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Leases
 12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Leases Leases
Operating lease assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, we use the rate implicit in the lease to discount lease payments to present value. For leases that do not provide a readily determinable implicit rate, we estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.
Leases with a term of 12 months or less are not recorded on the balance sheet. Our lease agreements do not contain any residual value guarantees. For facility leases, we account for the lease and non-lease components as a single lease component.
The table below presents the lease-related assets and liabilities recorded on our consolidated balance sheets as of December 31, 2020 and 2019 (in millions):
As of December 31,
20202019
AssetsClassification on Balance Sheet
Operating lease assetsOperating lease assets$804 $912 
Finance lease assetsProperty and equipment, net131 171 
Total lease assets$935 $1,083 
LiabilitiesClassification on Balance Sheet
Current:
Operating lease liabilitiesCurrent operating lease liabilities$113 $128 
Finance lease liabilitiesCurrent maturities of long-term debt and finance lease obligations37 31 
Long-term:
Operating lease liabilitiesLong-term operating lease liabilities752 690 
Finance lease liabilitiesLong-term debt and finance lease obligations26 58 
Total lease liabilities$928 $907 
As of December 31,
20202019
Weighted average remaining lease term (in years)
Operating leases911
Finance leases23
Weighted average discount rate
Operating leases5.99 %5.95 %
Finance leases4.60 %4.75 %
Flight Equipment Leases
We operated a fleet of 267 aircraft as of December 31, 2020. Of our fleet, 62 aircraft were accounted for under operating leases and four aircraft were accounted for under finance leases. These aircraft leases generally have long durations with remaining terms of nine months to five years.
The majority of aircraft operating leases can be renewed at rates based on fair market value at the end of the lease term for one or two years. None of our aircraft operating leases have variable rent payments. We have purchase options for 40 of our aircraft leases at the end of their lease terms. These purchase options are at fair market value and have a one-time option during the term at fixed amounts that were expected to approximate the fair market value at lease inception.
As a result of the unprecedented decline in demand for travel caused by the COVID-19 pandemic, we recorded impairment losses of $273 million for the year ended December 31, 2020 relating to our Embraer E190 fleet. These losses were attributed to aircraft and related spare parts including the ones under operating leases. Refer to note 18 to our consolidated financial statements for further details.
Facility Leases
Our facility leases are primarily for space at the airports we serve. These leases are classified as operating leases and reflect our use of passenger terminal service facilities consisting of ticket counters, gate space, operations support area, and baggage service offices. We lease space directly or indirectly from the local airport authority on varying terms dependent on prevailing practices at each airport. The remaining terms of our airport leases vary from 2 months to 14 years. Our leases at certain airports contain provisions for periodic adjustments of rental rates based on the operating costs of the airports or the frequency of use of the facilities. Some of these leases also include renewal options and/or termination options that are factored into our determination of lease payments when appropriate. Because of the variable nature of the rates, these leases are not recorded as operating lease assets and operating lease liabilities on our consolidated balance sheets.
We also have leases for our corporate offices, training center, and various hangars and airport support facilities at our focus cities.
Other Ground and Property Equipment
We lease certain IT assets, ground support equipment, and various other pieces of equipment. The lease terms of our ground support equipment are less than 12 months. The amount of other equipment we have is not significant.
Lease Costs
The table below presents certain information related to our lease costs during the years ended December 31, 2020, 2019, and 2018 (in millions):
202020192018
Operating lease cost$160 $180 $185 
Short-term lease cost1 2 2 
Finance lease cost:
Amortization of assets6 9 10 
Interest on lease liabilities2 3 3 
Variable lease cost282 391 379 
Sublease income(5)(19)(15)
Total net lease cost$446 $566 $564 
Other Information
The table below presents supplemental cash flow information related to leases during the years ended December 31, 2020, 2019, and 2018 (in millions):

202020192018
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases$146 $136 $151 
Operating cash flows for finance leases4 5 5 
Financing cash flows for finance leases28 17 17 
Lease Commitments
The table below presents scheduled future minimum lease payments for operating and finance leases recorded on our consolidated balance sheets, as of December 31, 2020 (in millions):
As of December 31, 2020
Operating LeasesFinance Leases
2021$160 $40 
2022151 11 
2023141 11 
2024119 5 
202582 — 
Thereafter493 — 
Total minimum lease payments1,146 67 
Less: amount of lease payment representing interest(281)(4)
Present value of future minimum lease payment865 63 
Less: current obligations under leases(113)(37)
Long-term lease obligations$752 $26 
We did not have any lease commitments that have not yet commenced as of December 31, 2020.
Leases Leases
Operating lease assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, we use the rate implicit in the lease to discount lease payments to present value. For leases that do not provide a readily determinable implicit rate, we estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.
Leases with a term of 12 months or less are not recorded on the balance sheet. Our lease agreements do not contain any residual value guarantees. For facility leases, we account for the lease and non-lease components as a single lease component.
The table below presents the lease-related assets and liabilities recorded on our consolidated balance sheets as of December 31, 2020 and 2019 (in millions):
As of December 31,
20202019
AssetsClassification on Balance Sheet
Operating lease assetsOperating lease assets$804 $912 
Finance lease assetsProperty and equipment, net131 171 
Total lease assets$935 $1,083 
LiabilitiesClassification on Balance Sheet
Current:
Operating lease liabilitiesCurrent operating lease liabilities$113 $128 
Finance lease liabilitiesCurrent maturities of long-term debt and finance lease obligations37 31 
Long-term:
Operating lease liabilitiesLong-term operating lease liabilities752 690 
Finance lease liabilitiesLong-term debt and finance lease obligations26 58 
Total lease liabilities$928 $907 
As of December 31,
20202019
Weighted average remaining lease term (in years)
Operating leases911
Finance leases23
Weighted average discount rate
Operating leases5.99 %5.95 %
Finance leases4.60 %4.75 %
Flight Equipment Leases
We operated a fleet of 267 aircraft as of December 31, 2020. Of our fleet, 62 aircraft were accounted for under operating leases and four aircraft were accounted for under finance leases. These aircraft leases generally have long durations with remaining terms of nine months to five years.
The majority of aircraft operating leases can be renewed at rates based on fair market value at the end of the lease term for one or two years. None of our aircraft operating leases have variable rent payments. We have purchase options for 40 of our aircraft leases at the end of their lease terms. These purchase options are at fair market value and have a one-time option during the term at fixed amounts that were expected to approximate the fair market value at lease inception.
As a result of the unprecedented decline in demand for travel caused by the COVID-19 pandemic, we recorded impairment losses of $273 million for the year ended December 31, 2020 relating to our Embraer E190 fleet. These losses were attributed to aircraft and related spare parts including the ones under operating leases. Refer to note 18 to our consolidated financial statements for further details.
Facility Leases
Our facility leases are primarily for space at the airports we serve. These leases are classified as operating leases and reflect our use of passenger terminal service facilities consisting of ticket counters, gate space, operations support area, and baggage service offices. We lease space directly or indirectly from the local airport authority on varying terms dependent on prevailing practices at each airport. The remaining terms of our airport leases vary from 2 months to 14 years. Our leases at certain airports contain provisions for periodic adjustments of rental rates based on the operating costs of the airports or the frequency of use of the facilities. Some of these leases also include renewal options and/or termination options that are factored into our determination of lease payments when appropriate. Because of the variable nature of the rates, these leases are not recorded as operating lease assets and operating lease liabilities on our consolidated balance sheets.
We also have leases for our corporate offices, training center, and various hangars and airport support facilities at our focus cities.
Other Ground and Property Equipment
We lease certain IT assets, ground support equipment, and various other pieces of equipment. The lease terms of our ground support equipment are less than 12 months. The amount of other equipment we have is not significant.
Lease Costs
The table below presents certain information related to our lease costs during the years ended December 31, 2020, 2019, and 2018 (in millions):
202020192018
Operating lease cost$160 $180 $185 
Short-term lease cost1 2 2 
Finance lease cost:
Amortization of assets6 9 10 
Interest on lease liabilities2 3 3 
Variable lease cost282 391 379 
Sublease income(5)(19)(15)
Total net lease cost$446 $566 $564 
Other Information
The table below presents supplemental cash flow information related to leases during the years ended December 31, 2020, 2019, and 2018 (in millions):

202020192018
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases$146 $136 $151 
Operating cash flows for finance leases4 5 5 
Financing cash flows for finance leases28 17 17 
Lease Commitments
The table below presents scheduled future minimum lease payments for operating and finance leases recorded on our consolidated balance sheets, as of December 31, 2020 (in millions):
As of December 31, 2020
Operating LeasesFinance Leases
2021$160 $40 
2022151 11 
2023141 11 
2024119 5 
202582 — 
Thereafter493 — 
Total minimum lease payments1,146 67 
Less: amount of lease payment representing interest(281)(4)
Present value of future minimum lease payment865 63 
Less: current obligations under leases(113)(37)
Long-term lease obligations$752 $26 
We did not have any lease commitments that have not yet commenced as of December 31, 2020.