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Item 9A. Controls and Procedures

2024-04-25 compared with 2023-04-25 · 438 added, 409 removed, 1062 unchanged (44% of the section changed)

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls

may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an assessment of the effectiveness of our internal control over financial reporting as of February 29, 2024.

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The identification of our Audit Committee and our Audit Committee financial experts is posted on our website at www.aircastle.com under “ABOUT - COMMITTEE COMPOSITION”.

Information regarding our Code of Business Ethics and Conduct, any material amendments thereto and any related waivers is posted on our website at www.aircastle.com under “CORPORATE GOVERNANCE - GOVERNANCE DOCUMENTS”.

Information regarding our Code of Business Ethics and Conduct, any material amendments thereto and any related waivers is posted on our website at www.aircastle.com under “ESG”.

Information about our Directors.

The members of the Board of Directors of the Company (the “Board”) are Douglas A.

Hacker, Michael J.

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

Hacker, Naoshi Hirose, Michael J.

Inglese, Taro Kawabe, Keiji Okuno, Charles W.

Pollard and Takayuki Sakakida.

Takashi Kurihara

Naoshi Hirose 61

Keiji Okuno 60

Takayuki Sakakida

Takayuki Sakakida (Chairman)

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 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.

Naoshi Hirose was appointed to our Board as of April 8, 2024.

Currently holding the position of Managing Executive Officer and serving as the Regional CEO for the Americas, as well as the Regional COO for North & Central Americas at Marubeni, he also holds the role of President and CEO of Marubeni America Corporation.

Hirose joined Marubeni in January 2023 and from April 2023 he held the positions of Managing Executive Officer and Senior Operating Officer for CSO, in which he served as a Member of the Corporate Management Committee, exercising oversight of Marubeni group’s business operations.

Prior to joining Marubeni, Mr.

Hirose served the Ministry of Economy, Trade, and Industry in Japan for over 35 years, holding key positions, including Vice-Minister for International Affairs.

Hirose’s academic background includes a bachelor's degree from the Faculty of Law at Tokyo University in Tokyo and a Master’s degree from the Princeton School of Public and International Affairs at Princeton University.

With over three decades of such experience, Mr.

Hirose contributes a wealth of expertise to the Board, notably in operational management, strategic planning, and financial matters pertinent to the aviation sector.

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.

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Kawabe received his degree from Waseda University in 1990.

Takashi Kurihara 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 May 2019 to the consummation of the Merger, and was nominated by Marubeni.

Kurihara is the Advisor to the President of Marubeni America Corporation.

From January 2017 to March 2019, Mr.

Kurihara was a director of the Agricultural Solutions Business Division of Bridgestone.

Prior to that,

Kurihara was Deputy General Manager, Regional Coordination and Administration Department at Marubeni from April 2016 to September 2016.

From July 2013, he was Vice President and a Board member of Gavilon Agriculture Investment until April 2015, when Mr.

Kurihara became Executive Vice President and a Board member of Gavilon Agriculture Investment.

Kurihara received his MBA at Columbia Business School in New York and his bachelor’s degree of political science at Keio University in Tokyo.

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.

Keiji Okuno was appointed to our Board as of September 26, 2022.

Before joining Aircastle, Mr.

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Code of Business Conduct and Ethics .

To help ensure that the Company abides by applicable corporate governance standards, our Board has adopted a Code of Business Conduct and Ethics and a Code of Ethics for Chief Executive and Senior Financial Officers, which are posted on our website at http://www.aircastle.com under “Investors—Governance Documents” and which are available in print to any shareholder of the Company upon request.

To help ensure that the Company abides by applicable corporate governance standards, our Board has adopted a Code of Business Conduct and Ethics and a Code of Ethics for Chief Executive and Senior Financial Officers, which are posted on our website at http://www.aircastle.com under “ESG” and which are available in print to any shareholder of the Company upon request.

Audit Committee of the Board of Directors .

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

Hacker were designated as members of the Audit Committee.

Takayuki Sakakida (Chairman), Keiji Okuno and Douglas A.

Hacker are designated as members of the Audit Committee.

In addition, our Board has determined that Mr.

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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 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”).

This Compensation Discussion and Analysis focuses on the compensation paid for our 2023 fiscal year to our Chief Executive Officer, Chief Financial Officer and three other most highly compensated executive officers, together referred to as our named executive officers (“NEOs”).

For 2023, our NEOs were:

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Chief Legal Officer & Secretary

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.

Paul O’Callaghan Chief Operations Officer

Paul O’Callaghan, formerly, EVP, Portfolio Management, was appointed and promoted to Chief Operations Officer of the Company effective March 1, 2023.

Pay for Performance Philosophy

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Achievement of individual performance goals set at the beginning of each year.

For 2022, we made an annual incentive compensation award in the form of a cash bonus, the payment of which was based on a mix of corporate performance and individual performance.

For more highly compensated employees, including our NEOs, achievement of corporate financial metrics carried a greater weighting relative to individual performance, as illustrated in the table below:

For 2023, we granted an annual incentive compensation award in the form of a cash bonus, the payment of which was based on the achievement of a mix of corporate financial metrics and individual performance goals.

For more highly compensated employees, including our NEOs, achievement of the corporate financial metrics carried a greater weighting relative to individual performance, as illustrated in the table below:

Position Corporate Performance Individual Performance

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(4) Our discrete objectives are a qualitative rating based on our performance in maintaining our investment grade ratings, managing our assets and effectiveness on placements given the market environment.

Individual Performance Goals and Compensation.

Individual Performance Goals.

We set individual performance goals for every employee at the beginning of each year and measure each employee’s performance against those goals at the end of the year to determine incentive compensation levels.

For 2022, we determined incentive pay for each employee by applying the weighted corporate and individual performance metrics.

We set individual bonus targets based on an employee’s function, role and seniority within the organization, among other factors.

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

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.

For 2023, we determined the final amount of our annual incentive compensation awards for each employee by applying the weighted corporate financial metrics and individual performance goals, and such awards were paid out to our executive officers in the form of cash.

For additional retention purposes, we also granted long term incentive awards in 2023 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

For 2023, there were three primary elements of total direct compensation:

base salary, annual cash bonus, and annual long term incentive award.

base salary, annual incentive compensation in the form of a cash bonus, and a long term incentive plan award.

Base salaries provide fixed compensation and allow us to attract and retain talented management.

We set base salaries for our named executive officers and review them periodically by taking into account the current market environment and the responsibilities, experience, value to the Company and demonstrated performance of our NEOs.

We set base salaries for our NEOs and review them periodically by taking into account the current market environment and the responsibilities, experience, value to the Company and demonstrated performance of our NEOs.

Annual Incentive Compensation .

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.

We grant an annual 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 long term incentive (“LTI”) award program, in the form of cash awards, for our executive officers and certain other senior professionals.

In 2021, we introduced a long term incentive (“LTI”) award program, in the form of long term 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.

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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 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.

Prior to his appointment as our Chief Operations Officer effective March 1, 2023, Mr.

O’Callaghan was granted non-executive officer LTI awards in 2022 and 2021 that vest annually on the last day of each performance year, subject to his continued employment through such date.

Our LTI awards granted in 2023, 2022 and 2021 have the following performance ranges 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

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%

2023 LTI Awards 2022 LTI Awards 2021 LTI Awards % of Target Annual Award Earned

Equal to or greater than 5% Equal to or greater than 4% Equal to or greater than 6% 150%

Greater than 2.5% and less than 5% Greater than 1.5% and less than 4% Greater than 2.5% and less than 6% Interpolated

Equal to 1.0% through 2.5% Equal to 0.5% through 1.5% Equal to 0.5% through 2.5% 100%

Greater than -1.5% and less than 1.0% Greater than -2.0% and less than 0.5% Greater than -3.0% and less than 0.5% Interpolated

Less than or equal to -1.5% Less than or equal to -2.0% Less than or equal to -3.0% 50%

Actual Performance for 2023 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.

The Company’s financial performance reflects the continued expansion of global air traffic and strong demand for our narrow-body passenger aircraft, OEM production issues and delivery delays, as well as the improved financial health of our airline customers.

Our financial results also are partly driven by the increased demand for our aircraft through lease extension requests, 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.

As a result, the Book Equity IRR for the 2023 performance year was 3.9%.

Therefore, the portion of our 2023, 2022 and 2021 LTI awards related to the 2023 performance year were earned at 128%, 148% and 120%, respectively.

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

For our executive officers other than Mr.

O’Callaghan, the 2021 LTI Awards cliff-vested on February 29, 2024 and the 2022 LTI awards will cliff-vest on February 28, 2025.

For all of our executive officers, the 2023 LTI awards will cliff-vest on February 28, 2026.

For our executive officers other than Mr.

O’Callaghan, the 2021 LTI Awards that cliff-vested on February 29, 2024, were earned with respect to each performance year during the three-year performance period as follows:

2021 LTI Awards

Performance Year Book Equity IRR % of Target Annual Award Earned

Fiscal Year 2021 Less than -3.0% 50%

Fiscal Year 2022 2.9% 105.8%

Fiscal Year 2023 3.9% 120%

O’Callaghan, the portion of his 2021 LTI Award payable for the 2023 performance year was earned at 120% and vested on February 29, 2024, and the portion of his 2022 LTI Award payable for the 2023 performance year was earned at 148% and vested on February 29, 2024.

Other Compensation .

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.

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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(b) the executive provides at least twelve months' notice;

(c) the executive is at least 55 years old on the date of retirement and (d) such individual is not an executive officer (or serving in any other senior commercial role) with certain competitors prior to the vesting date.

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

and (d) such individual is not an executive officer (or serving in any other senior commercial role) with certain competitors prior to the vesting date.

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

2023 Compensation

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For 2023, the Company’s performance against its corporate financial metrics resulted in an incentive compensation pool equal to 119% of the total target, as shown in the table below.

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.

Certain financial metrics, such as profit before tax and cash flow, were impacted by the effects of the increased demand for our aircraft, 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.

(in millions) Weighting 2023 Performance (in millions) Performance Range Performance Weighted Score

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Cash flow $ 373.0 20% $ 370.3 50% - 150% 97% 19 %

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

New investments $ 1,355.0 20% $ 1,344.9 50% - 150% 99% 20 %

Discrete objectives — 20% — 50% - 150% 100% 20 %

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The Compensation Committee took the following actions related to fiscal year 2022 annual incentive compensation for our NEOs, which was determined solely based on corporate and individual performance levels.

Performance versus Individual Performance Goals.

For 2023, the performance of each of our NEOs against the individual performance goals was equal to 110% of target.

The Compensation Committee took the following actions related to fiscal year 2023 annual incentive compensation for our NEOs, which was determined solely based on the achievement of the corporate financial metrics and individual performance goals:

Named Executive Officer 2023 Incentive Compensation

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$675,280 cash

Joseph Schreiner

Paul O’Callaghan

$493,366 cash

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Role of Executive Officers.

For 2022, the Committee set the corporate financial metrics at the beginning of the year based on the annual business plan endorsed by the Board.

We set performance goals for the Chief Executive Officer, who in turn established individual performance goals for the other NEOs.

For 2023, the Compensation Committee set the corporate financial metrics at the beginning of the year based on the annual business plan endorsed by the Board.

The Compensation Committee also set individual performance goals for the Chief Executive Officer, who in turn established individual performance goals for the other NEOs.

Regularly during the year, the senior management team presented to us the Company’s actual performance against the corporate performance metrics.

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

The Compensation Committee shared these discussions with the full Board on a regular basis.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board is currently comprised of three Directors and operates pursuant to a written charter, which is available at http://www.aircastle.com under “Investors—Governance Documents.”

The Compensation Committee of the Board is currently comprised of three Directors and operates pursuant to a written charter, which is available at http://www.aircastle.com under “ESG.”

The Compensation Committee is primarily responsible for reviewing, approving and overseeing the Company’s compensation plans and practices and works with management to establish the Company’s executive compensation philosophy and programs.

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Pollard, Chair

Takashi Kurihara

Takayuki Sakakida

Summary Compensation Table for 2023

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Roy Chandran 2023 $ 575,000 $ 639,026 $ 551,680 $ 15,540 $ 1,781,246

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

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

Chief Financial Officer 2022 525,000 568,407 — 14,607 1,108,014

2021 475,000 300,240 — 13,440 788,680

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Secretary 2021 575,000 375,300 — 13,987 964,287

Joseph Schreiner (5)

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

Chief Technical Officer

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

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

Paul O’Callaghan (4)

2023 $ 450,025 $ 372,838 $ 96,160 $ 54,003 $ 973,026

Chief Operations Officer

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(1) Bonus compensation consists of:

(i) cash bonuses;

(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.

(i) cash bonuses, (ii) the portion of 2020 bonus restricted cash awards vested in 2022 and 2023, and (iii) the portion of 2019 bonus restricted cash awards vested in 2021 and 2022.

(2) See Compensation Overview-Long Term Incentive Plan above for information regarding our cash-based LTI awards granted in 2023, 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.

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 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

Accordingly, the amounts reported for 2023 represents the 2021 LTI awards granted to our NEOs (other than Mr.

O’Callaghan), which vested on February 29, 2024.

See footnote (4) below for additional information regarding Mr.

O’Callaghan’s cash-based LTI awards.

(3) The amounts reported in this column consist of Company contributions made to each named executive officer’s retirement plan account and certain insurance premiums paid by the Company.

(4) Paul O’Callaghan became one of the Company’s NEOs for 2023 as a result of his appointment and promotion to Chief Operations Officer effective March 1, 2023.

The amount reported in the “Non-Equity Incentive Plan” column relates to non-executive, cash-based LTI awards granted to Mr.

O’Callaghan in 2022 and 2021 prior to his appointment as Chief Operations Officer, which vested with respect to the 2023 performance year on February 29, 2024 and were paid out immediately upon vesting.

Grants of Plan-Based Awards for 2023

Estimated Possible Payouts Under

Non-Equity Incentive Plan Awards (2)(3)

Name Grant Date Vesting Date Grant of Cash LTI Award (1)

Minimum ($) Target ($) Maximum ($)

Inglese May 1, 2023 February 28, 2026 $ 2,500,000 $ 1,900,418 $ 2,733,752 $ 3,567,086

Roy Chandran May 1, 2023 February 28, 2026 $ 1,000,000 $ 760,168 $ 1,093,502 $ 1,426,836

Winter May 1, 2023 February 28, 2026 $ 1,000,000 $ 760,168 $ 1,093,502 $ 1,426,836

Christopher L.

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

Beers May 1, 2023 February 28, 2026 $ 1,000,000 $ 760,168 $ 1,093,502 $ 1,426,836

Paul O’Callaghan May 1, 2023 February 28, 2026 $ 426,919 $ 324,529 $ 466,836 $ 609,142

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

(1) Represents the aggregate target amount of our cash-based LTI awards granted to our NEOs in 2023.

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

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.

These amounts in the table reflect actual performance for the 2023 performance year (120%) and estimated minimum, target, and maximum amounts for the 2024 and 2025 performance years.

See Compensation Overview – Long Term Incentive Plan above for information regarding our cash-based LTI awards.

(3) 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.

Accordingly, see the Summary Compensation Table for 2023 for the total amounts paid out to our NEOs with respect to the 2021 LTI awards granted to our NEOs (other than Mr.

O’Callaghan), which vested on February 29, 2024.

See footnote (4) to the Summary Compensation Table for 2023 for additional information regarding the vesting and payment of Mr.

O’Callaghan’s 2021 and 2022 LTI awards.

Employment Agreements with NEOs

Through our subsidiary, Aircastle Advisor LLC, we have entered into an employment agreement (as amended) with each of our NEOs.

Through our subsidiaries, Aircastle Advisor LLC and Aircastle (Ireland) Designated Activity Company, we have entered into an employment agreement (as amended) with each of our NEOs.

These employment agreements generally provide for payment of an annual base salary and the executives’ eligibility to receive an annual cash bonus with indicated target annual cash bonus and LTI award levels.

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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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— — 3,306,903 3,306,903 3,306,903 — 3,306,903

Joseph Schreiner (2)

Paul O’Callaghan

Cash Severance $ — $ — $ 876,305 $ 1,752,610 $ 876,305 $ — $ —

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February 29 termination) — — 426,918 426,918 426,918 — 426,918

COBRA Reimbursement — — — — — 58,199 —

Health Insurance Benefits — — 3,867 3,867 3,867 — 3,867

Vacation 48,396 48,396 48,396 48,396 48,396 48,396 48,396

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_______________

(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.

(1) Includes the portion of 2020 bonus restricted cash awards vesting on March 1, 2024, the 2022 LTI awards (or for Mr.

O’Callaghan, the applicable portion thereof) vesting on February 28, 2025, and the 2023 LIT awards vesting on February 28, 2026 .

As described above in the section entitled “Employment Agreements with NEOs,” we, through our subsidiaries, Aircastle Advisor LLC and Aircastle (Ireland) Designated Activity Company, 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.

Under the employment agreements for our named executive officers:

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(ii) a pro-rata annual bonus for the year of termination;

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

(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;

(iii) reimbursement of COBRA premiums or health insurance benefits for up to twelve months;

(iv) accelerated vesting of any remaining cash-based LTI awards;

• 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.

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Marubeni Corporation (1)

7-1 Nihonbashi 2-chome

Chuo-ku, Tokyo, 103-6060 Japan

4-2 Ohtemachi 1-chome

Chiyoda-ku, Tokyo, 100-8088 Japan

MM Air Limited (2)

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_______________

(1) Marubeni beneficially owns 7,024 Common Shares through its wholly owned subsidiary MHC.

On March 27, 2020, Aircastle consummated the Merger.

At the Effective Time, each Common Share issued and outstanding immediately prior to the Effective Time (other than (i) shares canceled or converted into shares of the surviving company pursuant to the Merger Agreement and (ii) restricted shares canceled and exchanged pursuant to the Merger Agreement) was canceled and converted into the right to receive the Merger Consideration.

The shares that were owned by MHC immediately prior to the Effective Time were converted into the same percentage of shares of the surviving company in the Merger.

As a result, immediately following the Effective Time, MHC beneficially owned 28.8% of the outstanding common shares of the surviving company in the Merger, and MM Air Limited beneficially owned the remaining 71.2%.

On March 27, 2020, MM Air Limited transferred 2,976 Common Shares to MHC, resulting in MHC owning 7,024 Common Shares.

(1) Marubeni beneficially owns 7,782 Common Shares through its wholly owned subsidiary Marubeni Aviation Corporation.

During the year ended February 29, 2024, we issued 758 shares to Marubeni.

(2) MM Air Limited beneficially owns 7,782 Common Shares.

MM Air Limited is controlled by affiliates of Marubeni and Mizuho Leasing.

On March 27, 2020, Aircastle consummated the Merger.

At the Effective Time, each Common Share issued and outstanding immediately prior to the Effective Time (other than (i) shares canceled or converted into shares of the surviving company pursuant to the Merger Agreement (as described in footnote (1) above) and (ii) restricted shares canceled and exchanged pursuant to the Merger Agreement) was canceled and converted into the right to receive the Merger Consideration.

The shares that were owned by MHC immediately prior to the Effective Time were converted into the same percentage of shares of the surviving company in the Merger.

On March 27, 2020, MM Air Limited transferred 2,976 Common Shares to MHC, resulting in MM Air Limited owning 7,024 Common Shares.

During the year ended February 29, 2024, we issued 758 shares to MM Air Limited.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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

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.

We incurred fees from our Shareholders as part of intra-company service agreements totaling $8.3 million during the year ended February 29, 2024, whereby our Shareholders provide 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 $1.5 million during the year ended February 29, 2024.

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.

On January 31, 2024, we entered into an amendment that extended the maturity date of our $200.0 million 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 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.

On February 8, 2024, we entered into an amendment that extended the maturity date of our $300.0 million 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.

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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.

Our Related Person Policy covers all transactions, arrangements or relationships (or any series of similar transactions, arrangements or relationships) in which the Company or any of its subsidiaries was, is or will be a participant, in which the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest.

Our Related Person Policy covers all transactions, arrangements or relationships (or any series of similar transactions, arrangements or relationships) in which the Company or any of its subsidiaries was, is or will be a participant, in which the amount involved exceeds $120.0 thousand, and in which any Related Person had, has or will have a direct or indirect material interest.

A Related Person is any person who is, or at any time since the beginning of the Company’s last fiscal year was, a Director or executive officer of the Company or a nominee to become a Director of the Company;

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Hacker and Pollard to be independent and that Directors Messrs.

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

Hirose, Inglese, Kawabe and Okuno to be not independent.

The Board also considers the current Chairman Mr.

Sakakida to be not independent.

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

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Audit Fees, Audit Related Fees, Tax Fees and All Other Fees .

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.

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

Year Ended February 28,

In connection with the audit of the fiscal year 2023 and 2022 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.

Professional services rendered by EY for the years ended February 29, 2024 and February 28, 2023 were as follows:

Year Ended February 29, Year Ended February 28,

Audit fees (1)

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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) Represents fee for online research tool subscription.

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.

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 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.

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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Report of Independent Registered Public Accounting Firm.

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.

Consolidated Balance Sheets as of February 29, 2024 and February 28, 2023.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 29, 2024, and February 28, 2023 and 2022.

Consolidated Statements of Cash Flows for the years ended February 29, 2024, and February 28, 2023 and 2022.

Consolidated Statements of Changes in Shareholders’ Equity for the years ended February 29, 2024, and February 28, 2023 and 2022.

Notes to Consolidated Financial Statements.

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Description of Exhibit

2.1 Agreement and Plan of Merger, dated as of November 5, 2019, by and among Aircastle Limited, MM Air Limited and MM Air Merger Sub Limited (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K on filed November 7, 2019).

3.1 Memorandum of Association (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (Amendment No.

333-134669) filed on July 25, 2006).

3.2 Amended Bye-laws (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-3 (No.

333-182242) filed on June 20, 2012).

3.1 Amended and Restated Memorandum of Association of Aircastle Limited (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 27, 2020).

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4.11 Description of Aircastle Limited’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.13 to the Company’s Annual Report on Form 10-K filed on February 13, 2020).

Description of Exhibit

4.12 Deposit Agreement, dated June 8, 2021, among Aircastle Limited, Computershare Inc.

and Computershare Trust Company, N.A., acting jointly as depositary, and the holders from time to time of depositary receipts issued thereunder (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 8, 2021).

10.1 Form of Restricted Share Purchase Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (No.

333-134669) filed on June 2, 2006).

10.2 Form of Amended Restricted Share Grant Letter under the Amended and Restated Aircastle Limited 2005 Equity and Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K filed on March 5, 2010).

10.3 Form of Amended Restricted Share Agreement for Certain Executive Officers under the Amended and Restated Aircastle Limited 2005 Equity and Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K filed on March 10, 2011).

10.4 Form of Amended International Employee Restricted Share Unit Agreement under the Amended and Restated Aircastle Limited 2005 Equity and Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K filed on March 5, 2010).

10.5 Amended and Restated Aircastle Limited 2005 Equity and Incentive Plan (incorporated by reference to Exhibit 10.28 to the Company’s Registration Statement on Form S-1 (Amendment No.

333-134669) filed on July 25, 2006).

10.6 Letter Agreement, dated as of February 24, 2006, by and between Aircastle Advisor LLC and Joseph Schreiner (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1 (No.

333-134669) filed on June 2, 2006).

4.13 Indenture, dated as of July 18, 2023, between Aircastle Limited and Computershare Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on July 18, 2023).

Description of Exhibit

4.14 Indenture, dated as of January 22, 2024, between Aircastle Limited and Computershare Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 22, 2024).

10.1 Form of Employment Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 8, 2017).

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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 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).

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).

10.7 Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed on May 25, 2017).

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(incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K filed on February 13, 2020).

Description of Exhibit

10.17 Amendment No.

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(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

10.23 Amendment No.

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10.27 Amendment No.

19 to Purchase Agreement COM0270-15, dated as of April 18, 2023 (Amendment No.

19), 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 July 12, 2023).

10.28 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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(incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K filed on February 13, 2020).

Description of Exhibit

10.33 Amendment No.

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(incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on October 13, 2021).

10.46 Letter Agreement, dated as of October 4, 2016, by and between Aircastle Advisor LLC and Aaron Dahlke (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 7, 2016).

10.47 Retirement and Transition Agreement, dated September 17, 2018, for Michael L.

Kriedberg (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 19, 2018).

10.36 Voting and Support Agreement, dated as of November 5, 2019, by and among Aircastle Limited, Marubeni Corporation, Marubeni Aviation Corporation and Marubeni Aviation Holding Coöperatief U.A.

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10.37 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.

10.38 Subscription Agreement, dated July 5, 2023, by and among Aircastle Limited, MM Air Ltd.

and Marubeni Aviation Holdings Coöperatief U.A.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 7, 2023).

10.39 Amendment Agreement to the Seventh Amended and Restated Credit Agreement, dated as of February 8, 2024, 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.

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101 The following materials from the Company’s Annual Report on Form 10-K for the year ended February 29, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language):

(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, 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;

(i) Consolidated Balance Sheets as of February 29, 2024 and February 28, 2023;

(ii) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 29, 2024, and February 28, 2023 and 2022;

(iii) Consolidated Statements of Cash Flows for the years ended February 29, 2024, and February 28, 2023 and 2022;

(iv) Consolidated Statements of Changes in Shareholders’ Equity for the years ended February 29, 2024, and February 28, 2023 and 2022;

and (v) Notes to Consolidated Financial Statements*

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

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

Consolidated Balance Sheets as of February 29, 2024 and February 28, 2023

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 29, 2024, and February 28, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended February 29, 2024, and February 28, 2023 and 2022

Consolidated Statements of Changes in Shareholders’ Equity for the years ended February 29, 2024, and February 28, 2023 and 2022

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, 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.

We have audited the accompanying consolidated balance sheets of Aircastle Limited and Subsidiaries (the Company) as of February 29, 2024 and February 28, 2023, and the related consolidated statements of income (loss) and comprehensive income (loss), changes in shareholders' equity and cash flows for each of the three years in the period ended February 29, 2024, 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 29, 2024 and February 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 29, 2024 in conformity with U.S.

generally accepted accounting principles.

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Recoverability assessment and Impairment of flight equipment held for lease

Description of

the Matter As more fully described in Note 1 to the consolidated financial statements, flight equipment held for lease is assessed for recoverability by management on an aircraft-by-aircraft basis annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Description of the Matter

As more fully described in Note 1 to the consolidated financial statements, flight equipment held for lease is assessed for recoverability by management on an aircraft-by-aircraft basis annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

As a result of the assessments during the year ended February 29, 2024, the Company recorded impairment charges of $55 million related to the flight equipment held for lease.

Auditing the Company’s assessment of recoverability of flight equipment held for lease was complex and highly judgmental due to the higher estimation required in determining the future cash flows to evaluate whether such cash flows were less than the carrying amount of flight equipment.

Auditing the Company’s assessment of recoverability of flight equipment held for lease was judgmental due to the estimation required in determining the future cash flows to evaluate whether such cash flows were less than the carrying amount of flight equipment.

Further, auditing this analysis also involved evaluating the assumptions utilized in estimating the fair values to calculate the impairment charges.

In particular, the future cash flows were sensitive to changes related to significant assumptions such as the estimation of the future projected lease rates, future maintenance cash flows, scenario probabilities, as well as the value of aircraft adjusted for maintenance condition at the end of the useful life.

Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's processes to determine whether the book value of each aircraft is recoverable and measure the impairment charge, where applicable.

This included controls over management’s review of the significant assumptions described above, which are included in the Company’s recoverability analysis.

To test the estimated future cash flows attributable to the flight equipment held for lease, we performed audit procedures on a sample of transactions that included, among others, evaluating and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

Our testing of the Company’s significant assumptions included, among others, comparing data to currently contracted lease rental and maintenance cash flows, evaluating future projected lease rates to third party data, evaluating the timing and cost of estimated future maintenance cash flows to manufacturers’ specifications and/or historical data, recalculating end of life value of aircraft based on projected maintenance condition at the end of its useful life and comparing it to published third party and/or historical sales data, and evaluating scenario probabilities based on market conditions and publications.

In particular, the future cash flows were sensitive to changes related to significant assumptions such as the estimation of the future projected lease rates, future maintenance cash flows, as well as the value of aircraft adjusted for maintenance condition at the end of the useful life.

How We Addressed the Matter in Our Audit

To test the estimated future cash flows attributable to the flight equipment held for lease, we performed audit procedures on certain transactions that included, among others, evaluating and testing the estimation of the future projected lease rates, future maintenance cash flows, the value of aircraft adjusted for maintenance condition at the end of the useful life and the underlying data used by the Company in its analysis.

Our testing of the Company’s significant assumptions included, among others, comparing data to currently contracted lease rental and maintenance cash flows, evaluating future projected lease rates to third party data, evaluating the timing and cost of estimated future maintenance cash flows to manufacturers’ specifications and/or historical data, and recalculating end of life value of aircraft or its related parts based on projected maintenance condition at the end of its useful life and comparing it to published third party and/or historical sales data.

In addition, for the assumptions that most significantly impact recoverability we performed a sensitivity analysis to evaluate the changes to the future cash flows from changes in the significant assumptions.

We also involved our valuation specialists to assist in evaluating the reasonableness of the fair value of certain assets used in the calculation of the impairment charges recorded.

We considered current industry and economic trends and changes to the business.

We assessed the historical accuracy of certain assumptions by performing a look back analysis.

Accounting for Income Tax

Description of

the Matter The Company is incorporated in Bermuda and leases its aircraft within over 40 countries.

Description of the Matter

The Company is incorporated in Bermuda and leases its aircraft within over 40 countries.

The Company’s income is subject to U.S.

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As more fully described in Note 11 to the consolidated financial statements, the Company recognized a consolidated provision for income taxes of $23 million for the year ended February 29, 2024.

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

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

Specifically, the auditing of the application of changes in tax law and transactions to transfer, buy or sell aircraft in foreign jurisdictions required increased auditor effort, including the use of tax professionals with specialized skills, to evaluate the Company’s application of the tax laws in relevant jurisdictions and the related income tax.

Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to prepare the consolidated income tax provision.

Our procedures also included, among others, an evaluation of management’s review and consideration of the international tax structure, identification of changes to tax laws in the various jurisdictions in which it operates and its treatment of the transactions to transfer, buy and sell aircraft.

To test the income tax related accounts, we performed audit procedures that included, among others, understanding the Company’s tax structure as it relates to current leases through review of its organization chart and various lease documents.

How We Addressed the Matter in Our Audit

To test the Company’s application of tax laws in relevant jurisdictions and the related income tax, we performed audit procedures that included, among others, understanding the Company’s tax structure as it relates to current leases through review of its organization chart and various lease documents.

We evaluated the Company’s treatment of tax law changes, if any, in the foreign jurisdictions it operates to current tax laws.

We also obtained, and assessed the completeness of, a list of transactions to transfer, purchase and sell aircraft during the period and evaluated the tax treatment of a sample of transactions through review of the lease documents and our assessment of the tax law.

We also obtained, and assessed the completeness of, a list of transactions to transfer, purchase and sell aircraft during the period and evaluated the tax treatment of certain transactions through review of the lease documents and our assessment of the tax law.

Our audit procedures were performed with the assistance of our tax professionals with specialized skills and knowledge.

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(Dollars in thousands, except share data)

February 29, February 28,

Cash and cash equivalents $ 129,977 $ 231,861

Restricted cash and cash equivalents — 2,791

Accounts receivable 12,518 12,855

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LIABILITIES AND SHAREHOLDERS’ EQUITY

Borrowings from secured financings, net of debt issuance costs $ 752,298 $ 684,039

Borrowings from unsecured financings, net of debt issuance costs 3,842,454 3,835,841

Borrowings from secured financings, net $ 875,397 $ 752,298

Borrowings from unsecured financings, net 3,823,099 3,842,454

Accounts payable, accrued expenses and other liabilities 219,588 206,473

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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, 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

Preference shares, $ 0.01 par value, 50,000,000 shares authorized, 400 (aggregate liquidation preference of $ 400,000 ) shares issued and outstanding at February 29, 2024 and February 28, 2023

Common shares, $ 0.01 par value, 250,000,000 shares authorized, 15,564 and 14,048 shares issued and outstanding at February 29, 2024 and February 28, 2023, respectively

Additional paid-in capital 2,078,774 1,878,774

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

Retained earnings (accumulated deficit) 55,000 ( 7,316 )

Total shareholders’ equity 2,133,774 1,871,458

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(Dollars in thousands, except per share amounts)

Year Ended February 28,

Year Ended February 29, Year Ended February 28,

2024 2023 2022

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Total lease revenue 731,833 713,063 737,809

Gain on sale of flight equipment 70,860 26,001 33,536

Gain on sale or disposition of flight equipment 121,646 70,860 26,001

Other revenue 1,937 12,110 5,977

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Loss on extinguishment of debt — ( 636 ) ( 14,156 )

Merger expenses — — ( 32,605 )

Other 5,571 14,092 57,682

Total other income (expense) 13,456 43,526 ( 35,436 )

Total other income 5,571 13,456 43,526

Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investment 104,376 86,037 ( 289,251 )

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(Dollars in thousands)

Year Ended February 28,

Year Ended February 29, Year Ended February 28,

2024 2023 2022

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Deferred income taxes 20,053 13,690 ( 9,386 )

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

Collections on net investments in leases 3,557 6,505 14,297

Security deposits and maintenance payments included in earnings ( 54,373 ) ( 66,194 ) ( 123,969 )

Gain on the sale of flight equipment ( 70,860 ) ( 26,001 ) ( 33,536 )

Gain on sale or disposition of flight equipment ( 121,646 ) ( 70,860 ) ( 26,001 )

Loss on extinguishment of debt — 636 14,156

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Acquisition and improvement of flight equipment ( 1,240,183 ) ( 994,040 ) ( 795,426 )

Proceeds from sale of flight equipment 426,454 210,718 180,342

Proceeds from sale or disposition of flight equipment 361,826 426,454 210,718

Aircraft purchase deposits and progress payments, net of returned deposits and aircraft sales deposits 5,650 28,393 ( 202 )

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Other ( 6,408 ) 1,319 ( 1,694 )

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

Net cash and restricted cash used in investing activities ( 879,115 ) ( 537,874 ) ( 586,500 )

Cash flows from financing activities:

Repurchase of shares — — ( 25,536 )

Parent contribution at Merger — — 25,536

Proceeds from issuance of common shares 200,000 — —

Net proceeds from preference share issuance — — 392,997

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Net cash and restricted cash provided by (used in) financing activities 406,977 161,316 ( 196,281 )

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

Net (decrease) increase in cash and restricted cash ( 101,884 ) 61,179 ( 409,916 )

Cash and restricted cash at beginning of year 231,861 170,682 580,598

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(Dollars in thousands)

Year Ended February 28,

Year Ended February 29, Year Ended February 28,

2024 2023 2022

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Advance lease rentals, security deposits, maintenance payments, other liabilities and other assets assumed in asset acquisitions $ 28,350 $ 10,810 $ 21,764

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

Transfers from Flight equipment held for lease, net to Net investment in leases, net and Other assets $ 220,648 $ 1,695 $ 57,489

Acquisition of investments, at fair value

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(Dollars in thousands, except share amounts)

Common Shares Preference Shares Additional

Capital Retained

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Shareholders’

Common Shares Preference Shares

Shares Amount Shares Amount

Balance, February 28, 2021 14,048 $ — — $ — $ 1,485,777 $ 245,293 $ 1,731,070

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

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

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

Preference share dividends — — — — — ( 16,159 ) ( 16,159 )

Net loss — — — — — ( 278,209 ) ( 278,209 )

Payment of unvested shares at Merger ( 101,809 ) ( 1 ) — — ( 25,535 ) — ( 25,536 )

Parent contribution at Merger — — — — 25,536 — 25,536

Share cancellation and re-issuance at Merger ( 74,960,937 ) ( 750 ) — — 750 — —

Balance, February 28, 2022

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

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

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

Net loss — — — — — ( 278,209 ) ( 278,209 )

Net income — — — — — 62,759 62,759

Balance, February 28, 2023

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

Issuance of common shares 1,516 — — — 200,000 — 200,000

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

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Summary of Significant Accounting Policies

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 Limited (“Aircastle,” the “Company,” “we,” “us” or “our”) is a Bermuda 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.

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

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

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

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generally accepted accounting principles (“U.S.

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

GAAP”) and 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.

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

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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In making these estimates, we rely upon actual industry experience with the same or similar aircraft types and our anticipated lessee’s utilization of the aircraft.

For purchase and lease back transactions, we account for the transaction as a single arrangement.

For purchase lease-back transactions, we account for the transaction as a single arrangement.

We allocate the consideration paid based on the fair value of the aircraft and lease.

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We perform an annual recoverability assessment of all aircraft in our fleet, on an aircraft-by-aircraft basis.

A recoverability assessment is also performed whenever events or changes in circumstances, or indicators, suggest that the carrying amount or net book value of an asset may not be recoverable.

Additional customer or aircraft specific recoverability assessments are also performed whenever events or changes in circumstances, or indicators, suggest that the carrying amount or net book value of an asset may not be recoverable.

Indicators may include, but are not limited to, a significant lease restructuring or early lease termination, significant change in an aircraft type’s storage levels, the introduction of newer technology aircraft or engines, an aircraft type is no longer in production or a significant airworthiness directive is issued.

We 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 value deterioration.

When we perform a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the aircraft exceed its net book value.

The undiscounted cash flows consist of cash flows from currently contracted lease rental and maintenance payments, future projected lease rates and maintenance payments, transition costs, estimated down time, and estimated residual or scrap values for an aircraft.

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 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

In the event that an

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.

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

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 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 our estimates or assumptions change, including those related to our customers that have entered judicial insolvency proceedings or similar-type proceedings or restructurings, 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.

Net Investment in 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.

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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, depends on a variety of factors, including the creditworthiness of the lessee, the level of security deposit which may be

Our determination of whether

Aircastle Limited and Subsidiaries

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(Dollars in thousands, except per share amounts)

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

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 level of security deposit which may be 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 did not have any unrecognized tax benefits.

Fair Value Measurements

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

Aircastle Limited and Subsidiaries

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(Dollars in thousands, except per share amounts)

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

See Note 3 in the Notes to Consolidated Financial Statements .

Fair Value Measurements

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 certain of our investments in debt and equity securities on a recurring basis and measure the fair value of our aircraft and investment in unconsolidated joint venture on a non-recurring basis.

Lease Revenue Recognition

We lease flight equipment under net operating leases with lease terms typically ranging from three to seven years .

We lease flight equipment under net operating leases with lease terms typically ranging from 3 to 7 years.

We generally do not offer renewal terms or purchase options in our leases, although certain of our operating leases allow the lessee the option to extend the lease for an additional term.

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Deferred Financing Costs

Deferred financing costs, which are included in borrowings from secured and unsecured financings, net of debt issuance costs, in the Consolidated Balance Sheets, are amortized using the interest method for amortizing loans over the lives of the relevant related debt.

Deferred financing costs, which are included in borrowings from secured and unsecured financings, net, in the Consolidated Balance Sheets, are amortized using the interest method for amortizing loans over the lives of the relevant related debt.

Recent Accounting Pronouncements

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 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, 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.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASC 848”).

ASC 848 provides temporary optional expedients and exceptions to certain U.S.

GAAP contract modification requirements for contracts affected by reference rate reform as entities transition away from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates.

In December 2022, the FASB issued ASU 2022-06 to defer the sunset date of ASC 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the optional expedients in ASC 848.

The ICE Benchmark Administration Limited, LIBOR’s administrator, has ceased publishing all LIBOR settings, including the Overnight, 1-month, 3-month, 6-month, and 12-month USD LIBOR U.S.

dollar settings.

Effective March 1, 2023, we adopted ASC 848 and commenced the transition of our LIBOR-based contracts to the Secured Overnight Financing Rate (“SOFR” or “Term SOFR”).

As of February 29, 2024, we had no aircraft leases or debt financings for which the associated lease rental revenue or interest expense used LIBOR as the applicable reference rate.

The adoption of ASC 848 did not have a material impact on our consolidated financial statements.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASC 740”).

ASC 740 enhances the transparency of income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The standard requires disclosure of specific categories in the rate reconciliation, using both percentages and reporting currency amounts, as well as disclosure of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and individual jurisdictions.

The standard is effective for annual periods beginning after December 15, 2024.

We are currently evaluating the standard, however, it is not expected to have a material impact on our consolidated financial statements.

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).

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 on a Recurring Basis

The following tables set forth our financial assets as of February 29, 2024 and February 28, 2023, 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.

February 29, 2024

Fair Value Measurements at February 29, 2024

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Cash and cash equivalents $ 129,977 $ 129,977 $ — $ — Market

Investments, at fair value

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

Investment in equity securities 5,131 1,687 — 3,444 Market/Income

Total $ 242,680 $ 234,207 $ — $ 8,473

Total investments, at fair value $ 10,160 $ 1,687 $ — $ 8,473

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

February 28, 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

Total $ 170,682 $ 170,682 $ — $ —

Investments, at fair value

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

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

Total investments, at fair value $ 10,819 $ 2,346 $ — $ 8,473

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 investments in debt and equity securities consist of notes and shares received as a 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.

For the years ended February 29, 2024 and February 28, 2023, we had no transfers into or out of Level 3.

Assets Measured at Fair Value on a Non-recurring Basis

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

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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 (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.

Fair value measurements for aircraft in impairment tests are based on the average of the market approach (Level 2 or 3), 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.

Level 3 valuations contain significant non-observable inputs.

See “Aircraft Valuation” below for further information.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

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

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Financial Instruments

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.

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 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 investments, which consist of debt and equity securities, have been valued using either quoted market prices to the extent such securities are traded in an active market (Level 1), or using the income approach for those securities where there is no active market or there is limited market data (Level 3).

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:

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The carrying amounts and fair values of our financial instruments at February 29, 2024 and February 28, 2023, were as follows:

February 29, 2024 February 28, 2023

Carrying Amount

Assets Carrying Amount

of Asset Fair Value

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of Asset Fair Value

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

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

Carrying Amount

Investments, at fair value (1)

$ 10,160 $ 10,160 $ 10,819 $ 10,819

Other investments, net (2)

5,079 5,079 — —

Liabilities Carrying Amount

of Liability Fair Value

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Unsecured Term Loan — — 155,000 151,449

ECA Financings — — 21,576 21,931

Term Financings 883,451 885,139 761,283 739,804

Senior Notes 3,850,000 3,738,146 3,700,000 3,524,563

_______________

(1) See Assets Measured at Fair Value on a Recurring Basis.

(2) As of February 29, 2024, we had a $ 3.2 million allowance for credit losses on certain investments in debt securities that are carried at amortized cost – see Note 15.

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.

During the year ended February 29, 2024, the Company recorded impairments charges totaling $ 55.2 million.

Of the total impairments, $ 39.5 million were transactional impairments related to scheduled aircraft lease expirations and engine redeliveries during the year ended February 29, 2024.

The Company recognized $ 48.0 million of maintenance revenue for these aircraft and engines.

See “Annual Recoverability Assessment” below for further information regarding impairment charges recognized as part of our annual fleet review.

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.

The Company also 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.

In addition to the asset write-offs above, 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

Annual Recoverability Assessment

We performed our annual recoverability assessment of all our aircraft during the third quarter of fiscal 2023.

As a result, of our annul fleet review, we recorded impairment charges of $ 9.5 million related to 3 narrow-body aircraft, as well as 1 spare engine.

When we perform a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the aircraft exceed its net book value.

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.

Aircastle Limited and Subsidiaries

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(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.

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.

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:

The following table summarizes the activities for the Company’s flight equipment held for lease for the years ended February 29, 2024 and February 28, 2023:

February 29, February 28,

Beginning balance

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Accumulated depreciation $ 2,328,354 $ 2,289,264

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

Russian Aircraft Insurance Settlements

The Company leased 9 aircraft to Russian airlines that were unrecoverable following Russia’s invasion of Ukraine in February 2022.

The Company filed claims against the reinsurers of the Russian airlines’ insurance and the Company’s contingent and possessed insurance policies (“C&P Policies”) seeking indemnity.

On December 26, 2023, the Company received cash settlement proceeds of $ 43.2 million in settlement of the Company’s claims under the insurance policies of Joint Stock Company Aurora Airlines and Joint Stock Company Rossiya Airlines (collectively, the “Airlines”) in respect of 4 aircraft (collectively, the “Aircraft”) formerly on lease to the Airlines, which has been recorded within gain on sale or disposition of flight equipment.

The settlement resolves claims against the Airlines, their respective insurers, and transfers the Aircraft title to a Russian insurer.

The Company is in ongoing settlement discussions for the 5 other aircraft that were not included in the insurance settlement.

However, it is uncertain whether any of these discussions will result in any settlement and, if so, in what amount.

Settlement proceeds, net of any related costs, were recorded as a component of gain on sale or disposition of flight equipment for the year ended February 29, 2024.

The receipt of the insurance settlement proceeds serve to mitigate, in part, the Company’s losses under its aviation insurance policies.

The Company reserves all rights under its C&P Policies.

The collection, timing and amount of any future recoveries, including those related to insurance litigation, remain uncertain.

Accordingly, at this time, the Company can give no assurance as to when or what amounts it may ultimately collect with respect to these matters.

Aircastle Limited and Subsidiaries

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(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

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(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.

At February 29, 2024 and February 28, 2023, the amounts of lease incentive liabilities recorded in maintenance payments on the consolidated balance sheets were $ 26.6 million and $ 22.4 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:

At February 29, 2024 and February 28, 2023, our net investment in leases consisted of 15 and 4 aircraft, respectively.

The components of our net investment in leases at February 29, 2024 and February 28, 2023 were as follows:

February 29, February 28,

Lease receivable $ 142,983 $ 31,674

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Net investment in leases, net $ 282,439 $ 67,694

During the year ended February 29, 2024, 12 aircraft were reclassified from operating leases to sales-type leases and we recognized a provision for credit losses totaling $ 7.0 million for these aircraft.

Collectability of the lease payments for 10 of these 12 aircraft, which was not deemed probable at the effective date of the related lease modifications, became probable during the year ended February 29, 2024.

Accordingly, we derecognized the carrying amounts of the underlying aircraft and lease payments recorded by us as deposit liabilities and recognized net investments in leases.

A selling profit totaling $ 32.7 million for these 10 aircraft was recognized as a component of gain on sale or disposition of flight equipment for the year ended February 29, 2024.

We also sold 1 aircraft that was subject to a sales-type lease during the year ended February 29, 2024.

Aircastle Limited and Subsidiaries

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(Dollars in thousands, except per share amounts)

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:

As of February 29, 2024, future lease payments on net investment in leases were as follows:

Year Ending February 28/29, Amount

2025 $ 28,151

Thereafter 65,194

4 unchanged sentences

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:

The geographic concentration of our Net Book Value as of February 29, 2024 and February 28, 2023 was as follows:

February 29, 2024 February 28, 2023

11 unchanged sentences

_______________

(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)

(1) Of the 3 off-lease aircraft at February 29, 2024, we have 1 narrow-body freighter aircraft that we are currently marketing for lease or sale.

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:

7 unchanged sentences

$ 750,498 11 % 4 $ — — % —

United States (1)

806,162 11 % 5 — — % —

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

_______________

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

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

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

Year Ended February 28,

Year Ended February 29, Year Ended February 28,

Region 2024 2023 2022

6 unchanged sentences

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

Year Ended February 28,

February 29, Year Ended February 28,

2024 2023 2022

9 unchanged sentences

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 29, 2024, no single country comprised 10% or more of total revenue.

For the year ended February 28, 2023, total revenue attributable to the United States and India was 15 % and 12 %, respectively, and was partially driven by maintenance and other revenue and gains on sale of aircraft.

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%.

Unconsolidated Equity Method Investment

We have an equity method investment with Mizuho Leasing which has 9 aircraft with a net book value of $ 271.7 million at February 29, 2024.

February 29, February 28,

Balance at February 28, 2023 $ 40,505 $ 38,317

Earnings of unconsolidated equity method investment, net of tax 2,205 2,188

Balance at February 29, 2024 $ 42,710 $ 40,505

Aircastle Limited and Subsidiaries

1 unchanged sentence

(Dollars in thousands, except per share amounts)

Unconsolidated Equity Method Investment

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

6 unchanged sentences

Secured Debt Financings:

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

$ 883,451 38 2.36 % to 7.67 %

09/13/24 to 06/27/32 $ 761,283

Debt issuance costs ( 8,054 ) ( 8,985 )

2 unchanged sentences

5.000% Senior Notes due 2023 (2)

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

— — % N/A 500,000

4.400% Senior Notes due 2023 (2)

— — % N/A 650,000

Senior Notes due 2024 500,000 4.125 % 05/01/24 500,000

2 unchanged sentences

2.850% Senior Notes due 2028 750,000 2.85 % 01/26/28 750,000

6.500% Senior Notes due 2028 650,000 6.50 % 07/18/28 —

Senior Notes due 2029 650,000 5.95 % 02/15/29 —

Unsecured Term Loan (2)

Revolving Credit Facilities 20,000 1.63% to 6.36% 02/28/24 to 05/24/25 20,000

— — % N/A 155,000

Revolving Credit Facilities 20,000 7.48 % 05/24/25 to 02/08/28 20,000

Debt issuance costs and discounts ( 46,901 ) ( 32,546 )

4 unchanged sentences

(2) Repaid at their final stated maturity date.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(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.

During the year ended February 29, 2024, we borrowed the remaining $ 168.7 million available under our full recourse secured financing facility entered into on November 21, 2022 (the “2022 Secured Facility”).

The total amount borrowed under the 2022 Secured Facility was $ 447.7 million in relation to 17 owned aircraft.

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

Unsecured Debt Financings:

6.500 % Senior Notes due 2028

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.

On July 18, 2023, the Company issued $ 650.0 million aggregate principal amount of 6.500 % Senior Notes due 2028 (the “ 6.500 % Senior Notes due 2028”) at an issue price of 99.815 %.

The 6.500 % Senior Notes due 2028 will mature on July 18, 2028, and bear interest at a rate of 6.50 % per annum, payable semi-annually on January 18 and July 18 of each year, commencing on January 18, 2024.

Interest accrues on the 6.500 % Senior Notes due 2028 from July 18, 2023.

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

5.950 % Senior Notes due 2029

On January 22, 2024, the Company issued $ 650.0 million aggregate principal amount of 5.950 % Senior Notes due 2029 (the “Senior Notes due 2029”) at an issue price of 99.391 %.

The Senior Notes due 2029 will mature on February 15, 2029, and bear interest at a rate of 5.95 % per annum, payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 2024.

Interest accrues on the Senior Notes due 2029 from January 22, 2024.

Revolving Credit Facilities

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.

During the year ended February 29, 2024, we entered into various amendments for one of our unsecured revolving credit facilities that extended the maturity date and expanded the size of the facility from $ 245.0 million to $ 640.0 million.

Of the total commitment, $ 40.0 million was allocated to Tranche C, which matures on May 24, 2025, and $ 600.0 million was allocated to Tranche D, which matures on January 9, 2028.

The facility bears interest at Term SOFR (as defined in the amendment to the credit agreement) plus 1.950 %.

On January 31, 2024, we entered into an amendment that extended the maturity date of our $ 200.0 million revolving credit facility with Mizuho Marubeni Leasing America Corporation, a related party, to January 31, 2027.

The facility bears interest at Term SOFR (as defined in the amendment to the credit agreement) plus 2.01 %.

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

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.

On February 8, 2024, we entered into an amendment that extended the maturity date of our $ 300.0 million revolving credit facility with Mizuho Bank Ltd., a related party, to February 7, 2027.

The facility bears interest at Term SOFR (as defined in the amendment to the credit agreement) plus 1.5 %.

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

On February 8, 2024, we entered into an amendment that extended the maturity date of our $ 1.0 billion unsecured credit facility, to February 7, 2028.

The facility bears interest at Term SOFR (as defined in the amendment to the credit agreement) plus 1.25 %.

As of February 29, 2024, we had $ 20.0 million in borrowings outstanding under our revolving credit facilities and had $ 2.1 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

2025 $ 824,514

2029 1,337,374

Thereafter 343,646

2 unchanged sentences

Shareholders’ Equity

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.

Issuance of Common Shares

On July 5, 2023, the Company entered into a Subscription Agreement with its Shareholders, pursuant to which the Company has agreed to make a pro rata issuance of the Company’s common shares, $ 0.01 par value per share (the “Shares”), for an aggregate purchase price of up to $ 500.0 million.

The Shares will be issued in two tranches, with 1,516 Shares issued under the first tranche on July 18, 2023, for an aggregate purchase price of $ 200.0 million.

The issuance of the second tranche, which is subject to both the approval of the Company’s Board of Directors and Shareholders, is expected to occur during the Company’s first fiscal quarter of 2024 for an aggregate purchase price of up to $ 300.0

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The number of Shares and the subscription price per share are to be determined and agreed to by the parties at the time of issuance.

The Shares will rank pari passu in all respects with other common shares of the Company.

The Company has used and intends to continue to use the net proceeds from the issuance of Shares for general corporate purposes.

Preference Share Dividends

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

On September 15, 2023, the Company paid a semi-annual dividend in the amount of $ 10.5 million for its preference shares, which was approved by the Company’s Board of Directors on July 11, 2023.

On January 9, 2024, 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 29, 2024, and paid on March 15, 2024.

Related Party Transactions

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.

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.

We incurred fees from our Shareholders as part of intra-company service agreements totaling $ 8.3 million and $ 5.5 million during the years ended February 29, 2024 and February 28, 2023, respectively, whereby our Shareholders provide certain management and administrative services to the Company.

These fees are recorded in selling, general and administrative costs in the consolidated statement of income (loss).

In addition, the Company purchased parts under a parts management services and supply agreement with an affiliate of Marubeni totaling $ 1.5 million and $ 4.2 million during the years ended February 29, 2024 and February 28, 2023, respectively.

On February 8, 2024, the Company incurred fees of $ 2.7 million in relation to the amendment of our $ 300.0 million unsecured revolving credit facilities with Mizuho Bank Ltd., a related party - see Note 8 for additional information.

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

See Note 8 for additional information regarding amendments entered into during the year ended February 29, 2024 in respect of our unsecured revolving credit facilities with Mizuho Marubeni Leasing America Corporation and Mizuho Bank Ltd., each a related party.

See Note 9 for additional information regarding our Subscription Agreement entered into with our Shareholders during the year ended February 29, 2024.

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.

The Company received an assurance from the Bermuda Minister of Finance that it would be exempted from local income, withholding and capital gains taxes until March 2035.

In December 2023, the Government of Bermuda enacted the Bermuda Corporate Income Tax Act which imposes a 15% corporate income tax effective for tax years beginning on or after January 1, 2025, and is expected to supersede the Minister of Finance’s assurance from such date onwards.

The Company expects to be subject to Bermuda corporate income tax with respect to its fiscal year beginning March 1, 2025 and in subsequent years.

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

2 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, 2023, 2022 and 2021, were as follows:

Year Ended February 28,

The sources of income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investment for the years ended February 29, 2024, and February 28, 2023 and 2022, were as follows:

Year Ended February 29, Year Ended February 28,

2024 2023 2022

2 unchanged sentences

Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investment $ 104,376 $ 86,037 $ ( 289,251 )

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,

The components of the income tax provision (benefit) for the years ended February 29, 2024, and February 28, 2023 and 2022, consisted of the following:

Year Ended February 29, Year Ended February 28,

2024 2023 2022

10 unchanged sentences

Total $ 23,265 $ 25,466 $ ( 7,998 )

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,

Significant components of the Company’s deferred tax assets and liabilities at February 29, 2024 and February 28, 2023, consisted of the following:

Year Ended February 29, Year Ended February 28,

Deferred tax assets:

2 unchanged sentences

Other 23,426 26,041

Valuation allowance ( 53,408 ) —

Total deferred tax assets 211,409 172,479

4 unchanged sentences

Net deferred tax liabilities $ ( 100,357 ) $ ( 79,686 )

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 $ 152.1 million of federal net operating loss (“NOL”) carry forwards available at February 29, 2024 with no expiration date to offset future taxable income subject to U.S.

graduated tax rates.

The Company also had NOL carry forwards of $ 1.2 billion with no expiration date to offset future Irish taxable income.

The Bermuda Corporate Income Tax Act includes a provision which would allow the Company to carry forward losses incurred in Bermuda for the fiscal year ended February 28, 2021 and subsequent fiscal years.

The Company has NOL carryforwards of $ 356.1 million with no expiration date to offset future Bermuda taxable income.

A full valuation allowance of $ 356.1 million has been recognized against the Bermuda tax loss carry forwards based on all available information, including projections of future taxable income.

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

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

13 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, 2023, 2022 and 2021, consisted of the following:

Year Ended February 28,

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 29, 2024, and February 28, 2023 and 2022, consisted of the following:

Year Ended February 29, Year Ended February 28,

2024 2023 2022

8 unchanged sentences

Non-deductible expenses in the U.S.

19 16 ( 1,904 )

Other 1,107 ( 968 ) 71

10 unchanged sentences

(Dollars in thousands, except per share amounts)

Ireland and Bermuda Tax Law Changes

On December 18, 2023, Ireland enacted Finance (No.

2) Bill 2023 (the “Finance Bill”) which includes legislative changes for new tax measures and amendments to the Irish tax code, such as provisions to implement the Pillar Two GloBE rules, new outbound payment rules, and a dividend withholding tax, among other changes.

The Finance Bill requires a 20% withholding tax be applied to certain payments, such as interest payments, from Irish companies to recipients in no-tax and zero-tax jurisdictions, effective April 1, 2024.

The Finance Bill also requires a 25% withholding tax be applied to dividends and distributions, subject to certain exemptions, as well as introduces new interest deduction rules for a qualifying finance company.

The Company has determined that there is no current year impact of the law change and is currently evaluating the impact the Finance Bill may have in future years on its operations, in particular, with respect to existing intra-entity loans, as well as on our provision for income taxes and the consolidated financial statements.

On December 18, 2023, Bermuda enacted a 15% corporate income tax regime (the “Bermuda CIT”) that applies to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective for tax years beginning on or after January 1, 2025.

As a result of the Bermuda CIT, the Company’s exemption from Bermuda corporate income, withholding and capital gains taxes will cease on February 28, 2025.

The Company has determined that there is no current year impact of the law change and is currently evaluating the impact the Bermuda CIT may have in future years on its operations, as well as on our provision for income taxes and the consolidated financial statements.

Interest, Net

The following table shows the components of interest, net.

Year Ended February 28,

Year Ended February 29, Year Ended February 28,

2024 2023 2022

6 unchanged sentences

Commitments and Contingencies

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;

Dublin, Ireland;

and Singapore for future minimum lease payments as follows:

Rent expense, primarily for the corporate office and sales and marketing facilities, was $ 2.3 million, $ 2.1 million and $ 1.6 million for the years ended February 29, 2024, and February 28, 2023 and 2022, respectively.

As of February 29, 2024, Aircastle is obligated under non-cancelable operating leases relating principally to office facilities in the United States, Ireland and Singapore for future minimum lease payments as follows:

Year Ending February 28/29, Amount

2 unchanged sentences

At February 29, 2024, we had commitments to acquire 17 aircraft for $ 525.1 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

2024 $ 495,330

Total $ 763,711

Aircastle Limited and Subsidiaries

1 unchanged sentence

(Dollars in thousands, except per share amounts)

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

Commitments under signed purchase agreements, including $ 34.4 million of remaining progress payments, contractual price escalations and other adjustments for these aircraft at February 29, 2024, net of amounts already paid, were as follows:

Year Ending February 28/29, Amount

2025 $ 222,834

Total $ 525,053

Other assets consisted of the following as of February 29, 2024 and February 28, 2023:

February 29, February 28,

Deferred income tax asset $ 48 $ 304

4 unchanged sentences

Right-of-use asset (1)

Deferred rent receivable 35,631 55,478

16,053 16,930

Deferred rent receivable, net (2)

15,825 35,631

Investments, at fair value (3)

Other investments, net (2)(3)

Other assets 125,209 125,574

2 unchanged sentences

(1) Net of lease incentives and tenant allowances.

(2) Net of an allowance for credit losses as of February 29, 2024 – see Note 15.

(3) See Note 2.

Allowance for Credit Losses

The activity in the allowance for credit losses related to our net investment in leases, other investments, and deferred rent receivables for the years ended February 29, 2024 and February 28, 2023, were as follows:

Net Investment in Leases, net

Other Investments, net

Deferred Rent

Receivables, net

Balance at February 28, 2022

$ 1,764 $ — $ — $ 1,764

Provision for credit losses 1,507 — — 1,507

Write-offs ( 2,004 ) — — ( 2,004 )

Balance at February 28, 2023

1,267 — — 1,267

Provision for credit losses 6,726 3,209 2,146 12,081

Write-offs ( 279 ) — — ( 279 )

Balance at February 29, 2024

$ 7,714 $ 3,209 $ 2,146 $ 13,069

Aircastle Limited and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

During the year ended February 29, 2024, we increased our credit provision for net investment in leases as a result of 12 aircraft that were reclassified from operating leases to sales-type leases – see Note 5.

We also recognized a credit provision for debt securities received by us as part of an airline restructuring, as well as certain restructured receivables, during the year ended February 29, 2024.

Accounts Payable, Accrued Expenses and Other Liabilities

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

Accounts payable, accrued expenses and other liabilities consisted of the following as of February 29, 2024 and February 28, 2023:

February 29, February 28,

Accounts payable and accrued expenses $ 68,185 $ 60,225

17 unchanged sentences

Dane Silverman

/s/ Takashi Kurihara Chairman of the Board April 25, 2023

Takashi Kurihara

/s/ Takayuki Sakakida Chairman of the Board April 25, 2024

Takayuki Sakakida

/s/ Douglas A.

Hacker Director April 25, 2024

/s/ Naoshi Hirose Director April 25, 2024

Naoshi Hirose

/s/ Taro Kawabe Director April 25, 2024

2 unchanged sentences

Pollard Director April 25, 2024

/s/ Takayuki Sakakida Director April 25, 2023

Takayuki Sakakida

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