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Commitments and Contingencies | 6 Months Ended
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Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Flight Equipment Commitments As of June 30, 2024, the Company’s firm aircraft and engine purchase orders consisted of the following:
| A320neo |  | A321neo |  | Total Aircraft(a) |  | Engines
Year Ending |  |  |  |  |  |  |
Remainder of 2024 | — |  |  | 11 |  |  | 11 |  |  | 1 |
2025 | 14 |  |  | 23 |  |  | 37 |  |  | 4 |
2026 | 19 |  |  | 24 |  |  | 43 |  |  | 4 |
2027 | 14 |  |  | 21 |  |  | 35 |  |  | 3 |
2028 | 2 |  |  | 38 |  |  | 40 |  |  | 2 |
Thereafter | — |  |  | 32 |  |  | 32 |  |  | — |
Total | 49 |  |  | 149 |  |  | 198 |  |  | 14 |
__________________ (a) While the schedule presented reflects the contractual delivery dates as of June 30, 2024, the Company has recently experienced delays in the deliveries of Airbus aircraft which may persist in future periods. The Company is party to certain aircraft purchase agreements with Airbus (as amended from time to time, the “Airbus Purchase Agreements”) pursuant to which, as of June 30, 2024, the Company had commitments to purchase an aggregate of 49 A320neo and 149 A321neo aircraft, with deliveries expected through 2029 per the latest delivery schedule. In June 2024, the Company provided notice to Airbus as permitted in the Airbus Purchase Agreements that it will not purchase any A321XLR aircraft and will convert 18 A320neo to A321neo aircraft. This conversion has been reflected in the table above. The Airbus Purchase Agreements also provide for, among other things, varying purchase incentives for each aircraft type (e.g., A320neo versus A321neo), which are allocated proportionally by aircraft type over the remaining aircraft to be delivered so that each aircraft’s capitalized cost upon induction would be equal. Therefore, as cash paid for deliveries is greater than the capitalized cost due to the allocation of these purchase incentives, a deferred purchase incentive is recognized, which will ultimately be offset by future deliveries of aircraft with lower cash payments than their associated capitalized cost. As of June 30, 2024 and December 31, 2023, the Company had $88 million and $78 million, respectively, of deferred purchase incentives recognized within other assets on the Company’s condensed consolidated balance sheets. As of June 30, 2024, purchase commitments for these aircraft and engines, including estimated amounts for contractual price escalations and PDPs, consisted of the following (in millions):
| Total
Year Ending |
Remainder of 2024 | $ | 668 |
2025 | 2,224 |
2026 | 2,477 |
2027 | 2,066 |
2028 | 2,467 |
Thereafter | 2,002 |
Total | $ | 11,904 |
Litigation and Other Contingencies The Company is subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. During 2023, the DOT sent the Company a request for information to assist in its investigation into whether the Company cared for its customers as required by law during Winter Storm Elliott, which caused significant operational disruptions and spanned from December 21, 2022 to January 2, 2023, including providing adequate customer service assistance, prompt flight status notifications, and proper and timely refunds. The Company is fully cooperating with the DOT request. The Company regularly evaluates the status of such matters to assess whether a loss is probable and reasonably estimable in determining whether an accrual is appropriate. Furthermore, in determining whether disclosure is appropriate, the Company evaluates each matter to assess if there is at least a reasonable possibility that a loss or additional losses may have been incurred and whether an estimate of possible loss or range of loss can be made. The ultimate outcome of legal actions is unpredictable and can be subject to significant uncertainties, and it is difficult to determine whether any loss is probable or even possible. Additionally, it is also difficult to estimate the amount of loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Thus, actual losses may be in excess of any recorded liability or the range of reasonably possible loss. The Company believes the ultimate outcome of any potential lawsuits, proceedings and reviews will likely not, individually or in the aggregate, have a material adverse effect on its condensed consolidated financial position, liquidity or results of operations and that the Company’s current accruals cover matters where loss is deemed probable and can be reasonably estimated. In situations where the Company may be a plaintiff and receives, or expects to receive, a favorable ruling related to litigation, the Company follows the accounting standards codification guidance for gain contingencies. The Company does not recognize a gain contingency within its condensed consolidated financial statements prior to the settlement of the underlying events or contingencies associated with the gain contingency. As a result, the consideration related to a gain contingency is recorded in the condensed consolidated financial statements during the period in which all underlying events or contingencies are resolved and the gain is realized. During the three months ended June 30, 2024, the Company received a favorable ruling in the U.S District Court for the Southern District of New York regarding a breach of contract action against a former aircraft lessor in which the Company was awarded $50 million in damages plus post-judgement interest. Given that the judgment has been appealed to the Unites States Court of Appeals for the Second Circuit, the Company has not recorded any amounts within the condensed consolidated financial statements as of June 30, 2024. Employees The Company has seven union-represented employee groups that together represented approximately 88% of all employees as of June 30, 2024. The table below sets forth the Company’s employee groups and status of the collective bargaining agreements as of June 30, 2024:
|  |  |  |  |  | Percentage of Workforce
Employee Group |  | Representative |  | Amendable Date(a) |  | June 30, 2024
Pilots |  | Air Line Pilots Association (ALPA) |  | January 2024(b) |  | 26%
Flight Attendants |  | Association of Flight Attendants (AFA-CWA) |  | May 2024(c) |  | 53%
Aircraft Technicians |  | International Brotherhood of Teamsters (IBT) |  | May 2025 |  | 6%
Aircraft Appearance Agents |  | IBT |  | October 2023(d) |  | 1%
Dispatchers |  | Transport Workers Union (TWU) |  | August 2028 |  | 1%
Material Specialists |  | IBT |  | March 2022(d) |  | 1%
Maintenance Controllers |  | IBT |  | October 2023(d) |  | <1%
__________________ (a) Subject to standard early opener provisions. (b) ALPA filed for mediation through the National Mediation Board in January 2024, and the parties are meeting regularly as part of the mediation process. (c) In November 2023, AFA-CWA exercised their contractual right to open negotiations early. Negotiations are currently ongoing. (d) The Company’s collective bargaining agreements with its aircraft appearance agents, material specialists, and maintenance controllers, each represented by IBT, were still amendable as of June 30, 2024, and pursuant to the Railway Labor Act the parties continue to be bound by the existing agreements as negotiations continue. The Company is self-insured for health care claims, subject to a stop-loss policy, for eligible participating employees and qualified dependent medical and dental claims, subject to deductibles and limitations. The Company’s liabilities for claims incurred but not reported are determined based on an estimate of the ultimate aggregate liability for claims incurred. The estimate is calculated from actual claim rates and adjusted periodically as necessary. The Company had accrued $6 million and $5 million for health care claims estimated to be incurred but not yet paid, as of June 30, 2024 and December 31, 2023, respectively, which are included as a component of other current liabilities on the Company’s condensed consolidated balance sheets. General Indemnifications The Company has various leases with respect to real property as well as various agreements among airlines relating to fuel consortia or fuel farms at airports. Under some of these contracts, the Company is party to joint and several liability regarding environmental damages. Under others, where the Company is a member of an LLC or other entity that contracts directly with the airport operator, liabilities are borne through the fuel consortia structure. The Company’s aircraft, services, equipment lease and sale and financing agreements typically contain provisions requiring the Company, as the lessee, obligor or recipient of services, to indemnify the other parties to those agreements, including certain of those parties’ related persons, against virtually any liabilities that might arise from the use or operation of the aircraft or such other equipment. The Company believes that its insurance would cover most of its exposure to liabilities and related indemnities associated with the commercial real estate leases and aircraft, services, equipment lease and sale and financing agreements described above. Certain of the Company’s aircraft and other financing transactions include provisions that require payments to preserve an expected economic return to the lenders if that economic return is diminished due to certain changes in law or regulations. In certain of these financing transactions and other agreements, the Company also bears the risk of certain changes in tax laws that would subject payments to non-U.S. entities to withholding taxes. Certain of these indemnities survive the length of the related financing or lease. The Company cannot reasonably estimate the potential future payments under the indemnities and related provisions described above because it cannot predict (i) when and under what circumstances these provisions may be triggered, and (ii) the amount that would be payable if the provisions were triggered because the amounts would be based on facts and circumstances existing at such time.

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