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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Right-of-Use Asset and Operating Lease Liability | Operating 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 CPAs. Upon meeting certain criteria as stated in ASC 842 Leases (“ASC 842”), the lease component of a CPA would be accounted for as an embedded lease, with a corresponding balance included in the operating ROU asset and lease liability.
During the year ended December 31, 2024, the Company had the following lease transactions in accordance with ASC 842:
In October 2024, the Company signed the first amendment to the Aircraft Operator Agreement (“AOA”) with its exclusive operator in Europe, among other changes the amendment eliminated the flight hour guarantee and guarantee shortfall provisions, transitioning all payments to the operator to become variable, based solely on flight hours flown. As a result, in the absence of any contractual unavoidable costs associated with Blade’s exclusive usage of the aircraft, the embedded lease liability of $12,684 and ROU asset of $12,165 that arose from the original AOA were derecognized in full as of October 1, 2024. The net difference of $519 was recognized as a gain within general and administrative costs in the consolidated statements of operations. Under the agreement, all future payments, including additional cost-sharing amounts paid to the operator, will be recorded within cost of revenue in the period incurred, and any amounts reimbursed from the operator to the Company will be recorded as a reduction to cost of revenue. Under the amended AOA, following two consecutive years of performance below an agreed upon target, each Party may contractually terminate the amended AOA, however, the Company may choose to block such a termination by the counterparty through the allocation of additional profit to such counterparty. In the event of a termination, each party has certain exercisable rights over the assets within the agreement. For example, if the counterparty chose to terminate the agreement following two consecutive years of performance below target and the Company determined not to block such a termination, the Company would have the contractual right to purchase the operator’s fleet at a discount to fair market value.
Effective in July 2024, Blade entered into two agreements with separate operators for up to a 15-month term ending October 2025 for two aircraft. Under these CPAs, if the agreement expires or is terminated for cause, the flight hour guarantee will be pro-rated to the date of the termination. Additionally, Blade has the right for immediate termination with no penalty if a government authority enacts travel restrictions.
On May 1, 2024, an existing CPA for three aircraft was expanded to include a fourth aircraft, which commenced operations that same day and resulted in an additional ROU asset and corresponding lease liability of $992. The four rotorcraft are utilized by both our Passenger and Medical segment. In case of early termination by Blade, a one-year purchase 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.
In January 2024, an existing CPA for eight aircraft utilized by our Medical segment was restated and amended for a four-year term ending November 30, 2027. Subsequently, in April 2024, the agreement was terminated for seven aircraft following Blade’s acquisition of those seven aircraft (see “—Property and Equipment, Net” within Note 2). This termination resulted in a derecognition of ROU asset and lease liability balance totaling $6,367 and $6,490, respectively. The CPA for the eighth aircraft was terminated in July 2024.
Additionally, during the year ended December 31, 2024, the Company recognized a ROU asset and a lease liability for new office spaces. This includes a lease in Chandler, Arizona, which commenced in July 2024 with an initial term of approximately 7 years, serving the Medical segment. The initial recognition of the ROU asset and corresponding lease liability was $2,376. Similarly, a new lease in New York, New York, commenced in May 2024 with an initial term of approximately 3 years, serving the Passenger segment and functioning as Blade’s corporate office. The initial recognition of the ROU asset and corresponding lease liability was $2,689.
See Note 12, “Commitments and Contingencies”, for additional information about our capacity purchase agreements.
Balance sheet information related to the Company’s leases is presented below:
As of December 31, 2024, included in the table above is $3,443, $1,717 and $1,897 of operating right-of-use asset, operating lease liability, current, and operating lease liability, long-term, respectively, under aircraft leases that are
embedded within the capacity purchase agreements. As of December 31, 2023, included in the table above is $21,081, $3,215 and $18,871 of operating right-of-use asset, operating lease liability, current and operating lease liability, long-term, respectively, under aircraft leases that are embedded within the capacity purchase agreements.
The following provides details of the Company’s lease expense:
Other information related to leases is presented below:
As of December 31, 2024, the expected annual minimum lease payments of the Company’s operating lease liabilities were as follows:
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