Spirit Airlines 2015 Annual Report Download - page 83

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Notes to Financial Statements—(Continued)
83
Future minimum lease payments under noncancellable operating leases with initial or remaining terms in excess of one
year at December 31, 2015 were as follows:
Operating Leases
Aircraft
and Spare Engine
Leases Property Facility
Leases Total Operating
Leases
(in thousands)
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 213,491 $ 27,340 $ 240,831
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201,485 26,364 227,849
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177,697 29,820 207,517
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,333 28,733 179,066
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,992 20,546 160,538
2021 and thereafter . . . . . . . . . . . . . . . . . . . . . . 494,104 70,199 564,303
Total minimum lease payments . . . . . . . . . . . . $ 1,377,102 $ 203,002 $ 1,580,104
11. Financial Instruments and Risk Management
As part of the Company’s risk management program, the Company from time to time uses a variety of financial
instruments to reduce its exposure to fluctuations in the price of jet fuel and interest rates. The Company does not hold or issue
derivative financial instruments for trading purposes.
The Company is exposed to credit losses in the event of nonperformance by counterparties to these financial instruments.
The Company periodically reviews and seeks to mitigate exposure to the financial deterioration and nonperformance of any
counterparty by monitoring the absolute exposure levels, each counterparty's credit ratings and the historical performance of the
counterparties relating to hedge transactions. The credit exposure related to these financial instruments is limited to the fair
value of contracts in a net receivable position at the reporting date. The Company also maintains security agreements that
require the Company to post collateral if the value of selected instruments falls below specified mark-to-market thresholds. The
Company records financial derivative instruments at fair value, which includes an evaluation of each counterparty's credit risk.
As of December 31, 2015, the Company did not hold any derivatives.
Fuel Derivative Instruments
The Company's fuel derivative contracts generally consist of United States Gulf Coast jet fuel swaps (jet fuel swaps) and
United States Gulf Coast jet fuel options (jet fuel options). Both jet fuel swaps and jet fuel options are used at times to protect
the refining price risk between the price of crude oil and the price of refined jet fuel, and to manage the risk of increasing fuel
prices. Fair value of the instruments is determined using standard option valuation models.
The Company accounts for its fuel derivative contracts at fair value and recognizes them in the balance sheet in prepaid
expenses and other current assets or other current liabilities. The Company did not elect hedge accounting on any fuel
derivative instruments entered into during 2015, 2014 and 2013 and, as a result, changes in the fair value of these fuel
derivative contracts are recorded in aircraft fuel expense. The Company paid $2.5 million and $9.7 million in premiums to
acquire jet fuel options, during 2015 and 2014, respectively.