Item 2. Management’s Discussion and Analysis
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 are a leading independent engine maintenance platform focused on the CFM56-5B, CFM56-7B and V2500 aircraft engines which power the 737NG and A320ceo aircraft. We repair and rebuild engines in our maintenance facilities and with our joint venture partners, and sell or lease the engines to airlines and asset owners around the world. Our primary business model is to sell engines via exchange through our proprietary Maintenance, Repair and Exchange (“MRE”) model which is reported under our Aerospace Products segment.
We also own and manage a portfolio of on- and off-lease aircraft and engines through our Aviation Leasing segment. While historically these investment activities have been primarily held on balance sheet, at the end of 2024, we launched our Strategic Capital Initiative, which consists of an asset management business that manages third-party capital to invest in on-lease aircraft. We expect our primary investment activities to be through our Strategic Capital Initiative going forward.
As of June 30, 2026, we had total consolidated assets of $4.5 billion and total equity of $404.0 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%).
Strategic Capital Initiative
On December 30, 2024, we announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The Strategic Capital Initiative, and its related partnerships, allows us to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The first partnership under the initiative (the “2025 Partnership”) focuses on acquiring 737NG and A320ceo aircraft. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion of equity commitments.
The 2025 Partnership, and follow-on partnerships, is the primary buyer of on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, provides aircraft management services to the 2025 Partnership, and the Company receives customary, market-based compensation for providing such services. The Company made minority capital commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors.
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) Aerospace Products and (ii) Aviation Leasing. The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, 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.
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, and expenses relating to FTAI Power.
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Adjusted EBITDA (Non-GAAP)
Besides net income (loss), the chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, 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, asset impairment charges, incentive allocations, depreciation and amortization expense, interest expense and dividends on preferred shares, 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, if any.
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Results of Operations
Comparison of the three and six months ended June 30, 2026 and 2025
The following table presents our consolidated results of operations:
Three Months Ended June 30, Change Six Months Ended
June 30, Change
(in thousands) 2026 2025 2026 2025
Revenues
Aerospace products revenue $ 692,229 $ 420,686 $ 271,543 $ 1,214,814 $ 685,111 $ 529,703
MRE Contract revenue 182,799 69,585 113,214 404,029 170,223 233,806
Lease income 27,765 62,439 (34,674) 67,657 130,879 (63,222)
Maintenance revenue 25,793 73,104 (47,311) 56,392 122,711 (66,319)
Asset sales revenue 16,925 47,915 (30,990) 27,109 66,854 (39,745)
Other revenue (1)
7,574 2,508 5,066 13,781 2,539 11,242
Total revenues 953,085 676,237 276,848 1,783,782 1,178,317 605,465
Expenses
Cost of sales 635,782 369,258 266,524 1,160,050 617,972 542,078
Operating expenses 67,567 34,328 33,239 132,554 66,766 65,788
General and administrative 2,245 2,442 (197) 4,658 5,558 (900)
Acquisition and transaction expenses 5,699 4,489 1,210 22,060 11,781 10,279
Depreciation and amortization 46,986 55,236 (8,250) 99,275 114,798 (15,523)
Total expenses 758,279 465,753 292,526 1,418,597 816,875 601,722
Other (expense) income
Interest expense (64,102) (63,965) (137) (125,509) (126,005) 496
Equity in earnings (losses) of unconsolidated entities (2)
9,970 (5,003) 14,973 7,607 (12,617) 20,224
Gain on sale to the 2025 Partnership 2,465 34,604 (32,139) 17,633 45,474 (27,841)
Other income 7,574 27,156 (19,582) 55,156 60,227 (5,071)
Total other expense (44,093) (7,208) (36,885) (45,113) (32,921) (12,192)
Income before income taxes
150,713 203,276 (52,563) 320,072 328,521 (8,449)
Provision for income taxes
25,619 37,878 (12,259) 57,079 60,737 (3,658)
Net income
125,094 165,398 (40,304) 262,993 267,784 (4,791)
Less: Dividends on preferred shares 3,709 3,709 — 7,418 9,824 (2,406)
Less: Loss on redemption of preferred shares 3,800 — 3,800 3,800 6,327 (2,527)
Net income attributable to shareholders
$ 117,585 $ 161,689 $ (44,104) $ 251,775 $ 251,633 $ 142
(1) Includes servicing fees of $6,988 and $12,849 for the three and six months ended June 30, 2026, respectively (2025 - $2,052 and $2,600, respectively), from the 2025 Partnership.
(2) Includes the profit elimination of $(6,597) and $(16,597) for the three and six months ended June 30, 2026, respectively (2025 - $(4,935) and $(11,885), respectively), for sales to the 2025 Partnership.
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The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA:
Three Months Ended
June 30, Change Six Months Ended
June 30, Change
(in thousands) 2026 2025 2026 2025
Net income attributable to shareholders
$ 117,585 $ 161,689 $ (44,104) $ 251,775 $ 251,633 $ 142
Add: Provision for income taxes
25,619 37,878 (12,259) 57,079 60,737 (3,658)
Add: Equity-based compensation expense 7,332 5,515 1,817 13,679 10,404 3,275
Add: Acquisition and transaction expenses 5,699 4,489 1,210 22,060 11,781 10,279
Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations 3,800 — 3,800 3,800 6,327 (2,527)
Add: Asset impairment charges — — — — — —
Add: Incentive allocations — — — — — —
Add: Depreciation and amortization expense (1)
52,118 65,677 (13,559) 111,631 134,064 (22,433)
Add: Interest expense and dividends on preferred shares 67,812 67,674 138 132,928 135,829 (2,901)
Add: Internalization fee to affiliate — — — — — —
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
28,046 4,815 23,231 48,273 4,856 43,417
Less: Equity in (earnings) losses of unconsolidated entities (3)
(16,567) 68 (16,635) (24,204) 732 (24,936)
Adjusted EBITDA (non-GAAP) $ 291,444 $ 347,805 $ (56,361) $ 617,021 $ 616,363 $ 658
(1) Includes the following items for the three months ended June 30, 2026: (i) depreciation and amortization expense of $46,986 (2025 - $55,236), (ii) lease intangible amortization of $(89) (2025 - $2,153) and (iii) amortization for lease incentives of $5,221 (2025 - $8,288).
Includes the following items for the six months ended June 30, 2026: (i) depreciation and amortization expense of $99,275 (2025 - $114,798), (ii) lease intangible amortization of $248 (2025 - $5,359) and (iii) amortization for lease incentives of $12,108 (2025 - $13,907).
(2) Includes the following items for the three months ended June 30, 2026: (i) net income of $16,567 (2025 - net loss of $68), (ii) interest expense of $5,771 (2025 - $1,490), (iii) depreciation and amortization expense of $5,680 (2025 - $3,470), (iv) acquisition and transaction expenses of $0 (2025 - $(77)), and (v) tax expense of $28 (2025 - $0).
Includes the following items for the six months ended June 30, 2026: (i) net income of $24,204 (2025 - net loss of $732), (ii) interest expense of $9,267 (2025 - $1,490), (iii) depreciation and amortization expense of $14,747 (2025 - $3,628), (iv) acquisition and transaction expenses of $0 (2025 - $470), and (v) tax expense of $55 (2025 - $0).
(3) Excludes the profit elimination of $6,597 and $16,597 for the three and six months ended June 30, 2026, respectively (2025 - $4,935 and $11,885, respectively), for sales to the 2025 Partnership.
Revenues
Comparison of the three months ended June 30, 2026 and 2025
Total revenues increased by $276.8 million, driven by the following:
• Aerospace products revenue increased by $271.5 million, primarily due to a $262.6 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales.
• MRE Contract revenue increased by $113.2 million, primarily due to an increase in engine and module sales made to the 2025 Partnership.
• Lease income decreased by $34.7 million, due to decreases in aircraft lease revenue of $19.5 million, driven by the sale of Seed Assets to the 2025 Partnership, and decreases in engine lease revenue of $15.2 million, driven by a decrease in revenue generating assets on lease.
• Maintenance revenue decreased by $47.3 million, due to decreases in aircraft maintenance revenue of $31.0 million and engine maintenance revenue of $16.3 million, both driven by a decrease in revenue generating assets on lease.
• Asset sales revenue decreased by $31.0 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines in the current period as compared to the prior period.
Comparison of the six months ended June 30, 2026 and 2025
Total revenues increased by $605.5 million, driven by the following:
• Aerospace Products revenue increased by $529.7 million, primarily due to a $509.4 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales.
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• MRE Contract revenue increased by $233.8 million, primarily due to an increase in engine and module sales made to the 2025 Partnership.
• Maintenance revenue decreased by $66.3 million, primarily due to a decrease in aircraft maintenance revenue of $39.1 million and a decrease in engine maintenance revenue of $27.2 million, both driven by a decrease in revenue generating assets on lease.
• Lease income decreased by $63.2 million, primarily due to a decrease in aircraft lease revenue of $44.2 million, and a decrease in engine lease revenue of $19.0 million, both driven by a decrease in revenue generating assets on lease.
• Asset sales revenue decreased by $39.7 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines in the current period as compared to the prior period.
Expenses
Comparison of the three months ended June 30, 2026 and 2025
Total expenses increased by $292.5 million, driven by the following:
• Cost of sales increased by $266.5 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 $33.2 million, primarily due to increases in compensation and benefits expense and shipping and logistics expense across our operating segments, as well as increased technology development costs and general corporate expenses.
Comparison of the six months ended June 30, 2026 and 2025
Total expenses increased by $601.7 million, driven by the following:
• Cost of sales increased by $542.1 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 $65.8 million, primarily due to an increase in compensation and benefits expense due to an increase in employee headcount and increased overall compensation, technology development costs and general corporate expenses.
Other (expense) income
Comparison of the three months ended June 30, 2026 and 2025
Total other expense increased by $36.9 million driven by the following:
• Gain on sale to the 2025 Partnership decreased by $32.1 million, driven by the lower number of Seed Assets sold to the 2025 Partnership in the current period as compared to the prior period.
• Other income decreased $19.6 million, driven by a decrease in insurance settlements in the current period as compared to the prior period.
• Equity in earnings of unconsolidated entities increased by $15.0 million, driven by net income earned by the 2025 Partnership in the current period, compared to losses in the prior period.
Comparison of the six months ended June 30, 2026 and 2025
Total other expense increased by $12.2 million driven by the following:
• Gain on sale to the 2025 Partnership decreased by $27.8 million, driven by the lower number of Seed Assets sold to the 2025 Partnership in the current period as compared to the prior period.
• Other income decreased by $5.1 million, primarily due a decrease in insurance settlements in the current period as compared to the prior period.
• Equity in earnings of unconsolidated entities increased by $20.2 million, driven by net income earned by the 2025 Partnership in the current period, compared to losses in the prior period.
Provision for income taxes
The provision for income taxes decreased $12.3 million and $3.7 million for the three and six months ended June 30, 2026, as compared to the prior period, primarily driven by lower income generated in the Aviation Leasing segment within taxable jurisdictions.
Net income
Net income decreased by $40.3 million and $4.8 million for the three and six months ended June 30, 2026, as compared to the prior period, primarily due to the changes noted above.
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Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA decreased by $56.4 million and increased by $0.7 million for the three and six months ended June 30, 2026, as compared to the prior period, primarily due to the changes noted above.
Aerospace Products Segment
The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes, and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B, and V2500 commercial aircraft engines. Our engine, module, and parts sales are facilitated through a dedicated commercial maintenance program designed to focus on modular and parts repair and refurbishment of CFM56-7B and CFM56-5B engines. In addition, 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 engine pool.
In 2023, we acquired the remaining interest in Quick Turn Engine Center LLC (“QuickTurn”), a dedicated hospital maintenance and testing facility specializing in the CFM56-7B and CFM56-5B engines.
In 2024, we acquired Lockheed Martin Commercial Engine Solutions (“LMCES”) to establish permanent engine and module manufacturing capabilities.
In 2025, we entered into an agreement within our MRE business to supply replacement aircraft engines and modules for the life of the 2025 Partnership. We also acquired Pacific Aerodynamic Inc. (“Pac Aero”), a specialist in CFM56 compressor blade and vane repairs, expanding our repair capabilities, and the MRE business of AerotechOPS (“ATOPS”), expanding our MRE business in Miami.
Additionally, we maintain a (i) 25% equity interest in the Advanced Engine Repair joint venture, which focuses on developing innovative cost-saving programs for engine repairs, (ii) 50% equity interest in QuickTurn Europe, which operates as a dedicated maintenance, repair, and overhaul facility for CFM56 engines, and (iii) 50% equity interest in Prime Engine Accessories LLC, which focuses on developing in-house CFM56 accessory maintenance repairs.
The following table presents our results of operations:
Three Months Ended June 30, Change Six Months Ended
June 30, Change
(in thousands) 2026 2025 2026 2025
Revenues
Aerospace products revenue $ 692,229 $ 420,686 $ 271,543 $ 1,214,814 $ 685,111 $ 529,703
MRE Contract revenue 182,799 69,585 113,214 404,029 170,223 233,806
Total revenues 875,028 490,271 384,757 1,618,843 855,334 763,509
Expenses
Cost of sales 614,529 317,469 297,060 1,125,541 546,224 579,317
Operating expenses 10,997 8,989 2,008 21,836 14,676 7,160
Acquisition and transaction expenses 144 1,414 (1,270) 129 2,546 (2,417)
Depreciation and amortization 4,903 3,704 1,199 9,581 7,288 2,293
Total expenses 630,573 331,576 298,997 1,157,087 570,734 586,353
Other income (expense)
Equity in (losses) earnings of unconsolidated entities
(182) 714 (896) (222) 827 (1,049)
Other income
(59) — (59) 112 — 112
Total other income
(241) 714 (955) (110) 827 (937)
Income before income taxes 244,214 159,409 84,805 461,646 285,427 176,219
Provision for income taxes 49,970 25,827 24,143 83,667 45,202 38,465
Net income attributable to shareholders $ 194,244 $ 133,582 $ 60,662 $ 377,979 $ 240,225 $ 137,754
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The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA:
Three Months Ended June 30, Change Six Months Ended
June 30, Change
(in thousands) 2026 2025 2026 2025
Net income attributable to shareholders $ 194,244 $ 133,582 $ 60,662 $ 377,979 $ 240,225 $ 137,754
Add: Provision for income taxes
49,970 25,827 24,143 83,667 45,202 38,465
Add: Equity-based compensation expense 223 168 55 250 323 (73)
Add: Acquisition and transaction expenses 144 1,414 (1,270) 129 2,546 (2,417)
Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — — — — — —
Add: Asset impairment charges — — — — — —
Add: Incentive allocations — — — — — —
Add: Depreciation and amortization expense
4,903 3,704 1,199 9,581 7,288 2,293
Add: Interest expense and dividends on preferred shares — — — — — —
Add: Internalization fee to affiliate — — — — — —
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)
50 883 (833) 464 1,052 (588)
Less: Equity in losses (earnings) of unconsolidated entities
182 (714) 896 222 (827) 1,049
Adjusted EBITDA (non-GAAP) $ 249,716 $ 164,864 $ 84,852 $ 472,292 $ 295,809 $ 176,483
(1) Includes the following items for the three months ended June 30, 2026: (i) net loss of $182 (2025 - net income of $714), (ii) depreciation and amortization expense of $204 (2025 - $169), and (iii) tax expense of $28 (2025 - $0).
Includes the following items for the six months ended June 30, 2026: (i) net loss of $222 (2025 - net income of $827), (ii) depreciation and amortization expense of $631 (2025 - $225), and (iii) tax expense of $55 (2025 - $0).
Revenues
Comparison of the three months ended June 30, 2026 and 2025
Total revenues increased by $384.8 million, due to the following:
• Aerospace products revenue increased by $271.5 million, primarily due to a $262.6 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales.
• MRE Contract revenue increased by $113.2 million, primarily due to an increase in engine and module sales made to the 2025 Partnership.
Comparison of the six months ended June 30, 2026 and 2025
Tot al revenues increased by $763.5 million, due to the following:
• Aerospace products revenue increased by $529.7 million, primarily due to a $509.4 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales.
• MRE Contract revenue increased by $233.8 million, primarily due to an increase in engine and module sales made to the 2025 Partnership.
Expenses
Comparison of the three months ended June 30, 2026 and 2025
Tota l expens es increased by $299.0 million, due to the following:
• Cost of sales increased by $297.1 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 six months ended June 30, 2026 and 2025
Tota l expen ses increased by $586.4 million, due to the following:
• Cost of sales increased by $579.3 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.
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Provision for income taxes
The provision for income taxes increased by $24.1 million and $38.5 million for the three and six months ended June 30, 2026, 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 $60.7 million and $137.8 million for the three and six months ended June 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITD A increased $84.9 million and $176.5 million for the three and six months ended June 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
Aviation Leasing Segment
As of June 30, 2026, in our Aviation Leasing segment, we own and manage 198 aviation assets, consisting of 22 commercial aircraft and 176 engines.
As of June 30, 2026, 19 of our commercial aircraft and 93 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 68% utilized during the three months ended June 30, 2026, 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 37 months, and our engines currently on-lease have an average remaining lease term of 29 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, 2026
5 42 47
Purchases — — —
Sales — (15) (15)
Transfers — (2) (2)
Insurance settlement - Russia assets
(3) (5) (8)
Assets at June 30, 2026
2 20 22
Engines
Assets at January 1, 2026 18 225 243
Purchases 1 13 14
Sales — (1) (1)
Transfers (1) (62) (63)
Insurance settlement - Russia assets
(10) (7) (17)
Assets at June 30, 2026 8 168 176
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The following table presents our results of operations for our Aviation Leasing segment:
Three Months Ended June 30, Change Six Months Ended
June 30, Change
(in thousands) 2026 2025 2026 2025
Revenues
Lease income $ 27,765 $ 62,439 $ (34,674) $ 67,657 $ 130,879 $ (63,222)
Maintenance revenue 25,793 73,104 (47,311) 56,392 122,711 (66,319)
Asset sales revenue 16,925 47,915 (30,990) 27,109 66,854 (39,745)
Other revenue (1)
7,574 2,508 5,066 13,781 2,535 11,246
Total revenues 78,057 185,966 (107,909) 164,939 322,979 (158,040)
Expenses
Cost of sales 21,253 51,789 (30,536) 34,509 71,748 (37,239)
Operating expenses 11,785 11,089 696 22,060 18,515 3,545
Acquisition and transaction expenses 1,848 577 1,271 6,034 3,482 2,552
Depreciation and amortization 40,985 50,423 (9,438) 87,470 105,484 (18,014)
Total expenses 75,871 113,878 (38,007) 150,073 199,229 (49,156)
Other income (expense)
Equity in earnings (losses) of unconsolidated entities
16,749 (782) 17,531 24,426 (1,559) 25,985
Gain on sale to the 2025 Partnership 2,465 34,604 (32,139) 17,633 45,474 (27,841)
Other income 7,237 26,974 (19,737) 54,476 59,593 (5,117)
Total other income 26,451 60,796 (34,345) 96,535 103,508 (6,973)
Income before income taxes 28,637 132,884 (104,247) 111,401 227,258 (115,857)
Provision for income taxes 7,771 26,453 (18,682) 26,097 43,801 (17,704)
Net income attributable to shareholders $ 20,866 $ 106,431 $ (85,565) $ 85,304 $ 183,457 $ (98,153)
(1) Includes servicing fees of $6,988 and $12,849 for the three and six months ended June 30, 2026, respectively (2025 - $2,052 and $2,600, respectively), from the 2025 Partnership.
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The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA:
Three Months Ended June 30, Change Six Months Ended
June 30, Change
(in thousands) 2026 2025 2026 2025
Net income attributable to shareholders
$ 20,866 $ 106,431 $ (85,565) $ 85,304 $ 183,457 $ (98,153)
Add: Provision for income taxes
7,771 26,453 (18,682) 26,097 43,801 (17,704)
Add: Equity-based compensation expense 361 264 97 525 439 86
Add: Acquisition and transaction expenses 1,848 577 1,271 6,034 3,482 2,552
Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — — — — — —
Add: Asset impairment charges — — — — — —
Add: Incentive allocations — — — — — —
Add: Depreciation and amortization expense (1)
46,117 60,864 (14,747) 99,826 124,750 (24,924)
Add: Interest expense and dividends on preferred shares — — — — — —
Add: Internalization fee to affiliate — — — — — —
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
27,996 3,932 24,064 47,809 3,804 44,005
Less: Equity in (earnings) losses of unconsolidated entities
(16,749) 782 (17,531) (24,426) 1,559 (25,985)
Adjusted EBITDA (non-GAAP) $ 88,210 $ 199,303 $ (111,093) $ 241,169 $ 361,292 $ (120,123)
(1) Includes the following items for the three months ended June 30, 2026: (i) depreciation expense of $40,985 (2025 - $50,423), (ii) lease intangible amortization of $(89) (2025 - $2,153) and (iii) amortization for lease incentives of $5,221 (2025 - $8,288).
Includes the following items for the six months ended June 30, 2026: (i) depreciation expense of $87,470 (2025 - $105,484), (ii) lease intangible amortization of $248 (2025 - $5,359) and (iii) amortization for lease incentives of $12,108 (2025 - $13,907).
(2) Includes the following items for the three months ended June 30, 2026: (i) net income of $16,749 (2025 - net loss of $782), (ii) interest expense of $5,771 (2025 - $1,490), (iii) depreciation and amortization of $5,476 (2025 - $3,301), and (iv) acquisition and transaction expense of $0 (2025 - $(77)).
Includes the following items for the six months ended June 30, 2026: (i) net income of $24,426 (2025 - net loss of $1,559), (ii) interest expense of $9,267 (2025 - $1,490), (iii) depreciation and amortization of $14,116 (2025 - $3,403) and (iv) acquisition and transactions expenses of $0 (2025 - $470).
Revenues
Comparison of the three months ended June 30, 2026 and 2025
Total reven ue decreased by $107.9 million, driven by the following:
• Lease income decreased by $34.7 million, due to decreases in aircraft lease revenue of $19.5 million, driven by the sale of Seed Assets to the 2025 Partnership, and decreases in engine lease revenue of $15.2 million, driven by a decrease in revenue generating assets on lease.
• Maintenance revenue decreased by $47.3 million, due to decreases in aircraft maintenance revenue of $31.0 million and engine maintenance revenue of $16.3 million, both driven by a decrease in revenue generating assets on lease.
• Asset sales revenue decreased by $31.0 million, primarily due to an overall decrease 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 $5.1 million, primarily as a result of servicing fees earned in our capacity as the Servicer to the 2025 Partnership.
Comparison of the six months ended June 30, 2026 and 2025
Total revenue decreased by $158.0 million, driven by the following:
• Maintenance revenue decreased by $66.3 million, primarily due to a decrease in aircraft maintenance revenue of $39.1 million and a decrease in engine maintenance revenue of $27.2 million, both driven by a decrease in revenue generating assets on lease.
• Lease income decreased by $63.2 million, primarily due to a decrease in aircraft lease revenue of $44.2 million, and a decrease in engine lease revenue of $19.0 million, both driven by a decrease in revenue generating assets on lease.
• Asset sales revenue decreased by $39.7 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines in the current period as compared to the prior period.
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• Other revenue increased by $11.2 million as a result of servicing fees earned in our capacity as the Servicer to the 2025 Partnership.
Expenses
Comparison of the three months ended June 30, 2026 and 2025
Total expenses decreased by $38.0 million, driven by the following:
• Cost of sales decreased by $30.5 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 decreased by $9.4 million, primarily driven by the sale of Seed Assets to the 2025 Partnership.
Comparison of the six months ended June 30, 2026 and 2025
Total expenses decreased by $49.2 million, driven by the following:
• Cost of sales decreased by $37.2 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 decreased by $18.0 million, primarily driven by the sale of Seed Assets to the 2025 Partnership.
• Operating expense increased by $3.5 million, primarily driven by an increase in equipment lease expense in the current period.
• Acquisition and transaction expense increased by $2.6 million, primarily driven by higher professional fees associated with the 2025 Partnership in the current period.
Other income (expense)
Comparison of the three months ended June 30, 2026 and 2025
Total other income decreased by $34.3 million, primarily due (i) a $32.1 million decrease in gain on sale to the 2025 Partnership, driven by the lower number of Seed Assets sold to the 2025 Partnership as compared to the prior period, and (ii) a $19.7 million decrease in other income driven by a decrease in insurance settlements in the current period; partially offset by (iii) a $17.5 million increase in equity in earnings of unconsolidated entities as a result of net income earned by the 2025 Partnership.
Comparison of the six months ended June 30, 2026 and 2025
Total other income decreased by $7.0 million, primarily due (i) a $27.8 million decrease in gain on sale to the 2025 Partnership, driven by the lower number of Seed Assets sold to the 2025 Partnership as compared to the prior period; partially offset by (ii) a $26.0 million increase in equity in earnings of unconsolidated entities as a result of net income earned by the 2025 Partnership.
Provision for income taxes
The provision for income taxes decreased by $18.7 million and $17.7 million for the three and six months ended June 30, 2026, 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 $85.6 million and $98.2 million for the three and six months ended June 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITD A decreased by $111.1 million and $120.1 million for the three and six months ended June 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
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Corporate and Other
The following table presents our results of operations:
Three Months Ended
June 30, Change Six Months Ended
June 30, Change
(in thousands) 2026 2025 2026 2025
Revenues
Other revenue $ — $ — $ — $ — $ 4 $ (4)
Total revenues — — — — 4 (4)
Expenses
Operating expenses 44,785 14,250 30,535 88,658 33,575 55,083
General and administrative 2,245 2,442 (197) 4,658 5,558 (900)
Acquisition and transaction expenses 3,707 2,498 1,209 15,897 5,753 10,144
Depreciation and amortization 1,098 1,109 (11) 2,224 2,026 198
Total expenses 51,835 20,299 31,536 111,437 46,912 64,525
Other (expense) income
Interest expense (64,102) (63,965) (137) (125,509) (126,005) 496
Other income 396 182 214 568 634 (66)
Total other expense (63,706) (63,783) 77 (124,941) (125,371) 430
Loss before income taxes (115,541) (84,082) (31,459) (236,378) (172,279) (64,099)
Benefit from income taxes (32,122) (14,402) (17,720) (52,685) (28,266) (24,419)
Net loss (83,419) (69,680) (13,739) (183,693) (144,013) (39,680)
Less: Dividends on preferred shares 3,709 3,709 — 7,418 9,824 (2,406)
Less: Loss on redemption of preferred shares 3,800 — 3,800 3,800 6,327 (2,527)
Net loss attributable to shareholders $ (90,928) $ (73,389) $ (17,539) $ (194,911) $ (160,164) $ (34,747)
The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:
Three Months Ended June 30, Change Six Months Ended
June 30, Change
(in thousands) 2026 2025 2026 2025
Net loss attributable to shareholders
$ (90,928) $ (73,389) $ (17,539) $ (194,911) $ (160,164) $ (34,747)
Add: Benefit from income taxes
(32,122) (14,402) (17,720) (52,685) (28,266) (24,419)
Add: Equity-based compensation expense 6,748 5,083 1,665 12,904 9,642 3,262
Add: Acquisition and transaction expenses 3,707 2,498 1,209 15,897 5,753 10,144
Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations 3,800 — 3,800 3,800 6,327 (2,527)
Add: Asset impairment charges — — — — — —
Add: Incentive allocations — — — — — —
Add: Depreciation and amortization expense
1,098 1,109 (11) 2,224 2,026 198
Add: Interest expense and dividends on preferred shares 67,812 67,674 138 132,928 135,829 (2,901)
Add: Internalization fee to affiliate — — — — — —
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities
— — — — — —
Less: Equity in losses (earnings) of unconsolidated entities
— — — — — —
Adjusted EBITDA (non-GAAP) $ (39,885) $ (11,427) $ (28,458) $ (79,843) $ (28,853) $ (50,990)
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Expenses
Comparison of the three months ended June 30, 2026 and 2025
Total expens es increased by $31.5 million, primarily due to the following:
• Operating expenses increased $30.5 million, primarily due to an increase in compensation and benefits expense due to an increase in employee headcount and increased overall compensation, technology development costs and general corporate expenses.
Comparison of the six months ended June 30, 2026 and 2025
Total expenses increased by $64.5 million, primarily due to the following:
• Operating expenses increased $55.1 million, primarily due to an increase in compensation and benefits expense due to an increase in employee headcount and increased overall compensation, technology development costs and general corporate expenses.
• Acquisition and transaction expense increased $10.1 million, primarily due to higher professional fees associated with acquisitions and transactions in the current period.
Benefit from income taxes
The benefit from income taxes increased by $17.7 million and $24.4 million for the three and six months ended June 30, 2026, respectively, as compared to the prior period. The increase was mainly driven by higher corporate overhead expenses deductible for 2026 tax purposes.
Net loss
Net loss increased by $13.7 million and $39.7 million during the three and six months ended June 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA decreased by $28.5 million and $51.0 million during the three and six months ended June 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
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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 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 first partnership under the initiative, the 2025 Partnership, focuses on acquiring 737NG and A320ceo aircraft. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion of equity commitments.
The 2025 Partnership, and follow on partnerships, is the primary buyer of on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, provides aircraft management services to the 2025 Partnership, and the Company receives customary, market-based compensation for providing such services. The Company made minority capital commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors.
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.
• Cash used for the purpose of making investments was $352.6 million during the six months ended June 30, 2026 (2025 - $594.9 million).
• Distributions to shareholders, including cash dividends and preferred stock redemptions, were $200.1 million during the six months ended June 30, 2026 (2025 - $71.4 million).
• 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 from operating activities, plus the principal collections on finance leases and maintenance reserve collections, were $(252.7) million during the six months ended June 30, 2026 (2025 - $(107.2) million).
• During the six months ended June 30, 2026, additional borrowings and total principal repayments in connection with the Revolving Credit Facility were $625.0 million and $625.0 million, respectively (2025 - $430.0 million and $430.0 million, respectively).
• Proceeds from the sale of assets were $793.0 million during the six months ended June 30, 2026 (2025 - $(986.5) million).
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 six months ended June 30, 2026 and 2025
The following table compares the historical cash flow for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
(in thousands) 2026 2025
Cash Flow Data:
Net cash used in operating activities $ (265,303) $ (136,284)
Net cash provided by investing activities 515,714 496,148
Net cash used in financing activities (213,692) (173,069)
Net cash used in operating activities increased $129.0 million, primarily reflecting a decrease in our Net income of $4.8 million and certain adjustments to reconcile net income to cash used in operating activities, including a:
• increase in Changes in net working capital of $160.8 million,
• decrease in Deferred income taxes of $32.6 million,
• decrease in Equity in losses of unconsolidated entities of $20.2 million; partially offset by
• decrease in Gain on sale of assets of $48.2 million, and
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• decrease in Gain on sale of assets to the 2025 Partnership of $27.8 million.
Net cash provided by investing activities increased $19.6 million, primarily due to an:
• decrease in Acquisition of leasing equipment of $249.1 million,
• decrease in Investment in unconsolidated entities of $19.5 million,
• increase in Return of capital from unconsolidated entities of $19.2 million; partially offset by
• decrease in Proceeds from the sale of assets to the 2025 partnership of $221.5 million, and
• decrease in Return of deposits for acquisition of leasing equipment of $38.9 million.
Net cash used in financing activities increased $40.6 million, primarily due to a:
• decrease in Proceeds from debt of $195.0 million,
• increase in Repayment of debt of $195.0 million,
• increase in Cash dividends on ordinary shares of $25.7 million,
• decrease in receipt of maintenance deposits under operating lease agreements of $15.6 million,
• increase in Payment of deferred financing costs of $11.5 million,
• Increase in Settlement of equity-based compensation of $7.5 million; partially offset by
• decrease in Redemption of preferred shares of $18.7 million.
Contractual Obligations
Our material cash requirements include the following contractual and other obligations:
Debt Obligations — As of June 30, 2026, we had outstanding principal and interest payment obligations of $3.5 billion and $1.0 billion, respectively, of which only interest payments of $228.8 million are due in the next twelve months. Refer to Note 6, “Debt” in our “Notes to Consolidated Financial Statements” for additional information about our debt obligations.
Lease Obligations —As of June 30, 2026, we had outstanding operating and finance lease obligations of $43.0 million, of which $6.0 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 $153.9 million and $14.8 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 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, 2025.
Recent Accounting Pronouncements
See Note 2, “Summary of Significant Accounting Policies” in our “Notes to Consolidated Financial Statements” for recent accounting pronouncements.