LEASES

12 Months Ended

Dec. 31, 2025

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related asset and obligation at the present value of the fixed minimum lease payments over the term. Many of our leases include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when appropriate. We do not separate lease and nonlease components of contracts, except for regional aircraft and information technology ("IT") assets as discussed below.

We use the rate implicit in the lease to discount lease payments to present value, when readily determinable. When the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate, which is based on the estimated interest rate for collateralized borrowing over a similar term of the lease at commencement date.

Some of our aircraft lease agreements include provisions for residual value guarantees. These guarantees represent an immaterial portion of our lease liability.

Aircraft

As of December 31, 2025, including aircraft operated by our regional carriers, we leased 122 aircraft, of which 20 were under finance leases and 102 were operating leases. Our aircraft leases had remaining lease terms of two months to 10 years.

In addition, we have regional aircraft leases that are embedded within our capacity purchase agreements and included in the ROU asset and lease liability. We allocated the consideration in each capacity purchase agreement to the lease and nonlease components based on their relative standalone fair values. Lease components of these agreements consist of 119 aircraft as of December 31, 2025 and nonlease components primarily consist of flight operations, in-flight and maintenance services. We determined our best estimate of the standalone fair value of the individual components by considering observable information including rates paid by our wholly owned subsidiary, Endeavor Air, Inc., and rates published by independent valuation firms. See Note 9, "Commitments and Contingencies," for additional information about our capacity purchase agreements.

Airport Facilities

Our facility leases are primarily for space at approximately 300 airports around the world that we serve. These leases reflect our use of airport terminals, office space, cargo warehouses and maintenance facilities. We generally lease space from government agencies that control the use of the airport, and as a result, these leases are classified as operating leases. The remaining lease terms vary from one month to 28 years. At the majority of the U.S. airports, the lease rates depend on airport operating costs or use of the facilities and are reset at least annually. Because of the variable nature of the rates, these leases are not recorded on our balance sheets.

Some airport facilities have fixed payment schedules, the most significant of which is New York-JFK, which comprises the majority of our ground and other operating ROU asset and lease liability. For those airport leases with fixed payment schedules, we have recorded a ROU asset and lease liability representing the fixed component of the lease payments.

Other Ground Property and Equipment

We lease certain IT assets (including servers, mainframes, etc.), ground support equipment (including tugs, tractors, fuel trucks and de-icers) and various other equipment. The remaining lease terms range from one month to five years. Certain leased assets are embedded within various ground and IT service agreements. For ground service contracts, we have elected to include both the lease and nonlease components in the lease asset and lease liability balances on our balance sheets. For IT service contracts, we have elected to separate the lease and nonlease components and only the lease components are included in the lease asset and lease liability balances on our balance sheets. The amounts of these lease and nonlease components are not significant.

Lease Position

The table below presents the lease-related assets and liabilities recorded on the balance sheets.


Lease asset and liability balance sheet position by category
		December 31,
(in millions)	Classification on the Balance Sheets	2025			2024
Assets
Operating lease assets - Fleet(1)	Operating lease right-of-use assets	$	2,575		$	2,910
Operating lease assets - Ground and other	Operating lease right-of-use assets	3,669			3,734
Finance lease assets	Property and equipment, net	835			825
Total lease assets		$	7,079		$	7,469

Liabilities
Current
Operating - Fleet(1)	Current maturities of operating leases	$	591		$	551
Operating - Ground and other	Current maturities of operating leases	218			212
Finance	Current maturities of debt and finance leases	233			374
Noncurrent
Operating - Fleet(1)	Noncurrent operating leases	2,190			2,627
Operating - Ground and other	Noncurrent operating leases	3,163			3,187
Finance	Debt and finance leases	572			473
Total lease liabilities		$	6,967		$	7,424

Weighted-average remaining lease term
Operating leases		12 years			12 years
Finance leases		3 years			3 years
Weighted-average discount rate
Operating leases		4.21		%	4.28		%
Finance leases		3.63		%	3.53		%

(1)Includes mainline and regional aircraft leases, regional aircraft leases embedded within our capacity purchase arrangements, and engine leases. The interest portion of straight-line rent expense related to fleet operating leases was $140 million and $165 million during the years ended December 31, 2025 and 2024, respectively.

Lease Costs

The table below presents certain information related to the lease costs for finance and operating leases.


Lease cost by category
	Year Ended December 31,
(in millions)	2025		2024		2023
Finance lease cost
Amortization of leased assets	$	66	$	88	$	109
Interest of lease liabilities	37		54		42
Operating lease cost(1)	976		974		981
Short-term lease cost(1)	268		206		258
Variable lease cost(1)	3,343		2,902		2,230
Total lease cost	$	4,690	$	4,224	$	3,620

(1)Expenses are primarily classified within aircraft rent, landing fees and other rents and regional carrier expense on our income statement.

Other Information

The table below presents supplemental cash flow information related to leases.


Supplemental lease-related cash flow information
	Year Ended December 31,
(in millions)	2025		2024		2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	981	$	1,225	$	1,230
Operating cash flows for finance leases	36		56		71
Financing cash flows for finance leases	114		190		264

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet.


Future lease cash flows and reconciliation to the balance sheet
(in millions)	Operating Leases		Finance Leases
2026	$	1,020	$	256
2027	967		289
2028	846		61
2029	641		49
2030	508		109
Thereafter	3,784		106
Total minimum lease payments	7,766		870
Less: amount of lease payments representing interest	(1,604)		(65)
Present value of future minimum lease payments	6,162		805
Less: current obligations under leases	(809)		(233)
Long-term lease obligations	$	5,353	$	572

As of December 31, 2025, we had additional leases that will commence in the future (primarily in 2027) with contractual lease payments of $122 million. These are primarily regional aircraft leases with lease terms of seven years.

LEASES