Leases
We lease certain locomotives, freight cars, and other property for use in our rail operations.
The following are details related to our lease portfolio as of December 31:
| | | | | | | | | | | |
| Millions | Classification | 2025 | 2024 |
| Assets | | | |
| Operating leases | Operating lease assets | $ | 1,036 | | $ | 1,297 | |
| Finance leases | Properties, net [a] | 185 | | 172 | |
| Total leased assets | | $ | 1,221 | | $ | 1,469 | |
| Liabilities | | | |
| Current | | | |
| Operating | Accounts payable and other current liabilities | $ | 270 | | $ | 346 | |
| Finance | Debt due within one year | 39 | | 37 | |
| Noncurrent | | | |
| Operating | Operating lease liabilities | 738 | | 925 | |
| Finance | Debt due after one year | 66 | | 72 | |
| Total lease liabilities | | $ | 1,113 | | $ | 1,380 | |
[a]Finance lease assets are recorded net of accumulated amortization of $456 million and $472 million as of December 31, 2025 and 2024, respectively.
The following table presents the classification of lease cost components for the year-ended December 31:
| | | | | | | | |
| Millions | 2025 | 2024 |
| Operating lease cost [a] | $ | 305 | | $ | 340 | |
| Short-term lease cost | 23 | | 24 | |
| Variable lease cost | 39 | | 37 | |
| Finance lease cost | | |
| Amortization of leased assets [b] | 28 | | 31 | |
| Interest on lease liabilities [c] | 5 | | 5 | |
| Net lease cost | $ | 400 | | $ | 437 | |
[a]Operating lease cost is primarily reported in equipment and other rents in our Consolidated Statements of Income.
[b]Amortization of leased assets is reported in depreciation in our Consolidated Statements of Income.
[c]Interest on lease liabilities is reported in interest expense in our Consolidated Statements of Income.
The following table presents aggregate lease maturities as of December 31, 2025:
| | | | | | | | | | | |
| Millions | Operating leases | Finance leases | Total |
| 2026 | $ | 276 | | $ | 42 | | $ | 318 | |
| 2027 | 238 | | 37 | | 275 | |
| 2028 | 191 | | 14 | | 205 | |
| 2029 | 123 | | 21 | | 144 | |
| 2030 | 121 | | - | | 121 | |
| After 2030 | 176 | | - | | 176 | |
| Total lease payments | $ | 1,125 | | $ | 114 | | $ | 1,239 | |
| Less: Interest | 117 | | 9 | | 126 | |
| Present value of lease liabilities | $ | 1,008 | | $ | 105 | | $ | 1,113 | |
The following table presents the weighted average remaining lease term and discount rate as of December 31:
| | | | | |
| 2025 |
| Weighted-average remaining lease term (years) | |
| Operating leases | 5.4 |
| Finance leases | 2.6 |
| Weighted-average discount rate (%) | |
| Operating leases | 4.0 | |
| Finance leases | 4.5 | |
The following table presents other information related to our operating and finance leases for the years ended December 31:
| | | | | | | | |
| Millions | 2025 | 2024 |
| Cash paid for amounts included in the measurement of lease liabilities | | |
| Operating cash flows from operating leases | $ | 310 | | $ | 319 | |
| Investing cash flows from operating leases | 32 | | 32 | |
| Operating cash flows from finance leases | 4 | | 6 | |
| Financing cash flows from finance leases | 36 | | 47 | |
| | |
| Leased assets obtained in exchange for operating lease liabilities | $ | 198 | | $ | 119 | |
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.