10. COMMITMENTS AND CONTINGENCIES

The Company’s contractual obligations and commitments relate primarily to management and development services, lease arrangements, and financing arrangements.

On April 29, 2024, the Company entered into a lease agreement for one A321 passenger aircraft with a term of approximately two years, commencing on January 31, 2025. Under the lease agreement, the Company will pay the lessor fixed monthly rent for 22 months, plus supplemental rent for aircraft maintenance.

On June 6, 2025, the Company entered into a lease agreement for one A319 passenger aircraft and paid commitment fees to the lessor. The lease term is 39 months and will commence upon aircraft delivery, which is expected in 2026. In addition to basic rent, the Company will pay the lessor supplemental rent for aircraft maintenance.

On August 15, 2025, the Company entered into a lease agreement for one V2527-A5 aircraft engine with a term of two years, commencing on October 8, 2025. Under the lease agreement, the Company will pay the lessor 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 with a term of three years, commencing on August 28, 2025. Under the lease agreement, the Company will pay the lessor fixed monthly rent for 36 months. Under the terms of the lease, the Company will own the airframe at the end of the lease term.

On June 6, 2025, the Company entered into a lease agreement for one A319 passenger aircraft with a term of approximately two years, commencing on October 24, 2025. Under the lease agreement, the Company will pay the lessor fixed monthly rent for 25 months, plus supplemental rent for aircraft maintenance.

On June 6, 2025, the Company entered into a lease agreement for one A319 passenger aircraft with a term of approximately three years, commencing on March 6, 2026. Under the lease agreement, the Company will pay the lessor fixed monthly rent for 33 months, plus supplemental rent for aircraft maintenance.

On June 6, 2025, the Company entered into a lease agreement for one A319 passenger aircraft with a term of approximately three years, commencing on March 18, 2026. Under the lease agreement, the Company will pay the lessor fixed monthly rent for 34 months, plus supplemental rent for aircraft maintenance.

On May 11, 2026, the Company entered into a lease agreement for one CFM56-5B4/3 aircraft engine with a term of four years, commencing on May 11, 2026. Under the lease agreement, the Company will pay the lessor fixed monthly rent for 48 months, plus supplemental rent for maintenance of the aircraft engine.

On March 6, 2026, the Company entered into a lease agreement for one A320 passenger aircraft with a term of six years, commencing on June 25, 2026. Under the lease agreement, the Company will pay the lessor fixed monthly rent for 72 months, plus supplemental rent for aircraft maintenance.

On December 11, 2025, the Company signed an amendment extending the term of one aircraft lease by an additional four years, with incremental increases in monthly basic rent over the extended term. The Company accounted for this extension as a new finance lease, reclassified from an operating lease, under ASC 842, and recorded a new right-of-use asset and lease liability as of the lease commencement date. On May 10, 2026, the Company terminated an operating lease for one passenger aircraft, and on May 11, 2026, entered into a new finance lease for the same aircraft that includes a $1 bargain purchase option at the end of the lease term, which the Company expects to exercise. The Company accounted for the termination and replacement as a lease termination and new finance lease under ASC 842, and derecognized the existing right-of-use asset and lease liability and recorded a new right-of-use asset and lease liability as of the new lease's commencement date.

The following table sets forth the Company’s future minimum lease payments under finance lease liabilities and operating lease liabilities recorded, in thousands, on the Company’s condensed consolidated balance sheet as of June 30, 2026. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

The Company utilizes the rate implicit in the lease whenever it is easily determined. For leases where the implicit rate is not readily available, we utilize our incremental borrowing rate as the discount rate. The table below presents lease terms and discount rates related to the Company's finance and operating leases:

The Company is subject to various legal proceedings in the normal course of business and records legal costs as incurred. Management believes these proceedings will not have a materially adverse effect on the Company.

On May 15, 2023, the Company entered into an Ad Hoc Charter Services Agreement (the "AHCSA") with a broker-customer, pursuant to which the broker-customer made prepayments to the Company for future charter services. The AHCSA terminated on May 15, 2026. Following termination, a dispute arose regarding an uncredited prepayment balance of $1,944,142 owed by the Company to the broker-customer, which the Company had carried as a liability. On May 18, 2026, the Company filed suit against the broker-customer, in which

the Company asserted claims for breach of the AHCSA and breach of the implied covenant of good faith and fair dealing. The Company voluntarily dismissed the lawsuit without prejudice on June 4, 2026.

Effective June 30, 2026, the Company and the broker-customer entered into a Settlement Agreement and Mutual Release (the "Settlement Agreement") resolving the dispute and providing for a mutual release of related claims. Under the Settlement Agreement, the Company will pay the broker-customer a total of $1,000,000, payable in 20 equal monthly installments of $50,000, beginning July 1, 2026, and ending February 1, 2028, in full satisfaction of the $1,944,142 previously owed. The Settlement Agreement does not constitute an admission of liability or wrongdoing by either party.

Because the settlement payments are non-interest-bearing and extend beyond one year, the Company determined that the resulting obligation should be recorded at its present value in accordance with ASC 835-30, Interest-Imputation of Interest, discounted using the Company’s incremental borrowing rate of 13%. Accordingly, on June 30, 2026, the Company derecognized the $1,944,142 liability previously owed to the broker-customer and recognized a settlement obligation of $894,752, resulting in a gain on settlement of $1,049,390, which is presented as "Gain on Settlement" within non-operating income (expense) in the condensed consolidated statements of operations for the three and six months ended June 30, 2026. The resulting discount of $105,248 is being amortized to interest expense over the term of the installment payments using the effective interest method. As of June 30, 2026, $513,568 of the settlement obligation is included within accrued liabilities and $381,184 is included within other liabilities in the condensed consolidated balance sheet.