Commitments and Contingencies

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Aircraft-Related Commitments and Financing Arrangements

The Company’s contractual purchase commitments consist primarily of aircraft and engine acquisitions through manufacturers. During the first quarter of 2017, the Company negotiated revisions to its A320 aircraft order. The Company originally had four A320neo aircraft scheduled for delivery in 2018 of which two were converted to A320ceo aircraft and delivered in 2017, and the remaining two are deferred until 2019. As of December 31, 2017, the Company's firm aircraft orders consisted of the following:



	Airbus
	A320ceo	A320neo	A321ceo	Total
2018	5		5	10
2019	1	14		15
2020		16		16
2021		18		18
	6	48	5	59

During the first quarter of 2018, the Company negotiated revisions to its A320 aircraft order. The Company originally had 14 A320neo aircraft scheduled for delivery in 2019. Pursuant to the revision, 5 of the 14 scheduled A320neo aircraft were converted to A320ceo aircraft but remain scheduled to be delivered in 2019. The Company also has four spare engine orders for V2500 SelectTwo engines with IAE and nine spare engine orders for PurePower PW 1100G-JM engines with Pratt & Whitney. Spare engines are scheduled for delivery from 2018 through 2023. Purchase commitments for these aircraft and engines, including estimated amounts for contractual price escalations and pre-delivery payments, are expected to be $528.4 million in 2018, $774.8 million in 2019, $820.9 million in 2020, $785.1 million in 2021, $16.8 million in 2022, and $7.9 million in 2023 and beyond. As of December 31, 2017, the Company had secured financing commitments of $356.6 million for ten aircraft, scheduled for delivery in 2018, and did not have financing commitments in place for the remaining 49 Airbus aircraft currently on firm order, which are scheduled for delivery in 2019 through 2021.

Interest commitments related to the secured debt financing of 46 delivered aircraft as of December 31, 2017 are $60.8 million in 2018, in $56.2 million 2019, $51.0 million in 2020, $45.8 million in 2021, $40.7 million in 2022, and $133.3 million in 2023 and beyond. For principal commitments related to these financed aircraft, refer to Note 11, Debt and Other Obligations. As of December 31, 2017, principal and interest commitments related to the Company's future secured debt financing of ten undelivered aircraft under the Series 2017-1 EETC are approximately $19.6 million in 2018, $39.4 million in 2019, $35.8 million in 2020, $30.3 million in 2021, $29.0 million in 2022, and $301.4 million in 2023 and beyond.

In July 2015, the Company executed an upgrade service agreement with Airbus Americas Customer Services Inc. (Airbus) to reconfigure the seating and increase capacity in 40 of the Company’s A320ceos from 178 to 182 seats (reconfiguration). The reconfiguration of the aircraft commenced in the first quarter of 2016 and is expected to be completed in the second quarter of 2018 for a remaining committed cost of $0.6 million as of December 31, 2017. These amounts will be capitalized within flight equipment on the balance sheet.

In September 2015, the Company executed a lease agreement with Wayne County Airport Authority (the Authority), which owns and operates Detroit Metropolitan Wayne County Airport (DTW). Under the lease agreement, the Company leases a 10-acre site, adjacent to the airfield at DTW, in order to construct, operate and maintain an approximately 126,000-square-foot

hangar facility (the project). The project allows for the development of a maintenance hangar in order to fulfill the requirements of the Company's growing fleet and will reduce dependence on third-party facilities and contract line maintenance. The lease agreement has a 30-year term with two 10-year extension options. Upon termination of the lease, title of the project, which will be fully depreciated, will automatically pass to the Authority. The Company completed the project during the first quarter of 2017 and has no remaining capital commitments related to this project as of December 31, 2017.

The Company is contractually obligated to pay the following minimum guaranteed payments for its reservation system, new airport kiosks and other miscellaneous subscriptions and services as of December 31, 2017: $5.9 million in 2018, $1.8 million in 2019, $1.3 million in 2020, $0.7 million in 2021, $0.4 million in 2022, and $0.0 million in 2023 and beyond. The Company's current agreement with its reservation system provider expires in 2018.

Litigation

The Company is subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. The Company believes the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on its financial position, liquidity or results of operations.

Employees

The Company has four union-represented employee groups that together represent approximately 75% of all employees at December 31, 2017. The Company had four union-represented employee groups that together represented approximately 73% of all employees at December 31, 2016. The table below sets forth the Company's employee groups and status of the collective bargaining agreements as of December 31, 2017.



Employee Groups	Representative	Amendable Date	Percentage of Workforce
Pilots	Air Line Pilots Association, International (ALPA)	August 2015	26%
Flight Attendants	Association of Flight Attendants (AFA-CWA)	May 2021	44%
Dispatchers	Transport Workers Union (TWU)	August 2018	1%
Ramp Service Agents	International Association of Machinists and Aerospace Workers (IAMAW)	June 2020	4%

In August 2015, the Company's collective bargaining agreement with its pilots, represented by ALPA, became amendable. In June 2016, ALPA requested the services of the National Mediation Board (NMB) to facilitate negotiations for an amended agreement and the Company joined ALPA in the request. In January 2018, under the guidance of the NMB assigned mediators, the parties reached a tentative amendable agreement which is subject to ratification by the pilot group. The ratification vote will take place throughout February 2018. The current tentative agreement is for a five-year contract which includes a one-time $75 million ratification incentive and other negotiated contractual provisions. The Company can provide no assurance that the tentative agreement will be approved. Under the Railway Labor Act (RLA), the parties' current agreement remains in effect until an amended agreement is ratified.

In March 2016, under the supervision of the NMB, the Company and AFA-CWA reached a tentative agreement for a five-year contract with the Company's flight attendants. In May 2016, the flight attendants voted to approve the new five-year contract with the Company. In connection with this agreement, the Company paid a $9.6 million ratification incentive payment to the flight attendants recorded within salaries, wages and benefits in the statement of operations. Of the total ratification incentive, $8.4 million was recorded during 2016 as the remaining $1.2 million was previously accrued in 2015.

In December 2017, the Professional Airline Flight Control Association (“PAFCA”) filed an application with the NMB seeking to represent our dispatchers, who are currently represented by the TWU. In January 2018, the NMB determined that a representation election would be held. The voting period for the representation election will close on February 20, 2018.

The Company is self-insured for health care claims, subject to a stop-loss policy, for eligible participating employees and qualified dependent medical claims, subject to deductibles and limitations. The Company’s liabilities for claims incurred but not reported are determined based on an estimate of the ultimate aggregate liability for claims incurred. The estimate is calculated from actual claim rates and adjusted periodically as necessary. The Company has accrued $3.9 million and $5.7 million, for health care claims as of December 31, 2017, and 2016, respectively, recorded within other current liabilities on the Company's balance sheet.