What changed in this filing

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Item 1. Financial Statements

2022-01-13 compared with 2021-10-13 · 127 added, 108 removed, 485 unchanged (33% of the section changed)

22 unchanged sentences

SHAREHOLDERS’ EQUITY

Preference shares, $0.01 par value, 50,000,000 shares authorized, 400 (aggregate liquidation preference of $400,000) shares issued and outstanding at August 31, 2021 and no shares issued and outstanding at February 28, 2021 — —

Common shares, $0.01 par value, 250,000,000 shares authorized, 14,048 shares issued and outstanding at August 31, 2021 and February 28, 2021 — —

Preference shares, $0.01 par value, 50,000,000 shares authorized, 400 (aggregate liquidation preference of $400,000) shares issued and outstanding at November 30, 2021 and no shares issued and outstanding at February 28, 2021 — —

Common shares, $0.01 par value, 250,000,000 shares authorized, 14,048 shares issued and outstanding at November 30, 2021 and February 28, 2021 — —

Additional paid-in capital 1,878,774 1,485,777

6 unchanged sentences

(Dollars in thousands)

Three Months Ended August 31, Six Months Ended

Three Months Ended November 30, Nine Months Ended

2021 2020 2021 2020

4 unchanged sentences

Total lease revenue 183,455 163,791 495,357 592,617

Gain (loss) on sale of flight equipment 1,502 ( 848 ) 10,524 11,230

Gain on sale of flight equipment 7,420 12,951 17,944 24,181

Other revenue 605 4,169 1,641 17,962

3 unchanged sentences

Interest, net 50,515 59,945 163,965 173,996

Selling, general and administrative (including non-cash share-based payment expense of $0 and $0 for the three months ended, and $0 and $28,049 for the six months ended August 31, 2021 and 2020, respectively) 15,996 13,555 31,585 61,006

Selling, general and administrative (including non-cash share-based payment expense of $0 and $0 for the three months ended, and $0 and $28,049 for the nine months ended November 30, 2021 and 2020, respectively) 17,141 14,403 48,714 70,897

Provision for credit losses 958 742 970 5,255

Impairment of flight equipment 69,111 9,867 110,926 299,551

7 unchanged sentences

Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments ( 39,368 ) 4,409 ( 40,690 ) ( 224,580 )

Income tax provision (benefit) 7,665 13,020 ( 627 ) 12,469

Income tax provision 23,504 2,269 22,877 14,738

Earnings of unconsolidated equity method investments, net of tax 465 572 1,210 1,978

7 unchanged sentences

(Dollars in thousands)

Six Months Ended August 31,

Nine Months Ended November 30,

Cash flows from operating activities:

Net income (loss) $ 50 $ ( 240,052 )

Adjustments to reconcile net income (loss) to net cash and restricted cash provided by operating activities:

Net loss $ ( 62,357 ) $ ( 237,340 )

Adjustments to reconcile net loss to net cash and restricted cash provided by operating activities:

Depreciation 250,308 262,806

21 unchanged sentences

Other ( 64 ) ( 594 )

Net cash and restricted cash (used in) provided by investing activities ( 282,348 ) 15,529

Net cash and restricted cash used in investing activities ( 417,582 ) ( 25,352 )

Cash flows from financing activities:

18 unchanged sentences

(Dollars in thousands)

Six Months Ended August 31,

Nine Months Ended November 30,

Reconciliation to Consolidated Balance Sheets:

23 unchanged sentences

Balance, August 31, 2021 14,048 $ — 400 $ — $ 1,879,139 $ 239,685 $ 2,118,824

Net loss — — — — — ( 62,407 ) ( 62,407 )

Issuance of preference shares — — — — ( 365 ) — ( 365 )

Balance, November 30, 2021 14,048 $ — 400 $ — $ 1,878,774 $ 177,278 $ 2,056,052

Common Shares Preference Shares Additional Paid-In Capital Retained Earnings (Deficit) Total Shareholders’ Equity

9 unchanged sentences

Balance, August 31, 2020 14,048 $ — — $ — $ 1,485,777 $ 338,409 $ 1,824,186

Net income — — — — — 2,712 2,712

Balance, November 30, 2020 14,048 $ — — $ — $ 1,485,777 $ 341,121 $ 1,826,898

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

2 unchanged sentences

(Dollars in thousands, except per share amounts)

August 31, 2021

November 30, 2021

Summary of Significant Accounting Policies

16 unchanged sentences

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2021.

The Company’s management has reviewed and evaluated all events or transactions for potential recognition and/or disclosure subsequent to the balance sheet date of August 31, 2021, through the date on which the consolidated financial statements included in this Form 10-Q were issued.

The Company’s management has reviewed and evaluated all events or transactions for potential recognition and/or disclosure subsequent to the balance sheet date of November 30, 2021, through the date on which the consolidated financial statements included in this Form 10-Q were issued.

Principles of Consolidation

14 unchanged sentences

(Dollars in thousands, except per share amounts)

August 31, 2021

November 30, 2021

COVID-19 Pandemic

COVID-19 has had an unprecedented negative impact on the aviation sector, resulting in a dramatic slowdown in air traffic.

While there have been some improvements in certain markets recently, according to IATA, as of August 31, 2021, air travel was still down to approximately 44 % compared to normal levels and a full recovery to pre-pandemic levels is not expected for several years.

While there have been some improvements in certain markets recently, according to IATA, as of November 30, 2021, air travel was still down to approximately 53 % compared to normal levels and a full recovery to pre-pandemic levels is not expected for several years.

Substantially all the world’s airlines have experienced financial difficulties and liquidity challenges, including many of our customers.

2 unchanged sentences

Even as the airline industry begins to recover, airlines continue to seek support from their respective governments, raise debt and equity, delay or cancel new aircraft orders, furlough employees, request concessions from lessors, and in certain cases, seek judicial protection.

As of October 8, 2021, our total deferrals, net of repayments, were $ 101,844 .

These deferrals have been granted to twenty customers for an average of six to nine months of lease rentals and represent 18 % of Lease rental and Direct financing and sales-type lease revenues for the twelve months ended August 31, 2021.

Of the total deferrals, $ 89,777 is included in Accounts receivable or Other assets as of August 31, 2021, with the balance representing future lease payments.

Approximately 77 % of our total deferrals as of October 8, 2021, have been agreed to as part of broader lease restructurings.

As of January 7, 2022, our total deferrals, net of repayments, were $ 87,219 .

These deferrals have been granted to nineteen customers for an average of six to twelve months of lease rentals and represent 15 % of Lease rental and Direct financing and sales-type lease revenues for the twelve months ended November 30, 2021.

Of the total deferrals, $ 81,797 is included in Accounts receivable or Other assets as of November 30, 2021, with the balance representing future lease payments.

Approximately 87 % of our total deferrals as of January 7, 2022, have been agreed to as part of broader lease restructurings.

These generally include term extensions, better security packages, or other valuable consideration in exchange for near-term economic concessions.

Some have repayment terms that extend beyond twelve months and in a limited number of situations, we have agreed to broader lease restructurings that do not include the full repayment of all of lease payments.

Many have repayment terms that extend beyond twelve months and in a limited number of situations, we have agreed to broader lease restructurings that do not include the full repayment of all of lease payments.

If air traffic remains depressed and our customers are unable to obtain sufficient funds from private, governmental or other sources, we may need to grant additional deferrals to certain customers or extend the period of repayment for deferrals we have already made.

We may ultimately not be able to collect all the amounts we have deferred.

As of October 8, 2021, six of our customers are subject to judicial insolvency proceedings or similar protection.

These customers lease 22 aircraft, which represent 13 % of our net book value of flight equipment (including Flight equipment held for lease and Net investment in leases, or “net book value”) and 10 % of our Lease rental and direct financing and sales-type lease revenue as of and for the twelve months ended August 31, 2021.

As of January 7, 2022, six of our customers are subject to judicial insolvency proceedings or similar protection.

These customers lease 21 aircraft, which represent 13 % of our net book value of flight equipment (including Flight equipment held for lease and Net investment in leases, or “net book value”) and 12 % of our Lease rental and direct financing and sales-type lease revenue as of and for the twelve months ended November 30, 2021.

We are actively engaged in these judicial proceedings to protect our economic interests.

1 unchanged sentence

Based on historic experience, the judicial process can take up to twelve to eighteen months to be resolved.

As a result of these proceedings, the recognition of lease rental revenue for certain customers may be done on a cash basis of accounting rather than the accrual method depending on the customers’ lease security arrangements.

LATAM, our second largest customer, is included in the above group and represents 7 % of our net book value of flight equipment and 6 % of our Lease rental revenue as of and for the twelve months ended August 31, 2021.

We have signed restructured leases for all thirteen of the LATAM aircraft, subject only to LATAM emerging from the Chapter 11 process.

During the three months ended August 31, 2021, the Company entered into claims sale and purchase agreements with a third party for the sale of certain unsecured claims filed by various Aircastle entities against LATAM Airlines Group S.A.

As a result of these proceedings, lease rental revenue for certain customers may be recognized on a cash basis of accounting rather than the accrual method depending on the customers’ lease security arrangements.

LATAM, our second largest customer, is included in the above group and represents 7 % of our net book value of flight equipment and 7 % of our Lease rental revenue as of and for the twelve months ended November 30, 2021.

We have signed restructured leases for all thirteen of our LATAM aircraft, subject only to LATAM emerging from the Chapter 11 process.

During the second quarter of 2021, the Company entered into claims sale and purchase agreements with a third party for the sale of certain unsecured claims filed by various Aircastle entities against LATAM Airlines Group S.A.

and certain of its subsidiaries in the Chapter 11 case captioned LATAM Airlines Group S.A., et al., Case No.

20-11254 (JLG) (Jointly Administered) (the “LATAM Bankruptcy”).

The allowed amount of our unsecured claims was approved by the Bankruptcy Court and proceeds from the sales of these claims in the amount of $ 55,213 were received during the three and six months ended August 31, 2021 and recognized in Other income (expense).

The allowed amount of our unsecured claims was approved by the Bankruptcy Court and proceeds from the sales of these claims in the amount of $ 55,213 were received during the second quarter of 2021 and recognized in Other income (expense).

Lease Revenue Recognition

5 unchanged sentences

(Dollars in thousands, except per share amounts)

August 31, 2021

November 30, 2021

In certain instances, we may provide lease concessions to customers, generally in the form of lease rental deferrals.

21 unchanged sentences

Reference rate reform will primarily impact our lease and debt arrangements for which floating-rate lease rentals and interest expense are based on LIBOR.

As of August 31, 2021, less than 1 % of our fleet have floating-rate lease rentals and, for the three and six months ended August 31, 2021, 4 % of our interest expense was derived from floating-rate debt which is referenced to LIBOR.

As of November 30, 2021, less than 1 % of our fleet have floating-rate lease rentals and, for the three and nine months ended November 30, 2021, 4 % of our interest expense was derived from floating-rate debt which is referenced to LIBOR.

We have not adopted ASC 848 and are currently evaluating the election available to us under the standard.

2 unchanged sentences

(Dollars in thousands, except per share amounts)

August 31, 2021

November 30, 2021

Effective, March 1, 2021, the Company adopted FASB ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes.

4 unchanged sentences

Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs.

The following tables set forth our financial assets as of August 31, 2021 and February 28, 2021 that we measured at fair value on a recurring basis by level within the fair value hierarchy.

The following tables set forth our financial assets as of November 30, 2021 and February 28, 2021 that we measured at fair value on a recurring basis by level within the fair value hierarchy.

Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.

Fair Value Measurements at August 31, 2021

Fair Value Measurements at November 30, 2021

Using Fair Value Hierarchy

Fair Value as of August 31,

Fair Value as of November 30,

2021 Quoted Prices

16 unchanged sentences

These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within the fair value hierarchy.

For the three and six months ended August 31, 2021, we had no transfers into or out of Level 3.

For the three and nine months ended November 30, 2021, we had no transfers into or out of Level 3.

We measure the fair value of certain assets and liabilities on a non-recurring basis, when U.S.

6 unchanged sentences

(Dollars in thousands, except per share amounts)

August 31, 2021

November 30, 2021

We account for our investment in unconsolidated joint ventures under the equity method of accounting.

3 unchanged sentences

Impairment of Flight Equipment

During the three months ended August 31, 2021, the Company recorded impairment charges totaling $ 21,232 , of which $ 18,012 were transactional impairments primarily related to two narrow-body aircraft resulting from early lease terminations.

During the three months ended November 30, 2021, the Company recorded transactional impairment charges totaling $ 69,111 related to two narrow-body and one wide-body aircraft on lease to Garuda Indonesia, resulting from the lessee’s default on its lease obligations.

The Company recognized $ 24,268 of maintenance revenue for these three aircraft.

During the nine months ended November 30, 2021, the Company recorded impairment charges totaling $ 110,926 , of which $ 107,705 were transactional impairments, primarily related to six narrow-body and one wide-body aircraft.

The impairment charges resulted from early lease terminations, scheduled lease expiration and a lessee default.

The Company recognized $ 61,414 of maintenance revenue for these seven aircraft.

During the three months ended November 30, 2020, the Company recorded transactional impairment charges totaling $ 9,867 , primarily related to the scheduled lease expirations of two narrow-body aircraft.

The Company recognized $ 15,200 of maintenance revenue for these two aircraft.

During the six months ended August 31, 2021, the Company recorded impairment charges totaling $ 41,815 , of which $ 38,594 were transactional impairments, primarily related to four narrow-body aircraft resulting from three early lease terminations and one scheduled lease expiration.

The Company recognized $ 37,146 of maintenance revenue for these four aircraft.

During the three months ended August 31, 2020, the Company recorded impairment charges totaling $ 212,387 , of which $ 169,346 were transactional impairments, primarily related to four wide-body aircraft and two narrow-body aircraft.

The Company recognized $ 9,267 of maintenance revenue for these six aircraft.

The impairment charges were attributable to early lease terminations, judicial insolvency proceedings, or as a result of our annual recoverability assessment.

During the six months ended August 31, 2020, the Company recorded impairment charges totaling $ 289,685 , of which $ 246,644 were transactional impairments primarily related to twelve narrow-body and five wide-body aircraft.

The Company recognized $ 92,193 of maintenance and security deposits into revenue for these seventeen aircraft.

During the nine months ended November 30, 2020, the Company recorded impairment charges totaling $ 299,551 , of which $ 256,510 were transactional impairments, primarily related to thirteen narrow-body and five wide-body aircraft.

The Company recognized $ 107,448 of maintenance and security deposits into revenue for these eighteen aircraft.

The impairment charges were attributable to early lease terminations, scheduled lease expirations, lessee defaults, judicial insolvency proceedings, or as a result of our annual recoverability assessment.

Annual Recoverability Assessment

We plan to perform our annual recoverability assessment of all our aircraft during the fiscal third quarter for the nine months ended November 30, 2021.

We continue to closely monitor the impact of COVID-19 on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft.

We performed our annual recoverability assessment of all our aircraft during the third quarter of 2021.

No impairments were recorded as a result of our annual recoverability assessment – see the discussion above for further detail regarding transactional impairment charges recorded during the three and nine months ended November 30, 2021.

Although we have completed our annual recoverability assessment, we will continue to closely monitor the impact of COVID-19 on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft.

We have and will focus on our customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, aircraft with near-term lease expirations, and certain aircraft variants that are more susceptible to the impact of the COVID-19 pandemic and value deterioration.

The recoverability assessment is a comparison of the carrying value of each aircraft to its undiscounted expected future cash flows.

The recoverability assessment is a comparison of the carrying value of each aircraft to its estimated undiscounted future cash flows.

We develop the assumptions used in the recoverability assessment, including those relating to current and future demand for each aircraft type, based on management’s experience in the aircraft leasing industry, as well as information received from third-party sources.

5 unchanged sentences

(Dollars in thousands, except per share amounts)

August 31, 2021

November 30, 2021

Financial Instruments

Our financial instruments, other than cash, consist principally of cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and amounts borrowed under financings.

The fair value of cash, cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable approximates the carrying value of these financial instruments because of their short-term nature.

The fair value of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable approximates the carrying value of these financial instruments because of their short-term nature.

The fair value of our senior notes is estimated using quoted market prices.

The fair values of all our other financings are estimated using a discounted cash flow analysis, based on our current incremental borrowing rates for similar types of borrowing arrangements.

The carrying amounts and fair values of our financial instruments at August 31, 2021 and February 28, 2021 were as follows:

August 31, 2021 February 28, 2021

The carrying amounts and fair values of our financial instruments at November 30, 2021 and February 28, 2021 were as follows:

November 30, 2021 February 28, 2021

Carrying Amount

9 unchanged sentences

Lease Rental Revenues and Flight Equipment Held for Lease

Minimum future annual lease rentals contracted to be received under our existing operating leases of flight equipment at August 31, 2021 were as follows:

Minimum future annual lease rentals contracted to be received under our existing operating leases of flight equipment at November 30, 2021 were as follows:

Year Ending February 28/29, Amount (1)

7 unchanged sentences

(Dollars in thousands, except per share amounts)

August 31, 2021

November 30, 2021

Geographic concentration of lease rental revenue earned from flight equipment held for lease was as follows:

Three Months Ended August 31, Six Months Ended August 31,

Three Months Ended November 30, Nine Months Ended November 30,

Region 2021 2020 2021 2020

7 unchanged sentences

The following table shows the number of lessees with lease rental revenue of at least 5% of total lease rental revenue and their combined total percentage of lease rental revenue for the periods indicated:

Three Months Ended August 31, Six Months Ended August 31,

Three Months Ended November 30, Nine Months Ended November 30,

2021 2020 2021 2020

6 unchanged sentences

The following table sets forth revenue attributable to individual countries representing at least 10% of Total revenue (including maintenance and other revenue) based on each lessee’s principal place of business for the periods indicated:

Three Months Ended August 31, Six Months Ended August 31,

Three Months Ended November 30, Nine Months Ended November 30,

2021 2020 2021 2020

2 unchanged sentences

23,051 12 % 22,455 12 % 63,569 12 % 75,951 12 %

Chile — — % 17,102 10 % — — % — — %

Indonesia (3)

26,581 14 % — — % — — % — — %

(1) For the three and six months ended August 31, 2021, total revenue attributable to India included maintenance revenue totaling $ 1,346 and $ 2,000 .

For the three and six months ended August 31, 2020, total revenue attributable to India included maintenance, gain on the sale of flight equipment and other revenue totaling $ 10,171 and $ 10,402 .

(2) For the six months ended August 31, 2020, total revenue attributable to Mexico included maintenance and other revenue, including early lease termination fees and security deposits recognized into revenue, totaling $ 76,637 .

Total revenue attributable to Mexico was less than 10% for the three and six months ended August 31, 2021 and for the three months ended August 31, 2020.

— — % — — % — — % 85,711 14 %

_______________

(1) For the three months ended November 30, 2020, total revenue attributable to Canada included maintenance and other revenue, including early lease termination fees and security deposits recognized into revenue, totaling $ 19,260 .

Total revenue attributable to Canada was less than 10% for the three and nine months ended November 30, 2021 and for the nine months ended November 30, 2020

(2) For the three and nine months ended November 30, 2021, total revenue attributable to India included maintenance revenue totaling $ 3,609 and $ 5,608 , respectively.

For the three and nine months ended November 30, 2020, total revenue attributable to India included maintenance and other revenue, including early lease termination fees and security deposits recognized into revenue, totaling $ 6,080 and $ 16,251 , respectively.

(3) For the three months ended November 30, 2021, total revenue attributable to Indonesia included maintenance revenue totaling $ 24,268 .

Total revenue attributable to Indonesia was less than 10% for the nine months ended November 30, 2021 and for the three and nine months ended November 30, 2020.

(4) For the nine months ended November 30, 2020, total revenue attributable to Mexico included maintenance and other revenue, including early lease termination fees and security deposits recognized into revenue, totaling $ 79,912 .

Total revenue attributable to Mexico was less than 10% for the three and nine months ended November 30, 2021 and for the three months ended November 30, 2020.

Aircastle Limited and Subsidiaries

1 unchanged sentence

(Dollars in thousands, except per share amounts)

August 31, 2021

November 30, 2021

Geographic concentration of net book value of flight equipment (including flight equipment held for lease and net investment in leases, or “net book value”) was as follows:

August 31, 2021 February 28, 2021

November 30, 2021 February 28, 2021

Region Number

10 unchanged sentences

_______________

(1) Of the seventeen off-lease aircraft at August 31, 2021, we have two narrow-body aircraft and three wide-body aircraft which we are currently marketing for lease or sale.

(1) Of the thirteen off-lease aircraft at November 30, 2021, we have two narrow-body aircraft and three wide-body aircraft which we are currently marketing for lease or sale.

(2) Of the sixteen off-lease aircraft at February 28, 2021, we have three wide-body aircraft which we are currently marketing for lease or sale.

The following table sets forth the net book value of flight equipment (includes net book value of flight equipment held for lease and net investment in leases) attributable to individual countries representing at least 10% of net book value of flight equipment based on each lessee’s principal place of business as of:

August 31, 2021 February 28, 2021

November 30, 2021 February 28, 2021

Country Net Book

5 unchanged sentences

India $ 696,703 10 % 3 $ 756,514 11 % 3

At August 31, 2021 and February 28, 2021, the amounts of lease incentive liabilities recorded in maintenance payments on our Consolidated Balance Sheets were $ 17,577 and $ 14,673 , respectively.

At November 30, 2021 and February 28, 2021, the amounts of lease incentive liabilities recorded in maintenance payments on our Consolidated Balance Sheets were $ 19,832 and $ 14,673 , respectively.

Net Investment in Leases

At August 31, 2021 and February 28, 2021, our net investment in leases consisted of fifteen and fifteen aircraft, respectively.

The components of our net investment in leases at August 31, 2021 and February 28, 2021, were as follows:

August 31, 2021 February 28, 2021

At November 30, 2021 and February 28, 2021, our net investment in leases consisted of fifteen and fifteen aircraft, respectively.

The components of our net investment in leases at November 30, 2021 and February 28, 2021, were as follows:

November 30, 2021 February 28, 2021

Lease receivable $ 55,645 $ 67,075

6 unchanged sentences

(Dollars in thousands, except per share amounts)

August 31, 2021

The activity in the allowance for credit losses related to our net investment in leases for the six months ended August 31, 2021 is as follows:

November 30, 2021

The activity in the allowance for credit losses related to our net investment in leases for the nine months ended November 30, 2021 is as follows:

Balance at February 28, 2021 $ 864

Provision for credit losses 970

Balance at August 31, 2021 $ 876

At August 31, 2021, future lease payments on net investment in leases are as follows:

Write-offs ( 6 )

Balance at November 30, 2021 $ 1,828

At November 30, 2021, future lease payments on net investment in leases are as follows:

Year Ending February 28/29, Amount

5 unchanged sentences

Unconsolidated Equity Method Investments

We have a joint venture with Mizuho Leasing which has nine aircraft with a net book value of $ 305,251 at August 31, 2021.

Investment in joint ventures at February 28, 2021 $ 35,377

We have a joint venture with Mizuho Leasing which has nine aircraft with a net book value of $ 301,862 at November 30, 2021.

Investment in joint venture at February 28, 2021 $ 35,377

Earnings from joint venture, net of tax 1,210

Investment in joint ventures at August 31, 2021 $ 36,122

Investment in joint venture at November 30, 2021 $ 36,587

On December 9, 2021, we entered into a loan agreement to provide the joint venture with a $ 1,500 unsecured loan facility, which bears interest at a rate of LIBOR plus 2 % and is payable on December 9, 2022.

This transaction was approved by our management as an arm’s length transaction under our related party policy.

Aircastle Limited and Subsidiaries

1 unchanged sentence

(Dollars in thousands, except per share amounts)

August 31, 2021

November 30, 2021

Secured and Unsecured Debt Financings

The outstanding amounts of our secured and unsecured debt financings are as follows:

At August 31, 2021 At

At November 30, 2021 At

Debt Obligation Outstanding

20 unchanged sentences

Total secured and unsecured debt financings, net of debt issuance costs and discounts $ 4,576,176 $ 5,135,111

(1) The borrowings under these financings at August 31, 2021 have a weighted-average fixed rate of interest of 3.21 %.

(1) The borrowings under these financings at November 30, 2021 have a weighted-average fixed rate of interest of 3.21 %.

Unsecured Debt Financings:

Revolving Credit Facilities

On April 1, 2021, we entered into an amendment that split the $ 300,000 commitment of one of our unsecured revolving credit facilities into two tranches:

$ 160,000 was allocated to Tranche A, which will mature on the facility’s previously stated maturity date of December 27, 2021, and $ 140,000 was allocated to Tranche B, which will mature on February 28, 2023.

On May 24, 2021, the revolving credit facility was expanded to $ 330,000 , with $ 155,000 and $ 175,000 of the commitment allocated to Tranche A and Tranche B, respectively.

During the nine months ended November 30, 2021, we entered into various amendments for one of our unsecured revolving credit facilities that, among other things, expanded the size of the facility and split the commitment into two tranches.

As a result, the existing $ 300,000 commitment was expanded to $ 365,000 , with $ 135,000 and $ 230,000 of the commitment allocated to Tranche A and Tranche B, respectively.

Tranche A matured on the facility’s previously stated maturity date of December 27, 2021 and Tranche B will mature on February 28, 2023.

On April 26, 2021, we entered into an amendment that increased the size of one of our revolving credit facilities from $ 800,000 to $ 1,000,000 .

6 unchanged sentences

(Dollars in thousands, except per share amounts)

August 31, 2021

As of August 31, 2021, we had no borrowings outstanding under our revolving credit facilities and had $ 1,380,000 available for borrowing.

November 30, 2021

On December 6, 2021, the Company entered into a $ 100,000 senior unsecured revolving credit facility with Mizuho Marubeni Leasing America Corporation, a related party.

The facility bears interest at a rate of LIBOR plus 1.625 %, matures on December 6, 2023, and requires the Company to have a minimum of $ 20,000 revolving credit outstanding throughout the term of the facility.

This transaction was approved by our Audit Committee as an arm’s length transaction under our related party policy.

As of November 30, 2021, we had no borrowings outstanding under our revolving credit facilities and had $ 1,415,000 available for borrowing.

Senior Notes due 2022

On July 30, 2021, we redeemed all of the $ 500,000 outstanding aggregate principal amount of our 5.5 % Senior Notes due 2022, including $ 12,604 of accrued interest and a $ 13,314 call premium.

As of August 31, 2021, we were in compliance with all applicable covenants in our financings.

As of November 30, 2021, we were in compliance with all applicable covenants in our financings.

Shareholders' Equity

15 unchanged sentences

On April 26, 2021, the Company entered into an amendment that reduced the size and extended the term of our unsecured revolving credit facility with Mizuho Bank Ltd., a related party – see Note 6 for additional information.

During the three and six months ended August 31, 2021, the Company incurred $ 935 and $ 1,915 , respectively, in fees to Marubeni as part of its intra-company service agreement, whereby Marubeni provides certain management and administrative services to the Company.

The Company also entered into a parts management services and supply agreement with an affiliate of Marubeni under which we purchased parts totaling $ 1,441 and $ 1,958 during the three and six months ended August 31, 2021, respectively.

On December 6, 2021, the Company entered into a $ 100,000 senior unsecured revolving credit facility with Mizuho Marubeni Leasing America Corporation, a related party – see Note 6 for additional information.

This transaction was approved by our Audit Committee as an arm’s length transaction under our related party policy.

Aircastle Limited and Subsidiaries

1 unchanged sentence

(Dollars in thousands, except per share amounts)

August 31, 2021

November 30, 2021

During the three and nine months ended November 30, 2021, the Company incurred $ 951 and $ 2,866 , respectively, in fees to Marubeni as part of its intra-company service agreement, whereby Marubeni provides certain management and administrative services to the Company.

The Company also entered into a parts management services and supply agreement with an affiliate of Marubeni under which we purchased parts totaling $ 2,682 and $ 4,640 during the three and nine months ended November 30, 2021, respectively .

Income taxes have been provided for based upon the tax laws and rates in countries in which our operations are conducted and income is earned.

1 unchanged sentence

Consequently, the provision for income taxes relates to income earned by certain subsidiaries of the Company which are located in, or earn income in, jurisdictions that impose income taxes, primarily the United States and Ireland.

The sources of income (loss) from continuing operations before income taxes and earnings of our unconsolidated equity method investments for the three and six months ended August 31, 2021 and 2020 were as follows:

Three Months Ended August 31, Six Months Ended August 31,

The sources of income (loss) from continuing operations before income taxes and earnings of our unconsolidated equity method investments for the three and nine months ended November 30, 2021 and 2020 were as follows:

Three Months Ended November 30, Nine Months Ended November 30,

2021 2020 2021 2020

13 unchanged sentences

The CARES Act, among other things, includes provisions relating to net operating loss carrybacks, alternative minimum tax credit refunds, modification to the net interest expense deduction limitation and technical correction to the tax depreciation methods for qualified improvement property.

The CARES Act did not materially impact the Company’s effective tax rate for the six months ended August 31, 2021.

The Company’s effective tax rates (“ETRs”) for the three and six months ended August 31, 2021 and 2020 were 45.1 % and ( 6.5 )%, and 47.4 %, and ( 5.4 )%, respectively.

The CARES Act did not materially impact the Company’s effective tax rate for the nine months ended November 30, 2021.

The Company’s effective tax rates (“ETRs”) for the three and nine months ended November 30, 2021 and 2020 were ( 59.7 )% and 51.5 %, and ( 56.2 )%, and ( 6.6 )%, respectively.

The movement in the ETR is primarily caused by changes in the mix of the Company’s pre-tax earnings/(losses) in its taxable and non-tax jurisdictions.

The six months ended August 31, 2021 included income from the sale of unsecured claims related to the LATAM Bankruptcy, which was recorded in a low tax jurisdiction.

Further, the six months ended August 31, 2020 included discrete items related to stock compensation and the impact of the CARES act.

The nine months ended November 30, 2021 included income from the sale of unsecured claims related to the LATAM Bankruptcy and certain impairment charges, which were recorded in a low tax jurisdiction.

Further, the nine months ended November 30, 2020 included discrete items related to stock compensation and the impact of the CARES act.

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

November 30, 2021

Interest, Net

The following table shows the components of interest, net:

Three Months Ended August 31, Six Months Ended August 31,

Three Months Ended November 30, Nine Months Ended November 30,

2021 2020 2021 2020

5 unchanged sentences

Interest, net $ 50,515 $ 59,945 $ 163,965 $ 173,996

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2021

Commitments and Contingencies

Rent expense, primarily for the corporate offices and sales and marketing offices, was $ 395 and $ 808 for the three and six months ended August 31, 2021, and $ 390 and $ 801 for the three and six months ended August 31, 2020, respectively.

As of August 31, 2021, Aircastle is obligated under non-cancelable operating leases relating principally to office facilities in Stamford, Connecticut;

Rent expense, primarily for the corporate offices and sales and marketing offices, was $ 405 and $ 1,213 for the three and nine months ended November 30, 2021, and $ 413 and $ 1,213 for the three and nine months ended November 30, 2020, respectively.

As of November 30, 2021, Aircastle is obligated under non-cancelable operating leases relating principally to office facilities in Stamford, Connecticut;

Dublin, Ireland;

4 unchanged sentences

Total $ 11,816

At August 31, 2021, we had commitments to acquire 24 aircraft for $ 801,841 .

Commitments, including $ 97,784 of remaining progress payments, contractual price escalations and other adjustments for these aircraft, at August 31, 2021, net of amounts already paid, are as follows:

At November 30, 2021, we had commitments to acquire 27 aircraft for $ 964,292 .

Commitments, including $ 76,675 of remaining progress payments, contractual price escalations and other adjustments for these aircraft, at November 30, 2021, net of amounts already paid, are as follows:

Year Ending February 28/29, Amount

1 unchanged sentence

Total $ 964,292

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

November 30, 2021

The following table describes the principal components of other assets on our Consolidated Balance Sheets as of:

10 unchanged sentences

(1) Net of lease incentives and tenant allowances.

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2021

Accounts Payable, Accrued Expenses and Other Liabilities

7 unchanged sentences

Total accounts payable, accrued expenses and other liabilities $ 200,959 $ 174,267

Subsequent Event

During the fiscal third quarter of 2021, the Company will record impairment charges, net of maintenance and other revenue, approximating $ 48,000 related to three aircraft as a result of a lessee default.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements