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Leases

6 Months Ended

Jun. 30, 2025

Leases [Abstract]

Leases

Note 7. Leases

Operating leases

Our operating leases primarily relate to preferred berthing arrangements, real estate, and shipboard equipment which are included within Operating lease right-of-use assets, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of June 30, 2025 and December 31, 2024. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.

The company's preferred berthing agreement with Miami-Dade County ("County") includes the development plans for the County to finance the construction of a new and improved cruise Terminal G at PortMiami. The aggregate amount of the operating lease liabilities recorded for this berthing agreement was $168 million as of June 30, 2025 and December 31, 2024, respectively. There will be future remeasurements of the operating lease as the County completes several construction milestones throughout the term of the extended lease, including an expected remeasurement in 2027 or later, when the County satisfies substantial completion of Terminal G, as the minimum lease payments will increase at such time to approximately $55 million per year, with expected 3% annual increases thereafter.

For some of our real estate leases and berthing agreements, we do have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases primarily range from one to 10 years and the renewal periods for berthing agreements primarily range from one to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. We estimate our incremental borrowing rates based on Term SOFR and U.S. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral.
In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component.

Finance leases

Our finance leases primarily relate to buildings and surrounding land located at our Miami headquarters. Finance leases are included within Property and Equipment, net and Long-term debt with the current portion of the liability included within Current portion of long-term debt in our consolidated balance sheets as of June 30, 2025 and December 31, 2024.

The Company's master lease agreement (“Master Lease”) with the County related to the buildings and surrounding land located at our Miami headquarters is classified as a finance lease in accordance with ASC 842, Leases. The Master Lease includes two five-year options to extend the lease, which we are reasonably certain to exercise. Additionally, we previously executed a modification to the Master Lease agreement to extend its expiration from 2076 to 2077 after coming to an agreement with the County on the financing plans to finalize the development of the buildings and land. The modification of the Master Lease did not change the classification of the lease. The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $107 million as of June 30, 2025 and $106 million as of December 31, 2024, respectively. The development of the new campus buildings are expected to be completed in 2026, and the lease components will be recorded within our consolidated financial statements upon commencement.

The components of lease expense were as follows (in millions):

			Consolidated Statement of Comprehensive Income (Loss) Classification						Quarter Ended June 30, 2025						Six Months Ended June 30, 2025
Lease costs:
Operating lease costs			Commission, transportation and other						$	46					$	111
Operating lease costs			Other operating expenses						4						7
Operating lease costs			Marketing, selling and administrative expenses						4						9
Financial lease costs:
Amortization of right-of-use-assets			Depreciation and amortization expenses						1						1
Interest on lease liabilities			Interest expense, net of interest capitalized						2						4
Total lease costs									$	57					$	132

			Consolidated Statement of Comprehensive Income (Loss) Classification						Quarter Ended June 30, 2024						Six Months Ended June 30, 2024
Lease costs:
Operating lease costs			Commission, transportation and other						$	42					$	113
Operating lease costs			Other operating expenses						4						7
Operating lease costs			Marketing, selling and administrative expenses						5						9
Financial lease costs:
Amortization of right-of-use-assets			Depreciation and amortization expenses						3						7
Interest on lease liabilities			Interest expense, net of interest capitalized						7						14
Total lease costs									$	61					$	150

In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the quarter and six months ended June 30, 2025, we had $27 million and $86 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss), respectively, compared to $28 million and $79 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss) during the quarter and six months ended June 30, 2024, respectively. These variable lease costs are included within the balances presented above.

The weighted average of the remaining lease terms and weighted average discount rates are as follows:

			As of June 30, 2025						As of December 31, 2024
Weighted average of the remaining lease term in years
Operating leases			17.89						17.96
Finance leases			48.47						47.54
Weighted average discount rate
Operating leases			7.22		%				7.23		%
Finance leases			6.93		%				6.90		%

Supplemental cash flow information related to leases is as follows (in millions):

			Six Months Ended June 30, 2025						Six Months Ended June 30, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	140					$	138
Operating cash flows from finance leases			$	4					$	14
Financing cash flows from finance leases			$	3					$	13

As of June 30, 2025, maturities related to lease liabilities were as follows (in millions):

Year			Operating Leases						Finance Leases
Remainder of 2025			$	70					$	8
2026			126						10
2027			119						9
2028			111						9
2029			64						8
Thereafter			1,004						490
Total lease payments			1,494						534
Less: Interest			(771)						(419)
Present value of lease liabilities			$	723					$	115

Leases

Note 7. Leases

Operating leases

Our operating leases primarily relate to preferred berthing arrangements, real estate, and shipboard equipment which are included within Operating lease right-of-use assets, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of June 30, 2025 and December 31, 2024. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.

The company's preferred berthing agreement with Miami-Dade County ("County") includes the development plans for the County to finance the construction of a new and improved cruise Terminal G at PortMiami. The aggregate amount of the operating lease liabilities recorded for this berthing agreement was $168 million as of June 30, 2025 and December 31, 2024, respectively. There will be future remeasurements of the operating lease as the County completes several construction milestones throughout the term of the extended lease, including an expected remeasurement in 2027 or later, when the County satisfies substantial completion of Terminal G, as the minimum lease payments will increase at such time to approximately $55 million per year, with expected 3% annual increases thereafter.

For some of our real estate leases and berthing agreements, we do have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases primarily range from one to 10 years and the renewal periods for berthing agreements primarily range from one to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. We estimate our incremental borrowing rates based on Term SOFR and U.S. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral.
In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component.

Finance leases

Our finance leases primarily relate to buildings and surrounding land located at our Miami headquarters. Finance leases are included within Property and Equipment, net and Long-term debt with the current portion of the liability included within Current portion of long-term debt in our consolidated balance sheets as of June 30, 2025 and December 31, 2024.

The Company's master lease agreement (“Master Lease”) with the County related to the buildings and surrounding land located at our Miami headquarters is classified as a finance lease in accordance with ASC 842, Leases. The Master Lease includes two five-year options to extend the lease, which we are reasonably certain to exercise. Additionally, we previously executed a modification to the Master Lease agreement to extend its expiration from 2076 to 2077 after coming to an agreement with the County on the financing plans to finalize the development of the buildings and land. The modification of the Master Lease did not change the classification of the lease. The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $107 million as of June 30, 2025 and $106 million as of December 31, 2024, respectively. The development of the new campus buildings are expected to be completed in 2026, and the lease components will be recorded within our consolidated financial statements upon commencement.

The components of lease expense were as follows (in millions):

			Consolidated Statement of Comprehensive Income (Loss) Classification						Quarter Ended June 30, 2025						Six Months Ended June 30, 2025
Lease costs:
Operating lease costs			Commission, transportation and other						$	46					$	111
Operating lease costs			Other operating expenses						4						7
Operating lease costs			Marketing, selling and administrative expenses						4						9
Financial lease costs:
Amortization of right-of-use-assets			Depreciation and amortization expenses						1						1
Interest on lease liabilities			Interest expense, net of interest capitalized						2						4
Total lease costs									$	57					$	132

			Consolidated Statement of Comprehensive Income (Loss) Classification						Quarter Ended June 30, 2024						Six Months Ended June 30, 2024
Lease costs:
Operating lease costs			Commission, transportation and other						$	42					$	113
Operating lease costs			Other operating expenses						4						7
Operating lease costs			Marketing, selling and administrative expenses						5						9
Financial lease costs:
Amortization of right-of-use-assets			Depreciation and amortization expenses						3						7
Interest on lease liabilities			Interest expense, net of interest capitalized						7						14
Total lease costs									$	61					$	150

In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the quarter and six months ended June 30, 2025, we had $27 million and $86 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss), respectively, compared to $28 million and $79 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss) during the quarter and six months ended June 30, 2024, respectively. These variable lease costs are included within the balances presented above.

The weighted average of the remaining lease terms and weighted average discount rates are as follows:

			As of June 30, 2025						As of December 31, 2024
Weighted average of the remaining lease term in years
Operating leases			17.89						17.96
Finance leases			48.47						47.54
Weighted average discount rate
Operating leases			7.22		%				7.23		%
Finance leases			6.93		%				6.90		%

Supplemental cash flow information related to leases is as follows (in millions):

			Six Months Ended June 30, 2025						Six Months Ended June 30, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	140					$	138
Operating cash flows from finance leases			$	4					$	14
Financing cash flows from finance leases			$	3					$	13

As of June 30, 2025, maturities related to lease liabilities were as follows (in millions):

Year			Operating Leases						Finance Leases
Remainder of 2025			$	70					$	8
2026			126						10
2027			119						9
2028			111						9
2029			64						8
Thereafter			1,004						490
Total lease payments			1,494						534
Less: Interest			(771)						(419)
Present value of lease liabilities			$	723					$	115

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/842-20/tableOfContent

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- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/842-20/tableOfContent

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