What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-27 · 336 added, 315 removed, 964 unchanged (40% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021

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

Consolidated Statements of Comprehensive Income (loss) for the years ended December 31, 2023, 2022 and 2021

Consolidated Statement of Changes in Equity for the years ended December 31, 2023, 2022 and 2021

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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”).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

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Description of the Matter As described in Note 2 to the consolidated financial statements, the Company recognizes maintenance revenue for aircraft leases related to the portion of maintenance payments received from lessees that are not expected to be reimbursed for maintenance events.

Revenue related to maintenance on leased aircraft is recorded as a component of maintenance revenue, which totaled $148.8 million for the year ended December 31, 2022, as disclosed in Note 10.

Revenue related to maintenance on leased aircraft is recorded as a component of maintenance revenue, which totaled $191.3 million on the Consolidated Statements of Operations for the year ended December 31, 2023.

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.

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

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

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Other assets 2 286,456 125,834

Assets of discontinued operations 3 — 2,442,301

Total assets $ 2,964,685 $ 2,429,577

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Other liabilities 52,100 36,468

Liabilities of discontinued operations 3 — 980,255

Total liabilities $ 2,788,802 $ 2,410,175

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100,245,905 and 99,716,621 shares issued and outstanding as of December 31, 2023 and 2022, respectively)

$ 1,002 $ 997

Preferred shares ($ 0.01 par value per share;

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Accumulated deficit ( 81,785 ) ( 325,602 )

Accumulated other comprehensive loss — ( 156,381 )

Shareholders' equity 175,349 18,878

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Notes 2023 2022 2021

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

Lease Income $ 207,936 $ 179,314 $ 173,864

Maintenance revenue 191,347 148,846 128,819

Asset sales revenue 303,141 183,535 —

Aerospace products revenue 454,970 178,515 23,301

Other revenue 13,502 18,201 9,599

Total revenues 1,170,896 708,411 335,583

Cost of sales 502,132 248,385 14,308

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Equity in losses of unconsolidated entities 6 ( 1,606 ) ( 369 ) ( 1,403 )

Gain (loss) on sale of assets, net 77,211 49,015 ( 300 )

Gain on sale of assets, net — 77,211 49,015

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

Other income (expense) 7,590 207 ( 490 )

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

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 )

Total other income 5,984 57,190 43,868

Income (loss) from continuing operations before income taxes 184,017 ( 105,311 ) ( 39,735 )

(Benefit from) provision for income taxes 11 ( 59,800 ) 5,300 3,126

Net income (loss) from continuing operations 243,817 ( 110,611 ) ( 42,861 )

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

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

Net income (loss) 243,817 ( 212,027 ) ( 130,706 )

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

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Dividends on preferred shares 31,795 27,164 24,758

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

Loss per share:

Net income (loss) attributable to shareholders $ 212,022 $ ( 220,374 ) $ ( 128,992 )

Earnings (loss) per share:

Continuing operations $ 2.12 $ ( 1.39 ) $ ( 0.75 )

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FTAI AVIATION LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands)

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2023 2022 2021

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

Net income (loss) $ 243,817 $ ( 212,027 ) $ ( 130,706 )

Other comprehensive loss:

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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:

Comprehensive income (loss) 243,817 ( 394,990 ) ( 260,850 )

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

Continuing operations — — —

Discontinued operations — ( 18,817 ) ( 26,472 )

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

Comprehensive income (loss) attributable to shareholders $ 243,817 $ ( 376,173 ) $ ( 234,378 )

__________________________________________________

(1) Net of deferred tax (benefit) expense of $ — , $( 2,187 ) and $( 7,075 ) for the years ended December 31, 2022, 2021 and 2020, respectively.

(1) Net of deferred tax benefit of $ 0 , $ 0 and $( 2,187 ) for the years ended December 31, 2023, 2022 and 2021, respectively.

See accompanying notes to consolidated financial statements.

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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

Additional Paid In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

Equity - December 31, 2020 $ 856 $ 91 $ 1,130,106 $ ( 28,158 ) $ ( 26,237 ) $ 22,663 $ 1,099,321

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Issuance of ordinary shares 136 323,443 323,579

Conversion of participating securities ( 7 ) ( 7 )

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

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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

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

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

Issuance of ordinary shares 5 399 404

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

Issuance of preferred shares 42 101,158 101,200

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

Net loss ( 193,210 ) ( 18,817 ) ( 212,027 )

Net income 243,817 — 243,817

Other comprehensive loss — — — —

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

Total comprehensive income 243,817 — — 243,817

Contributions from non-controlling interest 10 10

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

Issuance of ordinary shares 5 924 929

Dividends declared - ordinary shares ( 119,847 ) ( 119,847 )

Issuance of preferred shares 26 61,703 61,729

Dividends declared - preferred shares ( 31,795 ) ( 31,795 )

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Cash flows from operating activities:

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

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

Net income (loss) $ 243,817 $ ( 212,027 ) $ ( 130,706 )

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

Equity in losses of unconsolidated entities 1,606 46,971 12,734

Gain on sale of subsidiaries — — ( 1,331 )

(Gain) loss on sale of assets, net ( 141,677 ) ( 49,031 ) 308

Gain on sale of assets, net ( 160,742 ) ( 141,677 ) ( 49,031 )

Security deposits and maintenance claims included in earnings ( 40,535 ) ( 41,845 ) ( 39,067 )

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Change in fair value of non-hedge derivatives — ( 1,567 ) ( 2,220 )

Change in fair value of guarantees ( 1,807 ) — —

Amortization of lease intangibles and incentives 43,764 37,135 27,978

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Other liabilities ( 997 ) 2,340 118

Net cash (used in) provided by operating activities ( 20,657 ) ( 22,044 ) 63,106

Net cash provided by (used in) operating activities 128,982 ( 20,657 ) ( 22,044 )

Cash flows from investing activities:

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Principal collections on finance leases 3,638 2,227 7,387

Principal collections on notes receivable 4,875 — —

Acquisition of business, net of cash acquired ( 29,632 ) ( 3,819 ) ( 627,090 )

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

Investment in promissory notes ( 11,500 ) — —

Purchase deposit for acquisitions ( 23,937 ) ( 6,671 ) ( 13,658 )

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Net cash provided by financing activities 282,208 44,914 1,587,645

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

Net increase (decrease) in cash and cash equivalents and restricted cash 37,841 ( 386,996 ) 278,643

Cash and cash equivalents and restricted cash, beginning of period 53,065 440,061 161,418

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Acquisition of property, plant and equipment ( 699 ) — ( 581 )

Transfers from leasing equipment 224,218 121,855 91,266

Security deposits, maintenance deposits, other assets and other liabilities settled in the sale of leasing equipment 24,116 18,385 400

Settled and assumed security deposits 823 ( 6,774 ) ( 4,041 )

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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.

(“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 our maintenance facility and exclusivity arrangements, aftermarket components for aircraft engines.

Additionally, we own and lease offshore energy equipment.

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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.

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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.

All intercompany transactions and balances have been eliminated.

Principles of Consolidation —We consolidate all entities in which we have a controlling financial interest and control over significant operating decisions.

The ownership interest of other investors in consolidated subsidiaries is recorded as non-controlling interest.

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Risks and Uncertainties —In the normal course of business, we encounter several significant types of economic risk including credit, market, and capital market risks.

Credit risk is the risk of the inability or unwillingness of a lessee, customer, or derivative counterparty to make contractually required payments or to fulfill its other contractual obligations.

Credit risk is the risk of the inability or unwillingness of a lessee or customer to make contractually required payments or to fulfill its other contractual obligations.

Market risk reflects the risk of a downturn or volatility in the underlying industry segments in which we operate, which could adversely impact the pricing of the services offered by us or a lessee’s or customer’s ability to make payments, increase the risk of unscheduled lease terminations and depress lease rates and the value of our leasing equipment or operating assets.

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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.

Restricted Cash —Restricted cash is $ 0.2 million and $ 19.5 million as of December 31, 2023 and 2022, respectively.

The balance as of December 31, 2022 consisted of funds required for the Company’s investment in QuickTurn, as described in Note 4.

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

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

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10% of new build cost

Buildings and improvements 40 to 50 years

Scrap value at end of useful life

Machinery and equipment 6 - 23 years

Scrap value at end of useful life

Furniture and fixtures 3 - 6 years from date of purchase

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Construction in progress N/A N/A

Other 5 - 7 years

Major improvements and modifications incurred in connection with the acquisition of property, plant and equipment and leasing equipment that are required to get the asset ready for initial service are capitalized and depreciated over the remaining life of the asset.

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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, residual values, economic conditions, technology, demand for a particular asset type and other factors.

FTAI AVIATION LTD.

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

Revenues — We disaggregate our revenue by products and services.

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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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 Asset sales revenue in the Consolidated Statements of Operations beginning in the third quarter 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 beginning in the third quarter 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 on sale of assets, net on the Consolidated Statements of Operations, as we were previously only occasionally selling these assets.

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

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

recorded as Maintenance revenues.

All excess maintenance payments received that we do not expect to repay to the lessee are recorded as Maintenance revenue on our Consolidated Statements of Operations.

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 lease payments are segregated into principal and interest components similar to a loan.

Unearned income is recognized on an effective interest method over the lease term and is recorded as finance lease income.

Unearned income is recognized on an effective interest method over the lease term and is recorded as lease income.

The principal component of the lease payment is reflected as a reduction to the net investment in finance leases.

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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.

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

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

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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.

Aerospace products revenue —Aerospace products revenue primarily consists of the transaction price related to the sale of repaired CFM56-7B, CFM56-5B and V2500 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.

Aerospace products revenue also consists of engine management service contracts, where the Company has a stand-ready obligation to provide replacement CFM56-7B and CFM56-5B engines to customers as they become unserviceable during the contract term.

The Company recognizes revenue over time using a straight-line attribution method and the costs related to fulfilling the performance obligation are expensed as incurred.

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).

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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.

ROU assets, for both operating and finance leases,

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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.

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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.

No single customer accounted for greater than 10% of total revenue during the years ended December 31, 2023 and 2022.

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

As of December 31, 2023, no single customer accounted for greater than 10% of t otal accounts receivable, net.

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

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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)

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.

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

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

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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.

As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines and our allowance for doubtful accounts at December 31, 2023 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.

Our comprehensive income (loss) represents net income (loss), as presented in the Consolidated Statements of Operations, adjusted for comprehensive loss related to cash flow hedges of our equity method investees of discontinued operations.

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 $ 43.5 million and $ 37.9 million, purchase deposits of $ 23.9 million and $ 6.7 million, notes receivable of $ 102.3 million and $ 49.2 million, operating lease right-of-use assets, net of $ 3.4 million and $ 3.0 million, and finance leases, net of $ 3.0 million and $ 6.4 million, maintenance right assets of $ 16.3 million and $ 6.8 million, prepaid expenses of $ 7.8 million an d $ 1.9 million as of December 31, 2023 and 2022, 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 $ 1.20 , $ 1.26 and $ 1.32 per ordinary share during each of the years ended December 31, 2023, 2022 and 2021, 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.

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, 2023, 2022, and 2021, respectively, the Series B Preferred Shares of $ 2.00 , $ 2.00 and $ 2.00 per share for the years ended December 31, 2023, 2022 and 2021, respectively, the Series C Preferred Shares of $ 2.06 , $ 2.06 , $ 1.49 per share for the year ended December 31, 2023, 2022 and 2021, respectively, and the Series D Preferred Shares of $ 1.78 per share for the year ended December 31, 2023.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Recent Accounting Pronouncements —In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures .

This ASU modifies the disclosure and presentation requirements of reportable segments.

The new guidance requires the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit and loss.

In addition, the new guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements.

This standard is effective retrospectively for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently assessing the impact this guidance will have on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures .

This ASU enhances the transparency and decision usefulness of income tax disclosures by expanding the disclosures of an entity’s income tax rate reconciliation and disaggregation of income taxes paid and income tax expense.

Under the new guidance, public business entities must annually disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate.

This standard is effective prospectively for all public entities for annual periods beginning after December 15, 2024, with early adoption and retrospective application permitted.

We are currently assessing the impact this guidance will have on our consolidated financial statements and related disclosures.

DISCONTINUED OPERATIONS

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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.

The Company used these proceeds to repay all 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.

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Switching revenues are derived from the performance of switching services, which involve the movement of cars from one point to another within the limits of an individual plant, industrial area, or a rail yard.

Switching revenues are recognized as the services are performed, and the services are generally completed on the same day they are initiated.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

revenues are recognized as the services are performed, and the services are generally completed on the same day they are initiated.

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

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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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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

During 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.

2 unchanged sentences

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 2021 or 2020.

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

4 unchanged sentences

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.

There were no impairments of goodwill for the year ended December 31, 2022.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Intangibles and amortization

2 unchanged sentences

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)

Financial Information of Discontinued Operations

1 unchanged sentence

Year Ended December 31,

2022 2021 2020

Total revenues $ 140,009 $ 120,219

9 unchanged sentences

Gain on sale of assets, net 258 16

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

Other (expense) income ( 1,423 ) ( 8,727 )

5 unchanged sentences

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

The cash flows related to discontinued operations have not been segregated, and are included in the Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021.

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

FTAI AVIATION LTD.

1 unchanged sentence

(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,

2022 2021 2020

Operating activities:

9 unchanged sentences

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.

The Company accounted for Long Ridge Terminal LLC, included in discontinued operations for the years ended December 31, 2022 and 2021 included above, using the equity method of accounting.

Summarized financial data for Long Ridge Terminal LLC are shown in the following table.

Income Statement 2022 2021

Total revenues $ 15,199 $ 85,638

Operating expenses 36,693 28,310

Depreciation and amortization 29,381 24,836

Interest expense 30,622 11,005

Total expenses 96,696 64,151

Total other expense ( 234 ) ( 44,302 )

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

ACQUISITION OF QUICKTURN

On December 1, 2023, we completed the acquisition of the remaining equity interest of Quick Turn Engine Center LLC (“QuickTurn”) from Unical Aviation Inc.

(“Unical”) for total cash consideratio n of $ 30.3 million to obtain full ownership with a 100 % equity interest.

The cash consideration included an additional $ 2.5 million in other assets acquired.

We acquired QuickTurn to better position the Company to have tighter integration over the development and delivery of aerospace products.

QuickTurn is a hospital maintenance and testing facility dedicated to the CFM56 engine located in Miami, Florida that operates within our Aerospace Products segment.

The results of operations at QuickTurn have been included in the Consolidated Statements of Operations beginning on the acquisition date.

In connection with the acquisition, we recorded $ 0.2 million of acquisition and transaction expense during the year ended December 31, 2023.

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 fair value of the property, plant, and equipment included replacement cost estimates 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.

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 fair values of Inventory;

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

and, (iv) other changes to assets and liabilities, including working capital accounts.

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

The following table summarizes the preliminary allocation of the Net assets acquired as presented in our Consolidated Balance Sheets:

December 1, 2023

Balance Sheet

Fair value of assets acquired:

Cash and cash equivalents $ 518

2 unchanged sentences

Property, plant, and equipment, net 30,559

Intangible assets, net 4,940

Goodwill 89,390

Intangible assets 2,377

Inventory, net 9,332

1 unchanged sentence

Total assets 52,370

Fair value of liabilities assumed:

Accounts payable and accrued liabilities 3,994

Debt, net 604,261

Derivative liabilities 339,033

Other liabilities 2,410

Total liabilities 6,404

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 )

Net assets acquired $ 50,596

________________________________________________________

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

This goodwill is assigned to the Aerospace Products 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 Estimated Fair value

Above market leases 4

Customer relationships 5 $ 1,907

Total $ 2,377

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

Estimated useful life in years Estimated Fair value

Buildings and improvements 49

Machinery and equipment 6 - 23

Total $ 30,559

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The unaudited financial information in the table below summarizes the combined results of operations of FTAI and QuickTurn on a pro forma basis.

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;

• 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, 2022.

Year Ended December 31,

Total revenue $ 1,195,899 $ 735,379

Net income (loss) attributable to shareholders $ 206,341 $ ( 236,786 )

LEASING EQUIPMENT, NET

3 unchanged sentences

Leasing equipment, net $ 2,032,413 $ 1,913,553

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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.

Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the three months ended March 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.

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

As of December 31, 2023 , eight aircraft and seventeen engin es were still located in 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:

Year Ended December 31,

2022 2021 2020

Acquisitions:

Aircraft 39 52 20

Engines 64 60 37

Dispositions:

Aircraft 8 4 —

Engines 71 56 25

As a result, w e adjusted the carrying value of these assets to fair value and recognized transactional impairment charges of $ 2.1 million , net of redelivery compensation during the year ended December 31, 2023.

Depreciation expense for leasing equipment is summarized as follows:

2 unchanged sentences

Depreciation expense for leasing equipment $ 168,901 $ 152,378 $ 147,444

PROPERTY, PLANT AND EQUIPMENT, NET

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

Construction in progress 7,864 36,777

Furniture and fixtures 1,449 1,374

Other 1,661 533

10,974 38,684

Accumulated depreciation ( 960 ) ( 421 )

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

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:

Year Ended December 31,

2022 2021 2020

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 % 1,682 1,830

Quick Turn Engine Center LLC Equity method 50 %* — —

$ 22,722 $ 22,037

________________________________________________

* 45 % pro rata distribution of income until return of JV partner's initial investment

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

We did not recognize any other-than-temporary impairments for the year ended December 31, 2023.

4 unchanged sentences

Falcon MSN 177 LLC ( 148 ) 741 —

Quick Turn Engine Center LLC ( 2,291 ) — —

Total $ ( 1,606 ) $ ( 369 ) $ ( 1,403 )

9 unchanged sentences

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

Quick Turn Engine Center LLC

On January 4, 2023, we invested $ 19.5 million for a 50 % interest ( 45 % pro rata distribution of income until return of the JV partner’s initial investment) in Quick Turn Engine Center LLC or “QuickTurn” (previously iAero Thrust LLC), a hospital maintenance and testing facility dedicated to the CFM56 engine.

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

On December 1, 2023, we purchased the remaining interest in QuickTurn from the joint venture partner for total cash consideration of $ 30.3 million to obtain full ownership with a 100 % equity interest.

The cash consideration included an additional $ 2.5 million in other assets acquired.

On the acquisition date, the Company accounted for QuickTurn on a consolidated basis and derecognized it as an equity method investment.

The Company remeasured its previously held equity method investment as of the acquisition date to a fair value of $ 17.2 million, determined using the implied fair value from the transaction price, and recorded a gain of $ 5.3 million.

The gain is included in Other income in the Consolidated Statements of Operations.

The result s of operations at QuickTurn have been included in the Consolidated Statements of Operations beginning on December 1, 2023.

See Notes 4 for additional information.

FTAI AVIATION LTD.

8 unchanged sentences

Acquired favorable lease intangibles, net 48,694 41,955

Acquired customer relationships 1,907 —

Accumulated amortization ( 11 ) —

Acquired customer relationships, net 1,896 —

Total intangible assets, net $ 50,590 $ 41,955

Intangible liabilities

2 unchanged sentences

Acquired unfavorable lease intangibles, net $ 1,762 $ 10,545

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

Intangible assets and liabilities are held within the Aviation Leasing and Aerospace Products segments.

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

2 unchanged sentences

2023 2022 2021

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

Lease intangibles Lease income $ 15,126 $ 13,913 $ 4,993

Customer relationships:

Depreciation and amortization 11 — —

Total $ 15,137 $ 13,913 $ 4,993

As of December 31, 2023, estimated net annual amortization of intangibles is as follows:

13 unchanged sentences

9/20/25 150,000

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

5 unchanged sentences

1,001,746 5.50 % 5/1/28 1,002,091

Senior Notes due 2030 (4)

496,704 7.88 % 12/1/30 —

Total bonds payable 2,550,493 2,055,127

7 unchanged sentences

(3) Includes an unamortized premium of $ 1,746 and $ 2,091 at December 31, 2023 and 2022, respectively.

(4) Includes unamortized disco unt of $ 3,296 at December 31, 2023

On November 21, 2023, w e issued $ 500.0 million aggregate principal amount of senior unsecured notes due 2030 (the “2030 Notes”).

The 2030 Notes bear interest at a rate of 7.88 % per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2024.

We used a portion of the proceeds to repay $ 250 million of outstanding borrowings under the Revolving Credit Facility, for general corporate purposes, and the funding of future acquisitions and investments.

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.

1 unchanged sentence

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.

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 approximate ly $ 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 during the year ended December 31, 2022 as a result of these pay downs.

We were in compliance with all debt covenants as of December 31, 2023.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

As of December 31, 2023, scheduled principal repayments under our debt agreements for the next five years and thereafter are summarized as follows:

4 unchanged sentences

Senior Notes due 2028 — — — — 1,000,000 — 1,000,000

Senior Notes due 2030 — — — — — 500,000 500,000

Total principal payments on loans and bonds payable $ — $ 650,000 $ — $ 400,000 $ 1,000,000 $ 500,000 $ 2,550,000

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

FAIR VALUE MEASUREMENTS

11 unchanged sentences

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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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:

3 unchanged sentences

Senior Notes due 2028 963,630 853,490

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.

Senior Notes due 2030 521,440 —

The fair value 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.

The Company has contingent obligations under ASC 460, Guarantees , in connection with certain sales of aircraft on lease, which are measured at fair value.

The guarantees are valued a t $ 6.8 million and $ 3.8 million as of December 31, 2023 and December 31, 2022, respectively, and are reflected as a component of Other liabilities on the Consolidated Balance Sheets.

The fair values of the guarantees are determined based on the estimated condition of the e ngines at the end of each lease term and the estimated cost of replacement and applicable discount rates and are classified as Level 3.

During the year ended December 31, 2023, the Company recorded a $ 4.8 million increase in guarantees related to the sale of seven a ircraft and a $ 1.8 million de crease related to the change in fair value, which is recorded as Asset sales revenue in the Consolidated Statements of Operations.

We measure the fair value of certain assets 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 intangible assets, property, plant and equipment and leasing equipment.

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 leasing and eventual sale of assets.

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 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.

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

(Dollars in tables in thousands, unless otherwise noted)

Year Ended December 31, 2022

Aviation Leasing Aerospace Products Corporate and Other Total

$ 158,628 $ — $ 20,246 $ 178,874

Maintenance revenue

148,846 — — 148,846

Finance lease income

Asset sales revenue 208,500 — — 208,500

Aerospace products revenue — 153,550 — 153,550

Other revenue

11,499 — 6,702 18,201

Total revenues

$ 527,913 $ 153,550 $ 26,948 $ 708,411

Year Ended December 31, 2021

Aviation Leasing Aerospace Products Corporate and Other Total

$ 161,986 $ — $ 10,131 $ 172,117

Maintenance revenue

128,819 — — 128,819

Finance lease income

1,747 — — 1,747

Asset sales revenue — — — —

Aerospace products revenue — 23,301 — 23,301

Other revenue

5,569 — 4,030 9,599

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

Year Ended December 31, 2020

Aviation Leasing Aerospace Products Corporate and Other Total

$ 166,331 $ — $ 11,145 $ 177,476

Maintenance revenue

101,462 — — 101,462

Finance lease income

2,260 — — 2,260

Asset sales revenue — — — —

Aerospace products revenue — — — —

Other revenue

11,158 — 5,578 16,736

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

Thereafter 44,285

Total $ 394,385

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.

As of December 31, 2023, 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.

Restricted Shares

During the first quarter of 2023, we issued restricted shares of the Company to select employees of FTAI Aviation LLC (a wholly owned subsidiary of the Company) that had a grant date fair value of $ 8.8 million and vest over 4.3 years.

These awards are subject to continued employment, and the compensation expense is recognized ratably over the vesting periods, with 50 % of the units vesting on June 30, 2026 and the remaining units vesting on June 30, 2027.

The fair value of these awards were calculated based on the closing price of FTAI Aviation Ltd.’s ordinary shares on grant date of March 13, 2023.

The Consolidated Statements of Operations includes the following expense related to our stock-based compensation arrangements:

December 31, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met

2023 2022 2021

Restricted Shares $ 1,638 $ — $ — $ 7,133

The following tables present information for our stock options and restricted shares:

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

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

Stock Options Restricted shares

Options Weighted Average Exercise Price Shares Weighted Average Issuance Price

Outstanding as of December 31, 2022 1,735,316 $ 22.67 — —

Granted 248,947 26.11 365,000 24.03

exercised / vested 1,368,086 22.80 — —

1 unchanged sentence

Outstanding as of December 31, 2023 616,177 365,000

Stock Options

Stock Options Restricted Shares

As of December 31, 2023:

2 unchanged sentences

Weighted average remaining contractual term (in years) 8.1 3.5

During the year ended December 31, 2022, the Manager transferre d 336,862 of its options to certain of the Manager’s employees.

During the year ended December 31, 2023, the Manager did not transfer any options to employees.

Stock Options

In connection with our equity offerings (see Note 14 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.

The following table presents information related to the options related to our shares:

The fair value of these options were recorded as an increase in equity with an offsetting reduction of capital proceeds received.

The following table presents information related to the options granted related to our shares:

Year Ended December 31,

2023 2022 2021

Number of options 248,947 — 1,684,318

7 unchanged sentences

Expected term Expected term used represents the period of time the options granted are expected to be outstanding.

10 years 10 years

No options were granted during the year ended December 31, 2022.

10 years 0 years 10 years

FTAI AVIATION LTD.

5 unchanged sentences

Cayman Islands $ — $ — $ —

Bermuda — — —

United States:

1 unchanged sentence

State and local 1,176 1,687 760

Other Non-U.S.

1,715 443 ( 11 )

1 unchanged sentence

Cayman Islands — — —

Bermuda ( 72,185 ) — —

United States:

1 unchanged sentence

State and local ( 2 ) 242 122

Other Non-U.S.

4,618 1,101 279

9 unchanged sentences

federal, state and foreign corporate income tax in locations where they conduct business.

The difference between our reported total provision for income taxes and the Cayman Islands statutory rate of 0% is as follows:

Historically, the Company’s Bermuda operations have not been subject to Bermuda income tax.

However, on December 27, 2023, the Government of Bermuda enac ted a 15% corporate income tax regime (the “Bermuda CIT”) that applies to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective for tax years beginning on or after January 1, 2025.

As a result of the Bermuda CIT, the exemption of certain of the Company’s Bermuda subsidiaries from Bermuda corporate income taxes will cease in 2025.

With the enactment of the Bermuda CIT in 2023, the Company underwent an analysis to determine the tax impacts to its consolidated financial statements for the year ended December 31, 2023.

We have recorded a deferred tax asset of $ 72.2 million in connection with the law change, which was recorded as a benefit from income taxes.

The difference between our reported total provision for income taxes and the Cayman Islands st atutory rate of 0% is as f ollows:

FTAI AVIATION LTD.

12 unchanged sentences

Investment in Partnerships 963 963

Other 272 320

Inventory 16,985 —

Customer Relationship Intangibles 28,500 —

Total deferred tax assets 87,220 47,105

2 unchanged sentences

Deferred tax liabilities:

Fixed assets ( 22,794 ) ( 20,072 )

Net deferred tax liabilities $ ( 3,254 ) $ 1,309

Fixed assets and goodwill ( 8,186 ) ( 22,794 )

Net deferred tax assets (liabilities) $ 60,372 $ ( 3,254 )

Deferred tax assets and liabilities are reported net in Other assets or Other liabilities in the Consolidated Balance Sheets.

9 unchanged sentences

Valuation allowance at end of period $ 18,599 $ 27,565 $ 9,142

As of December 31, 2022, certain of our corporate subsidiaries had U.S.

federal net operating loss carryforwards of approximately $ 39.3 million that are available to offset future taxable income.

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, 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 share ownership.

FTAI AVIATION LTD.

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(Dollars in tables in thousands, unless otherwise noted)

As of December 31, 2023, certain of our corporate subsidiaries had U.S.

federal net operating loss carryforwards of approximately $ 22.8 million which can be carried forward indefinitely against future business income.

As of December 31, 2023, we also had net operating loss carryforwards for Irish income tax purp oses of $ 266.4 million, w hich can be carried forward indefinitely against future business income, $ 1.6 million of net operating loss carryforwards for Malaysian income tax purposes, which will begin to expire in the year 2030, and $ 2.1 million of net operating loss carryforward for Singaporean income tax purpose, which can be carried forward indefinitely against the future business income.

In addition, the maximum annual use of net operating loss carryforwards may be limited after certain changes in share ownership.

As of and for the period ended December 31, 2023, we had not established a liability for uncertain tax positions as no such positions existed.

In general, our tax returns and the tax returns of our corporate subsidiaries are subject to U.S.

federal, state, local and foreign income tax examinations by tax authorities.

federal, state, local and f oreign income tax examinations by tax authorities.

Generally, we are not subject to examination by taxing authorities for tax years prior to 2019.

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In addition, the Manager may be reimbursed for various expenses incurred by the Manager on our behalf, including the costs of legal, accounting and other administrative activities.

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 0.01 % of FTAI Aviation Holdco Ltd.

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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 Master GP.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The following table summarizes the management fees, income incentive allocation and capital gains incentive allocation from continuing operations:

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Total $ 18,037 $ 3,562 $ 684

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

We pay all of our operating expenses, except those specifically required to be borne by the Manager under the Management Agreement.

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If we terminate the Management Agreement, we will generally be required to pay the Manager a termination fee.

The termination fee is equal to the amount of the management fee during the 12 months immediately preceding the date of the termination.

Pursuant to the terms of the Management Agreement, 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 Master GP if Master GP is removed due to the termination of the Management Agreement in certain specified circumstances.

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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:

Accrued management fees $ 53 $ 1,495

Other payables 4,688 2,283

FTAI AVIATION LTD.

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(Dollars in tables in thousands, unless otherwise noted)

The following table summarizes amounts due to the Manager, which are included within accounts payable and accrued liabilities in the Consolidated Balance Sheets:

Accrued management fees $ 224 $ 53

Other payables 6,200 4,688

Other Affiliate Transactions

During the year ended December 31, 2023, in connection with our equity offerings (as defined in Note 10 for details), we granted options to the Manager.

SEGMENT 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.

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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 .

The Aerospace Products segment develops and manufactures through a joint venture, and repairs and sells, through our maintenance facility and exclusivity arrangements, aftermarket components for aircraft engines.

During the fourth quarter of 2023, the Company changed the composition of its operating segments to include V2500 engines within the Aerospace Products segment.

Prior periods have been restated to reflect the change in accordance with the requirements of ASC 280, Segment Reporting .

See Note 2 for additional information.

Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, shared services costs, and management fees.

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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.

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.

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Adjusted EBITDA should not be considered as an alternative to net income (loss) attributable to shareholders as determined in accordance with U.S.

The following tables set forth certain information for each reportable segment:

FTAI AVIATION LTD.

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Aviation Leasing Aerospace Products Corporate and Other Total

Revenues $ 527,913 $ 153,550 $ 26,948 $ 708,411

Lease income $ 179,704 $ — $ 28,232 $ 207,936

Maintenance revenue 191,347 — — 191,347

Asset sales revenue 303,141 — — 303,141

Aerospace products revenue — 454,970 — 454,970

Other revenue 7,419 — 6,083 13,502

Total revenues 681,611 454,970 34,315 1,170,896

Cost of sales 221,852 280,280 — 502,132

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Other income (expense)

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 )

Other income (expense) 246 — ( 39 ) 207

Total other income (expense) 59,635 17,453 ( 19,898 ) 57,190

Equity in losses of unconsolidated entities ( 148 ) ( 1,458 ) — ( 1,606 )

Other income 1,300 5,347 943 7,590

Total other income 1,152 3,889 943 5,984

Income (loss) from continuing operations before income taxes 255,410 155,737 ( 227,130 ) 184,017

Provision for (benefit from) income taxes 2,502 2,961 ( 163 ) 5,300

(Benefit from) provision for income taxes ( 36,193 ) ( 24,440 ) 833 ( 59,800 )

Net income (loss) from continuing operations 291,603 180,177 ( 227,963 ) 243,817

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Equity-based compensation expense ( 1,638 )

Provision for income taxes ( 5,300 )

Net loss attributable to shareholders from continuing operations $ ( 137,775 )

Benefit from income taxes 59,800

Net income attributable to shareholders from continuing operations $ 212,022

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

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Total revenues $ 681,611 $ 454,970 $ 34,315 $ 1,170,896

Presented below are the contracted minimum future annual revenues to be received under existing operating leases as of December 31, 2023:

December 31, 2023

2024 $ 193,614

Thereafter 48,109

Total $ 626,868

FTAI AVIATION LTD.

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Aviation Leasing Aerospace Products Corporate and Other Total

Revenues $ 298,121 $ 23,301 $ 14,161 $ 335,583

Lease income $ 159,068 $ — $ 20,246 179,314

Maintenance revenue 148,846 — — 148,846

Asset sales revenue 183,535 — — 183,535

Aerospace products revenue — 178,515 — 178,515

Other revenue 11,499 — 6,702 18,201

Total revenues 502,948 178,515 26,948 708,411

Cost of sales 138,904 109,481 — 248,385

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Total expenses 503,536 121,949 245,427 870,912

Other (expense) income

Equity in losses of unconsolidated entities — ( 1,403 ) — ( 1,403 )

Other income (expense)

Equity in earnings (losses) of unconsolidated entities 740 ( 1,109 ) — ( 369 )

Gain on sale of assets, net 59,048 18,163 — 77,211

Loss on extinguishment of debt — — ( 19,859 ) ( 19,859 )

Other (expense) income ( 527 ) — 37 ( 490 )

Other income (expense) 246 — ( 39 ) 207

Total other income (expense) 60,034 17,054 ( 19,898 ) 57,190

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Net loss attributable to shareholders from continuing operations $ ( 137,775 )

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:

7 unchanged sentences

Total revenues $ 502,948 $ 178,515 $ 26,948 $ 708,411

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

For the Year Ended December 31, 2021

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Aviation Leasing Aerospace Products Corporate and Other Total

Revenues $ 281,211 $ — $ 16,723 $ 297,934

Lease income $ 163,733 $ — $ 10,131 $ 173,864

Maintenance revenue 128,819 — — $ 128,819

Asset sales revenue — — — $ —

Aerospace products revenue — 23,301 — $ 23,301

Other revenue 5,569 — 4,030 $ 9,599

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

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Equity in losses of unconsolidated entities — ( 1,403 ) — ( 1,403 )

Loss on sale of assets, net ( 300 ) — — ( 300 )

Gain on sale of assets, net 28,631 20,384 — 49,015

Loss on extinguishment of debt — — ( 3,254 ) ( 3,254 )

Other income 94 — — 94

Total other expense ( 2,138 ) — ( 6,943 ) ( 9,081 )

Other (expense) income ( 527 ) — 37 ( 490 )

Total other income (expense) 28,104 18,981 ( 3,217 ) 43,868

Income (loss) from continuing operations before income taxes 142,345 22,479 ( 204,559 ) ( 39,735 )

(Benefit from) provision for income taxes ( 4,812 ) — 469 ( 4,343 )

Provision for (benefit from) income taxes 2,073 1,135 ( 82 ) 3,126

Net income (loss) from continuing operations 140,272 21,344 ( 204,477 ) ( 42,861 )

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Equity-based compensation expense —

Benefit from income taxes 4,343

Provision for income taxes ( 3,126 )

Net loss attributable to shareholders from continuing operations $ ( 67,619 )

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Location of long-lived assets

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Total property, plant and equipment and leasing equipment, net $ 2,077,588 $ 1,923,567

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

EARNINGS PER SHARE AND EQUITY

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.

Basic earnings per ordinary share (“EPS”) is calculated by dividing net income (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.

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(in thousands, except share and per share data) 2023 2022 2021

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

Net income (loss) from continuing operations $ 243,817 $ ( 110,611 ) $ ( 42,861 )

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

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

Net income (loss) 243,817 ( 212,027 ) ( 130,706 )

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

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Dividends on preferred shares 31,795 27,164 24,758

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

Net income (loss) attributable to shareholders $ 212,022 $ ( 220,374 ) $ ( 128,992 )

Weighted Average Ordinary Shares Outstanding - Basic (1)

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100,425,777 99,421,008 89,922,088

Loss per share:

Earnings (loss) per share:

Continuing operations $ 2.12 $ ( 1.39 ) $ ( 0.75 )

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________________________________________________________

(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)

(1) Year ended December 31, 2021 includes participating securities which can be converted into a fixed amount of our shares.

The calculation of Diluted EPS excludes 0 , 582,200 and 898,299 shares for the years ended December 31, 2023, 2022 and 2021, respectively, because the impact would be anti-dilutive.

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Preferred Shares

In March 2023, in a public offering, we issued 2,600,000 shares of 9.50 % Fixed-Rate Reset Series D Cumulative Perpetual Redeemable Preferred Shares (“Series D Preferred Shares”), par value $ 0.01 per share, with a liquidation preference of $ 25.00 per share for net proceeds before expenses of approximate ly $ 63.0 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 10 for information related to options issued to the Manager in connection with these offerings.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

COMMITMENTS AND CONTINGENCIES

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We believe the risk of loss in connection with such arrangements is remote.

The Company has contingent obligations under ASC 460, Guarantees , in connection with certain sales of aircraft on lease.

Under the agreements, we provide certain guarantees at the end of the lease term for the condition of the aircraft engines that were sold to the buyer.

The guarantees are valued at $ 6.8 million and $ 3.8 million as of December 31, 2023 and 2022, respectively, and are reflected as a component of Other liabilities on the Consolidated Balance Sheets.

Given variability in the condition of the engines at the end of the lease terms, which range from 4 to 9 years, the maximum potential amount of undiscounted future payments that could be required under the guarantees at December 31, 2023 was $ 34.7 million, which is not reasonably expected.

SUBSEQUENT EVENTS

In January 2023, we issued 12,165 ordinary shares to certain directors as compensation.

On February 22, 2024, 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, 2023, payable on March 20, 2024 to the holders of record on March 8, 2024.

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.

Additionally, on February 22, 2024, our Board of Directors declared cash dividends on the Series A Preferred Shares, Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares of $ 0.52 , $ 0.50 , $ 0.52 and $ 0.59 per share, respectively, for the quarter ended December 31, 2023, payable on March 15, 2024 to the holders of record on March 5, 2024.

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