What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-03 compared with 2024-02-26 · 550 added, 454 removed, 846 unchanged (54% of the section changed)

16 unchanged sentences

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 3, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

14 unchanged sentences

Recognition of Maintenance Revenue for Aircraft Leases

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 $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.

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

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

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

To test maintenance revenue for aircraft leases, we performed audit procedures that included, among others, assessing the Company’s revenue recognition methodology and testing the MTBR assumption described above.

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

We performed testing on 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.

Maintenance revenue totaled $200.8 million for the year ended December 31, 2024, a portion of which relates to maintenance revenue for aircraft leases.

Auditing maintenance revenue for aircraft leases was challenging due to the estimation involved in the Company’s complex modeling process.

The estimation is sensitive to certain assumptions in the model such as the mean time between removal (MTBR) and forecasted utilization of the aircraft, which are affected by historical usage patterns and market conditions.

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

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

For example, we compared the MTBR assumption to data provided by a third-party specialist, assessed the accuracy of the historical usage patterns and the calculation of the forecasted utilization, and assessed the Company’s retrospective review of timing of estimated maintenance events to actual results to assess the historical accuracy of the MTBR assumption.

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

/s/ Ernst & Young LLP

1 unchanged sentence

New York, New York

February 26, 2024

March 3, 2025

FTAI AVIATION LTD.

1 unchanged sentence

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

Current Assets

Cash and cash equivalents 2 $ 115,116 $ 90,756

Restricted cash 2 150 19,500

Accounts receivable, net 150,823 115,156

Inventory, net 2 551,156 316,637

Other current assets 2 408,923 148,885

Total current assets 1,226,018 671,434

Leasing equipment, net 6 2,373,730 2,032,413

2 unchanged sentences

Intangible assets, net 8 42,205 50,590

Inventory, net 2 316,637 163,676

Other assets 2 286,456 125,834

Goodwill 5 61,070 4,630

Other non-current assets 2 208,430 137,721

Total assets $ 4,037,952 $ 2,964,685

Accounts payable and accrued liabilities $ 112,907 $ 86,452

Debt, net 8 2,517,343 2,175,727

Maintenance deposits 2 65,387 78,686

Security deposits 2 41,065 32,842

Other liabilities 52,100 36,468

Current Liabilities

Accounts payable $ 69,119 $ 41,590

Accrued liabilities 96,910 71,317

Current maintenance deposits 2 62,552 39,455

Current security deposits 2 18,100 17,735

Other current liabilities 100,565 11,746

Total current liabilities 347,246 181,843

Long-term debt, net 9 3,440,478 2,517,343

Non-current maintenance deposits 2 44,179 25,932

Non-current security deposits 2 26,830 23,330

Other non-current liabilities 97,851 40,354

Total liabilities $ 3,956,584 $ 2,788,802

30 unchanged sentences

Management fees and incentive allocation to affiliate 13 8,449 18,037 3,562

Internalization fee to affiliate 17 300,000 — —

Depreciation and amortization 6, 8 218,064 169,877 152,917

Asset impairment 962 2,121 137,219

Interest expense 161,639 169,194 155,017

Gain on sale of assets, net ( 18,705 ) — ( 77,211 )

Total expenses 1,497,074 831,224 624,507

1 unchanged sentence

Equity in losses of unconsolidated entities 7 ( 2,200 ) ( 1,606 ) ( 369 )

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

Interest expense ( 221,721 ) ( 161,639 ) ( 169,194 )

Loss on extinguishment of debt ( 17,101 ) — ( 19,859 )

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

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

Other income 17,364 7,590 207

Total other expense ( 223,658 ) ( 155,655 ) ( 189,215 )

Income (loss) from continuing operations before income taxes 14,169 184,017 ( 105,311 )

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

Provision for (benefit from) income taxes 12 5,487 ( 59,800 ) 5,300

Net income (loss) from continuing operations 8,682 243,817 ( 110,611 )

2 unchanged sentences

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

Continuing operations — — —

Discontinued operations 3 — — ( 18,817 )

Dividends on preferred shares 32,763 31,795 27,164

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

Earnings (loss) per share:

Loss on redemption of preferred shares 7,998 — —

Net (loss) income attributable to shareholders $ ( 32,079 ) $ 212,022 $ ( 220,374 )

(Loss) earnings per share:

Continuing operations $ ( 0.32 ) $ 2.12 $ ( 1.39 )

14 unchanged sentences

Other comprehensive loss related to equity method investees, net in discontinued operations — — ( 182,963 )

— ( 182,963 ) ( 129,820 )

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

Comprehensive income (loss) 8,682 243,817 ( 394,990 )

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

Continuing operations — — —

Comprehensive loss attributable to non-controlling interest:

Discontinued operations — — ( 18,817 )

Comprehensive income (loss) attributable to shareholders $ 8,682 $ 243,817 $ ( 376,173 )

__________________________________________________

(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.

9 unchanged sentences

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 )

1 unchanged sentence

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

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

Other comprehensive loss — ( 182,963 ) — ( 182,963 )

Net income 243,817 243,817

Total comprehensive loss 243,817 243,817

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 10 10

1 unchanged sentence

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 )

2 unchanged sentences

Net income 8,682 — 8,682

Other comprehensive loss — — — —

Total comprehensive income 8,682 — — 8,682

Contributions from non-controlling interest 10 10

Issuance of ordinary shares 5 924 929

Purchase of non-controlling interest ( 534 ) ( 534 )

Redemption of preferred shares ( 42 ) ( 97,313 ) ( 97,355 )

Loss on redemption of preferred shares ( 7,998 ) ( 7,998 )

Dividends declared - ordinary shares ( 121,577 ) ( 121,577 )

Issuance of preferred shares 26 61,703 61,729

Dividends declared - preferred shares ( 32,763 ) ( 32,763 )

Issuance of ordinary shares 24 151,000 151,024

Equity-based compensation 6,006 6,006

2 unchanged sentences

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

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

when the Merger was completed on November 10, 2022.

See accompanying notes to consolidated financial statements.

6 unchanged sentences

Net income (loss) $ 8,682 $ 243,817 $ ( 212,027 )

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

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

Equity in losses of unconsolidated entities 2,200 1,606 46,971

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

Gain on sale of assets ( 377,909 ) ( 160,742 ) ( 141,677 )

Security deposits and maintenance claims included in earnings ( 16,783 ) ( 40,535 ) ( 41,845 )

1 unchanged sentence

Equity-based compensation 6,006 1,638 2,623

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

Depreciation and amortization 218,064 169,877 193,236

Asset impairment 962 2,121 137,219

Change in deferred income taxes ( 63,626 ) 2,161 ( 2,057 )

Deferred income taxes ( 1,878 ) ( 63,626 ) 2,161

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

2 unchanged sentences

Amortization of deferred financing costs 11,458 8,860 19,018

Provision for credit losses 6,583 47,975 12,953

Bad debt expense 2,784 6,583 47,975

Other ( 273 ) ( 6,646 ) ( 1,010 )

Accounts receivable ( 41,196 ) ( 40,357 ) ( 65,969 )

Other assets ( 5,627 ) ( 23,037 ) ( 30,789 )

Inventory ( 206,880 ) ( 31,884 ) ( 23,267 )

Other assets ( 14,372 ) ( 5,627 ) ( 23,037 )

Accounts payable and accrued liabilities 15,886 1,254 ( 19,599 )

1 unchanged sentence

Other liabilities ( 2,354 ) ( 997 ) 2,340

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

Net cash (used in) provided by operating activities ( 187,956 ) 128,982 ( 20,657 )

Cash flows from investing activities:

4 unchanged sentences

Acquisition of leasing equipment ( 1,147,341 ) ( 749,780 ) ( 638,329 )

Investments in financing receivables ( 66,858 ) — —

Acquisition of property, plant and equipment ( 9,220 ) ( 6,148 ) ( 144,196 )

Acquisition of lease intangibles 3,168 ( 20,964 ) ( 31,127 )

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

Investment in promissory notes — ( 11,500 ) —

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

Proceeds from sale of leasing equipment 477,886 408,937 158,927

Deposits for acquisitions of leasing equipment ( 158,297 ) ( 23,937 ) ( 6,671 )

Proceeds from sale of assets 969,280 477,886 408,937

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

Proceeds for deposit on sale of aircraft and engine 1,413 3,780 600

Return of purchase deposits 300 — 1,010

Proceeds from deposits on sale of leasing equipment 79,777 1,413 3,780

Return of deposits for acquisition of leasing equipment 530 300 —

Net cash used in investing activities $ ( 469,498 ) $ ( 373,349 ) $ ( 411,253 )

9 unchanged sentences

Payment of deferred financing costs ( 17,356 ) ( 12,180 ) ( 18,607 )

Receipt of security deposits 9,927 3,882 8,770

Return of security deposits ( 2,385 ) ( 2,141 ) ( 1,201 )

Receipt of maintenance deposits 30,354 47,846 31,507

Release of maintenance deposits ( 275 ) ( 1,471 ) ( 20,724 )

Receipt of security deposits under operating lease agreements 8,104 9,927 3,882

Return of security deposits under operating lease agreements ( 421 ) ( 2,385 ) ( 2,141 )

Receipt of maintenance deposits under operating lease agreements 49,333 30,354 47,846

Release of maintenance deposits under operating lease agreements ( 7,134 ) ( 275 ) ( 1,471 )

Proceeds from issuance of ordinary shares, net of underwriter's discount — 5 —

Redemption of preferred shares ( 105,353 ) — —

Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs — 61,729 —

2 unchanged sentences

Settlement of equity-based compensation — — ( 148 )

Purchase of non-controlling interest shares ( 534 ) — —

Cash dividends - ordinary shares ( 121,577 ) ( 119,847 ) ( 128,483 )

8 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities

Acquisition of leasing equipment $ ( 105,313 ) ( 74,706 ) ( 44,552 )

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 )

Billed, assumed and settled maintenance deposits ( 18,907 ) ( 47,993 ) ( 21,710 )

(see Note 2 for additional non-cash information):

Receipt of notes receivable in connection with the sale of leasing equipment $ 88,271 46,654 16,463

Acquisition of leasing equipment in accrued liabilities ( 22,119 ) ( 8,962 ) ( 15,570 )

Receipt of leasing equipment in settlement of accounts receivable — ( 14,250 ) —

Purchase deposits reclassified to leasing equipment from other assets upon acquisition ( 19,608 ) ( 6,371 ) ( 13,658 )

Decrease in leasing equipment for engines provided to aircraft lessees in lieu of cash reimbursements of maintenance deposits — 10,970 6,108

Accounts receivable settled with security deposits ( 4,808 ) ( 6,050 ) ( 13,461 )

Accounts receivable settled with maintenance deposits ( 45,719 ) ( 1,856 ) ( 9,358 )

Non-cash change in equity method investment — — ( 182,963 )

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

Issuance of ordinary shares 924 399 455

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.

Additionally, we own and lease offshore energy equipment.

(“we”, “us”, “our” or the “Company”) 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.

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

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

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

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

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

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

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

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

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

Prior to May 28, 2024, FTAI Aviation Ltd.

operated under a management agreement (the “Management Agreement”) with FIG LLC (the “Former Manager”), and Fortress Worldwide Transportation and Infrastructure Master GP LLC (the “Master GP”), each an affiliate of Fortress Investment Group LLC (“Fortress”).

For their services, the Former Manager was entitled to management fees and the Master GP was entitled to certain incentive allocations, both defined in, and in accordance with the terms of, the Management Agreement.

On May 28, 2024, the Company entered into an Internalization Agreement with the Former Manager and the Master GP (the “Internalization Agreement”), pursuant to which the Management Agreement was terminated effective May 28, 2024 (the “Effective Date”), except that certain indemnification and other obligations survive, and the Company internalized its management functions (such transactions, the “Internalization”).

As a result of the Internalization, the Company ceased to be externally managed and operates as an internally managed company.

In connection with the termination of the Management Agreement, the Company (i) agreed to pay the Former Manager (for itself and on behalf of the Master GP, as applicable) $ 150.0 million (the “Cash Consideration”), the compensation accrued and payable, but not yet paid, under the Management Agreement, and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement;

(ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) 1,866,949 ordinary shares of the Company (the “Share Consideration”);

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 thousand.

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 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.

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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 unchanged sentences

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.

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

We use the equity method of accounting for investments in entities in which we exercise significant influence, but which do not meet the requirements for consolidation.

3 unchanged sentences

Actual results could differ from those estimates.

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 Former Manager under the Internalization Agreement is recorded within Internalization Fee to Affiliate.

See Note 17 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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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

6 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.

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, net —We hold aircraft engines, engine modules, spare parts and used material inventory for sale.

Additionally, at time inventory is transferred to leasing equipment in connection with a rebuilt engine or engine repair.

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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

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

Asset Range of Estimated Useful Lives Residual Value Estimates

5 unchanged sentences

Scrap value at end of useful life

Offshore energy vessels 25 years from date of manufacture

10% of new build cost

Buildings and improvements 40 to 50 years

7 unchanged sentences

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.

Project costs of major additions and betterments, including capitalizable engineering costs and other costs directly related to the development or construction of project, are capitalized and depreciation commences once it is placed into service.

Project costs of major additions and betterments, including capitalizable engineering costs and other costs directly related to the development or construction of a project, are capitalized and depreciation commences once it is placed into service for leasing equipment and once it is ready for service for property, plant and equipment.

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

1 unchanged sentence

For planned major maintenance or component overhaul activities for aviation equipment off lease, the cost of such major maintenance or component overhaul event is capitalized and depreciated on a straight-line basis over the period until the next maintenance or component overhaul event is required.

Our offshore energy vessels are required to be drydocked periodically for recertifications or major repairs and maintenance that cannot be performed while the vessels are operating.

Normal repairs and maintenance are expensed as incurred.

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

Major maintenance and overhauls of the Company’s maintenance repair facilities and related equipment that extend the life of the asset are capitalized and depreciated over the expected period until the next anticipated major maintenance or overhaul.

Upon retirement or disposal of property, plant and equipment, the cost and related accumulated depreciation are removed from the account, and the resulting gains or losses, if any, are recorded.

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

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

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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

3 unchanged sentences

Repairs and Maintenance —Repair and maintenance costs that do not extend the lives of the assets are expensed as incurred.

Our repairs and maintenance expense was $ 7.7 million, $ 7.2 million and $ 3.2 million during the years ended December 31, 2023, 2022 and 2021, respectively, and are included in Operating expenses in the Consolidated Statements of Operations.

Our repairs and maintenance expense was $ 9.8 million, $ 7.7 million and $ 7.2 million during the years ended December 31, 2024, 2023 and 2022, respectively, and are included in Operating expenses.

Impairment of Long-Lived Assets —We perform a recoverability assessment of each of our long-lived assets whenever events or changes in circumstances, or indicators, indicate that the carrying amount or net book value of an asset may not be recoverable.

2 unchanged sentences

a significant change in market conditions;

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

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

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

the introduction of newer technology and the length of time an asset is off lease related to leasing equipment, engines or for manufacturing equipment;

a significant decrease in market value;

adverse changes in use or condition;

legal or regulatory changes;

or cash flow reductions.

If a quantitative recoverability assessment is determined to be needed, we measure whether the estimated future undiscounted net cash flows expected to be generated by the asset exceeds its net book value.

The undiscounted cash flows consist of cash flows of the asset or asset group.

For long lived assets, the undiscounted cash flows consist of cash flows from currently contracted leases and contracts, future projected leases, transition costs, estimated down time and estimated residual or scrap values for leasing equipment or operating cash flows for manufacturing equipment, and maintenance and operating costs.

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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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, information received from third party industry sources, usage assumptions, asset lifespan for leasing equipment, and expected operating income and costs associated with operating and maintaining the manufacturing asset.

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, expected income and operating costs, maintenance and repairs, capital expenditures, and duration of the cash flows.

Recoverability of Goodwill —Goodwill is not amortized but rather is tested at least annually during the fourth quarter for impairment, or more often if events or circumstances indicate the carrying value of an asset may not be recoverable.

We assess the recoverability of goodwill using a qualitative evaluation or a quantitative test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.

The determination of fair value requires management to make assumptions and to apply judgment to estimate industry and economic factors and the profitability of future business strategies.

The Company conducts impairment testing based on current business strategy in light of present industry and economic conditions, as well as future expectations.

We performed a qualitative assessment for our goodwill impairment test for the year ended December 31, 2024.

No impairment was recorded as a result of these tests for the years ended December 31, 2024, 2023 and 2022, respectively.

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

5 unchanged sentences

Reimbursements made to the lessee upon the receipt of evidence of qualifying maintenance work are recorded against the maintenance deposit liability.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

In certain acquired leases, we or the lessee may be obligated to make a payment to the other party at lease termination based on redelivery conditions stipulated at the inception of the lease.

3 unchanged sentences

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

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

Intangibles and amortization —Intangibles include the value of acquired favorable and unfavorable leases and are included in Intangible assets, net.

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

1 unchanged sentence

Acquired lease intangibles are amortized on a straight-line basis over the remaining lease terms, which collectively had a weighted-average remaining amortization period of approximately 47 months as of December 31, 2023, and are recorded as a component of revenues in the accompanying Consolidated Statements of Operations.

Acquired lease intangibles are amortized on a straight-line basis over the remaining lease terms, which collectively had a weighted-average remaining amortization period of approximately 45 months as of December 31, 2024, and are recorded as a component of revenues.

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

Unamortized deferred financing costs of $ 33.2 million and $ 29.4 million as of December 31, 2023 and 2022, respectively, are included in Debt, net in the Consolidated Balance Sheets.

We also have unamortized deferred revolver fees related to our revolving debt o f $ 5.1 million and $ 5.5 million as of December 31, 2023 and 2022, respectively, which are included in Other assets in the Consolidated Balance Sheets.

Amortization expense was $ 8.9 million, $ 17.0 million and $ 19.1 million for the years ended December 31, 2023, 2022 and 2021, respectively, and is included in Interest expense in the Consolidated Statements of Operations.

Unamortized deferred financing costs of $ 55.5 million and $ 33.2 million as of December 31, 2024 and 2023, respectively, are included in Long-term debt, net.

We also have unamortized deferred revolver fees related to our revolving debt o f $ 8.2 million and $ 5.1 million as of December 31, 2024 and 2023, respectively, which are included in Other non-current assets.

Amortization expense was $ 11.5 million, $ 8.9 million and $ 17.0 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included in Interest expense.

Discontinued Operations — A disposal of an entity or component of an entity is reported in discontinued operations if the disposal represents a strategic shift that has or will have a material impact on our operations and financial results.

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.

Revenues — 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.

As a result of this update, the transaction price allocated to the sale of assets is included in Asset sales revenue 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 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, as we were previously only occasionally selling these assets.

Generally, assets sold were under leasing arrangements prior to sales and are included in Leasing equipment, net.

Operating Leases —We lease equipment pursuant to operating leases.

1 unchanged sentence

Revenue is not recognized when collection is not reasonably assured.

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

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

Generally, under our aircraft lease and engine agreements, the lessee is required to make periodic maintenance payments calculated based on the lessee’s utilization of the leased asset or at the end of the lease.

2 unchanged sentences

In the event the total cost of maintenance events over the term of a lease is less than the cumulative maintenance payments, we are not required to return any unused or excess maintenance payments to the lessee.

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

Maintenance payments received for which we expect to repay to the lessee are presented as current and non-current Maintenance deposits in our Consolidated Balance Sheets.

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

1 unchanged sentence

Significant changes to these estimates could have a material effect on the amount of revenue recognized in the period.

For purchase and lease back transactions, we account for the transaction as a single arrangement.

We allocate the consideration paid based on the relative fair value of the aircraft and lease.

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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

4 unchanged sentences

Revenue is not recognized when collection is not reasonably assured.

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

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

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.

2 unchanged sentences

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

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

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

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.

Revenue is recognized gross when a performance obligation is satisfied by transferring control over an asset to a customer along with corresponding costs of sales.

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 gross when a performance obligation is satisfied by transferring control over the related asset to a customer along with corresponding costs of sales.

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.

1 unchanged sentence

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

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

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

Operating lease right-of-use (“ROU”) assets are included in Other non-current assets and lease liabilities are included in Other current and non-current liabilities.

Finance lease ROU assets are recognized in Other non-current assets and lease liabilities are recognized in Other current and non-current liabilities.

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,

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.

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

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

1 unchanged sentence

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

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

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

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

1 unchanged sentence

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

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

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

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 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.

No single customer or lessee accounted for greater than 10% of total revenue during the years ended December 31, 2024, 2023 and 2022.

As of December 31, 2024 and 2023 no single customer or lessee 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 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 Statements of Operations.

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

Bad debt expense is included in Operating expenses.

Receivables are written off after all reasonable means to collect the full amount have been exhausted.

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

2024 2023 2022

Allowance at beginning of period $ 72,163 $ 65,580 $ 17,703

Provision for credit losses 6,583 47,877 12,880

Bad debt expense 2,784 6,583 47,877

Allowance at end of period $ 74,947 $ 72,163 $ 65,580

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 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 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 our allowance for doubtful accounts at December 31, 2024 includes all accounts receivable exposure to Russian and Ukrainian lessees.

Comprehensive Income (Loss) — Our comprehensive income (loss) represents net income (loss) adjusted for comprehensive loss related to cash flow hedges of our equity method investees of discontinued operations.

Other Current Assets — Other current assets are summarized as follows:

Notes receivable $ 165,338 $ 102,304

Prepaid expenses including prepayments for maintenance that has not yet been incurred 87,323 7,617

Purchase deposits 83,229 23,937

Financing receivable resulting from failed sale-leaseback transactions 32,486 —

Maintenance right assets — 6,716

Other 40,547 8,311

Other current assets $ 408,923 $ 148,885

Other Non-Current Assets — Other non-current assets are summarized as follows:

Lease incentives $ 56,812 $ 43,453

Deferred tax assets 42,893 72,185

Financing receivable resulting from failed sale-leaseback transactions 28,412 —

Maintenance right assets 25,907 9,628

Other 54,406 12,455

Other non-current assets $ 208,430 $ 137,721

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

The Board of Directors declared cash dividends of $ 1.20 , $ 1.20 and $ 1.26 per ordinary share during each of the years ended December 31, 2024, 2023 and 2022, 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, 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.

Additionally, the Board of Directors declared cash dividends on the Series A Preferred Shares of $ 1.55 , $ 2.06 and $ 2.06 per share for the years ended December 31, 2024, 2023, and 2022, respectively, the Series B Preferred Shares of $ 2.00 , $ 2.00 and $ 2.00 per share for the years ended December 31, 2024, 2023 and 2022, respectively, the Series C Preferred Shares of $ 2.06 , $ 2.06 , $ 2.06 per share for the year ended December 31, 2024, 2022 and 2021, respectively, and the Series D Preferred Shares of $ 2.38 and $ 1.78 per share for the year ended December 31, 2024 and 2023.

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.

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.

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.

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

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.

With respect to purchases of aircraft and engines, when the expected predominant source of cash inflows from the acquired leasing equipment at the time of acquisition is from leasing activities, the related cash outflow is reported as outflows in net cash used in investing activities.

When the expected predominant source of cash inflows is from sales transactions, the related cash outflow is reported as outflows in net cash (used in) provided by operating activities.

The cash and noncash related activities described above during the years ended December 31, 2024, 2023 and 2022 are detailed below:

Year Ended December 31,

(in thousands) 2024 2023 2022

Cost of modules and parts sold sourced from engines originally within leasing equipment $ 38,300 $ 41,167 $ 36,946

Transfers of engines from leasing equipment to inventory for manufacturing and sale 239,462 178,740 127,349

Transfers of inventory to leasing equipment for rebuilding and sale of engines ( 223,129 ) ( 78,788 ) ( 89,041 )

Total outflows related to manufacturing modules and parts - included in net cash (used in) provided by operating activities ( 345,821 ) ( 138,045 ) ( 101,249 )

Cash received for assets sold sourced from leasing equipment - inflow included in cash (used in) provided by operating activities 76,157 94,222 43,859

Cash received for sales of leasing equipment that include components sourced from inventory - inflow included in cash used in investing activities 436,217 79,474 118,735

Cash paid for engine and aircraft inventory - outflow included in cash provided by (used in) operating activities ( 8,280 ) — —

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

3 unchanged sentences

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 .

We adopted this guidance in the fourth quarter of 2024, and it did not have a material impact on our consolidated financial statements and related disclosures.

Unadopted Accounting Pronouncements — 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.

2 unchanged sentences

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

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

This ASU amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification.

The amendments apply to all reporting entities within the scope of the affected accounting guidance.

Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities.

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.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

In January 2025, the FASB issued Clarifying the Effective Date (“ASU 2025-01”) to add some clarity around the effective date of the guidance.

This ASU requires disaggregated information for specified categories of expenses, including inventory purchases, employee compensation, depreciation, amortization, and depletion, to be presented in certain expense captions on the face of the income statement.

This standard is effective for annual periods beginning after December 15, 2026, and interim periods beginning after

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

December 15, 2027, with early adoption and either prospective or retrospective application permitted.

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

DISCONTINUED OPERATIONS

12 unchanged sentences

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

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

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

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

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

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

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

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

Critical Accounting Policies

8 unchanged sentences

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.

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.

Switching 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.

12 unchanged sentences

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

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

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

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

Variable Interest Entity

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

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

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

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.

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.

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

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

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

The determination of fair value involves significant management judgment.

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

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

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

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

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

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

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

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

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

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

Intangibles and amortization

1 unchanged sentence

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

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

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.

Financial Information of Discontinued Operations

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

Year Ended December 31,

December 31, 2022

Total revenues $ 140,009

16 unchanged sentences

Net loss attributable to shareholders $ ( 82,599 )

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

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

14 unchanged sentences

Conversion of interests in unconsolidated entities ( 21,302 )

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.

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

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

7 unchanged sentences

Net loss $ ( 81,731 )

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.

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 total 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 14 for additional information.

The results of operations of LMCES have been included in the Company’s results since the effective date of the acquisition.

In connection with the acquisition, we record ed $ 6.9 million of acquisition and transaction expense during the year ended December 31, 2024.

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 the Company’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 consideration paid and 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.

(iii) changes in goodwill;

(iv) changes due to net working capital adjustments;

and (v) changes to other assets and other liabilities.

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

Subsequent to the acquisition, in the quarter ended December 31, 2024, measurement period adjustments as of the acquisition date were made to decrease accounts receivable by $ 1.5 million, decrease inventory by $ 21.5 million, increase other current assets by $ 4.1 million, increase property, plant and equipment by $ 1.0 million, increase other non-current assets by $ 0.1 million, decrease accounts payable by $ 0.4 million, decrease accrued liabilities by $ 0.1 million, decrease other current liabilities by $ 5.0 million, increase other non-current liabilities by $ 1.5 million an increase in total consideration transferred of $ 15.8 million.

These adjustments resulted in an increase to good will of $ 29.6 million.

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

September 9, 2024

Fair value of assets acquired:

Cash and cash equivalents $ 518

Restricted cash 150

Accounts receivable, net 5,133

Property, plant, and equipment, net 30,559

Intangible assets 2,377

Inventory, net 9,332

Other assets 4,301

Current Assets

Accounts receivable $ 10,758

Inventory 25,947

Other current assets 6,795

Total current assets 43,500

Property, plant, and equipment 72,414

Leasing equipment 5,675

Other non-current assets 10,270

Total assets 131,859

Fair value of liabilities assumed:

Accounts payable and accrued liabilities 3,994

Other liabilities 2,410

Current Liabilities

Accounts payable 7,669

Accrued liabilities 1,692

Other current liabilities 5,130

Total current liabilities 14,491

Other non-current liabilities 14,347

Total liabilities 28,838

1 unchanged sentence

________________________________________________________

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

(1) 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.

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:

(2) 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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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

1 unchanged sentence

Machinery and equipment 2 - 21

Other N/A 801

Total $ 72,414

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.

The unaudited financial information in the table below summarizes the combined results of operations of FTAI and LMCES 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;

• 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;

• Associated tax-related impacts of adjustments.

2 unchanged sentences

Total revenue $ 1,782,339 $ 1,257,302

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

Net (loss) income attributable to shareholders $ ( 35,850 ) $ 211,582

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.

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.

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.

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 the discount rate and future revenues and operating expenses.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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

December 1, 2023

Fair value of assets acquired:

Current Assets

Cash and cash equivalents $ 518

Restricted cash 150

Accounts receivable 5,133

Inventory 9,332

Other current assets 2,889

Total current assets 18,022

Property, plant, and equipment 30,559

Intangible assets 2,377

Other non-current assets 1,412

Total assets 52,370

Fair value of liabilities assumed:

Current Liabilities

Accounts payable 3,424

Accrued liabilities 571

Other current liabilities 1,475

Total current liabilities 5,470

Other non-current liabilities 934

Total liabilities 6,404

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.

LEASING EQUIPMENT, NET

3 unchanged sentences

Leasing equipment, net $ 2,373,730 $ 2,032,413

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.

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 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 did not expect to recover 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, 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.

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 $ 2.1 million , net of redelivery compensation, for the years ended December 31, 2024 and 2023, respectively.

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 did not expect to recover from Ukraine and Russia during the year ended December 31, 2022.

In the fourth quarter of 2024, the Company completed the sale of the two vessels included within Corporate and Other.

We sold the two offshore vessels for total proceeds of $ 142.6 million and the book value was $ 123.9 million.

This transaction resulted in a gain of $ 18.7 million and is reflected in the Gain on sale of assets, net, for the year ended December 31, 2024.

Depreciation expense for leasing equipment is summarized as follows:

2 unchanged sentences

Depreciation expense for leasing equipment $ 211,047 $ 168,901 $ 152,378

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

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

$ 19,048 $ 22,722

________________________________________________

* 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, 2024.

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

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

Year Ended December 31,

7 unchanged sentences

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

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

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

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

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.

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

Since November 2021, we owned 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 accounted for our investment in Falcon as an equity method investment as we have significant influence through our interest.

On May 3, 2024, we purchased the remaining interest from S7 Aerospace for total cash consideration of $ 0.8 million and it is now a consolidated subsidiary.

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.

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.

On December 1, 2023, we purchased the remaining interest in QuickTurn.

FTAI AVIATION LTD.

16 unchanged sentences

Acquired unfavorable lease intangibles, net $ 12,508 $ 1,762

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.

Intangible liabilities relate to unfavorable lease intangibles and are included as a component of Other non-current liabilities.

Amortization of intangible assets and liabilities is recorded as follows:

2 unchanged sentences

Lease intangibles Lease income $ 15,597 $ 15,126 $ 13,913

Customer relationships:

Depreciation and amortization 11 — —

Customer relationships Depreciation and amortization 403 11 —

Total $ 16,000 $ 15,137 $ 13,913

13 unchanged sentences

(ii) Adjusted Term SOFR Rate + 2.75 %

9/20/25 150,000

Total loans payable — —

7 unchanged sentences

497,071 7.88 % 12/1/30 496,704

Senior Notes due 2031 700,000 7.00 % 5/1/31 —

Senior Notes due 2032 800,000 7.00 % 6/15/32 —

Senior Notes due 2033 (5)

497,551 5.88 % 4/15/33 —

Total bonds payable 3,496,004 2,550,493

5 unchanged sentences

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

(2) Includes unamortized discount of $ 866 and $ 1,318 at December 31, 2023 and 2022, respectively, and an unamortized premium of $ 2,908 and $ 4,354 at December 31, 2023 and 2022, respectively.

(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 $ 1,382 and $ 1,746 at December 31, 2024 and 2023, 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.

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

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

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

(4) Includes unamortized discount of $ 2,929 and $ 3,296 at December 31, 2024 and 2023, respectively.

(5) Includes an unamortized discount of $ 2,449 at December 31, 2024.

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”).

The Senior Notes due 2031 bear interest at a rate of 7.00 % per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2024.

Using a portion of the net proceeds, the Company completed a cash tender offer for $ 324.6 million aggregate principal amount of 2025 Notes validly tendered on April 11, 2024.

Holders whose notes were accepted for purchase received equal consideration per $1,000 principal amount of 2025 Notes, plus accrued and unpaid interest to, but not including, April 11, 2024.

The Company used the remaining net proceeds to redeem the remaining $ 325.4 million aggregate principal amount of Senior Notes due 2025, plus accrued and unpaid interest, and recognized a loss on extinguishment of debt of $ 2.7 million .

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

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”).

These notes bear interest at a rate of 7.00 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2024.

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 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.

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

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, and recognized a loss on extinguishment of debt of $ 3.2 million.

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.

We were in compliance with all debt covenants as of December 31, 2024.

As of December 31, 2024, scheduled principal repayments under our debt agreements for the next five years and thereafter are summarized as follows:

5 unchanged sentences

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

Senior Notes due 2031 — — — — — 700,000 700,000

Senior Notes due 2032 — — — — — 800,000 800,000

Senior Notes due 2033 — — — — — 500,000 500,000

Total principal payments on loans and bonds payable $ — $ — $ — $ 1,000,000 $ — $ 2,500,000 $ 3,500,000

11 unchanged sentences

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

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.

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, 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, which are classified on the balance sheet.

FTAI AVIATION LTD.

1 unchanged sentence

(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:

December 31, 2023 December 31, 2022

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

December 31, 2024

Senior Notes due 2025 —

2 unchanged sentences

Senior Notes due 2030 526,380

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.

Senior Notes due 2031 713,923

Senior Notes due 2032 816,904

Senior Notes due 2033 483,100

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.

The guarantees are valued a t $ 8.9 million and $ 6.8 million as of December 31, 2024 and December 31, 2023, respectively, and are reflected as a component of Other non-current liabilities.

The fair values of the guarantees, which were first recorded in 2022, 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, 2024, the Company recorded a $ 2.1 million increase related to the change in fair value, which is recorded in Asset sales revenue.

During the year ended December 31, 2023, the Company recorded a $ 4.8 million increase in guarantees related to the sale of seven aircraft and a $ 1.8 million decrease related to the change in fair value, which is recorded in Asset sales revenue.

During the year ended December 31, 2022, the Company recorded $ 3.8 million in guarantees related to the sale of four aircraft, which is recorded in Asset sale revenue.

During the years ended December 31, 2024, 2023 and 2022, there were no significant transfers into or out of Level 3.

Given variability in the condition of the engines at the end of the lease terms, which range from 3 to 8 years, the maximum potential amount of undiscounted future payments that could be required under the guarantees at December 31, 2024 was $ 37.2 million , which is not reasonably expected.

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

4 unchanged sentences

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.

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 December 31, 2024, the Incentive Plan provides for the issuance of up to 28.3 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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 — —

forfeited and canceled — — — —

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

Stock Options Restricted Shares

As of December 31, 2023:

Weighted average exercise / issuance price (per share) $ 23.78 $ 24.03

Aggregate intrinsic value (in thousands) $ 13,939 $ 8,771

Weighted average remaining contractual term (in years) 8.1 3.5

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

Equity-based compensation expense is reported within Operating expenses in the Consolidated Statements of Operations.

Unvested equity-based awards are subject to forfeiture.

The Company’s accounting policy is to record the impact of forfeitures when they occur.

Stock Options

In connection with our equity offerings (see Note 14 for details), we granted options to the Manager related to ordinary shares.

In connection with our equity offerings (see Note 15 for details), we granted options to the Former Manager related to ordinary shares.

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

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.

The assumptions used in valuing the options were:

a 4.52 % risk-free rate, a 1.50 % dividend yield, a 43.00 % volatility and a 6.8 year term.

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

Year Ended December 31,

10 unchanged sentences

6.8 years 10 years 0 years

Restricted Shares

During the year ended December 31, 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.

The unrecognized compensation expense of restricted shares is expected to be recognized over a weighted-average period of 2.6 years.

Performance Shares

In November 2024, we granted up to 1,000,000 shares of performance shares to certain employees of the Company for which the ultimate number of units that will vest are determined based on the achievement of market conditions at the end of the stated performance period.

The awards which are to be earned is based on the “Performance Level” of the Company’s Compound Annualized Total Shareholder Return (“CAGR”) for the Performance Period.

The Performance Period is measured from November 5, 2024 through November 5, 2027.

The number of shares earned could range from 0 % to a maximum of 100 %.

The Earned Units from the Performance-based Awards become exercisable in three equal installments over a two-year period beginning with the completion of the Performance Period.

The three equal installments of Earned Units vest on (i) November 5, 2027, (ii) November 5, 2028, and (iii) November 5, 2029.

Compensation expense for the units is based on the estimated value of the awards on the grant date, and is recognized over the period from the grant date through the expected vest dates of each vesting condition.

The grant date fair value was $ 48.1 million and was determined using the Monte Carlo simulation, assuming a Geometric Brownian Motion (GBM) to model various simulation paths, which relies on highly subjective assumptions, including simulated share prices and simulated vesting percentages to simulate payoff paths.

Key assumptions in this method include the historical and implied equity volatility, an implied volatility weight, and the risk-free rate of returns.

The valuation model assumes dividends are immediately reinvested.

As of December 31, 2024, there was $ 46.2 million in unrecognized compensation cost related to unvested performance shares.

This cost is expected to be recognized over a weighted-average period of 3.8 years.

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

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

The Consolidated Statements of Operations includes the following expense related to our equity-based compensation arrangements which are recorded in Operating expenses:

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

2024 2023 2022

Stock options $ 296 $ — $ — $ 1,778

Performance shares 1,954 — — 46,156

Restricted shares 3,756 1,638 — 14,766

Total $ 6,006 $ 1,638 $ — $ 62,700

The tables below provide details on our stock options, performance shares, and restricted shares:

Stock Options Performance Shares Restricted Shares

Options Weighted Average Exercise/Issuance Price Shares Weighted Average Grant date fair value Shares Weighted Average Issuance Price

Outstanding as of December 31, 2023 616,177 $ 23.78 — — 365,000 24.03

Granted 60,000 79.13 1,000,000 48.11 141,138 84.94

exercised / vested 563,834 23.20 — — —

forfeited and canceled — — — 25,000 24.03

Outstanding as of December 31, 2024 112,343 1,000,000 481,138

Stock Options Performance Shares Restricted Shares

As of December 31, 2024:

Weighted average exercise / issuance price (per share) $ 52.70 48.11 $ 41.90

Aggregate intrinsic value (in thousands) $ 10,262 N/A $ 20,159

Weighted average remaining contractual term (in years) 4.8 3.8 2.6

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

The domestic and foreign components of the Company’s pre-tax income (loss) are as follows:

Year Ended December 31,

2024 2023 2022

Pre-tax book income (loss)

Domestic $ ( 259 ) $ ( 282 ) $ ( 247 )

Foreign 14,428 184,299 ( 105,064 )

Total $ 14,169 $ 184,017 $ ( 105,311 )

The current and deferred components of the provision for (benefit from) income taxes are as follows:

Year Ended December 31,

2024 2023 2022

Cayman Islands $ — $ — $ —

26 unchanged sentences

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:

The Company recorded the impact of this enactment in their provision for the year ended December 31, 2023.

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

FTAI AVIATION LTD.

6 unchanged sentences

Change in valuation allowance ( 94.4 ) % ( 4.9 ) % ( 11.6 ) %

Provision for income taxes ( 32.5 ) % ( 5.0 ) % ( 7.9 ) %

Income tax rate 38.7 % ( 32.5 ) % ( 5.0 ) %

Significant components of our deferred tax assets and liabilities are as follows:

5 unchanged sentences

Customer relationship intangibles 28,500 28,500

Other 4,250 —

Total deferred tax assets 71,738 87,220

3 unchanged sentences

Fixed assets and goodwill ( 32,545 ) ( 8,186 )

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.

Other ( 2,377 ) ( 63 )

Net deferred tax asset $ 31,588 $ 60,372

Deferred tax assets and liabilities are reported net in Other non-current assets or Other non-current liabilities.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

12 unchanged sentences

As of December 31, 2024, 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.

federal net operating loss carryforwards of $ 6.0 million which can be carried forward indefinitely against future business income.

As of December 31, 2024, we also had net operating loss carryforwards for Irish income tax purposes of $ 249.9 million, which can be carried forward indefinitely against future business income, $ 1.8 million of net operating loss carryforwards for Malaysian income tax purposes, which will begin to expire in the year 2030, $ 1.3 million of net operating loss carryforward for Singaporean income tax purpose, which can be carried forward indefinitely against the future business income and $ 2.5 million of net operating loss carryforward for Canadian income tax purpose, which will begin to expire in the year 2044.

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.

The Organization for Economic Cooperation and Development (“OECD”) is coordinating negotiations among more than 140 countries with the goal of achieving consensus around substantial changes to international tax policies, including the implementation of a minimum global effective tax rate of 15%.

While certain jurisdictions in which the Company operates have adopted the relevant legislation effective for tax years beginning on or after January 1, 2024, the Company was not subject to any changes in their income tax provision for the year ended December 31, 2024.

For the period ended December 31, 2025, the Company expects to be subject to a minimum global effective tax rate in certain jurisdictions.

The Company continues to monitor developments and evaluate the impacts of these new rules and will present any impacts in the December 31, 2025 financial statements.

As of December 31, 2024, the Company has not accrued taxes on $ 44.8 million of foreign earnings which are permanently reinvested outside the domicile.

The Company expects that taxes associated with any future repatriation of these earnings to be $ 2.2 million.

As of and for the period ended December 31, 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.

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

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

Generally, we are not subject to examination by taxing authorities for tax years prior to 2020.

We do not believe that it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within 12 months of the reporting date.

MANAGEMENT AGREEMENT AND AFFILIATE TRANSACTIONS

In connection with the spin-off of FTAI Infrastructure on August 1, 2022, we assigned our then-existing management and advisory agreement, dated as of May 20, 2015, with our Manager to FTAI Infrastructure.

On July 31, 2022, we entered into a new management and advisory agreement (the “Management Agreement”), by and among FTAI, FTAI Finance Holdco Ltd.

(a wholly owned subsidiary of the Company), and each of the subsidiaries that are party thereto and the Manager, with substantially similar terms and conditions as the existing management and advisory agreement.

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

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.

Additionally, we have entered into certain incentive allocation arrangements with Master GP, which owns approximately 0.01 % of FTAI Aviation Holdco Ltd.

The Manager is entitled to a management fee and reimbursement of certain expenses.

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

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

Master GP is entitled to incentive allocations (comprised of income incentive allocation and capital gains incentive allocation, defined below).

The income incentive allocation is calculated and distributable quarterly in arrears based on the pre-incentive allocation net income for the immediately preceding calendar quarter (the “Income Incentive Allocation”).

AFFILIATE TRANSACTIONS

On May 28, 2024, the Company entered into definitive agreements with the Former Manager and Master GP to internalize the Company’s management function.

As part of the termination of the Management Agreement, the Company (i) paid the Former Manager (for itself and on behalf of the Master GP, as applicable) the Cash Consideration, the compensation accrued and payable, but not yet paid, under the Management Agreement and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement;

(ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration;

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 thousand.

Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP.

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 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 %).

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.

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

Additionally, we entered into certain incentive allocation arrangements with Master GP, which owned approximately 0.01 % of FTAI Aviation Holdco Ltd.

(a wholly owned subsidiary of the Company).

The Former Manager was entitled to a management fee and reimbursement of certain expenses.

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 %, which was payable monthly in arrears in cash.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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).

The income incentive allocation was calculated and distributable quarterly in arrears based on the pre-incentive allocation net income for the immediately preceding calendar quarter (the “Income Incentive Allocation”).

For this purpose, pre-incentive allocation net income means, with respect to a calendar quarter, net income attributable to shareholders during such quarter calculated in accordance with U.S.

GAAP excluding our pro rata share of (1) realized or unrealized gains and losses, and (2) certain non-cash or one-time items, and (3) any other adjustments as may be approved by our independent directors.

Pre-incentive allocation net income does not include any Income Incentive Allocation or Capital Gains Incentive Allocation (described below) paid to Master GP during the relevant quarter.

One of our subsidiaries allocates and distributes to Master GP an Income Incentive Allocation with respect to its pre-incentive allocation net income in each calendar quarter as follows:

Pre-incentive allocation net income did not include any Income Incentive Allocation or Capital Gains Incentive Allocation (described below) paid to Master GP during the relevant quarter.

Prior to the Internalization, one of our subsidiaries allocated and distributed to Master GP an Income Incentive Allocation with respect to its pre-incentive allocation net income in each calendar quarter as follows:

(1) no Income Incentive Allocation in any calendar quarter in which pre-incentive allocation net income, expressed as a rate of return on the average value of our net equity capital (excluding non-controlling interests) at the end of the two most recently completed calendar quarters, does not exceed 2 % for such quarter ( 8 % annualized);

1 unchanged sentence

and (3) 10 % of the amount of pre-incentive allocation net income, if any, that exceeds 2.2223 % for such quarter.

These calculations will be prorated for any period of less than three months.

Capital Gains Incentive Allocation is calculated and distributable in arrears as of the end of each calendar year and is equal to 10 % of our pro rata share of cumulative realized gains from the date of the IPO through the end of the applicable calendar year, net of our pro rata share of cumulative realized or unrealized losses, the cumulative non-cash portion of equity-based compensation expenses and all realized gains upon which prior performance-based Capital Gains Incentive Allocation payments were made to 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:

These calculations were prorated for any period of less than three months.

Prior to the Internalization, Capital Gains Incentive Allocation was calculated and distributable in arrears as of the end of each calendar year and was 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.

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

Year Ended December 31,

2 unchanged sentences

Income incentive allocation 7,456 17,116 3,489

Capital gains incentive allocation — — —

Total $ 8,449 $ 18,037 $ 3,562

We pay all of our operating expenses, except those specifically required to be borne by the 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 Manager), the costs of printing and mailing proxies and reports to our shareholders, costs incurred by the 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 will pay or reimburse the 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.

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

we will not reimburse the Manager for these expenses.

The following table summarizes our reimbursements to the Manager from continuing operations:

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;

we did not reimburse the Former Manager for these expenses.

The following table summarizes our reimbursements to the Former Manager:

Year Ended December 31,

1 unchanged sentence

Classification in the Consolidated Statements of Operations:

General and administrative expenses $ 7,137 $ 6,891 $ 4,915

General and administrative $ 6,788 $ 7,137 $ 6,891

Acquisition and transaction expenses 2,137 678 1,144

Total $ 8,925 $ 7,815 $ 8,035

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

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.

The Incentive Allocation Fair Value Amount is an amount equal to the Income Incentive Allocation and the Capital Gains Incentive Allocation that would be paid to Master GP if our assets were sold for cash at their then current fair market value (as determined by an appraisal, taking into account, among other things, the expected future value of the underlying investments).

Upon the successful completion of an offering of our ordinary shares or other equity securities (including securities issued as consideration in an acquisition), we grant the Manager options to purchase ordinary shares in an amount equal to 10 % of the number of ordinary shares being sold in the offering (or if the issuance relates to equity securities other than our ordinary shares, options to purchase a number of ordinary shares equal to 10 % of the gross capital raised in the equity issuance divided by the fair market value of a ordinary share as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a ordinary share as of the date of the equity issuance if it relates to equity securities other than our ordinary shares).

Any ultimate purchaser of ordinary shares for which such options are granted may be an affiliate of the Manager.

FTAI AVIATION LTD.

1 unchanged sentence

(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.

Upon the successful completion of an offering of our ordinary shares or other equity securities (including securities issued as consideration in an acquisition), we granted the Former Manager options to purchase ordinary shares in an amount equal to 10 % of the number of ordinary shares being sold in the offering (or if the issuance relates to equity securities other than our ordinary shares, options to purchase a number of ordinary shares equal to 10 % of the gross capital raised in the equity issuance divided by the fair market value of a ordinary share as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a ordinary share as of the date of the equity issuance if it relates to equity securities other than our ordinary shares).

Any ultimate purchaser of ordinary shares for which such options are granted may have been an affiliate of the Former Manager.

SEGMENT INFORMATION

1 unchanged sentence

Our two reportable segments are (i) Aviation Leasing and (ii) Aerospace Products.

The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to customers.

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

The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to lessees.

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 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.

1 unchanged sentence

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.

Additionally, Corporate and Other also includes offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas activities and production which are typically subject to operating leases.

Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, internalization fee and management fees and incentive compensation pursuant to the Management Agreement prior to the Internalization effective May 28, 2024.

Additionally, Corporate and Other also includes results from an offshore energy business, which consists of vessels and equipment that support offshore oil and gas activities and production which are typically subject to operating leases.

We sold the two offshore vessels in 2024.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies;

2 unchanged sentences

Segment information is presented in the same manner that our CODM reviews the operating results in assessing performance and allocating resources.

The CODM evaluates performance for each reportable segment primarily based on Adjusted EBITDA.

Historically, the CODM’s assessment of segment performance included asset information.

The CODM evaluates performance for each reportable segment based on net income (loss) attributable to shareholders and is used to monitor budget vs.

actual results.

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.

Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

We believe that net income (loss) attributable to shareholders from continuing operations, as defined by U.S.

GAAP, is the most appropriate earnings measurement with which to reconcile Adjusted EBITDA.

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

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

The following tables set forth certain information, which include all significant expenses reviewed by the CODM, for each reportable segment:

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

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

For the Year Ended December 31, 2024

12 unchanged sentences

Management fees and incentive allocation to affiliate — — 8,449 8,449

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

Depreciation and amortization 201,497 6,630 9,937 218,064

Asset impairment 962 — — 962

Interest expense — — 161,639 161,639

Gain on sale of assets, net — — ( 18,705 ) ( 18,705 )

Total expenses 399,671 709,261 388,142 1,497,074

1 unchanged sentence

Equity in losses of unconsolidated entities ( 207 ) ( 1,993 ) — ( 2,200 )

Interest expense — — ( 221,721 ) ( 221,721 )

Loss on extinguishment of debt — — ( 17,101 ) ( 17,101 )

Other income 14,669 — 2,695 17,364

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

Total other income (expense) 14,462 ( 1,993 ) ( 236,127 ) ( 223,658 )

Income (loss) from continuing operations before income taxes 243,228 368,567 ( 597,626 ) 14,169

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

Provision for (benefit from) income taxes 32,979 22,221 ( 49,713 ) 5,487

Net income (loss) from continuing operations 210,249 346,346 ( 547,913 ) 8,682

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

Dividends on preferred shares — — 32,763 32,763

Loss on redemption of preferred shares — — 7,998 7,998

Net income (loss) attributable to shareholders from continuing operations $ 210,249 $ 346,346 $ ( 588,674 ) $ ( 32,079 )

2 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 from continuing operations:

Year Ended December 31, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

Adjusted EBITDA $ 467,388 $ 160,009 $ ( 30,115 ) $ 597,282

Non-controlling share of Adjusted EBITDA —

Equity in losses of unconsolidated entities ( 1,606 )

Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 310 )

Interest expense and dividends on preferred shares ( 193,434 )

Depreciation and amortization expense ( 213,641 )

Incentive allocations ( 17,116 )

Asset impairment charges ( 2,121 )

Changes in fair value of non-hedge derivative instruments —

Losses on the modification or extinguishment of debt and capital lease obligations —

Acquisition and transaction expenses ( 15,194 )

Equity-based compensation expense ( 1,638 )

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:

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

Year Ended December 31, 2024

6 unchanged sentences

Total revenues (1)

$ 628,437 $ 1,079,821 $ 26,643 $ 1,734,901

______________________________________________________

(1) The United States, included in North America, and Ireland, included in Europe, represent 31 % and 16 % of total revenues, respectively, based on the location of our 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 December 31, 2024:

22 unchanged sentences

Asset impairment 2,121 — — 2,121

Interest expense — — 169,194 169,194

Total expenses 427,353 303,122 100,749 831,224

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 income (expense) 246 — ( 39 ) 207

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

Interest expense — — ( 161,639 ) ( 161,639 )

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

Total other income (expense) 1,152 3,889 ( 160,696 ) ( 155,655 )

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

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

Dividends on preferred shares — — 31,795 31,795

Net income (loss) attributable to shareholders from continuing operations $ 291,603 $ 180,177 $ ( 259,758 ) $ 212,022

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, unless otherwise noted)

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

Year Ended December 31, 2022

Aviation Leasing Aerospace Products Corporate and Other Total

Adjusted EBITDA $ 380,145 $ 74,345 $ ( 26,393 ) $ 428,097

Non-controlling share of Adjusted EBITDA —

Equity in losses of unconsolidated entities ( 369 )

Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 40 )

Interest expense and dividends on preferred shares ( 196,358 )

Depreciation and amortization expense ( 190,031 )

Incentive allocations ( 3,489 )

Asset impairment charges ( 137,219 )

Changes in fair value of non-hedge derivative instruments —

Losses on the modification or extinguishment of debt and capital lease obligations ( 19,859 )

Acquisition and transaction expenses ( 13,207 )

Equity-based compensation expense —

Provision for income taxes ( 5,300 )

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

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

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

Year Ended December 31, 2023

6 unchanged sentences

Total revenues (1)

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

______________________________________________________

(1) The United States, included in North America, represents 47 % of total revenues based on the location of our lessees.

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

FTAI AVIATION LTD.

17 unchanged sentences

Asset impairment 137,219 — — 137,219

Interest expense — — 155,017 155,017

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

Total expenses 444,488 103,786 76,233 624,507

Other income (expense)

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

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

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

Interest expense — — ( 169,194 ) ( 169,194 )

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) 986 ( 1,109 ) ( 189,092 ) ( 189,215 )

2 unchanged sentences

Net income (loss) from continuing operations 56,944 70,659 ( 238,214 ) ( 110,611 )

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

Dividends on preferred shares — — 27,164 27,164

Net income (loss) attributable to shareholders from continuing operations $ 56,944 $ 70,659 $ ( 265,378 ) $ ( 137,775 )

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

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

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

Year Ended December 31, 2022

Aviation Leasing Aerospace Products Corporate and Other Total

Adjusted EBITDA $ 321,446 $ 22,745 $ ( 21,363 ) $ 322,828

Non-controlling share of Adjusted EBITDA —

Equity in losses of unconsolidated entities ( 1,403 )

Pro-rata share of Adjusted EBITDA from unconsolidated entities 1,203

Interest expense and dividends on preferred shares ( 179,775 )

Depreciation and amortization expense ( 175,718 )

Incentive allocations —

Asset impairment charges ( 10,463 )

Changes in fair value of non-hedge derivative instruments —

Losses on the modification or extinguishment of debt and capital lease obligations ( 3,254 )

Acquisition and transaction expenses ( 17,911 )

Equity-based compensation expense —

Provision for income taxes ( 3,126 )

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

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

Year Ended December 31, 2021

Aviation Leasing Aerospace Products Corporate and Other Total

Africa $ 250 $ 1,615 $ — $ 1,865

4 unchanged sentences

Total revenues (1)

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

________________________________________________________

(1) The United States, included in North America, represents 44 % of total revenues based on the location of our lessees.

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

Location of long-lived assets

8 unchanged sentences

Total property, plant and equipment and leasing equipment, net $ 2,481,181 $ 2,077,588

________________________________________________________

(1) The United States, included in North America, and Italy, included in Europe, represent 17 % and 12 % of property, plant and equipment and leasing equipment, net as of December 31, 2024 and 2023, respectively.

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

FTAI AVIATION LTD.

15 unchanged sentences

Dividends on preferred shares 32,763 31,795 27,164

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

Loss on redemption of preferred shares 7,998 — —

Net (loss) income attributable to shareholders $ ( 32,079 ) $ 212,022 $ ( 220,374 )

Weighted Average Ordinary Shares Outstanding - Basic

1 unchanged sentence

Weighted Average Ordinary Shares Outstanding - Diluted 101,538,835 100,425,777 99,421,008

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

Earnings (loss) per share:

(Loss) earnings per share:

Continuing operations $ ( 0.32 ) $ 2.12 $ ( 1.39 )

2 unchanged sentences

Discontinued operations $ — $ — $ ( 0.83 )

________________________________________________________

(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 , 0 and 582,200 shares for the years ended December 31, 2024, 2023 and 2022, respectively, because the impact would be anti-dilutive.

During the year ended December 31, 2023, 26,287 ordinary shares were issued to certain directors as compensation.

Ordinary shares issued to certain directors as compensation were 6,148 , 26,287 and 19,811 for the years ended December 31, 2024, 2023 and 2022, respectively.

Ordinary Shares

In September 2021, 12,000,000 ordinary shares, par value $ 0.01 per share, were issued at a price of $ 25.50 per share for net proceeds of $ 291.7 million after deducting underwriting discounts and offering expenses.

In October 2021, the underwriters exercised an option to purchase an additional 1,283,863 ordinary shares, par value $ 0.01 per share, at a price of $ 25.50 per share.

See Note 10 for information related to options issued to the Manager in connection with such offering.

In May 2024, in connection with the Internalization and termination of the Management Agreement, the Company issued 1,866,949 ordinary shares, par value $ 0.01 per share, at a price of $ 80.34 per share, to its Former Manager.

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.

See Note 10 for information related to options issued to the Manager in connection with these offerings.

In October 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.

FTAI AVIATION LTD.

6 unchanged sentences

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.

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

Pursuant to the Internalization Agreement, the Management Agreement was terminated effective May 28, 2024, except that certain indemnification and other obligations survive, and the Company was no longer required to pay management fees or incentive distributions with respect to any period thereafter.

As a result of the Internalization, the Company ceased to be externally managed and operates as an internally managed company.

In connection with the termination of the Management Agreement, the Company (i) agreed to pay the Former Manager (for itself and on behalf of the Master GP, as applicable) the Cash Consideration, the compensation accrued and payable, but not yet paid, under the Management Agreement and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement;

(ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration;

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 thousand.

RESTRUCTURING CHARGES

In connection with the Internalization and termination of the Management Agreement, the Company agreed to pay a total of $ 300.0 million to its Former Manager (for itself and on behalf of the Master GP, as applicable).

At closing, the Company issued 1,866,949 ordinary shares valued at $ 150.0 million.

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 year ended December 31, 2024.

See Note 13 for additional discussion.

There were no restructuring charges recorded for the years ended December 31, 2023 and 2022.

SUBSEQUENT EVENTS

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 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.

Strategic Capital Initiative

On December 30, 2024, the Company announced the launch of Strategic Capital Initiative, a new investment focused on acquiring 737NG and A320ceo aircraft, allowing the Company to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft.

The initial capital call for this fund was made on December 31, 2024.

As of December 31, 2024, no funds have been transferred under this capital call.

Series B Shares

On January 17, 2025, the Company issued the notice to redeem in full the outstanding 4,940,000 8.00 % Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares at a redemption price equal to $ 25.00 per share in cash, plus $ 2.4 million of accumulated and unpaid distributions thereon to, but not including, the redemption date of February 16, 2025.

On Febru ary 26, 2025, 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, 2024, payable on March 24, 2025 to the holders of record on March 14, 2025.

Additionally, on February 26, 2025, our Board of Directors declared cash dividends on the Series C Preferred Shares and Series D Preferred Shares of $ 0.52 and $ 0.59 per share, respectively, for the quarter ended December 31, 2024, payable on March 17, 2025 to the holders of record on March 10, 2025.

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