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Leases
12 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Leases

16.

Leases

At September 30, 2022, the Company leased 16 aircraft, airport facilities, office space, and other property and equipment under non-cancelable operating leases. The operating leases require the Company to pay taxes, maintenance, insurance, and other operating expenses. Rental expense is recognized on a straight-line basis over the lease term, net of lessor rebates and other incentives. The Company expects that, in the normal course of business, such operating leases that expire will be renewed or replaced by other leases, or the property may be purchased rather than leased. Aggregate rental expense under all operating aircraft, equipment and facility leases totaled approximately $43.4 million, $44.6 million, and $51.4 million for the year ended September 30, 2022, 2021, and 2020, respectively.

At September 30, 2022, the Company leased 2 aircraft and 3 spare engines under non-cancelable finance leases. Basic rent on finance leases is paid monthly and at the end of the lease term. At the end of the lease term, the Company has the option to purchase the aircraft and engines for most of the finance leases. These finance leases are reflected as finance lease obligations of $18.0 million on our consolidated balance sheet as of September 30, 2022.

The components of our operating and finance lease costs were as follows (in thousands):

 

 

 

Year Ended September 30,

 

 

 

2022

 

 

2021

 

Operating lease costs

 

$

37,637

 

 

$

37,929

 

Variable and short-term lease costs

 

 

5,783

 

 

 

6,708

 

Interest expense on finance lease liabilities

 

 

547

 

 

 

576

 

Amortization expense of finance lease assets

 

 

2,705

 

 

 

2,130

 

Total lease costs

 

$

46,672

 

 

$

47,343

 

As of September 30, 2022, the Company’s operating lease right-of-use assets were $43.1 million, the Company’s current maturities of operating lease liabilities were $17.2 million, and the Company’s noncurrent operating lease liabilities were $16.7 million. As of September 30, 2022, the Company’s current portion of finance lease liabilities were $2.7 million, and the Company’s noncurrent finance lease liabilities were $15.3 million.

The Company’s operating lease payments included in operating cash flows for the year ended September 30, 2022 and 2021 were $36.3 million and $47.6 million, respectively. The Company’s finance lease interest payments included in operating cash flows for the year ended September 30, 2022 and 2021 were $0.3 million and $0.6 million, respectively. The Company’s finance lease principal payments included in financing cash flows for the year ended September 30, 2022 and 2021 were $2.5 million and $2.3 million, respectively.  

Due to the impacts of the pilot shortage and the pilot wage increase, we evaluated all asset groups during the quarter ended September 30, 2022 and determined that only the asset group associated with the CRJ-900 fleet operating under the American CPA, discussed in Note 8, required impairment. This resulted in an impairment loss of $15.2 million to the leased aircraft within the asset group for the CRJ-900 fleet operating for the year ended September 30, 2022, which was recorded in asset impairment on our consolidated statements of operations and comprehensive (loss) income. Additionally, we recorded a $0.2 million of impairment on certain operating lease ROU assets associated with the abandonment of a leased facility during the year ended September 30, 2022. The Company did not record any impairment losses related to its operating lease right-of-use assets during the years ended September 30, 2021 and 2020.

The table below presents the weighted average remaining terms and discount rates for our operating and finance leases as of September 30, 2022:

 

As of September 30, 2022

 

 

 

 

Finance leases:

 

 

 

 

Weighted average remaining lease term

 

7.4 years

 

Weighted average discount rate

 

 

6.1

%

Operating leases:

 

 

 

 

Weighted average remaining lease term

 

3.8 years

 

Weighted average discount rate

 

 

4.5

%

 

The following table summarizes future minimum rental payments, primarily related to leased aircraft, required under operating and finance leases that had initial or remaining non-cancelable lease terms as of September 30, 2022 (in thousands):

 

Periods Ending

September 30,

 

Operating Leases

 

 

Finance

Leases

 

2023

 

$

18,356

 

 

$

2,730

 

2024

 

 

10,172

 

 

 

7,054

 

2025

 

 

1,564

 

 

 

1,800

 

2026

 

 

1,046

 

 

 

1,800

 

2027

 

 

1,029

 

 

 

1,800

 

Thereafter

 

 

5,054

 

 

 

6,600

 

Total lease payments

 

 

37,221

 

 

 

21,784

 

Less: imputed interest

 

 

(3,256

)

 

 

(3,746

)

Amounts recorded in the consolidated balance sheet

 

$

33,965

 

 

$

18,038

 

RASPRO Lease Facility. On September 23, 2005, Mesa Airlines, as lessee, entered into the RASPRO Lease Facility, with RASPRO as lessor, for 15 of our CRJ-900 aircraft. The obligations under the RASPRO Lease Facility are guaranteed by us, and basic rent is paid quarterly on each aircraft. On each of March 10, 2014, June 5, 2014, and December 8, 2017, the RASPRO Lease Facility was amended to defer certain payments of basic rent (the "Deferred Amounts"). Until the principal of and accrued interest on the Deferred Amounts are paid in full: (i) we and Mesa Airlines are prohibited from paying any dividends to holders of our common stock, (ii) we are prohibited from repurchasing any of our warrants or other equity interests, (iii) Mesa Airlines must maintain a minimum of $35.0 million of cash, cash equivalents and availability under lines of credit, (iv) Mesa Airlines must provide RASPRO with periodic monthly, quarterly and annual reports containing certain financial information and forecasted engine repair costs and (v) we must maintain a minimum debt-to-assets ratio.

In June 2020, the Company amended its RASPRO aircraft lease agreement to defer a $4.0 million lease payment otherwise due in June 2020. Per the amended agreement dated June 5, 2020, the Company is required to pay this amount over the period of September 2021 through March 2024. The Company made the accounting election available for COVID-19 related concessions provided by a lessor and accordingly, this was not a lease modification and required no changes to current accounting treatment. As of September 30, 2022, we were in compliance with the covenants in the RASPRO Lease Facility.