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FAIR VALUE MEASUREMENTS
 6 Months Ended
Jun. 30, 2024
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):
June 30, 2024
Level 1Level 2Level 3Fair Value
Assets:
Money market funds$93 $— $— 93 
Total assets$93 $— $— $93 
Liabilities:
Warrant liability - Public Warrants$— $70 $— $70 
Warrant liability - Private Warrants— 40 — 40 
Equipment Notes— — 229,635 229,635 
Term Loan
$— $— 297,800 $297,800 
Total liabilities$— $110 $527,435 $527,545 
December 31, 2023
Level 1Level 2Level 3Fair Value
Assets:
Money market funds$94 $— $— $94 
Total assets$94 $— $— $94 
Liabilities:
Warrant liability - Public Warrants$7 $— $— $7 
Warrant liability - Private Warrants— 5 — 5 
Equipment Notes— — 256,256 256,256 
Term Loan— — 297,800 297,800 
Total liabilities$7 $5 $554,056 $554,068 
The carrying amount of Money market funds approximates fair value and is classified within Level 1, because we determined the fair value through quoted market prices.
The Warrants (as defined below) were accounted for as a liability in accordance with ASC 815-40. 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 each of June 30, 2024 and December 31, 2023, we used Level 2 inputs for the Warrants. We valued the Warrants using a Monte Carlo simulation model to reflect the redemption conditions. See Note 11 for additional information about the Warrants.
The following table presents the changes in the fair value of the warrant liability (in thousands):
Public WarrantsPrivate WarrantsTotal Warrant Liability
Fair value as of December 31, 2023
$7 $5 $12 
Change in fair value of warrant liability63 35 98 
Fair value as of June 30, 2024
$70 $40 $110 
The estimated fair value of the Equipment Notes is categorized as a Level 3 valuation. We considered the appraised value of aircraft subject to first-priority liens under the Equipment Notes, as sourced during the third
quarter of 2023 and as required under the Equipment Notes, to determine the fair value of the Equipment Notes as of June 30, 2024.
The estimated fair value of the Term Loan is categorized as a Level 3 valuation. The estimated fair value as of the issuance date was principally based on inputs such as estimated credit risk, recently completed transactions and estimates based on interest rates, maturities, credit risk and underlying collateral. We considered the relatively short time period between the issuance of the Term Loan and the measurement date of June 30, 2024, in order to determine the fair value of the Term Loan as of June 30, 2024.