Allegiant Travel CO 10-K

Item 8. Financial Statements and Supplementary Data 55 Index to Consolidated Financial Statements Title Page No. Report of Independent Registered Public Accounting Firm (PCAOB ID 165) 57 Consolidated Balance Sheets as of December 31, 2025 and 2024 59 Consolidated Statements of Income (Loss) for the years ended December 31, 2025, 2024, and 2023 60 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2025, 2024, and 2023 61 Consolidated Statements of Shareholders' Equity for the years ended December 31, 2025, 2024, and 2023 62 Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024, and 2023 63 Notes to Consolidated Financial Statements for the years ended December 31, 2025, 2024, and 2023 64 Note 1 - Organization and Business of Company 64 Note 2 - Summary of Significant Accounting Policies 65 Note 3 - Special Charges 72 Note 4 - Revenue Recognition 72 Note 5 - Property and Equipment 74 Note 6 - Long-Term Debt 75 Note 7 - Leases 78 Note 8 - Shareholders' Equity 80 Note 9 - Fair Value Measurements 81 Note 10 - Income Taxes 83 Note 11 - Related Party Transactions 85 Note 12 - Employee Benefit Plans 85 Note 13 - Commitments and Contingencies 86 Note 14 - Operating Segments 87 Note 15 - Impairment and Sale of Sunseeker Resort 90 Note 16 - Proposed Acquisition of Sun Country Airlines Holdings, Inc. 91 56 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Allegiant Travel Company: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Allegiant Travel Company and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income (loss), comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. 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, 2025, 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 26, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. 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. Fair Value of Debt As discussed in Note 9 to the consolidated financial statements, the Company’s debt had a carrying value and fair value of $1,413 million and $1,424 million, respectively, as of December 31, 2025. The Company estimates the fair value of debt using a discounted cash flow method, which involves significant judgment in determining the discount rate. Management engaged a third-party specialist to assist in developing the discount rate. We identified the evaluation of the fair value of debt as a critical audit matter. Complex auditor judgment was required to evaluate the discount rate used in determining the fair value of debt because of the need to involve professionals with specialized skills and knowledge. Changes in the discount rate could have had a significant impact on the fair value of debt. 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 estimation of fair value of debt, including controls over the determination of the discount rate. We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s discount rate by comparing it to an independently developed discount rate range. 57 /s/ KPMG LLP We have served as the Company’s auditor since 2016. Dallas, Texas February 26, 2026 58 ALLEGIANT TRAVEL COMPANY CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) December 31, 2025 December 31, 2024 CURRENT ASSETS Cash and cash equivalents $ 172,696 $ 285,892 Restricted cash 18,064 16,427 Short-term investments 632,959 495,234 Accounts receivable 57,110 90,407 Expendable parts, supplies and fuel, net of reserve of $ 14,691 an d $ 12,597 34,431 36,070 Prepaid expenses and other current assets 52,393 67,575 TOTAL CURRENT ASSETS 967,653 991,605 Property and equipment (including $ 101,712 and $ 107,290 from VIEs, Note 6 ), net of accumulated depreciation of $ 1,178,315 and $ 1,067,194 2,947,536 3,069,949 Long-term investments 32,823 51,725 Deferred major maintenance, net of accumulated amortization of $ 170,226 and $ 165,333 148,506 173,892 Operating lease right-of-use assets, net 63,389 81,218 Deposits and other assets 49,494 61,464 TOTAL ASSETS: $ 4,209,401 $ 4,429,853 CURRENT LIABILITIES Accounts payable 64,506 62,092 Accrued liabilities 186,019 181,275 Accrued pilot retention bonus 235,887 146,129 Current operating lease liabilities 10,936 20,714 Air traffic liability 363,328 370,915 Current loyalty program liability 39,711 41,510 Current maturities of long-term debt and finance lease obligations (including $ 13,307 and $ 12,787 from VIEs, Note 6 ), net of related costs of $ 4,245 and $ 8,287 118,075 454,769 TOTAL CURRENT LIABILITIES 1,018,462 1,277,404 LONG-TERM DEBT AND OTHER NONCURRENT LIABILITIES Long-term debt and finance lease obligations (including $ 81,642 and $ 94,950 from VIEs, Note 6 ), net of current maturities and related costs of $ 12,404 and $ 8,842 1,681,541 1,611,735 Deferred income taxes 305,416 315,593 Noncurrent operating lease liabilities 54,170 62,392 Noncurrent loyalty program liability 37,921 39,201 Other noncurrent liabilities 59,214 34,136 TOTAL LIABILITIES: $ 3,156,724 $ 3,340,461 COMMITMENTS AND CONTINGENCIES ( NOTE 13 ) SHAREHOLDERS' EQUITY Common stock, par value $ 0.001 , 100,000,000 shares authorized; 25,559,128 and 25,580,445 shares issued; 18,377,737 and 18,407,799 shares outstanding at December 31 2025 and 2024, respectively 26 26 Treasury shares, at cost, 7,181,391 and 7,172,646 shares at December 31, 2025 and 2024, respectively ( 682,511 ) ( 678,431 ) Additional paid-in capital 771,967 760,600 Accumulated other comprehensive income, net 4,644 3,949 Retained earnings 958,551 1,003,248 TOTAL EQUITY: $ 1,052,677 $ 1,089,392 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY: $ 4,209,401 $ 4,429,853 The accompanying notes are an integral part of these consolidated financial statements. 59 ALLEGIANT TRAVEL COMPANY CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands, except per share amounts) Year Ended December 31, 2025 2024 2023 OPERATING REVENUES: Passenger $ 2,324,348 $ 2,217,059 $ 2,324,397 Third party products 143,188 142,128 112,579 Fixed fee contracts 77,647 80,660 68,548 Resort and other 61,396 72,742 4,333 Total operating revenues 2,606,579 2,512,589 2,509,857 OPERATING EXPENSES: Salaries and benefits 833,017 819,843 687,803 Aircraft fuel 639,731 627,755 695,871 Station operations 297,549 272,843 256,560 Depreciation and amortization 249,185 258,251 223,130 Maintenance and repairs 149,938 125,430 123,802 Sales and marketing 99,443 106,340 114,616 Aircraft lease rentals 36,488 23,573 24,948 Other 126,356 150,399 133,501 Special charges, net of recoveries 137,705 368,131 28,645 Total operating expenses 2,569,412 2,752,565 2,288,876 OPERATING INCOME (LOSS) 37,167 ( 239,976 ) 220,981 OTHER (INCOME) EXPENSES: Interest income ( 41,697 ) ( 44,012 ) ( 46,615 ) Interest expense 150,235 156,443 153,186 Capitalized interest ( 17,604 ) ( 45,385 ) ( 45,132 ) Other, net 1,107 1,428 491 Total other expenses 92,041 68,474 61,930 INCOME (LOSS) BEFORE INCOME TAXES ( 54,874 ) ( 308,450 ) 159,051 INCOME TAX PROVISION (BENEFIT) ( 10,177 ) ( 68,212 ) 41,455 NET INCOME (LOSS) $ ( 44,697 ) $ ( 240,238 ) $ 117,596 Earnings (loss) per share to common shareholders: Basic $ ( 2.48 ) $ ( 13.49 ) $ 6.32 Diluted $ ( 2.48 ) $ ( 13.49 ) $ 6.29 Shares used for computation: Basic 18,050 17,852 17,945 Diluted 18,050 17,852 18,019 Cash dividends declared per share: $ — $ 1.20 $ 1.20 The accompanying notes are an integral part of these consolidated financial statements. 60 ALLEGIANT TRAVEL COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Year Ended December 31, 2025 2024 2023 NET INCOME (LOSS) $ ( 44,697 ) $ ( 240,238 ) $ 117,596 Other comprehensive income: Change in available-for-sale securities, net of tax 695 ( 42 ) 2,734 TOTAL COMPREHENSIVE INCOME (LOSS) $ ( 44,002 ) $ ( 240,280 ) $ 120,330 The accompanying notes are an integral part of these consolidated financial statements. 61 ALLEGIANT TRAVEL COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in thousands, except per share amounts) Accumulated Common Additional other Total stock Par paid-in comprehensive Retained Treasury shareholders' outstanding value capital income earnings shares equity Balance at December 31, 2022 18,128 $ 25 $ 709,471 $ 1,257 $ 1,169,968 $ ( 660,023 ) $ 1,220,698 Share-based compensation 415 1 31,584 — — — 31,585 Shares repurchased by the Company and held as treasury shares ( 374 ) — — — — ( 30,076 ) ( 30,076 ) Stock issued under employee stock purchase plan 100 — — — — 8,167 8,167 Cash dividends, $ 1.20 per share — — — — ( 22,144 ) — ( 22,144 ) Other comprehensive income — — — 2,734 — — 2,734 Net income — — — — 117,596 — 117,596 Balance at December 31, 2023 18,269 $ 26 $ 741,055 $ 3,991 $ 1,265,420 $ ( 681,932 ) $ 1,328,560 Share-based compensation 79 — 19,545 — — — 19,545 Shares repurchased by the Company and held as treasury shares ( 95 ) — — — — ( 5,642 ) ( 5,642 ) Stock issued under employee stock purchase plan 155 — — — — 9,143 9,143 Cash dividends, $ 1.20 per share — — — — ( 21,934 ) — ( 21,934 ) 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 Share-based compensation ( 21 ) — 11,367 — — — 11,367 Shares repurchased by the Company and held as treasury shares ( 189 ) — — — — ( 13,588 ) ( 13,588 ) Stock issued under employee stock purchase plan 180 — — — — 9,508 9,508 Other comprehensive income — — — 695 — — 695 Net loss — — — — ( 44,697 ) — ( 44,697 ) Balance at December 31, 2025 18,378 $ 26 $ 771,967 $ 4,644 $ 958,551 $ ( 682,511 ) $ 1,052,677 The accompanying notes are an integral part of these consolidated financial statements. 62 ALLEGIANT TRAVEL COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year ended December 31, 2025 2024 2023 OPERATING ACTIVITIES: Net income (loss) $ ( 44,697 ) $ ( 240,238 ) $ 117,596 Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 249,185 258,251 223,130 (Gain) loss on aircraft and other equipment disposals ( 37,664 ) ( 34,936 ) 920 Special charges 127,636 348,985 27,189 Share-based compensation expense 10,867 22,568 29,749 Deferred income taxes ( 10,177 ) ( 69,009 ) 38,214 Other adjustments ( 639 ) ( 6,290 ) ( 11,284 ) Changes in certain assets and liabilities: Accounts receivable 12,204 4,362 29,390 Tax receivable 13,053 ( 5,616 ) 3,932 Accrued pilot retention bonus 89,758 91,498 54,631 Loyalty program liability ( 3,079 ) 9,899 14,313 Air traffic liability ( 7,587 ) 17,427 ( 25,971 ) Deferred major maintenance ( 44,686 ) ( 73,331 ) ( 67,862 ) Other assets/liabilities 35,594 14,886 ( 10,855 ) Net cash provided by operating activities 389,768 338,456 423,092 INVESTING ACTIVITIES: Purchase of investment securities ( 949,220 ) ( 567,299 ) ( 890,880 ) Proceeds from maturities of investment securities 844,050 763,841 976,804 Proceeds from sale of Sunseeker Resort 189,936 — — Proceeds from sale of property and equipment 76,804 86,156 26,526 Aircraft pre-delivery deposits ( 72,941 ) ( 35,053 ) ( 342,167 ) Purchase of property and equipment, including capitalized interest ( 314,664 ) ( 300,154 ) ( 528,320 ) Proceeds from loan receivable — 50,000 — Insurance proceeds from damage to property & equipment 4,890 6,646 35,730 Other investing activities 718 1,441 430 Net cash provided by (used in) investing activities ( 220,427 ) 5,578 ( 721,877 ) FINANCING ACTIVITIES: Cash dividends paid to shareholders — ( 21,934 ) ( 22,144 ) Proceeds from the issuance of debt and finance lease obligations 638,926 386,975 642,581 Repurchase of common stock ( 13,588 ) ( 6,030 ) ( 30,078 ) Principal payments on debt and finance lease obligations ( 906,294 ) ( 585,511 ) ( 480,818 ) Debt issuance costs ( 11,450 ) ( 2,260 ) ( 7,116 ) Proceeds from Sunseeker construction financing account 2,000 18,320 102,330 Other financing activities 9,506 9,141 8,168 Net cash provided by (used in) financing activities ( 280,900 ) ( 201,299 ) 212,923 NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 111,559 ) 142,735 ( 85,862 ) CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD 302,319 159,584 245,446 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 190,760 $ 302,319 $ 159,584 CASH PAYMENTS/(RECEIPTS) FOR: Interest paid, net of amount capitalized $ 121,663 $ 107,381 $ 111,912 SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS Right-of-use (ROU) assets acquired $ 2,879 $ 1,379 $ 8,320 Purchases of property and equipment in accrued liabilities and other $ 42,403 $ ( 671 ) $ 71,672 The accompanying notes are an integral part of these consolidated financial statements. 63 ALLEGIANT TRAVEL COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2025, 2024 and 2023 Note 1 — Organization and Business of Company Allegiant Travel Company (the “Company”) is a leisure travel company focused on providing travel services and products to residents of underserved cities in the United States. 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 and generates other ancillary revenues. Until September 4, 2025, the Company also owned and operated Sunseeker Resort and Aileron, the related golf course. 64 Note 2 — Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of Allegiant Travel Company and its majority-owned operating subsidiaries. The Company's investments in unconsolidated affiliates, which are 50 percent or less owned, are accounted for under the equity or cost method. All intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. 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 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. Restricted Cash Restricted cash represents escrowed funds under fixed fee contracts and cash collateral held against letters of credit required by hotel properties for guaranteed room availability, airports and certain other parties. Accounts Receivable Accounts receivable are recorded at the invoiced amount, which approximates fair value. In addition to income taxes 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 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. Short-term and Long-term Investments The Company’s investments in marketable securities are classified as available-for-sale and are reported at fair value with the net unrealized gain or (loss) reported as a component of accumulated other comprehensive income (loss) in shareholders’ equity. 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. Investment securities with original maturities of three months or less are classified as cash equivalents. Investment securities with original maturities greater than three months are classified as either short-term investments or long-term investments based on the maturity date in relation to the balance sheet date. Short-term investments have a maturity date less than or equal to one year from the balance sheet date, and long-term investments have a maturity date greater than one year from the balance sheet date. The amortized cost of investment securities sold is determined by the specific identification method with any realized gains or losses reflected in interest income. The Company had no material realized losses during the years ended December 31, 2025, 2024, and 2023. 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. The Company attempts to minimize its concentration risk with regard to its cash, cash equivalents, and investment portfolio. This is accomplished by diversifying and limiting amounts among different counterparties, the type of investment, and the amount invested in any individual security, commercial paper, or money market fund. Expendable Parts, Supplies and Fuel, Net Expendable parts, supplies and fuel inventories are valued at cost using the first-in, first-out method. 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 fleet. The obsolescence allowance for expendable parts and supplies was $ 14.7 million and $ 12.6 million at December 31, 2025 and 2024, respectively. Deposits and Other Assets 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. The Company also had outstanding receivables from 65 third parties as of December 31, 2025 and 2024, of which $ 10.5 million and $ 15.1 million respectively, were due more than one year after the balance sheet date. Operating Lease Right-of-Use Asset and Liability The Company determines if an arrangement is a lease at inception and has lease agreements for aircraft, training facilities, ground equipment, certain airport and terminal facilities, and other space and assets with non-cancelable lease terms. Certain real estate and property leases, aircraft leases, and various other operating leases are measured on the balance sheet with a lease liability and right-of-use ("ROU") asset. Airport terminal leases mostly include variable lease payments outside of those based on a fixed index, and are therefore excluded from consideration. ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make scheduled lease payments. ROU assets and lease liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term. At lease commencement, the present value of lease payments is calculated using the rate implicit in the lease, if known, or an estimated incremental borrowing rate which takes into consideration recent debt issuances as well as other applicable market data available. Lease payments include fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, and others as required by Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842). 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. Leases with a term of 12 months or less are not recorded on the balance sheet. Additionally, lease and non-lease components are accounted for as a single lease component for real estate agreements. Leased Aircraft Return Costs The Company's aircraft lease agreements generally require the Company to return airframes and engines to the lessor in a specified condition as required by the lease agreement or to pay an amount to the lessor based on the airframe and engines' actual condition on redelivery. Lease return conditions are evaluated at inception of a lease and throughout the lease term. Return conditions that are based on usage of the aircraft during the lease are considered a variable rent expense. Due to the inherent uncertainty in estimating (i) the condition of the airframe and engines at redelivery, and (ii) whether the Company intends to satisfy those conditions by performing repairs, making a required payment to the lessor, or, for aircraft engines, replacing the leased engine with an owned engine that meets the required conditions, lease return costs generally become probable and estimable near the end of the lease term and after the last major maintenance event occurring during the lease. Once the return costs have become probable and estimable, the Company recognizes the estimated expense over the remaining lease term as a component of aircraft lease rentals in the Company's consolidated statements of income (loss). Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives less any estimated salvage value. Property under finance leases and related obligations are initially recorded at an amount equal to the present value of future minimum lease payments computed using the rate implicit in the lease, if known, or on the basis of the Company’s estimated incremental borrowing rate, and depreciation is recorded on a straight-line basis and is included within depreciation and amortization expense. The estimated useful lives of the principal asset classes are shown below. Aircraft, engines and related rotable parts 10 - 25 Years Buildings and leasehold improvements 10 - 39 Years Equipment 5 - 10 Years Computer hardware and software 3 - 15 Years In estimating the useful lives and residual values of aircraft, the Company primarily relies upon actual experience with the same or similar aircraft types, current and projected future market information, and input from other industry sources. Subsequent revisions to these estimates could be caused by changing market prices of the Company’s aircraft, changes in utilization of the aircraft, and other fleet events. Changes in the estimate for useful lives or residual values of the Company’s property and equipment could result in changes in depreciation expense. The Company is required to make pre-delivery payments ("PDPs") towards the purchase price of new aircraft and engines prior to delivery. These deposits are included in flight equipment on the Company's consolidated balance sheets. 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. 66 Software Capitalization The Company capitalizes certain internal and external costs related to the acquisition and development of computer software during the application development stage of projects. The Company amortizes these capitalized costs using the straight-line method over the estimated useful life of the software, which typically ranges from three to fifteen years . The Company had unamortized computer software development costs of $ 139.7 million and $ 149.7 million as of December 31, 2025 and 2024, respectively. Amortization expense related to computer software was $ 19.2 million, $ 18.8 million and $ 12.4 million for the years ended December 31, 2025, 2024 and 2023 respectively. Costs incurred during the preliminary and post-implementation stages are expensed as incurred. Aircraft Maintenance and Repair Costs The Company accounts for all non-major maintenance and repair costs incurred for its fleet under the direct expense method. Under this method, maintenance and repair costs for aircraft are charged to maintenance and repair expenses as incurred. 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 for airframes and 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 2025 and 2024, the Company capitalized $ 45.9 million and $ 76.8 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 $ 64.4 million, $ 65.8 million, and $ 55.5 million for the years ended December 31, 2025, 2024, and 2023, respectively. Measurement of Impairment of Long-Lived Assets The Company records impairment losses on long-lived assets used in operations, consisting principally of property and equipment, 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. In making these determinations, the Company utilizes certain assumptions, including, but not limited to: (i) estimated fair value of the assets; 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. During the year ended December 31, 2024, the Company recorded an impairment loss of $ 321.8 million related to Sunseeker Resort. The impairment charges are more fully discussed in Note 15 . Assets Held for Sale The Company classifies assets as held for sale when the asset or asset group meets all of the accounting requirements to be classified as held for sale. Assets held for sale and any related liabilities are presented as single asset and liability amounts on the balance sheet with a valuation allowance, if necessary, to reduce the carrying amount of the net assets to the lower of carrying amount or estimated fair value less cost to sell. Estimates are required to determine the fair value and the related disposal costs. The estimated fair value is generally based on solicited offers or a discounted cash flow model. In subsequent periods, the valuation allowance may be adjusted based on changes in management’s estimate of fair value less cost to sell. Depreciation and amortization of long-lived assets are not recorded during the period in which such assets are classified as held for sale. In second quarter 2025, the Company determined that Sunseeker Resort met all of the held for sale accounting criteria and recorded a write-down loss of $ 100.4 million to reduce the Resort's carrying value to its estimated fair value. The sale of Sunseeker Resort 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. As of December 31, 2025, and 2024 respectively, the Company had $ 40.2 million and $ 16.8 million of deferred credit liabilities, recorded in other noncurrent liabilities in the Company's balance sheet, and $ 7.1 million and $ 17.0 million of credits receivable, recorded in deposits and other assets in the Company's balance sheet. 67 Accrued Pilot Retention Bonus In May 2023, to address pilot pay issues while a new collective bargaining agreement is negotiated, the Company began to accrue a retention bonus for pilots who continue employment with the Company until a new labor agreement is approved. The amount being accrued is 35 percent of current pay for a minimum 85 pay credit hours per month, except for first year first officers, for whom the percentage is 82 percent. At December 31, 2025 and 2024, the accrued pilot retention bonus, inclusive of payroll tax, was $ 235.9 million and $ 146.1 million, respectively. Revenue Recognition Passenger revenue Passenger revenue includes scheduled service revenue, ancillary air-related charges, and travel point redemptions from the co-brand Allegiant credit card and the Company's non-card loyalty program. Revenue from travel point redemptions from the co-brand credit card and the loyalty program are described in the Allways Rewards ® Credit Card Program and Allways Rewards ® Loyalty Program sections below. 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 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 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. These taxes and fees are not included as revenue in the Company’s consolidated statements of income and are recorded within accrued liabilities until remitted to the appropriate taxing authority. Third party products revenue Ancillary third party products revenue is generated from the sale of hotel rooms, rental cars, travel insurance and ticketed 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. Revenue from the sale of third party products is recorded net of amounts paid to wholesale providers, travel agent commissions, and transaction costs. Revenue from the marketing component associated with the co-brand credit card and the loyalty program are described in the Allways Rewards ® Credit Card Program and Allways Rewards ® Loyalty Program sections below. Fixed fee contract revenue Fixed fee contract revenue consists of fees under agreements to provide charter service on a year-round and ad hoc basis. Fixed fee contract revenue is recognized when the transportation is provided. Sunseeker Resort Until the sale of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") on September 4, 2025, the Company recorded revenue primarily consisting of sales of rooms, food and beverage, golf, retail and other goods and services. As compensation for such goods and services, the Company was typically entitled to a fixed nightly fee for an agreed upon period and additional fixed fees for any ancillary services purchased. Room charges were generally payable at the time the hotel guest checked out of the hotel. The Company generally satisfied the performance obligation related to room sales over time, and the Company recognized the revenue on a daily basis, as the rooms were occupied and the Company had rendered the services. Charges for food and beverage, golf, retail and other goods and services were settled at a point in time, as the sales were made. Sunseeker Resort revenues are included in resort and other revenue in the consolidated statements of income. Allways Rewards® Credit Card Program Under the Allegiant co-brand credit card arrangement, points are sold and consideration is received under an agreement with the issuer bank that expires in 2031. Under this arrangement, the Company identified the following deliverables: travel points to be 68 awarded (the travel component), use of the Company’s brand and access to its member lists, and certain other advertising and marketing elements (collectively the marketing component). Each of these deliverables is accounted for separately and allocation of the consideration from the agreement is determined based on the relative selling price of each deliverable. The Company applied a level of management judgment and estimation in determining the best estimate of selling price for each deliverable by considering multiple inputs and methods including, but not limited to, the redemption value of points awarded, discounted cash flows, brand value, volume discounts, published selling prices, number of points to be awarded and number of points expected to be redeemed. Revenue from the travel component is deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed by cardholders and the underlying service is provided. Revenue from the marketing component is considered earned in the period in which points are sold and is therefore recognized into third party products revenue in the same period. The loyalty program deferred revenue classified as a current liability represents our estimate of revenue expected to be recognized in the next twelve months based on projected redemptions, while the balance classified as a noncurrent liability represents our estimate of revenue expected to be recognized beyond twelve months. Payments are typically due to us monthly based on the volume of points sold during the period. Allways Rewards® Loyalty Program 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, and rental cars, 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 $1 spent at allegiantair.com, and two points per $1 for spending over $500 (excluding taxes and fees). Points earned through the program are deferred 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 (“breakage”) using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. Advertising Costs Advertising costs, included in sales and marketing expense in the consolidated statements of income, are charged to expense in the period incurred. Advertising expense was $ 29.1 million, $ 32.0 million and $ 41.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. Preopening expenses 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. Earnings per Share Basic and diluted earnings per share are computed using the two-class method. Under the two-class method, the Company attributes net income to two classes, common stock and unvested restricted stock awards. Unvested restricted stock awards granted to employees under the Company’s Long-Term Incentive Plan are considered participating securities because they receive non-forfeitable rights to cash dividends at the same rate as common stock. Diluted net income per share is calculated using the more dilutive of two methods. Under both methods, the exercise of employee stock options is assumed using the treasury stock method. The assumption of vesting of restricted stock, however, differs as described below: 1. Assume vesting of restricted stock using the treasury stock method. 2. Assume unvested restricted stock awards are not vested, and allocate earnings to common shares and unvested restricted stock awards using the two-class method. 69 For the years ended December 31, 2025, 2024 and 2023, the second method above was used in the computation because it was more dilutive than the first method. The following table sets forth the computation of net income per share on a basic and diluted basis for the periods indicated: Year ended December 31, (in thousands, except per share data) 2025 2024 2023 Basic: Net income (loss) $ ( 44,697 ) $ ( 240,238 ) $ 117,596 Less income allocated to participating securities — ( 618 ) ( 4,188 ) Net income (loss) attributable to common stock $ ( 44,697 ) $ ( 240,856 ) $ 113,408 Earnings (loss) per share, basic $ ( 2.48 ) $ ( 13.49 ) $ 6.32 Weighted-average shares outstanding 18,050 17,852 17,945 Diluted: Net income (loss) $ ( 44,697 ) $ ( 240,238 ) $ 117,596 Less income allocated to participating securities — ( 618 ) ( 4,175 ) Net income (loss) attributable to common stock $ ( 44,697 ) $ ( 240,856 ) $ 113,421 Earnings (loss) per share, diluted $ ( 2.48 ) $ ( 13.49 ) $ 6.29 Weighted-average shares outstanding 18,050 17,852 17,945 Dilutive effect of stock options and restricted stock — — 249 Adjusted weighted-average shares outstanding under treasury stock method 18,050 17,852 18,194 Participating securities excluded under two-class method — — ( 175 ) Adjusted weighted-average shares outstanding under two-class method 18,050 17,852 18,019 Stock awards outstanding of 290,873 , 452,560 , and 81,748 shares (not in thousands) as of December 31, 2025, 2024, and 2023, respectively, were excluded from the computation of diluted earnings per share as they were antidilutive. 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. The Company’s share-based employee compensation plan is more fully discussed in Not e 12 . Income Taxes 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 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 recorded if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company determines the net non-current deferred tax assets or liabilities separately for federal, state, foreign and other local jurisdictions. The Company’s income tax returns are subject to examination by the Internal Revenue Service (“IRS”) and other tax authorities in the jurisdictions where the Company operates. The Company assesses potentially unfavorable outcomes of such examinations based on the criteria set forth in uncertain tax position accounting standards. The accounting standards prescribe a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. Accounting standards for income taxes utilize a two-step approach for evaluating tax positions. Recognition (Step I) occurs when the Company concludes that a tax position, based on its technical merits, is more likely than not to be sustained upon examination. Measurement (Step II) is only addressed if the position is deemed to be more likely than not to be sustained. Under Step II, the tax benefit is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. The tax positions failing to qualify for initial recognition are recognized in the first subsequent interim period they meet the “more likely than not” standard. If it is subsequently determined that a previously recognized tax position no longer meets the “more likely than not” standard, it is required that the tax position be derecognized. As applicable, the Company will recognize accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes. 70 Recent Accounting Pronouncements Beginning with annual reporting for the year ended December 31, 2025, the Company adopted Accounting Standards Update ("ASU") 2023-09 "Income Taxes (Topic 740): 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. Upon adoption, the guidance was applied retrospectively to all prior periods presented in the financial statements. See Note 10 - Income Taxes for additional information. 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. In September 2025, the FASB issued ASU 2025-06 "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal Use Software." This new standard clarifies and modernizes the accounting for costs related to internal-use software in Accounting Standards Codification (ASC) 350-40, including removing references to project stages and clarifying the threshold entities may apply to begin capitalizing costs. ASU 2025-06 is effective for all fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of adopting ASU 2025-06. In December 2025, the FASB issued ASU 2025-11 "Interim Reporting (Topic 270)." This new standard clarifies interim reporting guidance, develops a list of disclosures required by other Topics and intends to enhance consistency in interim reporting across entities. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11. 71 Note 3 — Special Charges Airline The Company has identified 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. To date, the Company has retired a total of 15 airframes under this plan. The remaining airframes are to be retired between January 2026 and January 2027. 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, 2025, 2024, and 2023. In second quarter 2025, the Company recorded $ 12.1 million of special charges related to corporate restructuring efforts taken in response to softness in air travel demand due to heightened macroeconomic uncertainty. These efforts included voluntary separation packages offered to corporate and operational personnel and termination of certain marketing agreements. In fourth quarter 2025, the Company committed to a plan to redevelop certain internal-use software to better suit operational needs. The redevelopment is expected to be completed by fourth quarter 2026. As a result, the estimated useful life of the existing internal-use software asset was shortened, and the accelerated amortization resulting from the change in estimated useful life is recorded as a special charge of $ 10.0 million in the year ended December 31, 2025. In conjunction with the software redevelopment, the Company also identified certain software development costs that were yet to be placed in service and will be replaced by the redeveloped software. As a result, the Company recorded an additional one-time special charge of $ 9.3 million to reflect the write-off of those costs. In fourth quarter 2025, the Company recorded $ 4.1 million of special charges for professional services and other costs related to the proposed acquisition of Sun Country Airlines Holdings, Inc. ("Sun Country"), which is more fully discussed in Note 16 . 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. Sunseeker Resort During the year ended December 31, 2025, the Company recorded $ 98.3 million of special charges related to sale of Sunseeker Resort and the associated Aileron Golf Course. This included an asset write-down charge of $ 100.4 million, offset by $ 2.1 million of closing adjustments associated with the sale. The sale of the Resort is more fully discussed in Note 15 . 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. The impairment charge is more fully discussed in Note 15 . Sunseeker Resort was damaged by weather events occurring between 2022 and 2024. The Company considered these events unusual and accounted for their costs and related insurance recoveries as special charges. Estimated losses were recorded as special charges at the time of the event and offset by insurance recoveries when approved for payment. The Company recorded $ 4.2 million net insurance recoveries during 2025. No further insurance recoveries are expected. Special Charges Table The table below summarizes special charges recorded during the years ended December 31, 2025, 2024, and 2023. Twelve Months Ended December 31, (in thousands) 2025 2024 2023 Accelerated depreciation on airframes identified for early retirement $ 8,029 $ 31,066 $ 35,091 Organizational restructuring 12,095 3,420 — Accelerated amortization and disposal of software identified for redevelopment 19,292 — — Costs related to Sun Country Airlines acquisition 4,123 — — Flight attendant ratification bonus — 10,821 — Airline special charges 43,539 45,307 35,091 Sunseeker special charges, net of insurance recoveries 94,166 322,824 ( 6,446 ) Total special charges $ 137,705 $ 368,131 $ 28,645 72 Note 4 — Revenue Recognition Passenger revenue Passenger revenue is the most significant category in the Company's reported operating revenues, as outlined below: Year Ended December 31, (in thousands) 2025 2024 2023 Scheduled service $ 974,901 $ 1,030,795 $ 1,133,001 Ancillary air-related charges 1,270,807 1,129,149 1,137,226 Loyalty redemptions 78,640 57,115 54,170 Total passenger revenue $ 2,324,348 $ 2,217,059 $ 2,324,397 Sales of passenger tickets not yet flown are recorded in air traffic liability. As of December 31, 2025, the air traffic liability balance was $ 363.3 million, of which approximately $ 319.8 million was related to forward bookings, with the remaining $ 43.5 million related to credit vouchers for future travel. The normal contract term of passenger tickets is 12 months and passenger revenue associated with future travel will principally be recognized within this time frame. Of the $ 370.9 million that was recorded in the air traffic liability balance at December 31, 2024, substantially all was recognized into passenger revenue during the 12 months ended December 31, 2025. 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. Loyalty redemptions In relation to the travel component of the Allways Rewards® co-brand credit card contract and the Allways Rewards® loyalty program, the Company has a performance obligation to its members with future travel award redemptions at the airline. The accounting and recognition for the loyalty program redemptions are discussed in Note 2 above. 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, (in thousands) 2025 2024 Balance at January 1 $ 80,711 $ 70,813 Points awarded (deferral of revenue) 75,546 67,050 Points redeemed (recognition of revenue) (1) ( 78,625 ) ( 57,152 ) Balance at December 31 (2) $ 77,632 $ 80,711 (1) Points are combined in one homogeneous pool and are not separately identifiable. Revenue from points redeemed includes both points that were part of the loyalty program liability at the beginning of the period, as well as points that were issued during the period. (2) The current portion of the loyalty program liability represents the estimate of revenue to be recognized in the next 12 months based on historical trends, with the remaining balance reflected in noncurrent liabilities expected to be recognized into revenue in periods thereafter. Third Party Products Revenue Third party products revenue primarily includes revenue associated with our loyalty program, which is comprised of the marketing component of point sales to the co-brand credit card provider and other marketing related payments which totaled $ 82.8 million, $ 86.5 million and $ 65.4 million for the twelve months ended December 31, 2025, 2024 and 2023, respectively. The accounting and recognition for the loyalty program marketing services are discussed in Note 2 above. The remaining amounts included within third party products revenue relate to travel insurance, hotel rooms, rental cars and ticket attractions. 73 Resort Revenue The revenues of Sunseeker Resort prior to its sale on September 4, 2025 ( Note 15 ), are set forth in the table below: Year Ended December 31, (in thousands) 2025 2024 2023 Rooms $ 28,172 $ 31,628 $ 946 Food and beverage 21,280 29,895 1,713 Other 11,228 10,227 222 Total resort revenue $ 60,680 $ 71,750 $ 2,881 Revenue from banquets, golf, retail, and spa services is included in other resort revenue. Resort revenue was recognized as the underlying services or goods were provided, with minimal timing differences between service delivery and payment. There were no advance deposit liabilities or guest ledger receivables at December 31, 2025, due to the sale of the Resort on September 4, 2025. Note 5 — Property and Equipment Property and equipment consisted of the following: As of December 31, (in thousands) 2025 2024 Airline Flight equipment $ 3,584,212 $ 3,345,458 Computer hardware and software 339,441 320,432 Land and buildings/leasehold improvements 83,304 66,115 Other property and equipment 118,894 115,043 Sunseeker Resort (1) Land and buildings/leasehold improvements — 255,201 Other property and equipment — 34,894 Total property and equipment 4,125,851 4,137,143 Less accumulated depreciation and amortization ( 1,178,315 ) ( 1,067,194 ) Property and equipment, net $ 2,947,536 $ 3,069,949 (1) On September 4, 2025, the Company completed the sale of Sunseeker Resort and related Aileron Golf Course. See Note 15 . As of December 31, 2025, the Company had firm commitments to purchase 34 aircraft which are expected to be delivered between 2026 and 2028. 74 Note 6 — Long-Term Debt Long-term debt consisted of the following: As of December 31, (in thousands) 2025 2024 Fixed-rate debt and finance lease obligations due through 2032 $ 1,062,935 $ 1,481,186 Variable-rate debt due through 2037 736,681 585,318 Total long-term debt and finance lease obligations, net of related costs 1,799,616 2,066,504 Less current maturities, net of related costs 118,075 454,769 Long-term debt and finance lease obligations, net of current maturities and related costs $ 1,681,541 $ 1,611,735 Weighted average fixed-interest rate on debt 6.7 % 6.5 % Weighted average variable-interest rate on debt 5.9 % 6.8 % Interest Rate(s) Per Annum at As of December 31, (in thousands) Maturity Dates December 31, 2025 2025 2024 Senior secured notes 2027 7.25 % $ 403,009 $ 550,000 Consolidated variable interest entities 2028 — 2029 2.92 % — 5.19 % 95,111 107,959 Revolving credit facilities 2028 — 2030 N/A — — Debt secured by aircraft, engines, other equipment and real estate 2028 — 2037 1.87 % — 7.93 % 915,084 765,278 Finance leases 2028 — 2032 4.44 % — 7.02 % 403,060 429,896 Construction loan agreement N/A N/A — 100,000 Unsecured debt N/A N/A — 130,500 Total debt and finance lease obligations $ 1,816,264 $ 2,083,633 Related costs ( 16,648 ) ( 17,129 ) Total debt and finance lease obligations, net of related costs $ 1,799,616 $ 2,066,504 Maturities of long-term debt as of December 31, 2025, for the next five years and thereafter, in the aggregate, are: (in thousands) As of December 31, 2025 2026 118,075 2027 527,473 2028 169,924 2029 203,299 2030 177,460 Thereafter 603,385 Total debt and finance lease obligations, net of related costs $ 1,799,616 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, except that the collateral package excludes aircraft, aircraft engines, and certain other assets. The collateral also secures the Company’s $ 150.0 million revolving credit facility (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. The 2027 Notes mature on August 15, 2027. 75 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. During the year ended December 31, 2025, the Company redeemed and repurchased $ 147.0 million of the 2027 Notes through a combination of redemptions and open-market repurchases. As of December 31, 2025, $ 403.0 million of the 2027 Notes remain outstanding. Consolidated Variable Interest Entities The Company evaluates ownership, contractual lease arrangements and other interests in entities to determine if they are variable interest entities ("VIEs") based on the nature and extent of those interests. 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. 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 In August 2022, the Company entered into a credit agreement that provided a senior secured revolving loan facility of $ 75.0 million, with an original term of 57 months. The facility is secured by the same collateral that secures the 2027 Senior Secured Notes (discussed above), and notes under the facility will bear interest at a floating rate based on SOFR. In December 2025, the Company amended the revolving loan facility to increase the total commitment to $ 150.0 million and extend the maturity date to December 5, 2030, subject to acceleration based on the balance and status of the 2027 Notes. As of December 31, 2025, the facility remained undrawn. In March 2021, the Company entered into a revolving credit facility, under which it was entitled to borrow up to $ 50.0 million. In February 2023, the Company extended the term of this agreement to March 2026 and the commitment was increased to $ 100.0 million. In April 2025, the agreement was further amended to extend the maturity date to April 2028. 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, 2025, the facility was undrawn. Debt Secured by Aircraft and Other Assets 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 or that were drawn or repaid during 2025. In September 2023, the Company entered into a credit agreement under which it was entitled to borrow up to $ 412.1 million collateralized by aircraft, which was drawn in full during 2023 and 2024. In December 2025, the Company made a voluntary prepayment of $ 50.8 million reducing the principal amount owed under this credit agreement. In March 2024, the Company entered into credit agreements under which it was entitled to borrow up to $ 218.5 million, collateralized by new aircraft upon delivery. During the year ended December 31, 2025, the Company borrowed the entirety of the $ 218.5 million available under these agreements, resulting in the facilities being fully drawn. The loans bear interest at a variable rate based on three-month SOFR and are payable in quarterly installments over a term of 12 years. In April 2025, the Company entered into a credit agreement with a borrowing capacity of up to $ 221.3 million to be secured by new aircraft upon delivery. During the year ended December 31, 2025, the Company borrowed the entirety of the $ 221.3 million available under the agreement, resulting in the facility being fully drawn. The borrowing carries a variable interest rate based on three-month SOFR and consists of two tranches maturing in seven and twelve years payable in quarterly installments with a balloon payment at maturity. In June 2025, the Company entered into a financing agreement providing for borrowings of up to $ 149.2 million secured by new aircraft upon delivery. During the year ended December 31, 2025, the Company borrowed the entirety of the $ 149.2 million 76 available under the agreement, resulting in the facility being fully drawn. The loan bears interest at a variable rate based on three-month SOFR and matures twelve years from the drawing date, payable in quarterly installments. During the year ended December 31, 2025, the Company fully repaid several facilities secured by aircraft and other assets ahead of their originally scheduled maturity dates. The repayments totaled $ 204.7 million, including the $ 50.8 million mentioned above. The loans repaid were originally scheduled to mature between October 2025 and September 2036. PDP Financing 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 was originally due upon delivery of each aircraft or no later than June 30, 2025. In April 2025, the Company entered into an amendment to extend the maturity date of the agreement to no later than March 2027. The Company drew a total of $ 132.6 million on the facility between November 2023 and February 2024. During the year ended December 31, 2025, the Company fully repaid the $ 132.6 million in outstanding principal, and the facility had undrawn borrowing capacity of $ 25.1 million as of that same date. 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, 2025. See Note 7 for more information on the Company's finance lease obligations. Construction Loan Agreement In October 2021, the Company, through a wholly-owned subsidiary, entered into a credit agreement to borrow $ 350.0 million to fund the initial phases of Sunseeker Resort construction. The Company prepaid $ 250.0 million of the loan's principal balance during 2024, and in February 2025, prepaid the remaining $ 100.0 million principal balance resulting in full repayment of the loan. Unsecured Debt In December 2024, the Company entered into an unsecured credit facility and received proceeds of $ 130.5 million. The loan matured upon delivery of certain aircraft and was to be repaid using the proceeds from financing associated with those aircraft. During the year ended December 31, 2025, the Company repaid the entirety of the $ 130.5 million outstanding under the facility as the associated aircraft delivered. 77 Note 7 — Leases The Company had 23 aircraft under finance leases and nine aircraft under operating leases as of December 31, 2025 (excluding six aircraft under operating lease which have been removed from service pending redelivery), with remaining terms through 2032. As of December 31, 2024, there were 23 aircraft under finance lease and 17 aircraft under operating lease. Lease Costs The components of lease costs recognized on the statements of income were as follows: Year Ended December 31, (in thousands) Classification on the Statements of Income 2025 2024 2023 Finance lease costs: Amortization of assets Depreciation and amortization $ 24,013 $ 23,855 $ 27,170 Interest on lease liabilities Interest expense 24,505 25,994 27,502 Operating lease cost Aircraft lease rentals; Station operations; Maintenance and repairs; Other operating expense 25,250 26,178 25,246 Variable lease cost (1) Aircraft lease rentals; Station operations; Maintenance and repairs; Other operating expense 13,509 492 1,563 Total lease cost $ 87,277 $ 76,519 $ 81,481 (1) In 2025, includes estimated lease return costs which we began to accrue in second quarter 2025 for certain aircraft on operating leases related to redeliveries in 2025 and future years. Lease position as of December 31, 2025 and December 31, 2024 The table below presents the lease-related assets and liabilities recorded on the balance sheet. As of December 31, (in thousands) Classification on the Balance Sheet 2025 2024 Assets Operating lease assets Operating lease right-of-use assets, net $ 63,389 $ 81,218 Finance lease assets Property and equipment, net of accumulated depreciation 403,783 427,664 Total lease assets $ 467,172 $ 508,882 Liabilities Current Operating Current operating lease liabilities $ 10,936 $ 20,714 Finance Current maturities of long-term debt and finance lease obligations 28,106 26,836 Noncurrent Operating Noncurrent operating lease liabilities 54,170 62,392 Finance Long-term debt and finance lease obligations 374,954 403,060 Total lease liabilities $ 468,166 $ 513,002 Weighted-average remaining lease term Operating leases 7.6 years 7.2 years Finance leases 5.1 years 6.1 years Weighted-average discount rate Operating leases 5.7 % 5.6 % Finance leases 5.9 % 5.9 % 78 Other Information The table below presents supplemental cash flow information related to leases during the years ended December 31, 2025, 2024 and 2023. Year Ended December 31, (in thousands) 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating leases $ 24,545 $ 26,679 $ 25,774 Operating cash flows for finance leases 24,572 26,056 27,672 Financing cash flows for finance leases 26,836 25,352 39,044 Maturities of Lease Liabilities The table below indicates the future minimum payments of lease liabilities as of December 31, 2025. (in thousands) Operating Leases Finance Leases 2026 $ 14,143 $ 51,108 2027 12,048 51,108 2028 10,382 65,908 2029 10,447 104,396 2030 9,952 105,233 Thereafter 25,176 126,539 Total lease payments 82,148 504,292 Less imputed interest ( 17,042 ) ( 101,232 ) Total lease obligations 65,106 403,060 Less current obligations ( 10,936 ) ( 28,106 ) Long-term lease obligations $ 54,170 $ 374,954 79 Note 8 — Shareholders’ Equity 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 of December 31, 2025, the Company had remaining unused purchase authority of $ 64.7 million. The Board of Directors has, to date, authorized additional expenditures for share repurchases when the authority is exhausted. The Company will make open market repurchases when advantageous opportunities arise. Share repurchases consisted of the following during the periods indicated: Year Ended December 31, 2025 2024 2023 Shares repurchased (1) 144,967 — 309,155 Average price per share $ 75.90 $ — $ 78.61 Total (in thousands) $ 11,003 $ — $ 24,303 (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 44,215 , 95,014 , and 65,284 shares (not in thousands) for 2025, 2024, and 2023 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, 2025 2024 2023 Total quarterly cash dividends declared, per share $ — $ 1.20 $ 1.20 Total cash dividends paid (in thousands) — 21,934 22,144 The Company has suspended its quarterly dividend indefinitely since July 2024. 80 Note 9 — Fair Value Measurements Investments The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 - Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities Level 2 - Defined as inputs other than Level 1 inputs that are either directly or indirectly observable Level 3 - Defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions The Company uses the market approach valuation technique to determine fair value for investment securities. The assets classified as Level 1 consist of money market funds for which original cost approximates fair value. The assets classified as Level 2 consist of commercial paper, municipal debt securities, federal agency debt securities, U.S. 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. For those assets classified as Level 2 that are not in active markets, the Company obtains fair value from pricing sources using quoted market prices for identical or comparable instruments, and uses pricing models which include all significant observable inputs: maturity dates, issue dates, settlement dates, benchmark yields, reported trades, broker-dealer quotes, issue spreads, benchmark securities, bids, offers and other market related data. These inputs are observable or can be derived from, or corroborated by, observable market data for substantially the full term of the asset. Financial instruments measured at fair value on a recurring basis: As of December 31, 2025 As of December 31, 2024 (in thousands) Total Level 1 Level 2 Total Level 1 Level 2 Cash equivalents Money market funds $ 42,833 $ 42,833 $ — $ 41,494 $ 41,494 $ — US Government and agency obligations 16,901 — 16,901 81,535 — 81,535 Commercial paper 14,712 — 14,712 22,689 — 22,689 Corporate debt securities 5,713 — 5,713 4,133 — 4,133 Municipal debt securities 4,520 — 4,520 10,299 — 10,299 Total cash equivalents 84,679 42,833 41,846 160,150 41,494 118,656 Short-term Corporate debt securities 337,988 — 337,988 242,313 — 242,313 Commercial paper 179,697 — 179,697 149,807 — 149,807 US Government and agency obligations 67,696 — 67,696 94,295 — 94,295 Certificates of deposit 27,960 — 27,960 7,239 — 7,239 Municipal debt securities 19,618 — 19,618 1,580 — 1,580 Total short-term 632,959 — 632,959 495,234 — 495,234 Long-term Corporate debt securities 30,127 — 30,127 39,931 — 39,931 US Government and agency obligations 2,696 — 2,696 10,452 — 10,452 Municipal debt securities — — — 1,342 — 1,342 Total long-term 32,823 — 32,823 51,725 — 51,725 Total financial instruments $ 750,461 $ 42,833 $ 707,628 $ 707,109 $ 41,494 $ 665,615 There were no significant transfers between Level 1 and Level 2 assets for the years ended December 31, 2025 and 2024. 81 Long-term Debt None of the Company's long-term debt is publicly traded. The Company has determined the estimated fair value of all of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable and, therefore, could be sensitive to changes in inputs.The Company utilizes the discounted cash flow method to estimate the fair value of Level 3 debt. Carrying value and estimated fair value of long-term debt, including current maturities and without reduction for related costs, are as follows: As of December 31, 2025 As of December 31, 2024 (in thousands) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Fair Value Level Long-term debt $ 1,413,205 $ 1,424,251 $ 1,653,737 $ 1,667,275 3 Other Due to the short term nature, carrying amounts of cash, restricted cash, accounts receivable and accounts payable approximate fair value. 82 Note 10 — Income Taxes The Company is subject to income taxation in the United States and various state jurisdictions in which it operates. 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. Substantially all of the Company's income before taxes is from its domestic operations. Income Tax Provision/(Benefit) The provision (benefit) for income taxes is composed of the following: Year ended December 31, (in thousands) 2025 2024 2023 Current: Federal $ 532 $ 1,431 $ — State ( 200 ) ( 1,665 ) 3,306 Foreign — 311 204 Total current 332 77 3,510 Deferred: Federal ( 10,448 ) ( 62,244 ) 36,910 State ( 61 ) ( 6,045 ) 1,035 Total deferred ( 10,509 ) ( 68,289 ) 37,945 Total: Federal ( 9,916 ) ( 60,813 ) 36,910 State ( 261 ) ( 7,710 ) 4,341 Foreign — 311 204 Total income tax provision (benefit) $ ( 10,177 ) $ ( 68,212 ) $ 41,455 Income Taxes Paid (Refunded) Year ended December 31, (in thousands) 2025 2024 2023 Federal $ ( 15,000 ) $ 8,700 $ 3 State ( 264 ) ( 274 ) 596 Foreign — 312 413 Total $ ( 15,264 ) $ 8,738 $ 1,012 83 Reconciliation of Effective Tax Rate The effective tax rate on income before income taxes differed from the federal statutory income tax rate as follows: Year ended December 31, 2025 2024 2023 (in thousands) Amount Percent Amount Percent Amount Percent Pre-tax income $ ( 54,874 ) $ ( 308,450 ) $ 159,051 Federal statutory income tax rate ( 11,524 ) 21.0 % ( 64,774 ) 21.0 % 33,401 21.0 % Domestic federal Tax credits Research credits — — % ( 459 ) 0.1 % ( 1,652 ) ( 1.0 ) % Other ( 117 ) 0.2 % ( 501 ) 0.2 % ( 90 ) ( 0.1 ) % Nontaxable and nondeductible items Executive compensation 542 ( 1.0 ) % 2,707 ( 0.9 ) % 3,395 2.1 % Share based compensation 665 ( 1.2 ) % 2,500 ( 0.8 ) % 1,732 1.1 % Other 633 ( 1.2 ) % 569 ( 0.2 ) % 666 0.4 % Other adjustments 265 ( 0.5 ) % ( 1,366 ) 0.4 % 38 — % Domestic state and local income taxes, net of federal effect (1) ( 519 ) 0.9 % ( 7,168 ) 2.3 % 3,503 2.2 % Other foreign jurisdictions — — % 311 ( 0.1 ) % 204 0.1 % Worldwide changes in unrecognized tax benefits ( 122 ) 0.2 % ( 31 ) — % 258 0.2 % Total $ ( 10,177 ) 18.5 % $ ( 68,212 ) 22.1 % $ 41,455 26.1 % (1) In 2025, 2024, and 2023, state and local income taxes in Arizona, California, Indiana, Florida, Tennessee, and New York comprise the majority of the domestic state and local income taxes, net of federal effect category. Deferred Taxes The major components of the Company’s net deferred tax assets and liabilities are as follows: As of December 31, (in thousands) 2025 2024 Deferred tax assets: Employee benefits $ 57,114 $ 38,277 Interest expense 36,649 24,692 Net operating loss 116,728 6,252 Tax credits 3,546 3,683 Other 39,523 45,543 Less: valuation allowance ( 1,214 ) ( 1,214 ) Total deferred tax assets 252,346 117,233 Deferred tax liabilities: Prepaid expenses 4,408 5,235 Depreciation 518,472 398,022 Other 34,882 29,569 Total deferred tax liabilities 557,762 432,826 Net deferred tax liabilities $ 305,416 $ 315,593 Net Operating Loss Carryforwards At December 31, 2025, the Company recognized $ 103.1 million of tax-effected federal net operating loss carryforwards which may be carried forward indefinitely. Additionally, the Company recognized $ 13.6 million of tax-effected state net operating loss carryforwards. Under the current law, $ 1.6 million of the state net operating loss carryforward amounts do not expire and the remaining amounts expire in taxable years 2025 through 2044 if unused. 84 Note 11 — Related Party Transactions During the years ended December 31, 2025, 2024 and 2023, there were no related party transactions that required disclosure. Note 12 — Employee Benefit Plans 401(k) Plan 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 up to 5 percent of eligible employee wages. The Company recognized expense under this plan of $ 32.3 million, $ 28.9 million, and $ 25.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. Share-based employee compensation 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 2022 Plan is administered by the compensation committee of the Board of Directors. In 2025, the Board and stockholders approved an amendment to the 2022 Plan to authorize an additional 1,000,000 shares for issuance under the Plan, which increased restricted-stock capacity by 500,000 shares pursuant to the Plan's fungible ratio. Employee Stock Purchase Plan 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. Employees may contribute up to 25 percent of their base pay per offering period, not to exceed $ 25,000 each calendar year, for the purchase of common stock. The ESPP is a compensatory plan under applicable accounting guidance and results in the recognition of compensation expense. The following table provides information about the Company’s ESPP activity during 2025, 2024, and 2023: Year Ended Total number of shares purchased in year Average price paid per share Weighted-average fair value of discount under the ESPP (1) December 31, 2023 99,802 $ 85.27 $ 14.44 December 31, 2024 155,101 $ 50.82 $ 8.84 December 31, 2025 180,437 $ 46.37 $ 7.90 (1) The weighted-average fair value of the discount under the ESPP granted is equal to a percentage discount from the market value of the common stock at the end of each semi-annual purchase period. 15 percent is the maximum allowable discount under the ESPP and was the discount percentage in effect in each of 2025, 2024 and 2023. Share-based compensation expense For the years ended December 31, 2025, 2024 and 2023, the Company recorded expense of $ 14.5 million, $ 24.0 million and $ 31.5 million, respectively, related to share-based compensation, including restricted stock awards, phantom stock awards, and the ESPP. 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. 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 non-vested restricted stock awards, subject generally to the individual's continued employment or service, are subject to a three-year graded vesting schedule. A summary of the status of non-vested restricted stock grants during the y ears ended December 31, 2025, 2024 and 2023 is presented below: Shares Weighted Average Grant Date Fair Value Per Share Non-vested at December 31, 2022 429,868 $ 109.33 Granted 567,004 93.57 Vested ( 238,020 ) 119.00 Forfeited ( 151,459 ) 94.07 Non-vested at December 31, 2023 607,393 $ 94.64 Granted 223,825 51.12 Vested ( 321,281 ) 92.24 Forfeited ( 145,203 ) 92.91 Non-vested at December 31, 2024 364,734 $ 70.73 Granted 7,672 65.45 Vested ( 172,176 ) 74.60 Forfeited ( 28,989 ) 64.73 Non-vested at December 31, 2025 171,241 $ 67.61 The total grant date fair value of restricted stock that vested during the years ended December 31, 2025, 2024 and 2023 was $ 12.8 million, $ 29.6 million and $ 28.3 million, respectively. Unrecognized compensation cost was $ 8.1 million as of December 31, 2025 for unvested restricted stock expected to be recognized over a weighted-average period of 1.46 years. Phantom stock awards In 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, 2025, share-based compensation liability related to PSAs was $ 0.6 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, 2025, is presented below. No PSAs were 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 Vested — — Forfeited ( 812 ) 46.15 Non-vested at December 31, 2024 124,309 $ 94.12 Granted — $ — Vested ( 63,180 ) 46.15 Forfeited ( 12,878 ) 46.15 Non-vested at December 31, 2025 48,251 $ 85.27 (1) Reflects grant date fair value, except for awards outstanding at December 31, which reflects fair value at that date. Unrecognized compensation cost was $ 3.0 million as of December 31, 2025 for unvested phantom stock awards expected to be recognized over a weighted-average period of 1.23 years. 85 Note 13 — Commitments and Contingencies The Company leases assets including aircraft, office facilities, office equipment, certain airport and terminal facilities, and other space. These commitments have remaining non-cancelable lease terms, which range from 2026 to 2048. Refer to Note 7 for more information on the Company's lease agreements. As of December 31, 2025, the Company had outstanding purchase commitments for 34 aircraft which are expected to deliver from 2026 through 2028. The Company's contractual purchase commitments consist primarily of aircraft and engine acquisitions. The total future commitments are as follows, based on contractual terms in place at December 31, 2025: (in thousands) As of December 31, 2025 2026 $ 632,159 2027 601,083 2028 70,084 Total purchase commitments $ 1,303,326 Contingencies The Company is party to collective bargaining agreements with the employee groups listed below. As of December 31, 2025, the percentage of full-time equivalent employees for each of these pay groups was as follows: As of December 31, 2025 Pilots 23.6 % Flight Attendants 31.8 Maintenance Technicians 14.6 Flight Dispatchers 1.2 Total 71.2 % As of December 31, 2025, the Company employed approximately 5,620 full-time equivalent employees, 23.6 percent of whom (the pilots) are covered by collective bargaining agreements that are currently amendable and are in negotiation. See Item I - Business , for further discussion on the status of each group which has elected union representation. The Company's credit card processing agreements provide that no cash reserve ("Reserve") is required, and no withholding of payment related to receivables collected will occur, except in certain circumstances, including when a required level of liquidity is not maintained. To date, the Company has always satisfied the required level of liquidity. In circumstances in which the credit card processor can establish a Reserve or withhold payments, the amount of the Reserve or payments that may be withheld would be up to the potential liability of the credit card processor for tickets purchased with credit cards, as applicable, that had not yet been used for travel. The Company did not have a Reserve or any amount withheld as of December 31, 2025 or 2024. The Company is party to aircraft and other financial transactions that include provisions that require payments to preserve an economic return to the lenders if that economic return is diminished due to specified changes in law or regulations. In some of these financing transactions, the Company would also bear the risk of changes in tax laws that would subject payments to non-U.S. lenders to withholding taxes. The Company cannot reasonably estimate potential future payments under these provisions as it cannot predict when and under what circumstances these provisions may be triggered. The Company is subject to certain other legal and administrative actions it considers routine to its business activities. 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. 86 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 CEO, who assesses segment performance and makes resource allocation decisions using information about each operating segment's operating income and pretax income. During 2025, the CODM reviewed separate financial information and made resource allocation decisions for the Company's two operating segments: Airline and Sunseeker Resort. Subsequent to the sale of Sunseeker Resort in September 2025, the Company is managed as a single Airline operating segment. Airline Segment 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. 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. Sunseeker Resort Segment The Company's consolidated financial statements include the operating results of Sunseeker Resort through the completion of the sale of the Resort's assets on September 4, 2025. The Sunseeker Resort segment was operated as a single business unit and included hotel rooms and suites for occupancy, group meeting facilities, food and beverage options, Aileron Golf Course and other Resort amenities. 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: 87 Twelve Months Ended December 31, 2025 (in thousands) Airline Sunseeker Consolidated REVENUES FROM EXTERNAL CUSTOMERS $ 2,545,899 $ 60,680 $ 2,606,579 OPERATING EXPENSES: Salaries and benefits 805,432 27,585 833,017 Aircraft fuel 639,731 — 639,731 Station operations 297,549 — 297,549 Depreciation and amortization 242,026 7,159 249,185 Maintenance and repairs 149,938 — 149,938 Sales and marketing 95,053 4,390 99,443 Aircraft lease rentals 36,488 — 36,488 Other operating expense (1) 92,273 34,083 126,356 Special charges, net of recoveries 43,539 94,166 137,705 Total operating expenses 2,402,029 167,383 2,569,412 OPERATING INCOME (LOSS) 143,870 ( 106,703 ) 37,167 OTHER (INCOME) EXPENSES: Interest income ( 41,697 ) — ( 41,697 ) Interest expense 126,769 23,466 150,235 Capitalized interest ( 17,604 ) — ( 17,604 ) Other non-operating expense (2) 1,107 — 1,107 INCOME (LOSS) BEFORE INCOME TAXES $ 75,295 $ ( 130,169 ) $ ( 54,874 ) Capital expenditures 406,805 1,442 408,247 Total assets 4,209,401 — 4,209,401 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 Capitalized interest ( 45,059 ) ( 326 ) ( 45,385 ) 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 Total assets 4,116,289 313,564 4,429,853 88 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 Capitalized interest ( 21,838 ) ( 23,294 ) ( 45,132 ) Other non-operating expense (2) 491 — 491 INCOME (LOSS) BEFORE INCOME TAXES $ 188,121 $ ( 29,070 ) $ 159,051 Capital expenditures 568,309 321,044 889,353 Total assets 4,200,545 656,122 4,856,667 (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 expenses. (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 in all years presented. 89 Note 15 — Impairment & Sale of Sunseeker Resort In fourth quarter 2024, 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 of the Resort. These circumstances constituted a triggering event, necessitating an impairment test which consequently resulted in an impairment loss of $ 321.8 million that was recorded and included in special charges at the end of fourth quarter 2024. Through a competitive bidding process, the Company received multiple offers for the sale of the Resort. In June 2025, the Company's board of directors approved a plan for the sale of the Resort and management determined that all of the held-for-sale accounting requirements were met. On July 3, 2025, the Company and its Sunseeker subsidiaries entered into an Agreement of Purchase and Sale with a third-party buyer for the sale of substantially all of the Resort's assets, including the Aileron Golf Course and related property, for a sale price of $ 200.0 million, subject to various adjustments. Upon meeting the held-for-sale criteria in second quarter 2025, the Resort disposal group was measured at its fair value less costs to sell, resulting in a $ 100.4 million write-down charge included in special charges during the three months ended June 30, 2025. Upon classification as held for sale, the Company ceased recording depreciation and amortization expense for long-lived assets of the disposal group. On September 4, 2025, the Company completed the sale of the Resort and received cash proceeds of $ 189.9 million after various closing adjustments. There were $ 2.1 million of closing adjustments recorded as an offset to special charges, which partially offset the second quarter 2025 write down charge. For the year ended December 31, 2025, total special charges related to the Resort sale were $ 98.3 million. All assets and liabilities associated with Sunseeker Resort were derecognized from the Company's balance sheet as of September 4, 2025. 90 Note 16 — Proposed Acquisition of Sun Country Airlines Holdings, Inc. On January 11, 2026, the Company announced the proposed acquisition of Sun Country Airlines Holdings, Inc. (“Sun Country”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement, each existing share of Sun Country common stock will be converted into the right to receive (i) $ 4.10 in cash, without interest and (ii) 0.1557 shares of the Company's common stock. The transaction has been unanimously approved by the boards of directors of both companies and is expected to close in the second half of 2026, subject to satisfaction of customary closing conditions, including each company’s receipt of certain shareholder approvals and regulatory reviews and approvals. To date, the financial impacts of the pending acquisition have not been material, and future financial impacts are not yet estimable. 91 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.