5. LEASES

As of December 31, 2025, and 2024, the Company operated 19 and 18 leased aircraft, respectively, which are accounted for under operating and finance lease agreements with terms ranging from 22 months to 10 years. Leases with an initial term of 12 months or less will be recognized in the Consolidated Statements of Operations on a straight-line basis over the lease term. These leases primarily relate to the Company’s lease agreements for the month-to-month agreement for office space and leases for office equipment.

For operating leases with terms greater than 12 months, including renewal options when appropriate, we record the related right-of-use asset and lease liability as the present value of fixed lease payments over the lease term.

In addition, some aircraft leases require the Company to make maintenance reserve payments to cover the cost of major scheduled maintenance for the aircraft. These payments are generally variable as they are based on utilization of the aircraft, including the number of flight hours flown and/or flight departures, and are not included as minimal rental obligations.

On August 8, 2023, the Company entered into a lease agreement for one A320 passenger aircraft. The three-year lease commenced on September 3, 2024. Under the agreement, the Company will pay the lessor a fixed monthly rent for 36 months, plus supplemental rent for maintenance of the aircraft.

On November 20, 2023, the Company entered into a lease agreement for one A320 passenger aircraft. The approximately seven-year lease term commenced on February 9, 2024. Under the agreement, the Company will pay the lessor a fixed monthly rent for 86 months, plus supplemental rent for maintenance of the aircraft.

On December 22, 2023, the Company entered into a lease agreement for one A321F cargo aircraft. The ten-year lease commenced on March 8, 2024. Under the agreement, the Company will pay the lessor a fixed monthly rent for 120 months, plus supplemental rent for maintenance of the aircraft.

On January 19, 2024, the Company entered into a lease agreement for one A320 passenger aircraft. The approximately one-year lease commenced on July 9, 2024. Under the agreement, the Company will pay the lessor a fixed monthly rent for 16 months, plus supplemental rent for maintenance of the aircraft.

On April 16, 2024, the Company entered into a lease agreement for one A320 passenger aircraft. The six-year lease commenced on April 17, 2024. Under the agreement, the Company will pay the lessor a fixed monthly rent for 72 months, plus supplemental rent for maintenance of the aircraft.

On April 29, 2024, the Company entered into a lease agreement for one A321F passenger aircraft. The approximately one-year lease commenced on January 31, 2025. Under the agreement, the Company will pay the lessor a fixed monthly rent for 22 months, plus supplemental rent for maintenance of the aircraft. Following the expiration date, the aircraft is expected to undergo a passenger-to-freighter conversion and a second lease after completion which will run through an additional 102 months from redelivery date.

On June 6, 2025, the Company entered into a lease agreement for one A319 passenger aircraft. The approximately two-year lease commenced on October 24, 2025. Under the agreement, the Company will pay the lessor a fixed monthly rent for 27 months, plus supplemental rent for maintenance of the aircraft.

On June 6, 2025, the Company signed a lease agreement for one A319 passenger aircraft and paid commitment fees to the lessor. The lease will commence upon aircraft delivery which is expected to be in 2026 and will run through 36 months from the delivery date. In addition to basic rent due, the Company will pay the lessor supplemental rent for maintenance of the aircraft.

On June 6, 2025, the Company signed a lease agreement for one A319 passenger aircraft and paid commitment fees to the lessor. The lease will commence upon aircraft delivery which is expected to be in 2026 and will run through 37 months from the delivery date. In addition to basic rent due, the Company will pay the lessor supplemental rent for maintenance of the aircraft.

On June 6, 2025, the Company signed a lease agreement for one A319 passenger aircraft and paid commitment fees to the lessor. The lease will commence upon aircraft delivery which is expected to be in 2026 and will run through 39 months from the delivery date. In addition to basic rent due, the Company will pay the lessor supplemental rent for maintenance of the aircraft.

On August 15, 2025, the Company signed a lease agreement for one V2527-A5 aircraft engine. The two-year lease commenced on October 8, 2025. Under the lease agreement, the Company will pay the lessor a fixed monthly rent for 24 months, plus supplemental rent for maintenance of the aircraft engine.

On August 15, 2025, the Company entered into a lease agreement for one A320 passenger aircraft airframe. The three-year lease commenced on August 28, 2025. Under the lease agreement, the Company will pay the lessor a fixed monthly rent for 36 months. According to the lease terms, at the end of the lease the Company will own the airframe.

The Company reviewed the operating leases for extension options that may be reasonably certain to be exercised and then would become part of the right-of-use assets and lease liabilities. On December 21, 2022, and October 10, 2023, the Company executed extensions for two aircraft, extending their lease terms by 60 and 15 months, respectively. The first extension changed the original expiration date from June 1, 2023, to May 31, 2028, and the second changed the original expiration date from October 1, 2023, to December 31, 2024. On March 27, 2024, the Company signed an additional extension for 74 months, moving the previously extended expiration date of December 31, 2024 to February 28, 2031. The terms of these extensions granted the Company the right to use the assets for the additional periods with no changes to basic rent. Accordingly, each extension was accounted for as a lease modification under ASC 842, rather than as a new contract, and the Company remeasured the right-of-use asset, lease liability, discount rate, lease term, and lease classification as of each modification date.

On August 1, 2024, the Company signed a new lease extending one A320 passenger aircraft for an additional 93 months from the original expiration date of November 15, 2023 to April 30, 2032. The terms of the extension include contingencies relating to the lessor’s timely delivery of engine repairs and incremental increases in monthly basic rent over the lease term. As these terms differed materially from the original lease, the extension was accounted for as a new lease under ASC 842, and the Company recorded a new right-of-use asset and lease liability as of the lease commencement date. On December 11, 2025, the Company signed an amendment to extend one aircraft lease term for an additional four years. The terms of the extension included incremental increases in monthly basic rent over the lease term. This extension was accounted for as a new finance lease, reclassified from an operating lease, under ASC 842, and the Company recorded a new right-of-use asset and lease liability as of the lease commencement date.

As of December 31, 2025, the Company had 71 aircraft support equipment and buildings capitalized within its Consolidated Balance Sheets, with useful lives ranging from 60 months to 30 years. All aircraft support equipment was financed through finance and operating leases with terms between one and seven years. The related right-of-use assets and lease liabilities are recorded at the present value of fixed lease payments over the lease term. Amortization of equipment under both finance and operating leases is recognized on a straight-line basis over the lease term and is included in “Depreciation and amortization” in the Consolidated Statements of Operations. Residual values for equipment are estimated to range from 0% to 77%. Certain finance leases include optional renewal periods. Generally, the Company does not consider these renewal periods reasonably certain to be exercised because the initial lease term covers all or substantially all of the useful life of the equipment. Accordingly, such renewal periods are not included in the lease term, and no related payments are reflected in finance lease assets or finance lease liabilities.

The Company uses the rate stated in the lease to discount lease payments to present value. In the event the leases do not provide a readily determinable implicit or stated rate, the Company estimates the incremental borrowing rate to discount lease payments based on information available initially at adoption and at lease commencement going forward, taking into consideration recent debt issuance as well as publicly available data for instruments with similar characteristics. The table below presents lease terms and discount rates related to the Company’s finance and operating leases:

We also lease office space and office equipment for our headquarters, airport facilities, and certain airport gate facilities and maintenance facilities on a month-to-month basis. Amounts for leases that are on a month-to-month basis are not included as an obligation in the table above.