What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-27 compared with 2022-02-28 · 529 added, 1067 removed, 750 unchanged (68% of the section changed)

1 unchanged sentence

Index to Financial Statements:

Consolidated Financial Statements of Fortress Transportation and Infrastructure Investors LLC:

Consolidated Financial Statements of FTAI Aviation Ltd.:

Report of Independent Registered Public Accounting Firm (PCAOB ID:

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Consolidated Statements of Operations for the years ended December 31, 202 2 , 202 1 and 20 20

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Comprehensive Loss for the years ended December 31, 202 2 , 202 1 and 20 20

Consolidated Statement of Changes in Equity for the years ended December 31, 202 2 , 202 1 and 20 20

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Fortress Transportation and Infrastructure Investors LLC

To the Shareholders and the Board of Directors of FTAI Aviation Ltd.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fortress Transportation and Infrastructure Investors LLC (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive (loss) income, changes in equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of FTAI Aviation Ltd.

(the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, changes in equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill-Jefferson Terminal Reporting Unit

Description of the Matter At December 31, 2021, the Company’s goodwill was $122.7 million for the Jefferson Terminal reporting unit.

As discussed in Note 2 of the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level.

Auditing the fair value of the Jefferson Terminal reporting unit used in the annual goodwill impairment test was complex and highly judgmental due to the significant estimation required in determining the fair value of the Jefferson Terminal reporting unit.

In particular, the fair value estimate was sensitive to significant assumptions such as the forecasted revenue growth rates, EBITDA margins, capital expenditures, the timing of future cash flows and discount rate, which are affected by expectations about the Company’s ability to secure additional contracts and increase volumes from existing contracts as well as expectations about the overall industry, market and economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including tests of controls over management’s review of valuation methodology and significant assumptions described above.

To test the estimated fair value of the Company’s Jefferson Terminal reporting unit for use in the goodwill impairment assessment, we performed audit procedures that included, among others, assessing the valuation methodology used and testing the significant assumptions described above and the completeness and accuracy of the underlying data used by the Company in its impairment test.

For example, we compared the significant assumptions used by management to current industry, market and economic trends;

to the historical results of the reporting unit and other guideline companies within the same industry;

and evaluated whether changes to the Company’s business model, customer base or product mix and other relevant factors would affect the significant assumptions.

We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses over significant assumptions to evaluate the changes in the fair value of the Jefferson Terminal reporting unit that would result from changes in the significant assumptions.

We also involved our valuation specialists to assist in our evaluation of the Company's valuation methodology and certain significant assumptions.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Recognition of Maintenance Revenue for Aircraft Leases

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Auditing maintenance revenue related to aircraft leases was complex and highly judgmental due to the significant estimation involved in projecting the timing of future major maintenance events.

In particular, such estimates are sensitive to significant assumptions such as the mean time between removal (MTBR) and forecasted utilization of the aircraft which are affected by historical usage patterns and overall industry, market and economic conditions.

Changes to these significant assumptions could have a material effect on the amount of maintenance revenue recognized in the period.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s maintenance revenue recognition process, including controls over management’s review of the significant assumptions used in determining the estimated timing of major maintenance events as described above.

To test maintenance revenue for aircraft leases, we performed audit procedures that included, among others, assessing the Company’s revenue recognition methodology and testing the significant assumptions described above and the completeness and accuracy of the underlying data used by the Company in its analyses.

For example, we compared the significant assumptions used by management to the underlying customer lease agreements, historical utilization and third- party estimates for MTBR, when available.

We tested management’s retrospective review of timing of estimated maintenance events to actual results to assess the historical accuracy of significant assumptions and contrary evidence, if any.

We also performed a sensitivity analysis on utilization of the aircraft to evaluate the changes in the timing of the maintenance events from changes in utilization assumptions and the impact, if any, on maintenance revenue recognized in the period.

Accounting for the Acquisition of Transtar, LLC

Description of the Matter On July 28, 2021, the Company completed its acquisition of Transtar, LLC for a total cash consideration of $636.0 million.

As disclosed in Note 4 to the consolidated financial statements, the transaction was accounted for as a business combination, and as such, the purchase price was attributed to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including property, plant and equipment and customer relationship intangible assets.

Auditing the Company’s accounting for its acquisition of Transtar, LLC was significant to our audit due to the higher extent of audit effort, significant estimation and the judgmental nature of the inputs used to determine the fair value of property, plant and equipment and the customer relationship intangible assets, which are inherently uncertain and generally unobservable, requiring the involvement of valuation specialists.

The significant assumptions used to estimate the fair value of the property, plant and equipment included replacement cost estimates, salvage values and market data for similar assets where available.

The significant assumptions used to estimate the value of the customer relationship intangible assets included discount rate and future revenues and operating expenses.

When estimating the significant assumptions to be used in the valuation of the property, plant and equipment and customer relationship intangible assets, the Company included consideration of current industry information, market and economic trends, and historical results of the acquired business.

These significant assumptions are forward-looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s valuation of the property, plant and equipment and customer relationship intangible assets, including tests of controls over management’s review of the valuation methodologies and the related assumptions described above.

To test the estimated fair value of the property, plant, and equipment and customer relationship intangible assets, our audit procedures included, among others assessing the valuation methodologies, testing the models, evaluating significant assumptions used as described above, and testing the completeness and accuracy of the underlying data used by the Company.

For example, we compared the significant assumptions used by management to the historical results of the acquired business as well as to current industry and economic trends.

We performed sensitivity analyses of significant assumptions to evaluate the change in the fair values of the customer relationship intangible assets resulting from changes in the assumptions.

In addition, we involved valuation specialists to assist in evaluating the methodologies used and the significant assumptions applied in developing the fair value estimates of property, plant and equipment and customer relationship intangible assets.

In particular, the estimate is sensitive to the mean time between removal (MTBR) assumption, which is affected by historical usage patterns and overall industry, market and economic conditions.

Significant changes to this assumption could have a material effect on the amount of maintenance revenue recognized in the period.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s maintenance revenue recognition process, including controls over management’s review of the estimated timing of major maintenance events as described above.

For example, we compared the MTBR assumption to third-party estimates and assessed management’s retrospective review of timing of estimated maintenance events to actual results to assess the historical accuracy of the MTBR assumption and contrary evidence, if any.

We performed testing on maintenance revenue due to changes in timing of maintenance events and the impact, if any, on maintenance revenue recognized in the period.

We also involved our valuation specialists to assist in our evaluation of the appropriateness of the MTBR assumption.

/s/ Ernst & Young LLP

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February 27, 2023

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

CONSOLIDATED BALANCE SHEETS

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Leasing equipment, net 4 1,913,553 1,855,637

Operating lease right-of-use assets, net 14 75,344 62,355

Finance leases, net 6 7,583 6,927

Property, plant, and equipment, net 5 10,014 38,263

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Intangible assets, net 7 41,955 30,962

Goodwill 257,137 122,735

Inventory, net 2 163,676 100,307

Other assets 2 125,834 110,337

Assets of discontinued operations 3 — 2,442,301

Total assets $ 2,429,577 $ 4,863,854

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Security deposits 2 32,842 40,149

Operating lease liabilities 14 73,594 62,001

Other liabilities 36,468 23,892

Liabilities of discontinued operations 3 — 980,255

Total liabilities $ 2,410,175 $ 3,739,754

Commitments and contingencies 16

Common shares ($ 0.01 par value per share;

Ordinary shares ($ 0.01 par value per share;

2,000,000,000 shares authorized;

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See accompanying notes to consolidated financial statements.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

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Notes 2022 2021 2020

Equipment leasing revenues $ 335,583 $ 297,934 $ 349,322

Infrastructure revenues 120,219 68,562 229,452

Total revenues 13 455,802 366,496 578,774

Revenues 10 $ 708,411 $ 335,583 $ 297,934

Cost of sales 248,385 14,308 —

Operating expenses 132,264 59,615 40,121

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Total expenses 870,912 419,186 332,247

Other (expense) income

Other income (expense)

Equity in losses of unconsolidated entities 6 ( 369 ) ( 1,403 ) ( 1,932 )

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Loss on extinguishment of debt ( 19,859 ) ( 3,254 ) ( 6,943 )

Interest income 1,711 162 531

Other (expense) income ( 10,928 ) 70 3,445

Other income (expense) 207 ( 490 ) 94

Total other income (expense) 57,190 43,868 ( 9,081 )

(Loss) income from continuing operations before income taxes ( 131,763 ) ( 110,928 ) 152,132

(Benefit from) provision for income taxes 17 ( 1,057 ) ( 5,905 ) 17,810

Net (loss) income from continuing operations ( 130,706 ) ( 105,023 ) 134,322

Net income from discontinued operations, net of income taxes 3 — 1,331 73,462

Net (loss) income ( 130,706 ) ( 103,692 ) 207,784

Net (loss) income attributable to non-controlling interests in consolidated subsidiaries:

Loss from continuing operations before income taxes ( 105,311 ) ( 39,735 ) ( 43,394 )

Provision for (benefit from) income taxes 12 5,300 3,126 ( 4,343 )

Net loss from continuing operations ( 110,611 ) ( 42,861 ) ( 39,051 )

Net loss from discontinued operations, net of income taxes 3 ( 101,416 ) ( 87,845 ) ( 64,641 )

Net loss ( 212,027 ) ( 130,706 ) ( 103,692 )

Net loss attributable to non-controlling interests in consolidated subsidiaries:

Continuing operations — — —

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Dividends on preferred shares 27,164 24,758 17,869

Net (loss) income attributable to shareholders $ ( 128,992 ) $ ( 105,039 ) $ 223,270

(Loss) earnings per share:

Net loss attributable to shareholders $ ( 220,374 ) $ ( 128,992 ) $ ( 105,039 )

Loss per share:

Continuing operations $ ( 1.39 ) $ ( 0.75 ) $ ( 0.66 )

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See accompanying notes to consolidated financial statements.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FTAI AVIATION LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Dollars in thousands)

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2022 2021 2020

Net (loss) income $ ( 130,706 ) $ ( 103,692 ) $ 207,784

Other comprehensive (loss) income:

Other comprehensive (loss) income related to equity method investees, net (1)

Net loss $ ( 212,027 ) $ ( 130,706 ) $ ( 103,692 )

Other comprehensive loss:

Other comprehensive loss related to equity method investees, net (1) in discontinued operations

( 182,963 ) ( 129,820 ) ( 26,609 )

Changes in pension and other employee benefit accounts ( 324 ) — —

Comprehensive (loss) income ( 260,850 ) ( 130,301 ) 208,156

Comprehensive (loss) income attributable to non-controlling interest:

Changes in pension and other employee benefit accounts in discontinued operations — ( 324 ) —

Comprehensive loss ( 394,990 ) ( 260,850 ) ( 130,301 )

Comprehensive loss attributable to non-controlling interest:

Continuing operations — — —

Discontinued operations ( 18,817 ) ( 26,472 ) ( 16,522 )

Comprehensive (loss) income attributable to shareholders $ ( 234,378 ) $ ( 113,779 ) $ 225,480

Comprehensive loss attributable to shareholders $ ( 376,173 ) $ ( 234,378 ) $ ( 113,779 )

__________________________________________________

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See accompanying notes to consolidated financial statements.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Dollars in thousands)

Common Shares Preferred Shares Additional Paid In Capital (Accumulated Deficit) Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

Ordinary Shares (1)

Preferred Shares (1)

Additional Paid In Capital Retained Earnings

(Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

Equity - December 31, 2019 $ 849 $ 81 $ 1,110,122 $ 190,453 $ 372 $ 36,980 $ 1,338,857

Net income (loss) 225,108 ( 17,324 ) 207,784

Other comprehensive income — 372 — 372

Total comprehensive income (loss) 225,108 372 ( 17,324 ) 208,156

Net loss ( 87,170 ) ( 16,522 ) ( 103,692 )

Other comprehensive loss — ( 26,609 ) — ( 26,609 )

Total comprehensive loss ( 87,170 ) ( 26,609 ) ( 16,522 ) ( 130,301 )

Settlement of equity-based compensation ( 120 ) ( 120 )

Issuance of common shares 9 384 — 393

Issuance of ordinary shares 7 304 — 311

Conversion of participating securities ( 7 ) ( 7 )

Dividends declared - common shares ( 113,541 ) — ( 113,541 )

Dividends declared - ordinary shares ( 113,572 ) — ( 113,572 )

Issuance of preferred shares 10 19,687 19,697

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Settlement of equity-based compensation ( 421 ) ( 421 )

Issuance of common shares 7 304 311

Conversion of participating securities ( 7 ) ( 7 )

Dividends declared - common shares ( 113,572 ) ( 113,572 )

Issuance of ordinary shares 136 323,443 323,579

Dividends declared - ordinary shares ( 118,009 ) ( 118,009 )

Issuance of preferred shares 42 101,158 101,200

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Total comprehensive loss ( 193,210 ) ( 182,963 ) ( 18,817 ) ( 394,990 )

Spin-off of FTAI Infrastructure, Inc., net of distributions ( 913,342 ) 339,344 12,817 ( 561,181 )

Acquisition of consolidated subsidiary 3,054 3,054

Contributions from non-controlling interest 1,187 1,187

Settlement of equity-based compensation ( 148 ) ( 148 )

Issuance of common shares 136 323,443 323,579

Dividends declared - common shares ( 118,009 ) ( 118,009 )

Issuance of preferred shares 42 101,158 101,200

Issuance of ordinary shares 5 399 404

Dividends declared - ordinary shares ( 128,483 ) ( 128,483 )

Dividends declared - preferred shares ( 27,164 ) ( 27,164 )

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Equity - December 31, 2022 $ 997 $ 133 $ 343,350 $ ( 325,602 ) $ — $ 524 $ 19,402

________________________________________________

(1) Common and Preferred Shares of Fortress Transportation and Infrastructure Investors LLC were exchanged for Ordinary and Preferred Shares of FTAI Aviation Ltd.

when the Merger, as detailed in Note 1, was completed on November 10, 2022.

See accompanying notes to consolidated financial statements.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Cash flows from operating activities:

Net (loss) income $ ( 130,706 ) $ ( 103,692 ) $ 207,784

Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:

Net loss $ ( 212,027 ) $ ( 130,706 ) $ ( 103,692 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Equity in losses of unconsolidated entities 46,971 12,734 5,039

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Amortization of deferred financing costs 19,018 21,723 7,315

Bad debt expense 12,953 3,595 3,986

Provision for credit losses 47,975 12,953 3,595

Other ( 1,010 ) ( 440 ) 1,502

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Other assets ( 23,037 ) ( 30,789 ) 3,660

Inventory ( 23,267 ) — —

Accounts payable and accrued liabilities ( 19,599 ) 25,079 ( 5,258 )

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Investment in convertible promissory notes — ( 10,000 ) —

Acquisition of remaining interest in JV investment — — ( 28,828 )

Purchase deposit for aircraft and aircraft engines ( 13,658 ) ( 8,343 ) ( 1,000 )

Proceeds from sale of subsidiaries — — 183,819

Purchase deposit for acquisitions ( 6,671 ) ( 13,658 ) ( 8,343 )

Proceeds from sale of leasing equipment 408,937 158,927 72,175

Proceeds from sale of property, plant and equipment 5,289 4,494 —

Receipt of deposits for sale of aircraft and engine 600 — —

Proceeds for deposit on sale of aircraft and engine 3,780 600 —

Return of purchase deposits — 1,010 2,350

Return of capital distributions from unconsolidated entities — — 1,555

Net cash used in investing activities $ ( 411,253 ) $ ( 1,286,958 ) $ ( 509,123 )

See accompanying notes to consolidated financial statements.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Release of maintenance deposits ( 1,471 ) ( 20,724 ) ( 15,712 )

Proceeds from issuance of common shares, net of underwriter's discount 323,124 — —

Proceeds from issuance of ordinary shares, net of underwriter's discount — 323,124 —

Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs — 101,200 19,694

Capital contributions from non-controlling interests 1,187 — —

Dividend from spin-off of FTAI Infrastructure, net of cash transferred 500,562 — —

Settlement of equity-based compensation ( 148 ) ( 421 ) ( 120 )

Cash dividends - common shares ( 118,009 ) ( 113,572 ) ( 113,541 )

Cash dividends - ordinary shares ( 128,483 ) ( 118,009 ) ( 113,572 )

Cash dividends - preferred shares ( 27,164 ) ( 24,758 ) ( 17,869 )

Net cash provided by financing activities 44,914 1,587,645 364,918

Net increase (decrease) in cash and cash equivalents and restricted cash 278,643 ( 81,099 ) 121,680

Net (decrease) increase in cash and cash equivalents and restricted cash ( 386,996 ) 278,643 ( 81,099 )

Cash and cash equivalents and restricted cash, beginning of period 440,061 161,418 242,517

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Supplemental disclosure of non-cash investing and financing activities:

Repayment and settlement of debt $ — $ — $ ( 24,250 )

Acquisition of leasing equipment $ 65,534 47,114 141,478

Acquisition of property, plant and equipment — ( 581 ) ( 13,237 )

Investment in Long Ridge JV — — 155,589

Settled and assumed security deposits ( 6,774 ) ( 4,041 ) ( 5,825 )

Settlement of equity based compensation — — ( 2,405 )

Billed, assumed and settled maintenance deposits ( 47,993 ) ( 21,710 ) ( 58,906 )

Deferred financing costs — — ( 1,161 )

Change in fair value of pension and other retirement benefit liabilities ( 237 ) — —

Change in fair value of cash flow hedge — — 372

Non-cash change in equity method investment ( 182,963 ) ( 129,907 ) ( 26,609 )

Issuance of common shares 455 304 385

Conversion of interests in unconsolidated entities ( 21,302 ) — —

Issuance of ordinary shares 399 455 304

See accompanying notes to consolidated financial statements.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Fortress Transportation and Infrastructure Investors LLC (“we”, “us”, “our” or the “Company”) is a Delaware limited liability company which, through its subsidiary, Fortress Worldwide Transportation and Infrastructure General Partnership (the “Partnership”), owns and leases aviation equipment and also owns and operates (i) a multi-modal crude oil and refined products terminal in Beaumont, Texas (“Jefferson Terminal”), (ii) a deep-water port located along the Delaware River with an underground storage cavern, a new multipurpose dock, a rail-to-ship transloading system and multiple industrial development opportunities (“Repauno”), (iii) an equity method investment in a multi-modal terminal located along the Ohio River with multiple industrial development opportunities, including a power plant in operation (“Long Ridge”) and (iv) five freight railroads and one switching company (“Transtar”) that provide rail service to certain manufacturing and production facilities.

Additionally, we own and lease offshore energy equipment and shipping containers.

We have four reportable segments, (i) Aviation Leasing, (ii) Jefferson Terminal, (iii) Ports and Terminals and (iv) Transtar, which operate in two primary businesses, Equipment Leasing and Infrastructure (see Note 19).

FTAI Aviation Ltd.

(“we”, “us”, “our” or the “Company” and formerly “Fortress Transportation and Infrastructure Investors LLC”) is a Cayman Islands exempted company which through its subsidiaries owns, leases, and sells aviation equipment and also develops and manufactures, through a joint venture, and repairs and sells, through exclusivity arrangements, aftermarket components for aircraft engines.

Additionally, we own and lease offshore energy equipment.

We have two reportable segments, (i) Aviation Leasing and (ii) Aerospace Products (see Note 14).

On August 1, 2022, the Company completed the spin-off of its infrastructure business into an independent publicly traded company.

Accordingly, the operating results of, and costs to separate, the infrastructure business are reported in Net loss from discontinued operations, net of income taxes in the Consolidated Statements of Operations for all periods presented.

In addition, the related assets and liabilities held prior to the spin-off are reported as Assets and Liabilities of Discontinued Operations on the Consolidated Balance Sheets.

All amounts and disclosures included in the Notes to Consolidated Financial Statements reflect only the Company's continuing operations unless otherwise noted.

For additional information, see Note 3, "Discontinued Operations."

On November 10, 2022, the Company completed a reverse merger transaction pursuant to the Agreement and Plan of Merger (the “Merger”) between Fortress Transportation and Infrastructure Investors LLC (“FTAI”) and the Company and the parties thereto, with FTAI becoming a subsidiary of the Company.

This reverse merger represents a transaction between entities under common control.

Upon merger completion, FTAI’s shareholders received one share of the Company’s ordinary shares, Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares in exchange for each share of FTAI’s common shares, Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares, respectively, with the new Shares of FTAI Aviation having substantially similar rights and privileges as the respective FTAI shares being converted.

All exchanges were completed without any further action from the shareholders.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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generally accepted accounting principles (“U.S.

GAAP”) and include both our accounts and those of our subsidiaries.

GAAP”) and include the accounts of us and our subsidiaries.

Principles of Consolidation —We consolidate all entities in which we have a controlling financial interest and control over significant operating decisions, as well as variable interest entities (“VIEs”) in which we are the primary beneficiary.

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such international operations are subject to the same risks as those associated with our United States operations as well as additional risks, including unexpected changes in regulatory requirements, heightened risk of political and economic instability, potentially adverse tax consequences and the burden of complying with foreign laws.

We do not have significant exposure to foreign currency risk as all of our leasing arrangements and the majority of terminal services revenue are denominated in U.S.

Variable Interest Entities — The assessment of whether an entity is a VIE and the determination of whether to consolidate a VIE requires judgment.

VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.

A VIE is required to be consolidated by its primary beneficiary, and only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Delaware River Partners LLC

During 2016, through Delaware River Partners LLC (“DRP”), a consolidated subsidiary, we purchased the assets of Repauno, which consisted primarily of land, a storage cavern, and riparian rights for the acquired land, site improvements and rights.

Upon acquisition there were no operational processes that could be applied to these assets that would result in outputs without significant green field development.

We currently hold an approximately 98 % economic interest, and a 100 % voting interest in DRP.

DRP is solely reliant on us to finance its activities and therefore is a VIE.

We concluded that we are the primary beneficiary and, accordingly, DRP has been presented on a consolidated basis in the accompanying financial statements.

Total VIE assets of DRP were $ 316.5 million and $ 273.6 million, and total VIE liabilities of DRP were $ 32.6 million and $ 32.2 million as of December 31, 2021 and 2020, respectively.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

We do not have significant exposure to foreign currency risk as all of our leasing arrangements are denominated in U.S.

Cash and Cash Equivalents —We consider all highly liquid short-term investments with a maturity of 90 days or less when purchased to be cash equivalents.

Restricted Cash —Restricted cash consists of funds required for the Company’s investment in iAero Thrust as described in subsequent events (Note 17).

Inventory —We hold aircraft engine modules, spare parts and used material inventory for trading and to support operations.

Inventory is carried at the lower of cost or net realizable value on our consolidated balance sheets.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Cash and Cash Equivalents — We consider all highly liquid short-term investments with a maturity of 90 days or less when purchased to be cash equivalents.

Restricted Cash —Restricted cash consists of prepaid interest and principal pursuant to the requirements of certain of our debt agreements (see Note 10) and other qualifying constructions projects at Jefferson Terminal.

Inventory —We hold aircraft engine modules, spare parts and used material inventory for trading and to support operations within our Aviation Leasing segment.

Aviation inventory is carried at the lower of cost or net realizable value on our balance sheet.

We had Aviation inventory of $ 100.3 million and $ 58.2 million as of December 31, 2021 and 2020, respectively, which is included in Other assets in the Consolidated Balance Sheets.

Commodities inventory is carried at the lower of cost or net realizable value on our balance sheet.

Commodities are removed from inventory based on the average cost at the time of sale.

We had commodities inventory of $ 6.8 million and $ 0.1 million as of December 31, 2021 and 2020, respectively, which is included in Other assets in the Consolidated Balance Sheets.

Property, Plant and Equipment, Leasing Equipment and Depreciation —Property, plant and equipment and leasing equipment are stated at cost (inclusive of capitalized acquisition costs, where applicable) and depreciated using the straight-line method, over estimated useful lives, to estimated residual values which are summarized as follows:

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Sum of engine core salvage value plus the estimated fair value of life limited parts

Aviation tooling and equipment 3 - 6 years from date of purchase

Scrap value at end of useful life

Offshore energy vessels 25 years from date of manufacture

10% of new build cost

Railcars and locomotives 1 - 50 years from date of manufacture

Scrap value at end of useful life

Track and track related assets 1 - 50 years from date of manufacture

Scrap value at end of useful life

Land, site improvements and rights N/A N/A

Bridges and tunnels 15 - 55 years

Scrap value at end of useful life

Buildings and site improvements 3 - 30 years

Scrap value at end of useful life

Railroad equipment 2 - 15 years from date of manufacture

Scrap value at end of useful life

Terminal machinery and equipment 15 - 25 years from date of manufacture

Scrap value at end of useful life

Vehicles 2 - 7 years from date of manufacture

Scrap value at end of useful life

Furniture and fixtures 3 - 6 years from date of purchase

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Interest costs directly related to and incurred during the construction period of property, plant and equipment are capitalized.

Significant spare parts are depreciated in conjunction with the underlying property, plant and equipment asset when placed in service.

We review our depreciation policies on a regular basis to determine whether changes have taken place that would suggest that a change in our depreciation policies, useful lives of our equipment or the assigned residual values is warranted.

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Normal repairs and maintenance are expensed as incurred.

We capitalize the costs associated with the drydockings and amortize them on a straight-line basis over the period between drydockings, usually between 30 and 60 months.

We capitalize the costs associated with the drydockings and amortize them on a straight-line basis over the period between drydockings, usually during a 60 month time span.

In accounting for leasing equipment, we make estimates about the expected useful lives, residual values and the fair value of acquired in-place leases and acquired maintenance liabilities (for aviation equipment).

In making these estimates, we rely upon observable market data for the same or similar types of equipment and, in the case of aviation equipment, our own estimates with respect to a lessee’s anticipated utilization of the aircraft or engine.

When we acquire leasing equipment subject to an in-place lease, determining the fair value of the in-place lease requires us to make assumptions regarding the current fair values of leases for identical or similar equipment, in order to determine if the in-place lease is within a fair value range of current lease

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

If a lease is below or above the range of current lease rates, the resulting lease discount or premium is recognized as a lease intangible and amortized into lease income over the remaining term of the lease.

We, through our equity method investment in Long Ridge, have a working interest in various natural gas reserves located in southeastern Ohio.

Our interest in this natural gas joint venture is consolidated on a proportionate basis by Long Ridge in accordance with Accounting Standards Codification (“ASC”) Topic 932 Extractive Activities – Oil and Gas .

We follow the successful efforts method of accounting for costs incurred in oil and gas producing activities.

Capitalized costs are amortized using the unit-of-production method based on total proved reserves.

Capitalized Interest — The interest cost associated with major development, construction projects and tax exempt bonds is capitalized and included in the cost of the project.

Capitalized Interest —The interest cost associated with major development and construction projects are capitalized and included in the cost of the project.

Interest capitalization ceases once a project is substantially complete or no longer undergoing construction activities to prepare it for its intended use.

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a significant change in market conditions;

or the introduction of newer technology aircraft, vessels, engines or railcars.

or the introduction of newer technology aircraft, vessels or engines.

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

The undiscounted cash flows consist of cash flows from currently contracted leases and terminal services contracts, future projected leases, terminal service and freight rail rates, transition costs, estimated down time and estimated residual or scrap values.

The undiscounted cash flows consist of cash flows from currently contracted leases and contracts, future projected leases, transition costs, estimated down time and estimated residual or scrap values.

In the event that an asset does not meet the recoverability test, the carrying value of the asset will be adjusted to fair value resulting in an impairment charge.

Management develops the assumptions used in the recoverability analysis based on its knowledge of active contracts, current and future expectations of the global demand for a particular asset and historical experience in the leasing markets, as well as information received from third party industry sources.

The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in contracted lease rates, terminal service, and freight rail rates, residual values, economic conditions, technology, demand for a particular asset type and other factors.

The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in contracted lease rates, residual values, economic conditions, technology, demand for a particular asset type and other factors.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Security Deposits —Our operating leases generally require the lessee to pay a security deposit or provide a letter of credit.

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When the lessee is required to return the aircraft in an improved maintenance condition, we record a maintenance right asset, as a component of other assets, for the estimated value of the end-of-life maintenance payment at acquisition.

We recognize payments received as end-of-lease compensation adjustments, within lease revenue or as a reduction to the maintenance right asset, when payment is received or collectability is assured.

In the event we are required to make payments at the end of the lease for redelivery conditions, amounts are accrued as additional maintenance liability and expensed when we are obligated and can reasonably estimate such payment.

We recognize payments received as end-of-lease compensation adjustments, within lease income or as a reduction to the maintenance right asset, when payment is received or collectability is assured.

Lease Incentives and Amortization —Lease incentives, which include lease acquisition costs related to reconfiguration of the aircraft cabin, other lessee specific modifications and other direct costs, are capitalized and amortized as a reduction of lease income over the primary term of the lease, assuming no lease renewals.

Goodwill — Goodwill includes the excess of the purchase price over the fair value of the net tangible and intangible assets associated with the acquisition of Jefferson Terminal and Transtar.

The carrying amount of goodwill was approximately $ 257.1 million and $ 122.7 million as of December 31, 2021 and 2020, respectively.

The goodwill amounts as of December 31, 2020 related to the Jefferson reporting unit.

The increase in 2021 reflects our acquisition of Transtar.

See Note 4 for additional information.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

We review the carrying values of goodwill at least annually to assess impairment since these assets are not amortized.

An annual impairment review is conducted as of October 1st of each year.

Additionally, we review the carrying value of goodwill whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

The determination of fair value involves significant management judgment.

For an annual goodwill impairment assessment, an optional qualitative analysis may be performed.

If the option is not elected or if it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a goodwill impairment test is performed to identify potential goodwill impairment and measure an impairment loss.

A qualitative analysis was not elected for the years ended December 31, 2021 or 2020.

Beginning in 2020, we adopted new guidance regarding the testing and recognition of a goodwill impairment, which prior to 2020 required two steps.

A goodwill impairment assessment compares the fair value of the respective reporting unit with its carrying amount, including goodwill.

The estimate of fair value of the respective reporting unit is based on the best information available as of the date of assessment, which primarily incorporates certain factors including our assumptions about operating results, business plans, income projections, anticipated future cash flows and market data.

If the estimated fair value of the reporting unit is less than the carrying amount, a goodwill impairment is recorded to the extent that the carrying value of the reporting unit exceeds its fair value.

We estimate the fair value of the Jefferson and Transtar reporting units using an income approach, specifically a discounted cash flow analysis.

This analysis requires us to make significant assumptions and estimates about the forecasted revenue growth rates, capital expenditures, the timing of future cash flows, and discount rates.

The estimates and assumptions used consider historical performance if indicative of future performance and are consistent with the assumptions used in determining future profit plans for the reporting units.

In connection with our impairment analysis, although we believe the estimates of fair value are reasonable, the determination of certain valuation inputs is subject to management's judgment.

Changes in these inputs, including as a result of events beyond our control, could materially affect the results of the impairment review.

If the forecasted cash flows or other key inputs are negatively revised in the future, the estimated fair value of the reporting unit could be adversely impacted, potentially leading to an impairment in the future that could materially affect our operating results.

Due to the acquisition of Transtar in the current year, the estimated fair value of that reporting unit approximates the book value.

The Jefferson reporting unit had an estimated fair value that exceeded its carrying value by less than 20%.

The Jefferson Terminal segment forecasted revenue is dependent on the ramp up of volumes under current and expected future contracts for storage and throughput of heavy and light crude and refined products and is subject to obtaining rail capacity for crude, expansion of refined product distribution to Mexico and movements in future oil spreads.

At October 31, 2021, approximately 4.3 million barrels of storage was currently operational with 1.9 million barrels currently under construction for new contracts which will complete our storage development for our main terminal.

Our discount rate for our 2021 goodwill impairment analysis was 9.0 % and our assumed terminal growth rate was 2.0 %.

If our strategy changes from planned capacity downward due to an inability to source contracts or expand volumes, the fair value of the reporting unit would be negatively affected, which could lead to an impairment.

The expansion of refineries in the Beaumont/Port Arthur area, as well as growing crude oil production in the U.S.

and Canada, are expected to result in increased demand for storage on the U.S.

Although we do not have significant direct exposure to volatility of crude oil prices, changes in crude oil pricing that affect long term refining planned output could impact Jefferson Terminal operations.

We expect the Jefferson Terminal segment to continue to generate positive Adjusted EBITDA in future years.

Although certain of our anticipated contracts or expected volumes from existing contracts for Jefferson Terminal have been delayed, we continue to believe our projected revenues are achievable.

Further delays in executing these contracts or achieving our projections could adversely affect the fair value of the reporting unit.

The impact of the COVID-19 global pandemic during 2020 and 2021 negatively affected refining volumes and therefore Jefferson Terminal crude throughput but we have seen the activity starting to normalize and are expected to ramp back to normal during 2022.

Furthermore, we anticipate strengthening macroeconomic demand for storage and the increasing spread between Western Canadian Crude and Western Texas Intermediate as Canadian crude pipeline apportionment increases.

Also, as our pipeline connections became fully operational during 2021, we remain positive for the outlook of Jefferson Terminal's earnings potential.

There were no impairments of goodwill for the years ended December 31, 2021, 2020, and 2019.

Intangibles and amortization — Intangibles include the value of acquired favorable and unfavorable leases and existing customer relationships acquired in connection with the acquisition of Jefferson Terminal and Transtar.

Intangibles and amortization —Intangibles include the value of acquired favorable and unfavorable leases.

In accounting for acquired leasing equipment, we make estimates about the fair value of the acquired leases.

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Acquired lease intangibles are amortized on a straight-line basis over the remaining lease terms, which collectively had a weighted-average remaining amortization period of approximately 61 months as of December 31, 2021, and are recorded as a component of equipment leasing revenues in the accompanying Consolidated Statements of Operations.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Customer relationship intangible assets are amortized on a straight-line basis over their useful lives as the pattern in which the asset’s economic benefits are consumed cannot reliably be determined.

Customer relationship intangible assets have useful lives ranging from 5 to 15 years, no estimated residual value, and amortization is recorded as a component of Depreciation and amortization in the Consolidated Statements of Operations.

The weighted-average remaining amortization period was approximately 154 months as of December 31, 2021.

Acquired lease intangibles are amortized on a straight-line basis over the remaining lease terms, which collectively had a weighted-average remaining amortization period of approximately 59 months as of December 31, 2022, and are recorded as a component of revenues in the accompanying Consolidated Statements of Operations.

Deferred Financing Costs —Costs incurred in connection with obtaining long term financing are capitalized and amortized to interest expense over the term of the underlying loans.

Unamortized deferred financing costs of $ 29.4 million and $ 43.0 million as of December 31, 2022 and 2021, respectively, are included in Debt, net in the Consolidated Balance Sheets.

We also have unamortized deferred revolver fees related to our revolving debt of $ 2.9 million and $ 1.6 million as of December 31, 2021 and 2020, respectively, which are included in Other assets in the Consolidated Balance Sheets.

We also have unamortized deferred revolver fees related to our revolving debt o f $ 5.5 million and $ 2.4 million as of December 31, 2022 and 2021, respectively, which are included in Other assets in the Consolidated Balance Sheets.

Amortization expense was $ 17.0 million , $ 19.1 million and $ 5.8 million for the years ended December 31, 2022, 2021 and 2020, respectively, and is included in Interest expense in the Consolidated Statements of Operations.

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See Note 3 for additional information related to our discontinued operations.

Equipment Leasing Revenues

Operating Leases —We lease equipment pursuant to operating leases.

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Maintenance payments received for which we expect to repay to the lessee are presented as Maintenance Deposits in our Consolidated Balance Sheets.

All excess maintenance payments received that we do not expect to repay to the lessee are recorded as Maintenance revenues.

All excess maintenance payments received that we do not expect to repay to the lessee are

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

recorded as Maintenance revenues.

Estimates in recognizing revenue include mean time between removal, projected costs for engine maintenance and forecasted utilization of aircraft which are affected by historical usage patterns and overall industry, market and economic conditions.

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The fair value of the lease may include a lease premium or discount, which is recorded as a favorable or unfavorable lease intangible.

In April 2020, the FASB Staff issued a question-and-answer document (the “Q&A”) regarding accounting for lease concessions related to the effects of the COVID-19 pandemic.

The Q&A permits an entity to elect to forgo the evaluation of the enforceable rights and obligations of a lease contract required under ASC 842, Leases , as long as the total rent payments after the lease concessions are substantially the same, or less than, the total rent payments in the existing lease.

The impact of the COVID-19 related lease concessions granted above did not have a material impact on our results of operations during the year ended December 31, 2021.

Finance Leases —From time to time we enter into finance lease arrangements that include a lessee obligation to purchase the leased equipment at the end of the lease term, a bargain purchase option, or provides for minimum lease payments with a present value that equals or exceeds substantially all of the fair value of the leased equipment at the date of lease inception.

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When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

Asset sales revenue —Asset sales revenue primarily consists of the transaction price related to the sale of aircraft and aircraft engines from our Aviation Leasing segment.

From time to time, the Company may also assign the related lease agreements to the customer as part of the sale of these asset s.

We routinely sell leasing equipment to customers and such transactions are considered recurring and ordinary in nature to our business.

As such, these sales are accounted for within the scope of ASC 606.

Revenue is recognized when a performance obligation is satisfied by transferring control over an asset to a customer.

Revenue is recorded with corresponding costs of sales, presented on a gross basis in the Consolidated Statements of Operations.

See Note 10 for additional information.

Aerospace Products revenue —Aerospace Products revenue primarily consists of the transaction price related to the sale of repaired CFM56-7B and CFM56-5B engines, engine modules, spare parts and used material inventory, and are accounted for within the scope of ASC 606.

Revenue is recognized when a performance obligation is satisfied by transferring control over the related asset to a customer.

Revenue is recorded with corresponding costs of sales, presented on a gross basis in the Consolidated Statements of Operations.

Leasing Arrangements —At contract inception, we evaluate whether an arrangement is or contains a lease for which we are the lessee (that is, arrangements which provide us with the right to control a physical asset for a period of time).

Operating lease right-of-use (“ROU”) assets and lease liabilities are included in Other assets and Other liabilities in our Consolidated Balance Sheets, respectively.

Finance lease ROU assets are recognized in Other assets and lease liabilities are recognized in Other liabilities in our Consolidated Balance Sheets.

All lease liabilities are measured at the present value of the unpaid lease payments, discounted using our incremental borrowing rate based on the information available at commencement date of the lease.

ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for prepaid rent and lease incentives.

Operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for prepaid or accrued lease payments and lease incentives.

The finance lease ROU assets are subsequently amortized using the straight-line method.

Operating lease expenses are recognized on a straight-line basis over the lease term.

With respect to finance leases, amortization of the ROU asset is presented separately from interest expense related to the finance lease liability and is recorded in Operating expenses in the Consolidated Statements of Operations.

Variable lease payments, which are primarily based on usage, are recognized when the associated activity occurs.

We have elected to combine lease and non-lease components for all lease contracts where we are the lessee.

Additionally, for arrangements with lease terms of 12 months or less, we do not recognize ROU assets, and lease liabilities and lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred.

Concentration of Credit Risk —We are subject to concentrations of credit risk with respect to amounts due from customers.

We attempt to limit our credit risk by performing ongoing credit evaluations.

No single customer accounted for greater than 10% of total revenue during the year ended December 31, 2022.

We earned 11 % and 11 % of our revenue from one customer in the Aviation Leasing segment during the years ended December 31, 2021, and 2020, respectively.

As of December 31, 2022, there were two customers in the Aviation Leasing segment that repres ented 20 % and 12 % of t otal accounts receivable, net.

As of December 31, 2021, there were two customers in the Aviation Leasing segment that represented 51 % and 18 % of total accounts receivable, net.

We maintain cash and restricted cash balances, which generally exceed federally insured limits, and subject us to credit risk, in high credit quality financial institutions.

We monitor the financial condition of these institutions and have not experienced any losses associated with these accounts.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Infrastructure Revenues

Allowance for Doubtful Accounts —We determine the allowance for doubtful accounts based on our assessment of the collectability of our receivables on a customer-by-customer basis.

Provision in credit losses is included in Operating expenses in the Consolidated Statement of Operations.

The activity in the allowance for doubtful accounts is as follows:

2022 2021 2020

Allowance at beginning of period $ 17,703 $ 4,823 $ 1,227

Provision for credit losses 47,877 12,880 3,596

Allowance at end of period $ 65,580 $ 17,703 $ 4,823

Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the first quarter of 2022.

As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines during the first quarter of 2022 and recognized approximately $ 47.1 million in provision for credit losses during the year ended December 31, 2022.

Our allowance for doubtful accounts at December 31, 2022 includes all accounts receivable exposure to Russian and Ukrainian customers.

Comprehensive Income (Loss) — Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from investments by and distributions to owners.

Our comprehensive income (loss) represents net income (loss), as presented in the Consolidated Statements of Operations, adjusted for fair value changes for pensions and other postretirement benefits of discontinued operations, and other comprehensive income related to cash flow hedges of our equity method investees of discontinued operations.

These changes are also recorded in Accumulated other comprehensive loss in our Consolidated Balance Sheets.

The cash flow impact of derivative contracts held by the equity method investees that are not designated as hedging instruments is recognized in Equity in losses (earnings) in unconsolidated entities in our Consolidated Statements of Cash Flows, and the cash flow impact of commodity derivatives held by our consolidated subsidiaries is recognized in Change in fair value of non-hedge derivatives in our Consolidated Statements of Cash Flows.

Other Assets — Other assets is primarily comprised of lease incentives of $ 37.9 million and $ 46.9 million, purchase deposits of $ 6.7 million and $ 13.7 million, notes receivable of $ 49.2 million and $ 22.4 million, operating lease right-of-use assets, net of $ 3.0 million and $ 3.8 million, and finance leases, net of $ 6.4 million and $ 7.6 million, maintenance right assets of $ 6.8 million and $ 5.1 million, prepaid expenses of $ 1.9 million an d $ 4.0 million as of December 31, 2022 and 2021, respectively.

As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines and recognized approximately $ 7.5 million in amortization for the remaining lease incentives during the year ended December 31, 2022.

Dividends — Dividends are recorded if and when declared by the Board of Directors.

The Board of Directors declared cash dividends of $ 1.26 , $ 1.32 and $ 1.32 per ordinary share during each of the years ended December 31, 2022, 2021 and 2020, respectively.

Additionally, the Board of Directors declared cash dividends on the Series A Preferred Shares of $ 2.06 , $ 2.06 and $ 2.06 per share for the years ended December 31, 2022, 2021, and 2020, respectively, the Series B Preferred Shares of $ 2.00 ,$ 2.00 and $ 2.10 per share for the years ended December 31, 2022, 2021 and 2020, respectively, and the Series C Preferred Shares of $ 2.06 and $ 1.49 per share for the year ended December 31, 2022 and 2021, respectively.

Recent Accounting Pronouncements —In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842):

Lessors—Certain Leases with Variable Lease Payments .

This ASU requires lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if (i) the lease would have been classified as a sales-type lease or a direct financing lease under Topic 842 and (ii) the lessor would have otherwise recognized a day-one loss.

This standard is effective for all reporting periods beginning after December 15, 2021.

We adopted this guidance in the first quarter of 2022, which did not have a material impact on our consolidated financial statements.

DISCONTINUED OPERATIONS

FTAI Infrastructure Inc.

(“FTAI Infrastructure”) Spin-Off

On April 28, 2022, the Board of Directors of the Company unanimously approved the previously announced spin-off of the Company’s infrastructure business held by FTAI Infrastructure (a wholly owned subsidiary of the Company).

The spin-off was effected as a distribution of all of the shares owned by the Company of common stock of FTAI Infrastructure to the holders of the Company’s ordinary shares as of July 21, 2022.

The distribution was completed on August 1, 2022.

Under ASC 205-20, Presentation of Financial Statements – Discontinued Operations , the spin-off met the criteria to be reported as a discontinued operation.

Therefore, FTAI Infrastructure is presented as a discontinued operation within the Company’s financial statements for all periods prior to August 1, 2022.

FTAI Infrastructure is a corporation for U.S.

federal income tax purposes and holds, among other things, the Company’s previously held interests in the (i) Jefferson Terminal business, (ii) Repauno business, (iii) Long Ridge investment, and (iv) Transtar business.

FTAI Infrastructure retained all related project-level debt of those businesses.

In connection with the spin-off, FTAI Infrastructure paid a dividend of $ 730.3 million to the Company.

The Company used these proceeds to repay all

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

outstanding borrowings under its 2021 bridge loans, $ 200.0 million of its 6.50 % senior unsecured notes due 2025, and approximately $ 175.0 million of the outstanding borrowings under its revolving credit facility.

FTAI retained the aviation business and certain other assets, and FTAI’s remaining outstanding corporate indebtedness.

In connection with the spin-off, the Company and the Manager assigned the Company’s then-existing management agreement to FTAI Infrastructure, and FTAI Infrastructure and the Manager executed an amended and restated agreement.

The Company and certain of its subsidiaries executed a new management agreement with the Manager.

The new management agreement has an initial term of six years.

The Manager is entitled to a management fee and reimbursement of certain expenses on substantially similar terms as the previous arrangements with the Manager, which were assigned to FTAI Infrastructure.

Prior to the Merger described below, our Manager remained entitled to incentive allocations (comprised of income incentive allocation and capital gains incentive allocation) on the same terms as they existed prior to spin-off.

Following the Merger, the Company entered into a Services and Profit Sharing Agreement (the “Services and Profit Sharing Agreement”), with a subsidiary of the Company and Fortress Worldwide Transportation and Infrastructure Master GP LLC (“Master GP”), pursuant to which Master GP is entitled to incentive payments on substantially similar terms as the previous arrangements.

Critical Accounting Policies

Revenue Recognition

Revenues of discontinued operations consist of the following revenue streams:

Terminal Services Revenues —Terminal services are provided to customers for the receipt and redelivery of various commodities.

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Interline revenues are derived from transportation services for railcars that originate or terminate at our railroads and involve one or more other carriers.

For interline traffic, one railroad typically invoices a customer on behalf of all railroads participating in the route directed by the customer.

The invoicing railroad then pays the other railroads its portion of the total amount invoiced on a monthly basis.

We record revenue related to interline traffic for transportation service segments provided by carriers along railroads that are not owned or controlled by us on a net basis.

Interline revenues are recognized as the transportation movements occur.

Our ancillary services revenue primarily relates to demurrage and storage services.

Ancillary services revenue primarily relates to demurrage and storage services.

Demurrage represents charges assessed by railroads for the detention of cars by shippers or receivers of freight beyond a specified free time and is recognized on a per day basis.

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Lease income is recognized on a straight-line basis over the terms of the relevant lease agreement.

Crude Marketing Revenues —Crude marketing revenues consist of marketing revenue related to Canadian crude oil.

Contracts to sell crude products to customers contain performance obligations to deliver the product over the term of the contract.

The revenues are recognized when the control of the product is transferred to the customer, based on the volume delivered and the price within the contract.

Revenues are typically invoiced and paid on a monthly basis.

Other Revenue —Other revenue primarily consists of revenue related to the handling, storage and sale of raw materials.

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Other revenues are typically invoiced and paid on a monthly basis.

Additionally, other revenue consists of revenue related to derivative trading activities.

See Commodity Derivatives below for additional information.

Payment terms for Infrastructure Revenues are generally short term in nature.

Operating lease right-of-use (“ROU”) assets and lease liabilities are recognized in Operating lease right-of-use assets, net and Operating lease liabilities in our Consolidated Balance Sheets, respectively.

Finance lease ROU assets are recognized in Property, plant and equipment, net and lease liabilities are recognized in Other liabilities in our Consolidated Balance Sheets.

ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for prepaid rent and lease incentives.

Operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for prepaid or accrued lease payments and lease incentives.

The finance lease ROU assets are subsequently amortized using the straight-line method.

Operating lease expenses are recognized on a straight-line basis over the lease term.

Variable lease payments, which are primarily based on usage, are recognized when the associated activity occurs.

We have elected to combine lease and non-lease components for all lease contracts where we are the lessee.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Concentration of Credit Risk — We are subject to concentrations of credit risk with respect to amounts due from customers.

We attempt to limit our credit risk by performing ongoing credit evaluations.

We earned approximately 11 % and 12 % of our revenue from one customer in the Aviation segment and one customer in the Transtar segment during the year ended December 31, 2021.

We earned 11 % and 19 % of our revenue from one customer in the Aviation Leasing segment and one customer in the Jefferson Terminal segment during the years ended December 31, 2020, and 2019, respectively.

As of December 31, 2021, there were two customers in the Aviation Leasing segment that represented 36 % and 13 % of total accounts receivable, net.

As of December 31, 2020, there were two customers in the Aviation Leasing segment that represented 40 % and 15 % of total accounts receivable, net.

We maintain cash and restricted cash balances, which generally exceed federally insured limits, and subject us to credit risk, in high credit quality financial institutions.

We monitor the financial condition of these institutions and have not experienced any losses associated with these accounts.

Allowance for Doubtful Accounts — We determine the allowance for doubtful accounts based on our assessment of the collectability of our receivables on a customer-by-customer basis.

The allowance for doubtful accounts was $ 16.9 million and $ 4.6 million as of December 31, 2021 and 2020, respectively.

Bad debt expense was $ 13.0 million, $ 3.6 million and $ 3.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Expense Recognition —Expenses are recognized on an accrual basis as incurred.

Acquisition and Transaction Expenses —Acquisition and transaction expense is comprised of costs related to business combinations, dispositions and terminated deal costs related to asset acquisitions, including advisory, legal, accounting, valuation and other professional or consulting fees.

Our comprehensive income (loss) represents net income (loss), as presented in the Consolidated Statements of Operations, adjusted for fair value changes recorded in other comprehensive income related to cash flow hedges of our equity method investees and pension and other postretirement benefits.

Derivative Financial Instruments

Electricity Derivatives — Through our equity method investment in Long Ridge, we enter into derivative contracts as part of a risk management program to mitigate price risk associated with certain electricity price exposures.

We primarily use swap derivative contracts, which are agreements to buy or sell a quantity of electricity at a predetermined future date and at a predetermined price.

Cash Flow Hedges

Certain of these derivative instruments are designated and qualify as cash flow hedges.

Our share of the derivative's gain or loss is reported as Other comprehensive income (loss) related to equity method investees in our Consolidated Statements of Comprehensive (Loss) Income and recorded in Accumulated other comprehensive (loss) income in our Consolidated Balance Sheets.

The change in our equity method investment balance related to derivative gains or losses on cash flow hedges is disclosed as a Non-cash change in equity method investment in our Consolidated Statements of Cash Flows.

Derivatives Not Designated as Hedging Instruments

Certain of these derivative instruments are not designated as hedging instruments for accounting purposes.

Our share of change in fair value of these contracts is recognized in Equity in earnings (losses) in unconsolidated entities in the Consolidated Statements of Operations.

The cash flow impact of derivative contracts that are not designated as hedging instruments is recognized in Equity in earnings (losses) in unconsolidated entities in our Consolidated Statements of Cash Flows.

Commodity Derivatives — We also enter into short-term and long-term crude forward contracts.

Gains and losses related to our crude sales and purchase derivatives are recorded on a gross basis and are included in Crude marketing revenues and Operating expenses, respectively, in our Consolidated Statements of Operations.

The cash flow impact of these derivatives is recognized in Change in fair value of non-hedge derivatives in our Consolidated Statements of Cash Flows.

Additionally, depending on market conditions, we enter into short-term forward purchase and sales contracts for butane.

Gains and losses related to our butane derivatives are recorded on a net basis and are included in Other revenue in our Consolidated Statements of Operations, as these contracts are considered part of central operating activities.

The cash flow impact of these derivatives is recognized in Change in fair value of non-hedge derivatives in our Consolidated Statements of Cash Flows.

See Note 12 for additional details related to our commodity derivatives.

Foreign Currency — Our functional and reporting currency is the U.S.

Purchases and sales of assets and income and expense items denominated in foreign currencies are translated into U.S.

dollar amounts on the respective dates of such transactions.

Net realized foreign currency gains or losses relating to the differences between these recorded amounts and the U.S.

dollar equivalent actually received or paid are reported as a component of operating expenses within the Consolidated Statement of Operations.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

Additionally, other revenue consists of revenue related to derivative trading activities and also includes revenue related to providing roadside assistance services to customers in the intermodal and over-the-road trucking industries.

Revenue is recognized when a performance obligation is satisfied by completing a repair service at a point in time.

Revenues are typically invoiced for each repair and generally have 30-day payment terms.

Variable Interest Entity

The assessment of whether an entity is a VIE and the determination of whether to consolidate a VIE requires judgment.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Income Taxes — A portion of our income earned by our corporate subsidiaries is subject to U.S.

federal and state income taxation and is taxed at currently enacted rates.

The remainder of our income is allocated directly to our partners and is not subject to a corporate level of taxation.

Certain subsidiaries of ours are subject to income tax in the foreign countries in which they conduct business.

We account for these taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

A valuation allowance is established when management believes it is more likely than not that a deferred tax asset will not be realized.

We file income tax returns in the U.S.

federal jurisdiction, various state jurisdictions and in certain foreign jurisdictions.

The income tax returns filed by us and our subsidiaries are subject to examination by the U.S.

federal, state and foreign tax authorities.

We recognize tax benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its technical merits.

Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes in the Consolidated Statements of Operations.

Other Assets — Other assets is primarily comprised of commodities inventory of $ 6.8 million and $ 0.1 million, purchase deposits for acquisitions of $ 13.7 million and $ 6.1 million, lease incentives of $ 46.9 million and $ 55.1 million, prepaid expenses of $ 21.4 million and $ 10.1 million, notes receivable of $ 40.4 million and $ 0.7 million, maintenance right assets of $ 5.1 million and $ 6.4 million and aircraft engine modules, spare parts and used material inventory of $ 100.3 million and $ 58.2 million as of December 31, 2021 and 2020, respectively.

Accounts Payable and Accrued Liabilities —Accounts payable and accrued liabilities primarily include payables relating to construction projects, interline payables to other railroads, aviation leasing equipment maintenance and aircraft engine modules, spare parts, used material inventory , accrued compensation and interest.

Pension and Other Postretirement Benefits — We have obligations for a pension and a postretirement benefit plan in connection with the acquisition of Transtar for certain eligible Transtar employees.

The pension and other postretirement obligations and the related net periodic costs are based on, among other things, assumptions regarding the discount rate, salary increases, the projected mortality of participants and the current level and future escalation of health care costs.

Actuarial gains and losses occur when actual experience differs from any of the many assumptions used to value the benefit plans, or when assumptions change.

We will recognize into income on an annual basis a portion of unrecognized actuarial net gains or losses that exceed 10 percent of the projected benefit obligations (the corridor).

These unrecognized amounts in excess of the corridor are amortized over the plan participants' average life expectancy or average future service, depending on the demographics of the plan.

Refer to Note 16 for additional discussion on the pension and postretirement plans.

Dividends — Dividends are recorded if and when declared by the Board of Directors.

The Board of Directors declared cash dividends of $ 1.32 per common share during each of the years ended December 31, 2021, 2020 and 2019.

Additionally, the Board of Directors declared cash dividends on the Series A Preferred Shares of $ 2.06 , $ 2.06 and $ 0.53 per share for the years ended December 31, 2021, 2020 and 2019, respectively, the Series B Preferred Shares of $ 2.00 and $ 2.10 per share for the years ended December 31, 2021 and 2020, respectively, and the Series C Preferred Shares of $ 1.49 for the year ended December 31, 2021.

Recent Accounting Pronouncements — In March 2020 and January 2021, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU 2021-01, Reference Rate Reform:

Scope, respectively.

Together, the ASUs temporarily simplify the accounting for contract modifications, including hedging relationships, due to the transition from LIBOR and other interbank offered rates to alternative reference interest rates.

For example, entities can elect not to remeasure the contracts at the modification date or reassess a previous accounting determination if certain conditions are met.

Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met.

The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022.

Adoption did not have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) .

This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted.

We adopted this guidance in the first quarter of 2021, which did not have a material impact on our consolidated financial statements.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

At December 31, 2021, we held an approximately 98 % economic interest, and a 100 % voting interest in Delaware River Partners LLC (“DRP”).

DRP was solely reliant on us to finance its activities and therefore was a VIE.

We concluded that we were the primary beneficiary;

and accordingly, DRP has been presented on a consolidated basis in the tables below.

Total VIE assets of DRP were $ 316.5 million and total VIE liabilities were $ 32.6 million as of December 31, 2021.

Goodwill included the excess of the purchase price over the fair value of the net tangible and intangible assets associated with the acquisition of Jefferson Terminal and Transtar.

Subsequent to the spin-off on August 1, 2022, the Company does not have any goodwill.

We reviewed the carrying values of goodwill at least annually to assess impairment since these assets are not amortized.

An annual impairment review was conducted as of October 1st of each year.

Additionally, we reviewed the carrying value of goodwill whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

The determination of fair value involves significant management judgment.

For an annual goodwill impairment assessment, an optional qualitative analysis may be performed.

A qualitative analysis was not elected for 2021 or 2020.

A goodwill impairment assessment compares the fair value of the respective reporting unit with its carrying amount, including goodwill.

We estimated the fair value of the Jefferson and Transtar reporting units using an income approach, specifically a discounted cash flow analysis.

The analysis required us to make significant assumptions and estimates about the forecasted revenue growth rates, capital expenditures, the timing of future cash flows, and discount rates.

The estimates and assumptions were used to consider historical performance if indicative of future performance and were consistent with the assumptions used in determining future profit plans for the reporting units.

There were no impairments of goodwill for the years ended December 31, 2022, 2021, and 2020.

Intangibles and amortization

Intangibles included the value of existing customer relationships acquired in connection with the acquisition of Jefferson Terminal and Transtar.

Customer relationship intangible assets were amortized on a straight-line basis over their useful lives as the pattern in which the asset’s economic benefits are consumed cannot reliably be determined.

Customer relationship intangible assets have useful lives ranging from 5 to 15 years, no estimated residual value, and amortization was recorded as a component of Depreciation and amortization in the Consolidated Statements of Operations.

The weighted-average remaining amortization period was approximately 154 months as of December 31, 2021.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Unadopted Accounting Pronouncements — In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842):

Lessors—Certain Leases with Variable Lease Payments .

This standard is effective for all reporting periods beginning after December 15, 2021.

We are currently assessing the impact this guidance may have on our consolidated financial statements.

DISCONTINUED OPERATIONS

In December 2019, we completed the sale of Central Maine & Quebec Railway (“CMQR”), which was previously reported as our Railroad segment.

Under ASC 205-20, this disposition met the criteria to be reported as discontinued operations.

Accordingly, the assets, liabilities and results of operations of CMQR have been reported as discontinued operations for all periods presented.

The following table presents the significant components of net income from discontinued operations:

Financial Information of Discontinued Operations

The following table presents the significant components of net loss from discontinued operations:

Year Ended December 31,

1 unchanged sentence

Total revenues $ 140,009 $ 120,219 $ 68,562

Cost of sales 12,732 — 10,864

Operating expense 92,478 98,541 58,527

General and administrative expenses 2,694 3,961 4,053

Acquisition and transaction expenses 13,971 4,030 —

Management fees and incentive allocation to affiliate 8,134 15,638 13,073

Depreciation and amortization 40,319 54,016 31,114

1 unchanged sentence

Total expenses 185,433 192,205 128,395

Equity in losses of unconsolidated entities ( 46,602 ) ( 11,331 ) ( 3,107 )

Gain on sale of assets, net 258 16 1,323

Other income — 1,331 77,468

Income before income taxes — 1,331 74,538

Provision for income taxes — — 1,076

Net income — 1,331 73,462

Net income attributable to non-controlling interests in consolidated subsidiaries — — 247

Net income attributable to shareholders $ — $ 1,331 $ 73,215

The following table presents the significant non-cash items and capital expenditures from discontinued operations:

Loss on extinguishment of debt — — ( 4,724 )

Other (expense) income ( 1,421 ) ( 8,727 ) 138

Total other expense ( 47,765 ) ( 20,042 ) ( 6,370 )

Loss before income taxes ( 93,189 ) ( 92,028 ) ( 66,203 )

Provision for (benefit from) income taxes 8,227 ( 4,183 ) ( 1,562 )

Net loss from discontinued operations, net of income taxes ( 101,416 ) ( 87,845 ) ( 64,641 )

Net loss attributable to non-controlling interests in consolidated subsidiaries ( 18,817 ) ( 26,472 ) ( 16,522 )

Net loss attributable to shareholders $ ( 82,599 ) $ ( 61,373 ) $ ( 48,119 )

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following table summarizes the carrying value of the major classes of assets and liabilities of discontinued operations as of December 31, 2021:

December 31, 2021

Cash and cash equivalents $ 49,872

Restricted cash 251,983

Accounts receivable, net 50,301

Leasing equipment, net 36,012

Operating lease right-of-use assets, net 71,547

Property, plant and equipment, net 1,517,594

Investments 54,408

Intangible assets, net 67,737

Goodwill 257,137

Other assets 85,710

Total assets of discontinued operations 2,442,301

Accounts payable and accrued liabilities 115,634

Debt, net 718,624

Operating lease liabilities 70,404

Other liabilities 75,593

Total liabilities of discontinued operations 980,255

The cash flows related to discontinued operations have not been segregated, and are included in the Consolidated Statements of Cash Flows for all periods presented.

The following table summarizes depreciation and amortization, capital expenditures, and other significant operating and investing noncash items of discontinued operations for each period presented:

Year Ended December 31,

1 unchanged sentence

Operating activities:

Equity in losses of unconsolidated entities $ 46,601 $ 11,331 $ 3,107

Depreciation and amortization 40,319 54,016 31,114

Amortization of deferred financing costs — — 256

Share-based compensation expense — — 3,114

Equity-based compensation 2,623 4,038 2,325

Investing activities:

Purchases of property, plant and equipment $ — $ — $ ( 6,949 )

ACQUISITION OF TRANSTAR LLC

On July 28, 2021, we completed the acquisition for 100 % of the equity interests of Transtar, LLC (“Transtar”) from United States Steel Corporation (“USS”) for total cash consideration of $ 636 million.

Transtar is comprised of five freight railroads and one switching company, of which two railroads are connected to USS’s largest production facilities.

We also entered into an exclusive rail partnership with USS, under which we will provide rail service to USS for an initial term of 15 years with minimum volume commitments for the first five years.

Transtar operates as a separate reportable segment within our Infrastructure business.

See Note 19 for additional information.

The results of operations at Transtar have been included in the Consolidated Statements of Operations as of the effective date of the acquisition.

In connection with the acquisition, we recorded $ 9.8 million of acquisition and transaction expense during the year ended December 31, 2021.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

Acquisition of property, plant and equipment $ ( 129,920 ) $ ( 140,896 ) $ ( 247,961 )

Acquisition of business, net of cash acquired ( 3,819 ) ( 627,090 ) —

Investment in unconsolidated entities 7,954 53,055 ( 4,690 )

Proceeds from sale of property, plant and equipment 5,289 4,494 —

Non-cash change in equity method investment ( 182,963 ) ( 129,907 ) ( 26,609 )

Conversion of interests in unconsolidated entities ( 21,302 ) — —

The Company accounted for Long Ridge Terminal LLC, included in liabilities of discontinued operations at December 31, 2021 included above, using the equity method of accounting.

Summarized financial data for Long Ridge Terminal LLC are shown in the following tables for the periods in which the Company held the equity investment.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

We funded the transaction with bridge loans in an aggregate principal amount of $ 650 million.

In September 2021, we issued new equity and debt and repaid in full the bridge loans.

See Notes 10 and 20 for additional information.

In accordance with ASC 805, the following fair values were assigned to assets acquired and liabilities assumed based on management’s estimates and assumptions and are preliminary.

The significant assumptions used to estimate the value of the customer relationship intangible assets included discount rate and future revenues and operating expenses.

The final valuation and related allocation of the purchase price is subject to change as additional information is received and will be completed no later than 12 months after the closing date.

The final acquisition accounting adjustments may be materially different and may include (i) changes in fair values of Property, plant and equipment and associated salvage values;

(ii) changes in allocations to Intangible assets, as well as goodwill;

and, (iii) other changes to assets and liabilities, such as working capital accounts and inventory.

The following table summarizes the preliminary allocation of the purchase price, as presented in our Consolidated Balance Sheets:

Fair value of assets acquired:

December 31, 2021

Balance Sheet

Cash and cash equivalents $ 2,932

Accounts receivable 18,625

Operating lease right-of-use assets 12,231

Property, plant and equipment 490,561

Intangible assets 60,000

Restricted cash 32,469

Accounts receivable, net 17,896

Property, plant, and equipment, net 764,607

Intangible assets, net 4,940

Goodwill 89,390

Inventory, net 1,691

Other assets 12,750

Total assets $ 926,675

Fair value of liabilities assumed:

Accounts payable and accrued liabilities $ 16,121

Operating lease liabilities 10,689

Pension and other postretirement benefits (1)

Debt, net 604,261

Derivative liabilities 339,033

Other liabilities 2,246

Total liabilities 961,661

Total purchase consideration $ 636,007

________________________________________________________

(1) Included in Other liabilities in the Consolidated Balance Sheets.

(2) Goodwill is primarily attributable to the assembled workforce of Transtar and the synergies expected to be achieved.

This goodwill is assigned to the new Transtar segment and is deductible for income tax purposes.

The following table presents the identifiable intangible assets and their estimated useful lives:

Estimated useful life in years Fair value

Customer relationships 15

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following table presents the property, plant and equipment and their estimated useful lives:

Estimated useful life in years Fair value

Railcars and locomotives 1 - 40

Track and track related assets 1 - 40

Land, site improvements and rights N/A 87,450

Bridges and tunnels 15 - 55

Buildings and improvements 3 - 25

Railroad equipment 2 - 15

Terminal machinery and equipment 2 - 15

Vehicles 2 - 5

Construction in progress N/A 1,928

Computer hardware and software 2 - 5

Total $ 490,561

The unaudited financial information in the table below summarizes the combined results of operations of FTAI and Transtar on a pro forma basis, as though the companies had been combined as of January 1, 2020.

These pro forma results were based on estimates and assumptions which we believe are reasonable.

The pro forma adjustments are primarily comprised of the following:

• The allocation of the purchase price and related adjustments, including adjustments to depreciation and amortization expense related to the fair value of property, plant and equipment and intangible assets acquired;

• Impacts of debt financing, including interest for debt issued and amortization of deferred financing costs;

• The exclusion of acquisition-related costs incurred during the year ended December 31, 2021 and allocation of substantially all acquisition-related costs to the year ended December 31, 2020;

• Associated tax-related impacts of adjustments.

The following unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2020.

Year Ended December 31,

Total revenue $ 536,805 $ 481,678

Net loss attributable to shareholders ( 104,611 ) ( 125,989 )

Shareholders’ equity ( 1,035 )

Accumulated deficit ( 33,951 )

Total equity ( 34,986 )

Total liabilities and equity $ 926,675

Income Statement 2022 2021 2020

Total revenues $ 15,199 $ 85,638 $ 24,917

Operating expenses 36,693 28,310 16,339

Depreciation and amortization 29,381 24,836 11,004

Interest expense 30,622 11,005 2,037

Total expenses 96,696 64,151 29,380

Total other expense ( 234 ) ( 44,302 ) ( 1,967 )

Net loss $ ( 81,731 ) $ ( 22,815 ) $ ( 6,430 )

LEASING EQUIPMENT, NET

3 unchanged sentences

Leasing equipment, net $ 1,913,553 $ 1,855,637

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

During the year ended December 31, 2021, we evaluated our leasing equipment portfolio and identified certain assets with indicators of impairment including, but not limited to, early lease terminations and a decline in market values due to the ongoing COVID-19 pandemic for leasing equipment.

For these assets, we performed a recoverability assessment at the individual asset level and determined that the carrying amounts exceeded the estimated future undiscounted net cash flows and these assets were impaired.

To determine fair value, we used both a market approach, using quoted market prices for the same or similar assets, and an income approach, using discounted cash flows and an estimated discount rate.

As a result, we adjusted the carrying value of these assets to fair value and recognized transactional impairment charges of $ 10.5 million, net of redelivery compensation.

Economic sanctions and export controls against Russia and Russia’s aviation industry have been imposed due to its invasion of Ukraine during the year ended December 31, 2022.

As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines.

As of December 31, 2022, four aircraft and one engine were still located in Ukraine and eight aircraft and seventeen engines were still located in Russia.

We determined that it is unlikely that we will regain possession of the aircraft and engines that have not yet been recovered from Ukraine and Russia.

As a result, we recognized an impairment charge totaling $ 120.0 million, net of maintenance deposits, to write-off the entire carrying value of leasing equipment assets that we do not expect to recover from Ukraine and Russia.

Additionally, we identified certain assets in our leasing equipment portfolio with indicators of impairment.

As a result, we adjusted the carrying value of these assets to fair value and recognized transactional impairment charges of $ 17.2 million, net of redelivery compensation during the year ended December 31, 2022.

The following table presents information related to acquisitions and dispositions of aviation leasing equipment:

11 unchanged sentences

Depreciation expense for leasing equipment $ 152,378 $ 147,444 $ 141,161

FINANCE LEASES, NET

Finance leases, net are summarized as follows:

Finance leases $ 8,358 $ 9,389

Unearned revenue ( 775 ) ( 2,462 )

Finance leases, net $ 7,583 $ 6,927

During the year ended December 31, 2021, we entered into 52-month sales-type lease arrangements for five airframes.

During the fourth quarter of 2021, one of our lessees exercised its option to purchase the aircraft for an amount equal to the remaining principal balance plus unpaid accrued interest per the terms of the agreement.

Additionally, during 2019, we received insurance proceeds for a vessel which was on nonaccrual status due to a casualty event.

The insurance proceeds were in excess of the book value of the finance lease, which was written down to zero, and we recognized a gain of approximately $ 1.0 million which is included in Other income in the Consolidated Statements of Operations.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net is summarized as follows:

Land, site improvements and rights $ 149,914 $ 52,047

Construction in progress 7,864 36,777

Bridges and Tunnels 174,889 —

Buildings and improvements 19,164 4,491

Terminal machinery and equipment 962,552 557,788

Track and track related assets 100,014 2,349

Railroad equipment 8,331 5,560

Railcars and locomotives 111,574 —

Computer hardware and software 5,335 5,101

Furniture and fixtures 1,449 1,374

3 unchanged sentences

Property, plant and equipment, net $ 10,014 $ 38,263

We added property, plant and equipment of $ 639.4 million and $ 258.9 million during the years ended December 31, 2021 and 2020, respectively, which primarily consist of assets acquired in our acquisition of Transtar and terminal machinery and equipment placed in service or under development at Jefferson Terminal and Repauno.

We added property, plant and equipment of $ 14.4 million and $ 14.5 million during the years ended December 31, 2022 and 2021, respectively, which primarily consist of the build out of the well intervention tower and riser system for the Pride vessel and the purchase of additional aviation module containers.

Additionally, we placed the well intervention tower into service on December 1, 2022, which resulted in a $ 42.1 million transfer out of property, plant and equipment and into leasing equipment.

Depreciation expense for property, plant and equipment is summarized as follows:

1 unchanged sentence

2022 2021 2020

Depreciation expense for property, plant and equipment:

Continuing operations $ 47,915 $ 26,581 $ 28,466

Discontinued operations — — 2,187

Total $ 47,915 $ 26,581 $ 30,653

Depreciation expense $ 539 $ 295 $ 126

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following table presents the ownership interests and carrying values of our investments:

4 unchanged sentences

Equity method 50 % 1,830 1,600

Long Ridge Terminal LLC (1)

Equity method 50 % — 122,539

FYX Trust Holdco LLC Equity 14 % 1,255 1,255

GM-FTAI Holdco LLC Equity method See below 52,295 —

Clean Planet Energy USA LLC Equity method 50 % 858 —

$ 22,037 $ 22,917

________________________________________________________

(1) The carrying value of $ 17.5 million as of December 31, 2021 is included in Other liabilities in the Consolidated Balance Sheets.

We did not recognize any other-than-temporary impairments for the year ended December 31, 2022.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following table presents our proportionate share of equity in (losses) earnings:

The following table presents our proportionate share of equity in income (losses):

Year Ended December 31,

1 unchanged sentence

Advanced Engine Repair JV $ ( 1,110 ) $ ( 1,403 ) $ ( 1,932 )

JGP Energy Partners LLC — — ( 292 )

Intermodal Finance I, Ltd.

470 114 ( 62 )

Long Ridge Terminal LLC ( 11,429 ) ( 3,222 ) ( 192 )

GM-FTAI Holdco LLC ( 205 ) — —

Clean Planet Energy USA LLC ( 167 ) — —

Falcon MSN 177 LLC $ 741 — —

Total $ ( 369 ) $ ( 1,403 ) $ ( 1,932 )

Equity Method Investments

Clean Planet Energy USA LLC

In November 2021, we acquired 50 % of the Class A shares of Clean Planet Energy USA LLC (“CPE”) with an initial investment of $ 1.0 million.

CPE intends on building waste plastic-to-fuel plants in the United States.

The plants will convert various grades of non-recyclable waste plastic to renewable diesel in the form of jet fuel, diesel, naphtha, and low sulfur fuel oil.

We account for our investment in CPE as an equity method investment as we have significant influence through our ownership of Class A shares.

Falcon MSN 177 LLC

In November 2021, we invested $ 1.6 million for a 50 % interest in Falcon MSN 177 LLC, an entity that consists of one Dassault Falcon 2000 aircraft.

Falcon MSN 177 LLC leases the aircraft to charter operators on aircraft, crew maintenance, and insurance contracts.

We account for our investment in Falcon as an equity method investment as we have significant influence through our held interest.

GM-FTAI Holdco LLC

In September 2021, we acquired 1 % of the Class A shares and 50 % of the Class B shares of GM-FTAI Holdco LLC for $ 52.5 million.

GM-FTAI Holdco LLC owns 100 % interest in Gladieux Metals Recycling (“GMR”) and Aleon Renewable Metals LLC (“Aleon”).

GMR specializes in recycling spent catalyst produced in the petroleum refining industry.

Aleon plans to develop a lithium-ion battery recycling business across the United States.

Each planned location will collect, discharge and disassemble lithium-ion batteries to extract various metals in high-purity form for resale into the lithium-ion battery production market.

Aleon and GMR are governed by separate boards of directors.

Our ownership of Class A and B shares in GM-FTAI Holdco LLC provides us with 1 % and 50 % economic interest in GMR and Aleon, respectively.

We account for our investment in GM-FTAI Holdco LLC as an equity method investment as we have significant influence through our ownership of Class A and Class B shares of GM-FTAI Holdco LLC.

Long Ridge Terminal LLC

In December 2019, Ohio River Shareholder LLC (“ORP”), a wholly-owned subsidiary, contributed its equity interests in Long Ridge into Long Ridge Terminal LLC and sold a 49.9 % interest (the “Long Ridge Transaction”) for $ 150 million in cash, plus an earn out, which was written off during the year ended December 31, 2021.

We recognized a gain of $ 116.7 million in relation to the Long Ridge Transaction.

We no longer have a controlling interest in Long Ridge but still maintain significant influence through our retained interest and, therefore, now account for this investment in accordance with the equity method.

Following the sale, we deconsolidated ORP, which held the assets of Long Ridge.

Advanced Engine Repair JV

In 2016, we invested $ 15 million for a 25 % interest in an advanced engine repair joint venture.

We focus on developing new costs savings programs for engine repairs.

In December 2016, we invested $ 15 million for a 25 % interest in an advanced engine repair joint venture.

We focus on developing new cost savings programs for engine repairs.

We exercise significant influence over this investment and account for this investment as an equity method investment.

In August 2019, we expanded the scope of our joint venture and invested an additional $ 13.5 million and maintained a 25 % interest.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

JGP Energy Partners LLC

In 2016, we initiated activities in a 50 % non-controlling interest in JGP, a joint venture.

JGP was governed by a designated operating committee selected by the members in proportion to their equity interests.

JGP was solely reliant on its members to finance its activities and therefore was a VIE.

Initially, we concluded that we were not the primary beneficiary of JGP as the members shared equally in the risks and rewards and decision making authority of the entity and, therefore, we did not consolidate JGP and instead accounted for this investment in accordance with the equity method.

In December 2019, we purchased the remaining 50 % interest in JGP from the joint venture partner for a purchase price of approximately $ 30 million, consolidated JGP and no longer account for this as an equity method investment.

As a result of this transaction, we recorded additional goodwill of $ 6.6 million and a gain of $ 4.6 million during the year ended December 31, 2019.

Intermodal Finance I, Ltd.

In 2012, we acquired a 51 % non-controlling interest in Intermodal Finance I, Ltd.

(“Intermodal”), a joint venture.

Intermodal is governed by a board of directors, and its shareholders have voting rights through their equity interests.

As such, Intermodal is not within the scope of ASC 810-20 and should be evaluated for consolidation under the voting interest model.

Due to the existence of substantive participating rights of the 49 % equity investor, including the joint approval of material operating and capital decisions, such as material contracts and capital expenditures consistent with ASC 810-10-25-11, we do not have unilateral rights over this investment and, therefore, we do not consolidate Intermodal but account for this investment in accordance with the equity method.

We do not have a variable interest in this investment as none of the criteria of ASC 810-10-15-14 were met.

As of December 31, 2021, Intermodal owns a portfolio of approximately 500 sh ipping containers subject to multiple operating leases.

Equity Investments

FYX Trust Holdco LLC

In July 2020, we invested $ 1.3 million for a 14 % interest in an operating company that provides roadside assistance services for the intermodal and over-the-road trucking industries.

FYX has developed a mobile and web-based application that connects fleet managers, owner-operators, and drivers with repair vendors to efficiently and reliably quote, dispatch, monitor, and bill roadside repair services.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The tables below present summarized financial information for Long Ridge Terminal LLC:

Balance Sheet 2021 2020

Cash and cash equivalents $ 2,932 $ 3,057

Restricted cash 32,469 26,920

Accounts receivable, net 17,896 5,711

Property, plant, and equipment, net 764,607 612,234

Intangible assets, net 4,940 5,320

Goodwill 89,390 89,390

Other assets 14,441 9,384

Total assets $ 926,675 $ 752,016

Accounts payable and accrued liabilities $ 16,121 $ 25,173

Debt, net 604,261 445,733

Other liabilities 341,279 36,515

Total liabilities 961,661 507,421

Shareholders’ equity ( 1,035 ) 251,403

Accumulated deficit ( 33,951 ) ( 6,808 )

Total equity ( 34,986 ) 244,595

Total liabilities and equity $ 926,675 $ 752,016

Year Ended December 31,

Income Statement 2021 2020

Total revenue 85,638 24,917

Operating expenses 28,310 16,339

Depreciation and amortization 24,836 11,004

Interest expense 11,005 2,037

Total expenses 64,151 29,380

Other expense ( 44,302 ) ( 1,967 )

Net loss $ ( 22,815 ) $ ( 6,430 )

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

Falcon MSN 177 LLC

In November 2021, we invested $ 1.6 million for a 50 % interest in Falcon MSN 177 LLC, an entity that consists of one Dassault Falcon 2000 aircraft.

Falcon MSN 177 LLC leases the aircraft to charter operators on aircraft, crew, maintenance and insurance contracts.

We account for our investment in Falcon as an equity method investment as we have significant influence through our interest.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

Our intangible assets and liabilities, net are summarized as follows:

December 31, 2021

Aviation Leasing Jefferson Terminal Transtar Total

Intangible assets

Acquired favorable lease intangibles $ 67,013 $ — $ — $ 67,013

Accumulated amortization ( 36,051 ) — — ( 36,051 )

Acquired favorable lease intangibles, net 30,962 — — 30,962

Customer relationships — 35,513 60,000 95,513

Accumulated amortization — ( 26,038 ) ( 1,738 ) ( 27,776 )

Acquired customer relationships, net — 9,475 58,262 67,737

Total intangible assets, net $ 30,962 $ 9,475 $ 58,262 $ 98,699

Intangible liabilities

Acquired unfavorable lease intangibles $ 14,795 $ — $ — $ 14,795

Accumulated amortization ( 6,068 ) — — ( 6,068 )

Acquired unfavorable lease intangibles, net $ 8,727 $ — $ — $ 8,727

December 31, 2020

Aviation Leasing Jefferson Terminal Transtar Total

December 31, 2022 December 31, 2021

Intangible assets

2 unchanged sentences

Acquired favorable lease intangibles, net $ 41,955 $ 30,962

Customer relationships — 35,513 — 35,513

Accumulated amortization — ( 22,485 ) — ( 22,485 )

Acquired customer relationships, net — 13,028 — 13,028

Total intangible assets, net $ 5,758 $ 13,028 $ — $ 18,786

Intangible liabilities

2 unchanged sentences

Acquired unfavorable lease intangibles, net $ 10,545 $ 8,727

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Intangible liabilities relate to unfavorable lease intangibles and are included as a component of Other liabilities in the accompanying Consolidated Balance Sheets.

Intangible assets and liabilities are all held within the Aviation Leasing segment.

Intangible liabilities relate to unfavorable lease intangibles and are included as a component of Other liabilities in the Consolidated Balance Sheets.

Amortization of intangible assets and liabilities is recorded as follows:

1 unchanged sentence

2022 2021 2020

Lease intangibles Equipment leasing revenues $ 4,993 $ 3,747 $ 7,181

Customer relationships:

Depreciation and amortization

Continuing operations 5,292 3,553 3,553

Discontinued operations — — 15

Total $ 10,285 $ 7,300 $ 10,749

Lease intangibles Revenues $ 13,913 $ 4,993 $ 3,747

As of December 31, 2022, estimated net annual amortization of intangibles is as follows:

2 unchanged sentences

Total $ 31,410

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4 unchanged sentences

Loans payable

DRP Revolver (1)

$ 25,000 (i) Base Rate + 2.75 %;

(ii) Base Rate + 3.75 % (Eurodollar)

11/5/24 $ 25,000

Revolving Credit

Revolving Credit Facility (1)

150,000 (i) Base Rate + 1.75 %;

(ii) Adjusted Term SOFR Rate + 2.75 %

EB-5 Loan Agreement 26,100 5.75 % 1/25/26 —

9/20/25 189,473

2021 Bridge Loans — (i) Base Rate + 1.75 %;

(ii) Adjusted Term SOFR Rate + 2.75 %

12/15/22 100,527

Total loans payable 150,000 290,000

Bonds payable

Series 2020 Bonds 263,980 (i) Tax Exempt Series 2020A Bonds:

(ii) Tax Exempt Series 2020A Bonds:

(iii) Taxable Series 2020B Bonds:

Series 2021 Bonds 425,000 (i) Series 2021A Bonds:

1.875 % to 3.000 %

(ii) Series 2021B Bonds:

(i) 1/1/26 to 1/1/50

Senior Notes due 2025 (2)

— N/A N/A 399,331

Senior Notes due 2025 (4)

653,036 6.50 % 10/1/25 852,198

9 unchanged sentences

(1) Requires a quarterly commitment fee at a rate of 0.50 % on the average daily unused portion, as well as customary letter of credit fees and agency fees.

(2) Requires a quarterly commitment fee at a rate of 0.50 % on the average daily unused portion, as well as customary letter of credit fees and agency fees.

(3) Includes unamortized discount of $ 2,230 and an unamortized premium of $ 1,561 at December 31, 2020 .

(2) Includes unamortized discount of $ 1,318 and $ 3,509 at December 31, 2022 and 2021, respectively, and an unamortized premium of $ 4,354 and $ 5,707 at December 31, 2022 and 2021, respectively.

(5) Includes an unamortized premium of $ 2,416 at December 31, 2021.

2021 Activity

EB-5 Loan Agreement — On January 25, 2021, Jefferson entered into a non-recourse loan agreement under the U.S.

Citizenship and Immigration Services EB-5 Program (“EB-5 Loan Agreement”) to pay for the development, construction and acquisition of certain facilities at Jefferson Terminal.

The maximum aggregate principal amount available under the EB-5 Loan Agreement is $ 61.2 million, of which $ 26.1 million is available under the first tranche and $ 35.1 million is available under the second tranche.

The loans mature in 5 years from the funding of each individual tranche with an option to extend the maturity for both tranches by two one-year periods.

If the option to extend the maturity is exercised, the interest rate will increase to 6.25 % from 5.75 % for the extension period.

Senior Notes due 2028 — On April 12, 2021, we issued $ 500 million aggregate principal amount of senior unsecured notes due 2028 (the “Senior Notes due 2028”).

The Senior Notes due 2028 bear interest at a rate of 5.50 % per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2021.

We used a portion of the proceeds to redeem in full the Senior Notes due 2022 (see below), and used the remaining net proceeds for general corporate purposes, including the funding of acquisitions and investments, including aviation investments.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

On September 24, 2021, we issued an additional $ 500 million aggregate principal amount of the Senior Notes due 2028 at an offering price of 100.50 %, plus accrued interest from and including April 12, 2021.

We used a portion of the net proceeds in the amount of $ 358.3 million to repay in full the Bridge Loans (as defined below).

Senior Notes due 2022 — On May 7, 2021, we redeemed in full the Senior Notes due 2022, which totaled $ 400 million aggregate principal plus accrued and unpaid interest, and recognized a loss on extinguishment of debt of $ 3.3 million.

Bridge Loan Agreement — On July 28, 2021, in connection with our acquisition of Transtar, we entered into an agreement for senior unsecured bridge term loans (“Bridge Loans”) in an aggregate principal amount of $ 650 million, which we used to finance the acquisition and other certain fees associated with the transaction.

On September 14, 2021, we used net proceeds in the amount of $ 291.7 million from an equity offering (see Note 20) to repay a portion of the Bridge Loans.

On September 24, 2021, we used a portion of the net proceeds in the amount of $ 358.3 million from our issuance of the Senior Notes due 2028 to repay in full the Bridge Loans.

We recorded fees of approximately $ 12.2 million which are included in Interest expense in the Consolidated Statements of Operations.

Series 2021 Bonds — On August 18, 2021, Jefferson issued $ 425 million aggregate principal amount of Series 2021 Bonds, which are designated as $ 225 million of Series 2021A Dock and Wharf Facility Revenue Bonds (the “Series 2021A Bonds”) and $ 200 million of Series 2021B Taxable Facility Revenue Bonds (the “Taxable Series 2021B Bonds”).

The Series 2021A Bonds consist of:

i) $ 39.1 million aggregate principal amount of Serial Bonds maturing between January 1, 2026 and January 1, 2031, and bearing interest at specified fixed rates ranging from 1.875 % to 2.625 % per annum,

ii) $ 38.2 million aggregate principal amount of Term Bonds maturing January 1, 2036, and bearing interest at a fixed rate of 2.750 % per annum,

iii) $ 44.9 million aggregate principal amount of Term Bonds maturing January 1, 2041, and bearing interest at a fixed rate of 2.875 % per annum, and

iv) $ 102.8 million aggregate principal amount of Term Bonds maturing January 1, 2050, and bearing interest at a fixed rate of 3.00 % per annum.

The Taxable Series 2021B Bonds will mature on January 1, 2028, and bear interest at a fixed rate of 4.100 % per annum.

Jefferson used a portion of the net proceeds from the Series 2021 Bonds to repay certain indebtedness, and intend to use a portion of the net proceeds to pay for or reimburse the cost of development, construction and acquisition of certain facilities.

DRP Revolver — On November 5, 2021, we entered into an amendment to the DRP Revolver, which extends the maturity date under the DRP Revolver to November 5, 2024.

In connection with this extension, the obligations of FTAI to contribute capital in the event of an event of default under the DRP Revolver were terminated.

Revolving Credit Facility — On December 2, 2021, we entered into an amendment to the Revolving Credit Facility, which extends the maturity date under the Revolving Credit Facility to December 2, 2024.

2021 Bridge Loans — On December 2, 2021, we entered into an agreement for senior secured bridge term loans (“2021 Bridge Loans”) in an aggregate principal amount of $ 350.0 million, which we used to finance or refinance certain assets.

The 2021 Bridge Loans mature on December 15, 2022.

2020 Activity

Series 2020 Bonds — On February 11, 2020, our subsidiary (“Jefferson”) issued Series 2020 Bonds in an aggregate principal amount of $ 264.0 million (“Jefferson Refinancing”).

The Series 2020 Bonds are designated as $ 184.9 million of Series 2020A Dock and Wharf Facility Revenue Bonds (the “Tax Exempt Series 2020A Bonds”), and $ 79.1 million of Series 2020B Taxable Facility Revenue Bonds (the “Taxable Series 2020B Bonds”).

The Tax Exempt Series 2020A Bonds maturing on January 1, 2035 ($ 53.5 million aggregate principal amount) bear interest at a fixed rate of 3.625 %.

The Tax Exempt Series 2020A Bonds maturing on January 1, 2050 ($ 131.4 million aggregate principal amount) bear interest at a fixed rate of 4.00 %.

The Taxable Series 2020B Bonds will mature on January 1, 2025 and bear interest at a fixed rate of 6.00 %.

Jefferson used a portion of the net proceeds from this offering to refund, redeem and defease the Series 2012 Bonds, Series 2016 Bonds and Jefferson Revolver, and intends to use a portion of the net proceeds to pay for or reimburse the cost of development, construction and acquisition of certain facilities, to fund certain reserve and funded interest accounts related to the Series 2020 Bonds, and to pay for or reimburse certain costs of issuance of the Series 2020 Bonds.

Jefferson recognized a loss on extinguishment of debt of $ 4.7 million as a result of this transaction.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Revolving Credit Facility — On May 11, 2020, we entered into an amendment to the Revolving Credit Facility which, among other things, (i) permits the incurrence of additional secured indebtedness to finance the potential acquisition of certain aviation assets, subject to certain limitations, (ii) provides that, to the extent borrowings under the existing agreement exceed $ 150 million, we will pledge certain aviation assets as additional collateral and (iii) incorporates certain other updates, including procedures by which the parties will select a benchmark interest rate.

Senior Notes due 2027 — On July 28, 2020, we issued $ 400 million aggregate principal amount of senior unsecured notes due 2027 (the “2027 Notes”).

The 2027 Notes bear interest at a rate of 9.75 % per annum, payable semi-annually in arrears on February 1 and August 1 of each year, commencing on February 1, 2021.

We used a portion of the proceeds to repay $ 220 million of outstanding borrowings under the Revolving Credit Facility, and intend to use the remaining proceeds for general corporate purposes, and the funding of future acquisitions and investments, including aviation investments.

Senior Notes due 2025 — On December 23, 2020, we issued an additional $ 400 million of 2025 Notes at an offering price of 101.75 % of the principal amount plus accrued interest from and including October 1, 2020.

We used a portion of the proceeds to repay $ 300 million of outstanding 2022 Notes through the Tender Offer (as defined below), and to repay $ 50 million of borrowings under the Revolving Credit Facility.

Tender Offer for Senior Notes due 2022 — On December 9, 2020, we commenced a cash tender offer (the “Tender Offer”) for up to $ 300 million aggregate principal amount of the 2022 Notes.

On December 23, 2020, we completed the Tender Offer for the entire $ 300 million aggregate principal amount of 2022 Notes validly tendered in connection with the Tender Offer.

Holders whose notes were accepted for purchase received total consideration of $ 1,016.00 per $1,000 principal amount of 2022 Notes, including an early tender premium equal to $ 30.00 per $1,000 principal amount of 2022 Notes, plus accrued and unpaid interest on the 2022 Notes from September 15, 2020 (the most recent payment of semi-annual interest) to, but not including, December 23, 2020, subject to the terms and conditions of the Tender Offer.

We recognized a loss on extinguishment of debt of $ 6.9 million in connection with this transaction.

(3) Includes an unamortized premium of $ 2,091 and $ 2,416 at December 31, 2022 and 2021, respectively.

On September 20, 2022, the Company amended and restated its Revolving Credit Facility which provides for revolving loans to be made available to the Company in an aggregate principal amount of up to $ 225.0 million, of which up to $ 25.0 million may be utilized for the issuance of letters of credit.

On November 22, 2022, the Company entered into an additional amendment which provides for additional revolving commitments by Citizens Bank, National Association, as an incremental lender in an aggregate principal amount of $ 75.0 million (the “Incremental Commitment”).

After giving effect to the Incremental Commitment, the aggregate principal amount of the Commitments available to the Company is $ 300.0 million (the “Revolving Credit Facility”), of which up to $ 25.0 million may be utilized for the issuance of letters of credit.

In conjunction with the spin-off of FTAI Infrastructure, the Company repaid all outstanding borrowings under its 2021 bridge loans and $ 200.0 million of its 6.50 % senior unsecured notes due 2025, and approximately $ 175.0 million of the outstanding borrowings under its revolving credit facility.

The Company recorded a loss on extinguishment of debt of $ 19.9 million as a result of these pay downs.

We were in compliance with all debt covenants as of December 31, 2022.

1 unchanged sentence

2023 2024 2025 2026 2027 Thereafter Total

DRP Revolver $ — $ — $ 25,000 $ — $ — $ — $ 25,000

Revolving Credit Facility — — 150,000 — — — 150,000

EB-5 Loan Agreement — — — — 26,100 — 26,100

2021 Bridge Loans 100,527 — — — — — 100,527

Series 2020 Bonds — — — 79,060 — 184,920 263,980

Series 2021 Bonds — — — — 9,025 415,975 425,000

Senior Notes due 2025 — — 650,000 — — — 650,000

2 unchanged sentences

Total principal payments on loans and bonds payable $ — $ — $ 800,000 $ — $ 400,000 $ 1,000,000 $ 2,200,000

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

FAIR VALUE MEASUREMENTS

7 unchanged sentences

• Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

• Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

The following tables set forth our financial assets measured at fair value on a recurring basis by level within the fair value hierarchy.

Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.

Fair Value as of Fair Value Measurements Using Fair Value Hierarchy as of

December 31, 2021 December 31, 2021

Total Level 1 Level 2 Level 3 Valuation Technique

Cash and cash equivalents $ 188,078 $ 188,078 $ — $ — Market

Restricted cash 251,983 251,983 — — Market

Derivative assets 2,220 — 2,220 — Income

Total assets $ 442,281 $ 440,061 $ 2,220 $ —

Fair Value as of Fair Value Measurements Using Fair Value Hierarchy as of

December 31, 2020 December 31, 2020

Total Level 1 Level 2 Level 3 Valuation Technique

Cash and cash equivalents $ 121,703 $ 121,703 $ — $ — Market

Restricted cash 39,715 39,715 — — Market

Total assets $ 161,418 $ 161,418 $ — $ —

Our cash and cash equivalents and restricted cash consist largely of demand deposit accounts with maturities of 90 days or less when purchased that are considered to be highly liquid.

These instruments are valued using inputs observable in active markets for identical instruments and are therefore classified as Level 1 within the fair value hierarchy.

The fair value as of December 31, 2021 of our commodity derivative assets classified as Level 2 measurements are estimated by applying the income and market approaches, based on quotes of observable market transactions, and adjusted for estimated differential factors based on quality and delivery locations.

Except as discussed below, our financial instruments other than cash, cash equivalents and restricted cash consist principally of accounts receivable, accounts payable and accrued liabilities, loans payable, bonds payable, security deposits, maintenance deposits and management fees payable, whose fair value approximates their carrying value based on an evaluation of pricing data, vendor quotes, and historical trading activity or due to their short maturity profiles.

The fair value of our bonds and notes payable reported as debt, net in the Consolidated Balance Sheets are presented in the table below:

Series 2020 A Bonds (1)

$ 189,773 $ 186,306

Series 2020 B Bonds (1)

81,637 79,723

Series 2021 A Bonds (1)

Series 2021 B Bonds (1)

Senior Notes due 2022 — 403,536

Except as discussed below, our financial instruments other than cash and cash equivalents and restricted cash consist principally of accounts receivable, notes receivable, accounts payable and accrued liabilities, loans payable, security deposits, maintenance deposits and management fees payable, whose fair values approximate their carrying values based on an evaluation of pricing data, vendor quotes, and historical trading activity or due to their short maturity profiles.

The fair values of our bonds payable reported as Debt, net in the Consolidated Balance Sheets are presented in the table below and classified as Level 2 within the fair value hierarchy:

December 31, 2022 December 31, 2021

Senior Notes due 2025 613,152 881,408

1 unchanged sentence

Senior Notes due 2028 853,490 1,019,470

______________________________________________________________________________________

(1) Fair value is based upon market prices for similar municipal securities.

The fair value of all other items reported as debt, net in the Consolidated Balance Sheet approximate their carrying values due to their bearing market rates of interest and are classified as Level 2 within the fair value hierarchy.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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.

Assets subject to these measurements include goodwill, intangible assets, property, plant and equipment and leasing equipment.

The fair values of all other items reported as Debt, net in the Consolidated Balance Sheets approximate their carrying values due to their bearing market rates of interest and are classified as Level 2 within the fair value hierarchy.

We measure the fair value of certain assets on a non-recurring basis when 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 intangible assets, property, plant and equipment, leasing equipment and inventory.

We record such assets at fair value when it is determined the carrying value may not be recoverable.

Fair value measurements for assets subject to impairment tests are based on an income approach which uses Level 3 inputs, which include our assumptions as to future cash flows from operation of the underlying businesses and the leasing and eventual sale of assets.

DERIVATIVE FINANCIAL INSTRUMENTS

Commodity Derivatives

Depending on market conditions, we sourced crude oil from producers in Canada, arranging logistics to Jefferson Terminal and marketing crude oil to third parties.

We exited this strategy in the fourth quarter of 2019.

These crude oil forward purchase and sales contracts are not designated in hedging relationships.

Depending on market conditions, Repauno enters into forward purchase and sales contracts for butane.

These derivatives are short-term in nature, are used for trading purposes and classified as Level 2 derivatives.

The following table presents information related to our butane derivative contracts:

Notional Amount (BBL in thousands)

Fair Value of Assets (1)

Term 1 to 3 months

________________________________________________________

(1) Included in Other assets in the Consolidated Balance Sheets.

The following table presents a summary of the changes in fair value for all Level 3 crude oil derivatives:

Year Ended December 31,

2021 2020 2019

Beginning Balance $ — $ 181 $ 6,545

Net losses recognized in earnings — ( 181 ) ( 6,364 )

Purchases — — 314

Sales — — ( 674 )

Settlements — — 360

Ending Balance $ — $ — $ 181

There were no transfers into or out of Level 3 during the periods presented.

We disaggregate our revenue from contracts with customers by products and services provided for each of our segments, as we believe it best depicts the nature, amount, timing and uncertainty of our revenue.

Revenues attributed to our Equipment Leasing business unit are within the scope of ASC 842, while revenues attributed to our Infrastructure business unit are within the scope of ASC 606, unless otherwise noted.

Revenues are within the scope of ASC 842, Leases and ASC 606, Revenue from contracts with customers , unless otherwise noted.

We have elected to exclude sales and other similar taxes from revenues.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

During the third quarter of 2022, we updated our corporate strategy based on the opportunities available in the market such that the sale of aircraft and engines is now an output of our recurring, ordinary activities.

As a result of this update, the transaction price allocated to the sale of assets is included in Revenues in the Consolidated Statement of Operations for the third and fourth quarters of 2022 and are accounted for in accordance with ASC 606.

The corresponding net book values of the assets sold are recorded in Cost of sales in the Consolidated Statement of Operations for the third and fourth quarters of 2022.

Sales transactions of aircraft and engines prior to the third quarter of 2022 were accounted for in accordance with ASC 610-20, Gains and losses from the derecognition of nonfinancial assets and were included in Gain (loss) on sale of assets, net on the Consolidated Statement of Operations, as we were previously only occasionally selling these assets.

Generally, assets sold were under leasing arrangements with customers prior to sales and were included in Leasing equipment, net, on the Consolidated Balance Sheets.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Year Ended December 31, 2022

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Equipment leasing revenues

Aviation Leasing Aerospace Products Corporate and Other Total

$ 158,628 $ — $ 20,246 $ 178,874

2 unchanged sentences

Finance lease income

1,747 — — — — 1,747

Other revenue

28,871 — — — 4,030 32,901

Total equipment leasing revenues

$ 321,422 $ — $ — $ — $ 14,161 $ 335,583

Infrastructure revenues

— 1,688 — 736 — 2,424

Rail revenues

— — — 56,803 — 56,803

Terminal services revenues — 44,664 374 — — 45,038

Asset sales revenue 208,500 — — 208,500

Aerospace products revenue — 153,550 — 153,550

Other revenue

Total infrastructure revenues

11,499 — 6,702 18,201

2 unchanged sentences

Year Ended December 31, 2021

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Equipment leasing revenues

Lease income $ 166,331 $ — $ — $ — $ 11,145 $ 177,476

Aviation Leasing Aerospace Products Corporate and Other Total

$ 161,986 $ — $ 10,131 $ 172,117

Maintenance revenue

128,819 — — 128,819

Finance lease income

Other revenue 11,158 — — — 5,578 16,736

Total equipment leasing revenues

1,747 — — 1,747

Infrastructure revenues

Lease income — 1,186 — — — 1,186

Terminal services revenues — 50,887 — — — 50,887

Crude marketing revenues — 8,210 — — — 8,210

Asset sales revenue — — — —

Aerospace products revenue — 23,301 — 23,301

Other revenue

Total infrastructure revenues — 60,283 3,855 — 4,424 68,562

5,569 — 4,030 9,599

Total revenues $ 298,121 $ 23,301 $ 14,161 $ 335,583

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Year Ended December 31, 2020

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Equipment leasing revenues

Lease income $ 197,305 $ — $ — $ — $ 9,796 $ 207,101

Aviation Leasing Aerospace Products Corporate and Other Total

$ 166,331 $ — $ 11,145 $ 177,476

Maintenance revenue

101,462 — — 101,462

Finance lease income

Other revenue 1,808 — — — 2,851 4,659

Total equipment leasing revenues

2,260 — — 2,260

Infrastructure revenues

Lease income — 2,306 1,056 — — 3,362

Terminal services revenues — 35,908 7,057 — — 42,965

Crude marketing revenues — 166,134 — — — 166,134

Asset sales revenue — — — —

Aerospace products revenue — — — —

Other revenue

Total infrastructure revenues — 204,348 22,187 — 2,917 229,452

Total revenues $ 336,675 $ 204,348 $ 22,187 $ — $ 15,564 $ 578,774

Presented below are the contracted minimum future annual revenues to be received under existing operating and finance leases across several market sectors as of December 31, 2021:

Operating leases Finance leases

11,158 — 5,578 16,736

2023 131,397 258

2024 93,421 113

2025 65,849 10

Total revenues $ 281,211 $ — $ 16,723 $ 297,934

Presented below are the contracted minimum future annual revenues to be received under existing operating leases as of December 31, 2022:

December 31, 2022

2023 $ 141,154

1 unchanged sentence

Total $ 394,385

We have commitments as lessees under lease agreements primarily for real estate, equipment and vehicles.

Our leases have remaining lease terms ranging from approximately two months to 41 years.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following table presents lease related costs:

Year Ended December 31,

2021 2020 2019

Finance leases

Amortization of right-of-use assets $ 380 $ — $ —

Interest on lease liabilities 27 — —

Finance lease expense 407 — —

Operating lease expense 6,564 4,719 5,857

Short-term lease expense 995 778 3,605

Variable lease expense 1,590 1,379 3,263

Sublease income — — ( 1,032 )

Lease expense from continuing operations 9,556 6,876 11,693

Finance lease expense — — 304

Operating lease expense — — 3,705

Lease expense from discontinued operations — — 4,009

Total lease expense $ 9,556 $ 6,876 $ 15,702

The following table presents information related to our operating leases as of and for the year ended December 31, 2021:

Right-of-use assets, net $ 75,344

Lease liabilities $ 73,594

Weighted average remaining lease term 33.5 years

Weighted average incremental borrowing rate 5.6 %

Cash paid for amounts included in the measurement of operating lease liabilities

Continuing operations $ 6,114

The following table presents future minimum lease payments under non-cancellable operating leases as of December 31, 2021:

Thereafter 142,878

Total undiscounted lease payments 179,947

Imputed interest 106,353

Total lease liabilities $ 73,594

In July 2021, in connection with our acquisition of Transtar, we assumed ROU assets of approximately $ 12.2 million with a weighted average remaining term of 5.5 years.

Additionally, during the year ended December 31, 2021, we entered into a new lease for real estate, which had a ROU asset value of $ 2.7 million and a lease term of approximately five years at commencement.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

EQUITY-BASED COMPENSATION

In 2015, we established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) which provides for the ability to award equity compensation awards in the form of stock options to eligible employees, consultants, directors, and other individuals who provide services to us, each as determined by the Compensation Committee of the Board of Directors.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

EQUITY-BASED COMPENSATION

In 2015, we established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) which provides for the ability to award equity compensation awards in the form of stock options, stock appreciation rights, restricted stock, and performance awards to eligible employees, consultants, directors, and other individuals who provide services to us, each as determined by the Compensation Committee of the Board of Directors.

As of December 31, 2021, the Incentive Plan provides for the issuance of up to 29.8 million shares.

We account for equity-based compensation expense in accordance with ASC 718 Compensation-Stock Compensation and is reported within operating expenses and general and administrative in the Consolidated Statements of Operations.

The following table presents our stock-based compensation expense:

Year Ended December 31, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met as of December 31, 2021

2021 2020 2019

Restricted shares $ 3,215 $ 1,676 $ 1,054 $ 3,731

Common units 823 649 455 1,048

Total - continuing operations $ 4,038 $ 2,325 $ 1,509 $ 4,779

Common units - discontinued operations $ — $ — $ 3,114

The following tables present information for our stock options, restricted shares of our subsidiary and common units of our subsidiary:

Stock Options Restricted Shares Common Units

Options Weighted Average Exercise Price Shares Weighted Average Issuance Price Units Weighted Average Issuance Price

Outstanding as of

December 31, 2020 2,243,692 $ 16.81 578,802 $ 7.64 1,394,475 $ 1.14

Granted 1,684,318 26.35 662,423 8.48 1,052,632 1.14

In August 2022, in connection with the spin-off of our Infrastructure business, each FTAI option held by eligible employees, consultants, directors and other individuals who provide services to us was converted into an adjusted FTAI option and a new FTAI Infrastructure option.

The exercise price of each adjusted FTAI Infrastructure option was set to collectively maintain the intrinsic value of the FTAI option immediately prior to the spin-off and to maintain the ratio of the exercise price of the adjusted FTAI option and the FTAI Infrastructure option, respectively, to the fair market value of the underlying shares.

The following tables present information for our stock options:

Stock Options

Options Weighted Average Exercise Price

Outstanding as of December 31, 2021 3,762,742 $ 21.02

exercised / vested 2,027,426 14.52

forfeited and canceled — —

Outstanding as of

December 31, 2021 3,762,742 619,241 960,829

Stock Options Restricted Shares Common Units

Outstanding as of December 31, 2022 1,735,316

Stock Options

As of December 31, 2022:

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Weighted average remaining contractual term (in years) 8.5

During the year ended December 31, 2021, the Manager transferred 25,998 of its options to certain of the Manager’s employees.

During the year ended December 31, 2022, the Manager transferre d 336,862 of its options to certain of the Manager’s employees.

Stock Options

In connection with our equity offerings (see Note 20 for details), we granted options to the Manager related to common shares.

In connection with our equity offerings (see Note 15 for details), we granted options to the Manager related to ordinary shares.

The fair value of these options was recorded as an increase in equity with an offsetting reduction of capital proceeds received.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following table presents information related to the options related to our shares:

Year Ended December 31,

2021 2020 2019

Number of options 1,684,318 129,988

Fair value ($ millions) $ 13.8 $ 0.7

Expected volatility The expected stock volatility is based on an assessment of the volatility of our publicly traded common shares 44.78 % - 45.60 % 61.27 % - 62.12 % 21.45 % - 21.89 %

Expected volatility The expected share volatility is based on an assessment of the volatility of our publicly traded ordinary shares 44.78 % - 45.60 % 61.27 % - 62.12 %

Risk free interest rate The risk-free rate is determined using the implied yield currently available on U.S.

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Expected term Expected term used represents the period of time the options granted are expected to be outstanding.

10 years 10 years 10 years

Restricted Shares

We issued 662,423 , 545,806 and 113,121 restricted shares of our subsidiary during the years ended December 31, 2021, 2020 and 2019, respectively, that had grant date fair values of $ 5.6 million, $ 4.0 million and $ 1.5 million, respectively, and generally vest over three years .

These awards are subject to continued employment, and the compensation expense is recognized ratably over the vesting periods.

The fair value of these awards was based on the fair value of the operating subsidiary on each grant date, which was estimated using a discounted cash flow analysis that requires the application of discount factors and terminal multiples to projected cash flows.

Discount factors and terminal multiples were based on market-based inputs and transactions, as available at the measurement date.

We issued 1,052,632 , 831,140 and 1,110,000 common units of our subsidiary during the years ended December 31, 2021, 2020 and 2019, respectively, that had grant date fair values of $ 1.2 million, $ 0.9 million and $ 3.4 million, respectively, and vest over three years .

These awards are subject to continued employment and compensation expense is recognized ratably over the vesting periods.

The fair value was based on the fair value of the operating subsidiary on the grant date, which is estimated using a discounted cash flow analysis that requires the application of discount factors and terminal multiples to projected cash flows.

Discount factors and terminal multiples were based on market-based inputs and transactions, as available at the measurement date.

RETIREMENT BENEFIT PLANS

In connection with the acquisition of Transtar (see Note 4), we established a defined benefit pension plan as well as a postretirement benefit plan to assume certain retirement benefit obligations related to eligible Transtar employees.

Defined Benefit Pensions

Our pension plan covers certain eligible Transtar employees.

These plans are noncontributory.

Pension benefits earned are generally based on years of service and compensation during active employment.

Postretirement Benefits

Our unfunded postretirement plan provides healthcare and life insurance benefits for eligible retirees and dependents of Transtar.

Depending on retirement date and employee classification, certain healthcare plans contain contribution and cost-sharing features such as deductibles and co-insurance.

The remaining healthcare and life insurance plans are non-contributory.

The following table summarizes our retirement plan costs for the year ended December 31, 2021 and estimated benefit obligation as of December 31, 2021.

Service costs and interest costs are recorded in Operating expenses and Other (expense) income, respectively, in the Consolidated Statements of Operations.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Pension Benefits Postretirement Benefits

Benefit obligation as of January 1, 2021 $ — $ —

Transtar acquisition 9,055 28,488

Service costs 712 864

Interest costs 108 337

Actuarial losses (gains) ( 20 ) 344

Benefits paid ( 50 ) —

Benefit obligation as of December 31, 2021 $ 9,805 $ 30,033

The pension and postretirement benefits are unfunded and recorded in Other liabilities on the Consolidated Balance Sheets.

Weighted-average assumptions used to determine the estimated benefit obligation and period costs as of and for the year ended December 31, 2021 are as follows:

Pension Benefits Postretirement Benefits

Weighted-average assumptions used to determine pension and postretirement benefit obligations:

Discount rate 3.02 % 3.00 %

Rate of compensation increase 3.50 % N/A

Average future working lifetime (years) N/A 11.34

Initial healthcare cost trend rate - Pre-Medicare N/A 10.00 %

Initial healthcare cost trend rate - Medicare eligible N/A 3.00 %

Ultimate healthcare cost trend rate N/A 3.94 %

Year ultimate healthcare cost trend rate is reached N/A 2075

Weighted-average assumptions used to determine net periodic pension and postretirement costs:

Discount rate 2.88 % 2.86 %

Rate of compensation increases 3.50 % N/A

Average future working lifetime (years) 10.93 11.34

Initial healthcare cost trend rate N/A 6.00 %

Ultimate healthcare cost trend rate N/A 3.80 %

Year ultimate healthcare cost trend rate is reached N/A 2075

The following benefit payments, which reflect expected future service and compensation increases, as appropriate, are expected to be made from the Transtar defined benefit plans:

Pension Benefits Postretirement Benefits

2022 $ 51 $ 102

Years 2027-2031 4,501 3,252

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

10 years 10 years

No options were granted during the year ended December 31, 2022.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

2022 2021 2020

Cayman Islands $ — $ — $ —

United States:

Federal 522 $ 1,850 $ ( 114 )

State and local 1,687 $ 760 $ —

Foreign ( 11 ) 496 188

443 $ ( 11 ) $ 537

Total current provision 2,652 $ 2,599 $ 423

Cayman Islands — $ — $ —

United States:

Federal 1,305 $ 126 $ ( 474 )

State and local 242 $ 122 $ ( 142 )

Foreign 298 ( 4,882 ) 4,845

1,101 $ 279 $ ( 4,150 )

Total deferred (benefit) provision 2,648 $ 527 $ ( 4,766 )

(Benefit from) provision for income taxes:

Provision for (benefit from) income taxes:

Continuing operations 5,300 $ 3,126 $ ( 4,343 )

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Total 13,527 $ ( 1,057 ) $ ( 5,905 )

We are taxed as a flow-through entity for U.S.

income tax purposes and our taxable income or loss generated is the responsibility of our owners, except as related to certain wholly owned corporate subsidiaries for which only distributions therefrom flow through to our shareholders.

The Company is an exempted entity domiciled in the Cayman Islands where income taxes are not imposed.

The Company is considered a Passive Foreign Investment Company for U.S.

income tax purposes and certain income taxes are imposed on our owners.

Taxable income or loss generated by our corporate subsidiaries is subject to U.S.

federal, state and foreign corporate income tax in locations where they conduct business.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

The difference between our reported total provision for income taxes and the Cayman Islands statutory rate of 0% is as follows:

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The difference between our reported total provision for income taxes and the U.S.

federal statutory rate of 21 % is as follows:

Year Ended December 31,

2022 2021 2020

federal tax at statutory rate 21.0 % 21.0 % 21.0 %

Income not subject to tax at statutory rate ( 4.8 ) % ( 7.9 ) % ( 21.7 ) %

State and local taxes ( 0.6 ) % ( 0.3 ) % ( 0.1 ) %

Income subject to tax in the United States ( 6.9 ) % ( 7.2 ) % 0.3 %

Foreign taxes 13.5 % ( 8.7 ) % 3.2 %

Branch profit tax ( 0.1 ) % — % — %

Other ( 3.7 ) % 0.1 % ( 0.6 ) %

Change in valuation allowance ( 11.6 ) % 8.0 % 6.5 %

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Net operating loss carryforwards $ 43,116 $ 27,154

Accrued expenses 2,274 468

Interest expense 2,754 1,530

Operating lease liabilities 23,504 10,119

Investment in Partnerships 963 1,519

4 unchanged sentences

Deferred tax liabilities:

Investment in partnerships — ( 13,759 )

Fixed assets and goodwill ( 36,972 ) ( 29,448 )

Operating lease right-of-use assets ( 23,772 ) ( 10,062 )

Fixed assets ( 22,794 ) ( 20,072 )

Net deferred tax liabilities $ ( 3,254 ) $ 1,309

3 unchanged sentences

We have analyzed our deferred tax assets and have determined, based on the weight of available evidence, that it is more likely than not that a significant portion will not be realized.

Accordingly, valuation allowances have been recognized as of December 31, 2021 and 2020 of $ 142.5 million and $ 98.1 million, respectively, related to certain deductible temporary differences and net operating loss carryforwards.

Accordingly, valuation allowances have been recognized as of December 31, 2022, 2021 and 2020 of $ 27.6 million, $ 9.1 million and $ 6.8 million , res pectively, related to certain deductible temporary differences and net operating loss carryforwards.

A summary of the changes in the valuation allowance is as follows:

2022 2021 2020

Valuation allowance at beginning of period $ 9,142 $ 6,794 $ 2,603

2 unchanged sentences

Valuation allowance at end of period $ 27,565 $ 9,142 $ 6,794

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

As of December 31, 2022, certain of our corporate subsidiaries had U.S.

1 unchanged sentence

If not utilized, $ 0.6 million of these carryforwards will begin to expire in the year 2037, with $ 38.7 million of these carryforwards having no expiration date.

As of December 31, 2021, we also had net operating loss carryforwards for Irish income tax purposes of $ 246.9 million, which can be carried forward indefinitely against future business income, and $ 1.9 million of net operating loss carryforwards for Malaysian income tax purposes, which will begin to expire in the year 2025.

As of December 31, 2022, we also had net operating loss carryforwards for Irish income tax purposes of $ 250.1 million, which can be carried forward indefinitely against future business income, $ 1.3 million of net operating loss carryforwards for Malaysian income tax purposes, which will begin to expire in the year 2027, and $ 5.4 million of net operating loss carryforward for Australian income tax purpose, which can be carried forward indefinitely against the future business income.

The utilization of the net operating loss carryforwards to reduce future income taxes will depend on the relevant corporate subsidiary's ability to generate sufficient taxable income prior to the expiration of the carryforward period, if any.

In addition, the maximum annual use of net operating loss carryforwards may be limited after certain changes in stock ownership.

In addition, the maximum annual use of net operating loss carryforwards may be limited after certain changes in share ownership.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

As of and for the period ended December 31, 2022, we had not established a liability for uncertain tax positions as no such positions existed.

4 unchanged sentences

MANAGEMENT AGREEMENT AND AFFILIATE TRANSACTIONS

In connection with the spin-off of FTAI Infrastructure on August 1, 2022, we assigned our then-existing management and advisory agreement, dated as of May 20, 2015, with our Manager to FTAI Infrastructure.

On July 31, 2022, we entered into a new management and advisory agreement (the “Management Agreement”), by and among FTAI, FTAI Finance Holdco Ltd.

(a wholly owned subsidiary of the Company), and each of the subsidiaries that are party thereto and the Manager, with substantially similar terms and conditions as the existing management and advisory agreement.

The Manager is paid annual fees in exchange for advising us on various aspects of our business, formulating our investment strategies, arranging for the acquisition and disposition of assets, arranging for financing, monitoring performance, and managing our day-to-day operations, inclusive of all costs incidental thereto.

1 unchanged sentence

In May 2015, in connection with our IPO, we entered into the Management Agreement.

Additionally, we have entered into certain incentive allocation arrangements with Master GP, which owns approximately 0.05 % of the Partnership and is the general partner of the Partnership.

The Manager is entitled to a management fee, incentive allocations (comprised of income incentive allocation and capital gains incentive allocation, defined below) and reimbursement of certain expenses.

Additionally, we have entered into certain incentive allocation arrangements with Master GP, which owns approximately 0.01 % of FTAI Aviation Holdco Ltd.

The Manager is entitled to a management fee and reimbursement of certain expenses.

The management fee is determined by taking the average value of total equity (excluding non-controlling interests) determined on a consolidated basis in accordance with U.S.

GAAP at the end of the two most recently completed months multiplied by an annual rate of 1.50 %, and is payable monthly in arrears in cash.

Master GP is entitled to incentive allocations (comprised of income incentive allocation and capital gains incentive allocation, defined below).

The income incentive allocation is calculated and distributable quarterly in arrears based on the pre-incentive allocation net income for the immediately preceding calendar quarter (the “Income Incentive Allocation”).

1 unchanged sentence

GAAP excluding our pro rata share of (1) realized or unrealized gains and losses, and (2) certain non-cash or one-time items, and (3) any other adjustments as may be approved by our independent directors.

Pre-incentive allocation net income does not include any Income Incentive Allocation or Capital Gains Incentive Allocation (described below) paid to the Master GP during the relevant quarter.

One of our subsidiaries allocates and distributes to the Master GP an Income Incentive Allocation with respect to its pre-incentive allocation net income in each calendar quarter as follows:

Pre-incentive allocation net income does not include any Income Incentive Allocation or Capital Gains Incentive Allocation (described below) paid to Master GP during the relevant quarter.

One of our subsidiaries allocates and distributes to Master GP an Income Incentive Allocation with respect to its pre-incentive allocation net income in each calendar quarter as follows:

(1) no Income Incentive Allocation in any calendar quarter in which pre-incentive allocation net income, expressed as a rate of return on the average value of our net equity capital (excluding non-controlling interests) at the end of the two most recently completed calendar quarters, does not exceed 2 % for such quarter ( 8 % annualized);

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These calculations will be prorated for any period of less than three months.

Capital Gains Incentive Allocation is calculated and distributable in arrears as of the end of each calendar year and is equal to 10 % of our pro rata share of cumulative realized gains from the date of the IPO through the end of the applicable calendar year, net of our pro rata share of cumulative realized or unrealized losses, the cumulative non-cash portion of equity-based compensation expenses and all realized gains upon which prior performance-based Capital Gains Incentive Allocation payments were made to the Master GP.

The following table summarizes the management fees, income incentive allocation and capital gains incentive allocation:

The following table summarizes the management fees, income incentive allocation and capital gains incentive allocation from continuing operations:

Year Ended December 31,

4 unchanged sentences

Total $ 3,562 $ 684 $ 5,446

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5 unchanged sentences

we will not reimburse the Manager for these expenses.

The following table summarizes our reimbursements to the Manager:

The following table summarizes our reimbursements to the Manager from continuing operations:

Year Ended December 31,

6 unchanged sentences

The termination fee is equal to the amount of the management fee during the 12 months immediately preceding the date of the termination.

In addition, an Incentive Allocation Fair Value Amount will be distributable to the Master GP if the Master GP is removed due to the termination of the Management Agreement in certain specified circumstances.

The Incentive Allocation Fair Value Amount is an amount equal to the Income Incentive Allocation and the Capital Gains Incentive Allocation that would be paid to the Master GP if our assets were sold for cash at their then current fair market value (as determined by an appraisal, taking into account, among other things, the expected future value of the underlying investments).

Upon the successful completion of an offering of our common shares or other equity securities (including securities issued as consideration in an acquisition), we grant the Manager options to purchase common shares in an amount equal to 10 % of the number of common shares being sold in the offering (or if the issuance relates to equity securities other than our common shares, options to purchase a number of common shares equal to 10 % of the gross capital raised in the equity issuance divided by the fair market value of a common share as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a common share as of the date of the equity issuance if it relates to equity securities other than our common shares).

Any ultimate purchaser of common shares for which such options are granted may be an affiliate the Manager.

In addition, an Incentive Allocation Fair Value Amount will be distributable to Master GP if Master GP is removed due to the termination of the Management Agreement in certain specified circumstances.

The Incentive Allocation Fair Value Amount is an amount equal to the Income Incentive Allocation and the Capital Gains Incentive Allocation that would be paid to Master GP if our assets were sold for cash at their then current fair market value (as determined by an appraisal, taking into account, among other things, the expected future value of the underlying investments).

Upon the successful completion of an offering of our ordinary shares or other equity securities (including securities issued as consideration in an acquisition), we grant the Manager options to purchase ordinary shares in an amount equal to 10 % of the number of ordinary shares being sold in the offering (or if the issuance relates to equity securities other than our ordinary shares, options to purchase a number of ordinary shares equal to 10 % of the gross capital raised in the equity issuance divided by the fair market value of a ordinary share as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a ordinary share as of the date of the equity issuance if it relates to equity securities other than our ordinary shares).

Any ultimate purchaser of ordinary shares for which such options are granted may be an affiliate of the Manager.

The following table summarizes amounts due to the Manager, which are included within accounts payable and accrued liabilities in the Consolidated Balance Sheets:

1 unchanged sentence

Other payables 4,688 2,283

As of December 31, 2021 and 2020, no amounts were recorded as a receivable from the Manager.

Other Affiliate Transactions

As of December 31, 2021 and 2020, an affiliate of our Manager owns an approximately 20 % interest in Jefferson Terminal which has been accounted for as a component of non-controlling interest in consolidated subsidiaries in the accompanying consolidated financial statements.

The carrying amount of this non-controlling interest at December 31, 2021 and 2020 was $ 9.1 million and $ 17.2 million, respectively.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following table presents the amount of this non-controlling interest share of net loss:

Year Ended December 31,

2021 2020 2019

Non-controlling interest share of net loss $ ( 26,250 ) $ ( 16,483 ) $ ( 17,357 )

On June 21, 2018, we, through a wholly owned subsidiary, completed a private offering with several third parties (the “Holders”) to tender their approximately 20 % stake in Jefferson Terminal.

We increased our majority interest in Jefferson Terminal in exchange for Class B Units of another wholly owned subsidiary, which provide the right to convert such Class B Units to a fixed amount of our shares, equivalent to approximately 1.9 million shares, at a Holder’s request.

We have the option to satisfy any exchange request by delivering either common shares or cash.

The Holders are entitled to receive distributions equivalent to the distributions paid to our shareholders.

This transaction resulted in a purchase of non-controlling interest shares.

See Note 20 for details related to conversions during the period.

In July 2020, we purchased a 14 % interest in FYX from an affiliate of our Manager, which retained a non-controlling interest in FYX subsequent to the transaction.

Additionally, other investors in FYX are also affiliates of our Manager.

See Note 8 for additional information related to FYX.

During the year ended December 31, 2020, we granted options to the Manager in connection with preferred shares sold under the ATM Program (as defined in Note 20).

See Note 20 for additional information.

In connection with the Capital Call Agreement related to the Series 2016 Bonds, we entered into a Fee and Support Agreement with an affiliate of our Manager.

The Fee and Support Agreement provides that the affiliate of the Manager is compensated for its guarantee of a portion of the obligations under the Standby Bond Purchase Agreement.

This affiliate of the Manager received fees of $ 1.7 million, which was amortized as interest expense to the earlier of the redemption date or February 13, 2020.

In connection with the amendment to the Jefferson Revolver, on December 20, 2018, our subsidiary and an affiliate of our Manager entered into an amended and restated Fee and Support Agreement, and our subsidiary issued a $ 0.3 million promissory note to the affiliate of our Manager, as consideration for the fee payable pursuant to the amended and restated Fee and Support Agreement.

In February 2020, the Fee and Support Agreement was terminated in connection with the Jefferson Refinancing.

SEGMENT INFORMATION

Our reportable segments represent strategic business units comprised of investments in different types of transportation and infrastructure assets.

We have four reportable segments which operate in the Equipment Leasing and Infrastructure businesses across several market sectors.

Our reportable segments are (i) Aviation Leasing, (ii) Jefferson Terminal, (iii) Ports and Terminals and (iv) Transtar.

The Aviation Leasing segment consists of aircraft and aircraft engines held for lease and are typically held long-term.

The Jefferson Terminal segment consists of a multi-modal crude oil and refined products terminal and other related assets.

The Ports and Terminals segment consists of Repauno, which is a 1,630 acre deep-water port located along the Delaware River with an underground storage cavern, a new multipurpose dock, a rail-to-ship transloading system and multiple industrial development opportunities, and an equity method investment in Long Ridge, which is a 1,660 acre multi-modal port located along the Ohio River with rail, dock, and multiple industrial development opportunities, including a power plant in operation.

In July 2021, we acquired Transtar and it operates as a separate reportable segment within our Infrastructure business.

Transtar is comprised of five freight railroads and one switching company that provide rail service to certain manufacturing and production facilities.

See Note 4 for additional information.

In December 2019, we completed the sale of CMQR, which was formerly reported as our Railroad segment.

Under ASC 205-20, this disposition met the criteria to be reported as discontinued operations and the assets, liabilities and results of operations have been presented as discontinued operations for all periods presented.

Additionally, in accordance with ASC 280, we assessed our reportable segments.

We determined that our retained investment of the railroad business no longer met the requirement as a reportable segment.

Accordingly, we have presented this operating segment, along with Corporate results, within Corporate and Other effective in 2019.

Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, and management fees.

Additionally, Corporate and Other includes (i) offshore energy related assets which consist of vessels and equipment that support offshore oil and gas activities and are typically subject to operating leases, (ii) an investment in an unconsolidated entity engaged in the leasing of shipping containers, (iii) railroad assets which consist of equipment that support a railcar cleaning business and (iv) various clean technology and sustainability investments (see Note 8 for additional information) .

As a result of the spin-off of FTAI Infrastructure effective on August 1, 2022, the Company reevaluated its operating segments.

The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services.

Our two reportable segments are (i) Aviation Leasing and (ii) Aerospace Products.

The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to customers.

The Aerospace Products segment develops and manufactures through a joint venture, and repairs and sells, through exclusivity arrangements, aftermarket components for aircraft engines.

The information for the year ended December 31, 2022 discloses the reportable segments on this basis, and prior periods have been restated to reflect the change in accordance with the requirements of ASC 280 – Segment Reporting .

Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, shared services costs, and management fees.

Additionally, Corporate and Other also includes offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas activities and production which are typically subject to operating leases.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies;

however, financial information presented by segment includes the impact of intercompany eliminations.

The chief operating decision maker evaluates investment performance for each reportable segment primarily based on Adjusted EBITDA.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, and interest expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

We believe that net income (loss) attributable to shareholders, as defined by U.S.

Our Chief Executive Officer is our Chief Operating Decision Maker (“CODM”).

Segment information is presented in the same manner that our CODM reviews the operating results in assessing performance and allocating resources.

The CODM evaluates performance for each reportable segment primarily based on Adjusted EBITDA.

Historically, the CODM’s assessment of segment performance included asset information.

During the third quarter of 2022, the CODM determined that segment asset information is not a key factor in measuring performance or allocating resources.

Therefore, segment asset information is not included in the tables below as it is not provided to or reviewed by our CODM.

During the year, the Company changed its measure of segment profit to include the add back of dividends on preferred shares in Adjusted EBITDA.

Prior period Adjusted EBITDA amounts and the reconciliation to net income (loss) attributable to shareholders from continuing operations have been recast to reflect this change in the measure of segment profit.

Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

We believe that net income (loss) attributable to shareholders from continuing operations, as defined by U.S.

GAAP, is the most appropriate earnings measurement with which to reconcile Adjusted EBITDA.

Adjusted EBITDA should not be considered as an alternative to net income (loss) attributable to shareholders as determined in accordance with U.S.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following tables set forth certain information for each reportable segment:

1 unchanged sentence

Year Ended December 31, 2022

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Equipment leasing revenues $ 321,422 $ — $ — $ — $ 14,161 $ 335,583

Infrastructure revenues — 46,352 11,617 57,539 4,711 120,219

Total revenues 321,422 46,352 11,617 57,539 18,872 455,802

Aviation Leasing Aerospace Products Corporate and Other Total

Revenues $ 527,913 $ 153,550 $ 26,948 $ 708,411

Cost of sales 159,490 88,895 — 248,385

Operating expenses 81,232 11,967 39,065 132,264

7 unchanged sentences

Other income (expense)

Equity in (losses) earnings of unconsolidated entities ( 1,403 ) — ( 11,429 ) — 98 ( 12,734 )

Equity in earnings (losses) of unconsolidated entities 740 ( 1,109 ) — ( 369 )

Gain on sale of assets, net 58,649 18,562 — 77,211

Loss on extinguishment of debt — — ( 19,859 ) ( 19,859 )

Interest income 1,153 — 318 — 240 1,711

Other (expense) income ( 1,680 ) ( 4,726 ) ( 4,100 ) ( 423 ) 1 ( 10,928 )

Other income (expense) 246 — ( 39 ) 207

Total other income (expense) 59,635 17,453 ( 19,898 ) 57,190

5 unchanged sentences

Net income (loss) attributable to shareholders from continuing operations $ 60,924 $ 66,679 $ ( 265,378 ) $ ( 137,775 )

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

Year Ended December 31, 2022

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Aviation Leasing Aerospace Products Corporate and Other Total

Adjusted EBITDA $ 384,125 $ 70,365 $ ( 26,393 ) $ 428,097

2 unchanged sentences

Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 40 )

Interest expense ( 171,036 )

Interest expense and dividends on preferred shares ( 196,358 )

Depreciation and amortization expense ( 190,031 )

5 unchanged sentences

Equity-based compensation expense —

Benefit from income taxes 1,057

Provision for income taxes ( 5,300 )

Net loss attributable to shareholders from continuing operations $ ( 137,775 )

1 unchanged sentence

Year Ended December 31, 2022

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Aviation Leasing Aerospace Products Corporate and Other Total

Africa $ 250 $ 1,615 $ — $ 1,865

4 unchanged sentences

Total revenues $ 527,913 $ 153,550 $ 26,948 $ 708,411

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

Year Ended December 31, 2021

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Equipment leasing revenues $ 281,211 $ — $ — $ — $ 16,723 $ 297,934

Infrastructure revenues — 60,283 3,855 — 4,424 68,562

Total revenues 281,211 60,283 3,855 — 21,147 366,496

Aviation Leasing Aerospace Products Corporate and Other Total

Revenues $ 298,121 $ 23,301 $ 14,161 $ 335,583

Cost of sales — 14,308 — 14,308

Operating expenses 32,757 5,429 21,429 59,615

7 unchanged sentences

Other (expense) income

Equity in (losses) earnings of unconsolidated entities ( 1,932 ) — ( 3,222 ) — 115 ( 5,039 )

Loss on sale of assets, net ( 300 ) ( 8 ) — — — ( 308 )

Equity in losses of unconsolidated entities — ( 1,403 ) — ( 1,403 )

Gain on sale of assets, net 29,098 19,917 — 49,015

Loss on extinguishment of debt — — ( 3,254 ) ( 3,254 )

Interest income 94 22 — — 46 162

Other income — 70 — — — 70

Total other expense ( 2,138 ) ( 4,640 ) ( 3,222 ) — ( 6,782 ) ( 16,782 )

Other (expense) income ( 527 ) — 37 ( 490 )

Total other income (expense) 28,571 18,514 ( 3,217 ) 43,868

Income (loss) from continuing operations before income taxes 142,812 22,012 ( 204,559 ) ( 39,735 )

(Benefit from) provision for income taxes ( 4,812 ) 278 ( 1,791 ) — 420 ( 5,905 )

Provision for (benefit from) income taxes 2,073 1,135 ( 82 ) 3,126

Net income (loss) from continuing operations 140,739 20,877 ( 204,477 ) ( 42,861 )

2 unchanged sentences

Net income (loss) attributable to shareholders from continuing operations $ 140,739 $ 20,877 $ ( 229,235 ) $ ( 67,619 )

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

Year Ended December 31, 2021

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Aviation Leasing Aerospace Products Corporate and Other Total

Adjusted EBITDA $ 321,913 $ 22,278 $ ( 21,363 ) $ 322,828

2 unchanged sentences

Pro-rata share of Adjusted EBITDA from unconsolidated entities 1,203

Interest expense ( 98,206 )

Interest expense and dividends on preferred shares ( 179,775 )

Depreciation and amortization expense ( 175,718 )

5 unchanged sentences

Equity-based compensation expense —

Benefit from income taxes 5,905

Provision for income taxes ( 3,126 )

Net loss attributable to shareholders from continuing operations $ ( 67,619 )

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

Year Ended December 31, 2021

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Aviation Leasing Aerospace Products Corporate and Other Total

Africa $ 235 $ — $ — $ 235

4 unchanged sentences

Total revenues $ 298,121 $ 23,301 $ 14,161 $ 335,583

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

For the Year Ended December 31, 2020

Year Ended December 31, 2020

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Equipment leasing revenues $ 336,675 $ — $ — $ — $ 12,647 $ 349,322

Infrastructure revenues — 204,348 22,187 — 2,917 229,452

Total revenues 336,675 204,348 22,187 — 15,564 578,774

Aviation Leasing Aerospace Products Corporate and Other Total

Revenues $ 281,211 $ — $ 16,723 $ 297,934

Operating expenses 20,667 — 19,454 40,121

8 unchanged sentences

Equity in losses of unconsolidated entities ( 1,932 ) — — ( 1,932 )

Gain on sale of assets, net 81,954 4,636 116,660 — — 203,250

Loss on sale of assets, net ( 300 ) — — ( 300 )

Loss on extinguishment of debt — — ( 6,943 ) ( 6,943 )

Interest income 104 118 289 — 20 531

Other income 94 — — 94

Total other income 80,229 5,096 118,566 — 960 204,851

Total other expense ( 2,138 ) — ( 6,943 ) ( 9,081 )

Income (loss) from continuing operations before income taxes 83,837 — ( 127,231 ) ( 43,394 )

Provision for income taxes 2,826 284 14,700 — — 17,810

(Benefit from) provision for income taxes ( 4,812 ) — 469 ( 4,343 )

Net income (loss) from continuing operations 88,649 — ( 127,700 ) ( 39,051 )

2 unchanged sentences

Net income (loss) attributable to shareholders from continuing operations $ 88,649 $ — $ ( 145,569 ) $ ( 56,920 )

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders from continuing operations:

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders from continuing operations:

Year Ended December 31, 2020

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Aviation Leasing Aerospace Products Corporate and Other Total

Adjusted EBITDA $ 288,752 $ — $ ( 22,283 ) $ 266,469

2 unchanged sentences

Pro-rata share of Adjusted EBITDA from unconsolidated entities 1,932

Interest expense ( 95,585 )

Interest expense and dividends on preferred shares ( 105,311 )

Depreciation and amortization expense ( 171,632 )

5 unchanged sentences

Equity-based compensation expense —

Provision for income taxes ( 17,810 )

Net income attributable to shareholders from continuing operations $ 150,055

Benefit from income taxes 4,343

Net loss attributable to shareholders from continuing operations $ ( 56,920 )

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

Year Ended December 31, 2020

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Aviation Leasing Aerospace Products Corporate and Other Total

Africa $ 10,259 $ — $ — $ 10,259

4 unchanged sentences

Total revenues $ 281,211 $ — $ 16,723 $ 297,934

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Balance Sheet and location of long-lived assets

The following tables sets forth summarized balance sheet information and the geographic location of property, plant and equipment and leasing equipment, net:

December 31, 2021

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Total assets $ 2,098,979 $ 1,284,432 $ 316,899 $ 762,294 $ 401,250 $ 4,863,854

Debt, net — 693,624 25,000 — 2,501,587 3,220,211

Total liabilities 214,564 820,725 50,651 109,325 2,544,489 3,739,754

Non-controlling interests in equity of consolidated subsidiaries — ( 2,604 ) 1,888 — 524 ( 192 )

Total equity 1,884,415 463,707 266,248 652,969 ( 2,143,239 ) 1,124,100

Total liabilities and equity $ 2,098,979 $ 1,284,432 $ 316,899 $ 762,294 $ 401,250 $ 4,863,854

December 31, 2021

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Property, plant and equipment and leasing equipment, net

Asia $ 368,298 $ — $ — $ — $ 175,313 $ 543,611

Europe 839,555 — — — — 839,555

North America 265,203 786,566 280,210 481,826 5,003 1,818,808

South America 245,532 — — — — 245,532

Total property, plant and equipment and leasing equipment, net $ 1,718,588 $ 786,566 $ 280,210 $ 481,826 $ 180,316 $ 3,447,506

December 31, 2020

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Total assets $ 1,704,205 $ 989,928 $ 400,217 $ — $ 293,627 $ 3,387,977

Debt, net — 253,473 25,000 — 1,626,289 1,904,762

Total liabilities 219,692 365,629 38,242 — 1,665,093 2,288,656

Non-controlling interests in equity of consolidated subsidiaries — 20,785 1,354 — 524 22,663

Total equity 1,484,513 624,299 361,975 — ( 1,371,466 ) 1,099,321

Total liabilities and equity $ 1,704,205 $ 989,928 $ 400,217 $ — $ 293,627 $ 3,387,977

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

December 31, 2020

Equipment Leasing Infrastructure

Aviation Leasing Jefferson Terminal Ports and Terminals Transtar Corporate and Other Total

Location of long-lived assets

The following tables sets forth summarized geographic location of property, plant and equipment and leasing equipment, net:

December 31, 2022 December 31, 2021

Property, plant and equipment and leasing equipment, net

Africa $ 7,952 $ —

Asia 383,378 543,609

4 unchanged sentences

EARNINGS PER SHARE AND EQUITY

Basic earnings per common share (“EPS”) is calculated by dividing net income attributable to shareholders by the weighted average number of common shares outstanding, plus any participating securities.

Diluted EPS is calculated by dividing net income attributable to shareholders by the weighted average number of common shares outstanding, plus any participating securities and potentially dilutive securities.

Basic earnings per ordinary share (“EPS”) is calculated by dividing net loss attributable to shareholders by the weighted average number of ordinary shares outstanding, plus any participating securities.

Diluted EPS is calculated by dividing net income attributable to shareholders by the weighted average number of ordinary shares outstanding, plus any participating securities and potentially dilutive securities.

Potentially dilutive securities are calculated using the treasury stock method.

2 unchanged sentences

(in thousands, except share and per share data) 2022 2021 2020

Net (loss) income from continuing operations $ ( 130,706 ) $ ( 105,023 ) $ 134,322

Net income from discontinued operations, net of income taxes — 1,331 73,462

Net (loss) income ( 130,706 ) ( 103,692 ) 207,784

Net (loss) income attributable to non-controlling interests in consolidated subsidiaries:

Net loss from continuing operations $ ( 110,611 ) $ ( 42,861 ) $ ( 39,051 )

Net loss from discontinued operations, net of income taxes ( 101,416 ) ( 87,845 ) ( 64,641 )

Net loss ( 212,027 ) ( 130,706 ) ( 103,692 )

Net loss attributable to non-controlling interests in consolidated subsidiaries:

Continuing operations — — —

1 unchanged sentence

Dividends on preferred shares 27,164 24,758 17,869

Net (loss) income attributable to shareholders $ ( 128,992 ) $ ( 105,039 ) $ 223,270

Weighted average shares outstanding:

Basic 89,922,088 86,015,702 85,992,019

Diluted 89,922,088 86,015,702 86,029,363

Net loss attributable to shareholders $ ( 220,374 ) $ ( 128,992 ) $ ( 105,039 )

Weighted Average Ordinary Shares Outstanding - Basic (1)

99,421,008 89,922,088 86,015,702

Weighted Average Ordinary Shares Outstanding - Diluted (1)

99,421,008 89,922,088 86,015,702

Loss per share:

Continuing operations $ ( 1.39 ) $ ( 0.75 ) $ ( 0.66 )

2 unchanged sentences

Discontinued operations $ ( 0.83 ) $ ( 0.68 ) $ ( 0.56 )

The calculation of Diluted EPS excludes 898,299 , 24,652 and 150,981 shares for the years ended December 31, 2021, 2020 and 2019, respectively, because the impact would be anti-dilutive.

Certain holders of Class B Units (see Note 18) converted 279,678 , 911,448 and 1,134,806 Class B Units, respectively, in exchange for 207,129 , 675,015 and 840,434 common shares, respectively, during the years ended December 31, 2021, 2020 and 2019.

We issued 17,155 common shares to certain directors as compensation during the year ended December 31, 2021.

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

________________________________________________________

(1) Years ended December 31, 2022, 2021 and 2020 include participating securities which can be converted into a fixed amount of our shares.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Common Shares

In September 2021, we issued 12,000,000 common shares, par value $ 0.01 per share, at a price of $ 25.50 per share.

We received net proceeds of $ 291.7 million after deducting underwriting discounts and offering expenses.

The proceeds were used to repay a portion of the Bridge Loans (see Note 10).

In October 2021, the underwriters exercised an option to purchase an additional 1,283,863 common shares, par value $ 0.01 per share, at a price of $ 25.50 per share.

The calculation of Diluted EPS excludes 582,200 , 898,299 and 24,652 shares for the years ended December 31, 2022, 2021 and 2020, respectively, because the impact would be anti-dilutive.

During the year ended December 31, 2022, 19,811 ordinary shares were issued to certain directors as compensation.

Ordinary Shares

In September 2021, 12,000,000 ordinary shares, par value $ 0.01 per share, were issued at a price of $ 25.50 per share for net proceeds of $ 291.7 million after deducting underwriting discounts and offering expenses.

In October 2021, the underwriters exercised an option to purchase an additional 1,283,863 ordinary shares, par value $ 0.01 per share, at a price of $ 25.50 per share.

See Note 11 for information related to options issued to the Manager in connection with such offering.

Preferred Shares

In March 2021, in a public offering, we issued 4,200,000 shares of 8.25 % Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares (“Series C Preferred Shares”), par value $ 0.01 per share, with a liquidation preference of $ 25.00 per share for net proceeds of approximately $ 101.2 million.

On June 30, 2020, we entered into an At Market Issuance Sales Agreement with a third party to sell shares of our Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares (“Series A Preferred Shares”) and Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares (“Series B Preferred Shares”, collectively, the “ATM Shares”), having an aggregate offering price of up to $ 100 million, from time to time, through an “at-the market” equity offering program (the “ATM Program”).

We sold 1,070,000 ATM Shares at a weighted average price of $ 19.54 per share for net proceeds of $ 20.6 million during the year ended December 31, 2020.

In connection with the shares sold under the ATM Program, we granted options to the Manager relating to 129,988 common shares, which had a grant date fair value of $ 0.7 million.

In September 2019, in a public offering, we issued 3,450,000 shares of 8.25 % Series A Preferred Shares, par value $ 0.01 per share, with a liquidation preference of $ 25.00 per share for net proceeds of approximately $ 82.9 million.

In November 2019, in a public offering, we issued 4,600,000 shares of 8.00 % Series B Preferred Shares, par value $ 0.01 per share, with a liquidation preference of $ 25.00 per share for net proceeds of approximately $ 111.1 million.

In March 2021, in a public offering, 4,200,000 shares of 8.25 % Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares (“Series C Preferred Shares”), par value $ 0.01 per share, were issued with a liquidation preference of $ 25.00 per share for net proceeds of approximately $ 101.2 million.

On June 30, 2020, an At Market Issuance Sales Agreement was executed with a third party to sell shares of Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares (“Series A Preferred Shares”) and Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares (“Series B Preferred Shares”, collectively, the “ATM Shares”), having an aggregate offering price of up to $ 100 million, from time to time, through an “at-the market” equity offering program (the “ATM Program”).

During the year ended December 31, 2020, 1,070,000 ATM Shares were sold at a weighted average price of $ 19.54 per share for net proceeds of $ 20.6 million.

In connection with the shares sold under the ATM Program, the Manager was granted 129,988 ordinary shares, which had a grant date fair value of $ 0.7 million.

In September 2019, in a public offering, 3,450,000 shares of 8.25 % Series A Preferred Shares, par value $ 0.01 per share, were issued with a liquidation preference of $ 25.00 per share for net proceeds of approximately $ 82.9 million.

In November 2019, in a public offering, 4,600,000 shares of 8.00 % Series B Preferred Shares, par value $ 0.01 per share, were issued with a liquidation preference of $ 25.00 per share for net proceeds of approximately $ 111.1 million.

See Note 11 for information related to options issued to the Manager in connection with these offerings.

1 unchanged sentence

In the normal course of business, the Company and its subsidiaries may be involved in various claims, legal proceedings, or may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications.

Within our offshore energy business, a lessee did not fulfill their obligation under their charter arrangement, therefore we are pursuing rights afforded to us under the charter and the range of potential losses against the obligation is $ 0.0 million to $ 3.3 million.

Within our offshore energy business, a lessee did not fulfill its obligation under its charter arrangement, therefore we are pursuing rights afforded to us under the charter and the range of potential losses against the obligation is $ 0.0 million to $ 3.3 million.

Our maximum exposure under other arrangements is unknown as no additional claims have been made.

We believe the risk of loss in connection with such arrangements is remote.

We have also entered into an arrangement with our non-controlling interest holder of Repauno, whereby the non-controlling interest holder may receive additional payments contingent upon the achievement of certain service conditions, not to exceed $ 15.0 million.

We will account for such amounts when and if such conditions are achieved.

The contingency related to $ 5.0 million of the total $ 15.0 million was resolved during the year ended December 31, 2021.

The $ 5.0 million payment was included in the cost of the asset acquisition.

Jefferson entered into a two-year pipeline capacity agreement for a recently completed pipeline.

Under the agreement, which took effect in the second quarter of 2021, Jefferson is obligated to pay fixed marketing fees over the two-year agreement, which totals a minimum of $ 10.2 million per year.

SUBSEQUENT EVENTS

In January 2022, we issued 8,311 common shares to certain directors as compensation.

On February 24, 2022, our Board of Directors declared a cash dividend on our common shares and eligible participating securities of $ 0.33 per share for the quarter ended December 31, 2021, payable on March 23, 2022 to the holders of record on March 11, 2022.

In January 2023, we issued 12,165 ordinary shares to certain directors as compensation.

On February 23, 2023, our Board of Directors declared a cash dividend on our ordinary shares and eligible participating securities of $ 0.30 per share for the quarter ended December 31, 2022, payable on March 22, 2023 to the holders of record on March 10, 2023.

Additionally, on February 23, 2023, our Board of Directors declared cash dividends on the Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares of $ 0.52 , $ 0.50 and $ 0.52 per share, respectively, for the quarter ended December 31, 2022, payable on March 15, 2023 to the holders of record on March 7, 2023.

On January 4, 2023, the Company completed the acquisition of its 50 % interest ( 45 % pro rata distribution of income until return of JV partner's initial investment) in iAero Thrust LLC (“iAero Thrust”), a hospital maintenance and testing facility dedicated to the CFM56 engine, for $ 19.5 million.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data