What changed in this filing

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Item 1. Business

2024-04-25 compared with 2023-04-25 · 85 added, 115 removed, 165 unchanged (55% of the section changed)

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Aircastle acquires, leases, and sells commercial jet aircraft to airlines throughout the world.

We are a leading secondary market investor that sources aircraft through various acquisition channels that include other aircraft lessors, airlines through purchase-leaseback transactions, financial institutions and other aircraft owners, and aircraft manufacturers.

We have significant experience in successfully managing aircraft throughout their life cycle, including lease and technical management, aircraft redeliveries, transitions, and sales or disposals.

We sell aircraft and engine assets, either with a lease attached or on a part-out basis, with the aim of generating profits and reinvesting proceeds.

Our aircraft are managed by an experienced team based in the United States, Ireland and Singapore.

Our aircraft are subject to net leases whereby the lessee is generally responsible for maintaining the aircraft and paying operational, maintenance and insurance costs.

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

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

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

As of February 29, 2024, we owned and managed on behalf of our joint venture 252 aircraft leased to 75 lessees located in 43 countries.

The net book value of our fleet (comprised of flight equipment held for lease and net investment in leases, or “Net Book Value”) was $7.2 billion as of February 29, 2024, up 9% from $6.6 billion as of February 28, 2023.

The weighted average age of our fleet was 9.3 years and the weighted average remaining lease term was 5.4 years.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The weighted average utilization rate of our fleet was 98% for the year ended February 29, 2024, which improved to 99% during the second half of fiscal 2023.

During the year ended February 29, 2024, we purchased 30 aircraft and sold 28 aircraft and other flight equipment.

As of February 29, 2024, we had commitments to purchase 17 aircraft with delivery through September 2026 for $525.1 million, which includes estimated amounts for pre-delivery deposits, contractual price escalations and other adjustments.

Our total revenues, net income and Adjusted EBITDA were $855.4 million, $83.3 million, and $759.5 million for the year ended February 29, 2024, respectively, and $796.0 million, $62.8 million and $732.3 million for the year ended February 28, 2023, respectively.

Cash flow provided by operating activities was $370.3 million and $437.7 million for the years ended February 29, 2024 and February 28, 2023, respectively.

The Company’s financial performance reflects the continued expansion of global air traffic and strong demand for our aircraft through lease extension requests, primarily due to Original Equipment Manufacturer (“OEM”) production issues and delivery delays, as well as the improved financial health of our airline customers.

Our financial results are also partly driven by end-of-lease maintenance payments, strong gains on sales and cash settlement proceeds received in respect of 4 aircraft formerly on lease to Russian airlines.

Growth in commercial air traffic has been correlated with world economic activity and has historically grown at a rate one to two times that of global gross domestic product (“GDP”) growth.

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

and there are approximately 26,000 commercial mainline passenger and freighter aircraft in the world fleet today.

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

There are approximately 26,000 commercial mainline passenger and freighter aircraft in the world fleet today.

Aircraft leasing companies own approximately 52% of the world’s commercial passenger jet aircraft.

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

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

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

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

Russian Invasion of Ukraine

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

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

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

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

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

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

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

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

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

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

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

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

We believe our portfolio, which is primarily comprised of new technology and mid-life, narrow-body aircraft, will remain attractive for our airline customers, enabling them to respond to the growing demand of global air travel.

As a leading secondary market investor, we believe that our long-standing business strategy of maintaining conservative leverage and limiting long-term financial commitments positions us well to take advantage of new investment opportunities as they arise.

We employ a team of experienced senior professionals with extensive industry and financial experience.

Our leadership team has an average of more than thirty years of relevant industry experience and has effectively enabled us to

manage through prior downturns in the aviation industry, such as the COVID-19 pandemic, the 2008 global financial crisis, and the September 11, 2001 terror attacks.

We believe we have sufficient liquidity to meet our contractual obligations over the next twelve months.

As of April 1, 2024, total liquidity of $3.0 billion included $2.1 billion of undrawn credit facilities, $0.5 billion of projected adjusted operating cash flows and sales through April 1, 2025, $0.3 billion of committed equity and $0.1 billion of unrestricted cash.

Our Competitive Strengths

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Our investment strategy is to seek out the best risk-adjusted return opportunities across the commercial jet market, so our acquisition targets vary with market opportunities.

We source our acquisitions through well-established relationships with airlines, other aircraft lessors, manufacturers, financial institutions and other aircraft owners.

We source our acquisitions through well-established relationships with other aircraft lessors, airlines, financial institutions, other aircraft owners and aircraft and engine manufacturers.

Since our formation in 2004, we have acquired 595 aircraft for $19.7 billion as of February 29, 2024.

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• Significant Experience in Successfully Selling Aircraft Throughout Their Life Cycle :

Our team is adept at managing and executing the sale of aircraft.

Our team is adept at managing and executing the sale of aircraft, either with a lease attached or on a part-out basis.

Since our formation, we have sold 327 aircraft to 101 buyers for $7.0 billion as of February 29, 2024.

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• Strong Capital Raising Track Record and Access to a Wide Range of Financing Sources:

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

Since our inception, we have raised $2.3 billion in equity capital from private and public investors as of February 29, 2024.

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

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

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

We have raised $21.4 billion in debt capital from a variety of sources including the unsecured bond market, commercial banks, export credit agency-backed debt, the aircraft securitization market and Japanese Operating Lease with Call Option (“JOLCO”) financings, which have been originated by Marubeni.

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

• Our Capital Structure Provides Investment Flexibility:

We have $1.7 billion available from unsecured revolving credit facilities, $1.4 billion of which does not expire until 2025, thereby limiting our near-term financial markets exposure.

As of February 29, 2024, we had $2.1 billion available from unsecured revolving credit facilities with maturities not scheduled until 2027 and 2028, thereby limiting our near-term financial markets exposure.

Given our relatively limited future capital commitments, we have the resources to take advantage of future investment opportunities.

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• Experienced Management Team with Significant Expertise:

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

Our leadership team has significant relevant industry experience, and we have expertise in the acquisition, leasing, financing, technical management, restructuring/repossession and sale of aviation assets.

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

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

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

Recent global disruptions have required enhanced focus on diligent, proactive risk monitoring while continuing to pursue our core strategies.

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

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

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

Our business strategy entails the following elements:

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

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

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

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

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

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

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

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

• Leveraging our strategic relationships .

We intend to capture the benefits provided through the extensive global contacts and relationships maintained by our shareholders, Marubeni and Mizuho Leasing, which have enabled greater access to Japanese-based financing and helped source and develop our joint venture.

We intend to optimize the benefits provided through our extensive global contacts, as well as relationships maintained by our shareholders, Marubeni and Mizuho Leasing Company, Limited (“Mizuho Leasing” and together with Marubeni, our “Shareholders”), which have enabled greater access to Japanese-based financing sources and helped source and develop our joint venture.

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

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

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

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

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

• Maintaining a balanced and diversified lease portfolio.

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Our risk guardrails set limits on lessee concentration by risk rating, geographic concentrations, aircraft type concentrations, overall portfolio credit quality distribution, and lease maturity distribution.

We believe that our balanced and diversified fleet, as well as continued focus on portfolio concentration, has and will enable us to reduce the risks associated with the impact of adverse geopolitical and economic events, such as the COVID-19 pandemic and the Russian invasion of Ukraine.

Acquisitions and Sales

We originate acquisitions and sales through well-established relationships with airlines, other aircraft lessors, financial institutions and brokers, as well as other sources.

We originate acquisitions and sales through well-established relationships with other aircraft lessors, airlines, financial institutions, other aircraft owners, and aircraft manufacturers, as well as other sources.

We believe that sourcing such transactions globally through multiple channels provides for a broad and relatively consistent set of opportunities.

During the year ended February 29, 2024, we acquired 30 aircraft for $1.2 billion and sold 28 aircraft and other flight equipment for net proceeds of $361.8 million.

We recognized gains on the sale or disposition of aircraft totaling $121.6 million, which included $43.2 million related to settlement proceeds received in respect of 4 aircraft formerly on lease to Russian airlines – see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — Russian Aircraft Insurance Settlements.”

Our objective is to develop and maintain a diverse operating lease portfolio.

We review our operating lease portfolio to manage our portfolio diversification and to sell aircraft opportunistically when we believe selling will achieve better expected risk-adjusted cash flows than reinvesting in and re-leasing the aircraft.

We review our operating lease portfolio to manage our portfolio diversification and to sell aircraft when we believe selling will achieve better expected risk-adjusted cash flows than reinvesting in and re-leasing the aircraft.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — Acquisitions and Sales.”

We have an experienced acquisition and sales team based in Stamford, Connecticut;

Dublin, Ireland;

and Singapore that maintains strong relationships with a wide variety of market participants throughout the world.

We have an experienced acquisition and sales team based in the United States, Ireland and Singapore that maintains strong relationships with a wide variety of market participants throughout the world.

We believe that our seasoned personnel and extensive industry contacts facilitate our access to acquisition and sales opportunities and that our strong operating track record facilitates our access to debt and equity capital markets.

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These teams consider a variety of aspects before we commit to purchase or sell an aircraft, including price, specification/configuration, age, condition and maintenance history, operating efficiency, lease terms, financial condition and liquidity of the lessee, jurisdiction, industry trends and future redeployment potential and values.

We believe that utilizing a cross-functional team of experts to consider investment parameters helps us assess more completely the overall risk and return profile of potential acquisitions and helps us move forward expeditiously on letters of intent and acquisition documentation.

We believe that cash on hand, payments received from lessees and other funds generated from operations, unsecured borrowings, borrowings from our revolving credit facilities, secured borrowings for aircraft, and other borrowings and proceeds from future aircraft sales will be sufficient to satisfy our liquidity and capital resource needs over the next twelve months.

We believe that utilizing a cross-functional team of experts to consider investment parameters helps us assess more completely the overall risk-adjusted returns of potential acquisitions and helps us move forward expeditiously on letters of intent and acquisition documentation.

We operate in a capital-intensive industry and have a demonstrated track record of raising substantial amounts of capital from debt and equity investors.

We believe that cash on hand, funds generated from operations, maintenance payments received from lessees, equity offerings, unsecured bond offerings, borrowings secured by our aircraft, draws under our revolving credit facilities and proceeds from any future aircraft sales will be sufficient to satisfy our liquidity and capital resource needs over the next twelve months.

We may choose to repay all or a portion of such borrowings from time to time with the net proceeds from subsequent long-term debt financings, additional equity offerings or cash generated from operations and asset sales.

Our ability to execute our business strategy, particularly the acquisition of additional commercial jet aircraft or other aviation assets, depends to a significant degree on our ability to obtain additional debt and equity capital on terms we deem attractive.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Secured Debt Financings” and “ — Unsecured Debt Financings” under Item 7.

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

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

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

leasing, financing, selling and managing commercial flight equipment.

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

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

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

Our leases require the lessee to pay periodic rentals during the lease term.

Approximately 99% of our leases have fixed rental rates that are payable monthly in advance in U.S.

For our variable rate leases, rentals are payable on a floating interest-rate basis using the secured overnight financing rate (“SOFR”).

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

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

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

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

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

Typically, the lessee is required to make payments for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft.

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

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

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

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

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

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

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

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

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

The scheduled maturities of our aircraft leases by aircraft type grouping currently are as follows, taking into account sales, sale agreements, lease placements and renewal commitments as of April 19, 2024, by fiscal year:

Aircraft Type 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Off-Lease (1)

Sold or Sale Agreement Total

Aircraft Type 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Off-Lease Sold or Sale Agreement Total

A319/A320/A321 8 12 15 17 21 17 3 8 4 — 2 — — — 107

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Total 16 26 26 36 26 30 17 26 16 13 6 3 1 1 243

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Fiscal Year 2024 Lease Expirations and Lease Placements

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26 aircraft, representing 9%.

Lease Payments and Security.

O ur leases require the lessee to pay periodic rentals during the lease term.

As of February 28, 2023, all but one of our leases have fixed rentals that do not vary according to changes in interest rates.

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

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

Typically, the lessee is required to make payments for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft.

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

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

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

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

Lease Management and Remarketing

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

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

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

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

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

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

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

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

These larger lessors include AerCap Holdings, Air Lease Corporation, SMBC Aviation Capital, BOC Aviation, Avolon Holdings, Aviation Capital Group, Dubai Aerospace Enterprise, Industrial and Commercial Bank of China and China Development Bank.

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

These larger lessors include AerCap Holdings, SMBC Aviation Capital, Avolon Holdings, Air Lease Corporation, BBAM and BOC Aviation.

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

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

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

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

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

We also believe our access to unsecured debt provides us with a competitive advantage in pursuing investments quickly and reliably and in acquiring aircraft in situations where it may be more difficult to finance on a secured, non-recourse basis.

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

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

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

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

In addition, some of our claims arising from the Russian invasion of Ukraine remain unsettled and, therefore, we have had to resort to litigation that we expect will take years to fully settle.

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

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

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

However, there can be no assurance that we have adequately

insured against all risks, that lessees will at all times comply with their obligations to maintain insurance, that our lessees’ insurers and re-insurers will be or will remain solvent and able to satisfy any claims, that any particular claim will ultimately be paid or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the future.

Environmental, Social and Governance (“ESG”)

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

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

Board oversight of ESG matters is conducted by the Company’s Risk and Governance Committee.

A detailed report with our ESG disclosures in alignment with Global Reporting Initiative guidance can be found on our website at www.aircastle.com.

The information on our website regarding our ESG disclosures is not part of, nor incorporated by reference, into this report, or any other report we file with, or furnish to, the SEC.

Our Commitment to Environmental Sustainability

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

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

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

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

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

Since 2021, the International Air Transport Association (“IATA”) has maintained a Fly Net Zero commitment for aviation to achieve net zero carbon by 2050.

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

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

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

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

Sustainable Aviation Fuel (“SAF”) is an alternative to conventional jet fuel that, on a lifecycle basis, reduces greenhouse gas emissions associated with air travel compared to conventional jet fuel.

Hydrogen and electronic propulsion for commercial jet aircraft are longer-term initiatives.

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

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

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

For the year ended February 29, 2024, 73% of our incremental net book value acquired were new technology aircraft with higher efficiency and lower emissions.

In addition, in February 2024, the Company announced it had made an investment commitment to the United Airlines Ventures’ Sustainable Flight Fund whose objective is scaling up the availability of SAF.

SAF provides the most readily available means for airline operators to reduce their carbon emissions while using existing technology, however the high cost and low availability present challenges for SAF’s impactful usage.

In making this commitment, the Company joins other corporate partners who represent various parts of the aviation supply chain that have committed over $200 million in capital to invest in a roster of companies developing cutting edge technologies for SAF production.

As of February 29, 2024, we had 118 employees.

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These values continue to this day and are shared by our employees.

In addition, these values are embodied in our Code of Business Conduct and Ethics, which has been adopted by the Board of Directors of the Company to serve as a statement of principles to guide our decision-making and reinforce our commitment to these values in all aspects of our business.

In addition, these values are embodied in our Code of Business

Conduct and Ethics, which has been adopted by the Board of Directors of the Company to serve as a statement of principles to guide our decision-making and reinforce our commitment to these values in all aspects of our business.

The Company also maintains independent third-party whistle-blower platforms for anonymous reporting of fraud or ethics violations.

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

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

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

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

Government Regulation

The air transportation industry is highly regulated, although Aircastle itself is generally not directly subject to most air transportation regulations as we do not operate aircraft.

The air transportation industry is highly regulated.

Aircastle itself is generally not directly subject to most air transportation regulations as we do not operate aircraft.

In contrast, our lessees are subject to extensive, direct regulation under the laws of the jurisdictions in which they are registered and where they operate.

1 unchanged sentence

Regulations, such as those limiting CO 2 emissions and reducing noise, are changing and developing in the aviation sector, where there is an additional international angle to the regulation.

The impact of recent crises, such as the COVID-19 pandemic and the Russian invasion of Ukraine, on the airline sector has further complicated matters.

Further regulatory changes are expected in the coming years.

The impact of these items on the airline sector, as well as recent crises, such as the COVID-19 pandemic, the Russian invasion of Ukraine and the conflict in the Middle East, have further complicated matters.

Further regulatory changes can be expected in the future.

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

What changed 10-K

Item 1. Business