Annual report [Section 13 and 15(d), not S-K Item 405]

LEASES

v3.25.4
LEASES
 12 Months Ended
Dec. 31, 2025
Leases [Abstract]  
LEASES
NOTE 11. 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. We also have long-term finance leases for aircraft that we operate.
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 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 2025, 2024 and 2023 were as follows (in millions):
2025 2024 2023
Operating lease costs $ 950  $ 912  $ 860 
Finance lease costs:
Amortization of assets $ 139  $ 145  $ 119 
Interest on lease liabilities 27  23  18 
Total finance lease costs 166  168  137 
Variable lease costs 382  311  279 
Short-term lease costs 1,091  1,079  1,166 
Total lease costs(1)
$ 2,589  $ 2,470  $ 2,442 
(1)    This table excludes sublease income for all periods presented as it was not material.
We also monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. We recognized certain immaterial impairments during 2025, 2024 and 2023.
Supplemental information related to leases and location within our consolidated balance sheets as of December 31, 2025 and 2024 are as follows (in millions, except lease term and discount rate):
2025 2024
Operating Leases:
Operating lease right-of-use assets $ 4,263  $ 4,149 
Current maturities of operating leases $ 763  $ 733 
Non-current operating leases 3,700  3,635 
Total operating lease obligations $ 4,463  $ 4,368 
Finance Leases:
Property, plant and equipment, net $ 1,146  $ 657 
Current maturities of long-term debt, commercial paper and finance leases $ 107  $ 104 
Long-term debt and finance leases 674  351 
Total finance lease obligations $ 781  $ 455 
Weighted average remaining lease term (in years):
Operating leases 10.6 10.4
Finance leases 22.3 11.1
Weighted average discount rate:
Operating leases 3.66  % 3.50  %
Finance leases 4.49  % 3.84  %
Future payments for lease obligations as of December 31, 2025 are as follows (in millions):
Finance Leases Operating Leases
2026 $ 137  $ 907 
2027 94  822 
2028 87  641 
2029 79  496 
2030 72  390 
Thereafter 585  2,151 
Total lease payments 1,054  5,407 
Less: Imputed interest (273) (944)
Total lease obligations 781  4,463 
Less: Current obligations (107) (763)
Long-term lease obligations $ 674  $ 3,700 
As of December 31, 2025, we had $2.6 billion of additional leases which had not commenced and are expected to commence between 2026 and 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 property, such as when leasehold improvements are completed or a certificate of occupancy is obtained.
LEASES
NOTE 11. 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. We also have long-term finance leases for aircraft that we operate.
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 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 2025, 2024 and 2023 were as follows (in millions):
2025 2024 2023
Operating lease costs $ 950  $ 912  $ 860 
Finance lease costs:
Amortization of assets $ 139  $ 145  $ 119 
Interest on lease liabilities 27  23  18 
Total finance lease costs 166  168  137 
Variable lease costs 382  311  279 
Short-term lease costs 1,091  1,079  1,166 
Total lease costs(1)
$ 2,589  $ 2,470  $ 2,442 
(1)    This table excludes sublease income for all periods presented as it was not material.
We also monitor all lease categories for any indicators that the carrying value of the assets may not be recoverable. We recognized certain immaterial impairments during 2025, 2024 and 2023.
Supplemental information related to leases and location within our consolidated balance sheets as of December 31, 2025 and 2024 are as follows (in millions, except lease term and discount rate):
2025 2024
Operating Leases:
Operating lease right-of-use assets $ 4,263  $ 4,149 
Current maturities of operating leases $ 763  $ 733 
Non-current operating leases 3,700  3,635 
Total operating lease obligations $ 4,463  $ 4,368 
Finance Leases:
Property, plant and equipment, net $ 1,146  $ 657 
Current maturities of long-term debt, commercial paper and finance leases $ 107  $ 104 
Long-term debt and finance leases 674  351 
Total finance lease obligations $ 781  $ 455 
Weighted average remaining lease term (in years):
Operating leases 10.6 10.4
Finance leases 22.3 11.1
Weighted average discount rate:
Operating leases 3.66  % 3.50  %
Finance leases 4.49  % 3.84  %
Future payments for lease obligations as of December 31, 2025 are as follows (in millions):
Finance Leases Operating Leases
2026 $ 137  $ 907 
2027 94  822 
2028 87  641 
2029 79  496 
2030 72  390 
Thereafter 585  2,151 
Total lease payments 1,054  5,407 
Less: Imputed interest (273) (944)
Total lease obligations 781  4,463 
Less: Current obligations (107) (763)
Long-term lease obligations $ 674  $ 3,700 
As of December 31, 2025, we had $2.6 billion of additional leases which had not commenced and are expected to commence between 2026 and 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 property, such as when leasehold improvements are completed or a certificate of occupancy is obtained.