What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-03 compared with 2024-02-29 · 320 added, 221 removed, 705 unchanged (43% of the section changed)

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Note 14 - Segments

Note 15 - Impairment

N ote 16 - Subseque nt Events

Report of Independent Registered Public Accounting Firm

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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, 2023, 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 29, 2024 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, 2024, 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 3, 2025 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 Loss associated with Sunseeker Resort

As discussed in Note 3 to the consolidated financial statements, the Sunseeker Resort at Charlotte Harbor (Sunseeker Resort) was damaged during 2023 as a result of Hurricane Idalia.

Based on the Company’s assessment of the damage and the anticipated future restoration costs, which approximate the carrying amount of the portion of the assets that were damaged, an estimated $23.6 million loss was recorded as a reduction to the carrying amount of the Sunseeker Resort during the year ended December 31, 2023.

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 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 adjustor.

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.

Impairment of Sunseeker Resort

As discussed in Notes 2, 3, 5, 14, and 15 to the consolidated financial statements, the Company recorded an impairment charge of $321.8 million, primarily related to Sunseeker Resort.

The Company records impairment losses on long-lived assets used in operations when events or changes in circumstances indicate, in management’s judgment, that the assets might be impaired and the undiscounted future cash flows estimated to be generated by those assets are less than the carrying amount of those assets.

The Company performed an undiscounted cash flow test and concluded that the carrying value of the long-lived assets was not recoverable.

The estimated fair value of the assets was determined using a discounted cash flow model.

The determination of fair value involved significant assumptions and estimates, including the discount rate, projected hotel revenue growth rates and the terminal capitalization rate.

We identified the evaluation of impairment of Sunseeker Resort as a critical audit matter.

We performed sensitivity analysis as a risk assessment procedure over assumptions used to estimate the fair value of Sunseeker Resort and determined the discount rate, projected hotel revenue growth rates and terminal capitalization rate represented the significant assumptions.

The discount rate, projected hotel revenue growth rates and terminal capitalization rate assumptions used to estimate the fair value of Sunseeker Resort were challenging to test as they represented subjective determinations of future market and economic conditions that were also sensitive to variation.

Minor changes to those assumptions could have had a significant effect on the Company’s assessment of the carrying value of

Sunseeker Resort.

Additionally, the audit effort associated with this estimate required the use of professionals with specialized skills and knowledge.

The following are the primary audit 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 impairment assessment process for Sunseeker Resort.

This included controls over the development of the projected hotel revenue growth rates and terminal capitalization rate assumptions and selection of the discount rate assumption used to develop the fair value estimate.

We involved valuation professionals with specialized skills and knowledge, who assisted in assessing the appropriateness of the discount rate, projected hotel revenue growth rates and terminal capitalization rate used by the Company by comparing them to market data and considering the risk profile of Sunseeker Resort.

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

Dallas, Texas

February 29, 2024

March 3, 2025

ALLEGIANT TRAVEL COMPANY

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Accounts receivable 90,407 70,743

Expendable parts, supplies and fuel, net of reserve of $ 10,284 and $ 8,079

Expendable parts, supplies and fuel, net of reserve of $ 12,597 an d $ 10,284

36,070 36,335

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25,580,445 and 25,501,823 shares issued;

18,269,090 and 18,128,182 shares outstanding in 2023 and 2022 respectively

Treasury shares, at cost, 7,232,733 and 6,958,096 shares in 2023 and 2022, respectively

18,407,799 and 18,269,090 shares outstanding in 2024 and 2023

Treasury shares, at cost, 7,172,646 and 7,232,733 shares in 2024 and 2023

( 678,431 ) ( 681,932 )

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Fixed fee contracts 80,660 68,548 60,937

Other 4,333 2,171 1,803

Resort and other 72,742 4,333 2,171

Total operating revenues 2,512,589 2,509,857 2,301,829

OPERATING EXPENSES:

Aircraft fuel 695,871 814,803 440,235

Salaries and benefits 819,843 687,803 552,413

Aircraft fuel 627,755 695,871 814,803

Station operations 272,843 256,560 255,168

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Other 150,399 133,501 113,532

Payroll Support Programs grant recognition — — ( 202,181 )

Special charges, net of recoveries 368,131 28,645 34,612

Total operating expenses 2,752,565 2,288,876 2,210,183

OPERATING INCOME 220,981 91,646 263,075

OPERATING INCOME (LOSS) ( 239,976 ) 220,981 91,646

OTHER (INCOME) EXPENSES:

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Total other expenses 68,474 61,930 86,693

INCOME BEFORE INCOME TAXES 159,051 4,953 196,620

INCOME TAX PROVISION 41,455 2,460 44,767

NET INCOME $ 117,596 $ 2,493 $ 151,853

Earnings per share to common shareholders:

INCOME (LOSS) BEFORE INCOME TAXES ( 308,450 ) 159,051 4,953

INCOME TAX PROVISION (BENEFIT) ( 68,212 ) 41,455 2,460

NET INCOME (LOSS) $ ( 240,238 ) $ 117,596 $ 2,493

Earnings (loss) per share to common shareholders:

Basic $ ( 13.49 ) $ 6.32 $ 0.14

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2024 2023 2022

NET INCOME $ 117,596 $ 2,493 $ 151,853

Other comprehensive income:

NET INCOME (LOSS) $ ( 240,238 ) $ 117,596 $ 2,493

Other comprehensive income (loss):

Change in available for sale securities, net of tax ( 42 ) 2,734 ( 799 )

TOTAL COMPREHENSIVE INCOME $ 120,330 $ 1,694 $ 153,936

TOTAL COMPREHENSIVE INCOME (LOSS) $ ( 240,280 ) $ 120,330 $ 1,694

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

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

Issuance of common stock, net of forfeitures 1,553 2 335,137 — — — 335,139

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 income — — — 2,083 — — 2,083

Payroll Support Programs warrant issuance — — 105 — — — 105

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

Net income — — — — 2,493 — 2,493

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Stock issued under employee stock purchase plan 100 — — — — 8,167 8,167

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

Cash dividends, $ 1.20 per share

— — — — ( 22,144 ) — ( 22,144 )

Other comprehensive income — — — 2,734 — — 2,734

Net income — — — — 117,596 — 117,596

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— — — — ( 21,934 ) — ( 21,934 )

Other comprehensive income — — — 2,734 — — 2,734

Net income — — — — 117,596 — 117,596

Other comprehensive loss — — — ( 42 ) — — ( 42 )

Net loss — — — — ( 240,238 ) — ( 240,238 )

Balance at December 31, 2024 18,408 $ 26 $ 760,600 $ 3,949 $ 1,003,248 $ ( 678,431 ) $ 1,089,392

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OPERATING ACTIVITIES:

Net income $ 117,596 $ 2,493 $ 151,853

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

Net income (loss) $ ( 240,238 ) $ 117,596 $ 2,493

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

Depreciation and amortization 258,251 223,130 197,542

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Accrued liabilities 95,503 65,568 42,605

Loyalty program liability 9,899 14,313 15,704

Air traffic liability 17,427 ( 25,971 ) 72,006

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Proceeds from maturities of investment securities 763,841 976,804 1,301,286

Proceeds from sale of property and equipment 86,156 26,526 1,320

Aircraft pre-delivery deposits ( 35,053 ) ( 342,167 ) ( 96,532 )

Purchase of property and equipment, including capitalized interest ( 300,154 ) ( 528,320 ) ( 434,690 )

Purchase of note receivable — — ( 50,000 )

Proceeds from loan receivable 50,000 — —

Insurance proceeds from damage to property & equipment 6,646 35,730 5,450

Other investing activities 1,441 430 ( 992 )

Net cash used in investing activities ( 721,877 ) ( 491,424 ) ( 593,278 )

Net cash provided by (used in) investing activities 5,578 ( 721,877 ) ( 491,424 )

FINANCING ACTIVITIES:

Proceeds from issuance of common stock — — 335,139

Cash dividends paid to shareholders ( 21,934 ) ( 22,144 ) —

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Debt issuance costs ( 2,260 ) ( 7,116 ) ( 14,297 )

Sunseeker construction financing disbursements (deposits) 102,330 ( 92,650 ) ( 30,000 )

Sunseeker construction financing disbursements 18,320 102,330 ( 92,650 )

Other financing activities 9,141 8,168 7,940

Net cash provided by financing activities 212,923 33,119 285,467

Net cash provided by (used in) financing activities ( 201,299 ) 212,923 33,119

NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 142,735 ( 85,862 ) ( 155,255 )

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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 302,319 $ 159,584 $ 245,446

CASH PAYMENTS/(RECEIPTS) FOR:

CASH PAYMENTS FOR:

Interest paid, net of amount capitalized $ 107,381 $ 111,912 $ 82,903

Income tax paid (refunds) 1,012 308 ( 128,540 )

Income tax paid 8,738 1,012 308

SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS

Right-of-use (ROU) assets acquired $ 1,379 $ 8,320 $ —

Purchases of property and equipment in accrued liabilities $ 71,672 $ 54,641 $ 17,671

Purchases of property and equipment in accrued liabilities and other $ ( 671 ) $ 71,672 $ 54,641

Flight equipment acquired under finance leases — — 192,457

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The Company operates a low-cost, low utilization passenger airline which sells air transportation both on a stand-alone basis and bundled with the sale of ancillary air-related and third party services and products.

The Company also provides air transportation under fixed fee flying arrangements, generates other ancillary revenues, and owns and operates the Sunseeker Resort and Aileron, the related golf course.

Scheduled service and fixed fee air transportation services have similar operating margins, economic characteristics, and production processes (check-in, baggage handling and flight services) which target the same class of customers, and are subject to the same regulatory environment.

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 Sunseeker Resort represents a separate reportable segment.

Refer to Note 14 for additional information.

The Company also provides air transportation under fixed fee flying arrangements, generates other ancillary revenues, and owns and operates Sunseeker Resort and Aileron, the related golf course.

Note 2 — Summary of Significant Accounting Policies

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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.

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

These receivables are short-term and generally settle within a few days of sale.

There are also receivables related to commission amounts due from Enterprise Holdings Inc.

based on terms in the rental car provider agreement and amounts due related to fixed fee charter agreements.

There are also receivables related to commission amounts due from rental car providers based on terms in the rental car provider agreement and amounts due related to fixed fee charter agreements.

If deemed necessary, the Company records charges to its allowance for doubtful accounts for amounts not expected to be collected, for which the balance was immaterial for all years presented.

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For investments in an unrealized loss position, the Company determines whether a credit loss exists by considering information about the collectability of the instrument and current market conditions.

There have been no credit losses in the years presented.

There have been no material credit losses in the years presented.

Investment securities with original maturities of three months or less are classified as cash equivalents.

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The amortized cost of investment securities sold is determined by the specific identification method with any realized gains or losses reflected in other (income) expense.

The Company had minimal realized losses during the years ended December 31, 2023, 2022, and 2021.

The Company had no material realized losses during the years ended December 31, 2024, 2023, and 2022.

The Company believes unrealized losses related to debt securities are not other-than-temporary and does not intend to sell these securities prior to amortized cost recoverability.

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Deposits and Other Assets

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

The Company also had outstanding receivables from third parties as of December 31, 2023 and 2022, of which $ 17.0 million and $ 18.3 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, investments in unconsolidated affiliates, credits receivable under aircraft purchase agreements and scrap assets.

At December 31, 2023, deposits and other assets included a $ 50.0 million note receivable from the counterparty in the Company's joint-venture alliance, which amount was repaid in full during 2024.

The Company also had outstanding receivables from third parties as of December 31, 2024 and 2023, of which $ 15.1 million and $ 17.0 million respectively, were due more than one year after the balance sheet date.

Operating Lease Right-of-Use Asset and Liability

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Lease payments include fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, and others as required by the Accounting Standards (ASU) 2016-02, Leases (Topic 842).

Lease payments do not include variable lease payments other than those that depend on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components.

Lease payments do not include variable lease payments other than those based on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components.

Lease terms include options to extend when it is reasonably certain that the option will be exercised.

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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 2023 and 2022, the Company capitalized $ 68.5 million and $ 60.6 million of major maintenance costs.

Amortization expense related to major maintenance costs was $ 55.5 million, $ 43.8 million, and $ 42.1 million for the years ended December 31, 2023, 2022, and 2021 respectively.

During 2024 and 2023, the Company capitalized $ 76.8 million and $ 68.5 million of major maintenance costs as deferred major maintenance.

Amortization expense related to deferred major maintenance, excluding amounts recorded in special charges related to the Company's aircraft retirement plan, was $ 65.8 million, $ 55.5 million, and $ 43.8 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Measurement of Impairment of Long-Lived Assets

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(i) estimated fair value of the assets;

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.

The Company did not recognize any impairment for the years ended December 31, 2023 and December 31, 2022.

and (ii) estimated future cash flows expected to be generated by those assets which are based on additional assumptions such as (but not limited to) asset utilization, average fare, block hours, fuel costs, fixed fee contracts, estimated salvage values, discount rate, projected growth rates and terminal value assumptions.

For the year ended December 31, 2024, the Company recorded a $ 321.8 million impairment loss related to the Sunseeker Resort Segment.

The impairment is more fully discussed in Note 15 .

Manufacturer's Credits

The Company periodically receives credits in connection with the acquisition of aircraft and engines or in connection with delivery delays or manufacturer's incentives.

These credits are generally applied as a reduction of the cost of each item acquired under the purchase agreement at the time of delivery, which results in either deferral of the credit or recognition of an asset depending on the timing of receipt.

Revenue Recognition

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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.

Nonrefundable scheduled itineraries expire on the date of the intended flight, unless the date is extended by notification from the customer in advance.

Nonrefundable scheduled itineraries expire on the date of the intended flight, unless the itinerary is changed or canceled in advance of the flight under the terms and conditions of the ticket.

Itineraries sold for transportation not yet used, as well as unexpired vouchers, are included in air traffic liability.

Ancillary air-related charges include various services and products related to the flight such as baggage fees, the use of the Company’s website to purchase scheduled service transportation, advance seat assignments, and other services which are not included in the base ticket price.

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 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.

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

If a customer cancels a flight, a voucher may be issued for a future flight under certain circumstances, 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 estimate into revenue at the time of issuance.

Air-related charges sold for transportation not yet used, as well as unexpired vouchers, are included in air traffic liability.

Various taxes and fees, assessed on the sale of tickets to customers, are collected by the Company serving as an agent, and remitted to taxing authorities.

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Third party products revenue

Ancillary third party products revenue is generated from the sale of hotel rooms, rental cars and ticket attractions, as well as marketing revenue associated with the co-brand credit card.

Ancillary third party products revenue is generated from the sale of hotel rooms, rental cars, travel insurance and ticket attractions, as well as marketing revenue associated with the co-brand credit card.

Revenue from the sale of third party products is recognized at the time the product is utilized, such as the time a purchased hotel room is occupied.

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As compensation for such goods and services, the Company is typically entitled to a fixed nightly fee for an agreed upon period and additional fixed fees for any ancillary services purchased.

These fees are generally payable at the time the hotel guest checks out of the hotel.

The Company generally satisfies the performance obligations over time, and the Company recognizes the revenue from room sales and from other ancillary guest services on a daily basis, as the rooms are occupied and the Company has rendered the services.

Sunseeker Resort revenues are included in other revenue in the consolidated statements of income.

Room charges are generally payable at the time the hotel guest checks out of the hotel.

The Company generally satisfies the performance obligation related to room sales over time, and the Company recognizes the revenue on a daily basis, as the rooms are occupied and the Company has rendered the services.

Charges for food and beverage, golf, retail and other goods and services are settled at a point in time, as the sale is made.

Sunseeker Resort revenues are included in resort and other revenue in the consolidated statements of income.

Allways Rewards® Credit Card Program

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Allways Rewards® Loyalty Program

Allegiant’s Allways Rewards® Loyalty Program enables program members to earn points for every dollar they spend on the Company’s website.

Under the program, which launched in August 2021, members continue to accumulate points until the time they decide to redeem them.

In addition to opportunities to redeem points for flights, lodging, rental cars, and at the Sunseeker Resort, the program leverages Allegiant's partnerships to offer additional rewards to members, including sports tickets and exclusive experiences.

Allegiant’s Allways Rewards® Loyalty Program, which launched in 2021, enables program members to earn points for every dollar they spend on the Company’s website.

In addition to opportunities to redeem points for flights, lodging, rental cars, and at Sunseeker Resort, the program leverages Allegiant's partnerships to offer additional rewards to members, including sports tickets and exclusive experiences.

Members can also earn points by using their Allegiant co-brand 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).

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

Members also earn one point for every $1 spent at sunseekerresorts.com and one point per $1 spent during their stay at Sunseeker Resort, provided the purchases are charged to their room.

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.

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Preopening expenses

Preopening expenses represent personnel, advertising, and other costs incurred prior to the opening of Sunseeker Resort and are expensed as incurred.

Preopening expenses represent personnel, advertising, and other costs incurred prior to the opening of Sunseeker Resort and were expensed as incurred.

During the year ended December 31, 2023, the Company incurred $ 26.5 million of preopening expenses related to the opening of the Resort, which is included in salaries and benefits expense, sales and marketing expense, and other expense in the consolidated statements of income.

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(in thousands, except per share data) 2024 2023 2022

Net income $ 117,596 $ 2,493 $ 151,853

Net income (loss) $ ( 240,238 ) $ 117,596 $ 2,493

Less income allocated to participating securities ( 618 ) ( 4,188 ) ( 32 )

Net income attributable to common stock $ 113,408 $ 2,461 $ 149,635

Earnings per share, basic $ 6.32 $ 0.14 $ 8.69

Net income (loss) attributable to common stock $ ( 240,856 ) $ 113,408 $ 2,461

Earnings (loss) per share, basic $ ( 13.49 ) $ 6.32 $ 0.14

Weighted-average shares outstanding 17,852 17,945 17,959

Net income $ 117,596 $ 2,493 $ 151,853

Net income (loss) $ ( 240,238 ) $ 117,596 $ 2,493

Less income allocated to participating securities ( 618 ) ( 4,175 ) ( 32 )

Net income attributable to common stock $ 113,421 $ 2,461 $ 149,638

Earnings per share, diluted $ 6.29 $ 0.14 $ 8.68

Net income (loss) attributable to common stock $ ( 240,856 ) $ 113,421 $ 2,461

Earnings (loss) per share, diluted $ ( 13.49 ) $ 6.29 $ 0.14

Weighted-average shares outstanding 17,852 17,945 17,959

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Share-Based Compensation

The Company accounts for share-based compensation in accordance with accounting standards which require the compensation cost related to share-based payment transactions be recognized in the Company’s consolidated statements of income.

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

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Recent Accounting Pronouncements

In October 2023, the Financial Standards Accounting Board (FASB) issued Accounting Standards Update (ASU) 2023-06, Disclosure Improvements to align the requirements in the FASB Accounting Standards Codification with the SEC's regulations in response to the SEC's August 2018 final rule that updated and simplified certain disclosure requirements.

Each amendment in the ASU will only be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC, and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027.

Early adoption is prohibited.

The Company is currently evaluating the potential impact that the standard will have on its financial statement disclosures.

In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures," which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for the Company's annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

Beginning with annual reporting for the year ended December 31, 2024, the Company adopted Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures that was issued by the Financial Accounting Standards Board ("FASB").

This new standard requires an enhanced disclosure of significant segment expenses on an annual and interim basis.

Upon adoption, the guidance was applied retrospectively to all prior periods presented in the financial statements.

See Note 1 4 - Operating Segments for additional information.

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740):

Improvements to Income Tax Disclosures." The new standard requires expanded income tax disclosure of specific categories in the rate reconciliation and income taxes paid, disaggregated by jurisdiction.

Improvements to Income Tax Disclosures." This new standard requires expanded income tax disclosure of specific categories in the rate reconciliation and income taxes paid, disaggregated by jurisdiction.

ASU 2023-09 is effective for the Company's annual periods beginning January 1, 2025, with early adoption and retrospective application permitted.

The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

The Company will adopt this standard effective for 2025 and does not expect that the adoption of this standard will have a material effect on its financial statements.

In November 2024, the FASB issued ASU 2024-03 "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses." This new standard requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2024-03 and does not expect the adoption of this standard will have a material effect on its financial statements.

Note 3 — 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 of 2022, there was another weather-related event and a fire that caused additional damage.

Based on the Company’s assessment of these damages and the anticipated future restoration costs, an estimated loss of $ 52.1 million was recorded as a special charge in 2022, which was offset by $ 18.1 million of recorded insurance recoveries during 2022.

In 2023, an additional $ 2.4 million of loss was recorded as a result of updated damage assessments by the Company and the insurance providers.

During third quarter 2023, the Sunseeker Resort construction site incurred additional damages related to Hurricane Idalia.

Based on the Company’s assessment of these damages and the anticipated future restoration costs, an estimated loss of $ 23.6 million was recorded as a special charge in 2023.

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

During the years ended December 31, 2023 and December 31, 2022, the Company recorded losses of $ 26.0 million and $ 52.1 million, respectively, which were offset by $ 32.5 million and $ 18.1 million of insurance recoveries, respectively.

To date, the Company has recorded insurance recoveries of $ 1.0 million and $ 49.5 million, respectively, related to the 2023 and 2022 hurricanes and related weather events.

The Company anticipates that additional insurance recoveries related to the losses incurred in 2023 and 2022 will be recorded in future periods.

Due to the heavy maintenance needs on certain aging Airbus airframes and capacity constraints at the Company's maintenance, repair, and overhaul contractors, the Company reevaluated its fleet plan and identified 21 airframes for early retirement to coincide with 737 MAX aircraft deliveries as scheduled under an amendment to the Company's agreement with The Boeing Company signed in September 2023.

Two airframes were fully retired in 2023 and the remaining airframes are scheduled to be retired between January 2024 and September 2025.

The accelerated depreciation on these airframes resulting from a change in the estimated useful life is recorded as a special charge of $ 35.1 million for the year ended December 31, 2023.

Special charges in 2021 were incurred due to the impacts of the COVID-19 pandemic.

The charges were related to accelerated depreciation on aircraft identified for early retirement, impairment loss on a building related to a discontinued business unit, and acceleration of certain stock awards.

A portion of the special charge recorded in 2022 relates to accelerated depreciation on the last of the COVID-19 aircraft identified for early retirement, which amount is separate from the $ 35.1 million described above.

Sunseeker Resort

Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") was impacted by Hurricanes Ian, Idalia, Debby, Helene, and Milton between 2022 and 2024.

While the Resort was built to withstand hurricanes and flooding, these weather events are unprecedented in their frequency and the amount of destruction caused in Southwest Florida.

The Company believes these weather events will be unusual and has included the cost of these events and the related insurance recoveries in special charges.

The estimated losses are recorded to special charges in the period of the event and are offset by insurance recoveries in the period they are approved for payment by the insurer.

To date, the Company has recorded $ 87.2 million in losses and $ 58.6 million in insurance recoveries.

At this time, the Company does not expect that additional amounts to be recovered are significant.

During the fourth quarter of 2024, Sunseeker Resort was directly impacted by Hurricane Milton, which made landfall on the west coast of Florida on October 9, 2024.

As the Resort was within the evacuation zone, operations were temporarily halted beginning October 7, 2024, and the Resort reopened with limited services on October 14, 2024.

Additionally, the Resort was affected by Hurricanes Debby and Helene during 2024.

The combined impact of Hurricanes Milton, Debby, and Helene resulted in a total of $ 7.7 million in losses recorded by the Company for 2024 without regard to lost revenues.

In fourth quarter 2024, the Company recorded an impairment charge of $ 321.8 million in special charges related to Sunseeker Resort and associated Aileron Golf Course.

For more detailed discussion regarding the impairment charge see Note 15 .

In September 2023, the Company reevaluated its fleet plan and identified 21 airframes for early retirement to coincide with 737 MAX aircraft deliveries as scheduled under an amendment to the Company's agreement with The Boeing Company signed in September 2023.

Two airframes were retired in 2023 and seven airframes were retired in 2024.

The remaining airframes are to be retired between January 2025 and December 2026.

The accelerated depreciation on these airframes resulting from a change in the estimated useful life is recorded as a special charge in the years ended December 31, 2024 and December 31, 2023.

The Company also recorded a special charge in the year ended December 31, 2022 related to accelerated depreciation on the last of the aircraft identified for early retirement during 2020.

In April 2024, the Company's flight attendants, represented by the Transport Workers Union of America, ratified a new five-year collective bargaining agreement.

Under the agreement, a ratification bonus was paid in May 2024, which amount is included within special charges.

In third quarter 2024, the Company recorded $ 3.4 million of special charges related to organizational restructuring.

Special Charges

The table below summarizes special charges recorded during the years ended December 31, 2024, 2023, and 2022.

Year Ended December 31,

Twelve Months Ended December 31,

(in thousands) 2024 2023 2022

Sunseeker weather and related events $ 26,045 $ 52,095 $ —

Sunseeker weather and related events, insurance recoveries (1)

( 32,491 ) ( 18,050 ) —

Accelerated depreciation on airframes identified for early retirement $ 31,066 $ 35,091 $ 567

COVID-19 and related charges — — 11,477

Flight attendant ratification bonus 10,821 — —

Organizational restructuring 3,420 — —

Airline special charges 45,307 35,091 567

Sunseeker weather events, net of insurance recoveries (1)

987 ( 6,446 ) 34,045

Sunseeker impairment 321,837 — —

Sunseeker special charges, net of insurance recoveries (1)

322,824 ( 6,446 ) 34,045

Total special charges $ 368,131 $ 28,645 $ 34,612

(1) Includes $ 8.3 million of business interruption insurance proceeds for the year ended December 31, 2023.

No business interruption insurance recoveries were received for the years ended December 31, 2022 or December 31, 2021.

(1) Includes $ 2.7 million and $ 8.3 million of business interruption insurance proceeds for the years ended December 31, 2024 and December 31, 2023, respectively.

There were no business interruption recoveries for the year ended December 31, 2022.

Note 4 — Revenue Recognition

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Of the $ 353.5 million that was recorded in the air traffic liability balance at December 31, 2023, substantially all was recognized into passenger revenue during the 12 months ended December 31, 2024.

In 2020, the Company announced that credit vouchers issued for canceled travel beginning in January 2020 would have an extended expiration date of two years from the original booking date.

This policy continued for credit vouchers issued through June 30, 2021.

Estimates of passenger revenue to be recognized from air traffic liability for credit voucher breakage during this period may be subject to variability and differ from historical experience due to the change in contract duration and uncertainty regarding demand for future air travel.

Effective July 1, 2021, vouchers issued have an expiration date of one year from the original booking date.

The Company periodically evaluates the estimated amount of credit vouchers expected to expire unused and any adjustment is removed from air traffic liability and included in passenger revenue in the period in which the evaluation is complete.

Resort Revenue

The Company's Resort revenues for the periods indicated are set forth in the table below:

Year Ended December 31,

(in thousands) 2024 2023 2022

Rooms $ 31,628 $ 946 $ —

Food and beverage 29,895 1,713 —

Other 10,227 222 —

Total resort revenue $ 71,750 $ 2,881 $ —

Revenue from banquets, golf, retail and spa services are included in other resort revenue.

Resort revenue is recognized as the underlying services or goods have been provided.

There is typically little to no lag between when the services are performed and when payment is remitted.

Large group reservations, conventions, and other event bookings require advance deposits which are recorded as accrued liabilities in the Company's balance sheet until the related services and goods are provided.

Guest receivables are recorded in accounts receivable on the Company's balance sheet for room nights stayed prior to payment at checkout.

The amounts of advance deposit liabilities and guest ledger receivables were not material as of December 31, 2024 or December 31, 2023.

Loyalty redemptions

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Other property and equipment 34,894 75,116

Construction in progress 4,389 320,572

Total property and equipment 4,137,143 4,394,969

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As of December 31, 2024, the Company had firm commitments to purchase 46 aircraft which are expected to be delivered between 2025 and 2027.

During the year ended December 31, 2024, the Company sold flight equipment with a carrying amount of $ 51.3 million for proceeds of $ 86.2 million resulting in a gain of $ 34.9 million, which is included as an offset to other operating expense in the Company's consolidated income statement.

Accrued capital expenditures as of December 31, 2024 and 2023 were $ 8.9 million and $ 71.7 million, respectively.

For the year ended December 31, 2024, the Company recorded a $ 321.8 million impairment loss related to the Sunseeker Resort Segment.

The impairment is more fully discussed in Note 15 .

Note 6 — Long-Term Debt

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Consolidated variable interest entities 2028 — 2029 2.92 % — 5.19 % 107,959 130,650

Revolving credit facilities 2024 — 2027 7.97 % 200,000 30,327

Revolving credit facilities 2025 — 2027 N/A — 200,000

Debt secured by aircraft, engines, other equipment and real estate 2025 — 2036 1.87 % — 8.57 % 765,278 596,271

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Construction loan agreement 2026 5.75 % 100,000 350,000

Unsecured debt 2025 6.15 % 130,500 —

Total debt $ 2,083,633 $ 2,282,169

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(iii) create or incur certain liens;

(iv) dispose of loyalty program or

brand intellectual property collateral;

(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.

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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.

In November 2023, the Company prepaid the entirety of the $ 150.0 million outstanding on its 8.500 % Senior Secured Notes issued in October 2020 and originally due February 2024.

Consolidated Variable Interest Entities

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The Company consolidates a VIE when, among other criteria, it has the power to direct the activities that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or the right to receive benefits of the VIE, thus making the Company the primary beneficiary of the VIE.

During 2023, the Company, through a wholly owned subsidiary, entered into similarly structured agreements with trusts to borrow $ 63.0 million collateralized by aircraft and engines.

The trusts were funded at inception.

The borrowings bear interest at fixed rates and are payable in monthly installments through October 2028 and February 2029, at which time the Company will have purchase options at fixed amounts.

As these transactions are common control transactions, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $ 51.6 million and $ 63.0 million respectively, at the time of borrowing.

The Company, through a wholly owned subsidiary, has entered into similarly structured agreements with trusts to borrow amounts collateralized by aircraft and engines.The trusts were funded at inception of the loan and at maturity, the Company will have purchase options at fixed amounts.

As these transactions are common control transactions, the Company, as the primary beneficiary, measured and recorded the assets at their carrying values at the time of borrowing.

Revolving Credit Facilities

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

As of December 31, 2023, the facility remains undrawn.

As of December 31, 2024, the facility remained undrawn.

In August 2022, the Company entered into a credit agreement 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, 2023, the facility remains undrawn.

In September 2022, the Company entered into a credit agreement under which the Company is entitled to borrow up to $ 200.0 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 on certain 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.

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

As of December 31, 2023, the Company has fully drawn all $ 200.0 million under this facility.

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

As of December 31, 2024, the facility remained undrawn.

In September 2022, the Company entered into a credit agreement under which the Company was entitled to borrow up to $ 200.0 million, which expired as of December 31, 2024.

At December 31, 2023, the Company had drawn the full $ 200 million available under the facility.

During the year ended December 31, 2024, the facility was fully repaid.

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

In February, 2023, the Company extended the term of this agreement to March 2026 and upsized the capacity to $ 100.0 million.

In February, 2023, the Company extended the term of this agreement to March 2026 and the commitment was increased to $ 100.0 million.

The borrowing ability is based on the value of the aircraft and engines placed into the collateral pool.

The notes for amounts borrowed under the facility will bear interest at a floating rate based on SOFR.

As of December 31, 2023, the facility remains undrawn.

As of December 31, 2024, the facility remained undrawn.

Other Secured Debt

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 2023.

Below are described those debt transactions entered into or that were drawn during 2024.

In November 2023, the Company entered into a pre-delivery deposit financing facility to borrow up to $ 158.0 million secured by the Company's purchase rights for certain Boeing 737 MAX aircraft.

The facility bears a floating interest rate based on SOFR and is due upon delivery of each aircraft or no later than June 30, 2025.

As of December 31, 2023, the Company has drawn $ 113.9 million under the facility.

The Company drew an additional $ 18.8 million on this facility during the year ended December 31, 2024 and as of the same date, the Company had drawn a total of $ 132.6 million under the facility.

In September 2023, the Company entered into a credit agreement under which the Company is entitled to borrow up to $ 412.1 million.

In September 2023, the Company received funding of $ 196.4 million under the facility, which is collateralized by aircraft.

The proceeds were used in part to pay off existing debt collateralized by aircraft.

The outstanding balance bears interest at a fixed rate, to be paid in quarterly installments of principal and interest, and matures in September 2031.

The remaining undrawn balance of the facility will be funded upon delivery of, and collateralized by, Boeing 737 MAX aircraft currently on order from Boeing.

Future draws collateralized by 737 MAX aircraft will bear interest at a rate determined at the time of drawdown and will have a term of twelve years.

In May 2023, the Company borrowed $ 92.7 million under a loan agreement secured by aircraft.

The notes bear interest at a fixed rate, payable in quarterly installments maturing in May 2028.

During the year ended December 31, 2023, the Company made a total of $ 207.8 million in payments to extinguish six variable rate facilities secured by aircraft.

The initial draw of $ 196.4 million received in September 2023 was collateralized by aircraft and used in part to pay off existing debt.

This initial draw bears interest at a fixed rate, with quarterly installments of principal and interest, and matures in September 2031.

The Company received proceeds for the remaining commitment of $ 215.7 million in 2024.

These draws were collateralized by aircraft and bear a floating interest rate based on SOFR.

The 2024 draws have a term of twelve years , maturing between September 2036 and December 2036, and are payable in quarterly installments.

In March 2024, the Company entered into a credit agreement under which it is entitled to borrow up to $ 218.5 million, which will be collateralized by new aircraft upon delivery.

The loans will bear interest at a variable rate based on 3-month SOFR and are

payable in quarterly installments over a term of 12 years.

At December 31, 2024, the commitments remain undrawn pending new aircraft delivery.

In September 2024, the Company entered into a credit agreement under which the Company borrowed $ 22.0 million secured by certain aircraft assets.

The loan bears interest at a variable rate based on SOFR, is payable in quarterly installments, and will mature in September 2029.

Finance Leases

The Company has finance lease obligations related to 23 aircraft, which impacted the Company's recognized assets and liabilities as of December 31, 2024.

See Note 7 for more information on the Company's finance lease obligations.

Construction Loan Agreement

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The loan is secured by the Resort.

All of the shares in SFI are also pledged to secure the loan.

The equity of SFI is also pledged to secure the loan.

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 2027 Notes.

The credit agreement includes covenants similar to the covenants in the 2027 Notes.

To support the credit, the Company has guaranteed the full amount of the debt.

As of December 31, 2023, the entirety of the borrowed funds have been released from the construction disbursement account.

Finance Leases

The Company has finance lease obligations related to 23 aircraft, which impacted the Company's recognized assets and liabilities as of December 31, 2023.

See Note 7 for more information on finance lease obligations.

In December 2024, the Company made a voluntary partial prepayment of $ 250.0 million, and as of December 31, 2024, the remaining principal balance of the loan was $ 100 million.

Unsecured Debt

In December 2024, the Company entered into an unsecured credit facility and received proceeds of $ 130.5 million.

The loan bears interest at a floating rate based on SOFR, and principal repayments are due at the delivery of certain 737 MAX aircraft or no later than December 2025.

Note 7 — Leases

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Total lease cost $ 76,519 $ 81,481 $ 67,068

Lease position as of December 31, 2023

Lease position as of December 31, 2024 and December 31, 2023

The table below presents the lease-related assets and liabilities recorded on the balance sheet.

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The Company is authorized by its Board of Directors to acquire the Company’s stock through open market purchases under its share repurchase program.

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 U.S.

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.

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

The Company suspended stock repurchases upon the onset of the pandemic through September 30, 2022, as part of accepting benefits from the U.S.

Treasury under the Payroll Support Programs.

Since fourth quarter 2022, the Company is no longer subject to this restriction and has resumed repurchasing shares when advantageous opportunities arise.

Share repurchases consisted of the following during the periods indicated:

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Total (in thousands) $ — $ 24,303 $ 29,802

(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 65,284 , 1,423 , and zero shares (not in thousands) for 2023, 2022, and 2021 respectively.

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

(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 95,014 , 65,284 , and 1,423 shares (not in thousands) for 2024, 2023, and 2022 respectively.

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

Year Ended December 31,

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Treasury under the Payroll Support Programs, the Company agreed not to pay cash dividends through September 30, 2022.

The Company recommenced payment of cash dividends in the second half of 2023.

The Company recommenced payment of cash dividends in the second half of 2023, but on July 8, 2024, the Company suspended its quarterly dividend indefinitely.

Note 9 — Fair Value Measurements

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The assets classified as Level 2 consist of commercial paper, municipal debt securities, federal agency debt securities, U.S.

treasury bonds and corporate debt securities, which are valued using quoted market prices or alternative pricing sources including transactions involving identical or comparable assets and models utilizing market observable inputs.

treasury bonds, corporate debt securities and certificates of deposit, which are valued using quoted market prices or alternative pricing sources including transactions involving identical or comparable assets and models utilizing market observable inputs.

The Company has no investment securities classified as Level 3.

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Cash equivalents

US Government and agency obligations $ 81,535 $ — $ 81,535 $ 10,201 $ — $ 10,201

Money market funds 41,494 41,494 — 33,613 33,613 —

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Municipal debt securities 10,299 — 10,299 7,848 — 7,848

Federal agency debt securities 8,201 — 8,201 — — —

US Treasury bonds 2,000 — 2,000 — — —

Corporate debt securities 4,133 — 4,133 — — —

Total cash equivalents 160,150 41,494 118,656 71,237 33,613 37,624

Commercial paper 237,870 — 237,870 421,279 — 421,279

Corporate debt securities 242,313 — 242,313 210,982 — 210,982

Federal agency debt securities 194,522 — 194,522 107,222 — 107,222

US Treasury Bonds 14,126 — 14,126 — — —

Commercial paper 149,807 — 149,807 237,870 — 237,870

US Government and agency obligations 94,295 — 94,295 208,648 — 208,648

Certificates of deposit 7,239 — 7,239 — — —

Municipal debt securities 1,580 — 1,580 13,914 — 13,914

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Corporate debt securities 39,931 — 39,931 43,869 — 43,869

Federal agency debt securities 12,135 — 12,135 20,050 — 20,050

US Government and agency obligations 10,452 — 10,452 12,135 — 12,135

Municipal debt securities 1,342 — 1,342 — — —

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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.

The entirety of the Company's income before taxes are from its domestic operations.

The entirety of the Company's income before taxes is from its domestic operations.

Income Tax Provision/(Benefit)

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(in thousands) 2024 2023 2022

Income tax expense at federal statutory rate $ 33,401 $ 1,040 $ 41,575

Income tax expense (benefit) at federal statutory rate $ ( 64,774 ) $ 33,401 $ 1,040

State income taxes, net of federal income tax benefit ( 7,168 ) 3,503 1,189

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Other ( 365 ) 753 51

Total income tax expense $ 41,455 $ 2,460 $ 44,767

Total income tax expense (benefit) $ ( 68,212 ) $ 41,455 $ 2,460

Deferred Taxes

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Employee benefits $ 38,277 $ 8,410

Interest expense 24,692 21,165

Net operating loss 6,252 22,237

Tax credits 3,683 4,128

30,576 18,644

Other 45,543 9,411

valuation allowance 1,214 1,214

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Net deferred tax liabilities $ 315,593 $ 384,602

(1) Other deferred tax assets consists of interest expense and research and development expenses.

Net Operating Loss and Tax Credit Carryforwards

At December 31, 2023, the Company recognized $ 14.0 million and $ 8.2 million of tax-effected Federal and state net operating loss carryforwards, respectively.

Under the current law, the Federal net operating losses do not expire and state net operating loss carryforward amounts begin to expire in 2024 .

At December 31, 2024, the Company recognized $ 6.3 million of tax-effected state net operating loss carryforwards.

Under the current law, $ 1.8 million of the state net operating loss carryforward amounts do not expire and the remaining amounts expire between 2025 and 2043.

Note 11— Related Party Transactions

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The Company has a defined contribution plan covering all eligible employees.

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.

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

The Company recognized expense under this plan of $ 28.9 million, $ 25.5 million, and $ 24.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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The Company reserved 1,000,000 shares of common stock for employee purchases under the 2014 Employee Stock Purchase Plan ("ESPP").

The 2014 ESPP was extended for an additional ten years until October 2034 through an amendment and restatement of the ESPP ratified at the Company's 2024 annual meeting of stockholders.

Shares are purchased semi-annually, at a discount, based on the market value at period-end.

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Compensation expense

For the years ended December 31, 2023, 2022 and 2021, the Company recorded compensation expense of $ 31.5 million, $ 16.3 million and $ 17.2 million, respectively, related to restricted stock, stock options and the ESPP.

Forfeiture rates are estimated at the time of grant based on historical actuals for similar grants and are matched to actuals over the vesting period.

The unrecognized compensation cost was $ 39.7 million as of December 31, 2023 for unvested restricted stock expected to be recognized over a weighted-average period of 2.69 years.

As of December 31, 2023, there was $ 0.1 million unrecognized compensation cost related to stock options.

For the years ended December 31, 2024, 2023 and 2022, the Company recorded compensation expense of $ 24.0 million, $ 31.5 million and $ 16.3 million, respectively, related to stock compensation.

Forfeiture rates are estimated at the time of grant based on historical actuals for similar grants and are reconciled to actuals over the vesting period.

As of December 31, 2024, no stock options remain outstanding as options previously held by certain of the Company's executive officers have been forfeited or cancelled.

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.

Most of the Company's unvested restricted stock awards, subject generally to the individual's continued employment or service, vest over a three year period or longer for certain of the Company's executive officers.

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

A summary of the status of non-vested restricted stock grants during the y ears ended December 31, 2024, 2023 and 2022 is presented below:

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The total grant date fair value of restricted stock that vested during the years ended December 31, 2024, 2023 and 2022 was $ 29.6 million, $ 28.3 million and $ 13.4 million, respectively.

Unrecognized compensation cost was $ 19.9 million as of December 31, 2024 for unvested restricted stock expected to be recognized over a weighted-average period of 2.09 years.

Phantom stock awards

During 2024, the Company granted phantom stock awards ("PSAs") to certain employees.

The value of one PSA share is equal to the value of one share of the Company's common stock, and each grant is subject to a three-year graded vesting schedule.

The awards are settled in cash at vesting, with compensation costs recognized over the vesting period and adjusted to market value at each period end.

As of December 31, 2024, share-based compensation liability related to PSAs was $ 1.9 million, which is included in accrued liabilities in the Company's consolidated balance sheet.

A summary of the status of non-vested PSA grants during the y ear ended December 31, 2024, is presented below.

No PSAs have been granted prior to 2024.

Phantom Stock Awards Weighted Average Fair Value Per Share (1)

Non-vested at December 31, 2023

Granted 125,121 $ 46.15

Forfeited ( 812 ) 46.15

Non-vested at December 31, 2024

124,309 $ 94.12

(1) Reflects grant date fair value, except for awards outstanding at December 31, 2024, which reflects fair value at that date.

Unrecognized compensation cost was $ 8.9 million as of December 31, 2024 for unvested phantom stock awards expected to be recognized over a weighted-average period of 1.35 years.

Note 13 — Commitments and Contingencies

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Refer to Note 7 for more information on the Company's lease agreements.

As of December 31, 2024, the Company had outstanding purchase commitments for 46 aircraft which are expected to deliver from 2025 through 2027.

The Company's contractual purchase commitments consist primarily of aircraft and engine acquisitions.

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Total purchase commitments $ 1,578,109

Aircraft Commitments

As of December 31, 2023, the Company had entered into purchase agreements for 51 aircraft which are expected to deliver from 2024 through 2026.

Contingencies

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Flight Dispatchers 0.7

As of December 31, 2023, the Company employed approximately 6,700 full-time equivalent employees, 41.3 percent of whom are covered by collective bargaining agreements with various labor unions that are currently amendable and are i n negotiation.

As of December 31, 2024, the Company employed approximately 6,700 full-time equivalent employees, 20.5 percent of whom (the pilots) are covered by collective bargaining agreements that are currently amendable and are i n negotiation.

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 14 — Segments

Note 14 — Operating Segments

Operating segments are components of a company for which separate financial and operating information is regularly evaluated and reported to the Chief Operating Decision Maker ("CODM"), and is used to allocate resources and analyze performance.

The Company's CODM is the executive leadership team, which reviews information about the Company's two operating segments:

The Company's CODM is the President and CEO, who assesses segment performance and makes resource allocation decisions using information about each operating segment's operating income and pretax income.

The CODM reviews separate financial information and makes resource allocation decisions for the Company's two operating segments:

Airline and Sunseeker Resort.

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The Airline segment operates as a single business unit and includes all scheduled service air transportation, ancillary air-related products and services, third party products and services, fixed fee contract air transportation and other airline-related revenue.

The CODM evaluation includes, but is not limited to, route and flight profitability data, ancillary and third party product and service offering statistics, and fixed fee contract information when making resource allocation decisions with the goal of optimizing consolidated financial results.

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.

Sunseeker Resort Segment

The Sunseeker Resort segment operates as a single business unit and includes hotel rooms and suites for occupancy, group meeting facilities, food and beverage options, the Aileron Golf Course and other Resort amenities.

The Resort opened on December 15, 2023.

The CODM evaluation includes, but is not limited to, demand for hospitality offerings, occupancy rates, room pricing, food and beverage offerings, other charge points at the Resort and competitive information when making resource allocations with the goal of optimizing consolidated financial results.

For the year ended December 31, 2023, the Company recorded $ 26.5 million of preopening expenses related to the opening of the Resort, which is included in salaries and benefits expense, sales and marketing expense, and other expense in the consolidated statements of income.

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

(in thousands) Airline Sunseeker Resort Consolidated

Year Ended December 31, 2023

Operating revenue:

Passenger $ 2,324,397 $ — $ 2,324,397

Third party products 112,579 — 112,579

Fixed fee contract 68,548 — 68,548

Other 1,444 2,889 4,333

Segment profit or loss, revenues, significant segment expenses, and other required financial information for each of the Company's operating segments are set forth below:

Twelve Months Ended December 31, 2024

(in thousands) Airline Sunseeker Consolidated

REVENUES FROM EXTERNAL CUSTOMERS $ 2,440,839 $ 71,750 $ 2,512,589

OPERATING EXPENSES:

Salaries and benefits 770,667 49,176 819,843

Aircraft fuel 627,755 — 627,755

Station operations 272,843 — 272,843

Depreciation and amortization 231,789 26,462 258,251

Maintenance and repairs 125,430 — 125,430

Sales and marketing 99,269 7,071 106,340

Aircraft lease rentals 23,573 — 23,573

Other operating expense (1)

102,007 48,392 150,399

Special charges, net of recoveries 45,307 322,824 368,131

Total operating expenses 2,298,640 453,925 2,752,565

OPERATING INCOME (LOSS) 142,199 ( 382,175 ) ( 239,976 )

OTHER (INCOME) EXPENSES:

Interest income ( 44,012 ) — ( 44,012 )

Interest expense 135,584 20,859 156,443

130,512 21,868 152,380

Capitalized interest ( 45,059 ) ( 326 ) ( 45,385 )

Depreciation and amortization 220,915 2,215 223,130

Other non-operating expense (2)

1,428 — 1,428

INCOME (LOSS) BEFORE INCOME TAXES $ 94,258 $ ( 402,708 ) $ ( 308,450 )

Capital expenditures 244,802 19,499 264,301

Year Ended December 31, 2022

Operating revenue:

Passenger $ 2,137,762 $ — $ 2,137,762

Third party products 100,959 — 100,959

Fixed fee contract 60,937 — 60,937

Other 2,169 2 2,171

Total assets 4,116,289 313,564 4,429,853

Twelve Months Ended December 31, 2023

(in thousands) Airline Sunseeker Consolidated

REVENUES FROM EXTERNAL CUSTOMERS $ 2,506,976 $ 2,881 $ 2,509,857

OPERATING EXPENSES:

Salaries and benefits 672,459 15,344 687,803

Aircraft fuel 695,871 — 695,871

Station operations 256,560 — 256,560

Depreciation and amortization 220,915 2,215 223,130

Maintenance and repairs 123,802 — 123,802

Sales and marketing 108,453 6,163 114,616

Aircraft lease rentals 24,948 — 24,948

Other operating expense (1)

117,400 16,101 133,501

Special charges, net of recoveries 35,091 ( 6,446 ) 28,645

Total operating expenses 2,255,499 33,377 2,288,876

OPERATING INCOME (LOSS) 251,477 ( 30,496 ) 220,981

OTHER (INCOME) EXPENSES:

Interest income ( 46,615 ) — ( 46,615 )

Interest expense 131,318 21,868 153,186

92,785 16,046 108,831

Capitalized interest ( 21,838 ) ( 23,294 ) ( 45,132 )

Depreciation and amortization 197,433 109 197,542

Other non-operating expense (2)

INCOME (LOSS) BEFORE INCOME TAXES $ 188,121 $ ( 29,070 ) $ 159,051

Capital expenditures 568,309 321,044 889,353

Year Ended December 31, 2021

Operating revenue:

Passenger $ 1,578,436 $ — $ 1,578,436

Third party products 86,487 — 86,487

Fixed fee contract 41,184 — 41,184

Other 1,803 — 1,803

Total assets 4,200,545 656,122 4,856,667

Twelve Months Ended December 31, 2022

(in thousands) Airline Sunseeker Consolidated

REVENUES FROM EXTERNAL CUSTOMERS $ 2,301,829 $ — $ 2,301,829

OPERATING EXPENSES:

Salaries and benefits 547,295 5,118 552,413

Aircraft fuel 814,803 — 814,803

Station operations 255,168 — 255,168

Depreciation and amortization 197,433 109 197,542

Maintenance and repairs 117,814 — 117,814

Sales and marketing 99,558 1,120 100,678

Aircraft lease rentals 23,621 — 23,621

Other operating expense (1)

108,600 4,932 113,532

Special charges, net of recoveries 567 34,045 34,612

Total operating expenses 2,164,859 45,324 2,210,183

OPERATING INCOME (LOSS) 136,970 ( 45,324 ) 91,646

OTHER (INCOME) EXPENSES:

Interest income ( 16,469 ) — ( 16,469 )

Interest expense 99,665 16,046 115,711

66,585 1,818 68,403

Depreciation and amortization 180,923 112 181,035

Capitalized interest ( 4,308 ) ( 8,332 ) ( 12,640 )

Other non-operating expense (2)

INCOME (LOSS) BEFORE INCOME TAXES $ 57,991 $ ( 53,038 ) $ 4,953

Capital expenditures 475,254 288,408 763,662

(1) Excludes losses on debt extinguishment.

Total assets were as follows as of the dates indicated:

(in thousands) As of December 31, 2023 As of December 31, 2022

Airline $ 4,213,288 $ 4,047,134

Sunseeker Resort 656,122 464,163

Consolidated $ 4,869,410 $ 4,511,297

Total assets 4,047,134 464,163 4,511,297

(1) Other operating expenses in the Airline segment consist of insurance, crew training and travel, legal expense, gains and losses on the sale of flight equipment, and other general and administrative expenses.

Other operating expenses in the Sunseeker segment consist of food and beverage cost of goods sold, contract labor, property tax, insurance, and other general and administrative expense.

(2) Other non-operating expenses in the Airline segment consist primarily of a loss on the sale in 2024 of a cost-method investment that arose from the contribution of intellectual property rights to a private company and realized income from equity method investments.

Note 15 — Impairment

During the year ended December 31, 2024, Sunseeker Resort, along with the associated Aileron Golf Course and related assets, which consist primarily of land, buildings, and other furniture, fixtures, and equipment, incurred both an operating loss and a cash flow deficit, prompting multiple downward revisions to forecasts projecting continuing losses.

Consequently, the Company engaged an advisor to conduct a strategic review of the Resort with the aim of enhancing financial performance and ultimately facilitating a sale.

In fourth quarter 2024, the Company began to solicit proposals for the sale of the Resort or a majority interest in it.

As a result, it is more likely than not that the Resort or a majority interest in it will be sold before the end of its previously estimated useful life.

These circumstances constituted a triggering event, necessitating an impairment test for the long-lived assets.

In accordance with ASC 360, "Property, Plant, and Equipment," the Company performed an undiscounted cash flow test and concluded that the carrying value of the long-lived assets was not recoverable.

The estimated fair value of the assets was determined using a discounted cash flow model.

The determination of fair value involved significant assumptions and estimates, including the discount rate, projected hotel revenue growth rates, and the terminal capitalization rate.

Consequently, an impairment loss of $ 321.8 million was recorded at the end of fourth quarter 2024 to reflect the difference between the carrying values of these assets and their fair values.

The impairment loss is included in special charges in the consolidated statement of income for the year ended December 31, 2024.

Note 16 — Subsequent Events

In January 2025, the Company drew down $ 50.0 million from one of its existing revolving credit facilities.

Amounts borrowed under this facility bear interest at a floating rate based on the Secured Overnight Financing Rate ("SOFR").

The facility matures in March 2026.

In January and February 2025, the Company drew down $ 131.0 million on existing aircraft financing commitments.

The facilities bear interest at a floating rate based on the SOFR and are payable in monthly installments through January and February 2037.

In February 2025, the Company repaid $ 61.0 million on an existing unsecured credit facility.

In February 2025, the Company repaid the full remaining balance of $ 100.0 million on the Sunseeker construction loan.

The original loan, secured by the Resort and bearing interest at 5.75 percent per annum, was scheduled to mature in October 2028, with semi-annual principal payments of $ 26.0 million beginning in 2025.

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