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Leases
 3 Months Ended
Mar. 31, 2024
Leases [Abstract]  
Leases Leases
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 leased 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 condensed consolidated balance sheets as a right-of-use asset and lease liability. Lease terms are generally 4 years to 18 years for aircraft and up to 99 years for other leased equipment and property.
During the three months ended March 31, 2024, the Company took delivery of four aircraft under direct operating leases, three aircraft under sale leaseback transactions and purchased one spare engine with cash. As of March 31, 2024, the Company had a fleet consisting of 207 A320 family aircraft. As of March 31, 2024, the Company had 126 aircraft financed under operating leases with lease term expirations between 2025 and 2042. In addition, the Company owned 63 aircraft, of which, as of March 31, 2024, 12 were unencumbered. The Company also had 18 aircraft that would have been deemed finance leases resulting in failed sale-leaseback transactions. The related finance obligation is recorded within long-term debt in the Company's condensed consolidated balance sheets. Refer to Note 13, Debt and Other Obligations for additional information. The related asset is recorded within flight equipment in the Company's condensed consolidated balance sheets. As of March 31, 2024, the Company also had 6 spare engines financed under operating leases with lease term expiration dates ranging from 2024 to 2033 and owned 29 spare engines, of which, as of March 31, 2024, 5 were unencumbered and 24 were pledged as collateral under the Company's revolving credit facility maturing in 2025.

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 primarily made up of probable and estimable return condition obligations and lease return cost adjustments related to lease modifications and aircraft and engines purchased off lease.

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. The Company expects lease return costs 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.

As of March 31, 2024, the Company's finance lease obligations primarily related to the lease of computer equipment used by the Company's flight crews and office equipment. Payments under these finance lease agreements are fixed for terms ranging from four to five 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 condensed consolidated balance sheets.
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 condensed consolidated balance sheets as of March 31, 2024. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.
Finance LeasesOperating Leases
Aircraft and Spare Engine LeasesProperty Facility LeasesTotal
Operating and Finance Lease Obligations
(in thousands)
Remainder of 2024$226 $361,922 $4,827 $366,975 
2025219 469,226 4,143 473,588 
2026141 442,913 3,994 447,048 
202793 426,953 3,166 430,212 
202867 406,187 1,754 408,008 
2029 and thereafter5 4,021,097 143,340 4,164,442 
Total minimum lease payments$751 $6,128,298 $161,224 $6,290,273 
Less amount representing interest74 2,328,372 133,317 2,461,763 
Present value of minimum lease payments$677 $3,799,926 $27,907 $3,828,510 
Less current portion249 229,758 4,304 234,311 
Long-term portion$428 $3,570,168 $23,603 $3,594,199 
Commitments related to the Company's noncancellable short-term operating leases not recorded on the Company's condensed consolidated balance sheets are expected to be $3.6 million for the remainder of 2024 and none for 2025 and beyond.
The table below presents information for lease costs related to the Company's finance and operating leases:
Three Months Ended March 31,
20242023
(in thousands)
Finance lease cost
Amortization of leased assets$75 $158 
Interest of lease liabilities8 10 
Operating lease cost
Operating lease cost (1)
117,163 84,215 
Short-term lease cost (1)
10,162 10,905 
Variable lease cost (1)
54,900 52,655 
Total lease cost$182,308 $147,943 
(1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's condensed consolidated statements of operations.
The table below presents lease terms and discount rates related to the Company's finance and operating leases:
March 31, 2024March 31, 2023
Weighted-average remaining lease term
Operating leases14.9 years14.7 years
Finance leases3.2 years2.6 years
Weighted-average discount rate
Operating leases6.98 %6.39 %
Finance leases5.49 %4.46 %
Leases Leases
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 leased 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 condensed consolidated balance sheets as a right-of-use asset and lease liability. Lease terms are generally 4 years to 18 years for aircraft and up to 99 years for other leased equipment and property.
During the three months ended March 31, 2024, the Company took delivery of four aircraft under direct operating leases, three aircraft under sale leaseback transactions and purchased one spare engine with cash. As of March 31, 2024, the Company had a fleet consisting of 207 A320 family aircraft. As of March 31, 2024, the Company had 126 aircraft financed under operating leases with lease term expirations between 2025 and 2042. In addition, the Company owned 63 aircraft, of which, as of March 31, 2024, 12 were unencumbered. The Company also had 18 aircraft that would have been deemed finance leases resulting in failed sale-leaseback transactions. The related finance obligation is recorded within long-term debt in the Company's condensed consolidated balance sheets. Refer to Note 13, Debt and Other Obligations for additional information. The related asset is recorded within flight equipment in the Company's condensed consolidated balance sheets. As of March 31, 2024, the Company also had 6 spare engines financed under operating leases with lease term expiration dates ranging from 2024 to 2033 and owned 29 spare engines, of which, as of March 31, 2024, 5 were unencumbered and 24 were pledged as collateral under the Company's revolving credit facility maturing in 2025.

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 primarily made up of probable and estimable return condition obligations and lease return cost adjustments related to lease modifications and aircraft and engines purchased off lease.

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. The Company expects lease return costs 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.

As of March 31, 2024, the Company's finance lease obligations primarily related to the lease of computer equipment used by the Company's flight crews and office equipment. Payments under these finance lease agreements are fixed for terms ranging from four to five 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 condensed consolidated balance sheets.
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 condensed consolidated balance sheets as of March 31, 2024. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.
Finance LeasesOperating Leases
Aircraft and Spare Engine LeasesProperty Facility LeasesTotal
Operating and Finance Lease Obligations
(in thousands)
Remainder of 2024$226 $361,922 $4,827 $366,975 
2025219 469,226 4,143 473,588 
2026141 442,913 3,994 447,048 
202793 426,953 3,166 430,212 
202867 406,187 1,754 408,008 
2029 and thereafter5 4,021,097 143,340 4,164,442 
Total minimum lease payments$751 $6,128,298 $161,224 $6,290,273 
Less amount representing interest74 2,328,372 133,317 2,461,763 
Present value of minimum lease payments$677 $3,799,926 $27,907 $3,828,510 
Less current portion249 229,758 4,304 234,311 
Long-term portion$428 $3,570,168 $23,603 $3,594,199 
Commitments related to the Company's noncancellable short-term operating leases not recorded on the Company's condensed consolidated balance sheets are expected to be $3.6 million for the remainder of 2024 and none for 2025 and beyond.
The table below presents information for lease costs related to the Company's finance and operating leases:
Three Months Ended March 31,
20242023
(in thousands)
Finance lease cost
Amortization of leased assets$75 $158 
Interest of lease liabilities8 10 
Operating lease cost
Operating lease cost (1)
117,163 84,215 
Short-term lease cost (1)
10,162 10,905 
Variable lease cost (1)
54,900 52,655 
Total lease cost$182,308 $147,943 
(1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's condensed consolidated statements of operations.
The table below presents lease terms and discount rates related to the Company's finance and operating leases:
March 31, 2024March 31, 2023
Weighted-average remaining lease term
Operating leases14.9 years14.7 years
Finance leases3.2 years2.6 years
Weighted-average discount rate
Operating leases6.98 %6.39 %
Finance leases5.49 %4.46 %