Debt and Other Obligations

12 Months Ended

Dec. 31, 2017

Long-term debt

As of December 31, 2017, the Company held non-public and public debt instruments. During 2017, the Company acquired additional debt through the 2017 fixed-rate loans and the 2017-1 EETCs described below.

2017 Fixed-rate Loans

During 2017, the Company entered into fixed-rate debt, which as of December 31, 2017, provided $527.3 million of debt financing for 4 Airbus A320 aircraft and 10 Airbus A321 aircraft. Each loan is secured by a first-priority security interest on the individual aircraft. Each loan amortizes on a mortgage-style basis and has a 10 to 12 year term. Loans bear interest payable quarterly on a fixed-rate basis. As of December 31, 2017, the Company has taken delivery of all aircraft financed through the 2017 fixed-rate loans.

2017-1 EETCs

In November 2017, the Company created three separate pass-through trusts, which issued $420.5 million aggregate face amount of Series 2017-1 Class AA, Class A and Class B EETCs in connection with the financing of seven new Airbus A320 aircraft and five new Airbus A321 aircraft. Each class of certificates represents a fractional undivided interest in the respective pass-through trusts and is not an obligation of the Company. The proceeds from the issuance of these certificates are initially held in escrow by a depositary and, upon satisfaction of certain terms and conditions, are released and used to purchase equipment notes which are issued by the Company and secured by the Company's aircraft. Interest on the issued and outstanding equipment notes are payable semiannually on February 15 and August 15 of each year, commencing on August 15, 2018, and principal on such equipment notes is scheduled for payment on February 15 and August 15 of certain years. Principal payments commence on August 15, 2018 in the case of five new Airbus A321 scheduled for delivery from February 2018 to March 2018 and three Airbus A320 scheduled for delivery from December 2017 to January 2018 and on February 15, 2019 for four Airbus A320 aircraft scheduled for delivery from April 2018 to October 2018. Issued and outstanding Series AA and Series A equipment notes mature in February 2030 and Series B equipment notes mature in February 2026. Issued and outstanding Series AA, Series A and Series B equipment notes accrue interest at a rate of 3.375%, 3.650% and 3.800%, respectively. As of December 31, 2017, $63.9 million of the proceeds from the sale of the Series 2017-1 EETCs had been used to purchase equipment notes in connection with the financing of two Airbus A320 aircraft. The remaining $356.6 million of escrowed proceeds held by the pass-through trusts will be used to purchase equipment notes as the remaining 10 new aircraft are delivered. Equipment notes that are issued are reported as debt on the Company's condensed balance sheets.

The Company evaluated whether the pass-through trusts formed are variable interest entities (VIEs) required to be consolidated by the Company under applicable accounting guidance. The Company determined that the pass-through trusts are VIEs and that it does not have a variable interest in the pass-through trusts. Based on this analysis, the Company determined that it is not required to consolidate these pass-through trusts.

Long-term debt is comprised of the following:



	As of				Twelve Months Ended December 31,
	2017		2016		2017		2016
	(in millions)				(weighted-average interest rates)
Fixed-rate senior term loans due through 2027	$	417.9	$	451.9	4.10	%	4.10	%
Fixed-rate junior term loans due through 2022	39.3		47.1		6.90	%	6.90	%
Fixed-rate loans due through 2029	518.0		—		3.83	%	N/A
Fixed-rate class A 2015-1 EETC due through 2028	408.6		409.8		4.10	%	4.10	%
Fixed-rate class B 2015-1 EETC due through 2024	92.0		103.6		4.45	%	4.45	%
Fixed-rate class AA 2017-1 EETC due through 2030	37.5		—		3.38	%	N/A
Fixed-rate class A 2017-1 EETC due through 2030	12.5		—		3.65	%	N/A
Fixed-rate class B 2017-1 EETC due through 2026	13.8		—		3.80	%	N/A
Long-term debt	$	1,539.6	$	1,012.4
Less current maturities	115.4		84.4
Less unamortized discount, net	36.7		30.6
Total	$	1,387.5	$	897.4

The Company's debt financings are collateralized by first priority security interest in the individual aircraft being financed. During the year ended December 31, 2017 and 2016, the Company made scheduled principal payments of $102.3 million and $64.4 million on its outstanding debt obligations, respectively.

At December 31, 2017, long-term debt principal payments for the next five years and thereafter are as follows:



	December 31, 2017
	(in millions)
2018	$	121.0
2019	122.3
2020	121.8
2021	121.5
2022	118.8
2023 and beyond	934.2
Total debt principal payments	$	1,539.6

Interest Expense

Interest expense related to long-term debt consists of the following:



	Twelve Months Ended December 31,
	2017		2016
	(in thousands)
Senior term loans	$	18,328	$	19,759
Junior term loans	3,035		3,568
Fixed-rate loans	8,610		—
Class A 2015-1 EETC	17,230		11,509
Class B 2015-1 EETC	4,446		3,243
Class AA 2017-1 EETC	54		—
Class A 2017-1 EETC	19		—
Class B 2017-1 EETC	22		—
Commitment fees	124		127
Amortization of deferred financing costs	5,280		3,435
Total	$	57,148	$	41,641

As of December 31, 2017 and 2016, the Company had a line of credit for $33.6 million and $23.6 million related to corporate credit cards. Respectively, the Company had drawn $1.7 million and $9.9 million as of December 31, 2017 and 2016, which is included in accounts payable.

As of December 31, 2017 and 2016, the Company had lines of credit with counterparties for derivatives and physical fuel delivery in the amount of $51.5 million and $46.5 million, respectively. As of December 31, 2017 and 2016, the Company had drawn $24.2 million and $8.0 million on these lines of credit for physical fuel delivery, which is included in other current liabilities. The Company is required to post collateral for any excess above the lines of credit if the fuel derivatives are in a net liability position and make periodic payments in order to maintain an adequate undrawn portion for physical fuel delivery. As of December 31, 2017 and 2016, the Company did not have any outstanding fuel derivatives.