engine maintenance event and just prior to the termination of the lease.

We depend on sole-source suppliers for our aircraft and engines.

A critical cost-saving element of our business strategy is to operate a single-family aircraft fleet; however, our dependence on the Airbus A320-family aircraft and CFM engines for all of our flights makes us more vulnerable to any design defects or mechanical problems associated with this aircraft type or these engines. In the event of any actual or suspected design defects or mechanical problems with the Airbus A320-family aircraft or CFM engines, whether involving our aircraft or that of another airline, we may choose or be required to suspend or restrict the use of our aircraft. Our business could also be materially adversely affected if the public avoids flying on our aircraft due to an adverse perception of the Airbus A320-family aircraft or CFM engines, whether because of safety concerns or other problems, real or perceived, or in the event of an accident involving such aircraft or engines. Separately, if Airbus or CFM becomes unable to perform its contractual obligations and we must lease or purchase aircraft from another supplier, we would incur substantial transition costs, including expenses related to acquiring new aircraft, engines, spare parts, maintenance facilities and training activities, and we would lose the cost benefits from our current single-fleet composition, any of which could have a material adverse effect on our business.

We rely on third-party service providers to perform functions integral to our operations.

We depend on third-party service providers to provide the majority of the services required for our operations, including fueling, maintenance, catering, passenger handling, reservations and airport ground handling, as well as certain administrative and support services. We are likely to enter into similar service agreements for new markets we enter, and we cannot assure you that we will be able to obtain the necessary services at acceptable rates. Moreover, although we do enter into agreements with many of our third-party service providers that define expected service performance, we do not directly control these third-party service providers. Any of these third-party service providers may fail to meet their service performance commitments to us, suffer disruptions to their systems that could negatively impact their services or fail to perform their services reliably, professionally or at the high standard of quality that we expect. Any such failure of our third-party service providers may prevent us from operating one or more flights or providing other services to our customers and may materially adversely affect our business. In addition, our business could be materially adversely affected if our customers believe that our services are unreliable or unsatisfactory.

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Our business could be affected by severe weather conditions, natural disasters or the outbreak of contagious disease, any of which could materially adversely affect our business.

Our operations may be materially adversely affected by factors beyond our control, including severe weather conditions, natural disasters and the outbreak of disease. Severe weather conditions, such as winter snowstorms, hurricanes or other weather events, can cause flight cancellations, turbulence or significant delays that may result in increased costs and reduced revenue. Also, our two focus cities, Los Angeles and San Francisco, and our headquarters in Burlingame, California, are located on or near active seismic faults, and an earthquake could occur at any time, which could disrupt our operations at those locations. Similarly, outbreaks of pandemic or contagious diseases, such as avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine) flu and the Ebola virus could significantly reduce demand for passenger traffic and result in travel restrictions. Any interruption in our ability to operate flights or reduction in airline passenger demand because of such events could have a material adverse effect on our business.

Increases in insurance costs or reductions in insurance coverage may materially adversely affect our business.

If any of our aircraft were to be involved in an accident or if our property or operations were to be affected by a significant natural catastrophe or other event, we could be exposed to significant liability or loss. If we are unable to obtain sufficient insurance (including aviation hull and liability insurance and property and business interruption coverage) to cover such liabilities or losses, whether due to insurance market conditions or otherwise, our business could be materially adversely affected.

We currently obtain third-party war risk (terrorism) insurance, which is a separate policy from our commercial aviation hull and liability policy, from private insurance companies. Our current war risk insurance from commercial underwriters excludes NBCR (nuclear, biological, chemical and radiological) events. If we are unable to obtain adequate third-party war risk (terrorism) insurance or if a NBCR attack were to take place, our business could be materially adversely affected.

Our business could be materially adversely affected if we lose the services of our key personnel.

Our success depends to a significant extent upon the efforts and abilities of our officers, senior management team and key operating personnel. Competition for highly qualified personnel is intense, and a substantial turnover in key employees without adequate replacement or the inability to attract new qualified personnel could have a material adverse effect on our business.

Concentrated ownership by our principal stockholders could materially adversely affect our other stockholders.

As of June 30, 2015, the Virgin Group and Cyrus Holdings owned approximately 18.9% and 28.8% of our outstanding voting common stock, respectively. This concentrated ownership may limit the ability of other stockholders to influence corporate matters; as a result, these stockholders may cause us to take actions that our other stockholders do not view as beneficial. For example, this concentration of ownership could delay or prevent a change in control or otherwise discourage a potential acquirer from attempting to obtain control of us, which in turn could cause the trading price of our common stock to decline or prevent our stockholders from realizing a premium over the market price for their common stock.

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The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members or executive officers.

As a public company, we have incurred and will incur significant legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting requirements. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act of 2002, as amended, the Dodd-Frank Wall Street Reform and Consumer Protection Act, related rules implemented or to be implemented by the Securities and Exchange Commission, or the SEC, and the listing rules of the NASDAQ Global Select Market. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or our board committees or as our executive officers and may divert management’s attention. Furthermore, if we are unable to satisfy our obligations as a public company, our common stock could be delisted, and we could be subject to fines, sanctions and other regulatory action and potentially civil litigation.

We will be required to assess our internal control over financial reporting on an annual basis, and any future adverse findings from such assessment could result in a loss of investor confidence in our financial reports, result in significant expenses to remediate any internal control deficiencies and have a material adverse effect on our business.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and beginning with our Annual Report on Form 10-K for the year ending December 31, 2015, our management will be required to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. The rules governing management’s assessment of our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. We are currently in the process of reviewing, documenting and testing our internal control over financial reporting. We may encounter problems or delays in completing the implementation of any changes necessary to make a favorable assessment of our internal control over financial reporting. In connection with the attestation process by our independent registered public accounting firm, we may encounter problems or delays in implementing any requested improvements and receiving a favorable attestation. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, we will not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the NASDAQ Global Select Market, regulatory investigations, civil or criminal sanctions and litigation, any of which would materially adversely affect our business.

The market price of our common stock may be volatile, which could cause the value of an investment in our stock to decline.

We completed our initial public offering in November 2014. Prior to that offering, there was no public market for shares of our common stock, and an active public market for our shares may not be sustained. From November 14, 2014, the first date of trading of our common stock, through June 30, 2015, the last reported sale price of our common stock has fluctuated between $26.50 and $45.43 per share. The market price of our common stock may fluctuate substantially due to a variety of factors, many of which are beyond our control, including:

• changes in the price of aircraft fuel;

• announcements concerning our competitors, the airline industry or the economy in general;

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• strategic actions by us or our competitors, such as acquisitions or restructurings;

• media reports and publications about the safety of our aircraft or the aircraft type we operate;

• new regulatory pronouncements and changes in regulatory guidelines;

• announcements concerning the availability of the type of aircraft we use;

• general and industry-specific economic conditions;

• changes in financial estimates or recommendations by securities analysts or failure to meet analysts’ performance expectations;

• sales of our common stock or other actions by investors with significant shareholdings, including sales by our principal stockholders;

• trading strategies related to changes in fuel or oil prices; and

• general market, political and other economic conditions.

The stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of particular companies. Broad market fluctuations may materially adversely affect the trading price of our common stock.

In the past, stockholders have sometimes instituted securities class action litigation against companies following periods of volatility in the market price of their securities. Any similar litigation against us could result in substantial costs, divert management’s attention and resources and materially adversely affect our business.

If securities or industry analysts cease to publish research or reports about our business or publish negative reports about our business, our stock price and trading volume could decline.

The trading market for our common stock depends in part on the research and reports that securities and industry analysts may publish about us or our business. If one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, the trading price of our common stock would likely decline. If one or more of these analysts ceases to cover our company or fails to publish reports on us regularly, demand for our stock could decrease, which may cause the trading price of our common stock and our trading volume to decline.

Our anti-takeover provisions may delay or prevent a change of control, which could materially adversely affect the price of our common stock.

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make it difficult to remove our board of directors and management and may discourage or delay “change of control” transactions, which could materially adversely affect the price of our common stock. These provisions include, among others:

• our board of directors is divided into three staggered classes, with each class serving a three-year term, which prevents stockholders from electing an entirely new board of directors at a single annual meeting;

• actions to be taken by our stockholders may only be effected at an annual or special meeting of our stockholders and not by written consent;

• special meetings of our stockholders can be called only by our board of directors, the Chairman of the Board, our chief executive officer or our president;

• advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our stockholders may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and

• our board of directors may, without stockholder approval, issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control.

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The value of our common stock may be materially adversely affected by additional issuances of common stock or preferred stock by us or sales by our principal stockholders.

Any future issuances or sales of our common stock by us will be dilutive to our existing common stockholders. Cyrus Holdings and the Virgin Group collectively held an aggregate of 17,411,888 shares of our voting common stock, or 47.6% of our voting common stock outstanding, and 55.9% of the total outstanding equity interests in our company as of June 30, 2015 (which includes 6,852,738 shares of non-voting common stock held by the Virgin Group). Cyrus Capital and the Virgin Group are entitled to rights with respect to registration of such shares under the Securities Act. Sales of substantial amounts of our common stock in the public or private market, a perception in the market that such sales could occur, or the issuance or exercise of securities exercisable or convertible into our common stock, including warrants to purchase our common stock, could materially adversely affect the prevailing price of our common stock.

Our corporate charter and bylaws include provisions limiting voting and ownership by non-U.S. citizens and specifying an exclusive forum for stockholder disputes.

To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, our amended and restated certificate of incorporation and amended and restated bylaws restrict voting of shares of our common stock by non-U.S. citizens. The restrictions imposed by federal law currently require that no more than 24.9% of our stock be voted, directly or indirectly, by persons who are not U.S. citizens, that no more than 49.9% of our outstanding stock be owned (beneficially or of record) by persons who are not U.S. citizens and that our president and at least two-thirds of the members of our board of directors and senior management be U.S. citizens. Our amended and restated bylaws provide that the failure of non-U.S. citizens to register their shares on a separate stock record, which we refer to as the “foreign stock record,” would result in a suspension of their voting rights in the event that the aggregate foreign ownership of the outstanding common stock exceeds the foreign ownership restrictions imposed by federal law. Our amended and restated bylaws also provide that any transfer or issuance of our stock that would cause the amount of our stock owned by persons who are not U.S. citizens to exceed foreign ownership restrictions imposed by federal law will be void and of no effect.

Our amended and restated bylaws further provide that no shares of our common stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law. If it is determined that the amount registered in the foreign stock record exceeds the foreign ownership restrictions imposed by federal law, shares will be removed from the foreign stock record in reverse chronological order based on the date of registration therein, until the number of shares registered therein does not exceed the foreign ownership restrictions imposed by federal law. We are currently in compliance with these ownership restrictions.

As of July 3, 2015, non-U.S. citizens owned, in the aggregate, 7,589,707 shares of voting common stock and 14,442,445 shares of outstanding common stock (representing approximately 20.8% of the total voting rights and approximately 33.3% of the total outstanding equity interests in our company, respectively).

Our amended and restated certificate of incorporation provides that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a fiduciary duty owed by, or otherwise wrongdoing by, any of our directors, officers or other employees to us or our stockholders; (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or amended and restated bylaws; (iv) any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or the bylaws; or (v) any action asserting a claim against us or any of our directors, officers or employees governed by the internal affairs doctrine. Accordingly, you may be limited in your ability to pursue legal actions.

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We do not intend to pay cash dividends for the foreseeable future.

We have never declared or paid cash dividends on our common stock. We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in current or future financing instruments, business prospects and such other factors as our board of directors deems relevant.

We may become involved in litigation that may materially adversely affect us.

From time to time, we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including patent, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. In particular, in recent years, there has been significant litigation in the United States and abroad involving patents and other intellectual property rights. We have in the past faced, and may face in the future, claims by third parties that we infringe upon their intellectual property rights. Such matters can be time- consuming, divert management’s attention and resources, cause us to incur significant expenses or liability and/ or require us to change our business practices. Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we believe that we have meritorious claims or defenses. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business.

Risks associated with our presence in international emerging markets, including political or economic instability, and failure to adequately comply with existing legal requirements, may materially adversely affect us.

Countries with less developed economies, legal systems, financial markets and business and political environments are vulnerable to economic and political problems, such as significant fluctuations in gross domestic product, interest and currency exchange rates, civil disturbances, government instability, nationalization and expropriation of private assets, trafficking and the imposition of taxes or other charges by governments. The occurrence of any of these events in markets served by us now or in the future and the resulting instability may materially adversely affect our business.

We emphasize legal compliance and have implemented and continue to implement and refresh policies, procedures and certain ongoing training of our teammates with regard to business ethics and many key legal requirements; however, we cannot assure you that our teammates will adhere to our code of business ethics, other policies or other legal requirements. If we fail to enforce our policies and procedures properly or maintain adequate record-keeping and internal accounting practices to record our transactions accurately, we may be subject to sanctions. In the event we believe or have reason to believe our teammates have or may have violated applicable laws or regulations, we may incur investigation costs, potential penalties and other related costs which in turn may materially adversely affect our reputation and business.

Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.

We incurred significant cumulative net taxable losses through 2014. Our unused losses generally carry forward to offset future taxable income, if any, until such unused losses expire. We may be unable to use these losses to offset income before such unused losses expire. In addition, if a corporation undergoes an “ownership change” (generally defined as a greater than 50-percentage-point cumulative change in the equity ownership of certain stockholders over a rolling three-year period) under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, the corporation’s ability to use its pre-change net operating loss carryforwards, or NOLs and other pre-change tax attributes to offset future taxable income or taxes may be limited. We have experienced ownership changes in the past, including in connection with our IPO and 2014 Recapitalization, that could limit our ability to use pre-change NOLs to offset future taxable income. In addition, we may experience ownership changes as a result of future changes in our stock ownership (some of which changes may not be within our control), including in connection with sales of our common stock by Cyrus Capital or the Virgin Group. This, in turn, could materially reduce or eliminate our ability to use our losses or tax attributes to offset future taxable income or tax and have an adverse effect on our future cash flows.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We have not sold any equity securities during the period covered by this Quarterly Report on Form 10-Q that were not registered under the Securities Act.

Use of Proceeds from Initial Public Offering of Common Stock

On November 13, 2014, the Securities and Exchange Commission declared effective our Registration Statement on Form S-1 (File No. 333-197660), as amended, filed in connection with the IPO. Pursuant to the Registration Statement, we registered, issued and sold an aggregate of 13,106,377 shares of our common stock at a price to the public of $23.00 per share for aggregate gross offering proceeds of $301.4 million. In addition, pursuant to the Registration Statement, VX Employee Holdings, LLC, a Virgin America employee stock ownership vehicle that we consolidate for financial reporting purposes, sold 231,210 outstanding shares held by it at a price to the public of $23.00 per share for aggregate gross offering proceeds of $5.3 million, which were then immediately disbursed to our teammates.

There has been no material change in the planned use of proceeds from the offering as described in the Registration Statement and in our 2014 Form 10-K.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index and are incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: July 30, 2015

VIRGIN AMERICA INC.
By:	/s/ Peter D. Hunt
Peter D. Hunt Chief Financial Officer (Principal Financial Officer and Duly Authorized Signatory)

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EXHIBIT INDEX

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form		Exhibit No.		Filing Date		Provided Herewith
3.1	Amended and Restated Certificate of Incorporation of Virgin America Inc.		8-K		3.1		11/19/14
3.2	Amended and Restated Bylaws of Virgin America Inc.		8-K		3.2		11/19/14
10.1	Eighth Amendment, dated as of September 16, 2014, to that certain Office Lease Agreement, dated as of December 9, 2005, as amended, between CA-Bay Park Plaza Limited Partnership and Virgin America Inc.								X
10.2	Ninth Amendment, dated as of April 1, 2015, to that certain Office Lease Agreement, dated as of December 9, 2005, as amended, between CA-Bay Park Plaza Limited Partnership and Virgin America Inc.								X
10.3	Facility Agreement, dated as of April 29, 2015, among Virgin America Inc., each Loan Participant (defined therein), BNP Paribas, New York Branch, Investec Bank plc and Bank of Utah								X
10.4	Aircraft Lease Agreement, dated as of April 29, 2015, between VX 2015 LLC and Virgin America Inc.								X
10.5	Note Purchase Agreement, dated as of April 29, 2015, among VX 2015 LLC, the Purchasers (defined therein), New York Life Insurance Company, Investec Bank plc and Bank of Utah								X
10.6†	Second Amendment to the Terms and Conditions of Worldwide Acceptance of the American Express Card by Airlines, dated June 15, 2015, by and between Virgin America Inc. and American Express Travel Related Services Company, Inc.								X
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002								X
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.								X
32.1**	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002								X
101.INS	XBRL Instance Document								X
101.SCH	XBRL Taxonomy Extension Schema Document								X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document								X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document								X
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document								X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document								X

† Confidential treatment has been requested for certain portions of this Exhibit pursuant to Rule 24b-2 under the Exchange Act, which portions are omitted and filed separately with the Securities and Exchange Commission.

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** The certification attached as Exhibit 32.1 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Virgin America Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

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EX-10.1

Exhibit 10.1

EIGHTH AMENDMENT

THIS EIGHTH AMENDMENT (this “Amendment”) is made and entered into as of September 16, 2014, by and between CA-BAY PARK PLAZA LIMITED PARTNERSHIP, a Delaware limited partnership (“Landlord”), and VIRGIN AMERICA INC., a Delaware corporation (“Tenant”).

RECITALS

A. Landlord (as successor in interest to EOP-Bay Park Plaza, LL.C., a Delaware limited liability company) and Tenant (formerly known as Best Air Holdings, Inc., a Delaware corporation) are parties to that certain Office Lease Agreement dated December 9, 2005, as previously amended by that certain First Amendment dated July 1, 2009, that certain Second Amendment dated March 1, 2010, that certain Third Amendment dated November 5, 2010, that certain Fourth Amendment dated March 28, 2011, that certain Temporary Space Agreement dated November 16, 2011, that certain Fifth Amendment dated January 23, 2012, that certain Sixth Amendment (the “Sixth Amendment”) dated July 31, 2012 and that certain Seventh Amendment dated January 29, 2014 (as amended, the “Lease”). Pursuant to the Lease, Landlord has leased to Tenant space currently containing approximately 85,674 rentable square feet (the “Premises”) at the building commonly known as Bay Park Plaza II located at 555 Airport Boulevard, Burlingame, California (the “Building”) and described as: (i) Suite 100 consisting of approximately 10,758 on the first floor of the Building; (ii) Suite 120 consisting of approximately 6,341 on the first floor of the Building; (iii) Suite 150 consisting of approximately 3,963 on the first floor of the Building; (iv) Suite 200 consisting of approximately 23,870 on the second floor of the Building; (v) Suite 310 consisting of approximately 4,114 on the third floor of the Building; (vi) Suite 450 consisting of approximately 12,193 on the fourth floor of the Building; and (vii) Suite 500 consisting of approximately 24,435 on the fifth floor of the Building.

B. Tenant and Landlord mutually desire that the Lease be amended on and subject to the following terms and conditions.

NOW, THEREFORE, in consideration of the above recitals which by this reference are incorporated herein, the mutual covenants and conditions contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

1. Amendment. Effective as of the date hereof (unless different effective date(s) is/are specifically referenced in this Section), Landlord and Tenant agree that the Lease shall be amended in accordance with the following terms and conditions:

1.1. The reference to “September 30, 2014” in Section 6.3 of the Sixth Amendment is hereby amended and restated as “December 15, 2014”.

2. Miscellaneous.

2.1. This Amendment sets forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements. Tenant shall not be entitled, in connection with entering into this Amendment, to any free rent, allowance, alteration, improvement or similar economic incentive to which Tenant may have been entitled in connection with entering into the Lease, except as may be otherwise expressly provided in this Amendment.

2.2. Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect.

2.3. In the case of any inconsistency between the provisions of the Lease and this Amendment, the provisions of this Amendment shall govern and control.

2.4. Submission of this Amendment by Landlord is not an offer to enter into this Amendment but rather is a solicitation for such an offer by Tenant. Landlord shall not be bound by this Amendment until Landlord has executed and delivered it to Tenant.

2.5. Capitalized terms used but not defined in this Amendment shall have the meanings given in the Lease.

2.6. Tenant shall indemnify and hold Landlord, its trustees, members, principals, beneficiaries, partners, officers, directors, employees, mortgagee(s) and agents, and the respective principals and members of any such agents harmless from all claims of any brokers claiming to have represented Tenant in connection with this Amendment. Landlord shall indemnity and hold Tenant, its trustees, members, principals, beneficiaries, partners, officers, directors, employees, and agents, and the respective principals and members of any such agents harmless from all claims of any brokers claiming to have represented Landlord in connection with this Amendment. Tenant acknowledges that any assistance rendered by any agent or employee of any affiliate of Landlord in connection with this Amendment has been made as an accommodation to Tenant solely in furtherance of consummating the transaction on behalf of Landlord, and not as agent for Tenant.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of the day and year first above written.

LANDLORD:
CA-BAY PARK PLAZA LIMITED PARTNERSHIP, a Delaware limited partnership
By:	EOP Owner GP L.L.C., a Delaware limited liability company, its general partner
	By:	/s/ Kenneth Young
	Name:	Kenneth Young
	Title:	Vice President - Leasing
TENANT:
VIRGIN AMERICA INC., a Delaware corporation
By:	/s/ Peter D. Hunt
Name:	Peter D. Hunt
Title:	SVP & Chief Financial Officer

EX-10.2

Exhibit 10.2

NINTH AMENDMENT

THIS NINTH AMENDMENT (this “Amendment”) is made and entered into as of April 1, 2015, by and between HUDSON BAY PARK PLAZA, LLC, a Delaware limited liability company (“Landlord”), and VIRGIN AMERICA INC., a Delaware corporation (“Tenant”).

RECITALS

A. Landlord (as successor in interest to CA-Bay Park Plaza Limited Partnership, a Delaware limited partnership, as successor in interest to EOP-Bay Park Plaza, L.L.C., a Delaware limited liability company) and Tenant (formerly known as Best Air Holdings, Inc., a Delaware corporation) are parties to that certain Office Lease Agreement dated December 9, 2005, as previously amended by that certain First Amendment dated July 1, 2009, that certain Second Amendment dated March 1, 2010, that certain Third Amendment dated November 5, 2010, that certain Fourth Amendment dated March 28, 2011, that certain Temporary Space Agreement dated November 16, 2011, that certain Fifth Amendment dated January 23, 2012, that certain Sixth Amendment (the “Sixth Amendment”) dated July 31, 2012, that certain Seventh Amendment (the “Seventh Amendment”) dated January 29, 2014 and that certain Eighth Amendment (the “Eighth Amendment”) dated as of September 16, 2014 (as amended, the “Lease”). Pursuant to the Lease, Landlord has leased to Tenant space currently containing approximately 81,560 rentable square feet (the “Premises”) at the building commonly known as Bay Park Plaza II located at 555 Airport Boulevard, Burlingame, California (the “Building”) and described as: (i) Suite 100 consisting of approximately 10,758 on the first floor of the Building; (ii) Suite 120 consisting of approximately 6,341 on the first floor of the Building; (iii) Suite 150 consisting of approximately 3,963 on the first floor of the Building; (iv) Suite 200 consisting of approximately 23,870 on the second floor of the Building; (v) Suite 450 consisting of approximately 12,193 on the fourth floor of the Building (“Suite 450”); and (vi) Suite 500 consisting of approximately 24,435 on the fifth floor of the Building.

B. In addition, Tenant previously leased from Landlord Suite 310 consisting of approximately 4,114 on the third floor of the Building (the “Temporary Suite 310 Expansion Space” or “Suite 310”), provided, however, that the term with respect to the Temporary Suite 310 Expansion Space expired as of October 31, 2014 (the “Temporary Suite 310 Expansion Expiration Date”) and Tenant has been in hold-over in the Temporary Suite 310 Expansion Space since such date.

C. Tenant and Landlord mutually desire that the Lease be amended on and subject to the following terms and conditions.

NOW, THEREFORE, in consideration of the above recitals which by this reference are incorporated herein, the mutual covenants and conditions contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

1. Expansion. Effective as of April 1, 2015 (for purposes of this Amendment, the “Second Suite 310 Expansion Effective Date”), the Premises shall be increased from 81,560 rentable square feet on the first, second, fourth and fifth floors to 85,674 rentable square feet on the first, second, third, fourth and fifth floors by the addition of Suite 310, and, from and after the Second Suite 310 Expansion Effective Date through the Second Suite 310 Expansion Expiration Date (defined below), the Premises (as defined above) and Suite 310 shall collectively be deemed the Premises. The term of the Lease for Suite 310 (for purposes of this Amendment, the “Second Suite 310 Expansion Term”) shall commence on the Second Suite 310 Expansion Effective Date and, unless sooner

1

terminated in accordance with the Lease, end on October 7, 2017 (for purposes of this Amendment, the “Second Suite 310 Expansion Expiration Date”). During the Second Suite 310 Expansion Term, Suite 310 shall be subject to all the terms and conditions of the Lease except as provided herein. Except as may be expressly provided herein, (a) Tenant shall not be entitled to receive, with respect to Suite 310, any allowance, free rent or other financial concession granted with respect to the remainder of the Premises, and (b) no representation or warranty made by Landlord with respect to the remainder of the Premises shall apply to Suite 310.

2. Base Rent. With respect to Suite 310 during the Second Suite 310 Expansion Term, the schedule of Base Rent shall be as follows:

Period During Second Suite 310 Expansion Term	Annual Rate Per Square Foot (rounded to the nearest 100th of a dollar)	Monthly Base Rent
April 1, 2015 – January 31, 2016	$39.00	$	13,370.50
February 1, 2016 – January 31, 2017	$40.17	$	13,771.62
February 1, 2017 – October 7, 2017	$41.38	$	14,186.44

All such Base Rent shall be payable by Tenant in accordance with the terms of the Lease.

3. Additional Security Deposit. No additional security deposit shall be required in connection with this Amendment.

4. Tenant’s Pro Rata Share. With respect to Suite 310 during the Second Suite 310 Expansion Term, Tenant’s Pro Rata Share shall be 3.5115%.

5. Expenses and Taxes. With respect to Suite 310 during the Second Suite 310 Expansion Term, Tenant shall pay for Tenant’s Pro Rata Share of Expenses and Taxes in accordance with the terms of the Lease, as amended; provided, however, that, with respect to Suite 310 during the Second Suite 310 Expansion Term, the Base Year for Expenses and Taxes shall be 2014.

6. Improvements to Suite 310.

6.1. Configuration and Condition of Suite 310. Tenant acknowledges that it has inspected Suite 310 and agrees to accept it in its existing configuration and condition without any representation by Landlord regarding its configuration or condition and without any obligation on the part of Landlord to perform or pay for any alteration or improvement, except as may be otherwise expressly provided in this Amendment.

6.2. Responsibility for Improvements to Suite 310. Any improvements to Suite 310 performed by Tenant shall be paid for by Tenant and performed in accordance with the terms of the Lease

7. Suite 450 Allowance. The parties acknowledge and agree that Tenant has no further rights to the payment or distribution of the Suite 450 Allowance (as defined in Section 6.3 of the aforementioned Sixth Amendment, and as further modified by Section 1.1 of the aforementioned Eighth Amendment). In addition, Tenant represents and warrants to Landlord that Tenant has not (a) received a payment or distribution of any portion of the Suite 450 Allowance, nor (b) requested (nor

2

shall it request) from Landlord (or any predecessor) the payment or distribution of any portion of the Suite 450 Allowance. However, in lieu thereof, Landlord hereby grants to Tenant an allowance (the “Alternative Suite 450 Allowance”) in the amount of $274,342.50 to be used by Tenant for improvements and alterations to Suite 450. Landlord shall disburse the Alternative Suite 450 Allowance to Tenant for costs expended by Tenant prior to October 31, 2015, in connection with alterations or improvements performed by Tenant in Suite 450. Such disbursement shall be made to Tenant within 30 days after Landlord’s receipt of invoices marked paid, for work performed in Suite 450, together with any applicable governmental approvals on any work requiring permits, and with unconditional and final lien releases with respect to the work performed.

8. Miscellaneous.

8.1. This Amendment sets forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements. Tenant shall not be entitled, in connection with entering into this Amendment, to any free rent, allowance, alteration, improvement or similar economic incentive to which Tenant may have been entitled in connection with entering into the Lease, except as may be otherwise expressly provided in this Amendment.

8.2. Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect.

8.3. In the case of any inconsistency between the provisions of the Lease and this Amendment, the provisions of this Amendment shall govern and control.

8.4. Submission of this Amendment by Landlord is not an offer to enter into this Amendment but rather is a solicitation for such an offer by Tenant. Landlord shall not be bound by this Amendment until Landlord has executed and delivered it to Tenant.

8.5. Capitalized terms used but not defined in this Amendment shall have the meanings given in the Lease.

8.6. Tenant shall indemnify and hold Landlord, its trustees, members, principals, beneficiaries, partners, officers, directors, employees, mortgagee(s) and agents, and the respective principals and members of any such agents harmless from all claims of any brokers claiming to have represented Tenant in connection with this Amendment. Landlord shall indemnify and hold Tenant, its trustees, members, principals, beneficiaries, partners, officers, directors, employees, and agents, and the respective principals and members of any such agents harmless from all claims of any brokers claiming to have represented Landlord in connection with this Amendment. Tenant acknowledges that any assistance rendered by any agent or employee of any affiliate of Landlord in connection with this Amendment has been made as an accommodation to Tenant solely in furtherance of consummating the transaction on behalf of Landlord, and not as agent for Tenant.

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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of the day and year first above written.

LANDLORD:
HUDSON BAY PARK PLAZA, LLC, a Delaware limited liability company
By:	Hudson Pacific Properties, L.P., a Maryland limited partnership, its sole member
	By:	Hudson Pacific Properties, Inc., a Maryland corporation, its general partner
		By:	/s/ Kenneth Young
		Name:	Kenneth Young
		Title:	Vice President - Leasing
TENANT:
VIRGIN AMERICA INC., a Delaware corporation
By:	/s/ Peter D. Hunt
Name:	Peter D. Hunt
Title:	SVP & Chief Financial Officer

4

EX-10.3

Exhibit 10.3

EXECUTION VERSION

FACILITY AGREEMENT

[Virgin/Bank 2015]

dated as of April 29, 2015

among

VIRGIN AMERICA INC.,

Borrower,

EACH LOAN PARTICIPANT

IDENTIFIED ON SCHEDULE I HERETO,

Loan Participants,

BNP PARIBAS, NEW YORK BRANCH,

Senior Agent,

INVESTEC BANK PLC,

Junior Agent

and

BANK OF UTAH,

Security Trustee

BNP Paribas, New York Branch

Senior Underwriter

Investec Bank plc

Junior Underwriter

TABLE OF CONTENTS

		Page
SECTION 1.	CERTAIN DEFINITIONS		1
SECTION 2.	THE COMMITMENT; FUNDING PROCEDURES; CLOSING PROCEDURE		3
(a)	Commitment; Loan Certificates; Special Funding Elections		3
(b)	Funding Procedures		4
(c)	Registrations Upon Closing		6
(d)	Funding Mechanics		6
(e)	Closing Location		6
SECTION 3.	LOAN ECONOMICS		6
(a)	Principal Amortization		6
(b)	Interest		7
(c)	Structuring Fees		9
(d)	Agency Fee		9
(e)	Commitment Fees		9
(f)	Market Disruption		10
SECTION 4.	CONDITIONS PRECEDENT		12
(a)	Conditions Precedent to the Effectiveness of the Commitments		12
(b)	Conditions Precedent to the Loan Participants’ Participation in each Designated Aircraft		13
(c)	Conditions Subsequent		17
SECTION 5.	CLOSING PROCEDURE		18
(a)	Filings with FAA		18
(b)	Registrations by FAA Counsel		18
(c)	Discharges in Event of Failure to Fund		18
(d)	International Registry Filings		18
SECTION 6.	EXTENT OF INTEREST OF HOLDERS		19
SECTION 7.	REPRESENTATIONS AND WARRANTIES		19
(a)	Borrower’s Representations and Warranties		19
(b)	Representations and Warranties of the Security Trustee and Loan Participants		23
SECTION 8.	INDEMNITIES		24

i

Table of Contents

(continued)

		Page
(a)	General Indemnity		24
(b)	Tax Indemnities		27
(c)	Interest		27
(d)	Illegality		28
SECTION 9.	COVENANTS OF THE BORROWER		29
(a)	Borrower Merger		29
(b)	U.S. Air Carrier		31
(c)	Further Assurances		31
(d)	Sanctions, Etc		32
(e)	Financial Information		32
SECTION 10.	NOTICES		33
SECTION 11.	GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL		33
(a)	Governing Law		33
(b)	Submission to Jurisdiction		33
(c)	Forum		33
(d)	Service of Process		33
(e)	Waiver of Jury Trial		34
SECTION 12.	INVOICES AND PAYMENT OF EXPENSES		34
SECTION 13.	SUCCESSORS AND ASSIGNS		34
(a)	Benefits		34
(b)	Assignments by Borrower		34
(c)	Assignments by Loan Participants		34
SECTION 14.	THE AGENTS; THE SECURITY TRUSTEE		35
(a)	Appointment, Powers and Immunities		35
(b)	Reliance by Agent		36
(c)	Non-Receipt of Funds by the Agents		36
(d)	Defaults		37
(e)	Indemnification		37
(f)	Non Reliance on Agents and Other Loan Participants		37

ii

Table of Contents

(continued)

		Page
(g)	Failure to Act		38
(h)	Resignation or Removal of Agent		38
(i)	Consents under Operative Documents		38
(j)	The Security Trustee		38
SECTION 15.	MISCELLANEOUS		39
(a)	Section 1110 Compliance		39
(b)	Survival of Agreements		39
(c)	Separate Counterparts		39
(d)	No Liability of Loan Participants		39
(e)	Approvals by Loan Participants		39
(f)	Non-Disclosure of Purchase Agreement		39
(g)	Confidentiality		40
(h)	Quiet Enjoyment		40
(a)	General Tax Indemnity		1
(b)	Withholding Taxes		3
(c)	Payment		5
(d)	Contest		5
(e)	Withholding Tax Forms		8
(f)	Reimbursement by Indemnitees		8
(g)	Interest		9
(h)	Definitions		9

Schedules:

I.		Notice and Account Information
II.		Participations in Original Amount
III.		Tax Provisions
3(a)(i)		Amortization Schedule (Senior Loans)
3(a)(ii)		Amortization Schedule (Junior Loans)
Exhibit A	–	Form of Borrowing Notice
Exhibit B	–	Form of Assignment Agreement
Exhibit C	–	Form of Loan Certificate
Appendix A	–	Definitions and Rules of Usage

iii

FACILITY AGREEMENT [VIRGIN/BANK 2015]

THIS FACILITY AGREEMENT [Virgin/Bank 2015] dated as of April 29, 2015 (as modified, amended or supplemented from time to time, this “Agreement”) among Virgin America Inc., a Delaware corporation (the “Borrower”), each Loan Participant identified on Schedule I hereto (collectively, together with their successors, permitted assigns and permitted transferees, the “Loan Participants”), BNP Paribas, New York Branch, as Senior Agent hereunder (together with its successors hereunder in such capacity, the “Senior Agent”), Investec Bank plc, as Junior Agent hereunder (together with its successors hereunder in such capacity, the “Junior Agent”) and Bank of Utah, as Security Trustee hereunder (together with its successors hereunder in such capacity, the “Security Trustee”).

W I T N E S S E T H:

WHEREAS, certain terms are used herein as defined in Section 1 hereof; and

WHEREAS, concurrently with the execution and delivery of this Agreement, the Borrower and the Security Trustee are entering into the Mortgage and Security Agreement [Virgin/Bank 2015] dated as of the date hereof (as modified, amended or supplemented from time to time, the “Mortgage”) pursuant to which the Borrower agrees, among other things, to issue one or more Loan Certificates in respect of each Aircraft as evidence of the Borrower’s indebtedness to the Loan Participants, which Loan Certificates will be issued upon the financing of such Aircraft and which Loan Certificates will be secured by the mortgage and security interest on such Aircraft created by the Borrower in favor of the Security Trustee, and the Borrower shall execute and deliver a Mortgage Supplement covering such Aircraft, supplementing the Mortgage at the time of such delivery and financing.

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

Section 1. Certain Definitions. Except as otherwise defined in this Agreement, including its annexes, schedules and exhibits, terms used herein in capitalized form shall have the meanings attributed thereto in Appendix A hereto, and the rules of usage specified therein shall be applicable to this Agreement. In addition, the following terms shall have the following meanings:

“Applicable Margin” means, for any Loans and Loan Certificates relating to any Aircraft, (i) for any Senior Loan Certificate, 2.10% per annum; and (ii) for any Junior Loan Certificate, 5.20% per annum.

“Closing Date” means, for any Loans and Loan Certificates relating to any Aircraft, the date on which the Loan Participants advance such Loan to or for account of the Borrower.

“Commitment” means, as the context requires, the Senior Commitment and/or the Junior Commitment.

“Commitment Termination Date” means the last Business Day of December 2015; provided that the Commitment Termination Date for any Aircraft may be extended to a date

[Facility Agreement [Virgin/Bank 2015]]

mutually agreed by the Borrower and the Underwriters in the event of a delay in the Delivery Date for such Aircraft; provided further that any extension beyond January 31, 2016 shall be subject to receipt by each Underwriter of its credit committee approval (which may result in revised economic terms).

“Designated Aircraft” means each of the two Airbus A320-200 aircraft identified as follows: (i) manufacturer’s serial number 6669 and FAA Registration No. N281VA, scheduled to be delivered under the Purchase Agreement in July 2015 and (ii) manufacturer’s serial number 6835 and FAA Registration No. N284VA, scheduled to be delivered to the Borrower under the Purchase Agreement in November 2015, respectively (such months, in each case, being the “Scheduled Delivery Month” for such Designated Aircraft).

“Federal Funds Rate” for any day, means the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by the relevant Agent from three federal funds brokers of recognized standing selected by it.

“Fixed Rate Margin” means (i) for any Senior Loan Certificate, 0.10% per annum; and (ii) for any Junior Loan Certificate, 0.15% per annum.

“Junior Commitment” shall have the meaning ascribed thereto in Section 2(a)(ii).

“Junior Maturity Date” means, for any Series of Junior Loans, the six year anniversary of the Closing Date of such Loans.

“Minimum Liability Insurance Amount” means $600,000,000.

“Obsolete Part Amount” means, in respect of any Aircraft, $780,000, escalated annually on January 1st of each year (commencing January 1, 2016) by 4.0% per annum.

“Original Amount” means, in respect of any Aircraft, $39,000,000.

“Partial Loss Threshold” means $3,000,000.

“Past Due Rate” means (A) in the case of any Floating Rate Loan, the lesser of (a) the applicable Floating Rate plus the relevant Applicable Margin plus 2.00%; and (b) the maximum interest rate permitted under applicable law; and (B) in the case of any Fixed Rate Loan, the lesser of (a) 2.00% plus the higher of (i) the applicable Floating Rate plus the relevant Applicable Margin and (ii) the applicable Fixed Rate; and (b) the maximum interest rate permitted under applicable law.

“Prepayment Fee” means, with respect to any prepayment of any Loan, an amount equal to (i) if the prepayment is effected on or prior to the first anniversary of the Closing Date in respect of such Loan, 3.0% of the principal amount of such Loan being prepaid, (ii) if the prepayment is effected after the first anniversary of the Closing Date in respect of such Loan but on or prior to the second anniversary of the Closing Date of such Loan, 2.0% of the principal

2

[Facility Agreement [Virgin/Bank 2015]]

amount of such Loan being prepaid, (iii) if the prepayment is effected after the second anniversary of the Closing Date in respect of such Loan but on or prior to the third anniversary of the Closing Date of such Loan, 1.0% of the principal amount of such Loan being prepaid and (iv) if the prepayment is effected after the third anniversary of the Closing Date in respect of such Loan, zero.

“Senior Commitment” shall have the meaning ascribed thereto in Section 2(a)(ii).

“Senior Maturity Date” means, for any Series of Senior Loans, the 12 year anniversary of the Closing Date of such Loans.

“Stipulated Insured Amount” means, in respect of any Aircraft and as of any date of determination, an amount equal to (i) for any Floating Rate Loans, 110% of the aggregate principal amount then outstanding on all Loan Certificates in respect of such Aircraft and (ii) for any Fixed Rate Loans, 115% of the aggregate principal amount then outstanding on all Loan Certificates in respect of such Aircraft.

“Swap Rate” means, as of any Swap Effective Date and as relates to any fixed rate setting provided in Section 3(b)(ii)(1) for any Class and Series of Loan Certificates, the mid-market swap rate as at the time of rate-set on such date, determined by the swap desk of the applicable Agent on a market basis, to effect a swap transaction consistent with the swap described in Hedging Transaction.

Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be modified, amended or supplemented from time to time in accordance with its terms and the terms of each other agreement restricting the modification, amendment or supplement thereof.

Section 2. The Commitment; Funding Procedures; Closing Procedure.

(a) Commitment; Loan Certificates; Special Funding Elections.

(i) The Loans. Subject to the terms and conditions of this Agreement, each of the Loan Participants severally agrees to make secured loans to the Borrower (the “Loans”) in respect of each Designated Aircraft on a date to be designated for such Aircraft pursuant to Section 2(b)(i) hereof, but in no event later than the Commitment Termination Date, in two classes (each, a “Class”): (A) one senior class of Loans to be made by the Senior Loan Participants in an aggregate principal amount of $66,000,000, not to exceed $33,000,000 per Aircraft (the “Senior Loans”) and (B) one junior class of Loans to be made by the Junior Loan Participants in an aggregate principal amount of $12,000,000, not to exceed $6,000,000 per Aircraft (the “Junior Loans”). The aggregate original principal amount of the Loans for all Designated Aircraft shall not exceed $78,000,000 (which amount, for the avoidance of any doubt, shall not be subject to any appraisal or other test or condition precedent).

(ii) Commitment. Each Loan Participant’s funding obligation in respect of any Class shall be its Commitment of the amount thereof (respectively, its “Senior Commitment” and its “Junior Commitment”). Each Loan Participant shall

3

[Facility Agreement [Virgin/Bank 2015]]

receive, as evidence of the Senior Loan and/or Junior Loan made by it, a Loan Certificate(s) of the applicable Class in the amount of such Loan.

(iii) Class and Series. Loan Certificates shall be issued by reference to a particular “Class” and “Series”. The “Class” of any Loan Certificate, designated as “Senior” or “Junior”, shall indicate whether such Loan Certificate is issued in respect of a Senior Loan or a Junior Loan. The “Series” of any Loan Certificate, designated by manufacturer’s serial number of the applicable Designated Aircraft, shall indicate the Designated Aircraft relating to such Loan Certificate. The Class and Series of a Loan Certificate shall be indicated on the face of such Loan Certificate. Each Loan and the related Commitment may be designated as being of the Class and Series of its related Loan Certificates.

(iv) Loan Participants’ Elections. Schedule 1 to Exhibit A hereto sets out the Class of Loan Certificates of each Series that each Loan Participant has irrevocably elected to receive on behalf of itself and its successors, permitted assigns and permitted transferees. Any Loan Certificate initially issued to a Senior Loan Participant shall be and remain a Senior Loan Certificate, and any Loan Certificate initially issued to a Junior Loan Participant shall be and remain a Junior Loan Certificate, in each case, regardless of the Holder thereof. A Loan Certificate, once issued as a particular Class or Series, shall only be transferred, assigned and/or reissued as such Class or Series, as the case may be, entitling its Holder to the rights, and subjecting such Holder to the obligations, applicable to such Class or Series only, as further set forth herein.

(v) Loan Certificates. The Loan Certificates shall be substantially in the form set forth in Exhibit C. On the Delivery Date of each Designated Aircraft, the Borrower shall issue Loan Certificates in respect of such Aircraft in an aggregate amount equal to the Original Amount constituting (A) the Senior Commitment advanced by the Senior Loan Participants for such Aircraft and (B) the Junior Commitment advanced by the Junior Loan Participants for such Aircraft.

(b) Funding Procedures.

(i) Funding Date. In connection with the financing of any Designated Aircraft hereunder, the Borrower agrees to give each Loan Participant, each Agent and the Security Trustee at least three Business Days’ prior written notice of the anticipated Delivery Date of such Aircraft (for any Designated Aircraft, its “Funding Date”), which date shall be a Business Day not later than the Commitment Termination Date, and which notice shall be in substantially the form of the Notice of Borrowing attached hereto as Exhibit A.

(ii) Account. In order to facilitate the timely closing of the transactions contemplated hereby on any Funding Date, the Borrower, by delivery of the Notice of Borrowing to the Loan Participants and each Agent, irrevocably instructs such Loan Participants to wire transfer (for receipt by no later than 10:00 a.m. New York City time) on such Funding Date its Commitment by the wiring of immediately available

4

[Facility Agreement [Virgin/Bank 2015]]

funds (reference: Virgin/Bank 2015) to the account of the Security Trustee at the Payment Office (the “Account”).

(iii) Deposit. The funds so paid by each Loan Participant (the “Deposit”) into the Account are to be held by the Security Trustee for the account of such Loan Participant. Subject to paragraph (vi) below, upon the satisfaction (as determined by each Loan Participant) or waiver of the conditions precedent set forth in Section 4(b) hereof in respect of the applicable Designated Aircraft, such Loan Participant (or its special counsel acting on its behalf) shall instruct the Security Trustee to disburse the Deposit for application of its Commitment for such Aircraft as instructed by the Borrower.

(iv) Investment of Deposit. If, for any reason, the applicable Designated Aircraft to be financed hereunder on its Funding Date shall not be so financed on such date, the Deposit, and earnings thereon, will be invested and reinvested by the Security Trustee at the sole direction, for the account, and at the risk of the Borrower in an overnight investment selected by the Borrower and acceptable to the Security Trustee having consulted with the Loan Participants. Upon the Borrower’s oral (to be confirmed in writing) instructions, earnings on any such investments shall be applied to the Borrower’s payment obligations to each Loan Participant under this Section 2(b) or released to the Borrower to the extent of such earnings.

(v) Interest After Funding Date. If the actual Delivery Date for the applicable Designated Aircraft is a date falling after its Funding Date, the Borrower shall pay interest hereunder to each Loan Participant on the amount of its Commitment transferred to the Security Trustee for each Loan Certificate as indicated on Schedule 1 to the Notice of Borrowing for the period from and including such Funding Date to but excluding the earlier of (A) the Delivery Date for such Aircraft or (B) the Cutoff Date (as defined below). For each Loan Participant, such interest shall accrue on the amount of such Loan Participant’s Commitment transferred to the Security Trustee at the Applicable Rate. Interest on the Commitments accrued pursuant to the preceding sentence shall (I) if accrued to the Delivery Date for such Aircraft, be paid on the first Interest Payment Date and (II) if accrued to the Cutoff Date, be due and payable to each Loan Participant within three Business Days of such date.

(vi) Cutoff Date. If for any reason, other than the failure of any Loan Participant to comply with the terms hereof, the Delivery Date for the applicable Designated Aircraft shall not have occurred on or prior to seven Business Days (or such longer period as mutually agreed by the Borrower and the Underwriters) after the Funding Date for such Aircraft (the “Cutoff Date”), the Borrower hereby irrevocably agrees that each Loan Participant may cancel, terminate or otherwise unwind its funding arrangements made in the London interbank market or otherwise to fund its Commitment on the Funding Date, and the Security Trustee shall return each Loan Participant’s Commitment to it, subject, however, to such Loan Participant’s continuing commitment to fund as provided herein.

5

[Facility Agreement [Virgin/Bank 2015]]

(vii) Unwinding. In the event of the occurrence of the events described in paragraph (vi) above, (1) the Borrower agrees to pay each Loan Participant promptly (but in any event within three Business Days of the relevant Cutoff Date) (A) an amount of liquidated damages equal to any Swap Breakage Loss plus any loss incurred in connection with the unwinding or liquidating of any deposits or funding or financing arrangement with its funding sources and (B) without duplication of the amounts covered by the preceding clause (A), all reasonable out-of-pocket costs and expenses of such Loan Participant (including, without limitation, reasonable legal costs and expenses) incurred by such Loan Participant described in the definition of Transaction Expenses in Section 12 hereof; and (2) each Loan Participant agrees, so long as no Event of Default shall have occurred and be continuing, to pay to the Borrower promptly (but in any event within three Business Days of the relevant Cutoff Date) any Swap Breakage Gain in connection with the unwinding or liquidating of any deposits or funding or financing arrangement with its funding sources.

(c) Registrations Upon Closing. Subject to the terms and conditions of this Agreement, and simultaneously with receipt by the Borrower of the proceeds of the Loans made in connection with any Designated Aircraft pursuant to this Section 2, the Borrower shall authorize (i) the delivery and filing for record at the FAA of the Mortgage and the Mortgage Supplement for such Aircraft and (ii) the registration at the International Registry of the Security Trustee’s international interest in the related Airframe and each Engine.

(d) Funding Mechanics. On the Delivery Date for the Designated Aircraft specified in the Borrower’s notice referred to in Section 2(b)(i) hereof, subject to the terms and conditions of this Agreement, each Loan Participant, through the Security Trustee, agrees to pay the amount of its Commitment to the Borrower by wire transferring such amounts to the account of the Borrower as set forth on Schedule I hereto or to such other account as the Borrower shall direct the Security Trustee in writing, upon closing.

(e) Closing Location. The closing with respect to the financing of each Aircraft shall take place at the offices of Vedder Price P.C., 1633 Broadway, New York, New York 10019.

Section 3. Loan Economics.

(a) Principal Amortization.

(i) Senior Loans. The aggregate principal amount of the Senior Loan Certificates of each Series shall amortize quarterly on each Interest Payment Date (the first of which being the first Interest Payment Date following the Delivery Date of the related Designated Aircraft), as provided in Schedule 3(a)(i) hereto.

(ii) Junior Loans. The aggregate principal amount of the Junior Loan Certificates of each Series shall amortize quarterly on each Interest Payment Date (the first of which being the first Interest Payment Date following the Delivery Date of the related Designated Aircraft) as provided in Schedule 3(a)(ii) hereto.

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(iii) Amortization Schedules. The aggregate amortization schedules for the Loans of each Series and Class shall, based on the foregoing, be appended to the Mortgage Supplement delivered in connection with such Series (reflecting the Interest Payment Dates applicable thereto).

(b) Interest. The Borrower shall, subject to the terms and conditions of this Section 3(b), have the right to elect on or prior to the date that is two Business Days prior to the Funding Date for any Designated Aircraft that either Class of Loans in respect of such Designated Aircraft bear interest either at a Floating Rate or a Fixed Rate.

(i) Floating Rate. If the Borrower shall not have notified the Loan Participants of its request, pursuant to the Notice of Borrowing in respect of any Designated Aircraft, to have a particular Class of Loans in respect of such Designated Aircraft bear interest at a Fixed Rate, then the Applicable Rate for such Class and Series of Loans and related Loan Certificates shall be, for each Interest Period, the applicable Floating Rate for such Interest Period. Interest on each Loan of each Series payable by reference to the Floating Rate shall be payable quarterly in arrears on each Interest Payment Date for such Series and shall be calculated on the basis of a year of 360 days and actual number of days elapsed.

(ii) Fixed Rate Setting. The Borrower may notify the Loan Participants of its request, pursuant to the Notice of Borrowing in respect of any Designated Aircraft, for a particular Class of Loans in respect of such Designated Aircraft to bear interest at a Fixed Rate, which Fixed Rate shall be fixed two Business Days prior to the Funding Date for such Aircraft (the “Swap Effective Date”). Upon delivery by the Borrower of the Notice of Borrowing relating to any Fixed Rate Loans of a particular Series and Class to the relevant Agent and Loan Participants, the following procedures shall apply to determine the “Fixed Rate” for such Loans of such Series and Class:

(1) Notification of Rate. No later than 11:30 a.m. New York time (but no earlier than 11:00 a.m. New York time) on the second Business Day prior to the applicable Funding Date, the applicable Agent, the applicable Loan Participants and the Borrower shall convene a conference call during which such Agent will notify the Borrower of a single fixed rate of interest to be used as the basis for the calculation of the Fixed Rate for the applicable Series and Class of Loans. Such Fixed Rate for any Class and Series of Loan Certificates shall be the sum of (A) the Swap Rate plus (B) the Applicable Margin plus (C) the Fixed Rate Margin, and shall be the “Fixed Rate” for the Loan Certificates of such Class and Series, effective on the Swap Effective Date; provided that if such Fixed Rate cannot be established because the Borrower does not agree to the Swap Rate quoted by the relevant Agent, then Section 3(b)(i) shall apply to such Class and Series of Loans as though the Borrower never requested such Loans to bear interest at a Fixed Rate.

(2) Fixed Rate Stipulation. The Fixed Rate, as so established for the Loan Certificates of any Series and Class, shall be included on the cover page of the applicable Loan Certificates at issuance thereof.

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(3) Rate Swaps Sophistication. The Borrower understands and acknowledges that, in order to provide any Fixed Rate, the Loan Participants may be entering into one or more interest rate swaps or other hedging transactions (which may be effected internally (including on a notional basis) or externally), and that it has assessed the risks (including but not limited to risks in relation to any Swap Breakage Loss), benefits and consequences of obtaining a fixed interest so as to procure a fixed rate funding. The Borrower confirms that it is solely responsible for any decision to select a Fixed Rate for any Loan, having relied on its own independent business judgment and advisers in connection herewith.

(iii) Fixed Rate. If the Applicable Rate for any Class and/or Series of Loan Certificates and the related Loans in respect of any Designated Aircraft is calculated by reference to a Fixed Rate:

(1) Interest Generally. Interest on such Loan shall be payable quarterly in arrears on each Interest Payment Date and shall be calculated on the basis of a year of 360 days and actual number of days elapsed.

(2) Swap Breakage on Prepayment. On the date of any prepayment of such Loan Certificates, the Borrower may request that each Loan Participant advise the Security Trustee and the Borrower by 11:00 a.m., New York time, on such date of the Swap Break Amount applicable to such event.

(3) Payment of Swap Breakage Gain. Loan Participant agrees that, so long as no Special Default or Event of Default shall have occurred and be continuing, it shall promptly pay to the Borrower at such account as the Borrower may specify any Swap Breakage Gain in respect of the Loan Certificates, except that it may first deduct therefrom any amounts then due and owing to it under the Operative Documents and apply any amount so retained to the satisfaction thereof. Each Holder may retain any Swap Breakage Gain that arises after the occurrence of a Special Default or an Event of Default as security for the obligations of the Borrower until the earlier of (i) the date that such Special Default or Event of Default is cured by the Borrower (or, if such Holder reasonably anticipates that its costs and expenses incurred in connection with such Special Default or Event of Default cannot be determined at such time, the earlier of (x) the date such costs and expenses can be determined and (y) five Business Days after the date such Special Default or Event of Default is cured), promptly following which date such amount shall be paid over to the Borrower, except that such Holder may first deduct therefrom any amounts then due and owing to it under the Operative Documents and apply any amount so retained to the satisfaction thereof, or (ii) the date that Section 9.07 of the Mortgage shall be applicable, promptly following which date such amounts shall be remitted to the Security Trustee for application as provided in such Section 9.07.

(4) Swap Breakage Estimate. Upon the request of the Borrower to the relevant Agent, such Agent shall obtain from each Loan Participant of the relevant Class, and each such Loan Participant shall provide to

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such Agent, a good faith written estimate of the Swap Breakage Loss or Swap Breakage Gain, as the case may be, in connection with the occurrence, or anticipated occurrence, of any event contemplated by the Operative Documents that might give rise to an obligation to pay Swap Breakage Loss or the right to receive Swap Breakage Gain.

(5) Confirmation of Swap Breakage Estimate. Upon determination by a Loan Participant of any Swap Breakage Loss or Swap Breakage Gain payable to or by it, as the case may be, such Loan Participant will provide to the Borrower a written confirmation confirming such Swap Breakage Loss or Swap Breakage Gain, which confirmed amount shall be determined in accordance with the procedures set out in the definition of “Swap Break Amount”.

(6) Special Junior Lender. Anything herein or in any other Operative Document notwithstanding, if any Junior Loan Participant shall be a Special Junior Lender, such Junior Loan Participant shall neither be entitled to receive any Swap Breakage Loss nor be obligated to pay any Swap Breakage Gain in any circumstance in which Break Amount shall be payable hereunder or under any other Operative Document.

(iv) Past Due Interest. Overdue payments of principal of any Class of Loan (and to the extent permitted by applicable law, overdue payments of interest and other amounts overdue under the Operative Documents) shall bear interest at the Past Due Rate, payable on demand, for any period during which the same shall be overdue.

(c) Structuring Fees. The Borrower agrees to pay to the Security Trustee for account of each Underwriter as and when due the structuring fee specified for such Underwriter in its Fee Letter.

(d) Agency Fee. The Borrower agrees to pay an agency fee to each of the Senior Agent and the Junior Agent in an amount equal to $3,000 per Aircraft per year, which fee shall be payable annually in advance to such Agent on the Closing Date for such Designated Aircraft and each of the anniversary dates thereof (or, if such day is not a Business Day, the next following Business Day). Such fee shall not be refundable. The agency fee for any Agent specified in this Section 3(d) shall cease to be payable from and after the date the Loan Certificates of the applicable Class shall have been paid in full.

(e) Commitment Fees. With respect to each Designated Aircraft, the Borrower agrees to pay to the Security Trustee for account of each Loan Participant a commitment fee accrued for the period from and including the Effective Date to the earlier of (i) the Delivery Date of the second Designated Aircraft and (ii) the Commitment Termination Date, equal to the Commitment Fee Rate calculated on the average daily amount of such Loan Participant’s unutilized Commitment during the period for which payment of the commitment fee is made (calculated on the basis of a year of 360 days and actual days elapsed), payable quarterly in arrears on each three monthly anniversary dates of the Effective Date and on the date the commitment fee ceases to accrue in accordance with the foregoing. As used herein,

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“Commitment Fee Rate” means (A) for any Senior Commitment, 0.75% per annum and (B) for any Junior Commitment, 1.25% per annum.

(f) Market Disruption.

(i) If with respect to any Interest Period for any Aircraft:

(1) LIBOR Screen Unavailable. In the case of a Floating Rate Loan, the Senior Agent or the Junior Agent determines that, by reason of circumstances affecting the London interbank market or any other applicable financial market, adequate and reasonable means do not exist for ascertaining the LIBOR screen rate for an Interest Period and that no more than one of the Reference Banks was able to provide the respective Agent with its offered quotation for US dollar deposits for a period most comparable to such Interest Period to prime banks in the relevant interbank market; or

(2) Cost of Funds. In the case of a Fixed Rate Loan or a Floating Rate Loan, the Majority Senior Lenders or the Majority Junior Lenders, as the case may be, advise the respective Agent that the LIBOR screen rate as determined in accordance with the definition thereof will not adequately and fairly reflect the cost to such Loan Participants of maintaining or funding their respective Loans for any Interest Period, provided that such inadequacy is the result of circumstances affecting banks and other financial institutions participating in the relevant interbank market generally and is not directly and solely the result of a deterioration in the financial or other condition of such Loan Participant,

(each, a “Market Disruption Event”), then so long as such circumstances shall continue, the portion of the Loan that relates to each affected Loan Certificate shall bear interest, for each Interest Period (A) in the case of subclause (1) above, at the Market Disruption Cost of Funds for such Loan Participant, plus the Applicable Margin and (B) in the case of subclause (2) above, at the applicable Interest Rate (whether a Fixed Rate or a Floating Rate) at a per annum rate equal to their respective incremental cost of funds for such Interest Period over the then-current LIBOR.

(ii) Market Disruption Cost of Funds. If the provisions of this Section 3(f) are applicable, then each affected Loan Participant shall report, as provided in paragraph (iv) below, to the Security Trustee, the relevant Agent and the Borrower its cost of funding its share of the Loans for such Interest Period, expressed as a percentage rate per annum (such Loan Participant’s “Market Disruption Cost of Funds”). Based on the report of each affected Loan Participant, the relevant Agent shall calculate the weighted average (all in) interest amount (and equivalent per annum rate) due by the Borrower on the applicable Loan for such Interest Period and provide such calculation to the Borrower and the Security Trustee.

(iii) Report as Certification. The report by any affected Loan Participant to the Security Trustee, the relevant Agent and the Borrower of its cost of

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funds for any Interest Period shall be conclusive, absent manifest error, and shall constitute a certification by such Loan Participant that the interest rate so provided is an accurate, fair and non-discriminatory calculation of its treasury (or comparable) desk’s assessed funding costs which assessment has been made on a fair and non-discriminatory basis for such period relative to similarly situated borrowers from which it is entitled to assess market disruption costs and does not include any mark-up, fees, overhead allocations or other amounts not constituting the interest expense-type cost of obtaining such funding.

(iv) Notice of Cost of Funds. If the provisions of this Section 3(f) are applicable, each affected Loan Participant shall report to the Security Trustee, the relevant Agent and the Borrower its cost of funds for each affected Interest Period as soon as practicable and, in any event, prior to the first day of such Interest Period (or promptly thereafter under circumstances where such costs of funds are generally not available to lenders similarly situated to any affected Loan Participant); provided that if any affected Loan Participant is not able to obtain deposits in the London interbank (or other relevant) market matching such Interest Period, notice of its cost of funds rate shall be provided as follows: (i) prior to the first day of such Interest Period (or promptly thereafter under circumstances where such costs of funds are generally not available to lenders similarly situated to any affected Loan Participant), such Loan Participant shall provide to the Security Trustee, the relevant Agent and the Borrower an approximation of the cost to such Loan Participant of such funding for such Interest Period; and (ii) prior to the last day of such Interest Period (or earlier, to the extent practicable if deposits of a duration longer than one day are obtained), such Loan Participant shall provide to the Security Trustee, the relevant Agent and the Borrower the actual cost to such Loan Participant of such funding for such Interest Period.

(v) Actual/360. All amounts payable under this Section 3(f) shall be calculated on the basis of a year of 360 days and actual number of days elapsed.

(vi) Termination of Market Disruption Event. Upon any Loan Participant affected by a Market Disruption Event confirming to the Security Trustee, the relevant Agent and the Borrower that the event(s) giving rise to such Market Disruption Event have ceased (which confirmation shall be provided promptly on the cessation of such event(s)), the rate of interest applicable to such Loan Participant’s Loans will revert to such rate of interest immediately in effect prior to the occurrence of such Market Disruption Event.

(vii) Substitute Basis for Determination of Cost of Funds. If a Market Disruption Event occurs and is continuing and the Loan Participants or the Borrower so requests, the Loan Participants affected by such Market Disruption Event and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing on a substitute basis for determining the rate of interest payable in respect of the affected Loan Certificates, provided that any alternative basis agreed shall, with the prior consent of each affected Loan Participant and the Borrower, be binding on such parties. If within such 30 day period each of the affected Loan Participants and the Borrower agree upon a substitute basis for determining the rate of interest payable in

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respect of the affected Loan Certificates, such alternative basis shall be retroactive to and effective from the first day of the applicable Interest Period until and including the last day of such Interest Period. For the avoidance of doubt, during any such period of negotiation, the Borrower shall be required to perform its obligations under this Section 3(f).

(viii) Prepayment of Holders affected by a Market Disruption Event. The Borrower shall have the right but not the obligation to prepay the Loans of any Holder affected by a Market Disruption Event (without any Prepayment Fee), together with accrued interest thereon and any Break Amount, or direct the affected Holder to transfer such Holder’s Loans to another person for a purchase price equal to the amount that would otherwise have been paid on such a prepayment.

Section 4. Conditions Precedent.

(a) Conditions Precedent to the Effectiveness of the Commitments. It is agreed by each of the parties hereto that the respective Commitments of each Loan Participant in respect of each Designated Aircraft and the effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent:

(i) Effectiveness Documents. The following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto, shall each be satisfactory in form and substance to each Loan Participant and shall be in full force and effect and executed counterparts shall have been delivered to each Loan Participant and its counsel:

(1) this Agreement;

(2) the Mortgage; and

(3) the Intercreditor Agreement.

(ii) Corporate Documents. Each Loan Participant shall have received the following, in each case in form and substance satisfactory to it:

(1) Constitutional Documents of Borrower. A certified copy of the certificate of incorporation and bylaws of the Borrower and a copy of resolutions of the board of directors of the Borrower or the executive committee thereof, certified by the Secretary, an Assistant Secretary or other officer of the Borrower, duly authorizing the execution, delivery and performance by the Borrower of this Agreement, the Mortgage and each other document required to be executed and delivered by the Borrower on the Delivery Date for a Designated Aircraft in accordance with the provisions hereof and thereof;

(2) Signatories of Borrower. A certificate of the Borrower as to the person or persons authorized to execute and deliver this Agreement, the other Operative Documents, and any other documents to be executed on behalf of

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the Borrower in connection with the transactions contemplated hereby and as to the signature of such person or persons;

(3) Incumbency Certificate of Security Trustee. An incumbency certificate of the Security Trustee as to the person or persons authorized to execute and deliver this Agreement, the Mortgage, and any other documents to be executed on behalf of the Security Trustee in connection with the transactions contemplated hereby and as to the signatures of such person or persons (which may be in the form of a general “authorized signatories” certificate);

(4) Security Trustee’s Resolutions. Copy of the resolutions of the board of directors of the Security Trustee, certified by the Secretary or an Assistant Secretary of the Security Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Security Trustee in connection with the transactions contemplated hereby (which may be in the form of general standing resolutions to carry out its business in the manner contemplated by this Agreement); and

(5) Security Trustee. A copy of the articles of association and by-laws of the Security Trustee, each certified by the Secretary, an Assistant Secretary or other officer of the Security Trustee.

(iii) Know Your Customer of Borrower. Such Loan Participant shall have received any document reasonably requested from the Borrower (not less than five Business Days prior to the Effective Date) by such Loan Participant in order for such Loan Participant to satisfy any “know your customer” requirements with respect to the Borrower.

(iv) Opinions of Counsel. Such Loan Participant shall have received an opinion addressed to such Loan Participant, each Agent and the Security Trustee from (A) Milbank, Tweed, Hadley & McCloy, special New York counsel to the Borrower and (B) the Associate General Counsel or other duly authorized in-house counsel for the Borrower, in each case, in form and substance reasonably satisfactory to the addressees thereof.

(b) Conditions Precedent to the Loan Participants’ Participation in each Designated Aircraft. It is agreed by each of the parties hereto that the respective obligations of each Loan Participant to lend its Commitment to the Borrower in respect of any Designated Aircraft is subject to the satisfaction prior to or on the Delivery Date for such Aircraft of the following conditions precedent:

(i) Notice of Delivery Date. Such Loan Participant shall have received due notice with respect to such Delivery Date for such Aircraft pursuant to Section 2 hereof.

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(ii) No Change in Law. No change shall have occurred after the date of the execution and delivery of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities which, in the reasonable opinion of such Loan Participant would make it a violation of law or regulations for such Loan Participant to make its Commitment available to acquire its Loan Certificate(s) or to realize the benefits of the security afforded by the Mortgage.

(iii) No Material Adverse Change. On such Delivery Date, no material adverse change in the financial condition of the Borrower shall have occurred since December 31, 2014 that would materially and adversely affect the Borrower’s ability to perform its obligations under the Operative Documents.

(iv) Fees. (A) Each Underwriter shall have received its structuring fee specified in Section 3(c) and (B) each Agent shall have received its agency fee specified in Section 3(d).

(v) Certain Documents. The following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto, shall each be satisfactory in form and substance to each Loan Participant (acting reasonably) and shall be in full force and effect and executed counterparts shall have been delivered to such Loan Participant and its counsel, provided that only such Loan Participant shall receive an executed original of its Loan Certificate(s) to be issued to it:

(1) the Mortgage Supplement covering such Aircraft and dated the Delivery Date for such Aircraft;

(2) the Loan Certificates of the Series relating to such Aircraft, with Annex A for each Class of Loan Certificate duly completed as provided in Section 3(a) hereof;

(3) the Airframe Warranties Agreement and the Engine Consent and Agreement, in each case, in respect of such Aircraft;

(4) the Warranty Bill of Sale and FAA Bill of Sale for such Aircraft; and

(5) if necessary, a copy of that portion of the Purchase Agreement and Engine Agreement relating to such Aircraft certified by the Secretary, an Assistant Secretary or other officer of the Borrower as being a true and accurate copy of the same that relates to the Assigned Warranties and the related obligations of the Borrower or a successor in interest to the Borrower which has the right to exercise any such warranty.

(vi) Financing Statements. A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the granting clause of the Mortgage that are not covered by the recording system established by the Federal Aviation Act shall have been duly prepositioned for filing on closing in all places deemed necessary or advisable in the reasonable opinion of counsel for the Loan

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Participants, and any additional Uniform Commercial Code financing statements deemed advisable by such Loan Participant shall have been duly prepositioned for filing on closing and all other action shall have been taken as is deemed necessary or advisable, in the reasonable opinion of counsel for the Loan Participants, to establish and perfect the Security Trustee’s security interest in the applicable Aircraft.

(vii) FAA Actions. All appropriate action required to have been taken by the Federal Aviation Administration, or any governmental or political agency, subdivision or instrumentality of the United States, on or prior to such Delivery Date in connection with the transaction contemplated by this Agreement shall have been taken, and all orders, permits, waivers, authorizations, exemptions and approvals of such entities required to be in effect on such Delivery Date in connection with the transaction contemplated by this Agreement shall have been issued, and all such orders, permits, waivers, authorizations, exemptions and approvals shall be in full force and effect on such Delivery Date.

(viii) Evidence of Title and Security Interests. On such Delivery Date, the following statements shall be true, and such Loan Participant shall have received evidence satisfactory to it (including a printout of the “priority search certificates” (as defined in the Cape Town Convention from the International Registry relating to such Aircraft (and the constituent Airframe and Engines)) to the effect that:

(1) the Borrower has good title to such Aircraft, free and clear of Liens other than (subject to filing and recording of the FAA Bill of Sale with the Federal Aviation Administration and the registration of a contract of sale on the International Registry between the Manufacturer as seller and the Borrower as buyer with respect to the Airframe and Engines of such Aircraft, if the Borrower does not already own such Aircraft) the mortgage and security and international interests created by the Mortgage and the Mortgage Supplement for such Aircraft;

(2) the FAA Bill of Sale, the Mortgage (if not previously filed) and the Mortgage Supplement for such Aircraft have been duly filed with the FAA for recordation (or are in form suitable for recordation and are in the process of being so filed for recordation) and there exist no Liens of record on such Aircraft;

(3) the international interest of the Mortgage Supplement with respect to the Airframe and Engines associated with such Aircraft shall have been registered with the International Registry, and there exists no registered international interest on the International Registry;

(4) such Aircraft has a valid export certificate of airworthiness issued by the Direction générale de l’aviation civile of France;

(5) the Borrower is a U.S. Air Carrier (and such Loan Participant shall have received a copy of the Borrower’s air carrier operating certificate); and

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(6) the Security Trustee is entitled to the protection of Section 1110 of the United States Bankruptcy Code in connection with its right to take possession of such Aircraft in the event of a case under Chapter 11 of the United States Bankruptcy Code in which the Borrower is a debtor.

(ix) Representations and Warranties. On such Delivery Date, (A) the representations and warranties of the Borrower contained in Section 7 of this Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default.

(x) Opinion of New York Counsel. Such Loan Participant shall have received an opinion addressed to such Loan Participant, each Agent and the Security Trustee from Milbank, Tweed, Hadley & McCloy, special New York counsel to the Borrower, confirming, among other things, the statement set forth in Section 4(b)(viii)(6) hereof, in form and substance reasonably satisfactory to the addressees thereof.

(xi) Opinion of FAA Counsel. Such Loan Participant shall have received an opinion addressed to such Loan Participant, each Agent and the Security Trustee, and the Borrower from FAA Counsel, in form and substance reasonably satisfactory to the addressees thereof.

(xii) Opinion of Airbus. Such Loan Participant shall have received an opinion addressed to such Loan Participant, each Agent and the Security Trustee from counsel to Airbus S.A.S., in respect of the Bills of Sale, in form and substance reasonably satisfactory to the addressees thereof.

(xiii) Certificate of Borrower. Such Loan Participant shall have received a certificate signed by the President, a Vice President, the Chief Financial Officer, the General Counsel or the Treasurer of the Borrower, dated such Delivery Date, addressed to such Loan Participant and certifying as to the matters stated in paragraphs (ix), (xv) and (xvi) of this Section 4(b).

(xiv) Insurance Certificate and Report. Such Loan Participant shall have received an independent insurance brokers’ report and certificate(s) of insurance, in form and substance reasonably satisfactory to such Loan Participant as to the due compliance with the terms of Article VI of the Mortgage relating to insurance with respect to such Aircraft and a certificate, in form and substance reasonably acceptable to such Loan Participant, signed by the Treasurer, Chief Financial Officer, the President, a Vice President or General Counsel of the Borrower confirming indemnification or insurance provided by the United States and evidence of such indemnification or insurance, if any.

(xv) No Event of Loss. On such Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss)

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with respect to such Aircraft (or constituent Airframe) or any associated Engine has occurred.

(xvi) No Governmental Action. No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court or governmental agency at the time of such Delivery Date to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or the transaction contemplated hereby.

(xvii) Know Your Customer of Security Trustee. Such Loan Participant shall have received any document reasonably requested from the Security Trustee (not less than five Business Days prior to the initial Funding Date) by such Loan Participant in order for such Loan Participant to satisfy any “know your customer” requirements with respect to the Security Trustee; provided that, should the Security Trustee fail to provide any such document or the Security Trustee fails to pass a “know your customer” test of a Loan Participant, the Loan Participants shall appoint a successor Security Trustee pursuant to Section 14(h).

Promptly upon the recording of the Mortgage and the Mortgage Supplement at the FAA covering such Aircraft pursuant to the Federal Aviation Act, the Borrower will cause FAA counsel to deliver to each Loan Participant and the Borrower an opinion as to the due and valid registration of such Aircraft in the name of the Borrower, the due recording of the FAA Bill of Sale, the Mortgage and the Mortgage Supplement covering such Aircraft and the lack of filing of any intervening documents with respect to such Aircraft. Following the Delivery Date for such Aircraft, the Loan Participants may, if required by applicable law to perfect the security interest granted in any Assigned Warranties, cause a huissier to serve a copy of a notice delivered on such Delivery Date to the Aircraft Manufacturer in accordance with Article 1690 of the French Civil Code.

(c) Conditions Subsequent. The following conditions shall be conditions subsequent to the financing of any Designated Aircraft on its Delivery Date:

(i) Within two Business Days of such Delivery Date, each Loan Participant shall have received evidence that such Aircraft has been duly certified as to type and airworthiness by the FAA, and the Borrower has authority to operate such Aircraft (and each Loan Participant shall have received a copy of the airworthiness certificate for such Aircraft); and

(ii) Within 10 days of such Delivery Date, each Loan Participant shall have received evidence that such Aircraft has been duly registered in the name of the Borrower under the Federal Aviation Act, and such Loan Participant shall have received a copy of the FAA certificate of registration for such Aircraft.

Failure to satisfy these conditions subsequent within such time frame shall, on notice of the Security Trustee to the Borrower, constitute an automatic Event of Default.

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Section 5. Closing Procedure.

(a) Filings with FAA. Following the Borrower’s notice of the Delivery Date for any Designated Aircraft as provided in Section 2 hereof, the parties will pre-position the executed Mortgage and/or Mortgage Supplement with FAA Counsel in Oklahoma City, Oklahoma, together with the FAA Bill of Sale (and photocopy of the Warranty Bill of Sale) for such Aircraft, the AC Form 8050-1 Aircraft Registration Application for such Aircraft in the name of the Borrower, and an AC Form 8050-135 FAA Entry Point Filing Form (which the parties agree shall be prepared by FAA Counsel). On the Delivery Date for a Designated Aircraft and in sufficient time to permit the closing to occur during business hours of the FAA in Oklahoma City, Oklahoma, each Loan Participant will wire transfer its Commitment prior to 10:00 a.m. New York time for such Aircraft to the Security Trustee. On such Delivery Date, by conference telephone call among the Manufacturer, the Borrower, the Loan Participants (and/or their counsel acting on their behalf), each Agent, the Security Trustee and FAA Counsel, the Manufacturer will authorize the filing of the FAA Bill of Sale for such Aircraft to be delivered on such Delivery Date and the Borrower will cause the ownership interest of the Airframe and each Engine associated with such Aircraft to be duly registered with the International Registry as a contract of sale and Borrower will authorize the filing of each of the AC Form 8050-135 FAA Entry Point Filing Form, the AC Form 8050-1 Aircraft Registration Application, the Mortgage and/or the Mortgage Supplement for such Aircraft upon receipt by the Manufacturer of the purchase price for such Aircraft and receipt by the Borrower (or its order) of the Loans for such Aircraft. The irrevocable authorization to FAA Counsel to date and file the FAA Bill of Sale, the AC Form 8050-135 FAA Entry Point Filing Form, the AC Form 8050-1 Aircraft Registration Application, and the Mortgage and/or Mortgage Supplement for such Aircraft will occur prior to the transfer of the Loan for such Aircraft to or for account of the Borrower, but the filing will not occur until the Borrower’s (or its order) receipt of the funds at the designated account and the Manufacturer has released the Warranty Bill of Sale. The Loan Certificate(s) will be delivered to the Loan Participants and legal opinions delivered to all parties immediately following the transfer of the related Loan as provided in Section 2(c).

(b) Registrations by FAA Counsel. The Borrower irrevocably authorizes FAA counsel to file with the FAA the Mortgage and/or Mortgage Supplement and register the appropriate international interests with the International Registry for each Designated Aircraft following the closing of the financing for such Aircraft. FAA counsel may rely, without any further investigation, on any statement or certification by the Security Trustee that the closing of the financing for such Aircraft has occurred.

(c) Discharges in Event of Failure to Fund. If the financing for any Designated Aircraft shall fail to occur utilizing the Commitments hereunder, the Security Trustee agrees to register, at the Borrower’s cost, a discharge at the International Registry of any international interest in favor of the Security Trustee in respect of the related Airframe and the Engines.

(d) International Registry Filings. Each of the parties hereto consents to the registration with the International Registry of the international interests with respect to the Mortgage and each Mortgage Supplement, and each party hereto covenants and agrees that it will take all such action reasonably requested by the Borrower or the Security Trustee in order to

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make any registrations with the International Registry, including becoming a transacting user entity with the International Registry and providing consents to any registration as may be contemplated by the Operative Documents.

Section 6. Extent of Interest of Holders. No Holder shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Mortgage when and if the Original Amount of and interest on all Loan Certificates in respect of all Aircraft held by such Holder and all other sums payable to such Holder hereunder, under the Mortgage and under such Loan Certificates shall have been paid in full, provided, however, to the extent, for any reason, any such sums paid to a Holder are rescinded or must otherwise be restored by such Holder, the obligations of the Borrower and the security interests created by the Mortgage shall be automatically reinstated with respect to such Holder and the Security Trustee, as applicable.

Section 7. Representations and Warranties.

(a) Borrower’s Representations and Warranties. The Borrower represents and warrants that on the date hereof and on the Delivery Date for each Designated Aircraft:

(i) Existence. The Borrower is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires to be so qualified, except where the failure to be so qualified would not have a material adverse effect on the Borrower or its business; is a U.S. Air Carrier; and has the corporate power and authority to engage in air transport and to carry on scheduled passenger service as presently conducted, to own each Aircraft and to enter into and perform its obligations under the Operative Documents.

(ii) Authorization. The execution, delivery and performance by the Borrower of the Operative Documents will, on such Delivery Date, have been duly authorized by all necessary corporate action on the part of the Borrower, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of the Borrower except such as have been duly obtained by such Delivery Date and will on such Delivery Date be in full force and effect, and none of such Operative Documents contravenes any law, judgment, government rule, regulation or order binding on the Borrower or the certificate of incorporation or bylaws of the Borrower or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of the Borrower under, any indenture, mortgage, contract or other agreement to which the Borrower is a party or by which it or its properties may be bound or affected.

(iii) No Additional Authorization. Neither the execution and delivery by the Borrower of the Operative Documents nor the performance by the Borrower of its obligations thereunder requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction

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over the operation of each Aircraft by the Borrower, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained or will on or prior to such Delivery Date be duly obtained, and will on such Delivery Date be in full force and effect, (B) any normal periodic and other reporting requirements under the Federal Aviation Act and the regulations promulgated thereunder and the applicable rules and regulations of the FAA, in each case to the extent required to be given or obtained only after such Delivery Date and (C) any filings, registrations or applications specifically described in this Agreement.

(iv) Enforceability. The Operative Documents to which the Borrower is a party delivered on or prior to the date hereof or such Delivery Date, as the case may be, each constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with the terms thereof except as such may be limited by equitable principles or applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally.

(v) No Pending Actions. There are no pending or threatened actions or proceedings before any court, arbitrator or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material and adverse effect on the financial condition of the Borrower or the ability of the Borrower to perform its obligations under the Operative Documents.

(vi) Validity of Security Interests. Except for (A) the filing with the FAA of an FAA Entry Point Filing Form – AC Form 8050-135 and the procurement of unique authorization code for the following registrations on the International Registry and the registration of such interests on the International Registry: (i) the contracts of sale with respect to the related Airframe and Engine constituted by the FAA Bill of Sale and/or the Warranty Bill of Sale with the Manufacturer as seller and the Lessor as buyer, and (ii) the international interests with respect to the related Airframe and each Engine constituted by the Mortgage and the related Mortgage Supplement (incorporating the terms of the Mortgage) with the Security Trustee as creditor and the Owner as debtor, (B) the filing for recording pursuant to the Federal Aviation Act of the FAA Bill of Sale for such Aircraft (and the application for registration of such Aircraft in the name of the Borrower) and the Mortgage with the Mortgage Supplement for such Aircraft and (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the interests created by such documents under the Uniform Commercial Code of Delaware and such other states as may be specified in the opinion furnished pursuant to Section 4(b)(x) hereof, no further action, including any filing or recording of any document (including any financing statement in respect thereof under Article 9 of the Uniform Commercial Code of any applicable jurisdiction), is necessary or advisable in order to establish and perfect the first mortgage Lien on such Aircraft in favor of the Security Trustee pursuant to the Mortgage or to establish as against third parties the international interest under the Mortgage in any applicable jurisdiction in the United States.

(vii) No Defaults. There has not occurred any event which constitutes a Default or an Event of Default under the Mortgage which is presently continuing.

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(viii) Finances of Borrower. (x) On the date hereof (in the case of the December 31, 2014 financial statements) and on the Delivery Date for a Designated Aircraft, the statements of financial position of the Borrower as of December 31, 2014 and March 31, 2015 and the related statements of earnings and cash flow of the Borrower in all material respects for the year and fiscal quarter, as the case may be, then ended, copies of which have been furnished to each Loan Participant, fairly present the financial condition of the Borrower at such date and the results of operations and cash flow of the Borrower for the period ended on such dates, in accordance with generally accepted accounting principles consistently applied, subject, in the case of the March 31, 2015 statements, to normal year-end adjustments, and (y) since December 31, 2014 there has been no material adverse change in such condition having a material adverse effect on the Borrower’s ability to perform its obligations under the Operative Documents.

(ix) Liens on Aircraft. On the Delivery Date for a Designated Aircraft, the Borrower will have good title to such Aircraft free and clear of all Liens, except the Lien of the Mortgage. On the Delivery Date for a Designated Aircraft, such Aircraft (A) shall have a valid export certificate of airworthiness as to type and airworthiness, (B) will have been insured by the Borrower in accordance with the terms of the Mortgage, will have suffered no Event of Loss and will be in the condition and state of repair required under the terms of the Mortgage and (C) will have the necessary instruments filed with the FAA in order to duly register such Aircraft in the name of the Borrower under the Federal Aviation Act.

(x) Securities Compliance. Assuming the Loan Participants are acquiring their Loan Certificates in the ordinary course of their commercial banking business, none of the transactions contemplated by this Agreement will violate or result in a violation of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or any regulations issued pursuant thereto.

(xi) No Public Offering. Neither the Borrower nor anyone acting on behalf of the Borrower has directly or indirectly offered any interest in the Loan Certificates for sale to, or solicited any offer to acquire any of the same from, anyone other than the Loan Participants and not more than 35 other institutions believed capable of evaluating and bearing the risks of investment in the transactions contemplated hereby.

(xii) No ERISA Violation. (v) The Borrower has not engaged in any transaction in connection with which the Borrower could be subjected to either a material civil penalty assessed pursuant to Section 502(i) of ERISA, or a material tax imposed by Section 4975 of the Code; (w) no material liability to the Pension Benefit Guaranty Corporation (other than liability for premiums) has been incurred by the Borrower with respect to any Plan; (x) there has been no event or condition which presents a material risk of termination of any Plan by the Pension Benefit Guaranty Corporation; (y) the Borrower and any affiliate (as defined below) has not committed, or does not expect to commit, a failure described in ERISA Section 303(k)(1) or Section 430(k)(1) of the Code (whether or not waived) with respect to any Plan; and (z) no material amount of “withdrawal liability,” as that term is used in Section 4201 of ERISA, has been or is expected to be incurred by the Borrower nor has the Borrower or any affiliate of the

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Borrower been notified by any multi-employer plan (within the meaning of Section 3(37)(A) of ERISA) that such multi-employer plan is in reorganization or insolvency within the meaning of Section 4241 or Section 4245 of ERISA or that such multi-employer plan intends to terminate or has been terminated under Section 4041A of ERISA (for purposes of subclauses (y) and (z), the term “affiliate” shall mean any corporation or person (within the meaning of ERISA Section 3(9)) which together with the Borrower and any other related entity would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.

(xiii) No “Prohibited Transactions”. Assuming the accuracy of the representations set forth in Section 7(b)(ii) (and Section 6(ii) of each Assignment and Assumption Agreement, if any), the purchase and holding of the Loan Certificates will not result in a “prohibited transaction,” within the meaning of Section 406 of ERISA or Section 4975 of the Code which could subject the Borrower to any tax or penalty pursuant to Section 4975 of the Code or Section 502(i) of ERISA.

(xiv) Investment Company. The Borrower is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

(xv) No Material Misstatement or Omission. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Security Trustee, any Agent or any Loan Participant in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(xvi) Federal Reserve Regulations. No part of the proceeds of any Loan hereunder will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board of Governors of the Federal Reserve, including Regulations U and X.

(xvii) Cape Town Matters. (A) The Borrower: is a “transacting user entity” (as such term is defined in the Regulations of the International Registry); is “situated”, for the purposes of the Cape Town Convention, in the United States; and on such Delivery Date will have the power to “dispose” (as such term is used in the Cape Town Convention) of the Airframe and related Engines financed on the Delivery Date for an Aircraft; (B) the Airframe and related Engines financed on such Delivery Date are “aircraft objects” (as defined in the Cape Town Convention); (C) the United States is a Contracting State under the Cape Town Convention; and (D) the FAA Bill of Sale for the Airframe and/or the Warranty Bill of Sale for such Airframe and related Engines constitutes a “contract of sale” (as defined in the Cape Town Convention) and the Mortgage and the Mortgage Supplement for such Aircraft conveys an international interest in such Airframe and related Engines.

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(xviii) AML Laws; Anti-Corruption Laws and Sanctions. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws, applicable AML Laws and applicable Sanctions. None of (a) the Borrower, any subsidiary or any of their respective directors or officers, or, to the knowledge of the Borrower, any of their respective employees or Affiliates, or (b) to the knowledge of the Borrower, any agent of the Borrower or any subsidiary or other Affiliate that will act in any capacity in connection with or benefit from the credit facility established hereby, (i) is a Sanctioned Person, or (ii) is in violation of AML Laws, Anti-Corruption Laws, or Sanctions. No Loans, use of proceeds or other transaction contemplated by this Agreement will cause a violation of AML Laws, Anti-Corruption Laws or applicable Sanctions by any person participating in the transactions contemplated by this Agreement, whether as lender, borrower, guarantor, agent, or otherwise. The Borrower represents that, except as disclosed to each Agent and the Loan Participants prior to the date hereof, neither it nor any of its subsidiaries, nor its parent company, or, to the knowledge of the Borrower, any other Affiliate has engaged in or intends to engage in any dealings or transactions with, or for the benefit of, any Sanctioned Person or with or in any Sanctioned Country.

(b) Representations and Warranties of the Security Trustee and Loan Participants.

(i) The Security Trustee represents and warrants that:

(1) Authorization. It has all power, authority, and legal right to execute, deliver, and carry out the terms of each of the Operative Documents to which the Security Trustee is a party.

(2) Execution. It has duly authorized the execution and delivery of this Agreement and the other Operative Documents to which it is a party.

(3) No Violation. The Security Trustee’s execution and delivery of each Operative Document to which it is a party will not result in any violation of, or be in conflict with, or constitute a default under, any of the provisions of its organizational documents, or of any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, lease, note or bond purchase agreement, license, bank loan, credit agreement, or other agreement to which it is a party or by which it is bound, and will not contravene any existing law, governmental rule or regulation of the State of Utah, any existing law, governmental rule or regulation of the United States of America which governs the Security Trustee’s banking and trust powers, judgment or order applicable to or binding on the Security Trustee.

(4) No Approvals. Neither the Security Trustee’s execution and delivery of the Operative Documents to which it is a party, nor the Security Trustee’s consummation of any of the transactions contemplated thereby, requires

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the consent or approval of, giving of notice to, or registration with any governmental authority.

(5) The Security Trustee is a transacting user entity.

(ii) Loan Participants’ Representations and Warranties. Each Loan Participant severally represents and warrants that on the date hereof and on the Delivery Date for each Designated Aircraft:

(1) it is acquiring its interest in its Loan Certificates either (A) in the ordinary course of its general banking business or (B) for investment and not with a view to any distribution thereof that would require registration under the Securities Act of 1933, as amended, subject, however, to the disposition of its property being at all times within its control;

(2) the Operative Documents to which it is a party delivered on or prior to the date hereof or such Delivery Date, as the case may be, each constitute legal, valid and binding obligations of such Loan Participant enforceable against such Loan Participant in accordance with the terms thereof except as such may be limited by equitable principles or applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally; and

(3) either (i) no part of the funds to be used by it for the purchase of the Loan Certificates shall constitute “plan assets” as defined in Section 3(42) of ERISA or otherwise, nor shall its interest become “plan assets” during the period it holds the Loan Certificates or (ii) its purchase and holding of the Loan Certificates shall be covered by a prohibited transaction class exemption issued by the U.S. Department of Labor.

Section 8. Indemnities.

(a) General Indemnity.

(i) Subject to the next following paragraph, the Borrower hereby agrees to indemnify each Indemnitee against, and agrees to protect, save and keep harmless each of them from any and all Expenses imposed on, incurred by or asserted against any Indemnitee arising out of or directly resulting from (A) the operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery, non-delivery, lease, nonuse, modification, alteration, or sale of any Aircraft, any Airframe or any Engine, or any engine used in connection with such Airframe or any part of any of the foregoing by the Borrower, any lessee or any other Person whatsoever, whether or not such operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery, non-delivery, lease, nonuse, modification, alteration, or sale is in compliance with the terms of the Mortgage, including, without limitation, claims for death, personal injury or property damage or other loss or harm to any person whatsoever and claims relating to any laws, rules or regulations pertaining to such operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery, non-

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delivery, lease, non-use, modification, alteration, sale or return including environmental control, noise and pollution laws, rules or regulations; (B) the manufacture, design, purchase, acceptance, rejection, delivery, or condition of such Aircraft, such Airframe or any Engine, any engine used in connection with such Airframe, or any part of any of the foregoing including, without limitation, latent and other defects, whether or not discoverable, or trademark or copyright infringement; (C) any breach of or failure to perform or observe, or any other noncompliance with, any covenant or agreement to be performed, or other obligation of the Borrower under any of the Operative Documents to which it is a party, or the falsity of any representation or warranty of the Borrower in any of the Operative Documents to which it is a party; (D) the offer, sale and delivery by the Borrower or anyone acting on behalf of the Borrower of any Loan Certificates or successor debt obligations issued in connection with the refunding or refinancing thereof (including, without limitation, any claim arising out of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or any other Federal or state statute, law or regulation, or at common law or otherwise relating to securities (collectively “Securities Liabilities”)) (the indemnity provided in this clause (D) to extend also to any Person who controls an Indemnitee, its successors, assigns, employees, directors, officers, servants and agents within the meaning of Section 15 of the Securities Act of 1933, as amended); and (E) the transactions contemplated by the Operative Documents or any lease under the Mortgage, any Event of Default under the Mortgage or the enforcement against the Borrower of any of the terms thereof (including, without limitation, Article IX of the Mortgage).

(ii) Limitations on Indemnity. The foregoing indemnity shall not extend to any Expense of any Indemnitee to the extent attributable to one or more of the following: (1) acts or omissions involving the willful misconduct or gross negligence of such Indemnitee or any Person acting on behalf of such Indemnitee (other than gross negligence imputed to such Indemnitee solely by reason of its interest in any Aircraft); (2) the failure by such Indemnitee to perform or observe any agreement, covenant or condition in any of the Operative Documents applicable to it, including, without limitation, the creation or existence of a Security Trustee Lien or a Lender Lien (except to the extent such failure was caused directly by the failure of the Borrower to perform any of its obligations under the Operative Documents); (3) any representation or warranty by such Indemnitee in the Operative Documents or in connection therewith being incorrect in any material respect; (4) with respect to any Indemnitee, a disposition (voluntary or involuntary) by such Indemnitee of all or any part of such Indemnitee’s interest in such Airframe, any Engine or in any Operative Document other than during the continuance of an Event of Default; (5) other than amounts necessary to make payments on an after-tax basis pursuant to Section 8(a)(iii), any Tax, or increase in Tax liability under any applicable law whether or not the Borrower is required to indemnify for such Tax pursuant to Schedule III hereto; (6) acts or events occurring after the transfer of possession of an Aircraft pursuant to Article IX of the Mortgage except to the extent that such Claim is attributable to acts occurring in connection with the exercise of remedies pursuant to Section 9.01 of the Mortgage following the occurrence and continuance of an Event of Default; (7) a failure on the part of the Security Trustee or either Agent to distribute in accordance with this Agreement or the Mortgage any amounts received and distributable by it hereunder or thereunder; and (8) any Expense which is payable or

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borne by a Person other than the Borrower pursuant to any provision of any Operative Document.

(iii) Taxes. The Borrower further agrees that any payment or indemnity pursuant to this Section 8(a) in respect of any “Expense” shall be in an amount which, after deduction of all Taxes required to be paid by such recipient with respect to such payment or indemnity under the laws of any Federal, state or local government or taxing authority in the United States, or under the laws of any taxing authority or governmental subdivision of a foreign country, or any territory or possession of the United States or any international authority, shall be equal to the excess, if any, of (A) the amount of such Expense over (B) the net reduction in Taxes required to be paid by such recipient resulting from the accrual or payment of such Expense.

(iv) Claims Against Indemnities. If a claim is made against an Indemnitee involving one or more Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly after receiving such notice give notice of such claim to the Borrower; provided that the failure to provide such notice shall not release the Borrower from any of its obligations to indemnify hereunder except to the extent that the Borrower is prejudiced as a result of the failure to give such notice in a timely fashion, and no payment by the Borrower to an Indemnitee pursuant to this Section 8(a) shall be deemed to constitute a waiver or release of any right or remedy which the Borrower may have against such Indemnitee for any actual damages as a result of the failure by such Indemnitee to give the Borrower such notice. The Borrower shall be entitled, at its sole cost and expense, acting through counsel reasonably acceptable to the respective Indemnitee, so long as the Borrower has acknowledged in writing its responsibility for such Expense hereunder (unless such Expense is covered by clause (ii) of this Section 8(a), except that such acknowledgment does not apply if the decision of a court or arbitrator provides that the Borrower is not liable hereunder), (A) in any judicial or administrative proceeding that involves solely a claim for one or more Expenses, to assume responsibility for and control thereof, (B) in any judicial or administrative proceeding involving a claim for one or more Expenses and other claims related or unrelated to the transactions contemplated by the Operative Documents, to assume responsibility for and control of such claim for Expenses to the extent that the same may be and is severed from such other claims (and such Indemnitee shall use its reasonable efforts to obtain such severance), and (C) in any other case, to be consulted by such Indemnitee with respect to judicial proceedings subject to the control of such Indemnitee and to be allowed, at the Borrower’s sole expense, to participate therein. The Indemnitee may participate at its own expense and with its own counsel in any judicial proceeding controlled by the Borrower pursuant to the preceding provisions. Notwithstanding any of the foregoing, the Borrower shall not be entitled to assume responsibility for and control of any such judicial or administrative proceedings if any Event of Default shall have occurred and be continuing, if such proceedings will involve a material risk of the sale, forfeiture or loss of any Aircraft unless the Borrower shall have posted a bond or other security reasonably satisfactory to the relevant Indemnitee with respect to such risk or if such proceedings could entail any risk of criminal liability being imposed on such Indemnitee.

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(v) Information for Borrower. The Indemnitee shall supply the Borrower with such information reasonably requested by the Borrower as is necessary or advisable for the Borrower to control or participate in any proceeding to the extent permitted by this Section 8(a). Such Indemnitee shall not enter into a settlement or other compromise with respect to any Expense without the prior written consent of the Borrower, which consent shall not be unreasonably withheld or delayed, unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Section 8(a).

(vi) Information for Indemnitees. The Borrower shall supply the Indemnitee with such information reasonably requested by the Indemnitee as is necessary or advisable for the Indemnitee to control or participate in any proceeding to the extent permitted by this Section 8(a).

(vii) Expenses Covered by Insurance. In the case of any Expense indemnified by the Borrower hereunder which is covered by a policy of insurance maintained by the Borrower (or any Lessee) pursuant to Article VI of the Mortgage or otherwise, it shall be a condition of such indemnity with respect to any particular Indemnitee that such Indemnitee shall cooperate with the insurers in the exercise of their rights to investigate, defend or compromise such Expense as may be required to retain the benefits of such insurance with respect to such Expense. Notwithstanding any of the foregoing to the contrary, with respect to any Expense which is covered under policies of insurance maintained by the Borrower (or any Lessee) pursuant to Article VI of the Mortgage or otherwise, the rights of an Indemnitee to control or participate in any proceedings shall be modified to the extent necessary to comply with the requirements of such policies and the rights of the insurers thereunder.

(viii) Subrogation. To the extent of any payment of any Expense pursuant to this Section 8(a), the Borrower, without any further action, shall be subrogated to any claims the Indemnitee may have relating thereto. The Indemnitee agrees to give such further assurances or agreements and to cooperate with the Borrower to permit the Borrower to pursue such claims, if any, to the extent reasonably requested by the Borrower.

(ix) Reimbursement. In the event that the Borrower shall have paid an amount to an Indemnitee pursuant to this Section 8(a), and such Indemnitee subsequently shall be reimbursed in respect of such indemnified amount from any other Person, such Indemnitee shall promptly pay the Borrower the amount of such reimbursement, including interest received attributable thereto, provided that no Event of Default has occurred and is continuing.

(b) Tax Indemnities. The general tax and withholding tax indemnities are specified in Schedule III hereto, which provisions are incorporated herein by reference.

(c) Interest. The Borrower will pay to each Indemnitee on demand, to the extent permitted by applicable law, interest on any amount of indemnity not paid when due pursuant to this Section 8 until the same shall be paid, at the Past Due Rate.

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(d) Illegality.

(i) Change in Law or Illegality Event. Notwithstanding any other provision in this Agreement, if any Change in Law or Illegality Event shall make it unlawful for any Loan Participant to maintain its Commitment or its portion of the Loans in respect of any Designated Aircraft, then the affected Loan Participant shall deliver to the Borrower and the Security Trustee a written certification describing in reasonable detail the events giving rise to such unlawfulness. Upon receipt by Borrower of such notice, the Borrower and such Loan Participant shall negotiate for a period of 60 days in an effort to mitigate such illegality. During such mitigation period the affected Loan Participant shall not be required to advance any Loans to the Borrower hereunder. If after such mitigation period, such unlawfulness cannot be resolved, then the provisions of clause (ii) below shall apply.

(ii) Impaired Loan Participants. If there shall have occurred and be continuing an event with respect to a Loan Participant of the type described in clause (i) above (an “Impaired Loan Participant”), then such Impaired Loan Participant may and, if so instructed by the Borrower shall:

(x) Assumption of Remaining Commitment. Notify the Borrower and each other Loan Participant that such unlawfulness has occurred and give notice that (A) if no Loan shall then have been made by such Impaired Loan Participant, no Loan shall be made to the Borrower by such Impaired Loan Participant or (B) if a Loan shall then have been made by such Impaired Loan Participant and remain outstanding, no further Loans shall be made to the Borrower by such Impaired Loan Participant, and request each other Loan Participant to take up the relevant portion of such Impaired Loan Participant’s unfunded Commitments, if any, in which case each such other Loan Participant may (but shall not be obligated to) in its sole discretion assume its pro rata share of such Impaired Loan Participant’s Commitment by providing written notice of such assumption to such Impaired Loan Participant, the Security Trustee, the relevant Agent and the Borrower within five Business Days, and if such other Loan Participant does not so elect in writing to assume its pro rata share of the Impaired Loan Participant’s Commitments, such Impaired Loan Participant shall send a further notice to each remaining Loan Participant, which in turn may (but shall not be obligated to) in its sole discretion assume the remaining available Commitments of such Impaired Loan Participant on a pro rata basis by providing written notice of such assumption to such Impaired Loan Participant, the Security Trustee, each Agent and the Borrower within five Business Days; and

(y) Assumption by Remaining Loan Participants. Notify the Borrower and each other Loan Participant that such unlawfulness has occurred and, to the extent that applicable laws do not require the immediate repayment of all or a portion of such Impaired Loan Participant’s Loans, request each other Loan Participant to assume the relevant portion of such Impaired Loan Participant’s Loans, in which case each such other Loan Participant may (but shall not be obligated to) in its sole discretion assume its pro rata share of such Impaired Loan Participant’s Loans by providing written notice of such assumption to such Impaired Loan Participant, the Security Trustee and the

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Borrower within five Business Days and otherwise complying with the procedure set out in Section 13(c) hereof, and if any other Loan Participant does not so elect in writing to assume its pro rata share of the Impaired Loan Participant’s Loans, such Impaired Loan Participant shall send a further notice to each remaining Loan Participant and the Borrower, and each remaining Loan Participant in turn may (but shall not be obligated to) in its sole discretion assume the remaining available Loans of such Impaired Loan Participant on a pro rata basis by providing written notice of such assumption to such Impaired Loan Participant, the Security Trustee, the relevant Agent and the Borrower within five Business Days and otherwise complying with the procedure set out in Section 13(c) hereof; and

(z) Payment of Break Amount. To the extent that any of such Impaired Loan Participant’s Loans are not assumed by one or more of the other Loan Participants or a third party as contemplated in clause (x) or (y) above, or that applicable laws require the immediate repayment of all or a portion of such Impaired Loan Participant’s Loans, require the Borrower to repay the Loans advanced by such Impaired Loan Participant in full together with accrued interest and Break Amount, and all other amounts accrued and owing to such Impaired Loan Participant under the Operative Documents but without any Prepayment Fee, premium or penalty, whereupon the Borrower shall on the date specified in such notice (which shall be the earlier of the date on which applicable laws require the immediate repayment of all or a portion of such Impaired Loan Participant’s Loans and the Interest Payment Date first occurring not earlier than ten Business Days from the date of such notice), repay in full all such amounts.

(iii) Presumption. For the avoidance of doubt, the failure by any Loan Participant to provide written notice of assumption of an Impaired Loan Participant’s Commitments or Loans within the relevant time frame contemplated by clause (x) or (y) above, as applicable, shall be conclusive evidence that such Loan Participant has elected not to assume any such additional Commitments or Loans. To the extent that any of such Impaired Loan Participant’s Commitments or Loans are not assumed by one or more of the other Loan Participants as contemplated in clause (x) or (y) above, as applicable, the unassumed portion will be cancelled and the Commitments will be reduced accordingly. Nothing in this Section (d) shall affect the obligation of any Loan Participant other than an Impaired Loan Participant to make or maintain its Loan in accordance with the terms of this Agreement.

Section 9. Covenants of the Borrower.

(a) Borrower Merger. For so long as the Lien constituted by the Mortgage remains in force, the Borrower shall not enter into any merger or consolidation, or sell, transfer, lease or convey all or substantially all of its assets, unless:

(i) No Default. No Event of Default has occurred and is continuing or would result therefrom;

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(ii) U.S. Air Carrier. The Borrower is the surviving corporation or, if otherwise, such other Person or continuing corporation (herein called “Successor Corporation”) is a corporation or limited liability company incorporated under the laws of a state of the United States, and shall be a U.S. Air Carrier;

(iii) Requirements of Successor Corporation. In the case of Successor Corporation, the Successor Corporation shall (A) execute, prior to or contemporaneously with the consummation of such transaction, such agreements, if any, as are in the reasonable opinion of the Security Trustee necessary or advisable to evidence the assumption by the Successor Corporation of liability for all of the obligations of the Borrower under the Mortgage and the other Operative Documents, (B) make such registrations, recordings and filings, and take such other action with respect to the Operative Documents, as shall be necessary or advisable in the reasonable opinion of the Loan Participants to protect their security interest in each Aircraft, and (C) cause to be delivered to the Security Trustee, each Agent and the Loan Participants such legal opinions (which may be from in-house counsel) as any of them may reasonably request in connection with the matters specified in the preceding clauses (A) and (B), provided that if by operation of law (x) assumption by the Successor Corporation of liability for all of the obligations of the Borrower under the Mortgage and the other Operative Documents and (y) protection of the Loan Participants’ security interest in each Aircraft, occurs automatically, to the extent applicable, the agreements, registrations, recordations, filings and legal opinions described in this Section 9(a)(iii) shall not be required; and

(iv) Tangible Net Worth of Successor Corporation. Prior to such transaction, the Loan Participants shall obtain evidence to the effect that the Tangible Net Worth of the Borrower or Successor Corporation after giving effect to such transaction is no less than the Tangible Net Worth of the Borrower immediately prior to such transaction.

As used herein,

“Tangible Net Worth” means, as at any date for any Person, the sum for such Person and its Subsidiaries (determined on a consolidated basis without duplication in accordance with generally accepted accounting principles), of the following:

(a) the amount of capital stock, plus

(b) the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit), minus

(c) the sum of the following: cost of treasury shares and the book value of all assets which should be classified as intangibles, including goodwill, minority interests, research and development costs, trademarks, trade names, copyrights, patents and franchises, and unamortized debt discount and expense.

Upon any consolidation or merger in accordance with this Section 9(a), the Successor Corporation shall succeed to, and be substituted for, and may exercise every right and power of,

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the Borrower under this Agreement with the same effect as if such Successor Corporation had been named as the Borrower herein.

(b) U.S. Air Carrier. The Borrower covenants and agrees that at all times until the Lien of the Mortgage shall be discharged, released or terminated pursuant to Section 14.01 of the Mortgage, it will be an “air carrier” within the meaning of Section 40102(a) of the Federal Aviation Act operating under certificates issued pursuant to such Act and shall otherwise meet the standards of the definition of U.S. Air Carrier.

(c) Further Assurances. The Borrower covenants and agrees with each party hereto as follows:

(i) Further Acts. The Borrower will cause to be done, executed, acknowledged and delivered all and every such further acts, conveyances and assurances as any Holder shall reasonably require for accomplishing the purposes of this Agreement and the other Operative Documents; provided that any instrument or other document so executed by the Borrower will not expand any obligations or limit any rights of the Borrower in respect of the transactions contemplated by any Operative Documents. The Borrower shall cause each Aircraft to remain duly registered, in the name of the Borrower, except as otherwise permitted under Section 3.01(b) of the Mortgage, under the Federal Aviation Act.

(ii) Maintenance of Security Interests. The Borrower, at its expense, will cause (A) the Mortgage, all Mortgage Supplements and all amendments to the Mortgage to be promptly filed and recorded, or filed for recording, to the extent permitted under the Federal Aviation Act, or required under any other applicable law, (B) subject only to the consent of the Security Trustee (or the Manufacturer, in the case of the FAA Bill of Sale and the Warranty Bill of Sale), the registration with the International Registry of the contract of sale and the international interests with respect to the FAA Bill of Sale and/or Warranty Bill of Sale, the Mortgage and Mortgage Supplement and (C) the Lien of the Mortgage to at all times be and remain a first priority and perfected Lien on the Mortgage Estate. The Borrower agrees to furnish the Security Trustee, each Agent and the Loan Participants with copies of the foregoing documents with recording and registration data as promptly as practicable following the issuance of same by the FAA and the International Registry.

(iii) Costs and Expenses. The Borrower shall pay all reasonable costs and expenses (including costs and disbursements of counsel) incurred by the Security Trustee, each Agent and the Holders after the date hereof in connection with (x) any supplements or amendments of the Operative Documents (including, without limitation, any related recording and registration costs) (other than any supplement or amendment associated with the syndication of the Loan Certificates or the sale of participation interests therein), (y) any Event of Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any restructuring or “work-out” (whether or not consummated), or (z) the enforcement of this Section 9.

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(d) Sanctions, Etc.

(i) Compliance with Anti-Corruption Laws and Sanctions. The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws, applicable AML Laws and applicable Sanctions.

(ii) Use of Proceeds. The Borrower will not request any Loans, and the Borrower shall not use, and shall procure that its subsidiaries and its or their respective directors, officers, employees, Affiliates and agents shall not use, directly or indirectly, the proceeds of any Loans, or lend, contribute or otherwise make available such proceeds to any subsidiary, other Affiliate, joint venture partner or other Person, (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or AML Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or involving any goods originating in or with a Sanctioned Person or Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions by any Person (including any Person participating in the transactions contemplated hereunder, whether as underwriter, advisor lender, investor or otherwise).

(e) Financial Information. The Borrower shall provide to the Agents and the Security Trustee (i) (x) within 60 days after the end of each of the first three quarterly periods in each fiscal year of the Borrower, either (1) a consolidated balance sheet of the Borrower and its consolidated subsidiaries prepared by it as of the close of such period, together with the related consolidated statements of income for such period, certified by the Borrower’s chief executive officer or chief financial officer as having been prepared on a consolidated basis in accordance with GAAP consistently applied (except for inconsistencies required by changes to GAAP and changes approved by the accountants referred to in clause (y)(1) below in accordance with GAAP), subject to normal year-end audit adjustments and the absence of footnotes or (2) a report of the Borrower on Form 10-Q in respect of such period in the form filed with the Securities and Exchange Commission; and (y) within 120 days after the close of each fiscal year of the Borrower, either (1) a consolidated balance sheet of the Borrower and its consolidated subsidiaries as of the close of such fiscal year, together with the related consolidated statements of income for such fiscal year, as certified by independent public accountants of recognized national standing selected by the Borrower to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its subsidiaries on a consolidated basis in accordance with GAAP consistently applied (except for inconsistencies required by changes to GAAP and changes approved by such accountants in accordance with GAAP), or (2) a report of the Borrower on Form 10-K in respect of such year in the form filed with the Securities and Exchange Commission; and (ii) such other non-confidential information readily available to the Borrower as the Agents or the Security Trustee shall reasonably request. The items required to be furnished pursuant to clause (i) above shall be deemed to have been furnished on the date on which such item is posted on the Securities and Exchange Commission’s website at www.sec.gov, and such posting shall be deemed to satisfy the requirements of clause (e).

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Section 10. Notices. All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by facsimile, or by prepaid courier service, and shall be effective upon receipt.

Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 10, notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective facsimile numbers) as follows: (a) if to the Borrower or the Security Trustee, to the respective addresses set forth in Section 14.06 of the Mortgage; (b) if to a Loan Participant, to the address set forth on Schedule I hereto; or (c) if to any subsequent Holder, addressed to such Holder at its address set forth in the Certificate Register maintained pursuant to the Mortgage.

Section 11. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.

(a) Governing Law. This Agreement shall in all respects be governed by, and construed in accordance with, the law of the State of New York, including all matters of construction, validity and performance.

(b) Submission to Jurisdiction. Each party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Operative Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Operative Document shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any other Operative Document against another party or its properties in the courts of any jurisdiction.

(c) Forum. Each party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Service of Process. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10. Nothing in this Agreement or any other Operative Document will affect the right of any party to this Agreement or any other Operative Document to serve process in any other manner permitted by law.

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(e) Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 12. Invoices and Payment of Expenses. The Security Trustee, each Agent and the Loan Participants shall promptly submit to the Borrower for its prompt approval copies of invoices of the Transaction Expenses (as defined below) as they are received. The Borrower agrees to pay Transaction Expenses promptly upon receipt of invoices of such Transaction Expenses. For the purposes hereof, “Transaction Expenses” means (i) with respect to the preparation, negotiation, execution and delivery of this Agreement and the closing or anticipated closing of a Designated Aircraft on the Delivery Date for such Aircraft, the reasonable fees, and out-of-pocket expenses and disbursements of FAA Counsel and of Vedder Price P.C., special counsel to the Loan Participants, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, or registration of any international interest with the International Registry, (iii) the Underwriters’ and each other Loan Participant’s reasonable out-of-pocket travel expenses relating to the negotiation and closing of this transaction, and (iv) the Security Trustee’s fee as separately agreed; provided the Transaction Expenses of a Loan Participant which fails (a) to fund any Loan notwithstanding the satisfaction of the applicable conditions precedent or (b) to negotiate this Agreement and each other Operative Document in good faith, shall not be subject to reimbursement.

Section 13. Successors and Assigns.

(a) Benefits. This Agreement shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective successors and permitted assigns including each successive holder of any Loan Certificate(s) issued and delivered pursuant to this Agreement or the Mortgage whether or not an express assignment to any such holder of rights under the Agreement has been made.

(b) Assignments by Borrower. The Borrower may not assign any of its rights or obligations under this Agreement or the other Operative Documents except to the extent expressly provided thereby.

(c) Assignments by Loan Participants. No Loan Participant may assign its Commitments and/or Loan Certificates, in whole or in part, prior to June 21, 2015. Thereafter, each Loan Participant may assign its Commitments and/or Loan Certificates (A) without the consent of the Borrower, to any Permitted Transferee and (B) with the prior written consent of

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the Borrower (which consent shall not be unreasonably withheld or delayed) to any other Person. Any such assignment shall be subject to the following terms:

(i) it shall be effected pursuant to an agreement substantially in the form of the Assignment and Assumption Agreement;

(ii) it shall be in a minimum principal amount of $5,000,000 (in the case of Senior Loans); and $2,000,000 (in the case of Junior Loans); and

(iii) there shall be no more than four Senior Loan Participants per Aircraft in the aggregate for the Senior Loans after giving effect to such assignment.

Notwithstanding anything to the contrary set forth herein, no assignment or other transfer hereunder shall (1) require the Borrower as a result thereof to pay any greater amount hereunder than the assignor or transferor Loan Participant was entitled to hereunder or (2) otherwise increase the obligations of the Borrower under any Operative Document by reference to the laws in effect at the time of the assignment or transfer. Subject to Section 2(a), effective upon the assignment of any Commitment, the assigning Loan Participant shall be relieved of its obligations in respect of such Commitment to the extent the assignee thereof shall have become obligated in respect thereof. The Borrower shall not be liable for any costs, fees or expenses in connection with any assignment or transfer of Commitments or Loan Certificates except that, if an Event of Default shall have occurred and be continuing, the Borrower shall be liable for any associated legal expenses reasonably incurred.

In addition, an assignee of any Junior Loan Participant may be designated as a Special Junior Lender in the applicable Assignment and Assumption Agreement; provided that, if either (x) such assignee has been assigned Junior Notes representing more than one-half of the aggregate outstanding principal amount of the Junior Notes of all Series, in the aggregate, or (y) such assignment shall have been effected after the date that is the six month anniversary of the delivery date of the later of (A) the last Aircraft financed hereunder or (B) the last Other Aircraft financed under the Other Facility Agreement, then, in either such case, such designation shall be subject to the prior written consent of the Borrower.

Section 14. The Agents; the Security Trustee.

(a) Appointment, Powers and Immunities. Each Senior Loan Participant hereby irrevocably appoints and authorizes BNP Paribas, New York Branch to act as Senior Agent hereunder and under the other Operative Documents with such powers as are specifically delegated to the Senior Agent by the terms of this Agreement and of the other Operative Documents, together with such other powers as are reasonably incidental thereto, and BNP Paribas, New York Branch accepts such appointment. Each Junior Loan Participant hereby irrevocably appoints and authorizes Investec Bank plc to act as Junior Agent hereunder and under the other Operative Documents with such powers as are specifically delegated to the Junior Agent by the terms of this Agreement and of the other Operative Documents, together with such other powers as are reasonably incidental thereto, and Investec Bank plc accepts such appointment. Each Agent (which term as used in this sentence and in Section 14(e) and the first sentence of Section 14(f) hereof shall include reference to such Agent and its affiliates and such

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Agent’s and its affiliates’ officers, directors, employees and agents): (i) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Operative Documents, and shall not by reason of this Agreement or any other Operative Document be a trustee for any Loan Participant; (ii) shall not be responsible to the Loan Participants for any recitals, statements, representations or warranties contained in this Agreement or in any other Operative Document, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Operative Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, any Loan Certificate or any other Operative Document or any other document referred to or provided for herein or therein or for any failure by the Borrower or any other Person to perform any of its obligations hereunder or thereunder; (iii) shall not be required to initiate or conduct any litigation or collection proceedings hereunder or under any other Operative Document; and (iv) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other Operative Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct. Each Agent may employ agents and attorneys in fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys in fact selected by it in good faith.

(b) Reliance by Agent. Each Agent shall be entitled to rely upon any certification, notice or other communication (including, without limitation, any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by such Agent. As to any matters not expressly provided for by this Agreement or any other Operative Document, each Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Controlling Creditor or all of the Loan Participants as is required in such circumstance, and such instructions of such Loan Participants and any action taken or failure to act pursuant thereto shall be binding on all of the Loan Participants.

(c) Non-Receipt of Funds by the Agents. Unless an Agent shall have been notified by a Loan Participant or the Borrower (the “Payor”) prior to the date on which the Payor is to make payment to such Agent of (in the case of a Loan Participant) the proceeds of a Loan to be made by it hereunder or (in the case of the Borrower) a payment to such Agent for account of one or more of the Loan Participants hereunder (such payment being herein called the “Required Payment”), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to such Agent, such Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient(s) on such date and, if the Payor has not in fact made the Required Payment to such Agent, the recipient(s) of such payment shall, on demand, repay to such Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by such Agent until the date such Agent recovers such amount at a rate per annum equal to the Federal Funds Rate for such day and, if such recipient(s) shall fail promptly to make such payment, such Agent shall be entitled to recover such amount, from the Payor, together with interest as aforesaid.

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(d) Defaults. Neither Agent shall be deemed to have knowledge or notice of the occurrence of a Default or Event of Default (other than the non-payment of principal of or interest on Loan Certificates) unless such Agent has received notice from a Loan Participant or the Borrower specifying such Default and stating that such notice is a “Notice of Default”. In the event that such Agent receives such a notice of the occurrence of a Default, such Agent shall give prompt notice thereof to the Loan Participants (and shall give each Loan Participant prompt notice of each such non-payment). Each Agent shall (subject to Section 13.01 of the Mortgage) take such action with respect to any Event of Default as shall be directed by the Controlling Creditor, provided that, unless and until such Agent shall have received such directions, such Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable in the best interest of the Loan Participants except to the extent that the Mortgage expressly requires that such action be taken, or not be taken, only with the consent or upon the authorization of the Controlling Creditor or all of the Loan Participants.

(e) Indemnification. The Senior Loan Participants agree to indemnify the Senior Agent ratably in accordance with their respective Senior Loan Certificates (or, prior to the issuance of the Senior Loan Certificates, their respective Senior Commitments), and the Junior Loan Participants agree to indemnify the Junior Agent ratably in accordance with their respective Junior Loan Certificates (or, prior to the issuance of the Junior Loan Certificates, their respective Junior Commitments), in each case for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against such Agent (including by any Loan Participant) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Operative Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or the enforcement of any of the terms hereof or thereof or of any such other documents, provided that no Loan Participant shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of such Agent.

(f) Non Reliance on Agents and Other Loan Participants. Each Loan Participant agrees that it has, independently and without reliance on either Agent or any other Loan Participant, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrower and its own decision to enter into this Agreement and the other Operative Documents to which it is or is to be a party and that it will, independently and without reliance upon either Agent or any other Loan Participant, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement. Neither Agent shall be required to keep itself informed as to the performance or observance by the Borrower of this Agreement or any of the other Operative Documents or any other document referred to or provided for herein or therein or to inspect the properties or books of the Borrower. Except for notices, reports and other documents and information expressly required to be furnished to the Loan Participants by such Agent hereunder, neither Agent shall have any duty or responsibility to provide any Loan Participant with any credit or other information concerning the affairs, financial condition or business of Borrower (or any of its affiliates) that may come into the possession of such Agent or any of its affiliates.

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(g) Failure to Act. Except for action expressly required of an Agent hereunder and under the other Operative Documents, such Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Loan Participants of their indemnification obligations under Section 14(e) hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

(h) Resignation or Removal of Agent. Subject to the appointment and acceptance of a successor Agent as provided below, either Agent may resign at any time by giving notice thereof to the Loan Participants and the Borrower. Upon any such resignation of the Senior Agent, the Majority Senior Holders shall have the right to appoint a successor Senior Agent which shall be, so long as no Event of Default is continuing, reasonably acceptable to the Borrower, upon any such resignation of the Junior Agent, the Majority Junior Holders shall have the right to appoint a successor Junior Agent which shall be, so long as no Event of Default is continuing, reasonably acceptable to the Borrower. If no successor Agent shall have been so appointed by the Majority Senior Holders or the Majority Junior Holders, as the case may be, and shall have accepted such appointment within 30 days after the retiring Agent’s giving of notice of resignation, then the retiring Agent may, on behalf of the Loan Participants, appoint a successor Agent. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After the retiring Agent’s resignation hereunder as Agent, the provisions of this Section 14 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. The Borrower consents to any change in the identity of such Agent on the International Registry as a result of the appointment of a successor Agent pursuant to this Section 14(h), and if required by the International Registry to reflect such change, will provide its further consent thereto.

(i) Consents under Operative Documents. Subject to Section 13.01 of the Mortgage, no Agent may, without the prior consent of the Controlling Creditor, consent to any modification, supplement, waiver, amendment or take any other action under any of the Operative Documents, or otherwise grant its consent, approval or waiver of any matter hereunder or under the Mortgage, provided that, without the prior consent of each Loan Participant, such Agent shall not (except as provided herein or in the Operative Documents) release any collateral or otherwise terminate any Lien under any Operative Document providing for collateral security, or agree to additional obligations being secured by such collateral security (unless the Lien for such additional obligations shall be junior to the Lien in favor of the other obligations secured by such Operative Document), except that no such consent shall be required, and such Agent is hereby authorized, to release any Lien covering property which is the subject of a disposition of property permitted hereunder or under any other Operative Document or to which the Controlling Creditor have consented.

(j) The Security Trustee. Each Loan Participant hereby acknowledges its irrevocable appointment and authorization of Bank of Utah to act as its security trustee under the Mortgage and under the other Operative Documents with such powers as are specifically delegated to the Security Trustee by the terms of the Mortgage and of the other Operative Documents, together with such other powers as are reasonably incidental thereto. The provisions

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of Article XI of the Mortgage are hereby incorporated herein by reference, with the same force and effect as though set forth herein in their entirety.

Section 15. Miscellaneous.

(a) Section 1110 Compliance. Notwithstanding any provision herein or elsewhere contained to the contrary, it is understood and agreed among the parties hereto that the transactions contemplated by this Agreement, and the other Operative Documents are expressly intended to be, shall be and should be construed so as to be, entitled to the full benefits of 11 U.S.C. Section 1110, as amended from time to time, and any successor provision thereto.

(b) Survival of Agreements. The representations, warranties, indemnities and agreements of the Borrower, the Security Trustee and each Loan Participant provided for in this Agreement and each party’s obligations under any and all thereof, shall survive the expiration or other termination of this Agreement or any other Operative Document, except as expressly provided herein or therein.

(c) Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified, except by an instrument in writing signed by the party or parties thereto.

(d) No Liability of Loan Participants. No Loan Participant shall have any obligation or duty to the Borrower, or to other Persons with respect to the transactions contemplated hereby except those obligations or duties of such Loan Participant expressly set forth in this Agreement and the other Operative Documents and no Loan Participant shall be liable for performance by any other party hereto of such other party’s obligations or duties hereunder. Without limitation of the generality of the foregoing, under no circumstances whatsoever shall any Loan Participant be liable to the Borrower for any action or inaction on the part of the Security Trustee in connection with the transactions contemplated herein, whether or not such action or inaction is caused by willful misconduct or gross negligence of the Security Trustee.

(e) Approvals by Loan Participants. Any reference herein to an approval, consent or waiver to be given by the Loan Participants shall be deemed hereunder to be an approval, consent or waiver, as the case may be, if the Controlling Creditor approves, consents or waives, as the case may be.

(f) Non-Disclosure of Purchase Agreement. The Loan Participants agree that they shall not disclose to any person (other than its legal counsel) the terms of the Purchase Agreement or the Airframe Warranties Agreement, except (i) as required by applicable law or governmental regulations, (ii) to their respective auditors, counsel or bank examiners, (iii) in connection with any legal proceedings arising from the Airframe Warranties Agreement or the Purchase Agreement, or (iv) with the prior written consent of the Manufacturer, such consent not to be unreasonably withheld or delayed. This paragraph is for the benefit of the Manufacturer who is a third party beneficiary of this Section 15(f).

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(g) Confidentiality. Each of the Loan Participants and the Security Trustee covenants and agrees to keep confidential, and not to disclose to any third parties, all non-public information received by it from the Borrower pursuant to the Operative Documents, including any insurance report received pursuant to Article VI of the Mortgage, provided that such information may be made available:

(1) to prospective and permitted transferees of a Loan Participant’s Loan Certificates or the Security Trustee’s respective interest in an Aircraft, who agree to hold such information confidential,

(2) to any Holder’s counsel or independent certified public accountants, independent insurance advisors or other agents who agree to hold such information confidential,

(3) as may be required by applicable law or by any statute, court or administrative order or decree or governmental ruling or regulation (or, in the case of any Holder, to any bank examiner or other regulatory personnel) or

(4) as may be necessary for purposes of enforcement of any Operative Document.

Notwithstanding the foregoing, the legal obligations of confidentiality hereunder do not extend to the U.S. federal or state tax structure or the U.S. federal or state tax treatment of this transaction. If any U.S. federal or state tax analyses or materials are provided to any party, such party is free to disclose any such analyses or materials without limitation.

(h) Quiet Enjoyment. The Security Trustee, each Agent, each Loan Participant and each Holder agrees that neither it nor any Person claiming by, through or under it shall take any action in violation of the Borrower’s or any Permitted Lessee’s rights, including the right to quiet enjoyment, possession and use of any Aircraft so long as no Event of Default shall have occurred and be continuing under the Mortgage.

*        *        *

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IN WITNESS WHEREOF, the parties hereto have caused this Facility Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

VIRGIN AMERICA INC., as Borrower
By:	/s/ Peter D. Hunt
	Name: Peter D. Hunt
	Title:   SVP & CFO
BANK OF UTAH, as Security Trustee
By:	/s/ Brett R. King
	Name: Brett R. King
	Title:   Vice President
BNP PARIBAS, NEW YORK BRANCH, as a Loan Participant
By:	/s/ Stephanie Klein
	Name: Stephanie Klein
	Title:   Vice President, Aviation Finance Group -             Americas
By:	/s/ Robert Papas
	Name: Robert Papas
	Title:   Director, Transportation Group –             Aviation Finance
BNP PARIBAS, NEW YORK BRANCH, as Senior Agent
By:	/s/ Stephanie Klein
	Name: Stephanie Klein
	Title:   Vice President, Aviation Finance             Group - Americas
By:	/s/ Robert Papas
	Name: Robert Papas
	Title:   Director, Transportation Group –             Aviation Finance

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[Facility Agreement [Virgin/Bank 2015]]

INVESTEC BANK PLC, as a Loan Participant
By:	/s/ Oliver Tagg
	Name: Oliver Tagg
	Title:   Authorised Signatory
By:	/s/ Celia Britt
	Name: Celia Britt
	Title:   Authorised Signatory
INVESTEC BANK PLC, as Junior Agent
By:	/s/ Oliver Tagg
	Name: Oliver Tagg
	Title:   Authorised Signatory
By:	/s/ Celia Britt
	Name: Celia Britt
	Title:   Authorised Signatory

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APPENDIX A

DEFINITIONS AND RULES OF USAGE

(a) Unless a contrary indication appears, a reference in this Agreement to:

(i) the “agreed form” of any Operative Document means the form of such Operative Document which on the date hereof has been agreed by the Borrower and the Security Trustee (acting on the instructions of the Loan Participants);

(ii) any “applicable law” means (a) applicable laws, statutes, decrees, decree laws, acts, codes, regulations, legislation, treaties, conventions and similar instruments and, in respect of any of the foregoing, unless the context otherwise requires, any instrument passed in substitution therefor or for the purposes of consolidation thereof with any other instrument or instruments, in each case, unless the context otherwise requires, as amended, modified, varied or supplemented from time to time, (b) applicable final judgments, orders, determinations or awards of any court from which there is no right of appeal or if there is a right of appeal such appeal is not prosecuted within the allowable time and (c) applicable orders, guidelines, notices, guidance, rules and regulations of any state or government or any government entity, in each case having the force of law;

(iii) any person includes its and any subsequent successors in title, permitted assigns and permitted transferees;

(iv) “assets” includes present and future properties, revenues and rights of every description;

(v) “indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

(vi) an “Operative Document” or any other agreement or instrument is a reference to that Operative Document or other agreement or instrument as amended, supplemented or novated in accordance with the terms thereof and of this Agreement or any other Operative Document, together with all exhibits, schedules and other attachments thereto;

(vii) a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organization;

(viii) a reference to a “Schedule” is a reference to such Schedule as it may be amended from time to time in accordance herewith;

(ix) unless the context shall otherwise require, a provision of law is a reference to that provision as amended or reenacted; and

(x) a time of day is, unless stated otherwise, a reference to New York time.

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(b) Section and Schedule headings are for ease of reference only.

(c) Unless a contrary indication appears, a term used in any other Operative Document or in any notice given under or in connection with any Operative Document has the same meaning in that Operative Document or notice as in this Agreement.

DEFINED TERMS

“Additional Insured(s)” means the Security Trustee and the Holders.

“Affected Person” means (i) the Borrower, (ii) any subsidiary of the Borrower, (iii) any Affiliate of the Borrower (other than any Person that is an Affiliate of the Borrower solely by reason of its ownership of shares of the Borrower), or (iv) any officer, director, trustee or agent of the Borrower or such subsidiary or such Affiliate that will act in any capacity with respect to this Agreement.

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or under common control with, such Person. The term “control” means the possession, directly or indirectly of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agent” or “Agents” means either or both, as the context may require, of the Senior Agent and the Junior Agent.

“Aircraft” means the Airframe together with the two Engines referenced in a Mortgage Supplement delivered in connection with a Designated Aircraft, including buyer furnished equipment, whether or not such Engines are installed on the Airframe or any other airframe, and, where the context permits, all logs, manuals and data and inspection, modification and overhaul records required to be maintained with respect to the foregoing property.

“AML Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Loan Participant, the Borrower or any subsidiary or Affiliate of the Borrower from time to time concerning or relating to anti-money laundering.

“Airframe” means: (i) the Airbus A320-200 aircraft (excluding Engines or engines from time-to-time installed thereon) specified by United States Registration Number and Manufacturer’s Serial Number in a Mortgage Supplement; (ii) any and all related Parts; and (iii) any Replacement Airframe which may from time to time be substituted for the Airframe then subject to the Mortgage pursuant to Section 5.01(b) of the Mortgage.

“Airframe Warranties Agreement” means each agreement dated a Delivery Date, between, inter alios, the Manufacturer, the Borrower and the Security Trustee in respect of the airframe warranties associated with the Aircraft delivered on such date.

“Anti-Corruption Law” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any subsidiary or Affiliate of the Borrower from time to time concerning or relating to bribery or corruption.

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“Anti-Terrorism Law” means, with respect to any Person, any applicable law, rule or regulation related to financing terrorism including (a) the Patriot Act, (b) the Currency and Foreign Transactions Reporting Act (31 U.S.C. §§ 5311-5330) (also known as the “Bank Secrecy Act”), (c) the Trading With the Enemy Act (50 U.S.C. § 1 et seq.), the International Economic Emergency Powers Act (15 U.S.C. § 1701 et seq.) and (d) Executive Order 13224 (effective September 24, 2001).

“Applicable Margin”, in respect of the Loans for any Aircraft, has the meaning set forth in Section 1 of the Facility Agreement.

“Applicable Rate” means, for any Interest Period with respect to any Loan, a rate per annum equal to (i) in the case of a Floating Rate Loan, the relevant Floating Rate for such Interest Period and (ii) in the case of a Fixed Rate Loan, the relevant Fixed Rate for such Interest Period.

“Assigned Warranties” means the warranties referenced in the Airframe Warranties Agreement and the Engine Consent.

“Assignment and Assumption Agreement” means an agreement substantially in the form of Exhibit B to the Facility Agreement.

“Basel II” means the agreements on capital requirements, a leverage ratio and liquidity standards contained in, or methods of calculating capital adequacy pursuant to, “Basel II: International Convergence of Capital Measurement and Capital Standards: a Revised Framework – Comprehensive Version” published by the Basel Committee on Banking Supervision in June 2006, as amended, supplemented or restated (other than by Basel III), or any implementation, adoption (whether voluntary or compulsory) thereof, whether by an EC Directive or the FSA Integrated Prudential Sourcebook or any other law or regulation.

“Basel III” means the agreements on capital requirements, a leverage ratio and liquidity standards contained in, or methods of calculating capital adequacy pursuant to, “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision on 16 December 2010, each as amended, supplemented or restated, or any implementation, adoption (whether voluntary or compulsory) thereof, whether by an EC Directive or the FSA Integrated Prudential Sourcebook or any other law or regulation.

“Bills of Sale” means, for any Aircraft, the FAA Bill of Sale and the Warranty Bill of Sale in favor of Borrower in respect of such Aircraft.

“Break Amount” means, as of any date of determination and for the Loan Certificates, the amount, if any, equal to the sum of (i) LIBOR Break Amount and (ii) Swap Breakage Loss.

“BNP” shall mean BNP Paribas, New York Branch.

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“Business Day” means any day other than a Saturday or Sunday or a day on which commercial banks are required or authorized to close in New York, New York and, if such day relates to (i) the giving of notices or quotes in connection with the LIBOR, the city and state in which the Payment Office is located, New York, New York and London, England or (ii) the borrowing of any Loan or payment or prepayment of principal of or interest on the Loan Certificates, the city and state in which the Payment Office is located, New York, New York and London, England.

“Cape Town Convention” means the official English language texts of the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment which were signed in Cape Town, South Africa on November 16, 2001.

“Certificate Register” has the meaning specified in Section 2.06 of the Mortgage.

“Change in Law” means the occurrence, after the date of the Facility Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Body or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, pursuant to Basel II shall not be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Civil Reserve Air Fleet Program” or “CRAF” means the Civil Reserve Air Fleet Program administered by the United States Government or any substantially similar program.

“Class” means, with respect to any Loan Certificate, a designation of whether such Loan Certificate is a Senior Loan Certificate or Junior Loan Certificate.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

“Commitment” has the meaning specified in Section 2(a) of the Facility Agreement.

“Commitment Termination Date” has the meaning specified in Section 1 of the Facility Agreement.

“Controlling Creditor” has the meaning specified in the Intercreditor Agreement.

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“Default” means any event which with the giving of notice or the lapse of time or both if not timely cured or remedied would become an Event of Default pursuant to Article VIII of the Mortgage.

“Delivery Date” means, for any Aircraft, the date of the initial Mortgage Supplement for such Aircraft, which date shall be the date the Loan Participants advance the Loan of the related Series to or for account of the Borrower.

“Dollars”, “Dollar” and “$” means the lawful currency of the United States of America.

“Effective Date” means the date the Facility Agreement becomes effective as provided in Section 4(a) of the Facility Agreement.

“Engine” means (i) each of the two CFM International Inc. model CFM56-5B4 engines listed by Manufacturer’s Serial Numbers in the initial Mortgage Supplement for each Aircraft, whether or not from time to time installed on an Airframe or any other airframe; (ii) any Replacement Engine which may from time to time be substituted for any Engine pursuant to the terms of the Mortgage; and (iii) in each case, any and all related Parts.

“Engine Agreement” means the General Terms Agreement CFM-04-0012B, dated June 14, 2004 between the Borrower and Engine Manufacturer.

“Engine Consent and Agreement” means the Engine Consent and Agreement [Virgin/Bank 2015] dated as of the Delivery Date of the Engine Manufacturer in respect of the Aircraft.

“Engine Manufacturer” means CFM International Inc.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Event of Default” has the meaning specified in Article VIII of the Mortgage.

“Event of Loss” means, with respect to any Aircraft or any Airframe or any Engine, any of the following events with respect to such property:

(a) the loss of such property or of the use thereof due to destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use for any reason whatsoever;

(b) any damage to such property that results in an insurance settlement with respect to such property on the basis of a total loss or a constructive total loss;

(c) the requisition for use or hire of such property by any government (other than the government of the country of registry of such Aircraft) that shall have resulted in the loss of possession of such property by the Borrower (or any Permitted Lessee) for a period in excess of nine consecutive months;

APPENDIX A

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(d) requisition of title or other compulsory acquisition, capture, seizure, deprivation, confiscation or detention for any reason of such Aircraft or any Airframe or any Engine associated with such Aircraft by any government, whether de facto or de jure, but shall exclude requisition for use or hire not involving requisition of title;

(e) as a result of any law, rule or regulation, order or other action by the FAA or other government of the country of registry, the use of such Aircraft or Airframe in the normal business of air transportation shall have been prohibited by virtue of a condition affecting all aircraft of the same type for a period of 12 consecutive months, unless the Borrower (or Permitted Lessee), prior to the expiration of such 12 month period, shall be diligently carrying forward all steps that are necessary or desirable to permit the normal use of such Aircraft or Airframe or, in any event, if such use shall have been prohibited for a period of 18 consecutive months; and

(f) with respect to an Engine only, any divestiture of title to or interest in such Engine or any event with respect to such Engine that is deemed to be an Event of Loss with respect to such Engine pursuant to Section 3.03(a) or 5.02 of the Mortgage.

An Event of Loss with respect to an Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe related to such Aircraft.

“Excluded Taxes” has the meaning specified in Schedule III to the Facility Agreement.

“Expense” or “Expenses” means any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, out of pocket costs, expenses and disbursements (including reasonable legal fees and expenses) of whatever kind and nature but excluding internal costs and expenses such as salaries, any amounts that would be included in Break Amount, and overhead of whatsoever kind and nature.

“FAA Bill of Sale” means a bill of sale on AC Form 8050-2 or such other form as may be approved by the FAA in favor of the Borrower from the Manufacturer in respect of an Aircraft.

“FAA Counsel” means McAfee & Taft A Professional Corporation.

“Facility Agreement” means that certain Facility Agreement [Virgin/Bank 2015], dated as of April 29, 2015, among the Borrower, the Loan Participants, the Agent, the Swap Agent and the Security Trustee as such Facility Agreement may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

“FATCA” has the meaning specified in Schedule III to the Facility Agreement.

“FCPA” means the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd 1, et seq.

“Federal Aviation Act” means subtitle VII of Title 49 of the United States Code, or any successor provision.

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“Federal Aviation Administration” and “FAA” mean the United States Federal Aviation Administration and any successor agency or agencies thereto.

“FedWire” means the funds transfer system used to transfer reserve balances for immediately available credit among the member banks of the United States Federal Reserve System.

“Fee Letter” means each of (i) in the case of BNP, the letter agreement between the Borrower and BNP, pursuant to which the Borrower has agreed to pay certain fees and (ii) in the case of Investec, the letter agreement between the Borrower and Investec, pursuant to which the Borrower has agreed to pay certain fees.

“Finance Parties” means, together, the Loan Participants, each Agent and the Security Trustee (each, a “Finance Party”).

“Fixed Rate” means, if the Loan Certificates of any Class in respect of any Aircraft are to bear interest at a fixed rate, the fixed rate for such Loan Certificates determined in accordance with Section 3(b)(ii) of the Facility Agreement (calculated on the basis of a year of 360 days and actual number of days elapsed). The Fixed Rate for any Senior Loan Certificate shall be the rate specified on Schedule I to the Mortgage Supplement for the applicable Aircraft and the Fixed Rate for any Junior Loan Certificate shall be the rate specified on Schedule II to the Mortgage Supplement for the applicable Aircraft; provided that, in the case of any Special Junior Lender, the Fixed Rate applicable to its Junior Loan Certificates shall be reduced by 15 basis points for so long as it shall be a holder of such Junior Loan Certificates.

“Fixed Rate Loan” means a Loan evidenced by Loan Certificates which bear interest at a Fixed Rate.

“Fixed Rate Margin” has the meaning specified in Section 1 of the Facility Agreement.

“Floating Rate” means, for any Interest Period and Class of Loan Certificate, the sum of (1) LIBOR for such Interest Period, plus (2) the Applicable Margin applicable to such Class of Loan Certificate (calculated on a basis of actual number of days elapsed in a year of 360 days).

“Floating Rate Loan” means a Loan evidenced by Loan Certificates which bear interest at a Floating Rate. Each Loan shall be a Floating Rate Loan unless the Borrower shall have made an election to have such Loan bear interest at a Fixed Rate in accordance with Section 3(b)(ii) of the Facility Agreement.

“Foreign Air Carrier” means any air carrier which is not a U.S. Air Carrier and which performs maintenance, preventative maintenance and inspections for the Aircraft, the Airframe and/or any Engine or engine to standards which are approved by, or which are substantially equivalent to those required by, the Federal Aviation Administration, the Civil Aviation Authority of the United Kingdom, the Direction Generale de l’Aviation Civile of the French Republic, the Luftfahrt Bundesamt of the Federal Republic of Germany, the Nederlandse Luchtvaart Authoriteit of the Kingdom of the Netherlands, the Ministry of Transportation of Japan or the Federal Ministry of Transport of Canada (and any agency or instrumentality of the applicable government succeeding to the functions of any of the foregoing entities).

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“Funding Date” has the meaning specified in Section 2(b)(i) of the Facility Agreement.

“GAAP” means generally accepted accounting principles then in effect in the United States, consistently applied.

“Governmental Body” means (a) any federal, state or similar government, and any body, board, department, commission, court, tribunal, authority, agency or other instrumentality of any such government or otherwise exercising any executive, legislative, judicial, administrative or regulatory functions of such government or (b) any other government entity having jurisdiction over any matter contemplated by the Operative Documents or relating to the observance or performance of the obligations of any of the parties to the Operative Documents.

“Hedging Transaction” means, for any Holder of a Fixed Rate Loan and in respect of the Loan Certificates of any Class for such Loan, an interest rate swap transaction entered into by such Holder (on an actual or notional basis) with a Swap Counterparty in connection with such Fixed Rate Loan on customary terms consistent with market practice (documented (or deemed documented)) by the Swap Form and a hedge confirmation incorporating the terms of this definition) where such Holder will (i) pay to such Swap Counterparty under such swap transaction on each Interest Payment Date for such Class following the Swap Effective Date, an amount equal to the interest scheduled to be paid to such Holder on such Loan Certificates calculated at a rate equal to the Fixed Rate for such Loan minus the Applicable Margin for such Loan (calculated on the basis of a year of 360 days and actual number of days elapsed) and (ii) receive from such Swap Counterparty on each such Interest Payment Date an amount equal to the amount of interest that would have accrued on such Loan Certificates during the Interest Period for such Class ending on such Interest Payment Date at LIBOR (flat) (subject, for the avoidance of doubt, to the 0% floor as provided in the definition of LIBOR) taking into account any stub periods on the first and/or last Interest Periods (for which stub periods the applicable floating rate for such period will be calculated using standard interpolation methodologies) for such Interest Period (calculated on the basis of a year of 360 days and actual number of days elapsed) and incorporating the methodologies described in the definition of “Swap Break Amount” associated with any termination of such swap transaction in whole or in part in association with any acceleration or prepayment of such Fixed Rate Loan.

“Holder” means, at any time, any holder of any Senior Loan Certificate or any Junior Loan Certificate.

“Illegality Event” means the occurrence of any of the following events or circumstances:

(a) it becomes unlawful or contrary to any applicable law for any party to any of the Operative Documents to perform any of its material obligations under the Operative Documents and/or to continue as a party to any of the Operative Documents; or

(b) all or any material part of any Operative Document becomes void, illegal, invalid, unenforceable or of limited force and effect.

“Inchoate Liens” means inchoate Liens of the type described in Section 7.01(ii) of the Mortgage for taxes not yet due and 7.01(iii) (other than, in the case of said clause (iii), contested

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Liens); for the avoidance of doubt, “Inchoate Liens” shall not include any such Lien registered with the International Registry.

“Increased Cost Notice” has the meaning specified in Section 2.11 of the Mortgage.

“Increased Costs” has the meaning specified in Section 2.11 of the Mortgage.

“Indemnitee” or “Indemnitees” means the Security Trustee, the Holders and each of their respective successors, permitted assigns, and directors, officers, and employees.

“Intercreditor Agreement” means the Intercreditor Agreement [Virgin/Bank 2015], dated as of April 29, 2015, among the Borrower, the Senior Loan Participants, the Junior Loan Participants, the Agents and the Security Trustee.

“Interest Payment Date” means, in respect of any Series of Loan Certificates, each of the four quarterly anniversary dates of the Funding Date of the related Aircraft (or if there is no comparable day in any applicable month, the last day of such month); provided that, (i) in the case of a Floating Rate Loan, if any such date shall not be a Business Day, then the relevant Interest Payment Date shall be the next succeeding Business Day unless by virtue of such extension such date would fall in the next succeeding calendar month, in which case the relevant Interest Payment Date shall be the next preceding Business Day and (ii) in the case of a Fixed Rate Loan, there shall be no adjustment to period end dates by virtue of non-Business Days for the purpose of interest accrual. The Interest Payment Dates shall be the dates specified in the amortization schedule relating thereto attached to the Loan Certificates of the applicable Series (subject to modification by the above proviso).

“Interest Period” means (a) initially, the period commencing on the Funding Date and ending on the first Interest Payment Date thereafter and (b) thereafter, each successive three-month (or other applicable) period commencing on the final day of the preceding Interest Period and ending on the next succeeding Interest Payment Date.

“international interest” is defined in the Cape Town Convention.

“International Registry” is defined in the Cape Town Convention.

“Investec” means Investec Bank plc.

“Junior Agent” has the meaning specified in the preamble to the Facility Agreement.

“Junior Loan Certificate” means each loan certificate issued by the Borrower to the Junior Loan Participants pursuant to Section 2.02 of the Mortgage and any such Certificate issued in exchange or replacement therefor pursuant to Section 2.08 or Section 2.09 of the Mortgage.

“Junior Loan Participants” means Investec Bank plc, and each successor, permitted assignee or permitted transferee thereof as a Holder of a Junior Loan Certificate.

APPENDIX A

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“Junior Loans” means the loans made by the Junior Loan Participants to the Borrower to finance the Aircraft pursuant to the terms of Section 2.02 of the Mortgage, and outstanding from time to time under the Mortgage.

“Lease” means any lease agreement permitted by the terms of Section 3.03 of the Mortgage.

“Lender Lien” means any Lien which arises from acts or claims against a Loan Participant not related to the transactions contemplated by the Operative Documents.

“Lessee” means any lessee under a Lease.

“LIBOR” means, for any Interest Period for any Loan, the rate per annum equal to:

(a) the Screen Rate for such Interest Period for such Loan; or

(b) (i) if no such Screen Rate is available for Dollars or for such Interest Period, the rate for deposits of an amount comparable to the aggregate outstanding principal amount of such Loan for such Interest Period in Dollars for that period determined to be the arithmetic mean of the rates offered at or about 11:00 a.m. (London time) on the relevant Quotation Date by at least two Reference Banks to prime banks in the London interbank market and (ii) if the rate specified in (b)(i) is not available, then the rate for deposits of an amount comparable to the aggregate outstanding principal amount of such Loan for such Interest Period in Dollars for that period determined to be the arithmetic mean of the rates offered at or about 11:00 a.m. New York time on the relevant Quotation Date by at least two Reference Banks to prime banks in the New York interbank market; provided, that for any Interest Period having a duration of less than three months, LIBOR for such Interest Period shall be the interpolated LIBOR determined using the Screen Rate and standard interpolation methodologies by reference to the next higher and next lower available maturities (as determined by the Agent for such Loan).

Notwithstanding the foregoing, LIBOR for any Interest Period shall not be less than 0% per annum.

“LIBOR Break Amount” means the amount, if any, required to compensate each Holder for any losses, costs or expenses (excluding loss of profit) which it may incur as the result of the prepayment (including any by virtue of an acceleration) (or the failure to make any such prepayment on the date irrevocably scheduled therefor) of any Loan Certificate held by it on a date other than the last day of the then current Interest Period therefor, including, without limitation, losses, costs or expenses incurred in connection with unwinding or liquidating any deposits or funding or financing arrangement with its funding sources, as reasonably determined by such Holder. Without limiting the effect of the preceding sentence, such compensation shall include an amount equal to the excess, if any, of (i) the amount of interest which otherwise would have accrued on the principal amount so prepaid (including any by virtue of an acceleration) from the date of such prepayment (including any by virtue of an acceleration) to the last day of such Interest Period (the “Break Period”) at the LIBOR therefor in excess of (ii) the interest component of the amount the affected Holder would have bid in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to the Break Period (as reasonably determined by such Holder).

APPENDIX A

Page 10

[Facility Agreement [Virgin/Bank 2015]]

Each Holder shall provide a certificate to the Borrower documenting its calculation of LIBOR Break Amount.

“Lien” means any mortgage, pledge, lien, claim, encumbrance, lease, security interest or other lien of any kind on property. “Lien” shall include any interest registered on the International Registry other than the Borrower’s ownership interest registered on the International Registry as a contract of sale with respect to the Aircraft.

“Loan Certificate” means either or both, as the context may require, of a Senior Loan Certificate or a Junior Loan Certificate and “Loan Certificates” means all Loan Certificates, whether a Junior Loan Certificate or Senior Loan Certificate, issued pursuant to Section 2.02 of the Mortgage and any such certificates issued in exchange or replacement therefor pursuant to Section 2.08 or 2.09 of the Mortgage.

“Loan Participant” means each Holder initially a party to the Facility Agreement, and its successors and assigns.

“Loans” means the Senior Loans and Junior Loans made by the Senior Loan Participants and Junior Loan Participants, respectively, to the Borrower pursuant to Section 2.02 of the Mortgage as evidenced by the Loan Certificates.

“Maintenance Program” means the maintenance program for an Aircraft which is approved by the FAA or (if different), the aviation authority of the jurisdiction of registry of such Aircraft.

“Majority Junior Holders” means, as of any date of the determination thereof, (i) if no amount in respect of any Junior Loan is then outstanding, a Junior Loan Participant or Junior Loan Participants whose Junior Commitments aggregate more than 50% of the aggregate Junior Commitments of all Junior Loan Participants, or (ii) otherwise, the Holders of more than 50% in aggregate outstanding principal amount of all Junior Loan Certificates. For all purposes of the foregoing definition, in determining as of any date the then aggregate outstanding principal amount of any Junior Loan Certificates or amount of the Junior Commitments, there shall be excluded all Junior Loan Certificates and Junior Commitments, if any, held by the Borrower or any Affiliate thereof.

“Majority Senior Holders” means, as of any date of the determination thereof, (i) if no amount in respect of any Senior Loan is then outstanding, a Senior Loan Participant or Senior Loan Participants whose Senior Commitments aggregate more than 50% of the aggregate Senior Commitments of all Senior Loan Participants, or (ii) otherwise, the Holders of more than 50% in aggregate outstanding principal amount of all Senior Loan Certificates. For all purposes of the foregoing definition, in determining as of any date the then aggregate outstanding principal amount of any Senior Loan Certificates or amount of the Senior Commitments, there shall be excluded all Senior Loan Certificates and Senior Commitments, if any, held by the Borrower or any Affiliate thereof.

“Manufacturer” means Airbus S.A.S., in its capacity as manufacturer of the Aircraft, and its successors and assigns.

APPENDIX A

Page 11

[Facility Agreement [Virgin/Bank 2015]]

“Market Disruption Cost of Funds” has the meaning specified in Section 3(g)(ii) of the Facility Agreement.

“Market Disruption Event” has the meaning specified in Section 3(g)(i) of the Facility Agreement.

“Mortgage” means the Mortgage and Security Agreement [Virgin/Bank 2015] dated as of April 29, 2015 between the Borrower and the Security Trustee, including any Mortgage Supplement and each other supplement from time to time entered into pursuant hereto.

“Mortgage Estate” is defined in the Granting Clause to the Mortgage.

“Mortgage Supplement” means a supplement to the Mortgage substantially in the form of Exhibit A, which shall particularly describe the Airframe and Engines, or any Replacement Airframe or Replacement Engine, included in the property of the Borrower covered by the Mortgage, or any other supplement hereto.

“Non-U.S. Person” means any Person other than (i) a citizen or resident of the United States of America (for purposes of this definition, the “United States”), (ii) a corporation, partnership, limited liability company or other entity created or organized under the laws of the United States or any political subdivision thereof or therein or (iii) an estate or trust that is subject to United States federal income taxation regardless of the source of its income.

“Obsolete Part Amount” has the meaning specified in Section 1 of the Facility Agreement.

“Operative Documents” means the Facility Agreement, the Mortgage, any Mortgage Supplement, each Loan Certificate, each Fee Letter, the Intercreditor Agreement, the Airframe Warranties Agreement, the Engine Consent and Agreement and any amendments or supplements of any of the foregoing.

“Original Amount” means, with respect to a Series of Loan Certificates, the stated aggregate original principal amount of such Loan Certificates, which shall, on the Delivery Date for an Aircraft, equal the amount of the Loans issued in respect of such Aircraft. The Original Amount for the Loan Certificates for each Series shall be as specified in Section 1 of the Facility Agreement.

“Other Aircraft” means each “Aircraft” under and as defined in the Other Facility Agreement.

“Other Borrower” means VX 2015 LLC.

“Other Facility Agreement” means the Note Purchase Agreement [Virgin/NPA 2015], dated as of April 29, 2015, among the Other Borrower, each Note Purchaser party thereto, New York Life Insurance Company, as senior agent, the Junior Agent and the Security Trustee.

“Other Junior Loan Participants” means the “Junior Purchasers” as defined in the Other Facility Agreement.

APPENDIX A

Page 12

[Facility Agreement [Virgin/Bank 2015]]

“Other Junior Loans” means each note purchased by the “Junior Purchasers” as defined in the Other Facility Agreement.

“Other Junior Obligations” means, with respect to the Other Facility Agreement, the principal and interest on the Other Junior Loans and all other amounts due and payable under the Other Facility Agreement to the Other Junior Loan Participants.

“Other Mortgage” means the Mortgage and Security Agreement [Virgin/NPA 2015], dated as of April 29, 2015, between the Other Borrower, as mortgagor, and the Security Trustee, as mortgagee, in respect of the Other Aircraft.

“Parts” means all appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than (i) complete Engines or engines or (ii) PCE), which are from time to time incorporated or installed in or attached to the Airframe or any Engine and all such items which are subsequently removed therefrom so long as the Lien of the Mortgage shall cover the same pursuant to the terms of the Mortgage.

“Past Due Rate” has the meaning specified in Section 1 of the Facility Agreement.

“Payment Office” means the Security Trustee’s office and bank and account number referred to in Schedule I to the Facility Agreement.

“PCE” means passenger convenience equipment.

“Permitted Lessee” means (i) any United States air carrier as to which there is in force at the time of entering into such sublease or other transfer a certificate issued pursuant to 49 U.S.C. 44705 or any successor provisions that give like authority and that is not subject to bankruptcy proceedings; or (ii) any manufacturer of airframes or engines or any air carrier that is listed in Schedule 1 to the Mortgage; provided that for any entity described in clause (ii), (x) such entity is based in a country with which the United States maintains normal diplomatic relations, (y) such entity is not subject to bankruptcy proceedings and (z) such transfer of possession shall not deprive the Finance Parties of their perfected and enforceable security interest.

“Permitted Investments” means those investments described in Section 12.01 of the Mortgage.

“Permitted Lien” means any Lien permitted under Section 7.01 of the Mortgage.

“Permitted Transferee” means (i) the Borrower or any of its Affiliates, (ii) any Loan Participant or any Affiliate of a Loan Participant, (iii) any reputable bank or other reputable financial institution that is regularly engaged in or established for the purposes of making, purchasing or investing in commercial loans; provided that, without the prior written consent of the Borrower, no airline or Affiliate of an airline shall be a Permitted Transferee.

“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

APPENDIX A

Page 13

[Facility Agreement [Virgin/Bank 2015]]

“Plan” means an “employee benefit plan” (as such term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended) or any “plan” (as such term is defined in Section 4975(e)(1) of the Code) which has been established or maintained or contributed to by the Borrower or an Affiliate (other than a multiemployer plan within the meaning of Section 3(37) of ERISA) that, together with the Borrower, is treated as a single employer under Section 414(b), (c) or (m) of the Code.

“Prepayment Fee” has the meaning specified in Section 1 of the Facility Agreement.

“prospective international interest” is defined in the Cape Town Convention.

“Purchase Agreement” means those provisions of the Airbus A320 Family Purchase Agreement between the Borrower and the Manufacturer dated as of December 29, 2010 relating to the purchase by the Borrower of, inter alia, the Designated Aircraft, as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the foregoing relates to the Designated Aircraft.

“Quotation Date” means, in relation to any Interest Period, two London business days before the first day of such Interest Period.

“Reference Banks” means, with respect to any Loan, the principal London offices of BNP, Investec and JPMorgan Chase or such other bank or banks as may from time to time be designated by the Agent for such Loan and as may be reasonably acceptable to the Borrower.

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

“Replacement Aircraft” means any aircraft substituted for the Aircraft pursuant to Section 10.01 of the Mortgage.

“Replacement Airframe” means any airframe substituted for the Airframe pursuant to Section 10.01 of the Mortgage.

“Replacement Engine” means any engine substituted for an Engine pursuant to Section 10.01 of the Mortgage.

“Reserve Requirement” means, for any Loan Certificate, the average maximum rate at which reserves (including, without limitation, any marginal, supplemental or emergency reserves) are required to be maintained during the Interest Period in respect of such Loan Certificate under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding one billion Dollars against “Eurocurrency liabilities” (as such term is used in Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement includes any other reserves required to be maintained by such member banks by reason of any Change in Law with respect to (i) any category of liabilities that includes deposits by reference to which the LIBOR is to be determined or (ii) any category of extensions of credit or other assets that includes the Loan Certificates.

APPENDIX A

Page 14

[Facility Agreement [Virgin/Bank 2015]]

“Sanctioned Country” means, at any time, a country or territory which is, or whose government is, the subject or target of any Sanctions broadly restricting or prohibiting dealings with such country, territory or government (currently, Cuba, Iran, Burma, North Korea, Sudan, and Syria).

“Sanctioned Person” means, at any time, any Person with whom dealings are restricted or prohibited under Sanctions, including (a) any Person listed in any Sanctions-related list of designated Persons maintained by the United States (including by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or the U.S. Department of Commerce), the United Nations Security Council, the European Union or any of its member states, Her Majesty’s Treasury, Switzerland or any other relevant authority, (b) any Person located, organized or resident in, or any Governmental Entity or governmental instrumentality of, a Sanctioned Country or (c) any Person 25% or more directly or indirectly owned by, controlled by, or acting for the benefit or on behalf of, any Person described in clauses (a) or (b) hereof.

“Sanctions” means economic or financial sanctions or trade embargoes or restrictive measures enacted, imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or the U.S. Department of Commerce (b) the United Nations Security Council; (c) the European Union or any of its member states; (d) Her Majesty’s Treasury; (e) Switzerland; or (f) any other relevant authority.

“Screen Rate” means, for any Interest Period with respect to any Loan, the London Interbank Offered Rate administered by ICE Benchmark Administration Limited (or any other successor person which takes over the administration of that rate) for Dollar deposits for a three-month period (without rounding), which rate is displayed on the relevant Bloomberg page (or such other screen as may replace such Bloomberg page) at or about 11:00 a.m. (London time) on the Quotation Date for such Interest Period. If the agreed page is replaced or service ceases to be available, the Security Trustee may specify another page or service displaying the appropriate rate after consultation with the Loan Participants and the Borrower.

“Securities Act” means the Securities Act of 1933, as amended.

“Security Trustee” means Bank of Utah in its capacity as Security Trustee hereunder, and any successor thereto in such capacity.

“Security Trustee Lien” means any Lien which arises as a result of (A) claims against the Security Trustee not related to its interest in the Aircraft, (B) acts of the Security Trustee not permitted by, or failure of the Security Trustee to take any action required by, the Operative Documents to the extent such acts arise or such failure arises from or constitutes gross negligence or willful misconduct, (C) claims against the Security Trustee relating to Taxes or Expenses which are excluded from the indemnification provided by Section 8 of the Facility Agreement, or (D) claims against the Security Trustee arising out of the transfer by the Security Trustee of all or any portion of its interest in the Aircraft or the Operative Documents other than a transfer of the Aircraft pursuant to Article IX of the Mortgage while an Event of Default has

APPENDIX A

Page 15

[Facility Agreement [Virgin/Bank 2015]]

occurred and is continuing and prior to the time that the Security Trustee has received all amounts due pursuant to the Mortgage.

“Senior Agent” has the meaning specified in the preamble to the Facility Agreement.

“Senior Loan Certificate” means each loan certificate issued by the Borrower to the Senior Loan Participants pursuant to Section 2.02 of the Mortgage and any such Senior Loan Certificate issued in exchange or replacement therefor pursuant to Section 2.08 or Section 2.09 of the Mortgage.

“Senior Discharge Date” means the date on which all Senior Obligations have been fully and indefeasibly discharged in full.

“Senior Loan Participants” means BNP Paribas, New York Branch and each successor, permitted assignee or permitted transferee thereof as a Holder of a Senior Loan Certificate.

“Senior Loans” means the loans made by the Senior Loan Participants to the Borrower to finance the Aircraft pursuant to the terms of Section 2.02 of the Mortgage, and outstanding from time to time under the Mortgage.

“Senior Secured Obligations” means all obligations payable in respect of the Senior Loans under the Facility Agreement.

“Senior Underwriter” means BNP Paribas, New York Branch.

“Series” has the meaning specified in Section 2(a)(iii) of the Facility Agreement.

“Special Default” means a Default under any of Section 8.01, 8.02, 8.06 or 8.07 of the Mortgage.

“Special Junior Lender” means a Junior Loan Participant that has identified itself as such in the Assignment and Assumption Agreement; and for which the Borrower’s consent has been obtained if and as required under Section 16(c) of the Facility Agreement.

“Specified Jurisdiction” means any of France, Germany, Ireland, Luxembourg, The Netherlands, the United Kingdom or the United States.

“Specified Transferee Jurisdiction” has the meaning specified in Schedule III to the Facility Agreement.

“Stipulated Insured Amount” has the meaning specified in Section 1 of the Facility Agreement.

“Swap Break Amount” means, as of any date on which Break Amount may be payable under the Operative Documents in respect of a Fixed Rate Loan and for any Holder’s related Hedging Transaction, the amount a Swap Counterparty would require in accordance with market practice on the basis of the “Close-out Amount” (as defined in the Swap Form) approach to have paid to such Swap Counterparty on such date by such Holder (such amount to be expressed as a

APPENDIX A

Page 16

[Facility Agreement [Virgin/Bank 2015]]

positive number), or the amount such Swap Counterparty would be willing to pay in accordance with market practice on the basis of “Close-out Amount” to such Holder on such date (such amount to be expressed as a negative number), in either case, to terminate such Hedging Transaction on such date with respect to, and to the extent of, such Holder’s then outstanding principal amount of all of the Loan Certificates held by such Holder relating to Fixed Rate Loans that are subject to prepayment or purchase (or the entire Commitment), but excluding any unpaid amounts under such Hedging Transaction due to or payable by such Swap Counterparty prior to such date in respect of interest payments received by such Holder); provided that where a Holder has not entered into a Hedging Transaction, such amount shall be calculated on the basis of a deemed fixed-for-floating interest rate swap on market terms that meets the definition of Hedging Transaction for a notional amount equal to the outstanding principal amount of the Fixed Rate Loans of such Holder (taking into account any required amortization of such Fixed Rate Loans).

“Swap Breakage Gain” means, as to any Holder of a Fixed Rate Loan, the absolute value of the Swap Break Amount payable to such Holder if the Swap Break Amount is a negative number.

“Swap Breakage Loss” means, as to any Holder, the value of the Swap Break Amount payable by such Holder if the Swap Break Amount is a positive number.

“Swap Counterparty” means, for any Hedging Transaction, a floating rate payor counterparty sourced by the applicable Holder, or in the case of an internal Hedging Transaction, such Holder’s swap or treasury desk. For the avoidance of doubt, the Borrower shall not be a Swap Counterparty to any Hedging Transaction.

“Swap Effective Date” has the meaning specified in Section 3(b)(ii) of the Facility Agreement.

“Swap Form” means a 2002 Master Agreement of the International Swaps and Derivatives Association in the form published in 2002 (or any comparable form) and supplemented by the 2006 ISDA Definitions (as amended).

“Tax” or “Taxes” is defined in Schedule III to the Facility Agreement.

“Taxing Authority” is defined in Schedule III to the Facility Agreement.

“transacting user entity” is defined in the Regulations for the International Registry.

“Treaty Loan Participant” has the meaning specified in Schedule III to the Facility Agreement.

“U.S. Air Carrier” means any United States air carrier as to which there is in force a certificate issued pursuant to Section 41102(a) of the Federal Aviation Act, and which is a citizen of the United States (as defined in 49 U.S.C. § 40102(a)(15)) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of title 49 (or the equivalent authority issued by the Civil Aeronautics Board under the predecessor regulatory laws, rules and regulations) for aircraft capable of carrying 10 or more individuals or 6,000

APPENDIX A

Page 17

[Facility Agreement [Virgin/Bank 2015]]

pounds or more of cargo or which may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof.

“Underwriters” means the Loan Participants originally party to the Facility Agreement on the date of the Facility Agreement.

“War Risk Insurance” has the meaning assigned to such term in Section 6.02 of the Mortgage.

“Warranty Agreements” means the Airframe Warranties Agreement and the Engine Agreement.

“Warranty Bill of Sale” means a full warranty bill of sale in favor of the Borrower from the Manufacturer in respect of an Aircraft.

“Wet Lease” means any arrangement whereby the Borrower agrees to furnish the Airframe and associated Engines or engines installed thereon to a third party pursuant to which the Airframe and Engines or engines (i) are operated by pilots who are regular employees of the Borrower, and (ii) such property is maintained by the Borrower.

APPENDIX A

Page 18

EX-10.4

Exhibit 10.4

EXECUTION VERSION

AIRCRAFT LEASE AGREEMENT

[VIRGIN/NPA 2015]

dated as of April 29, 2015

between

VX 2015 LLC

as Lessor

and

VIRGIN AMERICA INC.

as Lessee

Certain rights, title and interests of the Lessor in and to this Lease Agreement have been, or will be, assigned to and are, or will be, subject to a security interest in favor of Bank of Utah (the “Security Trustee”) as security trustee for the Secured Parties (as defined in a Mortgage and Security Agreement dated as of the date hereof between Lessor and the Security Trustee). This Lease Agreement has been executed in multiple counterparts. The counterpart to be deemed the Original Counterpart contains a receipt therefor executed by the Security Trustee on its signature page. To the extent that this Lease Agreement constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), a security interest in this Lease Agreement may be perfected only by the transfer of possession of that Original Counterpart.

TABLE OF CONTENTS

		Page
Section 1.	Definitions		1
Section 2.	Agreement to Lease		1
(a)	Delivery		1
(b)	Acceptance		1
(c)	Cape Town Convention		2
(d)	Commitment Termination		2
(e)	Finance Lease Matters		2
Section 3.	Term and Rent		3
(a)	Term		3
(b)	Initial Rent; Basic Rent		3
(c)	Supplemental Rent		3
(d)	Manner of Payment		3
(e)	Early Termination Option		4
(f)	Note Acceleration; Mandatory Prepayment		4
(g)	Absolute Obligation		5
(h)	No Deductions or Withholdings		5
Section 4.	Lessor’s Disclaimer of Warranties; Treatment of Manufacturer’s Warranties		6
(a)	Disclaimer		6
(b)	Manufacturer’s Warranties		7
Section 5.	Purchase Option; Return of Aircraft		8
(a)	Purchase Option		8
(b)	Purchase Procedure; Termination		8
(c)	Return of Aircraft; Condition Upon Return		9
(d)	Place of Redelivery; Storage Upon Return		9
(e)	Commercially Reasonable		9
Section 6.	Representations and Warranties; Certain Covenants		9
(a)	Representations and Warranties		9
(b)	Certain Covenants		14
Section 7.	Registration, Maintenance, Operation and Possession		17
(a)	Registration and Maintenance		17
(b)	Operation		21
(c)	Possession and Subleases		22
(d)	Terms of Permitted Subleases		25
(e)	Wet Leases		25
(f)	Assignment of Subleases		25
(g)	No Interests in Other Airframes and Engines		25

i

TABLE OF CONTENTS

(continued)

		Page
(h)	Special Operation and Possession Covenants		26
(i)	Permitted Sublessee’s Performance and Rights		28
(j)	Inspection		28
(k)	Information Concerning the Aircraft and Engines		29
(l)	Substitution of Engines		29
Section 8.	Replacement; Temporary Installation; Pooling; Alterations, Modifications and Additions; Etc.		29
(a)	Replacement of Parts		29
(b)	Pooling of Parts; Temporary Replacement Parts		29
(c)	Alterations, Modifications and Additions		30
(d)	Nameplate and Other Markings		30
(e)	No Authorization to Contract for Lessor		31
(f)	No Rights of Retention		31
Section 9.	Loss, Destruction, Requisition, Etc		31
(a)	Event of Loss with Respect to an Aircraft		31
(b)	Replacement Aircraft		32
(c)	Release of Liens upon Compliance		35
(d)	Event of Loss With Respect to an Engine		35
(e)	Application of Payments From Governmental Authorities for Requisition of Title, Etc.		37
(f)	Requisition for Use of an Aircraft by the United States Government or the Government of Registry of such Aircraft		38
(g)	Application of Payments During Existence of Special Defaults or Lease Events of Default		38
Section 10.	Insurance		38
(a)	Bodily Injury Liability and Property Damage Liability Insurance		38
(b)	Insurance Against Loss or Damage to an Aircraft		39
(c)	Reports, Etc.		42
(d)	Self-Insurance		42
(e)	Additional Insurance by Lessee; Insurance by Security Trustee		42
(f)	Application of Payments During Existence of a Special Default or a Lease Event of Default		43
(g)	Terms of Insurance Policies		43
(h)	Failure to Insure		45
(i)	Continuing Insurance for Indemnity		45
(j)	Indemnification by United States Government in Lieu of Insurance		45
Section 11.	Absolute Obligations		46
Section 12.	Assignment		47

ii

TABLE OF CONTENTS

(continued)

		Page
Section 13.	Events of Default		47
(a)	Payments on Rent and Notes		47
(b)	Other Payments		47
(c)	Insurance		47
(d)	Breach of Covenant		47
(e)	Incorrect or False Representation or Warranty		48
(f)	Voluntary Bankruptcy Proceeding		48
(g)	Involuntary Uncured Bankruptcy Proceeding		48
(h)	Air Carrier License		48
(i)	Security Interest		48
(j)	Note Purchase Agreement		49
(k)	Default under Other Mortgage		49
Section 14.	Remedies		49
Section 15.	Further Assurances; Investment of Security Funds		51
(a)	Further Assurances		51
(b)	Investment of Security Funds		52
Section 16.	Quiet Enjoyment		53
Section 17.	Notices		53
Section 18.	Miscellaneous; Governing Law		53
Section 19.	WAIVER OF JURY TRIAL		54
Section 20.	Security for Lessor’s Obligation		54
Section 21.	Lessor and Security Trustee Appointed Attorney-in-Fact		55
Section 22.	Lessor’s Right to Perform for Lessee		56
Section 23.	English Language Prevails		56
Section 24.	Complete Agreement; ACC Counsel-Mandated Revisions		56
Section 25.	No Merger of Title		56
Section 26.	General Indemnity		56
(a)	Operational indemnity		56

SCHEDULE 1	-	Permitted Sublessees
EXHIBIT I	-	Form of Lease Supplement
APPENDIX A	-	Definitions

iii

AIRCRAFT LEASE AGREEMENT [VIRGIN/NPA 2015]

THIS AIRCRAFT LEASE AGREEMENT [VIRGIN/NPA 2015] dated as of April 29, 2015 (this “Lease”) is between VX 2015 LLC, as lessor (“Lessor”) and VIRGIN AMERICA INC., a corporation organized under the laws of the State of Delaware, as lessee (“Lessee”).

W I T N E S S E T H:

WHEREAS, pursuant to the Purchase Agreement Assignments, Lessor will acquire certain rights under the Purchase Agreement in respect of the Aircraft;

WHEREAS, pursuant to the terms and conditions of this Lease, Lessor has agreed to lease the Aircraft to Lessee; and

WHEREAS, Lessee is a certificated air carrier duly authorized by the FAA to operate aircraft, including, without limitation, the Aircraft, in commercial passenger air transportation.

NOW, THEREFORE, the parties hereto agree as follows:

Section 1. Definitions. Unless the context otherwise requires, (a) capitalized terms used herein and not otherwise defined herein shall have the meanings assigned thereto in Appendix A hereto for all purposes of this Lease and (b) the rules of construction and interpretation shall be as set forth in Appendix A hereto for all purposes of this Lease. In addition, the following terms shall have the following meanings:

“Obsolete Part Amount” means, in respect of any Aircraft, $780,000, escalated annually on January 1st of each year (commencing January 1, 2016) by 4.0% per annum.

Section 2. Agreement to Lease.

(a) Delivery. Lessor hereby agrees on each Delivery Date, subject to (i) the purchase of the Aircraft to be delivered on such Delivery Date by Lessor in accordance with the Note Purchase Agreement and pursuant to the Purchase Agreement and the relevant Purchase Agreement Assignment, (ii) the satisfaction or waiver of the conditions with respect to such Aircraft set forth or referred to in Section 4 of the Note Purchase Agreement and (iii) Section 2(d) below, to deliver to and lease to Lessee hereunder, and Lessee hereby agrees, subject to the foregoing and the satisfaction of the conditions set forth in Section 4 of the Note Purchase Agreement, to accept delivery of, and to lease from Lessor hereunder, such Aircraft, whereupon the Term for such Aircraft shall commence. Lessee acknowledges and agrees that at all times during the relevant Term, title to such Aircraft (including the Aircraft Documentation) shall remain vested in Lessor.

(b) Acceptance. Lessor hereby appoints Lessee or Lessee’s designee as its attorney-in-fact to accept delivery of the Aircraft under the Purchase Agreement. Lessee hereby agrees that the execution of a Lease Supplement in the form of Exhibit I hereto for an Aircraft shall be deemed to constitute acceptance of such Aircraft (“as-is”, “where-is”) by Lessee under this Lease.

[Lease Agreement [Virgin/NPA 2015]]

(c) Cape Town Convention. The parties hereto agree that for all purposes of the Cape Town Convention, upon execution of a Lease Supplement for an Aircraft (i) this Lease, together with such Lease Supplement, will constitute a separate International Interest under the Cape Town Convention with respect to the Airframe and each Engine identified in such Lease Supplement, (ii) each of the Airframe and Engines identified in each Lease Supplement constitutes an Aircraft Object under the Cape Town Convention and (iii) this Lease, together with such Lease Supplement, will constitute an agreement for the registration of the Airframe and each Engine identified therein.

(d) Commitment Termination. Notwithstanding anything to the contrary herein, if Delivery of an Aircraft shall not have occurred by the Commitment Termination Date for such Aircraft, this Lease shall terminate with respect to such Aircraft, and the Lessee shall pay to the Lessor on such Commitment Termination Date an amount equal to all accrued and unpaid Rent in respect of such Aircraft (including, without duplication, any amounts necessary to enable Lessor to meet its obligations under the Operative Documents in respect of any termination of the associated financing pursuant to the Note Purchase Agreement relating to such Aircraft).

(e) Finance Lease Matters.

(i) Granting Clause. Lessee hereby irrevocably grants, assigns, conveys, mortgages, pledges, hypothecates and transfers to Lessor a security interest in all Lessee’s right, title and interest in, to and under the Aircraft and all proceeds thereof, such proceeds to have the broadest meaning possible in accordance with the Uniform Commercial Code as adopted by the State of New York and as amended therein from time to time. Lessee hereby specifically authorizes Lessor to execute in its name and to file any and all financing statements, continuation statements, amendments and other documents as may from time to time be necessary or desirable to perfect any security interest in favor of Lessor granted by Lessee now or hereafter in any and all Aircraft included within any Lease Supplement. Any execution on filing of any financing statement by Lessor pursuant to this paragraphs is hereby ratified and confirmed in all respects.

(ii) Release. Upon (or at any time after) this Lease shall be terminated in respect of any Aircraft and there shall have been paid in full all amounts owing hereunder in respect of such Aircraft, and provided that there shall be no Default Event continuing after giving effect to such payment, the Lessee may direct the Lessor to execute and deliver to or as directed in writing by the Lessee an appropriate instrument or instruments prepared by the Lessee and reasonably satisfactory to the Lessor releasing such Aircraft from the lien of this Lease and the Lessor shall execute and deliver such instruments as aforesaid and give written notice thereof to such Persons as the Lessee may reasonably request.

(iii) Finance Lease. This Lease is a finance lease. The parties hereto recognize and agree that the Lessee shall be deemed to be the owner (but not the title owner) of the Aircraft for all commercial, accounting, FAA and tax purposes.

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Section 3. Term and Rent.

(a) Term. Subject to acceptance of an Aircraft as provided in Section 2, Lessee hereby leases from Lessor such Aircraft for the Term applicable thereto.

(b) Initial Rent; Basic Rent. Lessee agrees to pay or cause to be paid on the Delivery Date in respect of each Aircraft the Initial Rent in Dollars in respect of such Aircraft. In addition, Lessee agrees to pay Lessor rent in Dollars for each Aircraft in arrears on each Payment Date occurring during the Term applicable thereto, in each case in an amount equal to the Basic Rent for such Aircraft. For all purposes of this Lease Agreement, the Basic Rent payable in respect of an Aircraft on each related Payment Date occurring during the Term applicable thereto shall be equal to the sum of (x) the “Principal Component” set forth in Schedule I to the Lease Supplement for such Aircraft for such Payment Date and (y) the “Interest Component” set forth in Schedule I to the Lease Supplement for such Aircraft for such Payment Date.

Each installment of Basic Rent in respect of an Aircraft payable on any Payment Date shall in all events be in an amount that is at least equal to the amount of the scheduled principal of, and interest on, the Notes relating to such Aircraft on such Payment Date.

(c) Supplemental Rent. Lessee shall pay all Supplemental Rent to Lessor or to such other Person to whom such amount may be owed under the Operative Documents promptly as the same shall become due and owing and in the currency (whether Dollars or another currency) in which the same is due and owing. Lessee will also pay interest on demand to the recipient entitled thereto, as Supplemental Rent, to the extent permitted by applicable law, at a rate per annum equal to the applicable Post-Default Rate on any part of any installment of Basic Rent not paid when due for the period from and including the due date thereof to but excluding the date on which the same is paid in full and, in the case of payment to any of the Lessor, any Purchaser and the Security Trustee, on any payment of Supplemental Rent payable but not paid when due for the period from and including the due date thereof to but excluding the date on which the same is paid in full. For the avoidance of doubt, Supplemental Rent shall include all Commitment Fees, Prepayment Fee, and Break Amount due and payable under the Note Purchase Agreement in respect of any Series of Notes and all other amounts, other than the principal of and interest on the Notes, payable by the Owner under the Note Purchase Agreement and the other Operative Documents.

(d) Manner of Payment. All Rent and other sums payable hereunder shall be paid by 1:00 p.m. (New York City time) on the date payment is due, in Dollars (or, in the case of any Supplemental Rent denominated in a currency other than Dollars, in the relevant currency) and in immediately available funds (or such other funds as are from time to time customary for the settlement of international banking transactions in Dollars or other relevant currency in New York City or other relevant jurisdiction of such other currency). If any sum payable hereunder falls due on a day which is not a Business Day, then such sum shall be payable on the next succeeding Business Day; provided that, in the case of Basic Rent payable on a Payment Date, if by virtue of such extension such payment would fall in the next succeeding month, such sum shall be payable on the next preceding Business Day. All payments of Rent to Lessor and all other amounts payable hereunder by Lessee to Lessor shall be paid to

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the Payment Office (or such other account as Lessor, with the prior written consent of the Security Trustee, may specify from time to time in writing not less than ten Business Days prior to the date on which the relevant amount is payable).

(e) Early Termination Option. Provided that neither this Lease nor the Term for the applicable Aircraft has otherwise terminated, Lessee may, by not less than five Business Days’ prior written notice delivered to Lessor (which notice shall be irrevocable), request that Lessor prepay in full the Notes in respect of (x) any Aircraft or (y) all of the Aircraft, in each case on the Business Day specified in such notice (the “Voluntary Termination Date”). In such event, Lessor shall promptly give notice of its election to prepay the relevant Notes on such date as shall be agreed by Lessee and Lessor. On the Voluntary Termination Date, the Lessee shall pay or cause to be paid (A) in the case of the preceding clause (x), an amount sufficient to permit Lessor to pay the Note Value for the applicable Aircraft as of such date, together with all accrued but unpaid Rent in respect of such Aircraft and all other amounts then due and payable by Lessee under the Operative Documents and (B) in the case of the preceding clause (y), an amount sufficient to permit Lessor to pay the aggregate of the Note Values for all of the Aircraft as of such date, together with all accrued but unpaid Rent, if any, and all other amounts then due and payable by Lessee under the Operative Documents. As a condition to any purchase of an Aircraft pursuant to the foregoing, the outstanding principal and interest on the Notes Allocated To such Aircraft, together with all other amounts then due and payable hereunder and under the other Operative Documents, shall have been (or shall concurrently be) paid in full. Upon payment in full of the amounts payable under this Section 3(e) in respect of an Aircraft, the Term for such Aircraft shall end, and Lessor shall transfer title to such Aircraft to Lessee or its designee in accordance with Section 5(b).

(f) Note Acceleration; Mandatory Prepayment. If the Notes are expressed to become due and payable or become due and payable in full, upon payment in full of the amounts payable in respect thereof under the Operative Documents, the Term shall end and Lessor shall transfer title to the Aircraft to Lessee or its designee in accordance with Section 5(b) hereof.

(i) If for any reason whatsoever the Notes Allocated To an Aircraft are expressed to become due and payable or become due and payable in full under any provision of the Operative Documents, including by reason of a mandatory prepayment under Section 3(g)(ix) of the Note Purchase Agreement, then on the date on which such Notes are expressed to become due and payable or become due and payable in full by Lessor thereunder, Lessee shall pay or cause to be paid, on behalf of Lessor, to the Person entitled thereto in accordance with the terms of the Operative Documents the sum of (A) an amount sufficient to satisfy, in full, Lessor’s obligation to pay the relevant Note Value applicable to such date, (B) any accrued but unpaid Rent (including, without limitation, amounts corresponding to accrued interest on such Notes through the date of prepayment) and (C) all other amounts then due and payable by Lessee under this Lease and the other Operative Documents. Upon payment in full of the amounts payable under this Section 3(f)(i) in respect of an Aircraft, the Term for such Aircraft shall end and Lessor shall transfer title to such Aircraft to Lessee or its designee in accordance with Section 5(b).

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(ii) In the event that Lessor is obliged to or becomes obliged to prepay any part the Notes Allocated To an Aircraft under the Operative Documents in a circumstance where the whole of such Notes is not due and payable, then Lessee shall on the date which Lessor is obliged to make the relevant prepayment thereunder pay or cause to be paid, on behalf of Lessor, to the Person entitled thereto in accordance with the terms of the Operative Documents an amount equal to the amount necessary for Lessor to satisfy the obligation to prepay the relevant amount of the prepayment to be paid by Lessor under the Operative Documents and all other amounts then due and payable by the Lessor in respect of such prepayment. Any payment made pursuant to the preceding sentence shall (as it relates to principal) correspondingly reduce the related Note Value. Promptly following any payment by Lessee pursuant to this Section 3(f)(ii), the Purchasers shall prepare revised schedules in substitution for the then current schedules to this Lease. Such revised schedules shall be prepared on the same basis as the schedules prepared in accordance with the Note Purchase Agreement to reflect that the payment of Basic Rent and Note Value with respect to such Aircraft under this Lease shall each be in an amount which is sufficient to repay the Notes Allocated To such Aircraft and interest thereon under the Note Purchase Agreement. The revised schedules shall be submitted to each of Lessor and Lessee for approval (which approval shall not be unreasonably withheld or delayed). Following approval by such parties, the revised schedules shall be substituted for the then existing schedules and henceforth all payments to be made by Lessee under this Lease shall be made in accordance with such substituted schedules.

(g) Absolute Obligation. The obligation of Lessee to pay Rent hereunder shall be absolute and unconditional as more fully set forth in Section 11.

(h) No Deductions or Withholdings.

(i) All payments by Lessee under or in connection with this Agreement shall be made in full without any deduction or withholding for or on account of any Taxes unless a deduction or withholding is required by any applicable law, in which event the Lessee shall:

(1) ensure that the deduction or withholding does not exceed the minimum amount legally required;

(2) in relation to any payment to a Lessor or an Indemnitee (each, a “Tax Indemnitee”), pay to such Tax Indemnitee immediately the additional amount that will result in the net amount received by that Tax Indemnitee being equal to the amount which would have been received by that Tax Indemnitee had no such deduction or withholding for Indemnified Taxes been made;

(3) pay to the relevant Governmental Authority within the period for payment permitted by any applicable law the minimum amount of the deduction or withholding required by law; and

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(4) when requested to do so by such Tax Indemnitee, provide to such Tax Indemnitee, within the period for payment permitted by any applicable law, an official receipt or copy of an official receipt (if available) of the relevant Governmental Authority for all amounts deducted or withheld, or if such receipts are not issued by the relevant Governmental Authority, a certificate of deduction or any other evidence of the relevant deduction or withholding reasonably requested by such Tax Indemnitee.

(ii) Lessee shall promptly upon becoming aware that it must make a withholding or deduction from any payment required to be made by it under this Agreement or other Operative Document (or that there is any change in the rate or the basis of a withholding or deduction), notify the affected Tax Indemnitee in writing accordingly.

(iii) Each Tax Indemnitee and Lessee shall timely furnish a duly executed IRS Form W-9 or an applicable IRS Form W-8 and shall co-operate in completing any procedural formalities necessary for such Tax Indemnitee and Lessee to obtain authorization to make each payment without deduction or withholding, or, if not possible, to the extent possible at the cost and expense of Lessee.

Section 4. Lessor’s Disclaimer of Warranties; Treatment of Manufacturer’s Warranties.

(a) Disclaimer. Subject to Section 4(b), Lessee acknowledges and agrees that (A) each Aircraft is of a size, design, capacity and manufacture selected by and acceptable to Lessee and (B) Lessee is satisfied that each Aircraft is suitable for its purposes. NONE OF LESSOR, ANY PURCHASER OR THE SECURITY TRUSTEE SHALL MAKE OR GIVE OR SHALL BE DEEMED TO HAVE MADE OR GIVEN AND HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION, WARRANTY OR GUARANTEE OF ANY KIND, EXPRESS OR IMPLIED, AS TO (I) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, COMPLIANCE WITH SPECIFICATIONS OF, OPERATION OF, OR THE QUALITY OF THE MATERIAL OF OR WORKMANSHIP IN, OR TITLE TO, OR ANY DEFECT IN, ANY AIRCRAFT, ANY AIRFRAME, ANY ENGINE, ANY PART, ANY DATA OR ANY OTHER THING DELIVERED, LEASED, SOLD OR TRANSFERRED HEREUNDER, (II) THE MERCHANTABILITY OR FITNESS FOR USE OR FOR A PARTICULAR PURPOSE OF ANY AIRCRAFT, ANY AIRFRAME, ANY ENGINE, ANY PART, ANY DATA OR ANY OTHER THING DELIVERED, LEASED, SOLD OR TRANSFERRED HEREUNDER, OR AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR THE LIKE, OR ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, (III) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT WITH RESPECT TO ANY AIRCRAFT, ANY AIRFRAME, ANY ENGINE, ANY PART, ANY DATA OR ANY OTHER THING DELIVERED, LEASED, SOLD OR TRANSFERRED HEREUNDER, WHETHER OR NOT IN STRICT OR ABSOLUTE LIABILITY OR ARISING FROM THE NEGLIGENCE OF LESSOR, ANY PURCHASER OR THE SECURITY TRUSTEE, ACTUAL OR IMPUTED, (INCLUDING ANY STATUTORY WARRANTY OR

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CONDITION UNDER THE LAW OF THE UNITED STATES OR ANY STATE THEREOF, OR (IV) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF, OR DAMAGE TO, ANY AIRCRAFT, ANY AIRFRAME, ANY ENGINE, ANY PART, ANY DATA OR ANY OTHER THING, FOR ANY LOSS OF USE, REVENUE OR PROFIT, OR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES THEREFROM, IT BEING UNDERSTOOD THAT ALL SUCH RISKS, AS BETWEEN LESSEE AND SUCH OTHER PERSONS, ARE TO BE BORNE BY LESSEE, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THE OPERATIVE DOCUMENTS. NO PURCHASER NOR THE SECURITY TRUSTEE SHALL BE LIABLE OR OTHERWISE RESPONSIBLE IN ANY MANNER FOR ANY REPRESENTATION OR WARRANTY MADE BY LESSOR HEREUNDER OR UNDER ANY OTHER OPERATIVE DOCUMENT.

(b) Manufacturer’s Warranties. None of the provisions of this Section 4 or any other provision of this Lease shall be deemed to amend, modify or otherwise affect the representations, warranties or other obligations (express or implied) of the Manufacturer or Engine Manufacturer or any subcontractor or supplier of the Manufacturer or Engine Manufacturer with respect to any Aircraft, any Airframe, any Engine or any Parts forming a part of or installed on or attached to any Aircraft, any Airframe or any Engine or to release the Manufacturer or Engine Manufacturer or any such subcontractor or supplier from any such representation, warranty or obligation. So long as no Lease Event of Default shall have occurred and be continuing, Lessee shall have the benefit of and shall be entitled to enforce (as it shall deem appropriate), either in its own name or in the name of Lessor (at the cost of Lessee and in respect of which enforcement Lessee hereby agrees to indemnify Lessor) for the use and benefit of Lessee during the relevant Term by way of revocable license (provided that Lessor shall not revoke such license until a Lease Event of Default occurs and shall reinstate such license in the event the Lease Event of Default is cured or waived), any and all dealer’s, manufacturer’s or subcontractor’s credits, guarantees, indemnities, warranties or other benefits, if any, available to Lessor in respect of any Aircraft, any Engine and/or any Part; provided, that Lessee shall not be entitled to modify, amend or otherwise alter any of the foregoing without the prior written consent of Lessor except in circumstances where such modification, amendment or alteration could not reasonably be expected to have a material adverse effect in relation to Lessor or any Secured Party, and Lessor agrees at Lessee’s expense to do, execute and deliver such further acts, deeds, matters or things as may be reasonably requested by Lessee to enable Lessee to obtain customary warranty service furnished for any Aircraft, any Engine and/or Part by such dealer, manufacturer or subcontractor or any supplier as aforesaid or to exercise any other rights in relation to any of the foregoing benefits, and any moneys recovered from such enforcement shall be promptly paid to, and retained by, Lessee; provided further, that if a Lease Event of Default shall have occurred and be continuing, any such moneys payable to Lessee shall instead be paid to Lessor as security for, and applied to, the obligations of Lessee under the Operative Documents in such order as Lessor shall elect and, at such time as no Lease Event of Default shall be continuing, to the extent not so applied, promptly paid to Lessee. Lessee hereby acknowledges the provisions of the Purchase Agreement Assignments and the Warranty Agreements and of the security interests granted to the Security Trustee in respect of Lessor’s rights, title and interests in and to the Purchase Agreement and the Engine Agreement (as defined in the applicable Warranty Agreement) created by the Operative Documents.

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Section 5. Purchase Option; Return of Aircraft.

(a) Purchase Option. Provided that (i) this Lease has not otherwise terminated in respect of the applicable Aircraft and (ii) all Rent and other amounts that shall be then due and payable by Lessee to Lessor in respect of the relevant Aircraft shall have been paid, Lessee shall, on the expiry of the Term of an Aircraft, purchase such Aircraft for a purchase price equal to the remaining balance of the Notes issued in respect of such Aircraft.

(b) Purchase Procedure; Termination. In connection with the purchase of an Aircraft pursuant to clause (a) above or pursuant to Section 3(e) or 3(f)(i), upon payment to Lessor of all amounts payable hereunder and under the other Operative Documents and provided that no Lease Event of Default has occurred and is continuing, Lessor will transfer to Lessee all of Lessor’s right, title and interest in and to such Aircraft (including any warranties relating thereto and assigned to Lessor pursuant to the relevant Warranty Agreement), in “AS-IS, WHERE-IS” condition, WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND EXCEPT AS TO THE ABSENCE OF LESSOR LIENS. THE WARRANTY CONTAINED IN THE IMMEDIATELY PRECEDING SENTENCE WILL BE MADE BY LESSOR IN LIEU OF AND IN SUBSTITUTION FOR, AND LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER EXPRESS OR IMPLIED WARRANTIES, CONDITIONS OR REPRESENTATIONS WITH REGARD TO THE CONDITION OF SUCH AIRCRAFT (INCLUDING SUCH AS TO THE STATE, DESCRIPTION, QUALITY, AIRWORTHINESS, VALUE OR FITNESS OF SUCH AIRCRAFT), AND ALL OBLIGATIONS AND LIABILITIES OF LESSOR HEREUNDER WITH RESPECT TO CONSEQUENTIAL DAMAGES THEREFROM, AND ALL RIGHTS, CLAIMS AND REMEDIES OF LESSEE, EXPRESS OR IMPLIED, ARISING OUT OF LAW OR OTHERWISE WITH RESPECT THERETO THE USE OR OPERATION OF SUCH AIRCRAFT AND ANYTHING GIVEN OR SOUGHT TO BE IMPLIED FROM ANYTHING SAID OR WRITTEN IN THE NEGOTIATIONS BETWEEN THE PARTIES HERETO OR THEIR REPRESENTATIVES PRIOR TO ENTERING INTO THIS AGREEMENT WITH RESPECT THERETO. ANY STATUTORY OR OTHER WARRANTY, CONDITION, DESCRIPTION OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE STATE, QUALITY, AIRWORTHINESS, VALUE OR FITNESS OF SUCH AIRCRAFT IS EXPRESSLY EXCLUDED, INCLUDING BUT NOT LIMITED TO: (AA) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS; (BB) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; (CC) ANY OBLIGATION OR LIABILITY WITH RESPECT TO ANY ACTUAL OR ALLEGED INFRINGEMENT OF PATENTS, LICENSES OR THE LIKE, OR ANY OTHER INTELLECTUAL PROPERTY; (DD) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM EACH PARTY’S OR ITS ASSIGNS’ NEGLIGENCE, ACTUAL OR IMPUTED; AND (EE) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO SUCH AIRCRAFT, FOR LOSS OF USE, REVENUE OR PROFIT WITH RESPECT TO LESSEE OR FOR ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF WHATEVER DESCRIPTION. In connection with such transfer, Lessee shall prepare and Lessor shall execute, all in form recordable in the State of Registration, a bill of sale evidencing each such transfer, a termination of this Lease with respect to such Aircraft and such other documents (including the discharge of the Lien of the Mortgage with respect to such Aircraft and

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opinions of counsel) as Lessee may reasonably request, all at the expense of Lessee. Upon a purchase of an Aircraft by Lessee pursuant to Section 5(a) and payment in full of the amounts payable under such Section in respect to such Aircraft, this Lease shall terminate for purposes of such Aircraft.

(c) Return of Aircraft; Condition Upon Return. Unless Lessee or its designee shall have acquired title to the relevant Aircraft pursuant to Section 5(b), Lessee will, upon the termination or expiration of this Lease with respect to an Aircraft (other than following an Event of Loss with respect to such Aircraft), at its own risk and expense, cause the Airframe for such Aircraft together with the Aircraft Documentation therefor to be delivered to Lessor pursuant to Section 5(d), equipped with its two Engines (or two engines of the same manufacturer or of another manufacturer, of the same or an improved model (it being understood that such engines on such Aircraft shall be of the same model and suitable for installation and use on the related Airframe but having a value and utility at least equal to, and being in as good operating condition as, the Engines for such Aircraft)), duly installed thereon. At the time of such return, (A) such Aircraft shall have a valid Certificate of Airworthiness, (B) the Airframe for such Aircraft and such Engines or engines shall be free and clear of all Liens (other than Permitted Liens), (C) the Airframe for such Aircraft and such Engines or engines shall be in as good operating condition as when originally accepted by Lessee under this Lease, ordinary wear and tear excepted, and in proper operating condition for scheduled revenue passenger flights as provided in this Section 5(c), Section 7(b) and Section 8 and (D) such Aircraft shall, except as otherwise provided herein, be in substantially the same configuration and have installed the same or equivalent avionics and other equipment, safety equipment and appurtenances as when such Aircraft was originally delivered to Lessee hereunder (it being agreed that the records of the Manufacturer, including the Purchase Agreement and the Aircraft Documentation, shall be prima facie evidence thereof).

(d) Place of Redelivery; Storage Upon Return. Each Aircraft to be returned pursuant to Section 5(c) shall be returned at any airport in Lessee’s network (as reasonably designated by Lessor in its sole discretion) that is an airport in the continental United States of America where the Aircraft may safely land, and Lessee shall retain the risk of loss for such Aircraft, its Airframe, Engines and Parts until they are returned in conformity with the provisions of this Lease at such airport.

(e) Commercially Reasonable. Lessor and Lessee agree that all of the foregoing provisions of this Section 5 are commercially reasonable.

Section 6. Representations and Warranties; Certain Covenants.

(a) Representations and Warranties. Lessee represents and warrants to Lessor that as of the date hereof and on each Delivery Date:

(i) Existence. The Lessee is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires to be so qualified, except where the failure to be so qualified would not have a material adverse effect on the Lessee or its business; is a U.S.

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Air Carrier; and has the corporate power and authority to engage in air transport and to carry on scheduled passenger service as presently conducted, to own each Aircraft and to enter into and perform its obligations under the Operative Documents.

(ii) Authorization. The execution, delivery and performance by the Lessee of the Operative Documents will, on such Delivery Date, have been duly authorized by all necessary corporate action on the part of the Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of the Lessee except such as have been duly obtained by such Delivery Date and will on such Delivery Date be in full force and effect, and none of such Operative Documents contravenes any law, judgment, government rule, regulation or order binding on the Lessee or the certificate of incorporation or bylaws of the Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of the Lessee under, any indenture, mortgage, contract or other agreement to which the Lessee is a party or by which it or its properties may be bound or affected.

(iii) No Additional Authorization. Neither the execution and delivery by the Lessee of the Operative Documents nor the performance by the Lessee of its obligations thereunder requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of each Aircraft by the Lessee, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained or will on or prior to such Delivery Date be duly obtained, and will on such Delivery Date be in full force and effect, (B) any normal periodic and other reporting requirements under the Federal Aviation Act and the regulations promulgated thereunder and the applicable rules and regulations of the FAA, in each case to the extent required to be given or obtained only after such Delivery Date and (C) any filings, registrations or applications specifically described in this Agreement or the Note Purchase Agreement.

(iv) Enforceability. The Operative Documents to which the Lessee is a party delivered on or prior to the date hereof or such Delivery Date, as the case may be, each constitute legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with the terms thereof except as such may be limited by equitable principles or applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally.

(v) No Pending Actions. There are no pending or threatened actions or proceedings before any court, arbitrator or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material and adverse effect on the financial condition of the Lessee or the ability of the Lessee to perform its obligations under the Operative Documents.

(vi) Validity of Security Interests. Except for (A) the filing with the FAA of an FAA Entry Point Filing Form – AC Form 8050-135 and the procurement of a

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unique authorization code for the following registrations on the International Registry and the registration of such interests on the International Registry: (i) the contracts of sale with respect to the related Airframe and each Engine constituted by the FAA Bill of Sale and/or the Warranty Bill of Sale with the Manufacturer as seller and the Lessor as buyer, (ii) the international interests with respect to the related Airframe and each Engine constituted by the Mortgage and the related Mortgage Supplement (incorporating the terms of the Mortgage) with the Security Trustee as creditor and the Owner as debtor, (iii) the international interest with respect to the related Airframe and each Engine under the Lease and the related Lease Supplement (incorporating the terms of the Lease) with the Lessor as creditor and the Lessee as debtor, (iv) the assignment of international interest with respect to the related Airframe and each Engine constituted by the Mortgage and the related Mortgage Supplement (incorporating the terms of the Mortgage) (assigning the international interest under the Lease and the related Lease Supplement, including an assignment of the right to discharge such international interest) with the Security Trustee as assignee and the Lessor as assignor and (v) the transfer of the right to discharge the international interest with respect to the related Airframe and each Engine under the Lease and the related Lease Supplement with the Lessor as transferor and the Security Trustee as transferee, (B) the filing for recording pursuant to the Federal Aviation Act of the FAA Bill of Sale for such Aircraft (and the application for registration of such Aircraft in the name of the Lessee) and the Mortgage with the Mortgage Supplement and the Lease with the Lease Supplement for such Aircraft and (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the interests created by such documents under the Uniform Commercial Code of Delaware and such other states as may be specified in the opinion furnished pursuant to Section 4(b)(xii) of the Note Purchase Agreement, no further action, including any filing or recording of any document (including any financing statement in respect thereof under Article 9 of the Uniform Commercial Code of any applicable jurisdiction), is necessary or advisable in order to establish and perfect the first mortgage Lien on such Aircraft and the assignment of the Lease with respect to such Aircraft in favor of the Security Trustee pursuant to the Mortgage or to establish as against third parties the international interests and assignment of international interests under the Mortgage in any applicable jurisdiction in the United States.

(vii) No Defaults. There has not occurred any event which constitutes a Lease Default or a Lease Event of Default under the Mortgage which is presently continuing.

(viii) Finances of Lessee. (x) On the date hereof (in the case of the December 31, 2014 financial statements) and on the Delivery Date for a Designated Aircraft, the statements of financial position of the Lessee as of December 31, 2014 and March 31, 2015 and the related statements of earnings and cash flow of the Lessee in all material respects for the year and fiscal quarter, as the case may be, then ended, copies of which have been furnished to each Purchaser, fairly present the financial condition of the Lessee at such date and the results of operations and cash flow of the Lessee for the period ended on such dates, in accordance with generally accepted accounting principles consistently applied, subject, in the case of the March 31, 2015 statements, to normal year-end adjustments, and (y) since December 31, 2014 there has been no material

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adverse change in such condition having a material adverse effect on the Lessee’s ability to perform its obligations under the Operative Documents.

(ix) Liens on Aircraft. On the Delivery Date for a Designated Aircraft, the Lessor will have good title to such Aircraft free and clear of all Liens, except the Lien of the Mortgage. On the Delivery Date for a Designated Aircraft, such Aircraft (A) shall have a valid export certificate of airworthiness issued by the French Direction générale de l’aviation civile, (B) will have been insured by the Lessee in accordance with the terms of the Mortgage, will have suffered no Event of Loss and will be in the condition and state of repair required under the terms of the Mortgage and (C) will have the necessary instruments filed with the FAA in order to duly register such Aircraft in the name of the Lessee under the Federal Aviation Act.

(x) Securities Compliance. Assuming the Purchasers are purchasing their Notes in the ordinary course of their commercial banking business, none of the transactions contemplated by this Agreement will violate or result in a violation of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or any regulations issued pursuant thereto.

(xi) No Public Offering. Neither the Lessee nor anyone acting on behalf of the Lessee has directly or indirectly offered any interest in the Notes for sale to, or solicited any offer to acquire any of the same from, anyone other than the Purchasers and not more than 35 other institutions believed capable of evaluating and bearing the risks of investment in the transactions contemplated hereby.

(xii) No ERISA Violation. (v) The Lessee has not engaged in any transaction in connection with which the Lessee could be subjected to either a material civil penalty assessed pursuant to Section 502(i) of ERISA, or a material tax imposed by Section 4975 of the Code; (w) no material liability to the Pension Benefit Guaranty Corporation (other than liability for premiums) has been incurred by the Lessee with respect to any Plan; (x) there has been no event or condition which presents a material risk of termination of any Plan by the Pension Benefit Guaranty Corporation; (y) the Lessee and any affiliate (as defined below) has not committed, or does not expect to commit, a failure described in ERISA Section 303(k)(1) or Section 430(k)(1) of the Code (whether or not waived) with respect to any Plan; and (z) no material amount of “withdrawal liability,” as that term is used in Section 4201 of ERISA, has been or is expected to be incurred by the Lessee nor has the Lessee or any affiliate of the Lessee been notified by any multi-employer plan (within the meaning of Section 3(37)(A) of ERISA) that such multi-employer plan is in reorganization or insolvency within the meaning of Section 4241 or Section 4245 of ERISA or that such multi-employer plan intends to terminate or has been terminated under Section 4041A of ERISA (for purposes of subclauses (y) and (z), the term “affiliate” shall mean any corporation or person (within the meaning of ERISA Section 3(9)) which together with the Lessee and any other related entity would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.

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(xiii) No “Prohibited Transactions”. Assuming the accuracy of the representations set forth in Section 7(b)(ii) of the Note Purchase Agreement (and Section 5(ii) of each Assignment and Assumption Agreement, if any), the purchase and holding of the Notes will not result in a “prohibited transaction,” within the meaning of Section 406 of ERISA or Section 4975 of the Code with respect to the transactions contemplated hereby which could subject the Lessee to any tax or penalty pursuant to Section 4975 of the Code or Section 502(i) of ERISA.

(xiv) Investment Company. The Lessee is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

(xv) No Material Misstatement or Omission. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Lessee to the Security Trustee, any Agent or any Purchaser in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(xvi) Federal Reserve Regulations. No part of the proceeds of any Note hereunder will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board of Governors of the Federal Reserve, including Regulations U and X.

(xvii) Cape Town Matters. (A) The Lessee: is a “transacting user entity” (as such term is defined in the Regulations of the International Registry); and is “situated”, for the purposes of the Cape Town Convention, in the United States; (B) the Airframe and related Engines financed on such Delivery Date are “aircraft objects” (as defined in the Cape Town Convention); (C) the United States is a Contracting State under the Cape Town Convention; (D) the FAA Bill of Sale for the Airframe and/or the Warranty Bill of Sale for such Airframe and related Engines constitutes a “contract of sale” (as defined in the Cape Town Convention), the Mortgage and the Mortgage Supplement for such Aircraft conveys an international interest in such Airframe and related Engines and assigns an international interest in the Lease and the Lease Supplement with respect to such Airframe and related Engines, and the Lease and the Lease Supplement for such Aircraft constitutes an international interest in such Airframe and related Engines; and (E) the obligations of the Lessee under this Lease in respect of such Airframe and related Engines are “associated rights” (as defined in the Cape Town Convention).

(xviii) AML Laws; Anti-Corruption Laws and Sanctions. The Lessee has implemented and maintains in effect policies and procedures designed to ensure compliance by the Lessee, its subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws, applicable AML Laws and applicable Sanctions. None of (a) the Lessee, any subsidiary or any of their respective directors or officers, or, to the knowledge of the Lessee, any of their respective employees or Affiliates, or (b) to the knowledge of the Lessee, any agent of the Lessee or any

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subsidiary or other Affiliate that will act in any capacity in connection with or benefit from the credit facility established hereby, (i) is a Sanctioned Person, or (ii) is in violation of AML Laws, Anti-Corruption Laws, or Sanctions. No Notes, use of proceeds or other transaction contemplated by this Agreement will cause a violation of AML Laws, Anti-Corruption Laws or applicable Sanctions by any person participating in the transactions contemplated by this Agreement, whether as lender, Lessee, guarantor, agent, or otherwise. The Lessee represents that, except as disclosed to each Agent and the Purchasers prior to the date hereof, neither it nor any of its subsidiaries, nor its parent company, or, to the knowledge of the Lessee, any other Affiliate has engaged in or intends to engage in any dealings or transactions with, or for the benefit of, any Sanctioned Person or with or in any Sanctioned Country.

(xix) Citizenship. The Lessee is a “Citizen of the United States” within the meaning of 49 U.S.C. § 40102(a)(15), as amended, or any successor statutes thereto.

(b) Certain Covenants. Lessee covenants and agrees as follows:

(i) Lessee Merger. For so long as the Lien of the Mortgage remains in force, the Lessee shall not enter into any merger or consolidation, or sell, transfer, lease or convey all or substantially all of its assets, unless:

(1) No Default. No Event of Default has occurred and is continuing or would result therefrom;

(2) U.S. Air Carrier. The Lessee is the surviving corporation or, if otherwise, such other Person or continuing corporation (herein called “Successor Corporation”) is a corporation or limited liability company incorporated under the laws of a state of the United States, and shall be a U.S. Air Carrier;

(3) Requirements of Successor Corporation. In the case of Successor Corporation, the Successor Corporation shall (A) execute, prior to or contemporaneously with the consummation of such transaction, such agreements, if any, as are in the reasonable opinion of the Security Trustee necessary or advisable to evidence the assumption by the Successor Corporation of liability for all of the obligations of the Lessee under the Mortgage and the other Operative Documents, (B) make such registrations, recordings and filings, and take such other action with respect to the Operative Documents, as shall be necessary or advisable in the reasonable opinion of the Purchasers to protect their security interest in each Aircraft, and (C) cause to be delivered to the Security Trustee and each Purchaser such legal opinions (which may be from in-house counsel) as any of them may reasonably request in connection with the matters specified in the preceding clauses (A) and (B) provided that if by operation of law (x) assumption by the Successor Corporation of liability for all of the obligations of the Lessee under this Lease and the other Operative Documents and (y) protection of the Purchasers’ security interest in each Aircraft, occurs automatically, to the extent

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applicable, the agreements, registrations, recordations, filings and legal opinions described in this Section 6(b)(i)(3) shall not be required; and

(4) Tangible Net Worth of Successor Corporation. Prior to such transaction, the Purchasers shall obtain evidence to the effect that the Tangible Net Worth of the Lessee or Successor Corporation after giving effect to such transaction is no less than the Tangible Net Worth of the Lessee immediately prior to such transaction.

As used herein,

“Tangible Net Worth” means, as at any date for any Person, the sum for such Person and its Subsidiaries (determined on a consolidated basis without duplication in accordance with generally accepted accounting principles), of the following:

(a) the amount of capital stock, plus

(b) the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit), minus

(c) the sum of the following: cost of treasury shares and the book value of all assets which should be classified as intangibles, including goodwill, minority interests, research and development costs, trademarks, trade names, copyrights, patents and franchises, and unamortized debt discount and expense.

Upon any consolidation or merger in accordance with this Section 6(b)(i), the Successor Corporation shall succeed to, and be substituted for, and may exercise every right and power of, the Lessee under this Agreement with the same effect as if such Successor Corporation had been named as the Lessee herein.

(ii) Financial Information. The Lessee shall provide to the Agents and the Security Trustee (i) (x) within 60 days after the end of each of the first three quarterly periods in each fiscal year of the Lessee, either (1) a consolidated balance sheet of the Lessee and its consolidated subsidiaries prepared by it as of the close of such period, together with the related consolidated statements of income for such period, certified by the Lessee’s chief executive officer or chief financial officer as having been prepared on a consolidated basis in accordance with GAAP consistently applied (except for inconsistencies required by changes to GAAP and changes approved by the accountants referred to in clause (y)(1) below in accordance with GAAP), subject to normal year-end audit adjustments and the absence of footnotes or (2) a report of the Lessee on Form 10-Q in respect of such period in the form filed with the Securities and Exchange Commission; and (y) within 120 days after the close of each fiscal year of the Lessee, either (1) a consolidated balance sheet of the Lessee and its consolidated subsidiaries as of the close of such fiscal year, together with the related consolidated statements of income for such fiscal year, as certified by independent public accountants of recognized national standing selected by the Lessee to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Lessee and its subsidiaries on a consolidated basis in accordance with GAAP consistently

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applied (except for inconsistencies required by changes to GAAP and changes approved by such accountants in accordance with GAAP), or (2) a report of the Lessee on Form 10-K in respect of such year in the form filed with the Securities and Exchange Commission; and (ii) such other non-confidential information readily available to the Lessee as the Agents or the Security Trustee shall reasonably request. The items required to be furnished pursuant to clause (i) above shall be deemed to have been furnished on the date on which such item is posted on the Securities and Exchange Commission’s website at www.sec.gov, and such posting shall be deemed to satisfy the requirements of clause (i).

(iii) U.S. Air Carrier. The Lessee covenants and agrees that at all times until the Lien of the Mortgage shall be discharged, released or terminated pursuant to Section 6.01 of the Mortgage, it will be an “air carrier” within the meaning of Section 40102(a) of the Federal Aviation Act operating under certificates issued pursuant to such Act and shall otherwise meet the standards of the definition of U.S. Air Carrier.

(iv) Further Assurances. The Lessee covenants and agrees with each party hereto as follows:

(1) Further Acts. The Lessee will cause to be done, executed, acknowledged and delivered all and every such further acts, conveyances and assurances as any Holder shall reasonably require for accomplishing the purposes of this Agreement and the other Operative Documents; provided that any instrument or other document so executed by the Lessee will not expand any obligations or limit any rights of the Lessee in respect of the transactions contemplated by any Operative Documents. The Lessee shall cause each Aircraft to remain duly registered, in the name of the Lessee, except as otherwise permitted under Section 7(a), under the Federal Aviation Act.

(2) Maintenance of Security Interests. The Lessee, at its expense, will cause (A) the Mortgage, all Mortgage Supplements and all amendments to the Mortgage, the Lease, all Lease Supplements and all amendments to the Lease to be promptly filed and recorded, or filed for recording, to the extent permitted under the Federal Aviation Act, or required under any other applicable law, (B) subject only to the consent of the Security Trustee (or the Manufacturer, in the case of the FAA Bill of Sale and the Warranty Bill of Sale), the registration with the International Registry of the contract of sale, the international interests and the assignment of international interests with respect to the FAA Bill of Sale and/or Warranty Bill of Sale, the Mortgage and Mortgage Supplement, the Lease and Lease Supplement and (C) the Lien of the Mortgage to at all times be and remain a first priority and perfected Lien on the Mortgage Estate. The Lessee agrees to furnish the Security Trustee, each Agent and the Purchasers with copies of the foregoing documents with recording and registration data as promptly as practicable following the issuance of same by the FAA and the International Registry.

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(3) Costs and Expenses. The Lessee shall pay all reasonable costs and expenses (including costs and disbursements of counsel) incurred by the Security Trustee, each Agent and the Holders after the date hereof in connection with (x) any supplements or amendments of the Operative Documents requested by the Lessee (including, without limitation, any related recording and registration costs) (other than any supplement or amendment associated with the syndication of the Notes or the sale of participation interests therein), (y) any Event of Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any restructuring or “work-out” (whether or not consummated), or (z) the enforcement of this Section 6(b)(iv)(3).

(v) Sanctions, Etc.

(1) Compliance with Anti-Corruption Laws and Sanctions. The Lessee will maintain in effect and enforce policies and procedures designed to ensure compliance by the Lessee, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws, applicable AML Laws and applicable Sanctions.

(2) Use of Proceeds. The Lessee will not request any Notes, and the Lessee shall not use, and shall procure that its subsidiaries and its or their respective directors, officers, employees, Affiliates and agents shall not use, directly or indirectly, the proceeds of any Notes, or lend, contribute or otherwise make available such proceeds to any subsidiary, other Affiliate, joint venture partner or other Person, (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or AML Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or involving any goods originating in or with a Sanctioned Person or Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions by any Person (including any Person participating in the transactions contemplated hereunder, whether as underwriter, advisor lender, investor or otherwise).

Section 7. Registration, Maintenance, Operation and Possession.

(a) Registration and Maintenance.

(i) Generally. The Lessee shall:

(1) On the Delivery Date for each Aircraft, (i) file with the FAA the instruments necessary to cause such Aircraft to be duly registered in its name (if not so registered) and cause the ownership interest of such Airframe and each Engine to be duly registered with the International Registry as a contract of sale, and, at all times thereafter, to remain duly registered in the United States of America in its name under the Federal Aviation Act, and (ii) cause this Lease (and the related Lease Supplement) and the related Mortgage (and the related

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Mortgage Supplement) to be duly filed with the FAA for recordation and, except as otherwise expressly provided herein, cause the international interest with respect to this Lease (and the related Lease Supplement), the international interest with respect to the Mortgage (and the related Mortgage Supplement), and the assignment of international interest with respect to the assignment of the Lease (and the related Lease Supplement) in the applicable Airframe and each Engine to be duly registered on the International Registry as an international interest and an assignment of international interest and, at all times thereafter, so long as any Note in respect of the related Aircraft shall be outstanding, cause (A) this Lease to be maintained of record as a perfected finance lease on such Aircraft and (B) the Mortgage to be maintained of record as a first priority and perfected mortgage of the Lessor’s interest in such Aircraft and the assignment of the Lease, and cause such international interests and assignments of international interests to remain so registered as an international interest and assignment of international interest in such Airframe and such Engines (subject only to the interest of the Lessee as lessee and of the Lessor as mortgagor);

(2) Maintain, service, repair, and overhaul (or cause to be maintained, serviced, repaired, and overhauled) such Aircraft (and any engine which is not an Engine but which is installed on such Aircraft):

(A) so as to keep such Aircraft in as good condition as when delivered to the Lessee by the Manufacturer (ordinary wear and tear excepted) and so as to keep such Aircraft in good operating condition and in such condition as may be necessary to enable the airworthiness certification for such Aircraft to be maintained in good standing at all times under the Federal Aviation Act except when (x) such Aircraft is being serviced, repaired, maintained, overhauled, tested or modified as permitted or required by the terms of this Lease or (y) all Airbus A320-200 aircraft powered by engines of the same type as those with which such Airframe shall be equipped at the time of such grounding and registered in the United States have been grounded by the FAA (although such certification need actually be maintained only during such periods as such Aircraft is registered in the United States), or the applicable laws of any other jurisdiction in which such Aircraft may then be registered from time to time in accordance with Section 7(a)(ii) below;

(B) in accordance with the Maintenance Program for such Aircraft, utilizing, except during any period that a Sublease is in effect, the same manner and standard of maintenance, service, repair or overhaul used by the Lessee with respect to similar aircraft operated by the Lessee in similar circumstances and utilizing, during any period that a Sublease is in effect, the same manner and standard of maintenance, service, repair or overhaul used by the Sublessee with respect to similar aircraft operated by the Sublessee in similar circumstances; and

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(C) so as to keep such Aircraft in passenger configuration; and

(3) Maintain or cause to be maintained in English all records, logs and other materials required to be maintained in respect of such Aircraft by the FAA or any other applicable aviation authority, which may be maintained in electronic format.

(ii) Reregistration. Notwithstanding the registration requirements of Section 7(a)(i) hereof, the Lessee shall have the right, at any time so long as no Special Default or Lease Event of Default shall have occurred and be continuing, to request with at least 30 days’ prior written notice, a change in the registration of any Aircraft in association with the subleasing by the Lessee of such Aircraft to a Permitted Sublessee. The Lessor agrees to cooperate in good faith with the Lessee in effecting such change; provided that prior to any such change in the country of registry of such Aircraft, the Lessor (and the Security Trustee and each Purchaser) shall have received evidence satisfactory thereto in its judgment acting reasonably, which evidence may be established by means of legal opinions from counsel of recognized reputation satisfactory to the Lessor and qualified under the laws of the relevant jurisdiction, certificates of insurance, officer’s certificates and/or other suitable and available means, that:

(1) Protection of Interests. Such country would provide substantially equivalent protection (both as a matter of law and practice) for the rights and remedies of finance lessors and mortgagees in similar transactions as provided under the laws of United States of America (it being understood that, in the absence of restrictions similar to those imposed under §§ 362 and 363 of the Bankruptcy Code, rights and remedies similar to those available under § 1110 of the Bankruptcy Code are not required).

(2) Recognition of Interests. After giving effect to such change in registration, the Lessee’s, Lessor’s and Security Trustee’s interest in the applicable Aircraft shall be recognized under the laws of such jurisdiction, and all filing, recording or other action necessary to effect the same will be accomplished.

(3) Enforceability of Interests. After giving effect to such change in registration, the obligations of the Lessee and Lessor, and the rights and remedies of the Security Trustee under this Mortgage shall remain valid, binding and enforceable under the laws of the jurisdiction to which the laws of the jurisdiction of registry would refer as the applicable governing law; provided that opinions of counsel addressing this provision may be subject, with respect to the enforceability of remedies, to customary exceptions relating to insolvency or bankruptcy, general principles of equity, or other similar matters which do not hinder the Lessor’s or the Security Trustee’s ability to enforce the remedies under this Lease or the Mortgage in any manner greater than would have been the case had the applicable Aircraft been registered in the United States.

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(4) Priority of Interests. After giving effect to such change in registration, the lien of this Lease and of the Mortgage in the applicable Aircraft will continue as a valid and duly perfected first priority security and international interest (offering a similar level of protection as compared to a registered United States aircraft mortgage), and all filing, recording or other action necessary to protect the same will be accomplished, including at the International Registry.

(5) No Doing Business. It is not necessary, solely as a consequence of such change in registration and without giving effect to any other activity of the Lessor or any Purchaser or the Security Trustee, for the Lessor or such Purchaser or the Security Trustee to qualify to do business in such jurisdiction, unless qualification only results in an obligation to pay fees or taxes and the Lessee provides adequate funds or, in the case of future payments, makes adequate provision for that purpose.

(6) Conversion of Currency. (Unless the Lessee shall have agreed to provide insurance covering the risk of requisition of use or title of the applicable Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use or title of such Aircraft in the event of the requisition by such government of such use or title.

(7) Insurance. After giving effect to such change in registration, the insurance requirements of Section 10 are satisfied in respect of the applicable Aircraft.

(8) Exchange Permits. Any exchange permits necessary to remit rent and other payments provided for under the related Lease shall be in full force and effect.

(9) Indemnities. After giving effect to such change in registration, the original indemnities in favor of the Purchaser(s) and the Security Trustee under the Note Purchase Agreement and this Lease afford each such party substantially the same protection as provided prior to such change of registry.

(10) Licenses. (Unless the Lessee shall have agreed to provide insurance reasonably satisfactory to the Security Trustee covering the risk of the government of such jurisdiction preventing the export of the applicable Aircraft out of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) that any import and, if requested by the Security Trustee (and such request is reasonable in light of the circumstances) and if and to the extent obtainable with reasonable effort and if it is otherwise customary to obtain the same in such jurisdiction, export permits or licenses necessary to take such Aircraft into or out of such jurisdiction shall be in full force and effect.

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(11) De-registration Power of Attorney. If the same is necessary or advisable in order to effect a de-registration of the applicable Aircraft, the Security Trustee, as assignee of the Lessee, shall have obtained a de-registration power of attorney in respect of such Aircraft from the Sublessee and the Lessee.

(12) Airworthiness. The applicable Aircraft shall have been duly certified as to type and airworthiness by the appropriate aviation authority.

(13) Taxes. Any value added tax, customs duty, tariff or similar governmental charge relating to the change in jurisdiction or registration of the applicable Aircraft shall have been paid or adequately provided for by the Lessee.

All reasonable costs and expenses (including reasonable legal fees and expenses) of the Lessor, the Purchasers and the Security Trustee incurred in connection with any such reregistration shall be for account of the Lessee. Such costs and expenses, to the extent incurred, shall include the following: (w) the fees and disbursements of United States counsel and counsel in the country of registry; (x) filing or recordation fees, taxes or similar payments incurred in connection with the registration of the applicable Aircraft and the creation and perfection of the security interest therein; (y) any costs and expenses incurred in connection with any UCC filings necessary to continue in the United States the perfection of the security interest in such Aircraft and the Mortgage Estate; and (z) any other reasonable costs, expenses or taxes, whether initial or continuing, incurred by the Lessor, the Security Trustee or the Purchasers as a result of the registration of such Aircraft, or the creation of the security interest therein, under the country of registry.

(b) Operation.

(i) No Violation by Lessee. The Lessee will not maintain, use, service, repair, overhaul or operate any Aircraft in violation of any law, rule, regulation, treaty, or order of any government or governmental authority (domestic or foreign) having jurisdiction, or in violation of any airworthiness certificate, license or registration relating to such Aircraft issued by any such authority except the Lessee may contest in good faith the validity or application of any such law, rule, regulation, treaty, order, certificate, license or registration, so long as there is no material risk of the sale, forfeiture or loss of such Aircraft, the related Airframe or any Engine, or the Security Trustee’s interest therein. The Lessee will not operate or fly any Aircraft: (i) in any area of recognized or, in the Lessee’s reasonable judgment, threatened hostilities unless (a) covered by war risk and allied perils insurance covering such risks or (b) operated or used under contract with the government of registry under which contract such government assumes liability for the same risks in at least the same amounts and on the same terms as would be covered by such insurance; or (b) in any area excluded from coverage by any insurance required to be maintained by the terms of Section 10 (or any indemnity issued in lieu thereof) unless operated or used under contract with the government of registry under which contract such government assumes liability for the same risks in at least the same amounts and on the same terms as would be covered by such insurance; provided, however, that the failure of the Lessee to comply with the provisions of this sentence shall not give rise to an Event of Default hereunder for up to

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30 days where such failure is attributable to a hijacking, medical emergency, equipment malfunction, weather condition, navigational error or other event or circumstances beyond the control of the Lessee or any Sublessee and the Lessee or Sublessee, as the case may be, is using all reasonable efforts to retrieve such Aircraft during such period.

(ii) No Violation by Permitted Sublessee. The Lessee will not permit any Permitted Sublessee to use or operate any Aircraft in violation of any applicable law, except to the extent the application of such law is being contested in good faith and except for unanticipated, minor or non-recurring violations, provided the Lessee is using all reasonable efforts to mitigate any such illegality and such mitigation is not prejudicial to the Mortgage Estate or any Financing Party’s reputation.

(c) Possession and Subleases. The Lessee will not, without the prior written consent of the Lessor, which consent will not be unreasonably withheld or delayed, lease, sublease or otherwise in any manner deliver, transfer or relinquish possession of any Airframe or any Engine or install any Engine or permit any Engine to be installed on any airframe other than such Airframe; provided that so long as no Lease Event of Default or Special Default shall have occurred and be continuing at the time of such delivery, transfer or relinquishment of possession or installation and the Lessee shall continue to comply with the provisions of Section 7(a) and Section 10 hereof, the Lessee may, without the prior written consent of the Security Trustee:

(i) Customary Pooling Arrangements. Subject any Airframe and the Engines or engines installed thereon to any interchange agreements or any Engine to normal pooling or similar arrangements customary in the airline industry and entered into by the Lessee in the ordinary course of its business with, (A) in the case of the Lessee or any U.S. Air Carrier, another U.S. Air Carrier, (B) a Foreign Air Carrier that is a Permitted Sublessee under this Section 7(c), (C) a manufacturer of aircraft, engines or parts or (D) any other Person if approved in writing by the Security Trustee (which approval will not be unreasonably withheld or delayed); provided that (1) no such agreement or arrangement contemplates or requires the transfer of title to such Airframe, (2) if the Lessor’s title to any Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to such Engine and the Lessee shall (or shall cause a Sublessee to) comply with Section 9(d) hereof in respect thereof, and (3) any interchange agreement to which such Airframe may be subject shall be with a U.S. Air Carrier, a Foreign Air Carrier or any other air carrier if approved in writing by the Security Trustee (which approval will not be unreasonably withheld or delayed).

(ii) Repairs and Maintenance. Deliver possession of any Airframe or any Engine to the Manufacturer or the Engine Manufacturer, or to any Person (or for delivery thereto) for testing, service, repair, maintenance or overhaul work on such Airframe or any Engine or for alterations or modifications in or additions to such Airframe(s) or Engine(s).

(iii) Other Airframes. Install an Engine on an airframe owned by the Lessee, leased to the Lessee, or owned or purchased by the Lessee subject to a conditional sale or other security agreement, provided that (1) such airframe is free and

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clear of all Liens, except (A) in the case of airframes leased to the Lessee or owned or purchased by the Lessee subject to a conditional sale or other security agreement, the rights of the parties to the lease or conditional sale agreement or other security agreement covering such airframe, or their assignee, (B) Permitted Liens, and (C) the rights of other air carriers under normal interchange agreements which are customary in the airline industry and do not contemplate, permit or require the transfer of title to the airframe or engines installed thereon, and (2) any such lease, conditional sale or other security agreement provides that such Engine shall not become subject to the lien of such lease, conditional sale or other security agreement, notwithstanding the installation thereof on such airframe, and the inclusion in such agreement of a provision similar to the last paragraph of this Section 7(c) shall satisfy such requirement.

(iv) Event of Loss. Install an Engine on an airframe owned by the Lessee, leased to the Lessee or purchased by the Lessee subject to a conditional sale or other security agreement under circumstances where paragraph 7(c)(iii) above is inapplicable, provided that such installation shall be deemed an Event of Loss with respect to such Engine and the Lessee shall comply with Section 9(d) hereof in respect thereof, the Security Trustee not intending hereby to waive any right or interest it may have to or in such Engine under applicable law until compliance by the Lessee with such Section 9(d), which shall be achieved within 30 days for the purposes of this clause.

(v) Other Pooling Arrangements. To the extent permitted by Section 8(b) hereof, subject any appliances, Parts or other equipment owned by the Lessee and removed from any Airframe or any Engine to any pooling arrangement referred to in Section 8(b) hereof.

(vi) Transfers to CRAF. Transfer possession of any Airframe or any Engine to the United States of America or any instrumentality or agency thereof pursuant to CRAF so long as the Lessee shall promptly notify the Security Trustee upon transferring possession of such Airframe or such Engine to the United States of America or any agency or instrumentality thereof pursuant to such program and provide the Security Trustee with the name and address of the Contracting Office Representative for the Military Airlift Command of the United States Air Force to whom notice must be given.

(vii) Transfer to United States Government. Transfer possession of any Airframe or any Engine to the United States of America or any instrumentality or agency thereof which bears the full faith and credit of the United States of America.

(viii) Permitted Subleases. Provided that no Special Default or Lease Event of Default has occurred and is continuing, enter into a lease of any Aircraft with a Permitted Sublessee; provided, that the Security Trustee shall have received:

(A) evidence that:

(1) all necessary governmental approvals required for such Aircraft to be imported and, if requested by the Security Trustee (and such request

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is reasonable in light of the circumstances) and if and to the extent obtainable with reasonable effort and if it is otherwise customary to obtain the same in such jurisdiction, exported from the applicable country of domicile upon repossession of such leased equipment by the Security Trustee (and the Lessee as lessor) shall have been obtained prior to commencement of any such lease;

(2) the insurance requirements of Section 10 are satisfied and that War Risk Insurance shall be carried and maintained of such scope and coverage, and subject to such exclusions and exceptions, as is standard for air carriers flying similar equipment on routes comparable to those flown by such Aircraft; and

(3) if re-registration is required, the Lessee shall have complied with the provisions of Section 7(a); and

(B) in the case of a Sublease to any air carrier that is listed in Schedule 1, an opinion of counsel (which counsel and opinion are satisfactory to the Security Trustee) that:

(1) it is not necessary for the Security Trustee or any Holder to register or qualify to do business in such jurisdiction solely as a result of the proposed lease, unless the only result of such registration or qualification is a Tax or cost that the Lessee is indemnifying such party against;

(2) the Security Trustee’s Lien on such Aircraft will be recognized;

(3) the laws of such jurisdiction of domicile require fair compensation by the government of such jurisdiction payable in a currency freely convertible into Dollars for the loss of the title to such Aircraft or such Engine in the event of the requisition by such government of title (unless the Lessee shall provide insurance covering the risk of requisition of title to such Aircraft by the government of such jurisdiction so long as such Aircraft is subject to such lease);

(4) the required agreement of such non-U.S. air carrier that its rights under the Sublease are subject and subordinate to all of the terms of this Lease is enforceable against such non-U.S. air carrier under applicable law (subject only to customary exceptions as to enforceability); and

(5) there exist no possessory rights in favor of such Sublessee under the laws of such jurisdiction which would, upon bankruptcy of or other default by the Sublessee, prevent or unreasonably delay the return or repossession of such Aircraft to the Lessor or the Security Trustee in accordance with and when permitted by the terms of Section 14 hereof upon the exercise by the Security Trustee of remedies under Section 14 hereof.

(ix) The currency of payments under such Sublease must be Dollars or a currency freely convertible into Dollars.

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[Lease Agreement [Virgin/NPA 2015]]

(d) Terms of Permitted Subleases. The rights of any Sublessee or other transferee who receives possession by reason of a transfer permitted by this Section 7(d) (other than the transfer of an Engine deemed an Event of Loss) shall be subject and subordinate to, and any Sublease permitted by this Section 7(d), shall expressly provide that it is subject and subordinate to, all the terms of this Lease; provided that in the case of the use of such Aircraft in CRAF the subject and subordinate requirements herein shall be subject to the notice specified in Section 14 and other requirements of the CRAF program. In the case of any Sublease, the Lessee shall remain primarily liable hereunder for the performance of all of the terms of this Lease, and the terms of any such Sublease shall not permit any Sublessee to take any action not permitted to be taken by the Lessee hereunder with respect to the leased Aircraft but may permit the Sublessee to cure any default by Lessee and to terminate the Sublease upon such default; provided, however, that the Lessee may procure such performance from any Sublessee pursuant to the relevant Sublease, and the Security Trustee hereby agrees to accept such performance by such Sublessee in satisfaction of the Lessee’s obligations hereunder; and provided further that all rights accruing hereunder to the Lessee (including, without limitation, the right to contest any law as provided in Section 7(b), the right to relinquish possession of such Aircraft as provided in Section 7(c) (other than Section 7(c)(vii)), the right to subject Parts to pooling arrangements as provided in Section 8(b), the right to make alterations, modifications and additions as provided in Section 8(c) (except that no Sublessee shall be entitled to reduce the value of such Aircraft by utilizing the “obsolete parts” provision therein) and the right to create a Permitted Lien) shall likewise accrue to such Sublessee to the extent the Lessee so permits and to the extent such rights may be subject to any limitation or conditions herein. The Lessee shall promptly notify the Security Trustee after entering into any Lease.

(e) Wet Leases. Any Wet Lease or similar arrangement under which the Lessee maintains operational control of any Aircraft shall not constitute a delivery, transfer or relinquishment of possession for purposes of this Section 7.

(f) Assignment of Subleases. The Lessee shall assign each Sublease with a term of more than 12 months (including mandatory renewals and extensions) to the Security Trustee as security for the obligations secured hereby, which assignment shall be in form and substance reasonably satisfactory to the Security Trustee and shall provide that so long as no Event of Default or Special Default shall have occurred and be continuing, all payments made under such Sublease shall be paid to the Lessee and, during any period when a Special Default shall have occurred and be continuing, shall be paid to the Security Trustee to be held as collateral and applied against the Lessee’s obligations hereunder as and when due. Unless a Special Default shall have occurred and be continuing, the Lessee shall be entitled to exercise all rights as lessor under any Sublease, including with respect to any amendment thereto or any defaults thereunder.

(g) No Interests in Other Airframes and Engines. The Security Trustee agrees, for the benefit of the Lessee and for the benefit of any mortgagee or other holder of a security interest in any engine owned by the Lessee, any lessor of any engine leased to the Lessee and any conditional vendor of any engine purchased by the Lessee subject to a conditional sale agreement or any other security agreement, that no interest shall be created hereunder in any engine so owned, leased or purchased and that neither the Security Trustee nor its successors or assigns will acquire or claim, as against the Lessee or any such mortgagee,

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[Lease Agreement [Virgin/NPA 2015]]

lessor or conditional vendor or other holder of a security interest or interest in such engine as the result of such engine being installed on any Airframe; provided, however, that such agreement of the Security Trustee shall not be for the benefit of any lessor or secured party of any airframe leased to the Lessee or purchased by the Lessee subject to a conditional sale or other security agreement or for the benefit of any mortgagee of or any other holder of a security interest in an airframe owned by the Lessee, unless such lessor, conditional vendor, other secured party or mortgagee has agreed (which agreement may be contained in such lease, conditional sale or other security agreement or mortgage and may consist of a paragraph similar to this paragraph) that neither it nor its successors or assigns will acquire, as against the Security Trustee, any right, title or interest in an Engine as a result of such Engine being installed on such airframe.

(h) Special Operation and Possession Covenants. In addition to the foregoing requirements, Lessee covenants and agrees as follows:

(i) Restricted Use of Aircraft. Lessee shall not cause or permit (whether, directly, under a dry lease, Wet Lease or charter or under requisition by any Governmental Authority) any Aircraft, any Engine or any Part to be:

(1) flown to or within, or otherwise operated or used to or within, an Excluded Country in contravention of applicable law (including, without limitation, the requirements of 15 C.F.R. 740.15, where applicable) or operated or used (whether under a dry lease, Wet Lease, charter, pooling, blocked-space or similar arrangement, or other arrangement) by or for an airline or by any other Person which is a national of, or established under, the laws of, or whose principal place of business or principal place of aircraft operations is located in, an Excluded Country;

(2) operated or used (whether under a dry lease, Wet Lease, charter, pooling, or other similar arrangement) by or for any other Person except in accordance with Sections 7(c), 7(d) and 7(e);

(3) operated or used in contravention of any United States law, regulation or stated policy of general applicability prohibiting the operation or use of United States-manufactured or financed aircraft and engines and such restrictions are applicable to the transactions contemplated hereby; or

(4) operated or used for any purpose for which it is not designed or reasonably suited in accordance with the Approved Maintenance Program, applicable law and applicable material warranties or for any primary purpose or other than the commercial transport of passengers and cargo.

(ii) Waiver of Defenses to Repossession. Neither Lessee, nor anyone claiming through or under it, shall set up, claim or seek to take advantage of any applicable law now or hereafter in force in any jurisdiction in which any Aircraft or any portion thereof may be situated in order to prevent, hinder or delay any effort in accordance with this Lease on the part of Lessor or the Security Trustee to regain possession of an Aircraft or re-export an Aircraft or any portion thereof from any

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jurisdiction in which such Aircraft or any portion thereof may be situated following the occurrence of a Lease Event of Default and while the same shall be continuing, and Lessee, for itself and all who may at any time claim through or under it, hereby waives, to the full extent that it may be lawful so to do, the benefit of all such applicable law (including, without limitation, any rights it may have, if any, to avail itself of the protection provided by the Convention of 1933 on the Unification of Certain Rules Relating to the Precautionary Arrest of Aircraft, or any other similar law, treaty or convention applicable to Lessee or any Aircraft which would limit the ability of Lessor or the Security Trustee to repossess or otherwise recover any Aircraft following the occurrence and during the continuance of a Lease Event of Default).

(iii) Statement of Account of Landing Fees or Navigation Charges. In the event that a Governmental Authority of any country in which any Aircraft, Lessee or any Permitted Sublessee operates shall adopt legislation which permits the detention or seizure of aircraft for unpaid landing fees or navigation charges without formal legal proceedings, Lessee shall promptly following demand, deliver to Lessor a letter, in form and substance reasonably acceptable to Lessor, addressed to the airport or air navigation authority of such country authorizing such authority to release to the Security Trustee from time to time a statement of account of all such fees and charges then due in respect of all aircraft owned by or leased to Lessee or such Permitted Sublessee but indicating, where applicable, that such request is not being made in connection with a Lease Default, as the case may be.

(iv) No Operation by the Secured Parties. Lessee shall in no event represent any Secured Party as carrying goods or passengers on any Aircraft or as being in any way connected or associated with any operation or carriage which may be undertaken by Lessee or any Permitted Sublessee or as having any operational interest in any Aircraft.

(v) Seizure of the Aircraft. Lessee shall not do, and shall use all lawful and reasonable efforts to prevent, any act which could reasonably be expected to result in any Aircraft, any Airframe or any Engine being arrested, confiscated, seized, taken in execution, attached, impounded, forfeited, detained in exercise or purported exercise of any registered or possessory lien or other claim or otherwise taken from the possession of Lessee or any Permitted Sublessee, and if any such arrest, confiscation, seizure, execution, taking, attachment, impoundment, forfeiture, detention or other loss of possession occurs, Lessee shall give Lessor immediate notice thereof and shall forthwith procure the prompt release of such Aircraft, Airframe or Engine.

(vi) Credit for Maintenance. Lessee shall not pledge the credit of any Secured Party for any maintenance, service, repairs, overhauls of, or modifications to, or changes or alterations in, or additions to, any Aircraft, any Airframe, any Engine or any Part.

(vii) Notice of Suspension. Lessee shall give Lessor immediate written notice of any action being taken by the management of Lessee relating to any general suspension of payment proceeding under any applicable law.

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[Lease Agreement [Virgin/NPA 2015]]

(viii) Notice of War Risk Insurance Claim. Lessee shall give Lessor prompt written notice of the occurrence of any loss, damage or casualty affecting any Aircraft, any Airframe, any Engine or any Part which is likely to result in a claim being made under the War Risk Insurance required to be maintained under Section 10 and shall take immediate action to increase any fleet limitation (including automatic reinstatement) applicable to such war risk coverage to the level (including automatic reinstatement) that existed immediately prior to such event of loss, damage or casualty.

(i) Permitted Sublessee’s Performance and Rights. Any obligation imposed on Lessee in this Lease shall require only that Lessee perform or cause to be performed such obligation, even if stated herein as a direct obligation, and the full or partial performance of any such obligation by any permitted assignee, Permitted Sublessee or permitted transferee under a permitted sublease, pooling or transfer agreement then in effect shall be deemed to have been caused by Lessee and shall pro tanto constitute performance by Lessee and discharge such obligation by Lessee to the extent performed; provided, however, that where performance consists of an agreement or undertaking for further action or performance or in the case of only partial performance, Lessee shall remain liable for discharge of its obligations until such further action or performance is completed. Except as otherwise expressly provided herein, any right granted to Lessee in this Lease shall grant Lessee the right to exercise such right or permit such right to be exercised by any such permitted assignee, Permitted Sublessee or permitted transferee. The inclusion of specific references to obligations or rights of any such assignee, Permitted Sublessee or transferee in certain provisions of this Lease shall not in any way prevent or diminish the application of the provisions of the two sentences immediately preceding with respect to obligations or rights in respect of which specific reference to any assignee, Permitted Sublessee or transferee has not been made in this Lease.

(j) Inspection. At reasonable times, each of the Security Trustee, each Agent and any Holder of a Note in respect of any Aircraft, or their authorized representatives, may inspect such Aircraft and FAA (or other applicable governmental authority) required books and records of the Lessee relating to the maintenance of such Aircraft (at the inspecting party’s expense (other than in the case of an inspection occurring while an Event of Default has occurred and is continuing, in which case the Lessee shall bear the reasonable cost of such inspection)) and shall keep any information obtained thereby confidential as provided in Section 16(g) of the Note Purchase Agreement. Any such inspection of such Aircraft shall be upon at least 10 Business Days’ advance written notice from such inspecting party to the Lessee (other than in the case of an inspection occurring while a Special Default or a Lease Event of Default has occurred and is continuing, in which case there shall be no notice requirement), shall be during normal business hours and shall be a visual, walk-around inspection (including on-board inspection) and may include inspection of areas exposed by any open panels, bays or the like, but shall not include opening any panels, bays or the like without the express written consent of the Lessee; provided that, so long as no Special Default or Lease Event of Default shall have occurred and be continuing, such Aircraft (including related books and records) may not be inspected more frequently than once in any 12-month period. No exercise of such inspection right shall interfere with the normal operation or maintenance of such Aircraft by, or the business of, the Lessee or any Permitted Sublessee. Neither the Security Trustee nor any Holder shall have any duty to make any such inspection nor shall any such Person incur any liability or obligation by reason of not making any such inspection.

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(k) Information Concerning the Aircraft and Engines. Lessee shall at its own cost and expense promptly provide Lessor with such information (to the extent required by this Lease or maintained by Lessee or any Permitted Sublessee in accordance with its standard fleet procedures) regarding the registration, location, operation, use, insurance, maintenance and condition of each Aircraft and any Engines, including all Parts to the extent practicable, as Lessor may from time to time reasonably request in writing.

(l) Substitution of Engines. So long as no Special Default or Lease Event of Default shall have occurred and be continuing, the Lessee shall have the right at its option at any time for operational reasons on at least five Business Days’ prior written notice, to terminate the Lien of the Mortgage with respect to any Engine. In such event, and at the time of such termination, the Lessee shall replace such Engine hereunder by complying with the terms of Section 9(d) hereof to the same extent as if an Event of Loss had occurred with respect to such Engine (other than the time periods allowed for such replacement), and the Security Trustee shall release the replaced Engine from the Lien of the Mortgage as provided in Section 9(d).

Section 8. Replacement; Temporary Installation; Pooling; Alterations, Modifications and Additions; Etc.

(a) Replacement of Parts. The Lessee will promptly replace or cause to be replaced all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever, except as otherwise provided in Section 8(c) or if an Airframe or an Engine to which a Part relates has suffered an Event of Loss. In addition, the Lessee (or any Permitted Sublessee) may, at its own cost and expense, remove in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that the Lessee (or any Sublessee), except as otherwise provided in Section 8(c), will, at its own cost and expense, replace such Parts as promptly as practicable. All replacement parts (other than replacement parts temporarily installed as provided in Section 8(b)) shall be free and clear of all Liens (except Permitted Liens), and shall be in as good an operating condition as, and shall have a value and utility substantially equal to, the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof. Except as otherwise provided in Section 8(c), all Parts at any time removed from such Airframe or any Engine shall remain subject to the Lien of the Mortgage, no matter where located, until such time as such Parts shall be replaced by parts which meet the requirements for replacement parts specified above. Upon any replacement part becoming incorporated or installed in or attached to such Airframe or any Engine, without further act (subject only to Permitted Liens and any arrangement permitted by Section 8(b) hereof and except in the case of replacement property temporarily installed as provided in Section 8(b)), (i) such replacement part shall become subject to the Lien of the Mortgage and be deemed a Part for all purposes hereof to the same extent as the Parts originally incorporated or installed in or attached to such Airframe or such Engine and (ii) the replaced Part shall be free and clear of all rights of the Security Trustee, and shall no longer be subject to the Lien of the Mortgage or deemed a Part hereunder.

(b) Pooling of Parts; Temporary Replacement Parts. Any Part removed from any Airframe or any Engine as provided in Section 8(a) hereof may be subjected by the

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Lessee to a pooling arrangement of the type which is permitted for Engines by paragraph 7(c) hereof; provided that the Part replacing such removed Part shall be incorporated or installed in or attached to such Airframe or such Engine in accordance with Section 8(a) as promptly as practicable after the removal of such removed Part. In addition, the Lessee may use temporary parts or pooled parts on an Aircraft as temporary replacements for Parts, provided that the Lessee as promptly thereafter as practicable, either (1) causes such pooled or temporary replacement part to become subject to the Lien of the Mortgage free and clear of all Liens other than Permitted Liens, at which time such temporary replacement part shall become a Part or (2) replaces such replacement part by incorporating or installing in or attaching to such Airframe or an Engine a further replacement part owned by the Lessee which meets the requirements of Section 8(a) and which shall become subject to the Lien of the Mortgage, free and clear of all Liens other than Permitted Liens.

(c) Alterations, Modifications and Additions. The Lessee will make (or cause to be made) such alterations, modifications and additions to each Airframe and each Engine as may be required to meet the applicable standards of the FAA, subject to clause (i)(2) of Section 7(a). In addition, the Lessee or any Permitted Sublessee may from time to time, at its own expense, make such alterations and modifications in and additions to any Airframe or any Engine as the Lessee or such Permitted Sublessee may deem desirable in the proper conduct of its business, including removal of Parts which the Lessee or such Permitted Sublessee deems to be obsolete or no longer suitable or appropriate for use on such Airframe or such Engine; provided that no such alteration, modification, removal or addition materially decreases the value, utility and remaining useful life of such Airframe or such Engine below the value, utility or remaining useful life thereof (without regard to hours or cycles) immediately prior to such alteration, modification, removal or addition, assuming that such Airframe or such Engine is in the condition required hereunder, except that, so long as no Special Default or Event of Default is continuing, the value (but not the utility) of such Airframe or any Engine may be reduced by the value of obsolete Parts which shall have been removed so long as the aggregate value of all obsolete Parts which shall have been removed and not replaced shall not exceed the Obsolete Part Amount. All parts incorporated or installed in or attached or added to an Airframe or an Engine as the result of such alteration, modification or addition (except PCE which the Lessee has leased from others and Parts which may be removed by the Lessee pursuant to the next sentence) (the “Additional Part” or “Additional Parts”) shall, without further act, become subject to the Lien of the Mortgage. Notwithstanding the foregoing, the Lessee may remove any Additional Part, provided that such Additional Part (i) is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or attached to such Airframe or any Engine at the time of delivery thereof hereunder or any Part in replacement of or substitution for any such Part, (ii) is not required to be incorporated or installed in or attached or added to such Airframe or any Engine pursuant to the terms of Section 7 hereof or the first sentence of this Section 8(c), and (iii) can be removed from such Airframe or such Engine without impairing the airworthiness of such Airframe or such Engine or diminishing the value, utility and remaining useful life of such Airframe or such Engine which such Airframe or such Engine would have had at such time had such alteration, modification or addition not occurred.

(d) Nameplate and Other Markings. Lessee shall affix and maintain (or cause to be affixed and maintained) in the cockpit of each Airframe and on each related Engine a nameplate bearing the inscription “THIS [AIRFRAME/ENGINE] IS OWNED BY VX 2015

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[Lease Agreement [Virgin/NPA 2015]]

LLC, LEASED TO VIRGIN AMERICA INC. AND SUBJECT TO A MORTGAGE IN FAVOR OF BANK OF UTAH, AS SECURITY TRUSTEE”, or such other inscription as Lessor from time to time may reasonably request (such nameplate to be affixed within ten days after the Delivery Date for such Airframe and such Engines, and Lessee shall thereupon so advise Lessor). Nothing herein contained shall prohibit the Lessee from placing its customary colors and insignia on such Airframe or any Engine or from otherwise operating the applicable Aircraft in its livery.

(e) No Authorization to Contract for Lessor. Nothing contained in this Lease shall constitute any consent or request by Lessor or any Secured Party express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of any Aircraft, any Engine or any Part thereof, nor as giving Lessee any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property, in such fashion as would permit the making of any claim against Lessor or any Secured Party in respect thereof or any claim that any Lien (other than Permitted Liens) based on the performance of such labor or services or the furnishing of any such materials or other property is prior to the interests of Lessor or any other Person in any Aircraft, any Engine or any Part thereof.

(f) No Rights of Retention. Lessee hereby waives any and all rights of retention which it may have or which at any time hereafter may be conferred upon it, by virtue of law or otherwise, related to any replacement of Parts, alterations, modifications or additions that Lessee may make to any Airframe or any Engine. Lessee hereby expressly releases Lessor and the Secured Parties from any and all obligations, whether present or future, to indemnify or reimburse Lessee for any of the aforementioned replacements, alterations, modifications, improvements or additions.

Section 9. Loss, Destruction, Requisition, Etc.

(a) Event of Loss with Respect to an Aircraft. Generally. Upon the occurrence of an Event of Loss with respect to any Aircraft or any Airframe and the Engines and/or engines then installed thereon, the Lessee shall forthwith give each Holder and the Security Trustee written notice of such Event of Loss but in any event within five Business Days of the definitive determination of such occurrence. On the Business Day next following the earlier of (x) the 120th day following the occurrence of such Event of Loss or (y) the third Business Day following the receipt of the insurance proceeds in respect of such Event of Loss, the Lessee shall either:

1. pay or cause to be paid to the Security Trustee an amount equal to the aggregate amount of principal, Break Amount (if any), interest and other amounts then due on or in respect of the Notes for the Series relating to the applicable Aircraft, or

2. deliver the amount determined in paragraph 1 above to the Security Trustee to be held by the Security Trustee as security for the obligations of the Lessee under this Section 9 pending the Lessee’s decision, to be made no later than 90 days following such Event of Loss, whether or not to substitute an aircraft, airframe or an airframe and one engine as provided below.

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The obligation of the Lessee under the preceding sentence shall be deemed satisfied by the depositing of insurance proceeds relating to such Event of Loss, pursuant to Section 10(b)(i)(2) hereof, with the Security Trustee in the amounts and the timing specified above. The Lessee may utilize such funds on deposit pursuant to paragraph 2 above to purchase the Replacement Airframe and Replacement Engines, if any, necessary to comply with the terms of this Section 9(a).

Concurrently with any payment pursuant to paragraph 1 or 2 above, the Lessee will provide each Holder and the Security Trustee with written notice specifying whether such amounts have been provided pursuant to paragraph 1 or paragraph 2, as the case may be; provided that in the case of a direct payment by the insurers to the Security Trustee, the Lessee shall have a minimum of 90 days from the date of such Event of Loss to provide such notification. If the Lessee intends to replace any Aircraft, any Airframe, any Engine, or any Airframe and one related Engine subject to an Event of Loss as provided below, the Lessee will obtain a suitable substitute and otherwise comply with the provisions hereof regarding substitution within 120 days following the occurrence of the Event of Loss and if the Lessee fails to do so (and has not obtained an extension of such 120 day period from the Security Trustee), the Lessee shall be deemed to have elected to pay, and shall pay, to the Security Trustee on such 120th day (or the next following Business Day if such day is not a Business Day) the amount determined in accordance with paragraph 1 above. The amounts held by the Security Trustee as collateral security for the Lessee’s obligations on such date, together with interest or other earnings on such amount shall be applied by the Security Trustee on such date (to the extent not in excess of the amount then due and payable by the Lessee) and, to the extent of such application and payment, shall reduce the amount required to be paid by the Lessee on such payment date. To the extent, if any, that such amounts held by the Security Trustee as collateral security, together with interest and earnings thereon, exceed the amounts payable by the Lessee pursuant to the second preceding sentence, the Security Trustee shall, after application of such excess amounts to any amounts payable by the Lessee pursuant to the immediately succeeding paragraph, pay to the Lessee any such excess amounts.

(b) Replacement Aircraft. In the event the Lessee shall elect to substitute an aircraft (or an airframe or an airframe and one engine, as the case may be) for any Aircraft (or any airframe and one or more Engines) subject to an Event of Loss, the Lessee shall, not later than the 120th day following the occurrence of such Event of Loss (or the next succeeding Business Day if the 120th day is not a Business Day):

(i) cause to be conveyed to the Lessor (if not already owned by the Lessor) title to an aircraft (or an airframe or an airframe and one engine which, together with the Engines constituting a part of such Aircraft but not installed thereon at the time of such Event of Loss, constitute such Aircraft) free and clear of all Liens (other than Incohate Liens) and having at least the age (as determined by year of manufacture), value and utility and being in as good an operating condition as such Aircraft subject to such Event of Loss (in each case without taking into account hours, cycles and maintenance schedule) assuming that such Aircraft had been maintained in accordance with the terms of the Mortgage; provided that any aircraft, airframe or engine so substituted hereunder shall be an Airbus A320-200 aircraft or an CFM International Inc., model CFM56-5B4 engine, as applicable; and

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(ii) prior to or at the time of any such substitution, the Lessee will:

(1) Lease and Mortgage Supplement. Cause a Lease Supplement and a Mortgage Supplement with respect to any replacement airframe or engine to be duly executed by the Lessee and Lessor, respectively, and filed for recording pursuant to the Federal Aviation Act, or the applicable laws, rules and regulations of any other jurisdiction in which an airframe is to be registered, cause the international interest with respect to such Mortgage Supplement, the international interest with respect to such Lease Supplement (with the right to discharge transferred by the Lessor as transferor to the Security Trustee as transferee), and the assignment of an international interest (assigning the international interest of this Lease) to be registered with the International Registry as an international interest with respect to such replacement airframe or engine, and cause to be prepared for execution and filing such additional documents as are necessary to reflect the security interests of the Lessor and the Security Trustee.

(2) Title and Insurance. Furnish the Lessor with such evidence of the Lessor’s title to such replacement airframe and engine(s) and of compliance with the insurance provisions of Section 10 with respect to such substituted property as the Lessor may reasonably request.

(3) Certificate of Lessee. Furnish a certificate satisfactory to the Lessor signed by a duly authorized officer of the Lessee stating the following:

(x) with respect to any replacement airframe:

(i) a description of the Airframe subject to the Event of Loss which shall be identified by manufacturer, model, U.S. registration number (or other applicable registration information) and manufacturer’s serial number;

(ii) a description of the replacement airframe to be received (including the manufacturer, model, U.S. registration number (or other applicable registration information) and manufacturer’s serial number);

(iii) that on the date of the Lease Supplement and the Mortgage Supplement relating to the replacement airframe the Lessor will be the title owner of such replacement airframe, free and clear of all Liens except Inchoate Liens (if acquired by the Lessor after February 28, 2006, with such ownership interest reflected on the International Registry as a contract of sale), that such replacement airframe will be on such date in good operating condition (subject to maintenance permitted or required by this Lease) and that such replacement airframe has been or, substantially concurrently therewith, will be duly registered in the name of the Lessee under the Federal Aviation Act (with Lessor’s title ownership interest reflected on the International Registry as a contract of sale), or under the law then applicable to the registration of the replaced Airframe and that an airworthiness certificate has been duly issued under such Act (or such other applicable law) with respect to such replacement airframe, that such

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registration and certificate is in full force and effect, and that the Lessee will have the full right and authority to use such replacement airframe;

(iv) the existence of the insurance (or self-insurance) required by Section 10 hereof with respect to such replacement airframe and the payment of all premiums, if any, then due on any such insurance;

(v) that the replacement airframe is of the same or improved model as such Airframe subject to the Event of Loss;

(vi) the fair market value of the replacement airframe (subject to maintenance permitted or required by this Lease) as of the date of such certificate (which shall be not less than the fair market value of the replaced Airframe immediately prior to the date such Airframe suffered an Event of Loss (assuming such Airframe was in the condition and repair required to be maintained under this Lease)); and

(vii) that no Special Default or Lease Event of Default has occurred which has not been remedied or waived, or

(y) with respect to any replacement engine:

(i) a description of the Engine suffering the Event of Loss, which shall be identified by manufacturer’s serial number;

(ii) a description of the replacement engine (including the manufacturer’s name and serial number);

(iii) that on the date of the Mortgage Supplement and Lease Supplement relating to the replacement engine the Lessor will be the title owner of such replacement engine (if acquired by the Lessor after February 28, 2006, with such ownership interest reflected on the International Registry as a contract of sale) free and clear of all Liens except Inchoate Liens, that such replacement engine on such date will be in good working order (subject to maintenance permitted or required by this Lease) and condition and will have a value and utility (without regard to hours or cycles) at least equal to the Engine, and that such replacement engine is of the same or an improved model of the Engine; and

(iv) that each of the conditions specified in Section 9(d) below with respect to such replacement engine has been satisfied.

(4) Manufacturer’s Warranties. Furnish the appropriate instruments assigning to the Security Trustee the benefit of all manufacturer’s and vendor’s warranties generally available with respect to such replacement airframe.

(5) Appraisal. Deliver a certificate from an independent aircraft appraiser satisfactory to the Lessor confirming the accuracy of the information set forth in clause (b)(ii)(3)(x)(vii) above.

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(6) Opinion of Counsel. Provide an opinion from the Lessee’s counsel reasonably satisfactory to the Security Trustee, to the effect that the instruments referred to in clause (1) above have been duly authorized and delivered, the replacement airframe and any replacement engine is free and clear of all Liens of record, the Security Trustee is entitled to the benefits of 11 USC §1110 with respect to the replacement airframe and any replacement engine to the same extent as with respect to the original Airframe and Engine(s) subject to the Event of Loss, the replacement airframe or replacement engine has been duly subjected to the Lien of the Mortgage and the Lease on a first priority and perfected basis (or, if such Aircraft is not then subject to U.S. registry, having the same priority and perfection required to be maintained under the Operative Documents in respect of the property being so replaced), the instruments subjecting such replacement airframe and any replacement engine to the Mortgage and to the Lease have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of such Aircraft, (x) if any of the same was acquired by the Lessor after February 28, 2006, a contract of sale in favor of the Lessor as owner of such replacement airframe and/or engine(s) and (y) the international interest of the Mortgage in favor of the Security Trustee as mortgagee, the international interest of the Lease in favor of the Lessor (with the right to discharge transferred by the Lessor as transferor to the Security Trustee as transferee), and the assignment of an international interest (assigning the international interest of the Lease) by the Lessor as assignor in favor of the Security Trustee as assignee, with respect to such replacement airframe and/or engine(s) have been duly registered with the International Registry (subject to no prior interests) and no further action or filing or recording of any document is necessary or advisable in order to establish and perfect the Lien of the Security Trustee or the Lessor to such replacement airframe and any replacement engine.

(c) Release of Liens upon Compliance. Upon compliance by the Lessee with all of the terms of Section 9(b) applicable to any replacement airframe and any engine, the Lessor will (and will direct the Security Trustee to) execute such documents as Lessee shall request to release from the Lien of the Mortgage and this Lease the applicable Aircraft or an Airframe and one or more related Engines, and the assignment of this Lease as it pertains to the applicable Aircraft or an Airframe and one or more related Engines, as the case may be, with respect to which such Event of Loss occurred; and the Security Trustee shall, contemporaneously with such transfer, release to the Lessee (or to the Person from which the Lessee is obtaining any Replacement Aircraft) all monies deposited by or on behalf of the Lessee with the Security Trustee as collateral security for the Lessee’s obligations pursuant to this Section. For all purposes hereof, the property so substituted shall after such transfer be deemed part of the property subject to the Lien of the Mortgage and to this Lease and shall be deemed the “Aircraft,” the “Airframe,” and an “Engine,” as the case may be, as defined herein.

(d) Event of Loss With Respect to an Engine. Upon the occurrence of an Event of Loss with respect to an Engine under circumstances in which there has not occurred an Event of Loss with respect to the related Airframe, the Lessee shall forthwith give the Lessor written notice thereof (but in any event within ten days of such occurrence) and shall, within

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90 days after the occurrence of such Event of Loss, as replacement for the Engine with respect to which such Event of Loss occurred, subject to the Lien of the Mortgage another CFM International Inc. model CFM56-5B4 engine (or, in each case, an engine of the same manufacturer of the same or an improved model and suitable for installation and use on such Airframe and compatible with the other Engines mortgaged hereunder) free and clear of all Liens (other than Inchoate Liens) and having a value and utility (without regard to hours or cycles) at least equal to, and being in as good an operating condition (subject to maintenance permitted or required by this Lease), as the Engine subject to such Event of Loss, assuming such Engine was maintained in accordance with the provisions of the Mortgage. Prior to or at the time of any such conveyance, the Lessee will:

(i) Mortgage Supplement. Cause a Mortgage Supplement and a Lease Supplement with respect to such Replacement Engine to be duly executed and filed for recording pursuant to the Federal Aviation Act, and cause the international interest of such Mortgage Supplement, the international interest of such Lease Supplement (with the right to discharge transferred by the Lessor as transferor to the Security Trustee as transferee), and the assignment of an international interest (assigning the international interest of the Lease) to be registered with the International Registry with respect to such replacement engine;

(ii) Opinion of Counsel. Furnish the Lessor with a certificate from an officer of the Lessee to the effect that such Replacement Engine is free and clear of all Liens (other than Inchoate Liens), and an opinion of the Lessee’s counsel that upon execution and filing of the Mortgage Supplement and the Lease Supplement or other required document the Replacement Engine will be subject to the Lien of the Mortgage and the Lease on a first priority and perfected basis and (x) if such Replacement Engine was acquired by the Lessor after February 28, 2006, a contract of sale in favor of the Lessor as owner of such replacement engine(s) and (y) the international interest of the Mortgage in favor of the Security Trustee as mortgagee, the international interest of the Lease in favor of the Lessor (with the right to discharge transferred by the Lessor as transferor to the Security Trustee as transferee), and the assignment of an international interest (assigning the international interest of the Lease) by the Lessor as assignor in favor of the Security Trustee as assignee, with respect to such replacement engine(s) have been duly registered with the International Registry (subject to no prior international interests); provided that, in the case of any such Lien which ranks on par with or ahead in priority to the Lien of the Mortgage, the Lessee may satisfy the foregoing requirement if the Lessee shall have provided a bond or other security in respect of such Lien in an amount and under terms reasonably satisfactory to the Lessor;

(iii) Certificate of Lessee. Furnish the Lessor with a certificate signed by a duly authorized officer of the Lessee stating with respect to any Replacement Engine:

(1) a description of the Engine suffering the Event of Loss, which shall be identified by manufacturer’s serial number;

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(2) a description of the Replacement Engine (including the manufacturer’s name and serial number);

(3) that on the date of the Lease Supplement and Mortgage Supplement relating to the Replacement Engine the Lessor will be the owner of such Replacement Engine (with such ownership interest reflected on the International Registry as a contract of sale if such Replacement Engine was acquired by the Lessor after February 28, 2006) free and clear of all Liens except Inchoate Liens, that such Replacement Engine will be on such date in good working order (subject to maintenance permitted or required by this Lease) and condition and that such Replacement Engine is of the same or an improved model of the Engine; and

(4) that each of the conditions specified in this Section 9(d) with respect to such Replacement Engine has been satisfied;

(iv) Insurance Compliance. Furnish the Lessor with such evidence of compliance with the insurance provisions of Section 10 hereof with respect to such Replacement Engine as the Security Trustee may reasonably request;

(v) Placement into Service. Furnish the Lessor with evidence that such Replacement Engine was either first placed in service after October 22, 1994 or was acquired by the Lessee with the proceeds of insurance resulting from the associated Event of Loss of the Engine being replaced; and

(vi) Appraisal. Furnish the Lessor with an appraisal or engineer’s report reasonably satisfactory to the Security Trustee attesting to the requisite valuation of such Replacement Engine. Upon compliance by the Lessee with all of the terms of this Section 9(d) such Engine shall thereupon cease to be an Engine secured hereunder. For all purposes hereof, each such Replacement Engine shall, after such conveyance, be deemed an “Engine” hereunder.

(e) Application of Payments From Governmental Authorities for Requisition of Title, Etc. Any payments (other than insurance proceeds the application of which is provided for in Section 10) received at any time by the Lessee, Lessor or the Security Trustee from any governmental authority or other Person with respect to an Event of Loss (other than a requisition for use by the government of the United States of America or any other government of registry of any Aircraft or any instrumentality or agency of any thereof not constituting an Event of Loss) will be applied as follows:

1. Reimbursement of Aircraft or Airframe. If payments are received with respect to an Aircraft (or an Airframe or any Engines or engines then installed thereon), after reimbursement of the Security Trustee and the Holders for reasonable costs and expenses, so much of such payments remaining as shall not exceed the amounts required to be paid by the Lessee pursuant to Section 9(a) shall be paid to the Security Trustee and applied in reduction of the Lessee’s obligation to pay such other amounts, if not already paid by the Lessee, or, if already paid by the Lessee, shall be applied to reimburse the

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Lessee for its payment of such amounts, and following the foregoing application, the balance, if any, of such payments shall be paid to the Lessee; and

2. Reimbursement of Engine. If such payments are received with respect to an Engine under circumstances contemplated by Section 9(d) hereof, so much of such payments remaining after reimbursement of the Security Trustee for reasonable costs and expenses shall be paid over to, or retained by, the Lessee, provided that the Lessee shall have fully performed, or will perform, the terms of Section 9(d) with respect to the Event of Loss for which such payments are made.

(f) Requisition for Use of an Aircraft by the United States Government or the Government of Registry of such Aircraft. In the event of the requisition for use of any Airframe or the Engines or engines installed on such Airframe by the government of the United States of America or any other government of registry of any Aircraft or any instrumentality or agency of any thereof or a CRAF activation, in either case not constituting an Event of Loss, the Lessee shall promptly notify the Lessor of such requisition or activation, and all of the Lessee’s obligations under this Lease with respect to such Aircraft shall continue to the same extent as if such requisition or activation had not occurred. All payments received by the Security Trustee or the Lessee from such government for the use of such Airframe and Engines or engines shall be paid over to, or retained by, the Lessee.

(g) Application of Payments During Existence of Special Defaults or Lease Events of Default. Any amount referred to in this Section 9 which is payable to or retainable by the Lessee shall not be paid to or retained by the Lessee if at the time of such payment or retention a Special Default or a Lease Event of Default shall have occurred and be continuing, but shall be held by or paid over to the Security Trustee as security for the obligations of the Lessee under this Lease and, if the Lessor declares this Lease to be in default pursuant to Section 14 hereof, applied against the Lessee’s obligations hereunder as and when due. At such time as there shall not be continuing any such Special Default or Event of Default, such amount shall be paid to the Lessee to the extent not previously applied in accordance with the preceding sentence.

Section 10. Insurance.

(a) Bodily Injury Liability and Property Damage Liability Insurance.

(i) Liability Insurance. Except as provided in paragraph (ii) of this Section 10, and subject to the self-insurance to the extent permitted by Section 10(d), the Lessee will at all times carry and maintain or cause to be carried and maintained, on a non-discriminatory basis and with insurers of internationally recognized responsibility, airline liability insurance, including third party and passenger legal liability, bodily injury liability, war risk and allied perils liability (“Liability War Risk Insurance”) as per and of a scope as comprehensive as AVN 52E, clause property damage liability, and contractual liability (exclusive of manufacturer’s product liability insurance) with respect to each Aircraft:

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(1) Amount. In an amount per occurrence and in the aggregate where applicable not less than the greater of (x) the Minimum Liability Insurance Amount and (y) such amount as shall be standard in the industry and customarily maintained by a majority of similarly situated comparable U.S. carriers operating similar equipment on similar routes;

(2) Type. Of the type and covering the same risks as from time to time applicable to aircraft operated by the Lessee of the same type which comprise the Lessee’s fleet; and

(3) Scope. Of a scope consistent with industry practice for major U.S. carriers operating similarly-sized equipment on similar routes; provided that, in the case of Liability War Risk Insurance, such insurance shall be maintained by the Lessee if and to the extent that a majority of similarly-situated U.S. carriers operating similarly-sized equipment on similar routes maintain such insurance. The Lessee shall maintain cargo liability insurance for each Aircraft in an amount not less than the amount of cargo liability insurance maintained for other aircraft operated by the Lessee which is consistent with industry practice for major U.S. carriers operating similar sized equipment on similar routes.

(ii) Liability Insurance While Not in Operation. During any period that any Aircraft is on the ground and not in operation, the Lessee may carry or cause to be carried, in lieu of the insurance required by paragraph (i) above, and subject to the self-insurance to the extent permitted by Section 10(d), insurance otherwise conforming to the provisions of said paragraph (i) except that:

(1) Coverage. The amounts of coverage shall not be required to exceed the amounts of bodily injury liability and property damage liability insurance from time to time applicable to aircraft owned or leased by major U.S. carriers of the same or similar type as such Aircraft which are on the ground and not in operation; and

(2) Scope of Risks. The scope of the risks covered and the type of insurance shall be consistent with industry practice and the same as from time to time shall be applicable to aircraft owned or leased by major U.S. carriers of the same or similar type which are on the ground and not in operation and will be consistent with industry practice.

(b) Insurance Against Loss or Damage to an Aircraft.

(i) Hull All Risks and Hull War Risks and Allied Perils Insurance.

(1) Generally. Except as provided in paragraph (ii) of this Section 10, and subject to the provisions of Section 10(d) permitting self-insurance, the Lessee shall at all times carry and maintain or cause to be carried and maintained, on a non-discriminatory basis, in effect with insurers of internationally recognized responsibility:

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i. All Risk. “All risk” aircraft hull insurance covering each Aircraft (with flight, taxiing and ingestion coverages) on an agreed value basis;

ii. Transit and Extended Coverage. Fire, transit and extended coverage of Engines and Parts while removed from such Aircraft (providing insurance for replacement value); and

iii. War Risk. War risk and allied perils insurance, including governmental confiscation and expropriation (other than by the government of registry of such Aircraft) and hijacking insurance (collectively, “Hull War Risk Insurance” and, collectively with Liability War Risk Insurance, “War Risk Insurance”) as per and of a scope as comprehensive as LSW 555D clause; provided that, in the case of Hull War Risk Insurance, such insurance shall be maintained by the Lessee if and to the extent that a majority of similarly-situated U.S. carriers operating similarly-sized equipment on similar routes maintain such insurance.

The foregoing insurances under clauses (A) and (C) shall at all times while an Aircraft is subject to the Mortgage be for an amount (taking into account self-insurance to the extent permitted by Section 10(d)) not less than the Stipulated Insured Amount for such Aircraft. In the case of a loss with respect to an engine (other than an Engine) installed on an Airframe, the Security Trustee shall hold any payment received by it of any hull insurance proceeds in respect of such loss for account of the Lessee or any other third party to the extent the Lessee or such third party is entitled to receive such proceeds.

(2) Adjustment. Except during a period when a Special Default or an Event of Default has occurred and is continuing (in which case all losses will be adjusted by the loss payee), all losses will be adjusted with the insurers by the Lessee (giving due regard to the interest of the Security Trustee). It is agreed that all insurance payments received under insurance policies required to be maintained by the Lessee pursuant to this Section 10(b) as the result of the occurrence of an Event of Loss will be applied as follows:

1. (x) if such payments are received as a result of an Event of Loss with respect to any Airframe (or such Airframe and the Engines installed thereon) that has been or is being replaced by the Lessee as contemplated by Section 9(a) hereof, such payments shall be paid over to, or retained by, the Security Trustee as security and upon completion of such replacement shall be paid over to the Lessee and (y) if such payments are received with respect to such Airframe (or such Airframe and the Engines installed thereon) that has not been or is not being replaced by the Lessee as contemplated by Section 9(a), payments as shall not exceed the amounts due pursuant to Section 3(g)(ii) of the Note Purchase Agreement shall be applied, after reimbursement of the Security Trustee for reasonable costs and expenses, in reduction of the Lessee’s obligation to pay

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such amounts, if not already paid by the Lessee, or, if already paid by the Lessee, shall be applied to reimburse the Lessee for its payment of such amounts and the balance, if any, of such payments remaining thereafter will be paid over to, or retained by, the Lessee; and

2. if such payments are received with respect to an Engine under the circumstances contemplated by Section 9(d) hereof, such payments shall be paid over to, or retained by, the Lessee, provided that the Lessee shall have fully performed or, concurrently therewith, will fully perform the terms of Section 9(d) with respect to the Event of Loss for which such payments are made.

(3) Non-Event of Loss. The insurance payments for any property damage loss to an Airframe or any Engine not constituting an Event of Loss with respect thereto or with respect to an Event of Loss of an Engine (except as provided in this Section 10(b)(i)(2)) shall be paid as follows: all proceeds in respect of losses less than or equal to the Partial Loss Threshold shall be paid to the Lessee or to the repairmen, and all proceeds in respect of losses greater than the Partial Loss Threshold shall be paid to the Security Trustee, to be held as collateral security for the Lessee’s obligations hereunder, and applied to reimburse the Lessee for accomplishing repairs and/or replacements as required, or to pay suppliers directly for such repairs and/or replacements as directed by the Lessee; provided that any amounts in excess of the Stipulated Insured Amount for such Aircraft shall be paid to the Lessee. In the case of any payment to the Security Trustee (other than in respect of an Event of Loss of such Aircraft), the Security Trustee shall, upon receipt of evidence reasonably satisfactory to it that the damage giving rise to such payment shall have been repaired or that such payment shall then be required to pay for repairs then being made or the replacement of the Engine suffering the Event of Loss, pay the amount of such payment, and any interest or income earned thereon, to the Lessee or its order. The Security Trustee shall pay any insurance proceeds received by it to the Security Trustee at any time such proceeds are required to be applied to prepay the Notes for the Series relating to the applicable Aircraft.

(ii) Hull All Risks and Hull War Risks and Allied Perils While Not in Operation. During any period that any Aircraft is on the ground and not in operation, the Lessee may carry or cause to be carried, in lieu of the insurance required by paragraph (i) above, and subject to the self-insurance to the extent permitted by Section 10(d), insurance otherwise conforming with the provisions of said paragraph (i), except that the scope of the risks and the type of insurance shall be the same as from time to time applicable to aircraft owned or leased and operated by major U.S. carriers of the same or similar type similarly on the ground and not in operation, provided that, subject to the self-insurance to the extent permitted by Section 10(d), the Lessee shall maintain insurance against risk of loss or damage to such Aircraft in an amount at least equal to the Stipulated Insured Amount during such period that such Aircraft is on the ground and not in operation.

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(c) Reports, Etc. The Lessee will furnish, or cause to be furnished, to the Security Trustee and the Holders on or before the Delivery Date and annually on or before the renewal dates of the Lessee’s relevant insurance policies, a report, signed by Marsh or any other recognized independent firm of insurance brokers, which brokers may be regularly retained by the Lessee (the “Insurance Brokers”), describing in reasonable detail the hull and liability insurance then carried and maintained with respect to each Aircraft and stating the opinion of such firm that, to the best of its knowledge, such insurance complies with the terms of this Section 10. Such information shall remain confidential as provided in Section 16(g) of the Note Purchase Agreement. The Lessee will cause the Insurance Brokers to agree to advise the Security Trustee and the Holders in writing:

(i) Notice of Default; Etc. (1) Of any default in the payment of premium, (2) of receipt of any notice of cancellation of such insurance policies, (3) if the Insurance Brokers cease to be the Lessee’s insurance broker for such insurance policies, (4) upon written request, of the premium payment situation, and (5) upon written request no later than one month prior to the expiration of such insurance policies, and within 14 days of receipt of such written request, whether the Lessee has sent renewal instructions to the Insurance Brokers; and

(ii) Notice of Cancellation or Material Adverse Change. At least 30 days (seven days (or such other period as shall be available) in the case of War Risk Insurance) prior to the cancellation (but not scheduled expiration) or material adverse change of any insurance maintained pursuant to this Section 10, provided that, in respect of the War Risk Insurance, if the notice period specified above is not obtainable, the Insurance Brokers shall provide for as long a period of prior notice as shall then be obtainable.

(d) Self-Insurance. The Lessee may self-insure, by way of deductible, premium adjustment provisions in insurance policies, or otherwise, under a program applicable to all aircraft in the Lessee’s fleet, the risks required to be insured against pursuant to Sections 10(a) and 10(b) but in no case shall the self-insurance with respect to any Aircraft exceed the lesser of (i) $2,000,000 and (ii) the prevailing mandatory minimum per aircraft (or, if applicable, any annual or other period) hull or liability insurance deductible imposed by aircraft hull and/or liability insurers in the applicable world-wide insurance markets; provided that no deductible shall be applicable in the case of a total loss of the applicable Airframe (unless U.S. industry standard requires a deductible to apply in such situation). No other self-insurance shall be permitted.

(e) Additional Insurance by Lessee; Insurance by Security Trustee. The Lessee may carry for its own account at its sole cost and expense additional insurance with respect to its interest in each Aircraft, provided that such insurance does not prevent the Lessee from carrying the insurance required or permitted by this Section 10 or adversely affect such insurance provided hereunder or the cost thereof. In the event that the Lessee shall fail to maintain or cause to be maintained insurance as herein provided, the Security Trustee may, at its sole option, provide such insurance and, in such event, the Lessee shall, upon demand, reimburse the Security Trustee for the cost thereof.

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(f) Application of Payments During Existence of a Special Default or a Lease Event of Default. Any amount referred to in this Section 10 which is payable to or retainable by or to be held for the benefit of the Lessee shall not be paid to or retained by or held for the benefit of the Lessee if at the time of such payment or retention a Special Default or a Lease Event of Default shall have occurred and be continuing, but shall be held by or paid over to the Security Trustee, as security for the obligations of the Lessee under the Mortgage and, if the Security Trustee shall have declared the Mortgage to be in default, applied against the Lessee’s obligations hereunder as and when due. At such time as there shall not be continuing any such Special Default or Event of Default, such amount shall be paid to the Lessee to the extent not previously applied in accordance with the preceding sentence.

(g) Terms of Insurance Policies. Any policies carried in accordance with Sections 10(a) and 10(b) covering any Aircraft, and any policies taken out in substitution or replacement for any such policies, as applicable:

(1) shall (in the case of policies of airline liability and hull war liability coverage only) name the Additional Insureds as additional insureds, as their interests may appear;

(2) shall (in the case of aircraft hull and hull war and allied perils insurance coverages only) name the Security Trustee as loss payee to the extent provided in clause (12) below;

(3) may provide for self-insurance to the extent permitted in Section 10(d);

(4) shall provide that if the insurers cancel such insurance for any reason whatsoever, or if any material change is made in the insurance which adversely affects the interest of any Additional Insured, such cancellation or change shall not be effective as to the Additional Insureds for 30 days after receipt by (but, in the case of War Risk Insurance, seven (7) days (or such other period as shall be available) after sending to) the Additional Insureds of written notice by such insurers of such cancellation or change, provided, however, that if, in respect of the War Risk Insurance, any notice period specified above is not obtainable, such policies shall provide for as long a period of prior notice as shall then be obtainable;

(5) shall provide that in respect of the Additional Insureds’ respective interests in such policies the insurance shall not be invalidated by any action or inaction of the Lessee and shall insure the respective interests of the Additional Insureds regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee;

(6) shall (in the case of airline liability and hull war liability coverages only) be primary without any right of contribution from any other insurance which is carried by any Additional Insured;

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(7) shall (in the case of airline liability and hull war liability coverages only) expressly provide that all of the provisions thereof, except the limits of liability, shall operate in the same manner as if a separate policy covered each insured;

(8) shall waive any right of subrogation of the insurers or any right of the insurers to set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of any Additional Insured but only to the extent of the indemnities provided under the Note Purchase Agreement;

(9) shall provide that losses (other than for total loss of such Aircraft) shall be adjusted with the Lessee (or, if an Event of Default shall have occurred which is continuing, with the Security Trustee);

(10) shall provide that the Additional Insureds are not liable for any insurance premiums;

(11) shall be effective with respect to both domestic and international operations;

(12) shall provide that:

(i) except as specified in clause (iii) of this clause (12), in the event of a loss involving payments in excess of the Partial Loss Threshold, all payments in respect of such loss up to the amount of Stipulated Insured Amount (whether such payment is payable to the Lessee or any third party) shall be paid to the Security Trustee, it being understood and agreed that in the case of any payment to the Security Trustee otherwise than in respect of an Event of Loss of such Aircraft, the Security Trustee shall, upon receipt of evidence reasonably satisfactory to it that the damage giving rise to such payment shall have been repaired or that such payment shall then be required to pay for repairs then being made or the replacement of the Engine suffering the Event of Loss, pay the amount of such payment, and any interest or income earned thereon, to the Lessee or its order;

(ii) except as specified in clause (iii) of this clause (12), all proceeds involving payments of the Partial Loss Threshold or less and any payments of any loss in excess of Stipulated Insured Amount for such Aircraft shall be paid to the Lessee or its order; and

(iii) notwithstanding anything to the contrary contained in the preceding clauses (i) and (ii), if such payment is made on account of an Event of Loss of the applicable Airframe or a Special Default or an Event of Default shall have occurred and be continuing and the insurers have been notified thereof by the Security Trustee, all payments of loss shall be paid to the Security Trustee; and

(13) if war risk coverage is maintained, shall contain a 50/50 clause as per AVS 103.

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(h) Failure to Insure. If the Lessee fails to maintain or cause to be maintained insurances in compliance with this Agreement:

(1) the Lessee shall, if the result is that:

(A) hull and hull war insurance in an amount at least equal to the Stipulated Insured Amount; or

(B) liability insurance in the amount required by this Agreement

is not in force with respect to the Aircraft, ensure that the Aircraft is immediately grounded and kept grounded until such time as the insurances are again in force or, if earlier, until the Lessor gives its consent for the Aircraft to continue to be operated; and

(2) the Lessee shall immediately notify the Security Trustee of the non-compliance and provide the Security Trustee with full details of any steps which the Lessee is taking, or proposes to take, in order to remedy such non-compliance; and each of the Security Trustee will be entitled but not bound (without prejudice to any other rights under this Agreement:

(A) subject to the agreement of the relevant insurers and/or brokers, to pay the premia due or to effect or maintain insurances satisfactory to the Security Trustee or otherwise remedy such failure in such manner (including by effecting and maintaining an “owner’s interest” policy) as the Security Trustee consider appropriate whereupon the Lessee shall immediately reimburse the Security Trustee for any amount so expended; and

(B) at any time while such failure is continuing to require the Aircraft to remain at any airport or to proceed to and remain at any airport designated by the Security Trustee, until such failure is remedied to the Security Trustee’s satisfaction.

(i) Continuing Insurance for Indemnity. The Lessee shall continue to effect and maintain (or shall cause to be effected and maintained), at its own cost, liability insurance on each Aircraft after the payment in full of all Obligations with respect to such Aircraft and the release of such Aircraft from the lien hereof for such period as the Security Trustee may reasonably require (but for not after the earlier of (a) the second anniversary of such release and (b) completion of the next major overhaul with respect to such Aircraft and each associated Engine) which liability insurances provide for each Additional Insured to continue to be named as an additional insured thereunder.

(j) Indemnification by United States Government in Lieu of Insurance. Notwithstanding any provisions of Sections 10(a) or 10(b) requiring insurance, in lieu of insurance against any risk with respect to the Aircraft, indemnification from or insurance provided by the United States government or any agency or instrumentality thereof shall be at

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least equal to the amount of insurance against such risk otherwise required by Sections 10(a) or 10(b) and shall be considered adequate insurance for the purpose of Sections 10(a) and 10(b).

Section 11. Absolute Obligations. This Lease is a net lease, and, except as may otherwise be expressly provided herein or in the other Operative Documents, it is intended that Lessee shall pay or cause to be paid all costs, charges, fees, assessments, expenses, withholdings and Taxes (other than Excluded Taxes) of every character whether foreseen or unforeseen, ordinary or extraordinary, incurred in connection with or arising out of the use, operation, maintenance, repair, modification, alteration, replacement and leasing of any Aircraft during the related Term, including the costs, expenses and taxes and similar levies set forth in the Note Purchase Agreement. Lessee’s obligation to pay all Rent and to perform all other obligations hereunder is absolute and unconditional and shall not be affected or reduced by any circumstances or for any reason, including (i) any setoff, counterclaim, recoupment, defense or other right which Lessee may have against Lessor, the Purchasers, the Security Trustee, the Manufacturer, the Engine Manufacturer or any Person providing services with respect to any Aircraft, or any other Person, for any reason whatsoever (whether in connection with the transactions contemplated hereby or otherwise), including any breach by Lessor of its warranties contained herein or in the other Operative Documents; (ii) any defect in the title, airworthiness, eligibility of registration under any applicable law, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, any Aircraft or any portion thereof (subject to the provisions of Section 9 hereof), any interruption or cessation in the use of or possession thereof by or availability to Lessee for any reason whatsoever, whether arising out of or related to an act or omission of Lessor, the Purchasers, the Security Trustee, the Manufacturer, the Engine Manufacturer or any other Person; (iii) any Lien with respect to any Aircraft or any portion thereof; (iv) the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any absence of right, power or authority of any Person to enter into any Operative Document; (v) any change, waiver, extension, indulgence or liability or other act or omission in respect of any liability or obligation of Lessor, the Security Trustee or the Purchasers; (vi) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Lessee, Lessor or any Secured Party or any disaffirmance, rejection or other action taken with respect to this Lease, any other Operative Document, by Lessor, the Purchasers, the Security Trustee or any other Person, or by any court, in any such proceeding; (vii) Lessee at any time having immunity from suit, prejudgment attachment, attachment in aid of execution or execution on the grounds of sovereignty or otherwise, which immunity, if any, Lessee hereby expressly waives; (viii) any restrictions applicable to Lessee on the transfer or conversion of currency; or (ix) any other circumstances or happening of any nature whatsoever, whether or not similar to any of the foregoing; it being the express intention of Lessor and Lessee that all Rent payable hereunder shall be payable in all events, unless the obligation to pay the same shall be terminated pursuant to the express provisions of this Lease or the other Operative Documents.

This Lease shall not, except as expressly set forth herein, be cancelable by Lessee and, except as expressly set forth elsewhere in this Lease, Lessee hereby waives any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer, suspend or surrender this Lease or any Aircraft or any obligation imposed upon Lessee hereunder or under the other Operative Documents (including payment of Rent), except in accordance with the terms hereof and thereof.

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If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of applicable law, except as specifically provided herein, Lessee, if and to the extent that Lessee retains the use and possession of an Aircraft, nonetheless agrees to pay to Lessor in respect of such Aircraft an amount equal to each Basic Rent payment and any Supplemental Rent payment at the time such payments would have become due and payable in accordance with the terms hereof and the other Operative Documents had this Lease not been terminated in whole or in part and so long as such payments are made and all other terms and conditions hereof are complied with by Lessee, Lessor and Lessee will deem this Lease to remain in full force and effect.

Nothing contained in this Lease shall be construed as a waiver of Lessee’s right to seek any claim against the Lessor, the Security Trustee, any Secured Party or any other Person arising out of the transactions contemplated by the Operative Documents in a separate proceeding.

Section 12. Assignment. The terms and provisions of this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Except as otherwise provided in Sections 6(b)(i) and 7(c), neither party hereto shall, without the prior written consent of the other and except as expressly permitted by the Operative Documents, assign any of its rights or obligations hereunder.

Section 13. Events of Default. The following events shall constitute “Lease Events of Default” hereunder (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body in the United States or any other jurisdiction, or the administration or interpretation thereof) and each such Lease Event of Default shall be deemed to exist and continue so long as, but only so long as, it shall not have been remedied:

(a) Payments on Rent and Notes. The Lessee shall have failed to make a payment of any principal of or interest of Basic Rent or on any Note in respect of any Aircraft within five Business Days after the same shall have become due; or

(b) Other Payments. The Lessee shall have failed to make any payment of any amount under the Operative Documents other than principal and interest on the Note or of Basic Rent in respect of any Aircraft after the same shall have become due and such failure shall continue for 10 Business Days after the Lessee’s receipt of written notice of such failure; or

(c) Insurance. (i) The Lessee shall fail to procure and maintain (or cause to be procured and maintained), with respect to any Aircraft, insurance required to be maintained in accordance with the provisions of Section 10 hereof or such insurance shall lapse or be canceled; or (ii) the Lessee shall fail to comply with its obligations in Section 7(b) hereof; or

(d) Breach of Covenant. The Lessee shall have failed to perform or observe, or caused to be performed and observed, in any material respect any other covenant or agreement to be performed or observed by it under any Operative Document, and such failure

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shall continue unremedied for a period of 30 days after the Lessee’s receipt of written notice thereof from any Agent or any Holder; provided that, if such failure is capable of being remedied, no such failure shall constitute an Event of Default for a period of 180 days after such notice is received by the Lessee so long as the Lessee is diligently proceeding to remedy such failure; or

(e) Incorrect or False Representation or Warranty. Any representation or warranty made by the Lessee in any Operative Document or any document or certificate furnished by the Lessee in connection therewith or pursuant thereto shall prove to have been incorrect in a material respect at the time made and shall remain materially incorrect at the time discovered and, if such incorrectness, together with its consequences, is subject to cure, the adverse impact of such incorrectness remains uncured for 30 days after receipt of notice thereof by the Lessee; or

(f) Voluntary Bankruptcy Proceeding. The commencement by the Lessee of a voluntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy, insolvency or other similar law in the United States, or the consent by the Lessee to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Lessee or for all or substantially all of its property, or the making by the Lessee of any general assignment for the benefit of creditors or the Lessee shall take any corporate action to authorize any of the foregoing or to authorize a general payment moratorium; or

(g) Involuntary Uncured Bankruptcy Proceeding. The commencement of an involuntary case or other proceeding in respect of the Lessee in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law in the United States or seeking the appointment of a receiver liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Lessee or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding remains undismissed and unstayed, in each case, provided that such event is curable and the Lessee is diligently proceeding to cure, for a period of 90 consecutive days, or an order, judgment or decree shall be entered in any proceeding by any court of competent jurisdiction appointing, without the consent of the Lessee, a receiver, trustee or liquidator of the Lessee, or for all or substantially all of its property, or sequestering of all or substantially all of the property of the Lessee and any such order, judgment or decree or appointment or sequestration shall be final or shall remain in force undismissed, unstayed or unvacated, in each case, provided that such event is curable and the Lessee is diligently proceeding to cure, for a period of 90 consecutive days after the date of entry thereof; or

(h) Air Carrier License. The Lessee fails or ceases to be a certificated air carrier or is suspended as a certificated air carrier or no longer has licenses to operate as an airline; or

(i) Security Interest. The Security Trustee’s first priority and perfected lien and international interest on the Mortgage Estate shall cease to exist; or

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(j) Note Purchase Agreement. There exists any “Event of Default” under and as defined in the Note Purchase Agreement; or

(k) Default under Other Mortgage. For so long as the Junior Underwriter is the Majority Junior Holder hereunder and the “Majority Junior Holder” under the Other Mortgage, an “Event of Default” shall have occurred and shall be continuing under and as defined in any Other Mortgage.

Section 14. Remedies. Upon the occurrence of any Lease Event of Default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare this Lease by notice to Lessee to be in default and by notice to Lessee may, at its option, terminate any commitment of Lessor to lease any Aircraft for which the Delivery Date has not yet occurred (provided, that upon the occurrence of any Lease Event of Default described in Section 13(f) and (g), this Lease shall automatically be deemed in default and the Lessor’s commitment shall automatically terminate); and at any time after this Lease shall be declared or deemed to be declared to be in default, Lessor may, so long as Lessee shall not have remedied all outstanding Lease Events of Default or Lessor shall not have waived such Events of Default, exercise one or more of the following remedies with respect to all or any part of the Aircraft as Lessor in its sole discretion shall elect:

(a) Lessor may demand that Lessee pay Lessor, and Lessee shall pay to Lessor all Basic Rent for each Aircraft that is accrued but unpaid in respect thereof until the date of receipt thereof, together with the then applicable Termination Sum computed as of the date of final payment in full thereof, all Supplemental Rent then due and payable by Lessee hereunder and all amounts then due and payable by Lessee under all other Operative Documents, and upon such payment of all such amounts, all Supplemental Rent then due and payable by Lessee hereunder, the Term shall terminate and, so long as no Lease Event of Default shall have occurred and be continuing, Lessor shall transfer pursuant to the terms and conditions set forth in Section 5(b) all of its rights, title and interest in and to the Aircraft (free and clear of all Liens created by the Security Documents) to Lessee, and Lessor and Security Trustee shall, at Lessee’s expense, execute and deliver such documents evidencing such transfer and shall take such further actions as may be required to effect such transfer;

(b) Lessor shall be entitled in addition to making any demand referred to in clause (a) above:

(i) to cause Lessee upon demand of Lessor (provided that such demand shall be deemed to have been given if Lessor is stayed by operation of law from making such demand) and at Lessee’s expense, to return promptly, and Lessee shall return promptly, all or such part of the Aircraft and the Aircraft Documentation relating thereto, as Lessor may so demand, to Lessor in the manner and condition required by, and otherwise in accordance with all the provisions of, Section 5 as if the Aircraft were being returned at the end of the Term, or if Lessee does not so deliver the Aircraft or the Aircraft Documentation, Lessor, at its option, may enter upon the premises where all or any part of the Aircraft and the Aircraft Documentation are located and take immediate possession of and remove the same (together with any engine or part which is not an Engine or Part but which is installed on an Airframe or stored with or attached to any

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Engine subject to all of the rights of the Lessee, lessor, lienor or secured party of such engine or part provided, that as soon as practicable after Lessor has taken possession of such Aircraft, Lessor shall, at no cost to Lessor and at the request of the relevant owner, lessor, lienor or secured party, return such engine or part to Lessee unless such engine or part shall be an accession to such Aircraft under applicable law) by summary proceedings or otherwise all without liability accruing to Lessor for or by reason of such entry or taking of possession (except for liability caused by the gross negligence, willful misconduct or fraud of Lessor), whether for restoration of damage to property caused by such taking or otherwise; provided that all actions of Lessor in this respect are reasonable and necessary, and Lessor may institute proceedings to repossess an Aircraft in any jurisdiction where such Aircraft may be located; and provided further that if at any time after Lessor has exercised its rights under this clause (b), Lessee shall make the payments referred to in clause (a) above, the Term shall terminate;

(ii) following repossession of an Aircraft pursuant to Section 14(b)(i), to sell such Aircraft at public or private sale, as the Lessor may determine; provided that Lessor shall apply the proceeds of any sale in the manner set forth in the Mortgage, and Lessor agrees to give Lessee at least 15 days’ prior notice of the date fixed for any public sale of such Aircraft or of the date on or after which will occur the execution of any contract providing for any private sale thereof, and any such sale shall be conducted so as to afford Lessee a reasonable opportunity to bid; and

(iii) Lessor may exercise any other right or remedy which may be available to it as a secured party under applicable law or under and subject to the Cape Town Convention, including, without limitation, all rights and remedies under and subject to Chapter III of the Convention and Chapter II of the Protocol. To the extent permitted by applicable law, Lessee and Lessor hereby agree that Lessor (including the Security Trustee and its assigns) shall not be required to provide notice to Lessee as set forth in Article IX(6) of the Protocol in connection with a proposal to procure the de-registration and export of the Aircraft without a court order. Lessee expressly agrees to permit Lessor to obtain from any applicable court, pending final determination of any claim resulting from a Lease Event of Default hereunder, speedy relief in the form of any of the orders specified in Article 13 of the Convention and Article X of the Protocol as Lessor shall determine in its sole and absolute discretion, subject to any procedural requirements proscribed by applicable laws.

In addition, Lessee shall be liable, except as otherwise provided above, for any and all unpaid Supplemental Rent due hereunder before, after or during the exercise of any of the foregoing remedies and for all proper legal fees and other costs and expenses actually incurred by Lessor, the Purchasers or the Security Trustee by reason of the occurrence of any Lease Event of Default or the exercise of Lessor’s remedies with respect thereto, including (A) all costs and expenses incurred in connection with the return of the Aircraft in accordance with the terms of Section 5 or in placing the Aircraft in the condition and airworthiness required by such Section and (B) any other costs and expenses that Lessor, any Purchaser or the Security Trustee may incur in connection with the retaking, holding, storage, export, deregistration and preparing for sale of the Aircraft and other like action or that Lessee has agreed to assume in any other Operative Document or pursuant to applicable law. Except as otherwise expressly provided

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above, no remedy referred to in this Section 14 is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to above; and the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any or all of such other remedies. No express or implied waiver by Lessor of, and no course of dealing by it with respect to, any Lease Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Lease Event of Default.

(c) In any proceeding in any jurisdiction commenced to repossess any Aircraft, it shall not be necessary for Lessor, or any other Person, to post any bond, security, undertaking or indemnity, in favor of, or for the benefit of Lessee, or any other Person, all of which are hereby knowingly, intentionally and irrevocably waived by Lessee.

(d) Lessee hereby consents to the exercise by Lessor of the remedies granted herein and in the Cape Town Convention (in accordance with the terms of the Cape Town Convention). Lessee acknowledges and agrees that Lessor may exercise such of the foregoing remedies as it shall determine in its sole discretion and none of the foregoing remedies is manifestly unreasonable. To the extent permitted by applicable law, Lessee and Lessor hereby agree that paragraph 2 of Article 13 of the Convention shall not apply to this Lease or to the exercise of any remedy by the Lessor under this Lease or the Cape Town Convention. Following termination of this Lease, Lessee agrees to immediately discharge, upon demand by Lessor or the Security Trustee, any registration made with the International Registry in its favor.

Section 15. Further Assurances; Investment of Security Funds.

(a) Further Assurances. Lessee and Lessor shall from time to time, at the cost and expense of Lessee, do and perform such other and further acts and duly execute and deliver such further documents and assurances as may be required by applicable law or reasonably requested by the one party to establish, maintain and protect the respective rights and remedies of the other party and to carry out and effect the intent and purpose of this Lease including, if reasonably requested by Lessor and at the expense of Lessee, the execution and delivery of supplements hereto or to the other Operative Documents, in recordable form, subjecting to this Lease or to the other Operative Documents, any replacement or substitute airframe or engine and the recording or filing of counterparts hereto or thereto, in accordance with the laws of such jurisdictions in which any Aircraft is based as Lessor may from time to time reasonably deem necessary after prior consultation with Lessee. Lessee shall be solely responsible for obtaining all required consents and approvals of, giving all required notices to, performing all required registrations and filings for recordation with, and taking all other necessary actions in the State of Registration and/or the United States, including any governmental or political agency, subdivision or instrumentality thereof. Without limiting the foregoing, Lessee shall cause this Lease, and any and all additional instruments which shall be executed pursuant to the terms hereof, to be kept, filed, deposited or recorded, at all times, in such places in the State of Registration, the jurisdiction where Liens are perfected against Lessor (if different), and such other jurisdictions in which any Aircraft is based as Lessor may reasonably request in order to perfect and preserve the rights of Lessor, the Security Trustee or the other Secured Parties hereunder, and furnish to Lessor an opinion or opinions of counsel or other evidence satisfactory to Lessor (acting reasonably) of each such filing, deposit or recordation and, without limitation of any of the foregoing, at the request of Lessor, promptly

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correct any defect, error or omission which may at any time hereafter be discovered in the contents of this Lease or in the execution, acknowledgment or delivery hereof and, at the request of Lessee, Lessor shall promptly correct any defect, error or omission which may at any time be discovered in the contents of this Lease or in the execution, acknowledgment or delivery hereof. Without limiting any of the foregoing, Lessee will cooperate fully with Lessor for obtaining the deregistration of each Aircraft and any required export licenses, when requested by the Security Trustee upon any return of an Aircraft required hereunder.

(b) Investment of Security Funds. Any moneys held by the Security Trustee as security hereunder for Lessee’s obligations shall, until paid to Lessee or otherwise applied in accordance with the terms of the Operative Documents, be invested by the Security Trustee as Lessee may from time-to-time direct in writing (or orally and confirmed in writing), but subject to availability at the Security Trustee’s discretion (it being understood that absent such a direction, there shall be no obligation to invest such moneys) in:

(i) Governmental Obligations. Obligations of, or guaranteed by, the United States Government or agencies thereof.

(ii) Commercial Paper. Open market commercial paper of any corporation incorporated under the laws of the United States of America or any State thereof rated at least P 2 or its equivalent by Moody’s Investors Service, Inc. or at least A-2 or its equivalent by Standard & Poor’s Ratings Service.

(iii) Certificates of Deposit. Certificates of deposit issued by commercial banks organized under the laws of the United States or of any political subdivision thereof having a combined capital and surplus in excess of $750,000,000 which banks or their holding companies have a rating of A or its equivalent by Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Service; provided, however, that the aggregate amount at any one time so invested in certificates of deposit issued by any one bank shall not exceed five percent (5%) of such bank’s capital and surplus.

(iv) Offshore Certificates of Deposit. Dollar denominated offshore certificates of deposit issued by, or offshore time deposits with, any commercial bank described in (iii) or any subsidiary thereof.

(v) Repurchase Agreements. Repurchase agreements with any financial institution having combined capital and surplus of at least $750,000,000 with any of the obligations described in clauses (i) through (iv) as collateral, none of which investments (but exclusive of any underlying investment that may be subject to a repo) shall have a term to maturity in excess of 30 days.

There shall be promptly remitted to Lessee or its order (but no more frequently than monthly) any gain (including interest received) realized as a result of any such investment (net of any, fees, commissions and other expenses, if any, incurred in connection with such investment) unless a Special Default or an Event of Default shall have occurred and be continuing. The Lessee shall be responsible for any net loss realized as a result of any such investment and shall reimburse the Security Trustee on demand.

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Section 16. Quiet Enjoyment. Notwithstanding anything contained herein to the contrary, Lessor agrees and covenants that, unless a Lease Event of Default shall have occurred and be continuing, it will not take, and it will not permit any Person claiming through or under it to take, any action inconsistent with Lessee’s rights under this Lease, or otherwise through its own actions or failure to observe its obligations hereunder or under any other Operative Document in any way interfere with or interrupt or permit any Person claiming through or under it to interfere with or interrupt the quiet enjoyment of the use, operation and possession of any Aircraft, any Airframe or any Engine by Lessee or any sublessee, assignee or transferee under any sublease, assignment or transfer then in effect and permitted by the terms of this Lease.

Section 17. Notices. All notices, requests and other communications provided for herein (including, without limitation, any modifications of, or waivers or consents under, this Lease) shall be given or made in writing (including, without limitation, by telecopy or e-mail), delivered to the intended recipient at the “Address for Notices” specified on its signature page hereto (or, in the case of the Security Trustee, in the Administrative Schedule of the Note Purchase Agreement) or, as to any party, at such other address as shall be designated by such party by notice to each other party. Except as otherwise provided in this Lease, all such communications shall be deemed to have been duly given when transmitted by telecopier or e-mail or personally delivered or, in the case of a notice sent by commercial courier or by hand, upon receipt, in each case given or addressed as aforesaid.

Section 18. Miscellaneous; Governing Law.

(a) Any provision of this Lease that is prohibited or unenforceable in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction, and shall not invalidate or render unenforceable the other provisions hereof in any jurisdiction. To the extent permitted by applicable law, Lessee hereby waives any provision of law which renders any provision hereof prohibited or unenforceable in any respect. No term or provision of this Lease may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which the enforcement of the change, waiver, discharge or termination is sought and only as permitted by the Operative Documents. The section and paragraph headings in this Lease and the table of contents are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof.

(b) THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

(c) Any suit, action or proceeding against any of the parties hereto with respect to this Lease or any judgment entered by any court in respect thereof may be brought in the Supreme Court of the State of New York, County of New York or in the United States District Court for the Southern District of New York, as either party hereto in its sole discretion may elect, and each party hereto hereby submits to the non-exclusive jurisdiction of such courts for the purpose of any such suit, action or proceeding. Each of Lessee and Lessor irrevocably consents to service of process in the manner provided for notices in Section 17. Nothing in this

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Lease or any other Operative Document will affect the right of any party to this Lease or any other Operative Document to serve process in any other manner permitted by law. Each party hereto hereby irrevocably waives any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Lease brought in any of the aforesaid courts and hereby further irrevocably waives any claim that any such suit, action or proceeding has been brought in an inconvenient forum.

(d) To the extent that Lessee may be or hereafter become entitled, in any jurisdiction in which judicial proceedings may at any time be commenced with respect to this Lease, to claim for itself or its property, assets or revenues immunity (whether by reason of sovereignty or otherwise) from suit, jurisdiction of any court, attachment prior to judgment, attachment in aid of execution of a judgment, setoff, execution of judgment or from any other legal process, and to the extent that in any such jurisdiction there may be attributed any such immunity (whether or not claimed), Lessee hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity.

(e) The payment obligations of Lessee payable under this Lease and any other Operative Document (the “payor”) expressed to be payable thereunder in one currency (the “first currency”) shall not be discharged by an amount paid in another currency (the “second currency”), whether pursuant to a judgment or otherwise, to the extent that the amount so paid on prompt conversion to the first currency under normal banking procedures does not yield the full amount of the first currency due thereunder, and the payor shall indemnify the recipient of such payment (the “payee”) against any such shortfall; and in the event that any payment by the payor, whether pursuant to a judgment or otherwise, upon conversion and transfer does not result in payment of such amount of the first currency, the payee shall have a separate cause of action against the payor for the additional amount necessary to yield the amount due and owing to the payee.

(f) If it is necessary to determine for any reason other than that referred to in Section 18(e) above the equivalent in the first currency of a sum denominated in the second currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Security Trustee could purchase the first currency with the second currency on the Business Day on which such determination is to be made (or, if such day is not a Business Day, on the next preceding Business Day).

Section 19. WAIVER OF JURY TRIAL. EACH OF LESSOR AND LESSEE IRREVOCABLY WAIVES AS AGAINST THE OTHER PARTY HERETO ANY RIGHTS IT MAY HAVE TO A JURY TRIAL IN THE UNITED STATES OF AMERICA IN RESPECT OF ANY CIVIL ACTION ARISING UNDER THIS LEASE.

Section 20. Security for Lessor’s Obligation. In order to secure the repayment, inter alia, of the Notes, Lessor has agreed in the Mortgage, among other things, to mortgage and assign to the Security Trustee its right, title and interest in and to this Lease and the Aircraft, subject to the reservations and conditions therein set forth. Lessee hereby consents to such mortgage and assignment and acknowledges receipt of a copy of the Mortgage it being understood that such consent shall not affect any requirement or the absence of any requirement for any consent under any other circumstances. Until the Lien of the Mortgage has been

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released, (a) Lessee shall, notwithstanding anything herein to the contrary, make all payments of Rent and all other amounts payable hereunder in accordance with Section 3(h) of the Note Purchase Agreement and such payments shall not be subject to any defense, counterclaim, set-off or other right or claim of any kind which Lessee may be able to assert against Lessor or any other Person in an action brought by any thereof on this Lease, (b) all rights of Lessor with respect to this Lease (including, without limitation, all consent, waiver and notice rights, and rights to make any requests or determinations), any Aircraft, any Airframe, any Engine or any Part thereof, to the extent set forth in and subject in each case to the exceptions set forth in the Mortgage, shall be exercisable by the Security Trustee (to the exclusion of Lessor) and (c) all documents, notices, certificates and opinions of counsel sent by Lessee to Lessor shall also be sent to the Security Trustee. To the extent, if any, that this Lease constitutes tangible chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this Lease may be perfected through the transfer or possession of any counterpart hereof other than the original executed counterpart, which shall be identified as the counterpart containing the receipt therefor executed by the Security Trustee on the signature page thereof.

Section 21. Lessor and Security Trustee Appointed Attorney-in-Fact. Lessee hereby irrevocably appoints each of Lessor and the Security Trustee the true and lawful attorney of Lessee (with full power of substitution) in the name, place and stead of, and at the expense of, Lessee in connection with the enforcement of the rights and remedies provided for in this Lease, exercisable upon the occurrence of and during the continuation of a Lease Event of Default: (i) to act singly and in its own name to represent Lessee before any governmental authority, ministry, agency or department in the State of Registration and also before any company, organization, individual or other entity and to execute and to do and perform on behalf of Lessee and in the name of Lessee or otherwise to deliver any applications, documents, consents, instruments or certificates which may be required in order to effect the deregistration in the State of Registration to obtain export licenses from the State of Registration, if required, and to take any other actions necessary or advisable for the repossession and exportation from the State of Registration of any Aircraft, any Airframe, any Engine or any Part, (ii) to give any necessary receipts or acquittances for amounts collected or received hereunder, (iii) to make all necessary transfers of any Aircraft, any Airframe, any Engine or any Part or part thereof in connection with any sale, lease or other disposition made pursuant hereto, in each case, in conformity with the applicable provisions hereof and of the other Operative Documents, (iv) to execute and deliver all necessary or appropriate bills of sale, assignments and other instruments in connection with any such sale, lease or other disposition made pursuant hereto and the other Operative Documents, Lessee hereby ratifying and confirming all that such attorney (or any substitute) shall lawfully do hereunder and pursuant hereto and (v) to terminate any pooling agreement or interchange agreement of Lessee pursuant to which any Airframe, any Engine or any Part may then be possessed by a Person other than Lessee. The power hereby granted is absolute, irrevocable and unconditional and is hereby deemed coupled with an interest. Nevertheless, if so requested by Lessor, the Security Trustee or a purchaser, lessee, or other transferee, Lessee shall ratify and confirm any such sale, lease or other disposition by executing and delivering to Lessor, the Security Trustee or such purchaser, lessee or transferee all proper bills of sale, assignments, releases, leases and other instruments as may be properly designated in any such request. Any recoveries by Lessor or the Security Trustee, whether pursuant to the exercise of any remedy

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hereunder or otherwise, shall be paid over to the Security Trustee and applied by the Security Trustee in accordance with the Mortgage.

Section 22. Lessor’s Right to Perform for Lessee. If Lessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any of its agreements contained herein, then (but in each case, other than in the case of failure to maintain insurance as required hereunder, no earlier than five Business Days after notice to the Lessee as to the occurrence of such failure, whether or not it shall yet constitute a Lease Event of Default hereunder) Lessor or the Security Trustee may (but shall be under no obligation to) itself make such payment or perform or comply with such agreement, and the amount of such payment and the amount of the reasonable expenses of Lessor or the Security Trustee incurred in connection with such payment or the performance of or compliance with such agreement, as the case may be, shall be deemed Supplemental Rent payable by Lessee upon demand together with interest thereon at the applicable Post-Default Rate.

Section 23. English Language Prevails. For the avoidance of doubt, Lessor and Lessee agree any translation of this Lease shall not apply in construing this Lease and that the English version of this Lease shall govern for all purposes.

Section 24. Complete Agreement; ACC Counsel-Mandated Revisions. Except for the other Operative Documents, this Lease contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior written or oral communications or agreements with respect thereto. Subject to the legend on the cover page of this Lease, this Lease may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. The parties hereto agree to amend this Lease in order to comport with any changes required by ACC counsel of the FAA following their review hereof to allow registration of the Aircraft in the name of the Lessee.

Section 25. No Merger of Title. There shall be no merger of this Lease or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly, in whole or in part, (i) this Lease or the leasehold estate created hereby or any interest in this Lease or such leasehold estate, (ii) the fee estate in any Aircraft, or (iii) a beneficial interest in the Lessor.

Section 26. General Indemnity.

(a) Operational indemnity. The Lessee shall indemnify and at all times keep indemnified each Indemnitee against, on an After-Tax Basis, all Losses which may at any time be incurred by that Indemnitee:

(i) Subject to the next following paragraph, the Lessee hereby agrees to indemnify each Indemnitee against, and agrees to protect, save and keep harmless each of them from any and all Expenses imposed on, incurred by or asserted against any Indemnitee arising out of or directly resulting from (A) the operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery, non-delivery, lease, nonuse, modification, alteration, or sale of any Aircraft, any Airframe or any Engine, or

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any engine used in connection with such Airframe or any part of any of the foregoing by the Lessee, any lessee or any other Person whatsoever, whether or not such operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery, non-delivery, lease, nonuse, modification, alteration, or sale is in compliance with the terms of the Mortgage, including, without limitation, claims for death, personal injury or property damage or other loss or harm to any person whatsoever and claims relating to any laws, rules or regulations pertaining to such operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery, non-delivery, lease, non-use, modification, alteration, sale or return including environmental control, noise and pollution laws, rules or regulations; (B) the manufacture, design, purchase, acceptance, rejection, delivery, or condition of such Aircraft, such Airframe or any Engine, any engine used in connection with such Airframe, or any part of any of the foregoing including, without limitation, latent and other defects, whether or not discoverable, or trademark or copyright infringement; (C) any breach of or failure to perform or observe, or any other noncompliance with, any covenant or agreement to be performed, or other obligation of the Lessee under any of the Operative Documents to which it is a party, or the falsity of any representation or warranty of the Lessee in any of the Operative Documents to which it is a party; (D) the offer, sale and delivery by the Lessee or anyone acting on behalf of the Lessee of any Note or successor debt obligations issued in connection with the refunding or refinancing thereof (including, without limitation, any claim arising out of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or any other Federal or state statute, law or regulation, or at common law or otherwise relating to securities (collectively “Securities Liabilities”)) (the indemnity provided in this clause (D) to extend also to any Person who controls an Indemnitee, its successors, assigns, employees, directors, officers, servants and agents within the meaning of Section 15 of the Securities Act of 1933, as amended); and (E) the transactions contemplated by the Operative Documents or any lease hereunder, any Lease Event of Default or the enforcement against the Lessee of any of the terms thereof (including, without limitation, Article V of the Mortgage).

(ii) Limitations on Indemnity. The foregoing indemnity shall not extend to any Expense of any Indemnitee to the extent attributable to one or more of the following: (1) acts or omissions involving the willful misconduct or gross negligence of such Indemnitee or any Person acting on behalf of such Indemnitee (other than gross negligence imputed to such Indemnitee solely by reason of its interest in any Aircraft); (2) the failure by such Indemnitee to perform or observe any agreement, covenant or condition in any of the Operative Documents applicable to it, including, without limitation, the creation or existence of a Security Trustee Lien or a Lender Lien (except to the extent such failure was caused directly by the failure of the Lessee to perform any of its obligations under the Operative Documents); (3) any representation or warranty by such Indemnitee in the Operative Documents or in connection therewith being incorrect in any material respect; (4) with respect to any Indemnitee, a disposition (voluntary or involuntary) by such Indemnitee of all or any part of such Indemnitee’s interest in such Airframe, any Engine or in any Operative Document other than during the continuance of an Event of Default; (5) other than amounts necessary to make payments on an after-tax basis, any Tax, or increase in Tax liability under any applicable law whether or not the Lessee is required to indemnify for such Tax pursuant to Schedule III to the Note

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Purchase Agreement; (6) acts or events occurring after (x) the Notes and all other amounts due to such Indemnitee under the Operative Documents have been paid in full or (y) the transfer of possession of an Aircraft pursuant to Article V of the Mortgage except to the extent that such Claim is attributable to acts occurring in connection with the exercise of remedies pursuant to Section 5.01 of the Mortgage following the occurrence and continuance of an Event of Default; (7) a failure on the part of the Security Trustee or either Agent to distribute in accordance with the Note Purchase Agreement or the Mortgage any amounts received and distributable by it thereunder; and (8) any Expense which is payable or borne by a Person other than the Lessee pursuant to any provision of any Operative Document.

(iii) Claims Against Indemnities. If a claim is made against an Indemnitee involving one or more Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly after receiving such notice give notice of such claim to the Lessee; provided that the failure to provide such notice shall not release the Lessee from any of its obligations to indemnify hereunder except to the extent that the Lessee is prejudiced as a result of the failure to give such notice in a timely fashion, and no payment by the Lessee to an Indemnitee pursuant to this Section 26(c) shall be deemed to constitute a waiver or release of any right or remedy which the Lessee may have against such Indemnitee for any actual damages as a result of the failure by such Indemnitee to give the Lessee such notice. The Lessee shall be entitled, at its sole cost and expense, acting through counsel reasonably acceptable to the respective Indemnitee, so long as the Lessee has acknowledged in writing its responsibility for such Expense hereunder (unless such Expense is covered by clause (ii) of this Section 26(c), except that such acknowledgment does not apply if the decision of a court or arbitrator provides that the Lessee is not liable hereunder), (A) in any judicial or administrative proceeding that involves solely a claim for one or more Expenses, to assume responsibility for and control thereof, (B) in any judicial or administrative proceeding involving a claim for one or more Expenses and other claims related or unrelated to the transactions contemplated by the Operative Documents, to assume responsibility for and control of such claim for Expenses to the extent that the same may be and is severed from such other claims (and such Indemnitee shall use its reasonable efforts to obtain such severance), and (C) in any other case, to be consulted by such Indemnitee with respect to judicial proceedings subject to the control of such Indemnitee and to be allowed, at the Lessee’s sole expense, to participate therein. The Indemnitee may participate at its own expense and with its own counsel in any judicial proceeding controlled by the Lessee pursuant to the preceding provisions. Notwithstanding any of the foregoing, the Lessee shall not be entitled to assume responsibility for and control of any such judicial or administrative proceedings if any Lease Event of Default shall have occurred and be continuing, if such proceedings will involve a material risk of the sale, forfeiture or loss of any Aircraft unless the Lessee shall have posted a bond or other security reasonably satisfactory to the relevant Indemnitee with respect to such risk or if such proceedings could entail any risk of criminal liability being imposed on such Indemnitee.

(iv) Information for Lessee. The Indemnitee shall supply the Lessee with such information reasonably requested by the Lessee as is necessary or advisable for the Lessee to control or participate in any proceeding to the extent permitted by this

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Section 26(c). Such Indemnitee shall not enter into a settlement or other compromise with respect to any Expense without the prior written consent of the Lessee, which consent shall not be unreasonably withheld or delayed, unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Section 26(c).

(v) Information for Indemnitees. The Lessee shall supply the Indemnitee with such information reasonably requested by the Indemnitee as is necessary or advisable for the Indemnitee to control or participate in any proceeding to the extent permitted by this Section 26(c).

(vi) Expenses Covered by Insurance. In the case of any Expense indemnified by the Lessee hereunder which is covered by a policy of insurance maintained by the Lessee (or any Lessee) pursuant to Section 10 or otherwise, it shall be a condition of such indemnity with respect to any particular Indemnitee that such Indemnitee shall cooperate with the insurers in the exercise of their rights to investigate, defend or compromise such Expense as may be required to retain the benefits of such insurance with respect to such Expense. Notwithstanding any of the foregoing to the contrary, with respect to any Expense which is covered under policies of insurance maintained by the Lessee (or any Lessee) pursuant to Section 10 or otherwise, the rights of an Indemnitee to control or participate in any proceedings shall be modified to the extent necessary to comply with the requirements of such policies and the rights of the insurers thereunder.

(vii) Subrogation. To the extent of any payment of any Expense pursuant to this Section 26(c), the Lessee, without any further action, shall be subrogated to any claims the Indemnitee may have relating thereto. The Indemnitee agrees to give such further assurances or agreements and to cooperate with the Lessee to permit the Lessee to pursue such claims, if any, to the extent reasonably requested by the Lessee.

(viii) Reimbursement. In the event that the Lessee shall have paid an amount to an Indemnitee pursuant to this Section 26(c), and such Indemnitee subsequently shall be reimbursed in respect of such indemnified amount from any other Person, such Indemnitee shall promptly pay the Lessee the amount of such reimbursement, including interest received attributable thereto, provided that no Lease Event of Default has occurred and is continuing.

*         *         *

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IN WITNESS WHEREOF, the parties hereto have caused this Aircraft Lease Agreement to be duly executed by their respective duly authorized officers as of the date first above written.

		VX 2015 LLC
		By VX 2015 Trust, its Manager
		By Delaware Trust Company, not in its individual capacity but solely as Trustee
		By:	/s/ Alan R. Halpern
			Name: Alan R. Halpern
			Title: Vice President
		Address for Notices:
		VIRGIN AMERICA INC.
		By:	/s/ Peter D. Hunt
			Name: Peter D. Hunt
			Title: SVP & CFO
		Address for Notices:
Receipt of this original counterpart No. 1 is acknowledged by:
BANK OF UTAH, as Security Trustee
By:	/s/ Arge Feotis
	Name: Arge Feotis
	Title: Asst. Vice President

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APPENDIX A

DEFINITIONS AND RULES OF USAGE

(a) Unless a contrary indication appears, a reference in this Agreement to:

(i) the “agreed form” of any Operative Document means the form of such Operative Document which on the date hereof has been agreed by the Lessee and the Security Trustee (acting on the instructions of the Purchasers);

(ii) any “applicable law” means (a) applicable laws, statutes, decrees, decree laws, acts, codes, regulations, legislation, treaties, conventions and similar instruments and, in respect of any of the foregoing, unless the context otherwise requires, any instrument passed in substitution therefor or for the purposes of consolidation thereof with any other instrument or instruments, in each case, unless the context otherwise requires, as amended, modified, varied or supplemented from time to time, (b) applicable final judgments, orders, determinations or awards of any court from which there is no right of appeal or if there is a right of appeal such appeal is not prosecuted within the allowable time and (c) applicable orders, guidelines, notices, guidance, rules and regulations of any state or government or any government entity, in each case having the force of law;

(iii) any person includes its and any subsequent successors in title, permitted assigns and permitted transferees;

(iv) “assets” includes present and future properties, revenues and rights of every description;

(v) “indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

(vi) an “Operative Document” or any other agreement or instrument is a reference to that Operative Document or other agreement or instrument as amended, supplemented or novated in accordance with the terms thereof and of this Agreement or any other Operative Document, together with all exhibits, schedules and other attachments thereto;

(vii) a “regulation” includes any regulation, rule or official directive (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organization;

(viii) a reference to a “Schedule” is a reference to such Schedule as it may be amended from time to time in accordance herewith;

(ix) unless the context shall otherwise require, a provision of law is a reference to that provision as amended or reenacted; and

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(x) a time of day is, unless stated otherwise, a reference to New York time.

(b) Section and Schedule headings are for ease of reference only.

(c) Unless a contrary indication appears, a term used in any other Operative Document or in any notice given under or in connection with any Operative Document has the same meaning in that Operative Document or notice as in this Agreement.

DEFINED TERMS

“Additional Insured(s)” means the Lessor, the Lessor Parent, DTC, the Security Trustee and the Holders.

“Affected Person” means, (i) the Owner, (ii) any subsidiary of the Owner, (iii) any Affiliate of the Owner (other than any Person that is an Affiliate of the Owner solely by reason of its ownership of shares of the Owner), or (iv) any officer, director, trustee or agent of the Owner or such subsidiary or such Affiliate that will act in any capacity with respect to this Agreement.

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or under common control with, such Person. The term “control” means the possession, directly or indirectly of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agent” or “Agents” means either or both, as the context may require, of the Senior Agent and the Junior Agent.

“Aircraft” means the Airframe together with the two Engines referenced in a Mortgage Supplement delivered in connection with a Designated Aircraft, including buyer furnished equipment, whether or not such Engines are installed on the Airframe or any other airframe, and, where the context permits, all logs, manuals and data and inspection, modification and overhaul records required to be maintained with respect to the foregoing property.

“Aircraft Related Agreement” means, for any Aircraft, its Bills of Sale, Purchase Agreement and Purchase Agreement Assignment.

“Airframe” means: (i) the Airbus A320-200 aircraft (excluding Engines or engines from time-to-time installed thereon) specified by United States Registration Number and Manufacturer’s Serial Number in a Mortgage Supplement; (ii) any and all related Parts; and (iii) any Replacement Airframe which may from time to time be substituted for the Airframe then subject to the Mortgage pursuant to Section 9(b) of the Lease.

“Airframe Warranties Agreement” means each agreement dated a Delivery Date, between, inter alios, the Manufacturer, the Lessee and the Security Trustee in respect of the airframe warranties associated with the Aircraft delivered on such date.

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“Allocated To” means, with reference to any Aircraft, the portion of the Notes relating to such Aircraft which shall be designated as a specific “Series”, being the outstanding principal amount of the related issuance made with respect to such Aircraft.

“AML Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Purchaser, the Owner or any subsidiary or Affiliate of the Owner from time to time concerning or relating to anti-money laundering.

“Anti-Corruption Law” means all laws, rules, and regulations of any jurisdiction applicable to the Owner or any subsidiary or Affiliate of the Owner from time to time concerning or relating to bribery or corruption.

“Anti-Terrorism Law” means, with respect to any Person, any applicable law, rule or regulation related to financing terrorism including (a) the Patriot Act, (b) the Currency and Foreign Transactions Reporting Act (31 U.S.C. §§ 5311-5330) (also known as the “Bank Secrecy Act”), (c) the Trading With the Enemy Act (50 U.S.C. § 1 et seq.), the International Economic Emergency Powers Act (15 U.S.C. § 1701 et seq.) and (d) Executive Order 13224 (effective September 24, 2001).

“Applicable Margin”, in respect of the Notes for any Aircraft, has the meaning set forth in Section 1 of the Note Purchase Agreement.

“Applicable Rate” means, for any Interest Period with respect to any Note, a rate per annum equal to (i) in the case of a Floating Rate Note, the relevant Floating Rate for such Interest Period and (ii) in the case of a Fixed Rate Note, the relevant Fixed Rate for such Interest Period.

“Assigned Warranties” means the warranties referenced in the Airframe Warranties Agreement and the Engine Consent.

“Assignment and Assumption Agreement” means an agreement substantially in the form of Exhibit B to the Note Purchase Agreement.

“Basel II” means the agreements on capital requirements, a leverage ratio and liquidity standards contained in, or methods of calculating capital adequacy pursuant to, “Basel II: International Convergence of Capital Measurement and Capital Standards: a Revised Framework - Comprehensive Version” published by the Basel Committee on Banking Supervision in June 2006, as amended, supplemented or restated (other than by Basel III), or any implementation, adoption (whether voluntary or compulsory) thereof, whether by an EC Directive or the FSA Integrated Prudential Sourcebook or any other law or regulation.

“Basel III” means the agreements on capital requirements, a leverage ratio and liquidity standards contained in, or methods of calculating capital adequacy pursuant to, “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the

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Basel Committee on Banking Supervision on 16 December 2010, each as amended, supplemented or restated, or any implementation, adoption (whether voluntary or compulsory) thereof, whether by an EC Directive or the FSA Integrated Prudential Sourcebook or any other law or regulation.

“Basic Rent” means, in respect of an Aircraft, the rent payable under Section 3(b) of the Lease.

“Benchmark Index Rate Adjustment” means the difference between the Closing Benchmark Index Rate and the Initial Benchmark Index Rate.

“Bills of Sale” means, for any Aircraft, the FAA Bill of Sale and the Warranty Bill of Sale in favor of Owner in respect of such Aircraft.

“Break Amount” means, as of any date of determination and for the Junior Notes, the amount, if any, equal to the sum of (i) LIBOR Break Amount and (ii) Swap Breakage Loss.

“Business Day” means any day other than a Saturday or Sunday or a day on which commercial banks are required or authorized to close in New York, New York and, if such day relates to (i) the giving of notices or quotes in connection with the LIBOR, the city and state in which the Payment Office is located, New York, New York and London, England or (ii) the borrowing of any Note or payment or prepayment of principal of or interest on the Notes, the city and state in which the Payment Office is located, New York, New York and London, England.

“Cape Town Convention” means the official English language texts of the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment which were signed in Cape Town, South Africa on November 16, 2001.

“Certificate Register” has the meaning specified in Section 14(d) of the Note Purchase Agreement.

“Change in Law” means the occurrence, after the date of the Note Purchase Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Body or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, pursuant to Basel II shall not be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

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“Civil Reserve Air Fleet Program” or “CRAF” means the Civil Reserve Air Fleet Program administered by the United States Government or any substantially similar program.

“Class” means, with respect to any Note, a designation of whether such Note is a Senior Note or Junior Note.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

“Collections” means, in respect of an Aircraft or the Lease, the “Collections” as defined in the Granting Clause to the Mortgage, but in all cases excluding Excluded Payments.

“Commitment” has the meaning specified in Section 2(a) of the Note Purchase Agreement.

“Consent and Agreement” means the Manufacturer Consent and Agreement [Virgin/NPA 2015], dated as of the Delivery Date, of Airbus S.A.S. in respect of the Aircraft.

“Controlling Creditor” has the meaning specified in the Intercreditor Agreement.

“Default” means any event which with the giving of notice or the lapse of time or both if not timely cured or remedied would become a Lease Event of Default pursuant to Section 13 of the Lease.

“Default Event” means a Lease Event of Default or an Event of Default.

“Delivery Date” means, for any Aircraft, the date of the initial Mortgage Supplement for such Aircraft.

“Dollars”, “Dollar” and “$” means the lawful currency of the United States of America.

“DTC” means Delaware Trust Company, in its individual capacity.

“Effective Date” means the date the Note Purchase Agreement becomes effective as provided in Section 4(a) of the Note Purchase Agreement.

“Engine” means (i) each of the two CFM International Inc. model CFM56-5B4 engines listed by Manufacturer’s Serial Numbers in the initial Mortgage Supplement for each Aircraft, whether or not from time to time installed on an Airframe or any other airframe; (ii) any Replacement Engine which may from time to time be substituted for any Engine pursuant to the terms of the Lease; and (iii) in each case, any and all related Parts.

“Engine Agreement” means General Terms Agreement CFM-04-0012B, dated June 14, 2004 between the Lessee and Engine Manufacturer.

“Engine Consent and Agreement” means the Engine Consent and Agreement [Virgin/NPA 2015] dated as of the Delivery Date of the Engine Manufacturer in respect of the Aircraft.

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“Engine Manufacturer” means CFM International Inc.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Event of Default” has the meaning specified in Section 10 of the Note Purchase Agreement, which, for ease of reference is also contained below:

“SECTION 10 Events of Default. If one or more of the following events (herein called “Events of Default”) shall occur and be continuing:

(i) the Owner shall default in the payment of any interest on any Note on the Payment Date thereof; or

(ii) the outstanding principal amount of the Notes shall not have been paid in full by Final Legal Maturity;

THEREUPON: (A) the Security Trustee may, by notice to the Owner, terminate the Commitments and they shall thereupon terminate, (B) the Security Trustee may and, upon request of the Controlling Creditor shall, by notice to the Owner demand payment of the Termination Sum, (C) declare the principal amount then outstanding of, and the accrued interest on, the Notes and all other amounts payable by the Owner and the Lessee (under such Operative Document to which each is a party and without duplication) hereunder and under the Notes to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Owner and (D) exercise any or all of the remedies set forth in Article V to the Mortgage.

For the avoidance of doubt, the failure to pay interest on any Note that converts to principal as provided in Section 3.2(d) hereof shall be deemed not to be a default in payment of interest for the purposes of clause (i) of this Section 10.”

“Event of Loss” means, with respect to any Aircraft or any Airframe or any Engine, any of the following events with respect to such property:

(a) the loss of such property or of the use thereof due to destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use for any reason whatsoever;

(b) any damage to such property that results in an insurance settlement with respect to such property on the basis of a total loss or a constructive total loss;

(c) the requisition for use or hire of such property by any government (other than the government of the country of registry of such Aircraft) that shall have resulted in the loss of possession of such property by the Lessee (or any Permitted Sublessee) for a period in excess of nine consecutive months;

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(d) requisition of title or other compulsory acquisition, capture, seizure, deprivation, confiscation or detention for any reason of such Aircraft or any Airframe or any Engine associated with such Aircraft by any government, whether de facto or de jure, but shall exclude requisition for use or hire not involving requisition of title;

(e) as a result of any law, rule or regulation, order or other action by the FAA or other government of the country of registry, the use of such Aircraft or Airframe in the normal business of air transportation shall have been prohibited by virtue of a condition affecting all aircraft of the same type for a period of 12 consecutive months, unless the Lessee (or Permitted Sublessee), prior to the expiration of such 12 month period, shall be diligently carrying forward all steps that are necessary or desirable to permit the normal use of such Aircraft or Airframe or, in any event, if such use shall have been prohibited for a period of 18 consecutive months; and

(f) with respect to an Engine only, any divestiture of title to or interest in such Engine or any event with respect to such Engine that is deemed to be an Event of Loss with respect to such Engine pursuant to Section 7(c) of the Lease.

An Event of Loss with respect to an Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe related to such Aircraft.

“Excluded Payments” means, with respect to any Aircraft, the Lease and the related Aircraft Related Agreements, (i) indemnity or similar payments (whether or not payable as supplemental rent) paid or payable by the Lessee under the Lease or Aircraft Related Agreements or related documents to the indemnitee or other payee entitled thereto pursuant to the Lease or Aircraft Related Agreements, (ii) proceeds of public liability insurance in respect of such Aircraft payable as a result of insurance claims made, or losses suffered, by the indemnitee or payee entitled thereto, (iii) proceeds of insurance maintained with respect to such Aircraft by the Lessee or any Affiliate of the Lessee and not required under the Lease or under the Note Purchase Agreement or any other Operative Document, (iv) any interest paid or payable on any amounts described in clauses (i) through (iii) of this definition, and (v) the proceeds from the enforcement by the Owner or other indemnitee or payee of the payment of any amount described in clauses (i) through (iv) of this definition, in each case however, only to the extent such amount is in respect of a claim personal to the applicable Person and is not necessary to restore the value of the Collateral.

“Excluded Taxes” has the meaning specified in Schedule III to the Note Purchase Agreement.

“Expense” or “Expenses” means any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, out of pocket costs, expenses and disbursements (including reasonable legal fees and expenses) of whatever kind and nature but excluding internal costs and expenses such as salaries, any amounts that would be included in Break Amount, and overhead of whatsoever kind and nature.

“FAA Bill of Sale” means a bill of sale on AC Form 8050-2 or such other form as may be approved by the FAA in favor of the Owner from the Manufacturer in respect of an Aircraft.

“FAA Counsel” means McAfee & Taft, A Professional Corporation.

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“FATCA” has the meaning specified in Schedule III to the Note Purchase Agreement.

“FCPA” means the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq.

“Federal Aviation Act” means subtitle VII of Title 49 of the United States Code, or any successor provision.

“Federal Aviation Administration” and “FAA” mean the United States Federal Aviation Administration and any successor agency or agencies thereto.

“FedWire” means the funds transfer system used to transfer reserve balances for immediately available credit among the member banks of the United States Federal Reserve System.

“Fee Letter” means each of (i) in the case of New York Life, the letter agreement between the Lessee and New York Life, pursuant to which the Lessee has agreed to pay certain fees and (ii) in the case of Investec, the letter agreement between the Lessee and Investec, pursuant to which the Lessee has agreed to pay certain fees.

“Finance Parties” means, together, the Purchasers, each Agent and the Security Trustee (each, a “Finance Party”).

“Fixed Rate” means, if the Notes of any Class in respect of any Aircraft are to bear interest at a fixed rate, the fixed rate for such Notes determined in accordance with Section 3(b)(ii) of the Note Purchase Agreement (calculated on the basis of a year of 360 days consisting of 12 30-day months). The Fixed Rate for any Senior Note shall be the rate specified on Schedule I to the Mortgage Supplement for the applicable Aircraft and the Fixed Rate for any Junior Note shall be the rate specified on Schedule II to the Mortgage Supplement for the applicable Aircraft; provided that, in the case of any Special Junior Lender, the Fixed Rate applicable to its Junior Notes shall be reduced by 15 basis points for so long as it shall be a holder of such Junior Notes.

“Fixed Rate Note” means a Note evidenced by Notes which bear interest at a Fixed Rate.

“Floating Rate Note” means Junior Notes which bear interest at the Floating Rate. Each Junior Note shall be a Floating Rate Note unless the Owner shall have made an election to have such Note bear interest at a Fixed Rate in accordance with Section 3(b)(ii) of the Note Purchase Agreement.

“Foreign Air Carrier” means any air carrier which is not a U.S. Air Carrier and which performs maintenance, preventative maintenance and inspections for the Aircraft, the Airframe and/or any Engine or engine to standards which are approved by, or which are substantially equivalent to those required by, the Federal Aviation Administration, the Civil Aviation Authority of the United Kingdom, the Direction Generale de l’Aviation Civile of the French Republic, the Luftfahrt Bundesamt of the Federal Republic of Germany, the Nederlandse Luchtvaart Authoriteit of the Kingdom of the Netherlands, the Ministry of Transportation of Japan or the Federal Ministry of Transport of Canada (and any agency or instrumentality of the applicable government succeeding to the functions of any of the foregoing entities).

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“GAAP” means generally accepted accounting principles then in effect in the United States, consistently applied.

“Governmental Authority” means (a) any federal, state or similar government, and any body, board, department, commission, court, tribunal, authority, agency or other instrumentality of any such government or otherwise exercising any executive, legislative, judicial, administrative or regulatory functions of such government or (b) any other government entity having jurisdiction over any matter contemplated by the Operative Documents or relating to the observance or performance of the obligations of any of the parties to the Operative Documents.

“Hedging Transaction” means, for any Junior Purchaser of a Fixed Rate Note and in respect of the Notes of any Class for such Note, an interest rate swap transaction entered into by such Holder (on an actual or notional basis) with a Swap Counterparty in connection with such Fixed Rate Note on customary terms consistent with market practice (documented (or deemed documented)) by the Swap Form and a hedge confirmation incorporating the terms of this definition) where such Holder will (i) pay to such Swap Counterparty under such swap transaction on each Interest Payment Date for such Class following the Swap Effective Date, an amount equal to the interest scheduled to be paid to such Holder on such Notes calculated at a rate equal to the Fixed Rate for such Note minus the Applicable Margin for such Note (calculated on the basis of a year of 360 days and actual number of days elapsed) and (ii) receive from such Swap Counterparty on each such Interest Payment Date an amount equal to the amount of interest that would have accrued on such Notes during the Interest Period for such Class ending on such Interest Payment Date at LIBOR (flat) (subject, for the avoidance of doubt, to the 0% floor as provided in the definition of LIBOR) taking into account any stub periods on the first and/or last Interest Periods (for which stub periods the applicable floating rate for such period will be calculated using standard interpolation methodologies) for such Interest Period (calculated on the basis of a year of 360 days and actual number of days elapsed) and incorporating the methodologies described in the definition of “Swap Break Amount” associated with any termination of such swap transaction in whole or in part in association with any acceleration or prepayment of such Fixed Rate Note.

“Holder” means, at any time, any holder of any Senior Note or any Junior Note.

“Illegality Event” means the occurrence of any of the following events or circumstances:

(a) it becomes unlawful or contrary to any applicable law for any party to any of the Operative Documents to perform any of its material obligations under the Operative Documents and/or to continue as a party to any of the Operative Documents; or

(b) all or any material part of any Operative Document becomes void, illegal, invalid, unenforceable or of limited force and effect.

“Increased Cost Notice” has the meaning specified in Section 3(k) of the Note Purchase Agreement.

“Increased Costs” has the meaning specified in Section 3(k) of the Note Purchase Agreement.

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[Lease Agreement [Virgin/NPA 2015]]

“Indemnitee” or “Indemnitees” means the Lessor, the Lessor Parent, DTC, the Security Trustee, the Holders, the Agents and each of their respective successors, permitted assigns, and directors, officers, and employees.

“Initial Rent” means, in respect of an Aircraft, an amount equal to the difference between the purchase price for such Aircraft and the sum of the pre-delivery payments made on account of such Aircraft and the aggregate Commitments of the Purchasers therefor.

“Intercreditor Agreement” means the Intercreditor Agreement [Virgin/NPA 2015], dated as of April 29, 2015, among the Owner, the Senior Purchasers, the Junior Purchasers, the Agents and the Security Trustee.

“Interest Payment Date” means, in respect of any Series of Notes, each of the four quarterly anniversary dates of the Issuance Date of the related Aircraft (or if there is no comparable day in any applicable month, the last day of such month); provided that, (i) in the case of a Floating Rate Note, if any such date shall not be a Business Day, then the relevant Interest Payment Date shall be the next succeeding Business Day unless by virtue of such extension such date would fall in the next succeeding calendar month, in which case the relevant Interest Payment Date shall be the next preceding Business Day and (ii) in the case of a Fixed Rate Note, there shall be no adjustment to period end dates by virtue of non-Business Days for the purpose of interest accruals. The Interest Payment Dates shall be the dates specified in the amortization schedule relating thereto attached to the Notes of the applicable Series (subject to modification by the above proviso).

“Interest Period” means (a) initially, the period commencing on the Issuance Date and ending on the first Interest Payment Date thereafter and (b) thereafter, each successive three-month (or other applicable) period commencing on the final day of the preceding Interest Period and ending on the next succeeding Interest Payment Date.

“international interest” is defined in the Cape Town Convention.

“International Registry” is defined in the Cape Town Convention.

“Investec” means Investec Bank plc.

“Issuance Date” has the meaning specified in Section 2(b)(i) of the Note Purchase Agreement.

“Junior Agent” has the meaning specified in the preamble to the Note Purchase Agreement.

“Junior Applicable Margin” has the meaning specified in Section 1 of the Note Purchase Agreement.

“Junior Note” means each Note issued by the Owner to the Junior Purchasers pursuant to Section 2(a)(i) of the Note Purchase Agreement and any such Note issued in exchange or replacement therefor pursuant to Section 14(d) or 14(e) of the Note Purchase Agreement.

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[Lease Agreement [Virgin/NPA 2015]]

“Junior Purchasers” means Investec Bank plc, and each successor, permitted assignee or permitted transferee thereof as a Holder of a Junior Note.

“Lease” means the Aircraft Lease Agreement [Virgin/NPA 2015] dated as of April 29, 2015 between the Owner, as lessor, and Lessee.

“Lease Event of Default” is defined in Section 13 of the Lease.

“Lease Supplement” means, in respect of an Aircraft, the lease supplement relating to such Aircraft to be entered into between Owner and Lessee under the Lease dated the Drawdown Date for such Aircraft, substantially in the form of Exhibit I to the Lease

“Lender Lien” means any Lien which arises from acts or claims against a Purchaser not related to the transactions contemplated by the Operative Documents.

“Lessor” means VX 2015 LLC, a Delaware limited liability company.

“Lessor Parent” means VX 2015 Trust, a Delaware statutory trust.

“LIBOR” means, for any Interest Period for any Note, the rate per annum equal to:

(a) the Screen Rate for such Interest Period for such Note; or

(b) (i) if no such Screen Rate is available for Dollars or for such Interest Period, the rate for deposits of an amount comparable to the aggregate outstanding principal amount of such Note for such Interest Period in Dollars for that period determined to be the arithmetic mean of the rates offered at or about 11:00 a.m. London time on the relevant Quotation Date by at least two Reference Banks to prime banks in the London interbank market and (ii) if the rate specified in (b)(i) is not available, then the rate for deposits of an amount comparable to the aggregate outstanding principal amount of such Note for such Interest Period in Dollars for that period determined to be the arithmetic mean of the rates offered at or about 11:00 a.m. New York time on the relevant Quotation Date by at least two Reference Banks to prime banks in the New York interbank market; provided, that for any Interest Period having a duration of less than three months, LIBOR for such Interest Period shall be the interpolated LIBOR determined using the Screen Rate and standard interpolation methodologies by reference to the next higher and next lower available maturities (as determined by the Agent for such Note).

Notwithstanding the foregoing, LIBOR for any Interest Period shall not be less than 0% per annum.

“LIBOR Break Amount” means the amount, if any, required to compensate each Holder for any losses, costs or expenses (excluding loss of profit) which it may incur as the result of the prepayment (including any by virtue of an acceleration) (or the failure to make any such prepayment on the date irrevocably scheduled therefor) of any Junior Note held by it on a date other than the last day of the then current Interest Period therefor, including, without limitation, losses, costs or expenses incurred in connection with unwinding or liquidating any deposits or funding or financing arrangement with its funding sources, as reasonably determined by such

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Holder. Without limiting the effect of the preceding sentence, such compensation shall include an amount equal to the excess, if any, of (i) the amount of interest which otherwise would have accrued on the principal amount so prepaid (including any by virtue of an acceleration) from the date of such prepayment (including any by virtue of an acceleration) to the last day of such Interest Period (the “Break Period”) at the LIBOR therefor in excess of (ii) the interest component of the amount the affected Holder would have bid in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to the Break Period (as reasonably determined by such Holder). Each Holder shall provide a certificate to the Owner and the Lessee documenting its calculation of LIBOR Break Amount.

“Lien” means any mortgage, pledge, lien, claim, encumbrance, lease, security interest or other lien of any kind on property. “Lien” shall include any interest registered on the International Registry other than the Owner’s ownership interest registered on the International Registry as a contract of sale with respect to the Aircraft.

“Loan Documents” means the Operative Documents.

“Losses” shall mean and include all losses (including loss of profit), payments, damages, liabilities, claims, proceedings, actions, penalties, fines, Taxes, duties, fees, rates, levies, charges, demands, royalties or other sanctions of a monetary nature, fees, insurance premiums, calls, judgments, costs and expenses.

“Maintenance Program” means (a) the maintenance program for the Aircraft which is approved by the FAA or the regulatory authority having jurisdiction over the Aircraft and (b) in respect of the Engines, the OnPoint program provided by CFM and its affiliates.

“Majority Junior Holders” means, as of any date of the determination thereof, (i) if no amount in respect of any Junior Note is then outstanding, a Junior Purchaser or Junior Purchasers whose Junior Commitments aggregate more than 50% of the aggregate Junior Commitments of all Junior Purchasers, or (ii) otherwise, the Holders of more than 50% in aggregate outstanding principal amount of all Junior Notes. For all purposes of the foregoing definition, in determining as of any date the then aggregate outstanding principal amount of any Junior Notes or amount of the Junior Commitments, there shall be excluded all Junior Notes and Junior Commitments, if any, held by the Owner or any Affiliate thereof.

“Majority Senior Holders” means, as of any date of the determination thereof, (i) if no amount in respect of any Senior Note is then outstanding, a Senior Purchaser or Senior Purchasers whose Senior Commitments aggregate more than 50% of the aggregate Senior Commitments of all Senior Purchasers, or (ii) otherwise, the Holders of more than 50% in aggregate outstanding principal amount of all Senior Notes. For all purposes of the foregoing definition, in determining as of any date the then aggregate outstanding principal amount of any Senior Notes or amount of the Senior Commitments, there shall be excluded all Senior Notes and Senior Commitments, if any, held by the Owner or any Affiliate thereof.

“Manufacturer” means Airbus S.A.S., in its capacity as manufacturer of the Aircraft, and its successors and assigns.

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[Lease Agreement [Virgin/NPA 2015]]

“Market Disruption Cost of Funds” has the meaning specified in Section 3(g)(ii) of the Note Purchase Agreement.

“Market Disruption Event” has the meaning specified in Section 3(g)(i) of the Note Purchase Agreement.

“Maturity Date” means, in respect of any Note, the date that all remaining principal and the Balloon payable in respect of such Note shall be due and payable.

“Mortgage” means the Mortgage and Security Agreement [Virgin/NPA 2015] dated as of April 29, 2015 between the Owner and the Security Trustee, including any Mortgage Supplement and each other supplement from time to time entered into pursuant hereto.

“Mortgage Estate” is defined in the Granting Clause to the Mortgage.

“Mortgage Supplement” means a supplement to the Mortgage substantially in the form of Exhibit A, which shall particularly describe the Airframe and Engines, or any Replacement Airframe or Replacement Engine, included in the property of the Owner covered by the Mortgage, or any other supplement hereto.

“Mortgagor” means the Owner.

“New York Life” means New York Life Insurance Company.

“Non-U.S. Person” means any Person other than (i) a citizen or resident of the United States of America (for purposes of this definition, the “United States”), (ii) a corporation, partnership, limited liability company or other entity created or organized under the laws of the United States or any political subdivision thereof or therein or (iii) an estate or trust that is subject to United States federal income taxation regardless of the source of its income.

“Note” means either or both, as the context may require, of a Senior Note or a Junior Note and “Notes” means all Notes, whether a Junior Note or Senior Note, issued pursuant to Section 2(a) of the Note Purchase Agreement and any such certificates issued in exchange or replacement therefor pursuant to Section 14(d) or 14(e) of the Note Purchase Agreement.

“Note Purchase Agreement” means that certain Note Purchase Agreement [Virgin/NPA 2015], dated as of the date hereof, among the Owner, the Purchasers, the Agents and the Security Trustee as such Note Purchase Agreement may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

“Note Value” means, as of any particular date of computation, in respect of an Aircraft, the amount required to prepay or repay the Notes of the Series relating to such Aircraft in full, together with interest thereon accrued to (but excluding) the date of such prepayment or repayment, Prepayment Fee and all other amounts of whatever description in respect of such Notes due to the Purchasers and the Security Trustee under the Note Purchase Agreement and the other Operative Documents as of such date.

“Obligations” is defined in the Granting Clause of the Mortgage.

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[Lease Agreement [Virgin/NPA 2015]]

“Obligor” or “Obligors” means each of the Owner and the Lessee

“Obsolete Part Amount” has the meaning specified in Section 1 of the Note Purchase Agreement.

“Operative Documents” means the Note Purchase Agreement, the Mortgage, any Mortgage Supplement, each Note, the Pledge Agreement, the Fee Letter, the Intercreditor Agreement, the Consent and Agreement, the Engine Consent and Agreement and any amendments or supplements of any of the foregoing.

“Original Amount” means, with respect to a Series of Notes, the stated aggregate original principal amount of such Notes, which shall, on the Delivery Date for an Aircraft, equal the amount of the Notes issued in respect of such Aircraft. The Original Amount for the Notes for each Series shall be as specified in Section 1 of the Note Purchase Agreement.

“Other Aircraft” means each “Aircraft” under and as defined in the Other Note Purchase Agreement.

“Other Note Purchase Agreement” means the Facility Agreement [Virgin/Bank 2015], dated as of April 29, 2015, among the Lessee, as borrower, each Loan Participant party thereto, BNP Paribas, New York Branch, as senior agent, the Junior Agent and the Security Trustee.

“Other Junior Purchasers” means the “Junior Purchasers” as defined in the Other Note Purchase Agreement.

“Other Junior Notes” means each note purchased by the “Junior Purchasers” as defined in the Other Note Purchase Agreement.

“Other Junior Obligations” means, with respect to the Other Note Purchase Agreement, the principal and interest on the Other Junior Notes and all other amounts due and payable under the Other Note Purchase Agreement to the Other Junior Purchasers.

“Other Mortgage” means the Mortgage and Security Agreement [Virgin/Bank 2015], dated as of April 29, 2015, between the Owner, as mortgagor, and the Security Trustee, as mortgagee, in respect of the Other Aircraft.

“Owner” means the Lessor.

“Parts” means all appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than (i) complete Engines or engines or (ii) PCE), which are from time to time incorporated or installed in or attached to the Airframe or any Engine and all such items which are subsequently removed therefrom so long as the Lien of the Mortgage shall cover the same pursuant to the terms of the Mortgage.

“Past Due Rate” has the meaning specified in Section 1 of the Note Purchase Agreement.

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[Lease Agreement [Virgin/NPA 2015]]

“Payment Office” means the Security Trustee’s office and bank account referred to in Schedule I to the Note Purchase Agreement.

“PCE” means passenger convenience equipment.

“Permitted Investments” means those investments described in Section 2(b)(iv) of the Note Purchase Agreement.

“Permitted Lien” means (i) the respective rights of each of the parties to the Operative Documents as provided in the Operative Documents, (ii) the rights of any Permitted Sublessee and other Persons under any subleases and other agreements and arrangements to the extent permitted by the terms of Sections 7 and 8 of the Lease, (iii) Liens for fees or charges of any airport or air navigation authority payable by Lessee or any Permitted Sublessee either not yet due or being contested in good faith by appropriate proceedings that do not involve any material likelihood of the sale, seizure, forfeiture or loss of any Aircraft, or any part thereof, title thereto, interest therein or use thereof and that do not involve any potential for criminal liability, (iv) Liens for Taxes payable by Lessee or any Permitted Sublessee either not yet due or being contested in good faith by appropriate proceedings that do not involve any material likelihood of the sale, seizure, forfeiture or loss of any Aircraft or any Part thereof, title thereto, interest therein or use thereof and that do not involve either any potential for criminal liability or the imposition of any Lien for which an adequate bond has not been posted by Lessee, and in the case of such proceedings so long as adequate reserves are maintained in respect of such Taxes in accordance with relevant generally accepted accounting principles, (v) materialmen’s, mechanics’, workmen’s, repairmen’s, employees’ or other like Liens on any Aircraft, any Airframe or any Engine arising in the ordinary course of business of Lessee or any Permitted Sublessee for amounts the payment of which is either not yet due or which are being contested in good faith by appropriate proceedings that do not involve any material likelihood of the sale, seizure, forfeiture or loss of any Aircraft or any Part thereof, title thereto, interest therein or use thereof and in the case of such proceedings so long as adequate reserves are maintained in respect of such amounts in accordance with relevant generally accepted accounting principles, (vi) Liens arising out of judgments or awards against Lessee with respect to which at the time an appeal or proceeding for review is being prosecuted in good faith by appropriate proceedings that do not involve any material likelihood of the sale, seizure, forfeiture or loss of any Aircraft or any Part thereof, title thereto, interest therein or use thereof and in the case of such proceedings so long as adequate reserves are maintained in respect of such amounts in accordance with relevant generally accepted accounting principles or a bond in accordance with the requirements of any applicable law, (vii) salvage or similar rights of insurers under insurance policies maintained pursuant to and in accordance with Section 10 of the Lease and (viii) any Lien created with the prior written consent of the Security Trustee (in its sole discretion).

“Permitted Sublessee” means (i) any United States air carrier as to which there is in force at the time of entering into such sublease or other transfer a certificate issued pursuant to 49 U.S.C. 44705 or any successor provisions that give like authority and that is not subject to bankruptcy proceedings; or (ii) any manufacturer of airframes or engines or any air carrier that is listed in Schedule 1 to the Lease; provided that for any entity described in clause (ii), (x) such entity is based in a country with which the United States maintains normal diplomatic relations,

APPENDIX A

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[Lease Agreement [Virgin/NPA 2015]]

(y) such entity is not subject to bankruptcy proceedings and (z) such transfer of possession shall not deprive the Finance Parties of their perfected and enforceable security interest.

“Permitted Transferee” means (i) the Lessee or any of its Affiliates, (ii) any Purchaser or any Affiliate of a Purchaser, (iii) any reputable bank or other reputable financial institution that is regularly engaged in or established for the purposes of making, purchasing or investing in commercial loans or secured notes; provided that, without the prior written consent of the Lessee, no airline or Affiliate of an airline shall be a Permitted Transferee.

“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Plan” means an “employee benefit plan” (as such term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended) or any “plan” (as such term is defined in Section 4975(e)(1) of the Code) which has been established or maintained or contributed to by the Lessee or an Affiliate (other than a multiemployer plan within the meaning of Section 3(37) of ERISA) that, together with the Lessee, is treated as a single employer under Section 414(b), (c) or (m) of the Code.

“Pledge Agreement” means the Pledge Agreement dated on or before the first Issuance Date between the Trust and the Security Trustee with respect to the Pledged Interest, substantially in the form of Exhibit D to the Note Purchase Agreement as may from time to time be supplemented, modified or amended in accordance with the applicable provisions thereof.

“Pledged Interest” has the meaning assigned to such term in the Pledge Agreement.

“Purchase Agreement” means those provisions of the Airbus A320 Family Purchase Agreement between the Lessee and the Manufacturer dated as of December 29, 2010 relating to the purchase by the Lessee of, inter alia, the Aircraft, as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the foregoing relates to the Aircraft.

“Purchase Agreement Assignment” means, in respect of an Aircraft, a purchase agreement assignment dated as of the Delivery Date for such Aircraft, between Owner, as assignee, and Lessee, as assignor, pursuant to which Lessee assigns to Owner, inter alia, its right to purchase such Aircraft under the Purchase Agreement, in form and substance reasonably satisfactory to the Security Trustee.

“Purchaser” means each Holder initially a party to the Note Purchase Agreement, and its successors and assigns.

“Quotation Date” means, in relation to any Interest Period, two London business days before the first day of such Interest Period.

“Rating Agency” means Fitch, or such other nationally recognized credit rating agency as agreed by the Lessee and the Purchasers (in their sole discretion).

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[Lease Agreement [Virgin/NPA 2015]]

“Ratings Requirement” means the obligation of the Owner to obtain a preliminary long term credit rating (at no particular required rating level) with respect to the Notes, from the Rating Agency with respect to the current payment of interest and ultimate payment of principal on Final Legal Maturity.

“Reference Banks” means, with respect to any Note, the principal London offices of BNP, Investec and JPMorgan Chase or such other bank or banks as may from time to time be designated by the Agent for such Note and as may be reasonably acceptable to the Lessee.

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

“Rent” means, collectively, Initial Rent, Basic Rent and Supplemental Rent.

“Replacement Engine” means (a) CFM International Inc. model CFM56-5B4 engines or (b) an improved engine of the same manufacturer, which, in the case of any engine described in clauses (a) or (b) hereof, shall be in compliance with the requirements of Section 7(l) or 9(b) of the Lease.

“Reserve Requirement” means, for any Note, the average maximum rate at which reserves (including, without limitation, any marginal, supplemental or emergency reserves) are required to be maintained during the Interest Period in respect of such Note under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding one billion Dollars against “Eurocurrency liabilities” (as such term is used in Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement includes any other reserves required to be maintained by such member banks by reason of any Change in Law with respect to (i) any category of liabilities that includes deposits by reference to which the LIBOR is to be determined or (ii) any category of extensions of credit or other assets that includes the Notes.

“Sanctioned Country” means, at any time, a country or territory which is, or whose government is, the subject or target of any Sanctions broadly restricting or prohibiting dealings with such country, territory or government (currently, Cuba, Iran, Burma, North Korea, Sudan, and Syria).

“Sanctioned Person” means, at any time, any Person with whom dealings are restricted or prohibited under Sanctions, including (a) any Person listed in any Sanctions-related list of designated Persons maintained by the United States (including by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or the U.S. Department of Commerce), the United Nations Security Council, the European Union or any of its member states, Her Majesty’s Treasury, Switzerland or any other relevant authority, (b) any Person located, organized or resident in, or any Governmental Entity or governmental instrumentality of, a Sanctioned Country or (c) any Person 25% or more directly or indirectly owned by, controlled by, or acting for the benefit or on behalf of, any Person described in clauses (a) or (b) hereof.

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“Sanctions” means economic or financial sanctions or trade embargoes or restrictive measures enacted, imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or the U.S. Department of Commerce (b) the United Nations Security Council; (c) the European Union or any of its member states; (d) Her Majesty’s Treasury; (e) Switzerland; or (f) any other relevant authority.

“Screen Rate” means, for any Interest Period with respect to any Note, the London Interbank Offered Rate administered by ICE Benchmark Administration Limited (or any other successor person which takes over the administration of that rate) for Dollar deposits for a three-month period (without rounding), which rate is displayed on the relevant Bloomberg page (or such other screen as may replace such Bloomberg page) at or about 11:00 a.m. (London time) on the Quotation Date for such Interest Period. If the agreed page is replaced or service ceases to be available, the Security Trustee may specify another page or service displaying the appropriate rate after consultation with the Purchasers and the Lessee.

“Secured Parties” means each Purchaser and the Security Trustee.

“Securities Act” means the Securities Act of 1933, as amended.

“Security Trustee” means Bank of Utah in its capacity as Security Trustee hereunder, and any successor thereto in such capacity.

“Security Trustee Lien” means any Lien which arises as a result of (A) claims against the Security Trustee not related to its interest in the Aircraft, (B) acts of the Security Trustee not permitted by, or failure of the Security Trustee to take any action required by, the Operative Documents to the extent such acts arise or such failure arises from or constitutes gross negligence or willful misconduct, (C) claims against the Security Trustee relating to Taxes or Expenses which are excluded from the indemnification provided by Section 8 of the Facility Agreement, or (D) claims against the Security Trustee arising out of the transfer by the Security Trustee of all or any portion of its interest in the Aircraft or the Operative Documents other than a transfer of the Aircraft pursuant to Article V of the Mortgage while an Event of Default has occurred and is continuing and prior to the time that the Security Trustee has received all amounts due pursuant to the Mortgage.

“Senior Agent” has the meaning specified in the preamble to the Note Purchase Agreement.

“Senior Applicable Margin” has the meaning specified in Section 1 of the Note Purchase Agreement.

“Senior Discharge Date” means the date on which all Senior Secured Obligations have been fully and indefeasibly discharged in full.

“Senior Note” means each Note issued by the Owner to the Senior Purchasers pursuant to Section 2(a)(i) of the Note Purchase Agreement and any such Senior Note issued in exchange or replacement therefor pursuant to Section 14(d) or 14(e) of the Note Purchase Agreement.

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[Lease Agreement [Virgin/NPA 2015]]

“Senior Purchasers” means New York Life Insurance Company and each successor, permitted assignee or permitted transferee thereof as a Holder of a Senior Note.

“Senior Secured Obligations” means all obligations payable in respect of the Senior Notes under the Note Purchase Agreement.

“Senior Swap Rate” has the meaning specified in Section 1 of the Note Purchase Agreement.

“Series” has the meaning specified in Section 2(a)(iii) of the Note Purchase Agreement.

“Special Default” means a Default under any of Sections 13(a), 13(b), 13(f) and 13(g) of the Lease.

“Special Junior Lender” means a Junior Purchaser that has identified itself as such in the Assignment and Assumption Agreement; and for which the Lessee’s consent has been obtained if and as required under Section 14(c) of the Note Purchase Agreement.

“Specified Jurisdiction” means any of France, Germany, Ireland, Luxembourg, The Netherlands, the United Kingdom or the United States.

“Specified Transferee Jurisdiction” has the meaning specified in Schedule III to the Note Purchase Agreement.

“State of Registration” means, with respect to any Aircraft, the United States or each other country in which the Aircraft is registered from time to time pursuant to Section 7(a) of the Lease.

“Stipulated Insured Amount” means, in respect of any Aircraft and as of any date of determination, an amount equal to 110% of the aggregate principal amount then outstanding on all Notes in respect of such Aircraft.

“Sublease” means any sublease agreement permitted by the terms of Section 7(c) of the Lease.

“Sublessee” means any sublessee under a Sublease.

“Supplemental Rent” means any amount that the Lessee assumes or agrees to pay to the Owner or any other Person under the Lease or any other Operative Document with respect to any Aircraft (excluding Basic Rent for the Aircraft) and (without duplication) any amount payable by the Owner under the terms of the Note Purchase Agreement and the other Operative Documents.

“Swap Break Amount” means, as of any date on which Break Amount may be payable under the Operative Documents in respect of a Junior Note which is a Fixed Rate Note and for any Holder’s related Hedging Transaction, the amount a Swap Counterparty would require in accordance with market practice on the basis of the “Close-out Amount” (as defined in the Swap Form) approach to have paid to such Swap Counterparty on such date by such Holder (such amount to be expressed as a positive number), or the amount such Swap Counterparty would be

APPENDIX A

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[Lease Agreement [Virgin/NPA 2015]]

willing to pay in accordance with market practice on the basis of “Close-out Amount” to such Holder on such date (such amount to be expressed as a negative number), in either case, to terminate such Hedging Transaction on such date with respect to, and to the extent of, such Holder’s then outstanding principal amount of all of the Junior Notes held by such Holder relating to Fixed Rate Notes that are subject to prepayment or purchase (or the entire Commitment), but excluding any unpaid amounts under such Hedging Transaction due to or payable by such Swap Counterparty prior to such date in respect of interest payments received by such Holder); provided that where a Holder has not entered into a Hedging Transaction, such amount shall be calculated on the basis of a deemed fixed-for-floating interest rate swap on market terms that meets the definition of Hedging Transaction for a notional amount equal to the outstanding principal amount of the Junior Notes which are Fixed Rate Notes of such Holder (taking into account any required amortization of such Fixed Rate Notes).

“Swap Breakage Gain” means, as to any Holder of a Fixed Rate Note, the absolute value of the Swap Break Amount payable to such Holder if the Swap Break Amount is a negative number.

“Swap Breakage Loss” means, as to any Holder, the value of the Swap Break Amount payable by such Holder if the Swap Break Amount is a positive number.

“Swap Counterparty” means, for any Hedging Transaction, a floating rate payor counterparty sourced by the applicable Holder, or in the case of an internal Hedging Transaction, such Holder’s swap or treasury desk. For the avoidance of doubt, neither the Owner nor the Lessee shall be a Swap Counterparty to any Hedging Transaction.

“Swap Effective Date” has the meaning specified in Section 3(b)(ii) of the Note Purchase Agreement.

“Swap Form” means a 2002 Master Agreement of the International Swaps and Derivatives Association in the form published in 2002 (or any comparable form) and supplemented by the 2006 ISDA Definitions (as amended).

“Tax” or “Taxes” is defined in Schedule III to the Note Purchase Agreement.

“Taxing Authority “ is defined in Schedule III to the Note Purchase Agreement.

“Term” means, in respect of an Aircraft, the period commencing on the Delivery Date for such Aircraft to and including the Maturity Date relating to such Aircraft or such shorter period that may result from earlier termination of the leasing of such Aircraft in accordance with the terms of the Lease.

“Termination Sum” means (i) all expenses incurred by the Purchasers and the Security Trustee, including, without limitation, those incurred in enforcing any right, power or remedy, (ii) the Prepayment Fee, (iii) all accrued and unpaid interest on the Notes, including interest on past due amounts at the Post-Default Rate and PIK Interest and (iv) all outstanding principal of the Notes.

“transacting user entity” is defined in the Regulations for the International Registry.

APPENDIX A

Page 20

[Lease Agreement [Virgin/NPA 2015]]

“Treaty Purchaser” has the meaning specified in Schedule III to the Note Purchase Agreement.

“Trust” means VX 2015 Trust.

“U.S. Air Carrier” means any United States air carrier as to which there is in force a certificate issued pursuant to Section 41102(a) of the Federal Aviation Act, and which is a citizen of the United States (as defined in 49 U.S.C. § 40102(a)(15)) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of title 49 (or the equivalent authority issued by the Civil Aeronautics Board under the predecessor regulatory laws, rules and regulations) for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo or which may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof.

“Underwriters” means the Purchasers originally party to the Note Purchase Agreement on the date of the Note Purchase Agreement.

“War Risk Insurance” has the meaning assigned to such term in Section 10(b) of the Lease.

“Warranty Bill of Sale” means a full warranty bill of sale in favor of the Owner from the Manufacturer in respect of an Aircraft.

“Wet Lease” means any arrangement whereby the Lessee agrees to furnish the Airframe and associated Engines or engines installed thereon to a third party pursuant to which the Airframe and Engines or engines (i) are operated by pilots who are regular employees of the Lessee, and (ii) such property is maintained by the Lessee.

APPENDIX A

Page 21

EX-10.5

Exhibit 10.5

EXECUTION VERSION

NOTE PURCHASE AGREEMENT

[Virgin/NPA 2015]

Dated as of

April 29, 2015

among

VX 2015 LLC,

Owner,

EACH PURCHASER

IDENTIFIED ON SCHEDULE I HERETO,

NEW YORK LIFE INSURANCE COMPANY,

Senior Agent,

INVESTEC BANK PLC,

Junior Agent,

and

BANK OF UTAH,

Security Trustee

New York Life Insurance Company

Senior Underwriter

Investec Bank plc

Junior Underwriter

TABLE OF CONTENTS

		Page
SECTION 1	CERTAIN DEFINITIONS		1
SECTION 2	THE COMMITMENT; FUNDING PROCEDURES; CLOSING PROCEDURE		5
(a)	Commitment; Notes; Special Funding Elections		5
(b)	Funding Procedures		6
(c)	Registrations Upon Closing		8
(d)	Funding Mechanics		8
(e)	Closing Location		8
SECTION 3	NOTE ECONOMICS		8
(a)	Principal Amortization		8
(b)	Senior Interest		9
(c)	Junior Interest		10
(d)	PIK Interest		12
(e)	Structuring Fees		13
(f)	Commitment Fees		13
(g)	Prepayments		13
(h)	Method of Payment		15
(i)	Application of Payments		15
(j)	Market Disruption		16
(k)	Increased Costs		18
SECTION 4	CONDITIONS PRECEDENT		20
(a)	Conditions Precedent to the Effectiveness of the Commitments		20
(b)	Conditions Precedent to the Purchasers’ Participation in each Designated Aircraft		21
(c)	Conditions Subsequent		27
SECTION 5	CLOSING PROCEDURE		27
(a)	Filings with FAA		27
(b)	Registrations by FAA Counsel		28
(c)	Discharges in Event of Failure to Fund		28
(d)	International Registry Filings		28
SECTION 6	EXTENT OF INTEREST OF HOLDERS		28
SECTION 7	REPRESENTATIONS AND WARRANTIES		28
(a)	Owner’s Representations and Warranties		28
(b)	Representations and Warranties of the Security Trustee and Purchasers		33
SECTION 8	TAXES		34
SECTION 9	COVENANTS OF THE OWNER		34
(a)	Notifications		34

i

TABLE OF CONTENTS

(continued)

		Page
(b)	Litigation		34
(c)	Existence, Etc		34
(d)	Special Purpose		35
(e)	Limitation on Liens		35
(f)	Protection of Collateral		35
(g)	Separateness		36
(h)	Co-operation with Rating Agency		37
(i)	IR Registrations; IDERA		37
(j)	Sanctions, Etc		37
SECTION 10	EVENTS OF DEFAULT		38
SECTION 11	NOTICES		38
SECTION 12	GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL		38
(a)	Governing Law		38
(b)	Submission to Jurisdiction		39
(c)	Forum		39
(d)	Service of Process		39
(e)	Waiver of Jury Trial		39
SECTION 13	INVOICES AND PAYMENT OF EXPENSES		39
SECTION 14	SUCCESSORS AND ASSIGNS; NOTES		40
(a)	Benefits		40
(b)	Assignments by Owner		40
(c)	Assignments by Purchasers		40
(d)	Registration, Transfer and Exchange of Notes		41
(e)	Mutilated, Destroyed, Lost or Stolen Notes		42
(f)	Payment of Expenses on Transfer		42
SECTION 15	THE AGENTS; THE SECURITY TRUSTEE		42
(a)	Appointment, Powers and Immunities		42
(b)	Reliance by Agent		43
(c)	Non-Receipt of Funds by the Agents		43
(d)	Defaults		44
(e)	Indemnification		44
(f)	Non Reliance on Agents and Other Purchasers		44
(g)	Failure to Act		45
(h)	Resignation or Removal of Agent		45
(i)	Consents under Operative Documents		45
(j)	The Security Trustee		46
(k)	Representations and Warranties of the Senior Purchasers		49

ii

TABLE OF CONTENTS

(continued)

		Page
SECTION 16	MISCELLANEOUS		51
(a)	Section 1110 Compliance		51
(b)	Survival of Agreements		51
(c)	Separate Counterparts		51
(d)	No Liability of Purchasers		51
(e)	Approvals by Purchasers		51
(f)	Non-Disclosure of Purchase Agreement		52
(g)	Confidentiality		52
(h)	Quiet Enjoyment		52
(a)	General Tax Indemnity		1
(b)	Withholding Taxes		3
(c)	Payment		5
(d)	Contest		6
(e)	Withholding Tax Forms		8
(f)	Reimbursement by Indemnitees		8
(g)	Interest		9
(h)	Definitions		9

Schedules:

I.		Notice and Account Information
II.		Participations in Original Amount
III.		Tax Provisions
3(a)(i)		Amortization Schedule (Senior Notes)
3(a)(ii)		Amortization Schedule (Junior Notes)
Exhibit A	–	Form of Notice of Issuance
Exhibit B	–	Form of Assignment Agreement
Exhibit C	–	Form of Note
Exhibit D	–	Form of Pledge Agreement
Appendix A	–	Definitions and Rules of Usage

iii

NOTE PURCHASE AGREEMENT [Virgin/NPA 2015]

THIS NOTE PURCHASE AGREEMENT [Virgin/NPA 2015] dated as of April 29, 2015 (as modified, amended or supplemented from time to time, this “Agreement”) among VX 2015 LLC, a Delaware limited liability company (the “Owner”), each Purchaser identified on Schedule I hereto (collectively, together with their successors, permitted assigns and permitted transferees, the “Purchasers”), New York Life Insurance Company, as Senior Agent hereunder (together with its successors hereunder in such capacity, the “Senior Agent”), Investec Bank plc, as Junior Agent hereunder (together with its successors hereunder in such capacity, the “Junior Agent”), and Bank of Utah, as Security Trustee hereunder (together with its successors hereunder in such capacity, the “Security Trustee”).

W I T N E S S E T H:

WHEREAS, certain terms are used herein as defined in Section 1 hereof; and

WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner and the Security Trustee are entering into the Mortgage and Security Agreement [Virgin/NPA 2015] dated as of the date hereof (as modified, amended or supplemented from time to time, the “Mortgage”) pursuant to which the Owner agrees, among other things, to issue one or more Notes in respect of each Aircraft as evidence of the Owner’s indebtedness to the Purchasers, which Notes will be issued upon the financing of such Aircraft and which Notes will be secured by the mortgage and security interest on such Aircraft created by the Owner in favor of the Security Trustee, and the Owner shall execute and deliver a Mortgage Supplement covering such Aircraft, supplementing the Mortgage at the time of such delivery and financing.

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

SECTION 1 Certain Definitions.

Except as otherwise defined in this Agreement, including its annexes, schedules and exhibits, terms used herein in capitalized form shall have the meanings attributed thereto in Appendix A hereto, and the rules of usage specified therein shall be applicable to this Agreement. In addition, the following terms shall have the following meanings:

“Applicable Margin” means, for any Class of any Series of Notes, (i) the Senior Applicable Margin or (ii) the Junior Applicable Margin.

“Balloon” means, in respect of any Senior Note, an amount equal to 20% of the principal amount of such Senior Note payable on its Maturity Date.

“Benchmark Index Rate” means, as at any date of determination, the 10-day moving average Barclays Industrial Corporate Bond Index as referenced on Bloomberg screen LUAIOAS at 11:00 a.m. New York time on such date; which rate is presented as a percentage.

“Closing Benchmark Index Rate” shall mean the 10 day moving average as referenced at 11:00 a.m. New York time two Business Days prior to each Issuance Date.

[Note Purchase Agreement [Virgin/NPA 2015]]

“Closing Date” means, in respect of any Notes, the date on which such Notes are initially issued to the Holders in accordance with the terms of this Agreement.

“Commitment” means, as the context requires, the Senior Commitment and/or the Junior Commitment.

“Commitment Termination Date” means the last Business Day of January 2016; provided that the Commitment Termination Date for any Aircraft may be extended to a date mutually agreed by the Lessee and the Underwriters.

“Designated Aircraft” means each of the three Airbus A320-200 aircraft identified as follows: (i) manufacturer’s serial number 6704 with FAA registration No. N282VA, scheduled to be delivered to the Owner under the Purchase Agreement in August 2015; (ii) manufacturer’s serial number 6787 with FAA registration No. N283VA, scheduled to be delivered to the Owner under the Purchase Agreement in October 2015; and (iii) manufacturer’s serial number 6889 with FAA registration No. N285VA, scheduled to be delivered to the Owner under the Purchase Agreement in December 2015, respectively (such months, in each case, being the “Scheduled Delivery Month” for such Designated Aircraft).

“Discount Rate” means, as at any date of determination, the sum of (i) the Make-Whole plus (ii) 0.50%.

“Federal Funds Rate” for any day, means the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by the relevant Agent from three federal funds brokers of recognized standing selected by it.

“Final Legal Maturity” means, with respect to any Note, the calendar date 36 months following the Maturity Date of such Note.

“Fixed Benchmark Index Rate” means, if the Owner (acting at the direction of the Lessee) elects to use a “Fixed Benchmark Index Rate” pursuant to Section 3(b)(iii), the Benchmark Index Rate established on the date the Owner or Lessee notifies the Senior Purchasers of such election.

“Fixed Rate Margin” means, for any Junior Note, 0.15% per annum.

“Fixed Senior Swap Rate” means the Senior Swap Rate as determined pursuant to Section 3(b)(iii)(1) hereof.

“Floating Benchmark Index Rate” means the Benchmark Index Rate as determined, for each Series of Senior Notes, on the third Business Day prior to the Issuance Date for such Series of Notes.

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[Note Purchase Agreement [Virgin/NPA 2015]]

“Floating Rate” means, for any Interest Period and Junior Note, the sum of (1) LIBOR for such Interest Period, plus (2) the Applicable Margin applicable to such Junior Note (calculated on the basis of actual number of days elapsed in a year of 360 days).

“Floating Senior Swap Rate” means the Senior Swap Rate as determined, for each Series of Senior Notes, pursuant to Section 3(b)(iii)(2) hereof.

“Initial Benchmark Index Rate” means 1.35%.

“Junior Applicable Margin” means, (a) for any Series of Junior Notes bearing interest at a Fixed Rate, 5.27% per annum and (b) for any Series of Junior Notes bearing interest at a Floating Rate, 5.20% per annum.

“Junior Commitment” shall have the meaning ascribed thereto in Section 2(a).

“Junior Maturity Date” means, for any Series of Junior Notes, the six year anniversary of the Issuance Date of such Notes.

“Junior Swap Rate” means, as of any Swap Effective Date and as relates to any fixed rate setting provided in Section 2(b)(ii)(1) for any Junior Notes of any Series, the mid-market swap rate as at the time of rate-set on such date, determined by the swap desk of the Junior Agent on a market basis, to effect a swap transaction consistent with the swap described in Hedging Transaction.

“Make-Whole” means, for any Senior Note as at any determination date, the interest rate for the fixed leg of a U.S. Dollar Interest Rate “Swap Mid” appearing on Bloomberg Screen USSW (the “Screen”) with maturities equal to the Remaining Weighted Average Life of (i) in the case of establishing the Fixed Rate for the Senior Notes of any Series, all Senior Notes (of both Tranches) of such Series on a blended basis and (ii) otherwise, such Note, or if such a maturity is not posted on the Screen, an interpolation of such rate as provided below based on maturities next above and below the then Remaining Weighted Average Life of such Note at approximately 11:00 a.m. New York time on the date one Business Day before the determination date; such interpolated rate to be calculated by the original Purchasers (or, if an original Senior Purchaser is no longer a Holder of any Notes, the Holder then holding the greatest principal amount of Notes) in accordance with the following formula:

WAY	=	Y1 + (Y2-Y1)(X-X1)
		(X2-X1)

where:

WAY	=	weighted average yield.
X	=	Remaining Weighted Average Life in years of such Note.
X1	=	whole integer closest to and less than X that is closest in maturity to Make-Whole and available on the Screen.

3

[Note Purchase Agreement [Virgin/NPA 2015]]

X2	=	whole integer closest to and greater than X that is closest in maturity in years to Make-Whole and available on the Screen.
Y1	=	Make-Whole with maturities equal to X1.
Y2	=	Make-Whole with maturities equal to X2.

“Minimum Liability Insurance Amount” means $600,000,000.

“Original Amount” means, in respect of any Aircraft, $39,000,000.

“Partial Loss Threshold” means $3,000,000.

“Past Due Rate” means, as to any Note (or amount owing in respect thereof or to the Holder thereof), the lesser of (a) 2.00% plus the relevant Applicable Rate or (b) the maximum interest rate permitted under applicable law.

“Prepayment Fee” means, in respect of a Senior Note as at any date of determination, the excess, if any, of (a) the present value, as of the date of the relevant prepayment of such Note, of the installments of principal of and interest on such Note that, but for such prepayment, would have been payable on the Payment Dates after such prepayment, over (b) the principal amount of such Note then being prepaid. Such present value shall be determined by discounting the amounts of such installments semi-annually (assuming a 360-day year and the actual number of days elapsed) from their respective Payment Dates to the date of such prepayment at a rate equal to the Discount Rate. If the Discount Rate is equal to or higher than the Fixed Rate for any Note, the Prepayment Fee for such Note shall be zero.

“Senior Applicable Margin” means, for any Senior Notes of any Series, as selected by the Owner (acting at the direction of the Lessee) on or prior to the establishment of the applicable Fixed Rate for such Senior Notes, (i) the applicable Floating Benchmark Index Rate or (ii) the Fixed Benchmark Index Rate.

“Senior Commitment” shall have the meaning ascribed thereto in Section 2(a).

“Senior Maturity Date” means, for any Series of Senior Notes, the 12 year anniversary of the Closing Date of such Notes.

“Senior Swap Rate” means, as at any date of determination, the interpolated mid-market swap rate for a USD fixed rate swap interpolated to a 7.75 weighted average life using the 7 and 8 year mid-market rates published on Bloomberg screen IRSB18 (as referenced at the time of rate setting).

Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be modified, amended or supplemented from time to time in accordance with its terms and the terms of each other agreement restricting the modification, amendment or supplement thereof.

4

[Note Purchase Agreement [Virgin/NPA 2015]]

SECTION 2 The Commitment; Funding Procedures; Closing Procedure.

(a) Commitment; Notes; Special Funding Elections.

(i) The Notes. Subject to the terms and conditions of this Agreement, (i) the Owner agrees to authorize and issue the sale of secured notes (the “Notes”), such Notes to be issued (A) in two Classes (each, a “Class”), “Senior Notes” and “Junior Notes” and (B) in three separate series (each, a “Series”) as relate to each Designated Aircraft and (ii) each Purchaser severally agrees to purchase Notes of each Series and Class in respect of each Designated Aircraft on a date to be designated for such Aircraft pursuant to Section 2(b)(i) hereof, but in no event later than the Commitment Termination Date, as provided in clause (iii) below. The Senior Class Notes are to be issued to the Senior Purchasers in an aggregate principal amount of $102,600,000, not to exceed $34,200,000 per Designated Aircraft (the “Senior Notes”). The Junior Class Notes are to be issued to the Junior Purchasers in an aggregate principal amount of $14,400,000, not to exceed $4,800,000 per Designated Aircraft (the “Junior Notes”). The aggregate original principal amount of the Notes for all Designated Aircraft shall not exceed $117,000,000 (which amount, for the avoidance of doubt, shall not be subject to any appraisal or other test or condition precedent].

(ii) Commitment. Each Purchaser’s funding obligation in respect of any Class shall be its Commitment of the amount thereof (respectively, its “Senior Commitment” and its “Junior Commitment”). Each Purchaser shall receive, as evidence of the Senior Note and/or Junior Note made by it in respect of any Designated Aircraft, a Note(s) of the applicable Class and Series in the amount of such Note.

(iii) Class and Series. Notes shall be issued by reference to a particular “Class” and “Series”. The “Class” of any Note, designated as “Senior” or “Junior”, shall indicate whether such Note is issued in respect of a Senior Note or a Junior Note. The “Series” of any Note, designated by manufacturer’s serial number of the applicable Designated Aircraft, shall indicate the Designated Aircraft relating to such Note. The Class and Series of a Note shall be indicated on the face of such Note. Each Note and the related Commitment may be designated as being of the Class and Series of its related Notes.

(iv) Purchasers’ Elections. Schedule 1 to Exhibit A hereto sets out the Class of Notes of each Series that each Purchaser has irrevocably elected to receive on behalf of itself and its successors, permitted assigns and permitted transferees. Any Note initially issued to a Senior Purchaser shall be and remain a Senior Note, and any Note initially issued to a Junior Purchaser shall be and remain a Junior Note, in each case, regardless of the Holder thereof. A Note, once issued as a particular Class or Series, shall only be transferred, assigned and/or reissued as such Class or Series, as the case may be, entitling its Holder to the rights, and subjecting such Holder to the obligations, applicable to such Class or Series only, as further set forth herein.

(v) Notes. The Notes shall be substantially in the form set forth in Exhibit C. On the Delivery Date of each Designated Aircraft, the Owner shall issue

5

[Note Purchase Agreement [Virgin/NPA 2015]]

Notes in respect of such Aircraft in an aggregate amount equal to the Original Amount constituting (A) the Senior Commitment advanced by the Senior Purchasers for such Aircraft and (B) the Junior Commitment advanced by the Junior Purchasers for such Aircraft.

(vi) Sub-Tranchings. Notwithstanding the foregoing, at the election of the original Senior Purchasers, the original Senior Purchasers may, so long as they continue to be the Holders of all Senior Notes of a Series:

(1) tranche of such Series and Class into separate tranches (a “Tranche”) and reallocate the principal amounts of the existing Senior Notes as amongst the Tranches, and

(2) adjust the Applicable Margin (and, accordingly, the Fixed Rate) applicable to such Tranches,

so long as the overall principal amount of the Senior Notes of such Series and the all-in amount payable to the Holders of the Senior Notes of such Series payable on each Payment Date and any amount payable by Owner hereunder and under the Lease does not change. In connection therewith, (A) the original Senior Purchasers shall exchange their Senior Notes of the relevant Series for new Senior Notes of the relevant Series as so adjusted, and the Owner shall execute and deliver the replacement Senior Notes of the relevant Series therefor and (B) an NPA Supplement shall be executed and delivered by the parties hereto reflecting all such changes and adjustments, including the subordination of one Tranche over another in a default situation. Any costs of the Owner and the Lessee associated with such reissuance and exchange shall be for account of the original Senior Purchasers. Prior to or contemporaneously with the effectiveness of any new Tranche created under clause (1) above, amendments or other modifications to the Operative Documents, in each case in form and substance satisfactory to the Senior Purchasers, and acceptable to the Owner and the Lessee, each acting reasonably, shall be entered into in order to effect changes thereto necessary or reasonably requested by the Senior Purchasers in connection therewith.

(b) Funding Procedures.

(i) Issuance Date. In connection with the financing of any Designated Aircraft hereunder, the Owner agrees to give each Purchaser, each Agent and the Security Trustee at least three Business Days’ prior written notice of the anticipated Delivery Date of such Aircraft (for any Designated Aircraft, its “Issuance Date”), which date shall be a Business Day not later than the Commitment Termination Date, and which notice shall be countersigned by the Lessee and in substantially the form of the Notice of Issuance attached hereto as Exhibit A (a “Notice of Issuance”).

(ii) Account. In order to facilitate the timely closing of the transactions contemplated hereby on any Issuance Date, the Owner, by delivery of the Notice of Issuance to the Purchasers and each Agent, irrevocably instructs such Purchasers to wire transfer (for receipt by no later than 10:00 a.m. New York City time) on such Issuance Date its Commitment by the wiring of immediately available funds

6

[Note Purchase Agreement [Virgin/NPA 2015]]

(reference: Virgin/NPA 2015) to the account of the Security Trustee at the Payment Office (the “Account”).

(iii) Deposit. The funds so paid by each Purchaser (the “Deposit”) into the Account are to be held by the Security Trustee for account of such Purchaser. Subject to paragraph (vi) below, upon the satisfaction (as determined by each Purchaser) or waiver of the conditions precedent set forth in Section 4(b) hereof in respect of the applicable Designated Aircraft, such Purchaser (or its special counsel acting on its behalf) shall instruct the Security Trustee to disburse the Deposit for application of its Commitment for such Aircraft as instructed by the Owner.

(iv) Investment of Deposit. If, for any reason, the applicable Designated Aircraft to be financed hereunder on its Issuance Date shall not be so financed on such date, the Deposit, and earnings thereon, will be invested and reinvested by the Security Trustee at the sole direction, for the account, and at the risk of the Lessee in an overnight investment selected by the Lessee and acceptable to the Security Trustee having consulted with the Purchasers. Upon the Lessee’s oral (to be confirmed in writing) instructions, earnings on any such investments shall be applied to the Owner’s payment obligations to each Purchaser under this Section 2(b) or released to the Lessee to the extent of such earnings.

(v) Interest After Issuance Date. If the actual Delivery Date for the applicable Designated Aircraft is a date falling after its Issuance Date, the Owner shall pay interest hereunder to each Purchaser on the amount of its Commitment transferred to the Security Trustee for each Note as indicated on Schedule 1 to the Notice of Issuance for the period from and including such Issuance Date to but excluding the earlier of (A) the Delivery Date for such Aircraft or (B) the Cutoff Date (as defined below). For each Purchaser, such interest shall accrue on the amount of such Purchaser’s Commitment transferred to the Security Trustee at the Applicable Rate. Interest on the Commitments accrued pursuant to the preceding sentence shall (I) if accrued to the Delivery Date for such Aircraft, be paid on the first Interest Payment Date and (II) if accrued to the Cutoff Date, be due and payable to each Purchaser within three Business Days of such date.

(vi) Cutoff Date. If for any reason, other than the failure of any Purchaser to comply with the terms hereof, the Delivery Date for the applicable Designated Aircraft shall not have occurred on or prior to seven Business Days (or such longer period as mutually agreed by the Owner and the Underwriters) after the Issuance Date for such Aircraft (the “Cutoff Date”), the Owner hereby irrevocably agrees that each Purchaser may cancel, terminate or otherwise unwind its funding arrangements made in the London interbank market or otherwise to fund its Commitment on the Issuance Date, and the Security Trustee shall return each Purchaser’s Commitment to it, subject, however, to such Purchaser’s continuing commitment to fund as provided herein.

(vii) Unwinding. In the event of the occurrence of the events described in paragraph (vi) above, (1) the Owner agrees to pay each Purchaser promptly (but in any event within three Business Days of the relevant Cutoff Date) (A) in the case of the

7

[Note Purchase Agreement [Virgin/NPA 2015]]

Junior Purchasers only, an amount of liquidated damages equal to any Swap Breakage Loss plus any loss incurred in connection with the unwinding or liquidating of any deposits or funding or financing arrangement with its funding sources and (B) without duplication of the amounts covered by the preceding clause (A), all reasonable out-of-pocket costs and expenses of such Purchaser (including, without limitation, reasonable legal costs and expenses) incurred by such Purchaser described in the definition of Transaction Expenses in Section 13 hereof; and (2) each Junior Purchaser agrees, so long as no Event of Default shall have occurred and be continuing, to pay to the Lessee promptly (but in any event within three Business Days of the relevant Cutoff Date) any Swap Breakage Gain in connection with the unwinding or liquidating of any deposits or funding or financing arrangement with its funding sources. For the avoidance of doubt, no other amounts shall be payable to the Senior Purchasers as a result of the occurrence of the events described in paragraph (vi) above.

(c) Registrations Upon Closing. Subject to the terms and conditions of this Agreement, and simultaneously with receipt by the Owner of the proceeds of the Notes made in connection with any Designated Aircraft pursuant to this Section 2, the Owner shall authorize (i) the delivery and filing for record at the FAA of the Mortgage and the Mortgage Supplement and the Lease and the Lease Supplement for such Aircraft and (ii) the registration at the International Registry of the Security Trustee’s international interest in the related Airframe and each Engine installed thereon and in the Lease and such Lease Supplement.

(d) Funding Mechanics. On the Delivery Date for the Designated Aircraft specified in the Owner’s notice referred to in Section 2(b)(i) hereof, subject to the terms and conditions of this Agreement, each Purchaser, through the Security Trustee, agrees to pay the amount of its Commitment to the Owner by wire transferring such amounts to the account of the Owner as set forth on Schedule I hereto or to such other account as the Owner shall direct the Security Trustee in writing, upon closing.

(e) Closing Location. The closing with respect to the financing of each Aircraft shall take place at the offices of Vedder Price P.C., 1633 Broadway, New York, New York 10019.

SECTION 3 Note Economics.

(a) Principal Amortization.

(i) Senior Notes. The aggregate principal amount of the Senior Notes of each Series shall amortize quarterly on each Interest Payment Date (the first of which being the first Interest Payment Date following the Delivery Date of the related Designated Aircraft), as provided in Schedule 3(a)(i) hereto.

(ii) Junior Notes. The aggregate principal amount of the Junior Notes of each Series shall amortize quarterly on each Interest Payment Date (the first of which being the first Interest Payment Date following the Delivery Date of the related Designated Aircraft) to the Balloon as provided in Schedule 3(a)(ii) hereto.

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(iii) Amortization Schedules. The aggregate amortization schedules for the Notes of each Series and Class shall, based on the foregoing, be appended to the Mortgage Supplement delivered in connection with such Series (reflecting the Interest Payment Dates applicable thereto).

(b) Senior Interest. The Senior Notes of each Series shall bear interest at a fixed rate equal to the sum of the applicable Senior Swap Rate plus the applicable Senior Applicable Margin (calculated on the basis of a year of 360 days consisting of 12 30-day months). Such interest rate shall be determined as provided in the following clauses (i), (ii) and (iii) of this Section 3(b).

(i) Senior Applicable Margin. The Owner (acting at the direction of the Lessee) shall, subject to the terms and conditions of this Section 3(b), have the right to elect on or prior to the date that is five Business Days following the Effective Date to fix the Senior Applicable Margin in respect of each Designated Aircraft (on an aircraft by aircraft basis). If the Owner shall not have notified the Senior Purchasers of such election, the Senior Applicable Margin shall be the Floating Benchmark Index Rate and the Floating Senior Swap Rate shall be applicable.

(ii) Benchmark Index Rate Adjustment. The Senior Applicable Margin shall be adjusted by the Benchmark Index Rate Adjustment. Based on the election made by the Owner of the Senior Applicable Margin, the Owner (acting at the direction of the Lessee) shall further elect to either (A) increase the Senior Applicable Margin for each Series of Senior Notes or (B) increase the Senior Upfront Fee, in each case pursuant to the corresponding values:

	Senior Applicable Margin			Senior Upfront Fee			Plus Benchmark Index Rate Adjustment
Floating Benchmark Index Rate and Floating Senior Swap Rate		2.40	%		.375	%	Yes
Floating Benchmark Index Rate and Fixed Senior Swap Rate		2.54	%		1.475	%	Yes
Fixed Benchmark Index Rate and Floating Senior Swap Rate		2.57	%		1.675	%	No
Fixed Benchmark Index Rate and Fixed Senior Swap Rate		2.71	%		2.775	%	No

(iii) Senior Swap Rate. The Senior Swap Rate shall be set either (1) in the event the Owner elects the Fixed Senior Swap Rate, three Business Days after the Owner provides notice of such election to the Senior Purchasers and (2) in the event the Owner elects the Floating Senior Swap Rate, two Business Days prior to the Issuance Date for the Senior Notes relating to the applicable Designated Aircraft. If the Owner

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elects the Fixed Senior Swap Rate, (A) neither the Owner nor the Lessee shall be required to post any collateral and (B) in the event of any delay in the Delivery Date, any swap or other hedge (notional or otherwise) shall not be broken until the Commitment Termination Date and the Senior Swap Rate, Senior Upfront Fee and Senior Applicable Margin shall apply until such Commitment Termination Date; provided that in the case of any such break, the Owner shall pay the “Senior Swap Breakage” as provided in the following clause (iv).

(iv) Senior Swap Rate Breakage. Any “Senior Swap Breakage” amounts payable in connection with an unwinding of an established Fixed Senior Swap Rate shall be calculated in accordance with ISDA Close-out Amount provisions in respect of a notional fixed for floating interest rate swap reflecting notional amounts that match the anticipated Delivery Dates and amortization schedules included in Schedule 3(a)(i) hereto. The Senior Purchasers shall have no obligation to pay to the Owner any swap breakage “gain” associated with any such break unless (A) the Senior Purchasers do not purchase the Notes for any reason solely within such Senior Purchasers’ control or (B) there is a material adverse change in the financial position of the Lessee since its last audited financial statements that materially impairs its ability to perform its obligations under the Operative Documents.

(c) Junior Interest. The Owner (acting at the direction of the Lessee) shall, subject to the terms and conditions of this Section 3(c), have the right to elect on or prior to the date that is two Business Days prior to the Issuance Date for any Designated Aircraft that the Junior Class of Notes in respect of such Designated Aircraft bear interest either at a Floating Rate or a Fixed Rate.

(i) Floating Rate. If the Owner shall not have notified the Junior Purchasers of its request, pursuant to the Notice of Issuance in respect of any Designated Aircraft, to have the Junior Notes in respect of such Designated Aircraft bear interest at a Fixed Rate, then the Applicable Rate for such Series of Junior Notes shall be, for each Interest Period, the applicable Floating Rate for such Interest Period. Interest on each Junior Note of each Series payable by reference to the Floating Rate shall be payable quarterly in arrears on each Interest Payment Date for such Series and shall be calculated on the basis of a year of 360 days and actual number of days elapsed.

(ii) Fixed Rate Setting. The Owner (acting at the direction of the Lessee) may notify the Junior Purchasers of its request, pursuant to the Notice of Issuance in respect of any Designated Aircraft, for the Junior Notes in respect of such Designated Aircraft to bear interest at a Fixed Rate, which Fixed Rate shall be fixed two Business Days prior to the Issuance Date for such Aircraft (the “Swap Effective Date”). Upon delivery by the Owner of the Notice of Issuance relating to any Fixed Rate Notes of a particular Series to the Junior Agent and Junior Purchasers, the following procedures shall apply to determine the “Fixed Rate” for such Series of Junior Notes:

(1) Notification of Rate. No later than 11:30 a.m. New York time (but no earlier than 11:00 a.m. New York time) on the second Business Day prior to the applicable Issuance Date, the Junior Agent, the Junior Purchasers and

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the Lessee shall convene a conference call during which the Junior Agent will notify the Lessee of a single fixed rate of interest to be used as the basis for the calculation of the Fixed Rate for the applicable Series of Junior Notes. Such Fixed Rate for any Series of Junior Notes shall be the sum of (A) the Swap Rate plus (B) the Applicable Margin plus (C) the Fixed Rate Margin, and shall be the “Fixed Rate” for the Junior Notes of such Series, effective on the Swap Effective Date; provided that if such Fixed Rate cannot be established because the Lessee does not agree to the Swap Rate quoted by the relevant Agent, then Section 3(c)(i) shall apply to such Series of Junior Notes as though the Owner never requested such Junior Notes to bear interest at a Fixed Rate.

(2) Fixed Rate Stipulation. The Fixed Rate, as so established for the Junior Notes of any Series, shall be included on the cover page of the applicable Notes at issuance thereof.

(3) Rate Swaps Sophistication. The Owner understands and acknowledges that, in order to provide any Fixed Rate, the Junior Purchasers may be entering into one or more interest rate swaps or other hedging transactions (which may be effected internally (including on a notional basis) or externally), and that it has assessed the risks (including but not limited to risks in relation to any Swap Breakage Loss), benefits and consequences of obtaining a fixed interest so as to procure a fixed rate funding. The Owner confirms that the Lessee is solely responsible for any decision to select a Fixed Rate for any Junior Note, having relied on its own independent business judgment and advisers in connection herewith.

(iii) Fixed Rate. If the Applicable Rate for any Series of Junior Notes in respect of any Designated Aircraft is calculated by reference to a Fixed Rate:

(1) Interest Generally. Interest on such Note shall be payable quarterly in arrears on each Interest Payment Date and shall be calculated on the basis of a year of 360 days consisting of 12 30-day months.

(2) Swap Breakage on Prepayment. On the date of any prepayment of such Notes, the Owner may request that each Junior Purchaser advise the Security Trustee, the Lessee and the Owner by 11:00 a.m., New York time, on such date of the Swap Break Amount applicable to such event.

(3) Payment of Swap Breakage Gain. The Junior Purchaser agrees that, so long as no Special Default or Event of Default shall have occurred and be continuing, it shall promptly pay to the Lessee at such account as the Lessee may specify any Swap Breakage Gain in respect of the Junior Notes, except that it may first deduct therefrom any amounts then due and payable to it under the Operative Documents and apply any amount so retained to the satisfaction thereof. Each Holder of a Junior Note may retain any Swap Breakage Gain that arises after the occurrence of a Special Default or an Event of Default as security for the obligations of the Owner until the earlier of (i) the date that such

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Special Default or Event of Default is cured by the Owner (or, if such Holder reasonably anticipates that its costs and expenses incurred in connection with such Special Default or Event of Default cannot be determined at such time, the earlier of (x) the date such costs and expenses can be determined and (y) five Business Days after the date such Special Default or Event of Default is cured), promptly following which date such amount shall be paid over to the Owner (or its designee), except that such Holder may first deduct therefrom any amounts then due and payable to it under the Operative Documents and apply any amount so retained to the satisfaction thereof, or (ii) the date that Section 5.07 of the Mortgage shall be applicable, promptly following which date such amounts shall be remitted to the Security Trustee for application as provided in such Section 5.07.

(4) Swap Breakage Estimate. Upon the request of the Owner or the Lessee to the Junior Agent, such Agent shall obtain from each Junior Purchaser, and each such Junior Purchaser shall provide to such Agent, a good faith written estimate of the Swap Breakage Loss or Swap Breakage Gain, as the case may be, in connection with the occurrence, or anticipated occurrence, of any event contemplated by the Operative Documents that might give rise to an obligation to pay Swap Breakage Loss or the right to receive Swap Breakage Gain.

(5) Confirmation of Swap Breakage Estimate. Upon determination by a Junior Purchaser of any Swap Breakage Loss or Swap Breakage Gain payable to or by it, as the case may be, such Purchaser will provide to the Owner and the Lessee a written confirmation confirming such Swap Breakage Loss or Swap Breakage Gain, which confirmed amount shall be determined in accordance with the procedures set out in the definition of “Swap Break Amount”.

(6) Special Junior Lender. Anything herein or in any other Operative Document notwithstanding, if any Junior Purchaser shall be a Special Junior Lender, such Junior Purchaser shall neither be entitled to receive any Swap Breakage Loss nor be obligated to pay any Swap Breakage Gain in any circumstance in which Break Amount shall be payable hereunder or under any other Operative Document.

(iv) Past Due Interest. Overdue payments of principal of any Class of Note (and to the extent permitted by applicable law, overdue payments of interest and other amounts overdue under the Operative Documents) shall bear interest at the Past Due Rate, payable on demand, for any period during which the same shall be overdue.

(d) PIK Interest. Notwithstanding anything to the contrary in Section 3(a) or 3(b) above, if interest on any Note is not paid on the date such payment becomes due, such amount shall be converted automatically to principal as of the date such interest fell due unless, at the time of such conversion, a cumulative 18 months of interest on such Note shall have been converted to principal pursuant to this Section 3(d). Interest so converted to principal (“PIK

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Interest”) shall be treated for all purposes hereof and the Operative Documents as principal, provided that interest shall accrue on the amount of the PIK Interest until paid at the Past Default Rate (and such default interest shall likewise “PIK” as and when it shall become due and payable).

(e) Structuring Fees. The Owner agrees to pay to the Security Trustee for account of each Underwriter as and when due the structuring fee specified for such Underwriter in its Fee Letter.

(f) Commitment Fees. With respect to each Designated Aircraft, the Owner agrees to pay to the Security Trustee for account of each Purchaser a commitment fee accrued for the period from and including (1) in the case of the Senior Purchasers, March 23, 2015 and (2) in the case of the Junior Purchasers, the Effective Date, to the earlier of (i) the Delivery Date of the third Designated Aircraft and (ii) the Commitment Termination Date, equal to the Commitment Fee Rate calculated on the average daily amount of such Purchaser’s unutilized Commitment during the period for which payment of the commitment fee is made (calculated on the basis of a year of 360 days and actual days elapsed), payable quarterly in arrears on each three monthly anniversary dates of the Effective Date and on the date the commitment fee ceases to accrue in accordance with the foregoing. As used herein, “Commitment Fee Rate” means (A) for any Senior Commitment, 0.50% per annum and (B) for any Junior Commitment, 1.25% per annum.

(g) Prepayments.

(i) Generally. On at least five Business Days’ prior written notice to the Security Trustee, the Owner (acting on instructions of the Lessee) may prepay on the date specified in its notice of prepayment delivered pursuant to paragraph (iv) below in whole, or in part, any or all Notes in respect of any Class or any Series then outstanding at the principal amount thereof (or portion thereof to be repaid), together with accrued interest thereon to the date of prepayment plus all Break Amount (if any), Prepayment Fee (if any) and all other amounts due to the Holders of such Notes hereunder, thereunder and under the other Operative Documents; provided that, (A) no prepayment under this Section 3(g)(i) of any Note may be effected prior to the third anniversary of the Issuance Date of such Note and (B) any partial prepayment of such Notes shall be in an aggregate original principal amount of at least $5,000,000 and in $1,000,000 multiples thereafter (or such lesser amount as shall equal the entire outstanding principal amount of such Notes), and the amount thereof shall be specified in such written notice. Any partial prepayment shall be applied ratably among the Senior Notes and Junior Notes; provided that, so long as no Event of Default shall have occurred and be continuing, the Owner may (subject to the limitations contained in clause (A) above, which may be waived by the Junior Purchasers) prepay Junior Notes of a single Series without having to effect a prepayment on the Senior Notes of the same Series after the eighth Payment Date for such Junior Notes; provided further that only the Junior Notes of a single Series may be prepaid unless Other Junior Notes in respect of an aircraft financed under the Other Note Purchase Agreement shall likewise have been prepaid (concurrently or previously). The Security Trustee will give prompt notice of the Owner’s notice to prepay to the Holders.

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(ii) Prepayment upon Event of Loss. On at least five Business Days’ prior written notice to the Security Trustee, the Owner shall prepay, without any Prepayment Fee, on the date specified in its notice of prepayment delivered pursuant to paragraph (iv) below all Notes of the Series issued in respect of an Aircraft in full, but not in part, together with accrued interest thereon to the date of prepayment plus all Break Amount (if any) and all other amounts due thereunder and hereunder and under the other Operative Documents to the Holders upon the occurrence of an Event of Loss with respect to such Aircraft; such prepayment shall, in any event, be the last day permitted for such payment under Section 9(a) of the Lease; provided that if, pursuant to the terms of the Lease, a Replacement Airframe, together with the same number of Replacement Engines as the Engines, if any, subject to such Event of Loss, shall have been substituted for such Airframe and the Engines, if any, subject to such Event of Loss, then no such prepayment shall be required. The Security Trustee will give notice of prepayment to the Holders under this Section 3(g)(ii) promptly.

(iii) Prepayment in Event of Change of Law. On at least five Business Days’ prior written notice to the Security Trustee, the Owner (acting on instructions of the Lessee) may prepay, without any Prepayment Fee, on the date specified in its notice of prepayment delivered pursuant to paragraph (iv) below, all Junior Notes held by any Holder claiming compensation for Increased Costs and any Holder to whom the Owner is required to pay an additional amount pursuant to Schedule III(b) of this Agreement, so that after making all required withholdings or deductions for withholding Taxes from any payment, such Holder receives the same amount it would have received had no such withholdings or deductions been made, together with accrued interest thereon to the date of prepayment plus all Break Amount (if any) and all other amounts due to such Holder hereunder and under the other Operative Documents. The Security Trustee will give notice of prepayment to any affected Holder under this Section 3(g)(iii) promptly.

(iv) Notice Irrevocable. Any notice of prepayment delivered pursuant to paragraph (i), (ii) or (iii) above shall be irrevocable if not revoked at least five Business Days prior to the specified date of payment and shall identify the amount to be prepaid.

(v) Amounts to Be Prepaid. Notice of prepayment having been given and not revoked as aforesaid, the principal amount of the Notes so to be prepaid, plus accrued interest thereon to the date of prepayment, together with the Break Amount (if any) and Prepayment Fee (if any) to the extent herein provided, shall become due and payable on the prepayment date specified in the notice.

(vi) Prepayment Date. On the date fixed for prepayment under this Section 3(g), immediately available funds in Dollars shall be deposited by the Owner in the account of the Security Trustee at the place and by the time and otherwise in the manner provided in Section 3(h), in an amount equal to the principal amount of Notes to be prepaid together with accrued and unpaid interest thereon to the date fixed for such prepayment, all Break Amount (if any), Prepayment Fee (if any) and all other amounts due to the Holders of the Notes hereunder, thereunder and under the other Operative Documents.

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(vii) Calculation of Break Amount. Each Holder of a Note shall furnish to the Owner, with a copy to the Security Trustee, a certificate setting forth in reasonable detail the calculation of the amounts of Break Amount or Prepayment Fee, if any, due to such Holder, which certificate shall be presumptively correct.

(viii) No Amounts to Be Re-Borrowed. Any amount prepaid pursuant to this Section 3(g) hereof may not be re-borrowed by the issuance of Notes or otherwise.

(ix) Supplemental Mandatory Prepayments.

(1) Supplemental Mandatory Prepayments. The Owner shall prepay the Notes in accordance with paragraph (2) below in full following notice to the Owner of a Lease Event of Default and demand therefor (which notice and demand shall not be required if such Lease Event of Default is a Special Default).

(2) Manner of Payment. Any prepayment required by the preceding paragraph (1) shall be due and payable on the date of demand therefor without presentment, demand, protest or other notice of any kind, all of which are hereby waived. Any prepayment of principal on the Notes required by the preceding paragraph (1) shall be accompanied by interest on the amount prepaid through the date of prepayment, together with any Prepayment Fee and Break Amount and all other amounts then due and payable.

(h) Method of Payment. Principal and interest and other amounts due hereunder or under the Notes or in respect hereof or thereof shall be payable in Dollars in immediately available funds prior to 1:00 p.m., New York time, on the due date thereof, to the Security Trustee at the Payment Office and the Security Trustee shall, subject to the terms and conditions hereof, remit all such amounts so received by it to the Holders at such account or accounts at such financial institution or institutions as the Holders shall have designated to the Security Trustee in writing, in immediately available funds for distribution to the relevant Holders, such payment to be made, in the case of any such designated account in the United States, prior to 3:00 p.m., New York time, on the due date thereof. In the event the Security Trustee shall fail to make any such payment as provided in the immediately foregoing sentence after its receipt of funds at the place and prior to the time specified above, the Security Trustee, without right of reimbursement from the Owner or the Lessee, agrees to compensate the Holders for loss of use of funds in a commercially reasonable manner. All such payments by the Owner and the Security Trustee shall be made free and clear of and without reduction on account of all wire and other like charges, and without setoff or deduction (except as required by applicable law). Prior to the due presentment for registration of transfer of any Note, the Owner and the Security Trustee shall deem and treat the Person in whose name any Note is registered on the Certificate Register as the absolute owner of such Note for the purpose of receiving payment of all amounts payable with respect to such Note and for all other purposes whether or not such Note shall be overdue, and neither the Owner nor the Security Trustee shall be affected by any notice to the contrary.

(i) Application of Payments. Except as otherwise expressly provided herein or in the Intercreditor Agreement, each payment of principal and interest or other amounts due in

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respect of each Note shall be distributed to the Holders thereof ratably, without priority of any one Note over any other Note in the proportion that the amount of such payment or payments then due under each Note bears to the aggregate amount of the payments then due under all Notes. Each such payment shall, except as otherwise expressly provided herein, be applied, first, to the payment of any amount (other than the principal of or interest on such Note) due in respect of such Note, second, to the payment of interest on such Note (as well as any interest on overdue principal and, to the extent permitted by law, interest and other amounts payable thereunder) due thereunder, third, to the payment of the principal of such Note then due and fourth, the balance, if any, remaining thereafter, to the payment of the principal of such Note remaining unpaid (provided that such Note shall not be subject to prepayment without the consent of the affected Holder except as permitted by Section 3(g)). The amounts paid pursuant to clause fourth above shall be applied to the installments of principal of such Note in inverse order of maturity.

(j) Market Disruption.

(i) If with respect to any Interest Period for any Aircraft:

(1) LIBOR Screen Unavailable. In the case of a Floating Rate Note, the Junior Agent determines that, by reason of circumstances affecting the London interbank market or any other applicable financial market, adequate and reasonable means do not exist for ascertaining the LIBOR screen rate for an Interest Period and that no more than one of the Reference Banks was able to provide the respective Agent with its offered quotation for US dollar deposits for a period most comparable to such Interest Period to prime banks in the relevant interbank market; or

(2) Cost of Funds. In the case of a Fixed Rate Note or a Floating Rate Note, the Majority Junior Lenders advise the Junior Agent that the LIBOR screen rate as determined in accordance with the definition thereof will not adequately and fairly reflect the cost to such Purchasers of maintaining or funding their respective Notes for any Interest Period, provided that such inadequacy is the result of circumstances affecting banks and other financial institutions participating in the relevant interbank market generally and is not directly and solely the result of a deterioration in the financial or other condition of such Purchaser,

(each, a “Market Disruption Event”), then so long as such circumstances shall continue, each affected Junior Note shall bear interest, for each Interest Period (A) in the case of subclause (1) above, at the Market Disruption Cost of Funds for such Purchaser, plus the Applicable Margin and (B) in the case of subclause (2) above, at the applicable Interest Rate (whether a Fixed Rate or a Floating Rate) at a per annum rate equal to their respective incremental cost of funds for such Interest Period over the then-current LIBOR.

(ii) Market Disruption Cost of Funds. If the provisions of this Section 3(j) are applicable, then each affected Junior Purchaser shall report, as provided in paragraph (iv) below, to the Security Trustee, the Junior Agent and the Lessee its cost of funding its share of the Junior Notes for such Interest Period, expressed as a

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percentage rate per annum (such Purchaser’s “Market Disruption Cost of Funds”). Based on the report of each affected Junior Purchaser, the Junior Agent shall calculate the weighted average (all in) interest amount (and equivalent per annum rate) due by the Owner on the applicable Junior Note for such Interest Period and provide such calculation to the Lessee and the Security Trustee.

(iii) Report as Certification. The report by any affected Junior Purchaser to the Security Trustee, the Junior Agent and the Lessee of its cost of funds for any Interest Period shall be conclusive, absent manifest error, and shall constitute a certification by such Purchaser that the interest rate so provided is an accurate, fair and non-discriminatory calculation of its treasury (or comparable) desk’s assessed funding costs which assessment has been made on a fair and non-discriminatory basis for such period relative to similarly situated issuers from which it is entitled to assess market disruption costs and does not include any mark-up, fees, overhead allocations or other amounts not constituting the interest expense-type cost of obtaining such funding.

(iv) Notice of Cost of Funds. If the provisions of this Section 3(j) are applicable, each affected Junior Purchaser shall report to the Security Trustee, the Junior Agent and the Lessee its cost of funds for each affected Interest Period as soon as practicable and, in any event, prior to the first day of such Interest Period (or promptly thereafter under circumstances where such costs of funds are generally not available to lenders similarly situated to any affected Junior Purchaser); provided that if any affected Junior Purchaser is not able to obtain deposits in the London interbank (or other relevant) market matching such Interest Period, notice of its cost of funds rate shall be provided as follows: (i) prior to the first day of such Interest Period (or promptly thereafter under circumstances where such costs of funds are generally not available to lenders similarly situated to any affected Purchaser), such Purchaser shall provide to the Security Trustee, the relevant Agent and the Owner an approximation of the cost to such Purchaser of such funding for such Interest Period; and (ii) prior to the last day of such Interest Period (or earlier, to the extent practicable if deposits of a duration longer than one day are obtained), such Purchaser shall provide to the Security Trustee, the Junior Agent and the Lessee the actual cost to such Purchaser of such funding for such Interest Period.

(v) Actual/360. All amounts payable under this Section 3(j) shall be calculated on the basis of a year of 360 days and actual number of days elapsed.

(vi) Termination of Market Disruption Event. Upon any Junior Purchaser affected by a Market Disruption Event confirming to the Security Trustee, the Junior Agent and the Lessee that the event(s) giving rise to such Market Disruption Event have ceased (which confirmation shall be provided promptly on the cessation of such event(s)), the rate of interest applicable to such Purchaser’s Junior Notes will revert to such rate of interest immediately in effect prior to the occurrence of such Market Disruption Event.

(vii) Substitute Basis for Determination of Cost of Funds. If a Market Disruption Event occurs and is continuing and the Junior Purchasers or the Lessee so requests, the Purchasers affected by such Market Disruption Event and the Lessee shall

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enter into negotiations (for a period of not more than 30 days) with a view to agreeing on a substitute basis for determining the rate of interest payable in respect of the affected Notes, provided that any alternative basis agreed shall, with the prior consent of each affected Purchaser and the Owner, be binding on such parties. If within such 30 day period each of the affected Purchasers and the Lessee agree upon a substitute basis for determining the rate of interest payable in respect of the affected Notes, such alternative basis shall be retroactive to and effective from the first day of the applicable Interest Period until and including the last day of such Interest Period. For the avoidance of doubt, during any such period of negotiation, the Owner shall be required to perform its obligations under this Section 3(j).

(viii) Prepayment of Holders affected by a Market Disruption Event. The Owner shall have the right (acting on instructions of the Lessee) but not the obligation to (x) prepay the Junior Notes of any Holder affected by a Market Disruption Event, together with accrued interest thereon and any Break Amount, or (y) direct the affected Holder to transfer such Holder’s Junior Notes to another person for a purchase price equal to the amount that would otherwise have been paid on such a prepayment.

(k) Increased Costs.

(i) Payment to Holders. The Owner shall pay directly to each Holder of a Junior Note from time to time within five Business Days of the presentation by such Holder of the certificate specified in the second sentence of Section 3(k)(iii) hereof such amounts as such Holder may reasonably determine to be necessary to compensate such Holder for any increase in actual costs that such Holder reasonably determines are attributable to its making or maintaining of its Commitment or the loans evidenced by its Junior Notes or funding arrangements utilized in connection with such loans, or any reduction in any amount receivable by such Holder hereunder in respect of any of Commitments, such loans or such arrangements (such increases in costs and reductions in amounts receivable being herein called “Increased Costs”), resulting from any Change in Law under which:

(1) Reduction of Rate of Return. Any Junior Purchaser has a reduction on its rate of return on its capital as relates to the class of assets and liabilities that includes its Commitments and loans made under this Agreement materially below that which such Purchaser would have achieved but for such Change in Law (taking into account the capital adequacy and liquidity adequacy policies developed by such Purchaser in connection with the adoption and/or implementation of the Basel II accord);

(2) Cost of Performance. A Purchaser incurs a cost as a result of such Purchaser entering into or assuming or maintaining a commitment or performing its obligations (including its obligation to participate in the making of the Loan) under this Agreement; or

(3) Costs of Funding. There is any increase in the cost to any Purchaser of funding or maintaining all or any of the loans comprised in a class of

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loans formed by or including such Purchaser’s share of the loans made or to be made by such Purchaser, including any reserve, special deposit or similar requirement assessed against assets of, deposits with or for account of, or credit extended by, such Purchaser.

(ii) Compensation for Increased Costs. Without limiting the effect of the foregoing provisions of this Section 3(k) (but without duplication), the Owner shall pay directly to each Holder of a Junior Note from time to time within five Business Days of the presentation by such Holder of the certificate specified in the second sentence of Section 3(k)(iii) hereof, such amounts as such Holder may determine to be necessary to compensate such Holder (or, without duplication, the holding company of which such Holder is a subsidiary) for any increase in costs that it determines are attributable to the maintenance by such Holder (or any lending office or such holding company) of capital or liquidity, pursuant to any law or regulation or any interpretation, directive or request (whether or not having the force of law and whether or not failure to comply therewith would be unlawful so long as compliance therewith is standard banking practice in the relevant jurisdiction) of any court or governmental or monetary authority following any Change in Law. The Holders of Junior Notes will not treat the Junior Notes any less favorably than another similarly-situated aircraft loan for any similarly situated issuer.

(iii) Notifications to Owner. Each Holder of a Junior Note shall notify the Owner of any event occurring after the date of this Mortgage entitling such Holder to compensation under paragraph (a) or (b) of this Section 3(k) as promptly as practicable after such Holder obtains actual knowledge thereof; provided that (1) such Holder shall, with respect to compensation payable pursuant to this Section 3(k) in respect of any Increased Costs resulting from such event, only be entitled to payment under this Section 3(k) for Increased Costs incurred from and after the later of (x) the Closing Date and (y) the date that is 180 days prior to the date such Holder does give such notice and (2) each Holder will use commercially reasonable efforts (at the Owner’s expense) in consultation with the Owner for up to 30 days to mitigate the amount of the Increased Costs associated with such event, including designating a different lending office for the Notes of such Holder affected by such event if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the sole opinion of such Holder, result in any economic, legal or regulatory disadvantage to such Holder (other than economic disadvantages for which the Owner agrees to indemnify such Holder and which indemnity is acceptable to such Holder in its discretion acting reasonably based on its credit assessment of the Owner). Each Holder of a Junior Note will furnish to the Owner an officer’s certificate setting forth in reasonable detail (A) the events giving rise to such Increased Costs, (B) the basis for determining and allocating such Increased Costs and (C) the amount of each request by such Holder for compensation under paragraph (i) or (ii) of this Section 3(k) (subject, however, to any limitations such Holder may require in respect of disclosure of confidential information relating to its capital structure), together with a statement that the determinations and allocations made in respect of the Increased Costs comply with the provisions of this Section 3(k), including as provided in the last proviso of this paragraph (iii). Determinations and allocations by any Holder for purposes of this Section 3(k) of the effect of any Change in Law pursuant to paragraph (i) of this Section 3(k), or of the effect of capital maintained pursuant to paragraph (ii) of

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this Section 3(k), on its costs or rate of return of maintaining Notes or its funding, or on amounts receivable by it in respect of Notes, and of the amounts required to compensate such Holder under this Section 3(k), shall be conclusive absent manifest error, provided that such determinations and allocations are made on a reasonable basis and, in the case of allocations, are made fairly.

(iv) Certain Exceptions. The Owner shall not be required to make payments under this Section to any Holder of a Junior Note (1) if a claim hereunder arises through circumstances peculiar to such Holder and which do not affect commercial lenders in the same jurisdiction generally, (2) if the claim arises out of a voluntary relocation by such Holder of its lending office (it being understood that any such relocation effected pursuant to Section 3(k)(iii)(2) is not “voluntary”), (3) to the extent such claim exceeds such amount as a Holder domiciled in any Specified Jurisdiction would be entitled to claim hereunder and (4) without prejudice to the Owner’s obligations under Schedule III to this Agreement, to the extent the increase in costs or reduction in amounts receivable is as a result of Taxes imposed on such Holder or amounts payable to such Holder.

SECTION 4 Conditions Precedent.

(a) Conditions Precedent to the Effectiveness of the Commitments. It is agreed by each of the parties hereto that the respective Commitments of each Purchaser in respect of each Designated Aircraft and the effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent:

(i) Effectiveness Documents. The following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto, shall each be satisfactory in form and substance to each Purchaser and shall be in full force and effect and executed counterparts shall have been delivered to each Purchaser and its counsel:

(1) this Agreement;

(2) the Mortgage;

(3) the Lease; and

(4) the Intercreditor Agreement.

(ii) Corporate Documents. Each Purchaser shall have received the following, in each case in form and substance satisfactory to it:

(1) Constitutional Documents of Obligors. A certified copy of the certificate of incorporation and bylaws of each Obligor and a copy of resolutions of the board of directors of such Obligor or the executive committee thereof, certified by the Secretary, an Assistant Secretary or other officer of such Obligor, duly authorizing the execution, delivery and performance by such Obligor of this Agreement and each other document required to be executed and

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delivered by such Obligor on the Delivery Date for a Designated Aircraft in accordance with the provisions hereof and thereof;

(2) Signatories of Obligors. A certificate of each Obligor as to the person or persons authorized to execute and deliver this Agreement (in the case of the Owner), the other Operative Documents to which they are a party, and any other documents to be executed on behalf of such Obligor in connection with the transactions contemplated hereby and as to the signature of such person or persons;

(3) Incumbency Certificate of Security Trustee. An incumbency certificate of the Security Trustee as to the person or persons authorized to execute and deliver this Agreement, the Mortgage, and any other documents to be executed on behalf of the Security Trustee in connection with the transactions contemplated hereby and as to the signatures of such person or persons (which may be in the form of a general “authorized signatories” certificate);

(4) Security Trustee’s Resolutions. Copy of the resolutions of the board of directors of the Security Trustee, certified by the Secretary or an Assistant Secretary of the Security Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Security Trustee in connection with the transactions contemplated hereby (which may be in the form of general standing resolutions to carry out its business in the manner contemplated by this Agreement); and

(5) Constitutional Documents of Security Trustee. A copy of the articles of association and by-laws of the Security Trustee, each certified by the Secretary, an Assistant Secretary or other officer of the Security Trustee.

(iii) Opinions of Counsel. Such Purchaser shall have received an opinion addressed to such Purchaser, each Agent and the Security Trustee from (A) Milbank, Tweed, Hadley & McCloy, special New York counsel to the Lessee and (B) the Associate General Counsel or other duly authorized in-house counsel for the Lessee, in each case, in form and substance reasonably satisfactory to the addressees thereof.

(iv) Know Your Customer for Owner and Lessee. Such Purchaser shall have received any document reasonably requested from the Owner or Lessee (not less than five Business Days prior to the Effective Date) by such Purchaser in order for such Purchaser to satisfy any “know your customer” requirements with respect to the Owner and Lessee.

(b) Conditions Precedent to the Purchasers’ Participation in each Designated Aircraft. It is agreed by each of the parties hereto that the respective obligations of each

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Purchaser to purchase its Notes in respect of any Designated Aircraft is subject to the satisfaction prior to or on the Delivery Date for such Aircraft of the following conditions precedent:

(i) Notice of Delivery Date. Such Purchaser shall have received due notice with respect to such Delivery Date pursuant to Section 2 hereof.

(ii) International Interests. International interests in the related Airframe and Engines shall have been duly registered by FAA Counsel (which shall be the “professional user entity” (as defined in the Cape Town Convention) with respect to such Aircraft) (or any other professional user entity agreed to by the Security Trustee and the Lessee), on the International Registry with respect to (A) the international interests with respect to the related Airframe and each Engine constituted by the Mortgage and related Mortgage Supplement (incorporating the terms of the Mortgage) with the Security Trustee as creditor and the Owner as debtor, (B) the international interest with respect to the related Airframe and each Engine under the Lease and the related Lease Supplement (incorporating the terms of the Lease) with the Owner as creditor and the Lessee as debtor, (C) the assignment of international interest with respect to the related Airframe and each Engine constituted by the Mortgage and the related Mortgage Supplement (incorporating the terms of the Mortgage) (assigning the international interest under the Lease and related Lease Supplement, including an assignment of the right to discharge such international interest) with the Security Trustee as assignee and the Owner as assignor and (D) the transfer of the right to discharge with respect to Airframe and each Engine under the Lease and the related Lease Supplement with the Owner as transferor and the Security Trustee as transferee.

(iii) No Change in Law. No change shall have occurred after the date of the execution and delivery of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities which, in the reasonable opinion of such Purchaser would make it a violation of law or regulations for such Purchaser to make its Commitment available to acquire its Note(s) or to realize the benefits of the security afforded by the Mortgage.

(iv) No Material Adverse Change. On such Delivery Date, no material adverse change in the financial condition of the Lessee shall have occurred since December 31, 2014 that would materially and adversely affect the Lessee’s ability to perform its obligations under the Operative Documents.

(v) Fees and other Payments. Each Underwriter shall have received its structuring fee specified in Section 3(e) and the Lessee shall have made the Initial Rent payment to the Manufacturer.

(vi) Certain Documents. The following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto, shall each be satisfactory in form and substance to each Purchaser (acting reasonably) and shall be in full force and effect and executed counterparts shall have been delivered to such Purchaser and its counsel, provided that only such Purchaser shall receive an executed original of its Note(s) to be issued to it:

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(1) the Mortgage Supplement covering such Aircraft and dated the Delivery Date for such Aircraft;

(2) the Notes of each Class of the Series relating to such Aircraft, with Annex A for each Class of Note duly completed as provided in Section 3(a) hereof (with a CUSIP Number);

(3) the Airframe Warranties Agreement, the Consent and Agreement and the Engine Consent and Agreement, in each case, in respect of such Aircraft;

(4) the Warranty Bill of Sale and FAA Bill of Sale for such Aircraft;

(5) the NPA Supplement for the relevant Series of Notes;

(6) the Purchase Agreement Assignment for such Aircraft;

(7) the Pledge Agreement (to be delivered on the initial Delivery Date);

(8) the Lease Supplement for such Aircraft (the chattel paper original to be delivered to the Security Trustee); and

(9) if necessary, a copy of that portion of the Purchase Agreement and Engine Agreement relating to such Aircraft certified by the Secretary or an Assistant Secretary or other officer of the Owner as being a true and accurate copy of the same that relates to the Assigned Warranties and the related obligations of the Owner or a successor in interest to the Owner which has the right to exercise any such warranty.

(vii) Financing Statements. Uniform Commercial Code financing statements covering all the security interests created by or pursuant to the Lease and pursuant to the granting clause of the Mortgage that are not covered by the recording system established by the Federal Aviation Act shall have been duly prepositioned for filing on closing in all places deemed necessary or advisable in the reasonable opinion of counsel for the Purchasers, and any additional Uniform Commercial Code financing statements deemed advisable by such Purchaser shall have been duly prepositioned for filing on closing and all other action shall have been taken as is deemed necessary or advisable, in the reasonable opinion of counsel for the Purchasers, to establish and perfect the Security Trustee’s security interest in such Aircraft.

(viii) FAA Actions. All appropriate action required to have been taken by the Federal Aviation Administration, or any governmental or political agency, subdivision or instrumentality of the United States, on or prior to such Delivery Date in connection with the transaction contemplated by this Agreement shall have been taken, and all orders, permits, waivers, authorizations, exemptions and approvals of such entities required to be in effect on such Delivery Date in connection with the transaction

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contemplated by this Agreement shall have been issued, and all such orders, permits, waivers, authorizations, exemptions and approvals shall be in full force and effect on such Delivery Date.

(ix) Evidence of Title and Security Interests. On such Delivery Date, the following statements shall be true, and such Purchaser shall have received evidence satisfactory to it (including a printout of the “priority search certificates” (as defined under the Cape Town Convention) from the International Registry relating to such Aircraft (and the constituent Airframe and Engines)) to the effect that:

(1) the Owner has good title to such Aircraft and the Lessee is the registered owner of such Aircraft, free and clear of Liens other than (subject to filing and recording of the FAA Bill of Sale with the Federal Aviation Administration and the registration of a contract of sale on the International Registry between the Manufacturer as seller and the Owner as buyer with respect to the Airframe and Engines of such Aircraft) the mortgage and security and international interests created by the Mortgage and the Mortgage Supplement for such Aircraft and the lease and international interest created by the Lease and the Lease Supplement for such Aircraft;

(2) the FAA Bill of Sale, the Mortgage (if not previously filed), the Mortgage Supplement for such Aircraft, the Lease (if not previously filed) and the Lease Supplement for such Aircraft have been duly filed with the FAA for recordation (or are in form suitable for recordation and are in the process of being so filed for recordation) and there exist no Liens of record on such Aircraft;

(3) (A) the international interests with respect to the related Airframe and each Engine constituted by the Mortgage and related Mortgage Supplement (incorporating the terms of the Mortgage) shall have been (or shall be concurrently) registered with the International Registry with the Security Trustee as creditor and the Owner as debtor, (B) the international interest with respect to the related Airframe and each Engine under the Lease and the related Lease Supplement (incorporating the terms of the Lease) shall have been (or shall be concurrently) registered with the International Registry with the Owner as creditor and the Lessee as debtor, (C) the assignment of international interest with respect to the related Airframe and each Engine constituted by the Mortgage and the related Mortgage Supplement (incorporating the terms of the Mortgage) (assigning the international interest under the Lease and related Lease Supplement, including an assignment of the right to discharge such international interest) shall have been (or shall be concurrently) registered with the International Registry with the Security Trustee as assignee and the Owner as assignor and (D) the transfer of the right to discharge with respect to Airframe and each Engine under the Lease and the related Lease Supplement shall have been (or shall be concurrently) registered with the International Registry with the Owner as transferor and the Security Trustee as transferee; and there shall exist no other undischarged registered international interest with respect to the related Airframe or any Engine on the International Registry;

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(4) the Security Trustee shall have a perfected first priority Lien on the Pledged Interests;

(5) such Aircraft has a valid export certificate of airworthiness issued by the Direction générale de l’aviation civile of France;

(6) the Lessee is a U.S. Air Carrier (and such Purchaser shall have received a copy of the Lessee’s air carrier operating certificate); and

(7) the Security Trustee, as assignee of the Owner’s rights under the Lease, is entitled to the protection of Section 1110 of the United States Bankruptcy Code in connection with its right to take possession of such Aircraft in the event of a case under Chapter 11 of the United States Bankruptcy Code in which the Lessee is a debtor.

(x) Representations and Warranties. On such Delivery Date, (A) the representations and warranties of the Owner contained in Section 7 of this Agreement and the representations and warranties of the Lessee contained in Section 6(a) of the Lease shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing which constitutes (or would, with the passage of time or the giving of notice or both, constitute) a Default Event.

(xi) Ratings Requirement. The Senior Purchasers shall have received evidence satisfactory to them that the Ratings Requirement has been satisfied.

(xii) Opinions of Counsel. Such Purchaser shall have received an opinion addressed to such Purchaser, each Agent and the Security Trustee from (A) Milbank, Tweed, Hadley & McCloy, special New York counsel to the Lessee, confirming, among other things, the statement set forth in Section 4(b)(ix)(6) hereof and (B) Morris James LLP, special counsel to the Owner and the Trust, in each case in form and substance reasonably satisfactory to the addressees thereof.

(xiii) Opinion of FAA Counsel. Such Purchaser shall have received an opinion addressed to such Purchaser, each Agent and the Security Trustee, the Lessee and the Owner from FAA Counsel, in form and substance reasonably satisfactory to the addressees thereof.

(xiv) Opinion of Airbus. Such Purchaser shall have received an opinion addressed to such Purchaser, each Agent and the Security Trustee from counsel to Airbus S.A.S., in respect of the Bills of Sale, in form and substance reasonably satisfactory to the addressees thereof.

(xv) Pledged Interest. If the Pledged Interests are certificated, the Security Trustee or its nominee shall have received the Pledged Instruments (as defined

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in the Pledge Agreement) in respect of the Pledged Interest, together with originals of the executed transfer form(s) in respect thereof.

(xvi) Certificate of Lessee. Such Purchaser shall have received a certificate signed by the President, a Vice President, the Chief Financial Officer, the General Counsel or the Treasurer of the Lessee, dated the Delivery Date for such Aircraft, addressed to such Purchaser and certifying as to the matters stated in paragraphs (x), (xvii) and (xix) of this Section 4(b).

(xvii) Insurance Certificate and Report. Such Purchaser shall have received an independent insurance brokers’ report and certificate(s) of insurance, in form and substance reasonably satisfactory to such Purchaser as to the due compliance with the terms of Section 10 of the Lease relating to insurance with respect to such Aircraft and, if applicable, a certificate, in form and substance reasonably acceptable to such Purchaser, signed by the Treasurer, Chief Financial Officer, the President, a Vice President or General Counsel of the Lessee confirming indemnification or insurance provided by the United States and evidence of such indemnification or insurance, if any.

(xviii) No Event of Loss. On such Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to such Aircraft (or constituent Airframe) or any associated Engine has occurred.

(xix) No Governmental Action. No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court or governmental agency at the time of such Delivery Date to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or the transaction contemplated hereby.

(xx) Know Your Customer for the Security Trustee. Such Purchaser shall have received any document reasonably requested from the Security Trustee (not less than five Business Days prior to the initial Issuance Date) by such Purchaser in order for such Purchaser to satisfy any “know your customer” requirements with respect to the Security Trustee; provided that, should the Security Trustee fail to provide any such document, or the Security Trustee fails to pass a “know your customer” test of a Purchaser, the Purchasers shall appoint a successor Security Trustee pursuant to Section 15(h).

Promptly upon the recording of the Mortgage and the Mortgage Supplement and the Lease and the Lease Supplement at the FAA covering such Aircraft pursuant to the Federal Aviation Act, the Owner will cause FAA Counsel to deliver to each Purchaser, the Lessee and the Owner an opinion as to the due and valid registration of such Aircraft in the name of the Lessee, the due recording of the FAA Bill of Sale, the Mortgage and the Mortgage Supplement covering such Aircraft and the Lease and Lease Supplement covering such Aircraft and the lack of filing of any intervening documents with respect to such Aircraft. Following the Delivery Date for such Aircraft, the Purchasers may, if required by applicable law to perfect the security interest granted

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in any Assigned Warranties, cause a huissier to serve a copy of a notice delivered on such Delivery Date to the Aircraft Manufacturer in accordance with Article 1690 of the French Civil Code.

(c) Conditions Subsequent. The following conditions shall be conditions subsequent to the issuance of any Notes Allocated To a Designated Aircraft on its Delivery Date:

(i) Airworthiness. Within two Business Days of such Delivery Date, each Purchaser shall have received evidence that such Aircraft has been duly certified as to type and airworthiness by the FAA, and the Lessee has authority to operate such Aircraft (and each Purchaser shall have received a copy of the airworthiness certificate for such Aircraft); and

(ii) Registration. Within 10 days of such Delivery Date, each Purchaser shall have received evidence that such Aircraft has been duly registered in the name of the Lessee under the Federal Aviation Act, and such Purchaser shall have received a copy of the FAA certificate of registration for such Aircraft.

Failure to satisfy these conditions subsequent within such time frame shall, on notice of the Security Trustee, constitute an automatic Event of Default.

SECTION 5 Closing Procedure.

(a) Filings with FAA. Following the Owner’s notice of the Delivery Date for any Designated Aircraft as provided in Section 2 hereof, the parties will pre-position each of the executed Mortgage and/or Mortgage Supplement and the Lease and/or Lease Supplement with FAA Counsel in Oklahoma City, Oklahoma, together with the FAA Bill of Sale (and photocopy of the Warranty Bill of Sale) for such Aircraft, the AC Form 8050-1 Aircraft Registration Application for such Aircraft in the name of the Lessee and AC Form 8050-135 FAA Entry Point Filing Form (which the parties agree shall be prepared by FAA Counsel). On the Delivery Date for a Designated Aircraft and in sufficient time to permit the closing to occur during business hours of the FAA in Oklahoma City, Oklahoma, each Purchaser will wire transfer its Commitment prior to 10:00 a.m. New York time for such Aircraft to the Security Trustee. On such Delivery Date, by conference telephone call among the Manufacturer, the Owner, the Lessee, the Purchasers (and/or their counsel acting on their behalf), each Agent, the Security Trustee and FAA Counsel, the Manufacturer will authorize the filing of the FAA Bill of Sale for such Aircraft to be delivered on such Delivery Date and the Owner will cause the ownership interest of the Airframe and each Engine associated with such Aircraft to be duly registered with the International Registry as a contract of sale and Owner will authorize the filing of each of the AC Form 8050-135 FAA Entry Point Filing Form, the AC Form 8050-1 Aircraft Registration Application, the Mortgage and/or the Mortgage Supplement and the Lease and/or Lease Supplement for such Aircraft upon receipt by the Manufacturer of the purchase price for such Aircraft and receipt by the Owner (or its order) of the proceeds from the issuance of the Notes for such Aircraft. The irrevocable authorization to FAA Counsel to date and file the FAA Bill of Sale, the AC Form 8050-135 FAA Entry Point Filing Form, the AC Form 8050-1 Aircraft Registration Application, the Mortgage and/or Mortgage Supplement and the Lease and/or Lease Supplement for such Aircraft will occur prior to the transfer of the Note for such Aircraft to or

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for account of the Owner, but the filing will not occur until the Owner’s (or its order) receipt of the funds at the designated account and the Manufacturer has released the Warranty Bill of Sale. The Note(s) will be delivered to the Purchasers and legal opinions delivered to all parties immediately following the transfer of the proceeds from the issuance of the related Notes as provided in Section 2(c).

(b) Registrations by FAA Counsel. The Owner irrevocably authorizes FAA Counsel to file with the FAA the Mortgage and/or Mortgage Supplement and the Lease and/or Lease Supplement and register the appropriate international interests and other interests described herein with the International Registry for each Designated Aircraft following the closing of the financing for such Aircraft. FAA Counsel may rely, without any further investigation, on any statement or certification by the Security Trustee that the closing of the financing for such Aircraft has occurred.

(c) Discharges in Event of Failure to Fund. If the financing for any Designated Aircraft shall fail to occur utilizing the Commitments hereunder, the Security Trustee agrees to register, at the Owner’s cost, a discharge at the International Registry of any international interest in favor of the Security Trustee in respect of the related Airframe and the Engines.

(d) International Registry Filings. Each of the parties hereto consents to the registration with the International Registry of the international interests and other interests described herein with respect to the Mortgage and each Mortgage Supplement and the Lease and each Lease Supplement, and each party hereto covenants and agrees that it will take all such action reasonably requested by the Lessee, the Owner or the Security Trustee in order to make any registrations with the International Registry, including becoming a transacting user entity with the International Registry and providing consents to any registration as may be contemplated by the Operative Documents.

SECTION 6 Extent of Interest of Holders.

No Holder shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Mortgage when and if the Original Amount of and interest on all Notes in respect of all Aircraft held by such Holder and all other sums payable to such Holder hereunder, under the Mortgage and under such Notes shall have been paid in full, provided, however, to the extent, for any reason, any such sums paid to a Holder are rescinded or must otherwise be restored by such Holder, the obligations of the Owner and the security interests created by the Mortgage shall be automatically reinstated with respect to such Holder and the Security Trustee, as applicable.

SECTION 7 Representations and Warranties.

(a) Owner’s Representations and Warranties. The Owner represents and warrants that on the date hereof and on the Delivery Date for each Designated Aircraft:

(i) Existence. The Owner is a limited liability company duly organized and validly existing in good standing pursuant to the laws of the State of

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Delaware and has the power and authority to enter into and perform its obligations under this Agreement and the other Operative Documents.

(ii) No Conflict. The execution, delivery and performance of this Agreement, each of the other Operative Documents to which Owner is a party, and the execution, delivery and payment of the Notes, does not and will not: (i) contravene any provision of its constitutional documents, (ii) contravene, conflict with or violate any Applicable Law, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority; or (iii) violate or result in the breach of, or constitute a default under any indenture or other loan or credit agreement, or other agreement or instrument to which it is a party or by which it, or its property and assets, may be bound or affected. It is not in violation or breach of or default under any Applicable Law, order, writ, judgment, injunction, decree, determination or award or any contract, agreement, lease, license, indenture or other instrument to which it is a party.

(iii) Authorization. The Owner has all power necessary, and has been duly authorized, to execute and deliver this Agreement and the other Operative Documents to which it is a party. The Owner is and will continue to be duly authorized to issue notes hereunder, and Owner is and will continue to have the organizational authority to perform its obligations under this Agreement and under the other Operative Documents to which it is a party. The execution, delivery and performance by Owner of this Agreement and the other Operative Documents to which Owner is a party and the issuances hereunder do not and will not require any consent or approval of any Governmental Authority or any other Person which has not already been obtained.

(iv) Enforceability. The Operative Documents to which the Owner is a party delivered on or prior to the date hereof or such Delivery Date, as the case may be, each constitute legal, valid and binding obligations of the Owner enforceable against the Owner in accordance with the terms thereof except as such may be limited by equitable principles or applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally.

(v) No Pending Actions. There are no pending or threatened actions or proceedings before any court, arbitrator or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material and adverse effect on the financial condition of the Owner or the ability of the Owner to perform its obligations under the Operative Documents.

(vi) Ownership of the Owner. The Trust is the legal and beneficial owner of all Pledged Interests (as defined in the Pledge Agreement) issued by the Owner.

(vii) Validity of Security Interests.

(1) Security Interest in the Collateral. On the relevant Delivery Date, the security interest in the Collateral created pursuant to the Mortgage and any applicable Mortgage Supplement shall have been validly created, and no action (other than the filings and actions referred to in Section 7(a)(vii)(2) and the

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related continuation statements) is required to be taken by any person in order for the full benefit of the security interest created thereby to vest in the Security Trustee on behalf of the Purchasers or in order to ensure the first priority perfected security interests of the Security Trustee for the benefit of the Purchasers in such Collateral will be maintained. The security interest in the Pledged Interest created pursuant to the Pledge Agreement has been validly created, and no action (other than the filings and actions referred to in Section 7(a)(vii)(2) and the related continuation statements) is required to be taken by any person in order for the full benefit of the security interests created thereby to vest in the Security Trustee on behalf of the Purchasers or in order to ensure the first priority perfected security interests of the Security Trustee for the benefit of the Purchasers in such Collateral will be maintained.

(2) Filings, Registrations, Etc. It is not necessary to ensure the legality, validity, enforceability or admissibility in evidence in the United States of the Operative Documents that any of them or any other instrument be filed, recorded, registered or enrolled in any court, public office or elsewhere in the United States, except as expressly provided herein, or that any stamp, registration or similar tax be paid in the United States on or in relation to any of the Operative Documents, and no further action in the United States, including any filing or recording of any document, is necessary or permissible to establish and/or perfect Owner’s title to and interest in, and the Security Trustee’s security interests pursuant to the Operative Documents in, any Aircraft, the Lease and the other Collateral as against any Obligor and any third parties, except for (i) the filing of financing statements (and continuation statements at regular intervals) under the Uniform Commercial Code in the State of Delaware, (ii) the taking and retaining of possession by the Security Trustee of the chattel paper original of the Lease, (iii) the taking of the actions specified in Section 4(b)(ix)(3) in respect of each Aircraft (and associated Airframe and Engines) with the International Registry and (iv) the affixation of nameplates to each Airframe and each Engine.

(viii) No Defaults. There has not occurred any event which constitutes a Default, a Lease Event of Default or an Event of Default under the Mortgage which is presently continuing.

(ix) Liens on Aircraft. On the Delivery Date for a Designated Aircraft, the Owner will have good title to such Aircraft free and clear of all Liens, except the Lien of the Mortgage and the Lease. On the Delivery Date for a Designated Aircraft, such Aircraft (A) shall have a valid export certificate of airworthiness issued by the French Direction générale de l’aviation civile, (B) will have been insured by the Lessee in accordance with the terms of the Lease, will have suffered no Event of Loss and will be in the condition and state of repair required under the terms of the Mortgage and (C) will have been duly registered in the name of the Lessee under the Federal Aviation Act.

(x) Securities Compliance. Assuming the Purchasers are acquiring their Notes in the ordinary course of their commercial banking business, none of the transactions contemplated by this Agreement will violate or result in a violation of the

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Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or any regulations issued pursuant thereto.

(xi) No Public Offering. Neither the Owner nor anyone acting on behalf of the Owner has directly or indirectly offered any interest in the Notes for sale to, or solicited any offer to acquire any of the same from, anyone other than the Purchasers and not more than 35 other institutions believed capable of evaluating and bearing the risks of investment in the transactions contemplated hereby.

(xii) No ERISA Violation. (v) The Owner has not engaged in any transaction in connection with which the Owner could be subjected to either a material civil penalty assessed pursuant to Section 502(i) of ERISA, or a material tax imposed by Section 4975 of the Code; (w) no material liability to the Pension Benefit Guaranty Corporation (other than liability for premiums) has been incurred by the Owner with respect to any Plan; (x) there has been no event or condition which presents a material risk of termination of any Plan by the Pension Benefit Guaranty Corporation; (y) the Owner and any affiliate (as defined below) has not committed, or does not expect to commit, a failure described in ERISA Section 303(k)(1) or Section 430(k)(1) of the Code (whether or not waived) with respect to any Plan; and (z) no material amount of “withdrawal liability,” as that term is used in Section 4201 of ERISA, has been or is expected to be incurred by the Owner nor has the Owner or any affiliate of the Owner been notified by any multi-employer plan (within the meaning of Section 3(37)(A) of ERISA) that such multi-employer plan is in reorganization or insolvency within the meaning of Section 4241 or Section 4245 of ERISA or that such multi-employer plan intends to terminate or has been terminated under Section 4041A of ERISA (for purposes of subclauses (y) and (z), the term “affiliate” shall mean any corporation or person (within the meaning of ERISA Section 3(9)) which together with the Owner and any other related entity would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.

(xiii) No “Prohibited Transactions”. Assuming the accuracy of the representations set forth in Section 7(b)(ii) (and Section 5(ii) of each Assignment and Assumption Agreement, if any), the purchase and holding of the Notes will not result in a “prohibited transaction,” within the meaning of Section 406 of ERISA or Section 4975 of the Code with respect to the transactions contemplated hereby which could subject the Owner to any tax or penalty pursuant to Section 4975 of the Code or Section 502(i) of ERISA.

(xiv) Investment Company. The Owner is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

(xv) No Material Misstatement or Omission. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Owner to the Security Trustee, any Agent or any Purchaser in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to

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state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(xvi) Federal Reserve Regulations. No part of the proceeds of any Note hereunder will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board of Governors of the Federal Reserve, including Regulations U and X.

(xvii) Cape Town Matters. (A) The Lessee is, and the Owner will be prior to the first Delivery Date, a “transacting user entity” (as such term is defined in the Regulations of the International Registry); and each is “situated”, for the purposes of the Cape Town Convention, in the United States; (B) the Airframe and related Engines financed on such Delivery Date are “aircraft objects” (as defined in the Cape Town Convention); (C) the United States is a Contracting State under the Cape Town Convention; (D) the FAA Bill of Sale for the Airframe and/or the Warranty Bill of Sale for such Airframe and related Engines constitutes a “contract of sale” (as defined in the Cape Town Convention) and the Mortgage and the Mortgage Supplement for such Airframe and related Engines conveys an international interest in such Airframe and related Engines and assigns an international interest in the Lease and Lease Supplement with respect to such Aircraft, and the Lease and the Lease Supplement for such Aircraft constitutes an international interest in such Airframe and related Engines; (E) the obligations of the Lessee under the Lease in respect of such Airframe and related Engines are “associated rights” (as defined in the Cape Town Convention); and (F) the Owner on each Delivery Date will have the power to “dispose” (as such term is used in the Cape Town Convention) of the Airframe and related Engines financed on the Delivery Date for an Aircraft.

(xviii) AML Laws; Anti-Corruption Laws and Sanctions. None of (a) the Owner, any subsidiary or any of their respective directors or officers, or, to the knowledge of the Owner, any of their respective employees or Affiliates, or (b) to the knowledge of the Owner, any agent of the Owner or any subsidiary or other Affiliate that will act in any capacity in connection with or benefit from the credit facility established hereby, (i) is a Sanctioned Person, or (ii) is in violation of AML Laws, Anti-Corruption Laws, or Sanctions. No Notes, use of proceeds or other transaction contemplated by this Agreement will cause a violation of AML Laws, Anti-Corruption Laws or applicable Sanctions by any person participating in the transactions contemplated by this Agreement, whether as lender, issuer, agent, or otherwise. The Owner represents that, except as disclosed to each Agent and the Purchasers prior to the date hereof, neither it nor any of its subsidiaries, nor its parent company, or, to the knowledge of the Owner, any other Affiliate has engaged in or intends to engage in any dealings or transactions with, or for the benefit of, any Sanctioned Person or with or in any Sanctioned Country.

(xix) Special Purpose. The Owner has been formed for the sole purpose of negotiating, entering into and performing the transactions contemplated by the Operative Documents to which it is a party and matters reasonably incidental thereto, and since its formation, it has not entered into any transaction or conducted any business except as required or contemplated by the Operative Documents.

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(b) Representations and Warranties of the Security Trustee and Purchasers.

(i) The Security Trustee represents and warrants that:

(1) Authorization. It has all power, authority, and legal right to execute, deliver, and carry out the terms of each of the Operative Documents to which the Security Trustee is a party.

(2) Execution. It has duly authorized the execution and delivery of this Agreement and the other Operative Documents to which it is a party.

(3) No Violation. The Security Trustee’s execution and delivery of each Operative Document to which it is a party will not result in any violation of, or be in conflict with, or constitute a default under, any of the provisions of its organizational documents, or of any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, lease, note or bond purchase agreement, license, bank loan, credit agreement, or other agreement to which it is a party or by which it is bound, and will not contravene any existing law, governmental rule or regulation of the State of Utah, any existing law, governmental rule or regulation of the United States of America which governs the Security Trustee’s banking and trust powers, judgment or order applicable to or binding on the Security Trustee.

(4) No Approvals. Neither the Security Trustee’s execution and delivery of the Operative Documents to which it is a party, nor the Security Trustee’s consummation of any of the transactions contemplated thereby, requires the consent or approval of, giving of notice to, or registration with any governmental authority.

(5) Transaction User Entity. The Security Trustee is a transacting user entity.

(ii) Purchasers’ Representations and Warranties. Each Purchaser severally represents and warrants on the date hereof and on the Delivery Date for each Designated Aircraft that:

(1) it is acquiring its interest in its Notes either (A) in the ordinary course of its general banking business or (B) for investment and not with a view to any distribution thereof that would require registration under the Securities Act of 1933, as amended, subject, however, to the disposition of its property being at all times within its control;

(2) the Operative Documents to which it is a party delivered on or prior to the date hereof or such Delivery Date, as the case may be, each constitute legal, valid and binding obligations of such Purchaser enforceable against such Purchaser in accordance with the terms thereof except as such may be limited by equitable principles or applicable bankruptcy, insolvency,

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reorganization, moratorium or other similar laws affecting creditors’ rights generally; and

(3) either (i) no part of the funds to be used by it for the purchase of the Notes shall constitute “plan assets” as defined in Section 3(42) of ERISA or otherwise, nor shall its interest become “plan assets” during the period it holds the Notes or (ii) its purchase and holding of the Notes shall be covered by a prohibited transaction class exemption issued by the U.S. Department of Labor.

SECTION 8 Taxes. Tax matters are as provided in Schedule III hereto which is incorporated herein by reference.

SECTION 9 Covenants of the Owner.

(a) Notifications. The Owner shall deliver or cause to be delivered to each Purchaser such information regarding the financial condition, operations, or business of the Owner as any Purchaser may reasonably request.

(b) Litigation. The Owner will promptly give each Purchaser notice of all legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, and any material development in respect of such legal or other proceedings, involving the Owner or Lessee if, in the case of the Lessee, the determination of those proceedings in a manner adverse to the Lessee would have a material adverse effect on the Lessee’s ability to meet its obligations under the Operative Documents to which it is a party.

(c) Existence, Etc. The Owner shall:

(i) Status. Keep in full effect its existence as a limited liability company organized under the laws of the State of Delaware (and shall not change its jurisdiction of formation) and all of its licenses, permits, governmental approvals, rights, privileges and franchises necessary in the normal conduct of its business as now conducted or presently proposed to be conducted.

(ii) Qualification. Obtain and preserve its qualification to do business as a company or other entity in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of the rights of the Purchasers under this Agreement or the other Operative Documents.

(iii) Compliance with Applicable Laws. Comply with (A) the provisions of its organization documents, and not amend the same without the prior written consent of the Security Trustee and (B) the requirements of all Applicable Laws to the extent that the failure to comply therewith would, in the aggregate, have a material adverse effect on the Owner’s ability to meet its obligations under the Operative Documents to which it is a party.

(iv) Records. Keep adequate records and books of account, in which complete entries will be made in accordance with generally accepted accounting principles consistently applied.

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(v) Business Discussions. Permit representatives of any Purchaser to discuss its business and affairs with its officers, all to the extent reasonably requested by such Purchaser.

(d) Special Purpose. The Owner will not:

(i) have any employees earning compensation;

(ii) except for Notes and as expressly contemplated by the Operative Documents, incur or contract to incur any Indebtedness;

(iii) engage in any activity other than the execution, delivery and performance of the Operative Documents to which it is a party and activities incidental thereto, as well as ordinary housekeeping activities;

(iv) except for the acquisition of any Aircraft by the Owner, make or agree to make any capital expenditure;

(v) create or own any subsidiary;

(vi) except as provided in the Mortgage, make any investments;

(vii) declare or make any dividend payment or distribution to any owner of its Ownership Interests (as defined in the Pledge Agreement) or other equity interests, other than in respect of (A) Excluded Payments or (B) any other payments which the Owner is entitled to receive under the Mortgage; or

(viii) incur any material obligation to any third party (excluding any payment or other obligation incurred pursuant to or in the performance of the obligations under the Operative Documents).

(e) Limitation on Liens. The Owner will not create, incur, assume or suffer to exist any Lien upon the Collateral except Permitted Liens.

(f) Protection of Collateral. The Owner agrees that from time to time, at the expense of the Lessee (and the Lessee hereby agrees to pay such expenses), it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary and as may be reasonably requested by any Purchaser in order to perfect and protect any security interest granted or purported to be granted pursuant to the Security Documents (including, without limitation, to the extent applicable registrations of international interests in respect of each Airframe and Engine with the International Registry), or to enable the Security Trustee to exercise and enforce its rights and remedies under and in accordance with the provisions hereof or of the Security Documents. The Owner hereby authorizes, and will cause Lessee to authorize, each Purchaser and/or the Security Trustee to file one or more UCC financing or continuation statements, and amendments thereto, or any similar document, with respect to all or any part of the Collateral granted by the Owner or the Lessee without the signature of the Owner where permitted by Applicable Law. The Security Trustee shall prepare and file on behalf of the Owner all necessary continuation statements (or such other similar

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documents) in order to maintain the perfection of the Security Trustee’s security interest in the Collateral (taking into account whether a Mortgage Filing for any particular item was required). Without limiting the foregoing, the Owner will, upon the reasonable request of the Security Trustee or any Purchaser, take at the Lessee’s cost and expense (and the Lessee hereby agrees to pay such costs and expenses) such other reasonable action necessary or advisable to:

(i) grant more effectively the security interest in all or any portion of the Collateral;

(ii) maintain or preserve the first perfected security interest of the Security Trustee in the Collateral or carry out more effectively the purposes hereof;

(iii) perfect, publish notice of or protect the validity of the security interest in the Collateral created by the Security Documents;

(iv) perfect the Security Trustee’s interest in the applicable Aircraft and Lease under the Cape Town Convention to the extent applicable and under any international perfection standards that may be adopted after the date of this Agreement to the extent practicable and without unreasonable cost;

(v) preserve and defend its right, title and interest to the Collateral and the rights of the Purchasers and the Security Trustee in such Collateral against the claims of all Persons (other than the Purchasers or any Person claiming through any Purchaser); and

(vi) cause the Lessee to pay any and all fees, taxes and other charges payable in connection with any financing statements which are required to be filed with any applicable Governmental Authority pursuant to this Agreement or any other Operative Document.

(g) Separateness. The Owner does and will continue to do the following:

(i) prepare and maintain its own full and complete books and records separately from those of any other entity;

(ii) in all dealings with third parties and the public, identify itself by its own name as a separate and distinct entity and not identify itself as being a division or part of any other entity whatsoever;

(iii) ensure that all decisions with respect to its business and daily operations are and will be independently made by it and will not be directed or dictated by any other entity and shall maintain an arms-length relationship with all other entities;

(iv) act solely in its own name and through its own authorized officers and agents and shall ensure that all communications including invoices, purchase orders, contracts, statements, stationery, checks and applications will be made solely in its name;

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(v) ensure that its assets are and will remain separate from those of any other entity and are and will be maintained in a manner which facilitates the identification and segregation of those assets from those of any other entity whatsoever;

(vi) observe all corporate formalities and governmental requirements and make all required filings to all applicable authorities;

(vii) discharge all expenses incurred and liabilities incurred by it only out of its own funds;

(viii) ensure that its bank accounts or other accounts are kept separate from the accounts of any other person or entity;

(ix) not acquire any shares or interest in any entity; and

(x) correct any known misunderstanding regarding its separate identity.

(h) Co-operation with Rating Agency. The Owner agrees, at the cost and expense of the Lessee (provided that any such costs and expenses in excess of $150,000 shall be borne by the Senior Purchasers), to provide to any Rating Agency whose rating is being sought by such Purchaser on the Notes, such information as such Rating Agency (acting through such Purchaser) may reasonably request, and otherwise cooperate with such Purchaser to procure such a rating.

(i) IR Registrations; IDERA. The Owner shall not consent to any registrations made in respect of the Aircraft on the International Registry except those made pursuant to the Operative Documents. Owner shall not issue any irrevocable deregistration and export request authorization in favor of any Person other than the Security Trustee.

(j) Sanctions, Etc.

(i) Compliance with Anti-Corruption Laws and Sanctions. The Owner will comply with all applicable Anti-Corruption Laws, applicable AML Laws and applicable Sanctions.

(ii) Use of Proceeds. The Owner will not issue any Notes, and the Owner shall not use, and shall procure that its subsidiaries and its or their respective directors, officers, employees, Affiliates and agents shall not use, directly or indirectly, the proceeds of any Notes, or lend, contribute or otherwise make available such proceeds to any subsidiary, other Affiliate, joint venture partner or other Person, (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or AML Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or involving any goods originating in or with a Sanctioned Person or Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions by any Person

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(including any Person participating in the transactions contemplated hereunder, whether as underwriter, advisor lender, investor or otherwise).

SECTION 10 Events of Default. If one or more of the following events (herein called “Events of Default”) shall occur and be continuing:

(i) the Owner shall default in the payment of any interest on any Note on the Payment Date thereof; or

(ii) the outstanding principal amount of the Notes shall not have been paid in full by Final Legal Maturity;

THEREUPON: (A) the Security Trustee may, by notice to the Owner, terminate the Commitments and they shall thereupon terminate, (B) the Security Trustee may and, upon request of the Controlling Creditor shall, by notice to the Owner demand payment of the Termination Sum, (C) declare the principal amount then outstanding of, and the accrued interest on, the Notes and all other amounts payable by the Owner and the Lessee (under such Operative Document to which each is a party and without duplication) hereunder and under the Notes to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Owner and (D) exercise any or all of the remedies set forth in Article V to the Mortgage.

For the avoidance of doubt, the failure to pay interest on any Note that converts to principal as provided in Section 3.2(d) hereof shall be deemed not to be a default in payment of interest for the purposes of clause (i) of this Section 10.

SECTION 11 Notices.

All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by facsimile, or by prepaid courier service, and shall be effective upon receipt.

Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11, notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective facsimile numbers) as follows: (a) if to the Owner or the Security Trustee, to the respective addresses set forth in Section 6.06 of the Mortgage; (b) if to a Purchaser, to the address set forth on Schedule I hereto; or (c) if to any subsequent Holder, addressed to such Holder at its address set forth in the Certificate Register maintained pursuant to the Mortgage.

SECTION 12 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.

(a) Governing Law. This Agreement shall in all respects be governed by, and construed in accordance with, the law of the State of New York, including all matters of construction, validity and performance.

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(b) Submission to Jurisdiction. Each party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Operative Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Operative Document shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any other Operative Document against another party or its properties in the courts of any jurisdiction.

(c) Forum. Each party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Service of Process. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 11. Nothing in this Agreement or any other Operative Document will affect the right of any party to this Agreement or any other Operative Document to serve process in any other manner permitted by law.

(e) Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 13 Invoices and Payment of Expenses.

The Security Trustee, each Agent and the Purchasers shall promptly submit to the Owner for its prompt approval copies of invoices of the Transaction Expenses (as defined below) as they are received. The Owner agrees to pay Transaction Expenses promptly upon receipt of invoices of such Transaction Expenses. For the purposes hereof, “Transaction Expenses” means (i) with respect to the preparation, negotiation, execution and delivery of this Agreement and the

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closing or anticipated closing of a Designated Aircraft on the Delivery Date for such Aircraft, the reasonable fees, and out-of-pocket expenses and disbursements of FAA Counsel, of Vedder Price P.C., special counsel to the Purchasers and the Rating Agency, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, or registration of any international interest with the International Registry, (iii) the Underwriters’ and each other Purchaser’s reasonable out-of-pocket travel expenses relating to the negotiation and closing of this transaction, and (iv) the Security Trustee’s fee as separately agreed; provided the Transaction Expenses of a Purchaser which (a) fails to fund any Note notwithstanding the satisfaction of the applicable conditions precedent or (b) fails to obtain all necessary credit approvals required for the transactions contemplated by this Agreement, shall not be subject to reimbursement.

SECTION 14 Successors and Assigns; Notes.

(a) Benefits. This Agreement shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective successors and permitted assigns including each successive holder of any Note(s) issued and delivered pursuant to this Agreement or the Mortgage whether or not an express assignment to any such holder of rights under the Agreement has been made.

(b) Assignments by Owner. The Owner may not assign any of its rights or obligations under this Agreement or the other Operative Documents except to the extent expressly provided thereby or with the consent of all of the Purchasers and the Lessee.

(c) Assignments by Purchasers. No Senior Purchaser may assign its Commitment, in whole or in part, without the prior written consent of the Lessee. No Junior Purchaser may assign its Commitments and/or Notes, in whole or in part, prior to June 23, 2015. Thereafter, the Senior Purchaser may assign its Notes (but not its Commitments) and the Junior Purchaser may assign its Commitments and/or Notes (A) without the prior written consent of the Lessee or the Owner to any Permitted Transferee and (B) with the consent of the Lessee (which consent shall not be unreasonably withheld or delayed) to any other Person. Any such assignment shall be subject to the following terms:

(i) it shall be effected pursuant to an agreement substantially in the form of the Assignment and Assumption Agreement;

(ii) it shall be in a minimum principal amount of $5,000,000 (in the case of Senior Notes); and $2,000,000 (in the case of Junior Notes); and

(iii) there shall be no more than four Senior Purchasers per Aircraft in the aggregate for the Senior Notes after giving effect to such assignment.

Notwithstanding anything to the contrary set forth herein, no assignment or other transfer hereunder shall (1) require the Owner or the Lessee as a result thereof to pay any greater amount hereunder than the assignor or transferor Purchaser was entitled to hereunder or (2) otherwise increase the obligations of the Owner or the Lessee under any Operative Document by reference to the laws in effect at the time of the assignment or transfer. Subject to Section 2(a), effective upon the assignment of any Commitment, the assigning Purchaser shall be relieved of its

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obligations in respect of such Commitment to the extent the assignee thereof shall have become obligated in respect thereof. Neither the Owner nor the Lessee shall be liable for any costs, fees or expenses in connection with any assignment or transfer of Commitments or Notes, except if an Event of Default shall have occurred and be continuing, the Owner shall be liable for any associated legal expenses reasonably incurred.

In addition, an assignee of any Junior Purchaser may be designated as a Special Junior Lender in the applicable Assignment and Assumption Agreement; provided that, if either (x) such assignee has been assigned Junior Notes representing more than one-half of the aggregate outstanding principal amount of the Junior Notes of all Series, in the aggregate or (y) such assignment shall have been effected after the date that is the six-month anniversary of the delivery date of the later of (A) the last Aircraft financed hereunder or (B) the last Other Aircraft financed under the Other Facility Agreement, then, in either such case, such designation shall be subject to the prior written consent of the Owner.

(d) Registration, Transfer and Exchange of Notes. The Security Trustee agrees with the Owner that the Security Trustee shall keep a register (herein sometimes referred to as the “Certificate Register”) in which provision shall be made for the registration of the Notes of each Class and the registration of transfers of the Notes of such Class and Series. Prior to the due presentment for registration of the transfer of any Note, the Owner and the Security Trustee shall deem and treat the person in whose name such Note is registered on the Certificate Register as the absolute owner of such Note, and the Holder for the purpose of receiving payment of all amounts payable with respect to such Note, and for all other purposes whether or not such Note is overdue, and neither the Owner nor the Security Trustee shall be affected by notice to the contrary. The Certificate Register shall be kept at the Payment Office of the Security Trustee or at the office of any successor Security Trustee, and the Security Trustee is hereby appointed “Certificate Registrar” for the purpose of registering Notes and transfers of Notes as herein provided. Subject to the terms and conditions of Section 14(c), upon surrender for registration of transfer of any Note of any Class and Series at the Payment Office and upon delivery by the Security Trustee to the Owner of such surrendered Note, the Owner shall execute, and the Security Trustee shall deliver, in the name of the designated transferee or transferees, one or more new Notes of a like aggregate principal amount, Class and Series. At the option of the Holder, its Notes of any Class and Series may be exchanged for other Notes of such Class and Series of any authorized denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged at the Payment Office. Each new Note issued upon transfer or exchange shall be in a principal amount of at least (i) $5,000,000 (in the aggregate), in the case of the Senior Notes and (ii) $2,000,000 (in the aggregate), in the case of the Junior Notes (except as may be necessary to evidence the entire outstanding principal amount of a Note) and dated the Delivery Date. Whenever any Notes are so surrendered for exchange, the Owner shall execute and deliver the Notes which the Holder making the exchange is entitled to receive. Each Holder may also assign to any assignee an interest in any Note held by it and the Security Trustee shall, upon receipt of a written request of such assignee, accompanied by such proof of such assignment as the Security Trustee may reasonably require, register in the name of such assignee such interest in such Note and thereafter such assignee shall be a Holder for all purposes of the Operative Documents (subject to any limitations in the instrument of assignment). All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Owner evidencing the same respective obligations, and entitled to the

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same security and benefits under this Mortgage, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or exchange, shall (if so required by the Security Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form reasonably satisfactory to the Security Trustee duly executed by the Holder thereof or his attorney duly authorized in writing, and the Security Trustee may require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the securities laws of any applicable state. The Security Trustee shall make a notation on each new Note or Notes of the amount of all payments of principal previously made on the old Note or Notes with respect to which such new Note is issued and the date to which interest accrued on such old Note or Notes has been paid and the extent, if any, to which any interest therein has been subject to a registered assignment. The Security Trustee shall not be required to register the transfer of or exchange any surrendered Notes as above provided during the five calendar day period preceding the due date of any payment on such Notes. Any Holder may transfer any or all of its Notes to any Permitted Transferee subject to the terms of Section 14(c). The Owner and the Security Trustee shall treat the Person in whose name each Note is registered on the Certificate Register as the Holder with respect thereto for all purposes hereof until due presentment for registration of transfer as provided in this Section 14(d). The Security Trustee shall give the Owner and each Holder notice of such transfer of a Note under this Section 14(d).

(e) Mutilated, Destroyed, Lost or Stolen Notes. If any Note shall become mutilated, destroyed, lost or stolen, the Owner shall, upon the written request of the affected Holder, execute and deliver in replacement thereof, a new Note of a like Class and Series, in the same principal amount, dated the date of such Note and designated as issued under this Mortgage. If the Note being replaced has become mutilated, such Note shall be surrendered to the Security Trustee and the original thereof shall be furnished to the Owner by the Security Trustee. If the Note being replaced has been destroyed, lost or stolen, the affected Holder shall furnish to the Owner and the Security Trustee such security or indemnity as may be reasonably required by them to hold the Owner and the Security Trustee harmless and evidence satisfactory to the Owner and the Security Trustee of the destruction, loss or theft of such Note and of the ownership thereof; provided, however, that if the affected Holder is an original party to the Note Purchase Agreement or an Affiliate thereof, the written notice of such destruction, loss or theft and such ownership and the written undertaking of such Holder delivered to the Owner and the Security Trustee to hold harmless the Owner and the Security Trustee in respect of the execution and delivery of such new Note shall be sufficient evidence, security and indemnity.

(f) Payment of Expenses on Transfer. Upon the issuance of a new Note or new Notes pursuant to Section 14(d) or 14(e), the Owner and/or the Security Trustee may require from the party requesting such new Note or Notes payment of a sum sufficient to reimburse the Owner and/or the Security Trustee for, or to provide funds for, the payment of any tax or other governmental charge in connection therewith or any charges and expenses connected with such tax or other governmental charge paid or payable by the Owner or the Security Trustee.

SECTION 15 The Agents; the Security Trustee.

(a) Appointment, Powers and Immunities. Each Senior Purchaser hereby irrevocably appoints and authorizes New York Life Insurance Company to act as Senior Agent

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[Note Purchase Agreement [Virgin/NPA 2015]]

hereunder and under the other Operative Documents with such powers as are specifically delegated to the Senior Agent by the terms of this Agreement and of the other Operative Documents, together with such other powers as are reasonably incidental thereto, and New York Life Insurance Company accepts such appointment. Each Junior Purchaser hereby irrevocably appoints and authorizes Investec Bank plc to act as Junior Agent hereunder and under the other Operative Documents with such powers as are specifically delegated to the Junior Agent by the terms of this Agreement and of the other Operative Documents, together with such other powers as are reasonably incidental thereto, and Investec Bank plc accepts such appointment. Each Agent (which term as used in this sentence and in Section 15(e) and the first sentence of Section 15(f) hereof shall include reference to such Agent and its affiliates and such Agent’s and its affiliates’ officers, directors, employees and agents): (i) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Operative Documents, and shall not by reason of this Agreement or any other Operative Document be a trustee for any Purchaser; (ii) shall not be responsible to the Purchasers for any recitals, statements, representations or warranties contained in this Agreement or in any other Operative Document, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Operative Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, any Note or any other Operative Document or any other document referred to or provided for herein or therein or for any failure by the Owner or any other Person to perform any of its obligations hereunder or thereunder; (iii) shall not be required to initiate or conduct any litigation or collection proceedings hereunder or under any other Operative Document; and (iv) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other Operative Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct. Each Agent may employ agents and attorneys in fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys in fact selected by it in good faith.

(b) Reliance by Agent. Each Agent shall be entitled to rely upon any certification, notice or other communication (including, without limitation, any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by such Agent. As to any matters not expressly provided for by this Agreement or any other Operative Document, each Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Controlling Creditor or all of the Purchasers as is required in such circumstance, and such instructions of such Purchasers and any action taken or failure to act pursuant thereto shall be binding on all of the Purchasers.

(c) Non-Receipt of Funds by the Agents. Unless an Agent shall have been notified by a Purchaser or the Owner (the “Payor”) prior to the date on which the Payor is to make payment to such Agent of (in the case of a Purchaser) the proceeds of a Note to be made by it hereunder or (in the case of the Owner) a payment to such Agent for account of one or more of the Purchasers hereunder (such payment being herein called the “Required Payment”), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to such Agent, such Agent may assume that the Required Payment has been made and

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[Note Purchase Agreement [Virgin/NPA 2015]]

may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient(s) on such date and, if the Payor has not in fact made the Required Payment to such Agent, the recipient(s) of such payment shall, on demand, repay to such Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by such Agent until the date such Agent recovers such amount at a rate per annum equal to the Federal Funds Rate for such day and, if such recipient(s) shall fail promptly to make such payment, such Agent shall be entitled to recover such amount, from the Payor, together with interest as aforesaid.

(d) Defaults. Neither Agent shall be deemed to have knowledge or notice of the occurrence of a Default or Event of Default (other than the non-payment of principal of or interest on Notes) unless such Agent has received notice from a Purchaser or the Owner specifying such Event of Default and stating that such notice is a “Notice of Default”. In the event that such Agent receives such a notice of the occurrence of an Event of Default, such Agent shall give prompt notice thereof to the Purchasers (and shall give each Purchaser prompt notice of each such non-payment). Each Agent shall take such action with respect to such Event of Default as shall be directed by the Controlling Creditor, provided that, unless and until such Agent shall have received such directions, such Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable in the best interest of the Purchasers except to the extent that the Mortgage expressly requires that such action be taken, or not be taken, only with the consent or upon the authorization of the Controlling Creditor or all of the Purchasers.

(e) Indemnification. The Senior Purchasers agree to indemnify the Senior Agent ratably in accordance with their respective Senior Notes (or, prior to the issuance of the Senior Notes, their respective Senior Commitments), and the Junior Purchasers agree to indemnify the Junior Agent ratably in accordance with their respective Junior Notes (or, prior to the issuance of the Junior Notes, their respective Junior Commitments), in each case for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against such Agent (including by any Purchaser) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Operative Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or the enforcement of any of the terms hereof or thereof or of any such other documents, provided that no Purchaser shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of such Agent.

(f) Non Reliance on Agents and Other Purchasers. Each Purchaser agrees that it has, independently and without reliance on either Agent or any other Purchaser, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Owner and its own decision to enter into this Agreement and the other Operative Documents to which it is or is to be a party and that it will, independently and without reliance upon either Agent or any other Purchaser, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement. Neither Agent shall be required to keep itself informed as to the performance or observance by the Owner of this Agreement or any of the other Operative Documents or any other document referred to or provided for herein or therein or to inspect the

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properties or books of the Owner. Except for notices, reports and other documents and information expressly required to be furnished to the Purchasers by such Agent hereunder, neither Agent shall have any duty or responsibility to provide any Purchaser with any credit or other information concerning the affairs, financial condition or business of Owner (or any of its affiliates) that may come into the possession of such Agent or any of its affiliates.

(g) Failure to Act. Except for action expressly required of an Agent hereunder and under the other Operative Documents, such Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Purchasers of their indemnification obligations under Section 15(e) hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

(h) Resignation or Removal of Agent. Subject to the appointment and acceptance of a successor Agent as provided below, either Agent may resign at any time by giving notice thereof to the Purchasers and the Owner. Upon any such resignation of the Senior Agent, the Majority Senior Holders shall have the right to appoint a successor Senior Agent which shall be, so long as no Event of Default has occurred and is continuing, reasonably acceptable to the Lessee, and upon any such resignation of the Junior Agent, the Majority Junior Holders shall have the right to appoint a successor Junior Agent which shall be, so long as no Event of Default has occurred and is continuing, reasonably acceptable to the Lessee. If no successor Agent shall have been so appointed by the Majority Senior Holders or the Majority Junior Holders, as the case may be, and shall have accepted such appointment within 30 days after the retiring Agent’s giving of notice of resignation, then the retiring Agent may, on behalf of the Purchasers, appoint a successor Agent. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After the retiring Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. The Owner consents to any change in the identity of such Agent on the International Registry as a result of the appointment of a successor Agent pursuant to this Section 15(h), and if required by the International Registry to reflect such change, will provide its further consent thereto.

(i) Consents under Operative Documents. Subject to Section 4.01 of the Mortgage, no Agent may, without the prior consent of the Controlling Creditor, consent to any modification, supplement, waiver, amendment or take any other action under any of the Operative Documents, or otherwise grant its consent, approval or waiver of any matter hereunder or under the Mortgage, provided that, without the prior consent of each Purchaser, such Agent shall not (except as provided herein or in the Operative Documents) release any collateral or otherwise terminate any Lien under any Operative Document providing for collateral security, or agree to additional obligations being secured by such collateral security (unless the Lien for such additional obligations shall be junior to the Lien in favor of the other obligations secured by such Operative Document), except that no such consent shall be required, and such Agent is hereby authorized, to release any Lien covering property which is the subject of a disposition of property permitted hereunder or under any other Document or to which the Controlling Creditor has consented.

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(j) The Security Trustee.

(i) Appointment, Powers and Immunities. Each Purchaser hereby irrevocably appoints and authorizes Bank of Utah, and Bank of Utah hereby accepts such appointment, to act as its Security Trustee hereunder and under the other Operative Documents with such powers as are specifically delegated to the Security Trustee by the terms of this Agreement, of the other Operative Documents, together with such other powers as are reasonably incidental thereto. The Security Trustee (which term as used in this sentence and in Section 15(j)(v) and the first sentence of Section 15(j)(vi) shall include reference to its affiliates and its own and its affiliates’ officers, directors, employees and agents): (a) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Operative Documents, and shall not by reason of this Agreement or any other Operative Document be a trustee for any Purchaser; (b) shall not be responsible to the Purchasers for any recitals, statements, representations or warranties contained in this Agreement, in any other Operative Document, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement, any other Operative Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, any Note, any other Operative Document or any other document referred to or provided for herein or therein or for any failure by the Owner or any other Person to perform any of its obligations hereunder or thereunder; (c) shall not be required to initiate or conduct any litigation or collection proceedings hereunder or under any other Operative Document; and (d) shall not be responsible for any action taken or omitted to be taken by it hereunder, under any other Operative Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct. The Security Trustee may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. The Security Trustee may deem and treat the payee of any Note as the Holder thereof for all purposes hereof unless and until a notice of the assignment or transfer thereof shall have been filed, together with the consent of the Lessee to such assignment or transfer (to the extent provided in Section 14(c)).

(ii) Reliance by Security Trustee. The Security Trustee shall be entitled to rely upon any certification, notice or other communication (including, without limitation, any thereof by telephone, telecopy or e-mail) reasonably believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Security Trustee. As to any matters not expressly provided for by this Agreement or any other Operative Document, the Security Trustee shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Controlling Creditor or, if provided herein, in accordance with the instructions given by the Controlling Creditor or all of the Purchasers as is required in such circumstance, and such instructions of such Purchasers and any action taken or failure to act pursuant thereto shall be binding on all of the Purchasers.

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(iii) Defaults. The Security Trustee shall not be deemed to have knowledge or notice of the occurrence of a Default or Event of Default (other than the nonpayment of principal of or interest on Notes) unless the Security Trustee has received notice from a Purchaser or the Owner specifying such Default or Event of Default and stating that such notice is a “Notice of Default.” In the event that the Security Trustee receive such a notice of the occurrence of a Default or Event of Default, the Security Trustee shall give prompt notice thereof to the Purchasers (and shall give each Purchaser prompt notice of each such nonpayment) and, if such Notice of Default is received from a Purchaser, to the Owner and the Lessee, provided that the failure to do so shall not affect the obligations of any Obligor under any Operative Document. The Security Trustee shall (subject to Section 15(j)(vi)) take such action with respect to such Default or Event of Default as shall be directed by the Controlling Creditor, provided that, unless and until the Security Trustee shall have received such directions, the Security Trustee may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interest of the Purchasers except to the extent that this Agreement expressly requires that such action be taken, or not be taken, only with the consent or upon the authorization of the Controlling Creditor, or all of the Purchasers.

(iv) Indemnification. The Purchasers agree to indemnify the Security Trustee ratably in accordance with their respective Commitments, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Security Trustee (including by any Purchaser) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement, any other Operative Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or the enforcement of any of the terms hereof or thereof or of any such other documents, provided that no Purchaser shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified.

(v) Non-Reliance on Other Purchasers. Each Purchaser agrees that it has, independently and without reliance on the Security Trustee or any other Purchaser, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Obligors and each of their Subsidiaries and decision to enter into this Agreement and that it will, independently and without reliance upon the Security Trustee or any other Purchaser, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement. The Security Trustee shall not be required to keep itself informed as to the performance or observance by any Obligor of this Agreement, any of the other Operative Documents or any other document referred to or provided for herein or therein or to inspect the Properties or books of the Owner or any of its Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Purchasers by the Security Trustee hereunder, the Security Trustee shall not have any duty or responsibility to provide any Purchaser with any credit or other information concerning the affairs, financial condition or

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business of the Owner or any of its Subsidiaries (or any of their affiliates) that may come into the possession of the Security Trustee or any of its affiliates.

(vi) Failure to Act. Except for action expressly required of the Security Trustee hereunder and under the other Operative Documents, the Security Trustee shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Purchasers of their indemnification obligations under Section 15(j)(iv) hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

(vii) Resignation or Removal of Security Trustee. Subject to the appointment and acceptance of a successor Security Trustee as provided below, (i) the Security Trustee may resign at any time and (ii) the Controlling Creditor may remove the Security Trustee, in each case by giving notice thereof to the Purchasers and the Owner. Upon any such resignation or removal, the Controlling Creditor shall have the right to appoint a successor Security Trustee, provided that, so long as no Event of Default has occurred and is continuing, such successor Security Trustee is reasonably satisfactory to the Lessee. If no successor Security Trustee shall have been so appointed by the Controlling Creditor and shall have accepted such appointment within 30 days after the retiring Security Trustee’s giving of notice of resignation, then, in the case of a resigning Security Trustee, the retiring Security Trustee may, on behalf of the Purchasers, appoint a successor Security Trustee, provided that such successor Security Trustee is reasonably satisfactory to the Owner. Upon the acceptance of any appointment as Security Trustee hereunder by a successor Security Trustee, such successor Security Trustee shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Security Trustee, and the retiring or removed Security Trustee shall be discharged from its duties and obligations hereunder. After any Security Trustee’s resignation or removal hereunder as Security Trustee, the provisions of this Section 15(j) shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Security Trustee.

(viii) Representations and Warranties of the Security Trustee. The Security Trustee represents and warrants on each Issuance Date as follows:

(1) it is a bank duly organized and validly existing under the laws of the State of Utah, and it has all requisite power and authority to enter into and perform its obligations under this Agreement and each other Operative Document to which it is a party or will become a party and to carry out the transactions contemplated hereby and thereby;

(2) neither the execution and delivery of this Agreement and each other Operative Document executed or to be executed by it, the performance of its obligations hereunder or thereunder, nor its consummation of the transactions contemplated hereby or thereby will conflict with or result in any breach of, or constitute a default under, or result in the creation or imposition of any Lien upon the Aircraft or any other part of the Collateral under the laws of the

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State of Utah or federal laws of the United States governing its banking or trust powers not related to the ownership, operation or maintenance of the Aircraft, its memorandum and articles of association or any indenture, charge, debenture, mortgage, deed or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject;

(3) the execution, delivery and performance of this Agreement and each other Operative Document executed or to be executed by it have been duly authorized by all necessary corporate action of it. Assuming due authorization, execution and delivery by the other parties hereto and thereto, this Agreement and each other Operative Document executed or to be executed by it constitutes, or upon execution and delivery will constitute, its legal, valid and binding obligation, enforceable against it in accordance with its terms;

(4) the execution and delivery by it of this Agreement and each other Operative Document executed or to be executed by it and the performance of its obligations hereunder and thereunder do not require any approval or consent of any stockholder, trustee or holder of any of its indebtedness or other obligations, other than such approvals or consents as have heretofore been obtained; and

(5) there are no pending or, to its knowledge, threatened suits or proceedings against it or affecting it or its properties that, if determined adversely, would materially adversely affect its ability to perform its obligations under this Agreement and each other Operative Document executed or to be executed by it.

(ix) Lease Obligations. The Security Trustee agrees to comply with the obligations under the Lease stated to be for its account.

(k) Representations and Warranties of the Senior Purchasers. Each original Senior Purchaser (and each investment advisor signing on behalf of such original Senior Purchaser) and each other Senior Purchaser (and each investment advisor signing on behalf of each other Senior Purchaser) from time to time, by its acceptance of a Note, represents and warrants to the Owner and the Security Trustee that:

(i) This Agreement has been duly authorized, executed and delivered by a person who is duly authorized to execute and deliver this Agreement on its behalf. Each Senior Purchaser (and each investment advisor signing on behalf of a Senior Purchaser) when acting on behalf of its accounts, has been duly authorized and empowered by its accounts to enter into and perform its obligations under this Agreement.

(ii) It is both a QIB and an “accredited investor” within the meaning of Regulation D under the Securities Act.

(iii) It is not purchasing the Notes as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper,

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magazine, website or similar media or broadcast over television, radio or internet, or presented at any seminar or general meeting, or any solicitation by any person not previously known to it.

(iv) It acknowledges that (i) the Notes have not been registered under the Securities Act or any other applicable securities law and are being offered for sale to such Senior Purchasers in reliance upon the private offering exemption contained in Section 4(b) of the Securities Act and Rule 506 of Regulation D thereunder and (ii) the Owner does not have an intention or obligation to register the Notes. No person may offer, sell or otherwise transfer the Notes except in compliance with the registration requirements of the Securities Act or any other applicable securities law, pursuant to an exemption therefrom, or in a transaction not subject thereto, and in each case in compliance with the conditions for transfer set forth in Section 14(c) hereof.

(v) It (and for each account for which it is acquiring the Notes) has carefully reviewed any disclosure documents used in the offering of the Notes and has been furnished with all other materials that it considers relevant to an investment in the Notes, has had a full opportunity to ask questions of and receive answers from the Owner or any person or persons acting on behalf of the Owner concerning the terms and conditions of an investment in the Notes and no statement which is contrary to the disclosure documents has been made or given to it by or on behalf of the Owner; and that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any other person, except for the statements, representations and warranties contained in this Agreement.

(vi) It acknowledges that the Notes will bear a legend to the following effect unless otherwise agreed by the Owner and the Holder thereof:

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF REPRESENTS THAT IT IS AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) or (7) of REGULATION D UNDER THE SECURITIES ACT.

(vii) It acknowledges that the preceding restrictions apply to holders of beneficial interests in the Notes as well as to Holders of the Notes.

(viii) It acknowledges that the Security Trustee will not be required to accept for registration or transfer any Notes acquired by it, except upon presentation of

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[Note Purchase Agreement [Virgin/NPA 2015]]

evidence satisfactory to the Owner and the Security Trustee that the restrictions set forth in Section 14(c) hereof been complied with and it agrees that it will give to each person to whom it transfers Notes notice of any restrictions on transfers of such Notes.

(ix) It acknowledges that the Owner, the other Obligors, the Security Trustee and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements in this Section 15(k) and agree that if any of the acknowledgements, representations and agreements in this Section 15(k) deemed to have been made by its purchase of the Notes are no longer accurate, it shall promptly notify the Owner and the Security Trustee. If it is acquiring the Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and it has full power to make the acknowledgements, representations and agreements in this Section 15(k) on behalf of each account and that each such investor account is eligible to purchase the Notes.

SECTION 16 Miscellaneous.

(a) Section 1110 Compliance. Notwithstanding any provision herein or elsewhere contained to the contrary, it is understood and agreed among the parties hereto that the transactions contemplated by this Agreement, and the other Operative Documents are expressly intended to be, shall be and should be construed so as to be, entitled to the full benefits of 11 U.S.C. Section 1110, as amended from time to time, and any successor provision thereto.

(b) Survival of Agreements. The representations, warranties, indemnities and agreements of the Owner, the Security Trustee and each Purchaser provided for in this Agreement and each party’s obligations under any and all thereof, shall survive the expiration or other termination of this Agreement or any other Operative Document, except as expressly provided herein or therein.

(c) Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified, except by an instrument in writing signed by the party or parties thereto.

(d) No Liability of Purchasers. No Purchaser shall have any obligation or duty to the Owner, or to other Persons with respect to the transactions contemplated hereby except those obligations or duties of such Purchaser expressly set forth in this Agreement and the other Operative Documents and no Purchaser shall be liable for performance by any other party hereto of such other party’s obligations or duties hereunder. Without limitation of the generality of the foregoing, under no circumstances whatsoever shall any Purchaser be liable to the Owner for any action or inaction on the part of the Security Trustee in connection with the transactions contemplated herein, whether or not such action or inaction is caused by willful misconduct or gross negligence of the Security Trustee.

(e) Approvals by Purchasers. Any reference herein to an approval, consent or waiver to be given by the Purchasers shall be deemed hereunder to be an approval, consent or

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waiver, as the case may be, if the Controlling Creditor approves, consents or waives, as the case may be.

(f) Non-Disclosure of Purchase Agreement. The Purchasers agree that they shall not disclose to any person (other than its legal counsel) the terms of the Purchase Agreement or the Consent and Agreement, except (i) as required by applicable law or governmental regulations, (ii) to their respective auditors, counsel or bank examiners, (iii) in connection with any legal proceedings arising from the Consent and Agreement or the Purchase Agreement, or (iv) with the prior written consent of the Manufacturer, such consent not to be unreasonably withheld or delayed. This paragraph is for the benefit of the Manufacturer who is a third party beneficiary of this Section 16(f).

(g) Confidentiality. Each of the Purchasers and the Security Trustee covenants and agrees to keep confidential, and not to disclose to any third parties, all non-public information received by it from the Owner pursuant to the Operative Documents, including any insurance report received pursuant to Section 10 of the Lease, provided that such information may be made available:

(1) to prospective and permitted transferees of a Purchaser’s Notes or the Security Trustee’s respective interest in an Aircraft, who agree to hold such information confidential,

(2) to any Holder’s counsel or independent certified public accountants, independent insurance advisors, any Rating Agency from whom a rating for the Notes is sought or is outstanding or other agents who agree to hold such information confidential,

(3) as may be required by applicable law or by any statute, court or administrative order or decree or governmental ruling or regulation (or, in the case of any Holder, to any bank examiner or other regulatory personnel) or

(4) as may be necessary for purposes of enforcement of any Operative Document.

Notwithstanding the foregoing, the legal obligations of confidentiality hereunder do not extend to the U.S. federal or state tax structure or the U.S. federal or state tax treatment of this transaction. If any U.S. federal or state tax analyses or materials are provided to any party, such party is free to disclose any such analyses or materials without limitation.

(h) Quiet Enjoyment. The Security Trustee, each Agent and each Purchaser each agrees that neither it nor any Person claiming by, through or under it shall take or cause to be taken any action in violation of the Lessee’s or any Permitted Sublessee’s right to possession, use and quiet enjoyment of each Aircraft so long as no Event of Default shall have occurred and be continuing under the Lease.

*        *        *

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[Note Purchase Agreement [Virgin/NPA 2015]]

IN WITNESS WHEREOF, the parties hereto have caused this Note Purchase Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

VX 2015 LLC, as Owner By VX 2015 TRUST, its Manager, By Delaware Trust Company, not in its individual capacity but solely as Trustee
By:	/s/ Alan R. Halpern
Name:	Alan R. Halpern
Title:	Vice President
BANK OF UTAH, as Security Trustee
By:	/s/ Arge Feotis
Its:	Arge Feotis – Asst. Vice President
NEW YORK LIFE INSURANCE COMPANY, as a Senior Purchaser
By:	/s/ Edward J. Fitzgerald
Its:	Edward J. Fitzgerald – Vice President
By:
Its:

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NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION, as a Senior Purchaser By: NYL Investors LLC, its Investment Manager
By	/s/ Edward J. Fitzgerald
Name:	Edward J. Fitzgerald
Title:	Managing Director
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT (BOLI 30-C), as a Senior Purchaser By: NYL Investors LLC, its Investment Manager
By:	/s/ Edward J. Fitzgerald
Name:	Edward J. Fitzgerald
Title:	Managing Director
NEW YORK LIFE INSURANCE COMPANY, as Senior Agent
By:	/s/ Edward J. Fitzgerald
Its:	Edward J. Fitzgerald – Vice President
By:
Its:
INVESTEC BANK PLC, as a Purchaser
By:	/s/ Oliver Tagg
Its:	Oliver Tagg – Authorised Signatory
By:	/s/ Celia Britt
Its:	Celia Britt – Authorised Signatory

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INVESTEC BANK PLC, as Junior Agent
By:	/s/ Oliver Tagg
Its:	Oliver Tagg – Authorised Signatory
By:	/s/ Celia Britt
Its:	Celia Britt – Authorised Signatory

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[Note Purchase Agreement [Virgin/NPA 2015]]

APPENDIX A

DEFINITIONS AND RULES OF USAGE

(a) Unless a contrary indication appears, a reference in this Agreement to:

(i) the “agreed form” of any Operative Document means the form of such Operative Document which on the date hereof has been agreed by the Lessee and the Security Trustee (acting on the instructions of the Purchasers);

(ii) any “applicable law” means (a) applicable laws, statutes, decrees, decree laws, acts, codes, regulations, legislation, treaties, conventions and similar instruments and, in respect of any of the foregoing, unless the context otherwise requires, any instrument passed in substitution therefor or for the purposes of consolidation thereof with any other instrument or instruments, in each case, unless the context otherwise requires, as amended, modified, varied or supplemented from time to time, (b) applicable final judgments, orders, determinations or awards of any court from which there is no right of appeal or if there is a right of appeal such appeal is not prosecuted within the allowable time and (c) applicable orders, guidelines, notices, guidance, rules and regulations of any state or government or any government entity, in each case having the force of law;

(iii) any person includes its and any subsequent successors in title, permitted assigns and permitted transferees;

(iv) “assets” includes present and future properties, revenues and rights of every description;

(v) “indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

(vi) an “Operative Document” or any other agreement or instrument is a reference to that Operative Document or other agreement or instrument as amended, supplemented or novated in accordance with the terms thereof and of this Agreement or any other Operative Document, together with all exhibits, schedules and other attachments thereto;

(vii) a “regulation” includes any regulation, rule or official directive (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organization;

(viii) a reference to a “Schedule” is a reference to such Schedule as it may be amended from time to time in accordance herewith;

(ix) unless the context shall otherwise require, a provision of law is a reference to that provision as amended or reenacted; and

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(x) a time of day is, unless stated otherwise, a reference to New York time.

(b) Section and Schedule headings are for ease of reference only.

(c) Unless a contrary indication appears, a term used in any other Operative Document or in any notice given under or in connection with any Operative Document has the same meaning in that Operative Document or notice as in this Agreement.

DEFINED TERMS

“Additional Insured(s)” means the Lessor, the Lessor Parent, DTC, the Security Trustee and the Holders.

“Affected Person” means, (i) the Owner, (ii) any subsidiary of the Owner, (iii) any Affiliate of the Owner (other than any Person that is an Affiliate of the Owner solely by reason of its ownership of shares of the Owner), or (iv) any officer, director, trustee or agent of the Owner or such subsidiary or such Affiliate that will act in any capacity with respect to this Agreement.

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or under common control with, such Person. The term “control” means the possession, directly or indirectly of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agent” or “Agents” means either or both, as the context may require, of the Senior Agent and the Junior Agent.

“Aircraft” means the Airframe together with the two Engines referenced in a Mortgage Supplement delivered in connection with a Designated Aircraft, including buyer furnished equipment, whether or not such Engines are installed on the Airframe or any other airframe, and, where the context permits, all logs, manuals and data and inspection, modification and overhaul records required to be maintained with respect to the foregoing property.

“Aircraft Related Agreement” means, for any Aircraft, its Bills of Sale, Purchase Agreement and Purchase Agreement Assignment.

“Airframe” means: (i) the Airbus A320-200 aircraft (excluding Engines or engines from time-to-time installed thereon) specified by United States Registration Number and Manufacturer’s Serial Number in a Mortgage Supplement; (ii) any and all related Parts; and (iii) any Replacement Airframe which may from time to time be substituted for the Airframe then subject to the Mortgage pursuant to Section 9(b) of the Lease.

“Airframe Warranties Agreement” means each agreement dated a Delivery Date, between, inter alios, the Manufacturer, the Lessee and the Security Trustee in respect of the airframe warranties associated with the Aircraft delivered on such date.

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“Allocated To” means, with reference to any Aircraft, the portion of the Notes relating to such Aircraft which shall be designated as a specific “Series”, being the outstanding principal amount of the related issuance made with respect to such Aircraft.

“AML Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Purchaser, the Owner or any subsidiary or Affiliate of the Owner from time to time concerning or relating to anti-money laundering.

“Anti-Corruption Law” means all laws, rules, and regulations of any jurisdiction applicable to the Owner or any subsidiary or Affiliate of the Owner from time to time concerning or relating to bribery or corruption.

“Anti-Terrorism Law” means, with respect to any Person, any applicable law, rule or regulation related to financing terrorism including (a) the Patriot Act, (b) the Currency and Foreign Transactions Reporting Act (31 U.S.C. §§ 5311-5330) (also known as the “Bank Secrecy Act”), (c) the Trading With the Enemy Act (50 U.S.C. § 1 et seq.), the International Economic Emergency Powers Act (15 U.S.C. § 1701 et seq.) and (d) Executive Order 13224 (effective September 24, 2001).

“Applicable Margin”, in respect of the Notes for any Aircraft, has the meaning set forth in Section 1 of the Note Purchase Agreement.

“Applicable Rate” means, for any Interest Period with respect to any Note, a rate per annum equal to (i) in the case of a Floating Rate Note, the relevant Floating Rate for such Interest Period and (ii) in the case of a Fixed Rate Note, the relevant Fixed Rate for such Interest Period.

“Assigned Warranties” means the warranties referenced in the Airframe Warranties Agreement and the Engine Consent.

“Assignment and Assumption Agreement” means an agreement substantially in the form of Exhibit B to the Note Purchase Agreement.

“Basel II” means the agreements on capital requirements, a leverage ratio and liquidity standards contained in, or methods of calculating capital adequacy pursuant to, “Basel II: International Convergence of Capital Measurement and Capital Standards: a Revised Framework—Comprehensive Version” published by the Basel Committee on Banking Supervision in June 2006, as amended, supplemented or restated (other than by Basel III), or any implementation, adoption (whether voluntary or compulsory) thereof, whether by an EC Directive or the FSA Integrated Prudential Sourcebook or any other law or regulation.

“Basel III” means the agreements on capital requirements, a leverage ratio and liquidity standards contained in, or methods of calculating capital adequacy pursuant to, “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the

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Basel Committee on Banking Supervision on 16 December 2010, each as amended, supplemented or restated, or any implementation, adoption (whether voluntary or compulsory) thereof, whether by an EC Directive or the FSA Integrated Prudential Sourcebook or any other law or regulation.

“Basic Rent” means, in respect of an Aircraft, the rent payable under Section 3(b) of the Lease.

“Benchmark Index Rate Adjustment” means the difference between the Closing Benchmark Index Rate and the Initial Benchmark Index Rate.

“Bills of Sale” means, for any Aircraft, the FAA Bill of Sale and the Warranty Bill of Sale in favor of Owner in respect of such Aircraft.

“Break Amount” means, as of any date of determination and for the Junior Notes, the amount, if any, equal to the sum of (i) LIBOR Break Amount and (ii) Swap Breakage Loss.

“Business Day” means any day other than a Saturday or Sunday or a day on which commercial banks are required or authorized to close in New York, New York and, if such day relates to (i) the giving of notices or quotes in connection with the LIBOR, the city and state in which the Payment Office is located, New York, New York and London, England or (ii) the borrowing of any Note or payment or prepayment of principal of or interest on the Notes, the city and state in which the Payment Office is located, New York, New York and London, England.

“Cape Town Convention” means the official English language texts of the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment which were signed in Cape Town, South Africa on November 16, 2001.

“Certificate Register” has the meaning specified in Section 14(d) of the Note Purchase Agreement.

“Change in Law” means the occurrence, after the date of the Note Purchase Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Body or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, pursuant to Basel II shall not be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

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“Civil Reserve Air Fleet Program” or “CRAF” means the Civil Reserve Air Fleet Program administered by the United States Government or any substantially similar program.

“Class” means, with respect to any Note, a designation of whether such Note is a Senior Note or Junior Note.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

“Collections” means, in respect of an Aircraft or the Lease, the “Collections” as defined in the Granting Clause to the Mortgage, but in all cases excluding Excluded Payments.

“Commitment” has the meaning specified in Section 2(a) of the Note Purchase Agreement.

“Consent and Agreement” means the Manufacturer Consent and Agreement [Virgin/NPA 2015], dated as of the Delivery Date, of Airbus S.A.S. in respect of the Aircraft.

“Controlling Creditor” has the meaning specified in the Intercreditor Agreement.

“Default” means any event which with the giving of notice or the lapse of time or both if not timely cured or remedied would become a Lease Event of Default pursuant to Section 13 of the Lease.

“Default Event” means a Lease Event of Default or an Event of Default.

“Delivery Date” means, for any Aircraft, the date of the initial Mortgage Supplement for such Aircraft.

“Dollars”, “Dollar” and “$” means the lawful currency of the United States of America.

“DTC” means Delaware Trust Company, in its individual capacity.

“Effective Date” means the date the Note Purchase Agreement becomes effective as provided in Section 4(a) of the Note Purchase Agreement.

“Engine” means (i) each of the two CFM International Inc. model CFM56-5B4 engines listed by Manufacturer’s Serial Numbers in the initial Mortgage Supplement for each Aircraft, whether or not from time to time installed on an Airframe or any other airframe; (ii) any Replacement Engine which may from time to time be substituted for any Engine pursuant to the terms of the Lease; and (iii) in each case, any and all related Parts.

“Engine Agreement” means General Terms Agreement CFM-04-0012B, dated June 14, 2004 between the Lessee and Engine Manufacturer.

“Engine Consent and Agreement” means the Engine Consent and Agreement [Virgin/NPA 2015] dated as of the Delivery Date of the Engine Manufacturer in respect of the Aircraft.

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“Engine Manufacturer” means CFM International Inc.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Event of Default” has the meaning specified in Section 10 of the Note Purchase Agreement, which, for ease of reference is also contained below:

“SECTION 10 Events of Default. If one or more of the following events (herein called “Events of Default”) shall occur and be continuing:

(i) the Owner shall default in the payment of any interest on any Note on the Payment Date thereof; or

(ii) the outstanding principal amount of the Notes shall not have been paid in full by Final Legal Maturity;

THEREUPON: (A) the Security Trustee may, by notice to the Owner, terminate the Commitments and they shall thereupon terminate, (B) the Security Trustee may and, upon request of the Controlling Creditor shall, by notice to the Owner demand payment of the Termination Sum, (C) declare the principal amount then outstanding of, and the accrued interest on, the Notes and all other amounts payable by the Owner and the Lessee (under such Operative Document to which each is a party and without duplication) hereunder and under the Notes to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Owner and (D) exercise any or all of the remedies set forth in Article V to the Mortgage.

For the avoidance of doubt, the failure to pay interest on any Note that converts to principal as provided in Section 3.2(d) hereof shall be deemed not to be a default in payment of interest for the purposes of clause (i) of this Section 10.”

“Event of Loss” means, with respect to any Aircraft or any Airframe or any Engine, any of the following events with respect to such property:

(a) the loss of such property or of the use thereof due to destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use for any reason whatsoever;

(b) any damage to such property that results in an insurance settlement with respect to such property on the basis of a total loss or a constructive total loss;

(c) the requisition for use or hire of such property by any government (other than the government of the country of registry of such Aircraft) that shall have resulted in the loss of possession of such property by the Lessee (or any Permitted Sublessee) for a period in excess of nine consecutive months;

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(d) requisition of title or other compulsory acquisition, capture, seizure, deprivation, confiscation or detention for any reason of such Aircraft or any Airframe or any Engine associated with such Aircraft by any government, whether de facto or de jure, but shall exclude requisition for use or hire not involving requisition of title;

(e) as a result of any law, rule or regulation, order or other action by the FAA or other government of the country of registry, the use of such Aircraft or Airframe in the normal business of air transportation shall have been prohibited by virtue of a condition affecting all aircraft of the same type for a period of 12 consecutive months, unless the Lessee (or Permitted Sublessee), prior to the expiration of such 12 month period, shall be diligently carrying forward all steps that are necessary or desirable to permit the normal use of such Aircraft or Airframe or, in any event, if such use shall have been prohibited for a period of 18 consecutive months; and

(f) with respect to an Engine only, any divestiture of title to or interest in such Engine or any event with respect to such Engine that is deemed to be an Event of Loss with respect to such Engine pursuant to Section 7(c) of the Lease.

An Event of Loss with respect to an Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe related to such Aircraft.

“Excluded Payments” means, with respect to any Aircraft, the Lease and the related Aircraft Related Agreements, (i) indemnity or similar payments (whether or not payable as supplemental rent) paid or payable by the Lessee under the Lease or Aircraft Related Agreements or related documents to the indemnitee or other payee entitled thereto pursuant to the Lease or Aircraft Related Agreements, (ii) proceeds of public liability insurance in respect of such Aircraft payable as a result of insurance claims made, or losses suffered, by the indemnitee or payee entitled thereto, (iii) proceeds of insurance maintained with respect to such Aircraft by the Lessee or any Affiliate of the Lessee and not required under the Lease or under the Note Purchase Agreement or any other Operative Document, (iv) any interest paid or payable on any amounts described in clauses (i) through (iii) of this definition, and (v) the proceeds from the enforcement by the Owner or other indemnitee or payee of the payment of any amount described in clauses (i) through (iv) of this definition, in each case however, only to the extent such amount is in respect of a claim personal to the applicable Person and is not necessary to restore the value of the Collateral.

“Excluded Taxes” has the meaning specified in Schedule III to the Note Purchase Agreement.

“Expense” or “Expenses” means any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, out of pocket costs, expenses and disbursements (including reasonable legal fees and expenses) of whatever kind and nature but excluding internal costs and expenses such as salaries, any amounts that would be included in Break Amount, and overhead of whatsoever kind and nature.

“FAA Bill of Sale” means a bill of sale on AC Form 8050-2 or such other form as may be approved by the FAA in favor of the Owner from the Manufacturer in respect of an Aircraft.

“FAA Counsel” means McAfee & Taft, A Professional Corporation.

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“FATCA” has the meaning specified in Schedule III to the Note Purchase Agreement.

“FCPA” means the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq.

“Federal Aviation Act” means subtitle VII of Title 49 of the United States Code, or any successor provision.

“Federal Aviation Administration” and “FAA” mean the United States Federal Aviation Administration and any successor agency or agencies thereto.

“FedWire” means the funds transfer system used to transfer reserve balances for immediately available credit among the member banks of the United States Federal Reserve System.

“Fee Letter” means each of (i) in the case of New York Life, the letter agreement between the Lessee and New York Life, pursuant to which the Lessee has agreed to pay certain fees and (ii) in the case of Investec, the letter agreement between the Lessee and Investec, pursuant to which the Lessee has agreed to pay certain fees.

“Finance Parties” means, together, the Purchasers, each Agent and the Security Trustee (each, a “Finance Party”).

“Fixed Rate” means, if the Notes of any Class in respect of any Aircraft are to bear interest at a fixed rate, the fixed rate for such Notes determined in accordance with Section 3(b)(ii) of the Note Purchase Agreement (calculated on the basis of a year of 360 days consisting of 12 30-day months). The Fixed Rate for any Senior Note shall be the rate specified on Schedule I to the Mortgage Supplement for the applicable Aircraft and the Fixed Rate for any Junior Note shall be the rate specified on Schedule II to the Mortgage Supplement for the applicable Aircraft; provided that, in the case of any Special Junior Lender, the Fixed Rate applicable to its Junior Notes shall be reduced by 15 basis points for so long as it shall be a holder of such Junior Notes.

“Fixed Rate Note” means a Note evidenced by Notes which bear interest at a Fixed Rate.

“Floating Rate Note” means Junior Notes which bear interest at the Floating Rate. Each Junior Note shall be a Floating Rate Note unless the Owner shall have made an election to have such Note bear interest at a Fixed Rate in accordance with Section 3(b)(ii) of the Note Purchase Agreement.

“Foreign Air Carrier” means any air carrier which is not a U.S. Air Carrier and which performs maintenance, preventative maintenance and inspections for the Aircraft, the Airframe and/or any Engine or engine to standards which are approved by, or which are substantially equivalent to those required by, the Federal Aviation Administration, the Civil Aviation Authority of the United Kingdom, the Direction Generale de l’Aviation Civile of the French Republic, the Luftfahrt Bundesamt of the Federal Republic of Germany, the Nederlandse Luchtvaart Authoriteit of the Kingdom of the Netherlands, the Ministry of Transportation of Japan or the Federal Ministry of Transport of Canada (and any agency or instrumentality of the applicable government succeeding to the functions of any of the foregoing entities).

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“GAAP” means generally accepted accounting principles then in effect in the United States, consistently applied.

“Governmental Authority” means (a) any federal, state or similar government, and any body, board, department, commission, court, tribunal, authority, agency or other instrumentality of any such government or otherwise exercising any executive, legislative, judicial, administrative or regulatory functions of such government or (b) any other government entity having jurisdiction over any matter contemplated by the Operative Documents or relating to the observance or performance of the obligations of any of the parties to the Operative Documents.

“Hedging Transaction” means, for any Junior Purchaser of a Fixed Rate Note and in respect of the Notes of any Class for such Note, an interest rate swap transaction entered into by such Holder (on an actual or notional basis) with a Swap Counterparty in connection with such Fixed Rate Note on customary terms consistent with market practice (documented (or deemed documented)) by the Swap Form and a hedge confirmation incorporating the terms of this definition) where such Holder will (i) pay to such Swap Counterparty under such swap transaction on each Interest Payment Date for such Class following the Swap Effective Date, an amount equal to the interest scheduled to be paid to such Holder on such Notes calculated at a rate equal to the Fixed Rate for such Note minus the Applicable Margin for such Note (calculated on the basis of a year of 360 days and actual number of days elapsed) and (ii) receive from such Swap Counterparty on each such Interest Payment Date an amount equal to the amount of interest that would have accrued on such Notes during the Interest Period for such Class ending on such Interest Payment Date at LIBOR (flat) (subject, for the avoidance of doubt, to the 0% floor as provided in the definition of LIBOR) taking into account any stub periods on the first and/or last Interest Periods (for which stub periods the applicable floating rate for such period will be calculated using standard interpolation methodologies) for such Interest Period (calculated on the basis of a year of 360 days and actual number of days elapsed) and incorporating the methodologies described in the definition of “Swap Break Amount” associated with any termination of such swap transaction in whole or in part in association with any acceleration or prepayment of such Fixed Rate Note.

“Holder” means, at any time, any holder of any Senior Note or any Junior Note.

“Illegality Event” means the occurrence of any of the following events or circumstances:

(a) it becomes unlawful or contrary to any applicable law for any party to any of the Operative Documents to perform any of its material obligations under the Operative Documents and/or to continue as a party to any of the Operative Documents; or

(b) all or any material part of any Operative Document becomes void, illegal, invalid, unenforceable or of limited force and effect.

“Increased Cost Notice” has the meaning specified in Section 3(k) of the Note Purchase Agreement.

“Increased Costs” has the meaning specified in Section 3(k) of the Note Purchase Agreement.

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“Indemnitee” or “Indemnitees” means the Lessor, the Lessor Parent, DTC, the Security Trustee, the Holders, the Agents and each of their respective successors, permitted assigns, and directors, officers, and employees.

“Initial Rent” means, in respect of an Aircraft, an amount equal to the difference between the purchase price for such Aircraft and the sum of the pre-delivery payments made on account of such Aircraft and the aggregate Commitments of the Purchasers therefor.

“Intercreditor Agreement” means the Intercreditor Agreement [Virgin/NPA 2015], dated as of April 29, 2015, among the Owner, the Senior Purchasers, the Junior Purchasers, the Agents and the Security Trustee.

“Interest Payment Date” means, in respect of any Series of Notes, each of the four quarterly anniversary dates of the Issuance Date of the related Aircraft (or if there is no comparable day in any applicable month, the last day of such month); provided that, (i) in the case of a Floating Rate Note, if any such date shall not be a Business Day, then the relevant Interest Payment Date shall be the next succeeding Business Day unless by virtue of such extension such date would fall in the next succeeding calendar month, in which case the relevant Interest Payment Date shall be the next preceding Business Day and (ii) in the case of a Fixed Rate Note, there shall be no adjustment to period end dates by virtue of non-Business Days for the purpose of interest accruals. The Interest Payment Dates shall be the dates specified in the amortization schedule relating thereto attached to the Notes of the applicable Series (subject to modification by the above proviso).

“Interest Period” means (a) initially, the period commencing on the Issuance Date and ending on the first Interest Payment Date thereafter and (b) thereafter, each successive three-month (or other applicable) period commencing on the final day of the preceding Interest Period and ending on the next succeeding Interest Payment Date.

“international interest” is defined in the Cape Town Convention.

“International Registry” is defined in the Cape Town Convention.

“Investec” means Investec Bank plc.

“Issuance Date” has the meaning specified in Section 2(b)(i) of the Note Purchase Agreement.

“Junior Agent” has the meaning specified in the preamble to the Note Purchase Agreement.

“Junior Applicable Margin” has the meaning specified in Section 1 of the Note Purchase Agreement.

“Junior Note” means each Note issued by the Owner to the Junior Purchasers pursuant to Section 2(a)(i) of the Note Purchase Agreement and any such Note issued in exchange or replacement therefor pursuant to Section 14(d) or 14(e) of the Note Purchase Agreement.

APPENDIX A

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“Junior Purchasers” means Investec Bank plc, and each successor, permitted assignee or permitted transferee thereof as a Holder of a Junior Note.

“Lease” means the Aircraft Lease Agreement [Virgin/NPA 2015] dated as of April 29, 2015 between the Owner, as lessor, and Lessee.

“Lease Event of Default” is defined in Section 13 of the Lease.

“Lease Supplement” means, in respect of an Aircraft, the lease supplement relating to such Aircraft to be entered into between Owner and Lessee under the Lease dated the Drawdown Date for such Aircraft, substantially in the form of Exhibit I to the Lease

“Lender Lien” means any Lien which arises from acts or claims against a Purchaser not related to the transactions contemplated by the Operative Documents.

“Lessor” means VX 2015 LLC, a Delaware limited liability company.

“Lessor Parent” means VX 2015 Trust, a Delaware statutory trust.

“LIBOR” means, for any Interest Period for any Note, the rate per annum equal to:

(a) the Screen Rate for such Interest Period for such Note; or

(b) (i) if no such Screen Rate is available for Dollars or for such Interest Period, the rate for deposits of an amount comparable to the aggregate outstanding principal amount of such Note for such Interest Period in Dollars for that period determined to be the arithmetic mean of the rates offered at or about 11:00 a.m. London time on the relevant Quotation Date by at least two Reference Banks to prime banks in the London interbank market and (ii) if the rate specified in (b)(i) is not available, then the rate for deposits of an amount comparable to the aggregate outstanding principal amount of such Note for such Interest Period in Dollars for that period determined to be the arithmetic mean of the rates offered at or about 11:00 a.m. New York time on the relevant Quotation Date by at least two Reference Banks to prime banks in the New York interbank market; provided, that for any Interest Period having a duration of less than three months, LIBOR for such Interest Period shall be the interpolated LIBOR determined using the Screen Rate and standard interpolation methodologies by reference to the next higher and next lower available maturities (as determined by the Agent for such Note).

Notwithstanding the foregoing, LIBOR for any Interest Period shall not be less than 0% per annum.

“LIBOR Break Amount” means the amount, if any, required to compensate each Holder for any losses, costs or expenses (excluding loss of profit) which it may incur as the result of the prepayment (including any by virtue of an acceleration) (or the failure to make any such prepayment on the date irrevocably scheduled therefor) of any Junior Note held by it on a date other than the last day of the then current Interest Period therefor, including, without limitation, losses, costs or expenses incurred in connection with unwinding or liquidating any deposits or funding or financing arrangement with its funding sources, as reasonably determined by such

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Holder. Without limiting the effect of the preceding sentence, such compensation shall include an amount equal to the excess, if any, of (i) the amount of interest which otherwise would have accrued on the principal amount so prepaid (including any by virtue of an acceleration) from the date of such prepayment (including any by virtue of an acceleration) to the last day of such Interest Period (the “Break Period”) at the LIBOR therefor in excess of (ii) the interest component of the amount the affected Holder would have bid in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to the Break Period (as reasonably determined by such Holder). Each Holder shall provide a certificate to the Owner and the Lessee documenting its calculation of LIBOR Break Amount.

“Lien” means any mortgage, pledge, lien, claim, encumbrance, lease, security interest or other lien of any kind on property. “Lien” shall include any interest registered on the International Registry other than the Owner’s ownership interest registered on the International Registry as a contract of sale with respect to the Aircraft.

“Loan Documents” means the Operative Documents.

“Losses” shall mean and include all losses (including loss of profit), payments, damages, liabilities, claims, proceedings, actions, penalties, fines, Taxes, duties, fees, rates, levies, charges, demands, royalties or other sanctions of a monetary nature, fees, insurance premiums, calls, judgments, costs and expenses.

“Maintenance Program” means (a) the maintenance program for the Aircraft which is approved by the FAA or the regulatory authority having jurisdiction over the Aircraft and (b) in respect of the Engines, the OnPoint program provided by CFM and its affiliates.

“Majority Junior Holders” means, as of any date of the determination thereof, (i) if no amount in respect of any Junior Note is then outstanding, a Junior Purchaser or Junior Purchasers whose Junior Commitments aggregate more than 50% of the aggregate Junior Commitments of all Junior Purchasers, or (ii) otherwise, the Holders of more than 50% in aggregate outstanding principal amount of all Junior Notes. For all purposes of the foregoing definition, in determining as of any date the then aggregate outstanding principal amount of any Junior Notes or amount of the Junior Commitments, there shall be excluded all Junior Notes and Junior Commitments, if any, held by the Owner or any Affiliate thereof.

“Majority Senior Holders” means, as of any date of the determination thereof, (i) if no amount in respect of any Senior Note is then outstanding, a Senior Purchaser or Senior Purchasers whose Senior Commitments aggregate more than 50% of the aggregate Senior Commitments of all Senior Purchasers, or (ii) otherwise, the Holders of more than 50% in aggregate outstanding principal amount of all Senior Notes. For all purposes of the foregoing definition, in determining as of any date the then aggregate outstanding principal amount of any Senior Notes or amount of the Senior Commitments, there shall be excluded all Senior Notes and Senior Commitments, if any, held by the Owner or any Affiliate thereof.

“Manufacturer” means Airbus S.A.S., in its capacity as manufacturer of the Aircraft, and its successors and assigns.

APPENDIX A

Page 12

[Note Purchase Agreement [Virgin/NPA 2015]]

“Market Disruption Cost of Funds” has the meaning specified in Section 3(g)(ii) of the Note Purchase Agreement.

“Market Disruption Event” has the meaning specified in Section 3(g)(i) of the Note Purchase Agreement.

“Maturity Date” means, in respect of any Note, the date that all remaining principal and the Balloon payable in respect of such Note shall be due and payable.

“Mortgage” means the Mortgage and Security Agreement [Virgin/NPA 2015] dated as of April 29, 2015 between the Owner and the Security Trustee, including any Mortgage Supplement and each other supplement from time to time entered into pursuant hereto.

“Mortgage Estate” is defined in the Granting Clause to the Mortgage.

“Mortgage Supplement” means a supplement to the Mortgage substantially in the form of Exhibit A, which shall particularly describe the Airframe and Engines, or any Replacement Airframe or Replacement Engine, included in the property of the Owner covered by the Mortgage, or any other supplement hereto.

“Mortgagor” means the Owner.

“New York Life” means New York Life Insurance Company.

“Non-U.S. Person” means any Person other than (i) a citizen or resident of the United States of America (for purposes of this definition, the “United States”), (ii) a corporation, partnership, limited liability company or other entity created or organized under the laws of the United States or any political subdivision thereof or therein or (iii) an estate or trust that is subject to United States federal income taxation regardless of the source of its income.

“Note” means either or both, as the context may require, of a Senior Note or a Junior Note and “Notes” means all Notes, whether a Junior Note or Senior Note, issued pursuant to Section 2(a) of the Note Purchase Agreement and any such certificates issued in exchange or replacement therefor pursuant to Section 14(d) or 14(e) of the Note Purchase Agreement.

“Note Purchase Agreement” means that certain Note Purchase Agreement [Virgin/NPA 2015], dated as of the date hereof, among the Owner, the Purchasers, the Agents and the Security Trustee as such Note Purchase Agreement may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

“Note Value” means, as of any particular date of computation, in respect of an Aircraft, the amount required to prepay or repay the Notes of the Series relating to such Aircraft in full, together with interest thereon accrued to (but excluding) the date of such prepayment or repayment, Prepayment Fee and all other amounts of whatever description in respect of such Notes due to the Purchasers and the Security Trustee under the Note Purchase Agreement and the other Operative Documents as of such date.

“Obligations” is defined in the Granting Clause of the Mortgage.

APPENDIX A

Page 13

[Note Purchase Agreement [Virgin/NPA 2015]]

“Obligor” or “Obligors” means each of the Owner and the Lessee

“Obsolete Part Amount” has the meaning specified in Section 1 of the Note Purchase Agreement.

“Operative Documents” means the Note Purchase Agreement, the Mortgage, any Mortgage Supplement, each Note, the Pledge Agreement, the Fee Letter, the Intercreditor Agreement, the Consent and Agreement, the Engine Consent and Agreement and any amendments or supplements of any of the foregoing.

“Original Amount” means, with respect to a Series of Notes, the stated aggregate original principal amount of such Notes, which shall, on the Delivery Date for an Aircraft, equal the amount of the Notes issued in respect of such Aircraft. The Original Amount for the Notes for each Series shall be as specified in Section 1 of the Note Purchase Agreement.

“Other Aircraft” means each “Aircraft” under and as defined in the Other Note Purchase Agreement.

“Other Note Purchase Agreement” means the Facility Agreement [Virgin/Bank 2015], dated as of April 29, 2015, among the Lessee, as borrower, each Loan Participant party thereto, BNP Paribas, New York Branch, as senior agent, the Junior Agent and the Security Trustee.

“Other Junior Purchasers” means the “Junior Purchasers” as defined in the Other Note Purchase Agreement.

“Other Junior Notes” means each note purchased by the “Junior Purchasers” as defined in the Other Note Purchase Agreement.

“Other Junior Obligations” means, with respect to the Other Note Purchase Agreement, the principal and interest on the Other Junior Notes and all other amounts due and payable under the Other Note Purchase Agreement to the Other Junior Purchasers.

“Other Mortgage” means the Mortgage and Security Agreement [Virgin/Bank 2015], dated as of April 29, 2015, between the Owner, as mortgagor, and the Security Trustee, as mortgagee, in respect of the Other Aircraft.

“Owner” means the Lessor.

“Parts” means all appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than (i) complete Engines or engines or (ii) PCE), which are from time to time incorporated or installed in or attached to the Airframe or any Engine and all such items which are subsequently removed therefrom so long as the Lien of the Mortgage shall cover the same pursuant to the terms of the Mortgage.

“Past Due Rate” has the meaning specified in Section 1 of the Note Purchase Agreement.

APPENDIX A

Page 14

[Note Purchase Agreement [Virgin/NPA 2015]]

“Payment Office” means the Security Trustee’s office and bank account referred to in Schedule I to the Note Purchase Agreement.

“PCE” means passenger convenience equipment.

“Permitted Investments” means those investments described in Section 2(b)(iv) of the Note Purchase Agreement.

“Permitted Lien” means (i) the respective rights of each of the parties to the Operative Documents as provided in the Operative Documents, (ii) the rights of any Permitted Sublessee and other Persons under any subleases and other agreements and arrangements to the extent permitted by the terms of Sections 7 and 8 of the Lease, (iii) Liens for fees or charges of any airport or air navigation authority payable by Lessee or any Permitted Sublessee either not yet due or being contested in good faith by appropriate proceedings that do not involve any material likelihood of the sale, seizure, forfeiture or loss of any Aircraft, or any part thereof, title thereto, interest therein or use thereof and that do not involve any potential for criminal liability, (iv) Liens for Taxes payable by Lessee or any Permitted Sublessee either not yet due or being contested in good faith by appropriate proceedings that do not involve any material likelihood of the sale, seizure, forfeiture or loss of any Aircraft or any Part thereof, title thereto, interest therein or use thereof and that do not involve either any potential for criminal liability or the imposition of any Lien for which an adequate bond has not been posted by Lessee, and in the case of such proceedings so long as adequate reserves are maintained in respect of such Taxes in accordance with relevant generally accepted accounting principles, (v) materialmen’s, mechanics’, workmen’s, repairmen’s, employees’ or other like Liens on any Aircraft, any Airframe or any Engine arising in the ordinary course of business of Lessee or any Permitted Sublessee for amounts the payment of which is either not yet due or which are being contested in good faith by appropriate proceedings that do not involve any material likelihood of the sale, seizure, forfeiture or loss of any Aircraft or any Part thereof, title thereto, interest therein or use thereof and in the case of such proceedings so long as adequate reserves are maintained in respect of such amounts in accordance with relevant generally accepted accounting principles, (vi) Liens arising out of judgments or awards against Lessee with respect to which at the time an appeal or proceeding for review is being prosecuted in good faith by appropriate proceedings that do not involve any material likelihood of the sale, seizure, forfeiture or loss of any Aircraft or any Part thereof, title thereto, interest therein or use thereof and in the case of such proceedings so long as adequate reserves are maintained in respect of such amounts in accordance with relevant generally accepted accounting principles or a bond in accordance with the requirements of any applicable law, (vii) salvage or similar rights of insurers under insurance policies maintained pursuant to and in accordance with Section 10 of the Lease and (viii) any Lien created with the prior written consent of the Security Trustee (in its sole discretion).

“Permitted Sublessee” means (i) any United States air carrier as to which there is in force at the time of entering into such sublease or other transfer a certificate issued pursuant to 49 U.S.C. 44705 or any successor provisions that give like authority and that is not subject to bankruptcy proceedings; or (ii) any manufacturer of airframes or engines or any air carrier that is listed in Schedule 1 to the Lease; provided that for any entity described in clause (ii), (x) such entity is based in a country with which the United States maintains normal diplomatic relations,

APPENDIX A

Page 15

[Note Purchase Agreement [Virgin/NPA 2015]]

(y) such entity is not subject to bankruptcy proceedings and (z) such transfer of possession shall not deprive the Finance Parties of their perfected and enforceable security interest.

“Permitted Transferee” means (i) the Lessee or any of its Affiliates, (ii) any Purchaser or any Affiliate of a Purchaser, (iii) any reputable bank or other reputable financial institution that is regularly engaged in or established for the purposes of making, purchasing or investing in commercial loans or secured notes; provided that, without the prior written consent of the Lessee, no airline or Affiliate of an airline shall be a Permitted Transferee.

“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Plan” means an “employee benefit plan” (as such term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended) or any “plan” (as such term is defined in Section 4975(e)(1) of the Code) which has been established or maintained or contributed to by the Lessee or an Affiliate (other than a multiemployer plan within the meaning of Section 3(37) of ERISA) that, together with the Lessee, is treated as a single employer under Section 414(b), (c) or (m) of the Code.

“Pledge Agreement” means the Pledge Agreement dated on or before the first Issuance Date between the Trust and the Security Trustee with respect to the Pledged Interest, substantially in the form of Exhibit D to the Note Purchase Agreement as may from time to time be supplemented, modified or amended in accordance with the applicable provisions thereof.

“Pledged Interest” has the meaning assigned to such term in the Pledge Agreement.

“Purchase Agreement” means those provisions of the Airbus A320 Family Purchase Agreement between the Lessee and the Manufacturer dated as of December 29, 2010 relating to the purchase by the Lessee of, inter alia, the Aircraft, as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the foregoing relates to the Aircraft.

“Purchase Agreement Assignment” means, in respect of an Aircraft, a purchase agreement assignment dated as of the Delivery Date for such Aircraft, between Owner, as assignee, and Lessee, as assignor, pursuant to which Lessee assigns to Owner, inter alia, its right to purchase such Aircraft under the Purchase Agreement, in form and substance reasonably satisfactory to the Security Trustee.

“Purchaser” means each Holder initially a party to the Note Purchase Agreement, and its successors and assigns.

“Quotation Date” means, in relation to any Interest Period, two London business days before the first day of such Interest Period.

“Rating Agency” means Fitch, or such other nationally recognized credit rating agency as agreed by the Lessee and the Purchasers (in their sole discretion).

APPENDIX A

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[Note Purchase Agreement [Virgin/NPA 2015]]

“Ratings Requirement” means the obligation of the Owner to obtain a preliminary long term credit rating (at no particular required rating level) with respect to the Notes, from the Rating Agency with respect to the current payment of interest and ultimate payment of principal on Final Legal Maturity.

“Reference Banks” means, with respect to any Note, the principal London offices of BNP, Investec and JPMorgan Chase or such other bank or banks as may from time to time be designated by the Agent for such Note and as may be reasonably acceptable to the Lessee.

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

“Rent” means, collectively, Initial Rent, Basic Rent and Supplemental Rent.

“Replacement Engine” means (a) CFM International Inc. model CFM56-5B4 engines or (b) an improved engine of the same manufacturer, which, in the case of any engine described in clauses (a) or (b) hereof, shall be in compliance with the requirements of Section 7(l) or 9(b) of the Lease.

“Reserve Requirement” means, for any Note, the average maximum rate at which reserves (including, without limitation, any marginal, supplemental or emergency reserves) are required to be maintained during the Interest Period in respect of such Note under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding one billion Dollars against “Eurocurrency liabilities” (as such term is used in Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement includes any other reserves required to be maintained by such member banks by reason of any Change in Law with respect to (i) any category of liabilities that includes deposits by reference to which the LIBOR is to be determined or (ii) any category of extensions of credit or other assets that includes the Notes.

“Sanctioned Country” means, at any time, a country or territory which is, or whose government is, the subject or target of any Sanctions broadly restricting or prohibiting dealings with such country, territory or government (currently, Cuba, Iran, Burma, North Korea, Sudan, and Syria).

“Sanctioned Person” means, at any time, any Person with whom dealings are restricted or prohibited under Sanctions, including (a) any Person listed in any Sanctions-related list of designated Persons maintained by the United States (including by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or the U.S. Department of Commerce), the United Nations Security Council, the European Union or any of its member states, Her Majesty’s Treasury, Switzerland or any other relevant authority, (b) any Person located, organized or resident in, or any Governmental Entity or governmental instrumentality of, a Sanctioned Country or (c) any Person 25% or more directly or indirectly owned by, controlled by, or acting for the benefit or on behalf of, any Person described in clauses (a) or (b) hereof.

APPENDIX A

Page 17

[Note Purchase Agreement [Virgin/NPA 2015]]

“Sanctions” means economic or financial sanctions or trade embargoes or restrictive measures enacted, imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or the U.S. Department of Commerce (b) the United Nations Security Council; (c) the European Union or any of its member states; (d) Her Majesty’s Treasury; (e) Switzerland; or (f) any other relevant authority.

“Screen Rate” means, for any Interest Period with respect to any Note, the London Interbank Offered Rate administered by ICE Benchmark Administration Limited (or any other successor person which takes over the administration of that rate) for Dollar deposits for a three-month period (without rounding), which rate is displayed on the relevant Bloomberg page (or such other screen as may replace such Bloomberg page) at or about 11:00 a.m. (London time) on the Quotation Date for such Interest Period. If the agreed page is replaced or service ceases to be available, the Security Trustee may specify another page or service displaying the appropriate rate after consultation with the Purchasers and the Lessee.

“Secured Parties” means each Purchaser and the Security Trustee.

“Securities Act” means the Securities Act of 1933, as amended.

“Security Trustee” means Bank of Utah in its capacity as Security Trustee hereunder, and any successor thereto in such capacity.

“Security Trustee Lien” means any Lien which arises as a result of (A) claims against the Security Trustee not related to its interest in the Aircraft, (B) acts of the Security Trustee not permitted by, or failure of the Security Trustee to take any action required by, the Operative Documents to the extent such acts arise or such failure arises from or constitutes gross negligence or willful misconduct, (C) claims against the Security Trustee relating to Taxes or Expenses which are excluded from the indemnification provided by Section 8 of the Facility Agreement, or (D) claims against the Security Trustee arising out of the transfer by the Security Trustee of all or any portion of its interest in the Aircraft or the Operative Documents other than a transfer of the Aircraft pursuant to Article V of the Mortgage while an Event of Default has occurred and is continuing and prior to the time that the Security Trustee has received all amounts due pursuant to the Mortgage.

“Senior Agent” has the meaning specified in the preamble to the Note Purchase Agreement.

“Senior Applicable Margin” has the meaning specified in Section 1 of the Note Purchase Agreement.

“Senior Discharge Date” means the date on which all Senior Secured Obligations have been fully and indefeasibly discharged in full.

“Senior Note” means each Note issued by the Owner to the Senior Purchasers pursuant to Section 2(a)(i) of the Note Purchase Agreement and any such Senior Note issued in exchange or replacement therefor pursuant to Section 14(d) or 14(e) of the Note Purchase Agreement.

APPENDIX A

Page 18

[Note Purchase Agreement [Virgin/NPA 2015]]

“Senior Purchasers” means New York Life Insurance Company and each successor, permitted assignee or permitted transferee thereof as a Holder of a Senior Note.

“Senior Secured Obligations” means all obligations payable in respect of the Senior Notes under the Note Purchase Agreement.

“Senior Swap Rate” has the meaning specified in Section 1 of the Note Purchase Agreement.

“Series” has the meaning specified in Section 2(a)(iii) of the Note Purchase Agreement.

“Special Default” means a Default under any of Sections 13(a), 13(b), 13(f) and 13(g) of the Lease.

“Special Junior Lender” means a Junior Purchaser that has identified itself as such in the Assignment and Assumption Agreement; and for which the Lessee’s consent has been obtained if and as required under Section 14(c) of the Note Purchase Agreement.

“Specified Jurisdiction” means any of France, Germany, Ireland, Luxembourg, The Netherlands, the United Kingdom or the United States.

“Specified Transferee Jurisdiction” has the meaning specified in Schedule III to the Note Purchase Agreement.

“State of Registration” means, with respect to any Aircraft, the United States or each other country in which the Aircraft is registered from time to time pursuant to Section 7(a) of the Lease.

“Stipulated Insured Amount” means, in respect of any Aircraft and as of any date of determination, an amount equal to 110% of the aggregate principal amount then outstanding on all Notes in respect of such Aircraft.

“Sublease” means any sublease agreement permitted by the terms of Section 7(c) of the Lease.

“Sublessee” means any sublessee under a Sublease.

“Supplemental Rent” means any amount that the Lessee assumes or agrees to pay to the Owner or any other Person under the Lease or any other Operative Document with respect to any Aircraft (excluding Basic Rent for the Aircraft) and (without duplication) any amount payable by the Owner under the terms of the Note Purchase Agreement and the other Operative Documents.

“Swap Break Amount” means, as of any date on which Break Amount may be payable under the Operative Documents in respect of a Junior Note which is a Fixed Rate Note and for any Holder’s related Hedging Transaction, the amount a Swap Counterparty would require in accordance with market practice on the basis of the “Close-out Amount” (as defined in the Swap Form) approach to have paid to such Swap Counterparty on such date by such Holder (such amount to be expressed as a positive number), or the amount such Swap Counterparty would be

APPENDIX A

Page 19

[Note Purchase Agreement [Virgin/NPA 2015]]

willing to pay in accordance with market practice on the basis of “Close-out Amount” to such Holder on such date (such amount to be expressed as a negative number), in either case, to terminate such Hedging Transaction on such date with respect to, and to the extent of, such Holder’s then outstanding principal amount of all of the Junior Notes held by such Holder relating to Fixed Rate Notes that are subject to prepayment or purchase (or the entire Commitment), but excluding any unpaid amounts under such Hedging Transaction due to or payable by such Swap Counterparty prior to such date in respect of interest payments received by such Holder); provided that where a Holder has not entered into a Hedging Transaction, such amount shall be calculated on the basis of a deemed fixed-for-floating interest rate swap on market terms that meets the definition of Hedging Transaction for a notional amount equal to the outstanding principal amount of the Junior Notes which are Fixed Rate Notes of such Holder (taking into account any required amortization of such Fixed Rate Notes).

“Swap Breakage Gain” means, as to any Holder of a Fixed Rate Note, the absolute value of the Swap Break Amount payable to such Holder if the Swap Break Amount is a negative number.

“Swap Breakage Loss” means, as to any Holder, the value of the Swap Break Amount payable by such Holder if the Swap Break Amount is a positive number.

“Swap Counterparty” means, for any Hedging Transaction, a floating rate payor counterparty sourced by the applicable Holder, or in the case of an internal Hedging Transaction, such Holder’s swap or treasury desk. For the avoidance of doubt, neither the Owner nor the Lessee shall be a Swap Counterparty to any Hedging Transaction.

“Swap Effective Date” has the meaning specified in Section 3(b)(ii) of the Note Purchase Agreement.

“Swap Form” means a 2002 Master Agreement of the International Swaps and Derivatives Association in the form published in 2002 (or any comparable form) and supplemented by the 2006 ISDA Definitions (as amended).

“Tax” or “Taxes” is defined in Schedule III to the Note Purchase Agreement.

“Taxing Authority” is defined in Schedule III to the Note Purchase Agreement.

“Term” means, in respect of an Aircraft, the period commencing on the Delivery Date for such Aircraft to and including the Maturity Date relating to such Aircraft or such shorter period that may result from earlier termination of the leasing of such Aircraft in accordance with the terms of the Lease.

“Termination Sum” means (i) all expenses incurred by the Purchasers and the Security Trustee, including, without limitation, those incurred in enforcing any right, power or remedy, (ii) the Prepayment Fee, (iii) all accrued and unpaid interest on the Notes, including interest on past due amounts at the Post-Default Rate and PIK Interest and (iv) all outstanding principal of the Notes.

“transacting user entity” is defined in the Regulations for the International Registry.

APPENDIX A

Page 20

[Note Purchase Agreement [Virgin/NPA 2015]]

“Treaty Purchaser” has the meaning specified in Schedule III to the Note Purchase Agreement.

“Trust” means VX 2015 Trust.

“U.S. Air Carrier” means any United States air carrier as to which there is in force a certificate issued pursuant to Section 41102(a) of the Federal Aviation Act, and which is a citizen of the United States (as defined in 49 U.S.C. § 40102(a)(15)) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of title 49 (or the equivalent authority issued by the Civil Aeronautics Board under the predecessor regulatory laws, rules and regulations) for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo or which may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof.

“Underwriters” means the Purchasers originally party to the Note Purchase Agreement on the date of the Note Purchase Agreement.

“War Risk Insurance” has the meaning assigned to such term in Section 10(b) of the Lease.

“Warranty Bill of Sale” means a full warranty bill of sale in favor of the Owner from the Manufacturer in respect of an Aircraft.

“Wet Lease” means any arrangement whereby the Lessee agrees to furnish the Airframe and associated Engines or engines installed thereon to a third party pursuant to which the Airframe and Engines or engines (i) are operated by pilots who are regular employees of the Lessee, and (ii) such property is maintained by the Lessee.

APPENDIX A

Page 21

EX-10.6

Exhibit 10.6

Amendment to the Terms and Conditions for

Worldwide Acceptance of the American Express Card by Airlines

This Amendment (“Amendment”), effective as of June 15, 2015 (the “Amendment Effective Date”) by and among Virgin America Inc. (“Carrier”, “you”, or “your”) and American Express Travel Related Services Company, Inc. (“Amex”, “us”, “our” or “we”), amends the Terms and Conditions for Worldwide Acceptance of the American Express Card by Airlines dated September 1, 2006 (together with all amendments, supplements and addenda thereto, the “Agreement”). Each capitalized term used but not otherwise defined herein shall have the meaning ascribed to it in the Amendment or the Agreement, as applicable.

W T N E S S E T H:

WHEREAS, Carrier and Amex wish to further amend Section 9 of the Agreement;

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth, Amex and Carrier agree as follows:

1. The following definitions shall be added to Section 9 of the Agreement:

“Affiliate” means any entity that controls, is controlled by, or is under common control with a party or any of its Subsidiaries and includes for the avoidance of doubt any Subsidiary of a party. As used in this definition, control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an Entity, whether through the ownership of voting securities, by contract, or otherwise. The direct or indirect ownership of more than fifty percent (50%) of (i) the voting securities or (ii) an interest in the assets, profits, or earnings of an Entity shall be deemed to constitute “control” of the Entity.

“Capital Expenditures” shall mean, for any period, the sum of all amounts that would, in accordance with GAAP, be included as additions to property, plant and equipment and other capital expenditures on a Consolidated statement of cash flows of Carrier for such period (including the amount of assets under capital leases).

“Cash Equivalents” shall mean short-term, highly liquid investments that are readily convertible to known amounts of cash and which (i) are subject to an insignificant risk of changes in value, and (ii) have a short maturity of three months or less from the date of acquisition. Equity investments are excluded from the definition of “Cash Equivalents”.

“EBITDAR” shall mean operating income excluding non-recurring items, earnings before interest, taxes, depreciation, amortization and Lease Expense in respect of aircraft and engines only.

“EBITDA Margin” shall mean earnings before interest, taxes, depreciation and amortization as a percentage of revenues.

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

Page 1 of 7

“Entity” means a corporation, partnership, trust, association, or any other legally recognized entity or organization.

“Fixed Coverage Ratio” shall mean the LTM EBITDAR divided by the sum of the following, determined in accordance with GAAP:

(i) LTM aircraft rent; and

(ii) LTM net interest expense.

“Lease Expense” shall mean for any period, the amount of (i) all payment obligations of Carrier and its Subsidiaries under agreements for the lease, hire or use of any real or personal property (including, without limitation, aircraft), whether treated as operating leases or capital leases, minus (ii) sublease income.

“Liquidity” means, the aggregate amount of Cash, Cash Equivalents and short-term investments classified on Carrier’s consolidated financial statements in accordance with GAAP plus any undrawn lines of credit; provided, however, that Liquidity shall not include any amounts classified as Restricted Cash on Carrier’s consolidated balance sheet (except for any amounts held by Amex in a Reserve).

“LTM” shall mean, as of any determination date, the twelve (12) consecutive fiscal months ending on the most recently completed full month for which financial statements prepared in accordance with GAAP are available.

“Operating Expenses” shall mean expenses related to the principal revenue-producing activities of the entity and other activities that are not investing or financing activities.

“Restricted Cash” shall mean Cash, the use of which, in whole or in part, is restricted for specific purposes bound by virtue of contracted agreements.”

2. The second sentence of subsection 9.A.(1) shall be deleted in its entirety and replaced with the word “Reserved.”

3. The following provisions are hereby added as a new subsection 9.A.(7):

“(7) Financial Reporting Obligations. To permit Amex to accurately assess its risk under the Agreement, Carrier shall provide to Amex the following information (collectively, the “Reporting Obligations”) and furnish Amex on a quarterly basis a compliance certificate in the form attached as Annex 1. For avoidance of doubt, Carrier shall be deemed to have satisfied its Reporting Obligations (i) by furnishing Amex such quarterly compliance certificate; and (ii) by filing its Quarterly Report on Form 10-Q and Annual Report on Form 10-K with the Securities and Exchange Commission:

(i) Within forty (40) days following the end of each calendar quarter (provided that this information will be furnished within seventy-five (75) days after December 31^st of each year) during the term, an income statement and cash flow statements for the immediately preceding quarter, and a balance sheet as of the last day of the

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

Page 2 of 7

immediately preceding quarter, with accompanying footnotes. The financial statements shall include details on:

1. Current Liquidity and Fixed Coverage Ratio required to be disclosed in the quarterly financial statements in accordance with GAAP;

2. Debt payment commitments over the next twelve (12) months based on the disclosure of short-term debt on the Carrier’s balance sheet;

3. Fuel hedging activity disclosures required to be disclosed in accordance with GAAP in the quarterly financial statements; and

4. Forward-looking information related to aircraft and non-aircraft Capital Expenditures as required to be reported in the footnotes to the financial statements in accordance with GAAP.

(ii) Carrier’s operating (traffic) data, to include: ASMs, RPMs, passenger numbers, fuel consumption (in gallons of jet fuel) and average aircraft stage length; and

(iii) Ticketing Data: Details regarding Charge and Credit transactions equal to the full amount of Charges submitted by Carrier for goods and/or services not yet received by Cardmembers, including:

• Charges for Future Liability;

• Charges for Stranded Liability; and

• Charges for Past Liability for the last twelve (12) months (for Past Liability, Carrier shall furnish Amex an officer’s certificate in the form attached as Annex 2).

For the purposes of satisfying Carrier’s obligations under this subsection 9.A.(7)(iii), the parties agree that the foregoing ticketing data will be obtained by Amex directly from Sabre (except for Past Liability, which Carrier shall supply an officer’s certificate), the Carrier’s ticket booking service.

(iv) Additional Reporting on Occurrence of a Trigger Event. Upon a Trigger Event in addition to the information provided above in subsection 9.A.(7), within five (5) business days, Carrier shall provide to Amex ***** (collectively, the “Trigger Event Reports”).

(v) Reporting in Event of Privatization. In the event that Carrier is privatized during the term of this Agreement, Carrier, or its successor Entity, shall provide Amex with pro forma statements of income, cash flows, and a consolidated balance

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

Page 3 of 7

sheet (the “Pro Forma Statements”) within forty (40) days of the close of each fiscal quarter.”

4. The following shall be added to the definition of “Trigger Event” as subsections *****

5. The parties acknowledge that Amex, under the Agreement, is currently holding Thirty Five Million Dollars ($35,000,000) as Reserve in the form of a Letter of Credit with Barclays Bank PCL. Amex agrees that within fifteen (15) days following complete execution of this Amendment, Amex shall release the Letter of Credit to Carrier held as Reserve under the Agreement.

5. Multiple Counterparts. This Amendment may be executed in two or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument.

6. Miscellaneous. Unless otherwise defined or modified by this Amendment, all capitalized terms shall be given the meaning ascribed to them in the Agreement. This Amendment shall be governed by and construed under the laws of the State of New York excluding its conflicts of laws rules. Provisions contained in this Amendment shall prevail in case of conflict over the terms of the Agreement.

[Signatures appear on next page]

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

Page 4 of 7

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized officers as of the day and year first above written.

Virgin America Inc.		American Express Travel Related Services Company, Inc.
By:	/s/ Peter D. Hunt	By:	/s/ Curtis L. Wilson

Name: Peter D. Hunt Name: Curtis L. Wilson

Title: SVP & Chief Financial Officer Title: Vice Pres. & Gr. Mgr

Date: 6/15/15 Date: 6/16/15

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

Page 5 of 7

Annex 1

FINANCIAL COVENANT CERTIFICATE

This Financial Covenant Certificate is being submitted pursuant to the Agreement. The undersigned, Virgin America Inc., hereby certifies that, to the best of his/her knowledge after reasonable investigation as of the date of this Certificate the following are true and correct and were compiled from the books and records of Virgin America Inc. in accordance with the terms of the Agreement. Defined terms used herein are defined in the Terms and Conditions for Worldwide Acceptance dated September 1, 2006, as amended.

1. Liquidity as of [insert date for quarter end] was $[insert amount];

2. Liquidity as of [insert date for quarter end] was x% of LTM Operating Expenses.

3. Our EBITDA Margin for the most recent twelve (12) months ending [insert date] was [insert number]%;

4. Our Fixed Coverage Ratio is [insert amount]; and

5. No other Trigger Event has occurred [and is continuing except]:

[Describe Trigger Event(s) here]

All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

Dated:                     

Virgin America Inc.

By:

Its:

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

Page 6 of 7

Annex 2

OFFICER’S CERTIFICATE

I, the undersigned, Chief Financial Officer of VIRGIN AMERICA INC. (the “Company”), a company organized and existing under the laws of Delaware, DO HEREBY CERTIFY that:

1. This Certificate is furnished in accordance with subsection 7.(iii) of the Agreement.

2. The Company sells non-refundable and refundable airlines tickets.

3. As of December 31, 201    , the percentage of refundable airline ticket sales received through American Express Cards for travel dates prior to December 31, 201     and that had not been used or applied to travel represented approximately             % of total American Express Cards airline ticket sales during the period of January 1, 201     through December 21, 201    .

IN WITNESS WHEREOF, I have hereunto set my hand this              day of             , 201    .

By:

Name:

Title: Chief Financial Officer

***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission.

Page 7 of 7

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, C. David Cush, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Virgin America Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2015
By:	/s/ C. David Cush
C. David Cush
Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION

302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter D. Hunt, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Virgin America Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2015
By:	/s/ Peter D. Hunt
Peter D. Hunt
Chief Financial Officer
(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

Ladies and Gentlemen:

The certification set forth below is being furnished to the Securities and Exchange Commission solely for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and with Section 1350 of Chapter 63 of Title 18 of the United States Code. A signed original of this written statement required by Section 906 has been provided to Virgin America Inc. (the “Company”) and will be retained by the Company and furnished to the Securities and Exchange Commission (the “SEC”) or its staff upon request.

C. David Cush, the Chief Executive Officer of the Company, and Peter D. Hunt, the Chief Financial Officer of the Company, each certify that:

1. this Quarterly Report on Form 10-Q for the period ended June 30, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Virgin America Inc.

This certification accompanies the Report to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

IN WITNESS WHEREOF, the undersigned have set their hands hereto as of the 30th day of July 2015.

By:	/s/ C. David Cush
C. David Cush
Chief Executive Officer
(Principal Executive Officer)

By:	/s/ Peter D. Hunt
Peter D. Hunt
Chief Financial Officer
(Principal Financial Officer)

XML

Financial Derivative Instruments and Risk Management - Notional Amounts of the Outstanding Fuel Derivatives (Details) gal in Millions, $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2015 USD ($) gal	Dec. 31, 2014 USD ($) gal
Designated as Hedging Instrument | Energy Related Derivative | Heating Oil | Collars
Derivatives, Fair Value [Line Items]
Notional amounts	0	36
Designated as Hedging Instrument | Energy Related Derivative | Heating Oil | Swaps
Derivatives, Fair Value [Line Items]
Notional amounts	9	0
Designated as Hedging Instrument | Energy Related Derivative | Brent Calls | Calls
Derivatives, Fair Value [Line Items]
Notional amounts	0	16
Designated as Hedging Instrument | Energy Related Derivative | Jet Fuel | Swaps
Derivatives, Fair Value [Line Items]
Notional amounts	28	0
Designated as Hedging Instrument | Interest Rate Swaps
Derivatives, Fair Value [Line Items]
Derivative, Notional Amount | $	$ 39	$ 0
Not Designated as Hedging Instrument | Energy Related Derivative | Heating Oil | Collars
Derivatives, Fair Value [Line Items]
Notional amounts	0	3
Not Designated as Hedging Instrument | Energy Related Derivative | Heating Oil | Swaps
Derivatives, Fair Value [Line Items]
Notional amounts	2	0
Not Designated as Hedging Instrument | Energy Related Derivative | Brent Calls | Calls
Derivatives, Fair Value [Line Items]
Notional amounts	11	13
Not Designated as Hedging Instrument | Energy Related Derivative | Jet Fuel | Swaps
Derivatives, Fair Value [Line Items]
Notional amounts	0	0
Not Designated as Hedging Instrument | Interest Rate Swaps
Derivatives, Fair Value [Line Items]
Derivative, Notional Amount | $	$ 0	$ 0

XML

Contingencies and Commitments

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Commitments

Contingencies and Commitments

(a) Contingencies

The Company is subject to legal proceedings, claims and investigations arising in the ordinary course of business. While the outcome of these matters is currently not determinable, the Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on its condensed consolidated financial position, results of operations or cash flows.

The Company is party to routine contracts under which it indemnifies third parties for various risks. The Company has not accrued any liability for these indemnities, as the amounts are neither determinable nor estimable.

In its aircraft related agreements, as is typical of commercial arrangements made in order to purchase, finance and operate commercial aircraft, the Company indemnifies the manufacturer, the financing parties and other related parties against liabilities that arise from the manufacture, design, ownership, financing, use, operation and maintenance of the aircraft for tort liability, whether or not these liabilities arise out of or relate to the negligence of these indemnified parties, except for their gross negligence or willful misconduct. The Company believes that it will be covered by insurance subject to deductibles for most tort liabilities and related indemnities as described above with respect to the aircraft the Company will operate. Additionally, if there is a change in the law that results in the imposition of any reserve, capital adequacy, special deposit or similar requirement the result of which is to increase the cost to the lender, the Company will pay the lender the additional amount necessary to compensate the lender for the actual cost increase. The Company cannot estimate the potential amount of future payments under the foregoing indemnities.

(b) Commitments

Pre-Delivery Payments and Financing for Flight Equipment

In December 2010, the Company entered into a purchase agreement with Airbus for 60 A320 aircraft, including 30 A320neo aircraft, the first commercial order for the new eco-efficient engine option. Under the terms of the Company’s aircraft purchase agreement, the Company is committed to making pre-delivery payments at varying dates prior to delivery.

In December 2012, the Company amended its 2010 aircraft purchase agreement with Airbus reducing its order of 60 A320 aircraft to 40 aircraft and deferring delivery dates to begin in 2015. Under the amended agreement, the Company also obtained cancellation rights for the last 30 of the 40 aircraft, which cancellation rights are exercisable in groups of five aircraft two years prior to the stated delivery periods in 2020 to 2022, subject to loss of deposits and credits as a cancellation fee. All of the deposits have been reapplied according to the new delivery schedule except for $11.0 million which was converted into a credit earned upon delivery of the last 10 of the 40 aircraft. The Company has evaluated the recoverability of the deposits, credits and related capitalized interest in connection with the anticipated purchase of aircraft in future periods and determined them to be recoverable. If the Company ultimately exercises its cancellation rights for up to 30 aircraft, it would incur a loss of deposits and credits of up to $26.0 million held by Airbus as a cancellation fee, but would not be required to pay any additional funds. Because the Company concluded that the deposits and credits are recoverable and that it is not likely to incur cancellation fees, the Company did not record such fees. The Company maintains $117.5 million of pre-delivery payments, of which $91.5 million relates to the first 10 and $26.0 million to the last 30 aircraft, in its accompanying condensed consolidated balance sheets as of June 30, 2015, $68.7 million of which was financed by a third party and all of which is payable in 2015 and 2016.

Committed expenditures not subject to cancellation rights for these aircraft and separately sourced spare engines, including estimated amounts for contractual price escalations and pre-delivery payment deposits, will total approximately $213.9 million in the remainder of 2015 and $209.6 million in 2016. The Company believes that its cash resources and commercially available aircraft financing will be sufficient to satisfy these purchase commitments. In April 2015, the Company executed debt facility agreements to finance the Company’s 2015 aircraft deliveries for $195.0 million with three financing parties. These financings will represent approximately 80% of the net purchase price of the five A320 CEO aircraft. Each of the loans will be closed and funded on the date of each aircraft delivery from July through December 2015. The Company will finance an aggregate of $168.6 million through the senior debt facilities, subject to 12-year repayment terms, and $26.4 million through the subordinated debt facility, subject to six-year repayment terms. All of the debt will accrue interest which, if fixed at the applicable LIBOR swap rate for the weighted average life of the loan, would average approximately 5.0%. As of June 30, 2015, senior debt in the amount of $102.6 million has been fixed under these agreements at an aggregate interest rate of 4.77% and is not subject to further changes in interest rates. Principal and interest will be payable quarterly in arrears. Loans related to two of the aircraft are pre-payable with a premium prior to the third anniversary of such advance date and at par thereafter, subject to payment of early termination charges, if applicable. Loans related to three of the aircraft are not pre-payable prior to the third anniversary of the issuance date and are pre-payable at par thereafter, subject to payment of early termination charges, if applicable. The debt facility agreements have no financial covenants. The Company entered into interest rate swaps on the underlying base indexed interest rates for $33 million notional of aircraft financing with a 12-year term at 2.36% and for $6 million of the subordinated aircraft financing at 1.70% with a six-year term. See Note 3, Financial Derivative Instruments and Risk Management for more information.

In July 2015, the Company took delivery of the first of five aircraft scheduled to be delivered in 2015.

Letter of Credit Facility

In connection with the 2014 Recapitalization, the Virgin Group arranged for a $100.0 million Letter of Credit Facility issued on behalf of the Company to certain companies that process substantially all of the Company’s credit card transactions. The Letter of Credit Facility would have only become an obligation of the Company if one or both of its credit card processors had drawn on the Letter of Credit Facility. The Letter of Credit Facility was canceled in June 2015 upon the elimination of the credit card holdback requirement by the Company's primary credit card processors.

The note purchase agreement for the Post-IPO Note provides that the term of the Post-IPO Note will reduce from eight to six years in the event that the Letter of Credit Facility is terminated within the first six years of issuance. As a result of the cancellation of the Letter of Credit Facility, the Post-IPO Note and the related accrued interest will become payable in November 2020.

Summary of Future Payment Obligations

As of June 30, 2015, the Company has the following contractual payment commitments (in thousands):

Year	Long-term debt including related- party  (1)		Aircraft and engine purchases (2)		Aircraft and engine leases (3)		Maintenance deposits (4)		Other leases (5)		Total
2015	$	33,824	$	213,918	$	112,277	$	5,645	$	13,373	$	379,037
2016	34,832		209,583		217,457		8,968		26,547		497,387
2017	—		—		204,303		9,367		26,712		240,382
2018	40,000		—		188,903		10,186		23,541		262,630
2019	51,534		—		172,562		10,814		16,888		251,798
Thereafter	—		—		487,888		36,900		34,265		559,053
	$	160,190	$	423,501	$	1,383,390	$	81,880	$	141,326	$	2,190,287

(1) Includes accrued interest; excludes future interest of $15.5 million to be accrued through and payable in November 2020 on the Post-IPO Note.

(2) Represents non-cancelable contractual payment commitments for aircraft and engines; includes $195.0 million of aircraft financing obtained for 2015 deliveries.

(3) Represents future minimum lease payments under non-cancelable operating leases with initial terms in excess of one year, including renewal payments for signed lease extensions and excluding lease rebates.

(4) Represents the fixed portion of supplemental rent under lessor contracts for maintenance reserve payment commitments; excludes variable future amounts that will be based on actual flight hours.

(5) Represents future minimum lease payments under non-cancelable building, airport station and equipment leases.     

The table above excludes the Company’s commitment to pay royalties in 2015 of 0.5% of the Company’s operating revenue for the use of the Company’s brand name to a related party. This license fee will increase to 0.7% starting in the first quarter of 2016 until the Company’s total annual revenue exceeds $4.5 billion, at which time the annual license fee would resume to 0.5%. For additional information, see the consolidated financial statements included in the 2014 Form 10-K.

XML

Income Taxes (Details)	6 Months Ended
	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Federal statutory income tax rate (percent)	35.00%

XML

Contingencies and Commitments - Contractual Minimum Payments (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Long-term Purchase Commitment [Line Items]
2015	$ 33,824
2016	34,832
2017	0
2018	40,000
2019	51,534
Thereafter	0
Total	160,190
2015	213,918
2016	209,583
2017	0
2018	0
2019	0
Thereafter	0
Total	423,501
2015	379,037
2016	497,387
2017	240,382
2018	262,630
2019	251,798
Thereafter	559,053
Total	2,190,287
Maintenance Deposits
Long-term Purchase Commitment [Line Items]
2015	5,645
2016	8,968
2017	9,367
2018	10,186
2019	10,814
Thereafter	36,900
Total	81,880
Other Leases
Long-term Purchase Commitment [Line Items]
2015	13,373
2016	26,547
2017	26,712
2018	23,541
2019	16,888
Thereafter	34,265
Total	141,326
Aircraft and Engine Leases
Long-term Purchase Commitment [Line Items]
2015	112,277
2016	217,457
2017	204,303
2018	188,903
2019	172,562
Thereafter	487,888
Total	$ 1,383,390

XML

Related-Party Transactions (Details)	1 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($)	May. 31, 2015	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) designee	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)	Nov. 30, 2014 USD ($)	Oct. 31, 2014 USD ($)
Related Party Transaction [Line Items]
Percentage owned by related parties	27.10%		27.10%		27.10%
Long-term debt	$ 149,100,000		$ 149,100,000		$ 149,100,000
Related-party interest expense			822,000	$ 9,558,000	1,628,000	$ 18,940,000
Virgin Group | Line of Credit | Letter of Credit
Related Party Transaction [Line Items]
Maximum borrowing capacity	$ 100,000,000		100,000,000		$ 100,000,000
Line of credit commitment fee percentage					5.00%
Commitment fee			$ 1,100,000		$ 2,500,000
VX Holdings L.P.
Related Party Transaction [Line Items]
Ownership percentage	18.90%		18.90%		18.90%
Cyrus Aviation Holdings, LLC
Related Party Transaction [Line Items]
Ownership percentage	28.80%		28.80%		28.80%
Principal Owner | Virgin Group
Related Party Transaction [Line Items]
Carrying value of related party debt								$ 38,500,000	$ 728,300,000
Affiliated Entity | Virgin Enterprises Limited
Related Party Transaction [Line Items]
Number of Board of Director designees | designee					1
License Fees | Affiliated Entity
Related Party Transaction [Line Items]
License fees			$ 2,000,000	$ 2,000,000	$ 3,700,000	$ 3,600,000
Accrued Unpaid Royalty Fees | Affiliated Entity
Related Party Transaction [Line Items]
Accrued unpaid royalty fees	$ 2,000,000		$ 2,000,000		$ 2,000,000		$ 1,800,000
Post-IPO Note Issued for Extinguishment of Previous Debt | Principal Owner | Virgin Group
Related Party Transaction [Line Items]
Carrying value of related party debt								$ 50,000,000
Term of debt instrument	6 years	8 years			8 years
Reduction in debt term					6 years

XML

Net Income Per Share - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Basic:
Net (loss) income	$ 64,989	$ 36,983	$ 77,775	$ 14,629
Less: net income allocated to participating securities	0	(22,658)	0	(8,962)
Net income attributable to common shareholders	$ 64,989	$ 14,325	$ 77,775	$ 5,667
Weighted-average common shares outstanding	43,298	702	43,239	702
Basic net (loss) income per share (in dollars per share)	$ 1.50	$ 20.42	$ 1.80	$ 8.08
Diluted:
Less: net income allocated to participating securities	$ 0	$ (13,230)	$ 0	$ (5,233)
Net income attributable to common shareholders	$ 64,989	$ 23,753	$ 77,775	$ 9,396
Effect of dilutive potential common shares	785	1,290	1,299	1,290
Weighted-average common shares outstanding-diluted	44,083	1,992	44,538	1,992
Diluted net (loss) income per share (in dollars per share)	$ 1.47	$ 11.92	$ 1.75	$ 4.72

XML

Financial Derivative Instruments and Risk Management

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Derivative Instruments and Risk Management

Financial Derivative Instruments and Risk Management

Fuel Hedges

To manage economic risks associated with the fluctuations of aircraft fuel prices, since 2012, the Company has hedged a targeted percentage of its forecasted fuel requirements over the following 12 months with a rolling strategy of entering into call options for crude oil and collar contracts for heating oil in the longer term, three to 12 months before the expected fuel purchase date; then prior to maturity of these contracts, within three months of the fuel purchase, the Company exited these contracts by entering into offsetting trades and locking in the price of a percentage of its fuel requirements through the purchase of fixed forward pricing ("FFP") contracts in jet fuel. In 2015, the Company eliminated the use of call options and collars from its fuel hedging program and began utilizing forward swaps on jet fuel, heating oil and crude oil to lock in future fuel purchase prices.

The Company utilizes FFP contracts with its fuel service provider as part of its risk management strategy, wherein fixed prices are negotiated for set volumes of future purchases of fuel. The Company takes physical delivery of the future purchases. The Company has applied the normal purchase and normal sales exception for these commitments. As of June 30, 2015, the total commitment related to FFP contracts was $38.6 million, for which the related fuel will be purchased during 2015.

The Company designates the majority of its fuel hedge derivatives contracts as cash flow hedges under the applicable accounting standard, if they qualify for hedge accounting. Under hedge accounting, all periodic changes in the fair value of the derivatives designated as effective hedges are recorded in accumulated other comprehensive income (loss) ("AOCI") until the underlying fuel is purchased, at which point the deferred gain or loss will be recorded as fuel expense. In the event that the Company’s fuel hedge derivatives do not qualify as effective hedges, the periodic changes in fair value of the derivatives are included in fuel expense in the period they occur. If the Company terminates a fuel hedge derivative contract prior to its settlement date, the cumulative gain or loss recognized in AOCI at the termination date will remain in AOCI until the terminated intended transaction occurs. In the event it becomes improbable that such event will occur, the cumulative gain or loss is immediately reclassified into earnings. All cash flows associated with purchasing and settling of fuel hedge derivatives are classified as operating cash flows in the accompanying condensed consolidated statements of cash flows.

Interest Rate Swaps

In April 2015, the Company executed debt facility agreements to finance the Company’s 2015 aircraft deliveries. Refer to Note 4 - Contingencies and Commitments for additional information. The Company entered into interest rate swaps in May 2015 to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to future interest payments on the committed financing for an aircraft to be delivered in November 2015. The interest rate swaps hedge the risk of changes in the Company's cash flows (i.e., interest payments attributable to changes in the three-month USD-LIBOR-BBA swap rate, the designated benchmark interest rate being hedged) on an amount of the debt principal equal to the committed financing amount. As such, the swap terms match the payment terms on the debt. The interest rate swaps are designated cash flow hedges. The gains and losses related to the changes in fair value of the swaps are included in AOCI in the accompanying condensed consolidated balance sheet. The effect of such swaps is to convert the floating interest rate to a fixed rate until the aircraft is delivered in November 2015, when the debt funding occurs. Hedge accounting will cease once the interest rate has been contractually fixed upon aircraft delivery, and the outstanding AOCI balance associated with the interest rate swap will be amortized using the interest method over the term of the debt. The fair value of the interest rate swaps is reflected in other current assets in the accompanying condensed consolidated balance sheet. The measurement of hedge effectiveness is based on the hypothetical-derivative method in which the cumulative change in the fair value of the hedging instrument will be compared to the cumulative change in fair value of the hypothetical derivative.

The following tables present the fair value of derivative assets and liabilities that are designated and not designated as hedging instruments, as well as the location of the asset and liability balances within the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014 (in thousands):

Derivatives designated as cash flow hedges	Consolidated balance sheet location	Fair value of derivatives as of
		June 30, 2015			December 31, 2014
		(unaudited)
Fuel derivative instruments—Heating oil collars	Current liabilities	—			(24,762		)
Fuel derivative instruments—Brent calls	Current liabilities	—			(84		)
Fuel derivative instruments—Heating oil swaps	Current liabilities	317			—
Fuel derivative instruments—Jet fuel swaps	Current liabilities	(259		)	—
Interest rate swaps	Current assets	42			—
Total current assets (liabilities)		$	100		$	(24,846	)

Derivatives not designated as cash flow hedges	Consolidated balance sheet location	Fair value of derivatives as of
		June 30, 2015			December 31, 2014
		(unaudited)
Fuel derivative instruments—Heating oil collars	Current liabilities	—			(2,408		)
Fuel derivative instruments—Brent calls	Current liabilities	1			134
Fuel derivative instruments—Heating oil swaps	Current liabilities	(116		)	—
Total current assets (liabilities)		$	(115	)	$	(2,274	)

As of June 30, 2015, the Company had no margin call balances with its counterparties. At December 31, 2014, the Company had deposited $14.4 million as collateral with one of its counterparties to comply with margin call requirements related to fuel derivative losses that exceed the portfolio’s credit limit. The Company had recorded the margin call deposits in other current liabilities in the accompanying condensed consolidated balance sheet as of December 31, 2014, offsetting the net hedge liability of $27.1 million. Thus the total net current hedge liability was $12.7 million at December 31, 2014.

The following table summarizes the effect of fuel derivative instruments in the condensed consolidated statements of operations for the three and six months ended June 30, 2015 and 2014 (in thousands):

Derivatives accounted for as hedging instruments under ASC 815	Consolidated financial  statement location	Gains (losses) on derivative contracts for the three months ended						Gains (losses) on derivative contracts for the six months ended
		June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Fuel derivative instruments	Aircraft fuel expense	$	(9,219	)	$	(549	)	$	(24,434	)	$	(677	)
Total impact to the consolidated statements of operations		$	(9,219	)	$	(549	)	$	(24,434	)	$	(677	)

Derivatives not accounted for as hedging instruments under ASC 815	Consolidated financial  statement location	Gains (losses) on derivative contracts for the three months ended					Gains (losses) on derivative contracts for the six months ended
		June 30, 2015		June 30, 2014			June 30, 2015		June 30, 2014
		(unaudited)		(unaudited)			(unaudited)		(unaudited)
Fuel derivative instruments	Aircraft fuel expense	$	800	$	(476	)	$	353	$	(928	)
Total impact to the consolidated statements of operations		$	800	$	(476	)	$	353	$	(928	)

At June 30, 2015, the Company estimated that approximately $0.3 million of net derivative losses related to its cash flow fuel hedges included in AOCI will be reclassified into earnings within the next nine months.

Interest rate swaps did not affect the condensed consolidated statement of operations as of June 30, 2015. At June 30, 2015, the Company estimates that an immaterial amount of net derivative gains related to its interest rate swaps included in AOCI will be reclassified into earnings within the next twelve months.

The effect of fuel derivative instruments designated as cash flow hedges and the underlying hedged items on the condensed consolidated statements of operations for the three and six months ended June 30, 2015 and 2014, respectively, is summarized as follows (in thousands):

Derivatives designated as cash flow hedges	Amount of gain (loss) recognized in AOCI on derivatives (Effective portion)				Gain (loss) reclassified from AOCI into income (Fuel expense or Interest expense) (Effective portion)						Amount of gain (loss) recognized into income (Ineffective portion)
	Three Months Ended,				Three Months Ended,						Three Months Ended,
	June 30, 2015		June 30, 2014		June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
	(unaudited)		(unaudited)		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Fuel derivative instruments	$	4,527	$	1,518	$	(9,080	)	$	(484	)	$	(139	)	$	(65	)
Interest rate swaps	42		—		—			—			—			—

Derivatives designated as cash flow hedges	Amount of gain (loss) recognized in AOCI on derivatives (Effective portion)					Gain (loss) reclassified from AOCI into income (Fuel expense or Interest expense) (Effective portion)						Amount of gain (loss) recognized into income (Ineffective portion)
	Six Months Ended,					Six Months Ended,						Six Months Ended,
	June 30, 2015		June 30, 2014			June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
	(unaudited)		(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Fuel derivative instruments	$	1,509	$	(1,227	)	$	(24,315	)	$	(501	)	$	(119	)	$	(176	)
Interest rate swaps	42		—			—			—			—			—

The notional amounts of the Company’s outstanding fuel and debt payment related derivatives are summarized as follows (in millions):

	June 30, 2015		December 31, 2014
	(unaudited)
Derivatives designated as hedging instruments:
Fuel derivative instruments—Heating oil collars (gallons)	0		36
Fuel derivative instruments—Brent calls (gallons)	0		16
Fuel derivative instruments—Heating oil swaps (gallons)	9		0
Fuel derivative instruments—Jet fuel swaps (gallons)	28		0
Interest rate swaps (dollars)	$	39	$	0
Derivatives not designated as hedging instruments:
Fuel derivative instruments—Heating oil collars (gallons)	0		3
Fuel derivative instruments—Brent calls (gallons)	11		13
Fuel derivative instruments—Heating oil swaps (gallons)	2		0
Fuel derivative instruments—Jet fuel swaps (gallons)	0		0
Interest rate swaps (dollars)	$	0	$	0

As of June 30, 2015, the Company had entered into fuel derivative contracts for approximately 30% of its forecasted aircraft fuel requirements for the next nine months at a weighted-average cost per gallon of $1.86(excluding related fuel taxes).

The Company presents its fuel derivative instruments at net fair value in the accompanying condensed consolidated balance sheets. The Company’s master netting arrangements with counterparties allow for net settlement under certain conditions. As of June 30, 2015 and December 31, 2014, information related to these offsetting arrangements was as follows (in thousands):

	June 30, 2015 (unaudited)
	Derivatives offset in consolidated balance sheet									Derivatives eligible for offsetting
	Gross derivative amounts			Gross derivative amounts offset  in consolidated balance sheet			Net amount			Gross derivative amounts			Gross derivative amounts  eligible for offsetting			Net amount
Fair value of assets	$	2,176		$	(2,176	)	$	—		$	2,176		$	(2,176	)	$	—
Fair value of liabilities	(2,233		)	2,176			(57		)	(2,233		)	2,176			(57		)
Margin call deposits							—									—
Total							$	(57	)							$	(57	)

	December 31, 2014
	Derivatives offset in consolidated balance sheet									Derivatives eligible for offsetting
	Gross derivative amounts			Gross derivative amounts offset  in consolidated balance sheet			Net amount			Gross derivative amounts			Gross derivative amounts  eligible for offsetting			Net amount
Fair value of assets	$	256		$	(256	)	$	0		$	256		$	(256	)	$	0
Fair value of liabilities	(27,376		)	256			(27,120		)	(27,376		)	256			(27,120		)
Margin call deposits							14,390									14,390
Total							(12,730		)							(12,730		)

The fuel derivative agreements the Company has with its counterparties may require the Company to pay all, or a portion of, the outstanding loss positions related to these contracts in the form of a margin call prior to their scheduled maturities. The amount of collateral posted, if any, is adjusted based on the fair value of the fuel hedge derivatives. The Company did not have any collateral posted related to outstanding fuel hedge contracts at June 30, 2015 and had $14.4 million of collateral posted related to outstanding fuel hedge contracts at December 31, 2014, which is reflected in the table above.

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Net Income Per Share - Anti-dilutive Securities (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Warrants to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of diluted earnings per share	0	42,243	0	42,243
Stock option awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of diluted earnings per share	22	0	18	0

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Assets, Current [Abstract]
Cash and cash equivalents	$ 500,457	$ 394,643
Receivables, net	30,191	23,414
Prepaid expenses and other assets	35,404	20,874
Total current assets	566,052	438,931
Property and equipment:
Property and equipment, net	80,998	73,207
Pre-delivery payments for flight equipment	117,501	94,280
Total property and equipment, net	198,499	167,487
Noncurrent Assets
Aircraft maintenance deposits	223,104	211,946
Aircraft lease deposits	49,292	50,758
Restricted cash	19,744	18,775
Other non-current assets	127,032	112,279
Noncurrent assets	419,172	393,758
Total assets	1,183,723	1,000,176
Current liabilities:
Accounts payable	52,725	52,821
Air traffic liability	223,187	150,479
Other current liabilities	92,573	100,723
Long-term debt-current portion	68,656	33,824
Total current liabilities	437,141	337,847
Long-term debt-related parties	40,477	38,848
Long-term debt	40,000	57,416
Other long-term liabilities	102,647	106,812
Total liabilities	$ 620,265	$ 540,923
Contingencies and commitments
Preferred stock	$ 0	$ 0
Common stock	434	431
Additional paid-in capital	1,238,505	1,237,944
Accumulated deficit	(675,241)	(753,016)
Accumulated other comprehensive loss	(240)	(26,106)
Total stockholders’ equity	563,458	459,253
Total liabilities and stockholders’ equity	$ 1,183,723	$ 1,000,176

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Basis of Presentation

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements of Virgin America Inc. (the "Company") for the three and six months ended June 30, 2014 include the accounts of the Company and its variable interest entity, VX Employee Holdings LLC, for which it was the primary beneficiary until all of the shares held by VX Employee Holdings LLC were sold to the public as part of the Company's initial public offering (the "IPO") in November 2014 as discussed below. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company's 2014 audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 ("2014 Form 10-K").

These unaudited condensed consolidated financial statements have been prepared as required by the U.S. Securities Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been condensed or omitted as permitted by the SEC. The financial statements include all adjustments, including normal recurring adjustments and other adjustments, which are considered necessary for a fair presentation of the Company’s financial position and results of operations. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for the entire year. Certain prior year amounts have been reclassified to conform to current year presentation. These amounts were not material to any of the periods presented.

In November 2014, concurrent with the pricing of the IPO, the Company entered into a recapitalization agreement (the "2014 Recapitalization") with certain security-holders to exchange or extinguish the majority of its then-outstanding related-party debt and accrued interest (the "Related-Party Notes") with contractual value of $684.8 million at the time and all of its convertible preferred stock and outstanding warrants. The Company repaid $156.5 million of certain Related-Party Notes with $56.5 million from the proceeds of the IPO and $100.0 million from the release of cash collateral to the Company in connection with a $100.0 million letter of credit facility issued on its behalf to certain of its credit card processors by the Virgin Group (the “Letter of Credit Facility”, which has since been terminated). The Company issued a new $50.0 million note to the Virgin Group (the “Post-IPO Note”) in exchange for the cancellation of $50.0 million of certain Related-Party Notes previously outstanding and held by the Virgin Group. The Company recorded the Post-IPO Note at the estimated fair value of $38.5 million. The Company exchanged the remainder of the Related-Party Notes for 22,159,070 shares of common stock based on the IPO offering price and the remaining outstanding contractual value of the debt, except for principal and accrued interest under certain secured notes issued in December 2011 and certain secured notes issued in May 2013 both held by Cyrus Capital, which were converted at a premium of 117% of the outstanding contractual value. The Company also converted each of 1,950,937 shares of convertible preferred stock and Class A, Class A-1, Class B, Class C and Class G common stock into shares of common stock on a one-to-one basis and exchanged related-party warrants to purchase 26,067,475 shares of common stock for 5,742,543 shares of common stock with the remaining related-party warrants to purchase 16,175,126 shares of common stock canceled in their entirety. For additional information, see the consolidated financial statements included in the 2014 Form 10-K.    During the three months ended June 30, 2015, the Company recorded an immaterial correction related to prior period Elevate loyalty revenue to increase passenger revenue and decrease deferred revenue by $3.2 million. The Company assessed the materiality of this adjustment for each quarterly and annual period and determined that the adjustment was immaterial to all reported periods.

Receivables, net

Receivable, net includes credit card holdbacks and other receivables. Credit card holdbacks and related receivables are amounts due from credit card processors associated with sales for future travel and are carried at cost. Under the terms of the Company’s credit card processing agreements, certain proceeds from advance ticket sales are held back to serve as collateral by the credit card processors, due to the Company’s credit and in part to cover any possible refunds or chargebacks that may occur. These holdbacks are short-term, as the travel for which they relate occurs within twelve months. In June 2015, the Company entered into agreements with its credit card processors to reduce the holdback requirements to 0% and, in connection with this the $100.0 million Letter of Credit Facility was terminated. The credit card processors have the right to increase the credit card holdback amount in the future depending on the Company's financial performance. If the Company's credit card processors were to implement a new holdback requirement, it would be funded through withholding proceeds from future ticket sales made through credit card transactions. As of June 30, 2015, the Company recorded $18.6 million in credit card receivables. As of December 31, 2014, the Company had no net holdbacks outstanding as a result of the Letter of Credit Facility and $9.6 million of credit card receivables.

New Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") and International Accounting Standards Board ("IASB") jointly issued a comprehensive new revenue recognition standard that will replace most existing revenue recognition standards under U.S. GAAP and International Financial Reporting Standards ("IFRS"). The new standard will require the Company to recognize revenue when goods or services are transferred to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. As a result, the Company will need to use more judgments and estimates to determine when and how revenue is recognized than U.S. GAAP currently requires. The new standard will become effective for the Company on January 1, 2018. The Company believes the most significant effect of this accounting standards update will be the elimination of the incremental cost method for frequent flyer accounting, which would require the Company to re-value its liability earned by customers associated with flights points with a relative fair value approach. The Company is continuing to evaluate the new guidance and plans to provide additional information about its expected financial effect at a future date.

In February 2015, the FASB issued an accounting standards update that eliminates the deferral of FAS 167, which has allowed entities with interests in certain investment funds to follow the previous consolidation guidance in FIN 46(R), and makes other changes to both the variable interest model and the voting model.In some cases, consolidation conclusions will change. In other cases, reporting entities will need to provide additional disclosures about entities that currently aren’t considered variable interest entities (VIEs) but will be considered VIEs under the new guidance provided they have a variable interest in those VIEs. The guidance will be effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company does not expect this accounting standards update to have a material impact on the consolidated financial statements.

In April 2015, the FASB issued an accounting standards update that simplifies the guidance related to presentation of debt issuance costs. The guidance requires presentation of debt issuance costs on the balance sheet as a direct deduction from the face amount of that note, consistent with debt discounts. The guidance is to be applied retrospectively to the financial periods presented as a change in accounting principle. The guidance will be effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company does not expect this accounting standards update to have a material impact on the consolidated financial statements.

In June 2015, the FASB issued an accounting standards update that corrects differences between original accounting guidance and the accounting guidance codification, clarifies the accounting guidance, corrects references and makes minor improvements affecting a variety of accounting topics. Transition guidance varies based on the amendments in the update. The amendments in the update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect this accounting standards update to have a material impact on the consolidated financial statements.

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Financial Derivative Instruments and Risk Management - Fair Value of Derivative Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Designated as Hedging Instrument | Energy Related Derivative
Derivatives, Fair Value [Line Items]
Total current assets (liabilities)	$ 100	$ (24,846)
Designated as Hedging Instrument | Current Liabilities | Energy Related Derivative | Heating Oil | Collars
Derivatives, Fair Value [Line Items]
Total current assets (liabilities)	0	(24,762)
Designated as Hedging Instrument | Current Liabilities | Energy Related Derivative | Heating Oil | Swaps
Derivatives, Fair Value [Line Items]
Total current assets (liabilities)	317	0
Designated as Hedging Instrument | Current Liabilities | Energy Related Derivative | Brent Calls | Calls
Derivatives, Fair Value [Line Items]
Total current assets (liabilities)	0	(84)
Designated as Hedging Instrument | Current Liabilities | Energy Related Derivative | Jet Fuel | Swaps
Derivatives, Fair Value [Line Items]
Total current assets (liabilities)	(259)	0
Designated as Hedging Instrument | Current Assets | Interest Rate Swaps | Swaps
Derivatives, Fair Value [Line Items]
Total current assets (liabilities)		0
Not Designated as Hedging Instrument | Energy Related Derivative
Derivatives, Fair Value [Line Items]
Total current assets (liabilities)	(115)	(2,274)
Not Designated as Hedging Instrument | Current Liabilities | Energy Related Derivative | Heating Oil | Collars
Derivatives, Fair Value [Line Items]
Total current assets (liabilities)	0	(2,408)
Not Designated as Hedging Instrument | Current Liabilities | Energy Related Derivative | Heating Oil | Swaps
Derivatives, Fair Value [Line Items]
Total current assets (liabilities)	(116)	0
Not Designated as Hedging Instrument | Current Liabilities | Energy Related Derivative | Brent Calls | Calls
Derivatives, Fair Value [Line Items]
Total current assets (liabilities)	$ 1	$ 134

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Financial Derivative Instruments and Risk Management - Effect of Fuel Derivative Instruments Designated as Cash Flow Hedges (Details) - Cash Flow Hedging - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain (loss) recognized in AOCI on derivatives (Effective portion)	$ 42			$ 0
Gain (loss) reclassified from AOCI into income (Fuel expense) (Effective portion)			$ 0	0
Amount of gain (loss) recognized into income (Ineffective portion)			0	0
Energy Related Derivative | Jet Fuel
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain (loss) recognized in AOCI on derivatives (Effective portion)	4,527	$ 1,518	1,509	(1,227)
Gain (loss) reclassified from AOCI into income (Fuel expense) (Effective portion)	(9,080)	(484)	(24,315)	(501)
Amount of gain (loss) recognized into income (Ineffective portion)	(139)	(65)	$ (119)	$ (176)
Interest Rate Swaps
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain (loss) recognized in AOCI on derivatives (Effective portion)		0
Gain (loss) reclassified from AOCI into income (Fuel expense) (Effective portion)	0	0
Amount of gain (loss) recognized into income (Ineffective portion)	$ 0	$ 0

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Fair Value

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

The accounting guidance establishes a fair value hierarchy as follows:

Level 1	Observable inputs such as quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the assets or liabilities.
Level 3	Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities.

The following is a listing of the Company’s assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the fair value hierarchy as of June 30, 2015 and December 31, 2014 respectively (in thousands):

	June 30, 2015 (unaudited)
	Level 1		Level 2			Level 3		Total
Assets (Liability)
Cash equivalents	$	444,803	$	—		$	—	$	444,803
Restricted cash	19,744		—			—		19,744
Heating oil collars - fuel derivative instruments	—		—			—		—
Brent calls - fuel derivative instruments	—		1			—		1
Heating oil swaps - fuel derivative instruments	—		201			—		201
Jet fuel swaps - fuel derivative instruments	—		(259		)	—		(259		)
Interest rate swaps	—		42			—		42
	$	464,547	$	(15	)	$	—	$	464,532
	December 31, 2014
	Level 1		Level 2			Level 3		Total
Assets (Liability)
Cash equivalents	$	339,211	$	—		$	—	$	339,211
Restricted cash	18,775		—			—		18,775
Heating oil collars - fuel derivative instruments	—		(27,170		)	—		(27,170		)
Brent calls - fuel derivative instruments	—		50			—		50
	$	357,986	$	(27,120	)	$	—	$	330,866

A portion of the Company’s debt is privately negotiated with related parties. The estimated fair value of related-party debt was $45.9 million and $38.8 million at June 30, 2015 and December 31, 2014, respectively. The estimated fair value of the non-related party debt includes financing associated with aircraft pre-delivery payments of $68.7 million and $51.2 million at June 30, 2015 and December 31, 2014 and a $40.0 million financing of airport slots. The Company uses significant unobservable inputs in determining discounted cash flows to estimate the fair value, and therefore, such amounts are categorized as Level 3 in the fair value hierarchy.

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Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Operating revenues:
Passenger	$ 359,709	$ 358,108	$ 649,073	$ 636,148
Other	41,177	40,737	78,165	76,087
Total operating revenues	400,886	398,845	727,238	712,235
Operating expenses:
Aircraft fuel	93,743	131,664	182,301	247,423
Salaries, wages and benefits	74,758	59,318	139,490	113,143
Aircraft rent	45,708	45,861	90,690	92,357
Landing fees and other rents	34,071	33,286	68,054	65,507
Sales and marketing	30,704	28,615	57,083	53,177
Aircraft maintenance	12,656	16,409	26,489	35,453
Depreciation and amortization	4,225	3,484	8,328	6,753
Other operating expenses	37,363	33,082	71,762	64,427
Total operating expenses	333,228	351,719	644,197	678,240
Operating income:	67,658	47,126	83,041	33,995
Other income (expense):
Interest expense-related-party	(822)	(9,558)	(1,628)	(18,940)
Interest expense	(1,616)	(951)	(2,831)	(1,484)
Capitalized interest	1,242	635	2,309	1,116
Other income (expense), net	(1,109)	(2)	(2,428)	258
Total other expense	(2,305)	(9,876)	(4,578)	(19,050)
Income before income tax	65,353	37,250	78,463	14,945
Income tax expense	364	267	688	316
Net income	$ 64,989	$ 36,983	$ 77,775	$ 14,629
Net income per share:
Basic (in dollars per share)	$ 1.50	$ 20.42	$ 1.80	$ 8.08
Diluted (in dollars per share)	$ 1.47	$ 11.92	$ 1.75	$ 4.72
Shares used for computation:
Basic (in shares)	43,298	702	43,239	702
Diluted (in shares)	44,083	1,992	44,538	1,992

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Net Income Per Share (Tables)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share Basic and Diluted

The following table sets forth the computation of the Company’s basic and diluted net income per share attributable to common stock for the periods presented (in thousands, except per share data):

	Three Months Ended June 30,					Six Months Ended June 30,
	2015		2014			2015		2014
	(unaudited)		(unaudited)			(unaudited)		(unaudited)
BASIC:
Net income	$	64,989	$	36,983		77,775		$	14,629
Less: net income allocated to participating securities	—		(22,658		)	—		(8,962		)
Net income attributable to common shareholders	$	64,989	$	14,325		$	77,775	$	5,667
Weighted-average common shares outstanding	43,298		702			43,239		702
Basic net income per share	$	1.50	$	20.42		$	1.80	$	8.08
DILUTED:
Net income	$	64,989	$	36,983		$	77,775	$	14,629
Less: net income allocated to participating securities	—		(13,230		)	—		(5,233		)
Net income attributable to common shareholders	$	64,989	$	23,753		$	77,775	$	9,396
Weighted-average common shares outstanding-basic	43,298		702			43,239		702
Effect of dilutive potential common shares	785		1,290			1,299		1,290
Weighted-average common shares outstanding-diluted	44,083		1,992			44,538		1,992
Diluted net income per share	$	1.47	$	11.92		$	1.75	$	4.72

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following warrants and director and employee stock awards were excluded from the calculation of diluted net earnings per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented (share data, in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Warrants to purchase common stock	—	42,243	—	42,243
Stock option awards	22	—	18	—

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Document and Entity Information Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 22, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	VIRGIN AMERICA INC.
Entity Central Index Key	0001614436
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		43,412,080

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Basis of Presentation (Details)	1 Months Ended		3 Months Ended
	Jun. 30, 2015 USD ($)	Nov. 30, 2014 USD ($) shares	Jun. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)	Oct. 31, 2014 USD ($)
Related Party Transaction [Line Items]
Due to related-party		$ 684,800,000
Repayments of related-party debt		156,500,000
Related-party debt, proceeds from IPO		56,500,000
Repayments of related-party debt, release of collateral		$ 100,000,000
Decrease in deferred revenue			$ 3,200,000
Credit card holdbacks(percent)	0.00%
Credit card holdbacks				$ 0
Credit card receivables	$ 18,600,000		18,600,000	$ 9,600,000
Convertible Preferred Stock Converted to Common Stock
Related Party Transaction [Line Items]
Conversion of stock number of shares converted | shares		1,950,937
Conversion ratio		1.00
Common Class A Stock Converted to Common Stock
Related Party Transaction [Line Items]
Conversion of stock number of shares converted | shares		1,950,937
Conversion ratio		1.00
Common Class A-1 Stock Converted to Common Stock
Related Party Transaction [Line Items]
Conversion of stock number of shares converted | shares		1,950,937
Conversion ratio		1.00
Common Class B Stock Converted to Common Stock
Related Party Transaction [Line Items]
Conversion of stock number of shares converted | shares		1,950,937
Conversion ratio		1.00
Common Class C Stock Converted to Common Stock
Related Party Transaction [Line Items]
Conversion of stock number of shares converted | shares		1,950,937
Conversion ratio		1.00
Common Class G Stock Converted to Common Stock
Related Party Transaction [Line Items]
Conversion of stock number of shares converted | shares		1,950,937
Conversion ratio		1.00
Related-Party Warrants Converted to Common Stock | Related-Party Warrant
Related Party Transaction [Line Items]
Number of related-party warrants exchanged for common stock | shares		26,067,475
Conversion of stock number of shares issued | shares		5,742,543
Number of canceled shares of common stock | shares		16,175,126
Virgin Group | Principal Owner
Related Party Transaction [Line Items]
Fair value of related party debt		$ 38,500,000			$ 728,300,000
Virgin Group | Principal Owner | Post-IPO Note Issued for Extinguishment of Previous Debt
Related Party Transaction [Line Items]
Fair value of related party debt		50,000,000
Extinguishment of debt		50,000,000
Fair value of related party debt		$ 38,500,000
Cyrus Capital | Principal Owner | Exchange of certain Related-Party Notes for common stock
Related Party Transaction [Line Items]
Converted instrument premium (percent)		117.00%
Virgin Group | Line of Credit | Letter of Credit
Related Party Transaction [Line Items]
Maximum borrowing capacity	$ 100,000,000		$ 100,000,000
Common Stock [Member] | Principal Owner | Exchange of certain Related-Party Notes for common stock
Related Party Transaction [Line Items]
Debt conversion number of shares issued | shares		22,159,070

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Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 64,989	$ 36,983	$ 77,775	$ 14,629
Change in unrealized losses (gains)	4,569	1,518	1,551	(1,227)
Net losses reclassified into earnings	9,080	484	24,315	501
Other comprehensive income (loss)	13,649	2,002	25,866	(726)
Total comprehensive income	$ 78,638	$ 38,985	$ 103,641	$ 13,903

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Net Income Per Share

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Net Income Per Share

Net Income Per Share

Employee equity share options and unvested shares granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of of in-the-money options, unvested restricted stock units, and shares to be issued under the Company's ESPP. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are collectively assumed to be used to repurchase shares.

Basic and diluted net income per share were computed using the two-class method for periods prior to the completion of the IPO, which is an allocation method that determines net income per share for common stock and participating securities.

The following table sets forth the computation of the Company’s basic and diluted net income per share attributable to common stock for the periods presented (in thousands, except per share data):

	Three Months Ended June 30,					Six Months Ended June 30,
	2015		2014			2015		2014
	(unaudited)		(unaudited)			(unaudited)		(unaudited)
BASIC:
Net income	$	64,989	$	36,983		77,775		$	14,629
Less: net income allocated to participating securities	—		(22,658		)	—		(8,962		)
Net income attributable to common shareholders	$	64,989	$	14,325		$	77,775	$	5,667
Weighted-average common shares outstanding	43,298		702			43,239		702
Basic net income per share	$	1.50	$	20.42		$	1.80	$	8.08
DILUTED:
Net income	$	64,989	$	36,983		$	77,775	$	14,629
Less: net income allocated to participating securities	—		(13,230		)	—		(5,233		)
Net income attributable to common shareholders	$	64,989	$	23,753		$	77,775	$	9,396
Weighted-average common shares outstanding-basic	43,298		702			43,239		702
Effect of dilutive potential common shares	785		1,290			1,299		1,290
Weighted-average common shares outstanding-diluted	44,083		1,992			44,538		1,992
Diluted net income per share	$	1.47	$	11.92		$	1.75	$	4.72

The following warrants and director and employee stock awards were excluded from the calculation of diluted net earnings per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented (share data, in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Warrants to purchase common stock	—	42,243	—	42,243
Stock option awards	22	—	18	—

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Related-Party Transactions

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Related-Party Transactions

Related-Party Transactions

The Company licenses the use of its brand name from certain entities affiliated with Virgin Enterprises Limited, a company incorporated in England and Wales (“VEL”). VEL is an affiliate of one of the Company’s largest stockholders, the Virgin Group, which has one designee on the Company's board of directors. The Company paid license fees of $2.0 million during each of the three months ended June 30, 2015 and 2014 and $3.7 million and $3.6 million for the six months ended June 30, 2015 and 2014. The Company had accrued unpaid royalty fees of $2.0 million and $1.8 million at June 30, 2015 and December 31, 2014.

As of June 30, 2015 the Virgin Group, through its affiliates including VX Holdings L.P., owned approximately 18.9% of the Company’s issued and outstanding voting stock and all of the outstanding related-party debt. In order to comply with requirements under U.S. law governing the ownership and control of U.S. airlines, at least 75% of the voting stock of the Company must be held by U.S. citizens and at least two-thirds of the Company's board of directors must be U.S. citizens. U.S. citizen investors owned over 75% of the voting stock of the Company, of which Cyrus Aviation Holdings, LLC, the largest single U.S. investor, owned approximately 28.8% as of June 30, 2015.

As of June 30, 2015, 27.1% of the Company’s $149.1 million debt was held by related-party investors. In connection with the 2014 Recapitalization, the Company reduced related-party debt with a carrying value of $728.3 million to $38.5 million. The Company incurred $0.8 million and $9.6 million of related-party interest expense for the three months ended June 30, 2015 and 2014 and $1.6 million and $18.9 million for the six months ended June 30, 2015 and 2014. Commencing in November 2014, the Company began to incur an annual commitment fee on the $100.0 million Letter of Credit Facility issued by the Virgin Group. The fee was equal to 5.0% per annum of the daily maximum amount available to be drawn, accruing on a daily basis from the date of issuance and was payable quarterly. For the three and six months ended June 30, 2015, the Company recorded $1.1 million and $2.5 million in commitment fees in the accompanying condensed consolidated statements of operations. In June 2015, the Company canceled the Letter of Credit Facility in conjunction with the elimination of the credit card holdback requirement and is no longer incurring related commitment fees. The Post-IPO Note provided for a reduction of the term of the Note from eight to six years in the event of early termination of the Letter of Credit Facility. In connection with the cancellation of the Letter of Credit Facility in June 2015, and as required by the related note purchase agreement, the term of the Post-IPO Note issued to Virgin Group was reduced from eight to six years.

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Financial Derivative Instruments and Risk Management - Effect of Fuel Derivative Instruments in the Condensed Consolidated Statements of Operations (Details) - Energy Related Derivative - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Total impact to the consolidated statements of operations	$ (9,219)	$ (549)	$ (24,434)	$ (677)
Designated as Hedging Instrument | Jet Fuel | Aircraft Fuel Expense
Derivative Instruments, Gain (Loss) [Line Items]
Total impact to the consolidated statements of operations	(9,219)	(549)	(24,434)	(677)
Not Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Total impact to the consolidated statements of operations	800	(476)	353	(928)
Not Designated as Hedging Instrument | Jet Fuel | Aircraft Fuel Expense
Derivative Instruments, Gain (Loss) [Line Items]
Total impact to the consolidated statements of operations	$ 800	$ (476)	$ 353	$ (928)

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Fair Value - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 444,803	$ 339,211
Restricted cash	19,744	18,775
Assets fair value disclosure	464,532	330,866
Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	42
Heating Oil | Collars
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0	(27,170)
Heating Oil | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	201
Brent Calls | Calls
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	1	50
Jet Fuel | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	(259)
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	444,803	339,211
Restricted cash	19,744	18,775
Assets fair value disclosure	464,547	357,986
Fair Value, Inputs, Level 1 | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0
Fair Value, Inputs, Level 1 | Heating Oil | Collars
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0	0
Fair Value, Inputs, Level 1 | Heating Oil | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0
Fair Value, Inputs, Level 1 | Brent Calls | Calls
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0	0
Fair Value, Inputs, Level 1 | Jet Fuel | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Restricted cash	0	0
Assets fair value disclosure	(15)	(27,120)
Fair Value, Inputs, Level 2 | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	42
Fair Value, Inputs, Level 2 | Heating Oil | Collars
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0	(27,170)
Fair Value, Inputs, Level 2 | Heating Oil | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	201
Fair Value, Inputs, Level 2 | Brent Calls | Calls
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	1	50
Fair Value, Inputs, Level 2 | Jet Fuel | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	(259)
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Restricted cash	0	0
Assets fair value disclosure	0	0
Fair Value, Inputs, Level 3 | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0
Fair Value, Inputs, Level 3 | Heating Oil | Collars
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0	0
Fair Value, Inputs, Level 3 | Heating Oil | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0
Fair Value, Inputs, Level 3 | Brent Calls | Calls
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	0	$ 0
Fair Value, Inputs, Level 3 | Jet Fuel | Swaps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total current assets (liabilities)	$ 0

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Financial Derivative Instruments and Risk Management (Tables)

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Assets and Liabilities

The following tables present the fair value of derivative assets and liabilities that are designated and not designated as hedging instruments, as well as the location of the asset and liability balances within the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014 (in thousands):

Derivatives designated as cash flow hedges	Consolidated balance sheet location	Fair value of derivatives as of
		June 30, 2015			December 31, 2014
		(unaudited)
Fuel derivative instruments—Heating oil collars	Current liabilities	—			(24,762		)
Fuel derivative instruments—Brent calls	Current liabilities	—			(84		)
Fuel derivative instruments—Heating oil swaps	Current liabilities	317			—
Fuel derivative instruments—Jet fuel swaps	Current liabilities	(259		)	—
Interest rate swaps	Current assets	42			—
Total current assets (liabilities)		$	100		$	(24,846	)

Derivatives not designated as cash flow hedges	Consolidated balance sheet location	Fair value of derivatives as of
		June 30, 2015			December 31, 2014
		(unaudited)
Fuel derivative instruments—Heating oil collars	Current liabilities	—			(2,408		)
Fuel derivative instruments—Brent calls	Current liabilities	1			134
Fuel derivative instruments—Heating oil swaps	Current liabilities	(116		)	—
Total current assets (liabilities)		$	(115	)	$	(2,274	)

Effects of Fuel Derivative Instruments in Condensed Consolidated Statements of Operations

The following table summarizes the effect of fuel derivative instruments in the condensed consolidated statements of operations for the three and six months ended June 30, 2015 and 2014 (in thousands):

Derivatives accounted for as hedging instruments under ASC 815	Consolidated financial  statement location	Gains (losses) on derivative contracts for the three months ended						Gains (losses) on derivative contracts for the six months ended
		June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Fuel derivative instruments	Aircraft fuel expense	$	(9,219	)	$	(549	)	$	(24,434	)	$	(677	)
Total impact to the consolidated statements of operations		$	(9,219	)	$	(549	)	$	(24,434	)	$	(677	)

Derivatives not accounted for as hedging instruments under ASC 815	Consolidated financial  statement location	Gains (losses) on derivative contracts for the three months ended					Gains (losses) on derivative contracts for the six months ended
		June 30, 2015		June 30, 2014			June 30, 2015		June 30, 2014
		(unaudited)		(unaudited)			(unaudited)		(unaudited)
Fuel derivative instruments	Aircraft fuel expense	$	800	$	(476	)	$	353	$	(928	)
Total impact to the consolidated statements of operations		$	800	$	(476	)	$	353	$	(928	)

Effect of Fuel Derivative Instrument Designated as Cash Flow Hedges on Condensed Consolidated Statements of Operations

The effect of fuel derivative instruments designated as cash flow hedges and the underlying hedged items on the condensed consolidated statements of operations for the three and six months ended June 30, 2015 and 2014, respectively, is summarized as follows (in thousands):

Derivatives designated as cash flow hedges	Amount of gain (loss) recognized in AOCI on derivatives (Effective portion)				Gain (loss) reclassified from AOCI into income (Fuel expense or Interest expense) (Effective portion)						Amount of gain (loss) recognized into income (Ineffective portion)
	Three Months Ended,				Three Months Ended,						Three Months Ended,
	June 30, 2015		June 30, 2014		June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
	(unaudited)		(unaudited)		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Fuel derivative instruments	$	4,527	$	1,518	$	(9,080	)	$	(484	)	$	(139	)	$	(65	)
Interest rate swaps	42		—		—			—			—			—

Derivatives designated as cash flow hedges	Amount of gain (loss) recognized in AOCI on derivatives (Effective portion)					Gain (loss) reclassified from AOCI into income (Fuel expense or Interest expense) (Effective portion)						Amount of gain (loss) recognized into income (Ineffective portion)
	Six Months Ended,					Six Months Ended,						Six Months Ended,
	June 30, 2015		June 30, 2014			June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
	(unaudited)		(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Fuel derivative instruments	$	1,509	$	(1,227	)	$	(24,315	)	$	(501	)	$	(119	)	$	(176	)
Interest rate swaps	42		—			—			—			—			—

Notional Amounts of Outstanding Derivative Positions

The notional amounts of the Company’s outstanding fuel and debt payment related derivatives are summarized as follows (in millions):

	June 30, 2015		December 31, 2014
	(unaudited)
Derivatives designated as hedging instruments:
Fuel derivative instruments—Heating oil collars (gallons)	0		36
Fuel derivative instruments—Brent calls (gallons)	0		16
Fuel derivative instruments—Heating oil swaps (gallons)	9		0
Fuel derivative instruments—Jet fuel swaps (gallons)	28		0
Interest rate swaps (dollars)	$	39	$	0
Derivatives not designated as hedging instruments:
Fuel derivative instruments—Heating oil collars (gallons)	0		3
Fuel derivative instruments—Brent calls (gallons)	11		13
Fuel derivative instruments—Heating oil swaps (gallons)	2		0
Fuel derivative instruments—Jet fuel swaps (gallons)	0		0
Interest rate swaps (dollars)	$	0	$	0

Offsetting Assets

As of June 30, 2015 and December 31, 2014, information related to these offsetting arrangements was as follows (in thousands):

	June 30, 2015 (unaudited)
	Derivatives offset in consolidated balance sheet									Derivatives eligible for offsetting
	Gross derivative amounts			Gross derivative amounts offset  in consolidated balance sheet			Net amount			Gross derivative amounts			Gross derivative amounts  eligible for offsetting			Net amount
Fair value of assets	$	2,176		$	(2,176	)	$	—		$	2,176		$	(2,176	)	$	—
Fair value of liabilities	(2,233		)	2,176			(57		)	(2,233		)	2,176			(57		)
Margin call deposits							—									—
Total							$	(57	)							$	(57	)

	December 31, 2014
	Derivatives offset in consolidated balance sheet									Derivatives eligible for offsetting
	Gross derivative amounts			Gross derivative amounts offset  in consolidated balance sheet			Net amount			Gross derivative amounts			Gross derivative amounts  eligible for offsetting			Net amount
Fair value of assets	$	256		$	(256	)	$	0		$	256		$	(256	)	$	0
Fair value of liabilities	(27,376		)	256			(27,120		)	(27,376		)	256			(27,120		)
Margin call deposits							14,390									14,390
Total							(12,730		)							(12,730		)

Offsetting Liabilities

As of June 30, 2015 and December 31, 2014, information related to these offsetting arrangements was as follows (in thousands):

	June 30, 2015 (unaudited)
	Derivatives offset in consolidated balance sheet									Derivatives eligible for offsetting
	Gross derivative amounts			Gross derivative amounts offset  in consolidated balance sheet			Net amount			Gross derivative amounts			Gross derivative amounts  eligible for offsetting			Net amount
Fair value of assets	$	2,176		$	(2,176	)	$	—		$	2,176		$	(2,176	)	$	—
Fair value of liabilities	(2,233		)	2,176			(57		)	(2,233		)	2,176			(57		)
Margin call deposits							—									—
Total							$	(57	)							$	(57	)

	December 31, 2014
	Derivatives offset in consolidated balance sheet									Derivatives eligible for offsetting
	Gross derivative amounts			Gross derivative amounts offset  in consolidated balance sheet			Net amount			Gross derivative amounts			Gross derivative amounts  eligible for offsetting			Net amount
Fair value of assets	$	256		$	(256	)	$	0		$	256		$	(256	)	$	0
Fair value of liabilities	(27,376		)	256			(27,120		)	(27,376		)	256			(27,120		)
Margin call deposits							14,390									14,390
Total							(12,730		)							(12,730		)

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidation

The condensed consolidated financial statements of Virgin America Inc. (the "Company") for the three and six months ended June 30, 2014 include the accounts of the Company and its variable interest entity, VX Employee Holdings LLC, for which it was the primary beneficiary until all of the shares held by VX Employee Holdings LLC were sold to the public as part of the Company's initial public offering (the "IPO") in November 2014 as discussed below.

Basis of accounting

These unaudited condensed consolidated financial statements have been prepared as required by the U.S. Securities Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been condensed or omitted as permitted by the SEC.

Use of estimates

The financial statements include all adjustments, including normal recurring adjustments and other adjustments, which are considered necessary for a fair presentation of the Company’s financial position and results of operations. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for the entire year.

Prior period reclassifications

Certain prior year amounts have been reclassified to conform to current year presentation. These amounts were not material to any of the periods presented.

Receivables

Receivables, net

Receivable, net includes credit card holdbacks and other receivables. Credit card holdbacks and related receivables are amounts due from credit card processors associated with sales for future travel and are carried at cost. Under the terms of the Company’s credit card processing agreements, certain proceeds from advance ticket sales are held back to serve as collateral by the credit card processors, due to the Company’s credit and in part to cover any possible refunds or chargebacks that may occur. These holdbacks are short-term, as the travel for which they relate occurs within twelve months. In June 2015, the Company entered into agreements with its credit card processors to reduce the holdback requirements to 0% and, in connection with this the $100.0 million Letter of Credit Facility was terminated. The credit card processors have the right to increase the credit card holdback amount in the future depending on the Company's financial performance. If the Company's credit card processors were to implement a new holdback requirement, it would be funded through withholding proceeds from future ticket sales made through credit card transactions. As of June 30, 2015, the Company recorded $18.6 million in credit card receivables. As of December 31, 2014, the Company had no net holdbacks outstanding as a result of the Letter of Credit Facility and $9.6 million of credit card receivables

New accounting standards

New Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") and International Accounting Standards Board ("IASB") jointly issued a comprehensive new revenue recognition standard that will replace most existing revenue recognition standards under U.S. GAAP and International Financial Reporting Standards ("IFRS"). The new standard will require the Company to recognize revenue when goods or services are transferred to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. As a result, the Company will need to use more judgments and estimates to determine when and how revenue is recognized than U.S. GAAP currently requires. The new standard will become effective for the Company on January 1, 2018. The Company believes the most significant effect of this accounting standards update will be the elimination of the incremental cost method for frequent flyer accounting, which would require the Company to re-value its liability earned by customers associated with flights points with a relative fair value approach. The Company is continuing to evaluate the new guidance and plans to provide additional information about its expected financial effect at a future date.

In February 2015, the FASB issued an accounting standards update that eliminates the deferral of FAS 167, which has allowed entities with interests in certain investment funds to follow the previous consolidation guidance in FIN 46(R), and makes other changes to both the variable interest model and the voting model.In some cases, consolidation conclusions will change. In other cases, reporting entities will need to provide additional disclosures about entities that currently aren’t considered variable interest entities (VIEs) but will be considered VIEs under the new guidance provided they have a variable interest in those VIEs. The guidance will be effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company does not expect this accounting standards update to have a material impact on the consolidated financial statements.

In April 2015, the FASB issued an accounting standards update that simplifies the guidance related to presentation of debt issuance costs. The guidance requires presentation of debt issuance costs on the balance sheet as a direct deduction from the face amount of that note, consistent with debt discounts. The guidance is to be applied retrospectively to the financial periods presented as a change in accounting principle. The guidance will be effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company does not expect this accounting standards update to have a material impact on the consolidated financial statements.

In June 2015, the FASB issued an accounting standards update that corrects differences between original accounting guidance and the accounting guidance codification, clarifies the accounting guidance, corrects references and makes minor improvements affecting a variety of accounting topics. Transition guidance varies based on the amendments in the update. The amendments in the update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect this accounting standards update to have a material impact on the consolidated financial statements.

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

The following is a listing of the Company’s assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the fair value hierarchy as of June 30, 2015 and December 31, 2014 respectively (in thousands):

	June 30, 2015 (unaudited)
	Level 1		Level 2			Level 3		Total
Assets (Liability)
Cash equivalents	$	444,803	$	—		$	—	$	444,803
Restricted cash	19,744		—			—		19,744
Heating oil collars - fuel derivative instruments	—		—			—		—
Brent calls - fuel derivative instruments	—		1			—		1
Heating oil swaps - fuel derivative instruments	—		201			—		201
Jet fuel swaps - fuel derivative instruments	—		(259		)	—		(259		)
Interest rate swaps	—		42			—		42
	$	464,547	$	(15	)	$	—	$	464,532
	December 31, 2014
	Level 1		Level 2			Level 3		Total
Assets (Liability)
Cash equivalents	$	339,211	$	—		$	—	$	339,211
Restricted cash	18,775		—			—		18,775
Heating oil collars - fuel derivative instruments	—		(27,170		)	—		(27,170		)
Brent calls - fuel derivative instruments	—		50			—		50
	$	357,986	$	(27,120	)	$	—	$	330,866

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Contingencies and Commitments (Tables)

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Contractual Payment Commitments

As of June 30, 2015, the Company has the following contractual payment commitments (in thousands):

Year	Long-term debt including related- party  (1)		Aircraft and engine purchases (2)		Aircraft and engine leases (3)		Maintenance deposits (4)		Other leases (5)		Total
2015	$	33,824	$	213,918	$	112,277	$	5,645	$	13,373	$	379,037
2016	34,832		209,583		217,457		8,968		26,547		497,387
2017	—		—		204,303		9,367		26,712		240,382
2018	40,000		—		188,903		10,186		23,541		262,630
2019	51,534		—		172,562		10,814		16,888		251,798
Thereafter	—		—		487,888		36,900		34,265		559,053
	$	160,190	$	423,501	$	1,383,390	$	81,880	$	141,326	$	2,190,287

(1) Includes accrued interest; excludes future interest of $15.5 million to be accrued through and payable in November 2020 on the Post-IPO Note.

(2) Represents non-cancelable contractual payment commitments for aircraft and engines; includes $195.0 million of aircraft financing obtained for 2015 deliveries.

(3) Represents future minimum lease payments under non-cancelable operating leases with initial terms in excess of one year, including renewal payments for signed lease extensions and excluding lease rebates.

(4) Represents the fixed portion of supplemental rent under lessor contracts for maintenance reserve payment commitments; excludes variable future amounts that will be based on actual flight hours.

(5) Represents future minimum lease payments under non-cancelable building, airport station and equipment leases.

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Financial Derivative Instruments and Risk Management - Narrative (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2015 USD ($) $ / gal	Dec. 31, 2014 USD ($)
Derivative [Line Items]
Margin call deposits	$ 0	$ 14,390
Net hedge liability	57	27,120
Net current liability	57	$ 12,730
Estimate of net derivative losses to be reclassified in future	(300)
Forward Contracts
Derivative [Line Items]
Committed purchase contracts	$ 38,600
Forward Contracts | Jet Fuel
Derivative [Line Items]
Percent of fuel derivative contracts based on forecasted fuel requirements	30.00%
Weighted-average cost per gallon | $ / gal	1.86
Energy Related Derivative | Crude Oil and Heating Oil
Derivative [Line Items]
Exit date prior to need	3 months
Energy Related Derivative | Crude Oil and Heating Oil | Minimum
Derivative [Line Items]
Purchase period prior to expected need	3 months
Energy Related Derivative | Crude Oil and Heating Oil | Maximum
Derivative [Line Items]
Purchase period prior to expected need	12 months

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Financial Derivative Instruments and Risk Management - Offsetting Arrangements (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Derivative offset in consolidated balance sheet [Abstract]
Gross derivative amounts - fair value of assets	$ 2,176	$ 256
Gross derivative amounts offset in consolidated balance sheet - fair value of assets	2,176	256
Net amount - fair value of assets	0	0
Gross derivative amounts - fair value of liabilities	(2,233)	(27,376)
Gross derivative amounts offset in consolidated balance sheet - fair value of liabilities	2,176	256
Net amount - fair value of liabilities	(57)	(27,120)
Net amount - margin call deposits	0	14,390
Net amount - Total	(57)	(12,730)
Derivative eligible for offsetting [Abstract]
Gross derivative amount - fair value of assets	2,176	256
Gross derivative amounts offset in consolidated balance sheet - fair value of assets	(2,176)	(256)
Gross derivative amounts - fair value of liabilities	(2,233)	(27,376)
Gross derivative amounts offset in consolidated balance sheet - fair value of liabilities	2,176	256
Net amount - Total	57	$ 12,730
Derivative Liability, Fair Value, Amount Not Offset Against Collateral	57
Derivative Asset, Fair Value, Amount Not Offset Against Collateral	$ 0

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Condensed Consolidated Statement of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Statement of Cash Flows [Abstract]
Cash flows from operating activities:	$ 130,920	$ 25,059
Cash flows from investing activities:
Acquisition of property and equipment and intangible assets	(16,273)	(31,070)
Pre-delivery payments for flight equipment	(5,805)	(9,182)
Net cash used in investing activities	(22,078)	(40,252)
Cash flows from financing activities:
Net proceeds of equity issuance	1,526	8
Proceeds of term loan facility	0	40,000
Debt issuance costs	(818)	(494)
Shares repurchased for tax withholding on vesting of restricted stock units	(3,736)	0
Net cash provided by (used in) financing activities	(3,028)	39,514
Net increase in cash and cash equivalents	105,814	24,321
Cash and cash equivalents, beginning of period	394,643	155,659
Cash and cash equivalents, end of period	500,457	179,980
Non-cash transactions:
Non-cash loan borrowings on pre-delivery payments for flight equipment	$ 17,416	$ 0

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Income Taxes

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company's effective tax rates are lower than the federal statutory rate of 35% primarily because of the impact of changes to existing valuation allowances. The Company continues to provide a valuation allowance for its deferred tax assets in excess of deferred tax liabilities because the Company concluded that it is more likely than not that such deferred tax assets will ultimately not be realized.

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Contingencies and Commitments - Narrative (Details)	1 Months Ended						6 Months Ended
	Jul. 31, 2015 aircraft	Jun. 30, 2015 USD ($) aircraft	May. 31, 2015	Apr. 30, 2015 USD ($) aircraft lender	Dec. 31, 2012 USD ($) aircraft	Dec. 31, 2010 aircraft	Jun. 30, 2015 USD ($) aircraft	Apr. 29, 2015	Dec. 31, 2014 USD ($)
Loss Contingencies [Line Items]
Pre-delivery payments for flight equipment		$ 117,501,000					$ 117,501,000		$ 94,280,000
Committed expenditures in 2015		213,918,000					213,918,000
Committed expenditures in 2016		209,583,000					$ 209,583,000
Royalty fee (percent)							0.50%
Royalty fee starting in the first quarter of 2016 (percent)							0.70%
Revenue target amount to reach the ultimate royalty fee rate							$ 4,500,000,000.0
Ultimate royalty fee (percent)							0.50%
Notes Payable, Other Payables
Loss Contingencies [Line Items]
Notes payable		68,700,000					$ 68,700,000
Debt financing facility
Loss Contingencies [Line Items]
Maximum borrowing capacity				$ 195,000,000.0
Number of lenders | lender				3
Percentage of purchase price financed through the debt facility				80.00%
Average interest rate - less than (percent)								5.00%
Senior debt facility
Loss Contingencies [Line Items]
Maximum borrowing capacity				$ 168,600,000
Term of debt instrument				12 years
Subordinate debt facility
Loss Contingencies [Line Items]
Maximum borrowing capacity				$ 26,400,000
Term of debt instrument				6 years
Virgin Group | Line of Credit | Letter of Credit
Loss Contingencies [Line Items]
Maximum borrowing capacity		100,000,000					$ 100,000,000
Termination period							6 years
A-320 | Debt financing facility
Loss Contingencies [Line Items]
Number of aircraft | aircraft				5
Capital Addition Purchase Commitments | A-320
Loss Contingencies [Line Items]
Number of aircraft | aircraft					40	60
Cancellation rights (number of aircraft) | aircraft					30
Number of aircraft in group | aircraft					5
Cancellation rights period prior to delivery (period)					2 years
Deposits on flight equipment converted to credits					$ 11,000,000
Last tranche of aircraft | aircraft					10
Cancellation fee					$ 26,000,000
Capital Addition Purchase Commitments | A-320 Neo
Loss Contingencies [Line Items]
Number of aircraft | aircraft						30
Capital Addition Purchase Commitments, First Ten Aircraft | A-320
Loss Contingencies [Line Items]
Pre-delivery payments for flight equipment		$ 91,500,000					$ 91,500,000
Long-term purchase commitment, tranche one | aircraft		10					10
Capital Addition Purchase Commitments, Last Thirty Aircraft | A-320
Loss Contingencies [Line Items]
Pre-delivery payments for flight equipment		$ 26,000,000					$ 26,000,000
Long-term purchase commitment, tranche two | aircraft		30					30
Swaps | May 2015 12 Year Interest Rate Swaps
Loss Contingencies [Line Items]
Notional amount of derivatives		$ 33,000,000					$ 33,000,000
Term of contract							12 years
Variable interest rate (percent)		2.36%					2.36%
Swaps | May 2015 6 Year Interest Rate Swaps
Loss Contingencies [Line Items]
Notional amount of derivatives		$ 6,000,000					$ 6,000,000
Term of contract							6 years
Variable interest rate (percent)		1.70%					1.70%
4.77% Senior Notes | Senior debt facility
Loss Contingencies [Line Items]
Maximum borrowing capacity		$ 102,600,000					$ 102,600,000
Interest rate (percent)		4.77%					4.77%
Subsequent Event | Debt financing facility
Loss Contingencies [Line Items]
Number of aircraft | aircraft	5
Post-IPO Note Issued for Extinguishment of Previous Debt | Principal Owner | Virgin Group
Loss Contingencies [Line Items]
Term of debt instrument		6 years	8 years				8 years
Reduction in debt term							6 years
Interest payable		$ 15,500,000					$ 15,500,000

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Fair Value - Narrative (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Pre-Delivery Payments
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of non-related party debt	$ 68.7	$ 51.2
Airport Slots
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of non-related party debt	40.0
Principal Owner
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of related party debt	$ 45.9	$ 38.8