Quarterly report pursuant to Section 13 or 15(d)

Right-of-Use Asset and Operating Lease Liability

v3.24.1.u1
Right-of-Use Asset and Operating Lease Liability
 3 Months Ended
Mar. 31, 2024
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 CPA 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 three months ended March 31, 2024, the Company added the following leases in accordance with ASC 842:

Effective in March 2022, Blade entered into an agreement for a three-year term ending March 31, 2025 for six aircraft. This CPA was restated and amended in March 2023 for seven aircraft and additional two years (for a total five-year term ending March 31, 2028). This CPA was restated and amended in December 2023 for up to eight aircraft for a five-year term ending March 31, 2028. This CPA was further restated and amended in January 2024 for eight aircraft for a four-year term ending November 30, 2027. The additional eighth aircraft commenced January 1, 2024. 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 allocates 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 determines its best estimate of the standalone value of the individual components by considering observable information from publicly available market rates.

See Note 9, “Commitments and Contingencies”, for additional information about our capacity purchase agreements.
Balance sheet information related to the Company’s leases is presented below:
March 31, 2024 December 31, 2023
Operating leases:
Operating right-of-use asset $ 24,576  $ 23,484 
Operating lease liability, current 4,428  4,787 
Operating lease liability, long-term 21,101  19,738 
As of March 31, 2024, included in the table above is $23,165, $3,857 and $20,287 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, 2023, included in the table above is $21,081, $3,215 and $18,871 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 March 31,
2024 2023
Lease cost:
Short-term lease cost
 $ 98  $ 94 
Operating lease cost
 356  467 
Operating lease cost - Cost of revenue
 1,456  990 
Total $ 1,910  $ 1,551 
Operating lease costs related to aircraft leases that are embedded within CPAs are recorded within Cost of revenue on the Company’s unaudited interim condensed consolidated statement of operations.

Other information related to leases is presented below:
March 31, 2024
Weighted-average discount rate – operating lease
 8.90  %
Weighted-average remaining lease term – operating lease (in years)
 6.3
As of March 31, 2024, the expected annual minimum lease payments of the Company’s operating lease liabilities were as follows:
For the Year Ended December 31
Remainder of 2024 $ 4,832 
2025 6,166 
2026 5,846 
2027 4,842 
2028 2,387 
Thereafter 8,779 
Total future minimum lease payments, undiscounted
 32,852 
Less: Imputed interest for leases in excess of one year
 (7,323)
Present value of future minimum lease payments
 $ 25,529 
Leases Not Yet Commenced
As of March 31, 2024, the Company had additional operating real estate leases that had not yet commenced of $5,311. These operating leases will commence over the next 12 months.
Construction of the leased facilities will be managed and contracted by the Lessor.