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LEASES | 6 Months Ended
--- | ---
Jun. 30, 2024
Leases [Abstract] |
LEASES | LEASES We have finance and operating leases for real estate (primarily package centers, airport facilities and warehouses), aircraft and engines, information technology equipment, vehicles and various other equipment used in operating our business. Certain leases for real estate and aircraft contain options to purchase, extend or terminate the lease. Aircraft In addition to the aircraft that we own, we charter aircraft to handle package and cargo volume on certain international trade lanes and domestic routes. Due to the nature of these agreements, primarily being that either party can cancel the agreement with short notice, we have classified these as short-term leases. A majority of our long-term aircraft operating leases are operated by a third party to handle package and cargo volume in geographic regions where, due to government regulations, we are restricted from operating an airline. Transportation equipment and other equipment We enter into both long-term and short-term leases for transportation equipment to supplement our capacity or meet contractual demands. Some of these assets are leased on a month-to-month basis and the leases can be terminated without penalty. We also enter into equipment leases to increase capacity during periods of high demand. These leases are treated as short-term as the cumulative right of use is less than 12 months over the term of the contract. Some of our transportation and technology equipment leases require us to make additional lease payments based on the underlying usage of the assets. Due to the variable nature of these costs, these are expensed as incurred and are not included in the right of use lease asset and associated lease obligation. The components of lease expense for the three and six months ended June 30, 2024 and 2023 were as follows (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Operating lease costs | $ | 231 |  |  | $ | 219 |  |  | $ | 462 |  |  | $ | 426 |
Finance lease costs: |  |  |  |  |  |  |
Amortization of assets | 31 |  |  | 28 |  |  | 66 |  |  | 57 |
Interest on lease liabilities | 5 |  |  | 5 |  |  | 10 |  |  | 9 |
Total finance lease costs | 36 |  |  | 33 |  |  | 76 |  |  | 66 |
Variable lease costs | 78 |  |  | 68 |  |  | 154 |  |  | 140 |
Short-term lease costs | 192 |  |  | 226 |  |  | 391 |  |  | 503 |
Total lease costs(1) | $ | 537 |  |  | $ | 546 |  |  | $ | 1,083 |  |  | $ | 1,135 |
(1) This table excludes sublease income as it was not material for the three and six months ended June 30, 2024 and 2023. In addition to the lease costs disclosed in the table above, we monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. There were no material lease impairments recognized during the three or six months ended June 30, 2024 or 2023. Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):
| June 30, 2024 |  | December 31, 2023
Operating Leases: |  |  |
Operating lease right-of-use assets | $ | 4,088 |  |  | $ | 4,308 |
Current maturities of operating leases | $ | 683 |  |  | $ | 709 |
Non-current operating leases | 3,561 |  |  | 3,756 |
Total operating lease obligations | $ | 4,244 |  |  | $ | 4,465 |
Finance Leases: |  |  |
Property, plant and equipment, net | $ | 667 |  |  | $ | 856 |
Current maturities of long-term debt, commercial paper and finance leases | $ | 106 |  |  | $ | 104 |
Long-term debt and finance leases | 331 |  |  | 368 |
Total finance lease obligations | $ | 437 |  |  | $ | 472 |
Weighted average remaining lease term (in years): |  |  |
Operating leases | 10.7 |  | 10.8
Finance leases | 7.2 |  | 7.4
Weighted average discount rate: |  |  |
Operating leases | 3.35 | % |  | 3.20 | %
Finance leases | 3.99 | % |  | 3.88 | %
Supplemental cash flow information related to leases is as follows (in millions):
| Six Months Ended June 30,
| 2024 |  | 2023
Cash paid for amounts included in measurement of obligations: |  |  |
Operating cash flows from operating leases | $ | 448 |  |  | $ | 419 |
Operating cash flows from finance leases | 10 |  |  | 8 |
Financing cash flows from finance leases | 58 |  |  | 79 |
Right-of-use assets obtained in exchange for lease obligations: |  |  |
Operating leases | $ | 232 |  |  | $ | 826 |
Finance leases | $ | 23 |  |  | $ | 106 |
Maturities of lease obligations as of June 30, 2024 were as follows (in millions):
| Finance Leases |  | Operating Leases
2024 | $ | 64 |  |  | $ | 396 |
2025 | 105 |  |  | 828 |
2026 | 79 |  |  | 721 |
2027 | 49 |  |  | 619 |
2028 | 42 |  |  | 468 |
Thereafter | 173 |  |  | 2,067 |
Total lease payments | 512 |  |  | 5,099 |
Less: Imputed interest | (75) |  |  | (855) |
Total lease obligations | 437 |  |  | 4,244 |
Less: Current obligations | (106) |  |  | (683) |
Long-term lease obligations | $ | 331 |  |  | $ | 3,561 |
As of June 30, 2024, we had $628 million of additional leases which had not commenced. These leases will commence later in 2024 through 2026 when we are granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained.
LEASES | LEASES We have finance and operating leases for real estate (primarily package centers, airport facilities and warehouses), aircraft and engines, information technology equipment, vehicles and various other equipment used in operating our business. Certain leases for real estate and aircraft contain options to purchase, extend or terminate the lease. Aircraft In addition to the aircraft that we own, we charter aircraft to handle package and cargo volume on certain international trade lanes and domestic routes. Due to the nature of these agreements, primarily being that either party can cancel the agreement with short notice, we have classified these as short-term leases. A majority of our long-term aircraft operating leases are operated by a third party to handle package and cargo volume in geographic regions where, due to government regulations, we are restricted from operating an airline. Transportation equipment and other equipment We enter into both long-term and short-term leases for transportation equipment to supplement our capacity or meet contractual demands. Some of these assets are leased on a month-to-month basis and the leases can be terminated without penalty. We also enter into equipment leases to increase capacity during periods of high demand. These leases are treated as short-term as the cumulative right of use is less than 12 months over the term of the contract. Some of our transportation and technology equipment leases require us to make additional lease payments based on the underlying usage of the assets. Due to the variable nature of these costs, these are expensed as incurred and are not included in the right of use lease asset and associated lease obligation. The components of lease expense for the three and six months ended June 30, 2024 and 2023 were as follows (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Operating lease costs | $ | 231 |  |  | $ | 219 |  |  | $ | 462 |  |  | $ | 426 |
Finance lease costs: |  |  |  |  |  |  |
Amortization of assets | 31 |  |  | 28 |  |  | 66 |  |  | 57 |
Interest on lease liabilities | 5 |  |  | 5 |  |  | 10 |  |  | 9 |
Total finance lease costs | 36 |  |  | 33 |  |  | 76 |  |  | 66 |
Variable lease costs | 78 |  |  | 68 |  |  | 154 |  |  | 140 |
Short-term lease costs | 192 |  |  | 226 |  |  | 391 |  |  | 503 |
Total lease costs(1) | $ | 537 |  |  | $ | 546 |  |  | $ | 1,083 |  |  | $ | 1,135 |
(1) This table excludes sublease income as it was not material for the three and six months ended June 30, 2024 and 2023. In addition to the lease costs disclosed in the table above, we monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. There were no material lease impairments recognized during the three or six months ended June 30, 2024 or 2023. Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):
| June 30, 2024 |  | December 31, 2023
Operating Leases: |  |  |
Operating lease right-of-use assets | $ | 4,088 |  |  | $ | 4,308 |
Current maturities of operating leases | $ | 683 |  |  | $ | 709 |
Non-current operating leases | 3,561 |  |  | 3,756 |
Total operating lease obligations | $ | 4,244 |  |  | $ | 4,465 |
Finance Leases: |  |  |
Property, plant and equipment, net | $ | 667 |  |  | $ | 856 |
Current maturities of long-term debt, commercial paper and finance leases | $ | 106 |  |  | $ | 104 |
Long-term debt and finance leases | 331 |  |  | 368 |
Total finance lease obligations | $ | 437 |  |  | $ | 472 |
Weighted average remaining lease term (in years): |  |  |
Operating leases | 10.7 |  | 10.8
Finance leases | 7.2 |  | 7.4
Weighted average discount rate: |  |  |
Operating leases | 3.35 | % |  | 3.20 | %
Finance leases | 3.99 | % |  | 3.88 | %
Supplemental cash flow information related to leases is as follows (in millions):
| Six Months Ended June 30,
| 2024 |  | 2023
Cash paid for amounts included in measurement of obligations: |  |  |
Operating cash flows from operating leases | $ | 448 |  |  | $ | 419 |
Operating cash flows from finance leases | 10 |  |  | 8 |
Financing cash flows from finance leases | 58 |  |  | 79 |
Right-of-use assets obtained in exchange for lease obligations: |  |  |
Operating leases | $ | 232 |  |  | $ | 826 |
Finance leases | $ | 23 |  |  | $ | 106 |
Maturities of lease obligations as of June 30, 2024 were as follows (in millions):
| Finance Leases |  | Operating Leases
2024 | $ | 64 |  |  | $ | 396 |
2025 | 105 |  |  | 828 |
2026 | 79 |  |  | 721 |
2027 | 49 |  |  | 619 |
2028 | 42 |  |  | 468 |
Thereafter | 173 |  |  | 2,067 |
Total lease payments | 512 |  |  | 5,099 |
Less: Imputed interest | (75) |  |  | (855) |
Total lease obligations | 437 |  |  | 4,244 |
Less: Current obligations | (106) |  |  | (683) |
Long-term lease obligations | $ | 331 |  |  | $ | 3,561 |
As of June 30, 2024, we had $628 million of additional leases which had not commenced. These leases will commence later in 2024 through 2026 when we are granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained.

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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 + Details
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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 + Details
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