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Long-Term Debt, Financing Leases and Other Borrowings | 3 Months Ended
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Dec. 31, 2019
Debt Disclosure [Abstract] |
Long-Term Debt, Financing Leases and Other Borrowings |
8. | Long-Term Debt, Financing Leases and Other Borrowings
Long-term debt as of December 31, 2019 and September 30, 2019, consisted of the following (in thousands):
|  | December 31, |  |  | September 30, |
|  | 2019 |  |  | 2019 |
Notes payable to financial institution, collateralized by the underlying |  |  |  |  |  |  |  |
aircraft, due 2022(1)(2) |  | $ | 45,019 |  |  | $ | 49,795 |
Notes payable to financial institution, collateralized by the underlying |  |  |  |  |  |  |  |
aircraft, due 2024(3) |  |  | 57,867 |  |  |  | 60,761 |
Senior and subordinated notes payable to secured parties, collateralized |  |  |  |  |  |  |  |
by the underlying aircraft, due 2027(4) |  |  | 107,940 |  |  |  | 110,912 |
Notes payable to secured parties, collateralized by the underlying |  |  |  |  |  |  |  |
aircraft, due 2028(5) |  |  | 191,168 |  |  |  | 191,168 |
Senior and subordinated notes payable to secured parties, collateralized |  |  |  |  |  |  |  |
by the underlying aircraft, due 2028(6) |  |  | 149,283 |  |  |  | 152,945 |
Senior and subordinated notes payable to secured parties, collateralized |  |  |  |  |  |  |  |
by the underlying aircraft, due 2022(7) |  |  | 65,984 |  |  |  | 71,998 |
Senior and subordinated notes payable to secured parties, collateralized |  |  |  |  |  |  |  |
by the underlying aircraft, due 2022(8) |  |  | 43,136 |  |  |  | 47,309 |
Notes payable to financial institution, collateralized by the underlying |  |  |  |  |  |  |  |
equipment, due 2020(9) |  |  | 1,244 |  |  |  | 1,659 |
Notes payable to financial institution due 2020(10) |  |  | 1,822 |  |  |  | 2,329 |
Notes payable to financial institution, collateralized by the underlying |  |  |  |  |  |  |  |
equipment, due 2020(11) |  |  | 5,358 |  |  |  | 6,962 |
Other obligations due to financial institution, collateralized by the underlying |  |  |  |  |  |  |  |
equipment, due 2023(12) |  |  | 8,162 |  |  |  | 8,530 |
Notes payable to financial institution, collateralized by the underlying |  |  |  |  |  |  |  |
equipment, due 2024(13) |  |  | 76,037 |  |  |  | 80,153 |
Notes payable to financial institution, collateralized by the underlying |  |  |  |  |  |  |  |
aircraft, due 2023(14) |  |  | 61,250 |  |  |  | 65,625 |
Notes payable to financial institution due 2023 (15) |  |  | 7,503 |  |  |  | 8,000 |
Revolving Credit Facility (16) |  |  | — |  |  |  | — |
Gross long-term debt, including current maturities |  |  | 821,773 |  |  |  | 858,145 |
Less unamortized debt issuance costs |  |  | (14,667 | ) |  |  | (14,822 | )
Net long-term debt, including current maturities |  |  | 807,106 |  |  |  | 843,323 |
Less current portion |  |  | (166,089 | ) |  |  | (165,900 | )
Net long-term debt |  | $ | 641,017 |  |  | $ | 677,423 |
(1) | In fiscal 2007, the Company financed three CRJ-900 and three CRJ-700 aircraft for $120.3 million. The debt bears interest at the monthly LIBOR plus 2.25% (4.16% at December 31, 2019) and requires monthly principal and interest payments.
(2) | In fiscal 2014, the Company financed ten CRJ-900 aircraft for $88.4 million. The debt bears interest at the monthly LIBOR plus a spread ranging from 1.95% to 7.25% (3.86% to 9.16% at December 31, 2019) and requires monthly principal and interest payments. In fiscal 2018, the Company repaid $40.0 million related to four CRJ-900 aircraft.
(3) | In fiscal 2014, the Company financed eight CRJ-900 aircraft with $114.5 million in debt. The debt bears interest at 5.00% and requires monthly principal and interest payments.
(4) | In fiscal 2015, the Company financed seven CRJ-900 aircraft with $170.2 million in debt. The senior notes payable of $151.0 million bear interest at monthly LIBOR plus 2.71% (4.62% at December 31, 2019) and require monthly principal and interest payments. The subordinated notes payable are noninterest-bearing and become payable in full on the last day of the term of the notes. The Company has imputed an interest rate of 6.25% on the subordinated notes payable and recorded a related discount of $8.1 million, which is being accreted to interest expense over the term of the notes.
(5) | In fiscal 2016, the Company financed ten E-175 aircraft with $246.0 million in debt under an EETC financing arrangement (see discussion below). The debt bears interest ranging from 4.75% to 6.25% and requires semi-annual principal and interest payments.
(6) | In fiscal 2016, the Company financed eight E-175 aircraft with $195.3 million in debt. The senior notes payable of $172.0 million bear interest at the three-month LIBOR plus a spread ranging from 2.20% to 2.32% (3.96% to 4.08% at December 31, 2019) and require quarterly principal and interest payments. The subordinated notes payable bear interest at 4.50% and require quarterly principal and interest payments.
(7) | In June 2018, the Company refinanced six CRJ-900 aircraft with $27.5 million in debt and financed nine CRJ-900 aircraft, which were previously leased, with $69.6 million in debt. The senior notes payable of $65.8 million bear interest at the three-month LIBOR plus 3.50% (5.26 % at December 31, 2019) and require quarterly principal and interest payments. The subordinated notes payable of $29.8 million bear interest at three month LIBOR plus 7.50% (9.26% at December 31, 2019) and require quarterly principal and interest payments.
(8) | In December 2017, the Company refinanced nine CRJ-900 aircraft with $74.9 million in debt. The senior notes payable of $46.9 million bear interest at the three-month LIBOR plus 3.50% (5.26% at December 31, 2019) and require quarterly principal and interest payments. The subordinated notes payable bear interest at the three-month LIBOR plus 4.50% (6.26% at December 31, 2019) and require quarterly principal and interest payments.
(9) | In fiscal 2015, the Company financed certain flight equipment with $8.3 million in debt. The debt bears interest at 5.163% and requires monthly principal and interest payments.
(10) | In fiscal 2015 and 2016, the Company financed certain flight equipment maintenance costs with $10.2 million in debt. The debt bears interest at the monthly LIBOR plus 3.07% (4.98% at December 31, 2019) and requires quarterly principal and interest payments.
(11) | In fiscal 2016-2019, the Company financed certain flight equipment maintenance costs with $26.1 million in debt. The debt bears interest at the three-month LIBOR plus a spread ranging from 2.93% to 3.21% (4.69% to 4.97% at December 31, 2019) and requires quarterly principal and interest payments. The debt is subject to a fixed charge ratio covenant. As of December 31, 2019, the Company was in compliance with this covenant.
12) | In February 2018, the Company leased two spare engines. The leases were determined to be capital as the leases contain a bargain purchase option at the end of the term. Imputed interest is 9.128% and the leases requires monthly payments.
(13) | In January 2019, the Company financed certain flight equipment with $91.2 million in debt. The debt bears interest at the monthly LIBOR plus 3.10% (5.01% at December 31, 2019) and requires monthly principal and interest payments.
(14) | In June 2019, the Company financed ten CRJ-700 aircraft with $70.0 million in debt, which were previously leased. The debt bears interest at the monthly LIBOR plus 5.00% (6.91% at December 31, 2019) and requires monthly principal and interest payments. The interest rate reduced from 5.25% to 5.00% in 1st quarter, 2020 due to United Airlines extension of CRJ-700.
(15) | On September 27,2019, the Company financed certain flight equipment for $8.0 million. The debt bears interest at the monthly LIBOR plus 5.00% (6.91% at December 31, 2019) and requires monthly principal and interest payments. The interest rate reduced from 5.25% to 5.00% in 1st quarter, 2020 due to United Airlines extension of CRJ-700.
(16) | On September 25, 2019, the company extended the term on their $35.0 million working capital draw loan by three years, which now terminates in September 2022. Interest is assessed on drawn amounts at one-month LIBOR plus 3.75%.
Principal maturities of long-term debt as of December 31, 2019, and for each of the next five years are as follows (in thousands):
Periods Ending December 31, |  | Total Principal |
Remainder of 2020 |  | $ | 166,089 |
2021 |  |  | 160,084 |
2022 |  |  | 140,139 |
2023 |  |  | 96,722 |
2024 |  |  | 62,605 |
Thereafter |  |  | 196,134 |
|  | $ | 821,773 |
The net book value of collateralized aircraft and equipment as of December 31, 2019 was $1,081.0 million. In December 2015, an Enhanced Equipment Trust Certificate ("EETC") pass-through trust was created to issue pass-through certificates to obtain financing for new E-175 aircraft. At December 31, 2019 Mesa has $191.2 million of equipment notes outstanding issued under the EETC financing included in long-term debt on the condensed consolidated balance sheets. The structure of the EETC financing consists of a pass-through trust created by Mesa to issue pass-through certificates, which represent fractional undivided interests in the pass-through trust and are not obligations of Mesa. The proceeds of the issuance of the pass-through certificates were used to purchase equipment notes which were issued by Mesa and secured by its aircraft. The payment obligations under the equipment notes are those of Mesa. Proceeds received from the sale of pass-through certificates were initially held by a depositary in escrow for the benefit of the certificate holders until Mesa issued equipment notes to the trust, which purchased such notes with a portion of the escrowed funds. Mesa evaluated whether the pass-through trust formed for its EETC financing is a Variable Interest Entity ("VIE") and required to be consolidated. The pass-through trust was determined to be a VIE, however, the Company has determined that it does not have a variable interest in the pass-through trust, and therefore, has not consolidated the pass-through trust with its financial statements. On January 28, 2019, the Company entered into a Term Loan Agreement (the "Term Loan") pursuant to which the lenders thereunder committed to lend to the Company term loans in the aggregate principal amount of $91.2 million. Borrowings under the Term Loan bear interest at LIBOR plus 3.10%. This interest rate is significantly lower than the interest rate under the Company's Spare Engine Facility (defined below), which the Term Loan refinanced and replaced. The Spare Engine Facility accrued interest at LIBOR plus 7.25%. The Term Loan has a term of five years, with principal and interest payments due monthly over the term of the loan in accordance with an amortization schedule. The Company recorded a loss on extinguishment of debt of $3.6 million, due to a $1.9 million write-off of financing fees and $1.7 million in prepayment penalties, in connection with the repayment of the Spare Engine Facility. On June 14, 2019, the Company completed the purchase of ten CRJ-700 aircraft, which were previously leased under the aircraft lease facility with Wells Fargo Bank Northwest, National Association, as owner trustee and lessor (the “GECAS Lease Facility”), for $70.0 million. The Company financed the aircraft purchase with $70.0 million in new debt. The notes payable of $70.0 million require monthly payments of principal and interest through fiscal 2023 bearing interest at LIBOR plus 5.0%. The Company recorded non-cash lease termination expense of $9.5 million in connection with the lease buyout (14). On September 25, 2019, the company extended the term on their $35.0 million working capital draw loan by three years, which now terminates in September 2022. Interest is assessed on drawn amounts at one-month LIBOR plus 3.75%. On September 27, 2019, the company financed certain flight equipment with $8.0 million in new debt. The debt of $8.0 million require monthly payments of principal and interest through fiscal 2023 bearing interest at Libor plus 5.0%(15).

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- Definition The entire disclosure for debt and capital lease obligations can be reported. Information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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