Quarterly report pursuant to Section 13 or 15(d)

LEASES

v3.24.3
LEASES
 9 Months Ended
Sep. 30, 2024
Leases [Abstract]  
LEASES 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.
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.
The components of lease expense for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):
Three Months Ended
 September 30,		 Nine Months Ended
 September 30,
2024 2023 2024 2023
Operating lease costs $ 220  $ 219  $ 682  $ 645 
Finance lease costs:
Amortization of assets 38  31  104  88 
Interest on lease liabilities 6  4  16  13 
Total finance lease costs 44  35  120  101 
Variable lease costs 81  63  235  203 
Short-term lease costs 221  243  612  746 
Total lease costs(1)
$ 566  $ 560  $ 1,649  $ 1,695 
(1)    This table excludes sublease income as it was not material for the three and nine months ended September 30, 2024 and 2023.
In addition to the lease costs disclosed in the table above, we monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. We recognized certain immaterial impairments, primarily within our Supply Chain Solutions segment, during the three and nine months ended September 30, 2024 and during the nine months ended September 30, 2023. There were no impairments recognized during the three months ended September 30, 2023.
Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):
September 30,
2024		 December 31,
2023
Operating Leases:
Operating lease right-of-use assets $ 4,129  $ 4,308 
Current maturities of operating leases $ 699  $ 709 
Non-current operating leases 3,613  3,756 
Total operating lease obligations $ 4,312  $ 4,465 
Finance Leases:
Property, plant and equipment, net $ 640  $ 856 
Current maturities of long-term debt, commercial paper and finance leases $ 103  $ 104 
Long-term debt and finance leases 336  368 
Total finance lease obligations $ 439  $ 472 
Weighted average remaining lease term (in years):
Operating leases 10.8 10.8
Finance leases 7.2 7.4
Weighted average discount rate:
Operating leases 3.42  % 3.20  %
Finance leases 3.99  % 3.88  %

Supplemental cash flow information related to leases is as follows (in millions):
Nine Months Ended
 September 30,
2024 2023
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases $ 657  $ 627 
Operating cash flows from finance leases 13  10 
Financing cash flows from finance leases 93  101 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 403  $ 1,013 
Finance leases $ 58  $ 136 
Maturities of lease obligations as of September 30, 2024 were as follows (in millions):
Finance Leases Operating Leases
2024 $ 38  $ 180 
2025 111  858 
2026 85  751 
2027 54  646 
2028 46  486 
Thereafter 180  2,271 
Total lease payments 514  5,192 
Less: Imputed interest (75) (880)
Total lease obligations 439  4,312 
Less: Current obligations (103) (699)
Long-term lease obligations $ 336  $ 3,613 
As of September 30, 2024, we had $624 million of additional leases which had not commenced. These leases will commence later in 2024 through 2026 when we are granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained.
LEASES 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.
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.
The components of lease expense for the three and nine months ended September 30, 2024 and 2023 were as follows (in millions):
Three Months Ended
 September 30,		 Nine Months Ended
 September 30,
2024 2023 2024 2023
Operating lease costs $ 220  $ 219  $ 682  $ 645 
Finance lease costs:
Amortization of assets 38  31  104  88 
Interest on lease liabilities 6  4  16  13 
Total finance lease costs 44  35  120  101 
Variable lease costs 81  63  235  203 
Short-term lease costs 221  243  612  746 
Total lease costs(1)
$ 566  $ 560  $ 1,649  $ 1,695 
(1)    This table excludes sublease income as it was not material for the three and nine months ended September 30, 2024 and 2023.
In addition to the lease costs disclosed in the table above, we monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. We recognized certain immaterial impairments, primarily within our Supply Chain Solutions segment, during the three and nine months ended September 30, 2024 and during the nine months ended September 30, 2023. There were no impairments recognized during the three months ended September 30, 2023.
Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):
September 30,
2024		 December 31,
2023
Operating Leases:
Operating lease right-of-use assets $ 4,129  $ 4,308 
Current maturities of operating leases $ 699  $ 709 
Non-current operating leases 3,613  3,756 
Total operating lease obligations $ 4,312  $ 4,465 
Finance Leases:
Property, plant and equipment, net $ 640  $ 856 
Current maturities of long-term debt, commercial paper and finance leases $ 103  $ 104 
Long-term debt and finance leases 336  368 
Total finance lease obligations $ 439  $ 472 
Weighted average remaining lease term (in years):
Operating leases 10.8 10.8
Finance leases 7.2 7.4
Weighted average discount rate:
Operating leases 3.42  % 3.20  %
Finance leases 3.99  % 3.88  %

Supplemental cash flow information related to leases is as follows (in millions):
Nine Months Ended
 September 30,
2024 2023
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases $ 657  $ 627 
Operating cash flows from finance leases 13  10 
Financing cash flows from finance leases 93  101 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 403  $ 1,013 
Finance leases $ 58  $ 136 
Maturities of lease obligations as of September 30, 2024 were as follows (in millions):
Finance Leases Operating Leases
2024 $ 38  $ 180 
2025 111  858 
2026 85  751 
2027 54  646 
2028 46  486 
Thereafter 180  2,271 
Total lease payments 514  5,192 
Less: Imputed interest (75) (880)
Total lease obligations 439  4,312 
Less: Current obligations (103) (699)
Long-term lease obligations $ 336  $ 3,613 
As of September 30, 2024, we had $624 million of additional leases which had not commenced. These leases will commence later in 2024 through 2026 when we are granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained.