Goodwill, Intangibles and Equity Investments

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, Intangibles and Equity Investments

GOODWILL, INTANGIBLES AND EQUITY INVESTMENTS

Goodwill reflects the excess purchase price over the estimated fair value of net assets acquired in a business acquisition. As of December 31, 2023, 2022 and 2021, the goodwill amounts for reporting units that have goodwill were separately tested for impairment. To perform the goodwill impairment test, the Company determined the fair value of the reporting units using industry market multiples and discounted cash flows utilizing a market-derived cost of capital (level 3 fair value inputs). The goodwill amounts were not impaired.

The carrying amounts of goodwill are as follows (in thousands):

	CAM		ACMI Services		All Other		Total
Carrying value as of December 31, 2021	$	153,290	$	234,571	$	8,113	$	395,974
Carrying value as of December 31, 2022	$	153,290	$	234,571	$	8,113	$	395,974
Carrying value as of December 31, 2023	$	153,290	$	234,571	$	8,113	$	395,974

The Company's acquired intangible assets are as follows (in thousands):

	Airline		Amortizing
	Certificates		Intangibles		Total
Carrying value as of December 31, 2021	$	9,000	$	100,151	$	109,151
Amortization	—		(12,483)		(12,483)
Carrying value as of December 31, 2022	$	9,000	$	87,668	$	96,668
Amortization	—		(10,215)		(10,215)
Carrying value as of December 31, 2023	$	9,000	$	77,453	$	86,453

The airline certificates have an indefinite life and therefore are not amortized. The Company amortizes finite-lived intangible assets, including customer relationship and STC intangibles, over 2 to 15 remaining years. The Company recorded intangible amortization expense of $10.2 million, $12.5 million and $11.2 million for the years ending December 31, 2023, 2022 and 2021, respectively. Estimated amortization expense for the next five years is $10.2 million, $9.4 million, $4.5 million, $4.5 million and $4.5 million.

Stock warrants issued to a lessee (see Note C) as an incentive are recorded as a lease incentive asset using their fair value at the time that the lessee has met its performance obligations and amortized against revenues over the duration of related aircraft leases. The Company's lease incentive granted to the lessee was as follows (in thousands):

	Lease
	Incentive
Carrying value as of December 31, 2021	$	102,913
Amortization	(23,263)
Carrying value as of December 31, 2022	$	79,650
Amortization	(18,689)
Carrying value as of December 31, 2023	$	60,961

The lease incentive began to amortize in April 2016 with the commencement of certain aircraft leases. As of December 31, 2023, based on the warrants granted to date, the Company expects to record amortization, as a reduction to the lease revenue, of $15.7 million, $15.8 million, $12.8 million, $6.7 million and $4.4 million for each of the next five years ending December 31, 2028.

The Company has a 49% ownership in a joint-venture agreement with Precision Aircraft Solutions, LLC, to develop a passenger-to-freighter conversion program for Airbus A321-200 aircraft. In April 2022, the Company acquired a 40% ownership interest in the joint-venture company GA Telesis Engine Services, LLC to provide engine tear-down services to harvest and sell engine parts. The Company accounts for its investment in these joint ventures under the equity method of accounting, in which the carrying value of each investment is reduced for the Company's share of the non-consolidated affiliates' operating results.

During the 2022 and 2021 years, we contributed $14.9 million and $2.5 million to 321 Precision Conversions, LLC, respectively. The Company also contributed $1.6 million and $1.6 million to GA Telesis Engines Services, LLC during 2023 and 2022, respectively.

The carrying value of the joint ventures totaled $22.7 million and $18.9 million at December 31, 2023 and 2022, respectively, and are reflected in “Other Assets” in the Company’s consolidated balance sheets. The Company monitors its investments in affiliates for indicators of other-than-temporary declines in value on an ongoing basis in accordance with GAAP. If the Company determines that an other-than-temporary decline in value has occurred, it recognizes an impairment loss, which is measured as the difference between the recorded carrying value and the fair value of the investment. The fair value is generally determined using an income approach based on discounted cash flows or using negotiated transaction values.