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Leases
 12 Months Ended
Dec. 31, 2024
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, 2024 and 2023 (in millions):
As of December 31,
20242023
AssetsClassification on Balance Sheet
Operating lease assetsOperating lease assets$550 $593 
Finance lease assetsProperty and equipment, net115 — 
Total lease assets$665 $593 
LiabilitiesClassification on Balance Sheet
Current:
Operating lease liabilitiesCurrent operating lease liabilities$93 $117 
Finance lease liabilitiesCurrent maturities of long-term debt and finance lease obligations15 — 
Long-term:
Operating lease liabilitiesLong-term operating lease liabilities510 547 
Finance lease liabilitiesLong-term debt and finance lease obligations101 — 
Total lease liabilities$719 $664 
As of December 31,
20242023
Weighted average remaining lease term (in years)
Operating leases88
Finance leases7— 
Weighted average discount rate
Operating leases7.1 %7.1 %
Finance leases5.8 %— %
Flight Equipment Leases
We operated a fleet of 290 aircraft as of December 31, 2024. Of our fleet, 26 aircraft were accounted for as operating leases and none were accounted for as finance leases. These operating aircraft leases generally have long durations with remaining terms of two months to four years. As of December 31, 2024, we had 12 and 26 spare engines accounted for as finance leases and operating leases, respectively.
The Company completed two engine sale-leaseback transactions for the year ended December 31, 2024, which resulted in a gain of $17 million, which is included within other operating expenses on our consolidated statement of operations. These sale-leasebacks are accounted for as operating leases and are included in operating lease assets and operating lease liabilities on our consolidated balance sheets. There were no sale-leaseback transactions for the years ended December 31, 2023 and 2022.
We have purchase options for eight 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.
We did not record any impairment losses for the year ended December 31, 2024 and 2023. In 2022, we recorded $52 million in impairment losses relating to our Embraer E190 fleet transition. These losses were attributed to aircraft and related spare parts including the ones under operating leases. Refer to Note 17 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 one month 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, 2024, 2023, and 2022 (in millions):
202420232022
Operating lease cost$139 $167 $158 
Short-term lease cost5 2 1 
Finance lease cost:
Amortization of assets7 — — 
Interest on lease liabilities3 — — 
Variable lease cost607 614 500 
Sublease income(23)(20)(20)
Total net lease cost$738 $763 $639 
Other Information
The table below presents supplemental cash flow information related to leases during the years ended December 31, 2024, 2023, and 2022 (in millions):
202420232022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases$162 $168 $154 
Operating cash flows for finance leases3 — — 
Financing cash flows for finance leases6 2 1 
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, 2024 (in millions):
As of December 31, 2024
Operating LeasesFinance Leases
2025$132 $21 
2026108 21 
202796 21 
202882 21 
202975 21 
Thereafter301 34 
Total minimum lease payments$794 $139 
Less: amount of lease payment representing interest(191)(23)
Present value of future minimum lease payment$603 $116 
Less: current obligations under leases(93)(15)
Long-term lease obligations$510 $101 
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, 2024 and 2023 (in millions):
As of December 31,
20242023
AssetsClassification on Balance Sheet
Operating lease assetsOperating lease assets$550 $593 
Finance lease assetsProperty and equipment, net115 — 
Total lease assets$665 $593 
LiabilitiesClassification on Balance Sheet
Current:
Operating lease liabilitiesCurrent operating lease liabilities$93 $117 
Finance lease liabilitiesCurrent maturities of long-term debt and finance lease obligations15 — 
Long-term:
Operating lease liabilitiesLong-term operating lease liabilities510 547 
Finance lease liabilitiesLong-term debt and finance lease obligations101 — 
Total lease liabilities$719 $664 
As of December 31,
20242023
Weighted average remaining lease term (in years)
Operating leases88
Finance leases7— 
Weighted average discount rate
Operating leases7.1 %7.1 %
Finance leases5.8 %— %
Flight Equipment Leases
We operated a fleet of 290 aircraft as of December 31, 2024. Of our fleet, 26 aircraft were accounted for as operating leases and none were accounted for as finance leases. These operating aircraft leases generally have long durations with remaining terms of two months to four years. As of December 31, 2024, we had 12 and 26 spare engines accounted for as finance leases and operating leases, respectively.
The Company completed two engine sale-leaseback transactions for the year ended December 31, 2024, which resulted in a gain of $17 million, which is included within other operating expenses on our consolidated statement of operations. These sale-leasebacks are accounted for as operating leases and are included in operating lease assets and operating lease liabilities on our consolidated balance sheets. There were no sale-leaseback transactions for the years ended December 31, 2023 and 2022.
We have purchase options for eight 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.
We did not record any impairment losses for the year ended December 31, 2024 and 2023. In 2022, we recorded $52 million in impairment losses relating to our Embraer E190 fleet transition. These losses were attributed to aircraft and related spare parts including the ones under operating leases. Refer to Note 17 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 one month 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, 2024, 2023, and 2022 (in millions):
202420232022
Operating lease cost$139 $167 $158 
Short-term lease cost5 2 1 
Finance lease cost:
Amortization of assets7 — — 
Interest on lease liabilities3 — — 
Variable lease cost607 614 500 
Sublease income(23)(20)(20)
Total net lease cost$738 $763 $639 
Other Information
The table below presents supplemental cash flow information related to leases during the years ended December 31, 2024, 2023, and 2022 (in millions):
202420232022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases$162 $168 $154 
Operating cash flows for finance leases3 — — 
Financing cash flows for finance leases6 2 1 
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, 2024 (in millions):
As of December 31, 2024
Operating LeasesFinance Leases
2025$132 $21 
2026108 21 
202796 21 
202882 21 
202975 21 
Thereafter301 34 
Total minimum lease payments$794 $139 
Less: amount of lease payment representing interest(191)(23)
Present value of future minimum lease payment$603 $116 
Less: current obligations under leases(93)(15)
Long-term lease obligations$510 $101