UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35784

NORWEGIAN CRUISE LINE HOLDINGS LTD.

(Exact name of registrant as specified in its charter)


Bermuda		98-0691007
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7665 Corporate Center Drive, Miami, Florida 33126		33126
(Address of principal executive offices)		(zip code)

(305) 436-4000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary shares, par value $0.001 per share		NCLH		The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ⌧	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

There were 429,040,624 ordinary shares outstanding as of April 30, 2024.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)


	Three Months Ended
	March 31,
	2024		2023
Revenue
Passenger ticket	$	1,459,814	$	1,208,841
Onboard and other		731,401		613,098
Total revenue		2,191,215		1,821,939
Cruise operating expense
Commissions, transportation and other		436,210		409,684
Onboard and other		132,036		119,697
Payroll and related		344,281		304,155
Fuel		197,734		194,868
Food		84,708		95,966
Other		192,454		156,048
Total cruise operating expense		1,387,423		1,280,418
Other operating expense
Marketing, general and administrative		362,469		336,013
Depreciation and amortization		222,929		194,790
Total other operating expense		585,398		530,803
Operating income		218,394		10,718
Non-operating income (expense)
Interest expense, net		(218,177)		(171,257)
Other income (expense), net		18,137		(8,955)
Total non-operating income (expense)		(200,040)		(180,212)
Net income (loss) before income taxes		18,354		(169,494)
Income tax benefit (expense)		(1,001)		10,173
Net income (loss)	$	17,353	$	(159,321)
Weighted-average shares outstanding
Basic		426,803,519		422,655,215
Diluted		431,019,206		422,655,215
Earnings (loss) per share
Basic	$	0.04	$	(0.38)
Diluted	$	0.04	$	(0.38)

The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)


	Three Months Ended
	March 31,
	2024		2023
Net income (loss)	$	17,353	$	(159,321)
Other comprehensive income (loss):
Shipboard Retirement Plan		95		64
Cash flow hedges:
Net unrealized gain (loss)		47,253		(18,475)
Amount realized and reclassified into earnings		(3,333)		(9,874)
Total other comprehensive income (loss)		44,015		(28,285)
Total comprehensive income (loss)	$	61,368	$	(187,606)

The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share data)


	March 31,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	559,814	$	402,415
Accounts receivable, net		282,313		280,271
Inventories		157,879		157,646
Prepaid expenses and other assets		590,148		472,816
Total current assets		1,590,154		1,313,148
Property and equipment, net		16,463,522		16,433,292
Goodwill		98,134		98,134
Trade names		500,525		500,525
Other long-term assets		1,172,853		1,147,891
Total assets	$	19,825,188	$	19,492,990
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt	$	1,744,221	$	1,744,778
Accounts payable		204,971		174,338
Accrued expenses and other liabilities		1,019,620		1,058,919
Advance ticket sales		3,629,707		3,060,666
Total current liabilities		6,598,519		6,038,701
Long-term debt		12,005,296		12,314,147
Other long-term liabilities		859,282		839,335
Total liabilities		19,463,097		19,192,183
Commitments and contingencies (Note 9)
Shareholders’ equity:
Ordinary shares, $0.001 par value; 980,000,000 shares authorized; 429,025,827 shares issued and outstanding at March 31, 2024 and 425,546,570 shares issued and outstanding at December 31, 2023		429		425
Additional paid-in capital		7,708,869		7,708,957
Accumulated other comprehensive income (loss)		(464,423)		(508,438)
Accumulated deficit		(6,882,784)		(6,900,137)
Total shareholders’ equity		362,091		300,807
Total liabilities and shareholders’ equity	$	19,825,188	$	19,492,990

The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Three Months Ended
	March 31,
	2024		2023
Cash flows from operating activities
Net income (loss)	$	17,353	$	(159,321)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense		245,092		210,676
(Gain) loss on derivatives		(1,125)		4,404
Loss on extinguishment of debt		29,000		2,434
Provision for bad debts and inventory obsolescence		1,532		1,199
Gain on involuntary conversion of assets		(2,846)		—
Share-based compensation expense		21,948		28,155
Net foreign currency adjustments on euro-denominated debt		(6,603)		1,021
Changes in operating assets and liabilities:
Accounts receivable, net		(4,052)		65,391
Inventories		(517)		2,812
Prepaid expenses and other assets		(83,414)		(127,192)
Accounts payable		29,987		(25,926)
Accrued expenses and other liabilities		(31,422)		(168,581)
Advance ticket sales		592,238		668,261
Net cash provided by operating activities		807,171		503,333
Cash flows from investing activities
Additions to property and equipment, net		(258,851)		(237,676)
Other		3,608		1,320
Net cash used in investing activities		(255,243)		(236,356)
Cash flows from financing activities
Repayments of long-term debt		(425,339)		(1,821,412)
Proceeds from long-term debt		92,406		1,330,622
Proceeds from employee related plans		—		2,618
Net share settlement of restricted share units		(22,032)		(11,306)
Early redemption premium		(19,163)		—
Deferred financing fees		(20,401)		(13,886)
Net cash used in financing activities		(394,529)		(513,364)
Net increase (decrease) in cash and cash equivalents		157,399		(246,387)
Cash and cash equivalents at beginning of period		402,415		946,987
Cash and cash equivalents at end of period	$	559,814	$	700,600

The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity (Deficit)

(Unaudited)

(in thousands)


	Three Months Ended March 31, 2024
					Accumulated
			Additional		Other				Total
	Ordinary		Paid-in		Comprehensive		Accumulated		Shareholders’
	Shares		Capital		Income (Loss)		Deficit		Equity (Deficit)
Balance, December 31, 2023	$	425	$	7,708,957	$	(508,438)	$	(6,900,137)	$	300,807
Share-based compensation		—		21,948		—		—		21,948
Issuance of shares under employee related plans		4		(4)		—		—		—
Net share settlement of restricted share units		—		(22,032)		—		—		(22,032)
Other comprehensive income, net		—		—		44,015		—		44,015
Net income		—		—		—		17,353		17,353
Balance, March 31, 2024	$	429	$	7,708,869	$	(464,423)	$	(6,882,784)	$	362,091


	Three Months Ended March 31, 2023
					Accumulated
			Additional		Other				Total
	Ordinary		Paid-in		Comprehensive		Accumulated		Shareholders’
	Shares		Capital		Income (Loss)		Deficit		Equity (Deficit)
Balance, December 31, 2022	$	421	$	7,611,564	$	(477,079)	$	(7,066,315)	$	68,591
Share-based compensation		—		28,155		—		—		28,155
Issuance of shares under employee related plans		3		2,615		—		—		2,618
Net share settlement of restricted share units		—		(11,306)		—		—		(11,306)
Other comprehensive loss, net		—		—		(28,285)		—		(28,285)
Net loss		—		—		—		(159,321)		(159,321)
Balance, March 31, 2023	$	424	$	7,631,028	$	(505,364)	$	(7,225,636)	$	(99,548)

The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Notes to Consolidated Financial Statements

(Unaudited)

Unless otherwise indicated or the context otherwise requires, references in this report to (i) the “Company,” “we,” “our” and “us” refer to NCLH (as defined below) and its subsidiaries, (ii) “NCLC” refers to NCL Corporation Ltd., (iii) “NCLH” refers to Norwegian Cruise Line Holdings Ltd., (iv) “Norwegian Cruise Line” or “Norwegian” refers to the Norwegian Cruise Line brand and its predecessors, (v) “Oceania Cruises” refers to the Oceania Cruises brand and (vi) “Regent” refers to the Regent Seven Seas Cruises brand.

References to the “U.S.” are to the United States of America, and “dollar(s)” or “$” are to U.S. dollars, the “U.K.” are to the United Kingdom and “euro(s)” or “€” are to the official currency of the Eurozone. We refer you to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Terminology” for the capitalized terms used and not otherwise defined throughout these notes to consolidated financial statements.

1. Description of Business and Organization

We are a leading global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. As of March 31, 2024, we had 32 ships with approximately 66,400 Berths and had orders for five additional ships to be delivered through 2028.

As of March 31, 2024, we had four Prima Class Ships on order with currently scheduled delivery dates from 2025 through 2028, and we had one Allura Class Ship on order for delivery in 2025. Subsequent to March 31, 2024, we announced anticipated additional newbuilds for our fleet.

2. Summary of Significant Accounting Policies

Liquidity

As of March 31, 2024, we had liquidity of approximately $2.4 billion, including cash and cash equivalents of $559.8 million and borrowings available under our $1.2 billion undrawn Revolving Loan Facility and $650 million undrawn commitment of senior unsecured notes issuable by NCLC less related fees (see Note 6 – “Long-Term Debt”). Additionally, in April 2024, a €200 million commitment became available that can be used for future newbuild payments (see Note 6 – “Long-Term Debt”). We believe that we have sufficient liquidity to fund our obligations and expect to remain in compliance with our financial covenants for at least the next twelve months from the issuance of these financial statements.

We will continue to pursue various opportunities to refinance future debt maturities to reduce interest expense and/or to extend the maturity dates associated with our existing indebtedness and obtain relevant financial covenant amendments or waivers, if needed.

Basis of Presentation

The accompanying consolidated financial statements are unaudited and, in our opinion, contain all normal recurring adjustments necessary for a fair statement of the results for the periods presented.

Our operations are seasonal and results for interim periods are not necessarily indicative of the results for the entire fiscal year. Historically, demand for cruises has been strongest during the Northern Hemisphere’s summer months. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023, which are included in our most recent Annual Report on Form 10-K filed with the SEC on February 28, 2024.

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Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the basic weighted-average number of shares outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) and assumed conversion of exchangeable notes by diluted weighted-average shares outstanding.

A reconciliation between basic and diluted earnings (loss) per share was as follows (in thousands, except share and per share data):


	Three Months Ended
	March 31,
	2024		2023
Net income (loss) - Basic EPS	$	17,353	$	(159,321)
Basic weighted-average shares outstanding		426,803,519		422,655,215
Dilutive effect of share awards		4,215,687		—
Diluted weighted-average shares outstanding		431,019,206		422,655,215
Basic EPS	$	0.04	$	(0.38)
Diluted EPS	$	0.04	$	(0.38)

Each exchangeable note (see Note 6 – “Long-Term Debt”) is individually evaluated for its dilutive or anti-dilutive impact on EPS as determined under the if-converted method. Only the interest expense and weighted average shares for exchangeable notes that are dilutive are included in the effect of dilutive securities above. During the three months ended March 31, 2024 and 2023, each of the exchangeable notes was anti-dilutive. Share awards are evaluated for a dilutive or anti-dilutive impact on EPS using the treasury stock method. For the three months ended March 31, 2024 and 2023, a total of 91.1 million and 89.4 million shares, respectively, have been excluded from diluted weighted-average shares outstanding because the effect of including them would have been anti-dilutive.

Foreign Currency

The majority of our transactions are settled in U.S. dollars. We remeasure assets and liabilities denominated in foreign currencies at exchange rates in effect at the balance sheet date. The resulting gains or losses are recognized in our consolidated statements of operations within other income (expense), net. We recognized a gain of $13.3 million and a loss of $8.7 million for the three months ended March 31, 2024 and 2023, respectively, related to remeasurement of assets and liabilities denominated in foreign currencies. Remeasurements of foreign currency related to operating activities are recognized within changes in operating assets and liabilities in the consolidated statement of cash flows.

Depreciation and Amortization Expense

The amortization of deferred financing fees is included in depreciation and amortization expense in the consolidated statements of cash flows; however, for purposes of the consolidated statements of operations they are included in interest expense, net.

Accounts Receivable, Net

Accounts receivable, net included $19.8 million and $20.1 million due from credit card processors as of March 31, 2024 and December 31, 2023, respectively.

Recently Issued Accounting Guidance

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 includes additional disclosures on an interim and annual basis and requires that the disclosures be applied to public entities that have a single reportable segment. These provisions are effective for fiscal years beginning after December 15, 2023 and interim periods after December 15, 2024. ASU 2023-07 shall be applied retrospectively unless it

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is impracticable to do so. We are evaluating the impact of ASU 2023-07 on our notes to the consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information as well as certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024 and should be applied on a prospective basis. We are evaluating the impact of ASU 2023-09 on our notes to the consolidated financial statements.

3. Revenue Recognition

Disaggregation of Revenue

Revenue and cash flows are affected by economic factors in various geographical regions. Revenues by destination were as follows (in thousands):


	Three Months Ended
	March 31,
	2024		2023
North America	$	1,560,772	$	1,361,053
Europe		25,236		81,318
Asia-Pacific		397,002		205,662
Other		208,205		173,906
Total revenue	$	2,191,215	$	1,821,939

North America includes the U.S., the Caribbean, Canada and Mexico. Europe includes the Baltic region, Canary Islands and Mediterranean. Asia-Pacific includes Australia, New Zealand and Asia. Other includes all other international territories.

Segment Reporting

We have concluded that our business has a single reportable segment. Each brand, Norwegian, Oceania Cruises and Regent, constitutes a business for which discrete financial information is available and management regularly reviews the brand level operating results and, therefore, each brand is considered an operating segment. Our operating segments have similar economic and qualitative characteristics, including similar long-term margins, products and services; therefore, we aggregate all of the operating segments into one reportable segment.

Although we sell cruises on an international basis, our passenger ticket revenue is primarily attributed to U.S.-sourced guests who make reservations through the U.S. Revenue attributable to U.S.-sourced guests has approximated 84-87% of total revenue over the preceding three fiscal years. No other individual country’s revenues exceed 10% in any given period.

Contract Balances

Receivables from customers are included within accounts receivable, net. As of March 31, 2024 and December 31, 2023, our receivables from customers were $131.8 million and $126.4 million, respectively, primarily related to in-transit credit card receivables.

Future cruise credits that have been issued as face value reimbursement for cancelled bookings due to COVID-19 are approximately $66.0 million. The future cruise credits are not contracts, and therefore, guests who elected this option are excluded from our contract liability balance; however, the credit for the original amount paid is included in advance ticket sales.

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Our contract liabilities are included within advance ticket sales. As of March 31, 2024 and December 31, 2023, our contract liabilities were $2.7 billion and $2.2 billion, respectively. Of the amounts included within contract liabilities as of March 31, 2024, approximately 45% were refundable in accordance with our cancellation policies. Of the deposits included within advance ticket sales, the majority are refundable in accordance with our cancellation policies and it is uncertain to what extent guests may request refunds. For the three months ended March 31, 2024, $1.7 billion of revenue recognized was included in the contract liability balance at the beginning of the period.

4. Leases

Operating lease balances were as follows (in thousands):


	Balance Sheet location	March 31, 2024		December 31, 2023
Operating leases
Right-of-use assets	Other long-term assets	$	764,045	$	753,652
Current operating lease liabilities	Accrued expenses and other liabilities		29,043		23,226
Non-current operating lease liabilities	Other long-term liabilities		648,487		644,646

5. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) for the three months ended March 31, 2024 was as follows (in thousands):


	Three Months Ended March 31, 2024
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	(508,438)	$	(508,524)		$	86
Current period other comprehensive income before reclassifications		47,253		47,253			—
Amounts reclassified into earnings		(3,238)		(3,333)	(1)		95	(2)
Accumulated other comprehensive income (loss) at end of period	$	(464,423)	$	(464,604)	(3)	$	181

Accumulated other comprehensive income (loss) for the three months ended March 31, 2023 was as follows (in thousands):


	Three Months Ended March 31, 2023
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	(477,079)	$	(480,578)		$	3,499
Current period other comprehensive loss before reclassifications		(18,475)		(18,475)			—
Amounts reclassified into earnings		(9,810)		(9,874)	(1)		64	(2)
Accumulated other comprehensive income (loss) at end of period	$	(505,364)	$	(508,927)		$	3,563

(1)	We refer you to Note 7 – “Fair Value Measurements and Derivatives” for the affected line items in the consolidated statements of operations.

(2)	Amortization of prior-service cost and actuarial loss reclassified to other income (expense), net.

(3)	Includes $6.6 million of gains expected to be reclassified into earnings in the next 12 months.

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6. Long-Term Debt

In February 2024, NCLC and the purchasers named therein (collectively, the “Commitment Parties”) entered into a third amended and restated commitment letter (the “third amended commitment letter”), which became effective in March 2024. The third amended commitment letter amended and restated the commitment letter dated February 22, 2023 and extended the commitments thereunder through March 2025. Pursuant to the third amended commitment letter, the Commitment Parties have agreed to purchase from NCLC an aggregate principal amount of $650 million of senior unsecured notes due five years after the issue date (the “Commitment Notes”) at NCLC’s option. If issued, the Commitment Notes will be subject to an issue fee of 0.50% and will bear interest at a rate per annum equal to (A) the greater of (i) the interest rate of the 7.75% senior notes due 2029 (“2029 Unsecured Notes”) and (ii) the then-current secondary trading yield applicable to the 2029 Unsecured Notes plus (B) 200 basis points. The Commitment Notes are subject to a one-time structuring fee of 0.50% and a quarterly commitment fee of 0.75% for so long as the commitments with respect to the Commitment Notes are outstanding.

In connection with the execution of the third amended commitment letter, NCLC agreed to repurchase all of the outstanding $250 million aggregate principal amount of 9.75% senior secured notes due 2028 (the “2028 Secured Notes”) at a negotiated premium plus accrued and unpaid interest thereon. In March 2024, in connection with the settlement of the repurchase, the aggregate principal amount outstanding under the 2028 Secured Notes was cancelled while also releasing the related collateral. The loss on extinguishment was $29.0 million, recognized in interest expense, net.

In November 2023, we executed an agreement for a commitment of €200 million in connection with financial support for our newbuilds, which became available in April 2024. The commitment if drawn will pay interest quarterly at a rate per annum based on an applicable margin plus Euribor 3-months. The commitment may be drawn at any time and is payable within 364 days, but no later than July 15, 2025. Any amount repaid prior to July 15, 2025 may be drawn again.

Exchangeable Notes

The following is a summary of NCLC’s exchangeable notes as of March 31, 2024 (in thousands):


			Unamortized
	Principal		Deferred		Net Carrying		Fair Value
	Amount		Financing Fees		Amount		Amount		Leveling
2024 Exchangeable Notes (1)	$	146,601	$	(193)	$	146,408	$	224,238	Level 2
2025 Exchangeable Notes		449,990		(3,383)		446,607		581,270	Level 2
2027 1.125% Exchangeable Notes		1,150,000		(16,544)		1,133,456		1,098,273	Level 2
2027 2.5% Exchangeable Notes		473,175		(7,254)		465,921		464,540	Level 2

(1)	Classified within current portion of long-term debt as of March 31, 2024. We expect that the holders of the 2024 Exchangeable Notes will exchange their 2024 Exchangeable Notes for shares.

The following is a summary of NCLC’s exchangeable notes as of December 31, 2023 (in thousands):


			Unamortized
	Principal		Deferred		Net Carrying		Fair Value
	Amount		Financing Fees		Amount		Amount		Leveling
2024 Exchangeable Notes (1)	$	146,601	$	(557)	$	146,044	$	217,790	Level 2
2025 Exchangeable Notes		449,990		(3,963)		446,027		572,567	Level 2
2027 1.125% Exchangeable Notes		1,150,000		(17,921)		1,132,079		1,068,431	Level 2
2027 2.5% Exchangeable Notes		473,175		(7,836)		465,339		453,784	Level 2

(1)	Classified within current portion of long-term debt as of December 31, 2023. We expect that the holders of the 2024 Exchangeable Notes will exchange their 2024 Exchangeable Notes for shares.

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The following provides a summary of the interest expense of NCLC’s exchangeable notes (in thousands):


	Three Months Ended
	March 31,
	2024		2023
Coupon interest	$	14,437	$	14,438
Amortization of deferred financing fees		2,903		2,643
Total	$	17,340	$	17,081

As of March 31, 2024, the effective interest rate is 7.04%, 5.97%, 1.64% and 3.06% for the 2024 Exchangeable Notes, 2025 Exchangeable Notes, 2027 1.125% Exchangeable Notes and 2027 2.5% Exchangeable Notes, respectively.

Debt Repayments

The following are scheduled principal repayments on our long-term debt including exchangeable notes, which can be settled in shares, and finance lease obligations as of March 31, 2024 (in thousands):


Year	Amount
Remainder of 2024	$	1,569,504
2025		1,321,130
2026		2,234,657
2027		3,291,131
2028		1,697,619
2029		1,911,513
Thereafter		2,064,110
Total	$	14,089,664

Debt Covenants

As of March 31, 2024, we were in compliance with all of our debt covenants. If we do not continue to remain in compliance with our covenants, we would have to seek additional amendments to or waivers of our covenants. However, no assurances can be made that such amendments or waivers would be approved by our lenders. Generally, if an event of default under any debt agreement occurs, then pursuant to cross default and/or cross acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated, which would have a material adverse impact on our operations and liquidity.

7. Fair Value Measurements and Derivatives

Fair value is defined as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

Derivatives are generally recorded at fair value. Contracts that are designated as normal purchases and normal sales are not recorded at fair value. The normal purchases and normal sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of business. All of our allowance purchase agreements related to the European Union’s Emissions Trading System meet the criteria specified for this exception.

Fair Value Hierarchy

The following hierarchy for inputs used in measuring fair value should maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs be used when available:

Level 1 Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement dates.

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Level 2 Significant other observable inputs that are used by market participants in pricing the asset or liability based on market data obtained from independent sources.

Level 3 Significant unobservable inputs we believe market participants would use in pricing the asset or liability based on the best information available.

Derivatives

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We attempt to minimize these risks through a combination of our normal operating and financing activities and through the use of derivatives. We assess whether derivatives used in hedging transactions are “highly effective” in offsetting changes in the cash flow of our hedged forecasted transactions. We use critical terms match or regression analysis for hedge relationships and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the fair values of the derivative and the hedged forecasted transaction. Cash flows from the derivatives are classified in the same category as the cash flows from the underlying hedged transaction. If it is determined that the hedged forecasted transaction is no longer probable of occurring, then the amount recognized in accumulated other comprehensive income (loss) is released to earnings. There are no amounts excluded from the assessment of hedge effectiveness, and there are no credit-risk-related contingent features in our derivative agreements. We monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Credit risk, including but not limited to counterparty non-performance under derivatives, is not considered significant, as we primarily conduct business with large, well-established financial institutions with which we have established relationships, and which have credit risks acceptable to us, or the credit risk is spread out among many creditors. We do not anticipate non-performance by any of our significant counterparties.

As of March 31, 2024, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 630 thousand metric tons of our projected fuel purchases, maturing through December 31, 2025.

As of March 31, 2024, we had fuel swaps pertaining to approximately 4 thousand metric tons of our projected fuel purchases which were not designated as cash flow hedges maturing through December 31, 2024.

The derivatives measured at fair value and the respective location in the consolidated balance sheets include the following (in thousands):


		Assets				Liabilities
		March 31,		December 31,		March 31,		December 31,
	Balance Sheet Location	2024		2023		2024		2023
Derivative Contracts Designated as Hedging Instruments

Fuel contracts
	Prepaid expenses and other assets	$	22,725	$	—	$	109	$	—
	Other long-term assets		2,839		—		410		—
	Accrued expenses and other liabilities		—		4,309		—		11,247
	Other long-term liabilities		—		137		—		8,932
Total derivatives designated as hedging instruments		$	25,564	$	4,446	$	519	$	20,179

Derivative Contracts Not Designated as Hedging Instruments

Fuel contracts
	Prepaid expenses and other assets	$	—	$	—	$	45	$	—
	Accrued expenses and other liabilities		—		141		—		1,031
	Other long-term liabilities		—		—		—		280

Total derivatives not designated as hedging instruments		$	—	$	141	$	45	$	1,311
Total derivatives		$	25,564	$	4,587	$	564	$	21,490

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The fair values of swap and forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The Company determines the value of options and collars utilizing an option pricing model based on inputs that are either readily available in public markets or can be derived from information available in publicly quoted markets. The option pricing model used by the Company is an industry standard model for valuing options and is used by the broker/dealer community. The inputs to this option pricing model are the option strike price, underlying price, risk-free rate of interest, time to expiration, and volatility. The fair value of option contracts considers both the intrinsic value and any remaining time value associated with those derivatives that have not yet settled. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values.

Our derivatives and financial instruments were categorized as Level 2 in the fair value hierarchy, and we had no derivatives or financial instruments categorized as Level 1 or Level 3. Our derivative contracts include rights of offset with our counterparties. We have elected to net certain assets and liabilities within counterparties when the rights of offset exist. We are not required to post cash collateral related to our derivative instruments.

The following table discloses the gross and net amounts recognized within assets and liabilities (in thousands):


			Gross				Gross
	Gross		Amounts		Total Net		Amounts
March 31, 2024	Amounts		Offset		Amounts		Not Offset		Net Amounts
Assets	$	25,564	$	(564)	$	25,000	$	—	$	25,000


			Gross				Gross
	Gross		Amounts		Total Net		Amounts
December 31, 2023	Amounts		Offset		Amounts		Not Offset		Net Amounts
Liabilities	$	21,490	$	(4,587)	$	16,903	$	—	$	16,903

The effects of cash flow hedge accounting on accumulated other comprehensive income (loss) were as follows (in thousands):


					Location of Gain
					(Loss) Reclassified
					from Accumulated	Amount of Gain (Loss) Reclassified
	Amount of Gain (Loss)				Other Comprehensive	from Accumulated Other
	Recognized in Other				Income (Loss) into	Comprehensive Income
Derivatives	Comprehensive Loss				Income (Expense)	(Loss) into Income (Expense)
	Three Months		Three Months			Three Months		Three Months
	Ended		Ended			Ended		Ended
	March 31, 2024		March 31, 2023			March 31, 2024		March 31, 2023
Fuel contracts	$	47,253	$	(29,015)	Fuel	$	6,577	$	12,597
Fuel contracts		—		—	Other income (expense), net		875		(37)
Foreign currency contracts		—		10,540	Depreciation and amortization		(4,119)		(2,686)
Total gain (loss) recognized in other comprehensive loss	$	47,253	$	(18,475)		$	3,333	$	9,874

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The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in thousands):


	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
			Depreciation						Depreciation
			and		Other Income				and		Other Income
	Fuel		Amortization		(Expense), net		Fuel		Amortization		(Expense), net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	197,734	$	222,929	$	18,137	$	194,868	$	194,790	$	(8,955)

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense)
Fuel contracts		6,577		—		—		12,597		—		—
Foreign currency contracts		—		(4,119)		—		—		(2,686)		—

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense) as a result that a forecasted transaction is no longer probable of occurring


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 5.	Other Information	36

Item 6.	Exhibits	36

SIGNATURES		38