Lease Obligations

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Lease Obligations

7. Lease Obligations

The Company reviewed all contracts and service agreements in effect in 2022 for criteria meeting the definition of a lease within the framework of ASC 842 and ASC 606. Those that were determined to be a lease may contain both a lease and a non-lease component. In those instances, the Company elected to account for such components as a single lease component. The Company’s operating lease activities are recorded in operating lease right-of-use assets, current portion of operating lease liability, and long-term operating lease liability in the consolidated balance sheets. Air Wisconsin has operating leases with terms greater than twelve months for training simulators and facility space including office space and maintenance facilities. The remaining lease terms for training simulators and facility space vary from six months to 11 years. For leases of 12 months or less, the Company elected a short-term lease practical expedient for all leases, regardless of the underlying class of asset, that allows the lessee to not recognize a lease right-of-use asset or lease liability. As a result, the Company recognized lease payments for short-term leases as an expense on a straight-line basis over the lease term. 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 the lease payments over the lease term. The Company used Air Wisconsin’s incremental borrowing rate to discount the lease payments based on information available at lease inception. Air Wisconsin’s operating leases with lease rates that are variable based on operating costs, use of the facilities, or other variable factors were excluded from the Company’s right-of-use assets and operating lease liabilities in accordance with the applicable accounting guidance. Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the lease term.

Certain leases contain an option to extend or terminate the lease agreement. The Company evaluates each option prior to its expiration and may or may not exercise such option depending on conditions present at the time. At the inception of the lease, if it is reasonably certain that the Company will exercise an option to extend or terminate a lease, the Company considers the option in determining the classification and measurement of the lease. The Company expects that in the normal course of business operating leases that expire will be renewed or replaced by other leases.

As of December 31, 2022, the Company’s right-of-use assets were $13,480, the Company’s current maturities of operating lease liabilities were $5,091, and the Company’s noncurrent lease liabilities were $5,849. During the years ended December 31, 2022 and December 31, 2021, the Company paid $5,881 and $4,714, respectively, in operating lease payments reflected as a reduction from operating cash flows.

The table below presents operating lease related terms and discount rates as of December 31, 2022:

Weighted-average remaining lease term	2.93 years
Weighted-average discount rate	5.73	%

Components of lease costs were as follows for the years ended December 31,

	2022		2021
Operating lease costs	$	5,862	$	4,809
Short-term lease costs		508		499
Variable lease costs		212		134
Total Lease Costs	$	6,582	$	5,442

As of December 31, 2022 and December 31, 2021, Air Wisconsin leased or subleased certain training simulators and facilities for terms of greater than 12 months. Certain leases are subject to non-cancellable lease terms or may include variable rate increases tied to the consumer price index. One of our leases also provides that Air Wisconsin reimburse the Lessor for Air Wisconsin’s pro-rata share of taxes and other operating expenses applicable to the leased property. The Company expects that, in the normal course of business, such operating leases that expire will be renewed or replaced by other leases. Rent expense recorded under all operating leases, inclusive of engine leases, was $6,582 and $5,442 in the years ended December 31, 2022 and December 31, 2021, respectively.

The following table summarizes the future minimum rental payments required under operating leases that had initial or remaining non-cancelable lease terms greater than twelve months as of December 31, 2022:

Fiscal Year	Amount
2023	$	5,580
2024		3,222
2025		2,487
2026		171
2027		75
Thereafter		357
Total lease payments		11,892
Less imputed interest		(952	)
Total Lease Liabilities	$	10,940