UNITED PARCEL SERVICE INCUPS
UNITED PARCEL SERVICE INC Leases Disclosure
NOTE 11. LEASES
We have finance and operating leases for real estate (primarily package centers, airport facilities and warehouses), aircraft and engines, information technology equipment, vehicles and various other equipment used in operating our business. Certain leases for real estate and aircraft contain options to purchase, extend or terminate the lease.
Aircraft
In addition to the aircraft that we own, we charter aircraft to handle package and cargo volume on certain international trade lanes and domestic routes. Due to the nature of these agreements, primarily being that either party can cancel the agreement with short notice, we have classified these as short-term leases. A majority of our long-term aircraft operating leases are operated by a third party to handle package and cargo volume in geographic regions where, due to government regulations, we are restricted from operating an airline. We also have long-term finance leases for aircraft that we operate.
Transportation equipment and other equipment
We enter into both long-term and short-term leases for transportation equipment to supplement our capacity or meet contractual demands. Some of these assets are leased on a month-to-month basis and the leases can be terminated without penalty. We also enter into equipment leases to increase capacity during periods of high demand. These leases are treated as short-term as the cumulative right of use is less than 12 months over the term of the contract.
Some of our transportation and technology equipment leases require us to make additional lease payments based on the underlying usage of the assets. Due to the variable nature of these costs, these are expensed as incurred and are not included in the right-of-use lease asset and associated lease obligation.
Sale-leaseback transactions
In 2025, we entered into sale-leaseback transactions involving a data center and real estate properties.
The real estate transactions were entered into under triple-net operating lease agreements with initial terms ranging from 15 to 20 years, which may be renewed. The leases include increases to base rent at rates ranging from 2.5% to 3.0% over the remaining terms of the leases.
The components of lease expense for 2025, 2024 and 2023 were as follows (in millions):
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating lease costs | $ | 950 | $ | 912 | $ | 860 | |||||||||||
| Finance lease costs: | |||||||||||||||||
| Amortization of assets | $ | 139 | $ | 145 | $ | 119 | |||||||||||
| Interest on lease liabilities | 27 | 23 | 18 | ||||||||||||||
| Total finance lease costs | 166 | 168 | 137 | ||||||||||||||
| Variable lease costs | 382 | 311 | 279 | ||||||||||||||
| Short-term lease costs | 1,091 | 1,079 | 1,166 | ||||||||||||||
Total lease costs(1) | $ | 2,589 | $ | 2,470 | $ | 2,442 | |||||||||||
(1) This table excludes sublease income for all periods presented as it was not material.
We also monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. We recognized certain immaterial impairments during 2025, 2024 and 2023.
Supplemental information related to leases and location within our consolidated balance sheets as of December 31, 2025 and 2024 are as follows (in millions, except lease term and discount rate):
| 2025 | 2024 | ||||||||||
| Operating Leases: | |||||||||||
| Operating lease right-of-use assets | $ | 4,263 | $ | 4,149 | |||||||
| Current maturities of operating leases | $ | 763 | $ | 733 | |||||||
| Non-current operating leases | 3,700 | 3,635 | |||||||||
| Total operating lease obligations | $ | 4,463 | $ | 4,368 | |||||||
| Finance Leases: | |||||||||||
| Property, plant and equipment, net | $ | 1,146 | $ | 657 | |||||||
| $ | 107 | $ | 104 | ||||||||
| 674 | 351 | ||||||||||
| Total finance lease obligations | $ | 781 | $ | 455 | |||||||
| Weighted average remaining lease term (in years): | |||||||||||
| Operating leases | 10.6 | 10.4 | |||||||||
| Finance leases | 22.3 | 11.1 | |||||||||
| Weighted average discount rate: | |||||||||||
| Operating leases | 3.66 | % | 3.50 | % | |||||||
| Finance leases | 4.49 | % | 3.84 | % | |||||||
Future payments for lease obligations as of December 31, 2025 are as follows (in millions):
| Finance Leases | Operating Leases | ||||||||||
| 2026 | $ | 137 | $ | 907 | |||||||
| 2027 | 94 | 822 | |||||||||
| 2028 | 87 | 641 | |||||||||
| 2029 | 79 | 496 | |||||||||
| 2030 | 72 | 390 | |||||||||
| Thereafter | 585 | 2,151 | |||||||||
| Total lease payments | 1,054 | 5,407 | |||||||||
| Less: Imputed interest | (273) | (944) | |||||||||
| Total lease obligations | 781 | 4,463 | |||||||||
| Less: Current obligations | (107) | (763) | |||||||||
| Long-term lease obligations | $ | 674 | $ | 3,700 | |||||||
As of December 31, 2025, we had $2.6 billion of additional leases which had not commenced and are expected to commence between 2026 and 2027. These leases are primarily related to aircraft and will commence when the related aircraft is delivered. Other leases will commence when we are granted access to property, such as when leasehold improvements are completed or a certificate of occupancy is obtained.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 20, 2020 | |
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.