Company: UP
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001819516-25-000044
Chunk: 49

Company: Wheels Up Experience Inc.
Filing Date: 2025-08-07
Form: 10-Q
Item: Item 1
Chunk 49
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 for as a liability in accordance with ASC 815-40. The Warrant liability was measured at fair value upon assumption and on a recurring basis, with changes in fair value presented in the condensed consolidated statements of operations. As of each of June 30, 2025 and December 31, 2024, we used Level 2 inputs for the Warrants. See Note 10 for additional information about the Warrants.The estimated fair value of the Revolving Equipment Notes is categorized as a Level 3 valuation. We considered the appraised value of aircraft subject to first-priority liens under the Revolving Equipment Notes, as sourced during the second quarter of 2025 and as required under the Revolving Equipment Notes, to determine the fair value of the Revolving Equipment Notes as of June 30, 2025. 

The estimated fair value of the Term Loan is categorized as a Level 3 valuation. The estimated fair value as of June 30, 2025 was estimated using a discounted cash flows analysis, based on our current estimated incremental borrowing rate for a similar type of borrowing arrangement and taking into account amounts outstanding as of June 30, 2025 in connection with the Credit Support Premium.  

8.LEASES

Leases primarily pertain to certain controlled aircraft, office spaces and operational facilities, which are all accounted for as operating leases. Certain of these operating leases have renewal options to further extend for additional time periods at our discretion.We have certain variable lease agreements with certain aircraft lessors that contain payment terms based on an hourly lease rate multiplied by the number of flight hours for the applicable aircraft during a given period. Variable lease payments are not included in the right-of-use asset and lease liability balances but rather are expensed as incurred.The components of net lease cost were as follows (in thousands):Three Months Ended June 30,Six Months Ended June 30,2025202420252024Operating lease costs$3,732 $7,509 $9,350 $15,049 Short-term lease costs1,797 173 2,665 386 Variable lease payments1,086 5,826 3,062 10,139 Total lease costs$6,615 $13,508 $15,077 $25,574 Lease costs related to leased aircraft and operational facilities are included in Cost of revenue in the condensed consolidated statements of operations. Lease costs related to leased aircraft were $3.9 million and $9.3 million during