What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-27 compared with 2022-03-01 · 170 added, 217 removed, 711 unchanged (35% of the section changed)

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 27, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Estimated credit vouchers not expected to be redeemed

As discussed in Note 4 to the consolidated financial statements, the Company recorded an air traffic liability of $307.5 million, of which $67.0 million relates to credit vouchers for future travel as of December 31, 2021.

In response to the COVID-19 pandemic, the contract duration for credit vouchers issued for canceled travel between January 1, 2020 and June 30, 2021 was extended from one to two years from the original booking date.

The air traffic liability as of December 31, 2021 represents the value of credit vouchers for future travel, less an estimate for the amount of credit vouchers that are not expected to be redeemed prior to their contractual expiration date.

The amount of such credit vouchers expected to expire unused is estimated based on the Company’s historical usage data for credit vouchers.

We identified the evaluation of certain credit vouchers used to determine the estimated air traffic liability as a critical audit matter.

Subjective and challenging auditor judgment was required to evaluate the estimated amount of credit vouchers issued for canceled travel between January 1, 2020 and June 30, 2021 that are expected to expire unused.

There is inherent uncertainty associated with management’s assumption of the historical usage data, which may differ from future usage of these credit vouchers.

Estimated Loss associated with Sunseeker Resort

As discussed in Note 2 to the consolidated financial statements, the Sunseeker Resort at Charlotte Harbor (Sunseeker Resort) was damaged during 2022 as a result of Hurricane Ian, another weather-related event and a fire.

Based on the Company’s assessment of these damages and the anticipated future restoration costs, which approximate the carrying amount of the portion of the assets that were damaged, an estimated $52.1 million loss was recorded as a reduction to the carrying amount of the Sunseeker Resort during the year ended December 31, 2022.

We identified the evaluation of the estimated loss associated with the Sunseeker Resort as a critical audit matter.

Subjective auditor judgment was required to evaluate the estimated loss and the assumption that the future restoration costs approximate the carrying amount of the damaged assets.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s air traffic liability process, including controls related to the estimated amount of credit vouchers expected to expire unused.

We assessed the

reasonableness of the Company’s estimate of credit vouchers issued between January 1, 2020 and June 30, 2021 expected to expire unused by comparing expected future usage to historical usage.

We also evaluated the Company’s estimated amount of credit vouchers expected to expire unused by comparing it to our expectation, developed based on actual expirations of these credit vouchers that occurred subsequent to December 31, 2021.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s property loss estimation process, including a control related to determining the assumption that the future restoration costs approximate the carrying amount of the damaged assets.

We evaluated the reasonableness of the estimated loss by obtaining a confirmation of the anticipated restoration costs estimated by the Company’s insurance claim adjustor directly from that

We compared the confirmation of the future restoration costs from the insurance claim adjustor to the estimated loss recorded by the Company.

We evaluated certain publicly available costing indices to assess the Company’s assumption that the future restoration costs approximate the carrying amount of the damaged assets.

We have served as the Company’s auditor since 2016.

Dallas, Texas

March 1, 2022

February 27, 2023

ALLEGIANT TRAVEL COMPANY

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Expendable parts, supplies and fuel, net of reserve of $ 8,079 and $ 6,041

35,546 27,500

Prepaid expenses and other current assets 161,636 28,073

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Property and equipment (including $ 80,591 and $ 84,406 from VIEs, Note 6), net of accumulated depreciation of $ 814,837 and $ 696,178

2,810,693 2,259,507

Long-term investments 63,318 2,231

Deferred major maintenance, net of accumulated amortization of $ 108,779 and $ 75,177

157,410 146,850

Operating lease right-of-use assets, net 111,679 130,087

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Current maturities of long-term debt and finance lease obligations (including $ 9,315 and $ 9,000 from VIEs, Note 6), net of related costs of $ 6,599 and $ 7,751

152,900 130,053

TOTAL CURRENT LIABILITIES 869,831 663,045

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Long-term debt and finance lease obligations (including $ 69,812 and $ 79,127 from VIEs, Note 6), net of current maturities and related costs of $ 16,866 and $ 15,664

1,944,078 1,612,486

Deferred income taxes 346,388 346,137

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Treasury shares, at cost, 6,958,096 and 6,652,412 shares in 2022 and 2021, respectively

( 660,023 ) ( 638,057 )

Additional paid in capital 709,471 692,053

Accumulated other comprehensive gain (loss), net 2,056 ( 27 )

Accumulated other comprehensive gain, net 1,257 2,056

Retained earnings 1,169,968 1,167,475

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OPERATING EXPENSES:

Salary and benefits 484,573 377,825 450,448

Aircraft fuel 814,803 440,235 221,827

Salaries and benefits 552,413 484,573 377,825

Station operations 255,168 243,346 144,771

Maintenance and repairs 105,943 63,895 91,713

Depreciation and amortization 197,542 181,035 176,267

Maintenance and repairs 117,814 105,943 63,895

Sales and marketing 100,678 72,742 43,517

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Interest expense 115,711 68,474 61,715

Loss on extinguishment of debt 71 1,222 3,677

Capitalized interest ( 12,640 ) — ( 4,067 )

Special charges — — 26,632

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NET INCOME (LOSS) $ 2,493 $ 151,853 $ ( 184,093 )

Other comprehensive income (loss):

Other comprehensive income:

Change in available for sale securities, net of tax ( 799 ) 2,083 ( 178 )

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Cash dividends declared, $0.70 per share (1)

Other comprehensive income — — — 759 — — 759

Net Income — — — — 232,117 — 232,117

Cumulative effect of the New Lease Standard (see Note 8) — $ — $ — $ — $ ( 550 ) $ — $ ( 550 )

Balance at December 31, 2019 16,303 $ 23 $ 289,933 $ 98 $ 1,211,076 $ ( 617,579 ) $ 883,551

Share-based compensation 262 — 38,445 — — — 38,445

Shares repurchased by the Company and held as treasury shares ( 217 ) — — — — ( 33,773 ) ( 33,773 )

Stock issued under employee stock purchase plan 57 — — — — 5,344 5,344

Cash dividends, $0.70 per share (1)

— — — — ( 11,361 ) — ( 11,361 )

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Balance at December 31, 2021 $ 18,111 $ 25 $ 692,053 $ 2,056 $ 1,167,475 $ ( 638,057 ) $ 1,223,552

Share-based compensation 323 — 17,418 — — — 17,418

Shares repurchased by the Company and held as treasury shares ( 379 ) — — — — ( 29,905 ) ( 29,905 )

Stock issued under employee stock purchase plan 73 — — — — 7,939 7,939

Other comprehensive (loss) — — — ( 799 ) — — ( 799 )

Net income — — — — 2,493 — 2,493

Balance at December 31, 2022 18,128 $ 25 $ 709,471 $ 1,257 $ 1,169,968 $ ( 660,023 ) $ 1,220,698

(1) Dividend declared and paid in the first quarter of 2020 prior to the onset of the pandemic.

As a part of accepting benefits from the Treasury under payroll support programs, the Company has agreed not to pay cash dividends through September 30, 2022.

As a part of accepting benefits from the Treasury under payroll support programs, the Company agreed not to pay cash dividends through September 30, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

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Net income (loss) $ 2,493 $ 151,853 $ ( 184,093 )

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 197,542 181,035 176,267

Gain on aircraft and other equipment disposals ( 3,052 ) ( 1,811 ) ( 8,475 )

(Gain) loss on aircraft and other equipment disposals 2,158 ( 3,052 ) ( 1,811 )

Special charges 34,268 13,998 292,790

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Proceeds from maturities of investment securities 1,301,286 954,970 504,600

Aircraft pre-delivery deposits ( 96,532 ) ( 11,924 ) —

Purchase of property and equipment, including capitalized interest ( 434,690 ) ( 243,613 ) ( 281,159 )

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Interest paid, net of amount capitalized $ 82,903 $ 43,511 $ 48,002

Income tax refunds ( 128,540 ) ( 95,229 ) ( 2,157 )

Income tax paid (refunds) 308 ( 128,540 ) ( 95,229 )

SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS

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(1) Dividend declared and paid in the first quarter of 2020 prior to the onset of the pandemic.

As a part of accepting benefits from the Treasury under payroll support programs, the Company has agreed not to pay cash dividends through September 30, 2022.

As a part of accepting benefits from the Treasury under payroll support programs, the Company agreed not to pay cash dividends through September 30, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

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As a result, the Company believes its airline activities operate under one reportable segment and does not separately track expenses for scheduled service and fixed fee air transportation services.

The Company's non-airline related entities represent separate reportable segments and include Sunseeker Resort, and other non-airline activities.

The Company's Sunseeker Resort represents a separate reportable segment.

Refer to Note 14 for additional information.

Note 2 — Impact of the COVID-19 Pandemic

The rapid spread of COVID-19 and the related government restrictions, social distancing measures, and consumer fears have impacted flight loads, resulted in unprecedented cancellations of bookings and substantially reduced demand for new bookings throughout the airline industry.

Starting in March 2020, the Company and the airline industry experienced a severe reduction in air travel which continued into 2021 to some extent.

Demand in the foreseeable future will continue to be affected by fluctuations in COVID-19 cases, variants, hospitalizations, deaths, treatment efficacy and the availability of vaccines.

The Company is continuously reevaluating flight schedules and adjusting capacity based on demand trends.

During 2020 and 2021, Congress enacted various legislation which provided support for the airline industry.

This included The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") enacted in March 2020, the Consolidated Appropriations Act, 2021 enacted in December 2020 (the “Payroll Support Program Extension”) and the American Rescue Plan Act enacted in March 2021) (the “ARPA”).

On January 15, 2021, the Company through its airline operating subsidiary Allegiant Air, LLC entered into a Payroll Support Program Extension Agreement (the “PSP2”) with the Treasury and received $ 91.8 million under the Payroll Support Program Extension.

In April 2021, the Company received $ 13.8 million in additional funds related to the PSP2 which included a loan of $ 1.7 million.

In consideration for these additional funds, the Company issued additional warrants ( the "PSP2 Warrants") to the Treasury to acquire 924 shares of common stock at a price of $ 179.23 per share (based on the price of the Company's common stock on the Nasdaq Global Select Market on December 24, 2020).

The funds under PSP2 were used exclusively for wages, salaries and benefits.

In April 2021, the Company through its airline operating subsidiary Allegiant Air, LLC entered into a Payroll Support Program 3 Agreement (the "PSP3") with the Treasury under the ARPA and received a total of $ 98.4 million.

The funds were used exclusively for wages, salaries and benefits.

As of December 31, 2021, all Payroll Support Program funds have been fully utilized.

Special Charges

The table below summarizes special charges recorded during 2021 and 2020.

For the Year Ended December 31, 2021 Airline Sunseeker Resort Other non-airline Total

Operating $ 13,453 $ — $ 545 $ 13,998

Non-operating — — — —

Total special charges $ 13,453 $ — $ 545 $ 13,998

Additional detail for the $ 14.0 million of total special charges for 2021 appears below:

• $ 2.5 million resulting from the accelerated retirement of two airframes and three engines

• $ 0.5 million impairment loss on a building in Chesterfield, Missouri associated with the Allegiant Nonstop family entertainment line of business.

• $ 10.9 million related to the acceleration of certain existing stock awards.

For the Year Ended December 31, 2020 Airline Sunseeker Resort Other non-airline Total

Operating $ 141,713 $ 137,994 $ 26,592 $ 306,299

Non-operating — 26,632 — 26,632

Total special charges $ 141,713 $ 164,626 $ 26,592 $ 332,931

Additional detail for the $ 332.9 million of total special charges (operating and non-operating) for 2020 appears below:

• $ 161.6 million in impairment charges primarily in our non-airline subsidiaries

• $ 98.0 million resulting from the accelerated retirement of eight airframes and five engines, loss on sale leaseback transactions of eight aircraft, and write-offs of other aircraft related assets

• $ 35.1 million for additional salaries and benefits expense in relation to the elimination of positions as well as other non-recurring compensation expense associated with the acceleration of certain existing stock awards

• $ 26.6 million related to termination of a loan agreement intended to finance the development of Sunseeker Resort-Charlotte Harbor

• $ 5.0 million related to suspension of construction at Sunseeker Resort

• $ 6.6 million write-down on various non-aircraft assets and other various expenses

Note 2 — Sunseeker Special Charges

As a result of Hurricane Ian’s direct hit on the southwest coast of Florida on September 28, 2022, the construction site of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") was damaged.

Additionally in the fourth quarter, there was another weather-related event and a fire that caused additional damage.

Within days after the hurricane, the Company and insurance providers began to assess the damage to the Resort and that damage assessment remains ongoing.

Based on the Company’s assessment of these damages and the anticipated future restoration costs, which approximate the carrying amount of the portion of the assets that were damaged, an estimated $ 52.1 million loss was recorded, offset by $ 18.1 million of recorded insurance recoveries during the year ended December 31, 2022, resulting in a Sunseeker special charge of $ 34.0 million.

This charge also reduced the carrying amount of the Resort.

The estimate is preliminary and subject to change as the damage assessment by the Company and the insurance providers continues.

The amount of losses recorded to date will continue to be offset in future periods by amounts to be recovered under the Company’s insurance policies.

In 2023, the Company expects to receive insurance proceeds approximating the losses recorded to date.

Note 3 — Summary of Significant Accounting Policies

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Actual results could differ from these estimates.

The Company has reclassified certain prior period amounts to conform to the current period presentation .

Cash and Cash Equivalents

Cash and cash equivalents include investments and interest bearing instruments with original maturities of three months or less.

Cash and cash equivalents include highly liquid investments and interest bearing instruments with original maturities of three months or less when purchased.

Such investments are carried at cost which approximates fair value.

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Accounts Receivable

Accounts receivable are carried at face amount which approximates fair value.

Accounts receivable are recorded at invoiced amount which approximates fair value.

In addition to income tax receivables, the accounts receivable consist primarily of amounts due from credit card companies associated with the sale of tickets for future travel.

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Expendable parts, supplies and fuel inventories are valued at cost using the first-in, first-out method.

Such inventories are charged to expense as they are used in operations.

Such expendable parts, supplies and fuel are charged to expense as they are used in operations.

An obsolescence allowance for expendable parts and supplies is based on salvage values and the average remaining useful life of the Airbus fleet.

The obsolescence allowance for expendable parts and supplies was $ 8.1 million and $ 6.0 million at December 31, 2022 and 2021, respectively.

Rotable aircraft parts inventories are included in property and equipment.

Deposits and Other Assets

Deposits and Other Assets consist primarily of airport deposits, aircraft purchase deposits, deposits as required by the construction loan agreement and a note receivable to the counter-party in the Company’s joint venture alliance.

The Company also had outstanding receivables from third parties as of December 31, 2021 and 2020, of which $ 12.4 million and $ 10.9 million respectively, was due more than one year after the balance sheet date.

Deposits and Other Assets consist primarily of airport deposits, aircraft lease deposits, deposits as required by the construction loan agreement and a note receivable to the counter-party in the Company’s joint venture alliance.

The Company also had

outstanding receivables from third parties as of December 31, 2022 and 2021, of which $ 18.3 million and $ 12.4 million respectively, was due more than one year after the balance sheet date.

Operating Lease Right-of-Use Asset and Liability

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Changes in the estimate for useful lives or residual values of the Company’s property and equipment could result in changes in depreciation expense.

Interest is capitalized using the Company’s weighted average borrowing rate and depreciated over the estimated useful life of the related asset(s) acquired/developed.

Capitalized interest for the years ended December 31, 2021, 2020 and 2019 was $ 0.2 million, $ 4.1 million and $ 4.5 million, respectively.

Interest is capitalized by applying a capitalization rate to the weighted-average carrying amount of expenditures for qualifying assets over the period and depreciated over the estimated useful life of the related asset(s) acquired/developed.

Software Capitalization

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The Company accounts for all non-major maintenance and repair costs incurred for its Airbus fleet under the direct expense method.

Under this method, maintenance and repair costs for aircraft are charged to operating expenses as incurred.

Maintenance and repair costs includes all parts, materials, and line maintenance activities required to maintain the Company's fleet.

Under this method, maintenance and repair costs for aircraft are charged to maintenance and repair expenses as

Maintenance and repair costs include all parts, materials, and line maintenance activities required to maintain the Company's fleet.

The Company accounts for major maintenance costs of its Airbus airframes and the related CFM engines using the deferral method.

Under this method, the Company capitalizes the cost of major maintenance events, which are amortized as a component of depreciation and amortization expense, over the estimated period until the next scheduled major maintenance event.

During 2021 and 2020, the Company capitalized $ 23.3 million and $ 12.8 million of major maintenance costs for engines with associated amortization expense of $ 21.0 million and $ 17.6 million respectively.

During 2022 and 2021, the Company capitalized $ 4.1 million and $ 23.3 million of major maintenance costs for engines.

Amortization expense related to major maintenance costs for engines was $ 21.5 million, $ 21.0 million, and 17.6 million for the years ended December 31, 2022, 2021, and 2020 respectively.

During 2022 and 2021, the Company capitalized $ 56.5 million and $ 39.0 million of major maintenance costs for airframes.

Amortization expense related to major maintenance costs was $ 21.1 million, $ 19.9 million and $ 14.9 million for the years ended December 31, 2021, 2020 and 2019 respectively.

Amortization expense related to major maintenance costs for airframes was $ 22.3 million, $ 21.1 million and $ 19.9 million for the years ended December 31, 2022, 2021 and 2020 respectively.

Measurement of Impairment of Long-Lived Assets

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and (ii) estimated future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization, length of service for which the asset will be used in operations, and estimated salvage values.

For the year ended December 31, 2019, the Company did not incur any impairment losses.

For the year ended December 31, 2020, the Company recorded a $ 161.6 million impairment as a result of COVID-19.

For the year ended December 31, 2021, the Company recorded a $ 0.5 million impairment loss on a building in Chesterfield, Missouri associated with the Allegiant Nonstop family entertainment line of business.

The Company did not recognize any impairment for the year ended December 31, 2022.

Revenue Recognition

Passenger revenue

Passenger revenue includes scheduled service revenue, ancillary air-related charges, and travel point redemptions from the co-branded Allegiant World Mastercard® credit card and the Company's non-card loyalty program.

Passenger revenue includes scheduled service revenue, ancillary air-related charges, and travel point redemptions from the co-branded Allegiant credit card and the Company's non-card loyalty program.

Scheduled service revenue consists of ticket revenue generated from nonstop flights in the Company’s route network, recognized either when the transportation is provided, or when ticket voucher breakage occurs.

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Revenues from air-related charges are recognized when the transportation is provided.

If a customer cancels a flight, a voucher may be issued for a future flight, at which time the associated revenue is recognized upon completion of the future flight.

If a customer cancels a flight, a voucher may be issued for a future flight, at which time the associated revenue is recognized in scheduled service revenue upon completion of the future flight.

Additionally, the Company estimates the value of vouchers that will expire unused and recognizes such revenue at the time of issuance.

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Revenue from the sale of third party products is recorded net of amounts paid to wholesale providers, travel agent commissions, and transaction costs.

Pursuant to the co-brand arrangement with Bank of America, the Company has various performance obligations which are collectively referred to as the marketing component.

These obligations consist of use of the Company’s brand and access to its member lists, and certain other advertising and marketing elements.

The marketing component is recorded as third party products revenue in the period in which points are awarded to the credit card holders.

Revenue from travel point redemptions from the co-branded credit card and the loyalty program are described in the Affinity Credit Card Program and Allways Rewards ® Loyalty Program sections below.

Fixed fee contract revenue

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Fixed fee contract revenue is recognized when the transportation is provided.

Other revenue

Other revenue is generated from non-airline activities as well as leasing aircraft and engines.

Lease revenue is recognized ratably over the lease term.

Affinity Credit Card Program

The Allegiant World Mastercard® is issued by Bank of America through which arrangement points are sold and consideration is received under an agreement that expires in 2029.

The Allegiant co-branded credit card is issued by Bank of America through which arrangement points are sold and consideration is received under an agreement that expires in 2029.

Under this arrangement, the Company identified the following deliverables:

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In addition to opportunities to redeem points for flights, lodging and rental cars, the program leverages Allegiant's partnerships to offer additional rewards to Members, including sports and live music event tickets and exclusive experiences.

Members can also earn points by using their Allegiant World Mastercard®.

Members can also earn points by using their Allegiant co-branded credit card.

Under Allways Rewards ® , Members receive one point for every dollar spent at Allegiant.com, and two points per $1 for spending over $500 (excluding taxes and fees).

The Company utilizes the deferred revenue method of accounting for points earned through the program based on the stand alone selling price and revenue is recognized when points are redeemed and the underlying service has been provided.

The stand alone selling price of points is adjusted for an estimate of points that will not be redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption.

Advertising Costs

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Advertising expense was $ 40.1 million, $ 31.3 million and $ 12.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

In 2019, the Company entered into a naming rights agreement with the Raiders of the National Football League for the professional football stadium in Las Vegas which opened in 2020.

Prepayments and other associated advertising expenses began in mid-2020 and will continue through the term of this agreement.

Earnings per Share

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For the years ended December 31, 2022 and 2021, the second method above was used in the computation because it was more dilutive than the first method.

Given the loss position in 2020, both methods yield the same result.

Given the net loss generated in 2020, both methods yield the same result.

The following table sets forth the computation of net income (loss) per share on a basic and diluted basis for the periods indicated:

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The share-based cost is measured based on grant date fair value.

The Company’s share-based employee compensation plan is more fully discussed in Note 13.

The Company’s share-based employee compensation plan is more fully discussed in Not e 1 2 .

The Company recognizes deferred income taxes based on the asset and liability method required by accounting standards.

Deferred tax assets and liabilities are determined based on the timing differences between book basis for financial reporting purposes and tax basis of the asset and liability and measured using the enacted tax rates and provisions of the enacted tax law.

Deferred tax assets and liabilities are determined based on the timing differences between book basis for financial reporting purposes and tax basis of the assets and liabilities and measured using the enacted tax rates and provisions of the enacted tax law.

A valuation allowance for deferred tax assets is provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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Recent Accounting Pronouncements

On June 16, 2016, the FASB issued ASU No.

2016-13, Measurement of Credit Losses on Financial Instruments.

The standard requires the use of an “expected loss” model on certain types of financial instruments.

The standard also amends the impairment model for available-for-sale debt securities and requires estimated credit losses to be recorded as allowances instead of reductions to amortized cost of the securities.

The Company adopted this accounting standard prospectively as of January 1, 2020, and it did not have a significant impact on its consolidated financial statements

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

This standard is intended to simplify various aspects related to accounting for income taxes and is effective for fiscal years beginning after December 15, 2020, including interim periods therein, and early adoption is permitted.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of Topic 740.

The Company adopted ASU 2019-12 in the first quarter of 2021 and its adoption did not have a material effect on the Company's consolidated financial statements.

On November 17, 2021, the Financial Accounting Standards Board (the "FASB") issued ASU 2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance.

The new standard increases transparency of government assistance by focusing on the types of assistance given, an entity's accounting for the assistance, and the effect of the assistance on the entity's financial statements to allow for more comparable information for investors and other financial statement users.

This standard is effective for all entities under the scope for financial statements issued for annual periods beginning after December 15, 2021, but early adoption is permitted.

The Company adopted the standard early as of January 1, 2021.

See Note 2 for further information on the Company's treatment of government assistance received.

On January 7, 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848).

This new standard provides optional temporary guidance for entities transitioning away from London Interbank Offered Rate ("LIBOR") to new reference interest rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions with Topic 848.

These amendments do not apply to any contract modifications made after December 31, 2024, any new hedging relationships entered into after December 31, 2024, or to existing hedging relationships evaluated for effectiveness existing as of December 31, 2024, that apply certain optional practical expedients.

This standard was effective immediately and may be applied (i) on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or (ii) on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued.

The Company had no material LIBOR-related contract modifications during the twelve months ended December 31, 2022.

Note 4 — Revenue Recognition

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Loyalty redemptions

In relation to the travel component of the co-branded credit card contract with Bank of America, the Company has a performance obligation to provide cardholders with points to be used for future travel award redemptions.

Therefore, consideration received from Bank of America related to the travel component is deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed and the transportation is provided.

The following table presents the activity of the co-brand point liability as of the dates indicated:

The following table presents the activity of the co-brand credit card and the loyalty program as of the dates indicated:

Year Ended December 31,

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Other property and equipment 95,156 78,192

Sunseeker Resort 320,572 83,864

Total property and equipment 3,625,530 2,955,685

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Property and equipment, net $ 2,810,693 $ 2,259,507

As of December 31, 2021, the Company had firm commitments to purchase fifty-one aircraft which are expected to be delivered between 2022 and 2025.

As of December 31, 2022, the Company had firm commitments to purchase 54 aircraft which are expected to be delivered between 2023 and 2025.

Accrued capital expenditures as of December 31, 2022 and 2021 were $ 54.6 million and $ 17.7 million, respectively.

Note 6 — Accrued Liabilities

Accrued liabilities consisted of the following:

As of December 31,

(in thousands) 2021 2020

Salaries, wages and benefits $ 38,313 $ 21,878

Sunseeker Resort development 12,241 14,084

Maintenance and repairs 11,718 12,847

Loyalty program liability 17,787 10,929

Station expenses 21,297 10,526

Property taxes 7,853 9,042

Interest 10,519 6,560

Passenger taxes and fees 14,324 4,686

Advertising accruals 1,863 890

Other accruals 26,977 24,651

Total accrued liabilities $ 162,892 $ 116,093

Note 6 — Long-Term Debt

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Weighted average variable-interest rate on debt 6.1 % 2.5 %

Interest Rate(s) Per Annum at As of December 31,

(in thousands) Maturity Dates December 31, 2022 2022 2021

Term Loan and senior secured notes 2024 — 2027 7.25 % — 8.50 % $ 700,000 $ 685,857

Consolidated variable interest entities 2024 — 2029 3.23 % — 4.10 % 79,453 88,513

Revolving credit facilities 2023 — 2027 6.83 % 30,327 —

Debt secured by aircraft, engines, other equipment and real estate 2023 — 2029 1.87 % — 7.16 % 466,335 472,267

Finance leases 2023 — 2032 4.44 % — 8.36 % 494,328 318,493

Construction loan agreement 2028 5.75 % 350,000 175,000

Unsecured debt n/a n/a — 25,824

Total debt $ 2,120,443 $ 1,765,954

Related costs ( 23,465 ) ( 23,415 )

Total debt net of related costs $ 2,096,978 $ 1,742,539

Maturities of long-term debt as of December 31, 2022, for the next five years and thereafter, in the aggregate, are:

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Total debt and finance lease obligations, net of related costs $ 2,096,978

Total long-term debt is presented net of related costs of $ 23.4 million and $ 23.5 million at December 31, 2021 and 2020, respectively.

Term Loan and Senior Secured Notes

In February 2019, the Company entered into a Credit and Guaranty Agreement (the “Term Loan”) to borrow $ 450.0 million, guaranteed by all of the Company's subsidiaries, excluding Sunseeker Resorts Inc.

and its subsidiaries, and other insignificant subsidiaries (the "Term Loan Guarantors").

In February 2020, the Company entered into an amendment to the Term Loan under which the interest rate was reduced by 150 basis points, and the principal amount of the debt was increased by a net amount of $ 100.0 million to $ 545.5 million.

Quarterly principal payments increased under the amendment, but the remaining provisions were substantially unchanged, including the maturity date.

The Term Loan is secured by substantially all property and assets of the Company and the Term Loan Guarantors, excluding aircraft and aircraft engines, and excluding certain other assets.

The Term Loan bears interest based on LIBOR with a zero percent floor and provides for quarterly interest payments along with quarterly principal payments of $ 1.4 million through February 2024, at which time the Term Loan is due.

The Term Loan may be prepaid at any time without penalty.

In October 2020, the Company closed on the private offering of $ 150.0 million principal amount of 8.5 percent Senior Secured Notes due 2024 (the "Senior Secured Notes").

The Senior Secured Notes and related guarantees are secured by first priority security interests in the same collateral package as securing the Term Loan and the debt is subject to an Intercreditor Agreement with the collateral agent for the Term Loan.

The guarantors of the Notes include all significant subsidiaries other than Sunseeker Resorts, Inc.

and its subsidiaries.

Senior Secured Notes

In August, 2022, the Company issued $ 550.0 million in aggregate principal amount of its 7.250 % Senior Secured Notes due 2027 (the “2027 Notes”) pursuant to an Indenture, dated as of August 17, 2022.

The 2027 Notes are secured by first priority security interests in, subject to permitted liens, substantially all of the property and assets of the Company and its subsidiaries (other than Sunseeker Resort and its subsidiaries), except that the collateral package excludes aircraft, aircraft engines, real property and certain other assets.

The collateral also secures the Company’s existing $ 150.0 million 8.500 % Senior Secured Notes due 2024 and the Company’s revolving credit facility through Barclays Bank, PLC (described below), on a pari passu basis.

The 2027 Notes bear interest at a fixed rate of 7.25 percent per annum, payable in cash on February 15 and August 15 of each year, beginning February 15, 2023.

The 2027 Notes will mature on August 15, 2027.

The 2027 Notes contain certain covenants that limit the ability of the Company to, among other things:

(i) make restricted payments;

(ii) incur indebtedness or issue preferred stock;

(iii) create or incur certain liens;

(iv) dispose of loyalty program or brand intellectual property collateral;

(v) merge, consolidate or sell all or substantially all assets and (vi) enter into certain transactions with affiliates.

The 2027 Notes also require the Company to comply with certain affirmative covenants, including to maintain a minimum aggregate amount of liquidity of $ 300.0 million.

If the Company fails to satisfy the minimum liquidity requirement, then the Company will be required to pay additional interest on all outstanding 2027 Notes in an amount equal to 2.0 % per annum of the principal amount of such 2027 Notes until the Company demonstrates compliance with the liquidity requirement.

The Company used the net proceeds from the sale of the 2027 Notes to repay the Company’s Term Loan B, which had an outstanding principal amount of $ 533.0 million, and to pay costs and expenses of the transaction.

Consolidated Variable Interest Entities

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The trust was funded on inception.

The borrowing bears interest at a blended rate of

3.2 percent and is payable in monthly installments through October 2024, at which time the Company will have a purchase option at a fixed amount.

The borrowing bears interest at a blended rate of 3.2 percent and is payable in monthly installments through October 2024, at which time the Company will have a purchase option at a fixed amount.

As this transaction is a common control transaction, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $ 18.6 million and $ 23.5 million, respectively, at the time of borrowing.

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Payroll Support Program Loans

During 2020 and 2021, Congress enacted various legislation which provided support for the airline industry.

This included The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") enacted in March 2020, the Consolidated Appropriations Act, 2021 enacted in December 2020, and the American Rescue Plan Act enacted in March 2021 (collectively the “Payroll Support Programs”).

In 2020 and 2021, the Company entered into low-interest rate, senior unsecured term promissory notes (the "PSP Notes") with the Treasury under the Payroll Support Programs.

The Notes mature in full after ten years, and bear interest at a rate of 1.0 percent per annum for the first five years and, thereafter, at the secured overnight financing rate (SOFR) plus 2 percent.

The PSP Notes are prepayable at any time at par, without penalty.

As of December 31, 2021, the Company received $ 24.7 million in funds under the PSP Notes, which is recorded within noncurrent debt on the balance sheet.

In connection with the Payroll Support Programs, the Company is required to comply with the relevant provisions of the CARES Act, the Payroll Support Program Extension and ARPA, including those prohibiting the repurchase of common stock and the payment of common stock dividends through September 30, 2022, as well as those restricting the payment of certain executive compensation for periods through March 31, 2023.

Senior Secured Revolving Credit Facility

The senior secured revolving credit facility under which the Company was able to borrow up to $ 81.0 million matured on March 31, 2021 and the outstanding balance of $ 46.5 million was paid at that time

In March 2021, the Company entered into a new revolving credit facility under which it is entitled to borrow up to $ 50.0 million.

The PSP Notes were to mature in full after ten years, and bore interest at a rate of 1.0 percent per annum for the first five years and, thereafter, at the secured overnight financing rate (SOFR) plus 2 percent.

The PSP Notes were prepayable at any time at par, without penalty.

As of December 31, 2022, the Company had fully repaid the PSP Notes.

Revolving Credit Facilities

In August, 2022, the Company entered into a credit agreement with MUFG Bank, Ltd under which the Company is entitled to borrow up to $ 100.0 million.

The revolving credit facility has a term of 24 months and the borrowing ability is based on the value of aircraft and engines placed into the collateral pool.

The notes under the facility bear interest at a floating rate based on SOFR.

As of December 31, 2022, the facility remains undrawn.

In August, 2022, the Company entered into a credit agreement with certain lenders and Barclays Bank PLC as administrative agent and lead arranger that provides a senior secured revolving loan facility of $ 75.0 million.

The facility is secured by the same collateral that secures the 2027 Notes, has a term of 57 months and notes under the facility bear interest at a floating rate based on SOFR.

As of December 31, 2022, the facility remains undrawn.

In September, 2022, the Company entered into a credit agreement with Norddeutsche Landesbank Girozentrale (acting through its New York branch) and Landesbank Hessen-Thüringen Girozentrale (the "Lenders") under which the Company is entitled to borrow up to $ 300.0 million.

The revolving credit facility has a term of 24 months and the borrowing ability is based on the amount of pre-delivery deposits paid with respect to up to 20 737-MAX aircraft, the purchase rights for which the Company may choose to place in the collateral pool.

The facility is secured by the purchase rights for the applicable aircraft.

The commitment amount at the time of signing is $ 200.0 million and the facility may be increased to $ 300.0 million subject to agreement between the Company and the Lenders.

Any notes under the facility will bear interest at a floating rate based on SOFR and all borrowings will be due no later than December 31, 2024 or upon delivery of the applicable aircraft.

As of December 31, 2022, the Company has drawn $ 30.3 million under this facility.

In March 2021, the Company entered into a revolving credit facility under which it is entitled to borrow up to $ 50.0 million.

The facility has a term of 24 months and the borrowing ability is based on the value of the Airbus A320 series aircraft placed into the collateral pool.

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Other Secured Debt

In September 2020, the Company borrowed $ 84.0 million under a loan agreement secured by aircraft and spare engines.

The note bears interest at a fixed rate, payable in monthly installments maturing in September 2025 and September 2026 for the spare engines and aircraft, respectively.

In April 2020, the Company borrowed $ 31.0 million under a loan agreement secured by two aircraft.

The note bears interest at a fixed rate, payable in quarterly installments with a maturity date in April 2028.

The Company is party to financing agreements under which aircraft, other equipment or other assets serve as collateral.

Below are described those debt transactions entered into during 2022.

In April 2022, the Company borrowed $ 62.3 million under a loan agreement secured by Airbus A320 series aircraft.

The notes bear interest at a fixed rate, payable in quarterly installments maturing in April 2027.

In April 2022, the Company borrowed $ 46.0 million under a loan agreement secured by Airbus A320 series aircraft.

The notes bear interest at a variable rate, payable in quarterly installments maturing in April 2028.

Construction Loan Agreement

In October 2021, Sunseeker Florida, Inc.

(“SFI”), a wholly-owned subsidiary of the Company, entered into a Credit Agreement pursuant to which SFI may borrow up to $ 350.0 million funded by one or more entities directly or indirectly managed by Castlelake, L.P.(“Lender”) to fund the remaining construction of the initial phases of Sunseeker Resort at Charlotte Harbor (the "Resort").

(“SFI”), a wholly-owned subsidiary of the Company, entered into a Credit Agreement pursuant to which SFI has borrowed $ 350.0 million funded by one or more entities directly or indirectly managed by Castlelake, L.P.(“Lender”) to fund the remaining construction of the initial phases of Sunseeker Resort.

The Loan is secured by the Resort.

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The Loan bears interest at 5.75 percent per annum payable semi-annually, provides for semi-annual principal payments of $ 26.0 million beginning in 2025 and matures in October 2028.

The Credit Agreement includes covenants similar to the covenants in the Company’s Term Loan.

To support the credit, the Company has guaranteed the full amount of the debt, has agreed to guarantee completion of the Project in accordance with approved plans and specifications and made a $ 30 million deposit into a construction disbursement account.

As of December 31, 2021, $ 175.0 million has been advanced.

The Credit Agreement includes covenants similar to the covenants in the Company’s 2027 Notes.

To support the credit, the Company has guaranteed the full amount of the debt, has agreed to guarantee completion of the remaining construction in accordance with approved plans and specifications and made a $ 30.0 million deposit into a construction disbursement account.

The lender funded $ 175.0 million of the loan in October 2021 and in 2022, the Lender funded the remaining $ 175.0 million into the construction disbursement account for the Resort.

As of December 31, 2022, $ 117.5 million of borrowed funds remains in the construction disbursement account which is recorded in other current assets.

Finance Leases

The Company has finance lease obligations related to fifteen aircraft, which impacted the Company's recognized assets and liabilities as of December 31, 2021.

The Company has finance lease obligations related to 24 aircraft, which impacted the Company's recognized assets and liabilities as of December 31, 2022.

See Note 7 for more information on finance lease obligations.

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Finance leases 5.9 % 5.2 %

Sale-Leaseback Transactions

In March 2021, the Company entered into a sale-leaseback transaction involving three aircraft and generating $ 105.0 million of proceeds.

The lease was classified as a finance lease and as a result, the transaction did not qualify as a sale.

The aircraft were not removed from property and equipment in the Company's balance sheet and the Company recorded a financial liability in the amount of $ 105.0 million.

The proceeds from this transaction are treated as cash inflows from finance lease obligations and reported in financing activities on the statement of cash flows.

During the year ended December 31, 2020, the Company entered into sale-leaseback transactions involving eight total aircraft.

The transactions qualified as sales, and generated $ 87.6 million of proceeds.

As a result of the sales, the aircraft were removed from property and equipment in the Company's balance sheet, resulting in a $ 53.2 million loss on the sales.

The loss is reflected within operating special charges on the statement of income since the Company would not likely have completed the transactions absent cash conservation efforts as a result of COVID-19.

The leased aircraft were subsequently recorded within operating lease right-of-use assets, with the related lease liabilities recorded within current and noncurrent operating lease liabilities on the balance sheet.

The proceeds from the sales of aircraft in these transactions are treated as cash inflows from investing activities on the statement of cash flows.

Other Information

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As repurchase authority is exhausted, the Board of Directors has, to date, authorized additional expenditures for share repurchases.

The Company suspended stock repurchases upon the onset of the pandemic and as part of accepting benefits from the Treasury under the Payroll Support Programs, the Company has agreed not to repurchase stock through September 30, 2022.

The Company suspended stock repurchases upon the onset of the pandemic and as part of accepting benefits from the Treasury under the Payroll Support Programs, the Company agreed not to repurchase stock through September 30, 2022.

The Company recommenced repurchasing shares in the fourth quarter 2022 after those restrictions expired.

Share repurchases consisted of the following during the periods indicated:

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Total (in thousands) $ 29,802 $ — $ 30,651

(1) Share amounts shown above include only open market repurchases and do not include shares withheld from employees for tax withholding obligations related to restricted stock vestings, which were 19,001 and 27,700 shares for 2020 and 2019, respectively.

(1) Share amounts shown above include only open market repurchases and do not include shares withheld from employees for tax withholding obligations related to restricted stock vestings, which were 1,423 and 19,001 shares (not in thousands) for 2022 and 2020, respectively.

Cash dividends declared by the Board and paid by the Company consisted of the following during the periods indicated:

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Total cash dividends paid (in thousands) — — 11,361

The Company suspended payment of cash dividends upon the onset of the pandemic and as part of accepting benefits from the Treasury under the Payroll Support Programs, the Company has agreed not to pay cash dividends through September 30, 2022.

The Company suspended payment of cash dividends upon the onset of the pandemic and as part of accepting benefits from the Treasury under the Payroll Support Programs, the Company agreed not to pay cash dividends through September 30, 2022.

The Company has yet to recommence payment of cash dividends.

Note 9 — Fair Value Measurements

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Municipal debt securities 8,599 — 8,599 63,875 — 63,875

Federal agency debt securities — — — 51,400 — 51,400

Total cash equivalents 147,463 88,073 59,390 268,349 25,019 243,330

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Corporate debt securities 166,136 — 166,136 234,436 — 234,436

Municipal debt securities 165,572 — 165,572 87,290 — 87,290

Federal agency debt securities 107,222 — 107,222 — — —

Municipal debt securities 30,426 — 30,426 165,572 — 165,572

Total short-term 725,063 — 725,063 819,477 — 819,477

Corporate debt securities 35,688 — 35,688 — — —

Federal agency debt securities 20,050 — 20,050 — — —

Municipal debt securities 7,580 — 7,580 2,231 — 2,231

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In accordance with income tax accounting standards, the Company recognizes tax benefits or expenses on the temporary differences between the financial reporting and tax bases of its assets and liabilities.

In 2021, 2020 and 2019, the Company recorded net tax (benefit)/provision of $ 44.8 million, $( 177.0 ) million and $ 69.1 million, respectively.

Cash taxes, net of (refunds), were $( 128.5 ) million, $( 95.2 ) million and $( 2.2 ) million, respectively.

Components of Income before Income Taxes from Continuing Operations

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State 983 4,022 ( 5,449 )

Foreign — — —

Total deferred 2,172 44,715 18,677

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Other 21 ( 1,059 ) ( 3,164 )

Total income tax expense $ 44,767 $ ( 176,974 ) $ 69,130

Total income tax expense (benefit) $ 2,460 $ 44,767 $ ( 176,974 )

Deferred Taxes

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Deferred tax assets:

Accrued vacation $ 1,197 $ 1,024

Accrued bonus 4,086 —

State taxes 248 —

Accrued property taxes 1,048 1,111

Stock-based compensation expense 1,372 1,025

Employee benefits $ 9,938 $ 6,656

Net operating loss 30,370 7,827

Tax credit 4,523 10,995

Tax credits 4,290 4,523

valuation allowance 1,214 1,214

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Net deferred tax liabilities $ 346,388 $ 346,137

(1) Other deferred tax assets consists of interest expense and R&D expenses.

Net Operating Loss and Tax Credit Carryforwards

Pursuant to the CARES Act, the Company carried back net operating tax losses generated in 2018, 2019 and 2020 in the amounts of $ 185.4 million, $ 116.7 million and $ 422.1 million respectively to tax years ended December 31, 2013 through December 31, 2016.

The net operating loss carryback resulted in prior years’ foreign tax credits and general business credits generated in 2014 - 2020 in the amount of $ 5.7 million and $ 5.2 million respectively to be released.

During 2021, the Company utilized $ 2.3 million and $ 4.5 million of the released foreign tax credits and general business credits.

Unused foreign tax credit and general business credits will expire in 2026 – 2030, but the Company expects to utilize these credits prior to the expiration.

In addition, as of December 31, 2021, the Company recognized state net operating loss carryforwards for income tax purposes in the amount of $ 7.8 million.

A portion of the state net operating loss carryforward amounts will expire between 2022 and 2040 while a majority of these net operating losses have an indefinite carryforward period.

At December 31, 2022, the Company recognized $ 22.8 million and $ 7.5 million of tax-effected Federal and state net operating loss carryforwards respectively.

Under the current law, the Federal net operating losses do not expire.

While a portion of the state net operating loss carryforward amounts will expire between 2023 and 2040, the majority of these net operating losses have an indefinite carryforward period.

Note 11— Related Party Transactions

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Under the plan, employees may contribute up to 90 percent of their eligible annual compensation with the Company making matching contributions on employee deferrals of up to 5 percent of eligible employee wages.

The matching contributions on pilot deferrals is 200 percent for the first 5 percent of eligible wages resulting from the pilot collective bargaining agreement.

The matching contributions on pilot deferrals is 200 percent for the first 5 percent of eligible wages as provided under the pilot collective bargaining agreement.

The Company recognized expense under this plan of $ 24.0 million, $ 21.4 million, and $ 18.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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The Company reserved 2,000,000 shares of common stock for the Company to grant stock options, restricted stock, cash-settled stock appreciation rights ("SARs") and other stock-based awards to certain officers, directors and employees of the Company under the 2022 Long-Term Incentive Plan (the "2022 Plan").

The 2016 Plan is administered by the Company’s compensation committee of the Board of Directors.

The 2022 Plan is administered by the compensation committee of the Board of Directors.

Employee Stock Purchase Plan

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The unrecognized compensation cost was $ 32.4 million as of December 31, 2022 for unvested restricted stock expected to be recognized over a weighted-average period of 1.86 years.

As of December 31, 2021, there was no unrecognized compensation cost for either cash-settled SARs or stock options.

As of December 31, 2022, there was $ 0.9 million unrecognized compensation cost related to stock options and no unrecognized compensation cost for cash-settled SARs.

Restricted stock awards

The closing price of the Company's stock on the date of grant is used as the fair value for the issuance of restricted stock.

A summary of the status of non-vested restricted stock grants during the years ended December 31, 2021, 2020 and 2019 is presented below:

The majority of the Company's unvested restricted stock awards, subject generally to the individual's continued employment or service, vest one third each year over a three year period.

A summary of the status of non-vested restricted stock grants during the y ears ended December 31, 2022, 2021 and 2020 is presented below:

Shares Weighted Average Grant Date Fair Value Per Share

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The Company is party to collective bargaining agreements with the employee groups listed below.

As of December 31, 2021, the percentage of full-time equivalent employees for these pay groups were as follows:

As of December 31, 2022, the percentage of full-time equivalent employees for each of these pay groups was as follows:

As of December 31, 2022

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Flight Dispatchers 0.9

As of December 31, 2022, the Company employed approximately 5,300 full-time equivalent employees, 53.6 percent of whom are covered by collective bargaining agreements with various labor unions that are currently amendable or will become amendable in one year.

See Item I - Business, for further discussion on the status of each group which has elected union representation.

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The Company believes the ultimate outcome of any pending legal or administrative matters will not have a material adverse impact on its financial position, liquidity or results of operations.

Note 15 — Valuation and Qualifying Accounts

(in thousands) Balance at Beginning of Year Changes Charged to Statement of Income Accounts Write Offs (net of recoveries) Balance at End of Year

Allowance for expendable parts and supplies

For the Year Ended December 31, 2021 $ 4,323 $ 1,718 $ — $ 6,041

For the Year Ended December 31, 2020 2,748 1,575 — 4,323

For the Year Ended December 31, 2019 (1)

14,410 2,257 ( 13,919 ) 2,748

(1) Increase in write offs mostly related to disposal of MD-80 fleet parts in 2019.

Note 14 — Segments

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Sunseeker Resort Segment

The Sunseeker Resort segment represents activity related to the development and construction of Sunseeker Resort in Southwest Florida, as well as the operation of Kingsway Golf Course.

The Sunseeker Resort segment represents activity related to the development and construction of Sunseeker Resort in Southwest Florida, as well as the renovation of Aileron Golf Course (formerly known as Kingsway Golf Course).

Plans for the resort include a 500 -room hotel and two towers offering an estimated 180 one, two and three-bedroom suites, bar and restaurant options, and other amenities.

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The construction of Sunseeker Resort is an extension of the Company's leisure travel focus and it is expected that many customers flying to Southwest Florida on Allegiant will elect to stay at this resort and enjoy its amenities.

Other non-Airline Segment

The other non-airline segment includes the Teesnap golf course management solution and Allegiant Nonstop family entertainment centers.

Allegiant Nonstop family entertainment centers featured games, attractions, and food facilities.

Due to the impacts of COVID-19, the Company permanently closed the Allegiant Nonstop locations in Warren, MI, Clearfield, Utah, and the Allegiant Nonstop location in West Jordan, Utah, which was being developed.

In April 2021, the Company closed on a transaction to sell 85 percent of Teesnap.

Selected information for the Company's segments and the reconciliation to the consolidated financial statement amounts are as follows:

(in thousands) Airline Sunseeker Resort Other non - airline Consolidated

(in thousands) Airline Sunseeker Resort Consolidated

Year Ended December 31, 2022

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Interest expense, net (1)

72,008 7,714 79,722

Depreciation and amortization 197,433 109 197,542

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Interest expense, net (1)

64,529 1,818 66,347

Depreciation and amortization 180,923 112 181,035

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Interest expense, net (1)

50,355 562 50,917

Depreciation and amortization 175,652 615 176,267

Capital expenditures 263,190 45,160 308,350

(1) Excludes losses on debt extinguishment.

Total assets were as follows as of the dates indicated:

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Sunseeker Resort 464,163 119,032

Other non-airline 290 7,790

Consolidated $ 4,511,297 $ 3,991,073

Note 15 — Subsequent Events

Under the agreement entered into with The Boeing Company (“Boeing”) to acquire fifty ( 50 ) newly manufactured Boeing 737-MAX aircraft, the Company made pre-delivery deposits of $ 44.5 million in January 2022.

On February 1, 2023, the Company, through a wholly owned subsidiary, entered into a new senior secured revolving credit facility under which it will be able to borrow up to $ 100.0 million based on the value of new and used aircraft and engines which the Company may choose (subject to certain concentration limits and asset age restrictions) to place in the collateral pool.

The facility has a term of 36 months and once placed in the facility, such aircraft and engines may remain in the facility for the duration of the term at Company discretion.

This credit facility will replace the revolving credit facility with the same lender which was to expire in March 2023.

In February 2023, the Company, through a wholly owned subsidiary, entered into agreements with a trust to borrow $ 27.0 million secured by one Airbus A320 aircraft.

The borrowing bears interest at a fixed rate and will be payable in monthly installments through March 2029, at which time, the Company will have a purchase option at a fixed amount.

The aircraft was previously under a finance lease and a portion of the funds were used to exercise the purchase option.

The balance of the proceeds from the loan will be used for general corporate purposes.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data