What changed in this filing

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Item 1. Business

2025-04-23 compared with 2024-04-25 · 55 added, 42 removed, 208 unchanged (32% of the section changed)

Unless the context suggests otherwise, references in this Annual Report to “Aircastle,” the “Company,” “we,” “us,” or “our” refer to Aircastle Limited and its subsidiaries.

Throughout this Annual Report, when we refer to our aircraft, we include aircraft that we have transferred into grantor trusts or similar entities for purposes of financing such assets through securitizations and term financings.

These grantor trusts or similar entities are consolidated for purposes of our financial statements.

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The weighted average age of our fleet was 9.1 years and the weighted average remaining lease term was 5.4 years.

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

The weighted average utilization rate of our fleet was 99% for the year ended February 28, 2025.

During the year ended February 28, 2025, we purchased 50 aircraft and sold 27 aircraft and other flight equipment.

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

As of February 28, 2025, we had commitments to purchase 20 aircraft with delivery through March 2027 for $771.7 million, which includes estimated amounts for pre-delivery deposits, contractual price escalations and other adjustments.

Our total revenues, net income and Adjusted EBITDA were $821.0 million, $123.6 million, and $789.9 million for the year ended February 28, 2025, respectively, and $855.4 million, $83.3 million and $759.5 million for the year ended February 29, 2024, respectively.

Cash flow provided by operating activities was $464.0 million and $370.3 million for the years ended February 28, 2025 and February 29, 2024, respectively.

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

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

The Company’s financial performance reflects the strong global passenger demand for air travel and the robust demand for our aircraft due to ongoing Original Equipment Manufacturer (“OEM”) delivery delays and supply chain constraints.

The increased demand for our aircraft through lease extension requests and strong gains on sales contributed positively to our financial results, which are also partly driven by cash settlement proceeds received in respect of our contingent and possessed insurance policies for aircraft formerly on lease to Russian airlines.

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

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

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

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

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

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

Our leadership team has an average of more than 30 years of relevant industry experience and has effectively enabled us to manage through prior downturns in the aviation industry, such as the COVID-19 pandemic, the 2008 global financial

crisis, and the September 11, 2001 terror attacks.

We believe we have sufficient liquidity to meet our contractual obligations over the next 12 months.

As of April 1, 2025, total liquidity of $2.7 billion included $2.1 billion of undrawn credit facilities, $0.5 billion of projected adjusted operating cash flows and sales through April 1, 2026 and $0.1 billion of unrestricted cash.

Our Competitive Strengths

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• Our Capital Structure Provides Investment Flexibility:

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

As of February 28, 2025, we had $2.0 billion available from unsecured revolving credit facilities, 98% of which is not scheduled to mature until 2027 and 2028, thereby limiting our near-term financial markets exposure.

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

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• Global and Scalable Business Platform:

We operate through offices in the United States, Ireland and Singapore, using a modern asset management system designed specifically for aircraft operating lessors and capable of handling a significantly larger aircraft portfolio.

We operate through offices in the United States, Ireland and Singapore, using a modern asset management system designed specifically for aircraft operating lessors and

capable of handling a significantly larger aircraft portfolio.

We believe that our current facilities, systems and personnel are capable of supporting an increase in our revenue base and asset base without a proportional increase in overhead costs.

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During the year ended February 28, 2025, we acquired 50 aircraft for $1.6 billion and sold 27 aircraft and other flight equipment for net proceeds of $565.9 million.

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

We recognized gains on the sale or disposition of aircraft totaling $77.2 million.

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

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

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

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

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

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

Approximately 98% of our leases have fixed rental rates

that are payable monthly in advance in U.S.

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

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

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

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

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

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

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

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

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

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A330-200/300 3 1 3 — 2 1 3 — — — — — — — 13

737-700/800 — 7 6 10 3 11 6 — — 2 — — 1 1 47

737-MAX8 — — — — — — 1 — 4 1 — — — — 6

737-700/800/900ER 4 4 9 5 9 7 — — 2 3 1 — — 2 46

737-MAX8/MAX9 — — — — — 1 1 4 1 — — 5 — — 12

777-300ER — — — — — — 1 — — — — — — — 1

E195 — 4 1 — — — — — — — — — — — 5

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Fiscal Year 2026-2029 Lease Expirations and Lease Placements

Taking into account lease and sale commitments, we currently have the following number of aircraft with lease expirations scheduled in fiscal years 2025-2028, representing the percentage of our Net Book Value at February 29, 2024, specified below:

Taking into account lease and sale commitments, we currently have the following number of aircraft with lease expirations scheduled between fiscal years 2026 and 2029, representing the percentage of our Net Book Value at February 28, 2025, specified below:

33 aircraft, representing 10%;

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We also take a proactive approach to monitoring the credit quality of our customers and may seek early return and redeployment of aircraft if we feel that a lessee is unlikely to perform its obligations under a lease.

We have invested significant resources in developing and implementing what we consider to be state-of-the-art lease management information systems and processes to enable efficient management of aircraft in our portfolio.

We have invested significant resources in developing and implementing modern, efficient lease management information systems and processes to enable effective management of aircraft in our portfolio.

Portfolio Risk Management

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

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

We are paid market-based fees for these services, which are recorded in other revenue in our consolidated statements of income.

We believe we have a world class servicing platform and may also pursue opportunities to capitalize on these capabilities such as providing aircraft management services for third party aircraft owners.

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

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

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

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

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

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

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

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

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

We require our lessees to carry general third-party legal liability insurance, all-risk aircraft hull insurance (both with respect to the aircraft and with respect to each engine when not installed on our aircraft) and war-risk hull and legal liability insurance.

We are named as an additional insured on liability insurance policies carried by our lessees, and we or one of our lenders would typically be designated as a loss payee in the event of a total loss of the aircraft.

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

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

We require our lessees to carry general third-party legal liability insurance, all-risk aircraft hull and spares insurance (both with respect to the aircraft and with respect to each engine or part when not installed on our aircraft);

war-risk hull and spares insurance;

and excess war liability insurance.

We are named as an additional insured on liability insurance policies carried by our lessees, and we or one of our lenders will be designated as a contract party/loss payee in the event of a total loss of the aircraft.

We maintain contingent and possessed hull, war, excess war and legal and liability insurance coverage with respect to our aircraft which provides coverage when our equipment is not on lease or where a lessee party fails to indemnify us;

this is intended to provide coverage for certain risks, including where a lessee’s insurance fails, but excluding coverage for other risks such as the risk of insolvency of the primary insurer or reinsurer.

Not all losses are covered by insurance and in some cases, the insurers also have maximum limits (aggregate limits) on amounts payable.

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

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

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

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

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

However, there can be no assurance that we have adequately

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

Environmental, Social and Governance (“ESG”)

Recent geopolitical events, such as the ongoing Russia-Ukraine conflict, have led insurers to reassess their coverage and significantly increase premiums.

In addition, we have claims arising from the Russian invasion of Ukraine which remain unsettled and in respect of which we have had to resort to litigation that may take years to fully settle, if at all.

We believe that the insurance coverage currently carried by our lessees and by Aircastle is consistent with industry

practice and provides adequate protection against the accident-related and other covered risks involved in the conduct of our business.

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

Furthermore, war risk insurance may be automatically cancelled as a result of certain events outside our control, including in the event of hostilities between the United Kingdom, the United States, France, Russia and China.

Corporate Responsibility

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

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

Board oversight of environmental, social and governance (“ESG”) matters is conducted by the Company’s Risk and Governance Committee.

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

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For the year ended February 28, 2025, 57% of our incremental net book value acquired were new technology aircraft with higher efficiency and lower emissions.

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

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

In addition, the Company is an investment partner in the United Airlines Ventures’ Sustainable Flight Fund whose objective is scaling up the availability of SAF.

SAF provides the most readily available means for airline operators to reduce their carbon emissions while using existing technology.

Many governments have mandated SAF blends for commercial aircraft operators.

The high cost and low availability of SAF present challenges for airlines seeking to meet these mandates.

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

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We believe that our commitment to our employees is critical to our continued success, leading to high employee satisfaction and low employee turnover.

To facilitate talent attraction and retention, we strive to have a diverse, inclusive and safe workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits and health and wellness programs, and by programs that build connections between our employees and their communities.

To facilitate talent attraction and retention, we strive to have an inclusive and safe workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits and health and wellness programs, and by programs that build connections between our employees and their communities.

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

Our Culture & Governance

Our Company was formed in 2004 on the values of integrity, common decency and respect for others.

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

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

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

Our C.A.S.T.L.E.

Values guide our people and our operations:

Community – we unify and collaborate to create a better work environment;

Accountability – we are reliable, honest and act with integrity;

Sustainability – we embrace sustainable initiatives which have local and global impacts;

Transparency – we build trust through open, honest and respectful communication;

Leadership – we coach, mentor and empower our people to expand their potential;

and Equality – we foster inclusivity and respect for all.

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

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

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

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

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

Government Regulation

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

What changed 10-K

Item 1. Business