In March 2026, the Company entered into an agreement (the “Early Return Agreement”) to early terminate the leases associated with 24 A320neo aircraft, which represented a lease modification. The costs associated with the Early Return Agreement include non-recurring non-cash charges during the nine months ended September 30, 2026 comprised of: $73 million related to the write-off of non-recoverable capitalized prepaid maintenance balances recorded in maintenance, materials and repairs within the Company’s condensed consolidated statement of operations, $63 million of accelerated depreciation expense related to the remeasurement of useful lives of capitalized maintenance recorded in depreciation and amortization within the Company’s condensed consolidated statement of operations and $(6) million of benefit related to the reversal of previously accrued fixed lease return costs recorded in aircraft rent within the Company’s condensed consolidated statement of operations. Additionally, during the nine months ended September 30, 2026, the Company recorded $81 million of charges in connection with the return condition of aircraft and engines in aircraft rent within the Company’s condensed consolidated statement of operations which will largely be settled in fiscal years 2028 and 2029. During the three months ended September 30, 2026, the Company recorded $2 million of charges in connection with the return condition of aircraft and engines in aircraft rent within the Company’s condensed consolidated statement of operations.

In August 2026, the Company entered into an agreement (the “Second Early Return Agreement”) to early terminate the leases associated with 13 A320neo aircraft, which represented a lease modification. The costs associated with the Second Early Return Agreement include non-recurring non-cash charges during the three months ended September 30, 2026 comprised of: $31 million of accelerated depreciation expense related to the remeasurement of useful lives of capitalized maintenance recorded in depreciation and amortization within the Company’s condensed consolidated statement of operations, $26 million related to the write-off of non-recoverable capitalized prepaid maintenance balances recorded in maintenance, materials and repairs within the Company’s condensed consolidated statement of operations and $(7) million of benefit related to the reversal of previously

accrued fixed lease return costs recorded in aircraft rent within the Company’s condensed consolidated statement of operations. Additionally, during the three months ended September 30, 2026, the Company recorded $84 million of charges in connection with the return condition of aircraft and engines in aircraft rent within the Company’s condensed consolidated statement of operations, with the majority to be settled in 2028 and 2029.

As of September 30, 2026, the Company leased 164 aircraft with remaining terms ranging from 1 month to 12 years, all of which are under operating leases and primarily included within operating lease right-of-use assets and operating lease liabilities on the Company’s condensed consolidated balance sheets. In addition, as of September 30, 2026, the Company leased 61 spare engines, all of which are under operating leases, with the remaining terms ranging from 1 month to 11 years. As of September 30, 2026, the lease rates for 18 of the engines depended on usage-based metrics which are variable and, as such, these leases were not recorded on the Company’s condensed consolidated balance sheets as operating lease right-of-use assets or as operating lease liabilities.

During the three and nine months ended September 30, 2026 and 2025, the Company completed sale-leaseback transactions with third-party lessors for 4, 17, 2 and 9 new Airbus A320neo family aircraft, respectively. Additionally, during the three and nine months ended September 30, 2025, the Company completed 6 and 8 sale-leaseback transactions with third-party lessors for engines, respectively. All of the leases from the sale-leaseback transactions are accounted for as operating leases. The Company recognized gains on sale-leaseback transactions of $32 million, $126 million, $67 million, and $157 million during the three and nine months ended September 30, 2026 and 2025, respectively, which are included as a component of other operating expenses within the Company’s condensed consolidated statements of operations.

During the three and nine months ended September 30, 2026 and 2025, aircraft rent expense was $301 million, $832 million, $181 million and $536 million, respectively. Aircraft rent expense includes supplemental rent, which is made up of probable lease return condition obligations. The portion of supplemental rent expense (benefit) related to probable lease return condition obligations was $97 million, $218 million, $(1) million, and $2 million for the three and nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026 and December 31, 2025, the Company’s total leased aircraft and spare engine return cost liability was $229 million and $19 million, respectively, which are reflected in other current liabilities and other long-term liabilities on the Company’s condensed consolidated balance sheets.

During the three and nine months ended September 30, 2026, the Company amended certain aircraft operating leases that were slated to expire in 2027 in order to extend the term of the lease, and recorded a benefit of $13 million and $17 million, respectively, to aircraft rent in the Company’s condensed consolidated statements of operations related to previously accrued lease return costs. These costs were variable in nature and associated with the anticipated utilization and condition of the airframes and engines at the original return date. Given the extension of the terms of these aircraft operating leases, such variable return costs are no longer probable of occurring.

During the three and nine months ended September 30, 2025, the Company amended certain aircraft operating leases that were slated to expire in 2026 and 2027 in order to extend the term of the lease, and recorded a benefit of $7 million and $27 million, respectively, to aircraft rent in the Company’s condensed consolidated statements of operations related to previously accrued lease return costs. These costs were variable in nature and associated with the anticipated utilization and condition of the airframes and engines at the original return date. Given the extension of the terms of these aircraft operating leases, such variable return costs are no longer probable of occurring.

The Company’s facility leases are primarily for space at approximately 90 airports, primarily in the United States. These leases are classified as operating leases and reflect the use of airport terminals, ticket counters, office space, and maintenance facilities. Generally, this space is leased from government agencies that control the use of the airport. The majority of these leases are short-term in nature and renew on an evergreen basis. For these leases, the contractual term is used as the lease term. As of September 30, 2026, the remaining lease terms vary from 1 month to 12 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, and because of the variable nature of the rates, these leases are not recorded on the Company’s condensed consolidated balance sheets as right-of-use assets and lease liabilities.

The Company leases certain other assets such as flight training equipment, building space, and various other equipment. Certain of the Company’s leases for other assets are deemed to contain fixed rental payments and, as such, are classified as operating leases and are recorded on the Company’s condensed consolidated balance sheets as right-of-use assets and liabilities. The remaining lease terms range from 1 month to 9 years as of September 30, 2026.

The table below presents certain information related to lease costs for operating leases during the three and nine months ended September 30, 2026 and 2025 (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Operating lease cost(a)	$	278	$	186	$	759	$	548
Variable lease cost(a)	151		114		402		340
Total lease costs	$	429	$	300	$	1,161	$	888

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During the three and nine months ended September 30, 2026 and 2025, the Company acquired, through new or modified operating leases, operating lease assets totaling $209 million, $840 million, $167 million and $725 million, respectively, which are included in operating lease right-of-use assets on the Company’s condensed consolidated balance sheets. During the three months ended September 30, 2026, in connection with the Second Early Return Agreement, the Company reduced operating lease right-of-use assets and liabilities due to the lease modification remeasurement totaling $254 million and $261 million, respectively. During the nine months ended September 30, 2026, in connection with the Early Return Agreement and Second Early Return Agreement (collectively, the “Early Return Agreements”), the Company reduced operating lease right-of-use assets and liabilities due to the lease modification remeasurement totaling $673 million and $686 million, respectively. During the three and nine months ended September 30, 2026 and 2025, the Company paid cash of $198 million, $609 million, $184 million, and $540 million, respectively, for amounts included in the measurement of lease liabilities.