Debt and Other Obligations

9 Months Ended

Sep. 30, 2018

As of September 30, 2018, the Company had outstanding non-public and public debt instruments. During the nine months ended September 30, 2018, the Company issued additional debt through the 2015-1 and 2017-1 EETCs described below.

2017-1 Class AA, Class A and Class B 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 7 new Airbus A320 aircraft and 5 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 is 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 commenced on August 15, 2018 in the case of five new Airbus A321 aircraft delivered from February 2018 to March 2018 and three Airbus A320 aircraft delivered from December 2017 to January 2018 and will commence on February 15, 2019 for three Airbus A320 aircraft delivered from April 2018 to August 2018 and one Airbus A320 aircraft scheduled for delivery in 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 September 30, 2018, $388.0 million of the proceeds from the sale of the Series 2017-1 Class AA, Class A and Class B EETCs had been used to purchase equipment notes in connection with the financing of five Airbus A321 aircraft and six Airbus A320 aircraft. The remaining $32.5 million of escrowed proceeds held by the pass-through trusts will be used to purchase equipment notes as the remaining one new aircraft is delivered in October 2018. Equipment notes that are issued are reported as debt on the Company's condensed balance sheets.

2015-1C and 2017-1C EETCs

In May 2018, the Company completed a private placement of an aggregate amount of $115.2 million pass-through certificates, Series 2015-1C. The Company entered into 15 separate participation agreement amendments to existing participation agreements that were entered into by the Company during the period from October 2015 to February 2017 under the existing pass through trust formed by the Company on August 11, 2015. The Series 2015-1C equipment notes are secured by 12 Airbus A321 aircraft previously delivered from October 2015 to January 2017 and 3 Airbus A320 aircraft previously delivered from March 2016 to June 2016. The Series 2015-1C equipment notes mature in April 2023 and accrue interest at a

rate of 4.93%. Principal and interest on the issued and outstanding Series 2015-1C equipment notes is payable semiannually on April 1 and October 1 of each year, commencing on October 1, 2018. Equipment notes that are issued are reported as debt on the Company's condensed balance sheets.

In May 2018, the Company also completed a private placement of an aggregate amount of $85.5 million pass-through certificates, Series 2017-1C. The Company entered into 9 separate participation agreement amendments to existing participation agreements that were entered into by the Company during the period from December 2017 to April 2018 under the existing pass through trust formed by the Company on November 28, 2017. The participation agreement amendments provide for the issuance of series 2017-1C equipment notes, in the aggregate principal amount of $65.7 million in connection with previously delivered aircraft. The 2017-1C equipment notes are secured by five Airbus A321 aircraft previously delivered from February 2018 to March 2018 and four Airbus A320 aircraft previously delivered from December 2017 to April 2018. The Series 2017-1C equipment notes mature in February 2023 and accrue interest at a rate of 5.11%. Interest on the Class C 2017-1 issued and outstanding equipment notes are payable semiannually on February 15 and August 15 of each year, commencing on August 15, 2018. The entire principal on the issued and outstanding Series 2017-1C equipment notes is scheduled for payment on February 15, 2023. As of September 30, 2018, $13.2 million of the proceeds from the sale of the Series 2017-1 Class C had been used to purchase equipment notes in connection with the financing of two Airbus A320 aircraft. The remaining $6.6 million of escrowed proceeds held by the pass-through trusts will be used to purchase equipment notes when the remaining 1 Airbus A320 aircraft is delivered in October 2018. 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				Three Months Ended September 30,				Nine Months Ended September 30,
	September 30, 2018		December 31, 2017		2018		2017		2018		2017
	(in millions)				(weighted-average interest rates)
Fixed-rate senior term loans due through 2027	$	391.4	$	417.9	4.10	%	4.10	%	4.10	%	4.10	%
Fixed-rate junior term loans due through 2022	33.2		39.3		6.90	%	6.90	%	6.90	%	6.90	%
Fixed-rate loans due through 2029	493.9		518.0		3.83	%	3.76	%	3.83	%	3.76	%
Fixed-rate class A 2015-1 EETC due through 2028	393.6		408.6		4.10	%	4.10	%	4.10	%	4.10	%
Fixed-rate class B 2015-1 EETC due through 2024	84.0		92.0		4.45	%	4.45	%	4.45	%	4.45	%
Fixed-rate class C 2015-1 EETC due through 2023	115.2		—		4.93	%	N/A		4.93	%	N/A
Fixed-rate class AA 2017-1 EETC due through 2030	223.3		37.5		3.38	%	N/A		3.38	%	N/A
Fixed-rate class A 2017-1 EETC due through 2030	74.4		12.5		3.65	%	N/A		3.65	%	N/A
Fixed-rate class B 2017-1 EETC due through 2026	76.7		13.8		3.80	%	N/A		3.80	%	N/A
Fixed-rate class C 2017-1 EETC due through 2023	78.9		—		5.11	%	N/A		5.11	%	N/A
Long-term debt	1,964.6		1,539.6
Less current maturities	150.2		115.4
Less unamortized discounts	43.9		36.7
Total	$	1,770.5	$	1,387.5

During the three and nine months ended September 30, 2018, the Company made scheduled principal payments of $32.6 million and $93.2 million on its outstanding debt obligations, respectively. During the three and nine months ended September 30, 2017, the Company made scheduled principal payments of $13.4 million and $63.4 million on its outstanding debt obligations, respectively.

At September 30, 2018, long-term debt principal payments for the next five years and thereafter are as follows:



	September 30, 2018
	(in millions)
remainder of 2018	$	44.0
2019	158.3
2020	155.3
2021	151.0
2022	147.9
2023 and beyond	1,308.1
Total debt principal payments	$	1,964.6

Interest Expense

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
	(in thousands)
Senior term loans	$	4,195	$	4,564	$	12,769	$	13,854
Junior term loans	605		746		1,908		2,323
Fixed-rate loans	4,844		2,811		14,636		4,555
Class A 2015-1 EETC	4,057		4,366		12,214		12,995
Class B 2015-1 EETC	939		1,118		2,881		3,410
Class C 2015-1 EETC	1,420		—		2,209		—
Class AA 2017-1 EETC	1,751		—		4,008		—
Class A 2017-1 EETC	631		—		1,445		—
Class B 2017-1 EETC	700		—		1,636		—
Class C 2017-1 EETC	934		—		1,400		—
Commitment fees	50		29		153		87
Amortization of debt discounts	1,784		1,362		4,930		3,883
Total	$	21,910	$	14,996	$	60,189	$	41,107