Segment Reporting

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Segment Reporting

10. Segment Reporting

We have the following two operating and reportable segments: Airline Operations and Dry Leasing, both of which are directly or indirectly engaged in the business of air transportation services but have different commercial and economic characteristics. Each operating segment is separately reviewed by our chief operating decision maker to assess operating results and make resource allocation decisions. We do not aggregate our operating segments and, therefore, our operating segments are our reportable segments.

We use an economic performance metric called Direct Contribution, which shows the profitability of each segment. Direct Contribution includes Income before income taxes and excludes the following: Special charges, Transaction-related expenses, nonrecurring items, Loss (gain) on disposal of flight equipment, Losses on early extinguishment of debt, Unrealized loss on financial instruments and Unallocated income and expenses, net. Direct operating and ownership costs include crew costs, maintenance, fuel, ground operations, sales costs, aircraft rent, interest expense on the portion of debt used for financing aircraft, interest income on debt securities and aircraft depreciation. Unallocated income and expenses, net include corporate overhead, nonaircraft depreciation, noncash expenses and income, interest expense on the portion of debt used for general corporate purposes, interest income on nondebt securities, capitalized interest, foreign exchange gains and losses, other revenue, other non-operating costs and CARES Act grant income.

The following table sets forth Operating Revenue and Direct Contribution for our reportable segments reconciled to Operating Income and Income before income taxes:

	For the Three Months Ended						For the Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Operating Revenue:
Airline Operations	$	1,142,731		$	955,861		$	2,138,086		$	1,782,101
Dry Leasing		41,314			40,404			87,484			80,768
Customer incentive asset amortization		(9,864	)		(11,443	)		(19,915	)		(21,924	)
Other		5,790			5,610			11,472			10,787
Total Operating Revenue	$	1,179,971		$	990,432		$	2,217,127		$	1,851,732
Direct Contribution:
Airline Operations	$	196,331		$	231,793		$	382,150		$	400,943
Dry Leasing		12,646			10,766			29,555			21,329
Total Direct Contribution for Reportable Segments		208,977			242,559			411,705			422,272
Unallocated income and (expenses), net		(93,361	)		(102,464	)		(194,101	)		(163,998	)
Loss on early extinguishment of debt		(689	)		-			(689	)		-
Unrealized loss on financial instruments		-			-			-			(113	)
Special charge		-			-			(2,633	)		-
Transaction-related expenses		-			(117	)		-			(318	)
Gain (loss) on disposal of flight equipment		(19	)		-			6,221			(16	)
Income before income taxes		114,908			139,978			220,503			257,827
Add back (subtract):
Interest income		(873	)		(189	)		(1,113	)		(400	)
Interest expense		19,924			26,992			40,347			54,172
Capitalized interest		(3,339	)		(1,850	)		(7,103	)		(3,121	)
Loss on early extinguishment of debt		689			-			689			-
Unrealized loss on financial instruments		-			-			-			113
Other (income) expense, net		837			(4,854	)		219			(44,310	)
Operating Income	$	132,146		$	160,077		$	253,542		$	264,281

The following table disaggregates our Airline Operations segment revenue by customer and service type:

	For the Three Months Ended
	June 30, 2022							June 30, 2021
		Cargo		Passenger		Total		Cargo		Passenger		Total
Commercial customers		$	989,169	$	422	$	989,591	$	819,175	$	-	$	819,175
AMC			85,631		67,509		153,140		49,072		87,614		136,686
Total Airline Operations Revenue		$	1,074,800	$	67,931	$	1,142,731	$	868,247	$	87,614	$	955,861
	For the Six Months Ended
	June 30, 2022							June 30, 2021
		Cargo		Passenger		Total		Cargo		Passenger		Total
Commercial customers		$	1,892,451	$	2,047	$	1,894,498	$	1,532,387	$	2,879	$	1,535,266
AMC			114,920		128,668		243,588		94,384		152,451		246,835
Airline Operations Revenue		$	2,007,371	$	130,715	$	2,138,086	$	1,626,771	$	155,330	$	1,782,101

Given the nature of our business and international flying, geographic information for revenue, long-lived assets and total assets is not presented because it is impracticable to do so.

We are exposed to a concentration of revenue from the U.S. Military Air Mobility Command (“AMC”), Polar and DHL (see above for the AMC and Note 3 for further discussion regarding Polar). No other customer accounted for more than 10.0% of our Total Operating Revenue. Revenue from DHL was $142.0 million and $277.6 million for the three and six months ended June 30, 2022, respectively. Revenue from DHL was $169.4 million and $327.3 million for the three and six months ended June 30, 2021, respectively. We have not experienced any credit issues with these customers.