What changed in this filing

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Item 1. Financial Statements

2025-05-05 compared with 2024-11-12 · 384 added, 569 removed, 510 unchanged (65% of the section changed)

3 unchanged sentences

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

Notes September 30, 2024 December 31, 2023

Notes March 31, 2025 December 31, 2024

Current Assets

Cash and cash equivalents 2 $ 112,133 $ 115,116

Restricted cash 150 150

Accounts receivable, net (1)

2 223,504 150,823

Inventory, net 2 645,163 551,156

Assets held for sale 2 465,725 —

Other current assets (2)

2 423,336 408,923

Total current assets 1,869,861 1,226,018

Leasing equipment, net 4 1,989,367 2,373,730

2 unchanged sentences

Intangible assets, net 6 16,036 42,205

Assets held for sale 2 119,012 —

Goodwill 3 61,070 61,070

Inventory, net 2 490,997 316,637

Other assets 2 591,601 286,456

Other non-current assets 2 192,356 208,430

Total assets $ 4,268,144 $ 4,037,952

Accounts payable and accrued liabilities $ 196,660 $ 112,907

Debt, net 8 3,218,343 2,517,343

Maintenance deposits 2 75,606 65,387

Security deposits 2 42,863 41,065

Other liabilities 86,906 52,100

Current Liabilities

Accounts payable $ 110,802 $ 69,119

Liabilities held for sale 76,496 —

Accrued liabilities 142,098 96,910

Current maintenance deposits 33,748 62,552

Current security deposits 19,557 18,100

Other current liabilities 91,061 100,565

Total current liabilities 473,762 347,246

Long-term debt, net 7 3,642,527 3,440,478

Non-current maintenance deposits 2 25,510 44,179

Non-current security deposits 2 13,429 26,830

Other non-current liabilities 84,583 97,851

Total liabilities $ 4,239,811 $ 3,956,584

2 unchanged sentences

2,000,000,000 shares authorized;

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

102,555,975 and 102,550,975 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively)

$ 1,026 $ 1,026

1 unchanged sentence

200,000,000 shares authorized;

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

6,800,000 and 11,740,000 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively)

Additional paid in capital ( 2,044 ) 153,328

Accumulated deficit ( 175,551 ) ( 81,785 )

Retained earnings (accumulated deficit) 29,283 ( 73,103 )

Shareholders' equity 28,333 81,368

Non-controlling interest in equity of consolidated subsidiaries — 534

Total equity 118,532 175,883

Total liabilities and equity $ 4,268,144 $ 4,037,952

______________________________________________________

(1) Includes accounts receivable from the 2025 Partnership of $ 69,140 and $ 0 as of March 31, 2025 and December 31, 2024, respectively.

(2) Includes receivables from the 2025 Partnership of $ 34,110 and $ 0 as of March 31, 2025 and December 31, 2024, respectively.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

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

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

Three Months Ended March 31,

Notes 2025 2024

Aerospace products revenue (1)

$ 365,063 $ 189,057

Lease income 68,471 53,240

1 unchanged sentence

Asset sales revenue 18,939 38,607

Aerospace products revenue 303,469 118,675 737,726 296,513

Other revenue 2,005 1,474 6,104 12,447

Total revenues 12 502,080 326,694

4 unchanged sentences

Management fees and incentive allocation to affiliate 11 — 4,895

Internalization fee to affiliate 16 — — 300,000 —

Depreciation and amortization 4, 6 59,562 49,920

2 unchanged sentences

Other (expense) income

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

Interest expense ( 62,040 ) ( 47,707 )

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

Equity in losses of unconsolidated entities (2)

5 ( 7,614 ) ( 667 )

Other income (3)

Total other expense ( 25,713 ) ( 47,740 )

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

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

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

Income before income taxes 125,245 45,194

Provision for income taxes 10 22,859 5,572

Net income 102,386 39,622

Dividends on preferred shares 6,115 8,335

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

Earnings (loss) per share:

Loss on redemption of preferred shares 6,327 —

Net income attributable to shareholders $ 89,944 $ 31,287

Earnings per share:

Basic $ 0.88 $ 0.31

3 unchanged sentences

Diluted 103,159,051 100,960,065

______________________________________________________

(1) Includes revenue of $ 100,638 and $ 0 for the three months ended March 31, 2025 and 2024, respectively, for sales to the 2025 Partnership.

See Note 11 for additional information.

(2) Includes the profit elimination of $( 6,950 ) and $ 0 for the three months ended March 31, 2025 and 2024, respectively, for sales to the 2025 Partnership.

(3) Includes gain on sale of $ 10,870 and $ 0 for the three months ended March 31, 2025 and 2024, respectively, for sales to the 2025 Partnership.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Three and Nine Months Ended September 30, 2024

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

Three Months Ended March 31, 2025

Ordinary Shares Preferred Shares Additional Paid In Capital (Accumulated Deficit) Retained Earnings Total Equity

Equity - December 31, 2024 $ 1,026 $ 117 $ 153,328 $ ( 73,103 ) $ 81,368

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

Total comprehensive loss ( 180,248 ) ( 180,248 )

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

Dividends declared - ordinary shares ( 60,148 ) ( 60,148 )

Dividends declared - preferred shares ( 16,670 ) ( 16,670 )

Issuance of ordinary shares 20 150,116 150,136

Equity-based compensation 1,148 1,148

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

Net income 102,386 102,386

Total comprehensive income 102,386 102,386

Redemption of preferred shares ( 49 ) ( 117,791 ) ( 117,840 )

Loss on redemption of preferred shares ( 6,327 ) ( 6,327 )

Issuance of ordinary shares 739 739

Dividends declared - ordinary shares ( 30,767 ) ( 30,767 )

Dividends declared - preferred shares ( 6,115 ) ( 6,115 )

Issuance of ordinary shares 3 46 49

Equity-based compensation 4,889 4,889

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

See accompanying notes to consolidated financial statements.

FTAI AVIATION LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)

(Dollars in thousands)

Three and Nine Months Ended September 30, 2023

Equity - March 31, 2025 $ 1,026 $ 68 $ ( 2,044 ) $ 29,283 $ 28,333

Three Months Ended March 31, 2024

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

2 unchanged sentences

Total comprehensive income 39,622 39,622

Contributions from non-controlling interest 10 10

Issuance of ordinary shares 389 389

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

Issuance of preferred shares 26 61,703 61,729

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

Equity-based compensation 510 510

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

Net income 41,307 41,307

Total comprehensive income 41,307 41,307

Issuance of ordinary shares 5 178 183

Dividends declared - ordinary shares ( 29,922 ) ( 29,922 )

Dividends declared - preferred shares ( 8,334 ) ( 8,334 )

Equity-based compensation 510 510

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

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

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

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

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

Net income $ 102,386 $ 39,622

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

Equity in losses of unconsolidated entities (1)

Gain on sale of assets (2)

( 19,419 ) ( 58,061 )

Gain on insurance recoveries ( 30,125 ) —

Security deposits and maintenance claims included in earnings ( 3,559 ) ( 2,437 )

Loss on extinguishment of debt 13,920 —

Equity-based compensation 4,889 510

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

Depreciation and amortization 59,562 49,920

Asset impairment — 962

Change in deferred income taxes ( 2,470 ) 5,974

Deferred income taxes 20,683 4,548

Change in fair value of guarantees 316 ( 259 )

1 unchanged sentence

Amortization of deferred financing costs 2,830 2,638

Provision for credit losses 2,784 6,583

Bad debt expense 150 —

Other 60 ( 259 )

5 unchanged sentences

Other liabilities ( 3,460 ) ( 717 )

Net cash (used in) provided by operating activities ( 146,153 ) 116,766

Net cash used in operating activities ( 25,966 ) ( 345 )

Cash flows from investing activities:

2 unchanged sentences

Principal collections on notes receivable 989 1,964

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

Acquisition of leasing equipment ( 267,417 ) ( 276,990 )

Investments in financing receivables ( 63,857 ) —

Investment in financing receivables ( 2,764 ) —

Acquisition of property, plant and equipment ( 4,156 ) ( 1,312 )

Acquisition of lease intangibles 1,282 862

Investment in promissory notes — ( 11,500 )

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

Deposits for acquisition of leasing equipment (3)

( 46,344 ) ( 25,535 )

Proceeds from sale of assets (4)

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

Return of deposits for acquisition of aircraft and engines 530 300

232,946 128,384

Proceeds from settlement of insurance claims 30,125 —

Proceeds from deposits on sale of leasing equipment 3,376 2,098

Return of deposits for acquisition of leasing equipment (3)

Net cash used in investing activities $ ( 27,627 ) $ ( 169,213 )

3 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from financing activities:

6 unchanged sentences

Release of maintenance deposits under operating lease agreements ( 4,246 ) ( 3,056 )

Capital contributions from non-controlling interests ( 534 ) 10

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

Redemption of preferred shares ( 124,167 ) —

Cash dividends - ordinary shares ( 30,767 ) ( 30,074 )

1 unchanged sentence

Net cash provided by financing activities $ 50,610 $ 144,026

Net increase (decrease) in cash and cash equivalents and restricted cash 21,132 ( 186 )

Net decrease in cash and cash equivalents and restricted cash ( 2,983 ) ( 25,532 )

Cash and cash equivalents and restricted cash, beginning of period 115,266 90,906

Cash and cash equivalents and restricted cash, end of period $ 112,283 $ 65,374

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

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

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

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

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

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

Supplemental disclosure of non-cash investing and financing activities

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

Receipt of notes receivable in connection with the sale of leasing equipment $ 34,602 $ 31,968

Acquisition of leasing equipment in accrued liabilities ( 8,341 ) ( 6,854 )

Receipt of leasing equipment in settlement of accounts receivable ( 2,634 ) —

Purchase deposits reclassified to leasing equipment from other assets upon acquisition ( 17,027 ) ( 11,808 )

Decrease (increase) in leasing equipment for engines provided to aircraft lessees in lieu of cash reimbursements of maintenance deposits 5,756 ( 1,497 )

Accounts receivable settled with security deposits ( 601 ) ( 1,442 )

Accounts receivable settled with maintenance deposits ( 5,787 ) ( 18,964 )

______________________________________________________

(1) Includes the profit elimination of $( 6,950 ) and $ 0 for the three months ended March 31, 2025 and 2024, respectively, for sales to the 2025 Partnership within the Aerospace Products segment.

(2) Includes gain on sale of $ 10,870 and $ 0 for the three months ended March 31, 2025 and 2024, respectively, for sales to the 2025 Partnership.

(3) Includes deposits for acquisition of leasing equipment paid on behalf of the 2025 Partnership of $ 25,400 and $ 0 for the three months ended March 31, 2025 and 2024, respectively, and return of deposits for the acquisition of leasing equipment reimbursed from the 2025 Partnership of $ 42,813 and $ 0 for the three months ended March 31, 2025 and 2024, respectively.

(4) Includes proceeds from sale of assets of $ 58,892 and $ 0 for the three months ended March 31, 2025 and 2024, respectively, for sales to the 2025 Partnership.

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 facilities and exclusivity arrangements, aftermarket components for aircraft engines.

Additionally, we own and lease offshore energy equipment.

is a Cayman Islands exempted company, which through its subsidiaries, is a leading full-service provider for CFM56-5B, CFM56-7B and V2500 aircraft engines, which power the majority of the world’s fleet of narrowbody aircraft.

We own and lease aircraft and engines to airlines and asset owners globally.

Additionally, we repair and sell refurbished engines and aftermarket components of engines as well as develop and manufacture Parts Manufacturer Approval (“PMA”) parts through a joint venture.

Our engine maintenance activities are performed at our owned maintenance facilities in Montréal and Miami which total over 700,000 square feet in size and at locations worldwide through our exclusivity arrangements and partnerships.

Our principal corporate location is in New York City, and we have a global presence through our offices in Cardiff, Dubai, Dublin and Singapore, in addition to Montréal and Miami.

The majority of our target customers are small and medium sized airlines which have narrowbody fleets powered by CFM56-5B, CFM56-7B and V2500 engines.

There are hundreds of these operators worldwide, which creates a large addressable market in which FTAI focuses and can provide significant value versus competitors.

We have two reportable segments, (i) Aviation Leasing and (ii) Aerospace Products (see Note 12).

Except as otherwise specified, “we”, “us”, “our”, “FTAI”, “FTAI Aviation” or “the Company” refer to us and our consolidated subsidiaries.

Prior to May 28, 2024, FTAI Aviation Ltd.

5 unchanged sentences

(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 .

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.

12 unchanged sentences

All adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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.

Under the equity method, we record our proportionate share of the underlying net income (loss) of these entities.

Under the equity method, we record our proportionate share of the underlying net income (loss) of these entities, or under the HLBV method, as applicable.

Use of Estimates — The preparation of financial statements in conformity with U.S.

1 unchanged sentence

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 in the Consolidated Statements of Operations.

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

7 unchanged sentences

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

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

Inventory is carried at the lower of cost or net realizable value.

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.

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

At times 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.

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

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

2 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.

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.

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

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.

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 and other related assets/liabilities acquired.

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

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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

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

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 CFM56-5B and CFM56-7B engines to customers as they become unserviceable during the contract term.

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

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

Other Income — On December 30, 2024, we announced the launch of a Strategic Capital Initiative in partnership with third-party institutional investors.

The first partnership under the initiative (the “2025 Partnership”) focuses on acquiring 737NG and A320ceo aircraft.

As part of this transaction, the 2025 Partnership committed to acquire 45 on-lease narrowbody aircraft from us (the “Seed Assets”) and has signed an agreement through which our Maintenance, Repair and Exchange (“MRE”) business will provide replacement aircraft engines and modules for the life of the 2025 Partnership.

Four of the aircraft were sold for a gain of $ 10.9 million, which was recognized within other income during the three months ended March 31, 2025.

The aircraft sales (and the remaining 41 aircraft to be sold) are accounted for under ASC 610-20, Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets , as they are non-recurring in nature and not considered part of the Company’s ordinary activities.

During the three months ended March 31, 2025, the Company received $ 30.1 million in insurance recoveries in connection with the settlement of claims related to the aircraft and engines located in Russia and recorded the gain within other income.

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 three and nine months ended September 30, 2024 and September 30, 2023.

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

We earned 19 % of our revenue from one customer in the Aerospace Products segment during the three months ended March 31, 2025.

No single customer or lessee accounted for greater than 10% of total revenue during the three months ended March 31, 2024

As of March 31, 2025 there was one customer in the Aerospace Products segment that represented 31% of total accounts receivable, net.

As of December 31, 2024, 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 Ac counts and Credit Losses — For receivables related to operating lease arrangements, we determine the allowance for doubtful accounts based on our assessment of the collectability of our receivables on a customer-by-customer basis.

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

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

The allowance for doubtful accounts was $ 75.1 million and $ 74.9 million as of March 31, 2025 and December 31, 2024, respectively.

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

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

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

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

Our comprehensive income represents net income, as presented in the Consolidated Statements of Operations.

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

There was a provision for credit losses of $ 0.2 million and $ 0.0 million for the three months ended March 31, 2025 and 2024, respectively, included in operating expenses.

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

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

March 31, 2025

(unaudited) December 31, 2024

Notes receivable $ 206,388 $ 165,338

Contract asset from the 2025 Partnership 31,498 —

Prepaid expenses including prepayments for maintenance that has not yet been incurred 65,426 87,323

Purchase deposits 45,084 83,229

Financing receivable resulting from failed sale-leaseback transactions 35,689 32,486

Other 39,251 40,547

Other current assets $ 423,336 $ 408,923

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

March 31, 2025

(unaudited) December 31, 2024

Lease incentives $ 49,425 $ 56,812

Deferred tax assets 39,656 42,893

Financing receivable resulting from failed sale-leaseback transactions 26,519 28,412

Maintenance right assets 26,646 25,907

Other 50,110 54,406

Other non-current assets $ 192,356 $ 208,430

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

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

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

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

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

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

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

The Company expects to sell the remaining 41 Seed Assets to the 2025 Partnership and has classified them as held for sale.

Upon reclassification, depreciation of the long-lived assets within the disposal group ceased, and the related assets and liabilities were transferred to assets held for sale and liabilities held for sale, respectively.

The sales are expected to be completed in the second quarter of 2025.

The assets and liabilities include the aircraft previously classified as leasing equipment, as well as related intangible assets and liabilities, and maintenance and security deposit liabilities.

The sale of the 45 Seed Assets is treated as a single transaction and one disposal group under ASC 360, Property, plant and equipment , with the aggregate purchase price for Seed Assets, less costs to sell, exceeding the disposal group’s net book value.

Assets and liabilities held for sale are summarized as follows (unaudited):

March 31, 2025

Leasing equipment, net $ 437,546

Intangible assets, net 22,024

Other non-current assets 6,155

Assets held for sale $ 465,725

Current maintenance deposits $ 32,536

Current security deposits 390

Non-current maintenance deposits 13,156

Non-current security deposits 11,001

Other non-current liabilities 19,413

Liabilities held for sale $ 76,496

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

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

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

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

For the three months ended March 31, 2025 and 2024, the Board of Directors declared cash dividends of $ 0.30 per ordinary share.

Additionally, in the quarter ended March 31, 2025, the 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.

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.

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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.

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

FTAI AVIATION LTD.

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(Dollars in tables in thousands, unless otherwise noted)

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

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

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

Nine Months Ended September 30,

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 three months ended March 31, 2025 and 2024 are detailed below (unaudited):

Three Months Ended March 31,

(in thousands) 2025 2024

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Cash received for assets sold sourced from leasing equipment - inflow included in cash (used in) provided by operating activities 21,182 20,050

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

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

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

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

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

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

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

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

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

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

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

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.

Cash received for sales of leasing equipment that include components sourced from inventory - inflow included in cash used in investing activities 145,450 43,898

Cash paid for engine and aircraft inventory - outflow included in cash provided by (used in) operating activities ( 15,835 ) —

ACQUISITION OF LOCKHEED MARTIN COMMERCIAL ENGINE SOLUTIONS

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

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

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

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

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

See Note 13 for additional information.

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

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The acquisition of LMCES was accounted for as a business combination and, as such, the following fair values were assigned to assets acquired and liabilities assumed based on management’s estimates and assumptions and are preliminary.

We acquired LMCES to further enhance our MRE 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 CFM56-5B and CFM56-7B engines.

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

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 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 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, including goodwill;

(iii) changes in goodwill;

(iv) changes due to net working capital adjustments;

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

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

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Fair value of assets acquired:

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

Inventory 47,445

Other assets (1)

Other non-current assets 10,270

Total assets 131,859

Fair value of liabilities assumed:

Accounts payable and accrued liabilities 9,847

Other liabilities 22,996

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

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________________________________________________________

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

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

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Total $ 72,414

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

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

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

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

2024 2023 2024 2023

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

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

ACQUISITION OF QUICKTURN

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 consideration 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 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 the discount rate and future revenues and operating expenses.

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

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

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

December 1, 2023

Fair value of assets acquired:

Cash and cash equivalents $ 518

Restricted cash 150

Accounts receivable 5,133

Property, plant, and equipment 30,559

Intangible assets 2,377

Inventory 9,332

Other assets 4,301

Total assets 52,370

Fair value of liabilities assumed:

Accounts payable and accrued liabilities 3,994

Other liabilities 2,410

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.

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 $ 470

Customer relationships 5 $ 1,907

Total $ 2,377

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

Estimated useful life in years Estimated Fair value

Buildings and improvements 25 13,790

Machinery and equipment 6 - 23

Total $ 30,559

The 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.

The following pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2023.

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2023

The following unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2024.

Three Months Ended March 31, 2024

Total revenue $ 338,276

Net income attributable to shareholders $ 32,102

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

LEASING EQUIPMENT, NET

Leasing equipment, net is summarized as follows:

September 30, 2024 December 31, 2023

March 31, 2025

(unaudited) December 31, 2024

Leasing equipment $ 2,480,641 $ 2,963,452

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Due to specific transactions, we identified certain assets in our leasing equipment portfolio with indicators of impairment.

As a result, we adjusted the carrying value of these assets to fair value and recognized transactional impairment charges of $ 1.0 million and $ 1.2 million, net of redelivery compensation, for the nine months ended September 30, 2024 and 2023, respectively.

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

Depreciation expense for leasing equipment is summarized as follows:

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

2024 2023 2024 2023

As a result, we adjusted the carrying value of these assets to fair value and recognized transactional impairment charges of $ 0.0 million and $ 1.0 million, net of redelivery compensation, during the three months ended March 31, 2025 and 2024, respectively.

Depreciation expense for leasing equipment is summarized as follows (unaudited):

Three Months Ended March 31,

Depreciation expense for leasing equipment $ 55,886 $ 48,902

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Carrying Value

Investment Ownership Percentage September 30, 2024 December 31, 2023

Investment Ownership Percentage March 31, 2025

(unaudited) December 31, 2024

Advanced Engine Repair JV Equity method 25 % $ 19,161 $ 19,048

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

$ 19,448 $ 22,722

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

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

2025 Partnership Equity method 20 % 12,239 —

$ 31,400 $ 19,048

We did not recognize any other-than-temporary impairments for the three months ended March 31, 2025 and 2024.

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

Three Months Ended March 31,

Advanced Engine Repair JV $ 113 $ ( 521 )

Falcon MSN 177 LLC — ( 146 )

Quick Turn Engine Center LLC — ( 909 ) — ( 2,763 )

2025 Partnership ( 7,727 ) —

Total $ ( 7,614 ) $ ( 667 )

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Falcon MSN 177 LLC

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

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 account 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 obtained full ownership of the aircraft with a 100 % equity interest.

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

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 (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.

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

See Note 4 for additional information.

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.

2025 Partnership

FTAI AVIATION LTD.

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(Dollars in tables in thousands, unless otherwise noted)

During the first quarter of 2025, we invested $ 20.0 million in the 2025 Partnership, an investment focused on acquiring 737NG and A320ceo on-lease narrowbody aircraft, for which we are the General Partner and hold a 20 % limited partner ownership.

We exercise significant influence over this investment and account for it using the equity method.

The Company's proportionate share of equity in earnings related to this investment is based on the contractual profit-sharing arrangement, the elimination of profit on sales of engine and modules to the 2025 Partnership under ASC 606, and the servicing fees charged by us in our capacity as the General Partner to the 2025 Partnership.

The profit is eliminated through equity method earnings and will be recognized over time as the 2025 Partnership generates income from leasing and sales activities.

Variable Interest Entities

The Company evaluates its investments and other significant relationships to determine whether an investee qualifies as a variable interest entity (“VIE”).

If an investee is deemed a VIE, we assess our authority to direct its activities, our obligation to absorb its expected losses, and our right to receive its residual returns to determine whether we are the primary beneficiary.

If the Company determines that we are the primary beneficiary of a VIE, we consolidate the entity and recognize the non-controlling interests of other beneficiaries.

To make this determination, we conduct an analysis that primarily considers the entity’s purpose, design, and associated risks, as well as its capital structure, the terms of agreements between the VIE and its variable interest holders and other involved parties, and any affiliations with related parties.

Unconsolidated VIE

Certain of the Company’s equity method investments are considered variable interest entities (“VIE”), as defined under the accounting guidance for consolidation.

The Company is not considered the primary beneficiary of and therefore does not consolidate the VIEs.

The Company’s involvement with the VIEs is in the form of equity interests, which are recorded within investments.

The primary purpose of our U.S.-based and foreign-based unconsolidated VIE investments is to create strategic partnerships with third-party institutional investors to acquire 737NG and A320ceo on-lease narrowbody aircraft.

The Company’s maximum exposure to loss with respect to the VIEs is its investments.

The following table sets forth the Company’s investments in its unconsolidated VIEs and the maximum exposure to loss:

March 31, 2025

(unaudited) December 31, 2024

Investment Maximum Exposure to Loss Investment Maximum Exposure to Loss

Variable Interest Entity $ 12,239 $ 12,239 $ — $ —

Consolidated VIE

The Company also had a consolidated VIE investment associated with the 2025 Partnership, for which we are determined to be the primary beneficiary.

However, the carrying amounts of the assets and liabilities of the consolidated VIE were $ 0.0 million and $ 0.0 million as of March 31, 2025 and December 31, 2024, respectively.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

INTANGIBLE ASSETS AND LIABILITIES, NET

Intangible assets and liabilities, net are summarized as follows:

September 30, 2024 December 31, 2023

March 31, 2025

(unaudited) December 31, 2024

Intangible assets

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Acquired unfavorable lease intangibles, net $ 7,580 $ 12,508

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

Amortization of intangible assets and liabilities is recorded as follows:

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

2024 2023 2024 2023

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 (unaudited):

Classification in Consolidated Statements of Operations Three Months Ended March 31,

Lease intangibles Lease income $ 3,206 $ 3,976

1 unchanged sentence

Total $ 3,301 4,093

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

As of March 31, 2025, estimated net annual amortization of intangibles is as follows (unaudited):

Remainder of 2025 $ 3,014

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Our debt, net is summarized as follows:

September 30, 2024 December 31, 2023

March 31, 2025 (unaudited) December 31, 2024

Outstanding Borrowings Stated Interest Rate Maturity Date Outstanding Borrowings

8 unchanged sentences

Senior Notes due 2030 (3)

Senior Notes due 2028 (3)

497,168 7.88 % 12/1/30 497,071

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

496,976 7.88 % 12/1/30 496,704

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

Senior Notes due 2033 (4)

497,608 5.88 % 4/15/33 497,551

Total bonds payable 3,496,063 3,496,004

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 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 $ 1,475 and $ 1,746 at September 30, 2024 and December 31, 2023, respectively.

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

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

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

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

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.

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

(2) Includes an unamortized premium of $ 1,287 and $ 1,382 at March 31, 2025 and December 31, 2024, respectively.

(3) Includes an unamortized discount of $ 2,832 and $ 2,929 at March 31, 2025 and December 31, 2024, respectively.

(4) Includes an unamortized discount of $ 2,392 and $ 2,449 at March 31, 2025 and December 31, 2024, respectively.

We were in compliance with all debt covenants as of March 31, 2025.

FAIR VALUE MEASUREMENTS

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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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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.

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

September 30, 2024 December 31, 2023

Senior Notes due 2025 $ — $ 649,383

March 31, 2025

(unaudited) December 31, 2024

Senior Notes due 2028 980,730 980,140

4 unchanged sentences

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

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

The guarantees are valued at $ 9.2 million and $ 8.9 million as of March 31, 2025 and December 31, 2024, respectively, and are reflected as a component of other non-current liabilities.

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

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

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

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

The Company recorded a $ 0.3 million increase related to the change in fair value, which is recorded in Asset sales revenue, during the three months ended March 31, 2025 and 2024, respectively.

During the three months ended March 31, 2025 and 2024, 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 March 31, 2025 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.

5 unchanged sentences

We have a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) which provides for the ability to award equity compensation awards in the form of stock options to eligible employees, consultants, directors, and other individuals who provide services to us, each as determined by the Compensation Committee of the Board of Directors.

As of March 31, 2025, the Incentive Plan provides for the issuance of up to 28.2 million shares.

Equity-based compensation expense is reported within cost of sales and operating expenses.

Unvested equity-based awards are subject to forfeiture.

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

Equity-based compensation for each type of award was as follows (unaudited):

Three Months Ended March 31, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met Weighted Average Remaining Contractual Term (in years)

Stock Options $ 127 $ — $ 1,651 9.2

Performance shares 3,262 — $ 47,266 3.3

Restricted shares 1,500 510 18,788 2.4

Total $ 4,889 $ 510 $ 67,705

During the three months ended March 31, 2025, the Company did not issue any options to employees.

During the three months ended March 31, 2024, the Former Manager transferred 49,790 of its options to certain of the Manager’s employees.

All of these options were issued prior to Internalization.

Performance Shares

FTAI AVIATION LTD.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

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

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

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

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

2024 2023 2024 2023

Stock Options $ 128 $ — $ 170 $ — $ 1,905 3.8 years

Restricted Shares 1,302 510 2,408 1,128 16,112 2.9 years

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

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

All of these options were issued prior to the Internalization.

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

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.

During the three months ended March 31, 2025, we issued performance shares to select officers and employees of the Company with a grant date fair value of $ 4.4 million, vesting over a 3 year performance period based on the achievement of relative total shareholder return ( 50 %) and cumulative diluted EPS ( 50 %).

Restricted Shares

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

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

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

During the three months ended March 31, 2025, we issued restricted shares to select officers and employees of the Company with a grant date fair value of $ 5.5 million, vesting over 3 years.

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

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

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

2024 2023 2024 2023

The fair values of the cumulative diluted EPS performance shares and restricted shares were based on the closing price of FTAI Aviation Ltd.’s ordinary shares on the respective grant dates, and the fair value of the total shareholder return performance shares was determined using the Monte Carlo simulation.

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

Three Months Ended March 31,

Cayman Islands $ — $ —

Bermuda — — — —

United States:

1 unchanged sentence

State and local 390 578

446 851 1,235 1,669

Other Non-U.S.

including Pillar Two top-up tax 1,542 146

Total current provision 2,176 1,024

4 unchanged sentences

State and local 378 ( 358 )

776 1,756 ( 2,699 ) 3,562

Other Non-U.S.

Total deferred provision 20,683 4,548

1 unchanged sentence

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

The Company is considered a Passive Foreign Investment Company for U.S.

income tax purposes and certain income taxes are imposed on our owners.

Taxable income or loss generated by our corporate subsidiaries is subject to corporate income tax in locations where they conduct business.

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

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

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

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

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

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

Our effective tax rate differs from the U.S.

federal tax rate of 21% primarily due to a significant portion of our income not being subject to U.S.

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

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

The Company has previously been classified as a “passive foreign investment company” for U.S.

income tax purposes, resulting in income tax obligations for certain of our shareholders.

Taxable income or loss generated by our corporate subsidiaries is subject to U.S.

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

Our effective tax rate differs from the Cayman Islands statutory rate of 0% primarily due to a significant portion of our income being subject to tax in jurisdictions where we operate.

As of and for the three months ended March 31, 2025, 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.

2 unchanged sentences

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.

AFFILIATE TRANSACTIONS

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

AFFILIATE TRANSACTIONS AND FORMER MANAGEMENT AGREEMENT

Strategic Capital Initiative – 2025 Partnership

On December 30, 2024, the Company announced the launch of its Strategic Capital Initiative in collaboration with third-party institutional investors.

As part of the first partnership under the initiative, certain subsidiaries of the Company entered into an Aircraft Sale and Purchase Agreement, dated December 30, 2024, and a Beneficial Interest Sale and Purchase Agreement, dated December 30, 2024 (together, and as each may be amended from time to time, the “Aircraft Sale and Purchase Agreements”), pursuant to which special purpose entities (the “SPVs”) of the 2025 Partnership will acquire 45 on-lease 737NG and A320ceo aircraft for an aggregate net purchase price of approximately $ 500.0 million, subject to certain customary closing conditions.

The SPVs have entered into agreements with third-party institutional investors for the private placement of limited partner interests in the SPVs.

The Company also made a minority limited partner investment and will make future investments in the 2025 Partnership in the same proportion relative to third party limited partner investments.

During 2024 and the three month period ended March 31, 2025, on behalf of the 2025 Partnership, the Company paid refundable deposits of $ 19.3 million and $ 25.4 million to unrelated, third-parties on future purchases of aircraft, respectively.

As of March 31, 2025, the 2025 Partnership reimbursed the Company $ 42.8 million in refundable deposits, and the remaining $ 1.9 million owed to the Company is recorded in other current assets.

The Company, along with certain subsidiaries of the SPVs, has entered into a MRE Agreement that requires the Company to sell serviceable engines and modules and purchase unserviceable engines and modules from the SPVs when aircraft controlled by the SPVs need such serviceable engines and modules to fulfill their obligations under an aircraft lease.

Under this agreement, the Company will sell CFM56-5B, CFM56-7B and V2500 commercial aircraft engines and related modules to the SPVs and purchase unserviceable engines and modules for a net cash purchase price.

The net cash purchase price received by the Company is contractual and customary market-based compensation for fulfilling such performance obligations, primarily through sales transactions where serviceable engines and modules are exchanged for cash consideration and noncash consideration, in which unserviceable engines or modules owned by the 2025 Partnership are transferred to the Company.

Revenue from these transactions is recognized under ASC 606 when control of the serviceable engine or module transfers to the 2025 Partnership.

During the three month period March 31, 2025 and 2024, the Company recorded revenue of $ 100.6 million and $ 0.0 million , for sale and purchase of such engines to and from the 2025 Partnership.

Former Management Agreement

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

1 unchanged sentence

(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 .

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.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

9 unchanged sentences

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

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

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(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).

9 unchanged sentences

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:

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

2024 2023 2024 2023

The following table summarizes the management fees and income incentive allocation prior to the Internalization (unaudited):

Three Months Ended

March 31, 2024

Management fees $ 587

1 unchanged sentence

Total $ 4,895

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

3 unchanged sentences

we did not reimburse the Former Manager for these expenses.

The following table summarizes our reimbursements to the Former Manager:

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

2024 2023 2024 2023

The following table summarizes our reimbursements to the Former Manager (unaudited):

Three Months Ended

March 31, 2025 March 31, 2024

Classification in the Consolidated Statements of Operations:

2 unchanged sentences

Total $ 300 $ 2,267

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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.

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

September 30, 2024 December 31, 2023

Accrued management fees $ — $ 224

Other payables 2,500 6,200

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

The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to lessees, directly and also through its equity method investment.

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 CFM56-5B, CFM56-7B 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.

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

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

See Note 2 for additional information.

Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, shared services costs, 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 vessels and equipment that support offshore oil and gas activities and production which are typically subject to operating leases.

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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, 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, 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.

We believe that net income (loss) attributable to shareholders, 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:

For the Three Months Ended September 30, 2024

Three Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

Lease income $ 57,322 $ — $ 8,128 $ 65,450

Maintenance revenue 59,917 — — 59,917

Asset sales revenue 34,953 — — 34,953

Aerospace products revenue — 303,469 — 303,469

Other revenue 74 — 1,931 2,005

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

Cost of sales 20,684 198,812 — 219,496

Operating expenses 9,995 2,617 14,246 26,858

General and administrative — — 4,045 4,045

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

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

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

Other income (expense)

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

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

Other income 1,982 — 927 2,909

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

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

Provision for (benefit from) income taxes 8,898 4,408 ( 5,975 ) 7,331

Net income (loss) 59,596 93,788 ( 66,902 ) 86,482

Dividends on preferred shares — — 8,335 8,335

Net income (loss) attributable to shareholders $ 59,596 $ 93,788 $ ( 75,237 ) $ 78,147

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

For the Three Months Ended March 31, 2025

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 income attributable to shareholders:

Three Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

Adjusted EBITDA $ 136,423 $ 101,814 $ ( 6,207 ) $ 232,030

Non-controlling share of Adjusted EBITDA —

Equity in losses of unconsolidated entities ( 438 )

Pro-rata share of Adjusted EBITDA from unconsolidated entities 382

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

Depreciation and amortization expense ( 69,453 )

Incentive allocations —

Asset impairment charges —

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 ( 9,341 )

Equity-based compensation expense ( 1,430 )

Provision for income taxes ( 7,331 )

Net income attributable to shareholders $ 78,147

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

Three Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

Africa $ 1,266 $ — $ — $ 1,266

Asia 46,459 65,714 10,059 $ 122,232

Europe 56,750 84,136 — $ 140,886

North America 34,700 149,530 — $ 184,230

South America 13,091 4,089 — $ 17,180

Total revenues (1)

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

Three Months Ended March 31, 2025

Aviation Leasing Aerospace Products Corporate and Other Eliminations Total

Aerospace products revenue (1)

$ — $ 365,063 $ — $ — $ 365,063

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

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

For the Nine Months Ended September 30, 2024

Nine Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

Lease income 68,467 — 4 — 68,471

1 unchanged sentence

Asset sales revenue 18,939 — — — 18,939

Aerospace products revenue — 737,726 — 737,726

Other revenue 199 — 5,905 6,104

Total revenues $ 137,013 $ 365,063 $ 4 $ — $ 502,080

3 unchanged sentences

Acquisition and transaction expenses 2,905 1,132 3,255 — 7,292

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

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

Depreciation and amortization 55,061 3,584 917 — 59,562

Asset impairment 962 — — 962

Total expenses 85,351 239,158 26,613 — 351,122

Other income (expense)

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

Interest expense — — ( 62,040 ) — ( 62,040 )

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

Equity in (losses) earnings of unconsolidated entities (2)

( 777 ) 113 — ( 6,950 ) ( 7,614 )

Other income (3)

43,489 — 452 — 43,941

Total other income (expense) 42,712 113 ( 61,588 ) ( 6,950 ) ( 25,713 )

3 unchanged sentences

Dividends on preferred shares — — 6,115 — 6,115

Loss on redemption of preferred shares — — 6,327 — 6,327

Net income (loss) attributable to shareholders $ 77,026 $ 106,643 $ ( 86,775 ) $ ( 6,950 ) $ 89,944

______________________________________________________

(1) Includes revenue of $ 100,638 for the three months ended March 31, 2025 for sales to the 2025 Partnership.

See Note 11 for additional information.

(2) Includes the profit elimination of $( 6,950 ) for the three months ended March 31, 2025 for sales to the 2025 Partnership within the Aerospace Products segment.

(3) Includes gain on sale of $ 10,870 for the three months ended March 31, 2025 for sales to the 2025 Partnership within the Aviation Leasing segment.

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:

Nine Months Ended September 30, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

Adjusted EBITDA $ 366,211 $ 263,331 $ ( 19,507 ) $ 610,035

Non-controlling share of Adjusted EBITDA —

Equity in losses of unconsolidated entities ( 1,799 )

Pro-rata share of Adjusted EBITDA from unconsolidated entities 1,547

Internalization fee to affiliate ( 300,000 )

Interest expense and dividends on preferred shares ( 185,845 )

Depreciation and amortization expense ( 194,384 )

Incentive allocations ( 7,456 )

Asset impairment charges ( 962 )

Changes in fair value of non-hedge derivative instruments —

Losses on the modification or extinguishment of debt and capital lease obligations ( 13,920 )

Acquisition and transaction expenses ( 23,539 )

Equity-based compensation expense ( 2,578 )

Benefit from income taxes 130

Net loss attributable to shareholders $ ( 118,771 )

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

Nine Months Ended September 30, 2024

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

Three Months Ended March 31, 2025

Aviation Leasing Aerospace Products Corporate and Other Total

7 unchanged sentences

______________________________________________________

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

(1) The United States, included in North America, Ireland, included in Europe, and Bermuda, included in North America, represent 26 %, 19 % and 11 % 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 September 30, 2024:

Operating Leases

Presented below are the contracted minimum future annual revenues to be received under existing operating leases as of March 31, 2025:

March 31, 2025

Remainder of 2025 $ 130,220

4 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

For the Three Months Ended September 30, 2023

Three Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

Three Months Ended March 31, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

Aerospace products revenue $ — $ 189,057 $ — $ 189,057

Lease income 50,913 — 2,327 53,240

1 unchanged sentence

Asset sales revenue 38,607 — — 38,607

Aerospace products revenue — 118,675 — 118,675

Other revenue 82 — 1,392 1,474

Total revenues $ 135,310 $ 189,057 $ 2,327 $ 326,694

5 unchanged sentences

Depreciation and amortization 46,084 933 2,903 49,920

Asset impairment 962 — — 962

Total expenses 89,903 119,564 24,293 233,760

Other income (expense)

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

Interest expense — — ( 47,707 ) ( 47,707 )

Equity in losses of unconsolidated entities ( 146 ) ( 521 ) — ( 667 )

Other income 369 — 265 634

5 unchanged sentences

Net income (loss) attributable to shareholders $ 42,597 $ 66,433 $ ( 77,743 ) $ 31,287

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

Three Months Ended September 30, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

Adjusted EBITDA $ 116,858 $ 43,289 $ ( 5,929 ) $ 154,218

Non-controlling share of Adjusted EBITDA —

Equity in earnings of unconsolidated entities 46

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

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

Depreciation and amortization expense ( 59,380 )

Incentive allocations ( 4,274 )

Asset impairment charges —

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 ( 4,261 )

Equity-based compensation expense ( 510 )

Provision for income taxes ( 3,705 )

Net income attributable to shareholders $ 32,973

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

Three Months Ended September 30, 2023

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

Three Months Ended March 31, 2024

Aviation Leasing Aerospace Products Corporate and Other Total

7 unchanged sentences

______________________________________________________

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

(1) The United States, included in North America, and Ireland, included in Europe, represent 30 % and 13 % of total revenues, respectively, based on the location of our lessees.

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

2 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

For the Nine Months Ended September 30, 2023

Nine Months Ended September 30, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

Lease income $ 132,978 $ — $ 28,163 $ 161,141

Maintenance revenue 141,131 — — 141,131

Asset sales revenue 246,927 — — 246,927

Aerospace products revenue — 296,513 — 296,513

Other revenue 6,773 — 5,674 12,447

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

Cost of sales 188,343 178,566 — 366,909

Operating expenses 28,610 12,838 39,770 81,218

General and administrative — — 10,270 10,270

Acquisition and transaction expenses 4,960 1,137 4,098 10,195

Management fees and incentive allocation to affiliate — — 13,137 13,137

Depreciation and amortization 114,994 298 8,107 123,399

Asset impairment 1,220 — — 1,220

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

Other income (expense)

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

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

Other income 860 — 17 877

Total other income (expense) 618 ( 1,427 ) ( 117,959 ) ( 118,768 )

Income (loss) before income taxes 190,300 102,247 ( 159,504 ) 133,043

Provision for income taxes 4,414 2,631 541 7,586

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

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

Net income (loss) attributable to shareholders $ 185,886 $ 99,616 $ ( 183,505 ) $ 101,997

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

Nine Months Ended September 30, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

Adjusted EBITDA $ 345,580 $ 105,413 $ ( 16,042 ) $ 434,951

Non-controlling share of Adjusted EBITDA —

Equity in losses of unconsolidated entities ( 1,669 )

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

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

Depreciation and amortization expense ( 157,084 )

Incentive allocations ( 12,540 )

Asset impairment charges ( 1,220 )

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 ( 10,195 )

Equity-based compensation expense ( 1,128 )

Provision for income taxes ( 7,586 )

Net income attributable to shareholders $ 101,997

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

Nine Months Ended September 30, 2023

Aviation Leasing Aerospace Products Corporate and Other Total

Africa $ 154 $ 875 $ — $ 1,029

Asia 81,285 2,737 33,837 117,859

Europe 188,498 84,547 — 273,045

North America 225,769 198,359 — 424,128

South America 32,103 9,995 — 42,098

Total revenues (1)

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

________________________________________________________

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

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

Location of Long-Lived Assets

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

September 30, 2024 December 31, 2023

March 31, 2025

(unaudited) December 31, 2024

Property, plant and equipment and leasing equipment, net

6 unchanged sentences

________________________________________________________

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

(1) The United States, included in North America represents 19 % of property, plant and equipment and leasing equipment, net as of March 31, 2025.

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, respectively.

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

EARNINGS PER SHARE AND EQUITY

2 unchanged sentences

Potentially dilutive securities are calculated using the treasury stock method.

The calculation of basic and diluted EPS is presented below:

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

The calculation of basic and diluted EPS is presented below (unaudited):

Three Months Ended March 31,

(in thousands, except share and per share data) 2025 2024

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

Net income $ 102,386 $ 39,622

Dividends on preferred shares 6,115 8,335

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

Loss on redemption of preferred shares 6,327 —

Net income attributable to shareholders $ 89,944 $ 31,287

Weighted Average Ordinary Shares Outstanding - Basic 102,552,436 100,245,905

Weighted Average Ordinary Shares Outstanding - Diluted 103,159,051 100,960,065

Earnings (loss) per share:

Earnings per share:

Basic $ 0.88 $ 0.31

Diluted $ 0.87 $ 0.31

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

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

For the three months ended March 31, 2025 and 2024, no shares have been excluded from the calculation of diluted EPS.

Preferred Shares

In February 2025, the Company redeemed 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.

COMMITMENTS AND CONTINGENCIES

3 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 $ 8.1 million and $ 6.8 million as of September 30, 2024 and December 31, 2023, respectively, and are reflected as a component of Other liabilities.

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

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

3 unchanged sentences

(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 .

FTAI AVIATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

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

2 unchanged sentences

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

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

See Note 12 for additional discussion.

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

There were no restructuring charges recorded for the three months ended March 31, 2025 and 2024, respectively.

SUBSEQUENT EVENTS

Senior Notes due 2033

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

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

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

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

Series A Shares

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

On October 30, 2024, our Board of Directors declared a cash dividend on our ordinary shares and eligible participating securities of $ 0.30 per share for the quarter ended September 30, 2024, payable on November 25, 2024 to the holders of record on November 14, 2024.

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

On April 30, 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 March 31, 2025, payable on May 23, 2025 to the holders of record on May 16, 2025.

Additionally, on April 30, 2025, our Board of Directors also declared cash dividends on the Series C Preferred Shares and Series D Preferred Shares of $ 0.52 and $ 0.59 per share, respectively, payable on May 19, 2025 to the holders of record on May 12, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements