Annual report pursuant to Section 13 and 15(d)

LEASES

v3.24.0.1
LEASES
 12 Months Ended
Dec. 31, 2023
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 years ended December 31, 2023, 2022 and 2021 were as follows (in millions):
2023 2022 2021
Operating lease costs $ 860  $ 736  $ 729 
Finance lease costs:
Amortization of assets $ 119  $ 112  $ 97 
Interest on lease liabilities 18  14  14 
Total finance lease costs 137  126  111 
Variable lease costs 279  270  246 
Short-term lease costs 1,166  1,499  1,510 
Total lease costs(1)
$ 2,442  $ 2,631  $ 2,596 
(1)    This table excludes sublease income for all periods presented as it was not material.
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. There were no material impairments recognized for the years ended December 31, 2023, 2022 or 2021.
Supplemental information related to leases and location within our consolidated balance sheets as of December 31, 2023 and 2022 are as follows (in millions, except lease term and discount rate):
2023 2022
Operating Leases:
Operating lease right-of-use assets $ 4,308  $ 3,755 
Current maturities of operating leases $ 709  $ 621 
Non-current operating leases 3,756  3,238 
Total operating lease obligations $ 4,465  $ 3,859 
Finance Leases:
Property, plant and equipment, net $ 856  $ 959 
Current maturities of long-term debt, commercial paper and finance leases $ 104  $ 92 
Long-term debt and finance leases 368  298 
Total finance lease obligations $ 472  $ 390 
Weighted average remaining lease term (in years):
Operating leases 10.8 10.8
Finance leases 7.4 8.4
Weighted average discount rate:
Operating leases 3.20  % 2.32  %
Finance leases 3.88  % 3.17  %
Supplemental cash flow information related to leases for the years ended December 31, 2023 and 2022 is as follows (in millions):
2023 2022
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases $ 835  $ 705 
Operating cash flows from finance leases 17  14 
Financing cash flows from finance leases 126  149 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 1,278  $ 879 
Finance leases $ 209  $ 122 
Future payments for lease obligations as of December 31, 2023 are as follows (in millions):
Finance Leases Operating Leases
2024 $ 119  $ 819 
2025 96  764 
2026 70  657 
2027 45  561 
2028 40  415 
Thereafter 185  2,106 
Total lease payments 555  5,322 
Less: Imputed interest (83) (857)
Total lease obligations 472  4,465 
Less: Current obligations (104) (709)
Long-term lease obligations $ 368  $ 3,756 
As of December 31, 2023, we had additional leases which have not commenced of $835 million. These leases will commence between 2024 and 2025 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 years ended December 31, 2023, 2022 and 2021 were as follows (in millions):
2023 2022 2021
Operating lease costs $ 860  $ 736  $ 729 
Finance lease costs:
Amortization of assets $ 119  $ 112  $ 97 
Interest on lease liabilities 18  14  14 
Total finance lease costs 137  126  111 
Variable lease costs 279  270  246 
Short-term lease costs 1,166  1,499  1,510 
Total lease costs(1)
$ 2,442  $ 2,631  $ 2,596 
(1)    This table excludes sublease income for all periods presented as it was not material.
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. There were no material impairments recognized for the years ended December 31, 2023, 2022 or 2021.
Supplemental information related to leases and location within our consolidated balance sheets as of December 31, 2023 and 2022 are as follows (in millions, except lease term and discount rate):
2023 2022
Operating Leases:
Operating lease right-of-use assets $ 4,308  $ 3,755 
Current maturities of operating leases $ 709  $ 621 
Non-current operating leases 3,756  3,238 
Total operating lease obligations $ 4,465  $ 3,859 
Finance Leases:
Property, plant and equipment, net $ 856  $ 959 
Current maturities of long-term debt, commercial paper and finance leases $ 104  $ 92 
Long-term debt and finance leases 368  298 
Total finance lease obligations $ 472  $ 390 
Weighted average remaining lease term (in years):
Operating leases 10.8 10.8
Finance leases 7.4 8.4
Weighted average discount rate:
Operating leases 3.20  % 2.32  %
Finance leases 3.88  % 3.17  %
Supplemental cash flow information related to leases for the years ended December 31, 2023 and 2022 is as follows (in millions):
2023 2022
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases $ 835  $ 705 
Operating cash flows from finance leases 17  14 
Financing cash flows from finance leases 126  149 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 1,278  $ 879 
Finance leases $ 209  $ 122 
Future payments for lease obligations as of December 31, 2023 are as follows (in millions):
Finance Leases Operating Leases
2024 $ 119  $ 819 
2025 96  764 
2026 70  657 
2027 45  561 
2028 40  415 
Thereafter 185  2,106 
Total lease payments 555  5,322 
Less: Imputed interest (83) (857)
Total lease obligations 472  4,465 
Less: Current obligations (104) (709)
Long-term lease obligations $ 368  $ 3,756 
As of December 31, 2023, we had additional leases which have not commenced of $835 million. These leases will commence between 2024 and 2025 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.