QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2019
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-33166
Allegiant Travel Company
(Exact Name of Registrant as Specified in Its Charter)
Nevada
20-4745737
(State or Other Jurisdiction of Incorporation or Organization)
(IRS Employer Identification No.)
1201 North Town Center Drive
Las Vegas,
Nevada
89144
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (702) 851-7300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common stock, par value $.001
ALGT
NASDAQ Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 28, 2019, the registrant had 16,288,448 shares of common stock, $.001 par value per share, outstanding.
Current maturities of long-term debt and finance lease obligations, net of related costs
138,685
152,287
TOTAL CURRENT LIABILITIES
549,253
513,996
Long-term debt and finance lease obligations, net of current maturities and related costs
1,213,299
1,119,446
Deferred income taxes
211,801
164,027
Other noncurrent liabilities
33,519
10,878
TOTAL LIABILITIES:
2,007,872
1,808,347
SHAREHOLDERS' EQUITY
Common stock, par value $.001
23
23
Treasury shares
(620,655
)
(605,037
)
Additional paid in capital
285,318
270,935
Accumulated other comprehensive income (loss), net
29
(661
)
Retained earnings
1,161,893
1,025,061
TOTAL EQUITY:
826,608
690,321
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:
$
2,834,480
$
2,498,668
The accompanying notes are an integral part of these consolidated financial statements.
3
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2019
2018
2019
2018
OPERATING REVENUES:
Passenger
$
391,222
$
355,100
$
1,265,978
$
1,157,443
Third party products
18,207
15,921
53,557
44,045
Fixed fee contracts
19,797
14,791
42,859
33,000
Other
7,283
7,297
17,498
20,845
Total operating revenues
436,509
393,109
1,379,892
1,255,333
OPERATING EXPENSES:
Salary and benefits
107,586
97,706
340,589
312,314
Aircraft fuel
104,583
113,525
324,253
342,006
Station operations
43,522
43,128
128,357
122,265
Depreciation and amortization
39,436
34,658
114,112
92,641
Maintenance and repairs
24,768
31,983
68,470
75,864
Sales and marketing
17,591
16,798
59,057
54,224
Aircraft lease rental
—
671
—
767
Other
26,907
28,459
73,756
74,881
Total operating expenses
364,393
366,928
1,108,594
1,074,962
OPERATING INCOME
72,116
26,181
271,298
180,371
OTHER (INCOME) EXPENSES:
Interest expense
19,506
14,309
58,531
40,467
Capitalized interest
(903
)
—
(3,444
)
(279
)
Interest income
(3,335
)
(2,425
)
(10,038
)
(6,259
)
Loss on debt extinguishment
—
—
3,677
—
Other, net
(57
)
(118
)
(41
)
(408
)
Total other expenses
15,211
11,766
48,685
33,521
INCOME BEFORE INCOME TAXES
56,905
14,415
222,613
146,850
PROVISION FOR INCOME TAXES
12,976
(732
)
51,017
26,494
NET INCOME
$
43,929
$
15,147
$
171,596
$
120,356
Earnings per share to common shareholders:
Basic
$
2.70
$
0.94
$
10.55
$
7.46
Diluted
$
2.70
$
0.94
$
10.54
$
7.45
Shares used for computation:
Basic
16,037
15,957
16,037
15,929
Diluted
16,039
15,962
16,045
15,938
Cash dividends declared per share:
$
0.70
$
0.70
$
2.10
$
2.10
The accompanying notes are an integral part of these consolidated financial statements.
4
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2019
2018
2019
2018
NET INCOME
$
43,929
$
15,147
$
171,596
$
120,356
Other comprehensive income:
Change in available for sale securities, net of tax
16
(83
)
669
(926
)
Foreign currency translation adjustments
17
4
21
218
Change in derivatives, net of tax
—
1,325
—
2,321
Total other comprehensive income
33
1,246
690
1,613
TOTAL COMPREHENSIVE INCOME
$
43,962
$
16,393
$
172,286
$
121,969
The accompanying notes are an integral part of these consolidated financial statements.
5
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
(unaudited)
Three Months Ended September 30, 2019
Common stock outstanding
Par value
Additional paid-in capital
Accumulated other comprehensive income (loss)
Retained earnings
Treasury shares
Total shareholders' equity
Balance at June 30, 2019
16,305
$
23
$
280,783
$
(4
)
$
1,128,822
$
(605,115
)
$
804,509
Share-based compensation
—
—
4,535
—
—
—
4,535
Shares repurchased by the Company and held as treasury shares
(110
)
—
—
—
—
(15,540
)
(15,540
)
Cash dividends, $0.70 per share
—
—
—
—
(11,409
)
—
(11,409
)
Other comprehensive income
—
—
—
33
551
—
584
Net income
—
—
—
—
43,929
—
43,929
Balance at September 30, 2019
16,195
$
23
$
285,318
$
29
$
1,161,893
$
(620,655
)
$
826,608
Nine Months Ended September 30, 2019
Common stock outstanding
Par value
Additional paid-in capital
Accumulated other comprehensive income (loss)
Retained earnings
Treasury shares
Total shareholders' equity
Balance at December 31, 2018
16,183
$
23
$
270,935
$
(661
)
$
1,025,061
$
(605,037
)
$
690,321
Share-based compensation
124
—
14,383
—
—
—
14,383
Shares repurchased by the Company and held as treasury shares
(132
)
—
—
—
—
(18,549
)
(18,549
)
Stock issued under employee stock purchase plan
20
—
—
—
—
2,931
2,931
Cash dividends, $2.10 per share
—
—
—
—
(34,214
)
—
(34,214
)
Other comprehensive income
—
—
—
690
—
—
690
Net income
—
—
—
—
171,596
—
171,596
Cumulative effect of the New Lease Standard (see Note 5)
—
—
—
—
(550
)
—
(550
)
Balance at September 30, 2019
16,195
$
23
$
285,318
$
29
$
1,161,893
$
(620,655
)
$
826,608
Three Months Ended September 30, 2018
Common stock outstanding
Par value
Additional paid-in capital
Accumulated other comprehensive income (loss)
Retained earnings
Treasury shares
Total shareholders' equity
Balance at June 30, 2018
16,161
$
23
$
263,034
$
(2,473
)
$
991,109
$
(607,025
)
$
644,668
Share-based compensation
—
—
3,873
—
—
—
3,873
Issuance of common stock, net of forfeitures
3
—
—
—
—
—
—
Shares repurchased by the Company and held as treasury shares
(5
)
—
—
—
—
(624
)
(624
)
Cash dividends, $0.70 per share
—
—
—
—
(11,314
)
—
(11,314
)
Other comprehensive income
—
—
—
1,246
—
—
1,246
Net income
—
—
—
—
15,147
—
15,147
Balance at September 30, 2018
16,159
$
23
$
266,907
$
(1,227
)
$
994,942
$
(607,649
)
$
652,996
6
Nine Months Ended September 30, 2018
Common stock outstanding
Par value
Additional paid-in capital
Accumulated other comprehensive income (loss)
Retained earnings
Treasury shares
Total shareholders' equity
Balance at December 31, 2017
16,066
$
23
$
253,840
$
(2,840
)
$
907,943
$
(605,655
)
$
553,311
Share-based compensation
98
—
13,067
—
—
—
13,067
Issuance of common stock, net of forfeitures
8
—
—
—
—
—
—
Shares repurchased by the Company and held as treasury shares
(23
)
—
—
—
—
(3,617
)
(3,617
)
Stock issued under employee stock purchase plan
10
—
—
—
—
1,623
1,623
Cash dividends, $2.10 per share
—
—
—
—
(33,919
)
—
(33,919
)
Other comprehensive income
—
—
—
1,613
562
—
2,175
Net income
—
—
—
—
120,356
—
120,356
Balance at September 30, 2018
16,159
$
23
$
266,907
$
(1,227
)
$
994,942
$
(607,649
)
$
652,996
The accompanying notes are an integral part of these consolidated financial statements.
7
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30,
2019
2018
OPERATING ACTIVITIES:
Net income
$
171,596
$
120,356
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
114,112
92,641
(Gain)/loss on aircraft and other equipment disposals
(8,553
)
2,274
Share-based compensation expense
13,563
11,043
Deferred income taxes
47,795
21,760
Other adjustments
7,330
1,833
Changes in certain assets and liabilities:
Accounts receivable
4,564
38,005
Prepaid expenses
(13,493
)
(6,709
)
Accounts payable
(3,655
)
(2,437
)
Accrued liabilities
(8,158
)
5,960
Air traffic liability
55,446
27,432
Deferred major maintenance
(48,081
)
(21,699
)
Other assets/liabilities
(11,039
)
(336
)
Net cash provided by operating activities
321,427
290,123
INVESTING ACTIVITIES:
Purchase of investment securities
(397,504
)
(263,057
)
Proceeds from maturities of investment securities
413,038
355,325
Purchase of property and equipment, including capitalized interest
(350,187
)
(273,999
)
Other investing activities
10,647
(5,399
)
Net cash used in investing activities
(324,006
)
(187,130
)
FINANCING ACTIVITIES:
Cash dividends paid to shareholders
(34,214
)
(33,919
)
Proceeds from the issuance of debt
770,435
191,724
Repurchase of common stock
(18,549
)
(3,617
)
Principal payments on debt and finance lease obligations
(670,148
)
(171,438
)
Debt issuance costs
(32,592
)
(1,147
)
Other financing activities
325
5,834
Net cash provided by (used in) financing activities
15,257
(12,563
)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
12,678
90,430
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD
95,911
70,639
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD
$
108,589
$
161,069
CASH PAYMENTS (RECEIPTS) FOR:
Interest paid, net of amount capitalized
$
53,089
$
43,751
Income tax refunds
(2,227
)
(41,145
)
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Property capitalized under operating leases
$
25,533
$
—
Flight equipment acquired under finance leases
—
127,625
The accompanying notes are an integral part of these consolidated financial statements.
8
ALLEGIANT TRAVEL COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of Allegiant Travel Company (the “Company”) and its majority-owned operating subsidiaries. The Company's investments in unconsolidated affiliates, which are 50 percent or less owned, are accounted for under the equity or cost method, and are insignificant to the consolidated financial statements. All intercompany balances and transactions have been eliminated.
These unaudited consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to present fairly the financial position, results of operations, and cash flows of the Company for the respective periods presented. Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto included in the annual report of the Company on Form 10-K for the year ended December 31, 2018 and filed with the Securities and Exchange Commission.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.
Recent Accounting Pronouncements
Recently Adopted Standards
In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842), (the "New Lease Standard"). This standard requires leases, other than short-term, to be recognized on the balance sheet as a lease liability and a corresponding right-of-use asset.
Lease payments include fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, and other payments as required by the standard. Lease payments do not include variable lease payments other than those that depend on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components. This standard is effective for interim and annual reporting periods beginning after December 15, 2018 and the Company adopted the New Lease Standard as of January 1, 2019. The Company also elected the package of practical expedients, which among other things, does not require reassessment of lease classification.
The Company adopted the New Lease Standard using the modified retrospective transition approach as of the effective date as permitted by the amendments in ASU 2018-11, "Targeted Improvements - Leases (Topic 842)." Under this method, the cumulative effect adjustment to the opening balance of retained earnings is recognized at the adoption date. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption on January 1, 2019.
The Company's consolidated balance sheet was affected by this standard, but the consolidated statements of income and the Company's liquidity were not significantly impacted. The most significant change to the consolidated balance sheet upon adoption on January 1, 2019 relates to the recognition of new right-of-use (ROU) assets of $18.0 million and operating liabilities of $19.1 million. The Company's accounting for finance leases remains substantially unchanged.
See Note 5, "Leases," for more information.
9
Note 2 — Revenue Recognition
Passenger Revenue
Passenger revenue is the most significant category in our reported operating revenues. Passenger revenue is primarily composed of scheduled service revenue (including passenger ticket sales and credit voucher breakage), revenue from ancillary air-related charges (including seat fees, baggage fees, and other travel-related services performed in conjunction with a passenger’s flight), as well as co-brand credit card point redemptions, as outlined below:
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands)
2019
2018
2019
2018
Scheduled service
$
200,233
$
202,796
$
672,690
$
677,061
Ancillary air-related charges
187,776
150,095
583,003
472,443
Co-brand redemptions
3,213
2,209
10,285
7,939
Total passenger revenue
$
391,222
$
355,100
$
1,265,978
$
1,157,443
Sales of passenger tickets not yet flown are recorded in air traffic liability. Passenger revenue is recognized when transportation is provided or when ticket voucher breakage occurs, to the extent different from estimated breakage.
The contract term of passenger tickets is twelve months and revenue associated with future travel will principally be recognized within this time frame. During the nine months ended September 30, 2019, $210.1 million was recognized into passenger revenue that was recorded in the air traffic liability balance of $212.2 million at December 31, 2018.
Co-brand redemptions
In relation to the travel component of the co-branded credit card contract with Bank of America, the Company has a performance obligation to provide cardholders with points to be used for future travel award redemptions. Therefore, consideration received from Bank of America related to the travel component is deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed and the transportation is provided.
The following table presents the activity of the co-brand point liability as of the dates indicated:
Nine Months Ended September 30,
(in thousands)
2019
2018
Balance at January 1
$
10,708
$
8,903
Points awarded (deferral of revenue)
14,308
10,872
Points redeemed (recognition of revenue)
(10,285
)
(7,939
)
Balance at September 30
$
14,731
$
11,836
As of September 30, 2019 and 2018, $10.6 million and $8.1 million, respectively, of the current points liability is reflected in Accrued liabilities and represents our current estimate of revenue to be recognized in the next twelve months based on historical trends, with the remaining balance reflected in other noncurrent liabilities expected to be recognized into revenue in periods thereafter.
10
Note 3 — Property and Equipment
Property and equipment:
(in thousands)
As of September 30, 2019
As of December 31, 2018
Flight equipment, including pre-delivery deposits
$
2,168,557
$
1,905,157
Computer hardware and software
158,720
140,385
Land and buildings/leasehold improvements
86,163
85,925
Other property and equipment
142,198
89,778
Total property and equipment
2,555,638
2,221,245
Less accumulated depreciation and amortization
(452,823
)
(373,977
)
Property and equipment, net
$
2,102,815
$
1,847,268
Accrued capital expenditures as of September 30, 2019 and September 30, 2018 were $6.1 million and $3.8 million, respectively.
Note 4 — Long-Term Debt
Long-term debt and finance lease obligations:
(in thousands)
As of September 30, 2019
As of December 31, 2018
Fixed-rate debt and finance lease obligations due through 2029(1)
$
215,839
$
640,806
Variable-rate debt due through 2029
1,136,145
630,927
Total long-term debt and finance lease obligations, net of related costs
1,351,984
1,271,733
Less current maturities, net of related costs(1)
138,685
152,287
Long-term debt and finance lease obligations, net of current maturities and related costs
$
1,213,299
$
1,119,446
Weighted average fixed-interest rate on debt
3.9
%
5.3
%
Weighted average variable-interest rate on debt
4.8
%
4.2
%
(1) As of December 31, 2018, $428.0 million of the Company's Unsecured Senior Notes were classified as long-term as management refinanced the borrowings on a long-term basis in February 2019, as discussed below.
Maturities of long-term debt and finance lease obligations for the remainder of 2019 and for the next four years and thereafter, in the aggregate, are: remaining in 2019 - $33.0 million; 2020 - $138.9 million; 2021 - $133.4 million; 2022 - $113.8 million; 2023 - $100.9 million; and $832.0 million thereafter.
Consolidated Variable Interest Entity
In March 2019, the Company, through a wholly owned subsidiary, entered into agreements with a trust to borrow $44.0 million secured by one aircraft. The trust was funded on inception. These borrowings bear interest at a blended rate of 3.8 percent, payable in quarterly installments through April 2029, at which time the Company will have a purchase option at a fixed amount. As this transaction is a common control transaction, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $39.1 million and $44.0 million, respectively, at the time of borrowing.
Senior Secured Revolving Credit Facility
The Company has a senior secured revolving credit facility under which it is able to borrow up to $81.0 million. There was no balance under this facility as of September 30, 2019. The facility has a term of 24 months and is based on the value of aircraft placed in the collateral pool. Aircraft remain in the collateral pool for up to two years, and, as of September 30, 2019, there were four aircraft in the collateral pool.
Secured Debt
In June 2019, the Company entered into an agreement to borrow $213.0 million secured by 23 aircraft. The borrowing bears interest at a floating rate based on LIBOR, and is payable in quarterly installments over five years. A portion of the proceeds was
11
used for the prepayment of the balance under six existing debt agreements and the repayment of the outstanding balance on the senior secured revolving credit facility.
During the second quarter 2019, the Company borrowed a total of $63.4 million under loan agreements secured by spare engines. The borrowings bear interest at a floating rate based on LIBOR, and are payable in quarterly installments, with terms ranging from seven to ten years.
Term Loan
In February 2019, the Company entered into a Credit and Guaranty Agreement (the “Term Loan”) to borrow $450.0 million, guaranteed by all of the Company's subsidiaries, excluding Sunseeker Resorts Inc. and its subsidiaries, and other insignificant subsidiaries (the "Term Loan Guarantors"). The Term Loan is secured by substantially all property and assets of the Company and the Term Loan Guarantors, excluding aircraft and aircraft engines, and excluding certain other assets. The Term Loan has a five-year term, bears interest based on LIBOR and provides for quarterly interest payments along with quarterly principal payments of $1.1 million through February 2024, at which time the Term Loan is due. The Term Loan may be prepaid at any time without penalty.
In connection with the Term Loan, the Company conducted a tender offer for its 5.5 percent senior unsecured obligation, as outlined below.
General Unsecured Senior Notes
Until February 2019, the Company had outstanding $450.0 million aggregate principal amount of senior unsecured obligations (the "Notes") which bore interest at 5.5 percent per year and matured in July 2019.
In connection with the Term Loan discussed above, the Company completed a tender offer in February 2019, whereby it purchased $347.9 million of the Notes, and incurred related debt extinguishment costs of $3.7 million. The remaining $102.1 million of the Notes were paid at their maturity in July 2019.
Construction Loan Agreement
In March 2019, Sunseeker Florida, Inc. (“SFI”), a wholly-owned subsidiary of the Company, entered into a Construction Loan Agreement with certain lenders affiliated with TPG Sixth Street Partners, LLC (the “Lender”). Under the Construction Loan Agreement, SFI may borrow up to $175.0 million (the “Loan”) to fund the construction of Phase 1 of Sunseeker Resort -Charlotte Harbor (the “Project”). No amount has been drawn under this agreement as of September 30, 2019.
Under the Construction Loan Agreement, the Lender is to provide the final $175.0 million of funding for the Project, with initial funding to come from the Company. The loan is secured by the Project and, for a period of time, the surrounding land owned by SFI. The Company has guaranteed one-third of the debt, has agreed to bear responsibility under a Non-Recourse Carve-Out Guaranty, and has agreed to guarantee completion of the Project in accordance with approved plans and specifications. All of the shares in SFI are also pledged to secure the loan. The Loan bears interest based on LIBOR and matures in March 2023.
Note 5 — Leases
The Company determines if an arrangement is a lease at inception and has lease agreements for office facilities, office equipment, certain airport and terminal facilities, and other space and assets. These commitments have remaining non-cancelable lease terms, with lease expirations which range from 2019 to 2036.
As a result of the New Lease Standard, certain real estate and property leases, and various other operating leases have been measured on the balance sheet with a lease liability and right-of-use asset ("ROU"). Airport terminal leases mostly include variable lease payments outside of those based on a fixed index, and are therefore excluded from consideration. Accounting for finance leases is substantially unchanged.
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. ROU assets and liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term. The present value of lease payments is calculated using the incremental borrowing rate at lease commencement, which takes into consideration recent debt issuances as well as other applicable market data available.
Lease terms include options to extend when it is reasonably certain that the option will be exercised. Leases with a term of twelve months or less are not recorded on the balance sheet. Additionally, lease and non-lease components are accounted for as a single lease component for real estate agreements.
In addition to operating leases, the Company had five aircraft under finance leases as of September 30, 2019, with remaining terms to 2029.
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Lease Costs
The components of lease costs recognized on the statements of income were as follows:
Three Months Ended
Nine Months Ended
(in thousands)
Classification on the Statements of Income
September 30, 2019
September 30, 2019
Finance lease costs:
Amortization of assets
Depreciation and amortization
$
1,629
$
4,888
Interest on lease liabilities
Interest expense
1,306
3,978
Operating lease cost
Station operations; Maintenance and repairs; Other operating expense
897
2,634
Variable lease cost
Station operations; Maintenance and repairs; Other operating expense
663
1,672
Total lease cost
$
4,495
$
13,172
Lease position as of September 30, 2019
The table below presents the lease-related assets and liabilities recorded on the balance sheet.
As of
(in thousands)
Classification on the Balance Sheet
September 30, 2019
Assets
Operating lease assets
Operating lease right-of-use assets, net
$
22,433
Finance lease assets
Property and equipment, net
113,294
Total lease assets
$
135,727
Liabilities
Current
Operating
Accrued liabilities
$
2,388
Finance
Current maturities of long-term debt and finance lease obligations
7,582
Noncurrent
Operating
Other noncurrent liabilities
21,744
Finance
Long-term debt and finance lease obligations
109,878
Total lease liabilities
$
141,592
Weighted-average remaining lease term
Operating leases
9.4 years
Finance leases
10.1 years
Weighted-average discount rate
Operating leases
4.3
%
Finance leases
4.4
%
Other Information
The table below presents supplemental cash flow information related to leases during the three and nine months ended September 30, 2019.
13
Three Months Ended
Nine Months Ended
(in thousands)
September 30, 2019
September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases
$
725
$
2,190
Operating cash flows for finance leases
1,306
3,978
Financing cash flows for finance leases
1,844
5,472
Maturities of Lease Liabilities
The table below indicates the future minimum payments of lease liabilities as of September 30, 2019.
(in thousands)
Operating Leases
Finance Leases
Remaining in 2019
$
726
$
3,150
2020
3,566
12,600
2021
3,382
12,600
2022
3,361
11,095
2023
3,213
10,500
Thereafter
15,317
103,459
Total lease payments
29,565
153,404
Less imputed interest
(5,433
)
(35,944
)
Total lease obligations
24,132
117,460
Less current obligations
(2,388
)
(7,582
)
Long-term lease obligations
$
21,744
$
109,878
The Company adopted the New Lease Standard on January 1, 2019 as noted above, and as required, the following disclosure is provided for periods prior to adoption. Future annual minimum lease payments as of December 31, 2018 were as follows:
