Sun Country Airlines Holdings, LLCSNCY
Sun Country Airlines Holdings, LLC Leases Disclosure
9. LEASES
Lessee and Sublease Arrangements
The Company classifies its Leases into three categories: Aircraft, Real Estate, and Other. Aircraft leases consist of aircraft, engines, and aircraft equipment under lease agreements. As of December 31, 2025, the Company had 13 leases for aircraft, all of which were under finance leases. Real estate leases consist of leased hangar and headquarter facilities, a simulator housing facility, and other leases consist of non-aircraft equipment under operating lease agreements. Real estate and other leases generally have initial terms of up to ten years.
The Company’s Cargo fleet of 20 aircraft is subleased directly from Amazon and the Company operates them pursuant to the A&R ATSA. The sublease arrangement does not qualify as a lease because the Company does not control the use of the aircraft. As such, no right-of-use asset and lease liability is recognized in these financial statements for the Amazon arrangement. This conclusion is unchanged from the original ATSA. For more information on the A&R ATSA, see Note 2 within these Consolidated Financial Statements.
As of December 31, 2025, the Company had one subleased aircraft which was classified as an operating lease. This sublease arrangement does not relieve the Company of its primary lease obligations with the lessor (the "head lease"). Therefore, the Company continues to account for the head lease as a finance lease. The Company is entitled to fixed payments over the remaining sublease terms, with additional variable sublease payments based on aircraft utilization. The sublease expires in the second quarter of 2026. The aircraft will be delivered to Sun Country on the sublease expiry date and will continue to be leased by the Company. The aircraft is expected to be inducted into the Company's fleet upon redelivery. The rental revenue associated with the sublease is recognized as it is earned and is included in Other Revenue. As of December 31, 2025, future undiscounted cash flows of $1,325 are expected to be received in 2026.
In February 2026, an amendment was executed to extend the lease expiry term for the one aircraft subleased to an unaffiliated airline, which now expires in the fourth quarter of 2026. As a result, future undiscounted cash flows of $2,915 are expected to be received in 2026.
The Company also has various airport terminal agreements which include provisions for variable lease payments which are based on several factors, including, but not limited to, number of carriers, enplaned passengers, and airports’ annual operating budgets. Due to the variable nature of the rates, these leases are not recorded on the Company’s Consolidated Balance Sheets as a right-of-use asset and lease liability.
Certain aircraft lease agreements grant the Company the option to purchase the aircraft at the end of the lease term. To the extent the Company is reasonably certain to exercise the purchase option, the lease arrangement has been accounted for as a finance lease with the purchase option price recognized as part of the lease obligation.
Lessor Arrangements
During the year ended December 31, 2023, the Company acquired five Owned Aircraft Held for Operating Lease. The Company obtained outright ownership of these aircraft upon purchase and assumed the position of lessor until the end of the related aircraft lease terms. The Company is entitled to fixed payments over the remaining lease term for each aircraft, which expire at various dates through the fourth quarter of 2026. On each lease expiry date, the Owned Aircraft Held for Operating Lease will be redelivered to Sun Country and are expected to be inducted into the Company’s fleet. The rental revenue associated with the Owned Aircraft Held for Operating Lease is recognized as it is earned and is included in Other Revenue. The Company recognized $14,328, $23,380 and $17,689 of rental revenue during the years ended December 31, 2025, 2024 and 2023 respectively. As of December 31, 2025, future undiscounted cash flows of $6,600 are expected to be received in 2026.
Upon acquisition of the Owned Aircraft held for Operating Lease during the year ended December 31, 2023, the Company recognized a Maintenance Rights Asset associated with the acquired leases. During the years ended December 31, 2025 and 2024, the Company accepted delivery of two and one, respectively, Owned Aircraft Held for Operating Lease that were previously leased to an unaffiliated airline. Based on the maintenance condition of the aircraft on the lease return dates, the Maintenance Rights Asset settlements resulted in capitalized asset improvements of $8,750 and $5,054, and cash received from the lessee in excess of the Maintenance Rights Asset totaling $5,808 and $2,849, for the years ended December 31, 2025 and 2024, respectively. The cash received for end of lease compensation in excess of the Maintenance Rights Asset was recognized within Other Revenue on the Company’s Consolidated Statement of Operations. For more information on the Maintenance Rights Asset and related accounting, see Note 2 included within these Consolidated Financial Statements.
The following table summarizes the lease-related assets and liabilities recorded on the Company’s Consolidated Balance Sheets:
| December 31, | |||||||||||||||||
| Classification | 2025 | 2024 | |||||||||||||||
| Assets | |||||||||||||||||
| Finance lease assets, net | Property and Equipment, net | $ | 213,108 | $ | 234,960 | ||||||||||||
| Operating lease assets | Operating Lease Right-of-use Assets | 14,257 | 16,896 | ||||||||||||||
| Owned Aircraft and Flight Equipment Held for Operating Lease | Property and Equipment, net | 54,388 | 113,535 | ||||||||||||||
| Total lease assets | $ | 281,753 | $ | 365,391 | |||||||||||||
| Liabilities | |||||||||||||||||
| Current: | |||||||||||||||||
| Finance lease liabilities | Current Finance Lease Obligations | $ | 61,616 | $ | 20,175 | ||||||||||||
| Operating lease liabilities | Current Operating Lease Obligations | 3,601 | 3,281 | ||||||||||||||
| Long-term: | |||||||||||||||||
| Finance lease liabilities | Long-term Finance Lease Obligations | 189,471 | 251,087 | ||||||||||||||
| Operating lease liabilities | Long-term Operating Lease Obligations | 13,792 | 17,369 | ||||||||||||||
| Total lease liabilities | $ | 268,480 | $ | 291,912 | |||||||||||||
The following table provides details of the Company’s obligations under Finance and Operating Leases as of December 31, 2025:
| Finance Leases | Operating Leases | |||||||||||||||||||||||||
Year Ending December 31 | Aircraft | Real Estate | Total | Real Estate and Other | ||||||||||||||||||||||
| 2026 | $ | 76,132 | $ | 1,773 | $ | 77,905 | $ | 4,827 | ||||||||||||||||||
| 2027 | 26,724 | 1,773 | 28,497 | 4,815 | ||||||||||||||||||||||
| 2028 | 44,232 | 1,773 | 46,005 | 4,853 | ||||||||||||||||||||||
| 2029 | 87,153 | 1,404 | 88,557 | 2,922 | ||||||||||||||||||||||
| 2030 | 56,256 | — | 56,256 | 1,181 | ||||||||||||||||||||||
| Thereafter | 2,162 | — | 2,162 | 2,248 | ||||||||||||||||||||||
| Total Minimum Lease Payments | 292,659 | 6,723 | 299,382 | 20,846 | ||||||||||||||||||||||
| Less: Amount Representing Interest | (47,118) | (1,177) | (48,295) | (3,453) | ||||||||||||||||||||||
| Present Value of Minimum Lease Payments | 245,541 | 5,546 | 251,087 | 17,393 | ||||||||||||||||||||||
| Less: Short-term Obligations | (60,356) | (1,260) | (61,616) | (3,601) | ||||||||||||||||||||||
| Long-term Lease Obligations | $ | 185,185 | $ | 4,286 | $ | 189,471 | $ | 13,792 | ||||||||||||||||||
The following table presents lease costs related to the Company’s Finance and Operating Leases:
Year Ended December 31, | |||||||||||||||||||||||
| Classification | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Finance lease cost | |||||||||||||||||||||||
| Amortization of leased assets | Depreciation and Amortization | $ | 21,852 | $ | 23,108 | $ | 21,150 | ||||||||||||||||
| Interest on lease liabilities | Interest Expense | 17,652 | 19,568 | 16,325 | |||||||||||||||||||
| Operating lease cost | |||||||||||||||||||||||
| Included in ROU asset - Aircraft | Aircraft Rent (1) | — | — | 2,210 | |||||||||||||||||||
| Included in ROU asset - Real Estate & Other | Ground Handling, Landing Fees and Airport Rent & Other Operating | 4,689 | 4,644 | 4,438 | |||||||||||||||||||
| Short-term lease cost | Aircraft Rent | — | — | 396 | |||||||||||||||||||
| Variable - Aircraft | Aircraft Rent (1) | — | — | (325) | |||||||||||||||||||
| Variable - Other | Landing Fees & Airport Rentals | 3,123 | 2,691 | 2,212 | |||||||||||||||||||
| Sublease Income | Other Revenue | (14,771) | (16,091) | (768) | |||||||||||||||||||
| Total Lease cost | $ | 32,545 | $ | 33,920 | $ | 45,638 | |||||||||||||||||
_________________________________
1) | The year ended December 31, 2023 included credits of $723 for the amortization of Over-market Liabilities established at the Acquisition Date related to lease rates and maintenance reserves. As of December 31, 2023, the balance of Over-market liabilities was $0. | ||||
The following table presents Supplemental cash flow information related to leases, included in the Consolidated Statements of Cash Flows:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating Cash Flows for Operating Leases | $ | 4,771 | $ | 3,888 | $ | 5,971 | |||||||||||
| Operating Cash Flows for Finance Leases | $ | 17,652 | $ | 19,568 | $ | 16,325 | |||||||||||
| Financing Cash Flows for Finance Leases | $ | 20,175 | $ | 45,942 | $ | 21,883 | |||||||||||
The table below presents lease-related terms and discount rates related to the Company’s Finance and Operating Leases:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted-average remaining lease term | |||||||||||||||||
| Operating Leases | 4.8 years | 5.6 years | 6.8 years | ||||||||||||||
| Finance Leases | 3.4 years | 4.4 years | 4.9 years | ||||||||||||||
| Weighted-average discount rates | |||||||||||||||||
| Operating Leases | 7.8% | 7.8% | 6.5% | ||||||||||||||
| Finance Leases | 6.8% | 6.8% | 6.6% | ||||||||||||||
During the year ended December 31, 2023 the Company expensed $620 of maintenance reserve payments. These expenses are reflected in Aircraft Rent on the accompanying Consolidated Statements of Operations. During the year ended December 31, 2023, the composition of our aircraft fleet shifted from aircraft under operating leases to all owned aircraft or aircraft under finance leases. Accordingly, we did not expense any maintenance reserve payments during the years ended December 31, 2025 or 2024 because all maintenance deposits are expected to be recoverable either through reimbursable maintenance events or through application towards the purchase of the aircraft.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 12, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 15, 2023 | |
| 2021 | Feb 18, 2022 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.