What changed in this filing

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Item 9A. Controls and Procedures

2023-04-25 compared with 2022-04-28 · 426 added, 468 removed, 1045 unchanged (46% of the section changed)

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Hacker, Michael J.

Inglese, Taro Kawabe, Takashi Kurihara, Charles W.

Pollard, Takayuki Sakakida and Noriyuki Yukawa.

Inglese, Taro Kawabe, Takashi Kurihara, Keiji Okuno, Charles W.

Pollard, and Takayuki Sakakida.

Takashi Kurihara

Keiji Okuno 59

Takayuki Sakakida

Noriyuki Yukawa

Hacker was appointed to our Board on March 27, 2020 following the consummation of the Merger and served on the prior Board of Aircastle Limited from August 2, 2006 to the consummation of the Merger.

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Hacker served as a director of Travelport from 2016 until May 2019.

Hacker serves as the Co-Chair of a series of open-end investment companies that are part of the Columbia family of mutual funds and as an independent director and Chair of the Board of Directors of SpartanNash Company.

Inglese was appointed a member of our Board on March 27, 2020 following the consummation of the Merger and served on the prior Board of Aircastle Limited from June 2017 to the consummation of the Merger.

Hacker serves as the Co-Chair of a series of open-end investment companies that are part of the Columbia Threadneedle family of mutual funds and as an independent director and Chair of the Board of Directors of SpartanNash Company.

Inglese was appointed to our Board on March 27, 2020 following the consummation of the Merger and served on the prior Board of Aircastle Limited from June 2017 to the consummation of the Merger.

He became our Chief Executive Officer in June 2017, having served as Aircastle’s Acting Chief Executive Officer from January 2017.

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Taro Kawabe was appointed to our Board on March 27, 2020 following the consummation of the Merger.

Kawabe is currently an Executive Officer, Chief Operating Officer of the Finance and Leasing Business Division of Marubeni.

Kawabe is currently an Executive Officer, Chief Operating Officer of the Finance, Leasing and Real Estate Business Division of Marubeni.

Previously, he was Senior Operating Officer of the Finance and Leasing Business Division of Marubeni from April 2019 to March 2020.

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Kurihara has over 30 years of experience at Marubeni including the structured finance for Energy & Chemical plant projects in various countries, the management of the investment decision making process by conducting the analysis and the recommendation to its CEO, various M&A activities including Gavilon and its post-merger integration, and brings to the Board extensive experience in operations, strategic planning and financial matters.

Keiji Okuno was appointed to our Board as of September 26, 2022, succeeding Noriyuki Yukawa who resigned as a member of the Board effective September 26, 2022.

Before joining Aircastle, Mr.

Okuno was Senior Vice President of PNB-Mizuho Leasing & Finance Corporation and is also a Director of PNB-Mizuho Equipment & Rental Corporation.

From January 2019 to November 2019, Mr.

Okuno was Deputy General Manager of Mizuho Leasing Ltd.

Prior to joining Mizuho Leasing Co.

Okuno had over 15 years at ORIX Group in various roles including Vice President, Global Business Group, Executive Vice President, and Managing Director.

Okuno received a B.A.

from Dokkyo University and a diploma from New York University.

Okuno is a CPA.

Pollard was appointed to our Board on March 27, 2020 following the consummation of the Merger and served on the prior Board of Aircastle Limited from July 6, 2010 to the consummation of the Merger.

Pollard joined Omni Air International, Inc., a passenger charter carrier, in 1997, where he served variously as Managing Director, President and CEO, and Vice Chairman until 2009.

Previously, he spent ten years in senior management positions, including President and CEO, at World Airways, Inc.

Previously, he spent 10 years in senior management positions, including President and CEO, at World Airways, Inc.

Prior to joining World Airways, Inc., he practiced corporate law at Skadden, Arps, Slate, Meagher & Flom.

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From April 2011 to 2015, he seconded to MD Aviation Capital Pte Ltd (Singapore) as Managing Director.

Sakakida has over seventeen years of experience in the aviation industry and brings to the Board extensive experience in operations, strategic planning and financial matters relevant to the aviation industry.

Sakakida has over 18 years of experience in the aviation industry and brings to the Board extensive experience in operations, strategic planning and financial matters relevant to the aviation industry.

He maintains high-level contacts with major manufacturers in the aviation industry as well as Asian airlines which may in the future be customers of the Company.

Noriyuki Yukawa was appointed to our Board on March 27, 2020 following the consummation of the Merger.

Yukawa is currently an Advisor at Mizuho Leasing, and from April 2013 until March 2020, he also held the title of Managing Executive Officer.

From April 2017 to March 2020, he led the Aviation, Finance and Real Estate Departments, and from April 2013 to March 2017 he was in charge of Real Estate.

Prior to joining Mizuho Leasing in April 2009, Mr.

Yukawa had a 28-year career at Mizuho Bank.

His roles included General Manager of the M&A Advisory Division, Joint General Manager of the M&A Finance Division, and Deputy General Manager of the Real Estate Finance Division, as well as an Executive Assistant for the Chairman of the Board.

Yukawa received a Master of Comparative Laws from the University of Illinois, College of Law and a Bachelor of Law from the University of Tokyo.

Yukawa is also a member of the Board of Directors of PLM Fleet LLC.

Information about our Executive Officers .

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Audit Committee of the Board of Directors .

Takashi Kurihara (Chairman), Noriyuki Yukawa and Douglas A.

Takashi Kurihara (Chairman), Keiji Okuno and Douglas A.

Hacker were designated as members of the Audit Committee.

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This Compensation Discussion and Analysis describes and analyzes our executive compensation philosophy and programs.

This Compensation Discussion and Analysis focuses on the compensation paid for our 2021 fiscal year to our current Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers, together referred to as our named executive officers (“NEOs”).

This Compensation Discussion and Analysis focuses on the compensation paid for our 2022 fiscal year to our Chief Executive Officer, Chief Financial Officer (including our former Chief Financial Officer) and three other most highly compensated executive officers, together referred to as our named executive officers (“NEOs”).

For 2022, our NEOs were:

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Inglese Chief Executive Officer

Dahlke Chief Financial Officer

Chief Financial Officer

Chief Commercial Officer

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Chief Legal Officer & Secretary

Chief Strategy Officer

Joseph Schreiner Former Chief Technical Officer

Former Chief Financial Officer

Dahlke, our former Chief Financial Officer, resigned from the Company effective September 20, 2022 to pursue an opportunity outside of the aviation industry.

Roy Chandran, the Company’s Chief Strategy Officer, assumed the role as Chief Financial Officer effective September 1, 2022.

Joseph Schreiner, our former Chief Technical Officer, retired from the Company effective February 28, 2023.

Pay for Performance Philosophy

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For 2022, our annual incentive compensation awards were paid out to our executive officers in the form of cash.

For additional retention purposes, we introduced a new long term incentive award program in 2021 – see below for further discussion regarding our new long term incentive program.

For additional retention purposes, we granted long term incentive awards in 2022 as part of our long term incentive award program that was introduced in 2021 – see below for further discussion of our long-term incentive award program.

Compensation Overview

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Annual Incentive Compensation .

We make an incentive compensation award in the form of a cash bonus based on the Company’s performance against corporate financial metrics and performance against individual performance goals.

We grant an incentive compensation award in the form of a cash bonus based on the Company’s performance against corporate financial metrics and performance against individual performance goals.

Long-Term Incentive Plan .

In 2021, we introduced a new long term incentive (“LTI”) award program, in the form of cash awards, for our executive officers and certain other senior professionals.

The LTI awards are intended to enhance management retention by rewarding participants for exceptional performance over a three-year performance period using the internal rate of return with respect to the common shareholders’ equity book equity “Book Equity IRR”) Internal Rate of Return (“IRR”) as the measure of long-term performance.

In 2021, we introduced a long term incentive (“LTI”) award program, in the form of cash awards, for our executive officers and certain other senior professionals.

The LTI awards are intended to enhance management retention by rewarding participants for exceptional performance over a three-year performance period using the internal rate of return with respect to our common shareholders’ book equity (“Book Equity IRR”) as the measure of long-term performance.

Each fiscal year within the three-year performance period constitutes a performance year.

Our LTI awards are granted with a target award amount, whereby one-third of the target award relates to each performance year.

The annual award earned in respect of a given performance year is adjusted based on the Book Equity IRR achieved, which is calculated as the internal rate of return based on the change in our common shareholders’ equity.

The annual award earned in respect of a given performance year is adjusted based on the Book Equity IRR achieved for the given performance year.

The Book Equity IRR for each performance year is evaluated against a performance range in order to determine the target annual award earned.

The LTI awards yield a minimum payout of 50% and a maximum payout of 150% of the target annual award.

The LTI awards for our non-executive officers vest ratably over the three-year performance period subject to continued employment through each annual vesting date.

For maximum retention, our executive officers’ LTI awards cliff vest at the end of the three-year performance period subject to continued employment through such date.

Our LTI awards granted in May 2021 have the following performance range with results between the minimum and target and the maximum and target being interpolated on a linear basis.

Our LTI awards granted in 2022 and 2021 have the following performance range with results between the minimum and target and the maximum and target being interpolated on a linear basis.

Annual Performance Range for LTI Awards

Book Equity (IRR) % of Target Annual Award Earned

Equal to or greater than 6% 150%

Greater than 2.5% and less than 6% Interpolated

Equal to 0.5% through 2.5% 100%

Greater than -3.0% and less than 0.5% Interpolated

Less than or equal to -3.0% 50%

Actual Performance for 2021 .

The Russian invasion of Ukraine and resulting sanctions greatly impacted the global aviation industry and the Company’s financial performance.

We recorded net non-cash impairment changes of $252 million.

As a result of the impairment charges, the Book Equity IRR for 2021 was below the minimum target.

Therefore, the portion of those 2021 LTI awards related to the 2021 performance year were earned and accrued at 50%.

For our executive officers, these awards will vest on February 29, 2024.

Book Equity (IRR)

2022 LTI Awards 2021 LTI Awards % of Target Annual Award Earned

Equal to or greater than 4% Equal to or greater than 6% 150%

Greater than 1.5% and less than 4% Greater than 2.5% and less than 6% Interpolated

Equal to 0.5% through 1.5% Equal to 0.5% through 2.5% 100%

Greater than -2.0% and less than 0.5% Greater than -3.0% and less than 0.5% Interpolated

Less than or equal to -2.0% Less than or equal to -3.0% 50%

Actual Performance for 2022 Performance Year .

The Company’s financial performance reflects the aviation industry’s emergence from the COVID-19 pandemic, the recovery of global air traffic, and an improvement in our customer’s financial condition.

Our financial results are partly driven by strong gains on sales, which include the sales of 2 freighter aircraft and 1 wide-body aircraft that we recovered from our former Russian or Russian-affiliated lessees.

As a result, the Book Equity IRR for the 2022 performance year was 2.9%.

Therefore, the portion of our 2022 and 2021 LTI awards related to the 2022 performance year were earned at 128.1% and 105.8%, respectively.

For our executive officers, the 2022 and 2021 LTI awards will vest on February 28, 2025 and February 29, 2024, respectively.

Other Compensation .

We also offered our NEOs severance payments and accelerated vesting of restricted cash awards and LTI awards in certain circumstances, as described in greater detail below in the section entitled “Potential Payments upon Termination or Change in Control.” Severance and change in control benefits provide transitional assistance for separated employees and are essential to recruiting and retaining talented executives in a competitive

Our NEOs are eligible to receive severance payments and accelerated vesting of restricted cash awards and LTI awards in certain circumstances, as described in greater detail below in the section entitled “Potential Payments upon Termination or Change in Control.” Severance and change in control benefits provide transitional assistance for separated employees and are essential to recruiting and retaining talented executives in a competitive market.

In addition, our NEOs are also eligible to participate in our employee benefit plans, including medical, dental, life insurance and 401(k) plans.

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The policy applies to all incentive compensation awarded or paid to an executive officer in the three years prior to the restatement, even if the executive officer did not engage in conduct which contributed to the restatement.

In addition, we may seek to recover any portion of incentive compensation when we determine that an executive officer engaged in a certain misconduct, namely involving:

(i) material acts of fraud or dishonesty in connection with employment by the Company;

(ii) willfully not complying with material policies or procedures of the Company;

or (iii) the commission of a felony or a crime involving material dishonesty.

In addition, we may seek to recover any portion of incentive compensation when we determine that an executive officer engaged in a certain misconduct.

For our executive officers, we have designed a qualifying retirement feature that will allow the LTI awards to continue to vest following retirement, subject to satisfaction of the Book Equity IRR performance objectives.

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The primary goals of our compensation programs are to attract, motivate and retain the most talented and dedicated employees and to align incentive compensation.

What We Don’t Pay or Provide

• Individual contractual rights to change in control benefits based on a single trigger;

• Deferred compensation plans;

• Company cars or aircraft;

• Individual contractual rights to income tax gross-ups;

• Special or enhanced pension or retirement programs.

2022 Compensation

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For 2022, the Company’s performance against its corporate financial metrics resulted in an incentive compensation pool equal to 118% of the total target, as shown in the table below.

Certain financial metrics, such as profit before tax, were impacted by the continuing effects of the COVID-19 pandemic on the commercial aviation industry, as well as the Russian invasion of Ukraine in late fiscal year 2021.

Certain financial metrics, such as profit before tax and cash flow, were impacted by the effects of the aviation industry’s emergency from the COVID-19 pandemic, the recovery of global air traffic, and an improvement in our customer’s financial condition.

(in millions) Weighting 2022 Performance (in millions) Performance Range Performance Weighted Score

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Cash flow $ 415.0 20% $ 437.7 50% - 150% 118% 24 %

$ 361.0 40% $ 372.9 50% - 150% 111 % 44 %

New investments (in millions) $ 1,100.0 20% $ 914.2 50% - 150% 83% 16 %

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Inglese $872,160 cash

Dahlke $465,500 cash

Roy Chandran $607,026 cash

$664,838 cash

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$664,838 cash

Joseph Schreiner

$429,840 cash

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We believe none of our compensation programs create risks that are reasonably likely to have a material adverse impact on the Company.

Base salary is a fixed amount that does not encourage risk taking, and our annual incentive compensation program and LTI award program are both limited to a maximum payout of 150% of target.

Role of Executive Officers.

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We shared these discussions with the full Board on a regular basis.

Tax Implications of Our Compensation

The Tax Cuts and Jobs Act, enacted on December 22, 2017, substantially modified Section 162(m) of the Internal Revenue Code and, among other things, eliminated the performance-based exception to the $1.0 million deduction limit effective as of January 1, 2018.

As a result, beginning in 2018, compensation paid to certain executive officers in excess of $1.0 million will generally be nondeductible, whether or not it is performance-based.

In addition, beginning in 2018, the executive officers subject to Section 162(m) (the “Covered Employees”) will include any individual who served as the CEO or Chief Financial Officer (“CFO”) at any time during the taxable year and the three other most highly compensated officers (other than the CEO and CFO) for the taxable year, and once an individual becomes a Covered Employee for any taxable year beginning after December 31, 2016, that individual will remain a Covered Employee for all future years.

Effective as of the closing of the Merger, Section 162(m) no longer applied to the Company.

COMPENSATION COMMITTEE REPORT

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Summary Compensation Table for 2022

The table below sets forth information regarding fiscal years 2021 and 2020, the Transition Period (“2020 (2mo)”) and 2019 compensation for each of our NEOs.

Name and Principal Position Fiscal Year Salary Bonus Annual Equity Award (3)

Long Term Equity Incentive Plan (3)(6)

The table below sets forth information regarding fiscal years 2022, 2021 and 2020 compensation for each of our NEOs.

Name and Principal Position Fiscal Year Salary Bonus (1)

Non-Equity Incentive Plan (2)

All Other Compensation (3)

Inglese 2021 (FY) $ 750,000 $ 678,060 $ — $ — $ 13,340 $ 1,441,400

Chief Executive Officer 2020 (FY) 675,000 1,076,868 — — 12,840 1,764,708

2020 (2mo) 112,500 469,123 — — 2,140 583,763

Inglese 2022 $ 750,000 $ 1,036,185 $ — $ 14,607 $ 1,800,792

Chief Executive Officer 2021 750,000 678,060 — 13,340 1,441,400

2020 675,000 1,076,868 — 12,840 1,764,708

Dahlke 2021 (FY) $ 475,000 $ 300,240 $ — $ — $ 13,340 $ 788,580

Chief Financial Officer 2020 (FY) 400,000 344,331 — — 12,840 757,171

2020 (2mo) 66,667 181,349 — — 2,140 250,156

Roy Chandran (4)

2022 $ 525,000 $ 568,407 $ — $ 14,607 $ 1,108,014

Winter 2021 (FY) $ 575,000 $ 375,300 $ — $ — $ 13,508 $ 963,808

Chief Commercial Officer 2020 (FY) 500,000 506,803 — — 21,527 1,028,330

2020 (2mo) 83,333 233,631 — — 2,094 319,058

Chief Strategy Officer 2021 475,000 300,240 — 13,440 788,680

2020 400,000 344,331 — 12,840 757,171

Winter 2022 $ 575,000 $ 692,133 $ — $ 14,607 $ 1,281,740

Chief Commercial Officer 2021 575,000 375,300 — 13,508 963,808

2020 500,000 506,803 — 21,527 1,028,330

Christopher L.

Beers 2021 (FY) $ 575,000 $ 375,300 $ — $ — $ 13,987 $ 964,287

Chief Legal Officer & 2020 (FY) 500,000 506,803 — — 13,250 1,020,053

Secretary 2020 (2mo) 83,333 233,631 — — 2,208 319,172

Beers 2022 $ 575,000 $ 692,133 $ — $ 14,607 $ 1,281,740

Chief Legal Officer & 2021 575,000 375,300 — 13,987 964,287

Secretary 2020 500,000 506,803 — 13,250 1,020,053

Joseph Schreiner (5)

2022 $ 375,000 $ 401,716 $ — $ 326,863 $ 1,103,579

Roy Chandran (5)

2021 (FY) $ 475,000 $ 300,240 $ — $ — $ 13,440 $ 788,680

Chief Strategy Officer 2020 (FY) 400,000 344,331 — — 12,840 757,171

2020 (2mo) 66,667 181,349 — — 2,140 250,156

Chief Technical Officer

2022 $ 262,772 $ 497,500 $ — $ 48,292 $ 808,564

Chief Financial Officer 2021 475,000 300,240 — 13,340 788,580

2020 400,000 344,331 — 12,840 757,171

(1) The amounts reported in the Annual Equity Award column for 2019 reflect, in part, the aggregate fair value on the grant date of the restricted share awards granted to our NEOs determined in accordance with FASB ASC Topic 718.

The amounts reported in the Long-Term Equity Incentive Plan column for 2019 reflect, in part, the aggregate fair value on the grant date of the adjusted return on equity (“AROE”) performance share units (“PSUs”) and the total stockholder return (“TSR”) PSUs granted to our NEOs determined in accordance with FASB ASC Topic 718 based on the probable achievement of the applicable AROE and TSR performance conditions as of the grant date.

The aggregate fair value on the grant date that would have been included for the AROE PSUs and TSR PSUs, assuming that the highest level of the performance conditions would be achieved, is as follows:

Inglese $2,475,000;

Winter $1,000,000;

Dahlke $600,000;

Beers $1,000,000;

Chandran $600,000.

For a summary of the assumptions made in the valuation of these awards, please see Note 8 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Pursuant to SEC guidance, the amounts included in both columns also include the incremental fair value of certain restricted share awards and PSUs that were materially modified in December 2019 as a result of their accelerated vesting in connection with the 280G mitigation actions taken in connection with the Merger.

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(1) Bonus compensation consists of:

(i) cash bonuses;

(ii) cash-based long-term incentive compensation awarded in 2020 with a one-year vesting period;

and (iii) the portion of 2019 bonus restricted cash awards vested in 2020 and 2021.

(3) Please refer to the Company's Form 10K/A for the year ended December 31, 2019 (filed April 22, 2020) for a description of the Annual Equity Awards and Long Term Equity Incentive Plan awards for 2019.

No Annual Equity Awards or Long Term Equity Incentive Plan awards were granted after 2019.

See Compensation Overview-Long Term Incentive Plan above for information regarding our new cash-based LTI awards granted for the first time in 2021.

Pursuant to SEC rules, amounts paid out to our NEOs with respect to our cash-based LTI awards will be reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for the year earned, not the year granted

(ii) the portion of 2019 bonus restricted cash awards vested in 2020, 2021, and 2022 (iii) the portion of 2020 bonus restricted cash awards vested in 2022, and (iv) cash-based long-term incentive compensation awarded in 2020 with a one-year vesting period.

(2) See Compensation Overview-Long Term Incentive Plan above for information regarding our cash-based LTI awards granted in 2022 and 2021.

Pursuant to SEC rules, amounts paid out to our NEOs with respect to our cash-based LTI awards will be reported in the “Non-Equity Incentive Plan” column of the Summary Compensation Table for the year earned, not the year granted.

(3) The amounts reported in this column consist of Company contributions made to each named executive officer’s 401(k) plan account and certain insurance premiums paid by the Company, in addition to $8,960 paid to Douglas C.

Winter as a dividend payment on unvested restricted common shares.

(5) In March 2020, Mr.

Chandran was promoted to Chief Strategy Officer.

(6) 2021 LTI awards granted to our NEOs, which vest on February 29, 2024, and in accordance with SEC rules are not reported in the Summary Compensation Table for 2021 as part of our 2021 compensation, were provided in the following target award amounts:

Inglese $2,500,000;

Dahlke $600,000;

Winter $1,000,000;

Beers $1,000,000;

Chandran $600,000.

Grants of Plan-Based Awards for 2021

See (4) and (5) below for additional information regarding Mr.

Dahlke and Mr.

Schreiner’s other compensation.

(4) On September 1, 2022, Mr.

Chandran was promoted to Chief Financial Officer.

Dahlke, our former Chief Financial Officer, resigned from the Company effective September 20, 2022 to pursue an opportunity outside of the aviation industry.

The amount reported in the “All Other Compensation” column for Mr.

Dahlke includes $34,712 of vacation paid as part of his voluntary resignation.

(5) Joseph Schreiner became one of the Company’s NEOs in 2022 as a result of Mr.

Dahlke’s resignation and Mr.

Chandran’s appointment and promotion to Chief Financial Officer, as discussed above.

The amount reported in the “All Other Compensation” column for Mr.

Schreiner includes $35,596 of vacation paid as part of his retirement, as well as $250,000 and $26,800 related to items (ii) and (iii) described in “Mr Schreiner’s Retirement Agreement” below.

Grants of Plan-Based Awards

Estimated Possible Payouts under Non-Equity Incentive Plan Awards (2)

Name Grant Date Minimum ($) Target ($) Maximum ($)

Inglese May 20, 2021 $ 1,250,000 $ 2,500,000 $ 3,750,000

Dahlke May 20, 2021 300,000 600,000 900,000

Winter May 20, 2021 500,000 1,000,000 1,500,000

Name Grant Date Vesting Date Grant of Cash LTI Award Minimum ($) Target ($) Maximum ($)

Inglese August 15, 2022 February 28, 2025 $ 2,500,000 $ 1,901,085 $ 2,734,419 $ 3,567,753

May 20, 2021 February 29, 2024 2,500,000 1,715,083 2,131,750 2,548,417

Roy Chandran August 15, 2022 February 28, 2025 $ 800,000 $ 608,347 $ 875,014 $ 1,141,681

May 20, 2021 February 29, 2024 600,000 411,620 511,620 611,620

Winter August 15, 2022 February 28, 2025 $ 1,000,000 $ 760,435 $ 1,093,769 $ 1,427,103

May 20, 2021 February 29, 2024 1,000,000 686,033 852,700 1,019,367

Christopher L.

Beers May 20, 2021 500,000 1,000,000 1,500,000

Roy Chandran May 20, 2021 300,000 600,000 900,000

Represents our new cash-based LTI awards granted to our NEOs in May 2021 which vest on February 29, 2024.

Beers August 15, 2022 February 28, 2025 $ 1,000,000 $ 760,435 $ 1,093,769 $ 1,427,103

May 20, 2021 February 29, 2024 1,000,000 686,033 852,700 1,019,367

Joseph Schreiner August 15, 2022 February 28, 2025 $ 500,000 $ 380,217 $ 546,884 $ 713,551

May 20, 2021 February 29, 2024 500,000 343,017 426,350 509,683

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(1) Represents the aggregate target amount of our cash-based LTI awards granted to our NEOs.

(2) The LTI awards yield a minimum payout of 50% and a maximum payout of 150% of the target annual award.

See Compensation Overview – Long Term Incentive Plan above for information regarding our new cash-based LTI awards granted for the first time in 2021.

These amounts in the table include actual performance for the 2022 and 2021 performance years and estimated minimum, target, and maximum amounts for the 2023 and 2024 performance years.

See Compensation Overview – Long Term Incentive Plan above for information regarding our cash-based LTI awards granted in 2022 and 2021.

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A summary of the payments and benefits to be provided to the NEOs upon a termination of employment, along with a description of the restrictive covenants applicable to each NEO, is set forth below in the section entitled “Potential Payments upon Termination or Change in Control.”

Schreiner’s Retirement Agreement

On November 22, 2022, we entered into a retirement agreement with Mr.

Schreiner in connection with his intended retirement at the end of our then-current fiscal year, effective February 28, 2023 (the “Retirement Date”).

Pursuant to his retirement agreement, Mr.

Schreiner continued to serve as Chief Technical Officer through the Retirement Date and received his then-current base salary and all other components of his usual and customary compensation and benefits, provided that (i) he was entitled to a cash bonus for the 2022 performance year in the amount of $429,840, (ii) he received a cash payment of $250,000 on the Retirement Date, (iii) he is entitled to reimbursement of COBRA premiums for thirteen months, (iv) his unvested 2020 bonus restricted cash awards in the amount of $26,800 will vest and be paid out no later than 60 days following the Retirement Date, and (v) he will not receive any LTI awards for 2023 or any year thereafter, however he will continue to vest in all unvested LTI awards as if he were a full-time employee of the Company.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

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— — 2,026,468 2,026,468 2,026,468 — 2,026,468

Joseph Schreiner (2)

Cash Severance $ — $ — $ — $ — $ — $ 250,000 $ —

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(1) Includes the portion of 2019 bonus restricted cash awards vesting on February 28, 2022, the portion of 2020 bonus restricted cash awards vesting on March 1, 2023 and 2024, and the 2021 LTI awards vesting on February 29, 2024.

(1) Includes the portion of 2020 bonus restricted cash awards vesting on March 1, 2023 and 2024, and the 2021 LTI awards vesting on February 29, 2024, and 2022 LTI awards vesting on February 28, 2025.

(2) In accordance with SEC rules, the amounts presented in the table above reflect amounts paid or payable to Joseph Schreiner in accordance with his retirement agreement, as described in “ Mr.

Schreiner’s Retirement Agreement” above.

As described above in the section entitled “Employment Agreements with NEOs,” we, through our subsidiary, Aircastle Advisor LLC, have entered into employment agreements (as amended) with our named executive officers which set forth certain terms and conditions of their employment relating to termination and termination payments.

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(iii) reimbursement of COBRA premiums for up to twelve months;

(iv) accelerated vesting of any remaining LTI awards, payable within 60 days following the performance period or, if the NEO’s employment is terminated following a change in control event, within 60 days following the date of termination;

• if any amounts to be paid to such named executive officer would constitute “excess parachute payments” subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, the amount will be reduced to the extent necessary to avoid the excise tax, but only if such reduction results in a higher after-tax payment to him;

(iv) accelerated vesting of any remaining restricted cash and LTI awards, payable within either 30 or 60 days following the performance period or, if the NEO’s employment is terminated following a change in control event, within either 30 or 60 days following the date of termination;

• such named executive officer covenants not to compete with Aircastle for six months following termination of his employment for any reason and will not solicit the employees of Aircastle or the clients or customers of Aircastle for competing business, in each case, for a period of twelve months following termination.

Each of the employment agreements were amended effective as of December 19, 2019, to provide that any grants of restricted cash awards in lieu of the annual PSU grants for 2020 and the equity-based portion of the annual bonuses in respect of 2019 will not constitute a good reason event for purposes of the employment agreements or for any other purpose.

Director Compensation Table for 2022

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We believe the terms and conditions set forth in such agreements were reasonable and customary for transactions of this type.

On April 26, 2021, we entered into an amendment that reduced the size of our revolving credit facility with Mizuho Bank Ltd., a related party, from $150,000 to $50,000 and extended its maturity date to July 30, 2022.

Mizuho Bank, Ltd.

is now a lender for our $1,000,000 revolving credit facility with a commitment in the amount of $100,000.

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.

The Company incurred fees from Marubeni as part of its intra-company service agreement totaling $5.5 million during the year ended February 28, 2023, whereby Marubeni provides certain management and administrative services to the Company.

In addition, the Company purchased parts under a parts management services and supply agreement with an affiliate of Marubeni totaling $4.2 million during the year ended February 28, 2023.

On January 27, 2023, the Company entered into an amendment that expanded the size and extended the term of our unsecured revolving credit facility with Mizuho Marubeni Leasing America Corporation., a related party – see Note 8 in the Notes to Consolidated Financial Statements for additional information.

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

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.

During the year ended February 28, 2022, the Company incurred $5.0 million 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 $5.9 million during the year ended February 28, 2022.

On February 28, 2023, the Company entered into a $300.0 million senior unsecured revolving credit facility with Mizuho Bank Ltd., a related party – see Note 8 in the Notes to Consolidated Financial Statements for additional information.

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

Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons

Our Board has adopted a Policy and Procedures with Respect to Related Person Transactions, our Related Person Policy.

Pursuant to the terms of the Related Person Policy, the Audit Committee must review and approve in advance any transaction involving an affiliate or related party (as defined under Accounting Standards Codification Topic 850), in which the amount involved exceeds $5.0 million, other than those that are pre-approved pursuant to pre-approval guidelines or rules that may be established by the Audit Committee to cover specific categories of transactions, including the guidelines described below.

Pursuant to the terms of the Related Person Policy, the Audit Committee must review and approve in advance any

transaction involving an affiliate or related party (as defined under Accounting Standards Codification Topic 850), in which the amount involved exceeds $5.0 million, other than those that are pre-approved pursuant to pre-approval guidelines or rules that may be established by the Audit Committee to cover specific categories of transactions, including the guidelines described below.

All Related Persons, as defined below, are required to report to our legal department any such related person transaction prior to its completion, and the legal department will determine whether it should be submitted to the Audit Committee for consideration.

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Hacker and Pollard to be independent and that Directors Messrs.

Inglese, Kawabe, Kurihara, Sakakida and Yukawa to be not independent.

Inglese, Kawabe, Kurihara, Okuno and Sakakida to be not independent.

Our standing Risk and Governance, Audit and Compensation Committees include independent and non-independent Directors.

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In connection with the audit of the 2022 and 2021 financial statements, the Company entered into an engagement letter with Ernst & Young LLP (“EY”) that sets forth the terms by which EY has performed audit services for the Company.

The following summarizes the fees paid by us to EY for professional services rendered in the years ended February 28, 2022 and 2021:

Professional services rendered by EY for the years ended February 28, 2023 and 2022 are as follows:

Year Ended February 28,

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(2) Represents fees related primarily to assistance with tax compliance matters, including international, federal and state tax return preparation, and consultations regarding tax matters.

(3) Estimate based on approved fees, subject to finalization upon completion of audit work.

Audit Committee Pre-Approval Policies and Procedures

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In the early part of each year, the Audit Committee approves the proposed services, including the nature, type and scope of services contemplated, and the related fees, to be rendered by these firms during the year.

In addition, pre-approval by the Audit Committee or one of its members is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved by the Audit Committee pursuant to the Sarbanes-Oxley Act.

pre-approval by the Audit Committee or one of its members is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved by the Audit Committee pursuant to the Sarbanes-Oxley Act.

In accordance with this policy, the Audit Committee pre-approved all services to be performed by the Company’s independent registered accounting firm.

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Consolidated Balance Sheets as of February 28, 2023 and 2022.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 28, 2022 and 2021, two months ended February 29, 2020, and year ended December 31, 2019.

Consolidated Statements of Cash Flows for the years ended February 28, 2022 and 2021, two months ended February 29, 2020, and year ended December 31, 2019.

Consolidated Statements of Changes in Shareholders’ Equity for the years ended February 28, 2022 and 2021, two months ended February 29, 2020, and year ended December 31, 2019.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 28, 2023, 2022 and 2021.

Consolidated Statements of Cash Flows for the years ended February 28, 2023, 2022 and 2021.

Consolidated Statements of Changes in Shareholders’ Equity for the years ended February 28, 2023, 2022 and 2021.

Notes to Consolidated Financial Statements.

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Morgan Securities LLC and RBC Capital Markets, LLC (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 6, 2013).

4.5 Second Supplemental Indenture, dated as of March 26, 2014, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 26, 2014).

4.5 Fourth Supplemental Indenture, dated as of March 24, 2016, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 24, 2016).

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4.7 Sixth Supplemental Indenture, dated as of September 25, 2018, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 25, 2018).

4.9 Indenture, dated as of August 11, 2020, by and between Aircastle Limited and Wells Fargo Bank, National Association, as (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on August 11, 2020).

4.8 Seventh Supplemental Indenture, dated as of June 13, 2019, between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 13, 2019).

4.90 Indenture, dated as of August 11, 2020, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on August 11, 2020).

4.10 Indenture, dated as of January 26, 2021, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 26, 2021).

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Morgan Securities LLC, Citigroup Global Markets Inc., Goldman, Sachs & Co and RBC Capital Markets, LLC, as representatives of the several Initial Purchasers named therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 30, 2012).

10.13 Third Amended and Restated Credit Agreement, dated as of March 28, 2016, by and among Aircastle Limited, the several lenders from time to time parties thereto, and Citibank N.A., in its capacity as agent for the lenders (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 4, 2016).

10.13 Aircastle Limited 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 23, 2014).

10.14 Form of Restricted Share Agreement for Certain Executive Officers Under the Aircastle Limited 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2014).

Description of Exhibit

10.15 Form of Non-Officer Director Restricted Share Agreement Under the Aircastle Limited 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2014).

10.16 Form of Performance Share Unit Agreement for Certain Executive Officers under the Aircastle Limited 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 4, 2016).

Description of Exhibit

10.17 Form of Restricted Share Unit Agreement Under the Aircastle Limited 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 4, 2017).

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(incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on October 13, 2021).

Description of Exhibit

10.31 Amendment No.

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and Yaborã Indústria Aeronáutics S.A.

(incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K filed on April 28, 2022).

10.33 Amendment No.

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and Yaborã Indústria Aeronáutics S.A.

(incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K filed on April 28, 2022).

Description of Exhibit

10.34 Amendment No.

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and Yaborã Indústria Aeronáutics S.A.

(incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K filed on April 28, 2022).

10.35 Amendment No.

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and Yaborã Indústria Aeronáutics S.A.

(incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K filed on April 28, 2022).

10.36 Amendment No.

17 to Purchase Agreement COM0270-15, dated as of August 24, 2022 (Amendment No.

17), by and between Aircastle Holding Corporation and Embraer S.A.

(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on October 12, 2022).

10.37 Amendment No.

18 to Purchase Agreement COM0270-15, dated as of December 8, 2022 (Amendment No.

18), by and between Aircastle Holding Corporation and Embraer S.A.

(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on January 12, 2023).

10.38 Amendment No.

1 to Letter Agreement COM0271-15 in Purchase Agreement COM0270-15, dated as of November 11, 2016, by and between Aircastle Holding Corporation and Embraer S.A.

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10.40 Amendment No.

3 to Letter Agreement COM0271-15 in Purchase Agreement COM0270-15, dated as of February 23, 2018, by and between Aircastle Holding Corporation and Embra er S.A.

3 to Letter Agreement COM0271-15 in Purchase Agreement COM0270-15, dated as of February 23, 2018, by and between Aircastle Holding Corporation and Embraer S.A.

(incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2018).

10.41 Amendment No.

4 to Letter Agreement COM271-15 in Purchase Agreement COM0270-15, dated as of April 19, 2018, by and between Aircastle Holding Corporation and Embra er S.A.

4 to Letter Agreement COM271-15 in Purchase Agreement COM0270-15, dated as of April 19, 2018, by and between Aircastle Holding Corporation and Embraer S.A.

(incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2018).

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and Yaborã Indústria Aeronáutics S.A.

(incorporated by reference to Exhibit 10.43 to the Company’s Annual Report on Form 10-K filed on April 28, 2022).

10.45 Notice and Consent COM0439-19, dated as of September 18, 2020, between Aircastle Holding Corporation, Embraer S.A.

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10.49 Form of Indemnification Agreement with directors and officers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 27, 2020).

10.50 Sixth Amended and Restated Credit Agreement, dated as of April 26, 2021, by and among Aircastle Limited, the several lenders from time to time parties thereto, and Citibank N.A., in its capacity as agent for the lenders.

Description of Exhibit

10.51 Amendment Agreement to the Sixth Amended and Restated Credit Agreement, dated as of September 8 , 2022, by and among Aircastle Limited, the several lenders from time to time parties thereto, and Citibank N.A., in its capacity as agent for the lenders.

21.1 Subsidiaries of the Subsidiaries of the Registrant.

31.1 Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

Description of Exhibit

31.2 Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

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(i) Consolidated Balance Sheets as of February 28, 2023 and 2022;

(ii) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 28, 2022 and 2021, the two months ended February 29, 2020, and the year ended December 31, 2019;

(iii) Consolidated Statements of Cash Flows for the years ended February 28, 2022 and 2021, the two months ended February 29, 2020, and the year ended December 31, 2019;

(iv) Consolidated Statements of Changes in Shareholders’ Equity for the years ended February 29, 2022 and 2021, the two months ended February 29, 2020, and the year ended December 31, 2019;

(ii) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 28, 2023, 2022 and 2021;

(iii) Consolidated Statements of Cash Flows for the years ended February 28, 2023, 2022 and 2021;

(iv) Consolidated Statements of Changes in Shareholders’ Equity for the years ended February 28, 2023, 2022 and 2021;

and (v) Notes to Consolidated Financial Statements*

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* Filed herewith.

** Certain attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

Ø Portions of this exhibit have been omitted pursuant to a request for confidential treatment.

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Report of Independent Registered Public Accounting Firm (PCAOB ID 42 )

Consolidated Balance Sheets as of February 28, 2022 and February 28, 2021 F - 5

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 28, 2022 and 2021, two months ended February 29, 2020, and year ended December 31, 2019 F - 6

Consolidated Statements of Cash Flows for the years ended February 28, 2022 and 2021, two months ended February 29, 2020, and year ended December 31, 2019 F - 7

Consolidated Statements of Changes in Shareholders’ Equity for the years ended February 28, 2022 and 2021, two months ended February 29, 2020, and year ended December 31, 2019 F - 8

Consolidated Balance Sheets as of February 28, 2023 and 2022

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 28, 2023, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended February 28, 2023, 2022 and 2021

Consolidated Statements of Changes in Shareholders’ Equity for the years ended February 28, 2023, 2022 and 2021

Notes to Consolidated Financial Statements F - 9

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Aircastle Limited and Subsidiaries (the Company) as of February 28, 2022 and 2021, the related consolidated statements of income (loss), comprehensive income (loss), changes in shareholders' equity and cash flows for the years then ended, the two months ended February 29, 2020, and the year ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 28, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, the two months ended February 29, 2020, and the year ended December 31, 2019, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Aircastle Limited and Subsidiaries (the Company) as of February 28, 2023 and 2022, the related consolidated statements of income (loss), comprehensive income (loss), shareholders' equity and cash flows for the years then ended and the year ended February 28, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 28, 2023 and 2022, and the results of its operations and its cash flows for the years then ended and the year ended February 28, 2021, in conformity with U.S.

generally accepted accounting principles.

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federal, state and local income taxes, as well as foreign income tax in many of the jurisdictions it leases aircraft.

As more fully described in Note 10 to the consolidated financial statements, the Company recognized a consolidated benefit for income taxes of $8 million for the year ended February 28, 2022.

As more fully described in Note 11 to the consolidated financial statements, the Company recognized a consolidated provision for income taxes of $25 million for the year ended February 28, 2023.

Auditing the Company’s income tax accounting was complex due to the complicated international tax structure maintained by the Company.

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Accounts receivable 12,855 63,666

Flight equipment held for lease, net of accumulated depreciation of $ 2,766,429 and $ 2,076,972 , respectively

6,313,950 6,492,471

Net investment in leases, net of allowance for credit losses of $ 1,764 and $ 864 , respectively

150,325 195,376

Unconsolidated equity method investments 38,317 35,377

Flight equipment held for lease, net 6,567,606 6,313,950

Net investment in leases, net 67,694 150,325

Unconsolidated equity method investment 40,505 38,317

Other assets 346,330 356,326

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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 February 28, 2022 and no shares issued and outstanding at 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 February 28, 2023 and 2022

Common shares, $ 0.01 par value, 250,000,000 shares authorized, 14,048 shares issued and outstanding at February 28, 2023 and 2022

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

Retained earnings (accumulated deficit) ( 49,075 ) 245,293

Accumulated deficit ( 7,316 ) ( 49,075 )

Total shareholders’ equity 1,871,458 1,829,699

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(Dollars in thousands, except per share amounts)

Year Ended February 28, Two Months Ended February 29, Year Ended December 31,

Year Ended February 28,

2023 2022 2021

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Interest, net 204,606 214,352 235,338

Selling, general and administrative (including non-cash share-based payment expense of $ 0 , $ 28,049 , $ 10,678 and $ 15,830 , respectively)

66,338 88,413 22,901 77,034

Selling, general and administrative 76,857 66,338 88,413

Provision for credit losses 1,507 930 5,258

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Net income (loss) available to common shareholders $ 41,759 $ ( 294,368 ) $ ( 333,168 )

Net derivative loss reclassified into earnings — — — 184

Other comprehensive income — — — 184

Total comprehensive income (loss) available to common shareholders $ 41,759 $ ( 294,368 ) $ ( 333,168 )

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(Dollars in thousands)

Year Ended February 28, Two Months Ended February 29, Year Ended December 31,

Year Ended February 28,

2023 2022 2021

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Non-cash share-based payment expense — — 28,049

Cash flow hedges reclassified into earnings — — — 184

Collections on net investments in leases 6,505 14,297 16,859

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Aircraft purchase deposits and progress payments, net of returned deposits and aircraft sales deposits 28,393 ( 202 ) ( 13,024 )

Unconsolidated equity method investment and associated costs — — — ( 15,175 )

Distributions from unconsolidated equity method investment in excess of earnings — 104 419

Other 1,319 ( 1,694 ) ( 676 )

Net cash and restricted cash provided by (used in) investing activities ( 586,500 ) 21,472 75,974 ( 784,029 )

Net cash and restricted cash (used in) provided by investing activities ( 537,874 ) ( 586,500 ) 21,472

Cash flows from financing activities:

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Net cash and restricted cash provided by (used in) financing activities 161,316 ( 196,281 ) 212,667

Net (decrease) increase in cash and restricted cash ( 409,916 ) 409,161 15,994 ( 12,410 )

Net increase (decrease) in cash and restricted cash 61,179 ( 409,916 ) 409,161

Cash and restricted cash at beginning of year 170,682 580,598 171,437

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(Dollars in thousands)

Year Ended February 28, Two Months Ended February 29, Year Ended December 31,

Year Ended February 28,

2023 2022 2021

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Cash paid during the year for interest $ 193,283 $ 200,922 $ 241,011

Cash paid (received) during the year for income taxes $ 240 $ 1,469 $ ( 15 ) $ ( 656 )

Cash paid during the year for income taxes $ 9,511 $ 240 $ 1,469

Supplemental disclosures of non-cash investing activities:

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Transfers from Flight equipment held for lease to Net investment in direct financing and sales-type leases and Other assets $ 1,695 $ 57,489 $ 90,352

Acquisition of investments, at fair value

$ 10,819 $ — $ —

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

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Capital Retained

Deficit) Accumulated Other Comprehensive Income (Loss) Total

Deficit) Total

Shareholders’

Shares Amount Shares Amount

Balance, December 31, 2018 75,454,511 $ 754 — $ — $ 1,468,779 $ 539,332 $ ( 184 ) $ 2,008,681

Issuance of common shares to stockholders, directors and employees 1,281,598 13 — — ( 13 ) — — —

Repurchase of common shares from stockholders, directors and employees ( 1,613,980 ) ( 16 ) — — ( 36,723 ) — — ( 36,739 )

Amortization of share-based payments — — — — 13,825 — — 13,825

Reclassification of prior year director stock award liability — — — — 796 — — 796

Dividends declared — — — — — ( 91,328 ) — ( 91,328 )

Net income — — — — — 156,575 — 156,575

Adoption of accounting standard — — — — — 690 — 690

Net derivative loss reclassified into earnings — — — — — — 184 184

Balance, December 31, 2019 75,122,129 $ 751 — $ — $ 1,446,664 $ 605,269 $ — $ 2,052,684

Issuance of common shares to stockholders, directors and employees 28,568 1 — — ( 1 ) — — —

Repurchase of common shares from stockholders, directors and employees ( 73,903 ) ( 1 ) — — ( 2,369 ) — — ( 2,370 )

Amortization of share-based payments — — — — 10,678 — — 10,678

Reclassification of prior year director stock award liability — — — — 2,005 — — 2,005

Dividends declared — — — — — ( 24,025 ) — ( 24,025 )

Net income — — — — — 3,659 — 3,659

Adoption of accounting standard — — — — — ( 6,442 ) — ( 6,442 )

Balance, February 29, 2020

75,076,794 $ 751 — $ — $ 1,456,977 $ 578,461 $ 2,036,189

Amortization of share-based payments — — — — 28,049 — 28,049

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Balance, February 28, 2021

14,048 $ — — $ — $ 1,485,777 $ 245,293 $ 1,731,070

Issuance of preference shares — — 400 — 392,997 — 392,997

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Balance, February 28, 2022

14,048 $ — 400 $ — $ 1,878,774 $ ( 49,075 ) $ 1,829,699

Preference share dividends — — — — — ( 21,000 ) ( 21,000 )

Net income — — — — — 62,759 62,759

Balance, February 28, 2023

14,048 $ — 400 $ — $ 1,878,774 $ ( 7,316 ) $ 1,871,458

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

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Summary of Significant Accounting Policies

Organization and Basis of Presentation

Aircastle Limited (“Aircastle,” the “Company,” “we,” “us” or “our”) is a Bermuda exempted company that was incorporated on October 29, 2004 under the provisions of Section 14 of the Companies Act of 1981 of Bermuda.

Aircastle’s business is acquiring, leasing, managing and selling commercial jet aircraft.

On March 27, 2020, the Company successfully completed its merger (the “Merger”) and is now controlled by affiliates of Marubeni Corporation and Mizuho Leasing Company, Limited (“Mizuho Leasing”).

Aircastle is a holding company that conducts its business through subsidiaries.

Aircastle directly or indirectly owns all outstanding common shares of its subsidiaries.

The Company is controlled by affiliates of Marubeni Corporation (“Marubeni”) and Mizuho Leasing Company, Limited (“Mizuho Leasing”).

Aircastle is a holding company and conducts its business through subsidiaries that are wholly-owned, either directly or indirectly, by Aircastle.

Basis of Presentation and Principles of Consolidation

The consolidated financial statements presented are prepared in accordance with U.S.

generally accepted accounting principles (“U.S.

The Company manages, analyzes and reports on its business and results of operations based on one operating segment:

GAAP”) and include the accounts of Aircastle and all its subsidiaries, including any variable interest entity of which Aircastle is the primary beneficiary.

All intercompany transactions and balances have been eliminated in consolidation.

We manage and analyze our business and report on operations based on one operating segment:

leasing, financing, selling and managing commercial flight equipment.

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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 February 28, 2023 through the date on which the consolidated financial statements included in this Annual Report were issued.

Principles of Consolidation

The consolidated financial statements include the accounts of Aircastle and all its subsidiaries, including any Variable Interest Entity (“VIE”) of which Aircastle is the primary beneficiary.

All intercompany transactions and balances have been eliminated in consolidation.

Risk and Uncertainties

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Market risk reflects the change in the value of financings due to changes in interest rate spreads or other market factors, including the value of collateral underlying financings.

Aviation industry risk is the risk of a downturn in the commercial aviation industry which could adversely impact a lessee’s ability to make payments, increase the risk of unscheduled lease terminations and depress lease rates and the value of the Company’s aircraft.

Aviation industry risk is the risk of a downturn in the commercial aviation industry which could adversely impact a lessee’s ability to make payments, increase the risk of early lease terminations and depress lease rates and the value of the Company’s aircraft.

Capital market risk is the risk that the Company is unable to obtain capital at reasonable rates to fund the growth of its business or to refinance existing debt facilities.

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While Aircastle believes the estimates and related assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates.

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash and Cash Equivalents

Aircastle considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

Restricted cash and cash equivalents consist primarily of rent collections, maintenance payments and security deposits received from lessees pursuant to the terms of various lease agreements held in lockbox accounts in accordance with our financings.

Virtually all our cash and cash equivalents are held or managed by five major financial institutions.

Aircastle Limited and Subsidiaries

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(Dollars in thousands, except per share amounts)

Virtually all our cash and cash equivalents and restricted cash and cash equivalents are held or managed by three major financial institutions.

Flight Equipment Held for Lease and Depreciation

Flight equipment held for lease is stated at cost and depreciated using the straight-line method, typically over a 25 -year life from the date of manufacture for passenger aircraft and over a 30 to 35 -year life for freighter aircraft, depending on whether the aircraft is a converted or purpose-built freighter, to estimated residual values.

Estimated residual values are generally determined to be approximately 15 % of the manufacturer’s estimated realized price for passenger aircraft when new and 5 % to 10 % for freighter aircraft when new.

Estimated residual values are generally determined to be 15 % of the manufacturer’s estimated realized price for passenger aircraft when new and 5 % to 10 % for freighter aircraft when new.

Management may make exceptions to this policy on a case-by-case basis when, in its judgment, the residual value calculated pursuant to this policy does not appear to reflect current expectations of value.

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For planned major maintenance activities for aircraft off-lease, the Company capitalizes the actual maintenance costs by applying the deferral method.

Under the deferral method, we capitalize the actual cost of major maintenance events, which are depreciated on a straight-line basis over the period until the next maintenance event is required.

Under the deferral method, we capitalize the actual cost of major maintenance events, which are typically depreciated on a straight-line basis over the period until the next maintenance event is required.

In accounting for flight equipment held for lease, we make estimates about the expected useful lives, the fair value of attached leases, acquired maintenance assets or liabilities and the estimated residual values.

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In the event that an aircraft does not meet the recoverability test, the aircraft will be adjusted to fair value, resulting in an impairment charge.

See Note 3 in the Notes to the Consolidated Financial Statements.

See Note 2 in the Notes to Consolidated Financial Statements.

Management develops the assumptions used in the recoverability analysis based on current and future expectations of the global demand for a particular aircraft type and historical experience in the aircraft leasing market and aviation

Aircastle Limited and Subsidiaries

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(Dollars in thousands, except per share amounts)

industry, as well as information received from third party industry sources.

The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in projected lease rental and maintenance payments, residual values, economic conditions, technology, airline demand for a particular aircraft type and other factors, such as the location of the aircraft and accessibility to records and technical documentation.

We continue to closely monitor the impact of COVID-19 and the Russian invasion of Ukraine on our customers, air traffic, lease rental rates, and aircraft valuations, and have performed 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 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 other customers or aircraft variants that are more susceptible to the impact of the above crises and value deterioration.

We continue to closely monitor the impact of recent crises, such as the Russian invasion of Ukraine and the COVID-19 pandemic, on our customers, air traffic, lease rental rates, and aircraft valuations, and have performed 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 focused and will continue to focus on aircraft with near-term lease expirations, customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, and certain other customers or aircraft variants that are more susceptible to the impact of the above crises and value deterioration.

Net Investment in Direct Financing and Sales-Type Leases

If a lease meets specific criteria at lease commencement or at the effective date of a lease modification, we recognize the lease as a direct financing or sales-type lease.

The net investment in direct financing and sales-type leases consists of the lease receivable, estimated unguaranteed residual value of the lease flight equipment at lease-end and, for direct financing leases, deferred selling profit.

The net investment in direct financing and sales-type leases consists of the lease receivable, estimated unguaranteed residual value of the leased flight equipment at lease-end and, for direct financing leases, deferred selling profit.

For sales-type leases, we recognize the difference between the net book value of the aircraft and the net investment in the lease as a gain or loss on sale of flight equipment.

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These maintenance payments are based on hours or cycles of utilization or on calendar time, depending upon the component, and are required to be made monthly in arrears or at the end of the lease term.

Whether to permit a lessee to make maintenance payments at the end of the lease term, rather than requiring such payments to be made monthly,

Whether to permit a lessee to make maintenance payments at the end of the lease term, rather than requiring such payments to be made monthly, depends on a variety of factors, including the creditworthiness of the lessee, the level of security deposit which may be

Aircastle Limited and Subsidiaries

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(Dollars in thousands, except per share amounts)

depends on a variety of factors, including the creditworthiness of the lessee, the level of security deposit which may be provided by the lessee and market conditions at the time we enter into the lease.

provided by the lessee and market conditions at the time we enter into the lease.

If a lease requires monthly maintenance payments, we would typically be obligated to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components to the extent of maintenance payments received in respect of the specific maintenance event, usually shortly following completion of the relevant work.

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We estimate the amount of our portion for such costs, typically for the first major maintenance event for the airframe, engines, landing gear and auxiliary power units, expected to be paid to the lessee based on assumed utilization of the related aircraft by the lessee, the anticipated amount of the maintenance event cost and the estimated amounts the lessee is responsible to pay.

The assumptions supporting these estimates are re-evaluated annually.

The assumptions supporting these estimates are reevaluated annually.

This estimated lease incentive is not recognized as a lease incentive liability at the inception of the lease.

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Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

We measure the fair value of our cash and cash equivalents and restricted cash and cash equivalents on a recurring basis and measure the fair value of our investment in

We measure the fair value of our cash and cash equivalents and our investments in debt and equity securities on a recurring basis and measure the fair value of our

Aircastle Limited and Subsidiaries

1 unchanged sentence

(Dollars in thousands, except per share amounts)

unconsolidated joint ventures and aircraft on a non-recurring basis.

See Note 3 in the Notes to the Consolidated Financial Statements .

investment in unconsolidated joint venture and aircraft on a non-recurring basis.

See Note 3 in the Notes to Consolidated Financial Statements .

Lease Revenue Recognition

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GAAP, are excluded from net income (loss).

Share-Based Compensation

Aircastle recognized compensation cost relating to share-based payment transactions in the financial statements based on the fair value of the equity instruments issued.

Aircastle used the straight-line method of accounting for compensation cost on share-based payment awards that contained pro-rata vesting provisions.

Deferred Financing Costs

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Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform Topic 848 (“ASC 848”), in response to the market transition from the LIBOR and other interbank offered rates (“IBORs”) to alternative reference rates.

In December 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2022-06 to defer the sunset date of Reference Rate Reform Topic 848 (“ASC 848”).

GAAP requires entities to evaluate whether a contract modification, such as the replacement or change of a reference rate, results in the establishment of a new contract or continuation of an existing contract.

ASC 848 allows an entity to elect not to apply certain modification accounting requirements to contracts affected by reference rate reform.

ASC 848 allows an entity to elect not to apply certain modification accounting requirements to contracts affected by reference rate reform as entities transition away from the LIBOR to alternative reference rates.

The standard provides this temporary election through December 31, 2024, and cannot be applied to contract modifications that occur after December 31, 2024.

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 February 28, 2022, we have only one aircraft with a floating-rate lease rental and for the year ended February 28, 2022, 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.

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

The guidance aims to simplify the accounting for income taxes by removing certain

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

exceptions to the general principles within the current guidance and by clarifying and amending the current guidance.

The guidance is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2020.

This adoption did not have a material impact on our consolidated financial statements.

Update on COVID-19 Pandemic and Russian Invasion of Ukraine

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 certain markets, according to IATA, as of February 28, 2022, air travel was still down 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 widespread 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.

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.

While we continued to receive requests from our customers for lease concessions, such as deferrals of lease payments or broader lease restructurings, the number of requests for such concessions during the year ended February 28, 2022 has declined compared to 2021.

As of February 28, 2022, we had deferred rent receivables of $ 55,478 related to nine customers that were included in other assets.

Approximately 93 % of these deferrals have been agreed to as part of broader lease restructurings, which generally include term extensions, better security packages, or other valuable consideration in exchange for near-term economic concessions.

The outstanding deferred rent receivables are scheduled to be repaid, on average, within the next seven years .

If air traffic remains depressed and our customers are unable to raise sufficient funds, we may need to grant additional deferrals 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 April 25, 2022, four of our customers are subject to judicial insolvency proceedings or similar protection.

These customers lease eighteen aircraft, which comprise 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.

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.

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 second quarter of 2021 and recognized in other income (expense).

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.

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.

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.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

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 $ 251,878 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 former Russian lessees were approximately $ 3,488 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 $ 49,502 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 $ 350,000 .

The ten aircraft that are not in our possession had a pre-impairment book value of $ 314,127 .

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.

As of February 28, 2023, we have only 1 aircraft in our fleet that has a floating-rate lease rental and for the year ended February 28, 2023, 7 % of our interest expense was derived from floating-rate debt which is referenced to LIBOR.

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

Fair Value Measurements

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Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants price the asset or liability.

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• The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The following tables set forth our financial assets and liabilities as of February 28, 2022 and 2021, that we measured at fair value on a recurring basis by level within the fair value hierarchy.

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

The following tables set forth our financial assets as of February 28, 2023 and 2022, 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.

2023 Fair Value Measurements at February 28, 2023

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Cash and cash equivalents $ 231,861 $ 231,861 $ — $ — Market

Restricted cash and cash equivalents 2,791 2,791 — — Market

Investment in debt securities 5,029 — — 5,029 Income

Investment in equity securities 5,790 2,346 — 3,444 Market/Income

Total $ 242,680 $ 234,207 $ — $ 8,473

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Total $ 170,682 $ 170,682 $ — $ —

Our cash and cash equivalents and our restricted cash and cash equivalents consist largely of money market securities that are highly liquid and easily tradable.

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

Our cash and cash equivalents consist largely of money market securities that are highly liquid and easily tradable.

These securities are valued using inputs observable in active markets for identical securities (Level 1).

During the year ended February 28, 2023, the Company received debt securities in the form of notes and equity securities as result of claims settlements from various airline customers that had entered into bankruptcy proceedings or similar-type restructurings.

Our investment in equity securities that are traded in an active market have been valued using quoted market prices (Level 1).

Our investments in other equity securities and debt securities for which there is no active market or there is limited market data have been valued using the income approach (Level 3).

For the years ended February 28, 2023 and 2022, we had no transfers into or out of Level 3.

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GAAP requires the application of fair value, including events or changes in circumstances that indicate the carrying amounts of these assets may not be recoverable.

Assets subject to these measurements include our investment in unconsolidated joint ventures and aircraft.

Assets subject to these measurements include our aircraft and investment in unconsolidated joint venture.

We record aircraft at fair value when we determine the carrying value may not be recoverable.

Fair value measurements for aircraft in impairment tests are based on the average of the market approach that uses Level 2 inputs, which include third party appraisal data and an income approach that uses Level 3 inputs, which include the Company’s assumptions and appraisal data as to future cash proceeds from leasing and selling aircraft discounted using the Company’s weighted average cost of capital.

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

Investments are recorded at cost and are adjusted by undistributed earnings and losses and the distributions of dividends and capital.

These investments are also reviewed for impairment whenever events or changes in circumstances indicate the fair value is less than its carrying value and the decline is other-than-temporary.

Aircraft Valuation

Impairment of Flight Equipment

Excluding impairment charges resulting from the Russian invasion of Ukraine, during the year ended February 28, 2022, the Company recorded impairment charges totaling $ 110,926 , of which $ 107,705 were transactional impairments.

These impairments primarily related to six narrow-body and one wide-body aircraft, and resulted from early lease terminations, a scheduled lease expiration, and a lessee default.

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

During the year ended February 28, 2022, the Company recorded impairment charges totaling $ 341,324 related to ten narrow-body, one wide-body, and two freighter aircraft that were leased to Russian and Ukrainian airlines.

The Company recognized $ 89,446 of lease rentals received in advance, maintenance, security deposits and other revenue for

Fair value measurements for aircraft in impairment tests are based on the average of the market approach (Level 2) , which includes third party appraisal data, and an income approach (Level 3), which includes the Company’s assumptions and appraisal data as to future cash proceeds from leasing and selling aircraft discounted using the Company’s weighted average cost of capital.

See “Aircraft Valuation” below for further information.

Aircastle Limited and Subsidiaries

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(Dollars in thousands, except per share amounts)

these thirteen aircraft.

These impairment charges resulted from the Russian invasion of Ukraine and related sanctions placed on Russia during the fourth quarter of 2021, which required the termination of aircraft leasing activities in Russia, as well as our consideration of the likelihood of successfully repossessing our aircraft including the related technical records and documentation.

During the year ended February 28, 2021, the Company recorded impairment charges totaling $ 425,579 , of which $ 378,247 were transactional impairments, which primarily related to seventeen narrow-body and eight wide-body aircraft.

The Company recognized $ 157,014 of maintenance revenue and security deposits into revenue related to these 25 aircraft during the year ended February 28, 2021.

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

Annual Recoverability Assessment

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 year ended February 28, 2022.

Although we have completed our annual recoverability assessment, we will continue to closely monitor the impact of COVID-19 and the Russian invasion of Ukraine on our customers, air traffic, lease rental rates, and aircraft valuations, and have performed 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 focused 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 other customers or aircraft variants that are more susceptible to the impact of the above crises and value deterioration.

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.

Estimates of the undiscounted cash flows for each aircraft type are impacted by changes in contracted and future expected lease rates, residual values, expected scrap values, economic conditions and other factors.

If our estimates or assumptions change, including those related to our customers that have entered judicial insolvency proceedings, we may revise our cash flow assumptions and record future impairment charges.

While we believe that the estimates and related assumptions used in our recoverability assessments are appropriate, actual results could differ from those estimates.

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

Our investment is recorded at cost and is adjusted by undistributed earnings and losses and the distributions of dividends and capital.

This investment is reviewed for impairment whenever events or changes in circumstances indicate the fair value is less than its carrying value and the decline is other-than-temporary.

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 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.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Our financial instruments, other than cash, consist principally of cash equivalents, accounts receivable, investments in debt and equity securities, accounts payable, and secured and unsecured debt financings.

The fair value of 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 (Level 1), whereas all our other financings are valued using a discounted cash flow analysis, based on our current incremental borrowing rates for similar types of borrowing arrangements (Level 2).

The carrying amounts and fair values of our financial instruments at February 28, 2023 and 2022, are as follows:

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Carrying Amount

of Asset Fair Value

of Asset Carrying Amount

of Asset Fair Value

Investment in debt securities $ 5,029 $ 5,029 $ — $ —

Investment in equity securities 5,790 5,790 — —

Carrying Amount

of Liability Fair Value

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ECA Financings — — 21,576 21,931

Bank Financings 666,258 675,667 738,353 740,086

Term Financings 761,283 739,804 666,258 675,667

Senior Notes 3,700,000 3,524,563 3,700,000 3,776,997

All of our financial instruments are classified as Level 2 with the exception of our senior notes, which are classified as Level 1.

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 February 28, 2022 were as follows:

Aircraft Valuation

Impairment of Flight Equipment

Excluding asset write-offs related to the Russian invasion of Ukraine, during the year ended February 28, 2023, the Company recorded impairment charges totaling $ 53.7 million primarily related to the scheduled lease expirations of 3 narrow-body aircraft and lease terminations of 2 narrow-body aircraft, as well as 1 wide-body aircraft resulting from our annual fleet review.

The Company recognized $ 58.9 million of maintenance and lease rentals received in advance into revenue for these aircraft during the year ended February 28, 2023.

The Company wrote off the remaining book values of 8 narrow-body and 1 freighter aircraft in Russia which have not been returned to us.

As a result, the Company recorded impairment charges totaling $ 31.9 million during the year ended February 28, 2023 – see Note 3 in the Notes to Consolidated Financial Statements.

During the year ended February 28, 2023, the Company recognized $ 20.3 million of maintenance and other revenue for these 9 aircraft related to payments received on maintenance and general security letters of credit.

During the year ended February 28, 2022, we recorded impairment charges of $ 452.3 million, of which $ 449.0 million were transactional impairments, primarily related to 16 narrow-body, 2 wide-body and 2 freighter aircraft.

The Company recognized $ 147.8 million of maintenance, security deposits and lease rentals received in advance into revenue for these 20 aircraft during the year ended February 28, 2022.

The impairment charges, in part, resulted from lease terminations, scheduled lease expirations and lessee defaults.

Of the total impairment charges, $ 341.3 million related to

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

13 aircraft that were leased to Russian and Ukrainian lessees, resulting from the Russian invasion of Ukraine and related sanctions placed on Russia.

The Company recognized $ 89.4 million of maintenance, security deposits and lease rentals received in advance into revenue for these 13 aircraft.

Annual Recoverability Assessment

We performed our annual recoverability assessment of all our aircraft during the third quarter of 2022.

We recorded an impairment charge of $ 6.3 million related to 1 wide-body aircraft during the year ended February 28, 2023, as a result of our annual recoverability assessment – see the discussion above for further detail regarding impairment of our flight equipment.

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 analysis based on current and future expectations of the global demand for a particular aircraft type and historical experience in the aircraft leasing market and aviation industry, as well as information received from third-party sources.

These factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in projected lease rental and maintenance payments, residual values, economic conditions and other factors, such as the location of the aircraft and accessibility to records and technical documentation.

While we believe that the estimates and related assumptions used in our recoverability assessments are appropriate, actual results could differ from those estimates.

Flight Equipment Held for Lease, Net

The following table summarizes the activities for the Company’s flight equipment held for lease for the years ended February 28, 2023 and 2022:

Beginning balance

$ 6,313,950 $ 6,492,471

Additions 984,172 791,935

Depreciation ( 331,387 ) ( 336,505 )

Disposals and transfers to net investment in leases and held for sale ( 316,892 ) ( 184,922 )

Impairments ( 82,237 ) ( 449,029 )

Ending balance

$ 6,567,606 $ 6,313,950

Accumulated depreciation $ 2,289,264 $ 2,766,429

Write-off of Russian 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

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

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 also had 1 freighter aircraft outside of Russia that we successfully repossessed during the year ended February 28, 2023.

Additionally, in response to further sanctions against Russia in the United Kingdom (“U.K.”), the Company terminated the lease of 1 freighter aircraft with a U.K.-based airline and successfully repossessed that aircraft during the year ended February 28, 2023.

We recognized $ 18.8 million of maintenance and other revenue as a result of this lease termination.

We sold these 2 freighter aircraft and 1 wide-body aircraft, which was also leased to a Russian airline, during the year ended February 28, 2023, 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.

Lease Rental Revenues

Minimum future lease rentals contracted to be received under our existing operating leases of flight equipment at February 28, 2023 were as follows:

Year Ended February 28/29, Amount (1)

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Total $ 2,872,475

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

Year Ended February 28, Two Months Ended February 29, Year Ended

Region 2022 2021 2020 2019

Asia and Pacific 29 % 40 % 43 % 43 %

Europe 36 % 31 % 26 % 27 %

Middle East and Africa 5 % 6 % 7 % 10 %

North America 15 % 12 % 11 % 9 %

South America 15 % 11 % 13 % 11 %

Total 100 % 100 % 100 % 100 %

The classification of regions in the table above and in the tables and discussion below is determined based on the principal location of the lessee of each aircraft.

_______________

(1) Reflects impact of lessee lease rental deferrals.

At February 28, 2023 and 2022, the amounts of lease incentive liabilities recorded in maintenance payments on the consolidated balance sheets were $ 22.4 million and $ 16.5 million, respectively.

Net Investment in Leases, Net

At February 28, 2023 and 2022, our net investment in leases consisted of 4 and 11 aircraft, respectively.

The components of our net investment in leases at February 28, 2023 and 2022 were as follows:

Lease receivable $ 31,674 $ 52,021

Unguaranteed residual value of flight equipment 37,287 100,068

Net investment in leases 68,961 152,089

Allowance for credit losses ( 1,267 ) ( 1,764 )

Net investment in leases, net $ 67,694 $ 150,325

Aircastle Limited and Subsidiaries

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(Dollars in thousands, except per share amounts)

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:

Year Ended February 28, Two Months Ended February 29, Year Ended

2022 2021 2020 2019

Number of Lessees Combined % of

Lease Rental Revenue Number of Lessees Combined % of

Lease Rental Revenue

Largest lessees by lease rental revenue (1)

6 38 % 4 30 % 3 21 % 2 16 %

______________

(1) The number of lessees and combined percentage for the year ended February 28, 2022 includes one of our Russian lessees, which accounted for 5 % of total lease rental revenue.

Lease rental revenue for this customer includes the recognition of lease rentals received in advance of $ 17,194 into revenue;

excluding this amount, this customer accounted for 2 % of total lease rental revenue.

For the year ended February 28, 2022, we had six Russian lessees that accounted for $ 129,703 , or 17 %, of our total revenue.

Total revenue from these lessees included $ 89,446 of lease rentals received in advance, maintenance, security deposits and other revenue resulting from the sanctions placed on Russia, which required the termination of leasing activities.

Total revenue attributable to Russia was less than 10% for the years ended February 28, 2021 and December 31, 2019 and for the two months ended February 29, 2020.

For the year ended February 28, 2022, total revenue attributable to India was $ 82,246 , or 11 %, and included maintenance and other revenue, including early lease termination fees, totaling $ 6,141 .

For the years ended February 28, 2021 and December 31, 2019, total revenue attributable to India was 12 % and 13 %, respectively.

Total revenue attributable to India was less than 10% for the two months ended February 29, 2020.

Geographic concentration of our Net Book Value of flight equipment was as follows:

The activity in the allowance for credit losses related to our net investment in leases for the years ended February 28, 2023 and 2022 was as follows:

Balance at February 28, 2021

Provision for credit losses 930

Write-offs ( 30 )

Balance at February 28, 2022

Provision for credit losses 1,507

Write-offs ( 2,004 )

Balance at February 28, 2023

During the year ended February 28, 2023, we wrote off allowance for credit losses totaling $ 2.0 million related to the sale of 3 aircraft and scheduled lease expirations of 2 aircraft that were classified as net investment in leases.

As of February 28, 2023, future lease payments on net investment in leases are as follows:

Year Ending February 28/29, Amount

Thereafter 5,382

Total lease payments to be received 38,098

Present value of lease payments - lease receivable ( 31,674 )

Difference between undiscounted lease payments and lease receivable $ 6,424

Concentration of Risk

The classification of regions in the tables below is based on our customers’ principal place of business.

The geographic concentration of our Net Book Value as of February 28, 2023 and 2022 was as follows:

February 28, 2023 February 28, 2022

11 unchanged sentences

_______________

(1) Of the eleven off-lease aircraft at February 28, 2022, we have three wide-body aircraft that we are currently marketing for lease or sale.

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

(1) Of the 14 off-lease aircraft at February 28, 2023, we have 1 wide-body and 4 narrow-body aircraft that we are currently marketing for lease or sale.

(2) All 11 off-lease aircraft at February 28, 2022, have been placed for lease or sold.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The following table sets forth Net Book Value of flight equipment 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:

6 unchanged sentences

Value % Number

India $ 670,523 10 % 3 $ 756,514 11 % 3

At February 28, 2022 and 2021, the amounts of lease incentive liabilities recorded in maintenance payments on the consolidated balance sheets were $ 16,481 and $ 14,673 , respectively.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Net Investment in Direct Financing and Sales-Type Leases

At February 28, 2022 and 2021, our net investment in leases consisted of eleven and fifteen aircraft, respectively.

The components of our net investment in leases at February 28, 2022 and 2021 were as follows:

Lease receivable $ 52,021 $ 67,075

Unguaranteed residual value of flight equipment 100,068 129,165

Net investment leases 152,089 196,240

Allowance for credit losses ( 1,764 ) ( 864 )

Net investment in leases, net of allowance $ 150,325 $ 195,376

The activity in the allowance for credit losses related to our net investment in leases for the years ended February 28, 2022 and 2021 is as follows:

Balance at February 29, 2020 $ 6,558

Provision for credit losses 5,258

Write-offs ( 10,952 )

Balance at February 28, 2021 864

Provision for credit losses 930

Write-offs ( 30 )

Balance at February 28, 2022 $ 1,764

During the year ended February 28, 2022, we sold five aircraft that were classified as net investment in direct financing and sales-type leases and wrote-off the corresponding allowance for credit losses.

At February 28, 2022, future lease payments on net investment in leases are as follows:

Year Ending February 28/29, Amount

$ — — % — $ 670,523 10 % 3

Thereafter 14,430

Total lease payments to be received 61,350

Present value of lease payments - lease receivable ( 52,021 )

Difference between undiscounted lease payments and lease receivable $ 9,329

_______________

(1) As of February 28, 2023, India represented less than 10% of our Net Book Value.

The geographic concentration of our lease rental revenue earned from flight equipment held for lease was as follows:

Year Ended February 28,

Region 2023 2022 2021

Asia and Pacific 33 % 29 % 40 %

Europe 29 % 36 % 31 %

Middle East and Africa 5 % 5 % 6 %

North America 19 % 15 % 12 %

South America 14 % 15 % 11 %

Total 100 % 100 % 100 %

Year Ended February 28,

2023 2022 2021

Number of Lessees Combined % of

Lease Rental Revenue Number of Lessees Combined % of

Lease Rental Revenue

Largest lessees by lease rental revenue (1)

3 21 % 6 38 % 4 30 %

_______________

(1) The number of lessees and combined percentage for the year ended February 28, 2022, includes 1 of our Russian lessees, which accounted for 5 % of total lease rental revenue.

Lease rental revenue for this customer includes the recognition of lease rentals received in advance of $ 17.2 million into revenue;

excluding this amount, this customer accounted for 2 % of total lease rental revenue.

For the year ended February 28, 2023, total revenue attributable to the United States was 15 % and included $ 14.0 million of maintenance revenue and $ 54.5 million of gains on sales of aircraft.

For the years ended February 28, 2022 and 2021, total revenue attributable to the United States was less than 10%.

For the year ended February 28, 2023, total revenue attributable to India was 12 %, and included maintenance and other revenue totaling $ 21.2 million.

For the years ended February 28, 2022 and 2021, total revenue attributable to India was 11 % and 12 %, respectively.

For the year ended February 28, 2022, we had 6 Russian lessees that accounted for 17 % of our total revenue.

Total revenue from these lessees included $ 89.4 million of lease rentals received in advance, maintenance, security deposits and other revenue resulting from the sanctions placed on Russia, which required the termination of leasing activities.

For the years ended February 28, 2023 and 2021, total revenue attributable to Russia was less than 10%.

Aircastle Limited and Subsidiaries

2 unchanged sentences

Unconsolidated Equity Method Investment

We have a joint venture with Mizuho Leasing that has nine aircraft with a net book value of $ 298,473 at February 28, 2022.

Investment in joint ventures at February 29, 2020 $ 33,470

Distributions ( 419 )

Earnings from joint venture, net of tax 2,326

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

Distributions ( 104 )

Earnings from joint venture, net of tax 3,044

Investment in joint ventures at February 28, 2022 $ 38,317

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.

We have a joint venture with Mizuho Leasing which has 9 aircraft with a net book value of $ 285.2 million at February 28, 2023.

Unconsolidated equity method investment at beginning of year $ 38,317 $ 35,377

Distributions from unconsolidated equity method investment — ( 104 )

Earnings of unconsolidated equity method investment, net of tax 2,188 3,044

Unconsolidated equity method investment at end of year $ 40,505 $ 38,317

On June 30, 2022, the Company received full repayment of the unsecured loan facility it provided to the joint venture in the amount of $ 1.5 million.

Borrowings from Secured and Unsecured Debt Financings

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

At February 28, 2022 At

At February 28, 2023

February 28, 2022

3 unchanged sentences

Secured Debt Financings:

ECA Financings (1)

$ 21,576 1 3.49 % 11/30/24 $ 36,423

Bank Financings 666,258 31 2.25% to 4.55% 06/17/23 to 03/06/25 738,353

ECA Financings $ — — — % N/A $ 21,576

Term Financings (1)

761,283 30 2.36% to 7.22% 09/13/24 to 02/24/32 666,258

Debt issuance costs ( 8,985 ) ( 3,795 )

2 unchanged sentences

5.000% Senior Notes due 2023 (2)

Senior 5.00% Notes due 2023 500,000 5.00 % 04/01/23 500,000

500,000 5.00 % 04/01/23 500,000

4.400% Senior Notes due 2023 650,000 4.40 % 09/25/23 650,000

10 unchanged sentences

(1) The borrowings under these financings at February 28, 2023 have a weighted-average fixed rate of interest of 4.82 %.

(2) Repaid at their final stated maturity date.

Aircastle Limited and Subsidiaries

1 unchanged sentence

(Dollars in thousands, except per share amounts)

Secured Debt Financings:

Term Financings

On November 21, 2022 (“the “Effective Date”), we entered into a full recourse $ 450.0 million secured financing facility (the “2022 Secured Facility”) with a syndicate of banks in relation to 17 owned aircraft.

The 2022 Secured Facility bears interest at a floating rate under the Term Secured Overnight Funding Rate (“SOFR”) (as defined in the credit agreement governing the 2022 Secured Facility) plus 2.35 % per annum and matures on November 21, 2029.

The 2022 Secured Facility contains, among other customary provisions, a $ 1.1 billion minimum net worth covenant, a 2.0 :1.0 minimum interest coverage ratio covenant, and a 75 % maximum loan-to-value ratio, which reduces to 70 % through the term of the facility.

The credit commitments under the 2022 Secured Facility will be available for borrowings for three to six months following the Effective Date.

As of February 28, 2023, $ 279.0 million was borrowed under the 2022 Secured Facility in relation to 10 aircraft.

On February 10, 2023, we prepaid in full the $ 159.4 million outstanding principal amount of one of our term financings secured by 12 aircraft, including $ 1.3 million of accrued interest.

We incurred a loss on the early extinguishment of debt totaling $ 0.6 million, primarily related to the write off of deferred financing costs.

Unsecured Debt Financings:

5.000 % Senior Notes due 2023

We repaid the $ 500.0 million aggregate principal amount of our 5.000 % Senior Notes due 2023 at their final stated maturity date in April 2023.

Revolving Credit Facilities

During the year ended February 28, 2022, 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 .

The stated maturity date for $ 900,000 of the total commitment was extended to April 26, 2025, and the remaining $ 100,000 commitment will mature on the facility’s previously stated maturity date of June 27, 2022.

On April 26, 2021, we entered into an amendment that reduced the size of our revolving credit facility with Mizuho Bank Ltd., a related party, from $ 150,000 to $ 50,000 and extended its maturity date to July 30, 2022.

Mizuho Bank, Ltd.

is now a lender for our $ 1,000,000 revolving credit facility with a commitment in the amount of $ 100,000 .

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.

On May 24, 2022, we entered into an amendment for one of our unsecured revolving credit facilities that expanded the size and extended the term of the facility.

As a result, the existing $ 230.0 million commitment was expanded to $ 280.0 million, with $ 35.0 million and $ 245.0 million of the commitment allocated to Tranche B and Tranche C, respectively.

Tranche A and Tranche B matured on their respective stated maturity dates of December 27, 2021 and February 28, 2023.

Tranche C will mature on May 24, 2025.

On June 27, 2022, a $ 100.0 million commitment under one of our unsecured revolving credit facilities, with a total commitment of $ 1.0 billion, matured on its stated maturity date.

On September 8, 2022, we entered into an amendment that expanded the size of the facility from $ 900.0 million to $ 1.0 billion and replaced LIBOR with Term SOFR as the benchmark interest rate.

The facility bears interest at Adjusted Term SOFR (as defined in the amendment to the credit agreement) plus 1.625 % per annum and matures on April 26, 2025.

On July 30, 2022, a $ 50.0 million commitment under our revolving credit facility with Mizuho Bank Ltd., a related party, matured on its stated maturity date.

On January 27, 2023, we entered into an amendment that expanded the size of our revolving credit facility with Mizuho Marubeni Leasing America Corporation, a related party, from $ 100.0 million to $ 200.0 million and extended its maturity date to January 26, 2025.

The amendment also replaced LIBOR with Term SOFR as the benchmark interest rate.

The facility bears interest at a rate of Adjusted Term SOFR (as defined in the amendment to the credit agreement) plus either 1.72 % or 1.97 %, depending on the amount drawn, and requires the Company to have a minimum of $ 20.0 million 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 February 28, 2022, we had $ 20,000 in borrowings outstanding under our revolving credit facilities and had $ 1,360,000 available for borrowing.

Unsecured Term Loan

On February 18, 2022, we repaid Tranche A of our unsecured term loan in the amount of $ 60,000 .

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.

On February 28, 2023, the Company entered into a $ 300.0 million unsecured revolving credit facility with Mizuho Bank Ltd., a related party.

The facility bears interest at a rate of Adjusted Term SOFR (as defined in the amendment to the credit agreement) plus 2.0 %, matures on February 28, 2024 and includes a one-year extension option.

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

As of February 28, 2023, we had $ 20.0 million in borrowings outstanding under our revolving credit facilities and had $ 1.7 billion available for borrowing.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Maturities of the secured and unsecured debt financings over the next five years and thereafter are as follows:

1 unchanged sentence

2024 $ 1,372,409

2024 1,552,698

Thereafter 239,287

2 unchanged sentences

Shareholders’ Equity

On June 8, 2021, the Company issued 400 shares of 5.250 % Series A Cumulative Redeemable Perpetual Preference Shares, $ 0.01 par value, with a liquidation preference of $ 1,000 per share (the “Preference Shares”).

The Preference Shares are perpetual and have no maturity date.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Dividends on the Preference Shares, when, as and if declared by the Company’s board of directors are payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2021.

Dividends will be payable:

(i) from the date of original issue to, but excluding September 15, 2026 (the “original reset date”) at a fixed rate per annum of 5.250 %;

(ii) from, and including, the original reset date to, but excluding, September 15, 2031 (the “2031 reset date”), at a rate per annum equal to the five-year treasury rate as of the most recent reset dividend determination date plus 4.410 %;

(iii) from, and including, the 2031 reset date to, but excluding, September 15, 2046 (the “2046 reset date”), during each reset period at a rate per annum equal to the five-year treasury rate as of the most recent reset dividend determination date plus 4.660 %;

and (iv) from, and including, the 2046 reset date, during each reset period at a rate per annum equal to the five-year treasury rate as of the most recent reset dividend determination date plus 5.410 %.

Dividends on the Preference Shares will accumulate daily and be cumulative from, and including, the date of original issuance of the Preference Shares.

The Company may not redeem the Preference Shares before the date that is 90-days prior to the original reset date.

The Company may, at its option, redeem the Preference Shares, in whole or in part, from time to time during the period beginning 90-days prior to each reset date and ending on such reset date at a redemption price in cash equal to $ 1,000 per Preference Share, plus all accumulated and unpaid dividends (whether or not declared) to, but excluding, such redemption date.

In addition, the Company may redeem the Preference Shares, in whole but not in part, at the Company’s option under certain other limited conditions.

Except with respect to certain amendments to the terms of the Preference Shares, in the case of certain dividend non-payments and as otherwise required by applicable law, the Preference Shares do not have voting rights.

On August 19, 2021, the Company’s Board of Directors approved a quarterly dividend for the Company’s Preference Shares in the amount of $ 5,658 , which was paid on September 15, 2021.

Additionally, on January 6, 2022, the Company’s Board of Directors approved a quarterly dividend for the Company’s Preference Shares in the amount of $ 10,500 , which was paid on March 15, 2022.

On March 15, 2022 and September 15, 2022, the Company paid semi-annual dividends each in the amount of $ 10.5 million for its Preference Shares, which was approved by the Company’s Board of Directors and accrued as of February 28, 2022 and August 31, 2022, respectively.

On January 10, 2023, the Company’s Board of Directors approved a semi-annual dividend in the amount of $ 10.5 million for its Preference Shares, which was accrued as of February 28, 2023, and paid on March 15, 2023.

Related Party Transactions

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 7 in the Notes to the Consolidated Financial Statements for additional information.

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 7 in the Notes to the Consolidated Financial Statements for additional information.

The Company incurred fees from Marubeni as part of its intra-company service agreement totaling $ 5.5 million and $ 5.0 million during the years ended February 28, 2023 and 2022, respectively, whereby Marubeni provides certain management and administrative services to the Company.

In addition, the Company purchased parts under a parts management services and supply agreement with an affiliate of Marubeni totaling $ 4.2 million and $ 5.9 million during the years ended February 28, 2023 and 2022, respectively.

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

During the year ended February 28, 2022, the Company incurred $ 5,048 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 $ 5,857 during the year ended February 28, 2022.

On February 28, 2023, the Company entered into a $ 300.0 million senior unsecured revolving credit facility with Mizuho Bank Ltd., a related party – see Note 8 in the Notes to Consolidated Financial Statements for additional information.

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

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.

4 unchanged sentences

(Dollars in thousands, except per share amounts)

The sources of income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investment for the years ended February 28, 2022 and 2021, the two months ended February 29, 2020, and the year ended December 31, 2019, were as follows:

Year Ended February 28, Two Months Ended February 29, Year Ended December 31,

The sources of income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investment for the years ended February 28, 2023, 2022 and 2021, were as follows:

Year Ended February 28,

2023 2022 2021

2 unchanged sentences

Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investment $ 86,037 $ ( 289,251 ) $ ( 325,258 )

The components of the income tax provision (benefit) from continuing operations for the years ended February 28, 2022 and 2021, the two months ended February 29, 2020, and the year ended December 31, 2019, consisted of the following:

Year Ended February 28, Two Months Ended February 29, Year Ended December 31,

The components of the income tax provision (benefit) from continuing operations for the years ended February 28, 2023, 2022 and 2021, consisted of the following:

Year Ended February 28,

2023 2022 2021

10 unchanged sentences

Total $ 25,466 $ ( 7,998 ) $ 10,236

Significant components of the Company’s deferred tax assets and liabilities at February 28, 2022 and 2021, February 29, 2020, and December 31, 2019, consisted of the following:

Year Ended February 28, Two Months Ended February 29, Year Ended December 31,

2022 2021 2020 2019

Significant components of the Company’s deferred tax assets and liabilities at February 28, 2023 and 2022, consisted of the following:

Year Ended February 28,

Deferred tax assets:

Non-cash share-based payments $ — $ — $ 215 $ 614

Net operating loss carry forwards $ 145,299 $ 117,448

Interest expense carry forwards 1,139 —

Other 26,041 34,955

5 unchanged sentences

Net deferred tax liabilities $ ( 79,686 ) $ ( 65,553 )

The Company had $ 96.8 million of federal net operating loss (“NOL”) carry forwards available at February 28, 2023 with no expiration date to offset future taxable income subject to U.S.

graduated tax rates.

The Company also had NOL carry forwards of $ 961.2 million with no expiration date to offset future Irish taxable income.

Deferred tax assets and liabilities are included in other assets and accounts payable, accrued expenses and other liabilities, respectively.

Aircastle Limited and Subsidiaries

1 unchanged sentence

(Dollars in thousands, except per share amounts)

The Company had $ 102,435 of federal net operating loss (“NOL”) carry forwards available at February 28, 2022 to offset future taxable income subject to U.S.

graduated tax rates.

If not utilized, $ 35,510 of these carry forwards will expire by 2037, with $ 66,925 of these carry forwards having no expiration date.

The Company also had NOL carry forwards of $ 729,749 with no expiration date to offset future Irish taxable income.

Deferred tax assets and liabilities are included in other assets and accounts payable and accrued liabilities, respectively.

We do not expect to incur income taxes on future distributions of undistributed earnings of non-U.S.

1 unchanged sentence

As of February 28, 2023, we have elected to permanently reinvest our accumulated undistributed U.S.

earnings of $ 40,041 .

earnings of $ 44.1 million.

Accordingly, no U.S.

withholding taxes have been provided.

Withholding tax of $ 2,002 would be due if such earnings were remitted.

Withholding tax of $ 2.2 million would be due if such earnings were remitted.

Our aircraft-owning subsidiaries generally earn income from sources outside the United States and typically are not subject to U.S.

6 unchanged sentences

subsidiaries and are subject to tax in those respective jurisdictions.

Differences between statutory income tax rates and our effective income tax rates applied to pre-tax income from continuing operations for the years ended February 28, 2022 and 2021, the two months ended February 29, 2020, and the year ended December 31, 2019, consisted of the following:

Year Ended February 28, Two Months Ended February 29, Year Ended December 31,

Differences between statutory income tax rates and our effective income tax rates applied to pre-tax income from continuing operations for the years ended February 28, 2023, 2022 and 2021, consisted of the following:

Year Ended February 28,

2023 2022 2021

23 unchanged sentences

The following table shows the components of interest, net.

Year Ended February 28, Two Months Ended February 29, Year Ended December 31,

Year Ended February 28,

2023 2022 2021

Interest on borrowings and other liabilities $ 196,502 $ 200,220 $ 221,246

Amortization of deferred losses related to interest rate derivatives — — — 184

Amortization of deferred financing fees and debt discount 14,338 16,267 14,791

4 unchanged sentences

Commitments and Contingencies

Rent expense, primarily for the corporate office and sales and marketing facilities, was $ 1,621 , $ 1,626 , $ 278 and $ 1,601 for the years ended February 28, 2022 and 2021, the two months ended February 29, 2020, and the year ended December 31, 2019, respectively.

Rent expense, primarily for the corporate office and sales and marketing facilities, was $ 2.1 million, $ 1.6 million and $ 1.6 million for the years ended February 28, 2023, 2022 and 2021, respectively.

As of February 28, 2023, Aircastle is obligated under non-cancelable operating leases relating principally to office facilities in Stamford, Connecticut;

4 unchanged sentences

Total $ 30,523

At February 28, 2022, we had commitments to acquire 23 for $ 819,273 .

Commitments under signed purchase agreements, including $ 76,675 of remaining progress payments, contractual price escalations and other adjustments for these aircraft at February 28, 2022, net of amounts already paid, are as follows:

At February 28, 2023, we had commitments to acquire 20 aircraft for $ 763.7 million.

Commitments under signed purchase agreements, including $ 46.2 million of remaining progress payments, contractual price escalations and other adjustments for these aircraft at February 28, 2023, net of amounts already paid, are as follows:

Year Ending February 28/29, Amount

4 unchanged sentences

(Dollars in thousands, except per share amounts)

The following table describes the principal components of other assets on our consolidated balance sheets as of:

Other assets consisted of the following as of February 28, 2023 and 2022:

Deferred income tax asset $ 304 $ 570

5 unchanged sentences

Deferred rent receivable 35,631 55,478

Investments, at fair value 10,819 —

Other assets 125,574 105,796

3 unchanged sentences

Accounts Payable, Accrued Expenses and Other Liabilities

The following table describes the principal components of accounts payable, accrued expenses and other liabilities recorded on our consolidated balance sheets as of:

Accounts payable, accrued expenses and other liabilities consisted of the following as of February 28, 2023 and 2022:

Accounts payable and accrued expenses $ 60,225 $ 58,882

14 unchanged sentences

Michael Inglese

/s/ Aaron Dahlke Chief Financial Officer April 28, 2022

/s/ Roy Chandran Chief Financial Officer April 25, 2023

/s/ Dane Silverman Chief Accounting Officer April 25, 2023

5 unchanged sentences

/s/ Taro Kawabe Director April 25, 2023

/s/ Keiji Okuno Director April 25, 2023

/s/ Charles W.

2 unchanged sentences

Takayuki Sakakida

/s/ Noriyuki Yukawa Director April 28, 2022

Noriyuki Yukawa

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 9A. Controls and Procedures