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FAIR VALUE MEASUREMENTS | 3 Months Ended
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Mar. 31, 2023
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, an exit price, in an orderly transaction between unaffiliated willing market participants on the measurement date under current market conditions. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available and activity in the markets used to measure fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
Level 1 - | Quoted prices, unadjusted, in active markets for identical assets or liabilities that can be accessed at the measurement date.
Level 2 - | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - | Unobservable inputs developed using our own estimates and assumptions, which reflect those that market participants would use in pricing the asset or liability.
Financial instruments that are measured at fair value on a recurring basis and their corresponding placement in the fair value hierarchy consisted of the following (in thousands):
| March 31, 2023
| Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
Assets: |  |  |  |  |  |  |
Money market funds | $ | 268,940 |  |  | $ | — |  |  | $ | — |  |  | 268,940 |
Total assets | $ | 268,940 |  |  | $ | — |  |  | $ | — |  |  | $ | 268,940 |
Liabilities: |  |  |  |  |  |  |
Warrant liability - Public Warrants | $ | 400 |  |  | $ | — |  |  | $ | — |  |  | $ | 400 |
Warrant liability - Private Warrants | — |  |  | 226 |  |  | — |  |  | 226 |
Equipment Notes | — |  |  | — |  |  | 263,249 |  |  | 263,249 |
Total liabilities | $ | 400 |  |  | $ | 226 |  |  | $ | 263,249 |  |  | $ | 263,875 |
| December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
Assets: |  |  |  |  |  |  |
Money market funds | $ | 230,626 |  |  | $ | — |  |  | $ | — |  |  | $ | 230,626 |
Treasury bills | 199,700 |  |  | — |  |  | — |  |  | 199,700 |
Total assets | $ | 430,326 |  |  | $ | — |  |  | $ | — |  |  | $ | 430,326 |
Liabilities: |  |  |  |  |  |  |
Warrant liability - Public Warrants | $ | 479 |  |  | $ | — |  |  | $ | — |  |  | $ | 479 |
Warrant liability - Private Warrants | — |  |  | 272 |  |  | — |  |  | 272 |
Equipment Notes | — |  |  | 270,000 |  |  | — |  |  | 270,000 |
Total liabilities | $ | 479 |  |  | $ | 270,272 |  |  | $ | — |  |  | $ | 270,751 |
The carrying amount of cash equivalents approximates fair value and is classified within Level 1, because we determined the fair value through quoted market prices. The estimated fair value of the Equipment Notes is categorized as a Level 3 valuation. We considered the relatively short time period between the issuance of the Equipment Notes and the measurement date of March 31, 2023, as well as the estimated fair value of aircraft subject to first priority liens under the Equipment Notes to determine the fair value of the Equipment Notes as of March 31, 2023. The warrants were accounted for as a liability in accordance with Accounting Standards Codification 815-40 (see Note 11). The warrant liability was measured at fair value upon assumption and on a recurring basis, with changes in fair value presented in the condensed consolidated statements of operations. As of March 31, 2023 and December 31, 2022, we used Level 1 inputs for the Public Warrants (as defined below) and Level 2 inputs for the Private Warrants (as defined below). We valued the Private Warrants by applying the valuation technique of a Monte Carlo simulation model to reflect the redemption conditions. The Private Warrants are substantially similar to the Public Warrants, but are not directly traded or quoted on an active trading market. The following table presents the changes in the fair value of the warrant liability (in thousands):
| Public Warrants |  | Private Warrants |  | Total Warrant Liability
Fair value as of December 31, 2022 | $ | 479 |  |  | $ | 272 |  |  | $ | 751 |
Change in fair value of warrant liability | (80) |  |  | (45) |  |  | (125) |
Fair value as of March 31, 2023 | $ | 399 |  |  | $ | 227 |  |  | $ | 626 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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