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Item 7. Management’s Discussion and Analysis

2026-04-21 compared with 2025-04-23 · 158 added, 146 removed, 302 unchanged (50% of the section changed)

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Unless otherwise indicated, all references to “dollars” and “$” in this Annual Report are to, and all monetary amounts in this Annual Report are presented in, U.S.

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

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

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

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

Aircastle acquires, leases, and sells commercial jet aircraft to airlines worldwide.

We are a leading secondary market investor, sourcing aircraft through a variety of acquisition channels, including other aircraft lessors, airlines through purchase-leaseback transactions, financial institutions and other aircraft owners, and aircraft manufacturers.

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

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

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

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 fleet was $7.9 billion as of February 28, 2025, up 9% from $7.2 billion as of February 29, 2024.

As of February 28, 2026, we owned and managed 282 aircraft leased to 76 lessees located in 45 countries.

The Net Book Value of our fleet was $8.5 billion as of February 28, 2026, an increase of 8% from $7.9 billion as of February 28,

The weighted average age of our fleet was 9.0 years and the weighted average remaining lease term was 5.4 years.

The weighted average utilization rate of our fleet was 99% for the year ended February 28, 2026.

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 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.

Our total revenues, net income and Adjusted EBITDA were $975.1 million, $194.0 million, and $945.1 million, respectively, for the year ended February 28, 2026, compared to $821.0 million, $123.6 million and $789.9 million, respectively, for the year ended February 28, 2025.

Our financial performance continued to reflect strong global passenger demand for air travel and sustained demand for our narrow-body aircraft, driven by ongoing OEM delivery delays and broader supply chain constraints.

These market conditions supported elevated lease extension activity and strong gains on sales, which contributed positively to our operating results.

Our financial performance was also favorably impacted by additional cash settlement proceeds received in respect of our contingent and possessed insurance policies (“C&P Policies”) for aircraft formerly on lease to Russian airlines.

Acquisitions and Sales

During the year ended February 28, 2026, we acquired 46 aircraft for $1.7 billion.

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 $77.2 million.

As of February 28, 2026, we had commitments to acquire 17 aircraft for $829.5 million, with delivery through November 2028, which include estimated amounts for pre-delivery deposits, contractual price escalations and other adjustments.

As of April 14, 2026, we have acquired 1 additional aircraft and have commitments to acquire 20 aircraft for $908.9 million.

During the year ended February 28, 2026, we sold 33 aircraft and other flight equipment for net proceeds of $729.5 million and recognized gains on the sale or disposition of aircraft totaling $95.9 million.

As of April 14, 2026, we have sold 2 additional aircraft.

Middle East Conflict

Recent armed conflicts and heightened geopolitical tensions in the Middle East have increased uncertainty regarding regional stability.

Military actions and retaliatory measures involving multiple parties in the region have disrupted, and may continue to disrupt, commercial aviation and related economic activity, including oil markets and trade flows.

We are closely monitoring the evolving conflict and related geopolitical developments.

While the ultimate impact on our business, financial condition and results of operations is currently uncertain, these hostilities have adversely affected, and an escalation or prolonged continuation of hostilities could continue to adversely affect, commercial aviation activity in the region, including through airspace closures, reduced flight operations, increased fuel and insurance costs, supply chain disruptions and broader macroeconomic effects.

Such impacts could, in turn, negatively affect the financial condition and operating performance of airlines operating in, or flying through, the region, potentially resulting in lease restructurings, payment deferrals, or defaults.

As of and for the year ended February 28, 2026, our airline customers located in the Middle East represented approximately 5% of both our Net Book Value and lease rental revenue.

Although our exposure to the region is limited and diversified across lessees and aircraft types, a sustained deterioration in regional or economic conditions could nevertheless have an adverse effect on our business, financial condition and results of operations.

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.

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.

The Company filed claims against the reinsurers of the Russian airlines’ insurance, as well as under the Company’s C&P Policies, seeking indemnification.

During the years ended February 28, 2025 and February 29, 2024, the Company received insurance settlement proceeds of $49.5 million and $43.2 million, respectively.

For the year ended February 28, 2025, the proceeds were recorded in other income and related to settlements under certain of the Company’s C&P Policies.

For the year ended February 29, 2024, the proceeds were recorded within gain on sale or disposition of flight equipment and related to 4 aircraft formerly on lease to Joint Stock Company Aurora Airlines and Joint Stock Company Rossiya Airlines, resulting in the transfer of aircraft title to a Russian insurer.

In addition, during the year ended February 28, 2026, the Company recognized other income of $70.8 million related to settlement agreements with certain additional insurers under its C&P Policies.

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

The Company continues to pursue recoveries from the remaining insurers;

however, the timing and amount of any additional 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 $2.6 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.

We intend to fund new investments through cash on hand, funds generated from operations, maintenance payments received from lessees, equity offerings, unsecured bond offerings, borrowings secured by our aircraft, draws under on our revolving credit facilities and proceeds from any future aircraft sales.

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

Since our inception, 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, 2026 and 2025, from our Shareholders.

We have also obtained $25.0 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 these financing sources demonstrates our ability to adapt to changing market conditions and seize new growth opportunities.

We may 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.

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

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

See “Liquidity and Capital Resources” below.

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:

The following table sets forth certain information with respect to our owned aircraft and aircraft managed by us as of February 28, 2026 and 2025:

As of February 28,

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Portfolio Yield for the Year Ended (4)

Managed Aircraft on behalf of Joint Venture

Net Book Value of Flight Equipment $ 244 $ 272

Number of Aircraft 8 9

Managed Aircraft

Number of Managed Aircraft (5)

(1) Weighted by Net Book Value.

(2) Aircraft on lease as a percentage of total days in period weighted by net book value.

(3) Lease rental revenue, interest income and cash collections on our net investment in leases for the period as a percent of the average Net Book Value for the period;

(3) The fourth quarter of fiscal year 2025 includes 4 aircraft that were previously leased to a customer that filed for bankruptcy protection, and we expect these aircraft to remain off-lease for an extended period.

(4) Lease rental revenue, together with interest income and cash collections on our net investment in leases for the period, expressed as a percentage of the average Net Book Value for the period;

quarterly information is annualized.

(5) Number of managed aircraft as of February 28, 2026 includes 4 aircraft owned by our joint venture with Mizuho Leasing.

PORTFOLIO DIVERSIFICATION

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(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:

(2) We currently have 6 off-lease narrow-body aircraft that are being marketed for lease.

Of these aircraft, 4 were previously leased to a customer that filed for bankruptcy protection, and we expect these aircraft to remain off-lease for an extended period.

Of the remaining 2 aircraft, 1 aircraft was delivered on lease to a customer during the first quarter of fiscal year 2026 and the other aircraft is expected to be delivered on lease to a customer in the second quarter of fiscal year 2026.

The top ten customers for our owned aircraft as of February 28, 2026 were as follows:

Customer Percent of

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IndiGo 10.0% India 17

United 6.9% United States 12

KLM 5.6% Netherlands 15

easyJet 4.6% United Kingdom 22

American Airlines

4.8% United States 17

United 4.0% United States 7

LATAM 4.7% Chile 13

Frontier Airlines

4.4% United States 7

LATAM 3.8% Chile 10

3.4% Indonesia 10

WestJet 3.6% Canada 7

3.3% Mexico 8

3.0% Indonesia 10

Aerolineas Argentinas 2.6% Argentina 7

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Selling, general and administrative 89,483 86,416

Provision for credit losses 8,715 12,081

Provision (benefit) for credit losses (57) 8,715

Impairment of flight equipment 53,323 19,391

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Other income (expense):

Gain on extinguishment of debt 285 —

Gain (loss) on extinguishment of debt (2,973) 285

Other 74,120 56,247

Total other income:

71,147 56,532

Income from continuing operations before income taxes 220,249 142,458

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Net income $ 194,048 $ 123,613

Total revenues decreased $34.4 million, attributable to:

Total revenues increased $154.1 million, attributable to:

Lease rental revenue increased $107.3 million, primarily attributable to an increase of $179.4 million related to 94 aircraft purchased since March 1, 2024.

This was partially offset by:

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

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

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.

This was partially offset by a $65.3 million decrease related to the sale of 58 aircraft since March 1, 2024.

Amortization of lease premiums, discounts and incentives:

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Amortization of lease premiums, discounts and incentives $ 280 $ (21,682)

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.

The amortization of lease premiums decreased by $4.3 million, primarily attributable to the full amortization of premiums on aircraft whose leases were extended.

The amortization of lease discounts increased by $10.8 million due to the acquisition of aircraft.

The amortization of lease incentives decreased by $6.8 million, primarily due to the reversal of lease incentive liabilities related to 2 engine redeliveries and the sale of aircraft.

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.

For the years ended February 28, 2026 and 2025, we recorded $95.7 million and $90.5 million, respectively, of maintenance revenue, primarily related to maintenance payments received by us and recognized into income in connection with scheduled aircraft lease expirations and engine redeliveries.

Gain on sale or disposition of flight equipment.

During the year ended February 28, 2026, we sold 33 aircraft and other flight equipment for gains totaling $95.9 million.

During the year ended February 28, 2025, we sold 27 aircraft for gains totaling $77.2 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 decreased $21.6 million attributable to:

Total operating expenses increased $91.0 million attributable to:

Depreciation expense increased $28.4 million, primarily attributable to an increase of $68.7 million related to 95 aircraft purchased since March 1, 2024.

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

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.

This increase was partially offset by a decrease of $30.7 million related to 57 aircraft sold since March 1, 2024.

Interest, net increased $34.2 million due to a higher weighted average debt outstanding of $619.3 million.

Selling, general and administrative expenses increased $3.1 million primarily due to higher personnel costs.

Provision (benefit) for credit losses.

During the year ended February 28, 2025, we recorded a credit provision of $8.7 million, primarily related to debt securities and certain restructured receivables in connection with an airline restructuring.

No material provision for credit losses was recorded for the year ended February 28, 2026.

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.

During the year ended February 28, 2026, the Company recorded total impairment charges of $53.3 million.

This amount includes $35.9 million related to aircraft leased to 2 customers that filed for bankruptcy protection.

For these aircraft, the Company recognized $11.5 million of maintenance and lease rentals received in advance into revenue during the same period.

The remaining $17.4 million of impairment charges were primarily transaction-related, including aircraft and engine redeliveries, and also related to other flight equipment recorded within other assets that is subject to tear-down and parts sales programs.

For these items, the Company recognized $25.0 million of revenue related to maintenance, security deposits and the reversal of lease incentive liabilities during the year ended February 28, 2026.

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 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) :

Other Income :

Total other income increased by $14.6 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 years ended February 28, 2026 and 2025, the Company entered into settlement agreements with certain insurers under its C&P Policies for aggregate settlement amounts of $70.8 million and $49.5 million, respectively, related to aircraft formerly on lease to Russian airlines.

Income Tax Provision :

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.

Income tax provision.

We recognized income tax provisions of $28.9 million and $21.9 million for the years ended February 28, 2026 and 2025, respectively.

Our effective tax rate for the years ended February 28, 2026 and 2025 was 13.1% and 15.4%, respectively.

The decrease in our effective tax rate was primarily attributable to the mix of profits between the various jurisdictions in which we operate, primarily driven by lower U.S.

earnings and the utilization of Bermuda net operating losses.

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

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Lease Revenue Recognition

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

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

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

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.

Our aircraft lease agreements generally provide for the periodic payment of a fixed amount of rent over the life of the lease, and the amount of the contracted rent will depend upon the type, age, specification and condition of the aircraft and market conditions at the time the lease is committed.

The amount of rent we receive will depend on a number of factors, including the creditworthiness of our lessees and the occurrence of delinquencies, restructurings and defaults.

Our lease rental revenues are also affected by the extent to which aircraft are off-lease and our ability to remarket aircraft that are nearing the end of their leases in order to minimize their off-lease time.

Our aircraft lease agreements generally provide for the periodic payment of fixed rent over the term of the lease, with the amount of contracted rent dependent upon the type, age, specification and condition of the aircraft, as well as market conditions at the time the lease is committed.

The amount of rent we receive is also affected by a number of factors, including the creditworthiness of our lessees and the occurrence of delinquencies, restructurings and defaults.

In addition, our lease rental revenues are affected by the extent to which aircraft are off-lease and our ability to remarket aircraft nearing the end of their leases in order to minimize off-lease time.

Our success in re-leasing aircraft is affected by market conditions relating to our aircraft and by general industry conditions and trends.

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Maintenance Payments and Maintenance Revenue

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;

aircraft registration;

and insurance premiums.

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 aircraft are generally leased under net leases, pursuant to which the lessee is responsible for paying operating expenses incurred or accrued during the term of the lease, which typically include maintenance, overhaul, fuel, crew, landing, airport and navigation charges, certain taxes, licenses, consents and approvals, aircraft registration and insurance premiums.

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

In general, 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.

These maintenance payments are typically calculated based on hours or cycles of utilization or on calendar time, depending upon the applicable component, and are 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 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.

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 such maintenance payments as maintenance revenue during the lease.

Where a lessee makes monthly maintenance payments, we are generally obligated to use such funds to reimburse the lessee for costs they incur for eligible heavy maintenance, overhaul or replacement of certain high-value components during the lease term, typically

following the completion of the relevant work.

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

In some cases, however, we may owe a net payment to the lessee if 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 payment liabilities in recognition of our obligation in the lease to refund such receipts, and therefore 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 a 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.

The amount of maintenance revenue or contra maintenance revenue we recognize in any reporting period is inherently volatile and is dependent upon a number of factors, including the timing of lease expiries, including scheduled expiries and early lease terminations, the timing of maintenance events and the utilization of the aircraft by the lessee.

The amount of maintenance revenue or contra maintenance revenue we recognize in any reporting period is inherently volatile and is dependent on a number of factors, including the timing of lease expiries, including scheduled expiries and early lease terminations, the timing of maintenance events and the utilization of the aircraft by the lessee.

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 cost of the maintenance event and the estimated amounts the lessee is responsible to pay.

We account for these expected payments as lease incentives, which are amortized on a straight-line basis as a reduction of revenue over the lease term.

These estimates are based on assumed utilization of the related aircraft by the lessee, the anticipated cost of the maintenance event 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.

We recognize the lease incentive as a reduction of lease revenue on a straight-line basis over the lease term, with the offset being recorded as a lease incentive liability, which is included in maintenance payments on the balance sheet.

Flight Equipment Held for Lease and Depreciation

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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:

Examples of circumstances in which such exceptions may arise include but are not limited to:

• flight equipment where estimates of the manufacturers’ realized sales prices are not relevant (e.g., freighter conversions);

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• 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 place the aircraft into initial service are capitalized and depreciated over the remaining life of the flight equipment.

For planned major maintenance activities for aircraft that are 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 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.

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.

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

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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 the attached lease 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 fair value range 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.

When we acquire an aircraft with a lease attached, determining the fair value of the lease requires us to make assumptions regarding the current fair values of leases for comparable aircraft.

We estimate a range of current lease rates for similar aircraft to assess whether the attached lease is within a fair value range.

If the contractual lease rate is below or above the estimated market range, the Company records a lease discount or premium equal to the present value the estimated amount below or above fair value range over the remaining term of the lease.

Any such lease discount or premium is amortized into lease revenue on a straight-line basis over the remaining lease term.

Impairment of Flight Equipment

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.

We perform recoverability assessments of all our aircraft and other flight equipment at least annually, and more frequently when events or changes in circumstances indicate that the carrying amount or net book value of an asset may not be recoverable.

We perform aircraft-specific recoverability tests when such indicators exist.

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.

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.

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

These undiscounted cash flows include 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.

If an aircraft does not meet the recoverability test, the aircraft will be written down to its estimated fair value, resulting in an impairment charge.

Our estimates and 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 cash flows are subject to change in future periods and may be affected by 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.

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 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.

If a lease meets specific criteria at lease commencement or at the effective date of a lease modification, we classify the lease as a direct financing or sales-type lease.

The net investment in leases consists of the lease receivable, the 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 fight 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 lease revenue over the lease term in a manner that produces a constant rate of return on the net investment in the lease.

Interest income on our net investment in leases is recognized as direct financing and sales-type lease 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 in the consolidated financial statements net of an allowance for credit losses.

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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.

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.

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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 that the carrying amounts of assets may not be recoverable.

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

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 the present value of future cash proceeds from leasing and selling aircraft.

Fair value measurements for aircraft in impairment tests are based on a combination of valuation techniques, including market approach (Level 2 or 3), which incorporates third party appraisal data, and an income approach (Level 3), which reflects the Company’s assumptions and appraisal data regarding the present value of future cash proceeds from leasing and selling aircraft.

Level 3 valuations contain significant unobservable inputs.

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

Our investment 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.

The Company records an income tax provision in accordance with the various tax laws for those jurisdictions within which our transactions occur.

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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 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;

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

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

• asset sales;

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Going forward, we expect to continue to seek liquidity from these sources and other sources, subject to pricing and conditions we consider satisfactory.

During the year ended February 28, 2025, we met our liquidity and capital resource needs with $464.0 million of cash flows from operations and $565.9 million of proceeds from the sale of aircraft and other flight equipment.

During the year ended February 28, 2026, we met our liquidity and capital resource needs with $483.1 million of cash flows from operations and $729.5 million of proceeds from the sale or disposition of aircraft and other flight equipment.

As of February 28, 2026, the weighted average maturity of our secured and unsecured debt financings was 3.1 years and we were in compliance with all applicable covenants.

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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.

As of April 1, 2026, total liquidity of $2.6 billion included $2.0 billion of undrawn credit facilities, $0.5 billion of projected adjusted operating cash flows and sales through April 1, 2027 and $0.1 billion of unrestricted cash through April 1, 2027.

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 12 months.

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Operating Activities:

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 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.

Cash flow provided by operating activities was $483.1 million and $464.0 million for the years ended February 28, 2026 and 2025, respectively.

The year ended February 28, 2026 included higher customer collections driven by the growth of our fleet and higher lease rates on lease extensions.

These increases were offset by higher cash paid for interest, primarily due to higher weighted average debt outstanding during the year ended February 28, 2026.

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 $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.

Cash flow used in investing activities was $897.6 million and $970.2 million for the years ended February 28, 2026 and 2025, respectively.

The net decrease of $72.6 million was primarily attributable to higher proceeds from the sale or disposition of aircraft and other flight equipment of $163.6 million, partially offset by a $122.6 million increase in cash used for the acquisition and improvement of flight equipment.

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 $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.

Cash flow provided by financing activities was $315.4 million and $655.3 million for the years ended February 28, 2026 and 2025, respectively.

The net decrease of $339.9 million was primarily attributable to a $300.0 million decrease in proceeds from the issuance of our common shares.

In addition, there were increases of $41.8 million in dividends paid to our Shareholders and $33.4 million in maintenance and security deposits returned, net of receipts.

These outflows were partially offset by a $40.9 million increase 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 $6.7 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.

Total contractual obligations increased to $7.1 billion at February 28, 2026 from $6.7 billion at February 28, 2025, due to higher outstanding debt, interest obligations and aircraft purchase commitments.

The following table presents our actual contractual obligations and their payment due dates as of February 28, 2026.

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Senior Notes due 2026-2031 $ 4,350,000 $ 650,000 $ 2,050,000 $ 1,150,000 $ 500,000

Revolving Credit Facilities

150,000 — 150,000 — —

Bank Financings

509,104 31,948 69,618 307,558 99,980

Unsecured Revolving Credit Facilities and Term Loan 840,000 — 240,000 600,000 —

Other Financings 114,177 3,398 7,095 7,516 96,168

Total principal payments 5,304,177 653,398 2,297,095 1,757,516 596,168

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_____________

(1) Future interest payments on variable rate, SOFR-based debt obligations are estimated using the interest rate in effect at February 28, 2025.

(1) Future interest payments on variable rate, SOFR-based debt obligations are estimated using the interest rate in effect as of February 28, 2026.

(2) Represents contractual payment obligations for our office leases in the United States, Ireland and Singapore.

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

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

As of April 14, 2026, we have commitments to acquire 20 aircraft for $908.9 million.

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 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.

In general, the costs of operating an aircraft, including maintenance expenditures, increase with the age of the aircraft.

Our lease agreements call for the lessee to be primarily responsible for maintaining the aircraft.

For the years ended February 28, 2026 and 2025, and February 29, 2024, we incurred a total of $24.0 million, $20.4 million and $76.0 million, respectively, of capital expenditures, including lease incentives, related to the acquisition and improvement of flight equipment.

As of February 28, 2026, the weighted average age of our aircraft, by Net Book Value, was 9.0 years.

In general, the costs of operating an aircraft, including maintenance expenditures, increases as aircraft age.

Our lease agreements generally require the lessee to be primarily responsible for maintaining the aircraft.

Maintenance reserves are generally paid by the lessee to provide for future maintenance events.

Provided a lessee performs scheduled maintenance of the aircraft, we are required to reimburse the lessee for scheduled maintenance payments.

Provided a lessee performs scheduled maintenance of the aircraft, we are required to reimburse the lessee for qualifying maintenance payments.

In certain cases, we are also required to make lessor contributions, in excess of amounts a lessee may have paid, towards the costs of maintenance events performed by or on behalf of the lessee.

We may incur additional maintenance and modification costs in the future in the event we are required to remarket an aircraft or a lessee fails to meet its maintenance obligations under the lease agreement.

Actual maintenance payments to us by lessees in the future may be less than projected as a result of a number of factors, such as in the event of a lessee default.

We may incur additional maintenance and modification costs in the

future if we are required to remarket an aircraft or if a lessee fails to meet its maintenance obligations under the lease agreement.

Actual maintenance payments to us by lessees in the future may be less than projected as a result of a number of factors, such as a lessee default.

Maintenance reserves may not cover the entire amount of actual maintenance expenses incurred and, where these expenses are not otherwise covered by the lessees, there can be no assurance that our operational cash flow and maintenance reserves will be sufficient to fund maintenance requirements, particularly as our aircraft age.

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Off-Balance Sheet Arrangements

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.

We have an unconsolidated equity method investment in an aircraft leasing entity with Mizuho Leasing in which we hold a 25% equity interest.

As of February 28, 2026, the Net Book Value of its 4 aircraft was $146.5 million.

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Foreign Currency Risk and Foreign Operations

At February 28, 2025, more than 99% of our leases are payable to us in U.S.

At February 28, 2026, approximately 99% of our leases are payable to us in U.S.

However, we incur Euro- and Singapore dollar-denominated expenses in connection with our subsidiaries in Ireland and Singapore.

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Our international operations are a significant component of our business strategy and permit us to more effectively source new aircraft, service the aircraft we own and maintain contact with our lessees.

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

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.

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

Although we have not entered into foreign currency hedges, 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, 2026 and 2025, and February 29, 2024, we incurred insignificant net gains and losses on foreign currency transactions.

Management’s Use of EBITDA and Adjusted EBITDA

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Adjusted EBITDA is a material component of these covenants.

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.

The table below shows the reconciliation of net income to EBITDA and Adjusted EBITDA for the years ended February 28, 2026 and 2025, and February 29, 2024.

Year Ended February 28/29,

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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