Company: AIRTP
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0000353184-25-000126
Chunk: 42

Company: AIR T INC
Filing Date: 2025-11-12
Form: 10-Q
Item: Item 8
Chunk 42
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794 Total inventories51,789 43,422 Reserves(5,163)(4,906)Total inventories, net of reserves$46,626 $38,516 

11.     Lessor Arrangements

Equipment LeasesThe Company leases equipment to third-parties, primarily through Contrail. Leases for aircraft and engines to aviation customers typically have terms ranging from 1 and 4 years under operating lease agreements. The Company depreciates aircraft and engines on a straight-line basis over the assets' useful life from the acquisition date to an estimated residual value. On August 26, 2024, Contrail executed the operating agreement for CASP Leasing 1, LLC ("CASP"), a newly-created and 95% owned subsidiary of Contrail. Shortly thereafter, on August 29, 2024, CASP entered into two purchase agreements to acquire, and subsequently lease, two Airbus Model A321-111 aircraft. On July 15, 2025, CASP completed the sale of these two aircraft, including their associated engines, for a total contracted sales price exceeding $25.0 million. In connection with the sale, CASP executed assignment, assumption, and amendment agreements under the existing leases, thereby transferring all lessor rights and obligations to the purchaser. After applying purchase price adjustments for deposits and rent payments as described in the sale and purchase agreements, CASP received net closing proceeds of $19.9 million. 

22

For the assets currently on lease, there are no options for the lessees to purchase the assets at the end of the lease term. During the three and six months ended September 30, 2025, the Company recognized depreciation expense relating to equipment leases of $0.1 million and $0.7 million, respectively. Depreciation expense relating to equipment leases for the three and six months ended September 30, 2024 was $0.2 million and $0.3 million, respectively.Future minimum undiscounted rental payments to be received do not include contingent rentals that may be received under certain leases because amounts are based on usage. Earned contingent rent on equipment leases totaled approximately $0.5 million during the six months ended September 30, 2025, and was immaterial during the three months ended September 30, 2025. Contingent rent earned on equipment leases during the three and six months ended September 30, 2024 was immaterial. As of September