Quarterly report [Sections 13 or 15(d)]

LEASES

v3.25.1
LEASES
 3 Months Ended
Mar. 31, 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 the first quarter of 2025, we entered into a sale-leaseback transaction involving 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 continue to 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. Subsequent to March 31, 2025, we entered into six new 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.
The components of lease expense for the three months ended March 31, 2025 and 2024 were as follows (in millions):
2025 2024
Operating lease costs $ 231  $ 231 
Finance lease costs:
Amortization of assets 35  35 
Interest on lease liabilities 7  5 
Total finance lease costs 42  40 
Variable lease costs 72  76 
Short-term lease costs 212  199 
Total lease costs(1)
$ 557  $ 546 
(1)    This table excludes sublease income as it was not material for the three months ended March 31, 2025 and 2024.
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 months ended March 31, 2025. There were no impairments recognized during the three months ended March 31, 2024.
Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):
March 31,
2025		 December 31,
2024
Operating Leases:
Operating lease right-of-use assets $ 4,015  $ 4,149 
Current maturities of operating leases $ 720  $ 733 
Non-current operating leases 3,505  3,635 
Total operating lease obligations $ 4,225  $ 4,368 
Finance Leases:
Property, plant and equipment, net $ 644  $ 657 
Current maturities of long-term debt, commercial paper and finance leases $ 98  $ 104 
Long-term debt and finance leases 361  351 
Total finance lease obligations $ 459  $ 455 

Supplemental cash flow information related to leases is as follows (in millions):
Three Months Ended
 March 31,
2025 2024
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases $ 238  $ 227 
Operating cash flows from finance leases 3  3 
Financing cash flows from finance leases 30  26 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 16  $ 151 
Finance leases 32  14 
Maturities of lease obligations as of March 31, 2025 were as follows (in millions):
Finance Leases Operating Leases
2025 $ 93  $ 637 
2026 93  799 
2027 61  689 
2028 54  528 
2029 43  408 
Thereafter 222  1,989 
Total lease payments 566  5,050 
Less: Imputed interest (107) (825)
Total lease obligations 459  4,225 
Less: Current obligations (98) (720)
Long-term lease obligations $ 361  $ 3,505 
As of March 31, 2025, we had $562 million of additional leases which had not commenced. These leases will commence later in 2025 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.
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 the first quarter of 2025, we entered into a sale-leaseback transaction involving 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 continue to 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. Subsequent to March 31, 2025, we entered into six new 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.
The components of lease expense for the three months ended March 31, 2025 and 2024 were as follows (in millions):
2025 2024
Operating lease costs $ 231  $ 231 
Finance lease costs:
Amortization of assets 35  35 
Interest on lease liabilities 7  5 
Total finance lease costs 42  40 
Variable lease costs 72  76 
Short-term lease costs 212  199 
Total lease costs(1)
$ 557  $ 546 
(1)    This table excludes sublease income as it was not material for the three months ended March 31, 2025 and 2024.
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 months ended March 31, 2025. There were no impairments recognized during the three months ended March 31, 2024.
Supplemental information related to leases and location within our consolidated balance sheets is as follows (in millions, except lease term and discount rate):
March 31,
2025		 December 31,
2024
Operating Leases:
Operating lease right-of-use assets $ 4,015  $ 4,149 
Current maturities of operating leases $ 720  $ 733 
Non-current operating leases 3,505  3,635 
Total operating lease obligations $ 4,225  $ 4,368 
Finance Leases:
Property, plant and equipment, net $ 644  $ 657 
Current maturities of long-term debt, commercial paper and finance leases $ 98  $ 104 
Long-term debt and finance leases 361  351 
Total finance lease obligations $ 459  $ 455 

Supplemental cash flow information related to leases is as follows (in millions):
Three Months Ended
 March 31,
2025 2024
Cash paid for amounts included in measurement of obligations:
Operating cash flows from operating leases $ 238  $ 227 
Operating cash flows from finance leases 3  3 
Financing cash flows from finance leases 30  26 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 16  $ 151 
Finance leases 32  14 
Maturities of lease obligations as of March 31, 2025 were as follows (in millions):
Finance Leases Operating Leases
2025 $ 93  $ 637 
2026 93  799 
2027 61  689 
2028 54  528 
2029 43  408 
Thereafter 222  1,989 
Total lease payments 566  5,050 
Less: Imputed interest (107) (825)
Total lease obligations 459  4,225 
Less: Current obligations (98) (720)
Long-term lease obligations $ 361  $ 3,505 
As of March 31, 2025, we had $562 million of additional leases which had not commenced. These leases will commence later in 2025 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.