Lessor Arrangements

3 Months Ended

Jun. 30, 2025

Equipment Leases

The Company leases equipment to third-parties, primarily through Contrail. Leases for aircraft and engines to aviation customers typically have terms ranging from 1 and 4 years under operating lease agreements. On August 26, 2024, Contrail executed the operating agreement for CASP Leasing 1, LLC ("CASP"), a newly-created and 95% owned subsidiary of Contrail. On August 29, 2024, CASP entered into two purchase agreements to acquire and subsequently lease two Airbus Model A321-111 aircraft. The lease term for these two leased assets ends December 31, 2027. For the assets currently on lease, there are no options for the lessees to purchase the assets at the end of the lease term. The Company depreciates the aircraft and engines on a straight-line basis over the assets' useful life from the acquisition date to an estimated residual value. During the three months ended June 30, 2025 and 2024, the Company recognized depreciation expense relating to equipment leases of $0.6 million and $0.1 million, respectively.

Future minimum rental payments to be received do not include contingent rentals that may be received under certain leases because amounts are based on usage. During the three months ended June 30, 2025, earned contingent rent on equipment leases totaled approximately $0.5 million. The Company had no contingent rent earned on equipment leases during the three months ended June 30, 2024. As of June 30, 2025, future minimum rental payments to be received under non-cancelable leases are as follows (in thousands):


Year ended March 31,
2026 (excluding the 3 months ended 06/30/2025)	$	2,192
2027	3,361
2028	2,843



Thereafter	—
Total	$	8,396

Subsequent to the financial statement period end date, as mentioned in Note 19 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on July 15, 2025, CASP completed the sale of the two Airbus Model A321-111 aircrafts, including associated engines, for over $18.0 million. Concurrently, CASP entered into assignment, assumption, and amendment agreements under the existing leases, effectively transferring the lessor’s rights and obligations to the purchaser. The amounts related to the transferred leases included in the future minimum rental payments to be received under non-cancelable leases schedule above are as follows: $2.1 million, $3.3 million, and $2.8 million for the years ended March 31, 2026 (excluding the 3 months ended June 30, 2025), 2027, and 2028, respectively.

Office leases

The Company, through its wholly-owned subsidiary, Wolfe Lake, leases offices to third parties with lease terms between 5 and 29 years under operating lease agreements. For the offices currently on lease, there are no options for the lessees to purchase the spaces at the end of the leases. Our contractual obligations for offices currently on lease can include termination and renewal options. We utilize the reasonably certain threshold criteria in determining which options our customers will exercise. The Company depreciates the assets on a straight-line basis over the assets' useful life. Depreciation expense relating to office leases was $0.1 million for the three months ended June 30, 2025 and 2024, respectively.

During the three months ended June 30, 2025, the Company recognized rental and other revenues related to operating lease payments of $0.5 million, of which variable lease payments were $0.2 million. During the three months ended June 30, 2024, the Company recognized rental and other revenues related to operating lease payments of $0.5 million, of which variable lease payments were $0.2 million. Future minimum rental payments to be received do not include variable lease payments that may be received under certain leases because amounts are based on usage. The following table sets forth the undiscounted cash flows for future minimum base rents to be received from customers for office leases in effect as of June 30, 2025:


Year ended March 31,
2026 (excluding the 3 months ended 06/30/2025)	$	765
2027	990
2028	849
2029	774
2030	743
Thereafter	1,824
Total	$	5,945