Leases, Commitments and Contingencies

9 Months Ended

Sep. 30, 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 September 30, 2021, excluding aircraft financed by the Company’s major airline partners that the Company operates for them under contract, the Company had 43 aircraft under long-term lease agreements with remaining terms ranging from three years to nine 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 35 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 September 30, 2021, the Company’s right-of-use assets were $248.6 million, the Company’s current maturities of operating lease liabilities were $78.2 million, and the Company’s noncurrent lease liabilities were $171.4 million. During the nine months ended September 30, 2021, the Company paid $63.1 million in operating leases reflected as a reduction from operating cash flows.

The table below presents lease related terms and discount rates as of September 30, 2021.

	As of September 30, 2021
Weighted-average remaining lease term for operating leases	6.3 years
Weighted-average discount rate for operating leases	6.0%

The Company’s lease costs for the three and nine months ended September 30, 2021, and 2020 included the following components (in thousands):

	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020
Operating lease cost	$	23,370	$	23,538	$	67,582	$	72,696
Variable and short-term lease cost		976		950		3,256		3,501
Sublease income		(1,888)		(1,587)		(4,717)		(4,718)
Total lease cost	$	22,458	$	22,901	$	66,121	$	71,479

As of September 30, 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 September 30, 2021 (in thousands):

October 2021 through December 2021	$	22,346
2022		80,467
2023		74,119
2024		30,426
2025		17,824
Thereafter		84,253
	$	309,435

As of September 30, 2021, the Company had a firm purchase commitment for 39 E175 aircraft from Embraer, S.A. (“Embraer”) with anticipated delivery dates through the first half of 2023 and a firm purchase commitment for seven used CRJ700 aircraft from a third party with anticipated delivery dates by the end of 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		Oct - Dec 2021		2022		2023		2024		2025		Thereafter
Operating lease payments for aircraft and facility obligations	$	309,435	$	22,346	$	80,467	$	74,119	$	30,426	$	17,824	$	84,253
Firm aircraft and spare engine commitments		1,062,834		327,446		708,909		26,480		—		—		—
Interest commitments (1)		480,115		28,177		106,024		90,452		74,768		59,766		120,928
Principal maturities on long-term debt		2,996,573		92,341		378,855		386,035		380,475		395,673		1,363,194
Total commitments and obligations	$	4,848,958	$	470,310	$	1,274,255	$	577,086	$	485,669	$	473,263	$	1,568,375

(1) At September 30, 2021, the Company’s long-term debt had fixed interest rates.