What changed in this filing

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Item 1. Business

2023-04-25 compared with 2022-04-28 · 84 added, 89 removed, 196 unchanged (47% of the section changed)

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However, in many cases we are obligated to pay a specified portion of maintenance or modification costs.

As of February 28, 2022, we owned and managed on behalf of our joint venture 260 aircraft leased to 81 lessees located in 45 countries.

During the year ended February 28, 2022, we purchased eighteen aircraft and sold fifteen aircraft and other flight equipment.

As of February 28, 2022, the net book value of our fleet (comprised of flight equipment held for lease and net investment in direct financing and sales-type leases, or “Net Book Value”) was $6.5 billion.

During the year ended February 28, 2023, we purchased 22 aircraft and sold 25 aircraft and other flight equipment.

As of February 28, 2023, we owned and managed on behalf of our joint venture 248 aircraft leased to 73 lessees located in 44 countries and the net book value of our fleet (comprised of flight equipment held for lease and net investment in direct financing and sales-type leases, or “Net Book Value”) was $6.6 billion.

The weighted average age of our fleet was 9.7 years and the weighted average remaining lease term was 5.3 years.

As of February 28, 2023, we had commitments to purchase 20 aircraft with delivery through 2024 for $763.7 million, which includes estimated amounts for pre-delivery deposits, contractual price escalations and other adjustments.

Our total revenues, net loss and Adjusted EBITDA were $769.8 million, $278.2 million, and $752.3 million for the year ended February 28, 2022, and $832.3 million, $333.2 million and $774.4 million for the year ended February 28, 2021.

Our total revenues, net income (loss) and Adjusted EBITDA were $796.0 million, $62.8 million, and $732.3 million for the year ended February 28, 2023, respectively, and $769.8 million, $(278.2) million and $752.3 million for the year ended February 28, 2022, respectively.

Cash flow provided by operating activities was $437.7 million and $372.9 million for the years ended February 28, 2023 and 2022, respectively.

Our business and financial results, customers, and the aviation industry has and will continue to be impacted by the COVID-19 pandemic and the Russian invasion of Ukraine.

We believe our platform and personnel position us to effectively manage through these crises and will enable us to take advantage of new investment opportunities when they arise.

Our business and financial results, customers, and the aviation industry have been impacted by the COVID-19 pandemic and the Russian invasion of Ukraine.

We believe our platform and personnel have enabled us to effectively manage through these crises and will position us to take advantage of new investment opportunities when they arise.

Our Company employs a team of experienced senior professionals with extensive industry and financial experience.

Our leadership team has an average of more than twenty years of relevant industry experience, including managing through prior downturns in the aviation industry, like the 2008 global financial crisis and the September 11, 2001 terror attacks.

Our leadership team has an average of more than thirty years of relevant industry experience, including managing through prior downturns in the aviation industry, like the 2008 global financial crisis and the September 11, 2001 terror attacks.

Global air travel continues to recover following the impact of the COVID-19 pandemic.

According to the International Air Transit Association (“IATA”), air travel approximated 85% of pre-pandemic levels as of February 28, 2023, compared to 55% as of February 28, 2022.

The recovery has been driven by strong demand for domestic travel and an improvement in international traffic, which has benefited from the relaxation of travel restrictions in most markets.

The recent lifting of travel restrictions in China should help further strengthen global international traffic volumes in 2023 and beyond.

We continue to believe long-term demand for air travel will return to historical trends over time.

Historically, growth in commercial air traffic has been correlated with world economic activity.

Prior to the COVID-19 pandemic, commercial air traffic growth expanded at a rate 1 to 2 times that of global GDP growth.

Prior to the COVID-19 pandemic, commercial air traffic growth expanded at a rate one to two times that of global GDP growth.

This expansion of air travel has driven growth in the world aircraft fleet;

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Aircraft leasing companies own approximately 49% of the world’s commercial jet aircraft.

Under normal circumstances, we would expect the global fleet to continue expanding at a two to four percent average annual rate.

We believe that our long-standing business strategy of maintaining conservative leverage, limiting long-term financial commitments, and focusing our portfolio on more liquid narrow-body aircraft will enable us to manage through recent crises, such as the COVID-19 pandemic and the Russian invasion of Ukraine.

Under normal circumstances, we would expect the global fleet to continue expanding at a 2-3% average annual rate.

As a leading secondary market investor, we believe that our long-standing business strategy of maintaining conservative leverage, limiting long-term financial commitments, and focusing our portfolio on more liquid narrow-body aircraft has enabled us to manage through recent crises, such as the COVID-19 pandemic and the Russian invasion of Ukraine.

Our portfolio of primarily mid-life, narrow-body aircraft should remain attractive relative to new technology aircraft due to their lower capital costs in an environment of tight airline margins.

We believe that we have sufficient liquidity to meet our contractual obligations over the next twelve months and as of April 1, 2022, total liquidity of $2.1 billion includes $1.4 billion of undrawn credit facilities, $0.2 billion of unrestricted cash, $0.1 billion of contracted asset sales and $0.4 billion of projected adjusted operating cash flows through April 1, 2023.

As of February 28, 2022, we have commitments to acquire 23 aircraft for $819.3 million between 2022-2024.

Update on Impact of COVID-19 Pandemic

The COVID-19 pandemic and related mitigation efforts has had an unprecedented negative impact on the aviation sector, resulting in a dramatic slowdown in air traffic.

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

While there have been improvements in many markets, particularly in terms of domestic travel, according to the International Air Transit Association (“IATA”), as of February 28, 2022, air travel was still down to approximately 55% compared to normal levels.

A full recovery to pre-pandemic levels is not expected for several years and will depend on the effectiveness of vaccination efforts and the continued easing of travel restrictions, among other things.

While the extent and duration of the impact of the COVID-19 pandemic remain unknown, we continue to believe long-term demand for air travel will return to historical trends over time.

As of April 25, 2022, four of our customers are subject to judicial insolvency proceedings or similar protection.

These customers lease eighteen aircraft, which represent 12% of our Net Book Value and 9% of our lease rental and direct financing and sales-type lease revenue as of and for the year ended February 28, 2022.

One of these customers is LATAM, our second largest customer, which represents 7% of our Net Book Value and 8% of our lease rental revenue as of and for the year ended February 28, 2022.

We have signed restructured leases for all thirteen of our LATAM aircraft, subject only to LATAM emerging from the Chapter 11 process, which we expect to occur in late 2022.

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

However, the outcome of these proceedings is uncertain and could result in these customers negotiating reductions in aircraft lease rentals, rejecting their leases or taking other actions that could adversely impact us or the value of our aircraft.

We believe we have sufficient liquidity to meet our contractual obligations over the next twelve months and as of April 3, 2023, total liquidity of $2.0 billion included $1.4 billion of undrawn credit facilities, $0.5 billion of projected adjusted operating cash flows through April 1, 2024, and $0.1 billion of unrestricted cash.

Russian Invasion of Ukraine

On February 24, 2022, the Russian Federation invaded Ukraine.

This has resulted in the closing of airspace in several countries as well as the placement of sanctions on a variety of Russian entities and certain activities involving Russia or Russian entities, such as the leasing of aircraft.

We have and will continue to fully comply with all applicable sanctions.

As of February 24, 2022, we had twelve aircraft on lease with six Russian airlines and one aircraft with a Ukrainian airline.

We have since terminated the leasing activities for all our Russian aircraft and have sought to repossess the aircraft and remove them from Russia.

We have successfully repossessed two of the twelve Russian aircraft.

Nine aircraft remain in Russia and one aircraft was undergoing maintenance outside of Russia and is not operational.

Our aircraft with a Ukrainian airline is in temporary storage outside of Ukraine.

It is unclear whether we will be able to recover the remaining aircraft from our former Russian airline customers or what the condition of the aircraft will be at the time of repossession if we do so or whether we will be able to recover the related technical records and documentation.

Failure to repossess any of our aircraft could adversely affect our business and financial results.

Many of these Russian airlines have continued to fly our aircraft notwithstanding the leasing terminations and our repeated demands for the return of our assets.

Our aircraft that remain in Russia may suffer damage or deterioration due to inadequate maintenance and lack of spare parts.

During the fourth quarter of 2021, we recorded net non-cash impairment charges of $251.9 million related to our Russian and Ukrainian aircraft – see Note 3 in the Notes to the Consolidated Financial Statements.

These thirteen aircraft comprised 6% of our Net Book Value before impairment and 1% of our Net Book Value after impairment.

Excluding lease rentals received in advance recognized into revenue, they represented 7% of our lease rental and direct financing and sales-type lease revenue for the year ended February 28, 2022.

Basic lease rentals for our Russian lessees were approximately $3.5 million for the month of February 2022.

The termination of our Russian leases will result in reduced revenues and operating cash flows.

We had letters of credit of $49.5 million as of February 28, 2022 related to our aircraft leased to Russian airlines.

We have presented requests for payment to the various financial institutions and have received about half of the proceeds.

We are pursuing collection on remaining letters of credit, but the timing and amount of any further recovery are uncertain.

We have insurance, through the airlines’ insurance and our own policies, and have filed claims against the relevant policies seeking an indemnity of approximately $350 million.

The ten aircraft that are not in our possession had a pre-impairment book value of $314.1 million.

Our claims are subject to the terms of the applicable policies, and given the

unprecedented scenario and the magnitude of potential claims, insurers and reinsurers may raise various defenses.

Accordingly, at this stage we can give no assurance as to when or what amounts we may ultimately collect.

Insurance recoveries are generally recognized when they are realized or realizable, which typically occurs at the time cash proceeds are received or a claim agreement is executed, and also considers the counterparty’s ability to pay the claim amount.

At the onset of the Russian Federation’s invasion of Ukraine on February 24, 2022, we had 13 aircraft on lease with Russian or Russian-affiliated airlines and have since terminated the leasing activities for all of these aircraft.

As of February 28, 2023, 9 of our aircraft that were previously leased to Russian airlines remain in Russia.

Most of the operators of these aircraft have continued to fly the aircraft notwithstanding the sanctions imposed on Russia and leasing terminations.

While we will continue to pursue repossession, it is unlikely we will regain possession of any of these 9 aircraft.

As a result, the Company wrote off the remaining book value of these 9 aircraft, resulting in impairment charges totaling $31.9 million during the year ended February 28, 2023.

These 9 aircraft have been removed from the Company’s owned fleet count.

The Company is vigorously pursuing insurance claims to recover its losses relating to these aircraft and has initiated legal proceedings against its contingent and possessed insurers.

The collection, timing and amounts of any insurance recoveries is uncertain.

We have also successfully recovered 4 aircraft that were previously leased to Russian or Russian-affiliated airlines as of February 28, 2023, comprised of 1 narrow-body, 1 wide-body and 2 freighter aircraft.

During the year ended February 28, 2023, we sold the 2 freighter aircraft and 1 wide-body aircraft that we recovered for gains totaling $53.5 million.

We received $48.9 million of maintenance and general security letters of credit for our former Russian lessees during the year ended February 28, 2023, which we have recognized in maintenance and other revenue.

We collected the remaining letters of credit totaling $0.6 million subsequent to February 28, 2023.

Our Competitive Strengths

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These sales produced net gains of $514.1 million and involved a wide range of aircraft types and buyers.

Of these aircraft, 186, or 68%, were over fourteen years old at the time of sale;

Of these aircraft, 205, or 69%, were over 14 years old at the time of sale;

often being sold on a part-out disposition basis, where the airframe and engines may be sold to various buyers.

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Since our inception, we have raised approximately $2.1 billion in equity capital from private and public investors as of February 28, 2023.

We maintain a strong, strategic relationship with Marubeni Corporation (“Marubeni”), which is our controlling shareholder.

We have obtained $18.9 billion in debt capital from a variety of sources including the unsecured bond market, commercial banks, export credit agency-backed debt, and the aircraft securitization market.

We maintain a strong, strategic relationship with Marubeni Corporation (“Marubeni”), which is one of our controlling shareholders.

We have obtained $19.4 billion in debt capital from a variety of

sources including the unsecured bond market, commercial banks, export credit agency-backed debt, and the aircraft securitization market.

The diversity and global nature of our financing sources demonstrates our ability to adapt to changing market conditions and seize new opportunities.

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• Experienced Management Team with Significant Expertise:

Each member of our management team has more than twenty years of industry experience and we have expertise in the acquisition, leasing, financing, technical management, restructuring/repossession and sale of aviation assets.

Our leadership team has an average of more than thirty years of relevant industry experience and we have expertise in the acquisition, leasing, financing, technical management, restructuring/repossession and sale of aviation assets.

This experience spans several industry cycles and a wide range of business conditions and is global in nature.

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Business Strategy

Our traditional business approach is to continue to remain differentiated from those of other large leasing companies.

The recent global disruptions that occurred as a result of the COVID-19 pandemic and the Russian invasion of Ukraine has required enhanced focus on diligent, proactive risk monitoring while continuing to pursue our core strategies.

Our focus is to manage risk and secure liquidity while also planning to grow our business and profits over the long-term.

By limiting long-term capital commitments and maintaining a conservative and flexible capital structure as we remain subject to these unprecedented circumstances, we seek to best position ourselves for investment opportunities in future periods of recovery.

Our business approach is to continue to remain differentiated from those of other leasing companies which have orders with aircraft manufacturers.

The recent global disruptions that occurred as a result of the COVID-19 pandemic and the Russian invasion of Ukraine have required enhanced focus on diligent, proactive risk monitoring while continuing to pursue our core strategies.

Our focus is to manage risk and secure liquidity while growing our assets and profits over the long term.

By limiting long-term capital commitments and maintaining a conservative capital structure, we seek to best position ourselves for future investment opportunities as macroeconomic conditions improve.

Our business strategy entails the following elements:

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In our view, the relative values of different aircraft change over time.

We evaluate investments across different aircraft models, ages, lessees and acquisition sources and re-evaluate these choices as market conditions and relative investment values change.

We continually reevaluate investments across different aircraft models, ages, lessees and acquisition channels as market conditions and relative investment values change.

We believe our team’s experience with a wide range of asset types and the financing flexibility offered through unsecured debt provides us with a competitive advantage.

In response to the COVID-19 pandemic, we have intentionally limited large, long-term capital commitments and are less reliant on orders for new aircraft from aircraft manufacturers as a source of new investments than many of our competitors.

While our current position is defensive given the macro situation, over the long-term we plan to grow our business and profits while maintaining a conservative and flexible capital structure.

We view orders from aircraft manufacturers to be part of our investment opportunity set, however we have limited large, long-term capital commitments and are not reliant on orders for new aircraft from manufacturers as a source of new investments, as many of our competitors do.

Over the long term we plan to grow our business and profits while maintaining a conservative and flexible capital structure.

• Selling assets when attractive opportunities arise.

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To implement this approach, we believe it is important to maintain access to a wide variety of financing sources.

During 2018, we improved our corporate credit ratings to an investment grade level by maintaining strong portfolio and capital structure metrics while achieving a critical size through accretive growth.

Since 2018, we have had an investment grade corporate credit rating and maintained strong portfolio and capital structure metrics while achieving critical size through accretive growth.

We believe our investment grade rating not only reduces our borrowing costs, but also facilitates more reliable access to both unsecured and secured debt capital throughout the business cycle.

There can be no assurance, however, that we will be able to access capital on a cost-effective basis and our failure to do so could have a material adverse effect on our business, financial condition or results of operations.

There can be no assurance, however, that we will be

able to access capital on a cost-effective basis and our failure to do so could have a material adverse effect on our business, financial condition or results of operation.

• Leveraging our strategic relationships .

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• Capturing the value of our efficient operating platform and strong operating track record .

We believe our team’s capabilities in the global aircraft leasing market place us in a favorable position to explore new income-generating activities as capital becomes available for such activities.

We believe our team’s capabilities in the global aircraft leasing marketplace us in a favorable position to explore new income-generating activities as capital becomes available for such activities.

We intend to continue to focus our efforts on investment opportunities in areas where we believe we have competitive advantages and on transactions that offer attractive risk/return profiles.

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Typically, the lessee agrees to lease an aircraft for a fixed term, although certain of our leases allow the lessee the option to extend the lease for an additional term or, in rare cases, terminate the lease prior to its expiration.

Substantially all of our leases have fixed rates that are payable monthly in advance in U.S.

Under our leases, the lessee must pay operating expenses payable or accrued during the term of the lease, which normally include maintenance, overhaul, fuel, crew, landing, airport and navigation charges, certain taxes, licenses, consents and approvals, aircraft registration and insurance premiums.

Generally, we receive a cash deposit or letter of credit as security for the lessee’s performance of its obligations under the lease.

Typically, the lessee is required to make payments for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft, which are either made monthly in arrears or at the end of the lease term.

Our determination of whether to require such payments to be made monthly or to permit a lessee to make a single maintenance payment at the end of the lease term depends on a variety of factors, including the creditworthiness of the lessee, the amount of security deposit provided by the lessee and market conditions at the time.

If a lessee is making monthly maintenance payments, we would typically be obligated to use funds paid by the lessee during the lease term to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components, usually following completion of the relevant work.

If a lessee makes a single end of lease maintenance payment, the lessee would typically be required to pay us for its utilization of the aircraft during the lease.

In some cases, however, we may owe a net payment to the lessee in the event heavy maintenance is performed and the aircraft is returned to us in better condition than at lease inception.

Many of our leases also contain provisions requiring us to pay a portion of the cost of modifications to the aircraft performed by the lessee at its expense if such modifications are mandated by recognized airworthiness authorities.

The lessees are obliged to remove liens on the aircraft other than liens permitted under the leases.

Our leases generally provide that the lessees’ payment obligations are absolute and unconditional under any and all circumstances and require lessees to make payments without withholding payment on account of any amounts the lessor may owe the lessee or any claims the lessee may have against the lessor for any reason, except that under certain of the leases a breach of quiet enjoyment by the lessor may permit a lessee to withhold payment.

The leases also generally include an obligation of the lessee to gross up payments under the lease where lease payments are subject to withholding and other taxes, although there may be some limitations to the gross up obligation, including provisions which do not require a lessee to gross up payments if the withholdings arise out of our ownership or tax structure.

In addition, changes in law may result in the imposition of withholding and other taxes and charges that are not reimbursable by the lessee under the lease or that cannot be so reimbursed under applicable law.

Our leases also generally require the lessee to indemnify the lessor for tax liabilities relating to the leases and the aircraft, including in most cases, value added tax and stamp duties, but excluding income tax or its equivalent imposed on the lessor.

The scheduled maturities of our aircraft leases by aircraft type grouping currently are as follows, taking into account sales, sale agreements, lease placements and renewal commitments as of April 18, 2023, by fiscal year:

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A330-200/300 1 — 3 1 4 — — 1 3 — — — 1 1 15

737-700/800/900ER 6 7 10 9 4 8 3 7 7 — — 2 — — 2 65

737-700/800 7 8 8 6 7 3 9 2 1 — 2 — 2 2 57

737-MAX8 — — — — — — — 1 — 2 1 — — — 4

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(1) We have one narrow-body and three wide-body aircraft that we are currently marketing for lease or sale.

(2) Excludes three Airbus A319-100, four Airbus A320-200, one Boeing 737-800 and two Boeing 747-400ERF aircraft that were on lease with Russian airlines and which we continue to work to repossess.

Fiscal Year 2023 Lease Expirations and Lease Placements

As of April 25, 2022, we have four off-lease aircraft and fourteen aircraft with leases expiring in fiscal year 2022, which combined account for 5% of our Net Book Value at February 28, 2022, still to be placed or sold.

Additionally, we have ten aircraft that had been on lease to Russian lessees and which account for less than 1% of our Net Book Value at February 28, 2022.

We do not yet have physical possession of these ten aircraft.

As of April 18, 2023, we have 5 off-lease aircraft and 19 aircraft with leases expiring in fiscal year 2023, which combined account for 7% of our Net Book Value at February 28, 2023, still to be placed or sold.

Fiscal Year 2024-2027 Lease Expirations and Lease Placements

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For the one variable rate lease, rentals are payable on a floating interest-rate basis.

Virtually all lease rentals are payable monthly in advance, and all lease rentals are payable in U.S.

Virtually all lease rentals are payable monthly in advance and in U.S.

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If a lessee makes a single end of lease maintenance payment, the lessee would typically be required to pay us for its utilization of the

aircraft during the lease.

If a lessee makes a single end of lease maintenance payment, the lessee would typically be required to pay us for its utilization of the aircraft during the lease.

In some cases, however, we may owe a net payment to the lessee in the event heavy maintenance is performed and the aircraft is returned to us in better condition than at lease inception.

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In the future, we may make opportunistic investments in these or other sectors or in other aviation-related assets, and we intend to continue to explore other income-generating activities and investments.

We source and service investments for our joint venture and provide marketing, asset management and administrative services to it.

We source and service investments for our joint venture to which we provide marketing, asset management and administrative services.

We are paid market-based fees for these services, which are recorded in Other revenue in our Consolidated Statements of Income (Loss).

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The aircraft leasing and trading industry is highly competitive with a significant number of active participants.

We face competition for the acquisition, placement and ultimately for the sale of aircraft.

face competition for the acquisition, placement and ultimately for the sale of aircraft.

Competition for aircraft acquisitions comes from many sources, ranging from large established aircraft leasing companies to smaller players and new entrants.

Competition for leasing, re-leasing and selling aircraft is based principally upon the availability, type and condition of the aircraft, user base, lease rates, prices, and other lease terms.

Aircraft manufacturers, leasing companies, airlines and other operators, distributors, equipment managers, financial institutions and other parties engaged in leasing, managing, marketing or remarketing aircraft compete with us, although their focus may be on different market segments and aircraft types.

Larger lessors are generally more focused on acquiring new aircraft via direct orders with the original equipment manufacturers and through purchase and lease-back transactions with airlines.

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Competition for mid-aged and older aircraft comes from other competitors that, in many cases, rely on private equity or hedge fund capital sources.

Such competitors include Carlyle Aviation Partners, Castlelake, Merx Aviation and other players funded by alternative investment funds and companies.

Such competitors include Carlyle Aviation Partners, Castlelake, Merx Aviation and other players, including new entrants, funded by alternative investment funds and companies.

These companies are typically fund-based, rather than having permanent capital structures, and have benefited from the availability of debt financing for mid-aged aircraft.

Recently, however, some of these companies have started to set up some permanent capital structure so as to be able to access the unsecured debt market.

Competition for leasing/re-leasing aircraft, as well as aircraft sales, is based principally upon the availability, type and condition of the aircraft, user base, lease rates, prices, and other lease terms.

Some of these companies have also set up permanent capital structures to be able to access the unsecured debt market.

Some of our competitors have greater financial resources and / or a lower cost of capital.

A number commit to speculative orders of new aircraft to be placed on operating lease upon delivery from the manufacturer, which compete with new and used aircraft offered by other lessors.

The aircraft leasing industry is characterized by on-going merger and acquisition activity as well as new entrants as barriers to entry into the industry are relatively low.

In 2022, two start-ups with significant financial backing started operations:

High Ridge Aviation (U.S., backed by PIMCO) and AviLease (Saudi Arabia, backed by a sovereign wealth fund).

We believe that we can compete favorably in aircraft acquisition, leasing and sales activities due to the reputation of our team of experienced professionals, extensive market contacts and expertise in sourcing and acquiring aircraft.

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We maintain contingent hull and liability insurance coverage with respect to our aircraft which is intended to provide coverage for certain risks, including the risk of cancellation of the hull or liability insurance maintained by any of our lessees without notice to us, but which excludes coverage for other risks such as the risk of insolvency of the primary insurer or reinsurer.

Not all losses are covered by insurance and in some cases, the insurers also have maximum limits that will be payable called aggregate limits.

We maintain insurance policies to cover non-aviation risks related to physical damage to our equipment and property, as well as with respect to third-party liabilities arising through the course of our normal business operations (other than aircraft operations).

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Consistent with industry practice, our insurance policies are generally subject to deductibles or self-retention amounts.

We believe the insurance coverage currently carried by our lessees and by Aircastle provides adequate protection against the accident-related and other covered risks involved in the conduct of our business.

However, there can be no assurance that we have adequately insured against all risks, that lessees will at all times comply with their obligations to maintain insurance, that our lessees’ insurers and re-insurers will be or will remain solvent and able to satisfy any claims, that any particular claim will ultimately be paid or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the future.

Environmental, Social and Governance

Both our insurers and the airlines’ insurers have not settled our claims arising from the Russian invasion of Ukraine and we have had to resort to litigation that could take years to fully settle.

The Russian invasion of Ukraine has also led insurers to reassess their coverage and significantly increase premiums.

We nevertheless continue to believe the insurance coverage currently carried by our lessees and by Aircastle provides adequate protection against the accident-related and other covered risks involved in the conduct of our business.

However, there can be no assurance that we have adequately insured against all risks, that lessees will at all times comply with their obligations to maintain insurance, that

our lessees’ insurers and re-insurers will be or will remain solvent and able to satisfy any claims, that any particular claim will ultimately be paid or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the future.

Environmental, Social and Governance (“ESG”)

We believe that our commitment to identifying and implementing positive environmental and social related business practices strengthens our Company, and better serves our customers, our communities and the broader environment within which we conduct our business.

Board oversight of ESG matters is conducted by the Company’s Risk and Governance Committee.” A detailed report with our ESG disclosures in alignment with Global Reporting Initiative guidance can be found on our website at www.aircastle.com.

Our Commitment to Environmental Sustainability

Ambitious targets have been made towards the ultimate the goal of curbing the adverse effects of climate change.

Ambitious targets have been made towards the ultimate goal of curbing the adverse effects of climate change.

In October 2021, IATA announced its Fly Net Zero commitment to achieve net zero carbon by 2050.

This commitment was echoed by the United States Aviation Climate Action Plan, released in November 2021.

In February 2022, a collective of airlines, airports, and aviation manufacturers operating in the E.U., U.K., and EFTA unveiled the flagship sustainability measure, Destination 2050.

In February 2022, a collective of airlines, airports, and aviation manufacturers operating in the European Union (“E.U.”), United Kingdom (“U.K.”), and European Free Trade Associate (“EFTA”) unveiled the flagship sustainability measure, Destination 2050.

For these ambitious measures to reach implementation, a wide political and administrative consensus will be required.

Due to the inherent complexities of jet aircraft, decarbonizing aviation requires more radical new technology as compared to other modes of transportation.

Sustainable aviation fuels (“SAFs”) provide the most readily available means for airline operators to reduce their carbon emissions while using existing technology.

Hydrogen and electronic propulsion for commercial jet aircraft are far-reaching initiatives.

Sustainable aviation fuels (“SAFs”) provide the most readily available means for airline operators to reduce their carbon emissions while using existing technology, however the high cost and low availability present challenges for SAFs impactful usage.

The Company believes the operations of our customers could be affected by the potential impacts of both climate change and sustainability targets and initiatives aimed at curbing its effect, so we are committed to monitoring sustainability developments.

The Company’s long-term strategic plan takes these rapidly developing initiatives into consideration when we evaluate the technology behind the aircraft we target for investment.

For the fiscal year ended 2021, fourteen out of the Company’s eighteen total acquisitions were in new technology aircraft with higher efficiency and lower emissions.

For the year ended February 28, 2023, 16 out of the Company’s 22 total acquisitions were in new technology aircraft with higher efficiency and lower emissions.

As of February 28, 2023, we had 115 employees.

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Each year, we review employee career development and succession planning internally and with our Compensation Committee.

During the COVID-19 pandemic, the physical and mental health and safety of our employees, customers and business partners was a key priority for us, and we continue to monitor related safety precautions.

After working remotely, we have begun a gradual, staggered return to in-office work at our three locations, although we continue to monitor trends and local government regulations and guidelines, and may adjust plans accordingly to ensure the health and safety of our employees.

Our Culture & Governance

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Our cyber security initiatives provide protection through malware detection, cloud penetration testing, threat hunting and incident responsiveness.

We believe that our commitment to our Company, our employees and the communities in which we operate has led to high employee satisfaction and low employee turnover, as discussed above, and our commitment to our customers and business partners has resulted in high customer satisfaction, as evidenced by long-time relationships with our customers and new/repeat transactions with our business partners.

business partners has resulted in high customer satisfaction, as evidenced by long-time relationships with our customers and new/repeat transactions with our business partners.

Government Regulation

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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-K

Item 1. Business