Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. Commitments and Contingencies

Legal Matters

The Company is subject to certain legal proceedings, which it considers routine to its business activities. As of September 30, 2022, the Company believes, after consultation with legal counsel, that the ultimate outcome of such legal proceedings, whether individually or in the aggregate, is not likely to have a material adverse effect on the Company’s financial position, liquidity, or results of operations.

United Capacity Purchase Agreement Dispute

A dispute exists under the United capacity purchase agreement with respect to certain recurring amounts owed to Air Wisconsin by United. As of September 30, 2022, the aggregate amount in dispute was approximately $33,042. In October 2022, United initiated arbitration under the agreement and requested a declaration that it does not owe any of the disputed amounts as claimed by Air Wisconsin. As Air Wisconsin and United are in the early stages of arbitration, Air Wisconsin cannot, with any degree of certainty, estimate the likely outcome of the arbitration including any potential award of the disputed amounts. Air Wisconsin, however, maintains that it has a strong position and is entitled to the disputed amounts under the terms of the United capacity purchase agreement. As a result, the Company has recognized all disputed amounts through September 30, 2022.

Treasury Payroll Support Program Audit

In September 2020, the Treasury’s Office of Inspector General (OIG) commenced a routine audit in connection with Air Wisconsin’s receipt of funds under the PSP-1 Agreement. The audit focused, among other things, on certain calculations used to determine the amount of Treasury Payroll Support Air Wisconsin was entitled to receive under the program. Air Wisconsin has disputed in good faith the Treasury’s interpretation of certain provisions of the application for Treasury Payroll Support and the PSP-1 Agreement, as well as the Treasury’s guidance regarding the Payroll Support Program. As of the date of this filing, Air Wisconsin has not received written confirmation from the OIG regarding the status or results of the audit. Nevertheless, the Treasury subsequently entered into the PSP-2 Agreement and the PSP-3 Agreement with Air Wisconsin, has paid to Air Wisconsin the amounts to be paid under the PSP-2 Agreement and the PSP-3 Agreement, and has not required Air Wisconsin to refund any amounts it received under the PSP-1 Agreement.

Standby Letters of Credit

As of September 30, 2022, Air Wisconsin had six outstanding letters of credit in the aggregate amount of $372 to guarantee the performance of its obligations under certain lease agreements, airport agreements and insurance policies. Air Wisconsin maintained a credit facility with a borrowing capacity of $373 for the issuance of such letters of credit as needed to support its operations. A significant portion of Air Wisconsin’s restricted cash balance secures the credit facility.

Cash Obligations

The following table sets forth the Company’s cash obligations for the periods presented:

	Total		October through December 2022		2023		2024		2025		2026		Thereafter
Aircraft Notes Principal	$	59,100	$	3,500	$	7,000	$	7,000	$	41,600	$	—	$	—
Aircraft Notes Interest		6,213		591		2,154		1,874		1,594		—		—
Operating Lease Obligations		14,026		1,452		5,841		3,365		2,664		177		527
Total	$	79,339	$	5,543	$	14,995	$	12,239	$	45,858	$	177	$	527

The principal amount of the Aircraft Notes is payable in semi-annual installments of $3,500, and certain additional amounts may be payable based on excess cash flow. The amounts set forth in the table do not reflect any such additional excess cash flow payments. As a result of certain prepayments made under the Aircraft Notes in June 2021, no semi-annual installments are due prior to December 31, 2022. As of September 30, 2022, all of the Company’s long-term debt was subject to fixed interest rates.

For additional information regarding the Aircraft Notes, refer to Note 6, Debt, in the audited consolidated financial statements within the 2021 Annual Report.