10-K: American Electric Power and Julia Sloat Enter Aircraft Time Sharing Agreement

American Electric Power Service Corporation and Julia A. Sloat have entered into a time sharing agreement for the use of company aircraft.

Summary

• American Electric Power Service Corporation (AEP) and Julia A. Sloat have entered into an Aircraft Time Sharing Agreement, effective January 1, 2023.
• The agreement allows Ms. Sloat to use AEP's aircraft for up to 40 flight hours per year, excluding deadhead flights, with additional use requiring approval from the Chairman of the Human Resources Committee or AEP Inc.'s Lead Director.
• Ms. Sloat will reimburse AEP for the direct expenses of each flight, including fuel, crew travel, hangar costs, insurance, landing fees, customs fees, catering, and flight planning services.
• AEP will provide qualified flight crew at its own expense and retains full operational control of the aircraft.
• The agreement has a one-year term and will automatically renew for additional one-year terms unless terminated.
• AEP will maintain aviation liability insurance of at least $200 million, including Ms. Sloat as an additional insured.
• Ms. Sloat warrants that she will use the aircraft for her own account and will not use it for commercial purposes.
• AEP is not liable for any loss, injury, or damage due to delays or failure to provide the aircraft and crew.
• The base of operations for the aircraft is John Glenn International Airport in Columbus, Ohio, but this may be changed with notice.
• The agreement is subject to AEP's lease agreement with the aircraft lessor and is subordinate to the lessor's interest in the aircraft.
• Either party may terminate the agreement with 30 days' written notice, or immediately in the event of a breach or to comply with applicable laws or insurance requirements.

Sentiment

Score: 7

Explanation: The document is a standard legal agreement with no strong positive or negative sentiment. It outlines the terms of a business arrangement in a neutral and professional manner.

Positives

• The agreement provides a clear framework for the use of AEP's aircraft by Ms. Sloat.
• AEP retains full operational control and responsibility for the aircraft.
• The agreement includes provisions for automatic renewal, providing continuity.
• AEP is responsible for providing qualified flight crew at its own expense.
• The agreement includes a comprehensive list of reimbursable expenses, ensuring transparency.
• The agreement includes a robust insurance policy with Ms. Sloat as an additional insured.

Negatives

• Ms. Sloat's use of the aircraft is limited to 40 flight hours per year, which may be restrictive.
• Additional use of the aircraft requires approval from the Chairman of the Human Resources Committee or AEP Inc.'s Lead Director.
• AEP is not liable for any loss, injury, or damage due to delays or failure to provide the aircraft and crew.
• The agreement is subordinate to AEP's lease agreement with the aircraft lessor, which could impact Ms. Sloat's use of the aircraft.

Risks

• Ms. Sloat's use of the aircraft is subject to AEP's prior planned utilization and may not always be available.
• AEP is not liable for delays or failure to provide the aircraft due to various reasons, including mechanical issues, weather, or government regulations.
• The agreement is subordinate to the lessor's interest in the aircraft, which could impact Ms. Sloat's use of the aircraft.
• The agreement can be terminated by either party with 30 days' notice, or immediately in the event of a breach or to comply with applicable laws or insurance requirements.

Future Outlook

The agreement will automatically extend for additional one-year terms unless terminated.

Industry Context

Time sharing agreements are common in the aviation industry, allowing individuals to access private aircraft without the full cost of ownership. This agreement allows AEP to provide a benefit to Ms. Sloat while maintaining control of its assets.

Comparison to Industry Standards

• Time sharing agreements are a common practice in the aviation industry, particularly for corporate aircraft.
• The terms of this agreement, including the 40-hour limit and reimbursement of expenses, are generally consistent with industry standards for such arrangements.
• The insurance coverage of $200 million is a standard amount for aviation liability insurance.
• The agreement's subordination to the lessor's interest is also a common practice in aircraft leasing and time sharing agreements.

Stakeholder Impact

• Shareholders: The agreement allows for the efficient use of company assets.
• Employees: The agreement ensures that qualified flight crew are provided at AEP's expense.
• Customers: The agreement does not directly impact AEP's customers.
• Suppliers: The agreement may impact suppliers of fuel, catering, and other flight-related services.
• Creditors: The agreement is subordinate to the lessor's interest in the aircraft.

Next Steps

• AEP will provide invoices to Ms. Sloat for flight expenses on a quarterly basis.
• Ms. Sloat will pay AEP within 30 days of the invoice date.
• AEP will notify Ms. Sloat if any maintenance is required that will interfere with her requested or scheduled flights.
• AEP will send a copy of the agreement to the FAA within 24 hours of execution.
• AEP will notify the FAA of the first flight under the agreement.

Key Dates

Keywords

aircraft time sharing, aviation agreement, flight hours, aircraft operation, flight crew, aviation insurance, aircraft maintenance, federal aviation regulations, reimbursement of expenses, operational control