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Leases and Aircraft Maintenance Deposits
 12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Leases and Aircraft Maintenance Deposits Leases and Aircraft Maintenance Deposits
The Company leases aircraft, engines, airport terminals, maintenance and training facilities, aircraft hangars, commercial real estate and office and computer equipment, among other items. Certain of these leases include provisions for variable lease payments which are based on several factors, including, but not limited to, relative leases square footage, enplaned passengers, and airports' annual operating budgets. Due to the variable nature of the rates, these leases are not recorded on the Company's consolidated balance sheets as a right-of-use asset and lease liability. Lease terms are generally 8 to 18 years for aircraft and up to 99 years for other leased equipment and property.

As of December 31, 2021, the Company had a fleet consisting of 173 A320 family aircraft. As of December 31, 2021, the Company had 67 aircraft financed under operating leases with lease term expirations between 2023 and 2039. In addition, the Company owned 105 aircraft of which 33 were purchased off lease and are currently unencumbered. The Company also had 1 aircraft recorded as a failed sale-leaseback. The related finance obligation is recorded within long-term debt in the Company's consolidated balance sheets. Refer to Note 14, Debt and Other Obligations for additional information. The related asset is recorded within flight equipment in the Company's consolidated balance sheets. As of December 31, 2021, the Company also had 12 spare engines financed under operating leases with lease term expiration dates ranging from 2022 to 2033 and owned 20 spare engines unencumbered, of which 18, as of December 31, 2021, were pledged as collateral under the Company's revolving credit facility maturing in 2024.

Total rent expense for the years ended 2021, 2020 and 2019 was $449.4 million, $371.6 million and $345.0 million, respectively. Total rental expense for aircraft and engine operating leases for the years ended December 31, 2021, 2020 and 2019 was $246.6 million, $196.4 million and $182.6 million, respectively.

Some of the Company’s aircraft and engine master lease agreements provide that the Company pays maintenance reserves to aircraft lessors to be held as collateral in advance of the Company’s required performance of major maintenance activities. Maintenance reserve payments that are substantively and contractually related to the maintenance of the leased asset are accounted for as aircraft maintenance deposits to the extent they are expected to be recoverable. A majority of these maintenance reserve payments are calculated based on a utilization measure, such as flight hours or cycles, while some maintenance reserve payments are fixed, time-based contractual amounts. Fixed maintenance reserve payments that are not probable of being recovered are considered lease payments and are included in the right-of-use asset and lease liability. Maintenance reserve payments that are based on a utilization measure and are not probable of being recovered are considered variable lease payments that are recognized when they are probable of being incurred and are not included in the right-of-use asset and lease liability.

These lease agreements generally provide that maintenance reserves are reimbursable to the Company upon completion of the maintenance event. Some of the master lease agreements do not require that the Company pay maintenance reserves so long as the Company's cash balance does not fall below a certain level. As of December 31, 2021, the Company is in full compliance with those requirements and does not anticipate having to pay reserves related to these master leases in the future.

Under the terms of the lease agreements, the Company will continue to operate and maintain the aircraft. Payments under the majority of the lease agreements are fixed for the term of the lease. The lease agreements contain standard termination events, including termination upon a breach of the Company's obligations to make rental payments and upon any other material breach of the Company's obligations under the leases, and standard maintenance and return condition provisions. These return provisions are evaluated at inception of the lease and throughout the lease terms and are accounted for as either fixed or variable lease payments (depending on the nature of the lease return condition) when it is probable that such amounts will be incurred. When determining probability and estimated cost of lease return obligations, there are various other factors that need to be considered such as the contractual terms of the lease, the ability to swap engines or other aircraft components, current condition of the aircraft, the age of the aircraft at lease expiration, utilization of engines and other components, the extent of repairs needed at return, return locations, current configuration of the aircraft and cost of repairs and materials at the time of return. Management assesses the factors listed above and the need to accrue lease return costs throughout the lease as facts and circumstances warrant an assessment. As a result of COVID-19, the Company is currently operating its aircraft at lower utilization levels. If the Company continues flying its aircraft at lower utilization levels beyond its current projections, the timing of future maintenance events may change such that the Company will be required to accrue lease return costs and/or record reserves against its maintenance deposits earlier than it would have expected and such amounts could be significant. The Company expects lease return costs and unrecoverable maintenance deposits will increase as individual aircraft lease agreements approach their respective termination dates and the Company begins to accrue the estimated cost of return conditions for the corresponding aircraft. Upon a termination of the lease due to a breach by the Company, the Company would
be liable for standard contractual damages, possibly including damages suffered by the lessor in connection with remarketing the aircraft or while the aircraft is not leased to another party.
Aircraft rent expense consists of monthly lease rents for aircraft and spare engines under the terms of the Company's aircraft and spare engine lease agreements recognized on a straight-line basis. Supplemental rent, recorded within aircraft rent expense, is made up of maintenance reserves paid to aircraft lessors that are not probable of being reimbursed and probable and estimable return condition obligations. The Company expensed $31.7 million, $3.3 million and $4.8 million of supplemental rent recorded within aircraft rent during 2021, 2020 and 2019, respectively. During 2021, the Company expensed $22.9 million in lease return costs within supplemental rent related to the purchase of four aircraft off lease and two spare engines off lease made during the twelve months ended December 31, 2021, partially offset by the release of an accrual related to an engine lease modification. The Company did not expense any paid maintenance reserves as supplemental rent in 2021 and 2020. As of December 31, 2021, the Company had $48.9 million of aircraft maintenance deposits ($10.7 million in aircraft maintenance deposits and $38.2 million in long-term aircraft maintenance deposits) on the Company's consolidated balance sheets.
During the twelve months ended December 31, 2021, the Company took delivery of 10 aircraft under direct operating leases, 6 aircraft under sale-leaseback transactions (1 of which did not qualify to be accounted for as a sale-leaseback), 2 engines purchased with cash and 6 engines under direct, short-term, operating leases. In addition, the Company purchased 4 previously leased aircraft and 2 previously leased engines.
Under Topic 842, gains and losses on sale-leaseback transactions, subject to adjustment for off-market terms, are recognized immediately and recorded within gain/loss on disposal of assets on the Company's consolidated statements of operations.
As of December 31, 2021, the Company's finance lease obligations relate to the lease of computer equipment used by the Company's flight crew and office equipment. Payments under these finance lease agreements are fixed for terms ranging from 4 to 5 years. Finance lease assets are recorded within property and equipment and the related liabilities are recorded within long-term debt and finance leases in the Company's consolidated balance sheets.
During the fourth quarter of 2019, the Company purchased an 8.5-acre parcel of land for $41.0 million and entered into a 99-year lease agreement for the lease of a 2.6-acre parcel of land, in Dania Beach, Florida, where the Company is building its new headquarters campus. During January 2021, the Company began building its new headquarters campus with an expected completion during the fall season of 2023. In connection with the lease agreement, the Company is also expected to build a 200-unit residential building. The 8.5-acre parcel of land is capitalized within ground property and equipment on the Company's consolidated balance sheets. The 99-year lease was determined to be an operating lease and is recorded within operating lease right-of-use asset and operating lease liability on the Company's consolidated balance sheets. Operating lease commitments related to this lease are included in the table below within property facility leases.
The following table provides details of the Company's future minimum lease payments under finance lease liabilities and operating lease liabilities recorded on the Company's consolidated balance sheets as of December 31, 2021. The table does not include commitments that are contingent on events or other factors that are currently uncertain and unknown.
Finance LeasesOperating LeasesTotal Operating and Finance Lease Obligations
Aircraft and Spare Engine LeasesProperty Facility LeasesOther
(in thousands)
2022$842 $255,121 $4,771 $157 $260,891 
2023465 249,420 4,788 14 254,687 
2024215 236,811 3,028 — 240,054 
2025117 218,569 1,126 — 219,812 
202639 192,309 964 — 193,312 
2027 and thereafter— 1,512,674 142,175 — 1,654,849 
Total minimum lease payments$1,678 $2,664,904 $156,852 $171 $2,823,605 
Less amount representing interest90 778,639 133,304 2 912,035 
Present value of minimum lease payments$1,588 $1,886,265 $23,548 $169 $1,911,570 
Less current portion785 154,946 3,529 156 159,416 
Long-term portion$803 $1,731,319 $20,019 $13 $1,752,154 
Commitments related to the Company's noncancellable short-term operating leases not recorded on the Company's consolidated balance sheets are expected to be $3.8 million for 2022 and none for 2023 and beyond.
The table below presents information for lease costs related to the Company's finance and operating leases:
Year Ended December 31,
20212020
(in thousands)
Finance lease cost
Amortization of leased assets$733 $824 
Interest of lease liabilities93 194 
Operating lease cost
Operating lease cost (1)
220,137 201,474 
Short-term lease cost (1)
31,036 25,195 
Variable lease cost (1)
181,902 125,534 
Total lease cost$433,901 $353,221 
    (1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's consolidated statements of operations.
The table below presents lease-related terms and discount rates as of December 31, 2021:
December 31, 2021December 31, 2020
Weighted-average remaining lease term
Operating leases14.9 years12.9 years
Finance leases2.5 years2.6 years
Weighted-average discount rate
Operating leases5.62 %6.08 %
Finance leases4.79 %5.54 %
Leases and Aircraft Maintenance Deposits Leases and Aircraft Maintenance Deposits
The Company leases aircraft, engines, airport terminals, maintenance and training facilities, aircraft hangars, commercial real estate and office and computer equipment, among other items. Certain of these leases include provisions for variable lease payments which are based on several factors, including, but not limited to, relative leases square footage, enplaned passengers, and airports' annual operating budgets. Due to the variable nature of the rates, these leases are not recorded on the Company's consolidated balance sheets as a right-of-use asset and lease liability. Lease terms are generally 8 to 18 years for aircraft and up to 99 years for other leased equipment and property.

As of December 31, 2021, the Company had a fleet consisting of 173 A320 family aircraft. As of December 31, 2021, the Company had 67 aircraft financed under operating leases with lease term expirations between 2023 and 2039. In addition, the Company owned 105 aircraft of which 33 were purchased off lease and are currently unencumbered. The Company also had 1 aircraft recorded as a failed sale-leaseback. The related finance obligation is recorded within long-term debt in the Company's consolidated balance sheets. Refer to Note 14, Debt and Other Obligations for additional information. The related asset is recorded within flight equipment in the Company's consolidated balance sheets. As of December 31, 2021, the Company also had 12 spare engines financed under operating leases with lease term expiration dates ranging from 2022 to 2033 and owned 20 spare engines unencumbered, of which 18, as of December 31, 2021, were pledged as collateral under the Company's revolving credit facility maturing in 2024.

Total rent expense for the years ended 2021, 2020 and 2019 was $449.4 million, $371.6 million and $345.0 million, respectively. Total rental expense for aircraft and engine operating leases for the years ended December 31, 2021, 2020 and 2019 was $246.6 million, $196.4 million and $182.6 million, respectively.

Some of the Company’s aircraft and engine master lease agreements provide that the Company pays maintenance reserves to aircraft lessors to be held as collateral in advance of the Company’s required performance of major maintenance activities. Maintenance reserve payments that are substantively and contractually related to the maintenance of the leased asset are accounted for as aircraft maintenance deposits to the extent they are expected to be recoverable. A majority of these maintenance reserve payments are calculated based on a utilization measure, such as flight hours or cycles, while some maintenance reserve payments are fixed, time-based contractual amounts. Fixed maintenance reserve payments that are not probable of being recovered are considered lease payments and are included in the right-of-use asset and lease liability. Maintenance reserve payments that are based on a utilization measure and are not probable of being recovered are considered variable lease payments that are recognized when they are probable of being incurred and are not included in the right-of-use asset and lease liability.

These lease agreements generally provide that maintenance reserves are reimbursable to the Company upon completion of the maintenance event. Some of the master lease agreements do not require that the Company pay maintenance reserves so long as the Company's cash balance does not fall below a certain level. As of December 31, 2021, the Company is in full compliance with those requirements and does not anticipate having to pay reserves related to these master leases in the future.

Under the terms of the lease agreements, the Company will continue to operate and maintain the aircraft. Payments under the majority of the lease agreements are fixed for the term of the lease. The lease agreements contain standard termination events, including termination upon a breach of the Company's obligations to make rental payments and upon any other material breach of the Company's obligations under the leases, and standard maintenance and return condition provisions. These return provisions are evaluated at inception of the lease and throughout the lease terms and are accounted for as either fixed or variable lease payments (depending on the nature of the lease return condition) when it is probable that such amounts will be incurred. When determining probability and estimated cost of lease return obligations, there are various other factors that need to be considered such as the contractual terms of the lease, the ability to swap engines or other aircraft components, current condition of the aircraft, the age of the aircraft at lease expiration, utilization of engines and other components, the extent of repairs needed at return, return locations, current configuration of the aircraft and cost of repairs and materials at the time of return. Management assesses the factors listed above and the need to accrue lease return costs throughout the lease as facts and circumstances warrant an assessment. As a result of COVID-19, the Company is currently operating its aircraft at lower utilization levels. If the Company continues flying its aircraft at lower utilization levels beyond its current projections, the timing of future maintenance events may change such that the Company will be required to accrue lease return costs and/or record reserves against its maintenance deposits earlier than it would have expected and such amounts could be significant. The Company expects lease return costs and unrecoverable maintenance deposits will increase as individual aircraft lease agreements approach their respective termination dates and the Company begins to accrue the estimated cost of return conditions for the corresponding aircraft. Upon a termination of the lease due to a breach by the Company, the Company would
be liable for standard contractual damages, possibly including damages suffered by the lessor in connection with remarketing the aircraft or while the aircraft is not leased to another party.
Aircraft rent expense consists of monthly lease rents for aircraft and spare engines under the terms of the Company's aircraft and spare engine lease agreements recognized on a straight-line basis. Supplemental rent, recorded within aircraft rent expense, is made up of maintenance reserves paid to aircraft lessors that are not probable of being reimbursed and probable and estimable return condition obligations. The Company expensed $31.7 million, $3.3 million and $4.8 million of supplemental rent recorded within aircraft rent during 2021, 2020 and 2019, respectively. During 2021, the Company expensed $22.9 million in lease return costs within supplemental rent related to the purchase of four aircraft off lease and two spare engines off lease made during the twelve months ended December 31, 2021, partially offset by the release of an accrual related to an engine lease modification. The Company did not expense any paid maintenance reserves as supplemental rent in 2021 and 2020. As of December 31, 2021, the Company had $48.9 million of aircraft maintenance deposits ($10.7 million in aircraft maintenance deposits and $38.2 million in long-term aircraft maintenance deposits) on the Company's consolidated balance sheets.
During the twelve months ended December 31, 2021, the Company took delivery of 10 aircraft under direct operating leases, 6 aircraft under sale-leaseback transactions (1 of which did not qualify to be accounted for as a sale-leaseback), 2 engines purchased with cash and 6 engines under direct, short-term, operating leases. In addition, the Company purchased 4 previously leased aircraft and 2 previously leased engines.
Under Topic 842, gains and losses on sale-leaseback transactions, subject to adjustment for off-market terms, are recognized immediately and recorded within gain/loss on disposal of assets on the Company's consolidated statements of operations.
As of December 31, 2021, the Company's finance lease obligations relate to the lease of computer equipment used by the Company's flight crew and office equipment. Payments under these finance lease agreements are fixed for terms ranging from 4 to 5 years. Finance lease assets are recorded within property and equipment and the related liabilities are recorded within long-term debt and finance leases in the Company's consolidated balance sheets.
During the fourth quarter of 2019, the Company purchased an 8.5-acre parcel of land for $41.0 million and entered into a 99-year lease agreement for the lease of a 2.6-acre parcel of land, in Dania Beach, Florida, where the Company is building its new headquarters campus. During January 2021, the Company began building its new headquarters campus with an expected completion during the fall season of 2023. In connection with the lease agreement, the Company is also expected to build a 200-unit residential building. The 8.5-acre parcel of land is capitalized within ground property and equipment on the Company's consolidated balance sheets. The 99-year lease was determined to be an operating lease and is recorded within operating lease right-of-use asset and operating lease liability on the Company's consolidated balance sheets. Operating lease commitments related to this lease are included in the table below within property facility leases.
The following table provides details of the Company's future minimum lease payments under finance lease liabilities and operating lease liabilities recorded on the Company's consolidated balance sheets as of December 31, 2021. The table does not include commitments that are contingent on events or other factors that are currently uncertain and unknown.
Finance LeasesOperating LeasesTotal Operating and Finance Lease Obligations
Aircraft and Spare Engine LeasesProperty Facility LeasesOther
(in thousands)
2022$842 $255,121 $4,771 $157 $260,891 
2023465 249,420 4,788 14 254,687 
2024215 236,811 3,028 — 240,054 
2025117 218,569 1,126 — 219,812 
202639 192,309 964 — 193,312 
2027 and thereafter— 1,512,674 142,175 — 1,654,849 
Total minimum lease payments$1,678 $2,664,904 $156,852 $171 $2,823,605 
Less amount representing interest90 778,639 133,304 2 912,035 
Present value of minimum lease payments$1,588 $1,886,265 $23,548 $169 $1,911,570 
Less current portion785 154,946 3,529 156 159,416 
Long-term portion$803 $1,731,319 $20,019 $13 $1,752,154 
Commitments related to the Company's noncancellable short-term operating leases not recorded on the Company's consolidated balance sheets are expected to be $3.8 million for 2022 and none for 2023 and beyond.
The table below presents information for lease costs related to the Company's finance and operating leases:
Year Ended December 31,
20212020
(in thousands)
Finance lease cost
Amortization of leased assets$733 $824 
Interest of lease liabilities93 194 
Operating lease cost
Operating lease cost (1)
220,137 201,474 
Short-term lease cost (1)
31,036 25,195 
Variable lease cost (1)
181,902 125,534 
Total lease cost$433,901 $353,221 
    (1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's consolidated statements of operations.
The table below presents lease-related terms and discount rates as of December 31, 2021:
December 31, 2021December 31, 2020
Weighted-average remaining lease term
Operating leases14.9 years12.9 years
Finance leases2.5 years2.6 years
Weighted-average discount rate
Operating leases5.62 %6.08 %
Finance leases4.79 %5.54 %