Leases, Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Leases, Commitments and Contingencies

Leases, Commitments and Contingencies

(7) — Leases, Commitments and Contingencies

The Company leases property and equipment under operating leases. For leases with durations longer than 12 months, the Company recorded the related operating lease right-of-use asset and operating lease liability at the present value of lease payments over the term. The Company used its incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Aircraft

As of March 31, 2021, excluding aircraft financed by our major partners that we operate for them under contract, the Company had 42 aircraft under long-term lease agreements with remaining terms ranging from three years to ten years.

Airport facilities

The Company has operating leases for facility space including airport terminals, office space, cargo warehouses and maintenance facilities. The Company generally leases this space from government agencies that control the use of the various airports. The remaining lease terms for facility space vary from one month to 36 years. The Company’s operating leases with lease rates that are variable based on airport operating costs, use of the facilities or other variable factors are excluded from the Company’s right-of-use assets and operating lease liabilities in accordance with accounting guidance.

Leases

As of March 31, 2021, the Company’s right-of-use assets were $274.0 million, the Company’s current maturities of operating lease liabilities were $82.7 million, and the Company’s noncurrent lease liabilities were $200.6 million. During the three months ended March 31, 2021, the Company paid $16.6 million in operating leases reflected as a reduction from operating cash flows.

The table below presents lease related terms and discount rates as of March 31, 2021.

	As of March 31, 2021
Weighted-average remaining lease term for operating leases	6.4 years
Weighted-average discount rate for operating leases		6.1%

The Company’s lease costs for the three months ended March 31, 2021 and 2020 included the following components (in thousands):

	For the three months ended March 31,
	2021		2020
Operating lease cost	$	22,127	$	25,018
Variable and short-term lease cost		1,224		1,344
Sublease income		(1,335)		(1,571)
Total lease cost	$	22,016	$	24,791

As of March 31, 2021, the Company leased aircraft, airport facilities, office space, and other property and equipment under non-cancelable operating leases, which are generally on a long-term, triple-net lease basis pursuant to which the Company pays taxes, maintenance, insurance and certain other operating expenses applicable to the leased property. The Company expects that, in the normal course of business, such operating leases that expire may be renewed or replaced by other leases, or the property may be purchased rather than leased. The following table summarizes future minimum rental payments primarily related to leased aircraft required under operating leases that had initial or remaining non-cancelable lease terms as of March 31, 2021 (in thousands):

April 2021 through December 2021	$	70,255
2022		79,112
2023		72,153
2024		29,274
2025		16,725
Thereafter		83,239
	$	350,758

As of March 31, 2021, the Company had a firm purchase commitment for 20 E175 aircraft from Embraer, S.A. (“Embraer”) with anticipated delivery dates through 2022 and a firm purchase commitment for eight used CRJ700 aircraft from a third party with anticipated delivery dates through 2021.

The following table summarizes the Company’s commitments and obligations as noted for each of the next five years and thereafter (in thousands):

	Total		Apr - Dec 2021		2022		2023		2024		2025		Thereafter
Operating lease payments for aircraft and facility obligations	$	350,758	$	70,255	$	79,112	$	72,153	$	29,274	$	16,725	$	83,239
Firm aircraft and spare engine commitments		555,458		499,306		56,152		—		—		—		—
Interest commitments (1)		522,585		90,454		106,979		89,228		73,056		57,835		105,033
Principal maturities on long-term debt		3,140,774		271,082		407,226		417,720		371,994		446,924		1,225,828
Total commitments and obligations	$	4,569,575	$	931,097	$	649,469	$	579,101	$	474,324	$	521,484	$	1,414,100

(1) At March 31, 2021, 98.1% of the Company’s total long-term debt had fixed interest rates.