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Item 7. Management’s Discussion and Analysis

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 
 The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand FTAI Aviation Ltd. Our MD&A should be read in conjunction with our consolidated financial statements and the accompanying notes, and with Part I, Item 1A, “Risk Factors” and “Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K. 
 A discussion of our cash flows for 2024 compared to 2023 is included in our Annual Report on Form 10-K for the year ended December 31, 2024, under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. 
 Overview 
 We own, lease and sell aviation equipment. We also develop and manufacture through a joint venture, and repair and sell, through our maintenance facilities and exclusivity arrangements, aftermarket components for aircraft engines. We target assets that, on a combined basis, generate strong cash flows with potential for earnings growth and asset appreciation. We believe that there is a large number of acquisition opportunities in our markets and that our expertise and business and financing relationships, together with our access to capital, will allow us to take advantage of these opportunities. As of December 31, 2024, we had total consolidated assets of $4.0 billion and total equity of $81.4 million. 
 Internalization of Management 
 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) 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; (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 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, including the allocated cost of, among other things, overhead, employee wages and compensation, rent and related real estate expenses and actually incurred out-of-pocket expenses, plus a mark-up of ten percent (10%). The Company was required to use commercially reasonable efforts to make available to the Former Manager certain employees of the Company who were previously employees of the Former Manager to provide the Reverse Services, subject to certain exceptions. 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 Company is required to continue to provide the Reverse Services until the later to occur of the dissolution or sale of the entities receiving Reverse Services. 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. 
 Impact of Russia’s Invasion of Ukraine 
 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 aircraft 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 for the year ended December 31, 2022, 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, 2024 , eight aircraft and seventeen engines were still located in Russia. 
 Our lessees are required to provide insurance coverage with respect to leased aircraft and engines, and we are named as insureds under those policies in the event of a total loss of an aircraft or engine. We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where a lessee’s policy fails to indemnify us. The insured value of the aircraft and engines that remain in Russia is $210.7 million. We intend to pursue all of our claims under these policies. However, the timing and amount of any recoveries under these policies are uncertain. 
 The extent of the impact of Russia’s invasion of Ukraine and the related sanctions on our results, including the ability for us to recover our leasing equipment in the region, will depend on future developments, including the duration of the conflict, sanctions and restrictions imposed by Russian and international governments, all of which remain uncertain. 
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 Spin-Off of FTAI Infrastructure Inc. (“FTAI Infrastructure”) 
 On August 1, 2022, Fortress Transportation and Infrastructure Investors LLC (“we”, “us”, “our”, “FTAI” or the “Company” pre-Merger, as defined below, and FTAI Aviation Ltd. post-Merger) effected a spin-off of the Company’s infrastructure business held by FTAI Infrastructure (a wholly-owned subsidiary of the Company) as a distribution of all of the shares owned by the Company of common stock of FTAI Infrastructure to the holders of the Company’s ordinary shares as of July 21, 2022. 
 FTAI Infrastructure is a corporation for U.S. federal income tax purposes and holds, among other things, the Company’s previously held interests in the (i) Jefferson Terminal business, (ii) Repauno business, (iii) Long Ridge investment, and (iv) Transtar business. FTAI Infrastructure retained all related project-level debt of those entities. In connection with the spin-off, FTAI Infrastructure paid a dividend of $730.3 million to the Company. The Company used these proceeds to repay all outstanding borrowings under its 2021 bridge loans, $200.0 million of its 6.50% senior unsecured notes due 2025, and approximately $175.0 million of the outstanding borrowings under its revolving credit facility. FTAI retained the aviation business and certain other assets, and FTAI’s remaining outstanding corporate indebtedness. 
 In connection with the spin-off, the Company and the 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. The Company and certain of its subsidiaries executed a new management agreement with the Former Manager. The new management agreement has an initial term of six years. The Former Manager was entitled to a management fee and reimbursement of certain expenses on substantially similar terms as the previous arrangements with the Former Manager, which were assigned to FTAI Infrastructure. Prior to the Merger described below, our Former 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 Former 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. 
 On November 10, 2022, the Company completed the transactions set forth in the Agreement and Plan of Merger (the “Merger”) between Fortress Transportation and Infrastructure Investors LLC (“FTAI”) and FTAI Aviation Ltd. (“FTAI Aviation”) and certain other parties, with FTAI becoming a subsidiary of the company. As a result of the merger, the FTAI became a Cayman Islands exempted company. Upon merger completion, Fortress Transportation and Infrastructure Investors LLC public common shareholders’ shares of the Company were exchanged automatically for shares of FTAI Aviation Ltd. without any further action from the shareholders. 
 Strategic Capital Initiative 
 On December 30, 2024, the Company announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The first partnership under the initiative (the “2025 Partnership”) will focus on acquiring 737NG and A320ceo aircraft. The Strategic Capital Initiative, and its related partnerships, will allow the Company to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The Company has agreed that the 2025 Partnership, and follow-on partnerships, will be the primary buyer of on-lease 737NG and A320ceo aircraft. The Company will provide aircraft management services to the 2025 Partnership, and the Company will receive customary, market-based compensation for providing such services. The Company has also committed to make a minority investment in the 2025 Partnership. The Company expects to provide aircraft management services to, and make minority investments in, future partnerships. 
 Operating Segments 
 The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aviation Leasing and (ii) Aerospace Products. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to lessees and customers. 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. 
 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 offshore energy related assets, which consist of equipment that support offshore oil and gas activities and production. 
 
 
 
 
 
 
 
 
 
 
 
 
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 Results of Operations 
 
 
 Adjusted EBITDA (Non-GAAP) 
 Besides net income (loss), the chief operating decision maker (“CODM”) utilizes Adjusted EBITDA as a key performance measure. Adjusted EBITDA is not a financial measure in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). This performance measure provides the CODM with the information necessary to assess operational performance and make resource and allocation decisions. We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance. 
 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 preferred shares 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, internalization fee to affiliate, (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, if any. 
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 The following table presents our consolidated results of operations: 
 
 Year Ended December 31, Change 
 (in thousands) 2024 2023 2022 '24 vs '23 '23 vs '22 
 Revenues 
 Lease income $ 255,338 $ 207,936 $ 179,314 $ 47,402 $ 28,622 
 Maintenance revenue 200,809 191,347 148,846 9,462 42,501 
 Asset sales revenue 192,176 303,141 183,535 (110,965) 119,606 
 Aerospace products revenue 1,079,821 454,970 178,515 624,851 276,455 
 Other revenue 6,757 13,502 18,201 (6,745) (4,699) 
 Total revenues 1,734,901 1,170,896 708,411 564,005 462,485 
 
 Expenses 
 Cost of sales 825,884 502,132 248,385 323,752 253,747 
 Operating expenses 115,861 110,163 132,264 5,698 (22,101) 
 General and administrative 14,263 13,700 14,164 563 (464) 
 Acquisition and transaction expenses 32,296 15,194 13,207 17,102 1,987 
 Management fees and incentive allocation to affiliate 8,449 18,037 3,562 (9,588) 14,475 
 Internalization fee to affiliate 300,000 — — 300,000 — 
 Depreciation and amortization 218,064 169,877 152,917 48,187 16,960 
 Asset impairment 962 2,121 137,219 (1,159) (135,098) 
 Gain on sale of assets, net (18,705) — (77,211) (18,705) 77,211 
 Total expenses 1,497,074 831,224 624,507 665,850 206,717 
 
 Other income (expense) 
 Equity in losses of unconsolidated entities (2,200) (1,606) (369) (594) (1,237) 
 Interest expense (221,721) (161,639) (169,194) (60,082) 7,555 
 Loss on extinguishment of debt (17,101) — (19,859) (17,101) 19,859 
 Other income 17,364 7,590 207 9,774 7,383 
 Total other expense (223,658) (155,655) (189,215) (68,003) 33,560 
 Income (loss) from continuing operations before income taxes 14,169 184,017 (105,311) (169,848) 289,328 
 Provision for (benefit from) income taxes 5,487 (59,800) 5,300 65,287 (65,100) 
 Net income (loss) from continuing operations 8,682 243,817 (110,611) (235,135) 354,428 
 Net loss from discontinued operations, net of income taxes — — (101,416) — 101,416 
 Net income (loss) 8,682 243,817 (212,027) (235,135) 455,844 
 Less: Net income (loss) attributable to non-controlling interest in consolidated subsidiaries: 
 
 Discontinued operations — — (18,817) — 18,817 
 Less: Dividends on preferred shares 32,763 31,795 27,164 968 4,631 
 Less: Loss on redemption of preferred shares 7,998 — — 7,998 $ — 
 Net (loss) income attributable to shareholders $ (32,079) $ 212,022 $ (220,374) $ (244,101) $ 432,396 

 
 
 The following table sets forth a reconciliation of net (loss) income attributable to shareholders from continuing operations to Adjusted EBITDA: 
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 Year Ended December 31, Change 
 (in thousands) 2024 2023 2022 '24 vs '23 '23 vs '22 
 Net (loss) income attributable to shareholders from continuing operations $ (32,079) $ 212,022 $ (137,775) $ (244,101) $ 349,797 
 Add: Provision for (benefit from) income taxes 5,487 (59,800) 5,300 65,287 (65,100) 
 Add: Equity-based compensation expense 6,006 1,638 — 4,368 1,638 
 Add: Acquisition and transaction expenses 32,296 15,194 13,207 17,102 1,987 
 Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations 25,099 — 19,859 25,099 (19,859) 
 Add: Changes in fair value of non-hedge derivative instruments — — — — — 
 Add: Asset impairment charges 962 2,121 137,219 (1,159) (135,098) 
 Add: Incentive allocations 7,456 17,116 3,489 (9,660) 13,627 
 Add: Depreciation & amortization expense (1) 
 262,031 213,641 190,031 48,390 23,610 
 Add: Interest expense and dividends on preferred shares 254,484 193,434 196,358 61,050 (2,924) 
 Add: Internalization fee to affiliate 300,000 — — 300,000 — 
 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 
 (1,892) 310 40 (2,202) 270 
 Less: Equity in losses of unconsolidated entities 2,200 1,606 369 594 1,237 
 Less: Non-controlling share of Adjusted EBITDA — — — — — 
 Adjusted EBITDA (non-GAAP) $ 862,050 $ 597,282 $ 428,097 $ 264,768 $ 169,185 

 __________________________________________________ 
 (1) Includes the following items for the years ended December 31, 2024, 2023 and 2022: (i) depreciation and amortization expense of $218,064, $169,877 and $152,917, (ii) lease intangible amortization of $15,597, $15,126 and $13,913 and (iii) amortization for lease incentives of $28,370, $28,638 and $23,201, respectively. 
 (2) Includes the following items for the years ended December 31, 2024, 2023 and 2022: (i) net loss of $2,200, $1,606 and $369, (ii) depreciation and amortization expense of $308, $1,488 and $409 and (iii) acquisition and transaction expense of $0, $428 and $0, respectively. 
 Revenues 
 Presentation of aircraft and engine sales 
 During the third quarter of 2022, we updated our corporate strategy based on the opportunities available in the market such that the sale of aircraft and engines is now an output of our recurring, ordinary activities. As a result of this update, the transaction price allocated to the sale of assets is included in Revenues in the Consolidated Statements of Operations beginning in the third quarter of 2022 and is accounted for in accordance with ASC 606. The sale of CFM56-7B, CFM56-5B and V2500 engines are included in the Aerospace Products Segment and the sale of aircraft and other engines are included in the Aviation Leasing Segment. The corresponding net book values of the assets sold are recorded in Cost of sales in the Consolidated Statements 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 (loss) on sale of assets, net on the Consolidated Statements of Operations, as we were previously only occasionally selling these assets. Generally, assets sold were included in Leasing equipment, net, on the Consolidated Balance Sheets. 
 Comparison of the years ended December 31, 2024 and 2023 
 Total revenue s increased by $564.0 million, dr iven by the following: 
 • Aerospace products revenue increased by $624.9 million, primarily due to a $546.0 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $28.5 million increase in parts inventory sales, and other revenues of $47.7 million from the QuickTurn and LMCES acquisitions. 
 • Lease income increased by $47.4 million, primarily due to an increase in engine lease revenue of $37.3 million and an increase in aircraft lease revenue of $17.5 million, driven by an increased number of aircraft and engines on lease. This was partially offset by a decrease of $7.3 million in the Offshore Energy business driven by one of our vessels having fewer days on-hire in 2024 compared to 2023, as well as the sale of the two vessels during 2024. 
 • Maintenance revenue increased by $9.5 million. Engine maintenance revenue increased by $43.2 million, driven by an increased number of engines on lease in 2024 as compared to 2023. This increase was partially offset by a decrease in aircraft maintenance revenue of $32.7 million, primarily due to $20.1 million of higher maintenance reserves taken into revenue in 2023, partially offset by an increased number of aircraft on lease in 2024. 
 • Asset sales revenue decreased by $111.0 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, three aircraft and 14 engines were sold in 2024 as compared to 13 aircraft and 41 engines sold in 2023. 
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 • Other revenue decreased by $6.7 million, primarily due to a decrease in assets with end-of-lease redelivery compensation. During 2024, one aircraft and three engines had end-of-lease redelivery compensation, as compared to eight aircraft and four engines in 2023. 
 Expenses 
 Total expenses increased $665.9 million, driven by the following: 
 • Cost of sales increased by $323.8 million, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period. This was partially offset by a decrease of $69.9 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue. 
 • Internalization fee to affiliate increased by $300.0 million relating to the Internalization effective May 28, 2024. 
 • Depreciation and amortization increased by $48.2 million, primarily driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered. 
 • Acquisition and transaction expenses increased by $17.1 million, primarily due to higher professional fees incurred in evaluating and completing strategic transactions and fees associated with the Internalization and the acquisition of LMCES in Q3 2024. 
 • Operating expenses increased by $5.7 million, primarily due to the acquisition of LMCES in Q3 2024. 
 • Gain on sale of assets, net increased $18.7 million driven by the sale of two vessels within the Offshore Energy business during the fourth quarter of 2024. 
 • Management fees and incentive allocation to affiliate decreased by $9.6 million, due to a decrease in management and incentive fees to the Former Manager during 2024, with the Internalization effective May 28, 2024. 
 Other income (expense) 
 Total other expense increased by $68.0 million due to the following: 
 • Interest expense increased by $60.1 million, reflecting an increase in the average debt outstanding of approximately $779.3 million, primarily due to increases in (i) the Senior Notes due 2030 of $414.1 million, issued in November 2023 (ii) Senior Notes due 2031 of $525.0 million, issued in April 2024 (iii) Senior Notes due 2032 of $466.7 million, issued in June 2024, (iv) Senior Notes due 2033 of $124.4 million, issued in October 2024, partially offset by decreases in the (v) Senior Notes due 2025 of $489.6 million, which were redeemed in April 2024, (vi) Senior Notes due 2027 of $189.8 million, which were fully redeemed in October 2024, and the (vii) Revolving Credit Facility of $70.4 million. 
 • Loss on extinguishment of debt increased by $17.1 million, primarily due to the redemption of the Senior Notes due 2025 and Senior Notes due 2027. 
 • Other income increased by $9.8 million, primarily driven by a $10.8 million insurance settlement received within our Aviation Leasing Segment. 
 Provision for (benefit from) income taxes 
 
 
 The Provision for income taxes increased $65.3 million, primarily due to the benefit from income taxes recorded in 2023 in connection with a tax law change in Bermuda as well as the increase in income from leasing and Aerospace Products activities in jurisdictions subject to taxes. As the company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes. This increase was partially offset by the tax benefit from the Internalization fee paid to the affiliate. 
 Net income (loss) from continuing operations 
 Net income from continuing operation s decreased by $235.1 million, primarily due to the changes noted above. 
 Adjusted EBITDA (Non-GAAP) 
 Adjusted EBITD A increased by $264.8 million, primarily due to the changes noted above. 
 
 
 Comparison of the years ended December 31, 2023 and 2022 
 Total revenues increased by $462.5 million, driven by the following: 
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 • Aerospace products revenue increased by $276.5 million, primarily due to a $213.0 million increase in CFM56-7B, CFM56-5B and V2500 engines and module sales, a $44.7 million increase in parts inventory sales, $16.7 million increase due to engine management contracts, and other sales revenue of $2.0 million from the QuickTurn acquisition. See above discussion regarding presentation of asset sales. 
 • Asset sales revenue increased by $119.6 million, primarily due to an overall increase in the number of material sales transactions of commercial aircraft and engines. Specifically, 13 aircraft and 41 engines were sold in 2023 as compared to eight aircraft and 71 engines sold in 2022. See above discussion regarding presentation of asset sales. 
 • Maintenance revenue increased $42.5 million. Engine maintenance revenue increased by $26.5 million, driven by an increased number of engines on lease in 2023 as compared to 2022. Aircraft maintenance revenue increased $16.0 million primarily due to $20.1 million of maintenance reserves taken into revenue due to the early redelivery of five aircraft, partially offset by less aircraft on lease. 
 • Lease income increased by $28.6 million, primarily due to an increase in engine lease revenue of $19.7 million, driven by an increased number of engines on lease, partially offset by an increase in the number of engines redelivered. An increase of $7.4 million in the Offshore Energy business due to one of our vessel being on-hire longer in 2023 compared to 2022, and with a charterer at higher rates. 
 • Other revenue decreased by $4.7 million, primarily due to a decreas e in assets with end-of-lease redelivery compensation. During 2023, eight aircraft and four engines had end-of-lease redelivery compensation, as compared to 18 aircraft and one engine in 2022. 
 Expenses 
 Total expense s increased by $206.7 million, driven by the following: 
 • Cost of sales increased by $253.7 million, primarily due to an increase of $170.8 million in our Aerospace Products segment, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period. An increase of $82.9 million in the Aviation Leasing segment primarily due to an overall increase in the number of material sales transactions of commercial aircraft and engines, as well as the gross presentation of asset sales revenues and related costs of sales as described above. 
 • Gain on sale of assets, net decreased by $77.2 million, primarily due to the change in presentation of asset sales recorded during 2022. See above discussion regarding presentation of asset sales and impact on Gain on sale of assets, net. 
 • Depreciation and amortization increased by $17.0 million, primarily driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool. 
 • Management fees and incentive allocation to affiliate increased by $14.5 million, primarily due to a $13.6 million increase in incentive fee due to the Former Manager driven by an increase in net income. 
 • Asset impairment decreased by $135.1 million, primarily due to the 2022 write down of aircraft and engines located in Russia and Ukraine that were deemed not recoverable. See Note 6 to the consolidated financial statements for additional information. 
 • Operating expenses decreased by $22.1 million, primarily due to the following: 
 • a decrease of $43.4 million in the Aviation Leasing segment primarily as a result of a $41.4 million decrease in provision for credit losses as a result of the sanctions imposed on Russian airlines in 2022, a $2.5 million decrease in shipping and storage fees and repairs and maintenance expenses, partially offset by a $1.2 million increase in insurance expense. 
 • an increase of $12.8 million in the Offshore Energy business which reflects increases in offshore crew expenses of $2.1 million, project costs of $3.9 million and other operating expenses of $1.3 million for one of our vessels driven by increased cost of operations based on the operating location of the vessel, as well as increased number of days on-hire. Additionally, repairs and maintenance expense increased $0.6 million due to repairs on one of our vessels. 
 • an increase of $8.5 million in the Aerospace Products segment primarily due to a $7.2 million increase in commission expenses due to the increase in sales from the used material program as well as $1.2 million increase in shipping and storage fees as operations continued to ramp-up in 2023. 
 Other income (expense) 
 Total other expense decreased by $33.6 million, due to the following: 
 • Loss on extinguishment of debt of $19.9 million was recognized during 2022. This loss was related to the pay-down of the 2021 Bridge Loan, issued in December 2021 and February 2022, and the partial redemption of Senior Notes due 2025. 
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 • Interest expense decreased $7.6 million, which reflects a decrease in the average outstanding debt of approximately $183.8 million primarily due to decreases in (i) the 2021 Bridge Loans of $178.3 million and (ii) the Senior Notes due 2025 of $116.7 million, which were partially redeemed in August 2022, partially offset by increases in (iii) the Revolving Credit Facility of $28.7 million and (iv) the Senior Notes due 2030 of $82.8 million, which were issued in November 2023. 
 • Other income increased $7.4 million primarily driven by a $5.3 million gain on consolidation of investment in connection with the QuickTurn acquisition within our Aerospace Products Segment and $1.0 million of interest income from the Company’s investments in money market funds. 
 Provision for (benefit from) income taxes 
 The benefit from income taxes increased $65.1 million primarily due to the Company establishing a deferred tax asset of $72.2 million in connection with a tax law change in Bermuda, which was recorded as a benefit from income taxes during the fourth quarter of 2023. See Note 12 to the consolidated financial statements for additional information. The benefit was offset by a $7.1 million increase from income taxes primarily attributable to an increase in income generated from operating activities in jurisdictions subject to taxes. As the Company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes. 
 Net income (loss) from continuing operations 
 Net income from continuing operations increased by $354.4 million, primarily due to the changes noted above. 
 Net loss from discontinued operations 
 Net loss from discontinued operations decreased by $101.4 million for the year ended December 31, 2023, compared to the prior year as these businesses have spun off and there is no corresponding activity in the current period. 
 Adjusted EBITDA (Non-GAAP) 
 Adjusted EBITDA increased by $169.2 million, primarily due to the changes noted above. 
 
 Aviation Leasing Segment 
 As of December 31, 2024, in our Aviation Leasing segment, we own and manage 421 aviation assets, consisting of 109 commercial aircraft and 312 engines, including eight aircraft and seventeen engines that were still located in Russia. 
 As of December 31, 2024, 94 of our commercial aircraft and 181 of our engines were leased to operators or other third parties. Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease. Our aviation equipment was approximately 76% utilized during the three months ended December 31, 2024, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes. Our aircraft currently have a weighted average remaining lease term of 47 months, and our engines currently on-lease have an average remaining lease term of 22 months. The table below provides additional information on the assets in our Aviation Leasing segment, including transfers which involve aircraft breakdowns, engine transfers from leasing equipment to inventory for manufacturing and sales, and engine transfers from inventory to leasing equipment for rebuilding and sales: 
 
 Aviation Assets Widebody Narrowbody Total 
 Aircraft 
 Assets at January 1, 2024 5 91 96 
 Purchases — 50 50 
 Sales — (3) (3) 
 Transfers — (34) (34) 
 Assets at December 31, 2024 5 104 109 
 
 Engines 
 Assets at January 1, 2024 32 235 267 
 Purchases 4 134 138 
 Sales (13) (1) (14) 
 Transfers — (79) (79) 
 Assets at December 31, 2024 23 289 312 

 
 
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 The following table presents our results of operations for our Aviation Leasing segment: 
 
 
 
 Year Ended December 31, Change 
 (in thousands) 2024 2023 2022 '24 vs '23 '23 vs '22 
 Revenues 
 Lease income $ 234,411 $ 179,704 $ 159,068 $ 54,707 $ 20,636 
 Maintenance revenue 200,809 191,347 148,846 9,462 42,501 
 Asset sales revenue 192,176 303,141 183,535 (110,965) 119,606 
 Other revenue 1,041 7,419 11,499 (6,378) (4,080) 
 Total revenues 628,437 681,611 502,948 (53,174) 178,663 
 
 Expenses 
 Cost of sales 151,977 221,852 138,904 (69,875) 82,948 
 Operating expenses 35,495 37,876 81,232 (2,381) (43,356) 
 Acquisition and transaction expenses 9,740 7,150 1,923 2,590 5,227 
 Depreciation and amortization 201,497 158,354 144,258 43,143 14,096 
 Asset impairment 962 2,121 137,219 (1,159) (135,098) 
 Gain on sale of assets, net — — (59,048) — 59,048 
 Total expenses 399,671 427,353 444,488 (27,682) (17,135) 
 
 Other income (expense) 
 Equity in (losses) earnings of unconsolidated entities (207) (148) 740 (59) (888) 
 Other income 14,669 1,300 246 13,369 1,054 
 Total other income 14,462 1,152 986 13,310 166 
 Income before income taxes 243,228 255,410 59,446 (12,182) 195,964 
 Provision for (benefit from) income taxes 32,979 (36,193) 2,502 69,172 (38,695) 
 
 
 Net income attributable to shareholders $ 210,249 $ 291,603 $ 56,944 $ (81,354) $ 234,659 

 
 
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 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: 
 
 
 
 Year Ended December 31, Change 
 (in thousands) 2024 2023 2022 '24 vs '23 '23 vs '22 
 Net income attributable to shareholders $ 210,249 $ 291,603 $ 56,944 $ (81,354) $ 234,659 
 Add: Provision for (benefit from) income taxes 32,979 (36,193) 2,502 69,172 (38,695) 
 Add: Equity-based compensation expense 584 337 — 247 337 
 Add: Acquisition and transaction expenses 9,740 7,150 1,923 2,590 5,227 
 Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — — — — — 
 Add: Changes in fair value of non-hedge derivative instruments — — — — — 
 Add: Asset impairment charges 962 2,121 137,219 (1,159) (135,098) 
 Add: Incentive allocations — — — — — 
 Add: Depreciation and amortization expense (1) 
 245,464 202,118 181,372 43,346 20,746 
 Add: Interest expense and dividends on preferred shares — — — — — 
 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 
 (123) 104 925 (227) (821) 
 Less: Equity in losses (earnings) of unconsolidated entities 207 148 (740) 59 888 
 Less: Non-controlling share of Adjusted EBITDA — — — — — 
 Adjusted EBITDA (non-GAAP) $ 500,062 $ 467,388 $ 380,145 $ 32,674 $ 87,243 

 __________________________________________________ 
 (1) Includes the following items for the years ended December 31, 2024, 2023 and 2022: (i) depreciation expense of $201,497, $158,354 and $144,258, (ii) lease intangible amortization of $15,597, $15,126 and $13,913 and (iii) amortization for lease incentives of $28,370, $28,638 and $23,201, respectively. 
 (2) Includes the following items for the years ended December 31, 2024, 2023 and 2022: (i) net (loss) income of $(207), $(148) and $740 and (ii) depreciation and amortization of $84, $252 and $185, respectively. 
 
 
 Comparison of the years ended December 31, 2024 and 2023 
 Revenues 
 Total revenues decreased by $53.2 million, driven by the following: 
 • Asset sales revenue decreased by $111.0 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, three aircraft and 14 engines were sold in 2024 as compared to 13 aircraft and 41 engines sold in 2023. 
 • Other revenue decreased by $6.4 million, primarily due to a decrease in end-of-lease redelivery compensation. During 2024, one aircraft and three engines had end-of-lease redelivery compensation, as compared to eight aircraft and four engines in 2023. 
 • Lease income increased by $54.7 million, due to an increase in engine lease revenue of $37.3 million and an increase in aircraft lease revenue of $17.5 million, driven by an increased number of engines and aircraft on lease. 
 • Maintenance revenue increased by $9.5 million. Engine maintenance revenue increased by $43.2 million, driven by an increased number of engines on lease in 2024 as compared to 2023. This increase was partially offset by a decrease in aircraft maintenance revenue of $32.7 million, primarily due to $20.1 million of higher maintenance reserves taken into revenue in 2023, partially offset by an increased number of aircraft on lease in 2024 . 
 Expenses 
 Total expenses decreased by $27.7 million, driven by the following: 
 39 

 
 

 • Cost of sales decreased by $69.9 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines and is in line with an overall decrease in the corresponding asset sales revenue. Specifically, three aircraft and 14 engines were sold in 2024 compared to 13 aircraft and 41 engines sold in 2023. 
 • Operating expenses decreased by $2.4 million, primarily driven by a decrease in bad debt expense of $5.9 million, partially offset by increases in legal fees of $2.7 million and repairs and maintenance expense of $1.0 million. 
 • Depreciation and amortization expense increased by $43.1 million, driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool. 
 • Acquisition and transaction expen ses increased by $2.6 million, primarily due to higher legal fees incurred in evaluating and completing strategic transactions. 
 Other income (expense) 
 Total other incom e increased by $13.3 million primarily driven by a $10.8 million insurance settlement as well as a $3.9 million increase in interest income earned on financing receivables during 2024. 
 Provision for (benefit from) income taxes 
 The Provisio n for income taxes increased by $69.2 million, primarily due to the benefit from income taxes recorded in 2023 in connection with a tax law change in Bermuda as well as the increase in income from leasing activities in jurisdictions subject to taxes. As the company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes. 
 Net income 
 Net income decreased by $81.4 million, primarily due to the changes noted above. 
 Adjusted EBITDA (Non-GAAP) 
 Adjusted EBITDA increased by $32.7 million, primarily due to the changes noted above. 
 Comparison of the years ended December 31, 2023 and 2022 
 Revenues 
 Total revenues increased by $178.7 million, driven by the following: 
 • Asset sales revenue increas ed by $119.6 million, primarily d ue to an increase in the number of material sales transactions of commercial aircraft and engines. Specifically, 13 aircraft and 41 engines were sold in 2023 as compared to eight aircraft and 71 engines sold in 2022. See above discussion regarding presentation of asset sales. 
 • Maintenance revenue increased by $42.5 million. Engine maintenance revenue increased by $26.5 million, driven by an increased number of engines on lease in 2023 as compared to 2022. Aircraft maintenance revenue increased $16.0 million, primarily due to $20.1 million of higher maintenance reserves taken into revenue due to the early redelivery of five aircraft, partially offset by less aircraft on lease. 
 • Lease income increased by $20.6 million, primarily due to an increase in engine lease revenue of $19.7 million, driven by an increased number of engines on lease, partially offset by an increase in the number of engines redelivered. 
 • Other revenue decreased $4.1 million primarily due to a decrease in end-of-lease redelivery compensation. During 2023, eight aircraft and four engines had end-of-lease redelivery compensation, as compared to 18 aircraft and one engine in 2022. 
 Expenses 
 Total expenses decreased by $17.1 million, driven by the following: 
 • Asset impairment decreased by $135.1 million, primarily due to the 2022 write down of aircraft and engines located in Russia and Ukraine that were deemed not recoverable. See Note 6 to the consolidated financial statements for additional information. 
 • Operating expenses decreased by $43.4 million, primarily driven by the $41.4 million decrease in provision for credit losses as a result of the sanctions imposed on Russian airlines in 2022, a $2.5 million decrease in shipping and storage fees and repairs and maintenance expenses, partially offset by a $1.2 million increase in insurance expense. 
 • Cost of sales increased by $82.9 million, primarily due to an overall increase in the number of material sales transactions of commercial aircraft and engines, as well as the gross presentation of asset sales revenues and related costs of sales as described above. Specifically, 13 aircraft and 41 engines were sold in 2023 as compared to eight aircraft and 71 engines sold in 2022. 
 • Gain on sale of assets, net decreased by $59.0 million, due to the change in presentation of asset sales recorded during 2022. See above discussion regarding presentation of asset sales and impact on Gain on sale of assets, net. 
 40 

 
 

 • Depreciation and amortization expense increased by $14.1 million, driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool. 
 • Acquisition and transaction expense increased by $5.2 million, driven by higher costs associated with the acquisition of aviation leasing equipment. 
 Provision for (benefit from) income taxes 
 The benefit from income taxes increased $38.7 million primarily due to the Company establishing a deferred tax asset of $46.6 million in connection with a tax law change in Bermuda , which was recorded as a benefit from income taxes during the fourth quarter of 2023. See Note 12 to the consoli dated financial statements for additional information. The benefit was offset by a $7.9 million increase from income taxes primarily attributable to an increase in income generated from leasing activities in jurisdictions subject to taxes. As the Company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes. 
 Adjusted EBITDA (Non-GAAP) 
 Adjusted EBITDA increased by $87.2 million, primarily due to the changes noted above. 
 
 
 
 Aerospace Products Segment 
 The Aerospace Products segment, through our maintenance facilities, equity method investment and exclusivity arrangements, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines . Our engine, module and parts sales are facilitated through a dedicated commercial maintenance program, designed to focus on modular and parts repair and refurbishment of CFM56-7B, CFM56-5B and V2500 engines. In September 2024, we acquired LMCES to further enhance this business and establish permanent engine and module manufacturing capabilities. Refer to Note 4 “Acquisition of Lockheed Martin Commercial Engine Solutions”, for additional information. In addition, other serviceable used modules and parts are sold through our ex clusive partnership, who is responsible for the teardown, repair, marketing and sales of parts from our CFM56 engine pool. In December 2023, we acquired the remaining interest in Quick Turn Engine Center LLC or “QuickTurn” (previously iAero Thrust LLC), a hospital maintenance and testing facility dedicated to the CFM56 engine. Refer to Note 5 “Acquisition of QuickTurn”, for additional information. We also hold a 25% interest in the Advanced Engine Repair JV which focuses on developing new cost savings programs for engine repairs. 
 The following table presents our results of operations: 
 
 Year Ended December 31, Change 
 (in thousands) 2024 2023 2022 '24 vs '23 '23 vs '22 
 Aerospace products revenue $ 1,079,821 $ 454,970 $ 178,515 $ 624,851 $ 276,455 
 
 Expenses 
 Cost of sales 673,907 280,280 109,481 393,627 170,799 
 Operating expenses 23,818 20,459 11,967 3,359 8,492 
 Acquisition and transaction expenses 4,906 1,722 243 3,184 1,479 
 Depreciation and amortization 6,630 661 258 5,969 403 
 
 Gain on sale of assets, net — — (18,163) — 18,163 
 Total expenses 709,261 303,122 103,786 406,139 199,336 
 
 Other income (expense) 
 Equity in losses of unconsolidated entities (1,993) (1,458) (1,109) (535) (349) 
 Other income — 5,347 — (5,347) 5,347 
 Total other (expense) income (1,993) 3,889 (1,109) (5,882) 4,998 
 Income before income taxes 368,567 155,737 73,620 212,830 82,117 
 Provision for (benefit from) income taxes 22,221 (24,440) 2,961 46,661 (27,401) 
 
 
 Net income attributable to shareholders $ 346,346 $ 180,177 $ 70,659 $ 166,169 $ 109,518 

 
 
 41 

 
 

 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: 
 
 Year Ended December 31, Change 
 (in thousands) 2024 2023 2022 '24 vs '23 '23 vs '22 
 Net income attributable to shareholders $ 346,346 $ 180,177 $ 70,659 $ 166,169 $ 109,518 
 Add: Provision for (benefit from) income taxes 22,221 (24,440) 2,961 46,661 (27,401) 
 Add: Equity-based compensation expense 309 225 — 84 225 
 Add: Acquisition and transaction expenses 4,906 1,722 243 3,184 1,479 
 Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — — — — — 
 Add: Changes in fair value of non-hedge derivative instruments — — — — — 
 Add: Asset impairment charges — — — — — 
 Add: Incentive allocations — — — — — 
 Add: Depreciation and amortization expense 6,630 661 258 5,969 403 
 Add: Interest expense and dividends on preferred shares — — — — — 
 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) 
 (1,769) 206 (885) (1,975) 1,091 
 Less: Equity in losses of unconsolidated entities 1,993 1,458 1,109 535 349 
 Less: Non-controlling share of Adjusted EBITDA 
 — — — — — 
 Adjusted EBITDA (non-GAAP) $ 380,636 $ 160,009 $ 74,345 $ 220,627 $ 85,664 

 __________________________________________________ 
 (1) Includes the following items for the years ended December 31, 2024, 2023 and 2022: (i) net loss of $ 1,993 , $1,458 and $1,109 (ii) depreciation and amortization of $224 , $1,236 and $224 and (iii) acquisition and transaction expense of $0, $428, $0, respectively. 
 
 
 Comparison of the years ended December 31, 2024 and 2023 
 Revenues 
 Total Aerospace products revenue increased by $624.9 million, primarily due to a $546.0 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $28.5 million increase in parts inventory sales, and other revenues of $47.7 million from the QuickTurn and LMCES acquisitions. 
 Expenses 
 Total expenses increased by $406.1 million, due to the following: 
 • Cost of sales increased by $393.6 million, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period. 
 • Depreciation and amortization increased by $6.0 million due to the acquisitions of LMCES in Q3 2024 and QuickTurn in Q4 2023. 
 • Operating expenses increased by $3.4 million, primarily due to the acquisition of LMCES in Q3 2024. 
 • Acquisition and transaction expenses increased by $3.2 million, primarily driven by higher professional fees incurred in evaluating and completing strategic transactions. 
 Provision for (benefit from) income taxes 
 The Provision for income taxes increased by $46.7 million, primarily due to the benefit from income taxes recorded in 2023 in connection with a tax law change in Bermuda as well as the increase in income from Aerospace Products activities in jurisdictions subject to taxes. As the company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes. 
 Net income 
 Net income increased by $166.2 million, primarily due to the changes noted above. 
 Adjusted EBITDA (Non-GAAP) 
 Adjusted EBITDA increased by $220.6 million, primarily due to the changes noted above. 
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 Comparison of the years ended December 31, 2023 and 2022 
 Revenues 
 Total Aerospace products revenue increased by $276.5 million, primarily due to a $213.0 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $44.7 million increase in parts inventory sales, $16.7 million increase in revenue from engine management contracts, and other revenues of $2.0 million from the QuickTurn acquisition. See above discussion regarding presentation of asset sales. 
 Expenses 
 Total expenses increased by $199.3 million, primarily due to the following: 
 • Cost of sales increased by $170.8 million, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period and the gross presentation described above. 
 • Gain on sale of assets, net decreased by $18.2 million, primarily due to t he change in presentation of asset sales recorded during 2022. See above discussion regarding presentation of asset sales and impact on Gain on sale of assets, net. 
 • Operating expenses increased by $8.5 million, primarily due to a $7.2 million increase in commission expenses due to the increase in sales from the used material program as well as a $1.2 million increase in shipping and storage fees as operations continued to ramp-up in 2023. 
 Other income (expense) 
 Total other income increased $5.0 million, which primarily reflects an increase of $5.3 million in gain on consolidation of investment in connection with the QuickTurn acquisition, offset by an increase of $0.3 million in our proportionate share of unconsolidated entities’ net loss. 
 Provision for (benefit from) income taxes 
 The benefit from income taxes increase d $27.4 million primarily due to the Company establishing a deferred tax asset of $25.6 million in connection with a tax law change in Bermuda, which was recorded as a benefit from income taxes during the fourth quarter of 2023. See Note 12 to the consolidated financial statements for additional information. 
 Net income 
 Net income increased by $109.5 million, primarily due to the changes noted above. 
 Adjusted EBITDA (Non-GAAP) 
 Adjusted EBITDA increased by $85.7 million, primarily due to the changes noted above. 
 
 
 43 

 
 
 

 Corporate and Other 
 The following table presents our results of operations: 
 
 Year Ended December 31, Change 
 (in thousands) 2024 2023 2022 '24 vs '23 '23 vs '22 
 Revenues 
 Lease income $ 20,927 $ 28,232 $ 20,246 $ (7,305) $ 7,986 
 Other revenue 5,716 6,083 6,702 (367) (619) 
 Total revenues 26,643 34,315 26,948 (7,672) 7,367 
 
 Expenses 
 Operating expenses 56,548 51,828 39,065 4,720 12,763 
 General and administrative 14,263 13,700 14,164 563 (464) 
 Acquisition and transaction expenses 17,650 6,322 11,041 11,328 (4,719) 
 Management fees and incentive allocation to affiliate 8,449 18,037 3,562 (9,588) 14,475 
 Internalization fee to affiliate 300,000 — — 300,000 — 
 Depreciation and amortization 9,937 10,862 8,401 (925) 2,461 
 Gain on sale of assets, net (18,705) — — (18,705) — 
 Total expenses 388,142 100,749 76,233 287,393 24,516 
 
 Other income (expense) 
 Loss on extinguishment of debt (17,101) — (19,859) (17,101) 19,859 
 Interest expense (221,721) (161,639) (169,194) (60,082) 7,555 
 Other income (expense) 2,695 943 (39) 1,752 982 
 Total other expense (236,127) (160,696) (189,092) (75,431) 28,396 
 Loss before income taxes (597,626) (227,130) (238,377) (370,496) 11,247 
 (Benefit from) provision for income taxes (49,713) 833 (163) (50,546) 996 
 Net loss (547,913) (227,963) (238,214) (319,950) 10,251 
 
 Less: Dividends on preferred shares 32,763 31,795 27,164 968 4,631 
 Less: Loss on redemption of preferred shares 7,998 — — 7,998 — 
 Net loss attributable to shareholders from continuing operations $ (588,674) $ (259,758) $ (265,378) $ (327,948) $ 5,620 

 
 
 44 

 
 

 The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA: 
 
 Year Ended December 31, Change 
 (in thousands) 2024 2023 2022 '24 vs '23 '23 vs '22 
 Net loss attributable to shareholders from continuing operations $ (588,674) $ (259,758) $ (265,378) $ (328,916) $ 5,620 
 Add: (Benefit from) provision for income taxes (49,713) 833 (163) (50,546) 996 
 Add: Equity-based compensation expense 5,113 1,076 — 4,037 1,076 
 Add: Acquisition and transaction expenses 17,650 6,322 11,041 11,328 (4,719) 
 Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations 25,099 — 19,859 25,099 (19,859) 
 Add: Changes in fair value of non-hedge derivative instruments — — — — — 
 Add: Asset impairment charges — — — — — 
 Add: Incentive allocations 7,456 17,116 3,489 (9,660) 13,627 
 Add: Depreciation and amortization expense 9,937 10,862 8,401 (925) 2,461 
 Add: Interest expense and dividends on preferred shares 254,484 193,434 196,358 61,050 (2,924) 
 Add: Internalization fee to affiliate 300,000 — — 300,000 — 
 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — 
 Less: Equity in (earnings) losses of unconsolidated entities — — — — — 
 Less: Non-controlling share of Adjusted EBITDA — — — — — 
 Adjusted EBITDA (non-GAAP) $ (18,648) $ (30,115) $ (26,393) $ 11,467 $ (3,722) 

 Comparison of the years ended December 31, 2024 and 2023 
 Revenues 
 Total revenues decreased by $7.7 million, primarily due to a $7.3 million decrease in the Lease income. Lease income declined primarily due to one of our vessels in the Offshore Energy business having fewer days on-hire in 2024 compared to 2023, as well as the sale of the two vessels during 2024. 
 Expenses 
 Total expenses increased by $287.4 million, due to the following: 
 • Internalization fee to affiliate increased by $300.0 million for the Internalization effective May 28, 2024. 
 • Acquisition and transaction expenses increased by $11.3 million, primarily due to higher legal and other professional fees incurred for the Internalization on May 28, 2024 and the acquisition of LMCES on September 9, 2024. 
 • Gain on sale of assets, net, increased $18.7 million due to the sale of the two vessels within the Offshore Energy business. 
 • Management fees and incentive allocation to affiliate decreased by $9.6 million, due to a decrease in management and incentive fees to the Former Manager during 2024, with the Internalization effective May 28, 2024, as compared to fees paid during the year ended 2024 compared to 2023. 
 Other income (expense) 
 Total other expense increased by $75.4 million, due to the following: 
 • Interest expense increased by $60.1 million, reflecting an increase in the average debt outstanding of approximately $779.3 million, primarily due to increases in (i) the Senior Notes due 2030 of $414.1 million, issued in November 2023 (ii) Senior Notes due 2031 of $525.0 million, issued in April 2024 (iii) Senior Notes due 2032 of $466.7 million, issued in June 2024, (iv) Senior Notes due 2033 of $124.4 million, issued in October 2024, partially offset by decreases in the (v) Senior Notes due 2025 of $489.6 million, which were redeemed in April 2024, (vi) Senior Notes due 2027 of $189.8 million, which were fully redeemed in October 2024, and the (vii) Revolving Credit Facility of $70.4 million. 
 • Loss on extinguishment of debt increased by $17.1 million, driven by the redemption of Senior Notes due 2025 and a redemption of Senior Notes due 2027. 
 • Other income increased by $1.8 million, driven by interest income generated from the Company’s investments in money market funds. 
 45 

 
 

 (Benefit from) provision for income taxes 
 The benefit from income taxes increased by $50.5 million. This increase was primarily attributable to a substantial tax benefit arising from the Internalization fee paid to the affiliate. The fee provided a favorable impact on the company's overall tax position. 
 Net loss 
 Net loss increased by $320.0 million, primarily due to the changes noted above. 
 Adjusted EBITDA (Non-GAAP) 
 Adjusted EBIT DA increased by $11.5 million, primarily due to the changes noted above. 
 Comparison of the years ended December 31, 2023 and 2022 
 Revenues 
 Total revenues increased by $7.4 million, primarily due to an increase in the Offshore Energy business, as one of our vessels was on-hire longer in 2023 compared to 2022, and with a charterer at higher rates. 
 Expenses 
 Total expenses increased by $24.5 million, due to the following: 
 • Management fees and incentive allocation to affiliate increased by $14.5 million, primarily due to a $13.6 million increase in incentive fee due to the Former Manager driven by an increase in net income. 
 • Operating expenses increased by $12.8 million, primarily due to increases in the Offshore Energy business, driven by increases in offshore crew expenses of $2.1 million, project costs of $3.9 million and other operating expenses of $1.3 million for one of our vessels. The increase in the other operating expenses were driven by the operational location of the vessel, as well as the increased number of days on-hire. Additionally, repairs and maintenance expense increased $0.6 million due to repairs on one of our vessels. 
 • Depreciation and amortization increased by $2.5 million , primarily due to new assets being placed into service in the Offshore Energy business. 
 • Acquisition and transaction expenses decreased $4.7 million, primarily due to lower professional fees related to strategic transactions. 
 Other income (expense) 
 Total other expense decreased by $28.4 million, due to the following: 
 • Loss on extinguishment of debt decreased by $19.9 million driven by the 2022 pay-down of the 2021 Bridge Loans and the partial redemption of the Senior Notes due 2025. 
 • Interest expense decreased $7.6 million, which reflects a decrease in the average outstanding debt of approximately $183.8 million primarily due to decreases in (i) the 2021 Bridge Loans of $178.3 million and (ii) the Senior Notes due 2025 of $116.7 million, which were partially redeemed in August 2022, partially offset by increases in (iii) the Revolving Credit Facility of $28.7 million and (iv) the Senior Notes due 2030 of $82.8 million, which were issued in November 2023. 
 Net loss 
 Net loss decreased by $10.3 million, primarily due to the changes noted above. 
 Adjusted EBITDA (Non-GAAP) 
 Adjusted EBITDA decreased $3.7 million, primarily due to the changes noted above. 
 
 
 46 

 
 
 

 Transactions with Affiliates and Affiliated Entities 
 Prior to May 28, 2024, FTAI Aviation Ltd. operated under the Management Agreement with the Former Manager, and the Master GP, each an affiliate of 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 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. 
 Potential conflicts of interest may arise with respect to our decisions regarding how to allocate investment opportunities between us and partnerships in our Strategic Capital Initiative. Allocating investment opportunities appropriately frequently involves significant and subjective judgments. Investors in our Strategic Capital Initiative and our shareholders may perceive conflicts of interest regarding such investment decisions, which could harm our reputation with such investors and our shareholders. See “Risks Related to Our Business-Our Strategic Capital Initiative involves certain risks which could adversely affect our business, prospects, financial condition, results of operations and cash flows.” 
 Geographic Information 
 Please refer to Note 14 of our consolidated financial statements included in Item 8 in this Annual Report on Form 10-K for a report, by geographic area for each segment, of revenues from our external customers and lessees, for the years ended December 31, 2024, 2023 and 2022, as well as a report of our total property, plant and equipment as of December 31, 2024 and 2023. 
 
 Liquidity and Capital Resources 
 On October 9, 2024, we issued $500.0 million aggregate principal amount of senior unsecured notes due 2033. Using a portion of the net proceeds, the Company redeemed the remaining $130.5 million aggregate principal amount of Senior Notes due 2027, plus accrued and unpaid interest. The Company used the remaining net proceeds to pay down in full the Company’s Revolving Credit Facility, with any excess proceeds intended for general corporate purposes, including funding acquisitions and investments. 
 We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during various environments. This includes limiting discretionary spending across the organization and re-prioritizing our investments as necessary. On December 30, 2024, we announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The Strategic Capital Initiative, and its related partnerships, will allow us to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. We have agreed that the related partnerships will be the primary buyer of on-lease 737NG and A320ceo aircraft. We expect to provide aircraft management services to the related partnerships for which the Company will receive customary, market-based compensation. The Company also expects to make minority investment in the related partnerships. 
 Our principal uses of liquidity have been and continue to be (i) acquisitions of aircraft and engines, (ii) dividends to our ordinary and preferred shareholders, (iii) expenses associated with our operating activities, and (iv) debt service obligations associated with our investments. In the future, instead of acquiring on-lease aircraft directly, as part of the Strategic Capital Initiative, we will invest in the related partnerships and such partnerships will acquire on-lease aircraft. 
 • Cash used for the purpose of making investments was $1,526.2 million, $861.5 million and $831.5 million during the years ended December 31, 2024, 2023, and 2022, respectively. 
 • Distributions to shareholders, including cash dividends, were $154.3 million, $151.6 million and $155.6 million during the years ended December 31, 2024, 2023 and 2022, respectively. 
 • Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities. Uses of liquidity associated with our debt obligations are captured in our cash flows from financing activities. 
 47 

 
 

 Our principal sources of liquidity to fund these uses have been and continue to be (i) revenues from our aviation assets (including finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of securities and (iii) proceeds from asset sales. 
 • Cash flows from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $(136.5) million, $163.0 million and $29.4 million during the years ended December 31, 2024, 2023, and 2022, respectively. 
 • During the year ended December 31, 2024, additional borrowings were obtained in connection with the (i) Senior Notes due 2033 of $500.0 million, (ii) Senior Notes due 2032 of $800.0 million, (iii) Senior Notes due 2031 of $700.0 million and (iv) Revolving Credit Facility of $745.0 million. We made total principal repayments of (i) $650.0 million related to the Senior Notes due 2025, (ii) $745.0 million relating to the Revolving Credit Facility and (iii) $400.0 million related to the Senior Notes due 2027. 
 During the year ended December 31, 2023 , additional borrowings were obtained in connection with the (i) Revolving Credit Facility of $455.0 million and (ii) Senior Notes Due 2030 of $500.0 million. We made total principal repayments of $605.0 million relating to the Revolving Credit Facility. 
 During the year ended December 31, 2022, additional borrowings were obtained in connection with the (i) 2021 Bridge Loans of $239.5 million (ii) Revolving Credit Facility of $565.0 million and (iii) EB-5 Loan Agreement of $9.5 million. We made total principal repayments of (i) $604.5 million relating to the Revolving Credit Facility, (ii) $340.0 million related to the 2021 Bridge Loans and (iii) $200.0 million related to the Senior Notes due 2025. 
 • Proceeds from the sale of assets were $969.3 million, $477.9 million and $414.2 million during the years ended December 31, 2024, 2023, and 2022, respectively. 
 • Proceeds from the issuance of preferred shares, net of underwriters discount and issuance costs, were $61.7 million during the year ended December 31, 2023. There were no issuances of preferred shares during the years ended December 31, 2024 and 2022. In October 2024, the Company redeemed in full the outstanding Series A preferred shares at a redemption price equal to $25.00 per share in cash, plus $1.6 million of accumulated and unpaid distributions thereon to, but not including, the redemption date of October 29, 2024. 
 On May 28, 2024, we entered into definitive agreements with the Former Manager and Master GP to internalize our management function. As part of the termination of the Management Agreement, we agreed to pay $150.0 million to the Former Manager. Following the internalization of management on May 28, 2024, we no longer pay a management fee or incentive distribution to the Former Manager or Master GP. Consequently, we have assumed general and administrative, and compensation and benefit expenses directly. We anticipate a savings in operation costs as a result of the Internalization. 
 We are currently evaluating several potential transactions and related financings, including, but not limited to, certain additional debt and equity financings, which could occur within the next 12 months. None of these potential transactions, negotiations, or financings are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction or related financing. 
 Historical Cash Flow 
 The following table presents our historical cash flow from both continuing and discontinued operations: 
 Year Ended December 31, 
 (in thousands) 2024 2023 2022 
 Cash flow data: 
 Net cash used in operating activities $ (187,956) $ 128,982 $ (20,657) 
 Net cash used in investing activities (469,498) (373,349) (411,253) 
 Net cash provided by financing activities 681,814 282,208 44,914 

 Comparison of the years ended December 31, 2024 and 2023 
 Net cash used in operating activities increased $316.9 million, which primarily reflects (i) a decrease in our Net income of $235.1 million and increases in (ii) Changes in working capital of $178.5 million and (iii) Gain on sale of assets of $217.2 million, partially offset by certain adjustments to reconcile net income to cash used in operating activities including increases in (iv) Non-cash termination fee to affiliate (issuance of ordinary shares) of $150.0 million, (v) Deferred income taxes of $61.7 million, (vi) Depreciation and amortization of $48.2 million, a decrease in (vii) Security deposits and maintenance claims included in earnings of $23.8 million, an increase in (viii) Loss on extinguishment of debt of $17.1 million and a decrease in (ix) Other of $6.4 million 
 Net cash used in investing activities increased $96.1 million primarily due to increases in (i) Acquisition of leasing equipment of $397.6 million, (ii) Deposits for leasing equipment of $134.4 million, (iii) Acquisition of business, net of cash acquired of $118.0 million and (iv) Investments in financing receivables of $66.9 million, partially offset by higher (v) Proceeds from sale of assets of $491.4 million and (vi) Proceeds (refunds) from deposits on sale of leasing equipment of $78.4 million, and decreases in (vii) Acquisition of lease intangibles of $24.1 million, (viii) Investment in unconsolidated entities of $19.5 million and (ix) Investment in promissory notes of $11.5 million. 
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 Net cash provided by financing activities increased $399.6 million primarily due to increases in (i) Proceeds from debt of $1,630.2 million and (ii) Receipt of maintenance deposits under operating lease agreements of $19.0 million, partially offset by increases in (iii) Repayment of debt of $1,067.3 million and (iv) Redemption of preferred shares of $105.4 million, a decrease in (v) Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs of $61.7 million, and increases in (vi) Release of maintenance deposits under operating lease agreements of $6.9 million and (vii) Payment of deferred financing costs of $5.2 million. 
 Cash Flows of Discontinued Operations 
 The cash flows related to discontinued operations have not been segregated and are included in the Consolidated Statements of Cash Flows for all periods presented. Cash used in operating activities from discontinued operations were $63.9 million for the year ended December 31, 2022. Cash used in investing activities from discontinued operations were $136.3 million for the year ended December 31, 2022. 
 The absence of cash flows from discontinued operations is not expected to adversely affect our liquidity or our ability to fund capital expenditures or working capital needs. 
 
 Contractual Obligations 
 Our material cash requirements include the following contractual and other obligations: 
 Debt Obligations — As of December 31, 2024, we had outstanding principal and interest payment obligations of $3.5 billion and $1.4 billion through the maturity date of the debt, respectively, of which only interest payments of $229.8 million are due in the next twelve months. See Note 9 to the consolidated financial statements for additional information about our debt obligations. 
 Lease Obligations — As of December 31, 2024, we had outstanding operating and finance lease obligations of $37.5 million, of which, $2.9 million is due in the next twelve months. 
 Other Cash Requirements — In addition to our contractual obligations, we pay quarterly cash dividends on our ordinary shares and preferred shares, which are subject to change at the discretion of our Board of Directors. During 2024, we declared cash dividends of $121.6 million and $32.8 million o n our ordinary shares and preferred shares, respectively. 
 We expect to meet our future short-term liquidity requirements through cash on hand, unused borrowing capacity or future financings and net cash provided by our current operations. We expect that our operating subsidiaries will generate sufficient cash flow to cover operating expenses and the payment of principal and interest on our indebtedness as they become due. We may elect to meet certain long-term liquidity requirements or to continue to pursue strategic opportunities through utilizing cash on hand, cash generated from our current operations and the issuance of securities in the future. Management believes adequate capital and borrowings are available from various sources to fund our commitments to the extent required. 
 
 Critical Accounting Estimates and Policies 
 The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 2 to the consolidated financial statements describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. 
 Operating Leases — We lease equipment pursuant to operating leases. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the lease, assuming no renewals. Revenue is not recognized when collection is not reasonably assured. 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. Typically, under our aircraft lease agreements, the lessee is responsible for maintenance, repairs and other operating expenses throughout the term of the lease. These periodic maintenance payments accumulate over the term of the lease to fund major maintenance events, and we are contractually obligated to return maintenance payments to the lessee up to the cost of maintenance paid by the lessee. 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. All excess maintenance payments received that we do not expect to repay to the lessee are recorded as Maintenance revenue. Estimates in recognizing revenue include mean time between removal, projected costs for engine maintenance and forecasted utilization of aircraft which are affected by historical usage patterns and overall industry, market and economic conditions. 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. 
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 Asset sales revenue —Asset sales revenue primarily consists of the transaction price related to the sale of aircraft and aircraft engines from our Aviation Leasing segment. From time to time, the Company may also assign the related lease agreements to the customer as part of the sale of these assets. We routinely sell leasing equipment to customers and such transactions are considered recurring and ordinary in nature to our business. As such, these sales are accounted for within the scope of ASC 606. Revenue is recognized when a performance obligation is satisfied by transferring control over an asset to a customer. Revenue is recorded with corresponding costs of sales, presented on a gross basis in the Consolidated Statements of Operations. See Note 14 for additional information. 
 Maintenance Payments —Typically, under an operating lease of aircraft, the lessee is responsible for performing all maintenance and is generally required to make maintenance payments to us for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft or engine. These maintenance payments are based on hours or cycles of utilization or on calendar time, depending on the component, and are generally required to be made monthly in arrears. If a lessee is making monthly maintenance payments, we would typically be obligated to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components to the extent of maintenance payments received in respect of the specific maintenance event, usually shortly following the completion of the relevant work. 
 We record the portion of maintenance payments paid by the lessee that are expected to be reimbursed as maintenance deposits in the Consolidated Balance Sheets. Reimbursements made to the lessee upon the receipt of evidence of qualifying maintenance work are recorded against the maintenance deposit liability. 
 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. When the lessee is required to return the aircraft in an improved maintenance condition, we record a maintenance right asset, as a component of other assets in the Consolidated Balance sheets, for the estimated value of the end-of-life maintenance payment at acquisition. We recognize payments received as end-of-lease compensation adjustments, within lease income or as a reduction to the maintenance right asset, when payment is received or collectability is assured. In the event we are required to make payments at the end of the lease for redelivery conditions, amounts are accrued as additional maintenance liability and expensed when we are obligated and can reasonably estimate such payments. 
 Leasing Equipment and Depreciation —Leasing equipment is 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: 
 
 Asset Range of Estimated Useful Lives Residual Value Estimates 
 Aircraft 25 years from date of manufacture 
 Generally not to exceed 15% of manufacturer’s list price when new 
 Aircraft engines 2 - 6 years, based on maintenance adjusted service life 
 Sum of engine core salvage value plus the estimated fair value of life limited parts 

 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. Indicators may include, but are not limited to, a significant lease restructuring or early lease termination; significant traffic decline; a significant change in market conditions; or the introduction of newer technology and the length of time an asset is off lease related to leasing equipment 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. In the event that an asset does not meet the recoverability test, the carrying value of the asset will be adjusted to fair value resulting in an impairment charge. 
 Management develops the assumptions used in the recoverability analysis based on its knowledge of active contracts, current and future expectations of the global demand for a particular asset and historical experience in the leasing markets, as well as information received from third party industry sources. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in contracted lease rates, residual values, economic conditions, technology, demand for a particular asset type and other factors. 
 Recent Accounting Pronouncements 
 Please see Note 2 to our consolidated financial statements included elsewhere in this filing for recent accounting pronouncements.
FTAI Aviation Ltd. 10-K

Item 7. Management’s Discussion and Analysis
