Debt and Other Obligations

3 Months Ended

Mar. 31, 2024

Revolving credit facility due in 2025

As of March 31, 2024 and December 31, 2023, the Company had a $300.0 million revolving credit facility which was undrawn and available. Any amounts drawn on this facility are included in current maturities of long-term debt, net, and finance leases on the Company's condensed consolidated balance sheets. This facility matures on September 30, 2025.

Convertible senior notes due 2025

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 ("convertible notes due 2025").

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. As of March 31, 2024, the notes did not qualify for conversion by noteholders through June 30, 2024.

Based on the terms of the indenture, 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. As of March 31, 2024, the conversion rate was 97.5929 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to a conversion price of approximately $10.25 per share of common stock). Refer to Note 3, Current Developments for additional information on the conversion rate.

Since the convertible notes due 2025 are currently not convertible in accordance with the terms of the indenture governing such notes, the Company had $25.1 million recorded within long-term debt and finance leases, less current maturities on its condensed consolidated balance sheets as of March 31, 2024 related to its convertible notes due 2025.

Convertible senior notes due 2026

On April 30, 2021, the Company completed the public offering of $500.0 million aggregate principal amount of 1.00% convertible senior notes due 2026 ("convertible notes due 2026").

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, 2021 (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; (4) if the Company calls such notes for redemption; and (5) at any time from, and including, February 17, 2026 until the close of business on the second scheduled trading day immediately before the maturity date. As of March 31, 2024, the convertible notes due 2026 did not qualify for conversion by noteholders through June 30, 2024.

Based on the terms of the indenture, the Company will have the right to elect to settle conversions in cash, shares of the Company’s common stock or a combination of cash and shares of common stock. Upon conversion of any notes, the Company will pay the conversion value in cash up to at least the principal amount of the notes being converted. The conversion value will be determined over an observation period consisting of 40 trading days. The initial conversion rate was 20.3791 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to an initial conversion price of approximately $49.07 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. As of March 31, 2024, the conversion rate was 25.3578 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to a conversion price of approximately $39.44 per share of common stock). Refer to Note 3, Current Developments for additional information on the adjusted conversion rate.

The Merger Agreement with JetBlue included settlement terms for any conversion of the convertible notes due 2026 to be paid in cash through the closing or termination of the Merger Agreement, causing the conversion option, which is an embedded derivative, not to qualify for the derivative accounting scope exception provided under ASC 815. As such, the Company bifurcated the fair value of the conversion option of the convertible senior notes due 2026 as a derivative liability with subsequent changes in fair value recorded in earnings. The Company recorded the fair value of the embedded derivative as a derivative liability within deferred gains and other long-term liabilities and a debt discount within long-term debt and finance leases, less current maturities on its condensed consolidated balance sheets. Upon the termination of the Merger, the conversion settlement terms reverted to the original settlement terms of the indenture. As such, as of the date of the Termination Agreement, the Company qualifies for the derivative accounting scope exception provided under ASC 815. During March 2024, the Company derecognized the remaining derivative liability as of the Termination Agreement execution date of $8.2 million, net of taxes, as an adjustment to additional paid-in-capital within the Company's condensed consolidated balance sheets in accordance with ASC 815. The original debt discount will continue to be amortized through interest expense, using the effective interest rate method, over the remaining life of the instrument.

Since the convertible notes due 2026 are currently not convertible in accordance with the terms of the indenture governing such notes, the Company had $475.5 million, net of the related unamortized debt discount of $24.5 million, recorded within long-term debt and finance leases, less current maturities on the Company's condensed consolidated balance sheets as of March 31, 2024 related to its convertible notes due 2026. For additional information, refer to Note 12, Fair Value Measurements.

Long-term debt is comprised of the following:


	As of				As of
	March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023
	(in millions)				(weighted-average interest rates)
8.00% senior secured notes due 2025	$	1,110.0	$	1,110.0	8.00	%	8.00	%
Fixed-rate loans due through 2039 (1)	1,055.8		1,093.3		6.44	%	5.83	%
Unsecured term loans due in 2031	136.3		136.3		1.00	%	1.00	%
Fixed-rate class A 2015-1 EETC due through 2028	256.6		256.6		4.10	%	4.10	%
Fixed-rate class B 2015-1 EETC due through 2024	40.0		40.0		4.45	%	4.45	%

Fixed-rate class AA 2017-1 EETC due through 2030	166.2		172.2		3.38	%	3.38	%
Fixed-rate class A 2017-1 EETC due through 2030	55.4		57.4		3.65	%	3.65	%
Fixed-rate class B 2017-1 EETC due through 2026	46.4		48.2		3.80	%	3.80	%

Convertible notes due 2025	25.1		25.1		4.75	%	4.75	%
Convertible notes due 2026	500.0		500.0		1.00	%	1.00	%


Long-term debt	$	3,391.8	$	3,439.1
Less current maturities	156.6		315.3
Less unamortized discounts, net	60.2		69.0
Total	$	3,175.0	$	3,054.8

(1) Includes obligations related to 18 aircraft recorded as a failed sale leaseback. Refer to Note 10, Leases for additional information.

During the three months ended March 31, 2024, the Company made scheduled principal payments of $46.8 million on its outstanding debt obligations. During the three months ended March 31, 2023, the Company made scheduled principal payments of $129.4 million on its outstanding debt obligations.

Extinguishment of Debt

During the three months ended March 31, 2024, the Company early extinguished $139.6 million of outstanding fixed-rate term loans related to 5 aircraft. In connection with this debt extinguishment, the Company recorded a gain of $15.0 million within loss (gain) on extinguishment of debt on its condensed consolidated statement of operations for the three months ended March 31, 2024. In addition, during the first quarter 2024, the Company completed five sale-leaseback transactions (on aircraft previously owned by the Company) of which, two resulted in operating leases and three would have been deemed finance leases resulting in failed sale-leaseback transactions. As a result of the three failed sale-leaseback transactions, the Company recorded the related debt of $123.5 million within current maturities of long-term debt and finance leases and long-term debt and finance leases, less current maturities. Refer to Note 10, Leases for additional information on the five sale-leaseback transactions.

At March 31, 2024, long-term debt principal payments for the next five years and thereafter were as follows:


	March 31, 2024
	(in millions)
Remainder of 2024	$	138.1
2025	1,267.5
2026	674.1
2027	154.7
2028	257.2
2029 and beyond	900.2
Total debt principal payments	$	3,391.8

Interest Expense

Interest expense related to long-term debt and finance leases consists of the following:


	Three Months Ended March 31,
	2024		2023
	(in thousands)
8.00% senior secured notes (1)	$	23,252	$	23,252
Fixed-rate term loans	17,852		9,563
Unsecured term loans	339		336
Class A 2015-1 EETC	2,612		2,824
Class B 2015-1 EETC	442		528
Class C 2015-1 EETC	—		777
Class AA 2017-1 EETC	1,420		1,521
Class A 2017-1 EETC	510		548
Class B 2017-1 EETC	445		476
Class C 2017-1 EETC	—		522
Convertible notes (2)	3,932		7,045

Finance leases	8		8
Commitment and other fees	415		417
Amortization of deferred financing costs	3,582		3,976

Total	$	54,809	$	51,793

(1) Includes $1.1 million of accretion and $22.2 million of interest expense for the three months ended March 31, 2024. Includes $1.1 million of accretion and $22.2 million of interest expense for the three months ended March 31, 2023.

(2) Includes $4.4 million of amortization of the discount for the convertible notes due 2026 as well as interest expense for the convertible notes due 2025 and 2026, offset by $0.5 million of favorable mark to market adjustments for the convertible notes due 2026 for the three months ended March 31, 2024. Includes $5.4 million of amortization of the discount for the convertible notes due 2026, as well as interest expense for the convertible notes due 2025 and 2026, and $1.7 million of unfavorable mark to market adjustments for the convertible notes due 2026 for the three months ended March 31, 2023.