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Debt and Other Obligations
 6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Debt and Other Obligations Debt and Other Obligations
As of June 30, 2020, the Company had outstanding non-public and public debt instruments. During the six months ended June 30, 2020, the Company incurred debt through fixed-rate secured and unsecured term loans, secured a new revolving credit facility and issued convertible notes described below.

Fixed-rate secured term loans

The Company entered into facility agreements which as of June 30, 2020, provided $249.0 million for six Airbus A320 aircraft delivered during the six months ended June 30, 2020. The loans extended under these facility agreements are secured by a first-priority security interest on the individual aircraft. These loans have a term life of 11 to 12 years and amortize on a mortgage-style basis, which requires quarterly principal and interest payments.

Fixed-rate unsecured term loans

On April 20, 2020, the Company entered into the PSP agreement with the Treasury, pursuant to which the Company has received $301.3 million as of June 30, 2020 and expects to receive an additional $33.4 million on or about July 31, 2020 for a total of $334.7 million under the PSP. These funds are to be used exclusively to pay for salaries, wages and benefits for the Company’s Team Members through September 30, 2020. Of the total amount received as of June 30, 2020, $60.4 million is in the form of a low-interest 10-year unsecured term loan. Of the $33.4 million expected in July 2020, $10.0 million will be in the form of an unsecured term loan under the PSP agreement, resulting in an expected maximum principal amount of $70.4 million. Interest on the loan is payable semi-annually at a rate of 1.0% in years 1 through 5 and a rate of the Secured Overnight Financing Rate plus 2.0% in years 6 through 10. The notes are prepayable at any time, without penalty, at the Company’s option and have principal due at maturity in 2030.

The Company has concluded that no terms exist within the contract that would require a short-term classification of the debt instrument within the Company’s condensed balance sheet at the inception of the loan. Therefore, the debt has been recorded at face value and classified within long-term debt in the Company’s condensed balance sheets. As of June 30, 2020, the Company had recorded $60.4 million in long-term debt on its condensed balance sheets, related to the PSP.

Revolving credit facility due in 2022

On March 30, 2020, the Company entered into the 2022 revolving credit facility for $110.0 million, with an option to increase the overall commitment amount up to $350 million with the consent of any participating lenders and subject to borrowing base availability. In the second quarter of 2020, the commitment was increased to $180.0 million. As of June 30, 2020, the Company had fully drawn the $180.0 million available. Any amounts drawn on this facility are included in long-term debt and finance leases, less current maturities on the Company's condensed balance sheets. The final maturity of the facility is March 30, 2022.

The Company may pledge the following types of assets as collateral to secure its obligations under the revolving credit facility: (i) certain take-off and landing rights of the Company at LaGuardia Airport, (ii) certain eligible aircraft spare parts and ground support equipment, (iii) aircraft, spare engines and flight simulators, (v) real property assets and (vi) cash and cash equivalents. The revolving credit facility bears variable interest based on LIBOR, plus a 2.00% margin per annum, or another rate, at the Company's election, based on certain market interest rates, plus a 1.00% margin per annum, in each case with a floor of 0%.
The 2022 revolving credit facility requires the Company to maintain (i) so long as any loans or letters of credit are outstanding under the 2022 revolving credit facility, unrestricted cash and cash equivalents and unused commitments available under all revolving credit facilities (including the 2022 revolving credit facility) aggregating not less than $400 million, of which no more than $200 million may be derived from unused commitments under the 2022 revolving credit facility, (ii) a minimum ratio of the borrowing base of the collateral described above (determined as the sum of a specified percentage of the appraised value of each type of such collateral) to outstanding obligations under the 2022 revolving credit facility of not less than 1.0 to 1.0 (if the Company does not meet the minimum collateral coverage ratio, it must either provide additional collateral to secure its obligations under the 2022 revolving credit facility or repay the loans under the 2022 revolving credit facility by an amount necessary to maintain compliance with the collateral coverage ratio), and (iii) at any time following the date that is one month after the effective date of the 2022 revolving credit facility, the pledged take-off and landing rights of the Company at LaGuardia Airport and a specified number of spare engines in the collateral described above so long as any loans or letters of credit are outstanding under the 2022 revolving credit facility.

Revolving credit facility due in 2021

During the fourth quarter of 2018, the Company entered into a revolving credit facility for up to $160.0 million secured by the collateral assignment of certain of the Company's rights under the purchase agreement with Airbus, related to 43 Airbus A320neo aircraft scheduled to be delivered between August 2019 and December 2021.

In June 2020, the Company entered into an agreement to amend the revolving credit facility originally maturing in December 2020. The agreement amends the revolving credit facility to extend the final maturity date from December 30, 2020 to March 31, 2021. Upon execution of the amended agreement, the maximum borrowing capacity decreased from $160.0 million to $111.2 million. This facility is secured by the collateral assignment of certain of the Company’s rights under the purchase agreement with Airbus, related to 20 Airbus A320neo aircraft scheduled to be delivered between August 2020 and September 2022. The initial maximum borrowing capacity of $111.2 million will decrease as the Company takes delivery of the related aircraft.

As of June 30, 2020 and December 31, 2019, the Company had drawn $111.2 million and $160.0 million, respectively, on the facility, which is included in current maturities of long-term debt and capital leases on the Company's condensed balance sheets. The revolving credit facility bears variable interest based on LIBOR.

Convertible debt

On May 12, 2020, the Company completed the public offering of $175.0 million aggregate principal amount of 4.75% convertible senior notes due 2025. The convertible notes bear interest at the rate of 4.75% per year and will mature on May 15, 2025. Interest on the notes is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2020.

To allocate the proceeds of the convertible notes, the Company first determined the fair value of the debt component of the convertible notes based on a similar liability with no conversion feature and utilized a discounted cash flow method whereby the contractual cash flows have been discounted at a risk-adjusted yield reflective of both the time value of money and the credit risk inherent in the convertible notes, as well as certain observable inputs. The Company allocated the remaining proceeds of the convertible notes to the equity component within APIC. The Company will accrete the resulting discount on the debt component through interest expense, using the effective interest method, over the 5-year life of the instrument. The Company received proceeds of $168.3 million as a result of the offering, net of total issuance costs of $6.7 million. The Company recorded $95.6 million in long-term debt, net of debt issuance costs of $3.8 million on its condensed balance sheets, related to the debt component of the convertible notes, and $72.7 million in APIC, net of issuance costs of $2.9 million on its condensed balance sheets, related to the equity component of the convertible notes. As of June 30, 2020, the if-converted value exceeds the principal amount of the convertible notes by $38 million using an average stock price in the period.
Noteholders may convert their notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; and (4) at any time from, and including, February 18, 2025 until the close of business on the second scheduled trading day immediately before the maturity date.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. The initial conversion rate is 78.4314 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to an initial conversion price of approximately $12.75 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its convertible notes in connection with such a corporate event in certain circumstances. In the event of a “Fundamental Change,” as defined in the indenture governing the convertible notes, the holders may require the Company to purchase for cash all or a portion of their notes at a purchase price equal to the principal amount of the notes, plus accrued and unpaid interest, if any. The Company may not redeem the notes at its option prior to the maturity date.

Long-term debt is comprised of the following:
As ofAs of
June 30, 2020December 31, 2019June 30, 2020December 31, 2019
(in millions)(weighted-average interest rates)
Fixed-rate senior term loans due through 2027$279.4  $296.1  3.55 %4.02 %
Fixed-rate loans due through 2031992.2  778.2  3.34 %3.70 %
Unsecured term loans due in 203060.4  —  1.00 %N/A
Fixed-rate class A 2015-1 EETC due through 2028333.5  348.6  4.10 %4.10 %
Fixed-rate class B 2015-1 EETC due through 202468.0  72.0  4.45 %4.45 %
Fixed-rate class C 2015-1 EETC due through 202392.4  98.1  4.93 %4.93 %
Fixed-rate class AA 2017-1 EETC due through 2030
221.4  228.4  3.38 %3.38 %
Fixed-rate class A 2017-1 EETC due through 2030
73.8  76.1  3.65 %3.65 %
Fixed-rate class B 2017-1 EETC due through 2026
65.6  70.6  3.80 %3.80 %
Fixed-rate class C 2017-1 EETC due through 2023
85.5  85.5  5.11 %5.11 %
Convertible debt due in 2025101.4  —  4.75 %N/A
Revolving credit facility due in 2021111.2  160.0  1.58 %3.12 %
Revolving credit facility due in 2022180.0  —  2.19 %N/A
Long-term debt2,664.8  2,213.6  
Less current maturities287.8  214.0  
Less unamortized discounts, net

44.8  40.4  
Total$2,332.2  $1,959.2  

During the three and six months ended June 30, 2020 the Company made scheduled principal payments of $106.9 million and $149.4 million, respectively, on its outstanding debt obligations. During the three and six months ended and June 30, 2019, the Company made scheduled principal payments of $47.9 million and $85.8 million, respectively, on its outstanding debt obligations.
At June 30, 2020, long-term debt principal payments for the next five years and thereafter are as follows:
June 30, 2020
(in millions)
remainder of 2020$110.2  
2021278.3  
2022365.6  
2023329.8  
2024215.1  
2025 and beyond1,365.8  
Total debt principal payments$2,664.8  

Interest Expense

Interest expense related to long-term debt and finance leases consists of the following:
 Three Months Ended June 30, Six Months Ended June 30,
2020201920202019
(in thousands)
Fixed-rate senior term loans$2,601  $3,878  $5,414  $7,823  
Fixed-rate junior term loans—  489  —  1,012  
Fixed-rate term loans8,210  6,432  15,823  12,634  
Unsecured term loans57  —  57  —  
Class A 2015-1 EETC3,403  3,709  6,952  7,547  
Class B 2015-1 EETC752  841  1,548  1,721  
Class C 2015-1 EETC1,138  1,280  2,347  2,615  
Class AA 2017-1 EETC1,868  1,997  3,755  3,986  
Class A 2017-1 EETC673  720  1,354  1,437  
Class B 2017-1 EETC623  737  1,267  1,491  
Class C 2017-1 EETC1,092  1,092  2,184  2,171  
Convertible debt (1)3,138  —  3,138  —  
Revolving credit facilities1,456  1,559  2,614  2,973  
Amortization of deferred financing costs2,526  2,177  4,632  4,369  
Commitment and other fees228  46  445  119  
Finance leases27  309  140  339  
Total$27,792  $25,266  $51,670  $50,237  

(1) Includes $2.0 million of accretion and $1.1 million of interest expense for the three and six months ended June 30, 2020.