Certain significant amounts included in the condensed consolidated balance sheets consisted of the following (in thousands):


	December 31,			September 30,
	2022			2022
Expendable parts and supplies, net:
Expendable parts and supplies	$	32,013		$	31,913
Less: obsolescence and other		(6,504	)		(5,198	)
	$	25,509		$	26,715
Prepaid expenses and other current assets:
Prepaid aviation insurance	$	1,026		$	2,618
Prepaid vendors		906			1,310
Prepaid other insurance		798			1,268
Lease incentives		143			352
Prepaid fuel and other		1,080			1,068
	$	3,953		$	6,616
Property and equipment, net:
Aircraft and other flight equipment	$	1,354,137		$	1,260,143
Other equipment		5,709			5,577
Leasehold improvements		2,776			2,776
Vehicles		1,003			992
Building		777			777
Furniture and fixtures		298			298
Total property and equipment		1,364,700			1,270,563
Less: accumulated depreciation		(419,155	)		(405,309	)
	$	945,545		$	865,254
Other assets:
Investments in equity securities	$	13,408		$	15,178
Lease incentives		1,061			1,097
Other		515			15
	$	14,984		$	16,290
Other accrued expenses:
Accrued property taxes	$	6,066		$	5,866
Accrued interest		5,016			2,882
Accrued vacation		7,768			4,746
Accrued lodging		3,529			3,795
Accrued maintenance		2,154			1,453
Accrued liability on government payroll program		—			2,967
Accrued simulator costs		149			1,045
Accrued employee benefits		1,097			1,679
Accrued fleet operating expense		1,232			1,606
Other		3,550			2,961
	$	30,561		$	29,000
Other noncurrent liabilities:
Warrant liabilities	$	25,225		$	25,225
Lease incentive obligations		1,050			1,050
Long-term employee benefits		843			1,123
Other		1,820			1,821
	$	28,938		$	29,219

The Company monitors for any indicators of impairment of the long-lived fixed assets. When certain conditions or changes in the economic situation exist, the assets may be impaired and the carrying amount of the assets exceed their fair value. The assets are then tested for recoverability of carrying amount. The Company records impairment charges on long-lived assets used in operations when events and circumstances indicate that the assets may be impaired, the undiscounted net cash flows estimated to be generated by those assets are less than the carrying amount of those assets, and the net book value of the assets exceeds their estimated fair value.

We group assets at the capacity purchase agreement, flight services agreement, and fleet-type level (i.e., the lowest level for which there are identifiable cash flows). If impairment indicators exist with respect to any of the asset groups, we estimate future cash flows based on projections of capacity purchase or flight services agreement, block hours, maintenance events, labor costs and other relevant factors.

During the fiscal year ended September 30, 2022, due to the impacts of the pilot shortage and the pilot wage increase, the Company assessed whether any indicators of impairment existed in any of our long-lived asset groups. The Company concluded there was impairment of its American asset group and recorded it as asset impairment in our condensed consolidated statements of operations and comprehensive loss.

During the three months ended December 31, 2022, the Company qualitatively evaluated indictors of impairment and concluded that the remaining carrying value of the American intangible asset required impairment. The Company recognized a total impairment loss of $3.7 million related to the American intangible asset in the condensed consolidated statements of operations and comprehensive loss. The Company determined that no other indicators of impairment were present during the quarter and no further steps were determined to be necessary. The Company did not record any impairment losses related to its long-lived assets during the three months ended December 31, 2021.

The Company’s assumptions about future conditions relevant to the assessment of potential impairment of its long-lived assets, including the impact of the COVID-2019 pandemic to its business, are subject to uncertainty, and the Company will continue to monitor these conditions in future periods as new information becomes available, and will update its analyses accordingly.

Depreciation of property and equipment totaled $14.4 million and $20.5 million for the three months ended December 31, 2022 and 2021, respectively.

In connection with a negotiated forward purchase contract for electrically-powered vertical takeoff and landing aircraft (“eVTOL aircraft”) executed in February 2021, we obtained equity warrant assets giving us the right to acquire a number shares of common stock in Archer Aviation, Inc. (“Archer”), which at the time of our initial investment was a private, venture-backed company. As the initial investment in Archer did not have a readily determinable fair value, we accounted for this investment using the measurement alternative under ASC 321, Investments – Equity Securities, and measured the investments at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments from the same issuer. We estimated the initial equity warrant asset value to be $16.4 million based on publicly available information as of the grant date. In September 2021, the merger between Archer and a special purpose acquisition company (“SPAC”) was completed, resulting in a readily determinable fair value of our investments in Archer. Accordingly, gains and losses associated with changes in the fair value of our investments in Archer are measured in earnings, in accordance with ASC 321.

The initial grant date values of the warrants, $16.4 million, was recognized as a vendor credit liability within other noncurrent liabilities. The liability related to the warrant assets will be settled in the future, as a reduction of the acquisition date value of the eVTOL aircraft contemplated in the related aircraft purchase agreement.

In connection with closing of the merger between Archer and the SPAC described above, in September 2021, we purchased 500,000 Class A common shares in Archer for $5.0 million and obtained an additional warrant to purchase shares of Archer with a total grant date value of $5.6 million. The initial value of the warrants was recognized as a vendor credit liability within other noncurrent liabilities, and will be settled in the future, as a reduction of the acquisition date value of the eVTOL aircraft contemplated in the related aircraft purchase agreement. Because these investments have readily determinable fair values, gains and losses resulting from changes in fair value of the investments are reflected in earnings, in accordance with ASC 321. All of our vested warrants have been exercised into shares of Archer common stock.

The fair values of the Company’s investments in Archer are Level 1 within the fair value hierarchy as the values are determined using quoted prices for the equity securities.

In connection with a negotiated forward purchase contract for fully electric aircraft executed in July 2021, we obtained $5.0 million of preferred stock in Heart Aerospace Incorporated (“Heart”), a privately held company. Our investment in Heart does not have a readily determinable fair value, so we account for the investment using the measurement alternative under ASC 321 and measure the investment at initial cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments from the same issuer. We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, financing transactions subsequent to the acquisition of the investment, or other features that indicate a change to fair value is warranted. Any changes in fair value from the initial cost of the investment in preferred stock are recognized as increases or decreases on our balance sheet and as net gains or losses on investments in equity securities. The initial investment in preferred stock was measured at cost of $5.0 million.

In connection with a negotiated forward purchase contract for hybrid-electric vertical takeoff and landing (“VTOL”) aircraft executed in February 2022, we obtained a warrant giving us the right to acquire a number of shares of common stock in the privately-held manufacturer of the VTOL aircraft. These investments do not have a readily determinable fair value, so we account for them using the measurement alternative under ASC 321 and measure the investments at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments from the same issuer. We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, financing transactions subsequent to the acquisition of the investment or other features that indicate a discount to fair value is warranted. Any changes in fair value from the grant date value of the warrant assets will be recognized as increases or decreases to the investment on our balance sheet and as net gains or losses on investments equity securities. We estimated the initial warrant asset value to be $3.2 million based on prices of similar investments in the same issuer. The grant date value of the warrants, $3.2 million, was recognized as a vendor credit liability within other noncurrent liabilities. The liability related to the warrant assets will be settled in the future, as a reduction of the acquisition date value of the VTOL aircraft contemplated in the related forward purchase agreement.

Total net losses on our investments in equity securities totaled $1.7 million and $6.5 million during the three months ended December 31, 2022 and 2021, respectively, and are reflected in loss on investments, net in our condensed consolidated statements of operations and comprehensive loss. As of December 31, 2022, the aggregate carrying amount of our investments in equity securities was $13.4 million, and the carrying amount of our investments without readily determinable fair values was $9.0 million.