Aircastle LTD 10-K

ITEM 9A. CONTROLS AND PROCEDURES Management’s Evaluation of Disclosure Controls and Procedures The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as appropriate, to allow timely decisions regarding required disclosure. An evaluation was performed under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the Company’s disclosure controls and procedures as of February 29, 2024. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of February 29, 2024. Management’s Annual Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 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 43 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. The assessment was based on criteria established in the Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. Based on this assessment, management concluded that our internal control over financial reporting was effective as of February 29, 2024. Changes in Internal Control over Financial Reporting There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended February 29, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 44 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Pursuant to Item 401(b) of Regulation S-K, the requisite information pertaining to our executive officers is reported immediately following Item 4 of Part I of this Annual Report. 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 “ESG”. Information about our Directors. The members of the Board of Directors of the Company (the “Board”) are Douglas A. Hacker, Naoshi Hirose, Michael J. Inglese, Taro Kawabe, Keiji Okuno, Charles W. Pollard and Takayuki Sakakida. Name Age Douglas A. Hacker 68 Naoshi Hirose 61 Michael J. Inglese 63 Taro Kawabe 56 Keiji Okuno 60 Charles W. Pollard 66 Takayuki Sakakida (Chairman) 52 Douglas A. 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. Mr. Hacker is currently an independent business executive and formerly served as Executive Vice President, Strategy for UAL Corporation, an airline holding company, and has served in such position from December 2002 to May 2006. Prior to that, Mr. Hacker served with UAL Corporation as President, UAL Loyalty Services from September 2001 to December 2002, and as Executive Vice President and Chief Financial Officer from July 1999 to September 2001. Mr. Hacker served as a director of Travelport from 2016 until May 2019. Mr. 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. Mr. 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. Mr. 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. Michael J. Inglese was appointed to our Board on March 27, 2020 following the consummation of the Merger and served on the prior Board of Aircastle Limited from June 2017 to the consummation of the Merger. He became our Chief Executive Officer in June 2017, having served as Aircastle’s Acting Chief Executive Officer from January 2017. He was previously our Chief Financial Officer from April 2007 to January 2017. Prior to joining the Company, Mr. Inglese served as Chief Financial Officer of PanAmSat Holding Corporation from June 2000 until the closing of PanAmSat’s sale to Intelsat in July 2006. Mr. Inglese joined PanAmSat in May 1998 as Vice President, Finance after serving as Chief Financial Officer for DIRECTV Japan, Inc. He is a Chartered Financial Analyst who holds a BS in Mechanical Engineering from Rutgers University College of Engineering and his MBA from Rutgers Graduate School of Business Management. 45 Taro Kawabe was appointed to our Board on March 27, 2020 following the consummation of the Merger. Mr. Kawabe is currently an Executive Officer, Chief Operating Officer of the Finance, Leasing and Real Estate Business Division of Marubeni. Previously, he was Senior Operating Officer of the Finance and Leasing Business Division of Marubeni from April 2019 to March 2020. Prior to that, Mr. Kawabe was the General Manager of the Leasing Business Department of Marubeni from April 2016 to March 2019. Mr. Kawabe joined Marubeni in April 1990. Mr. Kawabe received his degree from Waseda University in 1990. Keiji Okuno was appointed to our Board as of September 26, 2022. Before joining Aircastle, Mr. Okuno was Senior Vice President of PNB-Mizuho Leasing & Finance Corporation and is also a Director of PNB-Mizuho Equipment & Rental Corporation. From January 2019 to November 2019, Mr. Okuno was Deputy General Manager of Mizuho Leasing Ltd. Prior to joining Mizuho Leasing Co. Ltd., Mr. Okuno had over 15 years at ORIX Group in various roles including Vice President, Global Business Group, Executive Vice President, and Managing Director. Mr. Okuno received a B.A. from Dokkyo University and a diploma from New York University. Mr. Okuno is a CPA. Charles W. Pollard was appointed to our Board on March 27, 2020 following the consummation of the Merger and served on the prior Board of Aircastle Limited from July 6, 2010 to the consummation of the Merger. Mr. Pollard joined Omni Air International, Inc., a passenger charter carrier, in 1997, where he served variously as Managing Director, President and CEO, and Vice Chairman until 2009. Previously, he spent 10 years in senior management positions, including President and CEO, at World Airways, Inc. Prior to joining World Airways, Inc., he practiced corporate law at Skadden, Arps, Slate, Meagher & Flom. He currently serves on the board of directors of Allegiant Travel Company. Takayuki Sakakida was appointed to our Board on March 27, 2020 upon the consummation of the Merger and served on the prior Board of Aircastle Limited from June 9, 2017 to the consummation of the Merger, and was nominated by Marubeni. In December 2020, Mr. Sakakida was appointed as Senior Advisor to the CEO of the Company. In April 2019, Mr. Sakakida was appointed as General Manager, Finance & Leasing Business Dept. – II, Marubeni. In April 2017, Mr. Sakakida was appointed as Vice President and General Manager, Aerospace and Ship Unit, Marubeni America Corporation, which is a subsidiary of Marubeni, a general trading company, engaged as an intermediary, importer/exporter, facilitator or broker in various types of trade between and among business enterprises and countries. In April 2016, Mr. Sakakida was appointed as Assistant General Manager, Aerospace and Defense Systems Department, Marubeni. From April 2015 to April 2016, he served as General Manager, Business Administration Section, Aerospace and Defense Systems Department of Marubeni. From April 2011 to 2015, he seconded to MD Aviation Capital Pte Ltd (Singapore) as Managing Director. Mr. Sakakida has over 18 years of experience in the aviation industry and brings to the Board extensive experience in operations, strategic planning and financial matters relevant to the aviation industry. He maintains high-level contacts with major manufacturers in the aviation industry as well as Asian airlines which may in the future be customers of the Company. Information about our Executive Officers . The names of the executive officers of the Company and their ages, titles and biographies may be found in: Information about our Executive Officers. 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 “ESG” and which are available in print to any shareholder of the Company upon request. Audit Committee of the Board of Directors . 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. Hacker is qualified as an audit committee financial expert, under the SEC rules. 46 ITEM 11. EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION Compensation Discussion and Analysis Our 2023 fiscal year began on March 1, 2023 and ended on February 29, 2024. All references herein to a year shall mean our fiscal year unless otherwise noted. 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 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: Named Executive Officer Title Michael J. Inglese Chief Executive Officer Roy Chandran Chief Financial Officer Douglas C. Winter Chief Commercial Officer Christopher L. Beers Chief Legal Officer & Secretary 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 We believe executive compensation should be tied to Company performance weighted in favor of long-term performance, and our compensation program for 2023 rewarded executives and employees in two areas: • Annual Corporate Performance : Achievement of internal corporate financial metrics focused on: (i) profit before tax; (ii) cash flow; (iii) growth through new investments; and (iv) discrete objectives (as described below); and • Individual Performance : Achievement of individual performance goals set at the beginning of each year. 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 CEO 85% 15% Other NEOs 80% 20% 2023 Corporate Financial Metrics . We based corporate performance targets on the Company’s business plan and established a performance range for each metric. Results below the low end of each range would yield a minimum contribution of 50% to the Company’s incentive compensation pool for that metric. Conversely, performance above target would result in an enhanced contribution to the Company’s incentive compensation pool, up to a 150% contribution at the upper end of the performance range for each metric. For 2023, we established the following targets, performance ranges and relative weightings for the corporate financial metrics: Metric 2023 Target (in millions) Performance Range Weighted Score Profit before tax (1) $ 59.0 50%-150% 40% Cash flow (2) $ 373.0 50%-150% 20% Net investments (3) $ 1,335.0 50%-150% 20% Discrete objectives (4) $ — 50%-150% 20% 47 _______________ (1) Profit before tax is Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments, plus earnings of unconsolidated equity method investments. (2) Cash flow for a period is Cash Flow from Operations plus distributions from our joint venture investment, if any. (3) New investments measures the total annual amount invested in aviation assets. (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. 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. We set individual bonus targets based on an employee’s function, role and seniority within the organization, among other factors. 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 incentive compensation in the form of a cash bonus, and a long term incentive plan award. Base Salary. Base salaries provide fixed compensation and allow us to attract and retain talented management. 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 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 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. Each fiscal year within the three-year performance period constitutes a performance year. Our LTI awards are granted with a target award amount, whereby one-third of the target award relates to each performance year. The annual award earned in respect of a given performance year is adjusted based on the Book Equity IRR achieved for the given performance year. The Book Equity IRR for each performance year is evaluated against a performance range in order to determine the target annual award earned. The LTI awards yield a minimum payout of 50% and a maximum payout of 150% of the target annual award. 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. 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. 48 Annual Performance Range for LTI Awards Book Equity IRR 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 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 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% For Mr. 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. In addition, our NEOs are also eligible to participate in our employee benefit plans, including medical, dental, life insurance and 401(k) plans. These plans are available to all employees and do not discriminate in favor of our NEOs. Recoupment Policy . In January 2016, we adopted a clawback policy covering certain incentive compensation awarded to our executive officers. The policy requires reimbursement of incentive payments awarded to an executive officer based upon financial results that were subsequently the subject of a restatement due to the Company’s material noncompliance with financial reporting requirements. The amount of reimbursement would be to the extent that a lower payment would have been awarded to the executive based on the restated financial results. The policy applies to all incentive compensation awarded or paid to an executive officer in the three years prior to the restatement, even if the executive officer did not engage in conduct which contributed to the restatement. In addition, we may seek to recover any portion of incentive compensation when we determine that an executive officer engaged in a certain misconduct. Retirement. For our executive officers, we have designed a qualifying retirement feature that will allow the LTI awards to continue to vest following retirement, subject to satisfaction of the Book Equity IRR performance objectives. For purposes of the LTI awards, a qualifying retirement means: (a) a retirement date no earlier than March 27, 2024; (b) the executive provides at least twelve months' notice; (c) the executive is at least 55 years old on the date of retirement 49 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. Summary . 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 Performance versus Corporate Financial Metrics . 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 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. Metric 2023 Target (in millions) Weighting 2023 Performance (in millions) Performance Range Performance Weighted Score Profit before tax $ 59.0 40% $ 106.6 50% - 150% 150% 60 % Cash flow $ 373.0 20% $ 370.3 50% - 150% 97% 19 % New investments $ 1,355.0 20% $ 1,344.9 50% - 150% 99% 20 % Discrete objectives — 20% — 50% - 150% 100% 20 % Total 119 % 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 Michael J. Inglese $884,288 cash Roy Chandran $675,280 cash Douglas C. Winter $675,280 cash Christopher L. Beers $675,280 cash Paul O’Callaghan $493,366 cash How We Make Decisions Risk . The Compensation Committee reviews the risks and rewards associated with the Company’s compensation programs. We believe that our compensation programs encourage prudent business judgment and appropriate risk-taking, with the overall goal of building sustainable and profitable growth. We believe none of our compensation programs create risks that are reasonably likely to have a material adverse impact on the Company. Role of Executive Officers. 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. The Compensation Committee shared these discussions with the full Board on a regular basis. 50 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 “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. The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and based on that review and discussion, has recommended to the Board that it be included in this Form 10-K. Respectfully submitted, The Compensation Committee Charles W. Pollard, Chair Takayuki Sakakida Michael J. Inglese 51 Summary Compensation Table for 2023 The table below sets forth information regarding fiscal years 2023, 2022 and 2021 compensation for each of our NEOs. Awards Name and Principal Position Fiscal Year Salary Bonus (1) Non-Equity Incentive Plan (2) All Other Compensation (3) Total Michael J. Inglese 2023 $ 750,000 $ 939,660 $ 2,298,667 $ 15,540 $ 4,003,867 Chief Executive Officer 2022 750,000 1,036,185 — 14,607 1,800,792 2021 750,000 678,060 — 13,340 1,441,400 Roy Chandran 2023 $ 575,000 $ 639,026 $ 551,680 $ 15,540 $ 1,781,246 Chief Financial Officer 2022 525,000 568,407 — 14,607 1,108,014 2021 475,000 300,240 — 13,440 788,680 Douglas C. Winter 2023 $ 575,000 $ 704,838 $ 919,467 $ 15,540 $ 2,214,845 Chief Commercial Officer 2022 575,000 692,133 — 14,607 1,281,740 2021 575,000 375,300 — 13,508 963,808 Christopher L. Beers 2023 $ 575,000 $ 704,838 $ 919,467 $ 15,540 $ 2,214,845 Chief Legal Officer & 2022 575,000 692,133 — 14,607 1,281,740 Secretary 2021 575,000 375,300 — 13,987 964,287 Paul O’Callaghan (4) 2023 $ 450,025 $ 372,838 $ 96,160 $ 54,003 $ 973,026 Chief Operations Officer _______________ (1) Bonus compensation consists of: (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 in which the LTI award was originally granted. 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. 52 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 ($) Michael J. 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 Douglas C. Winter May 1, 2023 February 28, 2026 $ 1,000,000 $ 760,168 $ 1,093,502 $ 1,426,836 Christopher L. 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 _______________ (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 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 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. Each employment agreement provides that the NEO is employed “at-will” and may be terminated at any time and for whatever reason by either us or him. 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.” 53 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The following table and summary set forth potential amounts payable to our NEOs upon termination of employment or a change in control, as described below. The table below reflects amounts payable to our NEOs assuming termination of employment on February 29, 2024: Name and Principal Position Voluntary resignation by executive Termination by us for cause Termination by us without cause Termination by us without cause or by executive for good reason following change in control (1) Termination by executive for good reason Normal retirement Death or disability Michael J. Inglese Cash Severance $ — $ — $ 1,500,000 $ 3,000,000 $ 1,500,000 $ — $ — Pro-rata Bonus (assumes February 29 termination) — — 750,000 750,000 750,000 — 750,000 COBRA Reimbursement — — 74,772 74,772 74,772 — 74,772 Vacation 80,769 80,769 80,769 80,769 80,769 80,769 80,769 Remainder of Restricted Cash and LTI Awards (1) — — 8,234,753 8,234,753 8,234,753 — 8,234,753 Roy Chandran Cash Severance $ — $ — $ 1,150,000 $ 2,300,000 $ 1,150,000 $ — $ — Pro-rata Bonus (assumes February 29 termination) — — 575,000 575,000 575,000 — 575,000 COBRA Reimbursement — — 74,772 74,772 74,772 — 74,772 Vacation 61,923 61,923 61,923 61,923 61,923 61,923 61,923 Remainder of Restricted Cash and LTI Awards (1) — — 2,680,328 2,680,328 2,680,328 — 2,680,328 Douglas C. Winter Cash Severance $ — $ — $ 1,150,000 $ 2,300,000 $ 1,150,000 $ — $ — Pro-rata Bonus (assumes February 29 termination) — — 575,000 575,000 575,000 — 575,000 COBRA Reimbursement — — 58,018 58,018 58,018 — 58,018 Vacation 61,923 61,923 61,923 61,923 61,923 61,923 61,923 Remainder of Restricted Cash and LTI Awards (1) — — 3,306,903 3,306,903 3,306,903 — 3,306,903 Christopher L. Beers Cash Severance $ — $ — $ 1,150,000 $ 2,300,000 $ 1,150,000 $ — $ — Pro-rata Bonus (assumes February 29 termination) — — 575,000 575,000 575,000 — 575,000 COBRA Reimbursement — — 74,772 74,772 74,772 — 74,772 Vacation 61,923 61,923 61,923 61,923 61,923 61,923 61,923 Remainder of Restricted Cash and LTI Awards (1) — — 3,306,903 3,306,903 3,306,903 — 3,306,903 Paul O’Callaghan Cash Severance $ — $ — $ 876,305 $ 1,752,610 $ 876,305 $ — $ — Pro-rata Bonus (assumes February 29 termination) — — 426,918 426,918 426,918 — 426,918 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 Remainder of Restricted Cash and LTI Awards (1) — — 598,865 598,865 598,865 — 598,865 _______________ (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 . 54 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: • if the employment of such named executive officer is terminated without “cause” or with “good reason” (as defined in such employment agreement), and if he signs a general release of claims and complies with the covenants described below, then he will be entitled to receive: (i) an amount equal to the sum of the base salary and target annual cash bonus for the year of termination, payable over a one-year period (two times such amount and payable in a lump sum if the termination occurs within 120 days prior to or within two years following a “change in control” as defined in such employment agreement); (ii) a pro-rata annual bonus for the year 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; and • 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. Director Compensation Table for 2023 The table below describes our compensation of Directors for the fiscal year ended February 29, 2024: Name Fees Earned or Paid in Cash ($) Total ($) Douglas A. Hacker $ 170,000 $ 170,000 Charles W. Pollard 170,000 170,000 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Security Ownership of Certain Beneficial Owners and Management . The table below sets forth information as of April 18, 2024, as to the beneficial ownership of our Common Shares. Name and Address of Beneficial Owner Common Shares Held Percent of Class Marubeni Corporation (1) 4-2 Ohtemachi 1-chome Chiyoda-ku, Tokyo, 100-8088 Japan 7,782 50 % MM Air Limited (2) c/o Compass Administration Services Ltd. Crawford House 50 Cedar Avenue Hamilton, HM11, Bermuda 7,782 50 % _______________ (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. During the year ended February 29, 2024, we issued 758 shares to MM Air Limited. 55 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Certain Relationships and Related Party Transactions The following is a summary of material provisions of certain transactions we entered into with our executive officers, Directors or 5% or greater shareholders. We believe the terms and conditions set forth in such agreements were reasonable and customary for transactions of this type. 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 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 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. Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons Our Board has adopted a Policy and Procedures with Respect to Related Person Transactions, our Related Person Policy. Pursuant to the terms of the Related Person Policy, the Audit Committee must review and approve in advance any transaction involving an affiliate or related party (as defined under Accounting Standards Codification Topic 850), in which the amount involved exceeds $5.0 million, other than those that are pre-approved pursuant to pre-approval guidelines or rules that may be established by the Audit Committee to cover specific categories of transactions, including the guidelines described below. 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 $120.0 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; Marubeni and Mizuho Leasing or their affiliates; any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the Director, executive officer, nominee or Marubeni and Mizuho Leasing or their affiliates, and any person (other than a tenant or employee) sharing the household of such Director, executive officer, nominee or Marubeni and Mizuho Leasing or their affiliates. Director Independence Although our Common Shares are no longer listed on the NYSE or any other national securities exchange and we are therefore not required to have a majority of independent directors, the Board considers the current Directors Messrs. Hacker and Pollard to be independent and that Directors Messrs. 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. In addition, the Board considered transactions described above under “Item 13. Certain Relationships and Related Transactions, and Director Independence—Certain Relationships and Related Party Transactions” in making the independence determinations. 56 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Audit Fees, Audit Related Fees, Tax Fees and All Other Fees . 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, 2024 2023 Audit fees (1) $ 2,315,000 $ 2,220,000 Tax fees (2) 844,800 754,000 All other fees (3) 5,200 5,200 _______________ (1) Represents fees for the audit of the Company’s consolidated financial statements and internal control over financial reporting, the reviews of interim financial statements included in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, certain Current Reports on Form 8-K, audits of IBJ Air joint venture, consultations concerning financial accounting and reporting standards, statutory audits and services rendered relating to the Company’s registration statements. (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 The Audit Committee has policies and procedures that require the pre-approval by the Audit Committee or one of its members of all services performed by the Company’s independent registered public accounting firm and related fee arrangements. In the early part of each year, the Audit Committee approves the proposed services, including the nature, type and scope of services contemplated, and the related fees, to be rendered by these firms during the year. In addition, pre-approval by the Audit Committee or one of its members is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved by the Audit Committee pursuant to the Sarbanes-Oxley Act. In accordance with this policy, the Audit Committee pre-approved all services to be performed by the Company’s independent registered accounting firm. 57 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (A) 1. Consolidated Financial Statements. The following is a list of the “Consolidated Financial Statements” of Aircastle Limited and its subsidiaries included in this Annual Report on Form 10-K, which are filed herewith pursuant to Item 8: Report of Independent Registered Public Accounting Firm. 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. 2. Financial Statement Schedules. There are no Financial Statement Schedules filed as part of this Annual Report, since the required information is included in the Consolidated Financial Statements, including the notes thereto, or the circumstances requiring inclusion of such schedules are not present. 3. Exhibits. The exhibits filed herewith are listed on the Exhibit Index filed as part of this Annual Report on Form 10-K. 58 (B) EXHIBIT INDEX Exhibit No. Description of Exhibit 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). 3.2 Amended and Restated Bye-laws of Aircastle Limited (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on March 27, 2020). 3.3 Certificate of Designations, dated June 8, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 8, 2021). 4.1 Specimen Share Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (Amendment No. 2) (No. 333-134669) filed on July 25, 2006). 4.2 Amended and Restated Shareholder Agreement, dated as of February 18, 2015, by and between Aircastle Limited and Marubeni Corporation (incorporated by reference to Exhibit 4.8 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2015). 4.3 Amendment Agreement No. 1 to the Amended and Restated Shareholder Agreement, dated as of September 23, 2016, by and between Aircastle Limited and Marubeni Corporation (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 26, 2016). 4.4 Indenture, dated as of December 5, 2013, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee, Citigroup Global Markets, Inc., Goldman, Sachs & Co., J.P. Morgan Securities LLC and RBC Capital Markets, LLC (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 6, 2013). 4.5 Fourth Supplemental Indenture, dated as of March 24, 2016, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 24, 2016). 4.6 Fifth Supplemental Indenture, dated as of March 20, 2017, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 20, 2017). 4.7 Sixth Supplemental Indenture, dated as of September 25, 2018, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 25, 2018). 4.8 Seventh Supplemental Indenture, dated as of June 13, 2019, between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 13, 2019). 4.9 Indenture, dated as of August 11, 2020, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on August 11, 2020). 4.10 Indenture, dated as of January 26, 2021, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 26, 2021). 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). 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). 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). E - 1 Exhibit No. 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). # 10.2 Form of Amendment to Executive Employment Agreement (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed on February 13, 2020). # 10.3 Form of Amended and Restated Indemnification Agreement with directors and officers (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2011). 10.4 Registration Rights Agreement, dated as of April 4, 2012, by and among Aircastle Limited and Goldman, Sachs & Co., Citigroup Global Markets Inc. and J.P. Morgan Securities 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 April 5, 2012). 10.5 Share Purchase Agreement, dated as of August 7, 2012, by and among Aircastle Limited and the Fortress Shareholders named therein (incorporated by reference to Exhibit 1.2 to the Company’s Current Report on Form 8-K filed on August 13, 2012). 10.6 Registration Rights Agreement, dated as of November 30, 2012, by and among Aircastle Limited and J.P. 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). 10.7 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). # 10.8 Purchase Agreement COM0270-15, dated as of June 12, 2015, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on August 6, 2015). Ø 10.9 Amendment No. 1 to Purchase Agreement COM0270-15, dated as of June 22, 2016, by and between Aircastle Holding Corporation and Embraer S. A. (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K filed on February 14, 2017). Ø 10.10 Amendment No. 2 to Purchase Agreement COM0270-15, dated as of November 11, 2016, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K filed on February 14, 2017). Ø . 10.11 Amendment No. 3 to Purchase Agreement COM0270-15, dated as of January 13, 2017, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed on February 14, 2017). Ø 10.12 Amendment No. 4 to Purchase Agreement COM0270-15, dated as of August 11, 2017, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on November 2, 2017). Ø 10.13 Amendment No. 5 to Purchase Agreement COM0270-15, dated as of April 19, 2018, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2018). Ø 10.14 Amendment No. 6 to Purchase Agreement COM0270-15, dated as of June 29, 2018, 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 November 1, 2018). Ø 10.15 Amendment No. 7 to Purchase Agreement COM0270-15, dated as of February 5, 2019, 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 May 2, 2019). ØØ 10.16 Amendment No. 8 to Purchase Agreement COM0270-15, dated as of October 24, 2019, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K filed on February 13, 2020). ØØ E - 2 Exhibit No. Description of Exhibit 10.17 Amendment No. 9 to Purchase Agreement COM0270-15, dated as of August 28, 2020, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on October 13, 2021). ØØ 10.18 Amendment No. 10 to Purchase Agreement COM0270-15, dated as of September 18, 2020, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on October 13, 2021). ØØ 10.19 Amendment No. 11 to Purchase Agreement COM0270-15, dated as of December 4, 2020, by and between Aircastle Holding Corporation and Yaborã Indústria Aeronáutics S.A. (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on October 13, 2021). ØØ 10.20 Amendment No. 12 to Purchase Agreement COM0270-15, dated as of June 2, 2021, by and between Aircastle Holding Corporation and Yaborã Indústria Aeronáutics S.A. (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed on October 13, 2021). ØØ 10.21 Amendment No. 13 to Purchase Agreement COM0270-15, dated as of September 2, 2021, by and between Aircastle Holding Corporation, Embraer S.A. and Yaborã Indústria Aeronáutics S.A. (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K filed on April 28, 2022). ØØ 10.22 Amendment No. 14 to Purchase Agreement COM0270-15, dated as of September 17, 2021, by and between Aircastle Holding Corporation, Embraer S.A. and Yaborã Indústria Aeronáutics S.A. (incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K filed on April 28, 2022). ØØ 10.23 Amendment No. 15 to Purchase Agreement COM0270-15, dated as of December 3, 2021, by and between Aircastle Holding Corporation, Embraer S.A. and Yaborã Indústria Aeronáutics S.A. (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K filed on April 28, 2022). ØØ 10.24 Amendment No. 16 to Purchase Agreement COM0270-15, dated as of February 9, 2022, by and between Aircastle Holding Corporation, Embraer S.A. and Yaborã Indústria Aeronáutics S.A. (incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K filed on April 28, 2022). ØØ 10.25 Amendment No. 17 to Purchase Agreement COM0270-15, dated as of August 24, 2022 (Amendment No. 17), by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on October 12, 2022). ** ØØ 10.26 Amendment No. 18 to Purchase Agreement COM0270-15, dated as of December 8, 2022 (Amendment No. 18), by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on January 12, 2023). ** ØØ 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). ** ØØ 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. (incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K filed on February 14, 2017). Ø 10.29 Amendment No. 2 to Letter Agreement COM0271-15 in Purchase Agreement COM0270-15, dated as of August 11, 2017, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed on November 2, 2017). Ø 10.30 Amendment No. 3 to Letter Agreement COM0271-15 in Purchase Agreement COM0270-15, dated as of February 23, 2018, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2018). Ø 10.31 Amendment No. 4 to Letter Agreement COM271-15 in Purchase Agreement COM0270-15, dated as of April 19, 2018, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2018). Ø 10.32 Amendment No. 5 to Letter Agreement COM0270-15, dated as of October 24, 2019, by and between Aircastle Holding Corporation and Embraer S.A. (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K filed on February 13, 2020). ØØ E - 3 Exhibit No. Description of Exhibit 10.33 Amendment No. 6 to Letter Agreement COM0270-15, dated as of December 4, 2020, by and between Aircastle Holding Corporation and Yaborã Indústria Aeronáutics S.A. (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed on October 13, 2021). ØØ 10.34 Amendment No. 7 to Letter Agreement COM0270-15, dated as of December 3, 2021, by and between Aircastle Holding Corporation, Embraer S.A. and Yaborã Indústria Aeronáutics S.A. (incorporated by reference to Exhibit 10.43 to the Company’s Annual Report on Form 10-K filed on April 28, 2022). ØØ 10.35 Notice and Consent COM0439-19, dated as of September 18, 2020, between Aircastle Holding Corporation, Embraer S.A. and Yaborã Indústria Aeronáutics S.A. (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on October 13, 2021). ^ ØØ 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. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 7, 2019). 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). 10.38 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. * 31.1 Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002. * 31.2 Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002. * 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of 2002. * 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Act of 2002. * 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 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* 104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. _____________ # Management contract or compensatory plan or arrangement. * Filed herewith. ** Certain attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Ø Portions of this exhibit have been omitted pursuant to a request for confidential treatment. ^ Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules to the SEC upon request. ØØ Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. ITEM 16. FORM 10-K SUMMARY None. E - 4 Index to Financial Statements Page No. Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID 42 ) F - 2 Consolidated Balance Sheets as of February 29, 2024 and February 28, 2023 F - 5 Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended February 29, 2024, and February 28, 2023 and 2022 F - 6 Consolidated Statements of Cash Flows for the years ended February 29, 2024, and February 28, 2023 and 2022 F - 7 Consolidated Statements of Changes in Shareholders’ Equity for the years ended February 29, 2024, and February 28, 2023 and 2022 F - 8 Notes to Consolidated Financial Statements F - 9 F - 1 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Aircastle Limited and Subsidiaries Opinion on the Financial Statements 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. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F - 2 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. 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 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, 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 assessed the historical accuracy of certain assumptions by performing a look back analysis. F - 3 Accounting for Income Tax 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. federal, state and local income taxes, as well as foreign income tax in many of the jurisdictions it leases aircraft. As more fully described in Note 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 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. 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 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. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2004. Stamford, CT April 25, 2024 F - 4 Aircastle Limited and Subsidiaries Consolidated Balance Sheets (Dollars in thousands, except share data) February 29, February 28, 2024 2023 ASSETS Cash and cash equivalents $ 129,977 $ 231,861 Accounts receivable 12,518 12,855 Flight equipment held for lease, net 6,940,502 6,567,606 Net investment in leases, net 282,439 67,694 Unconsolidated equity method investment 42,710 40,505 Other assets 271,807 346,330 Total assets $ 7,679,953 $ 7,266,851 LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES 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 Lease rentals received in advance 52,654 66,816 Security deposits 69,544 61,734 Maintenance payments 505,897 465,618 Total liabilities 5,546,179 5,395,393 Commitments and Contingencies 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 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 Retained earnings (accumulated deficit) 55,000 ( 7,316 ) Total shareholders’ equity 2,133,774 1,871,458 Total liabilities and shareholders’ equity $ 7,679,953 $ 7,266,851 The accompanying notes are an integral part of these consolidated financial statements. F - 5 Aircastle Limited and Subsidiaries Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Dollars in thousands, except per share amounts) Year Ended February 29, Year Ended February 28, 2024 2023 2022 Revenues: Lease rental revenue $ 603,571 $ 586,508 $ 595,236 Direct financing and sales-type lease revenue 16,503 9,030 10,733 Amortization of lease premiums, discounts and incentives ( 20,420 ) ( 20,574 ) ( 20,190 ) Maintenance revenue 132,179 138,099 152,030 Total lease revenue 731,833 713,063 737,809 Gain on sale or disposition of flight equipment 121,646 70,860 26,001 Other revenue 1,937 12,110 5,977 Total revenues 855,416 796,033 769,787 Operating expenses: Depreciation 348,229 332,663 337,528 Interest, net 229,050 204,606 214,352 Selling, general and administrative 82,127 76,857 66,338 Provision for credit losses 12,081 1,507 930 Impairment of flight equipment 55,240 85,623 452,250 Maintenance and other costs 29,884 22,196 31,166 Total operating expenses 756,611 723,452 1,102,564 Other income (expense): Loss on extinguishment of debt — ( 636 ) ( 14,156 ) Other 5,571 14,092 57,682 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 ) Income tax provision (benefit) 23,265 25,466 ( 7,998 ) Earnings of unconsolidated equity method investment, net of tax 2,205 2,188 3,044 Net income (loss) $ 83,316 $ 62,759 $ ( 278,209 ) Preference share dividends ( 21,000 ) ( 21,000 ) ( 16,159 ) Net income (loss) available to common shareholders $ 62,316 $ 41,759 $ ( 294,368 ) Total comprehensive income (loss) available to common shareholders $ 62,316 $ 41,759 $ ( 294,368 ) The accompanying notes are an integral part of these consolidated financial statements. F - 6 Aircastle Limited and Subsidiaries Consolidated Statements of Cash Flows (Dollars in thousands) Year Ended February 29, Year Ended February 28, 2024 2023 2022 Cash flows from operating activities: Net income (loss) $ 83,316 $ 62,759 $ ( 278,209 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 348,229 332,663 337,528 Amortization of deferred financing costs 17,090 14,338 16,267 Amortization of lease premiums, discounts and incentives 20,420 20,574 20,190 Deferred income taxes 20,053 13,690 ( 9,386 ) 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 sale or disposition of flight equipment ( 121,646 ) ( 70,860 ) ( 26,001 ) Loss on extinguishment of debt — 636 14,156 Impairment of aircraft 55,240 85,623 452,250 Provision for credit losses 12,081 1,507 930 Other ( 2,512 ) ( 2,211 ) ( 3,043 ) Changes on certain assets and liabilities: Accounts receivable ( 443 ) 17,338 16,948 Other assets ( 9,317 ) ( 12,510 ) ( 29,963 ) Accounts payable, accrued expenses and other liabilities ( 15,907 ) 4,278 ( 5,716 ) Lease rentals received in advance 14,466 29,601 ( 23,414 ) Net cash and restricted cash provided by operating activities 370,254 437,737 372,865 Cash flows from investing activities: Acquisition and improvement of flight equipment ( 1,240,183 ) ( 994,040 ) ( 795,426 ) 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 ) Distributions from unconsolidated equity method investment in excess of earnings — — 104 Other ( 6,408 ) 1,319 ( 1,694 ) Net cash and restricted cash used in investing activities ( 879,115 ) ( 537,874 ) ( 586,500 ) Cash flows from financing activities: Proceeds from issuance of common shares 200,000 — — Net proceeds from preference share issuance — — 392,997 Proceeds from secured and unsecured debt financings 2,029,750 493,848 20,000 Repayments of secured and unsecured debt financings ( 1,917,744 ) ( 420,372 ) ( 646,943 ) Deferred financing costs ( 25,035 ) ( 13,242 ) ( 5,339 ) Debt extinguishment costs — ( 310 ) ( 13,372 ) Security deposits and maintenance payments received 159,792 142,699 88,891 Security deposits and maintenance payments returned ( 18,786 ) ( 20,307 ) ( 26,857 ) Dividends paid ( 21,000 ) ( 21,000 ) ( 5,658 ) Net cash and restricted cash provided by (used in) financing activities 406,977 161,316 ( 196,281 ) 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 Cash and restricted cash at end of year $ 129,977 $ 231,861 $ 170,682 Aircastle Limited and Subsidiaries Consolidated Statements of Cash Flows (Continued) (Dollars in thousands) Year Ended February 29, Year Ended February 28, 2024 2023 2022 Reconciliation to Consolidated Balance Sheets: Cash and cash equivalents $ 129,977 $ 231,861 $ 167,891 Restricted cash and cash equivalents — — 2,791 Unrestricted and restricted cash and cash equivalents $ 129,977 $ 231,861 $ 170,682 Supplemental disclosures of cash flow information: Cash paid during the year for interest $ 240,715 $ 193,283 $ 200,922 Cash paid during the year for income taxes $ 5,135 $ 9,511 $ 240 Supplemental disclosures of non-cash investing activities: Advance lease rentals, security deposits, maintenance payments, other liabilities and other assets settled in sale of flight equipment $ 55,046 $ 50,758 $ 12,391 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, net to Net investment in leases, net and Other assets $ 220,648 $ 1,695 $ 57,489 Acquisition of investments, at fair value $ — $ 10,819 $ — The accompanying notes are an integral part of these consolidated financial statements. F - 7 Aircastle Limited and Subsidiaries Consolidated Statements of Changes in Shareholders’ Equity (Dollars in thousands, except share amounts) Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Total Shareholders’ Equity Common Shares Preference Shares Shares Amount Shares Amount Balance, February 28, 2021 14,048 $ — — $ — $ 1,485,777 $ 245,293 $ 1,731,070 Issuance of preference shares — — 400 — 392,997 — 392,997 Preference share dividends — — — — — ( 16,159 ) ( 16,159 ) Net loss — — — — — ( 278,209 ) ( 278,209 ) Balance, February 28, 2022 14,048 $ — 400 $ — $ 1,878,774 $ ( 49,075 ) $ 1,829,699 Preference share dividends — — — — — ( 21,000 ) ( 21,000 ) Net income — — — — — 62,759 62,759 Balance, February 28, 2023 14,048 $ — 400 $ — $ 1,878,774 $ ( 7,316 ) $ 1,871,458 Issuance of common shares 1,516 — — — 200,000 — 200,000 Preference share dividends — — — — — ( 21,000 ) ( 21,000 ) Net income — — — — — 83,316 83,316 Balance, February 29, 2024 15,564 $ — 400 $ — $ 2,078,774 $ 55,000 $ 2,133,774 The accompanying notes are an integral part of these consolidated financial statements. F - 8 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Note 1. Summary of Significant Accounting Policies Organization 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” 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. Basis of Presentation and Principles of Consolidation The consolidated financial statements presented are prepared in accordance with U.S. generally accepted accounting principles (“U.S. 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 our results of operations based on one operating segment: leasing, financing, selling and managing commercial flight equipment. Our Chief Executive Officer is the chief operating decision maker. The Company’s management has reviewed and evaluated all events or transactions for potential recognition and/or disclosure subsequent to the balance sheet date of February 29, 2024, through the date on which the consolidated financial statements included in this Annual Report were issued. Risk and Uncertainties In the normal course of business, Aircastle encounters several significant types of economic risk, including credit, market, aviation industry and capital market risks. Credit risk is the risk of a lessee’s inability or unwillingness to make contractually required payments and to fulfill its other contractual obligations to Aircastle. Market risk reflects the change in the value of financings due to changes in interest rate spreads or other market factors, including the value of collateral underlying financings. Aviation industry risk is the risk of a downturn in the commercial aviation industry which could adversely impact a lessee’s ability to make payments, increase the risk of early lease terminations and depress lease rates and the value of the Company’s aircraft. Capital market risk is the risk that the Company is unable to obtain capital at reasonable rates to fund the growth of its business or to refinance existing debt facilities. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While Aircastle believes the estimates and related assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates. Cash and Cash Equivalents Aircastle considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Virtually all our cash and cash equivalents are held or managed by five major financial institutions. F - 9 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Flight Equipment Held for Lease and Depreciation Flight equipment held for lease is stated at cost and depreciated using the straight-line method, typically over a 25 -year life from the date of manufacture for passenger aircraft and over a 30 to 35 -year life for freighter aircraft, depending on whether the aircraft is a converted or purpose-built freighter, to estimated residual values. Estimated residual values are generally determined to be 15 % of the manufacturer’s estimated realized price for passenger aircraft when new and 5 % to 10 % for freighter aircraft when new. Management may make exceptions to this policy on a case-by-case basis when, in its judgment, the residual value calculated pursuant to this policy does not appear to reflect current expectations of value. Examples of situations where exceptions may arise include but are not limited to: • flight equipment where estimates of the manufacturer’s realized sales prices are not relevant (e.g., freighter conversions); • flight equipment where estimates of the manufacturer’s realized sales prices are not readily available; and • flight equipment which may have a shorter useful life due to obsolescence. Major improvements and modifications incurred in connection with the acquisition of aircraft that are required to get the aircraft ready for initial service are capitalized and depreciated over the remaining life of the flight equipment. For planned major maintenance activities for aircraft off-lease, the Company capitalizes the actual maintenance costs by applying the deferral method. Under the deferral method, we capitalize the actual cost of major maintenance events, which are typically depreciated on a straight-line basis over the period until the next maintenance event is required. In accounting for flight equipment held for lease, we make estimates about the expected useful lives, the fair value of attached leases, acquired maintenance assets or liabilities and the estimated residual values. 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 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. The fair value of the lease may include a maintenance premium and a lease premium or discount. When we acquire an aircraft with a lease, determining the fair value of attached leases requires us to make assumptions regarding the current fair values of leases for specific aircraft. We estimate a range of current lease rates of like aircraft in order to determine if the attached lease is within a fair value range. If a lease is below or above the range of current lease rates, we present value the estimated amount below or above the fair value range over the remaining term of the lease. The resulting lease discount or premium is amortized into lease rental income over the remaining term of the lease. Impairment of Flight Equipment We perform an annual recoverability assessment of all aircraft in our fleet, on an aircraft-by-aircraft basis. 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 F - 10 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) aircraft does not meet the recoverability test, the aircraft will be adjusted to fair value, resulting in an impairment charge. See Note 2. 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 industry, as well as information received from third party industry sources. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in projected lease rental and maintenance payments, residual values, economic conditions, technology, airline demand for a particular aircraft type and other factors, such as the location of the aircraft and accessibility to records and technical documentation. 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. The net investment in direct financing and sales-type leases consists of the lease receivable, estimated unguaranteed residual value of the leased flight equipment at lease-end and, for direct financing leases, deferred selling profit. For sales-type leases, we recognize the difference between the net book value of the aircraft and the net investment in the lease as a gain or loss on sale of flight equipment. Selling profit on a direct financing lease is deferred and amortized over the lease term, and a selling loss is recognized at lease commencement. Interest income on our net investment in leases is recognized as Direct financing and sales-type leases revenue over the lease term in a manner that produces a constant rate of return on the net investment in the lease. The net investment in leases is recorded net of an allowance for credit losses. The allowance for credit losses is recorded upon the initial recognition of the net investment in the lease based on the Company’s estimate of expected credit losses over the lease term. The allowance reflects the Company’s estimate of lessee default probabilities and loss given default percentages. When determining the credit loss allowance, we consider relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the net investment in the lease. The allowance also considers potential losses due to non-credit risk related to unguaranteed residual values. A provision for credit losses is recorded as a component of operating expenses to adjust the allowance for changes to management’s estimate of expected credit losses. Unconsolidated Equity Method Investment Aircastle accounts for its interest in an unconsolidated joint venture using the equity method as we do not control the joint venture entity. Under the equity method, the investment is initially recorded at cost and the carrying amount is affected by its share of the unconsolidated joint venture’s undistributed earnings and losses and distributions of dividends and capital. The investment may also reflect an equity loss in the event that circumstances indicate an other-than-temporary impairment. Security Deposits Most of our operating leases require the lessee to pay Aircastle a security deposit or provide a letter of credit. Security deposits represent cash received from the lessee that is held on deposit until lease expiration or termination. If a lease is terminated, we recognize security deposits in excess of outstanding lease payments as other revenue. Maintenance Payments Typically, under an operating lease, the lessee is responsible for performing all maintenance but they may also be required to make payments to us for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft. These maintenance payments are based on hours or cycles of utilization or on calendar time, depending upon the component, and are required to be made monthly in arrears or at the end of the lease term. Our determination of whether F - 11 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) 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. If a lease requires end of lease term maintenance payments, typically the lessee would be required to pay us for its utilization of the aircraft during the lease; however, in some cases, we may owe a net payment to the lessee in the event heavy maintenance is performed and paid for by the lessee during the lease term and the aircraft is returned to us in better condition than at lease inception. We record monthly maintenance payments by the lessee as accrued maintenance payments liabilities in recognition of our contractual commitment to refund such receipts. In these contracts, we typically do not recognize such maintenance payments as maintenance revenue during the lease. Reimbursements to the lessee upon the receipt of evidence of qualifying maintenance work are charged against the existing accrued maintenance payments liability. We currently defer maintenance revenue recognition of most monthly maintenance payments until we are able to determine the amount, if any, by which the monthly maintenance payments received from a lessee exceed costs to be incurred by that lessee in performing heavy maintenance, which generally occurs at or near the end of the lease. End of lease term maintenance payments made to us are recognized as maintenance revenue, and end of lease term maintenance payments we make to a lessee are recorded as contra maintenance revenue. Lease Incentives and Amortization Many of our leases contain provisions that may require us to pay a portion of the lessee’s costs for heavy maintenance, overhaul or replacement of certain high-value components. We account for these expected payments as lease incentives, which are amortized as a reduction of revenue over the life of the lease. We estimate the amount of our portion for such costs, typically for the first major maintenance event for the airframe, engines, landing gear and auxiliary power units, expected to be paid to the lessee based on assumed utilization of the related aircraft by the lessee, the anticipated amount of the maintenance event cost and the estimated amounts the lessee is responsible to pay. The assumptions supporting these estimates are reevaluated annually. This estimated lease incentive is not recognized as a lease incentive liability at the inception of the lease. We recognize the lease incentive as a reduction of lease revenue on a straight-line basis over the life of the lease, with the offset being recorded as a lease incentive liability which is included in maintenance payments on the balance sheet. The payment to the lessee for the lease incentive liability is first recorded against the lease incentive liability, and any excess above the lease incentive liability is recorded as a prepaid lease incentive asset, which is included in other assets on the balance sheet and continues to amortize over the remaining life of the lease. Lease acquisition costs related to reconfiguration of the aircraft cabin, other lessee specific modifications and other direct costs are capitalized and amortized into revenue over the initial life of the lease, assuming no lease renewals, and are included in other assets. Income Taxes Aircastle uses an asset and liability based approach in accounting for income taxes. Deferred income tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement and tax basis of existing assets and liabilities using enacted rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount estimated by us to be realizable. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. We did not have any unrecognized tax benefits. F - 12 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) 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. See Note 2 . Lease Revenue Recognition 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. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the initial lease, assuming no renewals. In certain instances, we may provide lease concessions to customers, generally in the form of lease rental deferrals. While these deferral arrangements affect the timing of lease rental payments, the total amount of lease rental payments required over the lease term is generally the same as that which was required under the original lease agreement. We account for the deferrals as if no modifications to the lease agreements were made and record the deferred rentals as a receivable within other assets. Should we determine that the collectability of rental payments is no longer probable, including any deferral thereof, we will recognize lease rental revenue using a cash basis of accounting rather than an accrual method. In the period we conclude that collection of lease payments is no longer probable, we recognize any difference between revenue amounts recognized to date under the accrual method and payments that have been collected from the lessee, including security deposit amounts held, as a current period adjustment to lease rental revenue. Comprehensive Income (Loss) Comprehensive income (loss) consists of net income and other gains and losses, net of income taxes, if any, affecting shareholders’ equity that, under U.S. GAAP, are excluded from net income (loss). Deferred Financing Costs 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 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. F - 13 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. Note 2. Fair Value Measurements Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows: • Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. • Level 2: 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. • Level 3: 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. The valuation techniques that may be used to measure fair value are as follows: • The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. • The income approach uses valuation techniques to convert future amounts to a single present amount based on current market expectation about those future amounts. • The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). 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. Fair Value as of February 29, 2024 Fair Value Measurements at February 29, 2024 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Valuation Technique Assets : 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 investments, at fair value $ 10,160 $ 1,687 $ — $ 8,473 F - 14 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Fair Value as of February 28, 2023 Fair Value Measurements at February 28, 2023 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Valuation Technique Assets : Cash and cash equivalents $ 231,861 $ 231,861 $ — $ — Market 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). 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 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. GAAP requires the application of fair value, including events or changes in circumstances that indicate the carrying amounts of these assets may not be recoverable. Assets subject to these measurements include our aircraft and investment in unconsolidated joint venture. We record aircraft at fair value when we determine the carrying value may not be recoverable. Fair value measurements for aircraft in impairment tests are based on the average of the market approach (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. We account for our investment in unconsolidated joint venture under the equity method of accounting. Our investment is recorded at cost and is adjusted by undistributed earnings and losses and the distributions of dividends and capital. This investment is reviewed for impairment whenever events or changes in circumstances indicate the fair value is less than its carrying value and the decline is other-than-temporary. Financial Instruments Our financial instruments, other than cash, consist principally of cash equivalents, 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). F - 15 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 Assets Carrying Amount of Asset Fair Value of Asset Carrying Amount of Asset Fair Value of Asset 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 of Liability Carrying Amount of Liability Fair Value of Liability Credit Facilities $ 20,000 $ 20,000 $ 20,000 $ 20,000 Unsecured Term Loan — — 155,000 151,449 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 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. 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. 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. F - 16 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) 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 industry, as well as information received from third party industry sources. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in projected lease rental and maintenance payments, residual values, economic conditions, technology, airline demand for a particular aircraft type and other factors, such as the location of the aircraft and accessibility to records and technical documentation. 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. Note 3. 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 29, 2024 and February 28, 2023: February 29, February 28, 2024 2023 Beginning balance $ 6,567,606 $ 6,313,950 Additions 1,264,369 984,172 Depreciation ( 347,297 ) ( 331,387 ) Disposals and transfers to net investment in leases and held for sale ( 492,818 ) ( 316,892 ) Impairments ( 51,358 ) ( 82,237 ) Ending balance $ 6,940,502 $ 6,567,606 Accumulated depreciation $ 2,328,354 $ 2,289,264 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. F - 17 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Note 4. Lease Rental Revenues Minimum future lease rentals contracted to be received under our existing operating leases of flight equipment at February 29, 2024 were as follows: Year Ended February 28/29, Amount (1) 2025 $ 613,668 2026 523,495 2027 459,657 2028 387,353 2029 313,853 Thereafter 792,459 Total $ 3,090,485 _______________ (1) Reflects impact of lessee lease rental deferrals. 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. Note 5. Net Investment in Leases, Net 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, 2024 2023 Lease receivable $ 142,983 $ 31,674 Unguaranteed residual value of flight equipment 147,170 37,287 Net investment in leases 290,153 68,961 Allowance for credit losses ( 7,714 ) ( 1,267 ) 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. F - 18 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) 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 2026 17,262 2027 26,160 2028 27,163 2029 26,716 Thereafter 65,194 Total lease payments to be received 190,646 Present value of lease payments - lease receivable ( 142,983 ) Difference between undiscounted lease payments and lease receivable $ 47,663 Note 6. Concentration of Risk The classification of regions in the tables below is based on our customers’ principal place of business. The geographic concentration of our Net Book Value as of February 29, 2024 and February 28, 2023 was as follows: February 29, 2024 February 28, 2023 Region Number of Aircraft Net Book Value % Number of Aircraft Net Book Value % Asia and Pacific 63 27 % 62 28 % Europe 90 30 % 88 30 % Middle East and Africa 9 5 % 8 3 % North America 46 23 % 38 20 % South America 32 14 % 29 14 % Off-lease 3 (1) 1 % 14 5 % Total 243 100 % 239 100 % _______________ (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: February 29, 2024 February 28, 2023 Region Net Book Value Net Book Value % Number of Lessees Net Book Value Net Book Value % Number of Lessees India (1) $ 750,498 11 % 4 $ — — % — United States (1) 806,162 11 % 5 — — % — _______________ (1) As of February 28, 2023, India and the United States represented less than 10% of our Net Book Value. F - 19 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 29, Year Ended February 28, Region 2024 2023 2022 Asia and Pacific 29 % 33 % 29 % Europe 30 % 29 % 36 % Middle East and Africa 4 % 5 % 5 % North America 23 % 19 % 15 % South America 14 % 14 % 15 % Total 100 % 100 % 100 % 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 29, Year Ended February 28, 2024 2023 2022 Number of Lessees Combined % of Lease Rental Revenue Number of Lessees Combined % of Lease Rental Revenue Number of Lessees Combined % of Lease Rental Revenue Largest lessees by lease rental revenue (1) 3 21 % 3 21 % 6 38 % _______________ (1) The number of lessees and combined percentage for the year ended February 28, 2022, includes 1 of our Russian lessees, which accounted for 5 % of total lease rental revenue. Lease rental revenue for this customer includes the recognition of lease rentals received in advance of $ 17.2 million into revenue; excluding this amount, this customer accounted for 2 % of total lease rental revenue. For the year ended February 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. Note 7. 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, 2024 2023 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 F - 20 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) Note 8. Borrowings from Secured and Unsecured Debt Financings The outstanding amounts of our secured and unsecured term debt financings were as follows: At February 29, 2024 At February 28, 2023 Debt Obligation Outstanding Borrowings Number of Aircraft Interest Rate Final Stated Maturity Outstanding Borrowings Secured Debt Financings: Term Financings (1) $ 883,451 38 2.36 % to 7.67 % 09/13/24 to 06/27/32 $ 761,283 Less: Debt issuance costs ( 8,054 ) ( 8,985 ) Total secured debt financings, net of debt issuance costs and discounts 875,397 752,298 Unsecured Debt Financings: 5.000% Senior Notes due 2023 (2) — — % 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 Senior Notes due 2025 650,000 5.25 % 08/11/25 650,000 Senior Notes due 2026 650,000 4.25 % 06/15/26 650,000 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) — — % N/A 155,000 Revolving Credit Facilities 20,000 7.48 % 05/24/25 to 02/08/28 20,000 Less: Debt issuance costs and discounts ( 46,901 ) ( 32,546 ) Total unsecured debt financings, net of debt issuance costs and discounts 3,823,099 3,842,454 Total secured and unsecured debt financings, net of debt issuance costs and discounts $ 4,698,496 $ 4,594,752 _______________ (1) The borrowings under these financings at February 29, 2024 have a weighted-average fixed rate of interest of 5.45 %. (2) Repaid at their final stated maturity date. Secured Debt Financings: Term Financings 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 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. F - 21 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 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 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. Maturities of the secured and unsecured debt financings over the next five years and thereafter are as follows: Year Ending February 28/29, Amount 2025 $ 824,514 2026 779,194 2027 683,380 2028 785,343 2029 1,337,374 Thereafter 343,646 Total $ 4,753,451 As of February 29, 2024, we were in compliance with all applicable covenants in our financings. Note 9. Shareholders’ Equity 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 F - 22 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) million. 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. Note 10. Related Party Transactions 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. Note 11. Income Taxes 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. F - 23 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (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 29, 2024, and February 28, 2023 and 2022, were as follows: Year Ended February 29, Year Ended February 28, 2024 2023 2022 U.S. operations $ 25,029 $ 21,172 $ 20,803 Non-U.S. operations 79,347 64,865 ( 310,054 ) 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) 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 Current: United States: Federal $ 2,484 $ 5,671 $ 247 State 2,249 1,667 161 Non-U.S. ( 1,521 ) 4,438 980 Current income tax provision 3,212 11,776 1,388 Deferred: United States: Federal 5,415 ( 728 ) 5,206 State 1,120 ( 341 ) 1,593 Non-U.S. 13,518 14,759 ( 16,185 ) Deferred income tax (benefit) 20,053 13,690 ( 9,386 ) Total $ 23,265 $ 25,466 $ ( 7,998 ) 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, 2024 2023 Deferred tax assets: Net operating loss carry forwards $ 239,306 $ 145,299 Interest expense carry forwards 2,085 1,139 Other 23,426 26,041 Valuation allowance ( 53,408 ) — Total deferred tax assets 211,409 172,479 Deferred tax liabilities: Accelerated depreciation ( 299,957 ) ( 233,340 ) Other ( 11,809 ) ( 18,825 ) Total deferred tax liabilities ( 311,766 ) ( 252,165 ) Net deferred tax liabilities $ ( 100,357 ) $ ( 79,686 ) F - 24 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (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. subsidiaries and accordingly, no deferred income taxes have been provided for the distributions of such earnings. As of February 29, 2024, we have elected to permanently reinvest our accumulated undistributed U.S. earnings of $ 44.6 million. Accordingly, no U.S. withholding taxes have been provided. Withholding tax of $ 2.2 million would be due if such earnings were remitted. Our aircraft-owning subsidiaries generally earn income from sources outside the United States and typically are not subject to U.S. federal, state or local income taxes. The aircraft owning subsidiaries resident in Ireland and the U.S. are subject to tax in those respective jurisdictions. We have a U.S.-based subsidiary which provides management services to our subsidiaries and is subject to U.S. federal, state and local income taxes. We also have Ireland and Singapore based subsidiaries which provide management services to our non-U.S. 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 29, 2024, and February 28, 2023 and 2022, consisted of the following: Year Ended February 29, Year Ended February 28, 2024 2023 2022 Notional U.S. federal income tax expense at the statutory rate: $ 21,919 $ 18,068 $ ( 60,742 ) U.S. state and local income tax, net 1,098 928 1,237 Non-U.S. operations: Bermuda ( 6,659 ) ( 12,039 ) 27,751 Ireland 5,709 19,279 23,510 Singapore ( 2 ) 27 174 Other low tax jurisdictions 64 152 ( 15 ) Non-deductible expenses in the U.S. 29 19 16 Other 1,107 ( 968 ) 71 Provision (benefit) for income taxes $ 23,265 $ 25,466 $ ( 7,998 ) The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. We did not have any unrecognized tax benefits. We conduct business globally and, as a result, the Company and its subsidiaries or branches are subject to foreign, U.S. federal and various state and local income taxes, as well as withholding taxes. In the normal course of business the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Ireland and the United States. Our policy is that we will recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We did not accrue interest or penalties associated with any unrecognized tax benefits, nor was any interest expense or penalty recognized during the year. F - 25 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (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. Note 12. Interest, Net The following table shows the components of interest, net. Year Ended February 29, Year Ended February 28, 2024 2023 2022 Interest on borrowings and other liabilities $ 228,539 $ 196,502 $ 200,220 Amortization of deferred financing fees and debt discount 17,090 14,338 16,267 Interest expense 245,629 210,840 216,487 Less: Interest income ( 13,710 ) ( 3,954 ) ( 1,209 ) Less: Capitalized interest ( 2,869 ) ( 2,280 ) ( 926 ) Interest, net $ 229,050 $ 204,606 $ 214,352 Note 13. Commitments and Contingencies 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 2025 $ 2,938 2026 2,783 2027 2,721 2028 2,752 2029 1,959 Thereafter 15,617 Total $ 28,770 At February 29, 2024, we had commitments to acquire 17 aircraft for $ 525.1 million. F - 26 Aircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) 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 2026 204,343 2027 97,876 2028 — 2029 — Thereafter — Total $ 525,053 Note 14. Other Assets Other assets consisted of the following as of February 29, 2024 and February 28, 2023: February 29, February 28, 2024 2023 Deferred income tax asset $ 48 $ 304 Lease incentives and premiums, net of accumulated amortization of $ 90,408 and $ 77,722 , respectively 37,459 54,208 Flight equipment held for sale 19,190 59,370 Aircraft purchase deposits and Embraer E-2 progress payments 42,784 43,494 Right-of-use asset (1) 16,053 16,930 Deferred rent receivable, net (2) 15,825 35,631 Investments, at fair value (3) 10,160 5,029 Other investments, net (2)(3) 5,079 5,790 Other assets 125,209 125,574 Total other assets $ 271,807 $ 346,330 ______________ (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. Note 15. 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 Total 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 F - 27 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. Note 16. Accounts Payable, Accrued Expenses and Other Liabilities Accounts payable, accrued expenses and other liabilities consisted of the following as of February 29, 2024 and February 28, 2023: February 29, February 28, 2024 2023 Accounts payable and accrued expenses $ 68,185 $ 60,225 Deferred income tax liability 100,405 79,990 Accrued interest payable 27,507 42,752 Lease liability 19,193 19,951 Lease discounts, net of accumulated amortization of $ 43,519 and $ 45,586 , respectively 4,298 3,555 Total accounts payable, accrued expenses and other liabilities $ 219,588 $ 206,473 F - 28 SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, Aircastle Limited has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: April 25, 2024 Aircastle Limited By: /s/ Michael Inglese Michael Inglese Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Aircastle Limited and in the capacities and on the date indicated. SIGNATURE TITLE DATE /s/ Michael Inglese Chief Executive Officer and Director April 25, 2024 Michael Inglese /s/ Roy Chandran Chief Financial Officer April 25, 2024 Roy Chandran /s/ Dane Silverman Chief Accounting Officer April 25, 2024 Dane Silverman /s/ Takayuki Sakakida Chairman of the Board April 25, 2024 Takayuki Sakakida /s/ Douglas A. Hacker Director April 25, 2024 Douglas A. Hacker /s/ Naoshi Hirose Director April 25, 2024 Naoshi Hirose /s/ Taro Kawabe Director April 25, 2024 Taro Kawabe /s/ Keiji Okuno Director April 25, 2024 Keiji Okuno /s/ Charles W. Pollard Director April 25, 2024 Charles W. Pollard S - 1