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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Employee Benefit Plans

NOTE 18: EMPLOYEE BENEFIT PLANS

Defined contribution pension plans

The Company has several defined contribution plans covering substantially all of its employees. Costs for the defined contribution plans were $24.4 million, $21.8 million and $19.5 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Defined benefit pension plans

The Company maintains defined benefit plans for certain employees in the United Kingdom and France.

In the United Kingdom, the Company maintains two defined benefit schemes which provide both pensions in retirement and death benefits to members. Pension benefits are related to the member’s final salary at retirement (or their career average revalued salary) and their length of service. The main scheme is the Vector Aerospace International Limited Pension Scheme (the “Scheme”). The other defined benefit scheme is the Vector Aerospace 1998 Pension Plan (the “Plan”). The Scheme and Plan are generally closed for new members, who participate in a separate defined contribution plan.

In France, the defined benefit plan is a government-mandated defined obligation that provides employees with retirement indemnities in the form of lump sums on the basis of the length of service and employee compensation levels. The plan is unfunded and benefits are paid when amounts become due, commencing when participants retire. Actuarial gains and losses of the year for long service awards are immediately recognized in the Consolidated Statements of Operations.

An actuarial valuation of the defined benefit plans was prepared as of December 31, 2024 and December 31, 2023.

The following table summarizes the funded status of the United Kingdom and France defined benefit pension plans as follows:

 

 

December 31, 2024

 

 

December 31, 2023

 

 

France

 

 

United
Kingdom

 

 

France

 

 

United
Kingdom

 

 

(in thousands)

 

Fair value of plan assets, beginning of year

 

$

—

 

 

$

71,602

 

 

$

—

 

 

$

67,423

 

Actual return on assets

 

 

—

 

 

 

(6,308

)

 

 

—

 

 

 

113

 

Company contribution

 

 

—

 

 

 

3,478

 

 

 

—

 

 

 

3,395

 

Benefits paid

 

 

—

 

 

 

(2,728

)

 

 

—

 

 

 

(3,135

)

Foreign exchange

 

 

—

 

 

 

(1,188

)

 

 

—

 

 

 

3,806

 

Plan assets, end of year

 

$

—

 

 

$

64,856

 

 

$

—

 

 

$

71,602

 

Projected pension obligation, beginning of year

 

$

(2,806

)

 

$

(75,678

)

 

$

(2,758

)

 

$

(68,870

)

Service costs

 

 

(132

)

 

 

—

 

 

 

(135

)

 

 

—

 

Interest costs

 

 

(79

)

 

 

(3,323

)

 

 

(83

)

 

 

(3,314

)

Actuarial gains (losses)

 

 

(115

)

 

 

10,110

 

 

 

(28

)

 

 

(2,681

)

Benefits paid

 

 

390

 

 

 

2,728

 

 

 

303

 

 

 

3,135

 

Foreign exchange

 

 

173

 

 

 

1,308

 

 

 

(105

)

 

 

(3,948

)

Projected pension obligation, end of year

 

 

(2,569

)

 

 

(64,855

)

 

 

(2,806

)

 

 

(75,678

)

Overfunded (underfunded) status, end of year

 

$

(2,569

)

 

$

1

 

 

$

(2,806

)

 

$

(4,076

)

 

The accumulated benefit obligation for all defined benefit pension plans was $65.4 million and $75.7 million at December 31, 2024 and December 31, 2023.

 

 

December 31, 2024

 

 

December 31, 2023

 

 

France

 

 

United
Kingdom

 

 

France

 

 

United
Kingdom

 

 

(In thousands)

 

Accumulated benefit obligation, end of year

 

$

1,960

 

 

$

63,478

 

 

$

2,207

 

 

$

73,510

 

Accumulated benefit obligation, beginning of year

 

 

2,207

 

 

 

73,510

 

 

 

2,126

 

 

 

67,283

 

 

Amounts recognized in the Consolidated Balance Sheets consist of $2.6 million as of December 31, 2024, and $6.9 million as of December 31, 2023, in Other non-current liabilities.

Amounts recognized in accumulated other comprehensive loss consist of the following amounts:

 

 

As of December 31,

 

 

2024

 

 

2023

 

 

(in thousands)

 

Cumulative gross unrecognized, net actuarial loss

 

$

(3,964

)

 

$

(4,348

)

Related tax impact

 

 

952

 

 

 

1,092

 

Total included in accumulated other comprehensive loss

 

$

(3,012

)

 

$

(3,256

)

 

The net periodic benefit cost charged to the Consolidated Statements of Operations includes the following components (in thousands):

 

 

Year ended December 31

 

 

2024

 

 

2023

 

 

2022

 

Service cost

 

$

132

 

 

$

135

 

 

$

148

 

Interest cost

 

 

3,402

 

 

 

3,397

 

 

 

2,141

 

Expected return on plan assets

 

 

(3,406

)

 

 

(3,207

)

 

 

(3,390

)

Amortization of net (gain) loss

 

 

(76

)

 

 

(78

)

 

 

(655

)

 

$

52

 

 

$

247

 

 

$

(1,756

)

 

The principal long-term assumptions on which the valuation was based are as follows:

 

 

France

 

 

United
Kingdom

 

 

France

 

 

United
Kingdom

 

 

2024

 

 

2024

 

 

2023

 

 

2023

 

Discount rate to determine benefit obligations

 

 

3.40

%

 

 

5.54

%

 

 

3.25

%

 

 

4.55

%

Discount rate – to determine net periodic benefit cost

 

 

3.40

%

 

 

4.55

%

 

 

3.10

%

 

 

4.77

%

Compensation growth rate

 

 

3.00

%

 

 

3.83

%

 

 

3.00

%

 

 

3.71

%

Expected return on plan assets – Scheme

 

n/a

 

 

 

6.10

%

 

n/a

 

 

 

4.83

%

Expected return on plan assets – Plan

 

n/a

 

 

 

5.47

%

 

n/a

 

 

 

4.79

%

 

The United Kingdom defined benefit plan assets are held in trust by the Trustees. The Trustees determine the investment strategy for the plan assets after taking advice from investment advisers and consulting with the Company. The assets chosen are invested in a diverse portfolio of investments in order to reduce investment risk. The allocation of investments is likely to change as a result of a range of factors such as changes in market conditions and the expected returns and risks. The two defined benefit pension arrangements in the United Kingdom have bespoke investment strategies to reflect the different maturity profiles and funding positions of the respective plans. The current investment strategy for the VA98 Plan includes target allocations for plan assets of approximately 9% in liquid growth, 15% in alternative assets and 76% in liability-driven investments and corporate bonds. The current investment strategy for the VAIL Scheme includes target allocations for plan assets of approximately 18% in liquid growth, 22% in alternative assets and 60% in liability-driven investments and corporate bonds. The Trustees recognize a number of risks involved in the investment of the plan assets and monitor and manage these risks on a regular basis, including through the use of derivatives, which are permitted within the investment strategy.

The Company has an established and well-documented process for determining fair values. Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon models that primarily use, as inputs, market-based or independently sourced market parameters, including yield curves, interest rates, volatilities, equity or debt prices, foreign exchange rates and credit curves. While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The authoritative literature establishes a three-level hierarchy to prioritize the inputs used in measuring fair value. The levels within the hierarchy are described in the table below with Level 1 having the highest priority and Level 3 having the lowest. The Net Asset Value (“NAV”) is based on the value of the underlying assets

owned by the fund, minus its liabilities, and then divided by the number of units outstanding. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for the investments measured at fair value.

•
Cash - Cash is valued at the amount held on deposit by the custodian bank and is classified as Level 1 of the valuation hierarchy.
•
Equity and fixed income funds - these funds are valued at the closing NAV values supplied by the fund managers at the reporting date based on the fair value of the underlying investments of the funds and are classified within Level 2 of the fair value hierarchy unless the determination of fair value of the underlying investments within the funds requires significant unobservable data in which case the funds are classified as Level 3 of the valuation hierarchy.
•
Real estate and property funds - the NAV of these funds are valued based on appraisals of the underlying real estate investments. Such appraisals involve significant judgments with respect to estimates and assumptions and as a result these funds are classified within Level 3 of the valuation hierarchy.
•
Hedge funds - the NAV of these funds are valued using observable inputs including interest rate curves, credit spreads and volatilities and are classified within Level 2 of the valuation hierarchy
•
Other assets - These investments are priced based on unobservable inputs and are classified as Level 3 of the valuation hierarchy.

The fair value of plan assets for the United Kingdom defined benefit plans by major category were as follows:

 

 

As of December 31, 2024

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

(in thousands)

 

Cash

 

$

3,546

 

 

$

—

 

 

$

—

 

 

$

3,546

 

Equity funds:

 

 

 

 

 

 

 

 

 

 

 

 

International equities

 

 

—

 

 

 

6,492

 

 

 

—

 

 

 

6,492

 

Emerging market equities

 

 

—

 

 

 

907

 

 

 

—

 

 

 

907

 

Fixed income funds:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. and international government bonds

 

 

—

 

 

 

25,494

 

 

 

—

 

 

 

25,494

 

Corporate bonds

 

 

—

 

 

 

11,699

 

 

 

4,305

 

 

 

16,004

 

Emerging market bonds

 

 

—

 

 

 

1,784

 

 

 

—

 

 

 

1,784

 

Real estate and property funds

 

 

—

 

 

 

—

 

 

 

7,489

 

 

 

7,489

 

Hedge funds

 

 

—

 

 

 

1,988

 

 

 

—

 

 

 

1,988

 

Other funds

 

 

—

 

 

 

—

 

 

 

1,152

 

 

 

1,152

 

Fair value of pension assets

 

$

3,546

 

 

$

48,364

 

 

$

12,946

 

 

$

64,856

 

 

The fair value of plan assets for the United Kingdom defined benefit plans by major category were as follows:

 

 

As of December 31, 2023

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

(in thousands)

 

Cash

 

$

165

 

 

$

—

 

 

$

—

 

 

$

165

 

Equity funds:

 

 

 

 

 

 

 

 

 

 

 

 

International equities

 

 

—

 

 

 

7,321

 

 

 

—

 

 

 

7,321

 

Emerging market equities

 

 

—

 

 

 

913

 

 

 

—

 

 

 

913

 

Fixed income funds:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. and international government bonds

 

 

—

 

 

 

32,944

 

 

 

—

 

 

 

32,944

 

Corporate bonds

 

 

—

 

 

 

13,892

 

 

 

3,658

 

 

 

17,550

 

Emerging market bonds

 

 

—

 

 

 

2,185

 

 

 

—

 

 

 

2,185

 

Real estate and property funds

 

 

—

 

 

 

—

 

 

 

7,859

 

 

 

7,859

 

Hedge funds

 

 

—

 

 

 

1,356

 

 

 

—

 

 

 

1,356

 

Other funds

 

 

—

 

 

 

—

 

 

 

1,309

 

 

 

1,309

 

Fair value of pension assets

 

$

165

 

 

$

58,611

 

 

$

12,826

 

 

$

71,602

 

 

The following table represents the reconciliation of the Level 3 pension assets measured at fair value:

 

 

Corporate
Bonds funds

 

 

Real Estate
and
Property
funds

 

 

Other funds

 

 

Total

 

 

(in thousands)

 

Balance, December 31, 2022

 

 

5,969

 

 

 

5,396

 

 

 

1,406

 

 

 

12,771

 

Purchases

 

 

—

 

 

 

2,612

 

 

 

4

 

 

 

2,616

 

Sales

 

 

(3,268

)

 

 

(199

)

 

 

(9

)

 

 

(3,476

)

Change in market value:

 

 

620

 

 

 

138

 

 

 

(559

)

 

 

199

 

Foreign exchange

 

 

337

 

 

 

(88

)

 

 

467

 

 

 

716

 

Balance, December 31, 2023

 

$

3,658

 

 

$

7,859

 

 

$

1,309

 

 

$

12,826

 

Sales

 

 

—

 

 

 

(482

)

 

 

(13

)

 

 

(495

)

Change in market value:

 

 

711

 

 

 

259

 

 

 

(69

)

 

 

901

 

Foreign exchange

 

 

(64

)

 

 

(147

)

 

 

(75

)

 

 

(286

)

Balance, December 31, 2024

 

$

4,305

 

 

$

7,489

 

 

$

1,152

 

 

$

12,946

 

 

The Company expects to contribute $3.4 million to its pension plan in 2025.

Future estimated benefit payments over the next 10 years from the United Kingdom and France defined benefit plans for the years ending December 31 and thereafter are as follows (in thousands) :

 

2025

 

$

2,942

 

2026

 

 

2,964

 

2027

 

 

3,081

 

2028

 

 

3,448

 

2029

 

 

3,474

 

Thereafter (2030-2034)

 

 

18,192

 

Total

 

$

34,101