Leases (Notes)

6 Months Ended

Jun. 30, 2020

Leases

The Company evaluates all operating leases and they are measured on the balance sheet with a lease liability and right-of-use asset (“ROU”) at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make scheduled lease payments. Airport terminal leases mostly include variable lease

payments outside of those based on a fixed index, and are therefore not recorded as ROU assets.



(in thousands)	Classification on the Balance Sheet	June 30, 2020		December 31, 2019
Assets
Operating lease assets⁽¹⁾	Operating lease right-of-use assets	$	99,819	$	22,081
Finance lease assets⁽²⁾	Property and equipment, net	108,407		111,665
Total lease assets		$	208,226	$	133,746

Liabilities
Current
Operating⁽¹⁾	Accrued liabilities	$	11,171	$	2,662
Finance⁽²⁾	Current maturities of long-term debt and finance lease obligations	7,836		7,666
Noncurrent
Operating⁽¹⁾	Other noncurrent liabilities	90,257		21,290
Finance⁽²⁾	Long-term debt and finance lease obligations	103,969		107,930
Total lease liabilities		$	213,233	$	139,548

(1) Represents assets and liabilities of seven aircraft, office facilities, office equipment, certain airport and terminal facilities, and other assets under operating lease

(2) Represents assets and liabilities of five aircraft under finance lease

Sale-Leaseback Transaction

In June 2020, the Company entered into a sale-leaseback transaction on four aircraft. The transaction qualified as a sale, and generated $48.0 million of proceeds. The aircraft were removed from the Company's balance sheet within property and equipment, resulting in a $30.2 million loss on sale. The loss is reflected within operating special charges on the statement of income since the Company would not likely have transacted absent cash conservation efforts as a result of COVID. The leased aircraft were subsequently recorded within operating lease right-of-use assets, with the related lease liabilities recorded within accrued liabilities and other noncurrent liabilities on the balance sheet. This transaction is treated as an cash inflow from investing activities on the statement of cash flows.