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Item 7. Management’s Discussion and Analysis

2025-04-23 compared with 2024-04-25 · 98 added, 108 removed, 350 unchanged (37% of the section changed)

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As of February 28, 2025, we owned and managed on behalf of our joint venture 273 aircraft leased to 77 lessees located in 47 countries.

The Net Book Value of our flight equipment was $7.2 billion as February 29, 2024, up 9% from $6.6 billion as of February 28, 2023.

The Net Book Value of our fleet was $7.9 billion as of February 28, 2025, up 9% from $7.2 billion as of February 29, 2024.

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 2023.

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

Our 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.

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 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 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.

Acquisitions and Sales

During the year ended February 28, 2025, we acquired 50 aircraft for $1.6 billion.

As of February 29, 2024, we had commitments to acquire 17 aircraft for $525.1 million, with delivery between March 2024 and June 2026, which include estimated amounts for pre-delivery deposits, contractual price escalations and other adjustments.

As of April 19, 2024, we have acquired 5 additional aircraft and have commitments to acquire 12 aircraft for $393.3 million.

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

As of April 16, 2025, we have acquired 9 additional aircraft and have commitments to acquire 26 aircraft for $1.4 billion.

During the year ended February 28, 2025, we 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 “Russian Aircraft Insurance Settlements” below.

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

As of April 16, 2025, we have sold 12 additional aircraft.

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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.

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 three months ending 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.

During the fourth quarter of fiscal year 2024, the Company received cash proceeds of $49.5 million in settlement of the Company’s claims against certain of the insurers under its C&P Policies.

The settlement proceeds were recorded as a component of other income for the year ended February 28, 2025.

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

We remain in settlement discussions with some of the remaining insurers under our C&P Policies.

However, 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.

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

Since our inception in late 2004, we raised $2.3 billion in equity capital from private and public investors, including $200.0 million received during the year ended February 29, 2024, in respect of the Subscription Agreement entered into with our Shareholders – see Note 9 in the Notes to Consolidated Financial Statements.

We also obtained $21.4 billion in debt capital from a variety of sources including export credit agency-backed debt, commercial bank debt, the aircraft securitization markets and the unsecured bond market.

Since our inception in late 2004, we raised $2.6 billion in equity capital from private and public investors, including $500.0 million received in aggregate during the years ended February 28, 2025 and February 29, 2024, in respect of the Subscription Agreement entered into with our Shareholders – see Note 9 in the Notes to Consolidated Financial Statements.

We also obtained $23.1 billion in debt capital from a variety of sources, including the unsecured bond market, commercial banks, export credit agency-backed debt, the aircraft securitization markets and JOLCO financings.

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

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See “Liquidity and Capital Resources” below.

AIRCASTLE AIRCRAFT INFORMATION (dollars in millions)

AIRCASTLE AIRCRAFT INFORMATION

The following table sets forth certain information with respect to our owned aircraft and aircraft managed by us on behalf of our joint venture as of February 28, 2025 and February 29, 2024:

Owned Aircraft As of

February 29, 2024

February 28, 2023

As of February 28/29

Owned Aircraft (Dollars in millions)

Net Book Value of Flight Equipment $ 7,902 $ 7,223

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Managed Aircraft on behalf of Joint Venture

Flight Equipment $ 272 $ 285

Net Book Value of Flight Equipment $ 244 $ 272

Number of Aircraft 8 9

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_______________

(1) Includes Airbus A320-200neo and A321-200neo, Boeing 737-MAX8, and Embraer E2 aircraft.

(2) Of the 3 off-lease aircraft at February 29, 2024, we have executed leases for 2 narrow-body converted freighter aircraft and 1 narrow-body converted freighter aircraft that we are currently marketing for lease or sale.

(1) Includes Airbus A320-200neo and A321-200neo, Boeing 737-MAX8 and 737-MAX9, and Embraer E2 aircraft.

(2) We currently have 1 narrow-body freighter aircraft that we are marketing for lease or sale.

The top ten customers for our owned aircraft at February 28, 2025 were as follows:

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IndiGo 11.1% India 18

LATAM 6.3% Chile 13

KLM 5.3% Netherlands 13

easyJet 4.6% United Kingdom 22

American Airlines

4.2% United States 13

4.0% Indonesia 10

3.7% Mexico 7

Aerolineas Argentinas 3.6% Argentina 7

United 4.0% United States 7

Frontier Airlines

3.8% United States 6

3.2% Hungary 5

LATAM 3.8% Chile 10

3.4% Indonesia 10

3.3% Mexico 7

Aerolineas Argentinas 3.0% Argentina 7

Total top ten customers 46.5% 113

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Results of Operations for the year ended February 28, 2025 as compared to the year ended February 29, 2024:

Year Ended February 29, Year Ended February 28,

Year Ended February 28/29,

(Dollars in thousands)

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Other income (expense):

Loss on extinguishment of debt — (636)

Gain on extinguishment of debt 285 —

Other 56,247 5,571

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Net income $ 123,613 $ 83,316

Total revenues increased $59.4 million, attributable to:

Total revenues decreased $34.4 million, attributable to:

Lease rental revenue increased $48.8 million, primarily attributable to an increase of $114.8 million related to 80 aircraft purchased since March 1, 2023.

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• a $53.5 million decrease related to the sale of 47 aircraft since March 1, 2023;

• a $13.3 million decrease, as the year ended February 28, 2023 included a cumulative catch-up adjustment to lease revenues for certain customers which the collectability assessment of lease payments changed to probable during the respective period – see Note 1 in the Notes to Consolidated Financial Statements regarding our lease revenue recognition policy;

• a $12.5 million decrease due to lease extensions, amendments, transitions, and other changes.

• a $12.4 million decrease due to lease terminations.

Direct financing and sales-type lease revenue increased $7.5 million, primarily related to the reclassification of 12 aircraft to sales-type leases, partially offset by the sale of 9 aircraft since March 1, 2022.

Direct financing and sales-type lease revenue increased $4.8 million, primarily related to the change in classification of 12 aircraft to sales-type leases, partially offset by the sale of 2 aircraft since March 1, 2023.

Amortization of lease premiums, discounts and incentives:

Year Ended February 29, Year Ended February 28,

Year Ended February 28/29,

(Dollars in thousands)

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Amortization of lease premiums, discounts and incentives $ (21,682) $ (20,420)

The amortization of lease discounts increased $4.8 million due to the acquisition of aircraft.

The amortization of lease incentives increased $6.1 million due to the transition of aircraft to new lessees.

Maintenance revenue.

For the year ended February 29, 2024, we recorded $132.2 million of maintenance revenue primarily related to maintenance payments received by us and recognized into income as a result of scheduled aircraft lease expirations and engine redeliveries.

For the year ended February 28, 2023, we recorded $138.1 million of maintenance revenue, comprised primarily of $46.4 million related to scheduled lease expirations and $49.9 million related to the early lease terminations of 5 narrow-body, 1 wide-body, and 1 freighter aircraft.

We also received $41.8 million of maintenance security letters of credit for our former Russian lessees during the year ended February 28, 2023, which was recognized in maintenance revenue.

For the year ended February 28, 2025, and February 29, 2024, we recorded $90.5 million and $132.2 million of maintenance revenue, respectively, primarily related to maintenance payments received by us and recognized into income as a result of scheduled aircraft lease expirations and engine redeliveries.

The decrease in maintenance revenue of $41.7 million is primarily attributable to fewer aircraft returns during the year ended February 28, 2025.

Gain on sale or disposition of flight equipment.

During the year ended February 29, 2024, we sold 28 aircraft and 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, and gains of $32.7 million related to the reclassification of 10 aircraft from operating leases to sales-type leases.

During the year ended February 28, 2025, we sold 27 aircraft for gains totaling $77.2 million.

Other revenue.

During the year ended February 28, 2023, we received $7.1 million of payments on general security letters of credit for our former Russian lessees.

We also recognized other revenue totaling $4.4 million for security deposits retained by us in connection with aircraft lease terminations and amendments.

During the year ended February 29, 2024, we collected the remaining general security letters of credit totaling $0.6 million.

During the year ended February 29, 2024, we sold 28 aircraft and 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, and gains of $32.7 million related to the change in classification of 10 aircraft from operating leases to sales-type leases.

Operating Expenses:

Total operating expenses increased $33.2 million attributable to:

Total operating expenses decreased $21.6 million attributable to:

Depreciation expense increased $7.4 million, primarily attributable to an increase of $42.1 million related to 80 aircraft purchased since March 1, 2023.

This was partially offset by a decrease of $35.0 million related to 49 aircraft sold since March 1, 2023.

Interest, net increased $24.4 million due to a higher average cost of borrowing and higher weighted average debt outstanding of $83.0 million.

Selling, general and administrative expense s increased $5.3 million primarily due to an increase in personnel costs and ongoing Russian litigation expenses.

Provision for credit losses increased $10.6 million, primarily related to 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 15 in the Notes to Consolidated Financial Statements.

Interest, net increased $18.9 million due primarily to a higher average cost of borrowing.

Selling, general and administrative expenses increased $4.3 million primarily due to an increase in personnel costs and ongoing Russian litigation expenses.

Provision for credit losses.

During the year ended February 28, 2025, we recorded a credit provision of $8.7 million for certain restructured receivables as part of an airline restructuring.

During the year ended February 29, 2024, we recorded a credit provision of $12.1 million primarily related to investment in leases as a result of 12 aircraft that whose classification was changed from operating leases to sales-type leases.

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.

See Note 15 in the Notes to Consolidated Financial Statements.

Impairment of aircraft.

During the year ended February 28, 2025, the Company recorded impairment charges totaling $19.4 million, including $11.0 million of transactional impairments related to a scheduled lease expiration and an aircraft lease amendment.

The Company recognized $24.0 million of maintenance revenue for these aircraft during the year ended February 28, 2025.

During the year ended February 29, 2024, the Company recorded impairment charges totaling $55.2 million , of which $39.5 million were transactional impairments related to scheduled aircraft lease expirations and engine redeliveries.

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

We also recorded impairments of $9.5 million resulting from the completion of our annual fleet review during the third quarter of fiscal 2023.

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 it.

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.

Maintenance and other costs increased $7.7 million, primarily attributable to higher aircraft insurance premiums and higher costs due to the timing of transition of aircraft to new lessees .

Higher transition costs are largely related to aircraft for which the previous lease was terminated early, and the aircraft was repossessed from the prior operator.

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

Maintenance and other costs decreased $12.9 million, primarily attributable to fewer aircraft transitions.

The year ended February 29, 2024 included higher costs due to the timing of transition of aircraft to new lessees, which largely related to aircraft for which the previous lease was terminated early, and the aircraft was repossessed from the prior operator.

Other Income (Expense) :

Total other income decreased by $7.9 million.

Total other income increased by $51.0 million.

During the year ended February 28, 2025, the Company received cash proceeds of $49.5 million in settlement of the Company’s claims against certain of the insurers under its C&P Policies in respect of aircraft formerly on lease to Russian airlines.

During the year ended February 29, 2024, the Company recognized $5.6 million of other income primarily consisting of cash received in connection with claims settlements from various airline customers that had entered into bankruptcy proceedings or similar-type restructurings.

During the year ended February 28, 2023, the Company recognized $14.1 million of other income related to claims settlements received in the form of cash, notes, or equity securities from various airline customers that had entered into bankruptcy proceedings or similar-type restructurings, partially offset by a $0.6 million loss on extinguishment of debt.

Income Tax Provision :

Our income tax expense was $23.3 million and $25.5 million and our effective tax rate was 22.3% and 29.6% for the years ended February 29, 2024 and February 28, 2023, respectively.

The year ended February 28, 2023 included higher income taxes of $10.4 million related to certain intra-entity transfers of aircraft assets to Irish aircraft-owning entities.

This was partially offset by an increase in taxes attributable to changes in the mix of profits in taxable and non-taxable jurisdictions, and, in particular, incremental profits earned in Ireland.

We recognized income tax provision of $21.9 million and $23.3 million and our effective tax rate was 15.4% and 22.3% for the years ended February 28, 2025 and February 29, 2024, respectively.

The decrease in our effective tax rate is primarily attributable to the mix of profits in taxable and nontaxable jurisdictions.

The year ended February 28, 2025 included $49.5 million of settlement proceeds, a portion of which was recorded in a nontaxable jurisdiction.

Results of Operations for the year ended February 29, 2024, as compared to the year ended February 28, 2023:

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Maintenance Payments and Maintenance Revenue

Under our leases, the lessee must pay operating expenses accrued or payable during the term of the lease, which would normally include maintenance, overhaul, fuel, crew, landing, airport and navigation charges;

Our aircraft are net leases, whereby the lessee must pay operating expenses accrued or payable during the term of the lease, which would normally include maintenance, overhaul, fuel, crew, landing, airport and navigation charges;

certain taxes, licenses, consents and approvals;

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and insurance premiums.

Typically, our aircraft are subject to net operating leases whereby the lessee pays lease rentals and is generally responsible for maintaining the aircraft and paying operational, maintenance and insurance costs, although in a majority of cases, we are obligated to pay a portion of specified maintenance or modification costs.

Typically, under an operating lease, the lessee will be responsible for performing maintenance on the relevant aircraft and will typically be required to make payments to us for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft.

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

Typically, the lessee is responsible for performing maintenance on the relevant aircraft and is 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 would be made either monthly in arrears or at the end of the lease term.

Our determination of whether to require such payments to be made monthly or to permit a lessee to make a single maintenance payment at the end of the lease term depends on a variety of factors, including the creditworthiness of the lessee, the 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 during a lease as accrued maintenance liabilities in recognition of our obligation in the lease to refund such payments, and therefore we typically do not recognize maintenance revenue during the lease.

If a lessee is making 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, usually following completion of the relevant

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 paid for by the lessee during the lease term and the aircraft is returned to us in better condition than at lease inception.

Reimbursements to the lessee upon the receipt of evidence of qualifying maintenance work are charged against the existing accrued maintenance payments liability.

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

As part of our due diligence review of each aircraft we purchase, we prepare an estimate of the expected

maintenance payments and any excess costs which may become payable by us, taking into consideration the then-current maintenance status of the aircraft and the relevant provisions of any existing lease.

As part of our due diligence review of each aircraft we purchase, we prepare an estimate of the expected maintenance payments and any excess costs which may become payable by us, taking into consideration the then-current maintenance status of the aircraft and the relevant provisions of any existing lease.

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

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If a lease is below or above the range of current lease rates, we present value the estimated amount below or above 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.

The resulting lease discount or premium is amortized into lease revenue 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.

We perform a recoverability test of all aircraft and other flight equipment on a quarterly and annual basis.

We perform a customer or aircraft specific recoverability test 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.

For assets with indicators of impairment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the asset exceed its net book value.

The undiscounted cash flows consist of cash flows from currently contracted lease rentals 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.

Our assumptions are 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 net 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, we may revise our cash flow assumptions and record future impairment charges.

See Note 2 in the Notes to Consolidated Financial Statements.

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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 in

our Consolidated Statements of Income (Loss) to adjust the allowance for changes to management’s estimate of expected credit losses.

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.

Fair Value Measurements

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

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

Assets subject to these measurements include our aircraft and investment in unconsolidated equity method investment.

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 include third party appraisal data and an income approach Level 3, which include the Company’s assumptions and appraisal data as to future cash proceeds from leasing and selling aircraft discounted using the Company’s weighted average cost of capital.

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

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

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

Investments are 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

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We have also met our liquidity and capital resource needs by utilizing several sources over time, including:

• unsecured indebtedness, including our current unsecured revolving credit facilities, term loan and senior notes;

• unsecured indebtedness, including our current unsecured revolving credit facilities and senior notes;

• various forms of borrowing secured by our aircraft, including term facilities, term financings and limited recourse securitization financings for new aircraft acquisitions;

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We have also determined that as of February 28, 2025, our consolidated subsidiaries’ restricted net assets, as defined by Rule 4-08(e)(3) of Regulation S-X, are less than 25% of our consolidated net assets.

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.

In addition, we believe payments received from lessees and other funds generated from operations, unsecured bond offerings, borrowings secured by our aircraft, borrowings under our revolving credit facilities and other borrowings and proceeds from future aircraft sales will be sufficient to satisfy our liquidity and capital resource needs over the next twelve months.

We believe 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 liquidity and capital resource needs include payments due under our aircraft purchase obligations, required principal and interest payments under our long-term debt facilities, expected capital expenditures, lessee maintenance payment reimbursements and lease incentive payments.

February 29, February 28,

Year Ended February 28/29,

(Dollars in thousands)

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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 decrease was primarily attributable to higher cash paid for interest of $47.4 million, of which $15.2 million relates to the timing of interest payments, and the remaining increase due to a higher average cost of borrowing and higher weighted average debt outstanding during the year ended February 29, 2024.

In addition, the year ended February 28, 2023 included incremental customer collections related to the repayment of lease deferrals and other outstanding receivables that had accumulated during the COVID-19 pandemic, as well as $48.9 million of payments received on maintenance and general security letters of credit for our former Russian lessees.

The net increase was primarily attributable to higher customer collections during the year ended February 28, 2025, partially offset by slightly lower cash paid for interest related to the timing of interest.

Investing Activities :

Cash flow used in investing activities was $970.2 million and $879.1 million for the years ended February 28, 2025 and February 29, 2024, respectively.

The net increase of $341.2 million was primarily attributable to a $246.1 million increase in the acquisition and improvement of flight equipment, in addition to lower proceeds from the sale or disposition of flight equipment of $64.6 million.

Proceeds from the sale or disposition of flight equipment for the year ended February 29, 2024 includes cash settlement proceeds of $43.2 million received in respect of 4 aircraft formerly on lease to Russian airlines — see Note 3 to the Notes to Consolidated Financial Statements.

Aircraft sales deposits received, net of aircraft purchase deposits paid and progress payments decreased $22.7 million.

The net increase of $91.1 million was primarily attributable to a $348.0 million increase in cash used for the acquisition and improvement of flight equipment.

This was partially offset by an increase of $204.1 million in proceeds from the sale or disposition of aircraft and other flight equipment during the year ended February 28, 2025.

Additionally, we received cash proceeds of $49.5 million in settlement of the Company’s claims against certain of the insurers under its C&P Policies — see Note 3 to the Notes to Consolidated Financial Statements.

Financing Activities :

Cash flow provided by financing activities was $655.3 million and $407.0 million for the years ended February 28, 2025 and February 29, 2024, respectively.

The net increase of $245.7 million was primarily attributable to $200.0 million in proceeds from the issuance of our common stock, in addition to a $38.5 million increase in borrowings from secured and unsecured financings, net of repayments.

The net increase of $248.3 million was primarily attributable to a $100.0 million increase in proceeds from the issuance of our common shares, in addition to a $137.7 million decrease in proceeds from secured and unsecured financings, net of repayments.

Debt Obligations

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Our contractual obligations consist of principal and interest payments on debt financings, aircraft acquisitions and rent payments pursuant to our office leases.

Total contractual obligations increased to $6.1 billion at February 29, 2024 from $6.0 billion at February 28, 2023, due to higher outstanding debt and interest obligations, partially offset by lower aircraft purchase commitments.

Total contractual obligations increased to $6.7 billion at February 28, 2025 from $6.1 billion at February 29, 2024, due to higher outstanding debt and interest payment obligations and higher aircraft purchase commitments.

The following table presents our actual contractual obligations and their payment due dates as of February 28, 2025.

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These amounts include estimates for pre-delivery deposits, contractual price escalation and other adjustments.

As of April 19, 2024, we have commitments to acquire 12 aircraft for $393.3 million.

As of April 16, 2025, we have commitments to acquire 26 aircraft for $1.4 billion.

Capital Expenditures

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These expenditures include the cost of major overhauls necessary to place an aircraft in service and modifications made at the request of lessees.

For the years ended February 29, 2024, and February 28, 2023 and 2022, we incurred a total of $76.0 million, $90.8 million and $46.6 million, respectively, of capital expenditures, including lease incentives, related to the acquisition and improvement of flight equipment.

For the years ended February 28, 2025, February 29, 2024 and February 28, 2023, we incurred a total of $20.4 million, $76.0 million and $90.8 million, respectively, of capital expenditures, including lease incentives, related to the acquisition and improvement of flight equipment.

As of February 28, 2025, the weighted average age by Net Book Value of our aircraft was 9.1 years.

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Off-Balance Sheet Arrangements

We entered into a joint venture arrangement in order to help expand our base of new business opportunities.

This joint venture does not qualify for consolidated accounting treatment.

We have an unconsolidated equity method investment in an aircraft leasing entity with Mizuho Leasing.

We hold a 25% equity interest in this entity, which was established to help expand our base of new business opportunities.

As of February 28, 2025, the net book value of its 8 aircraft was $244.3 million.

The assets and liabilities of this entity are not included in our consolidated balance sheets and we record our investment under the equity method of accounting.

See Note 7 in the Notes to Consolidated Financial Statements.

We hold a 25% equity interest in our joint venture with Mizuho Leasing and as of February 29, 2024, the net book value of its 9 aircraft was $271.7 million.

Foreign Currency Risk and Foreign Operations

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Therefore, it is likely that our international operations and our exposure to foreign currency risk will increase over time.

Although we have not yet entered into foreign currency hedges because our exposure to date has not been significant, if our foreign currency exposure increases we may enter into hedging transactions in the future to mitigate this risk.

For the years ended February 29, 2024, and February 28, 2023 and 2022, we incurred insignificant net gains and losses on foreign currency transactions.

Although we have not entered into foreign currency hedges because our exposure to date has not been significant, if our foreign currency exposure increases we may enter into hedging transactions in the future to mitigate this risk.

For the years ended February 28, 2025, February 29, 2024 and February 28, 2023, we incurred insignificant net gains and losses on foreign currency transactions.

Management’s Use of EBITDA and Adjusted EBITDA

We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization.

We define EBITDA as income (loss) from continuing operations before interest expense, income taxes, and depreciation and amortization.

We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-U.S.

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Adjusted EBITDA is a material component of these covenants.

The table below shows the reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the years ended February 29, 2024, and February 28, 2023 and 2022.

Year Ended February 29, Year Ended February 28,

The table below shows the reconciliation of net income to EBITDA and Adjusted EBITDA for the years ended February 28, 2025, February 29, 2024 and February 28, 2023.

Year Ended February 28/29,

2025 2024 2023

(Dollars in thousands)

Net income (loss) $ 83,316 $ 62,759 $ (278,209)

Net income $ 123,613 $ 83,316 $ 62,759

Depreciation 355,666 348,229 332,663

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Interest, net 247,923 229,050 204,606

Income tax provision (benefit) 23,265 25,466 (7,998)

Income tax provision 21,948 23,265 25,466

EBITDA $ 770,832 $ 704,280 $ 646,068

Impairment of flight equipment 19,391 55,240 85,623

Loss on extinguishment of debt — 636 14,156

(Gain) loss on extinguishment of debt (285) — 636

Adjusted EBITDA $ 789,938 $ 759,520 $ 732,327

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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 7. Management’s Discussion and Analysis