Quarterly report [Sections 13 or 15(d)]

LEASES

v3.25.3
LEASES
 9 Months Ended
Sep. 30, 2025
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.
We recognize a right-of-use asset and lease obligation for all leases greater than twelve months, inclusive of renewal or purchase options that are reasonably certain to be exercised. In 2025, we defined a new lease asset class, data centers, and elected to account for the lease and non-lease components separately. For all other lease arrangements, we account for lease and non-lease components as a single lease component.
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.
We also have long-term finance leases for aircraft that we operate. In the nine months ended September 30, 2025, we entered into new aircraft leases. The leases that have commenced were accounted for as finance leases and represent $312 million of noncash investing and financing activities during the nine months ended September 30, 2025. Subsequent to September 30, 2025, we entered into six additional aircraft leases which we expect will be treated as finance leases.
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.
Sale-leaseback transactions
In the nine months ended September 30, 2025, we entered into sale-leaseback transactions involving a data center and real estate properties.
The real estate transactions were entered into under triple-net operating lease agreements with initial terms ranging from 15 to 20 years, which may be renewed. The leases include increases to base rent at rates ranging from 2.5% to 3.0% over the remaining terms of the leases.
The components of lease expense for the three and nine months ended September 30, 2025 and 2024 were as follows (in millions):
Three Months Ended
 September 30,		 Nine Months Ended
 September 30,
2025 2024 2025 2024
Operating lease costs $ 246  $ 220  $ 709  $ 682 
Finance lease costs:
Amortization of assets 42  38  104  104 
Interest on lease obligations 6  6  18  16 
Total finance lease costs 48  44  122  120 
Variable lease costs 97  81  287  235 
Short-term lease costs 220  221  639  612 
Total lease costs(1)
$ 611  $ 566  $ 1,757  $ 1,649 
(1)    This table excludes sublease income as it was not material for the three and nine months ended September 30, 2025 and 2024.
In addition to the lease costs 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 businesses, during the three and nine months ended September 30, 2025 and September 30, 2024.
Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions):
September 30,
2025		 December 31,
2024
Operating Leases:
Operating lease right-of-use assets $ 4,217  $ 4,149 
Current maturities of operating leases $ 742  $ 733 
Non-current operating leases 3,687  3,635 
Total operating lease obligations $ 4,429  $ 4,368 
Finance Leases:
Property, plant and equipment, net $ 973  $ 657 
Current maturities of long-term debt, commercial paper and finance leases $ 108  $ 104 
Long-term debt and finance leases 510  351 
Total finance lease obligations $ 618  $ 455 
Supplemental cash flow information related to leases is as follows (in millions):
Nine Months Ended
 September 30,
2025 2024
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases $ 716  $ 657 
Operating cash flows from finance leases 12  13 
Financing cash flows from finance leases 93  93 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 561  $ 403 
Finance leases 472  58 
Maturities of lease obligations as of September 30, 2025 were as follows (in millions):
Finance Leases Operating Leases
2025 $ 38  $ 201 
2026 119  893 
2027 79  775 
2028 72  602 
2029 62  467 
Thereafter 448  2,449 
Total lease payments 818  5,387 
Less: Imputed interest (200) (958)
Total lease obligations 618  4,429 
Less: Current obligations (108) (742)
Long-term lease obligations $ 510  $ 3,687 
As of September 30, 2025, we had $2.2 billion of additional leases which had not commenced and are expected to commence later in 2025 through 2027. These leases are primarily related to aircraft and will commence when the related aircraft is delivered. Other leases will commence when we are granted access to the property, such as when leasehold improvements are completed 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.
We recognize a right-of-use asset and lease obligation for all leases greater than twelve months, inclusive of renewal or purchase options that are reasonably certain to be exercised. In 2025, we defined a new lease asset class, data centers, and elected to account for the lease and non-lease components separately. For all other lease arrangements, we account for lease and non-lease components as a single lease component.
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.
We also have long-term finance leases for aircraft that we operate. In the nine months ended September 30, 2025, we entered into new aircraft leases. The leases that have commenced were accounted for as finance leases and represent $312 million of noncash investing and financing activities during the nine months ended September 30, 2025. Subsequent to September 30, 2025, we entered into six additional aircraft leases which we expect will be treated as finance leases.
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.
Sale-leaseback transactions
In the nine months ended September 30, 2025, we entered into sale-leaseback transactions involving a data center and real estate properties.
The real estate transactions were entered into under triple-net operating lease agreements with initial terms ranging from 15 to 20 years, which may be renewed. The leases include increases to base rent at rates ranging from 2.5% to 3.0% over the remaining terms of the leases.
The components of lease expense for the three and nine months ended September 30, 2025 and 2024 were as follows (in millions):
Three Months Ended
 September 30,		 Nine Months Ended
 September 30,
2025 2024 2025 2024
Operating lease costs $ 246  $ 220  $ 709  $ 682 
Finance lease costs:
Amortization of assets 42  38  104  104 
Interest on lease obligations 6  6  18  16 
Total finance lease costs 48  44  122  120 
Variable lease costs 97  81  287  235 
Short-term lease costs 220  221  639  612 
Total lease costs(1)
$ 611  $ 566  $ 1,757  $ 1,649 
(1)    This table excludes sublease income as it was not material for the three and nine months ended September 30, 2025 and 2024.
In addition to the lease costs 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 businesses, during the three and nine months ended September 30, 2025 and September 30, 2024.
Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions):
September 30,
2025		 December 31,
2024
Operating Leases:
Operating lease right-of-use assets $ 4,217  $ 4,149 
Current maturities of operating leases $ 742  $ 733 
Non-current operating leases 3,687  3,635 
Total operating lease obligations $ 4,429  $ 4,368 
Finance Leases:
Property, plant and equipment, net $ 973  $ 657 
Current maturities of long-term debt, commercial paper and finance leases $ 108  $ 104 
Long-term debt and finance leases 510  351 
Total finance lease obligations $ 618  $ 455 
Supplemental cash flow information related to leases is as follows (in millions):
Nine Months Ended
 September 30,
2025 2024
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases $ 716  $ 657 
Operating cash flows from finance leases 12  13 
Financing cash flows from finance leases 93  93 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 561  $ 403 
Finance leases 472  58 
Maturities of lease obligations as of September 30, 2025 were as follows (in millions):
Finance Leases Operating Leases
2025 $ 38  $ 201 
2026 119  893 
2027 79  775 
2028 72  602 
2029 62  467 
Thereafter 448  2,449 
Total lease payments 818  5,387 
Less: Imputed interest (200) (958)
Total lease obligations 618  4,429 
Less: Current obligations (108) (742)
Long-term lease obligations $ 510  $ 3,687 
As of September 30, 2025, we had $2.2 billion of additional leases which had not commenced and are expected to commence later in 2025 through 2027. These leases are primarily related to aircraft and will commence when the related aircraft is delivered. Other leases will commence when we are granted access to the property, such as when leasehold improvements are completed or a certificate of occupancy is obtained.