The financial statements and notes to the financial statements for Delta Air Lines and Southwest Airlines can be found online.

Instructions

Use information found in the companies’ financial reports to answer the following questions.

a. What types of leases are used by Southwest and Delta and on what assets are these leases primarily used?

b. How long-term are some of Southwest’s leases? What are some of the characteristics or provisions of Southwest’s (as lessee) leases?

c. What did Southwest report in 2017 as its future minimum annual rental commitments under non-cancelable leases?

d. At year-end 2017, what was the present value of the minimum rental payments under Southwest’s capital leases? How much imputed interest was deducted from the future minimum annual rental commitments to arrive at the present value?

e. What were the amounts and details reported by Southwest for rental expense in 2017, 2016, and 2015?

f. How does Delta’s use of leases compare with Southwest’s?