Quarterly report pursuant to Section 13 or 15(d)

Right-of-Use Asset and Operating Lease Liability

v3.23.2
Right-of-Use Asset and Operating Lease Liability
 6 Months Ended
Jun. 30, 2023
Leases [Abstract]  
Right-of-Use Asset and Operating Lease Liability Right-of-Use Asset and Operating Lease Liability
Blade’s operating leases consist of airport and heliport terminals, offices, vehicles and aircraft leases that are embedded within certain capacity purchase agreements (“CPAs”). Upon meeting certain criteria as stated in ASC 842 Leases, the lease component of a capacity purchase agreement would be accounted for as an embedded lease, with a corresponding balance included in the operating right-of-use (“ROU”) asset and lease liability.
During the six months ended June 30, 2023, the Company has added the following leases in accordance with ASC 842, the details of which are discussed as follows.

A CPA for three aircraft became effective in February 2023 for a three-year term ending February 14, 2026 (previous term was less than one year). In case of early termination by Blade, a one-year revenue guarantee will be pro-rated to the date of the termination. In addition, Blade has the right for immediate termination with no penalty if a government authority enacts travel restrictions.

A CPA for seven aircraft was restated and amended in March 2023 for an additional two years for a total five-year term, ending March 31, 2028 (previous term was for three-years ending March 31, 2025 for six aircraft). Blade has the right to terminate the agreement without cause upon 60 days’ written notice, upon such termination a one-year flight hour guarantee will be pro-rated to the date of the termination and the operator will be entitled to retain any unapplied deposit paid by Blade at the time of such termination, in addition, Blade has the right for immediate termination with no penalty if a government authority enacts travel restrictions.

The Company allocated the consideration in the capacity purchase agreements to the lease and non-lease components based on their relative standalone value. The non-lease components for these agreements primarily consist of the costs associated
with flight operations. The Company determined its best estimate of the standalone value of the individual components by considering observable information from publicly available market rates.

See Note 8, “Commitments and Contingencies”, for additional information about our capacity purchase agreements.
Balance sheet information related to the Company’s leases is presented below:
June 30, 2023 December 31, 2022
Operating leases:
Operating right-of-use asset $ 23,186  $ 17,692 
Operating lease liability, current 4,380  3,362 
Operating lease liability, long-term 19,833  14,970 

As of June 30, 2023, included in the table above is $20,691, $2,729 and $18,921 of operating right-of-use asset, current operating lease liability, and long-term operating lease liability, respectively, under aircraft leases that are embedded within the capacity purchase agreements. As of December 31, 2022, included in the table above is $14,916, $1,748 and $13,705 of operating right-of-use asset, current operating lease liability, and long-term operating lease liability, respectively, under aircraft leases that are embedded within the capacity purchase agreements.

The following provides details of the Company’s lease expense:
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Lease cost:
Short-term lease cost
 $ 126  $ 59  $ 220  $ 97 
Operating lease cost
 494  227  961  410 
Operating lease cost - Cost of revenue
 1,150  250  2,140  250 
Total $ 1,770  $ 536  $ 3,321  $ 757 
Operating lease costs related to aircraft leases that are embedded within capacity purchase agreements are reported as part of Cost of revenue.

Other information related to leases is presented below:
June 30, 2023
Weighted-average discount rate – operating lease
 9.10  %
Weighted-average remaining lease term – operating lease (in years)
 6.7
As of June 30, 2023, the expected annual minimum lease payments of the Company’s operating lease liabilities were as follows:
For the Year Ended December 31
Remainder of 2023
 $ 3,275 
2024 6,189 
2025 5,030 
2026 3,997 
2027 3,857 
Thereafter 10,597 
Total future minimum lease payments, undiscounted
 32,945 
Less: Imputed interest for leases in excess of one year
 (8,732)
Present value of future minimum lease payments
 $ 24,213