FTAI Aviation Ltd. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand FTAI Aviation Ltd. (the “Company,” “we,” “our” or “us”). Our MD&A should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes, and with Part II, Item 1A, “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q. Overview We specialize in the acquisition, lease, repair and sale of aviation equipment, primarily CFM56-5B, CFM56-7B and V2500 aircraft engines. We repair and sell or lease, through our maintenance facilities, commercial expertise and exclusivity arrangements, refurbished aircraft engines and aftermarket components of aircraft engines, including PMA parts developed and manufactured through a joint venture. We target assets which require maintenance repairs that can be performed through our proprietary Module Factory process of engineering. Refurbishing our own engines, modules and parts at significant scale incentivizes us to conduct repairs as efficiently as possible, which we believe creates a large opportunity to provide a low-cost, flexible, customer-driven alternative to engine maintenance for airlines and lessors worldwide. As of September 30, 2025, we had total consolidated assets of $4.2 billion and total equity of $252.5 million. Internalization of Management On May 28, 2024, the Company entered into definitive agreements with the Former Manager and Master GP to internalize the Company’s management function. As part of the termination of the Management Agreement, the Company (i) paid the Former Manager (for itself and on behalf of the Master GP, as applicable) the Cash Consideration, the compensation accrued and payable, but not yet paid, under the Management Agreement and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration; (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30 thousand. Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP. In connection with the termination of the Management Agreement, the Company also entered into a Transition Services Agreement with the Former Manager. Under the Transition Services Agreement, the Former Manager was required to continue to provide the Company and its affiliates with all of the Services for a transition period until October 31, 2024, during which the Company procured replacements for the Services. In addition, the Former Manager was required to continue to provide the services that were reasonably required by the Company to prepare its quarterly and annual financial statements until May 31, 2025. The Services were provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, including the allocated cost of, among other things, overhead, employee wages and compensation, rent and related real estate expenses and actually incurred out-of-pocket expenses, plus a mark-up of ten percent (10%). Impact of Russia’s Invasion of Ukraine Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the three months ended March 31, 2022. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines. We determined that it is unlikely that we will regain possession of the aircraft and engines that had not yet been recovered from U kraine and Russia. As a result, we recognized an impairment charge totaling $120.0 million, net of maintenance deposits for the year ended December 31, 2022, to write-off the entire carrying value of leasing equipment assets that we did not expect to recover from Ukraine and Russia. As of September 30, 2025, eight aircraft and seventeen engines were still located in Russia. Our lessees are required to provide insurance coverage with respect to leased aircraft and engines, and we are named as insureds under those policies in the event of a total loss of an aircraft or engine. We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where a lessee’s policy fails to indemnify us. The insured value of the aircraft and engines that remain in Russia is $210.7 million. We intend to pursue all of our claims under these policies. However, the timing and amount of any recoveries under these policies are uncertain. The extent of the impact of Russia’s invasion of Ukraine and the related sanctions on our results, including the ability for us to recover our leasing equipment in the region, will depend on future developments, including the duration of the conflict, sanctions and restrictions imposed by Russian and international governments, all of which remain uncertain. Strategic Capital Initiative On December 30, 2024, the Company announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The first partnership under the initiative, the 2025 Partnership, will focus on acquiring 737NG and A320ceo aircraft. The Strategic Capital Initiative, and its related partnerships, will allow the Company to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The 2025 Partnership, and follow-on partnerships, will be the primary buyer of on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, will manage the aircraft in the 2025 Partnership, and the Company will receive customary, market-based compensation. The Company also made a minority capital commitment and will make additional commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors. 33 Operating Segments The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aviation Leasing and (ii) Aerospace Products. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to lessees, 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. Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, internalization fee and management fees and incentive compensation pursuant to the Management Agreement prior to the Internalization effective May 28, 2024. Additionally, Corporate and Other also includes offshore energy related assets, which consist of equipment that support offshore oil and gas activities and production. Adjusted EBITDA (Non-GAAP) Besides net income (loss), the chief operating decision maker (“CODM”) utilizes Adjusted EBITDA as a key performance measure. Adjusted EBITDA is not a financial measure in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). This performance measure provides the CODM with the information necessary to assess operational performance and make resource and allocation decisions. We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance. Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and preferred shares and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, internalization fee to affiliate, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA, if any. 34 Results of Operations Comparison of the three and nine months ended September 30, 2025 and 2024 The following table presents our consolidated results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2025 2024 2025 2024 Revenues Aerospace products revenue $ 459,206 $ 303,469 $ 155,737 $ 1,144,317 $ 737,726 $ 406,591 MRE Contract revenue 58,663 — 58,663 228,886 — 228,886 Lease income 55,072 65,450 (10,378) 185,951 189,365 (3,414) Maintenance revenue 52,370 59,917 (7,547) 175,081 156,894 18,187 Asset sales revenue 38,461 34,953 3,508 105,315 145,993 (40,678) Other revenue (1) 3,292 2,005 1,287 5,831 6,104 (273) Total revenues 667,064 465,794 201,270 1,845,381 1,236,082 609,299 Expenses Cost of sales 362,922 219,496 143,426 980,894 568,157 412,737 Operating expenses 39,092 26,858 12,234 105,858 81,274 24,584 General and administrative 1,829 4,045 (2,216) 7,387 10,697 (3,310) Acquisition and transaction expenses 7,066 9,341 (2,275) 18,847 23,539 (4,692) Management fees and incentive allocation to affiliate — — — — 8,449 (8,449) Internalization fee to affiliate — — — — 300,000 (300,000) Depreciation and amortization 55,278 56,775 (1,497) 170,076 163,386 6,690 Asset impairment — — — — 962 (962) Total expenses 466,187 316,515 149,672 1,283,062 1,156,464 126,598 Other (expense) income Interest expense (60,784) (57,937) (2,847) (186,789) (160,840) (25,949) Equity in losses of unconsolidated entities (2) (4,224) (438) (3,786) (16,841) (1,799) (15,042) Loss on extinguishment of debt — — — — (13,920) 13,920 Gain on sale to the 2025 Partnership 4,609 — 4,609 50,083 — 50,083 Other income 3,570 2,909 661 63,797 3,045 60,752 Total other expense (56,829) (55,466) (1,363) (89,750) (173,514) 83,764 Income (loss) from before income taxes 144,048 93,813 50,235 472,569 (93,896) 566,465 Provision for (benefit from) income taxes 26,330 7,331 18,999 87,067 (130) 87,197 Net income (loss) 117,718 86,482 31,236 385,502 (93,766) 479,268 Less: Dividends on preferred shares 3,709 8,335 (4,626) 13,533 25,005 (11,472) Less: Loss on redemption of preferred shares — — — 6,327 — 6,327 Net income (loss) attributable to shareholders $ 114,009 $ 78,147 $ 35,862 $ 365,642 $ (118,771) $ 484,413 ______________________________________________________ (1) Includes servicing fees of $3,035 and $5,635 for the three and nine months ended September 30, 2025, respectively, from the 2025 Partnership. (2) Includes the profit elimination of $(3,908) and $(15,793) for the three and nine months ended September 30, 2025, respectively, for sales to the 2025 Partnership. 35 The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2025 2024 2025 2024 Net income (loss) attributable to shareholders $ 114,009 $ 78,147 $ 35,862 $ 365,642 $ (118,771) $ 484,413 Add: Provision for (benefit from) income taxes 26,330 7,331 18,999 87,067 (130) 87,197 Add: Equity-based compensation expense 5,655 1,430 4,225 16,059 2,578 13,481 Add: Acquisition and transaction expenses 7,066 9,341 (2,275) 18,847 23,539 (4,692) Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — — — 6,327 13,920 (7,593) Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — 962 (962) Add: Incentive allocations — — — — 7,456 (7,456) Add: Depreciation and amortization expense (1) 67,855 69,453 (1,598) 201,919 194,384 7,535 Add: Interest expense and dividends on preferred shares 64,493 66,272 (1,779) 200,322 185,845 14,477 Add: Internalization fee to affiliate — — — — 300,000 (300,000) Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 11,657 (382) 12,039 16,513 (1,547) 18,060 Less: Equity in losses (earnings) of unconsolidated entities (3) 316 438 (122) 1,048 1,799 (751) Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 297,381 $ 232,030 $ 65,351 $ 913,744 $ 610,035 $ 303,709 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2025 and 2024: (i) depreciation and amortization expense of $55,278 and $56,775, (ii) lease intangible amortization of $534 and $3,720 and (iii) amortization for lease incentives of $12,043 and $8,958, respectively. Includes the following items for the nine months ended September 30, 2025 and 2024: (i) depreciation and amortization expense of $170,076 and $163,386, (ii) lease intangible amortization of $5,893 and $11,482 and (iii) amortization for lease incentives of $25,950 and $19,516, respectively. (2) Includes the following items for the three months ended September 30, 2025 and 2024: (i) net loss of $316 and $438, (ii) interest expense of $2,629 and $0, (iii) depreciation and amortization expense of $9,449 and $56, and (iv) tax benefit of $105 and $0, respectively. Includes the following items for the nine months ended September 30, 2025 and 2024: (i) net loss of $1,048 and $1,799, (ii) interest expense of $4,119 and $0, (iii) depreciation and amortization expense of $13,077 and $252, (iv) acquisition and transaction expenses of $470 and $0, and (v) tax benefit of $105 and $0 respectively. (3) Excludes the profit elimination of $3,908 and $15,793 for the three and nine months ended September 30, 2025, for sales to the 2025 Partnership. Revenues Comparison of the three months ended September 30, 2025 and 2024 Total revenues increased by $201.3 million, driven by the following: • Aerospace products revenue increased by $155.7 million, primarily due to a $145.7 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $7.4 million increase in other maintenance service revenues. • MRE Contract revenue increased by $58.7 million, primarily due to an increase in engine and module sales made to the 2025 Partnership. • Lease income decreased by $10.4 million, primarily due to a decrease of $8.1 million in the Offshore Energy business driven by the sale of the two vessels during Q4 2024 and a decrease in aircraft lease revenue of $9.0 million driven by the sale of Seed Assets to the 2025 Partnership. This was partially offset by an increase in engine lease revenue of $6.6 million. Comparison of the nine months ended September 30, 2025 and 2024 Total revenues increased by $609.3 million, driven by the following: • Aerospace products revenue increased $406.6 million, primarily due to a $382.7 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $19.3 million increase in other maintenance service revenues. 36 • MRE Contract revenue increased by $228.9 million, primarily due to an increase in engine and module sales made to the 2025 Partnership. • Maintenance reve nue increased by $18.2 million, primarily due to an increase in aircraft maintenance revenue of $17.7 million driven by higher end-of-lease return compensation and an increase in the recognition of maintenance deposits due to aircraft redelivery, partially offset by a decrease in utilization and number of aircraft on lease. • Asset sales revenue decreased by $40.7 million, primarily due to change in product mix of assets sold in the current period as compared to the prior period. Specifically, while the number of total assets sold in the current period was higher than prior period, the number of engines sold in the prior period was higher than the current period. Expenses Comparison of the three months ended September 30, 2025 and 2024 Total expenses increased by $149.7 million, driven by the following: • Cost of sales increased by $143.4 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period. Comparison of the nine months ended September 30, 2025 and 2024 Total expenses increased by $126.6 million, driven by the following: • Cost of sales increased by $412.7 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period. • Internalization fee to affiliate decreased by $300.0 million relating to the Internalization effective May 28, 2024. Other (expense) income Comparison of the three months ended September 30, 2025 and 2024 Total other expense increased by $1.4 million driven by the following: • Gain on sale to the 2025 Partnership increased by $4.6 million, resulting from the sale of 8 aircraft to the 2025 Partnership within the Aviation Leasing Segment. • Interest expense increased by $2.8 million, reflecting an increase in interest expense of $7.3 million on the 5.875% Senior Notes due 2033, which were issued in October 2024, partially offset by decreases in interest expense in (i) the 9.75% Senior Notes due 2027, which were redeemed in October 2024, of $3.2 million and (ii) the Revolving Credit Facility of $1.5 million, driven by the increase in average debt outstanding of $66.7 million. • Equity in losses of unconsolidated entities increased by $3.8 million, primarily driven by the profit elimination of $3.9 million for sales to the 2025 Partnership. Comparison of the nine months ended September 30, 2025 and 2024 Total other expense decreased by $83.8 million driven by the following: • Other income increased by $60.8 million, primarily due to a $54.3 million insurance settlement and a $5.3 million increase in interest income earned on financing receivables within our Aviation Leasing Segment. • Gain on sale to the 2025 Partnership increased by $50.1 million, resulting from the sale of 45 aircraft to the 2025 Partnership within the Aviation Leasing Segment. • Loss on debt extinguishment decreased by $13.9 million driven by the 2024 redemption of Senior Notes due 2025 and partial redemption of Senior Notes due 2027. • Interest expense increased by $25.9 million, reflecting increases in interest expense in (i) the 7.00% Senior Notes due 2032 of $26.0 million, (ii) the 5.875% Senior Notes due 2033 of $22.0 million, and (iii) the 7.00% Senior Notes due 2031 of $13.8 million. These were partially offset by decreases in interest expense in (i) the 9.75% senior notes due 2027 of $22.0 million, and (ii) the 6.5% senior notes due 2025 of 13.0 million. • Equity in losses of unconsolidated entities increased by $15.0 million, primarily driven by the profit elimination of $15.8 million for sales to the 2025 Partnership. Provision for (benefit from) income taxes The provision for income taxes increased $19.0 million and $87.2 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily driven by the higher income generated in the Aerospace Products segment within taxable jurisdictions for both the three and nine months ended September 30, 2025, and the higher income generated in the Aviation Leasing segment within taxable jurisdictions for the nine months ended September 30, 2025. 37 Net income (loss) Net income increased by $31.2 million and $479.3 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased by $65.4 million and $303.7 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the changes noted above. 38 Aviation Leasing Segment As of September 30, 2025, in our Aviation Leasing segment, we own and manage 323 aviation assets, consisting of 48 commercial aircraft and 275 engines, including eight aircraft and seventeen engines that were still located in Russia. As of September 30, 2025, 39 of our commercial aircraft and 167 of our engines were leased to operators or other third parties. Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease. Our aviation equipment was approximately 76% utilized during the three months ended September 30, 2025, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes. Our aircraft currently have a weighted average remaining lease term of 47 months, and our engines currently on-lease have an average remaining lease term of 35 months. The table below provides additional information on the assets in our Aviation Leasing segment, including transfers which involve aircraft breakdowns, engine transfers from leasing equipment to inventory for manufacturing and sales, and engine transfers from inventory to leasing equipment for rebuilding and sales: Aviation Assets Widebody Narrowbody Total Aircraft Assets at January 1, 2025 5 104 109 Purchases — 17 17 Sales — (45) (45) Transfers — (33) (33) Assets at September 30, 2025 5 43 48 Engines Assets at January 1, 2025 23 289 312 Purchases — 70 70 Sales (5) — (5) Transfers — (102) (102) Assets at September 30, 2025 18 257 275 39 The following table presents our results of operations for our Aviation Leasing segment: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2025 2024 2025 2024 Revenues Lease income $ 55,072 $ 57,322 $ (2,250) $ 185,951 $ 168,927 $ 17,024 Maintenance revenue 52,370 59,917 (7,547) 175,081 156,894 18,187 Asset sales revenue 38,461 34,953 3,508 105,315 145,993 (40,678) Other revenue (1) 3,292 74 3,218 5,827 199 5,628 Total revenues 149,195 152,266 (3,071) 472,174 472,013 161 Expenses Cost of sales 34,769 20,684 14,085 106,517 111,542 (5,025) Operating expenses 10,146 9,995 151 28,661 26,984 1,677 Acquisition and transaction expenses 3,571 2,620 951 7,053 7,350 (297) Depreciation and amortization 50,226 52,455 (2,229) 155,710 151,211 4,499 Asset impairment — — — — 962 (962) Total expenses 98,712 85,754 12,958 297,941 298,049 (108) Other income (expense) Equity in losses of unconsolidated entities (1,083) — (1,083) (2,642) (207) (2,435) Gain on sale to the 2025 Partnership 4,609 — 4,609 50,083 — 50,083 Other income 2,103 1,982 121 61,696 1,440 60,256 Total other income 5,629 1,982 3,647 109,137 1,233 107,904 Income before income taxes 56,112 68,494 (12,382) 283,370 175,197 108,173 Provision for income taxes 14,500 8,898 5,602 58,301 20,224 38,077 Net income attributable to shareholders $ 41,612 $ 59,596 $ (17,984) $ 225,069 $ 154,973 $ 70,096 ______________________________________________________ (1) Includes servicing fees of $3,035 and $5,635 for the three and nine months ended September 30, 2025, respectively, from the 2025 Partnership. 40 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2025 2024 2025 2024 Net income attributable to shareholders $ 41,612 $ 59,596 $ (17,984) $ 225,069 $ 154,973 $ 70,096 Add: Provision for income taxes 14,500 8,898 5,602 58,301 20,224 38,077 Add: Equity-based compensation expense 264 176 88 703 409 294 Add: Acquisition and transaction expenses 3,571 2,620 951 7,053 7,350 (297) Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — 962 (962) Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense (1) 62,803 65,133 (2,330) 187,553 182,209 5,344 Add: Interest expense and dividends on preferred shares — — — — — — Add: Internalization fee to affiliate — — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 10,575 — 10,575 14,379 (123) 14,502 Less: Equity in losses of unconsolidated entities 1,083 — 1,083 2,642 207 2,435 Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 134,408 $ 136,423 $ (2,015) $ 495,700 $ 366,211 $ 129,489 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2025 and 2024: (i) depreciation expense of $50,226 and $52,455, (ii) lease intangible amortization of $534 and $3,720 and (iii) amortization for lease incentives of $12,043 and $8,958, respectively. Includes the following items for the nine months ended September 30, 2025 and 2024: (i) depreciation expense of $155,710 and $151,211, (ii) lease intangible amortization of $5,893 and $11,482 and (iii) amortization for lease incentives of $25,950 and $19,516, respectively. (2) Includes the following items for the three months ended September 30, 2025 and 2024: (i) net loss of $1,083 and $0, (ii) interest expense of $2,629 and $0, and (iii) depreciation and amortization of $9,029 and $0, respectively. Includes the following items for the nine months ended September 30, 2025 and 2024: (i) net loss of $2,642 and $207, (ii) interest expense of $4,119 and $0, (iii) depreciation and amortization of $12,432 and $84 and (iv) acquisition and transaction expenses of $470 and $0, respectively. Revenues Comparison of the three months ended September 30, 2025 and 2024 Total reven ue decreased by $3.1 million, driven by the following: • Maintenance revenue decreased by $7.5 million, primarily due to a decrease in aircraft maintenance revenue of $7.0 million, driven by the sale of Seed Assets to the 2025 Partnership, as well as a decrease in utilization. • Lease income decreased by $2.3 million due to a decrease in aircraft lease revenue of $9.0 million, driven by the sale of Seed Assets to the 2025 Partnership, partially offset by an increase in engine lease revenue of $6.6 million. • Asset sales revenue increased by $3.5 million, primarily due to an overall increase in the number of sales transactions of commercial aircraft and engines in the current period as compared to the prior period. • Other revenue increased by $3.2 million as a result of servicing fees earned in our capacity as the Servicer to the 2025 Partnership. Comparison of the nine months ended September 30, 2025 and 2024 Total revenue increased $0.2 million, driven by the following: • Maintenance revenue increased by $18.2 million, primarily due to an increase in aircraft maintenance revenue of $17.7 million driven by higher end-of-lease return compensation and an increase in the recognition of maintenance deposits due to aircraft redelivery, partially offset by the sale of Seed Assets to the 2025 Partnership, as well as a decrease in utilization. • Lease income increased by $17.0 million, primarily due to an increase in engine lease revenue of $16.9 million, driven by an increased number of engines on lease in addition to higher rental rates. 41 • Other revenue increased by $5.6 million as a result of servicing fees earned in our capacity as the Servicer to the 2025 Partnership. • Asset sales revenue decreased by $40.7 million, primarily due to change in product mix of assets sold in the current period as compared to the prior period. Specifically, while the number of total assets sold in the current period was higher than prior period, the number of engines sold in the prior period was higher than the current period. Expenses Comparison of the three months ended September 30, 2025 and 2024 Total expenses increased by $13.0 million, driven by the following: • Cost of sales increased by $14.1 million, primarily due to an increase in asset sales as compared to the prior period. • Depreciation and amortization expense decreased by $2.2 million, primarily driven by the sale of Seed Assets to the 2025 Partnership. Comparison of the nine months ended September 30, 2025 and 2024 Total expenses decreased by $0.1 million, driven by the following: • Cost of sales decreased by $5.0 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue. • Depreciation and amortization expense increased by $4.5 million, primarily driven by a higher average book value of engines on lease, partially offset by the sale of Seed Assets to the 2025 Partnership during the period. Other income (expense) Total other income increased by $3.6 million and $107.9 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to (i) gains on sale to the 2025 Partnership of $4.6 million and $50.1 million, respectively, (ii) a $0.8 million and $5.3 million increase in interest income earned on financing receivables during 2025, respectively, and (iii) an insurance settlement of $54.3 million in the nine months ended September 30, 2025. Provision for income taxes The provision for income taxes increased by $5.6 million and $38.1 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the respective changes in income discussed above from leasing activities in jurisdictions subject to taxes. Net income Net income decreased by $18.0 million and increased by $70.1 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITD A decreased by $2.0 million and increased by $129.5 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the changes noted above. 42 Aerospace Products Segment The Aerospace Products segment, through our maintenance facilities, equity method investment and exclusivity arrangements, develops and manufactures, repairs/refurbishes, and sells aircraft engines and aftermarket components primarily for the CFM56-5B, CFM56-7B, and V2500 commercial aircraft engines. Our engine, module, and parts sales are facilitated through a dedicated commercial maintenance program designed to focus on modular and parts repair and refurbishment of these engines. To further enhance this business and establish permanent engine and module manufacturing capabilities, we acquired Lockheed Martin Commercial Engine Solutions (LMCES). Refer to Note 3, “Acquisition of Lockheed Martin Commercial Engine Solutions” in our “Notes to Consolidated Financial Statements” for additional information. We entered into an agreement within our MRE business to supply replacement aircraft engines and modules for the life of the 2025 Partnership. Other serviceable used modules and parts are sold through our exclusive partnership, which is responsible for the teardown, repair, marketing, and sales of parts from our CFM56-5B and CFM56-7B engine pool. We also acquired the remaining interest in Quick Turn Engine Center LLC, or “QuickTurn” (formerly iAero Thrust LLC), a hospital maintenance and testing facility specializing in the CFM56-5B and CFM56-7B engines. We further expanded our footprint in engine services by acquiring a 50% equity interest in QuickTurn Europe, which will operate as a dedicated maintenance, repair, and overhaul facility for CFM56 engines. Additionally, we maintain a 25% ownership stake in the Advanced Engine Repair joint venture, which is focused on developing innovative cost-saving programs for engine repairs. The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2025 2024 2025 2024 Revenues Aerospace products revenue $ 459,206 $ 303,469 $ 155,737 $ 1,144,317 $ 737,726 $ 406,591 MRE Contract revenue 58,663 — 58,663 228,886 — 228,886 Total revenues 517,869 303,469 214,400 1,373,203 737,726 635,477 Expenses Cost of sales 328,153 198,812 129,341 874,377 456,615 417,762 Operating expenses 10,545 2,617 7,928 25,221 16,510 8,711 Acquisition and transaction expenses 599 2,100 (1,501) 3,145 2,871 274 Depreciation and amortization 3,930 1,306 2,624 11,218 3,177 8,041 Total expenses 343,227 204,835 138,392 913,961 479,173 434,788 Other income (expense) Equity in earnings (losses) of unconsolidated entities 767 (438) 1,205 1,594 (1,592) 3,186 Total other income (expense) 767 (438) 1,205 1,594 (1,592) 3,186 Income before income taxes 175,409 98,196 77,213 460,836 256,961 203,875 Provision for income taxes 26,815 4,408 22,407 72,017 11,865 60,152 Net income attributable to shareholders $ 148,594 $ 93,788 $ 54,806 $ 388,819 $ 245,096 $ 143,723 43 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2025 2024 2025 2024 Net income attributable to shareholders $ 148,594 $ 93,788 $ 54,806 $ 388,819 $ 245,096 $ 143,723 Add: Provision for income taxes 26,815 4,408 22,407 72,017 11,865 60,152 Add: Equity-based compensation expense 168 156 12 491 154 337 Add: Acquisition and transaction expenses 599 2,100 (1,501) 3,145 2,871 274 Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 3,930 1,306 2,624 11,218 3,177 8,041 Add: Interest expense and dividends on preferred shares — — — — — — Add: Internalization fee to affiliate — — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) 1,082 (382) 1,464 2,134 (1,424) 3,558 Less: Equity in (earnings) losses of unconsolidated entities (767) 438 (1,205) (1,594) 1,592 (3,186) Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 180,421 $ 101,814 $ 78,607 $ 476,230 $ 263,331 $ 212,899 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2025 and 2024: (i) net income of $767 and net loss of $438, (ii) depreciation and amortization expense of $420 and $56, and (iii) tax benefit of $105 and $0, respectively. Includes the following items for the nine months ended September 30, 2025 and 2024: (i) net income of $1,594 and net loss of $1,592, (ii) depreciation and amortization expense of $645 and $168, and (iii) tax benefit of $105 and $0, respectively. Revenues Comparison of the three months ended September 30, 2025 and 2024 Total revenues increased by $214.4 million, due to the following: • Aerospace Products revenue increased by $155.7 million, primarily due to a $145.7 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $7.4 million increase in other maintenance service revenues. • MRE Contract revenue increased by $58.7 million, primarily due to an increase in engine and module sales made to the 2025 Partnership. Comparison of the nine months ended September 30, 2025 and 2024 Total revenues increased by $635.5 million, due to the following: • Aerospace Products revenue increased by $406.6 million, primarily due to a $382.7 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $19.3 million increase in other maintenance service revenues. • MRE Contract revenue increased by $228.9 million, primarily due to an increase in engine and module sales made to the 2025 Partnership. Expenses Comparison of the three months ended September 30, 2025 and 2024 Tota l expenses increased by $138.4 million, due to the following: • Cost of sale s increased by $129.3 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period. • Operating expenses increased by $7.9 million, primarily due to higher compensation and benefits expense due to the acquisition of LMCES and an increase in shipping and logistics expense. 44 Comparison of the nine months ended September 30, 2025 and 2024 Tota l expenses increased by $434.8 million, due to the following: • Cost of sale s increased by $417.8 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period. • Operating expenses increased by $8.7 million, primarily due to higher compensation and benefits expense due to the acquisition of LMCES. • Depreciation and amortization increased by $8.0 million due to the acquisition of LMCES in the third quarter of 2024. Provision for income taxes The provision for income taxes increased by $22.4 million and $60.2 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the increase in income discussed above from Aerospace Products activities in jurisdictions subject to taxes. Net income Net income increased $54.8 million and $143.7 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITD A increased $78.6 million and $212.9 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the changes noted above. 45 Corporate and Other The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2025 2024 2025 2024 Revenues Lease income $ — $ 8,128 $ (8,128) $ — $ 20,438 $ (20,438) Other revenue — 1,931 $ (1,931) 4 5,905 $ (5,901) Total revenues — 10,059 (10,059) 4 26,343 (26,339) Expenses Operating expenses 18,401 14,246 4,155 51,976 37,780 14,196 General and administrative 1,829 4,045 (2,216) 7,387 10,697 (3,310) Acquisition and transaction expenses 2,896 4,621 (1,725) 8,649 13,318 (4,669) Management fees and incentive allocation to affiliate — — — — 8,449 (8,449) Internalization fee to affiliate — — — — 300,000 (300,000) Depreciation and amortization 1,122 3,014 (1,892) 3,148 8,998 (5,850) Total expenses 24,248 25,926 (1,678) 71,160 379,242 (308,082) Other income (expense) Interest expense (60,784) (57,937) (2,847) (186,789) (160,840) (25,949) Loss on extinguishment of debt — — — — (13,920) 13,920 Other income 1,467 927 540 2,101 1,605 496 Total other expense (59,317) (57,010) (2,307) (184,688) (173,155) (11,533) Loss before income taxes (83,565) (72,877) (10,688) (255,844) (526,054) 270,210 Benefit from income taxes (14,985) (5,975) (9,010) (43,251) (32,219) (11,032) Net loss (68,580) (66,902) (1,678) (212,593) (493,835) 281,242 Less: Dividends on preferred shares 3,709 8,335 (4,626) 13,533 25,005 (11,472) Less: Loss on redemption of preferred shares — — — 6,327 — 6,327 Net loss attributable to shareholders $ (72,289) $ (75,237) $ 2,948 $ (232,453) $ (518,840) $ 286,387 46 The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2025 2024 2025 2024 Net loss attributable to shareholders $ (72,289) $ (75,237) $ 2,948 $ (232,453) $ (518,840) $ 286,387 Add: Benefit from income taxes (14,985) (5,975) (9,010) (43,251) (32,219) (11,032) Add: Equity-based compensation expense 5,223 1,098 4,125 14,865 2,015 12,850 Add: Acquisition and transaction expenses 2,896 4,621 (1,725) 8,649 13,318 (4,669) Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — — — 6,327 13,920 (7,593) Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — 7,456 (7,456) Add: Depreciation and amortization expense 1,122 3,014 (1,892) 3,148 8,998 (5,850) Add: Interest expense and dividends on preferred shares 64,493 66,272 (1,779) 200,322 185,845 14,477 Add: Internalization fee to affiliate — — — — 300,000 (300,000) Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — — Less: Equity in losses (earnings) of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ (13,540) $ (6,207) $ (7,333) $ (42,393) $ (19,507) $ (22,886) Revenues Total revenues decreased $10.1 million and $26.3 million for the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the sale of the two vessels within the Offshore Energy business during the fourth quarter of 2024. Expenses Comparison of the three months ended September 30, 2025 and 2024 Total expens es decreased by $1.7 million, due to the following: • Acquisition and transaction expense decreased $1.7 million, primarily due to lower professional fees associated with the Internalization. • Depreciation and amortization decreased by $1.9 million, due to the sale of the two vessels within the Offshore Energy business during the fourth quarter of 2024. • General and administrative decreased by $2.2 million, primarily due higher expenses in the comparative period related to the Internalization effective May 28, 2024. • Operating expenses increased $4.2 million, primarily due to higher compensation and benefits expense due to an increase in employee headcount and increased overall compensation. Comparison of the nine months ended September 30, 2025 and 2024 Total expenses decreased by $308.1 million, primarily due to the Internalization effective May 28, 2024, which resulted in an internalization fee to affiliate of $300.0 million in the comparative period. Other income (expense) Total other expense increased by $2.3 million for the three months ended September 30, 2025, as compared to the prior period, due to the following: • Interest expense increased by $2.8 million, reflecting an increase in interest expense of $7.3 million on the 5.875% Senior Notes due 2033, which were issued in October 2024, partially offset by decreases in interest expense in (i) the 9.75% Senior Notes due 2027, which were redeemed in October 2024, of $3.2 million and (ii) the Revolving Credit Facility of $1.5 million, driven by the decrease in average debt outstanding of $66.7 million. 47 Total other expense increased by $11.5 million for the nine months ended September 30, 2025, as compared to the prior period, due to the following: • Interest expense increased by $25.9 million, reflecting increases in interest expense in (i) the 7.00% Senior Notes due 2032 of $26.0 million, (ii) the 5.875% Senior Notes due 2033 of $22.0 million, and (iii) the 7.00% Senior Notes due 2031 of $13.8 million. These were partially offset by decreases in interest expense in (i) the 9.75% senior notes due 2027 of $22.0 million, and (ii) the 6.5% senior notes due 2025 of $13.0 million. • Loss on extinguishment of debt decreased by $13.9 million, driven by the 2024 redemption of Senior Notes due 2025 and partial redemption of Senior Notes due 2027. Benefit from income taxes The benefit from income taxes increased by $9.0 million and $11.0 million for the three and nine months ended September 30, 2025, as compared to the prior period. The increase was mainly driven by higher corporate overhead expenses deductible for 2025 tax purposes. Net loss Net loss increased by $1.7 million and decreased by $281.2 million during the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased by $7.3 million and $22.9 million during the three and nine months ended September 30, 2025, respectively, as compared to the prior period, primarily due to the changes noted above. Liquidity and Capital Resources We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during various environments. This includes limiting discretionary spending across the organization and re-prioritizing our investments as necessary. On December 30, 2024, the Company announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The first partnership under the initiative, the 2025 Partnership, focuses on acquiring 737NG and A320ceo aircraft. The Strategic Capital Initiative, and its related partnerships, allows the Company to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The Company has agreed that the 2025 Partnership, and follow-on partnerships, will be the primary buyer of on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, will manage the aircraft in the 2025 Partnership, and the Company will receive customary, market-based compensation. The Company has also made a minority investment and will make future investments in the 2025 Partnership. The Company expects to manage the aircraft for and make minority investments in, future partnerships. Our principal uses of liquidity have been and continue to be (i) acquisitions of aircraft and engines, (ii) dividends to our ordinary and preferred shareholders, (iii) expenses associated with our operating activities, and (iv) debt service obligations associated with our investments. In the future, instead of acquiring on-lease aircraft directly, as part of the Strategic Capital Initiative, we will invest in the related partnerships and such partnerships will acquire on-lease aircraft. • Cash used for the purpose of making investments was $757.4 million and $1.0 billion during the nine months ended September 30, 2025 and 2024, respectively. • Distributions to shareholders, including cash dividends, were $105.8 million and $115.8 million during the nine months ended September 30, 2025 and 2024, respectively. • Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities. Uses of liquidity associated with our debt obligations are captured in our cash flows from financing activities. Our principal sources of liquidity to fund these uses have been and continue to be (i) revenues from our aviation assets (including finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of securities and (iii) proceeds from asset sales. • Cash flows used in operating activities, plus the principal collections on finance leases and maintenance reserve collections were $89.8 million and $108.7 million during the nine months ended September 30, 2025 and 2024, respectively. • During the nine months ended September 30, 2025, additional borrowings and total principal repayments in connection with the Revolving Credit Facility were $430.0 million and $430.0 million, respectively. During the nine months ended September 30, 2024, additional borrowings were obtained in connection with the (i) Senior Notes due 2032 of $800.0 million, (ii) Senior Notes due 2031 of $700.0 million and (iii) Revolving Credit Facility of $590.0 million and total principal repayments were made of (i) $650.0 million related to the Senior Notes due 2025, (ii) $440.0 million relating to the Revolving Credit Facility and (iii) $269.5 million related to the Senior Notes due 2027. • Proceeds from the sale of assets were $1,375.5 million and $542.9 million during the nine months ended September 30, 2025 and 2024, respectively. 48 We are currently evaluating several potential transactions and related financings, including, but not limited to, certain additional debt and equity financings, which could occur within the next 12 months. None of these potential transactions, negotiations, or financings are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction or related financing. Historical Cash Flow Comparison of the nine months ended September 30, 2025 and 2024 The following table compares the historical cash flow for the nine months ended September 30, 2025 and 2024: Nine Months Ended September 30, (in thousands) 2025 2024 Cash Flow Data: Net cash used in operating activities $ (131,666) $ (146,153) Net cash provided by (used in) investing activities 722,668 (442,731) Net cash (used in) provided by financing activities (196,173) 610,016 Net cash used in operating activities decreased $14.5 million, primarily reflecting an increase in our Net income of $479.3 million and certain adjustments to reconcile net income to cash used in operating activities, including an: • increase in Deferred income taxes of $80.0 million; partially offset by • decrease in Changes in net working capital of $249.9 million, • decrease in Non-cash termination fee to affiliate of $150.0 million, • increase in Gain on insurance recoveries of $54.3 million, • increase in Gain on sale of assets of $50.4 million, • increase in Gain on sale of assets to the 2025 Partnership of $50.1 million. Net cash provided by investing activities increased $1.2 billion, primarily due to an: • increase in Proceeds from the sale of assets to the 2025 partnership of $485.1 million, • increase in Proceeds from the sale of assets of $347.5 million, • decrease in Acquisition of leasing equipment of $132.6 million, • decrease in Acquisition of business, net of cash acquired of $106.5 million, • decrease in Deposits for acquisition of leasing equipment of $104.1 million; partially offset by • increase in Investment in unconsolidated entities of $188.7 million. Net cash used in financing activities increased $806.2 million, primarily due to a: • decrease in Proceeds from debt of $1.6 billion, and • increase in Redemption of preferred shares of $124.2 million; partially offset by • decrease in Repayment of debt of $937.3 million. Contractual Obligations Our material cash requirements include the following contractual and other obligations: Debt Obligations — As of September 30, 2025, we had outstanding principal and interest payment obligations of $3.5 billion and $1.2 billion, respectively, of which only interest payments of $228.8 million are due in the next twelve months. Refer to Note 7, “Debt” in our “Notes to Consolidated Financial Statements” for additional information about our debt obligations. Lease Obligations —As of September 30, 2025, we had outstanding operating and finance lease obligations of $41.0 million, of which $4.4 million is due in the next twelve months. Other Cash Requirements —In addition to our contractual obligations, we pay quarterly cash dividends on our ordinary shares and preferred shares, which are subject to change at the discretion of our Board of Directors. During the last twelve months, we declared cash dividends of $123.1 million and $21.3 million on our ordinary shares and preferred shares, respectively. We expect to meet our future short-term liquidity requirements through cash on hand, unused borrowing capacity or future financings and net cash provided by our current operations. We expect that our operating subsidiaries will generate sufficient cash flow to cover operating expenses and the payment of principal and interest on our indebtedness as they become due. We may elect to meet certain long-term liquidity requirements or to continue to pursue strategic opportunities through utilizing cash 49 on hand, cash generated from our current operations and the issuance of securities in the future. Management believes adequate capital and borrowings are available from various sources to fund our commitments to the extent required. Critical Accounting Estimates and Policies There were no material changes to our critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2024. Recent Accounting Pronouncements See Note 2, “Summary of Significant Accounting Policies” in our “Notes to Consolidated Financial Statements” for recent accounting pronouncements.