The Company reviewed all contracts and service agreements in effect during the three months ended June 30, 2025 for criteria meeting the definition of a lease within the frameworks of ASC 842 and ASC 606. Those that were determined to be a lease may contain both a lease and a non-lease component. The Company elected as an accounting policy to not separate lease and non-lease components for major moveable equipment, as well as for building and commercial property leases. For all other underlying classes of assets, the Company identified the separate lease and non-lease components within the contract. If the Company could benefit from the underlying asset individually or in conjunction with other readily available goods and resources, and the asset was not highly dependent upon nor highly interrelated with another underlying asset covered by the contract, the Company considered the underlying asset to be a separate lease component. In those instances where the Company identified a separate lease and non-lease component, consideration in the contract was allocated to the components based on their standalone selling prices. If standalone selling prices were not available, the Company estimated those prices, maximizing the use of observable information.

The Company’s operating lease activities are recorded in Operating lease right-of-use assets, Current portion of operating lease liability, and Long-term operating lease liability in the condensed consolidated balance sheets. The creation of a right-of-use asset on the consolidated balance sheets is often offset by the creation of a lease liability, resulting in a non-cash transaction. Air Wisconsin had operating leases with terms greater than twelve months for training simulators and facility space, including office space and maintenance facilities. The remaining lease terms for training simulators and facility space varied from six months to 8.5 years. For leases with terms of 12 months or less, the Company elected as an accounting policy a short-term lease exception for all leases, regardless of the underlying class of asset, that allows the lessee to not recognize a lease right-of-use asset or lease liability. As a result, the Company recognized lease payments for short-term leases as an expense on a straight-line basis over the lease term. For leases with terms longer than 12 months, the Company recorded the related operating lease right-of-use asset and operating lease liability at the present value of the lease payments over the lease term. The Company used Air Wisconsin’s incremental borrowing rate to discount the lease payments based on information available at lease inception. Air Wisconsin’s operating leases with lease rates that were variable based on operating costs, use of the facilities, or other variable factors were excluded from the Company’s right-of-use assets and operating lease liabilities in accordance with the applicable accounting guidance. The variable amounts were paid as invoiced according to the terms of the respective leases. Leasehold improvements were capitalized at cost and amortized over the lesser of their expected useful life or the lease term.

Certain leases contained an option to extend or terminate the lease agreement. The Company evaluated each option prior to its expiration and would determine whether or not to exercise such option depending on conditions present at the time. At the inception of the lease, if it was reasonably certain that the Company would exercise an option to extend or terminate a lease, the Company considered the option in determining the classification and measurement of the lease. The Company historically expected that in the normal course of business operating leases that were going to expire would be renewed or replaced by other leases. Following the termination of the American capacity purchase agreement in April 2025, the Company exercised its right to terminate its leases in Dayton, Ohio and modified certain other leases at its Wisconsin-based facilities. The Company continued to review its lease obligations as it evaluated its alternative business strategies until the completion of the Aviation Disposition.

As of June 30, 2025, Operating lease right-of-use assets were $4,653, Current portion of operating lease liabilities was $1,697, and Long-term Operating lease liabilities were $1,042. During the six months ended June 30, 2025 and June 30, 2024, the Company paid $1,850 and $2,803, respectively, in operating lease payments, which are reflected as a reduction to operating cash flows. For additional information, please refer to Note 10, Supplemental Cash Flow Information.

As of June 30, 2025, Air Wisconsin leased or subleased certain training simulators and facilities for terms greater than 12 months. Certain leases are subject to non-cancellable lease terms or may include variable rate increases tied to the consumer price index. One of Air Wisconsin's leases required Air Wisconsin to reimburse the lessor for Air Wisconsin’s pro-rata share of taxes and other operating expenses applicable to the leased property. Rent expense recorded under all operating leases, inclusive of engine leases, was $1,007 and $2,126 for the three and six months ended June 30, 2025, respectively, compared to $1,680 and $3,376 for the three and six months ended June 30, 2024, respectively.