COMMITMENTS AND CONTINGENCIES

Leases

The Company leases property, two aircraft, aircraft engines and other types of equipment under operating leases. Property leases include hangars, warehouses, offices and other space at certain airports with fixed rent payments and lease terms ranging from one month to five years. The Company is obligated to pay the lessor for maintenance, real estate taxes, insurance and other operating expenses on certain property leases. These expenses are variable and are not included in the measurement of the lease asset or lease liability. These expenses are recognized as variable lease expense when incurred and are immaterial. Equipment leases include ground support and industrial equipment as well as computer hardware with fixed rent payments and terms of one month to three years.

The Company records the lease asset and lease liability at the present value of lease payments over the lease term. The leases typically do not provide an implicit rate; therefore,the Company uses its estimated incremental borrowing rate at the time of lease commencement to discount the present value of lease payments. The Company’s discount rate for operating leases at March 31, 2019 was 4.75%. Leases often include rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate. Although not material, the amount of such options is reflected in the “Maturity of Lease Liabilities” table below. Lease expense is recognized on a straight-line basis over the lease term. Our weighted-average remaining lease term is 3.5 years.

As of March 31, 2019, the maturities of operating leases liabilities are as follows (in thousands):



	Operating Leases
Remaining 2019	$	18,464
2020	14,096
2021	11,015
2022	5,212
2023	3,081
2024 and beyond	1,574
Total	53,442
Less: amount representing interest	(4,253		)
Present value of future minimum lease payments	49,189
Less: current obligations under leases	16,558
Long-term lease obligations	$	32,631

As of December 31, 2018, the cash flows of operating leases over the next five years were as follows (in thousands):



	Operating Leases
2019	$	16,674
2020	14,586
2021	11,875
2022	5,906
2023	3,813
2024 and beyond	2,001
Total minimum lease payments	$	54,855

Purchase Commitments

The Company has agreements with Israel Aerospace Industries Ltd. ("IAI") for the conversion of Boeing 767 passenger aircraft into a standard configured freighter aircraft. The conversions primarily consist of the installation of a standard cargo door and loading system. At March 31, 2019, the Company had non-refundable deposits of $35.1 million to purchase 22 Boeing 767-300 passenger aircraft. The Company could incur a cancellation fee with IAI for unused modification part kits.

Guarantees and Indemnifications

Certain leases and agreements of the Company contain guarantees and indemnification obligations to the lessor, or one or more other parties that are considered reasonable and customary (e.g. use, tax and environmental indemnifications), the terms of which range in duration and are often limited. Such indemnification obligations may continue after expiration of the respective lease or agreement.

Other

In addition to the foregoing matters, the Company is also a party to legal proceedings in various federal and state jurisdictions from time to time arising out of the operation of the Company's business. The amount of alleged liability, if any, from these proceedings cannot be determined with certainty; however, the Company believes that its ultimate liability, if any, arising from pending legal proceedings, as well as from asserted legal claims and known potential legal claims which are probable of assertion, taking into account established accruals for estimated liabilities, should not be material to our financial condition or results of operations.

Employees Under Collective Bargaining Agreements

As of March 31, 2019, the flight crewmember employees of ABX, ATI and Omni and flight attendant employees of ATI and Omni were represented by the labor unions listed below:



Airline	Labor Agreement Unit	Percentage of the Company’s Employees
ABX	International Brotherhood of Teamsters	6.3%
ATI	Air Line Pilots Association	6.6%
Omni	International Brotherhood of Teamsters	7.0%
ATI	Association of Flight Attendants	1.0%
Omni	Association of Flight Attendants	8.0%