Aircraft Rent. Aircraft rent expense increased $0.2 million, or 0.4%, to
$54.6 million for our nine months ended June 30, 2018 compared to the same period in 2017. The increase is attributable to an increase in engine rent.
Aircraft and Traffic Servicing. Aircraft and traffic servicing expense decreased $0.2 million, or 6.0%, to $2.6 million for our nine
months ended June 30, 2018 compared to the same period in 2017. The decrease is primarily due to a decrease in interrupted trip expense offset slightly by an increase in pass-through regulatory charges. For our nine months ended June 30,
2018 and 2017, 53.0% and 47.9%, respectively, of our aircraft and traffic servicing expenses were reimbursed by our major airline partners.
General and Administrative. General and administrative expense increased $12.1 million, or 38.8%, to $43.3 million for our nine months
ended June 30, 2018 compared to the same period in 2017. The increase is primarily related to a one-time, non-cash $11.1 million expense related to an increase
in the value of our stock appreciation rights (SARS) associated with an increase in fair value of our common stock.
Amortization. Depreciation and amortization expense increased $2.4 million, or 5.3%, to $47.6 million for our nine months ended June 30, 2018 compared to the same period in 2017. The increase is attributable to an increase in
depreciation expense related to our purchase of spare engines.
Lease Termination. Lease termination expense increased $15.1 million, or
100.0%, for our nine months ended June 30, 2018, compared to the same period in 2017. The increase was related to our acquisition of nine CRJ-900 aircraft which were previously leased under our GECAS
increased by $7.6 million, or 22.3%, to $41.7 million for our nine months ended June 30, 2018, compared to the same period in 2017. The increase is primarily due to an increase in interest expense of $5.7 million related to the
financing of 23 spare engines, financing of 9 CRJ-900 which were previously leased under the GECAS Lease Facility, $0.2 million in costs related to refinancing of nine fifteen CRJ-900 aircraft, our line of credit with CIT, a deferment of certain payments under our RASPRO Lease Facility, engine overhaul financing and higher LIBOR rates. Our expenses related to debt financing amortization
were also higher by $1.7 million, attributable to legal and commitment fees incurred in connection with our aircraft and engine financing and as well as aircraft debt refinancing.
In our nine months ended June 30,
2018, our effective tax rate was 228.2% compared to 37.2% in our nine months ended June 30, 2017. Our tax rate can vary depending on changes in tax laws, adoption of accounting standards, the amount of income we earn in each state and the state
tax rate applicable to such income, as well as any valuation allowance required on our state net operating losses.
The income tax provision for the
nine months ended June 30, 2018 results in an effective tax rate of 228.2%, which differs from the U.S. federal statutory rate of 35% through December 31, 2017 and 21% as of January 1, 2018 primarily due to a remeasurement of our net
deferred tax liability due to federal tax law changes and the adoption of Accounting Standards Update (ASU) 2016-09. Other factors include changes in the valuation allowance against state net operating losses,
expired state attributes and state apportionment and statutory rates.
The income tax provision for the nine months ended June 30, 2017 results
in an effective tax rate of 37.2%, which differs from the U.S. federal statutory rate of 35% primarily due to state taxes, changes in the valuation allowance against state net operating losses, expired state attributes, and the benefit resulting
from changes in state apportionment and statutory rates.
On December 22, 2017, the President signed into law the legislation colloquially
known as the Tax Cut and Jobs Act (the Tax Act). The Tax Act incorporates several new provisions that will have an impact on our financial statements. Most notably, the Tax Act decreased the federal statutory rate to 24.5% for the year
ending September 30, 2018, and 21% for years ending September 30, 2019 and forward. This decrease in federal statutory resulted in a net tax benefit due to the remeasurement of our net deferred tax liability. The change in our future
effective tax rate is not anticipated to have an effect on our cash tax until all of our U.S. federal net operating losses and credits have been utilized.
Additional provisions of the Tax Act that may impact our financial statements include 100% expensing of qualified property placed in service after
September 27, 2017 and before January 1, 2023, refundable minimum tax credits over a four year period, net interest expense deductions limited to 30% of earnings after interest, taxes, depreciation, and amortization through 2021 and of
earnings before interest and taxes thereafter, and net operating losses incurred in tax years beginning after December 31, 2017 are only allowed to offset up to 80% of a taxpayers taxable income. These net operating losses are allowed to
be carried forward indefinitely.