What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-09 · 295 added, 217 removed, 784 unchanged (40% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share and per share data)

Notes June 30, 2024 December 31, 2023

Notes September 30, 2024 December 31, 2023

Cash and cash equivalents 2 $ 111,888 $ 90,756

5 unchanged sentences

Intangible assets, net 7 38,001 50,590

Assets held for sale 2 119,012 —

Goodwill 4 31,533 4,630

11 unchanged sentences

2,000,000,000 shares authorized;

102,211,402 and 100,245,905 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)

102,549,679 and 100,245,905 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively)

$ 1,025 $ 1,002

1 unchanged sentence

200,000,000 shares authorized;

15,920,000 and 15,920,000 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)

15,920,000 and 15,920,000 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively)

Additional paid in capital 292,899 255,973

8 unchanged sentences

(Dollars in thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Notes 2024 2023 2024 2023

13 unchanged sentences

Asset impairment — — 962 1,220

Interest expense 55,196 38,499 102,903 77,791

Total expenses 316,515 206,406 1,156,464 606,348

Other (expense) income

Equity in losses of unconsolidated entities 5 ( 694 ) ( 380 ) ( 1,361 ) ( 1,715 )

Equity in (losses) earnings of unconsolidated entities 6 ( 438 ) 46 ( 1,799 ) ( 1,669 )

Interest expense ( 57,937 ) ( 40,185 ) ( 160,840 ) ( 117,976 )

Loss on extinguishment of debt — — ( 13,920 ) —

Other (expense) income ( 498 ) 408 136 416

Total other (expense) income ( 15,112 ) 28 ( 15,145 ) ( 1,299 )

(Loss) income before income taxes ( 232,903 ) 56,608 ( 187,709 ) 88,031

(Benefit from) provision for income taxes 10 ( 13,033 ) 1,855 ( 7,461 ) 3,881

Net (loss) income ( 219,870 ) 54,753 ( 180,248 ) 84,150

Other income 2,909 461 3,045 877

Total other expense ( 55,466 ) ( 39,678 ) ( 173,514 ) ( 118,768 )

Income (loss) before income taxes 93,813 45,012 ( 93,896 ) 133,043

Provision for (benefit from) income taxes 11 7,331 3,705 ( 130 ) 7,586

Net income (loss) 86,482 41,307 ( 93,766 ) 125,457

Dividends on preferred shares 8,335 8,334 25,005 23,460

Net (loss) income attributable to shareholders $ ( 228,205 ) $ 46,418 $ ( 196,918 ) $ 69,024

(Loss) Earnings per share:

Net income (loss) attributable to shareholders $ 78,147 $ 32,973 $ ( 118,771 ) $ 101,997

Earnings (loss) per share:

Basic $ 0.76 $ 0.33 $ ( 1.17 ) $ 1.02

7 unchanged sentences

(Dollars in thousands)

Three and Six Months Ended June 30, 2024

Three and Nine Months Ended September 30, 2024

Ordinary Shares Preferred Shares Additional Paid In Capital Accumulated Deficit Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

Equity - December 31, 2023 $ 1,002 $ 159 $ 255,973 $ ( 81,785 ) $ 534 $ 175,883

Net income 39,622 39,622

Total comprehensive income 39,622 39,622

Dividends declared - ordinary shares ( 30,074 ) ( 30,074 )

Dividends declared - preferred shares ( 8,335 ) ( 8,335 )

Equity-based compensation 510 510

Equity - March 31, 2024 $ 1,002 $ 159 $ 218,074 $ ( 42,163 ) $ 534 $ 177,606

Net loss ( 180,248 ) ( 180,248 )

6 unchanged sentences

Equity - June 30, 2024 $ 1,022 $ 159 $ 330,419 $ ( 262,033 ) $ — $ 69,567

Net income 86,482 86,482

Total comprehensive income 86,482 86,482

Dividends declared - ordinary shares ( 30,661 ) ( 30,661 )

Dividends declared - preferred shares ( 8,335 ) ( 8,335 )

Issuance of ordinary shares 3 46 49

Equity-based compensation 1,430 1,430

Equity - September 30, 2024 $ 1,025 $ 159 $ 292,899 $ ( 175,551 ) $ — $ 118,532

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Three and Six Months Ended June 30, 2023

Three and Nine Months Ended September 30, 2023

Ordinary Shares Preferred Shares Additional Paid In Capital Accumulated Deficit Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

2 unchanged sentences

Total comprehensive income 84,150 84,150

Contributions from non-controlling interest 10 10

Issuance of ordinary shares 389 389

3 unchanged sentences

Equity-based compensation 618 618

Equity - March 31, 2023 $ 997 $ 159 $ 368,681 $ ( 296,205 ) $ 524 $ 74,156

Equity - June 30, 2023 $ 997 $ 159 $ 331,080 $ ( 241,452 ) $ 534 $ 91,318

Net income 41,307 41,307

Total comprehensive income 41,307 41,307

Contributions from non-controlling interest 10 10

Issuance of ordinary shares 5 178 183

2 unchanged sentences

Equity-based compensation 510 510

Equity - June 30, 2023 $ 997 $ 159 $ 331,080 $ ( 241,452 ) $ 534 $ 91,318

Equity - September 30, 2023 $ 1,002 $ 159 $ 293,512 $ ( 200,145 ) $ 534 $ 95,062

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Net (loss) income $ ( 93,766 ) $ 125,457

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

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

Equity in losses of unconsolidated entities 1,799 1,669

Gain on sale of net assets ( 146,084 ) ( 75,960 )

Gain on sale of assets ( 244,353 ) ( 110,511 )

Security deposits and maintenance claims included in earnings ( 13,437 ) ( 34,458 )

1 unchanged sentence

Equity-based compensation 2,578 1,128

Non-cash termination fee to affiliate 150,000 —

Non-cash termination fee to affiliate (issuance of ordinary shares) 150,000 —

Depreciation and amortization 163,386 123,399

17 unchanged sentences

Principal collections on notes receivable 3,874 2,438

Acquisition of business, net of cash acquired ( 143,634 ) —

Acquisition of leasing equipment ( 622,366 ) ( 506,923 )

Investments in notes and financing receivable ( 19,750 ) —

Investments in financing receivables ( 63,857 ) —

Acquisition of property, plant and equipment ( 2,968 ) ( 3,906 )

1 unchanged sentence

Investment in promissory notes — ( 11,500 )

Purchase deposits for acquisitions ( 104,654 ) ( 11,200 )

Proceeds from sale of net assets 333,660 273,229

Proceeds for deposit on sale of aircraft and engine 4,580 1,817

Receipt of deposits for sale of aircraft and engine — 300

Return of purchase deposits 530 —

Deposits for acquisitions of aircraft and engines ( 162,708 ) ( 10,533 )

Proceeds from sale of assets 542,938 366,065

Proceeds (refunds) from deposits on sale of aircraft and engines 2,414 ( 683 )

Return of deposits for acquisition of aircraft and engines 530 300

Net cash used in investing activities $ ( 442,731 ) $ ( 191,092 )

3 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from financing activities:

2 unchanged sentences

Payment of deferred financing costs ( 10,825 ) ( 1,805 )

Receipt of security deposits 3,976 5,577

Return of security deposits — ( 1,295 )

Receipt of maintenance deposits 21,429 18,070

Release of maintenance deposits ( 3,938 ) —

Receipt of security deposits under operating lease agreements 6,120 7,355

Return of security deposits under operating lease agreements — ( 2,385 )

Receipt of maintenance deposits under operating lease agreements 35,583 22,747

Release of maintenance deposits under operating lease agreements ( 6,460 ) ( 275 )

Capital contributions from non-controlling interests ( 534 ) 10

6 unchanged sentences

Cash and cash equivalents and restricted cash, end of period $ 112,038 $ 52,879

Supplemental disclosure of non-cash investing and financing activities:

Transfers from leasing equipment to inventory $ 70,897 $ ( 8,421 )

Transfers from inventory to leasing equipment ( 98,192 ) 73,329

Sale on and issuance of promissory notes 37,367 12,538

Supplemental disclosure of non-cash investing and financing activities (see Note 2 for additional non-cash information):

Issuance of notes receivable in connection with the sale of aircraft and engines $ 69,826 $ 27,634

Acquisition of leasing equipment in accrued expenses ( 11,772 ) ( 8,825 )

Purchase deposits reclassified to leasing equipment ( 12,108 ) ( 6,371 )

Settled security deposits ( 4,077 ) ( 2,406 )

Settled maintenance deposits ( 24,536 ) ( 11,532 )

Purchase deposits reclassified to leasing equipment from other assets ( 19,608 ) ( 6,371 )

Security deposits settled with accounts receivable ( 4,365 ) ( 2,851 )

Maintenance deposits settled with accounts receivable ( 38,795 ) ( 38,754 )

See accompanying notes to consolidated financial statements.

3 unchanged sentences

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

Additionally, we own and lease offshore energy equipment.

8 unchanged sentences

and (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $ 30 .

In addition, the Former Manager will repay to the Company certain annual bonus payments due to certain employees of the Former Manager or its affiliates who provide services to the Company with respect to the 2024 calendar year on a pro rata basis.

In addition, the Former Manager repaid to the Company certain annual bonus payments due to certain employees of the Former Manager or its affiliates who provide services to the Company with respect to the 2024 calendar year on a pro rata basis.

The Company financed the cash payments through one or more debt financings, along with cash on hand.

On May 28, 2024, the Company also entered into a Transition Services Agreement (the “Transition Services Agreement”) with the Former Manager.

Under the Transition Services Agreement, the Former Manager is required to continue to provide the Company and its affiliates with all of the services provided by the Former Manager to the Company and its affiliates immediately prior to May 28, 2024 (the “Services”) for a transition period during which the Company will procure replacements for the Services.

The Services will be provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, plus a mark-up of ten percent ( 10 %).

Unless the Transition Services Agreement is terminated earlier or the Company elects to terminate a Service by providing written notice to the Former Manager, the Former Manager is required to provide certain Services to the Company until October 31, 2024.

Under the Transition Services Agreement, the Former Manager was required to continue to provide the Company and its affiliates with all of the services provided by the Former Manager to the Company and its affiliates immediately prior to May 28, 2024 (the “Services”) for a transition period until October 31, 2024, during which the Company procured replacements for the Services.

The Services were provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, plus a mark-up of ten percent ( 10 %).

In addition, the Former Manager is required to continue to provide the services that are reasonably required by the Company to prepare its quarterly and annual financial statements until May 31, 2025.

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Restructuring Charges — The termination of the Management Agreement was a material change in the management structure of the business and is accounted for under ASC 420, Exit or Disposal Cost Obligations .

The termination fee payment to the

The termination fee payment to the Former Manager under the Internalization Agreement is recorded within Internalization Fee to Affiliate in the Consolidated Statements of Operations.

See Note 16 for additional discussion of the restructuring charges related to the Internalization.

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

Former Manager under the Internalization Agreement is recorded within Internalization Fee to Affiliate in the Consolidated Statements of Operations.

See Note 15 for additional discussion of the restructuring charges related to the Internalization.

Reclassifications — Certain amounts from prior periods in the Company’s consolidated financial statements have been reclassified to align with the presentation in the current period.

7 unchanged sentences

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.

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

Inventory, net — We hold aircraft engines, 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.

33 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

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.

Aerospace products revenue —Aerospace products revenue primarily consists of the transaction price related to the sale of 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.

4 unchanged sentences

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

We earned 19 % and 13 % of our revenue from one customer in the Aerospace Products segment during the three and six months ended June 30, 2024.

We earn ed 10 % and 11 % o f our revenue from one customer in the Aviation Leasing segment during the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, there was one customer in the Aerospace Products segment that represented 11 % of total accounts receivable, net.

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

No single customer accounted for greater than 10% of total revenue during the three and nine months ended September 30, 2024 and September 30, 2023.

As of September 30, 2024 and December 31, 2023, no single customer accounted for greater than 10% of total accounts receivable, net.

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

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

Allowance for Doubtful Ac counts and Credit Losses — We determine the allowance for doubtful accounts based on our assessment of the collectability of our receivables on a customer-by-customer basis.

The allowance for doubtful accounts was $ 72.2 million as of June 30, 2024 and December 31, 2023, respectively .

Allowance for Doubtful Ac counts and Credit Losses — For receivables related to operating lease arrangements, we determine the allowance for doubtful accounts based on our assessment of the collectability of our receivables on a customer-by-customer basis.

The allowance for doubtful accounts was $ 74.9 million and $ 72.2 million as of September 30, 2024 and December 31, 2023, respectively .

We determine the credit loss reserve for note receivables, receivables related to finance leases and inventory sales.

There was $ 0.1 million provision for credit losses for the three and six months ended June 30, 2024.

There was provision for credit losses of $ 0.6 million and $ 1.0 million for the three and six months ended June 30, 2023, which is included in Operating expenses in the Consolidated Statements of Operations.

There was provision for credit losses of $ 2.7 million for the three and nine months ended September 30, 2024.

There was provision for credit losses of $ 5.6 million and $ 6.6 million for the three and nine months ended September 30, 2023.

Comprehensive Income — Comprehensive income 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 represents net income, as presented in the Consolidated Statements of Operations.

Other Assets— Other assets is primarily comprised of lease incentives of $ 57.7 million and $ 43.5 million, purchase deposits of $ 46.0 million and $ 23.9 million, notes receivable of $ 125.2 million and $ 102.3 million, operating lease right-of-use assets, net of $ 3.3 million and $ 3.4 million, finance leases, net of $ 1.4 million and $ 3.0 million, maintenance right assets of $ 14.0 million and $ 16.3 million and prepaid expenses of $ 77.4 million and $ 7.8 million as of June 30, 2024 and December 31, 2023, respectively.

Other Assets— Other assets is primarily comprised of lease incentives of $ 58.3 million and $ 43.5 million, purchase deposits of $ 46.5 million and $ 23.9 million, notes receivable for sales and exchanges of $ 152.2 million and $ 102.3 million, operating lease right-of-use assets, net of $ 12.2 million and $ 3.4 million, finance leases, net of $ 0.9 million and $ 3.0 million, maintenance right assets of $ 21.5 million and $ 16.3 million, financing receivable resulting from failed sale-leaseback transactions of $ 63.9 million and $ 0.0 million, and prepaid expenses including prepayments for maintenance that has not yet been incurred of $ 132.5 million and $ 7.8 million as of September 30, 2024 and December 31, 2023, respectively.

Assets Held for Sale— We classify assets as held for sale when the Company commits to a plan to sell and it is probable that the sale will be completed within one year.

These assets are recorded at the lower of their carrying value or fair market value, less costs to sell, starting from the period in which they meet the criteria for this classification.

In September 2024, the Company committed to a formal plan to sell two vessels within Corporate and Other, which includes offshore energy related assets.

Consequently, these vessels met the criteria to be classified as assets held for sale and have been presented separately.

Any subsequent changes in our estimate of the fair value of these assets or costs to sell before their sale will be recorded as a gain or loss, with a corresponding adjustment to their carrying values.

The disposal is expected to occur in the fourth quarter of 2024.

As of September 30, 2024 the vessels had a net book value of $ 119.0 million.

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

For the three and six months ended June 30, 2024 and 2023, the Board of Directors declared cash dividends of $ 0.30 and $ 0.60 per ordinary share, respectively.

Additionally, in the quarter ended June 30, 2024, the 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 three and nine months ended September 30, 2024 and 2023, the Board of Directors declared cash dividends of $ 0.30 and $ 0.90 per ordinary share, respectively.

Additionally, for the quarter ended September 30, 2024, the Board of Directors declared cash dividends on the Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares of $ 0.50 , $ 0.52 and $ 0.59 per share, respectively.

Cash Flow Presentation— Included in net cash (used in) provided by operating activities are inflows from the sale of engine modules and parts that were on engines originally purchased and reported as Leasing equipment, net on the Consolidated Balance Sheet.

The purchase of the original engine was reported as an outflow in net cash used in investing activities at the time of purchase through the Acquisition of leasing equipment line item.

As part of the Aerospace products business, the Company breaks down generally unserviceable engines with the intent to manufacture modules and parts for creation and sale of new assets.

To manufacture the modules and parts and bring them into a salable condition, the Company spends significant costs, often over multiple reporting periods, for new inventory and capitalizable labor (e.g., engineering) that are included in net cash (used in) provided by operating activities as components of the changes in the related working capital accounts.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Therefore, when the costs to manufacture the assets are greater than (predominant to) the estimated value transferred from Leasing equipment into inventory, the related cash receipt has been recorded as an inflow in net cash (used in) provided by operating activities.

Additionally, the Company buys inventory from third parties with the intent to use the parts in the manufacturing of the items discussed above, which is reported as an outflow in net cash (used in) provided by operating activities.

When rebuilding whole engines for resale, for which the cash inflow upon sale is reported as a cash inflow from investing activities, the Company will transfer modules and parts needed (those purchased from third parties as well as parts from engines previously transferred to inventory from leasing equipment and rebuilt as discussed above) in the rebuild from inventory to leasing equipment.

The cash and noncash related activities described above during the nine months ended September 30, 2024 and 2023 are detailed below:

Nine Months Ended September 30,

(in thousands) 2024 2023

Cost of modules and parts sold sourced from engines originally within leasing equipment $ 33,663 $ 30,045

Transfers of engines from leasing equipment to inventory for manufacturing and sale 143,678 147,285

Transfers of inventory to leasing equipment for rebuilding and sale of engines ( 159,876 ) ( 53,533 )

Total outflows related to manufacturing modules and parts - included in net cash (used in) provided by operating activities ( 270,679 ) ( 81,109 )

Cash received for assets sold sourced from Leasing equipment - inflow included in cash (used in) provided by operating activities 56,670 59,115

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

9 unchanged sentences

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

In March 2024, the FASB issued ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concept Statements.

3 unchanged sentences

ASU 2024-02 is effective January 1, 2025 and we are currently assessing the impact this guidance will have on our consolidated financial statements and related disclosures.

ACQUISITION OF LOCKHEED MARTIN COMMERCIAL ENGINE SOLUTIONS

On September 9, 2024, the Company, through its subsidiary FTAIC Aviation Inc.

(“FTAIC”) created on April 25, 2024, acquired certain assets and assumed certain liabilities of Lockheed Martin Commercial Engine Solutions (“LMCES”) from Lockheed Martin Canada for a total cash consideration of $ 170.0 million.

LMCES is a 526,000 -square-foot aircraft engine maintenance repair facility located in Montréal, Quebec.

We acquired LMCES to further enhance our Maintenance, Repair, and Exchange business and establish permanent engine and module manufacturing capabilities in Canada.

The facility operates within our Aerospace Products segment, providing extensive engine and piece-part repair capabilities for the CFM56 engines.

See Note 13 for additional information.

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

In connection with the acquisition, we recorded $ 4.8 million and $ 5.2 million of acquisition and transaction expense during the three and nine months ended September 30, 2024, respectively.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The acquisition of LMCES was accounted for as a business combination and, as such, 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 values of the property, plant, and equipment and inventory included replacement cost estimates and market data for similar assets where available.

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, including goodwill;

(iv) changes due to net working capital adjustments;

(v) changes due to deferred taxes and (vi) changes to other assets and other liabilities.

The following table summarizes the preliminary allocation of the net assets acquired:

September 9, 2024

Fair value of assets acquired:

Accounts receivable $ 12,273

Property, plant, and equipment 71,376

Leasing equipment 5,675

Inventory 47,445

Other assets (1)

Total assets 149,573

Fair value of liabilities assumed:

Accounts payable and accrued liabilities 9,847

Other liabilities 22,996

Total liabilities 32,843

Net assets acquired (3)

________________________________________________________

(1) Acquired Other assets include a favorable off-market lease component with an estimated fair value of $ 2,340 .

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

This goodwill is assigned to the Aerospace Products segment and is deductible for income tax purposes.

(3) Total consideration is calculated as cash paid, adjusted for the settlement of pre-existing relationships.

Cash consideration is also preliminary, as it is subject to net working capital adjustments.

The following table presents preliminary fair values of the components of property, plant and equipment acquired and their estimated useful lives:

Estimated useful life in years Estimated Fair value

Buildings and improvements 25

Machinery and equipment 2 - 21

Other N/A 801

Total $ 71,376

The results of operations for the acquired business are included in the accompanying Consolidated Statements of Operations from the acquisition date.

The following table presents supplemental pro-forma information as if the acquisitions had occurred at the beginning of fiscal year 2023.

The pro-forma information does not necessarily reflect the results of operations that would have occurred had the acquisitions had taken place as of January 1, 2023.

Cost savings are also not reflected in the pro-forma amounts presented below.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Total revenue $ 479,277 $ 315,666 $ 1,283,520 $ 929,297

Net income (loss) attributable to shareholders $ 83,727 $ 34,753 $ ( 122,542 ) $ 89,716

ACQUISITION OF QUICKTURN

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

In accordance with ASC 805, Business Combinations .

The following fair values were assigned to assets acquired and liabilities assumed based on management’s estimates and assumptions and are preliminary.

The acquisition of QuickTurn was accounted for as a business combination and, as such, 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 significant assumptions used to estimate the value of the customer relationship intangible assets included the 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.

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

The final acquisition accounting adjustment may be materially different and may include changes in fair values of Inventory.

The following table summarizes the preliminary allocation of the net assets acquired:

December 1, 2023

2 unchanged sentences

Restricted cash 150

Accounts receivable, net 5,133

Property, plant, and equipment, net 30,559

Accounts receivable 5,133

Property, plant, and equipment 30,559

Intangible assets 2,377

Inventory, net 9,332

Inventory 9,332

Other assets 4,301

8 unchanged sentences

This goodwill is assigned to the Aerospace Products segment and is deductible for income tax purposes.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

3 unchanged sentences

Total $ 2,377

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

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The following 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, 2023.

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2023

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2023

Total revenue $ 296,480 $ 875,066

2 unchanged sentences

Leasing equipment, net is summarized as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Leasing equipment $ 2,621,016 $ 2,574,394

1 unchanged sentence

Leasing equipment, net $ 2,066,337 $ 2,032,413

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 $ 0.0 million and $ 1.0 million, net of redelivery compensation, for the three and six months ended June 30, 2024, respectively.

In comparison, for the three and six months ended June 30, 2023, respectively, the Company recognized transactional impairment charges of $ 0.0 million and $ 1.2 million, net of redelivery compensation.

Due to specific transactions, 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 $ 1.0 million and $ 1.2 million, net of redelivery compensation, for the nine months ended September 30, 2024 and 2023, respectively.

For the three months ended September 30, 2024 and 2023, no transactional impairment charges were recorded.

Depreciation expense for leasing equipment is summarized as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Depreciation expense for leasing equipment $ 55,376 $ 43,765 159,936 122,867

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

Carrying Value

Investment Ownership Percentage June 30, 2024 December 31, 2023

Investment Ownership Percentage September 30, 2024 December 31, 2023

Advanced Engine Repair JV Equity method 25 % $ 19,448 $ 21,040

Falcon MSN 177 LLC Equity method 50 % — 1,682

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

$ 19,448 $ 22,722

____________________________________

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

We did not recognize any other-than-temporary impairments for the three and six months ended June 30, 2024 and 2023.

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

Three Months Ended June 30, Six Months Ended June 30,

We did not recognize any other-than-temporary impairments for the three and nine months ended September 30, 2024 and 2023.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

7 unchanged sentences

This joint venture is focused on developing new cost savings programs for engine repairs.

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

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

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

Falcon MSN 177 LLC

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

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

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

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

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

2 unchanged sentences

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.

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 (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.

7 unchanged sentences

Intangible assets and liabilities, net are summarized as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Intangible assets

12 unchanged sentences

Amortization of intangible assets and liabilities is recorded as follows:

Classification in Consolidated Statements of Operations Three Months Ended June 30, Six Months Ended June 30,

Classification in Consolidated Statements of Operations Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

2 unchanged sentences

Total $ 3,815 3,726 $ 11,789 11,325

As of June 30, 2024, estimated net annual amortization of intangibles is as follows:

As of September 30, 2024, estimated net annual amortization of intangibles is as follows:

Remainder of 2024 $ 3,849

5 unchanged sentences

Our debt, net is summarized as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Outstanding Borrowings Stated Interest Rate Maturity Date Outstanding Borrowings

22 unchanged sentences

(2) Includes an unamortized discount of $ 866 at December 31, 2023 and an unamortized premium of $ 2,908 at December 31, 2023.

(3) Includes an unamortized premium of $ 1,567 and $ 1,746 at June 30, 2024 and December 31, 2023, respectively.

(4) Includes unamortized discount of $ 3,116 and $ 3,296 at June 30, 2024 and December 31, 2023, respectively.

Revolving Credit Facility — On May 23, 2024, the Company amended and restated its Revolving Credit Facility by executing a Third Amended and Restated Credit Agreement (the “Amendment”) to the Second Amended and Restated Credit Agreement, dated as of September 20, 2022.

The Amendment provides for revolving loans to be made available to the Company in an aggregate principal amount of up to $ 400.0 million, of which up to $ 25.0 million may be utilized for the issuance of letters of credit.

(3) Includes an unamortized premium of $ 1,475 and $ 1,746 at September 30, 2024 and December 31, 2023, respectively.

(4) Includes unamortized discount of $ 3,024 and $ 3,296 at September 30, 2024 and December 31, 2023, respectively.

Revolving Credit Facility — On May 23, 2024, the Company amended and restated its Revolving Credit Facility by executing a Third Amended and Restated Credit Agreement (the “Revolver Amendment”).

The Revolver Amendment provides for revolving loans to be made available to the Company in an aggregate principal amount of up to $ 400.0 million, of which up to $ 25.0 million may be utilized for the issuance of letters of credit.

Senior Notes due 2031 — On April 11, 2024, we issued $ 700.0 million aggregate principal amount of senior unsecured notes due 2031 (the “Senior Notes due 2031”).

4 unchanged sentences

The remaining net proceeds were used for general corporate purposes, including the funding of acquisitions and investments.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Senior Notes due 2032 — On June 17, 2024, we issued $ 800.0 million aggregate principal amount of senior unsecured notes due 2032 (the “Senior Notes due 2032”).

1 unchanged sentence

The Company utilized the net proceeds from the issuance for several purposes:

(i) to fully repay outstanding amounts under our Revolving Credit Facility provided under the Third Amended and Restated Credit Agreement, dated as of May 23, 2024, without reduction in commitments, (ii) to fund the cash termination fee for the previously announced management Internalization described in Note 11, (iii) to complete a cash tender offer for up to $ 300.0 million in aggregate principal amount of 2027 Notes validly tendered on June 18, 2024, plus accrued and unpaid interest, and recognized a loss on extinguishment of debt of $ 11.2 million .

Holders whose notes were accepted for purchase received $30.00 per $1,000 principal amount of 2027 Notes, plus accrued and unpaid interest to, but not including, June 21, 2024, (iv) to cover fees and expenses related to the aforementioned transactions, and (v) for general corporate purposes.

We were in compliance with all debt covenants as of June 30, 2024.

(i) to fully repay outstanding amounts under our Revolving Credit Facility provided under the Revolver Amendment, without reduction in commitments, (ii) to fund the cash termination fee for the previously announced management Internalization described in Note 12, (iii) to complete a cash tender offer for up to $ 300.0 million in aggregate principal amount of Senior Notes due 2027 validly tendered on June 18, 2024, plus accrued and unpaid interest, and recognized a loss on extinguishment of debt of $ 11.2 million , (iv) to cover fees and expenses related to the aforementioned transactions, and (v) for general corporate purposes.

We were in compliance with all debt covenants as of September 30, 2024.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

FAIR VALUE MEASUREMENTS

12 unchanged sentences

The fair values of our bonds payable are presented in the table below and classified as Level 2 within the fair value hierarchy:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Senior Notes due 2025 $ — $ 649,383

5 unchanged sentences

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 at $ 7.8 million and $ 6.8 million as of June 30, 2024 and December 31, 2023, respectively, and are reflected as a component of Other liabilities.

The guarantees are valued at $ 8.1 million and $ 6.8 million as of September 30, 2024 and December 31, 2023, respectively, and are reflected as a component of Other liabilities.

The fair values of the guarantees are determined based on the estim ated condition of the engines 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 three and six months ended June 30, 2024, the Company recorded a $ 0.8 million and $ 1.0 million increase related to the change in fair value, which is recorded as Asset sales revenue.

During the six months ended June 30, 2023, the Company recorded a $ 4.9 million increase in guarantees related to the sale of seven aircrafts and a $ 1.9 million decrease related to the change in fair value, which is recorded as Asset sales revenue.

During the three and six months ended June 30, 2024 and 2023, there were no significant transfers into or out of Level 3 .

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

During the three and nine months ended September 30, 2024, the Company recorded a $ 0.3 million and $ 1.3 million increase related to the change in fair value, which is recorded as Asset sales revenue.

During the nine months ended September 30, 2023, the Company recorded a $ 4.9 million increase in guarantees related to the sale of seven aircrafts and a $ 1.7 million decrease related to the change in fair value, which is recorded as Asset sales revenue.

During the three and nine months ended September 30, 2024 and 2023, there were no significant transfers into or out of Level 3 .

We measure the fair value of certain assets on a non-recurring basis when U.S.

5 unchanged sentences

We have 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 June 30, 2024, 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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

As of September 30, 2024, the Incentive Plan provides for the issuance of up to 29.8 million shares.

Equity-based compensation expense is reported within operating expenses and general and administrative.

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

Three Months Ended June 30, Six Months Ended June 30, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met Weighted Average Remaining Contractual Term (in years)

Three Months Ended September 30, Nine Months Ended September 30, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met Weighted Average Remaining Contractual Term (in years)

2024 2023 2024 2023

2 unchanged sentences

Total $ 1,430 $ 510 $ 2,578 $ 1,128 $ 18,017

During the six months ended June 30, 2024, the Former Manager transferred 37,343 of its options to certain of the Former Manager’s employees.

During the nine months ended September 30, 2024, the Former Manager transferred 37,343 of its options to certain of the Former Manager’s employees.

All of these options were issued prior to the Internalization.

Additionally, the Company granted options to select employees of FTAI Aviation LLC (a wholly owned subsidiary of the Company) related to 60,000 ordinary shares at an exercise price of $ 79.13 , which had a grant date fair value of $ 2.1 million.

2 unchanged sentences

Restricted Shares

During the six months ended June 30, 2024, we issued restricted shares of the Company to select employees of FTAI Aviation LLC that had a grant date fair value of $ 5.7 million and vest over 4.0 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, 2027 and the remaining units vesting on June 30, 2028.

The fair value of these awards were calculated based on the closing price of FTAI Aviation Ltd.’s ordinary shares on grant date of May 30, 2024.

Additionally, we issued restricted shares of the Company to select officers of FTAI Aviation LLC that had a grant date fair value of $ 5.5 million and vest over 3.0 years.

These awards are subject to continued employment, and the compensation expense is recognized ratably over the three-year vesting period.

The fair value of these awards were calculated based on the closing price of FTAI Aviation Ltd.’s ordinary shares on grant date of May 28, 2024.

During the nine months ended September 30, 2024, we issued the following restricted shares of the Company to select employees and officers of FTAI Aviation LLC:

In May 2024, we issued restricted shares to (i) select officers with a grant date fair value of $ 5.5 million, vesting over 3.0 years and (ii) select employees with a grant date fair value of $ 5.7 million, vesting over 4.0 years.

In September 2024, we issued restricted shares to select employees with a grant date fair value of $ 0.8 million, vesting over 3.0 years.

All awards are subject to continued employment, with compensation expense recognized ratably over the vesting periods.

The fair value was based on the closing price of FTAI Aviation Ltd.’s ordinary shares on the respective grant dates.

FTAI AVIATION LTD.

2 unchanged sentences

The current and deferred components of the income tax provision included in the Consolidated Statements of Operations are as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

13 unchanged sentences

Total deferred provision 7,253 2,847 ( 2,470 ) 5,974

Total (benefit from) provision for income taxes $ ( 13,033 ) $ 1,855 $ ( 7,461 ) $ 3,881

Total provision for income taxes $ 7,331 $ 3,705 $ ( 130 ) $ 7,586

The Company is an exempted entity domiciled in the Cayman Islands where income taxes are not imposed.

6 unchanged sentences

For the year ended December 31, 2023, we recorded a deferred tax asset of $ 72.2 million in connection with the Bermuda law change.

As of June 30, 2024, we project the Bermuda subsidiaries to generate a net operating loss for the year ended December 31, 2024.

As of September 30, 2024, we project the Bermuda subsidiaries to generate a net operating loss for the year ended December 31, 2024.

As such, the Company recorded a tax benefit of $ 3.1 million to increase its Bermuda deferred tax asset.

2 unchanged sentences

corporate tax rates, or being deemed to be foreign sourced and thus either not taxable or taxable at effectively lower tax rates.

As of and for the six months ended June 30, 2024, we had not established a liability for uncertain tax positions as no such positions existed.

As of and for the nine months ended September 30, 2024, 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.

12 unchanged sentences

In connection with the termination of the Management Agreement, the Company also entered into a Transition Services Agreement with the Former Manager.

Under the Transition Services Agreement, the Former Manager is required to continue to provide the Company and its affiliates with all of the Services for a transition period during which the Company will procure replacements for the Services.

The Services will be provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, plus a mark-up of ten percent ( 10 %).

Under the Transition Services Agreement, the Former Manager was required to continue to provide the Company and its affiliates with all of the Services for a transition period through October 31, 2024, during which the Company procured replacements for the Services.

The Services were provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, plus a mark-up of ten percent ( 10 %).

The Transition Services Agreement may be terminated earlier (x) by mutual agreement of the parties, (y) by either the Former Manager or the Company in the event of a material breach by the non-terminating party that is not cured within thirty ( 30 ) days following written notification thereof, or (z) by the Former Manager if the Company fails to pay any undisputed sum overdue and payable for a period of at least thirty ( 30 ) days.

The Company incurred $ 3.4 million in costs for Transition Services during the three and six months ended June 30, 2024, and these costs are reported in Acquisition and transaction expenses in the Consolidated Statements of Operations.

Prior to the Internalization, the Former Manager was paid annual fees in exchange for advising us on various aspects of our business, formulating our investment strategies, arranging for the acquisition and disposition of assets, arranging for financing, monitoring performance, and managing our day-to-day operations, inclusive of all costs incidental thereto.

4 unchanged sentences

The management fee was determined by taking the average value of total equity (excluding non-controlling interests) determined on a consolidated basis in accordance with U.S.

GAAP at the end of the two most recently completed months multiplied by an annual rate of 1.50 %, and is payable monthly in arrears in cash.

GAAP at the end of the two most recently completed months multiplied by an annual rate of 1.50 %, and was payable monthly in arrears in cash.

Prior to the Internalization and the termination of the Management Agreement on May 28, 2024, Master GP, was entitled to incentive allocations (comprised of income incentive allocation and capital gains incentive allocation, defined below).

10 unchanged sentences

The following table summarizes the management fees, income incentive allocation and capital gains incentive allocation prior to the Internalization on May 28, 2024:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

5 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

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

The expenses required to be paid by us include, but are not limited to, issuance and transaction costs incident to the acquisition, disposition and financing of our assets, legal and auditing fees and expenses, the compensation and expenses of our independent directors, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of ours (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings of ours, costs and expenses incurred in contracting with third parties (including affiliates of the Former Manager), the costs of printing and mailing proxies and reports to our shareholders, costs incurred by the Former Manager or its affiliates for travel on our behalf, costs associated with any computer software or hardware that is used by us, costs to obtain liability insurance to indemnify our directors and officers and the compensation and expenses of our transfer agent.

We paid or reimbursed the Former Manager and its affiliates for performing certain legal, accounting, due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, provided that such costs and reimbursements are no greater than those which would be paid to outside professionals or consultants.

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

The expenses required to be paid by us included, but were not limited to, issuance and transaction costs incident to the acquisition, disposition and financing of our assets, legal and auditing fees and expenses, the compensation and expenses of our independent directors, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of ours (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings of ours, costs and expenses incurred in contracting with third parties (including affiliates of the Former Manager), the costs of printing and mailing proxies and reports to our shareholders, costs incurred by the Former Manager or its affiliates for travel on our behalf, costs associated with any computer software or hardware that was used by us, costs to obtain liability insurance to indemnify our directors and officers and the compensation and expenses of our transfer agent.

We paid or reimbursed the Former Manager and its affiliates for performing certain legal, accounting, due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, provided that such costs and reimbursements were no greater than those which would be paid to outside professionals or consultants.

The Former Manager was responsible for all of its other costs incident to the performance of its duties under the Management Agreement, including compensation of the Former Manager’s employees, rent for facilities and other “overhead” expenses;

1 unchanged sentence

The following table summarizes our reimbursements to the Former Manager:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

6 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Accrued management fees $ — $ 224

Other payables 2,500 6,200

As of June 30, 2024 and December 31, 2023, there were no receivables from the Former Manager.

As of September 30, 2024 and December 31, 2023, there were no receivables from the Former Manager.

SEGMENT INFORMATION

2 unchanged sentences

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

The Aerospace Products segment, through our maintenance facilities, equity method investment and exclusivity arrangements, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial 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.

19 unchanged sentences

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

For the Three Months Ended June 30, 2024

Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

Three Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

9 unchanged sentences

Acquisition and transaction expenses 2,620 2,100 4,621 9,341

Management fees and incentive allocation to affiliate — — 3,554 3,554

Internalization fee to affiliate — — 300,000 300,000

Depreciation and amortization 52,455 1,306 3,014 56,775

Asset impairment — — — —

Interest expense — — 55,196 55,196

Total expenses 85,754 204,835 25,926 316,515

Other expense

Other income (expense)

Equity in losses of unconsolidated entities — ( 438 ) — ( 438 )

Loss on extinguishment of debt — — ( 13,920 ) ( 13,920 )

Other (expense) income ( 911 ) — 413 ( 498 )

Total other expense ( 972 ) ( 633 ) ( 13,507 ) ( 15,112 )

Interest expense — — ( 57,937 ) ( 57,937 )

Other income 1,982 — 927 2,909

Total other income (expense) 1,982 ( 438 ) ( 57,010 ) ( 55,466 )

Income (loss) before income taxes 68,494 98,196 ( 72,877 ) 93,813

7 unchanged sentences

The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

3 unchanged sentences

Pro-rata share of Adjusted EBITDA from unconsolidated entities 382

Internalization fee to affiliate ( 300,000 )

Interest expense and dividends on preferred shares ( 66,272 )

6 unchanged sentences

Equity-based compensation expense ( 1,430 )

Benefit from income taxes 13,033

Net loss attributable to shareholders $ ( 228,205 )

Provision for income taxes ( 7,331 )

Net income attributable to shareholders $ 78,147

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

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

5 unchanged sentences

Total revenues (1)

$ 152,266 $ 303,469 $ 10,059 $ 465,794

_______________________________________________________

(1) The United States, included in North America, and Ireland, included in Europe, represent 35 % and 15 % of total revenues, respectively, based on the location of our customers and lessees.

No other country represents more than 10% of total revenues.

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

For the Six Months Ended June 30, 2024

Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

Nine Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

13 unchanged sentences

Asset impairment 962 — — 962

Interest expense — — 102,903 102,903

Total expenses 298,049 479,173 379,242 1,156,464

Other expense

Other income (expense)

Equity in losses of unconsolidated entities ( 207 ) ( 1,592 ) — ( 1,799 )

Interest expense — — ( 160,840 ) ( 160,840 )

Loss on extinguishment of debt — — ( 13,920 ) ( 13,920 )

Other (expense) income ( 542 ) — 678 136

Total other expense ( 749 ) ( 1,154 ) ( 13,242 ) ( 15,145 )

Other income 1,440 — 1,605 3,045

Total other income (expense) 1,233 ( 1,592 ) ( 173,155 ) ( 173,514 )

Income (loss) before income taxes 175,197 256,961 ( 526,054 ) ( 93,896 )

6 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:

Six Months Ended June 30, 2024

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders:

Nine Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

15 unchanged sentences

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

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

5 unchanged sentences

Total revenues (1)

Presented below are the contracted minimum future annual revenues to be received under existing operating leases as of June 30, 2024:

$ 472,013 $ 737,726 $ 26,343 $ 1,236,082

________________________________________________________

(1) The United States, included in North America, and Ireland, included in Europe, represent 32 % and 18 % of total revenues, respectively, based on the location of our customers and lessees.

No other country represents more than 10% of total revenues.

Presented below are the contracted minimum future annual revenues to be received under existing operating leases as of September 30, 2024:

Operating Leases

5 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

For the Three Months Ended June 30, 2023

Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

Three Months Ended September 30, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

11 unchanged sentences

Depreciation and amortization 41,141 115 2,703 43,959

Interest expense — — 38,499 38,499

Total expenses 103,925 76,368 26,113 206,406

Other income (expense)

Equity in losses of unconsolidated entities ( 35 ) ( 345 ) — ( 380 )

Equity in (losses) earnings of unconsolidated entities ( 108 ) 154 — 46

Interest expense — — ( 40,185 ) ( 40,185 )

Other income 444 — 17 461

8 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders:

Three Months Ended June 30, 2023

The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:

Three Months Ended September 30, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

1 unchanged sentence

Non-controlling share of Adjusted EBITDA —

Equity in losses of unconsolidated entities ( 380 )

Equity in earnings of unconsolidated entities 46

Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 642 )

Internalization fee to affiliate —

Interest expense and dividends on preferred shares ( 48,519 )

9 unchanged sentences

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

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

4 unchanged sentences

South America 11,919 5,549 — 17,468

Total $ 167,381 $ 92,725 $ 14,239 $ 274,345

Total revenues (1)

$ 161,388 $ 118,675 $ 11,033 $ 291,096

________________________________________________________

(1) The United States, included in North America, and Ireland, included in Europe, represent 35 % and 10 % of total revenues, respectively, based on the location of our customers and lessees.

No other country represents more than 10% of total revenues.

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

For the Six Months Ended June 30, 2023

Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

Nine Months Ended September 30, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

12 unchanged sentences

Asset impairment 1,220 — — 1,220

Interest expense — — 77,791 77,791

Total expenses 338,127 192,839 75,382 606,348

1 unchanged sentence

Equity in losses of unconsolidated entities ( 242 ) ( 1,427 ) — ( 1,669 )

Interest expense — — ( 117,976 ) ( 117,976 )

Other income 860 — 17 877

3 unchanged sentences

Net income (loss) 185,886 99,616 ( 160,045 ) 125,457

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

Dividends on preferred shares — — 23,460 23,460

3 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders:

Six Months Ended June 30, 2023

The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:

Nine Months Ended September 30, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

3 unchanged sentences

Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 96 )

Internalization fee to affiliate —

Interest expense and dividends on preferred shares ( 141,436 )

9 unchanged sentences

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

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

4 unchanged sentences

South America 32,103 9,995 — 42,098

Total $ 366,421 $ 177,838 $ 22,804 $ 567,063

Total revenues (1)

$ 527,809 $ 296,513 $ 33,837 $ 858,159

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(1) The United States, included in North America, represents 46 % of total revenues based on the location of our customers and lessees.

No other country represents more than 10% of total revenues.

Location of Long-Lived Assets

The following tables sets forth the geographic location of property, plant and equipment and leasing equipment, net:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Property, plant and equipment and leasing equipment, net

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Total property, plant and equipment and leasing equipment, net (1)

$ 2,169,942 $ 2,077,588

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(1) The United States, included in North America, and Italy, included in Europe, represent 21 % and 14 % of property, plant and equipment and leasing equipment, net as of September 30, 2024, and 17 % as of December 31, 2023, respectively.

No other country represents more than 10% of property, plant and equipment and leasing equipment, net.

FTAI AVIATION LTD.

6 unchanged sentences

The calculation of basic and diluted EPS is presented below:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands, except share and per share data) 2024 2023 2024 2023

Net (loss) income $ ( 219,870 ) $ 54,753 $ ( 180,248 ) $ 84,150

Net income (loss) $ 86,482 $ 41,307 $ ( 93,766 ) $ 125,457

Dividends on preferred shares 8,335 8,334 25,005 23,460

Net (loss) income attributable to shareholders $ ( 228,205 ) $ 46,418 $ ( 196,918 ) $ 69,024

Net income (loss) attributable to shareholders $ 78,147 $ 32,973 $ ( 118,771 ) $ 101,997

Weighted Average Ordinary Shares Outstanding - Basic 102,380,659 99,927,594 101,199,356 99,796,736

Weighted Average Ordinary Shares Outstanding - Diluted 103,395,348 100,482,309 101,199,356 100,269,203

(Loss) Earnings per share:

Earnings (loss) per share:

Basic $ 0.76 $ 0.33 $ ( 1.17 ) $ 1.02

Diluted $ 0.76 $ 0.33 $ ( 1.17 ) $ 1.02

For both the three months ended June 30, 2024 and 2023, zero shares and for the six months ended June 30, 2024 and 2023, 0 and 1,245 shares, respectively, have been excluded from the calculation of Diluted EPS because the impact would be anti-dilutive.

During the six months ended June 30, 2024 and 2023, we issued 4,370 and 18,457 ordinary shares to certain directors as compensation.

For both the three months ended September 30, 2024 and 2023, 0 shares, and for the nine months ended September 30, 2024 and 2023, 859,940 and 0 shares, respectively, were excluded from the calculation of diluted EPS due to an anti-dilutive impact.

During the three months ended September 30, 2024 and 2023, 482 and 0 ordinary shares, respectively, and for the nine months ended September 30, 2024 and 2023, 4,852 and 18,457 ordinary shares, respectively, were issued to certain directors as compensation.

COMMITMENTS AND CONTINGENCIES

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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 $ 7.8 million and $ 6.8 million as of June 30, 2024 and December 31, 2023, respectively, and are reflected as a component of Other liabilities.

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 June 30, 2024 was $ 37.2 million, which is not reasonably expected.

The guarantees are valued at $ 8.1 million and $ 6.8 million as of September 30, 2024 and December 31, 2023, respectively, and are reflected as a component of Other liabilities.

Given variability in the condition of the engines at the end of the lease terms, which range from 4 to 8 years, the maximum potential amount of undiscounted future payments that could be required under the guarantees at September 30, 2024 was $ 37.2 million, which is not reasonably expected.

Internalization — During the second quarter of 2024, the Company entered into the Internalization Agreement with the Former Manager and Master GP.

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and (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $ 30 .

Letter Agreements — Prior to May 28, 2024, the Company’s Chief Executive Officer and Chief Financial Officer were provided by its Former Manager under the terms of the Management Agreement.

In addition, the Company relied on employees of its Former Manager and affiliates to conduct the Company’s operations.

Since May 28, 2024, the Company entered into letter agreements with the Chief Executive Officer and Chief Financial Officer and is hiring certain employees of the Former Manager that serve in key roles at the Company, including, but not limited to, those who support the Company’s investment, legal, accounting, tax and treasury operations.

FTAI AVIATION LTD.

5 unchanged sentences

The remaining balance was paid in cash on June 17, 2024.

The restructuring charge paid in connection with the Internalization and termination of the Management Agreement is reflected in Internalization Fee to Affiliate expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2024.

See Note 12 for additional discussion.

There were no restructuring charges recorded for the three and six months ended June 30, 2023.

There were no restructuring charges recorded for the three and nine months ended September 30, 2023.

SUBSEQUENT EVENTS

On July 23, 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 June 30, 2024, payable on August 20, 2024 to the holders of record on August 12, 2024.

Additionally, on July 23, 2024, our Board of Directors also 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, payable on September 16, 2024 to the holders of record on September 6, 2024.

Senior Notes due 2033

On October 9, 2024, we issued $ 500.0 million aggregate principal amount of senior unsecured notes due 2033 (the “Senior Notes due 2033”).

The Senior Notes due 2033 bear interest at a rate of 5.875 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2025.

Using a portion of the net proceeds, the Company redeemed the remaining $ 130.5 million aggregate principal amount of Senior Notes due 2027, plus accrued and unpaid interest.

The Company used the remaining net proceeds to pay down in full the Company’s Revolving Credit Facility, with any excess proceeds intended for general corporate purposes, including funding acquisitions and investments.

Series A Shares

On October 29, 2024, the Company redeemed in full the outstanding 4,180,000 8.25 % Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares at a redemption price equal to $ 25.00 per share in cash, plus $ 1.6 million of accumulated and unpaid distributions thereon to, but not including, the redemption date of October 29, 2024.

On October 30, 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 September 30, 2024, payable on November 25, 2024 to the holders of record on November 14, 2024.

Additionally, on October 30, 2024, our Board of Directors also declared cash dividends on the Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares of $ 0.50 , $ 0.52 and $ 0.59 per share, respectively, payable on December 16, 2024 to the holders of record on December 2, 2024.

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-Q

Item 1. Financial Statements