Operating Right-of-Use Asset and Operating Lease Liability |
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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 right-of-use (“ROU”) asset and lease liability.
During the nine months ended September 30, 2024, the Company had the following lease transactions in accordance with ASC 842:
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.
An existing CPA for eight aircraft utilized by our Medical segment, was restated and amended in January 2024 for a four-year term ending November 30, 2027. Subsequently, this agreement was terminated in April 2024 for seven aircraft after Blade’s acquisition of those seven aircraft (see “—Property and Equipment, Net” within Note 1). The CPA for the eighth aircraft was terminated in July 2024.
An existing three aircraft CPA agreement was expanded on May 1, 2024 when a fourth aircraft commenced operations. The four aircraft are rotorcraft 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.
Additionally, during the nine months ended September 30, 2024, the Company recognized a right-of-use asset and a lease liability for new office spaces. This includes a lease at 4100 W. Galveston Street, Chandler, Arizona with an initial term of approximately 7 years commencing in July 2024 which serves the Medical segment. A new lease at 35 Hudson Yards in New York, New York with an initial term of approximately 3 years commenced in May 2024 and serves the Passenger segment and as Blade’s corporate office.
See Note 11, “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 September 30, 2024, included in the table above is $16,857, $2,900 and $14,718 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:
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 statements of operations.
Other information related to leases is presented below:
As of September 30, 2024, the expected annual minimum lease payments of the Company’s operating lease liabilities were as follows:
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