Annual report pursuant to Section 13 and 15(d)

LEASES

v3.25.0.1
LEASES
 12 Months Ended
Dec. 31, 2024
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.
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, 2024, 2023 and 2022 were as follows (in millions):
2024 2023 2022
Operating lease costs $ 912  $ 860  $ 736 
Finance lease costs:
Amortization of assets $ 145  $ 119  $ 112 
Interest on lease liabilities 23  18  14 
Total finance lease costs 168  137  126 
Variable lease costs 311  279  270 
Short-term lease costs 1,079  1,166  1,499 
Total lease costs(1)
$ 2,470  $ 2,442  $ 2,631 
(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. We recognized certain immaterial impairments, primarily within Supply Chain Solutions, for the years ended December 31, 2024, 2023 and 2022.
Supplemental information related to leases and location within our consolidated balance sheets as of December 31, 2024 and 2023 are as follows (in millions, except lease term and discount rate):
2024 2023
Operating Leases:
Operating lease right-of-use assets $ 4,149  $ 4,308 
Current maturities of operating leases $ 733  $ 709 
Non-current operating leases 3,635  3,756 
Total operating lease obligations $ 4,368  $ 4,465 
Finance Leases:
Property, plant and equipment, net $ 657  $ 856 
Current maturities of long-term debt, commercial paper and finance leases $ 104  $ 104 
Long-term debt and finance leases 351  368 
Total finance lease obligations $ 455  $ 472 
Weighted average remaining lease term (in years):
Operating leases 10.4 10.8
Finance leases 11.1 7.4
Weighted average discount rate:
Operating leases 3.50  % 3.20  %
Finance leases 3.84  % 3.88  %
Supplemental cash flow information related to leases for the years ended December 31, 2024 and 2023 is as follows (in millions):
2024 2023
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases $ 877  $ 835 
Operating cash flows from finance leases 20  17 
Financing cash flows from finance leases 136  126 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 740  $ 1,278 
Finance leases 120  209 
Future payments for lease obligations as of December 31, 2024 are as follows (in millions):
Finance Leases Operating Leases
2025 $ 115  $ 847 
2026 87  765 
2027 55  659 
2028 47  504 
2029 38  388 
Thereafter 207  2,049 
Total lease payments 549  5,212 
Less: Imputed interest (94) (844)
Total lease obligations 455  4,368 
Less: Current obligations (104) (733)
Long-term lease obligations $ 351  $ 3,635 
As of December 31, 2024, we had additional leases which have not commenced of $561 million. These leases will commence between 2025 and 2026 when we are granted access to the property, such as when we are able to begin constructing leasehold improvements or obtain a certificate of occupancy.
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.
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, 2024, 2023 and 2022 were as follows (in millions):
2024 2023 2022
Operating lease costs $ 912  $ 860  $ 736 
Finance lease costs:
Amortization of assets $ 145  $ 119  $ 112 
Interest on lease liabilities 23  18  14 
Total finance lease costs 168  137  126 
Variable lease costs 311  279  270 
Short-term lease costs 1,079  1,166  1,499 
Total lease costs(1)
$ 2,470  $ 2,442  $ 2,631 
(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. We recognized certain immaterial impairments, primarily within Supply Chain Solutions, for the years ended December 31, 2024, 2023 and 2022.
Supplemental information related to leases and location within our consolidated balance sheets as of December 31, 2024 and 2023 are as follows (in millions, except lease term and discount rate):
2024 2023
Operating Leases:
Operating lease right-of-use assets $ 4,149  $ 4,308 
Current maturities of operating leases $ 733  $ 709 
Non-current operating leases 3,635  3,756 
Total operating lease obligations $ 4,368  $ 4,465 
Finance Leases:
Property, plant and equipment, net $ 657  $ 856 
Current maturities of long-term debt, commercial paper and finance leases $ 104  $ 104 
Long-term debt and finance leases 351  368 
Total finance lease obligations $ 455  $ 472 
Weighted average remaining lease term (in years):
Operating leases 10.4 10.8
Finance leases 11.1 7.4
Weighted average discount rate:
Operating leases 3.50  % 3.20  %
Finance leases 3.84  % 3.88  %
Supplemental cash flow information related to leases for the years ended December 31, 2024 and 2023 is as follows (in millions):
2024 2023
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases $ 877  $ 835 
Operating cash flows from finance leases 20  17 
Financing cash flows from finance leases 136  126 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 740  $ 1,278 
Finance leases 120  209 
Future payments for lease obligations as of December 31, 2024 are as follows (in millions):
Finance Leases Operating Leases
2025 $ 115  $ 847 
2026 87  765 
2027 55  659 
2028 47  504 
2029 38  388 
Thereafter 207  2,049 
Total lease payments 549  5,212 
Less: Imputed interest (94) (844)
Total lease obligations 455  4,368 
Less: Current obligations (104) (733)
Long-term lease obligations $ 351  $ 3,635 
As of December 31, 2024, we had additional leases which have not commenced of $561 million. These leases will commence between 2025 and 2026 when we are granted access to the property, such as when we are able to begin constructing leasehold improvements or obtain a certificate of occupancy.