Operating Leases

9 Months Ended

Sep. 30, 2024

NOTE 17 – Operating Leases

Our operating leases primarily relate to office space and office equipment with remaining lease terms of 1 to 15 years. At September 30, 2024 and December 31, 2023, operating lease right-of-use assets were $812.7 million and $778.2 million, respectively, and lease liabilities were $872.4 million and $825.5 million, respectively.

The table below summarizes our net lease cost for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended September 30,
	2024			2023
Operating lease cost	$	27,789		$	27,183
Short-term lease cost		814			710
Variable lease cost		6,567			7,299
Sublease income		(290	)		(274	)
Net lease cost	$	34,880		$	34,918


	Nine Months Ended September 30,
	2024			2023
Operating lease cost	$	82,981		$	79,961
Short-term lease cost		2,192			1,425
Variable lease cost		20,579			21,244
Sublease income		(839	)		(836	)
Net lease cost	$	104,913		$	101,794

Operating lease costs are included in occupancy and equipment rental in the consolidated statements of operations.

The table below summarizes other information related to our operating leases as of and for the nine months ended September 30, 2024 (in thousands):


Operating lease cash flows	$	75,816
Right-of-use assets obtained in exchange for new operating lease liabilities	$	85,088
Weighted-average remaining lease term (years)		12.6
Weighted-average discount rate		4.93	%

The weighted average discount rate represents our company’s incremental borrowing rate at the lease inception date.

The table below presents information about operating lease liabilities as of September 30, 2024, (in thousands, except percentages).


Remainder of 2024	$	27,139
2025		104,756
2026		105,723
2027		106,217
2028		103,840
Thereafter		762,653
Total undiscounted lease payments		1,210,328
Imputed interest		(337,959	)
Total operating lease liabilities	$	872,369

Aircraft Engine Operating Leases

As of September 30, 2024, the Company had a total lease portfolio of 24 aircraft engines with a net book value of $157.0 million. The aircraft engines were purchased by the Company, through its subsidiaries, during 2024. See Note 25 for additional information.

During the third quarter of 2024, the Company transferred 22 aircraft engines with a net book value of $152.1 million from aircraft engine operating leases included in fixed assets, net to aircraft engines held for sale, included in other assets in the accompanying consolidated statements of financial condition. The Company ceases recognition of depreciation expense once an aircraft engine is classified as held for sale.

During the third quarter of 2024, the Company sold 2 aircraft engines with a net book value of $6.2 million and recognized a gain from the sale of $1.1 million, which is included in other income in the consolidated statements of operations. During the nine months ended September 30, 2024, the Company sold 5 aircraft engines with a net book value of $23.8 million and recognized a gain from the sale of $20.8 million.

Lease income, included in other income in the consolidated statements of operations, was $8.6 million and $18.2 million for the three and nine months ended September 30, 2024, respectively.